Compiled Cases on Obligations and Contracts

SUBJECT ELEMENTSOCAMPO III. VS. PEOPLE G.R Nos. 156547-51. February 4, 2008 FACTS: The Department of Budget and Management released the amount of Php 100 Million for the support of the local government unit of the province of Tarlac. However, petitioner Ocampo, governor of Tarlac, loaned out more than P 56.6 million in which he contracted with Lingkod Tarlac Foundation, Inc., thus, it was the subject of 25 criminal charges against the petitioner. The Sandiganbayan convicted the petitioner of the crime of malversation of public funds. However, the petitioner contended that the loan was private in character since it was a loan contracted with the Taralc Foundation. ISSUE: Whether or not the amount loaned out was private in nature. RULING: Yes, the loan was private in nature because Art. 1953 of the New Civil Code provides that “a person who receives a loan of money or any other fungible thing acquires the ownership thereof, and is bound to pay the creditor an equal amount of the same kind and quality.” The fact that the petitioner-Governor contracted the loan, the public fund changed its nature to private character, thus it is not malversation which is the subject of this case, instead it must be a simple collection of money suit against the petitioner in case of non payment . Therefore, the petitioner is acquitted for the crime of malversation. LEUNG BEN; plaintiff, VS. P. J. O’BRIEN, JAMES A. OSTRAND and GEO. R. HARVEY, Judges of First Instance of the City of Manila, defendants April 6, 1918 FACTS: On December 12, 1917, an action was instituted in the Court of First Instance of Manila by P.J. O’Brien to recover of Leung Ben the sum of P15,000, all alleged to have been lost by the plaintiff to the defendant in a series of gambling, banking, and percentage games conducted during the two or three months prior to the institution of the suit. The plaintiff asked for an attachment against the property of the defendant, on the ground that the latter was about to depart from the Philippines with intent to defraud his creditors. This attachment was issued. The provision of law under which this attachment was issued requires that there should be a cause of action arising upon contract, express or implied. The contention of the petitioner is that the statutory action to recover money lost at gaming is not such an action as is contemplated in this provision, and he insists that the original complaint shows on its face that the remedy of attachment is not available in aid thereof; that the Court of First Instance acted in excess of its jurisdiction in granting the writ of attachment; that the petitioner has no plain, speedy, and adequate remedy by appeal or otherwise; and that consequently the writ of certiorari supplies the appropriate remedy for this relief. ISSUE: Whether or not the statutory obligation to restore money won at gaming is an obligation arising from contract, express or implied. RULING: Yes. In permitting the recovery money lost at play, Act No. 1757 has introduced modifications in the application of Articles 1798, 1801, and 1305 of the Civil Code. A. LAW The first two of these articles relate to gambling contracts, while article 1305 treats of the nullity of contracts proceeding from a vicious or illicit consideration. Taking all these provisions together, it must be apparent that the obligation to return money lost at play has a decided affinity to contractual obligation; and the Court believes that it could, without violence to the doctrines of the civil law, be held that such obligations is an innominate quasi-contract. 1. 2. 3. 4. 5. 6. LEUNG BEN VS. O’BRIEN, 38 PHIL 182 PELAYO VS. LAURON, 12 PHIL 453 NIKKO HOTEL VS. REYES, 452 SCRA 532 ST. MARY’S ACADEMY VS. CARPITANOS, FEB. 6, 2002 REGINO VS. PANGASINAN COLLEGE, NOV. 18, 2004 COSMO ENTERTAINMENT VS. LA VILLE, AUG. 20, 2004 It is however, unnecessary to place the decision on this ground. In the opinion of the Court, the cause of action stated in the complaint in the court below is based on a contract, express or implied, and is therefore of such nature that the court had authority to issue the writ of attachment. The application for the writ of certiorari must therefore be denied and the proceedings dismissed. LAW AS A SOURCE OF OBLIGATION SOURCES OF OBLIGATIONS ARTURO PELAYO, plaintiff-appellant VS. MARCELO LAURON, defendant-appellee 12 Phil 453 January 12, 1909 February 14, 2008 FACTS: FACTS: On November 23, 1906, Arturo Pelayo, a physician, filed a complaint against Marcelo and Juana Abella. He alleged that on October 13, 1906 at night, Pelayo was called to the house of the defendants to assist their daughter-in-law who was about to give birth to a child. Unfortunately, the daughter-in-law died as a consequence of said childbirth. Thus, the defendant refuses to pay. The defendants argue that their daughterin-law lived with her husband independently and in a separate house without any relation, that her stay there was accidental and due to fortuitous event. Private respondent Evangelista contracted Petitioner ASJ Corporation for the incubation and hatching of eggs and by products owned by Evangelista Spouses. The contract includes the scheduled payments of the service of ASJ Corporation that the amount of installment shall be paid after the delivery of the chicks. However, the ASJ Corporation detained the chicks because Evangelista Spouses failed to pay the installment on time. ISSUE: ISSUE: Whether or not the detention of the alleged chicks valid and recognized under the law? Whether or not the defendants should be held liable for the fees demanded by the plaintiff upon rendering medical assistance to the defendants’ daughter-in-law. RULING: No. The Court held that the rendering of medical assistance is one of the obligations to which spouses are bound by mutual support, expressly determined by law and readily demanded. Therefore, there was no obligation on the part of the in-laws but rather on the part of the husband who is not a party. RULING: No, because ASJ Corporation must give due to the Evangelista Spouses in paying the installment, thus, it must not delay the delivery of the chicks. Thus, under the law, they are obliged to pay damages with each other for the breach of the obligation. Therefore, in a contract of service, each party must be in good faith in the performance of their obligation, thus when the petitioner had detained the hatched eggs of the respondents spouses, it is an implication of putting prejudice to the business of the spouses due to the delay of paying installment to the petitioner. Thus, decision affirmed. LAW AS A SOURCE OF OBLIGATION RAMAS, plaintiff-appellant VS. QUIAMCO, defendant-appellee December 6, 2006 LAW AS A SOURCE OF OBLIGATION ASI CORPORATION, plaintiff-appellant VS. EVANGELISTA, defendant-appellee FACTS: Quiamco has amicably settled with Davalan, Gabutero and Generoso for the crime of robbery and that in return, the three had surrendered to Quiamco a motorcycle with its registration. However, Atty. Ramas has sold to Gabutero the motorcycle in installment but when the latter did not able to pay the installment, Davalon continued the payment but when he became insolvent, he said that the motorcycle was taken by Quiamco’s men. However, after several years, the petitioner Ramas together with policemen took the motorcycle without the respondent’s permit and shouted that the respondent Quiamco is a thief of motorcycle. Respondent then filed an action for damages against petitioner alleging that petitioner is liable for unlawful taking of the motorcycle and utterance of a defamatory remark and filing a baseless complaint. Also, petitioners claim that they should not be held liable for petitioner’s exercise of its right as sellermortgagee to recover the mortgaged motorcycle preliminary to the enforcement of its right to foreclose on the mortgage in case of default. ISSUE: Whether or not the act of the petitioner is correct. invited by Dr. Filart, who was herself a guest. Not long after, a Makati policeman approached him and escorted him out of her party. Ms. Lim admitted having asked respondent to leave the party but not under the ignominious circumstances painted by Mr. Reyes, that she did the act politely and discreetly. Mindful of the wish of the celebrant to keep the party intimate and exclusive, she spoke to the respondent herself when she saw him by the buffet table with no other guests in the immediate vicinity. She asked him to leave the party after he finished eating. After she had turned to leave, the latter screamed and made a big scene. Dr. Filart testified that she did not want the celebrant to think that she invited Mr. Reyes to the party. Respondent filed an action for actual, moral and/or exemplary damages and attorney’s fees. The lower court dismissed the complaint. On appeal, the Court of Appeals reversed the ruling of the trial court, consequently imposing upon Hotel Nikko moral and exemplary damages and attorney’s fees. On motion for reconsideration, the Court of Appeals affirmed its decision. Thus, this instant petition for review. ISSUES: Whether or not Ms. Ruby Lim is liable under Articles 19 and 21 of the Civil Code in asking Mr. Reyes to leave the party as he was not invited by the celebrant thereof and whether or not Hotel Nikko, as the employer of Ms. Lim, be solidarily liable with her. RULING: No. The petitioner being a lawyer must know the legal procedure for the recovery of possession of the alleged mortgaged property in which said procedure must be conducted through judicial action. Furthermore, the petitioner acted in malice and intent to cause damage to the respondent when even without probable cause, he still instituted an act against the law on mortgage. LAW AS A SOURCE OF OBLIGATION NIKKO HOTEL MANILA GARDEN AND RUBY LIM VS. ROBERTO REYES a.k.a. “AMAY BISAYA” 2005 Feb 28 G.R. No. 154259 FACTS: In the evening of October 13, 1994, while drinking coffee at the lobby of Hotel Nikko, respondent was invited by a friend, Dr. Filart to join her in a party in celebration of the birthday of the hotel’s manager. During the party and when respondent was lined-up at the buffet table, he was stopped by Ruby Lim, the Executive Secretary of the hotel, and asked to leave the party. Shocked and embarrassed, he tried to explain that he was RULING: The Court found more credible the lower court’s findings of facts. There was no proof of motive on the part of Ms. Lim to humiliate Mr. Reyes and to expose him to ridicule and shame. Mr. Reyes’ version of the story was unsupported, failing to present any witness to back his story. Ms. Lim, not having abused her right to ask Mr. Reyes to leave the party to which he was not invited, cannot be made liable for damages under Articles 19 and 21 of the Civil Code. Necessarily, neither can her employer, Hotel Nikko, be held liable as its liability springs from that of its employees. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be responsible. Article 21 states that any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. Without proof of any ill-motive on her part, Ms. Lim’s act cannot amount to abusive conduct. The maxim “Volenti Non Fit Injuria” (self-inflicted injury) was upheld by the Court, that is, to which a person assents is not esteemed in law as injury, that consent to injury precludes the recovery of damages by one who has knowingly and voluntarily exposed himself to danger. Respondents Daniel spouses and Villanueva admitted that the immediate cause of the accident was not the negligence of petitioner or the reckless driving of James Daniel II, but the detachment of the steering wheel guide of the jeep. LAW AS A SOURCE OF OBLIGATION ST. MARY’S ACADEMY, petitioner, VS. WILLIAM CARPITANOS and LUCIA S. CARPITANOS, GUADA DANIEL, JAMES DANIEL II, JAMES DANIEL, SR., and VIVENCIO VILLANUEVA, respondents February 6, 2002 FACTS: From February 13 to 20, 1995, defendant-appellant St. Mary’s Academy of Dipolog City conducted an enrollment drive for the school year 1995-1996. As a student of St. Mary’s Academy, Sherwin Carpitanos was part of the campaigning group. Accordingly, Sherwin, along with other high school students were riding in a Mitsubishi jeep owned by defendant Vivencio Villanueva on their way to Larayan Elementary School, Larayan, Dapitan City. The jeep was driven by James Daniel II then 15 years old and a student of the same school. Allegedly, the latter drove the jeep in a reckless manner and as a result the jeep turned turtle. Sherwin Carpitanos died as a result of the injuries he sustained from the accident. The trial court ordered the defendants, St. Mary’s Academy principally liable and the parents of James Daniel as subsidiarily liable for damages. The Court of Appeals affirmed the decision of the trial court. The Court of Appeals held petitioner St. Mary’s Academy liable for the death of Sherwin Carpitanos under Articles 218 and 219 of the Family Code, pointing out that petitioner was negligent in allowing a minor to drive and in not having a teacher accompany the minor students in the jeep. Hence, liability for the accident, whether caused by the negligence of the minor driver or mechanical detachment of the steering wheel guide of the jeep, must be pinned on the minor’s parents primarily. The negligence of petitioner St. Mary’s Academy was only a remote cause of the accident. Between the remote cause and the injury, there intervened the negligence of the minor’s parents or the detachment of the steering wheel guide of the jeep. Considering that the negligence of the minor driver or the detachment of the steering wheel guide of the jeep owned by respondent Villanueva was an event over which petitioner St. Mary’s Academy had no control, and which was the proximate cause of the accident, petitioner may not be held liable for the death resulting from such accident. SOURCES OF OBLIGATIONS a. CONTRACTS 1. 2. 3. 4. 5. 6. 7. TSPI, INC., VS. TSPOC EMPLOYEES UNION 545 S 215 REGINO VS. CA, NOVEMBER 18, 1992 PSBA VS. CA, FEB. 4, 1992 COSMO ENTERTAINMENT VS. LA VILLE, 20 AUGUST 2004 AYALA CORP. VS. ROSA DIANA REALTY, 346 SCRA 663 BRICKTOWN DEVELOPMENT VS. AMOR TIERRA DEVELOPMENT, 239 SCRA 126 PILIPINAS HINO VS. CA, 338 SCRA 355 ISSUE: Whether or not the appellant St. Mary’s Academy is principally liable for damages for the death of Sherwin. RULING: No. Under Article 219 of the Family Code, if the person under custody is a minor, those exercising special parental authority are principally and solidarily liable for damages caused by the acts or omissions of the unemancipated minor while under their supervision, instruction, or custody. However, for petitioner to be liable, there must be a finding that the act or omission considered as negligent was the proximate cause of the injury caused because the negligence must have a causal connection to the accident. TSPI, INCORPORATION VS. TSPIC EMPLOYEES UNION G.R No. 163419. February 13, 2008 FACTS: TSPI Corporation entered into a Collective Bargaining Agreement with the corporation Union for the increase of salary for the latter’s members for the year 2000 to 2002 starting from January 2000. thus, the increased in salary was materialized on January 1, 2000. However, on October 6, 2000, the Regional Tripartite Wage and production Board raised daily minimum wage from P 223.50 to P 250.00 starting November 1, 2000. Conformably, the wages of the 17 probationary employees were increased to P250.00 and became regular employees therefore receiving another 10% increase in salary. In January 2001, TSPIC implemented the new wage rates as mandated by the CBA. As a result, the nine employees who were senior to the 17 recently regularized employees, received less wages. On January 19, 2001, TSPIC’s HRD notified the 24 employees who are private respondents, that due to an error in the automated payroll system, they were overpaid and the overpayment would be deducted from their salaries starting February 2001. The Union on the other hand, asserted that there was no error and the deduction of the alleged overpayment constituted diminution of pay. ISSUE: valid? Was the refusal of the university to allow Regino to take the final examination RULING: ISSUE: Union. Regino, an underprivileged, failed to purchase the tickets because of her status as well as that project was against her religious belief, thus, she was not allowed to take the final examination by her two professors. Whether the alleged overpayment constitutes diminution of pay as alleged by the RULING: Yes, because it is considered that Collective Bargaining Agreement entered into by unions and their employers are binding upon the parties and be acted in strict compliance therewith. Thus, the CBA in this case is the law between the employers and their employees. Therefore, there was no overpayment when there was an increase of salary for the members of the union simultaneous with the increasing of minimum wage for workers in the National Capital Region. The CBA should be followed thus, the senior employees who were first promoted as regular employees shall be entitled for the increase in their salaries and the same with lower rank workers. No, the Supreme Court declared that the act of PCST was not valid, though, it can impose its administrative policies, necessarily, the amount of tickets or payment shall be included or expressed in the student handbooks given to every student before the start of the regular classes of the semester. In this case, the fund raising project was not included in the activities to be undertaken by the university during the semester. The petitioner is entitled for damages due to her traumatic experience on the acts of the university causing her to stop studying sand later transfer to another school. CONTRACT AS A SOURCE OF OBLIGATION REGINO VS. PCST G.R No. 156109. November 18, 2004 FACTS: Petitioner Kristine Regino was a poor student enrolled at the Pangasinan College of Science and Technology. Thus, a fund raising project pertaining to a dance party was organized by PCST, requiring all its students to purchase two tickets in consideration as a prerequisite for the final exam. PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, ET AL. petitioners, VS. COURT OF APPEALS, HON. REGINA ORDOÑEZ-BENITEZ, SEGUNDA R. BAUTISTA, and ARSENIA D. BAUTISTA, respondents February 4, 1992 FACTS: Carlitos Bautista was a third year student at the Philippine School of Business Administration. Assailants, who were not members of the schools academic community, while in the premises of PSBA, stabbed Bautista to death. This incident prompted his parents to file a suit against PSBA and its corporate officers for damages due to their alleged negligence, recklessness and lack of security precautions, means and methods before, during and after the attack on the victim. 20 August 2004 The defendants filed a motion to dismiss, claiming that the compliant states no cause of action against them based on quasi-delicts, as the said rule does not cover academic institutions. The trial court denied the motion to dismiss. Their motion for reconsideration was likewise dismissed, and was affirmed by the appellate court. Hence, the case was forwarded to the Supreme Court. ISSUE: Whether or not PSBA is liable for the death of the student. RULING: Because the circumstances of the present case evince a contractual relation between the PSBA and Carlitos Bautista, the rules on quasi-delict do not really govern. A perusal of Article 2176 shows that obligations arising from quasi-delicts or tort, also known as extra-contractual obligations, arise only between parties not otherwise bound by contract, whether express or implied. However, this impression has not prevented this Court from determining the existence of a tort even when there obtains a contract. Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule in in loco parentis. Article 2180 provides that the damage should have been caused or inflicted by pupils or students of the educational institution sought to be held liable for the acts of its pupils or students while in its custody. However, this material situation does not exist in the present case for, as earlier indicated, the assailants of Carlitos were not students of the PSBA, for whose acts the school could be made liable. But it does not necessarily follow that PSBA is absolved form liability. When an academic institution accepts students for enrollment, there is established a contract between them, resulting in bilateral obligations which both parties is bound to comply with. For its part, the school undertakes to provide the student with an education that would presumably suffice to equip him with the necessary tools and skills to pursue higher education or a profession. This includes ensuring the safety of the students while in the school premises. On the other hand, the student covenants to abide by the school's academic requirements and observe its rules and regulations. Failing on its contractual and implied duty to ensure the safety of their student, PSBA is therefore held liable for his death. Petition denied. CONTRACT AS A SOURCE OF OBLIGATION COSMO ENTERTAINMENT MANAGEMENT, INC., Petitioner, VS. LA VILLE COMMERCIAL CORPORATION, Respondent G.R. No. 152801 FACTS: The respondent, La Ville Commercial Corporation, is the registered owner of a parcel of land covered by Transfer Certificate of Title (TCT) No. 174250 of the Registry of Deeds of Makati City together with the commercial building thereon situated at the corner of Kalayaan and Neptune Streets in Makati City. On March 17, 1993, it entered into a Contract of Lease with petitioner Cosmo Entertainment Management, Inc. over the subject property for a period of seven years with a monthly rental of P250 per square meter of the floor area of the building and a security deposit equivalent to three monthly rentals in the amount of P447,000 to guarantee the faithful compliance of the terms and conditions of the lease agreement. Upon execution of the contract, the petitioner took possession of the subject property. The petitioner, however, suffered business reverses and was constrained to stop operations in September 1996. Thereafter, the petitioner defaulted in its rental payments. Consequently, on February 1, 1997, the respondent made a demand on the petitioner to vacate the premises as well as to pay the accrued rentals plus interests which, as of January 31, 1997, amounted to P740,478.91. In reply to the demand, the petitioner averred that its unpaid rentals amounted to P698,500 only and since it made a security deposit of P419,100 with the respondent, the said amount should be applied to the unpaid rentals; hence, the outstanding accounts payable would only be P279,400. The respondent requested that the interest charges be waived and it be given time to find a solution to its financial problems. After negotiations between the parties failed, the respondent, on May 27, 1997, reiterated its demand on the petitioner to pay the unpaid rentals as well as to vacate and surrender the premises to the respondent. When the petitioner refused to comply with its demand, the respondent filed with the Metropolitan Trial Court (MeTC) of Makati City. The petitioner, in its answer to the complaint, raised the defense that, under the contract, it had the right to sublease the premises upon prior written consent by the respondent and payment of transfer fees. However, the respondent, without any justifiable reason, refused to allow the petitioner to sublease the premises. After due proceedings, the MeTC rendered judgment in favor of the respondent. ISSUE: Whether or not the contention of the petitioner is tenable. RULING: While petitioner pleads that a liberal, not literal, interpretation of the rules should be our policy guidance, nevertheless procedural rules are not to be disdained as mere technicalities. They may not be ignored to suit the convenience of a party. Adjective law ensures the effective enforcement of substantive rights through the orderly and speedy administration of justice. Rules are not intended to hamper litigants or complicate Rosa Diana Realty. The petition is DENIED. was bound by this stipulation. Rosa Diana submitted a building plan to Ayala complying with the DR but it also passed a different building plan to the building administrator of Makati. Respondent Company agreed to abode by the SCS and the DR stipulations. Rosa Diana was able to complete the construction of “The Peak. be compelled to comply with the DR and build the building in accordance with the building plan submitted to Ayala. as the owner-lessor of the premises. Contractual Obligations between parties have the force of law between them and absent any allegation that the same are contrary to law. which is not fair and legal. RD refused to grant Ayala such registration for in the lower court. ROSA DIANA REALTY 346 SCRA 633 FACTS: In April 1976. The DR specified the limits in height and floor area of the building to be constructed. And. having failed to pay the monthly rentals. CONTRACT AS A SOURCE OF OBLIGATION AYALA CORPORATION VS. Ayala filed a case praying that: 1) Rosa Diana. which should be followed by the vendees.R. the Court is convinced that the findings and conclusions of the court a quo and the RTC are in order. at the prescribed time in a peaceful though adversarial confrontation before a judge whose authority litigants acknowledge. had reserved its right to approve the sublease of the same. However. the Land Registration Authority (LRA) reversed RD’s ruling. AMOR TIERRA DEVELOPMENT CORPORATION and the HON. the vendees sold the said lot to the respondent. good customs. The trial court sustained the respondent’s point saying that Ayala was guilty of abandonment and/or estoppels due to its failure to enforce the terms of the DR and SCS against Sy and Kieng. “The Peak. which did not comply with the stipulations in the DR. The petitioner. and MARIANO Z. Sy and Kieng. The stipulations in the SCS are: The trial court ruled in favor of the respondent and thus. The deed of sale had some encumbrances contained in the Special Conditions of Sale (SCS) and Deed of Restrictions (DR). the petitioner is deemed to have violated the terms of the contract.” was being constructed. failed to build a building but nonetheless with the permission of Ayala. appellant-petitioner entered into a transaction with Manuel Sy and Sy Ka Kieng where former sold a lot in Salcedo Village in Makati. Thus. Ayala discriminately chose which obligor would be made to follow certain conditions. The appellate court upheld the RD’s ruling stating that the case before the trial court is a personal action for the cause of action arises from the alleged violation of the DR. the rescission of the deed of sale. VERALDE VS. or 2) on the alternative. the case is of personal action for a specific performance and/or rescission. Hence. morals. The Court finds no cogent reason to depart from this factual disquisition of the courts below in view of the rule that findings of facts of the trial courts are. In any case. the assailed decision of the Court of Appeals is reversed and set aside. 2) a building proposal must be submitted to Ayala which must be in accordance with the DR. and 4) that there will be no resale of the lot. 112182 December 12. However. this petition. the CA affirmed the lower court’s ruling. These courts uniformly found that. But they help provide for a vital system of justice where suitors may be heard in the correct form and manner. they must complied with in good faith. COURT OF APPEALS G. Ayala filed before the Register of Deeds (RD) of Makati a cause of annotation lis pendens. the respondent. Public order and our system of justice are well served by a conscientious observance of the rules of procedure. under the terms of the contract of lease.” Undeterred. No.litigation. Prior to the construction. 1994 239 SCRA 127 FACTS: . 3) the construction of the building must be completed on or before 1979. While the building. as a general rule. CONTRACT AS A SOURCE OF OBLIGATION BRICKTOWN DEVELOPMENT CORP. which did not comply with the stipulations in the DR. RULING: Yes. ISSUE: Whether or not Rosa Diana committed a breach of contract. public order or public policy. binding on this Court. the Supreme Court ruled that Rosa Diana committed a breach of contract by submitting a building plan to Ayala complying with the DR and submitting a different building plan to the building administrator of Makati. having voluntarily given its consent thereto. warranting its ejectment from the leased premises. On appeal. 1981. Several months later. Pursuant to the contract of lease.000.000.000. Inc. allegedly "amounting to P2.443. Unfortunately.90. the petitioner and respondents made a joint inspection of the premises to determine the extent of damages thereon.200. Inc. as follows: P2. 1990 to the respondents the amount of P1. but nothing conclusive happened. respondents averred that the true and actual damage amounted to P298. Inc. Pilipinas Hino. private respondent’s counsel.000. Notwithstanding repeated demands. or. RULING: The contract between Bricktown and Amor Tierra was validly rescinded because of the failure of the latter to pay the agreed amounts stipulated in the contract on the proper date even after the sixty-days grace period.334. Hence.000.000. represented by its President and copetitioner Mariano Z.00 and that the amount of P340. the parties continued to negotiate for a possible modification of their agreement. INC.Bricktown Development Corporation.25 on 31 December 1981.611. represented in these acts by its Vice-President. COURT of APPEALS G. Furthermore. covering a total of 96 residential lots at the Multinational Village Subdivision. On August 10. P3.000. 1989 to August 15.000. However. Moises G.00 and P5.738.364.639. private respondent should not be allowed to totally free itself from its own breach. The total price of P21.00 to answer repairs and damages that may be caused by the lessee on the leased premises during the period of lease. the parties executed a Supplemental Agreement. ISSUE: Whether or not the contract was properly rescinded. It may also be noteworthy to add that in a contract to sell. for a term of two years from August 16. the Supreme Court ruled that since the private respondent did not actually possessed the property under the contract.875. P4.500. Subsequently. to assign to private respondent an equivalent number of unencumbered lots at the same price fixed in the contracts.250. Metro Manila. The decision of the lower court was affirmed in toto by the Court of Appeals.729.75 on 30 June 1981.050. this petition.00. respondents returned only the amount of P200.811. 1981. VS. On the second issue. respectively. After the expiration of the contract.00 to be paid by means of an assumption by private respondent of petitioner corporation's mortgage liability to the Philippine Savings Bank or. 1990. alternately. as lessors.00. And on October 12.00. 2000 338 SCRA 355 FACTS: On or about August 14. Velarde.00 shall be returned to petitioner. executed two Contracts to Sell in favor of Amor Tierra Development Corporation. and herein respondents. Parañaque. remitted on August 10. Respondents decided to rescind and terminate the contract and promised to return to petitioner all the amounts paid in excess of the down payment after . However. demanded the refund of private respondent's various payments to petitioner corporation.68. Whether or not Bricktown properly forfeited the payments of Amor Tierra.00 as down payment. Petilla. The said Memorandum of Agreement to sell granted the owner (respondents) the option to rescind the same upon failure of the buyer to pay any of the first six installments with the corresponding obligation to return to the buyer the amount paid by the buyer in excess of the down payment as stated in paragraphs 7 and 9 of the Memorandum of Agreement.000. the petitioner is then ordered to return to private respondent the amount remitted. under which the respondents. No. 126570 August 18. CONTRACT AS A SOURCE OF OBLIGATION PILIPINAS HINO.455. March 31.21. totaling the down payment of P7. La Huerta.000. or 21% interest on the balance of down payment for the period from 31 March to 30 June 1981. petitioner and respondents entered into a contract to sell denominated as Memorandum of Agreement to sell whereby the latter agreed to sell to the former the leased property in the amount of P45.497. petitioner failed to pay the third installment and subsequent installments. the records showed that private respondent corporation paid less than the amount agreed upon.000.209.00 was stipulated to be paid by private respondent in such amounts and maturity dates. leased real property located at Bulacan to Pilipinas Hino. However.906. R. to adjudge any interest payment by petitioners on the amount to be thus refunded. and of P390. providing that private respondent would additionally pay to petitioner corporation the amounts of P55." with interest within fifteen days from receipt of said letter.00 leaving a balance of P140. and the balance of P11.00 on 31 March 1981.37 representing interest paid by petitioner corporation to the Philippine Savings Bank in updating the bank loan for the period from 01 February to 31 March 1981. Amor Tierra filed an action with the court a quo which rendered a decion in its favor. the non-payment of the purchase price can prevent the obligation to convey title from acquiring any obligatory force. to be made payable in cash. in lieu of a cash payment. Both agreed that the cost or repairs would amount to P60.000.369.800. Private respondent was only able to pay petitioner corporation the sum of P1. When the demand was not heeded.71. petitioner paid the first and second installments in the amount of P1. On date. 1989. The Supreme Court also added that such cancellation must be respected.00. petitioner’s counsel sent private respondent a “Notice of Cancellation of Contract” because of the latter’s failure to pay the agreed amount. a contract of lease was entered into between Pilipinas Hino. 1991.968. petitioner deposited with the respondents the amount of P400. No.000. 2002 382 SCRA 222 . thus the petitioner is demanding for the return of its advanced payment in the amount of P2. 156 SCRA 404 STATE INVESTMENT VS.00 for the tower’s architectural design and structure.00 and to the return of the amount of P924.deducing the interest due from third to sixth installments. The Court of Appeals affirmed the decision of the trial court. they shall return to the buyer any amount paid by the buyer in excess of the down payment with no obligation to pay interest thereon.732. CA.00 representing the accrued interest for the unpaid installments and the decision appealed is affirmed in all other respects. PRIMETOWN PROPERTY. Titan-Ikeda can not recover damages because it was found out there was no solutio indebiti or mistake in payment in this case since the latter is just entitled to the actual services it rendered to the respondent and thus it is ordered to return the condominium units to the respondent. QUASI – CONTRACTS 1. in a reciprocal obligation.. After the construction of the tower. ISSUE: Whether or not the petitioner is entitled to damages.R. ISSUE: Whether or not the petitioner is entitled to demand the balance of the deposits in the amount of P140.000.000. the respondent entered inot a contract of sale of the tower in favor of the petitioner in a manner called full-swapping. Since the respondent had allegedly constructed almost one third of the project as weel as selling some units to third persons unknown to the petitioner. 544 S 466 PADCOM CONDOMINIUM CORPORATION. February 12.00.000. In contrast. After trial. Howevere. INC. respondents deducted P924. ORTIGAS CENTER ASSOCIATION.00. MAY 9.000.” The private respondents’ withholding of the amount corresponding to the interest violated the specific and clear stipulation in paragraph 9 of the said memorandum. 000.000. PADCOM CONDOMINIUM VS.000.00 as interest and P220. 2008 FACTS: The respondent Primetown Property Corporation entered into contract weith the petitioner Titan-Ikeda Construction Corporation for the structural works of a 32-storey prime tower.000. respondent G. CA.00.000. VS. took over the project. 5. Said paragraphs provides in very clear terms that “when the owner exercise their option to forfeit the down payment.00. in 1994. QUASI-CONTRACT AS A SOURCE OF OBLIGATION a. The trial court did not hold petitioner liable for the whole amount of P384.50. The parties are bound by their agreement. Hence. 2. petitioner. this petition.00 and the respondents have the legal right to demand accrued interest on the unpaid installments in the amount of P924. From the amount of P7. PRIMETOWN G. the decision of the Court of Appeals is modified in that private respondent is ordered to return to the petitioner the amount of P924.000.00.00 as weel as the keys of the unit. RULING: No. 4. 1991.732. In this case. 198 SCRA 392 TITAN-IKEDA VS. 2002 MC ENGINEERING VS. inclusive. the lower court rendered judgment stating that the petitioner has no cause of action to demand the return of the balance of the deposits in the amount P140. returning to the petitioner the amount of P5. 380 SCRA 116 BPI VS. as testified by their witness who is an experienced contractor.050. RULING: The Supreme Court held that the petitioner failed to prove his first cause of action that the damages to the leased property amounted to more than P60.00 due to be returned to the petitioner.00 only. TITAN-IKEDA CONNSTRUUCTION VS. 158768. 146807 May 9. On the other hand. ORTIGAS.906.R No. PIÑEDA. Hence.00 as rent for the period from February 15 to March 15. 3.000. respondents were able to prove their counterclaim that the damage to the leased property amounted to P338.000. respondent again awarded to the petitioner the amount of P 130.000. the Supreme Court held that both lower and appellate court failed to consider paragraph 9 contained in the same memorandum of agreement entered into by the parties. Both parties are obliged to perform their obligation simultaneously and in good faith. Thus. petitioner. because in a contract necessarily that there is a meeting of the minds of the parties in which this will be the binding law upon them.50. but only for the amount of P200. Integrated Inc. 250..00 was for the restoration of the electrical and mechanical works. it subscribed to such conditions which gave rise to a quasi-contract between it and the OCA.13 as its share in the adjusted contract cost in the amount of P854. 2002 380 SCRA 116 FACTS: On October 29. G.720.00 per month to all members.51. The civil work aspect consisting of the building restoration and land improvement from which plaintiff would get P1.000. VII. plaintiff is still claiming from defendant the sum of P632. and Surigao Coconut Development Corporation signed a contract for the restoration of the latter’s building.104. GERENT BUILDERS. 104047 April 3. but the electrical works were cancelled.851.00 was completed and the corresponding certificate of acceptance was executed. ISSUE: Whether or not petitioner PADCOM can be compelled to become a member of the OCA and thus pay the membership dues based on the condition of the Deed of Sale.339.665. Mr.665. and STRONGHOLD INSURANCE CO. any price increase in petitioner’s main contract with Sucodeco.000. after deducting earlier payments made by defendant to plaintiff. Two (2) months later. Petitioner PADCOM appealed for review on certiorari at the Supreme Court. RULING: PADCOM became automatically a member of the OCA by virtue of the conditions of the Deed of Sale attached to its Title of the property. which was damaged by typhoon Nitang. The subcontract .51. and also the sum of P166. Herein respondent OCA filed a civil case for recovery of the amounts due.252. par 1 of their contract dated October 29. a subcontractor.00. The next day. electrical. plaintiff received from defendant the amount of P1.700. Mc Engineering. 1984.. RULING: Gerent Builders. The Ortigas Center Association (OCA) which was subsequently formed levies membership dues of P2. as evidenced by the affidavit executed by plaintiff’s president.00 to P3. or an increase of P854. Surigao City. with the express proviso that ‘except for the amendment above specified. INC.R. VS. on October 30. by increasing the price of the civil works from P2. Narciso C. which was dismissed by the Regional Trial Court and reversed on appeal. Petition denied for lack of merit.FACTS: Petitioner PADCOM CONDOMINIUM CORPORATION (PADCOM) bought a land from Tierra Development Corporation with terms and conditions among which is that the transferee and its successor-in-interest must become members of an Association for realty owners and long-term lessees at Ortigas Center. Petitioner refused to pay respondent Gerent. and voluntary act gives rise to a juridical relation between the parties to the end that no one shall be unjustly enriched of benefited at the expense of others.000.150. ISSUE: Whether or not respondent Gerent Builders. Inc.851.851.000. THE COURT OF APPEALS. 1984 defendant Mc Engineering and plaintiff Gerent Builders.00 in payment for additional electrical and civil works outside the scope of the sub-contract. on December 3. QUASI-CONTRACT AS A SOURCE OF OBLIGATION MC ENGINEERING. 1985. No. cannot claim for a share in the adjusted contract cost between petitioner and Sucodeco because petitioner was under no obligation to disclose to respondent Gerent.000. The subcontracted work covered the restoration of the buildings and improvement for P1. Sucodeco and defendant Mc Engineering entered into an agreement amending provision No. can claim a share in the adjusted contract cost between petitioner and Surigao Coconut Development Corporation basing its claim from its assertion that the quitclaim executed by plaintiff-appellant is vitiated with fraud. it could not avoid payment of the membership dues without violating the underlying principles of quasi-contract – which provides that certain lawful. Therefore.500.000. Nevertheless. alleging that the sub-contract is subject to the readjustment provided for in Section VII of the agreement. and mechanical equipment located at Lipata. INC. Inc.590.00 was for the restoration of the damaged buildings and land improvement.000. On January 2. Inc. Petitioner refused to pay the membership dues on the ground that it did not become automatic member of the Association when it bought the land. land improvement. all the other provisions of the original contract shall remain the same’.51. 1984. Inc. Roque wherein the latter acknowledged complete satisfaction for such payment on the basis of the Statement of Account which plaintiff had earlier forwarded to defendant. entered into an agreement wherein defendant subcontracted to plaintiff the restoration of the buildings and land improvement phase of its contract with Sucodeco but defendant retained for itself the restoration of the electrical and mechanical works. while the P3. 1984.00 as full payment of the sub-contract price. Respondent Gerent is not a party to the main contract. The agreed consideration was P5. By voluntarily buying the land with the conditions. INC.00 of which P2. unilateral. amounted to P84. 1967. on August 15. The trial court rendered a decision dismissing the compliant against defendants Interocean Shipping Corporation and Gacet. Inc.30 representing final and full payment of the subcontract price was paid by petitioner to respondent Gerent based on the statement of account Gerent itself prepared and submitted to petitioner. Concon of SIP and/or Bacong and Roman Azanza of Peoples Bank and Trust Company. under the terms of said Management Contract. fabrication and installation of necessary parts in said vessels in order to make them seaworthy and in good working operation. Inc. 1966. seeking to recover from SIP. Labor and materials supplied in connection therewith. As Peoples Bank and Trust Company and SIP were not satisfied with the amount of revenues being deposited with the said Bank. Inc. the record shows that the P139. it being suggested that diversions thereof were being made. to manage and supervise the operation of the vessels with Ezekiel P. On October 1.92 with interests thereon from the respective dates of each repair order until the same is fully paid. Meanwhile and by reason of the inability of SIP and/or Bacong to pay their mortgage indebtedness which was past due since 1964. No. (SIP) alleged that the abovementioned claim is the personal responsibility of Interocean Shipping Corporation and/or Gacet. defendants Peoples Bank and Trust Co. with the undertaking that the freight revenues from their charter and operation shall be deposited with the Trust Department of Peoples Bank and Trust Company and that disbursements made there from shall be covered by vouchers bearing the approval of SIP." thru financing furnished by defendant Peoples Bank and Trust Company. being the purchaser of said vessels. contracted the services of herein plaintiff-appellee. Peoples Bank and Trust Company. now Bank of P. since they win all be drawn against said deposit.I. RULING: ." SS "Southern Express" and SS "Southern Hope. Toeg as the manager thereof. SIP and/or Bacong sold said vessels to Peoples Bank by way of dacion en pago. they were dishonored as defendant Interocean stopped payment thereon. Gacet.95. P18. organized S. When these checks were however presented to the drawee. Defendants Bank of P. which amount was allegedly the total unpaid balance of the cost of repairs.522.A.095. Inc. GACET. Gregorio A. finding the aforequoted decision to be in accordance with law and the evidence. Accordingly. a Management Contract was entered into between SIP and GACET. Inc. Interocean issued three checks and the third one for P 17.377. QUASI-CONTRACT AS A SOURCE OF OBLIGATION BANK OF THE PHILIPPINE ISLANDS VS.. Likewise. the said vessels were mortgaged to Peoples Bank and Trust Company. plaintiff instituted the present action (Civil Case No. appealed to the Court of Appeals but the latter. Answering the complaint. these were placed under the booking agency of defendant Interocean Shipping Corporation. BENJAMIN PINEDA G.720. affirmed the same.70. 74379) before the Court of First Instance of Manila. renewable at the will of the parties.57.A. is jointly and severally liable for the outstanding balance of said repairs.75 of which was advanced by Interocean. L-62441 156 SCRA 404 FACTS: Southern Industrial Project (SIP) and/or Bacong purchased the vessels SS "Southern Comet. S. admittedly a lien on the properties in question.141.. thereby leaving a balance of P62. terminating the booking agency of Interocean Shipping Corporation. 1968." to carry out repairs.I.between petitioner and respondent Gerent does not require petitioner to disclose to Gerent any price increase in the main contract. without however. placing the supervision and management of the aforementioned vessels in the hands of GACET. now the Bank of the Philippine Islands.R.I. The non-disclosure by petitioner of the price increase cannot constitute fraud or breach of any obligation on the part of petitioner. and Southern Industrial Projects..095. Interocean and the Peoples Bank and 'Trust Company the principal sum of P62. For this balance. which was to run for a period of six (6) months. Benjamin Pineda doing business under the name and style "Pioneer Iron Works. Inc. the Peoples Bank and Trust Company was designated as depository of all revenues coming from the operation of the subject vessels thereby enabling it to control all expenses of GACET. During the period comprising March 16. GACET and Interocean in performing their obligations under said Management Contract. fabrication and installation of necessary parts carried out by the said plaintiff on the a forenamed vessels. and Southern Industrial Projects. ISSUE: Whether or not People's Bank. For the operation of the said vessels. the mortgagee Peoples Bank and Trust Company threatened to foreclose the mortgage on said vessels. 1967 and August 25. repairs on the vessels were made. and deny liability thereof Defendant Bacong Shipping Company. Inc. now Bank of P. Accordingly. Moreover. In order to avoid the inconvenience and expense of imminent foreclosure proceedings. Inc.. To secure the payment of whatever amounts maybe disbursed for the aforesaid purpose. Respondents expressed willingness to pay. without consignation in court of the sum due. ISSUES: Whether or not the phrase “upon payment” in the trial court’s decision means upon payment of spouses’ loan in the principal amount of P110. requesting that upon payment. The conditions had not been complied with. and (b) consignation of the sum due. Whether or not the conditions to be complied with by the debtor desirous of being released from his obligation in cases where the creditor unjustly refuses to accept payment have been met by the spouses Aquino. the Supreme Court stressed that a written tender of payment alone. NO.000. RULING: Anent the 1st issue." QUASI-CONTRACT AS A SOURCE OF OBLIGATION STATE INVESTMENT VS. respondent spouses Aquino. With respect to the 2nd issue. the debtor shall be released from responsibility by consignation of the thing or sum due.00.000 plus seventeen percent (17%) per annum regular interest computed from the time of maturity of the plaintiffs’ loan and until full payment of such principal and interest to defendants. respondent spouses Rafael and Refugio Aquino pledged certain shares of stock to petitioner State Investment House Inc. such acts "give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another. he would sell at public auction the shares of stock pledged to State. there being no showing that said agents exceeded their authority. the former as owner is liable for the costs of repairs made on the vessels. a disclosed principal. On the other hand. would constitute unjust enrichment on the part of the respondent spouses at the expense of petitioner State even though the spouses had not been guilty of mora.A. When the 1 st Account fell due. Indeed. cannot be held liable for repairs made on the vessels to keep them in good running condition in order to earn revenue. the shares of stock pledged be released. the debtor desirous of being released from his obligation must comply with two (2) conditions. (“State”) in order to secure a loan of P120. When the new loan matured. On 29.) to assume responsibility y for these obligations at the time of the sale of the vessels. In view of the foregoing facts.00 and to continue to use the same after maturity of the loan without payment of regular or monetary interest. Finally. The CA affirmed in toto the decision of the trial court. defendant Southern industrial Projects. which had not been secured by the pledge. On January 29. Under Art. they had been able and willing to pay the same. 1985. it was aptly stated by the trial court and affirmed by the Court of Appeals that when the parties executed the deed of "Confirmation of Obligation" they really intended to confirm and acknowledge the existing obligations for the purpose of the buyer assuming liability therefore and charging them to the seller after proper accounting. It was further alleged that their failure to pay their loan was excused because the Petitioner State itself had prevented the satisfaction of the obligation. June 1984. viz: (a) tender of payment. Thus. but petitioner had insisted that respondents pay even the loan account of Jose and Marcelino Aquino. there is merit in the trial court's view that if there was no intention on the part of People's Bank (now Bank of P.00. Article 1256 of the civil code states that: “ If the creditor to whom tender of payment has been made refuses without just cause to accept it. Prior to the execution of the pledge.00 alone without interest. Gacet undeniably mere agents of the owner.I. 2142 of the Civil Code. the trial court rendered a decision in favor of the plaintiff ordering State to immediately release the pledge and to deliver to respondents the share of stock upon payment of the loan. it is indisputable that the repairs made on the vessels ultimately redounded to the benefit of the new owner for without said repairs. Tender of payment must be accompanied or followed by consignation in order that the effects of payment may be produced.” Where the creditor unjustly refuses to accept payment.000. Interocean Shipping Corporation and S. while they are properly regarded as having . In the instant case. penalties and other charges. For respondent spouses to continue in possession of the principal of the loan amounting to P110. owned the vessels although mortgaged to People's Bank and Trust Company. does not suspend the accruing of regular or monetary interest. State demanded payment. The phrase “upon payment” as held by the Supreme Court means upon payment of the amount of P110. NO. Atty. verification and set offs have been made. Abaya.There is no question that at the time subject obligation was incurred. This new loan was secured by the same pledge agreement executed in relation to the 1st Account. COURT OF APPEALS 198 SCRA 392 FACTS: On 5 April 1982. This prompted respondents to file a case before the Regional Trial Court of Quezon City alleging that the intended foreclosure sale was illegal because from the time the obligation under the 2 nd Account became due. in Llamas v. Inc. Hence. respondent spouses paid the same partly with their own funds and partly from the proceeds of another loan which they obtained also from petitioner State designated as the 2 nd Account. Rolando Salonga sent to respondent spouses a Notice of Notarial Sale stating that upon request of State and by virtue of the pledge agreement.000.000. there is no sense in executing said Deed of Confirmation together with the deeds of sale and the stipulations there under would be pointless. those vessels would not be seaworthy.000. Petitioner State denied the request on the ground that the loan which it had extended to the spouses Jose and Marcelina Aquino has remained unpaid. respondent spouses Jose and Marcelina Aquino signed an agreement with petitioner State for the latter’s purchase of receivables amounting to P375. the latter was seen lugging with him a big carton box from which blood was dripping. However. This fact was broadcast over the radio and. on August 23. 2001 PEOPLE VS. his hands were tied by Johnny Balalio and was handed to a certain “Pedro”. accused Sia gave P3. 137457 2001 Nov 21 FACTS: The taxi was taken from the garage and driven by its regular driver. accused-appellants G. 29.00 for each count of simple rape is automatically granted. 8. plaintiff-appellee. BAYOTAS. No. ABULENCIA.000. The CA however modified the findings of the RTC declaring that appellant is guilty of four counts of simple rape and to suffer the penalty of reclusion perpetua. RELOVA. 21. prosecution failed to do so. ISSUE: Whether the award of damages was properly made. When Christian returned to Sia’s residence he was told to come back in the afternoon. whom she claims is her eldest son who was earning about P650. 2008 FACTS: The accused-appellant was accused for the crime of rape against his niece. PEOPLE VS. When Christian returned in the afternoon. 3.00 in the amount of P50.00 for each count).000. VS. The appellant contended that he and the victim were sweethearts but the trial court did not give weight to that theory. MALICSI G. at about 6:00 a. the lifeless body of Christian Bermudez was found and retrieved from a fishpond in Meycauayan. 5. to pay P300. The trial court found appellant guilty of the crime of four counts of qualified rape and was sentenced to suffer the penalty of death for each count of rape.00 as civil indemnity (P75. The ring taken from Christian was given to accused Jimmy Ponce by Rosauro Sia. 2001 BERMUDEZ VS. JAN. CA. 2001 PEOPLE VS. JOHNNY BALALIO y DEZA. ISSUE: . MELECIO. RULING: No. he was asked to get inside. JIMMY PONCE y TOL and JOHN DOE @ PEDRO MUÑOZ (at large). 26. AUG. Accused Rosauro Sia appears to have tipped driver Christian Bermudez to service him the following day in the morning and to be paid P150. Christian was taken to accused Rosauro and shortly afterwards. 20. the accused Peter Doe who has not been arrested. 22. The penalty imposed then should be reclusion perpetua.R No. failed to consign in court the amount due at the time of the maturity of the 2 nd Account No. the award of civil indemnity is reduced to P200. 6. On August 26. 2001 PEOPLE VS. 4.m. Since it is not included. NOV. 175833. 2. Moral damages are automatically granted to rape victim.HERRERA. Christian Bermudez.000. after hearing the same. and P200. 7. because the Supreme Court declared that the crime committed was four count of simple rape only and not qualified rape because the special aggravating circumstances of minority and relationship must be alleged in the information but the PEOPLE OF THE PHILIPPINES. on the said date with the passenger who is the accused Rosauro Sia. Agripina Bermudez went to see the lifeless body retrieved from the fishpond and confirmed it to be that of Christian.000.00 per hour which was apparently accepted because Rosauro gave instructions to accused Johnny Balalio and Jimmy Ponce to wait for him (Christian) that following morning. DOCTOLERO. 543 S 93 PEOPLE VS. DELICTS 1. 1995. Bulacan. Johnny Balalio and “Pedro” and admonished them not to say anything about what happened.000. 236 SCRA 239 DELICT AS A SOURCE OF OBLIGATION PEOPLE VS. FEB. 1988 PEOPLE VS. 1995.000.00 each to Jimmy Ponce. As soon as he alighted from the taxi. The incident was repeated trice by the appellant.R. January 29. SIA.made a written tender of payment to petitioner state.00 a day as a taxi driver. Accused Jimmy Ponce saw Rosauro hand the cartonwrapped lifeless body of Christian inside the carnapped FX taxi. 6. Before leaving with the lifeless body of Christian loaded in the taxi. ROSAURO SIA y DICHOSO.00 as moral damages (P50. It follows that their obligation to pay principal-cum-regular or monetary interest under the terms and conditions of the said Account was not extinguished by such tender of payment alone. MAR. 1987 MANANTAN VS.00 for moral damages. four counts of simple rape should be undertaken. AUG. SOURCES OF OBLIGATIONS: D. The appellate court also correctly affirmed the award by the trial court of P200.00 for each count).m. MALICSI.000. The taxi was last seen at the vicinity of the Pegasus Night Club at about 10:30 p.000. they decided to bring him to their boarding house.00 as death indemnity proper. Vicente Ganongan Jr. At this time.00 = 2/3 x (80-27) x [P169. FACTS: On November 20. 131866 2001 Aug 20 Accused-appellant was convicted of murder after appreciating the aggravating circumstance of treachery. He was sentenced to suffer the penalty of reclusion perpetua and was ordered to indemnify the heirs of Ganongan the amounts of P50. Rex Tabanganay. They went down Honeymoon road towards Rimando road to get a taxi for Litorco.00 P2. pegged at P50.867.00 – P84. The victim’s heirs are likewise entitled to moral damages.00 as burial and other expenses incurred in connection with the death of the victim must be deleted. net earnings are computed at fifty percent (50%) of the gross earnings. However. the award of the trial court with regard to lost income is thus modified accordingly. Carlos Garcia.000. they saw Garcia pointing a gun at the group of Ganongan. the group decided to go home. The records are bereft of any receipt or voucher to justify the trial court’s award of burial and other expenses incurred in connection with the victim’s death. he was with Oliver Alimani. Daodaoan. After two (2) hours. CARLOS DOCTOLERO. Tabanganay and Alimani. Dagson who was walking about 5 to 7 meters ahead with Litorco rushed to the boarding house and sought help. this Court finds the amount of P50.825. The second variable is computed by multiplying the life expectancy by the net earnings of the deceased. they hailed a taxi and rushed Ganongan to Saint Louis University Hospital where he expired. Dagson assisted Litorco and walked ahead of Ganongan.650. When Dagson came back. However. DELICT AS A SOURCE OF OBLIGATION The trial court was correct in awarding damages for loss of earning capacity despite the non-availability of documentary evidence.00 a day.00 by controlling case law. the Court notes that the victim was 27 years old at the time of his death and his mother testified that as a driver of the Tamaraw FX taxi. Hearing the commotion. Baguio City. When they arrived.33 x 84. Tabanganay shouted at his friends to run. meaning total earnings less expenses necessary in the creation of such earnings or income less living and other incidental expenses. Upon noticing that Litorco could not carry himself. he was earning P650. Doctolero fired at him. with three companions. pointing a gun at them.. Regie Daodaoan. Doctolero stepped back and fired twice at Daodaoan but missed. Carlos Doctolero Sr. the damages payable for the loss of the victim’s earning capacity is computed thus: Gross Annual Earnings = P650 x 261 working days in a year = Net Earning Capacity P169.000.Whether or not the trial court is correct in awarding the damages to the heirs of the victim. told them to stop.00] PEOPLE OF THE PHILIPPINES. No. accused-appellant G. In determining the amount of lost income. As the latter four neared the Garcia store along Honeymoon road. The formula used by this Court in computing loss of earning capacity is: Net Earning Capacity = [2/3 x (80 – age at time of death) x (gross annual income – reasonable and necessary living expenses)] In this case.00 as civil . Arman Alimani and Dexter Daggay. and Roderick Litorco went to their friends’ boarding house on Honeymoon Road. He then put his arm over Daodaoan’s shoulder. Considering that there is no proof of living expenses of the deceased. Daoadaoan shoved Doctolero’s hand and retreated.000.000. was standing at the edge of Honeymoon road. Anent the civil indemnity award. the amount of the trial court’s award needs to be recomputed and modified accordingly. VS. Daodaoan.996. taking into consideration the pain and anguish of the victim’s family brought about by his death. Oliver Alimani approached Garcia who in turn pointed his gun at Oliver and identified himself as barangay kagawad. Vicente Ganongan. Hence.20 Based on the foregoing computation. plaintiff-appellee. and (2) the rate of the loss sustained by the heirs of the deceased. the following must be taken into account: (1) the number of years for which the victim would otherwise have lived. Award of civil indemnity may be granted without any need of proof other than the death of the victim. the award of P200. following prevailing jurisprudence and in line with controlling policy.825. Thereat. hitting him twice. SR. = = 35. RULING: The Court finds no reason to reverse the ruling of the court a quo insofar as the crimes were committed. Damages representing net earning capacity have been awarded by the Court based on testimony in several cases. Oliver Alimani came to Ganongan’s aid when the latter yelled that he was hit.R. Thereafter. Tabanganay and Jeffrey Alimani. Jeffrey Alimani and Florencio Dagson agreed to drink gin in Sangatan Store. 1996 at around 7:00 in the evening. Tabanganay asked Daodaoan if he was hit and upon answering that he was not. When Ganongan turned around to run. Roderick Litorco.650. 40 representing funeral expenses. ISSUE: Whether or not the court a quo’s award of civil liability is reasonable based on the circumstances of the crime and whether circumstancial evidence is sufficient to warrant a conviction. that the appellant admitted having raped the victim in a tape interview by Dennis Mojares. DELICT AS A SOURCE OF OBLIGATION REYNALDO BERMUDEZ. was also in the same house at that time.00 damages.00. 1999. Jr. when sufficient. the victim tagging along. ROLLY ABULENCIA Y COYOS. the court a quo rendered its decision dated March 16. ISSUE: Whether or not the accused was guilty of murder and the damages awarded to the heirs were proper. Thus. HON. Expenses relating to the 9th day. however. Rule 133 of the Revised Rules on Evidence. and. RULING: No. is affirmed with modification insofar as the civil aspect is concerned.00 as actual damages. defendant-appellant 2001 Aug 22 G. the appellant left the house at about 5:30 o’clock in the afternoon to buy dilis in the nearby store located 40 meters away. brutally killed. SR.00 in accordance with existing jurisprudence DELICT AS A SOURCE OF OBLIGATION PEOPLE OF THE PHILIPPINES. and P6.000.00 as moral damages. which were duly proven and covered by receipts.000.425. As regards to the sufficiency of circumstantial evidence to warrant conviction.000.000.000. petitioners-appellants. does not preclude the conviction of a person accused of the complex crime of rape with homicide. as the guilty person. 40th day and 1st year anniversaries cannot be considered in the award of actual damages as these were incurred after a considerable lapse of time from the burial of the victim.000. (b) The facts from which the inferences are derived are proven.00 as actual damages. respondents-appellees February 26. thereafter. the appealed decision convicting Rolly Abulencia of the crime of rape with homicide and sentencing him to suffer the penalty of death.00 as actual damages.00 as exemplary damages. to the exclusion of all others. and (c) The combination of all the circumstances is such as to produce a conviction beyond a reasonable doubt. P25. JUDGE A.. P227.000. Appellant is thus ordered to pay the heirs of Rebelyn Garcia P100. both engaged in a drinking spree. and that the autopsy conducted on her cadaver shows that she was sexually abused and. another prosecution witness.R.” Likewise this Court has held that an accused can be convicted based on circumstantial evidence if the circumstances proven constitute an unbroken chain which leads to a fair and reasonable conclusion pointing to the accused. that they slept on the papag of Garcia’s house in the afternoon of that day. 1988 .00 as civil indemnity. which is fully justified and properly commensurate with the seriousness of that special complex crime. that after waking up. that in the evening of the same day. the Court held that the absence of direct evidence. VS.000. that the appellant and Rebelyn never returned. With respect to the award of moral damages. the appellant surrendered to Mayor Sevilleja.00 as moral damages plus costs. VS. and P300.413. P50. Ordering the RULING: With regard to the civil indemnity. to be implemented in the manner provided for by law. 138403 FACTS: It is established from the testimony of prosecution witness Reynaldo Garcia. convicting accused Rolly Abulencia of the crime as charged and to suffer the penalty of death. the sum of P75. that the victim Rebelyn. No. that he met the appellant in the morning of that fateful day of August 4. 1998 and later. ADONITA YABUT BERMUDEZ. Current jurisprudence has fixed at P100.000. accused to indemnify the heirs of Rebelyn Garcia. Since treachery was not proven to be resent in this case. reporting that he was with the victim when the latter allegedly fell from the bridge after he “accidentally tripped (napatid) her” off. After the trial on the merits.00 for exemplary damages plus P6. the same is reduced to P50.425.Circumstantial evidence is sufficient for conviction if: (a) There is more than one circumstance. the court deemed it proper to convict the accused of the crime of homicide. thus: “Circumstantial Evidence. MELENCIO-HERRERA. DOMINGO PONTINO y TACORDA and CORDOVA NG SUN KWAN. and another sum of P20. plaintiff-appellee. Circumstantial evidence can be as potent as direct evidence to sustain a conviction provided that there is a concurrence of all the requisites prescribed in Section 5. the trial court awarded only P75.00 the civil indemnity in cases of rape with homicide.indemnity. that the victim was found dead the following morning floating at the Colobong creek near the Aburido bridge.808. instead of murder thus damages were reduced to P112. he filed a motion to dismiss the information upon the grounds that the crime there charged had already prescribed and that the civil indemnity there sought to be recovered was beyond the jurisdiction of the Batangas City Court to award which was dismissed by the judge. . in the allegation of the petitioner "designed purposely to lower or decrease the readings of electric current consumption in the electric meter of the said electric plant. On 2 February 1976. The police discovered that electric wiring. The boy sustained injuries which caused his death. Batangas City. Plaintiffs-appellants filed on July 27. THE HONORABLE BENJAMIN RELOVA." On 24 November 1975. the plaintiffs-appellants filed a civil case for damages against Domingo Pontino y Tacorda and Cordova Ng Sun Kwan. 1969 constituted a quasi-delict." The accused Manuel Opulencia pleaded not guilty. under its terms. 1969 in the said criminal case "A Reservation to File Separate Civil Action. driven by Domingo Pontino and owned by Cordova Ng Sun Kwan. without the necessary authority from the city government. 1987 FACTS: On 1 February 1975.00) to Fifty Pesos (P50. Civil Code).FACTS: A cargo truck. It does not follow that a person who is not criminally liable is also free from civil liability. and MANUEL OPULENCIA. bumped a jeep on which Rogelio. Finding that the plaintiffs instituted the action "on the assumption that defendant Pontino's negligence in the accident of May 10. subject to the employer's defense of exercise of the diligence of a good father of the family. In fact. the Court allowed the injured party in the criminal case which resulted in the acquittal of the accused to recover damages based on quasidelict. No. ISSUE: Whether or not the present action is based on quasi-delict under the Civil Code and therefore could proceed independently of the criminal case for homicide thru reckless imprudence. even without such a reservation. searched and examined the premises of the Opulencia Carpena Ice Plant and Cold Storage owned and operated by the private respondent Manuel Opulencia. 92944 for Homicide Through Reckless Imprudence was filed against Domingo Pontino. equipped with a search warrant issued by a city judge of Batangas City. or both. which shall not exceed thirty (30) days. The judgment of acquittal extinguishes the civil liability of the accused only when it includes a declaration that the facts from which the civil liability might arise did not exist. the injured party or his heirs has the choice between an action to enforce the civil liability arising from crime under Article 100 of the Revised Penal Code and an action for quasi-delict under Article 2176-2194 of the Civil Code. These electric devices and contraptions were. Criminal Case No. a six-year old son of plaintiffs-appellants. respondents G." the trial court stated that plaintiffs had already elected to treat the accident as a "crime" by reserving in the criminal case their right to file a separate civil action. As a result. On July 28. VS.R. Manuel Opulencia admitted in a written statement that he had caused the installation of the electrical devices "in order to lower or decrease the readings of his electric meter." beyond reasonable doubt. A violation of this ordinance was." During the subsequent investigation. punishable by a fine "ranging from Five Pesos (P5. 1. Series of 1974. was riding. the action filed by appellant was an action for damages based on quasi-delict. RULING: In cases of negligence. the trial court decided to order the dismissal of the complaint against defendant Cordova Ng Sun Kwan and to suspend the hearing of the case against Domingo Pontino until after the criminal case for Homicide Through Reckless Imprudence is finally terminated. at the discretion of the court. In the case at bar. only a preponderance of evidence is required in a civil action for damages (Article 29. L-45129 March 6. If a party chooses the latter. The appellant precisely made a reservation to file an independent civil action. he may hold the employer solidarily liable for the negligent act of his employee. That being so. petitioner.00) or imprisonment. devices and contraptions had been installed. While the guilt of the accused in a criminal prosecution must be established DELICT AS A SOURCE OF OBLIGATION PEOPLE OF THE PHILIPPINES. The fact that appellants reserved their right in the criminal case to file an independent civil action did not preclude them from choosing to file a civil action for quasi-delict. members of the Batangas City Police together with personnel of the Batangas Electric Light System. an Assistant City Fiscal of Batangas City filed before the City Court of Batangas City an information against Manuel Opulencia for violation of Ordinance No. and "architecturally concealed inside the walls of the building" owned by the private respondent. 1969. even if the guilt of the accused has not been satisfactorily established. the criminal informations having been dismissed both by the City Court and by the Court of First Instance (from which dismissals the Batangas City electric light system could not have appealed) before trial could begin. The petitioner moved for reconsideration but the appellate court denied the motion. . and the civil action. Our law recognizes two kinds of acquittal. 1988. RULING: NO. However. First is an acquittal on the ground that the accused is not the author of the act or omission complained of as a felony. Isabela. the civil action for recovery of civil liability arising from the offense charged was impliedly instituted with the criminal action both before the City Court of Batangas City and the Court of First Instance of Batangas. RULING: The Supreme Court held that the accused was placed in double jeopardy. the Acting City Fiscal of Batangas City filed before the Court of First Instance of Batangas. 1988. for a person who has been found not to be the perpetrator of any act or omission cannot and can never be held liable for such act or omission. In its decision dated June 30. thereby causing the said automobile to turn turtle twice resulting to the death Ruben Nicolas passenger of the said automobile. the court a quo noted that at the time the accident occurred. In finding petitioner civil liability. Subsequently. promulgated on August 4.Fourteen (14) days later. which will be instituted must be based on ground other than the delict complained of. The extinction of criminal liability whether by prescription or by the bar of double jeopardy does not carry with it the extinction of civil liability arising from the offense charged. the Provincial Fiscal of Isabela filed an information charging petitioner Manantan with reckless imprudence resulting to homicide. of the Revised Penal Code. While the accused pleaded not guilty before the City Court of Batangas City. COURT OF APPEALS 350 SCRA 387 January 29. should be remanded to the Court of First Instance of Batangas City for reception of evidence on the amount or value of the electric power appropriated and converted by Manuel Opulencia and rendition of judgment conformably with such evidence. Branch II. Accordingly. 1983. ISSUES: Whether or not Manuel Opulencia can be tried for violation of the Revised Penal Code after acquittal from the violation of an ordinance due to prescription which were based from the same act and whether or not he may still be held liable civilly. with different effects on the civil liability of the accused. the respondent Judge granted the accused's Motion to Quash and ordered the case dismissed.m. DELICT AS A SOURCE OF OBLIGATION MANANTAN VS. The second instance is an acquittal based on reasonable doubt on the guilt of the accused. Manantan was in a state of intoxication. However. Because no reservation of the right to file a separate civil action was made by the Batangas City electric light system. the trial court decided the criminal case in favor of Manantan. By Order dated 16 August 1976. he is not exempt from civil liability which may be proved by preponderance of evidence only. on 20 April 1976. another information against Manuel Opulencia. this time for theft of electric power under Article 308 in relation to Article 309. accused Manuel Opulencia freely admitted during the police investigation having stolen electric current through the installation and use of unauthorized electrical connections or devices. Before he could be arraigned thereon. There being no delict. due to his having consume all in all a total amount of at least twelve bottles of beer between 9 a. there is no evidence in the record as to the amount or value of the electric power appropriated by Manuel Opulencia. Manuel Opulencia filed a Motion to Quash. paragraph (1). ISSUE: Whether or not the acquittal of the accused also extinguished his civil liability. dated 5 May 1976. On its decision. civil liability ex delicto is out of the question. The Nicolas spouses prayed that the decision appealed from be modified and that the appellee be ordered to pay indemnity and damages. NGA-816 willfully and unlawfully drove and operated the same while along the Daang Maharlika of the said municipality. could not be tried in the criminal case. in a negligent manner causing the automobile to sideswipe a passenger jeepney. the related civil action which has not been waived expressly or impliedly. 2001 FACTS: On June 1. he did not deny having appropriated electric power. if any. the private respondent spouses Nicolas filed their notice of appeal on the civil aspect of the trial court’s judgment. to 11 p. alleging that he had been previously acquitted of the offense charged in the second information and that the filing thereof was violative of his constitutional right against double jeopardy. allegedly committed on or about the 25 th day of September 1982. In this case. the Court of Appeals decided in favor of the private respondents. hence. This instance closes the door to civil liability. the civil liability aspects of this case are another matter.m. The said accused being then the driver and person-in-charge of an automobile bearing Plate No. in the municipality of Santiago. In the present case. 511 S 67 VILLANUEVA VS. 1942 73 PHIL 607 FACTS: .' for the simple reason that `there is no party defendant. 3. 1994 236 SCRA 239 FACTS: Rogelio Bayotas was charged with rape and eventually convicted on June 19.400. Moreover. The Supreme Court dismissed the criminal aspect of the appeal. he cited in support and invoked the ruling of the Court of Appeals in People v. of course. Hence. 2001 THERMOCHEM VS. Appeal dismissed. 543 S 560 SAFEGUARD SECURITY VS. the decision to be rendered must. arguing that the death of the accused while judgment of the conviction is pending appeal extinguishes both criminal and civil penalties. CHING.' The Rules of Court state that a judgment in a criminal case becomes final 'after the lapse of the period for perfecting an appeal or when the sentence has been partially or totally satisfied or served. the Solicitor-General expressed his view that the death of accused-appellant did not extinguish his civil liability as a result of his commission of the offense charged. Bayotas died. the death of the accused pending appeal of his conviction extinguishes his civil liability because tire liability is based solely on the criminal act committed. While the appeal was pending. he is absolved of both his criminal and civil liabilities based solely on delict or the crime committed. 2000 PICART VS. VS. NAVAL. FAUSTO BARREDO VS.R. the decision of the Court of Appeals finding that the defendant is civilly liable for his negligent and reckless act of driving his car which was the proximate cause of the vehicular accident. No. plaintiff-appellee. 2. In his comment. 2. ipso facto extinguishes the former. the extinction of the latter by death.R. it required the Solicitor-General to comment with regard to Bayotas’ civil liability arising from his commission of the offense charged. 48006 July 08. This comment was opposed by the counsel of accused-appellant. SEVERINO GARCIA and TIMOTEO ALMARIO G. Corollarily. 1. 30. where the civil liability does not exist independently of the criminal responsibility. SOURCES OF OBLIGATIONS E. GARCIA. 102007 Sept. QUASI-DELICTS 1. No. 6. 31 MAY 2000 LUDO AND LUYM CORP. 438 S 485 CALALAS VS. however. BARREDO VS. 8. SMITH. impliedly. Castillo. 5. RULING: Yes. 4. As in this case. Since civil liability is not extinguished in criminal cases if the accused acquittal is based on reasonable doubt.' In addition. cover 'both the criminal and the civil aspects of the case. TANGCO. the trial court acquitted him on reasonable doubt. CA. VS. if the same may also be predicted as one source of obligation other than delict. that death supervenes before final judgment. or the defendant has expressly waived in writing his right to appeal. of necessity. 37 PHIL 813 ISSUE: Whether or not the death of the accused pending appeal of his conviction extinguishes his civil liability.In the case at bar. 1991. the claim for civil liability survives notwithstanding the death of the accused. ROGELIO BAYOTAS Y CORDOVA. FEB.00 for the death of Ruben Nicolas. The decision of the trial court did not state in clear and equivocal terms that petitioner was not recklessly imprudent or negligent. 7. OCT. when a defendant dies before judgment becomes executory. 'there cannot be any determination by final judgment whether or not the felony upon which the civil action might arise exists. DELICT AS A SOURCE OF OBLIGATION PEOPLE OF THE PHILIPPINES. thus.' The accused died before final judgment was rendered. the right to institute a separate civil action is not reserved. DOMINGO. which was held that the civil obligation in a criminal case takes root in the criminal responsibility and therefore civil liability is extinguished if accused should die before final judgment is rendered. the accused’s acquittal is based on reasonable doubt. provided. and sentenced him to indemnify plaintiff-appellants in the amount of P74. 73 PHIL 607 DY TEBAN VS. CA. accused-appellant G. She was also a licensed-fire arm holder. the Supreme Court ruled that complainant’s liability is not only subsidiary but also primary liability. and second. QUASI-DELICT OR CULPA AQUILIANA is a separate legal institution under the Civil Code and is entirely distinct and independent from a delict or crime as punished under the Revised Penal Code (RPC). The Court affirmed the decision of the Court of Appeals which ruled that the liability sought to be imposed upon Barredo in this action is not a civil obligation arising from a felony. hence. The driver allegedly put earl warning devices but the only evidence being witnessed was a banana trunks and candles. QUASI-DELICT AS A SOURCE OF OBLIGATION DY TEBAN VS. Thus. and there was no showing that Barredo exercised the diligence of a good father of a family. Furthermore. the proprietor of the Malate Taxi and the employer of Fontanilla. the negligent act of Fontanilla produced two liabilities of Barredo. There was negligence on the part of the respondent when the latter failed to put and used an early warning device because it was found out that there was no early warning device being prescribed by law that was used by the driver in order to warn incoming vehicle. First.R No. 1903 of the Civil Code. QUASI-DELICT AS A SOURCE OF OBLIGATION SAFEGUARD SECURITY VS. December 14. TANGCO G. Thus the respondent is declared liable due to violation of road rules and regulations. the proximate cause of the accident was due to the position of the trailer where it covered a cemented part of the road. The parties instituted an action for damages under Art. RULING: Yes. 1903 of the Civil Code. under Art. The Nissan van owner claimed for damages against the respondent. Barredo must indemnify plaintiffs under the provisions of Art. the security guard of the bank. that his liability as employer is only subsidiary liable but Fontanilla was sued for civil liability. The heirs of the victim filed a criminal case against security guard and an action against Safeguard Security for failure to observe diligence of a goof father implied upon the act of its agent. Barredo claims that he can not be held liable. A criminal action was filed against Fontanilla. Barredo’s primary and direct responsibility arising from his presumed negligence as an employer in the selection of his employees or their supervision. It was undisputed that Fontanilla’s negligence was the cause of the accident as he was driving on the wrong side of the road at high speed. In this jurisdiction.R No. and he was convicted. 161803. Barredo was found guilty of negligence for carelessly employing Fontanilla. The carretela was overturned and a passenger. Barredo’s theory of defense is that Fontanilla’s negligence being punishable by the Revised Penal Code. In the instant case. the petition is denied. 16-year-old boy Garcia. there was a head-on collision between a taxi of the Malate Taxi driven by Fontanilla and a carretela guided by Dimapilis. the same negligent act causing damage may produce civil liability (subsidiary) arising from a crime under Art. the security guard shot the victim causing the latter’s instant death. making him primarily and directly responsible under culpa aquiliana. 1936. The court in the criminal case granted the petition to reserve the civil action against Barredo. The trial court found that the proximate cause of the three –way accident is the negligence and carelessness of driver of the respondent . February 4. 2006 FACTS: The victim Evangeline Tangco was depositor of Ecology Bank. thus it cause the swerving of a Nissan van owned by the petitioner when a passenger bus was coming in between the trailer.On May 3. ISSUE: Whether there was negligence on the part of the respondent. thus confused and made trick way for other vehicles to pass by. thus during the incident. a subsidiary one because of the civil liability of Fontanilla arising from the latter’s criminal negligence. 103 of the RPC. or create an action for the quasi delict or culpa aquiliana (primary) and the parties injured are free to choice which course to take. 165732. RULING: No. Suddenly. LIBERTY FOREST G. who had been caught several times for violation of the Automobile Law and speeding violation. 1903 of the Civil Code. ISSUE: Whether or not complainant’s liability as employer of Fontanilla was only subsidiary and not as primarily and directly responsible under Article 1903 of the Civil Code. However reversed the decision of the trial court. suffered injuries from which resulted to his death. Since the car was placed at the right wing of the road. but an obligation imposed in Article 1903 of the Civil Code by reason of his negligence in the selection or supervision of his servant or employee. . upon knowing that the victim carries a firearm. The trailer was owned by the respondent Liberty Forest. she was entering the bank to renew her time deposit and along with her was her firearm. 2008 FACTS: A Prime Mover Trailer suffered a tire blow out during the night of its travel at a national highway. employers are required to examine them as to their qualifications. accidentally hit Sunga causing the latter to suffer physical injuries where the attending physician ordered a three months of rest. It was declared that in the selection of employees and agents. an Isuzu Truck driven by Verene and owned by Salva. A charged was filed against Ocfemia and the owner Villanueva.ISSUE: Whether Safeguard Security can be held liable for the acts of its agent. responsibility therefore can be fixed on a definite individual. it was declared that the registered owner of any vehicle is primary land directly liable for any injury it incurs while it is being operated. that it was already swapped to another car . The lower court ruled in favor of ther petitioner. Thus. 1733 and 1755 of the Code. the employer must prove that there was no negligence on his part in the supervision of his employees. The petitioner is liable for the injury suffered by Sunga. thus it is presumed that he still possesses the car and that the damages caused by the car be charge against him being the registered owner. Villanueva claimed that he must not be held liable for the incident because he is no longer the owner of the car. In this case. 144274. In quasi-delicts cases. ISSUE: Whether the owner Villanueva be held liable for the mishap. DOMINGO G. Safeguard Security committed negligence in identifying the qualifications and ability of its agents. a collision was made by a green Mitsubishi lancer owned by Ocfemia against a silver Mitsubishi lancer driven by Leandro Domingo and owned by petitioner Priscilla Domingo. On the other hand. the petitioner Calalas filed an action against Salva. COURT OF APPEALS G. experience and service records. RULING: Yes. 2000 FACTS: Eliza Sunga was a passenger of a jeepney owned and operated by the petitioner Calalas. even the petitioner claimed that he was no longer the present owner of the car. The incident caused the car of Domingo bumped another two parked vehicles. RULING: Yes. QUASI-DELICT AS A SOURCE OF OBLIGATION . Sunga gave way to a passenger going outside the jeep. Thus.R No.R No. it was clearly observed that the petitioner has negligence in the conduct of his duty when he allowed Sunga to seat in the rear portion of the jeep which is prone to accident. still the registry was under his name. Thus. or that any damage or injury is caused by the vehicle. Under Article 1756 of the New Civil Code. ISSUE: Whether the petitionerr is liable. The primary function of Motor vehicle registration is to identify the owner so that if any accident happens. September 20. in order to overcome this presumption. the law presumes that any injury suffered by a passenger of the jeep is deemed to be due to the negligence of the driver. 2004 FACTS: In 1991. QUASI-DELICT AS A SOURCE OF OBLIGATION VILLANUEVA VS. RULING: Under the Motor Vehicle law. however. due diligence on the supervision and operation of employees includes the formulation of suitable rules and regulations for the guidance of employees and the issuance of proper instructions intended for the protection of the public and persons with whom the employer has relations through his employees. This is a case on Culpa Contractual where there was pre-existing obligations and that the fault is incidental to the performance of the obligation. the trial court ordered the petitioner to pay the damages incurred by the silver Mitsubishi lancer car. When the jeep stopped. being the owner of the truck. May 31. Sunga filed an action for damages against the petitioner for breach of contract of common carriage by the petitioner. thus the truck owner is liable for the damage to the jeep of the petitioner. in this case. Thus. This provision necessarily shifts to the common carrier the burden of proof. QUASI-DELICT AS A SOURCE OF OBLIGATION CALALAS VS. it provides that common carriers are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as defined in Arts. 122039. However. Private respondent Sunga sat in the rear protion of the jeepney where the conductor gave Sunga an extension seat. The law presumes that any injury committed either by fault or omission of an employee reflects the negligence of the employer. the registered owner. and/or ANSELMO OLASIMAN. No. at around 12:00 o'clock midnight. The doctrine of RES IPSA LOQUITOR says that when the thing that causes the damage is in the control and management of the respondent. in the absence of explanation. respondents were responsible for the damage. was maneuvering the ship MV Miguela owned by respondent Gabisan Shipping lines. ISSUE: Whether or not the private respondents are responsible for the damage done to the pier by the ship based on the doctrine of RES IPSA LOQUITOR. thus. at the pier owned by petitioner Ludo and Luym Corporation when it rammed the pile cluster damaging it and deforming the cable wires wound around it. Eduardo Eden. FACTS: On May 10. The MV Miguela was in the exclusive control of respondent Olasiman. 131541 2000 Oct 20 FACTS: Private respondent Anselmo Olasiman. 125483 February 1. Thermochem Incorporated. RULING: Yes. On appeal. respondent did not show persuasively other possible causes of the damage. the lower court adjudged petitioner Castro negligent and ordered petitioners. Pasig. and in the ordinary course of things the accident does not happen if those who have the management use proper care. sustained injuries as a result of the incident. this petition for review on certiorari. 2001 351 SCRA 35 THERMOCHEM INCORPORATED and JEROME O. Malfunction or loss of brake is not a fortuitous event. compensatory and exemplary damages plus attorney's fees and costs of suit. 1992. The point of impact was so great that the taxicab was hit in the middle portion and was pushed sideward. VS. Thus. causing the driver to lose control of the vehicle. petitioner. going to the direction of EDSA. The taxicab was then dragged into the nearby Question Tailoring Shop. going towards Cainta. to pay private respondent actual. INC. as captain. Thereafter. The principle applies here. and its driver. it affords reasonable evidence. petitioner Jerome Castro. it locked causing his Nissan Pathfinder to skid to the left and consequently hit the taxicab. QUASI-DELICT AS A SOURCE OF OBLIGATION Petition is ISSUE: Whether or not the petitioners are liable based on quasi-delict. to unload a passenger. A mechanically defective vehicle should avoid the streets. it is established that he was driving at a speed faster than 50 kilometers per hour. RULING: The Supreme Court sustained the Regional Trial Court decision partly on the ground that the incompetence of eyewitness Naval was not an assigned error at the appellate court. saying that the petitioner’s witness Naval was incompetent to testify on the negligence of the crew and that petitioner’s evidence did not positively identify that MV Miguela caused the damage. near Rosario. The sudden malfunction of the vehicle's brake system is the usual excuse of drivers involved in collisions which are the result of speedy driving. causing damage to the said tailoring shop. petitioner filed this petition for review. CASTRO. At this point. and its driver.LUDO AND LUYM CORPORATION. respondents G. Hence.R. granted and the decision of the Regional Trial Court reinstated. the driver executed a U-turn to traverse the same road. jointly and severally. the Regional Trial Court ruled against respondents for incompetence and negligence. COURT OF APPEALS. that the accident arose from want of care. Prior to the collision. No. the Nissan Pathfinder traveling along the same road going to the direction of Cainta collided with the taxicab. From petitioner Castro's testimonial admissions. In an appeal the Court of Appeals reversed the lower court’s decision. petitioners. respondents. . and aside from petitioner’s witness testimony that the vessel rammed the pile cluster. not far from the Rosario Bridge. VS. The owner and his driver are presumed to know about the conditions of the vehicle and is duty bound to take care thereof with the diligence of a good father of the family. as the owner of the Nissan Pathfinder. as owner of the taxi. In an action for recovery of damages filed by Petitioner. the taxicab was parked along the right side of Ortigas Avenue. But as he allegedly stepped on the brake.R. filed a damage suit against petitioner. The Court held that the driver of the oncoming Nissan Pathfinder vehicle was liable and the driver of the U-turning taxicab was contributorily liable. Therefore. After trial. Eduardo Edem was driving a "Luring Taxi" along Ortigas Avenue. the Court of Appeals affirmed the judgment of the court a quo. LEONORA NAVAL and THE COURT OF APPEALS. G. Private respondent. GABISAN SHIPPING LINES. there being no possibility o the horse getting across to the other side. the defendant quickly turned his car sufficiently to the right to escape hitting the horse. 266 SCRA 78 SPOUSES LORENZO G. The plaintiff on the other hand was guilty of antecedent negligence in planting himself on the wrong side o the road. he pulled the pony closely up against the railing on the right side of the bridge. The plaintiff heard the warning signal but instead of going to the let. to take the other side and ass sufficiently far away from the horse to avoid the danger of collision. In sum. A prudent man. 2. At first. Instead of doing this. the defendant was civilly liable as he had fair chance to avoid the accident. MERCADO. there was lack of foresight on his part. should be reduced in half. It was then his duty to bring his car to an immediate stop or. However. the defendant guided it toward the plaintiff. As the defendant neared the bridge. FRANCISCO and LORENZA D. FRANCISCO. the defendant ran straight on until he was almost upon the horse. As mentioned earlier. The driver of the taxi ought to have known that vehicles coming from the Rosario bridge are on a downhill slope. The negligent acts of the two arties were not contemporaneous. He averred that he thought he did not have sufficient time to get over the other side. the law is that the person who has the last fair chance to avoid the impending harm and fails to do is chargeable wit the consequences. though the plaintiff was guilty of negligence or being on the wrong side of the bridge. making him contributorily liable. it is clear that negligence is established. the driver of the taxi is contributorily liable. the defendant approached from the opposite direction in an automobile. he saw the plaintiff and blew his horn to give warning. the award of P47. The Court held that the control of the situation has shifted to the defendant when the incident occurred. RULING: Yes. HONORABLE COURT OF APPEALS. and would therefore have foreseen harm to the horse and rider as a reasonable consequence of that course.850. QUASI-DELICT AS A SOURCE OF OBLIGATION PICART VS. As the automobile approached. Applying this test to the conduct of the defendant. the record shows that the Nissan Pathfinder was on the wrong lane when the collision occurred. it was demonstrated that this would not be done. would have recognized that the course which he was pursuing was fraught with risk. SMITH 37 PHIL 813 FACTS: Plaintiff was riding on his pony across the bridge. U-turns are not generally advisable particularly on major streets. This was a disregard of traffic safety rules. Conduct is said to be negligent when a prudent man in the position of the tortfeasor would have foreseen that an effect harmful to another was sufficiently probable to warrant his foregoing the conduct or guarding against its consequences. since the negligence of the defendant succeeded the negligence of the plaintiff by an appreciable interval. 2003 401 SCRA 594 FACTS: . FRANCISCO VS. VS. Considering the contributory negligence of the driver of private respondent's taxi. the horse was still hit and died while the rider was thrown off violently.Moreover. without reference to the prior negligence of the other party. When the defendant exposed the horse and rider to this danger he was negligent in the eye of the law. he has the right to assume that the horse and rider would pass over to the other side but as he moved to the center. Under these circumstances the law imposed on the defendant the duty to guard against the threatened harm. respondents April 25. assuming the horseman would move to the other side. without diminution to speed. Under these circumstances. petitioners. seeing that there were no other person on the bridge. CA. CA. ISSUE: Whether the defendant was negligent in maneuvering his car giving rise to a civil obligation. NATURE AND EFFECT OF OBLIGATIONS POSITIVE PERSONAL OBLIGATIONS / TO DO 1. Before he had gotten half-way across.00. blameworthy or negligent in a man of ordinary diligence and prudence and determines liability by that. laced in the position o the defendant. Obviously. for the repair of the taxi. and BIENVENIDO C. When he had gotten quite near. The law considers what would be reckless. All other awards for damages are deleted for lack of merit. 401 SCRA 594 TANGUILING VS. No. Petitioners countered that respondent breached the Contract by failing to finish the subdivision within the 27 months agreed upon.R. petitioners granted respondent an authority to resume the sale of subdivision lots and the collection of payments subject to the following conditions: (1) all collections shall be deposited in a joint account with China Banking Corporation. At that time. RULING: The Supreme Court finds no merit in petitioner’s claim that respondent incurred delay in the performance of his obligation under the Contract. petitioners rendered respondent incapable. ENGINEERING AND GENERAL MERCHANDISING. COURT OF APPEALS and VICENTE HERCE JR. Further. San Fernando. Pampanga branch. On 20 January 1987. respondent would receive 50% of the total gross sales of the subdivision lots and other income of the subdivision. petitioners’ defense that respondent did not finish the development work on time was without basis. to develop the subdivision within the allotted period. Only a substantial and fundamental breach. respondents G. the HSRC extended the period for respondent to finish the development work until 30 July 1987. and any withdrawal shall be subject to the approval of petitioners. and (5) any violation of these conditions shall result in the automatic cancellation of the authority. (2) withdrawals shall be limited to 50% of the total collections or to respondent's share. Moreover petitioners hampered and interfered with respondent’s development work. The trial Court ruled that the petitioners breached the Contract by: (1) hiring Rosales to do development work on the subdivision within the 27-month period exclusively granted to respondent.00 for the initial expenses of the development work. which was the primary source of development funds. and (3) stopping respondent from managing the sale of lots and collection of payments. or at least made it difficult for him. will justify a cancellation. The law provides that delay may exist when the obligor fails to fulfill his obligation within the time expressly stipulated. In reciprocal obligations. In this case. (2) interfering with the latter’s development work. (3) only Franda Village Subdivision receipts. and therefore respondent was in delay. the law authorized HSRC to grant extensions of time for completion of subdivision projects. the HSRC extended the Contract up to July 1987. After some negotiations they agreed on . respondent secured from the Human Settlements Regulatory Commission ("HSRC") an extension of time to finish the subdivision development until 30 July 1987. Respondent also advanced P200. 1997 266 SCRA 78 FACTS: Sometime in April 1987.On 3 February 1984. Petitioners also stopped respondent from selling lots and collecting payments from lot buyers. Respondent’s failure to submit the monthly report cannot serve as sufficient basis for the cancellation of the Contract. Mercado entered into a Contract of Development for the development into a subdivision of several parcels of land in Pampanga. petitioner entered into a contract with herein private respondent to construct windmill for the latter. control and supervise the sales of the lots within the subdivision. Respondent committed to complete the construction within 27 months. ISSUE: Whether or not the respondent incurred delay in not finishing the work in the stipulated time. petitioner. VS.T. neither party incurs in delay if the other does not comply or is not ready to comply with what is incumbent upon him. the development work continued for more than two years despite the lack of a monthly report. Because petitioners were the first to breach the Contract and even interfered with the development work. In return. Respondent also enjoyed the exclusive and irrevocable authority to manage. 117190 January 2. Petitioners also alleged that respondent sold one subdivision lot to two different buyers. In effect. It is only when one of the parties fulfills his obligation that delay by the other begins.M. (4) collections shall be subject to a weekly or monthly audit. On 5 August 1986. On 8 August 1986. which defeats the very object of the parties in making the contract. Respondent filed an action to rescind the contract on the ground that conditional authority issued by petitioners violated the Contract. the trial court declared that respondent did not incur delay even if he completed only 28% of the development work. In the instant case. which can only be used for development expenses. POSITIVE PERSONAL OBLIGATIONS / TO DO JACINTO TANGUILIG doing business under the name and style J. duly countersigned by petitioners. The cancellation of a contract will not be permitted for a slight or casual breach. petitioners instructed respondent to stop selling subdivision lots and collecting payments from lot buyers.. The Court of Appeals affirmed the decision.000. the spouses Lorenzo and Lorenza Francisco and Engineer Bienvenido C. Respondent did not incur delay since the period granted him to fulfill his obligation had not expired at the time respondent filed the action for rescission on 27 February 1987. Since the Contract had not expired at the time respondent filed the action for rescission. shall be used. even remotely. On May 16. Petitioner merely stated that there was a "strong wind. PERIQUET VS. Petitioner. Notably.00.00. In order for a party to claim exemption from liability by reason of fortuitous event under Art.00 with a one-year guaranty from the date of completion and acceptance by respondent Herce Jr. a strong wind should be present in places where windmills are constructed. However. RULING: On the first issue. Petra left her estate to petitioner and provided for certain legacies to her brother. other intestate heirs also executed a Deed of assignment of Hereditary Rights except Florentino Zaragoza and Alberta ZaragozaMorgan. (d) the debtor must be free from any participation in or aggravation of the injury to the creditor. Fernando Periquet died. petitioner now seeks relief from the Supreme Court. Pursuant to the agreement respondent paid petitioner a down payment of P30. petitioner entered into a compromise agreement with the Zaragozas and Periquets. sister and children of her deceased siblings. 238 SCRA 697 LEGASPI OIL VS. VS. 1966. and. the Supreme Court held that petitioner is not obliged to construct the deep well.1966. of the project. (c) the event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner.000. BREACH OF OBLIGATIIONS: CAUSES AND EFFECTS 1. On August 3. The boy was given the name Fernando Periquet Jr. Felix Francisco filed an action to annul the Assignment of Hereditary Rights he executed in favor of petitioner. COURT OF APPEALS 238 SCRA 697 FACTS: Spouses Fernando Periquet and Petra Francisco were left childless so they took in a son out of wedlock of Maria. though he was not legally adopted. 224 SCRA 213 PERIQUET JR. Neither is there an itemization or description of the materials to be used in constructing the deep well. Court of Appeals reversed the trial court.the construction of the windmill for a consideration of P60.000.. Accordingly. otherwise the windmills will not turn. Also. CA. on the other hand. four (4) requisites must concur: (a) the cause of the breach of the obligation must be independent of the will of the debtor. CA. Petitioner failed to show that the collapse of the windmill was due solely to a fortuitous event. Prior to her untimely death." But a strong wind in this case cannot be fortuitous. sustaining the trial court to be correct that said deep well is not stipulated in their contract. In finding for plaintiff. unforeseeable or unavoidable. 1970. Petra instituted a Special Proceeding for probate of her deceased spouse’s will. due to the refusal and failure of respondent to pay the balance. an order for adjudication and transfer of the residue of the estate to petitioner was issued. On the contrary. Unfortunately. However. On 14 March 1988. 1969. On March 20. she asked her lawyer to prepare her last will and testament. denied the inclusion of the construction of a deep well in their contract and besides the destruction of the windmill is due to a force majeure. The trial court approved the compromise agreement. the evidence does not disclose that there was actually a typhoon on the day the windmill collapsed. nowhere in either proposal is the installation of a deep well mentioned. grave abuse of confidence. she died before she could sign it. 1174 of the Civil Code the event should be the sole and proximate cause of the loss or destruction of the object of the contract. petitioner filed a complaint to collect the amount. Petra died after only four months and eighteen days later. It ruled that the construction of the deep well was included in the agreement of the parties because the term "deep well" was mentioned in both proposals. He left a will wherein he named his wife Petra as his universal heir. The defects and the construction were not also clearly proven by the respondent. the trial court held that the construction of the deep well was not part of the windmill project as evidenced clearly by the letter proposals submitted by petitioner to respondent. Interestingly. Petra’s sister. private respondent claimed that petitioner did not build a deep well so he was not entitled for payment and also such windmill was defective and was easily destroyed by a typhoon. Felix Francisco executed a document of Assignment of Hereditary Rights in favor of Periquet Jr. . mistake and undue influence and lack of cause and/or consideration in the execution of the challenged Deed of Assignment. (b) the event must be either unforeseeable or unavoidable.000.00 and an installment payment of P15. There is absolutely no mention in the two (2) documents that a deep well pump is a component of the proposed windmill system. Court of Appeals. The action for annulment was based on gross misrepresentation and fraud. ISSUES: Whether or not petitioner is obliged to construct the deep well and is obliged to repair the windmills. His motion for reconsideration having been denied by the Court of Appeals. 2. However. In Nakpil vs. leaving a balance of P15.000. On December 13. gross misrepresentation or undue influence attended the execution and signing of the deed of Assignment. CC) LEGASPI OIL CO. that failure to deliver will mean cancellation . the claims of the parties.. petitioner.00 per 100 kilos on September 23. the parties have understood the same to be per 100 kilos in their previous transactions. the current price agreed upon is slightly higher than the last contract. Felix Francisco executed the document voluntarily and freely basing it on the Trial Court’s BREACH OF OBLIGATIIONS: CAUSES AND EFFECTS (Art. 1976. 1167. YES. VS. No fraud was employed by herein petitioner. indicating its unsteady position in the market. In all these contracts though. appellant's agent Jose Llover signed a contract for the sale of 100 tons of copra at P82. it being the obvious purpose of such compromise agreement to settle. depending on the prevailing market price when the contract is entered into. Clearly. had previous transactions with appellee for the sale and delivery of copra. Subsequently. 1975. ISSUES: Whether or not the CA erred in disregarding and ignoring the trial court’s strong and substantial findings of fact that no fraud.666 kilos as per running account card. Jose Llover. THE COURT OF APPEALS and BERNARD OSERAOS. The fraud that vitiates a contract refers to those insidious words or machinations resorted to by one of the contracting parties to induce the other to enter into a contract which without them he would not have agreed to. The finding of the trial court as to its existence or non-existence is final and cannot be reviewed save only when the finding id clearly shown to be erroneous. YES. deception. appellant sold only 46. cannot and should not be disturbed except for vices of consent or forgery. Anent the 3rd issue.R.00 per 100 kilos on May 27. The records show that he concluded a sale for 70 tons of copra at P95.334 kilos of copra thus leaving a balance of 53. INC. 1975. the then Intermediate Appellate Court annulled and rescinded the Assignment of Hereditary Rights. 1975 and another sale for 30 tons of P102. for the sale of copra to the latter. The price at which appellant sells the copra varies from time to time. manifestations of fraud are non-existent. In the case at bench. YES. The will of the victim. deception. had several transactions with appellee Legaspi Oil Co. 1993 224 SCRA 213 FACTS: Respondent Bernard Oseraos acting through his authorized agents. 1975. 1976. As compared to appellant's transaction on November 6. The kind of fraud that will vitiate a contract refers to those insidious words or machinations resorted to by one of the contracting parties to induce the other to enter into a contract which without them he would not have agreed to. 1976. One of his authorized agents. respondents G. On appeal. No. in effect. and bar all future disputes and controversies thereon. A motion for reconsideration was denied for lack of merit.00 per 100 kilos with delivery terms of 25 days effective December 15. Accordingly. Resultantly. Whether or not the Intermediate Appellate Court erred in disturbing and setting aside the Compromise Agreement. RULING: Anent the 1st issue. gross misrepresentation or undue influence attended the execution and signing of the Deed of Assignment of Hereditary Rights. It must have a determining influence on the consent of the victim. another designated agent signed a contract in behalf of appellant for the sale of 100 tons of copra at P79. However. After the period to deliver had lapsed. the selling price had always been stated as "total price" rather than per 100 kilos. The finding of the Trial Court as to the existence of fraud is final and cannot be reviewed save only when the finding is clearly shown to be erroneous. it must be noted that the price of copra had been fluctuating (going up and down).00 per 100 kilos with delivery terms of 20 days effective March 8. deception. the Assignment of Hereditary Rights executed by Felix Francisco in favor of herein petitioner is valid and effective. findings. 96505 July 1. or undue influence were not established by full. is maliciously vitiated by means of a false appearance of reality. gross misrepresentation. 1975. On February 16. It cannot be denied that a compromise agreement was entered into by the parties in that case in order to end the suit already filed in court. Furthermore. valid and binding. no such fraud was employed by herein petitioner. clear and convincing evidence. At this point. the allegations of fraud. In the case at bench. demands were made upon appellant to deliver the balance with a final warning embodied in a letter dated October 6. once and for all. Felix Francisco could not be considered to have been deceived into signing the subject deed of assignment. Whether or not the Intermediate Appellate Court erred in disregarding the trial court’s strong and substantial findings of fact that no fraud.. on November 6.The trial court declared the Assignment of Hereditary Rights executed by Francisco in favor of Periquet Jr. The same was approved by the court. Anent the 2nd issue. should private respondent fail to complete delivery of the balance of 53.666 kilograms.666 kilograms of copra.00 to P168 per 100 kilograms. Petitioner then demanded for the payment due him in relation to its partial performance of its obligation. are liable for damages. In case of fraud.152. petitioner made a final demand with a warning that.152. Thus.76 chargeable against appellant. BREACH OF OBLIGATIIONS: DEFAULT (Mora) (Art. both parties agreed that Primetown will take over the project. ISSUE: Whether or not Titan-Ikeda is responsible for the project’s delay. 1995 report.76 more than he would have paid had private respondent completed delivery of the copra as agreed upon. it is distinguished from negligence by the presence of deliberate intent. to evaluate the progress of the project. On October 22. the balance to be purchased at open market and the price differential to be charged against appellant. those who in the performance of their obligation are guilty of fraud. at that point. leaving an undelivered thus a balance of 53. 1976. petitioner exercised its right under the contract and purchased 53. 1976. since there was still no compliance. since there was still no compliance by private respondent. at the open market at the then prevailing price of P168.666 kilograms but private respondent elected to ignore the same. Under Article 1170 of the Civil Code of the Philippines. Despite ongoing negotiations. petitioner and respondent were discussing the possibility of the latter’s take over of the project’s supervision. Petitioner made repeated demands upon private respondent to comply with his contractual undertaking to deliver the balance of 53. appellee exercised its option under the contract and purchased the undelivered balance from the open market at the prevailing price of P168. which is lacking in the latter. private respondent is liable to pay respondent the amount of P46.of the contract. bad faith. 1976. Subsequently. The trial court ruling reinstated. However within the delivery period.334 kilograms of copra to petitioner. petitioner was compelled to buy the balance of 53.666 kilograms of copra. In a letter dated October 6.76 as damages. On October 22. ITI informed respondent that petitioner. Thus. private respondent is liable for damages. knowing and intending the effects which naturally and necessarily arise from such act or omission.00 per 100 kilos. Inc. The conduct of private respondent clearly manifests his deliberate fraudulent intent to evade his contractual obligation for the price of copra had in the meantime more than doubled from P82. For failure of Primetown to pay despite repeated demands. The private respondent is guilty of fraud in the performance of his obligation under the sales contract whereunder he bound himself to deliver to petitioner 100 metric tons of copra within twenty (20) days from March 8.666 kilograms of copra. the guilty party is liable for all damages. or a wilfull omission. The Appellate Court ordered the dismissal of the case on appeal.76. had only accomplished 31. 1976. Pursuant to said article. On account of private respondent's deliberate breach of his contractual obligation. Inc.152. the undelivered balance. petitioner filed a case for specific performance against Primetown. fraud may be defined as the voluntary execution of a wrongful act. Hence. the instant petition for review on certiorari. or a price differential of P86. Still private respondent failed to fulfill his contractual obligation to deliver the remaining 53.00 per 100 kilograms. In general. the fraud referred to in Article 1170 of the Civil Code of the Philippines is the deliberate and intentional evasion of the normal fulfillment of obligation. and those who in any manner contravene the tenor thereof. (ITI). or delay.89% of the project (or was 11 months and six days behind schedule). awarded the contract for the structural works of its 32-storey Makati Prime Tower (MPT) to petitioner TitanIkeda Construction and Development Corporation. CC) TITAN-IKEDA CONSTRUCTION VS. Meanwhile. which may be reasonably attributed to the non-performance of the obligation. RULING: . or wanton attitude. an engineering consultancy firm.00 per 100 kilos. The petitioner then filed a complaint against private respondent for breach of a contract and for damages. ISSUE: Whether or not private respondent Oseraos is liable for damages arising from fraud or bad faith in deliberately breaching the contract of sale entered into by the parties. Meanwhile. respondent Primetown Property Group. Oseraos delivered only 46. petitioner would purchase the balance at the open market and charge the price differential to private respondent. RULING: Yes. petition granted. In September 1995.00 per 100 kilograms or a total price differential of P46. Primetown demanded reimbursement for the amount it spent in having the project completed.152. In its report.666 kilos of copra in the open market at the then prevailing price of P168 per 100 kilograms thereby paying P46. respondent did not obtain petitioner’s consent in hiring ITI as the project’s construction manager. malice. a price differential of P86. PRIMETOWN PROPERTY 544 S 466 FACTS: In 1992.76.152. 1169. negligence. The trial court held Oseraos liable for damages amounting to P48. a net loss of P46. Neither did it inform petitioner of ITI’s September 7. respondent engaged the services of Integratech. Mora or delay is the failure to perform the obligation in due time because of dolo (malice) or culpa (negligence). 1997 268 SCRA 105 FACTS: Petitioner Ignacio Barzaga bought from the hardware store of respondent Angelito Alviar construction materials for the niche of his wife scheduled for internment on December 24. 219 SCRA 480 PERIQUET VS. Dasmarinas) were not indicated in the invoice receipts but were verbally acknowledged by the store attendant. 1995. commanding the sheriff “to attach the properties of the defendant. Henceforth. Respondent was not able to deliver the materials .00. Respondent never sent petitioner a written demand asking it to accelerate work on the project and reduce.M. On January 27. the sheriff issued a notice of garnishment addressed to the Philippine National Bank (PNB) attaching the “goods. The letter only connotes that PNEI was advising petitioner to settle the matter of implementing the earlier arrangement with PNB. monies and all other personal properties” of PNEI in the possession of the bank. The deed of assignment included sales invoices containing stipulations regarding payment of interest and attorney’s fees. 2001 363 SCRA 128 FACTS: Guillermo Uy. Once the creditor makes a demand.227. PNB MADECOR and PNEI are therefore creditors and debtors of each other and by force of the law on compensation. BARZAGA VS. (PNEI) amounting to P4. No. GERARDO C. No. Petitioner is obligated to pay the amount stated in the promissory note upon receipt of a notice to pay from PNEI. PNB MADECOR received a similar notice.000. 238 SCRA 697 IGNACIO BARZAGA. both obligations of PNB MADECOR and PNEI are already considered extinguished to the concurrent amount or up to P7. It also failed to deliver the concrete mix and rebars according to schedule. time (8 A. Therefore. 1990. COURT OF APPEALS and ANGELITO ALVIAR. and/or (of) any person representing the defendant” in such amount as to cover Gerardo Uy’s demand. NECESSITY OF DEMAND: EXTRAJUDICIAL OR JUDICIAL PNB MADECOR VS. 115129 February 12.00. 1984 was not a demand letter but merely a request for the implementation of the arrangement for set-off receivables.R. 2.784. petitioner had to adjust the scope of work. Enterprises.48 Uy filed an omnibus motion opposing PNB MADECOR’s claim of compensation in which the latter argued that the letter of PNEI on September 28. PNEI did not earn an interest of 18% annually. petitioner was not responsible for the project's delay. The records showed that the letter was not a demand letter but one that merely informed petitioner of the conveyance of a certain portion of its obligation to PNEI per a dacion en pago arrangement between PNEI and PNB. Petitioner then submitted a position paper stating that PNB MADECOR is a creditor of PNEI with respect to the P8.558.884. VS. and the unpaid balance of obligation after deducting the amount conveyed to PNB. the debtor incurs mora or delay.R. CA. petitioner. In view of the foregoing. assigned to respondent Gerardo Uy his receivables due from Pantranco North Express Inc. 1984 to PNB MADECOR was a demand letter. if petitioner fails to pay after such notice. and requesting a reply within five days.660. and place (Memorial Cemetery. UY G. A debtor is deemed to have violated his obligation to the creditor from the time the latter makes a demand. respondent belatedly informed petitioner of those modifications. real or personal.It was found that because respondent modified the MPT's architectural design. doing business under the name G.U. 3. For this reason. A writ of preliminary attachment was issued on January 26.227.00 so that PNEI is still obligated to pay PNB MADECOR the amount of P900. RULING: The Supreme Court observed that petitioner’s obligation to PNEI appears to be payable on demand. 4. WHEN DEMAND NOT NECESSARY 1. effects. Thus. credits.). He paid for the materials purchased but the circumstances of delivery with the specific date (December 22).000. we hold that petitioner did not incur delay in the performance of its obligation. 268 S 105 TANGUILING VS. 266 SCRA 78 TAYAG VS. 1995. CA.884. the obligation will earn an interest of 18 percentum per annum. if not eliminate. CA. Uy filed with the RTC a collection suit with an application for the issuance of a writ of preliminary attachment against PNEI.48 and at the same time its debtor with respect to the P7. CA. ISSUE: Whether or not the letter of PNEI on September 28. respondents G. slippage. Moreover. 129598 August 15. Respondent was negligent and incurred delay in the performance of his contractual obligations. who assert breach of the conditions as against private respondent’s claim anchored on full payment and compliance with the stipulations thereof. prior to his demise in 1979. After some negotiations. petitioners. which relieved him of any liability. respondents G.00 with a one-year guaranty from the date of completion and acceptance by Herce. 117190 January 2. Nueva Ecija is the subject matter of the present litigation between the heirs of Juan Galicia. Jr.00 and an installment payment of P15. TERESITA GALICIA.000. Sr. Hence. Tanguilig denied that the construction of a deep well was included in the agreement to build the windmill sytem. Therefore.000. ISSUE: Whether or not the petitioner is under obligation to reconstruct the windmill after it collapsed RULING: The Supreme Court held that when the windmill failed to function properly. It was no longer necessary to indicate the time of delivery. In his Answer before the trial court. Since the deep well formed part of the system. respondent cannot be said to have incurred in delay. in accordance with the oneyear guaranty. instead it is the petitioner who should bear the expenses for the reconstruction of the windmill. Guimba.00. No. The delay caused the inability of the petitioner to accede to the dying wishes of his wife that she be buried on the 24th of the month. WHEN DEMAND NOT NECESSARY TANGUILIG v. of the project. EVELYN GALICIA. Jr. should pay petitioner Tanguilig the balance of P15. the Supreme Court ruled that respondent Herce. in favor of Albrigido Leyva involving the undivided one-half portion of a piece of land situated at Poblacion. that assuming he owed petitioner a balance of P15. they agreed on the construction of the windmill for a consideration of P60.000.M. and Celerina Labuguin. . 1993 219 SCRA 418 FACTS: The deed of conveyance executed on May 28.00.000. paid Tanguilig a down payment of P30.. VS. due to the refusal and failure of respondent to pay the balance. private respondent is liable for damages. and RODRIGO GALICIA. Inc. Respondent’s contention in the appellate court that he did not incur delay in the performance of his obligation to deliver the thing sold to petitioner since the time of delivery was not indicated in the invoice receipt covering the sale could not be sustained in view of the positive verbal commitment of the respondent’s employee. denied the claim saying that he had already paid the amount to San Pedro General Merchandising. and suffering to the family of petitioner especially during Christmas day. ( J. Jr. Engineering and General Merchandising). JUAN GALICIA. after Christmas. for the contract price of P60. COURT of APPEALS G. petitioner filed a complaint to the collect the amount. Jr.00. Thus. RICARDO GALICIA.00 and likewise ordered petitioner Tanguilig to reconstruct subject defective windmill system. leaving a balance of P15. 1988.00 was solely for the windmill assembly and its installation.T. Pursuant to the agreement. Tanguilig also disowned any obligation to repair or reconstruct the system and insisted that he delivered it in good and working condition to respondent who accepted the same without protest.on the specified date and time which resulted to the delay in the construction of the niche and consequently to the delay in the internment of petitioners wife. No. a force majeure. petitioner Jacinto Tanguilig. proposed to respondent Vicente Herce. he is liable for moral damage for causing further anguish and pain.000. the payment Herce. exclusive of other incidental materials needed for the project. to construct a windmill system for him. it becomes incumbent upon the petitioner to institute the proper repairs in accordance with the guaranty stated in the contract. Herce. She was buried 2 and ½ days later. 1997 266 SCRA 78 FACTS: In April 1987. Jr. which the windmill was to be connected. Respondent also averred WHEN DEMAND NOT NECESSARY JOSEFINA TAYAG. ISSUE: Whether or not the respondent is liable for damages due to his non-performance of his obligation to deliver the materials on the specified date and time.R. this should be offset by the defects in the windmill which caused the structure to collapse after a strong wind hit hteir place.000. Sr. R.000. and for exemplary damages for not performing his obligation under the business contract. COURT OF APPEALS and ALBRIGIDO LEYVA. On March 14. 96053 March 3. Jr. tendered to SPGMI should be credited his account by Tanguilig. Respondent had no right to manipulate petitioner’s timetable and substitute it with his own. He also contended that the collapse was attributable to a typhoon. Herce. JR. RULING: Yes. 1975 by Juan Galicia. Petra’s sister. A contrario.00 was fully liquidated. emphasized the frank representation along this line of Josefina Tayag before the trial court. Moreover. Now. as to the issue of whether payments had in fact been made. and any of the contracting parties may. rescind the contract or seek fulfillment (Article 1191. and without expressing any protest or objection. FERNANDO PERIQUET. WHEN DEMAND NOT NECESSARY DR. By and large.000.520. private respondent filed the complaint for specific performance. 1979.00 representing the remaining balance was paid to them. Indeed.. claimed the same right to collect. there is no doubt that the second installment was actually paid to the heirs of Juan Galicia.25.The court of origin which tried the suit for specific performance filed by private respondent on account of the herein petitioner’s reluctance to abide by the covenant. 1975. when the court of origin. Insofar as the third item of the contract is concerned. aside from the P18. as well as the appellate court. According to petitioners. knowing its incompleteness or irregularity. only P9. Sr.48 to private respondent as overpayment of the P27. the right to rescind is not absolute and will not be granted where there has been substantial compliance by partial payments.00 had to be paid.000.428. for clarification. Sr. Consequently. Because of the apprehension that the heirs of Juan Galicia. 1981 five years after the amount of P27. There is no dispute that the sum of P3. petitioners must concede that in a reciprocal obligation like a contract of purchase. Sr. Sr. though he was not legally adopted. No. of the P10. less the P3.00 balance.520. and received by. the vendee paid only the sum of P6.707.000.000. accommodated private respondently by accepting the latter’s delayed payments not only beyond the grace periods but also during the pendency of the case for specific performance. FRANCISCO G.41 while the difference of the indebtedness came from Celerina Labuguin. petitioners’ actuation is susceptible of but one construction-that they are now estopped from reneging from their commitment on account of acceptance of benefits arising from overdue accounts of private respondent. will lead us to the sum of P28.00 to be paid within ten days from execution of the instrument. are disavowing the contract inked by their predecessor. RULING: Both the trial and appellate courts were correct in sustaining the claim of private respondent anchored on estopped or waiver by acceptance of delayed payments under Article 1235 of the Civil Code in that: “When the obligee accepts the performance. due to Josefina Tayag’s admission in judicio that the sum of P10. ruled in favor of the vendee while respondent court practically agreed with the trial court except as to the amount to be paid to petitioners and the refund to private respondent are concerned. the obligation is deemed fully complied with. Concerning private respondent’s assumption of the vendor’s obligation to the Philippine Veterans Bank.48 or a refund of P1. The boy was given the name Fernando Periquet Jr. Sr.926..00 which they acknowledge to have been deposited in court on January 22. HONORABLE FOURTH CIVIL CASES DIVISION OF THE INTERMEDIATE APPELLATE COURT and the HEIRS OF THE LATE FELIX R. It is thus erroneous for petitioners to suppose that “the evidence in the records do not support this conclusion”. . Civil Code).000. This suggestion ignores the fact that consignation alone produced the effect of payment in the case at bar because it was established that two or more heirs of Juan Galicia. These two figures representing private respondent’s payment of the fourth condition amount to P32. up to November 3. JR. ISSUE: Whether or not private respondent correctly anchored on estopped or waiver by acceptance of delayed payments. petitioners asserted that not a single centavo of the P27. Moreover. both parties are mutually obligors and also obliges. Petitioners argue that there was no valid tender of payment nor consignation of the sum of P18.778. VS.R. 69996 December 5. upon non-fulfillment by the other privy of his part of the prestation.00. petitioners did not bother to refute the evidence on hand that.” considering that the heirs of Juan Galicia. them on numerous occasions from May 29. But. 1994 238 SCRA 697 FACTS: Spouses Fernando Periquet and Petra Francisco were left childless so they took in a son out of wedlock of Maria. petitioners chose to remain completely mute even at this stage despite the opportunity accorded to them.649. the prejudicial aftermath of Josefina Tayag’s spontaneous reaction may no longer be obliterated on the basis of estoppel.00 was tendered to.000.649.77 paid by petitioners to the bank. it may be recalled that respondent court applied Article 1186 of the Civil Code on constructive fulfillment which petitioners claim should not have been appreciated because they are the obliges while the proviso in point speaks of the obligor.00 listed as first installment was received by Juan Galicia. provided for an acceleration clause stating that should the mortgagor default in the payment of any installment. 1970. subsequent checks were dated every 10th day of each succeeding month.On March 20. no such fraud was employed by herein petitioner. In addition. The contract of chattel mortgage. deception. prompting petitioner to file an action . assigned all its rights and interests in the chattel mortgage to petitioner Rizal Commercial Banking Corporation (RCBC). were no longer presented for payment. Felix Francisco filed an action to annul the Assignment of Hereditary Rights he executed in favor of petitioner. grave abuse of confidence. 1991. Prior to her untimely death. the whole amount remaining unpaid shall become due. he cannot be blinded by the same. for which he made a down payment of P164. However. she asked her lawyer to prepare her last will and testament. 1991 being unsigned. He left a will wherein he named his wife Petra as his universal heir. Petra left her estate to petitioner and provided for certain legacies to her brother.00 each. all remaining checks outstanding as of the date the account was forwarded were no longer presented for patent. ISSUE: Whether or not the findings of the Court of Appeals that the assignment of hereditary rights executed by Felix Francisco in favor of petitioner is void due to fraud. MORA SOLVENDI: EFFECTS RIZAL COMMERCIAL BANKING CORPORATION VS. which was unsigned. 133107 March 25. to him. other intestate heirs also executed a Deed of assignment of Hereditary Rights except Florentino Zaragoza and Alberta ZaragozaMorgan. Felipe Lustre purchased a Toyota Corolla from Toyota Shaw. RULING: The decision of the Court of Appeals was reversed and set aside for the kind of fraud that will vitiate a contract refers to those insidious words or machinations resorted to by one of the contracting parties to induce the other to enter into a contract which without them he would not have agreed to. 1993 were thereafter encashed and debited by RCBC from private respondent's account. the assignment of hereditary rights executed by Felix Francisco in favor of herein petitioner is valid and effective. Also. dated February 10. the last two checks. Accordingly. No. the balance of the purchase price to be paid in 24 equal monthly installments. the mortgagor shall be liable for 25% of the principal due as liquidated damages. 279805 representing the payment for August 10. an order for adjudication and transfer of the residue of the estate to petitioner was issued. All the checks dated April 10. This was purportedly in conformity with petitioner bank's procedure that once a client's account was forwarded to its account representative. private respondent executed a promissory note and a contract of chattel mortgage over the vehicle in favor of Toyota Shaw. Toyota Shaw. she died before she could sign it. Resultantly. 1993 and March 10. valid and binding. Unfortunately. The trial court approved the compromise agreement. petitioner entered into a compromise agreement with the Zaragozas and Periquets.620.00. in a letter dated January 21. 279805 was debited from private respondent's account but was later recalled and re-credited.1966. COURT OF APPEALS and FELIPE LUSTRE G. 1991 to January 10. including liquidated damages. petitioner. private respondent Atty. The first was dated April 10. Petra died after only four months and eighteen days later. demanded from private respondent the payment of the balance of the debt. In the case at bench. On August 3. Felix Francisco executed a document of Assignment of Hereditary Rights in favor of Periquet Jr. 1991. Private respondent thus issued 24 postdated checks for the amount of P14. 1966. in paragraph 11 thereof. Inc. 1991. On May 16. 1993.R. sister and children of her deceased siblings. On December 13. Felix is not a party to the compromise agreement. 1993. And since. 976. Inc. Inc. 1999 305 SCRA 449 FACTS: On March 10. except for RCBC Check No. or undue influence should be sustained. Previously. A motion for reconsideration was denied for lack of merit. Because of the recall. mistake and undue influence and lack of cause and/or consideration in the execution of the challenged Deed of Assignment. The action for annulment was based on gross misrepresentation and fraud. 1993. The trial court declared the Assignment of Hereditary Rights executed by Francisco in favor of Periquet Jr. Fernando Periquet died. On March 14. gross misrepresentation. On appeal. Petra instituted a Special Proceeding for probate of her deceased spouse’s will. the amount represented by RCBC Check No. 1969. The latter refused. the then Intermediate Appellate Court annulled and rescinded the Assignment of Hereditary Rights. To secure the balance. On the theory that respondent defaulted in his payments. the check representing the payment for August 10. and (b) consignation of the sum due. interposed a counterclaim for damages. Atty.for replevin and damages before the Pasay City Regional Trial Court (RTC). the shares of stock pledged be released.” Where the creditor unjustly refuses to accept payment. Petitioner State denied the request on the ground that the loan which it had extended to the spouses Jose and Marcelina Aquino has remained unpaid.000. viz: (a) tender of payment. respondent spouses Jose and Marcelina Aquino signed an agreement with petitioner State for the latter’s purchase of receivables amounting to P375. Thereafter. State demanded payment. (“State”) in order to secure a loan of P120. When the new loan matured. On 29. the Supreme Court stressed that a written tender of payment alone. Petitioner's conduct. When the 1 st Account fell due. Failing thus. petitioner encashed checks subsequently dated. demanded from private respondent payment of the value of said check and that of the last two checks. the debtor desirous of being released from his obligation must comply with two (2) conditions. COURT OF APPEALS 198 SCRA 392 FACTS: On 5 April 1982. In the instant case. including liquidated damages. in Llamas v. Rolando Salonga sent to respondent spouses a Notice of Notarial Sale stating that upon request of State and by virtue of the pledge agreement. requesting that upon payment.00. Abaya. wounded feelings and social humiliation suffered by the latter. claiming delay. while they are properly regarded as having made a written tender of payment to petitioner state. As pointed out by the trial court. Petitioner had already debited the value of the unsigned check from private respondent's account only to re-credit it much later to him.00. respondent. More than a year after the date of the unsigned check. It follows that their obligation to pay principal-cumregular or monetary interest under the terms and conditions of the said Account was not extinguished by such tender of payment alone. but also in observance of the standard in human relations. June 1984. Private The RTC dismissed the petition. petitioner is liable for damages caused to private respondent. and then abruptly refused to encash the last two." behooved the bank to do so. The conditions had not been complied with. which had not been secured by the pledge. RULING: No. respondent spouses paid the same partly with their own funds and partly from the proceeds of another loan which they obtained also from petitioner State designated as the 2 nd Account. MORA ACCEPIENDI: EFFECTS STATE INVESTMENT VS. they had been able and willing to pay the same. ISSUE: Whether or not petitioner’s claim is meritorious. ISSUE: Whether or not the conditions to be complied with by the debtor desirous of being released from his obligation in cases where the creditor unjustly refuses to accept payment have been met by the spouses Aquino. does not suspend the accruing of regular or monetary interest. failed to consign in court the amount due at the time of the maturity of the 2nd Account No.000. 1985. without consignation in court of the sum due. in the light of the circumstances of this case. The Court of Appeals stated that the "default" was not a case of failure to pay. The CA affirmed in toto the decision of the trial court. but petitioner had insisted that respondents pay even the loan account of Jose and Marcelino Aquino. the trial court rendered a decision in favor of the plaintiff ordering State to immediately release the pledge and to deliver to respondents the share of stock upon payment of the loan. Prior to the execution of the pledge. besmirched reputation. This new loan was secured by the same pledge agreement executed in relation to the 1st Account. Tender of payment must be accompanied or followed by consignation in order that the effects of payment may be produced. can only be described as mercenary. RULING: NO. This prompted respondents to file a case before the Regional Trial Court of Quezon City alleging that the intended foreclosure sale was illegal because from the time the obligation under the 2 nd Account became due. Article 1256 of the civil code states that: “ If the creditor to whom tender of payment has been made refuses without just cause to accept it. COMPENSATIO MORAE . this whole controversy could have been avoided if only petitioner bothered to call up private respondent and ask him to sign the check. not only in compliance with its contractual obligations. the petition for appeal was denied by the Court of Appeals. for every person "to act with justice. These include moral damages for the mental anguish. respondent spouses Aquino. and observe honesty and good faith. he would sell at public auction the shares of stock pledged to State. give everyone his due. Good faith. in his Answer. respondent spouses Rafael and Refugio Aquino pledged certain shares of stock to petitioner State Investment House Inc. petitioner. serious anxiety.EFFECTS . It was further alleged that their failure to pay their loan was excused because the Petitioner State itself had prevented the satisfaction of the obligation. Thus. the debtor shall be released from responsibility by consignation of the thing or sum due. Likewise. On January 29. Respondents expressed willingness to pay. CA. Petitioner Leaño agreed to pay the total purchase price of P 107. private respondent Hermogenes Fernando. COMPENSATIO MORAE .747.000 in cash and assumed the P500. without checking and correspondingly adjusting its records on the amount actually released to private respondents and the date when it was released. Lastly. The last payment she tendered was on April 1. the petitioner filed with the RTC of Bulacan a compliant of specific performance with preliminary injunction. It was also provided in the contract that there is a grace period of one month within which to make payments. But as admitted by private respondents themselves. Further. 1989. was not willing to extend the old interest rate to private respondents and proposed to grant them a new loan of P500. They paid P350. Eventually. On September 27. A writ of execution was thereafter issued on August 24. BPI INVESTMENT VS. Thus.1. Petitioner assailed the decision of the municipal trial court that it was violative of her right to due process and for being in .00. the vendor Fernando was authorized to declare the cancellation of the contract and dispose of the parcel of land. 1985 with interest of 18% per annum based on balances. ISSUE: Whether or not petitioner may be held liable for moral and exemplary damages. as vendee entered into a contract regarding the sale of a piece of land located at Baliuag. BPIIC was negligent in relying merely on the entries found in the deed of mortgage. 1993. CA. The payments and all other improvements made on the premises shall be considered as rents paid for the use and occupation of the premises and as liquidated damages. 377 S 117 LEAÑO VS.00 shall be paid within the period of 10 years at a monthly amortization of P1.30 to commence on December 7. No. however. 333 SCRA 170 LAFORTEZA VS. 371 SCRA 295 INTEGRATED PACKING VS. For this purpose. they were irregular in their payment of monthly amortization. we can not properly declare BPIIC in bad faith. CA. HON.R. 1991 until the petitioner vacated the premises. 3. the amount of P25. Roa sold the house and lot to private respondents ALS and Antonio Litonjua. In June 1984. The latter. 369 SCRA 36 HEIRS OF BACUS VS. 1991 rendered a decision on an ejectment case filed by respondent Fernando. in our view. the contract was executed and Leaño made several payments in lump sum. 333 SCRA 643 recognition of their rights which were violated by BPIIC. and it immediately initiated foreclosure proceedings when private respondents failed to make timely payment. Private respondents counter that BPIIC was guilty of bad faith and should be liable for said damages because it insisted on the payment of amortization on the loan even before it was released. ordering Leaño to vacate the premises and to pay P250. 2002 FACTS: Frank Roa obtained a loan at an interest rate of 16 1/4% per annum from Ayala Investment and Development Corporation (AIDC). we should rule out the award of moral and exemplary damages.975. as vendor and petitioner Carmelita Leaño.000 is sufficient. but in fact made an overpayment as of June 30. Bulacan.000.000 to be applied to Roa’s debt and secured by the same property. we sustain the award of P50. BPIIC instituted foreclosure proceedings against private respondents on the ground that they failed to pay the mortgage indebtedness. 4.750. Further. 2. FEBRUARY 15.00. it did not make the corresponding deduction in the monthly amortization to conform to the actual amount of loan released. COURT OF APPEALS G. MACHUCA. together with the one corresponding to the month of grace. CA. It merely exercised its right under the mortgage contract because private respondents were irregular in their monthly amortization. The trial court on September 16. an interest of 18% per annum will be charged on the unpaid installments. Said house and lot were mortgaged to AIDC to secure the loan. COURT OF APPEALS 369 SCRA 36 FACTS: On November 13. should the period of 90 days elapse from the expiration of the grace period without the overdue and unpaid installments having been paid with the corresponding interests up to that date.000 balance of Roa’s indebtedness with AIDC. 1984. at an interest rate of 20% per annum. P10. Consequently.000. 1985. Should the month of grace expire without the installments for both months having been satisfied. Private respondents on the other hand alleged that they were not in arrears in their payment. 5.00 per month by way of compensation for the use and occupation of the property from May 27.000 in favor of private respondents as attorney’s fees since they were compelled to litigate. attorney’s fees and cost of the suit. for which an award of nominal damages should be given in LEAÑO VS. Sometime in 1980. 1993. Further.EFFECTS BPI INVESTMENT CORPORATION vs. predecessor of petitioner BPIIC for the construction of a house on his lot. Such negligence resulted in damage to private respondents. She constructed thereafter a house on the lot valued at P800.00 was agreed as a down payment and the balance of P96. However. 133632. RULING: Petitioner claims that it should not be held liable for moral and exemplary damages for it did not act maliciously when it initiated the foreclosure proceedings. Fernando filed a motion for reconsideration and the supplement thereto. 1989. making the petitioner the owner of the contested lot upon actual and constructive delivery thereof. 1995. this petition.090. such deed shall be executed upon completion of payment by Leaño. the trial court issued a writ of preliminary injunction on the assailed decision of the municipal trial court. delay by the other begins. Since there had been no rescission. what was transferred was possession and not ownership.000. No deed could be registered in the case at bar since as stipulated in the contract. In a contract to sell real property on installments.00 and on November 4. rather. It brought into effect the cancellation provision of the contract. 2. hence. She also posted a cash bond of P50. First.000. NO. petitioner was not given the cash surrender value of the payments that she made. Therefore. petitioner Leaño may still reinstate the contract by updating the account during the grace p[period and before actual cancellation.00 with the clerk of court to cover the balance of the total cost of the contested lot. the contract to sell makes the sale. Leaño did not pay the installments after April 1. the transaction was an absolute sale. Consequently. neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. Fernando was divested of ownership and cannot recover the same unless the contract is rescinded pursuant to Article 1592 of the Civil Code which requires a judicial or notarial demand. 1989. Finally.00 by way of attorney’s fees and costs of suit. what is controlling is not Article 1592 of the Civil Code but the provisions of RA 6552 (The Realty Installment Buyer Protection Act) which recognizes not only the right of the seller to cancel the contract upon non-payment off an installment by the buyer but also rights of the buyer in case of cancellation. Article 1169 of the Civil Code provides that in reciprocal obligations. Although the ejectment case operated as the notice of cancellation required under the provisions of RA 6552. Leaño did not pay the installments after April 1. She further deposited the amount of P18. Regarding the issue of delay. YES. NO. 3. Whether or not there was proper cancellation of the contract to sell. cession and conveyance “subject to conditions” set forth on the contract. 2. The trial court held that the petitioner’s consignation on the amount of P18. According to the trial court. The Court of Appeals affirmed in toto the trial court’s decision.00 at the time of the execution of the contract.contrary with the intentions of RA 6552 regarding the protection of buyers of lots on installments.00 did not produce a legal effect since it was not undertaken in accordance with Articles 1176. which prevented the obligation of Fernando to convey the property. Article 1592 of the Civil Code is inapplicable in the case at bar. Second. which prevented the obligation of Fernando to convey the property. Since respondent Fernando performed his part of the obligation by allowing Leaño to have possession over the property and the latter not having paid the monthly . full payment of the purchase price is a positive suspensive condition and the failure of the payment is not a breach but rather shall be an event that will prevent the obligation of the seller to convey the title from acquiring any obligatory force. plus interest thereon at the rate of 18% per annum in accordance with the contract’s provision. On February 6. On February 21.000. 3. the trial court rendered a decision favoring the petitioner. the act of registration of the deed of sale was the operative act that could transfer ownership over the lot. there was no actual cancellation of the contract. it was a conditional sale. ISSUES: 1. the land is covered by the Torrens title. 1995. The trial court disregarded the petitioner’s claim that she gave a down payment of P10. From the moment one of the parties fulfills his obligation. ordering the plaintiff to pay the defendant P103. there was no proper cancellation of the contract to sell. Nevertheless. making the preliminary injunction permanent. the transaction was not an absolute sale.000. In the case at bar. RULING: 1. ordering the defendant to pay the plaintiff P10. 1993.000. petitioner cannot be evicted. The very intention of the parties was to reserve the ownership of the land in the seller (Fernando) until the buyer has paid the total purchase price. But the provisions of RA 6552 (The Realty Installment Buyer Protection Act) governs the case at bar which recognizes the right of the seller to cancel the contract upon non-payment of an installment by the buyer. The trial court relied on the statement of account and the summary prepared by the respondent to determine the liability of the petitioner for the payment of the liabilities and penalties. hence. there was delay on the petitioner’s part to pay the monthly amortizations. 1177 and 1178 of the Civil Code. It brought into effect the cancellation provision of the contract. The transfer of ownership and title would occur after full payment of the price.70 corresponding to the outstanding obligation under the contract executed which consists of the principal together with interest and surcharges. the trial court pointed out that the plaintiff defaulted in the payment of the amortization due and therefore she should be liable for the payment of the interest and penalties. Whether or not the transaction was an absolute and not a conditional sale. Whether or not there was delay on the petitioner’s part in the payment of the monthly amortization. the Court of appeals denied the motion of the Petitioners ratiocinated that they cannot be compelled to sell the disputed property by virtue of the nonfulfillment of the obligation under the option contract of the private respondents. petitioners. that questions of fact. COURT OF APPEALS 371 SCRA 295 FACTS: On June 1. and c) pay the damages. In the case at bar. praying that the heirs: a) execute a deed of sale over the subject property in favor of them. 2. RULING: 1. Whether or not the private respondents incurred in delay when they did not deliver the purchase price or consign it in court or before the expiration of the contract. favoring the private respondents. Luis Bacus leased to private respondent Faustino Duray a parcel of agricultural land in Talisay. the petitioners were not required to deliver the money or consign it in court. respondents conveyed to them their lack of interest to but the subject land for want of sufficient funds.000 payable too petitioners at anytime upon demand. Respondents argued that the petitioners are unclear if Rule 65 or 45 of the Rules of Court govern their petition. which at the time of the execution of the contract was P14. in toto. asking that he be allowed to purchase the land agreed upon in the contract with the decedent.000 square meters of the property within five (5) years from the year of the effectivity of the contract at P200 per square meter the rate of which shall be proportionately adjusted depending on the peso rate against the US dollar. The Court affirmed the decision of the appellate court. that they were willing and ready to purchase the property under the option to buy clause. neither party incurs delay if the other does not comply or is not ready to comply in a . the private respondents filed a complaint before the trial court. trail court rendered its decision. 1990. one the decedent’s heirs. the respondents opted to exercise their option to buy as contained in the contract. were they already required to deliver the money or consign it in court before the execution of the deed of transfer. 1991. ISSUES: 1. COMPENSATIO MORAE . Petitioners’ contention that private respondents failed to comply with their obligation under the option to buy because they failed to actually deliver the purchase price or consign it in court before the contract expired is not tenable. 1984. the private respondents did not incur any delay when they did not yet deliver payment or make consignation before the expiration of the contract. NO. Cebu for 6 years. the respondents were not yet obliged to make actual payment.EFFECTS HEIRS OF BACUS VS. On April 5. cannot be entertained by the Supreme Court in a petition for review.00. They even requested the respondents to pay in full the purchase price but the respondents refused. Having failed to come to an agreement. Nonetheless. consignation in court of the purchase price was not yet required. Consequently. On appeal. On March 30. Petitioners alleged that prior to the death of the decedent. Duray filed a complaint for specific performance against the heirs of the decedent with the Lupon Tagapamayapa of their barangay. Further. if the claim must be under Rule 45. NO. Obligations under an option to buy are reciprocal obligations. b) receive the payment of the purchase price. In an option to buy. 1990. 1990. the payment of the purchase price by the creditor is contingent upon the execution and delivery of a deed of sale by the debtor. due to the heirs’ refusal to sell the property to the respondents. ending May 31. private respondents manifested in court that they caused the issuance of a cashier’s check in the amount of P 650. On October 30. In reciprocal obligations. On August 31. The performance of one obligation is conditioned on the simultaneous fulfillment of the other obligation. 1990. 1990. Consignation is the act of depositing the thing due with the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment and it requires a prior tender of payment. the petitioner incurred delay and therefore is liable for damages. the private respondents did not incur delay when they did not deliver the purchase price or consign it in court or before the expiration of the contract. The contract contained an option to buy clause where the lessee had the exclusive and irrevocable right to buy 2. On March 15. since the obligation was not yet due. Whether or not when the respondents opted to buy the property. 2. Ergo. the Duray spouses signified their intention to Roque Bacus.amortization in accordance with the terms of the contract. Duray’s adverse claim was annotated by the Register of Deeds of Cebu. which were actually raised by the petitioners. and LEA Z.proper manner with what is incumbent upon him. NO. The instant petition is denied and the Court of Appeal’s decision is affirmed. Consequently. The contracts could not affect third persons like private respondent because of the basic civil law principle of relativity of contracts which provides that contracts can only bind the parties who entered into it. Fil-Anchor delivered only 1. 450 reams that were supposed to be delivered. it alleged that respondent breached when it failed to deliver 2.097. Fil-Anchor’s suspension of its deliveries to petitioner whenever the latter failed to pay on time is legally justified. Reciprocal obligations are to be performed simultaneously. 450 reams of printing papers in a staggered basis from May to October 1979. Eventually.101. in turn. Fil-Anchor filed a collection suit against petitioner totaling to P 766. as early as March 15. Fil-Anchor cannot be held liable under the contracts entered into by petitioner with Philacor because it is not a party to said agreements. Anent the 2nd issue. RULING: Anent the 1st issue. hence. COMPENSATIO MORAE .EFFECTS ROBERTO Z. Integrated once again entered into an additional printing contract with Philacor but failed to comply with what is incumbent upon it. COURT OF APPEALS 333 SCRA 170 FACTS: Petitioner Integrated Packaging Corporation (Integrated) entered into an agreement with private respondent Fil-Anchor paper Co. Out of the 3. The transaction between the parties is a contract of sale whereby Fil-Anchor obligates itself to deliver printing paper to Integrated which. LAFORTEZA. Hence. Consequently. Integrated entered into a contract with Philippine Appliance Corporation (Philacor) for the printing of a minimum of 300. Petitioner Integrated did not fulfill its side of the contract as its last payment in August 1981 could only cover materials covered by delivery invoices dated September and October of 1980. the CA affirmed the decision of the lower court with respect only to Integrated liabilities and not with Fil-Anchor’s liability to pay moral and compensatory damages. petitioners. Only from the moment one of the parties fulfills his obligation. LAFORTEZA.EFFECTS INTEGRATED PACKAGING CORPORATION VS.00 worth of printing papers to which Integrated encountered difficulties in its payment.101. binds itself to pay a sum of money. 1990.. LAFORTEZA. GONZALO Z. for the materials. The former made a formal demand from the latter to settles its outstanding account. 000 copies of books. respondent . VS.875 reams despite demand which made petitioner suffer actual damages and failed to realized expected profits. Then. As there was no compliance with what was incumbent upon the petitioners under the option to but. does delay by the other begins. so petitioner demanded immediate delivery of the rest of the reams of paper. Fil-Anchor undertakes to deliver printing paper of various quantities subject to petitioner’s corresponding obligation to pay. LAFORTEZA. It is also not a contract pour autriu. the lower court rendered its judgment after due hearing and trial. Fil-Anchor has the right to cease making further delivery. (Fil-Anchor) regarding the delivery of 3. NO. it was Integrated which breached the agreement as it failed to pay on time the materials delivered by private respondent. private respondents had not incurred in delay when the cashier’s check was issued even after the contract expired. ALONZO MACHUCA. Integrated made a partial payment totaling to P 97. so that the performance of one is conditioned upon the simultaneous fulfillment of the other.200. MICHAEL Z. even if he is aware of such contract and has acted with knowledge thereof. It ordered Integrated to pay P763. DENNIS Z.70 which represents the unpaid purchase price of the printing paper bought by Integrated.70 while it also ordered Fil-Anchor to pay Integrated moral damages and compensatory damages of P790. However. Inc. On the contrary. on a maximum 90-day credit. LAFORTEZA. Philacor demanded compensation from Integrated for the delay and damages it suffered on account of petitioner’s non-compliance with what was agreed upon in their contract.324.101. COMPENSATIO MORAE . Integrated denied the material allegations of the complaint and by way of a counterclaim. respondents communicated with the petitioners that they intended to exercise their exclusive right to buy the parcel of land stipulated in the contract but which was not given due course by the petitioners unless there is delivery of the sum of money. ISSUES: Whether or not private respondent violated the order agreement. Whether or not private respondent is liable for petitioner’s breach of contract with Philacor.30 for the unrealized income of Integrated when Fil-Anchor failed to deliver the reams of papers it needed for the printing of books. it did not violate the order agreement. Both parties conceded that the order agreement gives rise to reciprocal obligations such that the obligation of one is dependent upon the obligation of the other. Fil-Anchor consequently delivered P766. In the case at bar.00. and it cannot favor or prejudice a third person. Where the ownership in the things has not passed. while the failure to comply with the second condition only gives the other party the option either to refuse to proceed with the sale or to waive the condition. Roberto declared the property not for sale for failure to comply with the contractual obligations. on January 20.00) to be payable as stipulated: P30. 1989. 1989. The petitioners fail to distinguish between a condition imposed upon the perfection of the contract and a condition imposed on the performance of an obligation. 1988. The condition was imposed only on the performance of the obligations contained therein. If the other party has promised that the condition should happen or be performed. 1989. Considering however that the title was eventually "reconstituted" and that the petitioners admit their ability to execute the extrajudicial settlement of their father’s estate. such first mentioned party may also treat the nonperformance of the condition as a breach of warranty. 1983. Michael Z.June 16. ISSUE: Whether or not the rescission of the agreement for failure by the private respondent to fulfill his obligations was validly done. 137552 333 SCRA 643 FACTS: On August 2. assisted by a lawyer. Petitioners’ contention that since the condition was not met. the failure of which is not considered a breach.000 as stipulated in the agreement. casual or serious. which the defendant received on the same date. Thus. No. There is nothing contained in the MOA from which it can reasonably be deduced that the parties intended to enter into a contract to sell. On November 20. but not Gonzalo. ownership of the thing sold passes to the vendee upon actual or constructive delivery thereof. RULING: The Supreme Court ruled in the negative. The Supreme Court did not subscribe to the petitioners’ view that the Memorandum Agreement was a contract to sell.. 1545. 2000 G. appointing both as her Attorney-in-fact authorizing them jointly to sell the subject house and lot property and sign any document for the settlement of the estate of the late Francisco Q. an action for specific performance was filed in court. The mere fact that the obligation of the respondent to pay the balance of the purchase price was made subject to the condition that the petitioners first deliver the reconstituted title of the house and lot does not . the respondent had a right to demand fulfillment of the petitioners’ obligation to deliver and transfer ownership of the house and lot. Dennis Laforteza also executed Special Power of Attorneys on different dates.000 upon issuance of the new certificate of title in the name of the late Francisco Q. it held that the parties contemplated a contract of sale. Likewise on the same day. The trial court ruled in favor of the defendant.000.000 upon signing the agreement and the remaining P600. Laforteza represented by Roberto and Gonzalo entered into a Memorandum of Agreement (Contract to Sell) with Alonzo Machuca over the subject property for the sum of Six Hundred Thirty Thousand Only (P630. and the reconstituted title. an appeal to the Supreme Court was made. such party may refuse to proceed with the contract or he may waive performance of the condition. the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the full payment of the price. Failure to comply with the first condition results in the failure of a contract. i. On September 18. was the one who affirmed said request. A deed of sale is absolute in nature although denominated a conditional sale in the absence of a stipulation reserving title in the petitioners until full payment of the purchase price. 1989. meaning. such payment being a positive suspensive condition." In the case at bar. When the petitioner-heirs appealed this to the Court of Appeals. likewise. there was already a perfected contract. but said heirs refused to accept said payment. 1545 of the Civil Code states: "Art. Laforteza. Laforteza executed a Special Power of Attorney in favor of Roberto and Gonzalo Jr. Both agency instruments contained a provision that in any document or paper to exercise authority granted. asked for an extension until November 15. Lea Zulueta-Laforteza executed a Special Power of Attorney in favor of defendants Roberto Z. Although the memorandum agreement was also denominated as a "Contract to Sell". granting the same authority. In such cases. Art. the signature of both attorneys-in-fact must be affixed. Laforteza and Gonzalo Z. but simply an event which prevented the obligation from acquiring any obligatory force. Jr.e. or any provision which would impose non-payment of the price as a condition for the contract’s entering into force. Roberto.R. Defendant insisted tender of payment but when the defendants refused to accept such. they no longer had an obligation to proceed with the sale of the house and lot is unconvincing. of which on October 18. There is clearly no express reservation of title made by the petitioners over the property. 1989. the decision was rendered against them. the defendant was able to pay P30. The issuance of the new certificate of title in the name of the late Francisco Laforteza and the execution of an extrajudicial settlement of his estate was not a condition which determined the perfection of the contract of sale.. the heirs of the late Francisco Q. On June 20. Where the obligation of either party to a contract of sale is subject to any condition which is not performed. Laforteza and upon execution of an extra-judicial settlement of the decedent’s estate with sale in favor of the plaintiff. So. one whereby the prospective seller would explicitly reserve the transfer of title to the prospective buyer. and the agreement rescinded by the plaintiff-heirs. the buyer may treat the fulfillment by the seller of his obligation to deliver the same as described and as warranted expressly or by implication in the contract of sale as a condition of the obligation of the buyer to perform his promise to accept and pay for the thing. In the exercise of the above authority. Laforteza. defendant informed the heirs that Roberto had the payment for the balance. defendants sent letter informing the defendant his obligation to pay the remaining balance to be due after thirty (30) days. 2. the Memorandum Agreement between the parties did not contain a clause expressly authorizing the automatic cancellation of the contract without court intervention in the event that the terms thereof were violated. INTERNATIONAL CORPORAL BANK VS. The bank demanded payment of the amount of P184. FACTS: Respondents Gueco Spouses obtained a loan form petitioner International Corporate Bank (now Union Bank of the Philippines) to obtain a car.000. the petitioner comes to the Supreme Court by way of certiorari.000. the RTC ruled in favor of the Spouses. 351 SCRA 516 REPUBLIC VS. Dr.make the contract a contract to sell for such condition is not inconsistent with a contract of sale. As a result of the non-payment of the reduced amount on that date. After several demand letters and meetings with bank representatives. which needs the judicial or notarial act for its rescission.00 but the car was not released because of his refusal to sign the JOINT Motion to Dismiss.00 after negotiations and recomputations.00. DOLO INCIDENTE – EFFECTS: 1. considering that the six-month period was merely an approximation of the time it would take to reconstitute the lost title and was not a condition imposed on the perfection of the contract and considering further that the delay in payment was only thirty days which was caused by the respondents justified but mistaken belief that an extension to pay was granted to him. 1995. On August 29. being an immovable property. The Spouses defaulted in the payment of the installments and consequently.00 which represents the unpaid balance for the car loan which was lowered to P154. Dr. GUECO. The November 20. In consideration thereof. 1989 letter of the petitioners informing the respondent of the automatic rescission of the agreement did not amount to a demand for rescission. COURT OF TAX APPEALS. Gueco further renegotiated for the reduction of the outstanding loan to P150.000. It is not disputed that the petitioners did not make a judicial or notarial demand for rescission. On August 28. 1995 a civil action for “Sum of Money with Prayer for a Writ of Replivin. It was also made five days after the respondent’s attempt to make the payment of the purchase price. The property in dispute. the Court agreed with the CA’s ruling that the delay of one month in payment was a mere casual breach that would not entitle the respondents to rescind the contract. Dr. This offer to pay prior to the demand for rescission is sufficient to defeat the petitioners’ right under article 1592 of the Civil Code. pointing out that there was a meeting of the minds between the petitioner and the respondents as to the reduction of the amount of indebtedness and the release of the car but said agreement did not include the signing of the Joint Motion to Dismiss as a condition sine qua non for the effectivity of the compromise. On appeal. 366 SCRA 516 Hence. the agreement was still in force inasmuch as the contract was not yet rescinded. 1995. A seller cannot unilaterally and extrajudicially rescind a contract of sale where there is no express stipulation authorizing him to extrajudicially rescind. INTERNATIONAL CORPORATE BANK VS. Gueco delivered a manager’s check in the amount of P150. RESCISSION of a contract will not be permitted for a slight or casual breach. GUECO 351 SCRA 516 Whether or not the Court of Appeals erred in holding that the petitioner return the subject car to the respondents.” On August 25. but only such substantial and fundamental breach as would defeat the very object of the parties in making the agreement. Gueco was served summons and was fetched by the sheriff and representative of the bank for a meeting in the bank premises. without making any provision for the issuance of the new . as it was not notarized. ISSUES: Whether or not there was no agreement with respect to the execution of the Joint Motion to Dismiss as a condition for the compromise agreement. when the respondent filed his complaint for specific performance. At any rate. Neither was there a judicial demand for the rescission thereof. the Court of Appeals affirmed in toto the lower court’s decision.000. the respondents initiated a civil action for damages which was dismissed for lack of merit. On appeal. Besides. the petitioner filed on August 7. the Spouses executed promissory notes which were payable in monthly installments and chattel mortgage over the car to serve as security for the notes. Thus. exemplary damages and attorney’s fees. the car was detained within the bank’s compound. is governed by Article 1592 of the NCC. Whether or not the respondents should be granted moral. 1995. the Gueco spouses have not alleged or shown that they or the bank which issued the manager’s check has suffered damage or loss by the delay or non-presentment. Inc. YES. could not be located in its given address and was thus suspected to be a fictitious firm.. who. Hence. or the willful omission.. In awarding the damages. THE COURT OF TAX APPEALS and AGFHA. Inc. Respondents are further ordered to pay the original obligation amounting to P150. Inc. and should not be paid. John Barlin. Inc. The draft decision was submitted to the Deputy Commissioner for clearance and approval. petitioner. Convinced that the evidence presented established the legal existence of GQ GARMENTS.. Knowing and intending the effects which naturally and necessarily arise from such act or omission. Inc. submitted to the MICP Law Division. 3. there was none.. requested for an amendment of the Inward Foreign Manifest so as to correct the name of the consignee from that of GQ GARMENTS. had no authority to waive the right over the subject shipment in favor of AGFHA. should suffer the loss occasioned of the fact that the check had become stale. disapproved the new draft decision and denied the release of the goods. the Collector of Customs came up with a draft decision ordering the lifting of the warrant of seizure and detention on the basis of its findings that GQ GARMENTS. Inc. The CIIS placed the subject shipment under hold on the ground that GQ GARMENTS. however.. The Office of the Commissioner of Customs. the respondents are not entitled to the damages awarded by the Court of Appeals. filed a joint motion for reconsideration. There was no fraud on the part of the petitioner bank in requiring the respondent to sign the joint motion to dismiss. the only findings was that the agreement between the parties was merely regarding the lowering of the price and not anent the Joint Motion to Dismiss. Inc. The Deputy Commissioner then rejected the draft decision of the Collector of Customs. the Court is of the opinion that there is no bad faith or negligence. Forfeiture proceedings under the Tariff and Customs Code were initiated. Petitioner has the burden of proof that the oral compromise entered into by the parties included the stipulation that the parties would joint file a motion to dismiss. the check involved is not an ordinary bill of exchange but a manager’s check which is drawn by the bank manager upon the bank itself.. Premises considered. a shipping agent. ratified the waiver of its president. there was no agreement with respect to the execution of the Joint Motion to Dismiss as a condition for the compromise agreement. and finding that a resolution passed by the Board of Directors of GQ GARMENTS. Inc.. Further. Inc. The MICP indorsed the document to the Customs Intelligence Investigation Services (CIIS). 139050 FACTS: FIL-JAPAN. Fraud is the deliberate intention to cause damage or prejudice. In the case at bar. Inc. the amended Inward Foreign Manifest which the latter. After hearing. when its shipment’s Inward Foreign Manifest stated that the bales of cloth were consigned to GQ GARMENTS. 2. represented by the COMMISSIONER OF CUSTOMS.manager’s/ cashier’s check by the respondents in favor of the petitioner in lieu of the original cashier’s check that already became stale. and AGFHA. No. FIL-JAPAN forwarded to AGFHA. VS. INCORPORATED.R. when in the findings of the Supreme Court.. Inc. It is valueless. In deference to the directive of the Commissioner. the Court of Appeals committed the error anent the 3 rd issue. its president. There is no doubt that the petitioner bank held on the check and refused to encash the same because of the controversy surrounding the signing of the joint motion to dismiss. In this case. The CIIS opposed the draft decision.. transmitted it to the CIIS for comment. Incorporated. the District Collector of Customs ordered . GQ GARMENTS. insisting that GQ GARMENTS. was a fictitious corporation and that even if it did exist. AGFHA. in turn. NO. due to its own negligence. Inc.. to that of AGFHA. A stale check is one which has not been presented for payment within a reasonable time after its issue. to be the consignee. while the Clean Report of Findings issued by the Societe Generale de Surveilance mention AGFHA. both the trial and appellate courts found out that there was fraud. afterwhich. in turn. Inc. thus. the decision of the Court of appeals affirming the Trial court’s decision is set aside. the Collector of Customs in another draft decision granted the joint motion. Respondents aver that the delivery of the manager’s check produced the effect of payment. Inc. 2000 G. The Court is not persuaded. Inc. Factual findings of the lower court and the appellate court found no evidence to acknowledge the contestation of the petitioner bank that there was indeed such an agreement. petitioner is to return the subject motor vehicle in good working condition. NO.’s motion for intervention contending that it is the lawful owner and actual consignee of the subject shipment was granted.. DOLO INCIDENTE – EFFECTS: REPUBLIC OF THE PHILIPPINES. petitioner was negligent in opting not to deposit or use said check. It is the voluntary execution of a wrongful act. in favor of AGFHA. Respondents contend that the petitioner should return the car or its value and that the latter. was not a fictitious corporation and that there was a valid waiver of rights over the bales of cloth by GQ GARMENTS.000 to the petitioner upon surrender or cancellation of the manager’s check in the latter’s possession. respondents Oct 23. RULING: 1. however. in fact. the herein respondents. the Commissioner of Customs then challenged before the Court of Appeals the decision of the tax court but was dismissed for lack of merit. Inc. which is the proximate cause of the victim’s death. therefore. 161 SCRA 334 YAMBAO VS. and (c) an intention on the part of the importer/consignee to evade the payment of the duties due. the Court of Tax Appeals granted the petition and ordered the release of the goods to AGFHA. the bus bumped Herminigildo Zuñiga...all touching on the importation or exportation of merchandise. BORJA. the petitioner vehemently denied the material allegations of the complaint. letter or paper. a pedestrian. Inc. Petition denied. Decision affirmed. instead of AGFHA. Suddenly. RULING: The requisites for the forfeiture of goods under the Tariff and Customs Code are: (a) the wrongful making by the owner. maintains that there has only been an inadvertent error and not an intentional wrongful declaration by the shipper to evade payment of any tax due. The Court of Appeals attributed the error in indicating GQ GARMENTS. Inc. he succumbed shortly thereafter. in the Inward Foreign Manifest as being the consignee of the subject shipment to the shipping agent. while avoiding an unidentified woman who was chasing him. 3. Zuñiga was rushed to the Quezon City General Hospital where he was given medical attention. YAMBAO VS. a registered importer. exporter or consignee of any declaration or affidavit. It is thus evident that petitioner did not exercise the diligence of a good . Finding merit in the plea of appellants. rather the events positively point to the existence of fraud. interposed an appeal to the Office of the Commissioner of Customs but was dismissed. amounting to intentional wrong-doing with the clear purpose of avoiding the tax. the bus owned by petitioner Cecilia Yambao was being driven by her driver.. ZUÑIGA. A complaint against petitioner and her driver for damages was filed at the Regional Trial Court of Malolos City. The appellate court ruled that the Bureau of Customs has failed to satisfy its burden of proving fraud on the part of the importer or consignee. The trial court rendered its decision holding petitioner and her driver liable for the untimely death of Zuñiga and to indemnify his legal heirs. she alleged that she was not liable for any damages because she exercised the proper diligence of a good father of a family both in the selection and supervision of her bus driver. invoice. Mere negligence is not equivalent to the fraud contemplated by law. Therefore.. was. Such was the force of the impact that the left side of the front windshield of the bus was cracked.the forfeiture of the shipment. AGFHA. Furthermore. Inc. Inc. which will not deprive the government of its right to collect the proper tax. importer.M. 4. Inc. 2. She tried to shift the blame upon the victim. 393 SCRA 89 NPC VS. It contends that it did not presume fraud. CA. The Court of Appeals affirmed the said decision of the RTC. one Ceferino G. theorizing that Herminigildo bumped into her bus. 18 SCRA 266 SMITH BELL DODWELL SHIPPING VS. It must be actual. It also noted the finding of the tax court that GQ GARMENTS. Court of Tax Appeals and the Court of Appeals are unanimous in concluding that no fraud has been committed by AGFHA. On the other hand. Inc. Fraud must be proved to justify forfeiture. affidavit. The BOC instituted the instant petition for review under Rule 45 of the Revised Rules of Court assailing the affirmance by the Court of Appeals of the tax court's decision. but due to the massive injuries sustained. It was Venturina’s reckless and imprudent driving of petitioner’s bus. 1992 at around 3:30 P. but her motion was denied for lack of merit. RULING: YES.. In her answer. AGFHA. The Collector of Customs. (b) the falsity of such declaration. CA.. Petitioner duly moved for reconsideration. What is here involved is an honest mistake. ISSUE: Whether or not the petitioner exercised the diligence of a good father of a family in the selection and supervision of her employees thus absolving her from any liability. letter or paper . in the importation of the bales of cloth. AGFHA. Inc. committed fraud in the importation of bales of cloth. Venturina along EDSA. 383 SCRA 341 ILUSORIO VS. NEGLIGENCE AS A QUESTION OF FACT 1. Whether a person is negligent or not is a question of fact. Inc. ISSUE: Whether or not AGFHA. or the wrongful making or delivery by the same person of any invoice. the forfeiture cannot be justified. not even directly attributable to private respondent. Petitioner asserts that all of these requisites are present in this case. filed a petition for review with the Court of Tax Appeals questioning the forfeiture of the bales of textile cloth. ZUÑIGA 418 SCRA 266 FACTS: On May 6. the Supreme Court find no cogent reason to overturn factual findings of the RTC and the Court of Appeals since such findings were supported by substantial evidences. The assailed Decision is AFFIRMED with the following MODIFICATIONS: petitioner is ordered to pay the heirs of the victim . 143008 June 10. While knowing that their vessel was carrying dangerous inflammable chemicals. After weeks of intensive care at the hospital. and 3. ran outside to check what happened. Again. Borja swam his way for one hour until he was rescued by the people living in the squatters’ area and sent to San Juan De Dios Hospital. However. causes damage to persons or property due to his own negligence. while M/T King Family was unloading chemicals unto two (2) barges owned by ITTC. Thus. he hurriedly jumped over board to save himself. Seeing the fire and fearing for his life. when an employee. fault or negligence of the defendant.father of a family in the selection and supervision of her employees. ISSUE: Whether or not the RTC and the Court of Appeals misapprehension of facts regarding the negligence committed. NEGLIGENCE AS A QUESTION OF FACT SMITH BELL DODWELL SHIPPING AGENCY CORPORATION VS. (3) exposure to the elements while floating in sea water for about three (3) hours. a sudden explosion occurred setting the vessels afire. The law governing petitioner’s liability. Upon hearing the explosion. On appeal. The vessel contained 750 metric tons of alkyl benzene and methyl methacrylate monomer. (4) homonymous hemianopsia or blurring of the right eye [which was of] possible toxic origin. The three elements of QUASI-DELICT are: 1. 1987. while performing his duties. The presumption juris tantum that there was negligence in the selection of her bus driver remains unrebutted. therefore. Despite the tremendous heat. D. The “diligence of a good father” means diligence in the selection and supervision of employees. Respondent Borja suffered the following damage: and injuries: (1) chemical burns of the face and arms. both denied liabilities and attributed to each other negligence. However. Thus. Negligence is a conduct that creates undue risk of harm to another. another explosion was heard. Nalgan instructed respondent Catalino Borja to board said vessel and perform his duties as inspector upon the vessel’s arrival until its departure. the connection of cause and effect between the fault or negligence of the defendant and the damages inflicted on the plaintiff. However. labored under a RULING: Petitioner avers that both lower courts labored under a misapprehension of the facts. Borja was a customs inspector of the Bureau of Customs. (2) inhalation of fumes from burning chemicals. he made demands against Smith Bell and ITTC for the damages caused by the explosion. CATALINO BORJA and INTERNATIONAL TO WAGE AND TRANSPORT CORPORATION G.R. 1987. either in the selection of the employee or in the supervision over him after the selection. Petitioner was. the Petition is partly granted. On the same day. After hearing. It is the failure to observe that degree of care. negligent. the water was likewise on fire due mainly to the spilled chemicals. No. the basis of the liability being the relationship of pater familias or on the employer’s own negligence. left occipital region with right sided headache and the blurring of vision of right eye. 1987. Smith Bell filed a written request with the Bureau of Customs for the attendance of the latter’s inspection team on vessel M/T King Family which was due to arrive at the port of Manila on September 24.alkyl benzene and methyl methacrylate monomer. 2002 383 SCRA 341 FACTS: On September 23. Hence this petition. 2. Borja. Having failed to rebut the legal presumption of negligence in the selection and supervision of her driver is responsible for damages. who was at that time inside the cabin preparing reports. whereby that other person suffers injury. the same ruling was also upheld. At that time. his attending physician diagnosed Borja was diagnosed to be permanently disabled due to the incident. Petitioner’s vessel was carrying chemical cargo -. It claims that the documents adduced in the RTC conclusively revealed that the explosion that caused the fire on M/T King Family had originated from the barge ITTC101. the trial court ruled in favor of respondent Borja and held petitioner liable for damages and loss of income. As a result of the fire and the explosion during the unloading of the chemicals from petitioner’s vessel. and (5) cerebral infract with neo-vascularization. precaution and vigilance that the circumstances justly demand. Wherefore. there arises the juris tantum presumption that the employer is negligent. its officers and crew failed to take all the necessary precautions to prevent an accident. At about 11 o’clock in the morning on September 24. All these elements were established in this case. Supervising Customs Inspector Manuel Ma. damages suffered by the plaintiff. as the employer of bus driver Venturina is Article 2180 of the Civil Code. 240 as loss of earning capacity. Thus. passbooks. moral damages in the amount of P100. would do. The record shows that on November 4. petitioner filed the instant case. Petitioner did not bother to check his statement of account until a business partner apprised him that he saw Eugenio use his credit cards. bank statements. 1967. labor. petitioner entrusted to his secretary. whereby the former undertook to furnish all tools. not the bank. Katherine Eugenio. No. the defendant corporation caused the opening of the spillway gates”. in a letter. 2002 393 SCRA 89 FACTS: Ramon Ilusorio is a prominent businessman.000. RULING: NEGLIGENCE AS A QUESTION OF FACT NATIONAL POWER CORPORATION VS. it appears that petitioner accorded his secretary unusual degree of trust and unrestricted access to his credit cards. and to construct the proposed 2 nd Ipo-Bicti Tunnel. Eugenio was able to encash and deposit to her personal account about seventeen checks drawn against the respondent bank. 139130 November 27. Bulacan. Inc. the petitioner failed to comply with this request.000 as attorney’s fees. The NBI then suggested that petitioner be asked to submit seven or more additional standard signatures. the water in the reservoir of the Angat Dam was rising perilously at the rate of sixty (60) centimeters per hour. Strong winds struck the project area. Negligence is the omission to do something which a reasonable man. COURT OF APPEALS G. Petitioner failed to examine his bank statements not because he was prevented by some cause in not doing so. no recovery could be had for damages. and to complete said works within eight hundred (800) calendar days from the date the Constructor receives the formal notice to proceed. and materials (not furnished by Owner). Intake and Outlet Structures. the petition is dismissed. and Appurtenant Structures. On appeal. To prevent an overflow of water from the dam. but because he did not pay sufficient attention to the matter. including custody and possession of cancelled checks and reconciliation of accounts. who was negligent. Respondent bank also lodged a complaint for estafa thru falsification against Eugenio on the basis of petitioner’s statement that his signatures in the checks were forged. plaintiff Engineering Construction. After evaluating the evidence on both sides. In view of Article 2179 of the New Civil Code. check books. Due to the heavy downpour. Petitioner immediately fired his secretary and filed a criminal case against her for estafa thru falsification. and heavy rains intermittently fell. being a successful bidder. As he was then running about 20 corporations. at Norzagaray. COURT OF APPEALS 161 SCRA 334 G. The appellate court sustained the findings of the trial court that the evidence preponderantly established the fact that due to the negligent manner with which the spillway gates of the Angat Dam were opened. was the Managing Director of Multinational Investment Bancorporation and the Chairman and/or President of several other corporations he was a depositor in good standing of respondent bank. Hence. however. R. Manila Bank also sought the expertise of the National Bureau Investigation in determining the genuineness of the signatures appearing on the checks. and was going out of the country a number of times. 1964. an extraordinary large volume of water rushed out of the gates. and Appurtenant Features. The Supreme Court held that it was the petitioner. or the doing of something which a prudent and reasonable man would do. ILUSORIO VS. the NBI informed the trial court that they could not conduct the desired examination since the standard specimens were not sufficient for purposes of rendering a definitive opinion. L-47379 May 16. the Court of Appeals affirmed the decision of the trial court. In addition. plus another P50. ISSUE: Whether or not the respondent bank was negligent in not determining the genuineness of the signatures of the petitioner on the checks.R. since the water level had reached the danger height of 212 meters above sea level. passing trough the defendant’s Angat Hydro-electric Project and Dam at Ipo. Bulacan.damages in the amount of P320. Norzagaray. and hit the installations and construction works of ECI at the Ipo . guided by those considerations which ordinarily regulate the conduct of human affairs. However. 1988 FACTS: On August 4. his credit cards and checkbook with blank checks. when the plaintiff’s own negligence was the immediate and proximate cause of his injury. No. equipment. NEGLIGENCE AS A QUESTION OF FACT Petitioner’s failure to examine his bank statements appears as the proximate cause of his own damage. In the present case. the trial court dismissed the case for lack of sufficient basis. the Manila Banking Corporation. Petitioner then requested the respondent bank to credit back and restore to its account the value of the checks which were wrongfully encashed but the respondent bank refused.. typhoon “Welming” hit Central Luzon. executed a contract in Manila with National Waterworks and Sewerage Authority (NAWASA). petitioners were notified. the mere existence of grounds for the loss of trust and confidence justify their dismissal. 323 SCRA 231 MUAJE-TUAZON vs. On the principle of respondeat superior or command responsibility alone. RULING: There is no denying that petitioners were managerial employees. 4. and discipline the employees in their branch. GAMMAD. they had the power to hire personnel and assign them tasks. MUAJE-TUAZON VS. Consequently. 511 S 521 RCPI VS. Additionally. Their bare. DECEMBER 27. Tandang Sora and Fairview branches cheated. assign or discipline employees. NATIVIDAD. Because of its success. lost or destroyed. as it was also undeniable that NPC knew of the coming typhoon at least four days before it actually struck. FAR EAST BANK. respondent had a second run of the contest from April 26 to July 4. Before the announcement of the third round winners. MCU Caloocan. Her daughter Grace immediately went to the Sorsogon Branch of RCPI whose services she engaged to send a telegram to her sister Zenaida. Thereafter. as long as the employer has a reasonable ground to believe that the managerial employee concerned is responsible for the purported misconduct. 5. 8. 481 S 384 VICTORY LINER VS. as managerial employees. JADER. 2000 BAYNE ADJUSTERS VS. WENPHIL. or the nature of his participation renders him unworthy of the trust and confidence demanded by his position. unsubstantiated and uncorroborated denial of any participation in the cheating does not prove their innocence nor disprove their alleged guilt. WENPHIL G. JANUARY 31. petitioners may be held liable for negligence in the performance of their managerial duties. VERCHEZ G. ISSUE: Whether or not NAPOCOR is exempt from liability because the lost or deterioration of ECI’s facilities was due to fortuitous event. petitioners were dismissed. No. 3. in the case of petitioners. Grace sent a letter to Zenaida. camp facilities and permanent structures and accessories were either washed away. the tape receipts presented by respondents showed that there were anomalies committed in the branches managed by the petitioners. National Labor Relations Commission. The Meycauayan branch won again. In Wendy’s “Biggie Size It! Crew Challenge" promotion contest. 2006 FACTS: Editha Hebron Verchez (Editha) was confined in the hospital due to an ailment. some employees declared in their affidavits that the cheating was actually the idea of the petitioners. Immediately thereafter. They recommended actions on employees to the head office. As three days after RCPI was engaged to send the telegram to Zenaida no response was received from her. of hearings and of their immediate suspension. unless petitioners can positively show that they were not involved. 164349. 1999. the managerial employee can be dismissed. NPC cannot escape liability because its negligence was the proximate cause of the loss and damage. SARMIENTO. management received reports that as early as the first round of the contest.R.Site with terrific impact as a result of which the latter’s stockpile of materials and supplies. branches managed by petitioners won first and second places. Their position requires a high degree of responsibility that necessarily includes unearthing of fraudulent and irregular activities. 357 S 618 UNIVERSITY OF THE EAST VS. FEB. respectively. 444 S 355 FGU VS. They executed management policies.Article 212 (m) of the Labor Code defines a managerial employee as one who is vested with powers or prerogatives to lay down and execute management policies and/or hire. 162447. in writing. 7. Petitioners were summoned to the main office regarding the reported anomaly. reprimanding her for not sending . VERCHEZ. 2006 FACTS: Petitioners Annabelle M. In the present case. discharge. recall. Decision affirmed. lay-off. transfer. Tuazon and Almer R. Petitioners denied there was cheating. The MCU Caloocan branch failed to make it among the winners. 2.R. CULPA CONTRACTUAL 1. CA. 386 S 312 LRTA VS. An internal investigation ensued. Petitions dismissed. And even though the typhoon was an act of God or what we may call force majeure. 6. Abing worked as branch managers of the Wendy's food chains. 397 S 75 RODZSSEN VS. CULPA CONTRACTUAL RCPI vs. ISSUE: Is the respondent guilty of illegal suspension and dismissal in the case at bench? RULING: It is clear from the CA”S ruling that the petitioner NPC was undoubtedly negligent because it opened the spillway gates of the Angat Dam only at the height of typhoon “Welming” when it knew very well that it was safer to have opened the same gradually and earlier. suspend. the Meycauayan. Pursuant to our ruling in Caoile v. this time thru JRS Delivery Service. 17. No. vs. Messages sent by cable or wireless means are usually more important and urgent than those which can wait for the mail. Zenaida. anchored. causing it to fall into a deep canal. RCPI claimed that delivery was not immediately effected due to the occurrence of circumstances which were beyond the control and foresight of RCPI. a corresponding right of relief. Bamban.m. the bus while running at a high speed fell on a ravine which resulted in the death of Marie Grace and physical injuries to other passengers. No. RCPI’s liability as an employer could of course be avoided if it could prove that it observed the diligence of a good father of a family to prevent damage. Sarmiento Trucking Corporation (GPS) undertook to deliver refrigerators aboard one of its Isuzu truck. In a contract of carriage. the presumption is that it was at fault or negligent. INC. For breach of contract then. there is no evidence to rebut the statutory presumption that the proximate cause of Marie Grace’s death was the negligence of petitioner. the petitioner claimed that the incident was purely accidental and that it has always exercised extraordinary diligence in its 50 years of operation. an insurer of the . respondent heirs of the deceased filed a complaint for damages arising from culpa contractual against petitioner. with due regard to all the circumstances. RULING: Petitioner was correctly found liable for breach of contract of carriage. ISSUE: Whether petitioner should be held liable for breach of contract of carriage. On her arrival at Sorsogon. prima facie. AUGUST 6. 2004 FACTS: G. CULPA CONTRACTUAL FGU INSURANCE CORP. Inc. the mere proof of the existence of the contract and the failure of its compliance justify. Cagayan from Manila. to the Central Luzon Appliances in Dagupan City. however. the court need not even make an express finding of fault or negligence on the part of the common carrier. In the instant case. however. failed to rebut this presumption. negligence. RCPI’s arguments fail.any financial aid. For it is its breach of contract upon which its liability is. as well as the basis for the award of moral damages. While the truck was traversing the north diversion road along McArthur highway in Barangay Anupol. In culpa contractual. 159636. it is presumed that the common carrier was at fault or was negligent when a passenger dies or is injured. using the utmost diligence of very cautious persons. GAMMAD G. it collided with an unidentified truck. 141910. Marie Grace Pagulayan-Gammad was on board an air-conditioned Victory Liner bus bound for Tuguegarao. NOVEMBER 25. In its answer. against the presence of urgency in the delivery of the telegram.R. RULING: Article 1170 of the Civil Code provides: Those who in the performance of their obligations are guilty of fraud. resulting in damage to the cargoes. the courts below correctly ruled that petitioner was guilty of breach of contract of carriage. from the plant site of Concepcion Industries. SARMIENTO TRUCKING CORPORATION G. On inquiry from RCPI why it took that long to deliver it. Immediately after she received Grace’s letter. or delay. it bears repeating.P. At about 3:00 a.P. Tarlac. It. This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence. 2002 CULPA CONTRACTUAL FACTS: VICTORY LINER. FGU Insurance Corporation (FGU). and those who in any manner contravene the tenor thereof. it should exercise due diligence to ascertain that messages are delivered to the persons at the given address and should provide a system whereby in cases of undelivered messages the sender is given notice of non-delivery. will not permit a party to be set free from liability for any kind of misperformance of the contractual undertaking or a contravention of the tenor thereof. On May 14. No. along with her husband left for Sorsogon. RCPI argues.R. Since RCPI breached its contract. Considering the public utility of RCPI’s business and its contractual obligation to transmit messages. vs. 1996. A common carrier is bound to carry its passengers safely as far as human care and foresight can provide. recognizing the obligatory force of contracts. driven by Lambert Eroles. are liable for damages. she disclaimed having received any telegram. ISSUE: Whether or not RCPI is negligent in the performance of its obligation. Hence. G. Unless the presumption is rebutted. RCPI is liable to Grace for damages.. The telegram was finally delivered to Zenaida 25 days later. The law. Respondents asserted that that the cause of damage was purely accidental. a corresponding right of relief. CULPA CONTRACTUAL LRTA vs. may not be held liable under the agreement. NAVIDAD G. for the reason that the negligence of its employee. FGU. The driver. A contract can only bind the parties who have entered into it or their successors who have assumed their personality or their juridical position. no showing that petitioner Rodolfo Roman himself is guilty of any culpable act or omission. Rodolfo Roman. Nicanor Navidad. VS. along with her children.shipment. Since the trucking company failed to heed the claim. operated by petitioner Rodolfo Roman. upon which the action of petitioner rests as being the subrogee of Concepcion Industries. the mere proof of the existence of the contract and the failure of its compliance justify. ISSUE: Whether or not GPS is liable for damages arising from negligence. Navidad was struck by the moving train. Respondent trucking corporation recognizes the existence of a contract of carriage between it and petitioner and admits that the cargoes it has assumed to deliver have been lost or damaged while in its custody. Inc. the obligation – in this case.gives rise to a presumption of lack of care and corresponding liability on the part of the contractual obligor the burden being on him to establish otherwise. GPS has failed to do so. 2001 357 SCRA 618 . was adduced to indicate how the fight started or who. in turn. 109087 May 9. or failure of compliance with. No evidence. Prudent. delivered the first blow or how Navidad later fell on the LRT tracks. is liable for damages in relation to the death of Navidad? RULING: The foundation of LRTA’s liability is the contract of carriage and its obligation to indemnify the victim arises from the breach of that contract by reason of its failure to exercise the high diligence required of the common carrier. the delivery of the goods in its custody to the place of destination . as well as perhaps the surviving spouse and heirs of the late Nicanor Navidad. RODZSSEN SUPPLY CO. similarly. an LRT train. then drunk. INC. not being a party to the contract of carriage between petitioner and defendant. While Navidad was standing on the platform near the LRT tracks. In either case. prima facie.. Petitioner’s civil action against the driver can only be based on culpa aquiliana. the value of the covered cargoes. without concrete proof of his negligence or fault. The widow of Nicanor. denied liability and averred that it had exercised due diligence in the selection and supervision of its security guards. however. CULPA CONTRACTUAL Junelito Escartin. FGU filed a complaint for damages and breach of contract of carriage against GPS and its driver Lambert Eroles. A misunderstanding or an altercation between the two apparently ensued that led to a fist fight. he must also be absolved from liability. a default on. At the exact moment that Navidad fell. sought reimbursement of the amount it had paid to the latter from GPS. and he was killed instantaneously. was coming in. Escartin. LRTA and Roman filed a counterclaim against Navidad and a cross-claim against Escartin and Prudent. There being. FAR EAST BANK & TRUST CO. a carrier may choose to hire its own employees or avail itself of the services of an outsider or an independent firm to undertake the task. No. unlike culpa contractual. RULING: In culpa contractual. which. the common carrier is not relieved of its responsibilities under the contract of carriage. filed a complaint for damages against Junelito Escartin. the security guard assigned to the area approached Navidad. the LRTA. in the evening. In the discharge of its commitment to ensure the safety of passengers.R. Inc. 2003 FACTS: On 14 October 1993. 145804. ISSUE: Who. Inc. the Metro Transit Organization. entered the EDSA LRT station. has not been duly proven. between the two. and Prudent for the death of her husband. paid to Concepcion Industries. would require the claimant for damages to prove negligence or fault on the part of the defendant. may not himself be ordered to pay petitioner. if any. Respondent driver. GR No. being the subrogee of the rights and interests of Concepcion Industries. in its answer. (Metro Transit). Inc.. Regrettably for LRTA. In such a situation. this Court is concluded by the factual finding of the Court of Appeals that “there is nothing to link Prudent to the death of Navidad. FEBRUARY 6.. 1988 to September 30. In the invitation for graduation the name of the plaintiff appeared as one of the candidates. without verifying the status of ownership or possession of the loaders. serious anxiety. In the first semester of his last year (School year 1987-1988). wounded feelings and sleepless nights when he was not able to take the 1988 bar examinations arising from the latter's negligence.FACTS: Petitioner Rodzssen Supply opened a letter of credit with respondent Far East Bank for the payment of 5 loaders bought by petitioner from Ekman and Co. He enrolled for the second semester as fourth year law student and on February 1. He took a leave of absence without pay from his job from April 20. Having learned of the deficiency. Their rights and obligations may then be determined equally under the law proscribing the unjust enrichment. By acknowledging receipt of the loaders. He tendered a blow-out that evening. this petition for review. The bank paid the two remaining loaders five months after the expiration of the credit on March 1980. petitioner impliedly accepted its obligation to pay the respondent bank even when the bank paid for the delivery by Ekman after the expiration of the letter of credit. attorney's fees. 2000 Feb 17 G. Def. since such ceremony is the educational institution's way of announcing to the whole world that the students included in the list of those who will be conferred a degree during the baccalaureate . he failed to take the regular final examination in Practice Court I for which he was given an incomplete grade. RULING: It is the contractual obligation of the school to timely inform and furnish sufficient notice and information to each and every student as to whether he or she had already complied with all the requirements for the conferment of a degree or whether they would be included among those who will graduate.000 to Ekman within the validity of the letter of credit. respondent sued petitioner for damages alleging that he suffered moral shock. Practice Court I . 1988.B) as of Second Semester (1987-1988) with the following annotation: "JADER ROMEO A. 1979. Although commencement exercises are but a formal ceremony. At the foot of the list of the names of the candidates there appeared however the following annotation: This is a tentative list. He prayed for an award of moral and exemplary damages. CULPA CONTRACTUAL UNIVERSITY OF THE EAST. Petitioner refused to pay the P76. The letter of credit had a validity of 30 days to expire February 15. Culture and Sports. ROMEO A. He took the examination on March 28. When both parties are equally negligent in the performance of their obligations under a contract. He thereafter prepared himself for the bar examination. ISSUE: Whether or not respondent can claim damages from petitioner school. The plaintiff attended the investiture ceremonies during the program of which he went up the stage when his name was called.000 for the two loaders since the bank paid for them beyond the expiration of the letter of credit. JADER. No.x-1-87-88. Professor Carlos Ortega submitted his grade.. 1-87-88. he dropped his review class and was not able to take the bar examination. besmirched reputation. It was a grade of five (5). And there were pictures taken too during the blow-out. and costs of suit. The plaintiff's name appeared in the Tentative List of Candidates for graduation for the Degree of Bachelor of Laws (LL. While respondent bank was negligent in paying the P76. 1988 he filed an application for the removal of the incomplete grade given him by Professor Carlos Ortega which was approved by Dean Celedonio Tiongson after payment of the required fee. the fault of one cancels the negligent of the other. Conflict of Laws . 1988 and enrolled at the pre-bar review class in Far Eastern University. VS. petitioner voluntarily accepted the late delivery of the equipment and used it for 3 years before respondent demanded payment. On May 30.R. 132344 FACTS: Plaintiff was enrolled in the defendants' College of Law from 1984 up to 1988. C-1 to submit transcript with S. Both the RTC and the CA ruled for the respondent. unrealized income.Inc. mental anguish. it nonetheless is not an ordinary occasion. Degrees will be conferred upon these candidates who satisfactorily complete requirements as stated in the University Bulletin and as approved of the Department of Education. Three of the loaders were delivered to the petitioner and was paid by respondent.O. ISSUE: Is the petitioner liable to pay respondent bank when the bank paid Ekman only after 5 months beyond the expiration of the letter of credit? RULING: Yes. 1988. Thus. 1979 but was subsequently extended to October 16. The two remaining loaders were delivered to the petitioner belatedly but were still accepted by petitioner on the ground that it was bound to do so under the trust receipt arrangement with respondent bank. Consequently. ceremony have satisfied all the requirements for such degree. more specifically the principle of good dealings enshrined in Articles 19 and 20 of the Civil Code.649 MT. Consequently. is not only imputable to the professor but is an act of the school. 3. It is insured with private respondent Insurance Company of North America. regardless of their status or position outside of the university. which was lost.53. Although the cessation of the pumping operation in this case was not voluntarily requested by the pumping operation in this case was not voluntarily requested by the pumping operation in this case was not voluntarily requested by the consignee. Fontanilla tried to inform bargemen and surveyor about the agreement but he could not find them so he left the premises. consignee and Claimsmen Adjustment Company attended. CULPA CONTRACTUAL CULPA ACQUILIANA 1. 2003 PCIB VS.88. Consignee asked petitioner to send surveyor to conduct tank sounding. The conscious indifference of a person to the rights or welfare of the person/persons who may be affected by his act or omission can support a claim for damages. Nevertheless. not a liquid bulk surveyor. and the supervision of faculty and student services. 609. the pumping was interrupted for several times due to mechanical problems with the pump. INC. Educational institutions are duty-bound to inform the students of their academic status and not wait for the latter to inquire from the former. CA. the insurance company instituted action for collection of money as subrogee of the consignee after failure to extra judicially settles the manner with Bayne Adjusters. RULING: Yes. it was agreed that operation would resume the following day at 1030 hours. 2002 . The compromise quantity of the alkyl benzene. Thus. VS. The insurance company agreed to pay consignee the net amount of P84. OCT. CULPA CONTRACTUAL BAYNE ADJUSTERS AND SURVEYORS. A conference transpired which the petitioner. The following morning. Colgate Palmolive Philippines imported alkyl benzene from Japan valued at US $255. for instance by not promptly submitting a student's grade. Consignee filed a claim with the insurance company. 2. COURT OF APPEALS AND INSURANCE COMPANY OF NORTH AMERICA 323 SCRA 231 FACTS: On May 1987. but was due to mechanical problems with the pump. He must see to it that his own professors and teachers. C & A CONSORTIUM. the petitioner’s surveyors left the premises without leaving any instruction with the barge foremen what to do in event that the pump becomes operational again. When the bargemen arrived. must comply with the rules set by the latter. The University should have practiced what it inculcates in its students. CA. No other surveyor was left in the premises and the assigned surveyor did not seal the valves to the tank to avoid unsupervised pumping of the cargo. being his employer. The Supreme Court did not find that the trial court erred in holding the petitioner liable because of its failure to exercise due diligence which is governed by the Standard Operation Procedure in Handling Liquid Bulk Survey. a cargo surveyor. JULY 4. ISSUE: Whether or not the petitioner is liable for the loss of a certain amount of alkyl benzene. The negligence of the obligor in the performance of the obligation renders him liable for damages for the resulting loss suffered by the obligee. the pumping operation commenced at 2020 hours of June 27. they found that the valves of the tank are open and resumed pumping operation in the absence of any instruction from the surveyor. was 67. the petitioner sent Armando Fontilla. undetermined amount of alkyl benzene was lost due to overflow. DELSAN TRANSPORT VS. The petition was dismissed. 1987. the school has the obligation to promptly inform the student of any problem involving the latter's grades and performance and also most importantly. 1. 350 SCRA 446 SMC VS. of the procedures for remedying the same. there is greater reason to comply with the SOP. Prior or subsequent to the ceremony. Both the trial and appellate court rendered a decision adverse to the petitioner for its failure to comply Standard Operating Procedure for Handling Liquid Bulk Cargo. When the cargo arrived.802. The college dean is the senior officer responsible for the operation of an academic program. The petitioner assigned surveyor disregarded SOP and left the pump site without leaving any instruction or directive with the barge pump operators. HEIRS OF OUANA VS. Then after. When the pump broke down once again at about 1300 hours. The negligent act of a professor who fails to observe the rules of the school. Petitioner was contracted by the consignee to supervise the proper handling and discharge of the cargo from the chemical tanker to the receiving barge until the cargo is pumped into the consignee’s shore tank. enforcement of rules and regulations. ISSUE: Whether or not petitioner is solidarily liable under Article 2180 of the Civil Code for the quasi-delict committed by Capt. respondent G. and CITIBANK. he did nothing. Capt. At around 12:00 midnight of October 20. COURT OF APPEALS and FORD PHILIPPINES.. it was not very cloudy and there was no weather disturbance yet. At 10:00 a. VS. INC. he did not transfer as soon as the sun rose because. 25017. No. but when the engine was re-started and the ship was maneuvered full astern. it absolved petitioner of liability because the latter had no opportunity to adequately weigh the best solution to a threatening situation. RULING: The Court of Appeals was correct in holding that Capt. the decision of the trial court was reversed and set aside. 1994. when he decided to seek shelter at the North Harbor. At approximately 8:35 in the morning of October 21. which is an act of God. 2003 FACTS: Respondent C & A Construction. Jusep tried to seek shelter at the North Harbor but could not enter the area because it was already congested. which were embezzled allegedly by an organized syndicate.m.R. he could have had greater chances of finding a space at the North Harbor considering that the Navotas Port where they docked was very near North Harbor. Inc. Jusep guilty of negligence in deciding to transfer the vessel to the North Harbor only at 8:35 a. DELSAN TRANSPORT LINES. Capt. Applying the “emergency rule”. 1995 Decision of the Court of Appeals in CA-G. 1994 and thus held petitioner liable for damages.. N. 1994. Jusep showed an inexcusable lack of care and caution which an ordinary prudent person would have observed in the same situation.m. the waves were already reaching 8 to 10 feet high. petitioner. The original actions a quo were instituted by Ford Philippines to recover from the drawee bank. CULPA ACQUILIANA PHILIPPINE COMMERCIAL INTERNATIONAL BANK (formerly INSULAR BANK OF ASIA AND AMERICA). INC. Capt. it hit the deflector wall constructed by respondent. At that time. was engaged by the National Housing Authority (NHA) to construct a deflector wall at the Vitas Reclamation Area in Vitas. Jusep decided to drop anchor at the vicinity of Vitas mouth. Tondo. Capt. To avoid collision. entitled Ford Philippines. Jusep ordered a full stop of the vessel. Had he moved the vessel earlier. the value of several checks payable to the Commissioner of Internal Revenue. On October 9. Jusep ordered his crew to go full ahead to counter the wind which was dragging the ship towards the Napocor power barge. Jusep. anchored at the Navotas Fish Port for the purpose of installing a cargo pump and clearing the cargo oil tank. He cannot claim that he waited for the sun to rise instead of moving the vessel at midnight immediately after receiving the report because of the difficulty of traveling at night. The finding of negligence cannot be rebutted upon proof that the ship could not have sought refuge at the North Harbor even if the transfer was done earlier. Manila. Captain Demetrio T. complacently waited for the lapse of more than 8 hours thinking that the typhoon might change direction. Inc.R. is way past sunrise. 1994.A. It further held that even if the maneuver chosen by petitioner was a wrong move.. 1994. notwithstanding. CV No. 1994. Nos. 4 miles away from a Napocor power barge. 121413 and 121479 are twin petitions for review of the March 27. which unfortunately was already congested. 156034 October 1. M/V Delsan Express. (Citibank) and collecting bank. Jusep of M/V Delsan Express received a report from his radio head operator in Japan that a typhoon was going to hit Manila in about eight (8) hours.. a ship owned and operated by petitioner Delsan Transport Lines. . Jusep. it cannot be held liable as the cause of the damage sustained by respondent was typhoon “Katring”. The hour of 8:35 a. but the failure to take immediate and appropriate action under the circumstances..deciding to transfer the vessel only at 8:35 in the morning of October 21. When he ignored the weather report notwithstanding reasonable foresight of harm. INC. Furthermore. of October 21. The project was completed in 1994 but it was not formally turned over to NHA. despite knowledge that the typhoon was to hit Manila in 8 hours. G. On appeal to the Court of Appeals. Philippine Commercial International Bank (PCIBank). He succeeded in avoiding the power barge. N. C & A CONSTRUCTION. Jusep was negligent in As early as 12:00 midnight of October 20. This. It found Capt. Capt. The trial court ruled that petitioner was not guilty of negligence because it had taken all the necessary precautions to avoid the accident. respondents 2001 Jan 29 350 SCRA 446 FACTS: The consolidated petitions herein involve several fraudulently negotiated checks. The instant petition is denied. he received a report from his radio head operator in Japan that a typhoon was going to hit Manila after 8 hours. Even if the latter was already congested. VS. according to him.R. CITIBANK.A. until 8:35 in the morning of October 21.m. he would still have time to seek refuge in other ports. petitioner. 1994. Inc. Capt. It is not the speculative success or failure of a decision that determines the existence of negligence in the present case. The fact that the drawee bank did not discover the irregularity seasonably.Time and again. The latter may recover from the holder the money paid on the check.A. and Insular Bank of Asia and America (now Philippine Commercial International Bank). 10597 and 16508 would have been discovered in time. a bank which cashes a check drawn upon another bank. the Court has stressed that banking business is so impressed with public interest where the trust and confidence of the public in general is of paramount importance such that the appropriate standard of diligence must be very high.10 as damages for the misapplied proceeds of the plaintiff’s Citibank Check Numbers SN-10597 and 16508.R. petitioner Ford Philippines assails the October 15. No. one who encashed a check which had been forged or diverted and in turn received payment thereon from the drawee. . And if an officer or employee of a bank. always having in mind the fiduciary nature of their relationship. even though no benefit may accrue to the bank therefrom. In G. Citibank failed to establish that its payment of Ford’s checks were made in due course and legally in order." affirming in toto the judgment of the trial court holding the defendant drawee bank. nor will it be permitted to shirk its responsibility for such frauds. without requiring proof as to the identity of persons presenting it.298. the Court held that banking business requires that the one who first cashes and negotiates the check must take some precautions to learn whether or not it is genuine. Citibank failed to notice and verify the absence of the clearing stamps. For the general rule is that a bank is liable for the fraudulent acts or representations of an officer or agent acting within the course and apparent scope of his employment or authority. SN04867.. Remberto Castro. SN 10597 and 16508 do not bear any initials. Citibank. invoking the doctrine of comparative negligence. N. which is to ensure that the amount of the checks should be paid only to its designated payee. he should not be permitted to retain the proceeds of the check from the drawee whose sole fault was that it did not discover the forgery or the defect in the title of the person negotiating the instrument before paying the check. ISSUE: Whether or not the petitioner Ford has the right to recover from the collecting bank (PCIBank) and the drawee bank (Citibank) the value of the checks intended as payment to the Commissioner of Internal Revenue. the bank is under obligation to treat the accounts of its depositors with meticulous care. solely liable to pay the amount of P12. if not the highest. Citibank. For this reason. Citibank should have scrutinized Citibank Check Numbers SN 10597 and 16508 before paying the amount of the proceeds thereof to the collecting bank of the BIR. 128604. Thus. SN-04867. received Citibank Check Numbers SN 10597 and 16508. One thing is clear from the record: the clearing stamps at the back of Citibank Check Nos. SN 10597 and 16508. Castro. in his official capacity. The syndicate tampered with the checks and succeeded in replacing the worthless checks and the eventual encashment of Citibank Check Nos. Thus. In G. and his co-conspirator Assistant Manager apparently performed their activities using facilities in their official capacity or authority but for their personal and private gain or benefit. N. 1997 Resolution in CA-G. to pay the amount of Citibank Check No.R. 121413 and 121479. 128604. responsibility for negligence does not lie on PCIBank’s shoulders alone.A. who helped Castro open a Checking account of a fictitious person named "Reynaldo Reyes. the switching of the worthless checks to Citibank Check Nos. For this reason. 28430 entitled "Ford Philippines. N.163. Had this been duly examined. and the August 8. 1995 Resolution ordering the collecting bank. 1996 Decision of the Court of Appeals and its March 5. satisfied itself of the authenticity of the negotiation of the checks. degree of diligence. RULING: In G. the Court is of the view that both PCIBank and Citibank failed in their respective obligations and both were negligent in the selection and supervision of their employees resulting in the encashment of Citibank Check Nos. cannot hold the proceeds against the drawee when the proceeds of the checks were afterwards diverted to the hands of a third party." Castro deposited a worthless Bank of America Check in exactly the same amount of Ford checks. He passed the checks to a co-conspirator.R. the Court is constrained to hold them equally liable for the loss of the proceeds of said checks issued by Ford in favor of the CIR. constitutes negligence in carrying out the bank’s duty to its depositors. the bank is liable for his misappropriation of such sum. Thus.vs. receives money to satisfy an evidence of indebtedness lodged with his bank for collection. Citibank. the Court concludes that PCIBank is liable in the amount corresponding to the proceeds of Citibank Check No. A bank holding out its officers and agents as worthy of confidence will not be permitted to profit by the frauds these officers or agents were enabled to perpetrate in the apparent course of their employment. vs. The evidence on record shows that Citibank as drawee bank was likewise negligent in the performance of its duties. in our view. is guilty of negligence which proximately contributed to the success of the fraud practiced on the drawee bank. No. Nos. In such cases the drawee bank has a right to believe that the cashing bank (or the collecting bank) had. No. the pro-manager of San Andres Branch of PCIBank. or making inquiries with regard to them. an Assistant Manager of PCIBank’s Meralco Branch. And if the one cashing the check through indifference or other circumstance assists the forger in committing the fraud. SN 10597 and 16508.R. and Philippine Commercial International Bank. The PCIBank Pro-manager. by the usual proper investigation. Philippine Commercial International Bank. The point is that as a business affected with public interest and because of the nature of its functions. Inc. But in this case. Having established that the collecting bank’s negligence is the proximate cause of the loss. Citibank had indeed failed to perform what was incumbent upon it.A. warrants that the vessel is seaworthy and that there shall be no employer-employee relations between the owner and/or its vessel’s crew on one hand and the charterer on the other. 25017. care and trustworthiness expected of their employees and officials is far greater than those of ordinary clerks and employees.163. 1990. and shall be borne. P6.. of November 13. and JULIUS OUANO. Moreno again contacted Inguito at 4:00 p. damage or loss that may be attributable to the crew. 1990. only five survived. of November 13. of November 12. SMC argued that the proximate cause of the sinking was Ouano’s breach of his obligation to provide SMC with a seaworthy vessel duly manned by competent crew. are affirmed. Inguito. the owner shall be responsible to the charterer for damages and losses arising from the incompetence and/or negligence of. At 2:30 a.05.114.rn. the owner. At 4:00 a. Julius Ouano.m. CULPA ACQUILIANA SAN MIGUEL CORPORATION. which had complete control and disposal of the vessel as charterer and which issued the sailing order for its departure despite being forewarned of the impending typhoon. control and supervision of the owner.A bank’s liability as obligor is not merely vicarious but primary. On November 11. Still. However. wherein the defense of exercise of due diligence in the selection and supervision of its employees is of no moment. Banks are expected to exercise the highest degree of diligence in the selection and supervision of their employees. Thus. HEIRS OF SABINIANO INGUITO. which shall be paid together with six percent (6%) interest thereon to Ford Philippines Inc.R.m. Inguito called Moreno over the radio and requested him to contact the son of Julius Ouano because they needed a helicopter to rescue them. and each bank is ORDERED to pay Ford Philippines Inc.746. petitioner. Inguito replied that they will proceed since the typhoon was far away from them. declaring defendantappellants SMC and Julian C. The crew of the vessel shall continue to be under the employ. from the date the complaint was filed until full payment of said amount. among others. At 11:40 p. the captain refused to heed his advice. SMC Radio Operator Moreno contacted Inguito through the radio and advised him to take shelter. the owner further covenants to hold the charterer free from all claims and liabilities arising out of the acts of the crew and the condition of the vessel. including loss of the vessel used shall continue to be the responsibility of. the Decision and Resolution of the Court of Appeals in CA-G. of J.649. Moreno made a series of calls to the M/V Doña Roberta but he failed to get in touch with anyone in the vessel. filed a Marine Protest. Consequently. CV No.m. Under the terms of the agreement.m.298. PCIBank. respondents 2002 Jul 4 G. No. in lieu of the captain who perished in the sea tragedy. 28430 are MODIFIED as follows: PCIBank and Citibank are adjudged liable for and must share the loss. the M/V Doña Roberta sank.41.10) on a fifty-fifty ratio. The trial court ruled that the proximate cause of the loss of the M/V Doña Roberta was attributable to SMC and was ordered and sentenced to pay to the heirs of the deceased crew. SMC interposed counterclaims against Ouano for the value of the cargo lost in the sea tragedy. The vessel left Mandaue City at 6:00 a. No. SMC issued sailing orders to the Master of the MN Doña Roberta. with six percent (6%) interest thereon. Thus the Decision and Resolution of the Court of Appeals in CA-G. SMC chartered the M/V Doña Roberta for a period of two years for the purpose of transporting SMC’s beverage products from its Mandaue City plant to various points in Visayas and Mindanao. SN 04867 in the amount P4. that the Ouano. RULING: . On November 24.R. By the very nature of their work the degree of responsibility.m.R. except to the heirs of Capt. and reiterated the advice that it will be difficult to take shelter after passing Balicasag Island because they were approaching an open sea. and that the winds were in their favor. Banks handle daily transactions involving millions of pesos. typhoon Ruping was spotted. At 1:15 a.. ISSUE: Whether or not the finding of the appellate court was in order. Ouano jointly and severally liable to plaintiffs-appellees. and/or the failure to observe the required extraordinary diligence by the crew.. of the ill-fated M/V Doña Roberta filed a complaint for tort against SMC and Julius Ouano before the RTC.m.m. Out of the 25 officers and crew on board the vessel. The heirs of the deceased captain and crew. At 7:00 a. from the date when the original complaint was filed until said amount is fully paid. as well as the survivors. The CA modified the decision appealed from. The captain responded that they can manage. The TCPA provided. 1990. At 2:00 p. Captain Inguito. (concerning the proceeds of Citibank Check Numbers SN 10597 and 16508 totalling P12. 141716 FACTS: SMC entered into a Time Charter Party Agreement (TCPA) with Julius Ouano. is declared solely responsible for the loss of the proceeds of Citibank Check No. he prayed that SMC indemnify him for the cost of the vessel and the unrealized rentals and earnings thereof. by the owner. VS. Ouano Marine Services. Julius Ouano alleged that the proximate cause of the loss of the vessel and its officers and crew was the fault and negligence of SMC. Moreno again communicated with Inguito and advised him to take shelter.081. Inguito obtained the necessary sailing clearance from the Philippine Coast Guard. but the vessel cancelled its voyage due to typhoon. MERCURY DRUG VS. the charterer. zealously contacted and advised Capt. 22 JUNE 2007 2. SPOUSES HUANG. The evidence does not show that SMC or its employees were amiss in their duties.S. These two vehicles figured in a road accident.Under the terms of the TCPA between the parties. Likewise. The proximate cause of the sinking of the vessel was the gross failure of the captain of the vessel to observe due care and to heed SMC’s advice to take shelter. The contention that it was the issuance of the sailing order by SMC which was the proximate cause of the sinking is untenable.O. 2007 FACTS: Petitioner Mercury Drug is the registered owner of a six-wheeler 1990 Mitsubishi Truck. The Court of Appeals affirmed the said decision. TUAZON. Considering that the charter was a contract of affreightment. MENDOZA VS. The fact that there was an approaching typhoon is of no moment. he should have taken shelter in order to safeguard the vessel and its crew. it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. SMC issued a sailing order to the captain of the M/V Doña Roberta. HUANG GR No. the shipowner had the clear duty to ensure the safe carriage and arrival of goods transported on board its vessels. It has in its employ petitioner Rolando Del Rosario as driver. before typhoon "Ruping" was first spotted at 4:00 a. SMC’s Radio Operator Moreno.278. 172122 June 22. He failed to present proof that he exercised the due diligence of a bonus paterfamilias in the selection and supervision of the captain of the M/V Doña Roberta. He was fully apprised of typhoon "Ruping" and its strength. who was tasked to monitor every shipment of its cargo. Ouano is vicariously liable for the negligent acts of his employee. Hence. Chief Engineer of Doña Roberta. head. On the other hand. 1990. CEREZO VS. Captain Sabiniano Inguito was able to contact the radio operator of SMC. petitioner Del Rosario only had a Traffic Violation Receipt. in the total amount of P10. he is vicariously liable for the loss of lives and property occasioned by the lack of care and negligence of his employee. Ouano miserably failed to overcome the presumption of his negligence. SMC is not liable for the losses. 1990. SMC. unless it be shown that the same was due to its fault or negligence.542. Consequently. Solidary vs. who should also indemnify SMC for the cost of the lost cargo. A driver’s license had been confiscated because he had been previously apprehended for reckless driving. This presumption may be overcome only by satisfactorily showing that the employer exercised the care and the diligence of a good father of a family in the selection and the supervision of its employee. More specifically. Respondent’s fault petitioner Del Rosario for committing gross negligence and reckless imprudence while driving. owners and managers are responsible for damages caused by the negligence of a servant or an employee. 8 JUNE 2007 3. He is paralyzed for life from his chest down and requires continuous medical and rehabilitation treatment.m. of November 12. Independent Liability of Employer and/or Employee 1. testified that the ship sank at 2:30 in the early morning of November 13th. if there . ISSUE: Whether or not petitioner Mercury Drug is liable for the negligence of its employee. Respondent Stephen Huang sustained massive injuries to his spinal cord. from the time the vessel left the port of Mandaue at six o’clock in the morning. should be free from liability for any loss or damage sustained during the voyage. except Captain Sabiniano Inguito. message. the master or employer is presumed to be negligent either in the selection or in the supervision of that employee. It appears that on one previous occasion. RULING: Article 2176 and 2180 of the Civil Code provide: “Whoever by act or omission causes damage to another. Ouano should answer for the loss of lives and damages suffered by the heirs of the officers and crew who perished on board the M/V Doña Roberta. For a vessel to be seaworthy. Respondent spouses Richard and Carmen Huang are the parents of respondent Stephen Huang and own the red 1991 Toyota Corolla. At the time of the accident. The award of damages granted by the CA is affirmed only against Ouano. Inguito to take shelter from typhoon Ruping. Capt. Neither Ouano nor his son was available during the entire time that the vessel set out and encountered foul weather. it appears from the records that SMC issued the sailing order on November 11. The trial court found Mercury Drug and Del Rosario jointly and severally liable to pay respondents.40. Inguito. Rico Ouano tried to communicate with the captain only after receiving the S. Such fault or negligence. Under Articles 2176 and 2180 of the Civil Code. 426 S 167 MERCURY DRUG CORPORATION VS. is obliged to pay for the damages done. SORIANO. and petitioner Mercury Drug for failing to exercise the diligence of a good father of a family in the selection and supervision of its driver. Ouano expressly warranted in the TCPA that his vessel was seaworthy. face and lung. Gilbert Gonsaga. In contrast to the care exercised by Moreno. there being fault or negligence. Due diligence dictated that at any time before the vessel was in distress. asked Macasasa to bring Soriano to the hospital. 141538 March 23. But if his negligence was only contributory. Petitioner Mendoza contends that she was not liable since as owner of the vehicle. It observed that Soriano’s own negligence did not preclude recovery for damages from Macasasa’s negligence. 20% reduction of the amount of the damages awarded was awarded to petitioner. while crossing Commonwealth Avenue near Luzon Avenue. Cerezo’s employee. It further held that since petitioner failed to present evidenced to the contrary and conformably with Article 2180 of the Civil Code. and bus driver Danilo A. is called a quasi-delict and is governed by the provisions of this Chapter. Solidary vs. without any alternate. In this case. but the first flee. while the vehicle stopped some 25 meters from the point of impact. Article 2179 states that “when the plaintiff’s own negligence was the immediate and proximate cause of his injury. under Article 2180. was hit by a speeding Tamaraw FX driven by Lomer Macasasa. However. 164012 June 8. It is not conditioned on a prior recourse against the negligent employee. the plaintiff may recover damages. After considering Tuazon’s testimonial and documentary evidence. With this. The trial court made no pronouncement on Foronda’s liability because there was no service of summons on him. Cerezo solely liable for the damages sustained by Tuazon arising from the negligence of Mrs. Respondent’s wife and daughter filed a complaint for damages against Macasasa and petitioner Flordeliza Mendoza. one of Soriano’s companions. reversed the assailed decision of the lower court. her husband Attorney Juan Cerezo. but also for those of persons for whom one is responsible. or a prior showing of insolvency of such employee. The Court of Appeals. Soriano was thrown five meters away. Under Article 2185 of the Civil Code. a person driving a motor vehicle is presumed negligent if at the time of the mishap. It is also joint and solidary with the employee. the immediate and proximate cause of the injury being the defendant’s lack of due care. SORIANO GR No. both in the selection of the employee and in the supervision of the performance of his duties. the registered owner of the vehicle. TUAZON GR No. as owner of the bus line. employers are liable for the damages caused by their employees acting within the scope of their assigned tasks. petitioner Mercury Drug is liable jointly and severally liable to pay the respondents. The trial court dismissed the complaint against Macasasa and Mendoza. such that he was unable to avoid hitting the victim. Del Rosario took the driving test and psychological exam for the position of Delivery Man and not as Truck Man. the presumption of negligence of the employer in the selection and supervision of employees stood. he was violating traffic regulations.is no pre-existing contractual relationship between the parties.” “The obligation imposed by article 2176 is demandable not only for one’s own acts or omissions. on the other hand. pursuant to Article 2180 of the Civil Code. the trial court ruled in Tuazon’s favor. the petitioner Mercury Drug does not provide for back-up driver for long trips. The liability arises due to the presumed negligence of the employers in supervising their employees unless they prove that they observed all the diligence of a good father of a family to prevent the damage.” The liability of the employer under Article 2180 is direct and immediate. he cannot recover damages. It found Soriano negligent for crossing not in the pedestrian overpass. Cerezo liable as Tuazon failed to show that Mrs. Tricycle driver Tuazon filed a complaint for damages against Mrs. To be relieved f the liability. The trial court did not hold Atty. The trial court held Mrs. pursuant to Article 121(3) of the Family Code. Independent Liability of Employer and/or Employee CEREZO VS. 2004 FACTS: Country Bus Lines passenger bus collided with a tricycle. Foronda. Gerard Villaspin. 2007 FACTS: Sonny Soriano. ISSUE: Whether or not petitioner is liable for damages. but the court shall mitigate the damages awarded. Independent Liability of Employer and/or Employee MENDOZA VS. Macasas. Cerezo’s business benefited the family. RULING: While the appellate court agreed that Soriano was negligent. In this case petitioner is held primarily and solidarily liable for the damages caused by Macasasa. it also found Macasasa negligent for speeding. she had exercised the diligence of a good father of a family over her employee. As the time of the accident. The records show that Macasasa violated two traffic rules under the Land Transportation and Office Code. Further. Cerezo. Ruling that Soriano was guilty of contributory negligence for not using the pedestrian overpass. petitioner should show that it exercised the diligence of a good father of a family. Solidary vs. Del Rosario has been driving for more than thirteen hours. ISSUE: . Moreover. not juris et de jure. there arises the juris tantum presumption that the employer is negligent. VIRON TRANSPORTATION CO. Presumption of Fault/Negligence of Employer FACTS: Defendant Alberto delos Santos was the driver of defendant Rudy Samidan of the latter’s vehicle. DELOS SANTOS GR No. ISSUE: Whether the employer is liable to the negligence of his employee. as the bus swerved to his lane to avoid an incoming bus on its opposite direction. Therefore. This is the fault that the law condemns. he was driving said truck along the National Highway within the vicinity of Gerona. the employer is also civilly liable directly and separately for his own civil negligence in failing to exercise due diligence in selecting and supervising his employee. petitioner (employer) is liable for damages. and without whom no final resolution of the case is possible. as in this case. failed to rebut such legal presumption of negligence in the selection and supervision of employees. The presumption that they are negligent flows from the negligence of their employee. When an employee causes damage. the aggrieved party may sue the employer directly.” as contrasted with “subsidiary. tried to overtake his truck.Whether petitioner is solidarily liable. the basis of the liability being the relationship of pater familias or on the employer’s own negligence. each debtor is liable for the entire obligation. the law presumes that the employer has himself committed an act of negligence in not preventing or avoiding the damage. an employer’s liability based on a quasi-delict is primary and direct. Cerezo and not for the delict of Foronda. through its witnesses. Cerezo. At about 12:30 in the afternoon. however. driven by Wilfredo Villanueva. However. Where there is a solidary obligation on the part of debtors. 2000 RULING: Contrary to Mrs. a Forward Cargo Truck. Cerezo alone. and the other is not even a necessary party because complete relief is available from either. Thus. With the driver of another truck dealing likewise in vegetables. Although liability under Article 2180 originates from the negligent act of the employee. Hence. Both the RTC and the CA rendered its decision in favor of the private respondents. thus. when the employee causes damage due to his own negligence while performing his own duties. directly and primarily liable for the resulting damages. the two of them and the driver of the Viron bus proceeded to report the incident to the Police Station.” refer to the remedy provided by law for enforcing the obligation rather than to the character and limits of the obligation. The idea that the employer’s liability is solely subsidiary is wrong. That presumption. jurisdiction over Foronda is not even necessary as Tuazon may collect damages from Mrs. The Viron Bus. but as soon as he occupied the right lane of the road. and he swerved to the right shoulder of the highway. Mrs. it is also primary and direct. Cerezo’s assertion. the petitioner is. There is no merger or renunciation of rights. Hence. The responsibility of two or more persons who are liable for a quasi-delict is solidary. the petition was denied ordering the defendant Hermana Cerezo to pay the plaintiff. rebuttable only by proof of observance of the diligence of a good father of a family. While the employer is civilly liable in a subsidiary capacity for the employee’s criminal negligence. To hold the employer liable in a subsidiary capacity under a delict. then the trial court’s jurisdiction over Foronda is necessary. each debtor is liable to pay for the entire obligation in full. while the employer’s liability based on a delict is merely subsidiary. Their only possible defense is that they exercised all the diligence of a good father of a family to prevent the damage. Petitioner. 54080 November 22. is only jusris tantum. Where the obligation of the parties is solidary. but only mutual representation. However. In fine. Foronda is not an indispensable party to the case. VS. Proof of Employee’s Fault/Negligence . with the allegations and subsequent proof of negligence against the bus driver of petitioner. Cerezo’s liability as an employer in an action for a quasi-delict is not only solidary. Dulnuan. Foronda is not an indispensable party to the final resolution of Tuazon’s action for damages against Mrs. the aggrieved party must initiate a criminal action where the employee’s delict and corresponding primary liability are established. If the present action proceeds from a delict. INC.. the cargo truck which he was driving was hit by the Viron bus on its left front side. petitioner as the employer is responsible for damages. RULING: As employers of the bus driver. the present action is clearly for the quasi-delict of Mrs. Moreover. Tarlac. under Article 2180 of the Civil Code. An indispensable party is one whose interest is affected by the court’s action in the litigation. The words “primary and direct. either of the parties is indispensable. Respondent filed a complaint for damages against Pajarillo for negligently shooting Evangeline and against Safeguard for failing to observe the diligence of a good father of a family to prevent the damage committed by its security guard. and . Proof of Employee’s and Negligence SAFEGUARD SECURITY V. a duly licensed firearm holder with corresponding permit to carry the same outside her residence. however. Upon being shown the medicine. The car he was driving collided with the car of one Jose Peralta. ISSUE: Whether petitioner was negligent. after such selection. if there is no pre-existing contractual relationship between the parties. particularly of Pajarillo. and if so. approached security guard Pajarillo. and pulled out her firearm from her bag to deposit the same for safekeeping. ISSUES: 1. the employee should have been very cautious in dispensing medicines. instead of the prescribed diamicron. SAFEGUARD SECURITY VS. On the third day he took the medicine. may be rebutted by a clear showing on the part of the employer that he has exercised the care and diligence of a good father of a family in the selection and supervision of his employee. that Evangeline's death was not due to Pajarillo's negligence as the latter acted only in self-defense. instead of the prescribed Diamicron The RTC and CA rendered their decision in favor of respondent. but also for those of persons for whom one is responsible” It is thus clear that the employer of a negligent employee is liable for the damages caused by the latter. the saleslady misread the prescription Diamicron as a prescription for Dormicum. Quezon City. 165732 December 14. Sy was shocked to find that what was sold to him was Dormicum. 2006 FACTS: Evangeline Tangco (Evangeline) went to Ecology Bank. BAKING. The court disagrees. petitioner’s employee was grossly negligent in selling respondent domicrum. Cesar Sy for a medical check-up. petitioner failed to prove such exercised of due diligence of a good father of a family in the selection and supervision of employee. BAKING GR No. Suddenly. respondent took one pill of dormicum on three consecutive days. Unaware that what was given to him was the wrong medicine. RULING: Article 2176 states that “whoever by act or omission causes damage to another. It rejected Pajarillo's claim that he merely acted in self-defense. Katipunan Branch. Suspecting that the tablet he took may have bearing on his physical and mental state at the time of the collision. and he figured in a vehicular accident. MERCURY DRUG VS. Article 2180 in complementing the preceding article states that “the obligation imposed by articles 2176 is demandable not only for one’s own acts or omissions. 511 S 67 3. The RTC found respondents to be entitled to damages. respondent. Considering that a fatal mistake could be a matter of life and death for a buying patient. The accident could have not occurred had petitioner’s employee been careful in reading the prescription. went to the clinic of Dr. 432 S 329 MERCURY DRUG CORPORATION VS. PLEYTO VS. is obliged to pay for the damages done. However. TANGCO GR No. It ruled that while it may be conceded that Safeguard had perhaps exercised care in the selection of its employees. whether such negligence was the proximate cause of respondent’s accident. there was no sufficient evidence to show that Safeguard exercised the diligence of a good father of a family in the supervision of its employee. thus making the petitioner solidarily liable for the damages. Respondent then proceeded to petitioner Mercury Drug Corporation (Alabang Branch) to buy the prescribed medicines. The RTC also found Safeguard as employer of Pajarillo to be jointly and severally liable with Pajarillo. Respondent fell asleep while driving he could not remember anything about the collision nor felt its impact. LOMBOY. who was stationed outside the bank. In this case. 57435 May 25. Petitioners denied the material allegations in the complaint and alleged that Safeguard exercised the diligence of a good father of a family in the selection and supervision of Pajarillo. Sy gave respondent two medical prescriptions – Diomicron for his blood sugar and Benalize tablets for his triglyceride. Such fault or negligence. there being fault or negligence. Dr. to renew her time deposit per advise of the bank's cashier as she would sign a specimen card. is called a quasi-delict…” Obviously. Dr. 2007 FACTS: Sebastian Baking. respondent returned to Dr. Petitioner contends that the proximate cause of the accident was respondent’s negligence in driving. When an injury is caused by the negligence of an employee. Whether Pajarillo is guilty of negligence in shooting Evangeline. Evangeline. Pajarillo shot Evangeline with his service shotgun hitting her in the abdomen instantly causing her death. The presumption. there instantly arises a presumption of the law that there has been negligence on the part of the employer either in the selection of the employee or the supervision over him. Sy. 523 S 184 2. TANGCO.1. To establish these factors in a trial involving the issue of vicarious liability. Safeguard is primarily and solidarily liable for the quasi-delict committed by the former. the master or employer is presumed to be negligent either in the selection or in the supervision of that employee. This presumption may be overcome only by satisfactorily showing that the employer exercised the care and the diligence of a good father of a family in the selection and the supervision of its employee. experience. It claims that it had required the guards to undergo the necessary training and to submit the requisite qualifications and credentials which even the RTC found to have been complied with. if there is no pre-existing contractual relation between the parties is called a quasi-delict and is governed by the provisions of this Chapter. Whoever by act or omission causes damage to another. driven by Arnulfo Asuncion. that it was likewise error to say that Safeguard was negligent in seeing to it that the procedures and policies were not properly implemented by reason of one unfortunate event. when an injury is caused by the negligence of a servant or an employee. wherein supervisors are assigned to routinely check the activities of the security guards which include among others. The speed of the bus. but also for those of persons for whom one is responsible. we add that actual implementation and monitoring of consistent compliance with said rules should be the constant concern of the employer. He overtook the tricycle despite the oncoming car only fifty (50) meters away from him. Lomboy of Calasiao. In the selection of prospective employees. On the other hand. Article 2180 of the Civil Code provides: The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions. Ricardo Lomboy. a witness and one of the bus passengers. 1539 smashed head-on the car. that the fact that Pajarillo loaded his firearm contrary to Safeguard's operating procedure is not sufficient basis to say that Safeguard had failed its duty of proper supervision. acting through dependable supervisors who should regularly report on their supervisory functions. The Court of Appeals found PRBL liable for Pleyto’s negligence pursuant to Article 2180 in relation to Article 2176 of the Civil Code. Carmela and Rhino suffered injuries. there being fault or negligence. PRBL Bus No. one Rhino Daba. Defendant-appellant’s claim that he was driving at a mere 30 to 35 kilometers per hour does not deserve credence as it would have been easy to stop or properly maneuver the bus at this speed. the drizzle that made the road slippery. whether or not they are in their proper post and with proper equipment. but only Carmela required hospitalization. As the employer of Pajarillo. ISSUE: Did petitioner observed the proper diligence of a good father of a family? RULING: The negligence and fault of appellant driver is manifest. Safeguard contends that it cannot be jointly held liable since it had adequately shown that it had exercised the diligence required in the selection and supervision of its employees. Pleyto tried to overtake Esguerra’s tricycle but hit it instead. 2004 FACTS: Respondent Maria D. some fifty meters away. Coming down the lane. Whether Safeguard should be held solidarily liable for the damages awarded to respondents. and the proximity of the .2. RULING: ARTICLE 2176. The Supreme Court was not convinced. while in the back seat were Ricardo’s 18-year old daughter Carmela and her friend. including documentary evidence. employers are required to examine them as to their qualifications. Pangasinan. Tarlac. The accident was a head-on collision between the PRBL bus driven by petitioner Pleyto and the car where Ricardo was a passenger. Such fault or negligence. and service records. Carmela suffered injuries requiring hospitalization in the same accident which resulted in her father’s death. This presumption may be overcome only by satisfactorily showing that the employer exercised the care and the diligence of a good father of a family in the selection and the supervision of its employee. Proof of Employee’s and Negligence PLEYTO VS. The car was headed for Manila with some passengers. LOMBOY GR No. as well as regular evaluations of the employees' performances. employers must submit concrete proof. Safeguard further claims that it conducts monitoring of the activities of its personnel. Under Article 2180. According to Rolly Orpilla. in a vehicular accident. was a southbound Mitsubishi Lancer car. is the surviving spouse of the late Ricardo Lomboy. To this. Gerona. is obliged to pay for the damage done. Safeguard is presumed to be negligent in the selection and supervision of his employee by operation of law. that the RTC erroneously found that it did not exercise the diligence required in the supervision of its employee. Seated beside Arnulfo was his brother-in-law. due diligence in the supervision of employees includes the formulation of suitable rules and regulations for the guidance of employees and the issuance of proper instructions intended for the protection of the public and persons with whom the employer has relations through his or its employees and the imposition of necessary disciplinary measures upon employees in case of breach or as may be warranted to ensure the performance of acts indispensable to the business of and beneficial to their employer. who died in Pasolingan. killing Arnulfo and Ricardo instantly. 148737 December 16. Pleyto then swerved into the left opposite lane. the owner of the truck. under Article 2180 of the Civil Code. The presumption that they are negligent flows from the negligence of their employee. VS. BEGASA GR No. but as soon as he occupied the right lane of the road. Their only possible defense is that they exercised all the diligence of a good father of a family to prevent the damage. the latter has the burden of proving that it has been diligent not only in the selection of employees but also in the actual supervision of their work. with the allegations and subsequent proof of negligence against the bus driver of petitioner.car coming from the opposite direction were duly established by the evidence. is evident from the fact despite the application of the brakes. a Forward Cargo Truck. is only jusris tantum. ZUNIGA. Both the RTC and the CA rendered its decision in favor of the private respondents. Citing precedents. the driver of the truck. DELOS SANTOS GR No. the bus still bumped the tricycle. not juris et de jure. INC. FACTS: Respondent Salvador Begasa and his three companions flagged down a passenger jeepney driven by Joaquin Espina and owned by Aurora Pisuena. the petitioner is. 149149 October 23. VIRON VS. 2000 SYKL VS. petitioner (employer) is liable for damages. petitioner as the employer is responsible for damages. failed to rebut such legal presumption of negligence in the selection and supervision of employees. there arises the juris tantum presumption that the employer is negligent. Petitioner. including Pleyto. Respondent fell and fractured his left thigh bone. supra 2. YAMBAO VS. 54080 November 22. SYKL VS. While respondent was boarding the passenger jeepney (his right foot already inside while his left foot still on the boarding step of the passenger jeepney). the owner of the passenger jeepney. That presumption. no documentary evidence was presented to prove that petitioner PRBL exercised due diligence in the supervision of its employees. Proof of Due Diligence VIRON TRANSPORTATION CO. it is not enough for the employer to emptily invoke the existence of company guidelines and policies on hiring and supervision. herein petitioner Ernesto Syki. Respondent filed a complaint for damages for breach of common carrier’s contractual obligations and quasi-delict against Aurora Pisuena. and Elizalde Sablayan. the basis of the liability being the relationship of pater familias or on the employer’s own negligence. through its witnesses. . he was driving said truck along the National Highway within the vicinity of Gerona. and he swerved to the right shoulder of the highway. however. a truck driven by Elizalde Sablayan and owned by petitioner Ernesto Syki bumped the rear end of the passenger jeepney. petitioners presented several documents in evidence to show the various tests and pre-qualification requirements imposed upon petitioner Pleyto before his hiring as a driver by PRBL. At about 12:30 in the afternoon. directly and primarily liable for the resulting damages. With the driver of another truck dealing likewise in vegetables. Tarlac. rebuttable only by proof of observance of the diligence of a good father of a family. Hence. when the employee causes damage due to his own negligence while performing his own duties. However. In the present case. 414 S 237 3. BEGASA. The speed at which the bus traveled. Proof of Due Diligence 1. 2003 FACTS: Defendant Alberto delos Santos was the driver of defendant Rudy Samidan of the latter’s vehicle. the cargo truck which he was driving was hit by the Viron bus on its left front side. DE LOS SANTOS.. The Viron Bus. As the negligence of the employee gives rise to the presumption of negligence on the part of the employer. driven by Wilfredo Villanueva. In fine. In order that the defense of due diligence in the selection and supervision of employees may be deemed sufficient and plausible. as the bus swerved to his lane to avoid an incoming bus on its opposite direction.. the Court of Appeals opined. inappropriate in the light of the aforementioned circumstances. tried to overtake his truck. 418 S 266 ISSUE: Whether the employer is liable to the negligence of his employee. and then proceeded to collide with the incoming car with such force that the car was pushed beyond the edge of the road to the ricefield. thus.. the two of them and the driver of the Viron bus proceeded to report the incident to the Police Station. The mere allegation of the existence of hiring procedures and supervisory policies without anything more is decidedly not sufficient to overcome such presumption. RULING: As employers of the bus driver. Dulnuan. monitor their implementation. to pay damages to respondent Begasa for the injuries sustained by latter.” and “Right Turn. The question is: how does an employer prove that he had indeed exercised the diligence of a good father of a family in the selection and supervision of his employee. In the case at bar. ZUNIGA GR No. even though the former are not engaged in any business or industry. respondent was already partly inside the jeepney. the burden of proof is on the employer. jointly and severally ISSUE: 1. nor the results of Sablayan’s driving test. 146173 December 11. never presented the alleged police clearance given to him by Sablayan. On the other hand. 2003 FACTS: The bus owned by the petitioner was being driven by her driver. 2.” “One Way. Proof of Due Diligence YAMBAO VS. With Venturina was the bus conductor. to pay respondent Salvador Begasa. the trial court dismissed the complaint against Aurora Pisuena. testified that Sablayan passed the driving test and had never figured in any vehicular accident except the one in question. object or documentary. The passenger jeepney had long stopped to pick up respondent and his three companions and. Esteban Jaca. as found by the lower courts. employers must submit concrete proof. The said presumption may be rebutted only by a clear showing on the part of the employer that he had exercised the diligence of a good father of a family in the selection and supervision of his employee. employers should formulate standard operating procedures. Petitioner’s attempt to prove its “deligentissimi patris familias” in the selection and supervision of employees through oral evidence must fail as it was unable to buttress the same with any other evidence. Fernando Dumaliang. in fact. He also required Sablayan to undergo a driving test with conducted by his mechanic. and service records. petitioner is liable. Since the negligence of petitioner’s driver was the sole and proximate cause of the accident. Article 2180 of the Civil Code provides: Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks. when an injury is caused by the negligence of an employee. accompanied Sablayan during the driving test and that during the test.After hearing. Esteban Jaca. it is paramount that the best and most complete evidence is formally entered. Whether he exercised the diligence of a good father of a family. when petitioner’s driver bumped the rear end ofrear-ended it. in the present case. must be corroborated by documentary evidence. In sum. experience. Petitioner claimed that he. petitioner’s evidence consisted entirely of testimonial evidence. 2. horns and tires thereof before leaving for providing hauling services. to hold sway. with respect to the supervision of employees. From the above provision. Whether or not petitioner is liable for the act of his employee. while there is no rule which requires that testimonial evidence. he is relieved of liability. but he must also support such testimonial evidence with concrete or documentary evidence. he required him to submit a police clearance in order to determine if he was ever involved in any vehicular accident. Suddenly. including documentary evidence. in fact. however. Petitioner also did not present records of the regular inspections that his mechanic allegedly conducted. either or both. which might obviate the apparent biased nature of the testimony. we cannot consider the same as sufficiently persuasive proof that there was observance of due diligence in the selection and supervision of employees. the bus bumped . Petitioner. Elizalde Sablayan. a legal presumption instantly arises that the employer was negligent. Making proof in its or his case. If the employer successfully overcomes the legal presumption of negligence. one Ceferino G. To establish these factors in a trial involving the issue of vicarious liability. inasmuch as the witnesses’ testimonies dwelt on mere generalities. in the selection and/or supervision of his said employee duties. In other words. the sole and proximate cause of the accident was the negligence of petitioner’s driver who. In this case. Sablayan was taught to read and understand traffic signs like “Do Not Enter. He testified that before he hired Elizalde Sablayan. The employer must not merely present testimonial evidence to prove that he had observed the diligence of a good father of a family in the selection and supervision of his employee. but ordered petitioner Ernesto Syki and his truck driver.” “Left Turn.” Petitioner’s mechanic. RULING: 1. In the selection of prospective employees. did not slow down even when he was already approaching a busy intersection within the city proper. on the other hand. He also testified that he maintained in good condition all the trucks of petitioner by checking the brakes. employers are required to examine them as to their qualifications. the owner and operator of the passenger jeepney. Venturina along the northbound lane of Epifanio delos Santos Avenue (EDSA). and impose disciplinary measures for breaches thereof. The reason for this is to obviate the biased nature of the employer’s testimony or that of his witnesses. under Article 2180 of the Civil Code. To support her claim. 2004 FACTS: Petitioner Khristine Rea M. both in the selection and supervision of her driver and therefore. The petitioner vehemently denied the material allegations of the complaint. 2002. Gamurot and Elissa Baladad -. Regino refused to pay for the tickets. the students agree to abide by the academic requirements of the school and to observe its rules and regulations. and the barangay where he resides. In February 2002.Herminigildo Zuñiga. 156109 November 18. the basis of the liability being the relationship of pater familias or on the employer’s own negligence. filed a Complaint against petitioner and her driver. supra 2. PANGASINAN COLLEGES. 451 S 638 REGINO VS. PCST held a fund raising campaign dubbed the “Rave Party and Dance Revolution. Thus. as heirs of the victim. thus resulting in the victim’s premature death. PANGASINAN COLLEGES GR No. She further alleged that she was not liable for any damages because as an employer. so as not to be liable for the act committed by her employee? RULING: It held that this was a case of quasi-delict. Art. the scheduled dates of the final examinations in logic and statistics. she observed the proper diligence of a good father of a family. YHT VS CA. ISSUE: Whether or not the purchased of the tickets are mandatory and are part of the contract between school and student.upon enrolment of the student. The project was allegedly implemented by recompensing students who purchased tickets with additional points in their test scores. Quasi-delictual liability even in the existence of a contract between parties 1. On the other hand. Standards of academic performance and the . The terms of the school-student contract are defined at the moment of its inception -. On March 14 and March 15. Each student was required to pay for two tickets at the price of P100 each. Venturina. even though the former are not engaged in any business or industry. those who refused to pay were denied the opportunity to take the final examinations. theorizing that Herminigildo bumped into her bus.Respondents Rachelle A. petitioner’s liability to private respondents for the negligent and imprudent acts of her driver. She also required him to present his Social Security System (SSS) Number prior to accepting him for employment. there being no pre-existing contractual relationship between the parties.allegedly disallowed her from taking the tests. she points out that when Venturina applied with her as a driver in January 1992. under Article 2180 of the Civil Code is both manifest and clear.it gives rise to bilateral or reciprocal rights and obligations. both in the selection and supervision of her bus driver. her teachers -. The complaint essentially alleged that Venturina drove the bus in a reckless. Private respondents. but also for those of persons for whom one is responsible” Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks. she required him to produce not just his driver’s license. The court a quo then found the petitioner directly and primarily liable as Venturina’s employer pursuant to Article 2180 of the Civil Code as she failed to present evidence to prove that she has observed the diligence of a good father of a family in the selection and supervision of her employees. ISSUE: Whether or not petitioner observed the diligence of a good father of a family. Petitioner contends that as an employer. Such was the force of the impact that the left side of the front windshield of the bus was cracked. and only hired him after it was shown to her satisfaction that he had no blot upon his record. She tried to shift the blame for the accident upon the victim. while avoiding an unidentified woman who was chasing him. she exercised the proper diligence of a good father of a family. a pedestrian. without due regard to public safety.” the proceeds of which were to go to the construction of the school’s tennis and volleyball courts. She likewise stresses that she inquired from Venturina’s previous employer about his employment record. careless and imprudent manner. for damages. is relieved from any liability for the latter’s misdeed. but also clearances from the National Bureau of Investigation (NBI). having failed to rebut the legal presumption of negligence in the selection and supervision of her driver. REGINO VS. Regino was a first year computer science student at Respondent Pangasinan Colleges of Science and Technology (PCST). Venturina. in violation of traffic rules and regulations. In sum. he succumbed shortly thereafter. it has consequences appurtenant to and inherent in all contracts of such kind -. Petitioner. Zuñiga was rushed to the Quezon City General Hospital where he was given medical attention. the Philippine National Police. Financially strapped and prohibited by her religion from attending dance parties and celebrations. but due to the massive injuries sustained. 2180 states that “the obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions. RULING: Reciprocity of the School-Student Contract The school-student relationship is also reciprocal. The school undertakes to provide students with education sufficient to enable them to pursue higher education or a profession. is responsible for damages. CAPITOL MEDICAL CENTER. 2003. one of which is given to the registered guest. who was not the registered guest. Quasi-delictual liability even in the existence of a contract between parties YHT REALTY VS. both the assisting employees and YHT Realty Corporation itself. Thus. Further. 2005 FACTS: McLoughlin arrived from Australia and registered with Tropicana. No.code of behavior and discipline are usually set forth in manuals distributed to new students at the start of every school year. in the performance of their obligations. The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. PCST imposed the assailed revenue-raising measure belatedly. those who. to open the safety deposit box of McLoughlin. However. to their completion of a course. Also. In practice. Without the assistance of hotel employees. It exacted the dance party fee as a condition for the students’ taking the final examinations. satisfaction of the set academic standards. as owner and operator of Tropicana. CA. Any stipulation between the hotel-keeper and the guest whereby the responsibility of the former as set forth in Articles 1998 to 2001 is suppressed or diminished shall be void. he alone could personally request the management who then would assign one of its employees to accompany the guest and assist him in opening the safety deposit box with the two keys. The safety deposit box could only be opened through the use of two keys. was not part of the school-student contract entered into at the start of the school year. completion of academic requirements and observance of school rules and regulations. Medical Malpractice/ Medical Negligence Cases 1. The twin duty constitutes the essence of the business. CA. students are normally required to make a down payment upon enrollment. 5. When a registered guest wished to open his safety deposit box. 3 OCTOBER 2000 NOGALES VS. should be held solidarily liable. ISSUE: Whether petitioner is liable for the loss of the personal properties of respondent. This will allow the hotel to evade responsibility for any liability incurred by its employees in conspiracy with the guest’s relatives and visitors. it could not be unilaterally imposed to the prejudice of the enrollees. Article 2180 provides that the owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. Thus. under the pretense of being a family member or a visitor of the guest. the loss would not have occurred. ultimately. 511 S 204 PROFESSIONAL SERVICES VS. RULING: Under Article 1170 of the New Civil Code. with the balance to be paid before every preliminary. 3. The fee. CA GR. Thus. 2. it also underlines the importance of major examinations. The law in turn does not allow such duty to the public to be negated or diluted by any contrary stipulation in socalled “undertakings” that ordinarily appear in prepared forms imposed by hotel keepers on guests for their signature. Their failure to pay their financial obligation is regarded as a valid ground for the school to deny them the opportunity to take these examinations. In the case at bar. midterm and final examination. are guilty of negligence. even assuming that the latter was also guilty of negligence in allowing another person to use his key. however. schools inform prospective enrollees the amount of fees and the terms of payment. 126780 February 17. He rented a safety deposit box as it was his practice to rent a safety deposit box every time he registered at Tropicana in previous trips. and ultimately for its recognition of their ability to finish a course. students expect that upon their payment of tuition fees. when he returned coming from a trip. are liable for damages. to have access to the safety deposit box without fear of any liability that will attach thereafter in case such person turns out to be a complete stranger. Examination results form a significant basis for their final grades. and the other remaining in the possession of the management of the hotel. Tropicana was guilty of concurrent negligence in allowing Tan. 544 S 170 . this Court has ruled that if an employee is found negligent. 321 S 584 REYES VS. 4. in the middle of the semester. As a tourist. McLoughlin was aware of the procedure observed by Tropicana relative to its safety deposit boxes. the responsibility of securing the safety deposit box was shared not only by the guest himself but also by the management since two keys are necessary to open the safety deposit box. AGANA. The foregoing practice does not merely ensure compliance with financial obligations. 513 S 478 PROFESSIONAL SERVICES VS. These tests are usually a primary and an indispensable requisite to their elevation to the next educational level and. Failure to take a major examination is usually fatal to the students’ promotion to the next grade or to graduation. he noticed that his money in the envelope was lacking and that the jewelries were gone. RAMOS VS. Art. To rule otherwise would result in undermining the safety of the safety deposit boxes in hotels for the management will be given imprimatur to allow any person. The hotel business like the common carrier’s business is imbued with public interest. Hence. the school would reward them by recognizing their “completion” of the course enrolled in. it is presumed that the employer was negligent in selecting and/or supervising him for it is hard for the victim to prove the negligence of such employer. SISTERS OF MERCY. given the fact that the loss of McLoughlin’s money was consummated through the negligence of Tropicana’s employees in allowing Tan to open the safety deposit box without the guest’s consent. Hosaka who was not yet in Dr." The phrase "res ipsa loquitur" is a maxim for the rule that the fact of the occurrence of an injury. About four months thereafter the patient was released from the hospital. With regard to Dra. Rogelio. Gutierrez. Meanwhile. Calderon was then able to intubate the patient. Whether the respondent doctors are negligent. Because the discomforts somehow interfered with her normal ways. darating na iyon. who was outside the operating room. and she told Rogelio E. he told her (Herminda) to be back with the patient inside the operating room. She thereafter heard Dr. Hosaka. was likewise physically fit in mind and body. Herminda immediately rushed back. Herminda then went back to the patient who asked. 1985 and while still in her room. she went out of the operating room. Erlinda Ramos stayed at the ICU for a month. she went out of the operating room already decerebrate and totally incapacitated. because of the remarks of Dra. which was to include the anesthesiologist's fee and which was to be paid after the operation. She was advised to undergo an operation for the removal of a stone in her gall bladder. including the endotracheal tube. "Mindy. Hosaka is already here.. Gutierrez failed to properly intubate the patient. who are the physicians-in-charge. Obviously. may permit an inference or raise a presumption of negligence. The doctors explained that the patient had bronchospasm. Dr. Rodriguez Avenue. of June 17. Hosaka issue an order for someone to call Dr. 2. Ramos.M. As borne by the records. "ang hirap ma-intubate nito. Dr. At almost 3:00 P. taken with the surrounding circumstances. without undergoing surgery." She then saw people inside the operating room "moving. Hosaka decided that she should undergo a "cholecystectomy" operation after examining the documents (findings from the Capitol Medical Center. A day before the scheduled date of operation. asked Dr. she focused her attention on what Dr. in turn. she saw the patient taken to the Intensive Care Unit (ICU). Gutierrez was doing. Dr. however. Herminda Cruz. a person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia if the proper procedure was followed. were all under the exclusive control of private respondents. heard somebody say that "Dr. she then saw Dr. Her sister-in-law. on June 10. she saw this anesthesiologist trying to intubate the patient.00. Dr. we find her negligent in the care of Erlinda during the anesthesia phase. saw a respiratory machine being rushed towards the door of the operating room. The Court finds that she omitted to exercise reasonable care in not only intubating the patient. which Erlinda sustained. or make out a plaintiff's prima facie case. Gutierrez reached a nearby phone to look for Dr. Buenviaje she and her husband Rogelio met for the first time Dr. Herminda was allowed to stay inside the operating room.. during the administration of anesthesia and prior to the performance of cholecystectomy she suffered irreparable damage to her brain.M.a position where the head of the patient is placed in a position lower than her feet which is an indication that there is a decrease of blood supply to the patient's brain. located along E. At about 12:15 P.M. At around 9:30 A. Gutierrez. 124354 December 29. Furthermore. Thus. Erlinda was neurologically sound and. Likewise. wala pa ba ang Doctor"? The former replied. Hosaka charged a fee of P16. Rogelio E. Calderon arrived at the operating room. Orlino one of the defendants in this case. Quezon City. Herminda went out of the operating room and informed the patient's husband. who was the Dean of the College of Nursing at the Capitol Medical Center. she sought professional advice. doing this and that. except for a few minor discomforts. Gutierrez say. preparing the patient for the operation" As she held the hand of Erlinda Ramos. After Dr. that the doctor was not yet around. They agreed that their date at the operating table at the DLSMC (another defendant. Normally. this kind of situation does not happen in the absence of negligence of someone in the administration of anesthesia and in the use of endotracheal tube. and saw that the patient was still in trendelenburg position. assured Rogelio that he will get a good anesthesiologist. Hosaka to look for a good anesthesiologist. Hosaka approached her.000. respondent Dra. 1999 FACTS: Plaintiff Erlinda Ramos was a robust woman Except for occasional complaints of discomfort due to pains allegedly caused by the presence of a stone in her gall bladder. He also saw several doctors rushing towards the operating room. She then heard Dr. Rogelio. another anesthesiologist. Ramos "that something wrong was happening". is an injury which does not normally occur in the process of a gall bladder operation. However. Thereafter. and present a question of fact for defendant to meet with an explanation At the time of submission. 1985. she was admitted at one of the rooms of the DLSMC. RULING: Res ipsa loquitur is a Latin phrase which literally means "the thing or the transaction speaks for itself. Whether the respondent doctors and the hospital are solidarily liable. Dr. was also there for moral support. Herminda Cruz. ISSUE: 1.RAMOS VS. but also in not repeating the administration of atropine without due regard to the fact that the patient was inside the operating room for almost three (3) . the instruments used in the administration of anesthesia. Through the intercession of a mutual friend. Hosaka. O lumalaki ang tiyan". Dr. When informed by Herminda Cruz that something wrong was happening. Immediately thereafter. mali yata ang pagkakapasok. FEU Hospital and DLSMC) presented to him. she was prepared for the operation by the hospital staff. petitioner Erlinda could not have been guilty of contributory negligence because she was under the influence of anesthetics which rendered her unconscious. She thereafter noticed bluish discoloration of the nailbeds of the left hand of the hapless Erlinda even as Dr. In fact. CA GR No. who was inside the operating room with the patient. Gutierrez thereafter informed Herminda Cruz about the prospect of a delay in the arrival of Dr. "Huwag kang mag-alaala. The patient's nailbed became bluish and the patient was placed in a trendelenburg position . brain damage. At around 7:30 A.M. Doctors Gutierrez and Hosaka were also asked by the hospital to explain what happened to the patient. Gutierrez intubating the hapless patient. Calderon. of that fateful day. and lack of skill or foresight on the part of the defendants. He was attended to by respondent Dr. the determination of reasonable level of care and breach thereof. At around 1:00 in the morning. because of the decrease of blood supply to the patient's brain. Vacalares. The evidence further shows that the hapless patient suffered brain damage because of the absence of oxygen in her (patient's) brain for approximately four to five minutes which. Rico indorsed Jorge to respondent Dr. a bluish or purplish discoloration of the skin or mucous membrane due to deficient oxygenation of the blood. Furthermore. imprudence. and proximate causation.m. The court was not persuaded. and for arriving for the scheduled operation almost three (3) hours late. ISSUES: Whether the death of Jorge Reyes was due to or caused by the negligence. He also explained that despite the measures taken by respondents and the intravenous administration of the two doses of chloromycetin. Cagayan de Oro. Dr. who performed the autopsy of Jorge. he admitted that he had yet to do one on the body of a typhoid victim at the time he conducted the post mortem of Jorge.. Four elements involve in medical negligence cases. Dr. was placed in trendelenburg position. Chief Pathologist of the Northern Mindanao Training Hospital. Dr. Rico ordered a Widal Test. As she did not observe any adverse reaction. which could be due to allergic reaction or chloromycetin overdose. On the other hand. testified that he has already treated over a thousand cases of typhoid fever. the hospital is liable for failing through its responsible officials. Typhoid fever was then prevalent in the locality. this Court finds that he is liable for the acts of Dr. Vacalares may have had extensive experience in performing autopsies. It is breach of this duty which constitutes actionable malpractice. a resident physician and admitting physician on duty. Suspecting that Jorge could be suffering from this disease. belie their claim. Marilyn did not depart from the reasonable standard recommended by the experts as she in fact observed the due care required under the circumstances. The results of the test from which Dr. For if the patient was properly intubated as claimed by them. Gotiong. not an emergency case. Hosaka inexcusably failed to arrive on time. namely: duty. complications of the disease could not be discounted. As to this aspect of medical malpractice. he stated that chloromycetin was the drug of choice. who gave Jorge a physical examination and took his medical records. Although Dr. Accordingly.hours. there is no doubt that physician-patient relationship existed between respondent doctors and Jorge Reyes. they should have done. The petitioner presented Dr. As to the treatment of the disease. Orlino Hosaka. caused the patient to become comatose. However. It is a form of negligence which consists in the failure of the physician or surgeon to apply to his practice of medicine that degree of care and skill which is ordinarily employed by the profession. On the part of Dr. Moreover. Dr. the patient's nailbed became bluish and the patient. Though . she ordered the first 500 mg. Medical Malpractice/ Medical Negligence Cases REYES VS. this Court finds that it is liable for the acts of negligence of the doctors in their `practice of medicine' in the operating room. the defendants should have rescheduled the operation to a later date. in turn. to be performed on Jorge. this Court rejects the defense raised by defendants that they have acted with due care and prudence in rendering medical services to plaintiff-patient. expert testimony is essential. the latter are ordered to pay. It is also plain from his testimony that he treated only about three cases of typhoid fever.m. Antibiotics being the accepted treatment for typhoid fever. According to him a case of typhoid fever is suspected using the widal test. 2000 FACTS: Jorge Reyes was taken to the Mercy Community Clinic. In this case. Wherefore judgment is rendered in favor of the plaintiffs and against the defendants. This. And. a diplomate whose specialization is infectious diseases and microbiology and an associate professor at the Southern University College of Medicine and the Gullas College of Medicine. On the part of DLSMC (the hospital). thereafter. SISTERS OF MERCY HOSPITAL GR No. Rico’s diagnosis. They vouched for the correctness of Dr. of said antibiotic. At around 2:00 a. a standard test for typhoid fever. the patient did not respond to the treatment and slipped into cyanosis. For after she committed a mistake in intubating the patient. if the 1:320 results of the said test has been presented to him. injury. breach. Marivie Blanes. Dr. As her shift was only up to 5:00 p. jointly and severally. the two doctors presented by respondents clearly were experts on the subject. Rico concluded that Jorge was positive for typhoid fever. Jorge died. the fact that another anesthesiologist was called to try to intubate the patient after her (the patient's) nailbed turned bluish. Blanes also took the physical examination of Jorge. carelessness. He testified that Jorge did not die of typhoid fever but of shock undetermined. Perfecta Gutierrez whom he had chosen to administer anesthesia on the patient as part of his obligation to provide the patient a `good anesthesiologist'. to cancel the scheduled operation after Dr. RULING: Petitioner’s action is for medical malpractice. 130547 October 3. the patient would not have become comatose. if defendants acted with due care and prudence as the patient's case was an elective. Marlyn Rico. Blanes was called as Jorge’s temperature rose to 41 degrees and then valium was administered. Dr. In having held thus. she ordered that a compatibility test with the antibiotic chloromycetin be done on Jorge. of valium to be administered immediately by intramascular injection. Dr. head of the Obstetrics-Gynecology Department of the CMC. Corazon’s water bag ruptured spontaneously and started to experience convulsions. Dr. Estrada of the patient’s condition. 126467 February 11. CMC made Rogelio sign a consent forms printed in CMC letterhead. or should have known. First factor focuses on the hospital’s manifestations and is sometimes described as an inquiry whether the hospital acted in a manner which would lead a responsible person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital. Oscar Estrada. Estrada. After more than 11 years the Trial Court rendered its judgment finding Dr. And third. Upon being informed of Corazon’s profuse bleeding. Estrada ordered blood typing and cross matching with bottled blood. he examined the patient but despite his efforts Corazon died. taken with the fact that typhoid fever was then prevalent. 2006 FACTS: Pregnant with her fourth child. AGANA GR No. it remains a standard diagnostic test for typhoid fever and. Upon admission at the CMC. The second factor focuses on the patient’s reliance. Estrada. Estrada solely liable for damages. Estrada applied low forceps to extract the baby. CMC granted staff privileges to Dr. Uy. was notified of Corazon’s admission. However. the hospital may be held liable if the physician is the “ostensible” agent of the hospital. CMC impliedly held out Dr.the widal test is not conclusive. Under the doctrine of apparent authority a hospital can be held vicariously liable for the negligent act of a physician providing care at eh hospital. arrived about an hour late. an anesthesiologist. Dr. Espinola ordered immediate hysterectomy. which is dangerous complication of pregnancy. Dr. Estrada needed his service but the latter refused. Estrada when it extended its medical staff and facilities. Medical Malpractice/ Medical Negligence Cases weather. Estrada ordered for 10 mg. Espinola. in the present case. After examining Corazon. unless the patient knows. that the physician is an independent contractor. he advised her to immediate admission to the Capitol Medical Center. Estrada’s referral to Dr. Subsequently he asked if Dr. due to the inclement RULING: In general. Dr. Estrada at his home. Estrada ordered the injectionof ten grams of magnesium sulfate. This exception is also known as the “doctrine of apparent authority”. were sufficient to give upon any doctor of reasonable skill the impression that the patient had typhoid fever. Villaflor. Corazon began to manifest moderate vaginal bleeding which rapidly became profuse. he and her husband. 45641 December 19. Enriquez. Later he ordered that start of intravenous administration of syntocinon admixed with dextrose. Dr. 2008 . Dr. Estrada. However. Dr. Upon request to admit Corazon. who then was the Head of the Obstetrics and Gynecology Department of CMC. Medical Malpractice/ Medical Negligence Cases PROFESSIONAL SERVICES VS. ISSUE: Whether CMC is vicariously liable for the negligence of Dr. Estrada of her findings. a resident physician. 5% in lactated Ringers’ solution. Corazon Nogales was under the exclusive prenatal care of Dr. CAPITOL MEDICAL CENTER GR No. consistent with ordinary care and prudence. Espinola. a hospital is not liable for the negligence of an independent contractorphysician. who is assisting Dr. Estrada noted an increase in her blood pressure and development of leg edema indicating preeclampsia. Wherefore the court finds respondent Capitol Medical Center vicariously liable for the negligence of Dr. Estrada as a member of its medical staff. conducted an internal examination of Corazon and notified Dr. Dr. Rogelio Nogales executed and signed the Consent on Admission and Agreement and Admission Agreement. regardless of whether the physician is an independent contractor. prompted to see Dr. Petitioners filed a case against CMC personnel and physicians on the ground that they were negligent in the treatment and management of Corazon’s condition and charged CMC with negligence in the selection and supervision of defendant physicians and hospital staff. readily accommodated the patient and updated Dr. NOGALES VS. Then Corazon was brought to the labor room. While Corazon was on her lat trimester of pregnancy. a greater accuracy through repeated testing was rendered unobtainable by the early death of the patient. was apprised of Corazon’s condition by telephone. First. Dr.5 grams of magnesium sulfate. Second. Dr. at the rate of eight to ten micro-drops per minute. In this case. The results of the widal test and the patient’s history of fever with chills for five days. The baby came out in a weak and injured condition and consequently had to be intubated and resuscitated. through its personnel. It is sometimes characterized as an inquiry on whether the plaintiff acted in reliance upon the conduct of the hospital or its agent. Dr. administered only 2. Despite refusal he stayed to observe Corazon’s condition. When Corazon started to experience mild labor. Espinola. The doctrine of apparent authority involves two factors to determine the liability of an independent contractor-physician. Fuentes. Natividad complained excruciating pain in her anal region. performed a surgery upon her. Ampil. The operation. During the surgery. Ampil recommended that she consult an oncologist to treat the cancerous nodes which were not removed. In other words. They told her that the pain was the natural consequence of the surgical operation performed upon her. Dr. 2008 FACTS: On April 04. Fuentes. Dr. Ampil) found that the malignancy in her sigmoid area had spread to her left ovary. Under the "Captain of the Ship" rule. Fuentes. Ampil saw immediately informed. Dr. Two weeks thereafter . appeared to be flawed as the attending nurses entered in the corresponding Record of Operation that there were 2 lacking sponge and announced that it was searched by the surgeon but to no avail. Dr. Ampil recommended that she consult an oncologist to treat the cancerous nodes which were not removed. the operating surgeon is the person in complete charge of the surgery room and all personnel connected with the operation. however. Two weeks thereafter . Ampil obtained the consent of Natividad’s husband topermit Dr.FACTS: On April 04. Fuentes was dismissed.a foul-smelling gauze which infected her vaginal vault. Another surgical operation was performed upon her. Dr. Natividad’s daughter found a piece of gauze protruding from her vagina. Gutierrez detected a foreign object in her vagina . He proceeded to Natividad’s house where he extracted by hand a piece of gauze. Fuentes to perform hysterectomy upon Natividad. She consulted both Dr. completed the operation and closed the incision. Thus. Here. Their duty is to obey his orders. Ampil was the lead surgeon. Dr. 1984. Natividad and her husband went to the US to seek further treatment. After a couple of days. Natividad sought the treatment of Polymedic General Hospital thereat Dr. he found that the malignancy in her sigmoid area had spread to her left ovary. Natividad complained excruciating pain in her anal region. he was the "Captain of the Ship. Fuentes. Ampil and not by Dr. Dr. Gutierrez detected a foreign object in her vagina . Ampil. Thus. Ampil and Dr. Afterwards. INC. Ampil diagnosed her to be suffering from “cancer of the sigmoid”. the negligence was proven to have been committed by Dr. Dr. Fuentes performed the surgery and thereafter reported and showed his work to Dr. Ampil obtained the consent of Natividad’s husband to permit Dr. assisted by the medical staff of Medical City.a foul-smelling gauze which infected her vaginal vault. Ampil and Dr. Fuentes performed and completed the hysterectomy. necessitating the removal of certain portions of it. Natividad and her husband went to the US to seek further treatment. Ampil took over. but the misplaced gauzes were not found. Ampil saw immediately informed. Dr. Fuentes performed and completed the hysterectomy. Natividad’s daughter found a piece of gauze protruding from her vagina. Dr. Spouses Agana filed a complaint against PSI (owner of Medical City). however. The Trial Court found the respondents jointly and severally liable. RULING: It was duly established that Dr. Dr. Natividad sought the treatment of Polymedic General Hospital thereat Dr. assisted by the medical staff of Medical City. He was about to finish the procedure when the attending nurses informed him that two pieces of gauze were missing. During the surgery. Clearly. Fuentes. Dr. After a couple of days. They then flew back to the Philippines. During this entire period. Dr. Dr. As stated before. A recto-vaginal fistula had formed in her reproductive organ which forced stool to excrete in her vagina. Fuentes to leave the operating room. The CA affirmed said decision with modification that Dr. Another surgical operation was performed upon her. Dr. The latter examined it and finding everything to be in order. Ampil diagnosed her to be suffering from “cancer of the sigmoid”. performed a surgery upon her. After 4 months she was told that she was free of cancer. Ampil and Dr. appeared to be flawed as the attending nurses entered in the corresponding Record of Operation that there were 2 lacking sponge and announced that it was searched by the surgeon but to no avail. Dr. A "diligent search" was conducted. Ampil then directed that the incision be closed. the control and management of the thing which caused the injury was in the hands of Dr. Medical Malpractice/ Medical Negligence Cases PROFESSIONAL SERVICES. He requested the assistance of Dr. not Dr. Dr. Fuentes only to perform hysterectomy when he (Dr. VS. Ampil took over. completed the operation and closed the incision. Fuentes was no longer in the operating room and had. Afterwards. he found that the malignancy in her sigmoid area had spread to her left ovary. Fuentes of any liability. Ampil. Thus. They told her that the pain was the natural consequence of the surgical operation performed upon her. COURT OF APPEALS GR No. The operation." That he discharged such role is evident from his following conduct. A recto-vaginal fistula had formed in her reproductive organ which forced stool to excrete in her vagina. allowed Dr. necessitating the removal of certain portions of it. left the hospital. They then flew back to the Philippines. He proceeded to Natividad’s house where he extracted by hand a piece of gauze. She consulted both Dr. Dr. ISSUE: Whether the Court of Appeals erred in absolving Dr. After 4 months she was told that she was free of cancer. 126297 February 11. Natividad Agana was admitted at the Medical City General Hospital because of difficulty of bowel movement and bloody anal discharge. Fuentes to perform hysterectomy upon Natividad. Dr. Dr. in fact. Ampil then resumed operating on Natividad. 1984. Ampil was the lead surgeon during the operation of Natividad. . Thus. Natividad Agana was admitted at the Medical City General Hospital because of difficulty of bowel movement and bloody anal discharge. Ampil. Wherefore PSI and Dr. instituted another action for violation of P. Fuentes.D. yet. DE RAMOS. he is normally required to attend clinicopathological conferences. FACTS: RULING: PSI contends that the proximate cause of Natividad’s injury was Dr. the CA ruled that it did not bar the filing of the criminal action. even if it causes loss to another. 401. It concluded that the evidence on hand showed good faith on the part of DLPC in filing the subject complaints. However. DAVAO LIGHT GR No. Whether or not the compromise agreement entered into between DLPC and Diaz barred the former from instituting further actions. does not automatically result in an actionable injury. 2003. the filing of a damage suit against him before the RTC of Cebu City which was dismissed and the filing of another damage suit before the same Cebu RTC which is still pending. conduct bedside rounds for clerks. Blg. consistent with ordinary care and prudence. He further avers that the compromise agreement completely erased litigious .D. the hospital may be held liable if the physician is the “ostensible” agent of the hospital. 401 as amended after dismissal of the theft case. for plaintiff’s filing of a charge of violation of P. prejudice. 440 S 154 ISSUE: DIAZ VS. Fuentes was dismissed. A person’s right to litigate should not be penalized by holding him liable for damages. a hospital is not liable for the negligence of an independent contractorphysician. this did not change the fact that plaintiff made an illegal connection for electricity. Thus. Ampil and Dr. Ampil was indeed an employee of the hospital. It pointed out that Diaz had been using the electrical services of DLPC without its consent. In this case. moderate grand rounds and patient audits and perform other tasks and responsibilities. Thus. First factor focuses on the hospital’s manifestations and is sometimes described as an inquiry whether the hospital acted in a manner which would lead a responsible person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital. The doctrine of apparent authority involves two factors to determine the liability of an independent contractor-physician. comes before this Court in this petition for review on certiorari ISSUES: 1. The court held that there is an employee-employer relationship between hospital and their attending and visiting physician. embarrass. In the said case. for the privilege of being able to maintain a clinic in the hospital. Malicious Prosecution Plaintiff asks for damages for defendant’s alleged malicious prosecution of a criminal case of theft of electricity against him. The second factor focuses on the patient’s reliance. YASONNA VS. the only conclusion that can be inferred from the acts of DLPC is that they were designed to harass. DAVAO LIGHT. As to the effect of the compromise agreement. The RTC held that while the City Prosecutor. Whether or not DLPC acted in bad faith in instituting the criminal cases against Diaz RULING: The petition is without merit. In general. It is sometimes characterized as an inquiry on whether the plaintiff acted in reliance upon the conduct of the hospital or its agent. 1. now petitioner. On October 1.P. the hospital has a control over its attending or visiting physician. the CA affirmed the decision of the RTC. and 2. 2007 Whether there is an employee-employer relationship in order to hold PSI solidary liable. Damages are also being sought for defendant’s removal of Electric Meter. 160959 April 2. DLPC instituted the theft case against Diaz. Ampil is only a consultant of the said hospital. After a physician is accepted. and worse. DIAZ VS. it has been proven that the two factors were present. interns and residents. but this is a subject matter of a case pending before Branch 13 of this Court and therefore said court retains jurisdiction over the said cause of action. Dr. and ruin him. 4 APRIL 2007 2. and/or privilege of admitting patients into the hospital. Diaz. Ampil was its employee when they advertise and displayed his name in the directory at the lobby of the said hospital and that Natividad relied on such knowledge that Dr. This exception is also known as the “doctrine of apparent authority”. Ampil are liable jointly and severally. The hospital indeed made it appear that Dr. either as a visiting or attending consultant. The Trial Court found the respondents jointly and severally liable. the legitimate exercise of a person’s right. and later the Secretary of Justice. as amended by B. under the principle of damnum absque injuria. 876. The physician’s performance is generally evaluated and if said physician falls short of the minimum standards he is normally terminated. The CA affirmed said decision with modification that Dr. concluded that there was no probable cause for the crime of theft. Ampil’s negligence and that there is no employee-employer relationship between them because Dr.Spouses Agana filed a complaint against PSI (owner of Medical City). Petitioner insists that the compromise agreement as well as the decision of the CA already settled the controversies between them. though complete reparation should have been made of the damages suffered by the offended party. civil suit or other legal proceeding has been instituted maliciously and without probable cause. The foregoing are necessary to preserve a person’s right to litigate which may be emasculated by the undue filing of malicious prosecution cases. ISSUE: Whether or not the filing of the criminal complaint for estafa by petitioners against respondents constituted malicious prosecution? RULING: To constitute “malicious prosecution. Assistant Provincial Prosecutor Rodrigo B. They alleged that the filing of the estafa complaint against them was done with malice and it caused irreparable injury to their reputation. On the other hand. (2) that in bringing the action. Laguna in the names of Aurea and Jovencio Twenty-two years later. Jovencio and Rodencio filed a complaint for damages on the ground of malicious prosecution. The purpose of compromise is to settle the claims of the parties and bar all future disputes and controversies. requires the elements of (1) malice and (2) absence of probable cause. half of Yasoñas’ subject property would be sold to him. Aurea executed a deed of absolute sale in favor of Jovencio over half of the lot consisting of 123 square meters.” there must be proof that the prosecution was prompted by a sinister design to vex or humiliate a person. it can be inferred that malice and want of probable cause must both be clearly established to justify an award of damages based on malicious prosecution. Article 2028 of the Civil Code defines a compromise as a contract whereby the parties. A criminal case is committed against the People. otherwise their residential house and lot would be foreclosed. 156339 October 6. The court does not agree. Respondent DLPC cannot therefore be faulted in availing of the remedies provided for by law. after the termination of such prosecution. If petitioners had honestly believed that they still owned the entire property. Malicious Prosecution YASOÑA VS. and the offended party may not waive or extinguish the criminal liability that the law imposes for the commission of the offense. it was only in 1993 when petitioners decided to file the estafa complaint against respondents. and that it was initiated deliberately by the defendant knowing that his charges were false and groundless. All these pieces of evidence indicate that Aurea had long acknowledged Jovencio’s ownership of half of the property. Malicious prosecution. Also. the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution. the records show that the sale of the property was evidenced by a deed of sale duly notarized and registered with the local Register of Deeds. the following requisites must be proven by petitioner: (1) the fact of prosecution and the further fact that the defendant (respondent) was himself the prosecutor. or other proceeding in favor of the defendant therein. The complaint for estafa was dismissed outright as the prosecutor did not . In 1974. in August 1993. suit. Cruz. It is an established rule that in order for malicious prosecution to prosper. when Aurea borrowed money from the Rural Bank of Lumban in 1973 and the PNB in 1979. Separate titles were then issued in the names of Yasoña and Jovencio. upon payment by Jovencio of the loan to PNB. by making reciprocal concessions. Thereafter. 2004 FACTS: Aurea Yasoña and her son. Concededly. the prosecutor acted without probable cause. Jovencio acceded to the request. Aurea alleged that Rodencio asked her to sign a blank paper on the pretext that it would be used in the redemption of the mortgaged property On February 21. On account of this dismissal. In this case. In her complaint. Furthermore. by improper or sinister motive. only her portion was mortgaged. Jovencio had been paying the realty taxes of the portion registered in his name.matters that could necessarily arise Moreover. Aurea filed an estafa complaint against brothers Jovencio and Rodencio de Ramos on the ground that she was deceived by them when she asked for their assistance in 1971 concerning her mortgaged property. Zayenis dismissed the criminal complaint for estafa for lack of evidence. Moreover. Aurea even requested Jovencio to use his portion as bond for the temporary release of her son who was charged with malicious mischief. As agreed upon. that is. However. malicious prosecution has been defined as an action for damages brought by or against whom a criminal prosecution. Saturnino. the property was surveyed and divided into two portions. After the execution of the deed of sale. Since 1973. as Aurea knew fully well that she had already sold half of the property to Jovencio. From the foregoing requirements. avoid litigation or put an end to one already commenced. it would not have taken them 22 years to question Jovencio’s ownership of half of the property. criminal liability is not affected by compromise for it is a public offense which must be prosecuted and punished by the Government on its own motion. Jovencio paid Aurea’s bank loan. and that the action finally terminated with an acquittal. the lot was surveyed and separate titles were issued by the Register of Deeds of Sta. 1994. Inasmuch as Aurea was his aunt. DLPC was not motivated by malicious intent or by a sinister design to unduly harass petitioner. but only by a well-founded anxiety to protect its rights. went to the house of Jovencio de Ramos to ask for financial assistance in paying their loans to Philippine National Bank (PNB). DE RAMOS GR No. They agreed that. a compromise is not one of the grounds prescribed by the Revised Penal Code for the extinction of criminal liability.These two elements are present in the present controversy. and (3) that the prosecutor was actuated or impelled by legal malice. both in criminal and civil cases. Diaz asserts that the evidence he presented is sufficient to prove the damages he suffered by reason of the malicious institution of the criminal cases. There were two rear guards assigned to each rear column. the rear security guards started waving their hands for the vehicle to take the other side of the road. and others were overrun by the vehicle. DE LOS SANTOS G. each taxicab to be provided with the necessary taximeter and a radio transceiver for receiving and sending of messages from mobile taxicab to fixed base stations within the Naval Base at Subic Bay. MEDIALDEA and SANTIAGO A. VS. with the use of motor vehicle as the qualifying circumstance. At a distance of 100 meters. 1983 While they were negotiating Maitum Highway. the defendant entered into a contract with the U. MAGAT. Navy Exchange. the defendant. he fails and refuses to open the necessary letter of credit to cover payment of the goods ordered by him. such as by slackening his speed. they saw an Isuzu Elf truck coming at high speed towards them.ack short pants. The PNP trainees were divided into three columns and were wearing black t-shirts.S. Puerto. the Supreme Court convicted Glenn de Los Santos of one complex crime of reckless imprudence resulting in multiple homicide with serious physical injuries and less serious physical injuries and sentenced him to suffer an indeterminate penalty of four years of prision correccional. bl. and green and black combat shoes.R.R. No. and even communicated if defendant would like to rescind contract. Wherefore. GUERRERO. 131588 March 27. Since herein petitioner is known of his good reputation as a businessman. falling like dominoes one after the other. he should have observed due care in accordance with the conduct of a reasonably prudent man.find any probable cause against respondents. Some were thrown. Since the place of the incident was foggy and dark. The awards of death indemnity for each group of heirs of trainees are reduced to P50. but he subsequently instructed his banker not to give due course to his application for a letter of credit and that for reasons only known to the defendant. From Alae to Maitum Highway. The vehicle lights were in the high beam. about 20 vehicles passed them. and the awards in favor of other victims are deleted. FACTS: Sometime in September 1972. or turning to the left side even if it would mean entering the opposite lane. Subic Bay. The guards jumped in different directions. The defendant even used as a defense that the petitioner was delayed in ISSUE: Whether or not the incident was a product of a malicious intent on the part of accused-appellant RULING: . 2001 355 SCRA 415 FACTS: As part of the Special Counter Insurgency Operation Unit Training held at Camp Damilag. Defendant and his agent have repeatedly assured plaintiff herein of the defendant's financial capabilities to pay for the goods ordered by him and in fact he accomplished the necessary application for a letter of credit with his banker. ULPA CRIMINAL PEOPLE VS. After arraignment and trial. the court convicted accused-appellant guilty of complex crime of multiple murder. applying his brakes. HON. and 10 counts of reckless imprudence resulting in slight physical injuries and sentenced for each count. After some time. but the vehicle just kept its speed.000. L-37120 April 20. as minimum. The rear guards told their co-trainees to “retract”. respondents G. A suit for malicious prosecution will prosper where legal prosecution is carried out without probable cause. Their duty was to jog backwards facing the oncoming vehicles and give hand signals for other vehicles. 1995 which started at 2:20 am. to the penalty of 2 months of arresto mayor. tragic though it was in the light of the number of persons killed and seriously injured. Bukidnon. They saw their co-trainees being hit by the said vehicle. herein defendant failed to comply with his obligation. In said contract. all of which slowed down and took the left portion of the road when signaled to do so. was an accident than of a malicious intent on Glenn’s part. No. entered into a contract with the former. CONTRAVENTION OF THE TERMS VICTORINO D. for the operation of a fleet of taxicabs. petitioner. several members of the Philippine National Police were undergoing an “endurance run” on October 5. through his agent. and several demands were made by petitioner so as to reinforce such contract. Glenn showed an inexcusable lack of precaution. multiple frustrated murder and multiple attempted murder. since the latter would also engage a foreign company for such taximeter. Cagayan de Oro City. the defendant must open a letter of credit in favor of the petitioner. Glenn de los Santos did not reduce his speed even after hitting the first and second columns. The driver. Philippines. apparently ignoring their signals and coming closer and closer to them. The Supreme Court held that the incident. to 10 years of prision mayor. Manolo Fortich. but said defendant did not reply to such demands. as maximum. LEO D. Philippines. CA. thus court have no alternative but to enforce them as agreed upon and written. Navy Exchange for not complying with their agreement.delivering the taximeters when the former was apprehended by U. petitioner filed a case against the defendant but respondent judge dismissed such petition in a minute order for lack of cause of action. ISSUE: Whether or not petitioner has a cause of action against the defendant for the latter’s contravention of the terms of contract. NAGUIAT.R. Thus. the Supreme Court ruled that the Court of Appeals did not commit an error in deciding this issue. Pursuant to said agreement. He made another partial payment of P1. DE MISTICA VS. As a consequence. SPECIFIC PERFORMANCE: NECESSITY (Art. The stipulation of the parties constitute the law between them. respondents Aug 17. In fine. petitioners. This agreement was reduced to writing in a document. The failure of respondent to pay the value of the purchase price within ten (10) years from execution of the deed did not amount to a substantial breach.000. is the owner of the parcel of land which was leased to respondent Bernardinio Naguiat. One week thereafter. 112330 FACTS: On October 9. CC) 1. 1165. predecessor-in-interest of herein petitioner. 17. among others that the failure and refusal of respondent to pay the balance of the purchase price constitute a violation of the contract which established her to rescind the same.000 on February 8. AUG. HENRY CO AND ELIZABETH CO AND MELODY CO. CC) SPECIFIC PERFORMANCE: NECESSITY (Art. VS. the spouses Co entered into a verbal contract with Custodio for her purchase of the their house and lot worth $100. as it ruled that there is no breach of obligation in spite of the lapse of their stipulated period and the failure of the respondent to pay. 1999 G. represented by her Attorney-in-fact.00. That respondent have been in possession of the subject matter. VDA. 1980.000. he shall be liable for those damages that are the natural and probable consequences of the breach of the obligation and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. should be ordered to vacate and surrender possession of the same. ADORACION CUSTODIO. or delay. malice or wanton attitude. The same is true with respect to moral and exemplary damages. NAGUAIT 418 SCRA 73 SPS. the complaint sufficiently alleges bad faith on the part of the defendant. 1984. 418 SCRA 73 CO VS. TRINIDAD KALAGAYAN. the Supreme Court held that on the basis of the facts alleged in the complaint. the court could render a valid judgment in accordance with the prayer thereof. Mistica entered into a contract to sell with respondent over a portion of the aforementioned lot containing an area of 200 square meters. and those who in any manner contravene the tenor thereof are liable for damages. To our mind. FACTS: Eulalio Mistica.1991. negligence. RULING: NO. 1165. The applicable legal provisions on the matter.” The phrase "in any manner contravene the tenor" of the obligation includes any ilicit act or omission which impairs the strict and faithful fulfillment of the obligation and every kind of defective performance.00 and . it was stipulated that payment could be made even after ten (10) years from execution provided that the vendee paid 12% interest. he shall be liable for all damages which may be reasonably attributed to the non-performance of the obligation. 1999 VDA DE MISTICA VS. ISSUE: Whether or not the Court of Appeals erred in the application of Article 1191 of the Civil Code. 2. Articles 2220 and 2232 of the Civil Code.000. On December 4. bad faith. petitioner filed a complaint for rescission alleging. COURT OF APPEALS AND MRS. The damages which the obligor is liable for includes not only the value of the loss suffered by the obligee [daño emergente] but also the profits which the latter failed to obtain [lucro cesante]. If the obligor acted in good faith.S. No. RULING: Article 1170 of the Civil Code provides: “Those who in the performance of their obligation are guilty of fraud. In the agreement. Mistica died sometime in October 1986. respondent gave a down payment of P2. and shortly before she left for the United States she paid amounts of $1. allow the award of such damages in breaches of contract where the defendant acted in bad faith. He failed to make any payments thereafter. and in case of fraud. (2) determinate subject matter.000.00. same Code).000. 1985. earnest money given in a sale transaction is considered part of the purchase price and proof of the perfection of the sale.000. was willing to perform part of the contract while the appellants were not. The purchase price of $100. Petition denied.00 was accepted by the Cos. The elements of a valid contract of sale under Article 1458 of the Civil Code are (1) consent or meeting of the minds.000. Spouses Co’s counsel. in order that the same may be reserved for her purchase. (Article 1191.00 is payable in two payments $40. A contract of sale is a consensual contract and is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. subject of the sale at a price of $100. 1985 respectively was a breach of her obligation under Article 1191 of the Civil Code. It must be supported by consideration. The power to rescind obligations is implied in reciprocal ones. but such rescission can only be carried out when the one who demands rescission can return whatever he may be obliged to restore. same Code). plaintiff filed the instant complaint. 1986. and the price with its interest x x x x (Article 1385.000.000. and (3) price certain in money or its equivalent. Since it has been shown that the appellee who was not in default.000. In the absence of an express stipulation authorizing the sellers to extrajudicially rescind the contract of sale.000.00 to Custodio after ordering the rescission of the contract of sale over the property. Custodio acted well within her rights when she attempted to pay the remaining balance of $70. Even the manner of payment of the price was set forth in the letter. for such is a consequence of rescission.00 as earnest money.00.000. Custodio’s offer to purchase the Beata property. the agreed amount as selling price’ and on October 24.000.00 to complete the sum owed of $100.00 she had initially paid.000.00 was already received by the Cos. Laysa. Not satisfied with the decision. Custodio immediately sued for the rescission of the contract of sale and prayed for the return of the $30.00 paid by Custodio pursuant to the “option” granted to her. 1985. the March 15.00 and US$60.” The trial court ruled in favor of Custodio and ordered the spouses Co to refund the amount of $30. Despite the fact that Custodio’s failure to pay the amounts of US$40. In the case at bar. Under Article 1385 of the Civil Code. the sum of $30. When the Cos refused to accept said payment and to deliver the Beata property.00 on December 4. wrote a letter to Atty. she paid to the defendant Melody Co in the United States. Atty. Earnest money in the amounts of US$1. The price received by the appellants has to be returned to the appellee as aptly ruled by the lower court. Leopoldo Cotaco. counsel of Custodio. The Cos were of the mistaken belief that Custodio had lost her “option” over the Beata property when she failed to pay the remaining balance of $70. the Cos did not sue for either specific performance or rescission of the contract.00 and P40. Atty. From that moment the parties may reciprocally demand performance subject to the provisions of the law governing the form of contracts.P40.000. rescission creates the obligation to return the things. together with their fruits. . 1986.000.000. this appeal. the spouses Co appealed to the Court of Appeals. wrote a letter to the plaintiff dated March 15. Estrella O. 1985. the Cos cannot unilaterally and extrajudicially rescind the contract of sale. which were the object of the contract. rescission of the contract is in order. On January 25.00 as the contract was still subsisting at that time.000. all three elements of a contract of sale are present in the transaction between the petitioners and respondent. ISSUE: Whether or not the Court of Appeals erred in ordering the Cos to return the $30. Leopoldo Cotaco informing him that Custodio ‘is now ready to pay the remaining balance to complete the sum of $100. 1984 and January 5. as partial payment of the purchase price. Hence. demanding that she pay the balance of $70.00 pursuant to their August 8. although the period of payment had already expired. said lawyer wrote another letter to plaintiff dated August 8.000. However. It is a separate and distinct contract from that which the parties may enter into upon the consummation of the option. Under Article 1482 of the Civil Code.00 on January 5. 1986 letter. Decision affirmed.000. The Court of Appeals therefore did not err in ordering the Cos to return the amount of $30.000. Accordingly. informing her that she has lost her ‘option to purchase’ the property subject of this case and offered to sell her another property.000. RULING: An option is a contract granting a privilege to buy or sell within an agreed time and at a determined price. 1985 letter. Rescission creates the obligation to return the things which were the object of the contract. said earnest money to be deducted from the total purchase price. 1985 letter sent by the COS through their lawyer to Custodio reveals that the parties entered into a perfected contract of sale and not an option contract. in case one of the obligors should not comply with what is incumbent upon him. the property involved has not been delivered to the appellee.00 and not receiving any response thereto. This principle has been applied to rescission of reciprocal obligations under Article 1191 of the Civil Code. which is to restore the parties in their former situations. She has therefore nothing to return to the appellants. As evidenced by the March 15.00. 1984 and the balance of $60.00 on or before December 4. which affirmed the decision of the RTC. DELOS ANGELES. 6. transfer and convey to the petitioner of the said deed of conveyance. That before the issuance of the aforesaid preliminary injunction UP had taken steps to have another concessionaire take over the logging operation. ISSUE: Whether petitioner U. 477 S 666 GOLDENROD VS. ASTORGA. CA. CA. and the concession was awarded to Sta. the respondent Magdalo V. 35 S 102 FRANCISCO VS. 498 S 285 PAGUYO VS. CA. which was approved by the president of UP." UFC VS. 470 S 33 CASINO VS. and still is. etc. but that despite such knowledge. 1971 UNIVERSITY OF THE PHILIPPINES VS.74. because this. in the sense that he not only irregularly reported for work but also failed to assign. GALANG. allegedly. 543 S 644 CANNU VS. to borrow the petitioner's language. and an officer of the petitioner corporation. willing and able to comply with his obligations under the Bill of Assignment. DEAC CONST. but again incurred an unpaid account." dated 9 December 1964. entitled "Acknowledgment of Debt and Proposed Manner of Payments. ESTATE OF GONZAGA. in consideration of payment to UP of royalties.. . 4.94. to cut. CA. despite repeated demands. 2. INC. collect and remove timber from the Land Grant. The fact that the trademark "Mafran" was duly registered in the name of the petitioner pursuant to the Bill of Assignment. 7. in the amount of P61. 470 S 57 CARRASCOSO VS. in addition to the indebtedness that it had previously acknowledged. 3. for a period starting from the date of the agreement to 31 December 1965. DELOS ANGELES L-28602 September 29. 5. had actual knowledge of the resumption of production by the petitioner. the petitioner did not dismiss the respondent Francisco because he was. Inc. A. (b) that on the basis of the entire evidence on record and as found by the trial court. and may disregard the same before any judicial pronouncement to that effect. that ALUMCO cut and removed timber therefrom but. and that as such.P. standing by itself alone. as of 8 December 1964. 33 S 1 UP VS. was supposedly obligated to transfer and cede to the petitioner the formula for Mafran sauce and not merely its use. exh. as of that date. 299 S 141 RIGHT TO RESOLVE/RESCIND: REQUISITES UNIVERSAL FOOD CORPORATION VS. it had failed to pay.. was the intention of the parties. extendible for a further period of five (5) years by mutual agreement. he refused to report back for work notwithstanding the petitioner's call for him to do so. 9. ALUMCO continued its logging operations. ALUMCO executed an instrument.133. ISSUE: Whether respondent Francisco ceded to the petitioner merely the use of the formula for Mafran sauce and not the formula itself. For the said respondent allowed the petitioner to register the trademark for purposes merely of the "marketing of said project. RULING: The Court concluded that what was actually ceded and transferred was only the use of the Mafran sauce formula. 459 S 80 VILLANUEVA VS. it had incurred an unpaid account of P219. forest fees. considered as rescinded and of no further legal effect the logging agreement that they had entered in 1960. Francisco ceded and transferred to the petitioner not only the right to the use of the formula for Mafran sauce but also the formula itself. a member of the board of directors. for the period from 9 December 1964 to 15 July 1965. is not sufficient proof that the respondent Francisco FACTS: UP and ALUMCO entered into a logging agreement under which the latter was granted exclusive authority. that after it had received notice that UP would rescind or terminate the logging agreement. can treat its contract with ALUMCO rescinded. and (d) that the evidence on record shows that the respondent Francisco was the one not ready. a stockholder. Clara Lumber Company. which. That on 19 July 1965. CA L-29155 February 22.362. petitioner UP informed respondent ALUMCO that it had. 1970 FACTS: The petitioner contends that (a) under the terms of the Bill of Assignment.RIGHT TO RESOLVE/RESCIND: REQUISITES 1. (c) that the private respondents are not entitled to rescind the Bill of Assignment. 8. is not predicated on injury to economic interests on the part of the party plaintiff. NHMFC purchased the mortgage loan of respondentsspouses from Fortune Savings & Loan Association for P173. RULING: Article 1191 of the Civil Code provides that the power to rescind obligations is implied in reciprocal ones. Inc. that trial court was correct in ordering partial rescission of the portion of the construction. FELIPE AND LETICIA CANNU versus SPS. For it is only the final judgment of the corresponding court that will conclusively and finally settle whether the action taken was or was not correct in law. Otherwise. GR No.800. even without court intervention. and the remaining balance of 1. a downpayment of 2M should be paid upon signing of the construct of construction. a real estate mortgage was constituted on the said house and lot in favor of Fortune Savings & Loan Association. The rescission referred to in this article. Given the fact that the construction in this case is already 75% complete. DEAC CONSTRUCTION. and act accordingly. but of breach of faith by the defendant which is violative of the reciprocity between the parties. spouses Francisco had paid the downpayment.000. otherwise.00. Even prior to the execution of the contract. they would be compelled to invoke legal remedies. the party injured by the other's breach will have to passively sit and watch its damages accumulate during the pendency of the suit until the final judgment of rescission is rendered when the law itself requires that he should exercise due diligence to minimize its own damages. the creditor (UP) has "the right and the power to consider the Logging Agreement dated 2 December 1960 as rescinded without the necessity of any judicial suit. 2008 FACTS: Spouses Francisco obtained the services of DEAC Construction.P. upon default by the debtor ALUMCO. that it is only after a final court decree declaring the contract rescinded for violation of its terms that U. DEAC engaged the services of a subcontractor.00 to purchase a house and lot located at Pulang Lupa. 139523 2005 May 26 FACTS: Respondents-spouses Gil and Fernandina Galang obtained a loan from Fortune Savings & Loan Association for P173.00 and to assume the balance of the mortgage obligations with the NHMFC and with CERF Realty (the Developer of the property). The plaintiffs then file civil case for Rescission of Contract and Damages against DEAC. but it proceeds at its own risk. 171312 February 4. Las Piñas. Vigor Construction and Development Corporation. without previous court action. Work stoppage was issued against Lino Francisco pursuant to the previous Notice of Violations.5M was to be paid in two equal installments. GIL AND FERNANDINA GALANG AND NATIONAL HOME MORTGAGE FINANCE CORPORATION G. SPS. ISSUE: Whether or not spouses Francisco may rescind the contract. But the law definitely does not require that the contracting party who believes itself injured must first file suit and wait for a judgment before taking extrajudicial steps to protect its interest. the said construction commenced although DEAC had not yet obtained the necessary building permit for the proposed construction and that the contractor deviated from the approved plans." "There is nothing in the law that prohibits the parties from entering into agreement that violation of the terms of the contract would cause cancellation thereof. could disregard ALUMCO's rights under the contract and treat the agreement as breached and of no force or effect. UP and ALUMCO had expressly stipulated in the "Acknowledgment of Debt and Proposed Manner of Payments" that. as agreed upon.800. but allegedly without the spouses’ knowledge and consent. However. in issuing the injunction order of 25 February 1966. Petitioner Leticia Cannu agreed to buy the property for P120. in case one of the obligors should not comply with what is incumbent upon him." In other words. To undertake the said project. Equitable considerations justify rescission of the portion of the obligation which has not been delivered RIGHT TO RESOLVE/RESCIND: REQUISITES RIGHT TO RESOLVE/RESCIND: REQUISITES FRANCISCO VS. the party who deems the contract violated may consider it resolved or rescinded.5M. In other words. to construct a 3-storey residential building with mezzanine and roof deck on their lot for a contract price of 3. apparently sustained it (although the order expresses no specific findings in this regard). more appropriately referred to a resolution. and the lower court. it is not always necessary for the injured party to resort to court for rescission of the contract. Spouses Francisco demanded DEAC to comply with the approved plan. . in the names of respondents-spouses. To secure payment.RULING: Respondent ALUMCO contended. INC. No.R. In early 1990. 64 as full payment of her remaining mortgage loan with NHMFC. executed a MOA. Jr.00. However. Petitioners then requested permission from respondent Administratrix to use the .312. after the lapse of considerable time (18 months from last payment) and the purchase price was not yet fully paid. versus ESTATE OF GERARDO GONZAGA/ MA. 1191 states that the power to rescind obligations is implied in reciprocal ones. Therefore. Art. The court shall decree the rescission claimed. on 21 May 1993. Eight (8) years have already lapsed and plaintiffs-appellants have not yet complied with their obligation.. VILLA GONZAGA in her capacity as Administratrix G. Rescission under Article 1191 is a principal action. Because the Cannus failed to fully comply with their obligations. The question of whether a breach of contract is substantial depends upon the attending circumstances and not merely on the percentage of the amount not paid.00 constituting sixty (60%) percent of the total purchase price of the lots.000.000. 15731 2006 August 09 FACTS: On January 15. unless there be just cause authorizing the fixing of a period. this percentage is still substantial. Rescission will not be permitted for a slight or casual breach of the contract. from 1990 to present. business entrepreneurs engaged in the operation of transloading stations and sugar trading.47. in the span of eight (8) years. petitioners Generoso Villanueva and Raul Villanueva. Plaintiffs-appellants should have paid the P250. in case one of the obligors should not comply with what is incumbent upon him. As stipulated in the agreement. Also.00 or in the alternative to vacate the property in question. The former is based on breach by the other party that violates the reciprocity between the parties. He may also seek rescission. Villa J. the Spouses Gil and Fernandina Galang are ordered to return the partial payments made by petitioners in the amount of P165. The provision that applies in the case at bar is Article 1191. the reciprocity between the parties was violated when petitioners failed to fully pay the balance of P45.000. ISSUE: Whether or not the action for rescission was subsidiary. However. even after he has chosen fulfillment. However. Thus. the contract involved in the case is not one of those mentioned therein. No. with the payment of damages in either case. RIGHT TO RESOLVE/RESCIND: REQUISITES GENEROSO VILLANUEVA and RAUL VILLANUEVA JR.600. more accurately. RULING: Rescission or.957. and respondent Estate of Gerardo L. The injured party may choose between the fulfillment and the rescission of the obligation. while rescission under Article 1383 is a subsidiary action.A Deed of Sale with Assumption of Mortgage Obligation dated 20 August 1990 was made and entered into by and between spouses Fernandina and Gil Galang (vendors) and spouses Leticia and Felipe Cannu (vendees) over the house and lot and petitioners immediately took possession and occupied the house and lot. petitioners introduced improvements after paying P291. if the latter should become impossible.R.000. respondents-spouses exercised their right of rescission when they paid the outstanding balance of the mortgage loan with NHMFC. or eighteen percent thereof.000. while the latter is not. In the case at bar. respondent Ma. through their attorney-in-fact. despite requests from Adelina R. The fact that respondents-spouses accepted.000.00 to respondents-spouses and their failure to update their amortizations with the NHMFC. Adelina Timbang merely accepted the installment payments as an accommodation to petitioners since they kept on promising they would pay.. Their failure to fulfill their obligation gave the respondents-spouses Galang the right to rescission. 1990. the amount of only P75. From 1991 until the present. The subsidiary character of the action for rescission applies to contracts enumerated in Articles 1381 of the Civil Code. Even assuming arguendo that only said amount was left out of the supposed consideration of P250.00 is substantial. It was only after petitioners stopped paying that respondents-spouses moved to exercise their right of rescission. the petitioners’ failure to pay the remaining balance of P45. paid P233. respondent Fernandina Galang. payments in installments does not constitute waiver on their part to exercise their right to rescind the Deed of Sale with Assumption of Mortgage. Out of the P250.00 at the time of the execution of contract in 1990. no other payments were made by plaintiffsappellants to defendants-appellees spouses Galang. petitioners refused to do so. represented by its Judicial Administratrix. 1990 plaintiffs-appellants have paid.000.00 purchase price which was supposed to be paid on the day of the execution of contract in July. of a party to an obligation under Article 1191 is predicated on a breach of faith by the other party that violates the reciprocity between them. and that there was a substantial breach of the obligation. there was no waiver on the part of petitioners to demand the rescission of the Deed of Sale with Assumption of Mortgage. Gonzaga. resolution. Rescission may be had only for such breaches that are substantial and fundamental as to defeat the object of the parties in making the agreement. Gonzaga. Timbang and Fernandina Galang to pay the balance of P45.00. The remedy of rescission under Art. petitioners filed a complaint against respondents for breach of contract. Ownership over the lots is not to pass to the petitioners until full payment of the purchase price. Respondent refused on the ground that petitioners cannot use the premises until full payment of the purchase price. ground for the rescission of the Memorandum of Agreement. the payment of the purchase price is a positive suspensive condition. through counsel. title remains with the vendor and does not pass on to the vendee until the purchase price is paid in full. The trial court decided the case in favor of respondents. 130982 2005 September 16 FACTS: . Inc. unless the contract of sale is rescinded and set aside. Thus. petitioners should be allowed to pay the balance now. The MOA between petitioners and respondents is a conditional contract to sell. On May 28. Respondent merely reiterated the demand for payment. he is enforcing the contract and not rescinding it. Andrew Realty. In their Letter dated June 13. 1991. the vendor remains the owner for as long as the vendee has not complied fully with the condition of paying the purchase price.premises for the next milling season. where RIGHT TO RESOLVE/RESCIND: REQUISITES SPOUSES DOMINGO and LOURDES PAGUYO versus Pierre Astorga and St.R. 1991. in a contract to sell. Petitioners informed respondent that their immediate use of the premises was absolutely necessary and that any delay will cause them substantial damages. Petitioners have always expressed readiness to pay the balance of the purchase price once that is achieved. In a letter-reply dated April 5. Respondent remained firm in her refusal. 1991. but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. an the assailed decision is REVERSED and SET ASIDE. She demanded payment of the balance of the purchase price. specific performance and damages before the RTC-Bacolod City. However. 1991. The records show that the lots were finally released from mortgage in July 1991. since it is established that respondents’ demand for them to pay in April 1991 was premature. 1191 of the Civil Code is predicated on a breach of faith by the other party that violates the reciprocity between them. In Santos v. Since ownership has not been transferred. respondent Administratrix executed a Deed of Rescission rescinding the MOA. petitioners assured respondent of their readiness to pay the balance but reminded respondent of her obligation to redeem the lots from mortgage with the Philippine National Bank (PNB). In a contract to sell. Petitioners may not add further conditions now. G. Petitioners stood pat on their demand. The court have held in numerous cases that the remedy does not apply to contracts to sell. No. If the vendor should eject the vendee for failure to meet the condition precedent. Hence. formally demanded the production of the titles to the lots before they pay the balance of the purchase price. casual or serious. the vendor has lost ownership of the thing sold and cannot recover it. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. The effects in law are not identical. In a contract of sale. RULING: There is no legal basis for the rescission. or even a factual. Consequently. petitioners may not demand production by the respondents of the titles to the lots as a condition for their payment. Thus. if they so desire. ISSUE: non-payment of the price is a negative resolutory condition. Whether there is legal. is conditioned upon the release of the lots from mortgage with the PNB to be secured by the respondents. The MOA merely states that petitioners shall pay the balance “upon approval by the PNB of the release of the lots” from mortgage. The Court of Appeals affirmed the trial court’s decision but deleted the award for moral damages on the ground that petitioners were not guilty of bad faith in refusing to pay the balance of the purchase price. the petiotion is GRANTED. Enclosed with the demand letter was the PNB’s letter of approval dated April 8. Failure to pay the price agreed upon is not a mere breach. the intent of the parties in this regard is evident from the provision that a deed of absolute sale shall be executed only when the lots have been released from mortgage and the balance paid by petitioners. except an action to recover possession in case petitioners refuse to voluntarily surrender the lots. Petitioners’ obligation to pay. in turn. petitioners. Petitioners filed a petition for review before the Court of Appeals. in a contract to sell. 1991. This is entirely different from the situation in a contract of sale. respondent Administratrix wrote petitioners informing them that the PNB had agreed to release the lots from mortgage. and demanded that petitioners stop using the lots as a transloading station to service the Victorias Milling Company unless they pay the full purchase price. 1991. Court of Appeals. on June 19. however. Petitioners gave respondent ten (10) days within which to do so. The demand was ignored. On April 10. It was not required under the MOA. Although there was no express provision regarding reserved ownership until full payment of the purchase price. no further legal action need have been taken by the respondents. Petitioners demanded that respondent show the clean titles to the lots first before they pay the balance of the purchase price. petitioner Lourdes Paguyo entered into an agreement captioned as Receipt of Earnest Money with respondent Pierre Astorga. and the Deed of Assignment of Rights and Interest. The compromise agreement provided that in consideration of the total sum of One Million Seven Hundred Thousand Pesos (P1. or that the parties really intended a donation or some other act or contract. In sum. after its opportunity to enjoy the benefits of an agreement. and turned the building into a profitable business venture. the Deed of Absolute Sale of Building. be allowed to later disown the arrangement when the terms thereof ultimately would prove to operate against its hopeful expectations. there is no requirement that the price be equal to the exact value of the subject matter of sale. Makati City.00 to meet the former’s urgent need for money in connection with their construction business.000. the Mutual Undertaking. petitioners filed a Complaint for the rescission of the Receipt of Earnest Money with the undertaking to return the sum of P763. petitioners failed to comply with their obligation to acquire the lot from the Armas family despite the full financial support of respondents. unless there has been fraud. the parties maintained their business relationship under the terms and conditions of the above-mentioned Receipt of Earnest Money. Articles 1355 and 1470 of the Civil Code state: Art. Thereafter.50. which at that time stood at P917. WHEREFORE. on 5 January 1989. Inc. The court shall decree the rescission claimed. petitioners asked for and were given by respondents an additional P50. which would invalidate. the Deed of Absolute Sale of the Paguyo Building. the RTC ruled in favor of respondents. He may also seek rescission. there was an urgent need to make complete payment to the Armases. The court stated however that. and the Deed of Assignment of Rights and Interest. the existing building known as the Paguyo Building. if the latter should become impossible. rendered a decision on 20 January 1988 approving a Compromise Agreement made between the Armases and the petitioners. lesion or inadequacy of cause shall not invalidate a contract.700. were the owners of a small fivestorey building known as the Paguyo Building located at Makati Avenue. On 06 October 1989.00. 1470. in order to raise the much needed amount. with the payment of damages in either case. mistake or undue influence. and registered the same in the name of respondent St. for a party should not. Indeed.95. Article 1191 states: The power to rescind obligations is implied in reciprocal ones. the parties executed the four documents in question namely. Andrew Realty. After trial. the Decision of the Court of Appeals is AFFIRMED with MODIFICATION. On 29 November 1988. contrary to their express representation with respect to the subject lot.R. Branch 57. on their counterclaim. 133803 2005 September 16 FACTS: . Moreover. at the Makati Assessor’s Office after paying accrued real estate taxes in the total amount of P169. for the sale of the former’s property consisting of the lot which was to be purchased from the Armases. They also sought the rescission of the Deed of Real Estate Mortgage.890.00 considering that petitioners had previously made partial payments to the Armases. even after he has chosen fulfillment.470. Andrew Realty. CASIÑO. in case one of the obligors should not comply with what is incumbent upon him. On appeal.00). petitioners pray for rescission of the Deed of Sale of the building and offer to repay the purchase price after their liquidity position would have improved and after respondents would have refurbished the building. The injured party may choose between the fulfillment and the rescission of the obligation. Gross inadequacy of price does not affect a contract of sale. unless there be just cause authorizing the fixing of a period.174. 1355. On 12 December 1988. or even affect. particularly.Spouses Domingo Paguyo and Lourdes Paguyo. Inc. Thus.000.000. Except in cases specified by law. the Deed of Sale of the Building and the related documents. The petition for preliminary injunction is denied. The lot on which the Paguyo Building stands was the subject of Civil Case wherein the RTC of Makati City. the Deed of Real Estate Mortgage. Simultaneously with the signing of the four documents. Nevertheless. Art. the Armases committed to execute in favor of petitioners a deed of sale and/or conveyance assigning and transferring unto said petitioners all their rights and interests over the parcel of land containing an area of 299 square meters. and the court ordered the plaintiff spouses Domingo and Lourdes Paguyo to pay the defendants Pierre Astorga and St. corner Valdez Street. RIGHT TO RESOLVE/RESCIND: REQUISITES BIENVENIDO M. JR. Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code. No. However. the Court of Appeals affirmed the decision of the trial court ISSUE: Did the Court of Appeals err in upholding the trial court’s decision denying petitioners’ complaint for rescission? RULING: No. The right to rescind a contract involving reciprocal obligations is provided for in Article 1191 of the Civil Code. updated the real property taxes. except as may indicate a defect in the consent. respondents paid petitioners the additional amount of P500. the respondents renamed the Paguyo Building into GINZA Bldg. In order for the petitioners to complete their title and ownership over the lot in question. together with the improvements thereon. versus THE COURT OF APPEALS and OCTAGON REALTY DEVELOPMENT CORPORATION G. the Mutual Undertaking. it will not allow itself to be an instrument to the dissolution of contract validly entered into. 452.727. that the delivery and completion of the work could not be done upon the request and/or representations by the respondent because he failed to make available and/or to prepare the area in a suitable manner for the work contracted. For petitioner’s failure to make complete delivery and installation way beyond the time stipulated despite respondent’s demands.98 sq. he lacked the necessary funds to execute the work as he was totally dependent on the funds advanced to him by respondent. fully aware. In its complaint. For.245. to deliver and install the remainder despite demands for him to do so. WHEREFORE. Whether or not the rescission of the contract by the private respondent is valid. for a total price of P1. representing 40% of the total contract price. preventing the petitioner from complying with the delivery schedule under the contract. Jr. but only for such substantial and fundamental violations as would defeat the very object of the parties in making the agreement. ISSUE: Under the contract. filed a complaint for rescission of contract with damages against petitioner Bienvenido M. more so when viewed in the light of the large amount of money respondent had to pay another contractor to complete petitioner’s unfinished work.609. “the act of a party in treating a contract as cancelled or resolved on account of infractions by the other party must be made known to the other”.39 representing estimated loss on the new price. the right to rescind a contract for non-performance of its stipulations is not absolute. RIGHT TO RESOLVE/RESCIND: REQUISITES . the latter is vested by law with the right to rescind the parties’ agreement. 1991. it is petitioner who breached the contract. that petitioner delivered the required materials and performed the work despite these constraints. owner and proprietor of the Casiño Wood Parquet and Sanding Services.68. it entered into a contract with petitioner for the supply and installation by the latter of narra wood parquet (kiln dried) to the Manila Luxury Condominium Project.RULING: On October 2. not to mention the several letters respondent sent to him demanding compliance with his obligation. The petitioner therefore. Contrary to petitioner’s asseveration..425.30. to pay for said materials in accordance with the terms of payment set out under the parties’ agreement. Casiño. unliquidated damages and cost of money. by the end of the agreed period. respondent thereby agreeing to pay the latter P1.50. conformably with Article 1191 of the Civil Code.394. In the case. petitioner avers that the manner of payment. which amount the petitioner demanded from the respondent with the warning of suspension of deliveries or rescission for contract for non-payment. that in order to minimize losses. however. Thus.e. that the respondent failed to pay the petitioner’s second and third billings for deliveries and work performed in the sum of P105. as he was. respondent paid to petitioner the amount P463. without prior need of resorting to judicial action. is doubtless a substantial and fundamental breach..158. that in accordance with the terms of payment in the contract. it cannot be said that he had no inkling whatsoever of respondent’s recourse to rescission. The general rule is that rescission of a contract will not be permitted for a slight or casual breach. the respondent contracted the services of Hilvano Quality Parquet and Sanding Services to complete the petitioner’s unfinished work. relative to the parties’ agreement for the supply and installation by petitioner of narra wood parquet ordered by respondent. respondent who advised or issued orders to the petitioner to suspend the delivery and installation of the wood parquet. It is thus proper that respondent acted well within its rights in unilaterally terminating its contract with petitioner and in entering into a new one with a third person in order to minimize its losses. of which respondent is the developer. However. has failed to comply with his prestations under his contract with respondent. petitioner and respondent had respective obligations. after delivering only less than one-half of the contracted materials.198. the petition is DENIED and the assailed Decision and Resolution of the appellate court AFFIRMED. which created a storage problem for the petitioner. that the contract stipulated that full delivery by petitioner of labor and materials was in May 1990. be considered as “slight or casual”. that after delivering only 26. contrary to petitioner’s claim. that due to petitioner’s unlawful and malicious refusal to comply with its obligations. respondent Octagon Realty Development Corporation. by any measure. the former to supply and deliver the contracted volume of narra wood parquet materials and install the same at respondent’s condominium project by May. that petitioner misrepresented to respondent that he is qualified to do the work contracted when in truth and in fact he was not and.. petitioner cannot feign ignorance of respondent’s intention to rescind. ft. the latter failed to comply with his contractual commitment. petitioner failed. period of delivery and completion of work and/or full delivery of labor and materials were modified. petitioner incurred in delay in the delivery of the remainder of 34. furthermore. 1989.00. 1990. respondent incurred actual damages in the amount of P912. True. of his non-compliance with what was incumbent upon him. But while respondent was able to fulfill that which is incumbent upon it by making a downpayment representing 40% of the agreed price upon the signing of the contract and even paid the first billing of petitioner. and the latter. respondent alleges that on December 22. i.02 sq. the breach he committed cannot. of wood parquet materials. However.487. Likewise. ft. that it was the respondent who failed to prepare the area suitable for the delivery and installation of the wood parquet. Lauro and El Dorado finally filed a complaint for rescission of the Deed of Sale.00 as requested by the spouses Carrascoso. 2005 FACTS: El Dorado Plantation.00 was paid to El Dorado pursuant to the terms and conditions of the Deed of Sale.00. failed to perform his correlative obligation of paying in full the contract price in the manner and within the period agreed upon. Such failure to pay the price in the manner prescribed by the contract of sale entitles the unpaid seller to sue for collection or to rescind the contract.000 hectare portion of the property subject of their July 11. However.300.000. different motions and actions were done by both parties. For the failure of Carrascoso to give his reply.000. Carrascoso and the Philippine Long Distance Telephone Company (PLDT). T-6055 in the name of Carrascoso and the revival of TCT No. as Director and Minority Stockholder and On Behaf of Other Stockholders of El Dorado Plantation Inc. 1975.825 hectares covered by Transfer Certificate of Title (TCT) No.000. On March 24. ISSUE: Whether or not the rescission is valid. They also sought the cancellation of TCT No. Carrascoso and his wife Marlene executed a Real Estate Mortgage] over the property in favor of Home Savings Bank (HSB) to secure a loan in the amount of P1. later sent a letter of February 21. on July 11.00. 1972.. PLDT Agricultural Corporation (PLDTAC). The appellate court reversed the decision of the trial court. free from any liens and encumbrances.000. In the case at bar.00 to Carrascoso upon issuance of title to PLDTAC.000. PLDT and PLDTAC filed their respective appeals to the Court of Appeals. RULING: The right of rescission of a party to an obligation under Article 1191 is predicated on a breach of faith by the other party who violates the reciprocity between them. PLDT and PLDTAC thereupon filed their Answer In Intervention with Compulsory Counterclaim and Crossclaim against Carrascoso. Of this amount.000.000. The non-payment of the price by the buyer is a resolutory condition which extinguishes the transaction that for a time existed. a Resolution was passed authorizing Feliciano Leviste. Under the Deed of Sale. 1978. Carrascoso. On February 15.000 hectare portion of the property to its subsidiary. represented by one of its minority stockholders. executed an Agreement to Buy and Sell whereby the former agreed to sell 1. the amount of P2. 164489 December 14. through its President Ramon Cojuangco. as vendee forged on April 6.00 plus interest thereon at the rate of 10% per annum within a period of three (3) years from the signing of the contract on March 23. called the attention of the Board to Carrascoso’s failure to pay the balance of the purchase price of the property amounting to P1. and discharges the obligations created thereunder. 1972 Deed of Sale of Real Property. versus COURT OF APPEALS. P290. sold the property to Fernando O.00.000.FERNANDO CARRASCOSO JR. by Deed of Absolute Sale conveyed the aforesaid 1.000. In turn. to negotiate the sale of the property and sign all documents and contracts bearing thereon. When Jose Leviste informed him that El Dorado was .620. 1975 passed without him having complied therewith. the real estate mortgage in favor of HSB was amended to include an additional three year loan of P70. and EL DORADO PLANTATION. In the meantime. No. 1972. The latter.000.000.00 per hectare or a total of P3. through Feliciano Leviste.00. then President of El Dorado. the 3-year period for Carrascoso to fully pay for the property on March 23. Carrascoso was to pay the full amount of the purchase price on March 23. 1975 Agreement to Buy and Sell. and the buyer obligates itself to pay therefor a price certain in money or its equivalent.000. In the meantime. at a special meeting of El Dorado’s Board of Directors. 1977 to Carrascoso informing him that in view of his failure to pay the balance of the purchase price of the property.00 of which was payable to PLDT upon signing of said Deed. El Dorado. Occidental Mindoro. Lauro P. 123672 & G. The terms of the Deed are clear and unequivocal: Carrascoso was to pay the balance of the purchase price of the property amounting to P1. T-93 in the name of El Dorado.300. 1972. On July 31. Inc. The seller obligates itself to transfer the ownership of and deliver a determinate thing. and P380. INC. Lauro’s desire to rescind the sale was reiterated in two other letters addressed to the Board. On May 18. Lauro Leviste. Carrascoso. as President of El Dorado.000 hectares of the property to the latter at a consideration of P3. Leviste.00 was paid to Philippine National Bank to release the mortgage priorly constituted on the property and P210. on the other hand. Leviste G. as vendor and PLDT. A contract of sale is a reciprocal obligation. El Dorado was seeking the rescission of the March 23. R.000. a stockholder and member of the Board of Directors of El Dorado.R. LAURO LEVISTE. 1972. (El Dorado) was the registered owner of a parcel of land with an area of approximately 1. 1977 a Deed of Absolute Sale over the 1. 1972 Deed of Sale of Real Property which effectively transferred ownership of the property to Carrascoso.000. Carrascoso. Jose P. PLDT and PLDTAC filed an Urgent Motion for Intervention which was granted by the trial court. Thereafter. 1975. T-93 situated in Sablayan. Jr. The RTC dismissed the complaint. No. PLDT. El Dorado already performed its obligation through the execution of the March 23. for a consideration of P3. COURT OF APPEALS BARRETTO & SONS. possession of the 1.. petitioner again requested another extension of sixty days to pay the loan. Inc.000 hectare portion of the property. Logarta. RIGHT TO RESOLVE/RESCIND: REQUISITES GOLDENROD. PIO BARRETTO REALTY DEVELOPMENT. the period given to him within which to fully satisfy his obligation had long lapsed. leaving things in their status before the celebration of the contract.000. Inc. However. PLDT cannot shield itself from the notice of lis pendens because all that it had at the time of its inscription was an Agreement to Buy and Sell with Carrascoso. mutual restitution follows to put back the parties to their original situation prior to the consummation of the contract. which in turn sold the . wrote private respondent Anthony Que informing him on behalf of petitioner that it could not go through with the purchase of the property due to circumstances beyond its fault ( the denial by UCPB of its request for extension of time to pay the obligation). Quiapo. and ANTHONY QUE G. In 1988. which were mortgaged with the United Coconut Planters Bank (UCPB). 1977.5 million loan obligation of BARRETTO REALTY on the deadline set for payment. Respondent BARRETTO REALTY allegedly incurred expenses for the reconsolidation amounting to P250. pending full payment of any mortgage obligation of Carrascoso. Therefore. (BARRETTO & SONS) owned forty-three parcels of registered land with a total area of 18. the deadline set by the bank for payment.000. No. the obligation of the corporation with UCPB remained unpaid making foreclosure of the mortgage imminent..00 price of the farm plus legal interest from receipt thereof until paid. INC. 126812 1998 Nov 24 FACTS: Pio Barretto and Sons. the former acted in bad faith while the latter acted in good faith. Carrascoso should return to PLDT/PLDTAC the P3. petitioner did not pay UCPB the P24. which the bank granted. for the price of P23 million. all its assets and liabilities including the property located in Quiapo were transferred to respondent Pio Barretto Realty Development.. 1977 and May 30. Inc. Inc. Ownership was retained by Carrascoso which El Dorado may very well recover through its action for rescission. INC.500 square meters located at Carlos Palanca St. which in effect is a mere contract to sell that did not pass to it the ownership of the property. one of the two consolidated lots. President of Logarta Realty and Development Corporation. Moreover. In the meantime BARRETTO REALTY was able to cause the reconsolidation of the forty-three titles covering the property subject of the purchase into two titles covering Lots 1 and 2. WHEREFORE.000 hectare portion of the property should be turned over by PLDT to El Dorado. The exercise of the power to rescind extinguishes the obligatory relation as if it had never been created. On 31 August 1988 respondent BARRETTO REALTY sold to Asiaworld Trade Center Phils. When the term of existence of BARRETTO & SONS expired. it is the duty of the court to require both parties to surrender that which they have respectively received and to place each other as far as practicable in his original situation. The April 6. and as the Court affirms the declaration by the appellate court of the rescission of the Deed of Sale executed by El Dorado in favor of Carrascoso. Lot 2. 1977 Deeds of Absolute Sale being subject to the notice of lis pendens. INC. As regards the improvements introduced by PLDT on the 1. but the bank demurred. This is so because it was Carrascoso’s refusal to pay his just debt to El Dorado that caused PLDT/PLDTAC to suffer pecuniary losses. as expressly stipulated in the Deed. Goldenrod. Manila.seeking rescission of the contract by letter of February 21. The appellate court’s decision ordering the rescission of the March 23. 1972 Deed of Sale of Real Property between El Dorado and Carrascoso being in order. offered to buy the property from BARRETTO & SONS.00. On 13 October 1988 respondent BARRETTO REALTY executed a deed transferring by way of "dacion" the property reconsolidated as Lot 1 in favor of UCPB. The rescission is equivalent to invalidating and unmaking the juridical tie. (GOLDENROD).. and P20 million which was the balance of the purchase price of the property to be paid in installments within a 3-year period with interest at 18% per annum. Between Carrascoso and PLDT/PLDTAC. It asked for an extension of one month or up to 31 July 1988 to settle the obligation. The El Dorado Board Resolution and the Affidavit of Jose Leviste interposing no objection to Carrascoso’s mortgaging of the property to any bank did not have the effect of suspending the period to fully pay the purchase price.5 million representing the outstanding obligations of BARRETTO REALTY with UCPB on 30 June 1988. The reconsolidation of the titles was made pursuant to the request of petitioner in its letter to private respondents on 25 May 1988.R. the rescission has the effect of abrogating the contract in all parts.. which acted as agent and broker of petitioner. the petitions are DENIED.000. vs. a distinction should be made between those which it built prior to the annotation of the notice of lis pendens and those which it introduced subsequent thereto. On 30 August 1988 Alicia P. Petitioner's offer to buy the property resulted in its agreement with respondent BARRETTO REALTY that petitioner would pay P24. the extinction having a retroactive effect. Where a contract is rescinded. RULING: Under Art. It was held in the case of University of the Philippines v. G. Inc. Petitioner claims she went to private respondent pawnshop. its silence thereon suggests an admission of the veracity and validity of the rescinding party's claim.000. private respondent BARRETTO REALTY. 408 SCRA 560 ONG VS. it shall be considered as part of the purchase price and as proof of the perfection of the contract. she instructed her private secretary. 5. and then absconded with said amount and the pawn ticket. ISSUE: Whether or not the petitioner's extrajudicial rescission of its agreement with private respondents was valid. . especially in the absence of a clear and express agreement thereon. By reason of its failure to make payment petitioner. petitioner Loreta Serrano bought some pieces of jewelry for P48. Niceta informed the latter of this offer and suggested that petitioner go to the Long Life pawnshop to check the matter out. Petitioner claims that Yu An Kiong agreed. CA. when petitioner was in need of money. They told Niceta the ticket probably covered jewelry once owned by the latter which jewelry had been pawned by one Josefina Rocco. If the party does not oppose the declaration of rescission of the other party. 8. 1. petitioner resorted to extrajudicial rescission of its agreement with private respondents. It was an advance payment which must be deducted from the total price. A such.500. private respondents did not interpose any objection to the rescission by petitioner of the agreement. 45125 1991 Apr 22 FACTS: Sometime in early March 1968. Subsequently. Logarta again wrote respondent Que demanding the return of the earnest money to GOLDENROD.000. INC. up to the date of the EFFECTS OF RESOLUTION/RESCISSION 1. but to no avail. 1482 of the Civil Code. CA. Hence. Josefina Rocco. TIU. sold the same to ASIAWORLD.000. verified that indeed her missing jewelry was pledged there and told Yu An Kiong not to permit anyone to redeem the jewelry because she was the lawful owner thereof. in turn.R. 30 August 1988. and it fails to reply or protest against it. Yu An Kiong. 411 SCRA 18 REYES VS. CA. 3. one day after its President Anthony Que received the broker's letter rescinding the sale.00 plus legal interest from the date it received notice of rescission from petitioner." Three months later. 13. ASIAWORLD. 370 SCRA 56 VELARDE VS. No. COURT OF APPEALS and LONG LIFE PAWNSHOP. Petitioner clearly stated without any objection from private respondents that the earnest money was intended to form part of the purchase price. i. SERRANO VS. 6. Suspecting that it was the same jewelry she had sold to petitioner. FEB. 7. private respondent BARRETTO REALTY even sold Lot 2 of the subject consolidated lots to another buyer.property to ASIAWORLD for P24 million. Article 1385 of the Civil Code provides that rescission creates the obligation to return the things which were the object of the contract together with their fruits and interest. Gloria Duque and Amalia Celeste informed Niceta Ribaya that a pawnshop ticket issued by private respondent was being offered for sale.00 from Niceta Ribaya.000. informed private respondents that it would no longer push through with the sale. whenever earnest money is given in a contract of sale. 1999 LORETA SERRANO vs. 2002 EQUATORIAL REALTY VS. 417 SCRA 415 GIL VS. return or payment. MAYFAIR THEATER. ("Long Life"). specifying the grounds therefor. sold the property to other persons.00 with its principal owner and General Manager. to pawn the jewelry. by virtue of the extrajudicial rescission of the contract to sell by petitioner without opposition from private respondents who. However. It would be most inequitable if respondent BARRETTO REALTY would be allowed to retain petitioner's payment of P1. in turn. through its agent. 2. had the obligation to return the earnest money of P1. Sometime after the said sale. CA. EVANGELISTA..000. OCT. 1999 UY VS. Josefina then went to private respondent Long Life Pawnshop. as the vendor. 9.00 and at the same time appropriate the proceeds of the second sale made to another. As found by the Court of Appeals. de los Angeles that the right to rescind contracts is not absolute and is subject to scrutiny and review by the proper court. pledged the jewelry for P22. 4. In other words. The pawnshop ticket issued to Josefina Rocco stipulated that it was redeemable "on presentation by the bearer. 361 SCRA 56 ASUNCION VS.e. Therefore. SEPT. It was held further that rescission of reciprocal contracts may be extrajudicially rescinded unless successfully impugned in court. Petitioner then filed a complaint with the RTC of Manila against private respondents for the return of the amount of P1 million and the payment of damages including lost interests or profits. on 13 October 1988 respondent BARRETTO REALTY also conveyed ownership over Lot 1 to UCPB which. the parties could not have intended that the earnest money or advance payment would be forfeited when the buyer should fail to pay the balance of the price. LIM. Nieves Palma Gil. Petitioner is entitled to collect the balance of the value of the jewelry.. the next day. The respondent pawnbroker was. The court issued a writ of execution. 2003 411 SCRA 19 FACTS: Concepcion Palma Gil. 1953.100.2 square meters. On October 13. 1980. However. corresponding to the amount of the loan. entitled to demand payment of the loan extended on the security of the pledge before surrendering the jewelry. spouses Iluminada Pacetes and Agapito Pacetes executed a deed of absolute sale over the disputed lots in favor Constancio Maglana. On April 27. Concepcion died. Respondent pawnbroker acted in reckless disregard of that duty in the instant case and must bear the consequences. of course. Nieves. The pawn ticket was not a negotiable instrument under the Negotiable Instruments Law nor a negotiable document of title under Articles 1507 et seq. ordering the defendant to deliver to the plaintiff an undivided portion of the said property with an area of 256. the prudent recourse of the pawnbroker was to file an interpleader suit. with an area of 14 square meters. however. On 4 October 1968. Luis B. On March 16. 1956.On 9 July 1968. 127206 September 12. Concepcion filed a complaint against her sister Nieves with the then Court of First Instance of Davao City for specific performance. a member of the Manila Police went to the pawnshop. refused to execute the requisite deed in favor of her sister.00 to be paid upon delivery of the Title. impleading both petitioner and Tomasa de Leon. without prejudice to its right to recover damages from Josefina Rocco. Such a duty was imposed by Article 21 of the Civil Code. HON.500. The spouses Angel and Nieves Villarica had constructed a two-storey commercial building on the property.00. CONSTANCIO MAGLANA. with an area of 560 square meters. After due proceedings. Lot 59-C-3. did not dissolve that duty.00. And on August 4. and her sister. RULING: Having been notified by petitioner and the police that jewelry pawned to it was either stolen or involved in an embezzlement of the proceeds of the pledge. Thereafter. And on April 22. On October 24. rendered a decision in favor of petitioner. upon the assumption that it had given the loan in good faith and was not a "fence" for stolen articles and had not conspired with the faithless Josefina Rocco or with Tomasa de Leon. the court rendered judgment on April 7. The sheriff thereafter executed a Deed of Transfer to Concepcion over Lot 59-C-1 and Lot 59-C-2 with a total area of 256. Instead of doing so. ISSUE: Whether or not the Court of Appeals committed reversible error in rendering its Decision.2 square meters. Private respondent Long Life in turn is entitled to seek reimbursement from Josefina Rocco of the amount of the damages it must pay to petitioner. and Lot 59-C-4. . claimed to be owner thereof. JR. the sheriff had the property subdivided into four lots namely. VICENTE HIZON.00 is to be paid upon signing of the contract and the balance of P14.2 square meters. No. 1954 in favor of Concepcion. to redeem the jewelry. to compel the defendant to cede and deliver to her an undivided portion of the said property with an area of 256. married to Angel Villarica.600. with an area of 38 square meters. who redeemed the things pledged a day after petitioner and the police had notified Long Life. were the co-owners of a parcel of commercial land with an area of 829 square meters in Davao City. The circumstance that the pawn ticket stated that the pawn was redeemable by the bearer. all covered by a subdivision plan. with an area of 218 square meters.000. and a complaint first for qualified theft and later changed to estafa was subsequently filed against Josefina Rocco. Lot 59-C-1. petitioner went to the Manila Police Department to report the loss. Hence.500. 1956. and ANGEL PALMA GIL VS. 1966.00 upon which P7. of the Civil Code. EFFECTS OF RESOLUTION/RESCISSION PERLA PALMA GIL. Hon. showed Yu An Kiong petitioner's report and left the latter a note asking him to hold the jewelry and notify the police in case someone should redeem the same. Nieves appealed to the Court of Appeals which affirmed the assailed decision. The decision was however reversed on appeal and the complaint dismissed by the public respondent Court of Appeals. If the third person Tomasa de Leon. Yu An Kiong permitted one Tomasa de Leon. or the sum of P26. Maglana ewecuted a deed of sale in favor of Emilio Matulac for the purchase price of P150. petitioner filed a complaint for damages against private respondent Long Life for failure to hold the jewelry and for allowing its redemption without first notifying petitioner or the police. the court issued an order authorizing ex-officio Sheriff Eriberto Unson to execute the requisite deed of transfer to the plaintiff over an undivided portion of the property with a total area of 256. Lot 59-C-2. private respondent pawnbroker became duty bound to hold the things pledged and to give notice to petitioner and the police of any effort to redeem them. Reyes. exhibiting the appropriate pawnshop ticket. in an appropriate action against Josefina Rocco. Concepcion executed a deed of absolute sale over Lot 59-C1 in favor of Iluminada Pacetes for a purchase price of P21. 1959. COURT OF APPEALS.2 square meters. leaving all her obligations to her heirs including the petitioners. HEIRS OF EMILIO MATULAC.R. the trial court correctly held that private respondent was liable to petitioner for actual damages which corresponded to the difference in the value of the jewelry and the amount of the loan. AGAPITO PACETES & The REGISTER OF DEEDS OF DAVAO CITY G. are not the injured parties entitled to a rescission of the deed of absolute sale. It was Concepcion’s heirs. reciprocal obligations are to be performed simultaneously so that the performance of one is conditioned upon the simultaneous fulfillment of the other.000 on 1969. the to Emilio the transfer certificate title 1991. as successors-in-interest of the vendor. 1993.84 to GSIS. Emilio and petitioners appealed the decision to the Court of Appeals (CA). the consignation by the vendee of the purchase price of the property is sufficient to defeat the right of the petitioners to demand for a rescission of the said deed of absolute sale. Thus. the sales of the property from Concepcion Palma Gil to Iluminada Pacetes. In 1987.On June 11. RULING: YES. then to Constancio Maglana and to Emilio Matulac. the CA dismissed Emilio and docket fees which became final and On February 15. 1984. The plaintiffs appealed to the Court of Appeals which affirmed the latter’s decision. 1998 granted the respondents’ motion. 1984 judgment ordering the rescission of the deed of absolute sale with partial assumption of mortgage executed by petitioners and respondents is proper.R. thence.701. in G. including the petitioners. Petitioners filed a complaint for the rescission of the deed of absolute sale with partial assumption of mortgage on September 6. neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. The trial court issued an alias writ of execution upon issuance of order granting petitioners’ motion. respondents herein. EFFECTS OF RESOLUTION/RESCISSION SERRANO VS. failed to settle the amount to the GSIS. who were obliged to deliver to the vendee a certificate of title over the property under the latter’s name. The respondents’ appealed the decision before the CA which . They were able to pay P18. CA on May 12. P67. The payment by Emilio of the redemption price to the GSIS was made pending appeal by the respondents from the trial court’s order and concealed said payment to petitioners. 1996 claming for the first time that he had redeemed the said properties from GSIS in 1988 which was denied by the court. No. ISSUE: Whether or not the trial court’s September 6. The petitioners therefore. The couple mortgaged said properties in favor of Government Service Insurance System (GSIS) for a security loan of P50. The petitioners filed with the CA a petition for certiorari and/or prohibition praying for the nullification of the trial court orders. the trial court rendered judgment in favor of the defendants. the trial court was barred by the rulings of the Court. 1994. but had failed to comply with the obligation.000 and the balance of P32.000 to be paid to GSIS. The trial court ruled that this Court had affirmed. the court granted the motion for execution of the trial court’s September 6. RULING: Article 1191 in tandem with Article 1592 of the New Civil Code are central to the issues at bar. Furthermore. No. From the moment one of the parties fulfills his obligation. in reciprocal obligations.R. L-60690.000. hence. Accordingly. In petitioners’ appeal for failure to pay the requisite executory. ISSUE: Whether or not the trial court erred in not declaring the sale of the properties in question from Iluminada Pacetes to Constancio Maglana. The petition for review was denied for lack of merit. Emilio Geli and his children. Defendant filed a motion to quash on September 6. the spouses Serrano as vendors and respondents spouses Emilio and Evelyn Geli as vendees executed a deed of absolute sale with partial assumption of the mortgage for the price of P70. The right of rescission of a party to an obligation under Article 1191 of the New Civil Code is predicated on a breach of faith by the other party that violates the reciprocity between them. The trial court rendered a decision ordering rescission of the deed. The GSIS foreclosed the mortgage during the pendency of the appeal. Under the last paragraph of Article 1169 of the New Civil Code. Spouses Geli paid the amount of P38. A certificate of sale over the property was issued in favor of the GSIS it being the highest bidder.000. CA issued an order restraining the implementation of the alias writ of execution and the notice to vacate issued by the trial court. 1984 decision upon the motion of the petitioners which was not implemented. 85538 and G. 1956. On the same year. free from all liens and encumbrances within 120 days from the execution of the deed of absolute sale on October 24. delay in the other begins. from Constancio Maglana to Emilio Matulac NULL and VOID for there was delay incurred by Concepcion in not delivering the Title of the subject lands to Pacetes. Emilio paid the redemption price of GSIS executed a deed of transfer and turned over (TCT) without informing Serrano and the CA. COURT OF APPEALS 417 SCRA 415 FACTS Petitioners spouses Arturo and Niceta Serrano are the owners of the parcel of land and the house constructed thereon located in Quezon City and a parcel of land located in Quezon City. REYES VS.000.00 shall be paid at a bank designated by the buyer but upon the complete vacation of all the tenants or occupants of the property.000. Harrison Street. Petitioner claimed that he had informed Harrison Lumber to vacate the property before the end of January 1995.701. The contract also provided that in the event. respondents are obliged to vacate the subject property. the trial court’s decision became final and executory. 1997. The respondents. Pasay City on November 7. He learned that Reyes had already sold the property to Line One Foods Corporation on March 1. P400. The decision of the CA is reversed and set aside. No. R. P10.00 should be paid as down payment. he would hold them liable for the penalty of P400. Harrison Lumber occupied the property as lessee with a monthly rental of P35.00 a month as provided in the contract to sell.000. Reyes is seeking rescission of the Contract to Sell. With the rescission of the deed of sale. it had already started transferring some of its merchandise to its new business location in Malabon.000. 2003 408 SCRA 560 FACTS: Petitioner David Reyes. Lim filed his Answer stating that he was ready and willing to pay the balance of the purchase price on or before March 8. Lim also denied conniving with Keng and Harrison Lumber. EFFECTS OF RESOLUTION/RESCISSION On November 2. entered into a contract to sell a parcel of land located along F. 1994. The contract provided that the total consideration for the purchase of the property is P28.00 and upon signing of the contract. the rights of Emilio Geli under said deed to redeem the property had been extinguished. 1995.00 monthly penalty would have accumulated and equaled the unpaid purchase price of P18.000.000. 1995.00.782.000.00 until the complete vacation of the premises by the tenants. 1997. His complaint also alleged that Lim connived with Harrison Lumber not to vacate the property until the Meanwhile. the court denied Reyes’ motion for reconsideration and ordered Reyes to deposit the P10 million down payment on or before October 30. The purpose of the exercise of equity jurisdiction in this case is to prevent unjust enrichment and to ensure restitution. The petitioners cannot even be compelled to subrogate the respondents to their right under the real estate mortgage over the property which the petitioners executed in favor of GSIS since the payment of the redemption price was made without the knowledge of the petitioners. 1997. Reyes also informed Chuy Cheng Keng and Harrison Lumber that if they failed to vacate by March 8. 1995 for P16.000. ISSUE: Whether or not the petitioner should deposit the P10 million down payment to the custody of the trial court as an effect of rescission of the Contract to Sell RULING: The Supreme Court held that an action for rescission could prosper only if the party demanding rescission can return whatever he may be obliged to restore should the court grant the rescission. The trial court denied Reyes’ motion to set aside the order dated March 6.000. the tenants or occupants of the premises shall not vacate the premises on March 8.B.00. Neither did respondents file any motion for reconsideration for the dismissal of the appeal. Reyes file a petition for certiorari with the Court of Appeals but the appellate court dismissed the petition for lack of merit. Keng and Harrison Lumber denied that Lim had connived with them. 1995. On the other hand.000. 1995. LIM G. On March 9. as seller. The petitioners are obliged to return the amount of P67.000.480. Lim requested on March 6. the vendee shall withhold the payment of the balance of P18. In sum. Consequently.000. 134241 August 11. 1997 in open court that Reyes be ordered to deposit the P10 million down payment with the cashier of the trial court and the court granted this motion.000. On October 3. Lim prayed for the cancellation of the Contract to Sell and for the issuance of writ of preliminary attachment against Reyes but the court denied the writ.was subsequently dismissed for failure to pay the requisite docket fees. Lim requested a meeting with Reyes through the latter’s daughter but Reyes kept postponing them. Lim rejected Reyes’ offer and proceeded to verify the status of Reyes’ title to the property. The trial court in the exercise of its equity jurisdiction may validly order the deposit of P10 million down payment in court. however. . and Jose Lim. 1995. Harrison Lumber alleged that Reyes approved their request for an extension of time to vacate the property and that as of March 1995.000.000. Reyes offered to return the P10 million down payment to Lim because Reyes was having problems in removing the lessee from the property.04 to be deducted from the amount due the petitioners under said trial court’s decision. are entitled to be reimbursed by the petitioners to the extent that the latter were benefited. as buyer.00 and the vendor agrees to pay a penalty of 4% per month to the vendee based on the down payment of P10. Reyes filed a Motion for Leave to File Amended Complaint due to the filing by Lim of a complaint for estafa against Reyes as well as an action for specific performance and nullification of sale and title plus damages before another trial court. The balance of P18. . Reyes sold to Line One Foods Corporation the property. 1159. Tiu. the correlative duty of the obligation of the seller to deliver the property is the obligation of the buyer to pay the agreed price. ONG. CELY Y. the remedy of rescission is not available. IAC. and when David S. And the SECURITIES AND EXCHANGE COMMISSION. Inc.. REGISTER OF DEEDS OF PASAY CITY. to their proposed subscriptions. 1994. the appealed decision of the appellate court is affirmed and the petition is dismissed. to do or not to do.To subscribe top Reyes’ contention will unjustly enrich Reyes at the expense of Lim. in lieu of Art. 1191. MOLY YU GAW. and to pay. Wilson T. VS. 1156. ONG. JUANITA TAN ONG. the Ongs invoke Articles 1156 and 1159 of the New Civil Code which state – "Art.800 shares more of FLADC at a par value of P100. also when they refused to credit the number of FLADC shares in favor of the Tius commensurate to their 151 square meter property contribution.200 shares in order to complete a subscription of 1 million shares. Hence. D.000. Moreover. Ong and Julie Ong Alonzo. who paid the P10 million down payment in good faith only to discover later that Reyes had subsequently sold the property to another buyer. Moly Yu Gaw. ISSUE: ONG YONG. "Art. BELEN SEE YU. respectively of FLADC. WILSON T. The Court of Appeals did not err in ruling that the "Pre-Subscription Agreement" of the parties dated August 15. The Supreme Court find the equities weigh heavily in favor of Lim.902. RULING: No. Juanita Tan Ong. the correlative obligation of the Tius to let the Ongs have and exercise the functions of the positions of President and Secretary is the obligation of the Ongs to let the Tius have and exercise the functions of Vice-President and Treasurer. ONG. William T. LOURDES C. Belen See Yu. John Yu and Lourdes C. In the case at bar. there are here two (2) separate and distinct obligations each independent of the other the obligation to subscribe to.000. MASAGANA TELAMART. to illustrate their point that "As in the Songcuan case. 50% of the increased capital stock of FLADC. Cely Y. were invited by the Tius to invest in FLADC. Ong. ONG. 2002 FACTS: The Masagana Citimall. An obligation is a juridical necessity to give. Ong. By the Pre-Subscription Agreement. D. Specifically. JOHN YU. TIU.30 square meter property contribution. Tiu. but only after the Ongs and the Tius have subscribed each to 50% of the increased capital stock of FLADC. petitioners. EFFECTS OF RESOLUTION/RESCISSION The controversy between the two parties arose when the Ongs refused to credit the number of FLADC shares in the name of Masagana Telamart.00 per share while the Tius were to subscribe to 549. the Ongs allege that rescission is applicable only to reciprocal obligations and the "Pre-Subscription Agreement" does not provide for reciprocity. respondents G. TIU. 1994 may be rescinded under Article 1191 of the New Civil Code. the Ongs are now estopped from denying the applicability of Art. Terence Y. INC. the Ong Group composed of Ong Yong. Commensurate P100. These became the basis of the Tius' unilateral rescission of the Pre-Subscription Agreement on February.R." In this petition. No. the Ongs were to subscribe to 1 million shares of FLADC at a par value of P100. Obligations arising from contracts have the force of law between the .00 in cash. TERENCE Y. TIU. both parties agreed to maintain equal shareholdings in FLADC with the Ongs investing cash while the Tius contributing property. TIU. Tiu and Cely Y. hence. WILLIE T. Tiu. Reyes cannot claim ownership of the P10 million down payment because Reyes had already sold to another buyer the property for which Lim made the down payment. Tiu were proscribed from assuming and performing their duties as Vice-President and Treasurer.The Ongs illustrate reciprocity in the following manner: In a contract of sale. In order to recover from its floundering finances. The Ongs cited the case of Songcuan vs. Tiu. ANNA L. a commercial complex owned and managed by the First Landlink Asia Development Corporation (FLADC) was threatened with incompletion when its owner found in its financial distress in the amount of P190M for being indebted to the Philippine National Bank (PNB). FLADC was then fully owned by the Tiu Group composed of David S. commensurate to its 1. WILLIAM T. 144476 February 1. And JULIE ONG ALONZO. the Ongs were to pay Whether Court of Appeals erred in ruling that the ‘Pre-Subscription Agreement’ of the parties may be rescinded under Article 1191 of the New Civil Code.00 per share over and above their previous subscription of 450. and the obligation to install the Ongs and the Tius as members of the Board of Directors and to certain corporate positions. INTRALAND RESOURCES DEVELOPMENT CORP. the execution of a Pre-Subscription Agreement by and between the Tiu and Ong Groups on August 15. DAVID S. Anna L. while the Tius were to contribute the properties by way of separate Deeds of Assignments. Hence. 1191 to the present controversy. COURT OF APPEALS. DAVID A. upheld the trial court. In the case at bar. in the instant case. 2. The Deed of Absolute Sale was rescinded and the lot was registered in the name of Mayfair. ISSUES: 1. Equatorial filed a collection suit for a sum of money against Mayfair claiming payment of rentals or reasonable compensation for the use of the properties AFTER its lease contracts had expired. Since there was no actual rescission of the contract. for which Mayfair filed a motion for execution. Equatorial did not obtain right of ownership over the property when it entered into the Deed of Absolute Sale. Mayfair sued Equatorial for specific performance and annulment of the Deed of Absolute Sate with Carmelo. those who failed to fulfill their obligations should be required to perform their obligations under the agreement. entered into a Contract of Lease with Mayfair Theater for a parcel of land with 2-storey building for 20 years. The Deed of Absolute Sale entered into by Carmelo and Equatorial was a violation of the right of first refusal granted by Carmelo to Mayfair. While the execution of a public instrument of sale is recognized by law as the equivalent of delivery of the thing sold. in September 1997. The Supreme Court.Contrary to the Ongs' assertion. Equatorial did not get ownership right (real right)." and that should there be any violation. such constructive or symbolic delivery. However. Inc. Carmelo & Bauerman. the Songcuan case does not apply squarely to this case. Is the right of first refusal granted to Mayfair through the lease contracts with Carmelo superior to that of Equatorial. INC. The execution of the deed of absolute sale as a form of constructive delivery is a legal fiction. On the other hand. The Ongs illustrate reciprocity in the following manner: In a contract of sale.000. 133879 November 21. the Court ruled that Art. is deemed negated by the failure of the vendee to take actual possession of the property sold. However. The trial court ruled in favor Mayfair holding that the Deed of Absolute Sale in the mother case DID NOT confer on Equatorial any vested or residual property rights. Did Equatorial obtain rights to the property when it entered into Deed of Absolute Sale with Carmelo and hence. there was no consummation of the sale. Dissenting opinion: The Deed of Absolute Sale was deemed a rescissible contract and should remain valid until rescinded. Therefore. In both contracts. the obligations of the two (2) groups to pay 50% of the increased capital stock of FLADC and to install them as members of the Board of Directors and to certain corporate positions are simultaneous and arise upon the execution of the pre-subscription agreement. It holds true only if there is no legal impediment that may prevent the passing of the property from the vendor to the vendee. the present case. entitled to the fruits thereof? 2. The right of first refusal held by Mayfair was such legal impediment. Carmelo entered into a second Contract with Mayfair for another portion of the property also for 20 years. 1191 to rescind the right of the Alviars to repurchase does not apply because their corresponding obligations can hardly be called reciprocal because the obligation of the Alviars to lease to Songcuan the subject premise arises only after the latter had reconveyed the realties to them. In the Songcuan case. EFFECTS OF RESOLUTION/RESCISSION Spouses MARIANO Z. VELARDE VS. Two years later in March. No. on July 30. and therefore a bar to the consummation of the Deed of Absolute Sale between Carmelo and Equatorial? RULING: 1. INC. EFFECTS OF RESOLUTION/RESCISSION EQUATORIAL REALTY DEVELOPMENT. MAYFAIR THEATER. and therefore. Since Mayfair was in actual possession of the property by virtue of the lease contract with Carmelo. Carmelo sold the same properties to Equatorial for P11. then Equatorial was deemed the own of the property from the signing of the Deed to the time the property was legally transferred to Mayfair. RAYMUNDO and GEORGE RAYMUNDO 2001 Jul 11 . VS.300. VELARDE and AVELINA D. being only presumptive. There is delivery if the thing sold is placed in the control and possession of the vendee. then it was valid until it is rescinded in a proper court decision. GR No. Ownership of the property which the buyer acquires only upon the delivery of the thing to him. 2001 FACTS: In June 1967. however.contracting parties and should be complied with in good faith. within the 20-year period. 1978. Mayfair was given the right-of-first refusal to purchase the properties. the correlative obligation of the Tius to let the Ongs have and exercise the functions of the positions of President and Secretary is the obligation of the Ongs to let the Tius have and exercise the functions of Vice-President and Treasurer. the correlative duty of the obligation of the seller to deliver the property is the obligation of the buyer to pay the agreed price. Since the Deed was not actually rescinded in the decision of the mother case. Hence. 1969. The trial court ruled in favor of Mayfair but was reversed by the CA. there was no transfer of ownership from Camelot to Equatorial. private respondents validly exercised their right to rescind the contract. without necessity of notice or any judicial declaration to that effect. the VENDEE hereby assumes to pay the mortgage obligations on the property herein sold in the amount of ONE MILLION EIGHT HUNDRED THOUSAND PESOS (P1. RULING: The right of rescission of a party to an obligation under Article 1191 of the Civil Code is predicated on a breach of faith by the other party who violates the reciprocity between them. Moreover. the court shall decree the rescission.800. wrote plaintiffs informing the latter that their non-payment to the mortgage bank constituted non-performance of their obligation Plaintiffs. This prompted plaintiffs not to make any further payment. petitioners expressed their willingness to pay the balance of the purchase price one month after it became due. plus all payments made with the Bank of the Philippine Islands on the mortgage loan. however. 1986. And further agrees That. In the instant case. True. including interests and other charges for late payment levied by the Bank. 1987. shall be forfeited in favor of Mr. such breach would not normally defeat the intention of the parties to the contract. it cannot be said that the breach committed by petitioners was merely slight or casual as would preclude the exercise of the right to rescind. which was legally due and demandable under the contract of sale. private respondents were left with the legal option of seeking rescission to protect their own interest. and the same shall be deemed automatically cancelled and be of no further force or effect. the original Mortgagor. but they also imposed upon private respondents new obligations as preconditions to the performance of their own obligation. under lease. No. In effect. a violation that consequently gave rise to private respondents’ right to rescind the same in accordance with law. (b) defendant cause the release of title and mortgage from the Bank of P. that the downpayment of P800. Indubitably. The Vendee herby agreed that until such time as her assumption of the mortgage obligations on the property purchased is approved by the mortgagee bank. the qualified offer to pay was a repudiation of an existing obligation. the latter violated the very essence of reciprocity in the contract of sale. as vendee. Defendants. and make the title available and free from any liens and encumbrances. David A. the Bank of the Philippine Islands. which was. 142177.I.000.00. David A Raymundo shall resume total and complete ownership and possession of the property sold by way of Deed of Sale with Assumption of Mortgage. Raymundo. When the obligor cannot comply with what is incumbent upon it.G. however. Here. Thus. Raymundo. 1987. in the name of the VENDOR. 108346 FACTS: David Raymundo is the absolute and registered owner of a parcel of land.8 million balance. The breach contemplated in the said provision is the obligor’s failure to comply with an existing obligation. that they are willing to pay the balance in cash not later than January 21. as vendor. thru counsel. in the absence of any just cause for the court to determine the period of compliance. in the same manner as if (the) same had never been executed or entered into. and further agrees to strictly and faithfully comply with all the terms and conditions appearing in the Real Estate Mortgage signed and executed by the VENDOR in favor of BPI. On August 8. Dasmariñas Village. . the breach committed did not merely consist of a slight delay in payment or an irregularity. the offer to pay was conditioned on the performance by private respondents of additional burdens that had not been agreed upon in the original contract. and (c) defendant must execute an absolute deed of sale in plaintiff’s favor free from any liens or encumbrances not later than January 21. she shall continue to pay the said loan in accordance with the terms and conditions of the Deed of Real Estate Mortgage in the name of Mr.00).000. Plaintiffs were advised that the Application for Assumption of Mortgage with BPI was not approved. as and by way of liquidated damages. 1987 provided: (a) there is deliver actual possession of the property to her not later than January 15.. together with the house and other improvements thereon. Hence. responded. this was not equivalent to actual payment as would constitute a faithful compliance of their reciprocal obligation.R. in the event there is violation in any of the terms and conditions of the said Deed of Real Estate Mortgage. petitioners not only failed to pay the P1. a Deed of Sale with Assumption of Mortgage was executed by defendant David Raymundo. with terms and conditions one of which is: ‘That as part of the consideration of this sale. Defendant George Raymundo is David’s father who negotiated with plaintiffs Avelina and Mariano Velarde for the sale of said property. because of the failure of petitioners to comply with their obligation to pay the balance of the purchase price. thru counsel. in favor of plaintiff Avelina Velarde. as if the same were originally signed and executed by the VENDEE. In the present case. and Mr. Philippine currency. in favor of Bank of the Philippine Islands. Makati and covered by TCT No. the obligee may seek rescission and. David A. located at 1918 Kamias St. 1987 for her immediate occupancy. defendants sent plaintiffs a notarial notice of cancellation/rescission of the intended sale of the subject property allegedly due to the latter’s failure to comply with the terms and conditions of the Deed of Sale with Assumption of Mortgage ISSUE: Whether or not rescission should be granted in the case at bar. On January 8. The MOA entered into by the parties is declared rescinded. petitioner and private respondent executed a Memorandum of Agreement that states that petitioner will pay all of the loans of respondent provided that the latter will transfer the title of the farm and properties. which were mortgaged in favor of the petitioner.625. 1982. he borrowed P500. Private respondent was the majority stockholder of the corporation. he defaulted in his loan payments.ISSUE: Whether or not rescission of the MOA is a valid remedy for the petitioner. and registered it with the Securirties and Exchange Commission. his counsel died while the case was pending. . It was secured by a real estate mortgage on five other landholdings of private respondent. 1999 FACTS: Petitioners William Uy and Rodel Roxas are agents authorized to sell eight (8) parcels of land by the owners thereof. considering that private respondent was the first to refuse to deliver to petitioner the lands and certificates of stock that were the consideration for the almost 6M in debt that petitioner was to assume and pay. Article 1191 of the Civil Code governs the situation where there is noncompliance by one party in case of reciprocal obligations. 1998. The Supreme Court found that private respondent failed to perform his substantial obligations under the MOA. and deliver any and all documents necessary for the transfer and conveyance of the mortgaged properties as well as of the farm. On November 4. private respondent’s wife. EFFECTS OF RESOLUTION/RESCISSION ASUNCION VS. The Court holds. 1999 316 SCRA 848 FACTS: Private respondent has been operating a piggery since 1970. a copy of the decision of the trial court was sent by registered mail to petitioner’s counsel however. it follows the property. 1980. Benguet to respondent National Housing Authority (NHA) to be utilized and developed as a housing project. the landholdings of the respondent still remained titled in his name. petitioner sought the rescission of the agreement and ceased infusing capital into the piggery business of private respondent. No. Tadiangan. petitioner filed in the RTC a compliant for rescission of the MOA with a prayer for damages.000.R. He executed a real estate mortgage on three of his properties as security for the loan. However. EVANGELISTA G. The trial court ruled in favor of the private respondent. The effect of rescission is also provided in Article 1385 of the Civil Code. On August 2. EFFECTS OF RESOLUTION/RESCISSION UY VS. he obtained another loan in the amount of P844. organized Embassy Farms. considering that a recorded real estate mortgage is a lien inseparable from the property mortgaged and until discharged. 1986. 1994. unknown to petitioner. Inc.00. more than a year after signing the MOA. 133491 October 13. Neither did he inform said mortgages of the transfer of his lands.00 from Paluwagan ng Bayan Savings and Loan Association to use as working capital for the farm. he mortgaged ten titles more in favor of PAIC Savings and Mortgage Bank as security for another loan in the amount of P1. Decisions of the lower and appellate courts were reversed and set aside. penalties and other financial charges. Hence. private respondent debt had ballooned to almost six million pesos in overdue principal payments. By June 1984. However. The petitioner was able to pay partially the loans of respondent from the three creditors as compliance to the MOA. On February 2. petitioners offered to sell the lands. located in Tuba. The instant petition was granted. On April 10. that the MOA entered into by petitioner and private respondent should indeed be rescinded. Such refusal was justified.712. president and chief executive officer. together with three others. CA affirmed the decision of the trial court and ordered its immediate execution. By virtue of such authority. On July 12. 1981. 1984.000. The Court holds that the respondent’s insistence that petitioner execute a formal assumption of mortgage independent and separate from his own execution of a deed of cases is legally untenable. sign. private respondent was obligated under the MOA to execute. interests.78 from Mercator Finance Corporation. in fine. COURT OF APPEALS 314 SCRA 69 September 9. RULING: Yes. On February 16. all situated in Bulacan. In 1981. which was under the trade name of Embassy Farms. Petitioner’s motion for reconsideration was likewise denied. The respondent appellate court erred in assessing damages against petitioner for his refusal to fully pay private respondent’s overdue loans. For his part. He later justified his refusal to execute any deed of sale and deliver the certificates of stock by accusing petitioner of having failed to assume his debts. On September 9. Petitioner and its driver were held liable jointly and severally for damages as follows: a. a Dalin Liner bus on the southbound lane stopped to allow him and his carabao to pass. P50. D. it did not have the right to do so for the other parties to the contract. On March 9.m. P88.. The cancellation was not therefore a rescission under Article 1191. at around 7:00 p. not suitable for development into a housing project. ISSUE: Whether or not the contention of petitioner is correct.339. Andres Malecdan was thrown off the carabao.000. the costs of the suit.00. Indeed. He was taken by Lorena and another person to the district hospital where he died a few hours after arrival. NHA approved the acquisition of the said parcels of land with an area of 31.000. only five were paid for by the NHA because of the report it received from the Land Geosciences Bureau of the Department of Environment and Natural Resources that the remaining area is located at an active landslide area and therefore.00 as death indemnity.00 for actual damages. inter alia. Jr.00 as moral damages which is double the P100. 2. No.R. In so doing. respondent hit the old man and the carabao on which he was riding. Petitioners confuse the cancellation of the contract by the NHA as a rescission of the contract under Article 1191 of the Civil Code. However. After trial.867 million. were not suitable for housing. thirty percent (30%) as attorney’s fees of whatever amount that can be collected by the plaintiff. it was based on the negation of the cause arising from the realization that the lands.8231 hectares at the cost of P23. petitioners seek relief from this court contending. RULING: NO. CARREON. In this case. a criminal complaint for reckless imprudence resulting in homicide and damage to property was filed against the Victory Liner bus driver Ricardo Joson. The NHA did not suffer any injury. Subsequently. the Court of Appeals reversed the decision and entered a new one dismissing the complaint including the award of damages. pursuant to which the parties executed a series of Deeds of Absolute Sale covering the subject lands.On February 14.G. HEIRS. VS. Upon appeal by petitioners. the decision was affirmed by the Court of Appeals. P50. LABUNG-DEANG. with the modification that the award of attorney’s fees was fixed at P50. 3. Private respondents brought the suit for damages in the RTC which found the driver guilty of gross negligence in the operation of his vehicle and Victory Liner. that the CA erred in declaring that NHA had any legal basis to rescind the subject sale. while Andres was crossing the National Highway on his way home from the farm. which were the objects of the sale. ISSUES: 1. Rather. 1992. as Andres was crossing the highway. On appeal. however. the vendors did not commit any breach of their obligation.00 for moral damages. 365 SCRA 341 BPI INVESTMENT VS. is in accord with law and jurisprudence. NHA eventually cancelled the sale over the remaining three (3) parcels of land. KINDS OF DAMAGES: 1. from which bone fragments protruded. d. Inc. 1994. VICTORY LINER VS.000. c. The incident was witnessed by Andres Malecdan’s neighbor. The power to rescind is given to the injured party. also guilty of gross negligence in the selection and supervision of Joson. The motion for reconsideration having been denied. INC. Joson. Jr. Malecdan sustained a wound on his left shoulder. Whether or not the CA erred in affirming the appealed decision of the RTC granting P200. On July 15. 371 SCRA 58 VICTORY LINER.000. Whether or not the affirmation by the CA of the appealed decision of the RTC granting the award of moral and exemplary damages and attorney’s fees which were not proved and considering that there is no finding of bad faith and gross negligence on the part of the petitioner was not established. e. The carabao also died soon afterwards.. 2. RULING: . and f. 1989. petitioner. The Victory Liner bus sped past the old man. while the Dalin bus proceeded to its destination without helping him. 154278 394 SCRA 520 FACTS: Andres Malecdan was a 75 year-old farmer.000.000. while the beast toppled over.00 as prayed for by the private respondents in their complaint and in granting actual damages not supported by official receipts and spent way beyond the burial of the deceased victim. Virgilio Lorena.00 as exemplary damages. P200. Of the eight parcels of lands. bypassed the Dalin Bus. who was resting in a nearby waiting shed after working on his farm. Lorena executed a sworn statement before the police authorities. Jr. The right to rescission is predicated on a breach of faith by the other party that violates the reciprocity between them. 394 SCRA 520 GSIS VS. b. the NHA did not rescind the contract. As a result. a bus of petitioner Victory Liner. respondents 2002 Dec 27 G. the RTC of Quezon City rendered the cancellation of contract to be justified and awarded P1. HEIRS OF ANDRES MALECDAN.255 million as damages in favor of petitioners. driven by Ricardo C. petitioners filed a complaint for damages. after the accident. monitor their implementation and impose disciplinary measures for breaches thereof. In the selection of prospective employees. is obliged to pay for the damage done.00 for moral damages was reduced. there being fault or negligence. therefore. if there is no pre-existing contractual relation between the parties. actual driving tests. SPOUSES GONZALO and MATILDE LABUNG-DEANG G. the spouse. The award of P50. was grossly negligent in driving at such a high speed along the national highway and overtaking another vehicle which had stopped to allow a pedestrian to cross. the trial court awarded P88. Jr. the injured party may recover from the employers directly. In the instant case." For this purpose. Jr. Thus it was held that the trial court did not err in finding petitioner to be negligent in the supervision of its driver Joson.R. The loan was secured by a real estate mortgage constituted over the spouses’ property. Such fault or negligence. Under the circumstances. The award of P200. 1979. Jr. Petitioner likewise failed to establish the speed of its buses during its daily trips or to submit in evidence the trip tickets. birth certificate. In this case. The item cannot be allowed.000.339. Art. the spouses Deang obtained a housing loan from the GSIS in the amount of eight thousand five hundred pesos (P8. the spouses Daeng deposited the owner’s duplicate copy of the title with the GSIS. 135644 September 17. the loan was to mature on December 23. The trial court found that the wife and children of the deceased underwent "intense moral suffering" as a result of the latter’s death. Joson.” Article 2180 provides for the solidary liability of an employer for the quasi-delict committed by an employee. Under Art. student driver training. However. they have the burden of proving that they have indeed exercised such diligence. employers must formulate standard operating procedures. As required by the mortgage deed.00 as actual damages. 2206 of the Civil Code. experience and service records. the trial court noted that there is no record of Joson. legitimate children and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. To justify an award of actual damages. the cost of one pig which had been butchered for the 9th day death anniversary of the deceased. Worse. employers are required to examine them as to their qualifications.00 for indemnity is in accordance with current rulings of the Court. These facts must be shown by concrete proof. is called a quasi-delict and is governed by the provisions of this Chapter. petitioner presented the results of Joson. such as expenses relating to the 9th day. 1979. had nine years of driving experience. 2231 provides that exemplary damages may be recovered in cases involving quasi-delicts if the defendant acted with gross negligence. Jr. EFFECTS OF RESOLUTION/RESCISSION GOVERNMENT SERVICE INSURANCE SYSTEM VS.00. there should be proof of the actual amount of loss incurred in connection with the death. Article 2176 provides: “Whoever by act or omission causes damage to another. 40th day and 1st year death anniversaries are not to be taken accounted for.500.00 would be in keeping with the purpose of the law in allowing moral damages.’s written examination. Receipts showing expenses incurred some time after the burial of the victim. including documentary evidence.000. high school diploma and reports from the General Maintenance Manager and the Personnel Manager showing that he had passed all the tests and training sessions and was ready to work as a professional driver. While these were duly supported by receipts. these included the amount of P5. Employers may be relieved of responsibility for the negligent acts of their employees acting within the scope of their assigned task only if they can show that "they observed all the diligence of a good father of a family to prevent damage. Petitioner also presented testimonial evidence that drivers of the company were given seminars on driving safety at least twice a year. speed meters and reports of field inspectors. Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions. In this case. the spouses Deang settled their debt with the GSIS and requested for the release of the owner’s duplicate copy of the title since they intended to secure a loan from a private . x-ray examination. urinalysis. the trial court noted that petitioner did not present proof that Joson. ever attending such a seminar. NBI clearance.000. the trial court’s award of P50.00). both in the selection of the employee and in the supervision of the performance of his duties. With respect to the supervision of employees.00 as exemplary damages was proper. eleven (11) months before the maturity of the loan. wake or burial of the victim. No.900. The finding of the trial court that petitioner’s bus was running at a very fast speed when it overtook the Dalin bus and hit the deceased was not disputed by petitioner. 2001 365 SCRA 341 FACTS: Sometime in December 1969.000. did not stop the bus to help the victim. hematology examination. However.The Court found the appealed decision to be in order. Under the circumstances of this case an award of P100. regardless of the solvency of their employees. shop training. On January 19. psychological examination. physical examination. Jr. The responsibility of employers for the negligence of their employees in the performance of their duties is primary and. Under the agreement. petitioner’s driver Joson. Jr. DANIEL G. Branch 36. 1982. Satisfied that the owner’s duplicate copy of the title was really lost. Makati. On the other hand. respondents 2001 Nov 29 371 SCRA 58 FACTS: Petitioner BPI Investment Corporation (BPI Investments). AURORA J. The fact that the complainant suffered economic hardship or worries and mental anxiety is not enough. a complaint for recovery of a sum of money against D. 1982. it is also apparent that the spouses Deang suffered financial damage because of the loss of the owners’ duplicate copy of the title. but . AND JOSEFA M.000. 14926-R to the spouses Deang. Upon the request of BPI Investments. D. Negligence is obvious as the owners’ duplicate copy could not be returned to the owners. actual damages cannot be awarded as there is no factual basis for such award. BPI Investments wrote respondents Daniel Carreon and Aurora Carreon. The duty to return the owner’s duplicate copy of title arose as soon as the mortgage was released. in 1979. On October 28. EFFECTS OF RESOLUTION/RESCISSION BPI INVESTMENT CORPORATION. GSIS finally secured and released the reconstituted copy of the owner’s duplicate of Transfer Certificate of Title No. the spouses Daniel and Aurora Carreon sent to BPI Investments a proposed memorandum of agreement. G. Thus. 1979. They would use the proceeds of the loan applied for the renovation of the spouses’ residential house and for business. RULING: Under the facts. 1978. Respondent D. However. A court cannot rely on “speculation. 1979. moral damages are not awarded if the defendant is not shown to have acted fraudulently or with malice or bad faith. 1982. The agreement provided that respondent company. On April 21. First. Temperate damages may be granted on the amount of P20. Carreon filed with the Court of First Instance of Rizal. but must depend on actual proof. Carreon with preliminary attachment. The individual respondents. the trial court lifted the writ of attachment.937. CARREON. BPI Investments. CARREON COMMERCIAL CORPORATION. there was a pre-existing contract between the parties.00 as a reasonable amount considering that GSIS spent for the reconstitution of the owners’ duplicate copy of the title. BPI Investments moved for reconsideration. JECIEL. VS. in the spirit of goodwill.000. G. 000. G. Angeles City a complaint against GSIS for damages. On June 22.00. Wherefore the petition is denied. personnel of the GSIS were not able to release the owner’s duplicate of the title as it could not be found despite diligent search. spouses Daniel and Aurora Carreon and Josefa M. GSIS commenced the reconstitution proceedings with the Court of First Instance of Pampanga for the issuance of a new owner’s copy of the same. CARREON. Commercial Corporation was a client of petitioner and started its money market placements in September. dated May 7. conjecture or guess work” as to the fact and amount of damages. agreed to temporarily reimburse BPI the amount of P410. GSIS is liable for damages. claiming that as result of the delay in releasing the duplicate copy of the owner’s title. GSIS and the spouses Deang had a loan agreement secured by a real estate mortgage. on October 8. after the completion of judicial proceedings. Actual damages to be compensable must be proven by clear evidence. petitioner. formerly known as “Ayala Investment and Development Corporation. in a breach of contract. the trial court issued an order for preliminary attachment after submission of affidavit of merit to support the petition. and the posting of a bond in the amount of P200. The respondents asserted that there was no overpayment and asked for time to look for the papers. On May 14.937. the proceeds of which could have been used in defraying the estimated cost of the renovation of their residential house and which could have been invested in some profitable business undertaking. On May 10.00) which they applied for with one Milagros Runes.” was engaged in money market operations. Court of Appeals also affirmed the decision of the lower court. On June 26. The ISSUE: Whether or not GSIS is liable for damages.09 while the said controversy (transactions of the placement) would be checked within five years. Second. Jeceil also placed with BPI Investments their personal money in money market placements. 1982. GSIS issued a certificate of release of mortgage. The trial court rendered decision in favor of the spouses Labung-Deang. without responding to the memorandum and proposal of D. 1979. the spouses Deang filed with the Court of First Instance.lender and use the land covered by it as collateral security for the loan of fifty thousand pesos (P50. they were unable to secure a loan from Milagros Runes. On July 6. 1982. G. demanding the return of the overpayment of P410.09. 1982. However. Its vessel M/V Prince Eric was used by Philippine Agricultural Trading Corporation to ship 3. and in contracts and quasi-contracts. with legal interest of twelve (12%) percent per annum from June 3. especially their residential house and payment of their money market placement of P109. oppressive. short of gross negligence. REMEDIES IN CASE OF BREACH: ACCION PAULIANA KHE HONG CHENG VS. On July 19. Chapter 3. because of sleepless nights and mental anguish. the money market placement in the amount of P73. The shipment was covered by a marine . temperate. the trial court may release the deposited amount of P73. The sheriff of the issuing court did the execution and the attachment. until fully paid. Carreon filed with the trial court an answer to the complaint. Finally. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. BPI Investments did not act in a wanton.283. and to the estate of Josefa M. fraudulent. Both parties appealed. in addition to moral. No. while petitioner BPI Investments may not be guilty of gross negligence. the decision of the Court of Appeals is affirmed with modification. or the entire absence of care.00. reckless. with counterclaim.238. all defendants claimed for exemplary damages and attorney’s fees of P100.857. until fully paid.75. The petitioner may withdraw its deposit from the lower court at its peril. in quasi-delicts. D. COURT OF APPEALS 355 SCRA 701 G. The Court deems it prudent to award reasonable temperate damages to respondents under the circumstances. oppressive. 1993. to pay the estate of Josefa M. They are recoverable in criminal cases as part of the civil liability when the crime was committed with one or more aggravating circumstances. spouses Daniel and Aurora Carreon asked for moral damages of P1.75. 1982. BPI Investments is likewise ordered to pay temperate damages to the estate of the late Daniel G. Book IV of the Civil Code. On July 30. The award of moral damages and attorney’s fees is also not in keeping with existing jurisprudence.000.00.R.000. or in wanton disregard of his contractual obligation.000. with the elimination of award of moral damages. when it asked for preliminary attachment.00. or was guilty of gross negligence amounting to bad faith. G. respondents D. Jeceil. it failed to prove by clear and convincing evidence that D. It was just exercising a legal option. the trial court rendered a decision dismissing both the complaint and the counterclaim.” The law on exemplary damages is found in Section 5. G. 1982. if the defendant acted with gross negligence.000. liquidated. ”There is no doubt.00.857. “The alleged payments in the complaint were admitted by plaintiff itself to be withdrawals from validly issued commercial papers. or compensatory damages. reckless. The award of moral.000. be proved with certainty. 144169 March 28.57 to petitioner as the consignation was not proper or warranted. Moral damages may be awarded in a breach of contract when the defendant acted in bad faith.” However.00. the Court of Appeals affirmed the dismissal of the complaint but reversed and set aside the dismissal of the counterclaim thereby awarding respondents damages amounting to more than P5M in sum. and payment of her money market placement of P73. Title XVIII. however. Carreon in the amount of P300. with legal interest at twelve (12%) percent per annum from maturity on July 12. Thus.000. RULING: No. As to the claim for payment of the money market placement of Josefa Jeceil. ISSUE: Whether or not respondents are entitled to damages as awarded by Court of Appeals.000. Carreon indeed received money in excess of what was due them. compensatory and exemplary damages and attorney’s fees are deleted.1996.the trial court denied the motion after finding the absence of double payment to the defendants. Hence.00 because of the humiliation. BPI Investments is ordered to pay to the estate of Daniel G. if the defendant acted in a wanton. These are imposed by way of example or correction for the public good. Carreon the money market placement of P109. On May 25.57. Jeceil in the amount of P150. BPI Investments is not to be blamed for the excessive and wrongful attachment. sleepless nights and deterioration of health due to the filing of the complaint and indiscriminate and wrongful attachment of their property. Carreon in the amount of P300.857. Josefa Jeceil asked for moral damages of P500.57. Temperate or moderate damages may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot. that the damages sustained by respondents were due to petitioner’s fault or negligence. or malevolent manner. 2001 FACTS: Petitioner Khe Hong Cheng. The Court found petitioner not guilty of gross negligence in the handling of the money market placement of respondents. is the owner of Butuan Shipping Lines. fraudulent. so must the award of attorney’s fees be deleted. and to the estate of Aurora J. from the nature of the case. duly verified and signed by at least two authorized high-ranking officers of BPI Investments. “Gross negligence implies a want or absence of or failure to exercise slight care or diligence. or malevolent manner. Carreon asked for compensatory damages in an amount to be proven during the trial. Carreon and Aurora J. great mental anguish.400 bags of Copra at Masbate for delivery to Dipolog. 1982.G. in the case at bar. On November 2. However. So the contention of Khe Hong Cheng that the action accrued from the time of the constructive notice. that petitioner corporation had exercised due care and diligence in the safekeeping of the articles pledged with it and could not be made liable for an event that is fortuitous. December 27. 1987.R. barely a month from discovering that petitioner Khe Hong Cheng had no other property to satisfy the judgment award against him that the action for rescission accrued.C. and whether or not accion pauliana/ rescission of the deed of donation is proper. that the debtor has made a subsequent contract conveying a patrimonial benefit to a third person. is untenable. Respondent Lulu then requested petitioner Sicam to prepare the pawned jewelry for withdrawal on November 6. 266 SCRA 429 ROBERTO C. to Philippine Agricultural Trading Corporation. 1999 ACE AGRO VS. NO. All the above enumerated elements are presents in the case at bar. moral and exemplary damages as well as attorney's fees. and fifth. On September 28. i. Third. As a consequence of a favorable judgment for American Home. 1987 but petitioner Sicam failed to return the jewelry.e. However. Lulu V. ISSUES: Whether or not the action for the rescission of the deed of donation has prescribed. the following requisites must concur: first. JORGE..000. CA. SICAM VS. After trial .. versus LULU V. INC. i.e. 1987 informing her of the loss of her jewelry due to the robbery incident in the pawnshop. petitioner Sicam contends that he is not the real party-in-interest as the pawnshop was incorporated on April 20. the action is thereby barred by prescription. it was only in February 25. Sicam. 14. 1997. that the creditor has no other legal remedy to satisfy his claim. Metro Manila. the legal possibility of bringing the action. to secure a loan in the total amount of P59. the general rule is such shall be reckoned from the moment the cause of action accrues. 1989. But the writ of execution could not be implemented because Cheng’s property were already transferred to his children. On October 19. Since accion pauliana is an action of last resort after all other legal remedies have been exhausted and have been proven futile. advance notice must be given to the pawnshop so it could withdraw the jewelry from the bank. 2. American filed a case for the rescission of the deeds of donation executed by petitioner in favor of children on the ground that they were made in fraud of his creditors.insurance policy issued by American Home Insurance Company (eventually Philam). For an accion pauliana to accrue.00. BF Homes Parañaque. although demandable late. JORGE and CESAR JORGE G. While the case was pending. 8 AUGUST 2007 HUIBONHOA VS. The RTC held that robbery is a fortuitous event which . 1989 and such constituted constructive notice. based on breach of common carriage. Petitioner answered that the action should be dismissed for it already prescribed. if by onerous title. respondent Lulu then wrote a letter to petitioner Sicam expressing disbelief stating that when the robbery happened. respondent Lulu joined by her husband. And since the complaint was filed only in 1997. C. CA. Although the Civil Code provides that “The action to claim rescission must be commenced within four (4) years” is silent as to where the prescriptive period would commence.the RTC rendered its Decision dismissing respondents’ complaint as well as petitioners’ counterclaim.500. Jorge pawned several pieces of jewelry with Agencia de R. YES for the second issue. American Home was thereby subrogated unto the rights of the consignee and filed a case to recover money paid to the latter. RULING: NO for the first issue. which resulted to the total loss of the shipment. but would benefit by rescission of the conveyance to the third person. Insurer Philam paid the amount of P 354. that the third person who received the property conveyed. two armed men entered the pawnshop and took away whatever cash and jewelry were found inside the pawnshop vault. Petitioner posited that the registration of the donation was on December 27. the plaintiff asking for rescission has a credit prior to the alienation. the date that the deed of donation was registered. a writ of execution to garnish Khe Hong Cheng’s property was issued.00. Khe Hong Cheng executed deeds of donations of parcels of land in favor of his children. SICAM and AGENCIA de R. Petitioner Sicam sent respondent Lulu a letter dated October 19. Fourth.. 159617 August 8. 1987 and known as Agencia de R. more than four (4) years after registration. SICAM. 1988. Cesar Jorge. DEC. 3. Inc. Sicam located at No. which is the value of the copra. M/V Prince Eric sank. 17 Aguirre Ave. Second. FORTUITOUS EVENTS/ CASO FORTUITO – REQUISITES 1. all jewelry pawned were deposited with Far East Bank near the pawnshop since it had been the practice that before they could withdraw. 1987. Consequently. filed a complaint against petitioner Sicam with the Regional Trial Court of Makati seeking indemnification for the loss of pawned jewelry and payment of actual. 2007 FACTS: On different dates from September to October 1987.C. has been an accomplice in the fraud. that the act being impugned is fraudulent. R. petitioner. Subject contract was to enable the lessee.whether by active intervention. To constitute a fortuitous event. It is therefore. all in their (Gojoccos') names. And. One's negligence may have concurred with an act of God in producing damage and injury to another. COURT OF APPEALS. VS. he thought of opening a vault with the nearby bank for the purpose of safekeeping the FORTUITOUS EVENTS/ CASO FORTUITO – REQUISITES FLORENCIA T. ISSUE: Whether petitioners are liable for the loss of possession. 1174 of the Civil Code. as is commonly believed but it must be one impossible to foresee or to avoid. (c) the occurrence must be such as to render it impossible for the debtor to fulfill obligations in a normal manner. covered by Transfer Certificates of Title Nos. it is necessary that one has committed no negligence or misconduct that may have occasioned the loss. Moreover. nonetheless. (d) the obligor must be free from any participation in the aggravation of the injury or loss. 26-A. the robbery in this case took place in 1987 when robbery was already prevalent and petitioners in fact had already foreseen it as they wanted to deposit the pawn with a nearby bank for safekeeping. Binondo. Robbery per se. When the effect is found to be partly the result of a person's participation -. The testimony. showing that the immediate or proximate cause of the damage or injury was a fortuitous event would not exempt one from liability. and. to construct a "four-storey reinforced concrete building with concrete roof deck." . On June 30. It further held that the corresponding diligence required of a pawnshop is that it should take steps to secure and protect the pledged items and should take steps to insure itself against the loss of articles which are entrusted to its custody as it derives earnings from the pawnshop trade which petitioners failed to do and that robberies and hold-ups are foreseeable risks in that those engaged in the pawnshop business are expected to foresee. it must be impossible to avoid. 1983 and renewable upon agreement of the parties. according to plans and specifications approved by the City Engineer's Office. described as lot nos. Severino Gojocco and Loreta Gojocco Chua stipulating that Florencia T. The mere difficulty to foresee the happening is not impossibility to foresee the same. It has been held that an act of God cannot be invoked to protect a person who has failed to take steps to forestall the possible adverse consequences of such a loss. is not a fortuitous event. Spouses Rufina G. The very measures which petitioners had allegedly adopted show that to them the possibility of robbery was not only foreseeable. No. Huibonhoa entered into a memorandum of agreement with siblings Rufina Gojocco Lim. contradicts petitioners’ defense of fortuitous event. in effect. HUIBONHOA.exempts the victim from liability for the loss and under Art. Huibonhoa would lease from them (Gojoccos) three (3) adjacent commercial lots at Ilaya Street. Fortuitous events by definition are extraordinary events not foreseeable or avoidable. It does not foreclose the possibility of negligence on the part of herein petitioners. Lim and ANTHONY LIM. Also.the whole occurrence is humanized and removed from the rules applicable to acts of God. Thus. petitioners failed to show that they were free from any negligence by which the loss of the pawned jewelry may have been occasioned. The burden of proving that the loss was due to a fortuitous event rests on him who invokes it. Petitioner Sicam had testified that there was a security guard in their pawnshop at the time of the robbery and that when he started the pawnshop business in 1983. not enough that the event should not have been foreseen or anticipated. pursuant to the said memorandum of agreement. Florencia T. neglect or failure to act -. (b) it must be impossible to foresee the event that constitutes the caso fortuito or. Florencia T. 1983. Such report also does not prove that petitioners were not at fault. in order for a fortuitous event to exempt one from liability. 1983. the pawned articles in their RULING: valuables but was discouraged by the Central Bank since pawned articles should only be stored in a vault inside the pawnshop. 76098. 95897 FACTS: On June 8. The presentation of the police report of the Parañaque Police Station on the robbery committed based on the report of petitioners' employees is not sufficient to establish robbery. just like carnapping. petitioners are negligent in securing their pawnshop. respondents December 14. 26B and 26-C. LORETA GOJOCCO CHUA and Spouses SEVERINO and PRISCILLA GOJOCCO. if it can be foreseen. 1999 G. the following elements must concur: (a) the cause of the unforeseen and unexpected occurrence or of the failure of the debtor to comply with obligations must be independent of human will. Manila. Huibonhoa. the parties inked a contract of lease of the same three lots for a period of fifteen (15) years commencing on July 1. 80728 and 155450. but actually foreseen and anticipated. It is simply a universal trend that has not spared our country. the Court explained extraordinary inflation thus: "Extraordinary inflation exists when 'there is a decrease or increase in the purchasing power of the Philippine currency which is unusual or beyond the common fluctuation in the value of said currency’. which the lower courts did not consider as such. Hence. this downward fall of the currency cannot be considered unforeseeable considering that since the 1970's we have been experiencing inflation. the reduction of its amount and the extension of the lease by three (3) years. Huibonhoa has no valid ground to ask this Court to intervene and modify the lease agreement to suit her purpose. or aggravation of the injury to the creditor. Instead. An extraordinary inflation cannot be assumed. was inevitable. there is no merit in Huibonhoa's argument that the inflation borne by the Filipinos in 1983 justified the delayed accrual of monthly rental. of the delay in the construction of the building. While it is of judicial notice that there has been a decline in the purchasing power of the Philippine peso. RULING: The Supreme Court found no merit in petitioner’s submission that the assassination of the late Senator Benigno Aquino. for Huibonhoa to claim exemption from liability by reason of fortuitous event under Art. if indeed a fortuitous event deterred the timely fulfillment of Huibonhoa's obligation under the lease contract. To exempt the obligor from liability for a breach of an obligation due to an "act of God". ISSUE: Whether or not the assassination of Senator Benigno Aquino Jr. Jabson that even a worldwide increase in prices does not constitute a sufficient cause of action for modification of an instrument.The parties agreed that the lessee could let/sublease the building and/or its spaces to interested parties under such terms and conditions as the lessee would determine and that all amounts collected as rents or income from the property would belong exclusively to the lessee. Real estate taxes on the land would be borne by the lessor while that on the building. and (d) the debtor must be free from any participation in. 1266 and 1267 of the Civil Code. Conformably." The parties also agreed that upon the termination of the lease. As it is. The construction of the building was not met on the date agreed upon due to the assassination of the then Senator Benigno Aquino Jr.. which caused inflation. she failed to show by how much. or which even if foreseen. by the lessee. A fortuitous event is that which could not be foreseen. Be that as it may. Huibonhoa's contention is untenable. the ownership and title to the building thus constructed on the said lots would automatically transfer to the lessor. Jr. was a fortuitous event that justified a modification of the terms of the lease contract. this Court upheld the petitioner's view in Occena v. for instance. was a fortuitous event.” No decrease in the peso value of such magnitude having occurred. NAWASA. so that the parties could be restored to their status prior to the execution of the lease contract. she chose the wrong remedy in filing the case for reformation of the contract. Although she repeatedly alleged that the cost of constructing the building doubled from P6 million to P12 million. and such decrease or increase could not have been reasonably foreseen or was manifestly beyond the contemplation of the parties at the time of the establishment of the obligation. the following requisites must concur: (a) the cause of the breach of the obligation must be independent of the will of the debtor. Pathetically. In the case under scrutiny. The lessors would deduct from the monthly rental due all such advances made by the lessee. Huibonhoa even failed to prove by evidence. The lessee undertook to complete construction of the building "within eight (8) months from the date of the execution of the contract of lease. In Filipino Pipe and Foundry Corporation v. FORTUITOUS EVENTS/ CASO FORTUITO – REQUISITES ACE-AGRO DEVELOPMENT CORP. 1174 of the Civil Code. CA 266 SCRA 429 . the price index of goods and services had risen during that intervening period. There is inflation when there is an increase in the volume of money and credit relative to available goods resulting in a substantial and continuing rise in the general price level. she should have availed of the remedy of recission of contract in order that the court could release her from performing her obligation under Arts. documentary or testimonial. It is only when an extraordinary inflation supervenes that the law affords the parties a relief in contractual obligations. (c) the event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. (b) the event must be either unforeseeable or unavoidable. but the latter was authorized to advance the money needed to meet the lessors' obligations such as the payment of real estate taxes on their lots. even without any implementing document therefor. Having failed to do so. the assassination of Senator Aquino may indeed be considered a fortuitous event. in this case. It was claimed that increase in the value of the materials was a fortuitous event. What might have caused the delay was the resulting escalation of prices of commodities including construction materials. the said incident per se could not have caused the delay in the construction of the building. she must prove that inflation was the sole and proximate cause of the loss or destruction of the or. Inflation is the sharp increase of money or credit or both without a corresponding increase in business transaction. However. that there was an extraordinary inflation from July 1983 to February 1984. VS. it only temporarily suspends the performance of the obligation. the event must be unforeseeable or inevitable. Article 1174 of the Civil Code provides that if the nature of the obligation requires the assumption risk. The petitioner. and JUANITO LAUREANO. 12. MORILLO. all the mentioned requisites are present. “Except in cases expressly specified by law. Respondent was a patrol officer of the MVO office and at the time was waiting for a jeepney to take him to the office of the Provincial Copmmander. Respondent refused to pay the windshield himself. First.FACTS: Petitioner Ace-Agro Development Corporation and private respondent Cosmos Bottling Corporation entered into a service contract covering the period from January 1. compels the conclusion that in the absence of a legal provision or an express covenant. 2. AIDA DE LAUREANO. no person shall be responsible for those events which could not be foreseen. however. MAR. RULING: The damage to the windshield caused by the mischievous boys was a fortuitous event resulting in a loss. EFFECTS OF FORTUITOUS EVENT UPON OBLIGATIONS 1. NO. respondent rode on the car of petitioner with petitioner’s driver to the office of the provincial commander. which must be borne by the owner of the car. PHILLIP BROS. the August 29 letter did not allow them to resume their work on respondent’s premises which will be quite costly for them. VS. 1990 to December 31. 193 S 216 VASQUEZ VS. since the same due to force majeure. or when it is otherwise declared by stipulation. 2. ISSUES: 1. some mischievous boys stoned the car and its windshield was broken. the injury to the creditor. CA. CA. were inevitable. 3. 1990. YES. 136 SCRA 625 PHILAMGEN INSURANCE VS. Afterwards. Pursuant to Article 1174 of the Civil Code. 1990 which destroyed the area where petitioner did its work. Respondent terminated the service contract due to the fire. Along the way. which the respondent willingly considered through its letters dated August 29. especially that this case is one which has a resolutory condition. the cause of breach must be independent of the will of the obligor. 1990 and November 7. defendants-appellants 33 SCRA 65 FACTS: Petitioner Dioquino met respondent Laureano at the MVO office when the former went to register his car at the said office. Fortuitous events do not automatically warrant an extension for the period of a contract. the event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. who could facilitate the registration of his car and the request was graciously attended to. but rather. LAUREANO. refused to continue its work on two reasons.” . The fortuitous event that happened in this case could not warrant a termination of the service contract. 2. And fourth. 7. MAR 8 . Petitioner prevailed in the trial court. 2002 MINDEZ VS. Petitioner requested respondent to introduce him to one of the clerks in the MVO office. Petitioner. 17. CA. Second. Respondent chased and was able to catch one of the boys and took him to petitioner. Whether or not force majeure or fortuitous event is present in the case. however. MGG MARINE. 5. petitioner requested for an extension of two (2) months for their contract on account of the fire which the respondent did not heed into. 1997 JUNTILLA VS. did not file charges against the boy and his parents because the stone throwing was merely accidental and due to force majeure. According to the agreement. 1990 directing petitioner to resume its work. The fact is that the contract was subject to a resolutory period which relieved the parties of their respective obligations but did not stop the running of the period of their contract. Whether or not the respondet was justified in unilaterally terminating the contract due to a fortuitous event. 2002 NAPOCOR VS.” The requisites for an event to be considered a fortuitous event are as follows: First. OCT. or aggravation of. FONTANAR. 33 SCRA 65 BACHELOR EXPRESS VS. the debtor must be free from any participation in. Whether or not the fortuitous event allows the extension of a contract. 138 SCRA 558 YOBIDO VS. “no one should be held to account for fortuitous cases. 6. 369 SCRA 626 PEDRO DIOQUINO. DIOQUINO VS. FEDERICO LAUREANO. Petitioner sent several letters for reconsideration. or which though foreseen. ISSUE: Whether or not the respondent is liable for the broken windshield of petitioner’s car. Hence. The service contract was suspended on account of a fire on April 25. or when the nature of the obligation requires the assumption of risk. 8. In this case. Second. even after petitioner tried to settle and even asked respondent’s wife to convince her husband. plaintiff-appellee. The unilateral termination therefore shifted on petitioner’s part when it unreasonably refused to continue its services. NO. this appeal to the Court was filed. Third. 3. 3. 4. RULING: 1. the former shall clean soft drink bottles and repair wooden shells for private respondent. explicitly mandated by the law. COURT OF APPEALS . They failed to exercise that extraordinary diligence required from them. Inc. a passenger at the rear portion suddenly stabbed a PC soldier which caused commotion and panic among the passengers. came from Davao City on its way to Cagayan de Oro City passing Butuan City. the judgment was reversed. July 31. Thereafter. it is clear that petitioner has failed to overcome the presumption of fault and negligence found in the law governing common carriers. When the bus stopped. The argument that the petitioners are not insurers of their passengers deserves no merit in view of the failure of the petitioners to observe extraordinary diligence in transporting safely the passengers to their destination as warranted by law. in order that a common carrier may be absolved from liability in case of force majeure. there is no assumption of risk by the borrower of a car to respond to damages for the broken windshield caused by an accidental stone-throwing incident by boys playing along the road. but it must be one impossible to foresee or to avoid in order that a party may be said to have assumed the risk resulting from the nature of the obligation itself. and the driver Rivera. The common carrier must still proves that it was not negligent in causing the injuries resulting from such accident. The CA however reversed the RTC decision. ISSUES: 1. 2. Respondents defense of force majeure to extinguish its liability were not entertained. In the case. On appeal. Considering the factual findings in this case. While at Tabon-Tabon. the former already dead as a result of head injuries and the latter also suffering from severe injuries which caused her death later. sustained leaks and eventually sunk. Should the petitioner be absolved from liability for the death of its passengers? RULING: FACTS: A vessel sailed from Manila to Cebu despite the knowledge by the captain and officers that a typhoon was building up somewhere in Mindanao. which was granted. After due trial.Where the risk is quite evident such that the possibility of danger is not only foreseeable. passengers Ornominio Beter and Narcisa Rautraut were found lying down the road. 1990 FACTS: On 1 August 1980. When it passed Tanguigui Island. owned by Bachelor Express. the heirs of Ornomino Beter and Narcisa Rautraut (Ricardo Beter and Sergia Beter are the parents of Ornominio while Teofilo Rautraut and Zotera Rautraut are the parents of Narcisa) filed a complaint for “sum of money” against Bachelor Express. then it could be said that the nature of the obligation is such that a party could rightfully be deemed to have assumed it. and driven by Cresencio Rivera. There must be an entire exclusion of human agency from the cause of the injury or loss. A fortuitous event is constituted by the following: 1) The event must be independent of the human will. for the safety of the passengers. but also actually foreseen. and 3) the obligor must be free of participation in the aggravation of the injury suffered by the obligee or if it could be foreseen. Such is not the case at bar. the weather suddenly changed and the vessel struck a reef. it must have been impossible to avoid. ISSUE: Whether or not the defense of force majeure is tenable. Decision reversed as to the liability of respondent. the bus picked up a passenger. RULING: NO. It is not enough therefore that the event should not have been foreseen or anticipated. NO. 2) the occurrence must render it impossible for the debtor to fulfill the obligation in a normal manner. The ship sunk with the children of the petitioners who sued for damages before the CFI of Manila. 85691. Bus 800. Butuan City. the trial court issued an order dated 8 August 1985 dismissing the complaint. EFFECTS OF FORTUITOUS EVENT UPON OBLIGATIONS The sudden act o the passenger who stabbed another passenger in the bus is within the context of force majeure. its alleged owner Samson Yasay. COURT OF APPEALS 138 SCRA 558 Bachelor Express vs CA GR. Whether or not the case at bar is within the context of force majeure. However. About 15 minutes later. it is not enough that the accident was caused by force majeure. EFFECTS OF FORTUITOUS EVENT UPON OBLIGATIONS VASQUEZ VS. EFFECTS OF FORTUITOUS EVENT UPON OBLIGATIONS YOBIDO VS. The passenger-assailant alighted from the bus and ran toward the bushes but was killed by the police. The vessel still proceeded even though the captain already knew that they were within the typhoon zone and despite the fact that they were kept posted about the weather conditions. The disputable presumption may only be overcome by evidence that the carrier had observed extraordinary diligences as prescribed by Articles 1733. CLEMENTE FONTANAR 136 SCRA 625 G. Surigao Del Sur. 113003 Oct. before the Regional Trial Court of Davao City. and Cresencio Yobido.” As such. absolving the respondents from any obligation. once a passenger dies or is injured. and also requested his father-in-law to proceed immediately to the place of the accident and look for the watch. Inc. On August 29. The petitioner stated that there were three (3) passengers in the front seat and fourteen (14) passengers in the rear. Article 1755 provides that “(a) common carrier is bound to carry the passenger safely as far as human care and foresight can provide. It was registered under the franchise of defendant Clemente Fontanar but was actually owned by defendant Fernando Banzon. it was found that the blowout was caused by the established fact that the inner tube of the left front tire “was pressed between the inner circle of the left wheel and the rim which had slipped out of the left wheel “. On the issue of whether or not the tire blowout was a caso fortuito. . it found that “the falling of the bus to the cliff was a result of no other outside factor than the tire bolw-out. the left front tire of the bus exploded. No. 1988. The decision of the Court of Appeals was affirmed subject to the modification that petitioners shall. EFFECTS OF FORTUITOUS EVENT UPON OBLIGATIONS ROBERTO JUNTILLA VS. 17. 1991. spouses Tito and Leny Tumboy and their minor children named Ardee and Jasmin. in culpa contractual.R.281 SCRA 01 G. the lower court rendered a decision dismissing the action for lack of merit. in addition to the monetary awards therein. the tire blowout was “a caso fortuito which is completely an extraordinary circumstance independent of the will” of the defendants who should be relieved of “whatever liability the plaintiffs may have suffered by reason of the explosion pursuant to Article 1174 of the Civil Code. Consequently.R. L-45637 FACTS: The plaintiff was a passenger of the public utility jeepney on the course of the trip from Danao City to Cebu City. The incident resulted in the death of 28-year-old Tito Tumboy and physical injuries to other passengers. It was running at a very high speed before the accident and was overloaded. It reasoned out that in said case. he found that he had a lacerated wound on his right palm and injuries on his left arm. De Jesus that a tire blowout is a “mechanical defect of the conveyance or a fault in its equipment which was easily discoverable if the bus had been subjected to a more thorough or rigid check-up before it took to the road that morning” is inapplicable to this case. the Court of Appeals rendered the decision reversing the decision of the trial court. with a due regard for all the circumstances”. thereby. Because of his shock and injuries. a Yobido Liner bus bound for Davao City. be liable for the award of exemplary damages in the amount of P20. ISSUE: Whether or not the accident that happened was due to a fortuitous event. When he came to his senses. 1988. 1755 and 1756 of the Civil Code or that the injury of the passenger was due to fortuitous event. using the utmost diligence very cautious persons. The bus fell into a ravine around three (3) feet from the road and struck a tree. They also filed a third-party complaint against Philippine Surety and Insurance. In this case. its driver. 1997 FACTS: On April 26. a complaint for breach of contract of carriage. The plaintiff who was sitting at the front seat was thrown out of the vehicle and momentarily lost consciousness. There are specific acts of negligence on the part of the respondents. boarded at Mangagoy .Maria. When the defendants therein filed their answer to the complaint. The accident was not due to a fortuitous event. No. Sta. the court need make an express finding of fault or negligence on the part of the carrier to hold it responsible for damages sought by the passenger. When the jeepney reached Mandaue City. he went back to Danao City but on the way. the right rear tire exploded causing the vehicle to turn turtle. 1193. v.000. he immediately entered the Danao City Hospital to attend to his injuries. RULING: NO. 21.00. the wrist watch could no longer be found. At the pre-trial conference. It reasoned out that in said case. Along Picop Road in Km. The passenger jeepney turned turtle and jumped into a ditch immediately after its right rear tire exploded. the owner of the bus. 17. the carrier is presumed to have been at fault or to have acted negligently. RULING: On August 23. right thigh and on his back. damages and attorney’s fees was filed by Leny and her children against Alberta Yobido. Agusan del Sur. On Nov. the court added.” ISSUE: Whether or not the Trial Court erred in their findings that the tire blowout was a caso fortuito. Accordingly. he discovered that his "Omega" wrist watch was lost. the parties agreed to a stipulation of facts. In spite of the efforts of his father-inlaw. Upon his arrival in Danao City.” It held that the ruling in the La Mallorca and Pampanga Bus Co. This third-party defendant filed an answer with compulsory counterclaim. they raised the affirmative defense of caso fortuito. however.” the cause of the explosion remains a mystery until at present. The jeepney was driven by defendant Berfol Camoro. keel over. RULING: Common carriers. using the utmost diligence of a very cautious person. could have been caused by too much air pressure and aggravated by the fact that the jeepney was overloaded and speeding at the time of the accident. INC. The cargo were loaded on board the M/V Peatheray Patrick-G to be transported from Mandaue City to Bislig. strong winds and huge waves caused the vessel to sink. not to exceed safe and legal speed limits. private respondents cannot be held liable for the said loss. from the nature of their business and for reasons of public policy. In the case at bar. After having been cleared by the Coast Guard Station in Cebu the previous day. it was adequately shown that before the M/V Peatheray PatrickG left the port of Mandaue City.While the tire that blew-up was still good because the grooves were still visible. Surigao del Sur. Owing to this high degree of diligence required of them.80 with petitioner Philippine American General Insurance Company. and to know the correct measures to take when a tire blows up. are mandated to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them. and consequently lose the cargo contained therein. The driver and the owner of the vehicle are liable for damages. and DOROTEO GAERLAN 2002 Mar 8 G. therefore. Common carriers are obliged to supervise their drivers and ensure that they follow rules and regulations such as not to overload their vehicles. the vessel left the port of Mandaue City for Bislig.. and if so. Surigao del Sur on March 2. VS. San Miguel Corporation insured several beer bottle cases with an aggregate value of P5. Cortes.R. The vessel listed at the port side and eventually sunk at Cawit Point. 135645 FACTS: On March 1. are presumed to have been at fault or negligent if the goods transported by them are lost. he could not be expected to have foreseen the unfavorable weather condition that awaited the vessel in Cortes. The source of a common carrier's legal liability is the contract of carriage. Surigao del Sur on March 3. San Miguel Corporation claimed the amount of its loss from petitioner. . Surigao del Sur. No. Subsequently. Surigao del Sur. Thus. As a consequence thereof. destroyed or if the same deteriorated. The parties do not dispute that on the day the M/V Peatheray Patrick-G sunk. 1987 was shown to be the proximate and only cause of the sinking of the M/V Peatheray Patrick-G and the loss of the cargo belonging to San Miguel Corporation. the Captain confirmed with the Coast Guard that the weather condition would permit the safe travel of the vessel to Bislig. The Court of Appeals observed respondents from any liability because the cargo was lost due to a fortuitous event. March 3. No evidence was presented to show that the accident was due to adverse road conditions or that precautions were taken by the jeepney driver to avert possible accidents. M/V Peatheray Patrick-G listed and subsequently sunk off Cawit Point. it binds itself to carry the passengers safely as far as human care and foresight can provide.836. Surigao del Sur. The blowingup of the tire. said vessel encountered strong winds and huge waves ranging from six to ten feet in height. The appellate court likewise found that there was no negligence on the part of the crew of the M/V Peatheray Patrick-G. Since the presence of strong winds and enormous waves at Cortes. as a general rule. EFFECTS OF FORTUITOUS EVENT UPON OBLIGATIONS THE PHILIPPINE AMERICAN GENERAL INSURANCE CO.222. this does not make the explosion of the tire a fortuitous event. 1987. It was the presence of the strong winds and enormous waves which caused the vessel to list. common carriers. Surigao del Sur. whether such natural disaster was the sole and proximate cause of the loss or whether private respondents were partly to blame for failing to exercise due diligence to prevent the loss of the cargo. 1987. Cortes. The accident was caused either through the negligence of the driver or because of mechanical defects in the tire. The weather was calm when the vessel started its voyage. with a due regard for all the circumstances. ISSUE: Whether the loss of the cargo was due to the occurrence of a natural disaster. 1987. MGG MARINE SERVICES. The following day. INC. the cargo belonging to San Miguel Corporation was lost. and by entering into the said contract. RULING: YES. Instead. Mindex could have prevented the incident by immediately towing the truck to a motor shop for repair. Morillo sent a letter to Mindex proposing that he will entrust the said vehicle in the amount of P275. 1994 to the date of finality of the said decision. the petitioner is contributory negligent to the incident. The CA found petitioner was not without fault for the loss and destruction of the truck and thus liable therefore.EFFECTS OF FORTUITOUS EVENT UPON OBLIGATIONS MINDEZ RESOURCES DEVELOPMENT VS.00 daily.00 as balance of the unpaid rental for the 6x6 truck with interest of 12%. On April 11.000. he made counter offers which state that they will pay the rental of the 6x6 truck in the amount of P76. On July 10.750.400. The Philipp Brothers Oceanic. However.000. though foreseen. and that Mindex will pay P50. After the public bidding was conducted. “No person shall be responsible for a fortuitous event that could not be foreseen or. 1987. Morillo pulled out the truck from the repair shop of Mindex and had it repaired elsewhere for which he spent the amount of P132.000.00 valuation of the truck from P150. PHIBRO’s bid was accepted. 1987. The appellate court sustained RTC’s finding. Instead of delivering the coal on or before the .00 rentals and P132. Morillo’s stand has not been changed as he merely lowered the first payment on the P275. As stated by the Court of Appeals.00 unpaid rentals.00. repair and overhaul the truck on their own expenses and return it to Morillo on good running condition after repair. unidentified persons burned the truck while it was parked unattended at San Teodoro.800. 126204 November 20.00. and P20. P132.00. that he is amenable to receive the rental in the amount of P76. 2001 369 SCRA 629 FACTS: On May 14. 1987. In this case. 1991.R. Decision was denied. which was received by PHIBRO on July 15.000. the National Power Corporation (NAPOCOR) issued invitations to bid for the supply and delivery of 120. Oriental Mindoro due to mechanical trouble. In order to hasten the transfer of coal. PHIBRO proposed to NAPOCOR that they equally share the burden of a “strike-free” clause. was inevitable.00 per hour for a minimum of 8 hours a day or a total of P2. “the burning of the subject truck was impossible to foresee.00 monthly until the balance of P275. No.750.00 representing the cost of repair and overhaul of the truck with interest of 12% until fully paid. NAPOCOR’s acceptance was conveyed in a letter dated July 8. (PHIBRO) prequalified and was allowed to participate as one of the bidders.00 to P50. However. 1987. Except for his acceptance of the proffered P76. which could seriously hamper PHIBRO’s ability to supply the needed coal unless a “strike-free” clause is incorporated in the charter party or the contract of carriage.000. 2002 FACTS: On February 1991 a verbal agreement was entered into between Ephraim Morillo and Mindex Resources Corporation fro the lease of the former’s 6x6 10-wheeler cargo truck for use in Mindex’s mining operations in Oriental Mindoro at a stipulated rental of P300. Mindex responded by a hand written letter expressing their reservations on the above demands due to their tight financial situation. INC. MORILLO 379 SCRA 144 March 12.000.000.750.00 as attorney’s fees. 1987.000.00. The RTC found petitioner responsible fro the destruction of loss of the leased 6x6 truck and ordered it to pay respondent P76. PHIBRO sent word to NAPOCOR that industrial disputes might soon plague Australia. it modified the 12% interest on the P76. On August 6. NAPOCOR refused. On April 15. Deleting attorney’s fees.000. Batangas.000.000 metric tons of imported coal for its Batangas Coal-Fired Thermal Power Plant in Calaca. the shipment’s point of origin. Article 1174 of the Civil Code states that. Morillo replied that he will relinquish to Mindex the damaged truck.00. modified the RTC and CA’s EFFECTS OF FORTUITOUS EVENT UPON OBLIGATIONS NATIONAL POWER CORPORATION VS. ISSUE: Whether or not the CA is correct in finding the petitioner liable due to negligence and cannot be exonerated due to the defense of fortuitous event. PHIBRO received from NAPOCOR a confirmed and workable letter of credit.00 repair cost to 6% per annum form June 22. PHILIPP BROTHERS OCEANIC. Upon learning the burning incident.00 is fully paid. petitioner was found negligent and thus liable for the loss or destruction of the leased truck.00 that is its cost price without charging for the encumbrance of P76.000. there must be an exclusion of human intervention form the cause of injury on loss. but not impossible to avoid. Inc. It affirmed the award of attorney’s fees. 1991. April 18. Mindex was paying its rentals until April 10. G. Morillo offered to sell the truck to Mindex but the latter refused. In other words. it replaced the vehicle’s burned tires and had it towed to a shop for repair and overhauling. 000. decision.” In this case. The parties had since remain intransigent and so on August. they also signed a Continuing Guaranty Agreement for the loan dated December 13. though foreseen. On January 16. representing the increase in the price of coal. other than the payment of money due. Efraim and his son. CA. During the pendency of the testate proceedings. Again. Each of them was to assume the indebtedness of their late father to FCCC. 1987 those strikes had already ceased. that is. 2. It was intended to pay the balance of the purchase price of another unit of Ford 6600 Agricultural All-Purpose Diesel Tractor. corresponding to the tractor respectively taken by them. On April 9. leaving a holographic will. 3. CA. 1980. Hence. it is worthy to note that PHIBRO and NAPOCOR explicitly agreed in Section XVII of the “Bidding Terms and Specifications that “neither seller (PHIBRO) nor buyer (NAPOCOR) shall be liable for any delay in or failure of the performance of its obligations. 1987. VS. Furthermore. or which. The amount was intended for the payment of the purchase price of one unit Ford 6600 Agricultural All-Purpose Diesel Tractor. 358 SCRA 626 UNION BANK OF THE PHILIPPINES versus EDMUND SANTIBAÑEZ and FLORENCE SANTIBAÑEZ ARIOLA G.436. was appointed as the special administrator of the estate of the decedent. moral and exemplary damages and attorney’s fees. executed a Joint Agreement dated July 22. No. Edmund. INC. as agreed upon by the parties in the July contract. 1981 and every May 31st thereafter up to May 31.00.” “Strikes” then are undoubtedly included in the force majeure clause of the Bidding Terms and Specifications.R. . testate proceedings commenced before the RTC of Iloilo City. the First Countryside Credit Corporation (FCCC) and Efraim M. Subsequently in March 1981. 1992.00. 1980.745. executed a promissory note for the said amount in favor of the FCCC. two tractors for Edmund and one tractor for Florence. Consequently.thirtieth day after receipt of the Letter of Credit. Santibañez entered into a loan agreement in the amount of P128. PHIBRO filed an action for damages with application for injunction against NAPOCOR with the Regional Trial Court. Sometime in February 1981.185. he cannot be held liable for damages for non-performance.96 due on May 31. PHIBRO participated anew in this subsequent bidding but its application was denied for not meeting the minimum requirements. In addition to the above legal precept. 149926 2005 Feb 23 FACTS: On May 31. UNION BANK VS. 452 S 228 SAN AGUSTIN VS. 1980. the surviving heirs. NAPOCOR elevated the case to the Court of Appeals which affirmed in toto the latter’s decision. and a claim of P500. wherein they agreed to divide between themselves and take possession of the three tractors. Edmund. NAPOCOR claimed that due to PHIBRO’s failure to deliver the coal on time. ISSUE: Whether or not the lower court erred in holding that PHIBRO’s delay in the delivery of imported coal was due to force majeure. Unsatisfied.73. as one of the heirs. In its complaint. Efraim and his son. Aside from such promissory note. SANTIBANEZ. PHIBRO alleged that NAPOCOR’s act of disqualifying it in the October 1987 bidding and in all subsequent biddings was tainted with malice and bad faith. this time in the amount of P123. Edmund and his sister Florence Santibañez Ariola. On December 13. Thus. Efraim died. However. NAPOCOR once more advertised for the delivery of coal to its Calaca thermal plant. if any such delay or failure is due to Force Majeure. the trial court rendered a decision in favor of PHIBRO. This means that when an obligor is unable to fulfill his obligation because of a fortuitous event or force majeure.00 as litigation expenses. On the other hand NAPOCOR averred that the strikes in Australia could not be invoked as reason for the delay in the delivery of coal because PHIBRO itself admitted that as of July 28. Makati City. in October 1987. were inevitable. 371 SCRA 348 PROJECT BUILDERS.156. Edmund. with accessories. 1981. TRANSMISSIBILITY OF RIGHTS AND OBLIGATIONS 1. RULING: It was disclosed from the records of the case that what prevented PHIBRO from complying with its obligation under the July 1987 contract was the industrial disputes which besieged Australia during that time. the FCCC and Efraim entered into another loan agreement. this present petition. the principal sum payable in five equal annual amortizations of P43.000. In view thereof. PHIBRO prayed for actual. Branch 57.000. and one unit Howard Rotamotor Model AR 60K. executed a promissory note in favor of the FCCC. PHIBRO effected its first shipment only on November 17. 1985. The Civil Code provides that no person shall be responsible for those events which could not be foreseeen. PHIBRO found that the real reason for the disapproval was its purported failure to satisfy NAPOCOR’s demand for damages due to the delay in the delivery of the first coal shipment. it was compelled to purchase coal from ASEA at a higher price. 1981. NAPOCOR claimed for actual damages in the amount of P12. It presupposes that the properties to be partitioned are the same properties embraced in the will. Sometime in 1979. an Affidavit of Loss was filed with the Register of Deeds and a certified copy of TCT was issued. Petitioner moved for motion for reconsideration but was again denied.On August 20. 2. The heirs’ assumption of the indebtedness is not binding. 2. 1974. subject to any defenses Edmund may have as against the petitioner. the Register of Deeds of Rizal issued in the name of Caiquep. Upon consulting a new counsel. Whether or not the petitioner can hold the heirs liable on the obligation of the deceased. RULING: 1. When released. assigned all its assets and liabilities to Union Savings and Mortgage Bank. ISSUE: 1. were executed and signed only by the late Efraim Santibañez and his son Edmund. the court had not acquired jurisdiction over the person of Edmund. In testate succession. on February 5. any partition involving the said tractors among the heirs is not valid. a Deed of Assignment with Assumption of Liabilities was executed by and between FCCC and Union Savings and Mortgage Bank. before the RTC of Makati City. the right of a person to dispose of his property by will may be rendered nugatory. Demand letters for the settlement of his account were sent by petitioner Union Bank of the Philippines (UBP) to Edmund. It follows then that the assumption of liability cannot be given any force and effect. only Menez and counsel were present because the Register of Deeds and the Provincial Prosecutor were not notified. This being so. The next day. The partition being invalid. a parcel or residential land located in Pasig City. wherein the FCCC as the assignor. As the petitioner failed to file its money claim with the probate court. The joint agreement executed by Edmund and Florence. In December 1990. The law enjoins the probate of a will and the public requires it. He consulted a lawyer but the latter did not act immediately on the matter. . for being suspected as a subversive. Whether or not the heirs’ assumption of the indebtedness of the deceased is binding. that each heir shall take possession and use of their respective share under the agreement. particularly the promissory notes and the continuing guaranty agreement. Edmund and Florence. His search for the registered owner to different parts of the country failed prompting the former to file a petition for the issuance of owner’s duplicate copy to replace the lost one. During the hearing. Thus. there can be no valid partition among the heirs. Whether in testate succession. Vda de Caiquep and the present occupant of the property. it may only go after Edmund as co-maker of the decedent under the said promissory notes and continuing guaranty. among others. 3. On February 19. is invalid. and that they were to assume the indebtedness corresponding to the chattel that they were each to receive. Also. However. the petitioner filed a Complaint for sum of money against the heirs of Efraim Santibañez. He surrendered to the authorities and was detained for two years. military men ransacked Menez's’ house in Rizal. It was made dependent on the validity of the partition. COURT OF APPEALS 371 S 348 FACTS: On February 11. Florence S. the Government Service Insurance System (GSIS) sold to Macaria Vda de Caiquep. but the latter failed to heed the same and refused to pay. the petitioner had not sufficiently shown that it is the successor-in-interest of the Union Savings and Mortgage Bank to which the FCCC assigned its assets and liabilities. he discovered that the subject TCT was missing. specially so since at the time of its execution. at most. because unless a will is probated and notice thereof given to the whole world. TRANSMISSIBILITY OF RIGHTS AND OBLIGATIONS SAN AGUSTIN VS. 3. Private respondent also declared the property for tax purposes and obtained a certification thereof from the Assessor’s office. The trial court granted his petition after Menez presented his evidence ex parte. He filed A Motion to Reopen Reconstitution Proceedings but RTC denied said motion. The court then agrees with the appellate court that the provisions stated in the will is an all-encompassing provision embracing all the properties left by the decedent which might have escaped his mind at that time he was making his will. partitioning the tractors among themselves. Ariola could not be held accountable for any liability incurred by her late father. that is. part of the GSIS Low Cost Housing Project evidenced by a Deed of Absolute Sale. the heirs in effect did not receive any such tractor. The assumption of liability was conditioned upon the happening of an event. The documentary evidence presented. and other properties he may acquire thereafter. 1988. 1974. there was already a pending proceeding for the probate of their late father’s holographic will covering the said tractors. San Agustin claimed this was the first time he became aware of the case of his aunt Ma. there can be no valid partition among the heirs until after the will has been probated. another order for his arrest was issued so he hid in Mindanao for another four years or until March 1984. 1981. Caiquep sold the subject lot to private respondent Maximo Menez. of course. Transfer Certificate of Title. In this case.38 and consists of twenty accounts. respondents 2001 Jun 19 358 SCRA 626 FACTS: On August 21. Eventually. Of such receivables amounting to P7. either onerously or gratuitously. petitioner is bound by contracts entered into by his predecessor’s-in-interest. It was stipulated that the credit line of P5. in line with the rule that heirs are bound by contracts entered into by their predecessors-in-interest. Further. any purchase. 1975. the GSIS. the right of an assignor to an assignee who would then be capable of proceeding against the debtor for enforcement or satisfaction of the credit. RULING: The assignment of the contracts to sell falls within the purview of the Act. including petitioner who alleges to be one of her heirs. including all appurtenant accessory rights.00.000. When defendants allegedly ISSUE: Whether or not said Republic Act No. and any transaction or series of transactions having a similar purpose or effect.323. petitioners.549.437. the GSIS has not filed any action for the annulment of Deed of Absolute Sale of the lot the latter sold to Caiquep. The trial court dismissed the complaint but the Court of Appeals reversed it. or discount. The total amount of receivables discounted by defendant PBI is P7. or other acquisition of or any credit upon the security of.132. RULING: Yes.48 and the monetary interests. 5980 should govern the transaction between petitioners and private respondent which in reality was bilateral.00 granted includes the amount already assigned/discounted. any rental-purchase contract. the assignment partakes of the nature of a contract of sale or purchase. the rules on donation would likewise be pertinent.00 against which said defendant would discount and assign to plaintiff on a ‘with recourse non-collection basis’ its (PBI’s) accounts receivable under the contracts to sell specified in said agreement.986. part or all of the price is payable subsequent to the making of such sale or contract. However. JR. or other claim against. the said contract of sale is binding upon the heirs of Macaria Vda de Caiquep. The transfer of rights takes place upon perfection of the contract.802.815. pledge. PBI denied liability alleging that IFC has no case or right of action because the obligation is fully paid out of the proceeds of foreclosure sale of its property. unless and until annulled in the proper suit filed by the rightful party.237. property or money. THE COURT OF APPEALS and INDUSTRIAL FINANCE CORPORATION. and LEANDRO ENRIQUEZ. any obligation or claim arising out of the foregoing. The foreclosed property was redeemed a year later but after application of the redemption payment.000. and respondent financing company was not really subrogated in the place of the supposed seller or assignor. A collection suit was then filed by IFC against PBI. lien.986.08.053. plaintiff and defendant PBI entered into an agreement whereby it was agreed that plaintiff would provide a maximum amount of P2.Against the above-mentioned ‘credit line. to raise against the assignee the same defenses he could set up against the assignor.. it alleged that a proper accounting of the transaction between the parties will show that it is the IFC who is liable to PBI. . is thereupon acquired by the assignee. the same parties entered into an agreement whereby it was agreed that PBI’s credit line with plaintiff be increased to P5. where valuable consideration is involved. It ordered PBI to pay IFC the deficiency in the amount of P1. not trilateral. advance. mortgage. TRANSMISSIBILITY OF RIGHTS AND OBLIGATIONS PROJECT BUILDERS.. CALAPATIA.ISSUE: Whether or not petitioner is bound by the contract entered into by his predecessor-in-interest. and ownership of the right. plaintiff foreclosed the mortgage and plaintiff was the highest bidder in the amount of P3. GALICANO A.000. under which. To secure compliance with the terms and conditions of the agreement defendants executed a Deed of Real Estate Mortgage in favor of plaintiff.000. The term credit has been defined to . The assignment binds the debtor only upon acquiring knowledge of the assignment but he is entitled.000.’ defendant PBI discounted with plaintiff on different dates accounts receivables with different maturity dates from different condominium-unit buyers. INC. Heirs are bound by contracts entered into by their predecessors-in-interest."(c) x x x mean any loan. demand. In the Court’s view.000.500. or for the delivery of. even then.000. plaintiff claims that there is still a deficiency in the amount of P1.” An assignment of credit is an act of transferring. Where the assignment is on account of pure liberality on the part of the assignor. defaulted in the payment of the subject account.. For now.38 plaintiff released to defendant PBI the amount of P4. vs. nor the forfeiture of the lot in question.815.72 and the difference of P3. any option. any contract to sell. any conditional sales contract.00.66 represents the discounting fee or finance fee. either for present or future delivery.682. deed of trust. or sale or contract of sale of property or service. the contract of sale remains valid between the parties. The resort to foreclosure of the mortgaged properties did not preclude private respondent from collecting interest from the assigned Contracts To Sell from the time of foreclosure to the redemption of the foreclosed property.that. ELISEO D. 6 of Rep. 407 issued 10 June 1990. and Sec. that: “the VENDEES offered to repurchase and the VENDOR agreed to sell the above-described property.700. the assignee is effectively subrogated in place of the assignor and in a position to enforce the contract to sell to the same extent as the assignor could.470. REYES. COURT OF APPEALS. Dissatisfied. Act 6657 (the Comprehensive Agrarian Reform Law or CARL) approved 10 June 1988. ROLANDO D. The assignment. Private respondents mortgaged said land to petitioner. That the Assignor shall comply with all the terms and conditions specified on the said Contracts to Sell. 1 of E. the Vendor agrees to deliver to the Vendee/s(. a TCT was eventually issued in petitioner's name. executed by the assignor and its individual purchaser or customers. upon completion of the payment herein stipulated and agreed.36 shall be payable three months from the date of the execution of the documents and all subsequent amortization shall be due and payable every quarter thereafter. with a down payment of P8. and assigned/discounted to Assignee. Consequently. administrators and assigns(. in accordance with the provision of law. The Deed provided. still insisting that its obligation to execute a Deed of Sale in favor of private respondents had become a legal impossibility and that the non-impairment clause of the Constitution must yield to the demands of police power. among others. The imposition of interest was a mere enforcement or exercise of the right to the ownership of the credit or receivables which the parties stipulated in the 1976 financing agreement.O. private respondent was impressed with the entitlement over such interest payment. respondents 1996 September 20 G. Aggrieved. CC) DEVELOPMENT BANK OF THE PHILIPPINES. REQUISITES OF CONDITIONAL OBLIGATIONS (Art. Sps. condominium unit buyers. to collect payment from them. 6 of Rep.) his heirs." and default in the payment of installments had been duly established when petitioner corporation foreclosed on the mortgaged parcels of land. Thus -"f. with an area of 113. On 6 April 1984 petitioner and private respondents entered into a Deed of Conditional Sale wherein petitioner agreed to reconvey the foreclosed property to private respondents. ISSUE: Whether or not the petitioner’s prestation to execute and deliver a deed of conveyance in favor of private respondents had become legally impossible in view of Sec. Petitioner then informed private respondents that the prestation to execute and deliver a deed of conveyance in their favor had become legally impossible in view of Sec. subject matter of this deed of conditional sale. petitioner. and failure to make such payments on time shall entitle the Developer to charge interest at the rate of one percent (1%) per month without prejudice to the other remedies available to the Developer. MARIO C. No. 118180 262 SCRA 245 FACTS: Private respondents were the original owner of a parcel of agricultural land covered by a TCT.800 shall be payable in six (6) years on equal quarterly amortization plan at 18% interest per annum. In an assignment of credit. CARPIO and ANUNCIACION del ROSARIO. When private respondents defaulted on their obligation. RULING: .00 and the balance of P64. Sps.Upon an assignment of a contract to sell. 407 issued 10 June 1990.” One of the provisions in the contracts to sell.695 square meters. and Sec. .” On 6 April 1990.900.” As owner of the account receivables. his knowledge thereof or lack of it affecting only the efficaciousness or inefficaciousness of any payment he might make. CARPIO and RAFAELA VILLANUEVA. 1 of E. petitioner appealed to the CA. 1179. related to the imposition of interest in the event of default by the debtor in the payment of installments. for the sum of SEVENTY THREE THOUSAND SEVEN HUNDRED ONLY (P73. . the consent of the debtor is not essential for its perfection. was "with recourse. CARPIO and CARMEN ORQUISA.00).O. LUZ C. On 30 May 1977. more or less. subject to the terms and stipulations as hereinafter stipulated. is untenable. to wit: "All payments shall be made on or before their respective due dates without necessity of demand therefor. REYES. JULIET REYES-RUBIN. private respondents demanded from petitioner the execution of a Deed of Conveyance in their favor. VS. petitioner foreclosed the mortgage on the land and emerged as sole bidder in the ensuing auction sale. subject matter of the assignment agreement.R. Act 6657 (the Comprehensive Agrarian Reform Law or CARL) approved 10 June 1988. NORMY D. The first quarterly amortization of P4. An insistence of petitioners that the subject transaction should be considered a simple loan since private respondent did not communicate with the debtors. private respondents filed a complaint for specific performance with damages against petitioner before the RTC. The CA rendered judgment dismissing petitioner's appeal. upon completing the payment of the full repurchase price. it might be pointed out. The trial court rendered judgment ordering defendant to execute and deliver unto plaintiffs a deed of final sale of there land subject of their deed of conditional sale.) a good and sufficient deed of conveyance covering the property. Sps. The terms of this Contract is for a period of one year upon the signing thereof. having fully paid the repurchase price.O. 6 of Rep. 6 of RA 6657. appellant is required to transfer to the Republic of the Philippines "all lands foreclosed" effective June 10. allowed private respondents to fulfill the condition of effecting full payment. of a half-portion of a 'parcel of land containing an area of 12 hectares.000. THE HEIRS OF THOMAS and PAULA CRUZ. Applying this precept to the case. After the period of this Contract. 314 SCRA 585 INSULAR LIFE VS.00) payable within Two (2) Years period with an interest of 12% per annum subject to the devalued amount of the Philippine Peso. Consequently.. as well as the extinguishment or loss of those already acquired. The deed of conditional sale between petitioner and private respondents was executed on 6 April 1984. the demandability as well as the acquisition or effectivity of the rights arising from the obligation is suspended pending the happening or fulfillment of the fact or event which constitutes the condition. On this same reason. albeit conditionally. LAVINA. 1990. Act 6657 to set aside its obligations already existing prior to its enactment. Act 6657 in its entirety deals with retention limits allowed by law to small landowners. 373 SCRA 626 DIRECT FOUNDERS VS. 373 SCRA 645 FELIX L.If the obligation depends upon a suspensive condition.. Private respondents had religiously paid the agreed installments on the property until they completed payment on 6 April 1990. 131784 19 September 1999 314 SCRA 585 FACTS: On December 1. demanded the execution of a Deed of Sale in their favor. But this necessitates an entirely differently proceeding.R.. the Court held that they need not delve on the applicability of DBP Circular No. 1990 retracts to the time the contract of conditional sale was executed on April 6. 1984. R. Act 6657 nor Sec. appellant continued to accept the payments made by the appellant until it was fully paid on April 6. . Petitioner acquired the land through foreclosure proceedings but agreed thereafter to reconvey it to private respondents. In conditional obligations.A. Act 6657 only after private respondents. Petitioner. 6657. its effects retroact to the moment when the essential elements which gave birth to the obligation have taken place. 11. All that the appellant has to do then is to execute the final deed of sale in favor of the appellee. SUSPENSIVE CONDITIONS – MEANING 1. more or less. The property has already been sold to herein appellees even before the said E.. and the decision of the CA was AFFIRMED with the MODIFICATION that attorney's fees and nominal damages awarded to private respondent were DELETED. petitioner. 1 of E. 6657. VS. 1990. and an accretion of 2 hectares. The Court ruled in favor of private respondents. The Court ruled that the trial court and CA have correctly ruled that neither Sec. management contract or transfer or possession of private lands executed by the original landowner. The contract of Lease/Purchase contains the following provisions: '1. Once the event which constitutes the condition is fulfilled resulting in the effectivity of the obligation. the subject property has ceased to belong to the mass of foreclosed property failing within the reach of said law. TALENS. it is then within the jurisdiction of the Department of Agrarian Reform (DAR) to determine whether or not the property can be subjected to agrarian reform. more or less. Province of Rizal. GONZALES.O. the LESSEE shall purchase the property on the agreeable price of One Million Pesos (P1.. 2. the sole proprietor and manager of Felgon Farms. Since the property here involved is more or less ten (10) hectares. As such. 407 can neither affect appellant's obligation under the deed of conditional sale. said last paragraph clearly deals with "any sale. according to the following schedule of payment: Upon the execution of the Deed of Sale 50% . Under the said law.000. GONZALES VS. In the first place. 1. 3.and thereafter 25% every six (6) months thereafter. the contract of sale was perfected. the said sale does not come under the coverage of R. 407 was intended to impair the obligation of contract petitioner had much earlier concluded with private respondents. situated in Rodriguez Town. the same is not equivalent to gross and evident bad faith when it refused to execute the deed of sale in favor of private respondents. shall depend upon the happening of the event which constitutes the condition. HEIRS. has been enacted. in fact. 6 of Rep. and invoked Section 6 of Rep. the full payment by the appellee on April 6. Under the facts obtaining. The petition was DENIED. all elements of the contract of sale were present. lease. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.. 1983. Petitioner cannot invoke the last paragraph of Sec. entered into a Contract of Lease/Purchase with the defendant. E." The original owner in this case is not the petitioner but the private respondents. 6 of Rep. From that time. payable within the first ten (10) days of the beginning of each period of six (6) months. Sec. herein represented by ELENA C. No.O. the acquisition of rights. While DBP committed egregious error in interpreting Sec. Despite the mandate of Sec.A. Gonzales. Paula Cruz together with the plaintiffs heirs of Thomas and Paula Cruz. respondents G. YOUNG. Felix L. MARIA LOURDES ONGPIN. The defendant Gonzales paid the P2. both moral and compensatory and attorney's fees and litigation expenses. The record shows that at the time the contract was executed. 1. In fact. the clear intent of the ninth paragraph was for respondents to obtain a separate and distinct TCT in their names.. they could not have sold the disputed parcel of land. they could not compel petitioner to buy the parcel of land. 1983. holding that the property should be purchased first before respondents may be obliged to obtain a TCT in the name of petitioner-lessee-buyer. Alleging breach of the provisions of the Contract of Lease/Purchase. respondents seek to rescind the Contract and to recover the property..00) Pesos per hectare. Since respondents had not performed their obligation.. ARTHUR TAN.R. This was necessary to enable them to show their ownership of the stipulated portion of the land and their concomitant right to dispose of it. ELSIE DIZON. LOPE JUBAN. petitioner disagrees with the interpretation of the two courts and maintains that respondents were obligated to procure a TCT in their names before he could be obliged to purchase the property in question. over the herein leased portion to the LESSEE within a reasonable period of time which shall not in any case exceed four (4) years. Both the trial court and the Court of Appeals (CA) interpreted this provision to mean that the respondents had obliged themselves to obtain a TCT in the name of petitioner-lessee. Bernardina Calixto and Severo Cruz. SUSPENSIVE CONDITIONS: MEANING INSULAR LIFE ASSURANCE COMPANY. argues that he could not be compelled to purchase the property.000. on the other hand. RULING: Alleging that petitioner has not purchased the property after the lapse of one year. there was no assurance that the respondents were indeed the owners of the specific portion of the lot that petitioner wanted to buy. LTD. The defendant Gonzales did not.C. CECILIA VIRAY. JIMENEZ VS. JR.. He remained in possession of the property without paying the purchase price provided for in the Contract of Lease/Purchase and without paying any further rentals thereon. 1984.500. Title to the property remains in the name of the plaintiffs' predecessors-in-interest. and if so. it appears that petitioner's interpretation renders clause nine most effectual. after which a new Contract shall be executed by the herein parties which shall be the same in all respects with this Contract of Lease/Purchase insofar as the terms and conditions are concerned. because respondents have not complied with paragraph nine. The defendant Gonzales refused to vacate the property and continued possession thereof.. A letter was sent by one of the plaintiffs-heirs Ricardo Cruz to the defendant Gonzales informing him of the lessors' decision to rescind the Contract of Lease/Purchase due to a breach thereof committed by the defendant. There is no showing whether respondents were the only heirs of Severo Cruz or whether the other half of the land in the name of Bernardina Calixto was adjudicated to them by any means.'2. '9. Thus. MANUEL VIRAY and JOSE VITO BORROMEO 2002 Jan 16 G.. INSULAR SAVINGS BANK and JACINTO D. respondents' predecessors-in-interest. GABRIEL LA'O II. The property subject of the Contract of Lease/Purchase is currently the subject of an Extra-Judicial Partition. when the Contract of Lease/Purchase was executed.. He contends that paragraph nine was a condition precedent to the purchase of the property. the plaintiffs filed a complaint for recovery of possession of the property . No. however. 140964 .The LESSORS hereby commit themselves and shall undertake to obtain a separate and distinct T..The LESSEE shall pay by way of annual rental an amount equivalent to Two Thousand Five Hundred (P2. which obligates them to obtain a separate and distinct title in their names.T. exercise his option to purchase the property immediately after the expiration of the one-year lease on November 30.subject of the contract with damages. The trial court held that this obligation was a condition precedent to petitioner's purchase of the property. the land in question was still registered in the name of Bernardina Calixto and Severo Cruz. Absent any title in their names. YOLANDA BAYER.. Basic is the rule in the interpretation of contracts that if some stipulation therein should admit of several meanings. ISSUE: Whether or not the trial court gravely erred in holding that plaintiffs-appellants could not validly rescind and terminate the lease/purchase contract and thereafter to take possession of the land in question and eject therefrom defendants-appellees. ANTONIO ONGPIN. Considering the antecedents of the ownership of the disputed lot. it shall be understood as bearing that import most adequate to render it effectual. As earlier noted. upon the signing of this contract on Dec.. ROBERT YOUNG.. they admit that extrajudicial proceedings were still ongoing. The CA took the opposite view. The letter also served as a demand on the defendant to vacate the premises within 10 days from receipt of said letter. installing thereon the defendant Jesus Sambrano as his caretaker.00 annual rental on the half-portion of the property in accordance with the second provision of the Contract of Lease/Purchase and thereafter took possession of the property.. in what concept and to what extent. Petitioner..500..00 per hectare or P15. Hence. respondent Robert Young. It likewise specifies the warranty given by Young that the doubtful accounts of petitioner Bank amounted to P60. then it is incumbent upon the parties to perform their respective obligations under the contract. accepted the resignation of Young as President. 1991. petitioners. However. which must be set-off against the loans of the other respondents.000.539. wherein Insular Life and its Pension Fund agreed to purchase 830. 1991. representation and warranties are satisfied.714. Araneta backed out from the intended sale and demanded the return of his downpayment. Young and his group obtained 55% equity in the Bank.00 and pay the latter P162." And when the obligation assumed by a party to a contract is expressly subjected to a condition.000.000. On January 7. and (2) Insular Life and its Pension Fund shall undertake a due diligence audit on the Bank to determine whether the provision for P60. 1991) and Insular "may consider (his) obligations thereunder as defaulted.000. stating that due to business reverses. Meanwhile.000. RULING: Contrary to the findings of the Court of Appeals. The MOA is merely a contract to sell since the parties therein specifically undertook to enter into a contract of sale if the stipulated conditions are met and the representation and warranties given by Young prove to be true. records show that Young failed to infuse the required additional capital. the MOA is subject to Young's representations and warranties that. 1991 valid and enforceable between the parties despite respondent Young's failure to comply with the terms and conditions thereof. 1991 to December 27. and (c) total loans with doubtful recovery of P60. counsel of Insular Life.00 into the Bank. Insular Life and Young.000. specific performance and damages. together with his associates and co-respondents.000.00. Jacinto Jimenez. for annulment of notarial sale. inter alia. Here.00 into the Bank. 1991.000.00 only. as well as the extinguishment or loss of those already acquired.00 doubtful account made by Young is sufficient.000. for a total consideration of P198. Chairman of the Bank's Board of Directors.000.000. subject to due diligence audit and proper documentation. Insular Life invested a total of P325. on November 27.00. On October 21. respectively. Makati City.00. 1991.801. that under the MOA. representing the remaining 45% of its outstanding capital stock.000." for brevity).00. Young signed a letter prepared by Atty. he shall not be able to pay his obligations under the Credit Agreement between him and Insular Life. 1991.00. Under its terms.00 in the Bank.000. as of September 30. its Board of Directors. Ayllon. of the Bank's outstanding shares. during its meeting. entered into a Memorandum of Agreement (MOA). no obligation on the part of either party arises. the MOA provides that Young shall infuse additional capital of P50. October 29.000.000. the foregoing provisions of the MOA negate the existence of a perfected contract of sale. The obligation of petitioner Insular Life to purchase. Jacinto Jimenez is void as it does not comply with the requirement of notice of the second auction sale.000.000.000. Forthwith. now petitioner Insular Savings Bank ("the Bank. On October 1.900. (b) a total net worth of P114.00. addressed to Mr.000. the acquisition of rights. while Jorge Go and his group owned the remaining 45%. the due diligence audit shows that Young was involved in fraudulent schemes like checkkiting which amounted to a staggering P344. shall depend upon the happening of the event which constitutes the condition. Jacinto Jimenez. and in the event that the shares are not sold.000. respectively. Insular Life instructed its counsel to foreclose the pledge constituted upon the shares. Conversely. Vicente R. As a result of these anomalous transactions. However. Insular Life and its counsel. Young "unconditionally and irrevocably waive(s) the benefit of the period" of the loan (up to December 26. that the notarial sale conducted by petitioner Atty. are subject to the fulfillment of the conditions contained in the MOA. Insular Life should apply the purchase price of P198.FACTS: In December. . On October 9. from the Licaros family for P65. 1992.000. the Bank has (a) a total outstanding paid-in capital of P157..000.00. Atty.860 common shares and 311. Moreover.000. acquired by purchase Home Bankers Savings and Trust Co. Young and his associates filed with the Regional Trial Court (RTC). a second auction sale shall be held the next day. as well as the concomitant obligation of Young to convey to it the shares. ISSUE: Whether or not the respondent court erred in declaring the MOA dated October 9. 1991. the reserves of the Bank were depleted and it had to undergo a ten-year rehabilitation plan under the supervision of the Central Bank. This belies his representation that the doubtful accounts of petitioner Bank amounted only to P60. The complaint alleges. 1987.00." He likewise interposes no objection to Insular Life's exercise of its rights under the said agreement. 92-049. Branch 142.000.000. The MOA is also subject to these "condition precedents": (1) Young shall infuse additional capital of P50. that Young was forced by the officers of Insular Life to sign letters to enable them to have control of the Bank. docketed as Civil Case No. 1991. From October 31. Consequently. a complaint against the Bank. Once the conditions. Insular Life and Insular Life Pension Fund formally informed Young of their intention to acquire 30% and 12%. The latter then sent Young a notice informing him of the sale of the shares in a public auction scheduled on October 28. This is in accord with Article 1181 of the Civil Code which provides that "(i)n conditional obligations. in the event that these conditions are not met or complied with.572 common shares.000.00 (corresponding to the 55% of the outstanding capital stock of the Bank) to Young's loan of P200. the obligation cannot be enforced against him unless the condition is complied with. authorized to represent the other stockholders. On October 19. It would be unfair on the part of Young to demand compliance by Insular Life of its obligations when he himself was remiss in his own. LAVIÑA. petitioner filed with the Court of Appeals a motion for reconsideration of the decision. as well as the extinguishments or loss of those already acquired. 12357) covering the subject property. it was executed about eight (8) years after the execution of the real estate mortgage over the subject property. this appeal to the Supreme Court. Hence. hence. It must be emphasized that the MOA did not convey title of the shares to Insular Life. Despite the lawful order of a coordinate and co-equal court. respondents do not dispute petitioners’ assertion that Young committed fraud. R-5475 in a petition for the issuance of writ of possession thereof way back on October 23. Branch 157 in LRC Case No.Significantly. 1998. 418 SCRA 73 HERMOSA VS. 93 PHIL 383 . JUDGE CELSO D. CHAN. SUSPENSIVE CONDITIONS: MEANING DIRECT FUNDERS HOLDINGS CORPORATION. The fact that no deed of sale was subsequently executed by the parties confirms the conclusion that no sale transpired between them. 2000. No. 2. 1998. the motion for inhibition and the motion to dissolve the writ of preliminary injunction were also denied. the temporary restraining order (TRO) was issued. 1181. On February 2. the respondent Judge issued the questioned order granting the issuance of a writ of preliminary injunction who subsequently denied the petitioner’s motion to dismiss and supplemental motion to dismiss and the very urgent motion for reconsideration on February 16. the acquisition of rights. On September 28. ISSUE: Who between petitioner and respondent Kambiak Y. 1998. has a better right to the possession of the subject property? RULING: The Supreme Court ruled in favor of petitioner. Worse. Accordingly. alleging an obviously grave abuse of discretion. PRESIDING JUDGE OF RTC. the Court of Appeals denied petitioner’s motion stating that the arguments advanced were “mere reiteration and restatements of those contained in their pleadings. 1999. it was not consummated. no right in favor of Young's arose and no obligation on the part of Insular Life was created. LONGARA. the Court of Appeals promulgated a decision dismissing the petition ruling that the trial court had jurisdiction to issue the injunction that did not interfere with the writ of possession of a coordinate court. Jr. Branch 71 and KAMBIAK Y. misrepresented the warranties and failed to comply with his obligations under the MOA. 1999. petitioner filed with the Court of Appeals a petition for certiorari and prohibition assailing the trial court’s issuance of a writ of preliminary injunction. presiding Regional Trial Court of Pasig. 1997. Since no sale transpired between the parties. issued the questioned orders to restore possession to private respondent Chan. Consequently. respondents January 16. respondent’s claim to the subject property was as heretofore stated ineffectual. implemented the TRO and submitted the Return on December 9.Pasig City. it was not registered and duly annotated on the Transfer Certificate of Title (No. 3. 2002 G. 141851 FACTS: Herein petitioner was granted with a writ of possession. 93 PHIL 971 TRILLANA VS. R. the Court Sheriff IV Cresencio Rabello. Jr. the same was also a material breach of the stipulations of the real estate mortgage over the subject property. In conditional obligations. shall depend upon the happening of the event which constitutes the condition. To emphasize. 1997. QUEZON COLLEGES. The conditions of the conditional sale agreement were not fulfilled. petitioner. it was because they were pledged by Young to Insular Life under the Credit Agreement. tantamount to lack of jurisdiction. on January 21. 1997. United Savings Bank..” POTESTATIVE SUSPENSIVE CONDITIONS 1. Second. It found that the conditional sale agreement is officious and ineffectual. VDA. its findings that the debt of Young has been fully paid and that Insular Life is liable to pay for the remaining 45% equity have no basis. On the same date on December 8. Neither can he feign ignorance of the stipulation in the MOA since it is presumed that he read the same and was satisfied with its provisions before he affixed his signature therein. Third. it was made clear to the respondent Judge that the property in question was occupied by the petitioner by virtue of a writ of possession issued by the Regional Trial Court of Pasig. If ever there was delivery of the said shares to Insular Life. VS. It is a fundamental axiom in the law on contracts that a person not a party to an agreement cannot be affected thereby. 1998. On May 29. Article 1181 of the Civil Code reads: “Art. Then. DE MISTICA VS. During the hearing for the issuance of temporary restraining order filed by herein private respondent. the Court of Appeals erred in concluding that Insular Life purchased 55% of the total shares of the Bank under the MOA. JR. NAGUIAT. On August 5. not only was the conditional sale agreement executed without the consent of the mortgagee-creditor. the respondent Judge. Chan. Branch 71. First. the mortgagee (United Savings Bank) did not give its consent to the change of debtor. VS. she has to show competent proof to support her contention. On the other hand. ISSUE: Whether or not there is a potestative suspensive condition in the Kasulatan. 1979. that he is presently the owner in fee simple of the subject lot having acquired the same by virtue of a Free Patent Title duly awarded to him by the Bureau of Lands. It was stipulated that payment could be made even after ten years from the execution of the Contract. suspensive. Had she accepted the tender. petitioner filed a complaint for rescission alleging that the failure and refusal of respondents to pay the balance of the purchase price constitutes a violation of the contract which entitles her to rescind the same.000. The trial court dismissed the complaint and ordered the petitioner to pay the respondents attorney’s fee and the cost of suit while ordering the respondents to pay the Disallowing rescission. respondents pray for moral damages in the amount of P50. Second. with interest of 12 percent. which was well within the ten-year period. It explained that the conclusion of the ten-year period was not a resolutory term. This agreement was reduced to writing in a Kasulatan. However. Petitioner did not disprove the allegation of respondents that they had tendered payment of the balance of the purchase price during her husband’s funeral. Eulalio Mistica entered into a contract to sell with Bernardino over a portion of the aforementioned lot containing an area of 200 square meters. Bernardino likewise alleged that sometime in October 1986. 1991. petitioner and her deceased husband never made any demand for the balance of the purchase price. nowhere is it stated in the Deed that payment of the purchase price is dependent upon whether respondents want to pay it or not. Spouses BERNARDINO NAGUIAT and MARIA PAULINA GERONA-NAGUIAT. attorney’s fees in the amount of P10. payment would have been made well within the agreed period. was to order them to pay the balance of the purchase price.00 and another partial payment of P1.R. 2003 G. and a portion thereof was leased to Bernardino sometime in 1970. there is no breach or violation committed by them and no damages could yet be incurred by the late Eulalio Mistica. the CA held.00 a month. because they had already transferred the land title to their names. If petitioner would like to impress upon the Court that the parties intended otherwise. the fact that they .heirs of the petitioner the balance of the purchase price and reconveyance of the extra area of 58 square meters from the land in question. she argues that the period cannot be extended beyond ten years. because such obligations are usually not meant to be fulfilled. FIDELA DEL CASTILLO Vda. First. Petitioner even refused the payment tendered by respondents during her husband’s funeral. it is undisputed that during the ten-year period.000. a yearly interest of 12% is to be paid. 1980. he offered to pay the remaining balance to petitioner but the latter refused and hence. the CA held that its reconveyance was no longer feasible. On April 5. because the Contract had stipulated that payment. As counterclaim. On December 4. The appellate court ruled that the only remedy available was to order them to pay petitioner the fair market value of the usurped portion. predecessor-in-interest of herein petitioner. RULING: The failure of respondents to pay the balance of the purchase price within ten years from the execution of the Deed did not amount to a substantial breach. the Court of Appeals held that respondents did not breach the Contract of Sale. rescission would be unjust to respondents. could still be made if respondents failed to pay within the period. As to the matter of the extra 58 square meters. DE MISTICA. thus showing that she was not exactly blameless for the lapse of the ten-year period. is the owner of a parcel of land. that the reasonable amount of rental for the subject land is P200. with 12 percent interest. respondents contended that the contract couldn’t be rescinded on the ground that it clearly stipulates that in case of failure to pay the balance as stipulated. that on account of the unjustified actuations of respondents. because it had been included in the title issued to them. and that his title and ownership had already become indefeasible and incontrovertible. Moreover.000. Bernardino gave a downpayment of P2. 137909 418 SCRA 73 FACTS: Eulalio Mistica. conditional obligations that depend on the whims of the debtor.00. No. The Code prohibits purely potestative. provided the vendee paid 12 percent interest. petitioner. because to do so would convert the buyer’s obligation to a purely potestative obligation that would annul the contract under Article 1182 of the Civil Code. Moreover. that respondents have been in possession of the subject portion and they should be ordered to vacate and surrender possession of the same to petitioner.00.00 on February 7. he failed to make any payments thereafter. exemplary damages in the amount of P30. The proper recourse. respondents December 11. during the wake of the late Eulalio Mistica.000. Eulalio Mistica died sometime in October 1986. Indeed. Instead.000. petitioner has been constrained to litigate where she incurred expenses for attorney’s fees and litigation expenses. Pursuant to said agreement. The Kasulatan does not allow such thing.00 and other litigation expenses. his heirs or assigns pursuant to the said document. to allow the fulfillment of conditions to depend exclusively on the debtor’s will would be to sanction illusory obligations. POTESTATIVE SUSPENSIVE CONDITIONS (Art. Quezon College presented a claim of PhP20.00 on her intestate proceedings. 1948. INC. ready. Inc. The petitioner – administrator of the estate then contests the validity of said proceedings? ISSUE: Is the condition laid down by Damasa Crisostomo valid? RULING: There is nothing in the record to show that the Quezon College. As a consequence. able and willing to purchase the property under the condition demanded by the vendor. “You will find (Babayaran kong lahat pagkatapos na ako ay makapag-pahuli ng isda) pesos as my initial payment and the balance payable in accordance with law and the rules and regulations of the Quezon College. in accordance with article 1115 of the Old Civil Code. Inc. his wife.000. heirs of the intestate. 1182. or that if there was any acceptance the same came to her knowledge during her lifetime. said acceptance was essential. CC) FACTS: On June 1. Damasa Crisostomo applied for 200 shares of stock worth PhP100. Indeed. she stipulated. in view of the proposal of Damasa Crisostomo to pay the value of the subscription after she has harvested fish. POSITIVE SUSPENSIVE CONDITIONS 1. there was absolute necessity on the part of the College to express its agreement to Damasa's offer in order to bind the latter. COURT of APPEALS G.” Damasa died on October 26. becomes the more imperative.already made partial payment thereof only shows that the parties intended to be bound by the Kasulatan.R. As the application of Damasa Crisostomo is obviously at variance with the terms evidenced in the form letter issued by the Quezon College. POTESTATIVE SUSPENSIVE CONDITIONS (Art. CA. respondent filed an action for the payment of the aforesaid credits which was upheld by the lower court and by the Court of Appeals. accepted the term of payment suggested by Damasa Crisostomo. 219 SCRA 378 LEANO VS. rendering the obligation void. RULING: NO. because it would be unfair to immediately obligate the Quezon College. LONGARA 93 PHIL 971 FACTS: Intestate Fernando Hermosa. 369 SCRA 36 VISAYAN SAWMILL COMPANY. TRILLANA VS QUEZON COLLEGES GR No. 1993 . Conversely. there were still other conditions that had to concur to effect the sale. asked for three (3) credit advances from respondent Epifanio M. as soon as he receives funds derived from the sale of his property in Spain. sold the property and the same was paid for subsequently. ISSUE: Whether or not the condition made in the obligation is a purely suspensive condition dependent or potestative upon the exclusive will of the debtor. Thus. 1948. the condition of the obligation was that the payment was to be made “as soon as he (obligor) receives funds from the sale of his property in Spain. Inc. VISAYAN SAWMILL VS. the same was contested by herein petitioners. Since no payment was rendered on the subscription made in the foregoing letter. 1182. Longara. But in addition to this acceptability of the sale to him (obligor). the administration of the intestate’s property. CA.” After the intestate’s death and upon authorization of the probate court.” The will to sell on the part of the debtor (intestate) was present in fact or presumed legally to exist although the price and other condition thereof were still within his discretion and final approval. However. 83851. Under the Civil Code it is provided that if the fulfillment of the condition should depend upon the exclusive will of the debtor. mainly that of the presence of a buyer. under Damasa's promise to pay the price of the subscription after she had caused fish to be caught. facultative in nature. CC) HERMOSA VS. on the ground that the obligation contracted by the intestate was subject to a condition exclusively dependent upon the will of the debtor condicion potestiva and therefore null and void. Evidences show that said credits were asked by the intestate “on condition that their payment should be made by him. No. Inc. therefore.00 each at Quezon Colleges. 1953 Affirmed with the modification that the payment for the extra 58-square meter lot included in respondents’ title is deleted. Inc. a condition obviously dependent upon her sole will and.. June 27. Two (2) of said credit advances were made during his lifetime and in his favor and in his son while the last credit was made after his death and in favor of his grandson. it cannot be said that the letter ripened into a contract. the need for express acceptance on the part of the Quezon College. 2. the conditional obligation shall be void. March 3. Sr. Within her letter of application. VS. L-5003. after petitioner Leano posted acash bond of P50000.000 in favor of petitioner company on or before May 15. The failure of the private respondent to comply with the positive suspensive condition cannot even be considered a breach but simply an event that prevented the obligation of petitioner company to convey title from acquiring binding force. located at Sto. as if the contract had not been entered into. 1989. which is the private respondent’s opening. petitioner company alleged that they sent a telegram to private respondent canceling the contract of sale because of failure of the latter to comply with the conditions. On May 24. as vendor. RJH Trading started to dig and gather scrap iron at the defendant-appellant’s premises until May 30 when Visayan Sawmill Company Inc.R. Lot No. allegedly directed private respondent to desist from pursuing the work in view of an alleged case filed against private respondent by a certain Alberto Pursuelo.000. respondent Fernando.00. 1985.00) as the total purchase price of the lot. 1991. however. After the execution of the contract. Inc. with an area of 431 square meters. together with the one corresponding the month of grace. POSITIVE SUSPENSIVE CONDITIONS (Art.00 per month by way of compensation for the use and occupation of the property from May 27. the petition is granted and the assailed decision is reversed. 1983. On May 26. Bulacan. 1993. On August 24. entered into a sale involving scrap iron located at the stockyard of petitioner company at Cawitan. The contract also provided for a grace period of one month within which to make payments. On November 4. Hence. 1983. an interest of 18% per annum will be charged on the unpaid installments. Hence. No. Catalina. petitioner company received a letter of advice from the Dumaguete City Branch of the BPI. On July 19. The last payment that she made was on April 1. shall be considered as rents paid for the use and occupation of the premises and as liquidated damages. Should a period of (90) ninety days elapse from the expiration of the grace period without the overdue and unpaid installments having been paid with the corresponding interests up to that date. The payments made. the Trial Court rendered a decision in an ejectment case earlier filed by respondent Fernando ordering petitioner to vacate the premises and to pay P250. making or indorsing of an irrevocable and unconditional letter of credit. RJH Trading sent a series of telegrams stating that the case filed against him by Pursuelo had been dismissed and demanding that petitioner company comply with the Deed of Sale. RJH Trading informed petitioner company by telegram that the letter of credit was opened May 12. the appellate court affirmed with modification the decision of the lower court. 1983. 1983 at BPI main office in Ayala.219 SCRA 378 FACTS: On May 1. 1993.750. Hermogenes Fernando. COURT OF APPEALS 369 SCRA 36 G. and not a contract of sale. 1983. On September 16. as vendor and Carmelita Leano. However. this petition. The petitioner company’s obligation is subject to a positive suspensive condition. the trial court issued a writ of execution which was duly served on petitioner Leano. non-compliance with essential RULING: The Supreme Court held that the nature of the transaction between the petitioner company and the private respondent is a mere contract to sell. together with all the improvements made on the premises. The petitioner appealed from said decision to the Court of Appeals. This is evidenced by a contract entitled “Purchase and Sale of Scrap Iron” duly signed by both parties. Sta. 1983. 15. 876-B. Should the month of grace be expired without the installments for both months having been satisfied. was authorized to declare the contract cancelled and to dispose of the parcel of land. Private respondent filed an action for specific performance and damages with the trial court. attorney’s fees and costs of the suit. Negros Oriental. she constructed a house on the lot valued at P800. 1184. RJH Trading and Visayan Sawmill Company. ISSUE: . In the contract.129018 Nov. Carmelita Leano bound herself to pay Hermogenes Fernandez the sum of one hundred and fifty pesos (P107. CC) LEANO VS.Cristo. 1983. the trial court issued a writ of preliminary injunction to stay the enforcement of the decision of the municipal trial court. as vendee executed a contract to sell involving a piece of land. otherwise a case will be filed against them.00. 2001 FACTS: On November 13. on May 23. Carmelita Leano made several payments in lump sum. Petitioner company’s counsel on July 20. ISSUE: Whether or not the private respondent’s precondition justified the cancellation of the contract. The trial court rendered its decision in favor of the private respondent. subject to the condition that RJH Trading will open a leter of credit in the amount of P250. 1993. Thereafter.1991 until she vacated the premises. but that the transmittal was delayed. Baliuag. 1983 informed private respondent’s counsel that petitioner company is unwilling to continue with the sale due to private respondent’s failure to comply with essential preconditions of the contract. in his capacity as seller. to execute a deed of absolute sale in favor of Intervenor Lina pursuant to said conditional deed of sale to which the administrator filed a Motion to Dismiss and/or Opposition to said omnibus motion. Sixto Sandejas. she was in delay and liable for damages. The lower court granted intervenor's Motion but was overturned by the Court of Appeals. Sandejas Sr. which motion was granted. 1981. expressed his willingness to act as a new administrator. Sr. to sell forever and absolutely and in their entirety parcels of land which formed part of the estate. Letters of Administration were issued by the lower court appointing him as administrator of the estate of the decedent. Eliodoro P. Sandejas Sr. Mr. RULING: While the contract provided that the total purchase price shall be paid in monthly installments by claiming that the ten-year period. neither party incurs in delay if the other does not comply or is not ready to comply or is not ready to comply in a proper manner with what is incumbent upon him. 1993. on June 7. The lower court granted the said Motion and substituted Alex Lina with Sixto Sandejas as petitioner in the said Petitions. filed a Motion for Reconsideration and the appointment of another administrator. Remedios R. the same contract specified that the purchase price shall be paid in monthly installments for which the corresponding penalty shall be imposed in case of default. From the moment one of the parties fulfills his obligation. assigns.where the suspensive condition set forth therein. Heirs Sixto. when petitioner Leano did not pay the monthly amortization in accordance with the terms and conditions of the contract. Thus. Roberto. After the payment of the administrator's bond and approval thereof by the court. Sr. his heirs. The records of the letter of administration given to Sandejas. died in Canada. Administrator Sixto Sandejas took his oath as administrator of the estate of the deceased Remedios R. Sandejas Sr. however. respondent Lina filed his Manifestation and Counter Motion alleging that he had no objection to the appointment of Sixto Sandejas as administrator provided that Sixto Sandejas be also appointed as administrator of the intestate estate of his father. Petitioner Leano cannot ignore the provision on payment of monthly installments by claiming that the ten-year period within which to pay has not elapsed. EFFECTS OF NON-FULFILLMENT OF SUSPENSIVE CONDITION HEIRS OF SANDEJAS. Article 1169 of the Civil Code provides that in reciprocal obligations. respondent 351 SCRA 183 GR NO. were burned when the Manila City Hall was destroyed by fire. filed a petition in the lower court praying that letters of administration be issued in his favor for the settlement of the estate of his wife. petitioners VS. Sr. On November 29. and The lower court issued an Order directing the counsel for the four heirs and other heirs of Teresita R. Sr. Consequently.. Antonio and Benjamin. Sandejas. An Omnibus Pleading for motion to intervene and petition-in-intervention was filed by respondent Lina alleging among others that he and Administrator Sandejas Sr. administrators. Thereafter. the lower court issued an Order granting the intervention of respondent Lina. Petition denied. He also alleged. a son and heir. In the case at bar. filed a Motion for Reconstitution of the records. Sr. respondent Fernando performed his part of the obligation by allowing petitioner Leano to continue in possession and use of the property. However. Sandejas to move for the appointment of a new administrator within fifteen (15) days from receipt of this Order. Sandejas. all surnamed Sandejas. filed a Manifestation alleging among others that the administrator. to compel the heirs of Remedios Sandejas and Eliodoro Sandejas. bound and obligated himself. Clearly. Sandejas and was likewise issued Letters of Administration on the same. among others that the matter of the claim of Intervenor Lina becomes a money claim to be filed in the estate of the late Sandejas. is legally obligated to convey title to the property referred to in the subject document which was found to be in the nature of a contract to sell . ISSUE: Whether or not Eliodoro P. Sr.. Sandejas. 1982. was not complied with. delay by the other begins. On July 1. judgment affirmed in toto. RULING: . LINA. the default committed by the petitioner Leano in respect of the obligation could be compensated by the interest and surcharges imposed upon her under the contract in question. 141634 FACTS: Eliodoro Sandejas. thru their administrator. Eliodoro P. Sixto Sandejas in lieu of respondent Lina stating that it was only lately that Mr. Sandejas and Eliodoro P. Intervenor filed an Omnibus Motion to approve the deed of conditional sale executed between Plaintiff-in-lntervention Lina and Elidioro Sandejas.Whether or not the petitioner was in delay the payment of the monthly amortizations. Petitioners were supposed to deed the disputed lots over to respondent. pay the amount adjudged to plaintiff in this decision. MEANING AND DEFINITION PERIOD OR TERM. we hold that Section 31.. Hence. a year is equivalent to 365 days whether it be a regular year or a leap year. Chapter VIII. Santos required respondent to submit additional documents to support its claim. NAMARCO VS. 2000. and plus costs. Needless to state. 1999.court approval of the sale. Thus. CIR VS. the number of days is irrelevant. PERIOD OR TERM. Under the Administrative Code of 1987. Inc. Inc. in which case the payment of the purchase price is a positive suspensive condition..318. Inc. in case defendant Alto Surety & Insurance Co. governs the computation of legal periods. August 28. 13. August 27. their obligation to deliver the disputed parcels of land was converted into a money claim. Therefore.200. There obviously exists a manifest incompatibility in the manner of computing legal periods under the Civil Code and the Administrative Code of 1987. Under the Civil Code. 28 AUGUST 2007 as compared to 2. it was filed within the reglementary period. Nevertheless. PRIMETOWN. revenue officer Elizabeth Y. Henceforth. on April 14.00 plus 7% interest from May 25. L-29131. TECSON.the procurement of a court approval. Following this formula. Tecson and Alto Surety Insurance Co. Petitioners admit that the agreement between the deceased Eliodoro Sandejas Sr. Book I of the Administrative Code of 1987. 2007 FACTS: On March 11. (b) ordering defendant Miguel D. not full payment. Inc. respondent’s petition (filed on April 14. Hence. Gilbert Yap. This case was filed exactly on December 21. the parties were bound to fulfill what they had expressly agreed upon. to pay jointly and severally plaintiff PRATRA the sum of P7. and respondent was a contract to sell. the contract was perfected. 1960 until the amount is fully paid. the CTA dismissed the petition as it was filed compared to NAMARCO vs Tecson GR No. its birth or effectivity can take place only if and when the condition happens or is fulfilled.32. the agreement between Eliodoro Sr. The condition having been satisfied. the CFI rendered judgment: (a) Ordering the defendants Miguel D. 1965 but more than ten years have passed a year is a period of 365 days (Art. however. On the other hand. Tecson has fully reimbursed plaintiff of the said amount. because respondent suffered losses. it was not liable for income taxes. On December 15. 1969 FACTS: On a previous court case. Lex posteriori derogat priori. From the date of such payment defendant Miguel D. For this reason. . There was no reservation of ownership in the agreement. Defendant Miguel Tecson seeks the dismissal of the complaint on the ground of lack of jurisdiction and prescription. Respondents now assail that decision for dismissal of the CTA.. When a contract is subject to a suspensive condition. Chapter VIII. 139 P 584 CIR VS PRIMETOWN GR No. being the more recent law. 162155. Book I of the Administrative Code of 1987 deal with the same subject matter — the computation of legal periods. interest at 12% per annum until Miguel D. 2000) was filed on the last day of the 24th calendar month from the day respondent filed its final adjusted return. Thus. respondent paid its quarterly corporate income tax and remitted creditable withholding tax from real estate sales to the BIR in the total amount of P26. On May 13. under the Administrative Code of 1987. even before full payment. applied for the refund or credit of income tax respondent paid in 1997. their contract was a conditional sale. plus P500. and respondent is subject to a suspensive condition -. CCP). Inc. a year is composed of 12 calendar months.. despite the nonfulfillment of the suspensive condition -.. Respondent complied but its claim was not acted upon.. it filed a petition for review in the Court of Tax Appeals (CTA). beyond the two-year prescriptive period for filing a judicial claim for tax refund or tax credit. Tecson would pay the Alto Surety & Insurance Co. ISSUE: What is the expiration period for the filing of the action? RULING: Both Article 13 of the Civil Code and Section 31. the intestate court's grant of the Motion for Approval of the sale filed by respondent resulted in petitioners' obligation to execute the Deed of Sale of the disputed lots in his favor. MEANING AND DEFINITION 1. vice chair of respondent Primetown Property Group. 1999.398. Tecson to indemnify his co-defendant Alto Surety & Insurance Co.00 for attorney's fees. They assert that because this condition had not been satisfied. on the cross-claim for all the amounts it would be made to pay in this decision. rather than a contract to sell. 2000. The vendor's obligation to convey the title does not become effective in case of failure to pay.Petitioners argue that the CA erred in ordering the conveyance of the disputed 3/5 of the parcels of land. According to Yap. They could do this upon the court's approval. respondent was entitled to tax refund or tax credit. in People vs. that is. it is apparent that the fulfillment of the condition contained in this second alternative is made to depend upon defendant’s exclusive will. VICTORIA MILLING. plaintiff refused to accept the payment of the price. A day certain is understood to be that which must necessarily arrive. RULING: NO. LIRAG vs. 3. 1975 FACTS: On May 11. with the approval of the Civil Code of the Philippines (Republic Act 386) . During this same . sooner or later. for the fulfillment of which a day certain has been fixed. and for about two months.. “when the fulfillment of the condition depends upon the exclusive will of the debtor the conditional obligation shall be void. shall be demandable only when the day arrives. Del Rosario." The decision was affirmed. 1960 and for sometime prior and subsequent thereto. Defendant answered setting up a special defense and counterclaim. and not the solar or civil month. MAGDALENA ESTATES." with the particularity that.000. 92 P 110 LIRAG VS. the party selling would grant to the other party first an irrevocable option to purchase the same at the seller’s price. and viewed in this light. ISSUE: Whether or not the obligation is one subject to a term. defendant claims that on September 22. the obligation is rather subject to a condition.COURT OF APPEALS and CRISTAN ALCANTARA G. plaintiff Cristina Alcantara worked in a temporary capacity with defendant Lirag Textile Mills. CA. plaintiff fixed the sum of P200. obligations with a term. days or nights. the plaintiff’s obligation to sell did not arise.R. the obligation is conditional.. whereas the Spanish Code merely mentioned "months. even though it is not known when. The complaint avers that plaintiff and defendant are co-owners of said property. then it is also to be indefinite and contingent. therefore. L-30736 April 14. and for this refusal defendant suffered damages in the amount of P100. and so it is also a condition and not a term within the meaning of the law. 1960. under article 1115 of the old Civil Code. it sold to plaintiff one-third of the property in litigation subject to the express condition that should either vendor or vendee decide to sell his undivided share. BERG VS. No. INC. more or less. 4. DISTINCTIONS: CONDITION VS. we have reverted to the provisions of the Spanish Civil Code in accordance with which a month is to be considered as the regular 30-day month . otherwise." ours has added thereto the term "years" and explicitly ordains that "it shall be understood that years are of three hundred sixty-five days. it is clear that the granting of such loan is not definite and cannot be held to come within the terms “day certain. and FELIX K.” FACTS: This is an action for partition of the property known as Crystal Arcade situated in the City of Manila. ISSUE: Should the complaint be dismissed on the grounds of prescription? RULING: In the language of this Court.Plaintiff forgot that 1960. necessary that it should arrive. Viewing in this light the clause on which defendant relies for the enforcement of its right to buy the property. MAGDALENA ESTATES 92 PHIL 110 expire on May 31.” And if it is considered that the period given was until such time as defendant could raise money from other sources. In any event. defendant Felix Lirag was a member of the Board of Directors of the Philippine Chamber of Industries. Under Article 1125 of the old Civil Code. 97 PHIL 110 BERG VS. PERIOD/TERM LIRAG TEXTILE MILLS. rather. 63 SCRA 375 DAGUHOY VS. but a condition. it would seem that it is not a term. 1947. which offer was accepted and for the payment of said price plaintiff gave defendant a period of time which. until defendant shall have obtained a loan from the National City Bank of New York. In order that an obligation may be with a term. prior to May 11. 2. for. It avers that in January 1946. 1964 were both leap years so that when this present case was filed it was filed two days too late. 1943. including the extensions granted would DISTINCTIONS: CONDITION VS. if its arrival is uncertain. 96 PHIL 15 VICTORIA PLANTERS VS. Considering the first alternative. For these reasons.. PONCE. defendant asks for specific performance. Defendant claims that in spite of its acceptance of the offer.000 as the price of said share and offered to sell it to defendant. PERIOD/TERM 1. the former being the owner of one-third interest and the latter of the remaining two-thirds. As a special defense. Inc.. it is. The division is asked because plaintiff and defendant are unable to agree upon the management of the property and upon the partition thereof. On May 9. The measure of an employer's liability provided for in Republic Act 1052. payable within six years with interests at 12% annum. subject to a resolutory period.'s above letter of May 9. defendant Lirag Textile Mills. executed in favor of plaintiff corporation a deed of mortgage over a parcel of land including the improvements thereon to secure the payment of a loan of P5. VS. which act may even amount to bad faith on the employer's part. DISTINCTIONS: CONDITION VS. plaintiff received a salary of P400. 6884 principally its conclusion that the trial court did not commit any error in its evaluation of the evidence when it found that it was not true that petitioner Lirag Textile Mills (then defendant) suffered pecuniary loss and in market opportunities which it used as a justification to terminate the services of plaintiff Alcantara. violated the contract of employment with private respondent Alcantara when the former terminated his services without a valid cause. The act was attended with bad faith and deceit because said petitioner made false allegations of a supposed valid cause knowing them to be false. and that appellee Alcantara was correctly awarded moral damages and attorney's fees. defendant Felix Lirag was a director and Chairman of the Board of Directors of defendant Lirag Textile Mills. 1960 he (Alcantara) was promoted to the position of Assistant Administrative Officer. 1960. Inc. 000 granted to her by said corporation. for illegal dismissal as in accordance with the employment contract between herein then plaintiff and then defendant. that it was not also true that the latter suffered from lack of skill.00 and allowance of P100. 1960. is solely intended for contracts of employment without a stipulated period. Inc. 1960. his temporary designation as Technical Assistant to the Administrative Officer was made permanent and as Assistant to the Administrative Officer of the Lirag Textile Mills. It necessarily follows that if the petitioner-employer Lirag Textile Mills terminates the employment without a "valid cause or causes". of that date. wrote plaintiff (Alcantara) a letter advising him that because the company 'has suffered some serious reverses. 1960 was to be 'for an indefinite period. 1787. as it admittedly did. INC. Petitioner Lirag Textile Mills. Inc. wife of Domingo. The "indefinite period" of employment expressly agreed upon by and between the parties in this case is really a resolutory period because the employment is bound to terminate on a future "day certain" such as the employee's resignation or employer's termination of employment upon a valid cause or causes. that petitioner (then defendant) Felix Lirag was responsible for inducing private respondent Alcantara to leave his employment with the Philippine Chamber of Industries where he was holding a permanent position and to accept employment with petitioner (then defendant) Lirag Textile Mills. PERIOD/TERM DAGUHOY ENTERPRISES. unless sooner terminated by reason of voluntary resignation or by virtue of a valid cause or causes (the resolutory period). per defendant Lirag Textile Mills. thus making itself liable for payment of actual. namely voluntary resignation on the part of private respondent Alcantara or termination of employment at the option of petitioner Lirag Textile Mills. As of May 11. Respondent Court of Appeals affirmed the decision of the lower court in Civil Case No. defendant Lirag Textile Mills. On March 4. subject only to the resolutory period agreed upon which may end the indeterminate period of employment. Inc. Inc. Plaintiff's tenure of employment. There is an indefinite period of time for employment agreed upon by and between petitioners and the private respondent. PONCE 96 Phil 15 FACTS: In the year 1950. cannot with impunity be allowed the absolute and unilateral power to terminate without valid cause a contract of employment with a definite period it voluntarily entered into merely on the basis of its whim or caprice and under the false pretense of financial distress. Because of this. it committed a breach of the contract of employment executed by and between the parties. signed by its Executive Vice President and General Manager. . 1951. effective May 11. It is clear that petitioner Lirag Textile Mills. but for a "valid cause or causes". Ponce. unless sooner terminated by reason of voluntary resignation or by virtue of a valid cause or causes'. On June 24. It cannot possibly apply as a limitation to an employer's liability in cases where the employer commits a breach of contract by violating an indefinite period of employment expressly agreed upon through his wrongful act of terminating said employment without any valid cause or causes.period of time. Inc. plaintiff was advised that effective November 15. Inc. defendant-appellant Domingo Ponce was chairman and manager and his son Buhay M. ISSUE: Whether or not there has been a violation of the written contract for a period of employment between petitioner and private respondent. Rita L.00 per month. Ponce was secretary-treasurer of the plaintiff corporation Daguhoy Enterprises. therefore. 1961. per letter of defendant Lirag Textile Mills. RULING: The contract of employment was for an indefinite period as it shall continue without ending. there was a violation of the written contract of employment executed by and between petitioners and private respondent Alcantara.' the company was terminating his services and effecting his separation from defendant corporation effective at the close of working hours of August 22. On March 10. although it may not be known when. Inc. plaintiff Alcantara filed a complaint before the Regional Trial Court against defendant Lirag Textile Mills Inc. wrote a letter to plaintiff (Alcantara) advising him that. 1960. Inc. moral and exemplary damages. both in terms of pecuniary loss and in market opportunities. 1961. A. that. like death of the employee or termination of employer's corporate existence. Subsequently. on July 22. as amended by R. plus attorneys fees to private respondent Alcantara. comprising 4 years of the last World War II and 2 years of post-war reconstruction of respondent's central at Victorias. even if the defendants had already deposited a certain amount in favor of the corporation. Negros Occidental. including defendant’s act in withdrawing said two deeds from the office of the register of deeds and then mortgaging the same property in favor of the RFC. all the sugar cane produced by the planters of petitioner associations.190 and an interesr of P266. Inc. Negros Occidental. But because the defendants opposed said petition. the court denied it. thus it was again denied. Inc. 2) while a number of them executed milling contracts with the Victorias Milling Co. Thereafter. Inc.190 but for other sums. where after the standard form of milling contracts were executed. Ponce with the consent of her husband Domingo executed another mortgage deed amending the first one. not only for the amount of the loan of P6. the North Negros Sugar Co. From 1917 to 1934. 318 FACTS Potenciano Gapol. Domingo and his son filed in court a check of RFC in the amount of P6. except the 6-year period. To account for the amount of the loan. 1916 within which to make a study of and decide whether he would construct a sugar central or mill with a capacity of milling 300 tons of sugar cane every 24 hours and setting forth the mutual obligations and undertakings of such central and the planters and the terms and conditions under which the sugar cane produced by said planters would be milled in the event of the construction of such sugar central by Ossorio. in the name of the company. Negros Occidental. Negros Occidental. agreeing to the cancellation of the mortgage as soon as the amounts are withdrawn and deposited with the Bank of America. Rita and Domingo presented the two mortgage deeds for registration in the office of the register of deeds for registrations in the office of the register of deeds..Rita L. executed identical milling contracts. the defendants failed to agree. upon learning that the deeds of mortgage were not registered and that they were withdrawn from the office of the register of deeds and the land covered by the two deeds was again mortgaged to RFC. and so the obligation became pure and without any condition and consequently. they are not yet relieved from the payment of interests from the time of the deposit because the loan is not yet paid. Ossorio. Negros Occidental. the debtor lost the benefit of the period by reason of her failure to give the security in the form of the two deeds of mortgage and register them. in Manapla. but the said register advised the two to cure the defects and furnish the necessary data.000 to P6. and in 1946. Likewise. DISTINCTIONS: CONDITION VS.000 including the increase of P1. had its first milling during the 1921-1922 crop year. did not reconstruct its destroyed central at Manapla. a contract whereby Ossorio was given a period up to December 31.. and the Victorias Milling Co. for said respondent corporation to mill the sugar cane produced by the planters of Manapla and Cadiz holding milling contracts with it. ISSUE: Whether or not the sum in the form of an RFC check and some interest deposited in the civil case may be withdrawn to satisfy the judgment and to pay the loan of P6.10 in favor of the company.. Ossorio and which had constructed another Central at Victorias.190 was payable within six years from June 1950 and so did not become due and payable until 1956. filed a second petition for withdrawal. were milled in only one central. the sugar cane planters Manapla and Cadiz. under which the sugar central "North Negros Sugar Co.190. the majority stockholder in the corporation. who held milling contracts. Inc. VICTORIAS MILLING 97 PHIL.. that it had made arrangements with the respondent Victorias Milling Co. Inc. Instead of complying with the suggestion and requirements. through the North Negros Sugar Co. Negros Occidental. PERIOD/TERM VICTORIAS PLANTERS VS.. the terms and conditions of the mortgage remaining the same. The North Negros Sugar Co. it advised the North Negros Planters Association. Gapol petitioned the court for permission to withdraw the amounts as payment of the loan. After the liberation. Inc. RULING: Yes. Negros Occidental had executed with Miguel J.190 and part of the interest due. had its first milling during the 19181919 crop years. Inc. the loan became due and immediately demandable." would mill the sugar produced by the sugar cane planters of the Manapla and Cadiz districts. The sugar cane planters of Manapla and Cadiz. Inc. possibly on the theory that the loan in question was granted by Domingo and Buhay as officers of the corporation. Such central was in fact constructed by said Ossorio in Manapla. after the war. other than as follows: 1) a number of them executed such milling contracts with the North Negros Sugar Co. which was likewise organized by Miguel J. The parties cannot stipulate as to the milling contracts executed by the planters by Victorias. However. whereby the loan was increased from P5. he filed a civil case against the respondents.. Although the original loan of P5. Subsequent millings took place every successive crop year thereafter.. Cadiz. as well as in Victorias.. Gapol.. the trial court held that under article 1198 of the Civil Code. Thus. . the two withdrew the two mortgage deeds and then mortgaged the same parcel of land in favor of the Rehabilitation Finance Corporation (RFC) to secure a loan.. 500. etc. the parties stipulated that in the event of flood. 1985 and shall continue for an indefinite period provided the lessee is up-to-date in the payment of his monthly rentals. terminate this contract any time by giving sixty (60) days prior written notice of termination to the lessor. It only relieves the parties from the fulfillment of their respective obligations during that time — the planters from delivering sugar cane and the central from milling it.that of the respondent corporation at Victorias. war. the herein appellant. HON. COURT OF APPEALS. Fortuitous event relieves the obligor from fulfilling a contractual obligation. The lessee may. the contract shall be deemed suspended during said period. under the pertinent provisions of the standard milling contract.00. Uy. The prayer that the plaintiffs be compelled to deliver sugar cane to the appellant for six (6) years more to make up for what they failed to deliver during those trying years. the fulfillment of which was impossible. The performance of what the law has written off cannot be demanded and required.. insurrection. respondents 390 SCRA 27 FACTS: The subject of this controversy is an apartment building owned by Jespajo Realty Corporation.00 monthly effective February 1. and in the following years. and the planters-members of the Victorias Planters Association. Nemo tenetur ad impossibilia. The lessees through its counsel in a letter dated March 10. petitioner. TAN TE GUTIERREZ and CO TONG. 2. may be entitled to demand from the other parties the fulfillment of their part in the contracts. CA. typhoon. At most on the last year of the thirty-year period stipulated in the contracts the delivery of sugar cane could be extended up to a time when all the amount of sugar cane raised and harvested should have been delivered to the appellant's mill as agreed upon. 1990 manifested their opposition alleging that the same is in contravention of the terms of the contract of lease as agreed upon. The term "first milling" used in the contracts under consideration was for the purpose of reckoning the thirty-year period stipulated therein. does not mean that the happening of any of those events stops the running of the period agreed upon. Beginning with the year 1948. RULING: POTESTATIVE PERIOD 1. the lessee agrees to an automatic 20% yearly increase in the monthly rentals. However. Further. 1990. likewise considered the stipulated 30-year period of their milling contracts. the lessor corporation sent a written notice to the lessees informing them of the formers’ intention to increase the monthly rentals on the occupied premises to P3. JOSE. earthquake. when the planters-members of the North Negros Planters Association. would in effect be an extension of the term of the contracts entered into by and between the parties. JESPAJO REALTY VS. the herein respondent has refused and still refuses to accede to the same. organized strike. Inc. Said corporation. For the duration of the contract. violation of any of the terms and conditions of this contract shall be a sufficient ground for termination thereof by the lessor. In order that the central. On January 2. the latter must have been able to perform it but failed or refused to do so and not when they were prevented by force majeure such as war. fulfillment of an obligation which was impossible of performance at the time it became due. Even if the thirty-year period provided for in the contracts be construed as milling years. Inc. 47 SCRA 65 GONZALES VS. The lease period shall be effective as of February 1. at his option. ISSUE: Whether or not the trial court erred in rendering its disputed decision. contending that under the provisions of the milling contract. if granted. entered into separate contracts of lease with Tan Te Gutierrez and Co Tong. the lessor through its counsel in a letter dated April 10. Notwithstanding the repeated representations made by the herein petitioners with the respondent corporation. VS. or other force majeure. To require the planters to deliver the sugar cane which they failed to deliver during the four (4) years of the Japanese occupation and the two (2) years after liberation when the mill was being rebuilt is to demand from the obligors the JESPAJO REALTY CORPORATION. 66 PHIL 369 NO. the deduction or extension of six (6) years would not be justified. CA. 1990 . as having likewise expired and terminated in the crop year 1948-1949. Due to the opposition and the failure of the lessees to pay the increased monthly rentals in the amount of P3. 3. civil commotion. The obligee not being entitled to demand from the obligors the performance of the latter’s part of the contracts under those circumstances cannot later on demand its fulfillment. Jesus L. considered that the stipulated 30-year period of their milling contracts executed in the year 1918 had already expired and terminated in the crop year 1947-1948. 1990. The fact that the contracts make reference to "first milling" does not make the period of thirty (30) years one of thirty (30) milling years. represented by its President. 390 SCRA 27 BORROMEO VS. favoring the petitioner.500. 220. Furthermore. 1990 to January. agreeing to pay-“as soon as I have money. 1687 of the NCC. For as was also made clear therein.500. Jose A. Miller filed civil action against the defendant and attached his properties including those mortgaged to plaintiff. but defendant instead offered to execute a document promising to pay his indebtedness even after the lapse of ten (10) years. or otherwise waive my rights to the prescriptions established by our Code of Civil Procedure for the collection or recovery of the above sum of P7. making the agreement effective on a month-to-month basis since rental payments are made monthly RULING: No. CA 47 SCRA 65 FACTS: Before the year 1933. Branch 16 a case for consignation. POTESTATIVE PERIOD BORROMEO VS. and no period for the lease has been set. 1933 with interest at the rate of 12% per annum. It is undisputed that the lessees Gutierrez and Co Tong religiously paid their rent at the increasing rate of 20% annually. The lease contract between petitioner and respondents is with a period subject to a resolutory condition. The obligation in this case is one which is subject to a potestative condition.demanded that the lessees vacate the premises and pay the amount of P7. If the rent is weekly. Miller. 1991. it is understood to be from year to year. The court in its decision dismissed the ejectment suit for lack of merit. used to borrow from the latter certain amounts from time to time. when the petitioner unilaterally increased the rental payment to more than 20% or P3. 1687 finds no application in the case at bar. Plaintiff then pressed the defendant for the settlement of his obligation. the courts may fix a longer term for the lease after the lessee has occupied the premises for over one year. RULING: NO. one which is dependent solely on the will of the debtor. plaintiff did not file any complaint against the defendant within ten (10) years from the execution of the document as there was no property registered in defendant’s name who furthermore assured him that he could . the courts may likewise determine a longer period after the lessee has been in possession for over six months. from week to week. with the original terms and conditions agreed upon. Although this condition is void. Miller who was the agent of the Insular Lumber Company in Cebu City. if it is monthly. they instituted before the Metropolitan Trial Court of Manila.220.480. even though a monthly rent is paid. 1990.” ISSUE: Whether or not prescription extinguished the obligation. Mr. The statement “as soon as I have money” is the condition which is dependent on the debtor’s will. This was. the lessor instituted an ejectment suit against the lessees before the Metropolitan Trial Court of Manila Branch 20. Borromeo. The lessees exerted effort to pay the rentals due for the months of February and March 1990 at the monthly rate stipulated in the contract but was refused by the lessor so that on May 2. Villamor was a distributor of lumber belonging to Mr. if the rent is to be paid daily. for which defendant signed a promissory note on November 29. The trial judge in the consignation case issued an order allowing the plaintiffs therein to deposit with the City Treasurer of Manila the amount of P33. 1687 provides that if the period for the lease has not been fixed.00 a month. it has been relied upon by the creditor resulting to the delayed filing of the action. if the rent agreed upon is annual. The wording of the agreement is unequivocal: “The lease period shall continue for an indefinite period provided the lessee is up-to-date in the payment of his monthly rentals. More than six (6) months from the filing of the case for consignation. if the rent is weekly. Regional Trial Court is constrained to reverse the appealed decision and ordered another judgment to be entered in favor of appellant. 1990. The Court held that Art. and from day to day. inasmuch as the deed of mortgage in favor of plaintiff could not be registered because it was not properly drawn up. defendant borrowed from plaintiff a large sum of money for which he mortgaged his land and house in Cebu City. there had been since then verbal requests on the part of the creditor made to the debtor for the settlement of the loan.710. However. The agreement between the lessor and the lessees are therefore still subsisting.32 for Tan Te Gutierrez representing their respective rentals for thirteen (13) months from February. Liquidation was made and defendant was found to be indebted to plaintiff in the sum of P7. from month to month. On one occasion with some pressing obligation to settle with Mr. Prescription in this case cannot be applied strictly for it will result to grave injustice on the part of the creditor.28 for Co Tong and the amount of P32.” The condition imposed in order that the contract shall remain effective is that the lessee is up-to-date in his monthly payments.00 corresponding to the months of February and March.000. In case of daily rent. the courts may also fix a longer period after the lessee has stayed in the place for over one month. renounce. Art. reversed by the Court of Appeals ISSUE: Whether or not the subject contract of lease did not provide for a definite period hence it falls under the ambit of Art. however.” The note further stipulates that defendant “hereby relinquish. Defendant being a friend and former classmate of plaintiff. Article 1128 of the Civil Code provides: “If the obligation does not specify a term.95 within thirty (30) days from the date of notification of said decision. This period of prescription is ten (10) years. 1197. 21. 1984 PACIFIC BANKING VS. Mendoza. Baluyut instead filed an action for annulment of mortgage. TOBIAS. 5. PEOPLE. RULING: NO. 1934. 3. HUANG. POBLETE. 7. 2. 144435. being. POTESTATIVE PERIOD (Art. SANTOS. the period of the term shall be fixed by the court”. OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS MALAYAN REALTY VS UY .” Defendant appealed from the decision of the Court of First Instance of Manila ordering him to pay the plaintiff the sum of P547. 441 SCRA 472 MELOTINDOS VS. plus the costs. 6. The promissory note is the law between petitioner and private respondents and it clearly states that the loan shall mature in one month from date of the said Promissory Note. The action which should be brought in accordance with Article 1128 is different from the action for the recovery of the amount of the notes. 9. 8. like other civil actions. The defendant interposed the defense of prescription because the action was not filed by the plaintiff within the prescriptive period prescribed by law. 10 NOVEMBER 2006 KASAPIAN NG MANGGAGAWA NG COCA-COLA VS. 1981. no other evidence was presented to prove that the real date of maturity is one year. ISSUE: Is petitioner’s contention tenable? RULING: Evidence of a prior or contemporaneous verbal agreement is generally not admissible to vary. CA. 2007 FACTS: On July 20. ISSUE: Whether or not the action has already prescribed. The terms that were thusly reduced to writing is deemed to contain all the terms agreed upon and no evidence of such terms can be admitted other than the contents of the agreement itself. 4. which has already elapsed from the execution of the promissory notes until the filing of the action on June 1. His claim was rejected by the RTC and the CA. CA. 391 SCRA 299 LL AND COMPANY VS. The two (2) promissory notes were both worded as follows: “I promise to pay Mr. The debtor is therefore liable for the amount of the obligation plus interests. she was unable to pay her indebtedness which led the spouses to extrajudicially foreclose the mortgage. Benito Gonzalez the sum of P (amount) as soon as possible. After a month had passed. 514 S 370 MALAYAN REALTY VS. 1990 LIM VS. The property was then sold on Auction to the Poblete spouses who asked Baluyut to vacate the premises. In the instant case. ZAMORA.collect even after the lapse of ten years. Edwina Mendoza that the maturity of the loan which she incurred is only for one year. 1922 and September 13. UY. 1922 in favor of plaintiff Benito Gonzales. contradict or defeat the operation of a valid contract. 487 S 487 SANTOS-VENTURA VS. subject to the rules of prescription. although the effects of both are the same.000. NOV. BALUYOT VS. The action to ask the court to fix the period has already prescribed in accordance with section 43 (1) of the Code of Civil Procedure. Petitioner claims that based on the testimony of Atty. CC) 1. JOSE 66 PHIL 369 FACTS: Defendant Florentino de Jose executed two (2) promissory notes on June 22. 5. February 6. The words “as soon as possible” in the promissory notes denote that such is an obligation subject to a potestative condition. mortgaged her house to secure a loan in the amount of PhP850. but it is to be inferred from its nature and circumstances that it was intended to grant the debtor time for its performance. BALUYUT VS POBLETE GR No. MAY 5 1989 GONZALES VS. 1180 in rel to Art. aside from the testimony of Atty.00 from the spouses Eulogio and Salud Poblete. 378 SCRA 612 BRENT SCHOOL VS. FEB. The load was set to mature in one month. Guillermina Baluyut. the parties executed a Compromise Agreement which . 171256.00.. On June 1998. No. 2001 up to the present time. In 1958. Malayan entered into a verbal lease contract with Uy Han Yong (Uy) over the property at a monthly rental of P262. In the present case. private respondent closed its Manila and Antipolo plants resulting in the termination of employment of 646 employees. deemed sufficient as an extension and for him to find another place to stay. the monthly rental was P4. 1999. Consequently. VS. or on September 5. 2001.65. and was raffled to Branch 3 thereof. ERNESTO V. prompting Malayan to file before the Metropolitan Trial Court (MeTC) of Manila a complaint for ejectment. 153004 KASAPIAN NG MANGGAGAWA NG COCA-COLA VS CA GR No. 2006 FACTS: FACTS: Ernesto V. Santos and Santos Ventura Hocorma Foundation. The power of the courts to establish a grace period is potestative or discretionary. Petitioner. illegal dismissal. respectively. Thus. Inc. With the intervention of the NCMB Administrator. all those who have been with the company for one year by said date must automatically be considered regular employees by operation of law. Petitioner then demanded renegotiation of the CBA which private respondent refused. docketed as Civil Case No. is the owner of an apartment unit known as 3013 Interior No. and asking him to vacate and turn over the possession of the property within five days from August 31. on December 26.671. etc. On December 9. 2001. April 19. and therefore properly terminable. 2006 FACTS: Malayan Realty. 2001. ISSUE: Is the closure of the Manila and Antipolo plants valid? RULING: Under Article 280 of the Labor Code. of course. depending on the particular circumstances of the case. As part of the MOA. The wisdom or soundness of such characterizing or decision is not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long. 2001. 1998. despite the pendency of petitioner’s complaint before the NLRC. The Court ruled in favor of Uy and granted an extension period of five years. as violation of law or merely arbitrary and malicious action is not shown. On July 17. the private respondent’s decision to close the plant was a result of a study conducted which established that the most prudent course of action for the private respondent was to stop operations in said plants and transfer production to other more modern and technologically advanced plants of private respondent. Manila.. which time is. located at Nagtahan Street. The Petitioners amended their complaint to include union busting. SANTOS and RIVERLAND. 2001. Sampaloc. 159828. 1990. 163763. ISSUE: Is respondent Uy entitled to a grant of extension by the Court? RULING: The 2nd paragraph of Article 1687 provides that in the event that the lessee has occupied the leased premises for over a year. The monthly rental was increased yearly starting 1989. INC. (SVHFI) were the plaintiff and defendant. Respondents November 4.GR No. November 10. Effectively. petitioner demanded the payment and benefits of the newly regularized employees retroactive to December 1. a longer term may be granted where equities come into play. in several civil cases filed in different courts in the Philippines. is an exercise of business judgment on the part of the employer. The 61 employees all qualify as regular employees by this provision. Malayan sent Uy a written notice informing him that the lease contract would no longer be renewed or extended upon its expiration on August 31. and may be denied where none appears. Inc. The characterization of the employee’s services as no longer necessary or sustainable. respondent has remained in possession of the property from the time the complaint for ejectment was filed on September 18. 90 (the property). a Collective Bargaining Agreement which was in effect between petitioner union and private respondent company expired. 2000 G.R. 2009 and were paid their corresponding salaries. both parties executed and signed a MOA providing for salary increases and other economic and non-economic benefits. and by 2001. 1998. OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS SANTOS VENTURA HOCORMA FOUNDATION. he refused to vacate the property. The affected employees were considered on paid leave from December 9. respondent’s lease has been extended for more than five years. INC. Despite Uy’s receipt of the notice on June 18. (Malayan). On October 26. under the circumstances. 61 employees were regularized. the courts may fix a longer term for the lease. As found by the NLRC. always with due deference to the parties’ freedom to contract. 1999 to February 29. Defendant Foundation shall pay Plaintiff Santos P14. for the sale of real properties of petitioner in Bacolod City. Immediately upon the execution of this agreement (and [the] receipt of the P1. that in the event that the Foundation does not pay the whole or any part of such balance. In its Answer. Inc. There was no response from petitioner. provided. and location mutually acceptable to both parties. Subsequently. however. 1995. was the highest bidder. Petitioner counterclaimed for attorney’s fees and exemplary damages. All these efforts. Thus. The Certificates of Sale issued for both properties provided for the right of redemption within one year from the date of registration of the said properties. reversing the trial court’s decision. Pampanga were auctioned. were futile. shall be partially devoted to the payment of the Foundation’s obligations under this agreement as may still be subsisting and payable at the time of any such sale or sales. however. issued a Decision approving the compromise agreement. however.amicably ended all their pending litigations. On October 4. 1994. ISSUE: Whether or not the Court of Appeals was correct in its decision. 1992. payment of any unpaid portion shall only be in the form of land aforesaid. In the said auction. but payment of the remaining P12 million was effected only on November 22. that in the event that defendant Foundation shall sell or dispose of any of the lands previously subject of lis pendens. Petitioner. the proceeds of any such sale. Santos and Riverland Inc. plaintiff Santos shall cause the dismissal with prejudice of Civil Cases Nos. at the discretion of the Foundation. He also caused the lifting of the notices of lis pendens on the real properties involved. which were formerly subjects of the lis pendens. Again. or any part thereof as may be required. filed a Complaint for Declaratory Relief and Damages alleging that there was delay on the part of petitioner in paying the balance of P13 million. provided. respondent Santos sent another letter to petitioner inquiring when it would pay the balance of P13 million. Riverland. Riverland. on March 10.5 Million in the following manner: a) P1. For its part. Respondents then appealed to the Court of Appeals. which was ignored by the latter. otherwise. It further claimed that the alleged delay in the payment of the balance was due to its valid exercise of its rights to protect its interests as provided under the Rules. Subsequently. regarding the legal interest of herein respondents on aforementioned properties. 1413OR. No. On June 2.A. Thus. and.5 Million). In compliance with the Compromise Agreement. 1993. 1992. 1991. XXX On October 28.5 million to respondent Santos. leaving a balance of P13 million. paid P1. the trial court rendered a Decision dismissing herein respondents’ complaint and ordering them to pay attorney’s fees and exemplary damages to petitioner. 5. but in no case shall the payment of such balance be later than two (2) years from the date of this agreement. 1994.R. respondent Santos sent a letter to the petitioner demanding the payment of the remaining P13 million. 4968 (C. respondent Santos applied with the Regional Trial Court of Makati City. b) the balance of P13 Million shall be paid. On November 22. on September 30.R.5 Million immediately upon the execution of this agreement. Discovering the disposition made by the petitioner. No. 45366 and 18166 and voluntarily withdraw the appeals in Civil Cases Nos. whether in one lump sum or in installments. the Regional Trial Court of Makati City. The RTC granted the writ. TC-1024. filed numerous motions to block the enforcement of the said writ.-G. 88-743. valuation. penalty. which were previously subjects of lis pendens. the same shall be paid with the corresponding portion of the land or real properties subject of the aforesaid cases and previously covered by the notices of lis pendens. Inc. 1995. 26598) and 88-45366 (C. petitioner SVHFI. under such terms and conditions as to area. The challenge of the execution of the aforesaid compromise judgment even reached the Supreme Court. 1991. another auction sale was held on February 8. petitioner countered that respondents have no cause of action against it since it had fully paid its obligation to the latter. 1996. Branch 62. for such lifting). They further alleged that under the Compromise Agreement. Branch 62. The pertinent portions of the Agreement read as follows: 1. Furthermore. the obligation became due on October 26. petitioner’s real properties located in Mabalacat. attorney’s fees and costs of litigation. the Sheriff levied on the real properties of petitioner. Meanwhile. however. 24304) respectively and for the immediate lifting of the aforesaid various notices of lis pendens on the real properties aforementioned (by signing herein attached corresponding documents. The appellate court reversed the ruling of the trial court.-G. respondents prayed that petitioner be ordered to pay legal interest on the obligation. was the highest bidder for P12 million and it was issued a Certificate of Sale covering the real properties subject of the auction sale. respondent Santos moved for the dismissal of the aforesaid civil cases. within a period of not more than two (2) years from the execution of this agreement. for the issuance of a writ of execution of its compromise judgment dated September 30. they prayed that the aforesaid sales be declared final and not subject to legal redemption.A. RULING: . Failure of compliance of any of the foregoing terms and conditions by either or both parties to this agreement shall ipso facto and ipso jure automatically entitle the aggrieved party to a writ of execution for the enforcement of this agreement. Consequently. 2. petitioner SVHFI sold to Development Exchange Livelihood Corporation two real properties. Petitioner delayed in the performance. The second requisite is also present. the Compromise Agreement was entered into by the parties on October 26. 1992. 1995. for preventing or putting an end to a lawsuit. paid the initial P1. the petitioner is liable for damages for the delay in the performance of its obligation. 1992. When the respondents gave a demand letter on October 28. Applying existing jurisprudence. to the petitioner. and (3) that the creditor requires the performance judicially or extrajudicially. the compromise agreement as a consensual contract became binding between the parties upon its execution and not upon its court approval. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. Moreover. the obligation was already due and demandable. and which everyone of them prefers in the hope of gaining. The general rule is that a compromise has upon the parties the effect and authority of res judicata. Article 1169 of the New Civil Code provides: Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. Delay as used in this article is synonymous to default or mora which means delay in the fulfillment of obligations. the date of execution of the compromise agreement. In order for the debtor to be in default. i. When the debtor knows the amount and period when he is to pay. Sometime in the last quarter of 1995. represented by JOSEFINA PINEDA G. It was judicially approved on September 30. The goal of compensation requires that the complainant be compensated for the loss of use of those funds. A compromise is a contract whereby the parties. When respondents wrote a demand letter to petitioner on October 28. balanced by the danger of losing. This act of the petitioner showed that it acknowledges that the agreement was immediately executory and enforceable upon its execution. It is the non-fulfillment of the obligation with respect to time. No. it becomes the source of the rights and obligations of the parties thereto. it incurred delay. the obligation is liquidated because the debtor knows precisely how much he owes and when he should pay the amount due.e. (2) that the debtor delays performance. From the time a compromise is validly entered into. As to the remaining P13 million. MELOTINDOS VS. avoid litigation or put an end to one already commenced. adjust their difficulties by mutual consent in the manner which they agree on. Manuel D.The Supreme Court held the decision of the Court of Appeals correct. The legal interest for loan as forbearance of money is 12% per annum to be computed from default. 1992. This holds true even if the agreement has not been judicially approved. on the other hand. The petitioner. respondent demanded from petitioner either to pay an increased rate of monthly rentals or else to vacate the place so he and his mother . 146658 28 October 2002 391 SCRA 299 FACTS: Eighty-seven-year old petitioner.. Verily. In the case at bar. The purpose of the compromise is precisely to replace and terminate controverted claims. and not on the judicial approval of the compromise agreement on September 30. This compensation is in the form of interest. owing to his sickly mother who needed constant medical attention and filial care. Manila. In the absence of agreement. The two-year period ended on October 26. by making reciprocal concessions. who. interest as damages is generally allowed as a matter of right.5 million upon the execution of the agreement. Melontindos. respondent Melecio Tobias. it is necessary that the following requisites be present: (1) that the obligation be demandable and already liquidated. which is more than two years after the extra-judicial demand. the legal rate of interest shall prevail. When the petitioner failed to pay its due obligation after the demand was made. It was able to fully settle its outstanding balance only on February 8. and further delay the fulfillment of its obligation. was in accordance with an extra-judicial demand contemplated by law. with respect to the matter definitely stated therein. Third. was the lessee of the ground floor of a house in Malate. OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS MANUEL D. it filed several motions and elevated adverse resolutions to the appellate court to hinder the execution of a final and executory judgment.R. 1990. 1990. the obligation was already due and demandable after the lapse of the two-year period from the execution of the contract. who was then residing in Canada. Atty. the demand letter sent to the petitioner on October 28. In accordance with the compromise agreement. the obligation was already due and demandable. 1992. 1991. 1991. the terms and conditions of the compromise agreement are clear and unambiguous. the respondents asked for the dismissal of the pending civil cases. or which by implication from its terms should be deemed to have been included therein. Furthermore. This is provided for in Article 1170 of the New Civil Code. He had been renting the place since 1983 on a month-to-month basis from its owner. The two-year period must be counted from October 26. The complaining party has been deprived of funds to which he is entitled by virtue of their compromise agreement. In the case at bar. MELECIO TOBIAS. It is an agreement between two or more persons. that the lessor may judicially eject the lessee upon the expiration of “the period agreed upon or that. It also alleged that the amended lease contract already expired on September 16. The parties entered into the amended lease contract sometime in August 1991. RULING: It is not only the evidence on record but petitioner’s pleadings themselves that confirm his default in paying the rental fees for more than three (3) months in 1999 and 1998 prior to the filing of the ejectment complaint. i. have the potestative authority to set a longer period of lease.00 as of December 1998 and P6.000. respondent demanded the payment of the rental arrears as well as the restoration of the house to him. The Petition for Review is DENIED for lack of merit. although he had settled the arrears of four (4) months.” Where no period has been fixed by the parties.900. respondent was compelled to file a complaint for ejectment. The RTC of Manila upheld in toto the MeTC Decision and denied the subsequent motion for reconsideration for failure to set the date of hearing thereof not later than ten (10) days from its filing.00 for every month thereafter until he finally restored possession thereof to respondent plus attorney’s fees of P15. RULING: In general. or on 19 October 1998. 1991. Article 1675 of the Civil Code excludes cases falling under Article 1673 from those under Article 1687.000. Respondent were joined by the Tsai Chun International Resources Inc. On 1 June 1998 respondent asked petitioner to restore the premises to him for some essential repairs of its dilapidated structure. in their answer to the Complaint. Respondents and the corporation denied petitioner’s allegations. Thus.00 and the costs of suit.000. which is fixed for the duration of the leases. The MeTC of Manila decided the ejectment complaint in favor of respondent and ordered petitioner to vacate the leased premises and to pay rental arrears in the amount of P60.R. ISSUE: Whether or not the lower courts erred in their rulings. For two (2) years nothing came out of the demand to vacate. 142378 378 SCRA 612 FACTS: The case originated from an unlawful detainer case filed by petitioner before the trial court alleging that respondents Huang Chao Chun and Yang Tung Fa violated their amended lease contract over a 1.322. There is also sufficient basis for the courts a quo to conclude that respondent desperately needed the property in good faith for his own family and for the repair and renovation of the house standing thereon. These facts represent legal grounds to eject a tenant. Hence for the second time.” private respondents were not under any obligation to pay the increased monthly rental.could use the house during her regular medical check-up in Manila. It also ruled that the corporation’s failure to pay the monthly rentals as they fell due was justified by the fact that petitioner refused to honor the basis of the rental increase as stated in their Lease Agreement.00. since petitioner was insisting on keeping possession of the house but did not pay the rental for January 1999. after its expiration. OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS LL AND COMPANY DEVELOPMENT AND AGRO-INDUSTRIAL CORPORATION.always with due deference to the parties’ freedom to contract. wherein they alleged that the actual lessee is the corporation. The decision was likewise affirmed by the Court of Appeals. respondents Mar 7. Petitioner’s recourse to the Court of Appeals by petition for review was also unsuccessful since the assailed Decision was affirmed in its entirety as the ensuing motion for reconsideration thereof was denied for late filling. 1996 but respondents refused to surrender possession thereof plus the improvements made thereon. The renovation of the house was commenced but had to stop midway because petitioner refused to vacate the portion he was occupying and worse he neglected to pay for the lease for four (4) months from May to August 1998. The MTC dismissed the case. and pay the rental arrearages despite repeated demands. hence. when they did not pay the monthly rentals thereon in the total amount of P4. Article 1673 provides among others. pursuant to Article 1687. in 1997 respondent insisted upon raising the rental fee once again. the courts. the motion was filed only on 30 October 2000 beyond the fifteen (15) – day period from his receipt of the CA Decision on 9 October 2000 as shown by the registry return receipt. No. VS. It also held that the parties had a reciprocal obligation: unless and until petitioner presented “the increased realty tax. This time he did not offer petitioner anymore the option to pay higher rentals. This was affirmed by the RTC. Such power is to be exercised only in accordance with the particular circumstances of a case: a longer term to be granted where equities demanding extension come into play. to be denied where none appear -. petitioner. 2000 G. HUANG CHAO CHUN AND YANG TUNG FA..e. ISSUE: Whether or not the court could still extend the term of the lease. The same amended the lease contract previously entered into by the parties on August 8. The MTC ruled that the lessees could extend the contract entered into by the parties unilaterally for another five years for reasons of justice and equity. the power of the courts to fix a longer term for a lease is discretionary. courts are not bound to extend the lease. . On 3 February 1999.112 square meter lot it owns. Second. the date of execution of the agreement. Because the Lease Contract ended on September 15. effectivity or fulfillment cannot be made to depend exclusively upon the free and uncontrolled choice of just one party. to restore peaceful possession thereof to petitioner. its duty is confined to the interpretation of the one which they have made for themselves. The contract fixed a specific term for its existence. the disagreement of the parties over the increased rental rate and private respondents’ failure to pay it precluded the possibility of a mutual renewal. turns out to be disadvantageous to a party. OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS BRENT SCHOOL VS.” Here. August 28. On the other hand. in the present case. Court of Appeals. Petition granted. the courts cannot rescue it without crossing the constitutional right to contract. i. As a rule. Decision set aside. including the expiry date. Inc. As stated in Bacolod-Murcia Milling v. the extension of a lease contract must be made before the term of the agreement expires.. 1974 reiterated the same terms and conditions. 1996. the five-year period expired on September 15. Third.e. Upon the lapse of the stipulated period. 1991 to September 15. ZAMORA 181 SCRA 702 FACTS: The root of the controversy at bar is an employment contract in virtue of which Doroteo R. it ceased. suffice it to say that they did so with the knowledge of the risk -.000. courts cannot belatedly extend or make a new lease for the parties. demonstrating petitioner’s disinterest in renewing the contract was its letter dated August 23. the lessor cannot be completely deprived of any say on the matter. This ruling has however. as those contained in the original contract. but merely of its obedience to its express terms allowing the improvements. Ongsiaco and Cruz v. and his . Because there was no longer any lease that could be extended. the fact that the lessor allowed the lessee to introduce improvements on the property was indicative. without need of a demand. and to pay accrued rentals. pursuant to Fernandez. Alegre objected to this termination of his employment contending that since his services were necessary and desirable in the usual business of his employer. When such agreement. Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the termination of his services effective on July 16. the MeTC -. Subsequent subsidiary agreements dated March 15. 1971. not of the former’s intention to extend the contract automatically.” As to the contention that it is not fair to eject respondents from the premises after only five years. Because the lease period was for a determinate time. at a yearly compensation of P20. 1973. five (5) years. the owner-lessor has the prerogative to terminate the lease upon its expiration. those improvements were to “become its property. and September 14. even on the basis of equity. there was nothing in the aforesaid stipulation or in the actuation of the parties that showed that they intended an automatic renewal or extension of the term of the contract. Alegre as engaged as athletic director by Brent School. provided it is not illegal or contrary to public morals. Respondents ordered to vacate the premises. or more precisely on April 20. without regard to its wisdom or folly. Its continuance. 1996. 1976. not after. 1996. been expressly reversed in Fernandez v. “It is not the province of the court to alter a contract by construction or to make a new contract for the parties. Banco Nacional Filipino. considering the value of the improvements they introduced therein. 1973. made a new contract for the parties. Dalisay and Article 1196 of the Civil Code. Thus. without the parties reaching any agreement for renewal. and the fact that the contractual stipulations may turn out to be financially disadvantageous will not relieve the latter of their obligations. demanding that respondents vacate the premises for failure to pay rentals since 1993. respondents and the lower courts argue that the Contract of Lease provided for an automatic renewal of the lease period. They are not authorized to extricate parties from the necessary consequences of their acts.ruled that the stipulation in the Contract of Lease providing an option to renew should be construed in favor of and for the benefit of the lessee. 1976. the Contract of Lease provided for a fixed period of five (5) years -“specifically” from September 16. Absent any contrary stipulation in a reciprocal contract. to July 17. the MeTC. as the court cannot supply material stipulations or read into contract words which it does not contain. a power it did not have. Alberto. respondents can be ejected from the premises. Its renewal may be authorized only upon their mutual agreement or at their joint will. whereas the Complaint for ejectment was filed on October 6. First. Some three (3) months before the expiration of the stipulated period. 1996. “on the day fixed. in effect. While the lessee has the option to continue or to stop paying the rentals. 1996.upheld by the RTC and the CA -. CA and was recently reiterated in Heirs of Amando Dalisay v. freely and voluntarily entered into. at the expiration of the lease. In the instant case. by express provision of Article 1669 of the Civil Code. 1976.In the case. Citing Koh v. Parties are free to enter into any contractual stipulation. from July 18.” Furthermore. the period of lease is deemed to be for the benefit of both parties. After all. the period of the lease contract is deemed to have been set for the benefit of both parties.the contract had plainly provided for a five-year lease period. This loan was effected and the money released without any security except for the Continuing Guaranty. Insular Farms. for financial assiatance.00 on April 18. he had acquired the status of a regular employee and could not be removed except for valid cause. the appellant sent a money order for P100. such clearance should properly have been given. strongly negates transfer of ownership of the goods to the petitioner. Unfortunately. Alegre’s employment was terminated upon the expiration of his last contract with Brent School on July 16. nor an application for clearance to terminate which needed the approval of the Department of Labor to make the termination of his services effective. and she paid P90. 1989 173 SCRA 102 FACTS: On April 15.00. 1966. it is a fact that on October 19. Gulf of Lingayen which had great potential for the cultivation of fish and saltmaking.000 to the bank payable on or before July 1957. As no further amount was paid. The agreement constituted her as an agent with the obligation to return the tobacco if the same was not sold. ISSUE: Whether or not Alegre’s contention is tenable. The provisions of the Labor Code recognize the existence and legality of term employments. Joseph Hart and Clarkin signed a Memorandum of Agreement. Inc. borrowed from Pacific Banking Corporation sometime in July 1956.R. 1966. Insular Farms. Lim (Appellant) went to the house of Maria Ayroso and proposed to sell Ayroso's tobacco. R. executed a Promissory Note of P250. not a letter of termination. renewable for another 25 years. 1955. the appellant had paid to Ayroso only P240. Although the appellant denied that demands for payment were made upon her. obtained a lease from the Department of Agriculture for a period of 25 years. Therefore. in Manila. Inc. she wrote a letter to Salud Bantug stating that she could not pay in full the amount of P799. petitioner Chester Babst. OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS LOURDES VALERIO LIM VS. and particularly by her sister. RULING: NO. 1956. then President of Pepsi-Cola Bottling Co. The case at bar is one which involves term employment. Hence. or. COURT of APPEALS G. all other installments shall become due and payable. does not apply. Anent the argument that petitioner was not an agent because the agreement does not say that she would be paid the commission if the goods were sold. Joseph Hart approached businessman John Clarkin. Inc. 1956. PEOPLE OF THE PHILIPPINES G. that the obligation was immediately demandable as soon as the tobacco was disposed of. They organized Insular Farms. 45656 May 5. the business floundered. Demands for the payment of the balance of the value of the tobacco were made upon the appellant by Ayroso.00. but the appellant often eluded her. On July 31. Pursuant to this letter. The appellant was to receive the overprice for which she could sell the tobacco. Ayroso agreed to the proposition of the appellant to sell her tobacco consisting of 615 kilos at P1. and that the 'camarin' of the appellant was empty. did not . Of the total value of P799.50. 1967. Article 1197 of the New Civil Code. On July 15. 1956. and this was paid on three different times. It is clear in the agreement that the proceeds of the sale of the tobacco should be turned over to the complainant as soon as the same was sold.30 a kilo. nevertheless. No.30 per kilo and the proceeds to be given to complainant as soon as it was sold. and another for P50. 1976 without the necessity of any notice. of John Clarkin. L-34338 November 21. Whether or not the Article 1197 of the Civil Code can be applied in this case RULING: NO. who owned seven and half percent of the capital stock of the bank and his wife Helen. not denied.. which provides that the courts may fix the duration of the obligation if it does not fix a period. Due to financial difficulties. petitioner Pacific Banking Corporation and its then Executive Vice President. private respondents Joseph and Eleanor Hart discovered an area consisting of 480 hectares of tidewater land in Tambac. 1984 133 SCRA 333 FACTS: On January 10. 1967. No. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending expiration of his contract. executed on July 18. the complainant filed a complaint against the appellant for estafa.employment had lasted for five (5) years. Salud Bantug further testified that she had gone to the house of the appellant several times. ISSUE: OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS PACIFIC BANKING CORPORATION VS. the fact that appellant received the tobacco to be sold at P1. Such note provided that upon default in the payment of any installment when due.00 on March 8.00 on October 24. Salud Bantug. applied for and after eleven months. In any case.50 because it is also hard to demand payment from her “suki” in the market of Cabanatuan. 1967 or a total of P240. who constituted themselves as stockholders of Insular Farms and then resold back to Pacific Farms Inc. will be sold at public auction on March 21. the petition is dismissed. 1958 on the shares of stocks of Insular was sufficient consideration for the extension. On March 17. Pacific Banking Corporation. 46 PHIL 592 AGONCILLO VS. Accordingly. On August 8. No part of interest or principal due has been paid except the sum of P200 paid in 1908 by Anastacio Alano. dissatisfied with the decision. 1958 is valid since the shares of stocks had been pledged to insure an extension of the period to pay the July installment. 1916. The trial court rendered a decision ordering Pacific Farms Inc. CENTURY. would be sold at public auction on March 10. 1958. Whether or not the Court may fix a period in the parties’ agreement to extend the payment of the loan. On March 20. Even the ledge did not provide for dates of payment of installments. Hart received a notice that the pledged shared of stocks of Insular Farms. Hart filed another case for recovery of sum of money comprising his investments and earnings. Pacific Farms. including the installment which was due on or before July 1957 it being imprecise. ISSUES: Whether or not the sale by the petitioner bank of the shares of stocks of private respondent on March 21. ALTERNATIVE OBLIGATION: MEANING AND DEFINITION 1. AGONCILLO VS. Marcela Marino a document stipulating that the Alanos as testamentary heirs of deceased Rev.730. the date of maturity of the indebtedness should be as may be determined by the court under Article 1197 of the Civil Code. consequently. 1914. On March 7. JAVIER. On March 21. the provisions of Article 1197 of the Civil Code should apply. 1958. Anastasio Alano. considering that pledge was additional collateral required by the Pacific in addition to the continuing guaranty of Carkin. 38 PHIL 124 ONG GUAN VS. 1958. Inc. through petitioner Chester Babst wrote Insular Farms. Moreover. The latter then sold its shares of stocks to its own stockholders. would pay the sum of P2. Inc. Jlose Alano and Florencio Alano executed in favor of the plaintiff. On March 3. before the expiration of the indefinite period of extension. The next day. respondent Hart received a notice from PBC signed by Babst that the shares of stocks on Insular Farms Inc. the agreement provided that the Alanos are to convey the house and lot bequeathed to them by Cruz in the event of failure to pay the debt in money at its maturity. appealed to the Court of Appeals. directing Pacific Banking Corporation to pay Joseph Hart P100. upon petitions for dissolution of preliminary injunction filed by the petitioners PBC and Babst. 000 shares of stocks of Insular Farms to Pacific Farms. the court lifted the writ of preliminary injunction. 2. the plaintiffs filed the complaint against Florencio. petitioner Pacific Banking Corporation was precluded form enforcing the payment of the said installment of July 1957. the disputed foreclosure and subsequent sale was premature. Anastasio died intestate. but instead opted for more collateral in addition to the guaranty of Clarkin. all of Insular Farms assets except for a certificate of public convenience to operate an ice plant. 1958. As the business further deteriorated. Wherefore. with accrued interest at the stipulation rate. Jose and Crisanto praying that unless defendants pay the debt for the recovery of which the action was brought. Inc. Inc. In 1912. The pledge executed as collateral security no longer contained a provision on installment due on or before July 1957. The pledge constituted on February 19. 1958. 1958 to satisfy Insular Farms’ obligation.00. ISSUE: . that the property be appraised and if its value is found to be less than the amount of the debt.000. YES.000. to pay Joseph Hart for unpaid salaries and for loans made by private respondents to Insular Farms. JAVIER 38 PHIL 124 FACTS: On February 27 1904. Inc.demand payment for the initial July 1957 installment nor of the entire obligation. Hart filed a complaint for reconveyance and damages with prayer for a writ of preliminary injunction and the Court of First Instance granted the writ.50 within one (1) year with interest of 12 percent per annum representing the amount of debt incurred by Cruz. Anastacio Cruz. Hence. was organized to engage in the same business as Insular Farms. CFI of Batangas appointed Crisanto Javier as administrator of Anastasio’s estate. Hart agreed to Clarkin’s proposal that all Insular Farms shares of stocks be pledged to petitioner bank in lieu of additional collateral and to insure and extension of the period to pay the July 1957 installment. PBC sold the 1. or any fixed date for maturity of the whole indebtedness. The appellate court modified the lower court’s decision.00 in July 1957 as provided in the promissory note. On September 28. RULING: The Supreme Court held that since there was an agreement to extend indefinitely the payment of the installment of P50. judgment be rendered in favor of the plaintiffs for the balance. which period had to be fixed by the court as provided in Article 1197 of the Civil Code. 1959. However. Dra. subject to reimbursement from Babst. the private respondents. giving the latter 48 hours to pay its entire obligation. they be required to convey to plaintiffs the house and lot described in the agreement. In case the period of extension is not precise. The agreement to convey the house and lot on an appraised value in the event of failure to pay the debt in money at its maturity is valid. and the parties themselves have interpreted it. RULING: YES. On February 28 1923. Under the conditions of the policies. The plaintiff accepted the payment from Anastacio in 1908. Therefore. it shall be paid by the transfer of the property at a valuation. It must follow therefore that if the action to recover the debt was prescribed. will pay the sum of the money lent by the appellees or will transfer the rights to the ownership and possession of the house and lot bequeathed to the former by the testator in favor of the appellees. CENTURY INSURANCE COMPANY. is valid. the debtor. the CFI of Iloilo City rendered judgment in favor of the plaintiff. In the instant case. The agreement is not open to the objection that the agreement is pacto comisorio. The other prestation is payment of the amount of P45. 000) and the value of the merchandise burned (P15. appellant company did not give formal notice of its election to rebuild the house and the proposed reconstruction of the house was rejected by the creditor. and they had the right to elect which they would perform. Hence the defendant appealed from the judgment and prayed that it be permitted to rebuild the house as provided in the conditions of the insurance policies. the value of the insurance of the building and the merchandise. it will be paid in another way. In alternative obligations. It is not an attempt to permit the creditor to declare the forfeiture of the security upon the failure of the debtor to pay at its maturity. The contract is not susceptible of the interpretation that the title to the house and lot in question was to be transferred to the creditor ipso facto upon the mere failure of the debtors to pay the debt at its maturity. being dependent upon their failure to pay the debt in money. RULING: NO. The conditions in the insurance policies that the parties entered into allowed Century to either pay the insured value of the house. ALTERNATIVE OBLIGATION: MEANING AND DEFINITION ONG GUAN CUAN AND THE BANK OF THE PHILIPPINE ISLANDS. Such an agreement unrecorded. the value of the prestations must be equivalent or similar in value to each other. which is expressly allowed by law. but merely a subsidiary alternative pact relating to the method by which the debt must be paid. 22738 46 P 592 FACTS: A building of plaintiff Ong Guan Cuan was insured with defendant Century Insurance Company (Century) against fire for P30. It is simply an undertaking that if debt is not paid in money. It is quite clear therefore that under the terms of the contract. defendant-appelant 46 SCRA 592 GR No. as the agreement to make such conveyance was not an independent principal undertaking. The petitioner would build a smaller house and of materials of lower kind than those employed in the construction of the burned house. this stipulation is valid because it is simply an alternative obligation. creates no right in rem. the action to compel a conveyance of the house and lot is likewise barred. the building and the merchandise were burned while the policies issued were in force. The objective is to give the creditor opportunity to give consent or deny the election of the debtor. 1924. several years after the debt matured. Century proposed reconstruction of the house destroyed but plaintiff denied that the new house which will be constructed would be smaller and of materials of lower kind than those employed in the construction of the house which was destroyed. The proposed rebuilding of the house by the insurance company would be of lesser value than the other prestation. . Century. the defendant may at its option reinstate or replace the destroyed property instead of paying for the amount of the loss and that it is not bound to reinstate exactly or completely the damaged property.000. the liability of the defendant as to the conveyance of the house and lot is subsidiary and conditional. On April 19. at the maturity of the debt. the only recourse of the insurer is to pay the stipulated value of the insurance policy. but as between the parties. In alternative obligations. The conduct of parties shows that it was not their understanding that the right to discharge the obligation by the payment of the money was lost to the debtors by their failure to pay the debt at its maturity. Only after said notice shall election take legal effect when consented by the creditor (Article 120 Civil Code) or if impugned by the latter when declared proper by a competent court.000). or rebuild it making the obligation of the company an alternative one. ISSUE: Whether or not defendant Century may be allowed to rebuild the house as its option instead of payment of the insured value as stipulated in the insurance policies. It is simply provided that if the debt is not paid in money.000 corresponding to the value of the burned building (P30. The obligations assumed by the debtors were in the alternative. must notify the creditor of his election stating which of the two prestations it is disposed to fulfill.000. it is perfectly valid and specific performance by its terms may be enforced unless prevented by the creation of superior rights in favor of third persons. Plaintiff filed a complaint compelling defendant to pay the sum of P45. Plaintiff-appellees VS.000 as well as the merchandise therein for P15.Whether or not the agreement that the defendant-appellant. 83. as alleged value of the proceeds of the lands involved in the receivership in the case of Martinez vs. to the benefit of the defendants in said receivership and lastly. 1944. to recover the sum of the P10. It appears therefore. Defendant was later substituted upon death by his heir Miailhe and the Courts judged in defendant’s favor. the only currency available was the Philippine currency. CC) LEGARDA VS. and. her consignation did not have the effect of relieving her from her obligation of the defendant. 1942. In other words. And this is so because in alternative obligations there is no right to choose undertakings that are impossible or illegal. 1200.000 from the defendants as damages resulting from their improper meddling in the administration of the receivership property. Plaintiff now assails said decision. Reyes must be taken to have elected to take that particular parcel and he is now estopped from asserting a contrary election to take the five parcels of land described in his complaint. 1921 for the value of the said property. 12012. Grano.ALTERNATIVE OBLIGATIONS: EFFECTS: AS TO DEBTOR: RIGHT OF CHOICE/ELECTION: NATURE AND LIMITATIONS (Art.920. but in a proviso to said clause. The Court then decided in favor of plaintiff Legarda. the obligation on the part of the debtor to pay the mortgage indebtedness has since then ceased to be alternative. By this contract. RULING: Yes. ALTERNATIVE VS. The right to election ceased to exist on the date of plaintiff’s payment because it had become legally impossible.377. After the war and the subsequent defeat of the Japanese occupants. Therefore. that the tender of payment in Japanese Military notes was a valid tender because it was the only currency permissible at the time and its payment was tantamount to payment in Philippine currency. The Martinez heirs are ordered to procure the sufficient deed conveying to appellant Estanislao Reyes the parcels of land mentioned in paragraph 8 of the contract. FACULTATIVE OBLIGATION QUIZANA VS. including the English. Burke. to recover from the defendants the sum of P43. and praying that the latter be order (1) to receive the sum of P75. The plaintiff has been laboring along for several years in an unsuccessful legal battle with the defendants. payment with the clerk of court did not have any legal effect because it was made in certified check.B.000. so he claims. MARTINEZ 55 Phil 493 FACTS: Estanislao Reyes filed an action before the Court of First Instance of Laguna against the Martinez heirs upon four several causes of action in which the plaintiff seeks to recover five parcels of land. However. (2) to execute the corresponding deed of release of mortgage. or the Japanese Military notes. the parties contracting with Reyes agreed to assure to him certain other land containing an equivalent number of trees in case he should so elect. 1202-1203. were outlawed by a proclamation issued by the Japanese Imperial Commander on January 3. but which have gone. by forcing to deposit worthless Japanese military notes when they originally agreed that the interest was to be condoned until after the occupation and that payment was rendered either in Philippine or English currency. Reyes was to be given the parcel described in clause 8. and his right thereto has all along been recognized in the dispositions made by the court with respect to said land. containing proximately one thousand coconut trees. the title of the parcel is in the heirs of Inocente Martinez and it does not appear that they have transferred said title to Reyes. However. REDUGERIO . ALTERNATIVE OBLIGATION: EFFECTIVITY OF CHOICE (Art. defendant filed a case in court claiming that plaintiff Clara de Legarda violated her agreement with defendant. The litigation shows that the plaintiff elected to take and hold the parcel described in clause 8. Thus. 1926 cannot be conceded as the judgment itself bears interest at the lawful rate from the date the same was rendered. ISSUE: Is the tender of payment by plaintiff valid? RULING: On February 17. ISSUE: Whether or not Reyes is entitled to the damages against the party’s signatory to the contract of March 5. alleging defendant’s unjustified refusal to accept payment in discharge of a mortgage indebtedness in his favor. plaintiffs filed a complaint against the original defendant William J. The claim of the defendants to the interest of P8. The judgment against Reyes in favor of the Martinez heirs is enjoined. (3) to pay damages in the sum of P1.000 from July 31. CC) REYES VS.50. and a check does not meet the requirements of legal tender. to recover from the defendants the sum of P9.000. because all other currencies. This cause of action is founded upon the contract and the claim put forth by the plaintiff is to have the five parcels adjudge to him in lieu of another parcel formerly supposed to contain one thousand trees between him and certain of the Martinez heirs. being the alleged proceeds of some coconut trees. to which the plaintiff supposes himself to be entitled. MIAILHE 88 S 637 FACTS: On June 3. springing from his claim to be the owner of the property involved in the receivership. 1943. and to obtain a declaration of ownership in his favor as against the defendants with respect to said parcels. 00. rendered its questioned decision. When petitioner’s husband died. he subleased the fishpond for the remaining period of his lease to the spouses Placido and Purita Alipio and the spouses Bienvenido and Remedons Manuel. and the debts thereof paid in the testate or intestate proceeding of the . he prayed for the rescission of the sublease contract should the defendant failed to pay the balance. and in the alternative. Petitioner Purita moved to dismiss the case on the ground that her husband had passed away on December 1988. the lessees failed to comply with their obligation so that on October 13. However.600 with second installment falling due on June 30. JOINT OBLIGATIONS: HOW CREATED ALIPIO VS. Article 1206 provides: When only one prestation has been agreed upon but the obligation may render substitution. 1989. in the cases where she may legally bind the partnership. and in the absence of defendants. The defendant-appellant shall present a duly executed deed of mortgage over the property in the written obligation.e. The CFI denied the motion for continuance. 1949. ISSUE: Whether or not the trial court was correct in ignoring the 2 nd part of the written obligation and solely basing its decision on the last part of the 1st part. administered and liquidated. and those contracted by the wife. creditor cannot sue the surviving spouse of a decedent in an ordinary proceeding for the collection of the sum of money chargeable against the conjugal partnership and that the proper remedy is for him to file a claim in the settlement of the estate of the decedent. i. with a period of payment to be agreed upon by the parties with the approval of the court. Each of the four sublease parties signed the contract. the defendants appealed in the CFI which set the hearing on August 16. the acceptance of plaintiff of the written obligation without objection and protest and the fact that he kept and based his action therein. The motion was not acted upon until the day of the trial.600. 922 FACTS: This is an appeal to the Court from a decision rendered by the Court of the First Instance of Marinduque. 1990. Cruz.5 hectares fishpond in Barilto. but the second installment the sub lessees only satisfied a portion thereof.00 payable in two (2) installments of P300. they will mortgage the coconut plantation in Sta. their conjugal partnership was automatically dissolved and debts chargeable against it are to be paid in the settlement of estate proceeding in accordance with Rule 73 Section 2: When marriage dissolved by death of the husband or wife. and not in a proceeding for the settlement of the estate of the decedent. The lease was for a period of five (5) years ending September 12. RULING: YES. She based her action on Rule 3 Section 31 of 1964 Rules of Court.1989 private respondent sued Alipio and Manuel spouses for the collection of the said amount before the RTC. So eventually. Bataan. There were actionable documents attached to the complaint signed by the defendant-appellant spouses Redugerio and Pastrado on October 4. COURT OF APPEALS 341 SCRA 441 FACTS: Respondent Romeo Jaring was the lessee of a 14.00 and P185.. 1951. including the paragraph on the constitution of the mortgage. The stipulated amount of the rent was P 485.00. The first installment was duly paid. the community property shall be inventoried. leaving an unpaid of P50. 1948 and containing the provision that Quizana is to be paid on January 1949 and in case of failure. the counsel for defendants presented an “urgent motion for continuance” for the date of hearing coincides with his appearance in two (2) criminal cases previously set for trial before hearing on the aforesaid date. are concrete and positive proof that he agreed and consented to all the terms. the obligation is facultative obligation. The defendants admitted that they offered the transfer of possession but was eventually refused by the petitioner. wherein the defendant Gaudencio Redugerio was to pay the plaintiff Martina Quizana the sum of P550 with the interest from the time of the filing of the complaint and from an order of the same court denying a motion of the defendant for the reconsideration of the judgment on the ground that they were deprived of their day in court. On June 19.94 PHIL. ISSUE: Whether or not a creditor can sue the surviving spouses for the collection of debt which is owned by the conjugal partnership of gains.600. Despite due demand. Marinduque. that payment should have been made on January 21. Article 161(1) states that: All debts and obligation contracted by the husband for the benefits of the conjugal partnership. also for the same purpose. RULING: NO. II. Carlos Farrales. Petitioner maintains that the Court of Appeals improperly and incorrectly disregarded the body of the trial court’s Decision. or the nature or the wording of the obligations to which the preceding article refers[. private respondent assailed the levy on execution twice in 1984 and once in 1985 but not once did the latter even mention therein that his obligation was joint for failure of the dispositive portion of the decision to indicate that it was solidary. a Writ of Execution was issued and consequently implemented by the assigned Deputy Sheriff. in favor of the . filed an ‘Urgent Motion for Reconsideration and/or to Suspend the Order dated October 12. respondent Judge allegedly abused his discretion in setting aside the auction sale after the redemption period had expired. Lim. Thus. FARRALES. CA-G.deceased spouse. CA-G. the liability is joint. and the creditor is entitled to demand only a proportionate part of the credit from each debtor. On the other hand. Van Sebille and Federico C. A solidary obligation is one in which each of the debtors is liable for the entire obligation. Under the circumstances. Respondent Judge issued an order considering the assailed Order as well as the writ of possession as ‘of no force and effect’ thus the issue here has become moot and academic. Thomas H. 1991 was tainted with grave abuse of discretion based on the following grounds: “1. 1990. private respondent must be deemed to have waived that objection. 23324 PH Credit Corp. the credit or debt shall be presumed to be divided into as many equal shares as there are creditors or debtors x x x. ISSUE: Whether or not the Court of Appeals erred when it disregarded the body of the decision and concluded that the obligation was merely a joint obligation due to the failure of the dispositive portion of the decision dated 31 January 1984 to state that the obligation was joint and solidary. Farrales were levied and sold at public auction wherein PH Credit Corp. Judgment is rendered in favor of plaintiff PH Credit Corporation. A liability is solidary “only when the obligation expressly so states. as a thirdparty claimant with the court below.R. Respondent Judge erred in applying the presumption of a joint obligation in the face of the conclusion of fact and law contained in the decision showing that the obligation is solidary. the word solidary neither appears nor can it be inferred therefrom. If both spouses have died. Personal and real properties of defendant Carlos M. VS.. The fallo merely stated that the following respondents were liable: Pacific Lloyd Corporation. hence they were declared in default. “2. a joint obligation is one in which each debtors is liable only for a proportionate part of the debt. The redemption period after the auction sale of the properties had long lapsed so much [so] that the purchaser therein became the absolute owner thereof. SP NO. It held that. Lim.] the contrary does not appear. as provided by the Civil Code. 1984 decision was merely joint and not solidary with the defendants therein. The wellentrenched rule is that solidary obligations cannot be inferred lightly. was the highest bidder. RULING: No. which clearly stated as follows: “To support the Promissory Note. Motion for the issuance of a writ of possession was filed and the same was granted. and each of the creditors is entitled to demand the satisfaction of the whole obligation from any or all of the debtors. there was no legal basis for levying and selling Farrales’ real and personal properties in order to satisfy the whole obligation. Carlos M. EFFECTS OF JOINT OBLIGATIONS “3. petitioner.” In the dispositive portion of the January 31. 1984 Decision of the trial court. According to petitioner. the liability of Farrales was merely joint and not solidary. petitioner concludes. the conjugal partnership shall be liquidated in the testate or intestate proceeding of either. After service of summons upon the defendants. Lim. Van Sebille. Farrales and Thomas H. She claims that the actuations of respondent Judge was tainted with grave abuse of discretion. respondent Judge issued the writ of possession on October 26. Farrales and Federico C. Petitioner claims that she. Consequently. Federico C. They must be positively and clearly expressed.” Hence the execution must conform with that which is ordained or decreed in the dispositive portion of the decision. 1990’. which we quote:“ Art. If from the law. 1208.R. Respondent Judge refused to consider as “waived” private respondent’s objection that his obligation in the January 31. Thomas H. filed a case against Pacific Lloyd Corp. The Court of Appeals affirmed the trial court’s ruling declaring null and void (a) the auction sale of Respondent Ferrales’ real property and (b) the Writ of Possession issued in consequence thereof. for sum of money. when the law so provides or when the nature of the obligation so requires.. Thus. After the aforesaid decision has become final and executory. Carlos M.” PH CREDIT CORPORATION. respondents 2001 Nov 22 370 SCRA 441 FACTS: I. 1984 Decision of the trial court. they failed to file their answer within the reglementary period. SP NO. Van Sebille. COURT OF APPEALS and CARLOS M. pursuant to the January 31. 25714 Petitioner claims that the respondent Judge’s Order dated January 31. a Continuing Suretyship Agreement was executed by the defendants. but without acting there[on]. If petitioner had doubted this point. the parties would reimburse each other the proportionate share of any sum that any might pay to creditors. However. payment of any amount will not automatically result . Hence.plaintiff corporation. 1978. that the owner of the other vehicle which collided with a common carrier is solidarily liable to the injured passenger of the same. 501 S 228 REPUBLIC GLASS CORP. CA. Indemnity and Pledge of shares of Stocks. respondents Rebecca G. 331 SCRA 640 METRO MANILA TRANSIT VS. they never reached their destination because their bus was rammed from behind by a tractor-truck of CDCP in the South Expressway. 30 JULY 2004 INDUSTRIAL MANAGEMENT VS. The liability for the negligent conduct of the subordinate is direct and primary. September 8. respondents filed a Complaint for damages against CDCP. and (3) there is no novation in the instant case. RGC and Gervel paid Metrobank where a waiver and quitclaim in favor of the two was executed. In the instant case. VS. 2004 FACTS: Petitioners and respondent were stockholders of Ladtek. 2. Upon Qua’s refusal to reimburse. Lim. QUA G.R. a BLTB bus bound for Pasay City. respondent’s liability was solidary. Fletcher. QUA. there was no clear declaration in the body of the January 31. NLRC. On appeal. The elements of novation are not established in the instant case. the petition. it should have filed a motion for reconsideration before the finality of the Decision of the trial court.. ISSUE: Are the accused jointly or solidarily liable? RULING: The case filed by respondents against petitioner is an action for culpa aquiliana or quasi-delict under Article 2176 of the Civil Code. The strong impact pushed forward their seats and pinned their knees to the seats in front of them. 2006 FACTS: On December 29. No. which obtained loans from Metrobank and PDCP where they stood as sureties. v. Contrary to RGC and Gervel’s claim. RGC and Gervel cannot automatically claim for indemnity from Qua because Qua himself is liable directly to Metrobank and PDCP. Jr. and (2) Whether there was no novation. The Peitition was thusly DENIED. 3. Farrales and Thomas H. Carlos M. CDCP VS. Court of Appeals. SOLIDARY OBLIGATIONS: HOW CREATED REPUBLIC GLASS CORPORATION v. Inc. Ladtek defaulted on its loan obligations. but is subject to the defense of due diligence in the selection and supervision of the employee. the trial court found that petitioner failed to prove that it exercised the diligence of a good father of a family in the selection and supervision of Payunan. JUNE 21. stating that in case of default in the payment of loans. in which case the body of the decision will prevail. 4. In this instance. Rachel E. SOLIDARY OBLIGATIONS: HOW CREATED 1. Nowhere in the former can we find a definite declaration of the trial court that. Branch 13. Jr. 14413 July 30. 1993 CDCP VS ESTRELLA GR No. They suffered physical injuries as a result. During the pendency thereof. due to his judicial admissions. the CA issued the assailed decision and held that there was an implied novation of the agreement and that the payment did not extinguish the entire obligation and did not benefit Qua. It is well-settled in Fabre. Van Sebille will hold themselves jointly and severally together with defendant Pacific Lloyd Corporation to answer for the payment of said obligation. boarded in San Pablo City. indeed. and Wilfredo Datinguinoo before the Regional Trial Court of Manila. Among themselves they executed Agreements for Contribution. Estrella and her granddaughter. Espiridion Payunan. RULING: The petition is denied. Thereafter. They regained consciousness only when rescuers created a hole in the bus and extricated their legs from under the seats. 147791. where the petitioners claim the following: (1) Qua is estopped from claiming that the payment made was not for the entire obligation. RGC and Gervel foreclosed the pledged shares of stocks owned by Qua at a public auction. BLTB. ISSUES: (1) Whether payment of the entire obligation is an essential condition for reimbursement. (2) payment of the entire obligation is a condition sine qua non for the demand of reimbursement under the indemnity agreements. Jr. then Federico C. to the effect that if Pacific Lloyd Corporation cannot pay the amount loaned by plaintiff to said corporation. 1984 Decision to warrant a conclusion that there was an error in the fallo. Although the Agreement does not state that payment of the entire obligation is an essential condition for reimbursement. hence Metrobank filed a collection case. ESTRELLA.” The only exception when the body of a decision prevails over the fallo is when the inevitable conclusion from the former is that there was a glaring error in the latter. Esmeralco Pegarido. private respondents Enrique Sulit. considered joint and petitioner’s payment which has been accepted considered as full satisfaction of its liability. NLRC 331 SCRA 640 FACTS: In September 1984. This is precisely because if a solidary debtor pays an amount equal to his proportionate share in the obligation. the Court of Appeals modified the trial court's . As a consequence. The trial court found both drivers of the colliding vehicles concurrently negligent for non-observance of appropriate traffic rules and regulations and for failure to take the usual precautions when approaching an intersection. 1993 G. Thereat. After consideration of the appropriate pleadings on appeal and finding the appeal meritorious. falling onto the pavement unconscious with serious physical injuries. Taguig. Gonzales. If a solidary debtor pays the obligation in part. VS. ISSUE: Whether or not the petitioner’s liability pursuant to the decision of the labor arbiter dated March 10. bound for her work at Dynetics Incorporated located in Bicutan. (MMTC) bus driven by defendant Godofredo C. Virginia Bagus. 104408 FACTS: Plaintiff-appellant Nenita Custodio boarded as a passenger of a public utility jeepney. and as a consequence. she was confined for 24 days. Nierre. Leonardo bound for its terminal at Bicutan. Metro Manila. As joint tortfeasors. Nemenzo. If the debtor pays less than his share in the obligation. Taguig. A solidary or joint and several obligations is one in which each debtor is liable for the entire obligation and each creditor is entitled to demand the obligation. THE COURT OF APPEALS and NENITA CUSTODIO. When it is not provided in a judgment that the defendant are liable to pay jointly and severally a certain sum of money. Socorro Mahinay. both drivers. The collision impact caused plaintiff-appellant Nenita Custodio to hit the front windshield of the passenger jeepney and was thrown out therefrom. Jun 21.111 in Cebu City against Filipinas Carbon Mining Corp. respondents. Dhin Gin. Tita Bacusimo. RULING: NO. defendant Calebag was declared in default for failure to file an answer. She was brought to the Medical City Hospital where she regained consciousness only after 1 week.00. METRO MANILA TRANSIT CORPORATION. Plaintiff's motion to have that portion of the trial court's decision absolving MMTC from liability reconsidered having been denied for lack of merit. the liability pursuant to the decision of the labor arbiter dated March 10. 1987 petitioner filed a motion to quash alias writ of execution and set aside decision alleging among that the alias writ of execution altered and charged the tenor of the decision by charging the liability of therein respondent from joint to solidary by the insertion of the words ‘and/or’ between Gonzales and Filipinas. SOLIDARY OBLIGATIONS: HOW CREATED SOLIDARY OBLIGATIONS: HOW CREATED INDUSTRIAL MANAGEMENT VS. In a joint obligation each obligor answers only a part of the whole liability and to each obligation belong only a part of the correlative rights. Metro Manila another fast moving vehicle. By order of the trial court. when the law so provides or when the nature of the obligation so required. a collision between them occurred. No. she was unable to work for three and one half months 3 1/2. Bicutan. Dariogo and Roberto filed a complaint with the DOLE. a Metro Manila Transit Corp. Lo Kuan Chin to pay complainant Enrique Sulit total amount of P82. he can recover reimbursement from the co-debtors only in so far as his payment exceeded his share in the obligation. Lo Kuan Chin petitioner Industrial Management Development Corporation for payment of separation pay and unpaid wages.800. 1987 should be as it is hereby. Genardo Sicaty. Defendants denied all the material allegations in the complaint and pointed an accusing finger at each other as being the party at fault for the negligence in the failure to exercise due diligence in the selection and supervision of their respective employees. without the prejudice to the enforcement of the awards against the other five respondents in the said case. were held solidarily liable for damages sustained by plaintiff Custodio. Regional Arbitration Branch No. where she then worked as a machine operator. Labor Arbiter judgment-ordering Filipinas. neither did they blow their horns to warn approaching vehicles. petitioner. an appeal was filed by her with respondent appellate court. On September 3. Trial ensued after no amicable settlements were made. then he in effects pays only what is due from him. 1987 is solidary.R. There is solidary liability only when the obligation expressly so states. While the passenger jeepney was travelling at along DBP Avenue. he cannot demand reimbursement because his payment is less than his actual debt. then driven by defendant Agudo Calebag and owned by his co-defendant Victorino Lamayo. none of them may be compelled to satisfy in full said judgment. Gonzales. As both vehicles approached the intersection of DBP Avenue and Honeydew Road they failed to slow down and slacken their speed.in reimbursement. as well as defendant Lamayo. R. together with Gregorio Pantanosas Jr. petitioner. Whether or not the diligence of a good father of a family has been observed by petitioner is a matter of proof which under the circumstances in the case at bar has not been clearly established. Chapter 3. The latter. ISSUE: Whether or not the appellate court erred in holding that MMTC should be solidary liable with the other defendants. the provisions of Section 4. CA. A solidary or joint and several obligation is one in which each debtor is liable for the entire obligation. the liability of a guarantor is different from that of a solidary debtor. As joint tortfeasors. Petitioner argued that said promissory note has vitiated his consent through fraud and deceit which was later corroborated by Pantanosas for he only signed for the amount of P5. his should also be extinguished. Chapter 3. had their obligations arouse from the signing of a promissory note amounting to P50. as provided for by Article 2080 of the Civil Code on guarantors.decision by holding MMTC solidarily liable with the other defendants for the damages awarded by the trial court because of their concurrent negligence. Book IV of the Civil Code. While a guarantor may bind himself solidarily with the principal debtor. In such a case the contract is called a suretyship. OCT. Decision affirmed. As a consequence. and not the alleged amount. 1983. to buy chainsaw. only the summons addressed to petitioner was served as the sheriff learned that defendant Naybe had gone to Saudi Arabia. petitioner MMTC must suffer the consequences of its own inaction and indifference. retains all the other rights.” . and each creditor is entitled to demand the whole obligation. 1996 FACTS: Petitioner.” If a person binds himself solidarily with the principal debtor. Tolentino explains: “A guarantor who binds himself in solidum with the principal debtor under the provisions of the second paragraph does not become a solidary co-debtor to all intents and purposes. RULING: No. No. COURT OF APPEALS and PHILIPPINE BANK OF COMMUNICATIONS. There is a difference between a solidary co-debtor and a fiador in solidum (surety). On the other hand. The mere formulation of various company policies on safety without showing that they were being complied with is not sufficient to exempt petitioner from liability arising from negligence of its employees. 15. 2. The Regional Trial Court and the Court of Appeals rejected his petitions and so a petition for review on certiorari was filed with the Supreme Court. Thus.. the appellate court did not err in its decision. 96405 June 26. hence. assuming the putative existence thereof. while a solidary co-debtor has no other rights than those bestowed upon him in Section 4. the lower court dismissed the case against defendant Pantanosas as prayed for by the private respondent herein. On January 27. JR. outside of the liability he assumes to pay the debt before the property of the principal debtor has been exhausted. CA. all defendants. 257 SCRA 578 PHILIPPINE BLOOMING MILLS VS. this appeal. 2003 BALDOMERO INCIONG. VS. including MMTC will be solidarily liable for damages awarded by the trial court. ACTIVE SOLIDARITY OR MUTUAL AGENCY: EFFECTS 1. Meanwhile. The promissors failed to fulfill their obligations despite demand by the bank. RULING: The Supreme Court held that the petitioner signed the promissory note as a solidary co-maker and not as a guarantor. 000 holding themselves jointly and severally liable to private respondent Philippine Bank of Communications. 1987.000 on one of the copies of the promissory note. Title I of this Book shall be observed. called the guarantor. The promissory note was due on May 5. respondents G. It is not felt by the Court that there is enough evidence on record as would overturn the presumption of negligence. It is incumbent upon petitioner to show that in recruiting and employing the erring driver the recruitment procedures and company policies on efficiency and safety were followed. Article 2047 of the Civil Code states: “By guaranty a person. Title I. binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so.. had extinguished. an action to collect was filed with the court but was dismissed due to failure to prosecute. INCIONG VS. Said dismissal was reconsidered by the trial court and later ordered the sheriff to serve the summons. He also claimed that since the liabilities of Pantanosas and Naybe. ISSUE: Whether or not the petitioner is solidary co-maker of the promissory note in issue and not merely a guarantor. and Rene Naybe. Cagayan de Oro City branch. actions and benefits which pertain to him by reason of the fiansa. and for failure to submit all evidence within its control. his copromissors. Section 4. In his personal capacity and not as a corporate officer. TRB filed with the trial court a complaint for collection against PBM and Ching. Court of Appeals. (PBM). Under the trust receipts. Creditors may sue individual sureties of debtor corporations. Ching denied liability as surety and accommodation co-maker of PBM. The choice is left to the solidary creditor to determine against whom he will enforce collection. ACTIVE SOLIDARITY OR MUTUAL AGENCY: EFFECTS On 1 April 1982. The appellate court ruled that SEC assumed jurisdiction over Ching and PBM to the exclusion of courts or tribunals of coordinate rank. 1207 thereof. ten months after the SEC placed PBM under rehabilitation receivership. On 13 May 1983. Petitioner. In Traders Royal Bank v. The trial court stressed that TRB was holding Ching liable under the Deed of Suretyship. when there are two or more debtors in one and the same obligation. Because the promissory note involved in this case expressly states that the three signatories therein are jointly and severally liable. PBM defaulted in its payment of the two (2) trust receipts as well as the trust loan. FACTS: Alfredo Ching (Ching) was the Senior Vice President of Philippine Blooming Mills. may only have recourse against his comakers. Book IV of the Civil Code states the law on joint and several obligations. The appellate court granted Ching’s petition and ordered the dismissal of the case. which uniformly granted the TRB the right to take possession of the goods at any time to protect the TRB’s interests.000 trust loan from TRB. PBM and Ching also moved to dismiss the complaint on the ground that the trial court had no jurisdiction over the subject matter of the case. the dismissal of the case against Judge Pontanosas may not be deemed as having discharged petitioner from liability as well. Ching later accomplished and delivered to TRB trust receipts. TRB assailed the Court of Appeal’s decision before the Supreme Court. As regards Naybe. which acknowledged receipt in trust for TRB of the merchandise subject of the letters of credit. when the law so provides or when the nature of the obligation so requires. Traders Royal Bank (TRB) granted PBM letters of Credit on application of Ching in his capacity as Senior Vice President of PBM. 500. like Ching. TRB asked the trial court to order defendants to pay solidarily the indebtedness of PBM. On 27 April 1981. and obligations under the rehabilitation receivership of Kalaw. Ching signed as co-maker in the notarized Promissory Note evidencing said loan. in a separate proceeding before regular courts despite the pendency of a case before the SEC involving the debtor corporation. On March 24 and August 6 1980. PBM obtained a P3. any one. Chapter 3. There is a solidary liability only when the obligation expressly so states. therefore. liabilities. In his Answer dated 6 November 1989. the presumption is that the obligation is joint so that each of the debtors is liable only for a proportionate part of the debt. TRB moved to withdraw the complaint against PBM on the ground that the SEC had already placed PBM under receivership. some or all of them may be proceeded against for the entire obligation. the highest tribunal upheld the TRB and ruled that Ching was merely a nominal party in the SEC case. the SEC placed all of PBM’s assets. He further claimed . Title I. One of the listed creditors of PBM was TRB. He claimed that the SEC had already issued a decision approving a revised rehabilitation plan for PBM’s creditors. Ching filed a Petition for Certiorari and Prohibition before the Court of Appeals. Upon the trial court’s denial of his Motion for Reconsideration. PBM and Ching filed a petition for suspension of payments with the Securities and Exchange Commission (SEC). On 25 May 1983. On 9 July 1982. Inc. suffice it to say that the court never acquired jurisdiction over him. as provided by law. Escaler and Associates. PBM had the right to sell the merchandise for cash with the obligation to turn over the entire proceeds of the sale to TRB as payment of PBM’s indebtedness. the trial court ruled that TRB could proceed against Ching as surety upon default of the principal debtor PBM. Consequently. PBM and Ching invoked the assumption of jurisdiction by the SEC over all of PBM’s assets and liabilities. 2003 On 23 July 1983. The trial court denied the motion to dismiss with respect to Ching and affirmed its dismissal of the case with respect to PBM. Under Art. Ching signed a Deed of Suretyship dated 21 July 1977 binding himself solidarily liable together with the debtor PBM. The trial court thus dismissed the complaint against PBM. The petition sought to suspend payment of PBM’s obligations and prayed that the SEC allow PBM to continue its normal business operations free from the interference of its creditors. PHILIPPINE BLOOMING MILLS VS. COURT OF APPEALS 413 SCRA 445 OCTOBER 15. Ching further executed an Undertaking for each trust receipt. As Ching’s obligation was solidary. Eparwa and LDCU again filed separate motions for partial reconsideration. ISSUE: Is LDCU alone ultimately liable to the security guards for the wage differentials and premium for holiday and rest day pay? RULING: Articles 106. overtime pay. LDCU alone is ultimately liable. Under the Civil Code. service incentive leave. The law expressly allows a suretyship for “future debts” as provided for in Article 2053 of the Civil Code. The appellate court denied Eparwa’s motion for reconsideration. LDCU filed an appeal before the NLRC. LDCU alleged that security guards not similarly situated were granted uniform monetary awards and that the decision did not include the basis of the computation of the amount of the award. as creditor. 508 S 373 2. ISSUES: Whether or not Ching is liable for obligations PBM contracted after the execution of the Deed of Suretyship. 1991 2. Whether or not Ching’s liability is limited to the amount stated in PBM’s rehabilitation plan. and payment for attorney’s fees. entered into a Contract for Security Services. A continuing guaranty is one which is not limited to a single transaction. referring to amounts PBM “may now be indebted or may hereafter become indebted” to TRB. Ching cannot invoke Article 1222 of the Civil Code.Hence. No. The appellate court granted LDCU’s petition and reinstated the Labor Arbiter’s decision. This is evident from the tenor of the deed itself. which states that: “ the creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. CERNA VS. The complaint was filed against both Eparwa and LDCU for underpayment of salary. filed a complaint before the NLRC Regional Arbitration Branch No. LDCU filed a petition for certiorari before the appellate court assailing the NLRC’s decision. so long as the debt has not been fully collected. LICEO DE CAGAYAN UNIVERSITY G. CA. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others. TRB required Ching’s surety precisely to insure full recovery of the loan in case PBM becomes insolvent or fails to pay in full. 5. PCIB. 1993 EPARWA SECURITY. ESPARWA SECURITY VS. but which contemplates a future course of dealing. Eparwa also filed an appeal before the NLRC. in granting the loan to PBM. On 21 December 1998. a guaranty may be given to secure even future debts. there would remain a balance of PBM’s debt to TRB. On appeal.that even as a surety. MAR. Eparwa questioned its liability for the security guards’ claims and the awarded cross-claim amounts. Thus. 107 and 109 of the Labor Code read: . Ching cannot use PBM’s failure to pay in full as justification for his own reduced liability to TRB. rest day. This is clear from Article 1216 of the Civil Code. the amount of which may not be known at the time the guaranty is executed.R. AUG. the Court of Appeals affirmed the decision of the lower court. The Court of Appeals denied Ching’s Motion for Reconsideration for lack of merit. The trial court ruled that Ching is liable to TB under the Deed of Suretyship. 30. 13th month pay. generally for an indefinite time or until revoked. LICEO DE CAGAYAN. The Labor Arbiter found that the security guards are entitled to wage differentials and premium for holiday and rest day work. 2006 FACTS: On 1 December 1997. For its part. 150402 Nov 8. The Labor Arbiter held Eparwa and LDCU solidarily liable pursuant to Article 109 of the Labor Code. TRB.” EFFECTS OF PASSIVE SOLIDARITY/MUTUAL GUARANTY 1. has the right under the surety to proceed against Ching for the entire amount of PBM’s loan. 10 in Cagayan de Oro City. his liability as surety would attach only if. this petition. Although the NLRC held Eparwa and LDCU solidarily liable for the wage differentials and premium for holiday and rest day work. night shift differential. The NLRC found that the security guards are entitled to wage differentials and premium for holiday and rest day work. Thus. LDCU agreed with the Labor Arbiter’s decision on the security guards’ entitlement to salary differential but challenged the propriety of the amount of the award. In its Resolution NLRC declared that although Eparwa and LDCU are solidarily liable to the security guards for the monetary award. RULING: Ching is liable for credit obligations contracted by PBM against TRB before and after the execution of the 21 July 1977 Deed of Suretyship. Anent the second issue. he has the right to the defenses personal to PBM. legal holiday pay. 11 security guards (“security guards”) whom Eparwa assigned to LDCU from 1 December 1997 to 30 November 1998. The appellate court also allowed LDCU to claim reimbursement from Eparwa. the NLRC did not require Eparwa to reimburse LDCU for its payments to the security guards. after the rehabilitation of payments scheduled under the rehabilitation plan. covering a series of transactions. Eparwa and LDCU. v. DIMAYUGA VS. There is no privity of contract between the security guards and LDCU. EFFECTS OF PASSIVE SOLIDARITY/MUTUAL GUARANTY CARLOS DIMAYUGA. — The provisions of existing laws to the contrary notwithstanding.R.00 as evidenced by a promissory note executed and signed by Pedro Tanjuatco and Carlos Dimayuga. in case of non-payment. 1973. but LDCU’s liability to the security guards remains because of Articles 106. the money claim of the respondents should be dismissed and prosecuted against the estate of the late Pedro Tanjuatco as provided in Sec.00 plus 10% interest per annum. thus giving the workers ample protection as mandated by the 1987 Constitution. not being an employer. Contractor or subcontractor. if not guarantees. For purposes of determining the extent of their civil liability under this Chapter. they undertook among others to jointly and severally authorize respondent bank. LDCU cannot claim any reimbursement from Eparwa for any payment it may make to the security guards. both undertook to "jointly and severally authorize the respondent Philippine Commercial and Industrial Bank. payment of the workers’ performance of any work. 1969 to May 7. The trial court held the defendants jointly and severally liable to pay the plaintiff the sum of P9.00 by way of partial payments made from August 1. Indirect employer. as above stated. Labor Code]. there can be no dispute that Carlos Dimayuga bound himself jointly and severally with Pedro C. 1962 with interest at the rate of 10% per annum in case of non-payment at maturity as evidenced by and in accordance with the terms and conditions of the promissory note executed jointly and severally by defendants. partnership. respondents Aug 5. at its option to apply to the payment of this note any and all funds. Otherwise stated. petitioner borrowed from the plaintiff the sum of P10.00 until fully paid. Plaintiff. may collect from anyone of the solidary debtors. now deceased. Tanjuatco. if any. 107 and 109 of the Labor Code. 5.60 with interest at 10% per annum until fully paid plus P913. 1970 as evidenced by corresponding receipts thereto. charges and partly on the principal. securities or other real or personal property of value which hands (sic) on deposit or otherwise belonging to anyone or all of us. In lieu of an adjustment in the contract price." Upon the default of the promissors to pay. to pay the obligation with PCIB in the amount of P10. PHILIPPINE COMMERCIAL & INDUSTRIAL BANK and COURT OF APPEALS. VS. Solidary liability. Creditors. In addition. real or personal properties. On February 6. ISSUE: Whether or not the money claim of PCIB should be dismissed and prosecuted against the estate of the late Tanjuatco. Eparwa is already precluded from asking LDCU for an adjustment in the contract price because of the expiration of the contract. 1999 G. — The provisions of the immediately preceding Article shall likewise apply to any person. the actual source of the payment of their wage differentials and premium for holiday and rest day work does not matter as long as they are paid. 1962. association or corporation which. the petition is granted. etc. No. Eparwa may claim reimbursement from LDCU for any payment it may make to the security guards. two solidary debtors are liable for only half of the payment. New Rules of Court.Article 107. The trial court denied the motion for lack of merit. the employees of the contractor and of the latter’s subcontractor. now petitioner.000. is made the indirect employer of the contractor’s employees for purposes of paying the employees their wages should the contractor be unable to pay them. job or project.000. on the other hand. however.000.000. had remitted to the respondent the P4. is a banking institution and is the creditor of petitioner. 106. any and all funds. every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. they shall be considered as direct employers. For the security guards. job or project. bank filed a complaint for the collection of a sum of money.139. belonging to anyone or all of them. Defendant Carlos Dimayuga. the Court of Appeals dismissed the appeal for failure of the Record on Appeal to show on its face that the appeal was timely perfected. Carlos Dimayuga bound himself to pay jointly and severally with Pedro Tanjuatco interest at the rate of 10% per annum on the said amount of P10. This joint and several liability facilitates. the promissory note in question provides in . Solidary liability does not mean that. Hence. — Whenever an employer enters into a contract with another person for the performance of the former’s work. 42542 FACTS: Petitioner is the defendant-appellant in a case for collection of sum of money against whom the decision was rendered by the trial court on May 28. Moreover. RULING: From the evidence presented. such as the security guards. shall be paid in accordance with the provisions of this Code. task. The indebtedness was to be paid on May 7. However. Rule 86.96 as attorneys' fees and costs against defendants. at its option to apply to the payment of this note. This is the import of Eparwa and LDCU’s solidary liability. This joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance of the provisions therein including the statutory minimum wage [Article 99. securities. who is now the respondent in the instant petition. The contractor is made liable by virtue of his status as direct employer. petitioner. Article 109. as between themselves. The principal.Art. Petitioner then filed a motion alleging that since Pedro Tanjuatco died on December 23. On appeal. These payments were nevertheless applied to past interests. but Eparwa’s liability to the security guards remains because of their employer-employee relationship. 1974. contracts with an independent contractor for the performance of any work. LDCU’s ultimate liability comes into play because of the expiration of the Contract for Security Services. task. Court of Appeals decision reversed and set aside. Jr. Maximino Nazareno. Petitioner filed a motion to reconsider the said order but this was denied. Manolo P. Moreover. are the petitioners in this case. but that fact alone does not make a thirdparty mortgagor solidarily bound with the principal debtor in the fulfilling of the principal obligation that is. or when the law or nature of the obligation so requires. instead of instituting a proceeding for the settlement of the estate of the deceased debtor wherein his claim could be filed. Upon the . The respondent court hold petitioner and Delgado were solidary debtors.” It was clear that petitioner had no part in the contract. liable to pay the loan contracted by Delgado. JR. Anent the latter. NAZARENO and ELIZA NAZARENO G. 1972.unmistakable language that the obligation of petitioner Dimayuga is joint and several with Pedro C. with the Court of Appeals. This prompted Leviste to file a collection suit against Delgado and petitioner as solidary debtors.. Romeo. and Maximino. The trial court denied the motion to dismiss. "Hence. During their marriage. the creditor has recourse on the principal debtor. the creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. On February 18. And the liability of the third-party mortgagors extends only to the property mortgaged. 1980. to pay the loan. Delgado executed a chattel mortgage over a jeep owned by him. Cerna (petitioner). The petitioner then filed a special civil action for certiorari. and his wife Eliza Nazareno are the respondents. NAZARENO. namely. 1970. COURT OF APPEALS 220 SCRA 517 MARCH 30. Sr. mandamus. COURT OF APPEALS..R. while the estate of Maximino. The period lapsed without Delgado paying the loan. INDIVISIBLE OBLIGATIONS: CONVENTIONAL KINDS OF INDIVISIBILITY: NATURAL. the creditor may bring his action in toto against the debtors obligated in solidum. and Aurea Poblete acquired properties in Quezon City and in the Province of Cavite. died on December 18. and Aurea Poblete were husband and wife. he also mortgaged a “Taunus” car owned by the latter. The trial court again denied the said motion. petitioner claimed that the claim should be filed in the proceedings for the settlement of the estate of Delgado as the action did not survive Delgado’s death. 1977. There is also no legal provision nor jurisprudence in our jurisdiction which makes a third person who secures the fulfillment of another’s obligation by mortgaging his own property solidarily bound with the principal obligor. Nowhere did it appear in the promissory note that petitioner was a co-debtor. Should there be any deficiency. Sr. and prohibition with preliminary injunction on the ground that the respondent judge committed grave abuse of discretion. And acting as the attorney-in-fact of herein petitioner. However. Petitioner filed a motion to dismiss. SR. Sr." The notice is undoubtedly left to the solidary creditor to determine against whom he will enforce collection. Aurea died on April 15. petitioner is not a co-debtor of Delgado. Article 1311 of the Civil Code is clear that “contracts take effect only between the parties…” Moreover. petitioner filed another petition for certiorari and prohibition RULING: NO. MAXIMINO P. 138842 October 18. It is well settled under the law and jurisprudence that when the obligation is solidary. Thus. Pacifico. The respondent court dismissed the petition. NAZARENO. Sr. The signatory of the principal contract remains to be primarily bound. ROMEO P. Tanjuatco. EFFECTS OF PASSIVE SOLIDARITY/MUTUAL GUARANTY CERNA VS. which was evidenced by a promissory note. he could no longer foreclose the mortgage. It was Delgado alone who signed the said agreement. 1993 FACTS: Celerino Delgado and Conrad Leviste entered into a loan agreement on or about October 16. Article 1207 of the Civil Code states that “there is solidary liability only when the obligation expressly so states. Then. nowhere could it be seen from the agreement that petitioner was solidarily bound with Delgado for the payment of the loan. ESTATE OF MAXIMINO A. Romeo. Jr. Trial court decision affirmed. Natividad and Maximino. ISSUE: Whether or not petitioner is a co-debtor of Delgado. while Maximino. On the same date. It is only upon the default of the latter that the creditor may have recourse on the mortgagors by foreclosing the mortgaged properties in lieu of an action for recovery of the amount of the loan. VS. petitioner filed his second motion to dismiss. 2000 343 SCRA 637 FACTS: Maximino Nazareno. A chattel mortgage may be an “accessory contract” to a contract of loan. The grounds cited in the Motion were lack of cause of action and the death of Delgado. As expressly allowed by Article 1216 of the Civil Code. Jose. hence. there is nothing improper in the creditor's filing of an action against the surviving solidary debtors alone. LEGAL OR NATIVIDAD P. NAZARENO. They had five children. he also stated that since Leviste already opted to collect on the note. No. Natividad. the Court of Appeals denied the petition because herein petitioner failed to prove the death of Delgado and the consequent settlement of the latter’s estate. M. Alleging that the respondents failed to abide by the provisions of the Compromise Agreement by their failure to pay the amounts due thereon. with the consent of Aurea. Natividad sold Lot 3-B on July 31. Jr. the trial court ruled in favor of Maximino. petitioners discovered that a portion on the left side of the parcel of land was occupied by the respondents San Juan. his wife Eliza. 12932. petitioners then filed an Amended Motion for Execution.. 1988. On December 12. 1970 supposedly conveyed the six lots to Natividad. On motion for reconsideration. 1982 to Maximino. the trial court modified its decision. since 1969. Cavite. ISSUE: Whether or not the the Deed of Absolute Sale on January 29. When Romeo found out about the sale to Maximino. On June 15. but they refused to comply. ALONZO and TERESITA A. 3-b. Maximino. brought an action for recovery of possession and damages with prayer for writs of preliminary injunction and mandatory injunction with the RTC of Quezon City. Natividad and Maximino. 1990.800. and by Maximino. CV No. A demand letter was sent to the respondents requiring them to vacate the said premises. Romeo sought the declaration of nullity of the sale made on January 29. Quezon City. 1970 to Natividad and that made on July 31. Petitioners are therefore mistaken in basing the indivisibility of a contract on the number of obligors. . filed a third-party complaint against the spouses Romeo and Eliza. SAN JUAN. 1970 except as to lots 3. Among the lots covered by the above Deed of Sale is Lot 3-B which is registered under TCT No. 13 and 14 which had passed on to third persons. The trial court likewise denied the petitioners’ motion for reconsideration. No. 1970 to Natividad. without their knowledge or consent. he and his wife Eliza locked Maximino. 137549 February 11. 140946. the Deed of Sale of January 29. Natividad. otherwise the value of what is transferred is diminished. on behalf of the estate of Maximino. The case was filed in the RTC of Quezon City. had been surreptitiously appropriated by Romeo by securing for himself a new title in his name. Sr. The obligation is clearly indivisible because the performance of the contract cannot be done in parts. The decision of the Court of Appeals is AFFIRMED. Jr. Unknown to Romeo. On appeal to the Court of Appelas. Jr. With this. which was included in the Deed of Absolute Sale of January 29. 1983. KINDS OF PENALTIES: 1. Petitioners then filed a complaint against the respondents. the case was transferred to the RTC of Naic.).. Novaliches. JAIME and PERLITA SAN JUAN G. Romeo in turn filed. 1997 on their due dates. R.. CA. 316 SCRA 710 AURELIO P. the trial court found no reason to direct the issuance of the writ of execution and denied the petitioners’ Amended Motion for Execution. Jr. In the Compromise Agreement. They alleged that Lot 3 is being leased by the spouses Romeo and Eliza to third persons. the parties agreed to enter into a Compromise Agreement which the trial court approved in a judgment by compromise dated May 7.R. the decision of the trial court was modified in the sense that the titles to Lot 3 (in the name of Romeo Nazareno) and Lot 3-B ( in the name of Maximino Nazareno. whatever may be the nature of the thing which is the object thereof.00. evidenced by TCT No. Romeo was appointed administrator of his father’s estate. the said agreement shall be considered null and void. 1997 and August 31. In the course of the intestate proceedings. out of the house. Jr. Jr. the CA affirmed the decision of the trial court..reorganization of the courts in 1983. it rendered a decision declaring the nullity of the Deed of Sale dated January 29. During the pendency of the case. 451 SCRA 45 DAVID VS. Jr. Jr. 1970 for the total amount of P47. 293701 by the Register of Deeds of Quezon City. Jr. the present case for annulment of sale with damages against Natividad and Maximino. to Natividad on January 29. ISSUE: Whether or not the petitioners have a right to enforce the provision on Compromise Agreement by asking for the issuance of a writ of execution because of the failure of the respondents to pay. At around June 1996. as well as to Lots 10 and 11 were cancelled and ordered restored to the estate of Maximino. for which reason the latter was issued TCT No. on the ground that both sales were void for lack of consideration. In the present case. They alleged that Lot 3. Block 11. 152153. Sr. 1970 is an indivisible contract founded on an indivisible obligation RULING: An obligation is indivisible when it cannot be validly performed in parts. ALONZO VS. Agoncillo St. 1982 to Maximino. Romeo discovered that his parents had executed several deeds of sale conveying a number of real properties in favor of his sister. This lot had been occupied by Romeo. 2005 451 SCRA 45 FACTS: Petitioners Alonzo and Sison alleged that they are the registered owners of a parcel of land located at Lot 3. In the trial court. 1986. Sr. it was expressly stipulated that should any two of the installments of the purchase price be not paid by the respondents. thus the Compromise Agreement submitted by the parties became null and void. On March 1. Petitioners alleged that the respondents failed to pay the installments for July 31. One of the deeds involved six lots in Quezon City which were allegedly sold by Maximino. SISON VS. 1997. In CA-G. On August 4. The indivisibility refers to the prestation and not to the object thereof. Jr.. 2. Petitioners filed their motion for reconsideration to which the respondents opposed. On 16 April 1996 and 1 May 1996. petitioner Theresa Macalalag obtained loans from Grace Estrella (Estrella).000.000. with Judge Ricardo Diaz.000. 2006 KINDS OF PENALTIES: JESUS T. . Macalalag requested Estrella for a reduction of the same to which the latter agreed.R. However. OBLIGATIONS WITH A PENAL CLAUSE: PENALTIES VS. TAN VS. No.R. Finding the interest rates so burdensome.000. because the Agreement supplanted the complaint itself. the said checks were dishonored for the reason that the account against which the same was drawn was already closed. VS. petitioners are vested with the absolute right under the law and the agreement to enforce it by asking for the issuance of the writ of execution. 80718 and 10281 of private respondents. prohibition and mandamus. particularly on 30 July 1995 and 16 October 1995. 22 before the Municipal Trial Court in Cities (MTCC) of Bacolod City. they shall vacate and surrender possession of the land that they are occupying and the petitioners shall be entitled to obtain immediately from the trial court the corresponding writ of execution for the ejectment of the respondents. the Court of Appeals. RULING: FACTS: On two separate occasions.00 as stipulated by the parties the moment she breaches the terms and conditions thereof. each in the amount of P100. Once approved judicially.00.00 as liquidated damages and attorney's fees in the total sum of P40. then presiding. The decision of the Court of Appeals is affirmed. but the latter failed to do so. CRUZ. CA.The MTCC found the accused Theresa Macalalag guilty beyond reasonable doubt of the crime charged and is likewise ordered to pay as civil indemnity the total amount of P200. As security for the payment of the aforesaid loans. in favor of Estrella. This provision must be upheld. 1999 FACTS: The RTC of Manila. Branch 27. that in case of failure to pay on the part of the respondents. DAVID. petitioner. 164358 December 20. Macalalag issued two Philippine National Bank (PNB) Checks on 30 June 1996. the Compromise Agreement cannot and must not be disturbed except for vices of consent or forgery. asking for the issuance of a writ of execution was in accordance with the very stipulation in the agreement that the lower court could not change. each in the amount of P100.00.RULING: The Supreme Court held that the items 11 and 12 of the Compromise Agreement provided. Hence. Petitioner insists that in computing the interest due should be computed at 6% on the principal sum pursuant to Article 2209 and then interest on the legal interest should also be computed in accordance with the language of article 2212 of the Civil Code. Respondent Afable appealed to the Court of Appeals and then to the Supreme Court. each bearing an interest of 10% per month. PEOPLE OF THE PHILIPPINES G. In cases where no interest had been stipulated by the parties. Hence. issued a writ of attachment over real properties covered by TCT Nos. JR. MELCHOR P. 367 S 571 3. the original action for recovery of possession was set aside and the action was changed to a monetary obligation. respondent appellate court dismissed the petiton. PEOPLE. Macalalag executed Acknowledgment/Affirmation Receipts promising to pay Estrella the face value of the loans in the total amount of P200. EDGARDO P. 511 S 400 2. less whatever amount was thus far paid and validly deducted from the principal sum originally claimed. EASTERN SHIPPING VS. INTEREST 1. CA. a Compromise Agreement is immediately final and executory. NO. Estrella sent a notice of dishonor and demand to make good the said checks to Macalalag.000. THE COURT OF APPEALS HON. Petitioners elevated said orders to the Court of Appeals in a petition for certiorari.000.00 with interest at the legal rate from the time of the filing of the informations until the amount is fully paid. 234 S 78 THERESA MACALALAG vs. Under the two Acknowledgment/Affirmation Receipts. On appealed. she further obligated herself to pay for the two (2) loans the total sum of P100. Petitioners’ course of action.00 within two months from the date of its execution plus 6% interest per month for each loan. When the parties entered into a Compromise Agreement. Macalalag consistently paid the interests. the decision of the lower court was affirmed. However. no accrued conventional interest could further earn interest upon judicial demand. The instant petition is denied. In both instances. Estrella filed two criminal complaints for Violation of Batas Pambansa Blg. Entries of judgment were made and the record of the case was remanded to Branch 27 presided at that time by respondent Judge Cruz. respondents G. the petition is granted. Doctrinally. in clear terms. In his decision Judge Diaz ordered private respondent Afable to pay petitioner until fully paid. PENA AND VALENTIN AFABLE. MACALALAG VS. For failure of the respondents to abide by the judicial compromise. ISSUE: Whether or not respondent appellate court erred in affirming the respondent Judge’s order for the payment of simple interest only rather than the compounded interest. 115821 OCTOBER 13. In view of this means Compound interest. 00.R. “Even if we agree with petitioner Macalalag that the interests on her loans should not be imputed to the face value of the checks she issued. INTEREST TAN VS.16 as the drawer could very well have himself exonerated by the mere expediency of paying a minimal fraction of the face value of the check. defendant Allied Brokerage Corporation made deliveries of the shipment to the consignees' warehouse. respondent CCP filed with the RTC of Manila a complaint for a collection of a sum of money. respondent wrote petitioner demanding the full payment. evidenced by 2 promissory notes with maturity dates on May 14. 22. from receipt of the letter. Since the said stipulation has the force of law between the parties and does not appear to be inequitable or unjust. reduced the attorney’s fees to 5% of the principal amount to be collected from petitioner and deleted the exemplary damages. Petitioner defaulted but later he had the loans restructured by respondent CCP. Japan for delivery vessel `SS EASTERN COMET' owned by defendant Eastern Shipping Lines under Bill of Lading No. it must be respected. said to be in bad order.32 payable in five (5) installments. it was discharged unto the custody of defendant Metro Port Services. failed to pay any of the supposed installments and again offered another mode of paying restructured loan which respondent CCP refused to consent. 000. COURT OF APPEALS 367 SCRA 571 GR NO. On appeal. The penalty may be enforced only when it is demandable in accordance with the provisions. she has made a total payment of P156.466. damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation. OBLIGATIONS WITH A PENAL CLAUSE: PENALTIES VS. 1984. petitioner Macalalag failed to pay the full face value of the second check issued. Upon arrival of the shipment in Manila on December 12. 088. In the case at bar. one drum opened and without. 22. petitioner Antonio Tan obtained two loans in the total amount of four million pesos from respondent Cultural Center of the Philippines (CCP). ISSUE: Whether petitioner`s payments over and above the value of the said checks would free her from criminal liability. when Estrella presented the checks for payment. Inc. respectively. that of safeguarding the interest of the banking system and the legitimate public checking account user. On August 29. while the rest of the contents was adulterated/fake Plaintiff contended that due to the losses/damage . On January 7. On May 30. 1979 and July 6. the penalty shall substitute the indemnity for damages and the payment of interests in case of non-compliance. the Petition is denied. 1984 amounted to P6. 1982 defendant Allied Brokerage Corporation received the shipment from defendant Metro Port Service.382. No. Applying this amount to the first check (No. the Court of Appeals. 1978. Eventually. 81/01177 for P36. an amount insufficient to cover her obligation with respect to the second check. COURT OF APPEALS G. the same were dishonored on the ground that they were drawn against a closed account. of the latter’s restructured loan which as of April 30. petitioner Macalalag is still liable for Violation of Batas Pambansa Blg. C-889835). 116285 FACTS: On May 14. Article 1226 of the New Civil Code provides that in obligations with a penal clause. two fiber drums of riboflavin were shipped from Yokohama.00 as exemplary damages. Only a full payment of the face value of the second check at the time of its presentment or during the five-day grace period15 could have exonerated her from criminal liability. Nevertheless. Hence. Petitioner Macalalag herself declares that before the institution of the two cases against her. 1981. petitioner was ordered to pay said amount. On January 8 and 14. A contrary interpretation would defeat the purpose of Batas Pambansa Blg.000. the promissory note expressly provides for the imposition of both interest and penalties in case of default on the part of the petitioner in the payment of the subject restructured loan. which damage was unknown to plaintiff.411. ISSUE: Whether or not interests and penalties may be both awarded. INC vs. The latter excepted to one drum which contained spillages. 97412 Jul 12. what will be left is P56. 22. Inc. RULING: The Court argued that.735.. 1979. OBLIGATIONS WITH A PENAL CLAUSE: PENALTIES VS. INTEREST EASTERN SHIPPING INES. petitioner seeks for the deletion of the attorney’s fees and the reduction of the penalties.00.38. HON. Petitioner however. 1982. As stated above. YMA-8 (The shipment was insured under plaintiff's Marine Insurance Policy No.000. RULING: YES. 1981. Still unsatisfied with the decision. Despite notice of dishonor. The latter excepted to one drum. within ten (10) days.421. 1984. with 25% thereof as attorney’s fees and P500. 1994 FACTS: On December 4. if there is no stipulation to the contrary. Petitioner accordingly executed a promissory note on August 31. 1979 in the amount of P3.affirmed the RTC and the MTCC decisions with modification to the effect that accused was convicted only of one (1) count of Violation of Batas Pambansa Blg. Sheriff Regalado was adamant in his posture even if real properties have been offered which were sufficient to satisfy the judgment debt. and Hongkong and Shanghai Bank Corporation (HSBC). For garnishing accounts maintained by Equitable PCI Bank. No. (EPCIB) at Citibank. Aimee Yu and Ben Apas. Paulino L. as well as the accrual thereof. EPCIB cannot immediately pay by way of Manager’s Check so it exercised its option to choose and offered its real properties. the rate of legal interest. When the obligation is breached. regardless of its source.A. the interest due shall itself earn legal interest from the time it is judicially demanded. In the case at bar. Respondents Antonio A. it exercised its option because it cannot immediately pay the full amount stated in the writ of execution and all lawful fees in cash. quasi-contracts. P-05-1973. No interest. Sheriff Regalado violated EPCIB’s right to choose which property may be levied upon to be sold at auction for the satisfaction of the judgment debt. HELD: When an obligation. ESCALATION CLAUSE VS. delicts or quasi-delicts is breached. however.. above. DEE and ARCELITA M.032. the interest due should be that which may have been stipulated in writing. the consignee suffered losses totaling P19. this interim period being deemed to be by then an equivalent to a forbearance of credit. due to the fault and negligence of defendants. where the demand is established with reasonable certainty. is breached. allegedly in violation of Section 9(b) of Rule 39 of the Rules of Court.e. N. the interest shall begin to run only from the date of the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). N. Claims were presented against defendants who failed and refused to pay the same "As a consequence of the losses sustained. Accordingly. With the exercise of the option. Yusi against Sheriffs Antonio A. HSBC and PNB.’ Ken Appliance Division. doing business under the name and style ‘Ken Marketing. contracts. shall be 12% per annum from such finality until its satisfaction. is imposed. whether the case falls under paragraph 1 or paragraph 2. With regard particularly to an award of interest in the concept of actual and compensatory damages. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 23 of the Civil Code. ISSUE: a. law. and Benjamin Go. i. 435 S 565 3. the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. a complaint for grave abuse of authority was filed by Atty. Regalado. vs. entitled. Bellones and Generoso B. ESCALATION CLAUSE VS. plaintiff was compelled to pay the consignee P19. Furthermore. In the absence of stipulation. Cebu City. Defendants” for Annulment and/or Reformation of Documents and Contracts. CEB-26983 before the Regional Trial Court (RTC). so that it became subrogated to all the rights of action of said consignee against defendants. Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made. NG SHEUNG NGOR. Bellones and Generoso B. 296 S 247 PCI vs Ng Shueng Ngor A.95 under the aforestated marine insurance policy. “Ng Sheung Ngor. ACCELERATION CLAUSE NEW SAMPAGUITA BUILDERS CONSTRUCTION. PCI VS. the contravenor can be held liable for damages.e. Thus. the rate of interest.)Whether the payment of legal interest on an award for loss or damage is to be computed from the time the complaint is filed or form the date the decision appealed from is rendered... 541 S 223 2.M.sustained by said drum.e. not constituting a loan or forbearance of money. This is not true in the instant case. i. 3.. an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. Inc.A. INC. ISSUE: Did respondents violate the Rules of Court? RULING: By serving notices of garnishment on Citibank. When the judgment of the court awarding a sum of money becomes final and executory. 2. (NSBCI) and Spouses EDUARDO R.032. the rate of interest shall be 12% per annum to be computed from default. Sheriff Regalado should have ceased serving notices of garnishment and discontinued their implementation. ACCELERATION CLAUSE 1. Inc. Regalado are the sheriffs in Branches 9 and 16.. Branch 16. and it consists in the payment of a sum of money. 1169. Equitable PCI Bank. There was an offer of other real property by petitioner.95. PNB. respectively. PHILIPPINE NATIONAL BANK 2004 Jul 30 . as follows: 1. When a obligation. and b)Whether the applicable rate of interest is twelve percent or six percent. March 18. i. a loan or forbearance of money. 2005 FACTS: Complainant EPCIB is the defendant in Civil Case No. POLOTAN VS. it is clear that when EPCIB offered its real properties. shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. of the RTC of Cebu City. NSBC VS. CA. Plaintiffs. DEE VS. certified bank check or any other mode of payment acceptable to the judgment obligee. 1991. 1989. Quezon City. x x x check nos. In addition. under such terms agreed by the Bank and the NSBCI. ISSUE: Whether or not the escalation clause is valid and whether or not it is violative of the principle of mutuality of contracts. “where the parties do not bargain on equal footing. The loan was further secured by the joint and several signatures of Petitioners Eduardo Dee and Arcelita Marquez Dee. Although escalation clauses are valid in maintaining fiscal stability and retaining the value of money on long-term contracts. and authorizing petitioner-spouses to secure the loan and to sign any and all documents which may be required by Respondent PNB. 77 was approved by granting the request of Respondent PNB thru its Board NSBCI for an P8 Million loan broken down into a revolving credit line of P7. asking it to settle its past due loan account. Respondent PNB filed with the Provincial Sheriff of Pangasinan at Lingayen a Petition for Sale.000. Resolution No.67 in favor of Respondent PNB Upon presentment. Petitioners nevertheless failed to pay their loan obligations within the time frame given them and as a result. No interest shall be due. unless expressly stipulated in writing.5 percent in the second and again in the third. It would be the zenith of farcicality to specify and agree upon rates that could be subsequently upgraded at whim by only one party to the agreement.G. The loan of Petitioner NSBCI was secured by a first mortgage on the following: a) three (3) parcels of residential land located at Mangaldan. 1989 to support the ‘unadvised line’ of P300. Avenue. 03500087 and 03500088 dated September 29 and October 29. The “unilateral determination and imposition” of increased rates is “violative of the principle of mutuality of contracts ordained in Article 1308 of the Civil Code. Carcamo wrote Petitioner Eduardo Dee informing him that unless the dishonored checks were made good.7 Million x x x and the Credit Agreement dated September 5. Besides. On November 12.’” ESCALATION CLAUSE VS. ACCELERATION CLAUSE .019. Petitioners did not heed respondent’s warning and as a result. the PNB Dagupan Branch sent demand letters to Petitioner NSBCI at its office address at 1611 ERDC Building. 1991. The clause cited earlier made the fulfillment of the contracts “dependent exclusively upon the uncontrolled will” of respondent and was therefore void. Board Resolution No.231. who signed as accommodationmortgagors since all the collaterals were owned by them and registered in their names. PNB’s Mr. Dee as collateral. The Court holds that petitioners’ accessory duty to pay interest did not give respondent unrestrained freedom to charge any rate other than that which was agreed upon. Pangasinan. 1989 relating to the ‘revolving credit line’ of P7. the Promissory Notes specified the interest rate to be charged: 19.5 percent in the first. 1991 were dishonored by the drawee bank and returned due to a ‘stop payment’ order from petitioners. b) six (6) parcels of residential land situated at San Fabian. E. and 21. and c) a residential lot and improvements thereon located at Mangaldan. Moreover Petitioner NSBCI executed three promissory notes.R. the weaker party’s the debtor’s participation being reduced to the alternative ‘to take it or leave it. because such impositions are not based on the parties’ essential equality. a uniform clause therein permitted respondent to increase the rate “within the limits allowed by law at any time depending on whatever policy it may adopt in the future x x x. The sheriff foreclosed the real estate mortgage and sold at public auction the mortgaged properties of petitioner-spouses. and that petitioner-spouses shall act as sureties or co-obligors who shall be jointly and severally liable with Petitioner NSBCI for the payment of any [and all] obligations.334. with Respondent PNB being declared the highest bidder for the amount of P10. However.0M. Series of 1989 was approved by Petitioner NSBCI authorizing the company to x x x apply for or secure a commercial loan with the PNB in an aggregate amount of P8. 148753 435 SCRA 565 FACTS: On February 11. Rodriguez Sr.000. No.33.00.7M and an unadvised line of P0. Petitioner Eduardo Dee later tendered four (4) post-dated Interbank checks aggregating P1. however. On August 15.3M for additional operating and working capital to mobilize its various construction projects.” without even giving prior notice to petitioners.111. Petitioner Eduardo Dee wrote the PNB Branch Manager reiterating his proposals for the settlement of Petitioner NSBCI’s past due loan account amounting to P7. petitioner corporation also signed the Credit Agreement dated August 31. RULING: In each drawdown. said PNB branch ‘shall recall its recommendation to the Head Office for the restructuring of the loan account and refer the matter to its legal counsel for legal action.00. using or mortgaging the real estate properties registered in the name of its President and Chairman of the Board Petitioner Eduardo R. Petitioners refused to pay the above deficiency claim which compelled Respondent PNB to institute the instant Complaint for the collection of its deficiency claim. 05. 1989.” Onesided impositions do not have the force of law between the parties.306. Pangasinan. On September 6. the pro forma promissory notes have the character of a contract d’adhésion. giving respondent an unbridled right to adjust the interest independently and upwardly would completely take away from petitioners the “right to assent to an important modification in their agreement” and would also negate the element of mutuality in their contracts. these types of contracts have been declared as binding as ordinary contracts. 23. petitioner incurred credit charges plus appropriate interest and service charges in the aggregate amount of P33. 315 SCRA 13 9. IMPERIAL VS. TOMOL. 369 SCRA 99 8. a credit card company. It should be definitively ruled in this regard that the Usury Law had been rendered legally ineffective by Resolution No. FEB. RAMOS. 11. However. As of May 8. 1987. 384 S 105 7. Upon acceptance of his application. 544 S 608 2. The effect of these circulars is to allow the parties to agree on any interest that may be charged on a loan. 1998 FACTS: Private respondent Security Diners International Corporation (Diners Club). CA. 427 SCRA 517 3. The application form contained terms and conditions governing the use and availment of the Diners Club card. OCT. among which is for the cardholder to pay all charges made through the use of said card within the period indicated in the statement of account and any remaining unpaid balance to earn 3% interest per annum plus prime rate of Security Bank & Trust Company. LIGUTAN VS. the reason being that the party who adheres to the contract is free to reject it entirely. the second paragraph of the questioned proviso which provides that “the Cardholder hereby authorizes Security Diners to correspondingly increase the rate of such interest in the event of changes in prevailing market rates x x x” is an escalation clause. and later by Central Bank Circular No. In this case. REDUCTION OF CONVENTIONAL PENALTIES 1. Polotan. LO VS. FIRST METRO INVESTMENT VS. CA. DOMEL TRADING VS. JAUCIAN. 423 SCRA 596 4. 12. September 25. Escalation clauses are not basically wrong or legally objectionable as long as they are not solely potestative but based on reasonable and valid grounds. Sr. 79094 which. CV No. Encina avers that there ought to be longer gestation periods on its part being engaged in a business of agricultural character. in the application form submitted by petitioner. 2002 6. the Encina spouses never challenged the validity of their loan and the accessory contracts with PNB on the ground that they violated the principle of mutuality of contracts in view of the provision therein that the interest rate shall be set by management. This was the essence of the second cause of action alleged in the complaint. declared null and void the interest rate imposed by PNB on the loan obtained from it by respondents and the consequent extrajudicial foreclosure of the properties offered as security for the loan.84 which had become due and demandable. Nevertheless. 411 SCRA 523. ESTE DEL SOL. PASCUAL VS. CA. Petitioner Rodelo G.POLOTAN VS CA GR No. rendered in CA-G. among others. MEDEL VS. applied for membership and credit accmodations with Diners Club in October 1985. 139 SCRA 260. petitioner. REFORMINA VS. while the other party merely affixes his signature or his “adhesion” thereto. SEPT. it cannot be said to be dependent solely on the will of private respondent as it is also dependent on the prevailing market rates. but does not provide for a downward adjustment of the same in violation of Central Bank Circular 905. Respondents Encina spouses acquired several loans from PNB from which it failed to pay within due time.R. Notably. SAHIJWANI. ISSUE: Was there a violation of the Usury Law? RULING: As borne by the records. 905 which took effect on 1 January 1983 and removed the ceiling on interest rates for secured and unsecured loans regardless of maturity. petitioner was issued Diners Club card No. PABUGAIS VS. Admittedly. Their only contention concerning the interest rate was that the charges imposed by the bank violated the Usury Law. in effect. private respondent filed a Complaint for Collection of Sum of Money against petitioner before the lower court.819. ESCINA. Obviously. ENCINA 544 S 608 FACTS: The Philippine National Bank (PNB) assails the Decision of the Court of Appeals dated 15 May 2005. The virtual repeal of the Usury Law is within the . PNB VS. Demands for payment made against petitioner proved futile. extends credit accomodations to its cardholders for the purchase of goods and other services from member establishments. 2003 5. One party prepares the stipulation in the contract. 119379. 3651-212766-3005. 224 dated 3 December 1982 of the Monetary Board of the Central Bank. Hence. giving no room for negotiation and depriving the latter of the opportunity to bargain on equal footing. claims that the subject contract is one-sided in that the contract allows for the escalation of interests. Said goods and services are reimbursed later on by cardholders upon proper billing. CA. Ofricano Canlas obligated himself to pay jointly and severally with petitioner the latter’s obligation to private respondent. but cannot modify. 1985 PNB VS. ISSUE: Is petitioner liable for payment of credit charges plus interest and service charges? RULING: A contract of adhesion is one in which one of the contracting parties imposes a ready-made form of contract which the other party may accept or reject. 299 S 481 10. the fluctuation in the market rates is beyond the control of private respondent. the corresponding guarantee checks issued by defendant. Consequently. REDUCTION OF CONVENTIONAL PENALTIES IMPERIAL VS. it was improper for the RTC to rule on the constitutionality of Section 1. Jaucian against Restituta Imperial. It is the litigant. “Rather. it appears that petitioner’s failure to comply fully with her obligation was not motivated by ill will or malice. SAHIJWANI G.900. When the said loans became overdue and unpaid. Even if there has been no REDUCTION OF CONVENTIONAL PENALTIES FACTS: Teddy G.887. Also. the fundamental tenet is that the law is deemed part of the contract. the penalty may also be reduced by the courts if it is iniquitous or unconscionable. Said promissory notes indicate the interest of 16% per month. dishonored. filed by Alex A. The twenty-nine partial payments she made were a manifestation of her good faith. On August 15. Upon this premise. we hold that the RTC’s reduction of attorney’s fees -.00 to be paid within 60 days from the execution of the contract. penalties and attorney’s fees are contrary to morals. In the present case. If reasonably exercised. JAUCIAN 427 SCRA 517 2004 Apr 14 FACTS: The present controversy arose from a case for collection of money. Article 1229 of the Civil Code states thus: “The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. agreed to sell to Dave P. The face value of each promissory notes is bigger [than] the amount released to defendant because said face value already included the interest from date of note to date of maturity. Teddy filed a complaint for consignation. 1989.” So long as the stipulation does not contravene the law.000. on the other hand. Series of 1982. Teddy wrote to Dave saying that he is consigning the mount tendered with the RTC of Makati City. especially when the defendant’s checks were dishonored. 1994. public order or public policy. it is binding upon the obligor. who is the judgment creditor entitled to enforce the judgment by execution. Thus. the trial court was justified in reducing the stipulated penalty charge to the more equitable rate of 14 percent per annum. Article 1229 of the Civil Code specifically empowers the judge to reduce the civil penalty equitably. Pabugais. 156846. that defendant obtained from plaintiff six (6) separate loans for which the former executed in favor of the latter six (6) separate promissory notes and issued several checks as guarantee for payment. Central Bank Circular No. when the principal obligation has been partly or irregularly complied with. alleging that he twice rendered to Dave. admitted that his office received petitioner’s letter.from 25 percent to 10 percent of the total amount due and payable -. morals. Teddy failed to deliver the required documents. performance. Strictly speaking. Nevertheless.is reasonable. PABUGAIS v. plaintiff made repeated oral and written demands for payment. due date. Under the circumstances.range of judicial notice which courts are bound to take into account.500.00 as option/reservation fee and the balance of P14. courts are granted authority to reduce them equitably. simultaneous with delivery of the owner’s duplicate TCT in Dave’s name and other required documents. in addition to regular interests and attorney’s fees. such authority shall not be disturbed by appellate courts. However. The trial court’s clear and detailed computation of petitioner’s outstanding obligation to respondent was affirmed by the CA for being convincing and satisfactory. penalties and attorney’s fees. Dave’s counsel.000. After all.R. but was refused. TEDDY G. this covenant on attorney’s fees is different from that mentioned in and regulated by the Rules of Court. 2004 Whether or not the reduction of attorney’s fees by the RTC is reasonable. The complaint alleges. there was partial performance by petitioner when she remitted P116. DAVE P. No. iniquitous and unconscionable was the parties’ stipulated penalty charge of 5 percent per month or 60 percent per annum. The loans were covered by six (6) separate promissory notes executed by defendant. and returned to Dave the option/reservation fee by way of check.00 in the form of manager’s check. Sahijwani a lot located at North Forbes Park. courts must consider the circumstances of each case. What may be iniquitous and unconscionable in one may be totally just and equitable in another. through his counsel. Makati. 905. Dave paid Teddy the amount of P600.The Promissory Note carried a stipulation for attorney’s fees of 25 percent of the principal amount and accrued interests. which was. February 23. not the counsel. date of issue. however. Again. the attorney’s fees here are in the nature of liquidated damages and the stipulation therefor is aptly called a penal clause. the trial court was correct in ruling that the second cause of action was without basis.540 as partial payment of her principal obligation of P320. RULING: Iniquitous and unconscionable stipulations on interest rates. the CA held that without judicial inquiry. the amount of P672.” In exercising this power to determine what is iniquitous and unconscionable. On August11. but . inter alia. on October 26. 1994. ISSUES: Whether or not the penalties charged per month is in the guise of hidden interest. public order or public policy. Petitioner’s tender of payment is valid. contesting petitioner’s acquisition of the parcels of land in question in an action for annulment of sale. with an office building constructed thereon. or if the principal obligation has been partly or irregularly complied with. he filed an Ex Parte Motion to Withdraw Consigned Money.147 square meters. Private respondent National Onion Growers Cooperative Marketing Association. Teddy appealed the decision to the Court of Appeals. INC. redemption and damages. at the time. the CA declared the consignation as valid. On September 3. . the supervening realities.. including. Moreover. the following: the type. and (2) Whether or not petitioner can withdraw the amount consigned as a matter of right? RULING: The petition for review is denied. courts may equitably reduce a stipulated penalty in the contract if it is iniquitous or unconscionable. Petition denied. the stipulated penalty was reduced by the appellate court for being unconscionable and iniquitous. the same having been stipulated by the parties. THE HON. CA decision affirmed. The amount consigned with the trial court can no longer be withdrawn by petitioner because respondent’s prayer in his answer that the amount consigned be awarded to him is equivalent to an acceptance of the consignation. for the imposition of the contractually stipulated penalty of P5. Even if there has been no performance. the CA has yet to rule on its validity and Dave had not yet accepted the same. 1995 for P20. RULING: No. was the occupant of the disputed parcels of land under a subsisting contract of lease with Land Bank. which was denied by the CA. In this case. Inc. Petitioner acquired the subject parcels of land in an auction sale on November 9.000 per day of delay in surrendering the possession of the property to him. Thereafter. 1996. Upon the expiration of the lease contract. 1995. REDUCTION OF CONVENTIONAL PENALTIES ANTONIO LO.000 to P 1000 per day. Withdrawal of the money consigned would enrich petitioner and unjustly prejudice respondent. and thus held that Teddy cannot withdraw his consignation. the nature of the obligation. Teddy filed the present petition upon the contention that he can withdraw the amount deposited with the trial court as a matter of right since at the time he moved for the withdrawal. VS.. COURT OF APPEALS AND NATIONAL ONIONS GROWERS COOPERATIVE MARKETING ASSOCIATION. respondents FACTS: At the core of the present controversy are two parcels of land measuring a total of 2.claimed that no check was appended thereto. but not limited to. The lease was valid until December 31. On a motion for reconsideration. which has the effect of extinguishing petitioner’s obligation. ISSUES: (1) Whether or not there was a valid consignation. the penalty may also be reduced by the courts if it is iniquitous or unconscionable. good customs. Generally. the trial court decided the case in favor of petitioner. which has the effect of extinguishing petitioner’s obligation. the mode of breach and its consequences. with the modification that the penalty imposed upon private respondent for the delay in turning over the leased property to petitioner was reduced from P 5. On appeal to the RTC. The trial court declared the consignation invalid for failure to prove that there was a prior tender of payment and was refused by Dave. inter alia. Petitioner filed an action for ejectment before the MTC. Private respondent refused on the ground that it was. The CA rendered its assailed decision affirming the decision of the trial court. petitioner. ISSUE: Whether or not the Court of Appeals erred in reducing the penalty awarded by the trial court. This power of the courts is explicitly sanctioned by Article 1229 of the Civil Code which provides: Article 1229. He asked. He averred that there was no valid tender of payment because no check was tendered and the computation of the amount to be tendered was insufficient. morals.000 from the Land Bank of the Philippines (Land Bank). extent and purpose of the penalty. Nevertheless. petitioner demanded that private respondent vacate the leased premises and surrender its possession to him.170. the MTC decision was affirmed in toto. the standing and relationship of the parties. The amount consigned however can no longer be withdrawn because respondent’s prayer in his answer that the amount consigned be awarded to him is equivalent to an acceptance of the consignation. petitioner failed to manifest his intention to comply with the “Agreement And Undertaking” by delivering the necessary documents and the lot subject of the sale to respondent in exchange for the amount deposited. an agricultural cooperative. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Unfazed. courts are not at liberty to ignore the freedom of the parties to agree on such terms and conditions as they see fit as long as they are not contrary to law. The question of whether a penalty is reasonable or iniquitous is addressed to the sound discretion of the court and depends on several factors. but not necessarily confide to. Court of Appeals. In Rizal Commercial Banking Corp. given the circumstances.189% per annum upon maturity and to pay a penalty of 5% every month on the outstanding principal and interest in case of default. have it that the penalty sought to be deleted by petitioners was even insufficient to fully cover and compensate for the cost of money brought about by the radical devaluation and decrease in the purchasing power of the peso. v. 1981. the CA resolved the two (2) motions granting the prayer of the bank that the payment of interest and penalty be commenced on the date when the obligation became due and on the other hand held that a penalty of 3% per month or 36% per annum would suffice. Petitioners executed a promissory note binding themselves. Ramos prayed that the title or ownership over the subject parcels of land and improvements thereon be consolidated in his favor. The petitioner. Bulacan. the sum of P114. contended. Accordingly. 305626. 1981. the nature of the obligation. the penalty is not unreasonable. The bank asked that the payment of interest and penalty be commenced not from the date of filing of complaint but from the time of default as so stipulated in the contract of the parties. It also found that the Pascuals had made payments in the total sum of P344. the Spouses Pascual executed in his favor a Deed of Absolute Sale with Right to Repurchase over two parcels of land and the improvements thereon located in Bambang. in its Decision of 15 March 1995 the trial court ruled in favor of . before the Court. when the penalty clause itself suffers from fatal infirmity. The Pascuals did not exercise their right to repurchase the property within the stipulated one-year period. On September 5. not to mention the repeated acts of breach by petitioners of their contractual obligation. This document was annotated at the back of the title. granted an extension but only until December 29.189% interest and the penalty of 3% per month or 36% per annum imposed by private respondent bank on petitioner’s loan obligation are still manifestly exorbitant. both parties moved for reconsideration. It ordered the petitioners to pay. They further alleged that there was no agreement limiting the period within which to exercise the right to repurchase and that they had even overpaid Ramos. and when exceptional circumstances so exist as to warrant it. RULING: NO. On October 28. however. by and large. The stipulated penalty might even be deleted such as when there has been substantial performance in good faith by the obligor.000. extent and purpose of the penalty. In the case at bar. the payment of which was secured by a mortgage of the property covered by TCT No. which did not take an appeal. COURT OF APPEALS 376 SCRA 561 FEBRUARY 12. Petitioners prayed for the reduction of the 5% penalty for being unconscionable. 1982 until fully paid. 2002 FACTS: Petitioners Tolomeo Ligutan and Leonidas dela Llana obtained on May 11. Its resolution would depend on such factors as.000. 2% service charge and 5% per month penalty charge. The CA affirmed it but deleted the 2% service charge pursuant to Central Bank Circular No. and that with interest at 7% per annum.000. petitioners agreed to pay 10% of the total amount due by way of attorney’s fees if the matter were indorsed to a lawyer for collection or if a suit were instituted to enforce payment. The trial court found that the transaction between the parties was actually a loan in the amount of P150. however. REDUCTION OF CONVENTIONAL PENALTIES PASCUAL VS. iniquitous and unconscionable. the application of which. the trial court ruled in favor of the bank.REDUCTION OF CONVENTIONAL PENALTIES LIGUTAN VS. this Court sees no cogent ground to change the ruling of the appellate court. jointly and severally. the Pascuals admitted having signed the Deed of Absolute Sale with Right to Repurchase for a consideration of P150.500. 1988. they had overpaid the loan by P141.000. the mode of breach and its consequences. 783. the standing and relationship of the parties. jointly and severally. and the like. for example. In addition. When petitioners defaulted on their obligation. hence. Respondent bank.416. Not fully satisfied with the decision. is addressed to the sound discretion of the court. 1998.00 with interest thereon at the rate of 15. among others that the 15. the bank filed on November 3. ISSUE: Whether or not the penalty is reasonable and not iniquitous. 1981 a loan in the amount of P120. Bulacan. commencing on May 20. The Court held that the question of whether a penalty is reasonable or iniquitous can be partly subjective and partly objective. the type. the bank. In their Answer. for and in consideration of P150. 1982 with the RTC a complaint for recovery of the due amount. would.189% per annum. to pay the sum borrowed with an interest of 15. the supervening realities. The stipulated penalty might likewise be reduced when a partial or irregular payment is made by the payment. 000 but averred that what the parties had actually agreed upon and entered into was a real estate mortgage.00 from respondent Security Bank and Trust Company. The obligation matured on September 8. the Court has tempered the penalty charges after taking into account the debtor’s pitiful situation and its offer to settle the entire obligation with the creditor bank. RAMOS 384 S 105 FACTS: Ramos alleged that on 3 June 1987. 000 common shares of respondent Este del Sol’s capital stock for a onetime underwriting fee of P200. respondent Este del Sol executed several documents as security for payment. the Pascuals never lifted a finger to oppose the claim. respondent 369 SCRA 99 FACTS: Petitioner FMIC granted respondent Este del Sol a loan of Seven Million Three Hundred Eighty-Five Thousand Five Hundred Pesos (P7. if any. good customs. or public policy. conditions which they deem convenient provided they are not contrary to law. . among others. that is. et al. tender age or other handicap. the only argument raised by the Pascuals was that Ramos’s petition did not contain a prayer for general relief and. fees. It was only in their motion for the reconsideration of the decision of the Court of Appeals that the Pascuals made an issue of the interest rate and prayed for its reduction to 12% per annum. abandoned. waived. in fact. The Court of Appeals affirmed in toto the trial court’s Orders of 5 June 1995 and 7 September 1995. the proceeds of the loan were to be released on staggered basis. usurious and inequitable. Daez. ESTE DEL SOL MOUNTAIN RESERVE. Under the terms of the Loan Agreement. While overpayment was alleged in the Answer.00. public order. Besides. ignorance. which would entitle them to the vigilant protection of the courts as mandated by Article 24 of the Civil Code. In their pre-trial brief. and have in fact paid interest at. which in no case shall be less than Twenty Thousand Pesos (P20. an acceleration clause was. Admittedly. as provided for by the Loan Agreement. but not one of them touched on the validity of the stipulated interest rate. was barred by the statute of limitations. Jr. the Pascuals argued that the interest rate.00) if the services of a lawyer were hired. It must be stressed that they never raised as a defense or as basis for their counterclaim the nullity of the stipulated interest. is exorbitant. The Pascuals interposed the following defenses: (a) the trial court had no jurisdiction over the subject or nature of the petition.the defendants. morals. INC. hence.000. there is no allegation showing that petitioners were victims of fraud when they entered into the agreement with Ramos. (b) Ramos had no legal capacity to sue. Interest on the loan was pegged at sixteen (16%) percent per annum based on the diminishing balance. that interest on the loan as stipulated by the parties in that same document should be paid. In case of default. expenses or charges thereon until the unpaid balance is fully paid. (c) the cause of action.385. It is a basic principle in civil law that parties are bound by the stipulations in the contracts voluntarily entered into by them. Parties are free to stipulate terms and REDUCTION OF CONVENTIONAL PENALTIES FIRST METRO INVESTMENT petitioner. VS. unconscionable. among them. a sports/resort complex project. when Ramos moved for a reconsideration of the 15 March 1995 Decision of the trial court pointing out that the interest rate to be used should be 7% per month. in their Appellants’ Brief.000 representing the principal and unpaid interest. The interest rate of 7% per month was voluntarily agreed upon by Ramos and the Pascuals. The Pascuals should accept not only the favorable aspect of the court’s declaration that the document is actually an equitable mortgage but also the necessary consequence of such declaration. the Pascuals made a long list of issues. the Pascuals were at a disadvantage on account of their moral dependence. Their own evidence clearly shows that they have agreed on. provided and the amount due was made subject to a twenty (20%) percent one-time penalty on the amount due and such amount shall bear interest at the highest rate permitted by law from the date of default until full payment thereof plus liquidated damages at the rate of two (2%) percent per month compounded quarterly on the unpaid balance and accrued interests together with all the penalties.. (e) the claim or demand set forth in Ramos’s pleading had been paid. Neither is there a showing that in their contractual relations with Ramos.00) to finance the construction and development of the Este del Sol Mountain Reserve. RULING: The Pascuals are actually raising as issue the validity of the stipulated interest rate. Respondent Este del Sol also executed. the rate of 7% per month. mental weakness. and (f) Ramos has not complied with the required confrontation and conciliation before the barangay.000.500. the Pascuals should not be allowed to turn their back on the stipulation in that agreement to pay interest at the rate of 7% per month. in their Motion for Reconsideration of the Order of 5 June 1995. the trial court had no basis for ordering them to pay Ramos P511. There is nothing from the records and. (d) the petition stated no cause of action. whether it be 5% or 7%. plus attorney’s fees equivalent to twenty-five (25%) percent of the sum sought to be recovered. unreasonable. an Underwriting Agreement whereby petitioner FMIC shall underwrite on a best-efforts basis the public offering of 120. no ultimate facts which constituted the basis of the overpayment was alleged. or otherwise extinguished. (a) a Real Estate Mortgage and (b) individual Continuing Suretyship agreements by co-respondents Valentin S. After the trial court sustained petitioners’ claim that their agreement with RAMOS was actually a loan with real estate mortgage. ISSUE: Whether or not the contract entered into is a contract of loan. However. The loan was payable in thirty-six (36) equal and consecutive monthly amortizations to commence at the beginning of the thirteenth month from the date of the first release in accordance with the Schedule of Amortization. In accordance with the terms of the Loan Agreement. it is binding upon the parties.863.98 per the petitioner’s Statement of Account dated June 23. intended to circumvent the laws against usury shall be void. the entire obligation does not become void because of an agreement for usurious interest.000. or public order. a Consultancy Agreement was also executed on January 31. the penalty may also be reduced by the courts if it is iniquitous or unconscionable.The Underwriting Agreement also provided that for supervising the public offering of the shares. courts are empowered to reduce the amount of attorney’s fees if the same is “iniquitous or unconscionable. 1980. morals. retroactive application of a Central Bank Circular cannot. CA reversed the challenged decision of the trial court. Second. ISSUE: Whether or not the appellate court erred in reversing the decision of the trial court as regards to the payment of penalties. the unpaid principal debt still stands and remains valid but the stipulation as to the usurious interest is void. is manifestly exorbitant and unconscionable. it appeared to have incurred a total obligation of P12. 2227. the amount of Three Million One Hundred Eighty-Eight Thousand Six Hundred Thirty Pesos and Seventy-Five Centavos (P3. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. 1229.75) for the stipulated attorney’s fees equivalent to twenty-five (25%) percent of the alleged amount due.” In usurious loans. RULING: No. petitioner FMIC caused the extrajudicial foreclosure of the real estate mortgage on June 23. respondent Este del Sol shall pay petitioner FMIC an annual supervision fee of 200. and 25% percent thereof as and for attorney’s fees and costs. The trial court rendered its decision in favor of petitioner FMIC. Simultaneous with the execution of and in accordance with the terms of the Underwriting Agreement. such as in the instant case. shall be equitably reduced if they are iniquitous or unconscionable. be presumed.297. several facts and circumstances taken altogether show that the Underwriting and Consultancy Agreements were simply cloaks or devices to cover an illegal scheme employed by petitioner FMIC to conceal and collect excessively usurious interest. private respondent NDC-NACIDA Raw Materials Corporation (NNRMC) ordered from petitioner Domel Trading Corporation (DOMEL) 22.00 per annum for a period of four consecutive years. the Court agrees with the factual findings and conclusion of the appellate court. 1999 G. petitioner instituted the instant collection suit to collect the alleged deficiency balance of P6.00 per bundle to be delivered within 30 working days from the date . iniquitous and unconscionable. we agree with the appellate court that a reduction of the attorney’s fees to ten (10%) percent is appropriate and reasonable under the facts and circumstances of this case. No.500. Nonetheless.000. Accordingly. 1978 were exacted by petitioner FMIC as essential conditions for the grant of the loan. 1978 whereby respondent Este del Sol engaged the services of petitioner FMIC for a fee as consultant to render general consultancy services. under any cloak or device whatever. In the case at bar. HONORABLE COURT OF APPEALS and NDC-NACIDA RAW MATERIALS. Since respondent Este del Sol failed to meet the schedule of repayment in accordance with a revised Schedule of Amortization. consequently.630.630.679.73 plus interest thereon at 21% percent per annum from June 24.”[46] Articles 1229 and 2227 of the New Civil Code provide that: Art. it engaged counsel only when it was seeking the recovery of the alleged deficiency.000 bundles of buri midribs at P16. Article 1957 of the New Civil Code clearly provides that: “Art. whether intended as an indemnity or a penalty. the 20% penalty on the amount due and 10% of the proceeds of the foreclosure sale as attorney’s fees would suffice to compensate the appellee. 1980. Central Bank Circular No. Attorney’s fees as provided in penal clauses are in the nature of liquidated damages. In this connection. Art. The borrower may recover in accordance with the laws on usury. Accordingly. wherein it held that the stipulated penalties.188. An apparently lawful loan is usurious when it is intended that additional compensation for the loan be disguised by an ostensibly unrelated contract providing for payment by the borrower for the lender’s services which are of little value or which are not in fact to be rendered. Thus. Thus. So long as such stipulation does not contravene any law. Contracts and stipulations.00 per annum for a period of four consecutive years. 1981. The Underwriting Agreement also stipulated for the payment by respondent Este del Sol to petitioner FMIC a consultancy fee of P332. Liquidated damages. 1980 until fully paid. 84813 FACTS: On June 3. First. 1957. CORPORATION.00. especially so because there is no clear showing that the appellee hired the services of counsel to effect the foreclosure. excessive. and should not. Even if there has been no performance. Failing to secure from the individual respondents. respondents September 22. At the public auction. Accordingly. petitioner FMIC was the highest bidder of the mortgaged properties for P9. liquidated damages and attorney’s fees. the payment of the alleged deficiency balance. 905 did not repeal nor in any way amend the Usury Law but simply suspended the latter’s effectivity. The Underwriting and Consultancy Agreements which were executed and delivered contemporaneously with the Loan Agreement on January 31. the debt is to be considered without stipulation as to the interest.R. as of the date of the auction sale on June 23. REDUCTION OF CONVENTIONAL PENALTIES DOMEL TRADING CORPORATION. VS.000. petitioner. 1980. Hence. 1981.72 in damages.83 as opening charges on the two Letters of Credit and an additional P1.000. which served as their agreement.of the opening of a letter of credit. Both DOMEL and NNRMC assail the above-quoted decision in separate petitions which have been consolidated before this Court. In fact. Based on the pleadings submitted by the parties. If. 1981. The amount of P2.997. It is too scanty.000.00 to cover the price of 93.911. NNRMC filed a complaint for damages before the Regional Trial Court of Pasig. CV No. as in this case. it agreed in the reduction of the amount of liquidated damages to only P150. which demands were ignored by DOMEL. But the charges of P5. judgment was rendered in favor of plaintiff and against defendant. DOMEL and NNRMC agreed to restructure the latter’s purchase orders in a Memorandum of Agreement. 1981. In accordance with their agreement. Further. NNRMC was only able to prove that it incurred the amounts of P5. thus:“The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. The aforesaid testimony regarding the matter of profits is utterly lacking of the requisite details on how such huge amount of profits could be made possible. After trial. Verily. RULING: While the Supreme Court did not agree with the Court of Appeals that the failure of NNRMC to conduct the inspection mitigated DOMEL’s liability for liquidated damages. this Court has resolved to give due course to the petition and decides the same.85 as amendment charges on the same Letters of Credit. In short. NNRMC opened another letter of credit in favor of DOMEL in the amount of P1. NNRMC extended the expiry date of its two letters of credit to November 5. opened a letter of credit with Philippine National Bank (PNB) in favor of DOMEL in the amount of P1. ISSUE: Whether or not the decision of the Court of Appeals in CA-G. Even if there has been no performance.995. On June 4. vague and . NNRMC failed to prove it had suffered actual damages resulting from the nondelivery of the specified buri midribs and rattan poles. In violation of their agreement. the proof adduced thereon is flimsy and insufficient. NNRMC. The said unitemized amounts and various types of damages is too much and has to be reduced within reasonable limits.83 and P1.000. the penalty may also be reduced by the courts if it is iniquitous or unconscionable. 1982 for the payment of damages. and cannot be presumed. DOMEL failed to deliver the buri midribs and rattan poles within the stipulated period. DOMEL undertook to deliver the goods on or before October 31. private respondent again ordered 300.911. 1981.000.” Article 2227 of the Civil Code likewise states. On July 13. 1981.00. As regards the alleged forgone profits of P206. Such could not be considered as actual damages. Thus. The Court agreed with the following observation of the Court of Appeals: “Necessarily. the amount of liquidated damages has to be lessened to P150.000 bundles.995. nevertheless. also to be delivered within 60 days from the date of the opening of a letter of credit. Plaintiff-appellee’s witness did not detail out how such huge amount of gain could have been derived from the would-be exportation of buri midribs and rattan poles.943.R. on September 23.057 pieces of rattan poles and 22.00.943 pieces of rattan poles.000 pieces of rattan poles at P9. Article 1229 of the Civil Code states. DOMEL claims that NNRMC must first inspect the ordered items before delivery could be made.00. we consider such amount of expected profit highly conjectural and speculative. However. compensatory and consequential damages must be proved. It also reduced the quantity of the rattan poles from 300. were printed in two separate purchase orders. We discern some merit in the second assignment of error. Consequently. DOMEL submits it has not breached its contractual obligation to NNRMC inasmuch as it was the fault of the latter for not inspecting and examining the rattan poles as well as the buri midribs already shipped by the suppliers and stored in the former’s warehouse.966.00 testified on by Jose Victorioso as the profit appellee could have realized had appellant been able to supply the goods in question.895.85 on the two letters of credit involved should be reimbursed by appellant. on July 9. no deliveries were again made on the said date.000 bundles of buri midribs. 08952 which modified the decision of the lower court granting private respondent’s prayer for damages. which actual damages would include the interest and penalties the creditor may have had to pay on its own from its funding source.” a court may very well take into account the actual damages sustained by a creditor who was compelled to sue the defaulting debtor. In this case. the testimonial evidence on alleged unrealized profits earlier referred to is not enough to warrant the award of damages appealed from.00 as penalty for every day of delay is excessive and unconscionable. Well-entrenched is the doctrine that actual.000 to only 100. The specifications and provisions of both transactions.000 pieces while the quantity of buri midribs remained at 22. Under the agreement. As already elaborated upon in connection with the first assignment of error. was correct.65 per piece for a total price of P2. The trial court erred in holding the appellant liable for P908. demands were made by NNRMC on January 19. thus: “Liquidated damages. Other than that. 1981.000. whether intended as an indemnity or a penalty. what it allegedly suffered are what it calls “Foregone Interest Income” and “Foregone Profit” from the two Letters of Credit. shall be equitably reduced if they are iniquitous or unconscionable.000.” In determining whether a penalty clause is “iniquitous and unconscionable.236. no damages will be allowed.00 to cover its order for 206. unspecified to induce faith and reliance. NNRMC opened another letter of credit in favor of DOMEL in the amount of P1. no deliveries were again made on the said date. 1982 for the payment of damages. NNRMC was only able to prove that it incurred the amounts of P5. In violation of their agreement. Further. Based on the pleadings submitted by the parties.000. CV No. NNRMC. Both DOMEL and NNRMC assail the above-quoted decision in separate petitions which have been consolidated before this Court. which served as their agreement. RULING: While the Supreme Court did not agree with the Court of Appeals that the failure of NNRMC to conduct the inspection mitigated DOMEL’s liability for liquidated damages. However.000 bundles of buri midribs at P16. ISSUE: Whether or not the decision of the Court of Appeals in CA-G.000. Hence.000 pieces of rattan poles at P9. nevertheless. On June 4. On July 13. on September 23.057 pieces of rattan poles and 22.” In determining whether a penalty clause is “iniquitous and unconscionable.000.” a court may very well take into account the actual damages sustained by a creditor who was compelled to sue the defaulting debtor. In fact. this Court has resolved to give due course to the petition and decides the same. Even if there has been no performance. NNRMC extended the expiry date of its two letters of credit to November 5. was correct. In short.R.00.00 to cover its order for 206. After trial.911. on July 9. 1981. .000 pieces while the quantity of buri midribs remained at 22.00.83 as opening charges on the two Letters of Credit and an additional P1. Under the agreement.85 as amendment charges on the same Letters of Credit. It also reduced the quantity of the rattan poles from 300. private respondent again ordered 300. it agreed in the reduction of the amount of liquidated damages to only P150. what it allegedly suffered are what it calls “Foregone Interest Income” and “Foregone Profit” from the two Letters of Credit. whether intended as an indemnity or a penalty. demands were made by NNRMC on January 19. 1981. 08952 which modified the decision of the lower court granting private respondent’s prayer for damages.000 bundles of buri midribs. 1981.000. 1981. We are of the sense that.000.997. Consequently. private respondent NDC-NACIDA Raw Materials Corporation (NNRMC) ordered from petitioner Domel Trading Corporation (DOMEL) 22.00 as penalty for every day of delay is excessive and unconscionable.943 pieces of rattan poles. thus:“The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Article 1229 of the Civil Code states. also to be delivered within 60 days from the date of the opening of a letter of credit.236. NNRMC failed to prove it had suffered actual damages resulting from the nondelivery of the specified buri midribs and rattan poles. opened a letter of credit with Philippine National Bank (PNB) in favor of DOMEL in the amount of P1. DOMEL and NNRMC agreed to restructure the latter’s purchase orders in a Memorandum of Agreement. apart from the aforestated amount of liquidated damages and reimbursement of the charges paid by appellee for the unutilized letters of credit.” REDUCTION OF CONVENTIONAL PENALTIES MEDEL VS COURT OF APPEALS 299 S 481 September 22. In accordance with their agreement. which actual damages would include the interest and penalties the creditor may have had to pay on its own from its funding source. were printed in two separate purchase orders.000 to only 100. 1999 FACTS: On June 3. no other damages can be granted.895. judgment was rendered in favor of plaintiff and against defendant.00 per bundle to be delivered within 30 working days from the date of the opening of a letter of credit. Such could not be considered as actual damages. In this case.65 per piece for a total price of P2.” Article 2227 of the Civil Code likewise states. 1981.00 to cover the price of 93. DOMEL claims that NNRMC must first inspect the ordered items before delivery could be made. Thus. Other than that. DOMEL submits it has not breached its contractual obligation to NNRMC inasmuch as it was the fault of the latter for not inspecting and examining the rattan poles as well as the buri midribs already shipped by the suppliers and stored in the former’s warehouse. NNRMC filed a complaint for damages before the Regional Trial Court of Pasig. thus: “Liquidated damages. 1981. 1981. Absent the needed quantum of proof. DOMEL undertook to deliver the goods on or before October 31. The amount of P2.995. The specifications and provisions of both transactions. shall be equitably reduced if they are iniquitous or unconscionable. which demands were ignored by DOMEL. the penalty may also be reduced by the courts if it is iniquitous or unconscionable.000 bundles. DOMEL failed to deliver the buri midribs and rattan poles within the stipulated period. 000. Rafael Medel. Gonzales.5% per month on the loan in the sum of P500. ISSUE: Whether or not the petition is with merit. In other words. 1998 FACTS: The Medel spouses obtained several loans of which they were unable to pay in full. In the computation of the "legal interest" decreed in the judgment sought to be executed. 116.00 loan is excessive. whether intended as an indemnity or a penalty if they are iniquitous or unconscionable. which amended Act No. 1974. a complaint for collection of the full amount of the loan including interests and other charges.000. 1986. goods or credits. goods. not all money judgments are included in the said act. The petitioners prayed for the setting aside of the said Resolution and for a declaration that the judgment in their favor should bear legal interest at the rate of twelve (12%) percent per annum pursuant to Central Bank Circular No. unconscionable and exorbitant. invoking in support of their aforesaid submission. 20 The stipulation is void. pursuant to and by authority of Article 2209 of the New Civil Code in relation to Articles 2210 and 2211 thereof. adopted on December 22. They executed a promissory note indicating payment for the balance. Rather.000. 1990. The . The appellate court affirmed the decision but made certain modifications.REDUCTION OF CONVENTIONAL PENALTIES MEDEL VS CA G. we find the interest at 5. filed with the Regional Trial Court of Bulacan. 905. otherwise known as the Usury Law. hence. joined by her husband Danilo G. 905 of the Central Bank. Incorporated insist that said legal interest should be at the rate of six (6%) percent per annum only. or 66% per annum. 1982. The judgments spoken of and referred to are Judgments in litigations involving loans or forbearance of any 'money. evidenced by the above-quoted promissory note. On July 23. Dr. plus interests and penalties.00.000. 2655 deals with interest on (1) loans. Thus. RULING: No. On maturity of the loan. Acting pursuant to this grant of authority. is the Usury Law still effective. No. 416 which took effect on July 29. Gonzales. 1982. Central Bank of the Philippines Circular No. 1684? We agree with petitioners that the stipulated rate of interest at 5.Hence.000. and an additional 1% a month penalty charge as liquidated damages may be more reasonable. ISSUE: What is the interest that must be collected on the instant case? RULING: Basically.00. REDUCTION OF CONVENTIONAL PENALTIES REFORMINA VS. the question presented is whether or not the stipulated rate of interest at 5.D. 416. private respondents Shell and Michael. the Court of Appeals erred in upholding the stipulation of the parties. 416 dated July 29. Consequently.00. Any other kind of monetary judgment which has nothing to do with. Veronica R.D. 131622 November 27. 1980.000. iniquitous. However. we can not consider the rate "usurious" because this Court has consistently held that Circular No. its dismissal is in order. bringing their indebtedness to a total of P500. under the circumstances. 1974 was issued and promulgated by the Monetary Board pursuant to the authority granted to the Central Bank by P. 2655 to twelve (12%) percent per annum. of the then Court of First Instance of Cebu-Branch XI. nor involving loans or forbearance of any money. Upon the other hand. adopted on December 22. Central Bank Circular No. at Malolos. or credits. we agree with the trial court that. The petition is devoid of merit. 116. the issue revolves on the validity of the interest rate stipulated upon. or has it been repealed by Central Bank Circular No. Consequently. the Monetary Board increased the rate of legal interest from that of six (6%) percent per annum originally allowed under Section I of Act No. TOMOL 139 SCRA 260 OCTOBER 11. as amended by P. The said decision having become final on October 24. Servando and Leticia with the latter's husband. and sought from Veronica another loan in the amount of P60. if not against the law. On February 20. petitioners claim that the "legal interest" should be at the rate of twelve (12%) percent per annum.5% per month on the P500. the case was remanded to the lower court for execution and this is where the controversy started. an action for Recovery of Damages for injury to Person and Loss of Property. Tomol.5% per month. pursuant to its powers under P. Bulacan. Jr. the borrowers failed to pay the indebtedness of P500. and. 1986. interest at 12% per annum. (2) forbearances of any money. that plaintiffs extended to the defendants is usurious. respondent Judge Valeriano P.R. payable on August 23.D. Nevertheless. goods or credits does not fall within the coverage of the said law for it is not within the ambit of the authority granted to the Central Bank. stipulated upon by the parties in the promissory note iniquitous or unconscionable. and (3) rate allowed in judgments. The courts shall reduce equitably liquidated damages. Branch 16. 1985 FACTS: This is a Petition for Review on certiorari of the Resolution of the Hon. contrary to morals ("contra bonos mores"). It will be noted that Act No. consolidated all their previous unpaid loans totaling P440. has expressly removed the interest ceilings prescribed by the Usury Law and that the Usury Law is now "legally inexistent". No. 2655. No. No.00.00. 1991 (filing of the Complaint) until fully paid and attorney’s fees equivalent to 10% of the amount due and costs of the suit. An assignment of credit is an agreement by virtue of which the owner of a credit. In order that there be a valid dation in payment. which was docketed as Civil Case No. and without the consent of the debtor. MEANING OF PAYMENT / PERFORMANCE (ART. by a legal cause. known as the assignor. on January 10.00. Respondent appealed the decision to the Court of Appeals. who acquires the power to enforce it to the same extent as the assignor could enforce it against the debtor. is a building contractor. petitioner and respondent executed a Deed of Assignment. doing business under the name and style San’s Enterprises.14) with legal interest of 6% per annum from January 10.. (2) the object of the Deed did not exist at the time of the transaction. the appellate court rendered a decision reversing the appealed Decision and enters judgment ordering defendant-appellee Sonny Lo to pay the plaintiff-appellant KJS ECO-FORMWORK SYSTEM PHILIPPINES. respondent sent a letter to petitioner demanding payment of his obligation. for its part. the latter refused to honor the Deed of Assignment because it claimed that petitioner was also indebted to it. encountered financial difficulties and he was unable to settle his obligation to respondent despite oral and written demands made against him. INC. dacion en pago. petitioner ordered scaffolding equipments from respondent worth P540.000. exchange or donation. the trial court rendered a decision dismissing the complaint on the ground that the assignment of credit extinguished the obligation. On August 25. known as the assignee. 1991. and (3) petitioner violated the terms of the Deed of Assignment when he failed to execute and do all acts and deeds as shall be necessary to effectually enable the respondent to recover the collectibles.. 1990. petitioner. presented the testimony of its employee. On February 22. In finding that the Deed of Assignment did not extinguish the obligation of the petitioner to the respondent. CC) SONNY LO. Lo. in dacion en pago. transfers his credit and accessory rights to another. which was denied by the Court of Appeals. respondent 2003 Oct 8 G. rendering it void pursuant to Article 1409 of the Civil Code. On October 11. Hence. His business..425.462.462. Petitioner filed a motion for reconsideration of the said decision. RULING: The petition is without merit. the same is DISMISSED with costs against petitioners. A word or phrase in a statute is always used in association with other words or phrases and its meaning may thus be modified or restricted by the latter. Almeda Bañaga. In the absence of a clear contrary intention. During the trial. 1232-1261. is a corporation engaged in the sale of steel scaffoldings. Respondent delivered the scaffoldings to petitioner. but petitioner refused to pay claiming that his obligation had been extinguished when they executed the Deed of Assignment.80. However. INC. however. No. It is axiomatic in legal hermeneutics that statutes should be construed as a whole and not as a series of disconnected articles and phrases. when respondent tried to collect the said credit from Jomero Realty Corporation. while petitioner Sonny L. such as sale. Branch 147. 149420 413 SCRA 182 FACTS: Respondent KJS ECO-FORMWORK System Phil. this petition for review.Monetary Board may not tread on forbidden grounds. 91-074. Corollary thereto. Petitioner was able to pay the first two monthly installments. He paid a downpayment in the amount of P150. 1994. 1990. That function is vested solely with the legislative authority. the following are the requisites: (1) There must be the performance of the prestation in lieu of payment . Inc. On November 26. the Court of Appeals held that (1) petitioner failed to comply with his warranty under the Deed. who testified that Jomero Realty refused to honor the assignment of credit because it claimed that petitioner had an outstanding indebtedness to it. the debtor offers another thing to the creditor who accepts it as equivalent of payment of an outstanding debt. as a special mode of payment. petitioner argued that his obligation was extinguished with the execution of the Deed of Assignment of credit. Consequently. vs. 1990. The instant petition is without merit.R. KJS ECO-FORMWORK SYSTEM PHIL. 2001. words and phrases in statutes should not be interpreted in isolation from one another. Respondent. whereby petitioner assigned to respondent his receivables in the amount of P335. On April 19. respondent filed an action for recovery of a sum of money against the petitioner before the Regional Trial Court of Makati. The balance was made payable in ten monthly installments. It cannot rewrite other laws. ISSUE: Whether or not the Court Of Appeals erred in holding that the deed of assignment did not extinguish petitioner’s obligation on the wrong notion that petitioner failed to comply with his warranty thereunder.14 from Jomero Realty Corporation. Three Hundred Thirty Five Thousand Four Hundred Sixty-Two and 14/100 (P335. From the above provision. Sonia Gonzaga deposited it in her account with Far East Bank and Trust Co. administrators. produced the effects of a dation in payment which may extinguish the obligation. inasmuch as the obligation shall thereafter become equivalent to a forbearance of credit. as vendor or assignor. The petitioner was directed by the court to produce the said special power of attorney thereat. that is. for the existence and legality of the credit at the time of the sale but not for the solvency of the debtor. The award of attorney’s fees is DELETED for lack of evidentiary basis.480. his heirs. respondent alleged the non-existence of the credit and asserted its claim to petitioner’s warranty under the assignment.00 from petitioner.00 and delivered the same to one Sonia Gonzaga without Tan's knowledge. it essentially meant that its obligation to petitioner has been extinguished by compensation. Furthermore. stated that Sonia Gonzaga presented a Special Power of Attorney to him but borrowed it later with the promise to return it.00. the vendor or assignor is bound by certain warranties.R.480. execute and do all such further acts and deeds as shall be reasonably necessary to effectually enable said ASSIGNEE to recover whatever collectibles said ASSIGNOR has in accordance with the true intent and meaning of these presents. unless it has been so expressly stipulated or unless the insolvency was prior to the sale and of common knowledge. the rate of legal interest shall be 12% per annum. (2) There must be some difference between the prestation due and that which is given in substitution (aliud pro alio). its successors or assigns. 1978 order and a special power of attorney by virtue of which petitioner delivered the check to her. Tagamolila. The decision of the Court of Appeals was affirmed with modification that upon finality of the Decision. Expropriation proceedings were instituted by the government against private respondent Tan and other property owners before a trial court in Negros Occidental. the vendor in good faith shall be responsible. The trial court required petitioner PNB-Bacolod Branch to release to Tan the amount of P32. PNB's Assistant Branch Manager. The petitioner likewise filed a third-party complaint against the spouses Nilo and Sonia Gonzaga praying that they be ordered to pay private respondent the amount of P32. private respondent filed a motion with the court to require PNB to pay the same to him. the first paragraph of Article 1628 of the Civil Code provides: The vendor in good faith shall be responsible for the existence and legality of the credit at the time of the sale. is bound to warrant the existence and legality of the credit at the time of the sale or assignment. 1996 G. consent or authority. However. The undertaking really partakes in one sense of the nature of sale. However.(animo solvendi) which may consist in the delivery of a corporeal thing or a real right or a credit against the third person.00 deposited with it by the government. petitioner. in specified circumstances. Hence. PNB issued a manager's check for P32. but the same was refused on the ground that petitioner had already paid and delivered the amount to Sonia Gonzaga on the strength of a Special Power of Attorney (SPA) allegedly executed in her favor by Tan. or assigns. (3) There must be an agreement between the creditor and debtor that the obligation is immediately extinguished by reason of the performance of a prestation different from that due. the Court found that petitioner breached his obligation under the Deed of Assignment. Through its Assistant Branch Manager Juan Tagamolila. When he failed to recover the amount from PNB. COURT OF APPEALS and LORETO TAN. In other words.480. for failure of petitioner to have the summons served on the Gonzagas despite opportunities given to it. it may well be that the assignment of credit. REQUISITES OF PAYMENT/PERFORMANCE PHILIPPINE NATIONAL BANK. shall and will at times hereafter. petitioner contended that private respondent had duly authorized Sonia Gonzaga to act as his agent. at the request of said ASSIGNEE. payment for which is to be charged against the debtor’s debt. in his answer. but not for the solvency of the debtor. More specifically.480. it behooved on petitioner to make good its warranty and paid the obligation.00. the third-party complaint was dismissed. to wit: And the ASSIGNOR further agrees and stipulates as aforesaid that the said ASSIGNOR. Private respondent Tan subsequently demanded payment in the amount of P32. executors. to recover the said amount. claiming that she needed it to encash the check. (FEBTC) and later on withdrew the said amount. In its defense. as in any other contract of sale. respondents April 02. Therefore. As such. 108630 256 SCRA 44 FACTS: Private respondent Loreto Tan is the owner of a parcel of land in Bacolod City. petitioner. No. .480. at his cost and expense. the creditor is really buying the thing or property of the debtor. which is in the nature of a sale of personal property. petitioner failed to do so. Petitioner filed an opposition contending that Sonia Gonzaga presented to it a copy of the May 22. Tan filed a motion requesting issuance of an order for the release to him of the expropriation price of P32. The court decided that there was need for the matter to be ventilated in a separate civil action and thus private respondent filed a complaint with the Regional Trial Court in Bacolod City against petitioner and Juan Tagamolila. VS. When Jomero claimed that it was no longer indebted to petitioner since the latter also had an unpaid obligation to it. However. unless it should have been sold as doubtful. " Furthermore. In the absence of such document. 2.No. SABENIANO G. OBLIGATIONS TO PAY MONEY: EFFECTS OF INFLATION 1. 2006 Petitioner Citibank is a banking corporation duly authorized under the laws of the USA to do commercial banking activities n the Philippines. Petitioner alleged that respondent obtained several loans from the former and in default. Respondent filed a complaint against petitioners claiming to have substantial deposits. exemplary damages for P250. October 16. NORTHWEST AIRLINES.000. contrary to petitioner's contention that all that is needed to be proved is the existence of the SPA. TELENGTON BROS VS. CITIBANK VS.00 as attorney's fees is reinstated.The trial court rendered judgment ordering petitioner and Tagamolila to pay private respondent jointly and severally the amount of P32. Citibank is ordered to return to respondent the principal amount of P318. the best evidence rule applies.000. Decision affirmed with the modification that the award by the trial court of P5. When the court ordered petitioner to pay private respondent the amount of P32. the appellate court dismissed Tagamolila's appeal for failure to pay the docket fee within the reglementary period.632. In the instant case.R.897. Respondent to pay petitioner the balance of her outstanding loans of P1. to determine whether the document indeed authorized her to receive payment intended for private respondent. ISSUE: Whether petitioner may exercise its right to set-off respondent’s loans with her deposits and money in Citibank-Geneva RULING: Petition is partly granted with modification. 504 S 378 FACTS: CITIBANK vs. assistant cashier of PNB. 156132. 3. only the original document.00 plus 14. Citibank exercised its right to set-off respondent’s outstanding loans with her deposits and money. Both petitioner and Tagamolila appealed the case to the Court of Appeals. more specifically. RULING: There is no question that no payment had ever been made to private respondent as the check was never delivered to him. PAREDES.000. 381 S 314 PADILLA VS. RTC declared the act illegal. 4. it had the obligation to deliver the same to him. it is also necessary for evidence to be presented regarding the nature and extent of the alleged powers and authority granted to Sonia Gonzaga. null and void and ordered the petitioner to refund the amount plus interest. null and void.069. 6.00 with legal interest. 328 SCRA 434 TIBAJIA VS.34 and P203. Under Art. Citibank to pay respondent moral damages of P300. Tagamolila testified that the check was issued to the order of "Sonia Gonzaga as attorney-in-fact of Loreto Tan. which has not been presented at all. thus Citibank is ordered to refund said amount in Philippine currency or its equivalent using exchange rate at the time of payment. 1233 of the Civil Code. is the best evidence of the fact as to whether or not private respondent indeed authorized Sonia Gonzaga to receive the check from petitioner. 494 S 25 ISSUE: Whether or not payment was made to Loreto Tan.847. as the case may be. CA. a debt shall not be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered. Considering that the contents of the SPA are also in issue here.99 from respondent’s Citibank-Geneva account is declared illegal. However. . neither the SPA nor the check issued by petitioner was ever presented in court. The burden of proof of such payment lies with the debtor. The testimonies of petitioner's own witnesses regarding the check were conflicting. The remittance of US $149. 3. damages and attorney's fees. petitioner's arguments regarding due payment must fail. 5.000.40 inclusive off interest.480.00. on the other hand to pay Citibank her indebtedness. CA affirmed the decision entirely in favor of the respondent. 4.150. 1. 583 S 458 CF SHARP VS. Sabeniano was a client of both Petitioners Citibank and FNCB Finance. ordering Sabeniano. SABENIANO. the proceeds of which were supposedly deposited automatically and directly to respondent’s account with the petitioner Citibank and that allegedly petitioner refused to despite repeated demands. attorney’s fees of P200. stated that the check was issued to the order of "Loreto Tan. 223 S 163 DBP VS CA.480. Hence. The appellate court subsequently affirmed the trial court’s decision.5% per annum 2. US LINES." while Elvira Tibon. 1974. entered an International Passenger Sales Agency Agreement with petitioner. There is no reason for ordering the payment of an obligation in an amount different from what has been agreed upon because of the purported supervention of an extraordinary inflation.000 which the latter refused to pay despite repeated demands. ISSUE: Whether the re-computation of the judgment award in accordance with Article 1250 of the Civil Code proper RULING: The Supreme Court found as erroneous the trial court’s decision as affirmed y the Court of Appeals. Petitioner disclaims liability alleging that it has never entered into a contract nor signed an agreement to be bound by it. 132284. RULING: NO. An appeal. the Court of Appeals reduced the interest and it ruled that the basis of the conversion of petitioner’s liability in its peso equivalent should be the prevailing rate at the time of payment and not the rate on the date of the foreign judgment. NORTHWEST AIRLINES 381 SCRA 314 FACTS: On May 9. failed to remit the proceeds of the ticket sales. CF SHARP VS. CA affirmed the decision. The Court holds that there has been an extraordinary inflation within the meaning of Article 1250 of the Civil Code.158.R. the rule that the value of currency at the time of the establishment of the obligation shall be the basis of payment finds application only when there is an official pronouncement or declaration of the existence of an extraordinary inflation or deflation.2006 FACTS: Petitioner is a domestic corporation while US Lines is a foreign corporation engaged in overseas shipping. unless there is an agreement to the contrary” shall apply in this case is untenable. and was subsequently partly affirmed by the Supreme Court. It was made applicable that consignees who fail to take delivery of their containerized cargo within the 10-day free period are liable to pay demurrage charges. RTC ruled that petitioner is liable to respondent and all be computed as of the date of payment in accordance with Article 1250 of the Civil Code. respondent. Unable to execute the decision in Japan. This was affirmed by the Court of Appeals.OBLIGATIONS TO PAY MONEY: EFFECTS OF INFLATION TELENGTAN BROTHERS and SONS vs. authorizing the latter to sell its air transport tickets. the value of the currency at the time of establishment of the obligation shall be the basis of payment. Petitioner. for which reason the respondent filed a collection suit against petitioner before the Tokyo District Court. CF Sharp was then ordered to pay Northwest so that the RTC issued a writ of execution of decision ruling that Sharp is to pay Northwest the sum of 83. 1981. US Lines filed a suit against petitioner seeking payment of demurrage charges plus interest and damages. respondent filed a case to enforce said judgment with the regional trial court of Manila which dismissed the case. Hence. ISSUE: Whether or not the basis for the payment of the amount due is the value of the currency at the time of the establishment of the obligation. Petitioner incurred P94. OBLIGATIONS TO PAY MONEY: EFFECTS OF INFLATION OBLIGATIONS TO PAY MONEY . however. The said court ordered petitioner to pay respondent including damages for the delay.195 yen at the exchange rate prevailing on the date of the foreign judgment plus 6% per annum until fully paid. UNITED STATES LINES G.No. On June 22.February 28. through its Japan Branch. 6% damages and 6% interest. petitioners contention that Article 1250 of the Civil Code which provides that “in case of an extra ordinary inflation or deflation of the currency stipulated should supervene. The assailed decision is affirmed with modification that the order for recomputation as of the date of payment in accordance with the provisions of Article 1250 of New Civil Code is deleted. he offered to pay the balance in full for the entire property. In a letter dated February 14. 1989. On May 14. La Union.00 upon signing of the contract. Private respondents refused the offer.ALBERT R. 1990. Tan refused to accept the payment and insisted that the garnished funds be withdrawn to satisfy the judgment obligation. If petitioner did not agree with the proposal. The property was titled in the name of private respondent Adelina Paredes. petitioner failed to pay the full purchase price even after the expiration of the period set. private respondents are under no obligation. 1990 private respondents offered to sell to petitioner one-half of the property for all the payments the latter had made. Still. At that time. and the balance was to be paid within ten days from the issuance of a court order directing issuance of a decree of registration for the property. 1990. 1990. SPOUSES FLORESCO PAREDES and ADELINA PAREDES. and may not be compelled. instead of rescinding the contract. While he might have tendered payment through a check. Of the P312.00 in obtaining title to the property. No. petitioner instituted an action for specific performance against private respondents.000. with interest and attorney's fees.R. private respondents stated they would consider the contract rescinded.000. 1990. Tibajia Spouses delivered to Sheriff Bolima the total money judgment of P398483. the land was untitled although private respondents were paying taxes thereon. subdividing it. private respondents said they would take steps to enforce the automatic rescission of the contract. RULING: Petitioner’s offer to pay is clearly not the payment contemplated in the contract. the court ordered the issuance of a decree of land registration for the subject property. Under the contract. alleging that he had already substantially complied with his obligation under the contract to sell. petitioner Albert R. The lower court decided in favor of the petitioners stating that the breach committed was only casual and slight but the Court of Appeals reversed the ruling and favored respondents’ rescission of the contract to sell. and THE HONORABLE COURT OF APPEALS G. 2000 328 SCRA 434 FACTS: On October 20. June 4. Private respondents then demanded payment of the balance of the purchase price. petitioner made a payment of P100. 124874 March 17. some even before the court issued an order for the issuance of a decree of registration and they also offered to pay the land through a check. No.00 to private respondents. 100290. a mere tender of payment is not sufficient. On February 28. OBLIGATIONS TO PAY MONEY SPOUSES TIBAJIA v. RTC ruled in favor of Eden Tan and ordered the spouses to pay her an amount in excess of P3. Court of Appeals modified the decision by reducing the amount for damages. 1988. petitioner undertook to secure title to the property in private respondents' names. in a letter dated April 17. to convey title to petitioner and receive the full purchase price. still insufficient to cover the full purchase price. through counsel. and improving its right-of- way. demanded payment of the remaining balance. Otherwise. Padilla and private respondents Floresco and Adelina Paredes entered into a contract to sell involving a parcel of land in San Juan. Besides. Petitioner did not accept private respondents' proposal.000.70. in a letter dated May 2.000. the Deputy Sheriff filed a return stating that a deposit made by Tibajia in the amount of P442.750 in another case. ISSUE: Whether or not payment by means of check is considered payment in legal tender RULING: . Petitioner then made several payments to private respondents. plus interest and attorney's fees. had been garnished by him. COURT OF APPEALS and EDEN TAN G. Thus. R. 1993 FACTS: A suit of collection of sum of money was filed by Eden Tan against the spouses. Consignation is essential to extinguish petitioner's obligation to pay the purchase price. Instead.000. PADILLA VS.00 purchase price. The Supreme Court also affirmed the decision of the Court of Appeals where the respondents have the right to rescind the contract on the ground that there is failure on the part of the petitioners to pay the balance within ten days upon the conveyance of the Court of the Title of Land to respondents. this is not considered payment until the check is encashed.840. petitioner was to pay a downpayment of P50. within five days from receipt of the letter. ISSUE: Whether or not the payment made by petitioner is one which is contemplated on the contract. private respondents. A writ of attachment was issued. On December 27. He also averred that he had already spent P190. Shortly thereafter. 35 were consolidated into a single account.68. Petition is denied. Bathala Marketng. Ponciano agreed to lease a porton of Almeda Compound for a monthly rental of P1. whether it be a manager’s check. Cabilzo re-credit the amount of P91.69 for four years.500. On November 12. 2006 FACTS: In March 1968. Court of Appeals affirmed the decision with modification. 1998.No. all accrued interest and charges due amounting to P3.R. 7 of the contract and Article 1250.348. Amounting to P4. .000 and was paid to a certain Mr.The ruling applies the statutory provisions which lay down the rule that a check is not legal tender and that a creditor may validly refuse payment by check. On January 26. The petition is partly granted. NG SHEUNG NGOR. INSTRUMENTS/EVIDENCES OF CREDIT METROBANK v. RTC ordered Metrobank to pay the sum of P90. 150806. CABLZO G. It is obvious that Metrobank was remiss in the duty and violated that fiduciary relationship with its clients as it appeared that there are material alterations on the check that are visble to the naked eye but the bank failed to detect such.473.000 n cash and P2. this should be stricken out for being usurious.R. liable for the alternations on the subject check bearing the authentic signature of the drawer thereof RULING: The degree of diligence in the exercise of his tasks and the performance of his duties have been faithfully complied with by Cabilzo. ISSUE: Whether the prestation to collect by the DBP is unconscionable or usurious FACTS: Respondent Cabilzo was one of the Metrobank’s client who maintained a current account.000. DBP granted to private respondents an industrial loan in the amount of P2.992. It was discovered that the amount withdrawn wa P91. Cabilzo issued a Metrobank check payable to cash in the amount of P1. RTC. 199.700. Court of Appeals decision is affirmed with modification that exemplary damages in the amount of P50. DBP initiated foreclosure proceedings upon its computation that respondent’s loans were arrears by P62. BATHALA MKTNG. renewed its Contract of Lease with Ponciano Almeda. whichever is lower. 138703. the outstanding accounts wth DBP was restructured in view of failure to pay. thus.000. Assuming it did exceed 12% in addition to the other penalties stipulated in the note.21 were denominated as “ Notes Taken for Interests” and evidenced by a separate promissory note.074.000 in DBP Progress Bank. 154469 December 6. the check was altered.June 30. Under the contract.R.000 to his account but Metrobank refused to comply despite demands. 2006 EUFEMIA and ROMEL ALMEDA v.655. ISSUE: Whether holding Metrobank.000 be awarded. petitioner informed respondent that its monthly rental be increased by 73% pursuant to the condition No. ruled in favor of the respondents.000. 541 S 223 RULING: It cannot be determined whether DBP in fact applied an interest rate higher than what is prescribed under the law.107. January 28. 2008 FACTS: In May 1997.000 – P500.000 to Cabilzo. On the other hand. 542 S 470 2.. The check was oresented to Westmont Bank or payment and in turn indorsed to etrobank for appropriate clearing. The decision of the court of Appeals is affirmed. Decision of the court of Appeals is reversed and set aside. For failure to comply with its obligation.672. ALMEDA VS. Another loan was granted by DBP in the for of a 5-year revolving guarantee to P1. Respondents contended that the collection was unconscionable if not unlawful or usurious . PCI VS. OBLIGATIONS TO PAY MONEY DEVELOPMENT BANK OF THE PHILIPPINES v. The case is remanded o the trial court for the determination of the total amount of the respondent’s obligation based on the promissory notes. In 1975.No. COURT OF APEEALS G. It was evidenced by a promissory note and secured by a mortgage executed by respondents over their present and future properties. cashier’s or personal check. OBLIGATIONS TO PAY MONEY: EFFECTS OF INFLATION 1.954. No. as affirmed by the CA. BATHALA MARKETING G. according to the interest rate agreed upon by the parties on the interest rate of 12% per annum. Respondent refused the demand and insisted that there was no extraordinary inflation to warrant such application. as drawee bank. Marquez. 650. respondents Ngor and Go filed an action for amendment and/or reformation of documents and contracts against Equitable and its employees. They claimed that they were induced by the bank to avail of its peso and dollar credit facilities by offering low interests so they accepted and signed Equitable’s proposal. Jopson paid the petitioner in the amount of P1. respondent acquired possession of the lot and paid petitioner the stipulated amortizations which were in turn acknowledged by petitioner through receipts issued in the name of respondent.Respondent refused to pay the VAT and adjusted rentals as demanded by the petitioners but continually paid the stipulated amount. Respondent went to petitioner’s office to secure the title to the lot. In addition. As petitioner did not heed her demands.880. respondent undertook to assume the balance of Jopson’s account and to pay the same in accordance with the terms and conditions of the Contract to Sell. both parties admitted that Jopson assigned her rights over the property in favor of respondent and respondent . filed a Complaint for specific performance with damages. but in fact overpaid it by P3. ISSUE: Whether or not there was an extraordinary deflation RULING: Extraordinary inflation exists when there is an unusual decrease in the purchasing power of currency and such decrease could not be reasonably foreseen or SIMPLICIO PALANCA VS. 650 as her down payment. Decision of lower courts are reversed and set aside.00. Absent an official pronouncement or declaration by competent authorities of its existence. CA affirmed the decision deleting the amounts representing 10% VAT and rental adjustment. CA granted the Bank’s application for injunction but the properties were sold to public auction. leaving a balance of P9. RTC ruled in favor of the respondent and declared that plaintiff is not liable for the payment of VAT and the adjustment rental. OBLIGATIONS TO PAY MONEY: EFFECTS OF INFLATION EQUITABLE PCI BANK. 1508. Respondent alleged that she paid petitioner P14. They alleged that they were unaware that the documents contained escalation clauses granting Equitable authority to increase interest without their consent. In the deed of transfer. These were rebutted by the bank. Despite the devaluation of the peso.00. 171545. but petitioner informed her that she could not as she still had unpaid accounts. 600. respondent. After reimbursing Jopson P1.620. Respondents should pay their dollar denominated loans at the exchange rate fixed by the BSP on the date of maturity. there being no extraordinary inflation or devaluation. respondent. NG SHEUNG NGOR G. 250. Deflation is an inverse situation. 2005 452 SCRA 461 FACTS: On August 23.00. sent a letter to petitioner demanding compliance with his obligation and the release of the title in her name. ULYSSIS GUIDES joined by her husband LORENZO GUIDES February 28. VAT cannot be considered a “new tax”. 1983. 105742 issued on 26 September 1978 in the name of a certain Carissa T. 2001. Sometime in December 1983. through a lawyer. joined by her husband. Thereafter. Petitioner sought the dismissal of the complaint on the ground of respondent’s alleged failure to comply with the mandatory requirement of Presidential Decree (P. respondent verified the status of the lot with the Register of Deeds. At the pre-trial in 1989. BSP never declared a situation of extraordinary inflation. she claimed that petitioner charged her devaluation charges and illegal interest. CA decision is affirmed.D. Believing that she had fully paid the purchase price of the lot. Simplicio Palanca executed a Contract to Sell a parcel of land on installment with a certain Josefa Jopson for P11.00. 6th Condition states that respondent can only be held liable for new taxes imposed after the effectivity of the contract of lease. Petition is denied. December 19.R. RTC ordered the use of the 1996 dollar exchange rate in computing respondent’s dollar-denominated loans. only to find out that title thereto was not in the name of the petitioner as it was covered by Transfer Certificate of Title No. YU and APAS v. after 1977. INTEGRITY OF PRESTATION / SUBSTANTIAL PAYMENT RULING: Petitioners are stopped from shifting to respondent the burden of paying the VAT. which not only fully settled her obligation to him. Jopson assigned and transferred all her rights and interests over the property in question in favor of the respondent Ulyssis Guides.00. its effects are not to be applied. ISSUE: Whether the amount of rentals due the petitioners should be adjusted by reason of extraordinary inflation or devaluation was beyond the contemplation of the parties at the time of the obligation. Neither can petitioners legitimately demand rental adjustment because of extraordinary inflation or devaluation.NO. 2007 FACTS: On October 7.) No. de Leon. knowing its incompleteness or irregularity. WHO MAY DEMAND PAYMENT. CA.paid petitioner the subsequent monthly amortizations on installments.260 naturally reduced it to P3.00. No. nor demanded the payment of the alleged charges.047.96. 2. INC. respondent’s liability. There is no indication that he informed respondent of the alleged forfeiture. 1985.CA decision is reversed and set aside and in lieu thereof Atlas is ordered to pay PCIB the sum of P146. ISSUE: Whether atlas had complied with its obligation to PCIB RULING: While the original amount sought to be garnished was P4. with the legal interest commencing from the time of first demand on August 22. PCIB contended that Atlas still owed P908.000. 121989 January 31. the partial payment of P601.77. Quirino Avenue. On November 1996. 481 S 127 LAGON VS. WHO MAY DEMAND PAYMENT 1. COURT OF APPEALS G. thus the remedy if Atlas would be to proceed against NAAWU nut not against PCIB in relation to article 1236 of the Civil Code The petition is partly granted. 2006 FACTS: PCIB and MBC were joint bidders in a foreclosure sale held of assorted mining machinery and equipment previously mortgaged to them by Philippine Iron Mines. RTC ruled against Atlas to pay P908. 2001 349 SCRA 363 FACTS: Petitioner Jose V.000. vs. if any for said charges.398. Sometime in April 1981 Lagon and HOOVEN entered into two (2) contracts. without any specific demand for the individual charges he now seeks to recover. Davao City.298.000. 1235 of the Civil Code which provides that “When the obligee accepts the performance. 870. petitioner.298. 1240. The same goes true for the alleged forfeiture of the down payment made by Jopson.650. Lagon is a businessman and owner of a commercial building in Tacurong. both denominated Proposal. Atlas paid to NAMAWU the amount of P4. Atlas alleged that there was overpayment. In compliance with the contract. 349 SCRA 363 BPI VS. when petitioner accepted respondent’s installment payments despite the alleged charges incurred by the latter.75 to PCIB. Art. it affirmed the decision of the lower court.260. Respondent HOOVEN on the other is a domestic corporation known to be the biggest manufacturer and installer of aluminum materials in the country with branch office at E. HOOVEN COMALCO. PCIB VS. Petitioner likewise acknowledged the payments made by respondent as stated in the statement of accounts initiated by its manager.058.398. however. the trial court rendered its decision ordering the petitioner to execute in favor of the respondent a Deed of Sale. Thus. and without expressing any protest or objection. CA reversed the decision. The petition is denied. hence the suit against PCIB to obtain reimbursement.R. the obligation is deemed fully complied with. CREDITOR’S RIGHT OF PAYMENT (Art. RULING: The Supreme Court held that primarily preventing petitioner from recovering the amounts claimed from respondent is the effective waiver of these charges. CC) JOSE V.” is in point. 135657 January 17. 232 SCRA 302 PCIB v. is deemed fully satisfied. NO. Assuming that said charges are due. respondent G.77 Atlas overpaid NAMAWU. The petitioner appealed to the Court of Appeals.307. Sultan Kudarat.. Atlas issued HongKong and shanghai Bank check amounting to P12. LAGON.00 down payment paid by Jopson at the commencement of the contract.000 and the balance of P18.R.00 HOOVEN . petitioner waived the same when he accepted respondent’s payments without qualification.697.000. petitioner credited to respondent’s account the P1. Atlas agreed to purchase some of these properties and the sale was evidenced by a Deed of Sale with a downpayment of P12. Oscar Rivera. ISSUE: Whether or not the petitioner has a right to claim for unpaid charges as stipulated in the contract from the private respondent.77 in compliance with the writ of garnishment issued against Atlas to satisfy the judgment in favor of NAMAWU. much more demanded the payment again of the amount previously paid by Jopson.307. HOOVEN COMALCO INDUSTRIES.000 payable in 6 monthly installments. whereby for a total consideration of P104. and without any showing that he protested the irregularity of such payment. 3. CA.75 because NAAWU had been partially paid in the amount of P601. From its own Statements of Accounts and Payments Made. 104612 MAY 10. claimed to be petitioner’s driver. Upon execution of the contracts. 1994 FACTS: Private respondents Eastern Plywood Corporation and Benigno Lim as officer of the corporation.522. or more than five (5) years after the supposed completion of the project. the assailed Decision of the Court of Appeals dated 28 April 1997 is MODIFIED. and there is no way of determining now whether they were indeed authorized representatives of petitioner.00 in advance. the identities of these persons were never been established. 870.66 representing the value of the unpaid materials admittedly delivered to him. When Velasco died in 1977. the total value of the materials as reflected in all the invoices is P117. it exercised its right . On the other hand. COURT OF APPEALS 232 SCRA302 G. assert that the amount deposited in the joint account of Velasco and Lim came from Eastern and therefore rightfully belong to Eastern and/or Lim. they were fully paid. the invoices were based merely on the delivery receipts. and a certain bookkeeper.000. Eastern obtained a loan of P73. CC) BANK OF THE PHILIPPINE ISLANDS VS. for both issues. had an “AND/OR” joint account with Commercial Bank and Trust Co (CBTC). Secondly. then petitioner can only hold that amount against the joint checking account and must return the rest. a judicial settlement of the estate of Velasco ordered the withdrawal of the balance of the account of Velasco and Lim. temperate and nominal damages. WHO MAY DEMAND PAYMENT. Lagon is ordered to pay respondent Hooven Comalco Industries. 2310-001-42” referring to the joint checking account of Velasco and Lim. P6.00 Even more strange is the fact that HOOVEN instituted the present action for collection of sum of money against Lagon only on 24 February 1987. Lagon. that as a consequence he was compelled to procure the undelivered materials from other sources. Petitioner Jose V.00 while under the delivery receipts it is only P112. not the duty. 1240. the Holdout Agreement conferred on CBTC the power. P30. Sultan Kudarat. to set off the loan from the account subject of the Agreement. RULING: Yes. notwithstanding that. CREDITOR’S RIGHT OF PAYMENT (Art. However. RULING: Firstly.554. When BPI demanded payment of the loan from Eastern.R. Unfortunately for HOOVEN. as well as for attorney’s fees and expenses of litigation. said joint checking account had P662. Lagon paid HOOVEN P48. denied liability and averred that HOOVEN was the party guilty of breach of contract by failing to deliver and install some of the materials specified in the proposals. A closer examination of the receipts clearly showed that the deliveries were made to a certain Jose Rubin. All the delivery receipts did not appear to have been signed by petitioner or his duly authorized representative acknowledging receipt of the materials listed therein. in his answer. ISSUE: Whether or not all the materials specified in the contracts had been delivered and installed by respondent in petitioner’s commercial building in Tacurong.87. NO. respondent is ordered to pay petitioner P50. BPI filed the instant petition for recovery. 377.50. Inc. Eastern and CBTC executed a Holdout Agreement providing that the loan was secured by the “Holdout of the C/A No. Indeed. the quantity of materials and the amounts sated in the delivery receipts do not tally with those in the invoices covering them.00 from CBTC which was not secured. ISSUE: Whether BPI can demand the payment of the loan despite the existence of the Holdout Agreement and whether BPI is still liable to the private respondents on the account subject of the withdrawal by the heirs of Velasco.000.000 covered by the promissory note. Private respondents Eastern and Lim. WHEREFORE. Regarding the first. it is contrary to common experience that a creditor would take its own sweet time in collecting its credit. or a difference of P4.000. according to HOOVEN OIC Alberto Villanueva. the predecessor-in-interest of petitioner Bank of the Philippine Islands. Since the Holdout Agreement covers the loan of P73. more so in this case when the amount involved is not miniscule but substantial. 329.458. Sultan Kudarat.00 as moral damages.00 as attorney’s fees and P46. He counterclaimed for actual. Asserting that the Holdout Agreement provides for the security of the loan obtained by Eastern and that it is the duty of CBTC to debit the account of respondents to set off the amount of P73. however.agreed to sell and install various aluminum materials in Lagon’s commercial building in Tacurong. that as regards the materials duly delivered and installed by HOOVEN. By virtue of an Indemnity Undertaking executed by Lim and as President and General Manager of Eastern withdrew one half of this amount and deposited it to one of the accounts of Eastern with CBTC. Meanwhile. Armando Lagon.. Lim withdraw funds from such account and used it to open a joint checking account (an “AND” account) with Mariano Velasco.000.50 as actual damages and litigation expenses. exemplary. moral.000. November-December 1988. complainant was a regular nonproject worker. moral and exemplary damages as well as attorney’s fees. minimum wage increase adjustment. from the period March 16. He also claims that he is entitled to moral and exemplary damages. He has rendered thirteen (13) years of continuous. Eastern. and disregarded its option under the Holdout Agreement.63. petitioner would strive to provide them with more continuous work by successively employing its workers. complainant was surprised to receive a letter informing him that he will be considered terminated after the turnover of materials.. No. 1989 to July 31. petitioner failed to present any report of termination. When it allowed the withdrawal of the balance of the account by the heirs of Velasco. This proves that private respondent was regularly and continuously employed by petitioner in various job assignments from 1976 to 1989. helper/electrician. 1989 amounting to P765. The failure of petitioner to submit reports of termination supports the claim of private respondent that he was indeed a regular employee. Moreover.’ Simply put. petitioner submitted its unverified Comment to private respondent’s complaint stating . He includes payment of his overtime pay. The law provides that payment made by the debtor to the wrong party does not extinguish its obligation to the creditor who is without fault or negligence. PAYMENT – WHO MUST PAY: DEBTOR AUDION ELECTRIC CO. 1989 issued by petitioner which certified that private respondent is a bonafide employee of the petitioner from June 30. Therefore. The Court finds no grave abuse of discretion committed by NLRC in finding that private respondent was not a project employee. its demand was in the correct order. Therefore. he claims that he is entitled to reinstatement with full backwages. including respondents’ tools and equipments not later than August 15.50 and the proportionate 13th month pay for the period covering January to May 1988. and from January to August 1989. overtime pay. 1976 up to the time the certification was issued on April 10. proportionate 13th month pay and attorney’s fees. wage adjustment for the period from August 1. i. loyal and dedicated service with a clean record. BPI was obliged to return the amount of the said account only to the creditor. Private respondent’s employment status was established by the Certification of Employment dated April 10.to collect payment based on the promissory note. Therefore.R. The alleged gap in employment service cited by petitioner does not defeat private respondent’s regular status as he was rehired for many more projects without interruption and performed functions which are vital. Whether or not petitioner was denied due process when all the money claims of private respondent. stockman and timekeeper.. Complainant claims that he was dismissed without justifiable cause and due process and that his dismissal was done in bad faith which renders the dismissal illegal. it made the payment to the wrong party. NATIONAL LABOR RELATIONS COMMISSION and NICOLAS MADOLID 1999 Jun 17 G. proportionate 13th month pay. VS. 1989 in the amount of P256. 1989. BPI was still liable to the true creditor. stockman and timekeeper. it appears that complainant was employed by respondent Audion Electric Company on June 30. considering that private respondent had been hired since 1976. were granted. private respondent. ISSUES: Whether or not the respondent NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction when it ruled that private respondent was a regular employee and not a project employee. project allowances. in this case.00. Private respondent clearly specified in his affidavit the specific dates in which he was not paid overtime pay. As found by the Labor Arbiter. INC. Petitioner should have submitted or filed as many reports of termination as there were construction projects actually finished. Petitioner failed to present such employment contract for a specific project signed by private respondent that would show that his employment with the petitioner was for the duration of a particular project. project allowance. salary differential. On the other hand. Regarding the second issue. 1989 to April 3. 1989. On August 3. The same certificate of employment showed that private respondent’s exposure to their field of operation was as fabricator.e. 1989 to August 14. stockman/timekeeper. project allowance from April 16. 106648 FACTS: From the position paper and affidavit corroborated by oral testimony. that is. RULING: Respondent’s assigning complainant to its various projects did not make complainant a project worker. BPI was the debtor and Eastern was the creditor with respect to the joint checking account. ‘it appears that complainant was employed by respondent as fabricator and or projects as helper electrician. For this reason. for a total of 13 years. 1989 in the total amount of P255. This same affidavit was confirmed by private respondent in one of the scheduled hearings where he moved that he be allowed to present his evidence ex-parte for failure of petitioner or any of his representative to appear thereat. notwithstanding petitioner’s claim in its reply that in taking interest in the welfare of its workers. 1976 as fabricator and continuously rendered service assigned in different offices or projects as helper electrician. necessary and indispensable to the usual business of petitioner. the balance payable in 5 bi-monthly equal installments. the award of moral and exemplary damages must be deleted for being devoid of legal basis. 1. without establishing bad faith. EASTWEST BANKING CORPORATION G. 2208 of the Civil Code. Despite due demands by the respondent. 511 S 414 VDA. the challenged resolutions of the respondent NLRC are hereby AFFIRMED with the MODIFICATION that the awards of moral and exemplary damages and attorney’s fees are DELETED.R. the power to rescind the contract is unavailing to the petitioner. BJ Marthel is engaged in trading. serious anxiety as the result of the actuations of the other party. Private respondent has not shown that he is entitled thereto pursuant to Art. or constituted an act oppressive to labor. However. Private respondent not being entitled to award of moral damages. or was done in a manner contrary to morals. 1992 SPOUSES RAFAEL ESTANISLAO v. DE JAYME VS. such action must be shown to have been willfully done in bad faith or with ill-motive. Petitioner was given the opportunity to cross-examine private respondent yet petitioner forfeited such chance when it did not attend the hearing. Moral and exemplary damages are recoverable only where the dismissal of an employee was attended by bad faith or fraud. 544 S 369 AQUINTEY VS.. There having been no failure on the part of the respondent to perform its obligations. petitioner waived the claimed delay in the delivery of said items. Private respondent predicated his claim for such damages on his own allegations of sleepless nights and mental anguish. 2004 FACTS: Petitioner Lorenzo Shipping is engaged in coastwise shipping and owns the cargo M/V Dadiangas Express. marketing an dselling various industrial commodities. CA. NOV. SPECIAL FORMS OF PAYMENT: A. Invariably. No. Where the award of moral and exemplary damages is eliminated. TIBONG. ESTANISLAO VS. 390 SCRA 380 CALTEX VS. There was no delay since there was no demand. an award of exemplary damages is likewise baseless. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. but this was not considered by the Labor Arbiter for being unverified. Supreme Court geld that time was not of the essence. DACION EN PAGO / DATION IN PAYMENT WHERE PAYMENT MUST BE MADE LORENZO SHIPPING VS. Court of appeals decision is affirmed. It was allegedly paid through post dated checks but the same was dishonored due to insufficiency of funds. ISSUE: Whether or not respondent incurred delay in performing its obligation under the contract of sale RULING: By accepting the cylinders when they were delivered to the warehouse. 178537. petitioner falied contending that time was of the essence in the delivery of the cylinders and that there was a delay since the respondent committed said items “ within two months after receipt of fir order”. which was reversed by the Court of appeals ordering appellee to pay appellant P954.that he had already satisfied the unpaid wages and 13th month pay claimed by private respondent. 13. It failed to show proof by means of payroll or other evidence to disprove the claim of private respondent. fraud or ill motive as legal basis therefor. no again stating the date of the cylinder’s delivery.000 plus interest. and failed to rebut the claims of private respondent. Lorenzo Shipping ordered for the second time cylinder lines from the respondent stating the term of payment to be 25% upon delivery. Petition is denied. and bad faith or ill motive under the law cannot be presumed but must be established with clear and convincing evidence. EAST-WEST BANKING CORP. 3. Petitioner failed to rebut the claims of private respondent.February 11. so must the award for attorney’s fees be deleted. WHEREFORE. RTC held respondents bound to the quotation with respect to the term of payment. IAC. BJ MARTHEL 443 S 163 November 19. It is not enough that one merely suffered sleepless nights. 2. good customs or public policy. 2008 FACTS: . 4. mental anguish. 00 plus 6% per month. RTC ruled that the deed of assignment and the petitioner’s delivery of the heavy equipment effectively extinguished the petitioner’s obligation and respondent as stopped.000 from Felicdad’s debtors.459 and that their debtors had executed promissory notes in favor of Agrifina.1997. CA 390 SCRA 380 2002 Oct 4 FACTS: On January 8. SPOUSES TIBONG G. Despite demands. Meaning. Agrifina alleged that Felicidad secured loans from her on several occasions at monthly interest rates of 6% to 7%. the creditor accepts a third person who consent of the substitution and assumes the obligation. Court of Appeals correctly found that the respondent’s obligation to pay the balance of their account with petitioner was extinguished pro tanto by the deeds of credit. Respondent manifested to admit an amended complaint for the seizure and delivery of two more heavy equipment which are covered under the second deed of the chattel mortgage. may use the leased premises as a collateral to secure payment of a loan which Asiancars may obtain from any bank.275.R. It stated that the deed was to . In October 1977.919. There was no settlement. CA reversed the decision ordering the petitioner the outstanding debt of P4.00 exclusive of interests. Agrifina was able to collect the total amount of P301.December 20. the debtor offers.00.925. The lease was for twenty (20) years. It is necessary that the old debtor be released fro the obligation and the third person or new debtor takes his place in the relation . SPECIAL FORMS OF PAYMENT: DATION EN PAGO/ DATION IN PAYMENT VDA. shall automatically become the property of the Jayme spouses (the lessors). Petitioner defaulted entire obligation became due and demandable. the spouses signed a Deed of Real Estate Mortgage dated November 21. ISSUE: Did the Deed of Assignment operate to extinguish petitioner’s debt to the respondent such that the replevin suit could no longer prosper? RULING: The deed of assignment was a perfected agreement which extinguished petitioner’s total outstanding obligation to the respondent. The terms and conditions of the lease contract stipulated that Cebu Asiancars Inc. 2000 and March 8. The nature of the assignment was a dacion en pago whereby property is alienated to the creditor in the satisfaction of a debt in money. DE JAYME VS. covering one-half of Lot 2700 owned and registered to the former. provided that the proceeds of the loan shall be used solely for the construction of a building which.000 evidenced by a promissory note and secured by two deeds of chattel mortgage covering two dump trucks and a bull dozer . The entire Lot 2700 was offered as one of several properties given as collateral for the loan. 1977 in favor of MBTC. spouses Tiong alleged that they had executed deeds of assignment in favor of Agrifina amounting to P546.On July 24. a complaint for sum of money and damages against respondents.000.341. Since the agreement was consummated by the delivery of the last unit of heavy equipment under the deed. CA decision is affirmed with the modification that the principal amount of the respondents is P33.). Agrifina filed a complaint in the office of the barangay for the collection of P773. petitioner’s are deemed to have been released from all their obligations from the respondents. SPECIAL FORMS OF PAYMENT: DATION EN PAGO/ DATION IN PAYMENT AQUINTEY v. upon the termination of the lease or the voluntary surrender of the leased premises before the expiration of the contract. Spouses insisted that by virtue of these documents. spouses Tibong failed to pay their outstanding loans of P773. there is no novation. A deed of assignment was drafted by the respondent on October 6. petitioner Aquintey filed before RTC Baguio. president of Airland Motors Corporation (now Cebu Asiancars Inc. 2006 FACTS: On May 6. 1973.000 from the Metropolitan Bank and Trust Company. 166704. RTC favored Agrifina. petitioner obtained a loan fro the respondent in the amount of P3. No. 2001 respectively. the spouses Graciano and Mamerta Jayme entered into a Contract of Lease with George Neri. Asiancars obtained a loan of P6.000. Agrifina became the new collector of their debts. ISSUE: Whether or not the deeds of assignment in favor of petitioner has the effect of payment of the original obligation that would partially extinguish the same RULING: Substitution of the person of the debtor ay be affected by delegacion. Court of Appeals affirmed the decision with modification ordering defendant to pay the balance of total indebtedness in the amount of P51. She tried to collect the balance of Felicidad and when the latter reneged on her promise. Petitioners completed the delivery of heavy equipment mentioned in the deed of assignment to respondent which accepted the same without protest or objection.841.69 plus interests.000. Without such release. As mortgagors. However. 1999. including the right to alienate it. 1978. Asiancars. As such.449. The INTERMEDIATE APPELLATE COURT and ASIA PACIFIC AIRWAYS. 1979.R. private respondent had an outstanding obligation to petitioner in the total amount of P4." The building was valued at P980.. against respondent Asiancars. petitioner informed private respondent that the amount not returned (P510. Graciano Jayme died. could validly exercise rights of ownership. believing that it was entitled to a larger amount by way of refund. with six (6) percent interest per annum until fully paid. Both the trial and appellate courts found that no fraud attended the execution of the deed of mortgage. The trial court ruled that the REM is valid and binding upon the Jaymes. demanding the refund of the remaining amount. covering the period from January 1. A public auction was held on February 4. SPECIAL FORMS OF PAYMENT: DATION EN PAGO/ DATION IN PAYMENT CALTEX (PHILIPPINES). INC.00 representing the refund to respondent of Special Fund Import Payment on its fuel purchases was issued by the National Treasury in favor of petitioner. requesting a refund of said excess. No. At this point. consent. MBTC extrajudicially foreclosed the mortgage. Treasury Warrant No.294. 1978 until December 31. be it sale or novation. In any case.35.000 and the amount was applied as partial payment for the loan. The latter. MBTC was the highest bidder for P1. Mamerta Jayme also passed away. The undertaking really partakes in one sense of the nature of sale. As a result of the foreclosure. private respondent Asia Pacific Airways Inc. for Annulment of Contract with Damages with Prayer for Issuance of Preliminary Injunction. Asiancars conveyed ownership of the building on the leased premises to MBTC. Graciano’s heirs filed a civil complaint. by way of "dacion en pago. Petitioner. Dacion en pago is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation. The alienation via dacion en pago was made by Asiancars to MBTC on December 18. A certificate of sale was issued and was registered with the Register of Deeds on February 23. in January of 1982. 1980. as it did to MBTC. wrote petitioner anew.63) represented interest and service charges at the rate of 18% . wrote a letter to petitioner. 1973 and was to expire 20 years thereafter. though with the provision that said ownership be transferred to the Jaymes upon termination of the lease or the voluntary surrender of the premises. Meeting financial difficulties and incurring an outstanding balance on the loan. Meanwhile. what actually takes place in dacion en pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale. its officers and incorporators and MBTC.682. The ownership of the building had been effectively in the name of the lesseemortgagor (Asiancars). In response thereto. 1992 G. There still remained a balance of P2. ISSUE: Whether or not the dacion en pago by Asiancars in favor of MBTC is valid and binding despite the stipulation in the lease contract that ownership of the building will vest on the Jaymes at the termination of the lease. To settle this outstanding obligation. wherein it assigned to petitioner its receivables or refunds of Special Fund Import Payments from the National Treasury of the Philippines to be applied as payment of the amount of P4. 1981. 1993. acting on said request.000. B04708613 in the amount of P5. during the subsistence of the lease. 1980. Pursuant thereto. On February 12. VS. the mortgagor. private respondent.secure the payment of a loan obtained by Asiancars from the bank. payment for which is to be charged against the debtor’s debt. In its modern concept.00 plus in favor of private respondent. entered into an agreement with petitioner Caltex (Philippines) Inc. petitioner. 1981.. Later. in 1999.33. It is a special mode of payment where the debtor offers another thing to the creditor who accepts it as equivalent of payment of an outstanding debt. RULING: YES.072. or on January 8.13 which private respondent owed to petitioner. the essential elements of a contract of sale.344. The CA affirmed with modifications. to have the effect of totally extinguishing the debt or obligation. 1981. which Asiancars failed to pay. 72703 FACTS: On January 12. pursuant to the Deed of Assignment. representing the unpaid price of the fuel supplied. The Motion for Reconsideration was denied.66. The alienation of the building by Asiancars in favor of MBTC for the partial satisfaction of its indebtedness is valid. INC. while the debt is considered as the purchase price. respondents November 13. private respondent executed a Deed of Assignment dated July 31. made a refund in the amount of P900. whereby petitioner agreed to supply private respondent's aviation fuel requirements for two (2) years.683. common consent is an essential prerequisite. 1981.. petitioner supplied private respondent's fuel supply requirements.942. object certain.13.475. Private respondent MBTC is ordered to pay petitioners rentals in the total amount of P602. The lease was constituted on January 8.067. survived by his widow Mamerta and their children. Four days later.083. namely. As of June 30. having learned that the amount remitted to petitioner exceeded the amount covered by the Deed of Assignment. and cause or consideration must be present. on February 16. 1980. that is the creditor is really buying the thing or property of the debtor.072.550. Eventually. 1253. stated: "'The dation in payment extinguishes the obligation to the extent of the value of the thing delivered. by virtue of and pursuant to the decision in BOE Case No. Hence. 1980 plus any applicable interest charges on overdue account" and the clause "and other avturbo fuel lifting and deliveries that ASSIGNOR may from time to time receive from the ASSIGNEE". equivalent to the obligation. their contemporaneous and subsequent acts shall be principally considered (Art. 1980) constitutes a dacion in payment provided for in Article 1245 of the Civil Code which has the effect of extinguishing the obligation. On November 7. On August 27. in payment of ASSIGNOR's outstanding obligation plus any applicable interest charges on overdue account and other avturbo fuel lifting and deliveries that ASSIGNOR may from time to time receive from the ASSIGNEE. does hereby irrevocably assign and transfer unto ASSIGNEE any and all funds and/or Refund of Special Fund Payments. Thus. Likewise. plus any applicable interest on overdue account. the then Intermediate Appellate Court failed to take into consideration the subsequent acts of the parties which clearly show that they did not intend the Deed of Assignment to totally extinguish the obligation: (1) After the execution of the Deed of Assignment on July 31. speaking of the concept of dation in payment. RULING: The Supreme Court ruled that the Deed of Assignment executed by the parties on July 31. unless the parties by agreement. reiterating that the amount not returned represented interest and service charges on the unpaid and overdue account at the rate of 18% per annum. 1980 is not a dation in payment and did not totally extinguish respondent's obligations as stated therein. it is clear that a dation in payment does not necessarily mean total extinguishment of the obligation. and concluded that the Deed of Assignment of July 31.072. including all its rights and benefits accruing out of the same. by agreement.13 as of June 30. It was further alleged that the collection of said interest and service charges is sanctioned by law. 1980. As aptly argued by petitioner. The obligation is totally extinguished only when the parties.13 as of June 30. among others.072. Now therefore in consideration of the foregoing premises. and ordering petitioner to return the amount of P510. in the case of Lopez vs. and ASSIGNEE does hereby accepts such assignment in its favor. the then Intermediate Appellate Court failed to take into account the express recitals of the Deed of Assignment. 1985. respondent addressed the following request to petitioner: The Supreme Court. express or implied. 1980.550." From the above. 1980. This was pursuant to the Deed of Assignment which provides for respondent's obligation for "applicable interest charges on overdue account". on September 13. petitioner continued to charge respondent with interest on its overdue account up to January 31. The terms of the Deed of Assignment being clear. if possible. ASSIGNOR has an outstanding obligation with ASSIGNEE in the amount of P4. to be adopted as will give effect to all. private respondent filed a complaint against petitioner in the Regional Trial Court of Manila. 1980 to July 31.63. that ASSIGNOR might be entitled to. Court of Appeals. 1982. 1981. 80-123. or by their silence. The charges for interest were made every month and not once did respondent question or take exception to the interest. ASSIGNOR by virtue of these presents.63 to private respondent. which was made with the conformity of said private respondent who had accepted the validity of said interest and service charges. consider the thing as In order to judge the intention of the contracting parties. The foregoing subsequent acts of the parties clearly show that they did not intend the Deed of Assignment to have the effect of totally extinguishing the obligations of private respondent without payment of the applicable interest charges on the overdue account.682. and (3) the other avturbo fuel lifting and deliveries that assignor (private respondent) may from time to time receive from assignee (Petitioner). express or implied. 1983. and (2) In its letter of February 16. ISSUE: Whether or not there is a valid dation in payment in this case. 1981.13. in which case the obligation is totally extinguished. and is in accordance with the terms and conditions of the sale of petroleum products to respondent.00. the trial court rendered its decision dismissing the complaint. a decision was rendered by the said appellate court reversing the decision of the trial court.072. as well as the counterclaim filed by defendant therein. (2) the applicable interest charges on overdue accounts. they should have so stated and there would have been no need for them to qualify the statement of said amount with the clause "as of June 30. it could easily be seen that the Deed of Assignment speaks of three (3) obligations (1) the outstanding obligation of P4.682. Civil Code). such a construction is.682.550.per annum on the unpaid and overdue account of respondent from June 1. "That Whereas. thus supporting the claim of private respondent for the return of the amount retained by petitioner. In the instant case." Petitioner (defendant in the trial court) filed its answer. if it were the intention of the parties to limit or fix respondent's obligation to P4. In the construction of an instrument where there are several provisions or particulars. or by their silence. consider the thing as equivalent to the obligation. . either as agreed upon by the parties or as may be proved. The then Intermediate Appellate Court ruled that the three (3) requisites of dacion en pago are all present in the instant case. to collect the sum of P510. the literal meaning of its stipulations should control. Private respondent (plaintiff) appealed to the Intermediate Appellate Court (IAC). 1981. the nature of the obligation.147 square meters. Private respondent refused on the ground that it was. VS. The CA rendered its assailed decision affirming the decision of the trial court. 345 SCRA 134 CBC VS.170. On appeal to the RTC. Petition denied. 1995. 2.. redemption and damages. at the time. RULING: No. 545 S 300 PACULDO VS. courts are not at liberty to ignore the freedom of the parties to agree on such terms and conditions as they see fit as long as they are not contrary to law. petitioner demanded that private respondent vacate the leased premises and surrender its possession to him. with an office building constructed thereon. an agricultural cooperative. on account of respondent’s failure to pay the corresponding fees unjustified? . SPOUSES EFREN EVANGELISTA FACTS: Respondents are engaged in the large-scale business of buying broiler eggs. the standing and relationship of the parties. Petitioner acquired the subject parcels of land in an auction sale on November 9. but not limited to. ASJ received P15. 1253. ISSUE: Was petitioner’s retention of the chicks and by-products. 1996. respondents availed of the hatching services of ASJ Corp.000 to P 1000 per day.Finally. Petitioner filed an action for ejectment before the MTC. CA decision affirmed. including. APPLICATION OF PAYMENTS 1. payment of the principal shall not be deemed to have been made until the interests have been covered.000 from the Land Bank of the Philippines (Land Bank). the MTC decision was affirmed in toto. Private respondent National Onion Growers Cooperative Marketing Association. The lease was valid until December 31. the following: the type. CA. INC. the mode of breach and its consequences. For incubation and hatchings. 4. 1995 for P20. inter alia. for the imposition of the contractually stipulated penalty of P5. In this case. hatching and selling them and egg by-products. Fro consecutive times the respondents failed to pay the fee until such time that ASJ retained the chicks demanding full payment from the respondent." (Art. The question of whether a penalty is reasonable or iniquitous is addressed to the sound discretion of the court and depends on several factors. RTC ruling..072. Inc. good customs. Service fees were paid upon release. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. which was affirmed by the Court of Appeals holding that ASJ Corp and Antonio San Juan be solidarily liable to the respondents. or if the principal obligation has been partly or irregularly complied with. extent and purpose of the penalty. the stipulated penalty was reduced by the appellate court for being unconscionable and iniquitous. petitioner. On September 3. separate from the principal obligation of P4.13 was expressly stipulated in the Deed of Assignment. respondents FACTS: At the core of the present controversy are two parcels of land measuring a total of 2. morals. Generally.682. Upon the expiration of the lease contract. the penalty may also be reduced by the courts if it is iniquitous or unconscionable. was the occupant of the disputed parcels of land under a subsisting contract of lease with Land Bank. public order or public policy.000 for partial payment but the chicks were still not released. The law provides that "if the debt produces interest. He asked. COURT OF APPEALS AND NATIONAL ONIONS GROWERS COOPERATIVE MARKETING ASSOCIATION. ISSUE: Whether or not the Court of Appeals erred in reducing the penalty awarded by the trial court.000 per day of delay in surrendering the possession of the property to him. THE HON. PAYMENT BY CESSION OR ASSIGNMENT ANTONIO LO. courts may equitably reduce a stipulated penalty in the contract if it is iniquitous or unconscionable. contesting petitioner’s acquisition of the parcels of land in question in an action for annulment of sale. 265 SCRA 327 MOBIL VS. VS. the payment of applicable interest charges on overdue account. Nevertheless. They agreed o service fees of 80 centavos per egg.. REGALADO. with the modification that the penalty imposed upon private respondent for the delay in turning over the leased property to petitioner was reduced from P 5. 272 SCRA 523 ASI CORP and ANTONIO SAN JUAN v. ASI CORP. Civil Code). the trial court decided the case in favor of petitioner. 3. EVANGELISTA. the same having been stipulated by the parties. Even if there has been no performance. This power of the courts is explicitly sanctioned by Article 1229 of the Civil Code which provides: Article 1229. the supervening realities. CA. 55 in rental for the month of May. ten (10) of which were located within the Fairview compound. dated November 19. which states that petitioner’s security deposit for the Quirino lot. 000. respondent mortgaged the land subject of the lease contract. Respondents cannot substitute or apply as their payment the value of the chicks and by-products they expect to derive because it is necessary that all the debts be paid for the same kind. For the first five (5) years of the contract beginning December 27. petitioner leased eleven (11) other property from the respondent. he made it clear to respondent that they were to be applied to his rental obligations on the Fairview wet market property. the right to specify which among his various obligations to the same creditor is to be satisfied first rest with the debtor. Subsequently. Petitioner interposed no objection. 1992. On the same day. located at Fairview Park. respondent informed petitioner that the payment was to be applied not only to petitioner’s accounts under the subject land and the Quirino lot but also to heavy equipment bought by the latter from respondent.00. 1991. RULING: NO. 1991 and ending on December 27. dated July 15. respondent also filed a complaint for ejectment against petitioner. respondent applied a big portion of the amount paid by petitioner to the satisfaction of an obligation which was not yet due and demandable. while the eleventh was located along Quirino Highway Quezon City. the petitioner was not in arrears in the payment of rentals on the subject property at the time of the filing of the complaint for ejectment. The lower court rendered a decision in favor of the respondent. As provided in Article 1252 of the Civil Code.the payment of the eight heavy equipments.000. be applied as partial payment for his account under the subject lot as well as to the real estate taxes on the Quirino lot. 1990. to Monte de Piedad Savings Bank. Petitioner submits that his silence is not consent but is in fact a rejection. Aside from the above lease. petitioner filed an action for injunction and damages seeking to enjoin respondents from disturbing his possession of the property subject of the lease contract. REGALADO 345 SCRA 134 FACTS: On December 27. The contract was for twenty five (25) years. However. payable within the first five (5) days of each month with a 2% penalty for every month of late payment. On account of petitioner’s failure to pay P361. no payment is to be applied to a debt which is not yet due and the payment has to be applied first to the debt which is most onerous to the debtor. the respondent sent two demand letters to petitioner demanding payment of the back rentals. respondent refused to accept petitioner’s daily rental payments.00 for the months of June and July 1992. Quezon City. which was affirmed in toto by the Court of Appeals. as a security for a loan. On August 12. Unlike in the November letter. The Court of Appeals decision is modified. 000. in an earlier letter. .000. Petitioner also purchased from respondent eight (8) units of heavy equipment and vehicles in the aggregate amount of Php 1. and the monthly rental of P450.000. Meanwhile. 1990. 020. Though he entered into various contracts and obligations with respondent. if the debtor did not declare at the time he made the payment to which of his debts with the creditor the payment is to be applied. i.000.000. as evidenced by his signature signifying his conformity thereto. and the subsequent dates thereafter.e. In the case at bar. at the time petitioner made the payment. all the payments made. the law provided the guideline. Under the law. 2015. The petition is partly granted. 895. petitioner Nereo Paculdo and respondent Bonifacio Regalado entered into a contract of lease over a parcel of land with a wet market building. it would cause the cancellation of the lease contract. Nereo would pay a monthly rental of P450. APPLICATION OF PAYMENTS PACULDO VS.RULING: Respondents’ offer to partially satisfy their accounts is not enough to extinguish their obligation. 1991. As found by the lower court there was a letter sent by respondent to herein petitioner. on August 3. 1992.00 were to be applied to rental and security deposit on the Fairview wet market property. Without the knowledge of petitioner. ISSUE: Whether or not the petitioner was truly in arrears in the payment of rentals on the subject property at the time of the filing of the complaint for ejectment. including the improvements which petitioner introduced into the land amounting to P35. and if no payment was made within fifteen (15) days from the receipt of the letter. 1992. the July letter did not contain the signature of petitioner. commencing on January 1. about P11. 5 million and P3. Eight days before the foreclosure sale. including Violation of Article 1308 of the Civil Code. but it was denied in an Order dated September 23. 1993 and September 23. and another executed on August 10. VS. 1989 mortgage contracts. the petition is granted. and words in context. the notaries public scheduled the foreclosure sale of the spouses' real estate properties on April 13. Indeed. . respondents 1996 December 05 G. the provisions of P. under TCT No. 1995. all the words. and with respect to the publication of the notice of the auction sale. On April 7.e. . Taguiam for TCT No. ATTYS. . 1989 covering a parcel of land situated in Cubao. 1989 and August 10.5 million respectively stipulated in the July 27. and Notary Public Atty. Native West in turn executed promissory notes in favor of China Bank.500. a real estate mortgage executed on July 27. 1079 is the applicable statute. 121158 FACTS: China Banking Corporation (China Bank) extended several loans to Native West International Trading Corporation (Native West) and to So Ching. The promissory notes matured and despite due demands by China Bank neither private respondents Native West nor So Ching paid. REYNALDO M. viz. within the said limit of P6... Hence. attributing to the doubtful ones that sense which may result from all of them taken jointly. Thus. private respondents filed a complaint with the Regional Trial Court for accounting with damages and with temporary restraining order against petitioners alleging several grounds. . China Bank filed petitions for the extra-judicial foreclosure of the mortgaged properties before Notary Public Atty. and payments. CABUSORA and RENATO C. Cabusora for TCT No.. we find that the parties intent is to constitute the real estate properties as continuing securities liable for future obligations beyond the amounts of P6. i. 277797.00)" yet in the same clause it provides that "the mortgagee had required the mortgagor(s) to give collateral security for the payment of any and all obligations heretofore contracted/incurred and which may thereafter be contracted/incurred by the mortgagor(s) and/or debtor(s). Petitioners moved for reconsideration. Similarly." Applying the rule. Article 1374 of the Civil Code. . at any and all times outstanding . RULING: An important task in contract interpretation is the ascertainment of the intention of the contracting parties which is accomplished by looking at the words they used to project that intention in their contract.000. credit facilities not exceeding six million five hundred thousand pesos only (P6. whether evidenced by promissory notes or otherwise. however. under the third paragraph. No.000. The Court of Appeals accordingly dismissed the petition. under TCT No." The fourth paragraph. 1989 covering a parcel of land located in Mandaluyong. respondent Court of Appeals held that Administrative Circular No. 277797. and NATIVE WEST INTERNATIONAL TRADING CORP. So Ching. with the marital consent of his wife. which decree petitioners similarly failed to obey. . 5363. Reynaldo M. . . or any one of them. .D. TAGUIAM. 3 is the governing rule in extra-judicial foreclosure of mortgage. the instant petition under Rule 45 of the Rules of Court reiterating the grounds raised before respondent court. 5363. 1993." Again. In a decision dated January 17. After due notice and publication. Respondent Court of Appeals did not pass upon the other issues and confined its additional lengthy discussion on the validity of the trial court's issuance of the preliminary injunction. petitioners. SANTIAGO. or any one of them. "the idea being to make this deed a comprehensive and all embracing security that it is" supports this qualification. 1993. shall be secured by this mortgage" which manifestly shows that the parties principally intended to constitute the real estate properties as continuing securities for additional advancements which the . . Consequently. the trial court issued a temporary restraining order to enjoin the foreclosure sale. The first paragraph which ends with the clause. Pursuant to a provision embodied in the two mortgage contracts. PEDRO T. states that ". while the "whereas" clause initially provides that "the mortgagee has granted. it is provided that "the mortgagee may from time to time grant the mortgagor(s)/debtor(s) credit facilities exceeding the amount secured by this mortgage . No. additionally executed two mortgages over their properties. in addition. copies of which were given to the spouses So Ching and Cristina So." And although it was stated that "[t]he said credit shall extend to any account which shall. states “the various stipulations of a contract shall be interpreted together. Cristina So. To annul the trial court's Orders of April 28. HON. which circular petitioners however failed to follow. in favor of the mortgagee" which qualifies the initial part and shows that the collaterals or real estate properties serve as securities for future obligations. finding the same neither capricious nor whimsical exercise of judgment that could amount to grave abuse of discretion. Quezon City. Native West's president. ISSUE: Whether or not there was a correct application of payment in this case.The lease over the Fairview wet market is the most onerous to the petitioner in the case at bar. 1993. not words standing alone. the second paragraph provides that "the mortgagee may take further advances and all sums whatsoever advanced by the mortgagee shall be secured by this mortgagee . SPS. all such withdrawals. petitioners elevated the case through certiorari and prohibition before public respondent Court of Appeals. SO CHING and CRISTINA SO.R. as well as petitioners' subsequent motion for reconsideration. and may from time to time hereafter grant to the mortgagors . COURT OF APPEALS.00 exclusive of interest". APPLICATION OF PAYMENTS CHINA BANKING CORPORATION. Renato E. 1993. not just a particular word or two. this part of the second sentence is again qualified by its succeeding portion which provides that "this mortgage shall stand as security for all indebtedness of the mortgagor(s) and/or debtor(s).500. INC. CCC sought to recover consequential damages from MOPI. jointly and severally liable to private respondent Continental Cement Corporation in the amount of eight million pesos (P8. petitioner Mobil Oil Philippines. APPLICATION OF PAYMENTS MOBIL OIL PHILIPPINES. MOPI made a total of sixty-seven deliveries of BFO..00) for actual damages. its plant operations had to be stopped completely. CCC discovered that what should have been MOPI’s 20. as of 30 November 1982. HON. exemplary damages of the same amount. CCC suggested that MOPI’s storage tank in the Norzagaray plant be likewise investigated for possible contamination. through CFS’s lorry truck.). and that as a consequence of the “frivolous and malicious suit: which besmirched MOPI’s reputation.000. And while private respondents aver that they have already paid ten million pesos.730.000 liters of BFO delivered. Branch 101. is a continuing security and is not discharged by repayment of the amount named in the mortgage. (MOPI). On 08 October 1982. .00 against which CCC’s purchases of oil could initially be charged. A mortgage given to secure advancements. . the truck driver and helper fled. Sometime in May 1982. and CALTEX (PHILS. that when the delivery was being inspected by CCC’s representatives. extend. During the period starting from 12 July to 07 October 1982. the mortgagee has the right to foreclose the mortgage and to have the property seized and sold in view of applying the proceeds to the payment of the obligation. respondents G. MOPI had a “hauling contract” with Century Freight Services (CFS) whereby CFS undertook the delivery of Mobil products to designated consignees of MOPI. upon application. Inc. in the amount of P1. Inc. for having delivered water-contaminated bunker fuel oil to the serious prejudice and damage of the cement firm. an allegation which has still to be settled before the trial court.00 for the 20. that Rivera acknowledged full liability for such delivery.00.R. in case of default of payment. it suffered moral damages of not less than P10. 103052 23 May 2003 FACTS: The petition for review on certiorari in the case at bar seeks the reversal of the decision of the Court of Appeals. of Quezon City.238. and that the amounts named as consideration in said contracts do not limit the amount for which the mortgage may stand as security if from the four corners of the instrument the intent to secure future and other indebtedness can be gathered.000 liters of BFO under invoice No. and Caltex Philippines. the same cannot be utilized as a shield to enjoin the foreclosure sale. Foreclosure is valid where the debtors.000. are in default in the payment of their obligation. under which the former would supply the latter’s industrial fuel oil (IFO) or bunker fuel oil (BFO) requirements. In fact. In answer.000. MOPI claimed that CCC had an outstanding obligation to it.000. and that it was able to resume operations only after essential repairs had been undertaken on 02 October 1982.096. which found herein petitioners Mobil Oil Philippines. No.. COURT OF APPEALS and CONTINENTAL CEMENT CORPORATION. CHINA BANKING CORPORATION is hereby authorized to sell at public or private sales such securities or things of value for the purpose of applying their proceeds to such payments. the promissory notes executed to evidence the loans also authorize the mortgagee to foreclose on the mortgages. aside from the mortgage contracts. plus ten percent (10%) thereof by way of attorney’s fees. a cement producer. affirming that 2 of the Regional Trial Court (RTC). to CCC’s cement factory in Norzagaray. as in this case. until the full amount of the advancements are paid. INC.. a firm engaged in the marketing of petroleum products to industrial users. and that MOPI agreed to the water draining activity solely for the purpose of maintaining good business relations with CCC but not to admit any liability therefore. CCC at once informed MOPI of this anomaly and of its intention to meanwhile hold in abeyance all payments due to MOPI on its previous deliveries until such time as the parties would have ascertained that those deliveries were not themselves adulterated.000 liters.000. that on 23 September 1982. In its compulsory counterclaim. ISSUES: . The essence of a contract of mortgage indebtedness is that a property has been identified or set apart from the mass of the property of the debtor-mortgagor as security for the payment of money or the fulfillment of an obligation to answer the amount of indebtedness. Alleging in the complaint it ultimately filed with the RTC that its factory equipment broke down from 19 to 22 September 1982 due to the utilization of the watercontaminated BFO supplied by MOPI. petitioners VS.mortgagee may. It is well settled that mortgages given to secure future advancements or loans are valid and legal contracts. pure water. that Rivera promised to pay the amount of P42. in fact. Inc. The allegations stated are a clear admission that they were unable to settle to the fullest their obligation. that it was only on 08 October 1982 that CCC brought to its attention the alleged anomalous delivery of 20.. 47587 through Mariano Rivera’s lorry truck.000 BFO delivery to CCC’s Norzagaray plant. MOPI averred that CCC had accepted each delivery of BFO in accordance with the procedure for testing and acceptance of BFO deliveries.51. was. Thus: . entered into a supply agreement with private respondent Continental Cement Corporation (CCC). MOPI extended to CCC an unsecured credit line of P2. It is a settled rule that in a real estate mortgage when the obligation is not paid when due. each delivery consisting of 20.000. Bulacan. and the incurrence of attorney’s fees. except those that have already been used in cement operation by CCC.: was undertaken. and the contracted price of the BFO that CCC paid to MOPI included hauling charges. the sale itself specifically called for delivery by the seller to the buyer at the latter’s place of business. eventually the loan become due and demandable. the herein questioned decision of the Court of Appeals in AFFIRMED in toto. witnessed and signed by representatives of both MOPUI and CCC. 1997 RAYOS VS. otherwise. 316 SCRA 488 DE MESA VS. 172259. CA. ISSUE: Whether or not the contract of Pacto de Retro Sale be rescinded by the petitioner RULING: In the instant case. “and that the appellate court had so misapprehended the facts. 5. in the same manner that MOPI may not belatedly question the testing procedure theretofore adopted. 3. DEC. 398 SCRA 24 CEBU INTERNATIONAL VS. 2000. a son of Benos and Lawilao paid the bankl but the bank refused. The presumption laid down under Article 1523 of the Civil Code that delivery to the carrier should be deemed to be delivery to the buyer would have no application where. in good faith. not CCC. The factual finding that deliveries previous to 08 October 1982 were adulterated BFO was supported by the 22 October 1982 “joint undertaking. Lawilao failed to prove their offer to pay the balance.. the sale would become irrevocable. nonetheless. Benos could redeem the property within 18 months from the date of execution by returning the contract price. RTC declared Lawilao of the ownership of the subject property. OCT. evidence by the second “joint undertaking. Petition is granted. records show that Lawilao filed the petition for consignation against the bank in Civil Case without notifying the Benos.000. clearly showed that a “detailed verification of water contained on all BFO delivered by MOBIL OIL PHILS. that the Pacto de Retro Sale is rescinded and petitioner are ordered to return the amount of P150. Lawilao filed for consignation against the bank and deposited the amount of P159. REYES. one-half of which to be paid in cash to the Benos and the other half to be paid to the bank to pay off the loans of the Benos which was secured by the same lot and building. the latter.000 to respondents. RULING: The claim that the Court of Appeals “conveniently made an inference that the subject Continental storage tank contained Mobil BFO deliveries only because Mobil and Continental agreed to jointly examine the same. CFS was the contractor of MOPI. December 5. TENDER OF PAYMENT OR CONSIGNATION 1. Court of Appeals decision is reversed and set aside. 19. 1997 ETERNAL GARDENS VS. 4. as far as the Benos are concerned. Costs against petitioners. CA. 2006 FACTS: On February 11. the last of which had indicated that failure on MOPI’s part to send a representative would be tantamount to a waiver of its right to participate therein. . On August 14. 2.” This document. is unacceptable. WHEREFORE. Thus. The same could be said of the second water draining process. CA. 24. BENOS VS. relied upon MOPI’s conduct.00. and that the deliveries of BFO made by Mobil to Continental before 8 October 1982 were not contaminated with water. Lawilao took possession of the property. restructured it twicw. OCT. CS. Hence. was notified of the “counting” thrice. Whether or not Petitioners can be held liable for the contaminated BFO delivered on 8 October 1982 on the ground that Country Freight Service.R. such as in this case.1999. Implicit from this statement was that there still was at the time an availability of BFO in the storage tank designated by CCC for past Mobil deliveries. 6.Whether or not Petitioner Mobil is stopped from claiming that no Mobil BFO remained unused by Continental on 22 October 1982. there was no full and complete payment of the contract price which gives them the right to rescind. After paying the P150. The appellate court may not thus be faulted for holding that petitioners and barred from questioning the results of water draining processes conducted on the MOPI tank in the CCC plant site. 509 S 549 PEOPLE’S INDUSTRIAL VS. even before the filing of the consignation case. as carrier-hauler.” Although done without the participation of MOPI. INC. No. was an agent of Mobil.. which. Lawilao never notified the Benos. 9. which was affirmed by the Court of Appeals. SPOUSES GREGORIO LAWILAO G.000.000. Under the contract. 1999 SPOUSES JAIME BENOS v. MOPI cannot be allowed to turn its back to its own acts (or inactions) to the prejudice of CCC. petitioner-spouses Benos and respondent Lawilao executed a Pacto de Retro Sale where Benos sold their lot and the building erected thereon for P300. LAWILAO. however. 1997 G. Besides. The contract stipulates that the previous contracts involving the same lots "have been cancelled due to the failure of the purchaser to pay the stipulated installments.925. RULING: The parties' failure to agree on a fundamental provision of the contract was aggravated by petitioner's failure to deposit the installments agreed upon. The rule is different in case of an option contract or in legal redemption or in a sale with right to repurchase." It also demanded the removal of the illegal constructions on the property that had prejudiced the subdivision and its neighbors.R." This decision was affirmed by the Court of Appeals. they agreed to enter into a new contract to sell 8 involving seven lots.94.333. 112733 FACTS: Private respondent Mar-ick Investment Corporation is the exclusive and registered owner of Mar-ick Subdivision in Barrio Buli.00 with a down payment of P506. A contract to sell.250.00. Thereafter. not merely the exercise of a privilege or a right.contract bears the date of October 11. 1980. or to purchase the lots involved "at the current price or pay the rentals on the basis of the total area occupied. as president and majority stockholder of petitioner.418. 9 of each agreement.730. After ten years. private respondent's counsel protested petitioner's encroachment upon a portion of its subdivision. 1983 but neither of the parties signed it. Thus. It is consignation which is essential in order to extinguish petitioner's obligation to pay the balance of the purchase price. Tomas Siatianum. they represented the deposit under the new contract because petitioner failed to prove that those were monthly installments that private respondent refused to accept. Cainta. Receipt by private respondent of the five checks could not amount to perfection of the contract because private respondent never encashed and benefited from those checks.20 shall be payable in 120 equal monthly installments of P57. it had paid only the down payment and eight installments. As held in the Adelfa Properties case: "The mere sending of a letter by the vendee expressing the intention to pay. The new Private respondent received but did not encash those checks. Tomas Siatianum issued the checks in the total amount of P37. the fact that the parties tried to negotiate a new Contract indicated that they considered the first contract as "already cancelled.00 payable in forty-eight equal monthly amortization payments of P7. Five of the agreements. With respect to Lot No. It added that petitioner had failed to abide by its promise to remove the encroachment. the amount of P7. Rizal. 1980 to Mr. Instead filed in the trial court a complaint for accion publiciana de posesion against petitioner and Tomas Siatianum. petitioner still had not fully paid for the six lots. considering that the purchaser has already made use of the premises since 1981 to the present without paying the stipulated installments. the parties agreed to the purchase price of P7. petitioner VS. Consequently. is not considered a valid tender of payment.325.00 with a down payment of P42. The balance of P6. even after private respondent had given petitioner a grace period of four months to pay the arrears. petitioner did not lift a finger towards the performance of the contract other than the tender of down payment. as in the case before us.11 every 30th of the month. involves the performance of an obligation. 1961. The lower court rendered a decision finding that the original agreements of the parties were validly cancelled in accordance with provision No. all within a short period of time. There is no record that it even bothered to tender payment of the installments or to amend the contract to reflect the true intention . respondents." The parties agreed that the contract price would be P423. On May 29. the total amount due to private respondent under the contract was P214. redeem or repurchase) rather than the discharge of an obligation. As of May 1.00. without the accompanying payment.20 with a down payment of P480. 8. wherein consignation is not necessary because these cases involve an exercise of a right or privilege (to buy. Oct 24. a mere tender of payment is not sufficient to compel private respondents to deliver the property and execute the deed of absolute sale. private respondent entered into six agreements with petitioner People's Industrial and Commercial Corporation sell to petitioner six subdivision lots. The parties did not enter into a new they did not sign the draft contract. COURT OF APPEALS and MAR-ICK INVESTMENT CORPORATION. ISSUE: Whether there was a tender of payment and consignation in the case. TENDER OF PAYMENT OR CONSIGNATION PEOPLE'S INDUSTRIAL AND COMMERCIAL CORPORATION.00 payable upon the signing of the contract and the balance of P380.642.20. This is because the provisions on consignation are not applicable when there is no obligation to pay. hence tender of payment would be sufficient to preserve the right or privilege. involving similarly stipulate that the petitioner agreed to pay private respondent for each lot." In the case. performance or payment may be effected not by tender of payment alone but by both tender and consignation. In his letter of March 30. Neither did it attempt to make a consignation of the installments.853. After a series of negotiations between the parties.935.72 to private respondent. No. who signed the agreements for petitioner." It states further that the new contract was entered into "to avoid litigation.00 and equal monthly installments of P60. for a period of ten years. Considering EGMPC's arguments. However. EGMPC’s obligation to NPUM necessarily became more onerous as it became liable for interest on the amounts it failed to remit. The Singson heirs in turn filed an action for quieting of title against EGMPC and NPUM. as these fell due. and giving the private respondent [EGMPC] the opportunity to object thereto. Indeed. Petition denied. several proceedings ensued. Carmencita Angelo. the court set a hearing date where NPUM would present its documents "according to the Rules [of Court]. EGMPC took exception to the appellate court's having considered it to have waived its right to present documents. From these two cases. EGMPC under the agreement had the obligation to remit monthly to NPUM forty percent (40%) of its net gross collection from the development of a memorial park on property owned by NPUM. The rationale for consignation is to avoid the performance of an obligation becoming more onerous to the debtor by reason of causes not imputable to him. There was no obstacle. As in the earlier agreements. EGMPC cannot "suspend" payment on the pretext that it did not know who among the subject property's claimants was the rightful owner. private respondent may not be judicially enjoined to validate a contract that the former appeared to have taken for granted. EGMPC did not submit any document whatsoever to aid the appellate court in its mandated task.of the parties as regards the number of lots to be sold. the Court of Appeals proceeded with the disposition of the case and required the parties to appear at a scheduled hearing on June 16. to which the appellate court required the parties to comment on. EGMPC assailed the appellate court's resolution requiring "petitioner Eternal Gardens [to] deposit whatever amounts are due from it under the Land Development Agreement with a reputable bank to be designated by the respondent court. by petitioner's inaction. with the concurrence of the parties. Even disregarding the agreement. Mrs. legal or otherwise. It had a remedy under the New Civil Code of the Philippines to give in consignation the amounts due. Thus. to whom the documents were to be submitted.R. 1994. 124554 FACTS: Petitioner EGMPC and private respondent NPUM entered into a Land Development Agreement dated October 6. The parties further agreed that EGMPC had the obligation to remit monthly to NPUM forty percent (40%) of its net gross collection from the development of a memorial park on property owned by NPUM. and the trial court's decision favor of the Singson heirs was reversed and set aside. Consignation produces the effect of payment. EGMPC thus filed an action for interpleader against Maysilo Estate and NPUM. to the compliance by EGMPC of this provision in the contract. . Later. The withholding of the amounts due under the agreement was tantamount to a forbearance of money. Angelo submitted her Report dated January 31. For its failure to consign the amounts due. EGMPC was to develop a parcel of land owned by NPUM into a memorial park subdivided into lots. TENDER OF PAYMENT OR CONSIGNATION ETERNAL GARDENS MEMORIAL PARK CORPORATION VS. NPUM prepared and submitted a Summary of Sales and Total Amounts Due based on the following documents it likewise submitted to the court. Ms." ISSUE: Whether or not EGMPC is liable for interest because there was still the unresolved issue of ownership over the property subject of the Land Development Agreement of October 6. "with counsel and accountants. 1976. One such case. Under the agreement." The accounting of the parties' respective obligations was referred to the Court's Accountant. including the Maysilo Estate. 1976." The trial court dismissed the cases and the appellate court affirmed insofar as it dismissed the claims of the intervenors. even on the affectation that it did not know to whom payment was to be made. the Court of Appeals correctly held Eternal Gardens liable for interest at the rate of twelve percent (12%). 1995. COURT OF APPEALS and NORTH PHILIPPINE UNION MISSION OF THE SEVENTH DAY ADVENTIST 1997 Dec 9 G. It also provides for the designation of a depository/trustee bank to act as the depository/trustee for all funds collected by EGMPC. the appellate court declared that EGMPC has waived its right to present the records and documents necessarily for accounting. Decision affirmed. Through the resolution issued by the Supreme Court resolution.' to determine the remaining accrued rights and liabilities of said parties. No. as well as books of accounts and related records. RULING: The Supreme Court held that the argument is without merit. and the titles of NPUM to the subject parcel of land were declared valid. It also provides for the designation of a depository/trustee bank to act as the depository/trustee for all funds collected by EGMPC. petitioner ignored opportunities to resuscitate a contract to sell that were rendered moribund and inoperative by its inaction. Thus. and that it will now proceed "to the mutual accounting required to determine the remaining accrued rights and liabilities of the said parties…and that the Court will proceed to do what it is required to do on the basis of the documents submitted by the NPUMC. two claimants of the parcel of land surfaced Maysilo Estate and the heirs of a certain Vicente Singson Encarnacion. from the interpleader action. one Mamerto Reyes. Sapa. (d) the amount due was placed at the disposal of the court. first. with right to repurchase within 2 years from date thereof by paying to the vendee the purchase price and all expenses incident to their reconveyance.00 in favor of petitioners’ predecessor-in-interest Blas Rayos without first availing of his right to repurchase the properties. the petition for review is denied. Burgos. RULING: In order that consignation may be effective the debtor must show that (a) there was a debt due. (e) after the consignation had been made the person interested was notified thereof. After the sale the vendee a retro took physical possession of the properties and paid the taxes thereon. Mamerto Reyes was therefore within his right to refuse the tender of payment offered by petitioners because it was conditional upon his waiver of the two (2)-year redemption period stipulated in the deed of sale with right to repurchase. After the expiration of the redemption period. (c) previous notice of the consignation had been given to the person interested in the performance of the obligation. TENDER OF PAYMENT OR CONSIGNATION CEBU INTERNATIONAL FINANCE CORPORATION VS. ISSUE: Whether or not the consignation made by the petitioners is valid. to show the acceptance by the creditor of the amount deposited as full settlement of the obligation.00 to pay for the alleged debt. and canceling the supposed mortgage on the 3 parcels of land with the execution of the corresponding documents of On 22 June 1961 Francisco Tazal again sold the third parcel of land previously purchased by Mamerto Reyes to petitioner-spouses Teofilo and Simeona Rayos for P400. Francisco Tazal attempted to repurchase the properties from Mamerto Reyes by asserting that the 1 September 1957 deed of sale with right of repurchase was actually an equitable mortgage and offering the amount of P724. Wherefore. On 9 May 1960 Francisco Tazal filed a complaint with the Court of First Instance of Pangasinan against Mamerto Reyes for the declaration of the 1 September 1957 transaction as a contract of equitable mortgage. to offer a valid and unconditional tender of payment.R. The 3 parcels were formerly owned by the spouses Francisco and Asuncion Tazal who on 1 September 1957 sold them for P724. or in the alternative. He also prayed for an order requiring defendant Mamerto Reyes to accept the amount of P724. DONATO REYES. No. But Mamerto Reyes refused the tender of payment and vigorously claimed that their agreement was not an equitable mortgage. and third. second. No. on 1 September 1959 the conventional right of redemption in favor of spouses Francisco and Asuncion Tazal expired without the right being exercised by either the Tazal spouses or the vendee Blas Rayos. these contracts of sale in favor of petitioner-spouses were perfected while the aforementioned case was pending before the trial court. COURT of APPEALS G. TENDER OF PAYMENT OR CONSIGNATION SPOUSES TEOFILO and SIMEONA RAYOS. (b) the consignation of the obligation had been made because the creditor to whom a valid tender of payment was made refused to accept it. TOMASA R. and.00 the 2 lots that Tazal had sold at the first instance to Mamerto Reyes and thereafter to Blas Rayos.00 to respondents’ predecessor-ininterest. In the meantime. a declaration by the court of the validity of the consignation. 123031. petitioners failed. 2003 398 SCRA 25 FACTS: At stake in this petition for review is the ownership of 3 parcels of unregistered land with an area of approximately 130.reconveyance in his favor. Pangasinan. BUSTAMANTE and TORIBIA R. to notify respondents of the intention to deposit the amount with the court.00 which he had deposited on 31 May 1960 with the trial court as full payment for his debt. The failure of petitioners to comply with any of these requirements rendered the consignation ineffective. 150913 February 20. The otherwise inconsequential sale became controversial when 2 of the 3 parcels were again sold on 24 December 1958 by Francisco Tazal for P420. SATURNINO REYES. 1999 316 SCRA 488 FACTS: . In the instant case. Curiously. On 1 July 1961 petitioner-spouses bought from Blas Rayos for P400. the identities of which are not disputed. and GEORGE RAYOS VS.00.947 square meters situated in Brgy. October 12. Defendant denied plaintiff’s allegations and maintained that their contract was a sale with right of repurchase that had long expired. R. CAMELO G. and therefore cannot constitute valid tender of payment. 364. On April 25. Hence. private respondent’s wife deposited the check with Rizal Commercial Banking Corp. private respondent Vicente Alegre invested with CIFC P500. It alleged that BPI unlawfully deducted from CIFC’s checking account. CIFC appealed from the said decision. The action included the prayer to collect the amount of the check paid to Alegre but dishonored by BPI. alleging that he had connived with other persons to forge several checks of BPI’s client. Tender of payment involves a positive and unconditional act by the obligor of offering legal tender currency as payment to the obligee for the former’s obligation and demanding that the latter accept the same. CIFC has not yet tendered a valid payment of its obligation to the private respondent. CIFC issued BPI Check No. Failing to pay her mortgage debt. CIFC promised to replace the check but required an impossible condition that the original check must first be surrendered. all her mortgaged properties were foreclosed and sold at public auction held on different days. No. Private respondent made a formal demand of his money market placement. INC. On July 13. and General Santos City which were mortgaged to the Development Bank of the Philippines (DBP) as security for a loan she obtained from the bank. 1992. On April 30. Mrs. On July 27. testified that on July 16. but the proceeds. Cavite property was sold and the certificate of sale registered on the same day. 1981. BPI used the check to trace the perpetrators of the forgery. DBP was the winning bidder. the assailed decision is affirmed and the petition is denied. CIFC sought to recover its lost funds and formally filed against BPI a separate civil action for collection of a sum of money with RTC. 724. representing the difference between the purchase price of subject properties and the actual obligation to the DBP. CIFC denied the request and instead instructed private respondent to wait for its ongoing bank reconciliation with BPI. under a “Deed of Sale with Assumption of Mortgage.00 to petitioner.00 representing 20% of the total obligation. 1993. OSSA HOUSE. for contribution and indemnity.respondents G. 513397 for P514. 1978. On March 11.00 in cash. 238. 1977. ISSUE: Whether or not the petitioner is still liable for the payment of check even though BPI accepted the instrument RULING: The Supreme Court held that the money market transaction between the petitioner and private respondent is in the nature of loan. the Makar property was sold and the corresponding certificate of sale inscribed on March 10. 1978. On August 5. 1978. 1981. but the appellate court affirmed in toto the decision of the lower court. TENDER OF PAYMENT OR CONSIGNATION DOLORES LIGAYA DE MESA. the court dismissed the third-party complaint. In all the said auction sales. the Naic. de Mesa. counterfeit checks amounting to P1. AND DEVELOPMENT BANK OF THE PHILIPPINES. CIFC in its response to Alegre’s complaint filed for leaver of court and impleaded BPI to enforce a right. Immediately. 1991. private respondent notified CIFC of the dishonored check and demanded that he be paid in cash. A check is not a legal tender.94 in favor of the private respondent as proceeds of his mature investment plus interest. 1977. Tender of payment cannot be presumed by a mere inference from surrounding circumstances. In effect. BPI took custody of the check pending an investigation of several counterfeit checks drawn against CIFC’s checking account. BPI through its Manager. 106467-68 October 19. 1991. 1991. The check was drawn from petitioner’s current account maintained with Bank of the Philippine Islands (BPI) main branch at Makati City.58. DBP refused to accept the 9th quarterly installment paid by . During the hearing. THE COURT OF APPEALS. BPI encashed and deducted the said amount from the account of CIFC. as well as the check remained in BPI’s custody.” sold the foreclosed properties to private respondent OSSA under the condition that the latter was to assume the payment of the mortgage debt by the repurchase of all the properties mortgaged on installment basis. and the payment of the balance of more or less P45. 1992. On October 23. 1993.000. On May 27. that the check is subject of an investigation. 390.Cebu International Finance Corporation (CIFC) is a quasi-banking institution engaged in money market operations. Cavite. The note for P516. the obligation to pay a sum certain in money may be paid in money. BPI filed a separate collection suit against Alegre.000. The court granted CIFC’s motion but upon the motion to dismiss the third-party complaint filed by BPI. with an initial payment of P90. In a loan transaction. petitioner.R. vs. On February 25. 1991. On September 27. And on January 12. 000. RTC-Makati Branch rendered its judgment in favor of private respondent. Palawan. 1977. BPI dishonored the check. Petitioner issued a promissory note to mature on May 27. particularly the payment of installments to the Development Bank of the Philippines. petitioner de Mesa notified private respondent OSSA that she was rescinding the Deed of Sale with Assumption of Mortgage she executed in favor of the latter on the ground that OSSA failed to comply with the terms and conditions of their agreement. the three (3) parcels of land in Pasay City were also sold and the certificate of sale was recorded on the same date. CIFC is still liable for the payment of the check. amounting to P1.Makati Branch. 1999 FACTS: Petitioner Dolores Ligaya de Mesa owns several parcels of land in Makati. Alegre filed a complaint for recovery of sum of money against petitioner. the discharge and cancellation of the mortgage on the property listed in item IV of the first whereas clause. In turn. 724. (RCBC) in Puerto Princesa. 1993. by the use of a check. 58. Wherefore. 67 covered private respondent’s placement plus interest at 20.5% for 32 days. the two (2) parcels of land in Makati were sold at public auction and the certificate of sale was inscribed on November 25. This was alleged in accordance with the Compromise Agreement it entered with CIFC to end the litigation in RTC-Makati Branch. 364. On August 25. On June 17. On August 30. Pasay City. 1977. which is the legal tender or. in whole or in part”. The petitioner appealed to the Court of Appeals which handed down on March 31. 19145 and 19156 dated March 31. by the parties themselves. the tender thereof was still not valid. 42381 for specific performance and consignation. with the then Court of First Instance of Pasig. Nos. The records.000. After trial.363. What remained to be paid de Mesa was P44. FEATI BANK. RULING: Petitioner argues that there was no notice to her regarding OSSA's consignation of the amounts corresponding to the 12th up to the 20th quarterly installments. 1987. ISSUE: Whether or not the Court erred in ruling that the mandatory requirements of the Civil Code on consignation can be waived by the trial court or whether or not the requirements of Articles 1256 to 1261 can be 'relaxed' or 'substantially complied with'. with the DBP pegged as of May 10. Insisting that the worldwide increase in prices cited by private respondent does not constitute a sufficient cause of action for the modification of the terms and conditions of the contract. on August 11. as theorized by petitioner.363.00. and assuming ex gratia argumenti that it was the correct amount. JABSON.000.636. The lower court denied the motion for dismissal which was upheld by the CA based on the civil code provision that “when the service has become so difficult as to be manifestly beyond the contemplation of the parties.243. Rizal. ISSUE: Whether or not private respondent may demand modification of the terms of the contract on the ground that the prestation has manifestly come beyond the contemplation of the parties. COURT OF APPEALS AND TROPICAL HOMES. 94 SCRA 533 OCCENA VS. without making formal tenders of payment and serving notice of consignation. Civil Case No. however. the procedural requirements of consignation are deemed substantially complied with in the present case. Petitioner also insists that there was no valid tender of payment because the amount tendered was P34.08.26. so much so that the respondent OSSA found it pointless to keep on making formal tenders of payment and serving notices of consignation to petitioner. from which shall be deducted de Mesas's outstanding obligation. which OSSA tendered in cash.08. OCTOBER 29. the obligor may also be released therefrom.92. 1976 FACTS: Private respondent Tropical Homes. OSSA prayed before the lower court that it be allowed to deposit by way of consignation all the quarterly installments. 1981. petitioners filed the instant petition. hence the remaining amount payable to de Mesa is P34.R.92 owing DBP. was for a consideration of P500. which prayer was granted by the trial court in the Order dated July 3. but OSSA made an advance payment of P10. For reasons of equity. its decision modifying the challenged decision. L-44349. show that several tenders of payment were consistently turned down by the petitioner. at P455. Moreover. in a motion dated May 7.OSSA. however. 29.636. depositing in said case the amount of P15. The petition is DENIED and the assailed Decision of the Court of Appeals in CAG.92. does not accord with the records on hand.00. The contract stipulated that the petitioners’ fixed and sole share and participation is the land which is equivalent to forty percent of all cash receipts from the sale of the subdivision lots.824. respondent filed at the lower court a complaint for the modification of the terms and conditions of the contract by fixing the proper shares that should pertain to the parties therein out of the gross proceeds from the sales of the subdivision lots. the Court of Appeals ratiocinated: "The 'Deed of Sale with Assumption of Mortgage'. 1982. OCCENA VS. Petitioners moved for the dismissal of the complaint for lack of cause of action. is what OSSA agreed to assume. RULING: . This amount of P455. INC 73 SCRA 637 NO. 1976 ORTIGAS VS. This claim.08. the lower court came out with a Decision for the private respondent OSSA. Thus. the tender of which was in cash and not by check. OCT. prompting the latter to file against DBP and the petitioner. LOSS OF THE PRESTATION: KINDS OF LOSS 1. The Court of Appeals erred not in affirming the decision of the trial court of origin. the same having been made by check. 1992. not P51. The motion and the subsequent court order served on the petitioner in the consignation proceedings sufficiently served as notice to petitioner of OSSA's willingness to pay the quarterly installments and the consignation of such payments with the court. When the development costs increased to such level not anticipated during the signing of the contract and which threatened the financial viability of the project as assessed by the private respondent. It is thus beyond cavil that the respondent OSSA tendered the correct amount. 1992 AFFIRMED. 1978. 2. Inc had a subdivision contract with petitioners who are the owners of the land subject of subdivision development by private respondent.636. CA. residential purposes. G. 27. LIMITED PARTNERSHIP VS. 101613. Defendant-appellee. 27 s-1960 is a valid exercise of police power. TCT No. was obviously passed by the Municipal Council of Mandaluyong.. Both the agreements (of sale on installment) and the deeds of sale contained some stipulations or restrictions which were later annotated in TCT Nos." as stated in the Deed of Sale. but which defendant-appellee claims could also be devoted to. although defendant-appellee claims that Republic Flour Mills purchased the said Lot No. had been declared a commercial and industrial zone. Rizal. defendant-appellee acquired Lots Nos.. The above-cited civil code provision does not grant the court the power to remake. Therefore. It alleges that plaintiff-appellant 'completely sold and transferred to third persons all lots in said subdivision facing EDSA" and the subject lots thereunder were acquired by it "only on July 23. 101509 and 101511 of the Register of Deeds of Rizal. Granting that Resolution No. modify. Rizal in the exercise of police power to safeguard or promote the health. upon the other hand. covering the said lots and issued in the name of Emma Chavez. to be devoted to banking purposes. As a matter of fact the same section declares that the power exists "(A)ny provision of law to the contrary notwithstanding . respectively and the building restrictions were also annotated therein. The latter refused to comply with the demand. 5 and 6. the plaintiff executed the corresponding deeds of sale in favor of Emma Chavez. 27. that while non-impairment of contracts is constitutionally guaranteed. defendant-appellee having filed building and planning permit applications with the Municipality of Mandaluyong. good order and general welfare of the people in the locality. as vendees. LOSS OF THE PRESTATION: KINDS OF LOSS ORTIGAS & CO. 101613 and 106092 issued in its name. as vendor. and it had accordingly obtained building and planning permits to proceed with the construction. FEATI BANK AND TRUST CO. ISSUE: Whether or not Resolution No. dated February 4. plaintiff. and whether or not the said Resolution can nullify or supersede the contractual obligations assumed by defendant-appellee. 1979 FACTS: Plaintiff is a limited partnership and defendant Feati Bank and Trust Co. s-1960 declaring the western part of highway . But the prayer of the private respondent was for the modification of their valid contract. then private respondent can rely on said provision of the civil code. now EDSA. On July 19. 5 and 6. 1960 of the Municipal Council of Mandaluyong. especially where lots Nos. from Shaw Boulevard to the Pasig River as an industrial and commercial zone. has been declared a commercial and industrial zone. The following day. contending that the building was being constructed in accordance with the zoning regulations.. 27 is not an ordinance. private respondent’s complaint for modification of its contract with petitioner must be dismissed. free from all liens and encumbrances. developing and selling lots to the public. and used exclusively for.R. 1962. 1952. particularly the Highway Hills Subdivision along EDSA. the rule is not absolute. Defendant-appellee bought Lot No. 5 while Lot No. per Resolution No.. Resolution No. RULING: The validity of the resolution was admitted at least impliedly. is a corporation duly organized and existing in accordance with the laws of the Philippines. The lots themselves not only front . it should be stressed. and 106092 were imposed as part of its general building scheme designed for the beautification and development of the Highway Hills Subdivision which forms part of the big landed estate of plaintiff-appellant where commercial and industrial sites are also designated or established. 101511. Plaintiff-appellant claims that the restrictions annotated on TCT Nos. 6 "in good faith. in the stipulation of facts below when plaintiff-appellant did not dispute the same. Annex "F" between it and Emma Chavez. No. 101719. On or about May 5. "free from all liens and encumbrances as stated in Annex 'D'. Upon completion of payment of the purchase price. entered into separate agreements of sale on installments over two parcels of land. plaintiff-appellant demanded in writing that defendant-appellee stop the construction of the commerical building on the said lots. Eventually. 5 and 6 are located. 1962 or more than two (2) years after the area . defendant-appellee began laying the foundation and commenced the construction of a building on Lots Nos.. 101509. 5 directly from Emma Chavez. since it has to be reconciled with the legitimate exercise of police power. maintains that the area along the western part of EDSA from Shaw Boulevard to Pasig River. Plaintiff is engaged in real estate business. 1963. L-24670 December 14.. peace. The decision of respondent court is reversed. or revise the contract or to fix the division of the shares between the parties as contractually stipulated with the force of law between the parties. Mandaluyong. the said vendees transferred their rights and interests over the aforesaid lots in favor of one Emma Chavez." Annex "E". and Augusto Padilla and Natividad Angeles. 6 was acquired from Republic Flour Mills through a "Deed of Exchange.If the prayer of the private respondent is to be released from its contractual obligations on account of the fact that the prestation has become beyond the contemplation of the parties. " With regard to the contention that said resolution cannot nullify the contractual obligations assumed by the defendant-appellee referring to the restrictions incorporated in the deeds of sale and later in the corresponding Transfer Certificates of Title issued to defendant-appellee. safety. it certainly is a regulatory measure within the intendment or ambit of the word "regulation" under the provision. On March 4. with TCT Nos. Judicial notice may be taken of the conditions prevailing in the area. 101719 in the name of Republic Flour Mills likewise contained the same restrictions. Rizal. EDSA. in the corresponding deeds of sale. REBUS SIC STANTIBUS 1. represented by his lawyer. Aligada of Reliance Group Engineers. pursuant to the aforequoted Letter of Instruction. Unable to get a letter of credit from the Central Bank due to the refusal of the Philippine government to issue a permit to import the transceivers. CA. 5 and 6. Guerrero commenced operation of the taxicabs within Subic Naval Base. Aligada also advised Victorino to "proceed with the order upon receipt of letter of credit. the trial court granted the motion and dismissed the complaint. Victorino filed with the Regional Trial Court. President Ferdinand E." On January 10. 1973. 3. . four-door. wrote Victorino. Victorino. the Japanese firm would forfeit 30% of the deposit and charge a cancellation fee in an amount not yet known. Sometime in 1972. 1972. if not perfectly. As highest bidder. sedans. Further. the Radio Control Office issued Administrative Circular No. Guerrero was to "provide radio-controlled taxi service within the U. MAGAT VS. Atty. of the Municipality of Mandaluyong. Makati a complaint for damages arising from breach of contract against Guerrero. utilizing as demand requires . 2. On September 29. . Inc. Aligada informed Magat of the assigned frequency number. 1972. Subic Bay.S. Guerrero was President and Chairman of "Guerrero Transport Services". cannot be enforced. On May 22. government. 160 operational taxis consisting of four wheel.. 1973. a single proprietorship." not whimsical or oppressive. 1973. " On September 22. Guerrero Transport Services won a bid for the operation of a fleet of taxicabs within the Subic Naval Base. . Victorino would demand an additional amount equivalent to 10% of the contract price. Aligada was instructed to "proceed with the order thru Spectrum Electronics Laboratories. FOB Yokohoma. noise and pollution are hardly conducive to the health. 1972. not more than one year . It is. the municipality of Mandaluyong. middle man and broker Isidro Q. radio controlled. the non-impairment of contracts clause of the Constitution will not bar the municipality's proper exercise of the power. 1972. 1973. justified under the circumstances. should the contract be canceled. clear that even if the subject building restrictions were assumed by the defendant-appellee as vendee of Lots Nos. Vergara. 272 SCRA 183 NATELCO VS. 1972. 27.620. . On October 4. the building restrictions. 1. informing him that a radio frequency was not yet assigned to Guerrero and that government regulations might complicate the importation of the transceivers. Guerrero and Victorino D. therefore.the highway. 4: Subject: Suspending the acceptance and processing of applications for radio station construction permits and for permits to own and/or possess radio transmitters or transceivers. A. Navy Exchange Officer. ." Victorino was also assured of Guerrero's financial capability to comply with the contract. the contractual obligations so assumed cannot prevail over Resolution No. Sinesio S. industrial and commercial complexes have flourished about the place. On March 27. Guerrero moved to dismiss the complaint on the ground that it did not state a cause of action. which has validly exercised its police power through the said resolution. in Transfer Certificates of Title Nos. and it being a " legitimate response to a felt public need. Mason confirmed that Guerrero won the bid for the commercial transportation contract. On October 6. Victorino thus canceled his order with his Japanese supplier. This application was not pursued. On June 7. Guerrero informed Aligada of the frequency number assigned by Subic Naval Base authorities. Accordingly. 1972. informed Guererro that the order with the Japanese supplier has not been canceled. and later. However. Naval Base. safety or welfare of the residents in its route.” The contract was signed and Victorino contacted his Japanese supplier. 1972. through its Municipal 'council. executed a letter-contract for the purchase of transceivers at a quoted price of US$77. a single proprietorship. Victorino filed a petition for review on certiorari with this Court assailing the dismissal of the complaint. 337 SCRA 298 PNCC VS. On June 16. . as General Manager of Spectrum Electronic Laboratories.59. meter controlled. CA. Ltd. in the same letter. Koide & Co. Having been expressly granted the power to adopt zoning and subdivision ordinances or regulations. 1973. supports an endless stream of traffic and the resulting activity. in Olongapo. G.S. COURT OF APPEALS 337 SCRA 298 FACTS: Private respondent Santiago A. using radio units borrowed from the U. 1973. CA. The motives behind the passage of the questioned resolution being reasonable. Victorino was to deliver the transceivers within 60 to 90 days after receiving notice from Guerrero of the assigned radio frequency. Guerrero applied for a letter of credit with the Metropolitan Bank and Trust Company. Should the contract be canceled. 230 SCRA 351 MAGAT VS. four passenger. On July 11. Guerrero to bear the loss. with the advent of martial law. "taking note of Government Regulations. On September 25. Marcos issued Letter of Instruction No." On October 7. was reasonably. in passing the subject resolution. 5 and 6 as residential. On September 25. Magat. and placed an order for the transceivers. a main traffic artery which runs through several cities and municipalities in the Metro Manila area. which declare Lots Nos. 101613 and 106092. Victorino was advised to advise his supplier "to proceed (with) production pending frequency information. the obligor may also be released there from in whole or in parts. 1985. The parties to the contract must be presumed to have assumed the risks of unfavorable developments.00 as rental for one month prompting private respondent to file an action against the petitioner for specific performance with damages before the RTC of Pasig. and d) the property shall be used as premises of a rock crushing plan. Article 1267 of the New Civil Code provides that when the service has become so difficult as to manifestly beyond the contemplation of the parties. Anent the 2nd issue. the obligor may also be released therefrom. It then expressed its intention to terminate the contract and decided to cancel the project due to financial and technical difficulties. The trial court rendered decision in favor of private respondent. Magnolia.REBUS SIC STANTIBUS On April 20. and attorney's fees. The principle of rebus sic stantibus neither fits in with the facts of the case. The contract was not breached. private respondents and petitioner entered into a contract of lease of a parcel of land owned by the former. which enunciates the doctrine of unforeseen events. own. The Administrative Circular merely ordered the Radio Control Office to suspend the acceptance and processing… of application… for permits to possess. moved to reinstate the case and to substitute Victorino in its prosecution. 1991. Ma. 1985. Ronald and Dennis Magat. On March 12. the Supreme Court ruled that the complaint sufficiently averred a cause of action. which would endanger the security of contractual relations. 1995. Damnum absque injuria comes into the fore. On October 26. 1983. 000. and once these conditions cease to exist. Affirming the validity of the contract. NO. Under this theory. petitioner refused to accede to respondent’s request and reiterated their demand for the payment of the first annual rental. petitioners. Even if the Court assumes that there was a breach of contract. The LOI and Administrative Circular did not render “radios and transceivers” illegally per se. The contract was not void ab initio. The terms and conditions of said contract of lease are as follows: a) the lease shall be for a period of five (5) years which begins upon the issuance of permit by the Ministry of Human Settlement and renewable at the option of the lessee under the terms and conditions. NO. the Court of Appeals denied the motion for reconsideration. Dulce. This article. The petitioner cannot take refuge of the said article. however an absolute application of the principle of rebus sic stantibus. For this. Later. 1986. purchase and sell radio transmitters and transceivers… therefore. Olivia. . the trial court decided in favor of the heirs of Victorino and ordered Guerrero to pay temperate. Guerrero’s inability to secure a letter of credit and to comply with his obligation was a direct consequence of the denial of the permit to import. the contract also ceases to exist. On January 7. 1996. he cannot be faulted. They were valid objects of the contract. respondent requested the payment of the first annual rental. However. However it was dismissed. Whether or not the contract was breached. is not. On March 11. CA 272 SCRA 183 FACTS: On 18 November 1985. On April 29. hence. moral and exemplary damages. damages cannot be awarded. PNCC VS. 1985. b) the monthly rent is P20. RULING: NO. 1991. the trial court granted the motion. ISSUE: Whether or not petitioner can avail of the benefit of Article 1267 of the New Civil Code. On July 12. The Court set aside the order of dismissal and remanded the case to the trial court for further proceedings. ISSUES: Whether or not the transceivers were contraband items prohibited by the LOI and Administrative Circular to import. Nowhere in the LOI and Administrative Circular is there an express ban on the importation of transceivers. Guerrero appealed to the Court of Appeals. the law provides that when the service (required by the contract) has become so manifestly beyond the contemplation of the parties. The LOI and Administrative Circular did not render the transceivers outside the commerce of man. RULING: Anent the 1st issue. 000. transfer. petitioner obtained permit from the Ministry which was to be valid for two (2) years unless revoked by the Ministry. On November 27. It is therefore only in absolutely exceptional chances of circumstances that equity demands assistance for the debtor. 1984. the heirs of Victorino filed with the Court of Appeals a motion for reconsideration. Petitioner then appealed the decision of the trial court to the Court of Appeals but the later affirmed the decision of the trial court and denied the motion for reconsideration. in whole or in part. On August 21. But the petitioner argued that it was only obligated to pay P20. the trial court ordered that the case be archived for failure of Victorino to prosecute. Victorino died on February 18. But petitioner alleged that the payment of rental should commence on the date of the issuance of the industrial clearance not on the date of signing of the contract. the contract is void. Apparently. c) the rent shall be paid yearly in advance. the parties stipulate in the light of certain prevailing conditions.00 which shall be increased yearly by 5% based on the monthly rate. Here. possession and importation of the radio transmitters and transceivers was legal provided one had the necessary license for it. . a bare reading of this article reveals that it is not a requirement thereunder that the contract be for future service with future unusual change. and that petitioners had refused to pay private respondent said amount despite demands. ten (10) telephone connections for the use by private respondent. the trial court found the claim not sufficiently proved. under this theory.00. This is said to be based on the discredited theory of rebus sic stantibus in public international law. the parties stipulate in the light of certain prevailing conditions. The Court of Appeals affirmed the decision of the trial court. petitioners should pay private respondent for the use thereof the total amount of P267. and once these conditions cease to exist the contract also ceases to exist. nor does it constitute a defense of an action for specific performance. Inc. Article 1267 speaks of "service" which has become so difficult. the parties entered into a contract for the use by petitioners in the operation of its telephone service the electric light posts of private respondent in Naga City. (NATELCO) AND LUCIANO M. Taking into consideration the rationale behind this provision.00 from 1981 up to the filing of its complaint. ISSUE: Whether or not the principle of Rebus Sic Stantibus is applicable in the case at bar. Therefore. while private respondent should also be ordered to pay the monthly bills for the use of the telephones also in Naga City. 1989. And as third cause of action. that after eleven (11) years of petitioners' use of the posts.. 1989. free of charge. REBUS SIC STANTIBUS NAGA TELEPHONE CO. respondents 1994 Feb 24 230 SCRA 351 FACTS: Petitioner Naga Telephone Co. Article 1267 states in our law the doctrine of unforseen events. as held in Central Bank v. the obligation of private respondent consists in allowing petitioners to use its posts in Naga City. the payment to start on the date this case was filed. And in like manner. the trial court held that for reason of equity. the contract should be reformed by including therein the provision that for the use of private respondent's posts outside Naga City. CA. the telephone cables strung by them thereon have become much heavier with the increase in the volume of their subscribers. and private respondent should also pay petitioners the monthly dues on its telephone connections located outside Naga City beginning January. without any contract with it. petitioners. the term "service" should be understood as referring to the "performance" of the obligation. private respondent should pay petitioners from the same date its monthly bills for the use and transfers of its telephones in Naga City at the same rate that the public are paying. that the contract should be reformed by ordering petitioners to pay private respondent compensation for the use of their posts in Naga City. private respondent filed with the Regional Trial Court against petitioners for reformation of the contract with damages. According to Senator Arturo M. private respondent complained about the poor servicing by petitioners. In consideration therefor. And taking into consideration the guidelines of the NEA on the rental of posts by telephone companies and the increase in the costs of such posts.00 for each post of private respondent used by petitioners is reasonable. (CASURECO II) is a private corporation established for the purpose of operating an electric power service in the same city. as regards private respondent’s first cause of action. THE COURT OF APPEALS AND CAMARINES SUR II ELECTRIC COOPERATIVE. which is the service contemplated in said article. the trial court found that the contract does not mention anything about the use by petitioners of private respondent's posts outside Naga City.960. As second cause of action. Tolentino. private respondent alleged that starting with the year 1981. petitioners have used 319 posts outside Naga City. the disappearance of the basis of a contract gives rise to a right to relief in favor of the party prejudiced. Inc. MAGGAY. After the contract had been enforced for over ten (10) years. However.630. but based on different grounds to wit: (1) that Article 1267 of the New Civil Code is applicable and (2) that the contract was subject to a potestative condition which rendered said condition void.00 per post. petitioners agreed to install.00 per post. petitioners should pay a monthly rental of P10. On November 1. INC. so that justice and equity demand that the contract be reformed to abolish the inequities thereon. which rental it should pay from the filing of the complaint in this case on January 2. The trial court ruled. (CASURECO II). INC. petitioner averred that three (3) abrupt change in the political climate of the country after the EDSA Revolution and its poor financial condition rendered the performance of the lease contract impractical and inimical to the corporate survival of the petitioner. that it is not in conformity with the guidelines of the National Electrification Administration (NEA). mere pecuniary inability to fulfill an engagement does not discharge a contractual obligation. 1977.In this case. And with respect to private respondent's third cause of action. on the ground that it is too one-sided in favor of petitioners. that at the rate of P10. 1989. Considering practical needs and the demands of equity and good faith.. that a post now costs as much as P2. RULING: No. VS. On private respondent's second cause of action. or on January 2. (NATELCO) is a telephone company rendering local as well as long distance service in Naga City while private respondent Camarines Sur II Electric Cooperative. In the present case. the trial court opined that a monthly rental of P10. Furthermore. The Court. According to the bank. The Court found no reversible error committed by the appellate court in disposing of the appealed decision. a restructuring of the remaining indebtedness which then amounted to P1. The released parcels of land were then sold and the proceeds amounting to P1. The above disquisition finds no factual support.386.The allegations in private respondent's complaint and the evidence it has presented sufficiently made out a cause of action under Article 1267.00) pesos per post.00. 1271 of the Civil Code is not conclusive but merely prima facie. The presumption created by the Art.300. There it prayed that the mortgage over the two parcels of land be released and its stock inventory be lifted and that its obligation to the bank be declared as having been fully paid. petitioner requested for. As gleaned from the decision of the court a quo. .213. The loans were evidence and secured by four (4) promissory notes. Trans-Pacific expressed its willingness to pay the amount demanded by respondent bank. . " Decision affirmed. but we find it necessary to do so in order not to disrupt the basic and essential services being rendered by both parties herein to the public and to avoid unjust enrichment by appellant at the expense of plaintiff . If there be no evidence to the contrary. 1989. the disposition of the present controversy does not end here. in consonance with the contract will return all the telephone units to petitioners. VS.000. The mortgaged parcels of land were substituted by another mortgage covering two other parcels of land and a chattel mortgage on petitioner's stock inventory. and was It may not be amiss to add that Article 1271 of the Civil Code raises a presumption. Rather. FACTS: Sometime in 1979. By way of emphasis.614. The rationale for allowing the presumption of renunciation in the delivery of a private instrument is that. as distinguished further from the Occeña case. To secure the re-structured loan of P1. RULING: No.100. Initially. the Court finds sufficient justification to overthrow the presumption of payment generated by the delivery of the documents evidencing petitioners’ indebtedness. the Court requires. while private respondent. release the parties from their correlative obligations under the contract. the presumption loses its legal efficacy in the face of proof or evidence to the contrary. After trial. as aforesaid. Subsequently. respondent bank returned the duplicate original copies of the three promissory notes to Trans-Pacific with the word "PAID" stamped thereon. Conversely. TRANS-PACIFIC INDUSTRIAL SUPPLIES. judgment was rendered in favor of petitioner on the basis of presumptions. there could be just one copy of the evidence of credit.057. The Court shall not allow such eventuality.. Despite the return of the notes. petitioner applied for and was granted several financial accommodations amounting to P1. necessitates exercise of a equity jurisdiction. the sum of ten (P10. TL-9077-82. Associated Bank demanded from Trans-Pacific payment of the amount of P492. Camarines Sur and in other places where petitioners use private respondent's posts. unlike that of a public instrument. the court a quo rendered judgment in favor of Trans-Pacific. the promissory notes were erroneously released. The Court has to take into account the possible consequences of merely releasing the parties therefrom: petitioners will remove the telephone wires/cables in the posts of private respondent. However. THE COURT OF APPEALS and ASSOCIATED BANK. or on December 12. not of payment. per review of the records. . reversed the decision of the trial court. therefore.20. however. according to petitioner. respondents 1994 Aug 19 235 SCRA 494 In the case at bar. beginning January.00 representing accrued interest on PN No. In affirming said ruling. the presumption stands.00 by respondent Associated Bank. and 2)private respondent to pay petitioner the monthly dues of all its telephones at the same rate being paid by the public beginning January.500.400. INC.00. The appellate court which. petitioner. 1989. a real estate mortgage covering three parcels of land and a chattel mortgage over petitioner's stock and inventories. The peculiar circumstances of the present case. . as ordered by the trial court: 1) petitioners to pay private respondent for the use of its posts in Naga City and in the towns of Milaor. Magarao and Pili. Canaman. three new promissory notes were executed by Trans-Pacific. it had a change of heart and instead initiated an action before the Regional Trial Court for specific performance and damages. Unable to settle its obligation in full. Later. we are not making a new contract for the parties herein. causing prejudice to its business. the Court reiterates the rationalization of respondent court that: ". Where several originals are made out of a private . were turned over to the bank and applied to Trans-Pacific's restructured loan. resulting in disruption of their essential service to the public. ISSUE: Whether or not petitioner has indeed paid in full its obligation to respondent bank. REQUISITES OF CONDONATION – NOT INOFFICIOUS granted by respondent bank. per month. but of the renunciation of the credit where more convincing evidence would be required than what normally would be called for to prove payment. as all the previous payments made were applied to penalties and interests. 1985. Harden which were then in possession of the receiver appointed in case involving the liquidation of the conjugal partnership of the spouses Fred M. Almost one year thereafter. 069.43 be paid to the plaintiff from the funds under the control of the receiver "and the balance of P91. VS.” 1. de Harden. 1951 LOPEZ LISO VS. IMPLIED CONDONATION – PRESUMPTION OF DELIVERY LEONIDES LOPEZ LISO. Mrs. No. which represents fifty (50) per cent of the reduction plaintiff was able to secure from the Collector of Internal Revenue in the amount of unpaid taxes claimed to be due from the defendant. Harden regarded this proffer as a binding obligation and acted accordingly. 1913. MANUEL TAMBUNTING. 1949. 1913. plaintiff-appellee.74. When said checks were delivered to the latter.50. plaintiff filed a motion for the issuance of a writ of execution to satisfy the balance of P91. The Court of First Instance of Manila. NOV. and another for P24. notwithstanding the demands therefor made upon him by the plaintiff. This is an added circumstance. are owing for professional medical services rendered by the plaintiff to a daughter of the defendant from March 10 to July 15.574.17. setting aside the writs of execution and garnishment issued to the sheriff of Manila commanding him to levy on two (2) checks. I shall be pleased to write off as bad debt the balance of your account in the sum of P42.” This proffer was contained in a letter sent by the plaintiff to the defendant on March 23. payable to Fred M. de Harden after the final liquidation and partition thereof. the proffer made by the plaintiff to the defendant to the effect that “in the event you lose your case with your wife.74 shall be charged exclusively against the defendant Fred M. amount of the fees.069.R. The sheriff attempted to garnish these two (2) checks acting upon the writ of execution secured by the plaintiff. the intendment of the law would thus be to refer to the delivery only of the original rather than to the original duplicate of which the debtor would normally retain a copy. ISSUE: Whether or not the proffer made by the plaintiff to the defendant is binding. The defendant denied the allegations of the complaint. Harden and Esperanza P. 27. according to the complaint. which confirms the Court’s view that the understanding between the plaintiff and the defendant is really to defer payment of the balance of the claim until after the final liquidation of the conjugal partnership. which fees the defendant refused to pay. and the opposition of the receiver and of the wife on the other. filed an answer in intervention claiming that the amount sought by the plaintiff was exorbitant and prayed that it be reduced to 10 per cent of the rebate. IMPLIED CONDONATION – PRESUMPTION OF DELIVERY belonging to the conjugal partnership which was ordered by the court upon the joint petition of the spouses in order that they may have funds with which to defray their living and other similar expenses. 1950. Harden. Esperanza P. TAMBUNTING. after hearing the evidence introduced by both parties. 1948. which. after the same has been delivered to the latter. one for P9. plaintiff filed an action against the defendant for the collection of P113.767. without pronouncement as to costs and interests. Harden. Harden from whatever share he may still have in the conjugal partnership between him and Esperanza P. an amicable settlement was concluded by the plaintiff and the intervenor whereby it was agreed that the sum of P22. Harden. Defendant acknowledged this claim and prayed that judgment be rendered accordingly. de Harden. stating however in the order that it will be “without prejudice to the right of Francisco Dalupan to attach the money of the defendant Fred M.74.546.00. 069. and for plaintiff to say now that proffer is but a mere gesture of generosity or an act of Christian charity without any binding legal effect is unfair to say at least.document. HARDEN 1951 Nov 27 FACTS: The case is an appeal taken from an order of the First Instance of Manila dated May 19. Harden amounting to P33. 9806 33 PHIL 226 FACTS: These proceedings were brought to recover from the defendant the sum of P2. R-59634 and the wife of the defendant. and that after adjudication of the conjugal property what is left with you will not be sufficient for your livelihood. but the receivership court quashed the writ. and furthermore alleged that the obligation which the plaintiff endeavored to compel him to fulfill was already extinguished.028. The receiver in the liquidation of case No. 226 DALUPAN VS. de Harden. which was favorably acted upon. 2. with interest thereon from the filing of the complaint. On August 26. Petition denied DALUPAN VS. Esperanza P. which was accepted expressly by Fred M. rendered judgment on December 17. defendant-appellant 1916 January 19 G. HARDEN. 33 PHIL. One-half of the proceeds was given to Mrs. At that time the receiver had in his possession two (2) checks payable to Fred M. ordering the defendant to pay . By reason of the acquiescence of the defendant to the claim on one hand. representing part of the proceeds of the sale of two (2) lots RULING: YES." The court rendered judgment in accordance with this stipulation.000.837.50. 464 FACTS: On February 1. YUSINGCO. inasmuch as when the plaintiff sent the receipt to the defendant for the purpose of collecting his fee.43 only. rights.92. The court. the defendant entered into a contract of sale with Venancio Concepcion. and the balance was payable by installments in the form and manner stipulated in the contract. CONFUSION OR MERGER OR RIGHTS 1." formed by the agreement of February 1." The original capital stipulated was P150. did not prove sufficient. ISSUE: Whether or not the obligation alleged in the complaint has already been extinguished.961. In the present case. of which the vendor received at the time of executing the deed the amount of P945. Before the delivery to the purchasers of the hacienda thus sold. But the legal presumption established by the foregoing provisions of law cannot stand if sufficient proof is adduced against it. C. Antonio Sanz. de Luzuriaga. whereby he sold to the latter the estate and central known as "Palma" with its running business." Article 1188 of the Civil Code also provides that the voluntary surrender by a creditor to his debtor. This contract was executed before a notary public of Iloilo. In the case at bar the trial court correctly held that there was sufficient evidence to the contrary. Whitaker paid the sum of P47. notwithstanding that the defendant was in possession of the receipt. SERRA. 2. Venancio Concepcion and Phil. It was covenanted that the parties should pay this amount in equal parts and the plaintiffs were entrusted with the administration of the partnership. in favor of Messrs. 1920. machineries and buildings. in view of the preponderance thereof in favor of the plaintiff and of the circumstances connected with the defendant's possession of said receipt. The agreed capital of P150. C. and appurtenances then existing on the said hacienda. Phil. the Supreme Court ruled that the obligation has not been extinguished. for the construction and exploitation of a railroad line from the "San Isidro" and "Palma" centrals to the place known as "Nandong. and article 1189 prescribes that whenever the private instrument which evidences the debt is in the possession of the debtor. covering all the property of the vendor. Of the purchase price. implies the renunciation of the right of action against the debtor. on January 8. executing therefore the document. In the Deed. it cannot be said that these circumstances concurred. the Court affirmed the judgment appealed from. had reached the amount of P226. Eusebio R. however.861. Afterwards. between Serra. and Juan J. machineries. without express finding as to costs. C.90. 1919. C. This gave rise to the fact that on July 17.'d by the defendant. Whitaker. that the partnership "Palma" and "San Isidro. By reason of the foregoing. Whitaker bought from the plaintiffs the one-half of the railroad line pertaining to the latter.722. the amount of his fees he endeavored to collect from the defendant after he had finished rendering the services in question was in the latter's possession. The defendant. as stated in the laws cited.092. Lazaro Mota. excluding any amount which the defendant might be owing to the plaintiffs. that the evidence of the obligation be delivered up to the debtor and that the delivery of the instrument proving the credit be made voluntarily by the creditor to the debtor. among other things. SERRA 47 PHIL. reached the conclusion that. after hearing the testimony. 47 PHIL 464 YEK TN LIN VS. appealed from said judgment and forwarded to this court the proper bill of exceptions. Furthermore.K. presented by the administrator and O. it was not his intention that that document should remain in the possession of the defendant if the latter did not forthwith pay the amount specified therein. a notary public in and for the City of Manila. as the expenses up to May 15. Number 8 of section 334 of the Code of Civil Procedure provides as a legal presumption "that an obligation delivered up to the debtor has been paid. Vidaurrazaga for himself and in behalf of his brother. and Eusebio R.000. and this fact was alleged by him as proof that he had already paid said fees to the plaintiff. the said P700 had not been paid to the plaintiff. 1920. 1920. 1920. including the sugar plantation of the harvest year of 1920 to 1921. choices in action and interests.15. now deceased.to the plaintiff the sum of P700. Venancio Concepcion and Phil. for P700. buildings. real and personal properties. de Luzuriaga renounced all his rights under the contract of January 29. ESTATE OF MOTA VS. C.695. in order that such a presumption may be taken into account.90. The purchasers guaranteed the unpaid balance of the purchase price by a first and special mortgage in favor of the vendor upon the hacienda and the central with all the improvements. 1921. another deed of absolute sale of the said "Palma" Estate for the amount of P1. 000. RULING: No. plaintiffs and defendant entered into a contract of partnership. Whitaker. Venancio Concepcion and Phil. Venancio Concepcion and Phil. of a private instrument proving a credit. as well as all the improvements.544. unless the contrary is proven. Whitaker and the herein defendant executed before Mr. which was denied. after entering a motion for a new trial. The price of this sale was P237. The receipt signed by the plaintiff. 64 PHIL 1062 ESTATE OF MOTA VS. it will be presumed that the creditor delivered it of his own free will. Felix and Dionisio Vidaurrazaga. January 29. it is necessary. with the costs of this instance against the appellant. the plaintiffs and Concepcion and Whitaker agreed. should be dissolved upon the . 1919. These in turn acquired the credit of the plaintiffs by virtue of the debt. Phil. the allegation that the obligation of the defendant became extinguished by the merger of the rights of creditor and debtor by the purchase of Messrs. Whitaker and Venancio Concepcion were only those they had over the other half of the railroad line. became extinguished. acting as such attorneys in fact of Pelagio Yusingco. regarding the railroad line. RULING: 1. as such. including his vessels or steamships. Whitaker and Venancio Concepcion had purchased something from Mr. Phil. that is. and therefore absolved the defendant from the complaint with costs against the plaintiffs. whereby under Article 1192 of the Civil Code.. the obligation. Whitaker and Venancio Concepcion is wholly untenable. Since the defendant Salvador Serra failed to pay one-half of the amount expended by the plaintiffs upon the construction of the railroad line.046. executed a mortgage in favor of the plaintiffs on the same rights and titles that they had bought and also upon what they had purchased from Mr. to answer for any amount . 046. the plaintiffs instituted the present action praying: 1) that the deed of February 1. he executed. 1927. Phil. YUSINGCO 64 PHIL 473 FACTS: The defendant Pelagio Yusingco was the owner of the steamship Yusingco and. C. as required by Article 1205 of the Civil Code. Yu Seguios. with the stipulated interest at 10 per cent per annum beginning June 4. NO. since there was no novation of the contract between the plaintiffs and the defendant. The court a quo in its decision held that there was a novation of the contract by the substitution of the debtor. there was no novation of the contract. C. until full payment thereof. it implies on the part of the creditor a waiver of the right that he had before the novation which waiver must be express under the principle that renuntiatio non praesumitur. Whitaker and Venancio Concepcion. NO. With regard to the prayer that the said contract be declared valid and binding. the law requires that the creditor should consent to the substitution of a new debtor. the consent of the creditor is indispensable. as already stated. In other words. the herein defendant. ISSUES: Whether or not there was a novation of the contract by the substitution of the debtor with the consent of the creditor. Whitaker and Venancio Concepcion mortgaged unto the plaintiffs what they had bought from the plaintiffs and also what they had bought from Salvador Serra. and 3) that the defendant be sentenced to pay plaintiffs the aforesaid sum of P113. 2) the confusion of the rights of the creditor and debtor. This consent must be given expressly for the reason that. with the approval of the Bureau of Customs. C. as regards the obligation of the latter to pay the former one-half of the cost of the construction of the said railroad line. Ltd. the steamship Yusingco belonging to the defendant. 2) that after the execution of the said document the defendant improved economically so as to be able to pay the plaintiffs the amount owed. Defendant set up three special defenses: 1) the novation of the contract by the substitution of the debtor with the conformity of the creditors. C. thus. The fact that Phil. Salvador Serra.. That the plaintiffs sold their rights and titles over one-half of the line. 1919. and since the plaintiffs did not include in the sale. The purchasers. recognized by the law in declaring that a waiver of right may not be performed unless the will to waive is indisputably shown by him who holds the right. Another defense urged by the defendant is the merger of the rights of debtor and creditor. C. it will be seen that the credit which they had against the defendant for the amount of one-half of the cost of construction of the said line was not included in the sale. This clearly shows that the rights and titles transferred by the plaintiffs to Phil. and that the said partnership agreement should be totally cancelled and of no force and effect whatever. with the costs of the present action. As has been said. Therefore. and 3) the extinguishment of the contract. It is maintained in appellee's brief that the debt of the defendant was transferred to Phil. Whitaker and Venancio Concepcion refer only to one-half of the railroad line in question. the rights of the debtor and creditor were merged in one person. a power of attorney in favor of Yu Seguios to administer. It should be noted that in order to give novation its legal effect. If Messrs.46. 2. the fulfillment of which is demanded in the complaint. it was undoubtedly the one-half thereof pertaining to Mr. C. pursuant to Article 1205 of the Civil Code which reads as follows: Novation which consists in the substitution of a new debtor in the place of the original CONFUSION OR MERGER OR RIGHTS YEK TONG LIN VS. C. the court held that there was no way of reviving the contract which the parties themselves in interest had spontaneously and voluntarily extinguished. since novation extinguishes the personality of the first debtor who is to be substituted by new one. one may be made without the knowledge of the latter. Salvador Serra. but that he refused to pay either in part or in whole the said amount notwithstanding the several demands made on him for the purpose. Whitaker and Venancio Concepcion were willing to assume the defendant's obligation to the plaintiffs is of no avail. Whitaker and Venancio Concepcion by the document. lease. 1920. on November 19. P113. Salvador Serra. Phil. C. mortgaged to the plaintiff Yek Tong Lin Fire & Marine Insurance Co. and Whether or not there was a merger of rights of debtor and creditor under Article 1192 of the Civil Code. Whitaker and Venancio Concepcion. to secure the payment of the price. the credit that they had against the defendant. if the latter have not expressly consented to the substitution of the first debtor. mortgage and sell his properties. be declared valid and binding. in all contracts of novation consisting in the change of the debtor.46. C. but if we bear in mind that the rights and titles which the plaintiffs sold to Phil.execution of this contract. there was no merger of Rights. as well as Phil. but not without the consent of the creditor. The argument would at first seem to be incontrovertible. 172 S 442 E. Obligations are extinguished by the merger of the rights of the creditor and debtor (Articles 1156 and 1192. 1931.that said plaintiff might pay in the name of the defendant on account of a promissory note for P45. when said defendant discovered that he was not to be reimbursed for the repairs made on the steamship Yusingco. 41654. with the costs of the suit. by virtue of the writ of execution so issued. 190. Inasmuch as neither the defendant Pelagio Yusingco nor A.No. because he was bound thereto by reason of the bond filed by him. which was the highest bidder. and it was so with full knowledge that it had a mortgage credit on said vessel. The writ of preliminary injunction.V. the defendant sheriff turned over P10. RULING: NO. REALTY V CA G. which resulted in a judgment favorable to him and adverse to the Yusingcos. When neither A. 1932. as judgment creditor of said Pelagio Yusingco and A. Some days later.269. This was done by Vicente Madrigal. or in February. It is said sum of P10. Of said amount. 000 executed by it. 1932. Yusingco Hermones. 20 JULY 1999 AEROSPACE CHEMICAL VS. Cristina Condominium Corporation holds title to all common areas of Cristina Condominium and is in charge of managing. 1932. alleging that it had been mortgaged to him long before the issuance of said writ and. the payment then made by him having amounted to P8.000. said ship was sold at public auction on September 19. However. COMPENSATION – REQUISITES 1. 2. the only right left to the plaintiff was to collect its mortgage credit from the purchaser thereof at public auction. which was at the rate of 9 per cent per annum.V. NLRC.R. but in order to prevent him and the sheriff from proceeding with the execution. Civil Code). Realty Development Corporation is the owner/developer of a seven-storey condominium building known as Cristina Condominium. by the plaintiff and appellant itself. For this reason. and was purchased.195 to Vicente Madrigal in payment of his judgment credit. he was entitled to the possession thereof. therefore. Yusingco Hermanos which. ISSUE: Whether or not the credit of the plaintiff. inasmuch as the rule is that a mortgage directly and immediately subjects the property on which it is imposed. 23 SEPTEMBER 1999 APODCA VS. the plaintiff and appellant filed with the defendant sheriff a third party claim demanding said ship for himself.66. 1999 FACTS Petitioner E. 1930. EGV REALTY VS.G. CA. CA. 120236 July 20. the latter sought and obtained from the Court of First Instance. Yusingco Hermanos nor Pelagio Yusingco could pay said sum to the Earnshaw Docks & Honolulu Iron Works. the defendant and appellant Vicente Madrigal having filed a bond of P5.G. 41654 for the execution of the judgment rendered in favor of Vicente Madrigal. Yusingco Hermanos to compel them to reimburse him. was co-owner of Pelagio Yusingco. Civil Code). One year and some months later. maintaining and administering the condominium’s common . as mortgaged creditor of Pedagio Yusingco.60. Yusingco Hermanos paid the amount of the judgment rendered in civil case No. under the circumstances. but it so happens that it can not take such steps now because it was the purchaser of the steamship Yusingco at public auction. This left the preliminary injunction unimpaired and valid for the sale of the steamship Yusingco at public auction. having made the highest bid of P12. After the steamship Yusingco had been sold by virtue of the judicial writ issued in civil case No. the defendant and appellant Vicente Madrigal enjoy preference in the payment of his judgment credit. in favor of the defendant and appellant Vicente Madrigal. 3. is superior to that of Vicente Madrigal. It was provided in the judgment that upon failure of the Yusingcos to pay the abovestated amounts to Vicente Madrigal. according to documentary evidence of record. the defendant and appellant Vicente Madrigal had to make payment thereof with the stipulated interest thereon. before the sale of the steamship Yusingco. as the latter were ordered to pay him the sum of P3. he should file the indemnity bond required by section 451 of Act No. was later dissolved. 1931.195 which the lower court ordered Vicente Madrigal to turn over to the plaintiff. the steamship Yusingco needed some repairs which were made by the Earnshaw Docks & Honolulu Iron Works upon petition of A.000. which tried the case. whoever its possessor may be. was carried out.244. and in April. which was issued on August 19. the issuance of the corresponding writ of execution. a writ of execution would be issued in order to have the steamship Yusingco sold at public auction for the purpose of satisfying said amounts with the proceeds thereof. The repairs were made upon the guaranty of the defendant and appellant Vicente Madrigal at a cost of P8.66 plus interest thereon at said rate of 9 per cent per annum from May 6.777. he brought an action against his co-defendant Pelagio Yusingco and A. The defendant sheriff then informed the defendant and appellant Vicente Madrigal that if he wished to have the execution sought by him carried out. on March 9. to the fulfillment of the obligation for the security of which it was created (Article 1876. the plaintiff and appellant instituted this case in the court of origin and asked for the issuance of a writ of preliminary injunction addressed to said two defendants to restrain them from selling the steamship Yusingco at public auction. V. M/T Sultan Kayumanggi sank with a total of 227. respondent Unisphere demanded compensation and reimbursement from petitioner CCC for the losses incurred as a result of the robbery.00. 1986.67. Two survey reports conducted by the Societe Generale de Surveillance (SGS) Far East Limited. on a date not specified in the record. Melecio Hernandez. attested to these occurrences. On December 18. another robbery allegedly occurred at Unit 301 where the items carted away were valued at P6. There can be no doubt that Unisphere is indebted to the Corporation for its unpaid monthly dues in the amount of P13. A claim.142. but withdrew only 157. namely sulfuric acid. ISSUE Should expenses for the storage and preservation of the purchased fungible goods. 1981. 1987. September 1. The incident was reported to petitioner CCC. five days prior to the shipment date. respondent Unisphere’s Unit 301 was allegedly robbed of various items valued at P6.130. 1986. (Aerospace) purchased five hundred (500) metric tons of sulfuric acid from private respondent Philippine Phosphate Fertilizer Corporation (Philphos). Inc. bringing the total value of items lost to P12. addressed letters to private respondent.00. 1982. . we quote with approval the findings of the appellate court. Inc. acting for the petitioner.areas and providing for the building’s security.G. 1987. 1999 FACTS On June 27. Realty and CCC jointly filed a petition with the Securities and Exchange Commission (SEC) for the collection of the unpaid monthly dues in the amount of P13. Rental expenses of storing sulfuric acid should be at private respondent's account until ownership is transferred. according to petitioner. 1278). be on seller's account pursuant to Article 1504 of the Civil Code? RULING Petitioner tries to exempt itself from paying rental expenses and other damages by arguing that expenses for the preservation of fungible goods must be assumed by the seller. RULING Compensation or offset under the New Civil Code takes place only when two persons or entities in their own rights. pp. 1987. with a capacity of approximately 500 MT. A distinction must be made between a debt and a mere claim. 1989. petitioner Aerospace Industries. Initially set beginning July 1986. concerning additional orders of sulfuric acid to replace its sunken purchases. no compensation or off-set can take place. while the remaining four hundred metric tons (400 MT) should be retrieved from Sangi.But even assuming that the plaintiff did not consent to be so bound.51 MT of sulfuric acid on board.165. any such categorical admission by an obligor or final adjudication. However. On January 28.6 [TSN. ISSUE Whether or not set-off or compensation has taken place in the instant case.51 MT of sulfuric acid. the provisions of Civil Code come in to make it liable for the damages sought by the defendant. Later. Article 1504 of the Civil Code clearly states: "Unless otherwise agreed. the general rule that before delivery.295.67 against respondent Unisphere. the risk of loss is borne by the seller who is still the owner. It is mere evidence of a debt and must pass thru the process prescribed by law before it develops into what is properly called a debt." On this score.142. (hereinafter referred to as Unisphere) is the owner/occupant of Unit 301 of said condominium. Unless admitted by a debtor himself. Petitioner as buyer committed to secure the means of transport to pick-up the purchases from private respondent's loadports. Again. dated December 17. petitioners E. COMPENSATION – REQUISITES AEROSPACE CHEMICAL V CA g. Negros Oriental storage tank. M/T Sultan Kayumanggi docked at Sangi. It is a claim which has been formally passed upon by the courts or quasi-judicial bodies to which it can in law be submitted and has been declared to be a debt.00. the conclusion that he is in truth indebted to another cannot be definitely and finally pronounced. A debt is an amount actually ascertained. one hundred metric tons (100 MT) of sulfuric acid should be taken from Basay. M/T Don Victor. (Art. Per agreement. but when the ownership therein is transferred to the buyer the goods are at the buyer's risk whether actual delivery has been made or not. Cebu. except that: (2) Where actual delivery has been delayed through the fault of either the buyer or seller the goods are at the risk of the party at fault. Cebu.r. however. Further loading was aborted. Petitioner chartered another vessel. on the other hand.no. This incident was likewise reported to petitioner CCC. On July 25. no matter how convinced he may be from the examination of the pertinent records of the validity of that conclusion the indebtedness must be one that is admitted by the alleged debtor or pronounced by final judgment of a competent court or in this case by the Commission. On October 5. are creditors and debtors of each other. On November 28. is a debt in embryo. the vessel tilted. 1986 and January 2. This is admitted. the agreement provided that the buyer shall pay its purchases in equivalent Philippine currency value. Absent. 1982.] On January 26 and March 20. thus: The defendant [herein private respondent] was not remiss in reminding the plaintiff that it would have to bear the said expenses for failure to lift the commodity for an unreasonable length of time. 108129 september 23. 28-29. Respondent Unisphere International. the goods remain at the seller's risk until the ownership therein is transferred to the buyer. is not applicable in this case because petitioner had incurred delay in the performance of its obligation. R.000 as exemplary damages. respondent R&R Metal Casting and Fabricating. Mirasol persuaded petitioner to subscribe to P1. respondent filed with the trial court a motion for the issuance of subpoenae duces tecum and ad testificandum requiring petitioner PNB Management and Development Corp. Neither did the sheriff receive a reply to the notice of garnishment he sent to PNB-Escolta. On December 19.00. 80039 April1 8. the balance of his gasoline and representation expenses and his bonus compensation for 1986. can an obligation arising therefrom be offset against a money claim of an employee against the employer? RULING Firstly. the writ of execution was returned unsatisfied since the sheriff did not find any property of PNEI recorded at the Registries of Deeds of the different cities of Metro Manila. the Court of Appeals affirmed the decision. On March 27. DEC. 494 S 179 PNB MANAGEMENT and DEVELOPMENT CORP. executed a promissory note in favor of PNEI for P7. the unpaid subscriptions are not due and payable until a call is made by the corporation for payment. and that PNB MADECOR also had receivables from PNEI in the form of unpaid rentals amounting to more than P7. 373 SCRA 1 SILAHIS MARKETING VS. to satisfy the judgment against PNEI and in favor of respondent. his cost of living allowance.COMPENSATION – REQUISITES APODACA V NLRC G. (PNB MADECOR) to produce and testify on certain documents pertaining to transactions between petitioner and PNEI from 1981 to 1995. 1986. JUNE 28. 1989 FACTS Petitioner was employed in respondent corporation. 1988 TRINIDAD VS.5 million.93. VS.00.R. ACAPULCO. However. ISSUE Does the National Labor Relations Commission (NLRC) have jurisdiction to resolve a claim for non-payment of stock subscriptions to a corporation? Assuming that it has. R&R METAL CASTING and FABRICATING. . 1287-1288) 1. respondent Jose M. (PNEI). Petitioner and private respondents submitted their position papers to the labor arbiter. On the basis of said testimony. WHEN PROHIBITED (Art. and the costs of suit. 1993. INC. petitioner was appointed President and General Manager of the respondent corporation. 2002 G. petitioner instituted with the NLRC a complaint against private respondents for the payment of his unpaid wages. in the hands of PNB MADECOR for the satisfaction of the judgment in favor of respondent. No. From the testimony of the representative of PNB MADECOR.000.500. PNEI was ordered to pay respondent P213. It does not even appear that a notice of such call has been sent to petitioner by the respondent corporation. 132245 FACTS: On November 19.No. Inc. accordingly. 4. CA. On August 28.. respondent filed with the trial court a motion for the application of funds or properties of PNEI. Inc. This controversy is within the exclusive jurisdiction of the Securities and Exchange Commission. petitioner. 1975. On appeal.060. on January 2.07 but this was applied to the unpaid balance of his subscript in the amount of P95.8 million. petitioner’s forerunner.439. Petitioner questioned the set-off alleging that there was no call or notice for the payment of unpaid subscription and that. IAC. PNB MANAGEMENT VS. Secondly. COMPENSATION – LEGAL. he resigned. (PNB MADECOR). 3.00 per share or a total of P150. 1995. The trial court issued an order garnishing the amount owed by petitioner to PNEI under the promissory note. 1985. 7. 1986. Private respondents have not presented a resolution of the board of directors of respondent corporation calling for the payment of the unpaid subscriptions. it was discovered that NAREDECO. the NLRC has no jurisdiction to determine such intra-corporate dispute between the stockholder and the corporation as in the matter of unpaid subscriptions. However. P50. respondent January 2. 25 percent of the total amount payable as attorney’s fees. The appellate court also denied petitioner’s motion for reconsideration. On September 1. He made an initial payment of P37. 1989 FRANCIA VS. R & R METAL. (R&R) obtained a judgment in its favor against Pantranco North Express. its judgment debtor.500 shares of respondent corporation it P100. the alleged obligation is not enforceable. 2.050 plus interest as actual damages. Private respondents admitted that there is due to petitioner the amount of P17. assuming arguendo that the NLRC may exercise jurisdiction over the said subject matter under the circumstances of this case. Legal compensation could not have occurred because of the absence of one requisite in this case . and that he be at the same time a principal creditor of the other. Article 1279 of the Civil Code provides that: "In order that compensation may be proper. dated January 24.00 as unrealized profit for a supposed commission that Silahis should have received from de Leon for the sale of sprockets in the amount of P111.000. Petitioner is obligated to pay the amount stated in the promissory note upon receipt of a notice to pay from PNEI. testified that the letter was not a demand letter. PNEI requested offsetting of accounts between petitioner and PNEI. Since petitioner’s obligation to PNEI is payable on demand. petitioner. The answer admitted the allegations of the complaint insofar as the invoices were concerned but presented as affirmative defenses. respondents. Gregorio de Leon doing business under the name and style of Mark Industrial Sales sold and delivered to Silahis Marketing Corporation various items of merchandise covered by several invoices in the aggregate amount of P22.75 as contained in its answer. de Leon filed a complaint for the collection of the said accounts including accrued interest thereon in the amount of P661. Petitioner’s obligation to PNEI appears to be payable on demand. Incorporated without coursing the same through herein petitioner. Decision affirmed COMPENSATION –LEGAL. [5] that over neither of them there be any retention or controversy. INTERMEDIATE APPELLATE COURT and GREGORIO DE LEON. Domingo A. the obligation will earn an interest of 18 percent per annum. SILAHIS MARKETING CORPORATION. As observed by the Court of Appeals. RULING: NO. This obligation may undoubtedly be garnished in favor of respondent to satisfy PNEI’s judgment debt. There is another alleged demand letter on record. under the terms of the promissory note. this obligation may not be subject to compensation for lack of a requisite under the law.213. ISSUE: Whether or not private respondent is liable to the petitioner for the commission or margin for the direct sale which the former concluded and consummated with Dole Philippines. THUS. Respondent alleges that PNEI had already demanded payment. Loreto N. [a] a debit memo for P22. failure on the part of NAREDECO (PNB MADECOR) to pay the value of the instrument ‘after due notice has been made by PNEI would entitle PNEI to collect an 18% interest per annum from date of notice of demand. Without compensation having taken place. but one that merely informed petitioner of (1) the conveyance of a certain portion of its obligation to PNEI per a dacion en pago arrangement between PNEI and PNB.ISSUE: Whether or not the Court of Appeals erred when it ruled that the requisites for legal compensation as set forth under articles 1277 and 1278 of the civil code do not concur in the case at bar. and signed by Manuel Vijungco. No. and [b] Silahis' claim that it is entitled to return the stainless steel screen which was found defective by its client. they be of the same kind. [3] that the two debts be due. or if the things due are consumable. If petitioner fails to pay after such notice.R. are creditors and debtors to each other. 1989 December 07 G. 1990. 1975. in their own right. VS.03 and attorney's fees of P5. it follows that the obligation is not yet due. it is necessary: [1] that each one of the obligors be bound principally.00 plus costs of litigation. commenced by third persons and communicated in due time to the debtor. 74027 FACTS: On various dates in October. and to have the corresponding amount cancelled from its account with de Leon. The Court agrees with petitioner that this letter was not one demanding payment.00 made directly to Dole Philippines. [4] that they be liquidated and demandable. doing business under the name and style of "MARK INDUSTRIAL SALES".. and there being no demand made. but that PNEI was advising petitioner to settle the matter of implementing the earlier arrangement with PNB. November and December. [2] that both debts consist in a sum of money. and (2) the unpaid balance of its obligation after deducting the amount conveyed to PNB. Atty.200. Petitioner makes a similar assertion in its petition.213. It was addressed to Atty.000. Jr. Allegedly due to Silahis' failure to pay its account upon maturity despite repeated demands. Davao City. Tang. Santiago. Therefore. WHEN PROHIBITED RULING: It must be remembered that compensation takes place when two persons. petitioner remains obligated to PNEI to the extent stated in the promissory note.that both debts must be due and demandable. The import of this letter is not that PNEI was demanding payment. In said letter. petitioner admits the validity of its outstanding accounts with private respondent in the amount of P22. Petition denied. However." Undoubtedly. chairman of the Board of Directors of PNEI. PNEI’s own Assistant General Manager for Finance at that time. But whether . Senior Vice President and Chief Legal Counsel of PNB. and also of the same quality if the latter has been stated. Incorporated by the latter sometime in August 1975. Borden International.75 payable within thirty (30) days from date of the covering invoices. Incorporated. RULING: There is no legal basis for the contention. Clara. He later amended his complaint on January 24. 1977 was received by the petitioner on September 30. in the amount of P111.400. Metro Manila.000.116. ISSUE: Whether or not the tax delinquency of Francia has been extinguished by legal compensation.00 from the deposit so that he could pay the tax obligation thus aborting the sale at public auction.00 when a portion of his land was expropriated. 464 known as the Real Property Tax Code in order to satisfy a tax delinquency of P2. She alleged: Sometime in February 1991.R.00 has been extinguished by legal compensation since the government owed him P4. Pasay City. 1278. 2006 FACTS On May 6. such document can be taken as self-serving with no probative value absent a showing or at the very least an inference.116. By legal compensation. There are also other factors which compelled the Court to rule against the petitioner. 116. Inc. Ho Fernandez was the highest bidder for the property. The petitioner admitted in his testimony that he knew about the P4. The collection of a tax cannot await the results of a lawsuit against the government. The Court agrees with respondent appellate court that there is no evidence on record from which it can be inferred that there was any agreement between the petitioner and private respondent prohibiting the latter from selling directly to Dole Philippines. He further averred that his tax delinquency of P2. The tax was due to the city government while the expropriation was effected by the national government. The petition for review was dismissed.00. No. INTERMEDIATE APPELLATE COURT and HO FERNANDEZ G. On October 15. 1991. are extinguished (Art. In addition. Cañete also said that if respondent herself .00. 1980. a taxpayer cannot refuse to pay his tax when called upon by the collector because he has a claim against the governmental body not included in the tax levy. A person cannot refuse to pay a tax on the ground that the government owes him an amount equal to or greater than the tax being collected. Moreover.116. 328 square meters.00 representing the estimated amount equivalent to the assessed value of the aforesaid portion. (2) that the two debts be due. is vigorously disputed.000. 1977. a certain Primitivo Cañete requested her to sell a Mercedes Benz for P580. Inc. Definitely. WHEN PROHIBITED ENGRACIO FRANCIA VS.00. COMPENSATION – LEGAL. Hence. that the party sought to be bound assented to its contents or showed conformity thereto. 1979. 1988 162 SCRA 753 FACTS: Engracio Francia is the registered owner of a residential lot. respondent Estrella Acapulco filed a Complaint before the RTC seeking the nullification of a sale she made in favor of petitioner Hermenegildo M. The circumstances of the case do not satisfy the requirements provided by Article 1279. 1977. Civil Code). and to allow him to recover a 203 square meter lot which was sold at public auction to Ho Fernandez and ordered titled in the latter's name. Thus the questioned decision of respondent appellate court is hereby affirmed. obligations of persons.400. The petitioner seeks to set aside the auction sale of his property which took place on December 5. as correctly found by the appellate court. This circumstance prevents legal compensation from taking place.400.00 deposited with the bank but he did not withdraw it. Since 1963 up to 1977 inclusive. it cannot be asserted that the debit memo was a contract binding between the parties considering that the same.R. 1977. his property was sold at public auction pursuant to Section 73 of Presidential Decree No. On March 20. Francia failed to pay his real estate taxes. Thus. The Court had consistently ruled that there can be no off-setting of taxes against the claims that the taxpayer may have against the government. 1977. Francia filed a complaint to annul the auction sale. who in their own right are reciprocally debtors and creditors of each other. the amount of P4.private respondent is liable to pay the petitioner a 20% margin or commission on the subject sale to Dole Philippines. Notice of the deposit dated September 28. 147477 June 27. this petition for review.00 paid by the national government for the 125 square meter portion of his lot was deposited with the Philippine National Bank long before the sale at public auction of his remaining property. L-67649 June 28. and a two-story house built upon it situated at Barrio San Isidro. It would have been an easy matter to withdraw P2. to wit: (1) that each one of the obligors be bound principally and that he be at the same time a principal creditor of the other. was not signed by private respondent nor was there any mention therein of any commitment by the latter to pay any commission to the former involving the sale of sprockets to Dole Philippines. Indeed. a 125 square meter portion of Francia's property was expropriated by the Republic of the Philippines for the sum of P4. Trinidad. now District of Sta. COMPENSATION – REQUISITES TRINIDAD V ACAPULCO G. on December 5. The lower court rendered a decision in favor Fernandez which was affirmed by the Intermediate Appellate Court .No. 1293) (EXPROMISION VS. the consent of those three persons is necessary. When all the requisites mentioned in article 1279 are present. at monthly interest rates of 6% to 7%. In this kind of novation.00 exclusive of interests. the court found that respondents’ obligation to pay the balance of their account with petitioner was extinguished.600. the spouses Tibong failed to pay their outstanding loan. Petitioner borrowed the car from respondent for two days but instead of returning the car as promised. ISSUE Whether or not petitioner’s claim for legal compensation was already too late RULING The court ruled in favor of the petitioner. it retroacts to the date when all its requisites are fulfilled. the debtor offers. petitioner Agrifina Aquintey filed before the RTC of Baguio City. compensation takes effect by operation of law.00 for which respondent issued three checks in favor of Cañete. and the third person or new debtor take his place in the relation. Without such release. a complaint for sum of money and damages against the respondents. thus criminal charges were filed against her.[27] when used as a defense. and the creditor. Petitioner’s stance is that legal compensation has taken place and operates even against the will of the parties because: (a) respondent and petitioner were personally both creditor and debtor of each other.000. 2006 FACTS On May 6. Following petitioner’s instructions. petitioner was authorized to collect the amounts of P6. respondent requested Cañete to execute a deed of sale covering the car in respondent’s favor for P500. TIBONG G. amounting to P773. Cañete was willing to sell it for P500.00 and that of the petitioner was P500. If there is no agreement as to solidarity. meaning. Respondent Felicidad.00 from Cabang. Substitution of the person of the debtor may be effected by delegacion.00 and that petitioner would pay respondent after petitioner returns from Davao. DELEGACION) AQUINTEY V. In the case at bar. SUBSTITUION OF DEBTOR (Art.will buy the car. and extinguishes both debts to the concurrent amount. As gleaned from the deeds executed by respondent Felicidad relative to the accounts of her other debtors. likewise.R.000. and the obligation to pay the balance of their loans had been extinguished. The proceeds of the loan were then re-lent to other borrowers at higher interest rates. (c) both monetary obligations had become due and demandable—petitioner’s obligation as shown in the deed of sale and respondent’s indebtedness as shown in the dishonored checks. According to the spouses Tibong. 166704 December 20.00 showing that both indebtedness were monetary obligations the amount of which were also both known and liquidated.000. the third person who has assumed the obligation of the debtor merely becomes a co-debtor or a surety. Due to petitioner’s failure to pay respondent. spouses Felicidad and Rico Tibong. ISSUE Whether or not there is valid novation in the instant case? RULING Novation which consists in substituting a new debtor in the place of the original one may be made even without the knowledge or against the will of the latter but not without the consent of the creditor.000. by the deeds of assignment of credit executed by respondent Felicidad in favor of petitioner.000. spouses Tibong admitted that they had secured loans from Agrifina.[3] Respondent then prayed that the deed of sale between her and petitioner be declared null and void. the checks that respondent issued in favor of Cañete bounced. Thus. Respondent thereafter executed a deed of sale in favor of petitioner even though petitioner did not pay her any consideration for the sale. he refused to pay respondent the amount of P500. They obliged themselves to pay petitioner. They insisted that by virtue of these documents. NOVATION: SUBJECTIVE NOVATION. They. When petitioner returned from Davao. it is not enough to extend the juridical relation to a third person. 1999.unequivocably declared that Cabang and Cirilo no longer had any obligation to her. Agrifina became the new collector of their debtors. SUBROGATION OF THE RIGHTS OF THE CREDITOR (LEGAL VS. and that their debtors had executed promissory notes in Agrifina’s favor. accepts a third person who consents to the substitution and assumes the obligation. and (d) neither of the debts or obligations are subject of a controversy commenced by a third person.[26] This is in consonance with Article 1290 of the Civil Code which provides that: Article 1290. NOVATION: SUBJECTIVE NOVATION. Agrifina alleged that Felicidad had secured loans from her on several occasions. there is no novation.00 from Cirilo. CONVENTIONAL) . it is necessary that the old debtor be released from the obligation. and P63. (b) the monetary obligation of respondent was P566. that the car be returned to her. No.000. In their Answer with Counterclaim.000. this resulted in a novation of the original obligation to Agrifina. Since it takes place ipso jure.000. and that petitioner be ordered to pay damages. likewise. even though the creditors and debtors are not aware of the compensation. alleged that they had executed deeds of assignment in favor of Agrifina.00. the first and the new debtor are considered obligated jointly. petitioner told respondent to buy the car from Cañete for P500. pro tanto. Compensation takes effect by operation of law even without the consent or knowledge of the parties concerned when all the requisites mentioned in Article 1279 of the Civil Code are present.00 saying that said amount would just be deducted from whatever outstanding obligation respondent had with petitioner. Despite demands. CA. Yuseco executed a promissory note on September 13. petitioners applied for a loan with Credit Manila. Infante and Rodney David Hegerty. According to them. It is only upon petitioner’s default in the payment of the monthly amortizations that a cause of action would arise and give the private respondent a right to maintain an action against the petitioner. President and Chief Operating Officer of petitioner Azolla Farms International Philippines. Jr. together with its president and vice-president. 3. petitioners pray for P1. Christian had no cause of action because the three promissory notes were not yet due and demandable. and the Kiwanis. and 14 July 1997.00 as actual damages. SORIANO. The petitioner corporation. The project also involves the then Ministry of Agriculture. NOVATION: SUBJECTIVE NOVATION. In a letter dated 16 December 1998. authorizing Yuseco to borrow from Savings Bank in an amount not exceeding P2. 11 NOVEMBER 2004 CALIFORNIA BUS LINES VS.1.500. The Board of Directors of Azolla Farms. which the latter endorsed to its sister company. the private respondent had no cause of action to file the complaint.000.000. private respondent Christian filed with the Regional Trial Court of Baguio City. Christian informed the petitioner corporation that he was terminating the loans and demanded from the latter payment in the total amount of US$150. its president and vice-president. passed a board resolution on August 31. Yuseco.000 plus unpaid interests in the total amount of US$13. through Atty. The loan having been approved. petitioner Swagman Hotels and Travel.—When issues not raised by the pleadings are tried by express or implied consent of the parties. CONVENTIONAL) AZOLLA FARMS V CA G.No. 1983. Blaming Savings Bank. 1983 with the Regional Trial Court of Manila (Branch 25).000. Thus. is the Chairman.000. 2. meanwhile. 5. and resulted in their failure to pay off the loan.R. CA. 1982. the Kilusang Kabuhayan at Kaunlaran. not the extinctive type. Alterations of the terms and conditions of the obligation would generally result only in modificatory novation unless such terms and conditions are considered to be the essence of the obligation itself. 14 March 1997. Thus. Christian loans evidenced by three promissory notes dated 7 August 1996. Each of the promissory notes is in the amount of US$50. ISSUE Whether the trial court erred in admitting petitioners’ amended complaint RULING SEC. filed an Answer raising as defenses lack of cause of action and novation of the principal obligations. SUBROGATION OF THE RIGHTS OF THE CREDITOR (LEGAL VS. of the modificatory type. 418 S 297 OCAMPO-PAULE VS. To finance its participation. Inc.No. as well as private respondent’s summary of payments. 138085 November 11. 312 S 611 EVADEL REALTY VS.00. Branch 59. petitioners Yuseco and Azolla Farms filed on October 3. the Azolla Farms project collapsed. 2004 FACTS Petitioner Francis R. 7. their complaint alleges that Savings Bank unjustifiably refused to promptly release the remaining P300.000 payable after three years from its date with an interest of 15% per annum payable every three months. CA. CA..00 which impaired the timetable of the project and inevitably affected the viability of the project resulting in its collapse. .R. In essence. In 1982. 4.200. STATE INVVESTMENT. promising to pay Savings Bank the sum of P1. There was therefore a novation of the terms of the three promissory notes in that the interest was waived and the principal was payable in monthly installments of US$750. 2005 FACTS Sometime in 1996 and 1997. 6. respectively. respondent Savings Bank of Manila (Savings Bank). since the petitioner did not renege on its obligation to pay the monthly installments conformably with their new agreement and even continued paying during the pendency of the case. Leonor L. PILAR DEVELOPMENT.000. among others. obtained from private respondent Neal B. SWAGMAN VS. 161135 April 8. 5.[25] The resulting novation in this case was. 357 S 395 SWAGMAN V CA G. Infante. Azolla Farms undertook to participate in the National Azolla Production Program wherein it will purchase all the Azolla produced by the Azolla beneficiaries in the amount not exceeding the peso value of all the inputs provided to them.00 on or before September 13. Inc.. 4 FEBRUARY 2002 REYES VS. a complaint for damages. since the obligation to pay a sum of money remains in force. 383 S 471 BAUTISTA VS. ISSUE Where there is a valid novation. Amendment to conform to or authorize presentation of evidence . a complaint for a sum of money and damages against the petitioner corporation.. 455 S 175 AZOLLA FARMS VS. 1982. On 2 February 1999. may the original terms of contract which has been novated still prevail? HELD The receipts. lend credence to petitioner’s claim that the payments were for the principal loans and that the interests on the three consolidated loans were waived by the private respondent during the undisputed renegotiation of the loans on account of the business reverses suffered by the petitioner at the time. Hegerty. and Atty. therefore.400. Absent an unequivocal declaration of extinguishment of the preexisting obligation. As can be gleaned from the records. whether actually incurred or not.CBLI continued having trouble meeting its obligations to Delta. Inc. only a showing of complete incompatibility between the old and the new obligation would sustain a finding of novation by implication. ISSUE . Delta eventually became indebted to SIHI to the tune of P24. The restructuring agreement between Delta and CBLI executed on October 7. (1) a previous valid obligation. purchased on installment basis 35 units of M. 1979. This prompted Delta to threaten CBLI with the enforcement of the management takeover clause. executed sixteen (16) promissory notes in favor of Delta on January 23 and April 25. Dionisio O.000. 1980. or subrogating a third person in the rights of the creditor.A. assigned to respondent SIHI. June 19. either by changing the object or principal conditions. In this case. SUBROGATION OF THE RIGHTS OF THE CREDITOR (LEGAL VS. the former no longer required petitioner to issue a receipt acknowledging her receipt of the jewelry.167. 1991 to April.010. (2) an agreement of all parties concerned to a new contract.95). In addition to the notes.For novation to take place. The trial court agreed thereto and admitted the amended complaint.When petitioner failed to remit the proceeds of the sale of the jewelry or to return the unsold pieces to private complainant. petitioner California Bus Lines.00 in three separate credit agreements dated May 11. namely. The agreement between private complainant and petitioner was that the latter would sell the same and thereafter turn over and account for the proceeds of the sale. and (4) the birth of a valid new obligation. Diesel Buses and two (2) units of M. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time. even after judgment. RULING Novation has been defined as the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which terminates the first. 2002 FACTS During the period August. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings. Calilung several pieces of jewelry with a total value of One hundred Sixty Three Thousand One hundred Sixty Seven Pesos and Ninety Five Centavos (P163. Division (Delta) applied for financial assistance from respondent State Investment House. CBLI promised to pay Delta or order.000. Corp. or otherwise return to private complainant the unsold pieces of jewelry within two months from receipt thereof. ISSUE Whether the Restructuring Agreement dated October 7. To secure the payment of the purchase price of the 35 buses.[5] In each promissory note. Inc. NOVATION: SUBJECTIVE NOVATION. to cover its overdue obligations under the promissory notes.they shall be treated in all respects.R. Private complainant was constrained to refer the matter to the barangay captain of Sta.269. P2. Monica.N. petitioner failed to turn over the proceeds of the sale or to return the unsold pieces of jewelry. 1993. Diesel Conversion Engines from Delta. it should be noted that courts are given the discretion to allow amendments of pleadings to conform to the evidence presented during the trial. the latter sent petitioner a demand letter. as if they had been raised in the pleadings.314. (3) the extinguishment of the old obligation. in case of judicial proceedings to enforce collection. with interest at 14% per annum.No. Since private complainant and petitioner are relatives. 1981. novated the five promissory notes Delta Motors.A. 2003 FACTS Sometime in 1979. it entered into a restructuring agreement with Delta on October 7. On this score. Corp. petitioner received from private complainant Felicitas M. CBLI and its president. the attendant facts do not make out a case of novation. and August 22. When CBLI defaulted on all payments due.N. CBLI further promised to pay the holder of the said notes 25% of the amount due on the same as attorney’s fees and expenses of collection.A. Delta Motors Corporation—M. Llamas.No. four essential requisites have to be met.000 payable in 60 monthly installments starting August 31. CONVENTIONAL) CALIFORNIA BUS LINES V STATE INVESMENTS G. 1980. Mr. but failure so to amend does not affect the result of the trial of these issues. 1981. SIHI agreed to extend a credit line to Delta for P25. 1981. between petitioner CBLI and Delta Motors. NOVATION: SUBJECTIVE NOVATION. (hereafter CBLI). it was petitioners’ belief that respondent’s evidence justified the amendment of their complaint. the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice him in maintaining his action or defense upon the merits. CONVENTIONAL) OCAMPO-PAULE V CA G. or by substituting the person of the debtor. shows that the parties did not expressly stipulate that the restructuring agreement novated the promissory notes. Pampanga. CBLI executed chattel mortgages over the 35 buses in Delta’s favor.32 From April 1979 to May 1980. 147950 December 11.R.N. Lubao. 145872 February 4. Notwithstanding receipt of the demand letter. SUBROGATION OF THE RIGHTS OF THE CREDITOR (LEGAL VS. and hence. (3) extinguishment of the old contract. but this conversion did not extinguish the loan obligation. CONVENTIONAL) BAUTISTA V PILAR DEVELOPMENT g. Reyes against his first cousin petitioner Arsenio R.000. in its broad concept. (d) there must be the validity of the new contract. may either be extinctive or modificatory.r.no. SUBROGATION OF THE RIGHTS OF THE CREDITOR (LEGAL VS. (b) there must be an agreement of the parties concerned to a new contract. In any case. novation is not one of the grounds prescribed by the Revised Penal Code for the extinguishment of criminal liability. jointly and severally.180. To partially finance the purchase.378. Said Kasunduan did not change the object or principal conditions of the contract between them. did not extinguish petitioner’s liability to remit the proceeds of the sale of the jewelry or to return the same to private complainant. It must appear by express agreement of the parties. Significantly. They executed a promissory note on December 22. Reyes and witness Romeo Rueda. The change in manner of payment of petitioner’s obligation did not render the Kasunduan incompatible with the original agreement. or by their acts that are too clear and unequivocal to be mistaken for anything else.180. The parties did agree that the amount loaned would be converted into respondent's contribution to the partnership. In the case at bar. novation is never presumed. NOVATION: SUBJECTIVE NOVATION. (2) agreement of all the parties to the new contract. and (4) validity of the new one. Late payments were to be charged a penalty of one and one-half per cent (1 1/2%) of the amount due. It is extinctive when an old obligation is terminated by the creation of a new obligation that takes the place of the former. which totalled P1. The execution of the Kasunduan sa Bayaran does not constitute a novation of the original agreement between petitioner and private complainant. 2002 FACTS This petition arose from a civil case for collection of a sum of money with preliminary attachment filed by respondent Pablo V. Metro Manila.00 at the time of filing of the Complaint. FACTS In 1978. Las Pinas.00 with interest rate of 12% and service charge of 3%" for a period of 240 months. and. petitioner-spouses borrowed from him P600. the following requisites must concur: (a) there must be a previous valid obligation.726. SUBROGATION OF THE RIGHTS OF THE CREDITOR (LEGAL VS. by changing only the terms of payment and adding other obligations not incompatible with the old one. RULING It is well-settled that the following requisites must be present for novation to take place: (1) a previous valid obligation.250. Presidential Decree or any Central Bank regulation should be enacted increasing the lawful rate of interest and service charges .Whether or not there was a novation of petitioner’s criminal liability when she and private complainant executed the Kasunduan sa Bayaran. 1978 obligating themselves. An obligation to pay a sum of money is not novated in a new instrument wherein the old is ratified by changing only the terms of payment and adding other obligations not incompatible with the old one. in monthly installments of P1. in a new instrument wherein the old is ratified. In the same promissory note. it is merely modificatory when the old obligation subsists to the extent it remains compatible with the amendatory agreement.00 with interest at five percent (5%) per month. or twenty years. to pay the "principal sum of P100.83. or wherein the old contract is merely supplemented by the new one. 135046 august 17. they obtained from the Apex Mortgage & Loan Corporation a loan in the amount of P100.00. petitioners authorized Apex to "increase the rate of interest and/or service charges" without notice to them in the event that a law. petitioner spouses Florante and Laarni Bautista purchased a house and lot in Pilar Village. ISSUE Whether or not there was novation in the instant case? RULING For novation to take place. Reyes and Nieves S. CONVENTIONAL) In their Answer petitioners admitted their loan from respondent but averred that there was a novation so that the amount loaned was actually converted into respondent's contribution to a partnership formed between them on 23 March 1990. NOVATION: SUBJECTIVE NOVATION. or wherein the old contract is merely supplemented by the new one. 1999 REYES V CA june 26. from date. Reyes and spouse Nieves S. the third requisite is not present. Novation. The date when the acknowledgment receipt/promissory note was made negates the claim that the loan agreement was extinguished through novation since the note was made while the partnership was in existence. An obligation to pay a sum of money is not novated. According to private respondent. Reyes. (c) there must be the extinguishment of the old contract. It was evidenced by an acknowledgment receipt dated 15 July 1990 signed by the petitioner-spouses Arsenio R. The loan was to be used supposedly to buy a lot in Parañaque. Upon payment of the first installment. 543 S 1 MESINA VS. This second note became the new contract governing the parties' obligations. as stated above. The first promissory note was cancelled and replaced by the second note.R.43 in the first note which amount became the principal debt therein. 1982. In order that an obligation may be extinguished by another which substitutes the same. entered into a "Contract to Sell " with Evadel Realty and Development Corporation (petitioner). to vacate the encroached area. as sellers. Petitioner admitted receiving the demand letters but refused to vacate the said area. novation is not applicable in this case since. 6. CASPE. and April 24. Thus. (3) the extinguishment of the old contract. (3) the old contract is extinguished. Both parties voluntarily accepted the terms of the second note. (2) the parties concerned agree to a new contract. ISSUE ISSUE Whether or not there was valid novation in the case at bar? RULING Novation has four (4) essential requisites: (1) the existence of a previous valid obligation. On September 20. it is imperative that it be so declared in unequivocal terms (express novation) or that the old and the new obligations be on every point incompatible with each other (implied novation). one of the modes of extinguishing an obligation. This note was in the amount of P142. they unequivocally stipulated to extinguish the first note. 7. ipso facto. 144291 April 20.326.450 square meters. they executed another promissory note in favor of Apex. as buyer. an express intention to novate. TCT No. CA. denominated as Lot 5536-D-1 of the subdivision plan of Lot 5536-D of Psd-04-092419 and was later on segregated from the mother title and issued a new transfer certificate of title. Payment of the promissory note was secured by a second mortgage on the house and lot purchased by petitioners. Novation. March 7. 30 MAY 2000 VDA. 3. 9 MARCH 2000 BANCO FILIPINO VS. 1997.33 years. requires the concurrence of the following: (1) there is a valid previous obligation. a higher interest rate. CA. there was animus novandi. 509 S 431 HEIRS OF GAUDIANE VS. The first promissory note was a valid and subsisting contract when petitioner spouses and Apex executed the second promissory note. 11 MARCH 2004 LAUREANO VS.43 at the increased interest rate of twenty-one per cent (21%) per annum with no provision for service charge but with penalty charge of 1 1/2% for late payments. 1996. 125062 which was part of a huge tract of land known as the Imus Estate. CA. the area encroached upon was EXTINCTIVE PRESCRIPTION: INTERRUPTION 1. 769166. and a higher monthly amortization. In the instant case. 5. 9 MAMRCH 2000 . We quote with approval the following findings of the trial court: Since the alleged agreement between the plaintiffs [herein respondents] and defendant [herein petitioner] is not in writing and the alleged agreement pertains to the novation of the conditions of the contract to sell of the parcel of land subject of the instant litigation. all to be paid within a shorter period of 16. In the instant case. the terms of the second promissory note provided for a higher principal. petitioner introduced improvements thereon and fenced off the property with concrete walls. 2. 28 MARCH 2001 MAESTRADO VS. B & I REALTY VS. and also in the same note. is unavailing.on the loan. payable at a higher interest rate of 21% per annum. and (4) there is valid new contract. Neither was there implied novation since it was not shown that the two agreements were materially and substantially incompatible with each other. These changes are substantial and constitute the principal conditions of the obligation.Petitioner spouses failed to pay several installments. 2001 FACTS On April 12.No. all four requisites have been complied with. Respondent spouses successively sent demand letters to petitioner on February 14. respondent spouses discovered that the area fenced off by petitioner exceeded the area subject of the contract to sell by 2. Clearly. Later. SUBROGATION OF THE RIGHTS OF THE CREDITOR (LEGAL VS. in the name of respondent spouses. (2) the agreement of all parties to the new contract. Novation may be express or implied. CONVENTIONAL) Whether or not there was novation of contract? RULING Petitioner's claim that there was a novation of contract because there was a "second" agreement between the parties due to the encroachment made by the national road on the property subject of the contract by 1. 4. DE DELGADO VS CA. there was no express novation because the "second" agreement was not even put in writing. GARCIA. EVADEL REALTY V SORIANO G. and (4) the validity of the new one. NOVATION: SUBJECTIVE NOVATION. over a parcel of land denominated as Lot 5536-C of the Subdivision Plan of Lot 5536 covered by Transfer Certificate of Title No. the spouses Antero and Virginia Soriano (respondent spouses). novation must be clearly proven by the proponent thereof and the defendant in this case is clearly barred by the Statute of Frauds from proving its claim. CA.647 square meters.326. Upon verification by representatives of both parties. The second promissory note absorbed the unpaid principal and interest of P142. Consequently. Honorio Valisno Garcia and Felicisima Mesina. from the series of written extrajudicial demands made by respondent to have the execution of the Deed of Absolute Sale in her favor.R. covered and embraced by TCT No. the Venegases' counsel failed to appear and the complaint was eventually dismissed without prejudice. enstered into a Contract to Sell over a lot consisting of 235 square meters. Sangitan. along with her husband. She. starting May 1977. Respondent even filed a Complaint before the Housing and Land Use Regulatory Board way back in June.450. acknowledging that the lot was to be used as a collateral for bank financing and that the deed of sale was executed only as a device to obtain the loan. the prescriptive period of 10 years has been interrupted. Hence. petitioners refused to issue the necessary Deed of Sale to effect the transfer of the property to her. the subject of annulment of mortgage in Civil Case No. Venegas was the owner of a parcel of land located in Barrio BagongIlog in Pasig. to execute the necessary Deed of Absolute Sale for the transfer of title in her name. It was not at all the action contemplated in Article 1155 of the Civil Code which explicitly provides that the prescription of an action is interrupted only when the action itself is filed in court. when the case was called for pre-trial.85 per month. Therefore. T-78881 was issued in the name of herein petitioners. Datuin for purposes of obtaining a loan with the RCBC. 36852 by the Venegases had the effect of interrupting the prescriptive period for the filing of the complaint for judicial foreclosure of mortgage? RULING We agree with the CA's ruling that Civil Case No. EXTINCTIVE PRESCRIPTION: INTERRUPTION MESINA V. 2008 FACTS Consorcia L. However. Instituting this case at bar. the succeeding monthly installments are to be paid within the first week of every month. with damages. Rizal and covered by TCT No. Petitioner could have protected its right over the property by filing a cross-claim for judicial foreclosure of mortgage against respondents in Civil Case No. ISSUE Whether or not respondent’s cause of action had already prescribed? RULING Article 1155 of the Civil Code is explicit that the prescriptive period is interrupted when an action has been filed in court. 36852. She delivered said title to. He issued a receipt to the Venegases. Thereafter. 36852 did not have the effect of interrupting the prescription of the action for foreclosure of mortgage as it was not an action for foreclosure but one for annulment of title and nullification of the deed of mortgage and the deed of sale. CASPE G. and executed a simulated deed of sale in favor of. during their lifetime. 247434. respondent. The Contract to Sell provides that the cost of the lot is P70. 146972 January 29. Venegas learned of Datuin's fraudulent scheme when she sold the lot to herein respondents for P160. On 2 January 1997. instituted a complaint against Datuin in the then Court of First Instance CFI of Rizal. 377734. 36852.00. No. The filing of a cross-claim would have been proper there. However. Datuin prepared a deed of absolute sale and. and when there is any written acknowledgment of the debt by the debtor.00 per square meter for a total amount of P16.R. GARCIA G. it cannot be said that the cause of action of the respondent has already been prescribed. through forgery. The actuations clearly manifested that petitioner knew its rights under the law but chose to sleep on the same. All the issues pertaining to the mortgage validity of the mortgage and the propriety of foreclosure would have been passed upon concurrently and not on a piecemeal basis. Cabanatuan City. Branch 11. This should be the case as the issue of foreclosure of the subject mortgage was connected with. respondent asserts that despite the full payment made on 7 February 1984 for the consideration of the subject lot. because of utter frustration of the respondent. at the residence of the vendor at Quezon City. 2006 FACTS Atty. who was still alive at that time. through her counsel. sent a final demand letter to the petitioners for the execution of the Deed of Absolute Sale. with all unpaid monthly installments earning an interest of 1% per month.000 in a deed of conditional sale. or dependent on. when there is a written extrajudicial demand made by the creditors. docketed as Civil Case No. Datuin claimed that he had connections with the management of RCBC and offered his assistance to Venegas in obtaining a loan from the bank. No.B & I REALTY V. T-31643 in the name of Felicisima Mesina which title was eventually cancelled and TCT No. 1986. EXTINCTIVE PRESCRIPTION: INTERRUPTION . 188893. The records reveal that starting 19 April 1986 until 2 January 1997 respondent continuously demanded from the petitioners the execution of the said Deed of Absolute Sale but the latter conjured many reasons and excuses not to execute the same. in successive monthly installments of P260. 168035 November 30. to enforce her rights and to compel the mother of herein petitioners. ISSUE Whether or not filing of Civil Case No. for recovery of property and nullification of TCT No. payable within a period not to exceed 7 years at an interest rate of 12% per annum. situated at Diversion Road. she finally lodged a formal Complaint for Specific Performance with Damages before the trial court on 20 January 1997. but still to no avail. made it appear that the spouses Venegas executed the document in his favor. defendant. Appellees cannot. It reviewed their qualifications for possible promotion to the B-747 fleet. instituted a case for illegal dismissal before the Labor Arbiter. 3317-A. hit by a recession. Consequently. Sometime in 1982. 4389. for brevity) whereby he sold to his sister Juana his one-half share in Lot No. Clearly. EXTINCTIVE PRESCRIPTION: INTERRUPTION In the instant case. It did not. the one designed therefore should prevail. . Realizing that the recession would not be for a short time. .R. What is the prescriptive period for money claims arising from employer-employee relationship? Whether the court gravely erred in not giving due course to the claim of petitioners and legal effect of prescription and laches adverted by defendants-appellants in their answer and affirmative defenses proven during the hearing by documentary and testimonial evidence. 2986-A (OCT 2986-A) in the names of co-owners Felix and Juana Gaudiane.HEIRS OF GAUDIANE V CA G. the action for damages due to illegal termination was filed by plaintiff-appellee only on January 8. immediately terminate it's A-300 pilots. plaintiff on June 29.[12] Petitioners. Procopio Gaudiane and Segundo Gaudiane. 2004 FACTS The lot in controversy is Lot 4389 located at Dumaguete City and covered by Original Certificate of Title No. Herein respondents are the descendants of Felix while petitioners are the descendants of Juana. RULING. Money claims. It should be noted further that Article 291 of the Labor Code is a special law applicable to money claims arising from employer-employee relations. As explained earlier.R. Geronimo and Ines Iso (the Isos). Petitioner was employed in the singapore airlines limited as the pilot captain of B707. it necessarily prevails over Article 1144 of the Civil Code. RULING As a general rule. opposed it on the ground that the Isos falsified their copy of the Escritura by erasing “Lot 4156” and intercalating in its place “Lot 4389. they filed a pleading in the trial court seeking to direct the Register of Deeds of Dumaguete City to cancel OCT 2986-A covering Lot 4389 and to issue a new title in favor of the Isos.” ISSUE LAUREANO V CA G. Felix died in 1943 while his sister Juana died in 1939.' Petitioners’ claim is already rendered moot by our ruling barring petitioners from raising the defense of exclusive ownership due to res judicata. defendant decided to terminate its excess personnel. the complaint was withdrawn. believed that the sale by Felix to their mother Juana in 1927 included not only Lot 4156 but also Lot 4389. As correctly observed by the appellate court. plaintiff-appellee's action has already prescribed. 119879 March 11. however. Court of Appeals[13] which held that titled property may be acquired through prescription by a person who possessed the same for 36 years without any objection from the registered owner who was obviously guilty of laches. It was through this misrepresentation that appellees’ predecessor-in-interest succeeded in withholding possession of appellees’ share in Lot No. their contention is erroneous. This was later withdrawn after respondents’ predecessors-ininterest. 1982. thus. Seventeen expatriate captains in the Airbus fleet were found in excess of the defendant's requirement. Aggrieved. In 1974. a general law. defendant informed its expatriate pilots including plaintiff of the situation and advised them to take advance leaves. however. 1987 or more than four (4) years after the effectivity date of his dismissal on November 1. Article 291. Petitioners’ predecessors-in-interest. otherwise they shall be forever barred. invoke our ruling in Tambot vs. 4156 was sold. initiated cost-cutting measures. 114776 February 2. Unfortunately. Even assuming arguendo that petitioners are not so barred.No. 1927. Basic is the rule in statutory construction that 'where two statutes are of equal theoretical application to a particular case. Defendant moved to dismiss on jurisdictional grounds. plaintiff was not one of the twelve. ownership over titled property cannot be lost through prescription. Before said motion was resolved. Among the 17 excess Airbus pilots reviewed. On November 4. 2000 FACTS. Felix executed a document entitled Escritura de Compra-Venta (Escritura.No. 4156 covered by Transfer Certificate of Title No. ISSUE . by their own fraudulent act.All money claims arising from employee-employer relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued. benefit therefrom by alleging prescription and laches. only Lot No. twelve were found qualified. 1983. To secure payment of said loans. the spouses executed “Real Estate Mortgages” in favor of the appellants (Banco Filipino) over their parcels of land. RULING: The Supreme Court denied the petition and affirmed the decision of the Court of Appeals because the time of filing has been prescribed. Under Article 1144 of the Civil Code on Prescription based on written contracts. Jose Delgado filed a petition for reconveyance for a violation of the condition.549 square meter situated in the Municipality of Catarman Samar. Upon declaration of independence. The land was registered under TCT 0-2539-160 in favor of the Commonwealth however without any annotation. the Commonwealth was replaced by Republic of the Philippines which took over the subject land and turned over to Civil Aeronautics Administration. EXTINCTIVE PRESCRIPTION: INTERRUPTION Carlos Delgado was the absolute owner of a parcel of land with an area of 692.000 square meter in favor of the Commonwealth of the Philippines. 607 square meter mistakenly included in the title was also prescribed Article 1456 of the Civil Code states. the filing of action for reconveyance is within 10 years from the time the condition in the Deed of Donation was violated. The petitioner herein filed only 24 years in the first action and 43 years in the second filing of the 2nd action. Petitioner’s claim that the action of the private respondents have prescribed is bereft of merit. On September 2. COURT OF APPEALS 363 SCRA 58 FACTS: BANCO FILIPINO vs. later named Bureau of Air Transportation Office. ISSUE: Whether or not the CA erred when it held that the cause of action of the private respondents accrued on October 30.00 as evidenced by the “Promissory Note” executed by the spouses in favor of the said bank. Thus the period of prescription of any cause of action is reckoned only from the date of the cause of action accrued. if property is acquired through mistake or fraud. The petitioner filed only before 24 years o discovery which the law only requires 10 years of filing. The acceptance was then made to President Quezon in his capacity as Commander-in-Chief. by force of . But the CA reversed the said decision because of prescription. 1985 the appellee’s filed a complaint for “Annulment of the Loan Contracts. Carlos Delgado granted and conveyed by way of donation with quitclaim all rights. title.946. the person obtaining it is. The Deed of Donation was executed with a condition that the said land will be used for the formation of the National Defense of the Philippines. The appellee spouses failed to pay their monthly amortization to appellant. ISSUE: Whether or not the petitioner’s action for reconveyance is already barred by prescription. Calvin Arcilla secured on three occasions.107. Petitioners appealed to the Court of Appeals. interest claim and demand over a portion of land with an area of 165. loans from the Banco Filipino Savings and Mortgage bank in the amount of Php. Foreclosure Sale with Prohibitory and Injunction” which was granted by the RTC. The said parcel of land then covered by the Torrens System of the Philippines and was registered in the name of Commonwealth of the Philippines for a period of 40 years. the time for prescription of all kinds of action where there is no special provision which ordains otherwise shall be counted from the day they may be brought. The said agency utilizes the said land a domestic airport. Under Article 1150 of the Civil Code. but the CA affirmed the decision of the RTC. for it was only from the moment that they discovered the petitioner’s unilateral increase thereof. The action for reconveyance on the alleged excess of 33. The RTC ruled in favor of the plaintiff Delgado.EXTINCTIVE PRESCRIPTION: INTERRUPTION VDA. DE DEL GADO vs. The period should not be made to retroact to the date of the execution of the contract. 1978 and the filing of their complaint for annulment of their contracts in 1085 was not yet barred by the prescription/ RULING: The court held that the petition is unmeritorious. COURT OF APPEALS 332 SCRA 241 FACTS: Elsa Arcilla and her husband. but from the date they received the statement of account showing the increased rate of interest. vs. 5872 as still a common property and therefore must be divided into six parts. However.090-square meter property located in Sitio Gayas. According to respondent. subject to renewal within sixty days prior to its expiration. Petitioners appealed to the Court of Appeals which sustained the decision of the trial court. 373 S 31 TANAY RECREATION CENTER AND DEVELOPMENT CORP. as mentioned earlier. initiated intestate proceedings and was appointed administrator of said estates in the process. and Injunction In her Answer. the Court held that laches is inapplicable in this case. Six years after the execution of the quitclaims. Pacunayen. owned by Catalina Matienzo Fausto. 455 S 436 MENDOZA VS. Eventually. ESTOPPEL (ART. Significantly. The lease contract provided for a 20-year term. asking that petitioner remove the improvements built thereon. It appears that Fausto had earlier sold the property to Pacunayen and title has already been transferred in her name. Moreover. On this property stands the Tanay Coliseum Cockpit operated by petitioner. On June 17. and is registered in the name of the deceased spouses Ramon and Rosario Chaves. The lot has an area of 57.601 sq. the partition case effected and the respective shares of the heirs were delivered to them. petitioners then prepared a quitclaim to confirm the alleged oral agreement. petitioner shall have the “priority right” to purchase the same. FAUSTO. CA. The court approved the partition but a copy of said decision was missing. Lot No. under a Contract of Lease. An inventory of the estates was made and thereafter. respondent Anunciacion F.m. respondents discovered that indeed subject lot was still a common property in the name of the deceased spouses. RULING: The Supreme Court ruled that an action for quieting of title is imprescriptible especially if the plaintiff is in possession of the property being litigated. (TRCDC) is the lessee of a 3. 143-1439) 1. This is because. The trial court considered Lot No.) DEFINITION AND MEANING 1. Rizal. as she is now the absolute owner of the property. the heirs agreed on a project partition. The contract also provided that should Fausto decide to sell the property. QUEENSLAND. ISSUE: Whether or not the action for quieting of title had already prescribed. Subsequently. an action for Quieting of Title was filed by petitioners on December 22. if within 10 years such action for reconveyance has not been executed. respectively. Nonetheless. Tanay. considered a trustee of an implied trust for the benefits of the person from whom the property comes. there being six heirs.law. 1983. petitioner wrote Fausto informing her of its intention to renew the lease. when they met to discuss the .5872 was not included in a number of documents. EXTINCTIVE PRESCRIPTION: INTERRUPTION MAESTRADO vs. They were survived by six heirs. petitioners’ possession of the subject lot has rendered their right to bring an action for quieting of title imprescriptible. Petitioners maintain the existence of an oral partition agreement entered into by all heirs after the death of their parents. 1991. One who is in actual possession of a land. 2. Parties offered different explanations as to the omission of said lot in the documents. 5872 and the rights of the contending parties thereto. The spouses died intestate in 1943 and 1944. 3. 2005 FACTS: Petitioner Tanay Recreation Center and Development Corp. the estate was divided among the heirs. 9 MARCH 2000 LIM VS. respondent claimed that petitioner is estopped from assailing the validity of the deed of sale as the latter acknowledged her ownership when it merely asked for a renewal of the lease. COURT OF APPEALS 327 SCRA 678 FACTS: These consolidated cases involve Lot No. TANAY RECREATION VS. Angel Chaves. CATALINA MATIENZO FAUSTO April 12. To set things right. Petitioner filed an Amended Complaint for Annulment of Deed of Sale. in 1956. To settle the estate of said spouse. Specific Performance with Damages. Respondents dispute voluntariness of their consent to the quitclaims. one of the heirs. who replied. claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before making steps to vindicate his right because his undisturbed possession gives him a continuing right to seek the aid of the courts to ascertain the nature of the adverse claim and its effect on his title. it was Fausto’s daughter. between the parties and their successors in interest. his son. COURT OF APPEALS February 18. As such. petitioner continued to occupy the property but failed to pay the rentals. 1996. Fausto has the legal duty to petitioner not to sell the property to anybody. 2002 FACTS: Sometime in 1992. After expiration of the lease. 2005 DEFINITION AND MEANING FACTS: Manotok was the administrator of a parcel of land which it leased to Benjamin Mendoza.matter. and it even asked for grace period to vacate the premises. 1996. The consideration for the lease includes the consideration for the right of first refusal and is built into the reciprocal obligations of the parties. a market analyst and trader of Queensland. and leaves no room for interpretation. it is considered as containing all the terms agreed upon. that even after the expiration of the lease contract. and after his demise. 1988. 1989 to July 31. independent of any claim of ownership by any of the parties involved. RULING: When a lease contract contains a right of first refusal. The stipulation does not provide for the qualification that such right may be exercised only when the sale is made to strangers or persons other than Fausto’s kin. 1996. Benjamin Shia. QUEENSLAND TOKYO COMMODITIES. It appears that respondent corporation leased the property subject of this case to petitioner’s father. Petitioner’s right of first refusal is an integral and indivisible part of the contract of lease and is inseparable from the whole contract. vendor. It simply means that should Fausto decide to sell the leased property during the term of the lease. The complaint prayed that the court order Mendoza and those claiming rights under him to vacate the premises and deliver possession thereof to Manotok. RULING: This is a case for unlawful detainer. there can be. The lessee has a right that the lessor's first offer shall be in his favor. The only issue to be resolved in an unlawful detainer case is physical or material possession of the property involved. petitioner lost his right to possess the property upon demand by respondent corporation to vacate the rented lot. Manotok made a demand on Benjamin Mendoza to pay the rental arrears and to vacate the premises within fifteen (15) days from receipt of the demand letter. the lessor is under a legal duty to the lessee not to sell to anybody at any price until after he has made an offer to sell to the latter at a certain price and the lessee has failed to accept it. also referred to as the right of first refusal. no evidence of such terms other than the contents of the written agreement. continued to occupy the premises and thus incurred a total of P44. 1996.75 per month starting August 1. the Mendozas refused to vacate the property and to pay the rentals. that the contract of lease expired on December 31. On July 16. 1989 to July 31. express or implied. In this case. even her relatives. at any price until after she has made an offer to sell to petitioner at a certain price and said offer was rejected by petitioner. It was erroneous for the CA to rule that the right of first refusal does not apply when the property is sold to Fausto’s relative. that despite receipt of the letter and after the expiration of the 15-day period.25 as JEFFERSON LIM vs. until he finally vacates the premise.011. . unpaid rentals from January 1. that on July 16. DEFINITION AND MEANING ROMEO MENDOZA vs. except when it fails to express the true intent and agreement of the parties. An action for unlawful detainer may be filed when possession by a landlord. respondent corporation made a demand on petitioner to vacate the premises and to pay their arrears. under the terms of petitioner’s right of first refusal. subject to such increase allowed by law. such sale should first be offered to petitioner. Romeo. When the terms of an agreement have been reduced to writing. Petitioner cannot now refute the existence of the lease contract because of his prior admissions in his pleadings regarding his status as tenant on the subject property. Thus. vendee or other person of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession by virtue of a contract. ISSUE: The contention in this case refers to petitioner’s priority right to purchase. In the case at bar. and to pay the unpaid rentals from January 1. the wording of the stipulation giving petitioner the right of first refusal is plain and unambiguous. INC. January 4. ISSUE: Whether or not the Honorable Court of Appeals committed error in giving efficacy to a lease contract signed in 1988 when the alleged signatory was already dead since 1986. 1996 plus P875. petitioner did not demand for the exercise of its option to purchase the property. Benjamin Mendoza. 000 in manager’s check. However.000 as evidenced by PCI Bank Manager’s Check No. which gave rise to its execution and of the date of the latter. 31 JANUARY 2000 PLACEWELL INTERNATIONAL SERVICES CORP. It was made to apply to any authorized future transactions. 1992. that he and his co-workers sought assistance from the Philippine Embassy but they did not succeed in pursuing their cause of action because of difficulties in communication. SAAD retained respondent until his return to the Philippines two years after. that for the entire duration of the new contract. 2001. and out of ignorance. trading U. and answered for any trading account against which the deposit was made. or at least influence. Deutsche Mark and Swiss Franc. the check was kept in the drawer of respondent’s consultant. PLACEWELL VS.R. (2) intent. CAMOTE. thus the latter decided to terminate his services. 26 JUNE 2006 2. On October 27. and (3) knowledge. he and his fellow Filipino workers were required to sign another employment contract written in Arabic under the constraints of losing their jobs if they refused. Camote to work as building carpenter for SAAD Trading and Contracting Co. some of which were received by Lim. As the mock trading showed profitability. for any loss of whatever nature. Thus. respondent learned that it would take seventeen (17) days to clear the manager’s check given by petitioner. Inasmuch as that was a busy Friday. 2006 FACTS: Petitioner Placewell International Services Corporation (PISC) deployed respondent Ireneo B. ISSUE: Whether or not the CA erred in reversing the decision of the RTC which dismissed the respondent’s complaint RULING: The essential elements of estoppel are: (1) conduct of a party amounting to false representation or concealment of material facts or at least calculated to convey the impression that the facts are otherwise than. aware of his P44. the traveler’s check was deposited with Citibank. 2. those which the party subsequently attempts to assert. and inconsistent with. dated October 22. the original purchaser of the traveler’s check.465 loss. vs. Lim decided to invest with a marginal deposit of US$5. but the latter.00 per month. 1992. Petitioner Lim was then allowed to trade with respondent company which was coursed through Shia by virtue of blank order forms all signed by Lim. 1992. petitioner paid his investment deposit to respondent in the form of a manager’s check in the amount of US$5. from the accounting staff of Queensland. 1992. respondent pleaded for his retention and consented to accept a lower salary of SR 800. They conducted mock tradings without money involved. CAMOTE G. Marissa’s father was a former employee of Lim’s father.00 per month. (SAAD) at the Kingdom of Saudi Arabia (KSA) for a contract duration of two years. he received only SR 590. 69007. On November 27. that this conduct shall be acted upon by. one of his employees. ISSUE: . respondent filed a sworn Complaint for monetary claims against petitioner alleging that when he arrived at the job site. and for all obligations. which the investor would incur with the broker. with a corresponding salary of US$370. Later.) KINDS OF ESTOPPEL 1. demanded for a liquidation of his account and said he would get back what was left of his investment. 169973. Shia returned the check to petitioner who informed Shia that petitioner would rather replace the manager’s check with a traveler’s check. the other party. Lim requested Shia for proof that the foreign exchange was really lucrative. The marginal deposit represented the advance capital for his future tradings. British pound. Next. Because Shia trusted the latter’s good credit rating. At the job site. No.was introduced to petitioner Jefferson Lim by Marissa Bontia. Citibank informed respondent that the traveler’s check could not be cleared unless it was duly signed by Lim. or at least expectation. June 26. on October 22. respondent was allegedly found incompetent by his foreign employer. Respondent furnished Lim with the daily market report and statements of transactions as evidenced by the receiving forms. HEIRS OF RAGUA VS. A Miss Arajo. it is uncontested that petitioner had in fact signed the Customer’s Agreement in the morning of October 22. Shia noticed that the traveler’s check was not indorsed but Lim told Shia that Queensland could sign the endorsee portion. All these are indicia that petitioner treated the Customer’s Agreement as a valid and binding contract. of the real facts.00 per month. knowing fully well the nature of the contract he was entering into. he brought the check back to the office unsigned. dollar against the Japanese yen. Shia suggested that Lim invest in the Foreign Exchange Market. The Customer’s Agreement was duly notarized and as a public document it is evidence of the fact. Before investing. ere. Meanwhile. that he was not given his overtime pay despite rendering nine hours of work everyday. actual or constructive. returned the check to Lim for his signature. CA.S. Pagasa Village. warranting a presumption that the party entitled thereto has either abandoned it or declined to assert it. situated in Quezon City. KINDS OF ESTOPPEL HEIRS OF RAGUA vs. Chia and respondent GTP were eventually executed and signed. Visayas Avenue. known as the Diliman Estate. the entire Project 6 and Vasha Village. respondent filed his claim within the three-year prescriptive period for the filing of money claims set forth in Article 291 of the Labor Code from the time the cause of action accrued. Chia offered the subject property for sale to private respondent G. 8042 explicitly prohibits the substitution or alteration to the prejudice of the worker. went to METROBANK to inquire on Mr. could or should have been done earlier.00 as of August . he can not be adjudged guilty of laches. petitioner METROBANK refused to release the real estate mortgage on the subject . The subsequently executed side agreement of an overseas contract worker with her foreign employer which reduced her salary below the amount approved by the POEA is void because it is against our existing laws. part of Phil-Am Life Homes compound and four-fifths of North Triangle. Land Registration Authority. Veterans Memorial Hospital and golf course. but failed to do so. Ninoy Aquino Parks and Wildlife.416. Philippine Tobacco Administration. lasting more than thirty-five (35) years. San Francisco School. Laches has been defined as the failure of or neglect for an unreasonable and unexplained length of time to do that which by exercising due diligence. Nos. SPS. Quezon City Hospital.399. ISSUE: Whether estoppel by laches exists on the part of petitioner HELD: Petitioners filed the petition for reconstitution of OCT 632 nineteen (19) years after the title was allegedly lost or destroyed. Chia amounting to about P115. Training Institute building. On this 439 hectares of prime land now stand the following: the Quezon City Hall. Laches is not concerned with the mere lapse of time.000.71) for which METROBANK issued an official receipt acknowledging payment. with assumption of the mortgage indebtedness in favor of petitioner METROBANK secured by the subject property. This large estate was the subject of a petition for judicial reconstitution originally filed by Eulalio Ragua in 1964. Department of Agriculture. Thus. Thus. Philcoa Building.322 square meters.Whether there is estoppel by laches HELD: R. then. Bureau of Telecommunications. Department of Environment and Natural Resources. Chia's remaining balance on the real estate mortgage. GTP).) ESTOPPEL BY DEED 1. of employment contracts already approved and verified by the Department of Labor and Employment (DOLE) from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the DOLE. 2000 FACTS: Mr. METROBANK obliged with a statement of account of Mr. morals and public policy. This notwithstanding. the doctrine of laches presumes that the party guilty of negligence had the opportunity to do what should have been done. Development Corporation (hereafter. COURT OF APPEALS June 8. Conversely. CA. 88521-22 FACTS: These consolidated cases involve a prime lot consisting of 4. portions of Project 7. Pending negotiations for the proposed sale. Atty. The deed of sale and the memorandum of agreement between Mr. acting in behalf of respondent GTP.A. Atienza went to METROBANK Quiapo Branch and paid one hundred sixteen thousand four hundred sixteen pesos and seventy-one centavos (P116. MANUEL VS. Petitioner’s contention that respondent is guilty of laches is without basis. if the said party did not have the occasion to assert the right. the party must have been afforded an opportunity to pursue his claim in order that the delay may sufficiently constitute laches. COURT OF APPEALS G. part of Bago Bantay resettlement project.R. we find that the doctrine of laches finds no application in this case.1980. Mindanao Avenue subdivision. or to assert a right within reasonable time. which gave rise to protracted legal battles between the affected parties. warranting the presumption that the party entitled to assert it either has abandoned or declined to assert it. SM City North EDSA. Quezon Memorial Circle. CA. Bernardo Atienza. Agricultural METROPOLITAN BANK & TRUST COMPANY vs. rather. We thus consider petitioners guilty of laches. 8 JUNE 2000 2. 1 FEBRUARY 2001 In the instant case. 3. METROBANK VS.P. Sugar Regulatory Administration. portions of UP Village and East Triangle. Laches is negligence or omission to assert a right within a reasonable time.T. Philippine Science High School. No. Atty. The said side agreement cannot supersede her standard employment contract approved by the POEA. Maria. the latter inquired from Metrobank about the exact amount of the mortgage debt involved. were the original co-owners of the lot in question. 1951. all surnamed Bornales. DESIERTO. sold 24.property despite repeated requests from Atty. assign or mortgage it. paid the mortgage debt and redeemed the mortgaged portion of Lot 162 from Jose Regalado. heir of Soledad Daynolo who had since died. Sr. which the latter could validly transfer in whole or in part even without the consent of the other coowners. 149844. Soledad and her husband. 383 S 493 HANOPOL VS. Sr.R. 390 S 439’ TERMINAL FACILITIES VS. without the conformity of plaintiff-appellee. namely: Simplicio Distajo. No. Simplicio Distajo. Atienza. RULING: ISSUE: The Court found no compelling reasons to disturb the assailed decision.)ESTOPPEL IN PAIS: MEANING AND REQUISITES 1. thus prompting respondent GTP to file an action for specific performance against petitioner METROBANK and Mr. 4. 378 S 82 MENDOZA VS. that whatever debts or loans mortgagor Chia contracted with Metrobank after September 4.500.00 to herein petitioners. before buying subject property and assuming the mortgage debt thereon. PPA. the deed of sale executed between the parties expressly stipulated that the portion of Lot 162 sold to Soledad would be taken from Salome’s 4/16 undivided interest in said lot. As a matter of fact. We are persuaded that the contrary ruling on this point in Our October 24. and so rule. Petitioner METROBANK is estopped from refusing the discharge of the real estate mortgage on the claim that the subject property still secures "other unliquidated past due loans. 1980. Consorcia and Alfredo. On same date. The latter. All things studiedly viewed in proper perspective. Quirico and Julita. October 13. in turn. Sr. COURT OF APPEALS February 1. Salome sold part of her 4/16 share to Soledad Daynolo. CUENCO VS. CUENCO G. could not be adjudged as part of the mortgage debt the latter so assumed. Rosalia. 390 S 71 ROBLETT CONSTRUCTION VS. mortgaged the subject portion of the lot as security for a debt to Jose Regalado. A few years later. three of the eight co-owners of Lot 162. 1948. the Court are of the opinion. Rafael Distajo and Teresita Distajo-Regalado. and substitute another person in its enjoyment. the said heirs sold the redeemed portion of Lot 162 for P1. CA CUENCO vs. CUENCO. 6. SM. Simplicio Distajo. 4. 2001 FACTS: Salome.458 S 496 LAUREL VS. This transaction was evidenced by a Deed of Mortgage. 4. 5. On April 14. 2004 FACTS: . On May RULING: There can be no doubt that the transaction entered into by Salome and Soledad could be legally recognized in its entirety since the object of the sale did not even exceed the ideal shares held by the former in the co-ownership. Soledad Daynolo immediately took possession of the land described above and built a house thereon. Thereafter. On July 14. CA. Chia. 1994 decision would be unfair and unjust to plaintiff-appellee because. Whether or not the sale of the subject portion constitutes a sale of a concrete or definite portion of land owned in common does not absolutely deprive herein petitioners of any right or title thereto. executed a Deed of Discharge of Mortgage in favor of Soledad’s heirs. 1940. Jose. ISSUE: Whether or not the CA erred in reversing the decision of the lower court. Consorcia." ESTOPPEL BY DEED SPOUSES DEL CAMPO vs. Salome. specifically.993 square meters of said lot to Jose Regalado. 2. the spouses Manuel Del Campo and Salvacion Quiachon. Alfredo. 3. Salome’s right to sell part of her undivided interest in the co-owned property is absolute in accordance with the well-settled doctrine that a co-owner has full ownership of his pro-indiviso share and has the right to alienate. Petitioner also prays that the case be referred to the Court En Banc. executed in 1963. RT-6999 -. [40] In the present case. petitioner is estopped from asserting the contrary and claiming ownership thereof. Miguel led Mariano and the latter’s heirs. but in truth and in fact. it does not make petitioner. to protect and assert her rights to the property.one. FACTS: Petitioner Salvador H. admissions. Having induced him and his heirs to believe that Lot 903-A-6 had already been distributed to Concepcion as her own. When petitioner ousted her from her possession of the lot by tearing down her wire fence in 1969. Second. as Chair of the National Centennial Commission (NCC). By his acts as well as by his omissions. as early as 1947.000 [square meters]: Mariano Cuenco’s attorney’s fees Petitioner claims that respondent’s action is already barred by laches. Laurel moves for a reconsideration of this Court’s decision declaring him. ISSUE: Whether or not Laurel is a public officer as Chair of the NCC RULING: The issue in this case is whether petitioner. in designating Cabinet members.including Concepcion -. as she did not sleep on her rights. ANIANO A. Cebu City. the Cuenco and Cuenco Law Offices served as lawyers in two (2) cases entitled ‘Valeriano Solon versus Zoilo Solon’ (Civil Case 9037) and ‘Valeriano Solon versus Apolonia Solon’ (Civil Case 9040) involving a dispute among relatives over ownership of lot 903 of the Banilad Estate which is near the Cebu Provincial Capitol. and the latter rightfully relies and acts on such belief. the Senate President. representations. warranting a presumption that the party entitled to it has either abandoned or declined to assert it. inter alia that her father. Indeed. the [respondent] filed the initiatory complaint herein for specific performance against her uncle [Petitioner] Miguel Cuenco which averred. the late Don Mariano Jesus Cuenco (who became Senator) and said [petitioner] formed the ‘Cuenco and Cuenco Law Offices’.the title covering the entire Lot 903-A -. a public officer.she had her adverse claim annotated on the title in 1967. When Miguel took steps to have it separately titled in his name. the real lawyer behind the success of said cases was the influential Don Mariano Jesus Cuenco. including Concepcion.had been subdivided and distributed to his six children in his first marriage. Assuming. that on or around August 4. as Chair of the NCC. He claims that the official acts of the President. the awardees of Lot 903 subdivided said lot into three (3) parts as follows: Lot 903-A: 5. the party representing material facts must have the intention that the other party would act upon the representation. to believe that Petitioner Cuenco respected the ownership rights of respondent over Lot 903-A-6.took possession as owners of their respective portions. so as to be prejudiced if the former is permitted to deny the existence of those facts. DESIERTO July 1. We find that she cannot be held guilty of laches.by one’s acts. as NCC Chair. that the designation of other members to the NCC runs counter to the Constitution. ESTOPPEL IN PAIS Lot 903-B: 5. Such “serious constitutional repercussions” do not reduce the force of the rationale behind this Court’s decision. long before Mariano made his will in 1963. The contention has no merit.On September 19. petitioner invokes estoppel. 1970. Laches is negligence or omission to assert a right within a reasonable time. It is . 1970.000 [square meters]: Miguel Cuenco’s attorney’s fees LAUREL vs. despite the fact that she had the owner’s duplicate copy of TCT No. and the Supreme Court. Kamputhaw.situated along Juana Osmeña Extension. intentionally or through culpable negligence. That Mariano acted and relied on Miguel’s tacit recognition of his ownership thereof is evident from his will. Concepcion was in possession as owner of the property from 1949 to 1969. no whimper of protest from petitioner was heard until 1963. or silence when there is a need to speak out -. Lot 903-A -. respondent has persistently asserted her right to Lot 903-A-6 against petitioner.000 [square meters]: Solon’s retention Petitioner later claimed the property after the death of his brother. 2002 Lot 903-C: 54. 1931. In estoppel. induces another to believe certain facts to exist. that records of said cases indicate the name of the [petitioner] alone as counsel of record. the Speaker of the House of Representatives. ISSUES: Whether Petitioner is in is estoppel Whether laches barred the right of action of respondent HELD: From the time Lot 903-A was subdivided and Mariano’s six children -. near the Cebu Provincial Capitol -. led him to believe that the NCC is not a public office. that after winning said cases. Congressmen and Justices to the NCC. as petitioner proposes. Senators. less a public officer. The principle of estoppel in pais applies when -. HON. is a public officer under the jurisdiction of the Ombudsman. she commenced the present action on September 19. both are premised on the same facts. the relief being founded on the same facts. the Court did not render a “decision. (b) identity of rights asserted and relief prayed for. Mendiola. to permanently enjoin the foreclosure of the real estate mortgage executed by spouses Hanopol in favor of Shoemart. in such that any judgment that may be rendered in the pending case. and. purchase booklets and purchase journal. even overpaid. deductible from the semi-monthly payments to be made to Shoemart by spouses Hanopol. Estoppel must be unequivocal and intentional.000. that without the requisite documents. This contention also has no merit.00). as we pointed out in our decision. as provided in their contract. ESTOPPEL IN PAIS TERMINAL FACILITIES vs. the relief sought in the case before the Court of Appeals and the trial court are the same. In the case at bench. or at least such parties who represent the same interest in both actions. accordingly. and (c) the identity. regardless of which party is successful. with respect to the two (2) preceding particulars in the two (2) cases.preposterous to suppose that the President. holding that the Assistant Manager of the Treasury Division and the Head of the Loans Administration & Insurance Section of the Philippine National Construction Corporation (PNCC) is not a public officer under Republic Act No. The other issues raised by petitioner are mere reiterations of his earlier arguments. Spouses Hanopol alleged that Shoemart breached the contract when the latter failed to furnish the former with the requisite documents by which the former’s liability shall be determined. whatever they owed to Shoemart.89) as of October 6. Hanopol executed a Contract of Purchase on Credit. in the amount of Three Hundred Thousand Pesos (P300. namely: charge invoices. by the designation of such officials to the NCC. through its Executive Vice-President. Article VIII of the Constitution provides that “no doctrine or principle of law laid down by the court in a decision rendered en banc or in division may be modified or reversed except by the court sitting en banc. Sandiganbayan. Shoemart instituted extrajudicial foreclosure proceedings against the mortgaged properties.It is argued that by designating three of its then incumbent members to the NCC. petitioner submits that our decision in this case modified or reversed doctrines rendered by this Court. 2002 FACTS: Shoemart. The Court.” Invoking the same provision. Section 4 (3). Spouses Hanopol were given a five percent (5%) discount on all purchases made by their cardholders. should be held liable for damages. Much less did the Court. and spouses Manuel R. For failure of spouses Hanopol to pay the principal amount of One Hundred Twenty-Four Thousand Five Hundred Seventy-One Pesos and Eighty-Nine Centavos (P124. that is. SHOEMART INCORPORATED October 4. and. Third.” In designating three of its incumbent members to the NCC. The judgment of the Court of Appeals would constitute a bar to the suit before the trial court. however. Inc. a conclusion that EXPOCORP is a government-owned or controlled corporation would not alter the outcome of this case because petitioner’s position and functions as Chief Executive Officer of EXPOCORP are by virtue of his being Chairman of the NCC. as ground for the referral of the case to the Court En Banc. is a corporation duly organized and existing under the laws of the Philippines engaged in the operation of department stores. the Court took the position that the NCC was not a public office. Senen T.” in the context of said constitutional provision. On December 4. RULING: All the three (3) elements for litis pendentia as a ground for dismissal of an action are present. The rationale for the ruling in Macalino is that “the PNCC has no original charter as it was incorporated under the general law on corporations. namely: (a) identity of parties. intended to mislead petitioner just so he would accept the position of NCC Chair. Hanopol and Beatriz T. which can only be done by the Court En Banc. in fact.571. Moreover. the Senate President. the Speaker and the Supreme Court. would amount to res judicata in the other.. petitioner asserts that the decision in this case reversed or modified Macalino vs. by such designation. ISSUE: Whether or not Shoemart acted with manifest bad faith in pursuing with the foreclosure and auction sale of the property of spouses Hanopol. that despite said breach.” However. ESTOPPEL IN PAIS SPOUSES HANOPOL vs. the parties are the same. PPA 378 SCRA 82 . The argument is a bit of a stretch. 3019. for purchases on credit made by holders of SM Credit Card issued by spouses Hanopol for one year. articulate any “doctrine or principle of law. spouses Hanopol had no way of knowing that. renewable yearly thereafter. which contemplates an actual case. Shoemart extended credit accommodations. Shoemart even had the audacity to apply for extrajudicial foreclosure with the Sheriff. they had already paid. remains unswayed thereby. Shoemart. petitioner himself admits that the principle of estoppel does not operate against the Government in the exercise of its sovereign powers. Under the terms of the contract. 1987. 1985. ISSUE: Whether or not the collection by PPA of one hundred percent (100%) wharfage fees and berthing charges. On April 21. (c) opening of its pier facilities to all commercial and thirdparty cargoes and vessels for a period coterminous with its foreshore lease contract with the National Government. In return PPA promised to issue the necessary permits for TEFASCO's port activities. This exaction was never mentioned in the contract.07) representing fifty percent (50%) wharfage fees and Three Million Nine Hundred Sixty-One Thousand Nine Hundred Sixty-Four Pesos and Six Centavos (P3. the application imposed additional significant conditions. was compelled to submit an application for construction permit. Davao City. between TEFASCO and PPA. The committee recommended approval. TEFASCO moved for reconsideration which the Court of Appeals found partly meritorious. Thus the Court of Appeals in its Amended Decision partially affirmed the RTC decision only in the sense that PPA was directed to pay TEFASCO (1) the amounts of Fifteen Million Eight Hundred Ten Thousand Thirty-Two Pesos and Seven Centavos (P15. (d) tenure of five (5) years extendible by five (5) more years for TEFASCO's permit to operate cargo handling in its private port facilities. Without the consent of TEFASCO. 1978. 1988 TEFASCO sued PPA and PPA Port Manager. 1976 Resolution No. Two (2) years after the completion of the port facilities and the commencement of TEFASCO's port operations. It is engaged in the business of providing port and terminal facilities as well as arrastre. and discriminatory since much lower rates were charged in other private ports as shown by PPA issuances effective 1995 to 1997. 1976 Resolution No.810. Sometime in 1975 TEFASCO submitted to PPA a proposal for the construction of a specialized terminal complex with port facilities and a provision for port services in Davao City.FACTS: Before us are two (2) consolidated petitions for review. What was clearly stated in the terms and conditions appended to PPA Resolution No. PPA appealed the decision of the trial court to the Court of Appeals. the PPA Board curiously passed on October 1. much less is it a binding prestation. On August 30. with default penalized by automatic withdrawal of its commercial private port permit and permit to operate cargo handling services. The complaint also sought to nullify the February 10.563. stevedoring and other port-related services at its own private port at Barrio Ilang.75) payable monthly. later reduced to six percent (6%). government share out of arrastre and stevedoring gross income of TEFASCO is void. No. PPA again issued to TEFASCO another permit. The Court of Appeals held that the one hundred percent (100%) berthing and wharfage fees were unenforceable because they had not been approved by the President under P. On February 10. 50 under which TEFASCO. In the purported permit appeared for the first time the contentious provisions for ten percent (10%) government share out of arrastre and stevedoring gross income and one hundred percent (100%) wharfage and berthing charges. The appellate court in its original decision recognized the validity of the impositions and reversed in toto the decision of the trial court. 7 accepting and approving TEFASCO's project proposal.961. 1984 TEFASCO and PPA executed a Memorandum of Agreement (MOA) providing among others for (a) acknowledgment of TEFASCO's arrears in government share at Three Million Eight Hundred Seven Thousand Five Hundred SixtyThree Pesos and Seventy-Five Centavos (P3. without asking for one. (b) reduction of government share from ten percent (10%) to six percent (6%) on all cargo handling and related revenue (or arrastre and stevedoring gross income). and.D. and Port Officer in Davao City for refund of government share it had paid and for damages as a result of alleged illegal exaction from its clients of one hundred percent (100%) berthing and wharfage fees. or on June 10. (c) the propriety of the award of fifty percent (50%) wharfage fees and thirty percent (30%) berthing charges as actual damages in favor of TEFASCO for the period from 1977 to 1991 is valid. under which more onerous conditions were foisted on TEFASCO's port operations. To ease the acute congestion in the government ports at Sasa and Sta. PPA welcomed the proposal and organized an inter-agency committee to study the plan. 857.807. Long after TEFASCO broke round with massive infrastructure work. Davao City.032. Ana. Both PPA and TEFASCO were unsatisfied with this disposition hence these petitions." The government share demanded and collected from the gross income of TEFASCO from its arrastre and stevedoring activities in TEFASCO's wholly owned port is certainly not a fee or in any event a proper condition in a regulatory . TEFASCO is a domestic corporation organized and existing under the laws of the Philippines with principal place of business at Barrio Ilang. 1984 MOA and all other PPA issuances modifying the terms and conditions of the April 21. The series of PPA impositions did not stop there.06) representing thirty percent (30%) berthing fees which TEFASCO could have earned as private port usage fee from 1977 to 1991. RULING: The imposition by PPA of ten percent (10%). 7 above-mentioned. 1976 the PPA Board of Directors passed Resolution No. TEFASCO complied with the MOA and paid the accrued and current government share. 7 was for TEFASCO to pay and/or secure from the proper authorities "all fees and/or permits pertinent to the construction and operation of the proposed project. one filed by the Terminal Facilities and Services Corporation (TEFASCO) and the other by the Philippine Ports Authority (PPA).964. Respondent PNB extra-judicially foreclosed the real and chattel mortgages. Sometime in 1978 he was granted by respondent Philippine National Bank (PNB) a Five Hundred Thousand Pesos (P500. 1980 and signed by Branch Manager Fil S. 3) a new Two Million Pesos (P2. 1981. The petitioner testified that respondent PNB Mandaluyong Branch found his proposal favorable and recommended the implementation of the agreement.00) credit line and a One Million Pesos (P1.719. ESTOPPEL IN PAIS MENDOZA vs. Santolan. and the mortgaged properties were sold at public auction to respondent PNB.000.000.000.000. 2) capitalization and conversion of the balance into a 5-year term loan payable semi-annually or on annual installments. 2126 dated November 29..000. Fernando Maramag.permit.000. and the last dated September 27.00) Letter of Credit/Trust Receipt (LC/TR) line.000.000.00) LC/TR line against the mortgaged properties. and 5) maintenance of the existing Five Hundred Thousand Pesos (P500. 2001 his business.00). petitioner sent another letter addressed to PNB VicePresident Jose Salvador.00) upon the approval of the proposal.00) credit line. petitioner failed to pay to respondent bank his LC/TR accounts as they became due and demandable. He offered respondent PNB the following proposals: 1) the disposal of some of the mortgaged properties. He operates under the business name Atlantic Exchange Philippines (Atlantic). one dated March 8. Pasco Avenue.00) credit line." on various dates In a letter dated January 3.000. PNB Executive Vice-President. Petitioner made use of his LC/TR line to purchase raw materials from foreign importers. 1979. respondent PNB advised petitioner Mendoza that effective December 1. Ceferino D. He signed a total of eleven (11) documents denominated as "Application and Agreement for Commercial Letter of Credit. According to the letter. 4) assignment of all his receivables to PNB from all domestic and export sales generated by the LC/TR line. 1982. 1979 for Forty Thousand Pesos (P40. 4) capitalization of the interest component with interest rate at 16% per annum.000. Petitioner claimed he was forced to agree to these changes and that he was required to submit a new formal proposal and to sign two (2) blank promissory notes.000.00). regarding his request for restructuring of his loans. 127/82 and 128/82 as they fell due. Mendoza is engaged in the domestic and international trading of raw materials and chemicals. and 3) several pieces of machinery and equipment in his Pasig cocochemical plant. 5) establishment of a One Million Pesos (P1. disapproved the proposed release of the mortgaged properties and reduced the proposed new LC/TR line to One Million Pesos (P1. more particularly. 3) reduction of penalty from 3% to 1%.000. petitioner mortgaged to respondent PNB the following: 1) three (3) parcels of land with improvements in F.000. and 3) List of additional machinery and equipment and proof of ownership thereof. 2) payment of Four Hundred Thousand Pesos (P400. Rather it is an onerous "contractual stipulation" which finds no root or basis or reference even in the contract aforementioned. as highest bidder. On March 9. 2) Projected cash flow (cash in .000. 1979. Petitioner executed in favor of respondent PNB three (3) promissory notes covering the Five Hundred Thousand Pesos (P500. 2) his house and lot in Quezon City. his house and lot and a vacant lot in order to pay the overdue trust receipts.000. Pasig. Cura also suggested that petitioner reduce his total loan obligations to Three Million Pesos (P3. payable semi-annually with one year grace period on the principal. 1981. another dated March 30.000.00). for a total of Three Million Seven Hundred Ninety Eight Thousand Seven Hundred Nineteen Pesos and Fifty Centavos (P3.00) LC/TR line in order to enable Atlantic Exchange Philippines to operate at full capacity. FACTS: Petitioner Danilo D.50). he wrote a letter to respondent PNB requesting for the restructuring of his past due accounts into a five-year term loan and for an additional LC/TR line of Two Million Pesos (P2. . In a letter dated July 2. Cura. petitioner offered the following revised proposals to respondent bank: 1) the restructuring of past due accounts including interests and penalties into a 5-year term loan. in line with Central Bank's Monetary Board Resolution No. 1979 for One Hundred Fifty Thousand Pesos (P150.000. the bank raised its interest rates to 14% per annum. As security for the credit accommodations and for those which may thereinafter be granted. because of the shut-down of his end-user companies and the huge amount spent for the expansion of On September 25. 6) assignment of all his export proceeds to respondent bank to guarantee payment of his Petitioner failed to pay the subject two (2) Promissory Notes Nos.798.00). a single proprietorship registered with the Department of Trade and Industry (DTI).00). However.cash out) for five (5) years detailed yearly.000. Branch Manager of PNB Mandaluyong replied on behalf of the respondent bank and required petitioner to submit the following documents before the bank would act on his request: 1) Audited Financial Statements for 1979 and 1980.00). Carreon Jr. 1979 for Three Hundred Ten Thousand Pesos (P310.000. COURT OF APPEALS June 25. ISSUE: (2) such promise did in fact induce such action or forebearance. It is stretching the imagination to construe them as evidence that his proposed five-year restructuring plan has been approved by the respondent PNB which is admittedly a banking corporation. The trial court decided for the petitioner. those correspondences only prove that the parties had not gone beyond the preparation stage. As discussed earlier.00 in postdated checks which when deposited were dishonored. and (3) the party suffered detriment as a result. Aller Jr. Respondent Court of Appeals held that there is no evidence of a promise from respondent PNB.00 thus reducing petitioner's balance to P227..38.38 thus increasing its balance to P237. He alleged that the Extrajudicial Foreclosure Sale of the mortgaged properties was null and void since his loans were restructured to a five-year term loan. Upon appeal. hence. the doctrine does not apply to the case at bar. Manaligod. on the basis of the evidence adduced. ESTOPPEL IN PAIS Whether or not respondent promised to be bound by the proposal of the petitioner for a five-year restructuring of his overdue loan. As a result RICC incurred unpaid accounts amounting to P342. On 24 July 1986 Mariano R. and that the chattels be returned to petitioner Mendoza if they were removed from his Pasig premises or be paid for if they were lost or rendered unserviceable. 1992.909. sent a letter of demand to petitioner through its Vice President for Finance regarding the latter's overdue account of P237. he must first prove that respondent PNB had promised to approve the plan in exchange for the submission of the proposal. A day before the execution of their Agreement. therefore.909. that it had accepted the proposals of the petitioner to have a five-year restructuring of his overdue loan obligations. RICC paid CEC P10. FACTS: On 23 September 1986 respondent Contractors Equipment Corporation (CEC) instituted an action for a sum of money against petitioner Roblett Industrial Construction Corporation (RICC) before the Regional Trial Court of Makati alleging that in 1985 it leased to the latter various construction equipment which it used in its projects. admittedly a banking corporation." Nowhere in those letters presented by the petitioner is there a categorical statement that respondent PNB had approved the petitioner’s proposed five-year restructuring plan.000. in order to make out a claim of promissory estoppel. the trial court rendered judgment in favor of the petitioner and ordered the nullification of the extrajudicial foreclosure of the real estate mortgage.38. It found and held. nullification of the extrajudicial foreclosure and damages against respondents PNB. which is the period from the start of the negotiations until the moment just before the agreement of the parties. or on 18 December 1985. General Manager of CEC.38 and sought settlement thereof on or before 31 July . It is clear from the forgoing that the doctrine of promissory estoppel presupposes the existence of a promise on the part of one against whom estoppel is claimed. the Court of Appeals reversed the decision of the trial court and dismissed the complaint. If anything. so that reliance upon it was not reasonable. entered into an Agreement with CEC where it confirmed petitioner's account. COURT OF APPEALS 266 SCRA 71 RULING: No. ROBLETT INDUSTRIAL CONSTRUCTION CORPORATION vs. As a consequence the latter debited the amount to petitioner's account of P227. The promise must be plain and unambiguous and sufficiently specific so that the Judiciary can understand the obligation assumed and enforce the promise according to its terms.38.909. that PNB vacate the subject premises in Pasig and turn the same over to the petitioner. For petitioner to claim that respondent PNB is estopped to deny the five-year restructuring plan. The doctrine of promissory estoppel is an exception to the general rule that a promise of future conduct does not constitute an estoppel. it was not yet due and demandable. As an off-setting arrangement respondent received from petitioner construction materials worth P115.The petitioner filed a complaint for specific performance. In some jurisdictions.909. A cause of action for promissory estoppel does not lie where an alleged oral promise was conditional. It does not operate to create liability where it does not otherwise exist. On March 16. Jr. On 19 December 1985 RICC through its Assistant Vice President for Finance Candelario S.909. and also the nullification of the extrajudicial foreclosure and sheriff's sale of the mortgaged chattels. no such promise was proven.000. the Sheriff’s sale of the mortgaged real properties by virtue of consolidation thereof and the cancellation of the new titles issued to PNB. a party bears the burden of establishing the following elements: (1) a promise reasonably expected to induce action or forebearance. Only an absolute and unqualified acceptance of a definite offer manifests the consent necessary to perfect a contract. that "appellee's (Mendoza) communications were mere proposals while the bank's responses were not categorical that the appellee's request had been favorably accepted by the bank. whereas it considers the other terms and conditions as "onerous. in turn. Upon receipt of the check. The check was drawn against Cabilzo’s Account with Metrobank Pasong Tamo Branch under Current Account No.909. 000. 000.80. petitioner requested for thirty (30) days to have enough time to look for funds to substantially settle its account.1986. 1308. Civil Code). declared that petitioner had received a statement of account covering the period from 28 March to 12 July 1985 in the amount of P376. In reply. GARCIA PAHAMATONG VS. Aller Jr.440. finally sent a letter-demand to Metrobank for the payment of P90. SANTOS METROBANK vs. But while plaintiff treats the entire agreement as valid. Rules of Court). to which Metrobank complied. Cabilzo instituted a civil action for damages against Metrobank before the RTC of Manila. In his Complaint .000. 6. 000. Metrobank cleared the check for encashment in accordance with the Philippine Clearing House Corporation (PCHC) Rules. defendant wants the court to treat that portion which treats of the offsetting of P115. 3. 1431. Branch 13. the check was presented to Westmont Bank for payment. claimed that after deliberation and audit it appeared that petitioner overpaid respondent by P12.00. Cabilzo issued a Metrobank Check No. On rebuttal. 000. Cabilzo. Metrobank still failed or refused to comply with its obligation. It must be stressed that defendant's answer was not made under oath. 000. the genuineness and due execution of the agreement which was the basis for plaintiff's claim is deemed admitted (Section 8.38 as mentioned in the Agreement. based on respondent's account with petitioner and P30.00 to which the former replied in the negative. 000. under the principle of estoppel. Cabilzo demanded that Metrobank re-credit the amount of P91. 000. 618044873-3 and was paid by Cabilzo to a certain Mr. LELIS INTEGRATED LARENA VS.00 on the basis of the latter's Equipment Daily Time Reports for 2 May to 14 June 1985 which reflected a total obligation of only P103.000. It must be treated as a whole and not to be divided into parts and consider only those provisions which favor one party (in this case the defendant). Candelario S.Hence.00. He claimed however that the Agreement was not approved by the Board and that he did not authorize Aller Jr. Such written demand notwithstanding. From this amount P3. CABILZO 510 SCRA 259 FACTS: On 12 November 1994. indorsed the check to Metrobank for appropriate clearing.00. Cabilzo’s representative was at Metrobank Pasong Tamo Branch to make some transaction when he was asked by bank personnel if Cabilzo had issued a check in the amount of P91. 2. were deducted thus leaving a balance of P342. Cabilzo himself called Metrobank to reiterate that he did not issue a check in the amount of P91. Cabilzo discovered that Metrobank Check No. after deducting the original value of the check in the amount of P1. It must be emphasized that the same agreement was used by plaintiff as the basis for claiming defendant's obligation of P237. On the afternoon of the same date.000. 5. 1.00). and therefore.909. ROQUE MEATMASTERS VS. CABILZO MESINA VS. representing payments made by the latter. Either the agreement is valid or void." This Court cannot agree to defendant's contention. illegal and want of prior consent and Board approval.00 to Cabilzo’s account On 30 June 1995. PNB SHOPPER’S PARADISE VS. Repeated verbal demands followed but Metrobank still failed to re-credit the amount of P91. declared that he signed the Agreement with the real intention of having proof of payment. however. to sign thereon. Contracts must bind both contracting parties.00 as valid.00. Westmont Bank. including the availability of funds and the authenticity of the signature of the drawer. Subsequently. 5. On 16 November 1994. RULING: Yes. 4.18 which it never questioned.)ESTOPPEL BY LACHES Traversing the allegations of respondent. Marquez.350. is rendered conclusive upon defendant and cannot be denied or disproved as against plaintiff (Art. thru counsel. 000. Consequently. Metrobank. 985988. After the entries thereon were examined. as his sales commission. Manaligod Jr. refused reasoning that it has to refer the matter first to its Legal Division for appropriate action. payable to “CASH” and postdated on 24 November 1994 in the amount of One Thousand Pesos (P1. 000. its validity or compliance cannot be left to the will of one of them (Art. Rule 8. On 19 December 1990 the trial court rendered judgment ordering petitioner to pay respondent ISSUE: Whether or not the agreement between the parties is binding upon them.00 was altered to P91. Vice President for Finance of petitioner. Such admission.000. New Civil Code).00 to his account. In fact Baltazar Banlot. 985988 which he issued on 12 November 1994 in the amount of P1. MAPILI SANTOS VS.38 and also used by defendant as the same basis for its alleged payment in full of its obligation to plaintiff. METROBANK VS. 7.00 and requested that the questioned check be returned to him for verification.00 and the date 24 November 1994 was changed to 14 November 1994. 00. either by omission or commission. T-31643 in the name of Felicisima Mesina which title was eventually In the case at bar. Renato D. Instituting this case at bar. all surnamed Mesina. but also those in numerical figures. indorsed by the collecting bank. respondent had from said date until February 7. Honorio Valisno Garcia and Felicisima Mesina. Atty. Honorio Valisno Garcia is the deceased husband of [herein respondent Gloria C. actual and moral damages plus costs of the suit be awarded in his favor. was the cause of injury. that: Should the spouses Garcia fail to pay five (5) successive monthly installments. which petitioner failed to. Cabilzo prayed that in addition to his claim for reimbursement. Felicisima Mesina shall have a right to rescind the Contract to Sell. Metrobank’s representation that it is an innocent party is flimsy and evidently. spouses Garcia shouldering all expenses of said removal. and cleared by the drawee bank. Cabanatuan City. but unfortunately. In fact. to the damage and prejudice of Cabilzo. thereby rescinding the Contract to Sell. The Contract to sell provides that the cost of the lot is P70. and Melanie. For one. Metrobank cannot asseverate that Cabilzo was negligent and this negligence was the proximate cause of the loss in the absence of even a scintilla proof to buttress such claim. Accordingly. Sangitan. Metropolitan Bank and Trust Company. the check was still successfully altered.00 per square meter for a total amount of P16. At the same time. and encashed by the perpetrator of the fraud. Thereafter. the right of action of the respondent accrued on the date that the full and final payment of the contract price was made. to be exact entered into a Contract to Sell over a lot consisting of 235 square meters. during their lifetime. 95-75651. situated at Diversion Road. cancelled and TCT No. GARCIA 509 SCRA 431 FACTS: Atty.85 per month. or on 26 April 1977. spouses Garcia agree to remove all the improvements built on the lot within three (3) months from rescission of this contract. Garcia] while the late Felicisima Mesina is the mother of Danilo. in successive monthly installments of P260. must suffer a loss. it must be borne by the one whose erroneous conduct.docketed as Civil Case No. the Contract to Sell. each guiltless of any intentional or moral wrong. the succeeding monthly installments are to be paid within the first week of every month. petitioners refused to issue the necessary Deed of Sale to effect the transfer of the property to her ISSUES: Whether respondent’s cause of action had already prescribed Whether petitioners are in estoppel ESTOPPEL BY LACHES HELD: MESINA vs. 450. when there is a written . It was then the contention of the petitioners that when the respondent instituted her Complaint for Specific Performance with Damages on 20 January 1997. Simeon. The Contract also stipulated. The contention of the petitioners is untenable. misleading. payable within a period not to exceed seven (7) years at an interest rate of 12% per annum. Article 1155 of the Civil Code is explicit that the prescriptive period is interrupted when an action has been filed in court. Upon rescission of the Contract to sell. T-78881 was issued in the name of herein petitioners. Metrobank’s reliance on this dictum is misplaced. ISSUE: Whether equitable estoppel can be appreciated in favor of petitioner HELD: The degree of diligence required of a reasonable man in the exercise of his tasks and the performance of his duties has been faithfully complied with by Cabilzo.00 a month and that Felicisima Mesina shall have the further option to return the downpayment plus whatever balance spouses Garcia paid. The doctrine of equitable estoppel states that when one of the two innocent persons. Metrobank cannot lightly impute that Cabilzo was negligent and is therefore prevented from asserting his rights under the doctrine of equitable estoppel when the facts on record are bare of evidence to support such conclusion. with all unpaid monthly installments earning an interest of one percent (1%) per month. the same had already been barred by prescription. at the residence of the vendor at Quezon City. Negligence is not presumed but must be proven by the one who alleges it. 1994 within which to bring an action to enforce the written contract. covered and embraced by TCT No. he was wary enough that he filled with asterisks the spaces between and after the amounts. starting May 1977. Cabilzo v. respondent asserts that despite the full payment made on February 7. All paid installments to be recomputed as rental for usage of lot shall be at the rate of P100. as the full payment of the purchase price on the subject Contract to Sell had been effected on 7 February 1984 thus. as pointed out by the Court of Appeals. not only those stated in words. 1984 for the consideration of the subject lot. among others. in order to prevent any fraudulent insertion. ESTOPPEL BY LACHES PAHAMOTANG VS. 1973. represented its president. the title as well as the Deed of Sale could not have been prepared for their signature. Hence. and that they never induced respondent to believe that she had validly effected full payment. On September 15. and their eight (8) children. petitioners committed a fatal error of mounting a collateral attack on the foregoing orders instead of initiating a direct action to annul them. She was survived by her husband Agustin Pahamotang. 1792. It appears that Agustin was appointed petitioners' judicial guardian in an earlier case Special Civil Case No. ISSUE: Whether the Court of Appeals erred in reversing the decision of the trial court RULING: In the present case. namely: Ana. 1972. Genoveva. now deceased. Susana. 156403. 1986 sent to petitioner Simeon Mesina by Engineer Danilo Angeles. February 25. With respect to the issue on estoppel.00 by way of "reservation payment. hereinafter referred to as the intestate court. In the same way. petitioners cannot deny the fact that the full payment of the purchase value of the lot in question had in fact been made by the respondent. ESTOPPEL BY LACHES FACTS: On July 1. There were statements. Isabelita. therefore. docketed as Special Case No. There is no indication that mortgagor PNB and vendee Arguna had notified petitioners of the contracts they had executed with Agustin. 1972. if petitioners did not accept the late payments of the respondent." Simultaneously. and that the payments corresponded to the purchase value of the subject property. Petitioner issued to Dr. Hence the action has not yet prescribed. Absent any indication of the point in time when petitioners acquired knowledge of those orders. all surnamed Pahamotang. PNB G. upon reviewing the records of the case at bar. Felipe C.000. this Court. SHOPPER'S PARADISE REALTY & DEVELOPMENT CORPORATION vs. 1972. And the Court of Appeals cannot simply impute laches against them. it is not clear from the challenged decision of the appellate court when they (petitioners) actually learned of the existence of said orders of the intestate court. The petition. Roque a check for P250. and respondent was willing and ready to pay for the excess area. 1974.R. petitioner and Dr. EFREN ROQUE January 13. Melitona Pahamotang died. Roque. over a parcel of land. was raffled to Branch VI of said court. 1785 – also of the CFI of Davao City. petitioner Shopper's Paradise Realty & Development Corporation. Agustin filed with the then Court of First Instance of Davao City a petition for issuance of letters administration over the estate of his deceased wife. Roque likewise entered into a memorandum of . The element of delay in questioning the subject orders of the intestate court is sorely lacking. which made it crystal clear that the late payments were accepted by the petitioners. and when there is any written acknowledgment of the debt by the debtor.extrajudicial demand made by the creditors. October 19. In his petition. respondent could not have sent a demand letter to ask for the execution of those documents had they not been induced to believe that the late payments were validly accepted and that the purchase price had already been paid in full. indeed. 2005 The late Agustin then executed several mortgages and later sale of the properties with the PNB and Arguna respectively. Although petitioners finally obtained knowledge of the subject petitions filed by their father. The decision was reversed by the Court of Appeals. entered into a twenty-five year lease with Dr. finds no reason to overturn the findings of the appellate court that. On December 7. petitioners are estopped from avowing that they never had knowledge as to the acceptance of the delayed payments made by the respondent. Branch VI. the intestate court issued an order granting Agustin’s petition. Evidence on record show that petitioners can no longer deny having accepted the late payments made by the respondent because in a letter dated April 10. which were made under oath. 1980 and January 7. their alleged delay in impugning the validity thereof certainly cannot be established. March 21. 1981 orders of the intestate court. Concepcion and herein petitioners Josephine and Eleonor. 2004 FACTS: On 23 December 1993. he told petitioner Simeon Mesina that the title and the Deed of Sale were both ready for their signature. the appellate court erred in appreciating laches against petitioners. The heirs later questioned the validity of the transactions prejudicial to them. to the appellate court. who is the husband of petitioners’ authorized collection agent Angelina Angeles. Corazon. and if they did not consider such as full payment of the purchase price on the subject property as they claimed it to be. Veredigno Atienza. Agustin identified petitioners Josephine and Eleonor as among the heirs of his deceased spouse. No. and eventually challenged the July 18. Petitioners were totally unaware of the plan of Agustin to mortgage and sell the estate properties. The trial court declared the real estate mortgage and the sale void but both were valid with respect to the other parties. 2) an intent or. Plaintiff cannot be the third person because he is the successor-in-interest of his father. Efren P. "The registration of the Deed of Donation after the execution of the lease contract did not affect the latter unless he had knowledge thereof at the time of the registration which plaintiff had not been able to establish. . Plaintiff knew very well of the existence of the lease. The donation was made in a public instrument duly acknowledged by the donor-spouses before a notary public and duly accepted on the same day by respondent before the notary public in the same instrument of donation." The trial court ordered respondent to surrender TCT No. and 3) the knowledge. Conformably with the agreement. Thus. Roque. and that the late Dr. in its real sense. On 15 February 1995. The title to the property. the lessor. Felipe Roque. delegated to his father the mere administration of the property. While it shared the view expressed by the trial court that a deed of donation would have to be registered in order to bind third persons. the conditions he must satisfy are: 1) lack of knowledge or of the means of knowledge of the truth as to the facts in question. petitioner issued a check for another P250. upon the conduct or statements of the party to be estopped. however. in fact. the agreements have been perfected and partially executed by the receipt of his father of the downpayment and deposit totaling to P500.agreement for the construction. Neither is respondent estopped from repudiating the contracts. Roque alleged that he had long been the absolute owner of the subject property by virtue of a deed of donation inter vivos executed in his favor by his parents. and it is a rule that contracts take effect not only between the parties themselves but also between their assigns and heirs (Article 1311. Roque. He. calculated to convey the impression that the facts are otherwise than. in relation to the party sought to be estopped. RULING: The Court cannot accept petitioner's argument that respondent is guilty of laches. could respondent then be said to have neglected to assert his case for an unreasonable length of time. With respect to the party claiming the estoppel. Roque. or be acted upon by. Roque. and inconsistent with. at least. On 9 August 1996. remained in the name of Dr. On appeal. Hardly. the other party. Respondent learned of the contracts only in February 1994 after the death of his father. 2) reliance. He is bound by the contract even if he did not participate therein.000. 109754 to the Register of Deeds of Quezon City for the annotation of the questioned Contract of Lease and Memorandum of Agreement. and in the same year. the trial court dismissed the complaint of respondent. The appellate court based its findings largely on the testimony of Veredigno Atienza during cross-examination. Roque. is the failure or neglect. the Court of Appeals reversed the decision of the trial court and held to be invalid the Contract of Lease and Memorandum of Agreement. while he resided in the United States of America. for an unreasonable and unexplained length of time. it is negligence or omission to assert a right within a reasonable time. met with the officers of the defendant corporation at least once before he caused the registration of the deed of donation in his favor and although the lease itself was not registered. in good faith. however. Felipe Roque and Elisa Roque. respondent advised petitioner "to desist from any attempt to enforce the aforementioned contract of lease and memorandum of agreement". the lease contract together with the memorandum of agreement would be conclusive on plaintiff Efren Roque. warranting a presumption that the party entitled to assert it either has abandoned or declined to assert it. development and operation of a commercial building complex on the property. when Felipe Roque entered into a lease contract with defendant corporation. there is no cogent reason to reverse the Court of Appeals in its assailed decision. respondent filed a case for annulment of the contract of lease and the memorandum of agreement. however. Laches. The annotations. actual or constructive. the appellate court. petitioner has been shown not to be totally unaware of the real ownership of the subject property. it explained: Ordinarily. plaintiff Efren Roque (could) no longer assert the unregistered deed of donation and say that his father. dated 3 November 1994. Civil Code) and therefore. it remains valid considering that no third person is involved. In a letter. he assailed the validity of the agreements. to do that which. by him of the real facts. was no longer the owner of the subject property at the time the lease on the subject property was agreed upon. Altogether. were never made because of the untimely demise of Dr. more importantly. and that such actual knowledge had the effect of registration insofar as petitioner was concerned. Dr.00 "downpayment" to Dr. Felipe. or on 11 May 1994. Registration. Roque on 10 February 1994 constrained petitioner to deal with respondent Efren P. but the negotiations broke down due to some disagreements. Respondent came to know of the assailed contracts with petitioner only after retiring to the Philippines upon the death of his father. The essential elements of estoppel in pais. an expectation. ISSUE: Whether or not the respondent is barred by laches and estoppel from denying the contracts. could or should have been done earlier.000.00. and 3) action or inaction based thereon of such character as to change his position or status calculated to cause him injury or prejudice. are: 1) a clear conduct amounting to false representation or concealment of material facts or. by exercising due diligence. The death of Dr. on 26 December 1978. with a prayer for the issuance of a preliminary injunction. that this conduct shall influence. during November. Felipe Roque had no authority to enter into the assailed agreements with petitioner. and it was only transferred to and in the name of respondent sixteen years later. Moreover. Felipe C. at least. concluded that petitioner was not a lessee in good faith having had prior knowledge of the donation in favor of respondent. one of the surviving children of the late Dr. 12 It has not been shown that respondent intended to conceal the actual facts concerning the property. Felipe C. a deed of donation need not be registered in order to be valid between the parties. those which the party subsequently attempts to assert. is important in binding third persons. however. This is so because a court acquires jurisdiction over the subject matter of the action only upon the payment of the correct amount of docket fees regardless of the actual date of filing of the case in court. A copy of the decision was received by the respondent on December 9. the respondent seasonably filed the notice of appeal but it paid the docket fees one (1) month after the lapse of the appeal period.53. 1999 because of oversight. In the case at bar. ESTOPPEL BY LACHES MANIPOR vs. As admitted by the respondent. FACTS: ISSUE: Whether or not the Court of Appeals erred in entertaining the appeal of respondent despite the finality of the trial court’s decision. hence. RICAFORT 407 SCRA 298 CA set aside the decision of the trial court and directed petitioner to pay respondent the amount of P1. Corp. The Construction Agreement provided that the construction of petitioner’s slaughterhouse should be completed by March 10. Estoppel by laches arises from the negligence or omission to assert a right within a reasonable time. in the instant petition. 1999. 1998. 1998. The Ricaforts alleged that they are co-owners of said property together with Abelardo. Petitioner reiterated its objection in the motion to dismiss before the appellate court and finally. 1993. at the time the said docket fees were paid. Plainly. In the case at bar. Upon motion by the respondent however. 1998. the decision appealed from has long attained finality and no longer appealable. The court acquires jurisdiction over the case only upon the payment of the prescribed docket fees. the trial court dismissed the appeal for failure of the respondent to pay the requisite docket fees within the reglementary period. RULING: Yes. Obviously. . lot. Petitioner’s motion for reconsideration was denied Hence. 1996 before the Regional Trial Court. Respondent’s contention that the petitioner is now estopped from raising the issue of late payment of the docket fee because of his failure to assail promptly the trial court’s order approving the notice of appeal and accepting the appeal fee. In a motion to dismiss filed before the appellate court.m. the trial court rendered decision RESCINDING the Construction Agreement between plaintiff Meatmaster Int’l. the petitioner alleged that respondent’s appeal suffers from jurisdictional infirmity because of late payment of docket fees. petitioner raised at the first instance the non-payment of the docket fee in its motion for reconsideration before the trial court. A copy of the resolution denying the motion for reconsideration was received on March 25. with both parties shouldering their own respective damage. Respondent failed to finish the construction of the said facility within the stipulated period. the trial court reconsidered and gave due course to the notice of appeal because respondent paid the docket fees. The payment of the full amount of the docket fee is a sine qua non requirement for the perfection of an appeal. the father and predecessor of Renato as evidenced by an agreement whereby Abelardo recognized their ownership of ½ portion of the lot. 1999. the instant petition.081. A motion for reconsideration was filed by respondent on December 22. is untenable. and defendant Lelis Integrated Dev’t. Respondent spouses Pablo and Antonia Ricafort instituted an action for annulment of Transfer of Certificate of Title in the name of spouses Renato and Teresita Villareal covering a 299 sq. the last day for filing the notice of appeal was on March 29. petitioner filed a complaint for rescission of contract and damages on August 9. 1999. Corp. warranting a presumption that the party entitled to assert it either has abandoned or declined to assert it. 1994. LELIS INTEGRATED 452 SCRA 626 FACTS: On November 11. but it paid the docket fees only on April 30. petitioner cannot be faulted for being remiss in asserting its rights considering that it vigorously registered a persistent and consistent objection to the Court of Appeals’ assumption of jurisdiction at all stages of the proceedings. petitioner Meatmasters International Corporation engaged the services of respondent Lelis Integrated Development Corporation to undertake the construction of a slaughterhouse and meat cutting and packing plant. It is well-established that the payment of docket fees within the prescribed period is mandatory for the perfection of an appeal.ESTOPPEL BY LACHES MEATMASTER vs. Respondent filed its notice of appeal on March 29.863. Initially. On November 23. but the same was denied. would be prejudiced by petitioner’s misleading conduct. Moreover. Since the claims of purchase were unsubstantiated. note that in a Sinumpaang Salaysay. The Regional Trial Court. but a proof that the holder has a claim of title over the property. First. herein petitioners who are all siblings of Renato filed a motion for intervention and substitution of parties alleging that spouses Renato and Teresita have waived their interest in the disputed lot in their favor. Hence. Filomena did not acquire said property by means of sale. Eventually. RULING: Yes. . These heirs. Hence. However. RULING: Whether or not Filomena Larena acquired the subject property by means of sale. petitioner Aquilina Larena took possession of the property in the1970’s alleging that she had purchased it from her aunt (Filomena Larena) on February 17. ESTOPPEL BY LACHES LARENA vs. took possession of the property up to the outbreak of World War II when they evacuated to the hinterlands. ISSUE: FACTS: Hipolito Mapili during his lifetime owned a parcel of unregistered land declared for taxation purposes in his name. Abelardo obtained during his lifetime Original Certificate of Title over the lot without their knowledge and consent. an admission or representation is rendered conclusive upon the person making it and cannot be denied against the person relying thereon. respondents. It is good indicia of possession in the concept of owner. 1968. they agreed to physically divide the lot into half. petitioners’ acts of possessory character have been merely tolerated by the owner. The property had descended by succession from Hipolito to his only son Magno and on to the latter’s own widow and children. 1949. the Court of Appeals declared that respondents had never lost their right to the land in question as they were the heirs to whom the property had descended upon the death of the original claimant and possessor. the herein respondents. On the other hand. Renato and Teresita transferred the title over the land in their name and were issued a TCT. The trial court approved the compromise agreement but not long thereafter. the tax declarations are not a conclusive evidence of ownership. MAPILI 408 SCRA 484 No. Under the principle of estoppel. Most of them were denied until they resorted to this review before the Supreme Court. When Abelardo died in 1993. In the course of the proceedings. Filomena Larena in turn claimed to have bought it from Hipolito on October 28. it did not constitute possession. and records show that the lapse of time was only twenty-seven (27) years—a period that was short of three (3) years. respondents filed a motion to cite the Villareals in contempt of court for refusing to comply with the terms of the agreement. declared the said affidavit as spurious because Hipolito was already dead when the alleged transfer was made to Filomena Larena. On appeal. It may strengthen Aquilina’s bona fide claim of acquisition of ownership. Second. Under Article 1137 of the Civil Code. and/or laches. Otherwise. who rightfully relied on the Certificate of Title. petitioners are estopped from denying Renato’s absolute title to the lot. the lapse of time required for extra-ordinary acquisitive prescription is thirty (30) years. they cannot now be allowed to defeat respondent’s claim by conveniently asserting that they are coowners of the lot. acquisitive prescription is a mode of acquiring ownership by a possessor through the requisite lapse of time. Petitioners availed of various remedies only to pursue the endeavor for the annulment of the compromise judgment. there is lack of just title on the part of Aquilina and therefore. in violation of the agreement. They also agreed to cause a relocation survey and the expenses will be borne equally by them. since petitioners admitted that they donated the lot to Renato. Verily. ISSUE: Whether or not the petitioners are estopped from seeking the annulment of the compromise judgment. when the complaint was filed. petitioners admitted that they acquiesced to have the subject lot donated and registered in Renato’s name. petitioners failed to present the evidence needed to tack the date of possession on the property in question. however.Respondents also claim that. as evidence by the Affidavit of Transfer of Real Property executed on the same date. ordinary acquisitive prescription of ten (10) years as provided under Article 1134 of the Civil Code cannot be applied. parties entered into a compromise settlement wherein the Villareals admitted the genuineness and due execution of the agreement between respondents and Abelardo. In view of such admission. prescription and/or laches. prescription. 1959. the fourth (4th) element is lacking in this case. SANTOS 366 SCRA 395 Whether or not the cause of action of the respondents had prescribed and/or barred by laches. and possession thereof. FACTS: RULING: Petitioner Zenaida M. all surnamed Santos and Rosa Santos-Carreon. and 4) injury or prejudice to the defendant in the event relief is accorded to the complainant. it took respondents about sixteen (16) years to file the case. Zenaida filed an ejectment suit against him with the Metropolitan Trial Court of Manila. The spouses Jesus and Rosalia were the parents of the respondents and the husband of the petitioner. respondents’ cause of action has not prescribed. Moreover. petitioner argues that an action to annul a contract for lack of consideration prescribes in ten (10) years and even assuming that the cause of action has not prescribed. which eventually decided in Zenaida’s favor. and from his death up to the filing of the case for reconveyance. No. 1985. or of one under whom he claims. In other words. 2) delay in asserting the complainant’s rights. vs. which resulted in the issuance of new TCT. claiming to be Salvador’s heir. the complainant having knowledge or notice of the defendant’s conduct as having been afforded an opportunity to institute a suit. where they alleged that the two deeds of sale were simulated for lack of consideration. On January 9. Santos is the widow of Salvador Santos. COURT OF APPEALS April 12. laches. the original vendors remained in dominion. Moreover.MIJARES ET. The elements of laches are: 1) conduct on the part of the defendant. Rosa in turn sold her share to Salvador on November 20. a tenant of Rosalia. Hence. laches is a failure or neglect for an unreasonable and unexplained length of time to do that which could or should have been done earlier through the exercise of due diligence. 2000 . or the suit is not held barred. followed by Rosalia who died the following month. more or less twelve (12) years had lapsed. because even after the sale. Alberto. These elements must all be proved positively. giving rise to the situation of which the complainant seeks a remedy. private respondent instituted an action for reconveyance of property with preliminary injunction against petitioner in the Regional Trial Court of Manila. On January 5. the right to file an action for the reconveyance of the subject property to the estate of Rosalia has not prescribed since deeds of sale were simulated and fictitious. Rosalia continued to lease and receive rentals from the apartment units. a brother of private respondents Calixto. The spouses owned a parcel of registered land with a four-door apartment administered by Rosalia who rented them out. When the latter refused to pay. It held that the subject deeds of sale did not confer upon Salvador the ownership over the subject property. the spouses executed a deed of sale of the properties in favor of their children Salvador and Rosa. AL. 1973. four (4) years has elapsed. The petitioner on the other hand denied the material allegations in the complaint and that she further alleged that the respondents’ right to reconveyance was already barred by prescription and laches considering the fact that from the date of sale from Rosa to Salvador up to his death. Salvador died. On January 19. the cause of action by the respondents had not prescribed nor is it barred by First. the action to assail the same does not prescribe. Shortly after. The complaint amounts to a declaration of nullity of a void contract.Finally. control. demanded the rent from Antonio Hombrebueno. The alleged sixteen (16) years of respondents’ inaction has no adverse effect on the petitioner to make respondents guilty of laches. petitioner Zenaida. neither is their action barred by laches. The lapse of four (4) years is not an unreasonable delay sufficient to bar respondent’s action. Antonio. 1989. Second. which is imprescriptible. ESTOPPEL BY LACHES VILLANUEVA. respondents are guilty of laches for their inaction for a long period of time. the Court of Appeals affirmed the trial court’s decision. ISSUE: SANTOS vs. 3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right in which he bases his suit. STOPPEL BY LACHES The trial court decided in favor of private respondents in as much as the deeds of sale were fictitious. The filing by respondents of the complaint in 1977 completely negates the decision that the latter were negligent in asserting their claim. Upon appeal. Despite the transfer of the property to Salvador. The concept of laches is not concerned with the lapse of time but only with the effect of unreasonable lapse. but the reservation of essential attributes of sovereign power is also read into contracts as a basic postulate of the legal order. they believed and considered Leon their co-heir administrator.” ISSUE: Whether R. Ramon and Rosa were minors. his children. they filed for recovery. Prosperedad. THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL REVENUE 1994 Aug 25 G. who thereafter secured separate and independent titles over their respective pro. Private respondents.indiviso shares. PLATINUM PLANS AVON COSMETICS VS. 115455 235 SCRA 630 FACTS: The valued-added tax (VAT) is levied on the sale. After Leon’s death in 1972. not in 1948. 5. that they became aware of the actionable betrayal by their uncle. They could not be faulted for their failure to file a case to recover their inheritance from their uncle Leon. Leon also sold and partitioned the property in favor of petitioners. ISSUE: Whether or not laches apply against the minor’s property that was held in trust. No. Pedro declared under his name 1/6 portion of the property (1. Camila. the Contract Clause has never been thought as a . In July 1970. m. as far as the 1/6 share of Felipe. Eustaquio. No. when Felipe Villanueva died. They contended that Leon fraudulently obtained the sale in his favor through machinations and false pretenses. RICHMOND ARWOOD VS. 4. DM CONSUNJI. since up to the age of majority.A. SIMBOL TIU VS. Furthermore. Upon learning of their uncle’s actions. bartered or exchanged or of the gross receipts from the sale or exchange of services. TOLENTINO VS. Benito. RULING: No. 8. DUNCAN VS. In truth. 7. RAMOS. It is enough to say that the parties to a contract cannot. contrary to petitioner’s assertion. At the time of the signing of the Deed of Sale of August 26. Hence. private respondents Procerfina. He held the remaining properties in trust for his co-heirs who demanded the subdivision of the property but to no avail. through the exercise of prophetic discernment. The Supreme Court the contention of CREBA.905 sq. TOLENTINO VS. Fausta and Pedro. an implied trust was created by operation of law between Felipe’s children and Leon. RULING: No. Nicolasa. They did not sleep on their rights. their uncle. 1946 but registered only in 1971.).FACTS: Felipe Villanueva left a 15. filed an action for partition with annulment of documents and/or reconveyance and damages against petitioners. The policy of protecting contracts against impairment presupposes the maintenance of a government which retains adequate authority to secure the peace and good order of society.336-square-meter parcel of land in Kalibo. 6. It is equivalent to 10% of the gross selling price or gross value in money of goods or properties sold. sec 10 of the Bill of Rights. SECRETARY. III. 7716 seeks to widen the tax base of the existing VAT system and enhance its administration by amending the National Internal Revenue Code. fetter the exercise of the taxing power of the State. It was only in 1975. 3. who are also descendants of Felipe. The RTC declared that private respondents’ action had been barred by res judicata and that petitioners are the “legal owners of the property in question in accordance with the individual titles issued to them. private respondents discovered that the shares of Simplicio. 7716 is unconstitutional on ground that it violates the contract clause under Art. For not only are existing laws read into contracts in order to fix obligations as between parties. The Chamber of Real Estate and Builders Association (CREBA) contends that the imposition of VAT on sales and leases by virtue of contracts entered into prior to the effectivity of the law would violate the constitutional provision of “non-impairment of contracts. Republic Act No.R. that the imposition of the VAT on the sales and leases of real estate by virtue of contracts entered into prior to the effectivity of the law would violate the constitutional provision of non-impairment of contracts. Leon’s fraudulent titling of Felipe’s 1/6 share was a betrayal of that implied trust. LUNA DEL CASTILLO VS. AUTONOMY OF CONTRACTS 1. barter or exchange of goods and properties as well as on the sale or exchange of services. 235 SCRA 630 2. Fausta and Maria Baltazar had been purchased by Leon through a deed of sale dated August 25. GLAXO STARPAPER VS.1948. Capiz to his eight children: Simplicio. 384 SCRA 105 ARTURO M. In 1952. 394 SCRA 11 PASCUAL VS. is only slightly less abstract but nonetheless hypothetical. Leon. the doctrine of stale demands formulated in Tijam cannot be applied here. in view of the absence of a factual foundation of record.limitation on the exercise of the State's power of taxation save only where a tax exemption has been granted for a valid consideration. . it does not mean that every labor dispute will be decided in favor of the workers. but only by a specific. Thereafter. is that the removal of its tax exemption cannot be made by a general. That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth. The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. and the Court does not understand it to make this claim. its position. Such is not the case of PAL in G. the Court holds: (1) That the procedural requirements of the Constitution have been complied with by Congress in the enactment of the statute. there were notices and advises given to the petitioner regarding his romantic relationship to his marriage regarding the conflict of interest. nor deny to any of the parties the right to an education. expression or the press. the management and the employee will explore the possibility of a “transfer to another department in a noncounterchecking position” or preparation for employment outside the company after six months.beyond those prescribed by the Constitution . The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play. WHEREFORE. If management perceives a conflict of interest or a potential conflict between such relationship and the employee’s employment with the company. Tec son married Bettsy in September 1998. 115852. Inc. 7716 in its formal and substantive aspects as this has been raised in the various cases before it. Subsequently. In laying down the assailed company policy. that he agrees to study and abide by existing company rules. to resign from the company. Further. Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. To sum up. after Tecson had undergone training and orientation. 2004 FACTS: Petitioner Pedro A. and (4) That. the Supreme Court held the validity of Republic Act No. Tecson was initially assigned to market Glaxo’s products in the Camarines SurCamarines Norte sales area. claims that the law is regressive. (2) That judicial inquiry whether the formal requirements for the enactment of statutes . oppressive and confiscatory and that it violates vested rights protected under the Contract Clause are prematurely raised and do not justify the grant of prospective relief by writ of prohibition. No. especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry.R. among others. an employee of Astra Pharmaceuticals (Astra). 1995. a competitor of Glaxo. No. manufacturing formulas. Tecson was later reassigned at Butuan-Surigao-Agusan area to prevent conflict of interest but he refused and argued that he was constructively dismissed. Tecson received several reminders from his District Manager regarding the conflict of interest which his relationship with Bettsy might engender. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines. Still. as discussed above. The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management of any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies.R. ISSUE: Whether the Court of Appeals erred in ruling that Glaxo’s policy against its employees marrying employees from competitor companies is valid HELD: Glaxo has a right to guard its trade secrets. In this case. the petitions are DISMISSED. Tecson signed a contract of employment which stipulates. while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor. to disclose to management any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies and should management find that such relationship poses a possible conflict of interest. September 17. She supervised the district managers and medical representatives of her company and prepared marketing strategies for Astra in that area. law.have been observed is precluded by the principle of separation of powers. Indeed. AUTONOMY OF CONTRACTS DUNCAN ASSOCIATION OF DETAILMAN PTGW vs. nor interfere with the free exercise of religion. Bettsy was Astra’s Branch Coordinator in Albay. GLAXOWELLCOM PHILIPPINES G. Tecson entered into a romantic relationship with Bettsy. (Glaxo) as medical representative on October 24. Even before they got married. Rather. 162994. (3) That the law does not abridge freedom of speech. marketing strategies and other confidential programs and information from competitors. the only way it could pass judicial scrutiny is a showing that it is reasonable despite the discriminatory. The policy is premised on the mere fear that employees married to each other will be less efficient. New applicants will not be allowed to be hired if in case he/she has a relative. the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot benefit the petitioners. 1995. On January 1. already employed by the company. the issue as to whether respondents Simbol and Comia resigned voluntarily has become moot and academic. Under the policy of Star Paper the employees are: 1. Thus. policies based on an unproven presumption of a perceived danger at the expense of an employee’s right to security of tenure. If we uphold the questioned rule without valid justification. petitioner Daisy B. . then a Production Helper in the Selecting Department. Petitioners failed to show how the marriage of Simbol. then a Sheeting Machine Operator. AUTONOMY OF CONTRACTS STAR PAPER vs.Hence the petition was denied. February 28. respondent re-hired petitioner as Senior Assistant Vice-President and Territorial Operations Head in charge of its Hong Kong and Asean operations. PLATINUM PLANS PHILIPPINES G. No. but they are free to marry persons other than co-employees. Petition was denied. who married Howard Comia. then a helper in the cutter-machine.. Inc. but were asked to resign when they married a co-employee. Petitioners contend that their policy will apply only when one employee marries a co-employee. In case of two of our employees (singles. Lastly. From 1987 to 1989. The questioned policy may not facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under the disparate impact theory. the Court ruled that it was illegal. for failure of petitioners to present undisputed proof of a reasonable business necessity. AUTONOMY OF CONTRACTS ISSUE: TIU vs. In November 1995. The decision was appealed to the Court of Appeals which reversed the decision. 163512. she became the Vice-President for Sales of Professional Pension Plans. respondents were hired after they were found fit for the job.R. 2. Neither did petitioners explain how this detriment will happen in the case of Wilfreda Comia. Inc. albeit disproportionate. the employer can create FACTS: Respondent Platinum Plans Philippines. the petitioner failed to adduce proof to justify her dismissal. On September 16. Respondents Comia and Simbol both got married to their fellow employees. a corporation engaged also in the pre-need industry. Corollary. The protection given to labor in our jurisdiction is vast and extensive that we cannot prudently draw inferences from the legislature’s silence that married persons are not protected under our Constitution and declare valid a policy based on a prejudice or stereotype. to Alma Dayrit. The parties executed a contract of employment valid for five years. The respondents allege that they were forced to resign as a result of the implementation of the said assailed company policy. one male and another female) developed a friendly relationship during the course of their employment and then decided to get married. we rule that the questioned policy is an invalid exercise of management prerogative. 2007 Whether the prohibition to marry in the contract of employment is valid HELD: It is significant to note that in the case at bar. Estrella on the other hand had a relationship with a co-employee resulting to her pregnancy on the belief that such was separated. petitioner stopped reporting for work. The Labor Arbiter and the NLRC ruled in favor of petitioner. 1993. then an employee of the Repacking Section. effect. The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice the employee’s right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company. could be detrimental to its business operations. up to the 3rd degree of relationship. In the case of Estrella. Hence. one of them should resign to preserve the policy stated above. is a domestic corporation engaged in the pre-need industry. Tiu was its Division Marketing Director. SIMBOL 487 SCRA 228 FACTS: Petitioner was the employer of the respondents. therefore. the trial court found the twoyear restriction to be valid and reasonable. The Supervisor agrees: 1) To purchase products from the Company exclusively for resale and to be responsible for obtaining all permits and licenses required to sell the products on retail. (Avon). violated the non-involvement clause in her contract of employment. at any time upon notice to the other. among others. respondent Luna continued working for said successor company. the trial court ruled that a contract in restraint of trade is valid provided that there is a limitation upon either time or place. The Company and the Supervisor mutually agree: 1) That this agreement in no way makes the Supervisor an employee or agent of the Company. in 1972. 4) That the Supervisor shall sell or offer to sell. The Court of Appeals affirmed the decision. Sometime in 1978. In upholding the validity of the non-involvement clause. Inc. ISSUE: Whether the Court of Appeals erred in ruling that the Supervisor’s Agreement was invalid for being contrary to public policy . The contract was that: The Company agrees: 1) To allow the Supervisor to purchase at wholesale the products of the Company. LUNA 511 SCRA 376 FACTS: The present petition stemmed from a complaint[3] dated 1 December 1988. she bound herself to fulfill not only what was expressly stipulated in the contract. To allow her to engage in a rival business soon after she leaves would make respondent’s trade secrets vulnerable especially in a highly competitive marketing environment. Thus. Hence the restraint is valid and such stipulation prevails. the Supervisor shall not sell such products to stores. hence this petition. usage. she had been privy to confidential and highly sensitive marketing strategies of respondent’s business. respondent sued petitioner for damages before the RTC of Pasig City. acquired and took over the 2) That the Supervisor is an independent retailer/dealer insofar as the Company is concerned. filed by herein respondent Luna alleging. Aside from her work as a supervisor.Consequently. inter alia¸ that she began working for Beautifont. respondent Luna entered into the sales force of Sandre Philippines which caused her termination for the alleged violation of the terms of the contract. AUTONOMY OF CONTRACTS AVON COSMETICS vs. On appeal. In the case of the pre-need industry. supermarkets or to any entity or person who sells things at a fixed place of business. In sum. The trial court ruled in favor of Luna that the contract was contrary to public policy thus the dismissal was not proper. the Court of Appeals affirmed the trial court’s ruling. It is also limited as to trade. Avon Cosmetics. with or without cause. and shall have the sole discretion to determine where and how products purchased from the Company will be sold. Respondent alleged. Branch 261. Inc. Later. for which she received a per diem for each theatrical performance. the non-involvement clause has a time limit: two years from the time petitioner’s employment with respondent ends. ISSUE: Whether the Court of Appeals erred in sustaining the validity of the noninvolvement clause management and operations of Beautifont. The appellate court also ruled that the stipulation prohibiting non-employment for two years was valid and enforceable considering the nature of respondent’s business. It reasoned that petitioner entered into the contract on her own will and volition. More significantly. but also all its consequences that were not against good faith. Nonetheless. display or promote only and exclusively products sold by the Company. Inc. However. first as a franchise dealer and then a year later. Inc. that petitioner’s employment with Professional Pension Plans. 3) That this agreement supersedes any agreement/s between the Company and the Supervisor. The Court finds the non-involvement clause not contrary to public welfare and not greater than is necessary to afford a fair and reasonable protection to respondent. the Supervisor has no authority to bind the Company in any contracts with other parties. 5) Either party may terminate this agreement at will. HELD: In this case. respondent Luna also acted as a make-up artist of petitioner Avon’s Theatrical Promotion’s Group. since it only prohibits petitioner from engaging in any pre-need business akin to respondent’s. and law. herein petitioner. since petitioner was the Senior Assistant Vice-President and Territorial Operations Head in charge of respondent’s Hongkong and Asean operations. as a Supervisor. ." The defendant further. The contract provided that it can be terminated or cancelled for cause. RICHMOND 45 PHIL. Applying the preceding principles to the case at bar. The foreclosure effect. and all other Avon supervisors. there is nothing invalid or contrary to public policy either in the objectives sought to be attained by paragraph 5. namely. or tends clearly to undermine the security of individual rights. both at any time and after written notice. a court. public policy is that principle of the law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good. subject to the same notice requirement. and are unnecessary in order to constitute a just and reasonable protection to the defendant. the petition was granted. we now pass to a consideration of respondent Luna’s objections to the validity of her termination as provided for under paragraph 6 of the Supervisor’s Agreement giving petitioner Avon the right to terminate or cancel such contract. as plaintiff has announced his intention to do. for cause. The defendant interposed a general and special defense. in order to declare a contract void as against public policy. AUTONOMY OF CONTRACTS DEL CASTILLO vs. the same has prescribed. ISSUE: Whether the contract is valid and the autonomy of contracts be upheld The Company and the Supervisor mutually agree: HELD: 6) Either party may terminate this agreement at will. whether properly. whether of personal liability or of private property. has a tendency to injure the public. that such limitation is legal and reasonable and not contrary to public policy. from selling products other than those manufactured by petitioner Avon. respondent Luna was duly notified thereof. alleges that this action not having been brought within four years from the time the contract referred to in the complaint was executed. In his special defense he alleges that during the time the plaintiff was in the defendant's employ he obtained knowledge of his trade and professional secrets and came to know and became acquainted and established friendly relations with his customers so that to now annul the contract and permit plaintiff to establish a competing drugstore in the town of Legaspi. the termination clause of the Supervisor’s Agreement clearly provides for two ways of terminating and/or canceling the contract. must find that the contract as to the consideration or thing to be done. The Court is of the opinion. the main objection to exclusive dealing is its tendency to foreclose existing competitors or new entrants from competition in the covered portion of the relevant market during the term of the agreement. From another perspective. strictly and wholly a public law (derecho) or whether a law of the person. would be extremely prejudicial to defendant's interest. The paragraph 6 or the “termination clause” therein expressly provides that: exclude the other. . REPORTS 679 FACTS: The plaintiff alleges that the provisions and conditions contained in the third paragraph of their contract constitute an illegal and unreasonable restriction upon his liberty to contract. The only requirement is that of notice to the other party. One mode does not Considering the nature of the business in which the defendant is engaged. Thus. all the product and geographic sales they may readily compete for. the autonomy of the contract will be subverted. or is inconsistent with sound policy and good morals. the exclusivity clause. otherwise. whether or not the termination or cancellation of the Supervisor’s Agreement was “for cause. in prohibiting respondent Luna. if any.e.Whether there was subversion of the autonomy of contracts by the lower courts HELD: Agreements in violation of orden público must be considered as those which conflict with law. Obviously. no advantage is taken against each other by the contracting parties. Plainly put. The relevant market for this purpose includes the full range of selling opportunities reasonably open to rivals. and so decide. depends on the market share involved. Hence. is against the public good. and asked that the same be declared null and void and of no effect. When petitioner Avon chose to terminate the contract. In the case at bar. at any time upon notice to the other. Having held that the “exclusivity clause” as embodied in paragraph 5 of the Supervisor’s Agreement is valid and not against public policy.” is immaterial. Only those arrangements whose probable effect is to foreclose competition in a substantial share of the line of commerce affected can be considered as void for being against public policy. but law which in certain respects affects the interest of society. are contrary to public policy. in the absence of express legislation or constitutional prohibition. i. in an amended answer. it also stated that it can be terminated without cause. with or without cause. Worth stressing is that the right to unilaterally terminate or cancel the Supervisor’s Agreement with or without cause is equally available to respondent Luna. or contravenes some established interests of society. using easily convertible plants and marketing organizations. in relation with the limitation placed upon the plaintiff both as to time and place. As applied to contracts. respondent the second option, as the condominium project was in fact already completed. The payment of 2% then cannot be rejected. AUTONOMY OF CONTRACTS ARWOOD INDUSTRIES, INC. VS. D.M. CONSUNJI, INC. G.R No. 142277 December 11, 2002 394 SCRA 11 FACTS: Petitioner Arwood Industries and resppndent DM contractor, respectively, entered into a Civil, Structural Agreement on February 6, 1989 for the construction Condominium at No. 23 Eisenhower St. Greenhills, San Juan, price for the project aggregated to P20,800,000.00 Consunji, as owner and and Architectural Works of petitioner’s Westwood Metro Manila. The contract Despite completion of the project, the amount of P962,434.78 remained unpaid by petitioner. Demands were made by respondent for petitioner to pay went unheeded. Thus, on August 13, 1993, respondent filed a complaint for the recovery of the balance of the contract price and for damages against petitioner. It prayed for the payment of the a) amount of P962, 434.78 with interest of 2% per month or a fraction thereof, from November 1990 up to the time of payment; b) the payment of P250, 000 as attorney’s fees and litigation expenses; c) amount of P150, 000 as exemplary damages and d) costs of suit. The trial court and the Court of Appelas ruled in favor of DM Consunji. Hence, this petition. ISSUE: Whether or not the trial court and the CA correctly granted the imposition of the monetary interest of 2% per month on the amount of P962,434 RULING: The Agreement or the contract between the parties is the formal expression of the parties rights, duties, and obligations. It is the best evidence of the intention of the parties. Thus, “when the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement.” It must be noted that the Agreement provided the respondent-contractor two options in case of delay in monthly payments, to wit: a) suspend work on the project until payment is remitted by the owner or b) continue the work but the owner shall be required to pay the interest at a rate of 2% per month or fraction thereof. Evidently, Therefore, since the Agreement stands as the law between the parties, the Court cannot ignore the existence of such provision providing for a penalty for every month’s delay. Neither can petitioner impugn the Agreement to which it willingly gave its consent. Wherefore the petition is denied. AUTONOMY OF CONTRACTS SPOUSES SILVESTRE and CELIA PASCUAL VS. RODRIGO RAMOS G. R. No. 144712 FACTS: On June 3, 1987, spouses Silvestre and Celia Pascual executed in favor of Rodrigo Ramos a Deed of Absolute Sale with Right to Repurchase over two parcels of land located in Bambang, Bulacan, Bulacan for and in consideration of P150,000.00. The Pascuals did not exercixe their right to repurchase the property within the stipulated one-year period; thus, Ramos filed with the trial court a petition that the title or ownership over the subject parcels and improvements thereon be consolidated in his favor. In their answer, the Pascuals averred that what the parties had actually agreed upon and entered into was a real estate mortgage and that they had even overpaid Ramos. The Pascuals prayed that Ramos be ordered to execute a Deed of Cancellation, Release or Discharge of the Absolute Sale with Right to Repurchase or a Deed of Real Estate Mortgage and for the award of damages. Among the documents offered in evidence by Ramos during the trial was a document denominated as Sinumpaang Salaysay signed by Ramos and Silvestre Pascual, but not notarized. On the other hand, the Pascuals presented documentary evidence consisting of acknowledgement receipts to prove the payments they had made. The trial court found that the transaction was actually a loan in the amount of P150, 000, the payment of which was secured by a mortgage of the property. It also found that the Pascuals had made payments in the total sum of P344,000, and that with interest at 7% per annum, the Pascuals had overpaid the loan by P141,500. The trial court rendered its decision dismissing Ramos’ petition and awarding the Pascuals the sum of P141,500 as overpayments on the loan and interests. Ramos moved for the reconsideration of the decision, alleging that the trial court erred in using an interest rate of 7% pert annum in the computation of the total amount of obligation since what was expressly stipulated in the Sinumpaang Salaysay was 7% per month. Thus the total interest due was P643,000 was still due as interest. Adding the latter to the principal sum of P150,000, the total amount due from the Pascuals as of April 3, 1995, was P793,000. Finding merit in Ramos’ motion for reconsideration, which was not opposed by the Pascuals, the trial court issued an order modifying its decision. It deleted the award of P141,500 to the Pascuals and ordered them to pay Ramos P511,000. The trial court noted that during the trial, the Pascuals never disputed the stipulated interest which is 7% per month. However, the court declared it is too burdensome and onerous, thus reducing the interest rate at 5% per month. The Pascuals filed a motion to reconsider the Order of June 5, 1995 and Ramos opposed the motion of the Pascuals. The Pascuals appealed to the Court of Appeals but the appellate court affirmed in toto the trial court’s orders. Hence, this petition. ISSUE: Whether or not the Pascuals are liable for 5% interest per month from June 3, 1987 to April 3, 1995. RULING: The Supreme Court held that parties are bound by the stipulation in the contracts voluntarily entered into by them. Parties are free to stipulate terms and conditions which they deem convenient provided they are not contrary to law, morals, good customs, public order or public policy. The interest rate of 7% per month was voluntarily agreed upon by Ramos and the Pascuals. There is nothing from the records and no allegation showing that petitioners were victims of fraud when they entered into the agreement with Ramos. With the suspension of the Usury Law and the removal of interest ceiling, the parties are free to stipulate the interest to be imposed on loans. Absent any evidence of fraud, undue influence, or any vice of consent exercised by Ramos on the Pascuals, the interest agreed upon them is binding upon them. The Court is not in a position to impose upon parties contractual stipulations different from what they have agreed upon. The Court cannot supplant the interest rate, which was reduced to 5% per month without opposition on the part of Ramos. Hence, the Pascuals are liable for 5% interest per month from June 3, 1987 to April 3, 1995. The assailed decision is therefore affirmed and the petition is denied. OBLIGATORY FORCE OF CONTRACTS MAXIMA HEMEDES, petitioner, VS. THE HONORABLE COURT OF APPEALS, DOMINIUM REALTY AND CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES, and R & B INSURANCE CORPORATION, respondents G.R. No. 108472 October 8, 1999 FACTS: The instant controversy involves a question of ownership over an unregistered parcel of land, identified as Lot No. 6, plan Psu-111331, with an area of 21,773 square meters, situated in Sala, Cabuyao, Laguna. It was originally owned by the late Jose Hemedes, father of Maxima Hemedes and Enrique D. Hemedes. On March 22, 1947 Jose Hemedes executed a document entitled “Donation Inter Vivos With Resolutory Conditions” whereby he conveyed ownership over the subject land, together with all its improvements, in favor of his third wife, Justa Kausapin. Maxima Hemedes, through her counsel, filed an application for registration and confirmation of title over the subject unregistered land. Subsequently, Original Certificate of Title (OCT) No. (0-941) 0-198 was issued in the name of Maxima Hemedes married to Raul Rodriguez by the Registry of Deeds of Laguna on June 8, 1962, with the annotation that “Justa Kausapin shall have the usufructuary rights over the parcel of land herein described during her lifetime or widowhood.” On February 28, 1979, Enrique D. Hemedes sold the property to Dominium Realty and Construction Corporation (Dominium). On April 10, 1981, Justa Kausapin executed an affidavit affirming the conveyance of the subject property in favor of Enrique D. Hemedes as embodied in the “Kasunduan” dated May 27, 1971, and at the same time denying the conveyance made to Maxima Hemedes. On August 27, 1981, Dominium and Enrique D. Hemedes filed a complaint with the Court of First Instance of Binan, Laguna for the annulment of TCT No. 41985 issued in favor of R & b Insurance and/or the reconveyance to Dominium of the subject property. Specifically, the complaint alleged that Dominium was the absolute owner of the subject property by virtue of the February 28, 1979 deed of sale executed by Enrique D. Hemedes, who in turn obtained ownership of the land from Justa Kausapin, as evidenced by the “Kasunduan” dated May 27, 1971. The Plaintiffs asserted that Justa Kausapin never transferred the land to Maxima Hemedes and that Enrique D. Hemedes had no knowledge of the registration proceedings initiated by Maxima Hemedes. After considering the merits of the case, the trial court rendered judgment on February 22, 1989 in favor of plaintiffs Dominium and Enrique D. Hemedes. Both R & B Insurance and Maxima Hemedes appealed from the trial court’s decision. On September 11, 1992 the Court of Appeals affirmed the assailed decision in toto and on December 29, 1992, it denied R & Insurance’s motion for reconsideration. Thus, Maxima Hemedes and R & B Insurance filed their respective petitions for review with this Court on November 3, 1992 and February 22, 1993, respectively. ISSUE: Which of the two conveyances by Justa Kausapin, the first in favor of Maxima Hemedes and the second in favor of Enrique D. Hemedes, effectively transferred ownership over the subject land? RULING: Public respondent’s finding that the “Deed of Conveyance of Unregistered Real Property By Reversion” executed by Justa Kausapin in favor of Maxima Hemedes is spurious is not supported by the factual findings in this case. It is grounded upon the mere denial of the same by Justa Kausapin. A party to a contract cannot just evade compliance with his contractual obligations by the simple expedient of denying the execution of such contract. If, after a perfect and binding contract has been executed between the parties, it occurs to one of them to allege some defect therein as a reason for annulling it, the alleged defect must be conclusively proven, since the validity and fulfillment of contracts cannot be left to the will of one of the contracting parties. In upholding the deed of conveyance in favor of Maxima Hemedes, the Court must concomitantly rule that Enrique D. Hemedes and his transferee, Dominium, did not acquire any rights over the subject property. Justa Kausapin sought to transfer to her stepson exactly what she had earlier transferred to Maxima Hemedes – he ownership of the subject property pursuant to the first condition stipulated in the deed of donation executed by her husband. Thus, the donation in favor of Enrique D. Hemedes is null and void for the purported object thereof did not exist at the time of the transfer, having already been transferred to his sister. Similarly, the sale of the subject property by Enrique D. Hemedes to Dominium is also a nullity for the latter cannot acquire more rights than its predecessor-in-interest and is definitely not an innocent purchaser for value since Enrique D. Hemedes did not present any certificate of title upon which it relied. The Court upheld petitioner R & B Insurance’s assertion of ownership over the property in dispute, as evidenced by TCT No. 41985, subject to the usufructuary rights of Justa Kausapin, which encumbrance has been properly annotated upon the said certificate of title. September 6, 1973, Andres and Caigas, with the consent of their respective spouses, Anita Barrientos and Consolacion Tobias, sold the land to Fortune Tobacco Corporation for P60,000.00. Simultaneously, they executed a joint affidavit declaring that they had no tenants on said lot. On the same date, the sale was registered in the Office of the Register of Deeds of Isabela. TCT No. 68641 was cancelled and TCT No. T-68737 was issued in Fortune’s name. On August 6, 1976, Andres and Caigas executed a Deed of Reconveyance of the same lot in favor of Filomena Domingo, the mother of Joselito Villegas, defendant in the case before the trial court. Although no title was mentioned in this deed, Domingo succeeded in registering this document in the Office of the Register of Deeds on August 6, 1976, causing the latter to issue TCT No. T-91864 in her name. It appears in this title that the same was a transfer from TCT No. T-68641. On April 13, 1981, Domingo declared the lot for real estate taxation under Tax Declaration No. 105633. On December 4, 1976, the Office of the Register of Deeds of Isabela was burned together with all titles in the office. On December 17, 1976, the original of TCT No. T91864 was administratively reconstituted by the Register of Deeds. On June 2, 1979, a Deed of Absolute Sale of a portion of 20,000 square meters of Lot B-3-A was executed by Filomena Domingo in favor of Villegas for a consideration of P1,000.00. This document was registered on June 3, 1981 and as a result TCT No. T-131807 was issued by the Register of Deeds to Villegas. On the same date, the technical description of Lot B-3-A-2 was registered and TCT No. T-131808 was issued in the name of Domingo. On January 22, 1991, this document was registered and TCT No. 154962 was issued to the defendant, Joselito Villegas. On April 10, 1991, the trial court upon a petition filed by Fortune ordered the reconstitution of the original of TCT No. T-68737. After trial on the merits, the trial court rendered its assailed decision in favor of Fortune Tobacco, declaring it to be entitled to the property. Petitioners thus appealed this decision to the Court of Appeals, which affirmed the trial court’s decision. ISSUES: Whether or not the Court of Appeals was correct in affirming the trial court’s decision. RIGHTS OF FIRST REFUSAL 1. 2. 3. 4. VILLEGAS VS. CA EQUATORIAL REALTY VS. CARMELO PUP VS. CA LITONJUA VS. L &R JOSELITO VILLEGAS and DOMINGA VILLEGAS vs. COURT OF APPEALS G.R. No. 129977. February 1, 2001 FACTS: Before September 6, 1973, Lot B-3-A, with an area of 4 hectares was registered under TCT No. 68641 in the names of Ciriaco D. Andres and Henson Caigas. This land was also declared for real estate taxation under Tax Declaration No. C2-4442. On RULING: Even if Fortune had validly acquired the subject property, it would still be barred from asserting title because of laches. The failure or neglect, for an unreasonable length of time to do that which by exercising due diligence could or should have been done earlier constitutes laches. It is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it has either abandoned it or declined to assert it. While it is by express provision of law that no title to registered land in derogation of that of the registered owner shall be acquired by prescription or adverse possession, it is likewise an enshrined rule that even a registered owner may be barred from recovering possession of property by virtue of laches. Hence, petition was GRANTED and the Decision of the Court of Appeals was REVERSED. EQUATORIAL REALTY DEVELOPMENT, INC. & CARMELO & BAUERMANN, INC vs. MAYFAIR THEATER, INC G.R. No. 106063 1996 Nov 21 264 SCRA 483 FACTS: Carmelo owned a parcel of land, together with two 2-storey buildings constructed thereon. On June 1, 1967 Carmelo entered into a contract of lease with Mayfair for the latter’s lease of a portion of Carmelo’s property. Two years later, on March 31, 1969, Mayfair entered into a second contract of lease with Carmelo for the lease of another portion of Carmelo’s property. Both contracts of lease provide identically worded paragraph 8, which reads: ‘That if the LESSOR should desire to sell the leased premises, the LESSEE shall be given 30-days exclusive option to purchase the same. In the event, however, that the leased premises is sold to someone other than the LESSEE, the LESSOR is bound and obligated, as it hereby binds and obligates itself, to stipulate in the Deed of Sale thereof that the purchaser shall recognize this lease and be bound by all the terms and conditions thereof. Mr. Henry Pascal of Carmelo informed Mr. Henry Yang, President of Mayfair, through a telephone conversation that Carmelo was desirous of selling the entire Claro M. Recto property. Mr. Pascal told Mr. Yang that a certain Jose Araneta was offering to buy the whole property for US Dollars 1,200,000, and Mr. Pascal asked Mr. Yang if the latter was willing to buy the property for Six to Seven Million Pesos. Under your company’s two lease contracts with our client, it is uniformly provided: ‘8. That if the LESSOR should desire to sell the leased premises the LESSEE shall be given 30-days exclusive option to purchase the same. In the event, however, that the leased premises is sold to someone other than the LESSEE, the LESSOR is bound and obligated, as it here binds and obligates itself, to stipulate in the Deed of Sale thereof that the purchaser shall recognize this lease and be bound by all the terms and conditions hereof. Carmelo did not reply to this letter. On September 18, 1974, Mayfair sent another letter to Carmelo purporting to express interest in acquiring not only the leased premises but ‘the entire building and other improvements if the price is reasonable. However, both Carmelo and Equatorial questioned the authenticity of the second letter. Four years later, on July 30, 1978, Carmelo sold its entire C.M. Recto Avenue land and building, which included the leased premises housing the ‘Maxim’ and ‘Miramar’ theatres, to Equatorial by virtue of a Deed of Absolute Sale, for the total sum of P11,300,000.00. In September 1978, Mayfair instituted the action a quo for specific performance and annulment of the sale of the leased premises to Equatorial. It dismissed the complaint with costs against the plaintiff. The Court of Appeals reversed the decision of the trial court. RULING: Whether or not the decision of the Court of Appeals’ decision was correct. RULING: The Court agrees with the Court of Appeals that the aforecited contractual stipulation provides for a right of first refusal in favor of Mayfair. It is not an option clause or an option contract. It is a contract of a right of first refusal. As early as 1916, in the case of Beaumont vs. Prieto, unequivocal was our characterization of an option contract as one necessarily involving the choice granted to another for a distinct and separate consideration as to whether or not to purchase a determinate thing at a predetermined fixed price. Further, what Carmelo and Mayfair agreed to, by executing the two lease contracts, was that Mayfair will have the right of first refusal in the event Carmelo sells the leased premises. It is undisputed that Carmelo did recognize this right of Mayfair, for it informed the latter of its intention to sell the said property in 1974. There was an exchange of letters evidencing the offer and counter-offers made by both parties. Carmelo, however, did not pursue the exercise to its logical end. While it initially recognized Mayfair’s right of first refusal, Carmelo violated such right when without affording its negotiations with Mayfair the full process to ripen to at least an interface of a definite offer and a possible corresponding acceptance within the “30-day exclusive option” time granted Mayfair, Carmelo abandoned negotiations, kept a low profile for some time, and then sold, without prior notice to Mayfair, the entire Claro M. Recto property to Equatorial. Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the property in question rescissible. We agree with respondent Appellate Court that the records bear out the fact that Equatorial was aware of the lease contracts because its lawyers had, prior to the sale, studied the said contracts. As such, Equatorial cannot tenably claim to be a purchaser in good faith, and, therefore, rescission lies. Hence, the petition was denied. POLYTECHNIC UNIVERSITY OF THE PHILIPPINES vs. COURT OF APPEALS and FIRESTONE CERAMICS, INC. G.R. No. 143513. November 14, 2001 NATIONAL DEVELOPMENT CORPORATION vs. FIRESTONE CERAMICS INC G.R. No. 143590. November 14, 2001 FACTS: In the early sixties, petitioner National Development Corporation (NDC), had in its disposal a ten-hectare property located along Pureza St., Sta. Mesa, Manila. The estate was popularly known as the NDC compound and covered by Transfer Certificates of Title Nos. 92885, 110301 and 145470. Private respondent Firestone Ceramics Inc. manifested its desire to lease a portion of the property for its ceramic manufacturing business. NDC and FIRESTONE entered into a contract of lease denominated as Contract No. C-30-65 covering a portion of the property measured at 2.90118 hectares for use as a manufacturing plant for a term of ten years, renewable for another ten years under the same terms and conditions. In consequence of the agreement, FIRESTONE constructed on the leased premises several warehouses and other improvements needed for the fabrication of ceramic products. Three and a half years later, FIRESTONE entered into a second contract of lease with NDC over the latter's four-unit pre-fabricated reparation steel warehouse stored in Daliao, Davao. FIRESTONE agreed to ship the warehouse to Manila for eventual assembly within the NDC compound. The second contract, denominated as Contract No. C-26-68, was for similar use as a ceramic manufacturing plant and was agreed expressly to be "co-extensive with the lease of LESSEE with LESSOR on the 2.60 hectare-lot. The parties signed a similar contract concerning a sixunit pre-fabricated steel warehouse which, as agreed upon by the parties, would expire on 2 December 1978. Prior to the expiration of the aforementioned contract, FIRESTONE wrote NDC requesting for an extension of their lease agreement. Consequently, the Board of Directors of NDC adopted the Resolution extending the term of the lease, subject to several conditions among which was that in the event NDC "with the approval of higher authorities, decide to dispose and sell these properties including the lot, priority should be given to the LESSEE". In pursuance of the resolution, the parties entered into a new agreement for a ten-year lease of the property, renewable for another ten years, expressly granting FIRESTONE the first option to purchase the leased premises in the event that it decided "to dispose and sell these properties including the lot”. The parties' lessor-lessee relationship went smoothly until early 1988 when FIRESTONE, cognizant of the impending expiration of their lease agreement with NDC, informed the latter through several letters and telephone calls that it was renewing its lease over the property. While its letter of 17 March 1988 was answered by Antonio A. Henson, General Manager of NDC, who promised immediate action on the matter, the rest of its communications remained unacknowledged. FIRESTONE's predicament worsened when rumors of NDC's supposed plans to dispose of the subject property in favor of petitioner Polytechnic University of the Philippines came to its knowledge. Forthwith, FIRESTONE served notice on NDC conveying its desire to purchase the property in the exercise of its contractual right of first refusal. Apprehensive that its interest in the property would be disregarded, FIRESTONE instituted an action for specific performance to compel NDC to sell the leased property in its favor. Following the denial of its petition, FIRESTONE amended its complaint to include PUP and Executive Secretary Catalino Macaraeg, Jr., as party-defendants, and sought the annulment of Memorandum Order No. 214. After trial, judgment was rendered declaring the contracts of lease executed between FIRESTONE and NDC covering the 2.60-hectare property and the warehouses constructed thereon valid and existing until 2 June 1999. The Court of Appeals affirmed the decision of the trial court ordering the sale of the property in favor of FIRESTONE. ISSUE: Whether or not the Court of Appeals decided a question of substance in a way definitely not in accord with law or jurisprudence. RULING: The courts a quo did not hypothesize, much less conjure, the sale of the disputed property by NDC in favor of petitioner PUP. Aside from the fact that the intention of NDC and PUP to enter into a contract of sale was clearly expressed in the Memorandum Order No. 214, a close perusal of the circumstances of this case strengthens the theory that the conveyance of the property from NDC to PUP was one of absolute sale, for a valuable consideration, and not a mere paper transfer as argued by petitioners. A contract of sale, as defined in the Civil Code, is a contract where one of the parties obligates himself to transfer the ownership of and to deliver a determinate thing to the other or others who shall pay therefore a sum certain in money or its equivalent. It is therefore a general requisite for the existence of a valid and enforceable contract of sale that it be mutually obligatory, i.e., there should be a concurrence of the promise of the vendor to sell a determinate thing and the promise of the vendee to receive and pay for the property so delivered and transferred. The Civil Code provision is, in effect, a "catch-all" provision which effectively brings within its grasp a whole gamut of transfers whereby ownership of a thing is ceded for a consideration. Contrary to what petitioners PUP and NDC propose, there is not just one party involved in the questioned transaction. Petitioners NDC and PUP have their respective charters and therefore each possesses a separate and distinct individual personality. Hence, the petition was denied. SPS. LITONJUA vs. L & R CORPORATION G.R. No. 130722. December 9, 1999 320 SCRA 405 FACTS: This stems from loans obtained by the spouses Litonjua from L&R Corporation in the aggregate sum of P400,000.00; P200,000.00 of which was obtained on August 6, 1974 and the remaining P200,000.00 obtained on March 27, 1978. The loans were secured by a mortgage constituted by the spouses upon their two parcels of land and the improvements thereon The mortgage was duly registered with the Register of Deeds. Spouses Litonjua sold to Philippine White House Auto Supply, Inc. (PWHAS) the parcels of land they had previously mortgaged to L & R Corporation for the sum of P430,000.00. Meanwhile, with the spouses Litonjua having defaulted in the payment of their loans, L & R Corporation initiated extrajudicial foreclosure proceedings with the ExOficio Sheriff of Quezon City. The mortgaged properties were sold at public auction to L & R Corporation as the only bidder for the amount of P221,624.58. The Deputy Sheriff informed L & R Corporation of the payment by PWHAS of the full redemption price and advised it that it can claim the payment upon surrender of its owner’s duplicate certificates of title. The spouses Litonjua presented for registration the Certificate of Redemption issued in their favor to the Register of Deeds of Quezon City. The Certificate also informed L & R Corporation of the fact of redemption and directed the latter to surrender the owner’s duplicate certificates of title within five days. On April 22, 1981, L & R Corporation wrote a letter to the Sheriff, copy furnished to the Register of Deeds, stating: (1) that the sale of the mortgaged properties to PWHAS was without its consent, in contravention of paragraphs 8 and 9 of their Deed of Real Estate Mortgage; and (2) that it was not the spouses Litonjua, but PWHAS, who was seeking to redeem the foreclosed properties, when under Articles 1236 and 1237 of the New Civil Code, the latter had no legal personality or capacity to redeem the same. On the other hand, the spouses Litonjua asked the Register of Deeds to annotate their Certificate of Redemption as an adverse claim on the titles of the subject properties on account of the refusal of L & R Corporation to surrender the owner’s duplicate copies of the titles to the subject properties. With the refusal of the Register of Deeds to annotate their Certificate of Redemption, the Litonjua spouses filed a Petition on July 17, 1981 against L & R Corporation for the surrender of the owner’s duplicate of Transfer Certificates of Title No. 197232 and 197233 before the then CFI. While the said case was pending, L & R Corporation executed an Affidavit of Consolidation of Ownership. The Register of Deeds cancelled Transfer Certificates of Title No. 197232 and 197233 and in lieu thereof, issued Transfer Certificates of Title No. 280054 and 28055 in favor of L & R Corporation, free of any lien or encumbrance. A complaint for Quieting of Title, Annulment of Title and Damages with preliminary injunction was filed by the spouses Litonjua and PWHAS against herein respondents before the then CFI. ISSUE: Whether or not the Court of Appeals erred in its decision. RULING: In the case at bar, PWHAS cannot claim ignorance of the right of first refusal granted to L & R Corporation over the subject properties since the Deed of Real Estate Mortgage containing such a provision was duly registered with the Register of Deeds. As such, PWHAS is presumed to have been notified thereof by registration, which equates to notice to the whole world. Thus, the Decision appealed from was AFFIRMED with the following MODIFICATIONS. MUTUALITY OF CONTRACT JOSEFA VS. ZHANDONG TRADING CORPORATION 417 SCRA 269 G.R. NO. 150903 DECEMBER 8, 2003 FACTS: Respondent Zhandong delivered to petitioner Josefa, who was introduced to it as a client by Mr. Tan, the total volume of 313 crates of boards valued at P4,558,100.00 payable within 60 days from delivery. Instead of paying respondent, however, petitioner remitted his payments to Tan who in turn delivered various checks to respondent, who accepted them upon Tan’s assurance that said checks came from petitioner. When a number of the checks bounced, Tan issued his own checks and those of his mother, but Tan later stopped payments. Respondent demanded payment from Tan and petitioner but was ignored; hence he filed the instant complaint. In his answer petitioner averred that he had already paid all his obligations to respondent through Tan. Furthermore, he claimed he is not privy to the agreements between Tan and respondent, and hence, in case his payments were not remitted to respondent, then it was not his (petitioner) fault and that respondent should bear the consequences. ISSUE: Whether or not petitioner is liable for payment of the boards to respondent when he did not negotiate the transaction with it, rather through Tan as intermediary. RULING: No. The transaction was negotiated between Tan and petitioner who only received the goods delivered by respondent. Petitioner was not privy to the arrangement between Tan and respondent. Petitioner has fully paid for the goods to Tan with whom he had arranged the transaction. There was an offer of other real property by petitioner. SFMPI issued a Deed of Sale and Certificate of Perpetual. Lot Owners cannot contract other contractors for the construction of the said buildings and memorial. a complaint for grave abuse of authority was filed by Atty. 255 SCRA 48 ERMITANO VS. When there is no privity of contract.Contracts take effect only between the parties. “Ng Sheung Ngor. CA. as well as the government. According to the Rules (Rule 69) Mausoleum building and memorials should be constructed by the Park Personnel. Thus. no cause of action arises. The construction shall be under the close supervision of the Park Superintendent. Cebu City. N. there is likewise no obligation or liability and thus. P-05-1973. Teresita Dio agreed to buy. Regalado are the sheriffs in Branches 9 and 16. their successors in interest. respectively. 169578 November 30. that she was planning to build a mausoleum on her lot and sought the approval thereof. otherwise. 5. Equitable PCI Bank. should not be made liable for the failure of Tan to deliver the payment to respondent. and Hongkong and Shanghai Bank Corporation (HSBC). PRINCIPLE OF EQUALITY / CONTRACTS OF ADHESION 1.A. she would be impelled to file the necessary action/s against SFMPI and Tantoco. Respondents Antonio A. the amount of P100. doing business under the name and style ‘Ken Marketing. without the knowledge and intervention of SFMPI. G. Bellones and Generoso B. The plans and specifications were approved.00.000. demanded that she be allowed to construct the mausoleum within 10 days.. EPCIB cannot immediately pay by way of Manager’s Check so it exercised its option to choose and offered its real properties. being not privy to the transaction between Tan and respondent. certified bank check or any other mode of payment acceptable to the judgment obligee. a memorial lot from the St. HSBC and PNB. Petitioner. PCI VS.. Therefore. With the exercise of the option.TECSON PAL VS. She averred that she was not aware of Rule 69 of the SFMPI Rules and Regulations. Dio. Sheriff Regalado should have ceased serving notices of garnishment and discontinued their implementation.A.000. Branch 16. it exercised its option because it cannot immediately pay the full amount stated in the writ of execution and all lawful fees in cash.00 as construction cost . Mildred F. CEB-26983 before the Regional Trial Court (RTC). Dio filed a Complaint for Injunction with Damages against SFMPI and Tantoco before the RTC. 2. The mortal remains of Dio’s husband. N. of the RTC of Cebu City.’ Ken Appliance Division. 1972. as long as it is in accordance with the park standards. This is not true in the instant case. 1972. 2006 509 SCRA 453 FACTS: On December 11. Inc.R. For garnishing accounts maintained by Equitable PCI Bank. but Tantoco insisted that the mausoleum be built by it or its agents at a minimum cost of P100. INC. (SFMPI) in Lucena City.000. Sheriff Regalado violated EPCIB’s right to choose which property may be levied upon to be sold at auction for the satisfaction of the judgment debt. ST. The total amount excluded certain specific designs in the approved plan which if included would cost Dio much more. Ferdinand Memorial Park. Inc.FERDINAND MEMORIAL PILTEL VS. NG SHEUNG NGOR DIO VS. on installment basis. Plaintiffs. In the case at bar. CA. through counsel. and assigns. 4. 3. it is clear that when EPCIB offered its real properties. allegedly in violation of Section 9(b) of Rule 39 of the Rules of Court. Bellones and Generoso B. the lot owner is free to give their own design for the mausoleum to be constructed. March 18. and Benjamin Go.. entitled. Inc. PRINCIPLE OF EQUALITY / CONTRACTS OF ADHESION TERESITA DIO vs. 1973. however. In October 1986. 306 SCRA 218 PCI VS NG SHUENG NGOR A. Aimee Yu and Ben Apas. through its president and controlling stockholder. FERDINAND MEMORIALPARK. No.M. She obliged herself to abide by all such rules and regulations governing the SFMPI dated May 25. Yusi against Sheriffs Antonio A. respondent should recover the payment from Tan. Defendants” for Annulment and/or Reformation of Documents and Contracts. (EPCIB) at Citibank. additions and modifications that may later be adopted. Sheriff Regalado was adamant in his posture even if real properties have been offered which were sufficient to satisfy the judgment debt. Paulino L. Dio informed SFMPI. 2005 FACTS: Complainant EPCIB is the defendant in Civil Case No. Tantoco. including all amendments. ISSUE: Did respondents violate the Rules of Court? RULING: By serving notices of garnishment on Citibank. Regalado. The purchase was evidenced by a Pre-Need Purchase Agreement. The ownership of Dio over the property was made subject to the rules and regulations of SFMPI. ST. father and daughter were interred in the lot at her own expense. vs. No. Dio showed to Tantoco the plans and project specifications accomplished by her private contractor at an estimated cost of P60. heirs.00 as provided in Rule 69 of the Rules and Regulations the SFMPI issued on May 25. Subscriber hereby expressly waives any other venues. respondent had no sufficient opportunity to read and go over the terms and conditions embodied in the agreements. contracts of adhesion are not prohibited even as the courts remain careful in scrutinizing the factual circumstances underlying each case to determine the respective claims of contending parties on their efficacy. On appeal. If. respondent filed with the Regional Trial Court a complaint against petitioner for a “Sum of Money and Damages. Respondent continued. wherein one party imposes a readymade form of contract on the other. May 7. Nevertheless. ISSUE: Whether or not the Court of Appeals erred in affirming the orders of the trial court. the literal meaning of its stipulations must be held controlling. which applications were each approved and covered. a contract of adhesion. Further. to acquire in the pursuit of his business subsequent subscriptions and remained a subscriber of petitioner for quite sometime. Petitioner filed a petition for certiorari before the Court of Appeals. DELFINO TECSON G. after trial. Thus. The rule instead is that. PRINCIPLE OF EQUALITY / CONTRACTS OF ADHESION PILIPINO TELEPHONE CORPORATION vs. plaintiff testified that she informed the defendants of her intention to construct a mausoleum. ISSUE: Whether or not petitioner had knowledge of Rule 69 of SFMPI Rules and Regulations for memorial works in the mausoleum areas of the park when the Pre-Need Purchase Agreement and the Deed of Sale was executed and whether the said rule is valid and binding upon petitioner. struck down such contracts as being assailable when the weaker party is left with no choice by the dominant bargaining party and is thus completely deprived of an opportunity to bargain effectively. RULING: The contract herein involved is a contract of adhesion. Tecson applied for 6 cellular phone subscriptions with petitioner Pilipino Telephone Corporation (PILTEL). citing a common provision in the mobiline service agreements to the effect that . On 05 April 2001. When she signed the contract with the defendants. in her Complaint and during the trial. The trial court rendered judgment in favor of defendants. denied petitioner’s motion to dismiss and required it to file an answer within 15 days from receipt thereof. 2004 in the telecommunications business. informed the defendants of her plan to construct and erect a mausoleum. Branch 4. on occasion. informed the Court during the trial in this case that her mother. by six mobiline service agreements. It is true that this Court has.” The Regional Trial Court of Iligan City. respectively. a company engaged PRINCIPLE OF EQUALITY / CONTRACTS OF ADHESION . Delfino C. The Court of Appeals saw no merit in the petition and affirmed the assailed orders of the trial court. the plaintiff herein. the stipulations are not obscure. is not strictly against the law. Contrary to petitioner’s contention.“Venue of all suits arising from this Agreement or any other suit directly or indirectly arising from the relationship between PILTEL and subscriber shall be in the proper courts of Makati. She prayed that. RULING: Plaintiff’s allegation that she was not aware of the said Rules and Regulations lacks credence. in fact. This act of the plaintiff clearly shows that she was fully aware of the said rules and regulations otherwise she should not consult. In the case at bar. But such an agreement is not per se inefficacious.R. should there be ambiguities in a contract of adhesion. but are clear and leave no doubt on the intention of the parties. judgment be rendered in her favor. Even counsel for the plaintiff. such ambiguities are to be construed against the party that prepared it. No. the reason being that the party who adheres to the contract is free to reject it entirely. the petition was granted by the Court and the decision of the Court of Appeals is reversed and set aside. the CA affirmed the decision of the trial court. respondent secured 6 subscription contracts for cellular phones on various dates. Admittedly. A contract of adhesion is just as binding as ordinary contracts. The court issued a cease and desist order against defendants. was DISMISSED without prejudice to the filing of an appropriate complaint by respondent against petitioner with the court of proper venue. FACTS: On various dates in 1996. The Civil Case pending before the Regional Trial Court of Iligan City. the petition was denied.” Petitioner moved for the dismissal of the complaint on the ground of improper venue. It would be difficult to assume that. however. inform and seek permission from the defendants of her intention to build a mausoleum if she is not barred by the rules and regulations to do the same. Metro Manila. Hence. who is the son of the plaintiff. not every contract of adhesion is an invalid agreement.of the mausoleum was unconscionable and oppressive. during each of those times. granting a final injunction perpetually restraining defendants from enforcing the invalid Rule 69 of SFMPI’s “Rules for Memorial Work in the Mausoleum of the Park” or from refusing or preventing the construction of any improvement upon her property in the park. Lanao del Norte. she was estopped to question and attack the legality of said contract later on. 156966. A contract of adhesion is as binding as ordinary contracts. in finding that the provisions of the air waybill should be strictly construed against petitioner. That same night she informed. On September 25. On August 9. and transportation charges paid by plaintiff to defendant company. Manuelita stated that she “shall not be responsible for any and all charges incurred [through the use of the lost card] After August 29. according to petitioner.S. De Songco. But their claim was referred from one employee to another then told to come back the next day. Manuelita received a billing statement dated October 20. Demands both oral and written were made by plaintiff against the defendant for the reimbursement of the value of the damaged microwave oven. Among the items inside the bag was her BECC credit card. COURT OF APPEALS G. vs.50. Luis stressed that the contract BECC was referring to was a contract of adhesion and warned that if BECC insisted on charging him and his wife for the unauthorized purchases. They often exceeded this credit limit without protest from BCC. U. Manuelita. No. Metro Manila.R. Paco. Instead she was advised by defendant's employee at San Francisco. a (1) of the Air Waybill which provides: "(a) the person entitled to delivery must make a complaint to the carrier in writing in case: (1) of visible damage to the goods. Calasanz. But these demands fell on deaf ears.A. P607. 1996 255 SCRA 48 FACTS: On January 27. 1989. 000. Respondent appellate court approved said findings of the trial court in this manner: “We cannot agree with defendant-appellant's above contention. Mejia shipped thru defendant. if she was given a chance to negotiate on the conditions for loading her microwave oven. U. 1990. However. pointed to Luis the following stipulation in their contract: In his reply dated July 18.. 0-79-1013008-3.PHILIPPINE AIRLINES VS.S. COURT OF APPEALS 306 SCRA 218 FACTS: Petitioner Luis Ermitaño applied for a credit card from private respondent BPI Express Card Corp. 1986 with his wife. Philippines. Philippines.1989 which required her to immediately pay the total amount of P3. 1989. by telephone. 1990. In her letter. 1989. Vda. moral and exemplary damages as well as attorney’s fees. Philippine Airlines. its provisions should be strictly construed against herein petitioner. (BECC) on October 8. 1990. and the next day.70 covering the same (unauthorized) purchases.00 with defendant. or even if she had. In the earlier case of Angeles v. of said article in Manila. Gilda C. The latter rendered a decision rendering PAL liable to pay.350. the charges included amounts for purchases were made. Manuelita wrote again BECC disclaiming responsibility for those charges. plaintiff Gilda C. Inc.” PRINCIPLE OF EQUALITY / CONTRACTS OF ADHESION ERMITAÑO VS. actual. one amounting to P2. More particularly.000. . they consulted a lawyer who demanded from defendant on August 13. the Supreme Court ruled that the terms of a contract of adhesion must be interpreted against the party who drafted the same. the court below stated its findings thus: “In this case. when Luis received his monthly billing statement from BECC dated September 20. The spouses were given credit limit of P10. to Manila. immediately after discovery of the damage and at the latest within 14 days from the receipt of the goods. She also surrendered Luis’ credit card and requested for replacement cards. The call was received by BECC offices through a certain Gina Banzon.1989.197. ISSUE: Whether or not the respondent court erred in affirming the conclusions of the trial court that since the air waybill is a contract of adhesion. they will sue BECC continued to bill the spouses for said purchases.A.. in a letter dated July 13. RULING: The Supreme Court affirmed the appealed decision. the Air Waybill is a contract of adhesion considering that all the provisions thereof are prepared and drafted only by the carrier. When they got tired and frustrated of coming without a settlement of their claim in sight.05 and the other. et al. 1990”. that there is no need to declare the value of her oven since it is not brand new. with costs against petitioner. 119706 March 14. On appeal. the Court of Appeals similarly ruled in favor of private respondent by affirming in full the trial court's judgment. The trial court relied on the ruling in the case of Fieldmen's Insurance Co. Under our jurisprudence. Mejia filed an action for damages against the petitioner in the lower court. however. Further. plaintiff testified that she immediately submitted a formal claim for P30. as extension card holder. one (1) unit microwave oven under PAL Air Waybill No. it is seriously doubted whether plaintiff had read the printed conditions at the back of the Air Waybill. The only participation left of the other party is to affix his signature thereto. However. with a gross weight of 33 kilograms from San Francisco. Manuelita’s bag was snatched from her as she was shopping at the greenbelt mall in Makati. This is because. which were made after she had served BECC with notice of loss of her card. was filed out of time under paragraph 12. Upon arrival. until she was referred to a certain Atty. 1990. BECC of the loss. BECC.00. plaintiff discovered that its front glass door was broken and the damage rendered it unserviceable. This was followed by a letter dated August 30. (b) it is not liable to pay the Value-Added Tax for Project 1. PROJECT 3. As found by the CIAC.77 which is ordered to be paid to the Titan with 12% interest per annum commencing from 19 December 1992 until the date of payment. CA TAN VS.364.591. Thus. so-called because its terms are prepared by only one party while the other party merely affixes his signature signifying his adhesion thereto. vs. PROJECT 2.000. This project was completed in the latter part of October 1992 and turned over to Uniwide. payable in monthly progress billings to be certified to by Uniwide’s representative. 229 SCRA 60. On Project 3 – Kalookan: Uniwide is held liable for the unpaid balance in the amount of P5. TITAN-IKEDA HEIRS OF SALASVS. 126619 December 20. because unlike that case.00 of this amount. The first agreement was a written “Construction Contract” entered into by Titan and Uniwide sometime in May 1991 whereby Titan undertook to construct Uniwide’s Warehouse Club and Administration Building in Libis. She immediately notified BECC of loss of her card on the same day it was lost and. TITAN-IKEDA CONSTRUCTIONAND DEVELOPMENT CORPORATION G. Construction was allegedly to be on the basis of drawings and specifications provided by Uniwide’s structural engineers. The project was completed and turned over to Uniwide in June 1993.77 inclusive of Titan’s 20% mark-up. UNIWIDE VS. Uniwide is held liable for the unpaid balance in the amount of P6. The parties proceeded on the basis of a cost estimate of P21. No.000. Project 2 – Edsa Central: Uniwide is absolved of any liability for VAT payment on this project. petitioners have no chance at all to contest the stipulations appearing in the credit card application that was drafted entirely by private respondent. 2. 4. a clear contract of adhesion. the following day. the cardholder. Uniwide asserted in its petition that: (a) it overpaid Titan for unauthorized additional works in Project 1 and Project 3. we note that the contract between the parties in this case is indeed a contract of adhesion. which states the liability for purchases made after a card is lost or stolen shall be for the account of the cardholder until after notice of the lost or theft has been given to BECC and after the latter has informed its member establishments. In this case. Clearly. has complied with what was required of her under the contract with BECC. the building was eventually finished on 15 February 1992 and turned over to Uniwide.000. is void for being contrary to public policy and for being dependent upon the sole will of the debtor. In a written “Construction Contract.R. Manuelita. 3.63 which is ordered to be paid to Titan with 12% interest per . Such contracts are not void in themselves. PROJECT 1. ISSUE: Whether or not the Court of Appeals gravely erred in relying on the case of Serra v. Titan and Uniwide entered into the second agreement whereby the former agreed to construct an additional floor and to renovate the latter’s warehouse located at the EDSA Central Market Area in Mandaluyong City. LAPERAL MEDRANO VS. The parties executed the third agreement in May 1992. The trial court ruled that the latter portion of the condition in the parties’ contract. GULLAS UNIWIDE SALES REALTY AND RESOURCES CORPORATION. There was no written contract executed between the parties for this project.301. Court of appeals. Manuelita was being liable for those purchases. Parties who enter in to such contracts are free to reject the stipulations entirely. even if there is no showing that Manuelita herself had signed for said purchases. and after notice by her concerning her card’s loss was already given to BECC.50. the same being for the account of Titan.936.075. Sometime in July 1992.” Titan undertook to construct the Uniwide Sales Department Store Building in Kalookan City for the price of P118. 2006 511 SCRA 335 The decision: On Project 1 – Libis: Uniwide is absolved of any liability for the claims made by [Titan] on this Project. what happened in this case was that BECC failed to notify promptly the establishment in which the unauthorized purchases were made with the use of Manuelita’s lost card. (c) it is entitled to liquidated damages for the delay incurred in constructing Project 1 and Project 3. Titan conceded in its complaint to having received P15. NON-BINDING TO THIRD PARTIES 1. and (d) it should not have been found liable for deficiencies in the defectively constructed Project 2.158.000. On the other hand.FACTS: The trial court only opined that the only purpose for the suspension of the spouses’ credit privileges was to compel them to pay for the unauthorized purchases. thus. RULING: At the outset. The parties stipulated that the building shall be completed not later than 30 November 1991. Quezon City for a fee of P120.301.075. she sent a written notice of the loss to BECC. Titan is absolved of any liability on the counterclaim for defective construction of this project. It was stipulated that the project shall be completed not later than 28 February 1993. They are as binding as ordinary contracts.00 payable in progress billings to be certified to by Uniwide’s representative. Batangas spanning 1. who had then been missing for more than seven (7) years. 1996. RULING: The petition is DENIED and the Decision of the Court of Appeals was AFFIRMED. On May 15. February 18. But only they. supervision and management of the sale of his land. Jr. the assignor.484. NON-BINDING TO THIRD PARTIES HEIRS OF AUGUSTO L. would in effect result in multiplicity of suits. 1998. 1988. has the right to compel petitioners to first arbitrate before seeking judicial relief. in such amount as may be computed by the Bureau of Internal Revenue to be paid directly thereto. ISSUE: Whether or not the decision rendered is correct. 1996. Spouses Abrajano and Lava and respondent Dacillo filed a Joint Answer with Counterclaim and Crossclaim praying for dismissal of petitioners’ Complaint for the same reason. duplicitous procedure and unnecessary delay. Jr. 1311 of the New Civil Code which provides that “contracts take effect only between the parties. On the other hand. the trial court’s decision was nullified and set aside. Salas.. the assignee. BORBON. If respondent Laperal Realty. and respondent Laperal Realty are certainly bound by the Agreement. SALAS. Jr. 1999 FACTS: Salas. their assigns and heirs”. or to hold trial in abeyance pending arbitration between petitioners and respondent Laperal Realty. respondents Rockway Real Estate Corporation. 1987. 1991. Maharami Development Corporation. 150678. reconveyance. As such. spouses Abrajano. vs. LAPERAL REALTY CORPORATION G. Salas.’s land and sell the same. They are. Eduardo Vacuna. NON-BINDING TO THIRD PARTIES BIENVENIDO R. Laperal Realty filed a Motion to Dismiss on the ground that petitioners failed to submit their grievance to arbitration as required under Article VI of the Agreement. binds the parties thereto. No. left his home in the morning for a business trip to Nueva Ecija. making the former. Meantime. buyers of the land that respondent Laperal Realty was given the authority to develop and sell under the Agreement. ISSUE: Whether or not the trial court erred in dismissing the complaint. South Ridge Village. Florante de la Cruz and Jesus Vicente Capellan are not assignees of the rights of respondent Laperal Realty under the Agreement to develop Salas. respondent Laperal Realty subdivided the land of Salas. and to respondents Eduardo Vacuna. Said court was ordered to proceed with the hearing. they are not “assigns” contemplated in Art. as a contracting party to the Agreement. Teresita Diaz Salas filed with the Regional Trial Court a verified petition for the declaration of presumptive death of her husband.. However. He never returned. petitioners as heirs of Salas. NO. the Agreement. to respondent spouses Abrajano and Lava and Oscar Dacillo on June 27.annum commencing from 08 September 1993 until the date of payment.On August 6. JOSEFINA E. Jr. accounting and damages against herein respondents. Inc. for cash or on installment basis. 1990. Hence.354 square meters. ANTONIO and ESTELA A. Jr. It was granted on December 12. to split the proceedings into arbitration for respondent Laperal Realty and trial for the respondent lot buyers. The trial court issued an Order dismissing petitioners’ Complaint for noncompliance with the arbitration clause. such assignee would also be bound by the arbitration provision since assignment involves such transfer of rights as to vest in the assignee the power to enforce them to the same extent as the assignor could have enforced them against the debtor or in this case. Oscar Dacillo. MEDRANO and IBAAN RURAL BANK vs.. on February 22. Salas. Laperal Realty.R. JR. containing the stipulation on arbitration. Petitioners. and sold subdivided portions thereof to respondents Rockway Real Estate Corporation and South Ridge Village. Florante de la Cruz and Jesus Vicente Capalan on June 4. as heirs of Salas. he entered into an OwnerContractor Agreement with respondent Laperal Realty Corporation to render and provide complete (horizontal) construction services on his land. On June 10. was the registered owner of a vast tract of land in Lipa City. 1989. Jr. it would be in the interest of justice if the trial court hears the complaint against all herein respondents and adjudicates petitioners’ rights as against theirs in a single and complete proceeding. On September 23. against the heirs of the original party to the Agreement. The BIR is hereby notified that Uniwide Sales Realty and Resources Corporation has assumed responsibility and is held liable for VAT payment on this project. Jr. spouses Lava. FLOR G. However. 2005 . PACITA G. Jr. and the latter. December 13. On February 3. This accordingly exempts Claimant Titan-Ikeda Construction and Development Corporation from this obligation. had assigned its rights under the Agreement to a third party. cancellation of contract. Inc. 135362. filed in the Regional Trial Court a Complaint for declaration of nullity of sale. rather. Uniwide is held liable to pay in full the VAT on this project. 1996. CA. executed a Special Power of Attorney in favor of respondent Laperal Realty to exercise general control. RULING: A submission to arbitration is a contract.R. As such. as well as their assigns and heirs. 114 sq.200. The petitioners refused to pay and offered a measly sum of P5. The trial court rendered a Decision in favor of the respondents. She told Flor to confer with Medrano and to give them a written authority to negotiate the sale of the property.200. The power of attorney was non-exclusive and effective for one month from June 29. a businessman from Makati City. (hereafter. December 3. As such. petitioners went to see private respondent Eduardo Gullas to claim their commission. represented by its President/General Manager Teresa M. Private respondents agreed to sell the property to the Sisters of Mary. It was the first time that the buyers came to know that private respondent Eduardo Gullas was the owner of the property. construction manager of the Sisters of Mary of Banneaux. Thus. they are entitled to the broker’s commission of 5% of the selling price of P1. Estela Flor.00 per square meter. the respondents were constrained to file an action against herein petitioners. Medrano asked Mrs. He is. NON-BINDING TO THIRD PARTIES MANUEL B. found the same suitable for their purpose and expressed their desire to buy it. Thereafter. The sale was consummated. petitioner Tan visited the property with Engineer Ledesma. 1992. Medrano signed the said letter for and in behalf of the bank. Borbon relayed to her business associates and friends that she had a ready buyer for a mango orchard. Since the sale of the property was consummated. the Register of Deeds of issued TCT No. EDUARDO R. No. the two men accompanied Sisters Michaela Kim and Azucena Gaviola.R. Hence. promising to pay the respondents a 5% commission for their efforts in looking for a purchaser of the property. Lee would not have known about the mango plantation being sold by the petitioners. On June 29. a licensed real estate broker. 143978. a licensed real estate broker. Gullas and Norma S. in evident bad faith. and his associates Gregg M. they requested that the selling price be reduced to P530. In 1986. Private respondents refused to pay the broker’s fee and alleged that another group of agents was responsible for the sale of land to the Sisters of Mary. represented by Dominador Lee (as Vendee). Mr. Inc. GULLAS G. and subsequently executed a special power of attorney in favor of Eufemia Cañete.00.412.00.00 per square meter instead of P550. a bank owned by the Medrano family. petitioner Tan contacted Engineer Ledesma. with Transfer Certificate of Title No. or at the rate of P200.00 as evidenced by the deed of sale.800. giving her the special authority to sell.000.. m. a religious organization interested in acquiring a property.00 per square meter. 1992. 2002 FACTS: Spouses Eduardo R. Tecson and Alexander Saldaña.655. On appeal. Private respondent Eduardo Gullas referred the prospective buyers to his wife. On 1. and as owner of the property. TAN. malice and in order to evade payment of broker’s fee.60. Attorney-in-fact Cañete executed a deed of sale in favor of the Sisters of Mary for the price of P20. Earlier. GULLAS and NORMA S.00 per square meter. Pacita G. Inc. 1992. Sisters of Mary). transfer and convey the land at a fixed price of P200. Tan. The buyers subsequently paid the corresponding taxes. but that their efforts in consummating the sale were frustrated by the private respondents who. Gullas. but the latter told them that he and his wife have already agreed to sell the property to the Sisters of Mary. the CA affirmed the trial court’s decision. Medrano was the Vice-Chairman of Ibaan Rural Bank.00 per square meter. On the same date.FACTS: Bienvenido R. Antonio.000. dealt directly with the buyer .000. they executed a special power of attorney authorizing petitioners Manuel B. as well as moral and exemplary damages and attorney’s fees. It found that the letter of authority was valid and binding as against Medrano and the Ibaan Rural bank. A Deed of Sale was eventually executed between the bank. TECSON and ALEXANDER SALDAÑA.00 each. a cousin-in-law. Hence. therefore. Borbon. for the purchase price of P1. or 5% of the purchase price. 75981 in the name of the Sisters of Mary of Banneaux. to negotiate for the sale of the land at P550. at a commission of 3% of the gross price. on July 3. Mr. However. 1992.200. Ganzon (as Vendor) and KGB Farms.. Flor then advised her that her cousin-in-law owned a mango plantation which was up for sale. GREGG M. was a client of respondent Mrs. ISSUE: Whether or not the Court of Appeals erred in affirming the trial court’s decision. Inc. They alleged that they were the efficient procuring cause in bringing about the sale of the property to the Sisters of Mary. who had seen and inspected the land. to look for a buyer of a foreclosed asset of the bank. If not for the respondents. a 17-hectare mango plantation priced at P2. RULING: There can be no other conclusion than the respondents are indeed the procuring cause of the sale. Medrano issued the Letter of Authority in favor of Pacita G.000.822. representing the Sisters of Mary. The bank had profited from such transaction. Dominador Lee. Borbon and Josefina E. the Court of Appeal’s decision is affirmed. Thereafter. 31465. estopped from denying liability on the basis of the letter of authority he issued in favor of the respondents. petitioners filed a complaint against the defendants for recovery of their broker’s fee in the sum of P1. vs. The trial court further stated that the sale of the property could not have been possible without the representation and intervention of the respondents.00. were the registered owners of a parcel of land measuring 104. the respondents asked from the petitioners their commission. It would certainly be iniquitous if the respondents would not be rewarded their commission pursuant to the letter of authority. he did print campaign materials. Eduardo and Norma Gullas were ordered to pay jointly and severally plaintiffs Manuel Tan. who had been paid his commission. private respondents countered that. The Court of Appeals reversed and set aside the lower court’s decision and rendered another judgment dismissing the complaint. owned by his daughter Jennifer Gozun and mother Epifania Macalino Gozun. P446. “An agent receives a commission upon the successful conclusion of a sale. but only to ask for the reimbursement of their cellular phone expenses. CC) . Upon respondent’s request. respondent’s sister-in-law. they were not the efficient procuring cause in bringing about the consummation of the sale because another broker. MERCADO G. In their answer. respondent vied for the gubernatorial post in Pampanga. respondent’s wife had told him that respondent already approved his price quotation and that he could start printing the campaign materials. Despite repeated demands and respondent’s promise to pay. At the very least. the “cash advance” obtained by Lilian. Court of Appeals and Bayerische Motoren Werke Aktiengesellschaft (BMW) the SC ruled that.900 for St. On the other hand. even if no sale is eventually made. contrary to petitioners’ claim. the lower court rendered judgment in favor of petitioners.000 allegedly for the allowances of poll watchers who were attending a seminar and for other related expenses. respondent failed to settle the balance of his account to petitioner. petitioner. RULING: Petitioner is the real party in interest in this case. therefore. owner of JMG Publishing House. By petitioner’s claim. 1992.000. respectively. No. impleaded as plaintiffs. 1995. Joseph Printing Press. JOSE TEOFILO T. On March 31.906 itemized as follows: P640.000 to petitioner who issued a receipt therefor. Respondent’s wife partially paid P1. Gregg Tecson and Alexander Saldaña the sum of P624. There was no dispute as to the role that petitioners played in the transaction.684. ISSUE: Whether or not the Court of Appeals erred in reversing the trial courts’ decision. Private respondents maintained that when petitioners introduced the buyers to private respondent Eduardo Gullas.000. In the case of Alfred Hahn v. The trial court rendered judgment in favor of the petitioner. documentary stamps and other internal revenue taxes. petitioner availed of the services and facilities of Metro Angeles Printing and of St. ENFORCEABILITY JESUS M. The trial court’s findings on the matter were affirmed by the appellate court. Roberto Pacana. introduced the property to the Sisters of Mary ahead of the petitioners. RULING: It is readily apparent that private respondents are trying to evade payment of the commission which rightfully belongs to petitioners as brokers with respect to the sale. reversed the trial court’s decision and dismissed the complaint for lack of cause of action. a broker earns his pay merely by bringing the buyer and the seller together. RELATIVITY: PRIVITY: EXCEPTIONS (Art. It erred.R. petitioners. 1311.177. the former were already decided in buying the property through Pacana. but were not. however.177. submitted to respondent draft samples and price quotation of campaign materials. and P253. After trial. Joseph Printing Press.00 as broker’s fee with legal interest at the rate of 6% per annum from the date of filing of the complaint. The CA however. Lilian Soriano obtained from petitioner “cash advance” of P253. should be entitled to the commission whether or not the sale of the property subject matter of the contract was concluded through their efforts. They were not able to participate in its consummation only because they were prevented from doing so by the acts of the private respondents. and the sum of P50. ISSUE: Whether or not the Court of Appeals erred in dismissing the complaint.” Clearly.000. as brokers. Given the urgency and limited time to do the job order. GOZUN vs.906 plus “inflationary adjustment” and attorney’s fees. P837. Lilian acknowledged on petitioner’s 1995 diary receipt of the amount. hence. upon the wrong notion that they should have been. Private respondent Eduardo Gullas admitted that petitioners were in his office on July 3. Petitioner delivered the campaign materials to respondent’s headquarters. 167812 December 19.00 as attorney’s fees and costs of litigation. Petitioner later sent respondent a Statement of Account in the total amount of P2.310 for JMG Publishing House.696 for Metro Angeles Printing. Petitioner thus filed with the RTC a complaint against respondent to collect the remaining amount of P1. They further pointed out that the deed of sale was undervalued obviously to evade payment of the correct amount of capital gains tax. petitioners set the sale in motion. in not declaring petitioner as a real party in interest insofar as recovery of the cost of campaign materials made by petitioner’s mother and sister are concerned. 2006 FACTS: In the local elections of 1995. a printing shop.whom petitioners introduced to them. however. Under Article 1311 of the Civil Code. In a Decision dated February 21.·JR 2003 Apr 30 G. or the prevention or redress of a wrong. it was only between petitioners and Moreman.. Inc. 1985. Hence. INC. the case should also be dismissed for utter lack of merit. contracts are binding upon the parties (and their assigns and heirs) who execute them. and (2) that there were construction materials in petitioners’ warehouse at the time of respondent’s demand to return the same. Unfortunately. petitioners or respondent or any of their authorized representatives. Moreman failed to finish the construction of the hotel at the stipulated time.000. in an action against the depositary. respondents 1999 Jul 22 FACTS: Petitioners are residents of Barangay Cruz-na-Ligas. THE QUEZON CITY GOVERNMENT and UNIVERSITY OF THE PHILIPPINES. every cause of action ex-contractu must be founded upon a contract. Respondent purchased various construction materials and equipment in Manila. respondent filed with the then CFI an action for rescission and damages against Moreman. the burden is on the plaintiff to prove the bailment or deposit and the performance of conditions precedent to the right of action. 1976. they are unsigned and not duly received or authenticated by either Moreman. petitioners. JAIME BENITO. A depositary is obliged to return the thing to the depositor. the Court denied the petition. respondent entered into a building construction contract with Moreman Builders Co.. 1989 for being dilatory. P20. express or implied. moral and liquidated damages.00 as actual. Meanwhile. However. Moreover. herein petitioners. respondent filed with the RTC an action for damages with an application for a writ of preliminary attachment against petitioners. deposited them in the warehouse of Wilson and Lily Chan.00 representing the increase in the construction materials. in turn. respondent miserably failed to do so.. Petitioners. 1990 an Entry of Judgment was issued. is a non-stock corporation of which petitioners and other residents of Barangay Cruz-na-Ligas are members. herein respondent. the case should have been dismissed outright by the trial court because of patent procedural infirmities. told them that Moreman withdrew those construction materials in 1977. we hold that petitioners have no corresponding obligation or liability to respondent with respect to those construction materials. No.00 as attorney’s fees. Significantly. it is still incumbent upon respondent to prove its existence and that it was executed in his favor.000. nor between the latter and Moreman in his favor. and P35. BONIFACIO S. Considering that respondent failed to prove (1) the existence of any contract of deposit between him and petitioners. THE HONORABLE COURT OF APPEALS. Bonifacio S. obtained a P7. STIPULATION pour autrui TIMOTEO BALUYOT. BENIGNO EUGENIO. On April 23. 142591 402 SCRA 352 FACTS: On July 28. 1978. Inc. The deposit was free of charge. Hence. The complaint was later on amended to include private respondent Quezon City government as defendant. ISSUE: Whether or not respondent have the right to demand the release of the said materials and equipment or claim for damages. He elevated the case to this Court via a petition for review on certiorari.R. Moreman. Thereafter. MACEDA.3 million loan from the Development Bank of the Philippines for the construction of his New Gran Hotel Project in Tacloban City. Diliman. Jr. On November 28. FORTUNATO FULGENCIO and CRUZ-NA-LIGAS HOMESITE ASSOCIATION. As amended. Maceda. And granting arguendo that there was indeed a contract of deposit between petitioners and Moreman. Hence. those delivery receipts have no probative value at all. between petitioners and respondent. The Cruz-na-Ligas Homesite Association. on December 11. Even without such serious procedural flaw. Moreman interposed an appeal to the Court of Appeals but the same was dismissed on March 7. on February 1. or to the person who may have been designated in the contract. In the present case. the CFI rendered its Decision rescinding the contract between Moreman and respondent and awarding to the latter P445. If at all. 1978. WILSON CHAN and LILY CHAN VS.000. VS. They agreed that the construction would be finished not later than December 22. The only pieces of evidence respondent presented to prove the contract of deposit were the delivery receipts. Quezon City. oral or written. When there is no privity of contract. ROLANDO GONZALES. on September 29. respondent also failed to prove that there were construction materials and equipment in petitioners’ warehouse at the time he made a demand for their return. Specifically. RULING: At the outset. 1976. Petitioners filed a complaint for specific performance and damages against private respondent University of the Philippines before the RTC of Quezon City. oral or written. or to his heirs or successors. the record is bereft of any contract of deposit. there is likewise no obligation or liability to speak about and thus no cause of action arises. respondent ordered petitioners to return to him the construction materials and equipment which Moreman deposited in their warehouse.JOSEPH CHAN. during the pendency of the case. 1990. While our laws grant a person the remedial right to prosecute or institute a civil action against another for the enforcement or protection of a right. the complaint alleged: . 1977. Quezon City). that the area to be donated thru the defendant Quezon City government be subdivided into lots to be given to the qualified residents together with the certificate of titles. Krus Na Ligas. that defendant UP failed to deliver the certificate of title covering the property to be donated thus the defendant Quezon City Government was not able to register the ownership so that the defendant Quezon City Government can legally and fully comply with their obligations under the said deed of donation. petitioners were not parties to the deed of donation. Quezon City (now Diliman. the area was increased to 15. without cost. RULING: The Court found all the elements of a cause of action contained in the amended complaint of petitioners. defendant UP took exception to the aforesaid Order lifting the Order of Injunction and insisted on the dismissal of the case. that since October 1972. continuously and also in the concept of an owner. Art. (b) to order defendant UP to refrain from executing another deed of donation in favor another person or entity and in favor of non-bonafide residents of Barrio Cruz-na-Ligas different from the Deed of Donation. the following requisites must be present in order to have a stipulation pour autrui:(1) there must be a stipulation in favor of a third person. while the members of the plaintiff Association and their ascendants have possessed since time immemorial openly. by the office of the President of the Rep. (2) the stipulation must be a part.379 square meters). unilaterally. The Court of Appeals reversed the decision of the trial court. Barrio Cruz-na-Ligas. ordering defendant UP to observe status quo. of the Civil Code provides: If a contract should contain some stipulation in favor of a third person. provided. and ultimately. 16 hereof. 21 declaring the deed of donation revoked and the donated property be reverted to defendant UP. the rest of the area embraced by and within the Barrio Cruz-na-Ligas. he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. Diliman. after due notice and hearing. defendant UP backed-out from the arrangement to donate directly to the plaintiff Association for the benefit of the qualified residents and high-handedly resumed to negotiate the donation thru the defendant Quezon City Government under the terms disadvantageous or contrary to the rights of the bonafide residents of the Barrio. After several negotiations with the residents. and (5) neither of the contracting parties bears the legal representation or authorization of the third party. 1985.2 hectares of the site. and after trial on the merits. whimsically and unlawfully issued that Administrative Order No. judgment be rendered:declaring the Deed of Donation as valid and subsisting and ordering the defendant UP to abide by the terms and conditions thereof. adversely. thereafter.that upon expiration of the period of eighteen (18) months. 1311. prayed that a writ of preliminary injunction or at least a temporary restraining order be issued. that. of the Philippines. that plaintiff manifested its willingness to the dismissal of the case. defendant UP thru its President. they anchor their right to seek its enforcement upon their allegation that they are intended beneficiaries of the donation to the Quezon City government. pursuant to the said Indorsement from the Office of the President of the Rep. (4) the third person must have communicated his acceptance to the obligor before its revocation. not a mere incidental benefit or interest. that in the hearing of the Motion for Reconsideration filed by defendant UP.that plaintiffs and their ascendants are owners since memory can no longer recall of that parcel of riceland known Sitio Libis. A mere incidental benefit or interest of a person is not sufficient. in the issuance of the Indorsement of February 12. . however. for alleged non-compliance of the defendant Quezon City Government with terms and conditions quoted in par. capriciously. 1975 by the Bureau of Lands. issued that Reply Indorsement wherein it approved the donation of about 9. (a) to restrain defendant UP or to their representative from ejecting the plaintiffs from and demolishing their improvements on the riceland or farmland situated at Sitio Libis. of the Philippines confirming the rights of the bonafide residents of Barrio Cruzna-Ligas to the parcel of land they have been possessing or occupying. the claims of the plaintiffs and/or members of plaintiff Association have been the subject of quasi-judicial proceedings and administrative investigations in the different branches of the government penultimately resulting in the issuance of that Indorsement dated May 7. directly to the residents of Brgy. ISSUE: Whether or not defendant UP could execute another deed of donation in favor of third person.(3) the contracting parties must have clearly and deliberately conferred a favor upon a third person. that plaintiff Association forthwith amended its petition and prayed for a writ of preliminary injunction to restrain defendant UP from donating the area to the defendant Quezon City Government which was granted. The contracting parties must have clearly and deliberately conferred a favor upon a third person. that. The petitioners. however. plaintiff Association finally agreed to the lifting of the said Order granting the injunction after defendant UP made an assurance in their said Motion that the donation to the defendant Quezon City Government will be for the benefit of the residents of Cruz-NaLigas. Quezon City. Under this provision of the Civil Code. a writ of preliminary injunction be issued. While. Jose Abueva. admittedly. second paragraph. Mr.8 hectares (158. then. that defendant UP. not the whole of the contract. and Petitioners obtained a loan in the amount of P1. FACTS: 4. as donee. plus interest until fully paid.000. implying that the donation had been accepted by petitioners by demanding fulfillment thereof and that private respondents were aware of such acceptance.000. and secured by a Real Estate Mortgage over a parcel of land with improvements thereon situated in Cubao. Subsequently.00. that the deed of donation contains a stipulation that the Quezon City government. each of the private respondents had its own obligations. 1993. The amended complaint further alleges that respondent UP has an obligation to transfer the subject parcel of land to the city government so that the latter can in turn comply with its obligations to make improvements on the land and thereafter transfer the same to petitioners but that. P25.500. Respondents contend. 168736 April 19. It is evident that the trial court’s ruling on this question was only Petitioners made payments amounting to P291.700.00 was secured by the real estate mortgage at 18% per annum and that there was no agreement that the same will be compounded monthly. inclusive of the 18% interest compounded monthly.967. SPOUSES RENATO CUYCO and FILIPINA CUYCO G. and in case of default of such payment and upon proper motion. and (5) P250. upon which petitioners rely.84. (3) P500. 3. but failed to settle their outstanding loan obligations. as donor.The allegations in the following paragraphs of the amended complaint are sufficient to bring petitioners’ action within the purview of the second paragraph of Art. Paragraph 17. The CA partially granted the petition and modified the RTC decision insofar as the amount of the loan obligations secured by the real estate mortgage. 1997.00 on October 29.000. No. CUYCO vs.00 as attorney’s fees. Petitioners filed a motion to dismiss on the ground that the complaint states no cause of action which was denied by the RTC for lack of merit.332. by way of donations.019. The same paragraph. It is hardly necessary to state that our conclusion that petitioners’ complaint states a cause of action against respondents is in no wise a ruling on the merits. Petitioners admitted their loan obligations but argued that only the original loan of P1. (2) P150. All the allegations considered together from which it can be fairly inferred that neither of private respondents acted in representation of the other.000. that the trial court has already found that the donation (on which petitioners base their action) has already been revoked. It held that by express intention of the parties.000. broken down as follows: (1) P150. 1992.241. is required to transfer to qualified residents of Cruz-na-Ligas.500. UP failed to deliver the title to the land to the city government and then revoked the deed of donation after the latter failed to fulfill its obligations within the time allowed in the contract. and costs of suit. their indebtedness amounted to P6. So assuming the truth of the allegations. the property shall be ordered sold at public auction to satisfy the judgment.00. as donee.00 on September 5.000. The trial court’s ruling on this point was made in connection with petitioners’ application for a writ of preliminary injunction to stop respondent UP from ejecting petitioners.00 on January 13. without prejudice to the final resolution of the question after the presentation by the parties of their evidence.000. Paragraph 19.250.00 on May 30.000. within a period of 120 days from the entry of judgment. has been validly revoked.14. the lots occupied by them. That is for the trial court to determine in light of respondent UP’s defense that the donation to the Quezon City government. The decision of the Court of Appeals is reversed and the case is remanded to the RTC of Quezon City for trial on the merits. For the purpose of determining the sufficiency of petitioners’ cause of action.000. This contention has no merit. that as of August 31. we hold that petitioners have a cause of action against UP. these allegations of the amended complaint must be deemed to be hypothetically true. 1992. Paragraphs 15 and 16. The trial court denied injunction on the ground that the donation had already been revoked and therefore petitioners had no clear legal right to be protected. the real estate mortgage secured the original . CUYCO and FELICIANO U. Quezon City covered by a TCT. Respondents filed a complaint for foreclosure of mortgage with the RTC. that the intent of the parties to the deed of donation was to confer a favor upon petitioners by transferring to the latter the lots occupied by them. They alleged that petitioners’ loans were secured by the real estate mortgage. 5. in breach of this obligation.R. in view of conferring a favor upon petitioners. upon the Quezon City government. petitioners obtained additional loans from the respondents in the aggregate amount of P1. tentative. CONTRACTS CREATING REAL RIGHTS SPOUSES ADELINA S. and that petitioners’ refusal to settle the same entitles the respondents to foreclose the real estate mortgage. 1992. that this stipulation is part of conditions and obligations imposed by UP.00 from respondents payable within one year at 18% interest per annum. The RTC rendered judgment in favor of the respondents and ordered the petitioners to pay to the Court or to the respondents the amounts of P6. 2006 2. (4) P200. however. 1992.00 on July 1. that conferences were held between the parties to convince UP to surrender the certificates of title to the city government. 1311 on stipulations pour autrui: 1. The rent increase was later on reduced to 20% effective January 1. within a period of not less than 90 days nor more than 120 days from the entry of judgment. 1992 and September 5. occupied the warehouse for his own textile business. Tek Hua used the areas to store its textiles. 930. On March 4. Such interest is not due to stipulation but due to the mandate of the law as embodied in Article 2212 of the Civil Code. DCCSI acceded to petitioner’s request. respectively.00. Hence. CA.500. as long as unpaid..00 and P500. including Manuel C.. It ordered petitioners to pay the respondents (1) the total amount due. 1997) x 12% x no. managing partner of Tek Hua Trading. the appellate tribunal held that the parties never intended the same to be secured by the real estate mortgage. . Soler Street. They provided that should the lessee continue to occupy the premises after the term. SO VS. Enclosed in these letters were new lease contracts for signing. he had been occupying the premises for his textile business and religiously paid rent.00 obtained on July 1. formed Tek Hua Enterprising Corp. of years from due date until finality of judgment Interest on interest = Interest computed as of the filing of the complaint (September 10. 924-B and 924-C. the SC affirmed the CA decision with modifications. 1992.000. 1992. ISSUE: Whether or not petitioners must pay respondents legal interest of 12% per annum on the stipulated interest of 18% per annum. v. the SC derived the following formula for the RTCs guidance: TOTAL AMOUNT DUE = [principal + interest + interest on interest] .P1. (2) the legal interest of 12% per annum on the total amount due from such finality until fully paid. As regards the loans obtained on May 31.Tiong. petitioner So Ping Bun. Court of Appeals. Subjects of four (4) lease contracts were premises located at Nos. 1992. 1989. The lease contracts in favor of Trendsetter were executed. TAYAG VS. petitioner requested formal contracts of lease with DCCSI in favor Trendsetter Marketing. 25 MARCH 2004 SO PING BUN VS. private respondent Tiong sent a letter to petitioner asking Mr. upon other lessees’ demand. entered into lease agreements with lessor Dee C. DCCSI warned that failure of the lessee to accomplish the contracts shall be deemed as lack of interest on the lessee’s part. computed from the filing of the complaint until fully paid.Int. informing the latter of the 25% increase in rent effective September 1. When the contracts expired. lessor DCCSI sent letters addressed to Tek Hua enterprises. 1997 until finality of the Court’s Decision. Still. 21. So Ping Bun to vacate the premise because he used a warehouse. was dissolved. So Pek Giok. the lessor implemented a 30% rent increase.partial payments made Interest = principal x 18 % per annum x no. In accordance with the rules laid down in Eastern Shipping Lines. ISSUE: Whether the appellate court erred in affirming the trial court’s decision finding So Ping Bun guilty of tortuous interference of contact. 1993 in the amounts of P150. the computed interest from the filing of the complaint on September 10.00 as attorney’s fees.000. the principal amount of loans subject of the real estate mortgage must earn the stipulated interest of 18% per annum. this petition. also earns legal interest of 12% per annum. Again on December 1. the original members of Tek Hua Trading Co. but Tek Hua continued to occupy the premises in 1976 Tek Hua Trading Corp. Chuan and Sons Inc (DCCSI).00 loan and the subsequent loans of P150. Tek Hua Trading Co. herein respondent corporation. of years until finality of judgment Total amount due as of the date of finality of judgment will earn an interest of 12% per annum until fully paid. October 29. 1990. Private respondents did not answer any of these letters. TORTIOUS INTERFERENCE 1. which interest. 1999 2. SEPT. (3) the reasonable amount of P25.00.000. Inc. and in case of default of such payment the property shall be sold at public auction to satisfy the judgment. 1997 would no longer be true upon the finality of this Court’s decision. So Pek Giok. CA. Hence.. 1991. So Pek Giok’s grandson.000.. the total amount due shall earn interest of 12% per annum until satisfied Certainly. The contracts each had a one year term. On August 1. died in 1986. 1989. as computed by the RTC in accordance with the formula specified above. and agreement to the termination of the lese.000. computed from the date of the filing of the complaint on September 10. respectively. COURT OF APPEALS 314 SCRA 751 FACTS: In 1963. Trendsetter Marketing.00 and P250. through its managing partner. So Ping Bun claimed that after the death of his grandfather. 930. and (4) the costs of suit. On March 1. So Pek Giok. 1990. Manila. RULING: Applying the rules in the computation of interest. the lease shall be on a month to month basis. From such date of finality. 1992 and January 13. Later. the lease contracts were not rescinded.000. the parties did not renew the contracts. P200. Binondo. Petitioner refused to vacate.000. RULING: In the instant case, it is clear that petitioner So Ping Bun prevailed upon DCCSI to lease the warehouse to his enterprise at the expense of respondent corporation. Though petitioner took interest in the property of respondent corporation and benefited from it, nothing on record imputes deliberate wrongful motives or malice on him. of the conditions of the deed. Contained in the deed were stipulations regarding the payment and settlement of the purchase price of the land. The respondent however did not strictly comply this with. Despite the posterior payments however, petitioners accepted them. Respondent, on the contention that he fulfilled his obligation to pay filed this case for specific performance by the petitioners. A duty which the law of torts is concerned with is respect for the property of others, and cause of action ex delicto may be predicated upon an unlawful interference by one person of the enjoyment by the other of his private property. This may pertain to a situation where a third person induces a party to renege on or violate his undertaking under a contract. In the case before us, petitioner’s Trendsetter Marketing asked DCCSI to execute lease contracts in its favor, and as a result petitioner deprived respondent corporation of the latter’s property right. Clearly, and as correctly viewed by the appellate court, the three elements of tort interference above mentioned are present in the instant case. The court of origin which tried the suit for specific performance on account of the herein petitioner’s reluctance to abide by the covenant, ruled in favor of the vendee while respondent court practically agreed with the trial court except as to the amount to be paid to petitioners and the refund to private respondent are concerned. ISSUE: The issue is whether or not petitioners’ prayer for the rescission of the deed can prosper. RULING: The Supreme Court affirmed the decision of the lower courts. Authorities debate on whether interference may be justified where the defendant acts for the sole purpose of furthering his own financial or economic interest. One view is that, as a general rule, justification for interfering with the business relations of another exist where the actor’s motive is to benefit himself. Such justification does not exist where his sole motive is to cause harm to the other. Added to this, some authorities believe that it is not necessary that the interferer’s interest outweigh that of the party whose rights are invaded, and that an individual acts under an economic interest that is substantial, not merely I de minimis for he acts in self protection. Moreover, justification for protecting ones financial position should not be made to depend on a comparison of his economic interest in the subject matter with that of others. It is sufficient if the impetus of his conduct lies in a proper business interest rather than in wrongful motives. As early as Gilchrist vs. Cuddy we held that where there was no malice in the interference of a contract, and the impulse behind one’s conduct lies in a proper business interest rather than in wrongful motives, a party cannot be a malicious interferer. Where the alleged interferer is financially interested and such interest motivates his conduct it cannot be said that he is an officious or malicious intermeddler. TORTIOUS INTERFERENCE TAYAG VS. COURT OF APPEALS 219 SCRA 481 FACTS: Petitioners are the heirs of Juan Galicia, Sr. who are seeking to rescind the deed of conveyance executed by Galicia, Sr. together with Celerina Labuguin, in favor of Albrigido Leyva, respondent involving the undivided one-half portion of a piece of land situated at Poblacion, Guimba, Nueva Ecija. They contend that respondent is in breach The suggestion of petitioners that the covenant must be cancelled in the light of private respondent’s so-called breach seems to overlook petitioners’ demeanor who, instead of immediately filing the case precisely to rescind the instrument because of non-compliance, allowed private respondent to effect numerous payments posterior to the grace periods provided in the contract. This apathy of petitioners, who even permitted private respondent to take the initiative in filing the suit for specific performance against them, is akin to waiver of abandonment of the right to rescind. STAGES IN THE EXECUTION OF A CONTRACT – CONSUMMATION/TERMINATION METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner, VS. JANCOM ENVIRONMENTAL CORPORATION and JANCOM INTERNATIONAL DEVELOPMENT PROJECTS PTY. LIMITED OF AUSTRALIA, respondents January 30, 2002 G.R. No. 147465 FACTS: The Philippine Government under the Ramos Administration, and through the Metro Manila Development Authority (MMDA) Chairman, and the Cabinet Officer for Regional Development-National Capital Region (CORD-NCR), entered into a contract with herein respondent JANCOM, on waste-to-energy projects for the waste disposal sites in San Mateo, Rizal and Carmona, Cavite under the build-operate-transfer (BOT) scheme. However, before President Ramos could have signed the said contract, there was a change in the Administration and EXECOM. Said change caused the passage of the law, the Clean Air Act, prohibiting the incineration of garbage and thus, against the contents of said contract. The Philippine Government, through the MMDA Chairman, declared said contract inexistent for several reasons. Herein respondent filed a suit against petitioner. The Regional Trial Court ruled in favor of the respondent. Instead of filing an appeal to the decision, petitioner filed a writ of certiorari on the Court of Appeals, which the latter granted. The Regional Trial Court declared its decision final and executory, for which the petitioner appealed to the CA, which the CA denied such appeal and affirming RTC’s decision. ISSUE: Whether or not a valid contract is existing between herein petitioner and respondent. RULING: Under Article 1305 of the Civil Code, “a contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.” A contract undergoes three distinct stages - preparation or negotiation, its perfection, and finally, its consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. The perfection or birth of the contract takes place when the parties agree upon the essential elements of the contract. The last stage is the consummation of the contract wherein the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof. Article 1315 of the Civil Code, provides that a contract is perfected by mere consent. Consent, on the other hand, is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. In the case at bar, the signing and execution of the contract by the parties clearly show that, as between the parties, there was a concurrence of offer and acceptance with respect to the material details of the contract, thereby giving rise to the perfection of the contract. The execution and signing of the contract is not disputed by the parties. As the Court of Appeals aptly held: Contrary to petitioners’ insistence that there was no perfected contract, the meeting of the offer and acceptance upon the thing and the cause, which are to constitute the contract (Arts. 1315 and 1319, New Civil Code), is borne out by the records. Admittedly, when petitioners accepted private respondents’ bid proposal (offer), there was, in effect, a meeting of the minds upon the object (waste management project) and the cause (BOT scheme). Hence, the perfection of the contract. In City of Cebu vs. Heirs of Candido Rubi, the Supreme Court held that “the effect of an unqualified acceptance of the offer or proposal of the bidder is to perfect a contract, upon notice of the award to the bidder. In fact, in asserting that there is no valid and binding contract between the parties, MMDA can only allege that there was no valid notice of award; that the contract does not bear the signature of the President of the Philippines; and that the conditions precedent specified in the contract were not complied with. In asserting that the notice of award to JANCOM is not a proper notice of award, MMDA points to the Implementing Rules and Regulations of Republic Act No. 6957, otherwise known as the BOT Law, which require that i) prior to the notice of award, an Investment Coordinating Committee clearance must first be obtained; and ii) the notice of award indicate the time within which the awardee shall submit the prescribed performance security, proof of commitment of equity contributions and indications of financing resources. Admittedly, the notice of award has not complied with these requirements. However, the defect was cured by the subsequent execution of the contract entered into and signed by authorized representatives of the parties; hence, it may not be gainsaid that there is a perfected contract existing between the parties giving to them certain rights and obligations (conditions precedents) in accordance with the terms and conditions thereof. We borrow the words of the Court of Appeals: Petitioners belabor the point that there was no valid notice of award as to constitute acceptance of private respondent’s offer. They maintain that former MMDA Chairman Oreta’s letter to JANCOM EC dated February 27, 1997 cannot be considered as a valid notice of award as it does not comply with the rules implementing Rep. Act No. 6957, as amended. The argument is untenable. ELEMENTS OF CONSENT: OFFER AND ACCEPTANCE 1. 2. 3. 4. 5. 6. ROCKLAND VS. MID-PASIG LAND DEVELOPMENT MANILA METAL VS. PNB MONTECILLO VS. REYNES, 385 SCRA 244 SOLER VS. CA, 358 SCRA 57 PALATTAO VS. CA, MAY 7, 2002 ABS-CBN VS. CA, JAN. 21, 1999 ROCKLAND CONSTRUCTION COMPANY, INC vs. MID-PASIG LAND DEVELOPMENT CORPORATION G.R. No. 164587, February 04, 2008 Rockland Construction Company, Inc. in a letter dated March 1, 2000, offered to lease from Mid-Pasig Land Development Corporation the latter’s 3.1-hectare property in Pasig City. This property is covered by Transfer Certificate of Title Nos. 469702 and 337158 under the control of the Presidential Commission on Good Government. Upon instruction of Mid-Pasig to address the offer to the PCGG, Rockland wrote the PCGG on April 15, 2000. The letter, addressed to PCGG Chairman Magdangal Elma, included Rockland’ proposed terms and conditions for the lease. This letter was also received by Mid-Pasig on April 18, 2000, but Mid-Pasig made no response. Again, in another letter dated June 8, 2000 addressed to the Chairman of MidPasig, Mr. Ronaldo Salonga, Rockland sent a Metropolitan Bank and Trust Company Check No. 2930050168 for P1 million as a sign of its good faith and readiness to enter into the lease agreement under the certain terms and conditions stipulated in the letter. MidPasig received this letter on July 28, 2000. In a subsequent follow-up letter dated February 2, 2001, Rockland then said that it presumed that Mid-Pasig had accepted its offer because the P1 million check it issued had been credited to Mid-Pasig’s account on December 5, 2000. Mid-Pasig, however, denied it accepted Rockland’s offer and claimed that no check was attached to the said letter. It also vehemently denied receiving the P1 million check, much less depositing it in its account. In its letter dated February 6, 2001, Mid-Pasig replied to Rockland that it was only upon receipt of the latter’s February 2 letter that the former came to know where the check came from and what it was for. Nevertheless, it categorically informed Rockland that it could not entertain the latter’s lease application. Mid-Pasig reiterated its refusal of Rockland’s offer in a letter dated February 13, 2001. Rockland then filed an action for specific performance. Rockland sought to compel Mid-Pasig to execute in Rockland’s favor, a contract of lease over a 3.1-hectare portion of Mid-Pasig’s property in Pasig City. The RTC’s decision: 1. the plaintiff and the defendant have duly agreed upon a valid and enforceable lease agreement of subject portions of defendant’s properties comprising an area of 5,000 square meters, 11,000 square meters and 15,000 square meters, or a total of 31,000 square meters; 2. the principal terms and conditions of the aforesaid lease agreement are as stated in plaintiff’s June 8, 2000 letter; 3. defendant to execute a written lease contract in favor of the plaintiff containing the principal terms and conditions mentioned in the next-preceding paragraph, within sixty (60) days from finality of this judgment, and likewise ordering the plaintiff to pay rent to the defendant as specified in said terms and conditions; 4. defendant to keep and maintain the plaintiff in the peaceful possession and enjoyment of the leased premises during the term of said contract; 5. defendant to pay plaintiff attorney’s fees in the sum of One Million Pesos (P1,000,000.00), plus P2,000.00 for every appearance made by counsel in court; 6. The temporary restraining order dated April 2, 2001 is made PERMANENT; 7. Dismissed defendant’s counterclaim. The Court of Appeals reversed the trial court’s decision. ISSUES: 1. Was there a perfected contract of lease? 2. Had estoppel in pais set in? RULING: 1. A close review of the events in this case, in the light of the parties’ evidence, shows that there was no perfected contract of lease between the parties. MidPasig was not aware that Rockland deposited the P1 million check in its account. It only learned of Rockland’s check when it received Rockland’s February 2, 2001 letter. MidPasig, upon investigation, also learned that the check was deposited at the Philippine National Bank San Juan Branch, instead of PNB Ortigas Branch where Mid-Pasig maintains its account. Immediately, Mid-Pasig wrote Rockland on February 6, 2001 rejecting the offer, and proposed that Rockland apply the P1 million to its other existing lease instead. These circumstances clearly show that there was no concurrence of Rockland’s offer and Mid-Pasig’s acceptance. 2. Mid-Pasig is also not in estoppel in pais. The doctrine of estoppel is based on the grounds of public policy, fair dealing, good faith and justice, and its purpose is to forbid one to speak against his own act, representations, or commitments to the injury of one to whom they were directed and who reasonably relied thereon. Since estoppel is based on equity and justice, it is essential that before a person can be barred from asserting a fact contrary to his act or conduct, it must be shown that such act or conduct has been intended and would unjustly cause harm to those who are misled if the principle were not applied against him. Hence, the petition was denied. ELEMENTS OF CONSENT: OFFER AND ACCEPTANCE METROPOLITAN MANILA DEVELOPMENT AUTHORITY, VS. JANCOM ENVIRONMENTAL CORPORATION G.R. No. 147465 January 30, 2002 FACTS: The Philippine Government under the Ramos Administration, and through the Metro Manila Development Authority (MMDA) Chairman, and the Cabinet Officer for Regional Development-National Capital Region (CORD-NCR), entered into a contract with respondent JANCOM, on waste-to-energy projects for the waste disposal sites in San Mateo, Rizal and Carmona, Cavite under the build-operate-transfer (BOT) scheme. However, before President Ramos could have signed the said contract, there was a change in the Administration and EXECOM. Said change caused the passage of the law, the Clean Air Act, prohibiting the incineration of garbage and thus, against the contents of said contract. The Philippine Government, through the MMDA Chairman, declared said contract inexistent for several reasons. Herein respondent filed a suit against petitioner. The Regional Trial Court ruled in favor of the respondent. Instead of filing an appeal to the decision, petitioner filed a writ of certiorari on the Court of Appeals, which the latter granted. The Regional Trial Court declared its decision final and executory, for which the petitioner appealed to the CA, which the CA denied such appeal and affirming RTC’s decision. ISSUE: Whether or not a valid contract is existing between herein petitioner and respondent. RULING: Under Article 1305 of the Civil Code, “a contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.” A contract undergoes three distinct stages- preparation or negotiation, its perfection, and finally, its consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. The perfection or birth of the contract takes place when the parties agree upon the essential elements of the contract. The last stage is the consummation of the contract wherein the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof. Article 1315 of the Civil Code, provides that a contract is perfected by mere consent. Consent, on the other hand, is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. In the case at bar, the signing and execution of the contract by the parties clearly show that, as between the parties, there was a concurrence of offer and acceptance with respect to the material details of the contract, thereby giving rise to the perfection of the contract. The execution and signing of the contract is not disputed by the parties. As the Court of Appeals aptly held: Contrary to petitioners’ insistence that there was no perfected contract, the meeting of the offer and acceptance upon the thing and the cause, which are to constitute the contract (Arts. 1315 and 1319, New Civil Code), is borne out by the records. Admittedly, when petitioners accepted private respondents’ bid proposal (offer), there was, in effect, a meeting of the minds upon the object (waste management project) and the cause (BOT scheme). Hence, the perfection of the contract. In City of Cebu vs. Heirs of Candido Rubi, the Supreme Court held that “the effect of an unqualified acceptance of the offer or proposal of the bidder is to perfect a contract, upon notice of the award to the bidder. In fact, in asserting that there is no valid and binding contract between the parties, MMDA can only allege that there was no valid notice of award; that the contract does not bear the signature of the President of the Philippines; and that the conditions precedent specified in the contract were not complied with. In asserting that the notice of award to JANCOM is not a proper notice of award, MMDA points to the Implementing Rules and Regulations of Republic Act No. 6957, otherwise known as the BOT Law, which require that i) prior to the notice of award, an Investment Coordinating Committee clearance must first be obtained; and ii) the notice of award indicate the time within which the awardee shall submit the prescribed performance security, proof of commitment of equity contributions and indications of financing resources. Admittedly, the notice of award has not complied with these requirements. However, the defect was cured by the subsequent execution of the contract entered into and signed by authorized representatives of the parties; hence, it may not be gainsaid that there is a perfected contract existing between the parties giving to them certain rights and obligations (conditions precedents) in accordance with the terms and conditions thereof. We borrow the words of the Court of Appeals: Petitioners belabor the point that there was no valid notice of award as to constitute acceptance of private respondent’s offer. They maintain that former MMDA Chairman Oreta’s letter to JANCOM EC dated February 27, 1997 cannot be considered as a valid notice of award as it does not comply with the rules implementing Rep. Act No. 6957, as amended. The argument is untenable. ELEMENTS OF CONSENT: OFFER AND ACCEPTANCE MONTECILLO VS. REYNES 385 SCRA 244 FACTS: Respondents Ignacia Reynes and spouses Abucay filed on June 20, 1984 a complaint for Declaration of Nullity and Quieting of Title against petitioner Rico Montecillo. Reynes asserted that she is the owner of a lot situated in Mabolo, Cebu City. In 1981 Reynes sold 185 square meters of the Mabolo Lot to the Abucay Spouses who built a residential house on the lot they bought. Reynes alleged further that on March 1, 1984, she signed a Deed of Sale of the Mabolo Lot in favor of Montecillo. Reynes, being illiterate signed by affixing her thumbmark on the document. Montecillo promised to pay the agreed P47,000.00 purchase price within one month from the signing of the Deed of Sale. Reynes further alleged that Montecillo failed to pay the purchase price after the lapse of the one-month period, prompting Reynes to demand from Montecillo the return of the Deed of Sale. Since Montecillo refused to return the Deed of Sale, Reynes executed a document unilaterally revoking the sale and gave a copy of the document to Montecillo. Subsequently, on May 23, 1984 Reynes signed a Deed of Sale transferring to the Abucay Spouses the entire Mabolo Lot, at the same time confirming the previous sale in 1981 of a 185 square meter portion of the lot. Reynes and the Abucay Spouses alleged that on June 18, 1984 they received information that the Register of Deeds of Cebu City issued Certificate of Title No. 90805 in the name of Montecillo for the Mabolo Lot. Reynes and the Abucay Spouses argued that “for lack for consideration there (was) no meeting of the minds) between Reynes and Montecillo. Thus, the trial court should declare null and void ab initio Monticello’s Deed of sale, and order the cancellation of certificates of title No. 90805 in the name of Montecillo. In his Answer, Montecillo a bank executive with a BS Commerce degree, claimed he was a buyer in good faith and had actually paid the P47,000.00 consideration stated on his Deed of Sale. Montecillo however admitted he still owned Reynes a balance of P10,000.00. He also alleged that he paid P50,000.00 for the release of the chattel mortgage which he argued constituted a lien on the Mabolo Lot. He further alleged that he paid for the real property tax as well as the capital gains tax on the sale of the Mabolo Lot. In their reply, Reynes and the Abucay Spouses contended that Montecillo did not have authority to discharge the chattel mortgage especially after Reynes revoked Montecillo’s Deed of Sale and gave the mortgagee a copy of the document of revocation. Reynes and the Abucay Spouses claimed that Montecillo secured the release of the chattel mortgage through machination. They further asserted that Montecillo took advantage of the real property taxes paid by the Abucay Spouses and surreptitiously caused the transfer of the title to the Mabolo Lot in his name. During pre-trial Montecillo claimed that the consideration for the sale of the Mabolo Lot was the amount he paid to Cebu Iced and Cold Storage Corporation for the mortgage debt. Of Bienvenido Jayag. Montecillo argued that the release of the mortgage was necessary since the mortgage constituted a lien on the Mabolo Lot. Reynes, however stated that she had nothing to do with Jayag’s mortgage debt except that the house mortgaged by Jayag stood on a portion of the Mabolo Lot. Reynes further stated that the payment by Montecillo to release the mortgage on Jayag’s house is a matter between Montecillo and Jayag. The mortgage on the house being a chattel mortgage could not be interpreted in any way as an encumbrance on the Mabolo Lot. Reynes further claimed that the mortgage debt had long prescribed since the P47,000.00 mortgage debt was due for payment on January 30,1967. ISSUE: Whether or not there was a valid consent in the case at bar to have a valid contract. RULING: One of the three essential requisites of a valid contract is consent of the parties on the object and cause of the contract. In a contract of sale, the parities must agree not only on the p[rice, but also on the manner of payment of the price. An agreement on the price but a disagreement on the manner of its payment will not result in consent, thus preventing the existence of a valid contract for a lack of consent. This lack of consent is separate and distinct for lack of consideration where the contract states that the price has been paid when in fact it has never been paid. Reynes expected Montecillo to pay him directly the P47, 000.00 purchase price within one month after the signing of the Deed of Sale. On the other hand, Montecillo thought that his agreement with Reynes required him to pay the P47, 000.00-purchase price to Cebu Ice Storage to settle Jayag’s mortgage debt. Montecillo also acknowledged a balance of P10, 000.00 in favor of Reynes although this amount is not stated in Montecillo’s Deed of Sale. Thus, there was no consent or meeting of the minds, between Reynes and Montecillo on the manner of payment. This prevented the existence of a valid contract because of lack of consent. In summary, Montecillo’s Deed of Sale is null and void ab initio not only for lack of consideration, but also for lack of consent. The cancellation of TCT No. 90805 in the name of Montecillo is in order as there was no valid contract transferring ownership of the Mabolo Lot from Reynes to Montecillo. ELEMENTS OF CONSENT: OFFER AND ACCEPTANCE JASMIN SOLER, petitioner, VS. COURT OF APPEALS, COMMERCIAL BANK OF MANILA, and NIDA LOPEZ, respondents May 2, 2001 G.R. No. 123892 FACTS: Petitioner is a professional interior designer. In November 1986, her friend Rosario Pardo asked her to talk to Nida Lopez, who was manager of the COMBANK Ermita Branch for they were planning to renovate the branch offices. Even prior to November 1986, petitioner and Nida Lopez knew each other because of Rosario Pardo, the latter’s sister. During their meeting, petitioner was hesitant to accept the job because of her many out of town commitments, and also considering that Ms. Lopez was asking that the designs be submitted by December 1986, which was such a short notice. Ms. Lopez insisted, however, because she really wanted petitioner to do the design for renovation. Petitioner acceded to the request. Ms. Lopez assured her that she would be compensated for her services. Petitioner even told Ms. Lopez that her professional fee was P10,000.00, to which Ms. Lopez acceded. During the November 1986 meeting between petitioner and Ms. Lopez, there were discussions as to what was to be renovated. Ms. Lopez again assured petitioner that the bank would pay her fees. After a few days, petitioner requested for the blueprint of the building so that the proper design, plans and specifications could be given to Ms. Lopez in time for the board meeting in December 1986. Petitioner then asked her draftsman Jackie Barcelon to go to the jobsite to make the proper measurements using the blue print. Petitioner also did her research on the designs and individual drawings of what the bank wanted. Petitioner hired Engineer Ortanez to make the electrical layout, architects Frison Cruz and De Mesa to do the drafting. For the services rendered by these individuals, petitioner paid their professional fees. Petitioner also contacted the suppliers of the wallpaper and the sash makers for their quotation. So come December 1986, the lay out and the design were submitted to Ms. Lopez. She even told petitioner that she liked the designs. Subsequently, petitioner repeatedly demanded payment for her services but Ms. Lopez just ignored the demands. In February 1987, by chance petitioner and Ms. Lopez saw each other in a concert at the Cultural Center of the Philippines. Petitioner inquired about the payment for her services, Ms. Lopez curtly replied that she was not entitled to it because her designs did not conform to the bank’s policy of having a standard design, and that there was no agreement between her and the bank. Petitioner, through her lawyers, who wrote Ms. Lopez, demanding payment for her professional fees in the amount of P10,000.00 which Ms. Lopez ignored. The lawyers wrote Ms. Lopez once again demanding the return of the blueprint copies petitioner submitted which Ms. Lopez refused to return. The petitioner then filed at the trial court a complaint against COMBANK and Ms. Lopez for collection of professional fees and damages. In its answer, COMBANK stated that there was no contract between COMBANK and petitioner; that Ms. Lopez merely invited petitioner to participate in a bid for the renovation of the COMBANK Ermita Branch; that any proposal was still subject to the approval of the COMBANK’s head office. The trial court rendered judgment in favor of plaintiff. On appeal, the Court of Appeals reversed the decision. Hence, this petition. ISSUE: Whether or not the Court of Appeals erred in ruling that there was no contract between petitioner and respondents, in the absence of the element of consent. RULING: A contract is a meeting of the minds between two persons whereby one binds himself to give something or to render some service to bind himself to give something to render some service to another for consideration. There is no contract unless the following requisites concur: 1. Consent of the contracting parties; 2. Object certain which is the subject matter of the contract; and 3. Cause of the obligation which is established. In the case at bar, there was a perfected oral contract. When Ms. Lopez and petitioner met in November 1986, and discussed the details of the work, the first stage of the contract commenced. When they agreed to the payment of the P10,000.00 as professional fees of petitioner and that she should give the designs before the December 1986 board meeting of the bank, the second stage of the contract proceeded, and when finally petitioner gave the designs to Ms. Lopez, the contract was consummated. Petitioner believed that once she submitted the designs she would be paid her professional fees. Ms. Lopez assured petitioner that she would be paid. It is familiar doctrine that if a corporation knowingly permits one of its officers, or any other agent, to act within the scope of an apparent authority, it holds him out to the public as possessing the power to do those acts; and thus, the corporation will, as against anyone who has in good faith dealt with it through such agent, be estopped from denying the agent’s authority. Also, petitioner may be paid on the basis of quantum meruit. "It is essential for the proper operation of the principle that there is an acceptance of the benefits by one sought to be charged for the services rendered under circumstances as reasonably to notify him that the lawyer performing the task was expecting to be paid compensation therefor. The doctrine of quantum meruit is a device to prevent undue enrichment based on the equitable postulate that it is unjust for a person to retain benefit without paying for it." The designs petitioner submitted to Ms. Lopez were not returned. Ms. Lopez, an officer of the bank as branch manager used such designs for presentation to the board of the bank. Thus, the designs were in fact useful to Ms. Lopez for she did not appear to the board without any designs at the time of the deadline set by the board. Decision reversed and set aside. Decision of the trial court affirmed. ELEMENTS OF CONSENT: OFFER AND ACCEPTANCE PALATTAO VS. COURT OF APPEALS 381 SCRA 681 MAY 7, 2002 FACTS: Petitioner Yolanda Palattao interred into a lease contract whereby she leased to private respondent a house and a 490-square-meter lot located in 101 Caimito Road, Caloocan City, covered by Transfer Certificate of Title No. 247536 and registered in the name of petitioner. The duration of the lease contract was for three years, commencing from January 1, 1991, to December 31, 1993, renewable at the option of the parties. The agreed monthly rental was P7,500.00 for the first year; P 8,000.00 for the second year: and P8,500.l00 for the third year. The contract gave respondent lessee the first option to purchase the leased property. During the last year of the contract, the parties began negotiations for the sale of the leased premises to private respondent. In a letter dated April 2, 1993, petitioner offered to sell to private respondents 413.28 square meters of the leased lot at P 7,800.00 per square meter, or for the total amount of P3,223,548.00. private respondents replied on April 15, 1993 wherein he informed petitioner that he “shall definitely exercise his option to buy” the leased property. Private respondent, however, manifested his desire to buy the whole 490-square meters inquired from petitioner the reason why only 413.28 square meters of the leased lot were being offered for sale. In a letter dated November 6, 1993, petitioner made a final offer to sell the lot at P 7,500.00 per square meter with a down payment of 50% upon the signing of the contract of conditional sale, the balance payable in one year with a monthly lease/interest payment P 14,000.00 which must be paid on or before the fifth day every month that the balance is still outstanding. On November 7, 1993, private respondents accepted petitioners offer and reiterated his request for respondent accepted petitioner’s offers and reiterated his request for clarification as to the size of the lot for sale. Petitioner acknowledged private respondent’s acceptance of the offer in his letter dated November 10, 1993. Petitioner gave private respondent on or before November 24, 1993, within which to pay the 50% downpayment in cash or manager’s check. Petitioner stressed that failure to pay the downpayment on the stipulated period will enable petitioner to freely sell her property to others. Petitioner likewise notified private respondent, that she is no longer renewing the lease agreement upon its expiration on December 31, 1993. Whether or not there was a valid consent in the case at bar. RULING: There was no valid consent in the case at bar. Contracts that are consensual in nature, like a contract of sale, are perfected upon mere meeting of the minds. Once there is concurrence between the offer and the acceptance upon the subject matter, consideration, and terns of payment, a contract is produced. The offer must be certain. To convert the offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional, and without variance of any sort from the proposal. A qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and is a rejection of the original offer. Consequently, when something is desired which is not exactly is proposed in the offer, such acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer annuals the offer. In the case at bar, while it is true that private respondent informed petitioner that he is accepting the latter’s offer to sell the leased property, it appears that they did not reach an agreement as to the extent of the lot subject of the proposed sale. Private respondent did not accept the terms proposed by petitioner. Neither were there any documents of sale nor payment by private respondent of the required downpayment. Private respondent wrote a letter to petitioner on November 29, 1993 manifesting his intention to exercise his option to renew their lease contract for another three years, starting January 1, 1994 to December 31, 1996. This was rejected by petitioner, reiterating that she was no longer renewing the lease. Petitioner demanded that private respondent vacate the premises, but the latter refused. Letters reveal that private respondent did not give his consent to buy only 413.28 square meters of the leased lot, as he desired to purchase the whole 490 square-meterleased premises which, however, was not what was exactly proposed in petitioner’s offer. Clearly, therefore, private respondent’s acceptance of petitioner’s offer was not absolute, and will consequently not generate consent that would perfect a contract. Hence, private respondent filed with the Regional Trial Court of Caloocan, Branch 127, a case for specified performance, docketed as Civil Case No, 16287, seeking to compel petitioner to sell to him the leased property. Private respondent further prayed for the issuance of a writ preliminary injunction to prevent petitioner from filing an ejectment case upon the expiration of the lease contract on December 31, 1993. ELEMENTS OF CONSENT: OFFER AND ACCEPTANCE During the proceedings in the specific performance case, the parties agreed to maintain the status quo. After they failed to reach an amicable settlement, petitioner filed the instant ejectment case before the Metropolitan Trial Court of Caloocan City, Branch 53. In his answer, private respondent alleged that he refused to vacate the leased premises because there was a perfected contract of sale of the leased property between him and petitioner. Private respondent argued that he did not abandon his option to buy the leased property and that his proposal to renew the lease was but an alternative proposal to the sale. He further contended that the filing of the ejectment case violated their agreement to maintain the status quo. ISSUE: ABS-CBN BROADCASTING CORPORATION VS. HONORABLE COURT OF APPEALS, REPUBLIC BROADCASTING CORP., VIVA PRODUCTIONS, INC., and VICENTE DEL ROSARIO G.R. No. 128690 January 21, 1999 301 SCRA 573 FACTS: In 1990, ABS-CBN and VIVA executed a Film Exhibition Agreement whereby Viva gave ABS-CBN an exclusive right to exhibit some Viva films. Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-president Charo Santos-Concio, a list of three (3) film packages (36 title) from which ABS-CBN may exercise its right of first refusal under the afore-said agreement. ABS-CBN, however through Mrs. Concio, "can tick off only ten (10) titles" (from the list) "we can purchase" and therefore did not accept said But ABS-CBN. the RTC issued a temporary restraining order. proposing to sell to ABS-CBN airing rights over this package of 52 originals and 52 reruns for P60. Concio are not the subject of the case at bar except the film "Maging Sino Ka Man. unconditional. ABS-CBN made no acceptance of VIVA’s offer hence. this decision. WHEREFORE. This counter-proposal could be nothing less than the counter-offer of Mr. On the following day. or generation. On the other hand. consideration. after the rejection of the same package by ABS-CBN. with a list consisting of 52 original movie titles (i. Concio which contains a counter-proposal of ABS-CBN on the offer made by VIVA including the right of first refusal to 1992 Viva Films. unequivocal. such acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer annuls the offer. conception.000. not yet aired on television) including the 14 titles subject of the present case. or one that involves a new proposal. Eugenio Lopez III. and insisted that what he and Lopez discussed at the lunch meeting was Viva’s film package offer of 104 films (52 originals and 52 re-runs) for a total price of P60 million. sent through Ms. defendant Del Rosario and ABS-CBN’s general manager. the acceptance did not bind VIVA. there was no acceptance of VIVA’s offer. rejected such counter-offer. . Del Rosario allegedly agreed that ABS-CBN was granted exclusive film rights to fourteen (14) films for a total consideration of P36 million. Once there is concurrence between the offer and the acceptance upon the subject matter. which is established. Del Rosario and Mr. constitutes a counter-offer and is a rejection of the original offer. and cause of the obligation. as well as 104 re-runs (previously aired on television) from which ABS-CBN may choose another 52 titles. 1992. the same decision was affirmed.000. ABS-CBN filed before the RTC a complaint for specific performance with a prayer for a writ of preliminary injunction and/or temporary restraining order against private respondents Republic Broadcasting System (now GMA Network Inc. granting RBS the exclusive right to air 104 Viva-produced and/or acquired films including the fourteen (14) films subject of the present case.00 of which P30. the instant petition is GRANTED. Furthermore. On April 2. counter-proposal in the form a draft contract proposing exhibition of 53 films for a consideration of P35 million. Clearly. Lopez during his conference with Del Rosario at Tamarind Grill Restaurant. RULING: A contract is a meeting of minds between two persons whereby one binds himself to give something or render some service to another [Art. they underwent period of bargaining. after the rejection of ABS-CBN and following several negotiations and meetings defendant Del Rosario and Viva’s President Teresita Cruz. denied the existence of a napkin in which Lopez wrote something. 1992. On April 29. Mr. Civil Code. Graciano Gozon of RBS Senior vicepresident for Finance discussed the terms and conditions of Viva’s offer to sell the 104 films. Even if it be conceded arguendo that Del Rosario had accepted the counter-offer. 1992. Consequently. 1992. Concio. A qualified acceptance." On February 27. To convert the offer into a contract. Del Rosario of Viva met Mr. the acceptance must be absolute and must not qualify the terms of the offer. which is the fulfillment or performance of the terms agreed upon in the contract. Hence. it must be plain. and (c) consummation or death. which is the moment when the parties come to agree on the terms of the contract. that he allegedly put this agreement as to the price and number of films in a "napkin" and signed it and gave it to Mr. Del Rosario. object certain which is the subject of the contract. Del Rosario denied having made any agreement with Lopez regarding the 14 Viva films. On appeal.e. and without variance of any sort from the proposal..000. 1305.000. said package of 104 VIVA films was VIVA’s offer to ABS-CBN to enter into a new Film Exhibition Agreement. ABS-CBN then formalized its counter-proposals or counter-offer in a draft contract. [Art. Concio. for it was met by a counter-offer which substantially varied the terms of the offer. 1318. signed a letter of agreement dated April 24. defendant Del Rosario approached ABS-CBN’s Ms.] for a consideration. On 27 May 1992. Civil Code. The RTC then rendered decision in favor of RBS and against ABS-CBN. Lopez testified that he and Mr. Del Rosario received a draft contract from Ms. when Mr. as a total of 156 titles. VIVA through its Board of Directors. in consideration of P60 million.000. the proposal was rejected by the Board of Directors of VIVA and such was relayed to Ms. 1992.) On 28 May 1992. Lopez of ABS-CBN at the Tamarind Grill on 2 April 1992 to discuss the package of films. and terms of payment a contract is produced.00 will be in cash and P30. However. On April 06. Contracts that are consensual in nature are perfected upon mere meeting of the minds. The offer must be certain. when something is desired which is not exactly what is proposed in the offer. In the present case. as there was no proof whatsoever that Del Rosario had the specific authority to do so. which is the period of negotiation and bargaining rending at the moment of agreement of the parties. Concio.000. (b) perfection or birth of the contract.] A contract undergoes three stages: (a) preparation. The titles ticked off by Mrs. There is no contract unless the following requisites concur: (1) (2) (3) consent of the contracting parties.list. ISSUE: Whether or not there exists a perfected contract between ABS-CBN and VIVA. met at the Tamarind Grill Restaurant in Quezon City to discuss the package proposal of VIVA.00 worth of television spots. she agreed to but the property at the price of P34. however. Petitioner was asked to pay the balance of the purchase price to enable the respondent spouses to settle their obligation with the Ramoses. CA CATALAN vs. that TCT No. through their agent Marcosa Sanchez. the respondent spouses and the Ramoses did not appear. Feliciano married Corazon Cerezo. It is also sometimes called an “unaccepted offer”. offered to sell to petitioner Lourdes Ong Limson a parcel of land situated in Barrio San Dionisio. 1978. 1978. 1948. The respondent spouses were the owners of the subject property. The Deed of Sale between respondent spouses and respondent Sunvar was executed on September 15. 00 per square meter and gave P20. R. Metro Manila. 1978. respondent spouses Lorenzo de Vera and Asuncion Santos-de Vera. S-72946 covering the property was issued to respondent spouses. On the East by heirs of . Bounded on the North by heirs of Felipe Basa. COURT of APPEALS. Binmaley. Respondent spouses and Sunvar filed their Answers and Answers to Cross-Claim. Respondent spouses informed petitioner that the subject property was mortgaged to Emilio Ramos and Isidro Ramos. 1949. titled “Absolute Deed of Donation. MARIA VS. Hence. An option is not of itself a purchase. or under. the agent of the respondent spouses informed petitioner that the property was the subject of a negotiation for the sale to respondent Sunvar Realty Development Corporation. On September 5. this petition. 2. 4. BASA JULY 31. CATALAN VS. Hence. 6. On June 16. CA MENDOZONA VS. S-72377 was issued in favor of Sunvar on September 26. viz: A parcel of land located at Barangay Basing. certain terms and conditions. 1978. 2001 357 SCRA 209 FACTS: In July 1978. Its distinguishing characteristic is that it imposes no binding obligation on the person holding the option. OZAMIZ LIM VS. catatonic type. 1978.” On September 28. On August 23. to consummate the transaction.Whether or not the agreement between petitioner and respondent spouses was a mere option or a contract to sell. the assailed decision is affirmed. CA DELA CRUZ VS. 3. 000. 5. respectively.” wherein Feliciano allegedly donated to his sister MERCEDES CATALAN one-half of the real property described. REQUISITES OF OFFER AS DISTINGUISHED FROM OPTION LOURDES ONG LIMSON VS. with the modification that the award of nominal and exemplary damages as well as attorney’s fees is deleted. 1978 and TCT No. preoccupation with worries. The petition is denied. and sparse and pointless speech. petitioner allegedly gave respondent spouses three checks for the settlement the back taxes of property. BASA DOMINGO VS. On the same day. a document was executed. or in compliance with. Petitioner alleged that it was only on September 15. the Court of Appeals completely reversed the decision of the trial court and ordered the Register of Deeds of Makati City to lift the Adverse Claim and ordered petitioner to pay respondent Sunvar and respondent spouses exemplary and nominal damages and attorney’s fees. or which gives the owner of the property the right to sell or demand a sale. CA RURAL BANK OF STA. No. Pangasinan. On July 31. et al G. same with their second meeting. 2007 FACTS: On October 20. on the South by Barrio Road. withdrawal. An option is continuing offer or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a time certain. 7. 1978 with the Adverse Claim of petitioner annotated thereon. aside from the consideration for the offer. 135929 April 20. which incapacitates him because of flattening of mood and affect. Metro Manila. 1951. CA RUIZ VS. Petitioner agreed to meet respondent spouses and the Ramoses on August 5. FELICIANO CATALAN Feliciano was discharged from active military service. but merely secures the privilege to buy. The Board of Medical Officers of the Department of Veteran Affairs found that he was unfit to render military service due to his “schizophrenic reaction.00 as “earnest money”. ISSUE: RULING: The Supreme Court held that the agreement between the parties was a contract of option and not a contract to sell. On appeal. It is not a sale of property but a sale of the right to purchase. The respondent spouses signed a receipt thereafter and gave her a 10-day option period to purchase the property. petitioner filed and Affidavit of Adverse Claim with the Office of the Registry of Deeds of Makati. VICES OF CONSENT 1. Paranaque. to their son Eulogio Catalan. Recovery of Possession and Ownership. BPI alleged that the Deed of Absolute Donation to Mercedes was void ab initio. Thus. Librada Catalan and Zenaida Catalan. Needless to state. Competency and freedom from undue influence. there being no merit in the arguments of the petitioners. BPI raised doubts about the authenticity of the deed of sale. acting as Feliciano’s guardian. the subsequent Deed of Absolute Sale to Delia and Jesus Basa should likewise be nullified. petitioners raised the issue of prescription and laches for the first time on appeal before this Court. Thus. 127540. the donation would still be void. On December 11. the petition is DENIED. the presumption of due execution of the donation in question must be upheld. The Deed of Absolute Sale was registered with the Register of Deeds and a Tax Declaration was issued in the name of respondents. As her nearest surviving kin within the fifth degree of consanguinity. as well as damages against the herein respondents. 1953. 1953. In addition. more or less. Mercedes sold the property in issue in favor of her children Delia and Jesus Basa. the alleged deed of absolute sale was void for being spurious as well as lacking consideration. they inherited the three lots and the permanent improvements thereon when Paulina died. Containing an area of Eight Hundred One (801) square meters. On December 22. 18920 to Eulogio and Florida Catalan. The trial court found that the evidence presented by the complainants was insufficient to overcome the presumption that Feliciano was sane and competent at the time he executed the deed of donation in favor of Mercedes Catalan. In 1966. It is sufficient for this Court to note that even if the present appeal had prospered. despite his illness. the trial court issued its Order for Adjudication of Incompetency for Appointing Guardian for the Estate and Fixing Allowance of Feliciano. It is of little bearing that the Deed of Sale was registered only after the death of Mercedes. They said that Paulina Rigonan did not sell her properties to anyone. VICES OF CONSENT DOMINGO V. What is material is that the sale of the property to Delia and Jesus Basa was legal and binding at the time of its execution. the trial court appointed People’s Bank and Trust Company as Feliciano’s guardian. as Feliciano never donated the property to Mercedes. According to defendants. are presumed to continue until the contrary is shown. People’s Bank and Trust Company has been subsequently renamed. On August 14. filed a case for Declaration of Nullity of Documents. Feliciano and Corazon Cerezo donated Lots 1 and 3 of their property. 18920 to their children Alex Catalan.Segundo Catalan. Not a shred of evidence has been presented to prove the claim that Mercedes’ sale of the property to her children was tainted with fraud or falsehood. contract. and is presently known as the Bank of the Philippine Islands (BPI). since the donation was valid. the spouses Felipe and Concepcion Rigonan. October 17. People’s Bank and Trust Company filed a Special Proceedings before the Court of First Instance to declare Feliciano incompetent. 1997. Feliciano passed away. and on the West by Roman Basa. the presumption of sanity or competency not having been duly impugned. yet did not see fit to question his mental competence when he entered into a contract of marriage with Corazon Cerezo or when he executed deeds of donation of his other properties in their favor. ISSUE: Whether said decision of the lower courts is correct. it remained binding as it was not annulled in a proper action in court within four years. The original complaint was amended to substitute his heirs in lieu of BPI as complainants in Civil Case No. The presumption that Feliciano remained competent to execute contracts. No. The following day. force and intimidation. On November 22. shown to have existed in the other acts done or contracts executed. not a void. BPI averred that even if Feliciano had truly intended to give the property to her. 17666. 18920. registered under Original Certificate of Title (OCT) No. is bolstered by the existence of these other contracts. Thus. the Deed of Donation was still a voidable. Feliciano and Corazon Cerezo donated Lot 4 (Plan Psu-215956) of the same OCT No. Thus. As such. for Mercedes Catalan had no right to sell the property to anyone. BPI sought remuneration for incurred damages and litigation expenses. ISSUE: . The CA decision was affirmed in toto. COURT OF APPEALS G.R. the court declared. 1978. 1983. it claimed that if the Deed of Absolute Donation was void ab initio. The Court of Appeals upheld the trial court’s decision. RULING: Petitioners questioned Feliciano’s capacity at the time he donated the property. IN VIEW WHEREOF. 2001 FACTS: Paulina Rigonan owned three parcels of land including the house and warehouse on one parcel. as he was not of sound mind and was therefore incapable of giving valid consent. They said they had been in possession of the contested properties for more than 10 years. The donation was registered with the Register of Deeds. who claim to be her relatives. saying that its registration long after the death of Mercedes Catalan indicated fraud. She allegedly sold them to private respondents. BPI. On February 14. allegedly took possession of the properties by means of stealth. and refused to vacate the same. petitioners who claim to be her closest surviving relatives. the property in question belongs to Delia and Jesus Basa. Feliciano and Corazon Cerezo donated Lot 2 of the aforementioned property registered under OCT No. Mercedes had the right to sell the property to whomever she chose. and children. The carbon copy did not bear her signature. deliberately made by agreement of the parties. Jaime. the essential reason which moves the contracting parties to enter into the contract. On record. G. Mendezona. Private respondents presented only a carbon copy of this deed. 1932 and the latter on August 6. (b) the false appearance must have been intended by mutual agreement. February 6.) The Curt ruled in the negative. The former died on May 11. They left some ninety six hectares of land located in the municipality of Guinobatan and Camalig. Both died intestate. VICES OF CONSENT LIM VS. petitioner spouses Luis J. They are the petitioners in the case at bench. The respondents opposed the petitioners’ claim of ownership of the said parcels of land alleging that the titles issued in the petitioners’ names are defective and illegal. 2. and the ownership of the said property was acquired in bad faith and without value inasmuch as the consideration for the sale is grossly inadequate and unconscionable.466 square meters and 3. Antonietta. No. ISSUE: Whether or not the Deed of Absolute Sale in the case at bar was simulated. Mendezona and Maricar L. the P850. They argue that the Deed of Absolute sale is a simulated contract.) Whether or not the consideration in Deed of Sale can be used to impugn the validity of the Contract of Sale. Jose Jovita. The burden fell upon the respondents to prove their allegations attacking the validity and due execution of the said Deed of Absolute Sale. Cresencia.1. She loaned money to several people. and it carries the evidentiary weight conferred upon it with respect to its due execution. Respondents further alleged that at the time of the sale as alleged. The sad spectacle of the heirs squabbling over the properties of their deceased parents was again replayed . and the sale is null and void ab initio. Mendezona and Teresita M. Lorenzo. Albay. but only her alleged thumbprint. and petitioner Teresita Adad Vda. As such.” The requisites of simulation are: (a) an outward declaration of will different from the will of the parties. 2002 FACTS: Petitioner spouses Mario J.00 consideration for the nine (9) parcels of land including the house and bodega is grossly and shockingly inadequate.) Whether or not the alleged Deed of Sale executed by Paulina Rigonan in favor of the private respondents is valid. COURT OF APPEALS 229 SCRA 616 FACTS: The case involves the partition of the properties of the deceased spouses Tan Quico and Josefa Oraa. there is unrebutted testimony that Paulina as landowner was financially well off. when cross-examined and shown a copy of the subject deed. 1967. However. Carmen Ozamiz was already ailing and not in full possession of her mental faculties. it has in its favor the presumption of regularity. 3. The Court had seen no apparent and compelling reason for her to sell the subject 9 parcels of land with a house and warehouse at a meager price of P850 only. no original typewritten deed but only a carbon copy was presented to the trial court. V. It is admissible in evidence without further proof of its authenticity and is entitled to full faith and credit upon its face. The Deed of Absolute Sale is a notarized document duly acknowledged before a notary public. and that her properties having been placed in administration. VICES OF CONSENT MENDOZANA.462 square meters.468 square meters. None of these were clearly shown to exist in the case at bar. Cresencia died on December 20.R. None of the witnesses directly testified to prove positively and convincingly Paulina’s execution of the original deed of sale. The petitioners ultimately traced their titles of ownership over their respective properties from a notarized Deed of Absolute Sale executed in their favor by Carmen Ozamiz. she was in effect incapacitated to contract with petitioners. Anacoreta.) Consideration is the why of a contract. When the Register of Deeds was subpoenaed to produce the deed. RULING: 1. ET AL. de Mendezona own a parcel of land each with almost similar areas of 3. RULING: The Court ruled that the Deed in the case at bar is not a simulated contract. Benjamin and Rogelio. Juan Franco testified during the direct examination that he was an instrumental witness to the deed. Mariano. and (c) the purpose is to deceive third persons. the appearances of a juridical act which does not exist or is different from what that which was really executed. Respondents failed to discharge that burden. hence. 2. The late spouses were survived by four children. without issue. in order to produce. Simulation is defined as “the declaration of a fictitious will. Mendezona. Elias died on May 2. She was survived by her husband. Hermogenes and Elias. he retracted and said that said deed of sale was not the document he signed as witness. Lim Chay Sing. Undisputably. 1935. for the purposes of deception. 1932. Ruben. the presumption in favor of the said deed stands. 143370. The petitioners initiated the suit to remove a cloud on their said respective titles caused by the inscription thereon. OZAMIZ ET AL. amounting to P270. a language not understood by the late Cresencia an illiterate. we take our mandate from Article 1332 of the Civil Code which provides: “When one of the parties is unable to read.00 loan. As it is contrary to the provision of Art. They claimed that before her death. Respondents Lorenzo and Hermogenes’ adamant stance against partition is based on various contentions.in the case at bench.00. a lawyer and CPA. In the petition at bench.000. RULING: In the petition at bench. ISSUE: .000. After March 1996. On the other hand. and 3) promissory note dated 21 December 1995. The respondent court. petitioner obtained 3 more loans from private respondent. Lorenzo is a lawyer and a CPA. It was prepared by the respondent Lorenzo. the burden was on private respondents to prove that the content of the Deed was explained to the illiterate Cresencia before she signed it.00. This substantive law came into being due to the finding of the Code Commission that there is still a fairly large number of illiterates in this country. the person enforcing the contract must show that the terms thereof have been fully explained to the former. albeit. 000.00 loan. the loans were consolidated under 1 promissory note dated March 22. the questioned Deed is written in English. They cited as evidence the “Deed of Confirmation of Extra Judicial Settlement of the Estate of Tan Quico and Josefa Oraa” and a receipt of payment. and registered in the name of petitioner. they urge: 1) that the properties had already been partitioned. reversing the trial court. or 2 days before the execution of the subject promissory note. in the amount of P100.000. covered by Transfer of Certificate of Title No. The consolidated loan of P750. VICES OF CONSENT: RUIZ VS. 1995. under the following promissory notes: 1) promissory note dated 21 April 1995. ISSUE: Whether or not there is error in the signing of the Deed. The conclusion drawn by the Honorable of Appeals that there was no undue influence exerted on Cresencia O.000. the subject properties had been administered by respondent Lorenzo.” Because of petitioner’s failure to pay the principal loan of P750. RT-96686. Principally. Their effort proved fruitless. and Lorenzo and Hermogenes on the other side. These combined loans of P300. Thereafter. Heirs of Cresencia alleged that since the demise of the spouses Tan Quico and Josefa Oraa. She obtained loans from private respondent Consuelo Torres on different occasions and in different amounts.000. the late Cresencia had sold and conveyed all her interests in said properties to respondent Lorenzo. COURT OF APPEALS 401 SCRA 410 G.00. 2003 FACTS: Petitioner Corazon Ruiz is engaged in the business of buying and selling jewelry. The mortgage was signed by petitioner for herself and as attorney-in-fact of her husband Rogelio. Cresencia had demanded their partition from Lorenzo.000. the evidence adduced by the respondents failed to discharge their burden. and 2) during her lifetime. the questioned Deed is written in English. and documents are usually drawn up in English or Spanish. held that the evidence failed to establish that it was signed by the late Cresencia as a result of fraud. a language not understood by the late Cresencia an illiterate. In this regard. Considering these circumstances. The protagonists were the widower and children of Cresencia on one side. 146942 APRIL 22.00 loan but also of the P300. 1337.R. petitioner paid the stipulated 3% monthly interest on the P750. After Cresencia’s death. as well as the interest payment for April 1996. or if the contract is in a language not understood by him. The Court upheld this ruling erroneous. 2) promissory note dated 23 May !995 in the amount of P100. orally. It also supplements Article 24 of the Civil Code which calls on court to be vigilant in the protection of the rights of those who are disadvantaged in life. She could not read or write in English.000. and mistake or fraud is alleged. Tan by her (Lawyer-CPA) brother Lorenzo O. private respondent sought the extrajudicial foreclosure of the aforementioned real estate mortgage. mistake or undue influence. It was executed on 20 March 1995.000.00 worth of jewelry pledged by petitioner to private respondent. petitioner was unable to make interest payments as she had difficulties collecting from her clients in her jewelry business. When petitioner failed to pay. Respondent Lorenzo did not cause the notarization of the Deed. It is also in accord with our state policy of promoting social justice. they likewise clamored for their partition. Cresencia only reached the second grade of elementary school.00 was secured by a real estate mortgage on a lot in Quezon City. Tan based on facts stated in the questioned judgment is clearly incorrect.000. Prior to their maturity. NO.00 were secured by P571. From April 1995 to March 1996. in the amount of P100. private respondent demanded payment not only of the P750. In calibrating the credibility of the witnesses on this issue. Civil Code.000.00. The late Cresencia and Lorenzo had contrasting educational background. 1989. Therefore. especially if. SISON G. Petitioner had all the time to go over and study the stipulations embodied in the promissory note. Certificate Authorizing Payment of Capital Gains Tax. has been transferred and registered in the name of her nephew. would enable one to easily spot the differences. Upon her demise. Some of these documents even bore the signature of Epifania. she did not direct Eduardo to prepare the same. and the payment of the registration fees. ALBERTO VS. They averred that Epifania could not have been deceived into signing the Deed of Absolute Sale because it was duly notarized before Notary Public Maximo V. A comparison of the deed of sale in favor of Demetrio and the deed of sale in favor Eduardo. proof that she agreed to the transfer of the property. Sison. her foster child and the brother of Eduardo. and they have complied with all requisites for its registration. petitioner. therefore. Affidavit of Buyer/Transferee. unless they are contrary to those of the trial court. by inserting the deed among the documents she signed pertaining to the transfer of her residential land. with a little variance in the terms of interests and surcharges. her into signing the Deed of Sale. No. Bugallon. Affidavit of Seller/Transferor. Letter for the Secretary of Agrarian Reform. the foreclosure proceedings may now proceed. 1996 filed with the trial court. Cuesta.00. SISON and EUFEMIA S. never claimed that she was forced to sign the subject note. Moreover.00. Even at 83 years. 1989 is valid. Epifania claimed that sometime in 1992. which determines if foreclosure proceedings could proceed. in favor of Demetrio. SPS. as she alleges. substituted by LAUREANA V. These promissory notes contain similar terms and conditions. Epifania thus filed a complaint before the Regional Trial Court of Lingayen. Dela Cruz (Epifania). in her complaint dated October 7.R. Alberto. she discovered that her rice land in Salomague Sur. while the case was pending in the Court of Appeals. ISSUES: Whether the deed of absolute sale is valid. After a careful perusal of the records. . in which case we may wade into the factual dispute to settle it with finality. the complainant in this case was Epifania S. thus. she exhibited mental astuteness when she testified in court. Pangasinan. spouses Eduardo and Eufemia Sison (Spouses Sison). inconceivable for her to sign the assailed documents without ascertaining their contents. she was substituted by her niece. Epifania failed to satisfactorily establish her inability to read and understand the English language. denied that they employed fraud or trickery in the execution of the Deed of Sale. as evidenced by the Investigation Report by the Department of Agrarian Reform (DAR). RULING: VICES OF CONSENT EPIFANIA DELA CRUZ. RULING: The promissory note in question did not contain any fine print provision which could have escaped the attention of the petitioner. Although Epifania was 79 years old at the time of the execution of the assailed contract. even by someone as old as Epifania. She alleged that Eduardo tricked On the issue of whether fraud attended the execution of a contract is factual in nature. 2005 FACTS: Initially.000. 1996. EDUARDO C. house and camarin.. A casual perusal. without her knowledge and consent. Aside from the March 22. Jr. but she died on November 1. three other promissory notes of different dates and amounts were executed by petitioner in favor of private respondent. her age did not impair her mental faculties as to prevent her from properly and intelligently protecting her rights. Laureana V. They claimed that they purchased the property from Epifania for P20. we sustain the Court of Appeals’ ruling that the Deed of Absolute Sale dated November 24.Whether or not there is undue influence in the signing of the promissory note. Whether fraud attended the execution of a contract. this Court is bound by the appellate court’s findings. 163770 February 17. Eduardo C. Pangasinan. purportedly on the strength of a Deed of Sale she executed on November 24. It is. The fact that petitioner and private respondent had entered into not only one but several loan transactions shows that petitioner was not in any way compelled to accept the terms allegedly imposed by private respondent. Epifania could not have failed to miss them. 1995 promissory note for P750.000. Normally. There being no evidence adduced to support her bare allegations. draws out the conclusion that there was no trickery employed. Certification issued by the Provincial Agrarian Reform Officer (PARO). Respondents. One can readily see that the first deed of sale is in all significant respects different from the second deed of sale. to declare the deed of sale null and void. RULING: NO. PANGASINAN VS. 30. Rayandaran and Arceño presented the Deed of Absolute Sale to the bank and negotiated with the principal stockholder of the bank.000. The bank discontinued to comply with the Memorandum of Agreement due to the appearance of Christina Behis. From the sole reason submitted by the petitioner bank that it was kept in the dark as to the financial capacity of private respondents. Pangasinan. Natividad. Engr.4 million. Unfortunately.00.000. in a Real Estate Mortgage dated October 23.13 in a Statement of Account sent to Behis on May. accumulated an account amounting to P316. as it could not expect the private respondents to pay the bank the approximately P343. it would not have consented into entering the Memorandum of Agreement with Rayandayan and Arceño as it was put in the dark as to the real capacity and financial standing of private respondents to assume the mortgage from Manuel Behis. or that the bank would not have otherwise given its consent had it known of the real purchase price. if the intention was to deceive.00 as represented to petitioner bank. ESSENTIAL REQUISITES OF CONTRACT: LICIT OBJECT . plaintiffs demanded in a letter that the bank comply with its obligation under the Memorandum of Agreement to which the latter denied.00 to Manuel Behis on the sale of the land.000. for both parties. MARIA. In fact. Simply stated. It is a settled rule that one who denies the due execution of a deed where one’s signature appears has the burden of proving that. Jr. For this reason. Petitioner bank argued that the Memorandum of Agreement is voidable on the ground that its consent to enter said agreement was vitiated by fraud because private respondents withheld from petitioner bank the material information that the real consideration for the sale with assumption of mortgage of the property by Manuel Behis to Rayandayan and Arceño is P2. sold the land. Petitioner bank pointed out that it would not have assented to the agreement. the notary public. still in the name of Behis. Maximo V.400. i.00. COURT OF APPEALS 314 SCRA 255 FACTS: Manuel Behis mortgaged a land in favor of RBS. Unfortunately thereafter. 1978 as a security for loans obtained amounting to P156.4 million.782. Atty. Epifania never claimed her signatures as forgeries. both deeds of sale should have been mirror images as to mislead Epifania into thinking that she was signing what appeared to be the same document.00.4 million. and not P250.000. the loan. Meanwhile. In addition. Manuel. And so a Deed of Absolute Sale with Assumption of Mortgage was executed between him as vendor/assignor and Rayandayan and Arceño as vendees/assignees for the sum of P250. does not constitute fraud unless there is a special duty to disclose certain facts.00 mortgage debt when private respondents have to pay at the same time P2. Subsequently. the questioned deed of sale was duly notarized. or must have caused the consent to be given. KINDS OF FRAUD HOW COMMITTED RURAL BANK OF ST.000.22. According to petitioner bank.Indeed. The land. It is only with respect to the deed of sale in favor of Eduardo that she denies knowledge of affixing her signature. by itself. P2. On the same day.270. had it known for the real consideration for the sale. contrary to the recital in the jurat. Epifania never questioned the deed of sale in favor of Demetrio. the bank considered the MA as void. one never appeared before the notary public and acknowledged the deed to be a voluntary act. In the case at bar. we cannot see how the omission or concealment of the real purchase price could have induced the bank into giving its consent to the agreement. 1985. who claimed that her signature was forged. in Manila for the assumption of the indebtedness of Manuel Behis and the subsequent release of the mortgage on the property by the bank. Thereafter. silence or concealment. 1339 of the Code.368. The kind of fraud that will vitiate a contract refers to those insidious words or machinations resorted to by one of the contracting parties to induce to the other to enter into a contract which without them he would not have agreed to. It is believed that the non-disclosure to the bank of the purchase price of the sale of the land between private respondents and Manuel Behis cannot be the “fraud” contemplated by Article 1338 of the Civil Code. Rayandayan and Arceño. before whom they appeared. remained in the name of Behis because the former did not present to the Register of Deeds the contracts. 1986. E.e. Cuesta.400. Pursuant to Art. On January 7. died prior to the filing of the case. accepting it as a valid and binding document. Rayandaran and Arceño did not show to the bank the agreement with Manuel Behis providing for the real consideration of P2. together with Manual Behis executed another Agreement embodying the consideration of the sale of the land in the sum of P2. however. the fraud must be determining cause of the contract. Manuel’s wife and a co-signatory in the mortgaged land. being a delinquent in paying his debts. ISSUE: Whether or not there existed a fraud in the case at bar. private respondents had no duty to do such. the bank consented to the substitution of plaintiffs as mortgage debtors in place of Manuel Behis in a Memorandum of Agreement between private respondents and the bank with restricted and liberalized terms for the payment of the mortgage debt including the initial payment of P143. being inalienable and outside the commerce of man. the subject of the sale was a submerged land. the City of Cebu was sanctioned to reclaim foreshore lands under RA 1899 for it is a qualified end user government agency. RULING: YES. Second. But PEA is not an end user agency with respect to reclaimed lands under the amended JVA for reclaimed lands are public and therefore are inalienable. under the Joint Venture Agreement (JVA). the Senate Blue Ribbon Committee and Committee on Accountability of Public Officers. in the Ponce case. PEA finalized the JVA with Amari.200/ square meter. the submerged lands. i. At the end. forests or timber. Fourth.16 B from the purchase price of the actual sale. 78% of the total area sold by PEA to Amari is still submerged land. PUBLIC ESTATES AUTHORITY 415 SCRA 403 SYNOPSIS: This case involves a government contract conveyed to a private entity (Amari). During the process of investigation.200 per square meter. forces which are potential energies. could not be the subject of the commercial transactions specified in the Amended JVA. even without actual reclamation. which has been bolstered by the provisions of the Local Government Code. the Ponce doctrine which involved the validity to reclaim foreshore lands based on RA 1899 (authorizing municipalities and chartered cities to reclaim foreshore lands) is not applicable in the instant case because what is involved in the case at bar are submerged lands. not prior to reclamation. the “irrevocable option” to purchase portions of the foreshore lands shall be enforceable only upon reclamation. Submerged lands fall within the scope of such provision. amounting from P 500 – 1.. which allowed private corporations to acquire alienable lands of the public domain.e. The case at bar falls within the ambit of the 1987 Constitution which prohibits corporations from acquiring alienable lands of the public domain. and found out that the sale of such was grossly undervalued based on official documents submitted by the proper government agencies during the investigations. in violation of the Government Code. can sell patrimonial property to private parties. while the Municipal Assessor of Parañaque at P 6. PEA justified the purchase price based from the various appraisals of private real estate corporations. therefore. which states that any sale of the public land must be made only thru a public bidding. the contract between Amari and the PEA is void. the private entity. waters.84 hectares of reclaimed public lands totaling to P 1. As unequivocally stated in Article XII. fisheries. There being no public bidding in the subject sale of land. the Ponce doctrine. the BIR pitted the value at P 7. an indicia of great bribery. Further. does not fall squarely in the case. The difference is a mammoth P 140. all lands of the public domain. like foreshore lands. Hence. flora and fauna. it is unconstitutional for what was sold or alienated are lands of the public domain. is of the public domain and cannot be alienated. wildlife. coals. and other natural resources. was proven to have inveigled the Public Estates Authority to sell the reclaimed lands without public bidding. the amended JVA is a negotiated contract in patent violation of such law. Submerged lands. ISSUE: Whether or not the sale between PEA and Amari is unconstitutional. the contract was voided for Amari.CHAVEZ VS. Section 2 of the Constitution. conducted extensive public hearings to determine the actual market value of the public lands. 000/ square meter. the actual loss on the part of the government is a gargantuan value of P 31.000 per square meter. are inalienable. with the exception of agricultural lands. Further. sold to Amari Coastal Bay Development Corporation 157. First.89 B or P 1.000 per square meter and by the Commission on Audit (COA) at P21. However. in the Ponce case. minerals. the Ponce case was decided under the 1935 Constitution (1965-66).84 hectares of reclaimed public lands along Roxas Boulevard were sold at a negotiated price of P 1.800 per square meter. Fifth. Third. petroleum.333 per square meter. to which the respondent seeks refuge and sanctuary. but still. it was also found out that there were various offers from different private entities to buy the reclaimed public land at a rate higher than the offer of Amari. the Ponce doctrine has been superseded by the provisions of the Government Auditing Code. CITY OF ILOILO . FACTS: Two Senate Committees.78 B. REQUISITE OF CONTRACT – DETERMINATE OBJECT MELLIZA VS. However during the investigation process. Amari did not hide the fact that they agreed to pay huge commissions and bonuses to various persons for professional efforts and services in successfully negotiating and securing for Amari the JVA. Finally.76 B. Reports place the market price of land in that area at a high of P 90. Based on the official appraisal of the COA. the submerged lands were immediately transferred and sold to Amari. equivalent to the Judiciary’s budget for 17 years and three times the Marcos’ Swiss deposits forfeited in favor of the government as decided by the Supreme Court. where 157. The amount constituting the commissions and bonuses totaled to a huge P 1. Ergo. In the case at bar. It was found out that the Public Estates Authority (PEA). 23 SCRA 477 FACTS: Juliana Melliza during her lifetime owned three parcels of residential land in Iloilo City. of the execution of the contract. the University of the Philippines enclosed the site donated with a wire fence. residing in the municipal district of Tublay. On 1932. that the sale must have for its object a determinate thing. an illiterate Igorrote between 70 and 80 years of age. which succeeds to the Municipality of Iloilo. ISSUE: Whether or not the plaintiff has established his cause of action by a preponderance of the evidence. such as ignorance or the fact that one of the parties has an advantage over the other. and municipal president of Tublay. Nine years later. VS. On 1952. consisted of P1 and other valuable consideration. she donated to the then Municipality of Iloilo a certain lot to serve as site for the municipal hall. The defendant is Fernando A. Petitioner contends that LOT 1214-B was not included in those lots which were sold by Juliana Melliza to the then municipality of Iloilo and to say he would render the Deed of Sale invalid because the law requires as an essential element of sale. plaintiff-appellant. according to the conveyance. a man of greater intelligence. is fulfilled as long as. one cow. ABSENCE OF CAUSE VS. Fraud must be both alleged and proved. in 1923. defendant-appellee 1924 September 15 46 PHIL 179 FACTS: The plaintiff in this case is Askay. On being informed of the judgment of the trial court. donated the city hall sit to the University of the Philippines. formal. Sometime in 1938. and following trial before Judge of First Instance Harvey. in reality consisted of P107 in cash. FERNANDO A. Province of Benguet. judgment was rendered dismissing the complaint and absolving the defendant from the same. Later the City of Iloilo. COSALAN. One fact exists in plaintiffs favor. Remedios in turn transferred the rights to said portion of land to Pio Sian Melliza. it would render the contract invalid because the object would allegedly not be determinate as required by law. so that it may be sufficient to show it when taken in connection with other circumstances. Askay sold this claim to Cosalan. the object of the sale is cable of being determinate without the necessity of a new or further agreement between the parties. The donation was however revoked by the parties for the reason that area was found inadequate to meet the requirements of the development plan. Subsequently the said lot was divided into several divisions. coupled with mere inadequacy of price when both parties are in a position to form an independent judgment concerning the transaction. with costs against the plaintiff. Benguet. at the time the contract is entered into. and two carabaos. Plaintiff may be right but in our judgment he has failed to establish his claim. and which. and to obtain damages from the defendant in the amount of P10. But the fact that the bargain was a hard one. Against the plaintiff and in favor of the defendant. Pio Sian Melliza then filed action in the Court of First Instance of Iloilo against Iloilo City and the University of the Philippines for recovery of the parcel of land or of its value specifically LOT 1214-B. who at various times has been the owner of mining property. one sheet. 1914. plaintiff attacked it on two grounds: The first. Juliana Melliza sold her remaining interest on the said lot to Remedios San Villanueva. for rendering determinate said lots without the need of a new further agreement of the parties. FAILURE/INADEQUACY OF CAUSE ASKAY. The transfer Certificate of title in Melliza’s name bears on annotation stating that a portion of said lot belongs to the Municipality of Iloilo. Askay obtained title to the Pet Kel Mineral Claim located in Tublay. determinate object. Both motions were denied and an appeal was perfected. Cosalan. On November 23. according to the oral testimony. as of the time. who likewise has been interested along with his uncle in mining enterprises About 1907. the Court had the document itself executed in the presence of witnesses and before a notary public and filed with the . the nephew by marriage of Askay. Another fact is the inadequacy of the consideration for the transfer which. is not a sufficient ground for the cancellation of a contract. and the second. if we are to accept defendant's Exhibit 1. RULING: Plaintiff contends that the sale of the Pet Kel Mineral Claim was accomplished through fraud and deceit on the part of the defendant. to secure possession of the mineral claim. RULING: NO. Askay instituted action in the Court of First Instance of Benguet to have the sale of the Pet Kel Mineral Claim declared null. Iloilo Branch. Gross inadequacy naturally suggest fraud is some evidence thereof.500. and this is the age and ignorance of the plaintiff who could be easily by the defendant. a bill-fold. The requirement of the law specifically Article 1460 of the Civil Code. Following the presentation of various pleadings including the answer of the defendant. jurisdictional. ISSUE: Whether or not IF Lot 1214 – B is included in the Deed of Sale. The specific mention of some of the lots plus the statement that the lots object of the sale are the ones needed for city hall site sufficient provides a basis. As a result. the parties’ real agreement binds them. In absolute simulation. the trial court dismissed the complaint. Esperanza executed a Deed of Absolute Sale in favor of Rodrigo. Rodrigo made partial payments to Antonio who is authorized by his mother through a Special Power of Attorney.000. offered to sell to Rodrigo Lim. Two finger print experts. testified to the effect that in the presence of the plaintiff and the defendant and of the notary public and the subscribing witnesses. the court issued an order rejecting the amended complaint of the petitioners.000. On October 23. quieting of title. On March 30. It affirmed the trial court’s ruling that the lack of consent of the co-owners did not nullify the sale. if the parties state a false cause is relatively simulated.000. Having in mind of these circumstances. Hence. An absolutely simulated contract is void. RULING: No.000. the deed of sale was interpreted to the plaintiff and that thereupon he placed his thumb mark on the document. On motion of the petitioners. petitioners filed a complaint against Rodrigo with the Regional Trial Court for the annulment of sale.000. how can the plaintiff expect the courts to nullify the deed of sale on mere suspicion? Having waited nine years from the date when the deed was executed. LIM 446 SCRA 57 FACTS: The spouses Aurelio and Esperanza Balite were the owners of a parcel of land at Catarman. the excess from her undivided share should be taken from the undivided shares of Cristeta and Antonio. the parties intended to be bound by the Contract.000. Since the Deed of Absolute Sale was merely relatively simulated. Dr. Meanwhile.00 payable to Esperanza by installments. Simkus. However. it has an unlawful cause. Charles S. because the parties have no intention to be bound by it. ISSUE: Whether or not the Deed of Absolute Sale is null and void on the ground that it is falsified. On June 27.000 as reflected by their Joint Affidavit. his wife Esperanza and their children inherited the subject property and became co-owners thereof. therefore. they were granted leave to file an amended complaint impleading the bank as additional party defendant. Esperanza signed a letter addressed to Rodrigo informing the latter that her children did not agree to the sale of the property to him and that she was withdrawing all her commitments until the validity of the sale is finally resolved. the trial judge could have done nothing less than dismiss the action. The notary public. even if it did not reflect the actual purchase price of the property.00. They also executed on the same day a Joint Affidavit under which they declared that the real price of the property was P1. her undivided share for the price of P1. Esperanza became ill and was in dire need of money fro her hospital expenses. The Court of Appeals likewise held that the sale was valid and binding insofar as Esperanza Balite’s undivided share of the property was concerned. the sale by Esperanza of the property was valid. who expressly agreed to and benefit from the sale. and nine years permitting of a third party to obtain a contract of lease from Cosalan. they wrote to the Register of Deeds saying that their mother did not inform them of the sale of a portion of the said property nor did they give consent thereto. . 1996. a co-owner is not invalidated by the absence of the consent of the other co-owners.000. Only Esperanza and two of her children Antonio and Cristeta knew about the said transaction. The Court concludes. In the meantime.000. Nicanor Sison. The contract is an example of a simulated contract. Subsequently. nine years from the time Fernando A. Here. On the other hand. and it is contrary to law and/or public policy. it will be made to appear that the purchase price of the property would be P150. nine years from the time Askay himself had been deprived of the possession of the mine.000. She.000. that the complaint was properly dismissed. through her daughter. Esperanza died intestate and was survived by her children. 1997. Banks and A. and one of the attesting witnesses. Rodrigo caused to be published in the Samar Reporter the Deed of Absolute Sale.00 and executed a Real Estate Mortgage over the property as security thereof. It held that pursuant to Article 493 of the Civil Code. 1998. Cristeta. judgment is affirmed CAUSE: TRUE/REAL: SIMULATION OF CONTRACTS HEIRS OF THE LATE SPOUSES AURELIO AND ESPERANZA BALITE VS. the parties shall be bound by their real agreement for a consideration of P1. In the present case. it remains valid and enforceable. 1996. Nonetheless. On October 31. have declared in depositions that the thumb mark on exhibit is that of Askay.00. Article 1345 of the Civil Code provides that the simulation of a contract may either be absolute or relative. Rodrigo secured a loan from the Rizal Commercial Banking Corporation in the amount of P2. The letter of Esperanza to respondent and petitioner’s admission that there was partial payment made on the basis of the Absolute Sale reveals that the parties intended the agreement to produce legal effect. injunction and damages. Cosalan started developing the mine. When the rest of the children knew of the sale. All the essential requisites prescribed by law for the validity and perfection of contracts is present. When Aurelio died intestate. and the parties may recover from each other what they may have given under the “contract”. there is a colorable contract but without any substance. Esperaza and Rodrigo agreed that under the Deed of Absolute Sale. On April 16. how can the court overlook plaintiff's silent acquiescence in the legal rights of the defendant? On the facts of record. No less than four other witnesses testified that at various times Askay had admitted to them that he had sold the Pet Kel Mine to Fernando A.mining recorder.00 although the actual price agreed upon by them for the property was P1. 1996. Cosalan. Northern Samar. Likewise. Apolonio Ramos. 1969. Moreover. . The request having been obviously turned down. hence. 1969. Thereafter. CAUSE: TRUE/REAL: SIMULATION OF CONTRACTS SUNTAY V. Rafael scoffed at the attack against the validity and genuineness of the sale to him of Federico's land and rice mill. of the notarial register of Atty. and. while Federico continued to exercise rights of absolute ownership over the property. 1993.00 in favor of the Hagonoy Rural Bank. of the Notarial Register of Atty. T-36714. RULING: . Federico remained in possession of the property sold in concept of owner. Although on its face.000 cavans of palay. In his answer. while the trial court adjudged Rafael as the owner of the property in dispute. Federico. Rafael prepared an absolute deed of sale whereby Federico. although prepared by his nephew-lawyer. Federico. and other improvements situated in the said land. Atty." Nowhere on page 13 of the same notarial register could be found any entry pertaining to Rafael's deed of sale.00. when Rafael delivered the second deed to him. recorded as Document No. 1995 FACTS: Respondent Federico Suntay is the owner of a parcel of land and a rice mill. he had thought of allowing Rafael to make the application for him. His application. 1970. 1969. for a consideration of P20. Herminio V.000. Fojas prayed that said heirs be substituted as defendantsappellants in the case. on September 13. While the motion was pending resolution. executed by Rafael in favor of Federico. a counter sale was prepared and signed by Rafael who also caused its delivery to Federico. 114950. The prayer for substitution was duly noted by the court in a resolution dated April 6. Fojas filed in behalf of the heirs an opposition to the motion for reconsideration. Series of 1962. through his new counsel. in a letter applied as a miller-contractor of the National Rice and Corn Corporation (NARIC). Flores admitted that he failed to submit to the Clerk of Court a copy of the second deed. Federico filed a complaint for reconveyance and damages against Rafael. for and in consideration of P20. On July 8. In opposition thereto. The parties to the case were heard on oral argument on October 12. he never made any attempt to take possession thereof at any time.000. 57 and recorded on Page 13 of Book 1. was disapproved. 56 and recorded on Page 15 of Book 1.00. which deed is referred to above as Exhibit A. T-36714 so that Federico could have the counter deed of sale in his favor registered in his name. December 19. referred to as Exhibit B." On September 8. 1993. both Federico and Rafael appealed. On December 15. null and void. was simulated and without consideration. T-36714 was issued in the name of Rafael. ISSUE: Whether or not the deed of sale executed by Federico in favor of Rafael is simulated and fictitious and. Said deed was notarized as Document No. Atty. 16157 to secure a loan of P3. an examination thereof will show that. No. and for other valuable consideration". requested that Rafael deliver his copy of TCT No. with a modification that Federico was ordered to surrender the possession of the disputed property to Rafael. this second deed appears to have been notarized as Document No. 56 on Page 13. the same parcel of land with all its existing structures was sold by Rafael back to Federico for the same consideration of P20. TCT No. COURT OF APPEALS G. Even Federico himself alleged in his Complaint that. warehouse. it ruled that the counter-deed.000. While the trial court upheld the validity and genuineness of the deed of sale executed by Federico in favor of Rafael. Ricardo M. Agrava & Agrava. the Court of Appeals reversed itself and rendered an amended judgment. it was neither dated nor notarized. 1993. because at that time he was tied up with several unpaid loans. Series of 1962.500. Agrava & Agrava filed a petition with the Court of First Instance of Bulacan asking Rafael to surrender his owner's duplicate certificate of TCT No. For purposes of circumvention. hence. Atty. is not the said deed of sale but a certain "real estate mortgage on a parcel of land with TCT No. Counsel of Federico filed a motion for reconsideration of the aforecited decision. From the aforecited decision of the trial court. Philippine currency. The Court of Appeals rendered judgment affirming the trial court's decision. Through this counter conveyance.00 conveyed to Rafael said parcel of land with all its existing structures. In a letter. . Flores. Significantly.The petition is DENIED and the assailed decision AFFIRMED. Testifying on this irregularity. notwithstanding the fact that Rafael became the titled owner of said land and rice mill. dated August 14. Fojas entered his appearance in behalf of the heirs of Rafael who had passed away on November 23. Rafael chronicled the discrepancy in the notarization of the second deed of sale upon which said petition was premised and ultimately concluded that said deed was a counterfeit or "at least not a public document which is sufficient to transfer real rights according to law. Agrava & Agrava filed a motion to withdraw said petition. the Court granted the same.R. Flores. 1988. Upon the execution and registration of the first deed. Even after the execution of the deed. it did not go to the extent of ordering Federico to pay back rentals for the use of the property as the court made the evidential finding that Rafael simply allowed his uncle to have continuous possession of the property because or their understanding that Federico would subsequently repurchase the same. 02015 in the name of Federico was cancelled and in lieu thereof. Rafael Suntay. Neither was he able to enter the same in his notarial register. Less than three months after this conveyance. A rice miller. null and void ab initio. Certificate of Title No. He informed the NARIC that he had a daily rice mill output of 400 cavans of palay and warehouse storage capacity of 150. Atty. Rafael insisted that said property was "absolutely sold and conveyed . Herminio V. which were the objects of the sale. The same view is held by the Supreme Court of Spain. null and void. not suitable for development into a housing project.867 million. however. and eventually ended. Of the eight parcels of lands. NHA eventually cancelled the sale over the remaining three (3) parcels of land. On February 14. 1989. it was in the possession of his nephew who. Upon appeal by petitioners. only five were paid for by the NHA because of the report it received from the Land Geosciences Bureau of the Department of Environment and Natural Resources that the remaining area is located at an active landslide area and therefore. 1999 FACTS: Petitioners William Uy and Rodel Roxas are agents authorized to sell eight (8) parcels of land by the owners thereof. being his lawyer. holdinmg that the motive may be regarded as causa when it predermones the purpose of the contract. Rafael. RULING: Anent the 1st issue. openly. The complete absence of an attempt on the part of the buyer to assert his rights of ownership over the land and rice mill in question is the most protuberant index of simulation. of their obligation. Tadiangan.. After trial. it did not have the right to do so for the other parties to the contract. in its decisions of Fevruary 4. NHA approved the acquisition of the said parcels of land with an area of 31. Federico's title was not in the hands of a stranger or mere acquaintance.. Indeed. the RTC of Quezon City rendered the cancellation of contract to be justified and awarded P1. that the CA erred in declaring that NHA had any legal basis to rescind the subject sale. Federico had been all the while in possession of the land covered by his title and so there was no pressing reason for Federico to have a title in his name issued. were not suitable for housing. By virtue of such authority. As held in Liguez v. It was only when Federico needed the title in order to obtain a collaterized loan that Federico began to attend to the task of obtaining a title in his name over the subject land and rice mill. CA. as a general rule. Petitioners confuse the cancellation of the contract by the NHA as a rescission of the contract under Article 1191 of the Civil Code. petitioners offered to sell the lands. the NHA did not rescind the contract. As no property was validly conveyed under the deed. should be considered ineffective and unavailing. Benguet to respondent National Housing Authority (NHA) to be utilized and developed as a housing project. However. 102 PHIL 577 PHILBANK VS. Anent the 2nd issue. while maintaining the distinction and upholding the inoperativess of the motives of the parties to determine the validity of the contract. when the motive predetermines the cause. It is well to note. LUI SHE. expressly excepts from the rule those contracts that are conditioned upon the attainment of the motives of either party.255 million as damages in favor of petitioners. GRATUITOUS CAUSE 1. Rather. had served him faithfully for many years. is absolutely simulated and fictitious and. The allegation of Rafael that the lapse of seven years before Federico sought the issuance of a new title in his name necessarily makes Federico's claim stale and unenforceable does not hold water. In this case. Whether or not a party’s entry into a contract affects the validity of the contract. CAUSE VS. CA. the Court of Appeals reversed the decision and entered a new one dismissing the complaint including the award of damages. MOTIVE UY VS.8231 hectares at the cost of P23. The power to rescind is given to the injured party. a party’s motives for entering into a contract do not affect the contract. ISSUE: Whether or not the contention of petitioner is correct. NO. pursuant to which the parties executed a series of Deeds of Absolute Sale covering the subject lands. COURT OF APPEALS 314 SCRA 69 SEPTEMBER 9. that Manresa himself. 21 SCRA 52 . The cancellation was not therefore a rescission under Article 1191. The NHA did not suffer any injury. The motion for reconsideration having been denied. 1992. said parties having entered into a sale transaction to which they did not intend to be legally bound. The right to rescission is predicated on a breach of faith by the other party that violates the reciprocity between them. much less a substantial breach. On March 9. 1941 and December 4. it was based on the negation of the cause arising from the realization that the lands. the evidence on record demonstrate a combination of circumstances from which may be reasonably inferred certain badges of simulation that attach themselves to the deed of sale in question. petitioners seek relief from this court contending. the vendors did not commit any breach. and adversely. LIGUEZ VS. however. hence. the motive may be regarded as the cause.In the aggregate. . The deed of sale executed by Federico in favor of his now deceased nephew. petitioners filed a complaint for damages. Even when the relationship between the late Rafael and Federico deteriorated. 2. the second deed of sale executed by the late Rafael in favor of his uncle. to the exclusion of Rafael. located in Tuba. it is not at all strange for Federico to have been complacent and unconcerned about the status of his title over the disputed property since he has been possessing the same actually. 1946. inter alia. petitioner. the same Article 1274 provides that in remuneratory contracts. that he was in love with appellant. and null and void (1) because the husband. of which donor and donee were participants. Lopez. and that liberality per se can never be illegal. 1955. situated in Barrio Bogac-Linot. but also to secure her cohabiting with him. since it is neither against law or morals or public policy. The Court of Appeals found that when the donation was made. Actually. by some guerrillas who believed him to be pro-Japanese. Province of Davao. as causa for the donation in her favor.. sometime during June of 1943. demonstrate that in making the donation in question. had no right to donate conjugal property to the plaintiff appellant.CONCHITA LIGUEZ. the conveyance was clearly predicated upon an illicit causa. Appellant vigorously contends that the Court of First Instance as well as the Court of Appeals erred in holding the donation void for having an illicit causa or consideration. that is to say. a man of mature years to have sexual relations with appellant Conchita Liguez. the Court of Appeals held that the deed of donation was inoperative. RULING: Under Article 1274. since 1949. which the Supreme Court could not vary. Lopez to recover a parcel of 51. with consequent benefit for the employer. without any intent of producing any satisfaction for the donor. the late Salvador P. pursuant to a deed of donation of said land. L-7756. and (2) because the donation was tainted with illegal causa or consideration. VS. a married man. ISSUE: Whether or not the deed of donation made by Lopez in favor of Liguez was valid. the donation was but one part of an onerous transaction (at least with appellant's parents) that must be viewed in its totality. expressly excepts from the rule those contracts that are conditioned upon the attainment of the motives of either party. vs. Plaintiff averred to be its legal owner. . "in contracts of pure beneficence the consideration is the liberality of the donor". 1899. MARIA NGO VDA. For this very reason. Salvador P. Upon these facts. Lopez was not moved exclusively by the desire to benefit appellant Conchita Liguez. Appellant seeks to differentiate between the alleged liberality of Lopez. the consideration is the service or benefit for which the remuneration is given. Lopez had been living with the parents of appellant for barely a month. that Lopez had confessed to his love for appellant to the instrumental witnesses. Lopez. which was plaintiff's entering into marital relations with Salvador P. At the time. and his desire for cohabiting with appellant. in which the idea of self-interest is totally absent on the part of the transferor. and quotes from Manresa and the jurisprudence of this Court on the distinction that must be maintained between causa and motives. but "solvendi animo. It is argued that under Article 1274 of the Civil Code of 1889 (which was the governing law in 1943. but her parents would not agree unless he donated the land in question to her. It was also ascertained by the Court of Appeals that the donated land originally belonged to the conjugal partnership of Salvador P. causa is not liberality in these cases because the contract or conveyance is not made out of pure beneficence. executed in her favor by the late owner. It is well to note. No. R. until Lopez was killed on July 1st. Lopez lived together in the house that was built upon the latter's orders. therefore. Lopez. that the latter had met and berated Conchita for living maritally with her husband. Lopez and his wife. that the land was assessed in the tax rolls first in the name of Lopez and later in that of his widow. do not constitute donation having liberality for a consideration. Conchita Liguez and Salvador P. however.R. Davao. as motives that impelled him to make the donation. that the widow and children of Lopez were in possession of the land and made improvements thereon. with the remark that her parents would not allow Lopez to live with her unless he first donated the land in question. contracts designed solely and exclusively to procure the welfare of the beneficiary. that Manresa himself. 1943. only 16 years of age. while maintaining the distinction and upholding the inoperativeness of the motives of the parties to determine the validity of the contract. like the Supreme Court of Spain in its decision of 16 Feb. appellant Liguez was a minor. Here the facts as found by the Court of Appeals. the Court in Philippine Long Distance Co. that the donation was made in view of the desire of Salvador P. This is clear from the confession of Lopez to the witnesses Rodriguez and Ragay. in other words. The defense interposed was that the donation was null and void for having an illicit causa or consideration. liberality of the donor is deemed causa only in those contracts that are of "pure" beneficence. Thus considered. contracts. so that he could gratify his sexual impulses. has ruled that bonuses granted to employees to excite their zeal and efficiency. Salvador donated it to Liguez out of his love and affection to her. The Court of Appeals found that the deed of donation was prepared by the Justice of the Peace of Mati. DE LOPEZ. on 18 May 1943. Lopez. 1957 G. when the donation was executed). respondents 102 P 577 December 18. before whom it was signed and ratified on the date aforesaid. THE HONORABLE COURT OF APPEALS." In consonance with this view. that after the donation.84 hectares of land. and that the need of donation was never recorded. July 30. L-11240 FACTS: The case began upon complaint filed by petitioner-appellant against the widow and heirs of the late Salvador P. Maria Ngo. and that the property had been adjudicated to the appellees as heirs of Lopez by the Court of First Instance. ET AL. Jeturian* G. of the municipality of Mati. As privies of their parent. should be considered part of the donor's estate. 1957. representing the estate of JUSTINA SANTOS Y CANON FAUSTINO. In this regard. she executed another contract giving Wong the option to buy the leased premises for P120. as successors of the late donor. the value of the property donated to herein appellant. she bade her legatees to respect the contract she had entered into with Wong. defendant-appellant 21 SCRA 52 FACTS: Justina Santos and her sister Lorenza were the owners in common of a piece of land in Manila. the action was filed in the CFI of Manila. both parties died. the total or partial ineffectiveness of the same must be decided by different legal principles. It does not follow from what has been said that because the parties are in pari delicto they will be left where they are. in excess of the portion of free disposal . On November 18. while Wong Heng. paying monthly rentals. From this decision. the same should be governed by the rules of accession and possession in good faith. 1957. in her own behalf and as administratrix of the intestate of Wong Heng. without relief. Appellant Conchita Liguez was declared by the Supreme Court entitled to so much of the donated property as may be found.1958. to the prejudice of his wife Maria Ngo. but it appears to have a change of heart in a codicil. the forced heirs are entitled to have the donation set aside in so far as inofficious: i. although the lessee was give the right to withdraw at anytime from the agreement with a stipulated monthly rental. plaintiff-appellant. The sisters lived in one of the houses. So that in computing the legitimes. The illicit purpose then becomes the illegal causa. RULING: YES. On December 1. ISSUE: Whether or not the contracts entered into by the parties are void being in violation of the Constitutional prohibition on transfer of lands to aliens or those who are not citizens of the Philippines. He insisted that the various contracts were freely and voluntarily entered into by the parties. because said property was conjugal in character. After the case were submitted for decision. Justina became the owner of the entire property as her sister died with no other heir. But their right to a legitime out of his estate is not thereby affected. The lower court declared all the contracts null and void with the exception of the first. VS. The option was conditioned on his obtaining Philippine citizenship. Hence. Lopez or the legitimes of the forced heirs of the latter. but even those made in favor of strangers.e. they are barred from invoking the illegality of the donation.Appellees. both parties appealed directly to the Court. deceased. and Justina on 1964.000 payable within 10 years at monthly installment of P1. a Chinese. covering a portion already leased to him and another portion of the property. and bearing in mind that "collationable gifts" under Article 818 should include gifts made not only in favor of the forced heirs. Wong as substituted by his wife Lui She while Justina by the Philippine Banking Corporation. However the contacts are not necessarily valid on the ground that it circumvents the Constitutional prohibition against the transfer of lands to aliens. Wong on 1962. Justina executed a contract of lease in favor of Wong. Only the court of origin has the requisite date to determine whether the donation is inofficious or not. The situation of the children and forced heirs of Lopez approximates that of the widow.. upon proper liquidation. lived with his family in the restaurant. and the right of the husband to donate community property is strictly limited by law. For one thing. Conchita Liguez. Claiming that the various contracts were made because of her machinations and inducements practiced by him. not to prejudice the share of the widow Maria Ngo in the conjugal partnership with Salvador P. On November 18. she executed two other contracts one extending the term to 99 years and the term fixing the term of the option of 50 years. which is the contract of lease of November 15.000. The lease was for 50 years. 1957. In it are two residential houses. The Court held the lease and the rest of the contracts were obtained with the consent of Justina freely given and voluntarily. being thus precluded from pleading the defense of immorality or illegal causa of the donation. rendering the contracts void. His application for naturalization was withdrawn when it was discovered that he was a resident of Rizal. she now directed her executor to secure the annulment of the contracts. the original parties . On September 22. The complaint alleged that Wong obtained the contracts through fraud. Wong had been a long time lessee of a portion of the property. GRATUITOUS CAUSE PHILIPPINE BANKING CORPORATION. LUI SHE. since the legitime is granted them by the law itself. With regard to the improvements in the land in question. On November 1. it being undisputed that the widow and heirs of Lopez were unaware of the donation in favor of the appellant when the improvements were made. the Court of Appeals correctly held that Lopez could not donate the entirety of the property in litigation. computed as provided in Articles 818 and 819. In the two wills. deceased. which was then pending. as decided by the Supreme Court of Spain in its decisions of 4 May 1899 and 16 June 1902. Wong denied having taken advantage of her trust in order to secure the execution of the contracts on question. over and above the wishes of the deceased. This other copy shows that the objects of the sale were Lots 1320 and 2034. Julian had to rely on the representation of other persons in his business transactions.00. Upon further inquiry. ELENA ALOVERA SANTOS and CONSOLACION ALIVIO ALOVERA. The private respondents’ copy of the Absolute Sale was tampered so that the second parcel of lot sold. FUENTES and MARILOU FUENTES ESPLANA petitioners. And that it was only recently that they learned of the claim of private respondents when Consolacion filed a petition for the judicial reconstitution of the original certificates of title of Lots 1320 and 1333 with the Capiz Cadastre. Fuentes and Marilou Fuentes Esplana. Paulina originally owned these two parcels of land. Armando V. ownership of the lots passed to her daughter. and the prohibition of the law is designed for the protection of the plaintiff. Petitioners claimed that these two lots were never sold to Julian. FORM AS ESSENTIAL ELEMENT OF CONTRACTS SONIA F. for the purpose of binding or informing third parties. On March 30. Petitioners doubt the validity of the Absolute Sale because it was tampered. ISSUE Whether or not the notarized copy should prevail. situated in Barrio Culasi. Roxas City. petitioners harp on the fact that the notarized and registered copy of the Absolute Sale should have. respondents Dec 17. therefore. Capiz. Fuentes. 1959 registered only on September 22. OSCAR V. FUENTES. 136427 FACTS: The present case stemmed from a battle of ownership over Lots 1320 and 1333 both located in Barrio Baybay. is only for convenience. Sonia. Sonia Fuentes Londres. he may recover what he has paid or delivered. they are the owners of Lots 1320 and 1333. FUENTES. 1989. Despite demands. The cross-claim of petitioners against public respondents was for the recovery of just compensation. 2002 G. In 1988. Julian and Consolacion took possession of the lots. was also owned by their grandmother. Being consensual. Formal requirements are. Chi-Chita Fuentes Quintia.786-square meter portion of Lot 1333 as a vehicular parking area for the Roxas City Airport. Petitioners claimed that during the lifetime of Paulina. LEOPOLDO V.320. one of the petitioners. Petitioners sought to nullify the Absolute Sale conveying Lots 1320 and 1333 and to recover just compensation from public respondents DPWH and DOTC. Roxas City. public respondents also appropriated a 1. Filomena sold the two lots in favor of Consolacion and her husband. On the other hand. 1959. Julian purchased the lots from Filomena in good faith and for a valid consideration. Filomena. THE COURT OF APPEALS. The trial court issued its decision upholding the validity of the Absolute Sale. This was affirmed by the Court of Appeals. petitioners filed a complaint for the declaration of nullity of contract. FUENTES. Private respondents maintained that they are the legal owners of Lots 1333 and 1320. Leopoldo V. A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. Article 1416 of the Civil Code provides an exception to the pari de licto. and registration of the instrument is needed only to adversely affect third parties. Elena is the daughter of Consolacion and Julian. Private respondents claimed that the alteration in the Absolute Sale was made by Filomena to make it conform to the description of the lot in the Absolute Sale. executed a deed of absolute sale in favor of the Republic of the Philippines over this portion of Lot 1333. now claim ownership over Lots 1320 and 1333. The cadastral lot number of the second lot mentioned in the Absolute Sale was altered to read Lot 1333 when it was originally written as Lot 2034. Noncompliance with formal requirements does not adversely affect the validity of the contract or the contractual rights and obligations of the parties. Paulina. After Paulina’s death. ROBERTO V.200-square meter portion of Lot 1320. Petitioners pointed out that Lot 2034. Julian. the spouses’ successors-in-interest are in possession of the lots in the concept owners. been correspondingly corrected. 1982 in the Office of the Register of Deeds of Roxas City. After the sale. was placed in a disadvantageous position compared to Filomena. CHI-CHITA FUENTES QUINTIA. The land was used as part of the Arnaldo Boulevard in Roxas City without any payment of just compensation. Roberto V. According to petitioners. Up to now. Fuentes. Lot 2034 would read as Lot 1333. public respondents took a 3. Private respondents filed a counterclaim with damages. namely. We disagree. No. . damages and just compensation. petitioners discovered that there exists a notarized Absolute Sale executed on April 24. which requires certain contracts to be embodied in a public instrument. LONDRES. that when the agreement is not illegal per se but is merely prohibited. The surviving children of Filomena. Petitioners believe that the notarized and archived copy should prevail. ARMANDO V. Private respondents explained that Julian was deaf and dumb and as such. the vendee agreed to pay petitioners P214.who were guilty of violation of fundamental charter have died and have since substituted by their administrators to whom it would e unjust to impute their guilt. Article 1358 of the Civil Code. herein petitioners. the vendee failed to pay the stipulated amount. Petitioners claimed that as the surviving children of Filomena. For another thing. However.R. RULING Among others. a contract of sale has the force of law between the contracting parties and they are expected to abide in good faith with their respective contractual commitments. THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS. Capiz. the Records Management and Archives Office kept an unaltered copy of the Absolute Sale. private respondents Consolacion and Elena anchor their right of ownership over Lots 1320 and 1333 on the Absolute Sale executed by Filomena on April 24. vs. THE DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS. Decision affirmed with the modification that the cross-claim against public respondents is dismissed. either actual or constructive. as the legal spouse. 1982 "subject. vendor Roque delivered the owner's certificate of title to herein private respondent. other than vendor or any other person or persons privy to or claiming any rights or interests under it. With respect to the one-half share pro-indiviso now forming the estate of Maria Mesina. on August 20. valid and enforceable. The lower court then rendered judgment in favor of the Spouses Repuyan and declared the Deed of Absolute Sale as valid. The execution of the public instrument. Thus. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public instrument. 1966. Delivery of the thing bought or payment of the price is not necessary for the perfection of the contract. FORM FOR CONVENIENCE OF CONTRACTS (Art. 1358. In the instant case. possession of the public instrument of the land is sufficient to accord him the rights of ownership. not for validity or enforceability. CC) 1. delivery of a parcel of land may be done by placing the vendee in control and possession of the land (real) or by embodying the sale in a public instrument (constructive). without actual delivery of the thing. Clara Balatbat filed a motion for the issuance of a writ of possession which was granted by the trial court on September 14. Severa Roque and Osmundo Roque and Clara Balatbat. On appeal by petitioner Balatbat. HEIRS OF TEVES CLARA M. the only conjugal properties left are the house and lot above stated of which plaintiff herein. ISSUE: Whether or not the delivery of the owner’s certificate of title to spouses Repuyan by Aurelio Roque is for convenience or for validity or enforceability. is entitled to one-half share pro-indiviso thereof. to valid rights and interest of third persons over the same portion thereof. COURT OF APPEALS and Spouses JOSE REPUYAN and AURORA REPUYAN G. CC) UNIVERSAL ROBINA SUGAR MILLING CORPORATION. the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract. A contract of sale being consensual. for which the vendor may exercise his legal remedies. Feliciano Roque. RULING: The Supreme Court found that the sale between Aurelio and the Spouses Repuyan is not merely for the reason that there was no delivery of the subject property and that consideration/price was not fully paid but the sale as consummated. BALATBAT VS. 51330 was acquired by plaintiff Aurelio Roque and Maria Mesina during their conjugal union and the house constructed thereon was likewise built during their marital union. The non-delivery of the possession of the subject property to the private respondent. A deed of absolute sale was then executed on February 4.R. however. the Court of Appeals affirmed the lower court’s decision. BALATBAT VS. transfers the ownership from the vendor to the vendee. When Maria Mesina died on August 28. Aurelio filed a complaint for Rescission of Contract against Spouses Repuyan for the latter’s failure to pay the balance of the purchase price. On April 14. Article 1498 of the Civil Code provides that when the sale is made through a public instrument. HEIRS OF ANGEL TEVES. suffice it to say that ownership of the thing sold is acquired only from the time of delivery thereof. respondents 2002 Sep 18 . married to Alejandro Balatbat. CA 2. 109410 August 28. and failure of the vendee to pay the price after the execution of the contract does not make the sale null and void for lack of consideration but results at most in default on the part of the vendee. plaintiff and the four children. It is not necessary that vendee be physically present at every square inch of the land bought by him. if from the deed the contrary does not appear or cannot be inferred. plaintiff and Maria Mesina had four children. 1996 261 SCRA 128 FACTS: The lot in question covered by Transfer Certificate of Title No. No. Out of their union." The corresponding writ of possession was issued on September 20. Roque. petitioner. 1982 between Aurelio S. 1982. are each entitled to one-fifth (1/5) share pro-indiviso. UNIVERSAL ROBINA VS. VS. Corazon Roque. Tthe petition for review is hereby dismissed for lack of merit. hence. However. 1358. FORM FOR CONVENIENCE OF CONTRACTS (Art. 1980. who may thereafter exercise the rights of an owner over the same. it is perfected by the mere consent of the parties. 1982. The provision of Article 1358 on the necessity of a public document is only for convenience. Aurelio Roque then entered into a contract of Absolute Sale with the spouses Aurora and Jose Repuyan. the defendants here. on September 4. Furthermore. No. URSUMCO refused to heed Teves' demand. unless a third party has acquired the land in good faith and for value and has registered the subsequent deed. Later. Years later. URSUMCO further claimed that it was UPSUMCO. that the list of properties acquired by URSUMCO from the PNB does not include the disputed lot and. He stated in his demand letters that he merely allowed UPSUMCO to use his property until its corporate dissolution. because ownership was immediately conveyed to the purchaser upon payment of P115. The same document partly states that the lands subject of the foreshore and agricultural lease applications are bounded on the north by the "titled property of Andres Abanto bought by the transferor (UPSUMCO) but placed in the name of Angel Teves". Inc.000. duly notarized.00. However. When he died.000. 1994. Out of respect for his uncle Montenegro.00. ownership is. provides that the Abanto heirs sold to Teves the lot covered by TCT No. that Teves' failure to have the sale registered with the Registry of Deeds would not vitiate his right of ownership. reserved in the vendor and is not to pass to the vendee until full payment of the purchase price. Teves filed a complaint for recovery of possession of real property with damages against URSUMCO. In the case at bar. On appeal by URSUMCO. The absolute ownership over the registered land was indeed transferred to Teves is further shown by his acts subsequent to the execution of the contract. not the heirs of Andres Abanto. 1987. does not bind third parties. as shown by the "Deed of Transfer and Waiver of Rights and Possession" dated November 26. Upon learning of the acquisition of his lot. for a total sum of P115. title to the property passes to the vendee upon delivery of the thing sold. and that it was merely placed in the name of Angel Teves. by agreement. When the property was erroneously included among UPSUMCO's properties that were transferred to petitioner URSUMCO. Teves even furnished petitioner documents and letters showing his ownership of the lot. H-37. the same is void for lack of consideration because the total price of P115. did not transfer ownership of the disputed lot to Angel Teves. it was Teves. claiming that it acquired the right to occupy the property from UPSUMCO which purchased it from Andres Abanto. RULING: No. In a contract of sale. UPSUMCO transferred to URSUMCO its application for agricultural and foreshore lease. free of charge. therefore. not included among the foreclosed properties acquired by URSUMCO. Consequently.G. therefore. his heirs executed an "Extrajudicial Settlement of the Estate of the Deceased and Simultaneous Sale. the Court of Appeals affirmed the RTC decision. was not among those conveyed by UPSUMCO to URSUMCO. 128574 389 SCRA 316 FACTS: Andres Abanto owned two parcels of land situated in Campuyo. Under this document." In this document. subject to the condition that UPSUMCO shall shoulder the payment of real property taxes and that its occupation shall be co-terminus with its corporate existence. who was UPSUMCO's founder and president. Teves verbally allowed UPSUMCO to use the registered lot for pier and loading facilities. As held by the RTC and the Court of Appeals. URSUMCO filed a motion for reconsideration but was denied by the Appellate Court. the transaction is not merely a contract to sell but a contract of sale. being unregistered. ISSUE: Whether or not the respondents have established a cause of action against petitioner. not Teves. Abanto's heirs adjudicated unto themselves the two lots and sold the unregistered lot to the United Planters Sugar Milling Company. (UPSUMCO). Teves died and was substituted by his heirs. which has been paying the corresponding realty taxes. the RTC held that URSUMCO has no personality to question the validity of the sale of the property between the heirs of Andres Abanto and Angel Teves since it is not a party thereto. including Teves' lot.000. On October 29. and that it was not mortgaged by UPSUMCO with the PNB and.00 does not specifically refer to the registered lot making the price uncertain. Petitioner's contentions lack merit. the instant petition for review on certiorari. holding that the transaction between Angel Teves and Andres Abanto's heirs is a contract of sale. 1992. URSUMCO then took possession of UPSUMCO’s properties. Teves formally asked the corporation to turn over to him possession thereof or the corresponding rentals. the subject contract. and the registered lot to Angel M. sold the same to the Universal Robina Sugar Milling Corporation (URSUMCO). who informed petitioner that he owns the same and negotiated for an arrangement regarding its use. not one to sell. 1996. hence. UPSUMCO then built a guesthouse and pier facilities on the property.R. Hence. Teves. Negros Oriental. Petitioner URSUMCO contends that respondents have no cause of action because the "Extrajudicial Settlement of the Estate of the Deceased Andres Abanto and Simultaneous Sale" is merely a promise to sell and not an absolute deed of sale. There is no showing that the Abanto heirs merely promised to sell the said lot to Teves. On April 6. UPSUMCO’s properties were acquired by the Philippine National Bank (PNB). while in a contract to sell. the transaction. not Andres Abanto's heirs. The sale was not registered. Manjuyod. PNB transferred the same properties to the Asset Privatization Trust (APT) which. who allowed UPSUMCO to construct pier facilities and guesthouse on the land. in turn. As found by the trial court. One lot is registered in his name and the other lot is unregistered. such as a copy of the . it was Teves. Assuming that the document is a contract of sale. 1366-1367. Two years later. the Abanto heirs and Teves. No. CA. if not done. REFORMATION OF INSTRUMENTS: WHEN PROHIBITED (Art. and not the correct title covering Lot 4163 was the one delivered to Pinili. Alejandra and the vendors filed for the feformation of the Deed of Sale. would not adversely affect the validity or enforceability of the contract between the contracting parties themselves. 1. the brothers of the original defendant Silveria Flores. 2003 . Indeed. 4918-A. On January 1956. There is no dispute as to the intention of the parties to sell the land to Alejandra Delfino but there was a mistake as to the designation of the lot intended to be sold as stated in the Settlement of Estate and Sale. the buyer of one of the lots subject of this case. ISSUE: Whether or not reformation is proper in this case. DY. petition is denied. 407 SCRA 154 SARMING VS. H-37 covering the disputed lot. REFORMATION OF INSTRUMENTS: WHEN PROHIBITED (Art. and (3) the failure of the instrument to express the true intention of the parties is due to mistake. Silveria did not object to the sale of said portion to Alejandra. Being consensual in nature. although it was solely registered under her name. DY 383 SCRA 131 JUNE 6. Silveria Flores. Hilario. There was a meeting of the minds between the parties to the contract but the deed did not express the true intention ot the parties due to the designation of the lot subject of the deed. inequitable conduct or accident. 107199 July 22. A controversy arose regarding the sale of Lot 4163 which was half-owned by the original defendant. Tomasa. Alejandra immediately took possession of Lot 4163 and introduced improvements on the said lot. it is binding between the parties. fraud. which requires the embodiment of certain contracts in a public instrument.R. was the wrong lot. Unaware of the mistake committed. all surnamed Flores. Juan. VS. respondents G. 2.. by virtue of the valid sale. for the sale of their one-half share of Lot 4163 after offering the same to their co-owner. Ruperto. while respondents Cresencio Dy and Ludivina Dy-Chan are the succesors-in-interest of the original plaintiff Alejandra Delfino. petitioner."Extrajudicial Settlement of the Estate of the Deceased Andres Abanto and Simultaneous Sale" and a certified true copy of TCT No. Thus. when Alejandra Delfino purchased the adjoinin portion of the lot she had been occupying. and Luisa and Trinidad themselves. Deogracias Pinili. Alejandra’s lawyer then prepared the document of sale. CC) Atty. Angel Teves stepped into the shoes of the heirs of Andres Abanto and acquired all their rights to the property. OCT no. (2) the instrument does not express the true intention of the parties. CC) CEBU CONTRACTORS CONSORTIUM CO. 1366-1367. covering Lot 5734. Thus. Jose entered into a contract with plaintiff Alejandra Delfino. who declined for lack of money. who were also the original plaintiffs in the lower court. and the registration of the instrument would merely affect third persons. COURT OF APPEALS and MAKATI LEASING & FINANCE CORPORATION. Thus. All of these requesites are present in this case. Silveria. In the preparation of the document however. The other half was originally owned by Silveria’s brother. JUNE 6. Lot 5734. Formalities intended for greater efficacy or convenience or to bind third persons. They were joined in this petition by the successors-in-interest of Isabel. is only for convenience. 2002 FACTS: Petitioners are the succesors-in-interest of original defendant Silveria Flores. Reformation is that remedy in equity by means of which a written instrument is made or construed so as to express or inform to the real intention of the parties. Jose. SARMING VS. They are the descendants of Venancio and Jose. she discovered that what was designated in the deed. That the contract of sale was not registered does not affect its validity. the trial court and the Court of Appeals correctly ruled that Teves purchased the lot from the Abanto heirs. the heirs of RULING: YES. Article 1358 of the New Civil Code. 2002 CEBU VS. An action for reformation of instrument under this provision of law may prosper only upon the concurrence of the following requisites: (1) there must have been a meeting of the minds of the parties to the contract. prompting private respondent to notify petitioner of its cancellation of the charter contract and the withdrawal of the advance payment deposited to the account of ADR shipping. CCC submits that in any event. The trial court rendered decision upholding the lease agreement and finding CCC liable to MLFC in lease rentals. MARCELINO GALLARDO AND Court OF APPEALS. ambiguity must be construed strictly against ADR which drafted and caused the inclusion of the ambiguous provisions. ISSUE: Whether or not private respondent is entitled to the refund of the advance payment representing his deposit for the charter of the ship provided by petitioner. albeit not unreasonably. Private respondent paid an advance charter fee of P242. which will be leased back to him. CCCC began defaulting on the lease rentals. The charter agreement explicitly states that February 5. In this case. ADR Shipping refused to return the advance payment to Gallardo claiming that the agreement on the date of February 5. Ambiguities in a contract are interpreted strictly. INC. Respondent G. Hence. The transaction between CCC and MLFC involved the second type of financing lease. ISSUE: Whether or not respondent court erred in upholding the so. MLFC alleges that on August 25. 1976 a lease agreement relating to various equipment was entered into between MLFC. The right of action for reformation accrued from the date of execution of the contract of lease in 1976. The client sells to MLFC equipment that it owns. 134873 September 17.lease back. and a subsequent amendment thereto. against the drafter thereof when justified in light of the operative facts and surrounding circumstances. the appellate court affirmed the trial court’s decision. and CCCC. 1988 is the intended date when the ship is expected ready to load while February 16. Under the charter agreement. MLFC’s own evidence discloses that it offers two types of financing lease: a direct lease and a sale. MLFC filed a complaint for the payment of the rentals due and prayed that a writ of replevin be issued in order to obtain possession of the equipment leased and to foreclose on the equipment mortgaged. Petitioner. The Regional Trial Court ordered ADR Shipping to pay Gallardo the advance payment with 6 percent interest per annum and attorney’s fees. 1988. Inc. To secure the lease rentals. On June 30. CCC’s position is that it is no longer indebted to MLFC because the total amounts collected by the latter from the Ministry of Public Highways. RULING: The Court finds in favor of CCC. No. RULING: Yes. a chattel mortgage. On appeal. The logs were the subject of a sales agreement between private respondent as seller being a timber concessionaire and log dealer. This prompted the latter to file a case for sum of money and damages.000 representing ten percent of the agreed charter fee.CCC argues that the sale and lease back scheme is nothing more than an equitable mortgage and consequently.FACTS: The instant Petition for Review on Certiorari stems from a complaint for collection of a sum of money with replevin filed by respondent Makati Leasing and Finance Corporation (MLFC) against petitioner Cebu Contractors Consortium Company (CCCC) before the Regional Trial Court of Makati. INTERPRETATION OF CONTRACT – LITERAL INTERPRETATION ADR SHIPPING SERVICESS. This was properly exercised by CCC when it filed its answer with counterclaim to MLFC’s complaint in 1978 and asked for the reformation of the lease contract. Private respondent is entitled to the refund of the advance payment it made to petitioner. this petition. prompting MLFC to send demand letters. the boat should be ready to load by February 5. as lessor. There was ambiguity in the interpretation of the contract provisions as to the date of the loading of the ship. The terms and conditions of the lease were defined in said agreement and in two lease schedules of payment. The decision of the trial court was affirmed by the Court of Appeals.called sale-lease back scheme of the private respondent when the same is in reality nothing but an equitable mortgage. 1988. Wherefore. and from the proceeds of the foreclosed chattels were more than enough to cover CCC’s liabilities. as lessee. entered into a contract with private respondent Gallardo for the use of the former’s vessel MV Pacific Breeze to transport logs to Taiwan. were executed in favor of MLFC over other various equipment owned by CCCC. the decision appealed from is hereby affirmed. 2002 FACTS: Petitioner ADR Shipping Services. 1977. and Stywood Philippines. asks for its reformation. by virtue of the deed of assignment. The boat failed to arrive on time. When the demand letters were not heeded. VS. 1988 was just the “reference commencing date” and the true loading date was February 16. as buyer.R. 1988 is merely the canceling . the deed of assignment itself already freed CCC from its obligation to MLFC. and the injured party may rescind the obligation. INTERPRETATION OF CONTRACTS: IN CASE OF DOUBT 1. TSPIC CORP. No.00. After some time. 2008 TSPIC CORPORATION V. No. TSPIC Employees Union (Union). 4. The fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to comply with its provisions. 456 SCRA 165 GONZALEZ VS. 6. may be legally deducted by TSPIC from the employees’ salaries because on the first place that excess was not vested in them legally as a right because that will amount to unjust enrichment. the parties have no other recourse but to apply the literal meaning of the stipulations. 178537. hence. where it provides that the two dump trucks and the bulldozer shall be transferred. TIBONG CRUZ VS. on the other hand. 163419. TSPIC notified some of their employees were overpaid and the overpayment would be deducted from their salaries in a staggered basis. Any amount given to the employees in excess of what they were entitled to. The Court also agrees that TSPIC in charging the overpayments made to the respondents through staggered deductions from their salaries does not constitute diminution of benefits. the literal meaning of its stipulations is controlling. INTERPRETATION OF CONTRACTS: IN CASE OF DOUBT ESTANISLAO V. Pursuant to the provision of Art 1191 of the Civil Code. 3. In this case the private respondent is entitled to the return of his down payment. the error found by TSPIC in pursuance to the terms in the CBA must be sustained. The bank filed a suit for replevin with damages but subsequently. CA. . EAST-WEST BANKING CORP. with payment of damages. unsigned by private respondent. the wages of 17 probationary employees were increased to PhP 250. The cardinal rule is that when the terms of the contract are clear.R. subject to a legal interest of 6 percent per annum. and marketing integrated circuits to serve the communication. assigned and conveyed for the full payment of the debt. CA. as computed above. CA. leaving no doubt as to the intention of the parties. TSPIC and the Union entered into a Collective Bargaining Agreement. the bank file a petition in court praying for the deliver of the other heavy vehicles mortgaged in the second chattel mortgage. VS. But the bank. automotive.R. 454 SCRA 8 ALMIRA VS. February 13. Spouses defaulted in the amortizations and the entire obligation became due and demandable. FACTS: Spouses Rafael and Zenaida Estanislao obtained a loan from East West Banking Corporation videnced by a promissory note and secured by two deeds of chattel mortgage of two dump trucks and a bulldozer for the first and bulldozer and a wheel loader for the other. TSPIC implemented the new wage rates as mandated by the CBA. 5. hence. The regional trial court dismissed the complaint for lack of merit but it was reversed and set aside by the court of appeals. for an unknown reason failed to sign on the deed. 399 SCRA 351 RULING: The deduction of the alleged overpayment from the salaries of the respondents is a valid act. Therefore. TSPIC EMPLOYEES UNION G. ISSUE: Whether or not deduction of the alleged overpayment from the salaries of the affected members of the Union constitute diminution of benefits in violation of law. ISSUE: Whether or not the Deed of Assignment. February 11. AQUINTEY VS. the intention therein must be pursued basing on the principle that littera necat spiritus vivificate. 2. and aerospace industries. A few weeks after the salary increase for the year 2001 became effective. is the registered bargaining agent of the rank-and-file employees of TSPIC. TSPIC EMPLOYEES UNION ESTANISLAO VS. extinguishes the whole and full obligation of the petitioner. but it accepted the three heavy vehicles freely and voluntarily upon delivery made by the petitioner. data processing. drafted by the bank. Both parties executed a Deed of Assignment. As a result all the regular rank-and-file employees of TSPIC received a 10% increase in their salary. Considering that the subject contract contains the foregoing express provisions. manufacturing.50 to PhP 250. and to the payment of damages.date. EAST WEST BANKING CORPORATION G. the power to rescind obligations is implied in reciprocal ones in case one of the obligors should not comply with what is incumbent upon him. the bank moved for suspension of the proceedings on account of an earnest attempt to arrive at an amicable settlement of the case. A wage order was issued by the National Capital Region which raised the daily minimum wage from PhP 223. As a result several employees received fewer wage. 2008 FACTS: TSPIC is engaged in the business of designing. The CBA provided in its provision in the computation for the increase in TSPIC’s employees. RAMON G. Agrifina became the new collector of their debtors. the last two in their capacity as deputy sheriff and ex-officio sheriff of Rizal. petitioners and Arnel Cruz executed a Deed of Partial Partition. Rizal. respectively. INTERPRETATION OF CONTRACTS: IN CASE OF DOUBT ADORACION E. No. alleged that they had executed deeds of assignment in favor of Agrifina.122904 April 15. 49466. the agreement was consummated. 495225.TIBONG G. likewise. Manalastas in his capacity as Acting Register of Deeds of Rizal. 166704. It is the subject of this case. According to the spouses Tibong. . accepts a third person who consents to the substitution and assumes the obligation.R. If there is no agreement as to solidarity. Sta.. shall deliver the three units of heavy equipment to the assignee (respondent). According to petitioners. and that their debtors had executed promissory notes in Agrifina's favor.RULING: The deed of assignment was a perfected agreement which extinguished petitioner’s total outstanding obligation to the respondent.R. husband of Adoracion Cruz. GERRY E. and Ramon G. 2006 FACTS: Agrifina Aquintey filed a complaint for sum of money and damages against the respondents. and the creditor (delegatario). Without such release. the property was among the properties they and Arnel Cruz inherited upon the death of Delfin Cruz. it is necessary that the old debtor be released from the obligation. because with the delivery of the heavy equipment which the latter accepted. Petitioners files said case on February 11. the spouses Tibong failed to pay their outstanding loan exclusive of interests. The Complaint alleged that petitioners and Arnel Cruz were co-owners of a parcel of land situated in Taytay. the Court agrees with the appellate court’s decision that respondents' obligation to pay the balance of their account with petitioner was extinguished. whereby property is alienated to the creditor in satisfaction of a debt in money. CRUZ and NERISSA CRUZ-TAMAYO vs. Respondent’s approval may be inferred from its unqualified acceptance of the heavy equipment. They. which accepts the assignment in full payment of the above-mentioned debt. as well as Arnel Cruz. pro tanto. 1983 against Arnel Cruz and herein private respondents Summit Financing Corporation (“Summit”). this resulted in a novation of the original obligation to Agrifina. Therefore. NO. Despite demands. and petitioner’s aggregate indebtedness would then be considered to have been paid in full as well.2005 FACTS: Herein petitioner is the mother of her co petitioners Thelma Cruz. meaning. and the obligation to pay the balance of their loans had been extinguished. Gerry Cruz and Nerissa Cruz-Tamayo. THE HONORABLE COURT OF APPEALS. The nature of the assignment was a dation in payment. Substitution of the person of the debtor may be effected by delegacion. 1977. 495225. the first and the new debtor are considered obligated jointly. respondent’s credit would have been satisfied in full. ISSUE: Whether or not consent is necessary in novation. Even if we were to consider the agreement as a compromise agreement. and the third person or new debtor takes his place in the relation. ANA. The proceeds of the loan were then re-lent to other borrowers at higher interest rates. Victor S. there is no novation. INTERPRETATION OF CONTRACTS: IN CASE OF DOUBT QUINTEY V. at monthly interest rates. They insisted that by virtue of these documents. RULING: Novation which consists in substituting a new debtor (delegado) in the place of the original one (delegante) may be made even without the knowledge or against the will of the latter but not without the consent of the creditor. Thus. The deed explicitly provides that the assignor (petitioners). distributing to each of them their shares consisting of several lots previously held by them in common. Agrifina alleged that Felicidad had secured loans from her on several occasions. VICTOR STA. MAXIMO C. On August 22. December 20. Among the properties adjudicated to defendant Cruz was the parcel of land covered at the time by TCT No. which was then covered by Transfer Certificate of Title (TCT) No. Yet the property. spouses Felicidad and Rico Tibong. it is not enough to extend the juridical relation to a third person. CONTRERAS. there was no need for respondent’s signature on the same. CRUZ. MANALASTAS and VICENTE TORRES G. by the deeds of assignment of credit executed by respondent Felicidad in favor of petitioner. CRUZ. was registered only in the name of Arnel Cruz. THELMA DEBBIE E. the debtor offers. Spouses Tibong admitted that they had secured loans from Agrifina. in full payment of its obligation. SUMMIT FINANCING CORP. the consent of those three persons is necessary. Ana and Maximo C. Contreras. who was one of the defendants in Civil Case No. This could only mean that should petitioners complete the delivery of the three units of heavy equipment covered by the deed. the third person who has assumed the obligation of the debtor merely becomes a co-debtor or a surety. Such transaction is governed by the law on sales. In this kind of novation. the parties only bound themselves to share in the proceeds of the sale of the properties. they admitted its existence in their pleadings and submitted it as a part of their As correctly held by the Court of Appeals. RULING: A reading of the provisions of the Deed of Partition. 1977. to the exclusion of the other coowners. There is nothing from the words of said deed which expressly or impliedly stated that petitioners and Arnel Cruz intended to remain as co-owners with respect to the disputed property or to any of the properties for that matter. The loan matured in 1984. 1982 in the name of Summit. Upon presentation of the affidavit of consolidation of ownership. This arrangement was embodied in a Memorandum of Agreement executed on August 23. In particular.Subsequently. Moreover. 495225 on September 1. and at the foreclosure sale. The two lots were mortgaged to secure their loan. they obtained a loan from the Cavite Development Bank in the amount of P225. Thus. the Acting Register of Deeds of Rizal cancelled TCT No. Being clear manifestations of sole and exclusive dominion over the properties affected.00. Gabriel Caballero. 247310 (Lot 2). On the other hand. Arnel Cruz had the right to enjoy and dispose of the property. 495225 is valid and whether the mortgaged property was the exclusive property of Arnel Cruz when it was mortgaged. Sheriff Sta. 1980 in favor of one Nelson Tamayo. it was declared the highest bidder. Subsequent to the execution of the Deed of Partition and Memorandum of Agreement. ISSUE: Whether or not the real estate mortgage on the property then covered by TCT No. to ascertain the intent of the parties in a contractual relationship. there is absolutely nothing in the Memorandum of Agreement which diminishes the right of Arnel Cruz to alienate or encumber the properties allotted to him in the deed of partition. no other meaning can be gathered other than that petitioners and Arnel Cruz had put an end to the co-ownership. they argued that the mortgage was void since they did not consent to it. husband of petitioner Nerissa Cruz Tamayo. authorizing him to obtain a loan in the amount of One Hundred Four Thousand Pesos from respondent Summit. the deed is accorded its legal dire effect. In the aforesaid deed. COURT OF APPEALS 354 SCRA 8 FACTS: Private respondents. INTERPRETATION OF CONTRACTS: IN CASE OF DOUBT GONZALES VS. Petitioners Adoracion Cruz and Thelma Cruz separately sold the properties distributed to them as absolute owners thereof. Quezon City described in Transfer Certificate fo Title No. to Arnel Cruz was assigned the disputed property. are the registered owneres of two parcels of land situated in Cubao. 1977 or a day after the partition. Petitioners do not question the validity or efficacy of the Deed of Partial Partition. consistent with the parties contemporaneous and subsequent acts as regards the execution of the contract. petitioners learned that Arnel Cruz had executed a Special Power of Attorney on May 16. Mr. Summit instituted extra-judicial foreclosure proceedings. 247309 (Lot 1) and TCT No. Since the loan remained outstanding on maturity. it is imperative that the various stipulations provided for in the contracts be construed together. petitioners asserted that they co-owned the properties with Arnel Cruz. it follows that Arnel Cruz acquired absolute ownership over the specific parcels of land assigned to him in the Deed of Partial Partition. evidence. 514477 in the name of respondent Summit. The spouses’ residence stood in Lot 2. Ana issued a Certificate of Sale to respondent Summit which more than a year later consolidated its ownership of the foreclosed property. Sometime in January 1983. To pay the loan they offered Lot 1 for sale. 495225 and issued and in lieu thereof. The tenor of the Memorandum of Agreement was annotated at the back of the TCT No. In their complaint before the RTC. and Mrs. The offer was advertised in . The agreement does not direct reconveyance of the properties to reinstate the common ownership of the properties. As the absolute owner thereof then. the shares of petitioners and Arnel Cruz’s in the mass of co-owned properties were concretely determined and distributed to each of them. the acts signify total incongruence with the state of co-ownership claimed by the petitioners. Since a partition legally made confers upon each heir their exclusive ownership of the property adjudicated to him. as well as the right to constitute a real estate mortgage over the same without securing the consent of the petitioners. Upon investigation. Hence. including the property subject of this case.000. Consequently. the properties were titled individually in the names of the co-owners to which they were respectively adjudicated. the same parties to the Deed of Partition agreed in writing to share equally in the proceeds of the sale of the properties although they have been subdivided and individually titled in the names of the former co-owners pursuant to the Deed of Partition. 514477 was issued on October 18. as evidenced by the Memorandum of Agreement. In fact. TCT No. Sometime in 1979. petitioner Thelma Cruz discovered that TCT No. to be secured by a real estate mortgage on the subject parcel of land. The real estate mortgage on the disputed property is valid and does not contravene the agreement of the parties. Initially. petitioner as heirs of Julio Garcia.m. Yet he could not explain why I referred only to the sale of Lot 1 and not to the two lots.150. This standing notwithstanding. judicial determination of the parties’ intention is mandated.00. Petitioner admits he himself caused the preparation of the deed of sale presented before the lower court. the father of Ma. Lagrimas’ relative. lot was offered for P1. the issue here is whether the contract of sale between the parties involved Lot 1 and 2 as claimed by petitioner or only Lot 1 as private respondents contend. RULING: YES. the sale of Lot 1 valued at P576. 1984. Alibudbud. Defendants signed the deed of sale covering only Lot 1 but refused to deliver its title until petitioner paid the remaining balance of P70. ISSUE Whether or not the petitioner may rescind the Kasunduan pursuant to Article 1191 of the Civil Code for the failure of respondent to give full payment of the balance of the purchase price.000. Respondent took possession of the property subject of the Kasunduan and made various payments to petitioiners amountiong to P58500. to be deducted from the purchase price.00. However upon failure of petitionere to deliver to him a separate title to the property in the name of Julio Garcia he refused to make further payments. 1985. Alibudbud (1/4). one with a 2-storey house. Petitioner offered to buy the vacant lot for P470. Although there wad no separate title in the name of Julio Garcia.00 upon execution of the contract while the balance of P85. Lagrimas brought to the spouses her buyer.000. petitioners allegedly informed respondent that TCT No. as in this instance. RT-1076 was in the possession of their cousin. Lagrimas approached the spouses offering to broker the sale to an interested buyer. Petitioner assured the spouses this could be done since he had connections with the Bureau of Internal Revenue. As the courts a quo observed. return by respondent to petitioner of the possession of the subject parcel of land. a certain Mrs. The spouses agreed to sell at P470. Gonzales asked for the deeds of sale of the two lots and delivery of the titles to him. respondent willingly entered into the Kasunduan provided that the full payment of the purchase price will be made upon delivery to him of the title.000. and payment by respondent of damages in favour of petitioners. Caingin Sta.00. it was incomprehensible why the spouses would part with two lots. Mrs. Rosa Laguna.000. RULING: .655 square meter property denominated as lot 1642 of the Sta. there were tax declaration in his name to the intent of his grandfather’s share covering the area of 21460 square meter.150. who having bought Vicente de Guzman’s ½ shares. Conchila Alibudbud. and both situated at a prime commercial district for less than the price of one lot. After the mortgage was cancelled and upon release of the two titles.000. Petitioners paid the bank P375. if the intention of the parties was really to cover the sale of two lots.00 This prompted petitioner to file a complaint for specific performance and damages. As the trial court observed.00 which was what petitioner actually paid the bank. respondents refused to reduce their asking price. even if it were true that two lots were mortgaged and were about to be foreclosed.000. offers to purchase from prospective buyers did not On October 24. The 501 sq. INTERPRETATION OF CONTRACTS: IN CASE OF DOUBT ALMIRA VS.m. The loan still to be paid the bank was only P375. who turned out to be Mrs. 000.00 as well as payment of the capital gains tax. the ads private respondents placed in the Bulletin Today offered only Lot 1 and was strong indication that they did not intend to sell Lot 2. ISSUE: Whether or not the sale involved only Lot 1 and not both Lots. The lot was co-owned and registered in the names of three persons with the following shares: Vicente de Guzman (1/2).00. materialize. In a case where we have to judge conflicting claims on the intent of the parties. Initially. appears more plausible. Gonzales. Rosa Estate in Brgy.00. Nonetheless. herein petitioner Napoleon H. Respondent paid P65. the spouses told the broker that they were selling only to direct buyers. and respondent Federico Brines entered a Kasunduan ng Pagbibilihan (Kasunduan for Brevity) over the 21460 square meter portion for the sum of P150.00 per sq. with petitioner assuming the bank loan of P375.000. However. Contrary to what petitioner would make us believe. Principally. Enrique Hemedes (1/4) and Francisco Alibudbud. Petitioner bargained for a lower price with the suggestion that on paper the price will be markedly lower so the spouses would pay lower capital gains tax.000. The time of the execution of the kasunduan. 000.00 for P470. On July 5. COURT OF APPEALS 399 SCRA 351 FACTS: Petitioners are the wife and the children of the late Julio Garcia who inherited from his mother. prompting petitioner to file a civil action before the RTC for a rescission of the Kasunduan. owned the bigger portion of lot 1642. Contemporaneous and subsequent acts of the parties material to the case are to be considered. It alone would have fetched P576. Ma.00 was made payable within six (6) months from the date of the execution of the instrument. a portion of a 90.00.150.the Bulletin Today.00. 1995 in favor of petitioner for all loans.000. partly because of the surety agreement that assured the payment of the principal obligation. 2005 FACTS: On September 3. The legal action against the sureties arose not only from the security agreement but also from the promissory note. it is necessary to ascertain whether the Kasunduan is a contract to sell or a contract of Sale.” Respondent allegedly failed to pay said obligation upon maturity. Section 2 of the 1997 Rules of Civil Procedure. it was expressly stipulated therein that the venue for any legal action that may arise out of said promissory note shall be Makati City “to the excklusion of all other courts. The circumstances that relate to the issuance of the promissory note and the surety agreement are so intertwined that neither one could be separated from the other. 8298021001 on the amount of P3. CA. Hence it is the respondent who has the option. invoking the stipulation contained in the last paragraph of the promissory note with respect to the restriction/exclusive venue. thy are not in a position to ask for rescission. the petitioners were not ready. 1999. LIM. It was made in the form and language prepared by the bank. The factual milieu of the present case shows that the surety agreement was entered into to facilitate existing and future loan agreements. an accessory contract must be read in its entirety and together with the principal agreement.00. CONSOLIDATED LEASING. 158138 April 12. 1999 PHILIPPINE BANK OF COMMUNICATIONS VS. BANK OF COMMUNICATIONS VS. This no-segregation principle is based on Article 1374 of the Civil Code. 387 SCRA 437 VELASQUEZ VS. 455 SCRA 436 RIGOR VS.297. In the case at bar. under Rule 4. Notably.081. venue was properly laid in Manila. a careful reading of the provision of the Kasunduan reveals that it is a contract of Sale. credits.23 exclusive of interest. RAMON CALDERON and TRI-ORO INTERNATIONAL TRADING &MANUFACTURING CORPORATION G. ELENA LIM.23 as of August 31. It makes no sense to argue that the parties to the surety agreement were not bound by the stipulations in the promissory note. It was not a condition imposed in the perfection of the contract of Sale. 1998 as evidenced by a promissory note renewal BD-Variable No.” petitioner also restricted the venue of actions against the sureties. The rescission will not prosper since the power to rescind is only given to the injured party. willing and able to comply with their obligation to deliver a separate title in the name of Julio Garcia to respondent therefore. A motion for reconsideration of said order was likewise denied. that were extended or may be extended in the future to respondents. Failure to comply with a condition imposed on the performance of an obligation gives the other party the option either to refuse to proceed with the sale or to waive the condition under Art 1545 of the civil code. The aforementioned doctrine is applicable to the present case. JUNE 30. By inserting the provision of that Makati City would be the “venue for any legal action that may arise out of the promissory note. 1999.600. In capable of standing by itself. PHIL. The trial court supported its order with cases where venue was held to be permissive. the promissory note was a contract of adhesion that petitioner required the principal debtor to execute as a condition of the approval of the loan.014. Thus petitioner foreclosed the real estate mortgage executed by the respondents valued at P1. ISSUE: Whether or not the “complementary-contracts-construed together” principle is applicable in the case at bar. Petitioner alleged that respondents obtained a loan from it and executed a continuing surety agreement dated November 16. Respondents moved to dismiss the complaint on the ground of improper venue. although the nature of the Kasunduan was never places in dispute by both parties. Petitioner granted a renewal of said loan upon respondent’s request. 3. the surety agreement can be enforced only in conjuction with the promissory note. RULING: According to this principle.00 leaving a deficiency balance of P4. the right of the parties are governed by the terms ands the nature of the contract they entered. Thus. NO.014. DOCTRINE OF “COMPLEMENTARY CONTRACTS CONSTRUED TOGETHER” 1. certain stipulations cannot be segregated and then made to control.000. etc. as amended. Petitioner approved the loan covered by the promissory note. The delivery of a separation title in the name of Julio Garcia was a condition imposed on respondent’s obligation to pay the balance of the purchase price.R. This principle is used in construing contractual stipulations in order to arrive at their true meaning..NO. 2.297. The latter documents the debt that is sought to be collected in the action against the sureties. A deed of sale is absolute in nature in the absence of an any stipulation reserving title to the vendor until full payment of the purchase price. The injured party is the party who has faithfully fulfilled his obligation. petitioner filed a complaint against respondents fo0r the collection of a deficiency amounting to P4. the most recent being on January 21. Hence. The trial court denied said motion asseverating that petitioners had separate causes of action arising from the promissory note and the continuing surety agreement. DOCTRINE OF “COMPLEMENTARY CONTRACTS CONSTRUED TOGETHER” . Although both parties have consistency referred to the Kasunduan as a contract to Sell. The promissory note also provides that default in paying any installment renders the entire unpaid amount due and payable. respondents G. counterfeit. As held in Velasquez. As security for the loan. (PUFFI). Petition denied.930. this omission effectively eliminated any defense relating to the authenticity and due execution of the deed. or province where the holder/mortgagee has a branch office. 1998. petitioners executed in favor of private respondent a deed of chattel mortgage over two dump trucks.. or any court in the city. Private respondent opposed the motion to dismiss and argued that venue was properly laid in Dagupan City where it has a branch office based on a provision in the deed of chattel mortgage which states that. petitioners moved to dismiss the complaint on the ground of improper venue based on a provision in the promissory note which states that. Dean and Artemio L. Inc. petitioners. 1999 FACTS: The case arose from a complaint for a sum of money with preliminary attachment filed with the Regional Trial Court of Makati City by private respondent Philippine Commercial International Bank (PCIB) against petitioner Rodolfo P. Petitioners affixed their signatures in both contracts. failed to make the corresponding corrections in the promissory notes. we cannot sustain petitioners’ contentions. Petitioners failed to pay several installments despite demand from private respondent.630. Art. After a further exchange of pleadings. DOCTRINE OF “COMPLEMENTARY CONTRACTS CONSTRUED TOGETHER” RODOLFO P. It is presumed that petitioners did not sign the deed of chattel mortgage without informing themselves of its contents. x x x all legal actions arising out of this note or in connection with the chattels subject hereof shall only be brought in or submitted to the proper court in Makati City. ISSUE: Whether or not venue was properly laid under the provisions of the chattel mortgage contract in the light of Article 1374 of the Civil Code. that the document was spurious. CONSOLIDATED ORIX LEASING and FINANCE CORPORATION. Clearly. No.. VS. As aptly stated in a case. they being of age and businessmen of experience. respondent 2002 Aug 20 FACTS: Petitioners obtained a loan from private respondent Consolidated Orix Leasing and Finance Corporation in the amount of P1. it must be presumed that they acted with due care and have signed the documents in question with full knowledge of their import and the obligation they were assuming thereby.00 with PCIB under the government's Guarantee Fund for Small and Medium Enterprises (GFSME). In any event. complete jurisdiction is given the proper court of the city of Makati or any proper court within the province of Rizal. 1996 promising to pay the loan in 24 equal monthly installments of P67. petitioners filed a petition for certiorari before the Court of Appeals imputing grave abuse of discretion by the Dagupan trial court in denying the motion to dismiss which was denied.320. respectively.00. the Court of Appeals did not err in ruling that venue was properly laid in Dagupan City as provided in the deed of chattel mortgage.After service of summons. VS.SPOUSES EFREN N. 1374 provides that the various stipulations of a contract shall be interpreted together. The presumption is applied that a person takes ordinary care of his concerns. After it opened a branch office in Dagupan City. or of different import on its face as the one executed by the parties. On January 5.000. Petitioners executed a promissory note on July 31. but due to oversight. Canilao Jr. RIGOR and ZOSIMA D.000. were signed . filed an application for a loan of P7. private respondent made corrections in the deed of chattel mortgage. VELASQUEZ. or that the signatures were unauthorized. waiving for this purpose any proper venue. Private respondent explained that its older standard promissory notes confined venue in Makati City where it had its main office. To secure payment of the loan.500. Cesar R. INC. Raymundo.00. Nebrida. Inigo A.R. petitioners did not contest the deed of chattel mortgage under Section 8. the Dagupan trial court denied petitioners’ motion to dismiss Not satisfied with the orders.00 and P3. Philippines. Applying the doctrine to the instant case. RIGOR.000. On 16 April 1985 the parties executed the corresponding loan agreement. COURT OF APPEALS. petitioner. private respondent sought to foreclose the chattel mortgage by filing a complaint for Replevin with Damages against petitioners before the Regional Trial Court of Dagupan City.g. for themselves and as owners of CHIARA CONSTRUCTION. e. of which petitioner Velasquez was an officer and stockholder. The Court holds that private respondent is not barred from filing its case against petitioners in Dagupan City where private respondent has a branch office as provided for in the deed of chattel mortgage. x x x in case of litigation arising out of the transaction that gave rise to this contract. RULING: Yes. and PHILIPPINE COMMERCIAL INTERNATIONAL BANK. Velasquez together with Mariano N. 1996.500. promissory notes numbered TL 121231 and TL 121258 for the amounts of P4. 124049 June 30.00 every fifth day of the month commencing on September 5. Sometime in December 1994 the Pick-up Fresh Farms. The promissory note and the deed of chattel mortgage must be construed together.000. or that the signatures appearing thereon were forgeries. Rule 8 of the Revised Rules of Civil Procedure. attributing to the doubtful ones that sense which may result from all of them taken jointly. penalties and other charges. On appeal. However.00 plus costs of suit as well as its Resolution of 19 February 1995 denying reconsideration. Hence this petition.624. 1996. as officers of and for both PUFFI and Aircon and Refrigeration Industries. 1374 of the Civil Code which states that Art. The Decision of 28 September 1995 of the Court of Appeals affirming the 20 June 1990 judgment of the RTC. Two (2) years later. Jr. Raymundo. 4. Both leases contained a provision granting Mayfair a right of first refusal to purchase the said properties. 370 SCRA 56 SIGUAN VS. a part of the second floor and two spaces on the ground floor. MAYFAIR THEATER. provided to further secure the obligations of the BORROWER to the LENDER. Exemplary damages and attorney’s fees of 25% of the total amount due were also sought. The various stipulations of a contract shall be interpreted together. (ARII). 61.48 with annual interest of 17% and attorney’s fees of P700. MAYFAIR THEATER.000. Makati City. The provisions must be construed together to arrive at their true meaning. together with two two-storey buildings constructed thereon. 1374. also executed deeds of suretyship in favor of PCIB. Thus.000. attributing to the doubtful ones that sense which may result from all of them taken jointly. shall each execute a suretyship agreement in favor of the LENDER in form and substance acceptable to the LENDER. among others. Jr. Petitioner along with Nebrida and Canilao. PCIB filed an action to recover the remaining balance of the entire obligation including interests. Certain stipulations cannot be segregated and then made to control. Messrs. CA. The lease covered a portion of the second floor and mezzanine. LIM. A chattel mortgage was also executed by ARII over its equipment and machineries in favor of PCIB.00 as attorney’s fees and the costs of suit. On appeal. On June 1. When PUFFI defaulted in the payment of its obligations PCIB foreclosed the chattel mortgage. ordering petitioner Rodolfo P. The decision became final and executory and Mayfair filed a motion for its execution. VS. the petition is DENIED. which the court granted on April 25. Carmelo entered into a lease with Mayfair Theater. on July 30. 1999 KHE KONG VS. Dean and Artemio L. which in this case was the loan agreement. the Court of Appeals (CA) reversed and set aside the judgment of the lower court. (Carmelo) used to own a parcel of land.624. 370 SCRA 56 FACTS: Carmelo & Bauermann. Inc. However. The lease was also for a period of twenty (20) years. Nebrida and Mariano N. the court ruled in favor of Equatorial. 1967. On 20 June 1990 the trial court rendered a summary judgment in favor of PCIB holding petitioner and Canilao solidarily liable to pay P7. RESCISSIBLE CONTRACTS-NATURE AND EFFECTS-MUTUAL RESTITUTION 1.227. WHEREFORE. The case was dismissed without prejudice with regard to the other defendants as they were not properly served with summons. 2. As a result. 1978. is AFFIRMED. 3.48 plus annual interest of 17%. INC. EQUATORIAL REALTY VS. Separate deeds of suretyship were further executed by Cesar R.00. the Court of Appeals on 28 September 1995 affirmed in toto the RTC judgment. On 9 October 1989 a writ of preliminary attachment was granted by the trial court. The surety bond must be read in its entirety and together with the contract between the NPC and the contractors. and P700. NOVEMBER 19.by Inigo A. (Mayfair) for a period of 20 years. CA. ISSUE: Whether or not the appellate court committed reversible error in sustaining or affirming the summary judgment despite the existence of genuine triable issues of facts and in refusing to set aside the default order against petitioner. within the 20-year-lease term. RULING: The more appropriate doctrine in this case is that of the “complementary contracts construed together” doctrine. Petitioner’s motion for reconsideration was thereafter denied. Mayfair entered into a second lease with Carmelo for the lease of another property. 251 SCRA 430 EQUATORIAL REALTY DEVELOPMENT. That the “complementary contracts construed together” doctrine applies in this case finds support in the principle that the surety contract is merely an accessory contract and must be interpreted with its principal contract.Br. Jr. The proceeds of the sale amounted to P678. Canilao. (Equatorial) for the sum of P11.3M without their first being offered to Mayfair. INC. On November 21. This doctrine closely adheres to the spirit of Art. Inc. After trial.227. Canilao. Canilao. Inc. . to solidarily pay respondent Philippine Commercial and Industrial Bank (PCIB) the amount of P7. the Supreme Court denied Equatorial’s petition for review and declared the contract between Carmelo and Equatorial rescinded.000. Inc. Carmelo sold the subject properties to Equatorial Realty Development. Mayfair filed a complaint for specific performance and damages. 1997. Applying the “complementary contracts construed together” doctrine leaves no doubt that it was the intention of the parties that petitioner would be personally liable in the deed of suretyship because the loan agreement. Velasquez and Mariano N. Inc. Raymundo. Nebrida. 355 SCRA 701 SUNTAY VS. Dean and Velasquez and Aircon and Refrigeration Ind. RESCISSIBLE CONTRACTS-NATURE AND EFFECTS-MUTUAL RESTITUTION MARIA ANTONIA SIGUAN. but also the rentals paid. Article 1386 of the Civil Code provides rescission. The lower court debunked the claim of the petitioner for unpaid rentals. New transfer certificates of title were thereafter issued in the names of the donees. fraudulently transferred all her real property to her children in bad faith and in fraud of creditors. Lim was convicted of estafa by the RTC of Quezon City in Criminal Case No. On 23 June 1993. fiction yields to reality. and the price with its interest.000 and P241. Lim. . 22127-28. 134685 FACTS: On 25 and 26 August 1990. CEB-14181.668. together with their fruits. In its decision of 31 December 1994 the trial court ordered the rescission of the questioned deed of donation. the rentals that fell due from the time of the perfection of the sale to petitioner until its rescission by final judgment should belong to the owner of the property during that period. was registered with the Office of the Register of Deeds of Cebu City. jointly and severally. to petitioner's and other creditors' prejudice. even in expectancy. holding that the rescission of the Deed of Absolute Sale in the mother case did not confer on Equatorial any vested or residual proprietary rights. respondents 1999 Nov 19 G. No. Petitioner claimed therein that sometime in July 1991. the checks were dishonored for the reason "account closed. that Lim conspired and confederated with her children in antedating the questioned Deed of Donation. 1997. On the other hand. Hence. 22127-28 were erroneous. Linde. (3) ordered the Register of Deeds of Cebu City to cancel said titles and to reinstate the previous titles in the name of Rosa Lim. the sum of P10. Finally. 22. plus legal interest. petitioner. a criminal case for violation of Batas Pambansa Blg. which were the object of the contract. in a decision promulgated on 7 April 1997. she alleged that the Deed of Donation was registered only on 2 July 1991 because she was seriously ill. Rent is a civil fruit that belongs to the owner of the property producing it by right of accession. at the time of the fraudulent conveyance. No. Lim denied any liability to petitioner." Demands to make good the checks proved futile. As regards the questioned Deed of Donation. payable to "cash. she maintained that it was not antedated but was made in good faith at a time when she had sufficient property. and that Lim. Q-89-22162 filed by a certain Victoria Suarez. the Supreme Court. the court a quo convicted Lim as charged.Carmelo could no longer be located thus Mayfair deposited with the court its payment to Carmelo. Ingrid and Neil Lim. ROSA LIM. As a consequence. (2) declared null and void the transfer certificates of title issued in the names of private respondents Linde. It holds true only when there is no impediment that may prevent the passing of the property from the hands of the vendor into those of the vendee. Ingrid and Neil.000 as expenses of litigation.000 as attorney's fees.000 as moral damages. 134685. through a Deed of Donation. The case is pending before this Court for review and docketed as G. When there is such impediment. On September 18. a Deed of Donation conveying parcels of land and purportedly executed by Lim on 10 August 1989 in favor of her children. Meanwhile. were filed by petitioner against LIM with Branch 23 of the Regional Trial Court (RTC) of Cebu City. Equatorial filed an action for the collection of sum of money against Mayfair claiming payment of rentals or reasonable compensation for the defendant’s use of the premises after its lease contracts had expired. P10. The objection took the form of a court action impugning the sale that was rescinded by a judgment rendered by the Court in the mother case. Petitioner never took actual control and possession of the property sold. She claimed that her convictions in Criminal Cases Nos. had to be returned by the buyer. however. Consequently and ordinarily. VS. as actual damages. the delivery has not been effected. RULING: NO. ISSUE: Whether or not Equatorial may collect rentals or reasonable compensation for Mayfair’s use of subject premises after its lease contracts had expired. docketed as Criminal Cases Nos. on 2 July 1991. respectively. if any. The lower court issued a deed of reconveyance in favor of Carmelo and issued new certificates in the name of Mayfair." Upon presentment by petitioner with the drawee bank. which creates the obligation to return the things. and (4) directed the LIMs to pay the petitioner.R. On appeal. left no sufficient properties to pay her obligations. in view of the respondent’s timely objection to the sale and continued actual possession of the property. acquitted Lim but held her civilly liable in the amount of P169. petitioner filed an accion pauliana against Lim and her children before Branch 18 of the RTC of Cebu City to rescind the questioned Deed of Donation and to declare as null and void the new transfer certificates of title issued for the lots covered by the questioned Deed. It also appears that on 31 July 1990. which was the reason why she appealed said decision to the Court of Appeals. The complaint was docketed as Civil Case No. and P5. This decision was affirmed by the Court of Appeals. LINDE LIM. Lim issued two Metrobank checks in the sums of P300.R. respondent’s opposition to the transfer of property by way of sale to Equatorial was a legally sufficient impediment that effectively prevented the passing of the property into the latter’s hands. INGRID LIM and NEIL LIM.000. It has been held that the execution of a contract of sale as a form of constructive delivery is a legal fiction. including her. In its decision dated 29 December 1992. petitioners. being a public document.. MARIA ROSARIO and MARIA LOURDES. substituted by his heirs. RAFAEL. SUNTAY. RULING: The Supreme Court upheld the validity of the deed of donation. namely: ROSARIO. it is merely declaratory. the date of the judgment enforcing it is immaterial. respondents G. or at least the intent to commit fraud. appears on its face to have been executed on 10 August 1989. (1) there must be a credit existing prior to the celebration of the contract. essential that the party asking for rescission prove that he has exhausted all other legal means to obtain satisfaction of his claim." The fourth requisite for an accion pauliana to prosper is not present either. Notably. the Court of Appeals found the same untenable. for the rule is basic that the fraud must prejudice the creditor seeking the rescission. Under Section 23 of Rule 132 of the Rules of Court. it having been acknowledged before a notary public. Article 1383 of the same Code provides that the action for rescission is but a subsidiary remedy which cannot be instituted except when the party suffering damage has no other legal means to obtain reparation for the same. the Court of Appeals. In the instant case. although demandable later. MARIA VICTORIA. APOLINARIO. As such. (5) the third person who received the property conveyed. On this score. Anent petitioner's contention that assuming that the Deed of Donation was not antedated it was nevertheless in fraud of creditors because Victoria Suarez became Lim’s creditor on 8 October 1987. to the prejudice of the creditor seeking the rescission. therefore. and this must be proved as one of the bases of the judicial pronouncement setting aside the contract. in a promulgated on 20 February 1998. JR. that deed is a public document. (3) the creditor has no other legal remedy to satisfy his claim. her action for the rescission of the questioned deed is not maintainable even if the fraud charged actually did exist. No. the following requisites must be present: (1) the plaintiff asking for rescission has a credit prior to the alienation. the alleged debt of Lim in favor of petitioner was incurred in August 1990. Under Article 1381 of the Civil Code. Rule 132 of the Rules of Court. the first requirement for accion pauliana was not met. THE HON. there being no convincing evidence on record to indicate that the notary public and the parties did antedate it.R. contracts entered into in fraud of creditors may be rescinded only when the creditors cannot in any manner collect the claims due them. and among them are "those contracts undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them. (2) the debtor has made a subsequent contract conveying a patrimonial benefit to a third person. The term "subsidiary remedy" has been defined as "the exhaustion of all remedies by the prejudiced creditor to collect claims due him before rescission is resorted to. It held that two of the requisites for filing an accion pauliana were absent. pursuant to Section 23. if it is by onerous title. The general rule is that rescission requires the existence of creditors at the time of the alleged fraudulent alienation. Petitioner neither alleged nor proved that she did so. No antedating of the Deed of Donation was made. Also. or a year after the execution of the Deed of Donation. While it is necessary that the credit of the plaintiff in the accion pauliana must exist prior to the fraudulent alienation. According to the Court of Appeals. Even if the judgment be subsequent to the alienation. with retroactive effect to the date when the credit was constituted. The Supreme Court is not convinced with the allegation of the petitioner that the questioned deed was antedated to make it appear that it was made prior to petitioner's credit. the Deed of Donation." The action to rescind contracts in fraud of creditors is known as accion pauliana. has been an accomplice in the fraud. namely. which is 10 August 1989. Thus. RESCISSIBLE CONTRACTS-NATURE AND EFFECTS-MUTUAL RESTITUTION RAFAEL G. and (2) there must be a fraud. the fact that the questioned Deed was registered only on 2 July 1991 is not enough to overcome the presumption as to the truthfulness of the statement of the date in the questioned deed. Article 1381 of the Civil Code enumerates the contracts which are rescissible.On appeal." It is. For this action to prosper. Petitioner's claim against Lim was constituted only in August 1990. COURT OF APPEALS and FEDERICO C. there can neither be injury nor fraud. or a year after the questioned alienation. is evidence of the fact which gave rise to its execution and of the date thereof. the first two requisites for the rescission of contracts are absent. Since Lim's indebtedness to petitioner was incurred in August 1990. while the deed of donation was purportedly executed on 10 August 1989. In the present case. Without any prior existing debt. SUNTAY. the questioned Deed. VS. it is evidence of the fact which gave rise to its execution and of its date. (4) the act being impugned is fraudulent. Even assuming arguendo that petitioner became a creditor of Lim prior to the celebration of the contract of donation. still her action for rescission would not fare well because the third requisite was not met. ISSUE: Whether or not the deed of donation is valid. all surnamed SUNTAY. 1995 . 114950 December 19. RAYMUND. reversed the decision of the trial court and dismissed petitioner's accion pauliana. which was executed and acknowledged before a notary public. Philippine currency. of the Notarial Register of Atty. . Federico remained in possession of the property sold in concept of owner. Less than three months after this conveyance. Through this counter conveyance. notwithstanding the fact that Rafael became the titled owner of said land and rice mill." Nowhere on page 13 of the same notarial register could be found any entry pertaining to Rafael's deed of sale. 1969. The request having been obviously turned down. dated September 30. Series of 1962. TCT No. The parties to the case were heard on oral argument on October 12. 02015 in the name of Federico was cancelled and in lieu thereof. petitioner Rafael Suntay. Atty. Herminio V. While the trial court upheld the validity and genuineness of the deed of sale executed by Federico in favor of Rafael." On September 8. Agrava & Agrava filed a petition with the Court of First Instance of Bulacan asking Rafael to surrender his owner's duplicate certificate of TCT No. 1970. and other improvements. this second deed appears to have been notarized as Document No.FACTS: Respondent Federico Suntay was the registered owner of a parcel of land with an area in Bulacan. His application. Fojas prayed that said heirs be substituted as defendantsappellants in the case. referred to as Exhibit B. 1969.000. is not the said deed of sale but a certain "real estate mortgage on a parcel of land with TCT No. A rice miller. requested that Rafael deliver his copy of TCT No. Rafael insisted that said property was "absolutely sold and conveyed . Although on its face. was disapproved. 1960. it was neither dated nor notarized. he had thought of allowing Rafael to make the application for him. he never made any attempt to take possession thereof at any time. Rafael scoffed at the attack against the validity and genuineness of the sale to him of Federico's land and rice mill. it ruled that the counter-deed. null and void.000 cavans of palay. . On December 15. Significantly. On the land may be found: a rice mill. through his new counsel. obviously because at that time he was tied up with several unpaid loans. 56 on Page 13. Series of 1962. and. while the trial court adjudged Rafael as the owner of the property in dispute. Even after the execution of the deed. Counsel of Federico filed a motion for reconsideration of the aforecited decision. For purposes of circumvention. 16157 to secure a loan of P3. the Court granted the same. Flores. a warehouse. when Rafael delivered the second deed to him. T-36714 so that Federico could have the counter deed of sale in his favor registered in his name.500. In a letter. RULING: In the aggregate. hence. Said deed was notarized as Document No. Atty.000.00. 1993. and for other valuable consideration". it did not go to the extent of ordering Federico to pay back rentals for the use of the property as the court made the evidential finding that Rafael simply allowed his uncle to have continuous possession of the property because or their understanding that Federico would subsequently repurchase the same. 57 and recorded on Page 13 of Book 1. 56 and recorded on Page 15 of Book 1. Federico. while Federico continued to exercise rights of absolute ownership over the property. Agrava & Agrava filed a motion to withdraw said petition. In opposition thereto. 1993. in a letter. In his answer. the Court of Appeals reversed itself and rendered an amended judgment. Federico. a counter sale was prepared and signed by Rafael who also caused its delivery to Federico. null and void ab initio. for and in consideration of P20.000. Fojas entered his appearance in behalf of the heirs of Rafael who had passed away on November 23. 1988. The complete absence of an attempt . with a modification that Federico was ordered to surrender the possession of the disputed property to Rafael. Fojas filed in behalf of the heirs an opposition to the motion for reconsideration. for a consideration of P20. Atty. dated August 14. applied as a miller-contractor of the then National Rice and Corn Corporation (NARIC). Thereafter. hence. Flores. Upon the execution and registration of the first deed. ISSUE: Whether or not the deed of sale executed by Federico in favor of Rafael is simulated and fictitious and. The Court of Appeals rendered judgment affirming the trial court's decision. He informed the NARIC that he had a daily rice mill output of 400 cavans of palay and warehouse storage capacity of 150. Ricardo M.00 conveyed to Rafael said parcel of land with all its existing structures. From the aforecited decision of the trial court. Certificate of Title No. On July 8. Atty. Moreover. T-36714. Rafael prepared an absolute deed of sale whereby Federico. an examination thereof will show that. The prayer for substitution was duly noted by the court in a resolution dated April 6. Neither was he able to enter the same in his notarial register. was simulated and without consideration.00 in favor of the Hagonoy Rural Bank. although prepared by his nephew-lawyer. the evidence on record demonstrate a combination of circumstances from which may be reasonably inferred certain badges of simulation that attach themselves to the deed of sale in question. both Federico and Rafael appealed. recorded as Document No. Flores admitted that he failed to submit to the Clerk of Court a copy of the second deed. Herminio V. While the motion was pending resolution. executed by Rafael in favor of Federico. of the notarial register of Atty. Agrava & Agrava. 1969. the same parcel of land with all its existing structures was sold by Rafael back to Federico for the same consideration of P20. Even Federico himself alleged in his Complaint that. Federico filed a complaint for reconveyance and damages against Rafael. 1993.00. T-36714 was issued in the name of Rafael. Testifying on this irregularity. on September 13. Rafael chronicled the discrepancy in the notarization of the second deed of sale upon which said petition was premised and ultimately concluded that said deed was a counterfeit or "at least not a public document which is sufficient to transfer real rights according to law. which deed is referred to above as Exhibit A. It presupposes that the creditor has exhausted the property of the debtor. respondents G. alias Felix Khe.00. were ordered to reconvey to private respondent Federico G. SANDRA JOY KHE and RAY STEVEN KHE. it is not at all strange for Federico to have been complacent and unconcerned about the status of his title over the disputed property since he has been possessing the same actually. In the event that the petitioners fail or refuse to execute the necessary deed of reconveyance as herein directed. the second deed of sale executed by the late Rafael in favor of his uncle. The date of the decision of the trial court against the debtor is immaterial.400 bags of Copra at Masbate for delivery to Dipolog.1 of the complaint. the decision of the trial court against the debtor will retroact to the time when the debtor became indebted to the creditor. For as long as the creditor still has a remedy at law for the enforcement of his claim against the debtor. Insurer Philam paid the amount of P 354. hence. the creditor will not have any cause of action against the creditor for rescission of the contracts entered into by and between the debtor and another person or persons. the heirs of Rafael G. more than four (4) years after registration. Federico had been all the while in possession of the land covered by his title and so there was no pressing reason for Federico to have a title in his name issued. T-36714 of the Registry of Deeds of the Province of Bulacan. the action is thereby barred by prescription. 400 bags was covered by a marine insurance policy issued by American Home Insurance Company (eventually Philam). No. And since the complaint was filed only in 1997. is the owner of Butuan Shipping Lines to which the Philippine Agricultural Trading Corporation used its vessel M/V Prince Eric Corporation to ship 3. After all. petitioners. should be considered ineffective and unavailing. Khe Hong Cheng executed deeds of donations of parcels of land in favor of his children. INC. and adversely. a writ of execution to garnish Khe Hong Cheng’s property was issued but the sheriff failed to implement the same for Cheng’s property were already transferred to his children. Petitioners. Such shipping of 3. within 10 days from the finality of the Decision.. 1989 and such constituted constructive notice. said parties having entered into a sale transaction to which they did not intend to be legally bound. MAKATI CITY and PHILAM INSURANCE CO. RULING: An accion pauliana accrues only when the creditor discovers that he has no other legal remedy for the satisfaction of his claim against the debtor other than an accion pauliana. American home filed a case for the rescission of the deeds of donation executed by petitioner in favor of children for such were made in fraud of his creditors. HON. which is the value of the copra. Suntay the property described in paragraph 2. It was only when Federico needed the title in order to obtain a collaterized loan that Federico began to attend to the task of obtaining a title in his name over the subject land and rice mill. based on breach of common carriage. null and void. Petitioner answered saying that the action should be dismissed for it already prescribed. Federico's title was not in the hands of a stranger or mere acquaintance. Petitioner posited that the registration of the donation was on December 27. Suntay. COURT OF APPEALS. The allegation of Rafael that the lapse of seven years before Federico sought the issuance of a new title in his name necessarily makes Federico's claim stale and unenforceable does not hold water. The deed of sale executed by Federico in favor of his now deceased nephew. While the case was pending. As a consequence of a favorable judgment for American Home. However. an accion pauliana presupposes a judgment and the issuance by the trial court of a writ of execution for the satisfaction of the judgment and the failure of the Sheriff to enforce and satisfy the judgment of the court. Rafael. M/V Prince Eric sank somewhere between Negros Island and Northern Mindanao which resulted to the total loss of the shipment.on the part of the buyer to assert his rights of ownership over the land and rice mill in question is the most protuberant index of simulation. American Home was thereby subrogated unto the rights of the consignee and filed a case to recover money paid to the latter. the general rule is such shall be reckoned from the . RTC 147. What is important is that the credit of the plaintiff antedates that of the fraudulent alienation by the debtor of his property. Consequently. As no property was validly conveyed under the deed. the Clerk of Court of the Regional Trial Court of Bulacan was ordered to execute the same at the expense of the aforesaid heirs. and eventually ended. Although Article 1389 of the Civil Code provides that “The action to claim rescission must be commenced within four (4) years” is silent as to where the prescriptive period would commence. 144169 28 March 2001 355 SCRA 701 FACTS: Petitioner Khe Hong Cheng. 000. to Philippine Agricultural Trading Corporation. Indeed. to the exclusion of Rafael. Decision affirmed. alias FELIX KHE. RESCISSIBLE CONTRACTS-NATURE AND EFFECTS-MUTUAL RESTITUTION KHE HONG CHENG. is absolutely simulated and fictitious and. and to surrender to him within the same period the owner's duplicate copy of Transfer Certificate of Title No. openly.. being his lawyer. Even when the relationship between the late Rafael and Federico deteriorated. ISSUE: Whether or not the action for the rescission of the deed of donation has prescribed. had served him faithfully for many years. it was in the possession of his nephew who. The accion pauliana is an action of a last resort.R. VS. TEOFILO GUADIZ. 000. at her behest. 2005 FACTS: Cleopas Ape was the registered owner of a parcel of land (Lot No. 105 PHIL.. Romeo. 2319. the defendants below maintained having entered into a contract of lease with respondent involving Fortunato’s portion of Lot No. 354 SCRA 675 KATIPUNAN VS. their respective portions of Lot No. 392 SCRA 317 BRAGANZA VS. and to pay the costs. it was only in February 25. In their reply. prayed that Fortunato be ordered to execute and deliver to her “a sufficient and registrable deed of sale involving his oneeleventh (1/11) share. the vendee may compel the transfer of the ownership and to deliver the object of the sale while the vendor may demand the vendee to pay the thing sold. barely a month from discovering that petitioner Khe Hong Cheng had no other property to satisfy the judgment award against him that the action for rescission accrued. she supposedly demanded that Fortunato executes the corresponding deed of sale and to receive the balance of the consideration. in the case at bar. THE HONORABLE COURT OF APPEALS and GENOROSA CAWIT VDA.00. Upon its perfection. For there to be a perfected contract of sale. Andres Flores. Dominador. 4. Encarnacion. 456 MIAILHE VS. 2002 JUMALON VS. VILLA ABRILLE. private respondent. 2. During the trial. respondents G. DE APE VS. On 15 March 1973.00 for every appeal made. 6. 2319.000. the date that the deed of donation was registered.00 for attorney’s fees. JANUARY 30. however. the property passed on to his wife. Upon Cleopas Ape’s death sometime in 1950. private respondent alleged that Fortunato was present when the survey was conducted. CA. Fortunato unjustifiably refused to heed her demands. Maria Ondoy. 456 SCRA 193 FRANCISCO VS. Fortunato and petitioner denied the material allegations of the complaint and claimed that Fortunato never sold his share in Lot No. and Angelina. i. the legal possibility of bringing the action. Adela. as evidenced by various written instruments. After due trial. 2319 thus.moment the cause of action accrues. Bienvenido. Fortunato died and was substituted by his children named Salodada. 2319 to private respondent.R.e. The agreement was contained in a receipt prepared by private respondent’s son-in-law. Significantly. P500. Narciso. is untenable. At the trial court level. to pay P5. JANUARY 30. they insisted that Fortunato was no longer a co-owner of Lot No. December 27. HERRERA. P2. therefore. The Court of Appeals. RULING: No. Private respondent. the following elements must be present: consent.. VS. all surnamed Ape. Rodrigo. the court a quo rendered a decision dismissing both the complaint and the counterclaim. CA. Clarita. private respondent and Fortunato entered into a contract of sale of land under which for a consideration of P5. i. RP 1379 (RP-154 [300]). Loreta. the parties may reciprocally demand performance. CA. As private respondent wanted to register the claimed sale transaction. joined by her husband. Fortunato agreed to sell his share in Lot No.00 reimbursement for litigation expenses as well as additional P500. and their eleven (11) children. it is perfected by mere consent of the parties. namely: Fortunato. It was alleged in the complaint that on 11 April 1971. VDA. A contract of sale is a consensual contract. private respondent contended that her husband caused the annotation of an adverse claim on the certificate of title of Lot No. 1997. and Salvador. Lourdes. KATIPUNAN. DE LUMAYNO. reversed and set aside the trial court’s dismissal of the private respondent’s complaint but upheld the portion of the court a quo’s decision ordering the dismissal of petitioner and her children’s counterclaim. Cornelio. petitioner. 5. In addition. By virtue of these sales. Furtunato.000.. the private respondent and her husband alleged that they had purchased from Fortunato’s co-owners. Felicidad. Braulio. ISSUE: Whether the receipt signed by Fortunato proves the existence of a contract of sale between him and private respondent. Marieta. 2002 PERPETUA VDA. 3. 2319 to private respondent and that his signature appearing on the purported receipt was forged. and price in money or its equivalent. By way of counterclaim. Bernalda. 2319) which is covered by Original Certificate of Title (OCT) No. his right of redemption no longer existed. So the contention of Khe Hong Cheng that the action accrued from the time of the constructive notice. 2319 surveyed by a certain Oscar Mascada who came up with a technical description of said piece of land. It upheld private respondent’s position that Exhibit “G” which is the receipt of partial payment had all the earmarks of a valid contract of sale. instituted a case for “Specific Performance of a Deed of Sale with Damages” against Fortunato and his wife Perpetua (petitioner herein). 2319. EFFECTS OF ANNULMENT OF VOIDABLE CONTRACTS 1.00 in damages. thus. 133638 April 15. DE APE. object. . No. she and her husband had the whole Lot No. However. that is. Since accion pauliana is an action of last resort after all other legal remedies have been exhausted and have been proven futile.e. the Court ruled that the records of this case betray the stance of private respondent that Fortunato Ape entered into such an agreement with her. 1989. Jr. Lack of consideration makes a contract of sale fictitious. 3. MAPALAD OESMER VS. RTC ruled in favour of Nordelak. or if the contract is in a language not understood by him. however the four missing tcts turned out to be in possession of Nordelak Development Corporation. CA SANCHEZ vs. However. ISSUE: Whether or not there was a valid sale between Mapalad and Nordelak. MAPALAD 541 SCRA 397 FACTS: Respondent Mapalad was the registered owner of four (4) parcels of land located along Roxas Boulevard. Intelligence in consent is vitiated by error. 1989. spontaneity by fraud. Flores testified that. ERNESTO. Evidently. JOSEFINA. 6. The exception to this rule is provided for under Article 1332 of the Civil Code which provides that “when one of the parties is unable to read. intimidation or undue influence. that the signatures purporting to be his were genuine.. EFFECTS OF ANNULMENT OF VOIDABLE CONTRACTS 1. Baclaran. consent: (a) should be intelligent. A fictitious sale is void ab initio. it would still be voidable for lack of authority resulting in his incapacity to give consent for and in behalf of the corporation.” In this case. the person who signed for and in behalf of Mapalad in the deed of absolute sale dated November 2. the general rule is that he who alleges fraud or mistake in a transaction must substantiate his allegation as the presumption is that a person takes ordinary care for his concerns and that private dealings have been entered into fairly and regularly. The Ca reversed the decision of RTC. In this jurisdiction. CA KATIPUNAN VS.To be valid. Nordelak came into possession of the 4 TCTs by deed of sale purportedly executed by Miguel Magsaysay in his capacity as President and Board Chairman of Mapalad. BIBIANO. Even assuming. CA BRAGANZA VS. consent was purportedly given by Miguel Magsaysay. ROLANDO and FERNANDO. she bears the burden of proving that the terms of the agreement were fully explained to Fortunato Ape who was an illiterate. the person enforcing the contract must show that the terms thereof have been fully explained to the former. substituted by his heirs. Vice president/treasurer and General Manager of Mapalad discovered that the 4 TCTs were missing. as he categorically stated on the witness stand during trial. the petition is hereby DENIED and the appealed Court of Appeals decision AFFIRMED in toto. for the sake of argument. LEONORA. JR. (b) should be free and (c) should be spontaneous. all surnamed . Mapalad filed an action for annulment of deed of sale and reconveyance of title with damages against Nordelak. while he was very much aware of Fortunato’s inability to read and write in the English language. mental weakness or some other handicap. PDC VDA. Josef. 5. 1989 notwithstanding. such allegation was debunked by Andres Flores himself when the latter took the witness stand. 4. and mistake or fraud is alleged. DE APE VS. EFFECTS OF ANNULMENT OF VOIDABLE CONTRACTS RIZALINO. as private respondent is the one seeking to enforce the claimed contract of sale. the contract of sale between Mapalad and Nordelak is not only voidable on account of lack of valid consent on the part of the purported seller. LIBRADO and ENRIQUETA. He even dismissed the idea of asking somebody else to assist Fortunato considering that a measly sum of thirty pesos was involved. KATIPUNAN JUMALON VS. VILLA ABRILLLE MIALHE VS. he was no longer connected with Mapalad on the said date because he already divested all his interests in said corporation as early as 1982. While she claimed in her testimony that the contents of the receipt were made clear to Fortunato. 7. This she failed to do. WHEREFORE. the Court annuls the contract of sale between Fortunato and private respondent on the ground of vitiated consent. The alleged deed of absolute sale dated November 2. Parañaque The PCGG issued writs of sequestration for Mapalad and all its properties. RULING: In the present case. ignorance. he did not bother to fully explain to the latter the substance of the receipt (Exhibit “G”). but also void ab initio for being fictitious on account of lack of consideration. it did not occur to Flores that the document he himself prepared pertains to the transfer altogether of Fortunato’s property to his mother-in-law. 2. SANCHES VS.” Thus. It is precisely in situations such as this when the wisdom of Article 1332 of the Civil Code readily becomes apparent which is “to protect a party to a contract disadvantaged by illiteracy. freedom by violence. Leonora. Adolfo and Jesus. and Librado also signed the said Contract to Sell.000. However petitioners informed respondent corporation about their intention to rescind the Contract to Sell and to return the amount of Php 100. prayed that Fortunato be ordered to execute and deliver to her "a sufficient and registrable deed of sale involving his oneeleventh (1/11) share or participation in Lot No. From that moment. 2319 of the Escalante Cadastre Private respondent testified that Fortunato went to her store at the time when their lease contract was about to expire.00. 157493 February 5. they agreed instead to enter into a contract of sale which Fortunato acceded to provided private respondent bought his portion of Lot No. VS. ISSUE: Whether or not the receipt signed by Fortunato proves the existence of a contrct of sale between him and private respondent. may be in keeping with good faith. 2005 FACTS: Generosa Cawit de Lumayno (private respondent herein). and mistake or fraud is alleged. mental weakness or some other handicap EFFECTS OF ANNULMENT OF VOIDABLE CONTRACTS JULIAN FRANCISCO. two of the brothers. Bibiano. the acceptance may be express or implied. the acceptance must be made known to the offeror. To produce a contract. A check in the amount of P100. upon the acceptance by the offeree of the offer made by the offeror. Such signatures show their acceptance of what has been stipulated in the Contract to Sell and such acceptance was made known to respondent corporation when the duplicate copy of the Contract to Sell was returned to the latter bearing petitioners’ signatures. It is precisely in situations such as this when the wisdom of Article 1332 of the Civil Code readily becomes apparent which is "to protect a party to a contract disadvantaged by illiteracy. However." As can be gleaned from Flores's testimony. petitioner. ET. filed a complaint for Declaration of Nullity or for Annulment of Option Agreement or Contract to Sell with damages. at Otani Hotel in Manila. Accordingly. usage and law. He allegedly demanded the rental payment for his land but as she was no longer interested in renewing their lease agreement. DE APE. RUKING: It is well-settled that contracts are perfected by mere consent. PASTOR HERRERA . did not sign the document. EFFECTS OF ANNULMENT OF VOIDABLE CONTRACTS PERPETUA VDA.00.R. President of respondent Paraiso Development Corporation. A Contract to Sell was drafted. according to their nature. therefore. Private respondent. Evidently. Rizalino. However. G. Braulio. Petitioners.OESMER.000. Jr.000. respondent did not respond to the aforesaid letter.13 In the case at bar. Sometime thereafter. She supposedly demanded that Fortunato execute the corresponding deed of sale and to receive the balance of the consideration. Respondent. he did not bother to fully explain to the latter the substance of the receipt (Exhibit "G"). RUKING: Under Article 1332 of the Civil Code which provides that "[w]hen one of the parties is unable to read. AL.R. therefore. The said meeting was for the purpose of brokering the sale of petitioners’ properties to respondent corporation. she asked her son-in-law Flores to prepare the aforementioned receipt. was given as option money. Thereafter. the person enforcing the contract must show that the terms thereof have been fully explained to the former.. the Contract to Sell was perfected when the petitioners consented to the sale to the respondent of their shares in the subject parcels of land by affixing their signatures on the said contract. No. respondents G. Fortunato unjustifiably refused to heed her demands. CA affirmed the decision of RTC with modification. However. joined by her husband. payable to Ernesto. or if the contract is in a language not understood by him. ISSUE: Whether ot not Contract to Sell is void considering that on of the heirs did not sign it as to indicate its consent to be bound by its terms. 2319 for P5. DE LUMAYNO. No. Petitioners. the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which. For a contract to arise.00. The RTC rendered its decision in favor to respondent. it did not occur to Flores that the document he himself prepared pertains to the transfer altogether of Fortunato's property to his mother-in-law. He even dismissed the idea of asking somebody else to assist Fortunato considering that a measly sum of thirty pesos was involved. the acceptance can be withdrawn or revoked before it is made known to the offeror.3 instituted a case for "Specific Performance of a Deed of Sale with Damages" against Fortunato and his wife Perpetua (petitioner herein). the acceptance must not qualify the terms of the offer. ignorance. 2007 FACTS: Petitioner Ernesto to meet with a certain Sotero Lee. vs. while he was very much aware of Fortunato's inability to read and write in the English language. vs PARAISO DEVELOPMENT CORPORATION.THE HONORABLE COURT OF APPEALS and GENOROSA CAWIT VDA. 133638 April 15. 1991. 1991. Both were located at Barangay San Andres. these are contracts that are valid and binding unless annulled through a proper action filed in court seasonably. 01-00497 are hereby declared VALID. intimidation. Rodolfo and Guillermo appears to have received from Villa Abrille. Rizal. Further.. But. the children of Eligio.R. and respondent Pastor Herrera. In the present case. 1990 to August 10. RULING: A void or inexistent contract is one which has no force and effect from the very beginning. paid in installments from November 30. or deceit. An annullable contract may be rendered perfectly valid by ratification. herein respondent then filed a complaint for annulment of sale. tried to negotiate with petitioner to increase the purchase price. object certain as subject matter.000. was the owner of two parcels of land. Clearly. m. On January 3. Cainta. two years after the cessation of the present hostilities or as soon as International Exchange has been established in the Philippines. 1991. No. 139982 November 21. for the price of P1. Hence. the legal effect is that the contract is voidable or annullable as specifically provided in Article 1390. This bolsters the view that indeed there was ratification. on October 30. which can be express or implied. the father of respondent. it is as if it has never been entered into and cannot be validated either by the passage of time or by ratification. Sr. The two contracts of sale covering lots under TD No. entered into an agreement with petitioner. VILLA ABRILLE 105 PHIL 456 FACTS: Petitioners Braganza and her two sons. promised in writing to pay him P10. By contrast. characterized by deteriorating mental and physical condition including loss of memory. 01-00495. and another consisting of 451 sq.000. petitioner Julian Francisco bought from said landowner the first parcel. 000 in Japanese war note and in consideration thereof. 000 in legal currency on the P.000.. 2002 392 SCRA 317 FACTS: Eligio Herrera. if an insane or demented person does enter into a contract. plus 2% per annum. covered by Tax Declaration (TD) Nos. 01-00495 and No. Jr.. ISSUE: Whether or not the contract is void or merely voidable. before the alleged sale to petitioner. Article 1327 provides that insane or demented persons cannot give consent to a contract. for P750. Sr. Herrera. Eligio Herrera. only he wanted to get more. upon learning of the sale. It was only when respondent failed to convince petitioner to increase the price that the former instituted the complaint for reconveyance of the properties. Finally. this appeal. He likewise claimed that the first parcel was subject to the co-ownership of the surviving heirs of Francisca A. 1944 P70. error. WHEREFORE. undue influence. covered by TD No. respondent also alleged that the sale of the two lots was null and void on the ground that at the time of sale. 1990. respondent was agreeable to the contracts.. the wife of Eligio. it was established that the vendor Eligio. 01-00497. and cause of the obligation established. violence. as a loan. Sr. Eligio. One cannot negotiate for an increase in the price in one breath and in the same breath contend that the contract of sale is void. was already incapacitated to give consent to a contract because he was already afflicted with senile dementia. but vitiated by want of capacity. rather. Hence. but that the former’s capacity to consent was vitiated by senile dementia. EFFECTS OF ANNULMENT OF VOIDABLE CONTRACTS BRAGANZA VS. This is what happened in this case.I. When petitioner refused. and (2) those declared to be so under Article 1409 of the Civil Code. 01-00495 and 01-00497. one consisting of 500 sq. there is no showing that respondent returned the payments or made an offer to do so. considering that she died intestate on April 2. . The Court of Appeals affirmed the decision of the RTC. As found by the trial court and the Court of Appeals. And on March 12. Sr. Sr. In his complaint. a voidable or annullable contract is one in which the essential requisites for validity under Article 1318 are present. Article 1318 of the Civil Code states that no contract exists unless there is a concurrence of consent of the parties.G. Contending that the contract price for the two parcels of land was grossly inadequate.. hence. m. the instant petition is GRANTED. Implied ratification may take the form of accepting and retaining the benefits of a contract. petitioner bought the second parcel covered by TD No. namely. respondent claimed ownership over the second parcel allegedly by virtue of a sale in his favor since 1973. Josefina Cavestany. There are two types of void contracts: (1) those where one of the essential requisites of a valid contract as provided for by Article 1318 of the Civil Code is totally wanting. we must rule that the assailed contracts are not void or inexistent per se. with the RTC of Antipolo City. The RTC rendered decision declaring the contract null and void. respectively. respondent negotiated for the increase of the purchase price while receiving the installment payments. 2001 FACTS: On March 23. ISSUE: Whether or not the action for the annulment of the Contract of Sale has prescribed. Not binding a determinate conduct that can be extra judicially demanded. There is testimony that the funds delivered to them by Abrille were used for their support during the Japanese occupation. Petitioners are not absolved from monetary responsibility. which the petitioner half-heatedly espouses as the real nature of the action. that there was no forcible take-over of the subject properties and that the amount paid to private respondents was fair and reasonable Defendant DBP also filed its Answer raising as Special and Affirmative Defense that action had already prescribed. they shall make restitution to the extent that they may have profited by the money they received. P40. . Also they raised the defense of minority because at the time they signed the promissory notes. Such being the case. 1985. unless they are annulled by a proper action in court. it is but fair to hold that they had profited to the extent of the value of such money. Rodolfo and Guillermo were only 16 and 18 yrs. 1944. referred only to a creditor-debtor relationship. The records in this case indubitably show the lapse of the prescriptive period. Since Article 1390 of the Civil Code states that voidable “contracts are binding. it cannot be considered as an obligation either. the court issued an Order. 000 as plaintiff asserted. In their answer. on his own behalf and on behalf of Victoria Desbarats-Mialhe. the reckoning period for prescription would be that pertaining to an action for the annulment of contract. EFFECTS OF ANNULMENT OF VOIDABLE CONTRACTS WILLIAM ALAIN MIALHE. On May 25. There is as yet no obligation in existence. which was affirmed by the CA.00 of current Philippine money. of age. Reconveyance and Damages against Republic of the Philippines and defendant Development Bank of the Philippines before the court. On December 29. 000 plus 2% interest from October 30. Momique Mialhe-Sichere and Elaine Mialhe-Lencquesaing filed a Complaint for Annulment of Sale. COURT OF APPEALS and REPUBLIC OF THE PHILIPPINES. On September 11. The reconveyance of the three parcels of land. can prosper only if and when the Contract of Sale covering the subject lots is annulled. The CA also ruled that Article 1155 of the Civil Code. it is binding unless annulled by a proper action in court. respondent G. KATIPUNAN 375 SCRA 199 FACTS: Respondent is the owner of a lot and a five-door apartment constructed thereon occupied by lessees. RULING: CA correctly set aside the Order of the trial court. according to which a written extrajudicial demand by the creditors would interrupt prescription. as special and affirmative defenses. even if the contract is unenforceable because of non-age. EFFECTS OF ANNULMENT OF VOIDABLE CONTRACTS KATIPUNAN VS. respondent. 10899 March 20. petitioner. Respondent has no obligation to reconvey the subject lots because of the existing Contract of Sale.” it is clear that the defendant were not obligated to accede to any extra judicial demand to annul the Contract of Sale. 000 only instead of P70. RULING: NO. which is not the case here. William Alain Mialhe. ISSUE: Whether or not petitioners are excused from complying with their monetary obligation on account of minority of the two consigners. assisted by his brother. The lower court rendered judgment whereby the defendants were required solidarily to pay Abrille the sum of P10.00 Japanese notes were equivalent to P1.R. that is.Because of no payment had been made. entered into a Deed of Absolute Sale with their other brothers (co-petitioners. VS. which value has been authoritatively established in the so-called Ballantine Schedule: in October 1944. A suit to annul a voidable contract may be filed within four (4) years from the time the defect ceases. In accordance with the provisions of the Civil Code. four years from the time the defect in the consent ceases. No. 1992. The suit before the trial court was an action for the annulment on the Contract of Sale on the alleged ground of vitiation of consent by intimidation. Thus. Abrille sued them on March 1949. Although allegedly voidable. The Court of Appeals ruled that petitioner’s action had prescribed. 1990. 1990 filed its Answer denying the substantial facts allrged in the complaint and raising. petitioner. thus warranting the immediate dismissal of the Complaint. defendants claimed to have received P40. consent may be vitiated by any of the following: 1. 2. the petitioners are hereby ordered to turn over to respondent Braulio Katipunan. The presence of any of these vices renders the contract voidable. and hereby annulled. he found out that the subject house and lot was built within the 30-meter right of way of Meralco wherein high tension wires carrying 115. On July 24.represented by their father. complainant filed before the HLURB a complaint before the HLURB seeking the rescission of the Conditional Sales Agreement and the . Since the Deed of Absolute Sale between Respondent and the Balguma brothers is voidable. Atty. RULING: A contract of sale is born from the moment there is meeting of minds upon the thing which is the object of the contract and upon the price.) violence. 1986 up to the time the property shall have been returned to him. Consequently. 3. The JUMALON VS. 1991. 1991. 000. petitioner executed in favor of complainant a Deed of Absolute Sale. or intimidation. A contract where one of the parties is incapable of giving consent or where the consent is vitiated by mistake. respondent’s title to the property was cancelled and in lieu thereof. fraud. Jr. The lower court dismissed the case.T. he being only a third grader and through insidious words and machinations.. with evident bad faith. conspired with one another in taking advantage of his ignorance. Title was transferred to complainant on July 29. is not void ab initio but only voidable and is binding upon the parties unless annulled by proper court action. Under Article 1330 of the Civil Code. Thereafter. EFFECTS OF ANNULMENT OF VOIDABLE CONTRACTS ISSUE: Whether or not the subject contract is void ab initio or voidable on the ground that one of the parties is incapable of giving consent or where consent is vitiated by mistake. which turned out to be a Deed of Absolute Sale.) He acknowledged selling the property and that he stopped collecting the rentals.) undue influence. they made him sign a document purportedly a contract of employment. Therefore. respondent filed with the RTC a complaint for annulment of the above Deed of Absolute Sale on the ground that petitioners. or intimidation.) He signed the Deed of Absolute Sale. however. 00. Consequently. object.C. 4. fraud. effect of annulment is to restore the parties to the status quo ante in so far as legally and equitably possible. 1991. to the principle of mutual restitution. and price in money or its equivalent. then the restitution of the property and its fruits to respondent is just and proper. 2002 FACTS: On July 16. The said decision was however reversed by the Court of Appeals. sometime in November 1992.) intimidation. complainant filed a case for declaration of nullity or annulment of sale of real property before the R. Upon complainant’s inquiries to the Meralco and HLURB.) fraud. Thereafter. The lower court dismissed the complaint holding that respondent failed to prove his causes of action since he admitted that: 1. a new TCT was issued in favor of petitioners. with interest at the legal rate. and 5. the elements of a contract of sale are consent. Thereafter. complainant learned from neighboring residents that the presence of high-tension wires in the subdivision where the house and lot is located generate tremendous static electricity and produce electric sparks whenever it rains. Balguma involving the subject property for P187.) He obtained loans from the Balgumas. except when he has been benefited by the things or price received by him. 000 volts are located which posed serious risks on the property and its occupants.) mistake. Thus. the rentals they received for the five-door apartment corresponding to the period from January. petitioner and complainant entered into a Conditional Sales Agreement whereby the latter purchased from the former a house and lot. As an exception. This meeting of minds speaks of the intent of the parties in entering into the contract respecting the subject matter and the consideration thereof. Article 1399 provides that when the defect of the contract consists in the incapacity of one of the parties. and 3. 2. the incapacitated person is not obliged to make restitution. COURT OF APPEALS 375 SCRA 175 JANUARY 30. 1986. Albino. Plaintiff filed a complaint against defendant company. ISSUE: Whether or not there was fraud on the part of petitioner as to warrant the rescission of the Conditional Sales Agreement and of the Absolute Deed of Sale. It is not safely habitable. Alberto secured a note from Dr. entered into a written contract of lease of services with plaintiff Harry Ives Shoemaker for a period of 5 years. plaintiff would receive monthly during the period of the contract of the sum of Php 1. generates tremendous static electricity and produces electric sparks whenever it rained.000 volts of electricity. Francisco. When in an oral contract which by its terms. hence this petition. Nonetheless. Cayetano Corrompido with a right to repurchase within 8 years. one of the contracting parties has complied within the year . That during each year that the contract was in force.Absolute Deed of Sale on the ground of fraud. petitioner Rito effectively ratified it. on the ground that the facts alleged therein do not constitute a couse of action. LA TONDENA 2. They sold such property to Dr. Corrompido only released the document of sale with pacto de retro after Saturnina paid the share of her deceased son. It is built in a subdivision area where there is an existing 30-meter right of way of the Manila Electric Company (Meralco) with high-tension wires over the property. Alberto died leaving a wife and son. sold the latter’s pro indiviso share in subject land. Inc. since it is not averred that the alleged mutual agreement modifying the contract of lease of services. plus the note. But Dr. whereas it states that its terms and conditions may only be modified upon the written consent of both parties. Within the 8-year redemption period. she did not have the legal authority to do so. as legal guardian of petitioner Rito. SC agrees with the Court of Appeals that respondent de Leon was entitled to annul the sale. Corrompido Php 966. LA TONDEMA 68 Phil 24 FACTS: Defendant company.000.34 from respondents-spouses when he reaches the age if 21 considering that Saturnina paid Dr. has been put in writing. Corrompido. ET. The construction of houses underneath the high tension wires is prohibited as hazardous to life and property because the line carries 115. Leonara. The defendant company alleged that there were changes in the contract in which both the parties agreed upon. is not to be performed within 1 year from the execution thereof. 1. ISSUE: Whether or not the ocurt a quo ered in sustaining the demurrer interposed by the defendant company to the second amended complaint filed by plaintiff.00 per annum as minimum compensation if 8% of the net earnings of the aforementioned alleged business would not reach the amount. The defendant interposed a demurrer based on the ground that the facts therein alleged do not constitute a cause of action. Bonifacio and Albino tendered their payment to Dr. This act of ratification rendered the sale valid and binding as to him. NECESSITY OF WRITING The Supreme Court found the petition without merit for it involved questions of fact which is not reviewable unless it is within the ambit of exceptions. with a compensation consisting of 8% of the net earnings of defendant. PNB VS. The contarct of sale as to the pro indiviso share of Petitioner Rito was unenforceable. petitioner Nelson. FACTS: CABALES. posing a danger to life and property. Alberto and petitioner Rito inherited a parcel of land. Alberto. There was fraud in the sale of the subject house. HLURB rendered decision in favor of complainant which was upheld by the Court of Appeals. Thus when Saturnina.00 or Php 18. Corrompido in the amount of Php 300. AL vs COURT OF APPEALS August 31. 2007 Saturnina and her children Bonifacio. ISSUE: RUKING: Whether or not the slae entered into is valid and binding.500. Saturnina and her children executed an affidavit to the effect that petitioner Nelson would only receive the amount of Php 176. La tondena. SHOEMAKER VS. RULING: RUKING: The legal guardian only has the plenary power of administration of the minor’s property. However when he acknowledged receipt of the proceeds of the sale on July24.66 for the obligation of petitioner Nelson’s late father Alberto. PVOC SHOEMAKER vs. It does not include the power to alienation which needs judicial authority.00. . that it would furnish funds to the defendant so that it could continue operating its factory. PHILIPPINE VEGETABLE OIL COMPANY 49 Phil 897 FACTS: This appeal involves the legal right of the PNB to obtain a judgement against Vegetable Oil Co.00 in his account at PBCom Monteverde branch where he was later to deposit respondent’s check did not rule out petitioners’ securing a loan. or express made by the PNB to continue indefinitely the operation of the V corporation. on February 6. tacit. Accordingly. could prove a loan transaction. respecting the alleged loan.000. the other party cannot avoid the fulfillment of what is incumbent on him under the same contract by invoking the statute of frauds because the latter aims to prevent and not to protect fraud.812. Respondent filed a Complaint for sum of money against petitioners-spouses. The VOC owed the bank Php 17. 1992. for Php 15. RUKING: At all events. 1992 PBCom crossed check which loan was to be settled interest-free in six (6) months.37 In 1920. payable to the order of petitioner Tony Tan.000. since the alleged loan was one with a period — payable in six months. ISSUE: Whether or not Honorable Court of Appeals erred in concluding that the transaction in dispute was a contract of loan and not a mere matter of check encashment as found by the trial court. the preponderance of evidence inclines on respondent. intervenor Whitaker is not entitled to recover damages from the bank. as petitioners’ side of the case is incredible as it is inconsistent with the principles by which men similarly situated are governed. the Vegetable Oil Company. EXECUTORY VS. Whitaker as intervenor to obtain a judgement declaring the mortgage which the PNB seeks to foreclose to be without force and effect.” The invitation-request was received by petitioner Antonio Tan on June 22.00 ISSUE: Whether or not the plaintiff had failed to comply with the contract. In fine. and ordering the PVOC and the PNB to pay him the sum of Php 4.000. requiring an accouting from the PNB of the sales of the property and assets of the Vegetable Co. EXECUTORY VS. petitioners never did..00. 1992. it should have been expressly stipulated upon in writing by the parties but it was not. pertinent to the issue considered and found to disclose no binding promise. found itself in financial straits. which were admittedly received by petitioners. The PNB was securedly principally by a real and chattel mortgage in favor of the bank on its vessels Tankerville and H.000.454 and to foreclose a mortgage on the property of the PVOC for Php 17.. All the evidence.000.S. Inc. he did not show up at the Malita. whereas respondent’s claim that the proceeds of the check. a check. he would have no need to borrow a lesser amount.424.000. 1994 at 9:00 o’clock in the morning “in connection with the request of [herein respondent] Carmelito Villapaz.418. EXECUTED TAN vs VILLAPAZ 475 SCRA 720 November 22. It was in debt to the extent of approximately Php 30.000. alleging that. That petitioner Antonio Tan had.00 and the legal right of the Phil C.00. his issuance of the February 6. Petitioners alleged that they never received from respondent any demand for payment. The PNB was the largest creditor. it is found that the Board of Directors of the PNB had not consented to an agreement for practically unlimited backing of the V corporation and had not ratified any promise to trhat effect made by its general manager. .000. and despite repeated demands. petitioner Antonio Tan failed to settle the same. for conference of vital importance. the entries of which are no doubt in writing. an outstanding balance of more than P950. It is pure naivete to believe that if a businessman has such an outstanding balance in his bank account. be it verbal or written. Everett to guarantee the payment of sums not exceed Php 4. Davao del Sur Police Office. RUKING: In the present instance. 1994 but on the advice of his lawyer.000.with the obligations imposed on him said contract. represented a loan extended to petitioner Antonio Tan is credible. that it was alleged to have celebrated with the defendant and the intervenor.00. The Malita. 2005 FACTS: Respondent Carmelito Villapaz issued a Philippine Bank of Communications (PBCom) crossed check in the amount of P250. documentary and oral.000. EXECUTED PNB vs. on the maturity date of the loan or on August 6. Davao del Sur Police issued an invitation-request to petitioner Antonio Tan inviting him to appear before the Deputy Chief of Police Office on June 27. December 14. RUKING: The SC ruled that there was a perfected contact. it has already been established that petitioner had delivered the rattan poles to respondent. petitioners. De Basco and respondents. ALEJANDRO and GUADALUPE TIONGSON.EXECUTORY VS. EXECUTED GENARO CORDIAL. oral evidence will be admitted to prove the agreement. or partially executed contracts. Thus. The RTC rendered its decision in favor of the petitioner. The respondents demanded the executuion of a deed of sale and issuance of certificate of titile but the respondents refused to issue the same. the payment made rendered the sales contract beyong the ambit of the statutre of frauds/ The CA erred in concluding that there was no perfected contract of sale. spouses David and Vda. No. ISSUE: Whether or not contract of sale has not been perfected but petitioners and respondents. The trial court rendered its decision in favor of the respondents. The CA reversed the decision of the RTC. However. In the present case. . The parties expressly agredd that in case of payment has been fully paid respondents would execute an individual deed of absolute sale in plaintiffs flavor. filed a complaint for specific performance with damges. alleging that the latter sold to them lots located in Pampanga. in view of the stipulation of the parties that the deed of sale and corresponding certificate of title would be issued after full payment. the CA affirmed the RTC. was engaged in rattan business. were one party has performed one’s obligation. De Basco. the Statute of Frauds does not apply. petitioner. executed or partially executed contract. 2000 FACTS: David Miranda. the statute of frauds is inapplicable. In the case of spouses David. EXECUTORY VS. 1999 FACTS: Three sets of plaintiffs. respondents. Gener Buelva was the supplier of David but the former met an accident and died. then. RUKING: The CA and respondent Miranda stress the absence of a “written memorandum of the alleged contract between the parties”. a businessman from Angeles City. vs. they ad entered into a contract to sell and not a contract of sale. executed. However. Cordial shipped rattan poles as to the agreed number of pieces and sizes however Miranda refused to pay the cost of the rattan poles delivered. Cecilla. Cordial filed a complaint againt Miranda. ISSUE: Whether or not Statute of Frauds applies in this case. EXECUTED SPOUSES VENANCIO DAVID and PATRICIA MIRANDA DAVID and FLORENCIA VENTURA VDA. As with regard to the spouses Ventura. G. vs. respondent. Respondent implicity agrues that the alleged contract is unenforceable under the Statute of Frauds however. The contract was partially executed.R. the statute of frauds applies only to executor and not to completed. Genero Cordial and Miranda met through Buelva’s widow. against private respondents spouses Tiongson. However the CA ruled that contract of sale was not been perfrected between spouses David and/or Vda. The rule is settled that the statute of frauds applies only to executor and not to completed. They agreed that Cordial will be his supplier of rattan poles. namely spouses Ventura. Miranda alleged that there exist no privity of contract between Miranda and Cordial. DAVID MIRANDA. DE BASCO. 108169 August 25. ownership of the land was passed on to his children. but no subdivision took place. 2(e) of the NCC. a parcel of land situated at Estancia.R. The remaining undivided portion of the land was held in trust by leon. No. As such.00 a month and were allegedly verbally granted by the lessors the pre-emptive right to purchase the property if ever they decide to sell the same. it is a contractual grant. respondents. 2000 FACTS: During the lifetime. Felipe. FERNANDO MAGBANUA and LIZZA TIANGCO. such as the one involved in the instant case. It is thus evident that the statute of frauds does not contemplate cases involving a right of right of first refusal. The lease was nocovered by any contract. The defect is such that it cannot be cured except by the subsequent ratification of the unenforceable contract by the person in whose name the contract was executed. the application of Article 1403. the said Deed of Sale must remain unenforceable as to them. The lessees received a letter from de Leon advising them that the heirs of the late spouses have already sold the property to Resencor. Kalibo. After the death of Leon. albeit unwritten. G. got his share. vs. Furthermore. Thus. respondents. . ISSUE: Whether or not the appellate court erred in declaring the Deed of Sale unenforceable against the private respondent fro being unauthorized contract. The lessees filed an action f\before th RTC praying for the following: a) rescission of the Deed of Absolute Sale between de Leon and Rocencor. 108921 April 12. At best. Ramon. Capiz.. No.THE COURT OF APPEALS. there is no showing of any express or implied ratification of the assailed Deed of Sale by the private respondents Procerfina. G. RUKING: The court has ruled that the nullity of the unenforceable contract is of a permanent nature and it will exist as long the unenforceable contract is not duly ratifired. IRENE GUILLERMO. RUKING: A right of first refusal is not among those listed as unenforceable under the statute of frauds. not of the sale of the real property involed byt of the right of first refusal over the property sought to be sold. on of the children. Prosperidad. The mere lapse of time cannot igve efficacy to such a contract. Upong Felipe’s death. REMEDIES ROSENCOR DEVELOPMENT CORPORATION and RENE JOAQUIN. petitioners.PATERNO INQUING. The lesses were renting the premises then for Php 150.R. b) the defendants Rosencor/Rene Joaquin be ordered to reconvey the property to de Leon. owned real property. A right of first refusal. c) de Leon be ordered to reimburse the plaintiffs for the repair of the property or apply the said amount as part of the purchase of the property. Upon the death of the spouses Tiangco. ISSUE: Whether or not a right of first refusal is indeed covered by the provisions of the NCC on the Statute of Frauds. His co-heirs made several seasonable and lawful demands upon him to subdivide the partition the property. vs. and Rosa. EXECUTED VILLANUEVA-MIJARES petitioners.EXECUTORY VS. 2000 FACTS: Plaintiffs and plaintiffs-intervenors averred that they are the lessess since 1971 of a twostory residential apartment and owned by spouses Faustino and Cresencia Tiangco. a right of first refusal need not be written to be enforceable and may be proven by oral evidence. the management of the property was adjudicated to their heirs who were represented by Eufrocina deLeon. The RTC dismissed the complaint while the Ca reversed the decision of the RTC. FEDERICO BANTUGAN. Pedro. presupposes the existence of a perfected. par. In the instant case. contract of sale. is not by any means a perfected contract of sale of real property. private respondents discovered that the shares of four of the heirs of Felipe was purchased by Leon as evidenced by Deed of Sale. 140479 March 8. . In the instant case. The application of the Statute of Frauds presupposes the existence of a perfected contract. Quezon City. The complaint asked the trial court to order the Spouses Firme to execute the deed of sale and to delover the title of the property to Bukal Enterpises upon payment of the agreed purchase price. HEIR OF F. This conclusion arose from the appellate court’s erronoues finding that there was a perfected contract of sale. G. VOID/ INEXISTENT CONTRACTS: DECLARATION OF NULLITY 1. 8. SUPLICO FRENZEL VS. petitioners. 2. 146608 October 23. The heirs of Fortunato files a pleading in the form of petition. 2004 ACTION FOR Article 633 of the OCC provides that figts of real property . RUKING: RUKING: The CA held that partial performance of the contract of sale takes the oral contract out of the scope of Statute of Frauds. SALUD. DORONIO 541 SCRA 479 SPOUSES CONSTANTE FIRME AND AZUCENA E. WHO MAY BRING HEIRS OF M. No. it conveyed no title to the land in question to petitioner’s predecessors. they prayed that an order be issued declaring null and void the registration of the private deed of donation. The CA reversed and set aside the decision of the RTC. 2004 CAUTON VS. The RTC granted the petition. must appear in a public document. 389 SCRA 353 JAWORSKI VS. Whether or not the donation propter nuptias is valid. the heirs of Marcelino filed a petition “For the Registration of a Private Deed of Donation”. 2004 COMELEC VS. FIRME. The RTC rendered its decision against Bukal. while respondents are the heirs of Fortunato Doronio. Fairview Park. PAGCOR. In the petition. JANUARY 21. The recors shoe that there was no perfected contract of sale. JAN. The property in dispute is one of a private deed of donation propter nuptias who was executed by Spouses Simeon Doronio and Cornelia Gante in facor of Maralino Doronio and his wife Veronica Pico.REMEDIES HEIRS OF M. 14. vs. The CA reversed the decision of RTC> ISSUE: Whether or not Statute of Frauds is applicable. Eager to obtain the entire property. respondent. 3. Neither did it create any right because it was not made in a public instrument.R. 6. The RTC ruled in favor of the heirs of Marcelino. DORONIO vs. ISSUE: Petitioners are the heirs of Maralino Doronio. Bukal Enterprises filed a complaint for specific performance and damges with the trial court. QUIJANO-PADILLA. 5. DORONIO VS. aleeging that the Spouses Firme reneged on their agreement to sell the property.UKAL ENTERPRISES AND DEVELOPMENT CORPORATION. HEIERS OF F. 4. CATITO LA BUGA’AL-BLAAN VS. It is settled that a donation of real estate propter nuptias is void unless made by public instrument. the donation propter nuptias did not become valid. DORONIO GURREA VS. There is therefore no basis for the application of the Stature of Frauds. JAN. in order to be valid. 27. Hence. PIATCO. 2003 FACTS: FACTS: Petitioner Spouses Firme are the registered owner of a parcel of land located on Dahlia Avenue. RAMOS AGAN VS. 7. The heirs of Fortuanto Doronio contended that only the half of the property was actually incorporated in the deed of donation because it stated that Fortunato is the owner of the adjacent property. Petitioners. It is not for his sake. Enrique Suplico. sum of money and damages.VOID/ INEXISTENT CONTRACTS: WHO MAY BRING ACTION FOR DECLARATION OF NULLITY NATIVIDAD ARIAGA VDA. 2003 FACTS: Alfred Frenzel and Ederlina Catito had an amorous relationship which started in King’s Cross. however. a night spot in Sydney. contrary to the real justice. Respondent G. Alfred filed a complaint against Ederlina for specific performance. to allow the petitioner to recover the properties or the money used in the purchase of the parcels of land would be subversive of public policy. which the defendant has the advantage of. respondent. No. RUKING: The sales of three parcels of land in favor of the petitioner who is a foreigner is illegal per se. but. DE GURREA. An action for recovery of what has been paid without just cause has been designated as an accion in rem verso. petitioner. Thus. G. Johnson:69 "The objection that a contract is immoral or illegal as between the plaintiff and the defendant. ISSUE: Whether or not petitioner’s are entitled to the cancellation of respondent attorney’s title over the subject property and the reconveyance thereof to the herein petitioners or to be the estate of the Late Ricardo. This is without prejudice. the assignment of rights and interest over the subject property in favor of respondent is null and void for being violative of the provisions of Article 1491 of the Civil Code which expressly prohibits lawyers from acquiring property or rights which may be the object of any litigation in which they may take part by virtue of their profession. or from recovering the money he paid for the said properties.R. 143958 July 11. as Lord Mansfield stated in the early case of Holman vs. CATITO. 2006 FACTS: The petition arose from a complaint for anuulment of tilte with prayer for preliminary injunction filed with the court of First Instance by Rosalina Gurrea in her capacity as attorney-in-fact of the heirs of Ricardo Gurrea.R. The complaint was filed against Atty. Their relationship started to deteriorate when the husband of Ederlina threatened Ederlina that he would file a bigamy case against her for having an illicit affair with Alfred.EDERLINA P. TERESA GURREA-RODRIGUEZ. as in this case. ISSUE: Whether or not acquisition of a parcel of land is valid. the same to be distributed to the latter?s heirs. It follows that respondent’s title over the subject property should be cancelled and the property reconveyed to the estate of Ricardo. however. 68 It may be unfair and unjust to bar the petitioner from filing an accion in rem verso over the subject properties. CARLOS GURREA. VOID/ INEXISTENT CONTRACTS: WHO MAY BRING ACTION FOR DECLARATION OF NULLITY ALFRED FRITZ FRENZEL. that the objection is ever allowed. but it is founded in general principles of policy. Jr. it being undisputed that he rendered legal services for the latter. JULIETA GURREA. vs ENRIQUE SUPLICO. During their relationship Alfred bought properties in the Philippines in the name of Ederlina. 144320 April 26. Suplico alleged that the property in dispurte was for the payment of his services rendered to the late Ricardo Gurrrea which the offered to him as payment. declaration of real and personal properties. who was also married. No. as between him and the plaintiff. Atty. This provision does not apply if. sounds at all times very ill in the mouth of the defendant. RUKING: Having been established that the subject property was still the object of litigation at the time the subject deed of Transfer of Rights and Interest was executed. VICTORIA GURREACANDEL. RICARDO GURREA.. and RAMONA GURREA-MONTINOLA." . MA. to respondent?s right to claim his attorney?s fees from the estate of Ricardo. vs. the action is proscribed by the Constitution or by the application of the pari delicto doctrine. The transactions are void ab initio because they were entered into in violation of the Constitution. RODRIGO N. 1995. since by allowing the sums spent by government for the benefit of the contractor to be deductible from the State's share in net mining revenues. RULING: The Supreme Court held that the petitioners cannot be permitted to unmake the Contract voluntarily entered into by their predecessor. Injunction and Damages. Pedro Balite. LIM. Gaspar Balite.R. The Court of Appeals held that the sale was valid and binding insofar as Ezperanza Balite’s undivided share of the property was concerned. Hence. the Court en banc promulgated its Decision granting the Petition and declaring the unconstitutionality of certain provisions of RA 7942. RULING: Section 7. learned of the sale. Section 7. Inc. Esperanza signed a letter addressed to Rodrigo informing the latter that her children did not agree to the sale of the property to him and that she was withdrawing all her commitments until the validity of the sale is finally resolved. (WMCP). Flor. Flor Balite-Zamar. This constitutes unjust enrichment on the part of the contractor. to be executed by Esperanza over the property. 2004.00. It may likewise be stricken off without affecting the rest of the FTAA. Esperanza and Rodrigo agreed that.00.00.000. 1996.551 square meters.000. as well as of the entire FTAA executed between the government and WMCP.000. ISSUE: Whether or nor it is a void contract. [DAO] 96-40). Quieting of Title. (2) its Implementing Rules and Regulations (DENR Administrative Order No. On October 31. [RA] 7942 (The Philippine Mining Act of 1995). G. and requested the RD to hold the approval of any application for the registration of title of ownership in the name of the buyer of said lot which has not yet been partitioned judicially or extrajudicially. through her daughter. Esperanza Balite. although the actual price agreed upon by them for the property was P1.. it constitutes unjust enrichment on the part of the local and foreign stockholders in WMCP. Esperanza became ill and was in dire need of money for her hospital expenses. located at Poblacion Barangay Molave. ISSUE: Whether or not the heirs of Esperanza has the right to question the said contract. On October 23. Pedro and Aurelio. Cristeta Balite and Aurelio Balite.9 of the WMCP FTAA has effectively given away the State's share without anything in exchange. Visitacion BaliteDifuntorum. She. Jr. his wife. petitioners filed a complaint against Rodrigo with the Regional Trial Court of Northern Samar for “Annulment of Sale. without having to pay anything for it. .8(e) of the WMCP FTAA likewise is invalid. Section 7. Section 7. Catarman. When Aurelio died intestate in 1985. at the expense of government. with an area of 17. On January 27. For being grossly disadvantageous and prejudicial to government and contrary to public policy. offered to sell to Rodrigo Lim.8(e) must also be declared without effect. 1996. the local and foreign stockholders get a windfall. under the “Deed of Absolute Sale”. executed by the government with Western Mining Corporation (Philippines). Northern Samar. Pablo Balite. On June 27. inherited the subject property and became co-owners thereof. Gaspar. Esperanza died intestate and was survived by her children. DAO 96-40. Jr. as their share in the net mining revenues of WMCP is automatically increased. with Esperanza inheriting an undivided share of 9.000. December 10. 2004 446 SCRA 56 FACTS: The spouses Aurelio and Esperanza Balite were the owners of a parcel of land. petitioner Antonio Balite. even if the stated consideration included therein was for an unlawful purpose. and their children. 2004 FACTS: The Petition for Prohibition and Mandamus before the Court challenges the constitutionality of (1) Republic Act No. The binding force of a contract must be recognized as far as it is legally possible to do so. and (3) the FTAA dated March 30. it results in benefiting the contractor twice over.751 square meters. they wrote a letter to the Register of Deeds [RD] of Northern Samar. and on August 21.9 must therefore be stricken off as invalid. as well as violative of public policy.Being grossly disadvantageous to government and detrimental to the Filipino people. In the meantime. No. HEIRS OF THE LATE SPOUSES AURELIO AND ESPERANZA BALITE VS. Moreover. 152168. her undivided share for the price of P1. 1997. until the issue of the legality/validity of the above sale has been cleared.000. it will be made to appear that the purchase price of the property would be P150. The trial court dismissed the Complaint. 1996.VOID/ INEXISTENT CONTRACTS: WHO MAY BRING ACTION FOR DECLARATION OF NULLITY LA BUGA’AL-BLAAN vs RAMOS December 1. this Petition. Visitacion. mainly on the finding that FTAAs are service contracts prohibited by the 1987 Constitution. because by the mere act of divestment. Cristeta. saying that they were not informed of the sale of a portion of the said property by their mother nor did they give their consent thereto. White Plains. Here. 000. petitioner Pineda could not validly sell the subject property to petitioners Duque. Article 1318 of the Civil Code lists the requisites of a valid and perfected contract. 1983. In the present case. JR.6M. On January 27. the Supreme Court en banc promulgated its decision declaring the unconstitutionality of certain provisions of RA 7942 as well as of the entire FTAA executed between the government . executed an Agreement to Exchange Real Properties. 1995. VOID/ INEXISTENT CONTRACTS: WHO MAY BRING ACTION FOR DECLARATION OF NULLITY ALEJANDRIA PINEDA and SPOUSES ADEODATO DUQUE. the parties’ real agreement binds them. Pineda. whereby Pineda sold the property in the amount of P1. the trial court declared them as the absolute owners of the property located in White Plains. A special power of attorney is necessary to enter into any contract by which the ownership of an immovable is transmitted or acquired for a valuable consideration.R. However. (2) object certain which the subject matter of the contract. Consequently. RULING: No. RAMOS G.000 made on the basis of the Deed of Absolute Sale. et al VS. a special power of attorney is essential. This authority must be in writing. At the time of the execution of the agreement. the appellees discovered that the spouses Duque were occupying the white plains property and a fictitious deed of sale in the name of Pineda. That the parties intended the agreement to produce legal effect is revealed by the letter of Esperanza Balite to respondent dated October 23. the exchange did not materialize. namely: (1) consent of the contracting parties. Pineda paid the appellees the total amount of $12. and EVANGELINE MARY JANE DUQUE. Hence. The appellees gave Pineda the authority with the understanding that Pineda will deliver the title to the appellees. Pineda and the spouses Duque executed an agreement to sell over the white plains property. Inc. respondent Bañez. In absolute simulation. no contract was perfected. Pineda paid the mortgage of the white plains property and requested the appellees for a written authority for the release of the title from GSIS. the white plains property was mortgaged with the GSIS. In a civil case filed by the appellees. petitioners. 2004. even if it did not reflect the actual purchase price of the property. In his testimony.. Quezon City. As the consent of the real owner of the property was not obtained. 7942 (The Philippine Mining Act of 1995) and its Implementing Rules and Regulations and the Financial and Technical Assistance Agreement dated March 30. Pineda was not authorized to enter into a contract to sell the property. An absolutely simulated contract is void. 1996 and petitioners’ admission that there was a partial payment of P320. while the California property also had a mortgaged obligation. respondents 2002 Feb 6 FACTS: The appellees and the petitioner.. executed by the government with Western Mining Corporation (Philippines). the latter had no Special Power of Authority to sell the property. and the parties may recover from each other what they may have given under the “contract.” On the other hand. petitioner Adeodato Duque confirmed that at the time he "purchased" respondents’ property from Pineda. VS.Article 1345 of the Civil Code provides that the simulation of a contract may either be absolute or relative. INC. the Bañez spouses and petitioner Pineda executed an agreement to exchange real properties. The appellees exchanging their property at White Plains with that of the Pinedas located in California.000 square meters of the property. The Court denies the petition. There was an intention to transfer the ownership of over 10. otherwise the sale shall be void. petitioner Duque failed to validly acquire the subject property. the parties intended to be bound by the Contract. 127882 December 1. COURT OF APPEALS and SPOUSES NELSON BAÑEZ and MERCEDES BAÑEZ. any "sale" in favor of petitioners Duque is void. Further. Upon their return to the Philippines. (3) cause of the obligation which is established. The Deed of Absolute Sale was merely relatively simulated. Petitioner Pineda’s "sale" of the property to petitioners Duque was not authorized by the real owners of the land. such a contract is relatively simulated. 2004 445 SCRA 1 FACTS: Petitioners challenged constitutionality of Republic Act No. because the parties have no intention to be bound by it. No. VOID/ INEXISTENT CONTRACTS: WHO MAY BRING ACTION FOR DECLARATION OF NULLITY LA BUGAL-B’LAAN TRIBAL ASSOCIATION. It appears that the Bañez spouses were the original owners of the parcel of land and improvements located at 32 Sarangaya St. Without an authority in writing. The Civil Code provides that in a sale of a parcel of land or any interest therein made through an agent. ISSUE: Whether petitioners validly acquired the subject property. if the parties state a false cause in the contract to conceal their real agreement. On January 11. As stated in the exchange agreement. there is a colorable contract but without any substance. it remains valid and enforceable between the parties and their successors in interest since all the essential requisites prescribed by law for the validity and perfection of contracts are present. mainly on the finding that FTAAs are service contracts prohibited by the 1987 Constitution. COMELEC COMMISSIONERS RESURRECCION Z. or worse.. On the same day. complete. the Court stated that these particular provisions do not come within issues that were defined and delineated by during the Oral Argument. VOID/ INEXISTENT CONTRACTS: WHO MAY BRING ACTION FOR DECLARATION OF NULLITY Among the assailed provisions of the Mining Law were Section 80 and the colatilla in Section 84. the petition violates the doctrine of hierarchy of courts. And second. Without the concurrence of at least a majority of the members of the COMELEC. the Supreme Court required petitioners to comment. while the OSG. Upon motion for reconsideration of both parties. A contract was perfected between the parties. TUASON. compared and matched with other entries to eliminate double entries. In a Resolution dated March 9. After hearing the opposing sides. the COMELEC issued invitations to pre-qualify and bid for the supply and installations of information technology equipment and ancillary services for its VRIS Project. namely. Stated in Article 1421. “The defense of illegality of contracts is not available to third persons whose interests are not directly affected. 8189. permanent and updated list of voters. 2004.” The Court thus held that due process requires hearing the parties who have a real legal interests in the MPSAs (i. 151992 FACTS: In 1996. the instant petition for certiorari filed by the Office of the Solicitor General (OSG) in behalf of then COMELEC. the parties who executed them) before the MPSAs can be reviewed.e. First. 1999. The OSG said that it was not interposing any objection to the Motion for Intervention filed by the Chamber of Mines of the Philippines.. 00-0315 approving in principle the Voter's Registration and Identification System Project [(VRIS) Project]. The case was set for Oral Argument on June 29. BORRA and FLORENTINO A. Inc. and private respondent. JUDGE MA. the Court ruled that these were not argued upon by the parties in their respective pleadings. COMMISSION ON ELECTIONS." On September 9. respondents filed separate Motions for Reconsideration.and WMCP. Respondent filed a suit against petitioner. Memoranda were accordingly filed by the intervenor as well as by petitioners. struck down by the Court. the Commission on Elections (COMELEC) promulgated Resolution No. (1) mootness of the case by the sale of WMC shares in WMCP to Sagittarius which 60% its equity is owned by Filipinos and by the subsequent transfer and registration of the FTAA from WMCP to Sagittarius. Subsequently. the Manifestation and Motion for Intervention filed by the Office of the Solicitor General on behalf of public respondents. WMCP submitted its Reply Memorandum. as well as Section 112. RULING: The Supreme Court held that it cannot rule on mere surmises and hypothetical assumptions. The petitioners alleged that these sections limit the State’s share in a mineral production-sharing agreement to just the excise tax on the mineral product and the WMCP FTAA contains a provision which grants the contractor unbridled and automatic authority to convert the FTAA into MPSA (mineral productionsharing agreements. Private respondent Photokina Marketing Corporation (PHOTOKINA) pre-qualified and was allowed to participate as one of the bidders. Thus. on two procedural grounds. the Philippine Congress passed Republic Act No. the present petition. neither petitioners nor the OSG could file the petition in behalf of the COMELEC. REGIONAL TRIAL COURT OF QUEZON CITY. otherwise known as the "Voter's Registration Act of 1996.R. dwelling at length on three issues. public respondents. of which respondent judge granted the writ of prohibitory injunction to private respondent. in compliance to the order of the Supreme Court. its Implementing Rules and Regulations and the WMCP FTAA. A tamper-proof and counterfeit-resistant voter's identification card will then be issues to each registrant as a visual record of the registration. the Court noted inter alia. COMELEC CHAIRMAN ALFREDO L. VS. and eventually won. Later. Hence. JR. (3) proper interpretation of the phrase “agreements involving either technical of financial assistance contained in paragraph 4 of Section 2 of Article XII of the Constitution. Also. (2) constitutionality of the assailed provisions of the Mining Law. . in relation to the assailed provisions. the Court required the parties to submit their respective memoranda in amplification of their arguments." providing for the modernization and computerization of the voters' registration list and the appropriate of funds therefor "in order to establish a clean. petitioners. PHOTOKINA filed a Comment with Motion to Dismiss. No. particularly the third issue. and was in fact joining and adopting the latter’s Motion for Reconsideration. LUISA QUIJANO-PADILLA. filed a Compliance submitting copies of more FTAAs entered into by the government. 2002 G. respondent judge granted the writ of mandatory injunction of respondent and denying the Omnibus Motion of petitioner. but COMELEC failed to comply with the contract due to insufficiency of funds. The VRIS Project envisions a computerized database system for the May 2004 Elections. However. 2004. the petitioners have no right to question the assailed provisions. The idea is to have a national registration of voters whereby each registrant's fingerprints will be digitally entered into the system and upon completion of registration. and. without firm factual anchor. the OSG has no authority and/or standing to file the petition considering that the petitioners have not been authorized by the COMELEC en banc to take such action. BRANCH 215 and PHOTOKINA MARKETING CORP. Pursuant thereto. 84 and 112) for its unconstitutionality. BENIPAYO. respondents September 18. which pertained exclusively to FTAAs. ISSUE: Whether or not petitioners have a right to assail the statutory provisions (Sections 80. the OSG is the lawyer of the government. Civil Service Commission. the primordial concern of the OSG is to see to it that the best interest of the government is upheld. and even the People of the Philippines. Moreover. Furthermore. instituted a suit for foreclosure of real estate mortgage with damages against petitioner Mansueto Cuaton and his mother. is relevant. Under Executive Order No. Anent the alleged breach of the doctrine of hierarchy of courts. In the discharge of its task. 158382 January 27. 292 and Presidential Decree No. The case at bar is of similar import. Petitioner filed a motion for partial reconsideration of the trial court’s decision with respect to the award of interest in the amount of P610." In the present case. 478. This is not the first time that the Office of the Solicitor General has taken a position adverse to his clients like the CSC. thus: "x x x It is incumbent upon him (Solicitor General) to present to the court what he considers would legally uphold the best interest of the government although it may run counter to a client’s position. the National Labor Relations Commission. it appears that after the Solicitor General studied the issues he found merit in the cause of the petitioner based on the applicable law and jurisprudence. RULING: The contention regarding the excessive interest rates cannot be considered as an issue presented for the first time on appeal. ISSUE: Whether or not the excessive interest rates cannot be considered as an issue presented for the first time on appeal. The trial court rendered a decision declaring the mortgage constituted on October 31. suffice it to say that it is not an iron-clad dictum.000. as in this case. and its officials or agents. Both parties filed their respective notices of appeal. promote and protect the public wealth. this mandate includes the three petitioners who have been impleaded as public respondents in Special Civil Action No. VS. 2004 FACTS: On January 5. On several instances where this Court was confronted with cases of national interest and of serious implications. This was denied by the Court of Appeals. the OSG may transcend the parochial concerns of a particular client agency and instead. the loan secured by the mortgage in the amount of P1. it is his duty to represent the petitioner as he did by filing this petition.000. inter alia. in whose name the mortgaged lot was titled. Its hands are not shackled to the cause of its client agency. indeed. Surely. Q-01-45405. REBECCA SALUD and COURT OF APPEALS (Special Fourteenth Division). Endowed with a broad perspective that spans the legal interest of virtually the entire government officialdom.ISSUE: Whether or not the Office of the Solicitor-General has no authority and/or standing to file the petition considering that the petitioners have not been authorized by the COMELEC en banc to take such action.00 representing interests of 10% and 8% per month for the period February 1992 to August 1992. It is in the interest of the State that questions relating to government contracts be settled without delay. The Supreme Court’s ruling in Orbos vs. while petitioners’ stand is contrary to that of the majority of the Commissioners. among others. The . the OSG may represent the COMELEC as long as in its assessment. with the trial court. He cannot be disqualified from appearing for the petitioner even if in so doing his representation runs against the interests of the CSC. a project that has long been overdue. No. joined by her husband Rolando Salud. such would be for the best interest of the government. VOID/ INEXISTENT CONTRACTS: WHO MAY BRING ACTION FOR DECLARATION OF NULLITY MANSUETO CUATON.000 plus a total P610. respondent Rebecca Salud. respondents G. 1991 as void. the client of the OSG is not the agency but no less than the Republic of the Philippines in whom the plenum of sovereignty resides. involves the disbursement of public funds and the modernization of our country’s election process.R. This is especially so if the court finds that their consideration is necessary in arriving at a just decision of the case before it. Conchita Cuaton.00. For. in the final analysis. To deprive him of his right to assail the imposition of excessive interests would be to sacrifice justice to technicality. petitioner. arguing that the same was iniquitous and exorbitant. it never hesitated to set aside the rule and proceed with the judicial determination of the case. Thus. its agencies and instrumentalities. This is more so when the contract. This is regardless of the fact that what it perceived as the "best interest of the government" runs counter to its client agency’s position. The court ordered petitioner to pay Rebecca Salud. The records show that petitioner raised the validity of the 10% monthly interest in his answer filed with the trial court. The Court of Appeals affirmed the judgment of the trial court. 1993. still. an appellate court is clothed with ample authority to review rulings even if they are not assigned as errors. x x x.000. it must be emphasized that petitioners are also public officials entitled to be represented by the OSG. because it was executed by Mansueto Cuaton in favor of Rebecca Salud without expressly stating that he was merely acting as a representative of Conchita Cuaton. x x x" Hence. RULING: The OSG is an independent office. 2000.. 2003 decision and pray that the petitions be dismissed. and PIATCO. Hence.. Asia’s Emerging Dragon Corp. Respondent-Congressmen and NMTAI also pray that in the alternative. JR. the ARCA and its supplements in light of their separability clause. the amount due shall further earn interest at 12% per year. PIATCO prays that the Court should not strike down the entire 1997 Concession Agreement. 1991 until finality of this decision. signed the “Concession Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III” (1997 Concession Agreement). these three concepts are different although commonly directed towards ensuring that only certain parties can maintain an action. (Security Bank) (collectively. PHILIPPINE INTERNATIONAL AIR TERMINALS CO. Air and Grounds Services. or upon which a determination of the question raised by the error properly assigned is dependent.After finding that the Paircargo Consortium submitted a bid superior to the unsolicited proposal of AEDC and after failure by AEDC to match the said bid. PIATCOEmployees pray that the petitions be dismissed and remanded to the trial courts for trial on the merits or in the alternative that the 1997 Concession Agreement.A. Inc. 1994. this Court granted the said petitions and declared the 1997 Concession Agreement. Legal standing is relevant in the realm of public law. the 1997 Concession Agreement was superseded by the Amended and Restated Concession Agreement (ARCA) containing certain revisions and modifications from the original contract. As defined in the Rules of Court. 2002. respondent-Congressmen and respondents-intervenors now seek the reversal of the May 5. In certain instances. on July 12. AGAN. A series of supplemental agreements was also entered into by the Government and PIATCO. petitioners. the DOTC issued the notice of award for the NAIA IPT III project to the Paircargo Consortium. The First Supplement was signed on August 27. DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS and SECRETARY LEANDRO M. (Paircargo). Since respondents pointed out the matter of interest in their Appellants’ Brief before the Court of Appeals. (PAGS) and Security Bank Corp. 6957.. the ARCA and the Supplements null and void. 2001 (collectively. through then DOTC Secretary Arturo T. VS. 155001 January 21. a real party in interest is the party who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit. through its President. Henry T. the ARCA and the Supplements be declared valid and binding. (AEDC) submitted an unsolicited proposal to the Philippine Government through the Department of Transportation and Communication (DOTC) and Manila International Airport Authority (MIAA) for the construction and development of the NAIA IPT III under a build-operateand-transfer arrangement pursuant to R. Petition granted. the ARCA and the Supplements and to prohibit the public respondents DOTC and MIAA from implementing them. the fairness of the imposition thereof was opened to further evaluation. No. VOID/ INEXISTENT CONTRACTS: WHO MAY BRING ACTION FOR DECLARATION OF NULLITY DEMOSTHENES P.Capacity to sue deals with a situation where a person who may have a cause of action is disqualified from bringing a suit under applicable law or is incompetent to bring a suit or is under some legal disability that would prevent him from maintaining an action unless represented by a guardian ad litem. MANILA INTERNATIONAL AIRPORT AUTHORITY.On September 17. 1999. the DOTC/MIAA invited the public for submission of competitive and comparative proposals to the unsolicited proposal of AEDC. and the Third Supplement on June 22. 2004 FACTS: On October 5. Decision modified. 2003. No. To the legally discerning. 1996 a consortium composed of the People’s Air Cargo and Warehousing Co. submitted their competitive proposal to the Prequalification Bids and Awards Committee (PBAC).Respondent PIATCO. Go. respondents G. On September 20. Inc. Paircargo Consortium). No. Supplements) (the 1997 Concession Agreement. INC. The interest rates of 10% and 8% per month imposed by the trial court is reduced to 12% per annum. the cases at bar should be referred to arbitration pursuant to the provisions of the ARCA. which later organized into herein respondent PIATCO. capacity to sue and standing to sue.R. will be considered by the appellate court notwithstanding the failure to assign it as an error. as amended by R. et al. In a decision dated May 5. the Second Supplement on September 4. After the judgment becomes final and executory until the obligation is satisfied.Court has consistently held that an unassigned error closely related to an error properly assigned. 1997. RULING: The determination of whether a person may institute an action or become a party to a suit brings to fore the concepts of real party in interest..A. Enrile. the Government. The Court therefore is empowered to review the same. In accordance with the BOT Law and its Implementing Rules and Regulations (Implementing Rules). On November 26. Phil. various petitions were filed before this Court to annul the 1997 Concession Agreement. ISSUE: Whether or not that petitioners lack legal personality to file the cases at bar as they are not real parties in interest who are bound principally or subsidiarily to the PIATCO Contracts. courts have allowed private parties to institute actions challenging the validity of governmental . ARCA and the Supplements collectively referred to as the PIATCO Contracts). 7718 (BOT Law).. 1998. In the alternative. MENDOZA. computed from the date of the execution of the loan on October 31. on the other hand. They can chart the future inflow of investment under the BOT Law. Amusement and Sports. NAIA Passenger Terminals I and II will cease to be used as international passenger terminals. In these cases. would deprive them of their sources of livelihood. provided that to the satisfaction of PAGCOR.000.00. being an international network of computers. 144463 FACTS: On March 31. JAWORSKI. After the Court’s Decision. Further. Considering the nature of the controversy and the issues raised in the cases at bar. Consequently. necessarily . and to a good... Rule 19 provides that a Motion to Intervene should be filed “before rendition of judgment. the huge amount of investment to complete the project is estimated to be P13. hence. Nos.000. Second. constitutional and other legal issues with far-reaching economic and social implications are embedded in the cases at bar.R. In any event. They have not offered any worthy explanation to justify their late intervention. VOID/ INEXISTENT CONTRACTS: WHO MAY BRING ACTION FOR DECLARATION OF NULLITY SENATOR ROBERT S.000. trade. files the instant petition.” The Rules of Court govern the time of filing a Motion to Intervene. opportunities for social advancement. PIATCO employees claim that “they have a direct and personal interest [in the controversy]. Under settled jurisprudence.D. 1998. Further. conscientious and honest government. at stake is the build-operate-and–transfer contract of the country’s premier international airport with a projected capacity of 10 million passengers a year. the application of the doctrine on legal standing necessarily involves a preliminary consideration of the merits of the case and is not purely a procedural issue. namely. 1869. He contends that PAGCOR is not authorized under its legislative franchise.” NMTAI. the BOT Law and its implementing rules which have not been passed upon by this Court in previous cases. P. profession. The Court notes the bid of new parties to participate in the cases at bar as respondents-intervenors. Beyond iota of doubt. the New Respondents-Intervenors). or calling is a property right and is protected from wrongful interference. Over and above all these.action for violation of private rights or constitutional principles. he argues that the internet. since they stand to lose their jobs should the government’s contract with PIATCO be declared null and void.. praying that the grant of authority by PAGCOR in favor of SAGE be nullified. MIAA shall not renew any expired concession agreement relative to any service or operation currently being undertaken at the Ninoy Aquino International Airport Passenger Terminal I.. the implementation of the PIATCO Contracts. the ARCA provides: (d) For the purpose of an orderly transition. petitioner. a sideglance at these late motions will show that they hoist no novel arguments. Section 2. and Internet Gaming facilities to service local and international bettors. this Court liberally granted legal standing to the petitioning members of the House of RepresentativesFirst. represents itself as a corporation composed of responsible tax-paying Filipino citizens with the objective of “protecting and sustaining the rights of its members to civil liberties. or extend any concession agreement which may expire subsequent hereto. which granted SAGE the authority to operate and maintain Sports Betting station in PAGCOR’s casino locations. It is also self evident that the petitioning service providers stand in imminent danger of losing legitimate business investments in the event the PIATCO Contracts are upheld. their Motions for Reconsideration-InIntervention are denied for the rules cannot be relaxed to await litigants who sleep on their rights. He maintains that PAGCOR committed grave abuse of discretion amounting to lack or excess of jurisdiction when it authorized SAGE to operate gambling on the internet. Third. to operate gambling on the internet for the simple reason that the said decree could not have possibly contemplated internet gambling since at the time of its enactment on July 11. PAGCOR’s board of directors approved an instrument denominated as “Grant of Authority and Agreement for the Operation of Sports Betting and Internet Gaming”. except to the extent that the continuation of the existing services and operations shall lapse on or before the In-Service Date. PHILIPPINE AMUSEMENT AND GAMING CORPORATION and SPORTS AND GAMES ENTERTAINMENT CORPORATION. No.. Measured by this yardstick. the New Respondents- Intervenors filed separate Motions for Reconsideration-In-Intervention alleging prejudice and direct injury.” The New Respondents-Intervenors filed their separate motions after a decision has been promulgated in the present cases. appropriate safeguards and procedures are established to ensure the integrity and fairness of the games. one's employment. decent livelihood. a standard which is distinct from the concept of real party in interest. which the petitioners and petitioners-intervenors denounce as unconstitutional and illegal. this Court affirms its ruling that the petitioners have the requisite legal standing. Petitioner. respondents 2004 Jan 14 G. 1983 the internet was yet inexistent and gambling activities were confined exclusively to real-space. The 1997 Concession Agreement and the ARCA both provide that upon the commencement of operations at the NAIA IPT III. courts apply the doctrine of legal standing by determining whether the party has a direct and personal interest in the controversy and whether such party has sustained or is in imminent danger of sustaining an injury as a result of the act complained of. in his capacity as member of the Senate and Chairman of the Senate Committee on Games. vs. 155001 and 155661 are employees of service providers operating at the existing international airports and employees of MIAA while petitionersintervenors are service providers with existing contracts with MIAA and they will all sustain direct injury upon the implementation of the PIATCO Contracts. The petitioners in G. the primary issues posed in the cases at bar demand a discussion and interpretation of the Constitution. (1) the PIATCO Employees and (2) NMTAI (collectively.R. However. OZAMIZ. On December 22. the Commission issued an “Invitation to Apply for Eligibility and to Bid.Automated Counting and Canvassing System. 3. 2003.5 billion to fund the AES for the May 10. 2004 elections. COMELEC. acts. 5. Considering that the instant petition involves legal questions that may have serious implications on public interests. Comelec eventually decided against full national implementation and limited the automation to the Autonomous Region in Muslim Mindanao (ARMM). On February 17. HERRERA. SAHIJWANI. No. 8. in its discretion. 13. the Court clarified that where a case involves an issue of utmost importance. Phase I . or orders of various government agencies or instrumentalities are not without precedent. the counting and canvassing of votes for both national and local positions were also done manually. 354 SCRA 566 FRANCISCO VS. 159139 FACTS: On June 7. Initially intending to implement the automation during the May 11. INFORMATION TECH. rulings. as no additional ACMs had been acquired for that electoral exercise allegedly because of time constraints. Congress enacted Republic Act 8436authorizing Comelec to use an automated election system (AES) for the process of voting. ISSUE: Whether or not the petitioner has legal standing to file the instant petition as a concerned citizen or as a member of the Philippine Senate. and to adopt new electoral forms and printing materials. Ordinarily. 392 SCRA 317 On January 28. YOUNG. which authorized Comelec to conduct a nationwide demonstration of a computerized election system and allowed the poll body to pilot-test the system in the March 1996 elections in the Autonomous Region in Muslim Mindanao (ARMM). 1998 presidential elections. 172. within the territorial jurisdiction of the Republic of the Philippines. 4. JAN. 1869. The “Grant of Authority and Agreement to Operate Sports Betting and Internet Gaming” executed by PAGCOR in favor of SAGE is declared NULL and VOID. VIGILAR. It also mandated the poll body to acquire automated counting machines (ACMs). due to the failure of the machines to read correctly some automated ballots in one town. which allocated the sum of P2. the Court. 1995. 21 SCRA 52 EPG CONSTRUCTION VS. President Macapagal-Arroyo issued EO No. According to petitioner. the poll body released the Request for Proposal (RFP) to procure the election automation machines. 102 PHIL 577 PHILBANK VS. internet gambling does not fall under any of the categories of the authorized gambling activities enumerated under Section 10 of P. 1. computer equipment. 2. PROHIBITED CONTRACTS: EFFECTS AND REMEDIES IN CASE ONE PARTY IS INNOCENT / DISADVANTAGED On January 24. petitioner has the requisite legal standing to file this petition. and the grant to SAGE of authority to operate internet gambling contravenes the limitation in PAGCOR’s franchise. 6. under Section 14 of P.transcends the territorial jurisdiction of the Philippines.D.” Respondents argue that petitioner does not have the requisite personal and substantial interest to impugn the validity of PAGCOR’s grant of authority to SAGE. 423 SCRA 596 LIGUEZ VS. The instant petition is GRANTED. It resolved to conduct biddings for the three (3) phases of its Automated Election System. No. 7. counting votes and canvassing/consolidating the results of the national and local elections. The Bids and Awards Committee (BAC) of . On October 29. 354 SCRA 566 GO CHAN VS. 376 SCRA 482 INFORMATION TECHNOLOGY FOUNDATION OF THE PHILIPPINES VS. RULING: Objections to the legal standing of a member of the Senate or House of Representative to maintain a suit and assail the constitutionality or validity of laws. FOUNDATION VS. LUI SHE. namely. COMMISSION ON ELECTIONS 2004 Jan 13 G. decisions. or one of overreaching significance to society. However in a number of cases. 1997. 1869 which grants PAGCOR the “right. CA. devices and materials.R. clubs. Comelec adopted in its Resolution 02-0170 a modernization program for the 2004 elections. before a member of Congress may properly challenge the validity of an official act of any department of the government there must be an unmistakable showing that the challenged official act affects or impairs his rights and prerogatives as legislator. Upon the request of Comelec. privilege and authority to operate and maintain gambling casinos. sports gaming pools. and other recreation or amusement places. Congress passed Republic Act 8046. 2003. 2004 PABUGAIS VS. the poll body later ordered their manual count for the entire Province of Sulu. and Phase III . MENDEZONA VS. In the May 2001 elections.Voter Registration and Validation System.D.Electronic Transmission. No. can brush aside procedural technicalities and take cognizance of the petition. 2003. Phase II . she authorized the release of an additional P500 million. 2002. (2) when the issue involved is purely a legal question. imprudent and hasty actions of the Commission have not only desecrated legal and jurisprudential norms. suppliers and/or distributors forming themselves into a joint venture may be entertained. They protested the award of the Contract to Respondent MPC “due to glaring irregularities in the manner in which the bidding process had been conducted. as follows: “(1) when there is a violation of due process. they had undeniably failed to pass eight critical requirements designed to safeguard the integrity of elections. Joint venture is defined in the RFP as “a group of two or more manufacturers. (b) They were not able to detect previously downloaded results at various canvassing or consolidation levels and to prevent these from being inputted again and (c) They were unable to print the statutorily required audit trails of the count/canvass at different levels without any loss of data Because of the foregoing violations of law and the glaring grave abuse of discretion committed by Comelec. Among others. without adequately checking and observing mandatory financial. 2003 letter-protest. Alfredo M. they were referred to the BAC’s Technical Working Group (TWG) and the Department of Science and Technology (DOST). Notwithstanding these failures. Comelec en banc. On May 29. suppliers and/or distributors that intend to be jointly and severally responsible or liable for a particular contract. they sought a re-bidding. The illegal. (8) when it would amount to a nullification of a claim. the poll body signed the actual automation Contract with “Mega Pacific eSolutions.” . In the present case. (4) when there is estoppel on the part of the administrative agency concerned. in the exercise of its administrative functions. the BAC found MPC and the Total Information Management Corporation (TIMC) eligible. The Commission publicized this Resolution and the award of the project to MPC on May 16. it awarded to MPC the contract for the second phase of the comprehensive Automated Election System. And even without that May 29. orderly. the present Petition. represented by its president. (6) when the respondent is a department secretary whose acts as an alter ego of the President bears the implied and assumed approval of the latter.” a company that joined the bidding but had not met the eligibility requirements. and (11) when there are circumstances indicating the urgency of judicial intervention. the second envelope would be the Bid Envelope itself. (9) when the subject matter is a private land in land case proceedings. the public bidding was to be conducted under a two-envelope/two stage system. (3) when the administrative action is patently illegal amounting to lack or excess of jurisdiction. the agency vested with the exclusive constitutional mandate to oversee elections. capriciously or arbitrarily out of malice. RULING: Yes. especially the following three items: (a) They failed to achieve the accuracy rating criteria of 99. or (2) when it is executed whimsically. provided that the Philippine ownership thereof shall be at least 60 percent. 6074 awarding the project to MPC.Comelec convened a pre-bid conference on February 18.” Basically. five individuals and entities (including the herein Petitioners Information Technology Foundation of the Philippines. 2003. 2003. 2003 to submit their respective bids. and peaceful elections -. Truly. technical and legal requirements. For technical evaluation. For the automation of the counting and canvassing of the ballots in the 2004 elections. Court of Appeals. It also accepted the proferred computer hardware and software even if. 2003. (5) when there is irreparable injury. Despite this grant. the law or jurisprudence. However. Out of the 57 bidders. speedy and adequate remedy. Inc. Paat enumerates the instances when the rule on exhaustion of administrative remedies may be disregarded. ISSUE: Whether or not the Commission on Elections..” Citing therein the noncompliance with eligibility as well as technical and procedural requirements (many of which have been discussed at length in the Petition). his head executive assistant -. Comelec awarded the Contract to “Mega Pacific Consortium” an entity that had not participated in the bidding. on April 15. Torres. the pith and soul of democracy -. There is grave abuse of discretion (1) when an act is done contrary to the Constitution. the RFP provided that bids from manufacturers. The bidder’s first envelope or the Eligibility Envelope should establish the bidder’s eligibility to bid and its qualifications to perform the acts if accepted. Corazon Akol) wrote a letter to Comelec Chairman Benjamin Abalos Sr. at the time of the award. Comelec awarded this billion-peso undertaking with inexplicable haste. gravely abused its discretion when. Jaime Paz.credible. (7) when to require exhaustion of administrative remedies would be unreasonable.” Hence. but have also cast serious doubts upon the poll body’s ability and capacity to conduct automated elections. (10) when the rule does not provide a plain. the Commission on Elections approved the assailed Resolution and awarded the subject Contract not only in clear violation of law and jurisprudence.rejected the protest and declared that the award “would stand up to the strictest scrutiny.9995 percent set-up by the Comelec itself. the Comelec chairman -.has been put in jeopardy by the illegal and gravely abusive acts of Comelec. 2003 and gave prospective bidders until March 10. In its Report on the Evaluation of the Technical Proposals on Phase II. and Ma.speaking through Atty. but also in reckless disregard of its own bidding rules and procedure. promulgated Resolution No. the Court still holds that petitioners need not exhaust administrative remedies in the light of Paat v. the Court declared null and void the assailed Resolution and the subject Contract. DOST said that both MPC and TIMC had obtained a number of failed marks in the technical evaluation. On the other hand. ill will or personal bias. The letter-protest is sufficient compliance with the requirement to exhaust administrative remedies particularly because it hews closely to the procedure outlined in Section 55 of RA 9184. The present controversy precisely falls within the exceptions listed as Nos. “(7) when to require exhaustion of administrative remedies would be unreasonable; (10) when the rule does not provide a plain, speedy and adequate remedy, and (11) when there are circumstances indicating the urgency of judicial intervention.” As already stated, Comelec itself made the exhaustion of administrative remedies legally impossible or, at the very least, “unreasonable.” PROHIBITED CONTRACTS: EFFECTS AND REMEDIES IN CASE ONE PARTY IS INNOCENT / DISADVANTAGED TEDDY G. PABUGAIS v. DAVE P. SAHIJWANI G.R. No. 156846 February 23, 2004 423 SCRA 596 FACTS: Pursuant to an “Agreement And Undertaking” on December 3, 1993, petitioner Teddy G. Pabugais, in consideration of the amount of P15,487,500.00, agreed to sell to respondent Dave P. Sahijwani a lot containing 1,239 square meters located at Jacaranda Street, North Forbes Park, Makati, Metro Manila. Respondent paid petitioner the amount of P600,000.00 as option/reservation fee and the balance of P14,887,500.00 to be paid within 60 days from the execution of the contract, simultaneous with delivery of the owner’s duplicate Transfer Certificate of Title in respondent’s name the Deed of Absolute Sale; the Certificate of Non-Tax Delinquency on real estate taxes and Clearance on Payment of Association Dues. The parties further agreed that failure on the part of respondent to pay the balance of the purchase price entitles petitioner to forfeit the P600,000.00 option/reservation fee; while non-delivery by the latter of the necessary documents obliges him to return to respondent the said option/reservation fee with interest at 18% per annum. Petitioner failed to deliver the required documents. In compliance with their agreement, he returned to respondent the latter’s P600,000.00 option/reservation fee by way of Far East Bank & Trust Company Check, which was, however, dishonored. Petitioner claimed that he twice tendered to respondent, through his counsel, the amount of P672,900.00 (representing the P600,000.00 option/reservation fee plus 18% interest per annum computed from December 3, 1993 to August 3, 1994) in the form of Far East Bank & Trust Company Manager’s Check No. 088498, dated August 3, 1994, but said counsel refused to accept the same. On August 11, 1994, petitioner wrote a letter to respondent saying that he is consigning the amount tendered with the Regional Trial Court of Makati City. On August 15, 1994, petitioner filed a complaint for consignation. Respondent’s counsel, on the other hand, admitted that his office received petitioner’s letter dated August 5, 1994, but claimed that no check was appended thereto. He averred that there was no valid tender of payment because no check was tendered and the computation of the amount to be tendered was insufficient, because petitioner verbally promised to pay 3% monthly interest and 25% attorney’s fees as penalty for default, in addition to the interest of 18% per annum on the P600,000.00 option/reservation fee. On November 29, 1996, the trial court rendered a decision declaring the consignation invalid for failure to prove that petitioner tendered payment to respondent and that the latter refused to receive the same. Petitioner appealed the decision to the Court of Appeals. Petitioner’s motion to withdraw the amount consigned was denied by the Court of Appeals and the decision of the trial court was affirmed. On a motion for reconsideration, the Court of Appeals declared the consignation as valid in an Amended Decision dated January 16, 2003. It held that the validity of the consignation had the effect of extinguishing petitioner’s obligation to return the option/reservation fee to respondent. Hence, petitioner can no longer withdraw the same. Unfazed, petitioner filed the instant petition for review contending that he can withdraw the amount deposited with the trial court as a matter of right because at the time he moved for the withdrawal thereof, the Court of Appeals has yet to rule on the consignation’s validity and the respondent had not yet accepted the same. ISSUE: Whether or not assigning the amount of P672, 900.00 to Atty. De Guzman is prohibited. RULING: The amount consigned with the trial court can no longer be withdrawn by petitioner because respondent’s prayer in his answer that the amount consigned be awarded to him is equivalent to an acceptance of the consignation, which has the effect of extinguishing petitioner’s obligation. Moreover, petitioner failed to manifest his intention to comply with the “Agreement And Undertaking” by delivering the necessary documents and the lot subject of the sale to respondent in exchange for the amount deposited. Withdrawal of the money consigned would enrich petitioner and unjustly prejudice respondent. The withdrawal of the amount deposited in order to pay attorney’s fees to petitioner’s counsel, Atty. De Guzman, Jr., violates Article 1491 of the Civil Code which forbids lawyers from acquiring by assignment, property and rights which are the object of any litigation in which they may take part by virtue of their profession. Furthermore, Rule 10 of the Canons of Professional Ethics provides that “the lawyer should not purchase any interest in the subject matter of the litigation which he is conducting.” The assailed transaction falls within the prohibition because the Deed assigning the amount of P672,900.00 to Atty. De Guzman, Jr., as part of his attorney’s fees was executed during the pendency of this case with the Court of Appeals. In his Motion to Intervene, Atty. De Guzman, Jr., not only asserted ownership over said amount, but likewise prayed that the same be released to him. That petitioner knowingly and voluntarily assigned the subject amount to his counsel did not remove their agreement within the ambit of the prohibitory provisions. To grant the withdrawal would be to sanction a void contract. WHEREFORE, in view of all the foregoing, the instant petition for review is DENIED. the desire to benefit the petitioner but also to secure her cohabiting with him. Petitioner seeks to differentiate between the liberality of Lopez as cause and his desire as a motive. However, motive may be regarded as cause when it predetermined the purpose of the contract. The Court of Appeals rejected the claim of petitioner on the ground on the rule on pari delicto embodied in Article 1912 of the Civil Code. However, this rule cannot be applied in the case because it cannot be said that both parties had equal guilt where petitioner was a mere minor when the donation was made and that it was not shown that she was fully aware of the terms of the said donation. PROHIBITED CONTRACTS: EFFECTS AND REMEDIES IN CASE ONE PARTY IS INNOCENT / DISADVANTAGED PROHIBITED CONTRACTS: EFFECTS AND REMEDIES IN CASE ONE PARTY IS INNOCENT / DISADVANTAGED PHILBANK VS. LUI SHE 21 SCRA 52 LIGUEZ VS. COURT OF APPEALS 102 PHIL 577 FACTS: Justinia Santos was the owner of the property where a restaurant owned by Weng Heng is located. Being 90 years of age, without any surviving relatives, delivered to Weng being closed to her then, various sum of money for safekeeping. Subsequently, she executed a contract of lease in favor of Weng for a period of 50 years. However, the lessee was given the right to withdraw at any time from the agreement. Subsequently, she again executed another contract giving Weng the option to buy the premises. The option was conditioned on Weng’s obtaining a Filipino citizenship, which however, Weng failed to obtain. After which, Justinia again executed two other contracts, extending the term of the lease to 99 years and another fixing the term of the option to 50 years. However, a year later, she filed a complaint before the trial court alleging that the various contracts were executed by her because of machination, and inducement practiced by Weng, thereby she directed her executor to secure the annulment of the contract. FACTS: Petitioner filed a complaint for the recovery of parcel of land against the widow and heirs of Salvador Lopez. Petitioner averred that he is the owner of the aforementioned parcel of land pursuant to a Deed of Donation executed in her favor by the late owner, Salvador Lopez. The defense interposed that the donation was null and void for having illicit cause or consideration which was the petitioner’s entering into a marital relations with Salvador, a married man, and that the property had been adjudicated to the appellees as heirs of Salvador Lopez by the Court of First Instance. Meanwhile, the Court of Appeals found that the Deed of Donation was prepared by a Justice of Peace and was ratified and signed when petitioner Liquez was still a minor, 16 years of age. It was the ascertainment of the Court of Appeals that the donated land belonged to the conjugal partnership of Salvador and his wife and that the Deed of Donation was never recorded. Hence, the Court of Appeals held that the Deed of Donation was inoperative and null and void because the donation was tainted with illegal cause or consideration. ISSUE: Whether or not the Deed of Donation is void for having illicit cause or consideration. RULING: NO. Under Article 1279 of the Civil Code of 1989, which was the governing law during the execution of the Deed of Donation, the liberality of the donor is deemed cover only in those contracts that are pure beneficence. In these contracts, the idea of self interest is totally absent in the part of the transferee. Here, the facts as found demonstrated that in making the donation, Salvador Lopez was not moved exclusively by ISSUE: Whether or not the various contracts were void. RULING: Article 1308 of the Civil Code creates no impediment to the insertion in a contract of a resolutory condition permitting the cancellation of the contract by one of the parties. Such a stipulation does not make either the validity or the fulfillment of the contract dependent upon the will of the party to whom It conceded the privilege of the cancellation. In the case, the lease for an alien for a reasonable period is valid. So is the option giving the alien the right to buy the real property subject to the condition that he must obtain Filipino citizenship. Since alien’s residence in the Philippines is temporary, they may be grated temporary rights such as a lease contract which is not forbidden. However, if the alien is given not only the lease of, but also the option to buy a piece of land by virtue of which the Filipino owner cannot sell, or otherwise dispose of his property, this to last for 50 years, then it becomes clear that the arrangement is a virtual transfer of ownership. As such, the constitutional ban against alien landholding is in grave peril. However, it does not follow that because the parties are in pari delicto, they will be left where they are without relief. Article 1416 of the Civil Code provides an exception when the agreement is not illegal per se but is merely prohibited, and the prohibition by law is designed for the protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he had paid on delivery. PROHIBITED CONTRACTS: EFFECTS AND REMEDIES IN CASE ONE PARTY IS INNOCENT / DISADVANTAGED EPG CONSTRUCTION VS. VIGILAR 259 SCRA 566 FACTS: In 1989, the Ministry of Human Settlement through the BLISS Development Corporation, initiated a housing project on a government property. For this purpose, the MHS entered into a Memorandum of Agreement (MOA) with the Ministry of Public Works (MPWH) and Highway where the latter undertook to develop the housing site and construct therein 145 housing units. By virtue of the MOA, the MPWH forged individual contracts with petitioners for the construction of the housing units. Under the contracts, the scope of construction covered only 2/3 of each housing unit. After complying, the MPWH undersecretary made a verbal request for the additional construction, for the completion of the housing units, which the petitioner agreed. Subsequently, petitioner received payment for the construction work duly covered by the individual contracts, however, the amount covering the additional contracts were unpaid. The petitioner then sent a demand letter. The MPWH assistant secretary averred that the money claim should be based on quantum meruit to be forwarded to the COA. The amount of money was finally released, however, the MPWH secretary denied the subject money claim, which prompted the petitioner to file a case before the RTC. However, the trial court dismissed the case. ISSUE: Whether or not the petitioner has the right to be compensated for the public works housing project by virtue of the implied contract which was verbally executed. RULING: YES, the petitioner has the right to be compensated for the additional construction applying the principle of quantum meruit. Notably, the peculiar circumstances present in the instant case buttress petitioner’s claim for compensation for the additional construction, despite the illegality and void nature of the “implied contracts” forged between the MPWH and petitioners. In this matter, it is bear stressing that, the illegality of the subject contracts proceeds from the express declaration or prohibition of the law, and not for any intrinsic illegality. Stated differently, the subject contracts are not illegal per se. The Court cannot sanction an injustice so patent on its face and allow itself to be an instrument in the perpetration thereof. Justice and equity demands that the State’s cloak of invincibility against suit be shred in this particular case and that the petitionerscontractors be duly compensated, on the basis of quantum meruit, for the construction done on the public housing project. Petition is granted. Accordingly, the Commission on Audit is hereby directed to determine as ascertain with dispatch the total compensation due petitioners for the additional constructions on the housing project and to allow payment thereof. PROHIBITED CONTRACTS: EFFECTS AND REMEDIES IN CASE ONE PARTY IS INNOCENT / DISADVANTAGED GO CHAN VS. YOUNG 354 SCRA 201 FACTS: Gochan Realty was registered with the Security and Exchange Commission with Felix Gochan Sr., Maria Tiong, Pedro Gochan, Tomasa Gochan, Esteban Gochan and Crispo Gochan as its incorporators. Later, Felix Gochan Sr.’s daughter, Alice, mother of herein respondents, inherited 50 shares of stocks in Gochan Realty from the former. Alice subsequently died leaving the 50 shares to her husband, John Young Sr. Sometime in 1962, the RTC adjudicated 6/14 of these shares to her children. When her children, herein respondents, reached the age of majority, their father requested Gochan Realty to partition the shares of his late wife by canceling the stock certificate in his name and issuing, in lieu thereof, a new stock certificate in favor of his children. The Realty however, refused. Meanwhile, fifteen years later, Cecilia Uy and Miguel Uy filed a complaint with the SEC for issuance of shares of stocks to the rightful owners, nullification of shares of stock, reconveyance of the property impressed with trust and damages. The petitioners moved to dismiss the complaint. The SEC thereafter held that the Youngs were not shown to have been stockholders stock holders of Gochan Realty to confer them with the legal capacity to bring and maintain their action. That is why the case cannot be considered as an intra-corporate controversy within the jurisdiction of the Commission. The Court of Appeals, on appeal, held that the SEC had no jurisdiction over the case as far as the heirs of Alice Gochan were concerned; however, it upheld the capacity of Cecilia Gochan Uy and her spouse, Miguel Uy. ISSUE: Whether or not the spouses Uy have personality to file the suit before the Security and Exchange Commission. RULING: YES, the spouses have the personality. As a general rule, the jurisdiction of a court or tribunal over the subject matter is determined by the allegation in the complaint. The spouse averment in the complaint that the purchase of her stocks by the corporation was null and void ab initio was deemed admitted. It is elementary that a void contract produces no effect either against or in favor of anyone; it cannot create, modify or extinguish the juridical relations to where it attaches. Thus, Cecilia remains a stockholder of the corporation in view of the nullity of the contract of sale. Although she was no longer registered as a stock holder in the corporate record, the admitted allegation in the complaint made her still a bona fide stock holder of the corporation. PROHIBITED CONTRACTS: EFFECTS AND REMEDIES IN CASE ONE PARTY IS INNOCENT / DISADVANTAGED FRANCISCO VS. HERRERA 392 SCRA 317 FACTS: Eligio Herrera Sr. was the owner of 2 parcels of land located in Cainta, Rizal. On January 3, 1991, petitioner Julian Francisco bought from Herrera the first parcel of land covered by tax Declaration No. 01-00495 for P1M pain in installments from November 30, 1990 to August 10, 1991. Eventually, Francisco bought the second parcel of land covered by TD No. 01-00497 for P750T. Thereafter, the children of Eligio Sr. tried to negotiate with petitioner to increase the purchase price contending that it was grossly inadequate. When petitioner refused, respondent Pastor Herrera, son of Eligio, filed a complaint for annulment of sale. He claimed ownership over the second parcel of land allegedly by virtue of a sale in his favor since 1973. Moreover, he claimed that the first lot was subject to co-ownership of the surviving heirs of his parents before the alleged sale to Francisco. Ultimately, Pastor alleged that the sale of the 2 parcels of land was null and void on the ground that at the time of sale, Eligio Sr. was already incapacitated to give consent to a contract because of Senile Dementia which is characterized by deteriorating mental and physical condition including loss of memory. At variance, Francisco alleged that respondent was estopped from assailing the sale of the lots because respondent had effectively ratified both sales by receiving the consideration offered in each transaction. On November 14, 1994, the trial court declared the Deeds of Sale null and void. Francisco was ordered to return the lots in question including all improvements. Concomitantly, Herrera was ordered to return the purchase price of the lots sold. ISSUE: Whether or not the assailed contracts of sale are void or merely voidable and hence capable of being ratified. RULING: YES, the Supreme Court ruled that the contracts are merely voidable or annullable. Note that Article 1390 of the Civil Code specifically provides that when an insane or demented person enters into a contract, the legal effect is that the contract is voidable, not void or inexistent per se. Therefore, the contracts of sale entered into by Eligio Sr. are valid and binding unless annulled through a proper action filed in court seasonably. Furthermore, the questioned annullable contract was rendered perfectly valid in this case because of respondent’s acts of ratification. He actually received the payments on behalf of his father further manifesting that he was agreeable to the contracts. Similarly, respondent’s previous negotiation for an increase in the price bolster that indeed there was ratification of what he himself questions as a void contract. PROHIBITED CONTRACTS: EFFECTS AND REMEDIES IN CASE ONE PARTY IS INNOCENT / DISADVANTAGED MENDEZONA VS. OZAMIZ 376 SCRA 482 2002 Feb 6 FACTS: A civil case for quieting of title was instituted on September 25, 1991 by petitioner spouses Mendezona as plaintiffs. In their complaint, the petitioners, as plaintiffs therein, alleged that petitioner spouses own a parcel of land each with almost similar areas covered and described in Transfer Certificates of Title (TCT). The petitioners ultimately traced their titles of ownership over their respective properties from a notarized Deed of Absolute Sale dated April 28, 1989 executed in their favor by Carmen Ozamiz for and in consideration of the sum of One Million Forty Thousand Pesos (P1,040,000.00). The petitioners initiated the suit to remove a cloud on their said respective titles caused by the inscription thereon of a notice of lis pendens, which came about as a result of an incident in a Special Proceeding of the RTC. This Special Proceeding is a proceeding for guardianship over the person and properties of Carmen Ozamiz. In the course of the guardianship proceeding, the petitioners and the oppositors thereto agreed that Carmen Ozamiz needed a guardian over her person and her properties, and thus respondent Montalvan was designated as guardian over the person of Carmen Ozamiz while petitioner Mendezona, respondents Roberto J. Montalvan and Julio H. Ozamiz were designated as joint guardians over the properties of the said ward. The respondents opposed the petitioners’ claim of ownership of the Lahug property and alleged that the titles issued in the petitioners names are defective and illegal, and the ownership of the said property was acquired in bad faith and without value inasmuch as the consideration for the sale is grossly inadequate and unconscionable. Respondents further alleged that at the time of the sale on April 28, 1989 Carmen Ozamiz was already ailing and not in full possession of her mental faculties; and that her properties having been placed in administration, she was in effect incapacitated to contract with petitioners. Trial on the merits ensued and the lower court ruled in favor of petitioners. The appellate court reversed the factual findings of the trial court and ruled that the Deed of Absolute Sale dated April 28, 1989 was a simulated contract since the petitioners failed to prove that the consideration was actually paid, and, furthermore, that at the time of the execution of the contract the mental faculties of Carmen Ozamiz were already seriously impaired. Thus, the appellate court declared that the Deed of Absolute Sale of April 28, 1989 is null and void. It ordered the cancellation of the certificates of title issued in the petitioners’ names and directed the issuance of new certificates of title in favor of Carmen Ozamiz or her estate. The motion for reconsideration was denied. ISSUE: Whether or not the CA erred in ruling that the Deed of Absolute Sale dated on April 28, 1989 was a Simulated Contract. RULING: YES. Simulation is defined as "the declaration of a fictitious will, deliberately made by agreement of the parties, in order to produce, for the purposes of deception, the appearances of a juridical act which does not exist or is different from what that which was really executed." The requisites of simulation are: (a) an outward declaration of will different from the will of the parties; (b) the false appearance must have been intended by mutual agreement; and (c) the purpose is to deceive third persons. None of these were clearly shown to exist in the case at bar. Contrary to the erroneous conclusions of the appellate court, a simulated contract cannot be inferred from the mere non-production of the checks. It was not the burden of the petitioners to prove so. It is significant to note that the Deed of Absolute Sale dated April 28, 1989 is a notarized document duly acknowledged before a notary public. As such, it has in its favor the presumption of regularity, and it carries the evidentiary weight conferred upon it with respect to its due execution. It is admissible in evidence without further proof of its authenticity and is entitled to full faith and credit upon its face. Payment is not merely presumed from the fact that the notarized Deed of Absolute Sale dated April 28, 1989 has gone through the regular procedure as evidenced by the transfer certificates of title issued in petitioners’ names by the Register of Deeds. Considering that Carmen Ozamiz acknowledged, on the face of the notarized deed, that she received the consideration at One Million Forty Thousand Pesos (P1,040,000.00), the appellate court should not have placed too much emphasis on the checks, the presentation of which is not really necessary. Besides, the burden to prove alleged non-payment of the consideration of the sale was on the respondents, not on the petitioners. Also, between its conclusion based on inconsistent oral testimonies and a duly notarized document that enjoys presumption of regularity, the appellate court should have given more weight to the latter. Spoken words could be notoriously unreliable as against a written document that speaks a uniform language. It has been held that a person is not incapacitated to contract merely because of advanced years or by reason of physical infirmities. Only when such age or infirmities impair her mental faculties to such extent as to prevent her from properly, intelligently, and fairly protecting her property rights, is she considered incapacitated. The respondents utterly failed to show adequate proof that at the time of the sale on April 28, 1989 Carmen Ozamiz had allegedly lost control of her mental faculties. A person is presumed to be of sound mind at any particular time and the condition is presumed to continue to exist, in the absence of proof to the contrary. Competency and freedom from undue influence, shown to have existed in the other acts done or contracts executed, are presumed to continue until the contrary is shown. WHEREFORE, the instant petition is hereby GRANTED and the assailed Decision and Resolution of the Court of Appeals are hereby REVERSED and SET ASIDE. The Decision dated September 23, 1992 of the Regional Trial Court of Cebu City, Branch 6, in Civil Case No. CEB-10766 is REINSTATED. No pronouncement as to costs. NATURAL OBLIGATIONS: KINDS (1424-1430) 1. 2. MANZANILLA VS. CA, MARCH 15, 1990 RURAL BANK OF PARAÑAQUE VS. REMOLADO, MARCH 18, 1985 MANZANILLA VS. COURT OF APPEALS 183 SCRA 207 FACTS: In 1963, spouses Celedonio and Dolores Manzanilla sold on installment an undivided one-half portion of their residential house and lot. At the time of the sale, the said property was mortgaged to the Government Service Insurance System (GSIS), which fact was known to the vendees, spouses Magdaleno and Justina Campo. The Campo spouses took possession of the premises upon payment of the first installment. Some payments were made to petitioners while some were made directly to GSIS. On May 17, 1965, the GSIS filed its application to foreclose the mortgage on the property for failure of the Manzanilla spouses to pay their monthly amortizations. On October 11, 1965, the property was sold at public auction where GSIS was the highest bidder. Two months before the expiration of the period to redeem or on August 31, 1966, the Manzanilla spouses executed a Deed of Absolute Sale of the undivided one half portion of their property in favor of the Campo spouses. Upon the expiration of the period to redeem without the Manzanilla spouses exercising their right of redemption, title to the property was consolidated in favor of the GSIS and a new title issued in its name. In January 1969, the Manzanilla spouses made representations and succeeded in re-acquiring the property form the GSIS. Upon full payment of the purchase price, an Absolute Deed Of Sale was executed by GSIS in favor of the Manzanilla spouses. On May 14, 1973, the Manzanilla spouses mortgaged the property to the Biñan Rural Bank. On September 7, 1973, petitioner Ines Carpio purchased the property from the Manzanilla spouses and agreed to assume the mortgage in favor of Biñan Rural Bank. On November 12, 1973, private respondent Justina Campo registered her adverse claim over the said lot. On October 3, 1977, petitioner Carpio filed an ejectment case against private respondent Justina Campo. On July 31, 1979, private respondent Justina Campo (already a widow) filed a complaint for quieting of title against the Manzanilla spouses and Ines Carpio praying among others, for the issuance to her of a certificate of title over the undivided one-half portion of the property. The trial court rendered its decision in favor of Campo. The decision was appealed by petitioners to the Court of Appeals; however it only affirmed the decision of the trial court. Petitioners’ Motion for reconsideration was denied. ISSUE: Whether or not petitioners are under any legal duty to reconvey the undivided one-half portion of the property to private respondent Justina Campo. RULING: NO, there may be a moral duty on the part of petitioners to convey the one-half portion of the property previously sold to private respondent. However, they are under no legal obligation to do so. Hence, the action to quiet title filed by private respondent must fail. NATURAL OBLIGATIONS: KINDS (1424-1430) RURAL BANK OF PARAÑAQUE, INC., petitioner, VS. ISIDRA REMOLADO and COURT OF APPEALS, respondents 1985 March 18 FACTS: This case is about the repurchase of mortgaged property after the period of redemption had expired. Isidra Remolado, 64, a widow, and resident of Makati, Rizal, owned a lot with an area of 308 square meters, with a bungalow thereon, which was leased to Beatriz Cabagnot. In 1966 she mortgaged it to the Rural Bank of Parañaque, Inc. as security for a loan of P15,000. She paid the loan. On April 17, 1971 she mortgaged it again to the bank. She eventually secured loans totalling P18,000. The loans become overdue. The bank foreclosed the mortgage on July 21, 1972 and bought the property at the foreclosure sale for P22,192.70. The one-year, period of redemption was to expire on August 21, 1973. On August 8, 1973 the bank advised Remolado that she had until August 23 to redeem the property. On August 9, 1973 or 14 days before the expiration of the one-year redemption period, the bank gave her a statement showing that she should pay P25,491.96 for the redemption of the property on August 23. No redemption was made on that date. On September 3, 1973 the bank consolidated its ownership over the property. Remolado's title was cancelled. A new title, TCT No. 418737, was issued to the bank on September 5. On September 24, 1973, the bank gave Remolado up to ten o'clock in the morning of October 31, 1973, or 37 days, within which to repurchase (not redeem since the period of redemption had expired) the property. The bank did not specify the price. On October 26, 1973 Remolado and her daughter, Patrocinio Gomez, promised to pay the bank P33,000 on October 31 for the repurchase of the property. Contrary to her promise, Remolado did not repurchase the property on October 31. Five days later, or on November 5, Remolado and her daughter delivered P33,000 cash to the bank's assistant manager as repurchase price. The amount was returned to them the next day, November 6, 1973. At that time, the bank was no longer willing to allow the repurchase. Remolado filed an action to compel the bank to reconvey the property to her for P25,491.96 plus interest and other charges and to pay P35,000 as damages. The repurchase price was not consigned. A notice of lis pendens was registered. On It had given her about two years to liquidate her obligation. Petitioner became the trustee of Lot 20 and its improvements for the benefit of respondent as owner. Respondent Sandoval provided the money for the purchase of Lot 20 but the corresponding deed of sale and transfer certificate of title were placed in the name of petitioner Huang. HUANG VS. when these two options do not coincide. RULING: No. Villa. the instant recourse. the action must fail although the disadvantaged party deserves commiseration or sympathy. The choice between what is legally just and what is morally just. but because he has been defeated or overcome illegally. 4. the lessees prohibited the use of the swimming pool by the respondents. 236 SCRA 420 VDA. a violation of law. 253 SCRA 66 ANCOG VS.000. the bank sold the property to Pilar Aysip for P50. petitioner . 769. Through this transaction. CA. ISSUE: Whether or not petitioners can claim ownership of the property registered in their name but for which was paid by the respondents. RICARDO AND MILAGROS HUANG. Thus. A new title was issued to Aysip with an annotation of lis pendens The trial court ordered the bank to return the property to Remolado upon payment of the redemption price of P25. Hence.R.96 plus interest and other bank charges and to pay her P15. Thus. a resulting trust was created. KINDS OF TRUSTS: EXPRESS TRUST VS. Respondents G. VS. As a rule. is explained by Justice Moreland in Vales vs. 1997 MORALES VS. There must be. CA. 108525 September 13. 3. Respondents actually financed the construction of the house. 5. 1973. RULING: Yes. JUNE 30. She failed to do so. and lose money by them . CA. Private respondents bought Lot 21 and registered it in their name. BANCO FILIPINO.Et. A resulting trust arises because of the presumption the he who pays for a thing intends a beneficial therein for himself. petitioner was only a trustee of the property in question for the benefit of the respondent who is the real owner. respondents filed a complaint before the trial court for the nullification of the deed of sale to the petitioners and the quieting of title of Lot 20. but if there is no enforceable legal duty.000 as damages. the bank acted within its legal rights when it refused to give Remolado any extension to repurchase after October 31. Petitioner Huangs leased the property to Deltron Corporation for its official quarters without the permission of the respondents. No. Article 1448 of the New Civil Code provides that there is an implied trust when property is sold and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest for the property. DE ESCONDE VS. the Appellate Court's judgment is reversed and set aside. al. JUNE 19. the commission of what the law knows as an actionable wrong before the courts are authorized to lay hold of the situation and remedy it. 1994 FACTS: Private respondents Dolores and Aniceto Sandoval wanted to buy two lots in Dasmarinas Village. use miserable judgment. CA.indeed. The trial court found that the respondents were the real owners of the Lot 20 and therefore ordered the petitioners to vacate the property and to remit to the respondents the rentals earned from Lot 20. Petitioners were also allowed to mortgage the Lot 20 to the SSS to secure a loan." In the instant case. Even on the assumption that the bank should be bound by its commitment to allow repurchase on or before October 31. and the Huangs began challenging the respondents’ ownership of the property. equity follows the law. Justice is done according to law.November 15. and the fence surrounding the properties on the understanding that the petitioners would merely hold title in trust for the respondents’ beneficial interest. 1973. There may be a moral obligation. Men may do foolish things. in addition. Respondents constructed a house on Lot 21 while petitioners were allowed by respondents to build a house on Lot 20. Makati but was allowed to buy only one lot per policy of the subdivision owner. 392 SCRA 506 SPS. all they have in the world. There was no binding agreement for its repurchase. We hold that the trial court and the Appellate Court erred in ordering the reconveyance of the property. Petitioner. Respondents also bought Lot 20 but the deed of sale was in the name of petitioner Ricardo Huang and registered in his name. The Court of Appeals affirmed the lower court’s decision.491. still Remolado had no cause of action because she did not repurchase the property on that date. The Appellate Court affirmed the judgment. the swimming pool. Given these provisions of law. make ridiculous contracts. 1997 TALA REALTY VS. Therefore. 788 where he said: "Courts operate not because one person has been defeated or overcome by another. IMPLIED TRUST 1. But later. ISSUE: Whether or not the appellate court erred in reconveying the disputed property to Remolado. but not for that alone can the law intervene and restore. 35 Phil. often regarded as an equitable consideration (meaning compassion). 2. COURT OF APPEALS. 1700 having been registered in the name of private respondent on February 11. 1987. exceeded her authority as such in "donating" the lot to private respondent or waiving the rights thereto of Benjamin and Elenita in favor of private respondent. Transfer Certificate of Title No. Meanwhile. 1957 or more than thirty (30) years before the action was filed on June 29. and for damages (Civil Case No. Benjamin constructed the family home on Lot No. Benjamin also built a concrete fence and a common gate enclosing the two (2) lots. Eulogio died in April. They further prayed that private respondent be directed to enter into a partition agreement with them. the action to annul such title prescribed within ten (10) years on February 11. 1989. Lazara and Ciriaca. 5552). as well as an artesian well within Lot No. IMPLIED TRUST CATALINA BUAN VDA. the Party of the Third Part. and private respondent Pedro. with the exception of Constancia. more or less. 1700. 1700 was concerned because petitioner Catalina Buan vda. 1698-B which is adjacent to Lot No. the lower court ruled that the action had been barred by both prescription and laches. HONORABLE COURT OF APPEALS and PEDRO ESCONDE. petition is denied. the action would have prescribed on February 11. 1700 was issued on February 11. Pursuant to the same deed. Benjamin discovered that Lot No. DE PERALTA. Thus. 1987." ISSUE: Whether or not the action was already barred with laches and prescription. RULING: Trust is the legal relationship between one person having an equitable ownership in property and another person owning the legal title to such property. Hence. Andres is the brother of Estanislao Esconde. Because of the unenforceability of the deed. were then all minors. petitioners elevated the case to the Court of Appeals which affirmed the lower court's decision. with costs against petitioners. No. It found that the deed of extrajudicial partition was an unenforceable contract as far as Lot No. a trust relationship was created with private respondent as trustee and Benjamin and Elenita as beneficiaries However. 1982. At that time. they were represented by their mother and judicial guardian. Eulogio Esconde was one of the children and heirs of Andres Esconde. petitioner Catalina Buan vda. 1700 was registered in the name of his brother. The deed bears the thumbmark of Catalina Buan and the signature of Constancia Esconde. The decision of the trial court as sustained by the Court of Appeals is affirmed. 1700. the heirs of Lazara. still. 1700. 1947 in the name of private respondent but Catalina kept it in her possession until she delivered it to him in 1949 when private respondent got married. DE ESCONDE. petitioners. Benjamin demanded his share of the lot from private respondent. in 1985 constructed a "buho" fence to segregate Lot No. even if Art. 1977. Hence. 1963 of the old Civil Code providing for a 30-year prescriptive period for real actions over immovable properties were to be applied. petitioners herein filed a complaint before the Regional Trial Court of Bataan against private respondent for the annulment of TCT No. Lot No. as well as the approval and signature of Judge Basilio Bautista. Ciriaca and Eulogio executed a deed of extrajudicial partition. Eulogio's sisters. KINDS OF TRUSTS: EXPRESS TRUST VS. Sometime in December. 1946. the Party of the Second Part and that of Eulogio. 1944 survived by petitioners and private respondent. de Esconde. transfer certificates of title were issued to the new owners of the properties. 394. Survived by his only brother. on June 29. Benjamin and Elenita. Believing that the lot was coowned by all the children of Eulogio Esconde. respondents 1996 February 01 G. the equitable ownership of the former entitling him to the performance of certain duties and the . the original owner of the disputed lot who died without issue on April 1942. On December 5. CONSTANCIA ESCONDE VDA. VS. 1947. The appellate court held that the deed of extrajudicial partition established "an implied trust arising from the mistake of the judicial guardian in favoring one heir by giving him a bigger share in the hereditary property. that of Ciriaca. Andres. the lower court dismissed the complaint and the counterclaims." It stressed that "an action for reconveyance based on implied or constructive trust" prescribes in ten (10) years "counted from the registration of the property in the sole name of the co-heir. private respondent. Since the children of Eulogio. However. Thus. A portion of the house occupied an area of twenty (20) square meters. as mother and judicial guardian of her children.R.cannot claim ownership of the property even when it was registered in his name. of Lot No. had already died without having partitioned the estate of the late Estanislao Esconde. ELENITA ESCONDE and BENJAMIN ESCONDE. Bataan. 1700 from Lot No. 1698-B. are the children of the late Eulogio Esconde and petitioner Catalina Buan. private respondent asserted exclusive ownership thereof pursuant to the deed of extrajudicial partition and. de Esconde who renounced and waived her usufructuary rights over the parcels of land in favor of her children in the same deed. 103635 FACTS: Petitioners Constancia. In its decision of July 31. 394 for Lot No. with the heirs of Lazara identified therein as the Party of the First Part. Estanislao left an estate consisting of four (4) parcels of land in Samal. if indeed. independently of the particular intention of the parties. private respondent. said lot was registered in private respondent's name. private respondent was given the entirety of Lot No. In turn. Gorricho and Aguado that: . Laches has also circumscribed the action for. 190. However. the Court held in Diaz. there is neither a promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust nor intends holding the property for the beneficiary. Since the action for the annulment of private respondent's title to Lot No. Consequently. in allowing that he be given Lot No. While the deed of extrajudicial partition and the registration of Lot No.exercise of certain powers by the latter. hence. or an interest therein. Period of prescription as to real estate. real property. private respondent. by mistake. However. An action for recovery of title to. the fact is that. repudiation of the said trust is not a condition precedent to the running of the prescriptive period. implied trusts are those which. the Court ruled that the ten-year prescriptive period for an action for reconveyance of real property based on implied or constructive trust which is counted from the date of registration of the property. They arise contrary to intention against one who. Court of Appeals. On the other hand. or generate a fiduciary relation. whether the implied trust is constructive or resulting. credit must be given to petitioner Benjamin Esconde for resorting to all means possible in arriving at a settlement between him and his brother in accordance with Article 222 of the Civil Code. They arise from the nature or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. the latter is not justified in delaying action to recover his property. et al. 40. confidence is reposed in one person who is named a trustee for the benefit of another who is called the cestui que trust. de Esconde. private respondent exercised exclusive rights of ownership therein to the extent of even mortgaging the lot when he needed money. An express trust is created by the direct and positive acts of the parties. by some writing or deed or will or by words evidencing an intention to create a trust. However. in Heirs of Jose Olviga v. It provides: Sec. The rule that a trustee cannot acquire by prescription ownership over property entrusted to him until and unless he repudiates the trust. After TCT No. respecting property which is held by the trustee for the benefit of the cestui que trust. to hold. It is tragic that a land dispute has once again driven a wedge between brothers. A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a typical trust. v. by fraud. appears to have favored her elder son. in constructive trusts (that are imposed by law). Not only that. Although it does not appear on record whether Catalina intentionally granted private respondent that privileged bestowal. then a trust relationship was created between them and private respondent. A constructive trust. in equity and good conscience. Having filed their action only on June 29. can only be brought within ten years after the cause of such action accrues. as petitioners insist. 1700. constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. No particular words are required for the creation of an express trust. or possession of. Unfortunately. Petitioners. does not emanate from. applies when the plaintiff is not in possession of the contested property. These two are differentiated from each other as follows: Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to have been contemplated by the parties. a mistake was committed in allotting Lot No. In the case at bench. In this case. in constructive implied trusts. While in an express trust. in a constructive trust. Verbally and in two letters. 1700. without being expressed. 1700 in its entirety in the extrajudicial partition of the Esconde estate to the prejudice of her other children. obtains or holds the legal right to property which he ought not. as mother and legal guardian of her children. however. the so-called trustee does not recognize any trust and has no intent to hold for the beneficiary. he demanded that private . 1700 accrued during the effectivity of Act No. he may be estopped by his own laches. Trusts are either express or implied. implied trusts are either resulting or constructive trusts. there is neither promise nor fiduciary relation. If. it appears to have been out of tolerance to a brother. . Necessarily. prescription may supervene even if the trustee does not repudiate the relationship. If he allowed his brother Benjamin to construct or make improvements thereon. petitioners assailed it long after their right to do so had prescribed. not resulting. It is his fault if he delays. therefore. are deducible from the nature of the transaction as matters of intent or which are superinduced on the transaction by operation of law as matters of equity. . not petitioners who instituted the action. On the other hand. correctly questioned private respondent's exercise of absolute ownership over the property. petitioner Catalina Buan vda. 23 As regards constructive implied trusts. 1700 occurred in 1947 when the Code of Civil Procedure or Act No. applies to express trusts and resulting implied trusts. private respondent never considered himself a trustee. petitioners' action has been barred by prescription. therefore. 190 was yet in force. duress or abuse of confidence. implied trust. 1987. Thus. Section 40 of Chapter III thereof applies. the trust relationship between him and petitioners was a constructive. 1700 to private respondent. unlike an express trust. it being sufficient that a trust is clearly intended. a beneficiary and a trustee are linked by confidential or fiduciary relations. the Supreme Court held that the trial court correctly applied Article 1456. this doctrine applies. is in actual possession of Lot No. 394 was handed to him by his mother. private respondent Rosario Diez. The appellate court held that considering petitioner Jovita Yap Ancog’s educational attainment (Master of Arts and Bachelor of Laws). it was private respondent Diez who paid the loan of the Ancogs in order to secure the release of the property from mortgage Petitioner Jovita Yap Ancog contends that she could not have waived her share in the land because she is landless. Jr. respondents G. 1985. 1961. Ildefonso Ancog. Furthermore. When Rosario Diez applied again for a loan to the bank. Jr. that the heirs (Jovita Yap Ancog and Caridad Yap) meant the extrajudicial settlement to be fully effective is shown by the fact that Rosario Diez performed acts of dominion over the entire land. then only 15 years old.respondent give him and his sisters their share in Lot No. Atty. as shown by the fact that on February 28. upon the execution of a real estate mortgage on the land. In 1946. petitioner’s husband. Observing that even without the need of having title in her name Rosario Diez was able to obtain a loan using the land in question as collateral. RULING: In this case. one of the co-owners of the litigated property. 1700. and CARIDAD YAP. Atty. and private respondent Caridad Yap as his heirs. The court instead found that petitioner Ancog had waived her right to the land. KINDS OF TRUSTS: EXPRESS TRUST VS. and children. with improvements thereon. private respondent should not be unjustly enriched by the improvements introduced by his brother on Lot No. offering the land in question as security. On the other hand... it was improbable that she would sign the settlement if she did not mean it to be such. she brought an ejectment suit against petitioner Jovita Yap Ancog’s husband and son to evict them from the ground floor of the house built on the land for failure to pay rent. they accepted an appointment from Rosario Diez as the latter’s attorney-in-fact.. without any objection from them. Instead. the court held that the extrajudicial settlement could not have been simulated for the purpose of enabling her to obtain another loan. of their mother’s plan to sell the land. was formerly the conjugal property of the spouses Gregorio Yap and Rosario Diez. signed. petitioners. In 1985. petitioner Jovita Ancog agreed to lease the land from her mother. On April 14. and accepted from her a special power of attorney to use the land in question as collateral for a loan she was applying from the DBP.. Petitioners merely claimed that the extrajudicial settlement was demanded by the bank. He is obliged by law to indemnify his brother. Jr. which was annotated on its Original Certificate of Title No. petitioner Jovita Ancog learned that private respondent Rosario Diez had offered the land for sale. for whatever expenses the latter had incurred. Hence. As private respondent Caridad Yap was unwilling to join in the action against their mother. suggested that she submit an extrajudicial settlement covering the disputed land as a means of facilitating the approval of her application. The trial court rendered judgment dismissing petitioners’ action. but only to enable her to obtain a loan on the security of the land to cover expenses for Caridad’s school fees and for household repairs. 1961. 1997 FACTS: The land. The suggestion was accepted and on April 4. 1961. Unfortunately. 1700 which he himself had tolerated. Neither did petitioners adduce evidence to prove that an extrajudicial settlement was indeed required in order to obtain the additional loan. leaving his wife. with the exception of petitioner Gregorio Yap. Petitioners failed to overcome the presumptive validity of the extrajudicial settlement as a public instrument. 3094.On appeal. Narciso de la Serna. No. 1975. OCT No. Jr. petitioner Gregorio Yap. VS. ISSUE: Whether or not the appellate court erred in ruling that petitioner Gregorio Yap. leased the property from private respondent Diez. petitioners Jovita Yap Ancog and Gregorio Yap.To the contrary. de la Serna prepared an extrajudicial settlement. ROSARIO DIEZ. his efforts droved fruitless. the trial court and the Court of Appeals found no evidence to show that the extrajudicial settlement was required to enable private respondent Rosario Diez to obtain a loan from the Bank of Calape. The appellate court emphasized that the extrajudicial settlement could not have been simulated in order to obtain a loan. 112260 June 30. 622 was cancelled and Transfer Certificate of Title No.. when the spouses Ancog applied for a loan to the Development Bank of the Philippines using the land in question as collateral. 622. private respondent Caridad Yap is . the loan was approved by the bank. Indeed. this petition.R. In 1954 and again 1958. For that matter. the Court of Appeals upheld the validity of the extrajudicial settlement and sustained the trial court’s dismissal of the case. as the new loan was merely “in addition to” a previous one which private respondent Diez had been able to obtain even without an extrajudicial settlement. and GREGORIO YAP. who was living in Davao. had lost his rights to the property through prescription or laches. the bank’s lawyer. Petitioners alleged that the extrajudicial instrument was simulated and therefore void. 3447 (T-2411) was issued on April 13. He even reported the matter to the barangay authorities for which three conferences were held.Petitioner Ancog immediately informed her younger brother. Caridad was impleaded as a defendant. COURT OF APPEALS. Rosario Diez exercised rights of ownership over the land. Rosario Diez obtained loans from the Bank of Calape. They claimed that in signing the instrument they did not really intend to convey their interests in the property to their mother. JR. It dismissed petitioners’ claim that the extrajudicial settlement was simulated and held it was voluntarily signed by the parties. secured by a mortgage on the disputed land. they filed this action for partition in the Regional Trial Court of Bohol where it was docketed as Civil Case No. IMPLIED TRUST JOVITA YAP ANCOG. petitioner Benjamin Esconde. Gregorio Yap died. beginning with its registration. which the heirs. On June 6. The court also found that the action for partition had already prescribed. Shortly thereafter. private respondent Rosario Diez. Even the action he brought before the court was filed too late. As a result. Co Cho Chit. WHEREFORE. it cannot be taken as an act of repudiation adverse to petitioner Gregorio Yap. The complaint prayed that private respondents be declared the lawful owners of a parcel of land and the two-storey residential building standing thereon. whose share in the property was precisely not included by the parties in the partition. RANULFO ORTIZ. an exchange. As a general rule. which is founded on the presumed intention of the parties. COURT OF APPEALS (Former Seventeenth Division). and pay actual and moral damages. In accordance with Rule 74..” In the case of O’Laco v. the rule that the prescriptive period should be counted from the date of issuance of the Torrens certificate of title applies only to the remedy of reconveyance under the Property Registration Decree. 117228 FACTS: This is an action for recovery of possession of land and damages with a prayer for a writ of preliminary mandatory injunction filed by private respondents herein. petitioners. Jr. represented by his heirs. he was not included or even informed of the partition. The trial court allowed his substitution by his heirs. Since the action brought by petitioner Yap to claim his share was brought shortly after he was informed by Jovita Ancog of their mother’s effort to sell the property. Priscila Morales. the decision of the Court of Appeals is AFFIRMED with the MODIFICATION that this case is REMANDED to the Regional Trial Court for the determination of the claim of petitioner Gregorio Yap. and ERLINDA ORTIZ. 1988 Rodolfo Morales passed away. Roda. Instead. 1451 was held as creating a resulting trust. It is uncontroverted that. defendants heirs of Rodolfo Morales and intervenor Priscila Morales. filed a motion to intervene in the case. Jr. 1082 of the Civil Code. In turn. Jr. Jr. VS. every act which is intended to put an end to indivision among co-heirs is deemed to be a partition even though it should purport to be a sale. Furthermore. respondents Jun 19. Although the registration of the land in private respondent Diez’s name operated as a constructive notice of her claim of ownership. JR. On November 30. §1 of the Rules of Court. 1988. ISSUE: Whether or not Celso Avelino purchase the land in question from the Mendiolas as a mere trustee for his parents and siblings. implied trusts are either resulting or constructive trusts.also landless. Rosalia. it arises where such may be reasonably presumed to be the intention of the parties. one of the daughters of late Rosendo Avelino and Juana Ricaforte. In this case. which provides: “When land passes by succession to any person and he causes the legal title to be put in the name of another. KINDS OF TRUSTS: EXPRESS TRUST VS. Express trusts are created by the intention of the trustor or of the parties. but she signed the agreement. A cestui que trust may make a claim under a resulting trust within 10 years from the time the trust is repudiated. For this reason. 1451 of the Civil Code.This Court has ruled that for prescription to run in favor of the trustee. Art. Jr. the motion was granted on March 4. The Supreme Court held that the Court of Appeals erred in ruling that the claim of petitioner Gregorio Yap. IMPLIED TRUST RODOLFO MORALES. he is not bound by the settlement. and Erlinda Ortiz. and even contrary to. No. what the record of this case reveals is the intention of Jovita Ancog and Caridad Yap to cede their interest in the land to their mother Rosario Diez. either through implication of an intention to create a trust as a matter of law or through the imposition of the trust irrespective of. vacate the premises. RULING: Trusts are either express or implied. appealed to the Court of Appeals which in turn affirmed the decision. at the time the extrajudicial settlement was executed. private respondents herein. Cesar and Priscila. it has not been shown whether he had been informed of her exclusive claim over the entire property before 1985 when he was notified by petitioner Jovita Yap Ancog of their mother’s plan to sell the property. Thus. all surnamed Morales. while Atty. or any other transaction. attorney's fees and costs of the suit. the registration of the land in Rosario Diez’s name created an implied trust in his favor by analogy to Art. She testified that she did so out of filial devotion to her mother. and that Morales be ordered to remove whatever improvements he constructed thereon. a trust is established by implication of law for the benefit of the true owner. It is immaterial that they had been initially motivated by a desire to acquire a loan. against Rodolfo Morales. and PRISCILA MORALES. de la Serna added that the partition only involved the shares of the three participants. Jr. spouses Ranulfo Ortiz. while implied trusts come into being by operation of law. Gregorio Yap. as determined from the facts and circumstances existing at the time of the transaction out of which it is sought to be established. 1997 G. the trust must be repudiated by unequivocal acts made known to the cestui que trust and proved by clear and conclusive evidence. Under Art.R. Indeed. to the extent of his share. litigation expenses. the records disclose that the intention of the parties to the extrajudicial settlement was to establish a trust in favor of petitioner Yap. No opposition thereto having been filed. was a minor. any such intention.’s claim. as he did not take part in the partition. The trial court rendered its decision in favor of plaintiffs. Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to .’s claim cannot be considered barred either by prescription or by laches. Gregorio Yap. petitioners herein. Jr. was barred by laches. Rosario Diez testified that she did not claim the entire property. Dissatisfied with the trial court's decision. to the rentals due for the period during which the Bank was arbitrarily closed. herein petitioner. namely. Tomas Aguirre. on April 14.500. as found by the trial court and affirmed by the Court of Appeals. 1994. “However.00 as security deposit for the performance of the terms and conditions of the contract. if the person to whom the title is conveyed is a child. it being disputably presumed that there is a gift in favor of the child. that he considered the property he purchased from the Mendiolas as his exclusive property. That day. they should suffer the consequences of their deception by denying them any affirmative relief. With the advance rentals already used up. They failed to reach an agreement. legitimate or illegitimate. duress or abuse of confidence. The theory of implied trust with Celso Avelino as the trustor and his parents Rosendo Avelino and Juan Ricaforte as trustees is not even alleged. Antonio Tiu.have been contemplated by the parties.00. he sold the property to private respondents. 143263 FACTS: In 1979. respondent 2004 Jan 29 G. another lease contract was executed by the parties covering each branch site providing for a period of eleven years.500. On August 25. renewable for another nine years at the option of respondent. to buy the property allegedly in trust for the former. Decision affirmed. otherwise known as the General Banking Act. by fraud. Equity dictates that Tala should not be allowed to collect rent from the Bank. Thus. of the one paying the price of the sale. without doubt. Both the Bank and Tala participated in the deceptive creation of a trust to circumvent the real estate investment limit under Sections 25(a) and 34 of the General Banking Act. Finally. No. the RTC rendered its Decision dismissing petitioner’s complaint for ejectment for lack of merit. On the other hand. renewable for another twenty years. He had its tax declaration transferred in his name. his son. had to unload some of its branch sites since it has reached its allowable limit under Section 25(a) and 34 of Republic Act 337.00 and require respondent bank to pay petitioner P602. respondent. constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment.057. In the instant case. They arise from the nature or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. TALA stands for the names of Banco Filipino’s four major stockholders. VS. And respondent bank was required to pay P602. obtains or holds the legal right to property which he ought not. petitioner. Banco Filipino. with a monthly rental of P12. The major stockholders of Banco Filipino formed a corporation known as TALA Realty Services Corporation. rentals would be due Tala from the time the Bank stopped paying rent in April 1994 up to the expiration of the lease period. In turn. that title to the property was conveyed to Celso. The clean hands doctrine will not allow the creation or the use of a juridical . petitioner wrote respondent informing it of the expiration of the 11-year lease contract. 1999. The Bank should not be allowed to dispute the sale of its lands to Tala nor should Tala be allowed to further collect rent from the Bank. In August 1992. 1981. the Supreme Court ruled that the parties deliberately circumvented the real estate investment limit under Sections 25(a) and 34 of the General Banking Act. on July 23. On February 5. established positive acts of Celso Avelino indicating. and the Bank having stopped payment of the rent on the thirteenth year of the lease or in April 1994. They arise contrary to intention against one who. respondent bank executed in favor of petitioner TALA eleven deeds of sale transferring to the latter its branch sites. prompting petitioner to file civil case for illegal detainer. Accordingly. The fact remains. BANCO FILIPINO SAVINGS AND MORTGAGE BANK. expressly or impliedly. caused the property surveyed for him by the Bureau of Lands. the situation is governed by or falls within the exception under the third sentence of Article 1448. Respondent did not heed such demand. RULING: No.’ This would result in the application of the Bank’s advance rentals covering the eleventh to the twentieth years of the lease. Upholding Tala’s right to collect rent from the period during which the Bank was arbitrarily closed would allow Tala to benefit from the illegal ‘warehousing agreement. as amended. IMPLIED TRUST TALA REALTY SERVICES CORPORATION. petitioner leased these branch sites to respondent through separate contracts of lease for a period of twenty years. no trust is implied by law. KINDS OF TRUSTS: EXPRESS TRUST VS. the Court of Appeals.R. at the option of respondent.000. petitioners' theory is that Rosendo Avelino owned the money for the purchase of the property and he requested Celso. had dismissed the petition and upholding the 20-year lease contract between the parties. to hold. 1998.” The preponderance of evidence.600. and faithfully paid the realty taxes. ISSUE: Whether respondent may be ejected from the leased premises for non-payment of rent. Being in pari delicto. in equity and good conscience. petitioner notified respondent that the lease shall no longer be renewed and demanded that it vacate the premises and pay the rents in arrears amounting to P2. Nancy Lim and Pedro Aguirre. however. On appeal via a petition for review.00 as advance rentals. Obviously the action had not prescribed when private respondents filed their complaint against petitioners on 19 December 1995. Thereafter. ISABEL. and on 13 November 1991 Lot 1015 was bestowed upon Isabel Kionisala. RULING: The Supreme Court ruled that neither the action for declaration of nullity of free patents and certificates of title of Lot 1015 and Lot 1017 nor the action for reconveyance based on an implied trust of the same lots has prescribed. 378 SCRA 206 RAMOS VS. CA. 61 SCRA 284 INTESTATE ESTATE OF TY VS. 356 SCRA 661 VDA. Neither the Bank nor Tala came to court with clean hands. JOVEN and CARMELO.R. After the hearing on 3 December 1996 the trial court dismissed the complaint on the ground that the cause of action of private respondents was truly for reversion so that only the Director of Lands could have filed the complaint. Moreover.744 square meters and 69. neither will obtain relief from the court as one who seeks equity and justice must come to court with clean hands In support of their causes of action for declaration of nullity of titles and reconveyance. Libona. 4. CO CHO CHIT. 220 SCRA 656 HEIRS OF AMBROCIO KIONISALA. were registered. the petition is DENIED. 228 SCRA 75 O’LACO VS. 2002 378 SCRA 206 FACTS: On 19 December 1995 private respondents filed a complaint for declaration of nullity of titles. and produces no legal effects whatsoever. Wherefore. . This complaint involved 2 parcels of land known as Lot No. one of the impleaded heirs of Ambrocio Kionisala under Free Patent No. Bukidnon. 1017 and Lot No. private respondents claimed absolute ownership of Lot 1015 and 1017 even prior to the issuance of the corresponding free patents and certificates of title. 1015 with areas of 117. ISSUE: Whether or not the action for nullity of free patents and certificates of title of Lot 1015 and Lot 1017 or the action for reconveyance based on implied trust of the same lots has prescribed. 372 SCRA 712 CHIA LIONG TAN VS. On 7 March 2000 petitioners moved for reconsideration of the CA Decision. on 19 November 1990 Lot 1017 was registered under the Torrens system and was issued Original Certificate of Title No. the instant petition for review is denied. On 7 September 1990 Lot No. It ruled that “a free patent issued over private land is null and void. peaceful. At any rate. The action for reconveyance based on implied trust. continuous and adverse possession of the 2 parcels of land and its illegal inclusion in the free patents of petitioners and in their original certificates of title also amounts to an action for quieting of title which is imprescriptible. 603393. prescribes only after 10 years from 1990 and 1991 when the free patents and the certificates of title over Lot 1017 and Lot 1015. the action for reconveyance in the case at bar is also significantly deemed to be an action to quiet title for purposes of determining the prescriptive period on account of private respondents’ allegations of actual possession of the disputed lots. DE RETERTO VS. public. On 7 June 1997 private respondents appealed the order of dismissal to the Court of Appeals. 2. 101311-91-904. directly or indirectly. CA. 5. 147379 February 27. while on 5 December 1991 Lot No. 1015 was registered in the name of Isabel Kionisala under Original Certificate of Title No. namely. the law. P-19819 in petitioners’ name. On 23 December 1996 private respondents moved for reconsideration of the order of dismissal but on 3 June 1997 the motion was denied by the trial court. IMPLIED TRUSTS: PRESCRIPTIVE PERIODS OF ACTION TO ENFORCE IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE 1. reconveyance and damages against petitioners in the Regional Trial Court of Manolo Fortich. The challenged Decision of the Court of Appeals dated July 23. 2000. located in Pongol. Thus. HEIRS OF KIONISALA VS. on the other hand. HEIRS OF HONORIO DACUT G. ANA. Bukidnon. all surnamed KIONISALA v VS. HEIRS OF DACUT.974 square meters respectively. RAMOS. On 15 February 2000 the appellate court promulgated its assailed Decision reversing the order of dismissal. 1999 and its Resolution dated May 16. P-20229. 1017 was granted a free patent to petitioners Heirs of Ambrocio Kionisala under Free Patent No. 3. GRACE. 6. On 22 January 2001 the appellate court denied the motion for lack of merit. are REVERSED and SET ASIDE. In such a case. BARZ. hence this petition for review. the cause of action is truly imprescriptible.relation such as a trust to subvert. private respondents’ claim of open. No. respectively. a partition project was submitted which was signed by the 3 legitimate children and 2 of the 7 natural children. Judge Richard Campbell approved the partition project. RAMOS 61 SCRA 284 FACTS: Spouses Martin Ramos and Candida Tanate died on October 4. the partition was made in accordance with the Old Civil code.IMPLIED TRUSTS: PRESCRIPTIVE PERIODS OF ACTION TO ENFORCE IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE RAMOS VS. Ultimately. Indeed. TE. TY. the manifestation was not in strict conformity with the terms of the judge’s order and with the partition project itself. there was inexcusable delay thereby making the plaintiffs’ action unquestionably barred by prescription and laches and also by res judicata. HON. The shares of the 7 natural children were to be taken from that 1/3 free portion. Krizia Katrina. Thereafter. praying for the declaration of nullity of the deed of absolute sale of the shares of stock executed by private respondent in favor of the deceased Alexander. Nevertheless. and ALEJANDRO B. and only child. petitioner. represented by the Administratrix. 1981. Rafael Ramos. In the settlement of his estate. The court declared that the proceeding will be considered closed and the record should be archived as soon as proof was submitted that each he3ir had received the portion adjudicated to him. they were acquired through private-respondent’s money. 1906 and October 26. petitioner Silvia. It may either be express or implied. COURT OF APPEALS. ILDEFONSO E. respondents G. It is said that trust is the right. some head of cattle and the advances to the legitimate children. TY. a brother of Martin. 1/3 thereof was the free portion or P12. the legal title to which is vested in another. 1914. IMPLIED TRUSTS: PRESCRIPTIVE PERIODS OF ACTION TO ENFORCE IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE THE INTESTATE ESTATE OF ALEXANDER T. RULING: YES. Therefore. The motions to dismiss were denied. 112872 April 19. They were survived by their 3 children. the Supreme Court elucidated on the nature of trusts and the availability of prescription and laches to bar the action for reconveyance of property allegedly held in trust. Nonetheless. ty.497. Martin was survived by his 7 natural children. laches and res judicata to the effect that they were denied of their right to share in their father’s estate. no Deed of Trust was alleged and proven. praying for the recovery of the pieces of property that were placed in the name of deceased Alexander. Tywas married to Alexander T. consisting of 18 parcels of land. Ty. 1988 and was survived by his wife. Thus. Note that 1/6 of the subject lots represents the 1/3 free portion of martin’s shares which will eventually redound to the shares of his 7 legally acknowledged natural children. Neither did they specify the kind of implied trust contemplated in their action. The latter ids further subdivided into resulting and constructive trusts. VS. It is noteworthy that the main thrust of plaintiffs’ action is the alleged holding of their shares in trust by defendants. petitioner filed a motion for leave to sell or mortgage estate property in order to generate funds for the payment of deficiency estate taxes in the sum of P4.R. Moreover. when in fact the administrator was supposed to pay the cash adjudications to each of them as enshrined in the partition project.98. 1992. Emanating from such. ISSUE: Whether or not the plaintiffs’ action was barred by prescription. 8 lots of the Himamaylan Cadastre were registered in equal shares in the names of Gregoria (widow of Jose Ramos) and her daughter. Privite respondent Alejandro Ty then filed two complaints for the recovery of the above-mentioned property. Petitioner then filed petitions for certiorari in the Courts of Appeals. On November 4. on January 11. son of private respondent Alejandro b. The conjugal hereditary estate was appraised at P74. Eventually.560. Plaintiffs were then constrained to bring the suit before the court seeking for the reconveyance in their favor their corresponding participations in said parcels of land in accordance with Article 840 of the old Civil Code. respectively. administered the estate for more than 6 years. a special proceeding for the settlement of the intestate estate of said spouses was conducted. which were also dismissed for lack of merit. 2001 FACTS: Petitioner Sylvia S. . Inextricably interwoven with the questions of prescription and res judicata is the question on the existence of a trust. without any cause or consideration from deceased Alexander. Judge Nepumoceno asked the administrator to submit a report showing that the shares of the heirs had been delivered to them as required by the previous decision.00. its enforcement maybe barred by laches and prescription whether they contemplate a resulting or a constructive trust. SYLVIA S. Applying it now to the case at bar. the lower court dismissed the complaint on the grounds of res judicata. enforceable solely in equity to the beneficial enjoyment of property. GASCON. prescription and laches. The petitioners’ action was predicated on the theory that their shares were merely held in trust by defendants. The partition was sworn to before a justice of peace. On February 3.984. A certain Timoteo Zayco signed in representation of the other 5 natural children who were minors. the present petitions now before the Court.714. 1880. Alexander died of leukemia on May 19. petitioner was appointed administratrix of her late husband’s intestate estate. ½ thereof represented the estate of Martin.93. the plaintiffs did not prove any express trust. In December 1906. No. Petitioners failed to substantiate their allegation that their predecessor-in-interest had acquired any legal right to the property subject of the present controversy. Tan Ban Yong. RULING: NO. to hold. Since registration of real property is considered a constructive notice to all persons. Nor had they adduced evidence to show that the certificate of title of Pedro Barz was obtained through fraud. This. Thus. having found no reversible error was committed. petitioners are nonetheless barred from filing their claim of ownership. 896. No. a resulting trust was created. ISSUE: Whether or not petitioners’ defense is tenable. with an approximate area of 2. As owner thereof. 521 in November 16. Such transfer having been effected without cause of consideration. Even assuming arguendo that Pedro Barz acquired title to the property through mistake or fraud. 112872 is DISMISSED. with the then CFI of Cebu for the confirmation of his title over Lot 896 which included the Lot sold to Panfilo Retuerto. However. COURT OF APPEALS 228 SCRA 75 FACTS: Petitioner Chiao Liong Tan claims to be the owner of a motor vehicle. IMPLIED TRUSTS: PRESCRIPTIVE PERIODS OF ACTION TO ENFORCE IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE CHIAO LIONG TAN VS. having failed to show that grave abuse of discretion was committed in declaring that the regional trial court had jurisdiction over the case. petitioners should have filed an action for reconveyance within ten years from the issuance of OCT No. a confrontation arose and as a result respondents filed an action on September 5. 1941. they failed to do so. The Court ruled in his favor declaring him the lawful owner of the said property. 1940. and thus Original Certificate of Title No. Petitioners further contend that Pedro Barz misrepresented with the land registration court that he inherited the whole lot thereby constituting fraud on his part. Thus. filing or entering. 000. the Second World War ensued in the Pacific. in equity and good conscience. 1989 for “Quieting of Title.R. 521 was issued. On July 22. RULING: Private respondent contends that the pieces of property were transferred in the name of the deceased Alexander for the purpose of taking care of the property for him and his siblings. Pedro Barz. petitioner says he has been in possession. 1976 Model that he purchased in March 1987. the contention is bereft of merit. filed and application. Petitioner relies principally on the fact that the van is registered in his name under Certificate of Registration.ISSUE: Whether or not an express trust was created by private respondent when he transferred the property to his son. duress or abuse of confidence. no such Decree was issued as directed by the Court because.” In their answer. 896-A however was continuously occupied by the petitioners. He claims in his testimony before the trial court that the said motor vehicle was purchased from Balintawak Isuzu Motor Center for a price of over P100. 896-A. the Court issued an Order directing the Land Registration Commission for the issuance of the appropriate Decree in favor of Panfilo Retuerto over the said parcel of land. 00. enjoyment and utilization of the said motor vehicle until his older brother. while respondents are the heirs of Pedro Barz who is the sole heir of Juana Perez Barz. Juana Perez executed a Deed of Absolute Sale in favor of Panfilo Retuerto over a parcel of land. the petition for certiorari in G. the private respondent. Lot No. petitioners claimed that they were the owners of a portion of the lot which was registered under the name of Pedro Barz and therefore the issuance of the Original Certificate of Title in Pedro Barz’s name did not vest ownership but rather it merely constituted him as a trustee under a constructive trust. Juana Perez Barz was the original owner of Lot No. arising against one who. by fraud. WHEREFORE. by December 8.R. a subdivision of Lot No. Sometime in 1966. 1929. obtains or holds the legal right to property which he ought not. An action for reconveyance based on an implied or constructive trust prescribes within ten years from the time of its creation or upon the alleged fraudulent registration of the property. 114672 is DENIED. 1968. particularly described as Isuzu Elf van. The petition for review on certiorari in G.505 square meters.160 square meters. then the ten-year prescriptive period is reckoned from the time of such registering. However. identified as Lot No. Before her death on April 16. Panfilo failed to secure the appropriate decree after the war. IMPLIED TRUSTS: PRESCRIPTIVE PERIODS OF ACTION TO ENFORCE IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE VDA. took it from him. Constructive trusts are created in equity to prevent unjust enrichment. BARZ 372 SCRA 712 FACTS: Petitioners are the heirs of Panfilo Retuerto. Damages and Attorney’s Fees. DE RETUERTO VS. that he sent his brother to pay for the van and the receipt fro payment was placed in his name because it was his money that was used to pay for the . 896 having an area of 13. as the sole heir of Juana Perez. both coming into being by operation of law. it is undeniable that an implied trust was created when the certificate of registration of the motor vehicle was placed in the name of the petitioner although the price thereof was not paid by him but by private respondent. YES. It was also their understanding that he would keep the van for himself because CLT Industries was not in a position to pay him. For all practical purposes. After a month.vehicle. HELD: The New Civil Code recognizes cases of implied trusts other than those enumerated therein. A resulting trust was indeed intended by the parties under Art. Nevertheless. and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. by some writing or deed. The trial court declared that there was no trust relation of any sort between the sisters. Hence. . The Court of Appeals ruled otherwise.00 to be deposited as down payment for the van. or which are superinduced on the transaction by operation of law as matters of equity. By definition. the latter who is the former's older sister insists that the title was in her possession because she and her husband bought the property from their conjugal funds. Whether Prescription has set in. RULING: No. A certificate of registration of a motor vehicle in one’s name indeed creates a strong presumption of ownership.00 from his friend Tan Pit Sin. ISSUE: Whether a resulting trust was intended by them in the acquisition of the property. that he allowed his brother to use the van because the latter was working for his company. the person in whose favor it has been issued is virtually the owner thereof unless proved otherwise. IMPLIED TRUSTS: PRESCRIPTIVE PERIODS OF ACTION TO ENFORCE IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE O'LACO VS. CO CHO CHIT 220 SCRA 656 1993 Mar 31 FACTS: This Case involves half-sisters each claiming ownership over a parcel of land. After hearing. thereby lending credence to the claim of private respondent who has possession thereof. the Court of Appeals affirmed the decision of the trail court. that he owns the subject motor vehicle." . ISSUE: Whether or not the petitioner-appellant established proof of ownership over the subject motor vehicle. which would be available in about a month. Implied trusts are those which. 000. independently of the particular intention of the parties. WHEREFORE. the CLT Industries. In other words. Implied trusts may either be resulting or constructive trusts. Express trusts are those which are created by the direct and positive acts of the parties. Finding no merit in the appeal. The former is the trustee.000. while the latter is the beneficiary . from the time of the purchase. he had been in possession of the vehicle including the original registration papers thereof. which derives its strength from the confidence one reposes on another especially between brothers. The principle that a trustee who puts a certificate of registration in his name cannot repudiate the trust relying on the registration is one of the well-known limitations upon a title. he asked petitioner to look for a vehicle and gave him the amount of P5. without being express. the instant petition for review on certiorari of the decision of the appellate court together with its resolution denying reconsideration. Thus. A trust. although no specific provision could be cited to apply to the parties herein. respondent allowed the registration of the vehicle in petitioner’s name. such presumption is rebuttable by competent proof. . Petitioner did not have in his possession the Certificate of Registration of the motor vehicle and the official receipt of payment for the same. the instant petition for review is hereby DENIED for lack of merit. While petitioner Emilia O'Laco asserts that she merely left the certificate of title covering the property with private respondent O Lay Kia for safekeeping. and that his brother later refused to return the van to him and appropriated the same for himself. he himself paid the whole price out of a loan of P140. the trial court found for the private respondent. I. When the family business needed a vehicle in 1987 for use in the deliver of machinery to its customers. does not lose that character simply because of what appears in a legal document. Hence. There is an implied trust when property is sold. or will. 1448. are deducible from the nature of the transaction as matters of intent. 1448 of the New Civil Code which states ---"Art. private respondent testified that CLT Industries is a family business that was placed in petitioner’s name because at that time he was then leaving for the United Stated and petitioner remaining Filipino in the family residing in the Philippines. On the other hand. trust relations between parties may either be express or implied. or by words evincing an intention to create a trust. but allowing petitioner from time to time to use the van for deliveries of machinery. the Court categorically ruled that an action for reconveyance based on an implied or constructive trust must perforce prescribe in ten (10) years. Neither the registration of the Oroquieta property in the name of petitioner Emilia O'Laco nor the issuance of a new Torrens title in 1944 in her name in lieu of the alleged loss of the original may be made the basis for the commencement of the prescriptive period. prescription did not begin to run until the sale of the Oroquieta property. so long as the trustee recognizes the trust. executed a Contract to Sell and a Deed of Sale of forty-two subdivision lots within the Phib-Khik Subdivision of the Puentevella family. Thus. which was clearly an act of repudiation. Inc. Note: This is page 188A of Casebook (Part I-Obligations) IDENTITY OF PRESTATION (WHERE PAYMENT MUST BE MADE) BINALBAGAN VS. Consequently. which reversed the trial court. through its president. For. is AFFIRMED. Once the resulting trust is repudiated. there was no cause for any alarm on the part of respondentspouses. the action therefore has not yet prescribed. said petitioner took possession of the lots and the building and improvements thereon. and. THE END A resulting trust is repudiated if the following requisites concur: (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui qui trust. Since the complaint for breach of trust was filed by respondent-spouses two (2) months after acquiring knowledge of the sale. The Decision of the Court of Appeals of 9 April 1981. (hereinafter referred to as Binalbagan). the legal title was placed in the name of Emilia O'Laco. COURT OF APPEALS G. In turn Binalbagan. No. or just before she got married. 100594 March 10. respondent-spouses were not aware of any act of Emilia which would convey to them the idea that she was repudiating the resulting trust. There is no running of the prescriptive period if the trustee expressly recognizes the resulting trust. 1993 FACTS: On May 11. Hence. and ordinarily will not be in fault for omitting to bring an action to enforce his rights. But immediately after Emilia sold the Oroquieta property which is obviously a disavowal of the resulting trust. it is converted into a constructive trust and is subject to prescription. private respondents. in her capacity as Judicial Administrator of the intestate estate of Luis B. until that point.II. Puentevella. The transfer of the Torrens title in her name was only in consonance with the deed of sale in her favor. In Tale v. (b) such positive acts of repudiation have been made known to the cestui qui trust. the rule of imprescriptibility may apply for as long as the trustee has not repudiated the trust. The second requisite is therefore absent. the Petition for Review on Certiorari is DENIED. although the property was bought by respondent-spouses. As late as 1959. As differentiated from constructive trusts. petitioner Hermilo J. Nava (hereinafter referred to as Nava). conveying and transferring said lots to petitioner Binalbagan Tech.. Correspondingly. where the settled rule is that prescription may supervene. the beneficiary may rely upon the recognition. Emilia continued to recognize the ownership of respondent-spouses over the Oroquieta property. Costs against petitioners. respondent-spouses instituted the present suit for breach of trust. through Angelina P. Precisely. Binalbagan . and not otherwise. WHEREFORE. executed an Acknowledgment of Debt with Mortgage Agreement. however. After all. mortgaging said lots in favor of the estate of Puentevella. Echaus. thereby modifying previous decisions holding that the prescriptive period was four (4) years. 1967. Upon the transfer to Binalbagan of titles to the 42 subdivision lots. (c) the evidence thereon is clear and convincing. much less fraudulent.R. in resulting trust. Court of Appeals. laches cannot lie against them. the issuance of the Torrens title in the name of Emilia O'Laco could not be considered adverse. an ex-parte writ of preliminary injunction was issued by the Honorable Presiding Judge Carlos Abiera. Private respondent Angelina P. private respondent Echaus was not in a legal position to demand compliance of the prestation of petitioner to pay the price of said subdivision lots. Consequently. However. have and enjoy the legal and peaceful possession of the thing. the right to rescind a contract can be demanded only if a party thereto is ready. Echaus filed on October 8. 293 and reinstated to the possession thereof only in 1982. It will be noted that petitioner was not in possession of the lots from 1974 to May 31. Upon the filing of the instant case for injunction and damages on January 3. Civil Code). the Court of Appeals rendered judgment. petitioner was evicted from the subject subdivision lots in 1974 by virtue of a court order in Civil Case No. as well as warrant. In a contract of sale. admittedly. The cause of action of private respondent Echaus is based on the deed of sale afore-mentioned. It follows that during that period. 42211. The prescriptive period within which to institute an action upon a written contract is ten years (Art. 293. Civil Code). from the time ownership is passed. 1982.509. private respondent Angelina Echaus demanded payment from petitioner Binalbagan for the subdivision lots. No. 7435 of Regional Trial Court stationed at Himamaylan. In this pending case the intestate estate of the late Luis B. all payments therefor made and all improvements introduced on the property shall pertain to the promissor and shall be considered as rentals for the use and occupation thereof. 293 with the Court of Appeals interposed an appeal. Echaus filed an amended complaint by including her mother. 1983. the defendants in Civil Case No. 7435 was finally executed and enforced. which order.started operating a school on the property from 1967 when the titles and possession of the lots were transferred to it. the de la Cruz spouses. On October 30. 1354 of the Regional Trial Court of the Sixth Judicial Region stationed in Himamaylan. 1982. for the rescission of their contract to sell and the recovery of possession of the lots and buildings with damages. Nonetheless. representing the price of the land and accrued interest as of that date. and sisters as co-plaintiffs. thru Judicial Administratrix. after trial. enclosing in the letter of demand a statement of account as of September 1982 showing a total amount due of P367. Puentevella. As petitioner Binalbagan failed to effect payment. her right to demand payment was suspended during that period. During the period. It appears that there was a pending case. 7435 was filed by defendant Puentevella against Raul Javellana and the Southern Negros Colleges which was impleaded as a party defendant it being in actual possession thereof. 1966. Civil Case No. 1978. judgment was rendered in favor of Puentevella. however. RULING: No. Came December 29. Angelina L. 1495. After petitioner Binalbagan was again placed in possession of the subdivision lots. willing and able to comply with his own obligations there under (Art. 1981. which was admitted by the trial court on March 18. 1144.R. Thus. Puentevella sold said aforementioned lots to Raul Javellana with the condition that the vendeepromisee would not transfer his rights to said lots without the express consent of Puentevella and that in case of the cancellation of the contract by reason of the violation of any of the terms thereof. Civil Code). When the Supreme Court dissolved the aforesaid injunction issued by the Court of Appeals. Javellana having failed to pay the installments for a period of five years. private respondent Angelina P.93. in 1982 the judgment in Civil Case No. 1974 to 1982. ISSUE: Whether or not the petition is with merit. The trial court rendered a decision in favor of the petitioner because of prescription. 1965 when the plaintiffs in the instant case on appeal filed their ThirdParty Claim based on an alleged Deed of Sale executed in their favor by spouses Jose and Lolita Lopez. 1191. seller private respondent Angelina Echaus' warranty against eviction given to buyer petitioner was breached though. he warrants that the buyer shall. In the meantime. Petitioner Binalbagan transferred its school to another location. pending the finality of the decision of the Honorable Court of Appeals in the latter case. Accordingly. defendant Puentevella was restored to the possession of the lots and buildings subject of this case. Negros Occidental. As afore-stated. brothers. and the record of the case was remanded to the court of origin on December 22. and petitioner was restored to the possession of the subdivision lots an May 31. through no fault of her own. possession of the building and other property was taken from petitioner Binalbagan and given to the third-party claimants. Negros Occidental against petitioners for recovery of title and damages. 1981. Civil Case No. thus Puentevella was constrained to assert physical possession of the premises to counteract the fictitious and unenforceable claim of herein plaintiffs. was elevated to the Honorable Court of Appeals which issued a writ of preliminary injunction ordering Judge Carlos Abiera or any other person or persons in his behalf to refrain from further enforcing the injunction issued by him in this case and from further issuing any other writs or prohibitions which would in any manner affect the enforcement of the judgment rendered in Civil Case 7435. The deed of sale whereby private . Similarly. 1982 Civil Case No. In short. On April 29. reversing the appealed decision in Civil Case No. the thing which is the object of the sale (Art. A party to a contract cannot demand performance of the other party's obligations unless he is in a position to comply with his own obligations. plaintiffs filed a petition for review with the Supreme Court which issued a restraining order against the sale of the properties claimed by the spouses-plaintiffs. from 1974 to 1982. the vendor is bound to transfer the ownership of and deliver. the Court of Appeals reversed said decision. 1974-1982. therefore. judgment was entered in CA-G. Civil Case No. through no fault of hers. She filed Civil Case No. 1982. the 10-year prescriptive period had expired before she brought her action to recover title. CV No. 293. the period 1974 to 1982 should be deducted in computing the prescriptive period for the reason that. Consequently. which would certainly be the result if petitioner were allowed to own the 42 lots without full payment thereof. 1982. It was only when Civil Case No. Seemingly. 1967 to October 8.respondent Echaus transferred ownership of the subdivision lots was executed on May 11. as above discussed. From May 11. Here the execution of the judgment in Civil Case No. more than fifteen (15) years elapsed. 1354 was filed within the 10-year prescriptive period. the petition is DENIED and the decision of the Court of Appeals in CA-G. . 7435 could be implemented and petitioner Binalbagan restored to the possession of the subject lots. However. 7435 was stopped by the writ of preliminary injunction issued in Civil Case No. 293 was dismissed that the writ of execution in Civil Case No. from 1974 to 1982. 1967. private respondent Echaus was not in a legal position to initiate action against petitioner since as afore-stated. only seven years elapsed. Working against petitioner's position too is the principle against unjust enrichment.R. 1354 for recovery of title and damages only on October 8. In the case of it was held that a court order deferring action on the execution of judgment suspended the running of the 5-year period for execution of a judgment. Deducting eight years (1974 to 1982) from the period 1967 to 1982. WHEREFORE. her warranty against eviction was breached. 24635 is AFFIRMED.