Professional Documents
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Oblicon Conso 1 144
Oblicon Conso 1 144
Ca
Facts:
1. Petitioner and private respondent entered into an agreement into which Petitioner
bound himself to transfer his rights(shares of stocks) on Timberlwealth Corp to
private respondent.
2. That for and in consideration of the transfer of rights,
P e t i t i o n e r u n d e r t a k e t o p a y P r i v a t e Respondent s u b j e c t t o t h e
condition that the application of Private Respondent for an
additional area for forest concession be approved by Bureau of Forestry.
3. Private Respondent did not obtain the approval
Issue:
Held
➢
When a contract is subject to a suspensive condition, its birth and effectivity can take
place only if and when the event which constitutes the condition happens or is fulfilled. If
the suspensive condition does not take place, the parties would stand as if the
conditional obligation had never existed.
➢
Art. 1461 of the Civil Code, the efficacy of the sale of a mere hope or
expectancy is deemedsubject to the condition that the thing will come into existence
Facts: This case is about the legal consequences when a buyer in a contract to sell on
installment fails to make the next payments that he promised. On August 12, 2002 the
Atienzas and respondent Domingo P. Espidol entered into a contract called Kasunduan sa
Pagbibili ng Lupa na may Paunang-Bayad (contract to sell land with a down payment)
covering the property. They agreed on a price, payable in three instalments. When the
Atienzas demanded payment of the second installment of P 1,750,000.00 in December
2002, however, respondent Espidol could not pay it. Claiming that Espidol breached his
obligation, on February 21, 2003 the Atienzas filed a complaint for the annulment of their
agreement with damages before the Regional Trial Court (RTC) of Cabanatuan City in a
Civil Case.
Issue: Whether or not the Atienzas were entitled to the cancellation of the contract to
sell they entered into with respondent Espidol on the ground of the latter’s failure to pay
the second installment when it fell due.
Held: The Court declares the Kasunduan sa Pagbibili ng Lupa na may Paunang-Bayad
between petitioner Heirs of Paulino Atienza and respondent Domingo P. Espidol dated
August 12, 2002 cancelled and the Heirs’ obligation under it non-existent. Regarding the
right to cancel the contract for non-payment of an installment, there is need to initially
determine if what the parties had was a contract of sale or a contract to sell. In a contract
of sale, the title to the property passes to the buyer upon the delivery of the thing sold. In
a contract to sell, on the other hand, the ownership is, by agreement, retained by the seller
and is not to pass to the vendee until full payment of the purchase price. In the first place,
since Espidol failed to pay the installment on a day certain fixed in their agreement, the
Atienzas can afterwards validly cancel and ignore the contract to sell because their
obligation to sell under it did not arise. Since the suspensive condition did not arise, the
parties stood as if the conditional obligation had never existed.
FACTS
1. Sale will be cancelled if the petitioner can find a buyer of said properties
for the amount of P6.5 Million within the next three months. All payments
made by the respondent to the petitioner and the bank will be refunded to
Tuparan with an additional 6% monthly interest.
2. Petitioner Reyes will continue using the space occupied by her drug store
without rentals for the duration of the installment payments.
3. There will be a lease for 15 years in favor of Reyes for a monthly rental
of P8, 000 after full payment has been made by the defendant.
4. The defendant will undertake the renewal and payment of the fire
insurance policies of the 2 buildings, following the expiration of the current
policies, up to the time the respondent has fully paid the purchase price.
They presented the proposal for Tuparan to assume the mortgage to FSL Bank. The
bank approved on the condition that the petitioner would remain as co-maker of the
mortgage obligation.
Petitioner's Contention
Under their Deed of Conditional Sale, the respondent is obliged to pay a lump sum of
P1.2 Million in three fixed installments. Respondent, however defaulted in the
payment of the installments. To compensate for her delayed payments, respondent
agreed to pay petitioner monthly interest. But again, respondent failed to fulfill this
obligation. The petitioner further alleged that despite her success in finding another
buyer according to their conditional sale agreement, respondent refused to cancel
their transaction. The respondent also neglected to renew the fire insurance policy of
the buildings.
Respondent's Answer
Respondent alleges that the deed of Conditional Sale of Real Property with
Assumption of Mortgage was actually a pure and absolute contract of sale with a
term period. It could not be considered a conditional sale because the performance
of the obligation therein did not depend upon a future and uncertain event. She also
averred that she was able to fully pay the loan and secure the release of the
mortgage. Since she also paid more than the P4.2 Million purchase price, rescission
could not be resorted to since the parties could no longer be restored to their original
positions.
ISSUE
Can the transaction or obligation be rescinded given that the conditions were not
satisfied?
RULING(S)
RTC
The deed of conditional sale was a contract to sell. It was of the opinion that
although the petitioner was entitled to a rescission of the contract, it could not be
permitted because her non-payment in full of the purchase price “may not be
considered as substantial and fundamental breach of the contract as to defeat the
object of the parties in entering into the contract.” The RTC believed that respondent
showed her sincerity and willingness to settle her obligation. Hence, it would be more
equitable to give respondent a chance to pay the balance plus interest within a given
period of time. The court ordered the respondent to pay the petitioner the unpaid
balance of the purchase price.
CA
The CA agreed with the RTC that the remedy of rescission could not apply because
the respondent’s failure to pay the petitioner the balance of the purchase price in the
total amount of ₱805,000.00 was not a breach of contract, but merely an event that
prevented the seller (petitioner) from conveying title to the purchaser (respondent).
Since respondent had already paid a substantial amount of the purchase price, it was
but right and just to allow her to pay the unpaid balance of the purchase price plus
interest.
SC
The SC agrees that the conditional sale is a contract to sell. The title and ownership
of the subject properties remains with the petitioner until the respondent fully pays
the balance of the purchase price and the assumed mortgage obligation. Without
respondent’s full payment, there can be no breach of contract to speak of because
petitioner has no obligation yet to turn over the title. The court agrees that a
substantial amount of the purchase price has already been paid. It is only right and
just to allow Tuparan to pay the said unpaid balance of the purchase price to Reyes.
Granting that a rescission can be permitted under Article 1191, the Court still cannot
allow it for the reason that, considering the circumstances, there was only a slight or
casual breach in the fulfillment of the obligation. The court considered fulfillment of
20% of the purchase price is NOT a substantial breach. Unless the parties stipulated
it, rescission is allowed only when the breach of the contract is substantial and
fundamental to the fulfillment of the obligation. Whether the breach is slight or
substantial is largely determined by the attendant circumstance. As for the 6%
interest, petitioner failed to substantiate her claim that the respondent committed to
pay it. Petition is denied.
44. SPS. SANTOS vs. CA
Facts:
Spouses Santos owned the house and lot in Better Living Subdivision,
Paranaque, Metro Manila. The land together with the house, was mortgaged
with the Rural Bank of Salinas, Inc., to secure a loan of P150K. The bank
sent Rosalinda Santos a letter demanding payment of P16K in unpaid interest and other
charges. Since the Santos couple had no funds, Rosalinda offered to sell the house and lot
to Carmen Caseda. After inspecting the real property, Carmen and her husband agreed.
Carmen and Rosalinda signed a document, involving the sale of the house –
P350K as full amount, P54K as downpayment. Among other condition set is that
Caseda will pay the balance of the mortgage in the bank, real estate taxes and the electric
and water bills. The Casedas complied with the bank mortgage and the bills.
The Santoses, seeing that the Casedas lacked the m e a n s t o p a y t h e
remaining installments and/or amortization of the loan,
r e p o s s e s s e d t h e p r o p e r t y. T h e Santoses then collected the rentals from
the tenants. Carmen approached petitioners and offered to pay the balance of
the purchase price for the house and lot. The parties, however, could not
agree, and the deal could not push through because the Santoses wanted a higher
price.
Carmen is now praying that the Santoses execute the final deed of conveyance over the
property.
Issue:
Whether or not there was a perfected contract of sale? NO
Held:
A contract is what the law defines it to be, taking into consideration its
essential elements, and not what the contracting parties call it. Article 1458
expressly obliges the vendor to transfer ownership of the thing sold as an essential
element of a contract of sale. This is because the transfer of ownership in exchange for a
price paid or promised is the very essence of a contract of sale. There was no transfer
of ownership simultaneously with the delivery of the property purportedly
sold. The r e c o r d s c l e a r l y s h o w t h a t , n o t w i t h s t a n d i n g t h e f a c t t h a t
t h e C a s e d a s f i r s t t o o k t h e n l o s t p o s s e s s i o n o f t h e disputed house and lot,
the title to the property has remained always in the name of Rosalinda Santos. Although
the parties had agreed that the Casedas would assume the mortgage, all amortization
payments made by Carmen Caseda to the bank were in the name of Rosalinda
Santos. The foregoing circumstances categorically and clearly show that no
valid transfer of ownership was made by the Santoses to the Casedas. Absent this
essential element, their agreement cannot be deemed a contract of sale.
It was a contract to sell.
Ownership is reserved by the vendor and is not to pass until full payment of
the purchase price. This we find fully applicable and understandable in this case, given
that the property involved is a titled realty under mortgage to a bank and would require
notarial and other formalities of law before transfer thereof could be validly effected.
The CA cannot order rescission.
If the vendor should eject the vendee for failure to meet the
c o n d i t i o n p r e c e d e n t , h e i s enforcing the contract and not rescinding it.
FACTS:
In 1910, Concepcion Cirer and James Hill donated parcels of land to the municipality of
Tarlac on the condition that it be used absolutely and exclusively for the erection
of a central school and public parks, the work to commence within six months.
The president of the municipality of Tarlac accepted and registered the donation.
In 1921, Cirer and Hill sold the same property to George L. Parks.
Later on the, the municipality of Tarlac transferred their rights in the property to the
Province of Tarlac.
Parks filed a complaint seeking the annulment of the donation and asking that he be
declared the absolute owner of the property. Parks allege that the conditions of the
donation were not complied with.
ISSUE:
Whether or not the donation was coupled with a condition precedent? W/N the action to
revoke has prescribed?
HELD:
No. The condition to erect a school within six months is not a condition precedent. The
characteristic of a condition precedent is that the acquisiito of the right is not effected
while said condition is mot complied with or is not deemed complied with. Meanwhile
nothing is acquired and there is only an expectancy of a right. Consequently, when a
condition is imposed, the compliance of which cannot be effected except when the right
is deemed acquired, such condition cannot be a condition precedent. In the present case
the condition that a public school be erected and a public park be made of the donated
land could not be complied with except after giving effect to the donation.
The action to revoke the donation has prescribed. The prescriptive periods are: 5 years for
the revocation by the subsequent birth of children, 1 year if by reason of ingratitude. If no
special period is prescribed, 10 years, for an onerous donation following the law of
contracts and general rules on prescriptions. The donation was made in 1910, the cause of
action accrued in 1911, while the action to revoke was filed 1924, twenty three years
later.
FACTS:
In 1939, Don Ramon Lopez Sr. executed a deed of donation in favor of CPU together
with the following conditions:
a) The land should be utilized by CPU exclusively for the establishment & use of medical
college;
b) The said college shall not sell transfer or convey to any 3rd party;
c) The said land shall be called “Ramon Lopez Campus” and any income from that land
shall be put in the fund to be known as “Ramon Lopez Campus Fund”.
However, on May 31, 1989, PR, who are the heirs of Don Ramon filed an action for
annulment of donation, reconveyance & damages against CPU for not complying with
the conditions. The heirs also argued that CPU had negotiated with the NHA to exchange
the donated property with another land owned by the latter.
Petitioner alleged that the right of private respondents to file the action had prescribed.
ISSUE:
1) WON petitioner failed to comply the resolutely conditions annotated at the back of
petitioner’s certificate of title without a fixed period when to comply with such
conditions? YES
2) WON there is a need to fix the period for compliance of the condition? NO
HELD:
1)
Under Art. 1181, on conditional obligations, the acquisition of rights as well the
extinguishment or loss of those already acquired shall depend upon the happening of the
event which constitutes the condition. Thus, when a person donates land to another on the
condition that the latter would build upon the land a school is such a resolutory one. The
donation had to be valid before the fulfillment of the condition. If there was no
fulfillment with the condition such as what obtains in the instant case, the donation may
be revoked & all rights which the donee may have acquired shall be deemed lost &
extinguished.
More than a reasonable period of fifty (50) years has already been allowed petitioner to
avail of the opportunity to comply with the condition even if it be burdensome, to make
the donation in its favor forever valid. But, unfortunately, it failed to do so. Hence, there
is no more need to fix the duration of a term of the obligation when such procedure would
be a mere technicality and formality and would serve no purpose than to delay or lead to
an unnecessary and expensive multiplication of suits.
Records are clear and facts are undisputed that since the execution of the deed of
donation up to the time of filing of the instant action, petitioner has failed to comply with
its obligation as donee. Petitioner has slept on its obligation for an unreasonable length of
time. Hence, it is only just and equitable now to declare the subject donation already
ineffective and, for all purposes, revoked so that petitioner as donee should now return
the donated property to the heirs of the donor, private respondents herein, by means of
reconveyance.
2)
Under Art. 1197, when the obligation does not fix a period but from its nature &
circumstance it can be inferred that the period was intended, the court may fix the
duration thereof because the fulfillment of the obligation itself cannot be demanded until
after the court has fixed the period for compliance therewith & such period has arrived.
However, this general rule cannot be applied in this case considering the different set of
circumstances existing more than a reasonable period of 50yrs has already been allowed
to petitioner to avail of the opportunity to comply but unfortunately, it failed to do so.
Hence, there is no need to fix a period when such procedure would be a mere technicality
& formality & would serve no purpose than to delay or load to unnecessary and
expensive multiplication of suits.
Under Art. 1191, when one of the obligors cannot comply with what is incumbent upon
him, the obligee may seek rescission before the court unless there is just cause
authorizing the fixing of a period. In the absence of any just cause for the court to
determine the period of compliance there is no more obstacle for the court to decree
recission.
FACTS:
Spouses Vicente & Maria Del Rosario jointly & severally executed, signed and delivered
in favor of Radiowealth Finance Company a promissory note for P138,948.
Petitioner filed a complaint for the collection of sum of money before the RTC.
Trial court dismissed the complaint for the evidence presented were merely hearsay.
Petitioner claims that respondents are liable for the whole amount of their debt and the
interest thereon, after they defaulted on the monthly installments. Respondents counter
that the installments were not yet due and demandable. They theorize that the action for
immediate enforcement of their obligation is premature because its fulfillment is
dependent on the sole will of the debtor. Hence, they consider that the proper court should
first fix a period for payment, pursuant to Articles 1180 and 1197 of the Civil Code.
ISSUE:
Whether or Not the installments had already became due and demandable? YES
HELD:
The act of leaving blank space the due date of the first installment did not necessary mean
that the debtors were allowed to pay as & when they could. If this was the intention of the
parties, they should have so indicated in the promissory note. However, it did not reflect
any such intention.
While the specific date on which each installment would be due was left blank, the note
clearly provided that each installment should be payable each month.
Furthermore, it also provided for an acceleration clause and a late payment penalty, both
of which showed the intention of the parties that the installment should be paid at a
definite date. Had they intended that the debtors could pay as & when they could, there
would have been no need for these 2 clauses.
The installments had already became due & demandable is bolstered by the fact that
respondents started paying installments on the promissory note. The obligation of the
respondents had matured & they clearly defaulted when their checks bounced. Per the
acceleration clause, the whole debt became due one month after the date of the note
because the check representing their first installment bounced.
Facts: J. M. Tuason & Co., Inc. is the owner of a land, known as the Sta. Mesa Heights
Subdivision, and covered by a Torrens title in its name. On July 1950, through Gregorio
Araneta, Inc, JM, sod a portion thereof to herein respondent to Philippine Sugar Estates
Development Co., Ltd. The parties stipulated, among 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 and
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 occupies the
middle part thereof, refused to vacate the same; hence 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.
Defendants in said complaint argued that the action was premature since the obligation to
construct the streets in question was without a definite period which needs to be fixed
first by the court in a proper suit. The lower court dismissed the plaintiff’s complaint.
Motion to reconsider was prayed, and that the court fix a period within which petitioner
in said case can comply in the construction of the streets.
The Lower Court issued a order granting the motion for reconsideration and amended its
previous decision, prompting defendant Araneta to reconsider but this was denied thus
appealing in the Court of Appeals. The Appellate Court declared the fixing of the period
was within the pleadings and affirmed the Lower Court’s decision, hence this petition for
Certiorari.
Issue: Whether or not the fixing of the period of the Lower Court was valid and justified
base on the pleadings, the facts of the case, pursuant to Article 1197
Held: 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. And the
Trial Court and The Appellate Court were found to have committed a reversible error.
Decision appealed is reversed and the time for the performance of the obligation is fixed
at the date that all the squatters on affected areas are finally evicted from the area.
The fixing of a period by the courts under Article 1197 of the Civil Code of the
Philippines is sought to be justified on the basis that petitioner (defendant below) placed
the absence of a period in issue by pleading in its answer that the contract with
respondent Philippine Sugar Estates Development Co., Ltd. gave petitioner Gregorio
Araneta, Inc. "reasonable time within which to comply with its obligation to construct
and complete the streets" was found legally untenable.
If the contract so provided, then there was a period fixed, a "reasonable time;" and all that
the court should have done was to determine if that reasonable time had already elapsed
when suit was filed if it had passed, then the court should declare that petitioner had
breached the contract, as averred in the complaint, and fix the resulting damages.
.
FACTS:
- Plaintiff SSS approved the application of Defendant Moonwalk fora loan of
P30,000,000 for the purpose of developing andconstructing a housing project.
- Out of P30,000,000 approved loan, the sum of P9,595,000 wasreleased to defendant
Moonwalk.
-
A third Amendment Deed of Mortgage was executed for thepayment of the amount of
P9,595,000.
-
Moonwalk made a total payment of P23,657,901.84 to SSS for theloan principal of
P12,254,700.
-
After settlement of the account, SSS issued to Moonwalk the
release of Mortgage for Moonwalk’s Mortgaged properties.
-
In letter to Moonwalk, SSS alleged that it committed an honestmistake in releasing
defendant.
-
That Moonwalk has still 12% penalty for failure to pay on time theamortization which is
in the penal clause of the contract.
-
ISSUE:
Is the penalty demandable even after the extinguishment of the principal obligation?
HELD:
No. There has been a waiver of the penal clause as it was not demanded before the full obligation was fully
paid and extinguished.
Default begins from the moment the creditor demands the performance of the obligation.
In this case, although there were late amortizations there was no demand made by SSS for the
payment of the penalty. Hence Moonwalk is not in delay in the payment of the penalty.
No delay occurred and there was no occasion when the penalty became demandable and
enforceable. Since there was no default in the performance of the main obligation-payment
of the loan- SSS was never entitled to recover any penalty.
If the demand for the payment of the penalty was made prior tothe extinguishment of the
obligation which are: 1. e principal obligation 2. The interest of 12% on the principal
obligation 3.The penalty of 12% for late payment for after demand, Moonwalk would be
in delay and therefore liable for the penalty.
52. The Bachrach Motor Co v. Espiritu
Facts:
1. This is a consolidated case(Cases no. 28497 and 28948) involving two separate sale
transactions. One made in Feb. 18, 1925 (case 28498), when the defendant earlier bought
a truck on instalment from the petitioner and said truck was mortgaged together with the
two others (no. 77197 & 92744 in the 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.
2. It was agreed in both sales that 12% interest will be paid on the unpaid price, and in
case of the non-payment of the total debt at maturity, 25% shall be the penalty. The
defendant also signed a promissory note solidarily with his brother Rosario (acting as
intervenor), the sums secured by the mortgages. Rosario is alleged to be the owner of the
two white trucks no. 77197 & 92744 mortgaged.
3. 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.
4. The lower 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.
5. 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. 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.
6. But there is positive proof that they were included at the time the defendant signed
these documents. Besides, there were presented two of defendant's letters to Hidalgo, an
employee of the plaintiff's written a few days before the transaction, acquiescing in the
inclusion of all his White trucks already paid for, in the mortgage (Exhibit H-I).
Issue: W/N the 25% penalty upon the debt in addition to the 25% p.a. 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. The penalty is however reduced from 25 % upon the sum
owed, the defendants need pay only 10 % thereon as penalty. (Judgment appealed from is
affirmed in all other respects).
56.)AGCAOILI VS GSIS
FACTS:
In this case, appellant GSIS approved an application of the appellee Agcaoili for the
purchase of a house and lot in the GSIS Housing Project at Nangka, Marikina, subject to
the condition that the latter should forthwith occupy the house, a condition that Agcaoili
tried to fulfill but could not because the house was absolutely uninhabitable. However,
Agcaoili asked a homeless friend, a certain Villanueva, to stay in the premises as some
sort of a watchman, pending completion of the construction of the house.
Agcaoili after paying the first installment and other fees, having thereafter refused to
make further payment of other stipulated installments until the GSIS had made the house
habitable, and appellant having refused to do so, opting instead to cancel the award and
demanded the vacation by Agcaoili of the premises; and the latter having sued the GSIS
in the court of First Instance of Manila for specific performance with damages and having
obtained a favorable judgement, the case was appealed by the GSIS.
ISSUE:
Whether or not Agcaoili is entitled for specific performance with damages.
FACTS:
The parties entered in a memorandum of Agreement: Respondents as controlling
stockholders of the Rural Bank shall allow Unlad Resources to subscribe to a minimum
of P480, common or preferred non-voting shares of stock with a total par value of P4.8
million and pay up immediately P1.2 million for said subscription; that the respondents,
upon the signing of the said agreement shall transfer control and management of the
Rural Bank to Unlad Resources. The respondent complied with their obligation but the
petitioners did not, thus respondents filed a complaint for the rescission of the agreement
and the return of control and management of the Rural Bank from petitioners to
respondents, plus damages. RTC declared the MOA rescinded and ordered to
immediately return control and management over the Rural to respondents. Petitioners
appealed to the CA which dismissed the appeal for lack of merit.
ISSUE:
Did the RTC correctly rule for the rescision of the MOA?
RULING:
YES. Clearly, the petitioners failed to fulfill their end of the agreement, and thus,
there was just cause for rescission. With the contract thus rescinded, the parties must be
restored to the status quo ante, that is, before they entered into the Memorandum of
Agreement.
58.)BEROT VS SIAPNO
FACTS:
On May 23, 2002, Macaria Berot, and spouses Rodolfo and Lilia Berot (apellant)
obtained a loan from Felipe Siapno (apellee) in the sum of P250,000, payable within one
year together with interest thereon at the rate of 2% per annum from the date until fully
paid.
As security for the loan, appellant mortgage to appellee a portion, consisting of 147
square meters of that parcel of land with an area of 718 sq.m., situated in Banaoag,
Calasiao, Pangasinan and covered by Tax Declaration No. 1123 in the names of Macaria
and her husband Pedro Berot, deceassed. On June 23, 2003, Macaria Died.
Because of the mortgagor’s default, apellee filed an action against them for
foreclosure of mortgage and damages on July 15, 2004 in the Regional Trial Court.
ISSUES:
1. Whether or not the intestate estated of Macaria Berot could be a proper party by waiver
by waiver expressly or impliedly by voluntary appearance.
2. Whether or not the obligation is joint.
RULINGS:
Petitioners were correct when they argued that upon Macaria Berot’s death on 23
June 2003, her legal personality ceased, and she could no longer be impleaded as
respondent in the foreclosure suit. It is also true that her death opened to her heirs the
succession of her estate, which in this case was an intestate succession. The CA, in fact,
sustained petitioners’ position that a deceased person’s estate has no legal personality to
be sued.
On the second issue of whether the nature of the loan obligation contracted by
petitioners is joint or solidary, the court ruled that it is joint.Under Article 1207 of the
Civil Code of the Philippines, the general rule is that when there is a concurence of two
or more debtors under a single obligation, the obligation is presumed to be joint.
59.)OLONGAPO CITY VS SUBIC WATER AND SEWERAGE CO. INC.
(to be follow by Mercy Tabuan)
HELD: The burden of proving the presence of any of these probative factors lies with the one
alleging it. Unfortunately, petitioner simply claimed that Subic Water took over OCWD’s water
operations in Olongapo City. Apart from this allegation, petitioner failed to demonstrate any link
to justify the construction that Subic Water and OCWD are one and the same.
Under this evidentiary situation, the duty is to respect the separate and distinct personalities
of these two juridical entities.
The petition was denied. The writ of execution issued by RTC Olongapo in favor of
Olongapo City, is hereby confirmed to be null and void. Accordingly, the Subic Water cannot be
made liable under this writ.
FACTS:
On February 19, 1990, the spouses Danilo and Magdalena Manalastas executed a real
estate mortgage in favor of respondent China Banking Corp over two real estate
properties to secure a loan from Chinabank of Php 700,000 intended as working capital in
their rice milling business. During the next few years, they executed several amendments
to the mortgage contract progressively increasing their credit line secured by the
aforesaid mortgage. The spouses Manalastas executed several promissory notes in favor
of Chinabank. In the two PNs, petitioners Estanislao and Africa Sinamban signed as co-
makers.
On November 18, 1998, Chinabank filed a complaint for sum of money against the
spouses Manalastas and the spouses Sinamban before the RTC. The complaint alleged
that they reneged on their loan obligations under the PNs which the spouses Manalastas
executed in favor of Chinabank.
ISSUES:
Whether or not the spouses Sinamban are relieved from any liability being co-makers
on the said promissory notes?
RULINGS: Yes.
A co-maker of the 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.
A promissory note is a solemn acknowledgement of a debt and a formal commitment
to repay it on the date and under the conditions agreed upon by the borrower and the
lender. A person who signs such an instrument is bound to honor it as a legitimate
obligation duly assumed by him through the signature he affixes thereto as token of his
good faith. If he reneges on his promise without just cause, he forfeits the sympathy and
assistance of this court and deserves instead its sharp repudiation.
The decision of the Labor Arbiter held that the respondents will pay the complainants and all
other claims were dismissed. Since there was no appeal, the Decision becomes final and
executory. A writ of execution was issued but returned unsatisfied. The LA then issued an Alias
Writ of Execution.
The petitioner then filed a Motion to Quash Alias Writ of Execution and set aside the
Decision Alleging that the Alias writ of Execution altered and changed the Decision by changing
the liability of therein respondents from joint to solidary. The motion was denied by the Labor
Arbiter.
The petitioner then filed an appeal and the NLRC dismissed the appeal holding that the Writ
of Execution be given due course in all respects.
ISSUE:
Whether or not petitioner’s liability is solidary or not.
RULINGS:
The court held NO. INIMACO is not solidary but merely joint and that the respondent
NLRC acted with grave abuse of discretion in upholding the Alias Writ of Execution.
A solidary or joint and several obligation is one in which each debtor is liable for the entire
obligation, and each creditor is entitled to demand the whole obligation. In a joint obligation each
obligor answers only for a part of the whole liability and to each obligee belongs only a part of
the correlative rights.
Well-entrenched is the rule that solidary obligation cannot lightly be inferred. There is a
solidary obligation only when the obligation expressly so states, when the law so provides or
when the nature of the obligation requires.
Facts:
PNB assails the order of the dismissal of the lower court dismissing its complaints
against several solidary debtors on the ground that one of the defendants died during the
pendency of the case and therefore the complaint being the money claim based on a
contract should be prosecuted in the estate and intestate proceeding for the settlement of
the estate of deceased.
Issue:
Whether in an action for collection of a sum of money based on contract against all
the solidary debtors, the death of one defendant deprives the court of jurisdiction to
proceed with the case against the surviving defendants.
Held:
It is now settled that the quoted Article 1216 grants the creditor the substantive right
to seek satisfaction of his credit from one, some or all of his solidary debtors, as he deems
fit or convenient for the protection of his interests; and if, after instituting a collection suit
based on contract against some or all of them and, during its pendency, one of the
defendants dies, the court retains jurisdiction to continue the proceedings and decide the
case in respect of the surviving defendants
63.)Ronquillo vs CA
GR.no. L-55138, May 16,1983
FACTS:
Del Rosario owns a registered land adjacent to Estero Calubcub which is already dried up
due to the dumping of garbage by the sorrounding neighborhood and not by any natural
causes. Defendant now occupies said dried up land until Del Rosario, claiming ownership
over the same, required him to vacate on the basis of Article 370 of the Civil Code which
provides that riparian owner owns the dried up river bed abandoned by natural changes.
ISSUE:
RULING: No.
The rules on alluvion do not apply to man-made or artificial accretions nor to accretions
to lands that adjoin canals or esteros or artificial drainage systems. Considering our
earlier finding that the dried-up portion of Estero Calubcub was actually caused by the
active intervention of man, it follows that Article 370 does not apply to the case at bar
and, hence, the Del Rosarios cannot be entitled thereto supposedly as riparian owners.
The dried-up portion of Estero Calubcub should thus be considered as forming part of the
land of the public domain which cannot be subject to acquisition by private ownership.
64.)Spouses Chin Kong Wong Choi and Ana Chua vs. UCPB
Facts:
Petitioner spouses Chin Kong Wong Choi and Ana O. Chua (Spouses Choi) entered
into a Contract to Sell with Primetown Property Group, Inc. (Primetown), a domestic
corporation engaged in the business of condominium construction and real estate
development. The Contract to Sell provided that Spouses Choi agreed to buy
condominium unit no. A-322 in Kiener Hills Cebu (Kiener) from Primetown for a
consideration of P1,151,718.75, with a down payment of P100,000.00 and the remaining
balance payable in 40 equal monthly installments of P26,292.97 from January 16,1997 to
16 April 2000.
On 23 April 1998, respondent United Coconut Planters Bank (UCPB),a commercial bank
duly organized and existing under the laws of the Philippines, executed a Memorandum
of Agreement and Sale of Receivables and Assignment of Rights and Interests
(Agreement) with Primetown. The Agreement provided that Primetown, in consideration
of P748,000,000.00, “assigned, transferred, conveyed and set over unto [UCPB] all
Accounts Receivables accruing from [Primetown’s Kiener] x x x together with the
assignment of all its rights, titles, interests and participation over the units covered by or
arising from the Contracts to Sell from which the Accounts Receivables have arisen.”
Included in the assigned accounts receivable was the account of Spouses Choi, who
proved payment of one monthly amortization to UCPB on 3 February 1999.
On 11 April 2006, the Spouses Choi filed a complaint for refund ofmoney with interest
and damages against Primetown and UCPB before the Housing and Land Use Regulatory
Board (HLURB) Regional Field Office No. VI (RFO VI). Spouses Choi alleged that
despite their full payment of the purchase price, Primetown failed to finish the
construction of Kiener and to deliver the condominium unit to them.
Issue:
Whether, under the Agreement between Primetown and UCPB, UCPB assumed the
liabilities and obligations of Primetown under its contract to sell with Spouses Choi
Held:
In the present case, the Agreement between Primetown and UCPB provided that
Primetown, in consideration of P748,000,000.00, “assigned,transferred, conveyed and set
over unto [UCPB] all Accounts Receivables accruing from [Primetown’s Kiener] x x x
together with the assignment of all its rights, titles, interests and participation over the
units covered by or arising from the Contracts to Sell from which the Accounts
Receivables have risen.
The Agreement conveys the straight forward intention of Primetown to “sell, assign,
transfer, convey and set over” to UCPB the receivables, rights, titles, interests and
participation over the units covered by the contracts to sell. It explicitly excluded any and
all liabilities and obligations, which Primetown assumed under the contracts to sell.
Considering that UCPB is a mere assignee of the rights and receivables under the
Agreement, UCPB did not assume the obligations and liabilities of Primetown under its
contract to sell with Spouses Choi.
On April 22, 1989, Rolito Calang was driving Philtranco Bus, owned by Philtranco
along Daang Maharlika Highway in Barangay Lambao, Sta. Margarita, Samar when its
rear left side hit the front left portion of a Sarao jeep coming from the opposite direction.
As a result of the collision, Cresencio Pinohermoso, the jeeps driver, lost control of the
vehicle, and bumped and killed Jose Mabansag, a bystander who was standing along the
highways shoulder. From the point of impact, two of the jeeps passengers, Armando
Nablo and an unidentified woman, were instantly killed, while the other passengers
sustained serious physical injuries. The prosecution charged Calang with multiple
homicide, multiple serious physical injuries and damage to property thru reckless
imprudence before the Regional Trial Court and in its decision dated May 21, 2001,
found Calang guilty beyond reasonable doubt of reckless imprudence resulting to
multiple homicide, multiple physical injuries and damage to property, and sentenced him
to suffer an indeterminate penalty of thirty days of arresto menor, as minimum, to four
years and two months of prision correccional, as maximum. The RTC ordered Calang
and Philtranco, jointly and severally, to pay P50,000.00 as death indemnity to the heirs
of Armando; P50,000.00 as death indemnity to the heirs of Mabansag; and P90,083.93 as
actual damages to the private complainants.
The petitioners appealed the RTC decision to the Court of Appeals,The CA affirmed
RTC,s decision in toto, ruled that petitioner Calang failed to exercise due care and
precaution in driving the Philtranco bus.
Issue:
Won CA was coorect in holding Philtranco & Calang jointly & severally liable.
Held:
Liability of Calang: We see no reason to overturn the lower courts finding on Calangs
culpability. The finding of negligence on his part by the trial court, affirmed by the CA, is
a question of fact that we cannot pass upon without going into factual matters touching on
the finding of negligence. In petitions for review on certiorari under Rule 45 of the
Revised Rules of Court, this Court is limited to reviewing only errors of law, not of fact,
unless the factual findings complained of are devoid of support by the evidence on
record, or the assailed judgment is based on a misapprehension of facts.
Liability of Philtranco:We, however, hold that the RTC and the CA both erred in holding
Philtranco jointly and severally liable with Calang. We emphasize that Calang was
charged criminally before the RTC. Undisputedly, Philtranco was not a direct party in this
case. Since the cause of action against Calang was based on delict, both the RTC and the
CA erred in holding Philtranco jointly and severally liable with Calang, based on quasi-
delict under Articles 2176[1] and 2180[2] of the Civil Code. Articles 2176 and 2180 of
the Civil Code pertain to the vicarious liability of an employer for quasi-delicts that an
employee has committed. Such provision of law does not apply to civil liability arising
from delict.
Facts:
In July 1953 the plaintiff (hereinafter referred to as Saura, Inc.) applied to the
Rehabilitation Finance Corporation (RFC), before its conversion into DBP, for an
industrial loan of P500,000.00, to be used as follows: P250,000.00 for the construction of
a factory building (for the manufacture of jute sacks); P240,900.00 to pay the balance of
the purchase price of the jute mill machinery and equipment; and P9,100.00 as additional
working capital. RFC approved the loan to be secured by a first mortgage on the factory
buildings to be constructed, the land site thereof, and the machinery and equipment
installed. A day before the notice of approval, Saura wrote to RFC requesting
modifications of the terms to their agreement as regards the persons and entity who shall
sign the promissory notes with the company.
The negotiations came to a standstill, Saura did not pursue matter any further.
Instead,it ask that the mortgage be cancelled. RFC cancelled the mortgage. Almost 9
years after the cancellation of Saura’s mortgage with RFC, it commenced suit for
damages against now, DBP, alleging that it had failed to comply with the obligation to
release the approved loan that prevented the palintiff in complying with its own
commitments.
Issue:
Whether there was a perfected contract of loan between the parties despite Saura’s
having opted to cancel the mortgage when the negotiations came to an impasse.
Held:
Where after approval of his loan, the borrower, instead of insisting for its
release,asked that the mortgage given as security be cancelled and the creditor acceded
thereto, the action taken by both parties was in nature of mutual desistance- what
Manresa terms “mutuo desenso”- which is a mode of extinguishing an obligations.It is a
concept that derives from the principle that since mutual agreement can create a contract,
mutual disagreement can cause its extinguishment.
WHEREFORE, the judgment appealed from is reversed and the complaint dismissed,
with costs against the plaintiff-appellee.
Facts:
On January 25, 1995, Rivelisa Realty entered into a JVA with First Sta. Clara for the
construction and development of a residential subdivision located in Cabanatuan City .
According to its terms, First Sta. Clara was to assume the horizontal development works
in the remaining 69% undeveloped portion of the project owned by Rivelisa Realty, and
complete the same within twelve months from signing. Upon its completion, 60% of the
total subdivided lots shall be transferred in the name of First Sta. Clara. Also, since 31%
of the project had been previously developed by Rivelisa Realty which was assessed to
have an aggregate worth of 10 million, it was agreed that First Sta. Clara should initially
use its own resources (in the same aggregate amount of 10m.) before it can start claiming
additional funds from the pre-sale of the 31% developed lots. 40% of the cost of
additional works not originally part of the JVA was to be shouldered by Rivelisa Realty,
while 60% by First Sta. Clara.
During the course of the project, First Sta. Clara ran out of funds after only two (2)
months of construction, Rivelisa Realty was forced to shoulder part of the payment due to
the subcontractor. First Sta. Clara manifested its intention to back out from the JVA and to
discontinue operations when Rivelisa Realty refused to advance any more funds until
60% of the project had been accomplished. Rivelisa readily agreed to release First Sta.
Clara from the project and reimburse him.
However the reimbursement remained unpaid after several demands. First Sta. Clara
filed a complaint for rescission of the JVA against Rivelisa Realty before the RTC,
claiming the payment of damages for breach of contract and delay in the performance of
an obligation.
Issue:
Whether or not the CA erred in finding that: (a) the 15-day reglementary period for
the filing of a motion for reconsideration cannot be extended; and (b) First Sta. Clara is
entitled to be compensated for the development works it had accomplished on the project.
Held:
The petition is bereft of merit.The CA Decision subject of the instant petition for
review had already attained finality in view of Rivelisa Realty’s failure to file a motion
for reconsideration within the 15-day reglementary period allowed under the CA’s
internal rules.
The Court concurs with the CA that First Sta. Clara is entitled to be compensated for
the development works it had accomplished on the project based on the principle of
quantum meruit. Case law instructs that under this principle, a contractor is allowed to
recover the reasonable value of the thing or services rendered despite the lack of a written
contract, in order to avoid unjust enrichment. Quantum meruit means that, in an action for
work and labor, payment shall be made in such amount as the plaintiff reasonably
deserves. The measure of recovery should relate to the reasonable value of the services
performed because the principle aims to prevent undue enrichment based on the equitable
postulate that it is unjust for a person to retain any benefit without paying for it. In this
case, it is undisputed that First Sta. Clara already performed certain works on the project.
Facts:
This is an action for damages filed [on September 5, 2000] by plaintiff Arturo P.
Franco against Philippine Commercial International Bank (PCIB), now known as
Equitable-PCIBank, and Equitable Banking Corp.The complaint essentially alleges,
among others, that plaintiff secured from defendant PCIB the Trust Indenture Certificates.
That despite demands, defendants refused and still refuses to return to plaintiff the trust
amounts, plus the stipulated interest.
On June 22, 2000, he received a letter signed by defendant’s counsel, Curato Divina
& Partners, in effect denying plaintiff’s request for payment by stating that due to the
conversion of all outstanding PCIBank trust indenture accounts into common trust
certificates, all such PCIBank trust indenture certificates have been rendered "null and
void." Plaintiff prays for the payment of the amounts under the Trust Indenture
Certificates, plus interest, moral and exemplary damages and attorney’s fees.
Issue:
Upon perusal of the entire case records, the Court finds no reversible error committed
by the CA in sustaining the RTC Decision. Considering the evidence at hand, both courts
have applied the law in accordance with the facts of the case.
In this case, respondent's possession of the original copies of the subject TICs
strongly supports his claim that petitioner Bank's obligation to return the principal plus
interest of the money placement has not been extinguished. The TICs in the hands of
respondent is a proof of indebtedness and a prima facie evidence that they have not been
paid. Petitioner Bank could have easily presented documentary evidence to dispute the
claim, but it did not. In its omission, it may be reasonably deduced that no evidence to
that effect really exist. Worse, the testimonies of petitioner Bank's own witnesses,
reinforce, rather than belie, respondent's allegations of non-payment.
Facts:
On November 3, 1991, Netlink Computer, Inc. Products and Services (Netlink) hired
Eric S. Delmo (Delmo) as account manager tasked to canvass and source clients and
convince them to purchase the products and services of Netlink. Delmo worked in the
field most of the time. He and his fellow account managers were not required to
accomplish time cards to record their personal presence in the office of Netlink.He was
able to generate sales worth P35,000,000.00, more or less, from which he earned
commissions amounting to P993,558.89 and US$7,588.30.Later on Netlink issued several
memoranda detailing his supposed infractions of the company’s attendance policy.
Despite the memoranda, Delmo continued to generate huge sales for Netlink.
Despite Delmo’s Sales performance he was illegally and unjustly dismissed. NLRC
ruled that Delmo was legally dismissed due to just and valid cause. CA upholds NLRC’s
ruling with modification with the awarding of the commission and 13th month pay.
Issue:
(1) whether or not the payment of the commissions should be in US dollars; (2) whether
or not the award of attorney’s fees was warranted.
Held:
1.)As a general rule, all obligations shall be paid in Philippine currency. However, the
contracting parties may stipulate that foreign currencies may be used for settling
obligations. This is pursuant to Republic Act No. 8183.which provides as follows:
Section 1. All monetary obligations shall be settled in the Philippine currency which is
legal tender in the Philippines. However, the parties may agree that the obligation
ortransaction shall be settled in any other currency at the time of payment.
Facts:
On September 3, 1974, respondents and the Suico and Flores spouses executed a
supplemental agreement whereby they affirmed that what was actually sold to
respondents were Lots 512 and 513, while Lots 506 and 514 were given to them as
usufructuaries. DBP approved the sale of rights of the Suico and Flores spouses in favor
of herein respondents. Subsequently, respondents were able to repurchase the foreclosed
properties of the Suico and Flores spouses.
On September 13, 1976, respondent Restituto Sabordo (Restituto) filed an original action
for declaratory relief with damages and prayer for a writ of preliminary injunction raising
the issue of whether or not the Suico spouses have the right to recover from respondents
Lots 506 and 514.
RTC ruled in favor of the Suico spouses directing that the latter that they have until
August 31, 1987 within which to redeem or buy back from respondents Lots 506 and 514.
On appeal, the CA, in its Decision modified the RTC decision by giving the Suico
spouses until October 31, 1990 within which to exercise their option to purchase or
redeem the subject lots from respondents by paying the sum of P127,500.00.
In the meantime, Toribio Suico (Toribio) died leaving his widow, Eufrocina, and several
others, including herein petitioner, as legal heirs. Later, they discovered that respondents
mortgaged Lots 506 and 514 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 with the RTC seeking to compel herein respondents and RPB
to interplead and litigate between themselves their respective interests on the
abovementioned sum of money. The Complaint also prayed that respondents be directed
to substitute Lots 506 and 514 with other real estate properties as collateral for their
outstanding obligation with RPB and that the latter be ordered to accept the substitute
collateral and release the mortgage on Lots 506 and 514. Upon filing of their complaint,
the heirs of Toribio deposited the amount of P127,500.00 with the RTC of San Carlos
City.
Respondents filed their Answer with Counterclaim praying for the dismissal of the above
Complaint on the grounds that (1) the action for interpleader was improper since RPB is
not laying any claim on the sum of P127,500.00; (2) that the period within which the
complainants are allowed to purchase Lots 506 and 514 had already expired; (3) that
there was no valid consignation, and (4) that the case is barred by litis pendenciaor res
judicata.
RTC rendered judgment, dismissing the Complaint of petitioner and her co-heirs for lack
of merit. Respondents' Counterclaim was likewise dismissed.On appeal with CA they
contend 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.
In its assailed Decision, the CA denied the above appeal for lack of merit and affirmed
the disputed RTC Decision.
Issue:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THE
DECISION OF THE LOWER COURT WHICH HELD THAT THE JUDICIAL
DEPOSIT OF P127,500.00 MADE BY THE SUICOS WITH THE CLERK OF COURT
OF THE RTC, SAN CARLOS CITY, IN COMPLIANCE WITH THE FINAL AND
EXECUTORY DECISION OF THE COURT OF APPEALS IN CA-G.R. CV-13785
WAS NOT VALID.
Held:
The petition lacks merit. At the outset, the Court quotes with approval the discussion
of the CA regarding the definition and nature of consignation, to wit: … consignation [is]
the act of depositing the thing due with the court or judicial authorities whenever the
creditor cannot accept or refuses to accept payment, and it generally requires a prior
tender of payment. Tender and consignation, where validly made, produces the effect of
payment and extinguishes the obligation.
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. Hence, the fact that the subject lots
are in danger of being foreclosed does not excuse petitioner and her co-heirs from
tendering payment to respondents, as directed by the court.
#71
Bognot V RRI Lending
Facts:
Sometime in September 1996, the petitioner and his younger brother, Rolando A. Bognot
(collectively referred to as the "Bognot siblings"), applied for and obtained a loan of Five
Hundred Thousand Pesos (P500,000.00) from RRI Lending Corporationfrom, duly
represented by its General Manager, Mr. Dario J. Bernardez (Bernardez), respondent. The
loan was evidenced by a promissory note and was secured by a post dated check5 dated
November 30, 1996. Sometime in March 1997, the petitioner applied for another loan
renewal. Several days before the loan’s maturity, Rolando’s wife, Julieta Bognot (Mrs.
Bognot), went to the respondent’s office and applied for another renewal of the loan. On
the excuse that she needs to bring home the loan documents for the Bognot siblings’
signatures and replacement, Mrs. Bognot asked the respondent’s clerk to release to her
the promissory note, the disclosure statement, and the check dated July 30, 1997. Mrs.
Bognot, however, never returned these documents nor issued a new post-dated check.
Consequently, the respondent sent the petitioner follow-up letters demanding payment of
the loan, plus interest and penalty charges. These demands went unheeded.
The respondent mainly alleged that the loan renewal payable on June 30, 1997 which the
Bognot siblings applied for remained unpaid; that before June30, 1997, Mrs. Bognot
applied for another loan extension and issued IBE Check No. 00012522 as payment for
the renewal fee; that Mrs. Bognot convinced the respondent’s clerk to release to her the
promissory note and the other loan documents; that since Mrs. Bognot never issued any
replacement check, no loanextension took place and the loan, originally payable on June
30, 1997, became due on this date; and despite repeated demands, the Bognot siblings
failed to pay their joint and solidary obligation.
ISSUE:
Whether the parties’ obligation was extinguished by: (i) payment; and (ii) novation by
substitution of debtors.
RULING:
No Evidence Was Presented to Establish the Fact of Payment
Jurisprudence tells us that one who pleads payment has the burden of proving it;17 the
burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-
payment.18 Indeed, once the existence of an indebtedness is duly established by
evidence, the burden of showing with legal certainty that the obligation has been
discharged by payment rests on the debtor.19
In the present case, the petitioner failed to satisfactorily prove that his obligation had
already been extinguished by payment. As the CA correctly noted, the petitioner failed to
present any evidence that the respondent had in fact encashed his check and applied the
proceeds to the payment of the loan. Neither did he present official receipts evidencing
payment, nor any proof that the check had been dishonored.
We note that the petitioner merely relied on the respondent’s cancellation and return to
him of the check dated April 1, 1997. The evidence shows that this check was issued to
secure the indebtedness. The acts imputed on the respondent, standing alone, do not
constitute sufficient evidence of payment.
#72
Rivera V Spouses Chua
Facts:
The parties were friends of long standing having known each other since 1973: Rivera
and Salvador are kumpadres, the former is the godfather of the Spouses Chua’s son. On
24 February 1995, Rivera obtained a loan from the Spouses Chua in the amount of
120,000.00.
In October and December 1998, the Spouses Chua received check presumably issued by
Rivera, likewise drawn against Rivera’s PCIB current account. Both checks were simply
partial payment for Rivera’s loan in the principal amount of P120,000.00.
Upon presentment for payment, the two checks were dishonored for the reason “account
closed.”
As of 31 May 1999, the amount due the Spouses Chua was pegged at P366,000.00
covering the principal of P120,000.00 plus five percent (5%) interest per month from 1
January 1996 to 31 May 1999 in accordance with what's stipulated in the promisory note.
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 on 11 June 1999.
ISSUE:
Whether or not Rivera incurred delay and is also liable for indemnification?
HELD:
Yes. We refer to the clause in the Promissory Note containing the stipulation of interest:
(It is agreed and understood that failure on my part to pay the amount of (P120,000.00)
One Hundred Twenty Thousand Pesos on December 31, 1995. (sic) I agree to pay the
sum equivalent to FIVE PERCENT (5%) interest monthly from the date of default until
the entire obligation is fully paid for) which expressly requires the debtor (Rivera) to pay
a 5% monthly interest from the “date of default” until the entire obligation is fully paid
for. The parties evidently agreed that the maturity of the obligation at a date certain, 31
December 1995, will give rise to the obligation to pay interest. The Promissory Note
expressly provided that after 31 December 1995, default commences and the stipulation
on payment of interest starts.
#73
THE WELLEX GROUP, INC. v. U-LAND AIRLINES, CO., LTD.
Facts:
On May 16, 1998, Wellex and U-Land entered into a Memorandum of Agreement12
(First Memorandum of Agreement) to expand their respective airline operations in Asia.
Despite the absence of a share purchase agreement, U-Land remitted to Wellex a total of
US$7,499,945.00.46 These were made in varying amounts and through the issuance of
post-dated checks. Wellex acknowledged the receipt of these remittances in a
confirmation letter addressed to U-Land dated September 30, 1998.
U-Land remitted to Wellex a total of US$7,499,945.00 because of its intent to become
involved in the aviation business in the Philippines. Despite the remittance of this
amount, no share purchase agreement was entered into by the parties.
U-Land filed a Complaint72 praying for rescission of the First Memorandum of
Agreement and damages against Wellex and for the issuance of a Writ of Preliminary
Attachment.73 From U-Land’s point of view, its primary reason for purchasing APIC
shares from Wellex was APIC’s majority ownership of shares of stock in APC (APC
shares).74 After verification with the Securities and Exchange Commission, U-Land
discovered that “APIC did not own a single share of stock in APC.”75 U-Land alleged
that it repeatedly requested that the parties enter into the share purchase agreement.76 U-
Land attached the demand letter dated July 22, 1999 to the Complaint.77 However, the
40-day period lapsed, and no share purchase agreement was finalized.
ISSUE:
Whether rescission be granted and the amount paid by U-land be returned?
RULING:
Yes. Rescission, as defined by Article 1385, mandates that the parties must return to each
other everything that they may have received as a result of the contract. This pertains to
rescission or resolution under Article 1191, as well as the provisions governing all forms
of rescissible contracts.
#74
National Power Corporation V Lucman M. Ibrahim et al
Facts:
In 1978, petitioner took possession of a 21,995 square meter parcel of land in Marawi
City (subject land) for the purpose of building thereon a hydroelectric power plant
pursuant to its Agus 1 project. The subject land, while in truth a portion of a private estate
registered under Transfer Certificate of Title (TCT) No. 378-A4 in the name of herein
respondent Macapanton K. Mangondato (Mangondato),5 was occupied by petitioner
under the mistaken belief that such land is part of the vast tract of public land reserved for
its use by the government under Proclamation No. 1354, s. 1974. After more than a
decade, petitioner finally acquiesced to the fact that the subject land is private land
covered by TCT No. 378-A and consequently acknowledged Mangondato’s right, as
registered owner, to receive compensation therefor. On 21 August 1992, Branch 8 of the
Marawi City RTC rendered a Decision10 in Civil Case No. 605-92 and Civil Case No.
610-92. The decision upheld petitioner’s right to expropriate the subject land: it denied
Mangondato’s claim for reconveyance and decreed the subject land condemned in favor
of the petitioner, effective July of 1992, subject to payment by the latter of just
compensation in the amount of P21,995,000.00. Anent petitioner’s occupation of the
subject land from 1978 to July of 1992, on the other hand, the decision required the
former to pay rentals therefor at the rate of P15,000.00 per month with 12% interest per
annumannum.
Disagreeing with the amount of just compensation that it was adjudged to pay under the
said decision, petitioner filed an appeal with the Court of Appeals. This appeal was
docketed in the Court of Appeals as CA-G.R. CV No. 39353.
During the pendency of CA-G.R. CV No. 39353, or on 29 March 1993, herein
respondents the Ibrahims and Maruhoms12 filed before the RTC of Marawi City a
complaint13 against Mangondato and petitioner. The Ibrahims and Maruhoms submit that
since they are the real owners of the lands covered by TCT No. 378-A, they should be the
ones entitled to any rental fees or expropriation indemnity that may be found due for the
subject land.
ISSUE:
Whether or not NAPOCOR be held liable to Ibrahims and Maruhoms being the real
owners?
HELD:
No. Without the existence of bad faith, the ruling of the RTC and of the Court of Appeals
apropos petitioner’s remaining liability to the Ibrahims and Maruhoms becomes devoid of
legal basis. In fact, petitioner’s previous payment to Mangondato of the rental fees and
expropriation indemnity due the subject land pursuant to the final judgment may be
considered to have extinguished the former’s obligation regardless of who between
Mangondato, on one hand, and the Ibrahims and Maruhoms, on the other, turns out to be
the real owner of the subject land.62 Either way, petitioner cannot be made liable to the
Ibrahims and Maruhoms.
#75
Azcona v. Jamandre
Facts:
Guillermo Azcona leased 80 hectares out of his 150 hectare share in Hacienda Sta. Fe in
Negros Occidental to Cirilo Jamandre. The agreed yearly rental was P7200 and the term
was for 3 agricultural years beginning 1960. On March 30, 1960, when the first annual
rent was due, petitioner was not able to deliver possession of the leased property thus he
“waived” payment of that rental. Respondent only entered the premises on October 26,
1960 after paying P7000, which was acknowledged by the petitioner in the receipt. On
April 6, 1961, the petitioner notified respondent that the contract of lease was deemed
cancelled for violation of the conditions of the contract. Earlier, in fact, the respondent
had been ousted from the possession of the 60 hectares of the leased premises and let
with only 20 hectares of the original area.
Issues
Whether or not the lease contract is deemed cancelled upon failure of the respondent to:
1. Attach the parcelary plan identifying the exact area subject of the contract
2. Secure approval of PNB of said contract
3. Pay the rentals
Ruling
Parcelary PlanThe correct view is that there was an agreed subject-matter, although it was
not expressly defined because the plan was not annexed and never approved. There was
still an ascertainable object because the leased premiseswere sufficiently delineated and
identified. Failure to attach the plan was imputable to the petitioner himself because he
was supposed to prepare the said plan. Nevertheless, the identification of the lease area
rendered the plan unnecessary and its absence did not nullify the agreement.PNB
ApprovalPetitioners claim that such possession was not delivered because the approval of
bythe PNB had not materialized due to respondent's neglect. Respondent was negotiating
the loan with PNB but the contract does not state upon whom fell the obligation to secure
the approval.Payment of RentPetitioner contends that the payment of P7000, which was
short of P200, was a violation of the agreement thus the contract should be deemed
cancelled. But the petitioner unqualifiedly accepted the amount. The absence of any
mention of the discrepancy in the receipt nor any protest or demand to collect the
remaining balance, meansthat petitioner acknowledged the amount as the full payment
for the rent. The SC affirms the decision of the CA and petition is denied.Note: The CA
held that the amount of P200 had been condoned but the SC viewed it as a mere reduction
of the stipulated rental in consideration of the withdrawal from the leased premises where
the petitioner intended to graze his cattle.Relevant Articles/ JurisprudenceArt 1235 –
When the obligee accepts the performance, knowing its incompleteness or irregularity,
and without expressing any protest or objection, the obligation is deemed fully complied
with.
#76
J.M. TUASON & CO., INC. VS. JAVIER
FACTS: On September 7, 1954, petitioner J.M. Tuason & Co., Inc. entered a contract to
sell with respondent Ligaya Javier a parcel of land known as Lot No. 28, Block No. 356,
PSD 30328, of the Sta. Mesa Heights Subdivision for the sum of Php3,691.20 with 10%
interest per annum; Php396.12 will be payable upon execution of the contract, and an
installment of Php43.92 monthly for a period of ten (10) years. It was further stipulated in
the contract, particularly the sixth paragraph, that upon failure of respondent to pay the
monthly installment, she is given a one month grace period to pay such installment
together with the monthly installment falling on the said grace period. Furthermore,
failure to pay both monthly installments, respondent will pay an additional 10% interest.
And after 90 days from the end of the grace period, petitioner can rescind the contract,
the payments made by respondent will be considered as rentals. Upon the execution of
the contract, respondent religiously paid the monthly installment until January 5, 1962.
Respondent, however, was unable to the pay the monthly installments within the grace
period which petitioner, subsequently, sent a letter to respondent on May 22, 1964 that the
contract has been rescinded and asked the respondent to vacate the said land. So, upon
failure of respondent to vacate the said land, petitioner filed an action to the Court of First
Instance of Rizal for the rescission of the contract. The CFI rendered a decision in favor
of respondent in applying Article 1592 of the New Civil Code. Hence, petitioner made an
appeal to the Supreme Court alleging that since Article 1592 of the New
Civil applies only to contracts of sale and not in contracts to sell.
ISSUE:
Did the CFI erroneously apply Article 1592 of the New Civil Code?
RULING: Yes. Regardless, however, of the propriety of applying Article 1592, petitioner
has not been denied substantial justice under Article 1234 of the New Civil Code. In this
connection, respondent religiously satisfied the monthly installments for almost eight (8)
years or up to January 5, 1962. It has been shown that respondent had already paid
Php4,134.08 as of January 5, 1962 which is beyond the stipulated amount of
Php3,691.20. Also, respondent has offered to pay all installments overdue including the
stipulated interest, attorney’s fees and the costs which the CFI accordingly sentenced
respondent to pay such installment, interest, fees and costs. Thus, petitioner will be able
recover everything that was due
thereto. Under these circumstances, the SC feel that, in the interest of justice and equity,
the decision appealed from may be upheld upon the authority of Article 1234 of the New
Civil Code.
#77
SPOUSES MINIANO B. DELA CRUZ and LETA L. DELA CRUZ,
Petitioners, v. ANA MARIE CONCEPCION, Respondent.
PERALTA, J.:
FACTS:
Petitioners Miniano and Leta Dela Cruz (spouses Dela Cruz) entered into a contract to
sell with respondent Ana Marie Concepcion (Concepcion) involving a house and lot for a
consideration of PhP 2,000,000.00 payable in installments. As instructed by spousesDela
Cruz, Concepcion paid her last installment to a certain Adoracion or "Dori" Losloso.
Thus, Concepcion was able to pay the total purchase price and the title to the property
was transferred in her favor.
Notwithstanding Concepcions full payment, the spouses Dela Cruz demanded the amount
of P209,000.00 purportedly as remaining balance of the purchase price. Concepcion
refused to pay the said amount. The spouses averred that Concepcions payment to "Dori"
was not valid. Hence, spouses Dela Cruz filed a Complaint for Sum of Money with
Damages before the RTC.
In her answer, Concepcion failed to allege the defense of payment of the amount claimed
by the spouses. However, during the presentation of her evidence, she submitted a receipt
to prove that she had already paid the remaining balance.
The RTC dismissed the spouses complaint. On appeal, the CA affirmed the RTCs
decision with modification. Hence, this instant petition.
ISSUE:
II. Whether or not payment to Losloso amounts to a valid tender of payment?
HELD: Payment made to Losloso is deemed payment to the spouses Dela Cruz.
In order to extinguish said obligation, payment should be made to the proper person as set
forth in Article 1240 of the Civil Code. The Court explained in Cambroon v. City of
Butuan, cited in Republic v. De Guzman, to whom payment should be made in order to
extinguish an obligation: "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."
Taking into consideration the busy schedule of respondent, petitioners advised the latter
to leave the payment to a certain "Dori" who admittedly is Losloso, or to her trusted
helper. This is an express authority given to Losloso to receive payment. Thus, as shown
in the receipt signed by petitioners agent and pursuant to the authority granted by
petitioners to Losloso, payment made to the latter is deemed payment to petitioners.
#78
Aranas v. Tutaan Digest
Facts: The stocks of Universal Textile Mills (UTEX) were issued to co-defendants
Manuel and Castaneda. Subsequently, in 1971, the lower court declared that Luisa Aranas
is the rightful owner of the 400 shares of stocks at Universal Textile Mills (UTEX.
Further, it ordered that dividends in cash or stocks pertaining to the same be delivered to
Aranas. UTEX then filed a motion to clarify the phrase in said decision which states “to
deliver to her all dividends appertaining to the same, whether in cash or in stocks” meant
dividends properly pertaining to the plaintiffs after the court’s declaration of her
ownership. The said motion was granted, where the court ordered UTEX to pay the
plaintiff the cash dividends which accrued to the stocks in question after the current
decision was rendered but the cash dividends already paid to the co-defendants before the
court decision may not be claimed by the plaintiffs.
The co-defendants filed for a new trial and the decision was the same as the the 1971
ruling. Upon appeal to the CA, the said ruling was affirmed. The lower court issued a writ
of execution in 1979 directed to UTEX to 1) cancel the certificate of stocks of the co-
defendants and issue new ones in the name of the petitioners, and 2) Pay the cash
dividends accrued from 1972 to 1979 (period from the new trial to the issuance of writ of
execution). UTEX alleged that the cash dividends had already been paid.
RULING: No. It is elementary that payment made by a judgment debtor to a wrong party
cannot extinguish the obligation of such debtor to its creditor. It was clear in the motion
for clarification that all dividends accruing to the said shares after the rendition of
judgement belonged to the Aranas. When UTEX paid the wrong parties, despite its
knowledge and understanding of the final judgment, it is still liable to pay Aranas as the
lawful declared owners of the said shares. The burden to recover the wrong payment is on
UTEX and cannot be passed on to the Aranas as the innocent parties.
#79
Hydro Resources Contractors vs National Irrigation Administration
Facts:
A contract was entered into between Hydro and NIA for the project of the latter. The
contract price is to be payable partly in Philippine peso and US dollars. Once the project
was being executed, there was depreciation in value of Peso resulting to price differential.
In order to resolve the issue, the administrator of NIA, Mr Tek, and Hydro made a joint
computation of the amount corresponding to the foreign currency differential. The
computation showed that NIA owed Hydro for the differential. When a demand was made
by Hydro against NIA, NIA refused to pay contending that Mr Tek has no authority to
participate into a joint computation of the foreign currency differential and that Mr Tek
has no authority to bind NIA.
Issue:
Whether or not Mr Tek has the authority to bind NIA in the joint computation of the
foreign currency differential.
Held:
The SC found out that in the course of the project, Hydro has been dealing with NIA
represented by Mr. Tek. And applying the doctrine of apparent authority, if a corporation
knowingly permits one of its officers to act within the scope of an apparent authority, it
holds him out to the public possessing the power to do those acts; and thus, the
corporation will, as against anyone who has in good faith dealt with it through such agent,
be stopped from denying the agent’s authority.
#80
Ponce V Honorable Court in of Appeals
FACTS: In 1969, Jesusa Afable and two others procured a loan from Nelia Ponce in the
amount of $194,016.29. In June 1969, Afable and her co-debtors executed a promissory
note in favor of Ponce in the peso equivalent of the loan amount which was P814,868.42.
The promissory note went due and was left unpaid despite demands from Ponce. This
prompted Ponce to sue Afable et al. The trial court ruled in favor of Ponce. The Court of
Appeals initially affirmed the trial court but it later reversed its decisions as it ruled that
the promissory note under consideration was payable in US dollars, and, therefore
pursuant to Republic Act 529, the transaction was illegal with neither party entitled to
recover under the in pari delicto rule.
#81
KALALO VS LUZ
FACTS: Octavio Kalalo is an engineer whose services were contracted by Alfredo Luz,
an architect in 1961. Luz contracted Kalalo to work on ten projects across the country,
one of which was an in the International Rice Research Institute (IRRI) Research Center
in Los Baños, Laguna. Luz was to be paid $140,000.00 for the entire project. For Kalalo’s
work, Luz agreed to pay him 20% of what IRRI is going to pay or equivalent to
$28,000.00.
HELD: No. The agreement was forged in 1961, years before the passage of Republic Act
529 in 1950. The said law requires that payment in a particular kind of coin or currency
other than the Philippine currency shall be discharged in Philippine currency measured at
the prevailing rate of exchange at the time the obligation was incurred. Nothing in the law
however provides which rate of exchange shall be used hence it is but logical to use the
rate of exchange at the time of payment.
#82
TIBAJIA VS. COURT OF APPEALS
Facts: Eden Tan filed a suit of collection of sum of money against the spouses Tibajia.
For which, a writ of attachment was issued, the Deputy Sheriff filed a return stating that
Tibijia made a deposit in the amount of P442,750, which he subsequently garnished. RTC
ruled in favor of Eden Tan and ordered the spouses to pay her an amount in excess of
P3,000,000. Court of Appeals modified the decision by reducing the amount for damages.
Spouses Tibajia delivered to Sheriff Bolima the total money judgment of P398483.70.
Tan refused to accept the payment and insisted that the garnished funds be withdrawn to
satisfy the judgment obligation.
Issue: Whether or not payment by means of check is considered payment in legal tender.
Ruling: The ruling applies the statutory provisions which lay down the rule that a check
is not legal tender and that a creditor may validly refuse payment by check, whether it be
a manager’s check, cashier’s or personal check. The decision of the court of Appeals is
affirmed.
#83
Roman Catholic V iac
FACTS:
July 7, 1971: A contract over the land was executed between the Roman Catholic Bishop
of Malolos (bishop) as vendor and the through its then president, Mr. Carlos F. Robes, as
vendee, stipulating for a downpayment of P23,930 and the balance of P100,000 plus 12%
interest per annum to be paid within 4 years from execution of the contract.
The contract likewise provides for cancellation, forfeiture of previous payments, and
reconveyance of the land in case of failure to pay within the period
March 12, 1973: private respondent, through its new president, Atty. Adalia Francisco,
addressed a letter 6 to Father Vasquez, parish priest of San Jose Del Monte, Bulacan,
requesting to be furnished with a copy of the subject contract and the supporting
documents
July 17, 1975: after the expiration of the stipulated period for payment, Atty. Francisco
wrote the formal request that her company be allowed to pay the principal amount of
P100,000 in 3 equal installments of 6 months each with the 1st installment and the
accrued interest of P24,000 to be paid immediately upon approval
July 29, 1975: Bishop through its counsel, Atty. Carmelo Fernandez, formally denied the
request but granted a grace period of 5 days from the receipt of the denial to pay the total
balance of P124,000
August 4, 1975: private respondent, through its president, Atty. Francisco, wrote the
counsel of the petitioner requesting an extension of 30 days from to fully settle its
account. - denied
RTC: favored Bishop declaring the down payment as forfeited
#84
Papa v. Valencia
Facts:
1. The case arose from a sale of a parcel of land allegedly made to private respondent
Penarroyo by petitioner acting as attorney-in-fact of Anne Butte. The purchaser, through
Valencia, made a check payment in the amount of P40,000 and in cash, P5,000. Both
were accepted by petitioner as evidenced by various receipts. It appeared that the said
property has already been mortgaged to the bank previously together with other
properties of Butte.
2. When Butte passed away, the private respondent Penarroyo now demanded that the
title to the property be conveyed to him, however the bank refused. Hence, the filing of a
suit for specific performance by private respondents against the petitioner. The lower
court ruled in favor of the private respondents and ordered herein petitioner the
conveyance or the property or if not, its payment. The petitioner appealed the lower
court's decision alleging that the sale was not consummated as he never encashed the
check given as part of the purchase price.
3. The Court of Appeals affirmed with modifications the lower court's decision. It held
that there was a consummated sale of the subject property despite.
Issue: Whether or not the check is a valid tender of payment/Whether or not there was a
valid sale of the subject property
RULING: Yes. While it is true that the delivery of check produces payment only when
encashed (pursuant to Art. 1249, Civil Code), the rule is otherwise if the debtor is
prejudiced by the delay in presentment. (Here in this case, the petitioner now alleges that
he did not present the check, ten years after the same was paid to him as part of the
purchase price of the property.)
Check acceptance implied an undertaking of due diligence in presenting it for payment. If
the person who receives it sustains loss by want of this diligence, this will operated as
actual payment of the debt or obligation for which the check was given. The debtor
cannot now be held liable if non-presentment of the check was through the fault of the
creditor.
#85
SOLEDAD SOCO, petitioner,
vs.
HON. FRANCIS MILITANTE, Incumbent Presiding Judge of the
Court of First Instance of Cebu, Branch XII, Cebu City and REGINO
FRANCISCO, JR., respondents.
FACTS: Soco and Francisco entered into a contract of lease on January 17, 1973,
whereby Soco leased her commercial building and lot situated at Manalili Street, Cebu
City, to Francisco for a monthly rental of P 800.00 for a period of 10 years renewable for
another 10 years at the option of the lessee. It can readily be discerned from Exhibit “A”
(from SOCO) that paragraphs 10 and 11 appear to have been cancelled while in Exhibit
“2” (from FRANCISCO) only paragraph 10 has been cancelled. Claiming that paragraph
11 of the Contract of Lease was in fact not part of the contract because it was cancelled,
Soco filed Civil Case No. R-16261 in the Court of First Instance of Cebu seeking the
annulment and/or reformation of the Contract of Lease.
Sometime before the filing of Civil Case No. R-16261 Francisco noticed that Soco did
not anymore send her collector for the payment of rentals and at times there were
payments made but no receipts were issued. This situation prompted Francisco to write
Soco the letter dated February 7, 1975 which the latter received. After writing this letter,
Francisco sent his payment for rentals by checks issued by the Commercial Bank and
Trust Company.
The factual background setting of this case clearly indicates that soon after Soco learned
that Francisco sub-leased a portion of the building to NACIDA, at a monthly rental of
more than P3,000.00 which is definitely very much higher than what Francisco was
paying to Soco under the Contract of Lease, the latter felt that she was on the losing end
of the lease agreement so she tried to look for ways and means to terminate the contract.
In view of this alleged non-payment of rental of the leased premises beginning May,
1977, Soco through her lawyer sent a letter dated November 23, 1978 to Francisco
serving notice to the latter ‘to vacate the premises leased.’ In answer to this letter,
Francisco through his lawyer informed Soco and her lawyer that all payments of rental
due her were in fact paid by Commercial Bank and Trust Company through the Clerk of
Court of the City Court of Cebu. Despite this explanation, Soco filed this instant case of
Illegal Detainer.
MTC and RTC have conflicting findings. The former found that the consignation was
valid. RTC reversed and ordered the eviction of the Francisco.
HELD: In order that consignation may be effective, the debtor must first comply with
certain requirements prescribed by law. The debtor must show (1) that there was a debt
due; (2) that the consignation of the obligation had been made because the creditor to
whom tender of payment was made refused to accept it, or because he was absent or
incapacitated, or because several persons claimed to be entitled to receive the amount due
(Art. 1176, Civil Code); (3) that previous notice of the consignation had been given to the
person interested in the performance of the obligation (Art. 1177, Civil Code); (4) that the
amount due was placed at the disposal of the court (Art. 1178, Civil Code); and (5) that
after the consignation had been made the person interested was notified thereof (Art.
1178, Civil Code). Failure in any of these requirements is enough ground to render a
consignation ineffective. (parang wala naman tong mga to sa 1176, 1177 and 1178?)
We hold that the respondent lessee has utterly failed to prove the following requisites of a
valid consignation: First, tender of payment of the monthly rentals to the lessor. Second,
respondent lessee also failed to prove the first notice to the lessor prior to consignation,
Evidently, from this arrangement, it was the lessee’s duty to send someone to get the
cashier’s check from the bank and logically, the lessee has the obligation to make and
tender the check to the lessor. This the lessee failed to do, which is fatal to his defense.
Third, respondent lessee likewise failed to prove the second notice, that is after
consignation has been made, to the lessor. And the fourth requisite that respondent lessee
failed to prove is the actual deposit or consignation of the monthly rentals except the two
cashier’s checks referred to in Exhibit 12. As indicated earlier, not a single copy of the
official receipts issued by the Clerk of Court was presented at the trial of the case to
prove the actual deposit or consignation.
We, therefore, find and rule that the lessee has failed to prove tender of payment except
that in Exh. 10; he has failed to prove the first notice to the lessor prior to consignation
except that given in Exh. 10; he has failed to prove the second notice after consignation
except the two made in Exh. 12; and he has failed to pay the rentals for the months of
July and August, 1977 as of the time the complaint was filed for the eviction of the lessee.
We hold that the evidence is clear, competent and convincing showing that the lessee has
violated the terms of the lease contract and he may, therefore, be judicially ejected.
FACTS:
Security Bank and Trust Company (Security Bank), a commercial banking
institution, through its Sucat Branch issued 280 certificates of time deposit
(CTDs) in favor of Angel dela Cruz who deposited with Security Bank the
total amount of P1,120,000
Angel delivered the CTDs to Caltex for his purchase of fuel products
March 18, 1982: Angel informed Mr. Tiangco, the Sucat Branch Manager
that he lost all CTDs, submitted the required Affidavit of Loss and received
the replacement
March 25, 1982: Angel dela Cruz negotiated and obtained a loan from
Security Bank in the amount of P875,000 and executed a notarized Deed
of Assignment of Time Deposit
November, 1982: Mr. Aranas, Credit Manager of Caltex went to the Sucat
branch to verify the CTDs declared lost by Angel
November 26, 1982: Security Bank received a letter from Caltex formally
informing it of its possession of the CTDs in question and of its decision to
pre-terminate the same.
Security Bank rejected Caltex demand for payment bec. it failed to furnish
a copy of its agreement w/ Angel
April 1983, the loan of Angel dela Cruz with Security Bank matured
Caltex filed a complaint praying the bank to pay 1,120,000 plus 16%
interest
ISSUE:
1. W/N the CTDs are negotiable
2. W/N Caltex as holder in due course can rightfully recover on the CTDs
1. YES.
Section 1 Act No. 2031, otherwise known as the Negotiable Instruments Law,
enumerates the requisites for an instrument to become negotiable, viz:
o depositor = bearer
2. NO.
although the CTDs are bearer instruments, a valid negotiation thereof for
the true purpose and agreement between it and De la Cruz, as ultimately
ascertained, requires both delivery and indorsement
Where the holder has a lien on the instrument arising from contract, he is
deemed a holder for value to the extent of his lien.
98.) SOLINAP vs. DEL ROSARIO, G.R. No. L-50638 July 25, 1983
to
100.) GAN TION vs. HON. COURT OF APPEALS, G.R. NO. L-22490, May 21,
1969
FACTS
Isabela Wood Construction & Dvpt Corp (ISABELA) has a P2 Million savings account with PNB. A
Notice of garnishment was served on PNB, followed by a CFI order directing the latter to hand over
the P1.5M to the sheriff for delivery to the ACEROs. A second judgment was rendered ordering
ISABELLA to pay compensatory damages and atty.’s fees all amounting to almost P600k.
On the other hand, PNB's main thesis is that when it opened a savings account for ISABELA in the
amount of P 2M, it (PNB) became indebted to ISABELA in that amount. So that when ISABELA
itself subsequently came to be indebted to PNB on account of ISABELA's breach of the terms of
the Credit Agreement, ISABELA and PNB became at the same time creditors and debtors of each
other, compensation automatically took place between them.
PNB’s alternative theory: which is that the P2M deposit had been assigned to it by ISABELA as
"collateral," although not by way of pledge; that ISABELA had explicitly authorized it to apply the
P2M deposit in payment of its indebtedness; and that PNB had in fact applied the deposit to the
payment of ISABELA's debt in concept of voluntary compensation.
ISSUE:
W/N PNB’s contentions are correct, and that compensation automatically took place between the
parties thus preventing the Aceros’ garnishment thereof.
HELD:
NO. Article 1278 of the Civil Code provides that "Compensation shall take place when two persons,
in their own right, are creditors and debtors of each other.” Such legal provision cannot apply to
PNB’s advantage. PNB has no competent evidence that it is a creditor of ISABELA. All that the
documents presented by PNB prove is that a letter of credit might have been opened for ISABELA
by PNB, but not that the credit was ever availed of (by ISABELA's foreign correspondent MAN, or
that the goods thereby covered were in fact shipped, and received by ISABELA.
PNB’s alternative theory, is also untenable, there being no indebtedness to PNB on ISABELA's part
which can result to any mutual set-off, or compensation. While the Credit Agreement declares it to
be ISABELA's intention to "assign to the BANK the proceeds of its contract with the Department of
Public Works” it does not appear that that intention was adhered to, much less carried out. Thus,
For compensation to automatically apply by law, it must be proved by competent evidence that the
parties are the creditors and debtors of each other and property already in custodia legis cannot be
the subject of a set-off.102.) FRANCIA VS IAC
GR no. L-67649
FACTS
A portion of Engracio Francia’s land was expropriated by the government for P4,116.00. It also
appears that Francia failed to pay his real estate taxes amounting to P2,400.00. Thus, his property
was sold in a public auction by the City Treasurer of Pasay City. As such, the remaining portion of
his land was sold at a public auction. The highest bidder was Ho Fernandez who paid the purchase
price of P2,400.00.
Later, Francia filed a complaint to annul the auction sale on the ground that the selling price was
grossly inadequate. He further argued that his land should have never been auctioned because
the P2,400.00 he owed the government in taxes should have been set-off by the debt the
government owed him (legal compensation). He alleged that he was not paid by the government
for the expropriated portion of his land because though he knew that the payment therefor was
deposited in the Philippine National Bank, he never withdrew it.
ISSUE:
Whether or not the tax owed by Francia should be set-off by the “debt” owed him by the
government.
HELD:
No. By legal compensation, obligations of persons, who in their own right are reciprocally debtors
and creditors of each other, are extinguished (Art. 1278, Civil Code). This is not applicable in taxes.
There can be no off-setting of taxes against the claims that the taxpayer may have against the
government. A person cannot refuse to pay a tax on the ground that the government owes him an
amount equal to or greater than the tax collected. Further, the government already paid Francia. All
he has to do was to withdraw the money. Had he done that, he could have paid his tax obligations
even before the auction sale or could have exercised his right to redeem – which he did not do.
The contention of Francia that selling price of P2,400.00 was grossly inadequate is not tenable.
The Supreme Court said: “alleged gross inadequacy of price is not material when the law gives the
owner the right to redeem as when a sale is made at public auction, upon the theory that the lesser
the price, the easier it is for the owner to effect redemption.” If mere inadequacy of price is held to
be a valid objection to a sale for taxes, the collection of taxes in this manner would be greatly
embarrassed, if not rendered altogether impracticable. “Where land is sold for taxes, the
inadequacy of the price given is not a valid objection to the sale.” This rule arises from necessity,
for, if a fair price for the land were essential to the sale, it would be useless to offer the property.
Indeed, it is notorious that the prices habitually paid by purchasers at tax sales are grossly out of
proportion to the value of the land.
Facts:
Francisco Sycip agreed to buy, on installment, from Francel Realty Corporation (FRC), a
townhouse unit. Sycip issued to FRC 48 postdated checks covering 48 monthly installments. After
moving in his unit, Sycip complained to FRC regarding defects in the unit and incomplete features
of the townhouse project. FRC ignored the complaint.
-Sycip served on FRC 2 notarial notices to the effect that he was suspending his instalment
payments on the unit pending compliance with the project plans and specifications, as approved by
the Housing and Land Use Regulatory Board (HLURB).Notwithstanding the notarial notices, FRC
continued to present for encashment Sycip’s postdated checks in its possession. Sycip sent “stop
payment orders” to the bank.The bank (Citibank) advised Sycip to close his checking account to
avoid paying bank charges evry time he made a “stop payment” order.
Due to the closure of petitioner’s checking account, the drawee bank dishonoured six postdated
checks. FRC filed a complaint against petitioner for violations of BP Blg 22 involving said
dishonoured checks.
RTC and CA found petitioner guilty of violating Sec 1 of BP Blg 22 in each of the six cases.
Issue:
w/n the CA erred in affirming the conviction of petitioner for violation of the Bouncing Checks Law.
Held:
Petitioner’s exercise of a right of the buyer under Article 23 of PD 957 is a valid defense to the
charges against him. Sec 23 of PD 957 provides that “ The buyer of a townhouse unit has the right
to suspend his amortization payments, should the subdivision or condominium developer fail to
develop or complete the project in accordance with duly approved plans and specifications.
Petitioner is ACQUITTED of the charges against him under BP Blg. 22 .Under the provisions of BP
Blg 22, an offense is committed when the following elements are present: (1) the making, drawing
and issuance of any check to apply for account or for value; (2) the knowledge of the maker,
drawer, or issuer that at the time of issue he does not have sufficient funds in or credit with the
drawee bank for the payment of such check in full upon its presentment; and (3) the subsequent
dishonour of the check by the drawee bank for insufficiency of funds or credit or dishonor for the
same reason had not the drawer, without any valid cause, ordered the bank to stop payment.
Although the first element of the offense exists, the other elements have not been established
beyond reasonable doubt.
The records do not show that at the time said checks were issued, petitioner had knowledge that
his deposit or credit in the bank would be insufficient to cover them when presented for
encashment. The third element of “subsequent dishonour of the check…without valid cause” was
not established by the prosecution.
FACTS
Atty. Casiano P. Laquihon, in behalf of Pacweld Steel Corporation filed a pleading addressed to
the latter & Mindanao Portland Cement Corporation (MPCC) entitled 'motion to direct payment of
attorney's fee to counsel' (himself ), invoking in his motion the fact that in a court decision on Sept.
14, 1976, MPCC was adjudged to pay Pacweld the sum of P10,000.00 as attorney's fees.
MPCC filed an opposition to Atty. Laquihon's motion stating that said amount is set-off by a like
sum of P10,000.00 which MPCC has collectible from Pacweld also by way of attorney's fees which
MPCC recovered from the same Court of First Instance of Manila.
Hence, an appeal from the Order of the Court of First Instance dated June 26, 1978 ordering
MINDANAO PORTLAND CEMENT CORPORATION to pay the amount of P10,000.00 attorney's
fees directly to Atty. Casiano B. Laquihon and from the Order dated August 28, 1978 denying
appellant's motion for reconsideration.
ISSUE
Whether or not that the lower court erred in not holding that the two obligations are extinguished
reciprocally by operation of law.
HELD
Yes. The appealed orders of June 26 and August 28, 1978 of the Court of First Instance are hereby
annulled and set aside. It is clear from the record that both corporations, Mindanao Portland
Cement and Pacweld Steel Corporation were creditors and debtors of each other, their debts to
each other consisting in final and executory judgments of the Court of First Instance in two (2)
separate cases, ordering the payment to each other of the sum of P10,000.00 by way of attorney's
fees. The two (2) obligations, therefore, respectively offset each other, compensation having taken
effect by operation of law and extinguished both debts to the concurrent amount of P10,000.00,
pursuant to the provisions of Arts. 1278, 1279 and 1290 of the Civil Code, since all the requisites
provided in Art. 1279 of the said Code for automatic compensation "even though the creditors and
debtors are not aware of the compensation" were duly present.
105.)THE INTERNATIONAL CORPORATE BANK INC., petitioner, --VS.--
THE IMMEDIATE APPELLATE COURT, HON. ZOILO AGUINALDO, as presiding Judge of
the Regional Trial Court of Makati, Branch 143, NATIVIDAD M. FAJARDO, and SILVINO
R. PASTRANA, as Deputy and Special Sheriff, respondents.
G.R. No. L-69560
FACTS
The private respondent secured from petitioner a loan amounting to P50M mortgaged her real
properties. Of this loan, only P20M was approved for release. Respondent made a money market
placement with ATRIUM amounting to P1,046,253.77. Meanwhile, respondent allegedly failed to
pay her mortgaged indebtedness to the bank so there was an auction on the mortgage properties,
with Atrium as the only bidder. Petitioner contends that after foreclosing the mortgage, there is still
due from private respondent as deficiency the amount of P6.81 million against which it has the right
to apply or set off private respondent's money market claim of P1,062,063.83. Petitioner interposes
counterclaims for the recovery of P5,763,741.23, representing the balance of its deficiency claim.
Hence, private respondent filed a complaint with the trial court against petitioner for annulment of
the sheriff's sale of the mortgaged properties, for the release to her of the balance of her loan from
petitioner in the amount of P30,000,000,00, and for recovery of P1,062,063.83 representing the
proceeds of her money market investment. She alleges that the mortgage is not yet due and
demandable and the foreclosure was illegal.
Issue
Whether or not there can be legal compensation in the case at bar.
HELD
No.Compensation shall take place when two persons, in their own right, are creditors and debtors
of each other. (Art. 1278, Civil Code). 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.
There can be no doubt that petitioner is indebted to private respondent in the amount of
P1,062,063.83 representing the proceeds of her money market investment. But whether private
respondent is indebted to petitioner in the amount of P6.81 million representing the deficiency
balance after the foreclosure of the mortgage executed to secure the loan extended to her, is
vigorously disputed. This circumstance prevents legal compensation from taking place.
FACTS
Mondragon Personal Sales Inc., is engaged in selling various consumer products through a
network of sales representatives, entered into a Contract of Services with Victoriano S. Sola, Jr. for
a period of three years wherein the latter will provide service facilities, i.e., bodega cum office, to
petitioner's products, sales force and customers in General Santos City and as such, he was
entitled to commission or service fee. The agreement then came into effect when petitioner's goods
were delivered to respondent's bodega and were sold by petitioner's employees. Prior to the
execution of the contract, however, respondent’s wife, Lina Sola, had an existing obligation with
petitioner. Respondent obligated himself to pay on installment basis to pay his wife's account as
evidenced by his letter. Consequently, petitioner withheld the payment of respondent's service fees
and applied the same as partial payments to the debt which he obligated to pay.
Respondent filed a complaint for the rescission of the contract of services and for petitioner to
render an accounting of his service fees alleging that petitioner withheld his service fees which
resulted to suspension of his operations to minimize losses.
ISSUE:
W/N the CA erred in finding that petitioner breached its contract with respondent and that there is
no compensation in accordance to Article 1279 of the Civil Code and respondent did not assume
the obligation of his wife.
HELD:
The decisions of the Court of Appeals are REVERSED and SET ASIDE. A reading of the letter
shows that respondent becomes a co-debtor of his wife's accountabilities with petitioner.
Petitioner's act of withholding respondent's service fees/commissions and applying them to the
latter's outstanding obligation with the former is merely an acknowledgment of the legal
compensation that occurred by operation of law between the parties.
Petitioner and respondent are both principal obligors and creditors of each other. Their debts to
each other consist in a sum of money. Respondent acknowledged and bound himself to pay
petitioner a certain amount which was already due, while the service fees owing to respondent by
petitioner become due every month. Respondent's debt is liquidated and demandable, and
petitioner's payments of service fees are liquidated and demandable every month as they fall due.
Finally, there is no retention or controversy commenced by third persons over either of the debts.
Thus, legal compensation took place in this case, there is no basis for respondent to ask for
rescission since he was the first to breach their contract when he suddenly closed and padlocked
his bodega cum office occupied by petitioner.1âwphi1
107.)JESUS M. MONTEMAYOR,
- versus –
VICENTE D. MILLORA,
FACTS
Atty. Vicente D. Millora petitioner obtained a loan of P400,000.00 from Dr. Jesus M. Montemayor as
evidenced by a promissory note. The parties executed a loan contract wherein it was provided that
Vicente had already paid the amount of P100,000.00 as well as the P8,000.00 interest.
Subsequently, the interest rate was increased to P10,500.00 a month. Vicente was supposed to
pay P42,000.00 for 4 mos. interest but was able to pay only P24,000.00. Jesus made several
demands for Vicente to settle his obligation but to no avail which resulted to the filing of complaint
against the latter.
Vicente filed his Answer interposing a counterclaim for attorneys fees of not less than P500,000.00.
Vicente claimed that he handled several cases for Jesus but he was summarily dismissed from
handling them when the instant complaint for sum of money was filed.
Jesus contends that offsetting cannot be made because the judgment of the RTC failed to specify
the amount of attorneys fees. He maintains that for offsetting to apply, the two debts must be
liquidated or ascertainable. However, the trial court merely awarded to Vicente attorneys fees
based on quantum meruit without specifying the exact amount thereof.
Issue
Whether or not the absence of a specific amount in the decision representing respondents
counterclaim, the same could be validly [offset] against the specific amount of award mentioned in
the decision in favor of the petitioner.
HELD
No. The petition lacks merit. The amount of attorney’s fees is ascertainable from the RTC Decision.
Thus, compensation is possible. In the instant case, both obligations are liquidated. Vicente has the
obligation to pay his debt due to Jesus. For all the legal services rendered to plaintiff, defendant
deserves to be compensated at least on a quantum meruit basis.
At the outset, it should be stressed that the RTC Decision is already final and executory. Hence, it
can no longer be the subject of an appeal. Consequently, Jesus is bound by the decision and can
no longer impugn the same. Indeed, well-settled is the rule that a decision that has attained finality
can no longer be modified even if the modification is meant to correct erroneous conclusions of fact
or law. The doctrine of finality of judgment is grounded on fundamental considerations of public
policy and sound practice, and that, at the risk of occasional errors, the judgments or orders of
courts must become final at some definite time fixed by law; otherwise, there would be no end to
litigations, thus setting to naught the main role of courts of justice which is to assist in the
enforcement of the rule of law and the maintenance of peace and order by settling justiciable
controversies with finality.
108.) ARCO PULP AND PAPER CO., INC. and CANDIDA A. SANTOS
vs.
DAN T. LIM, doing business under the name and style of QUALITY PAPERS & PLASTIC
PRODUCTS ENTERPRISES
G.R. No. 206806
FACTS
Dan T. Lim delivered scrap papers to Arco Pulp and Paper Company, Inc. through its CEO and
President, Candida A. Santos. They agreed that Arco Pulp and Paper would either pay Dan T. Lim
the value of the raw materials or deliver to him their finished products of equivalent value. Upon
delivery of the raw materials, Arco Pulp and Paper issued a post-dated check as partial payment.
However, the check was dishonored for being drawn against a closed account. On the same day,
Arco Pulp and Paper and a certain Eric Sy executed a memorandum of agreement where Arco
Pulp and Paper bound themselves to deliver their finished products to Eric Sy. According to the
memorandum, the raw materials would be supplied by Dan T. Lim.
Dan T. Lim demanded payment but to no avail which lead to the filing of complaint. The trial court
rendered a judgment in favor of Arco Pulp and Paper holding that when Arco Pulp and Paper and
Eric Sy entered into the memorandum of agreement, novation took place, which extinguished Arco
Pulp and Paper’s obligation to Dan T. Lim.
Issues
1. Whether the obligation between the parties was extinguished by novation
2. Whether Candida A. Santos was solidarily liable with Arco Pulp and Paper Co., Inc.
3. Whether moral damages, exemplary damages, and attorney’s fees can be awarded
HELD
The petition is denied. The obligation between the parties was an alternative Obligation.
"In an alternative obligation, there is more than one object, and the fulfillment of one is sufficient,
determined by the choice of the debtor who generally has the right of election." When petitioner
Arco Pulp and Paper tendered a check to respondent in partial payment for the scrap papers, they
exercised their option to pay the price. Respondent’s receipt of the check and his subsequent act of
depositing it constituted his notice of petitioner Arco Pulp and Paper’s option to pay.The rules on
novation are outlined in Article 1291 which provides that,” Obligations may be modified by: (1)
Changing their object or principal conditions; (2) Substituting the person of the debtor; (3)
Subrogating a third person in the rights of the creditor. The consent of the creditor must also be
secured for the novation to be valid. Petitioner Arco Pulp and Paper’s act of tendering partial
payment to respondent also conflicts with their alleged intent to pass on their obligation to Eric Sy.
When respondent sent his letter of demand to petitioner Arco Pulp and Paper, and not to Eric Sy, it
showed that the former neither acknowledged nor consented to the latter as his new debtor. Since
there was no novation, Arco Pulp and Paper’s obligation to respondent remains valid and existing
and is also liable for damages. Petitioner Santos was solidarily liable with Arco Pulp and Paper,
stating that she cannot be allowed to hide behind the corporate veil since she not only issued an
unfunded check but also contracted with a third party in an effort to shift Arco Pulp and Paper’s
liability.
109.) THE WELLEX GROUP, INC., Petitioner, v. U-LAND AIRLINES, CO., LTD.
G.R. No. 167519
FACTS
Wellex and U-Land entered into a First Memorandum of Agreement to expand their
respective airline operations in Asia. Both parties bound themselves to negotiate with
each other within a 40-day period to enter into a share purchase agreement. If no share
purchase agreement was entered into, both parties would be freed from their respective
undertakings.
At the lapse of the 40-day period, the parties failed to enter into a share purchase
agreement. However, the parties continued their wherein U-Land remitted to Wellex a
total of US$7,499,945.00.46 and in return the latter delivered to the former stock
certificates representing PEC & APIC shares and the Transfer Certificates of Titles (TCTs).
Despite that, they still failed to enter into a share purchase agreement. Communication
between the parties ceased, and no further transactions took place.
U-Land filed a Complaint praying for rescission of the First Memorandum of Agreement
and damages against Wellex and for the issuance of a Writ of Preliminary Attachment.
U-Land’s primary reason for purchasing APIC shares from Wellex was APIC’s majority
ownership of shares of stock in APC. After verification with the SEC, U-Land discovered
that “APIC did not own a single share of stock in APC.”
Issue
W/N the Court of Appeals erred in affirming the Decision of the Regional Trial Court that
granted the rescission of the First Memorandum of Agreement prayed for by U-Land.
Held
The RTC and CA decisions are affirmed. Rescission or resolution under Article 1191, is a
principal action that is immediately available to the party at the time that the reciprocal
prestation was breached. Thus, respondent U-Land correctly sought the principal relief
of rescission or resolution under Article 1191. The obligations of the parties gave rise to
reciprocal prestations, which arose from the same cause: the desire of both parties to
enter into a share purchase agreement that would allow both parties to expand their
respective airline operations in the Philippines and other neighboring countries.
This Court agrees with the lower court that U Land is the injured party in this case, and
therefore is entitled to rescission, because the rescission referred to here is predicated
on the breach of faith by Wellex which breach is violative of the reciprocity between the
parties. It is noted that Wellex’s misrepresentations regarding APIC’s not owning shares
in APC vitiates U Land’s consent to the MOA. As such, petitioner Wellex is obligated to
return the remittances made by U-Land, in the same way that U-Land is obligated to
return the certificates of shares of stock and the land titles to Wellex.
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;
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. FBDC
received a letter informing it that MS Maxco had already assigned its receivables from
FBDC to Valentin Fong thru a Deed of Assignment to be taken from the retention money
with the FBDC. Replying, FBDC acknowledged the 5% retention money of MS Maxco but
asserted that the same was not yet due and demandable and the subject of garnishment
by MS Maxco’s creditors. Despite repeated requests, FBDC refused to release the
retention money and informed Fong that nothing was left of MS Maxco’s retention
money after the rectification of the defects in the projects. Valentin then filed a
complaint against FBDC to collect the P1, 577, 115.90 before the RTC. The RTC ruled in
favour of Fong. The Court of Appeals affirmed the RTC decision, hence FBDC elevated its
case to the Supreme Court.
ISSUES
(1) Whether or not FBDC was bound by the Deed of Assignment between Fong and
MS Maxco;
(2) Whether or not it was liable to pay the amount under the Deed of Assignment.
HELD
The petition is meritorious. CA Decision and Resolution are REVERSED and SET ASIDE.
Case law states that when a person assigns his credit to another person, the latter is
deemed subrogated to the rights as well as to the obligations of the former. 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. Accordingly, an assignee cannot acquire greater rights than those
pertaining to the assignor.The general rule is that an assignee of a non-negotiable chose
in action acquires no greater right than what was possessed by his assignor and simply
stands into the shoes of the latter.Applying the foregoing, the Court finds that 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 Clause 19.0 on “Assignment and Sub-letting” of the Trade Contract between
FBDC and MS Maxco. Without any proof that FBDC had consented to the assignment,
Fong cannot validly demand from FBDC the delivery of money that was supposedly
assigned to him by MS Maxco as a portion of its retention money with FBDC. The
practical efficacy of the assignment, although valid between Fong and MS Maxco,
remains contingent on FBDC’s consent,only MS Maxco, and not Fong, can collect on the
credit. Note, that this finding does not preclude any recourse that Fong may take against
MS Maxco. After all, an assignment of credit for a consideration and covering a
demandable sum of money is considered as a sale of personal property.
ISSUE
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
The Court answers in the negative and grants the Petition. The Decision and Resolution
of the Court of Appeals affirming with modification the Decision of the RTC REVERSED
and SET ASIDE. The Decision of the MeTC is REINSTATED with MODIFICATIONS. As a
general rule, since novation implies a waiver of the right the creditor had before the
novation, such waiver must be express. It should be noted that, the law requires that the
creditor should consent to the substitution of a new debtor. The acceptance by a
creditor of payments from a third person, who has assumed the obligation, will result
merely to the addition of debtors and not novation. The creditor may therefore enforce
the obligation against both debtors. It is worthy to stress that Amador, as the party
asserting novation, bears the burden of proving its existence. Amador cannot simply rely
on the failure of BPI to produce the checks if these were not actually returned to the
spouses Domingo. There is simply not enough evidence to establish the prima facie
existence of novation to shift the burden of evidence to BPI to controvert the same. The
Court is therefore convinced that there is no proof that BPI gave its clear and
unmistakable consent to release the spouses Domingo from the obligation to pay the car
loan.. Incidentally, Amador passed away during the pendency of the instant petition, and
is survived by his children. The extent of liability of Amador's heirs to BPI is limited to the
value of the estate which they inherited from Amador.
FACTS
Spouses Sy obtained a 16 Million php loan from Land Bank secured by three (3)
residential lots, five (5) cargo trucks, and a warehouse. Under the loan agreement, PhP 6
million of the loan would be short-term and would mature on February 28, 1997, while
the balance of PhP 10 million would be payable in seven (7) years. The Notice of Loan
Approval dated February 22, 1996 contained an acceleration clause wherein any default
in payment of amortizations or other charges would accelerate the maturity of the loan.
They failed to pay, and they sold the three parcels of land to Alfredo Ong. When Ong
paid the remaining amount, the application for assumption of mortgage was not
approved by Land Bank. The bank learned from its credit investigation report that the
Ongs had a real estate mortgage in the amount of PhP 18,300,000 with another bank
that was past due. Thus, the bank foreclosed the properties. Ong filed an action for
recovery of the money that he paid, and won in the RTC. On appeal to the CA, it likewise
affirmed the RTC decision. Thus, Land Bank appeals to the Supreme Court.
ISSUE
Whether or not Land Bank is liable to Ong.
HELD
The petition has no merit but amount is modified with interest at 6%. Unjust enrichment
exists "when a person unjustly retains a benefit to the loss of another, or when a person
retains money or property of another against the fundamental principles of justice,
equity and good conscience."There is unjust enrichment under Art.22 of the Civil Code
when (1) a person is unjustly benefited, and (2) such benefit is derived at the expense of
or with damages to another.
Land Bank made Alfredo believe that with the payment of PhP 750,000, he would be
able to assume the mortgage of the SpousesSy. The act of receiving payment without
returning it when demanded is contrary to the adage of giving someone what is due to
him. The outcome of the application would have been different had Land Bank first
conducted the credit investigation before accepting Alfredos payment. He would have
been notified that his assumption of mortgage had been disapproved; and he would not
have taken the futile action of paying PhP 750,000. The procedure Land Bank took in
acting on Alfredos application cannot be said to have been fair and proper.
113.) Boysaw vs Interphil Promotions
113.) Boysaw vs Interphil Promotions
114.) CALIFORNIA BUS LINES, INC., vs. STATE INVESTMENT HOUSE, INC., (G.R. No.
147950)
FACTS
Delta Motors Corporation applied for financial assistance from respondent State
Investment House, Inc. (SIHI) and the latter agreed to extend a credit line to Delta for
P25M. California Bus Lines, Inc. (CBLI), purchased on installment basis 35 units of M.A.N.
Diesel Buses and 2 units of M.A.N. Diesel Conversion Engines from Delta. CBLI executed
16 promissory notes for the 35 buses. When CBLI defaulted on all payments due, it
entered into a restructuring agreement with Delta to cover its overdue obligations under
the promissory notes. Still, CBLI had not meet its obligations which prompted Delta to
threaten CBLI with the enforcement of the management takeover clause. Delta executed
a Deed of Sale assigning to SIHI 5 of the 16 promissory notes from California Bus Lines,
Inc. SIHI subsequently sent a demand letter to CBLI requiring CBLI to remit the payments
due on the five promissory notes directly to it. Thereafter, Delta and CBLI entered into a
compromise agreement in Civil Case, the injunction case before the RTC. CBLI agreed
that Delta would exercise its right to extrajudicially foreclose on the chattel mortgages
over the 35 bus units.
ISSUES
(1) W/N the Restructuring Agreement CBLI and Delta novated the five promissory notes
Delta assigned to SIHI
(2) W/N the compromise agreement between CBLI and Delta superseded and/or
discharged the subject five promissory notes.
HELD
(1) No, this Court has ruled that an agreement subsequently executed between a seller
and a buyer that provided for a different schedule and manner of payment, to
restructure the mode of payments by the buyer so that it could settle its outstanding
obligation in spite of its delinquency in payment, is not tantamount to novation. The
restructuring agreement between Delta and CBLI shows that the parties did not
expressly stipulate that the restructuring agreement novated the promissory notes.
Further, obligation is not novated by an instrument that expressly recognizes the old,
changes only the terms of payment, and adds other obligations not incompatible with
the old ones, or where the new contract merely supplements the old one.
(2) No. A compromise agreement determines the rights and obligations of only the
parties to it. Having previously assigned the five promissory notes to SIHI, Delta had no
more right to compromise the same. Delta’s limited authority to collect for SIHI
stipulated in the Deed of Sale cannot be construed to include the power to compromise
CBLIs obligations in the said promissory notes. An authority to compromise, by express
provision of Article 1878 of the Civil Code, requires a special power of attorney, which is
absent in this case. The compromise agreement provided that it covered the rights &
obligations only of Delta and CBLI and that it did not refer to, nor cover the rights of, SIHI
as the new creditor of CBLI in the subject promissory notes. The assignment of five
notes operated to create a separate and independent obligation on the part of CBLI to
SIHI, distinct and separate from CBLIs obligations to Delta. And since there was a
previous revocation of Delta’s authority to collect for SIHI, Delta was no longer SIHIs
collecting agent. CBLI, in turn, knew of the assignment and Delta’s lack of authority to
compromise the subject notes, yet it readily agreed to the foreclosure.
FACTS
The spouses Marcial See and Lilian Tan constituted three real estate mortgage on their
property in favor of Metrobank for the following obligations: (1) Ylang- Ylang Merchandising
Company for P 250,000.00 (2) Ajax Marketing Company (formerly Ylang- Ylang
Merchandising Company for P 150,000.00; (3) Ajax Marketing and Development Corporation
for P 600,000.00. The three loans with an aggregate amount of P 1,000,000.00 were
restructured and consolidated into 1 loan and Ajax Marketing and Development Corporation
executed a promissory.On its face, the promissory Note has these typewritten: "secured by
REM" and "9. COLLATERAL. This is wholly/partly secured by: (x) "real estate",The property
was extra-judicially foreclosed in favor of METROBANK for the P 1,000,000.00 promissory
note.Petitioners argue that a novation occurred when their three (3) loans, which are all
secured by the same real estate property consolidated into a single loan of P1million under
Promissory Note No. BDS-3605, thereby extinguishing their monetary obligations and
releasing the mortgaged property from liability.
ISSUE
W/N there was a Novation of the contract between petitioners and MetroBank that
would result in the extinguishment of petitioner’s liability to the bank.
HELD
Novation is never presumed. Novation will not be allowed unless it is clearly shown by
express agreement, or by acts of equal import. Thus, the new obligation should expressly
declare that the old obligation is extinguished, or that the new obligation is incompatible
with the new one. Also, to effect a subjective Novation by a change in the person of the
debtor it is necessary that the old debtor be released expressly from the obligation, and the
third person or new debtor assumes his place in the relation. There is no Novation without
such release as the third person who has assumed the debtor's obligation becomes merely a
co-debtor or surety.
In this case there is no Novation. There is nothing in the records to show the unequivocal
intent of the parties to novate the three loan agreements through the execution of
promissory Note. The provisions of promissory Note yield no indication of the
extinguishment of, or an incompatibility with, the three loan agreements secured by the real
estate mortgages. On its face, promissory Note has these words typewritten: "secured by
REM" and "9. COLLATERAL. This is wholly/partly secured by: (x) "real estate", which strongly
negates petitioners' assertion that the consolidation of the three loans effected the
discharge of the mortgaged real estate property.
The three previous loans were merely restructured and renewed to expediently make the
loans current. There was no change in the object of the prior obligations. The consolidation
of the three loans, contrary to petitioners' contention, did not release the mortgaged real
estate property from any liability because the mortgage annotations at the back of TCT in all
remained uncancelled, thus indicating the continuing subsistence of the real estate
mortgages. An action to foreclose a mortgage is usually limited to the amount mentioned in
the mortgage, but where on the four corners of the mortgage contracts, as in this case, the
intent of the contracting parties is manifest that the mortgaged property shall also answer
for future loans or advancements then the same is valid and binding between the parties.
Facts:
Baguio City and Jadewell Parking Systems Corporation agreed on June 26, 2000 that the latter
(Jadewell) will be in charge for the on-street parking as well as the installation of modern parking
meters (DG4S Pay and Display Parking Meter) in the City. Due to the failure to install the meters
and to remit the stipulated share of the City, the City Council through City Resolution No. 037 s.
2002 expressed its intent to rescind. Baguio City informed Jadewell through its President,
Rogelio Tan, in a letter dated September 22, 2006 of the rescission. In compliance with the
Memorandum of Agreement section 12, 60 days was given to Jadewell prior to its effectivity.
Jadewell then filed with the RTC of Baguio a petition for Certiorari, Prohibition, and Mandamus,
assailing the validity of the resolution. The RTC found the rescission unlawful. The CA affirmed.
Issues:
Is the correctness of the CA’s ruling that Jadewell was deprived of due process when the Sangguniang
Panlungsod rescinded the MOA.
Held:
a.) In G.R. No. 160025, the Petition of the Sangguniang Panlungsod of Baguio City is DENIED. The
CA Decision dated 7 July 2003 in CA G.R. SP No. 74756 is hereby AFFIRMED with modification.
There is not enough evidence on record to conclude that Jadewell’s violations were sufficient to
justify the unilateral cancellation of the MOA by the Sangguniang Panlungsod of Baguio City; at
the same time, neither the RTC nor the CA provided a clear finding whether the breach of the
MOA by Jadewell was substantial. We affirm the CA as to the rest of its dispositions in its assailed
Decision. Nevertheless, no award of damages is hereby made in favour of Jadewell and neither is
there any pronouncement as to costs.
b.) G.R. Nos. 163052, 164107, 165564, 172216, 173043 and 174879, the Petitions of Jadewell to
cite Mayor Braulio D. Yaranon, Mayor Bernardo M. Vergara, Acting City Mayor Reinaldo A.
Bautista, Vice Mayor Betty Lourdes F. Tabanda, the members of the Sangguniang Panlungsod of
Baguio City namely: Elmer O. Datuin, Antonio R. Tabora, Edilberto B. Tenefrancia, Federico J.
Mandapat, Jr., Richard A. Carino, Faustino A. Olowan, Rufino M. Panagan, Leonardo B. Yangot, Jr.,
Rocky Thomas A. Balisong, Galo P. Weygan, Perlita L. Chan-Rondez, Jose M. Molintas, and Judge
Fernando Vil Pamintuan for indirect contempt and to disbar Sangguniang Panlungsod members
Rocky Thomas A. Balisong, Edilberto B. Tenefrancia, Faustino A. Olowan, Federico J. Mandapat,
Perlita L. Chan-Rondez, Jose M. Molintas, Melchor Carlos B. Rabanes and Mayor Braulio D.
Yaranon are all hereby DISMISSED for lack of merit. No pronouncement as to costs.
c.) We DENY the Petition of Jadewell for lack of merit in G.R. No. 172215. We likewise DENY its
prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction for
being moot and academic. No pronouncement as to costs.
d.) We DENY the Petition of Mayor Braulio D. Yaranon in G.R. No. 181488, for lack of merit and
AFFIRM the CA Decision CA-G.R. SP No. 96116. No pronouncement as to costs.
Facts:
Eulalio Mistica is the owner of a parcel of land located at Malhacan, Meycauayan, Bulacan. A
portion thereof was leased to respondent Naguiat. Consequently, Mistica entered into a contract to
sell with respondent over a portion of lot containing an area of 200 sq. mtrs.
Pursuant to said agreement, respondent gave a downpayment of P2K & made another partial
payment of P1K & thereafter failed to make any payments. Eulalio Mistica died sometime in Oct.
1986. Petitioner claims that she is entitled to rescind the Contract under Article 1191 of the Civil
Code, because respondents committed a substantial breach when they did not pay the balance of
the purchase price within the ten-year period.
Issue:
1. WON the Kasulatan was a contract to sell?
2. WON petitioner is entitled to rescind the contract?
3. WON the contract is in the nature of a potestative obligation?
Held:
1.NO. The Kasulatan was clearly a Contract of Sale. A deed of sale is considered absolute in
nature when there is neither a stipulation in the deed that title to the property sold is reserved to
the seller until the full payment of the price; nor a stipulation giving the vendor the right to
unilaterally resolve the contract the moment the buyer fails to pay within a fixed period.
2. NO. In a contract of sale, the remedy of an unpaid seller is either specific performance or
rescission. 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. In the
Kasulatan, 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. The stipulations of the contract
constitute the law between the parties; thus, courts have no alternative but to enforce them as
agreed upon and written.
Petitioner never made any demand for the balance of the purchase price. Petitioner even refused
the payment tendered by respondents during her husband’s funeral, thus showing that she was not
exactly blameless for the lapse of the ten-year period. Had she accepted the tender, payment
would have been made well within the agreed period.
3. NO. The Kasulatan does not allow it to be converted to a potestative obligation. 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
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 Dumpit or 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%.
FACTS:
In the 1st Quarter of 1998, Solar Harvest and Davao Corrugated entered into an unwritten
agreement. Solar Harvest placed orders for customized boxes for its business of exporting
bananas at USD 1.10 each. Petitioner made a full payment of USD 40,150.00. By Jan. 3, 2001
petitioner had not received any of the ordered boxes. On Feb. 19, 2001Davao Corrugated replied
that as early as April 3, 1998, order/boxes are completed and Solar Harvest failed to pick them up
from their warehouse within 30 days from completion as agreed upon. Respondent mentioned
that petitioner even placed additional order of 24,000.00 boxes, out of which, 14,000 had already
been manufactured without any advance payment from Solar Harvest. Davao Corrugated then
demanded that Solar Harvest remove boxes from their warehouse, pay balance of USD 15,400.00
for the additional boxes and P132,000 as storage fee. On August 17, 2001 Solar harvest filed
complaint against Davao Corrugated for sum of money and damages claiming that the agreement
was for the delivery of the boxes, which Davao Corrugated did not do. They further alleged that
whenever repeated follow-up was made to Davao Corrugated, they would only see sample boxes
and get promise of delivery. Due to Davao Corrugated’s failure to deliver, Solar Harvest had to
cancel the order and demanded payment and/or refund which Davao Corrugated refused to pay.
Davao Corrugated counterclaimed that they had already completed production of the 36,500
boxes plus an additional 14,000 boxes (which was part of the additional 24,000 order that is
unpaid). The agreement was for Solar Harvest to pick up the boxes, which they did not do. They
even averred that on Oct. 8, 1998 Solar Harvest’s representative Bobby Que even went to the
warehouse to inspect and saw that indeed boxes were ready for pick up. On Feb. 20, 1999, Que
visited the factory again and said that they ought to sell the boxes to recoup some of the costs of
the14,000 additional orders because their transaction to ship the bananas did not materialize.
Solar Harvest denies that they made the additional order. On March 20, 2004, the RTC ruled in
favor of Davao Corrugated.
ISSUE:
WON Corrugated was responsible for breach of contract as Solar Harvest had not yet demanded
from it the delivery of the boxes?
HELD:
NO. The CA held that it was unthinkable that for around 2 years petitioner merely followed up
and did not demand the delivery of the boxes. Even assuming that the agreement is for delivery
by Davao Corrugated, respondent would not be liable for breach of contract as petitioner had not
yet demanded from it the delivery of the boxes. There is no error in the decision of the RTC.
Facts:
Osmena III and 4 other members of the Senate and SSS members seek for nullification of the
following issuances of Social Security Commission:
1. Res. No. 428, July 124, 2004- Swiss Challenge Method – approved the sale of the entire equity
share of SSS to Equitable PCI bank
2. Res. 485, August 11, 2004 – pertains to the timetable and instruction to bidders
SSS in order to liquefy its long term investments and diversify them into higher yielding and less
volatile investments which includes its shareholdings in EPCIB (Reason: shares in question
substantially declined in value and SSS could no longer afford to continue holding on them) in a
purchase agreement it was agreed in that SSS will sell all its EPCIB shares to BDO. COA and
DOJ (in its opinion) approved the agreement. The Bidding was made “subject to the right of BDO
Capital to match the highest bid”. BDO turned out to be the highest bidder. The Petitioner alleged
that BDO to buy EPCIB shares is inconsistent with the idea of public bidding. BDO and EPCIB
had a merger, all EPCIB shares were transferred to BDO.
Issue:
WON in questioning the alleged resolution can still recover the shares and subject it to a “proper”
bidding process.
Ruling:
No, petitioners can no longer recover the shares. The obligation to give a determinate thing is
extinguished if the object is lost without the fault of the debtor. In the very real sense, the
interplay of the ensuing factor: a) the BDO-EPCIB merger and b) the cancellation of subject
shares and their replacement by totally new common shares of BDO had rendered the erstwhile
187.84 M EPCIB shares of SSS unrecoverable in the contemplation of Civil Code provision
126. Villamar vs. Mangaoil
FACTS:
T h e p e t i t i o n e r Vi l l a m a r, t h e r e g i s t e r e d o w n e r o f t h e p r o p e r t y, e n t e r e d
i n t o a n a g r e e m e n t w i t h t h e respondent Mangaoil to purchase and sale a parcel
of land. The terms in their agreement includes the down payment of P 185,000 pesos,
which will be for the payment of a loan secured from the Rural Bank of Cauayan so that it will be
withdrawn and released from the bank and that a deed of absolute sale will b e e x e c u t e d
in favor of the respondent Mangaoil which was
c o m p l i e d b y t h e p a r t i e s , consequently, the respondent Mangaoil informed
the petitioner that he will withdraw from the agreement for the land was not yet free from
incumbrances as there were still tenants who were not willing to vacate the land without giving
them back the amount that they mortgaged the land. Also, the petitioner failed and refused,
despite repeated demands, to hand over the certificate of Title. Then, the respondent Mangaoil
demanded the refund of the down payment that he had secured with the petitioner and filed a
complaint with the RTC to rescind the contract of sale. In the response of the petitioner, she
averred that she had already complied with the obligations and caused the release of the
mortgaged land and the delivery of the certificate of Title will be facilitated by a certain Atty.
Pedro C. Antonio. The respondent insisted that h e c a n r e s c i n d t h e c o n t r a c t
for the petitioner had failed to deliver the certificate of
Title.
The RTC and the CA dismissed the complaints for upon the deed of absolute sale, there was
already a valid and constructive delivery. Hence this petition.
Issue:
1. WON the failure of delivery of the Certificate of
Title will constitute rescission of the contract.
2. WON the execution of the deed of sale of real
property is equivalent to a valid and constructive
d e l i v e r y.
HELD:
1. No. The Court held that the failure of the petitioner to comply with the
obligation to deliver to the r e s p o n d e n t t h e
p o s s e s s i o n o f t h e p r o p e r t y a n d t h e
c e r t i f i c a t e o f t h e t i t l e .
It is clear that “the power to rescind obligations is implied in reciprocal
ones, in case one of the obligors should not comply with what is incumbent
upon him.” The respondent cannot be deprived of his right to demand for rescission in
view of the petitioner’s failure to abide with item nos. 2 and 3 of the agreement. This
remains true no withstanding the absence of express stipulations in the agreement
indicating the consequences of breaches which the p a r t i e s m a y c o m m i t . T o
h o l d o t h e r w i s e w o u l d r e n d e r ' r t i c l e 11 / 1 o f t h e # # a s
useless.
2. No. As a rule, article 1498 of the NCCgenerally considers the execution of a
public instrument as constructive delivery by the seller to the buyer of the property
subject of a contract of sale. The case at b a r, h o w e v e r, f a l l s a m o n g t h e
exceptions to the foregoing rule since a mere presumptive and not
conclusive delivery is created as the respondent failed to take material
possession of the subject property.
Even if we were to assume for argument’s sake that the agreement entered into by the
contending parties does not require the delivery of the physical possession of the subject
property from the mortgagors to the r e s p o n d e n t , s t i l l , t h e p e t i t i o n e r ’s c l a i m
t h a t h e r e x e c u t i o n o f a n a b s o l u t e d e e d o f s a l e w a s a l r e a d y sufficient as it
already amounted to a constructive delivery of the thing sold which article 1498 of the NCC
allows, cannot stand.
FACTS:
On December 13, 1943, Nicolas Adamos and Vicente Feria defendants-appellants herein
purchased two lots from Juan Porciuncula. Porciuncula’s successor in interest sought for the
annulment and cancellation of the sale which the court a quo favorably ruled.
In the meantime during the pendency of the above mentioned case, defendants-appellants sold
to Generosa Ayson Simon the lots in question. Due to the failure of defendants appellants to
comply with their commitment to have the subdivision plan of the lots approved and to deliver
to deliver the titles and possession to Generosa, the latter filed suit for specific performance. As
a result of the sale of the lot to said defendants sppellants being null and void, there is
impossibity that they can comply with their commitment to Generosa, the latter then seek the
rescission of the contract plus damages.
The defendants-appellants contend that Generosa’s action had prescribed, considering that she
had only four years from May 29, 1946 to rescind the transaction.
ISSUE:
HELD:
Article 1191 of the Civil Code provides that an injured party may also seek rescission if the
fulfilment should have become impossible. The cause of action to claim rescission arises when
the fulfilment of the obligation became impossible when the court declared that the sale was
null and void. The Generosa cannot be assailed on the ground that she slept on her rights.
128. ANGELES VS. CALASANZ
FACTS:
On December 19, 1957, defendants-appellants Ursula Torres Calasanz and plaintiffs-appellees
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 plaintiffs-appellees
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 plaintiffs-appellees paid the monthly installments until July 1966, when their
aggregate
payment already amounted to P4,533.38.
The plaintiffs-appellees 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:
Has the Contract to Sell been automatically and validly cancelled by the defendants-appellants?
RULING:
No. 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 the plaintiffs-appellees 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 the prayed application of a contract clever
in its phraseology, condemnable in its lop-sidedness 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 the plaintiffs-
appellees 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.
ISSUE:
Can petitioner UP treat its contract with ALUMCO rescinded, and may disregard the
same before any judicial pronouncement to that effect?
RULING:
Yes. In the first place, UP and ALUMCO had expressly stipulated that upon default by
the debtor, UP
has the right and the power to consider the Logging Agreement of December 2, 1960 as
rescinded without the necessity of any judicial suit. As to such special stipulation and in
connection with Article 1191 of the Civil Code, the Supreme Court, stated in Froilan vs.
Pan Oriental Shipping Co:
“There is nothing in the law that prohibits the parties from entering into agreement that
violation
of the terms of the contract would cause cancellation thereof, even without court
intervention. In other words, it is not always necessary for the injured party to resort to
court for rescission of the contract.”
FACTS:
This is a petition for certiorari by the UFC against the CA decision of February 13, 1968
declaring the BILL OF ASSIGNMENT rescinded, ordering UFC to return to Magdalo Francisco
his Mafran sauce trademark and to pay his monthly salary of P300.00 from Dec. 1, 1960 until the
return to him of said trademark and formula.
In 1938, plaintiff Magdalo V. Francisco, Sr. discovered a formula for the manufacture of a food
seasoning (sauce) derived from banana fruits popularly known as MAFRAN sauce. It was used
commercially since 1942, and in the same year plaintiff registered his trademark in his name as
owner and inventor with the
Bureau of Patents. However, due to lack of sufficient capital to finance the expansion of the
business, in 1960, said plaintiff secured the financial assistance of Tirso T. Reyes who, after a
series of negotiations, formed with others defendant Universal Food Corporation eventually
leading to the execution on May 11, 1960 of the aforequoted "Bill of Assignment" (Exhibit A or
1).
On May 31, 1960, Magdalo Francisco entered into contract with UFC stipulating among other
things that he be the Chief Chemist and Second Vice-President of UFC and shall have absolute
control and supervision over the laboratory assistants and personnel and in the purchase and
safekeeping of the chemicals used in the preparation of said Mafran sauce and that said positions
are permanent in nature.
In line with the terms and conditions of the Bill of Assignment, Magdalo Francisco was appointed
Chief Chemist with a salary of P300.00 a month. Magdalo Francisco kept the formula of the
Mafran sauce secret to himself. Thereafter, however, due to the alleged scarcity and high prices of
raw materials, on November 28, 1960, Secretary-Treasurer Ciriaco L. de Guzman of UFC issued
a Memorandum duly approved by the President and General Manager Tirso T. Reyes that only
Supervisor Ricardo Francisco should be retained in the factory and that the salary of plaintiff
Magdalo V. Francisco, Sr., should be stopped for the time being until the corporation should
resume its operation. On December 3, 1960, President and General Manager Tirso T. Reyes,
issued a memorandum to Victoriano Francisco ordering him to report to the factory and produce
"Mafran Sauce" at the rate of not less than 100 cases a day so as to cope with the orders of the
corporation's various distributors and dealers, and with instructions to take only the necessary
daily employees without employing permanent employees. Again, on December 6, 1961, another
memorandum was issued by the same President and General Manager instructing the
Assistant Chief Chemist Ricardo Francisco, to recall all daily employees who are connected in
the production of Mafran Sauce and also some additional daily employees for the production of
Porky Pops. On December 29, 1960, another memorandum was issued by the President and
General Manager instructing Ricardo Francisco, as Chief Chemist, and Porfirio Zarraga, as
Acting Superintendent, to produce Mafran Sauce and Porky Pops in full swing starting January 2,
1961 with further instructions to hire daily laborers in order to cope with the full blast operation.
Magdalo V. Francisco, Sr. received his salary as Chief Chemist in the amount of P300.00 a month
only until his services were terminated on November 30, 1960. On January 9 and 16, 1961, UFC,
acting thru its President and General Manager, authorized Porfirio Zarraga and Paula de Bacula to
look for a buyer of the corporation including its trademarks, formula and assets at a price of not
less than P300,000.00. Due to these successive memoranda, without plaintiff Magdalo V.
Francisco, Sr. being recalled back to work, he filed the present action on February 14, 1961. Then
in a letter dated March 20, 1961, UFC requested said plaintiff to report for duty, but the latter
declined the request because the present action was already filed in court.
ISSUES:
1. Was the Bill of Assignment really one that involves transfer of the formula for Mafran sauce
itself?
2. Was petitioner’s contention that Magdalo Francisco is not entitled to rescission valid?
RULING:
1. No. Certain provisions of the bill would lead one to believe that the formula itself was
transferred. To
quote, “the respondent patentee "assign, transfer and convey all its property rights and interest
over said Mafran trademark and formula for MAFRAN SAUCE unto the Party of the Second
Part," and the last
paragraph states that such "assignment, transfer and conveyance is absolute and irrevocable (and)
in no case shall the PARTY OF THE First Part ask, demand or sue for the surrender of its rights
and interest over said MAFRAN trademark and mafran formula."
“However, a perceptive analysis of the entire instrument and the language employed therein
would lead
one to the conclusion that what was actually ceded and transferred was only the use of the Mafran
sauce formula. This was the precise intention of the parties.”
The SC had the following reasons to back up the above conclusion. First, royalty was paid by
UFC to
Magdalo Francisco. Second, the formula of said Mafran sauce was never disclosed to anybody
else. Third, the Bill acknowledged the fact that upon dissolution of said Corporation, the patentee
rights and interests of said trademark shall automatically revert back to Magdalo Francisco.
Fourth, paragraph 3 of the Bill declared only the transfer of the use of the Mafran sauce and not
the formula itself which was admitted by UFC in its answer. Fifth, the facts of the case
undeniably show that what was transferred was only the use. Finally, our Civil Code allows only
“the least transmission of right, hence, what better way is there to show the least transmission of
right of the transfer of the use of the transfer of the formula itself.”
2. No. Petitioner’s contention that Magdalo Francisco’s petition for rescission should be denied
because under Article 1383 of the Civil Code of the Philippines rescission cannot be demanded
except when the party suffering damage has no other legal means to obtain reparation, was of no
merit because “it is predicated on a failure to distinguish between a rescission for breach of
contract under Article 1191 of the Civil Code and a rescission by reason of lesion or economic
prejudice, under Article 1381, et seq.” This was a case of reciprocal obligation. Article 1191 may
be scanned without disclosing anywhere that the action for rescission thereunder was
subordinated to anything other than the culpable breach of his obligations by the defendant.
Hence, the reparation of damages for the breach was purely secondary. Simply put, unlike Art.
1383, Art. 1191 allows both the rescission and the payment for damages. Rescission is not given
to the party as a last resort; hence, it is not subsidiary in nature.
G.R. No. 203655, August 13, 2014 - SM LAND, INC., Petitioner, v. BASES CONVERSION
AND DEVELOPMENT AUTHORITY AND ARNEL PACIANO D. CASANOVA, ESQ., IN HIS
OFFICIAL CAPACITY AS PRESIDENT AND CEO OF BCDA, Respondents.
Before Us is a Petition for Certiorari, Prohibition and Mandamus under Rule 65 of the Rules of
Court, with prayer for injunctive relief, seeking to nullify and set aside the Bases Conversion and
Development Authority (BCDA) Supplemental Notice No. 5 as well as all other acts pursued in
furtherance thereof, and to order respondents to immediately conduct and complete the
Competitive Selection Process on petitioner’s duly accepted unsolicited proposal.
The Facts
As culled from the records, the facts are simple and undisputed.
Pursuant to Republic Act No. (RA) 7227 or the “Bases Conversion and Development Act of
1992,” the BCDA opened for disposition and development its Bonifacio South Property, a 33.1-
hectare expanse located at Taguig City that was once used as the command center for the
country’s military forces. Jumping on the opportunity, petitioner SM Land, Inc. (SMLI), on
December 14, 2009, submitted to the BCDA an unsolicited proposal for the development of the
lot through a public-private joint venture agreement. The proposal guaranteed the BCDA secured
payments amounting to PhP 15,985/sqm or a total of PhP 8.1 billion.
Barely three months later, the initial proposal was followed by a second one with guaranteed
secured payments of PhP 31,139/sqm, totaling PhP 20 billion. On May 4, 2010, however, SMLI
submitted its third unsolicited proposal with guaranteed secured payments amounting to PhP
32,501/sqm for a total of PhP 22.6 billion.
Thereafter, the BCDA created a Joint Venture Selection Committee (JV-SC) following the
procedures prescribed under Annex “C” of the Detailed Guidelines for Competitive Challenge
Procedure for Public-Private Joint Ventures (NEDA JV Guidelines) promulgated by the National
Economic Development Authority (NEDA). The said committee recommended the acceptance of
the unsolicited proposal, which recommendation was favorably acted upon by the BCDA.
Through a letter dated May 12, 2010, the BCDA communicated to petitioner its acceptance of the
unsolicited proposal. Despite its acceptance, however, the BCDA clarified that its act should not
be construed to bind the agency to enter into a joint venture agreement with the petitioner but
only constitutes an authorization granted to the JV-SC to conduct detailed negotiations with
petitioner SMLI and iron out the terms and conditions of the agreement.
Pursuant to this authorization, the JV-SC and SMLI embarked on a series of detailed negotiations,
and on July 23, 2010, SMLI submitted its final revised proposal with guaranteed secured
payments amounting to a total of PhP 25.9 billion. Afterwards, upon arriving at mutually
acceptable terms and conditions, a Certification of Successful Negotiations (Certification) was
issued by the BCDA and signed by both parties on August 6, 2010. Through the said
Certification, the BCDA undertook to “subject SMLI’s Original Proposal to Competitive
Challenge pursuant to Annex C” and committed itself to “commence the activities for the
solicitation for comparative proposals.”
In an attempt to comply with its obligations, the BCDA prepared for the conduct of a Competitive
Challenge to determine whether or not there are other Private Sector Entities (PSEs) that can
match the proposal of SMLI, and concurrently ensure that the joint venture contract will be
awarded to the party that can offer the most advantageous terms in favor of the government. In
furtherance thereof, the agency issued Terms of Reference (TOR),2 which mapped out the
procedure to be followed in connection with the Competitive Challenge. Consequently, SMLI
was required, as it did, to post a proposal security in the amount of PhP 187 million, following the
prescribed procedure outlined in the TOR and the NEDA JV Guidelines.
Afterwards, the BCDA set the Pre-eligibility Conference on September 3, 2010. Invitations to
apply for eligibility and to submit comparative proposals were then duly published on August 12,
16 and 20, 2010. Hence, the pre-eligibility conference was conducted as scheduled. The
companies that participated in the conference included SMLI, as the Original Proponent, and
three (3) PSEs, namely Ayala Land, Inc., Rockwell Land Corp., and Filinvest Land, Inc.
The Issue
Without a doubt, the issue in this case boils down to whether or not the BCDA gravely abused its
discretion in issuing Supplemental Notice No. 5, in unilaterally aborting the Competitive
Challenge, and in subjecting the development of the project to public bidding.
HELD:
The Court’s Ruling
The petition is impressed with merit. SMLI has the right to a completed competitive challenge
pursuant to the NEDA JV Guidelines and the Certification issued by the BCDA. The reservation
clause adverted to by the respondent cannot, in any way, prejudice said right.
Perform any and all acts necessary to carry out and complete Stage Three of the Swiss Challenge
pursuant to the provisions of the TOR and NEDA JV Guidelines, including, but not limited to,
subjecting petitioner’s unsolicited proposal to a competitive challenge.
In the event that SM Land, Inc. already obtained from BCDA the amount representing its
Proposal Security, SM Land, Inc. is hereby DIRECTED to re-post the Proposal Security, in the
same amount as the previous one, on the first day of the publication of the invitation for
comparative proposals, per the NEDA JV Guidelines.
SO ORDERED.
132. GIDWANI VS. PEOPLE G.R NO 195064, JANUARY 15, 2014, J SERENO
The facts:
Petitioner is the president of G.G. Sportswear Manufacturing Corporation GSMC), which is engaged in the
export of ready-to-wear clothes. GSMC secured the embroidery services of El Grande Industrial
Corporation El Grande) and issued on various dates from June 1997 to December 1997 a total of 10 Banco
de Oro (BDO) checks as payment for the latter’s services worth an aggregate total of 1,626,707.62.
Upon presentment, these checks were dishonored by the drawee bank for having been drawn against a
closed account.
Thus, El Grande, through counsel, sent three demand letters regarding 8 of the 10 issued checks.
On 15 October 1997,5 petitioner wrote to El Grande’s counsel acknowledging receipt of the 8 October
demand letter6 and informing the latter that, on 29 August 1997, GSMC had filed a Petition with the
Securities and Exchange Commission (SEC). It was a Petition for the Declaration of a State of Suspension
of Payments, for the Approval of a Rehabilitation Plan and Appointment of a Management Committee. 7
Acting on the Petition, the SEC issued an Order 8 on 3 September 1997 ordering the suspension of all
actions, claims, and proceedings against GSMC until further order from the SEC Hearing Panel. Petitioner
attached this SEC Order to the 15 October 1997 letter. In short, GSMC did not pay El Grande.
Despite its receipt on 16 October 1997 of GSMC’s letter and explanation, El Grande still presented to the
drawee bank for payment BDO Check Nos. 0000063652 and 0000063653 dated November and December
1997, respectively.
Thereafter, sometime in November 1997, El Grande filed a Complaint with the Office of the City Prosecutor
of Manila charging petitioner with eight counts of violation of Batas Pambansa Blg. 22 (B.P. 22) for the
checks covering June to October 1997. El Grande likewise filed a similar Complaint in December 1997,
covering the checks issued in November and December 1997. Corresponding Informations for the
Complaints were subsequently filed on 1 October 2001.
On appeal, the Regional Trial Court (RTC) affirmed the findings of the MTC and likewise denied the Motion
for Reconsideration of petitioner.10
Thereafter, petitioner filed with the CA a Petition for Review under Rule 42.
Petitioner filed his Motion for Partial Reconsideration on 11 October 2010, 12 raising the following as his
defenses: (1) there was no clear evidence showing that he acknowledged the Notice of Dishonor of the
two remaining checks; (2) the suspension Order of the SEC was a valid reason for stopping the payment
of the checks; and, (3) as a corporate officer, he could only be held civilly liable.
On 6 January 2011, the CA denied the motion through its assailed Resolution. 13
Hence, this Petition.
ISSUES:
THE COURT OF APPEALS ERRED IN RULING THAT THE ORDER FOR THE SUSPENSION OF PAYMENT
ISSUED BY THE SECURITIES AND EXCHANGE COMMISSION IS NOT A VALID REASON TO STOP PAYMENT
OF A CHECK EVEN IF SUCH ORDER WAS ISSUED PRIOR TO THE PRESENTMENT OF THE SUBJECT CHECKS
FOR PAYMENT;
B. THE COURT OF APPEALS ERRED IN FINDING A CORPORATE OFFICER PERSONALLY LIABLE FOR THE
CIVIL OBLIGATION OF THE CORPORATION.
HELD:
1) making, drawing and issuing any check to apply on account or for value;
2) knowledge of the maker, drawer or issuer that at the time of issue he does not have sufficient funds in
or credit with the drawee bank for the payment of the check in full upon its presentment; and
3) subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit, or dishonor of
the check for the same reason had not the drawer, without any valid cause, ordered the bank to stop
payment.
WHEREFORE, in view of the foregoing, the Petition is hereby GRANTED. The Decision dated 7 September
2010 and the Resolution dated 6 January 2011 of the Court of Appeals in CA-G.R. CR No. 32642 are
REVERSED and SET ASIDE. Criminal Case Nos. 301888 and 301889 are DISMISSED, without prejudice to
the right of El Grande Industrial Corporation to file the proper civil action against G.G. Sportswear
Manufacturing Corporation for the value of the ten (10) checks.
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s
Division.
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, namely:
(1) Avelina Abarientos-Rebusquillo, petitioner in this case; (2) Fortunata Abarientos-Orosco, the
mother of petitioner Salvador; (3) Rosalino Abarientos; (4) Juan Abarientos; (5) Feliciano
Abarientos; (6) Abraham Abarientos; and (7) Carlos Abarientos. 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, which was covered by Tax Declaration ARP No. (TD) 0141. 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 reinstat TD0141 and so correct the injustice done
to the other heirs of Eulalio.
Issue
: Whether or not there was a simulation of contract.
Held
: The Civil Code provides: 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.
134. SPOUSES BALILA VS IAC GR. NO. L-68477 OCTOBER 29, 1987
FACTS:
Republic of the Philippines, through the Bureau of Internal Revenue, commenced an action in the
Court of First Instance (now Regional Trial Court), to collect from the spouses Antonio Pastor
and Clara Reyes-Pastor deficiency income taxes for the years 1955 to 1959 with surcharge and
monthly interest, and costs. The Pastors filed a motion to dismiss the complaint, but the motion
was denied. They filed an answer admitting there was an assessment against them for income tax
deficiency but denying liability therefor. They contended that they had availed of the tax amnesty
under P.D.’s Nos. 23, 213 and 370 and had paid the corresponding amnesty taxes amounting of
their reported untaxed income under P.D. 23, and a final payment on October 26, 1973 under P.D.
370 evidenced by the Government’s Official Receipt. The trial court held that the respondents had
settled their income tax deficiency for the years 1955 to 1959, not under P.D. 23 or P.D. 370, but
under P.D. 213.
The Government appealed to the Intermediate Appellant Court, alleging that the private
respondents were not qualified to avail of the tax amnesty under P.D. 213 for the benefits of that
decree are available only to persons who had no pending assessment for unpaid taxes, as provided
in Revenue Regulations Nos. 8-72 and 7-73. Since the Pastors did in fact have a pending
assessment against them, they were precluded from availing of the amnesty granted in P.D.’s Nos.
23 and 213. The Government further argued that “tax exemptions should be interpreted
strictissimi juris against the taxpayer. The Intermediate Appellate Court (now Court of Appeals)
rendered a decision dismissing the Government’s appeal and holding that the payment of
deficiency income taxes by the Pastors under PD. No. 213, and the acceptance thereof by the
Government, operated to divest the latter of its right to further recover deficiency income taxes
from the private respondents pursuant to the existing deficiency tax assessment against them.
ISSUE:
Whether or not the tax amnesty payments made by the private respondents bar an action for
recovery of deficient income taxes under P.D.’s Nos. 23, 213 and 370.
HELD:
YES. Petition for review is denied.
RATIO:
[T]he Government is estopped from collecting the difference between the deficiency tax
assessment and the amount already paid by them as amnesty tax. The finding of the appellate
court that the deficiency income taxes were paid by the Pastors, and accepted by the Government,
under P.D. 213, granting amnesty to persons who are required by law to file income tax returns
but who failed to do so, is entitled to the highest respect and may not be disturbed except under
exceptional circumstances
The rule is that in case of doubt, tax statutes are to be construed strictly against the Government
and liberally in favor of the taxpayer strictisimi juris for taxes, being burdens, are not to be
presumed beyond what the applicable statute (in this case P.D. 213) expressly and clearly
declares.
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 canand should nevertheless be sustained on the basis of there being such an
obligation arising fromlaw.
Issue:
Whether or not Central Bank has the obligation arising from law to resell theUS$154,094.56 to
Batchelder at the preferred rate.
Held:
Central Bank was 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
powersgranted to it under this Act to achieve the following objectives: (a) to maintain
monetarystability in the Philippines; (b) to preserve the international value of the peso and
theconvertibility of the peso into other freely convertible currencies; and (c) to promote a
risinglevel 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 thenis a law. A legal norm could so
require that a particular party be chargeable with a prestation orundertaking to give or to deliver
or to do or to render some service. It is an indispensablerequisite though that such a provision,
thus in fact exists. There must be a showing to that effect.As early as 1909 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, a 1918 decision, such an
obligation is "a creation of the positive law." They areordinarily traceable to code or statute. It is
true though, as noted in the motion forreconsideration following People v. Que Po Lay, that a
Central Bank circular may have the forceand 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.
Facts:
Napala purchased from spouses Tongson their 364 square meter parcel of land situated in Davao.
The respondent prepared an Absolute Deed of Sale indicating the consideration as P 400,000 and
executed another Memorandum of Agreement in conformity with the Deed of Sale. Upon signing,
Napala paid two hundred thousand pesos in cash to spouses and issued postdated PNB check to
represent the balance. However the check was dishonored for insufficient funds. Despite demand,
Napala failed to pay or return the purchase land. The petitioners filed for the annulment of the
contract.
The trial court ordered the annulment of the contract. Furthermore, Napala’s
action in giving the check constituted fraud that induced the spouses to enter in the sale.
Issue:
Whether or Not Napala employed fraud which induces the spouses to enter in the sale.
Held:
The issuance of PNB check and fraudulently representation made by Napala could not be
considered as determining cause for the sale of the subject parcel of land. A valid contract
requires occurrence of three elements. In the present, there is no dispute as regards the presence
of two requisites; namely, (a) determinate subject matter, and (b) price certain in money. As
regards the requisite which is the consent of the parties, it is clearly shown for the record that the
spouses agreed to sell the land to Napala who offered to pay the price. The fraud was not
employed during the negotiation and perfection stages of the sale, but existed in the
consummation when the parties are in the process of their respective obligations.
137. SPOUSES VICTOR AND EDNA BINUA VS. LUCIA P. ONG GR NO. 207176, JUNE
18, 2014, J REYES
FACTS:
In Criminal Case Nos. 8230 and 8465-70, Edna was convicted of Estafa upon complaint of Lucia
and sentenced to imprisonment of up to 30 years of reclusion perpetua, She was also ordered to
pay P2,285,000, with interest and damages. To avoid criminal liability, she and Victor executed
separate real estate mortgages over Victor’s properties worth P7,000,000.00. Edna then filed a
motion for new trial which was granted by the RTC. In its Decision, the RTC ordered Edna to pay
Lucia the amount of P2,285,000.00. It ruled that the presentation of the promissory note novated
the original agreement between them to a civil obligation. Edna, however, failed to pay the
obligation, thus Lucia extrajudicially foreclosed the properties covered by the real estate
mortgage. Edna and Victor then filed a case for Declaration of Nullity Of Mortgage Contracts,
citing that the mortgage documents were executed under duress, as they were suffering from the
effects of conviction of Edna, thus could not have freely entered into the contract. The trial court,
however, dismissed their complaint. While acknowledging that the mortgage contracts were
indeed executed under duress, it however applied Article 1335 of the Civil code, the last
paragraph of which says: “A threat to enforce one’s claim through competent authority, if the
claim is just and legal, does not vitiate consent.” Edna profited from it, as she did not go to jail.
The spouses appealed to the Court of Appeals, which also denied it, holding that the threat of
Edna going to jail thus they were made to sign the real estate mortgages was not the intimidation
contemplated by law. Edna and Victor elevated their case to the Supreme Court.
First, the Court must emphasize that in a Rule 45 petition for review, only questions of law may
be raised because the Court is not a trier of facts and is not to review or calibrate the evidence on
record; and when supported by substantial evidence, the findings of fact by the CA are conclusive
and binding on the parties and are not reviewable by this Court[1], unless the case falls under any
of the exceptions.[2]
In this case, the Court notes that the petitioners’ arguments are exact repetitions of the issues
raised in the CA, and the petitioners failed to advance any convincing reason that would alter the
resolution in this case. Not only that, the petitioners’ arguments are also downright inaccurate, if
not maliciously misleading.
The decisive factor in this case is the RTC-Branch 2 Decision dated February 24, 2006 in
Criminal Case Nos. 8230, 8465, 8466, 8467, 8468, 8469 & 8470. This was the decision that
overturned petitioner Edna’s previous conviction for estafa and adjudged her only to be civilly
liable to the respondent. Said RTC decision is already final and executory[3], and this was not
refuted by the petitioners. The Court has consistently ruled that “once a decision attains finality,
it becomes the law of the case regardless of any claim that it is erroneous. Having been rendered
by a court of competent jurisdiction acting within its authority, the judgment may no longer be
altered even at the risk of occasional legal infirmities or errors it may contain.”[4] Thus, said RTC
decision bars a rehash, not only of the issues raised therein but also of other issues that might
have been raised, and this includes the existence of the promissory note upon which petitioner
Edna’s exoneration rested. As a matter of fact, the RTC decision embodied petitioner Edna’s own
admission that she is indebted to the respondent.
ISSUE:
The issue of whether petitioner Edna’s liability under the note was, from the very beginning, civil
and not criminal in nature has no relevance in this case as the only issue to be resolved is whether
the mortgage contracts were executed under duress. Any other discussion pertinent to the RTC
decision will transgress the principle of immutability of a final judgment.
The petitioners claim that they were compelled by duress or intimidation when they executed the
mortgage contracts. According to them, they “were still suffering from the effect of the
conviction of [petitioner] Edna, and could not have been freely entered into said contracts.”[6]
The petitioners also allege that the respondent subsequently “rammed the two (2) mortgage
contracts involving two (2) prime properties on [petitioner Victor’s] throat, so to speak[,] just so
to make him sign the said documents[7],” and that the respondent took advantage of the
misfortune of the petitioners and was able to secure in her favor the real estate mortgages.[8]
Based on the petitioners’ own allegations, what the respondent did was merely inform them of
petitioner Edna’s conviction in the criminal cases for estafa. It might have evoked a sense of fear
or dread on the petitioners’ part, but certainly there is nothing unjust, unlawful or evil in the
respondent’s act. The petitioners also failed to show how such information was used by the
respondent in coercing them into signing the mortgages. The petitioners must remember that
petitioner Edna’s conviction was a result of a valid judicial process and even without the
respondent allegedly “ramming it into petitioner Victor’s throat,” petitioner Edna’s imprisonment
would be a legal consequence of such conviction. In Callanta v. National Labor Relations
Commission[12], the Court stated that the threat to prosecute for estafa not being an unjust act,
but rather a valid and legal act to enforce a claim, cannot at all be considered as intimidation.[13]
As correctly ruled by the CA, “[i]f the judgment of conviction is the only basis of the [petitioners]
in saying that their consents were vitiated, such will not suffice to nullify the real estate
mortgages and the subsequent foreclosure of the mortgaged properties. No proof was adduced to
show that [the respondent] used [force], duress, or threat to make [petitioner] Victor execute the
real estate mortgages.”[14]
Finally, the petitioners assail the ten percent (10%) imposed by the RTC-Branch 2 in the criminal
cases for estafa. As previously stated, however, the decision in said case is already final and
executory.[15] The Court will not even consider the petitioners’ arguments on such issue for to
do so would sanction the petitioners’ act of subverting the immutability of a final judgment.
HELD:
Petition denied.
138. ECE REALTY AND DEVELOPMENT INC. VS. RACHEL G. MANDAP GR. NO.
196182 SEPTEMBER 1, 2014, J PERALTA.
FACTS
ISSUE
The basic issue in the present case is whether petitioner was guilty of
fraud and if so, whether such fraud is sufficient ground to nullify its
contract with respondent.
HELD
The Facts
On May 31, 1983, Goldstar Conglomerates, Inc. (GCI), represented by Guillermo Zaldaga
(Zaldaga), obtained from First Summa Savings and Mortgage Bank (Summa Bank), now
respondent Paic Savings and Mortgage Bank, Inc. (PSMB),4 a loan in the amount of
P1,500,000.00 as evidenced by a Loan Agreement5 dated May 31, 1983. As security therefor,
GCI executed in favor of PSMB six (6) promissory notes6 in the aggregate amount of
P1,500,000.00 as well as a Deed of Real Estate Mortgage over a parcel of land covered by
Transfer Certificate of Title (TCT) No. 308475.7 As additional security, petitioners Francisco
Sierra, Rosario Sierra, and Spouses Felix Gatlabayan and Salome Sierra mortgaged four(4)
parcels of land in Antipolo City, covered by TCT Nos. 308476, 308477, 308478, and 308479,8
and respectively registered in their names (subject properties). Records show that after the signing
of the mortgage deed, Zaldaga gave petitioner Francisco Sierra9 four (4) manager’s checks with
an aggregate amount of P200,000.00, which werelater successfully encashed,10 as well as several
post-dated checks.11
Eventually, GCI defaulted in the payment of its loan to PSMB, thereby prompting the latter to
extrajudicially foreclose the mortgage on the subject properties in accordance with Act No.
3135,12 as amended, with due notice to petitioners.13 In the process, PSMB emerged as the
highest bidder in the public auction sale held on June 27, 1984 for a total bid price of
P2,467,272.66.14 Since petitioners failed to redeem the subject properties within the redemption
period, their certificates of title were cancelled and new ones were issued in PSMB’s name.15
On September 16, 1991, petitioners filed a complaint16 for the declaration of nullity ofthe real
estate mortgage and its extrajudicial foreclosure, and damages against PSMB and Summa Bank
before the RTC, docketed as Civil Case No. 91-2153.
In the said complaint, petitioners averred that under pressing need of money, with very limited
education and lacking proper instructions, they fell prey to a group who misrepresented to have
connectionswith Summa Bank and, thus, could help them secure a loan.17 They were made to
believe that they applied for a loan, the proceeds of which would be released through checks
drawn against Summa Bank.18 Relying in good faith on the checks19 issued to them, petitioners
unsuspectingly signed a document denominated as Deed of Real Estate Mortgage (subject deed),
couched in highly technical legal terms, which was notinterpreted in a language/dialect known to
them, and which was not accompanied by the loan documents. However, when they presented for
payment the earliest-dated checks to the drawee bank, the same were dishonored for the reason
"Account Closed." Upon confrontation, some members of the group assured petitioners that there
was only a misunderstanding and that their certificates of titles would be returned.20
Subsequently, petitioners learned that: (a) the loan account secured by the real estate mortgage
was in the nameof another person and not in their names as they were made to understand; (b)
despite lack of special authority from them, foreclosure proceedings over the subject properties
were initiated by PSMB and not Summa Bank in whose favor the mortgage was executed; (c) the
period of redemption had already lapsed; and (d) the ownership over the subject properties had
already been consolidated in the name of PSMB.21 Petitioners likewise lamented that they were
not furnished copies of the loan and mortgage documents, or notified/apprised of the assignment
to PSMB, rendering them unable to comply with their obligations under the subject deed. They
further claimed that theywere not furnished a copy of the statement of account, which was bloated
with unconscionable and unlawful charges, assessments, and fees, nor a copy of the petition for
foreclosure prior to the precipitate extrajudicial foreclosure and auction sale which failed to
comply with the posting and notice requirements.22 In light of the foregoing, petitioners prayed
that the real estate mortgage and the subsequent foreclosure proceedings, and all derivative titles
and rights arising therefrom be declared null and void ab initio, and that the subject properties be
reconveyed back to them, with further prayer for compensatory and exemplary damages, and
attorney’s fees.23
PSMB filed its answer,24 averring that PSMB and Summa Bank are one and the same entity.25 It
prayed for the dismissal of the complaint, claiming that petitioners have no cause of action
against it because it never extended any loan to them.26 PSMB maintained that: (a) it acted in
good faith with respect to the subject transactions and that petitioners’ action should be directed
against the group who deceived them;27 (b) the subject properties were mortgaged to securean
obligation covered by the loan agreement with GCI;28 (c) the mortgage was valid, having been
duly signed by petitioners before a notary public;29 (d) the foreclosure proceedings were regular,
having complied with the formalities required by law;30 and (e) petitioners allowed time topass
without pursuing their purported right against Summa Bank and/or PSMB.31 PSMB thereby
interposed a counterclaim for compensatory, moral and exemplary damages, and attorney’s fees
for the baseless suit.32
ISSUES:
The essential issues in this case are whether or not the CA erred in: (a) ruling that petitioners were
aware that they were mere accommodation mortgagors, and (b) dismissing the complaint on the
grounds of prescription and laches.
HELD:
The Court’s Ruling
WHEREFORE, the petition is DENIED. The Decision dated June 27, 2011 of the Court of
Appeals (CA) in CA-G.R. CV No. 91999 is hereby AFFIRMED.
SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice
140. SPOUSES VICTOR AND EUNA BINUA V LUCIA ONG GR NO. 207176,
JUNE 18, 2014, J REYES
FACTS:
In Criminal Case Nos. 8230 and 8465-70, Edna was convicted of Estafa upon complaint of Lucia
and sentenced to imprisonment of up to 30 years of reclusion perpetua, She was also ordered to
pay P2,285,000, with interest and damages. To avoid criminal liability, she and Victor executed
separate real estate mortgages over Victor’s properties worth P7,000,000.00. Edna then filed a
motion for new trial which was granted by the RTC. In its Decision, the RTC ordered Edna to pay
Lucia the amount of P2,285,000.00. It ruled that the presentation of the promissory note novated
the original agreement between them to a civil obligation. Edna, however, failed to pay the
obligation, thus Lucia extrajudicially foreclosed the properties covered by the real estate
mortgage. Edna and Victor then filed a case for Declaration of Nullity Of Mortgage Contracts,
citing that the mortgage documents were executed under duress, as they were suffering from the
effects of conviction of Edna, thus could not have freely entered into the contract. The trial court,
however, dismissed their complaint. While acknowledging that the mortgage contracts were
indeed executed under duress, it however applied Article 1335 of the Civil code, the last
paragraph of which says: “A threat to enforce one’s claim through competent authority, if the
claim is just and legal, does not vitiate consent.” Edna profited from it, as she did not go to jail.
The spouses appealed to the Court of Appeals, which also denied it, holding that the threat of
Edna going to jail thus they were made to sign the real estate mortgages was not the intimidation
contemplated by law. Edna and Victor elevated their case to the Supreme Court.
First, the Court must emphasize that in a Rule 45 petition for review, only questions of law may
be raised because the Court is not a trier of facts and is not to review or calibrate the evidence on
record; and when supported by substantial evidence, the findings of fact by the CA are conclusive
and binding on the parties and are not reviewable by this Court[1], unless the case falls under any
of the exceptions.[2]
In this case, the Court notes that the petitioners’ arguments are exact repetitions of the issues
raised in the CA, and the petitioners failed to advance any convincing reason that would alter the
resolution in this case. Not only that, the petitioners’ arguments are also downright inaccurate, if
not maliciously misleading.
The decisive factor in this case is the RTC-Branch 2 Decision dated February 24, 2006 in
Criminal Case Nos. 8230, 8465, 8466, 8467, 8468, 8469 & 8470. This was the decision that
overturned petitioner Edna’s previous conviction for estafa and adjudged her only to be civilly
liable to the respondent. Said RTC decision is already final and executory[3], and this was not
refuted by the petitioners. The Court has consistently ruled that “once a decision attains finality,
it becomes the law of the case regardless of any claim that it is erroneous. Having been rendered
by a court of competent jurisdiction acting within its authority, the judgment may no longer be
altered even at the risk of occasional legal infirmities or errors it may contain.”[4] Thus, said RTC
decision bars a rehash, not only of the issues raised therein but also of other issues that might
have been raised, and this includes the existence of the promissory note upon which petitioner
Edna’s exoneration rested. As a matter of fact, the RTC decision embodied petitioner Edna’s own
admission that she is indebted to the respondent.
ISSUE:
The issue of whether petitioner Edna’s liability under the note was, from the very beginning, civil
and not criminal in nature has no relevance in this case as the only issue to be resolved is whether
the mortgage contracts were executed under duress. Any other discussion pertinent to the RTC
decision will transgress the principle of immutability of a final judgment.
The petitioners claim that they were compelled by duress or intimidation when they executed the
mortgage contracts. According to them, they “were still suffering from the effect of the
conviction of [petitioner] Edna, and could not have been freely entered into said contracts.”[6]
The petitioners also allege that the respondent subsequently “rammed the two (2) mortgage
contracts involving two (2) prime properties on [petitioner Victor’s] throat, so to speak[,] just so
to make him sign the said documents[7],” and that the respondent took advantage of the
misfortune of the petitioners and was able to secure in her favor the real estate mortgages.[8]
Based on the petitioners’ own allegations, what the respondent did was merely inform them of
petitioner Edna’s conviction in the criminal cases for estafa. It might have evoked a sense of fear
or dread on the petitioners’ part, but certainly there is nothing unjust, unlawful or evil in the
respondent’s act. The petitioners also failed to show how such information was used by the
respondent in coercing them into signing the mortgages. The petitioners must remember that
petitioner Edna’s conviction was a result of a valid judicial process and even without the
respondent allegedly “ramming it into petitioner Victor’s throat,” petitioner Edna’s imprisonment
would be a legal consequence of such conviction. In Callanta v. National Labor Relations
Commission[12], the Court stated that the threat to prosecute for estafa not being an unjust act,
but rather a valid and legal act to enforce a claim, cannot at all be considered as intimidation.[13]
As correctly ruled by the CA, “[i]f the judgment of conviction is the only basis of the [petitioners]
in saying that their consents were vitiated, such will not suffice to nullify the real estate
mortgages and the subsequent foreclosure of the mortgaged properties. No proof was adduced to
show that [the respondent] used [force], duress, or threat to make [petitioner] Victor execute the
real estate mortgages.”[14]
Finally, the petitioners assail the ten percent (10%) imposed by the RTC-Branch 2 in the criminal
cases for estafa. As previously stated, however, the decision in said case is already final and
executory.[15] The Court will not even consider the petitioners’ arguments on such issue for to
do so would sanction the petitioners’ act of subverting the immutability of a final judgment.
HELD:
Petition denied.
Facts:
On 7 March 1997, an Isuzu Elf truck (Isuzu truck) with plate number UAW 582,3 owned by
respondent Leonora J. Gomez (Leonora)4 and driven by Antenojenes Perez (Perez),5 was hit by a
Mayamy Transportation bus (Mayamy bus) with temporary plate number 1376-1280,6 registered
under the name of petitioner Elvira Lim (Lim)7 and driven by petitioner Mariano C. Mendoza
(Mendoza).8
Owing to the incident, an Information for reckless imprudence resulting in damage to property
and multiple physical injuries was filed against Mendoza.9 Mendoza, however, eluded arrest,
thus, respondents filed a separate complaint for damages against Mendoza and Lim, seeking
actual damages, compensation for lost income, moral damages, exemplary damages, attorney’s
fees and costs of the suit.10 This was docketed as Civil Case No. 5352-V-97.
According to PO1 Melchor F. Rosales (PO1 Rosales), investigating officer of the case, at around
5:30 a.m., the Isuzu truck, coming from Katipunan Road and heading towards E. Rodriguez, Sr.
Avenue, was travelling along the downward portion of Boni Serrano Avenue when, upon reaching
the corner of Riviera Street, fronting St. Ignatius Village, its left front portion was hit by the
Mayamy bus.11 According to PO1 Rosales, the Mayamy bus, while traversing the opposite lane,
intruded on the lane occupied by the Isuzu truck.12
PO1 Rosales also reported that Mendoza tried to escape by speeding away, but he was
apprehended in Katipunan Road corner C. P. Garcia Avenue by one Traffic Enforcer Galante and
a security guard of St. Ignatius Village.13
As a result of the incident, Perez,as well as the helpers on board the Isuzu truck, namely Melchor
V. Anla (Anla), Romeo J. Banca (Banca), and Jimmy Repisada (Repisada), sustained injuries
necessitating medical treatment amounting to P11,267.35,which amount was shouldered by
respondents. Moreover, the Isuzu truck sustained extensive damages on its cowl, chassis, lights
and steering wheel, amounting to P142,757.40.14
Additionally, respondents averred that the mishap deprived them of a daily income of P1,000.00.
Engaged in the business of buying plastic scraps and delivering them to recycling plants,
respondents claimed that the Isuzu truck was vital in the furtherance of their business.
For their part, petitioners capitalized on the issue of ownership of the bus in question.
Respondents argued that although the registered owner was Lim, the actual owner of the bus was
SPO1 Cirilo Enriquez (Enriquez), who had the bus attached with Mayamy Transportation
Company (Mayamy Transport) under the so-called "kabit system." Respondents then impleaded
both Lim and Enriquez.
Petitioners, on the other hand, presented Teresita Gutierrez (Gutierrez), whose testimony was
offered to prove that Mayamy Bus or Mayamy Transport is a business name registered under her
name, and that such business is a sole proprietorship. Such was presented by petitioners to rebut
the allegation of respondents that Mayamy Transport is a corporation;15 and to show, moreover,
that although Gutierrez is the sole proprietor of Mayamy Transport, she was not impleaded by
respondents in the case at bar.16
After weighing the evidence, the RTC found Mendoza liable for direct personal negligence under
Article 2176 of the Civil Code, and it also found Lim vicariously liable under Article 2180 of the
same Code.
As regards Lim, the RTC relied on the Certificate of Registration issued by the Land
Transportation Office on 9 December 199617 in concluding that she is the registered owner of the
bus in question. Although actually owned by Enriquez, following the established principle in
transportation law, Lim, as the registered owner, is the one who can be held liable.
WHEREFORE, judgment is hereby rendered in favor of the [respondents] and against the
[petitioners]:
1. Ordering the [petitioners] except Enriquez to pay [respondents], jointly and severally, the costs
of repair of the damaged vehicle in the amount of P142,757.40;
2. Ordering the defendants except Enriquez to pay [respondents], jointly and severally, the
amount of P1,000.00 per day from March 7, 1997 up to November 1997 representing the
unrealized income of the [respondents] when the incident transpired up to the time the damaged
Isuzu truck was repaired;
3. Ordering the [petitioners] except Enriquez to pay [respondents], jointly and severally, the
amount of P100,000.00 as moral damages, plus a separate amount of P50,000.00 as exemplary
damages;
4. Ordering the [petitioners] except Enriquez to pay [respondents], jointly and severally, the
amount of P50,000.00 as attorney’s fees; 5. Ordering the [petitioners] except Enriquez to pay
[respondents] the costs of suit.18
Displeased, petitioners appealed to the CA, which appeal was docketed as CA-G.R. CV No.
71877. After evaluating the damages awarded by the RTC, such were affirmed by the CA with the
exception of the award of unrealized income which the CA ordered deleted, viz:
WHEREFORE, premises considered, the appeal is PARTLY GRANTED. The judgment of the
Regional Trial Court of Valenzuela City, Branch 172 dated January 31, 2001, is MODIFIED, in
that the award of P1,000.00 per day from March 1997 up to November 1997 representing
unrealized income is DELETED. The award of P142,757.40 for the cost of repair of the damaged
vehicle, the award of P100,000.00 as moral damages, the award of P50,000.00 as exemplary
damages, the award of P50,000.00 as attorney’s fees and the costs of the suit are hereby
MAINTAINED.19
ISSUES:
Unsatisfied with the CA ruling, petitioners filed an appeal by certiorari before the Court, raising
the following issues:
1. The court a quo has decided questions of substance in a way not in accord with law or with the
applicable decisions of the Supreme Court when it awarded:
a. Moral damages in spite of the fact that the [respondents’] cause of action is clearly based on
quasi-delict and [respondents] did not sustain physical injuries to be entitled thereto pursuant to
Article 2219 (2) of the New Civil Code and pertinent decisions of the Supreme Court to that
effect. The court a quo erroneously concluded that the driver acted in bad faith and erroneously
applied the provision of Article 21 of the same code to justify the award for bad faith is not
consistent with quasi-delict which is founded on fault or negligence.
b. Exemplary damages in spite of the fact that there is no finding that the vehicular accident was
due to petitioner-driver’s gross negligence to be entitled thereto pursuant to Article 2231 of the
New Civil Code and pertinent decisions of the Supreme Court to that effect. The factual basis of
the court a quo that "the act of the driver of the bus in attempting to escape after causing the
accident in wanton disregard of the consequences of his negligent act is such gross negligence
that justifies an award of exemplary damages" is an act after the fact which is not within the
contemplation of Article 2231 of the New Civil Code.
c. Attorney’s fees in spite of the fact that the assailed decisions of the trial court and the court a
quo are bereft with jurisdictions for the award of attorney’s fees pursuant to the pertinent
decisions of the Supreme Court on the matter and provision Article 2208 of the New Civil Code.
The court a quo erroneously applied the decision of the Supreme Court in Bañas, Jr. vs. Court of
Appeals, 325 SCRA 259.
HELD:
The Court’s Ruling
Respondents anchor their claim for damages on Mendoza’s negligence, banking on Article 2176
of the Civil Code, to wit:
Whoever by act or omission causes damage to another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this
Chapter.
In impleading Lim, on the other hand, respondents invoke the latter’s vicarious liability as
espoused in Article 2180 of the same Code:
The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions,
but also for those of persons for whom one is responsible.
WHEREFORE, premises considered, the Court Resolves to PARTIALLY GRANT the appeal by
certiorari, as follows:
1) DECLARE Mariano Mendoza and Elvira Lim solidarily liable to respondent Spouses Leonora
and Gabriel Gomez;
2) MAINTAIN the award of actual or compensatory damages in the amount of P142,757.40 for
the repair of the Isuzu Elf truck, with legal interest beginning 31 January 2001 until fully paid;
3) GRANT additional actual or compensatory damages in the amount of P11,267.35 for the
medical expenses shouldered by respondent Spouses Leonora and Gabriel Gomez, with legal
interest beginning 31 January 2001 until fully paid;
SO ORDERED.
Spouses Eduardo and Lydia Silos (petitioners) have been in business for
about two decades of operating a department store and buying and selling
of ready-to-wear apparel. Respondent Philippine National Bank (PNB) is a
banking corporation organized and existing under Philippine laws. To
secure a one-year revolving credit line of P150,000.00 obtained from
PNB, petitioners constituted in August 1987 a Real Estate Mortgage5 over
a 370- square meter lot in Kalibo, Aklan covered by Transfer Certificate
of Title No. (TCT) T-14250. In July 1988, the credit line was increased
to P1.8 million and the mortgage was correspondingly increased to P1.8
million.6 And in July 1989, a Supplement to the Existing Real Estate
Mortgage7 was executed to cover the same credit line, which was
increased to P2.5 million, and additional security was given in the form
of a 134-square meter lot covered by TCT T-16208. In addition,
petitioners issued eight Promissory Notes8 and signed a Credit
Agreement. 9 This July 1989 Credit Agreement contained a stipulation on
interest which provides as follows: 1.03. Interest. (a) The Loan shall
be subject to interest at the rate of 19.5% per annum. Interest shall be
payable in advance every one hundred twenty days at the rate prevailing
at the time of the renewal. (b) The Borrower agrees that the Bank may
modify the interest rate in the Loan depending on whatever policy the
Bank may adopt in the future, including without limitation, the shifting
from the floating interest rate system to the fixed interest rate
system, or vice versa. Where the Bank has imposed on the Loan interest
at a rate per annum, which is equal to the Bank’s spread over the
current floating interest rate, the Borrower hereby agrees that the Bank
may, without need of notice to the Borrower, increase or decrease its
spread over the floating interest rate at any time depending on whatever
policy it may adopt in the future. 10 (Emphases supplied) The eight
Promissory Notes, on the other hand, contained a stipulation granting
PNB the right to increase or reduce interest rates “within the limits
allowed by law or by the Monetary Board.”11 The Real Estate Mortgage
agreement provided the same right to increase or reduce interest rates
“at any time depending on whatever policy PNB may adopt in the
future.”12
ISSUES
1) Whether x x x the interest rates on petitioners’ outstanding
obligation were unilaterally and arbitrarily imposed by PNB;
2) Whether x x x the penalty charges were secured by the real estate
mortgage; and
3) Whether x x x the extrajudicial foreclosure and sale are valid.
HELD
3. The trial court’s award of one per cent (1%) attorney’s fees is
REINSTATED;
8. Considering that this case has been pending for such a long time and
that further proceedings, albeit uncomplicated, are required, the trial
court is ORDERED to proceed with dispatch.
Marivel Carandang and Joseph Soriano are the children of the late Sps. Jorja Rigor- Soriano and
Magin Soriano, the owners of the two parcels of land located in Macabucod, Aliaga, Nueva Ecija.
The properties became subject to Operation Land Transfer (OLT) and were valued by the Land
Bank and the Department of Agrarian Reform (DAR) at P10,000.00/hectare. Contending that
such valuation was too low compared to existing valuations of agricultural lands, the heirs
commenced an action for just compensation. They asked that a final valuation of the properties be
pegged at P1,800,000.00, based on Administrative Order No. 61, Series of 1992 and R.A. No.
6657.
The RTC ordered Land Bank to pay the heirs the amount P1,227,571.10 as just compensation.
During the pendency of the appeal, both parties entered into an agreement re-evaluating the cost
of the parcels of land. Thus, Land Bank submitted a manifestation informing the High Court that
the parties have already filed their Joint Motion to Approve submitting their Agreement dated
November 29, 2012.
ISSUE:
Whether or not the present appeal to the Supreme Court should be dismissed?
HELD:
The appeal should be closed and terminated.
The Agreement was a compromise that the parties freely and voluntarily entered into for the
purpose of finally settling their dispute in this case. Under Art. 2028 of the Civil Code, a
compromise is a contract whereby the parties, by making reciprocal concessions, avoid a
litigation or put an end to one already commenced. Accordingly, a compromise is either judicial,
if the objective is to put an end to a pending litigation, or extrajudicial, if the objective is to avoid
a litigation.