SPS. GUANIO v. MAKATI SHANGRI-LA HOTEL GR No. 190601 February, 7 2011 MANANTAN V. CA G.R. No.
MANANTAN V. CA G.R. No. 107125 January 29, 2001
FACTS:
For their wedding reception on July 28, 2001, spouses Luigi M. Guanio and Anna
Hernandez-Guanio (petitioners) booked at the Shangri-la Hotel Makati. Prior to the event,
Makati Shangri-La Hotel & Resort, Inc. (respondent) scheduled an initial and final food
tasting. The parties eventually agreed on a final price ─ P1,150 per person. On July 27,
2001, the parties finalized and signed their contract.
Petitioners claim that during the reception, respondent’s representatives, Catering
Director Bea Marquez and Sales Manager Tessa Alvarez, did not show up despite their
assurance that they would; their guests complained of the delay in the service of the
dinner; certain items listed in the published menu were unavailable; the hotel’s waiters
were rude and unapologetic when confronted about the delay; and despite Alvarez’s
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
accordance with their open bar arrangement, but these were not served to the guests who
were forced to pay for their drinks.
Petitioners thus sent a letter-complaint to the Makati Shangri-la Hotel and Resort,
Inc.and received an apologetic reply from Krister Svensson, the hotel’s Executive Assistant
Manager in charge of Food and Beverage. They nevertheless filed a complaint for breach
of contract and damages before the RTC of Makati City. Respondents averred that it was
the increase in number of the unexpected guests that led to the shortage claimed by the
petitioners.
The RTC rendered a decision in favor of the plaintiffs and was reversed by the CA,
upon appeal, the latter holding that the proximate cause of petitioners’ injury was an
unexpected increase in their guests.
ISSUE:
Whether or not the CA correctly held that the proximate cause of petitioners’ injury
was an unexpected increase in their guests.
RULING:
The Court finds that since petitioners’ complaint arose from a contract, the doctrine
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.
FACTS:
In the evening of September 25, 1982, at the National Highway of Malvar, Santiago,
Isabela, George Manantan was driving a Toyota car going home. At that time, he was with
Fiscal Ambrocio, Miguel Tabangin and Ruben Nicolas. Suddenly, a jeepney, coming from the
opposite direction hit the driver side of the car, driven by Manantan. Consequently,
Manantan, Ambrocio and Tabangin were injured while Nicolas died. Trial followed.
The trial court decided in favor of the accused. However, the Court of Appeals
modified the decision of the lower court, in that defendant-appellee is held civilly liable for
his negligent and reckless act of driving his car which was the proximate cause of the
vehicular accident and sentenced to indemnify plaintiff-appellants in the amount of P174,
400.00 for the death of Ruben Nicolas.
ISSUE:
Whether or not petitioner’s acquittal did extinguished his civil liability.
RULING:
The court of appeals in determining whether Article 29 of the Civil Code applied was
not precluded by the petitioners’ acquittal, from looking into the question of petitioners’
negligence or reckless imprudence. What was elevated to the Court of Appeals by private
respondents was the civil aspect of Criminal Case No. 066. Petitioner was not charged anew
with a second criminal offense identical to the first offense. Therefore, there was no second
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
was not extinguished by his discharge. It clearly shows that petitioner’s acquittal was
predicated on the conclusion that his guilt had not been established with moral certainty. At
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
claimed by the offended parties, as in this case, are not included in the computation of the
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
not so alleged, shall constitute a first lien on the judgment. The filing fees are deemed paid
from the filing of the criminal complaint or information.
 TANGUILIG V. COURT OF APPEALS G.R. No. 117190 January 2, 1997
FACTS:
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
windmill for a consideration of P60,000.00. On 14 March 1988, due to the refusal and
failure of respondent to pay the balance, petitioner filed a complaint to collect the amount.
Respondent denied the claim saying that he had already paid this amount to the San Pedro
General Merchandising Inc. (SPGMI) which constructed the deep well to which the windmill
system was to be connected. According to respondent, since the deep well formed part of
the system the payment he tendered to SPGMI should be credited to his account by
petitioner. Moreover, assuming that he owed petitioner a balance of P15,000.00, this should
be offset by the defects in the windmill system which caused the structure to collapse after
a strong wind hit their place. Petitioner denied that the construction of a deep well was
included in the agreement to build the windmill system, for the contract price of
P60,000.00 was solely for the windmill assembly and its installation. He also disowned any
obligation to repair or reconstruct the system since its collapse was attributable to a
typhoon, a force majeure, which relieved him of any liability.
ISSUES:
Whether or not the payment for the deep well is part of the contract price.
Whether or not Tanguilig is liable to reconstruct the damaged windmill considering
that its collapse is due to a typhoon.
RULING:
There is absolutely no mention in the two documents that a deep well pump is a
component of the proposed windmill system. The contract prices fixed in both proposals
cover only the features specifically described therein and no other. Respondent is directed
to pay petitioner Tanguilig the balance of P15,000 plus legal interest. Regarding the second
issue, the Supreme Court has consistently held that in order for a party to claim exemption
from liability by reason of fortuitous event under Art. 1174 of the Civil Code four (4)
requisites must concur: (a) the cause of the breach of the obligation must be independent
of the will of the debtor; (b) the event must be either unforeseeable or unavoidable; (c) the
event must be such as to render it impossible for the debtor to fulfill his obligation in a
normal manner; and, (d) the debtor must be free from any participation in or aggravation of
the injury to the creditor. Petitioner failed to show that the collapse of the windmill was due
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".
INTEGRATED PACKAGING CORP. V. COURT OF APPEALS G.R. No. 115117 June 8,
2000
FACTS:
Petitioner and private respondent executed an order agreement whereby private
respondent bound itself to deliver to petitioner 3,450 reams of printing papers under
specified schedule of delivery. As of July 30, 1979, private respondent had delivered to
petitioner 1,097 reams of printing paper out of the total 3,450 reams stated in the
agreement. Petitioner alleged it wrote private respondent to immediately deliver the
balance because further delay would greatly prejudice petitioner. From June 5, 1980 and
until July 23, 1981, private respondent delivered again to petitioner various quantities of
printing paper amounting to P766,101.70. However, petitioner encountered difficulties
paying private respondent said amount. Accordingly, private respondent made a formal
demand upon petitioner to settle the outstanding account. Private respondent filed a
collection suit against petitioner for the sum of P766,101.70, representing the unpaid
purchase price of printing paper bought by petitioner on credit. In its answer, petitioner
denied the material allegations of the complaint. It alleged that private respondent was
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
printing paper despite demand therefor, hence, petitioner suffered actual damages and
failed to realize expected profits.
ISSUE:
Whether or not private respondent violated the order agreement.
RULING:
The transaction between the parties is a contract of sale whereby private
respondent (seller) obligates itself to deliver printing paper to petitioner (buyer) which, in
turn, binds itself to pay its equivalent (price). Both parties concede that the order
agreement gives rise to a reciprocal obligation such that the obligation of one is dependent
upon the obligation of the other. Reciprocal obligations are to be performed simultaneously,
so that the performance of one is conditioned upon the simultaneous fulfillment of the
other. Thus, private respondent undertakes to deliver printing paper of various quantities
subject to petitioner’s corresponding obligation to pay, on a maximum 90-day credit, for
these materials. Clearly, petitioner did not fulfill its side of the contract as its last payment
in August 1981 could cover only materials covered by delivery invoices dated September
and October 1980. Thus, private respondent did not violate the order agreement.
 MUAJE-TUAZON V. WENPHIL G.R. No. 162447 December 27, 2006
FACTS:
Petitioners Annabelle M. Tuazon and Almer R. Abing worked as branch managers of
the Wendy's food chains. In Wendy’s “Biggie Size It! Crew Challenge" promotion contest,
branches managed by petitioners won first and second places, respectively. Because of its
success, respondent had a second run of the contest from April 26 to July 4, 1999. The
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
reports that as early as the first round of the contest, the Meycauayan, MCU Caloocan,
Tandang Sora and Fairview branches cheated. An internal investigation ensued. Petitioners
were summoned to the main office regarding the reported anomaly. Petitioners denied
there was cheating. Immediately thereafter, petitioners were notified, in writing, of
hearings and of their immediate suspension. Thereafter, petitioners were dismissed.
ISSUE:
Is the respondent guilty of illegal suspension and dismissal in the case at bench?
RULING:
There is no denying that petitioners were managerial employees. They executed
management policies, they had the power to hire personnel and assign them tasks; and
discipline the employees in their branch. They recommended actions on employees to the
head office.Article 212 (m) of the Labor Code defines a managerial employee as one who is
vested with powers or prerogatives to lay down and execute management policies and/or
hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees.
Consequently, as managerial employees, in the case of petitioners, the mere existence of
grounds for the loss of trust and confidence justify their dismissal. Pursuant to our ruling in
Caoile v. National Labor Relations Commission, as long as the employer has a reasonable
ground to believe that the managerial employee concerned is responsible for the purported
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.
In the present case, the tape receipts presented by respondents showed that there
were anomalies committed in the branches managed by the petitioners. On the principle of
respondeat superior or command responsibility alone, petitioners may be held liable for
negligence in the performance of their managerial duties, unless petitioners can positively
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,
unsubstantiated and uncorroborated denial of any participation in the cheating does not
prove their innocence nor disprove their alleged guilt. Additionally, some employees
declared in their affidavits that the cheating was actually the idea of the petitioners.
MENDOZA VS. SORIANO G.R. No. 164012 June 8, 2007
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,
while the vehicle stopped some 25 meters from the point of impact. Gerard Villaspin, one of
Soriano’s companions, asked Macasasa to bring Soriano to the hospital, but the first flee.
Respondent’s wife and daughter filed a complaint for damages against Macasasa and
petitioner Flordeliza Mendoza, the registered owner of the vehicle.
Petitioner Mendoza contends that she was not liable since as owner of the vehicle,
she had exercised the diligence of a good father of a family over her employee. Macasas.
The trial court dismissed the complaint against Macasasa and Mendoza. It found
Soriano negligent for crossing not in the pedestrian overpass. The Court of Appeals, on the
other hand, reversed the assailed decision of the lower court.
ISSUE:
Whether or not petitioner is liable for damages.
RULING:
While the appellate court agreed that Soriano was negligent, it also found Macasasa
negligent for speeding, such that he was unable to avoid hitting the victim. It observed that
Soriano’s own negligence did not preclude recovery for damages from Macasasa’s
negligence. It further held that since petitioner failed to present evidenced to the contrary
and conformably with Article 2180 of the Civil Code, the presumption of negligence of the
employer in the selection and supervision of employees stood.
The records show that Macasasa violated two traffic rules under the Land
Transportation and Office Code. Under Article 2185 of the Civil Code, a person driving a
motor vehicle is presumed negligent if at the time of the mishap, he was violating traffic
regulations.
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
presumed negligence of the employers in supervising their employees unless they prove
that they observed all the diligence of a good father of a family to prevent the damage. In
this case petitioner is held primarily and solidarily liable for the damages caused by
Macasasa.
However, Article 2179 states that “when the plaintiff’s own negligence was the
immediate and proximate cause of his injury, he cannot recover damages. But if his
negligence was only contributory, the immediate and proximate cause of the injury being
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.
 REYES v CA G.R. No. 130547 October 3, 2000
FACTS:
Reyes had been suffering from a recurring fever with chills. He was taken to the
Mercy Community Clinic. He was attended to by Dr. Rico, who gave physical examination
and took his medical history. Typhoid fever was then prevalent in the locality, as the clinic
had been getting from 15 to 20 cases of typhoid per month. Suspecting typhoid fever, Dr.
Rico ordered a Widal Testto be performed on Jorge. Dr. Rico concluded from the results that
patient was suffering from typhoid fever. As her shift was only up to 5:00 p.m., Dr. Rico
indorsed Jorge to respondent Dr. Blanes. Dr. Blanes attended to Jorge. Like Dr. Rico, her
impression was typhoid fever. She ordered that a compatibility test with the antibiotic
chloromycetin be done on Jorge. As she did not observe any adverse reaction,she ordered
the first five hundred milligrams and second dose at about three hours later.At around 1:00
a.m., Dr. Blanes was called as Jorge‗s temperature rose to 41°C. Dr. Blanes put him under
oxygenand administered hydrocortisone but his convulsions returned. Dr. Blanes re-applied
the emergency measures and valium was administered. Jorge, however, did not respond to
the treatment and slipped into cyanosis. At around 2:00 a.m., Jorge died. The cause of his
death was Ventricular Arrythemia Secondary to Hyperpyrexia and typhoid fever.
ISSUE:
Whether or not defendants exercised the required diligence in medical practice
RULING:
While it is true that the patient died just a few hours after professional medical
assistance was rendered, there is really nothing unusual or extraordinary about his death.
Prior to his admission, the patient already had recurring fevers and chills for five days
unrelieved by the analgesic, antipyretic, and antibiotics given to him by his wife. This shows
that he had been suffering from a serious illness and professional medical help came too
late for him. Petitioners contend that Dr. Marlyn Rico hastily relied upon the Widal Test
diagnosed Jorges illness as typhoid fever, and immediately prescribed the administration of
the antibiotic chloromycetin and Dr. Marvie Blanes erred in ordering the administration of
the second dose of 500 milligrams of chloromycetin barely three hours after the first was
given. Petitioners presented the testimony of Dr. Apolinar Vacalares, Chief Pathologist of the
Northern Mindanao Training Hospital, Cagayan de Oro City, who performed an autopsy on
the body of Jorge Reyes. Dr. Vacalares testified that, based on his findings during the
autopsy, Jorge Reyes did not die of typhoid fever but of shock undetermined, which could
be due to allergic reaction or chloromycetin overdose. This was, however, found to be
untenable by the Supreme Court since Dr. Vacalares, who was presented by the petitioners,
is not a specialist on infectious diseases and even admitted that he had not yet performed
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,
as held by the Court of Appeals, even if the deceased suffered from an anaphylactic shock,
this, of itself, would not yet establish the negligence of the appellee-physicians for all that
the law requires of them is that they perform the standard tests and perform standard
procedures. The law cannot require them to predict every possible reaction to all drugs
administered. The onus probandi was on the appellants to establish, before the trial court,
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.
CO V. CA G.R. No. 112330 August 17, 1999
FACTS:
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
the United States she paid amounts of $1,000.00 and P40,000.00 as earnest money, in order that the
same may be reserved for her purchase, said earnest money to be deducted from the total purchase
price. The purchase price of $100,000.00 is payable in two payments $40,000.00 on December 4, 1984
and the balance of $60,000.00 on January 5, 1985. On January 25, 1985, although the period of
payment had already expired, she paid to the defendant Melody Co in the United States, the sum of
$30,000.00, as partial payment of the purchase price. Spouses Co‗s counsel, Atty. Leopoldo Cotaco,
wrote a letter to the plaintiff dated March 15, 1985, demanding that she pay the balance of $70,000.00
and not receiving any response thereto, said lawyer wrote another letter to plaintiff dated August 8,
1986, informing her that she has lost her option to purchase the property subject of this case and
offered to sell her another property. Atty. Estrella O. Laysa, counsel of Custodio, wrote a letter to Atty.
Leopoldo Cotaco informing him that Custodio is now ready to pay the remaining balance to complete
the sum of $100,000.00, the agreed amount as selling price‗ and on October 24, 1986, plaintiff filed
the instant complaint. The trial court ruled in favor of Custodio and ordered the spouses Co to
refund the amount of $30,000.00. Not satisfied with the decision, the spouses Co appealed to the
Court of Appeals, which affirmed the decision of the RTC. Hence, this appeal.
ISSUE:
Whether or not the Court of Appeals erred in ordering the Cos to return the $30,000.00 paid by
Custodio pursuant to the ―option granted to her.
RULING:
An option is a contract granting a privilege to buy or sell within an agreed time and at a
determined price. It is a separate and distinct contract from that which the parties may enter into upon
the consummation of the option. It must be supported by consideration. However, the March 15, 1985
letter sent by the COS through their lawyer to Custodio reveals that the parties entered into a
perfected contract of sale and not an option contract.
A contract of sale is a consensual contract and is perfected at the moment there is a meeting
of the minds upon the thing which is the object of the contract and upon the price. From that moment
the parties may reciprocally demand performance subject to the provisions of the law governing the
form of contracts
The elements of a valid contract of sale under Article 1458 of the Civil Code are (1) consent or
meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent.
As evidenced by the March 15, 1985 letter, all three elements of a contract of sale are present in the
transaction between the petitioners and respondent. Custodio‗s offer to purchase the Beata property,
subject of the sale at a price of $100,000.00 was accepted by the Cos. Even the manner of payment of
the price was set forth in the letter. Earnest money in the amounts of US$1,000.00 and P40,000.00 was
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.
Despite the fact that Custodio’s failure to pay the amounts of US$40,000.00 and US$60,000.00
on or before December 4, 1984 and January 5, 1985 respectively was a breach of her obligation under
Article 1191 of the Civil Code, the Co’s did not sue for either specific performance or rescission of the
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
letter. In the absence of an express stipulation authorizing the sellers to extrajudicially rescind the
contract of sale, the Cos cannot unilaterally and extrajudicially rescind the contract of sale.
 ONG YONG V. DAVID S. TIU G.R. No. 144476
February 1, 2002
FACTS:
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
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
Telamart transferred titles of 2 properties in favor of FLADC. The Ongs had to pay P70M
more, aside from their P100M subscription payment in order to settle the P190M loan of
FLADC from PNB. The Tius also had to advance P20M, which amount was loaned to them by
the Ongs. The Tius rescinded the Pre- Subscription Agreement when the Ongs refused to
credit the FLADC shares in the name of Masagana Telamart commensurate to its 1, 902.30
sq. meter contribution and to credit the number of FLADC shares in favor of the Tius
commensurate to its 151 sq. meter property contribution; and when David Tius and Cely
Tiu were proscribed from assuming and performing their duties as V-P and Treasurer. SEC
confirmed the unilateral rescission of the agreement.
ISSUE:
Whether the rescission applies only to reciprocal obligations and the Pre-
Subscription agreement does not provide for reciprocity.
RULING:
In a contract of sale, the correlative duty of the obligation of the seller to deliver the
property is the obligation of the buyer to pay the agreed price. In the case, the correlative
obligation of the Tius to let the Ongs have and exercise the functions of the positions of
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-
Subscription Agreement’s specific performance yet they also actually failed to give a legal
basis therefor. They deny that the Tiu Group has a right to ask for rescission of their
agreement per Article 1191 of the Civil Code when they themselves invoke the same law as
basis for asking the specific performance of the same agreement. The CA then correctly
confirmed the rescission of the Pre-Subscription Agreement on the basis of Article 1191 of
the Civil Code. As a legal consequence of rescission, the order of the CA to return the cash
and property contribution of the parties is based on law, hence, cannot be considered an
act of misappropriation. In order for the rescission of the Pre-Subscription Agreement be
implemented, the returning to the two groups whatever they delivered to the corporation in
accordance with the Agreement is needed.
TAN V. OMC CARRIERS G.R. No. 190521 January 12, 2011
FACTS:
Respondent OMC Carriers owned a truck, driven by respondent Arambala, which crashed
into the home of petitioners Tan when its braking mechanism failed. This caused the death
of the head of the family, Celedonio Tan. The Tans went to court to demand damages due to
the negligence of OMC. OMC counters that the truck went out of control because of motor
oil spilled on the road. The RTC found OMC to be liable, that the brake of the truck
malfunctioned, and that there was no motor oil which caused the accident. The driver,
Aramballa, abandoned the truck when the brakes did not work which caused the truck to
slam into the home of the Tans. The RTC awarded actual damages, both on the loss of
property and earning capacity of Celedonio. Exemplary damages were also awarded. Upon
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
deleted for being totally unsubstantiated. The Tans were unable to present documents to
ascertain the amount of earning capacity lost. Exemplary damages were also reduced.
ISSUE:
Whether or not: a) the reduction of actual damages for loss of property was proper;
b)the removal of actual damages for loss of earning capacity was proper; and c) whether or
not the reduction of exemplary damages was proper.
RULING:
The petition is partly meritorious. Temperate damages are awarded when the exact
amount of damages is unknown. The petitioners clearly suffered damages. Their home and
property were damaged. The provider of the family passed away. It is clear and undisputed
that they did suffer losses. However, since the value of the properties damaged could not
be determined with certainty because of the nature of the property, temperate damages
are in order. Also, even if there are no documents supporting the earning capacity of the
deceased, the damage caused is still undisputed. Temperate damages must be awarded.
The reduction of exemplary damages is proper as exemplary damages are not meant to
enrich or reduce another party to poverty.
 YOBIDO V. CA G.R. No. 113003 October 17,
1997
FACTS:
On April 26, 1988, spouses Tito and Leny Tumboy and their minor children named
Ardee and Jasmin, boarded at Mangagoy, Surigao del Sur, a Yobido Liner bus bound for
Davao City. Along Picop Road in Km. 17, Sta. Maria, Agusan del Sur, the left front tire of the
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
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
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
hand, the defendants raised the affirmative defense of caso fortuito.
ISSUE:
Whether or not petitioners should be exempt from liability because the tire blowout
was a fortuitous event.
RULING:
As a rule, when a passenger boards a common carrier, he takes the risks incidental
to the mode of travel he has taken. After all, a carrier is not an insurer of the safety of its
passengers and is not bound absolutely and at all events to carry them safely and without
injury. However, when a passenger is injured or dies, while traveling, the law presumes that
the common carrier is negligent. Thus, the Civil Code provides under Article 1755 that a
common carrier is bound to carry the passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with a due regard for all
the circumstances. Accordingly, in culpa contractual, once a passenger dies or is injured,
the carrier is presumed to have been at fault or to have acted negligently. This disputable
presumption may only be overcome by evidence that the carrier had observed
extraordinary diligence as prescribed by Articles 1733, 10 1755 and 1756 of the Civil Code
or that the death or injury of the passenger was due to a fortuitous event. Consequently,
the court need not make an express finding of fault or negligence on the part of the carrier
to hold it responsible for damages sought by the passenger.
The petitioners' contention that they should be exempt from liability because the tire
blowout was no more than a fortuitous event that could not have been foreseen, must fail.
Under the circumstances of this case, the explosion of the new tire may not be considered
a fortuitous event. There are human factors involved in the situation. The fact that the tire
was new did not imply that it was entirely free from manufacturing defects or that it was
properly mounted on the vehicle. Neither may the fact that the tire bought and used in the
vehicle is of a brand name noted for quality, resulting in the conclusion that it could not
explode within five days' use. It is settled that an accident caused either by defects in the
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
had been proven. However, the same damages may be recovered when breach of contract
of carriage results in the death of a passenger, as in this case. Exemplary damages,
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
wanton, fraudulent, reckless, oppressive, or malevolent manner. Because petitioners failed
to exercise the extraordinary diligence required of a common carrier, which resulted in the
death of Tito Tumboy, it is deemed to have acted recklessly. As such, private respondents
shall be entitled to exemplary damages.
INSULAR LIFE V. ROBERT YOUNG G.R. No. 140964 January 16, 2002
FACTS:
Respondent, together with his associates and co-respondents, acquired by purchase
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
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
intention to purchase 99.82% of its outstanding capital stock, subject to the condition that
the ownership of all the shares will be consolidated in Young's name, he also paid Young a
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-
term loan from Interbank. However, the stockholder backed out from the intended sale and
demanded the return of his downpayment. Meanwhile, Young's loan from Interbank became
due, causing his serious financial problem. It was to the end that Insular Life and Young
MOA, wherein Insular Life and its Pension Fund agreed to purchase the common shares,
subject to certain condition precedents. A due diligence audit was then done on the bank,
pursuant to said MOA, where it was found that Young committed misrepresentations against
the terms and conditions of said MOA.
ISSUE:
Whether the MOA is valid and enforceable between the parties despite respondent
Young's failure to comply with the terms and conditions thereof.
RULING:
The provisions of the MOA negate the existence of a perfected contract of sale. The
MOA is merely a contract to sell since the parties therein specifically undertook to enter
into a contract of sale if the stipulated conditions are met and the representation and
warranties given by Young prove to be true. The obligation of petitioner Insular Life to
purchase, as well as the concomitant obligation of Young to convey to it the shares, are
subject to the fulfillment of the conditions contained in the MOA. Once the conditions,
representation and warranties are satisfied, then it is incumbent upon the parties to
perform their respective obligations under the contract. Conversely, in the event that these
conditions are not met or complied with, no obligation on the part of either party arises.
JESPAJO REALTY CORP V. CA G.R. No. 113626 September 27, 2002
FACTS: FACTS:
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
ISSUE:
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?
ISSUE: RULING:
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
RULING:
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:
QTCI is a duly licensed broker engaged in the trading of commodity futures. In 1995,
Guillermo Mendoza, Jr. (Mendoza) and Oniler Lontoc (Lontoc) of QTCI met with respondent
Thomas George (respondent), encouraging the latter to invest with QTCI. On July 7, 1995,
upon Mendoza's prodding, respondent finally invested with QTCI. On the same day, Collado,
in behalf of QTCI, and respondent signed the Customer's Agreement. Forming part of the
agreement was the Special Power of Attorney executed by respondent, appointing Mendoza
as his attorney-infact with full authority to trade and manage his account. On June 20,
1996, the Securities and Exchange Commission (SEC) issued a CeaseandDesist Order
against QTCI. Alarmed by the issuance of the CDO, respondent demanded from QTCI the
return of his investment, but it was not heeded. QTCI claimed that they were not aware of,
nor were they privy to, any arrangement which resulted in the account of respondent being
handled by unlicensed brokers. They pointed out that respondent transacted business with
QTCI for almost a year, without questioning the license or the authority of the traders
handling his account, rendering him estopped. It was only after it became apparent that
QTCI could no longer resume its business transactions by reason of the CDO that
respondent raised the alleged lack of authority of the brokers or traders handling his
account.
ISSUE:
Whether or not QTCI should be held liable for the loss incurred by George in the
investment he made with the corporation.
RULING:
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
of QTCI, concluded the Customer's Agreement despite the fact that the appointed attorney-
in-fact was not a licensed dealer. Worse, petitioners permitted Mendoza to handle
respondent's account. Doctrine dictates that a corporation is invested by law with a
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
corporation cannot be held personally liable for the liabilities of the latter. Personal liability
of a corporate director, trustee, or officer, along (although not necessarily) with the
corporation, may validly attach, as a rule, only when - (1) he assents to a patently unlawful
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
stockholders, or other persons; (2) he consents to the issuance of watered down stocks or
who, having knowledge thereof, does not forthwith file with the corporate secretary his
written objection thereto; (3) he agrees to hold himself personally and solidarily liable with
the corporation; or (4) he is made by a specific provision of law personally answerable for
his corporate action.
Romeo Lau, as president of [petitioner] QTCI, cannot feign innocence on the
existence of these unlawful activities within the company, especially so that Collado,
himself a ranking officer of QTCI, is involved in the unlawful execution of customers’ orders.
TAN V. COURT OF APPEALS G.R. No. 116285 October 19, 2001
FACTS:
On May 14, 1978 and July 6, 1978, petitioner Antonio Tan obtained two (2) loans each in the
principal amount of Two Million Pesos (P2,000,000.00), or in the total principal amount of Four Million
Pesos (P4,000,000.00) from respondent Cultural Center of the Philippines (CCP, for brevity) evidenced
by two (2) promissory notes with maturity dates on May 14, 1979 and July 6, 1979, respectively.
Petitioner defaulted but after a few partial payments he had the loans restructured by respondent CCP,
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
(P3,411,421.32) payable in five (5) installments. Petitioner Tan failed to pay any installment on the said
restructured loan of Three Million Four Hundred Eleven Thousand Four Hundred Twenty-One Pesos and
Thirty-Two Centavos (P3,411,421.32), the last installment falling due on December 31, 1980. In a letter
dated January 26, 1982, petitioner requested and proposed to respondent CCP a mode of paying the
restructured loan, i.e., (a) twenty percent (20%) of the principal amount of the loan upon the
respondent giving its conformity to his proposal; and (b) the balance on the principal obligation
payable in thirty-six (36) equal monthly installments until fully paid. On October 20, 1983, petitioner
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
the peso devaluation. No favorable response was made to said letters. Instead, respondent CCP,
through counsel, wrote a letter dated May 30, 1984 to the petitioner demanding full payment, within
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
(P6,088,735.03).
ISSUE:
Whether or not interest may accrue on the penalty or compensatory interest without violating
the provisions of Article 1959 of the New Civil Code.
RULING:
Penalty clauses can be in the form of penalty or compensatory interest. Thus, the compounding
of the penalty or compensatory interest is sanctioned by and allowed pursuant to the above-quoted
provision of Article 1959 of the New Civil Code.
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
has made partial payments which showed his good faith, a reduction of the penalty charge from two
percent (2%) per month on the total amount due, compounded monthly, until paid can indeed be
justified under the said provision of Article 1229 of the New Civil Code.
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
twenty-one (21) years since his default in 1980, we find it fair and equitable to reduce the penalty
charge to a straight twelve percent (12%) per annum on the total amount due starting August 28,
1986, the date of the last Statement of Account (Exhibits C to C-2). We also took into consideration the
offers of the petitioner to enter into a compromise for the settlement of his debt by presenting
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
are not unmindful of the respondents long overdue deprivation of the use of its money collectible from
the petitioner.
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
(12%) per annum starting from August 28, 1986. With costs against the petitioner.
PABUGAIS V. SAHIJWANI G.R. No. 156846
February 23, 2004
FACTS:
Pursuant to an Agreement And Undertaking dated December 3, 1993, petitioner
Teddy G. Pabugais, in consideration of the amount of Fifteen Million Four Hundred Eighty
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
Park, Makati, Metro Manila. Respondent paid petitioner the amount of P600,000.00 as
option/reservation fee and the balance of P14,887,500.00 to be paid within 60 days from
the execution of the contract, simultaneous with delivery of the owners duplicate Transfer
Certificate of Title in respondents name the Deed of Absolute Sale; the Certificate of NonTax
Delinquency on real estate taxes and Clearance on Payment of Association Dues. The
parties further agreed that failure on the part of respondent to pay the balance of the
purchase price entitles petitioner to forfeit the P600,000.00 option/reservation fee; while
non-delivery by the latter of the necessary documents obliges him to return to respondent
the said option/reservation fee with interest at 18% per annum.
Petitioner failed to deliver the required documents. In compliance with their
agreement, he returned to respondent the latters P600,000.00 option/reservation fee by
way of Far East Bank & Trust Company Check No. 25AO54252P, which was, however,
dishonored. Petitioner claimed that he twice tendered to respondent, through his counsel,
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
attempt to tender payment was allegedly made on August 3, 1994 through his messenger;
while the second one was on August 8, 1994, when he sent via DHL Worldwide Services,
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
with the Regional Trial Court of Makati City. On August 15, 1994, petitioner filed a complaint
for consignation.
ISSUE:
Whether or not there was valid consignation.
RULING:
Anent the sufficiency of the amount tendered, it appears that only the interest of
18% per annum on the P600,000.00 option/reservation fee stated in the default clause of
the Agreement And Undertaking was agreed upon by the parties, thus, DEFAULT In case the
FIRST PARTY [herein respondent] fails to pay the balance of the purchase price within the
stipulated due date, the sum of P600,000.00 shall be deemed forfeited, on the other hand,
should the SECOND PARTY [herein petitioner] fail to deliver within the stipulated period
the documents hereby undertaken, the SECOND PARTY shall return the sum of P600,000.00
with interest at 18% per annum. The managers check in the amount of P672,900.00
(representing the P600,000.00 option/reservation fee plus 18% interest per annum
AUDION ELECTRIC V. NATIONAL LABOR RELATIONS COMMISSION G.R. No. 106648
June 17, 1999
computed from December 3, 1993 to August 3, 1994) which was tendered but refused by
respondent, and thereafter consigned with the court, was enough to satisfy the obligation.
There being a valid tender of payment in an amount sufficient to extinguish the obligation,
the consignation is valid.
C.F. SHARP V. NORTHWEST AIRLINES G.R. No. 133498; April 18, 2002
FACTS:
On May 9, 1974, respondent, through its Japan Branch, entered an International
Passenger Sales Agency Agreement with petitioner, authorizing the latter to sell its air
transport tickets. Petitioner, however, failed to remit the proceeds of the ticket sales, for
which reason the respondent filed a collection suit against petitioner before the Tokyo
District Court. The said court ordered petitioner to pay respondent including damages for
the delay. Unable to execute the decision in Japan, respondent filed a case to enforce said
judgment with the regional trial court of Manila, which dismissed the case. This was
affirmed by the Court of Appeals, and was subsequently partly affirmed by the Supreme
Court. CF Sharp was then ordered to pay Northwest so that the RTC issued a writ of
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
fully paid, 6% damages and 6% interest. An appeal, the Court of Appeals reduced the
interest and it ruled that the basis of the conversion of petitioner’s liability in its peso
equivalent should be the prevailing rate at the time of payment and not the rate on the
date of the foreign judgment.
ISSUE:
Whether or not the basis for the payment of the amount due is the value of the
currency at the time of the establishment of the obligation.
RULING:
The rule that the value of currency at the time of the establishment of the obligation
shall be the basis of payment finds application only when there is an official
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
of an extra ordinary inflation or deflation of the currency stipulated should supervene, the
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,
stipulations on the satisfaction of obligations in foreign currency are void. Payments of
monetary obligations, subject to certain exceptions, shall be discharged in the currency,
which is the legal tender of the Philippines. But since the law doesn’t provide for the rate of
exchange for the payment of foreign currency obligations incurred after its enactment,
jurisprudence held that the exchange rate should be the prevailing rate at time of payment.
This law has been amended, allowing payments for obligations to be made in currency
other than Philippine currency but then again, it failed to state what the exchange rate that
should be used. This being the case the jurisprudence regarding the use of the exchange
rate at time of payment shall be used.
FACTS:
 From the position paper and affidavit corroborated by oral testimony, it appears that
complainant was employed by respondent Audion Electric Company on June 30, 1976 as
fabricator and continuously rendered service assigned in different offices or projects as
helper electrician, stockman and timekeeper. He has rendered thirteen (13) years of
continuous, loyal and dedicated service with a clean record. On August 3, complainant was
surprised to receive a letter informing him that he will be considered terminated after the
turnover of materials, including respondents‘ tools and equipment not later than August 15,
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
and attorney‘s fees.
ISSUE:
Whether or not petitioner was denied due process when all the money claims of
private respondent - overtime pay, project allowances, salary differential, proportionate
13th month pay, moral and exemplary damages as well as attorney‘s fees, were granted.
RULING:
Respondent‘s assigning complainant to its various projects did not make
complainant a project worker. As found by the Labor Arbiter, it appears that complainant
was employed by respondent as fabricator and or projects as helper electrician, stockman
and timekeeper. Simply put, complainant was a regular non-project worker. Private
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
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
amount of P256.50 and the proportionate 13th month pay for the period covering January
to May 1988, November-December 1988, and from January to August 1989. This same
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
his representative to appear thereat. On the other hand, petitioner submitted its unverified
Comment to private respondent‘s complaint stating that he had already satisfied the
unpaid wages and 13th month pay claimed by private respondent, but this was not
considered by the Labor Arbiter for being unverified. Petitioner failed to rebut the claims of
private respondent. It failed to show proof by means of payroll or other evidence to
disprove the claim of private respondent. Petitioner was given the opportunity to cross-
examine private respondent yet petitioner forfeited such chance when it did not attend the
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
established with clear and convincing evidence. Private respondent predicated his claim for
such damages on his own allegations of sleepless nights and mental anguish, without
establishing bad faith, fraud or ill motive as legal basis therefor. Private respondent not
being entitled to award of moral damages, an award of exemplary damages is likewise
baseless. Where the award of moral and exemplary damages is eliminated, so must the
award for attorney‘s fees be deleted. Private respondent has not shown that he is entitled
thereto pursuant to Art. 2208 of the Civil Code.
BENOS V. LAWILAO G.R. No. 172259 December 5, 2006
FACTS:
On February 11, 1999, petitioner-spouses Benos and respondent Lawilao executed a
Pacto de Retro Sale where Benos sold their lot and the building erected thereon for
P300,000, one-half of which to be paid in cash to the Benos and the other half to be paid to
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
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,
eventually the loan become due and demandable. On August 14, 2000, a son of Benos and
Lawilao paid the bankl but the bank refused. Lawilao filed for consignation against the bank
and deposited the amount of P159,000.00. RTC declared Lawilao of the ownership of the
subject property, which was affirmed by the Court of Appeals.
ISSUE:
Whether or not the contract of Pacto de Retro Sale may be rescinded by the
petitioner.
RULING:
In the instant case, records show that Lawilao filed the petition for consignation
against the bank in Civil Case without notifying the Benos. Hence, Lawilao failed to prove
their offer to pay the balance, even before the filing of the consignation case. Lawilao never
notified the Benos. Thus, as far as the Benos are concerned, there was no full and complete
payment of the contract price which gives them the right to rescind.
Petition is granted. Court of Appeals decision is reversed and set aside, that the
Pacto de Retro Sale is rescinded and petitioner are ordered to return the amount of
P150,000 to respondents.
 LOPEZ VITO V. TAMBUNTING G.R. NO. 9806 January 19, 1916; 33 PHIL 226
FACTS:
These proceedings were brought to recover from the defendant the sum of P2,000,
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,
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
fulfill was already extinguished.
The Court of First Instance of Manila, after hearing the evidence introduced by both
parties, rendered judgment on December 17, 1913, ordering the defendant to pay to the
plaintiff the sum of P700, without express finding as to costs. The defendant, after entering
a motion for a new trial, which was denied, appealed from said judgment and forwarded to
this court the proper bill of exceptions.
ISSUE:
Whether or not the obligation alleged in the complaint has already been
extinguished.
RULING:
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
from the defendant after he had finished rendering the services in question was in the
latter's possession, and this fact was alleged by him as proof that he had already paid said
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
been paid to the plaintiff.
Number 8 of section 334 of the Code of Civil Procedure provides as a legal
presumption "that an obligation delivered up to the debtor has been paid." Article 1188 of
the Civil Code also provides that the voluntary surrender by a creditor to his debtor, of a
private instrument proving a credit, implies the renunciation of the right of action against
the debtor; and article 1189 prescribes that whenever the private instrument which
evidences the debt is in the possession of the debtor, it will be presumed that the creditor
delivered it of his own free will, unless the contrary is proven.
But the legal presumption established by the foregoing provisions of law cannot
stand if sufficient proof is adduced against it. In the case at bar the trial court correctly
held that there was sufficient evidence to the contrary, in view of the preponderance
thereof in favor of the plaintiff and of the circumstances connected with the defendant's
possession of said receipt. Furthermore, in order that such a presumption may be taken
into account, it is necessary, as stated in the laws cited, that the evidence of the
obligation be delivered up to the debtor and that the delivery of the instrument proving
the credit be made voluntarily by the creditor to the debtor. In the present case, it cannot
be said that these circumstances concurred, inasmuch as when the plaintiff sent the
receipt to the defendant for the purpose of collecting his fee, it was not his intention that
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
the costs of this instance against the appellant.
FRANCIA V. CA G.R. NO. L-67649 June 28, 1988
FACTS:
Engracio Francia is the registered owner of a residential lot and a two-story house
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
expropriated by the Republic of the Philippines for the sum of P4,116.00representing the
estimated amount equivalent to the assessed value of the aforesaid portion. Since 1963 up
to 1977 inclusive, Francia failed to pay his real estate taxes. Thus, on December 5, 1977,
his property was sold at public auction by the City Treasurer of Pasay City in order to satisfy
a tax delinquency of P2,400.00. Ho Fernandez was the highest bidder for the property.
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
of title. Upon verification through his lawyer, Francia discovered that a Final Bill of Sale had
been issued in favor of Ho Fernandez by the City Treasurer on December 11, 1978. The
auction sale and the final bill of sale were both annotated at the back of TCT No. 4739
(37795) by the Register of Deeds.
ISSUE:
Whether or not Francia’s tax delinquency has been extinguished by legal
compensation.
RULING:
There is no legal basis for the contention. By legal compensation, obligations of
persons, who in their own right are reciprocally debtors and creditors of each other, are
extinguished. The circumstances of the case do not satisfy the requirements provided by
Article 1279 (1) that each one of the obligors be bound principally and that he be at the
same time a principal creditor of the other; (2) that the two debts be due.The court ruled
that there can be no off-setting of taxes against the claims that the taxpayer may have
against the government. A person cannot refuse to pay a tax on the ground that the
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
claim against the governmental body not included in the tax levy.The tax was due to the
city government while the expropriation was effected by the national government.
Moreover, the amount of P4,116.00 paid by the national government for the 125 square
meter portion of his lot was deposited with the Philippine National Bank long before the
sale at public auction of his remaining property. It would have been an easy matter to
withdraw P2,400.00 from the deposit so that he could pay the tax obligation thus aborting
the sale at public auction.Petitioner had one year within which to redeem his property
although, he claimed that he pocketed the notice of the auction sale without reading it.
Petitioner, therefore, was notified about the auction sale. It was negligence on his part
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,
 VECTOR SHIPPING V. AMERICAN HOME ASSURANCE CPO. G.R. No. 159213 July
03, 2013
FACTS:
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
December 20, 1987, the M/T Vector and the M/V Doña Paz, the latter a vessel owned and
operated by Sulpicio Lines, Inc., collided in the open sea near Dumali Point in Tablas Strait,
located between the Provinces of Marinduque and Oriental Mindoro. The collision led to the
sinking of both vessels. The entire petroleum cargo of Caltex on board the M/T Vector
perished. On July 12, 1988, respondent indemnified Caltex for the loss of the petroleum
cargo in the full amount of P7,455,421.08. On March 5, 1992, respondent filed a complaint
against Vector, Soriano, and Sulpicio Lines, Inc. to recover the full amount of P7,455,421.08
it paid to Caltex
ISSUE:
Has the prescriptive period elapsed?
RULING:
Article 1144. “The following actions must be brought within ten years from the time
the cause of action accrues: (1) Upon a written contract; (2) Upon an obligation created by
law: (3) Upon a judgment.” The court finds that that the present action was not upon a
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
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
complained of, the insurance company shall be subrogated to the rights of the insured
against the wrongdoer or the person who has violated the contract. If the amount paid by
the insurance company does not fully cover the injury or loss, the aggrieved party shall be
entitled to recover the deficiency from the person causing the loss or injury.” Considering
that the cause of action accrued as of the time respondent actually indemnified Caltex in
the amount of P7,455,421.08 on July 12, 1988, the action was not yet barred by the time of
the filing of its complaint on March 5, 1992, which was well within the 10-year period
prescribed by Article 1144 of the Civil Code.
TANAY RECREATION V. FAUSTO G.R. No. 140182 April 12, 2005
FACTS:
Tanay Recreation Center and Development Corp. is the lessee of a 3 property
located in Sitio Gayas, Tanay, Rizal, owned by Catalina Matienzo Fausto, under a Contract of
Lease. The lease contract provided for a 20-year term, subject to renewal within sixty days
prior to its expiration. It also provided that should Fausto decide to sell the property, Tanay
shall have the priority right to purchase the same. On June 17, 1991, Tanay wrote Fausto
informing her of its intention to renew the lease. However, it was Fausto’s daughter,
Anunciacion F. Pacunayen, asking that Tanay remove the improvements built thereon, as
she is now the absolute owner of the property. Fausto had earlier sold the property to
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,
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
when it merely asked for a renewal of the lease. According to Fausto, when they met to
discuss the matter, Tanay did not demand for the exercise of its option to purchase the
property, and it even asked for grace period to vacate the premises.
ISSUE:
Is Tanay estopped from claiming its priority right?
RULING:
NO. When a lease contract contains a right of first refusal, the lessor is under a legal
duty to the lessee not to sell to anybody at any price until after he has made an offer to sell
to the latter at a certain price and the lessee has failed to accept it. The lessee has a right
that the lessor's first offer shall be in his favor. Tanay’s right of first refusal is an integral
and indivisible part of the contract of lease and is inseparable from the whole contract. The
consideration for the lease includes the consideration for the right of first refusal and is
built into the reciprocal obligations of the parties. ART. 1311 states that “Contracts take
effect only between the parties, their assigns and heirs, except in case where the rights and
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
FACTS:
Macgraphics owned several billboards one of which was a billboard located at the Magallanes
Interchange. The Magallanes billboard was leased by Macgraphics to Sime Darby at a monthly rental of
P120,000.00. The lease had a term of 4 years. Sime Darby paid Macgraphics P1.2 million for the 10-
month deposit applied to the last ten months of the lease. Macgraphics configured the Magallanes
billboard to feature Sime Darbys name and logo. Sime Darby executed a Memorandum of Agreement,
with Goodyear, agreeing to sell its tire manufacturing plants and other assets for P1.5 billion. Goodyear
improved its offer to buy the assets of Sime Darby for P1.65 billion. The increase of the purchase price
was made in consideration of the assignment by Sime Darby of the receivables in connection with its
billboard advertising in other places. Sime Darby and Goodyear executed a Deed of Assignment in
connection with Microwave Communication Facility and in connection with Billboard Advertising which
Sime Darby assigned its leasehold rights and deposits made to Macgraphics. Sime Darby then notified
Macgraphics of the assignment of the Magallanes billboard in favor of Goodyear.
After submitting a new design for the Magallanes billboard to feature its name and logo,
Goodyear requested that Macgraphics submit its proposed quotation for the production costs of the
new design. Macgraphics informed Goodyear that the monthly rental of the Magallanes billboard is
P250,000.00 and explained that the increase in rental was in consideration of the provisions and
technical aspects of the submitted design. Goodyear replied that due to budget constraints, it could
not accept Macgraphics offer to integrate the cost of changing the design to the monthly rental.
Goodyear stated that it intended to honor the P120,000.00 monthly rental. They requested
Macgraphics send its quotation for the simple background repainting and re-lettering of the neon
tubing for the Magallanes billboard. Macgraphics sent a letter to Sime Darbyinforming the latter that it
could not give its consent to the assignment of lease to Goodyear. Macgraphics explained that the
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
manpower and resources that it did not foresee at the inception of the lease. Macgraphics advised
Goodyear that any advertising service it intended to get from them would have to wait until after the
expiration or valid pre-termination of the lease then existing with Sime Darby. Due to Macgraphics
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
Darbys leasehold rights over the Magallanes billboard.
ISSUE:
Was there Estoppel by laches?
RULING:
There was never a delay. The issue raised by Sime Darby for the first time only in this Court.
Basic is the rule that issues not raised below cannot The Issues not raised below cannot be raised for
the first time on appeal. Points of law, theories, issues and arguments not brought to the attention of
the lower court need not be, and ordinarily will not be, considered by the reviewing court, as they
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
time, to do that which, by exercising due diligence, could or should have been done earlier; it is
negligence or omission to assert a right within a reasonable time, warranting the presumption that the
party entitled to assert it either has abandoned or declined to assert it. There is no absolute rule as to
what constitutes laches or staleness of demand; each case is to be determined according to its
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.
DUNCAN V. GLAXO Gr No. 162994 September 17, 2004
FACTS:
Petitioner Pedro A. Tecson was hired by respondent Glaxo Welcome Philippines, Inc. (Glaxo) as
medical representative on October 24, 1995, after Tecson had undergone training and orientation.
Tecson signed a contract of employment which stipulates, among others, that he agrees to study and
abide by existing company rules; to disclose to management any existing or future relationship by
consanguinity or affinity with co-employees or employees of competing drug companies and should
management find that such relationship poses a possible conflict of interest, to resign from the
company. The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to
inform management of any existing or future relationship by consanguinity or affinity with co-
employees or employees of competing drug companies. If management perceives a conflict of interest
or a potential conflict between such relationship and the employee’s employment with the company,
the management and the employee will explore the possibility of a "transfer to another department in
a non-counterchecking position" or preparation for employment outside the company after six months.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra
Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy was Astra’s Branch Coordinator in Albay. Even
before they got married, Tecson received several reminders from his District Manager regarding the
conflict of interest which his relationship with Bettsy might engender. Still, love prevailed, and Tecson
married Bettsy in September 1998. Tecson’s superiors informed him that his marriage to Bettsy gave
rise to a conflict of interest. His superiors reminded him that he and Bettsy should decide which one of
them would resign from their jobs, although they told him that they wanted to retain him as much as
possible because he was performing his job well. In November 1999, Glaxo transferred Tecson to the
Butuan City-Surigao City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider its decision, but
his request was denied.
ISSUE/S:
Whether/not the court of appeals erred in ruling that glaxo’s policy against its employees
marrying employees from competitor companies is valid, and in not holding that said policy violates
the equal protection clause of the constitution.
RULING:
No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo’s policy
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
formulas, marketing strategies and other confidential programs and information from competitors,
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
Glaxo’s employees is reasonable under the circumstances because relationships of that nature might
compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims
to protect its interests against the possibility that a competitor company will gain access to its secrets
and procedures.
In any event, from the wordings of the contractual provision and the policy in its employee
handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships between
its employees and those of competitor companies. Its employees are free to cultivate relationships
with and marry persons of their own choosing. What the company merely seeks to avoid is a conflict of
interest between the employee and the company that may arise out of such relationships.
 VILLEGAS V. COURT OF APPEALS G.R. No. 129977 February 1, 2001
FACTS:
Before September 6, 1973, Lot B-3-A, with an area of 4 hectares was registered
under TCT No. 68641 in the names of Ciriaco D. Andres and Henson Caigas. This land was
also declared for real estate taxation under Tax Declaration No. C2-4442. On September 6,
1973, Andres and Caigas, with the consent of their respective spouses, Anita Barrientos
and Consolacion Tobias, sold the land to Fortune Tobacco Corporation for P60, 000.00.
Simultaneously, they executed a joint affidavit declaring that they had no tenants on said
lot. On the same date, the sale was registered in the Office of the Register of Deeds of
Isabela. TCT No. 68641 was cancelled and TCT No. T-68737 was issued in Fortune’s name.
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
trial court. Although no title was mentioned in this deed, Domingo succeeded in registering
this document in the Office of the Register of Deeds on August 6, 1976, causing the latter
to issue TCT No. T-91864 in her name. It appears in this title that the same was a transfer
from TCT No. T-68641. On April 13, 1981, Domingo declared the lot for real estate taxation
under Tax Declaration No. 10-5633. On December 4, 1976, the Office of the Register of
Deeds of Isabela was burned together with all titles in the office. On December 17,1976,
the original of TCT No. T-91864 was administratively reconstituted by the Register of Deeds.
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.
This document was registered on June 3, 1981 and as a result TCT No. T-131807 was issued
by the Register of Deeds to Villegas. On the same date, the technical description of Lot B-3-
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,
Joselito Villegas.
On April 10, 1991, the trial court upon a petition filed by Fortune ordered the
reconstitution of the original of TCT No. T-68737. After trial on the merits, the trial court
rendered its assailed decision in favor of Fortune Tobacco, declaring it to be entitled to the
property. Petitioners thus appealed this decision to the Court of Appeals, which affirmed the
trial court’s decision.
ISSUE:
Whether or not the Court of Appeals was correct in affirming the trial court’s
decision.
RULING:
Even if Fortune had validly acquired the subject property, it would still be barred
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.
TAN V. GULLAS G.R. No. 143978 December 3, 2002
FACTS:
Respondents, were the registered owners of a parcel of land, they executed a special
power of attorney authorizing petitioners Tan, a licensed real estate broker, and his
associates Tecson and Saldaña, to negotiate for the sale of the land, at a commission of 3%
of the gross price. Tan contacted the Sisters of Mary of Banneaux, Inc. (hereafter, Sisters of
Mary), areligious organization interested in acquiring a property. The Sisters, who had
already seen and inspected the land, found the same suitable for their purpose and
expressed their desire to buy it.
However, they requested that the selling price be reduced. Respondents agreed to
sell the property to the Sisters of Mary. Petitioners went to see respondents who refused to
pay the broker’s fee and alleged that another group of agents was responsible for the sale
of land to the Sisters of Mary. Petitioners filed a complaint against the defendants for
recovery of their broker’s fee. They alleged that they were the efficient procuring cause in
bringing about the sale of the, but that their efforts in consummating the sale were
frustrated by the respondents who, in evident bad faith, malice and in order to evade
payment of broker’s fee, dealt directly with the buyer whom petitioners introduced to them.
ISSUES:
Whether or not the petitioners are entitled to the brokerage commission. An agent
distinguished from a broker.
RULINGS:
The records show that petitioner Tan is a licensed real estate broker, and other
petitioners his associates. "Broker" as "one who is engaged, for others, on a commission,
negotiating contracts relative to property with the custody of which he has no concern; the
negotiator between other parties, never acting in his own name but in the name of those
who employed him. x x x a broker is one whose occupation is to bring the parties together,
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
dispute as to the role that petitioners played in the transaction. "An agent receives a
commission upon the successful conclusion of a sale.
On the other hand, broker earns his pay merely by bringing the buyer and the seller
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
of the contract was concluded to their efforts.
 MONTECILLO V. REYNES G.R. No. 138018 July 26, 2002
FACTS:
Doctrine Effect of non-payment of price; Where the deed of sale states that the purchase price
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
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
register the lot in his name, claiming he was a buyer in good faith and for value. The trial court and CA
declared the DoS to Montecillo void, and this was affirmed by the SC. Facts · Ignacia Reynes owned a
lot (446 m2) in Mabolo, Cebu City and sold 158 m2 to the Sps. Abucay in 1981. In 1984, Reynes signed
a Deed of Sale conveying the Mabolo lot to Montecillo for P47,000 to be paid in 1 month. Montecillo did
not pay on time, but refused to return the DoS. Reynes executed a document revoking the sale, then
sold the entire lot to Sps. Abucay. However, Montecillo was able to register the land in his name, so
Reynes and the Sps. Abucay filed a complaint for Declaration of Nullity and Quieting of Title against
Montecillo, alleging that there was lack of consideration. · Montecillo claimed he was a buyer in good
faith and for value, as he allegedly already paid the P47,000. Yet, he admitted having a balance of
P10,000. Supposedly, he had paid P50,000 to Cebu Ice Storage for the release of a chattel mortgage
debt (of Jayag) which was a lien on the land. He alleged that he paid real property tax and capital gains
tax for the lot. · Reynes claimed Montecillo secured the release of chattel mortgage through
machination, and took advantage of the taxes paid by the Sps. Abucay to transfer the title to his name.
She denied anything to do with Jayag mortgage debt. The trial court declared the DoS to Montecillo
null and void, because there was no cause or consideration, considering that he had never paid
Reynes. Thus, the DoS produced no legal effect. The CA affirmed the decision in toto, hence this
appeal.
ISSUE:
Wether or not Montecillo should have paid the purchase price to Cebu Ice Storage.
RULING:
The DoS did not even state that the P47,000 was to be paid to Cebu Ice Storage. Montecillo did
not produce evidence showing that Reynes agreed to the payment of the price to CIS. Applying Art.
1420, payment to CIS would not extinguish the obligation of Montecillo to Reynes. Payment shall be
made to the person in whose favor the obligation has been constituted, or his successor in interest, or
any person authorized to receive it (2) It goes against common sense to think that Reynes would sell
her land but not gain a single centavo from the sale, the price going to CIS instead. The trial court
found that Reynes had no connection at all to Jayag mortgage debt with CIS. Thus, payment to CIS
could not redound to the benefit of Reynes. II. W/N the Deed of Sale is void ab initio or only rescissible
(VOID AB INITIO) (1) Contracts have 3 essential requisites: consent, object, and cause. Montecillo
argues that the DoS is a valid sale because all three requisites are present, that there is only a non-
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
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
P47,000. There was a total absence of consideration. He merely alleged that he had a remaining
balance of P10,000.
(2) This is not merely a case of failure to pay the purchase price, but a contract that lacks a
cause (hence it is void ab initio). Where the deed of sale states that the purchase price has been paid
but in fact has never been paid, the deed of sale is null and void ab inito for lack of consideration. In
Mapalo v. Mapalo contract of sale is null and void and produces no effect whatsoever where the same
is without cause or consideration in that the purchase price which appears thereon as paid has in fact
never been paid. De Catindig v. Heirs of Catalina Roque such a sale is non-existent or cannot be
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,
while Montecillo thought he should pay the price to Cebu Ice Storage to settle the mortgage debt. Held
Petiition is DENIED.
RURAL BANK OF STA. MARIA V. COURT OF APPEALS G.R. No. 110672 September 14, 1999
FACTS:
The Court Finds that a parcel of land of about 49,969 square meters, located in Residence
Section J, Camp 7, Baguio City, covered by TCT T-29817 (land for short) is registered in the name of
Manuel Behis, married to Cristina Behis (Exhibit B). Said land originally was part of a bigger tract of
land owned by Behis (one name), father of Manuel Behis, covered by OCT-0-33 (Exhibit 26, Halsema,
for history of the land). And upon the latters death on September 24, 1971, his children, namely: Saro
Behis, Marcelo Behis, Manuel Behis, Lucia Behis, Clara Behis and Arana Behis, in an extrajudicial
settlement with Simultaneous Sale of Inheritance dated September 28, 1978, agreed to sell the land to
Manuel Behis, married to Cristina Behis (Exhibit `2, Halsema) but which subsequently was explained as
only an arrangement adopted by them to facilitate transactions over the land in a Confirmation of
Rights of Co-Ownership over real Property dated September 26, 1983, showing that the Behis
brothers and sisters, including Manuel Behis, are still co-owners thereof (Exhibit `30, Halsema, Exhibit
`AA).Manuel Behis mortgaged said land in favor of the Bank in a Real Estate Mortgage dated October
23, 1978 (Exhibit `Q-1) as security for loans obtained, covered by six promissory notes and trust
receipts under the Supervised Credit Program in the total sum of P156,750.00 (Exhibit `Q-2 to `Q-7,
Exhibits `4-A to `4-F, Halsema) and annotated at the back of the title on February 13, 1979 as Entry
No. 85538-10-231 (Exhibit 1- A-1, Halsema). The mortgage, the promissory notes and trust receipts
bear the signatures of both Manuel Behis and Cristina Behis.
Unfortunately thereafter, Manuel Behis was delinquent in paying his debts. On January 9, 1985,
[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
of January 9, 1985, plaintiffs and Manuel Behis simultaneously executed another Agreement (Exhibit
`15) whereby plaintiffs are indebted to Manuel Behis for the sum of P2,400,000.00 payable in
installments with P10,000.00 paid upon signing and in case of default in the installments, Manuel Behis
shall have legal recourse to the portions of the land equivalent to the unpaid balance of the amounts in
installments. Obviously, the real consideration of the sale of the land of Manuel Behis to the plaintiffs is
contained in this Agreement (Exhibit `15).Plaintiffs did not present to the Register of Deeds of Baguio
said two contracts and ask that the title, TCT T-29817 in the name of Manuel Behis be cancelled and a
new one issued in their name which normally a buyer does. Neither did plaintiffs annotate at the back
of the title the aforesaid two contracts. Nor did they immediately go to the Bank and present said two
contracts. Thus, the title to the land, TCT No. T-29817, remained in the name of Manuel Behis.
ISSUE:
Was there fraud?
RULING:
Not all elements of fraud vitiating consent for purposes of annulling a contract concur, to wit:
(a) It was employed by a contracting party upon the other; (b) It induced the other party to enter into
the contract; (c) It was serious; and; (d) It resulted in damages and injury to the party seeking
annulment. Petitioner bank has not sufficiently shown that it was induced to enter into the agreement
by the non-disclosure of the purchase price, and that the same resulted in damages to the bank.
Indeed, the general rule is that whosoever alleges fraud or mistake in any transaction must
substantiate his allegation, since it is presumed that a person takes ordinary care for his concerns and
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.
LIGUEZ V. COURT OF APPEALS G.R. No. L-
11240 December 18, 1957
FACTS:
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
there was an immoral or illegal cause to such donation and ask that such donation be
declared null and void because Lopez, a married man and one of advanced age, donated
such land to Conchita in order to have sexual relations with her at the tender age of
sixteen. The heirs also contend that such land is part of the conjugal partnership of Lopez
and his legal wife. The CFI and the CA affirmed the position of the heirs and declared the
donation as null and void. Hence, this petition by Conchita.
ISSUE:
Whether or not the donation is void.
RULING:
Lopez would not have conveyed the property in question had he known that
Conchita would refuse to cohabit with him. The cohabitation was an implied condition to
the donation, being unlawful, tainted the donation itself. The in pari delicto rule cannot be
applied in this case as the facts are more suggestive of seduction rather than of immoral
bargaining on the part of Conchita. The Court will leave them as they are as the contract
itself is void. Conchita Liguez is declared entitled to the donated property as may be found
upon proper liquidation not to prejudice the share of the widow or the legitimes of the
forced heirs. The case is remanded.
FRANCISCO V. HERRERA G.R. No. 139982 November 21, 2002
PHILIPPINE BANKING CORPORATION V. LIM G.R. No. L-17587 September 12,
1967
FACTS:
Justina Santos executed on a contract of lease in favor of Wong, covering the portion
then already leased to him and another portion fronting Florentino Torres street. The lease
was for 50 years, although the lessee was given the right to withdraw at any time from the
agreement.
On December 21 she executed another contract giving Wong the option to buy the
leased premises for P120,000, payable within ten years at a monthly installment of P1,000.
The option, written in Tagalog, imposed on him the obligation to pay for the food of the
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
which was then pending in the Court of First Instance of Rizal.
It appears, however, that this application for naturalization was withdrawn when it
was discovered that he was not a resident of Rizal. On October 28, 1958 she filed a petition
to adopt him and his children on the erroneous belief that adoption would confer on them
Philippine citizenship. The error was discovered and the proceedings were abandoned.
In two wills executed on August 24 and 29, 1959, she bade her legatees to respect
the contracts she had entered into with Wong, but in a codicil of a later date (November 4,
1959) she appears to have a change of heart. Claiming that the various contracts were
made by her because of machinations and inducements practiced by him, she now directed
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.
ISSUE:
Whether the contracts involving Wong were valid
RULING:
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.
FACTS:
 Eligio Herrera, Sr., father of respondent Pastor Herrera, owned two parcels of land
consisting of 500 sq. m. and 451 sq. m. located at Cainta, Rizal. The two parcels of land
was sold at 1M and 750K to the petitioner. Pastor, contending that the contract price for the
two parcels of land was grossly inadequate tried to negotiate with petitioner to increase the
purchase price. When petitioner refused, respondent then filed a complaint for annulment
of sale. Pastor alleged that the contract of sale was null and void on the ground that Eligio,
Sr., at that time, was already afflicted with senile dementia. Petitioner, on the other hand,
contended that respondent had effectively ratified both contracts of sales, by receiving the
consideration offered in each transaction.
RTC ruled that the contract of sale is null and void. CA affirmed, hence, this petition.
ISSUE:
Are the assailed contracts of sale void or merely voidable and hence
capable of being ratified?
RULING:
In the present case, vendor Eligio, Sr. entered into an agreement with petitioner, but
that the former’s capacity to consent was vitiated by senile dementia. Hence, it was ruled
that the assailed contracts are not void or inexistent per se; rather, these are contracts that
are valid and binding unless annulled through a proper action filed in court. An annullable
contract may be rendered perfectly valid by ratification, which can be express or implied.
Implied ratification may take the form of accepting and retaining the benefits of a contract.
As in this case, respondent negotiated for the increase of the purchase price while receiving
the installment payments from the petitioner. Clearly, respondent was agreeable to the
contract. Further, there is no showing that respondent returned the payments or made an
offer to do so. This bolsters the view that indeed there was ratification. Petition is granted.
the two contracts of sale are declared valid.
Firme V. Bukal G.R No. 146608 October 23,2003
FACTS:
Petitioner Spouses Constante and Azucena Firme are the registered owners of a
parcel of land located on Dahlia Avenue, Fairview Park, Quezon City. Renato de Castro, the
vice president of Bukal Enterprises and Development Corporation authorized his friend,
Teodoro Aviles, a broker, to negotiate with the Spouses Firme for the purchase of the
Property. On 28 March 1995, Bukal Enterprises filed a complaint for specific performance
and damages with the trial court, alleging that the Spouses Firme reneged on their
agreement to sell the Property. The complaint asked the trial court to order the Spouses
Firme to execute the deed of sale and to deliver the title to the Property to Bukal
Enterprises upon payment of the agreed purchase price.
ISSUE:
Is Statute of Frauds applicable?
RULING:
The CA held that partial performance of the contract of sale takes the oral contract
out of the scope of Statute of Frauds. This conclusion arose from the appellate court’s
erroneous finding that there was a perfected contract of sale. The records show that there
was no perfected contract of sale. There is therefore no basis for the application of the
Stature of Frauds. The application of the Statute of Frauds presupposes the existence of a
perfected contract.
Bukal Enterprises is obviously a builder in bad faith. No deed of sale has been
executed in this case. Despite the refusal of the Spouses Firme to sell the Property, Bukal
Enterprises still proceeded to introduce improvements on the Property. Bukal Enterprises
introduced improvements on the Property without the knowledge and consent of the
Spouses Firme. When the Spouses Firme learned about the unauthorized constructions
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
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
FACTS:
Respondent Hadji Abubakar Marahum sold to Petitioner Hadji Fatima Magoyag a
certain two-storey market stall located in the public market of Marawi City. The sale was
evidenced by a Deed of Assignment which also stated that although there was a sale,
possession will remain with the seller Hadji Maruhom and that he will pay a monthly rental.
However, after several years Hadji Maruhom suddenly stopped paying rentals. Petitioner
demanded payment but respondent failed to fulfill his promise and refused to vacate the
premises. On August 22, 1994 petitioner filed a complaint for recovery of possession and
damages with the RTC of Marawi City.
ISSUE:
Whether or not the Deed of Assignment prove the existence of a sale.
RULING:
The Deed of Assignment is a clear indication that the transaction was really of a sale
and not of a loan with an equitable mortgage. The language in the document is crystal
clear, unambiguous and needs no further interpretation. However, the validity of the sale
lies not with the interpretation of the contract. The sale was ultimately declared as invalid
because the respondent, Hadji Maruhom is not the owner of the property. Records show
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
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.
MEDINA V. COURT OF APPEALS G.R. No. L-26107 November 27, 1981
FACTS:
A decision was rendered against Arles Castares (Arles), now deceased and
represented by his heirs, to pay damages for running over and causing injuries to four-year
old Wenceslao Mahilum, Jr. Petitioner Jose Medina (Medina) was the representative of the
victim in the said case. To satisfy the judgment, the sheriff levied Arles two parcels of land
covered by Tax Declaration No. 1107 and Tax Declaration No. 1106.
When the heirs of Arles failed to settle their obligation, the lot covered by Tax
Declaration No. 1107 was sold at public auction wherein Medina emerged as the highest
bidder. Medina applied for the registration of the said lot. However, Andres Castares
(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
Abundio, Tax Declaration No. 1107 was cancelled and consequently, a tax declaration was
issued in his favor. He insisted that he is the rightful owner of the said portion of the land.
The RTC ruled in favor of Medina. On appeal, the CA reversed the RTC and it also
noted that there has been no settlement yet of the estate of Abundio and it was premature
for Arles to have allocated unto himself a distinct portion of the lot as his share in the
estate.
ISSUE:
Whether or not Abundios heirs have an actual right over the lot in dispute.
RULING:
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.