1. (Aban) Makati Stock Exchange vs. Campos

G.R. No. 138814, April 16, 2009

(Articles 1156 and 1157; Definition of Right; Cause of Action)

Facts:Respondent was the only surviving incorporator of the Makati Stock Exchange, Inc. (MKSE) who has maintained his membership. In recognition for such service and leadership, the Articles of Incorporation of MKSE was amended making him as Chairman Emeritus for life. As an active member and Chairman Emeritus of petitioner corporation, respondent (Campos) has always enjoyed the right given to all the other members to participate equally in the Initial Public Offerings (IPO) of corporations. However, on June 3, 1993, during a meeting of the Board of Directors of MKSE, the petitioner passed a resolution to stop giving respondent the IPOs he is entitled to, based on the ground that these shares were allegedly benefiting Gerardo O. Lanuza, Jr., who the petitioner wanted to get even with, for having filed cases before the Securities and Exchange (SEC) for their disqualification as member of the Board of Directors of MKSE.

Issue: WON the respondent has a cause of action to file a case against the petitioner.

Held:No. A cause of action is the act or omission by which a party violates a right of another. A cause of action has three elements, namely: (1) the legal right of the plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of the defendant in violation of said legal right. A right is a claim or title to an interest in anything whatsoever that is enforceable by law. An obligation is defined in the Civil Code as a juridical necessity to give, to do or not to do (Art. 1156). If these elements are absent, the complaint becomes vulnerable to dismissal on the ground of failure to state a cause of action.

The allocation of IPO shares was merely alleged to have been done in accord with a practice normally observed by the members of the stock exchange. However, a practice or custom is, as a general rule, not a source of a legally demandable or enforceable right. Furthermore, there is nothing in the petition of the respondent from which the Court can deduce that, by virtue of his position as Chairman Emeritus of MKSE, was granted by law, contract, or any other legal source (Art. 1157), the right to subscribe to the IPOs of corporations listed in the stock market at their offering price.

2. (Acosta) Deganos vs People of the Philippines,

G.R. No. 162826, October 14, 2013

Elements of an Obligation

Facts: Narciso Deganos received several pieces of gold and jewelry from spouses Atty. Jose Bordador and Lydia Bordador. Deganos was supposed to sell the items at a profit and remit the proceeds and return the unsold items. He was not able to pay the balance nor returned any of the unsold items. Deganos signed a compromise agreement with the Bordados and thus obligating himself to pay, on installment basis, the balance of his account plus interest. But, Deganos failed to comply and was charged and found guilty of the crime estafa.

Issue: Whether or not novation had converted the liability of the accused into civil one.

Held: The Supreme Court found Deganos guilty of estafa and his argument that when Bordados accepted his partial payments before criminal information was filed in court would extinguish his criminal liability is untenable. Novation is never presumed, whether totally or partially, must appear by express agreement of the parties, or their acts that are too clear and unequivocal to be mistaken.

3. (Algunas) Asuncion vs CA,

G.R. No. 109125, December 2. 1994

4. (Angeles) SSS vs Moonwalk Development & Housing Corporation,

G.R. No. 73345, April 7, 1993.

5. (Atega) Asian Construction and Development Corporation vs. Philippine

Commercial International Bank,

G.R. 153827, April 25, 2006

6. (Banaag) Ansay vs Board of Directors,

G.R. L13667, April 29, 1960

Topic: Natural Obligations Article 1423

Facts:

On July 25, 1956, appellants filed against appellees in the Court of First Instance of Manila a complaint praying for a 20% Christmas bonus for the years 1954 and 1955. Appellants contend that there exists a cause of action in their complaint because their claim rests on moral grounds or what in brief is defined by law as a natural obligation.

Issue:

W/N the respondents are entitled to pay the appellants the 20% Christmas bonus.

Held:

Article 1423 of the New Civil Code classifies obligations into civil or natural. "Civil obligations are a right of action to compel their performance. Natural obligations, not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what has been delivered or rendered by reason thereof".

From the legal point of view a bonus is not a demandable and enforceable obligation. It is so when it is made a part of the wage or salary compensation.

7. (Bantuas) DBP vs. Confessor,

G.R. L48889 May 11, 1989

Topic: Waiver of the Right to Prescription; Art. 1112

Facts: Private respondents obtained a loan from petitioner bank, as evidenced by a promissory note stating that the former shall pay the

debt in ten yearly amortizations. The loan remained unpaid even after the lapse of the ten-year period. Subsequently, the respondents

executed a second promissory note, which bound them to make payment on or before a specified date, otherwise the mortgage shall be

foreclosed in consideration of the said loan. A complaint was filed against the respondents when they still failed to pay the bank. The City

Court ruled in favor of the petitioner, but the decision was reversed upon appeal at the Court of First Instance.

Issue: Can the creditor enforce payment of the loan based on the second promissory note?

Ruling: Yes. The Court has previously held in a similar case that when a debt is already barred by prescription, it cannot be enforced by the

creditor. But a new contract recognizing and assuming the prescribed debt would be valid and enforceable. There is no doubt that

prescription has set in as to the first promissory note. However, when respondent executed the second promissory note whereby he

promised to pay the amount covered by the previous promissory note, said respondent thereby effectively and expressly renounced and

waived his right to the prescription of the action covering the first promissory note.

8. (Banas) ABS -CBN vs Office of the Ombudsman,

G.R. 133347 April 23, 2010

TOPIC:

SEPARATE CIVIL ACTION MAYBEPURSUED BY FILING A SEPARATE CIVIL ACTION FOR RECOVERY.

FACTS:

Before the court is a Motion for Reconsideration filed by petitioners Eugenio, Jr., Oscar and Augusto Almeda, all surnamed Lopez, in their

capacity as officers and on behalf of petitioner ABS-CBN Broadcasting Corporation (ABS-CBN), of the court’s Decision in, dismissing their petition for certiorari because of the absence of grave abuse of discretion in the Ombudsman Resolution which, in turn, found no probable cause to indict respondents for specified provisions in the Revised Penal Code (RPC).

ISSUE:

1.) Whether the motion for reconsideration filed by the petitioner has merits or not.

HELD: The motion for reconsideration was DISMISSED by the Court. The case was disposed due to these following reasons

1.) The dropping of respondents Roberto S. Benedicto and Salvador (Buddy) Tan as respondents in this case due to their death, as consistent with the court’s rulings in People v. Bayotas] and Benedicto v. Court of Appeals.

2.) The Court found that Ombudsman did not commit grave abuse of discretion in dismissing petitioners criminal complaint against respondents.

The Death of an accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based solely thereon. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the same may also be predicated on a source of obligation other than delict. Where the civil liability survive, an action for recovery thereof may be pursued but only by filing a separate civil action. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by prescription, in cases where during the prosecution of the criminal action and prior to its extinction, the private offended party instituted together therewith the civil action. In such case, the statute of limitations on the civil liability is deemed interrupted during the pendency of the criminal case

9. (Bucay) Salen vs. Balce,

G.R. L14414, April 27, 1960

Topic: quasi-delict; subsidiary liability

Facts

Plaintiffs are the legitimate parents of Carlos Salen who died from wounds caused by Gumersindo Balce, a legitimate son of defendant. At a time, Gumersindo Balce was a minor, below 18 years of age, and was living with the defendant. As a result of Carlos Salen’s death, Gumersindi Balce was accused and convicted of homicide; he was sentenced to imprisonment and to pay the heirs of the deceased an indemnity in the amount of P2, 000.00. Upon petition of plaintiff, the only heir of the deceased, a writ of execution was issued for the payment of the indemnity but it was returned unsatisfied because Gumersindo Balce was insolvent and had no property in his name. Thereupon, plaintiffs demanded upon defendant, father of Gumersindo, the payment of the indemnity the latter has failed to pay, but defendant refused, on the ground that the law upon which plaintiffs predicate the right to recover does not here apply for the reason that law refers to quasi-delicts and not to criminal cases. The trial court sustained the theory of the defendant, hence the present action.

Issue

Whether the Defendant can be held subsidiary liable to pay the indemnity of P2,000.00 which his son was sentenced to pay in the criminal case filed against him.

Ruling

YES. The particular law that governs this case is Article 2180, the pertinent portion of which provides that, “The father and, in case of his death or incapacity, the mother, are responsible for damages caused by the minor children who lived in their company.” To hold that this provision does not apply to the instant case because it only covers obligations which arise from quasi-delicts and not obligations which arise from criminal offenses, would result in the absurdity that while for an act where mere negligence intervenes the father or mother may stand subsidiarily liable for the damage caused by his or her son, no liability would be attach if the damage is caused with criminal intent. [Verily, the void that apparently exists in the Revised Penal Code is subserved by this particular provision of our Civil Code, as may be gleaned from some recent decisions of this Court which cover equal or identical cases.]

10. (Cagais) Metropolitan Bank and Trust Company vs Ana Grace Rosales and Yo

Yuk To,

G.R. 183204, January 13, 2014

FACTS:  Petitioner Metrobank is a domestic banking corporation duly organized and existing under the laws of the Philippines. respondent Rosales is the owner of a travel agency while Yo Yuk To is her mother. In 2000, respondents opened a joint Peso Account with petitioner’s Pritil-Tondo Branch. In May 2000, respondent Rosales accompanied her client Liu Chiu Fang, a Taiwanese National Applying for a retiree’s visa from the Phil. Leisure and Retirement Authority (PLRA), to petitioner’s branch in Escolta to open a savings account, Since Liu Chiu Fang could only speak in Mandarin, Rosales acted as an interpreter for her. On March 3, 2003, respondents opened with petitioner’s Pritil-Tondo branch a Joint Dollar Account with an initial deposit of US$14,000.00. On July 31, 2003, petitioner issued a “Hold Out” order against respondent’s account. On September 3, 2003, petitioner, through its Special Audit Dept. Head Antonio Ivan Aguirre, filed before the Office of the Prosecutor of Manila a criminal case for Estafa through False Pretences, Misrepresentation, Deceit, and Use of Falsified Documents. Respondent Rosales, however, denied in taking part in the fraudulent and unauthorized withdrawal from the dollar account of Liu Chiu Fang. On Dec. 15, 2003, the Office of the City Prosecutor of Manila issued a Resolution dismissing the criminal case for lack of probable cause. On Sept. 10, 2004, respondents filed before the RTC of Manila a complaint for Breach of Obligation and Contract with Damages. Upon appeal by petitioner, the CA affirmed the decision of the RTC.

ISSUE:  Whether Metrobank breached its contract with the respondents?

HELD:   YES. The SC held that Metrobank’s reliance on the “Hold Out” clause in the Application and Agreement for Deposit Account is misplaced. (Bank deposits, which are in the nature of a simple loan or mutuum, must be paid upon demand by the depositor.) The “Hold Out” clause applies only if there is a valid and existing obligation by the depositor arising from any of the sources of obligation enumerated in Art. 1157 of the Civil Code, to wit: law, contracts, quasi-contracts, delict, and quasi-delict. In this case, petitioner failed to show that respondents have an obligation to it under any of the aforementioned sources. And although a criminal case was filed by petitioner against Rosales, this is not enough reason to issue a “Hold Out” order as the case is still pending and no final judgment of conviction has been rendered against respondent. In fact, it is significant to note that at the time petitioner issued the “Hold Out” order, the criminal complaint had not yet been filed. Thus, considering that respondent is not liable for any of the five sources of obligation, there was NO LEGAL BASIS for petitioner to issue the “Hold Out” order. The SC affirmed the decisions of the RTC and CA that petitioner is guilty of breach of contract when it unjustifiably refused to release respondents’ deposit despite demand. Petitioner ordered to release respondents’ deposit with interest plus payment of moral, exemplary damages and attorney’s fees.

11. (Carwana) Saludaga vs FEU

G.R. 179337 April 30, 2008

12. (Castillo) Meralco vs Ramoy

G.R. 158911, March 4, 2008

13. (Chun) Cruz vs. Tuason

G.R. L23749 April 29, 1977

Topic: Quasi-Contracts or the Proper construction of Art. 2142

Facts:At the request of the Deudor Family, Faustino Cruz made permanent improvements on the 20 quinones of land that formed part of the 50 quinones of land owned by the former. Tuason & Co sought the help of Cruz to act as an intermediary in formulating a compromise agreement between Tuason & Co and the Deudor Family in a Civil Case which involved the 50 quinones of land of the Deudors. Cruz succeeded in executing a compromise agreement between the 2 parties.

Cruz alleged that Tuason & Co promised him 3,000 sq.m. of land occupied by him which was part of the 20 quiones of land within 10 years from the date of signing of the compromise agreement between the Deudors and the latter as consideration of his services. The said land was not conveyed to him by Tuason & Co.

Cruz further alleged that Tuason & Co. was unjustly enriched at his expense since they enjoyed the benefits of the improvements he made on the land acquired by the latter.

Issue: Whether or not a presumed quasi-contract can emerge as against one party when the subject matter thereof is already covered by a contract with another party.

Held: The court stated that the reliance of Cruz on Art. 2142 is misplaced. Article 2142 states: “certain lawful, voluntary and unilateral acts

give riseto the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another.”

For this case to fall under quasi-contracts, there must be an absence of an actual agreement between the parties concerned. However in this case, there is already an existing contract that covered the subject matter. Furthermore, it is essential that the act by which the defendant is benefited must have been voluntary and unilateral on the part of the plaintiff.

Since appellant has a clearer and more direct recourse against the Deudors with whom he had entered into an agreement regarding the improvements and expenditures made by him on the land of appellees. It cannot be said, in the sense contemplated in Article 2142, that appellees have been enriched at the expense of appellant.

14. (Constantino) Adille vs CA,

G.R. L44546 January 29 1988

Topic:

Art. 1456 Trustee of an implied trust

Facts:

Felisa Alzul married twice in her lifetime. Sometime in 1939, she sold a property in pacto de retro. The petitioner (her child from the first marriage), by himself, repurchased the property after her death and within the period of redemption. He then executed a deed of extra-judicial partition representing himself to be the only heir and child of his mother with the consequence that he was able to secure a title in his name alone. His half-siblings (from the second marriage) argued that the petitioner does not have full ownership of the lot and that he is a trustee of an implied trust.

Issue:

Whether or not the plaintiff is the sole owner of the property.

Held:

No. The right of repurchase may be exercised by a co-owner with respect to his share alone. Shouldering the expenses and having the title to the name of the petitioner did not extinguish the co-ownership. The petitioner may collect reimbursement for expenses incurred for the repurchase. The petitioner may be considered as a negotiorum gestor but if he is guilty of fraud, he must act as a trustee (Art. 1456), the private respondents as the beneficiaries. Either way, he will remain liable to his co-heirs.

15. (Contreras) Andres v. Manufacturers Hangover and Trust Corporation,

G.R. 82670 September 15, 1989

16. (Cu) Puyat & Sons, Inc. vs City of Manila,

G.R. L17447, April 30, 1963

17. (Daamo) CINCO vs Canonoy

G.R. L33171, May 31, 1979

TOPIC: Article 2177 of the Civil Code

FACTS: Cinco filed, a Complaint in the City Court of Mandaue City, Cebu, Branch II, for the recovery of damages on account of a vehicular accident involving his automobile and a jeepney driven by Romeo Hilot and operated by Valeriana Pepito and Carlos Pepito, the last three being the private respondents in this suit. Subsequent thereto, a criminal case was filed against the driver, Romeo Hilot, arising from the same accident. At the pre-trial in the civil case, counsel for private respondents moved to suspend the civil action pending the final determination of the criminal suit.

The City Court of Mandaue City ordered the suspension of the civil case. Petitioner elevated the matter on Certiorari to the Court of First Instance of Cebu, respondent Judge dismissed the Petition for Certiorari on the ground that there was no grave abuse of discretion on the part of the City Court in suspending the civil action inasmuch as damage to property is not one of the instances when an independent civil action is proper; that petitioner has another plain, speedy, and adequate remedy under the law, which is to submit his claim for damages in the criminal case.

ISSUE: Whether or not there can be an independent civil action for damage to property during the pendency of the criminal action.

RULING: From the Complaint filed by petitioner before the City Court of Mandaue City, Cebu, it is evident that the nature and character of his action was quasi-delictual, predicated principally on articles 2176 and 2180 of the Civil Code.

Liability being predicated on quasi-delict, the civil case may proceed as a separate and independent civil action, as specifically provided for in Article 2177 of the Civil Code."Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant."

18. (Dadang) NAPOCOR vs CA

G.R. 124378, March 8 2005

19. (Delilan) Jimenez vs City of Manila,

G.R. 71049, May 29, 1987

20. (Durias) Sanchez vs Rigos,

G.R. L25494 June 14, 1972

21. (Dy) Gaisano Cagayan, Inc. vs Insurance Company of North America,

G.R. 147839, June 8, 2006

22. (Flores) Arrieta vs Naric

G.R. L15645, January 31, 1964

23. (Fortin) Telefast vs Castro

G.R. 73867, February 29, 1988

24. (Gacus) Santos Ventura Hocorma Foundation, Inc. vs Santos,

G.R. 153004, November 5, 2004

25. (Jala) Manuel vs CA,

G.R. 95469

26. (Javier) Cortes vs CA,

G.R. 126083

27. (Ladera) UNLAD Resources Development Corporation vs. Dragon

G.R. 149338

28. (Laut) Sicam vs Jorge

G.R. 159617, Aug 8, 2007

29. (Lopez) Mindanao Terminal and brokerage service, Inc vs Phoenix Assurance

Company of New York, MCGEE & Co., Inc.

G.R. 162467

TOPICExercise of due diligence

FACTSDel Monte Philippines, Inc. contracted Mindanao Terminal and Brokerage Service, Inc. to load and stow a shipment of bananas and pineapples bound for Inchon, Korea into the cargo hold of the vessel M/V Mistrau. Upon arrival at the destination, part of the cargo was found to be damaged due to a typhoon encountered by the ship during the voyage.ISSUEWhether or not Mindanao Terminal exercised the necessary degree of diligence in the loading and stowing of the cargoRULINGYes. Art. 1173 of the Civil Code provides that,

If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required.

Since there was no contractual stipulation for Mindanao Terminal to observe a higher degree of diligence than that required of a good father of a family, then they are only required to observe ordinary diligence in loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau.Furthermore, Mindanao Terminal performed its duty as a stevedore under the supervision of the ship’s officers who would approve the loading of the cargo only if it complied with the stowage plan to assure that such cargo could withstand voyage in open seas.

30. (Macabalang) Comglasco Corporation/Aguila Glass vs Santos car Check Center

Corporation,

G.R. 202898

31. (Madrono) Nakpil & Sons vs CA,

G.R. L47851, April 15, 1988

32. (Magallon) Almeda vs Bathala Marketing,

G.R. 150806, Jan. 28, 2008

33. (Magdayao) Universal Food Corporation vs the Court of Appeals

G.R. L29155, May 13, 1970

34. (Magnaye) Javier vs CA

G.R. L48194

35. (Malingin) Hongkong and Shanghai Banking Cor vs. Broqueza

G.R. 178610

36. (Orcullo) Pay vs Palanca,

G.R. L29900

37. (Pacalna) Heirs of Paulino Atienza vs Espidol

G.R. 180665

38. (Paduganan) Reyes vs Tuparan

G.R. 188064

39. (Paler) SPS Santos vs CA

G.R. 120820

40. (Pedroza) Parks vs Province of Tarlac,

G.R. L24190

41. (Quina) Central Philippine University vs CA

G.R. 112230

42. (Radiamoda) Rowena Salonte vs COA, etc.

G.R. 207348

43. (Ramos) Radiowealth Finance Company vs Spouses Del Rosario

G.R. 138739

44. (Roa) Lim vs People of the Philippines

G.R. L34338

45. (Rodrigo) Araneta Inc. vs Philippine Sugar Estates

G.R. L22558

Topic: Art 1197; The Court should only fix a period when there is absence of such period fixed or contemplated by the parties.

Facts: J. M. Tuason & Co is the owner of a land, known as the Sta. Mesa Heights Subdivision covered by a Torrens title in its name. In July 1950, through Gregorio Araneta, Inc, Tuason & Co sold a portion thereof to herein respondent, Philippine Sugar Estates Development Co., Ltd.

The parties stipulated, in the contract of purchase and sale with mortgage, that the buyer will build on the said parcel land the Sto. Domingo Church and Convent while the seller for its part will construct streets on the NE, NW and SW sides of the land herein. Respondent was able to finish his obligation. However, herein petitioner was unable to finish the construction of the NE side because a third-party physically occupied the middle part thereof and refused to vacate the same. Respondent filed a complaint against petitioner seeking to compel Araneta to comply with the obligation, and/or to pay damages in the event they failed or refused to perform said obligation. RTC and CA decided in favor of the respondent and gave petitioner 2 years to comply with its obligation.

Issue:Whether or not the fixing of the period of the Lower Court was valid and justified pursuant to Article 1197

Ruling:NO. There was no justification in law for the setting of the performance at any other time than that of the eviction of the squatters occupying the land in question. This is the “reasonable time” pertained to in the obligation.Art. 1197 involves a two-step process. First, the Court must first determine that the obligation does not fix period (or that the period is made to depend upon the will of the debtor), but from the nature and the circumstances it can be inferred that a period was intended. Second, the Court must proceed to second step and decide what period was probably contemplated by parties.Article 1197 is clear that the period cannot be set arbitrarily.

46. (Rulona) The Bachrach Motor Co. Inc vs Espiritu

G.R. L28497

TOPIC:

Obligations with a Penal Clause

FACTS:

This is a consolidated case involving two separate sale transactions.

One made in Feb. 18, 1925 (case 28498), when the defendant earlier bought a truck on installment from the petitioner and said truck was mortgaged together with the two others (no. 77197 & 92744 in the subsequent sale transaction dated July 28, 1925. The said two of the other trucks were also purchased (but already paid previously) from the plaintiff.   The defendant failed to pay the balance. In July 1925, defendant again purchased another truck from Bachrach. The said truck, together with the 3 other vehicles were mortgaged to the plaintiff to secure the remaining balance. The defendant failed to pay the balance for the latest truck obtained.

In both sales it was agreed that 12 per cent interest would be paid upon the unpaid portion of the price at the execution of the

contracts, and in case of non-payment of the total debt upon its maturity, 25 per cent thereon, as penalty. In addition to the mortgage

deeds, the defendant also signed a promissory note with his brother Rosario Espiritu (acting as intervenor) for the several sums secured by

the two mortgages. Rosario Espiritu is alleged to be the exclusive owner of the two white trucks Nos. 77197 and 92744 mortgaged.

While these two cases were pending in the lower court the mortgaged trucks were sold by virtue of the mortgage, all of them together bringing in, after deducting the sheriff's fees and transportation charges to Manila, the net sum of P3,269.58.

The court ordered the defendants and the intervenor to pay plaintiff in case 28497 the sum of P7,732.09 with interest at the rate of 12 per cent per annum from May 1, 1926 until fully paid, and 25 per cent thereof in addition as penalty. In case 28498, the trial court ordered the defendant and the intervenor to pay plaintiff the sum of P4,208.28 with interest at 12 per cent per annum from December 1, 1925 until fully paid, and 25 per cent thereon as penalty.

The appellants contend that trucks 77197 and 92744 were not mortgaged, because, when the defendant signed the mortgage deeds these trucks were not included in those documents, and were only put in later, without defendant's knowledge. However, there is a positive proof that it was included in the documents as shown in the two letters to Hidalgo (an employee of the plaintiff’s corporation) written

a few days before the transaction, acquiescing in the inclusion of all his White trucks already paid for, in the mortgage.

Appellants also alleged that on February 4, 1925, the defendant sold his rights in said trucks Nos. 77197 and 92744 to the intervenor, and that as the latter did not sign the mortgage deeds, such trucks cannot be considered as mortgaged. But the evidence shows that the intervenor did not sign the two mortgage deeds but together with the defendant, signed the two promissory notes secured by these two mortgages. All these documents were executed at the same time and the intervenor consents the inclusion of the trucks 77197 and 92744 in the mortgages.

ISSUE/S:

W/N the 25% penalty upon the debt in addition to the 25% per annum is usurious?

RULING:

No, Article 1152 of the Civil Code permits the agreement upon a penalty apart from the interest. Should there be such an agreement, the penalty, as was held in the case of Lopez vs. Hernaez (32 Phil., 631), does not include the interest, and which may be demanded separately. The penalty is not to be added to the interest for the determination of whether the interest exceeds the rate fixed by the law, since said rate was fixed only for the interest. But considering that the obligation was partly performed, and making use of the power given to the court by article 1154 of the Civil Code, this penalty is reduced to 10 per cent of the unpaid debt. With the sole modification that instead of 25 per cent upon the sum owed, the defendants need pay only 10 per cent thereon as penalt, the judgment appealed from is affirmed in all other respects without special pronouncement as to costs.

47. (Sabandal) Robes- Franncisco Realty & Development Corporation vs CFI,

G.R. L41093

48. (Salde) Golden Valley Exploration Inc. vs Pinkian Mining Company and Copper

Valley, Inc.,

G.R. 190080

49. (Sena) Swire Realty Development Corporation vs Jayne Yu,

G.R. 207133

50. (Sindiong) Agcaoli vs GSIS,

G.R. L30056

51. (Sto Domino) Spouses Rodolfo Berot and Lilia Berot vs Felipe C. Siapno

G.R.188944

52. (Talon) Olongapo City vs Subic Water and Sewerage Co., Inc G.R. 171626

53. (Tan) Estanislao and Africa Sinamban vs China Banking Corporation

G.R. 193890

Topic:According to Article 2047 of the Civil Code, if a person binds himself solidarily with the principal debtor, the provisions of Articles 1207 to 1222 of the Civil Code (Section 4, Chapter 3, Title I, Book IV) on joint and solidary obligations shall be observed. This concerns the joint and solidary liability of a co-maker of a loan.

Facts:Spouses Manalastas executed a Real Estate Mortgage (REM) over two real estate properties in favor of Chinabank for the P700,000 loan to be used in their rice milling business. The spouses amended the mortgage contract increasing their credit line. Several promissory notes (PN) were executed whereby Spouses Sinamban signed as co-makers. The promissory note has an acceleration clause and a penalty clause. When Spouses Manalastas failed to pay, Chinabank instituted extrajudicial foreclosure proceedings against the mortgage security. Chinabank offered the highest bid of P4,600,000.00, but by then the defendants' total obligations on the three promissory notes had risen to P5,401,975.00 leaving a loan deficiency of P1,758,427.87. Chinabank filed a complaint alleging that Spouses Manalastas and Sinamban reneged on their loan obligations under three promissory notes and directing the defendants to jointly and severally settle the said deficiency, plus 12% interest per annum after May 18, 1998, the date of the auction sale. RTC ruled in favor of Chinabank, ordering Spouses Manalastas to pay the deficiency and Spouses Sinamban to pay a percentage of the deficiency jointly and severally with the Spouses Manalastas only on two promissory notes. Spouses Sinamban appealed in the CA but was denied.

Issue: Whether or not the proceeds of the auction sale (P4,600,000) of the properties securing all the three (3) promissory notes should first be applied to satisfy the promissory notes signed by the Spouses Sinamban?

Ruling:A co-maker of a PN who binds himself with the maker "jointly and severally" renders himself directly and primarily liable with the maker on the debt, without reference to his solvency. According to Article 2047 of the Civil Code, if a person binds himself solidarily with the principal debtor, the provisions of Articles 1207 to 1222 of the Civil Code on joint and solidary obligations shall be observed. Thus, where there is a concurrence of two or more creditors or of two or more debtors in one and the same obligation, Article 1207 provides that among them, "[t]here is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity." It is settled that when the obligor or obligors undertake to be "jointly and severally" liable, it means that the obligation is solidary. In this case, the spouses Sinamban expressly bound themselves to be jointly and severally, or solidarily, liable with the principal makers of the PNs, the spouses Manalastas.

Under the Promissory Notes, the borrowers and their co-makers expressly authorized Chinabank to sell at public or private sale such securities or things of value for the purpose of applying their proceeds to such payments. Since each loan, represented by each PN, was obtained under a single credit line extended by Chinabank for the working capital requirements of the spouses Manalastas' rice milling business, which credit line was secured also by a single REM over their properties, then each PN is simultaneously covered by the same mortgage security, the foreclosure of which will also benefit them proportionately. No PN enjoys any priority or preference in payment over the others, with the only difference being that the spouses Sinamban are solidarity liable for the deficiency on two of them. The spouses Sinamban are solidarily liable with the spouses Manalastas for only P370,107.32 on the said two PNs.

54. (Ungab) Inimaco vs. NLRC

G.R. 101723

FACTS:

Pr ivate respondents Enr ique Sul i t , e t a l , F led a complaint against Filipinas Carbon Mining Corp, Gerardo Sicat, Antonio, and petitioner - INIMACO for payment of separation pay and unpaid wages. The decision was in favor of PRs and a writ of execution was issued but it was returned unsatisfied. Labor arbiter issued an Alias writ of execution. Pet i t ioner f led a “mot ion to quash Al ias wr i t o f execution alleging that it altered and changed the tenor of the decis ion by changing the l iab i l i ty of therein respondents from joint to solidary, by the insertion of the words AND/OR between the petitioners.

ISSUE:

W/N petitioner’s liability is solidary or not?

HELD:

Petitioner INIMACO’s liability is not solidary but merely joint. Solidary or joint and several obligation is one in each credi tor is ent i t led to demand the whole obligation. Joint obligation, each obligor answers only for a part of the whole liability and to each oblige belongs

only a part of the correlative rights.-There is a solidary liability only:1) When the obligation expressly so states;

2) When the law so provides or;

3) When the nature of the obligation so requires

55. (Usop) PNB vs Independent Planters Association, Inc.

G.R. L28046

56. (Villamor) Ronquillo vs CA

G.R. L55138

57. (Waban) Spouses Chin Kong Wong Choi and Ana O. Chua vs United Coconut

Planters Bank

G.R. 207747, March 11, 2015, J. Carpio

58. (Aban) Calang vs People,

G.R. 190696

(Culpa Criminal; Arts. 2176 [1] and 2180[2] of Civil Code; and, Arts. 102 and 103 of RPC]

Facts: Calang was a bus driver of Philtranco Services Enterprises, Inc. (Philtranco) and was convicted of multiple homicide with multiple serious physical injuries and damage to property through reckless imprudence. In the said criminal case, Philtranco was ordered to pay jointly and severally with Calang death indemnity and actual damages based on quasi-delict under Articles 2176 and 2180 of the Civil Code.

Issue: Whether or not Philtranco should be solidarily liable in the said criminal case.

Held: No. Philtranco was not a direct party in the criminal case charged against Calang. Since the cause of action against Calang was based on delict, the provisions under Articles 2176 and 2180 of the Civil Code, which pertain to the vicarious liability of an employer for quasi-delicts that an employee has committed, is not applicable. Therefore, both the RTC and the CA erred in holing Philtranco jointly and severally liable with Calang.

If at all, Philtranco liability may only be subsidiary under Articles 102 and 103* of the Revised Penal Code. The provisions of the Revised Penal Code on subsidiary liability Articles 102 and 103 are deemed written into the judgments in cases to which they are applicable. Thus, in the dispositive portion of its decision, the trial court need not expressly pronounce the subsidiary liability of the employer. However, before the employer's subsidiary liability is enforced, the following requisites must be adequately proved: that (1) they are indeed the employers of the convicted employees; (2) they are engaged in some kind of industry; (3) the crime was committed by the employees in the discharge of their duties; and (4) the execution against the latter has not been satisfied due to insolvency. The determination of these conditions may be done in the same criminal action in which the employee liability, criminal and civil, has been pronounced, in a hearing set for that precise purpose, with due notice to the employer, as part of the proceedings for the execution of the judgment.*Art. 102 – Subsidiary civil liability of innkeepers, tavern-keepers, and proprietors of establishments; and, Art. 103 – Subsidiary liability of other persons.

59. (Acosta) Saura Import and Export Co Inc vs Development Bank of the

Philippines G.R. L24968

Extinguishment of Obligations

Facts: The Saura, Inc., applied to Rehabilitation Finance Corp., now DBP, for an industrial loan. In Resolution No. 145, the loan was approved to be secured first by mortgage on the factory building. The mortgage was registered and documents for the promissory note

were executed. But then, later on, was cancelled to make way for the registration of the mortgage contract over the same property in favor of Prudential Bank and Trust Co.. After almost nine years, Saura Inc, commenced an action against RFC, alleging failure on the latter to comply with its obligations to release the loan applied for the approved, thereby preventing the plaintiff from completing or paying contractual commitments it had entered. The trial court ruled in favor of Saura, ruling that there was a perfected contract between the parties and that the RFC was guilty of breach thereof.

Issue: Whether or not there was a perfected contract between the parties.

Held: When an application for a loan of money was approved by resolution of the respondent corporation and the responding mortgage was executed and registered, there arises a perfected consensual contract; but it should be noted that RFC imposed two conditions which Saura, Inc. was in no position to comply with RFC’s conditions and Saura Inc. asked that the mortgage be cancelled. The action thus taken by both parties was in nature of mutual desistance which is a mode of extinguishing obligations. It is a concept that derives from the principle that since mutual agreement can create a contract, mutual disagreement by the parties can cause its extinguishment. The judgment appealed from is reversed and complaint dismissed.

60. (Algunas) Rivelisa Realty Inc vs First Sta Clara Builders Corporation

G.R. 189618

61. (Angles) Philippine Commercial International Bamk vs Arturo P. Franco

G.R. 180069

62. (Atega) Netlink Computer Incorporated vs Eric Delmo

G.R. 160827

63. (Banaag) Elizabeth Del Carmen vs Spouses Restituto Sabordo and Mima

Mahilum- Sabordo

G.R. 181723

Topic: ConsignationFacts:

Petitioner herein is the heir of the Suico spouses who sold certain lots to the Sabordo spouses to avoid the cancellation of the conditional sale by the DBP. Later on, the Suico spouses wants to repurchase the said lots and was given a certain time period by the court to repurchase or redeem the lots. During such time it was discovered that the lots has been mortgaged by the respondents with Republic Planters Bank (RPB) as security for a loan which, subsequently, became delinquent.

Thereafter, claiming that they are ready with the payment of P127,500.00, but alleging that they cannot determine as to whom such payment shall be made, petitioner and her co-heirs filed a Complaint. Upon filing of their complaint, petitioner deposited the amount ofP127,500.00 with the RTC of San Carlos City. Petitioner filed an appeal with the CA contending that the judicial deposit or consignation of the amount of P127,500.00 was valid and binding and produced the effect of payment of the purchase price of the subject lots.

Issue:

W/N the consignation which petitioner made was a judicial deposit based on a final judgment and, as such, does not require compliance with the requirements of Articles 1256 and 1257 of the Civil Code.

Held:

The Court finds no cogent reason to depart from the findings of the CA and the RTC that petitioner and her co-heirs failed to make a prior

valid tender of payment to respondents. It is settled that compliance with the requisites of a valid consignation is mandatory. Failure to comply strictly with any of the requisites will render the consignation void. One of these requisites is a valid prior tender of payment.

Under Article 1256, the only instances where prior tender of payment is excused are: (1) when the creditor is absent or unknown, or does not appear at the place of payment; (2) when the creditor is incapacitated to receive the payment at the time it is due; (3) when, without just cause, the creditor refuses to give a receipt; (4) when two or more persons claim the same right to collect; and (5) when the title of the obligation has been lost. None of these instances are present in the instant case

64. (Bantuas) Leonardo Bognot vs RRI Lending Corporation,

G.R. 180144

Topic: Novation by Substitution; Art. 1293

Facts:

The petitioner and his younger brother, Rolando A. Bognot (collectively referred to as the

"Bognot siblings"), obtained a loan from the respondent evidenced by a promissory note

and was secured by a post dated check dated November 30, 1996. The loan was allowed

to be renewed several times by paying a sum as renewal fee and by issuing new postdated checks to replace the old ones. The loan was

extended until June 30, 1997.

Several days before the loan’s maturity, Rolando’s wife (“Mrs. Bognot”) applied for

another extension of the loan until July 30, 1997. On the excuse that she needs to bring

home the loan documents for the Bognot siblings’ signatures and replacement, Mrs.

Bognot convinced respondent’s clerk to release to her the promissory note, the disclosure

statement, and the July 30, 1997 post-dated check. However, she never returned. Despite

repeated demands, the loan was not paid. The petitioner claimed that he had been

released from his indebtedness when Mrs. Bognot renewed the loan and assumed the

indebtedness.

Issue: Did novation take effect which released the petitioner from his liability? Ruling: No. Depending on who took the initiative, novation by

substitution of debtor has two forms – substitution by expromision and substitution by delegacion. In expromision, the initiative for the

change does not come from -- and may even be made without the knowledge of -- the debtor, since it consists of a third person’s

assumption of the obligation. As such, it logically requires the consent of the third person and the creditor. In delegacion, the debtor offers,

and the creditor accepts, a third person who consents to the substitution and assumes the obligation; thus, the consent of these three

persons are necessary. In both cases, the original debtor must be released from the obligation; otherwise, there can be no valid novation.

Furthermore, novation by substitution of debtor must always be made with the consent of the creditor. Novation must be clearly and

unequivocally shown, and cannot be presumed. Since the petitioner failed to show that the respondent assented to the substitution, no

valid novation took place with the effect of releasing the petitioner from his obligation to the respondent.

65. (Banas) Rodrigo Rivera vs Spouses Salvador C. Chua

G.R. 184458/184472

TOPIC:

(ART 1169), HOWEVER, DEMAND FROM THE CREDITOR IS NOT NECESSARY FOR DELAY TO EXIST.

FACTS:

Given the fact that Rivera and Sanchez are very good friends, Rivera was granted a loan of good character. Revera was able to obtain a

loan from sanchez with an amount of 120,000.00 and a promissory note was executed by the debtor in order to give an assurance to his creditor that he shall be paying the amount he owed on December 31, 1995 and to pay the interest of 5 % per month upon the debtor incurs delay until the obligations has been fully paid . The Spouses Chua alleged that they have repeatedly demanded payment from Rivera to no avail. Because of Rivera’s unjustified refusal to pay, the Spouses Chua were constrained to file a suit.

After trial, the MeTC ruled in favor of the Spouses Chua.rOn appeal, the Regional Trial Court, Branch 17, Manila affirmed the Decision of the MeTC, but deleted the award of attorney’s fees to the Spouses Chua. Both trial courts found the Promissory Note as authentic and validly bore the signature of Rivera. Undaunted, Rivera appealed to the Court of Appeals which affirmed Rivera’s liability under the Promissory Note, reduced the imposition of interest on the loan from 60% to 12% per annum, and reinstated the award of attorney’s fees in favor of the Spouses Chua.

ISSUE:

1. Whether the honorable Court of Appeals erred in upholding the ruling of the RTC and the MeTC that there was a valid promissory note that was executed by rivera..

HELD:

The petition of Rivera was then DENIED with modifications. It was held by the court that the claim of the debtor that the promissory note was not executed by him and the same was forged is not true. The burden of proof was on the part of the person raising such contention. There was a reliable findings from the NBI that says it was really executed by the petitioner Rivera. It was also emphasized that There are four instances when demand is not necessary to constitute the debtor in default: (1) when there is an express stipulation to that effect; (2) where the law so provides; (3) when the period is the controlling motive or the principal inducement for the creation of the obligation; and (4) where demand would be useless. In the first two paragraphs, it is not sufficient that the law or obligation fixes a date for performance; it must further state expressly that after the period lapses, default will commence. Petitioner Rodrigo Rivera is ordered to pay respondents Spouse Salvador and Violeta Chua the following: the principal amount of P120,000.00; , legal interest of 12% per annum of the principal amount of P120000.00 reckoned from 1 January 1996 until 30 June 2013, legal interest of 6% per annum of the principal amount of P120,000.00 form 1 July 2013 to date when this Decision becomes final and executory; 12% per annum applied to the total of paragraphs 2 and 3 from 11 June 1999, date of judicial demand, to 30 June 2013, as interest due earning legal interest6% per annum applied to the total amount of paragraphs 2 and 3 from 1 July 2013 to date when this Decision becomes final and executor, as interest due earning legal interest; Attorney’s fees in the amount of P50,000.00; 6% per annum interest on the total of the monetary awards from the finality of this Decision until full payment thereof.

66. (Bucay) The Wellex Group, Inc vs U- Land Airlines Co. LTD

G.R. 167519

67. (Cagais) National Power Corporation vs Lucman M. Ibrahim

G.R. 175863

Topic: A petition for review on certiorari assailing the decision of dated 24 June 2005 and resolution Dec. 5, 2006 on Court of Appeals.

Facts:

In 1978 NPC took possession of a 21,995 sq.m of land in Marawi for the Purpose of building hydroelectric power for Agus 1 power Project. Portion of the said land is privately owned by Mangondato. He asks for just compensation for the said land. Unable to agree on its fair market value, Mangondato failed a complaint for reconveyance of the land and payment for rental from 1978 until the said land will be return to him. RTC ruled that NPC has the right to expropriate the land and therefore was ordered to pay Mangondato just compensation amounting to 21,995,000 and 15,000.00 monthly rental with 12% interest per annum. Meanwhile Ibrahim and Maruhom filed a complaint in RTC, disputing that they are the real owner of the subject land and that they are the rightful recipient of whatever indemnity adjudge to the said land. CA denied their appeal and affirmed the decision of the RTC dated Aug. 21, 1992 in toto. Mangondato filed a motion for execution of the decision. RTC granted and issued a writ of execution. NPC paid Mangondato all the indemnity ordered by the RTC. On the other hand RTC found out that the real owner of the land were Ibrahim and Maruhom. RTC ordered that Mangondato and NPC to pay jointly and severally to Ibrahim and Maruhom all forms of expropriation indemnity adjudge to the subject land and 200,000.00

pesos for attorneys fee. NPC appealed contending that Mangondato should be solidarily liable to pay Ibrahim and Maruhom.

Issue:

W/N NPC is liable to Ibrahim and Maruhom considering the Facts and circumstances of the case?

Held:

No, NPC is not liable. Art. 1242 states that Payment made in good faith to any person in possession of the credit shall release the debtor. The payment made by NPC to Mangondato was required by the decision of the court which is final and executory. NPC was compelled to pay thru a writ of execution issued by the court. Therefore, petitioner made the payment in good faith and is release for the liability against Ibrahim and Maruhom.

68. (Carwana) Azcona vs Jamandre

G.R. L30597

69. (Castillo) J.M. Tuason & Co. INC vs Javier

G.R. L28569

70. (Chun) Spouses Miniano vs Concepcion

G.R. 172825

Topic:Article 1240. Payment shall be made to the person in whose favor the obligation has been constituted, or his successor in interest, or any person authorized to receive it.

Facts:Petitioners claim that the RTC and the CA erred in giving credence to the receipt presented by respondent to show that her unpaid obligation had already been paid having been allegedly given to a person who was not armed with authority to receive payment.

Issue: Whether or not respondent’s obligation had already been extinguished by payment.

Ruling:

In general, a payment in order to be effective to discharge an obligation, must be made to the proper person. Thus, payment must be made to the obligee himself or to an agent having authority, express or implied, to receive the particular payment. Payment made to one having apparent authority to receive the money will, as a rule, be treated as though actual authority had been given for its receipt. Likewise, if payment is made to one who by law is authorized to act for the creditor, it will work a discharge. The receipt of money due on a judgment by an officer authorized by law to accept it will, therefore, satisfy the debt.

It has been proven that Losloso was an authorized agent of the petitioners. Thus, payment to Losloso is deemed payment to petitioner. Corollary, respondent’s obligation is extinguished.

71. (Constantino) Aranas vs Tutaan,

127 SCRA 828

Topic:

Payment to the wrong party

Facts:

Universal Textile Mills, Inc. (UTEX) was ordered by the courts to pay the cash dividends that

had accrued to the shares of the petitioners. UTEX made a supposed payment of cash dividends to the wrong parties (Castaneda & Manuel, who were co-defendants of the petitioners). The payment was made even though the courts made it known who the owners of the stocks and the dividends that accrued were, which was clear in the ruling of the motion of clarification filed by UTEX.

Issue:

Whether or not UTEX already made a valid payment and is no longer required to pay the petitioners.

Held:

No. The courts already made it clear to whom the payment of the cash dividends should be made and yet UTEX still chose to pay the wrong parties. UTEX is still liable to the petitioners and the burden of recovering the supposed payment of cash dividends to the wrong parties falls upon the debtor and it cannot be passed off to the petitioner, who is an innocent party.

72. (Contreras) Hyrdo Resources vs National Irrigation Administration

G.R. 160215

73. (Cu) Ponce vs The Honorable Court of Appeals,

G.R. L49494

74. (Daamo) Kalalo vs Luz,

G.R. L27782

TOPIC: Article 1431 of the Civil Code (Estoppel) and RA 529FACTS: Kalalo, an engineer, entered into an agreement with Luz, an architect. Kalalo was to render engineering design services to the latter for fees, as stipulated in the agreement. Kalalo sent a statement account asking for P116,565.00 engineering fees. Luz paid 57,000 thus leaving a balance due in the amount of P59,565.00. However, on May 1962, Luz sent resume of fees to Kalalo stating that they only owe P10,861.08. Luz sent Kalalo a check for said amount which the latter accepted but refused to accept it as full payment for services rendered. Kalalo filed a complaint against Luz. He alleged that for services rendered in connection with the different projects therein mentioned there was due him fees in sum consisting of $28K and P30,881.25. $28K fee is in dollars because it was for the International Research Institute Project. Luz contented that Kalalo has no cause of action and is in estoppel because of the statement of accounts, also Kalalo's claim regarding one of the projects was premature because Luz had not yet been paid for said project, and Kalalo’s services were not complete or were performed in violation of the agreement and/or otherwise unsatisfactory.The trial court, upon agreement of the parties, authorized the case to be heard before a Commissioner. The Commissioner’s report states that the amount due to Kalalo was $28,000.00 (U.S.) as his fee in IRIP and P51,539.91 for the other projects less the sum already paid by Luz. The former to be converted into the Philippine currency on the basis of the current rate of exchange at the time of the payment of this judgment, as certified to by the Central Bank of the Philippines. Luz appealed to SC.ISSUES: (1) Whether the doctrine of estoppel would apply.(2) Whether the recommendation in the Report that the payment of the amount due to the plaintiff in dollars was legally permissible and if not, at what rate of exchange it should be paid in pesos.HELD:(1) No. Statement of Accounts did not estopped Kalalos because Luz did not rely on it as the Commissioner’s report found. Under Art 1431 of the Civil Code, in order that estoppel may apply the person, to whom representations have been made and who claims the estoppel in his favor must have relied or acted on such representations.(2) Luz should pay the Kalalos the equivalent in pesos of the $28,000.00 at the free market rate of exchange at the time of payment. Under Republic Act 529, if the obligation was incurred prior to the enactment of the Act and one is required to pay in a particular kind of

coin or currency other than the Philippine currency the same shall be discharged in Philippine currency measured at the prevailing rate of exchange at the time the obligation was incurred. Republic Act 529 does not provide for the rate of exchange for the payment of obligation incurred after the enactment of said Act. Thus, the rate of exchange should be that prevailing at the time of payment for such contracts.

75. (Dadang) Tibajia vs CA

G.R. 100290

76. (Darimbang) Roman Catholic vs Intermediate Appellate Court,

G.R. 72110

77. (Delilan) Papa vs Valencia

G.R. 105188

78. (Durias) Soco vs Militante

G.R. L58961

79. (Dy) Dalton vs FG.R and Development Corp,

G.R. 172577

80. (Flores) Immaculate vs Navarro

G.R. L42230

81. (Fortin) Spouses Cacayorin vs Armed Forces and Police Mutual benefits

Association

G.R. 171298

82. (Gacus) Spouses Teofilo vs Reyes G.R. 150913

83. (Jala) Caltex Philippines Inc vs CA G.R. 72703

84. (Javier) PNB vs Pineda G.R. L46658

85. (Ladera) Filinvest vs Philippine Acetylene G.R. L50449

86. (Laut) Citizens Surety vs Court of Appeals, G.R. L48958

87. (Lopez) First United Construction Corporation and Blue Star Construction vs

Bahanihan Automotive Corporation, G.R. 164985

TOPICLegal compensationFACTSFirst United Constructors Corporation (FUCC) and Blue Star Construction Corporation (Blue Star) withheld payment for 2 vehicles purchased from Bayanihan Automotive Corp due to the refusal of respondent to repair one of the trucks previously purchased by petitioners, which the latter claims is a breach of warranty. Petitioner thus incurred expenses in the repair of the aforementioned truck.ISSUEWhether or not there may be legal compensationRULINGYes. Art. 1290 of the Civil Code provides that,

When all the requisites mentioned in Article 1279 are present, compensation takes effect by operation of law, and extinguishes both debts to the concurrent amount, even though the creditors and debtors are not aware of the compensation.

Based on the findings of the lower courts, the expenses for the repairs of the truck have already been determined, and are thus deemed liquidated. Since all of the requirements of Art. 1279 are now present, legal compensation should then follow, with the cost of repairs on one hand and the petitioners’ outstanding obligation on the other.

88. (Macabalang) Union Bank of the Philippines vs Development Bank of the Philippines

G.R. 191555

89. (Madrono) Cesar v. Areza and Lolita B. Areza vs. Express Savings Bank Inc, G.R.

176697

90. (Magallon) Federal Builders Inc vs Foundation Specialist Inc G.R. 194507

91. (Magdayao) Solinap vs Del Rosario G.R. L50638

92. (Magnaye) BPI vs CA G.R. 136202

93. (Malingin) Gan tion vs Hon Court of Appeals G.R. L22490

94. (Orcullo) PNB vs. VDA DE ONG ACERO G.R. L69255

95. (Pacalna) Francia vs IAC G.R. L67649

96. (Paduganan) SYCIP vs Honorable Court of Appeals G.R. L38711

97. (Paler) Mindanao Portland Cement Corporation vs CA G.R. L62169

98. (Pedroza) The International Corporation Bank Inc. vs IAC G.R. L69560Topic: Article 1290, Civil CodeFacts: In early part of 1980, private respondent secured from petitioner’s predecessors-in-interest, the then Investment and Underwriting Corp. of the Philippines and Atrium Capital Corp., a loan. To secure this loan, private respondent mortgaged her real properties. On September 11, 1980, private respondent made a money market placement with ATRIUM at 17% per annum for a period of 32 days or until October 13, 1980. Meanwhile, private respondent allegedly failed to pay her mortgaged indebtedness to the bank so that the latter refused to pay the proceeds of the money market placement on maturity but applied the amount instead to the deficiency in the proceeds of the auction sale of the mortgaged properties. However, private respondent is still indebted to petitioner. Petitioner contends that after foreclosing the mortgage, there is still due from private respondent a deficiency against which it has the right to apply or set off private respondent’s money market claim.Issue: Whether or not there can be legal compensation in the case at bar.Ruling: No. Compensation shall take place when two persons, in their own right, are creditors and debtors of each other (Art. 1278, CC). “When all the requisites mentioned in Art. 1279 of the Civil Code are present, compensation takes effect by operation of law, even without the consent or knowledge of the debtors” (Art. 1290, CC). Article 1279 of the Civil Code requires among others, that in order that legal compensation shall take place, “the two debts be due” and “they be liquidated and demandable.” Compensation is not proper where the claim of the person asserting the set-off against the other is not clear nor liquidated; compensation cannot extend to unliquidated, disputed claim arising from breach of contract. It must be noted that Civil Case No. 83-19717 is still pending consideration at the RTC Manila, for annulment of Sheriffs sale on extra-judicial foreclosure of private respondent’s property from which the alleged deficiency arose. Therefore, the validity of the extrajudicial foreclosure sale and petitioner’s claim for deficiency are still in question, so much so that it is evident, that the requirement of Article 1279 that the debts must be liquidated and demandable has not yet been met. For this reason, legal compensation cannot take place under Article 1290 of the Civil Code.

99. (Quina) Mondargon vs Sola G.R. 174882

100. (Radiamoda) Montemayor vs Millora G.R. 168251

101. (Ramos) Arco Pulp and Paper Co. and Candida Santos vs Dan Lim G.R. 206806

102. (Roa) The Welez Group Inc vs U- Land Airlines Co

G.R. 167519

103. (Rodrigo) Fort Bonifacio Development Corporation vs Valentin Fong,

G.R. 209370

Topic:Art 1311 – An assignee is bound by the stipulations of the contract entered into by his assignor

Facts:Fort Bonifacio Development Corporation (FBDC) and MS Maxco Company Inc., entered into a Trade Contract for the execution of the structural and partial architectural works on one of its projects in Taguig City. Under the contract the FBDC had the option to hire other contractors to rectify errors committed by MS Maxco by reason of its negligence, omission, act, or default. It was also prohibited from assigning or transferring any of its rights, obligations or liabilities without the express consent of FBDC.For failure of MS Maxco comply with the Trade Contract, FBDC had to hire other contractors and perform corrective works. In April, 2005, FBDC received a letter from the counsel of one Valentin Fong, informing it that MS Maxco had already assigned its receivables from FBDC to him (Valentin), thru a Deed of Assignment, to be taken from the retention money with the FBDC. FBDC informed Fong that nothing was left of MS Maxco’s retention money after the rectification of the defects in the projects.

Issue:Whether FBDC was bound by the Deed of Assignment between Fong and MS Maxco

Ruling:No. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. As such, the stipulations in contracts are binding on them unless the contract is contrary to law, morals, good customs, public order or public policy. The same principle on obligatory force applies by extension to the contracting party’s assignees, in turn, by virtue of the principle of relativity of contracts which is fleshed out in Article 1311 of the Civil CodeThe reason that a contracting party’s assignees, although seemingly a third party to the transaction, remain bound by the original party’s transaction under the relativity principle further lies in the concept of subrogation, which inheres in assignment. By virtue of the Deed of Assignment, the assignee is deemed subrogated to the rights and obligations of the assignor and is bound by exactly the same conditions as those which bound the assignor.MS Maxco, as the Trade Contractor, cannot assign or transfer any of its rights, obligations, or liabilities under the Trade Contract without the written consent of FBDC, the client, in view of the contract’s stipulations.

104. (Rulona) Bank of the Philippine Islands vs Amador Domingo G.R. 169407TOPIC: Novation by delegacion

FACTS:

On September 27, 1993, spouses Domingo executed a Promissory Note in favor of Makati Auto Center, Inc. in the sum of P 629,856.00, payable in 48 successive monthly installments in the amount of P 13, 122.00 each. They simultaneously executed a Deed of Chattel Mortgage over a 1993 Mazda 323 (subject vehicle) to secure the payment of their Promissory Note. Makati Auto Center, Inc. then assigned, ceded, and transferred all its rights and interests over the said Promissory Note and chattel mortgage to Far East Bank and Trust Company (FEBTC). Through a merger in April 7, 2000, all the assets and liabilities of FEBTC (absorbed corporation) were transferred to and absorbed by BPI (surviving corporation).

The spouses Domingo defaulted when they failed to pay 21 monthly installments that had fallen due consecutively from January 15, 1996 to September 15, 1997. BPI demanded that the spouses Domingo pay the balance of the Promissory Note including accrued late payment charges/interests or to return the possession of the subject vehicle for the purpose of foreclosure in accordance with the undertaking stated in the chattel mortgage. When the spouses Domingo still failed to comply with its demand, BPI filed on November 14, 2000 a Complaint for Replevin and Damages in the MeTC of Manila. BPI included a John Doe as defendant because at the time of filing of the Complaint, BPI was already aware that the subject vehicle was in the possession of a third person (Carmelita Gonzales) but did not yet know the identity of said person.ISSUE/S:

Whether or not there had been a novation of the loan obligation with chattel mortgage of the spouses Domingo to BPI so that the

spouses Domingo were released from said obligation and Carmelita was substituted as debtor?

HELD:

According to Article 1293 of the New Civil Code provides: “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.” In the case at bar, the court is convinced that there is no novation by delegacion and Amador Domingo remains a debtor of BPI. The court reinstates the MeTC judgment ordering Amador to pay for the P275, 562.00 balances on the Promissory Note, 10% attorney’s fees and costs suit; but modifies the rate of interest imposed and the date when such interest began to run.

The burden of establishing a novation is on the party who asserts its existence. Contrary to the findings of the Court of Appeals and the RTC, Amador failed to discharge such burden as he was unable to present proof of the clear and unmistakable consent of BPI to the substitution of debtors.

105. (Sabandal) LBP vs ONG G.R. 190755

106. (Salde) Boysaw vs Interphil promotions G.R. L22590

107. (Sena) California Bus Lines vs State Investment House G.R. 147950

108. (Sindiong) Ajax Marketing vs Hon. Court of Appeals G.R. 118585

109. (Sto Domingo) Sangguniang Panglungsod ng Baguio City vs Jadewell Parking

Systems Corp. G.R.

160025/163052/164107/165564/172215/172216/173043/174879

110. (Talon) Metropolitan Bank and Trust Company vs. Wilfred N. Chiok/Bank of the

Philippine Islands vs Wilfred N. Chiok G.R. 172652/175302/175394

111. (Tan) Del Castillo Vda. De Mistica vs Spouses Naguiat G.R. 137909Del Castillo Vda. De Mistica vs Spouses Naguiat

Topic: The failure to pay in full the purchase price stipulated in a deed of sale does not  ipso facto grant the seller the right to rescind the agreement. Unless otherwise stipulated by the parties, rescission is allowed only when the breach of the contract is substantial and fundamental to the fulfillment of the obligation. Applicable provision is Article 1191 of the Civil Code.

Facts:Mistica is an owner of a parcel of land which was lease to respondent Naguiat sometime in 1970. In 1979, Mistica entered into a contract to sell with Naguiat over a portion, 200 square meters, of said lot for P20,000. The kasulatan states that P2,000 would be paid as down payment and the remaining P18,000 would be paid within 10 years. Failure to pay within the year stipulated requires Naguiat to pay 12% interest per anum of the remaining balance until full payment. Pursuant to the agreement, P2,000 was given as down payment and P1,000 was given as partial payment. Naguiat failed to make payments thereafter. On October 1986, Mistica died. The title and ownership was already transferred to respondent. On December 1991, petitioner, wife of the deceased, filed a complaint for rescission alleging that respondent’s failure and refusal to pay the purchase price constitutes a violation of the contract which entitles her to rescind. Petitioner contends that the period cannot be extended beyond ten years, because to do so would convert the buyers obligation to a purely potestative obligation that would annul the contract under Article 1182 of the Civil Code.

Issue:(1) Whether or not there was breach of obligation entitling petitioner to rescind the contract? (2) Whether or not rescission of the contract is proper considering that a certificate of title has been issued in favor of respondents?

Ruling:

(1) In a contract of sale, the remedy of an unpaid seller is either specific performance or rescission. Under Article 1191 of the Civil Code, the right to rescind an obligation is predicated on the violation of the reciprocity between parties, brought about by a breach of faith by one of them. Rescission, however, is allowed only where the breach is substantial and fundamental to the fulfillment of the obligation. In the present case, 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. Furthermore, in the agreement, it was stipulated that payment could be made even after ten years from the execution of the Contract, provided the vendee paid 12 percent interest.

On the issue of potestative obligation, the Code prohibits purely potestative, suspensive, conditional obligations that depend on the whims of the debtor, because such obligations are usually not meant to be fulfilled. The kasulatan does not allow such a thing. First, nowhere is it stated in the Deed that payment of the purchase price is dependent upon whether respondents want to pay it or not. Second, the fact that they already made partial payment thereof only shows that the parties intended to be bound by the Kasulatan.

(2) Rescission unrelated to registration. The issuance of a certificate of title in favor of respondents does not determine whether petitioner is entitled to rescission. It is a fundamental principle in land registration that such title serves merely as an evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein.

112. (Ungab) Palay vs Clave G.R. L56076FACTS: In 1965, Palay Inc., through its President Onstott, executed in favor of Dumpit (respondent) a Contract to sell a parcel of land in Antipolo, Rizal. The sale was for P23, 300 with 9% interest per annum, payable with a downpayment of P4, 660 and monthly installments ofP246.42 until fully paid. Par. 6 of the contract provided for automatic extrajudicial rescission upon default in payment of any monthly installment after the lapse of 90 days from the expiration of the grace period of a month, without need of notice and forfeiture of all installments paid. Dumpit was able to pay the dp and several installments amounting to P13, 722.50, with the last payment made on Dec. 5, 1967 for installments up to Sept. 1967.In 1973, Dumpit requested Palay Inc to update his overdue accounts and sought its permission to assign his rights to Dizon. However, Palay informed him that his Contract to Sell had long been rescinded pursuant to Par. 6 and that the lot had already been resold. Dumpit filed a complaint with the NHA for reconveyance with an alternative prayer for refund. NHA ruled in favor of Dumpit, stating that the rescission is void for lack of either judicial or notarial demand. Office of the President affirmed. ISSUE:

1. W/N notice or demand may be dispensed with by stipulation in a contract to sell. 

2. W/N Palay should be liable for the refund of the installment payments made by Dumpit.

HELD:1. NO. Although a judicial action for rescission of a contract is not necessary where the contract provides for its revocation and

cancellation for violation of any of its terms and condition, jurisprudence has shown that at least, there was a written notice sent to the defaulter informing him of the rescission. Par. 6 cannot be considered a waiver of Dumpit's right to be notified because it was a contract of adhesion. A waiver must be certain and unequivocal and intelligently made; such waiver follows only where the liberty of choice has been fully accorded. Moreover, the indispensability of notice of cancellation to the buyer is protected under RA 6551. It is a matter of public policy to protect the buyers of real estate on installment payments against onerous and oppressive conditions. Waiver of notice is one such onerous and oppressive condition to buyers of real estate on installment payments.

2. YES. As a consequence of the rescission of the contract, right to the lot should be restored to Dumpitor the same should be replaced by another acceptable lot. However, considering that the lot had been resold to a third person, Dumpit is entitled to refund of the installments paid plus legal interest of 12%.

113. (Usop) Solar Harvest Inc vs Davao Corrugated Carton Corporation G.R.

176868

114. (Villamor) OSMENA III vs SSS, September 13, 2007

115. (Waban) Villamar vs Mangaoil G.R. 188661

116. (Aban) Ayson - Simon vs Adamos G.R. L39378(Article 1191; and Prescription [But I couldn’t find the basis of the 4-year period discussed in the case. I’ll update you as soon as possible guys.])FACTS:Defendants, Nicolas Adamos and Vicente Feria, purchased two lots from Juan Porciuncula. Thereafter, the successors-in-interest of the latter filed Civil Case No. 174 for annulment of the sale and the cancellation of TCT No. 69475, which had been issued to defendants-appellants by virtue of the disputed sale. The Court rendered a Decision annulling the sale. The said judgment was affirmed by the Appellate Court and had attained finality.Meanwhile, during the pendency of the case above, defendants sold the said two lots to petitioner Generosa Ayson-Simon. Due to the failure of the defendants to deliver the said lots, petitioner filed a civil case for specific performance which the CFI granted. However, defendants could not deliver the said lots because the CA had already annulled the sale of the two lots in Civil Case No. 174. Thus, petitioner filed another civil case for the rescission of the contract.Defendants were contending that petitioner cannot choose to rescind the contract since petitioner chose for specific performance of the obligation and, even if plaintiff could seek rescission, the action to rescind the obligation has already prescribed. ISSUES:1. Can petitioner choose to rescind the contract even after choosing for the specific performance of the obligation?2. Had the option to rescind the contract prescribed?RULING:1. Yes. The rule that the injured party can only choose between fulfillment and rescission of the obligation, and cannot have both, applies when the obligation is possible of fulfillment. If, as in this case, the fulfillment has become impossible, Article 1191 allows the injured party to seek rescission even after he has chosen fulfillment.

2. No. Article 1191 of the Civil Code provides that the injured party may also seek rescission, if the fulfillment should become impossible. The cause of action to claim rescission arises when the fulfillment of the obligation became impossible when the Court of First Instance of Quezon City in Civil Case No. 174 declared the sale of the land to defendants by Juan Porciuncula a complete nullity and ordered the cancellation of the TCT. The action for rescission must be commenced within four years from May 3, 1967, the date the decision in Civil Case No. 174 became final and executory. Since the complaint for rescission was filed on August 16, 1968, the four year period within which the action must be commenced had not expired.

117. (Acosta) Angeles, et al vs Calasanz G.R. L42283Rescission

Ursula and Tomas Calazans sold a piece of land to Buenaventura Angeles and Teofila Juani covered by a contract to sell. Angeles paid a downpayment upon the execution of the contract and started paying the balance in monthly installments and paid for nine years with only a few remaining installments left to pay. Calasanz demanded payment of past due accounts, but did not receive any. Eventually, Calasanz canceled the said contract because Angeles failed to pay the subsequent payments. Angeles filed a case to compel the Calasanz to execute in their favor the final deed of sale alleging that they have already fully paid the total price of the property.

Issue: Was the contract to sell validly cancelled?

Held: No. The rule that it is not always necessary for injured party to resort to court recession of the contract when the contract itself provides was qualified in the court.The general rule is that rescission of a contract will not be permitted for slight or casual breach, but only for substantial and fundamental breach. The breach of the contract alleged by Calasanz is so slight considering that Angeles had already paid monthly installments for almost nine years, the entire obligation would have been paid. To sanction the recission made by Calasanz will work injustice to Angeles and unjustly enrich Calasanz.

118. (Algunas) UP vs De Los Angeles G.R. L28602

119. (Angeles) SM Land Inc, vs Bases Conversion and Development Authority and

Arnel Paciano D. Casanova Esq, G.R. 203655

120. (Atega) Gidwani vs People G.R. 195064

121. (Banaag) Avelina Abarientos Rebusquillo vs. Sps. Domingo G.R. 204029Topic: Simulation of Contract, Article 1345

Facts: 

Petioners Avelina Abarientos Rebusquillo (Avelina) and Salvador Orosco (Salvador) filed a Complaint for annulment and revocation of an Affidavit of Self-Adjudication and a Deed of Absolute Sale before the court a quo. In it, petitioners alleged that Avelina was one of the children of Eulalio  Abarientos (Eulalio) and Victoria Villareal (Victoria). Eulalio died intestate on July 3, 1964, survived by his wife Victoria, six legitimate children, and one illegitimate child,

His wife Victoria eventually died intestate on June 30, 1983. On his death, Eulalio left behind an untitled parcel of land in Legazpi City consisting of two thousand eight hundred sixty-nine( 2,869) square meters, more or less

In 2001, Avelina was supposedly made to sign two (2) documents by her daughter Emelinda Rebusquillo-Gualvez (Emelinda) and her son-in-law Domingo Gualvez (Domingo), respondents in this case, on the pretext that the documents were needed to facilitate the titling of the lot. It was only in 2003, so petitioners claim, that Avelina realized that what she signed was an Affidavit of Self-  Adjudication and a Deed of Absolute Sale in favor of respondents.  As respondents purportedly ignored her when she tried to talk to them, Avelina  sought the intervention of the RTC to declare null and void the two (2) documents in order to reinstate and so correct the injustice done to the other heirs of Eulalio.Issue : Whether or not there was a simulation of contract.

Held: YES

Avelina, did not have the absolute ownership of the subject property but only an aliquot portion. What she could have transferred to respondents was only the ownership of such aliquot portion. It is apparent from the admissions of respondents and the records of this case that Avelina had no intention to transfer the ownership, of whatever extent, over the property to respondents. Hence, the Deed of Absolute Sale is nothing more than a simulated contract.

Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the parties do not intend to be bound at all; the latter, when the parties conceal their true agreement.

Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement.

122. (Bantuas) Spouses Balila vs IAC G.R. L68477 Topic: Novation Facts: Petitioners were plaintiffs and private respondents were defendants in a Civil Case. They entered into an amicable

settlement under which a pacto de retro sale of three parcels of land is to be paid on or before May 15, 1981. Seven months after said

date, the petitioners redeemed only one parcel. Private respondent Guadalupe filed a motion for a hearing on the consolidation of the title

over the remaining parcels of land alleging that the court decision approving the amicable settlement remained unenforced for non-

payment of the total obligation. An order affirming the consolidation was issued at the lower court and was sustained by the appellate

tribunal. Despite the rendition of the said decision by the appellate court, Guadalupe, represented by her son Waldo del Castillo as for

attorney-in-fact, accepted payments from petitioners and gave petitioners several extensions of time to pay their remaining obligations. On

the last day of payment, Guadalupe and son Waldo were nowhere to be found prompting the petitioners to consign the remaining balance

with the regional trial court. Issue: Was the Order approving the amicable settlement novated upon subsequent mutual agreements of the

parties? Ruling: Yes. The Supreme Court has previously laid down the principle that, when, after judgment has become final, facts and

circumstances transpire which render its execution impossible or unjust, the interested party may ask the court to modify or alter the

judgment to harmonize with justice and the facts. The several tender of payments made by the petitioners to Waldo after May 15, 1981

constitutes novation of the trial court’s judgment by compromise. A total of these payments reveal that petitioners have fully paid the

amount stated in the judgment by compromise. Therefore, the decision of the appellate court on the consolidation of title is set aside, and

the private respondents are obliged to reconvey and deliver the remaining lots to the petitioners.

123. (Banas) Batchelder vs The Central Bank of the Philippines G.R. L25071TOPIC:

SOURCES OF OBLIGATION

FACTS:Monetary Board Resolution No. 857 requires Filipino and American resident contractors for constructions in U.S. military bases in the Philippines to surrender to the Central Bank their dollar earnings under their respective contracts but were entitled to utilize 90% of their surrendered dollars for importation at the preferred rate of commodities for use within or outside said U.S. military bases. Resolution 695 moreover, denies their right to reacquire at the preferred rate ninety per cent (90%) of the foreign exchange the sold or surrendered earnings to Central Bank for the purpose of determining whether the imports against proceeds of  contracts entered into prior to April 25, 1960 are classified as dollar-to-dollar transactions or not.

George Batchelder, an American Citizen permanently residing in the Philippines who is engaged in the Construction Business, surrendered to the Central Bank his dollar earnings amounting to U.S. $199,966.00. He compels Central Bank of the Philippines to resell to him $170,210.60 at the preferred rate of exchange of two Philippine pesos for one American dollar, more specifically P2.00375 which was denied by the court. He then contended that said decision failed to consider that if there was no contract obligating the bank to resell to him at the preferred rate, the judgment of the lower court can and should nevertheless be sustained on the basis of there being such an obligation arising from law.

ISSUE:

Whether Central Bank has the obligation arising from law to resell the US$154,094.56 to Batchelder at the preferred rate.

HELD:

The decision of the lower court was reversed in favor of the respondent Central Bank of the Philippines. and the Supreme court then held that Central Bank intended to attain basic objectives in the field of currency and finance.

“It shall be the responsibility of the Central Bank of the Philippines to administer the monetary and banking system of the Republic. It shall be the duty of the Central Bank to use the powers granted to it under this Act to achieve the following objectives: (a) to maintain monetary stability in the Philippines; (b) to preserve the international value of the peso and the convertibility of the peso into other freely convertible currencies; and (c) to promote a rising level of production, employment and real income in the Philippines."It is, of course, true that obligations arise from 1) law; 2) contracts; 3) quasi-contracts;4) acts or omissions punished by law and 5) quasi-delicts. One of the sources an obligation then is a law. A legal norm could so require that a particular party be chargeable with a prestation or undertaking to give or to deliver or to do or to render some service.

It is an indispensable requisite though that such a provision, thus in fact exists. There must be a showing to that effect. In Pelayo v. Lauron, Court through Justice Torres, categorically declared:"Obligation arising from law are not presumed." For in the language of Justice Street in LeungBen v. O'Brien, such an obligation is "a creation of the positive law." They are ordinarily traceable to code or statute. It is true though, as noted in the motion for reconsideration following People v. Que Po Lay, that a Central Bank circular may have the force and effect of law, especially when issued in pursuance of its quasi-legislative power. That of itself, however, is no justification to conclude that it has thereby assumed an obligation.

124. (Bucay) Spouses Tongson vs Emergency Pawnshop Bula G.R. 167874Topic: rescission of contract

Facts

In May 1992, Napala offered to purchase from the spouses Tongson their 364-square meter parcel of land, situated in Davao City and covered by TCT#143020. Finding the offer acceptable, the spouses executed with Napala a Memorandun of Agreement dated May 8, 1992. Thus, on December 2, 1992, respondent prepared a Deed of Absolute Sale indicating the consideration as only P400, 000.00.

To conform with the consideration stated in the Deed of Absolute Sale, the parties executed another Memorandum of Agreement, which replaced the first MOA, showing that the selling price of the land was only P400, 000.00. Upon signing of the Deed of Absolute Sale, Napala paid P200, 000.00 in cash to the spouses and issued and issued a postdated PNB check for the remaining amount of P280, 000.00. Thereafter, TCT#143020 was cancelled and TCT#-186128 was issued in the name of Emergency Pawnshop Bula, Inc.

When presented for payment, the PNB check was dishonored for the reason “Drawn Against Insufficient Funds”. Despite the spouses’ repeated demands to either pay the full value of the check or return the subject parcel of land, Napala failed to do either.

Hence, spouses filed a complaint for annulment of contract and damages with a prayer for the issuance of a temporary restraining order and writ of preliminary injunction.

Issue

Whether the contract of sale can be annulled based on the fraud employed by Napala.

Held

YES. The court ordered the rescission of the contract of sale between the spouses Tongson and Emergency Pawnshop Bula, Inc. Under Art 1338 of the Civil code, there is fraud when, through insidious words or machinations of one of the contract parties, the order is induced to enter into a contract which, without them, he would not have a agreed to. In order that fraud may vitiate consent, it must be the causal (dolo causante), not merely the incidental (dolo incidente), inducement to the making of the contract.

We find no causal fraud in this case to justify the annulment of the contract of sale between the parties because even before Napala issued

the check, the parties had already consented and agreed to the sale transaction. However, while no causal fraud attended the execution of

the sales contract, there is fraud in its general sense, which involves a false representation of a fact, when Napala inveigled the Spouses

Tongson to accept the postdated PNB check on the representation that the check would sufficiently funded at its maturity. In other words,

the fraud surfaced when Napala issued a worthless check to the Spouses Tongson, which is definitely not during the negotiation and

perfection stages of the sale but rather, the fraud existed in the consummation sage of sale when the parties are in the process of

performing their respective obligations under the perfected contract of sale

125. (Cagais) Spouses Victor and Edna Binua vs Lucia P. Ong G.R. 207176Topic: A petition for review on certiorari assailing the decision of dated 24 June 2005 and resolution Dec. 5, 2006 on Court of Appeals.

Facts:

In 1978 NPC took possession of a 21,995 sq.m of land in Marawi for the Purpose of building hydroelectric power for Agus 1 power Project. Portion of the said land is privately owned by Mangondato. He asks for just compensation for the said land. Unable to agree on its fair market value, Mangondato failed a complaint for reconveyance of the land and payment for rental from 1978 until the said land will be return to him. RTC ruled that NPC has the right to expropriate the land and therefore was ordered to pay Mangondato just compensation amounting to 21,995,000 and 15,000.00 monthly rental with 12% interest per annum. Meanwhile Ibrahim and Maruhom filed a complaint in RTC, disputing that they are the real owner of the subject land and that they are the rightful recipient of whatever indemnity adjudge to the said land. CA denied their appeal and affirmed the decision of the RTC dated Aug. 21, 1992 in toto. Mangondato filed a motion for execution of the decision. RTC granted and issued a writ of execution. NPC paid Mangondato all the indemnity ordered by the RTC. On the other hand RTC found out that the real owner of the land were Ibrahim and Maruhom. RTC ordered that Mangondato and NPC to pay jointly and severally to Ibrahim and Maruhom all forms of expropriation indemnity adjudge to the subject land and 200,000.00

pesos for attorneys fee. NPC appealed contending that Mangondato should be solidarily liable to pay Ibrahim and Maruhom.

Issue:

W/N NPC is liable to Ibrahim and Maruhom considering the Facts and circumstances of the case?

Held:

No, NPC is not liable. Art. 1242 states that Payment made in good faith to any person in possession of the credit shall release the debtor. The payment made by NPC to Mangondato was required by the decision of the court which is final and executory. NPC was compelled to pay thru a writ of execution issued by the court. Therefore, petitioner made the payment in good faith and is release for the liability against Ibrahim and Maruhom.

126. (Carwana) Ece Realty and Development Inc vs Rachel G. Mandap G.R. 196182

127. (Castillo) Spouses Francisco Sierra et al vs PAIC savings and mortgage bank

G.R. 197857

128. (Chun) Mariano Mendoza and Elvira Lim v Spouses Leoonora J. gomez G.R.

160110

Topic: Liability of a registered owner of a vehicle

Facts: As a result of a vehicular collision resulting from the driver’s negligence, respondents suffered physical injuries and the Isuzu truck

sustained extensive damages. Hence, this case for damages. Respondents argued that although the registered owner of the bus was Lim,

the actual owner of the bus was Cirilo Enriquez (Enriquez), who had the bus attached with Mayamy Transportation Company (Mayamy

Transport) under the socalled "kabit system." Respondents then impleaded both Lim and Enriquez.

Issue: Who is liable? Who is deemed as Mendoza’s (driver) employer? Is it Enriquez, the actual owner of the bus or Lim, the registered

owner of the bus?

Ruling: The registered owner is deemed the employer of the negligent driver, and is thus vicariously liable under Article 2176, in relation to Article 2180, of the Civil Code. The registered owner of the motor vehicle is the employer of the negligent driver, and the actual employer is considered merely as an agent of such owner. Thus, whether there is an employeremployee relationship between the registered owner and the driver is irrelevant in determining the liability of the registered owner who the law holds primarily and directly responsible for any accident, injury or death caused by the operation of the vehicle in the streets and highways

As such, there can be no other conclusion but to hold Lim vicariously liable with Mendoza.

This does not mean, however, that Lim is left without any recourse against Enriquez and Mendoza. Under the civil law principle of unjust

enrichment, the registered owner of the motor vehicle has a right to be indemnified by the actual employer of the driver; and under Article

2181 of the Civil Code, whoever pays for the damage caused by his dependents or employees may recover from the latter what he has

paid or delivered in satisfaction of the claim.

[Supplementary Notes:]

Generally, when an injury is caused by the negligence of a servant or employee, there instantly arises a presumption of law that there was

negligence on the part of the master or employer either in the selection of the servant or employee (culpa in eligiendo) or in the supervision

over him after the selection (culpa vigilando), or both.

The presumption is juris tantum and not juris et de jure; consequently, it may be rebutted. Accordingly, the general rule is that if the

employer shows to the satisfaction of the court that in the selection and supervision of his employee he has exercised the care and

diligence of a good father of a family, the presumption is overcome and he is relieved of liability.

However, with the enactment of the motor vehicle registration law, the defenses available under Article 2180 of the Civil Code that the

employee acts beyond the scope of his assigned task or that it exercised the due diligence of a good father of a family to prevent damage –

are no longer available to the registered owner of the motor vehicle, because the motor vehicle registration law, to a certain extent,

modified Article 2180.

(Basically, as long as you’re the registered owner of the vehicle, you along with the driver are liable.)

129. (Constantino) Spouses Eduardo and Lydia Silos vs Philippine National Bank G.R.

181045

130. (Contreras) Land Bank vs Heirs of Spouses soriano G.R. 178312

131. (Cu) Lagunzad vs Vda. De Gonzales G.R. L32066

132. (Daamo) Velasco vs Honorable Court of Appeals G.R. L31018

133. (Dadang) Palattao vs CA G.R. 131726

134. (Darimbang) Law vs Olympic Sawmill G.R. L30771

135. (Delilan) Pentacapital Investment Corporation vs Mahinay G.R. 171736

136. (Durias) Heirs of Ureta vs Heirs of Liberato Ureta G.R. 165748

137. (Dy) Weldon Construction Corporation vs Court of Appeals G.R. L35721

138. (Flores) Lao Sok vs Sabaysabay G.R. L61898

139. (Fortin) Gallardo vs Honorable Intermediate Appellate Court G.R. L67742

140. (Gacus) Bugatti vs Court of Appeals G.R. 138113

141. (Jala) Tong Brothers Co vs IAC G.R. 73918

142. (Javier) Lim Yhi Luya vs Court of Appeals G.R. L40258

143. (Ladera) Briones vs Cammayo Et al G.R. L23559

144. (Laut) Asian Cathay Finance and Leasing Corporation vs Spouses Avador

G.R. 186550

145. (Lopez) Tiu vs Platinum Plans Phil G.R. 163512TOPICValidity of contractual stipulationsFACTSDaisy B. Tiu was re-hired by Platinum Plans Phil., Inc. as a Senior Assistant Vice-President and Territorial Operations Head. A contract of employment, valid for 5 years, was executed by both parties on January 1, 1993 and contained a non-involvement clause stating that the employee (Tiu) may not be involved in any corporation engaged in the same business or industry as that of the employer 2 years after the employee’s separation from the company. Tiu became Vice-President for Sales of another corporation also engaged in the same pre-need industry on November 1995. Respondent sued for damages, while petitioner countered by saying that such non-involvement clause was unenforceable for being against public order or public policy since it does not allow her to engage in the only line of work she knows.ISSUEWhether or not the non-involvement clause is contrary to public policyRULINGNo. Art. 1306 of the Civil Code provides that,

The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

Also, Art. 1159 of the same Code provides that,Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.

The Court has ruled that “a non-involvement clause is not necessarily void for being in restraint of trade as long as there are reasonable limitations as to time, trade, and place.” Also, by virtue of the position she once held, where she was privy to highly confidential information regarding respondent’s business, such non-involvement clause provides sufficient protection for the respondent and is thus not contrary to public welfare. Therefore, such agreement must be complied with by both parties in good faith.

146. (Macabalang) Carino vs Court of Appeals G.R. L47661

147. (Madrono) Rubias vs Batiller G.R. L35702

148. (Magallon) Tongoy vs the Honorable Court of Appeals G.R. L45645

149. (Madayao) Lita Enterprises Inc vs IAC G.R. L64693

150. (Magnaye) Arsenal vs IAC G.R. L66696

151. (Malingin) Manotok Realty Inc vs The Hon. Court of Appeals G.R. L45038

152. (Orcullo) Portugal vs IAC G.R. 73564

153. (Pacalna) Philippine Banking Corporation vs LUI SHE G.R. L17587

154. (Paduganan) Teja Marketing vs IAC G.R. L65510

155. (Paler) Francisco vs Herrera G.R. 139982

156. (Pedroza) Coronel vs Constantino G.R. 121069Topic: Sale of an undivided interest of a property only binds the co-owner only up to the portion of his/her interest; consequently, he/she can only transfer ownership over the same to other parties.Facts: The disputed property was originally owned by Honoria Aguinaldo. One half was inherited by Emilia Coronel together with her sons Benjamin, Catalino and Cerefino, all surnamed Coronel. The other half was inherited by Florentino Constantino and Aurea Buensuceso. Emilia sold her share of the lot to Jess C Santos and Priscilla Bernardo as evidenced by the “KASULATAN NG BILIHANG PATULUYAN.” Santos and Bernardo then sold it to the respondents. Petitioners built several constructions and improvements on the disputed lot. Respondents then filed a complaint for declaration of ownership, quieting of title and damages with prayer for writ of mandatory and/or prohibitory injunction with the trial court.Issue: Whether or not the sale was valid? If yes, up to what extent?Ruling: YES, only up to ¼ share of the land inherited by Emilia and her sons. Emilia signed only in her behalf and not in representation of her three children thus the sale is only binding to her share. The subject property was co-owned, pro-indiviso by petitioner Emilia together with her petitioner sons. No proof was presented to show that the co-ownership that existed among the heirs of Ceferino and Catalino and herein petitioners as never been terminated. No evidence was presented to show that the three brothers were aware of the sale made by

their mother. Since there was no partition made, Emilia is deemed to have sold only her share of the lot which is ¼ thereof. Consequently, SC declared respondents as owner of ½ undivided portion of the original lot which they inherited plus ¼ share (of their ½) of petitioner Emilia Coronel.

157. (Quina) Iglesia Filipina Independiente vs Heirs of Bernardino Taeza G.R.

179597

158. (Radiamoda) Yuvienco vs Dacuycuy G.R. L55048

159. (Ramos) Bisaya Land Transportation Co vs Sanchez G.R. 74623

160. (Roa) Ainza vs Spouses Padua G.R. 165420Meeting of the Minds in a Contract of Sale

This is a case involving family members. In April 1987, Ainza and her daughter Eugenia orally agreed that Ainza pay P100k in exchange for half of the portion of Eugenia’s undivided conjugal property (a lot located in QC). No Deed of Absolute Sale was executed. There was physical delivery of the land through Concepcion’s other daughter (Natividad) acting as atty-in-fact. Concepcion thereafter allowed Natividad and her husband occupy the purchased portion of the land.

In 1994, Antonio caused the division of the lot into three (two were occupied by the spouses), necessarily displacing Natividad. He also had each subdivision titled. Antonio requested Natividad to vacate the premises. Antonio averred that his wife only admitted of selling 1/3 of the property to Concepcion for which a receipt was issued signed by Concepcion. The RTC ruled in favor of Concepcion. The CA reversed the RTC ruling. CA explained that the property is conjugal hence the sale should have been with Antonio’s consent.

ISSUE: Whether or not the contract of sale between Ainza and Eugenia is valid.

HELD: Yes it is valid until annulled (voidable). There was a perfected contract of sale between Eugenia and Concepcion. The records show that Eugenia offered to sell a portion of the property to Concepcion, who accepted the offer and agreed to pay P100,000.00 as consideration. The contract of sale was consummated when both parties fully complied with their respective obligations. Eugenia delivered the property to Concepcion, who in turn, paid Eugenia the price of P100,000.00, as evidenced by the receipt. Since the land was undivided when it was sold, Concepcion is entitled to have half of it.

Antonio cannot, however, attack the validity of the sale b/n his wife and his mom-in-law, either under the Family Code or the Old Civil Code due to prescription. The sale came to his knowledge in 1987. He only filed the case in 1999. His right prescribed in 1993 (under the FC [5 years]) and 1997 (under OCC [10 years]).

161. (Rodrigo) Orduno vs Fuentebella G.R. 176841Topic: Statute of Frauds is inapplicable to partially executed contracts

Facts:Orduña purchased a residential lot from Gabriel Sr. payable in installments but no deed of sale was executed. The installments were paid to Gabriel Jr. after the death of his father. Improvements were thereafter introduced by petitioner while the latter even paid its real property tax since 1979. Unknown to Orduña, the property has been subject to further alienations until the same was ceded to respondent, Fuentebella. Orduña, after being demanded by Fuentebella to vacate the disputed land, then filed a Complaint for Annulment of Sale, Title and Reconveyance with Damages with a prayer to acquire ownership over the subject lot upon payment of their remaining balance. The RTC dismissed the petition because the verbal sale between Gabriel Sr. and Orduña was unenforceable under the Statute of Frauds. This was later affirmed by the Court of Appeals.

Issue:Whether the sale of the subject lot by Gabriel Sr to Orduña is unenforceable under the Statute of Frauds

Ruling:

No. It is a well-settled rule that the Statute of Frauds as expressed in Article 1403, par. (2), of the Civil Code is applicable only to purely executory contracts and not to contracts which have already been executed either totally or partially. Here, the verbal contract of sale has been partially executed through the partial payments made by Orduña duly received by both Gabriel Jr. and his father. The purpose of the Statute of Frauds is prevention fraud and perjury in the enforcement of obligations depending for their evidence on the unassisted memory of witnesses, by requiring some contracts and transactions to be evidenced by a writing signed by the party to be charged. Since there is already ratification of the verbal contract through the acceptance of benefits through the partial payments, it is thus withdrawn from the purview of the Statute of Frauds.

162. (Rulona) Hernandez vs Court of Appeals G.R. L41132TOPIC: STATUTE OF FRAUDS

FACTS:

Three parcels of land in Parañaque were owned by Fr. Garcia adjoining the lands owned by the petitioner (Hernandez). No dividing boundaries existed thereon between the two estates. In 1956, the cadastral surveyors from the Bureau of Lands laid down official monuments to mark the separation of the lots. These monuments were set along a line which the landowners had previously agreed upon as representing the correct boundary between their estates.

In 1959, Fr. Garcia applied for the registration of the three parcels of land under his name. It included 220 square meters of land (unknown to the petitioner) which fell beyond the stipulated boundaries of the former’s land and part of the petitioner’s property. The petitioner discovered the anomaly in the application upon the order of the court for the registration of the lots in Fr. Garcia’s name. Petitioner then filed a petition for review of the decree of registration and was denied by the Court of First Instance (Now, RTC). CA affirmed CFI’s decision and declared Fr. Garcia as absolute owner, by acquisitive prescription, of the said lands. Both courts were of the view essentially that the evidence presented by the petitioner did not bear out the claim of fraud; that under the Statute of Frauds, the parties’ covenant as to their properties metes and bounds was unenforceable since it was not reduced to writing; and that petitioner’s parents and predecessors-in-interest. Only 516 square meters of land was on the deed of sale upon buying the said land by the petitioner’s parents and thus, could not have included the disputed property. ISSUE/S:

1) W/N there was fraud on the application for registration of said lands by respondent?2) W/N the agreement is valid not being in writing?3) W/N the petitioner’s right to file for a review has prescribed by his inaction?

HELD:

1) The government through the Bureau of Land monuments put up marks to separate both their estates according to their agreement in 1956, which has been altered by the application and modifying the marks of separation, clearly herein petitioner is a victim of fraud, deftly cheated of the chance to vindicate his claim to the land

2) Not every agreement "affecting land" must be put in writing to attain enforceability. Under the Statute of Frauds, Article 1403(2) (e) of the Civil Code, such formality is only required of contracts involving leases for longer than one year, or for the sale of real property or of an interest therein. The Statute of Frauds finds no application to this case considering that the petitioner’s tenants are living for a long time on the disputed lands. Therefore, the agreement was valid.

The remedy must be given to the pet i t ioner being a vict im of fraud; therefore he is ent i t led to the rel ief sought. The

information on the deed of sale cannot be taken into considerat ion on this case because i t was not accurate as to the

actual measure of the estate upon purchase. Wherefore the SC reversed and set aside the decision of the CA and declared the 220 square

meters of land in the Original Certificate of Title of respondent was nul l and void grant ing the said land to pet i t ioner and re-

issuing a new OCT to the respondent excluding the 220 square meter land.

163. (Sabandal) Cabaliw vs Sadorra G.R. L25650

164. (Salde) Air France vs Honotable Court of Appeals G.R. 104234

165. (Sena) Republic of the Philippines vs PLDT G.R. L18841

166. (Sindiong) William Golangco Construction Corporation vs Philippine Commercial

International Bank, G.R. 142830

167. (Sto Domingo) Leal vs IAC G.R. L65425

168. (Talon) Marimperio vs Court of Appeals, G.R. L40234

169. (Tan) Occena vs Hon. Jabson G.R. L44349Topic: Applicable provision: Article 1267. This case concerns whether the court is allowed to modify or reverse a contract previously agreed upon between the parties.

ART. 1267. When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part. 

... a positive right is created in favor of the obligor to be released from the performance of an obligation in full or in part when its performance 'has become so difficult as to be manifestly beyond the contemplation of the parties.

Facts:Under the subdivision contract, respondent "guaranteed (petitioners as landowners) as the latter's fixed and sole share and participation an amount equivalent to forty (40%) percent of all cash receifpts fromthe sale of the subdivision lots". Private respondent Tropical Homes, Inc. filed a complaint for modification of the terms and conditions of its subdivision contract with petitioners. Respondent alleged that the modification is due to the increase in prices of oil and other commodities, including basis raw materials required for such development work. Respondents further alleged that the original contract would result to losses for the respondent and that the defendants would be unustly enriched at the expense of the plaintiff. CFI allowed the modification. Petitioners insist that the worldwide increase in prices cited by respondent does not constitute a sufficient cause of action for modification of the subdivision contract. Petitioners moved to dismiss the complaint principally for lack of cause of action.

Issue:Whether or not the complaint should be dismissed for lack of cause of action?

Ruling: The complaint was dismissed for failure to state a sufficient cause of action. Article 1267 does not grant the courts this authority to remake, modify or revise the contract or to fix the division of shares between the parties as contractually stipulated with the force of law between the parties, so as to substitute its own terms for those covenanted by the parties themselves. Respondent's complaint for modification of contract manifestly has no basis in law and therefore states no cause of action.

The Civil Code authorizes the release of an obligor when the service has become so difficult as to be manifestly beyond the contemplation of the parties but does not authorize the courts to modify or revise the subdivision contract between the parties or fix a different sharing ratio from that contractually stipulated with the force of law between the parties.

170. (Ungab) Cabahug vs NAPOCOR G.R. 186069FACTS:

Petitioners are registered owners of two parcels of land in Barangay Capokpok, Leyte were among the defendants in a special civil suit for expropriation earlier filed by the National Power Corporation (NPC) before the RTC in connection with its Leyte-Cebu Interconnection Project. The suit was later dismissed when NPC settled with the landowners through payment of an easement fee equivalent to 10% of value of their property in accordance with Section 3-A of RA 6395. Two documents denominated as the Right of Way Grant in favor of NPC were executed by Jesus Cabahug in consideration of the easement fees. Cabahug granted respondent a continuous easement of right of way for the latter’s transmissions lines on the parcels of land. By said grant, petitioner agreed not to construct any building or structure

whatsoever, nor plant in any area within the Right of Way that will adversely affect or obstruct the transmission line of NPC, except agricultural crops, the growth of which will not exceed three meters high. However under paragraph 4 of the grant, petitioner reserved the option to seek additional compensation for easement fee, based on a previous Supreme Court decision. The Spouses filed a complaint for payment of just compensation against NPC. They claimed to have been totally deprived of the use of the portions of land covered. They alleged that in accordance with the reservation provided under paragraph 4 of the grant, they have demanded from NPC payment of the balance of the just compensation for the subject properties. In its answer, NPC averred that it already paid the full easement fee and that the reservation in the grant referred to additional compensation for easement fee, not the full just compensation sought by the petitioners. The RTC ruled in favor of the spouses and ordered the NPC to pay them full just compensation based on the parcels of land taken by the transmission lines less the amount previously paid. It ruled that the NPC’s easement of right of way which indefinitely deprives the owner of their proprietary rights over their property falls within the power of eminent domain. The CA reversed the decision since the spouses had already accepted the payment of easement fee. An action to allow the spouses to collect again from NPC would amount to unjust enrichment and is a violation of the contract hence, this petition.

ISSUES:1. Whether or not NPC is liable for the payment of the full market value of the affected property2. Whether or not the 10% of the market value of the property due to the owner of the property subject to an easement of right of way in accordance with RA 6395 is proper.

HELD:1. Yes. The power of eminent domain may be exercised even if the title is not transferred to the expropriator in an easement of right of way. Just compensation is due where the nature and effect of the easement is to impose limitations against the use of the land for an indefinite period and deprive the landowner its ordinary use. In this case, the transmission lines not only endanger the life and limb but restricts as well the owner’s use of the land traversed thereby.2. No. Since the easement falls within the power of eminent domain, NPC’s utilization of RA 6395 has been repeatedly struck down. The determination of just compensation in eminent domain proceedings is a judicial function. Any valuation for just compensation laid down in the statutes may serve only as a guiding principle but it may not substitute the court’s own judgment.

171. (Usop) Banco Filipino Savings vs Navarro G.R. L46591

172. (Villamor) Spouses Florendo vs Court of Appeals G.R. 101771

173. (Waban) Philippine National Bank vs Spouses Augustin G.R. 164549174. (Aban) DKC Holdings Corporation vs Court of Appeals G.R. 118248 (Art. 1311 of the Civil Code)

FactsOn May 16, 1988, petitioner (DKC Holdings Corporation) entered into a contract of lease with option to buy with Encarnacion Bartolome (lessor and deceased mother of respondent Victor Bartolome) whereby petitioner was given the option to lease or lease with purchase the subject land, which option must be exercised within a period of two years counted from the signing of the contract. In turn, DKC undertook to pay P3,000.00 a month as consideration for the reservation of its option. Within the two-year period, DKC shall serve formal written notice upon the lessor of its desire to exercise its option. DKC regularly paid the lessor until her death in January 1990. DKC then directed its payment to the respondent Victor who is the sole heir but he refused the payment. He even executed an affidavit of Self-Adjudication all over his deceased mom’s properties, including the subject lot. Accordingly, respondent Register of Deeds cancelled the TCT of the land and issued another in the name of Victor Bartolome.On March 14, 1990, petitioner sent a notice to Victor, stating that they are going to exercise their option to lease but respondent refused to receive the rental payment and to surrender possession of the property. Respondent Register of Deeds also refused to register and annotate the contract on the title of Victor to the property.DKC filed a complaint for specific performance and damages against Victor and the Register of Deeds. DKC prayed for the surrender and delivery of possession of the subject land in accordance with the Contract terms; the surrender of title for registration and annotation thereon of the Contract; and the payment of damages and attorney’s fees. The lower court dismissed the complaint. On appeal, the CA affirmed the decision of the lower court

Issue: Whether or not the Contract of Lease with Option to Buy entered into by the late Encarnacion Bartolome with petitioner was terminated upon her death or whether it binds her sole heir, Victor, even after her demise.

Held: No. Under Article 1311 of the Civil Code, Victor is bound by the subject Contract of Lease with Option to buy executed by his predecessor-in-interest. It is futile for Victor to insist that he is not a party to the contract because of the clear provision of the aforementioned article. Indeed, being an heir of Encarnacion, there is privity of interest between him and his deceased mother. He only succeeds to what rights his mother had and what is valid and binding against her is also valid and binding as against him. The general rule, therefore, is that heirs are bound by contracts entered into by their predecessors-in-interest except when the rights and obligations arising therefrom are not transmissible by (1) their nature, (2) stipulation or (3) provision of law. In the case at bar, there is neither contractual stipulation nor legal provision making the rights and obligations under the contract intransmissible. More importantly, the nature of the rights and obligations therein are, by their nature, transmissible.

175. (Acosta) Metropolitan Bank vs Reynado G.R. 164538 Relativity, Privity of Contracts

Facts: Petitioner Metropolitan Bank and Trust Company charged respondents before the office of the City Prosecutor of Manila with the crime of estafa against Reynado. It was alleged that respondent perpetrated fraudulent transactions in Port Area branch in connivance with client Universal Converter Philippines, Inc.. Meanwhile, petitioner and Universal entered into Debt Settlement Agreement whereby the latter acknowledged its indebtedness to the former.

Issue: Whether or not respondent is a party in the agreement.

Held: Respondents are not parties to the agreement, nor assigns or heirs of either of the parties but who rely on the debt settlement agreement petitioner and Universal to preclude prosecution of the offense of estafa or prevent the incipience of any liability that may arise from the criminal offense. The civil law principle of relativity of contracts provides that “contracts can only bind the parties who entered into it, and it cannot favour or prejudice a third person, even if he is aware of such contract and has acted with knowledge thereof.”

176. (Algunas) Prudential Bank and Trust Company vs Abasolo G.R. 186738177. (Angeles) Corpus vs Court of Appeals G.R. L 40424178. (Atega) Ong Yiu vs Honorable Court of Appeals G.R. L40597 TOPIC:

In this Petition for Review by Certiorari, petitioner, a practicing lawyer and businessman, seeks a reversal of the Decision of the Court of Appeals in CA-G.R. No. 45005-R, which reduced his claim for damages for breach of contract of transportation.

FACTS:

Facts: On August 26, 1967, Ong Yiu was a fare paying passenger of respondent PAL from Mactan, Cebu to Butuan City wherein he was scheduled to attend a trial. As a passenger, he checked in one piece of luggage, blue maleta for which he was issued a claim ticket. Upon arrival at Butuan City, petitioner claimed his luggage but it could not be found. PAL Butuan sent a message to PAL Cebu which in turn sent a message to PAL Manila that same afternoon. PAL Manila advised PAL Cebu that the luggage has been overcarried to Manila and that it would be forwarded to PAL Cebu that same day. PAL Cebu then advised PAL Butuan that the luggage will be forwarded the following day, on scheduled morning flight. This message was not received by PAL Butuan as all the personnel had already gone for the day. Meanwhile, Ong Yiu was worried about the missing luggage because it contained vital documents needed for the trial the next day so he wired PAL Cebu demanding delivery of his luggage before noon that next day or he would hold PAL liable for damages based on gross negligence. Early morning, petitioner went to the Butuan Airport to inquire about the luggage but did not wait for the arrival of the morning flight at 10:00am. which carried his luggage. A certain Dagorro, a driver of a colorum car, who also used to drive the petitioner volunteered to take the luggage to the petitioner. He revelaed that the documents were lost. Ong Yiu demanded from PAL Cebu actual and compensatory damages as an incident of breach of contract of carriage. 

Issue: 1 Whether or not PAL is guilty of only simple negligence and not gross negligence? 2 Whether the doctrine of limited liability doctrine applies in the instant case? 

Held: 1. PAL had not acted in bad faith. It exercised due diligence in looking for petitioner’s luggage which had been miscarried. Had petitioner

waited or caused someone to wait at the airport for the arrival of the morning flight which carried his luggage, he would have been able to retrieve his luggage sooner. In the absence of a wrongful act or omission or fraud, the petitioner is not entitled to moral damages. Neither is he entitled to exemplary damages absent any proof that the defendant acted in a wanton, fraudulent, reckless manner. 

In the absence of a wrongful act or omission or of fraud or bad faith, petitioner is not entitled to moral damages.Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act of omission.Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.Petitioner is neither entitled to exemplary damages. In contracts, as provided for in Article 2232 of the Civil Code, exemplary damages can be granted if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner, which has not been proven in this case.

2. The limited liability applies in this case. On the presumed negligence of PAL, its liability for the loss however, is limited on the stipulation written on the back of the plane 

Ticket which is P100 per baggage. The petitioner not having declared a greater value and not having called the attention of PAL on its true value and paid the tariff therefore. The stipulation is printed in reasonably and fairly big letters and is easily readable. Moreso, petitioner had been a frequent passenger of PAL from Cebu to Butuan City and back and he being a lawyer and a businessman, must be fully aware of these conditions.

179. (Banaag) C &C Commercial Corporation vs Menor G.R. L 28360 Topic: Article 1326

Facts:

This case is about the requirement of a tax clearance certificate as a prerequisite for taking part in public biddings or contracts to sell supplies to any government agency.

C&C Commercial Corporation in spite of the fact that it had a pending tax case and had no tax clearance certificate has been allowed to participate as a qualified bidder in the public bidding for the supply of asbestos cement pressure pipes for NAWASA. C&C Commercial Corporation was the lowest bidder.

Issue:

W/N NAWASA should award the contract to the lowest bidder C&C Commercial Corporation.

Held:

NO. It should be noted that "advertisements for bidders are simply invitations to make proposals, and the advertiser is not bound to accept the highest or lowest bidder, unless the contrary appears" (Art. 1326, Civil Code).

180. (Bantuas) Tang vs Court of Appeals G.R. L48563 Topic: Contracts; Burden to show that the terms of the contract have been explained to the party who is illiterate; Art. 1332

Facts: Lee See Cuat, a 61 year old widow and an illiterate who spoke only Chinese applied for an insurance on her life. Because her answers indicated that she was healthy, the respondent company issued her a policy, with petitioner as her beneficiary. She applied for and was issued an additional issuance on her life. Her answers in her previous application were used in appraising her insurability for the second insurance. Five months after the second policy was issued, she died of lung cancer. The insurance company refused to pay on the ground

that the insured was guilty of concealment and misrepresentation. In the suit filed by petitioner against the company, the trial court dismissed the claim because of concealment practiced by the insured. The Court of Appeals affirmed the decision. In this petition for review, petitioner claims that because Lee See Guat was illiterate and spoke only Chinese, she could not be held guilty of concealment because the applications for insurance were in English and the insurer had not proved that the terms thereof had been fully explained to her, pursuant to Art. 1332 of the Civil Code.

Issue: Is Art. 1332 of the Civil Code applicable in the case?

Ruling: No. Article 1332 which stipulates that when one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former, is inapplicable in the case at bar because the company is not seeking to enforce the contracts and was therefore under no obligation to prove that the terms of the contract were fully explained to the other party.

181. (Banas) Buenaventura Angeles Et Al. vs Ursula Torres Calasanz G.R. L42283 TOPIC:

STAGES OF CONTRACTS(EXECUTION OF DEED OF SALE)

FACTS:On December 19, 1957, Ursula Torres Calasanz and Buenaventura Angeles and Teofila Juani entered into a contract to sell a piece of land located in Cainta, Rizal for the amount of P3,920.00 plus 7% interest per annum. The Buenaventura Angeles made a downpayment of P392.00 upon the execution of the contract. They promised to pay the balance in monthly installments of P41.20 until fully paid, the installment being due and payable on the 19th day of each month. The Buenaventura Angeles paid the monthly installments until July 1966, when their aggregate payment already amounted to P4,533.38. On December 7, 1966, the Ursula Torres Clasanz wrote Buena Ventura Angeles a letter requesting the remittance of past due accounts.

On January 28, 1967, Clasanz cancelled the said contract because the plaintiffs failed to meet subsequent payments. The plaintiffs’ letter with their plea for reconsideration of the said cancellation was denied by the defendants. Angeles filed a case before the Court of First Instance to compel the defendant to execute in their favor the final deed of sale alleging inter alia that after computing all subsequent payments for the land in question, they found out that they have already paid the total amount including interests, realty taxes and incidental expenses. The defendants alleged in their answer that the plaintiffs violated par. 6 of the contract to sell when they failed and refused to pay and/or offer to pay monthly installments corresponding to the month of August, 1966 for more than 5 months, thereby constraining the defendants to cancel the said contract. The Court of First Instance rendered judgment in favor of the plaintiffs, hence this appeal.

ISSUE:WHETHER THE CONTRACT TO SELL BE AUTOMATICALLY AND VALIDLY CANCELLED BY CLASANZ.

HELD:

No. While it is true that par.2 of the contract obligated angeles to pay the defendants the sum of P3,920 plus 7% interest per annum, it is likewise true that under par 12 the seller is obligated to transfer the title to the buyer upon payment of the said price. The contract to sell, being a contract of adhesion, must be construed against the party causing it.

The Supreme Court agree with the observation of angeles to the effect that the terms of a contract must be interpreted against the party who drafted the same,especially where such interpretation will help effect justice to buyers who, after having invested a big amount of money, are now sought to be deprived of the same thru theprayed application of a contract clever in its phraseology, condemnable in its lopsidedness and injurious in its effect which, in essence, and its entirety is most unfair to the buyers.

Thus, since the principal obligation under the contract is only P3,920.00 and angeles have already paid an aggregate amount of P4,533.38, the courts should only order the payment of the few remaining installments but not uphold the cancellation of the contract. Upon payment of the balance of P671.67 without any interest thereon, the defendant must immediately execute the final deed of sale in favor of the plaintiffs

and execute the necessary transfer of documents, as provided in par.12 of the contract.

182. (Bucay) Bonifacio Bros vs Mora G.R. L20853 Topic: thirds parties in a contract; doctrine of stipulation pour autrui

Facts

Enrique Mora mortgaged his car to the H.S. Reyes with the condition that the former would insure it with the latter as beneficiary. He insured it with the State Bonding & Insurance Co., Inc., with pertinent provisions of the policy which reads:

xxx xxx xxx4. The Insured may authorized the repair of the Motor Vehicle necessitated by damage for which the Company may

be liable under this Policy provided that: - (a)The estimated cost of such repair does not exceed the Authorized Repair Limit, (b) A detailed estimate of the cost is forwarded to the Company without delay, subject to the condition that “ Loss, if any is payable to H.S. Reyes, Inc.,” by virtue of the fact that said Oldsmobile sedan was mortgaged in favor of the said H.S. Reyes, Inc. and that under a clause in said insurance policy, any loss was made payable to the H.S. Reyes, Inc. as Mortgage;

xxx xxx xxx

However, during the effectivity of the insurance contract, the car met with an accident. The insurance company then assigned the accident to the Bayne Adjustment Co. for appraisal of the damage. Without the knowledge and consent of the H.S. Reyes, Inc., Enrique Mora authorized the Bonifacio Bros. Inc. to furnish the labor and materials, some of which were supplied by the Ayala Auto Parts Co.

The insurance company then drew a check as proceeds of the insurance policy, payable to the order of Enrique Mora or H.S. Reyes, Inc., and entrusted the check to the H.H. Bayne Adjustment Co. for disposition and delivery to the proper party. In the meantime, the car was delivered to Enrique Mora without the consent of H.S. Reyes, Inc., and without payment to the Bonifacio Bros. Inc. and the Ayala Auto Parts Co. of the cost of repairs and materials. Upon the theory that the insurance proceeds should be paid directly to them, the Bonifacio Bros. Inc. and the Ayala Auto Parts Co. filed this complaint. Their arguments are based on paragraph 4 of the insurance contract which provides that “the insured may authorized the repair of the Motor Vehicle necessitated by damage for which the company may be liable under the policy xxx.” It is stressed that the H.H. Bayne Adjustment Company’s recommendation of payment of the appellants’ bill for which the Insurance Company drew a check indicates that Mora and the H.H. Bayne Adjustment Co. acted for and in representation of the insurance company.

Issue

Whether or not there is privity (means a relationship between persons who successively has a legal interest in the same right or property, e.g., contract) of contract between the Bonifacio Bros. Inc. and the Ayala Auto Parts Co. on the one hand and the insurance company on the other. [Who has better right over the insurance proceeds?

Held

NONE. In the instant case the insurance contract does not contain any words or clauses to disclose an intent to give any benefit to any repaimen or materialmen in case of repair of the car in question. The parties to the insurance contract omitted such stipulation, which is a circumstance that supports the said conclusion. On the other hand, the “loss payable” clause of the insurance policy stipulates that “Loss, if any, is payable to H.S. Reyes, Inc.” indicating that it was only the H.S. Reyes, Inc. which they intended to benefit.

The general rule is that, contracts take effect only between the parties thereto, except in some specific instances provided by law where the contract contains some stipulation in favor of a third person. Such stipulation is known as stipulation pour autrui or a provision in favor of a third person not a pay to the contract.

183. (Cagais) Florentino vs Encarnacion G.R. L27696 Facts:

Both parties filed with the CFI of Ilocos Sur an application for registration of a parcel of agricultural land at Barrio Lubong, Dacquel, Cabugao, Ilocos Sur. The application alleged,that the applicants were the common and pro-indiviso owners of the land and the improvements thereon; that there was no mortgage, lien or encumbrance of any kind on the land; that there was no other person having interest on the land; that they had acquired that land through inheritance from their aunt Dona Encarnacion Florentino via an extrajudicial partition; and that some of the applicants further acquired their shares through purchase from original heirs.Upon hearing, no opposition was filed, and so an order of general default was withdrawn against the whole world.The controversy in this case is centered on Stipulation O-1 of the deed of extrajudicial partition, which was in Spanish, but translated stipulated that the products of the disputed land be used to fund various items needed for the celebration of religious holidays, including carriages for the Lenten procession, specifically the 3rd fall of Christ, the Child Jesus, the Seven Last Words, etc.Miguel Florentino, a petitioner here, asked the court to include this stipulation as an encumbrance on the land, and cause its entrance on the face of the title to be issued. This was opposed by Salvador Sr., Salvador Jr. and Angel Encarnacion, who withdrew their application on their respective shares of land.The CFI then issued an order clarifying that, among other things, the products of the land hand always been used to pay for the religious functions specified, though this was never registered. Thus, the use of the products for the benefit of the church being a simple donation, and this donation not having been accepted by the church, the stipulation was not an encumbrance on the land.This decision was later modified to state that the stipulation could not be an encumbrance because it could be revoked; in fact, it was a stipulation pour autrui. The Church in whose favor it was made did not communicate its acceptance of the stipulation before Encarnacion revoked it. Thus, it was void.Florentino filed for motion for reconsideration, but it was denied.

Issues:1.       WON Stipulation O-1 is an arrangement stipulation, revocable at the option of the co-owners 2.       WON the Stipulation is only binding on the parties who did not oppose it.

Held: Judgment modified. The Stipulation O-1 to be placed as encumbrance on the face of titles to be finally issued to applicants.

1. The Stipulation is not revocable at the unilateral option of the co-owners, nor is it only binding on those who did not oppose it. It was part of an extrajudicial partition duly agreed to and signed by the parties; therefore, it must bind all the contracting parties, and its validity or compliance cannot be left to the will of only one of them.While the general rule is that such stipulations will only take effect between the parties, their assignees, and their heirs, a recognized exception according to Art 1311 of the New Civil Code is the stipulation pour autrui, an example of which is Stipulation O-1.

2. the stipulation is not revocable at the option of the co-owners. While the stipulation pour autrui is not binding unless it is accepted by the party it benefits, the law does not provide when the third party must make acceptance.

184. (Carwana) Ping bun vs Court of Appeals G.R. 120554