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1. CIVIL LAW; CONTRACTS; INTERPRETATION "3. Upon completion of the design development
OF CONTRACTS; LITERAL MEANING OF services, but not more than 15 days after submission of
TERMINOLOGIES OF CONTRACT CONTROL WHEN the design development to the authority, a sum
THEY ARE CLEAR. The terminologies in the contract equivalent to 20% of the professional fee as stated in
being clear, leaving no doubt as to the intention of the Art. IV, computed upon the reasonable estimated
contracting parties, their literal meaning control (Article construction cost.
1370, Civil Code).
2. ID.; OBLIGATIONS; HAVE FORCE OF LAW "4. Upon completion of the contract document
BETWEEN CONTRACTING PARTIES AND SHOULD services but not more than 15 days after submission of
BE COMPLIED WITH IN GOOD FAITH WHEN ARISING the contract document to the Authority, a sum equivalent
FROM CONTRACT. The price escalation cost must to 25% of the professional fee as stated in Art. IV, shall
be deemed included in the final actual project cost and be paid computed on the same basis as above.
petitioner held entitled to the payment of its additional
professional fees. Obligations arising from contract "5. Upon completion of the work and acceptance
have the force of law between the contracting thereof by the Authority, the balance of the professional
parties and should be complied with in good faith fee, computed on the final actual project cost shall be
paid." (Emphasis supplied)
(Article 1159, Civil Code).
MELENCIO-HERRERA, J p: Pursuant to the foregoing Schedule, the PTA made
In this Petition for Certiorari, pursuant to Section 7, periodic payments of the stipulated professional fees to
Article IX of the 1987 Constitution, 1 petitioner, Flavio K. petitioner. And, upon completion of the project, PTA paid
Macasaet & Associates, Inc., prays that the ruling of petitioners what it perceived to be the balance of the
public respondent Commission on Audit (COA) denying latter's professional fees.
its claim for completion of payment of professional fees
be overturned. It turned out, however, that after the project was
completed, PTA paid Supra Construction Company, the
The facts follow: main contractor, the additional sum of P3,148,198.26
On 15 September 1977 respondent Philippine Tourism representing the escalation cost of the contract price
Authority (PTA) entered into a Contract for "Project due to the increase in the price of construction
Design and Management Services for the materials.
development of the proposed Zamboanga Golf and
Country Club, Calarian, Zamboanga City" with Upon learning of the price escalation, petitioner
petitioner company, but originally with Flavio K. requested payment of P219,302.47 additional
Macasaet alone (hereinafter referred to simply as the professional fee representing seven (7%) percent of
"Contract"). P3,148,198.26.
Under the Contract, PTA obligated itself to pay On 3 July 1985 PTA denied payment on the ground that
petitioner a professional fee of seven (7%) of the "the subject price escalation referred to increased cost of
actual construction cost, as follows: construction materials and did not entail additional work
on the part of petitioner as to entitle it to additional
"ARTICLE IV PROFESSIONAL FEE compensation under Article VI of the contract" 2
"In consideration for the professional services to be
performed by Designer under Article I of this Agreement, Reconsiderations sought by the petitioner, up to
the Authority shall pay seven percent (7%) of the actual respondent COA, were to no avail. The latter expressed
construction cost." the opinion that "to allow subject claim in the absence
In addition, a Schedule of Payments was provided for of a showing that extra or additional services had
while the construction was in progress and up to its final been rendered by claimant would certainly result in
completion, thus: overpayment to him to the prejudice of the
Government" (1st Endorsement, July 10, 1987, p. 3,
"ARTICLE V SCHEDULE OF PAYMENTS Rollo, p. 42).
"1. Upon the execution of the Agreement but not
more than fifteen (15) days, a minimum payment Hence this Petition, to which we gave due course.
equivalent to 10 percent of the professional fee as The basic issue for resolution is petitioner's
provided in Art. IV computed upon a reasonable entitlement to additional professional fees, which, in
estimated construction cost of the project.
turn, hinges on whether or not the price escalation The terminologies in the contract being clear, leaving no
should be included in the "final actual project cost." doubt as to the intention of the contracting parties, their
Public respondents, through the Solicitor General, literal meaning control (Article 1370, Civil Code). The
maintain that petitioner had been paid its professional price escalation cost must be deemed included in the
fee upon completion of the project and that its claim for final actual project cost and petitioner held entitled to the
additional payment is without any legal and factual basis payment of its additional professional fees. Obligations
for, after all, no additional architectural services were arising from contract have the force of law between the
rendered other than the ones under the terms of the contracting parties and should be complied with in good
Contract. LLphil faith (Article 1159, Civil Code). LLphil
On the other hand, petitioner anchors its claim to WHEREFORE, the ruling of respondent Commission on
additional professional fees, not on any change in Audit is hereby SET ASIDE and respondent Philippine
services rendered, but on Article IV, and paragraph 5 of Tourism Authority is hereby ordered to pay
Article V, of the Contract, supra. petitioner the additional amount of P219,302.47 to
The very terminologies used in the Contract call for complete the payment of its professional fee under
affirmative relief in petitioner's favor. their Contract for Project Design and Management
Services.
Under Article IV of said Contract, petitioner was to be
entitled to seven (7%) of the "actual construction cost." SO ORDERED.
Under paragraphs 1, 2, 3, and 4, Article V, periodic
payments were to be based on a "reasonable estimated Fernan (C.J.), Narvasa, Gutierrez, Jr., Cruz, Paras,
construction cost." Ultimately, under paragraph 5, Article Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes,
V, the balance of the professional fee was to be Grio-Aquino, Medialdea and Regalado, JJ., concur.
computed on the basis of "the final actual project cost." Footnotes
The use of the terms "actual construction cost", 1. Section 7. . . . Unless otherwise provided
gradating into "final actual project cost" is not without by this Constitution or by law, any decision, order, or
significance. The real intendment of the parties, as ruling of each Commission may be brought to the
shown by paragraph 5, Article V, of their Contract was to Supreme Court on certiorari by the aggrieved party
base the ultimate balance of petitioner's within thirty days from receipt of a copy thereof.
professional fees not on "actual construction cost" 2. Article VI CHANGE OF ORDERS.
alone but on the final actual project cost; not on Should the Authority order any major change on
"construction cost" alone but on " project cost." By the planning and engineering aspects after definite
so providing, the Contract allowed for flexibility based on designs have been previously agreed upon and
actuality and as a matter of equity for the contracting computation, designing, and drafting works completed
parties. For evidently, the final actual project cost would resulting in additional work, additional compensation
not necessarily tally with the actual construction cost shall be equitably paid for such additional work as
initially computed. The final actual project cost" covers mutually agreed upon by both parties.
the totality of all costs as actually and finally determined,
and logically includes the escalation cost of the contract Philippine Export and Foreign Loan Guarantee
price. Corporation v V.P. Eusebio Construction Inc.
WHEREFORE, the appealed decision is MODIFIED. At the height of the typhoon Kading, a flash flood
Respondent VICENTE HERCE JR. is directed to pay covered the towns near the Angat Dam, causing deaths
petitioner JACINTO M. TANGUILIG the balance of and destructions to residents and their properties.
P15,000.00 with interest at the legal rate from the date of Respondents blamed the tragedy to the reckless and
the filing of the complaint. In return, petitioner is ordered imprudent opening of the 3 floodgates by petitioner,
to "reconstruct subject defective windmill system, in without prior warning to the residents within the vicinity
accordance with the one-year guaranty" and to complete of the dam. Petitioners denied the allegations and
the same within three (3) months from the finality of this contended that they have kept the water at a safe level,
decision. that the opening of floodgates was done gradually, that it
exercises diligence in the selection of its employees, and
Obligations and Contracts Terms: that written warnings were sent to the residents. It further
contended that there was no direct causal relationship
Fortuitous Events- Refers to an occurrence or happening between the damage and the alleged negligence on their
which could not be foreseen, or even if foreseen, is part, that the residents assumed the risk by living near
inevitable. It is necessary that the obligor is free from the dam, and that what happened was a fortuitous event
negligence. Fortuitous events may be produced by two and are of the nature of damnum absque injuria.
(2) general causes: (1) by Nature, such as but not limited
to, earthquakes, storms, floods, epidemics, fires, and (2) Issues:
by the act of man, such as but not limited to, armed
invasion, attack by bandits, governmental prohibitions, (1) Whether the petitioner can be held liable even though
robbery, provided that they have the force of an the coming of the typhoon is a fortuitous event
imposition which the contractor or supplier could not
have resisted. (2) Whether a notice was sent to the residents
(3) Whether the damage suffered by respondents is one maintain and preserve the facilities of Angat Dam, but
of damnum absque injuria their negligence cannot be countenanced, however
noble their intention may be. The end does not justify the
Held: means, particularly because they could have done
otherwise than simultaneously opening the spillways to
(1) The obligor cannot escape liability, if upon the such extent. Needless to say, petitioners are not entitled
happening of a fortuitous event or an act of God, a to counterclaim.
corresponding fraud, negligence, delay or violation or
contravention in any manner of the tenor of the PICART vs. SMITH, JR.
obligation as provided in Article 1170 of the Civil Code
which results in loss or damage. Even if there was no FACTS: On the Carlatan Bridge in La Union. Picart was
contractual relation between themselves and private riding on his pony over said bridge. Before he had gotten
respondents, they are still liable under the law on quasi- half way across, Smith approached from the opposite
delict. Article 2176 of the Civil Code explicitly provides direction in an automobile. As the defendant neared the
"whoever by act or omission causes damage to another bridge he saw a horseman on it and blew his horn to
there being fault or negligence is obliged to pay for the give warning of his approach. He continued his course
damage done." Act of God or force majeure, by and after he had taken the bridge he gave two more
definition, are extraordinary events not foreseeable or successive blasts, as it appeared to him that the man on
avoidable, events that could not be foreseen, or which, horseback before him was not observing the rule of the
though foreseen, are inevitable. It is therefore not road.
enough that the event should not have been foreseen or
anticipated, as is commonly believed, but it must be one Picart saw the automobile coming and heard the warning
impossible to foresee or to avoid. The principle signals. However, being perturbed by the novelty of the
embodied in the act of God doctrine strictly requires that apparition or the rapidity of the approach, he pulled the
the act must be occasioned solely by the violence of pony closely up against the railing on the right side of the
nature. Human intervention is to be excluded from bridge instead of going to the left. He says that the
creating or entering into the cause of the mischief. When reason he did this was that he thought he did not have
the effect is found to be in part the result of the sufficient time to get over to the other side. As the
participation of man, whether due to his active automobile approached, Smith guided it toward his left,
intervention or neglect or failure to act, the whole that being the proper side of the road for the machine. In
occurrence is then humanized and removed from the so doing the defendant assumed that the horseman
rules applicable to the acts of God. In the case at bar, would move to the other side. Seeing that the pony was
although the typhoon "Kading" was an act of God, apparently quiet, the defendant, instead of veering to the
petitioners can not escape liability because their right while yet some distance away or slowing down,
negligence was the proximate cause of the loss and continued to approach directly toward the horse without
damage. diminution of speed. When he had gotten quite near,
there being then no possibility of the horse getting
(2) The letter itself, addressed merely "TO ALL across to the other side, the defendant quickly turned his
CONCERNED", would not strike one to be of serious car sufficiently to the right to escape hitting the horse;
importance, sufficient enough to set alarm and cause but in so doing the automobile passed in such close
people to take precautions for their safety's sake. The proximity to the animal that it became frightened and
notices were not delivered, or even addressed to turned its body across the bridge, got hit by the car and
responsible officials of the municipalities concerned who the limb was broken. The horse fell and its rider was
could have disseminated the warning properly. They thrown off with some violenceAs a result of its injuries
were delivered to ordinary employees and policemen. As the horse died. The plaintiff received contusions which
it happened, the said notices do not appear to have caused temporary unconsciousness and required
reached the people concerned, which are the residents medical attention for several days.
beside the Angat River. The plaintiffs in this case
definitely did not receive any such warning. Indeed, the From a judgment of the CFI of La Union absolving Smith
methods by which the defendants allegedly sent the from liability Picart has appealed.
notice or warning was so ineffectual that they cannot
claim, as they do in their second assignment of error, ISSUE: WON Smith was guilty of negligence such as
that the sending of said notice has absolved them from gives rise to a civil obligation to repair the damage done
liability.
HELD: the judgment of the lower court must be
(3) We cannot give credence to petitioners' third reversed, and judgment is here rendered that the Picart
assignment of error that the damage caused by the recover of Smith damages
opening of the dam was in the nature of damnum
absque injuria, which presupposes that although there YES
was physical damage, there was no legal injury in view
of the fortuitous events. There is no question that The test by which to determine the existence of
petitioners have the right, duty and obligation to operate, negligence in a particular case may be stated as follows:
Did the defendant in doing the alleged negligent act use where he explained that the shooting was accidental. He
that person would have used in the same situation? If was eventually released considering that no formal
not, then he is guilty of negligence. The existence of complaint was filed against him.
negligence in a given case is not determined by
reference to the personal judgment of the actor in the Saludaga thereafter filed with RTC Manila a complaint
situation before him. The law considers what would be for damages against respondents on the ground that
reckless, blameworthy, or negligent in the man of they breached their obligation to provide students with a
ordinary intelligence and prudence and determines safe and secure environment and an atmosphere
liability by that. The question as to what would constitute conducive to learning.
the conduct of a prudent man in a given situation must of
course be always determined in the light of human Respondents, in turn, filed a Third-Party Complaint
experience and in view of the facts involved in the against Galaxy Dvpt and Mgt Corp. (Galaxy), the agency
particular case. contracted by FEU to provide security services within its
premises and Mariano D. Imperial (Imperial), Galaxy's
Could a prudent man, in the case under consideration, President, to indemnify them for whatever would be
foresee harm as a result of the course actually pursued? adjudged in favor of petitioner, if any; and to pay
If so, it was the duty of the actor to take precautions to attorney's fees and cost of the suit. On the other hand,
guard against that harm. Reasonable foresight of harm, Galaxy and Imperial filed a Fourth-Party Complaint
followed by ignoring of the suggestion born of this against AFP General Insurance.
prevision, is always necessary before negligence can be
held to exist. Stated in these terms, the proper criterion On Nov.10, 2004, the trial court ruled in favor of
for determining the existence of negligence in a given Saludaga, the dispositive portion of which reads:
case is this: Conduct is said to be negligent when a WHEREFORE, from the foregoing, judgment is hereby
prudent man in the position of the tortfeasor would have rendered ordering:
foreseen that an effect harmful to another was
sufficiently probable to warrant his foregoing conduct or 1. FEU and Edilberto de Jesus, in his capacity as
guarding against its consequences. president of FEU to pay jointly and severally Joseph
Saludaga the amount of P35,298.25 for actual damages
Applying this test to the conduct of the defendant in the with 12% interest per annum from the filing of the
present case we think that negligence is clearly complaint until fully paid; moral damages xxx, exemplary
established. A prudent man, placed in the position of the damages xx, attorney's fees xx and cost of the suit;
defendant, would in our opinion, have recognized that 2. Galaxy Corp. and its president, Col. Mariano Imperial
the course which he was pursuing was fraught with risk, to indemnify jointly and severally 3rd party plaintiffs (FEU
and would therefore have foreseen harm to the horse and Edilberto de Jesus in his capacity as President of
and the rider as reasonable consequence of that course. FEU) for the above-mentioned amounts;
Under these circumstances the law imposed on the
Smith the duty to guard against the threatened harm. 3. And the 4th party complaint is dismissed for lack of
cause of action. No pronouncement as to costs.
It goes without saying that the plaintiff himself was not Respondents appealed to the CA which ruled in its favor,
free from fault, for he was guilty of antecedent reversing the RTC decision, dismissing the complaint,
negligence in planting himself on the wrong side of the and also denying Saludagas subsequent MR. Hence,
road. But as we have already stated, Smith was also the instant petition based on the following grounds:
negligent; and in such case the problem always is to
discover which agent is immediately and directly THE CA SERIOUSLY ERRED....IN RULING THAT:
responsible. It will be noted that the negligent acts of the 5.1. THE SHOOTING INCIDENT IS A FORTUITOUS
two parties were not contemporaneous, since the EVENT;
negligence of the defendant succeeded the negligence 5.2. RESPONDENTS ARE NOT LIABLE FOR
of the plaintiff by an appreciable interval. Under these DAMAGES FOR THE INJURY RESULTING FROM A
circumstances the law is that the person who has the GUNSHOT WOUND SUFFERED BY THE
last fair chance to avoid the impending harm and fails to PETITIONER.....IN VIOLATION OF
do so is chargeable with the consequences, without THEIR....CONTRACTUAL OBLIGATION TO
reference to the prior negligence of the other party. PETITIONER.......TO PROVIDE HIM WITH A SAFE AND
SECURE EDUCATIONAL ENVIRONMENT;
Saludaga vs FEU 5.3. ALEJANDRO ROSETE....IS NOT FEUS
EMPLOYEE.....; and
FACTS: 5.4. RESPONDENT EXERCISED DUE DILIGENCE IN
Petitioner Joseph Saludaga was a sophomore law SELECTING GALAXY AS THE AGENCY WHICH
student of (FEU) when he was shot by Alejandro Rosete, WOULD PROVIDE SECURITY SERVICES WITHIN
one of the security guards on duty at the school THE PREMISES OF RESPONDENT FEU.
premises on August 18, 1996. Petitioner was rushed to
FEU Hospital due to the wound he sustained. ISSUES:
Meanwhile, Rosete was brought to the police station
WON Saludaga may claim damages from FEU for qualifications required in the Security Service
breach of student-school contract for a safe learning Agreement.
environment
Whether FEUs liability is based on quasi-delict or on Consequently, FEU's defense of force majeure must fail.
contract In order for force majeure to be considered, FEU must
From what source of obligation did the other claims show that no negligence or misconduct was committed
arose? that may have occasioned the loss. An act of God
cannot be invoked to protect a person who has failed to
HELD: take steps to forestall the possible adverse
1) Yes. consequences of such a loss. When the effect is found
2) FEUs liability is based on contract, not quasi-delict. to be partly the result of a person's participation -
3) Quasi-delict vicarious liability between Galaxy whether by active intervention, neglect or failure to act -
Agency and security guard Rosete the whole occurrence is humanized and removed from
Quasi-delict but SC held that there is no vicarious the rules applicable to acts of God.
liability between FEU and Rosete
Quasi-delict damage to FEU due to the negligence of Article 1170 of the Civil Code provides that those who
Galaxy Agency in supplying FEU with an unqualified are negligent in the performance of their obligations are
guard (Imperial, the president of Galaxy is solidarily liable for damages. Accordingly, for breach of contract
liable with the agency) due to negligence in providing a safe learning
environment, respondent FEU is liable to petitioner for
It is undisputed that Saludaga was enrolled as a damages.
sophomore law student in FEU. As such, there was
created a contractual obligation between the two parties. We note that the trial court held respondent De Jesus
On Saludaga's part, he was obliged to comply with the solidarily liable with respondent FEU. In Powton
rules and regulations of the school. On the other hand, Conglomerate, Inc. v. Agcolicol, we held that:
FEU, as a learning institution is mandated to impart ... Personal liability of a corporate director, trustee or
knowledge and equip its students with the necessary officer along (although not necessarily) with the
skills to pursue higher education or a profession. At the corporation may so validly attach, as a rule, only when -
same time, it is obliged to ensure and take adequate (1) he assents to a patently unlawful act of the
steps to maintain peace and order within the campus. corporation, or when he is guilty of bad faith or gross
negligence in directing its affairs, or when there is a
It is settled that in culpa contractual, the mere proof of conflict of interest resulting in damages to the
the existence of the contract and the failure of its corporation, its stockholders or other persons; (2) he
compliance justify, prima facie, a corresponding right of consents to the issuance of watered down stocks or
relief. In the instant case when Saludaga was shot inside who, having knowledge thereof, does not forthwith file
the campus by no less the security guard who was hired with the corporate secretary his written objection thereto;
to maintain peace and secure the premises, there is a (3) he agrees to hold himself personally and solidarily
prima facie showing that FEU failed to comply with its liable with the corporation; or (4) he is made by a
obligation to provide a safe and secure environment to specific provision of law personally answerable for his
its students. corporate action.
None of the foregoing exceptions was established in the
In order to avoid liability, however, FEU alleged that the instant case; hence, respondent De Jesus should not be
shooting incident was a fortuitous event because they held solidarily liable with respondent FEU.
could not have reasonably foreseen nor avoided the
accident caused by Rosete as he was not their Incidentally, although the main cause of action in the
employee; and that they complied with their obligation to instant case is the breach of the school-student contract,
ensure a safe learning environment for their students by petitioner, in the alternative, also holds respondents
having exercised due diligence in selecting the security vicariously liable under Article 2180 of the Civil Code.
services of Galaxy. However, respondents cannot be held liable for
damages under Art. 2180 of the Civil Code because
After a thorough review of the records, the SC found that respondents are not the employers of Rosete. The latter
FEU failed to discharge the burden of proving that they was employed by Galaxy. The instructions issued by
exercised due diligence in providing a safe learning respondents' Security Consultant to Galaxy and its
environment for their students. They failed to prove that security guards are ordinarily no more than requests
they ensured that the guards assigned in the campus commonly envisaged in the contract for services entered
met the requirements stipulated in the Security Service into by a principal and a security agency.
Agreement. Certain documents about Galaxy were
presented during trial; however, no evidence as to the As to the Third Party Claim against Galaxy, evidence
qualifications of Rosete as a security guard for the duly supports that Galaxy is negligent not only in the
university was offered. FEU also failed to show that they selection of its employees but also in their supervision.
undertook steps to ascertain and confirm that the Indeed, no administrative sanction was imposed against
security guards assigned to them actually possess the Rosete despite the shooting incident; moreover, he was
even allowed to go on leave of absence which led Complaint for Recovery of a Sum of Money against
eventually to his disappearance. Galaxy also failed to Solidbank with the Regional Trial Court. After trial, the
monitor petitioner's condition or extend the necessary trial court rendered a decision absolving Solidbank and
assistance. For these acts of negligence and for having dismissing the complaint. Court of Appeals reversed the
supplied respondent FEU with an unqualified security decision of the trial court.
guard, which resulted to the latter's breach of obligation
to petitioner, it is proper to hold Galaxy liable to Issue: Whether or not Solidbank must be held liable for
respondent FEU for such damages equivalent to the the fraudulent withdrawal on private respondents
above-mentioned amounts awarded to petitioner. account.
Facts: Ferrer was contracted by the SBTC to construct a Lydia filed a complaint before the Regional Trial Court
bldg in Davao. The contract provided that it be finished (RTC) of Cebu City for reconveyance and damages
within 200 working days, it was finished upon stipulated against the MCIAA. The RTC of Cebu rendered
time but additional expenses were incurred amounting to judgment in favor of Tudtud et al. MCIAA appealed to the
300k on top of the original cost, these expenses were Court of Appeals but it affirmed the RTC decision.
made known to SBTC and timely demands for the MCIAA then filed a Motion for Reconsideration but was
payment of the increased cost were done by Ferrer to denied.
SBTC, the latter only recommended that the verified cost
is 200k. SBTC contend that in the contract, should there ISSUE: Whether or not Tudtud et al. are entitled for the
be any increase in the expenses, the owner shall reconveyance of the land expropriated
equitably make the appropriate adjustment on mutual
agreement of both parties. Ferrer filed for damages and HELD: Tudtud et al.s witness respondent Justiniano
the trial court ruled in his favor, the defendants were Borga declared that the original owners did not oppose
ordered to pay. On appeal, CA affirmed the tcs decision. the expropriation of the lot upon the assurance of the
NAC that they would reacquire it if it is no longer needed
Issue: WON SBTC is liable for damages and payment of by the airport. The rights and duties between the MCIAA
the additional expenses. and Tudtud et al are governed by Article 1190 of the Civil
Code which provides: When the conditions have for their
Held: CA decision AFFIRMED. purpose the extinguishment of an obligation to give, the
parties, upon the fulfillment of said conditions, shall
Ratio: Art. 22 states that, Every person who through an return to each other what they have received. In case of
act or performance by another or any other means, the loss, deterioration, or improvement of the thing, the
acquires or comes into possession of something at the provisions which, with respect to the debtor, are laid
expense of the latter without just or legal ground, shall down in the preceding article [Article 1189] shall be
return the same to him. applied to the party who is bound to return.
It is not denied that private respondent incurred
additional expenses in constructing petitioner banks While the MCIAA is obliged to reconvey Lot No. 988 to
bldg due to a drastic and unexpected in construction Tudtud et al., they must return to the MCIAA what they
cost. Hence, to allow petitioner bank to acquire the received as just compensation for the expropriation of
constructed bldg at a price far below its actual cost Lot No. 988, plus legal interest to be computed from
would undoubtedly constitute unjust enrichment for the default, which in this case runs from the time the MCIAA
bank to the prejudice of Ferrer, such cannot be allowed complies with its obligation to the respondents. Tudtud et
by law. al., must likewise pay the MCIAA the necessary
expenses it may have incurred in sustaining Lot No. 988
MACTAN-CEBU INTERNATIONAL AIRPORT and the monetary value of its services in managing it to
AUTHORITY vs. TUDTUD Case Digest the extent that Tudtud et al., were benefited thereby.
Following Article 1187 of the Civil Code, the MCIAA may
The former owner reacquires the property expropriated if keep whatever income or fruits it may have obtained
the expropriation of the same was subject to condition from Lot No. 988, and Tudtud et al., need not account for
that when that purpose is ended or abandoned, it shall the interests that the amounts they received as just
be returned to the owner. compensation may have earned in the meantime.
FACTS: The National Airports Corporation (NAC) filed a ROQUE VS. LAPUS
complaint for expropriation in order to expand the Cebu
Lahug Airport. It sought to acquire, by negotiated sale or FACTS:
Sometime in 1964, plaintiff and defendant entered into Can private respondent be entitled to the Benefits of the
an agreement of sale covering Lots 1, 2 and 9, Block 1, third paragraph of Article 1191, New Civil Code, for the
of said property, payable in 120 equal monthly fixing of period
installments at the rate of P16.00, P15.00 per square
meter, respectively. In accordance with said agreement, RULING: No. Respondent as obligor is not entitled to the
defendant paid to plaintiff the sum of P150.00 as deposit benefits of paragraph 3 of Art. 1191, NCC Having been
and the further sum of P740.56 to complete the payment in default and acted in bad faith, he is not entitled to the
of four monthly installments covering the months of July, new period of 90 days from entry of judgment within
August, September, and October, 1954. which to pay petitioner the balance of P11,434.44 with
interest due on the purchase price of P12,325.00 for the
On January 24, 1955, defendant requested plaintiff that two lots. To allow and grant respondent an additional
he be allowed to abandon and substitute Lots 1, 2 and 9, period for him to pay the balance of the purchase price,
the subject with Lots 4 and 12, Block 2 of the Rockville which balance is about 92% of the agreed price, would
Subdivision, which are corner lots, to which request be tantamount to excusing his bad faith and sanctioning
plaintiff graciously acceded. The evidence discloses that the deliberate infringement of a contractual obligation
defendant proposed to plaintiff modification of their that is repugnant and contrary to the stability, security
previous contract to sell because he found it quite and obligatory force of contracts. Moreover, respondent's
difficult to pay the monthly installments on the three lots, failure to pay the succeeding 116 monthly installments
and besides the two lots he had chosen were better lots, after paying only 4 monthly installments is a substantial
being corner lots. In addition, it was agreed that the and material breach on his part, not merely casual,
purchase price of these two lots would be at the uniform which takes the case out of the application of the
rate of P17.00 per square meter payable in 120 equal benefits of pa paragraph 3, Art. 1191, N.C.C.
monthly installments, with interest at 8% annually on the
balance unpaid. Pursuant to this new agreement, Pursuant to Art. 1191, New Civil Code, petitioner is
defendant occupied and possessed Lots 4 and 12, and entitled to rescission with payment of damages which
enclosed them, including the portion where his house the trial court and the appellate court, in the latter's
now stands, with barbed wires and adobe walls. original decision, granted in the form of rental at the rate
However, aside from the deposit of P150.00 and the of P60.00 per month from August, 1955 until respondent
amount of P740.56, which were paid under their shall have actually vacated the premises, plus P2,000.00
previous agreement, defendant failed to make any as attorney's fees. The Court affirmed the same to be
further payment on account of the agreed monthly fair and reasonable. The Court also sustained the right
installments for the two lots in dispute, under the new of the petitioner to the possession of the land, ordering
contract to sell. Plaintiff demanded upon defendant not thereby respondent to vacate the same and remove his
only to pay the stipulated monthly installments in arrears, house therefrom.
but also to make up-to-date his payments, but defendant
refused to comply with plaintiff's demands. GIL VS CA AND HEIRS OF MATULAC
Respondents filed a complaint for damages and In the instant case, petitioners failed,
recovery of ownership and possession of the 3 parcels
of land in dispute against herein petitioner-spouses first, to offer a valid and unconditional tender of payment;
Rayos and the administrator thereof before the RTC. It
was respondents theory that neither petitioners nor their second, to notify respondents of the intention to deposit
predecessors-in-interest Tazal and Rayos repurchased the amount with the court; and
the properties before buying them or when the judgment
in the Civil Case became final and executory, hence the third, to show the acceptance by the creditor of the
sale of the three (3) parcels of land to petitioner-spouses amount deposited as full settlement of the obligation, or
did not transfer ownership thereof to them. in the alternative, a declaration by the court of the
validity of the consignation. The failure of petitioners to
Petitioners argued on the other hand that the comply with any of these requirements rendered the
consignation of P724.00 in Civil Case No. A-245 had the consignation ineffective.
full effect of redeeming the properties from respondents
and their predecessor-in-interest, and that respondents Consignation and tender of payment must not be
were guilty of estoppel and laches since Reyes as their encumbered by conditions if they are to produce the
predecessor-in-interest did not oppose the sale to Rayos intended result of fulfilling the obligation. In the instant
and to petitioner-spouses Rayos. The parties then filed case, the tender of payment of P724.00 was conditional
their respective memoranda after which the case was and void as it was predicated upon the argument of
submitted for decision. Tazal that he was paying a debt which he could do at
any time allegedly because the 1 September 1957
The trial court promulgated its Decision in the Civil Case transaction was a contract of equitable mortgage and not
void the separate deeds of absolute sale thereof a deed of sale with right to repurchase. The ostensible
executed by Tazal in favor of Rayos and to spouses purposes of offering the amount in connection with a
Rayos and by Rayos to the same spouses, and ordered purported outstanding debt were to evade the stipulated
herein petitioners and Francisco Tazal to vacate and redemption period in the deed of sale which had already
reconvey the lands to respondents as heirs of Reyes expired when the tender of payment was made and the
and to pay damages. Petitioners appealed the Decision Civil Case was instituted, and as a corollary, to avail of
to the CA. the thirty (30)-day grace period under Art. 1606 of the
Civil Code within which to exercise the right to
The appellate court promulgated its Decision affirming in repurchase. Reyes was therefore within his right to
toto the judgment appealed from. Hence, the instant refuse the tender of payment offered by petitioners
petition for review. because it was conditional upon his waiver of the two
(2)-year redemption period stipulated in the deed of sale
ISSUE: with right to repurchase.
1. WON the consignation is valid Moreover, petitioners failed to prove in the Civil Cases
that any form of notice regarding their intention to
2. WON the respondents are barred by estoppel and deposit the amount of P724.00 with the CFI had been
laches served upon respondents. This requirement is not
fulfilled by the notice which could have ensued from the
3. Won the petitioners are in good faith filing of the complaint in the civil case or the stipulation
made between Tazal and Reyes regarding the
HELD: consignation of P724.00. The latter constitutes the
second notice required by law as it already concerns the
1. In order that consignation may be effective the debtor actual deposit or consignation of the amount and is
must show that: different from the first notice that makes known the
debtors intention to deposit the amount, a requirement
(a) there was a debt due; missing in the instant case. Without any announcement
of the intention to resort to consignation first being made
(b) the consignation of the obligation had been made to the persons interested in the fulfillment of the
because the creditor to whom a valid tender of payment obligation, the consignation as a means of payment is
was made refused to accept it; void.
It is also futile to argue that the deposit of P724.00 with To sanction the argument of petitioners and in the
the Court of First Instance could have perfected the process excuse them from their responsibility of securing
redemption of the three (3) parcels of land because it from the trial court in Civil Case No. A-245 a categorical
was not approved by the trial court, much less accepted declaration that the consignation of P724.00 had
by Mamerto Reyes or his heirs, herein respondents. The complied with all the essential elements for its validity
dispositive portion of the Decision in Civil Case No. A- would only dilute the rule requiring absolute compliance
245, which reads x x x x the Court, hereby renders with the requisites of consignation.26 It also disturbs a
judgment declaring the contract x x x entered into by the steady and stable status of proprietary rights, i.e., x x x
plaintiffs and the defendant and captioned Deed of Sale el acreedor tan solo, y no el juez, puede autorizar la
with Right to Repurchase as a true sale with right to variacion que para los derechos de aquel suponga la
repurchase x x x and not an equitable mortgage x x x que se intente en el objeto, cuantia o forma de las
and declaring the plaintiffs entitled to repurchase the obligaciones,27 since parties are left guessing on
property in question within thirty (30) days from finality of whether the repurchase of the properties had been
this decision x x x x plainly rejected the complaint for effected. In a broader sense, this uncertain state will only
lack of merit and necessarily also the consignation done depress the market value of the land and virtually
pursuant thereto. This conclusion is buttressed by the paralyze efforts of the landowner to meet his needs and
directive of the trial court in the body of the Decision that obligations and realize the full value of his land.
Francisco Tazal may still exercise the right to
repurchase the property in question by returning to the Moreover, we do not think that respondents causes of
[Mamerto Reyes] the purchase price of P724.00 plus all action in Civil Case No. A-2032 are now barred by
expenses incident to the reconveyance within the period estoppel and laches. The essence of estoppel and
of thirty (30)-days from the time this decision becomes laches is the failure or neglect for an unreasonable and
final x x x x21 The obvious reference of this statement unexplained length of time to do that which by exercising
was the stipulation made by the parties therein that the due diligence could or should have been done earlier; it
defendant [Mamerto Reyes] has been paying the taxes is the negligence or omission to assert a right within a
on said properties from 1958 to 1969 x x x x22 where reasonable time warranting a presumption that the party
the taxes paid constituted necessary expenses that entitled to assert it either has abandoned or declined to
petitioners had to reimburse to respondents assert it although there is no absolute rule as to what
predecessor-in-interest aside from the P724.00 earlier constitutes staleness of demand as each case is to be
deposited by Tazal. determined according to its particular circumstances.28
To be sure, while it has been held that approval of the In the instant case, it was prudent and discerning for
court or the obligees acceptance of the deposit is not respondents and their predecessor-in-interest Mamerto
necessary where the obligor has performed all acts Reyes that they deferred any action against petitioners,
necessary to a valid consignation such that court i.e., Civil Case No. A-2032, to recover ownership and
approval thereof cannot be doubted, Sia v. Court of possession of the three (3) pieces of real estate, until the
Appeals23 clearly advises that this ruling is applicable finality of judgment in Civil Case No. A-245. For patiently
only where there is unmistakable evidence on record electing not to inundate our courts of justice with cases
that the prerequisites of a valid consignation are present, the outcome of which may well depend upon the then
especially the conformity of the proffered payment to the pending civil suit, respondents cannot now be penalized
terms of the obligation which is to be paid.24 In the by barring their complaint in Civil Case No. A-2032 on
instant case, since there is no clear and preponderant the equitable grounds of estoppel and laches.
evidence that the consignation of P724.00 satisfied all
the requirements for validity and enforceability, and since We also find no reason to disturb our findings upon
Mamerto Reyes vehemently contested the propriety of petitioners assertion that they were purchasers of the
the consignation, petitioners cannot rely upon sheer three (3) parcels of land in good faith and for value. As
speculation and unfounded inference to construe the we held in David v. Bandin, the issue of good faith or
Decision of the Court of First Instance as one impliedly bad faith of the buyer is relevant only where the subject
approving the consignation of P724.00 and perfecting of the sale is registered land and the purchaser is buying
the redemption of the three (3) parcels of land. the same from the registered owner whose title to the
land is clean x x x in such case the purchaser who relies
It should be recalled that one of the requisites of on the clean title of the registered owner is protected if
consignation is the filing of the complaint by the debtor he is a purchaser in good faith for value.29 Since the
against the creditor. Hence it is the judgment on the properties in question are unregistered lands, petitioners
complaint where the court declares that the consignation as subsequent buyers thereof did so at their peril. Their
has been properly made that will release the debtor from claim of having bought the land in good faith, i.e., without
liability. Should the consignation be disapproved by the notice that some other person has a right to or interest in
court and the case dismissed, there is no payment and the property, would not protect them if it turns out, as it
the debtor is in mora and he shall be liable for the actually did in this case, that their seller did not own the
expenses and bear the risk of loss of the thing.25 property at the time of the sale.
At any rate, petitioners failed to discharge their burden of
proof that they were purchasers of the three (3) parcels There is no evidence to prove that petitioners paid at any
of land in good faith. For, as we ruled in Embrado v. time the repurchase price for the three (3) parcels of
Court of Appeals,30 the burden of proving the status of a land in dispute except for the deposit of P724.00 in the
purchaser in good faith and for value lies upon him who Court of First Instance which however fell short of all the
asserts that status, which is not discharged by simply acts necessary for a valid consignation and discharge of
invoking the ordinary presumption of good faith, i.e., that their obligation to respondents.
everyone is presumed to act in good faith, since the
good faith that is here essential is integral with the very In order that consignation may be effective the debtor
status which must be established. must show that (a) there was a debt due; (b) the
consignation of the obligation had been made because
In the proceedings a quo, what is evident is the admitted the creditor to whom a valid tender of payment was
fact of payment made by Mamerto Reyes as made refused to accept it; (c) previous notice of the
respondents predecessor-in-interest of the taxes on the consignation had been given to the person interested in
properties prior to and at the time when the contracts of the performance of the obligation; (d) the amount due
sale in favor of petitioner-spouses were perfected, which was placed at the disposal of the court; and, (e) after the
undoubtedly confirms the precedence of respondents consignation had been made the person interested was
possession of the parcels of land in question. This notified thereof.
situation should have compelled petitioners to
investigate the right of respondents over the properties NOTES:
before buying them, and in the absence of such inquiry,
the rule is settled that a buyer in the same No evidence to prove actual damages was offered in
circumstances herein involved cannot claim to be a Civil Case No. A-2032 since the parties therein
purchaser in good faith. submitted the case for decision on the basis of their
respective memoranda, hence no actual damages can
The absence of good faith on the part of petitioner- be awarded.32 In the same manner, there is no clear
spouses Teofilo and Simeona Rayos in purchasing the and convincing showing that petitioners acted in a
three (3) parcels of unregistered land precludes the wanton, fraudulent, reckless, oppressive, or malevolent
application of the rule on double sales enunciated in Art. manner to warrant the imposition of exemplary damages
1544 of the Civil Code.31 In any event, even if we apply in respondents favor.33 In any event, exemplary
Art. 1544, the facts would nonetheless show that damages cannot be adjudicated in the instant case since
respondents and their predecessor-in-interest registered there is no award of moral, temperate or compensatory
first the source of their ownership and possession, i.e., damages.
the 1 September 1957 deed of sale with right to It is appropriate to stress that the mere filing of a
repurchase, held the oldest title, and possessed the real complaint does not ipso facto entitle a party to attorneys
properties at the earliest time. Applying the doctrine of fees since this act is a means sanctioned by law to
priority in time, priority in rights or prius tempore, potior protect rights and interests even if found subsequently to
jure, respondents are entitled to the ownership and be unmeritorious.
possession of the parcels of land in dispute.