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MANANTAN V. CA G.R. No. 107125 January 29, 2001

For their wedding reception on July 28, 2001, spouses Luigi M. Guanio and Anna In the evening of September 25, 1982, at the National Highway of Malvar, Santiago,
Hernandez-Guanio (petitioners) booked at the Shangri-la Hotel Makati. Prior to the event, Isabela, George Manantan was driving a Toyota car going home. At that time, he was with
Makati Shangri-La Hotel & Resort, Inc. (respondent) scheduled an initial and final food Fiscal Ambrocio, Miguel Tabangin and Ruben Nicolas. Suddenly, a jeepney, coming from the
tasting. The parties eventually agreed on a final price ─ P1,150 per person. On July 27, opposite direction hit the driver side of the car, driven by Manantan. Consequently,
2001, the parties finalized and signed their contract. Manantan, Ambrocio and Tabangin were injured while Nicolas died. Trial followed.
Petitioners claim that during the reception, respondent’s representatives, Catering The trial court decided in favor of the accused. However, the Court of Appeals
Director Bea Marquez and Sales Manager Tessa Alvarez, did not show up despite their modified the decision of the lower court, in that defendant-appellee is held civilly liable for
assurance that they would; their guests complained of the delay in the service of the his negligent and reckless act of driving his car which was the proximate cause of the
dinner; certain items listed in the published menu were unavailable; the hotel’s waiters vehicular accident and sentenced to indemnify plaintiff-appellants in the amount of P174,
were rude and unapologetic when confronted about the delay; and despite Alvarez’s 400.00 for the death of Ruben Nicolas.
promise that there would be no charge for the extension of the reception beyond 12:00
midnight, they were billed and paid P8,000 per hour for the three-hour extension of the
event up to 4:00 A.M. the next day. They further claim that they brought wine and liquor in Whether or not petitioner’s acquittal did extinguished his civil liability.
accordance with their open bar arrangement, but these were not served to the guests who
were forced to pay for their drinks. RULING:

Petitioners thus sent a letter-complaint to the Makati Shangri-la Hotel and Resort, The court of appeals in determining whether Article 29 of the Civil Code applied was
Inc.and received an apologetic reply from Krister Svensson, the hotel’s Executive Assistant not precluded by the petitioners’ acquittal, from looking into the question of petitioners’
Manager in charge of Food and Beverage. They nevertheless filed a complaint for breach negligence or reckless imprudence. What was elevated to the Court of Appeals by private
of contract and damages before the RTC of Makati City. Respondents averred that it was respondents was the civil aspect of Criminal Case No. 066. Petitioner was not charged anew
the increase in number of the unexpected guests that led to the shortage claimed by the with a second criminal offense identical to the first offense. Therefore, there was no second
petitioners. jeopardy to speak of. The decision in Criminal Case No 066 supports the conclusions of the
appellate court that the acquittal was based on reasonable doubt; hence, the civil liability
The RTC rendered a decision in favor of the plaintiffs and was reversed by the CA, was not extinguished by his discharge. It clearly shows that petitioner’s acquittal was
upon appeal, the latter holding that the proximate cause of petitioners’ injury was an predicated on the conclusion that his guilt had not been established with moral certainty. At
unexpected increase in their guests. the time of the filing of the information in 1983, the implied institution of civil actions with
criminal actions was governed by Rule III, Section 1 of the 1964 Rules of Court. Where the
civil action is impliedly instituted together with the criminal action, the actual damages
Whether or not the CA correctly held that the proximate cause of petitioners’ injury claimed by the offended parties, as in this case, are not included in the computation of the
was an unexpected increase in their guests. filing fees. Filing fees are to be paid only if other items of damages such as moral, nominal,
temperate or exemplary damages are alleged in the complaint or information, or if they are
RULING: not so alleged, shall constitute a first lien on the judgment. The filing fees are deemed paid
The Court finds that since petitioners’ complaint arose from a contract, the doctrine from the filing of the criminal complaint or information.
of proximate cause finds no application to it, the latter applicable only to actions for quasi-
delicts, not in actions involving breach of contract. Breach of contract is defined as the
failure without legal reason to comply with the terms of a contract. It is also defined as the
failure, without legal excuse, to perform any promise which forms the whole or part of the
contract. The appellate court, and even the trial court, observed that petitioners were
remiss in their obligation to inform respondent of the change in the expected number of
guests. The observation is reflected in the records of the case. Petitioners’ failure to
discharge such obligation thus excused respondent from liability for “any damage or
inconvenience” occasioned thereby.
Petitioner Jacinto M. Tanguilig proposed to respondent Vicente Herce Jr. to construct
a windmill system for him. After some negotiations they agreed on the construction of the Petitioner and private respondent executed an order agreement whereby private
windmill for a consideration of P60,000.00. On 14 March 1988, due to the refusal and respondent bound itself to deliver to petitioner 3,450 reams of printing papers under
failure of respondent to pay the balance, petitioner filed a complaint to collect the amount. specified schedule of delivery. As of July 30, 1979, private respondent had delivered to
Respondent denied the claim saying that he had already paid this amount to the San Pedro petitioner 1,097 reams of printing paper out of the total 3,450 reams stated in the
General Merchandising Inc. (SPGMI) which constructed the deep well to which the windmill agreement. Petitioner alleged it wrote private respondent to immediately deliver the
system was to be connected. According to respondent, since the deep well formed part of balance because further delay would greatly prejudice petitioner. From June 5, 1980 and
the system the payment he tendered to SPGMI should be credited to his account by until July 23, 1981, private respondent delivered again to petitioner various quantities of
petitioner. Moreover, assuming that he owed petitioner a balance of P15,000.00, this should printing paper amounting to P766,101.70. However, petitioner encountered difficulties
be offset by the defects in the windmill system which caused the structure to collapse after paying private respondent said amount. Accordingly, private respondent made a formal
a strong wind hit their place. Petitioner denied that the construction of a deep well was demand upon petitioner to settle the outstanding account. Private respondent filed a
included in the agreement to build the windmill system, for the contract price of collection suit against petitioner for the sum of P766,101.70, representing the unpaid
P60,000.00 was solely for the windmill assembly and its installation. He also disowned any purchase price of printing paper bought by petitioner on credit. In its answer, petitioner
obligation to repair or reconstruct the system since its collapse was attributable to a denied the material allegations of the complaint. It alleged that private respondent was
typhoon, a force majeure, which relieved him of any liability. able to deliver only 1,097 reams of printing paper which was short of 2,875 reams, in total
disregard of their agreement; that private respondent failed to deliver the balance of the
ISSUES: printing paper despite demand therefor, hence, petitioner suffered actual damages and
Whether or not the payment for the deep well is part of the contract price. failed to realize expected profits.

Whether or not Tanguilig is liable to reconstruct the damaged windmill considering ISSUE:
that its collapse is due to a typhoon. Whether or not private respondent violated the order agreement.
There is absolutely no mention in the two documents that a deep well pump is a The transaction between the parties is a contract of sale whereby private
component of the proposed windmill system. The contract prices fixed in both proposals respondent (seller) obligates itself to deliver printing paper to petitioner (buyer) which, in
cover only the features specifically described therein and no other. Respondent is directed turn, binds itself to pay its equivalent (price). Both parties concede that the order
to pay petitioner Tanguilig the balance of P15,000 plus legal interest. Regarding the second agreement gives rise to a reciprocal obligation such that the obligation of one is dependent
issue, the Supreme Court has consistently held that in order for a party to claim exemption upon the obligation of the other. Reciprocal obligations are to be performed simultaneously,
from liability by reason of fortuitous event under Art. 1174 of the Civil Code four (4) so that the performance of one is conditioned upon the simultaneous fulfillment of the
requisites must concur: (a) the cause of the breach of the obligation must be independent other. Thus, private respondent undertakes to deliver printing paper of various quantities
of the will of the debtor; (b) the event must be either unforeseeable or unavoidable; (c) the subject to petitioner’s corresponding obligation to pay, on a maximum 90-day credit, for
event must be such as to render it impossible for the debtor to fulfill his obligation in a these materials. Clearly, petitioner did not fulfill its side of the contract as its last payment
normal manner; and, (d) the debtor must be free from any participation in or aggravation of in August 1981 could cover only materials covered by delivery invoices dated September
the injury to the creditor. Petitioner failed to show that the collapse of the windmill was due and October 1980. Thus, private respondent did not violate the order agreement.
solely to a fortuitous event. Petitioner merely stated that there was a "strong wind." But a
strong wind in this case cannot be fortuitous. On the contrary, a strong wind should be
present in places where windmills are constructed. Petitioner is ordered to "reconstruct
subject defective windmill system, in accordance with the one-year guaranty".
MUAJE-TUAZON V. WENPHIL G.R. No. 162447 December 27, 2006 FACTS:
FACTS: Sonny Soriano, while crossing Commonwealth Avenue near Luzon Avenue, was hit by
a speeding Tamaraw FX driven by Lomer Macasasa. Soriano was thrown five meters away,
Petitioners Annabelle M. Tuazon and Almer R. Abing worked as branch managers of while the vehicle stopped some 25 meters from the point of impact. Gerard Villaspin, one of
the Wendy's food chains. In Wendy’s “Biggie Size It! Crew Challenge" promotion contest, Soriano’s companions, asked Macasasa to bring Soriano to the hospital, but the first flee.
branches managed by petitioners won first and second places, respectively. Because of its Respondent’s wife and daughter filed a complaint for damages against Macasasa and
success, respondent had a second run of the contest from April 26 to July 4, 1999. The petitioner Flordeliza Mendoza, the registered owner of the vehicle.
Meycauayan branch won again. The MCU Caloocan branch failed to make it among the
winners. Before the announcement of the third round winners, management received Petitioner Mendoza contends that she was not liable since as owner of the vehicle,
reports that as early as the first round of the contest, the Meycauayan, MCU Caloocan, she had exercised the diligence of a good father of a family over her employee. Macasas.
Tandang Sora and Fairview branches cheated. An internal investigation ensued. Petitioners
The trial court dismissed the complaint against Macasasa and Mendoza. It found
were summoned to the main office regarding the reported anomaly. Petitioners denied
Soriano negligent for crossing not in the pedestrian overpass. The Court of Appeals, on the
there was cheating. Immediately thereafter, petitioners were notified, in writing, of
other hand, reversed the assailed decision of the lower court.
hearings and of their immediate suspension. Thereafter, petitioners were dismissed.
Whether or not petitioner is liable for damages.
Is the respondent guilty of illegal suspension and dismissal in the case at bench?
While the appellate court agreed that Soriano was negligent, it also found Macasasa
There is no denying that petitioners were managerial employees. They executed
negligent for speeding, such that he was unable to avoid hitting the victim. It observed that
management policies, they had the power to hire personnel and assign them tasks; and
Soriano’s own negligence did not preclude recovery for damages from Macasasa’s
discipline the employees in their branch. They recommended actions on employees to the
negligence. It further held that since petitioner failed to present evidenced to the contrary
head office.Article 212 (m) of the Labor Code defines a managerial employee as one who is
and conformably with Article 2180 of the Civil Code, the presumption of negligence of the
vested with powers or prerogatives to lay down and execute management policies and/or
employer in the selection and supervision of employees stood.
hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees.
Consequently, as managerial employees, in the case of petitioners, the mere existence of The records show that Macasasa violated two traffic rules under the Land
grounds for the loss of trust and confidence justify their dismissal. Pursuant to our ruling in Transportation and Office Code. Under Article 2185 of the Civil Code, a person driving a
Caoile v. National Labor Relations Commission, as long as the employer has a reasonable motor vehicle is presumed negligent if at the time of the mishap, he was violating traffic
ground to believe that the managerial employee concerned is responsible for the purported regulations.
misconduct, or the nature of his participation renders him unworthy of the trust and
confidence demanded by his position, the managerial employee can be dismissed. Further, under Article 2180, employers are liable for the damages caused by their
employees acting within the scope of their assigned tasks. The liability arises due to the
In the present case, the tape receipts presented by respondents showed that there presumed negligence of the employers in supervising their employees unless they prove
were anomalies committed in the branches managed by the petitioners. On the principle of that they observed all the diligence of a good father of a family to prevent the damage. In
respondeat superior or command responsibility alone, petitioners may be held liable for this case petitioner is held primarily and solidarily liable for the damages caused by
negligence in the performance of their managerial duties, unless petitioners can positively Macasasa.
show that they were not involved. Their position requires a high degree of responsibility
that necessarily includes unearthing of fraudulent and irregular activities. Their bare, However, Article 2179 states that “when the plaintiff’s own negligence was the
unsubstantiated and uncorroborated denial of any participation in the cheating does not immediate and proximate cause of his injury, he cannot recover damages. But if his
prove their innocence nor disprove their alleged guilt. Additionally, some employees negligence was only contributory, the immediate and proximate cause of the injury being
declared in their affidavits that the cheating was actually the idea of the petitioners. the defendant’s lack of due care, the plaintiff may recover damages, but the court shall
mitigate the damages awarded.
Ruling that Soriano was guilty of contributory negligence for not using the
pedestrian overpass, 20% reduction of the amount of the damages awarded was awarded
to petitioner.

MENDOZA VS. SORIANO G.R. No. 164012 June 8, 2007

REYES v CA G.R. No. 130547 October 3, 2000 CO V. CA G.R. No. 112330 August 17, 1999


Reyes had been suffering from a recurring fever with chills. He was taken to the On October 9, 1984, the spouses Co entered into a verbal contract with Custodio for her
purchase of the house and lot worth $100,000.00. One week thereafter, and shortly before she left for
Mercy Community Clinic. He was attended to by Dr. Rico, who gave physical examination
the United States she paid amounts of $1,000.00 and P40,000.00 as earnest money, in order that the
and took his medical history. Typhoid fever was then prevalent in the locality, as the clinic same may be reserved for her purchase, said earnest money to be deducted from the total purchase
had been getting from 15 to 20 cases of typhoid per month. Suspecting typhoid fever, Dr. price. The purchase price of $100,000.00 is payable in two payments $40,000.00 on December 4, 1984
Rico ordered a Widal Testto be performed on Jorge. Dr. Rico concluded from the results that and the balance of $60,000.00 on January 5, 1985. On January 25, 1985, although the period of
patient was suffering from typhoid fever. As her shift was only up to 5:00 p.m., Dr. Rico payment had already expired, she paid to the defendant Melody Co in the United States, the sum of
indorsed Jorge to respondent Dr. Blanes. Dr. Blanes attended to Jorge. Like Dr. Rico, her $30,000.00, as partial payment of the purchase price. Spouses Co‗s counsel, Atty. Leopoldo Cotaco,
impression was typhoid fever. She ordered that a compatibility test with the antibiotic wrote a letter to the plaintiff dated March 15, 1985, demanding that she pay the balance of $70,000.00
chloromycetin be done on Jorge. As she did not observe any adverse reaction,she ordered and not receiving any response thereto, said lawyer wrote another letter to plaintiff dated August 8,
1986, informing her that she has lost her option to purchase the property subject of this case and
the first five hundred milligrams and second dose at about three hours later.At around 1:00 offered to sell her another property. Atty. Estrella O. Laysa, counsel of Custodio, wrote a letter to Atty.
a.m., Dr. Blanes was called as Jorge‗s temperature rose to 41°C. Dr. Blanes put him under Leopoldo Cotaco informing him that Custodio is now ready to pay the remaining balance to complete
oxygenand administered hydrocortisone but his convulsions returned. Dr. Blanes re-applied the sum of $100,000.00, the agreed amount as selling price‗ and on October 24, 1986, plaintiff filed
the emergency measures and valium was administered. Jorge, however, did not respond to the instant complaint. The trial court ruled in favor of Custodio and ordered the spouses Co to
the treatment and slipped into cyanosis. At around 2:00 a.m., Jorge died. The cause of his refund the amount of $30,000.00. Not satisfied with the decision, the spouses Co appealed to the
death was Ventricular Arrythemia Secondary to Hyperpyrexia and typhoid fever. Court of Appeals, which affirmed the decision of the RTC. Hence, this appeal.


Whether or not defendants exercised the required diligence in medical practice Whether or not the Court of Appeals erred in ordering the Cos to return the $30,000.00 paid by
Custodio pursuant to the ―option granted to her.
While it is true that the patient died just a few hours after professional medical An option is a contract granting a privilege to buy or sell within an agreed time and at a
assistance was rendered, there is really nothing unusual or extraordinary about his death. determined price. It is a separate and distinct contract from that which the parties may enter into upon
Prior to his admission, the patient already had recurring fevers and chills for five days the consummation of the option. It must be supported by consideration. However, the March 15, 1985
unrelieved by the analgesic, antipyretic, and antibiotics given to him by his wife. This shows letter sent by the COS through their lawyer to Custodio reveals that the parties entered into a
that he had been suffering from a serious illness and professional medical help came too perfected contract of sale and not an option contract.
late for him. Petitioners contend that Dr. Marlyn Rico hastily relied upon the Widal Test A contract of sale is a consensual contract and is perfected at the moment there is a meeting
diagnosed Jorges illness as typhoid fever, and immediately prescribed the administration of of the minds upon the thing which is the object of the contract and upon the price. From that moment
the antibiotic chloromycetin and Dr. Marvie Blanes erred in ordering the administration of the parties may reciprocally demand performance subject to the provisions of the law governing the
the second dose of 500 milligrams of chloromycetin barely three hours after the first was form of contracts
given. Petitioners presented the testimony of Dr. Apolinar Vacalares, Chief Pathologist of the The elements of a valid contract of sale under Article 1458 of the Civil Code are (1) consent or
Northern Mindanao Training Hospital, Cagayan de Oro City, who performed an autopsy on meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent.
the body of Jorge Reyes. Dr. Vacalares testified that, based on his findings during the As evidenced by the March 15, 1985 letter, all three elements of a contract of sale are present in the
autopsy, Jorge Reyes did not die of typhoid fever but of shock undetermined, which could transaction between the petitioners and respondent. Custodio‗s offer to purchase the Beata property,
be due to allergic reaction or chloromycetin overdose. This was, however, found to be subject of the sale at a price of $100,000.00 was accepted by the Cos. Even the manner of payment of
untenable by the Supreme Court since Dr. Vacalares, who was presented by the petitioners, the price was set forth in the letter. Earnest money in the amounts of US$1,000.00 and P40,000.00 was
is not a specialist on infectious diseases and even admitted that he had not yet performed already received by the Cos. Under Article 1482 of the Civil Code, earnest money given in a sale
transaction is considered part of the purchase price and proof of the perfection of the sale.
an autopsy on the body of a typhoid victim. On the other hand, the expert witnesses
presented by the respondents vouched for the correctness of Dr. Rico‘s diagnosis. Further, Despite the fact that Custodio’s failure to pay the amounts of US$40,000.00 and US$60,000.00
as held by the Court of Appeals, even if the deceased suffered from an anaphylactic shock, on or before December 4, 1984 and January 5, 1985 respectively was a breach of her obligation under
this, of itself, would not yet establish the negligence of the appellee-physicians for all that Article 1191 of the Civil Code, the Co’s did not sue for either specific performance or rescission of the
the law requires of them is that they perform the standard tests and perform standard contract. The Co’s were of the mistaken belief that Custodio had lost her ―option over the Beata
property when she failed to pay the remaining balance of $70,000.00 pursuant to their August 8, 1986
procedures. The law cannot require them to predict every possible reaction to all drugs
letter. In the absence of an express stipulation authorizing the sellers to extrajudicially rescind the
administered. The onus probandi was on the appellants to establish, before the trial court, contract of sale, the Cos cannot unilaterally and extrajudicially rescind the contract of sale.
that the appellee-physicians ignored standard medical procedure, prescribed and
administered medication with recklessness and exhibited an absence of the competence
and skills expected of general practitioners similarly situated.
ONG YONG V. DAVID S. TIU G.R. No. 144476 accordance with the Agreement is needed.
February 1, 2002
Masagana Citimall was owned and managed by the First Landlink Asia Development
Corporation (FLADC). FLADC was fully owned by the Tiu Group. In order to recover from
floundering finances, the Tiu group entered into a Pre-Subscription Agreement with the Ong
group wherein both parties agreed to maintain equal shareholdings in FLADC the Ongs
investing cash, while the Tiu’s contributing property. The Ongs gave P100M as payment of
their 1 Million subscription shares at a par value of 1 peso per share. Intraland Resources TAN V. OMC CARRIERS G.R. No. 190521 January 12, 2011
and Development Corporation executed a requisite Deed of Assignment over a building it
owned in favor of FLADC and was duly credited with 200,000 shares in FLADC. Masagana FACTS:
Telamart transferred titles of 2 properties in favor of FLADC. The Ongs had to pay P70M Respondent OMC Carriers owned a truck, driven by respondent Arambala, which crashed
more, aside from their P100M subscription payment in order to settle the P190M loan of into the home of petitioners Tan when its braking mechanism failed. This caused the death
FLADC from PNB. The Tius also had to advance P20M, which amount was loaned to them by of the head of the family, Celedonio Tan. The Tans went to court to demand damages due to
the Ongs. The Tius rescinded the Pre- Subscription Agreement when the Ongs refused to the negligence of OMC. OMC counters that the truck went out of control because of motor
credit the FLADC shares in the name of Masagana Telamart commensurate to its 1, 902.30 oil spilled on the road. The RTC found OMC to be liable, that the brake of the truck
sq. meter contribution and to credit the number of FLADC shares in favor of the Tius malfunctioned, and that there was no motor oil which caused the accident. The driver,
commensurate to its 151 sq. meter property contribution; and when David Tius and Cely Aramballa, abandoned the truck when the brakes did not work which caused the truck to
Tiu were proscribed from assuming and performing their duties as V-P and Treasurer. SEC slam into the home of the Tans. The RTC awarded actual damages, both on the loss of
confirmed the unilateral rescission of the agreement. property and earning capacity of Celedonio. Exemplary damages were also awarded. Upon
ISSUE: appeal to the Court of Appeals, the actual damages for loss of property was reduced as
they were insufficiently substantiated. The damages for loss of earning capacity was
Whether the rescission applies only to reciprocal obligations and the Pre- deleted for being totally unsubstantiated. The Tans were unable to present documents to
Subscription agreement does not provide for reciprocity. ascertain the amount of earning capacity lost. Exemplary damages were also reduced.
In a contract of sale, the correlative duty of the obligation of the seller to deliver the Whether or not: a) the reduction of actual damages for loss of property was proper;
property is the obligation of the buyer to pay the agreed price. In the case, the correlative b)the removal of actual damages for loss of earning capacity was proper; and c) whether or
obligation of the Tius to let the Ongs have and exercise the functions of the positions of not the reduction of exemplary damages was proper.
President and Secretary is the obligation of the Ongs to let the Tius have and exercise the
functions of Vice- President and Treasurer. Petitioners keep on harping for the Pre- RULING:
Subscription Agreement’s specific performance yet they also actually failed to give a legal The petition is partly meritorious. Temperate damages are awarded when the exact
basis therefor. They deny that the Tiu Group has a right to ask for rescission of their amount of damages is unknown. The petitioners clearly suffered damages. Their home and
agreement per Article 1191 of the Civil Code when they themselves invoke the same law as property were damaged. The provider of the family passed away. It is clear and undisputed
basis for asking the specific performance of the same agreement. The CA then correctly that they did suffer losses. However, since the value of the properties damaged could not
confirmed the rescission of the Pre-Subscription Agreement on the basis of Article 1191 of be determined with certainty because of the nature of the property, temperate damages
the Civil Code. As a legal consequence of rescission, the order of the CA to return the cash are in order. Also, even if there are no documents supporting the earning capacity of the
and property contribution of the parties is based on law, hence, cannot be considered an deceased, the damage caused is still undisputed. Temperate damages must be awarded.
act of misappropriation. In order for the rescission of the Pre-Subscription Agreement be The reduction of exemplary damages is proper as exemplary damages are not meant to
implemented, the returning to the two groups whatever they delivered to the corporation in enrich or reduce another party to poverty.
YOBIDO V. CA G.R. No. 113003 October 17, of carriage results in the death of a passenger, as in this case. Exemplary damages,
1997 awarded by way of example or correction for the public good when moral damages are
awarded, may likewise be recovered in contractual obligations if the defendant acted in
FACTS: wanton, fraudulent, reckless, oppressive, or malevolent manner. Because petitioners failed
On April 26, 1988, spouses Tito and Leny Tumboy and their minor children named to exercise the extraordinary diligence required of a common carrier, which resulted in the
Ardee and Jasmin, boarded at Mangagoy, Surigao del Sur, a Yobido Liner bus bound for death of Tito Tumboy, it is deemed to have acted recklessly. As such, private respondents
Davao City. Along Picop Road in Km. 17, Sta. Maria, Agusan del Sur, the left front tire of the shall be entitled to exemplary damages.
bus exploded. The bus fell into a ravine around three (3) feet from the road and struck a
tree. The incident resulted in the death of 28-year-old Tito Tumboy, and physical injuries to
other passengers. On November 21, 1988, a complaint for breach of contract of carriage,
damages and attorney's fees was filed by Leny and her children against Alberta Yobido, the
INSULAR LIFE V. ROBERT YOUNG G.R. No. 140964 January 16, 2002
owner of the bus, and Cresencio Yobido, its driver, before the Regional Trial Court of Davao
City. The plaintiffs asserted that violation of the contract of carriage between them and the FACTS:
defendants was brought about by the driver's failure to exercise the diligence required of
the carrier in transporting passengers safely to their place of destination. On the other Respondent, together with his associates and co-respondents, acquired by purchase
hand, the defendants raised the affirmative defense of caso fortuito. Home Bankers Savings and Trust Co., now petitioner Insular Savings Bank, from the Licaros
family. Young and his group obtained 55% equity in the Bank, while Jorge Go and his group
ISSUE: owned the remaining 45%. Subsequently, the Bank granted respondents and others
individual loans, secured by promissory notes. After, a stockholder of the bank signified his
Whether or not petitioners should be exempt from liability because the tire blowout
intention to purchase 99.82% of its outstanding capital stock, subject to the condition that
was a fortuitous event.
the ownership of all the shares will be consolidated in Young's name, he also paid Young a
RULING: downpayment. In order to carry out the intended sale, Young bought from Jorge Go and his
group their 45% equity in the Bank. In order to pay this amount, Young obtained a short-
As a rule, when a passenger boards a common carrier, he takes the risks incidental term loan from Interbank. However, the stockholder backed out from the intended sale and
to the mode of travel he has taken. After all, a carrier is not an insurer of the safety of its demanded the return of his downpayment. Meanwhile, Young's loan from Interbank became
passengers and is not bound absolutely and at all events to carry them safely and without due, causing his serious financial problem. It was to the end that Insular Life and Young
injury. However, when a passenger is injured or dies, while traveling, the law presumes that MOA, wherein Insular Life and its Pension Fund agreed to purchase the common shares,
the common carrier is negligent. Thus, the Civil Code provides under Article 1755 that a subject to certain condition precedents. A due diligence audit was then done on the bank,
common carrier is bound to carry the passengers safely as far as human care and foresight pursuant to said MOA, where it was found that Young committed misrepresentations against
can provide, using the utmost diligence of very cautious persons, with a due regard for all the terms and conditions of said MOA.
the circumstances. Accordingly, in culpa contractual, once a passenger dies or is injured,
the carrier is presumed to have been at fault or to have acted negligently. This disputable ISSUE:
presumption may only be overcome by evidence that the carrier had observed
Whether the MOA is valid and enforceable between the parties despite respondent
extraordinary diligence as prescribed by Articles 1733, 10 1755 and 1756 of the Civil Code
Young's failure to comply with the terms and conditions thereof.
or that the death or injury of the passenger was due to a fortuitous event. Consequently,
the court need not make an express finding of fault or negligence on the part of the carrier RULING:
to hold it responsible for damages sought by the passenger.
The provisions of the MOA negate the existence of a perfected contract of sale. The
The petitioners' contention that they should be exempt from liability because the tire MOA is merely a contract to sell since the parties therein specifically undertook to enter
blowout was no more than a fortuitous event that could not have been foreseen, must fail. into a contract of sale if the stipulated conditions are met and the representation and
Under the circumstances of this case, the explosion of the new tire may not be considered warranties given by Young prove to be true. The obligation of petitioner Insular Life to
a fortuitous event. There are human factors involved in the situation. The fact that the tire purchase, as well as the concomitant obligation of Young to convey to it the shares, are
was new did not imply that it was entirely free from manufacturing defects or that it was subject to the fulfillment of the conditions contained in the MOA. Once the conditions,
properly mounted on the vehicle. Neither may the fact that the tire bought and used in the representation and warranties are satisfied, then it is incumbent upon the parties to
vehicle is of a brand name noted for quality, resulting in the conclusion that it could not perform their respective obligations under the contract. Conversely, in the event that these
explode within five days' use. It is settled that an accident caused either by defects in the conditions are not met or complied with, no obligation on the part of either party arises.
automobile or through the negligence of its driver is not a caso fortuito that would exempt
the carrier from liability for damages.
Moral damages are generally not recoverable in culpa contractual except when bad faith JESPAJO REALTY CORP V. CA G.R. No. 113626 September 27, 2002
had been proven. However, the same damages may be recovered when breach of contract
Petitioner executed a contract of lease with herein respondents Tan Te and Co Tong. The action was commenced in the CFI for the purpose of recovering an amount due
Pursuant to the said contract, Tan Te occupied rm. no. 217 of the said building at a monthly on the policy of insurance issued by the defendant to the plaintiff. On the same day a copy
rate of P814 while Tong occupied the penthouse at a monthly rate of P917. The contract of of the complaint was served upon the defendant, through its duly authorized
lease explicitly stipulated that the lessees may occupy the said premises as long as that representative. Although the defendants mailed their notice appeal, the court entered a
payment for monthly rental is updated. The lessees may terminate the contract anytime judgment by default be rendered against the defendant. The latter contended that the said
provided that they give a 60 day prior written notice. The lessor may terminate the contract notice of appearance was mailed, and that the steamship Vizcaya, carrying mails, including
anytime should the lessees commit any violation of the terms of agreement. For 5 years, the letter containing the notice of appearance, did not arrive in the usual course until after
the lessees were able to pay petitioner-corporation religiously. However, as of Jan. 1990, the time had expired for filing its appearance due to the fact that said ship encountered a
the petitioner sent them a letter asking for an increase in the monthly rent. In reply to the storm at sea. The same was denied.
said proposal, the respondents through their counsel, sent a letter of opposition to the said
proposal. Due to the opposition, the petitioner- corporation, filed an ejectment case against
the respondents. Respondents gave extra efforts to pay the petitioner according to the Whether or not the judgment by default rendered by the lower court should be set
original price agreed in the contract. However, it refused. aside and annulled?
Whether the stipulation in the contract shall subsist for an indefinite period provided the It has been frequently decided that, if pleadings or other papers essential to a case
lessee is up-to-date in the payment of his monthly rentals? are entrusted to the mails in due season and under proper precaution and are lost or
miscarried, it will be ground for vacating a judgment by default. A delay of mail, such as
occurred in the present case, in our opinion amounts to accident or surprise for which
The lease contract between petitioner and respondents is with a period subject to a judgments by default may be set aside, especially when the defendant shows by affidavit
resolutory condition. The wording of the agreement is unequivocal: The lease period xxx or otherwise that he has a valid and meritorious defense. The time fixed for filing papers in
shall continue for an indefinite period provided the lessee is up-to-date in the payment of a cause is generally directory and the court always has it in its power, in the exercise of a
his monthly rentals. The condition imposed in order that the contract shall remain effective proper discretion, to extend the time fixed by law whenever the ends of justice would seem
is that the lessee is up-to-date in his monthly payments. The agreement between the lessor to demand such an extension.
and the lessees are therefore still subsisting, with the original terms and conditions agreed
upon, when the petitioner unilaterally increased the rental payment to more than 20% or
P3,500.00 a month.
The contention of the petitioner that a provision in a contract that the lease period
shall subsist for an indefinite period provided the lessee is up-to-date in the payment of his
monthly rentals is contrary to Art. 1308 of the Civil Code is not plausible. The fact that such
option is binding only on the lessor and can be exercised only by the lessee does not render
it void for lack of mutuality. After all, the lessor is free to give or not to give the option to
the lessee. And while the lessee has a right to elect whether to continue with the lease or
not, once he exercises his option to continue and the lessor accepts, both parties are
thereafter bound by the new lease agreement. Their rights and obligations become
mutually fixed, and the lessee is entitled to retain possession of the property for the
duration of the new lease, and the lessor may hold him liable for the rent therefor. The
lessee cannot thereafter escape liability even if he should subsequently decide to abandon
the premises. Mutuality obtains in such a contract and equality exists between the lessor
and the lessee since they remain with the same faculties in respect to fulfillment.

ONG GUAN V. CENTURY INSURANCE G.R. No. L-21196 February 6, 1924

QUEENSLAND-TOKYO V. THOMAS GEORGE G.R. No. 172727 September 8, 2010
FACTS: TAN V. COURT OF APPEALS G.R. No. 116285 October 19, 2001

QTCI is a duly licensed broker engaged in the trading of commodity futures. In 1995, FACTS:
Guillermo Mendoza, Jr. (Mendoza) and Oniler Lontoc (Lontoc) of QTCI met with respondent On May 14, 1978 and July 6, 1978, petitioner Antonio Tan obtained two (2) loans each in the
Thomas George (respondent), encouraging the latter to invest with QTCI. On July 7, 1995, principal amount of Two Million Pesos (P2,000,000.00), or in the total principal amount of Four Million
upon Mendoza's prodding, respondent finally invested with QTCI. On the same day, Collado, Pesos (P4,000,000.00) from respondent Cultural Center of the Philippines (CCP, for brevity) evidenced
in behalf of QTCI, and respondent signed the Customer's Agreement. Forming part of the by two (2) promissory notes with maturity dates on May 14, 1979 and July 6, 1979, respectively.
agreement was the Special Power of Attorney executed by respondent, appointing Mendoza Petitioner defaulted but after a few partial payments he had the loans restructured by respondent CCP,
as his attorney-infact with full authority to trade and manage his account. On June 20, and petitioner accordingly executed a promissory note (Exhibit A) on August 31, 1979 in the amount of
Three Million Four Hundred Eleven Thousand Four Hundred Twenty-One Pesos and Thirty-Two Centavos
1996, the Securities and Exchange Commission (SEC) issued a CeaseandDesist Order
(P3,411,421.32) payable in five (5) installments. Petitioner Tan failed to pay any installment on the said
against QTCI. Alarmed by the issuance of the CDO, respondent demanded from QTCI the restructured loan of Three Million Four Hundred Eleven Thousand Four Hundred Twenty-One Pesos and
return of his investment, but it was not heeded. QTCI claimed that they were not aware of, Thirty-Two Centavos (P3,411,421.32), the last installment falling due on December 31, 1980. In a letter
nor were they privy to, any arrangement which resulted in the account of respondent being dated January 26, 1982, petitioner requested and proposed to respondent CCP a mode of paying the
handled by unlicensed brokers. They pointed out that respondent transacted business with restructured loan, i.e., (a) twenty percent (20%) of the principal amount of the loan upon the
QTCI for almost a year, without questioning the license or the authority of the traders respondent giving its conformity to his proposal; and (b) the balance on the principal obligation
handling his account, rendering him estopped. It was only after it became apparent that payable in thirty-six (36) equal monthly installments until fully paid. On October 20, 1983, petitioner
QTCI could no longer resume its business transactions by reason of the CDO that again sent a letter to respondent CCP requesting for a moratorium on his loan obligation until the
following year allegedly due to a substantial deduction in the volume of his business and on account of
respondent raised the alleged lack of authority of the brokers or traders handling his the peso devaluation. No favorable response was made to said letters. Instead, respondent CCP,
account. through counsel, wrote a letter dated May 30, 1984 to the petitioner demanding full payment, within
ISSUE: ten (10) days from receipt of said letter, of the petitioners restructured loan which as of April 30, 1984
amounted to Six Million EightyEight Thousand Seven Hundred Thirty- Five Pesos and Three Centavos
Whether or not QTCI should be held liable for the loss incurred by George in the (P6,088,735.03).
investment he made with the corporation. ISSUE:
RULING: Whether or not interest may accrue on the penalty or compensatory interest without violating
the provisions of Article 1959 of the New Civil Code.
It recognized Mendoza and Collado as its brokers. Petitioners did not object to, and in
fact recognized, Mendoza's appointment as respondent's attorney-in-fact. Collado, in behalf RULING:
of QTCI, concluded the Customer's Agreement despite the fact that the appointed attorney- Penalty clauses can be in the form of penalty or compensatory interest. Thus, the compounding
in-fact was not a licensed dealer. Worse, petitioners permitted Mendoza to handle of the penalty or compensatory interest is sanctioned by and allowed pursuant to the above-quoted
respondent's account. Doctrine dictates that a corporation is invested by law with a provision of Article 1959 of the New Civil Code.
personality separate and distinct from those of the persons composing it, such that, save
for certain exceptions, corporate officers who entered into contracts in behalf of the There appears to be a justification for a reduction of the penalty charge but not necessarily to
ten percent (10%) of the unpaid balance of the loan as suggested by petitioner. Inasmuch as petitioner
corporation cannot be held personally liable for the liabilities of the latter. Personal liability has made partial payments which showed his good faith, a reduction of the penalty charge from two
of a corporate director, trustee, or officer, along (although not necessarily) with the percent (2%) per month on the total amount due, compounded monthly, until paid can indeed be
corporation, may validly attach, as a rule, only when - (1) he assents to a patently unlawful justified under the said provision of Article 1229 of the New Civil Code.
act of the corporation, or when he is guilty of bad faith or gross negligence in directing its
affairs, or when there is a conflict of interest resulting in damages to the corporation, its Considering petitioners several partial payments and the fact he is liable under the note for the
two percent (2%) penalty charge per month on the total amount due, compounded monthly, for
stockholders, or other persons; (2) he consents to the issuance of watered down stocks or twenty-one (21) years since his default in 1980, we find it fair and equitable to reduce the penalty
who, having knowledge thereof, does not forthwith file with the corporate secretary his charge to a straight twelve percent (12%) per annum on the total amount due starting August 28,
written objection thereto; (3) he agrees to hold himself personally and solidarily liable with 1986, the date of the last Statement of Account (Exhibits C to C-2). We also took into consideration the
the corporation; or (4) he is made by a specific provision of law personally answerable for offers of the petitioner to enter into a compromise for the settlement of his debt by presenting
his corporate action. proposed payment schemes to respondent CCP. The said offers at compromise also showed his good
faith despite difficulty in complying with his loan obligation due to his financial problems. However, we
Romeo Lau, as president of [petitioner] QTCI, cannot feign innocence on the are not unmindful of the respondents long overdue deprivation of the use of its money collectible from
existence of these unlawful activities within the company, especially so that Collado, the petitioner.
himself a ranking officer of QTCI, is involved in the unlawful execution of customers’ orders.
It is our view, however, that the running of the interest and surcharge was not suspended by
the private respondents promise to assist the petitioners in applying for relief therefrom through the
Commission on Audit and the Office of the President. The penalty charge of two percent (2%) per
month on the total amount due, compounded monthly, is hereby reduced to a straight twelve percent computed from December 3, 1993 to August 3, 1994) which was tendered but refused by
(12%) per annum starting from August 28, 1986. With costs against the petitioner. respondent, and thereafter consigned with the court, was enough to satisfy the obligation.
PABUGAIS V. SAHIJWANI G.R. No. 156846 There being a valid tender of payment in an amount sufficient to extinguish the obligation,
February 23, 2004 the consignation is valid.

Pursuant to an Agreement And Undertaking dated December 3, 1993, petitioner C.F. SHARP V. NORTHWEST AIRLINES G.R. No. 133498; April 18, 2002
Teddy G. Pabugais, in consideration of the amount of Fifteen Million Four Hundred Eighty FACTS:
Seven Thousand Five Hundred Pesos (P15,487,500.00), agreed to sell to respondent Dave P.
Sahijwani a lot containing 1,239 square meters located at Jacaranda Street, North Forbes On May 9, 1974, respondent, through its Japan Branch, entered an International
Park, Makati, Metro Manila. Respondent paid petitioner the amount of P600,000.00 as Passenger Sales Agency Agreement with petitioner, authorizing the latter to sell its air
option/reservation fee and the balance of P14,887,500.00 to be paid within 60 days from transport tickets. Petitioner, however, failed to remit the proceeds of the ticket sales, for
the execution of the contract, simultaneous with delivery of the owners duplicate Transfer which reason the respondent filed a collection suit against petitioner before the Tokyo
Certificate of Title in respondents name the Deed of Absolute Sale; the Certificate of NonTax District Court. The said court ordered petitioner to pay respondent including damages for
Delinquency on real estate taxes and Clearance on Payment of Association Dues. The the delay. Unable to execute the decision in Japan, respondent filed a case to enforce said
parties further agreed that failure on the part of respondent to pay the balance of the judgment with the regional trial court of Manila, which dismissed the case. This was
purchase price entitles petitioner to forfeit the P600,000.00 option/reservation fee; while affirmed by the Court of Appeals, and was subsequently partly affirmed by the Supreme
non-delivery by the latter of the necessary documents obliges him to return to respondent Court. CF Sharp was then ordered to pay Northwest so that the RTC issued a writ of
the said option/reservation fee with interest at 18% per annum. execution of decision ruling that Sharp is to pay Northwest the sum of 83,158,195 yen at
the exchange rate prevailing on the date of the foreign judgment plus 6% per annum until
Petitioner failed to deliver the required documents. In compliance with their fully paid, 6% damages and 6% interest. An appeal, the Court of Appeals reduced the
agreement, he returned to respondent the latters P600,000.00 option/reservation fee by interest and it ruled that the basis of the conversion of petitioner’s liability in its peso
way of Far East Bank & Trust Company Check No. 25AO54252P, which was, however, equivalent should be the prevailing rate at the time of payment and not the rate on the
dishonored. Petitioner claimed that he twice tendered to respondent, through his counsel, date of the foreign judgment.
the amount of P672,900.00 in the form of Far East Bank & Trust Company Managers Check
No. 088498, dated August 3, 1994, but said counsel refused to accept the same. His first ISSUE:
attempt to tender payment was allegedly made on August 3, 1994 through his messenger; Whether or not the basis for the payment of the amount due is the value of the
while the second one was on August 8, 1994, when he sent via DHL Worldwide Services, currency at the time of the establishment of the obligation.
the managers check attached to a letter dated August 5, 1994. On August 11, 1994,
petitioner wrote a letter to respondent saying that he is consigning the amount tendered RULING:
with the Regional Trial Court of Makati City. On August 15, 1994, petitioner filed a complaint
The rule that the value of currency at the time of the establishment of the obligation
for consignation.
shall be the basis of payment finds application only when there is an official
ISSUE: pronouncement or declaration of the existence of an extraordinary inflation or deflation.
Hence, petitioners contention that Article 1250 of the Civil Code which provides that in case
Whether or not there was valid consignation. of an extra ordinary inflation or deflation of the currency stipulated should supervene, the
RULING: value of the currency at the time of establishment of the obligation shall be the basis of
payment, unless there is an agreement to the contrary. In addition, under RA 529,
Anent the sufficiency of the amount tendered, it appears that only the interest of stipulations on the satisfaction of obligations in foreign currency are void. Payments of
18% per annum on the P600,000.00 option/reservation fee stated in the default clause of monetary obligations, subject to certain exceptions, shall be discharged in the currency,
the Agreement And Undertaking was agreed upon by the parties, thus, DEFAULT In case the which is the legal tender of the Philippines. But since the law doesn’t provide for the rate of
FIRST PARTY [herein respondent] fails to pay the balance of the purchase price within the exchange for the payment of foreign currency obligations incurred after its enactment,
stipulated due date, the sum of P600,000.00 shall be deemed forfeited, on the other hand, jurisprudence held that the exchange rate should be the prevailing rate at time of payment.
should the SECOND PARTY [herein petitioner] fail to deliver within the stipulated period This law has been amended, allowing payments for obligations to be made in currency
the documents hereby undertaken, the SECOND PARTY shall return the sum of P600,000.00 other than Philippine currency but then again, it failed to state what the exchange rate that
with interest at 18% per annum. The managers check in the amount of P672,900.00 should be used. This being the case the jurisprudence regarding the use of the exchange
(representing the P600,000.00 option/reservation fee plus 18% interest per annum rate at time of payment shall be used.
June 17, 1999
From the position paper and affidavit corroborated by oral testimony, it appears that established with clear and convincing evidence. Private respondent predicated his claim for
complainant was employed by respondent Audion Electric Company on June 30, 1976 as such damages on his own allegations of sleepless nights and mental anguish, without
fabricator and continuously rendered service assigned in different offices or projects as establishing bad faith, fraud or ill motive as legal basis therefor. Private respondent not
helper electrician, stockman and timekeeper. He has rendered thirteen (13) years of being entitled to award of moral damages, an award of exemplary damages is likewise
continuous, loyal and dedicated service with a clean record. On August 3, complainant was baseless. Where the award of moral and exemplary damages is eliminated, so must the
surprised to receive a letter informing him that he will be considered terminated after the award for attorney‘s fees be deleted. Private respondent has not shown that he is entitled
turnover of materials, including respondents‘ tools and equipment not later than August 15, thereto pursuant to Art. 2208 of the Civil Code.
1989. Complainant claims that he was dismissed without justifiable cause and due process
and that his dismissal was done in bad faith which renders the dismissal illegal. For this
reason, he claims that he is entitled to reinstatement with full back wages. He also claims
that he is entitled to moral and exemplary damages. He includes payment of his overtime
pay, project allowance, minimum wage increase adjustment, proportionate 13th month pay BENOS V. LAWILAO G.R. No. 172259 December 5, 2006
and attorney‘s fees. FACTS:
ISSUE: On February 11, 1999, petitioner-spouses Benos and respondent Lawilao executed a
Whether or not petitioner was denied due process when all the money claims of Pacto de Retro Sale where Benos sold their lot and the building erected thereon for
private respondent - overtime pay, project allowances, salary differential, proportionate P300,000, one-half of which to be paid in cash to the Benos and the other half to be paid to
13th month pay, moral and exemplary damages as well as attorney‘s fees, were granted. the bank to pay off the loans of the Benos which was secured by the same lot and building.
Under the contract, Benos could redeem the property within 18 months from the date of
RULING: execution by returning the contract price, otherwise, the sale would become irrevocable.
After paying the P150,000, Lawilao took possession of the property, restructured it twicw,
Respondent‘s assigning complainant to its various projects did not make
eventually the loan become due and demandable. On August 14, 2000, a son of Benos and
complainant a project worker. As found by the Labor Arbiter, it appears that complainant
Lawilao paid the bankl but the bank refused. Lawilao filed for consignation against the bank
was employed by respondent as fabricator and or projects as helper electrician, stockman
and deposited the amount of P159,000.00. RTC declared Lawilao of the ownership of the
and timekeeper. Simply put, complainant was a regular non-project worker. Private
subject property, which was affirmed by the Court of Appeals.
respondent clearly specified in his affidavit the specific dates in which he was not paid
overtime pay, that is, from the period March 16, 1989 to April 3, 1989 amounting to ISSUE:
P765.63, project allowance from April 16, 1989 to July 31, 1989 in the total amount of
P255.00, wage adjustment for the period from August 1, 1989 to August 14, 1989 in the Whether or not the contract of Pacto de Retro Sale may be rescinded by the
amount of P256.50 and the proportionate 13th month pay for the period covering January petitioner.
to May 1988, November-December 1988, and from January to August 1989. This same RULING:
affidavit was confirmed by private respondent in one of the scheduled hearings where he
moved that he be allowed to present his evidence ex-parte for failure of petitioner or any of In the instant case, records show that Lawilao filed the petition for consignation
his representative to appear thereat. On the other hand, petitioner submitted its unverified against the bank in Civil Case without notifying the Benos. Hence, Lawilao failed to prove
Comment to private respondent‘s complaint stating that he had already satisfied the their offer to pay the balance, even before the filing of the consignation case. Lawilao never
unpaid wages and 13th month pay claimed by private respondent, but this was not notified the Benos. Thus, as far as the Benos are concerned, there was no full and complete
considered by the Labor Arbiter for being unverified. Petitioner failed to rebut the claims of payment of the contract price which gives them the right to rescind.
private respondent. It failed to show proof by means of payroll or other evidence to Petition is granted. Court of Appeals decision is reversed and set aside, that the
disprove the claim of private respondent. Petitioner was given the opportunity to cross- Pacto de Retro Sale is rescinded and petitioner are ordered to return the amount of
examine private respondent yet petitioner forfeited such chance when it did not attend the P150,000 to respondents.
hearing, and failed to rebut the claims of private respondent. However, the award of moral
and exemplary damages must be deleted for being devoid of legal basis. Moral and
exemplary damages are recoverable only where the dismissal of an employee was
attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a
manner contrary to morals, good customs or public policy. The person claiming moral
damages must prove the existence of bad faith by clear and convincing evidence for the
law always presumes good faith. It is not enough that one merely suffered sleepless nights,
mental anguish, serious anxiety as the result of the actuations of the other party.
Invariably, such action must be shown to have been willfully done in bad faith or with ill-
motive, and bad faith or ill motive under the law cannot be presumed but must be
LOPEZ VITO V. TAMBUNTING G.R. NO. 9806 January 19, 1916; 33 PHIL 226 that document should remain in the possession of the defendant if the latter did not
forthwith pay the amount specified therein.
By reason of the foregoing, the Court affirmed the judgment appealed from, with
These proceedings were brought to recover from the defendant the sum of P2,000, the costs of this instance against the appellant.
amount of the fees, which, according to the complaint, are owing for professional medical
services rendered by the plaintiff to a daughter of the defendant from March 10 to July 15, FRANCIA V. CA G.R. NO. L-67649 June 28, 1988
1913, which fees the defendant refused to pay, notwithstanding the demands therefor
made upon him by the plaintiff. The defendant denied the allegations of the complaint, and
furthermore alleged that the obligation which the plaintiff endeavored to compel him to Engracio Francia is the registered owner of a residential lot and a two-story house
fulfill was already extinguished. built upon it situated at Barrio San Isidro, now District of Sta. Clara, Pasay City, Metro
Manila. On October 15, 1977, a 125 square meter portion of Francia's property was
The Court of First Instance of Manila, after hearing the evidence introduced by both
expropriated by the Republic of the Philippines for the sum of P4,116.00representing the
parties, rendered judgment on December 17, 1913, ordering the defendant to pay to the
estimated amount equivalent to the assessed value of the aforesaid portion. Since 1963 up
plaintiff the sum of P700, without express finding as to costs. The defendant, after entering
to 1977 inclusive, Francia failed to pay his real estate taxes. Thus, on December 5, 1977,
a motion for a new trial, which was denied, appealed from said judgment and forwarded to
his property was sold at public auction by the City Treasurer of Pasay City in order to satisfy
this court the proper bill of exceptions.
a tax delinquency of P2,400.00. Ho Fernandez was the highest bidder for the property.
ISSUE: Francia was not present during the auction sale since he was in Iligan City. On March 3,
1979, Francia received a notice of hearing and the issuance in his name of a new certificate
Whether or not the obligation alleged in the complaint has already been of title. Upon verification through his lawyer, Francia discovered that a Final Bill of Sale had
extinguished. been issued in favor of Ho Fernandez by the City Treasurer on December 11, 1978. The
RULING: auction sale and the final bill of sale were both annotated at the back of TCT No. 4739
(37795) by the Register of Deeds.
No, the Supreme Court ruled that the obligation has not been extinguished. The
receipt signed by the plaintiff, for P700, the amount of his fees he endeavored to collect ISSUE:
from the defendant after he had finished rendering the services in question was in the Whether or not Francia’s tax delinquency has been extinguished by legal
latter's possession, and this fact was alleged by him as proof that he had already paid said compensation.
fees to the plaintiff. The court, after hearing the testimony, reached the conclusion that,
notwithstanding that the defendant was in possession of the receipt, the said P700 had not RULING:
been paid to the plaintiff.
There is no legal basis for the contention. By legal compensation, obligations of
Number 8 of section 334 of the Code of Civil Procedure provides as a legal persons, who in their own right are reciprocally debtors and creditors of each other, are
presumption "that an obligation delivered up to the debtor has been paid." Article 1188 of extinguished. The circumstances of the case do not satisfy the requirements provided by
the Civil Code also provides that the voluntary surrender by a creditor to his debtor, of a Article 1279 (1) that each one of the obligors be bound principally and that he be at the
private instrument proving a credit, implies the renunciation of the right of action against same time a principal creditor of the other; (2) that the two debts be due.The court ruled
the debtor; and article 1189 prescribes that whenever the private instrument which that there can be no off-setting of taxes against the claims that the taxpayer may have
evidences the debt is in the possession of the debtor, it will be presumed that the creditor against the government. A person cannot refuse to pay a tax on the ground that the
delivered it of his own free will, unless the contrary is proven. government owes him an amount equal to or greater than the tax beingcollected. The
collection of a tax cannot await the results of a lawsuit against the government. In addition,
a taxpayer cannot refuse to pay his tax when called upon by the collector because he has a
But the legal presumption established by the foregoing provisions of law cannot claim against the governmental body not included in the tax levy.The tax was due to the
stand if sufficient proof is adduced against it. In the case at bar the trial court correctly city government while the expropriation was effected by the national government.
held that there was sufficient evidence to the contrary, in view of the preponderance Moreover, the amount of P4,116.00 paid by the national government for the 125 square
thereof in favor of the plaintiff and of the circumstances connected with the defendant's meter portion of his lot was deposited with the Philippine National Bank long before the
possession of said receipt. Furthermore, in order that such a presumption may be taken sale at public auction of his remaining property. It would have been an easy matter to
into account, it is necessary, as stated in the laws cited, that the evidence of the withdraw P2,400.00 from the deposit so that he could pay the tax obligation thus aborting
obligation be delivered up to the debtor and that the delivery of the instrument proving the sale at public auction.Petitioner had one year within which to redeem his property
the credit be made voluntarily by the creditor to the debtor. In the present case, it cannot although, he claimed that he pocketed the notice of the auction sale without reading it.
be said that these circumstances concurred, inasmuch as when the plaintiff sent the Petitioner, therefore, was notified about the auction sale. It was negligence on his part
receipt to the defendant for the purpose of collecting his fee, it was not his intention that when he ignored such notice. By his very own admission that he received the notice, his
now coming to court assailing the validity of the auction sale loses its force. As a general
rule, gross inadequacy of price is immaterial when the law gives the owner the right to the easier it is for the owner to effect redemption.
redeem as when a sale is made at public auction, upon the theory that the lesser the price,
03, 2013
TANAY RECREATION V. FAUSTO G.R. No. 140182 April 12, 2005
Caltex entered into a contract of affreightment with Vector for the transport of
Caltex’s petroleum cargo through the M/T Vector. Caltex insured the petroleum cargo with
respondent for P7,455,421.08 under Marine Open Policy No. 34-5093-6. In the evening of Tanay Recreation Center and Development Corp. is the lessee of a 3 property
December 20, 1987, the M/T Vector and the M/V Doña Paz, the latter a vessel owned and located in Sitio Gayas, Tanay, Rizal, owned by Catalina Matienzo Fausto, under a Contract of
operated by Sulpicio Lines, Inc., collided in the open sea near Dumali Point in Tablas Strait, Lease. The lease contract provided for a 20-year term, subject to renewal within sixty days
located between the Provinces of Marinduque and Oriental Mindoro. The collision led to the prior to its expiration. It also provided that should Fausto decide to sell the property, Tanay
sinking of both vessels. The entire petroleum cargo of Caltex on board the M/T Vector shall have the priority right to purchase the same. On June 17, 1991, Tanay wrote Fausto
perished. On July 12, 1988, respondent indemnified Caltex for the loss of the petroleum informing her of its intention to renew the lease. However, it was Fausto’s daughter,
cargo in the full amount of P7,455,421.08. On March 5, 1992, respondent filed a complaint Anunciacion F. Pacunayen, asking that Tanay remove the improvements built thereon, as
against Vector, Soriano, and Sulpicio Lines, Inc. to recover the full amount of P7,455,421.08 she is now the absolute owner of the property. Fausto had earlier sold the property to
it paid to Caltex Pacunayen on August 8, 1990, for the sum of P10,000.00 under a Kasulatan ng Bilihan
Patuluyan ng Lupa, and title has already been transferred in her name. Despite efforts, the
matter was not resolved. Tanay filed an Amended Complaint for Annulment of Deed of Sale,
Has the prescriptive period elapsed? Specific Performance with Damages, and Injunction. Fausto claimed that Tanay is estopped
from assailing the validity of the deed of sale as the latter acknowledged her ownership
RULING: when it merely asked for a renewal of the lease. According to Fausto, when they met to
Article 1144. “The following actions must be brought within ten years from the time discuss the matter, Tanay did not demand for the exercise of its option to purchase the
the cause of action accrues: (1) Upon a written contract; (2) Upon an obligation created by property, and it even asked for grace period to vacate the premises.
law: (3) Upon a judgment.” The court finds that that the present action was not upon a ISSUE:
written contract, but upon an obligation created by law. Hence, it came under Article 1144
(2) of the Civil Code. This is because the subrogation of respondent to the rights of Caltex Is Tanay estopped from claiming its priority right?
as the insured was by virtue of the express provision of law embodied in Article 2207 of the
Civil Code, “If the plaintiff’s property has been insured, and he has received indemnity from
the insurance company for the injury or loss arising out of the wrong or breach of contract NO. When a lease contract contains a right of first refusal, the lessor is under a legal
complained of, the insurance company shall be subrogated to the rights of the insured duty to the lessee not to sell to anybody at any price until after he has made an offer to sell
against the wrongdoer or the person who has violated the contract. If the amount paid by to the latter at a certain price and the lessee has failed to accept it. The lessee has a right
the insurance company does not fully cover the injury or loss, the aggrieved party shall be that the lessor's first offer shall be in his favor. Tanay’s right of first refusal is an integral
entitled to recover the deficiency from the person causing the loss or injury.” Considering and indivisible part of the contract of lease and is inseparable from the whole contract. The
that the cause of action accrued as of the time respondent actually indemnified Caltex in consideration for the lease includes the consideration for the right of first refusal and is
the amount of P7,455,421.08 on July 12, 1988, the action was not yet barred by the time of built into the reciprocal obligations of the parties. ART. 1311 states that “Contracts take
the filing of its complaint on March 5, 1992, which was well within the 10-year period effect only between the parties, their assigns and heirs, except in case where the rights and
prescribed by Article 1144 of the Civil Code. obligations arising from the contract are not transmissible by their nature, or by stipulation
or by provision of law. The heir is not liable beyond the value of the property he received
from the decedent.” The essential elements of estoppel are: (1) conduct of a party
amounting to false representation or concealment of material facts or at least calculated to
convey the impression that the facts are otherwise than, and inconsistent with, those which
the party subsequently attempts to assert; (2) intent, or at least expectation, that this
conduct shall be acted upon by, or at least influence, the other party; and (3)
knowledge, actual or constructive, of the real facts. The records are bereft of any
proposition that petitioner waived its right of first refusal under the contract such that it is
now estopped from exercising the same. In a letter dated June 17, 1991, Tanay wrote to
Fausto asking for a renewal of the term of lease.
SIME DARBY V. GOODYEAR G.R. No. 182148 June 8, 2011 DUNCAN V. GLAXO Gr No. 162994 September 17, 2004
Macgraphics owned several billboards one of which was a billboard located at the Magallanes Petitioner Pedro A. Tecson was hired by respondent Glaxo Welcome Philippines, Inc. (Glaxo) as
Interchange. The Magallanes billboard was leased by Macgraphics to Sime Darby at a monthly rental of medical representative on October 24, 1995, after Tecson had undergone training and orientation.
P120,000.00. The lease had a term of 4 years. Sime Darby paid Macgraphics P1.2 million for the 10- Tecson signed a contract of employment which stipulates, among others, that he agrees to study and
month deposit applied to the last ten months of the lease. Macgraphics configured the Magallanes abide by existing company rules; to disclose to management any existing or future relationship by
billboard to feature Sime Darbys name and logo. Sime Darby executed a Memorandum of Agreement, consanguinity or affinity with co-employees or employees of competing drug companies and should
with Goodyear, agreeing to sell its tire manufacturing plants and other assets for P1.5 billion. Goodyear management find that such relationship poses a possible conflict of interest, to resign from the
improved its offer to buy the assets of Sime Darby for P1.65 billion. The increase of the purchase price company. The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to
was made in consideration of the assignment by Sime Darby of the receivables in connection with its inform management of any existing or future relationship by consanguinity or affinity with co-
billboard advertising in other places. Sime Darby and Goodyear executed a Deed of Assignment in employees or employees of competing drug companies. If management perceives a conflict of interest
connection with Microwave Communication Facility and in connection with Billboard Advertising which or a potential conflict between such relationship and the employee’s employment with the company,
Sime Darby assigned its leasehold rights and deposits made to Macgraphics. Sime Darby then notified the management and the employee will explore the possibility of a "transfer to another department in
Macgraphics of the assignment of the Magallanes billboard in favor of Goodyear. a non-counterchecking position" or preparation for employment outside the company after six months.
After submitting a new design for the Magallanes billboard to feature its name and logo, Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra
Goodyear requested that Macgraphics submit its proposed quotation for the production costs of the Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy was Astra’s Branch Coordinator in Albay. Even
new design. Macgraphics informed Goodyear that the monthly rental of the Magallanes billboard is before they got married, Tecson received several reminders from his District Manager regarding the
P250,000.00 and explained that the increase in rental was in consideration of the provisions and conflict of interest which his relationship with Bettsy might engender. Still, love prevailed, and Tecson
technical aspects of the submitted design. Goodyear replied that due to budget constraints, it could married Bettsy in September 1998. Tecson’s superiors informed him that his marriage to Bettsy gave
not accept Macgraphics offer to integrate the cost of changing the design to the monthly rental. rise to a conflict of interest. His superiors reminded him that he and Bettsy should decide which one of
Goodyear stated that it intended to honor the P120,000.00 monthly rental. They requested them would resign from their jobs, although they told him that they wanted to retain him as much as
Macgraphics send its quotation for the simple background repainting and re-lettering of the neon possible because he was performing his job well. In November 1999, Glaxo transferred Tecson to the
tubing for the Magallanes billboard. Macgraphics sent a letter to Sime Darbyinforming the latter that it Butuan City-Surigao City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider its decision, but
could not give its consent to the assignment of lease to Goodyear. Macgraphics explained that the his request was denied.
transfer of Sime Darbys leasehold rights to Goodyear would necessitate drastic changes to the design
and the structure of the neon display of the Magallanes billboard and would entail the commitment of ISSUE/S:
manpower and resources that it did not foresee at the inception of the lease. Macgraphics advised Whether/not the court of appeals erred in ruling that glaxo’s policy against its employees
Goodyear that any advertising service it intended to get from them would have to wait until after the marrying employees from competitor companies is valid, and in not holding that said policy violates
expiration or valid pre-termination of the lease then existing with Sime Darby. Due to Macgraphics the equal protection clause of the constitution.
refusal to honor the Deed of Assignment, Goodyear sent Sime Darby a letter, demanding partial
rescission of the Deed of Assignment and the refund of P1,239,000.00, the pro-rata value of Sime RULING:
Darbys leasehold rights over the Magallanes billboard.
No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo’s policy
ISSUE: prohibiting an employee from having a relationship with an employee of a competitor company is a
valid exercise of management prerogative. Glaxo has a right to guard its trade secrets, manufacturing
Was there Estoppel by laches? formulas, marketing strategies and other confidential programs and information from competitors,
RULING: especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor companies upon
There was never a delay. The issue raised by Sime Darby for the first time only in this Court. Glaxo’s employees is reasonable under the circumstances because relationships of that nature might
Basic is the rule that issues not raised below cannot The Issues not raised below cannot be raised for compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims
the first time on appeal. Points of law, theories, issues and arguments not brought to the attention of to protect its interests against the possibility that a competitor company will gain access to its secrets
the lower court need not be, and ordinarily will not be, considered by the reviewing court, as they and procedures.
cannot be raised for the first time at that late stage. Basic considerations of due process impel the
adoption of this rule. Laches is the failure or neglect, for an unreasonable and unexplained length of In any event, from the wordings of the contractual provision and the policy in its employee
time, to do that which, by exercising due diligence, could or should have been done earlier; it is handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships between
negligence or omission to assert a right within a reasonable time, warranting the presumption that the its employees and those of competitor companies. Its employees are free to cultivate relationships
party entitled to assert it either has abandoned or declined to assert it. There is no absolute rule as to with and marry persons of their own choosing. What the company merely seeks to avoid is a conflict of
what constitutes laches or staleness of demand; each case is to be determined according to its interest between the employee and the company that may arise out of such relationships.
particular circumstances, with the question of laches addressed to the sound discretion of the court.
Because laches is an equitable doctrine, its application is controlled by equitable considerations and
should not be used to defeat justice or to perpetuate fraud or injustice.
VILLEGAS V. COURT OF APPEALS G.R. No. 129977 February 1, 2001
FACTS: TAN V. GULLAS G.R. No. 143978 December 3, 2002
Before September 6, 1973, Lot B-3-A, with an area of 4 hectares was registered FACTS:
under TCT No. 68641 in the names of Ciriaco D. Andres and Henson Caigas. This land was
Respondents, were the registered owners of a parcel of land, they executed a special
also declared for real estate taxation under Tax Declaration No. C2-4442. On September 6,
power of attorney authorizing petitioners Tan, a licensed real estate broker, and his
1973, Andres and Caigas, with the consent of their respective spouses, Anita Barrientos
associates Tecson and Saldaña, to negotiate for the sale of the land, at a commission of 3%
and Consolacion Tobias, sold the land to Fortune Tobacco Corporation for P60, 000.00.
of the gross price. Tan contacted the Sisters of Mary of Banneaux, Inc. (hereafter, Sisters of
Simultaneously, they executed a joint affidavit declaring that they had no tenants on said
Mary), areligious organization interested in acquiring a property. The Sisters, who had
lot. On the same date, the sale was registered in the Office of the Register of Deeds of
already seen and inspected the land, found the same suitable for their purpose and
Isabela. TCT No. 68641 was cancelled and TCT No. T-68737 was issued in Fortune’s name.
expressed their desire to buy it.
On August 6, 1976, Andres and Caigas executed a Deed of Reconveyance of the same lot in
favor of Filomena Domingo, the mother of Joselito Villegas, defendant in the case before the However, they requested that the selling price be reduced. Respondents agreed to
trial court. Although no title was mentioned in this deed, Domingo succeeded in registering sell the property to the Sisters of Mary. Petitioners went to see respondents who refused to
this document in the Office of the Register of Deeds on August 6, 1976, causing the latter pay the broker’s fee and alleged that another group of agents was responsible for the sale
to issue TCT No. T-91864 in her name. It appears in this title that the same was a transfer of land to the Sisters of Mary. Petitioners filed a complaint against the defendants for
from TCT No. T-68641. On April 13, 1981, Domingo declared the lot for real estate taxation recovery of their broker’s fee. They alleged that they were the efficient procuring cause in
under Tax Declaration No. 10-5633. On December 4, 1976, the Office of the Register of bringing about the sale of the, but that their efforts in consummating the sale were
Deeds of Isabela was burned together with all titles in the office. On December 17,1976, frustrated by the respondents who, in evident bad faith, malice and in order to evade
the original of TCT No. T-91864 was administratively reconstituted by the Register of Deeds. payment of broker’s fee, dealt directly with the buyer whom petitioners introduced to them.
On June 2, 1979, a Deed of Absolute Sale of a portion of 20,000 square meters of Lot B3- A
was executed by Filomena Domingo in favor of Villegas for a consideration of P1,000.00. ISSUES:
This document was registered on June 3, 1981 and as a result TCT No. T-131807 was issued Whether or not the petitioners are entitled to the brokerage commission. An agent
by the Register of Deeds to Villegas. On the same date, the technical description of Lot B-3- distinguished from a broker.
A-2 was registered and TCT No. T-131808 was issued in the name of Domingo. On January
22, 1991, this document was registered and TCT No. 154962 was issued to the defendant, RULINGS:
Joselito Villegas. The records show that petitioner Tan is a licensed real estate broker, and other
On April 10, 1991, the trial court upon a petition filed by Fortune ordered the petitioners his associates. "Broker" as "one who is engaged, for others, on a commission,
reconstitution of the original of TCT No. T-68737. After trial on the merits, the trial court negotiating contracts relative to property with the custody of which he has no concern; the
rendered its assailed decision in favor of Fortune Tobacco, declaring it to be entitled to the negotiator between other parties, never acting in his own name but in the name of those
property. Petitioners thus appealed this decision to the Court of Appeals, which affirmed the who employed him. x x x a broker is one whose occupation is to bring the parties together,
trial court’s decision. in matters of trade, commerce or navigation." The petitioners were responsible for the
introduction of the representatives of the Sisters of Mary to respondent.(2) There was no
ISSUE: dispute as to the role that petitioners played in the transaction. "An agent receives a
Whether or not the Court of Appeals was correct in affirming the trial court’s commission upon the successful conclusion of a sale.
decision. On the other hand, broker earns his pay merely by bringing the buyer and the seller
RULING: together, even if no sale is eventually made. Clearly, therefore, petitioners, as brokers,
should be entitled to the commission whether or not the sale fo the property subject matter
Even if Fortune had validly acquired the subject property, it would still be barred of the contract was concluded to their efforts.
from asserting title because of laches. The failure or neglect, for an unreasonable length of
time to do that which by exercising due diligence could or should have been done earlier
constitutes laches. It is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it has either abandoned it or
declined to assert it. While it is by express provision of law that no title to registered land in
derogation of that of the registered owner shall be acquired by prescription or adverse
possession, it is likewise an enshrined rule that even a registered owner may be barred
from recovering possession of property by virtue of laches. Hence, petition was GRANTED
and the Decision of the Court of Appeals was REVERSED.
MONTECILLO V. REYNES G.R. No. 138018 July 26, 2002 considered as consummatedâ (3) Moreover, the contract is also void for lack of consent. There was a
disagreement on the manner of payment, as Reynes expected Montecillo to pay directly the P47,000,
FACTS: while Montecillo thought he should pay the price to Cebu Ice Storage to settle the mortgage debt. Held
Doctrine Effect of non-payment of price; Where the deed of sale states that the purchase price Petiition is DENIED.
has been paid but in fact has never been paid, the deed of sale is null and void ab initio for lack of
consideration. Summary Reynes and Sps. Abucay filed complaint against Montecillo, regarding a lot in
Mabolo, Cebu City. Reynes signed a Deed of Sale with Montecillo, who agreed to pay the price w/in 1 RURAL BANK OF STA. MARIA V. COURT OF APPEALS G.R. No. 110672 September 14, 1999
month. He failed to do so, but he also refused to return the DoS. Reynes executed a document
unilaterally revoking the sale, then sold the lot to the Sps. Abucay. Montecillo however, was able to FACTS:
register the lot in his name, claiming he was a buyer in good faith and for value. The trial court and CA The Court Finds that a parcel of land of about 49,969 square meters, located in Residence
declared the DoS to Montecillo void, and this was affirmed by the SC. Facts · Ignacia Reynes owned a Section J, Camp 7, Baguio City, covered by TCT T-29817 (land for short) is registered in the name of
lot (446 m2) in Mabolo, Cebu City and sold 158 m2 to the Sps. Abucay in 1981. In 1984, Reynes signed Manuel Behis, married to Cristina Behis (Exhibit B). Said land originally was part of a bigger tract of
a Deed of Sale conveying the Mabolo lot to Montecillo for P47,000 to be paid in 1 month. Montecillo did land owned by Behis (one name), father of Manuel Behis, covered by OCT-0-33 (Exhibit 26, Halsema,
not pay on time, but refused to return the DoS. Reynes executed a document revoking the sale, then for history of the land). And upon the latters death on September 24, 1971, his children, namely: Saro
sold the entire lot to Sps. Abucay. However, Montecillo was able to register the land in his name, so Behis, Marcelo Behis, Manuel Behis, Lucia Behis, Clara Behis and Arana Behis, in an extrajudicial
Reynes and the Sps. Abucay filed a complaint for Declaration of Nullity and Quieting of Title against settlement with Simultaneous Sale of Inheritance dated September 28, 1978, agreed to sell the land to
Montecillo, alleging that there was lack of consideration. · Montecillo claimed he was a buyer in good Manuel Behis, married to Cristina Behis (Exhibit `2, Halsema) but which subsequently was explained as
faith and for value, as he allegedly already paid the P47,000. Yet, he admitted having a balance of only an arrangement adopted by them to facilitate transactions over the land in a Confirmation of
P10,000. Supposedly, he had paid P50,000 to Cebu Ice Storage for the release of a chattel mortgage Rights of Co-Ownership over real Property dated September 26, 1983, showing that the Behis
debt (of Jayag) which was a lien on the land. He alleged that he paid real property tax and capital gains brothers and sisters, including Manuel Behis, are still co-owners thereof (Exhibit `30, Halsema, Exhibit
tax for the lot. · Reynes claimed Montecillo secured the release of chattel mortgage through `AA).Manuel Behis mortgaged said land in favor of the Bank in a Real Estate Mortgage dated October
machination, and took advantage of the taxes paid by the Sps. Abucay to transfer the title to his name. 23, 1978 (Exhibit `Q-1) as security for loans obtained, covered by six promissory notes and trust
She denied anything to do with Jayag mortgage debt. The trial court declared the DoS to Montecillo receipts under the Supervised Credit Program in the total sum of P156,750.00 (Exhibit `Q-2 to `Q-7,
null and void, because there was no cause or consideration, considering that he had never paid Exhibits `4-A to `4-F, Halsema) and annotated at the back of the title on February 13, 1979 as Entry
Reynes. Thus, the DoS produced no legal effect. The CA affirmed the decision in toto, hence this No. 85538-10-231 (Exhibit 1- A-1, Halsema). The mortgage, the promissory notes and trust receipts
appeal. bear the signatures of both Manuel Behis and Cristina Behis.
ISSUE: Unfortunately thereafter, Manuel Behis was delinquent in paying his debts. On January 9, 1985,
Wether or not Montecillo should have paid the purchase price to Cebu Ice Storage. [4]
Manuel Behis sold the land to the plaintiffs in a Deed of Absolute Sale with Assumption of Mortgage
for the sum of P250,000.00 (Exhibit `A) which bears the signature of his wife Cristina Behis. Manuel
Behis took it upon himself to secure the signature of his wife and came back with it. On the same date
The DoS did not even state that the P47,000 was to be paid to Cebu Ice Storage. Montecillo did of January 9, 1985, plaintiffs and Manuel Behis simultaneously executed another Agreement (Exhibit
not produce evidence showing that Reynes agreed to the payment of the price to CIS. Applying Art. `15) whereby plaintiffs are indebted to Manuel Behis for the sum of P2,400,000.00 payable in
1420, payment to CIS would not extinguish the obligation of Montecillo to Reynes. Payment shall be installments with P10,000.00 paid upon signing and in case of default in the installments, Manuel Behis
made to the person in whose favor the obligation has been constituted, or his successor in interest, or shall have legal recourse to the portions of the land equivalent to the unpaid balance of the amounts in
any person authorized to receive it (2) It goes against common sense to think that Reynes would sell installments. Obviously, the real consideration of the sale of the land of Manuel Behis to the plaintiffs is
her land but not gain a single centavo from the sale, the price going to CIS instead. The trial court contained in this Agreement (Exhibit `15).Plaintiffs did not present to the Register of Deeds of Baguio
found that Reynes had no connection at all to Jayag mortgage debt with CIS. Thus, payment to CIS said two contracts and ask that the title, TCT T-29817 in the name of Manuel Behis be cancelled and a
could not redound to the benefit of Reynes. II. W/N the Deed of Sale is void ab initio or only rescissible new one issued in their name which normally a buyer does. Neither did plaintiffs annotate at the back
(VOID AB INITIO) (1) Contracts have 3 essential requisites: consent, object, and cause. Montecillo of the title the aforesaid two contracts. Nor did they immediately go to the Bank and present said two
argues that the DoS is a valid sale because all three requisites are present, that there is only a non- contracts. Thus, the title to the land, TCT No. T-29817, remained in the name of Manuel Behis.
payment of consideration, which is just a breach of his obligation to pay on time. This should give rise
to Reynes’ right to ask for specific performance or annulment of the obligation to sell. Reynes did
not make a demand for payment, but revoked the DoS, Montecillo says the court should fix a period for Was there fraud?
payment of the balance. But, such arguments do not convince the court. The evidence shows that
while the DoS appears supported by valuable consideration, Montecillo never actually paid Reynes RULING:
P47,000. There was a total absence of consideration. He merely alleged that he had a remaining
Not all elements of fraud vitiating consent for purposes of annulling a contract concur, to wit:
balance of P10,000.
(a) It was employed by a contracting party upon the other; (b) It induced the other party to enter into
(2) This is not merely a case of failure to pay the purchase price, but a contract that lacks a the contract; (c) It was serious; and; (d) It resulted in damages and injury to the party seeking
cause (hence it is void ab initio). Where the deed of sale states that the purchase price has been paid annulment. Petitioner bank has not sufficiently shown that it was induced to enter into the agreement
but in fact has never been paid, the deed of sale is null and void ab inito for lack of consideration. In by the non-disclosure of the purchase price, and that the same resulted in damages to the bank.
Mapalo v. Mapalo contract of sale is null and void and produces no effect whatsoever where the same Indeed, the general rule is that whosoever alleges fraud or mistake in any transaction must
is without cause or consideration in that the purchase price which appears thereon as paid has in fact substantiate his allegation, since it is presumed that a person takes ordinary care for his concerns and
never been paid. De Catindig v. Heirs of Catalina Roque such a sale is non-existent or cannot be that private transactions have been fair and regular. Petitioner bank's allegation of fraud and deceit
have not been established sufficiently and competently to rebut the presumption of regularity and due
execution of the agreement.


11240 December 18, 1957 PHILIPPINE BANKING CORPORATION V. LIM G.R. No. L-17587 September 12,
The property in question was owned by the late Salvador Lopez who donated such
land to Conchita Liguez. The heirs now come to Court assailing such donation claiming that Justina Santos executed on a contract of lease in favor of Wong, covering the portion
there was an immoral or illegal cause to such donation and ask that such donation be then already leased to him and another portion fronting Florentino Torres street. The lease
declared null and void because Lopez, a married man and one of advanced age, donated was for 50 years, although the lessee was given the right to withdraw at any time from the
such land to Conchita in order to have sexual relations with her at the tender age of agreement.
sixteen. The heirs also contend that such land is part of the conjugal partnership of Lopez On December 21 she executed another contract giving Wong the option to buy the
and his legal wife. The CFI and the CA affirmed the position of the heirs and declared the leased premises for P120,000, payable within ten years at a monthly installment of P1,000.
donation as null and void. Hence, this petition by Conchita. The option, written in Tagalog, imposed on him the obligation to pay for the food of the
ISSUE: dogs and the salaries of the maids in her household, the charge not to exceed P1,800 a
month. The option was conditioned on his obtaining Philippine citizenship, a petition for
Whether or not the donation is void. which was then pending in the Court of First Instance of Rizal.
RULING: It appears, however, that this application for naturalization was withdrawn when it
Lopez would not have conveyed the property in question had he known that was discovered that he was not a resident of Rizal. On October 28, 1958 she filed a petition
Conchita would refuse to cohabit with him. The cohabitation was an implied condition to to adopt him and his children on the erroneous belief that adoption would confer on them
the donation, being unlawful, tainted the donation itself. The in pari delicto rule cannot be Philippine citizenship. The error was discovered and the proceedings were abandoned.
applied in this case as the facts are more suggestive of seduction rather than of immoral In two wills executed on August 24 and 29, 1959, she bade her legatees to respect
bargaining on the part of Conchita. The Court will leave them as they are as the contract the contracts she had entered into with Wong, but in a codicil of a later date (November 4,
itself is void. Conchita Liguez is declared entitled to the donated property as may be found 1959) she appears to have a change of heart. Claiming that the various contracts were
upon proper liquidation not to prejudice the share of the widow or the legitimes of the made by her because of machinations and inducements practiced by him, she now directed
forced heirs. The case is remanded. her executor to secure the annulment of the contracts.
Doctrine: Even if the contract appears to be valid, if the provisions is against a
constitutional prohibition, the same should be considered null and void.
Whether the contracts involving Wong were valid
The contracts show nothing that is necessarily illegal, but considered collectively,
they reveal an insidious pattern to subvert by indirection what the Constitution directly
prohibits. To be sure, a lease to an alien for a reasonable period is valid. So is an option
giving an alien the right to buy real property on condition that he is granted Philippine
citizenship. But if an alien is given not only a lease of, but also an option to buy, a piece of
land, by virtue of which the Filipino owner cannot sell or otherwise dispose of his property,
this to last for 50 years, then it becomes clear that the arrangement is a virtual transfer of
ownership whereby the owner divests himself in stages not only of the right to enjoy the
land but also of the right to dispose of it— rights the sum total of which make up
ownership. If this can be done, then the Constitutional ban against alien landholding in the
Philippines, is indeed in grave peril.
FRANCISCO V. HERRERA G.R. No. 139982 November 21, 2002 FACTS:
Eligio Herrera, Sr., father of respondent Pastor Herrera, owned two parcels of land FACTS:
consisting of 500 sq. m. and 451 sq. m. located at Cainta, Rizal. The two parcels of land
Petitioner Spouses Constante and Azucena Firme are the registered owners of a
was sold at 1M and 750K to the petitioner. Pastor, contending that the contract price for the
parcel of land located on Dahlia Avenue, Fairview Park, Quezon City. Renato de Castro, the
two parcels of land was grossly inadequate tried to negotiate with petitioner to increase the
vice president of Bukal Enterprises and Development Corporation authorized his friend,
purchase price. When petitioner refused, respondent then filed a complaint for annulment
Teodoro Aviles, a broker, to negotiate with the Spouses Firme for the purchase of the
of sale. Pastor alleged that the contract of sale was null and void on the ground that Eligio,
Property. On 28 March 1995, Bukal Enterprises filed a complaint for specific performance
Sr., at that time, was already afflicted with senile dementia. Petitioner, on the other hand,
and damages with the trial court, alleging that the Spouses Firme reneged on their
contended that respondent had effectively ratified both contracts of sales, by receiving the
agreement to sell the Property. The complaint asked the trial court to order the Spouses
consideration offered in each transaction.
Firme to execute the deed of sale and to deliver the title to the Property to Bukal
RTC ruled that the contract of sale is null and void. CA affirmed, hence, this petition. Enterprises upon payment of the agreed purchase price.
Are the assailed contracts of sale void or merely voidable and hence Is Statute of Frauds applicable?
capable of being ratified?
The CA held that partial performance of the contract of sale takes the oral contract
In the present case, vendor Eligio, Sr. entered into an agreement with petitioner, but out of the scope of Statute of Frauds. This conclusion arose from the appellate court’s
that the former’s capacity to consent was vitiated by senile dementia. Hence, it was ruled erroneous finding that there was a perfected contract of sale. The records show that there
that the assailed contracts are not void or inexistent per se; rather, these are contracts that was no perfected contract of sale. There is therefore no basis for the application of the
are valid and binding unless annulled through a proper action filed in court. An annullable Stature of Frauds. The application of the Statute of Frauds presupposes the existence of a
contract may be rendered perfectly valid by ratification, which can be express or implied. perfected contract.
Implied ratification may take the form of accepting and retaining the benefits of a contract.
Bukal Enterprises is obviously a builder in bad faith. No deed of sale has been
As in this case, respondent negotiated for the increase of the purchase price while receiving
executed in this case. Despite the refusal of the Spouses Firme to sell the Property, Bukal
the installment payments from the petitioner. Clearly, respondent was agreeable to the
Enterprises still proceeded to introduce improvements on the Property. Bukal Enterprises
contract. Further, there is no showing that respondent returned the payments or made an
introduced improvements on the Property without the knowledge and consent of the
offer to do so. This bolsters the view that indeed there was ratification. Petition is granted.
Spouses Firme. When the Spouses Firme learned about the unauthorized constructions
the two contracts of sale are declared valid.
made by Bukal Enterprises on the Property, they advised the latter to desist from further
acts of trespass on their Property.
The Civil Code provides: Art. 449. He who builds, plants or sows in bad faith on the
land of another, loses what is built, planted or sown without right of indemnity. Art. 450.
The owner of the land on which anything has been built, planted or sown in bad faith may
demand the demolition of the work, or that the planting or sowing be removed, in order to
replace things in their former condition at the expense of the person who built, planted or
sowed; or he may compel the builder or planter to pay the price of the land, and the owner
the proper rent.
Under these provisions the Spouses Firme have the following options: (1) to
appropriate what Bukal Enterprises has built without any obligation to pay indemnity; (2) to
ask Bukal Enterprises to remove what it has built; or (3) to compel Bukal Enterprises to pay
the value of the land. Since the Spouses Firme are undoubtedly not selling the Property to
Bukal Enterprises, they may exercise any of the first two options. They may appropriate
what has been built without paying indemnity or they may ask Bukal Enterprises to remove
what it has built at Bukal Enterprises own expense. Bukal Enterprises is not entitled to
reimbursement for the expenses incurred in relocating the squatters. Bukal Enterprises
Firme V. Bukal G.R No. 146608 October 23,2003 spent for the relocation of the squatters even after learning that the Spouses Firme were no
longer interested in selling the Property.
HADJA FATIMA V. HADJI ABUBACAR G.R. No. 179743 August 2, 2010 MEDINA V. COURT OF APPEALS G.R. No. L-26107 November 27, 1981
Respondent Hadji Abubakar Marahum sold to Petitioner Hadji Fatima Magoyag a A decision was rendered against Arles Castares (Arles), now deceased and
certain two-storey market stall located in the public market of Marawi City. The sale was represented by his heirs, to pay damages for running over and causing injuries to four-year
evidenced by a Deed of Assignment which also stated that although there was a sale, old Wenceslao Mahilum, Jr. Petitioner Jose Medina (Medina) was the representative of the
possession will remain with the seller Hadji Maruhom and that he will pay a monthly rental. victim in the said case. To satisfy the judgment, the sheriff levied Arles two parcels of land
However, after several years Hadji Maruhom suddenly stopped paying rentals. Petitioner covered by Tax Declaration No. 1107 and Tax Declaration No. 1106.
demanded payment but respondent failed to fulfill his promise and refused to vacate the
When the heirs of Arles failed to settle their obligation, the lot covered by Tax
premises. On August 22, 1994 petitioner filed a complaint for recovery of possession and
Declaration No. 1107 was sold at public auction wherein Medina emerged as the highest
damages with the RTC of Marawi City.
bidder. Medina applied for the registration of the said lot. However, Andres Castares
ISSUE: (Andres), brother of Arles and representing the heirs of the late Abundio Castares
(Abundio), filed an opposition thereto. Andres claimed that after the death of his father
Whether or not the Deed of Assignment prove the existence of a sale. Abundio, Tax Declaration No. 1107 was cancelled and consequently, a tax declaration was
RULING: issued in his favor. He insisted that he is the rightful owner of the said portion of the land.

The Deed of Assignment is a clear indication that the transaction was really of a sale The RTC ruled in favor of Medina. On appeal, the CA reversed the RTC and it also
and not of a loan with an equitable mortgage. The language in the document is crystal noted that there has been no settlement yet of the estate of Abundio and it was premature
clear, unambiguous and needs no further interpretation. However, the validity of the sale for Arles to have allocated unto himself a distinct portion of the lot as his share in the
lies not with the interpretation of the contract. The sale was ultimately declared as invalid estate.
because the respondent, Hadji Maruhom is not the owner of the property. Records show ISSUE:
that it is the city of Marawi who owned the property and as a mere grantee, he was
expressly prohibited from selling, donating or otherwise alienating the said property Whether or not Abundios heirs have an actual right over the lot in dispute.
without the consent of the city government. Violation of the condition shall automatically
render the sale, null and void. One cannot give what one does not have ― Nemo dat qoud
non habet. The appellate court is correct in stating that there was no settlement of the estate of
Abundio.There is no showing that Lot 224 has already been partitioned despite the demise
of Abundio. It has been held that an heirs right of ownership over the properties of the
decedent is merely inchoate as long as the estate has not been fully settled and
partitioned. This means that the impending heir has yet no absolute dominion over any
specific property in the decedents estate that could be specifically levied upon and sold at
public auction. Any encumbrance of attachment over the heirs interests in the estate,
therefore, remains a mere probability, and cannot summarily be satisfied without the final
distribution of the properties in the estate. Therefore, the public auction sale of the
property covered by Tax Declaration No. 1107 is void because the subject property is still
covered by the Estate of Abundio, which up to now, remains unpartitioned. Arles was not
proven to be the owner of the lot under Tax Declaration No. 1107. It may not be amiss to
state that a tax declaration by itself is not sufficient to prove ownership.