ObliCon Digests (For 1156-1170) - 2018.01.24

Primus5 DigestsOBLIGATIONS AND CONTRACTS2018.01.
24
Text:
Arturo M. Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. 4, Central Law Book
Publishing (latest edition)
OBLIGATIONS
I. Definition
II. Elements of an Obligation
III. Different Kinds of Prestations
IV. Classification of Obligations
V. Sources of obligations (Arts. 1156-1157)
A. A single act or omission can give rise to different causes of action
B. Natural obligations
C. Extra-contractual obligations
1156 ASUNCION ET AL. VS CA (G.R. 109125, DECEMBER 20, 1994)

FACTS:
On July 29, 1987, a Second Amended Complaint for Specific Performance was filed by Ang Yu Asuncion and Keh Tiong,
et al., against Bobby Cu Unjieng and Jose Tan before the Regional Trial Court of Manila. The plaintiffs were tenants or
lessees of residential and commercial spaces owned by defendants in Binondo, Manila. On several conditions defendants
informed the plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same. During
negotiations, Bobby Cu Unjieng offered a price of P6 million while plaintiffs made a counter of offer of P5 million. Plaintiff
thereafter asked the defendants to put their offer in writing to which the defendants acceded. In reply to defendants’ letter,
plaintiffs wrote, asking that they specify the terms and conditions of the offer to sell. When the plaintiffs did not receive any
reply, they sent another letter with the same request. Since defendants failed to specify the terms and conditions of the
offer to sell, and because of information received that the defendants were about to sell the property, plaintiffs were
compelled to file the complaint to compel defendants to sell the property to them. The court dismissed the complaint on
the ground that the parties did not agree upon the terms and conditions of the proposed sale, hence, there was no
contract of sale at all. On November 15, 1990, the Cu Unjieng spouses executed a Deed of Sale transferring the property
in question to Buen Realty and Development Corporation. Buen Realty, as the new owner of the subject property, wrote to
the lessees demanding the latter to vacate the premises. In its reply, it stated that Buen Realty and Development
Corporation brought the property subject to the notice of lis pendens.
ISSUE:
Can Buen Realty be bound by the writ of execution by virtue of the notice of lis pendens?
HELD:
No. An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil Code). The obligation is upon the
concurrence of the essential elements thereof, namely: (a) the vinculum juris or juridical tie which is the efficient cause
established by the various sources of obligations; (b) the object which is the prestation or conduct, required to be
observed; and (c) the subject-persons who, viewed from demandability of the obligation are the active (obligee) and the
passive (obligor) subjects. Among the sources of an obligation is a contract (Art. 1157), which is a meeting of minds
between two persons whereby one binds himself, with respect to the other, to give something or to render some service.
A contract undergoes various stages that include its negotiation or preparation, its perfection and, finally, its
consummation. Until the contract is perfected, it cannot, as an independent source of obligation, serve as a binding
juridical relation. In sales, particularly, to which the case at bench belongs, the contract is perfected when a person, called
the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to another, called the
buyer, over which the latter agrees. The registration of lis pendens must be independently addressed in appropriate
proceedings. Therefore, Buen Realty cannot be held subject to the writ of execution issued by the respondent Judge, let
alone ousted from the ownership and possession of the property, without first being duly afforded its day in court.
Page 1 of 20
Primus5 DigestsOBLIGATIONS AND CONTRACTS2018.01.24
1156 MAKATI STOCK EXCHANGE, ET AL. VS CAMPOS, (G.R. NO. 138814, APRIL 16, 2009
FACTS:
SEC Case No. 02-94-4678 was instituted on 10 February 1994 by respondent Miguel V. Campos with the Securities,
Investigation and Clearing Department (SICD) of the Securities and Exchange Commission (SEC), a Petition against
herein petitioners Makati Stock Exchange, Inc. (MKSE). The Petition, sought: (1) the nullification of the Resolution dated 3
June 1993 of the MKSE Board of Directors, which allegedly deprived him of his right to participate equally in the allocation
of Initial Public Offerings (IPO) of corporations registered with MKSE; (2) the delivery of the IPO shares he was allegedly
deprived of, for which he would pay IPO prices; and (3) the payment of P2 million as moral damages, P1 million as
exemplary damages, and P500,000.00 as attorney’s fees and litigation expenses.
The SICD issued an Order granting respondent’s prayer for the issuance of a Temporary Restraining Order to enjoin
petitioners from implementing or enforcing the Resolution of the MKSE Board of Directors. Subsequently issued another
Order on 10 March 1994 granting respondent’s application for a Writ of Preliminary Injunction, to continuously enjoin,
during the pendency of SEC Case No. 02-94-4678, the implementation or enforcement of the MKSE Board Resolution in
question.
On 11 March 1994, petitioners filed a Motion to Dismiss respondent’s Petition based on the following grounds: (1) the
Petition became moot due to the cancellation of the license of MKSE; (2) the SICD had no jurisdiction over the Petition;
and (3) the Petition failed to state a cause of action. The SICD denied petitioner’s Motion to Dismiss. Petitioners again
challenged Order of SICD before the SEC en banc through another Petition for Certiorari. The SEC en banc nullified the
Order of SICD granting a Writ of Preliminary Injunction in favour of respondent. SEC en banc annulled the Order of SICD
in SEC Case No. 02-94-4678 denying petitioners’ Motion to Dismiss, and accordingly ordered the dismissal of
respondent’s Petition before the SICD.
Respondent filed a Petition for Certiorari with the Court of Appeals. Petitioners filed a Motion for Reconsideration but was
denied by the Court of Appeals.
ISSUE:
WHETHER OR NOT THE PETITION FAILED TO STATE A CAUSE OF ACTION.
RULING:
The petition filled by the respondent, Miguel Campos should be dismissed for failure to state a cause of action.
A cause of action is the act or omission by which a party violates a right of another. A complaint states a cause of action
where it contains three essential elements of a cause of action, namely: (1) the legal right of the plaintiff, (2) the correlative
obligation of the defendant, and (3) the act or omission of the defendant in violation of said legal right. If these elements
are absent, the complaint becomes vulnerable to dismissal on the ground of failure to state a cause of action.
However, the terms right and obligation are not magic words that would automatically lead to the conclusion that such
Petition sufficiently states a cause of action. Right and obligation are legal terms with specific legal meaning. A right is a
claim or title to an interest in anything whatsoever that is enforceable by law while an obligation is defined in the Civil
Code as a juridical necessity to give, to do or not to do. Justice J.B.L. Reyes offers the definition given by Arias Ramos as
a more complete definition: An obligation is a juridical relation whereby a person (called the creditor) may demand from
another (called the debtor) the observance of a determinative conduct (the giving, doing or not doing), and in case of
breach, may demand satisfaction from the assets of the latter.
Art. 1157 of the Civil Code provides that Obligations arise from (1) Law; (2) Contracts; (3) Quasi-contracts; (4) Acts or
omissions punished by law; and (5) Quasi-delicts.
The mere assertion of a right and claim of an obligation in an initiatory pleading, whether a Complaint or Petition, without
identifying the basis or source thereof, is merely a conclusion of fact and law. (In the case at bar, although the Petition in
SEC Case No. 02-94-4678 does allege respondent’s right to subscribe to the IPOs of corporations listed in the stock
market at their offering prices, and petitioners’ obligation to continue respecting and observing such right, the Petition
utterly failed to lay down the source or basis of respondent’s right and/or petitioners’ obligation.)
Respondent merely quoted in his Petition the MKSE Board Resolution, passed sometime in 1989, granting him the
position of Chairman Emeritus of MKSE for life. However, there is nothing in the said Petition from which the Court can
deduce that respondent, by virtue of his position as Chairman Emeritus of MKSE, was granted by law, contract, or any
other legal source, the right to subscribe to the IPOs of corporations listed in the stock market at their offering prices.
Page 2 of 20
(allocation of IPO shares was merely alleged to have been done in accord with a practice normally observed by the
members of the stock exchange) A practice or custom is, as a general rule, not a source of a legally demandable or
enforceable right.
1156 TIU VS PLATINUM PLANS (G.R. 163512, FEBRUARY 28, 2007)

G.R. No. 163512, February 28, 2007
FACTS: Respondent Platinum Plans Philippines, Inc. is a domestic corporation engaged in the pre-need industry. From
1987 to 1989, petitioner Daisy B. Tiu was its Division Marketing Director. On January 1, 1993, respondent re-hired
petitioner as Senior Assistant Vice-President and Territorial Operations Head in charge of its Hong Kong and Asean
operations. The parties executed a contract of employment valid for five years.
On September 16, 1995, petitioner stopped reporting for work. In November 1995, she became the Vice-President for
Sales of Professional Pension Plans, Inc., a corporation engaged also in the pre-need industry.
Consequently, respondent sued petitioner for damages before the RTC of Pasig City, Branch 261. Respondent alleged,
among others, that petitioner’s employment with Professional Pension Plans, Inc. violated the non-involvement clause in
her contract of employment. In upholding the validity of the non-involvement clause, the trial court ruled that a contract in
restraint of trade is valid provided that there is a limitation upon either time or place. In the case of the pre-need industry,
the trial court found the two-year restriction to be valid and reasonable. On appeal, the Court of Appeals affirmed the trial
court’s ruling. It reasoned that petitioner entered into the contract on her own will and volition. Thus, she bound herself to
fulfill not only what was expressly stipulated in the contract, but also all its consequences that were not against good faith,
usage, and law. The appellate court also ruled that the stipulation prohibiting non-employment for two years was valid and
enforceable considering the nature of respondent’s business.
ISSUE: Whether the Court of Appeals erred in sustaining the validity of the non-involvement clause
HELD: In this case, the non-involvement clause has a time limit: two years from the time petitioner’s employment with
respondent ends. It is also limited as to trade, since it only prohibits petitioner from engaging in any pre-need business
akin to respondent’s. More significantly, since petitioner was the Senior Assistant Vice-President and Territorial
Operations Head in charge of respondent’s Hongkong and Asean operations, she had been privy to confidential and
highly sensitive marketing strategies of respondent’s business. To allow her to engage in a rival business soon after she
leaves would make respondent’s trade secrets vulnerable especially in a highly competitive marketing environment. In
sum, The Court finds the non-involvement clause not contrary to public welfare and not greater than is necessary to afford
a fair and reasonable protection to respondent. Hence the restraint is valid and such stipulation prevails.
1157 VILLEGAS ET AL VS CA (G.R. NO. 82562, APRIL 11, 1997)
FACTS: This case originated from a libel suit filed by then Assemblyman Antonio V. Raquiza against then Manila Mayor
Antonio J. Villegas, who allegedly publicly imputed to him acts constituting violations of the Anti-Graft and Corrupt
Practices Act. He did this on several occasions in August 1968 xxx
An Information for libel was filed against Villegas who denied the charge. After losing in the 1971 elections, Villegas left for
the United States where he stayed until his death. Nevertheless, trial proceeded on absentia. Two months after the
prosecution rested its case, the court issued an order dismissing the criminal aspect of the case but reserving the right to
resolve its civil aspect.
Subsequently the Court awarded Raquiza actual, moral, exemplary damages and cost of suit. On appeal, the CA affirmed
but reduced the amount of damages. Hence, this petition.
ISSUE: (related to the subject matter) did the death of the accused before final judgment extinguish his civil liability?
HELD: NO (Guys, take note of Article 33 of the Civil Code. Raquiza’s right to recover damages arose from this article not
from delict)
Page 3 of 20
Fortunately, this Court has already settled this issue with the promulgation of the case of People v. Bayotas (G.R. No.
102007) on September 2, 1994, 4 viz.:
1 Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability xxx
2 Corollarily the claim for civil liability survives notwithstanding the death of (the) accused, if the same may also be
predicated on a source of obligation other than delict. Article 1157 of the Civil Code enumerates these other sources of
obligation from which the civil liability may arise as a result of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) x x x x x x x x x
e) Quasi-delicts
3. Where the civil liability survives, as explained in Number 2 above, an action for recovery therefor may be pursued but
only by way of filing a separate civil action and subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as
amended. 8 This separate civil action may be enforced either against the executor/administrator o(f) the estate of the
accused, depending on the source of obligation upon which the same is based as explained above.
4. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by prescription, in
cases where during the prosecution of the criminal action and prior to its extinction, the private offended party instituted
together therewith the civil action. In such case, the statute of limitations on the civil liability is deemed interrupted during
the pendency of the criminal case (Art. 1155)
The source of Villegas’ civil liability in the present case is the felonious act of libel he allegedly committed. Yet, this act
could also be deemed a quasi-delict within the purview of Article 33 9 in relation to Article 1157 of the Civil Code.
The Bayotas ruling, however, makes the enforcement of a deceased accused’s civil liability dependent on two factors,
namely, that it be pursued by filing a separate civil action and that it be made subject to Section 1, Rule 111 of the 1985
Rules on Criminal Procedure, as amended.
Obviously, in the case at bar, the civil action was deemed instituted with the criminal. There was no waiver of the civil
action and no reservation of the right to institute the same, nor was it instituted prior to the criminal action. What then is
the recourse of the private offended party in a criminal case such as this which must be dismissed in accordance with the
Bayotas doctrine.
Now, where the civil action was impliedly instituted with it?
The answer is likewise provided in Bayatas, thus:

Assuming that for lack of express reservation, Belamala’s civil civil for damages was to be considered instituted together
with the criminal action still, since both proceedings were terminated without finals adjudication, the civil action of the
offended party under Article 33 may yet be enforced separately
The resolution of the civil aspect of the case after the dismissal of the main criminal action by the trial court was
technically defective. There was no proper substitution of parties, as correctly pointed out by the Heirs and repeatedly put
in issue by Atty. Quisumbing. What should have been followed by the court a quo was the procedure laid down in the
Rules of Court, specifically, Section 17, Rule 3, in connection with Section 1, Rule 87.
WHEREFORE, the petition in G.R. No. 82562 is GRANTED and the petition in G.R. No. 82592 is DENIED xxx without
prejudice to the right of the private offended party Antonio V. Raquiza, to file the appropriate civil action for damages
against the executor or administrator of the estate or the heirs of the late Antonto J. Villegas in accordance with the
foregoing procedure.
1157 ABS-CBN ET AL VS OMBUDSMAN (G.R. NO. 133347, OCTOBER 15, 2008)
Page 4 of 20
Facts: Senator Fernandez, representing Benedicto, met with Senator Tañada to discuss on how to arrive at a reasonable
rental for the use of ABS-CBN stations and facilities. Thereafter, they entered into a letter-agreement with ABS-CBN.
Barely two weeks from their entry into the ABS Broadcast Center, KBS personnel started making unauthorized
withdrawals from the ABS Stock Room. All these withdrawals of supplies and equipment were made under the orders of
Benedicto, et. al. No payment was ever made by either Benedicto for all the supplies and equipment withdrawn from the
ABS Broadcast Center.
Issue: Whether or not a criminal prosecution will proceed to prosecute civil liability notwithstanding the death of an
accused during the pendency of the case as decided in People vs Bayotas.
Ruling: Motion for Reconsideration denied. The motion contained in petitioner’s motion does not involve a question of law
as would merit the attention of this Court sitting en banc (Petitioner filed a Motion to Refer the case to the Court en banc).
Nowhere in People v. Bayotas does it state that a criminal complaint may continue and be prosecuted as an independent
civil action. 1. Death of an accused pending appeal of his conviction extinguishes his criminal liability as well as the civil
liability based solely thereon. As opined by Justice Regalado, in this regard, “the death of the accused prior to final
judgment terminates his criminal liability and only the civil liability directly arising from and based solely on the offense
committed, i.e., civil liability ex delicto in senso strictiore.” Corollarily, the claim for civil liability survives notwithstanding the
death of accused, if the same may also be predicated on a source of obligation other than delict. Article 1157 of the Civil
Code enumerates these other sources of obligation from which the civil liability may arise as a result of the same act or
omission: a) Law b) Contracts c) Quasi-contracts d) xxx xxx xxx e) Quasi-delicts 3. Where the civil liability survives, as
explained in Number 2 above, an action for recovery thereof may be pursued but only by filing a separate civil action and
subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate civil action may be
enforced either against the executor/administrator or the estate of the accused, depending on the source of obligation
upon which the same is based as explained above. As regards the offenses, complained of, the Court does not find any
grave abuse of discretion on the part of the Ombudsman. Petitioner has not established the element of intent to defraud
and petitioner’s inconsistent claims defeated their complaint.
1157 MANILA RAILROAD CO. VS LA COMPANIA TRANSATLANTICA (G.R. NO. L11318 OCTOBER 26, 1918)
FACTS:
SS/Alicante, belonging to Compania Transatlantica de Barcelona was transporting two locomotive boilers for the
Manila Railroad Company. The equipment of the ship for discharging the heavy cargo was not strong enough to handle
the boilers. Compania Transatlantica contracted the services of Atlantic gulf and Pacific Co., which had the best
equipment to lift the boilers out of the ship’s hold. When Alicante arrived in Manila, Atlantic company sent out its floating
crane under the charge of one Leyden. When the first boiler was being hoisted out of the ship’s hold, the boiler could not
be brought out because the sling was not properly placed and the head of the boiler was caught under the edge of the
hatch. The weight on the crane was increased by a strain estimated at 15 tons with the result that the cable of the sling
broke and the boiler fell to the bottom of the ship’s hold. The sling was again adjusted and the boiler was again lifted but
as it was being brought up the bolt at the end of the derrick broke and the boiler fell again. The boiler was so badly
damaged that it had to be shipped back to England to be rebuilt. The damages suffered by Manila Railroad amounted to
P23,343.29. Manila Railroad then filed an action against the Streamship Company to recover said damages. The
Steamship Company caused Atlantic Company to be brought as co-defendant arguing that Atlantic Company as an
independent contractor, who had undertaken to discharge the boilers had become responsible for the damage.
The Court of First Instance decided in favor of Manila Railroad, the plaintiff, against Atlantic Company and absolved
the Steamship Company. Manila Railroad appealed from the decision because the Steamship Company was not held
liable also. Atlantic Company also appealed from the judgment against it.
Page 5 of 20
ISSUES:
1. Was the Steamship Company liable to Manila Railroad for delivering the boiler in a damaged condition?
2. Was Atlantic Company liable to the Steamship Company for the amount it may be required to pay the plaintiff?
Was Atlantic Company directly liable to plaintiff as held by the trial court?
RULING:
There was a contractual relation between the Steamship Company and Manila Railroad. There was also a contractual
relation between the Steamship Company and Atlantic. But there was no contractual relation between the Railroad
Company and Atlantic Company.
There was no question that the Steamship Company was liable to Manila Railroad as it had the obligation to transport
the boiler in a proper manner safe and securely under the circumstances required by law and customs. The Steamship
Company cannot escape liability simply because it employed a competent independent contractor to discharge the boiler.
Atlantic Company claimed that it was not liable, because it had employed all the diligence of a good father of a family
and proper care in the selection of Leyden. Said argument was not tenable, because said defense was not applicable to
negligence arising in the course of the performance of a contractual obligation. The same can be said with respect to the
liability of Atlantic Company upon its contract with the Steamship Company. There was a distinction between negligence
in the performance of a contractual obligation (culpa contractual) and negligence considered as an independent source of
obligation (culpa aquiliana). Atlantic Company wasis liable to the Steamship Company for the damage brought upon the
latter by the failure of Atlantic Company to use due care in discharging the boiler, regardless of the fact that the damage
was caused by the negligence of an employee who was qualified for the work, duly chose with due care.
Since there was no contract between the Railroad Company and Atlantic Company, Railroad Company can had no
right of action to recover damages from Atlantic Company for the wrongful act which constituted the violation of the
contract. The rights of Manila Railroad can only be made effective through the Steamship Company with whom the
contract of affreightment was made.
1157 FAR EAST BANK AND TRUST CO VS. CA (GR 108164, FEBRUARY 23, 1995)
Far East Bank and Trust Company, petitioner
vs Court of Appeals, Luisa Luna and Clarita Luna, respondents
Ponente: Vitug
Facts:
Luis Luna applied for a Far East Card issued by Far East bank at its Pasig branch. Upon his request, the bank also issued
a supplemental card to private respondent Clarita Luna. Then Clarita lost her credit card and submitted an affidavit of loss.
Later on October 6, 1988 in a restaurant, Luis' credit card was not honored.
Luis thru a counsel then demanded from far east to pay damages for the humiliation he felt. The vice-president of the
bank expressed bank's apologies to Luis.
Still evidently feeling aggrieved, private respondents, on 05 December 1988, filed a complaint for damages with the
Regional Trial Court ("RTC") of Pasig against FEBTC.
On 30 March 1990, the RTC of Pasig, given the foregoing factual settings, rendered a decision ordering FEBTC to pay
private respondents (a) P300,000.00 moral damages; (b) P50,000.00 exemplary damages; and (c) P20,000.00 attorney's
fees.
On appeal to the Court of Appeals, the appellate court affirmed the decision of the trial court.
Its motion for reconsideration having been denied by the appellate court, FEBTC has come to this Court with this petition
for review.
Page 6 of 20
There is merit in this appeal.
In culpa contractual, moral damages may be recovered where the defendant is shown to have acted in bad faith or with
malice in the breach of the contract. The Civil Code provides:
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under
the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant
acted fraudulently or in bad faith.
Bad faith, in this context, includes gross, but not simple, negligence. Exceptionally, in a contract of carriage, moral
damages are also allowed in case of death of a passenger attributable to the fault (which is presumed) of the common
carrier.
Held:
The Court has not in the process overlooked another rule that a quasi-delict can be the cause for breaching a contract
that might thereby permit the application of applicable principles on tort 9 even where there is a pre-existing contract
between the plaintiff and the defendant. This doctrine, unfortunately, cannot improve private respondents' case for it can
aptly govern only where the act or omission complained of would constitute an actionable tort independently of the
contract. The test (whether a quasi-delict can be deemed to underlie the breach of a contract) can be stated
thusly: Where, without a pre-existing contract between two parties, an act or omission can nonetheless amount
to an actionable tort by itself, the fact that the parties are contractually bound is no bar to the application of
quasi-delict provisions to the case. Here, private respondents' damage claim is predicated solely on their contractual
relationship; without such agreement, the act or omission complained of cannot by itself be held to stand as a separate
cause of action or as an independent actionable tort.
1157 SAGRADA ORDEN VS NACOCO (GR 3756, JUNE 30, 1952)
FACTS
Plaintiff Sagrada Orden owned a piece of real property in Pandacan, Manila. During the Japanese occupation, the
land was acquired by a Japanese corporation Taiwan Tekkoshho. After the liberation, the Alien Property Custodian of
the United States took possession, control, and custody of the real property. During the year 1946, the property was
occupied by the Copra Export Management Company under the custodianship agreement with United States Alien
Property Custodian, and when it vacated, the property occupied by defendant National Coconut Corporation. Sagrada
Orden made claim to the property before the Alien Property Custodian of the United States but was denied. Hence,
plaintiff brought an action in court to annul the sale of property of Taiwan Tekkosho, and recover its possession. The case
did not come for trial because the parties presented a joint petition in which it is claimed by Sagrada Orden that the sale in
favor of Taiwan Tekkosho was null and void because it was executed under threats, duress, and intimidation, and that the
title be re-issued to Sagrada Orden. The court rendered judgment releasing the defendant from liability but reversing to
the plaintiff the right to recover from the defendant reasonable rentals for the use and occupation of the premises. The
present action to recover the reasonable rentals from August 1946, the date when defendant began to occupy, to the date
it vacated it. The defendant did not contest its liability for the rentals at the rate of P3, 000 per month from February 28,
1949, but resisted the claim therefore prior to that date. Defendant contends that it occupied the property in good faith,
under no obligation to pay rentals for the use and occupation. Judgment rendered for the plaintiff to recover from the
defendant the sum of P3, 000 a month, from August 1946, to the date the defendant vacates the premises. Thus, this
appeal made by defendant.
ISSUE
Can the defendant company be held liable to pay rentals from August 1946 to the date it vacated?
RULING
No. If defendant-appellant is liable at all, its obligations, must arise from any of the four sources of obligations,
namely, law, contract or quasi-contract, crime, or negligence. Defendant-appellant is not guilty of any offense at all,
because it entered the premises and occupied it with the permission of the entity which had the legal control and
administration thereof, the Alien Property Administration. Neither was there any negligence on its part. There was also no
privity between the Alien Property Custodian and the Taiwan Tekkosho, which had secured the possession of the property
Page 7 of 20
from the plaintiff-appellee by the use of duress, such that the Alien Property Custodian or its permittee
(defendant-appellant) may be held responsible for the supposed illegality of the occupation of the property by the said
Taiwan Tekkosho. The Alien Property Administration had the control and administration of the property not as successor
to the interests of the enemy holder of the title, the Taiwan Tekkosho. Neither is it a trustee of the former owner, the
plaintiff-appellee herein, but a trustee of the Government of the United States, in its own right, to the exclusion of, and
against the claim or title of, the enemy owner. From August 1946, when defendant-appellant took possession, to the late
of judgment on February 28, 1948, Alien Property Administration had the absolute control of the property as trustee of the
Government of the United States, with power to dispose of it by sale or otherwise, as though it were the absolute owner.
Therefore, even if defendant-appellant were liable to the Alien Property Administration for rentals, these would not accrue
to the benefit of the plaintiff-appellee, the owner, but to the United States Government.
1158 OSG VS AYALA LAND, ET AL. (G.R. NO. 177056, SEPTEMBER 18, 2009)
Facts:
This is a Petition for Review on Certiorari, under Rule 45 of the Revised Rules of Court, filed by petitioner seeking the
reversal and setting aside of the decision of CA which affirmed the decision of RTC, which denied the Motion for
Reconsideration of OSG. The RTC adjudged that respondents Ayala Land Incorporated (Ayala Land), Robinsons Land
Corporation (Robinsons), Shangri-la Plaza Corporation (Shangri-la), and SM Prime Holdings, Inc. (SM Prime) could not
be obliged to provide free parking spaces in their malls to their patrons and the general public.
The Senate Committee on Trade and Commerce found that the collection of parking fees by shopping malls is contrary to
National Building Code and figuratively speaking, the Code has “expropriated” the land for parking. Also, Committee
stated that the collection of parking fees would be against Article II of RA 9734 (Consumer Act of the Philippines) as to the
State’s policy of protecting the interest of consumers. Moreover, Section 201 of the National Building Code gives the
responsibility for the administration and enforcement of the provisions of the Code, including the imposition of penalties for
administrative violations thereof to the Secretary of Public Works. This is not being strictly followed as the LGUs are
tasked to discharge the regulatory powers of DPWH instead of DPWH instead.
As such, Senate Committee recommended that: 1) Office of Solicitor General should institute the action to enjoin the
collction of parking fees and enforce the sanctions for violation of National Building Code; 2) DTI pursuant to RA 7394
should enforce the provisions of Code relative to parking; and 3) Congress should amend and update the National
Building Code to prohibit the collection of parking fees and its waiver of liability.
Respondent SM Prime assailed the recommendation of the Committee and filed a Petition for Declaratory Relief under
Rule 63 of the Revised Rules of Court against DPWH and local building officials, contending that: 1) Rule XIX of
Implementing Rules and Regulations of National Building Code is unconstitutional and void; 2) respondent has the legal
right to lease parking spaces; and 3) National Building Code IRR is ineffective as it was not published for 3 consecutive
weeks in newspaper of general circulation as mandated by Section 211 of PD 1096.
OSG then filed a Petition for Declaratory Relief and Injunction (with Prayer for Temporary Restraining Order and Writ of
Preliminary Injunction) to the RTC against respondents, prohibiting them from collecting parking fees and contending that
their practice of charging parking fees is violative of National Building Code.
The RTC held that: 1) OSG has the capacity to institute the proceeding it being a controversy of public welfare; 2) a
petition for declaratory relief is proper since all the requisites are present; 3) the Building Code with its IRR does not
necessarily impose that parking spaces shall be free of charge and providing parking spaces for free can be considered
as unlawful taking of property right without just compensation; and 4) there was no sufficient evidence to justify any award
for damages. They deemed that the respondents are not obligated to provide parking spaces free of charge.
OSG appealed the decision to CA, saying that RTC erred in holding that the National Building Code did not intend the
parking spaces to be free of charge. On the other hand, respondent SM filed a separate appeal to the CA, contending
that: 1) RTC erred in failing to declare Rule XIX of IRR as unconstitutional; 2) RTC erred in failing to declare IRR
ineffective for not having been published as required by law; 3) RTC erred in dismissing the OSG’s petition for failure to
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exhaust administrative remedies; and 4) RTC erred in failing to declare that OSG has no legal standing as it is not a real
party-in-interest.
CA denied the appeals of both petitioners and respondents on the following grounds: 1) OSG did not fail to exhaust
administrative remedies and that an administrative review is not a condition precedent to judicial relief where the question
in dispute is purely a legal one and nothing of an administrative nature is to be or can be done; 2) the validity of National
Building Code IRR cannot be proceeded as it was not discussed in RTC and the controversy could be settled on other
grounds without touching the issue of validity since the courts should refrain from passing upon the constitutionality of a
law; and 3) Section 803 of National Building Code and Rule XIX of IRR are clear that they are only intended to control the
occupancy of areas and structures, and in the absence of provision of law, respondents could not be obliged to provide
parking spaces free of charge.
As such, OSG presented itself to SC for the instant Petition for Review.
Issues:
1. Whether the CA erred in affirming the ruling of RTC that respondents are not obliged to provide free parking spaces to
their customers or the public.
2. Whether the petition of OSG for prohibiting the collection of parking fees is a valid exercise of the police power of State.
Held:
1. No. The CA was correct in affirming the ruling of RTC, and the respondents are not obliged to provide free parking
spaces. SC found no merit in the OSG’s petition:
Sec 803 of National Building Code.

Percentage of Site Occupancy states that maximum site occupancy shall be governed by the use, type of construction,
and height of the building and the use, area, nature, and location of the site; and subject to the provisions of the local
zoning requirements and in accordance with the rules and regulations promulgated by the Secretary.
RULE XIX – PARKING AND LOADING SPACE REQUIREMENTS

Pursuant to Section 803 of the National Building Code (PD 1096) providing for maximum site occupancy, the following
provisions on parking and loading space requirements shall be observed:
1. The parking space ratings listed below are minimum off-street requirements for specific uses/occupancies for
buildings/structures:
1.1 The size of an average automobile parking slot shall be computed as 2.4 meters by 5.00 meters for perpendicular or
diagonal parking, 2.00 meters by 6.00 meters for parallel parking. A truck or bus parking/loading slot shall be computed at
a minimum of 3.60 meters by 12.00 meters. The parking slot shall be drawn to scale and the total number of which shall
be indicated on the plans and specified whether or not parking accommodations, are attendant-managed. (See Section 2
for computation of parking requirements).
xxxx
1.7 Neighborhood shopping center – 1 slot/100 sq. m. of shopping floor area
SECTION 102. Declaration of Policy

It is hereby declared to be the policy of the State to safeguard life, health, property, and public welfare, consistent with the
principles of sound environmental management and control; and to this end, make it the purpose of this Code to provide
for all buildings and structures, a framework of minimum standards and requirements to regulate and control their location,
site, design, quality of materials, construction, use, occupancy, and maintenance.
The requirement of free-of-charge parking, the OSG argues, greatly contributes to the aim of safeguarding “life, health,
property, and public welfare, consistent with the principles of sound environmental management and control.” Adequate
parking spaces would contribute greatly to alleviating traffic congestion when complemented by quick and easy access
thereto because of free-charge parking. Moreover, the power to regulate and control the use, occupancy, and
maintenance of buildings and structures carries with it the power to impose fees and, conversely, to control — partially or,
as in this case, absolutely — the imposition of such fees.
The explicit directive of the above is that respondents, as operators/lessors of neighborhood shopping centers, should
provide parking and loading spaces with the minimum ratio of one slot per 100 square meters of shopping floor area.
There is nothing therein pertaining to the collection (or non-collection) of parking fees by respondents. In fact, the term
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“parking fees” cannot even be found at all in the entire National Building Code and its IRR. One rule of statutory
construction is that if a statute is clear and unequivocal, it must be given its literal meaning and applied without any
attempt at interpretation. Since Section 803 of the National Building Code and Rule XIX of its IRR do not mention parking
fees, then simply, said provisions do not regulate the collection of the same
The OSG cannot rely on Section 102 of the National Building Code to expand the coverage of Section 803 of the same
Code and Rule XIX of the IRR, so as to include the regulation of parking fees. The OSG limits its citation to the first part of
Section 102 of the National Building Code declaring the policy of the State “to safeguard life, health, property, and public
welfare, consistent with the principles of sound environmental management and control”; but totally ignores the second
part of said provision, which reads, “and to this end, make it the purpose of this Code to provide for all buildings and
structures, a framework of minimum standards and requirements to regulate and control their location, site, design, quality
of materials, construction, use, occupancy, and maintenance.” While the first part of Section 102 of the National Building
Code lays down the State policy, it is the second part thereof that explains how said policy shall be carried out in the
Code. Section 102 of the National Building Code is not an all-encompassing grant of regulatory power to the DPWH
Secretary and local building officials in the name of life, health, property, and public welfare. On the contrary, it limits the
regulatory power of said officials to ensuring that the minimum standards and requirements for all buildings and
structures, as set forth in the National Building Code, are complied with.
Consequently, the OSG cannot claim that in addition to fixing the minimum requirements for parking spaces for buildings,
Rule XIX of the IRR also mandates that such parking spaces be provided by building owners free of charge. If Rule XIX is
not covered by the enabling law, then it cannot be added to or included in the implementing rules. The rule-making power
of administrative agencies must be confined to details for regulating the mode or proceedings to carry into effect the law
as it has been enacted, and it cannot be extended to amend or expand the statutory requirements or to embrace matters
not covered by the statute. Administrative regulations must always be in harmony with the provisions of the law because
any resulting discrepancy between the two will always be resolved in favor of the basic law.
2. No. The petition of OSG to prohibit collection of parking fees is not a valid exercise of the police power of State.
It is not sufficient for the OSG to claim that “the power to regulate and control the use, occupancy, and maintenance of
buildings and structures carries with it the power to impose fees and, conversely, to control, partially or, as in this case,
absolutely, the imposition of such fees.” Firstly, the fees within the power of regulatory agencies to impose are regulatory
fees. It has been settled law in this jurisdiction that this broad and all-compassing governmental competence to restrict
rights of liberty and property carries with it the undeniable power to collect a regulatory fee. It looks to the enactment of
specific measures that govern the relations not only as between individuals but also as between private parties and the
political society. True, if the regulatory agencies have the power to impose regulatory fees, then conversely, they also
have the power to remove the same. Even so, it is worthy to note that the present case does not involve the imposition by
the DPWH Secretary and local building officials of regulatory fees upon respondents; but the collection by respondents of
parking fees from persons who use the mall parking facilities. Secondly, assuming arguendo that the DPWH Secretary
and local building officials do have regulatory powers over the collection of parking fees for the use of privately owned
parking facilities, they cannot allow or prohibit such collection arbitrarily or whimsically. Whether allowing or prohibiting the
collection of such parking fees, the action of the DPWH Secretary and local building officials must pass the test of classic
reasonableness and propriety of the measures or means in the promotion of the ends sought to be accomplished.
Without using the term outright, the OSG is actually invoking police power to justify the regulation by the State, through
the DPWH Secretary and local building officials, of privately owned parking facilities, including the collection by the
owners/operators of such facilities of parking fees from the public for the use thereof. The Court finds, however, that in
totally prohibiting respondents from collecting parking fees, the State would be acting beyond the bounds of police power.
Police power is the power of promoting the public welfare by restraining and regulating the use of liberty and property. It is
usually exerted in order to merely regulate the use and enjoyment of the property of the owner. The power to regulate,
however, does not include the power to prohibit. A fortiori, the power to regulate does not include the power to confiscate.
Police power does not involve the taking or confiscation of property, with the exception of a few cases where there is a
necessity to confiscate private property in order to destroy it for the purpose of protecting peace and order and of
promoting the general welfare; for instance, the confiscation of an illegally possessed article, such as opium and firearms.
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When there is a taking or confiscation of private property for public use, the State is no longer exercising police power, but
another of its inherent powers, namely, eminent domain. Eminent domain enables the State to forcibly acquire private
lands intended for public use upon payment of just compensation to the owner.
Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession of, the
expropriated property; but no cogent reason appears why the said power may not be availed of only to impose a burden
upon the owner of condemned property, without loss of title and possession. It is a settled rule that neither acquisition of
title nor total destruction of value is essential to taking. It is usually in cases where title remains with the private owner that
inquiry should be made to determine whether the impairment of a property is merely regulated or amounts to a
compensable taking. A regulation that deprives any person of the profitable use of his property constitutes a taking and
entitles him to compensation, unless the invasion of rights is so slight as to permit the regulation to be justified under the
police power. Similarly, a police regulation that unreasonably restricts the right to use business property for business
purposes amounts to a taking of private property, and the owner may recover therefor.
Although in the present case, title to and/or possession of the parking facilities remain/s with respondents, the prohibition
against their collection of parking fees from the public, for the use of said facilities, is already tantamount to a taking or
confiscation of their properties. The State is not only requiring that respondents devote a portion of the latter’s properties
for use as parking spaces, but is also mandating that they give the public access to said parking spaces for free. Such is
already an excessive intrusion into the property rights of respondents. Not only are they being deprived of the right to use
a portion of their properties as they wish, they are further prohibited from profiting from its use or even just recovering
therefrom the expenses for the maintenance and operation of the required parking facilities.
In conclusion, the total prohibition against the collection by respondents of parking fees from persons who use the mall
parking facilities has no basis in the National Building Code or its IRR. The State also cannot impose the same prohibition
by generally invoking police power, since said prohibition amounts to a taking of respondents’ property without payment of
just compensation.
WHEREFORE, the instant Petition for Review on Certiorari is hereby DENIED. The Decision dated 25 January 2007 and
Resolution dated 14 March 2007 of the Court of Appeals in CA-G.R. CV No. 76298, affirming in toto the Joint Decision
dated 29 May 2002 of the Regional Trial Court of Makati City, Branch 138, in Civil Cases No. 00-1208 and No. 00-1210
are hereby AFFIRMED. No costs.
1159 PRISMA CONSTRUCTION VS PANTALEON (G.R. 160545, MARCH 9, 2010)

FACTS:
December 8, 1993, Pantaleon, President and Chairman of the Board of PRISMA, obtained a P1M loan from the
respondent, with monthly interest of P40,000.00 payable for 6 months, or a total obligation of P1,240,000.00 payable
within 6 mos. To secure the payment of the loan, Pantaleon issued a promissory. Pantaleon signed the promissory note in
his personal capacity and as duly authorized by the Board of Directors of PRISMA. The petitioners failed to completely
pay the loan within the 6-month period.
As of January 4, 1997, respondent found that the petitioners still had an outstanding balance of P1,364,151.00, to which
respondent applied a 4% monthly interest.
On August 28, 1997, respondent filed a complaint for sum of money to enforce the unpaid balance, plus 4% monthly
interest. In their Answer, the petitioners admitted the loan of P1,240,000.00, but denied the stipulation on the 4% monthly
interest, arguing that the interest was not provided in the promissory note. Pantaleon also denied that he made himself
personally liable and that he made representations that the loan would be repaid within six (6) months.
RTC found that the respondent issued a check for P1M in favor of the petitioners for a loan that would earn an interest of
4% or P40,000.00 per month, or a total of P240,000.00 for a 6-month period. RTC ordered the petitioners to jointly and
severally pay the respondent the amount of P3,526,117.00 plus 4% per month interest from February 11, 1999 until fully
paid.
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Petitioners appealed to CA insisting that there was no express stipulation on the 4% monthly interest. CA favored
respondent but noted that the interest of 4% per month, or 48% per annum, was unreasonable and should be reduced to
12% per annum. MR denied hence this petition.
ISSUE:
Whether the parties agreed to the 4% monthly interest on the loan. If so, does the rate of interest apply to the 6-month
payment period only or until full payment of the loan?
RULING:
Petition is meritorious. Interest due should be stipulated in writing; otherwise, 12% per annum
Obligations arising from contracts have the force of law between the contracting parties and should be complied with in
good faith. When the terms of a contract are clear and leave no doubt as to the intention of the contracting parties, the
literal meaning of its stipulations governs. Courts have no authority to alter the contract by construction or to make a new
contract for the parties; a court’s duty is confined to the interpretation of the contract the parties made for themselves
without regard to its wisdom or folly, as the court cannot supply material stipulations or read into the contract words the
contract does not contain. It is only when the contract is vague and ambiguous that courts are permitted to resort to the
interpretation of its terms to determine the parties’ intent.
In the present case, the respondent issued a check for P1M. In turn, Pantaleon, in his personal capacity and as
authorized by the Board, executed the promissory note. Thus, the P1M loan shall be payable within 6 months. The loan
shall earn an interest of P40,000.00 per month, for a total obligation of P1,240,000.00 for the six-month period. We note
that this agreed sum can be computed at 4% interest per month, but no such rate of interest was stipulated in the
promissory note; rather a fixed sum equivalent to this rate was agreed upon.
Article 1956 of the Civil Code specifically mandates that “no interest shall be due unless it has been expressly stipulated
in writing.” The payment of interest in loans or forbearance of money is allowed only if: (1) there was an express
stipulation for the payment of interest; and (2) the agreement for the payment of interest was reduced in writing. The
concurrence of the two conditions is required for the payment of interest at a stipulated rate. The collection of interest
without any stipulation in writing is prohibited by law.
The interest of P40,000.00 per month corresponds only to the six-month period of the loan, or from January 8, 1994 to
June 8, 1994, as agreed upon by the parties in the promissory note. Thereafter, the interest on the loan should be at the
legal interest rate of 12% per annum.
When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money,
the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn
legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per
annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of
Article 1169 of the Civil Code.
The facts show that the parties agreed to the payment of a specific sum of money of P40,000.00 per month for six
months, not to a 4% rate of interest payable within a 6-month period.
No issue on the excessiveness of the stipulated amount of P40,000.00 per month was ever put in issue by the petitioners;
they only assailed the application of a 4% interest rate, since it was not agreed upon.
It is a familiar doctrine in obligations and contracts that the parties are bound by the stipulations, clauses, terms and
conditions they have agreed to, which is the law between them, the only limitation being that these stipulations, clauses,
terms and conditions are not contrary to law, morals, public order or public policy. The payment of the specific sum of
money of P40,000.00 per month was voluntarily agreed upon by the petitioners and the respondent. There is nothing from
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the records and, in fact, there is no allegation showing that petitioners were victims of fraud when they entered into the
agreement with the respondent.
Therefore, as agreed by the parties, the loan of P1M shall earn P40,000.00 per month for a period of 6 months, for a total
principal and interest amount of P1,240,000.00. Thereafter, interest at the rate of 12% per annum shall apply. The
amounts already paid by the petitioners during the pendency of the suit, amounting toP1,228,772.00 as of February 12,
1999, should be deducted from the total amount due, computed as indicated above. We remand the case to the trial court
for the actual computation of the total amount due.
WHEREFORE, in light of all the foregoing, we hereby REVERSE and SET ASIDE the Decision CA.
1159 PHILIPPINE COMMUNICATIONS SATELLITE CORP. VS GLOBE TELECOM (G.R. NO. 147324 MAY 25, 2004) [BRAGA]
Facts: Globe Mckay and Radio Corporation, now Globe Telecom Inc (Globe) is the provider for communication facilities
for US bases in Clark and Subic for the US Defense Communication Agency. Globe then contracted with local service
provider such as Philippine Communications Satellite Corporation (PHILCOMSAT) for the provision of the Communication
facilities.
May 1991, Philcomsat and Globe entered into an Agreement whereby Philcomsat obligated itself to establish, operate and
provide an IBS Standard B earth station (earth station) within Cubi Point for the exclusive use of the USDCA. The term of
the contract was for 60 months, or five (5) years.Globe promised to pay Philcomsat monthly rentals for each leased circuit
involved.
At the time of the execution of the Agreement, both parties knew that the Military Bases Agreement between the Republic
of the Philippines and the US (RP-US Military Bases Agreement), was to expire in 1991. Under Section 25, Article XVIII of
the 1987 Constitution, foreign military bases, troops or facilities, which include those located at the US Naval Facility in
Cubi Point, shall not be allowed in the Philippines unless a new treaty is duly concurred in by the Senate and ratified by a
majority of the votes cast by the people in a national referendum when the Congress so requires, and such new treaty is
recognized as such by the US Government.
Subsequently, Philcomsat installed and established the earth station at Cubi Point and the USDCA made use of the
same.In September 1991, The Senate did not renew the Military Base Agreement.
In August 1992, Globe notified Philcomsat of its intention to discontinue Agreement due to Force Majuere. This is
provided for in Section 8 of the said Agreement.
In December 1992, the US left. Then PHILCOMSAT demanded out from Globe the standing obligation of 5 Million US
dollars. Then PHILCOMSAT filed a complaint with the RTC against globe for the collection of the rental fees.
RTC ordered Globe to pay PHILCOMSAT for the rental of the facilities for the month of December 1992.
CA ruled that the occurrence of Senate’s non-ratifiation was indeed force majeure. But it ruled that Globe is still liable for
$92 000 rental fee for the month of December.
Issue: Whether or not the Senate’s non-ratification of the Military Bases agreement which caused for the US withdrawal
from the US bases constituted force majeure?
Ruling: Supreme Court affirmed the Ruling of the CA.

Article 1174 of the Civil Code Exempts Obligor from liability due to force majeure which are not only unforeseeable but
also unavoidable.
A fortuitous event under Article 1174 may either be an act of God, or natural occurrences such as floods or typhoons, or
an act of man, such as riots, strikes or wars.
Philcomsat and Globe agreed in Section 8 of the Agreement that the following events shall be deemed events constituting
force majeure:
1. Any law, order, regulation, direction or request of the Philippine Government;
2. Strikes or other labor difficulties;
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3. Insurrection;
4. Riots;
5. National emergencies;
6. War;
7. Acts of public enemies;
8. Fire, floods, typhoons or other catastrophies or acts of God;
9. Other circumstances beyond the control of the parties.
Clearly, the foregoing are either unforeseeable, or foreseeable but beyond the control of the parties. There is nothing in
the enumeration that runs contrary to, or expands, the concept of a fortuitous event under Article 1174.
Moreover, it would be unjust to require Globe to continue paying rentals even though Philcomsat cannot be compelled to
perform its corresponding obligation under the Agreement
With respect to the issue of whether Globe is liable for payment of rentals for the month of December 1992, the Court
likewise affirms the Court of Appeals ruling that Globe should pay the same.
Although Globe alleged that it terminated the Agreement with Philcomsat effective November 1992 pursuant to the formal
order issued by Cdr. Corliss of the US Navy, the date when they actually ceased using the earth station subject of the
Agreement was not established during the trial. However, the trial court found that the US military forces and personnel
completely withdrew from Cubi Point only in December 1992. Thus, until that date, the USDCA had control over the earth
station and had the option of using the same. Furthermore, Philcomsat could not have removed or rendered ineffective
said communication facility until after 31 December 1992 because Cubi Point was accessible only to US naval personnel
up to that time. Hence, the Court of Appeals did not err when it affirmed the trial courts ruling that Globe is liable for
payment of rentals until December 1992.
WHEREFORE, the Petitions are DENIED for lack of merit. The assailed Decision of the Court of Appeals in CA-G.R. CV
No. 63619 is AFFIRMED.
1159 GREATER METROPOLITAN MANILA SOLID WASTE MANAGEMENT VS JANCOM (G.R. NO. 163663, JUNE 30 2006) [CORDOVEZ]
FACTS: President Fidel Ramos executed Memorandum Order No. 202 in 1994, which created an Executive Committee to
oversee and develop waste-to-energy projects for the waste disposal sites in San Mateo, Rizal and Carmona, Cavite
under the Build-Operate-Transfer (BOT) scheme.
Respondent Jancom International Development Projects Pty. Limited of Australia was one of the bidders for the San
Mateo Waste Disposal Site.
JANCOM was declared by the executive Committee as the sole complying bidder for the San Mateo Waste Disposal Site.
As such a contract fro the BOT implementation of the Solid Waste Management Project for the Rizal site was entered
between Greater Metropolitan Manila Solid Waste Management Committee (GMMSWMC) and the Metropolitan Manila
Development Authority (MMDA) and JANCOM. The contract was submitted to the President Ramos for approval who
subsequently endorsed the same to incoming President Joseph Estrada.
Due to the clamor of the residents of Rizal, the administration ordered for the closure of the San Mateo landfill.
Because of this, GMMSWMC adopted a resolution not to pursue the contract with JANCOM. The basis for which is the
passage of Republic Act 8749, of the Clean Air Act of 1999, the non-availability of the San Mateo site because it can only
accommodate 3000 tons of trash everyday while the expected outcome to wastes to be accumulated daily was 6000 tons,
and the costly tipping fees.
Thus, JANCOM filed with the RTC a petition to declare GMMSWMC resolution and the acts of the MMDA calling for the
bids and authorizing the forging of a new contract for the Metro Manila waste management as illegal and unconstitutional,
and to enjoin said agencies in making another award.
The RTC ruled in favor of JANCOM, this was affirmed by the CA. The Supreme Court declared the contract as valid and
has been perfected, although the same cannot be implemented without the approval by the President.
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Consequently, JANCOM and MMDA made negotiations to alter certain provisions of the contract which were embodied in
a draft amended agreement, it did not contain the signature of the parties. JANCOM then filed with the RTC an Omnibus
Motion for a writ of execution, this was challenged by GMMSWMC nd MMDA. Still the CA affirmed the RTC.
ISSUE:
Whether or not the contract is ineffective and cannot be implemented unless the same has been approved by the
President.
HELD:
Yes. The contract remains to be ineffective until approved by the President.
It is elementary that, being consensual, a contract is perfected by mere consent. The essence of consent is the conformity
of the parties to the terms of the contract, the acceptance by one of the offer made by the other; it is the concurrence of
the minds of the parties on the object and the cause which shall constitute the contract. Where there is merely an offer by
one party without acceptance by the other, there is no consent and the contract does not come into existence.
As distinguished from the original contract in which this Court held in G.R. No. 147465:
“x x x the signing and execution of the contract by the parties clearly show that, as between the parties, there was
concurrence of offer and acceptance with respect to the material details of the contract, thereby giving rise to the
perfection of the contract. The execution and signing of the contract is not disputed by the parties x x x,”
the parties did not, with respect to the Amended Agreement, get past the negotiation stage. No meeting of minds was
established. While there was an initial offer made, there was no acceptance.
Only an absolute or unqualified acceptance of a definite offer manifests the consent necessary to perfect a contract. If at
all, the MMDA letter only shows that the parties had not gone beyond the preparation stage, which is the period from the
start of the negotiations until the moment just before the agreement of the parties. Obviously, other material
considerations still remained before the Amended Agreement could be perfected. At any time prior to the perfection of a
contract, unaccepted offers and proposals remain as such and cannot be considered as binding commitments.
WHEREFORE, the petition is GRANTED. The Decision dated December 19, 2003 and Resolution dated May 11, 2004 of
the Court of Appeals in CA-G.R. SP No. 78752 are REVERSED and SET ASIDE. The June 11, 2003 Order of the
Regional Trial Court of Pasig, Branch 68 in SCA No. 1955 is declared NULL and VOID.
SO ORDERED.
1159 REPIDE VS AFZELIUS (GR 13438, NOVEMBER 20,1918) [LAZARO]

The case is about an action for Specific Performance
Facts:
The subject of the case is about a parcel of land owned by the Francisco Repide (Plaintiff) consisting of 2,695.24 Sqm
which is situated in the city of manila.
· In 1916 Ivar Afzelius and Patrocinio Afzelius (Defendants) made a proposal to the plaintiff that they will buy
the plaintiff’s property. After negotiation, they reached an agreement that the defendants pay the plaintiff P2,000
during the signing of the deed and the remaining balance of P8,000 would be pain in monthly instalments of
P150.
· When the deed was ready, the defendants were notified to appear to sign the deed. However they failed to
do so.
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· Defendant Patrocinio wrote a letter to the plaintiff informing that they won’t be able to consummate the deal
because their business failed in addition to that requested that the advanced payment of P2,000.00 for the reason
of they just borrowed the said amount from her sister-in-law and she needs the P2,000.00 for something
important.
· Plaintiff was still willing to execute the dead in accordance with the earlier agreed terms.
Hence this petition.
RTC – The trial court ruled in favour of the defendants, dismissing plaintiffs complaint.
Issue: W/N the action for Specific Performance can be enforced? Yes
Held:
“The American and English cases that relate to specific performance by the vendor are with a few exceptions all one way.
In the language of Chief Justice Marshall, "The right of a vendor to come into a court of equity to enforce a specific
performance is unquestionable The rule in nearly all jurisdictions is that specific performance may be had at the suit of the
vendor of land, the vendee being decreed to accept the deed and pay the purchase price. The reasoning supporting the
authorities is that the performance of contracts must and should be mutual. The contract is ordinarily bilateral. So should
the respective rights of the parties be. Nor does an action to recover damages for breach of contract ordinarily afford a
complete and adequate remedy. The equitable doctrine is not applied where it will be productive of great hardship.”
In the case at hand we have a perfectly valid contract, which is bilateral in character. Both parties entered in the contracts
freely. However the defendants pleads the impossibility of performance. The stability of commercial transaction require
that the rights of the seller be protected just as effectively as the right of the buyer. The rule of equity jurisprudence in
such a case is that mere pecuniary inability to fulfill an engagement does not discharge the obligation of the contract, nor
does it constitute any defense to a decree for specific performance. Thus it may result to the specific performance to fulfil
their obligations or the court may decide the execution on the property of the defendants.
*pampapogi-points*
· Art. 1159: Obligations arising from contracts have the force of between the contracting parties and
should be complied with in good faith.
· Any contract which is not contrary to public customs, public policy and good morals are valid
contracts hence they have the force of law which makes it enforceable for all purposes.
· Also under this article lies the concept of the Autonomy of the will/ Freedom of the will which means
it is the freedom to enter into a contract. You are not forced to enter into a contract. However when you
enter into a contract, the assumption is you entered freely. Hence you are bound by its terms. Thus you
must comply with it in good faith
· In the case at hand there is a perfectly valid contract which was perfected through the down
payment of the amount of P2,000.00 hence the defendants are bounded by the contract’s terms thus they
should fulfil their obligation to pay the remaining balance. However the defendants failed to do so, now
they may be compelled by an action for specific performance if they will not obey such the court may
order a Writ of Execution on their properties in order for the appellant to claim from the defendants.
Fallo:
Judgment shall be reversed, and an order shall issue, condemning the defendants to sign the deed and mortgage to the
land in question and to pay the first installment of the purchase price as stipulated.
The appellant shall recover costs of both instances. The Code of Civil Procedure in its Chapter XXI entitled "Costs in the
Several Courts" states in Section 487 that "Costs shall ordinarily be allowed to the prevailing party as a matter of course . .
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. ." Philippine law is, in this respect, identical with the general rule, which is that "On reversal, . . . the costs will generally
go to the prevailing party, that is, to the appellant." (7 R.C.L., 801, citing cases.) No special reasons exist in this case for
modifying the general rule. So ordered.
1161 RILLON VS RILLON (GR 13172 APRIL 28, 1960) [LUMAPAS]
Facts:
Civil action instituted by the minor Gilbert Rillon, assisted by his mother, Marcelina Rillon, as his, guardian ad litem
(appointed guardian by court), to recognize the minor as his natural child, declaring the latter entitled to the rights of a
natural child and to receive the sum of P20.00 a month for his maintenance and support, and that the defendant be further
ordered to pay the plaintiff mother P30,000 as actual damages, P5,000 as moral damages and P200 as the expenses
during the delivery and birth of the child.
· the minor needs food for subsistence as he is living with his mother who has no means to support him; that his
mother has asked the defendant to recognize the him as a natural child and provide him with support, but these
demands were refused by defendant;
· that the illegal act (RAPE) of defendant has caused the mother mental anguish, physical and mental inconvenience,
degradation and shame, and has caused her moral damages in the amount of P5,000 and a right to support for the
amount of P200;
· mother was a student of the Normal School in Manila and needed only three months to complete her studies when
her misfortune occurred and by reason of the acts of the defendant she has been caused actual damages in the
amount of P30,000.
Defendant denies the material allegations of the complaint and, by way of special defense, alleges that the minor is the
son of Marcelina Rillon by another man with whom she had carnal knowledge long before September 10, 1952; that her
failure to finish her studies, was due to her amorous relations with her "boy friend," her failure to pay her tuition fees and
her poor and unsatisfactory scholastic record. By way of counterclaim he alleges that plaintiffs' complaint is false, fictitious
and malicious, made in evident and wilfull bad faith, and has caused the defendant moral damages in the amount of
P40,000.
Issue:
whether or not a civil action for recognition and support and for moral damages filed by an offended party, under
allegations of facts constituting the crime of rape, can proceed even without the institution of a criminal action for rape
against the defendant and a judgment thereon convicting him of such crime.
Art. 30 states that, “When a separate civil action is brought to demand civil liability arising from a criminal offense, and no
criminal proceedings are instituted during the pendency of the civil case, a preponderance of evidence shall likewise be
sufficient to prove the act complained of”. This article implies the right of an offended party to bring a separate civil action
for the criminal act without instituting the criminal proceedings for the prosecution of the offense. A civil action may now be
instituted without and prosecuted to final judgment without awaiting the institution and termination of a criminal action.
it is not now necessary that a criminal prosecution for rape be first instituted and prosecuted to final judgment before a
civil action based on said offense in favor of the offended woman and the recognition of the offspring can be instituted and
prosecuted to final judgment. The provisions of Rule 107 of the present Rules promulgated in 1940 are, therefore,
considered repealed or modified pro tanto by the above-mentioned articles of the Civil Code and, as above stated, the
offended woman in the rape and the child born out of the crime may institute a civil action for damages and for recognition
and support without a previous action and judgment in a criminal case for rape against the offender.
SC: dismissing the case provisionally for the purpose of awaiting the results of the criminal action for rape
against defendant (REMANDED)
1162 CARIAGA VS LAGUNA TAYABAS (GR 11037, DECEMBER 29, 1960) [PATIAG]
Page 17 of 20
FACTS:
June 1952: 1PM – Bus No. 133 of the Laguna Tayabas Bus Company (LTB) LEFT Manila for Lilio, Laguna. The bus was
driven by Alfredo Moncada. One of the passengers was petitioner Edgardo Cariaga, a 4th year med student of UST.
3PM – At Bay, Laguna, where the national highway crossed a railroad track, the bus bumped against the engine of a
passing train. - The first six wheels of the train were derailed. - The engine and front part of the body of the bus were
wrecked. - Bus driver Moncada died. - Cariaga was severely injured.
Cariaga was confined. - He was transferred from San Pablo City Hospital (Laguna), to De los Santos Clinic (QC), then to
UST Hospital, and then back to De los Santos. - He was unconscious for the first 35 days after the accident. - He had to
have procedures to remove the fractured bones from his brain, and to cover a big hole on his head.
LTB paid for Cariaga’s medical and miscellaneous expenses (P16,964), as well as gave him a subsistence allowance
(P10/ day, total P775) for January to April 1953, during which Cariaga stayed at a private house in QC.
An action was filed to recover damages (actual, compensatory, moral, and exemplary) for Cariaga and his parents. A total
sum of P312,000 was claimed. - LTB: The accident was due to the negligence of Manila Railroad Company (MRR) for
not providing a crossing bar. They filed a cross-claim to recover P18,194, representing the expenses paid to Cariaga. -
MRR: The accident was due to the reckless negligence of the bus driver Moncada.
Lower court: LTB to pay Cariaga P10,490 as compensatory damages; Cross-claim dismissed.
The Cariagas and LTB appealed. - Cariagas: Amount of damages awarded too small; The lower court should have
awarded moral damages and attorney’s fees. - LTB: Both the train driver and the bus driver were at fault. As a
consequence, MRR should also liable.
ISSUE AS TO LTB APPEAL: WON LTB violated the law, thereby making them negligent – NO LTB: The train driver
violated the law by not sounding the whistle when it was at a safe distance of 300m.
Court: No. Cited the lower court’s factual findings:
The engineer sounded the whistle (two long and two short whistles) while at a distance of 300 meters from the highway,
and then again upon reaching a point of 100m from the highway.
All witnesses for the plaintiffs and defendants are uniform in stating that they heard the train whistle.
The other LTB bus which arrived ahead at the crossing heeded the warning by stopping and allowing the train to pass.
The bus driver Moncada totally ignored the whistle and noise of the train and instead, tried to make the bus pass the
crossing before the train. [These findings are predicated mainly upon the testimony of a witness for MRR. LTB tried to
assail his credibility, but the Court did not find any sufficient reason to discredit his testimony.]
LTB: The train driver also violated the law by not ringing the bell altogether, in violation of Sec. 91, Art. 1459 of the MRR
Charter. Court: No. LTB had the burden of proving this affirmatively, as a violation of law is never presumed. This burden
has not been satisfactorily discharged
ISSUE AS TO CARIAGAS’ APPEAL:

WON the award of the lower court of damages was correct – YES, except for compensatory damages Cariagas: The
award of P10,000 as compensatory damages is inadequate, considering the after effects of the physical injuries suffered
by him. Court: Yes. As a result of the physical injuries suffered by Cariaga, he is now in a helpless condition, virtually an
invalid, both physically and mentally.
Page 18 of 20
× Deposition of neurosurgeon Dr. Gustilo: - Cariaga’s right forehead was fractured necessitating the removal of practically
all of the right frontal lobe of his brain.
× Tesitmony of psychiatrist Dr. Fernandez: - Cariaga’s mentality has been so reduced that he can no longer finish his
studies as a med student. - He has become completely misfit for any kind of work. - He can hardly walk around without
someone helping him, and has to use a brace on his left leg and feet.
× Lower court’s findings: - The removal of his right frontal lobe reduced his intelligence by 50% - Due to the replacement
of the right frontal bone of his head with a tantalum plate, Cariaga has to lead a quiet and retired life because if the
tantalum plate is pressed in or dented, it would cause his death.
Cariagas: Under Art. 2201 of the Civil Code, the obligor who is guilty of a breach of contract but who acted in good faith
shall be liable for damages that are the natural and probable consequences of the breach, and which the parties had
foreseen or could reasonably have foreseen at the time the obligation was constituted, provided such damages had been
duly proved. Ergo, only the actual damages suffered by Cariaga consisting of medical, hospital, and the other
expensesare within this category. Court: No. The income which Cariaga could have earned, if he should have become a
doctor, should be deemed within this category because they could have reasonably been foreseen by the parties. × He
was already a 4th year med student in in a reputable university. It is sufficient to assume that he could have passed the
board test in due time, even if his grades were not first-rate. According to a witness of LTB, an amount of P300/ month
could easily be expected as his minimum monthly income, had he finished his studied.
Cariagas: The lower court should have awarded moral damages and attorney’s fees. Court: The lower court was correct
in denying moral damages and attorney’s fees.
× Lower court - Art. 2219 of the Civil Code enumerates the instances when moral damages may be covered and the case
under consideration does not fall under any one of them. The present action cannot come under paragraph 2 because it is
not one of the quasi-delict. - Neither could LTB be held liable to pay moral damages to Cariaga under Art. 2220 of the Civil
Code on account of breach of its contract of carriage because it did not act fraudulently or in bad faith in connection
therewith. There was due diligence in the selection and supervision of LTB’s employees. - Cariaga is also not entitled to
recover for attorney's fees, because this case does not fall under any of the instances enumerated in Art. 2208 of the Civil
Code.
× Cachero v. Manila Yellow Taxicab - The action was predicated on an alleged breach of contract of carriage, i.e., the
failure of the defendants to bring plaintiff "safely and without mishaps" to his destination. Only the first two numbers in Art.
2219 may have any bearing on the case (criminal offense resulting in physical injuries and quasi-delicts causing physical
injuries).
o However, with regard to the first, the defendant had not committed in connection with this case any "criminal
offense resulting in physical injuries". The one that committed the offense against the plaintiff is the driver of the
defendant, and that is why he has been already prosecuted and punished therefor. Although employers are subsidiary
civilly liable for felonies committed by their employees in the discharge of their duties (Art. 103, RPC), the plaintiff did not
maintain this action under such provision.
o The present complaint is not based either on a "quasi-delict causing physical injuries." From the report of the
Code Commission on the new Civil Code, a quasi-delicts are obligations which do not arise from law, contracts,
quasi-contracts, or criminal offenses. Jurisprudence also establishes the distinction between an obligation derived from
negligence and an obligation as a result of breach of contract.
× What has been said relative to the moral damages claimed by Edgardo Cariaga applies with greater force to a similar
claim made by his parents.
× The claim made Edgardo Cariagas’ parents for actual and compensatory damages is without merit. - Insofar as LTB is
concerned, the present action is based on breach of contract of carriage, to which Edgardo Cariaga’s parents were not a
party. - Neither can they premise their claim upon the negligence or quasi-delict,for the simple reason that they were not
themselves injured.
DISPOSITIVE: Compensatory damages increased to P25,000. Lower court judgment affirmed in all other respects.
Page 19 of 20
1162 DIANA V BATANGAS TRANSPORT CO. (G.R. NO. L-4920, JUNE 29, 1953) BRAGA
Facts: In 1945, Truck no. 14 owned by Batangas Transportation driven by Vivencio Bristol ran into a ditch at Bay, Laguna.
The incident resulted to the death of Florenio Diana and other passengers.
Bristol was charged and convicted of multiple homicide through reckless imprudence. He was ordered to indemnify the
heirs of Diana the amount of Php 2 000. The decision became final and a writ of execution was issued but the same was
not satisfied as Bristol had no visible leviable property.
Upon the failure of Batangas Transportation Co. to indemnify the Heirs of Diana under its subsidiary liablity. A civil case
was filed by the Heirs predicated on culpa aquilana, however Batangas Transportation filed a motion to dismiss on the
ground that there was another action pending between the same parties for the same cause. The lower court dismissed
the motion.
Issue: Whether or not the lower court correctly dismissed the complaint on sole ground that there was another action
pending between the same parties for the same cause?
Study in relation to: Arts. 1139-1155; 1423-1430; 2142-2175, 2176, 2177 NCC Arts. 100,104 of the Revised Penal Code
Page 20 of 20

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Primus5 DigestsOBLIGATIONS AND CONTRACTS2018.01.

1156 ASUNCION ET AL. VS CA (G.R. 109125, DECEMBER 20, 1994)

1156 TIU VS PLATINUM PLANS (G.R. 163512, FEBRUARY 28, 2007)

1157 VILLEGAS ET AL VS CA (G.R. NO. 82562, APRIL 11, 1997)

The answer is likewise provided in Bayatas, thus:

1157 ABS-CBN ET AL VS OMBUDSMAN (G.R. NO. 133347, OCTOBER 15, 2008)

There is merit in this appeal.

1157 SAGRADA ORDEN VS NACOCO (GR 3756, JUNE 30, 1952)

Sec 803 of National Building Code.

RULE XIX – PARKING AND LOADING SPACE REQUIREMENTS

SECTION 102. Declaration of Policy

1159 PRISMA CONSTRUCTION VS PANTALEON (G.R. 160545, MARCH 9, 2010)

Ruling: Supreme Court affirmed the Ruling of the CA.

1159 REPIDE VS AFZELIUS (GR 13438, NOVEMBER 20,1918) [LAZARO]

1161 RILLON VS RILLON (GR 13172 APRIL 28, 1960) [LUMAPAS]

Court: No. Cited the lower court’s factual findings:

ISSUE AS TO CARIAGAS’ APPEAL:

S-ar putea să vă placă și

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Primus5 DigestsOBLIGATIONS AND CONTRACTS2018.01.

1156 ASUNCION ET AL. VS CA (G.R. 109125, DECEMBER 20, 1994)

1156 TIU VS PLATINUM PLANS (G.R. 163512, FEBRUARY 28, 2007)

1157 VILLEGAS ET AL VS CA (G.R. NO. 82562, APRIL 11, 1997)

The answer is likewise provided in Bayatas, thus:

1157 ABS-CBN ET AL VS OMBUDSMAN (G.R. NO. 133347, OCTOBER 15, 2008)

There is merit in this appeal.

1157 SAGRADA ORDEN VS NACOCO (GR 3756, JUNE 30, 1952)

Sec 803 of National Building Code.

RULE XIX – PARKING AND LOADING SPACE REQUIREMENTS

​SECTION 102. Declaration of Policy

1159 PRISMA CONSTRUCTION VS PANTALEON (G.R. 160545, MARCH 9, 2010)

Ruling: Supreme Court affirmed the Ruling of the CA.

1159 REPIDE VS AFZELIUS (GR 13438, NOVEMBER 20,1918) [LAZARO]

1161 RILLON VS RILLON (GR 13172 APRIL 28, 1960) [LUMAPAS]

Court: No. Cited the lower court’s factual findings:

ISSUE AS TO CARIAGAS’ APPEAL:

S-ar putea să vă placă și

SECTION 102. Declaration of Policy