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JEFFERSON LIM v. QUEENSLAND TOKYO COMMODITIES, INC.

G.R. No. 136031 January 4, 2002

FACTS: Private respondent Queensland Tokyo Commodities, Incorporated (Queensland, for brevity) is a duly licensed broker
engaged in the trading of commodities futures with full membership and with a floor trading right at the Manila Futures Exchange,
Inc..
Sometime in 1992, Benjamin Shia, a market analyst and trader of Queensland, was introduced to petitioner Jefferson Lim by
Marissa Bontia, one of his employees. Marissas father was a former employee of Lims father.
Shia suggested that Lim invest in the Foreign Exchange Market, trading U.S. dollar against the Japanese yen, British pound,
Deutsche Mark and Swiss Franc.
Before investing, Lim requested Shia for proof that the foreign exchange was really lucrative. They conducted mock tradings
without money involved. As the mock trading showed profitability, Lim decided to invest with a marginal deposit of US$5,000 in
managers check. The marginal deposit represented the advance capital for his future tradings. It was made to apply to any
authorized future transactions, and answered for any trading account against which the deposit was made, for any loss of whatever
nature, and for all obligations, which the investor would incur with the broker.
Because respondent Queensland dealt in pesos only, it had to convert US$5,000 in managers check to pesos, amounting to
P125,000 since the exchange rate at that time was P25 to US$1.00. To accommodate petitioners request to trade right away, it
advanced the P125,000 from its own funds while waiting for the managers check to clear. Thereafter, a deposit notice in the
amount of P125,000 was issued to Queensland. This was sent to Lim who received it as indicated by his signature. Then, Lim
signed the Customers Agreement, marked as Exhibit "F," which provides as follows:
25. Upon signing of this Agreement, I shall deposit an initial margin either by personal check, managers check or cash. In the case
of the first, I shall not be permitted to trade until the check has been cleared by my bank and credited to your account. In respect of
margin calls or additional deposits required, I shall likewise pay them either by personal check, managers check or cash. In the
event my personal check is dishonored, the company has the right without call or notice to settle/close my trading account against
which the deposit was made. In such event, any loss of whatever nature shall be borne by me and I shall settle such loss upon
demand together with interest and reasonable cost of collection. However, in the event such liquidation gives rise to a profit then
such amount shall be credited to the Company. The above notwithstanding, I am not relieved of any legal responsibility as a result
of my check being dishonored by my bank.
Petitioner Lim was then allowed to trade with respondent company which was coursed through Shia by virtue of the blank order
forms all signed by Lim. Respondent furnished Lim with the daily market report and statements of transactions as evidenced by the
receiving forms some of which were received by Lim.
During the first day of trading or on October 22, 1992, Lim made a net profit of P6,845.57. Shia went to the office of Lim and
informed him about it. He was elated. He agreed to continue trading. During the second day of trading or on October 23, 1992, they
lost P44,465.
Meanwhile, on October 22, 1992, respondent learned that it would take seventeen (17) days to clear the managers check given by
petitioner. Hence, on October 23, 1992, at about 11:00 A.M., upon managements request, Shia returned the check to petitioner
who informed Shia that petitioner would rather replace the managers check with a travelers check.
On October 26, 1992, Shia informed petitioner that they incurred a floating loss of P44,695 on October 23, 1992. He told petitioner
that they could still recover their losses. He could unlock the floating loss on Friday. By unlocking the floating loss, the loss on a
particular day is minimized.
On October 27, 1992, Citibank informed respondent that the travelers check could not be cleared unless it was duly signed by Lim,
the original purchaser of the travelers check. A Miss Arajo, from the accounting staff of Queensland, returned the check to Lim for
his signature, but the latter, aware of his P44,465 loss, demanded for a liquidation of his account and said he would get back what
was left of his investment.16 Meanwhile, Lim signed only one portion of the travelers check, leaving the other half blank. He then
kept it.17 Arajo went back to the office without it.
Respondent asked Shia to talk to petitioner for a settlement of his account but petitioner refused to talk with Shia. Shia made
follow-ups for more than a week beginning October 27, 1992. Because petitioner disregarded this request, respondent was

compelled to engage the services of a lawyer, who sent a demand letter to petitioner. This letter went unheeded. Thus, respondent
filed a complaint against petitioner for collection of a sum of money.
The trial court dismissed the petition without pronouncement as to cost whereas the Court of Appeals reversed the trial courts
decision.
ISSUE: (3 ISSUES ARE ILLUSTRATED IN THE CASE, BUT I WILL FOCUS ON THE TOPIC ON ESTOPPEL) Whether or not the
appellate court erred in holding that petitioner is estopped from questioning the validity of the Customers Agreement that he
signed.
HELD: Yes, petitioner is stopped from questioning the validity of the Customers Agreement which he signed.
REASONING: The essential elements of estoppel are: (1) conduct of a party amounting to false representation or concealment of
material facts or at least calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which
the party subsequently attempts to assert; (2) intent, or at least expectation, that this conduct shall be acted upon by, or at least
influence, the other party; and (3) knowledge, actual or constructive, of the real facts.23
Here, it is uncontested that petitioner had in fact signed the Customers Agreement in the morning of October 22, 1992, knowing
fully well the nature of the contract he was entering into. The Customers Agreement was duly notarized and as a public document
it is evidence of the fact, which gave rise to its execution and of the date of the latter. Next, petitioner paid his investment deposit to
respondent in the form of a managers check in the amount of US$5,000 as evidenced by PCI Bank Managers Check No. 69007,
dated October 22, 1992. All these are indicia that petitioner treated the Customers Agreement as a valid and binding contract.
Moreover, we agree that, on petitioners part, there was misrepresentation of facts. He replaced the managers check with an
unendorsed travelers check, instead of cash, while assuring Shia that respondent Queensland could sign the indorsee portion
thereof. As it turned out, Citibank informed respondent that only the original purchaser (i.e. the petitioner) could sign said check.
When the check was returned to petitioner for his signature, he refused to sign. Then, as petitioner himself admitted in his
Memorandum, he used the travelers check for his travel expenses.
More significantly, petitioner already availed himself of the benefits of the Customers Agreement whose validity he now impugns.
As found by the CA, even before petitioners initial marginal deposit (in the form of the PCI managers check dated October 22,
1992) was converted into cash, he already started trading on October 22, 1992, thereby making a net profit of P6,845.57. On
October 23, he continued availing of said agreement, although this time he incurred a "floating loss" of P44,645. While he claimed
he had not authorized respondent to trade on those dates, this claim is belied by his signature affixed in the order forms, marked as
Exhibits "G", "G-1" to "G-13".
Clearly, by his own acts, petitioner is estopped from impugning the validity of the Customers Agreement. For a party to a contract
cannot deny the validity thereof after enjoying its benefits without outrage to ones sense of justice and fairness.
It appears that petitioners reason to back out of the agreement is that he began sustaining losses from the trade. However, this
alone is insufficient to nullify the contract or disregard its legal effects. By its very nature it is already a perfected, if not a
consummated, contract. Courts have no power to relieve parties from obligations voluntarily assumed, simply because their
contracts turned out to be disastrous or unwise investments. Notably, in the Customers Agreement, petitioner has been
forewarned of the high risk involved in the foreign currency investment as stated in the "Risk Disclosure Statement," located in the
same box where petitioner signed.
WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of Appeals dated June 25, 1998, in CAG.R. CV No. 46495 is AFFIRMED. Costs against petitioner.

ANAY RECREATION CENTER AND DEVELOPMENT CORP. vs. FAUSTO Case Digest
TANAY RECREATION CENTER AND DEVELOPMENT CORP. vs. CATALINA MATIENZO FAUSTO
G.R. No. 140182. April 12, 2005
FACTS: Petitioner Tanay Recreation Center and Development Corp. (TRCDC) is the lessee of a 3,090-square meter property
located in Sitio Gayas, Tanay, Rizal, owned by Catalina Matienzo Fausto, under a Contract of Lease. On this property stands the
Tanay Coliseum Cockpit operated by petitioner. The lease contract provided for a 20-year term, subject to renewal within sixty

days prior to its expiration. The contract also provided that should Fausto decide to sell the property, petitioner shall have the
priority right to purchase the same.
On June 17, 1991, petitioner wrote Fausto informing her of its intention to renew the lease. However, it was Faustos daughter,
respondent Anunciacion F. Pacunayen, who replied, asking that petitioner remove the improvements built thereon, as she is now
the absolute owner of the property. It appears that Fausto had earlier sold the property to Pacunayen and title has already been
transferred in her name. Petitioner filed an Amended Complaint for Annulment of Deed of Sale, Specific Performance with
Damages, and Injunction.
In her Answer, respondent claimed that petitioner is estopped from assailing the validity of the deed of sale as the latter
acknowledged her ownership when it merely asked for a renewal of the lease. According to respondent, when they met to discuss
the matter, petitioner did not demand for the exercise of its option to purchase the property, and it even asked for grace period to
vacate the premises.
ISSUE: The contention in this case refers to petitioners priority right to purchase, also referred to as the right of first refusal.
RULING: When a lease contract contains a right of first refusal, the lessor is under a legal duty to the lessee not to sell to anybody
at any price until after he has made an offer to sell to the latter at a certain price and the lessee has failed to accept it. The lessee
has a right that the lessor's first offer shall be in his favor. Petitioners right of first refusal is an integral and indivisible part of the
contract of lease and is inseparable from the whole contract. The consideration for the lease includes the consideration for the right
of first refusal and is built into the reciprocal obligations of the parties.
It was erroneous for the CA to rule that the right of first refusal does not apply when the property is sold to Faustos relative. When
the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon. As such, there
can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written
agreement, except when it fails to express the true intent and agreement of the parties. In this case, the wording of the stipulation
giving petitioner the right of first refusal is plain and unambiguous, and leaves no room for interpretation. It simply means that
should Fausto decide to sell the leased property during the term of the lease, such sale should first be offered to petitioner. The
stipulation does not provide for the qualification that such right may be exercised only when the sale is made to strangers or
persons other than Faustos kin. Thus, under the terms of petitioners right of first refusal, Fausto has the legal duty to petitioner not
to sell the property to anybody, even her relatives, at any price until after she has made an offer to sell to petitioner at a certain
price and said offer was rejected by petitioner.

Riviera Filipina Inc. vs. CA

Facts:
Respondent Reyes executed a ten year renewable Contract of Lease with Riviera involving a 1,018 square meter parcel of land
which was a subject of a Real Estate Mortgage executed by Reyes in favor of Prudential Bank. But the loan with Prudential Bank
remained unpaid upon maturity so the bank foreclosed the mortgage thereon and emerged as the highest bidder at the public
auction sale. Reyes decided to sell the property offered it to Reviera. After seven months, Riviera offered to buy the property but
Reyes denied it and increased the price of the property. Reyes counsel informed Riviera that he is selling the property for P6,000
per square meter and to confirm their conversation, Riviera sent a letter stating his interest in buying the property for the fixed and
final price of P5,000 per square meters but Reyes did not accede to said price.

Then Reyes confided to Traballo and the latter expressed interest in buying the said property for P5,300 per square meter but he
did not have enough amount so he looked for a partner. Despite of the impending expiration of the redemption period of the
foreclosed mortgaged property and the deal between Reyes and Traballo was not yet formally concluded, Reyes decided to
approach Riviera and requested Atty. Alinea to approach Angeles and find out if the latter was still interested in buying the subject
property and ask him to raise his offer for the purchase of the said property a little higher but Riviera said that his offer is P5,000
per square meter so Reyes did not agree.

Cypress and Trading Corporation, were able to come up with the amount sufficient to cover the redemption money, with which
Reyes paid to the Prudential Bank to redeem the subject property and Reyes executed a Deed of Absolute Sale covering the
subject property. Cypress and Cornhill mortgaged the subject property to Urban Development Bank. Riviera sought from Reyes,

Cypress and Cornhill a resale of the subject property to it claiming that its right of first refusal under the lease contract was violated
but his attempts were unsuccessful. Riviera filed the suit to compel Reyes, Cypress, Cornhill and Urban Development Bank to
transfer the disputed title to the land in favor of Riviera upon its payment of the price paid by Cypress and Cornhill.

Issue:
Whether or not petitioner can still exercise his right of first refusal.

Held:
No. The held that in order to have full compliance with the contractual right granting petitioner the first option to purchase, the sale
of the properties for the price for which they were finally sold to a third person should have likewise been first offered to the former.
Further, there should be identity of terms and conditions to be offered to the buyer holding a right of first refusal if such right is not
to be rendered illusory. Lastly, the basis of the right of first refusal must be the current offer to sell of the seller or offer to purchase
of any prospective buyer. Thus, the prevailing doctrine is that a right of first refusal means identity of terms and conditions to be
offered to the lessee and all other prospective buyers and a contract of sale entered into in violation of a right of first refusal of
another person, while valid, is rescissible.

SPS.
FELIPE
AND
LETICIA
CANNU, petitioners,
vs.
SPS. GIL AND FERNANDINA GALANG AND NATIONAL HOME MORTGAGE FINANCE CORPORATION,respondents.
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 Pias, 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 Realty5 (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.17
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.19
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.20
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.
MENCHAVEZ v. TEVES, 26 January 2005FACTS: Menchavez and Teves entered into a Contract of Lease for an area covered for a fishpond application for a
period of five years. During this period, Cebu RTC sheriffsdemolished the fishpond dikes constructed by Teves. As a consequence, Teves filed for damages with
application for preliminary attachment against Menchavez. In hisComplaint, he alleged that the lessors had violated their Contract of Lease, specificallythe
provision on peaceful and adequate enjoyment of the property for the entire durationof the Contract. Respondent further asserted that the lessors had withheld
from him thefindings of the trial court in Civil Case No. 510-T, entitled "Eufracia Colongan andPaulino Pamplona v. Juan Menchavez Sr. and Sevillana S.
Menchavez." In that caseinvolving the same property, subject of the lease, the Menchavez spouses were orderedto remove the dikes illegally constructed and to
pay damages and attorney's fees

.ISSUE:Whether or not Menchavez is liable for Teves for the sheriffs act of demolishing
the constructed dikes

.HELD: No. A void contract is deemed legally non-existent. It produces no legal effect. As a general rule, courts leave parties to such a contract as
they are, because they arein pari delicto or equally at fault. Neither party is entitled to legal protection.RATIO: The defendants ought to have known that they
cannot lease what does notbelong to them for as a matter of fact, they themselves are still applying for a lease of the same property under litigation from the
government. On the other hand, FlorentinoTeves, being fully aware that petitioners were not yet the owners, had assumed therisks and under the principle of
VOLENTI NON FIT INJURIA NEQUES DOLUS

Hewho voluntarily assumes a risk, does not suffer damages thereby. As a consequence,when Teves leased the fishpond area from petitioners

who were mere holders or possessors thereof, he took the risk that it may turn out later that his application for lease may not be approved. Unfortunately
however, even granting that the lease of petitioners and their application in 1972 were to be approved, still they could notsublease the same. In view therefore of
these, the parties must be left in the samesituation in which the court finds them, under the principle IN PARI DELICTO NONORITOR ACTIO, meaning: Where
both are at fault, no one can found a claim

MWSS
vs.
CA
[297
SCRA
287
(Oct
7
1998)]
Acts of Corporate Officer: Effects of Ratification by Board
Facts; MWSS leased 128 hectares of its land to CHGCCI for 25 years with a stipulation allowing the latter to exercise a right of
first refusal should the subject property be made open for sale. The terms and conditions of CHGCCIs purchase was nonetheless
subject
to
presidential
approval.
Then Pres. Marcos directed MWSS to negotiate the cancellation of this lease agreement between MWSS and CHGCCI. However,
MWSS general manager, Ilustre, informed CHGCCI that the property was up for sale, and that as per their contract, CHGCCI had
the preferential right to buy said property. Hence, the property was purchased, and Pres. Marcos later on approved this sale.
Then, BoT of MWSS also approved the sale by passing a resolution. CHGCCI sold the land to Ayala.
10 years later, MWSS filed an action against CHGCCI and Ayala in RTC praying for the declaration of nullity of the MWSSCHGCCI sales agreement. RTC dismissed the petition. CA affirmed. Hence, this petition for certiorari with SC. MWSS holds that
Ilustre was never given the authority by the BoT to enter into the initial agreement, and therefore, the sale of the property was null
and void.
Issue: Whether or not the sale was valid.
Held: Yes. Assuming that Ilustre was not given the ample authority to enter into the agreement, this infirmity was cured by
ratification. So settled is the precept that ratification can be made by the corporate board either expressly or impliedly. Implied
ratification may take various forms like silence or acquiescence, by acts showing approval or adoption of the contract, or by
acceptance and retention of benefits flowing therefrom. Both modes of ratification have been made in this case. There was
express ratification made by the BoT of MWSS when it passed a resolution approving the sale of the subject property to CHGCCI,
authorizing Ilustre to sign for and in behalf of MWSS the contract papers relative thereto. Implied ratification by silence or
acquiescence is revealed from the acts of MWSS in sending 3 demand letters for the payment of the purchase price, accepting
P25M as down payment, and accepting a letter of credit for the balance. Furthermore, MWSS did not return any of these amounts
covering the purchase price at any point in time. This is indicative of MWSS acceptance and retention of benefits flowing from the
sales transactions which is another form of implied ratification.

ARTMENT OF HEALTH VS. C.V. CANCHELA, et al., 475 SCRA 218


Carpio-Morales, J.
Facts:
The DOH entered into three owner consultant agreements with the private respondents covering infrastructure projects for the
Baguio General Hospital and Medical Center (BGHMC), the Batangas Regional Hospital and the Corazon L. Montelibano Memorial
regional Hospital in Bacolod City.The agreements for the three (3) projects are almost identical. This requires the private
respondents to prepare: detailed architectural and engineering design plans; technical specifications and detailed estimates of cost

of construction of the hospital, including the preparation of bid documents and requirements; and construction supervision until
completion of hand-over and issuance of final certificate.
While the Agreements were witnessed by the respective Chief Accountants of the hospitals and were duly approved by the
Department of Health, the former did not issue corresponding certificates of availability of funds to cover the professional or
consultancy fees.
The DOH through is authorized representative, wrote separate letters to the respective chiefs of hospitals confirming the
acceptance of private respondents complete Contract or Bid Documents for each project and RECOMMENDED THE PAYMENT
OF 7.5% OF THE PROJECT ALLOCATION TO PRIVATE RESPONDENTS AS CONSULTANCY FEES.
During the construction of the projects, various deficiencies in the performance of the agreed scope of private respondents work
were allegedly discovered which were not communicated to the private respondents. Due to such alleged deficiencies, petitioner
withheld payment of the consultancy fees due to private respondent. Neither did petitioner return the documents, plans,
specifications and estimates submitted by private respondents.
Considering the refusal of the DOH to pay said fees despite repeated demands, the private respondents submitted the dispute to
the Construction Industry Arbitration Commission (CIAC).
After the presentation of evidence by both parties, the Arbitrator issued his decision dated March 30, 1999 sentencing the DOH to
pay the private respondents to pay P3,492,713.00 for services performed and completed for and accepted by DOH. The said
amount shall earn interest at 6% per annum from the date of the award until the decision becomes final. Thereafter, the principal
and the interest accrued as of such time shall earn interest at 12% per annum.
The DOH filed a Petition for Review under Rule 43 before the Court of Appeals but was dismissed for being filed out of time. As
such, on motion of the private respondents, the Arbitrator issued a Writ of Execution .
Issue:
Whether or not the CIAC has jurisdiction to entertain the suit considering that the Agreements, being to promote the heath and
well-being of the citizens, is in furtherance of the states sovereign and governmental power and therefore, IMMUNE FROM SUIT.
Held:
In their Memorandum before the Supreme Court, the DOH, for the first time, raised the nullity of the three (3) agreements from the
very beginning for failure to include therein a certification of availability of funds which is required under existing laws, particularly
the Auditing Code of the Philippines, PD 1445. As such, the fees of the private respondents shall not be based on the project fund
allocation but on the basis of reasonable value or on the principle of quantum meruit.
While the agreement is indeed void ab initio for violation of existing laws, the DOH is liable to pay the private respondents their
consultancy services based on quantum merit to be determined by the Commission on Audit.
The invocation of immunity from suit is without merit. This is so because the government has already received and accepted the
benefits rendered. To refuse payment as a result of the states immunity from suit would be to allow the government to unjustly
enrich itself at the expense of another. (Citing Eslao vs. COA, 195 SCRA 730)

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