ALCANTARA-DAUS v.

SPOUSES DE LEON
G.R. No. 149750 June 16, 2003

FACTS:
            Spouses De Leon are the owners of a parcel of land situated in the Municipality of San Manuel, Pangasinan with an
area of Four Thousand Two Hundred Twelve square meters more or less. Respondent Hermoso De Leon inherited the
said lot from his father Marcelino De Leon by virtue of a Deed of Extra-Judicial Partition. Said lot is covered by Original
Certificate of Title No. 22134 of the Land Records of Pangasinan.

Sometime 1960s, Spouses De Leon engaged the services of the late Atty. Florencio Juan to take care of the documents of
their properties.  They were asked to sign voluminous documents by the latter.  After the death of Atty. Juan, some
documents surfaced and most revealed that their properties had been conveyed by sale or quitclaim to Hermoso’s brothers
and sisters, to Atty. Juan and his sisters, when in truth and in fact, no such conveyances were ever intended by them.
Furthermore, respondent found out that his signature in the Deed of Extra-judicial Partition with Quitclaim made in favor of
Rodolfo de Leon was forged. They discovered that the land in question was sold by Rodolfo de Leon to Aurora Alcantara

Spouses De Leon demanded the annulment of the document and re-conveyance but defendants refused. Petitioner,
Aurora Alcantara-Daus averred that she bought the land in question in good faith and for value on December 1975 and that
she has been in continuous, public, peaceful, open possession over the same and has been appropriating the produce
thereof without objection from anyone.

The RTC of Urdaneta, Pangasinan rendered its Decision in favor of herein petitioner.  It ruled that respondents’ claim was
barred by laches, because more than 18 years had passed since the land was sold.   It further ruled that since it was a
notarial document, the Deed of Extrajudicial Partition in favor of Rodolfo de Leon was presumptively authentic.

ISSUES:
           
Whether or not the Deed of Absolute executed by Rodolfo De Leon over the land in question in favor of petitioner was
perfected and binding upon the parties therein?

Whether or not the evidentiary weight of the Deed of Extrajudicial Partition with Quitclaim, executed by respondent
Hermoso de Leon, Perlita de Leon and Carlota de Leon in favor of Rodolfo de Leon was overcome by more than a
preponderance of evidence of respondents?

HELD:

First Issue:
NO. It is during the delivery that the law requires the seller to have the right to transfer ownership of the thing sold.  In
general, a perfected contract of sale cannot be challenged on the ground of the seller’s non-ownership of the thing sold at
the time of the perfection of the contract. Further, even after the contract of sale has been perfected between the parties,
its consummation by delivery is yet another matter.  It is through tradition or delivery that the buyer acquires the real right of
ownership over the thing sold. Undisputed is the fact that at the time of the sale, Rodolfo De Leon was not the owner of the
land he delivered to petitioner.  Thus, the consummation of the contract and the consequent transfer of ownership would
depend on whether he subsequently acquired ownership of the land in accordance with Article 1434 of the Civil
Code. Therefore, we need to resolve the issue of the authenticity and the due execution of the Extrajudicial Partition and
Quitclaim in his favor.

Second Issue:
NO. As a general rule, the due execution and authenticity of a document must be reasonably established before it may be
admitted in evidence. Notarial documents, however, may be presented in evidence without further proof of their
authenticity, since the certificate of acknowledgment is prima facie evidence of the execution of the instrument or document
involved. To contradict facts in a notarial document and the presumption of regularity in its favor, the evidence must be
clear, convincing and more than merely preponderant.

The CA ruled that the signature of Hermoso De Leon on the Extrajudicial Partition and Quitclaim was forged.   However,
this factual finding is in conflict with that of the RTC.  While normally this Court does not review factual issues, this rule
does not apply when there is a conflict between the holdings of the CA and those of the trial court,  as in the present case.
After poring over the records, the SC finds no reason to reverse the factual finding of the appellate court.   A comparison of
the genuine signatures of Hermoso De Leon with his purported signature on the Deed of Extrajudicial Partition with
Quitclaim will readily reveal that the latter is a forgery.  As aptly held by the CA, such variance cannot be attributed to the
age or the mechanical acts of the person signing. 

SOLIVA VS VILLALBA
G.R. No. 154017               December 8, 2003
FACTS: On May 5, 1982, Petitioner Soliva filed a complaint for recovery of ownership, possession and damages against
Respondent Valenta Villalba alleging that she is the owner of a parcel of agricultural land occupied by the respondent. On
January 4, 1966, the late Capt. Marcelo Villalba asked her permission to occupy her house on said land, promised to buy
the house and lot upon receipt of his money from Manila and gave her P600.00 for the occupation of the house; That Capt.
Villalba died in 1978 without having paid the consideration for the house and lot; and that after the death of Capt. Villalba,
his widow, Respondent Valenta refused to vacate the house and lot despite demands, destroyed the house thereon and
constructed a new one. The court rendered judgment restoring to petitioner her right of ownership and possession of the
property. The CA rendered judgment dismissing the complaint had barred her action to recover the disputed property from
the Villalbas. Hence this petition.

ISSUE: WON the plaintiff by reason of long inaction or inexcusable neglect should be barred entirely from asserting the
claim?

HELD: Yes, because to allow such action would be inequitable and unjust to the defendant. One of the essential elements
of laches is that the Delay by the complainant in asserting his right after he has had knowledge of the defendant’s conduct
and after he has had an opportunity to sue; The Petitioner complied with her obligation to deliver the property in 1966.
However, respondent’s husband failed to comply with his reciprocal obligation to pay, when the money he had been
expecting from Manila never materialized.25 He also failed to make further instalments after May 13, 1966. 26 As early as
1966, therefore, petitioner already had the right to compel payment or to ask for rescission, pursuant to Article 1169 of the
Civil Code, which reads: That those obliged to deliver or to do something incur in delay from the time the obligee judicially
or extra judicially demands from them the fulfilment of their obligation. In reciprocal obligations, neither party incurs in delay
if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the
moment one of the parties fulfils his obligation, delay by the other begins."

Nonetheless, petitioner failed to sue for collection or rescission. Due to insufficiency of evidence, the lower courts brushed
aside her assertions that she had availed herself of extrajudicial remedies to collect the balance or to serve an extrajudicial
demand on Villalba, prior to her legal action in 1982.Meanwhile, respondent had spent a considerable sum in renovating
the house and introducing improvements on the premises.In view thereof, the appellate court aptly ruled that petitioner’s
claim was already barred by laches.

G.R. No. 172804               January 24, 2011

VILLANUEVA vs. BRANOCO

CARPIO, J.:

FACTS

Gonzalo, here represented by his heirs, sued spouses Froilan and Leonila Branoco in the RTC of Naval, Biliran for the
recovery of a parcel of land in Leyte. He claimed ownership over the property through purchase from Vere who in turn
purchased the property from Rodrigo in 1970. The respondents in this case claimed ownership in their answer through
purchase in 1983 from Rodriguez to whom Rodrigo donated the property in 1965.

The trial court ruled in favor of the petitioner, saying that by the time Rodriguez sold the property to the respondents in this
case she had no title to transfer because the donation to her by Rodrigo was deemed cancelled when Rodrigo decided to
sell the property to Vere instead.

The respondents brought the case up to the Court of Appeals, which granted their appeal. It found the following factors
pivotal to its reading of the Deed as donation intervivos: (1) Rodriguez had been in possession of the Property as owner
since 21 May 1962, subject to the delivery of part of the produce to Apoy Alve; (2) the Deeds consideration was not
Rodrigos death but her "love and affection" for Rodriguez, considering the services the latter rendered; (3) Rodrigo waived
dominion over the Property in case Rodriguez predeceases her, implying its inclusion in Rodriguez’s estate; and (4)
Rodriguez accepted the donation in the Deed itself, an act necessary to effectuate donations intervivos, not devises.
Accordingly, the CA upheld the sale between Rodriguez and respondents, and, conversely found the sale between Rodrigo
and petitioners predecessor-in-interest,Vere, void for Rodrigos lack of title.
ISSUE: Whether petitioners title is superior to that of respondents.

HELD: The petition is unmeritorious.

CIVIL LAW Property; donations

It is immediately apparent that Rodrigo passed naked title to Rodriguez under a perfected donation intervivos.

First. Rodrigo stipulated that "if the herein Donee predeceases me, the Property will not be reverted to the Donor, but will
be inherited by the heirs of Rodriguez," signaling the irrevocability of the passage of title to Rodriguezs estate, waiving
Rodrigos right to reclaim title.

Second. What Rodrigo reserved for herself was only the beneficial title to the Property, evident from Rodriguezs
undertaking to "give one half of the produce of the land to Apoy Alve during her lifetime." Indeed, if Rodrigo still retained full
ownership over the Property, it was unnecessary for her to reserve partial usufructuary right over it.

Third. The existence of consideration other than the donor’s death, such as the donors love and affection to the done and
the services the latter rendered, while also true of devises, nevertheless "corroborates the express irrevocability of
intervivos transfers." Thus, the CA committed no error in giving weight to Rodrigos statement of "love and affection" for
Rodriguez, her niece, as consideration for the gift, to underscore its finding.

ESGUERA VS MANANTAN
GR NO 158328
FACTS: This case stemmed from the complaint for ejectment filed by petitioner Franco Esguerra against respondents
before the RTC. Franco claims he is the registered owner of a parcel of land and avers that he inherited it from his father,
Pio Esguerra, who had inherited it from his father, Lorenzo Esguerra. However, Pio allowed Gaudencio Miguel to occupy
his property and later mortgaged the land to Gaudencio as evidenced by a document entitled "Deed of Sale with Right to
Repurchase" dated June 6, 1960. In 1979, Gaudencio executed an instrument denominated as Kasunduan to cancel said
deed of sale with the right to repurchase. Before the repurchase of the property, respondents Alfonso Manantan, Danilo
Manantan, Ariang Antonio, Aquilino Concepcion and Fortunato Miguel constructed their houses on the lot without the
knowledge and consent of Pio. On April 14, 1992, Franco filed his application for free patent of the subject property. On
May 20, 1992, Free Patent No. 034914-92-1117 was issued in his name. Pursuant to such free patent title, the Register of
Deeds of the Province of Nueva Ecija issued Original Certificate of Title (OCT) No. P-15176 in Franco’s name. Thereafter,
Franco demanded that respondents vacate the premises, but they refused to do so. He then filed a complaint for ejectment
against them before the RTC which was docketed as Civil Case No. 723-G. Pending the ejectment case, respondents filed
a case for annulment of OCT No. P-15176 which was docketed as Civil Case No. 779-G. This case was subsequently
consolidated with Civil Case No. 723-G. On February 13, 1997, the RTC dismissed the complaint for ejectment and
declared null and void OCT No. P-15176. Franco appealed to the Court of Appeals. The appellate court denied the appeal
and affirmed the trial court’s decision. 

ISSUE: Who has a better right over the contested property?

HELD: In the present case, it was established that the subject land is private property since time immemorial. Records
reveal that the property was cultivated as riceland and was first declared for tax purposes under the name of Graciano
Agustin. On June 6, 1960, Pio exercised acts of ownership over the land by entering into a notarized contract of sale with
the right to repurchase with Gaudencio. He declared in the contract that he had inherited the land from his father and had
been in possession of the property for 27 years. Pio likewise declared the property for tax assessment purposes, as
required under Presidential Decree No. 76, on September 25, 1973. In the Kasunduan executed on April 25, 1979,
Gaudencio acknowledged that Pio owned the land. Pio further disposed of the property in his last will and testament in
favor of his heirs which include petitioner. Although the will is void for not complying with the formal requisites of a notarial
will, it may be used to show the exclusive and adverse character of petitioner’s possession as a co-heir and co-owner. It
also appears that respondents occupied the property on permission of Gaudencio. While petitioner did not actually reside
and cultivate the land, Gaudencio had agreed to pay buwis or rentals for the houses built thereon by Fortunato Miguel and
Alfonso Manantan. Aquilino Concepcion also agreed to pay the rent. Clearly, the evidence on record shows that the
property belonged to Pio and upon his death, passed on to his heirs.

Inasmuch as the subject property is private, a free patent issued over it is null and void, and produces no legal effect
whatsoever. Private ownership of land is not affected by the issuance of a free patent over the same land, because the
Public Land Law applies only to lands of the public domain. The Director of Lands has no authority to grant free patents to
lands that have ceased to be public in character and have passed to private ownership. Consequently, a certificate of title
issued pursuant to a homestead patent partakes of the nature of a certificate issued in a judicial proceeding only if the land
covered by it is really a part of the disposable land of the public domain. Hence, the free patent covering Lot No. 661, a
private land, and the certificate of title issued pursuant thereto, are null and void. Notwithstanding, petitioner’s right to
possess and claim of ownership over Lot No. 661 are substantiated, contrary to the findings of the trial court and Court of
Appeals. This Court is not a trier of facts and not duty-bound to analyze and weigh all over again the evidence already
considered in the proceedings below, unless there is a misapprehension of facts or failure to consider certain relevant facts
which, if properly taken into account, will justify a different conclusion. In the present case, the trial court and the Court of
Appeals failed to consider that Pio, as owner of the subject property and petitioner’s predecessor-in-interest, and
Gaudencio, respondents’ predecessor-in-interest, entered into a notarized contract of sale with the right to repurchase on
June 6, 1960. Such contract is an equitable mortgage under Article 1602.

SPS RAMON AND ESTRELLA RAGUDO vs. FABELLA ESTATE TENANTS ASSOCIATION
GR NO 146823

FACTS: FETA was formed by the tenants of the Fabella Estate to acquire the subject estate and distribute to the
members. As a condition to a loan from National Home Mortgage Finance Corporation, all tenants were required to
become members of the association. Spouses Ragudo refused to become members. As such, the subject lot was awarded
to another qualified member, Miriam de Guzman, while Sps Ragudo continued to occupy the same. Later on, FETA
became the registered owner of the Fabella Estate, with TCT issued in its name by RD Mandaluyong. To effect ejectment
of Sps. Ragudo, FETA filed a complaint for unlawful detainer with MeTC-Mandaluyong. The MeTC dismissed the complaint
ruling that unlawful detainer was an improper remedy considering that the Sps Ragudo had been occupying the subject lot
for more than one year. FETA filed a complaint for recovery of possession with RTC-Pasig. Defense of Sps Ragudo: 1.
they have already acquired ownership of the lot because they have been in occupation in the concept of an owner for more
than 40 years 2. the title of FETA is fake because the OCT it came from has been previously adjudged null and void by
RTC-Pasig 3. FETA’s right to recover is barred by laches by virtue of their occupancy of more than 40 years RTC: ruled in
favor of FETA CA: affirmed RTC decision; ordered Sps Ragudo to pay rent until they vacate; MR was denied

ISSUE: Whether acquisitive prescription and equitable laches had set in, i.e. whether the Sps Ragudo have already
acquired ownership over, and consequently the continuous possession of the subject lot, considering that they have been
occupying the same for more than 40 years rendering the right of FETA to recover such barred by laches.

HELD/RATIO: NO, Sps Ragudo did not acquire ownership and warranted continuous possession of the subject lot,
because title cannot be acquired by prescription over parcels of land registered under the Torrens System and FETA’s
right to recover is not barred by laches because the possession of Sps Ragudo was merely tolerated by FETA. A claim of
acquisitive prescription is baseless when the land involved is a registered land pursuant to Article 1126 of the CC in
relation to Sec 47 of PD 1529. 1126 of CC: prescription of ownership of lands registered under the Land Registration Act
shall be governed by Special laws Act No 496, now PD 1529: No title to registered land in derogation of that of the
registered owner shall be acquired by adverse possession. Accordingly, proof of possession is both immaterial and
inconsequential. With respect to laches: If claimant’s possession of the land is merely tolerated by its lawful owner, the
right of the lawful owner to recover possession is never barred by laches. The lawful owner has a right to eject any person
illegally occupying his property and this right is imprescriptible. Even if it be supposed that the lawful owner was aware of
the occupation of the property, and regardless of the length of that possession, the lawful owner has a right to demand the
return of his property at any time as long as the possession was unauthorized or merely tolerated, if at all. This right is
never barred by laches.

Heirs of Nieto vs. Mun. of Meycauayan

540 SCRA 100
Facts: Anacleto Nieto was the registered owner of a parcel of land, The property is being used by respondent,
Municipality of Meycauayan, Bulacan, which constructed an extension of the public market therein. Upon Anacletos death
on 1993, his wife, Sixta P. Nieto, and children collated all the documents pertaining to his estate. Petitioners discovered
that the missing copy of the title was in the possession of the respondent. In 1994, petitioners formally demanded from
respondent the return of the possession and full control of the property, and payment of a monthly rent with interest from
January 1964. Respondent did not comply with petitioners demand. Respondent alleged that the property was donated to it
and that the action was already time-barred because 32 years had elapsed since it possessed the property. The RTC did
not rule in favor of petitioners because of its finding that the case was already barred by prescription. Hence, this petition.

Issue: Whether or not the action of petitioner to recover the lands is barred by laches

Ruling: NO. Even if we apply the doctrine of laches to registered lands, it would still not bar petitioners claim. It should be
stressed that laches is not concerned only with the mere lapse of time. The following elements must be present in order to
constitute laches: 
(1)   conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which complaint is
made for which the complaint seeks a remedy;
(2)   delay in asserting the complainants rights, the complainant having had knowledge or notice, of the defendants conduct
and having been afforded an opportunity to institute a suit;
(3)   lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases
his suit; and
(4)   injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held to be
barred.
 In this case, the first element of laches occurred the moment respondent refused to vacate the property, upon petitioners
demand, on February 23, 1994. The filing of the complaint on December 28, 1994, after the lapse of a period of only ten
months, cannot be considered as unreasonable delay amounting to laches. Furthermore, the doctrine of laches cannot be
invoked to defeat justice or to perpetrate fraud and injustice. Petition is hereby granted.

VIRGILIO G. ANABE vs. ASIAN CONSTRUCTION (ASIAKONSTRUKT)

G.R. No. 183233 December 23, 2009

FACTS:
The petitioner was hired by respondent Asian Construction (Asiakonstrukt) as radio technician/operator . His services were
terminated on the ground of retrenchment. He thus filed a complaint for illegal dismissal and illegal deduction of his pay.

Because Asiakonstrukt failed to submit financial statements to prove losses, the Labor Arbiter ruled that petitioner was not
validly dismissed. Respondents are ordered to pay Virgilio Anade his 13th month pay, illegal deductions and overtime pay

When the case was elevated to the NLRC, Asiakonstrukt submitted the certified true copies of the Audited Financial
Statements from 1998 to 2000, NLRC modified the Labor Arbiter’s Decision by holding that petitioner was not illegally
dismissed and reduced the reimbursable amount of illegal deductions.
Petitioner filed a Motion for Reconsideration but it was denied. He then appealed to the Court of Appeals which affirmed
the decision rendered by the NLRC.

Hence, this appeal.

ISSUE:
Whether or not the petitioner’s dismissal on the ground of retrenchment was justified

RULING:
The SC granted the petition and remanded the case to the NLRC for recomputation of the monetary award. Retrenchment
is the termination of employment initiated by the employer through no fault of and without prejudice to the employees. It is
resorted to during periods of business recession and is recognized by Article 283 of the Labor Code

To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is reasonably necessary and
likely to prevent business losses; (2) the employer serves written notice both to the employee/s concerned and the
Department of Labor and Employment at least a month before the intended date of retrenchment; (3) the employer pays
the retrenched employee separation pay in an amount prescribed by the Code; (4) the employer exercises its prerogative
to retrench in good faith; and (5) the employer uses fair and reasonable criteria in ascertaining who would be retrenched or
retained.

In the present case, Asiakonstrukt failed to prove that it was suffering business losses to warrant a valid retrenchment of its
employees and it failed to submit its audited financial statements within the two years that the case was pending before the
Labor Arbiter. It submitted them only after it received the adverse judgment of the Labor Arbiter. On appeal, the NLRC is
not precluded from receiving evidence on appeal as technical rules of evidence are not binding in labor cases. Here, the
delay in the submission of evidence should have been clearly explained and should adequately prove the employer’s
allegation of the cause for termination but the employer did not provide any explanation. Thus, the Labor arbiter’s decision
was affirmed and the dismissal of the petitioner on account of retrenchment is held unjustified. Petitioner is thus entitled to
the twin reliefs of payment of backwages and other benefits from the time of his dismissal up to the finality of this Court’s
Decision, and reinstatement without loss of seniority rights or, in lieu thereof, payment of separation pay.

Mercado, petitioners, vs. Espinocilla, respondents.

[G.R. No. 184109. February 1, 2012, 664 SCRA 724]
Facts:
Doroteo Espinocilla owned a parcel of land, Lot No. 552, with an area of 570 sq. m. After he died, his five children,
Salvacion, Aspren, Isabel, Macario, and Dionisia divided Lot No. 552 equally among themselves. Later, Dionisia died
without issue ahead of her four siblings, and Macario took possession of Dionisias share. In an affidavit of transfer of real
property dated November 1, 1948, Macario claimed that Dionisia had donated her share to him in May 1945. 

Thereafter, on August 9, 1977, Macario sold 225 sq. m. to his son Roger Espinocilla, husband of respondent Belen
Espinocilla and father of respondent Ferdinand Espinocilla. On March 8, 1985, Roger Espinocilla sold 114 sq. m. to
Caridad Atienza. Respondents claim that they rightfully possess the land they occupy by virtue of acquisitive prescription.

RTC: ruled in favor of petitioner, The RTC found that petitioner inherited 142.5 sq. m. from his mother Salvacion and
bought 28.5 sq. m. from his aunt Aspren. The RTC computed that Salvacion, Aspren, Isabel and Macario each inherited
142.5 sq. m. of Lot No. 552. Each inherited 114 sq. m. from Doroteo and 28.5 sq. m. from Dionisia. The RTC further ruled
that Macario was not entitled to 228 sq. m. Thus, respondents must return 39 sq. m. to petitioner who occupies only 132
sq. m. There being no public document to prove Dionisias donation, the RTC also held that Macarios 1948 affidavit is void
and is an invalid repudiation of the shares.

CA: reversed the RTC decision and dismissed petitioners complaint on the ground that extraordinary acquisitive
prescription has already set in in favor of respondents. since petitioners complaint was filed only on July 13, 2000, the CA
concluded that prescription has set in.

Issue:

WON petitioners action to recover the subject portion is barred by prescription.

Held:

Yes. Affirm the CA ruling dismissing petitioners complaint on the ground of prescription.
Prescription, as a mode of acquiring ownership and other real rights over immovable property, is concerned with lapse of
time in the manner and under conditions laid down by law, namely, that the possession should be in the concept of an
owner, public, peaceful, uninterrupted, and adverse. Acquisitive prescription of real rights may be ordinary or
extraordinary. Ordinary acquisitive prescription requires possession in good faith and with just title for 10 years.  In
extraordinary prescription, ownership and other real rights over immovable property are acquired through uninterrupted
adverse possession for 30 years without need of title or of good faith.

Respondents uninterrupted adverse possession for 55 years of 109 sq. m. of Lot No. 552 was established. Macarios
possession of Dionisias share was public and adverse since his other co-owners, his three other sisters, also occupied
portions of Lot No. 552. In 1985, Roger also exercised an act of ownership when he sold 114 sq. m. to Caridad Atienza.  It
was only in the year 2000, upon receipt of the summons to answer petitioners complaint, that respondents peaceful
possession of the remaining portion (109 sq. m.) was interrupted. By then, however, extraordinary acquisitive prescription
has already set in in favor of respondents.

HEIRS OF TANYAG VS GABRIEL

FACTS: Subject of controversy are two adjacent parcels of land located at Ruhale, Barangay Calzada, Municipality of
Taguig. The first parcel (“Lot 1”) with an area of 686 square meters was originally declared in the name of Jose Gabriel,
while the second parcel (“Lot 2”) consisting of 147 square meters was originally declared in the name of Agueda
Dinguinbayan. For several years, these lands lined with bamboo plants remained undeveloped and uninhabited.
Petitioners claimed that Lot 1 was owned by Benita Gabriel, sister of Jose Gabriel, as part of her inheritance as declared
by her in a 1944 notarized instrument (“Affidavit of Sale”) whereby she sold the said property to spouses Gabriel Sulit and
Cornelia Sanga. Lot 1 allegedly came into the possession of Benita Gabriel’s own daughter, Florencia Gabriel Sulit, when
her father-in-law Gabriel Sulit gave it to her as part of inheritance of his son, Eliseo Sulit who was Florencia’s husband.
Florencia Sulit sold the same lot to Bienvenido S. Tanyag, father of petitioners, as evidenced by a notarized deed of sale
dated October 14, 1964. Petitioners then took possession of the property, paid the real estate taxes due on the land and
declared the same for tax purposes issued in 1969 in the name of Bienvenido’s wife, Araceli C. Tanyag. As to Lot 2,
petitioners averred that it was sold by Agueda Dinguinbayan to Araceli Tanyag under Deed of Sale executed on October
22, 1968. Thereupon, petitioners took possession of said property and declared the same for tax purposes. Petitioners
claimed to have continuously, publicly, notoriously and adversely occupied both Lots 1 and 2 through their caretaker Juana
Quinones; they fenced the premises and introduced improvements on the land. Sometime in 1979, Jose Gabriel, father of
respondents, secured in his name Lot 1 indicating therein an increased area of 1,763 square meters. On March 20, 2000,
petitioners instituted a civil case alleging that respondents never occupied the whole 686 square meters of Lot 1 and
fraudulently caused the inclusion of Lot 2 in such that Lot 1 consisting of 686 square meters originally declared in the name
of Jose Gabriel was increased to 1,763 square meters. They contended that the issuance of OCT No. 1035 on October 28,
1998 over the subject land in the name of respondent’s heirs of Jose Gabriel was null and void from the beginning. On the
other hand, respondents asserted that petitioners have no cause of action against them for they have not established their
ownership over the subject property covered by a Torrens title in respondents’ name. They further argued that OCT No.
1035 had become unassailable one year after its issuance and petitioners failed to establish that it was irregularly or
unlawfully procured.

ISSUE: Whether petitioners acquired the property through acquisitive prescription. (Yes)

RULING: Acquisitive prescription is a mode of acquiring ownership by a possessor through the requisite lapse of time. In
order to ripen into ownership, possession must be in the concept of an owner, public, peaceful and uninterrupted.
Possession is open when it is patent, visible, apparent, notorious and not clandestine. It is continuous when uninterrupted,
unbroken and not intermittent or occasional; exclusive when the adverse possessor can show exclusive dominion over the
land and an appropriation of it to his own use and benefit; and notorious when it is so conspicuous that it is generally
known and talked of by the public or the people in the neighborhood. The party who asserts ownership by adverse
possession must prove the presence of the essential elements of acquisitive prescription. Article 1137 of the Civil Code
provides that “ownership and other real rights over immovables also prescribe through uninterrupted adverse possession
thereof for thirty years, without need of title or of good faith. Here, petitioners have been in continuous, public and adverse
possession of the subject land for 31 years. Having possessed the property for such period and in the character required
by law as sufficient for extraordinary acquisitive prescription, petitioners have indeed acquired ownership over the subject
property. Such right cannot be defeated by respondents’ acts of declaring again the property for tax purposes in 1979 and
obtaining a Torrens certificate of title in their name in 1998. Petitioners were not able to interrupt respondents’ adverse
possession since 1962. Civil interruption takes place with the service of judicial summons to the possessor and not by filing
of a mere Notice of Adverse Claim. In this case, while there was a Notice of Adverse Claim, such cannot take the place of
the judicial summons required for under the law. Petitioners’ right as owner, however, does not extend to Lot 2 because
they failed to substantiate their claim over the same by virtue of a deed of sale from the original declared owner,
Dinguinbayan. Under Article 434 of the Civil Code, to successfully maintain an action to recover the ownership of a real
property, the person who claims a better right to it must prove two (2) things: first, the identity of the land claimed; and
second, his title thereto. In regard to the first requisite, in an accion reinvindicatoria, the person who claims that he has a
better right to the property must first fix the identity of the land he is claiming by describing the location, area and
boundaries thereof. In this case, petitioners failed to identify Lot 2 by providing evidence of the metes and bounds thereof,
so that the same may be compared with the technical description contained in OCT No. 1035. The testimony of
Dinguinbayan’s son would not suffice because said he merely stated the boundary owners as indicated in the 1966 and
1967 tax declarations of his mother. Arturo Tayag claimed that he had the lots surveyed in the 1970s in preparation for the
consolidation of the two parcels. However, no such plan was presented in court.

UNITED MUSLIM AND CHRISTIAN URBAN POOR ASSOCIATION vs.

BRYC-V DEVELOPMENT CORPORATION

FACTS: In 1991, UMCUPAI, an organization of squatters occupying Lot No. 300, initiated negotiations with Sea Foods
Corporation (SFC) for the purchase thereof.

a. UMCUPAI expressed its intention to buy using the proceeds of its pending loan application with National Home
Mortgage Finance Corporation (NHMF).
b. As such, the parties executed a Letter of Intent to Sell by SFC and Letter of Intent to Purchase by
UMCUPAI.
However, the intended sale was derailed due to UMCUPAI’s inability to secure loan from the NHMF. Another negotiation
took place seeking the division of Lot No. 300 into three portions. In December 1994, Lot No. 300 was subdivided into 3
parts.

c. In January 1995, UMCUPAI purchase Lot No. 300-A for 4.3M. In turn, Lot No. 300-B became a road and was
donated by SFC to the LGU.
d. In March 1995, UMCUPAI was given another 3 months to purchase Lot No. 300-C. As UMCUPAI failed to
purchase by then, SFC sold Lot No. 300-C to respondent BRYC-V for 2.5M
A year later, UMCUPAI filed with RTC a complaint against SFC and BRYC-V seeking to annul the sale. The RTC
dismissed UMCUPAI’s complaint. It held that the Letter of Intent was executed to facilitate the approval of UMCUPAI’s loan
from NHMF for its intent to purchase of Lot No. 300. The CA affirmed the RTC in toto.

ISSUE: Is the letter of intent to sell and letter of intent to buy a bilateral reciprocal contract within the meaning of NCC 1479
(1) – NO

RATIO: The SC held that the Letter of Intent was neither a contract to sell under NCC 1479 nor a conditional contract of
sale under NCC 1458.
 a. IT IS NOT A CONDITIONAL CONTRACT OF SALE: Nowhere in the Letter of Intent does it state that SFC
relinquishes its title over the subject property, subject only to the condition of complete payment of the
purchase price.
b. IT IS NOT A CONTRACT TO SELL: Also, nowhere in the Letter of Intent does it state, at the least, that SFC,
although expressly retaining ownership thereof, binds itself to sell the property exclusively to UMCUPAI.
c. RATHER, THE LETTER OF INTENT TO BUY AND SELL is just that – a manifestation of SFC’s intention to
sell the property and UMCUPAI’s intention to acquire the same.
i. As quoted from the RTC: A mere “intention” cannot give rise to an obligation to give, to do or not to do.
A Letter of Intent is not a contract between the parties thereto because it does not bind one party, with
respect to the other, to give something, or to render some service.

Pryce Corporation v PAGCOR 

GR No. 157480 

FACTS: PAGCOR set up a casino in Pryce Plaza Hotel for a period of 3 years. However, there has been interruptions in
the operations which ultimately caused the operations to cease prematurely upon order of the Office of the President.
CA: The CA ruled that the PAGCOR'S pretermination of the Contract of Lease was unjustified. The appellate court
explained that public demonstrations and rallies could not be considered as fortuitous events that would exempt the
gaming corporation from complying with the latter's contractual obligations. Therefore, the Contract continued to be
effective until PPC elected to terminate it on November 25, 1993.  

Regarding the contentions of PPC, the CA held that under Article 1659 of the Civil Code, PPC had the right to ask for (1)
rescission of the Contract and indemnification for damages; or (2) only indemnification plus the continuation of the
Contract. These two remedies were alternative, not cumulative, ruled the CA.   As PAGCOR had admitted its failure to pay
the rentals for September to November 1993, PPC correctly exercised the option to terminate the lease agreement.  

ISSUE:  (1) Whether or not Pryce is entitled to future rentals as provided in the contract even if PAGCOR contends, as the
CA ruled, that Article 1659 of the Civil Code governs; hence, PPC is allegedly no longer entitled to future rentals, because
it chose to rescind the Contract. 

HELD: (1) Pryce is entitled to future rentals as the provisions are not contrary to law, morals, public order, or public policy.  
The above provisions leave no doubt that the parties have covenanted 1) to give PPC the right to terminate and cancel the
Contract in the event of a default or breach by the lessee; and 2) to make PAGCOR fully liable for rentals for the remaining
term of the lease, despite the exercise of such right to terminate. Plainly, the parties have voluntarily bound themselves to
require strict compliance with the provisions of the Contract by stipulating that a default or breach, among others, shall give
the lessee the termination option, coupled with the lessor's liability for rentals for the remaining term of the lease. Article XX
(c) provides that, aside from the payment of the rentals corresponding to the remaining term of the lease, the lessee shall
also be liable "for any and all damages, actual or consequential, resulting from such default and termination of this
contract." Having entered into the Contract voluntarily and with full knowledge of its provisions, PAGCOR must be held
bound to its obligations. It cannot evade further liability for liquidated damages.  

PHILIPPINE NATIONAL BANK vs. SPOUSES CABATINGAN

G.R. No. 167058

Facts:  

Respondent spouses Cabatingan obtained two loans, secured by a real estate mortgage, in the total amount of P421, 200
from petitioner Philippine National Bank. However, they were unable to fully pay their obligation despite having been
granted more than enough time to do so. Thus, on September 25, 1991, petitioner extrajudicially foreclosed on the
mortgage pursuant to Act 3135. Thereafter, a notice of extrajudicial sale was issued stating that the foreclosed properties
would be sold at public auction on November 5, 1991 between 9:00 a.m. and 4:00 p.m. at the main entrance of the office of
the Clerk of Court on San Pedro St., Ormoc City. Pursuant to the notice, the properties were sold at public auction on
November 5, 1991. The auction began at 9:00 a.m. and was concluded after 20 minutes with petitioner as the highest
bidder.

On March 16, 1993, respondent spouses filed a complaint with the RTC of Ormocfor annulment of extrajudicial foreclosure
of real estate mortgage and the November 5, 1991 auction sale. They invoked Section 4 of Act 3135 which provides:

Section 4. The sale shall be made at public auction,  between the hours of nine in the morning and four in the
afternoon, and shall be under the direction of the sheriff of the province, the justice or auxiliary justice of peace of the
municipality in which such sale has to be made, or of a notary public of said municipality, who shall be entitled to collect a
fee of Five pesos for each day of actual work performed, in addition to his expenses.  
Petitioners claimed that the provision quoted above must be observed strictly. Thus, because the public auction of the
foreclosed properties was held for only 20 minutes (instead of seven hours as required by law), the consequent sale was
void. The RTC ruled in favor of Sps. Cabatingan and annulled the sale of public auction.

Petitioner moved for reconsideration but it was denied. Hence, this petition. Petitioner contends that the RTC erred in
interpreting Section 4 of Act 3135. The law only prohibits the conduct of a sale at any time before nine in the morning and
after four in the afternoon. Thus, a sale held within the intervening period (i.e., at any time between 9:00 a.m. and 4:00
p.m.), regardless of duration, is valid.

Issue: Whether a sale at public auction, to be valid, must be conducted the whole day from 9:00 a.m. until 4:00 p.m. of the
scheduled auction day.

Held: Statutes should be sensibly construed to give effect to the legislative intention. Act 3135 regulates the extrajudicial
sale of mortgaged real properties by prescribing a procedure which effectively safeguards the rights of both debtor and
creditor. Thus, its construction must be equally and mutually beneficial to both parties. The word “between” ordinarily
means “in the time interval that separates.” Thus, “between the hours of nine in the morning and four in the afternoon”
merely provides a time frame within which an auction sale may be conducted. Therefore, a sale at public auction held
within the intervening period provided by law (i.e., at any time from 9:00 a.m. until 4:00 p.m.) is valid, without regard to the
duration or length of time it took the auctioneer to conduct the proceedings. In this case, the November 5, 1991 sale at
public auction took place from 9:00 a.m. to 9:20 a.m. Since it was conducted within the time frame provided by law, the
sale was valid.

General Milling Corp. vs. Spouses Ramos, GR 193723, July 20, 2011
Doctrine: Article 1169 of the Civil Code states that: those obligated to deliver or to do something incur in delay from the
time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. Demand is necessary for
delay to exist unless the contract states that no such demand is needed.
Facts: General Milling Corporation (GMC) entered into a Growers Contract with spouses Librado and Remedios Ramos
(Spouses Ramos). Under the contract, GMC was to supply broiler chickens for the spouses to raise on their land. To
guarantee full compliance, the Growers Contract was accompanied by a Deed of Real Estate Mortgage over a piece of real
property and a surety bond. Spouses Ramos eventually were unable to settle their account with GMC. The property was
extrajudicially foreclosed and GMC was the highest bidder. Spouses Ramos questioned the validity of the foreclosure
proceedings. The CA found that GMC made no demand to spouses Ramos for the full payment of their obligation. A
perusal of the letters presented and offered as evidence by defendant-appellant GMC did not “demand” but only request
spouses Ramos to go to the office of GMC to “discuss” the settlement of their account.
Issue: WON GMC made sufficient demand to the spouses Ramos to fulfill their obligation - NO
Held: No. There are three requisites necessary for a finding of default. First, the obligation is demandable and liquidated;
second, the debtor delays performance; and third, the creditor judicially or extrajudicially requires the debtor's performance.
According to the CA, GMC did not make a demand on Spouses Ramos but merely requested them to go to GMCs office to
discuss the settlement of their account. In spite of the lack of demand made on the spouses, however, GMC proceeded
with the foreclosure proceedings. Neither was there any provision in the Deed of Real Estate Mortgage allowing GMC to
extrajudicially foreclose the mortgage without need of demand. Article 1169 of the Civil Code states that: those obligated to
deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the
fulfillment of their obligation. However, the demand by the creditor shall not be necessary in order that delay may exist,
when the obligation or the law expressly so declares. The Deed of Real Estate Mortgage (contract) in the instant case has
no such provision stating that demand is not necessary for delay to exist. GMC should have first made a demand on the
spouses before proceeding to foreclose the real estate mortgage.

Subic Bay Metropolitan Authority vs. CA

G.R. No.: G.R. No. 192885

FACTS: The petitioner and the private respondent entered into a lease agreements to rehabilitate the Subic Naval Base by
taking over abandoned barracks and constructing a hotel and restaurant facilities in order to accommodate the need of the
growing number of businessmen and encourage tourism in the Freeport Zone. Both parties entered into a Lease
Development Agreement which stipulated Section 6.1,for the payment of service fees, which pertain to the proportionate
share of the private respondent in the costs that the petitioner may incur in the provision of services, maintenance and
operation of common facilities computed at $0.10 per square meter of the gross land area of the leased property.
Consequently, upon the conduct of lease compliance audit, it was found that the private respondent and other Freeport
locators were not billed of the service fees. This led to a series of conciliation and clarificatory meetings between the
parties. Consequently, the SBMA Board decided to waive the payment of future service fees and advised private
respondent to lodge its protest for the payment of accumulated service fees to the accounting department. Then, the
private respondent requested for a reconsideration for the billing alleging that the services for which the billings was
supposed to be based were not actually provided by the petitioner but by independent contractors. On the other hand, the
petitioner contended that the services fees included other services which indirectly redounded for the benefit of the tenants.
The petitioner has the clear legal right to impose service fees under Section 13 (a) (3) of R.A. No. 7227, which does not
specifically pertain to garbage collection, electricity, telephone, and water service alone but to other services such as fire
protection, maintenance of common areas, police protection, and other services of similar nature. The private respondent
filed a Petition for Declaratory Relief with the RTC praying for the determination by the Court on whether petitioner has the
right to collect for the accumulated service fees from the private respondent. The RTC rendered its decision in favor of the
private respondent and held that petitioner has no legal right under Section 6.3 of the Lease and Development Agreement
to enforce the collection of previous billings for fixed service fees. Upon this judgment, the petitioner appealed to the CA
but was later on dismissed and arose this petition for certiorari.

ISSUE: Whether or not the petitioner has the right to collect for the service fees from the private respondent?

HELD: No, the Court held that the petitioner has no right to collect from the private respondent. The records show that
petitioner did not actually provide most of the services enumerated in the Lease and Development Agreement and that the
obligation involved in the agreement was reciprocal in nature. It is apparent that the questioned provisions of the contract
are reciprocal in nature. Reciprocal obligations are those which arise from the same cause, and in which each party is a
debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. 12 They are
to be performed simultaneously such that the performance of one is conditioned upon the simultaneous fulfillment of the
other.13 For one party to demand the performance of the obligation of the other party, the former must also perform its own
obligation. Accordingly, petitioner, not having provided the services that would require the payment of service fees as
stipulated in the Lease Development Agreement, is not entitled to collect the same.

The Court agrees with the ruling of the CA that private respondent's obligation to pay was dependent upon
petitioner's performance of its reciprocal duty to provide the agreed service, and since petitioner failed to perform its part of
the deal, it cannot exact compliance from private respondent of its duty to pay. The payment of "Service Fees" is not
dependent on the actual rendition of the services enumerated therein as the said fees comprise of the tenant's
proportionate share for all the costs which petitioner as landlord may incur in providing, maintaining or operating the
facilities. Lastly, it is apparent that the petitioner who did not actually render the service cannot demand payment from the
private respondent for its proportionate share of the services which were not really incurred. This is also contrary to the
claim of the petitioner that the nature of “service fees” is “additional rent.” The Court also held that the petitioner should
have changed the term “service fees” to “additional rent” if that is the actual intent of the parties. This showed a flaw in
reasoning of the petitioner. Thus, the petition is dismissed.

Eastern Shipping vs CA
GR No. 97412, 12 July 1994
234 SCRA 78

FACTS: Two fiber drums were shipped owned by Eastern Shipping from Japan. The shipment as insured with a marine
policy. Upon arrival in Manila unto the custody of metro Port Service, which excepted to one drum, said to be in bad order
and which damage was unknown the Mercantile Insurance Company. Allied Brokerage Corporation received the shipment
from Metro, one drum opened and without seal. Allied delivered the shipment to the consignee’s warehouse. The latter
excepted to one drum which contained spillages while the rest of the contents was adulterated/fake. As consequence of
the loss, the insurance company paid the consignee, so that it became subrogated to all the rights of action of consignee
against the defendants Eastern Shipping, Metro Port and Allied Brokerage. The insurance company filed before the trial
court. The trial court ruled in favor of plaintiff an ordered defendants to pay the former with present legal interest of 12% per
annum from the date of the filing of the complaint. On appeal by defendants, the appellate court denied the same and
affirmed in toto the decision of the trial court.

ISSUE: (1)   Whether the applicable rate of legal interest is 12% or 6%.

(2)   Whether the payment of legal interest on the award for loss or damage is to be computed from the time the complaint
is filed from the date the decision appealed from is rendered.
HELD:
(1)  The Court held that the legal interest is 6% computed from the decision of the court a quo. When an obligation, not
constituting a loan or forbearance of money, is breached, an interest on the amount of damaes awarded may be imposed
at the discretion of the court at the rate of 6% per annum. No interest shall be adjudged on unliquidated claims or damages
except when or until the demand can be established with reasonable certainty. When the judgment of the court awarding a
sum of money becomes final and executor, the rate of legal interest shall be 12% per annum from such finality until
satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of money. The interest due shall
be 12% PA to be computed fro default, J or EJD.
(2)   From the date the judgment is made. Where the demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or EJ but when such certainty cannot be so reasonably established
at the time the demand is made, the interest shll begin to run only from the date of judgment of the court is made.
ALINAS VS ALINAS
FACTS:Petitioners (Onesiforo and wife) separated in 1982 leaving behind two lots:
o Lot 896-B-9-A with a bodega (LOT A)
o Lot 896-B-9-B with the petitioners' house (LOT B) (This is the Lot which talks about conjugal partnership of
gains)
Petitioners entrusted both properties to respondents (Victor and wife) with the agreement that any income from rentals
should be remitted to the SSS and to the Rural Bank of Oroquieta City (RBO) as the rentals would be for payment of
petitioners' loans. Sometime in 1993, petitioners find out that both lots were titled in respondents' name. Apparently both
LOTS were foreclosed, and reacquired by respondents. Furthermore, records show that Onesiforo executed Absolute
Deed of Sale, dated March 10 1989, selling LOT B to Victor. Petitioners file for recovery of lots.RTC renders decision: Lot A
is respondents'. The sale of LOT B, is null and void, since Onesiforo sold w/o wife's consent. Respondents file with CA.CA
renders decision: Lot A is respondents'. LOT B's sale in so far as Rosario's share of 1/2 is concerned is of no force and
effect.

ISSUE: WON sale conducted by husband without consent of wife to whom he is separated with is void

HELD: YES . Art 124 of FC says that the absence of authority or consent of wife shall make the disposition or
encumberance void. Respondent spouses who bought land (1) knew that it was conjugal property (2) knew that the wife
did not know of the selling since they were separated (3) sale documents do not bear the wife‘s signature, thus they are
seen as buyers of bad faith However, petitioners are still ordered by court to reimburse them with interest.

Yobido v. Court of Appeals

G.R. No. 113003, 17 October 1997, 281 SCRA 1

FACTS: In 1988, spouses Tito and Leny Tumboy and their minor children named Ardee and Jasmin, boarded at
Mangagoy, Surigao del Sur, a Yobido Liner bus bound for Davao City. Along the way, the left front tire of the bus exploded
causing it to fall into a ravine around three (3) feet from the road and struck a tree. The incident resulted in the death of 28-
year-old Tito Tumboy and physical injuries to other passengers. As a consequence thereof, a complaint for breach of
contract of carriage, damages and attorneys fees was filed by Leny and her children against Alberta Yobido, the owner of
the bus, and Cresencio Yobido, its driver, before the RTC of Davao City. When the defendants therein filed their answer to
the complaint, they raised the affirmative defense of caso fortuito. In 1991, the lower court rendered a decision dismissing
the action for lack of merit. On the issue of whether or not the tire blowout was a caso fortuito, it found that the falling of the
bus to the cliff was a result of no other outside factor than the tire blow-out.

Dissatisfied, the plaintiffs appealed to the Court of Appeals. They ascribed to the lower court the following errors: (a) finding
that the tire blowout was a caso fortuito; (b) failing to hold that the defendants did not exercise utmost and/or extraordinary
diligence required of carriers under Article 1755 of the Civil Code, and (c) deciding the case contrary to the ruling in Juntilla
v. Fontanar, and Necesito v. Paras. In 1993, the Court of Appeals rendered the Decision reversing that of the lower court.
Proving that the tire that exploded is a new Goodyear tire is not sufficient to discharge defendant’s burden. As enunciated
in Necesito vs. Paras, the passenger has neither choice nor control over the carrier in the selection and use of its
equipment, and the good repute of the manufacturer will not necessarily relieve the carrier from liability. The defendants
filed a motion for reconsideration of said decision which was denied by the Court of Appeals. Hence, the instant petition
asserting the position that the tire blowout that caused the death of Tito Tumboy was a caso fortuito.

ISSUE: Whether or not the explosion of a newly installed tire of a passenger vehicle is a fortuitous event that exempts the
carrier from liability for the death of a passenger.

RULING: No. As a rule, when a passenger boards a common carrier, he takes the risks incidental to the mode of travel he
has taken. After all, a carrier is not an insurer of the safety of its passengers and is not bound absolutely and at all events
to carry them safely and without injury. However, when a passenger is injured or dies while travelling, the law presumes
that the common carrier is negligent. Thus, the Civil Code provides:

Art. 1756. In case of death or injuries to passengers, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755.
Article 1755 also provides that a common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances.

Accordingly, in culpa contractual, once a passenger dies or is injured, the carrier is presumed to have been at fault or to
have acted negligently. This disputable presumption may only be overcome by evidence that the carrier had observed
extraordinary diligence as prescribed by Articles 1733, 1755 and 1756 of the Civil Code or that the death or injury of the
passenger was due to a fortuitous event. Consequently, the court need not make an express finding of fault or negligence
on the part of the carrier to hold it responsible for damages sought by the passenger. In view of the foregoing, petitioners
contention that they should be exempt from liability because the tire blowout was no more than a fortuitous event that could
not have been foreseen, must fail. In other words, the explosion of the new tire may not be considered a fortuitous event
because there are human factors involved in the situation.

The Insular Life Assurance Co. vs Toyota Bel-Air

FACTS:
Toyota Bel-Air and Insular Life entered into a contract of lease over a lot and building owned by Insular Life in Makati City,
the contract is for a 5-yar period from April 16, 1992 to April 15, 1997. The conflict began upon the expiration of the lease
wherein Toyota Bel-Air refused to vacate the property, this actually forced Insular Life to file a complaint in Metropolitan
Trial Court (MeTC) for unlawful detainer against Toyota Bel-Air where the verdict was in favor of the petitioner Insular Life.
MeTC issued a writ of execution in an action for ejectment against of the respondent Toyota Bel-Air  where the deputy
sheriff of MeTC executed the writ by levying on the respondent’s real and personal properties as well as garnishing its
bank accounts. On the hand, because of the issued writ and the scheduled auction of the levied properties, the respondent
Toyota Bel-Air filed a petition before the Regional Trial Court (RTC) for the injunctive relief which was ultimately decided
that the writ of execution and the levy effected by the deputy sheriff was void.
ISSUE:
                Whether or not the petitioner Insular Life has the right to oust Toyota Bel-Air in the building?
SUPREME COURT RULING:
                The Supreme Court declared the writ of execution issued by MeTC valid
–          The compromise agreement is an agreement subject to a suspensive condition which will only give rise to the
obligation if all the stipulated conditions are followed which clearly in this case the respondent Toyota Bel-Air was not able
to comply with.

Perez v. CA- Perfection of the Contract of Insurance

323 SCRA 613 (2000)
Facts: Perez had been insured with the BF Lifeman Insurance Corporation since 1980 for P20,000.00. In October 1987,
an agent of Lifeman, Rodolfo Lalog, visited Perez in Quezon and convinced him to apply for additional insurance coverage
of P50,000.00, to avail of the ongoing promotional discount of P400.00 if the premium were paid annually.   Primitivo B.
Perez accomplished an application form for the additional insurance coverage.  Virginia A. Perez, his wife, paid P2,075.00
to Lalog. The receipt issued by Lalog indicated the amount received was a "deposit." Unfortunately, Lalog lost the
application form accomplished by Perez and so on October 28, 1987, he asked the latter to fill up another application form.
On November 1, 1987, Perez was made to undergo the required medical examination, which he passed. Lalog forwarded
the application for additional insurance of Perez, together with all its supporting papers, to the office of BF Lifeman
Insurance Corporationn in Quezon which office was supposed to forward the papers to the Manila office. On November 25,
1987, Perez died while he was riding a banca which capsized during a storm. At the time of his death, his application
papers for the additional insurance were still with the Quezon office. Lalog testified that when he went to follow up the
papers, he found them still in the Quezon office and so he personally brought the papers to the Manila office of BF Lifeman
Insurance Corporation. It was only on November 27, 1987 that said papers were received in Manila. Without knowing that
Perez died on November 25, 1987, BF Lifeman Insurance Corporation approved the application and issued the
corresponding policy for the P50,000.00 on December 2, 1987. Virginia went to Manila to claim the benefits under the
insurance policies of the deceased. She was paid P40,000.00 under the first insurance policy for P20,000.00 (double
indemnity in case of accident) but the insurance company refused to pay the claim under the additional policy coverage of
P50,000.00, the proceeds of which amount to P150,000.00 in view of a triple indemnity rider on the insurance policy. In its
letter of January 29, 1988 to Virginia A. Perez, the insurance company maintained that the insurance for P50,000.00 had
not been perfected at the time of the death of Primitivo Perez. Consequently, the insurance company refunded the amount
of P2,075.00 which Virginia Perez had paid. Lifeman filed for the rescission and the declaration of nullity.  Perez, on the
other hand, averred that the deceased had fulfilled all his prestations under the contract and all the elements of a valid
contract are present. RTC ruled in favor of Perez.  CA reversed.
Issue: Whether or not there was a perfected additional insurance contract.
Held:  The contract was not perfected. Insurance is a contract whereby, for a stipulated consideration, one party
undertakes to compensate the other for loss on a specified subject by specified perils.  A contract, on the other hand, is a
meeting of the minds between two persons whereby one binds himself, with respect to the other to give something or to
render some service. Consent must be manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract. The offer must be certain and the acceptance absolute. When Primitivo filed an
application for insurance, paid P2,075.00 and submitted the results of his medical examination, his application was subject
to the acceptance of private respondent BF Lifeman Insurance Corporation. The perfection of the contract of insurance
between the deceased and respondent corporation was further conditioned upon compliance with the following requisites
stated in the application form:
"there shall be no contract of insurance unless and until a policy is issued on this application and that the said
policy shall not take effect until the premium has been paid and the policy delivered to and accepted by me/us in
person while I/We, am/are in good health."
The assent of private respondent BF Lifeman Insurance Corporation therefore was not given when it merely received the
application form and all the requisite supporting papers of the applicant. Its assent was given when it issues a
corresponding policy to the applicant. Under the abovementioned provision, it is only when the applicant pays the premium
and receives and accepts the policy while he is in good health that the contract of insurance is deemed to have been
perfected. It is not disputed, however, that when Primitivo died on November 25, 1987, his application papers for additional
insurance coverage were still with the branch office of respondent corporation in Gumaca and it was only two days later, or
on November 27, 1987, when Lalog personally delivered the application papers to the head office in Manila. Consequently,
there was absolutely no way the acceptance of the application could have been communicated to the applicant for the
latter to accept inasmuch as the applicant at the time was already dead.

No. L-29155. May 13, 1970

UNIVERSAL FOOD CORPORATION vs. THE COURT OF APPEALS, MAGDALO V. FRANCISCO, SR. and
VICTORIANO V. FRANCISCO
Petition for certiorari to review a decision of the Court of Appeals

FACTS: 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 Francisco,
Sr. 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, Francisco, Sr. secured the financial assistance of Tirso T. Reyes
who, after a series of negotiations, formed Universal Food Corporation (UFC) eventually leading to the execution of a "Bill
of Assignment". Francisco, Sr. 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, UFC issued a
Memorandum Supervisor Ricardo Francisco should be retained in the factory and that the salary of Francisco, Sr., should
be stopped for the time being until the corporation should resume its operation. Subsequently, UFC issued several
Memorandums ordering Francisco, Sr to produce orders to cope with the orders of the corporation’s various distributors
and with instructions to take only the necessary daily employees without employing permanent employees. 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. Thereafter, UFC looked for a buyer of the corporation including its trademarks, formula and assets at
a price of not less than P300,000.00. Francisco, Sr. filed an action for rescission of contract and damages due to his
dismissal as Chief Chemist

ISSUE:
Whether or not Francisco, Sr. is entitled to rescission due to his dismissal from UFC

RULING: YES. Under Art 1191, 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 injured party may choose between fulfillment and rescission of the
obligation, with payment of damages in either case. The general rule is that rescission of a contract will not be permitted for
a slight or casual breach, but only for such substantial and fundamental breach as would defeat the very object of the
parties in making the agreement. Rescission is a subsidiary remedy which cannot be instituted except when the party
suffering damage has no other legal means to obtain reparation for the same. In this case the dismissal of the respondent
patentee Francisco, Sr. as the permanent chief chemist of the corporation is a fundamental and substantial breach of the
Bill of Assignment. He was dismissed without any fault or negligence on his part. Thus, apart from the legal principle that
the option·to demand performance or ask for rescission of a contract belongs to the injured party, the fact remains that the
Francisco had no alternative but to file the present action for rescission and damages.

G.R. no. 97347

Jaime Ong vs. Court of Appeals and Robles couple
July 6, 1999

Facts:
Petitioner Jaime Ong and respondents, Robles couple executed an “Agreement of Purchase and Sale” with regard to 2
parcels of land, on which a rice mill and a piggery were found and thus included.  The terms and conditions of the contract
included an initial payment, payment for the loan of the sellers including interest, and the balance to be satisfied in 4 equal
quarterly installments. As agreed, petitioner took possession of the subject property and everything else thereon upon
satisfaction of the initial payment. However, petitioner failed to comply with the payment for the loan. Plus, the checks that
the petitioner issued to the couple as payment for the balance were dishonored due to insufficient funds. To avoid
foreclosure, the respondent couple sold the ricemill with the knowledge and conformity of petitioner. Respondents sought
for the rescission of the properties due to the latter’s failure to comply with the terms and conditions on the contract.
RTC ruled in favor of the Robles couple and ordered the restitution of the properties. The couple were also ordered to
return an amount, as determined by the court, to Ong. CA affirmed the decision in contemplation of Article 1191 of The
New Civil Code

Issue:
(1) whether the contract entered into by the parties may be validly rescinded under Article 1191 of the New Civil Code as
distinguished to Article 1383 of the same.
 (2) whether the parties had novated their original contract as to the time and manner of payment.

HELD:

The Contract entered into by the parties was a “Contract to Sell” which means that the payment of the purchase price is a
positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the
obligation of the vendor to convey title from acquiring an obligatory force. Respondents bound themselves to deliver a deed
of absolute sale and clean title covering the two parcels of land upon full payment by the buyer of the purchase price of
P2,000,000.00 subject to the fulfillment of the suspensive condition of full payment of the purchase price by the petitioner.
Petitioner, however, failed to complete payment of the purchase price. The non-fulfillment of the condition of full payment
rendered the contract to sell ineffective and without force and effect. As to the issue on novation, in order for novation to
take place, the concurrence of the following requisites is indispensable: (1) there must be a previous valid obligation; (2)
there must be an agreement of the parties concerned to a new contract; (3) there must be the extinguishment of the old
contract; and (4) there must be the validity of the new contract. 25 The aforesaid requisites are not found in the case at
bench.

CO VS. CA
GR No. 112330 August 17, 1999

FACTS: Plaintiff entered into a verbal contract with defendant for her purchase of the latter’s house and lot located at 316
Beata St., New Alabang Village, Muntinlupa, Metro Manila, for and in consideration of the sum of $100,000.00. One week
thereafter, and shortly before she left for the United States, plaintiff paid to the defendants the amounts of $1,000.00 and
P40,000.00 as earnest money, in order that the same may be reserved for her purchase, said earnest money to be
deducted from the total purchase price. The purchase price of $100,000.00 is payable in two payments $40,000.00 on
December 4, 1984 and the balance of $60,000.00 on January 5, 1985. On January 25, 1985, although the period of
payment had already expired, plaintiff paid to the defendant Melody Co in the United States, the sum of $30,000.00, as
partial payment of the purchase price. Defendant’s counsel, Atty. Leopoldo Cotaco, wrote a letter to the plaintiff dated
March 15, 1985, demanding that she pay the balance of $70,000.00 and not receiving any response thereto, said lawyer
wrote another letter to plaintiff dated August 8, 1986, informing her that she has lost her ‘option to purchase’ the property
subject of this case and offered to sell her another property.

ISSUE: Whether or not the Court of Appeals erred in ordering the COS to return the $30,000.00 paid by Custodio pursuant
to the “option” granted to her over the Beata property?

RULING: The COS’ main argument is that Custodio lost her “option” over the Beata property and her failure to exercise
said option resulted in the forfeiture of any amounts paid by her pursuant to the August letter. An option is a contract
granting a privilege to buy or sell within an agreed time and at a determined price.
Article 1479.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the
promissor if the promise is supported by a consideration distinct from the price.”

However, the March 15, 1985 letter sent by the COS through their lawyer to the Custodio reveals that the parties
entered into a perfected contract of sale and not an option contract. In the case at bar, the property involved has not been
delivered to the appellee. She has therefore nothing to return to the appellants. The price received by the appellants has
to be returned to the appellee as aptly ruled by the lower court, for such is a consequence of rescission, which is to restore
the parties in their former situations.

William Uy vs. Court of Appeals

G.R. No. 120465, September 9, 1999
FACTS: Petitioners William Uy and Rodel Roxas are agents authorized to sell eight parcels of land by owners thereof. By
virtue of such authority, they entered the contract of sale to respondent National Housing Authority to be utilized in
developing as a housing project. However, due to the report of the DENR the three (3) parcels are located at an active
landslide area and not suitable for housing project, NHA issued a resolution canceling the sale of the three (3) parcels of
land but it offered the amount of P1.225 million to the land owners as danos perjuicious. Petitioners filed before the RTC a
complaint for damages against NHA. The RTC rendered a decision declaring the cancellation of contract to be justified.
Nevertheless, it awarded damages to plaintiff. Upon appeal by the petitioners, the Court of Appeals dismissed the
complaint and cancelled the award for damages.

ISSUE:Whether or not the cancellation of the sale has sufficient justifiable basis.

HELD: The cancellation of the sale was based on the negation of the cause arising from the realization that the land, which
were the object of the sale, were not suitable for housing cause is the essential reason which moves the contracting parties
to enter into a contract. The National Housing Authority would not have entered into the contract were the lands not
suitable for housing. In other words, the quality of the land was an implied condition for the NHA to enter into the contract.
NHA was justified in canceling the contract.

Iringan v. Court of Appeals

G.R. No. 129107, September 26, 2001, 366 SCRA 41
FACTS: Private respondent Antonio Palao sold to petitioner Alfonso Iringan, an undivided portion of Lot No. 992 of the
Tuguegarao Cadastre, located at the Poblacion of Tuguegarao and covered by Transfer Certificate of Title No. T-5790.
The parties executed a Deed of Sale] on the same date with the purchase price of P295,000.00,payable as follows:(a)
P10,000.00 upon the execution of this instrument ;(b) P140,000.00 on or before April 30, 1985;(c) P145,000.00 on or
before December 31, 1985. When the second payment was due, Iringan paid only P40,000. Thus, Palao sent a letter to
Iringan stating that he considered the contract as rescinded and that he would not accept any further payment considering
that Iringan failed to comply with his obligation to pay the full amount of the second installment. Iringan through his counsel
Atty. Hilarion L. Aquino, replied that they were not opposing the revocation of the Deed of Sale but asked for the
reimbursement of the following amounts:(a) P50,000.00 cash received;(b) P3,200.00 geodetic engineers fee;(c) P500.00
attorneys fee;(d) the current interest on P53,700.00. In response, Palao sent a letter dated January 10, 1986 to Atty.
Aquino, stating that he was not amenable to the reimbursements claimed by Iringan. On February 21, 1989, Iringan, now
represented by a new counsel Atty. Carmelo Z. Lasam, proposed that the P50,000 which he had already paid Palao be
reimbursed or Palao could sell to Iringan, an equivalent portion of the land. Palao instead wrote Iringan that the latters
standing obligation had reached P61,600, representing payment of arrears for rentals from October 1985 up to March
1989.[9] The parties failed to arrive at an agreement. On July 1, 1991, Palao filed a Complaint[10] for Judicial Confirmation
of Rescission of Contract and Damages against Iringan and his wife.

ISSUE: Whether or not the contract of sale was validly rescinded.

RULING: Article 1592 of the Civil Code is the applicable provision regarding the sale of an immovable property. Article
1592. In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the
time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of
the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial
act. After the demand, the court may not grant him a new term. Article 1592 requires the rescinding party to serve judicial
or notarial notice of his intent to resolve the contract.

Article 1191. 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 injured party may choose between the fulfillment and the rescission of the obligation,
with payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter
should become impossible. The court shall decree the rescission claimed, unless there be just cause authorizing the fixing
of a period.

This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with
articles 1385 and 1388 and the Mortgage Law.
But in our view, even if Article 1191 were applicable, petitioner would still not be entitled to automatic rescission.
In Escueta v. Pando, we ruled that under Article 1124 (now Article 1191) of the Civil Code, the right to resolve reciprocal
obligations, is deemed implied in case one of the obligors shall fail to comply with what is incumbent upon him. But that
right must be invoked judicially. The same article also provides: The Court shall decree the resolution demanded, unless
there should be grounds, which justify the allowance of a term for the performance of the obligation. This requirement has
been retained in the third paragraph of Article 1191, which states that the court shall decree the rescission claimed, unless
there be just cause authorizing the fixing of a period. Consequently, even if the right to rescind is made available to the
injured party, the obligation is not ipso facto erased by the failure of the other party to comply with what is incumbent upon
him. The party entitled to rescind should apply to the court for a decree of rescission.The right cannot be exercised solely
on a party’s own judgment that the other committed a breach of the obligation.The operative act which produces the
resolution of the contract is the decree of the court and not the mere act of the vendor. Since a judicial or notarial act is
required by law for a valid rescission to take place, the letter written by respondent declaring his intention to rescind did not
operate to validly rescind the contract.

Adelfa S. Rivera, Cynthia S. Rivera, and Jose S. Rivera vs. Fidela del Rosario

FACTS: Respondents Fidela (now deceased), Oscar, Rosita, Violeta, Enrique Jr., Carlos, Juanito and Eloisa, all surnamed
Del Rosario, were the registered owners of Lot No. 1083-C, a parcel of land situated at Lolomboy, Bulacan. This lot
spanned an area of 15,029 square meters and was covered by TCT No. T-50.668 (M) registered in the Registry of Deeds
of Bulacan. On May 16, 1983, Oscar, Rosita, Violeta, Enrique Jr., Juanito, and Eloisa, executed a Special Power of
Attorney in favor of their mother and co-respondent, Fidela, authorizing her to sell, lease, mortgage, transfer and convey
their rights over Lot No. 1083-C. Subsequently, Fidela borrowed P250,000 from Mariano Rivera in the early part of
1987. To secure the loan, she and Mariano Rivera agreed to execute a deed of real estate mortgage  and an agreement to
sell the land. Consequently, on March 9, 1987, Mariano went to his lawyer, Atty. Efren Barangan, to have three documents
drafted: the Deed of Real Estate Mortgage, a  Kasunduan (Agreement to Sell), and a Deed of Absolute Sale.
The Kasunduan provided that the children of Mariano Rivera, the petitioners, would purchase Lot No. 1083-C for a
consideration of P2,141,622.50. This purchase price was to be paid in three installments: P250,000 upon the signing of
the Kasunduan, P750,000 on August 31, 1987, and P1,141,622.50 on December 31, 1987. It also provided that the Deed
of Absolute Sale would be executed only after the second installment is paid and a postdated check for the last installment
is deposited with Fidela. As previously stated, however, Mariano had already caused the drafting of the Deed of Absolute
Sale. But unlike the Kasunduan, the said deed stipulated a purchase price of only P601,160, and covered a certain Lot No.
1083-A in addition to Lot No. 1083-C. This deed, as well as the Kasunduan and the Deed of Real Estate Mortgage, was
signed by Marianos children, petitioners Adelfa, Cynthia and Jose, as buyers and mortgagees, on March 9, 1987.

March 10, 1987,  Mariano Rivera returned to the office of Atty. Barangan, bringing with him the signed documents with him
Fidela and her son Oscar del Rosario to sign the mortgage and the Kasunduan there. Hoever, Fidela  inadvertently affixed
her signature on all the three documents in the office of Atty. Barangan . Mariano then gave Fidela the amount
of P250,000.

On October 30, 1987, he also gave Fidela a check for P200,000. In the ensuing months, also, Mariano gave Oscar del
Rosario several amounts totaling P67,800 upon the latters demand for the payment of the balance despite Oscars lack of
authority to receive payments under the Kasunduan.While Mariano was making payments to Oscar, Fidela entrusted the
owners copy of TCT No. T-50.668 (M) to Mariano to guarantee compliance with the Kasunduan. When Mariano
unreasonably refused to return the TCT, one of the respondents, Carlos del Rosario, caused the annotation on TCT No. T-
50.668 (M) of an Affidavit of Loss of the owners duplicate copy of the title on September 7, 1992. This annotation was
offset, however, when Mariano registered the Deed of Absolute Sale on October 13, 1992, and afterwards caused the
annotation of an Affidavit of Recovery of Title on October 14, 1992. Thus, TCT No. T-50.668 (M) was cancelled, and in its
place was issued TCT No. 158443 (M) in the name of petitioners Adelfa, Cynthia and Jose Rivera. Meanwhile, the Riveras,
representing themselves to be the new owners of Lot No. 1083-C, were also negotiating with the tenant, Feliciano Nieto, to
rid the land of the latters tenurial right. When Nieto refused to relinquish his tenurial right over 9,000 sq. m. of the land, the
Riveras offered to give 4,500 sq. m. in exchange for the surrender. Nieto could not resist and he accepted. Subdivision
Plan No. Psd-031404-052505 was then made on August 12, 1992 and was inscribed on TCT No. 158443 (M), and Lot No.
1083-C was divided into Lots 1083 C-1 and 1083 C-2.

February 18, 1993, respondents filed a complaint in the RTC of Malolos, asking that the Kasunduan be rescinded for
failure of the Riveras to comply with its conditions, with damages. They also sought the annulment of the Deed of Absolute
Sale on the ground of fraud, the cancellation of TCT No. T-161784 (M) and TCT No. T-161785 (M), and the reconveyance
to them of the entire property with TCT No. T-50.668 (M) restored. After trial, the RTC ruled in favor of RESPONDENTS.
The trial court ruled that Fidelas signature in the Deed of Absolute Sale was genuine, but found that Fidela never intended
to sign the said deed. Noting the peculiar differences between the Kasunduan  and the Deed of Absolute Sale, the trial
court concluded that the Riveras were guilty of fraud in securing the execution of the deed and its registration in the
Registry of Deeds. This notwithstanding, the trial court sustained the validity of TCT No. T-161784 (M) in the name of
Feliciano Nieto since there was no fraud proven on Nietos part. The trial court found him to have relied in good faith on the
representations of ownership of Mariano Rivera. Thus, Nietos rights, according to the trial court, were akin to those of an
innocent purchaser for value.

The trial court rescinded the Kasunduan  but ruled that the P450,000 paid by petitioners be retained by respondents as
payment for the 4,500 sq. m. portion of Lot No. 1083-C that petitioners gave to Nieto. On appeal to the  Court of Appeals,
the trial courts judgment was modified and the judgment appealed from was AFFIRMED with the MODIFICATION that the
Deed of Absolute Sale dated March 10, 1987 is declared null and void only insofar as Lot No. 1083-C is concerned, but
valid insofar as it conveyed Lot No. 1083-A, that TCT No. 158443 (M) is valid insofar as Lot No. 1083-A is concerned and
should not be annulled, and increasing the amount to be paid by the defendants-appellants to the plaintiffs-appellees for
the 4,500 square meters of land given to Feliciano Nieto to P323,617.50.

ISSUE: May the contract entered into between the parties, however, be rescinded based on Article 1191?

HELD: A careful reading of the Kasunduan reveals that it is in the nature of a contract to sell, as distinguished from a
contract of sale. In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold; while
in a contract to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment
of the purchase price. In a contract to sell, the payment of the purchase price is a positive suspensive condition the failure
of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from
acquiring an obligatory force. Respondents in this case bound themselves to deliver a deed of absolute sale and clean title
covering Lot No. 1083-C after petitioners have made the second installment. This promise to sell was subject to the
fulfillment of the suspensive condition that petitioners pay P750,000 on August 31, 1987, and deposit a postdated check for
the third installment of P1,141,622.50.Petitioners, however, failed to complete payment of the second installment. The non-
fulfillment of the condition rendered the contract to sell ineffective and without force and effect.  It must be stressed that the
breach contemplated in Article 1191 of the New Civil Code is the obligors failure to comply with an obligation already
extant, not a failure of a condition to render binding that obligation.  Coming now to the matter of prescription. Contrary to
petitioners assertion. On the matter of damages, the Court of Appeals awarded respondents  P323,617.50 as actual
damages for the loss of the land that was given to Nieto, P200,000 as moral damages,P50,000 as exemplary
damages, P50,000 as attorneys fees and the costs of suit. Respondents were amply compensated through the award of
actual damages, which should be sustained. The other damages awarded total P300,000, or almost equivalent to the
amount of actual damages. Practically this will double the amount of actual damages awarded to respondents. To avoid
breaching the doctrine on enrichment, award for damages other than actual should be reduced. Thus, the amount of moral
damages should be set at only P30,000, and the award of exemplary damages at only P20,000. The award of attorneys
fees should also be reduced to P20,000, which under the circumstances of this case appears justified and reasonable.

Cannu vs. Galang

FACTS: Respondents-spouses Gil and Fernandina Galang obtained a loan from Fortune Savings & Loan Association
forP173,800.00 to purchase a house and lot located at Pulang Lupa, Las Piñas, with an area of 150 square meters
covered by Transfer Certificate of Title (TCT) No. T-8505 in the names of respondents-spouses. To secure payment, a real
estate mortgage was constituted on the said house and lot in favor of Fortune Savings & Loan Association. In early 1990,
NHMFC purchased the mortgage loan of respondents-spouses from Fortune Savings & Loan Association for P173,800.00.
Respondent Fernandina Galang authorized4 her attorney-in-fact, Adelina R. Timbang, to sell the subject house and lot.
Petitioner Leticia Cannu agreed to buy the property for P120,000.00 and to assume the balance of the mortgage
obligations with the NHMFC and with CERF Realty 5 (the Developer of the property). A Deed of Sale with Assumption of
Mortgage Obligation10 dated 20 August 1990 was made and entered into by and between spouses Fernandina and Gil
Galang (vendors) and spouses Leticia and Felipe Cannu (vendees) over the house and lot in question. Petitioners paid the
“equity” or second mortgage to CERF Realty. Despite requests from Adelina R. Timbang and Fernandina Galang to pay
the balance of P45,000.00 or in the alternative to vacate the property in question, petitioners refused to do so. In a
letter18 dated 29 March 1993, petitioner Leticia Cannu informed Mr. Fermin T. Arzaga, Vice President, Fund Management
Group of the NHMFC, that the ownership rights over the land covered by TCT No. T-8505 in the names of respondents-
spouses had been ceded and transferred to her and her husband per Deed of Sale with Assumption of Mortgage, and that
they were obligated to assume the mortgage and pay the remaining unpaid loan balance. Petitioners’ formal assumption of
mortgage was not approved by the NHMFC. Because the Cannus failed to fully comply with their obligations, respondent
Fernandina Galang, on 21 May 1993, paid P233,957.64 as full payment of her remaining mortgage loan with NHMFC.
Petitioners opposed the release of TCT No. T-8505 in favor of respondents-spouses insisting that the subject property had
already been sold to them. Consequently, the NHMFC held in abeyance the release of said TCT.

ISSUES: If the rescission and annulment of the Deed of Sale with Assumption of Mortgage valid.

HELD: Court is of the view that plaintiffs have no cause of action either against the spouses Galang or the NHMFC.
Plaintiffs have admitted on record they failed to pay the amount of P45,000.00 the balance due to the Galangs in
consideration of the Deed of Sale With Assumption of Mortgage Obligation (Exhs. “C” and “3”). Consequently, this is a
breach of contract and evidently a failure to comply with obligation arising from contracts. . . In this case, NHMFC has not
been duly informed due to lack of formal requirements to acknowledge plaintiffs as legal assignees, or legitimate tranferees
and, therefore, successors-in-interest to the property, plaintiffs should have no legal personality to claim any right to the
same property.

OLIVERIO LAPERAL& FILIPINAS GOLF & COUNTRY CLUB INC. vs. SOLID HOMES, INC.
G.R. No. 130913. June 21, 2005
Facts: Filipinas Golf Sales and Development Corporation, predecessor-in-interest of Filipinas Golf and Country Club, Inc.,
represented by its then President, Oliverio Laperal, entered into a Development and Management Agreement with
respondent Solid Homes, Inc., a registered subdivision developer, involving several parcels of land owned by Laperal and
FGSDC. Under the terms and conditions of the aforementioned Agreement and the Supplement, respondent undertook to
convert at its own expense the land subject of the agreement into a first-class residential subdivision, in consideration of
which respondent will get 45% of the lot titles of the saleable area in the entire project. The aforementioned Agreement
was cancelled by the parties, and, in lieu thereof, two contracts identically denominated Revised Development and
Management Agreement were entered into by respondent with the two successors-in-interest of FGSDC. Unlike the
original agreement, both Revised Agreements omitted the obligation of petitioners Laperal and FGCCI to make available to
respondent Solid Homes, Inc. the owner’s duplicate copies of the titles covering the subject parcels of land. It appears,
however, that even as the Revised Agreements already provided for the non-surrender of the owner’s duplicate copies of
the titles, respondent persisted in its request for the delivery thereof .Then, petitioners served on respondent notices of
rescission of the Revised Agreements with a demand to vacate the subject properties and yield possession thereof to
them.
Issue: Whether the termination of the Revised Agreement and Addendum, because of the contractual breach committed
by respondent solid homes, carried with it the effect provided under Article 1385 of the New Civil Code.
Held: Mutual restitution is required in cases involving rescission under Article 1191. Since Article 1385 of the Civil Code
expressly and clearly states that “rescission creates the obligation to return the things which were the object of the
contract, together with their fruits, and the price with its interest,” the Court finds no justification to sustain petitioners’
position that said Article 1385 does not apply to rescission under Article 1191.As a consequence of the resolution by
petitioners, rights to the lot should be restored to private respondent or the same should be replaced by another acceptable
lot. Applying the clear language of the law and the consistent jurisprudence on the matter, therefore, the Court rules that
rescission under Article 1191 in the present case, carries with it the corresponding obligation of restitution.

LAURENCIO C. RAMEL, ET AL. VS. DANIEL AQUINO. ET AL

G.R. No. 133208  July 31, 2006
PUNO, J.:
 
DOCTRINES:
Absent any direct proof on the value of improvements and the fruits, it is just to offset the claim of improvements to
the claim of fruits derived from the land and then place the parties in their previous positions before the agreement.
 
FACTS:
            Daniel Aquino is a registered owner of a land which he mortgaged to the Development Bank of the Philippines
(DBP). As the property was in danger of being foreclosed, respondents sold to petitioners a portion of the land with the
agreement that petitioners would assume the remaining mortgage obligation of respondents with the DBP and the balance
shall be paid to respondents.  Petitioners were allowed by respondents to take possession of the land. Subsequently,
petitioners applied for a re-structuring of the mortgage loan win the DBP for a period of ten years. Petitioners then went to
DBP to pay for the amortization but they found out that respondents had paid the bank and the latter told the former that
they would return whatever the petitioners paid for the land and threatened to withdraw the title from the bank. Petitioners
filed with the trial court for Specific Performance with Preliminary Injunction and Damages and three days later,
respondents withdrew the amount which they had paid to the bank. During the pendency of the case, petitioners were able
to fully settle the loan with the DBP.
          The trial court rendered a decision assailed by herein petitioners on the ground, among others, that the offsetting the
claim of improvements by petitioners and the claim of the fruits derived from the land by respondents is erroneous citing
Articles 546 and 547 of the Civil Code.  Petitioners argue that as possessors in good faith and in the concept of an owner,
they are entitled to the fruits received before possession was legally interrupted and they must be reimbursed for their
expenses or for the increase in the value the subject property may have acquired by reason thereof.
 
ISSUE:
            Whether or not there is legal ground to order the offsetting of the claim of improvements by petitioners to the claim
of fruits derived from the land by respondents
 
RULING:
YES. The records show that both parties failed to prove their claims through any receipt or document. Despite the
lack of proof, the trial court ordered that whatever improvements spent on the land shall be offset from the fruits derived
therefrom. The plaintiffs claimed that they were able to improve the land after possession was given to them. No receipts
were shown to guide the court as to how much were the costs of the improvements. Likewise the defendants claimed that
the plaintiffs were able to cultivate the land and harvest palay although their testimonies to this effect are based on their
presumptions and calculations not on actual harvest such that the court also cannot make determination of the real fruits
derived from the land. This being so, the court shall just offset the claim of improvements to the claim of fruits derived from
the land and then place the parties in their previous positions before the agreement. Whatever improvements spent on the
land shall be compensated from the fruits derived therefrom.

Heirs Of Antonio F. Bernabe  Vs Court Of Appeals G.R. No. 154402, July 21, 2008

Facts: This case stemmed from a Complaint for specific performance filed by respondent Titan Construction Corporation
(Titan) against petitioners, who are co-owners of an undivided one-half (½) share in two (2) parcels of land located in La
Huerta, Parañaque, Metro Manila.  In an undated Deed of Sale of Real Estate entered into by Titan and the defendants,
the latter sold their one-half (½) share in the properties to Titan for P17,700,00.00 to be paid in the following manner: ONE
MILLION PESOS upon the signing by the VENDORS for the DEED OF SALE and the balance shall be paid within, but not
later than sixty (60) days. Titan prayed for judgment ordering defendants to comply with their obligations under the contract
and to pay damages, alleging that it had already paid a substantial portion of the down payment.
           A compromise agreement was subsequently entered into by Titan and the remaining defendants, whereby the latter
agreed to the sale of their one-half (½) share in the properties to Titan and waived whatever cause of action for damages
they might have against each other.  By virtue of the compromise agreement, similar Deeds of Conditional Sale were
separately entered into.
The RTC ordered the heirs to execute a registrable Deed of Absolute Sale over the one-third (1/3) share of Antonio
in the property covered by TCT No. 86793 of the Register of Deeds of Parañaque, pursuant to the  Deed of Conditional
Sale, upon Titan’s payment to them of the amount of P3,431,058.42 representing the balance of the purchase price. 
           Petitioners appealed the RTC decision to the Court of Appeals.  The appeal was dismissed. Hence, this petition for
review.

Issues:
(1)     May the vendee compel the vendors to execute a registerable deed of sale?
 (2)     May the vendors in a deed of conditional sale ask for rescission of contract for failure of the vendee to pay in full the
agreed consideration?
 
Held: 1.  No.  A careful reading of the stipulations in the Deed of Conditional Sale conveys the intent of the parties to
enter into a contract to sell.  The fourth paragraph of the contract explicitly states that only when full payment of the
purchase price is made shall Antonio execute the deed of absolute sale transferring and conveying his shares in the
subject properties.  Clearly, the intent is to reserve ownership in the seller, Antonio, until the buyer, Titan, pays in full the
purchase price.  The full payment of the purchase price does not automatically vest ownership in Titan. A deed of absolute
sale still has to be executed by Antonio.  Under the Deed of Conditional Sale, the balance of the purchase price should be
paid within sixty (60) days from the fulfillment of several conditions.  At the time of the filing of the supplemental complaint,
only three of the four conditions had been carried out.  Thus, at that point, the balance of the purchase price had not yet
become due and so, too, petitioners’ obligation to execute a registerable deed of absolute sale had not yet arisen.
Accordingly, the Deed of Conditional Sale remains valid, but petitioners cannot be compelled by specific performance to
execute the deed of absolute sale in favor of Titan until and unless Titan settles the balance of the purchase price as
agreed upon. 

2. No. The demand for rescission is based on Article 1191 of the New Civil Code.  This article refers to rescission
applicable to reciprocal obligations.  Reciprocal obligations are those which arise from the same cause, and in which each
party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the
other.  They are to be performed simultaneously such that the performance of one is conditioned upon the simultaneous
fulfillment of the other.  While Article 1191 uses the term “rescission,” the original term which was used in Article 1124 of
the old Civil Code, from which the article was based, was “resolution.” Resolution is a principal action which is based on
breach of a party or breach of faith by the other party who violates the reciprocity between them.  The breach contemplated
in the provision is the obligor’s failure to comply with an existing obligation. Thus, the power to rescind is given only to the
injured party. The injured party is the party who has faithfully fulfilled his obligation or is ready and willing to perform his
obligation. Thus, petitioners cannot ask for rescission of the Deed of Conditional Sale since it has been proven that far from
violating the conditions of the deed, Titan was ready and willing to perform its contractual obligations.  That the balance
had not yet become due and demandable is a result of the appeal from the RTC and CA decisions, and is not due to
Titan’s alleged refusal to comply with the contract.  

 FIL-ESTATE PROPERTIES VS SPOUSES RONQUILLO

G.R. No. 185798               January 13, 2014

 FACTS: Petitioner Fil-Estate Properties, Inc. is the owner and developer of the Central Park Place Tower while co-
petitioner Fil-Estate Network, Inc. is its authorized marketing agent. Respondent Spouses Conrado and Maria Victoria
Ronquillo purchased from petitioners an 82-square meter condominium unit for a pre-selling contract price of
P5,174,000.00. On 29 August 1997, respondents executed and signed a Reservation Application Agreement wherein they
deposited P200,000.00 as reservation fee. As agreed upon, respondents paid the full downpayment of P1,552,200.00 and
had been paying the P63,363.33 monthly amortizations until September 1998. Upon learning that construction works had
stopped, respondents likewise stopped paying their monthly amortization. Claiming to have paid a total of P2,198,949.96 to
petitioners, respondents through two (2) successive letters, demanded a full refund of their payment with interest. When
their demands went unheeded, respondents were constrained to file a Complaint for Refund and Damages before the
Housing and Land Use Regulatory Board (HLURB). Respondents prayed for reimbursement/refund of P2,198,949.96
representing the total amortization payments, P200,000.00 as and by way of moral damages, attorney’s fees and other
litigation expenses. On 13 June 2002, the HLURB in favor of herein respondents. The Arbiter considered petitioners’ failure
to develop the condominium project as a substantial breach of their obligation which entitles respondents to seek for
rescission with payment of damages. The Arbiter also stated that mere economic hardship is not an excuse for contractual
and legal delay.

ISSUES: Whether or not the Asian financial crisis constitute a fortuitous event which would justify delay by petitioners in
the performance of their contractual obligation;

HELD: NO. The Supreme Court held that the Asian financial crisis is not a fortuitous event that would excuse petitioners
from performing their contractual obligation. The Court ruled that “we cannot generalize that the Asian financial crisis in
1997 was unforeseeable and beyond the control of a business corporation. It is unfortunate that petitioner apparently met
with considerable difficulty e.g. increase cost of materials and labor, even before the scheduled commencement of its real
estate project as early as 1995. However, a real estate enterprise engaged in the pre-selling of condominium units is
concededly a master in projections on commodities and currency movements and business risks. The fluctuating
movement of the Philippine peso in the foreign exchange market is an everyday occurrence, and fluctuations in currency
exchange rates happen everyday, thus, not an instance of caso fortuito.”

Lirag Textile Mills, Inc. vs Court of Appeals GR No. L-30736 April 14, 1975
Facts: On May 11, 1960 and for sometime prior and subsequent thereto, Felix Lirag was a member of the Board of
Directors of the Philippine Chamber of Industries. That for about two months, more or less, prior to May 11, 1960,
Alcantara worked in a temporary capacity with Lirag Textile Mills, Inc. During this same period of time, Felix Lirag was a
director and Chairman of the Board of Directors of Lirag Textile Mills, Inc . On May 9, 1960, Lirag Textile Mills, Inc. wrote a
letter to Alcantara advising him that, effective May 11, 1960, his temporary designation as Technical Assistant to the
Administrative Officer was made permanent. That as Assistant to the Administrative Officer of the Lirag Textile Mills, Inc.
plaintiff received a salary of P400.00 and allowance of P100.00 per month. Plaintiff's tenure of employment, per Lirag
Textile Mills, Inc.'s above letter was to be 'for an indefinite period, unless sooner terminated by reason of voluntary
resignation or by virtue of a valid cause or causes'. On July 22, 1961, Lirag Textile Mills, Inc. wrote Alcantara a letter
advising him that because the company 'has suffered some serious reverses, both in terms of pecuniary loss and in market
opportunities,' the company was terminating his services and effecting his separation from defendant corporation effective
at the close of working hours of August 22, 1961. However, it was shown that Lirag Textile Mills Inc.'s original capital of
P5,000,000.00 was, on May 2, 1961, increased to P15,000,000.00 per certification issued by the Security and Exchange
Commission. The CFI found that Alcantara was dismissed without cause in violation of his contract of employment. The CA
affirmed affirmed the decision of the lower court principally its conclusion that the trial court did not commit any error in its
evaluation of the evidence when it found that it was not true that petitioner Lirag Textile Mills suffered pecuniary loss and in
market opportunities which it used as a justification to terminate the services of Alcantara and that Alcantara was correctly
awarded back salaries, moral damages and attorney's fees.
Issue: Whether or not the CA erred in awarding Alcantara back salaries from the time of dismissal up to final judgment for
the dismissal without cause
Held: A "period" has been defined "as a space of time which has an influence on obligation as a result of a juridical act,
and either suspends their demandableness or produces their extinguishment." Obligations with a period are those whose
consequences are subjected in one way or another to the expiration of said period or term. Art. 1193 of the Civil Code,
provides, among others, that "obligations with a resolutory period take effect at once, but terminate upon arrival of the day
certain. A day certain is understood to be that which must necessarily come, although it may not be known when". In the
light of the foregoing provisions We have no doubt that the "indefinite period" of employment expressly agreed upon by and
between the parties in this case is really a resolutory period because the employment is bound to terminate on a future
"day certain" such as the employee's resignation or employer's termination of employment upon a valid cause or causes,
like death of the employee or termination of employer's corporate existence, although it may not be known when. It is clear
that petitioner Lirag Textile Mills, Inc. violated the contract of employment with private respondent Alcantara when the
former terminated his services without a valid cause. The act was attended with bad faith and deceit because said
petitioner made false allegations of a supposed valid cause knowing them to be false, thus making itself liable for payment
of actual, moral and exemplary damages, plus attorneys fees to private respondent Alcantara. Petitioner Lirag Textile Mills,
Inc. cannot with impunity be allowed the absolute and unilateral power to terminate without valid cause a contract of
employment with a definite period it voluntarily entered into merely on the basis of its whim or caprice and under the false
pretense of financial distress. The SC affirmed the assailed decision of the CA.

ABESAMIS VS. WOODCRAFT WORKS, INC.

FACTS:This case was a contract in the delivery of logs before the end of July 1951 but not earlier than April of same year
as an option depending on availability of logs and vessels between Woodcraft Works and Abesamis Shipping. The failure
of the appellant to send vessels to Dolores, Samar was because of the storm that swept away all the log on May 5, 1951.
Under contract the delivery period of date was accomplished and that have been agreed to avoid the storm.
Woodcraftworks sued Abesamis to bear all loss as a result of typhoon

ISSUE:Whether or not Abesamis is liable to pay of the loss?

HELD: As a consequence of typhoon that struck on May 5 there was yet no delay on the part of the Abasamis. The
obligation between parties are the reciprocal one, appellant to furnish the vessel and appellee to furnish the logs. It was
also the obligation to benefit both parties. The period that agreed upon are decided to actually avoid typhoons.The
corresponding loss must be shouldered by the appellee.

Makati Dev’t Corp. v. Empire Insurance Co.G.R. No. L-21780, 30 June 1967
FACTS: On March 31, 1959, the Makati Development Corporation sold to Rodolfo P. Andal a lot. A so-called “special
condition” contained in the deed of sale provides that “the VENDEE/S shall commence the construction and complete at
least 50% of his/her/their/its residence on the property within two (2) years  to the satisfaction of the VENDOR and, in the
event of his/her/their/its failure to do so will be forfeited in favor of the VENDOR by the mere fact of failure of the
VENDEE/S to comply with this special condition.” To ensure faithful compliance with this “condition,” Andal gave a surety
bond the sum of P12,000 in case Andal failed to comply with his obligation under the deed of sale.

Andal did not build his house; instead, he sold the lot to Juan Carlos. As neither Andal nor Juan Carlos built a house on the
lot within the stipulated period, the Makati Development Corporation, sent a notice of claim to the Empire Insurance Co.
advising it of Andal’s failure to comply with his undertaking. Demand for the payment was refused, whereupon the Makati
Development Corporation filed a complaint against the Empire Insurance Co. to recover on the bond in the full amount,
plus attorney’s fees. In due time, the Empire Insurance Co. filed its answer with a third-party complaint against Andal. 

ISSUE: WHETHER OR NOT Andal is entitled to pay the surety bond of Php12,000 as a penal sanction.

RULING: No. The so-called “special condition” in the deed of sale is, in reality, an obligation 1 — to build a house at least 50
percent of which must be finished within two years. It was to secure the performance of this obligation that a penal clause
was inserted. Here the trial court found that Juan Carlos had finished more than 50 percent of his house or barely a month
after the expiration of the stipulated period. There was, therefore, a partial performance of the obligation within the meaning
and intendment of article 1229. The penal clause, in this case, was inserted not to indemnify the Makati Development
Corporation for any damage it might suffer as a result of a breach of the contract but rather compel performance of the so-
called “special condition” and thus encourage home building among lot owners in the Urdaneta Village.

Considering that a house had been built shortly after the period stipulated, the substantial, if tardy, performance of the
obligation, having in view the purpose of the penal clause, fully justified the trial court in reducing the penalty.
The stipulation, in this case, to commence the construction and complete at least 50 percent of the vendee’s house within
two years cannot be construed as imposing a strictly personal obligation on Andal. To adopt such a construction would be
to limit Andal’s right to dispose of the lot. There is nothing in the deed of sale restricting Andal’s right to sell the lot at least
within the two-year period and we think it plain that a reading of such a limitation on one of the rights of ownership must
rest on more explicit language in the contract. It cannot be left to mere inference.

TAN SHUY V. MAULAWIN

Facts: Tan Shuy is engaged in the business of buying copra and corn whenever they would buy copra or corn from crop
sellers, they would prepare and issue a pesada in their favor. A pesada is a document containing details of the transaction.
When a pesada contained the annotation “pd” on the total amount of the purchase price, it meant that the crop delivered
had already been paid for by petitioner. Maulawin , is a farmer-businessman engaged in the buying and selling of copra
and corn. Tan Shuy extended a loan to Guillermo in the amount of ₱420,000. In consideration thereof, Guillermo obligated
himself to pay the loan and to sell copra to petitioner.Tan Shuy alleged that despite repeated demands, Maulawin remitted
only a total of P28,000.
Guillermo countered that he had already paid the subject loan in full. According to him, he continuously delivered
and sold copra to Tan Shuy. Maulawin said they had an oral arrangement that the net proceeds thereof shall be applied as
installment payments for the loan. To bolster his claim, he presented copies of pesadas issued to him which meant that
actual payment of the net proceeds from copra deliveries was not given to him, but was instead applied as loan payment.
The trial court ruled that the net proceeds from Guillermo’s copra deliveries – represented in the pesadas should be
applied as installment payments for the loan. It gave weight and credence to the pesadas. Accordingly, the trial court found
that respondent had not made a full payment for the loan, as the total creditable copra deliveries merely amounted to
₱378,952.43.
The CA affirmed the decision of the RTC. Hence, the appeal.

Issue: WON the delivery of copra amounted to installment payments for the loan obtained by Maulawin from Tan Shuy.

Held: The pesadas served as proof that the net proceeds from the copra deliveries were used as installment payments for
the debts of Maulawin. Pursuant to Article 1232 of the Civil Code, an obligation is extinguished by payment or
performance. There is payment when there is delivery of money or performance of an obligation. Article 1245 of the Civil
Code provides for a special mode of payment called dation in payment (dación en pago). There is dation in payment when
property is alienated to the creditor in satisfaction of a debt in money. Here, the debtor delivers and transmits to the creditor
the former’s ownership over a thing as an accepted equivalent of the payment or performance of an outstanding debt. In
such cases, Article 1245 provides that the law on sales shall apply, since the undertaking really partakes – in one sense –
of the nature of sale; that is, the creditor is really buying the thing or property of the debtor, the payment for which is to be
charged against the debtor’s obligation. Dation in payment extinguishes the obligation to the extent of the value of the thing
delivered, either as agreed upon by the parties or as may be proved, unless the parties by agreement – express or implied,
or by their silence – consider the thing as equivalent to the obligation, in which case the obligation is totally extinguished.
However, some of the “pesadas” offered in evidence by Maulawin were not for copras that he delivered to Tan
Shuy but for corn. Hence, the amount of  P41,585.25 which the pesadas show as payment for corn delivered by Maulawin
to Tan Shuy cannot be claimed by Maulawin to have been applied also as payment to his loan. Therefore, the total
amount of payment made by Maulawin to Tan Shuy for his obligation to the latter is P378,952.43 which is the total amount
of the copra delivered. Maulawin is still indebted to Tan Shuy in the amount of P41,047.53. The subsequent arrangement
between Tan Shuy and Maulawin can thus be considered as one in the nature of dation in payment. There was partial
payment every time Maulawin delivered copra to petitioner, chose not to collect the net proceeds of his copra deliveries,
and instead applied the collectible as installment payments for his loan from Tan Shuy.

TRADERS INSURANCE V. DY ENG BIOK  

104 PHIL 806
 
FACTS: Dy Eng Giok was a provincial sales agent of distillery corporation, with the responsibility of remitting sales
proceeds to the principal corporation.  He has  a  running  balance  and  to  satisfy payment,  a  surety bond  was  issued
with petitioner as guarantor, whereby they bound themselves liable to the distillery corporation. 
More  purchases  was  made  by  Dy  Eng  Giok  and  he  was  able  to  pay  for these additional purchases.  Nonetheless,
the payment was first applied to his  prior  payables.    A  remaining  balance  still  is  unpaid.    Thus,  an  action was  filed 
against  sales  agent  and  surety  company.    Judgment  was rendered in favor of the corporation. 
 
HELD: The  remittances  of  Dy  Eng  Giok  should  first  be  applied  to  the  obligation first contracted by him and covered
by the surety agreement.  First, in the absence   of   express   stipulation,   a   guaranty   or   suretyship   operates
prospectively  and  not  retroactively.   
It  only  secures  the  debts  contracted after  the guaranty  takes  effect.    To  apply  the payment  to the  obligations
contracted  before  the  guaranty  would  make  the  surety  answer  for  debts outside the guaranty.  The surety agreement
didn't guarantee the payment of any outstanding balance due from the principal debtor but only he would
turn out the sales proceeds to the Distileria and this he has done, since his remittances  exceeded  the  value  of  the 
sales  during  the  period  of  the guaranty. Second, since the Dy Eng Biok’s obligations prior to the guaranty were not
covered,  and  absent  any  express  stipulation,  any  prior  payment  made should be applied to the debts that were
guaranteed since they are to be regarded as the more onerous debts.

Sering vs. CA

Facts: On August 6, 1988, spouses Democrito O. Sering and Juanita T. Sering executed a deed of real estate mortgagein
favor of Clarita L. Garcia of a parcel of land in Novaliches, Caloocan City, as security for a loan obtained from her in the
amount of P200,000.00. On March 10, 1990, Clarita L. Garcia sent a letter to Democrito O. Sering, husband of Juanita,
declaring that since August 6, 1988, Juanita has not paid a single monthly installment on her loan and demanding payment
of P200,000.00 on or before April 6, 1990. On April 15, 1992, Clarita L. Garcia wrote another letter to Juanita T. Sering
demanding payment of the amount of P200,000.00 within 10 days from notice, otherwise Clarita L. Garcia would cause the
extra-judicial foreclosure of the real estate mortgage. On May 16, 1992, Juanita T. Sering wrote a letter to Clarita L.
Garcia's lawyer promising to pay the amount of P200,000.00 on or before May 23, 1992, and that if she failed to remit the
said amount, Clarita L. Garcia would be free to take appropriate action on the real estate mortgage. Juanita T. Sering failed
to pay any amount of the loan. On January 6, 1993, Clarita L. Garcia filed with the city sheriff of Caloocan a petition for the
extra-judicial foreclosure of the real estate mortgage.The sheriff set the sale at public auction on February 17, 1993, at
10:00 in the morning. On February 9, 1993, Juanita T. Sering filed with the Regional Trial Court, Caloocan City a complaint
for injunction against Clarita L. Garcia and the sheriff, for a temporary restraining order to enjoin the sale at public auction
of her property. The trial court did not take any action on the complaint and the sheriff sold the mortgaged real estate at
public auction with Clarita L. Garcia as the highest bidder. On October 5, 1993, Juanita T. Sering filed with the trial court an
amended complaint praying that judgment be rendered in her favor and against Clarita L. Garcia; that the mortgage
contract and the foreclosure proceedings be declared void; and that damages be awarded to her. 11 Juanita Sering alleged
that the mortgage contract did not indicate the actual amount of her loan which was only P100,000; that she already paid
Clarita L. Garcia two hundred thousand P200,000 more or less. Hence, the foreclosure of the real estate mortgage was a
nullity. On August 1, 1996, the trial court rendered a decision dismissing the complaint and the counterclaim of Clarita L.
Garcia which the Court of Appeals affirmed.Hence, this appeal.

Issue: Whether petitioner has actually paid her loan to respondent as to preclude the foreclosure of the real estate
mortgage to secure the loan.

Held: Petitioner insists that she has paid her loan but respondent refused to sign the receipts evidencing monthly
installments paid. However, petitioner cannot entirely fault respondent for refusing to issue a receipt. In case respondent
refuses to issue a receipt for payment allegedly made, petitioner may consign her payment to the court in accordance with
the Civil Code. "If the creditor to whom tender of payment has been made refuses without just cause to accept it, the
debtor shall be released from responsibility by the consignation of the thing or sum due." Specifically, a debtor is released
from responsibility by the consignation of the sum due when, without just cause, the creditor refuses to give a receipt.

B.E. San Diego, Inc. vs. Alzul

524 SCRA 402

Facts: On February 10, 1975, respondent Alzul purchased from petitioner B.E. San
Diego, Inc. four (4) subdivision lots installment under Contract to Sell. On July 25, 1977, respondent signed a “Conditional
Deed of Assignment and Transfer of Rights” in favour of Wilson P. Yu her rights under the Contract to Sell.   Petitioner was
notified of the execution of such deed.  Later on, the Contract to Sell in respondent’s name was cancelled, and petitioner
issued a new one in favor of Yu. Thereafter, respondent informed petitioner about Yu’s failure and refusal to pay the
amounts due under the conditional deed.   She also manifested that she would be the one to pay the installments due to
respondent on account of Yu’s default.  On August 25, 1980, respondent commenced an action for rescission of the
conditional deed of assignment against Yu before the RTC which subsequently caused the annotation of notices of lis
pendens on the titles covering the subject lots. On April 28, 1989, the subject lots were sold to spouses Carlos and Sandra
Ventura who were surprised to find the annotation of lis pendens in their owner’s duplicate title.        On May 8, 1990,
the Ventura spouses filed an action for Quieting of Title with Prayer for Cancellation of Annotation and Damages before the
RTC. The trial court ruled in favor of the Ventura spouses.  On appeal before the CA, however, the decision was reversed.
In an attempt to comply with the SC’s directive, respondent tried to serve payment upon petitioner but the latter refused to
accept payment.  Thinking that an action for consignation alone would not be sufficient, respondent decided to file an
action for consignation and specific performance against petitioner before the Housing and Land Use Regulatory Board.
Aggrieved by the unfavorable decision, respondent filed a Petition for Review before the HLURB’s First
Division.  On March 17, 2000, a decision was rendered dismissing the petition for lack of merit. Respondent then filed an
appeal to the Office of the President.  This was, however, dismissed on June 2, 2003 for having been filed out of time.
Respondent Alzul brought before the CA a petition for certiorari. On February 18, 2005, the CA rendered its assailed
Decision reversing the HLURB’s Resolution ordering petitioner to accept payment from respondent and to issue the
corresponding Deed of Sale.

Issues: Whether or not respondent Alzul is still entitled to consignation despite the lapse of the period
Whether or not there was valid consignation

Ruling: No. The Court ruled that the non-compliance with our June 17, 1996 Resolution is fatal to respondent Alzul’s
action for consignation and specific performance. It is clear as day that respondent did not attempt nor pursue consignation
within the 30-day period given to her in accordance with the prescribed legal procedure. The Court explained that a mere
tender of payment is not enough to extinguish an obligation.  In Meat Packing Corporation of the Philippines v.
Sandiganbayan, it distinguished consignation from tender of payment and reiterated the rule that both must be validly done
in order to effect the extinguishment of the obligation.  There is no dispute that a valid tender of payment had been made
by respondent. Absent however a valid consignation, mere tender will not suffice to extinguish her obligation and
consummate the acquisition of the subject properties.   In St. Dominic Corporation involving the payment of the installment
balance for the purchase of a lot similar to the case at bar, where a period has been judicially directed to effect the
payment, the Court held that a valid consignation is made when the amount is consigned with the court within the required
period or within a reasonable time thereafter.  

No. The Court held that the respondent would not still be accorded relief assuming arguendo that it complied with the 30
day period or with a reasonable time thereafter. 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. It is of no moment if the refusal to accept payment be reasonable or not.  Indeed, consignation is the remedy for
an unjust refusal to accept payment.   Art. 1256 of the Civil Code also provides that “if the creditor to whom tender of
payment has been made refuses without just cause to accept it, the  debtor shall be released from responsibility
by the consignation of the thing or sum due of the consignation in other cases. Moreover, in order that consignation
may be effective, the debtor must show that: (1) there was a debt due; (2) the consignation of the obligation had been
made because the creditor to whom tender of payment was made refused to accept it, or because s/he was absent or
incapacitated, or because several persons claimed to be entitled to receive the amount due or because the title to the
obligation had been lost; (3) previous notice of the consignation had been given to the person interested in the
performance of the obligation; (4) the amount due was placed at the disposal of the court; and (5) after the  consignation
had been made, the person interested was notified of the action. In the case at bar, respondent did not comply with the
provisions of law particularly with the fourth and fifth requirements specified above for a valid consignation.  In her
complaint for consignation and specific performance, respondent only prayed that she be allowed to make the consignation
without placing or depositing the amount due at the disposal of the court of origin.  Verily, respondent made no valid
consignation.

Cinco vs. C.A., G.R. No. 151903

FACTS: Petitioner Manuel Cinco obtained a loan in the amount 700,000.00 from respondent Maasin Traders Lending
Corporation (MTLC). The loan was evidenced by the promissory note, and secured by a real estate mortgage over the
spouses Cinco’s land and 4-storey building. To pay the loan in favor of MTLC, the spouses Cinco applied for a loan with
the Philippine National Bank (PNB), and offered the same properties they previously mortgage to MTLC. The PNB
approved the load application for 1.3 Million; the release was, however, conditioned on the cancellation of the mortgage in
favor of MTLC. Manuel went to Ester Servacio (Ester), MTLC’s President to inform her that there was money with PNB for
Payment of his loan. Manuel executed a Special Power of Attorney (SPA) authorizing Ester to collect the proceeds of the
loan. Ester went to the PNB to inquire, the second time around, about the proceeds. The bank officer confirmed the
existence of such loan, but they required Ester to first sign a deed of release/cancellation of the mortgage before they
could release the proceeds of the loan to her. Outraged, Ester refused the deed and did not collect the 1.3 Million. Ester
instituted foreclosure proceeding. To prevent the foreclosure, the spouses Cinco filed an action for specific performance,
damages, and preliminary injunction.

Issue: Whether the loan due the MTLC had been extinguished by the act of the spouses Cinco amounted to payment.
Held: No, While Ester’s refusal was unjustified and unreasonable, we cannot agree with Manuel’s position that this refusal
had the effect of payment that extinguished his obligation to MTLC. Article 1256 is clear and unequivocal on this point
when it provides that – ARTICLE 1256. If the creditor to whom tender of payment has been made refuses without just
cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due. In short, a
refusal without just cause is not equivalent to payment; to have the effect of payment and the consequent extinguishment
of the obligation to pay, the law requires the companion acts of tender of payment and consignation. Tender of payment,
as defined in Far East Bank and Trust Company v. Diaz Realty, Inc., is the definitive act of offering the creditor what is due
him or her, together with the demand that the creditor accept the same. When a creditor refuses the debtor’s tender of
payment, the law allows the consignation of the thing or the sum due. Tender and consignation have the effect of payment,
as by consignation, the thing due is deposited and placed at the disposal of the judicial authorities for the creditor to collect.
Nonetheless, the SPA stood as an authority to collect the proceeds of the already-approved PNB loan that, upon receipt by
Ester, would have constituted as payment of the MTLC loan. The Court agrees with Manuel that Ester’s refusal of the
payment was without basis. Under these circumstances, we hold that while no completed tender of payment and
consignation took place sufficient to constitute payment, the spouses Go Cinco duly established that they have legitimately
secured a means of paying off their loan with MTLC; they were only prevented from doing so by the unjust refusal of Ester
to accept the proceeds of the PNB loan through her refusal to execute the release of the mortgage on the properties
mortgaged to MTLC. We also find that under the circumstances, the spouses Go Cinco have undertaken, at the very least,
the equivalent of a tender of payment that cannot but have legal effect. Since payment was available and was unjustifiably
refused, justice and equity demand that the spouses Go Cinco be freed from the obligation to pay interest on the
outstanding amount from the time the unjust refusal took place

METROPOLITAN BANK AND TRUST COMPANY VS. EDGARDO D. VIRAY

G.R. No. 162218; February 25, 2010

The Facts: Rico Shipping, Inc., represented by its President, Erlinda Viray-Jarque, and Edgardo D. Viray as solidary
obligors, obtained two separate loans from MBTC in the total amount of P250,000. The two loans were secured by one
promissory note. Under the note, the debtors made a total payment of P134,054 leaving a balance of P115,946 which
remained unpaid despite demands by MBTC. The debtors executed another promissory note and obtained a loan from
MBTC in the amount of P50,000. On the due date, the debtors again failed to pay the loan. The debtors obtained a third
loan from MBTC in the amount of P50,000 but again, the debtors failed and refused to pay on due date. MBTC filed a
complaint for sum of money against the debtors with the RTC of Manila. The RTC of Manila rendered a judgment in favor
of MBTC.

Meanwhile, the government issued Free Patents in favor of Viray over three lots all situated in Barangay Bulua, Cagayan
de Oro City, Misamis Oriental. The issued Original Certificates of Title covering the said Free Patent were registered with
the Registry of Deeds of Cagayan de Oro City.

The RTC of Manila issued a writ of execution over the lots owned by Viray. Hence, the City Sheriff of Cagayan de Oro sold
the lots at public auction in favor of MBTC as the winning bidder. The next day, the sheriff issued a Certificate of Sale to
MBTC. The sheriff executed a Deed of Final Conveyance to MBTC. The Register of Deeds of Cagayan de Oro City
cancelled OCT Nos. and issued in MBTC's name TCTs. Viray filed an action for annulment of sale against the sheriff and
MBTC with the RTC of Cagayan de Oro City. The RTC of Cagayan de Oro City rendered its decision in favor of MBTC.

Viray filed an appeal with the CA. The CA ruled that the auction sale conducted by the sheriff was null and void ab initio
since the sale was made during the five-year prohibition period in violation of Section 118 of Commonwealth Act No. 141
(CA 141) or the Public Land Act. MBTC filed a Motion for Reconsideration which was denied in a Resolution dated 13
February 2004. Hence, the instant petition.

The Issue: Does the auction sale falls within the five-year prohibition period laid down in Section 118 of CA 141?

The Court's Ruling: Yes. Section 118 of CA 141 clearly provides that lands which have been acquired under free patent
or homestead shall not be encumbered or alienated within five years from the date of issuance of the patent or be liable for
the satisfaction of any debt contracted prior to the expiration of the period.

In the present case, the three loans were obtained on separate dates - 7 July 1979, 5 June 1981 and 3 September 1981,
or several years before the free patents on the lots were issued by the government to Viray on 29 December 1982. The
RTC of Manila, in a Decision dated 28 April 1983, ruled in favor of MBTC ordering the debtors, including Viray, to pay
jointly and severally certain amounts of money. The public auction conducted by the sheriff on the lots owned by Viray
occurred on 12 October 1984. For a period of five years or from 29 December 1982 up to 28 December 1987, Section 118
of CA 141 provides that the lots comprising the free patents shall not be made liable for the payment of any debt until the
period of five years expires. In this case, the execution sale of the lots occurred less than two years after the date of the
issuance of the patents. This clearly falls within the five-year prohibition period provided in the law, regardless of the dates
when the loans wereincurred.
It is argued by defendant-appellee, however, that the debt referred to in the law must have been contracted within the five-
year prohibitory period; any debt contracted before or after the five-year prohibitory period is definitely not covered by the
law. This argument is weakest on two points. Firstly, because the provision of law does not say that the debt referred to
therein should be contracted before the five-year prohibitory period but before the "expiration" of the five-year prohibitory
period. This simply means that it is not material whether the debt is contracted before the five-year prohibitory period; what
is material is that the debt must be contracted before or prior to the expiration of the five-year prohibitory period from the
date of the issuance and approval of the patent or grant. And secondly, while it is true that the debt in this case was
contracted prior to the five-year prohibitory period, the same is of no consequence, for as held in Artates vs. Urbi, such
indebtedness has to be reckoned from the date said obligation was adjudicated and decreed by the court.

HEIRS OF GAITE VS THE PLAZA INC.

G.R. No. 177685 January 26, 2011

FACTS: On July 16, 1980, The Plaza, Inc. (The Plaza), a corporation engaged in the restaurant business, through its
President, Jose C. Reyes, entered into a contract with Rhogen Builders (Rhogen), represented by Ramon C. Gaite, for the
construction of a restaurant building in Greenbelt, Makati, Metro Manila for the price of P7,600,000. On July 28, 1980, The
Plaza paid P1,155,000 down payment to Gaite and soon after Rhogen commenced construction of the restaurant building.

2 Months later, Engineer Angelito Z. Gonzales, the Acting Building Official of the Municipality of Makati, ordered Gaite to
cease and desist from continuing with the construction of the building for violation of The National Building Code.

The Plaza’s Project Manager Architect Roberto evaluated the Progress Billing and Tayzon stated that actual jobsite
assessment showed that the finished works fall short of Rhogen’s claimed percentage of accomplishment and Rhogen was
entitled to only P32,684.16 and not P260,649.91 being demanded by Rhogen. On the same day, Gaite notified Reyes that
he is suspending all construction works until Reyes and the Project Manager cooperate to resolve the issue he had raised
to address the problem.

Gaite informed The Plaza that he is terminating their contract based on the Contractor’s Right to Stop Work or Terminate
Contracts as provided for in the General Conditions of the Contract and   demanded the payment of P63,058.50
representing the work that has already been completed by Rhogen. Reyes also informed Gaite that The Plaza will continue
the completion of the structure utilizing the services of a competent contractor but will charge Rhogen for liquidated
damages as stipulated in Article VIII of the Contract. The Plaza filed a civil case for breach of contract, sum of money and
damages against Gaite and FGU in the Court of First Instance (CFI) of Rizal. The RTC Makati rendered its decision
granting in favor of the Plaza against Gaite. The Court of Appeals affirmed such decision with modification.

ISSUE: Whether or not the Rhogen had factual or legal basis to terminate the General Construction Contract.

HELD: The construction contract between Rhogen and The Plaza provides for reciprocal obligations whereby the latter’s
obligation to pay the contract price or progress billing is conditioned on the former’s specified performance. Pursuant to its
contractual obligation, The Plaza furnished materials and paid the agreed down payment. Rhogen, having breached the
contractual obligation it had expressly assumed specifically to comply with all laws was already at fault. Respondent The
Plaza, on the other hand, was justified in withholding payment on Rhogen’s first progress billing. Upon the facts duly
established, Rhogen committed a serious breach of its contract with The Plaza, which justified the latter in terminating the
contract. Article 1170 of the Civil Code provides that those who in the performance of their obligations are guilty of fraud,
negligence or delay and those who in any manner contravene the tenor thereof are liable for damages. Petition DENIED. 

OSG v. Ayala Land Inc.

GR No. 177056 – Sept 18, 2009
FACTS: Respondents operate or lease out shopping malls that have parking facilities. The people that use said facilities
are required to pay parking fees by the respondents. Senate committees conducted an investigation to determine the
legality of said practice which the same found to be against the National Building Code. Respondents then received an
information from various government agencies enjoining them from collecting parking fees and later a civil case against
them. Respondents argued that the same constitutes undue taking of private property. OSG argues that the same is
implemented in view of public welfare more specifically to ease traffic congestion. The RTC ruled in favor of the
respondents. Hence petition for certiorari.

ISSUE: Whether or not the respondents are obligated to provide for free parking to its consumers and the public.
RULING: No. Respondents are not obligated to provide for free parking to the people. Article 1158 of the Civil Code
provides that “Obligations derived from law  are not presumed. Only those  expressly determined in this Code or in
special laws are demandable, and shall be regulated by the precepts of the law which establishes them; and as to what
has not been foreseen, by the provisions of this Book”. The court does not agree to the petitioner’s reliance on the National
Building Code as the same does not expressly provide that respondents are required to provide free parking to the public.
Moreover, the court holds that the code regulates buildings and not traffic congestion. Police power is a power to regulate
but not to confiscate. The OSG’s contention is a deprivation of private property and falls under eminent domain which
requires just compensation. Thus, the RTC decision is affirmed and petition is dismissed for lack of merit.

Siquian v. People

Facts: Jesusa Carreon went to the office of Manuel Siquian, the municipal mayor of Isabela, to apply for a job in the office
of the mayor. Siquian then appointed her as a clerk in the office of the municipal secretary and even said that her salary
would be included in the budget. Accompanying her appointment is the certification, among others, of the availability of
funds through a form issued by Siquian and addressed to the CSC, pursuant to the requirements of the latter. It should be
noted that the Municipal council of Isabela, failed to enact the annual budget for the municipality for the Fiscal Year 1975-
76. As such, the annual budget for the previous Fiscal Year 1974-75, was deemed re-enacted. No such position existed
then. Carreon worked for five months and was supposed to receive her salary of P120. She approached the municipal
treasurer to ask for the money but the latter said that there was no money yet. She then sued Siquian for falsification of a
public document. The RTC and CA ruled in favour of Carreon. Siquian interposed the defense of a lack of criminal intent.

Issue: Was Siquian guilty of falsification of public documents?

Ruling: Yes. He was found guilty under par 4 of art 171, “making untruthful statements in a narration of facts”; the
elements of which are: (a) That the offender makes in a document untruthful statements in a narration of facts; (b) that he
has a legal obligation to disclose the truth of the facts narrated by him; and (c) That the facts narrated by the offender are
absolutely false. In this case, all the elements for falsification were met especially when Siquian stated that funds were
available for the position to which Jesusa Carreon was appointed when he knew that, in reality, the position itself did not
even exist and no funds had been appropriated. It is further bolstered by the fact that when the budget was deemed re-
enacted, there is no such position as Clerk to the Municipal Secretary, the position to which Carreon was appointed. And
there is also no appropriation made in the Annual Budget for the Fiscal Year 1974-75 for such position, thus rendering
Siquian's statement in his certification utterly false. Siquian also had the legal obligation to disclose the truth of such facts.
Under the civil service rules and regulations, a certification of the availability of funds for the position to be filled up is
required to be signed by the head of office or any officer who has been delegated the authority to sign. As an officer
authorized by law to issue the certification, Siquian has a legal obligation to disclose the truth of the facts narrated by him
in said certification which includes information as to the availability of the funds for the position being filled up. He also took
advantage of his official position in falsifying the document. Abuse of public office is considered present when the offender
falsifies a document in connection with the duties of his office which consist of either making or preparing or otherwise
intervening in the preparation of a document. In this case, Siquian was charged with the duty of issuing the certification
necessary for the appointment of Carreon.

Lastly, the existence of a wrongful intent to injure a third person is not necessary when the falsified document is a public
document. The SC relied on the Go Tiok case in stating that wrongful intent on the part of an accused to injure a third
person is not an essential element of the crime of falsification of public document. This is because the principal thing
punished in falsifying public documents is the violation of the public faith and the destruction of truth as therein solemnly
proclaimed. Siquian cannot raise the defense of good faith. He presides at all meetings of the municipal council and signs
all ordinances and resolutions passed by the municipal council. He was also aware that there was no budget and no such
position (clerk of municipal secretary) existed.

CANCIO VS ISIP

Navida v Dizon

Facts: Beginning 1993, a number of personal injury suits were filed in different Texas state courts by citizens of twelve
foreign countries, including the Philippines. The thousands of plaintiffs sought damages for injuries they allegedly sustained
from their exposure to dibromochloropropane (DBCP), a chemical used to kill nematodes (worms), while working on farms
in 23 foreign countries. The cases were eventually transferred to, and consolidated in, the Federal District Court for the
Southern District of Texas, Houston Division. The defendants in the consolidated cases prayed for the dismissal of all the
actions under the doctrine of forum non conveniens. The RTC of Davao City, however, junked Civil Cases. The Court
however is constrained to dismiss the case at bar not solely on the basis of the above but because it shares the opinion of
legal experts given in the interview made by the Inquirer in its Special report “Pesticide Cause Mass Sterility,” Former
Justice Secretary Demetrio Demetria in a May 1995 opinion said: The Philippines should be an inconvenient forum to file
this kind of damage suit against foreign companies since the causes of action alleged in the petition do not exist under
Philippine laws. There has been no decided case in Philippine Jurisprudence awarding to those adversely affected by
DBCP. This means there is no available evidence which will prove and disprove the relation between sterility and DBCP.

Eventually, the cases reached the SC!

The main contention of the petitioners states that the allegedly tortious acts and/or omissions of defendant companies
occurred within Philippine territory. Said fact allegedly constitutes reasonable basis for our courts to assume jurisdiction
over the case. DOLE similarly maintains that the acts attributed to defendant companies constitute a quasi-delict, which
falls under Article 2176 of the Civil Code. DOLE also argues that if indeed there is no positive law defining the alleged acts
of defendant companies as actionable wrong, Article 9 of the Civil Code dictates that a judge may not refuse to render a
decision on the ground of insufficiency of the law. The court may still resolve the case, applying the customs of the place
and, in the absence thereof, the general principles of law.

CHIQUITA (another petitioner) argues that the courts a quo had jurisdiction over the subject matter of the cases filed
before them. CHIQUITA avers that the pertinent matter is the place of the alleged exposure to DBCP, not the place of
manufacture, packaging, distribution, sale, etc., of the said chemical. This is in consonance with the lex loci delicti commisi
theory in determining the situs of a tort, which states that the law of the place where the alleged wrong was committed will
govern the action. CHIQUITA and the other defendant companies also submitted themselves to the jurisdiction of the RTC
by making voluntary appearances and seeking for affirmative reliefs during the course of the proceedings.

Issue: Whether or not the RTCs have jurisdiction over the subject matter in these cases.

Held: Yes. The rule is settled that jurisdiction over the subject matter of a case is conferred by law and is determined by
the allegations in the complaint and the character of the relief sought, irrespective of whether the plaintiffs are entitled to all
or some of the claims asserted therein. Once vested by law, on a particular court or body, the jurisdiction over the subject
matter or nature of the action cannot be dislodged by anybody other than by the legislature through the enactment of a law.
At the time of the filing of the complaints, the jurisdiction of the RTC in civil cases under Batas Pambansa Blg. 129, as
amended by Republic Act No. 7691, was:
In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorney’s fees, litigation
expenses, and costs or the value of the property in controversy exceeds One hundred thousand pesos (P100,000.00) or, in
such other cases in Metro Manila, where the demand, exclusive of the abovementioned items exceeds Two hundred
thousand pesos (P200,000.00).

[G.R. No. 7567. November 12, 1912.]

THE UNITED STATES,  plaintiff-appellee, vs. SEGUNDO BARIAS,  defendant-appellant.

FACTS: The defendant, Segundo Barias, was a motorman for the Manila Electric Railroad and Light Company. At
about 6 o'clock on the morning of November 2, 1911, he was driving his car along Rizal Avenue and stopped it
near the intersection Calle Requesen street to take on some passengers. When the car stopped, the defendant
looked backward, presumably to note whether all the passengers were aboard, and then started his car. At that
moment Ferminia Jose, a child about 3 years old, walked or ran in front of the car. She was knocked down and
dragged some little distance underneath the car, and was left dead upon the track. The motorman proceeded with
his car to the end of the track, some distance from the place of the accident, and apparently knew nothing of it until
his return, when he was informed of what had happened. The trial court found the defendant guilty of imprudencia
temeraria (reckless negligence) as charged in the information, and sentenced him to one year and one month of
imprisonment and to pay the costs of the action.

ISSUE: Whether the evidence shows such carelessness or want of ordinary care on the part of the defendant as to
amount to reckless negligence.

RULING: The place on which the incident occurred was a public street in a densely populated section of the city. The
hour was six in the morning, or about the time when the residents of such streets begin to move about. Under the
present circumstances, a driver of a street car should exercise a high degree of diligence in the performance of his
duties. He was bound to know and to recognize that any negligence on his part in observing the track over which he was
running his car might result in fatal accidents. The Supreme Court finds that before setting his car again in motion, it was
his duty to satisfy himself that the track was clear, and, for that purpose, to look and to see the track just in front of his
car. This the defendant did not do, and the result of his negligence was the death of the child.
The judgment of the lower court convicting and sentencing the appellant is affirmed, however, the penalty is reduced.

AMADO PICART vs. FRANK SMITH, JR.

G.R. No. L-12219, March 15, 1918

FACTS: Amado Picart was riding on his pony over Carlatan Bridge in San Fernando, La Union When Smith approached
from the opposite direction in an automobile with rate of speed of about ten or twelve miles per hour. As the Smith neared
the bridge he saw a horseman on it and blew his horn to give warning of his approach. He continued his course and after
he had taken the bridge he gave two more successive blasts, as it appeared to him that the man on horseback before him
was not observing the rule of the road.

Picart saw the automobile and heard the warning signals. Being perturbed by the rapid approach of the vehicle, he pulled
the pony closely up against the railing on the right side of the bridge instead of going to the left. The bridge is about 75
meters and a width of only 4.80 meters. The vehicle approached without slowing down. Smith quickly turned his car
sufficiently to the right to escape hitting the horse alongside of the railing where it as then standing; but due to
the automobile’s close proximity to the animal, the animal became frightened and turned its body across the bridge with its
head toward the railing. In so doing, it as struck on the hock of the left hind leg by the flange of the car and the limb was
broken.

The horse fell and its rider was thrown off. As a result of its injuries the horse died. The plaintiff received contusions which
caused temporary unconsciousness and required medical attention for several days.

ISSUE: Whether Smith was guilty of negligence and liable for civil obligations
HELD: Yes. The control of the situation had then passed entirely to the defendant; and it was his duty either to bring his car
to an immediate stop or, seeing that there were no other persons on the bridge, to take the other side and pass sufficiently
far away from the horse to avoid the danger of collision. Instead of doing this, the defendant ran straight on until he was
almost upon the horse.
A prudent man, placed in the position of the defendant, would in our opinion, have recognized that the course which he
was pursuing was fraught with risk, and would therefore have foreseen harm to the horse and the rider as reasonable
consequence of that course. Under these circumstances the law imposed on the defendant the duty to guard against the
threatened harm.

It goes without saying that the plaintiff himself was not free from fault, for he was guilty of antecedent negligence in planting
himself on the wrong side of the road. But as we have already stated, the defendant was also negligent; and in such case
the problem always is to discover which agent is immediately and directly responsible. Under these circumstances the law
is that the person who has the last fair chance to avoid the impending harm and fails to do so is chargeable with the
consequences, without reference to the prior negligence of the other party.

Elcano and Elcano v. Hill and Hill

G.R. No. L-24803, May 26, 1977, 77 SCRA

Facts:

Respondent Reginald Hill killed the son of the plaintiffs named Agapito Elcano. A criminal complaint was instituted against
him but he was acquitted on the ground that his act was not criminal, because of lack of intent to kill, couple with mistake.
Subsequently, plaintiffs filed a complaint for recovery of damages against defendant Reginald Hill, a minor, married at the
time of the occurrence, and his father, the defendant Marvin Hill, with who he was living and getting subsistence, for the
same killing. A motion to dismiss was filed by the defendants. The Court of First Instance of Quezon City denied the
motion. Nevertheless, the civil case was finally dismissed upon motion for reconsideration.

Issues:

WoN the present civil action for damages is barred by the acquittal of Reginald in the criminal case.
 Ruling:

No, the present civil action for damages is not barred by the acquittal of Reginald in the criminal case. Firstly, there is a
distinction as regards the proof required in a criminal case and a civil case. To find the accused guilty in a criminal case,
proof of guilt beyond reasonable doubt is required, while in a civil case, preponderance of evidence is sufficient to make
the defendant pay in damages. Furthermore, a civil case for damages on the basis of quasi-delict does is independently
instituted from a criminal act. As such the acquittal of Reginald Hill in the criminal case has not extinguished his liability for
quasi-delict, hence that acquittal is not a bar to the instant action against him.

MANLICLIC VS CALAUNAN

GATCHALIAN VS ARLEGUI

Pantaleon v American Express

Facts: The petitioner (Pantaleon) and his family, joined an escorted tour of Western Europe. In Coster Diamond House,
Amsterdam, Mrs. Pantaleon (wife) was about to bought a 2.5 karat diamond brilliant cut, a pendant and a chain, all of
which totaled U.S. $13,826.00. To pay these purchases, around 9:15am, Pantaleon presented his American Express
Credit Card together with his passport. By 9:40am, Pantaleon was already worried about further inconveniencing the tour
group, he asked the store clerk to cancel the sale. the store manager though asked him to wait a few more minutes.
Around 10:00am (around 45 minutes after Pantaleon had presented his AmexCard), Coster decided to release the items
even without American Express International, Inc.’s (herein respondent, Amex for brevity) approval of the purchase. This
was 30 minutes after the tour group was supposed to have left the store. The spouses Pantelon returned. Their offers of
apology were met by their tourmates with stony silence. The tour group’s visible irritation was aggravated when the tour
guide announced that the city tour of Amsterdam was to be canceled due to lack of remaing time. Mrs. Pantaleon ended up
weeping. After the star-crossed tour had ended, the Pantaleon family proceeded to the United States before returning to
Manila. While in the United States, Pantaleon continued to use his AmEx card, several times without hassle or delay, but
with two other incidents similar to the Amsterdam.

Issue/s:

1. Whether or not Amex was in default or mora.

2. Whether Amex (Credit Card Company) is in mora solvendi or in mora accipiendi.

Ruling:

1. Yes. The Court is convinced that Amex’s delay constituted breach of its contractual obligation to act on his use of
the card abroad “with special handling.:

Notwithstanding the popular notion that credit card purchases are approved “WITHIN SECONDS,” there really is no strict,
legally determinative point of demarcation on how long must it take for a credit car company to approve or disapprove a
customer’s purchase, much less one specifically contracted upon by the parties. yet this is one of those instances when
“you’d know it what you’d see it,” and one hour appears to be an awfully long, patently unreasonable length of time to
approve or disapprove a credit card purchases. It is long enough time for the customer to walk to a bank a kilometer away,
withdraw money over the counter, and return to the store.

The Credit Authorization System (CAS) record on the Amsterdam transaction shows how Amexco Netherlands viewed the
delay as unusually frustrating. The Amex has a right to verify whether the credit it is extending upon on a particular
purchase was indeed contracted by the cardholder, and that the cardholder is within his means to make such transaction.
The culpable failure of respondent herein is not the failure to timely approve petitioner’s purchase, but the more elemental
failure to timely act on the same, whether favorably or unfavorably. Even assuming the respondent’s credit authorizers did
not have sufficient basis on hand to make a judgment, we see no reason why Amex could not have promptly informed
petitioner the reason for the delay, and duly advised him that resolving the same could take some time. In that way,
petitioner would have had informed basis on whether or not to pursue the transaction at Coster, given the attending
circumstances. instead, Pantaleon was left uncomfortably dangling in the chilly autumn winds in a foreign land and soon
forced to confront the wrath of foreign folk. The delay committed by Amex was clearly attended by unjustified neglect and
bad faith, since it alleges to have consumed more than one hour to simply go over Pantaleon’s pas credit history with
Amex, his payment record and his credit and bank references, when all such data are already stored and readily available
 from its computer. There is nothing in Pantaleon’s billing history that would warrant the imprudent suspension of action by
Amex in processing the purchase.

2. Amex is in mora solvendi. Generally, the relationship between a credit card provided and its card holder is that of
creditor-debtore, with the card company as a the creditor extending loans and credit to the card holder, who as debtor is
obliged to repay the creditor. The relationship already takes exception to the general rule that as between a bank and its
depositors, the bank is deemed as the debtor while the depositor is considered as the creditor. In the present case, we
should shift perspectives and again see the credit card company as the debtor/obligor, insofar as it has the obligation to the
customer as creditor/obligee to act promptly on its purchases on credit. If there was delay on the part of Amex in its normal
role as creditor to the cardholder, such delay would not have been in acceptance of the performance of the debtor’s
obligation (i.e., the repayment of the debt), but it would be delay in the extension of the credit in the first place. Such delay
would not fall under mora accipiendi, which contemplates that the obligation of the debtor, such as the actual purchases on
credit has already been instituted. The establishment of the debt itself (purchases on credit of the jewelry) had not yet been
perfected, as it remained pending the approval or consent of the credit card company.

Gacal vs. Philippine Airlines 

(183 SCRA 189, G.R. No. 55300 March 16, 1990) 

Facts: Plaintiffs Franklin Gacal, his wife and three others were passengers of PAL plane at Davao Airport for a flight to
Manila, not knowing that the flight, were Commander Zapata with other members of Moro National Liberation Front. They
were armed with grenades and pistols. After take off, the members of MNLF announced a hijacking and directed the pilot
to fly directly to Libya, later to Sabah. They were, however, forced to land in Zamboanga airport for refueling, because the
plane did not have enough fuel to make direct flight to Sabah. When the plane began to taxi at the runaway of Zamboanga
airport, it was met by two armored cars of the military. 

An armored car subsequently bumped the stairs leading inside the plane. That commenced the battle between the military
and the hijackers, which led ultimately to the liberation of the plane’s surviving crew and passengers with the final score of
ten passengers and three hijackers dead. 

Issue: Whether or not hijacking is a case fortuito or force majeure, which would exempt an aircraft from liability for,
damages to its passengers and personal belongings that were lost during the incident? 

Held: In order to constitute a caso fortuito that would exempt from liability under Art 1174 of the civil code, it is necessary
that the following elements must occur: (a) the cause of the breach of obligation must be independent of human will; (b) the
event must be unforeseeable or unavoidable; (c) the event must be such as to render it impossible for the debtor to fulfill
his obligation in a normal manner; (d) the debtor must be free from any participation in or aggravation of the injury to the
creditor. 

Applying the above guidelines, the failure to transport the petitioners safely from Davao to Manila was due to the
skyjacking incident staged buy the MNLF without connection to the private respondent, hence, independent of will of PAL
or its passengers. 

The events rendered it impossible for PAL to perform its obligation in a normal manner and it cannot be faulted for
negligence on the duty performed by the military. The existence of force majeure has been established thus exempting
PAL from payment of damages.

NAKPIL & SONS v. CA

To be exempt from liability due to an act of God, the engineer/architect/contractor must not have been negligent in the
construction of the building.

FACTS: Private respondents – Philippine Bar Association (PBA) – a non-profit organization formed under the corporation
law decided to put up a building in Intramuros, Manila. Hired to plan the specifications of the building were Juan Nakpil &
Sons, while United Construction was hired to construct it. The proposal was approved by the Board of Directors and signed
by the President, Ramon Ozaeta. The building was completed in 1966. In 1968, there was an unusually strong earthquake
which caused the building heavy damage, which led the building to tilt forward, leading the tenants to vacate the premises.
United Construction took remedial measures to sustain the building. PBA filed a suit for damages against United
Construction, but United Construction subsequently filed a suit against Nakpil and Sons, alleging defects in the plans and
specifications. Technical Issues in the case were referred to Mr. Hizon, as a court appointed Commissioner. PBA moved
for the demolition of the building, but was opposed. PBA eventually paid for the demolition after the building suffered more
damages in 1970 due to previous earthquakes. The Commissioner found that there were deviations in the specifications
and plans, as well as defects in the construction of the building.

ISSUE: Whether or not an act of God (fortuitous event) exempts from liability parties who would otherwise be due to
negligence?

HELD: Art. 1723 dictates that the engineer/architect and contractor are liable for damages should the building collapse
within 15 years from completion.
Art. 1174 of the NCC, however, states that no person shall be responsible for events, which could not be foreseen. But to
be exempt from liability due to an act of God, the ff must occur:
1) cause of breach must be independent of the will of the debtor
2) event must be unforeseeable or unavoidable
3) event must be such that it would render it impossible for the debtor to fulfill the obligation
4) debtor must be free from any participation or aggravation of the industry to the creditor.
In the case at bar, although the damage was ultimately caused by the earthquake which was an act of God, the defects in
the construction, as well as the deviations in the specifications and plans aggravated the damage, and lessened the
preventive measures that the building would otherwise have had.

PNB VS ENCINA

UNITED OVERSEAS BANK VS BOARD OF COMMISSIONERS

G.R. No. 207133, March 09, 2015

SWIRE REALTY DEVELOPMENT CORPORATION vs. JAYNE YU
Facts:
Respondent Jayne Yu and petitioner Swire Realty Development Corporation entered into a Contract to Sell covering one
residential condominium unit with an area of 137.30 square meters for the total contract price of P7,519,371.80, payable in
equal monthly installments. Respondent likewise purchased a parking slot in the same condominium building for
P600,000.00. On September 24, 1997, respondent paid the full purchase price of P7,519,371.80 for the unit while making
a down payment of P20,000.00 for the parking lot. However, notwithstanding full payment of the contract price, petitioner
failed to complete and deliver the subject unit on time.  This prompted respondent to file a Complaint for Rescission of
Contract with Damages before the Housing and Land Use Regulatory Board (HLURB). The HLURB dismissed the
respondent’s complaint, ruling that rescission is not permitted for slight or casual breach of the contract but only for such
breaches as are substantial and fundamental as to defeat the object of the parties in making the agreement. Respondent
then elevated the matter to the HLURB Board of Commissioners, who then reversed the earlier ruling, and ordered the
rescission of the Contract to Sell, ratiocinating: The report on the ocular inspection conducted on the subject condominium
project and subject unit shows that the amenities under the approved plan have not yet been provided as of May 3, 2002,
and that the subject unit has not been delivered to respondent as of August 28, 2002, which is beyond the period of
development of December 1999 under the license to sell. The delay in the completion of the project as well as of the delay
in the delivery of the unit are breaches of statutory and contractual obligations which entitles respondent to rescind the
contract, demand a refund and payment of damages. The delay in the completion of the project in accordance with the
license to sell also renders petitioner liable for the payment of administrative fine. When the case reached the CA, the CA
affirmed the decision of the HLURB Commissioners.
Hence, the appeal to SC.
Issues:
Whether or not the rescission of Contract to Sell was proper.
Held:
YES. Rescission is proper. Second, Article 1191 of the Civil Code sanctions the right to rescind the obligation in the event
that specific performance becomes impossible, to wit:
Article 1191. 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 injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in
either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with
Articles 1385 and 1388 and the Mortgage Law. Basic is the rule that the right of rescission of a party to an obligation under
Article 1191 of the Civil Code is predicated on a breach of faith by the other party who violates the reciprocity between
them. The breach contemplated in the said provision is the obligor’s failure to comply with an existing obligation. When the
obligor cannot comply with what is incumbent upon it, the obligee may seek rescission and, in the absence of any just
cause for the court to determine the period of compliance, the court shall decree the rescission. In the instant case, the CA
aptly found that the completion date of the condominium unit was November 1998 but was extended to December 1999.
However, at the time of the ocular inspection conducted by the HLURB, the unit was not yet completely finished as the
kitchen cabinets and fixtures were not yet installed and the agreed amenities were not yet available. From the foregoing, it
is evident that the ocular inspection conducted on the subject condominium project and subject unit shows that the
amenities under the approved plan have not yet been provided as of May 3, 2002, and that the subject unit has not been
delivered to respondent as of August 28, 2002, which is beyond the period of development of December 1999 under the
license to sell. Incontrovertibly, petitioner had incurred delay in the performance of its obligation amounting to breach of
contract as it failed to finish and deliver the unit to respondent within the stipulated period. The delay in the completion of
the project as well as of the delay in the delivery of the unit are breaches of statutory and contractual obligations which
entitle respondent to rescind the contract, demand a refund and payment of damages.

George C. Fong, Petitioner, vs. Jose V. Duenas, Respondent. (Gr. No. 185592, June 15, 2015)

Facts: Sometime in November 1996, petitioner and respondent entered into a verbal joint venture agreement where they
agreed to engage in food business and to incorporate a holding company under the name Alliance Holding, Inc. Its
capitalization would be P65 Million to which they would contribute in equal parts. The parties agreed that Fong would
contribute P32.5 Million in cash while Duenas would contribute all his share in Danton and Bakcom (his food manufacturing
and retailing company) which he valued at P32.5 Million. Fong required Duenas to submit the financial documents
supporting the valuation of these shares. In 1997, Fong sent Duenas a letter informing him that he is limiting his total
contribution to P5 Million because of certain personal factors. After sometime, Duenas still failed to show the financial
documents on the valuation of Danton and Bakcom. He also failed to incorporate and register Alliance with the SEC thus
prompting Fong to cancel the joint venture and to request for the refund of the P5 Million. Demands to have the P5 Million
refunded proved futile which led to the institution of complaint for collection of sum of money by Fong. The RTC decided in
favour of Fong which was reversed on appeal by the CA because according to the latter, the 1997 letter of Fong evidenced
his intention to convert his cash contributions from advances to mere investments. It is therefore, according to the CA, right
for Duenas to apply the P5 Million on Bakcom and Danton which would eventually form part of the Alliance.

Issue:

1. Whether the case is an action for rescission or a collection for sum of money.

Ruling: The case is an action for rescission. An examination of Fong’s complaint shows that although it was labeled as
an action for a sum of money and damages, it was actually a complaint for rescission. The following allegations in the
complaint support this finding:

9. Notwithstanding the aforesaid remittances, defendant failed for an unreasonable length of time to submit a
valuation of the equipment of D.C. Danton and Bakcom .

10. Worse, despite repeated reminders from plaintiff, defendant failed to accomplish the organization and
incorporation of the proposed holding company, contrary to his representation to promptly do so.

17. Considering that the incorporation of the proposed holding company failed to materialize, despite the lapse of
one year and four months from the time of subscription, plaintiff has the right to revoke his pre-incorporation
subscription. Such revocation entitles plaintiff to a refund of the amount of P5,000,000.00 he remitted to defendant,
representing advances made in favor of defendant to be considered as payment on plaintiff’s subscription to the
proposed holding company upon its incorporation, plus interest from receipt by defendant of said amount until fully
paid. [Emphasis supplied.]

Fong’s allegations primarily pertained to his cancellation of their verbal agreement because Dueñas failed to perform his
obligations to provide verifiable documents on the valuation of the Danton’s and Bakcom’s shares, and to incorporate the
proposed corporation. These allegations clearly show that what Fong sought was the joint venture agreement’s rescission.
As a contractual remedy, rescission is available when one of the parties substantially fails to do what he has obligated
himself to perform. It aims to address the breach of faith and the violation of reciprocity between two parties in a
contract. Under Article 1191 of the Civil Code, the right of rescission is inherent in reciprocal obligations, viz:

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. [Emphasis supplied.]

xxx Dueñas failed to appreciate that the ultimate effect of rescission is to restore the parties to their original status before
they entered in a contract. As the Court ruled in Unlad Resources v. Dragon:

Rescission has the effect of “unmaking a contract, or its undoing from the beginning, and not merely its
termination.” Hence, rescission creates the obligation to return the object of the contract. It can be carried out only when
the one who demands rescission can return whatever he may be obliged to restore. To rescind is to declare a contract void
at its inception and to put an end to it as though it never was. It is not merely to terminate it and release the parties from
further obligations to each other, but to abrogate it from the beginning and restore the parties to their relative positions as if
no contract has been made.

Velarde vs. Court of Appeals (361 SCRA 57)

FACTS: The private respondent executed a Deed of Sale with Assumption of Mortgage, with a balance of P1.8 million, in
favor of the petitioners. Pursuant to said agreements, plaintiffs paid the bank (BPI) for three (3) months until they were
advised that the Application for Assumption of Mortgage was denied. This prompted the plaintiffs not to make any further
payment. Private respondent wrote the petitioners informing the non-fulfillment of the obligations. Petitioners, thru counsel
responded that they are willing to pay in cash the balance subject to several conditions. Private respondents sent a notarial
notice of cancellation/rescission of the Deed of Sale. Petitioners filed a complaint which was consequently dismissed by an
outgoing judge but was reversed by the assuming judge in their Motion for Reconsideration. The Court of Appeals
reinstated the decision to dismiss.
ISSUE: Whether or not there is a substantial breach of contract that would entitle its rescission.
RULING: YES. Article 1191 of the New Civil Code applies. The breach committed did not merely consist of a slight delay in
payment or an irregularity; such breach would not normally defeat the intention of the parties to the contract. Here,
petitioners not only failed to pay the P1.8 million balance, but they also imposed upon private respondents new obligations
as preconditions to the performance of their own obligation. In effect, the qualified offer to pay was a repudiation of an
existing obligation, which was legally due and demandable under the contract of sale. Hence, private respondents were left
with the legal option of seeking rescission to protect their own interest.