LAND BANK OF THE PHILIPPINES VS.

EUGENIO DALAUTA
G.R. NO. 190004 08 AUGUST 2017
MENDOZA, J: EN BANC

NATURE OF ACTION: Petition for Review on Certiorari (Rule 45)

FACTS:

Respondent Eugenio Dalauta (Dalauta) was the registered owner of an agricultural land in
Florida, Butuan City. The land was placed by the Department of Agrarian Reform (DAR) under
compulsory acquisition of the Comprehensive Agrarian Reform Program (CARP) as reflected in the
Notice of Coverage, which Dalauta received on February 7, 1994. The compensation offered by Land
Bank of the Philippines (LBP) was not acceptable, thus Dalauta rejected the valuation for being too low.
The case was referred to the DAR Adjudication Board (DARAB) through the Provincial Agrarian Reform
Adjudicator (PARAD). The PARAD, through its resolution dated December 4, 1995, sustained the LBP
valuation. On February 28, 2000, Dalauta filed a petition for determination of just compensation with the
RTC, sitting as Special Agrarian Court (SAC). He alleged that LBP's valuation of the land was
inconsistent with the DAR rules and regulations. The LBP argues that the PARAD resolution already
attained finality when Dalauta filed the petition for determination of just compensation before the RTC
sitting as SAC. The petition was filed beyond the 15-day prescriptive period or, specifically, more than
five (5) years after the issuance of the PARAD Resolution, as provided by DARAB Rules of Procedure.
Dalauta contended that the action is imprescriptible.

ISSUE: Whether or not the action filed before the SAC already prescribed?

RULING:

No. Prescriptive period is ten (10) years from the time of the taking; and that at the time of the
filing of judicial determination, there should be no pending administrative action for the determination of
just compensation.

While R.A. No. 6657 itself does not provide for a period within which a landowner can file a
petition for the determination of just compensation before the SAC, it cannot be imprescriptible because
the parties cannot be placed in limbo indefinitely. The Civil Code settles such conundrum. Considering
that the payment of just compensation is an obligation created by law, it should only be ten (10) years
from the time the landowner received the notice of coverage. The Constitution itself provides for the
payment of just compensation in eminent domain cases. Under Article 1144, such actions must be
brought within ten (10) years from the time the right of action accrues.

In this case, Dalauta received the Notice of Coverage on February 7, 1994. He then filed a
petition for determination of just compensation on February 28, 2000. Clearly, the filing date was well
within the ten year prescriptive period under Article 1141.

JUDITH D. DARINES and JOYCE D. DARINES, Petitioners,

vs.
EDUARDO QUIÑONES and ROLANDO QUITAN, Respondents.

G.R. No. 206468 August 2, 2017

DEL CASTILLO, J.: FIRST DIVISION

NATURE OF ACTION: Complaint for Breach of Contract of Carriage & Damages

FACTS:

Judith D. Darines (Judith) and her daughter, Joyce D. Darines (Joyce) (petitioners) boarded the
Amianan Bus Line. Respondent Rolando M. Quitan (Quitan) was driving the bus at that time. The bus
crashed into a truck which was parked on the shoulder of Kennon Road; as a result petitioners were
injured. In particular, Joyce suffered cerebral concussion while Judith had an eye wound which required
an operation.

Petitioners argued that Quitan and respondent Eduardo Quiñones (Quiñones), the operator of
Amianan Bus Line, breached their contract of carriage as they failed to bring them safely to their
destination. They also contended that Quitan's reckless and negligent driving caused the collision.

Respondents countered in their Answer5 that, during the December 31, 2005 incident, Quitan was
driving in a careful, prudent, and dutiful manner at the normal speed of 40 kilometers per hour. According
to them, the proximate cause of the incident was the negligence of the truck driver, Ronald C. Fernandez,
who parked the truck at the roadside right after the curve without having installed any early warning
device.
 RTC rendered its Decision ordering respondents to pay petitioners damages. RTC held that
petitioners similarly failed to substantiate the same as there was no showing that Judith's failure to report
for work for two months was because of the incident. CA reversed and set aside the RTC Decision.

ISSUE: Whether or not the carrier was guilty of fraud and bad faith even if death does not result
and that neither of these circumstances were present in the case at bar.

RULING:

The Court fully agrees with the CA ruling that in an action for breach of contract, moral damages
may be recovered only when a) death of a passenger results; orb) the carrier was guilty of fraud and bad
faith even if death does not result; and that neither of these circumstances were present in the case at bar.
The CA correctly held that, since no moral damages were awarded then, there is no basis to grant
exemplary damages and attorney's fees to petitioners.

To stress, this case is one for breach of contract of carriage (culpa contractual) where it is
necessary to show the existence of the contract between the parties, and the failure of the common carrier
to transport its passenger safely to his or her destination. An action for breach of contract differs
from quasi-delicts (also referred as culpa aquiliana or culpa extra contractual) as the latter emanate from
the negligence of the tort feasor including such instance where a person is injured in a vehicular accident
by a party other than the carrier where he is a passenger.

The principle that, in an action for breach of contract of carriage, moral damages may be awarded
only in case (1) an accident results in the death of a passenger; or (2) the carrier is guilty of fraud or bad
faith, is pursuant to Article 1764, in relation to Article 2206(3) of the Civil Code, and Article 2220
thereof,

The aforesaid concepts of fraud or bad faith and negligence are basic as they are distinctly
differentiated by law. Specifically, fraud or bad faith connotes "deliberate or wanton wrong doing" or
such deliberate disregard of contractual obligations while negligence amount to sheer carelessness

Clearly, unless it is fully established (and not just lightly inferred) that negligence in an action for
breach of contract is so gross as to amount to malice, then the claim of moral damages is without merit.

The Court also sustains the CA's finding that petitioners are not entitled to exemplary damages.
Pursuant to Articles 2229 and 2234 of the Civil Code, exemplary damages may be awarded only in
addition to moral, temperate, liquidated, or compensatory damages. Since petitioners are not entitled to
either moral, temperate, liquidated, or compensatory damages, then their claim for exemplary damages is
bereft of merit.

Finally, considering the absence of any of the circumstances under Article 2208 of the Civil Code
where attorney's fees may be awarded, the same cannot be granted to petitioners.
 PEOPLE OF THE PHILIPPINES VS. PORFERIO CULAS Y RAGA
G.R. NO. 211166 05 JUNE 2017
PERLAS-BERNABE, J: FIRST DIVISION

NATURE OF THE ACTION: Violation of Statutory Rape

FACTS: The court finding Porferio Culas y Raga guilty beyond reasonable doubt of the crime of
Statutory Rape, the pertinent portion of which reads:

WHEREFORE, the Court ADOPTS the findings of fact and conclusions of law in the
July 25, 2013 Decision of the CA in CA-G.R. CEB-CR HC No. 00380 and AFFIRMS
said Decision finding accused appellant Porferio Culas y Raga GUILTY beyond
reasonable doubt of Statutory Rape under paragraph 1 (d), Article 266-A in relation to
Article 266-B (1) of the Revised Penal Code, sentencing him to suffer the penalty of
reclusion perpetua without eligibility for parole, with MODIFICATIONS as to the
amounts of civil indemnity and damages awarded.

Thus, accused-appellant is ordered to pay the following amounts: (a) P100,000.00 as

civil indemnity; (b) P100,000.00 as moral damages; and (c) P100,000.00 as exemplary
damages, plus legal interest at the rate of six percent (6%) per annum on the monetary
awards from the dated of the finality of this judgment until fully paid.

However, before an Entry of Judgment could be issued in the instant case, the Court received a
Letter from the Bureau of Corrections informing the Court of accused-appellant's death. Under prevailing
law and jurisprudence, accused-appellant's death prior to his final conviction by the Court renders
dismissible the criminal case against him. Article 89 (1) of the Revised Penal Code provides that criminal
liability is totally extinguished by the death of the accused.

ISSUE: Whether or not the civil liability of Culas based solely on the offense committed is
extinguished upon his death pending appeal?

RULING:
Yes. In People v. Layag, the Court thoroughly explained the effects of the death of an accused
pending appeal on his liabilities, as follows:
 1. Death of the accused pending appeal of his conviction extinguishes his criminal liability, as
well as the civil liability, based solely thereon. As opined by Justice Regalado, in this regard, "the death
of the accused prior to final judgment terminates his criminal liability and only the civil liability directly
arising from and based solely on the offense committed, i.e., civil liability ex delicto in senso strictiore."

2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the
same may also be predicated on a source of obligation other than delict. Article 1157 of the Civil Code
enumerates these other sources of obligation from which the civil liability may arise as a result of the
same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) x x x
e) Quasi-delicts

Thus, upon accused-appellant's death pending appeal of his conviction, the criminal action is
extinguished inasmuch as there is no longer a defendant to stand as the accused; the civil action instituted
therein for the recovery of the civil liability ex delicto is ipso facto extinguished, grounded as it is on the
criminal action. However, it is well to clarity that accused-appellant's civil liability in connection with his
acts against the victim, AAA, may be based on sources other than delicts; in which case, AAA may file a
separate civil action against the estate of accused-appellant, as may be warranted by law and procedural
rules.

GEORGIA OSMEÑA-JALANDONI, petitioner, vs. CARMEN A. ENCOMIENDA, respondent.

G.R. No. 205578; March 1, 2017; Justice Peralta; Second Division

NATURE OF THE ACTION: Claim for sum of money

FACTS:
Respondent Encomienda narrated that she met petitioner Georgia Osmeña-Jalandoni in Cebu
on October 24, 1995, when the former was purchasing a condominium unit and the latter was
the real estate broker. Thereafter, Encomienda and Jalandoni became close friends. On March
2, 1997, Jalandoni called Encomienda to ask if she could borrow money for the search and
rescue operation of her children in Manila, who were allegedly taken by their father, Luis
Jalandoni. Encomienda then went to Jalandoni's house and handed P100,000.00 in a sealed
envelope to the latter's security guard. While in Manila, Jalandoni again borrowed money for
various errands.

On April 1, 1997, Jalandoni borrowed P1 Million from Encomienda and promised that she would
pay the same when her money in the bank matured. Thereafter, Encomienda went to Manila to
attend the hearing of Jalandoni's habeas corpus case before the CA where P100,000.00 more
was requested. On May 26, 1997, now crying, Jalandoni asked if Encomienda could lend her an
additional P900,000.00. Encomienda still acceded, albeit already feeling annoyed. All in all,
Encomienda spent around P3,245,836.02 and $6,638.20 for Jalandoni. When Jalandoni came
back to Cebu on July 14, 1997, she never informed Encomienda. Encomienda then later gave
Jalandoni six (6) weeks to settle her debts. Despite several demands, no payment was made.
Jalandoni insisted that the amounts given were not in the form of loans. When they had to
appear before the Barangay for conciliation, no settlement was reached. But a member of the
Lupong Tagapamayapa of Barangay Kasambagan, Laureano Rogero, attested that Jalandoni
admitted having borrowed money from Encomienda and that she was willing to return it.
Jalandoni said she would talk to her lawyer first, but she never came back. Hence, Encomienda
filed a complaint. She impleaded Luis as a necessary party, being Georgia's husband.

For her defense, Jalandoni claimed that there was never a discussion or even just an allusion
about a loan. She confirmed that Encomienda would indeed deposit money in her bank account
and pay her bills in Cebu. But when asked, Encomienda would tell her that she just wanted to
extend some help and that it was not a loan. When Jalandoni returned to Cebu, Encomienda
wanted to fetch her at the airport but the former refused. This allegedly made Encomienda
upset, causing her to eventually demand payment for the amounts originally intended to be
gratuitous.

ISSUE:

Whether or not Encomienda is entitled to be reimbursed for the amounts she defrayed for
Jalandoni
RULING: Yes.

Contracts are binding between the parties, whether oral or written. The law is explicit that
contracts shall be obligatory in whatever form they may have been entered into, provided all the
essential requisites for their validity are present. A simple loan or mutuum exists when a person
receives a loan of money or any other fungible thing and acquires its ownership. He is bound to
pay to the creditor the equal amount of the same kind and quality.

Jalandoni posits that the more logical reason behind the disbursements would be what
Encomienda candidly told the trial court, that her acts were plainly an "unselfish display of
Christian help" and done out of "genuine concern for Georgia's children." However, the "display
of Christian help" is not inconsistent with the existence of a loan. Encomienda immediately
offered a helping hand when a friend asked for it. But this does not mean that she had already
waived her right to collect in the future. Indeed, when Encomienda felt that Jalandoni was
beginning to avoid her, that was when she realized that she had to protect her right to demand
payment. The fact that Encomienda kept the receipts even for the smallest amounts she had
advanced, repeatedly sent demand letters, and immediately filed the instant case when
Jalandoni stubbornly refused to heed her demands sufficiently disproves the latter's belief that
all the sums of money she received were merely given out of charity.

Truly, Jalandoni herself admitted that she received the aforementioned amounts from
Encomienda and is merely using her lack of authorization over the payments as her defence. In
fact, Lupong Tagapamayapa member Rogero, a disinterested third party, confirmed this, saying
that during the barangay conciliation, Jalandoni indeed admitted having borrowed money from
Encomienda and that she would return it. Jalandoni, however, reneged on said promise.

The principle of unjust enrichment finds application in this case. Unjust enrichment exists when
a person unfairly retains a benefit to the loss of another, or when a person retains money or
property of another against the fundamental principles of justice, equity, and good conscience.
There is unjust enrichment under Article 22 of the Civil Code when (1) a person is unjustly
benefited, and (2) such benefit is derived at the expense of or with damages to another. The
principle of unjust enrichment essentially contemplates payment when there is no duty to pay,
and the person who receives the payment has no right to receive it. The CA is then correct
when it ruled that allowing Jalandoni to keep the amounts received from Encomienda will
certainly cause an unjust enrichment on Jalandoni's part and to Encomienda's damage and
prejudice.

ALLAN S. CU VS. SMALL BUSINESS GUARANTEE AND FINANCE CORPORATION

THROUGH MR. HECTOR M. OLMEDILLO
 G.R. NO. 211222 07 AUGUST 2017
CAGUIOA. J: FIRST DIVISION

NATURE OF THE ACTION: Petition for Review on Certiorari (Rule 45)

FACTS:
G7 bank and SB Corp. had an Omnibus Credit Line Agreement. Five postdated checks were
issued by G7 Bank through Cu and a co-signatory as payment to the credit line. Prior to the maturity of
postdated checks, G7 Bank was placed under receivership by Philippine Deposit and Insurance
Corporation (PDIC) and the latter closed all of the former’s deposit accounts with other banks. Upon
maturity, SB Corp. presented the checks but all were dishonored for reason of “Account Closed”. SB
Corp filed criminal cases for violation of BP 22 against Cu and the co-signatory. The cases were
dismissed.

ISSUE: Whether or not G7 Bank’s placement under receivership is a suspensive condition that
prevented its obligation from being due and demandable?

RULING:
No. What is suspended here is not the birth of the loan obligation since the debtor had availed of
the loan proceeds. What is subject to a suspensive condition is the right of the creditor to demand the
payment or performance of the loan - the exact amount due not having been determined or liquidated as
the same is subject to PDIC's distribution plan. In the same vein, until then the debtor's obligation to pay
or perform is likewise suspended.

After the closure of G7 Bank, its obligations to SB Corp., including those which the subject
checks were supposed to pay, are subject to the outcome of the bank's liquidation. The exact
consideration of the subject checks is, thus, contingent and any demand for the payment of the obligation
for which those checks were issued after closure and pending liquidation of the bank is premature.
Furthermore, there was no way for Cu to pay SB Corp. the amount due on the subject checks or make
arrangements for its payment in full within five banking days from after receiving notice that such checks
had been dishonored pursuant to Section 2 of B.P. 22 because as of that time, the exact amount due on the
subject checks was not known or uncertain. Needless to add, the right of SB Corp. to pursue its civil or
monetary claim against G7 Bank before the liquidation court exists and is undiminished.
 SPOUSES AMADO O. IBAÑEZ and ESTHER R.
IBAÑEZ, petitioners, vs. JAMES HARPER as Representative of the Heirs
of FRANCISCO MUÑOZ, SR., the REGISTER OF DEEDS OF MANILA
and the SHERIFF OF MANILA, respondents.

G.R. No. 194272, February 15, 2017

Ponente: Justice Jardeleza
Third Division

Nature of the Action: Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court

Facts:

Sometime in October 1996, Sps. Ibañez borrowed from Francisco Muñoz, Sr.
(Francisco), Consuelo Estrada (Consuelo) and Ma. Consuelo E. Muñoz (Ma. Consuelo) the
amount of P1.3M, payable in 3 months, with interest at the rate of 3% a month. On October 14,
1996, Sps. Ibañez issued a Promissory Note (PN) binding themselves jointly and severally to pay
Ma. Consuelo and Consuelo the loan amount with interest. As security, on October 1 7, 1996,
Sps. Ibañez executed a Deed of Real Estate Mortgage (REM) in favor of Ma. Consuelo and
Consuelo over a parcel of land and its improvements covered by TCT No. 202978. The mortgage
contained the same terms as the PN. It further stipulated that Ma. Consuelo and Consuelo shall
have the right to immediately foreclose the mortgage upon the happening of the following
events: (1) filing by the mortgagor of any petition for insolvency or suspension of payment;
and/or (2) failure of the mortgagor to perform or comply with any covenant, agreement, term or
condition of the mortgage.

On September 23, 1997, alleging that the conditions of the mortgage have been violated
since November 17, 1996 and that all check payments were dishonored by the drawee, Ma.
Consuelo and Consuelo applied for foreclosure of the real estate mortgage.

On December 8, 1997, Sps. Ibañez filed in the RTC of Manila a Complaint for injunction
and damages with prayers for writ of preliminary injunction and temporary restraining order
against Francisco, Ma. Consuelo, Consuelo, et al. The Complaint alleged that there is no reason
to proceed with the foreclosure because the REM was novated. On December 12, 1997, Sps.
Ibañez filed an Amended Complaint. They alleged that the public auction was conducted, with
Francisco, Ma. Consuelo and Consuelo as the highest bidders and prayed that the Sheriff be
enjoined from executing the certificate of sale in their favor.

On December 16, 1997, the RTC issued a status quo order.

On June 11, 2002, the parties filed a Joint Motion for Approval of Amended Compromise
Agreement. The Amended Compromise Agreement, signed by Sps. Ibañez and Francisco, for
himself and on behalf of Ma. Consuelo and Consuelo, provides that, “in addition to the earlier
agreement, petitioners shall pay Francisco, et al. the total sum of P3M, P2M of which shall be
paid through the proceeds of a real estate loan from the GSIS, and the remaining balance, from
such other sources determined by Sps. Ibañez”. On June 17, 2002, the RTC approved the
Amended Compromise Agreement and adopted it as its Hatol.

On September 24, 2002, Sps. Ibañez manifested that: (1) there will be a slight delay in
their compliance due to new loan requirements of the GSIS; and (2) they have executed a
REM dated August 10, 2002 in favor of Ma. Consuelo and Consuelo over a property covered by
TCT No. T-77676.

On February 28, 2006, collaborating counsel for Francisco, Ma. Consuelo and Consuelo,
filed with the RTC an Omnibus Motion for Execution and Lifting of the Status Quo Order of
December 16, 1997 and for the Issuance of Writ of Possession, was granted. Sps. Ibañez filed
MR, which was also granted.

On June 29, 2006, Sps. Ibañez filed a Motion for the Implementation of the Amended
Compromise Agreement. On July 5, 2006, counsel for Francisco filed a Notice of his Death and
named James Harper as his legal representative.

On July 31, 2006, Sps. Ibañez filed a Motion to Adopt/Consider the Judicial Compromise
Agreement dated June 17, 2002 Designated as "Hatol" as the Final and Executory Decision. In
an Order dated August 11, 2006, the RTC granted Sps Ibañez' motion.

James, as Francisco's legal representative, sought reconsideration of the RTC's August

11, 2006 Order. Accdg. to James, Sps. Ibañez made it appear that only Ma. Consuelo and
Consuelo remained as parties after Francisco's death. Since James, as Francisco's representative,
was excluded from the Deed of Assignment, the Amended Compromise Agreement could not
have been completely complied with. In February 2007, RTC denied James' MR of the August
11, 2006 Order.

Aggrieved, the heirs of Francisco, represented by James Harper, filed before the CA a
Petition for Certiorari under Rule 65 of the Revised Rules of Court. On October 29, 2009, the
CA granted James' petition for certiorari. Hence, this petition.

Issue: WON all the provisions of the Amended Compromise Agreement have been complied
with.

Ruling:

No. The spouses Ibañez assigned the proceeds of the GSIS loan and executed a real estate
mortgage over the Puerto Azul property only in Ma. Consuelo and Consuelo's favour. By doing
so, they did not discharge their obligation in accordance with the terms of the Amended
Compromise Agreement and left their loan obligation to Francisco unsettled. Thus, and as
correctly held by the CA, it was gravely erroneous for the trial court to rule that all the
stipulations in the Hatol have been complied with. Under the circumstances, the obligations to
Francisco, and consequently, his heirs, have clearly not been complied with.
 A compromise agreement is a contract whereby the parties, make reciprocal concessions
to avoid a litigation or put an end to one already commenced. In a compromise, the parties adjust
their difficulties in the manner they have agreed upon, disregarding the possible gain in litigation
and keeping in mind that such gain is balanced by the danger of losing. It encompasses the
objects stated, although it may include other objects by necessary implication. It is binding on
the contractual parties, being expressly acknowledged as a juridical agreement between them,
and has the effect and authority of res judicata.

VISiTACION R. REBULTAN,
CECILOU R. BAYONA, CECILIO
REBULTAN JR., and VILNA R. LABRADOR vs SPOUSES EDMUNDO DAGANTA and
MARVELYN P. DAGANTA, and WILLIE VILORIA

GR NO 197108, JULY 4,2018, FIRST DIVISION, JARDELEZA J.

FACTS

On May 3, 1999, at about 6:30 in the morning, along the National

Highway in Barangay Mabanglit, Cabangan, Zambales, Cecilio Rebultan, Sr.
(Rebultan, Sr.) and his driver, Jaime Lomotos (Lomotos), were on board a Kia
Ceres, on their way to report for work in the Department of Environment and
Natural Resources (DENR) in Masinloc, Zambales when they figured in a
vehicular accident with an Isuzu-powered passenger jeepney driven by Willie
Viloria (Viloria).6 The Kia Ceres was traveling northbound to Iba, Zambales,
while the jeepney was traveling southbound to Cabangan, Zambales. 7 The
powerful impact resulted in serious physical injuries to Rebultan, Sr. and
Lomotos, as well as physical damage to both vehicles. Rebultan, Sr., who was
60 years old8 at that time, later died from his injuries.9
On February 15, 2000, the heirs of Rebultan, Sr. (petitioners) filed a
complaint10 for damages against Viloria, and Spouses Edmundo and Marvelyn
P. Daganta (spouses Daganta) as the owners of the jeepney (collectively,
respondents). Petitioners prayed for compensation for the loss of life and
earning capacity of Rebultan, Sr., actual and moral damages, attorney's and
appearance fees, as well as other just and equitable reliefs.

After trial, the RTC issued its Decision 16 dated July 24, 2008 finding
Viloria negligent in driving the jeepney which led to the death of Rebultan,
Sr. Spouses Daganta were found vicariously liable as the employers of
Viloria. Together, they were held solidarily liable to pay the heirs ofRebultan,
Sr. the following sums: (a) P71,857.15 as actual damages; (b) P50,000.00 as
moral damages; (c) Pl,552.731.72 as loss of earning capacity; and (d)
PS0,000.00 as attorney's fees. The RTC concluded that Viloria's continuous
driving even when turning left going to a street is the proximate cause of the
accident. It dismissed the third-party complaint against Lomotos. 17
Respondents appealed the Decision before the CA but only as to the
finding of negligence on the part of Viloria. They no longer appealed the
dismissal of the third-party complaint.
 In its Assailed Decision, the CA reversed the RTC ruling and dismissed
the complaint. 19 It ruled that it was Lomotos (not Viloria) who was negligent.
Under Section 42(a) and (b), Article III, Chapter IV of Republic Act No.
413620 (R.A. No. 4136), Viloria had the right of way, being the driver of the
vehicle on the right, and because he had already turned towards the left of the
intersection. 21 This, according to the CA, is the import of the ruling in
Caminos, Jr. v. People22 which it found squarely applicable to this case. It
held that Lomotos, being in violation of a traffic regulation, is presumed to be
negligent under Article 2185 of the Civil Code. 23 There being no negligence
on the part of Viloria, the spouses Daganta's vicarious liability cannot be
imposed. 24 The CA noted that while respondents filed a third-party complaint
against Lomotos, it cannot reverse its dismissal because respondents did not appeal .

ISSUE

WON both the drivers are solidary liable?

HELD

Yes.In sum, we hold that both drivers were negligent when they failed to
observe basic traffic rules designed for the safety of their fellow motorists and
passengers. This makes them joint tortfeasors who are solidarily liable to the
heirs of the deceased. 51 However, since the dismissal of the third-party
complaint against Lomotos was not appealed by respondents, and Lomotos is
not party to the case before us, we have no authority to render judgment
against him.

CHIQUITA BRANDS, INC. and CHIQUITA BRANDS INTERNATIONAL, INC. vs. HON.
GEORGE E. OMELIO, REGIONAL TRIAL COURT, DAVAO CITY, BRANCH 14, SHERIFF
ROBERTO C. ESGUERRA, CECILIO G. ABENION, and 1,842 OTHER PLAINTIFFS IN CIVIL
CASE NO. 95-45
G.R. No. 189102 07 June 2017
Leonen, J: Second Division

NATURE OF THE ACTION: Class suit for damages

Facts:
Thousands of banana plantation workers from over 14 class suit for damages in the United States
against 11 foreign corporations
 They claimed to have been exposed to dibromochloropropane (DBCP) in the 1970s up to the
1990s while working in plantations that utilized it. As a result, these workers suffered serious and
permanent injuries to their reproductive systems. The United States courts dismissed the actions on the
ground of forum non conveniens and directed the claimants to file actions in their respective home
countries.

Filipino banana plantation workers filed a complaint for damages against foreign corporations:
Chiquita Brands, Dow Chemical Company (Dow), Occidental Chemical Corporation (Occidental), Shell
Oil Company (Shell), Del Monte Fresh Produce, N.A., and Del Monte Tropical Fruit Co. (collectively,
Del Monte). Before pre-trial, Chiquita Brands, Inc., Chiquita, Dow, Occidental, Shell, Del Monte entered
into a worldwide settlement in the United States with all the banana plantation workers. The parties
executed a document denominated as the “Compromise Settlement, Indemnity, and Hold Harmless
Agreement”. The Compromise Agreement provided, among others, that the settlement amount should be
deposited in an escrow account, which should be administered by a mediator.

The claimants moved for the execution of the judgment on compromise. Chiquita, Dow,
Occidental, Shell, and Del Monte opposed the execution and argued that they had already complied with
their obligation under the Compromise Agreement by depositing the settlement amounts into an escrow
account, which was administered by the designated mediator Mr. Mills. Hence, there was nothing left for
the court to execute. The claimants moved to amend the Writ of Execution to include the subsidiaries of
Chiquita, Dow, Occidental, Shell, and Del Monte. The court directed the implementation of the Writ of
Execution. In the same Order, included Chiquita's subsidiaries and affiliates in the Writ of Execution

Petitioners assail the validity of the following orders and writs on the ground that they were
issued with grave abuse of discretion: which modified the terms of the Writ of Execution to include
petitioners' subsidiaries, affiliates, controlled and related entities, successors, and assigns doing business
in the Philippines.

Petitioners further argue that the trial courts gravely abused their discretion in ordering them to
directly pay each of the claimants anew and in imposing solidary liability on their "subsidiaries, affiliates,
controlled and related entities, successors, and assigns." Petitioners' obligation under the Compromise
Agreement consisted of depositing the settlement amount in an escrow fund. They were not required to
release and to directly give the settlement amount to each claimant since this duty was delegated to the
mediator, Mr. Mills. Therefore, it is unnecessary to prove that each claimant has received his or her
respective share in the settlement amount to determine whether the Compromise Agreement has been
satisfied. In addition, petitioners' subsidiaries and affiliates cannot be held liable under Clause 25 of the
Compromise Agreement. Their subsidiaries and affiliates were not privy to the Compromise Agreement.

ISSUE: Whether or not petitioner’s subsidiaries and affiliates can be held solidarily liable under
the Clause 25 of the Compromise Agreement?

RULING:
No. Solidary liability under Philippine law is not to be inferred lightly but must be clearly
expressed. Under Article 1207 of the Civil Code, there is solidary liability when "the obligation expressly
so states, or when the law or the nature of the obligation requires solidarity." The Compromise Agreement
provided:

25. Affiliates and Successors. This Agreement and the rights, obligations, and covenants
contained herein shall inure to the benefit of and be binding upon the Plaintiffs and
Settling Defendants and their respective subsidiaries, affiliates, controlled and related
entities, successors, and assigns.

Clearly, the Compromise Agreement did not impose solidary liability on the parties' subsidiaries,
affiliates, controlled, and related entities, successors, and assigns but merely allowed them to benefit from
its effects.

SPOUSES ROMEO PAJARES AND IDA T. PAJARES, PETITIONERS, V. REMARKABLE

LAUNDRY AND DRY CLEANING, REPRESENTED BY ARCHEMEDES G. SOLIS,
RESPONDENT
G.R. No. 212690 (Formerly UDK-15080) | 2017-02-20

DEL CASTILLO, J.:

Nature of the Action: Action for Damages

Facts:
 On September 3, 2012, respondent filed a Complaint denominated as "Breach of Contract
and Damages" against petitioners before the RTC of Cebu City. Respondent alleged that it
entered into a Remarkable Dealer Outlet Contract with petitioners whereby the latter, acting as a
dealer outlet, shall accept and receive items or materials for laundry which are then picked up
and processed by the former in its main plant or laundry outlet; that petitioners violated Article
IV (Standard Required Quota & Penalties) of said contract, which required them to produce at
least 200 kilos of laundry items each week, when, on April 30, 2012, they ceased dealer outlet
operations on account of lack of personnel; that respondent made written demands upon
petitioners for the payment of penalties imposed and provided for in the contract, but the latter
failed to pay; and, that petitioners' violation constitutes breach of contract.

During pre-trial, the issue of jurisdiction was raised, and the parties were required to
submit their respective position papers.

On February 19, 2013, the RTC issued an Order dismissing the complaint for lack of
jurisdiction, stating that the total amount of demand prayed for is only P280,000.00, which is less
than the jurisdictional amount of the RTCs.

Respondent filed its MR, arguing that the complaint is for breach of contract, or one
whose subject is incapable of pecuniary estimation, jurisdiction thus falls with the RTC.
However, in an April 29, 2013 Order, the RTC held its ground.

Respondent filed before the CA a Petition for Certiorari seeking to nullify the RTC's
February 19, 2013 and April 29, 2013 Orders. On December 11, 2013, the CA rendered the
assailed Decision setting aside the February 19, 2013 Order of the RTC and remanding the case
to the court a quo for further proceedings.

Petitioners sought to reconsider, but were denied. Hence, the present Petition.

Issue: WON petitioners complaint filed is for specific performance or rescission of contracts.

Held:
No, the RTC was correct in categorizing the complaint as an action for damages seeking
to recover an amount below its jurisdictional limit.

Specific performance is the remedy of requiring exact performance of a contract in the

specific form in which it was made, or according to the precise terms agreed upon. It is the actual
accomplishment of a contract by a party bound to fulfill it. Rescission of contract under Art.
1191 of the Civil Code, on the other hand, is a remedy available to the obligee when the obligor
cannot comply with what is incumbent upon him. It is predicated on a breach of faith by the
other party who violates the reciprocity between them. Rescission may also refer to a remedy
granted by law to the contracting parties and sometimes even to third persons in order to secure
reparation of damages caused them by a valid contract, by means of restoration of things to their
condition in which they were prior to the celebration of the contract.
 An analysis of the factual and material allegations in the Complaint shows that there is
nothing therein which would support a conclusion that respondent's Complaint is one for specific
performance or rescission of contract. It should be recalled that the principal obligation of
petitioners under the Remarkable Laundry Dealership Contract is to act as respondent's dealer
outlet. Respondent, however, neither asked the RTC to compel petitioners to perform such
obligation as contemplated in said contract nor sought the rescission thereof. The Complaint's
body, heading, and relief are bereft of such allegation. Respondent's counsels designated the
Complaint as one for "Breach of Contract & Damages." However, there is no such thing as an
"action for breach of contract." Rather, "breach of contract is a cause of action, but not the action
or relief itself." Breach of contract may be the cause of action in a complaint for specific
performance or rescission of contract, both of which are incapable of pecuniary estimation and,
therefore, cognizable by the RTC. However, as will be discussed below, breach of contract may
also be the cause of action in a complaint for damages.

Neither can we sustain respondent's contention that its Complaint is incapable of

pecuniary estimation since it primarily seeks to enforce the penal clause contained in Article IV
of the Remarkable Dealer Outlet Contract. What respondent primarily seeks in its Complaint is
to recover aforesaid liquidated damages (which it termed as "incidental and consequential
damages") premised on the alleged breach of contract committed by the petitioners when they
unilaterally ceased business operations. Breach of contract may also be the cause of action in a
complaint for damages filed pursuant to Art. 1170 of the Civil Code.

Having thus determined the nature of respondent's principal action, the next question brought to
fore is whether it is the RTC which has jurisdiction over the subject matter. In Administrative
Circular No. 09-94, the SC declared that "where the claim for damages is the main cause of
action, or one of the causes of action, the amount of such claim shall be considered in
determining the jurisdiction of the court." In other words, where the complaint primarily seeks to
recover damages, all claims for damages should be considered in determining which court has
jurisdiction over the subject matter of the case regardless of whether they arose from a single
cause of action or several causes of action. Since the total amount of the damages claimed by the
respondent in its Complaint amounted only to P280,000.00, the RTC was correct in refusing to
take cognizance of the case.

SECURITY BANK CORPORATION, Petitioner

vs.
GREAT WALL COMMERCIAL PRESS COMPANY, INC., ALFREDO BURIEL ATIENZA,
FREDINO CHENG ATIENZA and SPS. FREDERICK CHENG ATIENZA and MONICA CU
ATIENZA, Respondents

G.R. No. 219345 January 30, 2017

Mendoza, J.: SECOND DIVISION

NATURE OF ACTION: Complaint for Sum of Money with Application for Issuance of a Writ of
Preliminary Attachment
FACTS:

Security Bank filed a Complaint for Sum of Money against respondents Great Wall Commercial
Press Company, Inc. (Great Wall). The complaint sought to recover from respondents their unpaid
obligations under a credit facility covered by several trust receipts and surety agreements. RTC denied
respondents' motion to lift, explaining that the Credit Agreement7and the Continuing Suretyship
Agreement contained provisions on representations and warranties; that the said representations and
warranties were the very reasons why Security Bank decided to extend the loan; that they failed to explain
why the goods subject of the trust receipts were not returned and the proceeds of sale thereof remitted.
CA lifted the writ of preliminary attachment. The appellate court explained that the allegations of Security
Bank were insufficient to warrant the provisional remedy of preliminary attachment.

It pointed out that fraudulent intent could not be inferred from a debtor's inability to pay or
comply with its obligations. The CA opined that the non-return of the proceeds of the sale and/or the
goods subject of the trust receipts did not, by itself, constitute fraud and that, at most, these were only
averments for the award of damages once substantiated by competent evidence. It also stressed that
respondents' act of offering a repayment proposal negated the allegation of fraud. The CA held that fraud
must be present at the time of contracting the obligation, not thereafter.

ISSUE: Whether or not respondents employed fraud in the performance of their obligation to petitioner?

RULING:

The Court finds merit in the petition. Fraud in the performance of the obligation must be
considered. The Court finds that Security Bank was able to substantiate its factual allegation of fraud,
particularly, the violation of the trust receipt agreements, to warrant the issuance of the writ of
preliminary attachment.

While fraud cannot be presumed, it need not be proved by direct evidence and can well be
inferred from attendant circumstances. Fraud by its nature is not a thing susceptible of ocular observation
or readily demonstrable physically; it must of necessity be proved in many cases by inferences from
circumstances shown to have been involved in the transaction in question.
 The CA stated in the assailed decision that under Section 1 (d) of Rule 57, fraud must only be
present at the time of contracting the obligation, and not thereafter. Hence, the CA did not consider the
allegation of fraud - that respondents offered a repayment proposal but questionably failed to attend the
meeting with Security Bank regarding the said proposal - because these acts were done after contracting
the obligation. In this regard, the CA erred.

Accordingly, the alleged fraud committed by respondents in the performance of their obligation
should have been considered by the CA. Security Bank detailed in its complaint that respondents,
knowing full well that they were in default, submitted a Repayment Proposal. Then, they requested for a
meeting with the bank to discuss their proposal. For unknown reasons, they did not meet the
representatives of the Security Bank.

Respondents even attached to its Motion to Lift Writ of Preliminary Attachment Ad Cautelam the
correspondence they had with Security Bank, which revealed that they did not meet the representatives of
the latter despite providing a specific date to discuss the proposed repayment scheme. Respondents
merely offered lame excuses to justify their absence in the arranged meeting and, ultimately, they failed to
clarify the non-compliance with their commitments. Such acts bared that respondents were not sincere in
paying their obligation despite their maturity, substantiating the allegations of fraud in the performance
thereof.

These circumstances of the fraud committed by respondents in the performance of their

obligation undoubtedly support the issuance of a writ of preliminary attachment in favor of Security
Bank.
 LAND BANK OF PHILIPPINES v. WEST BAY COLLEGES
GR No. 211287 Apr 17, 2017
REYES, J.: THIRD DIVISION

NATURE OF ACTION: This resolves a petition for review on certiorari] filed by Land Bank of the
Philippines (Land Bank), assailing the Decision dated September 30, 2013 and Resolution dated February
10, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 127897.

FACTS:

West Bay applied for an interim financing with Land Bank for the construction of a school
building. West Bay, as an accommodation mortgagor, executed a Real and Chattel Mortgage over its
training vessel to secure the loan of PBR with Land Bank. The mortgaged vessel sank during the
typhoon Seniang. West Bay proposed a restructuring of its debts with Land Bank. Respondents filed a
petition for corporate rehabilitation with a prayer for suspension of payments.

The RTC approved the rehabilitation plan. Respondents filed an amended rehabilitation plan
transferring the application of the insurance proceeds from West Bay to PBR and BCP's obligations. West
Bay reasoned that the reimbursement was provided for in the restructuring plan previously approved by
Land Bank in the letter dated March 25, 2002 but was not complied with. It alleged that although the RTC
approved the rehabilitation plans authorizing the application of the insurance proceeds to the obligations
of West Bay, it was never implemented.

Land Bank averred that it was prompted to apply the insurance proceeds to West Bay's and PBR's
outstanding loans due to West Bay's failure to comply with the terms and conditions of the Restructuring
Agreement.

RTC denied the Urgent Motion as it found no justifiable reason for the reimbursement of the
insurance proceeds to West Bay.

ISSUE: Whether or not the obligation of Land Bank to reimburse the amount of insurance
proceeds constitute a forbearance of money.

RULING:

The Court denies giving due course to the petition for failure of Land Bank to show any
reversible error in the assailed decision as to warrant the exercise of the Court's discretionary appellate
jurisdiction.

The Court deems it proper to impose interest on the amount of the insurance proceeds in the
concept of actual and compensatory damages. Article 2209 of the Civil Code provides that if the
obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for
damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and
in the absence of stipulation, the legal interest, which is six percent (6%) per annum.

In the case of loans or forbearances of money, the rate of legal interest used to be twelve percent
(12%) per annum pursuant to Central Bank Circular No. 905-82, which took effect on January 1,
1983. "The term 'forbearance', within the context of usury law, has been described as a contractual
obligation of a lender or creditor to refrain, during a given period of time, from requiring the borrower or
debtor to repay the loan or debt then due and payable."

Since the obligation of Land Bank to reimburse the amount of insurance proceeds does not
constitute a forbearance of money, the interest rate of six percent (6%) is applicable. The pronouncement
of the Court in Sunga-Chan, et aL. v. CA, et al., on this matter is enlightening: For transactions involving
payment of indemnities in the concept of damages arising from default in the performance of obligations
in general and/or for money judgment not involving a loan or forbearance of money, goods, or credit, the
governing provision is Article. 2209 of the Civil Code prescribing a yearly six percent (6%) interest.

CALIFORNIA MANUFACTURING COMPANY, INC., Petitioner,

vs.
ADVANCED TECHNOLOGY SYSTEM, INC., Respondent.
G.R. No. 202454 April 25, 2017

SERENO, J.: FIRST DIVISION

NATURE OF ACTION: Before us is a Petition for Review on Certiorari assailing the Decision1 of the
Court of Appeals (CA) in CA-G.R. CV No. 94409, which denied the appeal filed by California
Manufacturing Company, Inc. (CMCI) from the Decision2 of Regional Trial Court (RTC) of Pasig City,
Branch 268, in the Complaint for Sum of Money filed by Advanced Technology Systems, Inc. (ATSI)
against the former.

FACTS:

CMCI leased from ATSI a Prodopak machine which was used to pack products in 20-ml.
pouches. The parties agreed to a monthly rental of ₱98,000 exclusive of tax. ATSI filed a Complaint for
Sum of Money against CMCI to collect unpaid rentals for the months of June, July, August, and
September 2003. ATSI alleged that CMCI was consistently paying the rents until June 2003 when the
latter defaulted on its obligation without just cause.

CMCI moved for the dismissal of the complaint on the ground of extinguishment of obligation
through legal compensation. CMCI likewise claims that in a letter dated 30 July 2001, Felicisima
proposed to set off PPPC's obligation to pay the mobilization fund with the rentals for the Prodopak
machine. CMCl argued that legal compensation had set in and that ATSI was even liable for the balance
of PPPC's unpaid obligation after deducting the rentals for the Prodopak machine. RTC rendered a
Decision in favor of ATSI. Trial court ruled that legal compensation did not apply because PPPC had a
separate legal personality from its individual stockholders, the Spouses Celones, and ATSI. CA affirmed
the trial court's ruling that legal compensation had not set in because the element of mutuality of parties
was lacking.

ISSUE: Whether or not the petitioner may validly invoke legal compensation?

RULING:

No, the uncertainty in the supposed debt of PPPC to CMCI negates legal compensation as
justification for its non-payment of the rentals for the subject Prodopak machine.

Nothing in the narration of Felicisima's letter to the new management of CMCI in 2003 supports
CMCI's claim that it had been led to believe that ATSI and PPPC were one and the same; or, that ATSI's
collectible was intertwined with the business transaction of PPPC with CMCI.

CMCI's dealing with ATSI began only in August 2001. It appears, however, that CMCI now
wants the Court to gloss over the separate corporate existence ATSI and PPPC notwithstanding the dearth
of evidence showing that either PPPC or ATSI had used their corporate cover to commit fraud or evade
their respective obligations to CMCI. It even appears that CMCI faithfully discharged its obligation to
ATSI for a good two years without raising any concern about its relationship to PPPC.

The fraud test, which is the second of the three-prong test to determine the application of the alter
ego doctrine, requires that the parent corporation's conduct in using the subsidiary corporation be unjust,
fraudulent or wrongful. Under the third prong, or the harm test, a causal connection between the
fraudulent conduct committed through the instrumentality of the subsidiary and the injury suffered or the
damage incurred by the plaintiff has to be established. None of these elements have been demonstrated in
this case. Hence, we can only agree with the CA and RTC in ruling out mutuality of parties to justify the
application of legal compensation in this case.

Article 1279 of the Civil Code provides:

ARTICLE 1279. In order that compensation may be proper, it is necessary:

 (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 both debts consist in a sum of money, or if the things due are consumable, they be of the
same kind, and also of the same quality if the latter has been stated;

(3) That the two debts be due;

(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or controversy, commenced by third persons
and communicated in due time to the debtor.

The law, therefore, requires that the debts be liquidated and demandable. Liquidated debts are those
whose exact amounts have already been determined.

CMCI has not presented any credible proof, or even just an exact computation, of the supposed
debt of PPPC. It claims that the mobilization fund that it had advanced to PPPC was in the amount of ₱4
million. Yet, Felicisima's proposal to conduct offsetting in her letter dated 30 July 2001 pertained to a
₱3.2 million debt of PPPC to CMCI. Meanwhile, in its Answer to ATSI's complaint, CMCI sought to set
off its unpaid rentals against the alleged ₱10 million debt of PPPC. The uncertainty in the supposed debt
of PPPC to CMCI negates the latter's invocation of legal compensation as justification for its non-
payment of the rentals for the subject Prodopak machine.

PARADIGM DEVELOPMENT CORPORATION OF THE PHILIPPINES,

vs.
BANK OF THE PHILIPPINE ISLANDS,
G.R. No. 191174, June 7, 2017
Reyes, J. Third Division

NATURE OF CASE: Complaint for Annulment of Mortgage

FACTS:

Sengkon Trading (Sengkon), a sole proprietorship owned by Anita Go, obtained a loan from Far
East Bank and Trust Company (FEBTC) under a credit facility denominated denominated as Omnibus
Line in the amount of P100 Million.
 FEBTC again granted Sengkon another credit facility, denominated as Credit Line, in the amount
of ₱60 Million as contained in the "Agreement for Credit Line." Two real estate mortgage (REM)
contracts were executed by PDCP President Anthony L. Go (Go) to partially secure Sengkon's obligations
under this Credit Line.

FEBTC informed Sengkon regarding the renewal, increase and conversion of its ₱l00 Million
Omnibus Line to ₱l50 Million LC-TR Line and P20 Million Discounting Line, the renewal of the ₱60
Million Credit Line and P8 Million Bills Purchased Line.

In the same letter, FEBTC also approved the request of Sengkon to change the account name
from SENGKON TRADING to SENGKON TRADING, INC. (STI).

ISSUE: Whether a novation took place?

RULING:
No, the Court likewise agrees with the CA that no novation took place in the present case.
Novation is a mode of extinguishing an obligation by changing its objects or principal obligations, by
substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the
creditor. Article 1293 of the Civil Code defines novation as "consists in substituting a new debtor in the
place of the original one, [which] may be made even without the knowledge or against the will of the
latter, but not without the consent of the creditor." However, while the consent of the creditor need not be
expressed but may be inferred from the creditor's clear and unmistakable acts, to change the person of the
debtor, the former debtor must be expressly released from the obligation, and the third person or new
debtor must assume the former's place in the contractual relation.

The well-settled rule is that novation is never presumed. Novation will not be allowed unless it is
clearly shown by express agreement, or by acts of equal import. Thus, to effect an objective novation it is
imperative that the new obligation expressly declare that the old obligation is thereby extinguished, or that
the new obligation be on every point incompatible with the new one. In the same vein, to effect a
subjective novation by a change in the person of the debtor it is necessary that the old debtor be released
expressly from the obligation, and the third person or new debtor assumes his place in the relation. There
is no novation without such release as the third person who has assumed the debtor's obligation becomes
merely a co-debtor or surety.
In the present case, PDCP failed to prove by preponderance of evidence that Sengkon was
already expressly released from the obligation and that STI assumed the former's obligation.
Again, as correctly pointed out by the CA, the Deed of Assumption of Line/Loan with
Mortgage (Deed of Assumption) which was supposed to embody STI's assumption of all the
obligations of Sengkon under the line, including but not necessarily limited to the repayment
of all the outstanding availments thereon, as well as all applicable interests and other
charges, was not signed by the parties.

G.R. No. 178591 SM SYSTEMS CORPORATION (formerly SPRINGSUN

MANAGEMENT SYSTEMS CORPORATION) vs OSCAR CAMERINO,
EFREN CAMERINO, CORNELIO MANTILE, DOMINGO ENRIQUEZ AND
HEIRS OF NOLASCO DEL ROSARIO

Facts: Victoria Homes, Inc. was the registered owner of the

subject lots. Respondents were farmers-tenants of Victoria
Homes, cultivating and planting rice and com on the lots.
Victoria Homes sold them to SMS SM SYSTEMS CORPORATION.
Springsun subsequently mortgaged the subject lots to Banco
Filipino Savings and Mortgage Bank (Banco Filipino) as security
for its various loans amounting to ₱ll,545,000.00. When
Springsun failed to pay its loans, the mortgage was foreclosed
extra-judicially. At the public auction sale, the lots were sold
to Banco Filipino, being the highest bidder, but they were
eventually redeemed by Springsun.

Respondents filed with the RTC a complaint against Springsun

and Banco Filipino for Temporary Restraining Order or, simply,
an action for Redemption. On January 25, 2002, the RTC rendered
a decision in favor of respondents authorizing them to redeem
the subject lots from SMS. On appeal to the CA, the appellate
court affirmed the RTC decision. On August 20, 2005, [SMS] and
[the farmers] (except [Oscar]) executed a document, denominated
as Kasunduan, wherein the latter agreed to receive ₱300,000.00
each from the SMS, as compromise settlement. SMS then filed a
Motion to Hold Execution in Abeyance on the Ground of
Supervening Event.

On September 7, 2005, the RTC denied motion and the Kasunduan

separately entered into by are hereby disapproved. Aggrieved SMS
elevated the matter to the CA. The CA concluded that the
compromise agreement could not novate the Court’s earlier
Decision because only four out of five parties executed the
agreement.

Issue: Whether or not the Kasunduan effectively novated the

judgment obligation.

Rulings: The Supreme Court ruled in affirmative. The Court,

thus, finds no compelling grounds to invalidate the
compromise agreements.In Heirs of Servando Franco v. Spouses
Gonzales, the Court discussed novation in this wise: A novation
arises when there is a substitution of an obligation by a
subsequent one that extinguishes the first, either by changing
the object or the principal conditions, or by substituting the
person of the debtor, or by subrogating a third person in the
rights of the creditor: For a valid novation to take place,
there must be, therefore: (a) a previous valid
obligation; (b) an agreement of the parties to make .a new
contract; (c) an extinguishment of the old contract; and (d) a
valid new contract. In short, the new obligation extinguishes
the prior agreement only when the substitution is unequivocally
declared, or the old and the new obligations are incompatible on
every point. A compromise of a final judgment operates as a
novation of the judgment obligation upon compliance with either
of these two conditions.Inthe case at bar, SMS’ obligation to
allow redemption of the three parcels of land was superseded by
the terms of the compromise agreements executed with the four
farmers. SMS’ new obligation consisted of the payment of
₱300,000.00 each to the four farmers, who, in turn, waived their
redemption rights. Novation, thus, arose as the old obligation
became incompatible with the new.

The Court also notes that Oscar, the farmer who did not execute
a compromise agreement with SMS, filed before the RTC a
Manifestation and Motion, dated September 15, 2006, indicating
that “he has no plans, as he is in no financial position, to
exercise the right of redemption” granted to him.

ENCARNACION CONSTRUCTION & INDUSTRIAL CORPORATION,

petitioner vs. PHOENIX READY MIX CONCRETE DEVELOPMENT &
CONSTRUCTION, INC., respondent.
 G.R. No. 225402, September 4, 2017
Ponente: Justice Perlas-Bernabe
Second Division

Nature of the Action: Petition for Review on Certiorari (Complaint for Recovery of Sum of
Money)

Facts:
Phoenix entered into two (2) separate Contract Proposals and Agreements (Agreement)
with ECIC for the delivery of various quantities of ready-mix concrete to be used in the
construction of the Valenzuela National High School (VNHS) Marulas Building. ECIC received
the ready-mix concrete delivery in due course. However, despite written demands from Phoenix,
ECIC refused to pay. Hence, Phoenix filed before the RTC the Complaint for Sum of Money
against ECIC for the payment of P982,240.35, plus interest and attorney's fees.

In its Answer with Counterclaim, ECIC claimed that it opted to suspend payment since
Phoenix delivered substandard ready-mix concrete, such that the City Engineer's Office of
Valenzuela (City Engineer's Office) required the demolition and reconstruction of the VNHS
building's 3rd floor. It contended that since the samples taken from the 3rd floor slab failed to
reach the comprehensive strength of 6,015 psi in 100 days, 12 the City Engineer's Office ordered
the dismantling of the VNHS building's 3rd floor, and thus, incurred additional expenses
amounting to P3,858,587.84 for the dismantling and reconstruction.

The RTC ordered ECIC to pay Phoenix and ruled that Phoenix fully complied with its
obligation under their Agreement to deliver the ready-mix concrete, with the agreed strength of
3000 and 3500 psi G-3/4 7D PCD, which ECIC used to complete the 3rd floor slab of the VNHS
building. It pointed out that the alleged sub-standard quality of the delivered ready-mix concrete
did not excuse ECIC from refusing payment, noting that under Paragraph 15 of the Agreement,
any claim it has on the quality and strength of the transit mixed concrete should have been made
at the time of delivery. Since ECIC raised the alleged defects in the delivered concrete only on
June 16, 2009, or 48 days after the last delivery date on April 29, 2009, it considered ECIC to
have waived its right to question the quality of the delivered concrete under the principle of
estoppel in pais.

Aggrieved, ECIC appealed 23 to the CA which affirmed the RTC ruling holding ECIC
liable for the payment of the delivered ready-mix concrete. Moreover, it observed that before
ECIC signed and bound itself to the Agreement, it should have questioned the condition set
under Paragraph 15, i.e., that complaints about the quality of the concrete should be made upon
delivery. Further, there is no showing that ECIC was at a disadvantage when it contracted with
Phoenix so as to render the Agreement void on the ground that it is a contract of adhesion.

Dissatisfied, ECIC moved for reconsideration, which the CA denied. Hence, this petition.

Issue: (WON) the CA erred in denying ECIC's counterclaim for damages on the basis that the
Agreement was void for being a contract of adhesion.
Ruling:
No. A contract of adhesion is one wherein one party imposes a readymade form of
contract on the other. It is a contract whereby almost all of its provisions are drafted by one
party, with the participation of the other party being limited to affixing his or her signature or
"adhesion" to the contract. However, contracts of adhesion are not invalid per se as they are
binding as ordinary contracts. While the Court has occasionally struck down contracts of
adhesion as void, it did so when the weaker party has been imposed upon in dealing with the
dominant bargaining party and reduced to the alternative of taking it or leaving it, completely
deprived of the opportunity to bargain on equal footing. Thus, the validity or enforceability of
the impugned contracts will have to be determined by the peculiar circumstances obtained in
each case and the situation of the parties concerned.
In this case, there is no proof that ECIC was disadvantaged or utterly inexperienced in
dealing with Phoenix. There were likewise no allegations and proof that its representative (and
owner/proprietor) Ramon Encarnacion (Encarnacion) was uneducated, or under duress or force
when he signed the Agreement on its behalf. In fact, Encarnacion is presumably an astute
businessman who signed the Agreement with full knowledge of its import. Case law states that
the natural presumption is that one does not sign a document without first informing himself of
its contents and consequences. This presumption has not been debunked.
Moreover, it deserves highlighting that apart from the (two) 2 Contract Proposals and
Agreements, ECIC and Phoenix had entered into three (3) similar Agreements under the same
terms and conditions for the supply of ready-mix concrete. Thus, the Court is hardpressed to
believe that Encarnacion had no sufficient opportunity to read and go over the stipulations of the
Agreement and reject or modify the terms had he chosen to do so.
PROVINCE OF CAMARINES SUR, represented by GOVERNOR LUIS RAYMUND F.
VILLAFUERTE, JR. vs. BODEGA GLASSWARE, represented by its owner JOSEPH D.
CABRAL
G.R. No. 194199 22 March 2017
Jardeleza, J: Third Division

NATURE OF THE ACTION: Action for unlawful detainer

FACTS:
Petitioner donated around a parcel of land to the Camarines Sur Teachers' Association, Inc.
(CASTEA). The Deed of Donation included an automatic revocation clause
.
CASTEA accepted the donation in accordance with the formalities of law and complied with the
conditions stated in the deed. However, CASTEA entered into a Contract of Lease with Bodega over the
donated property.
 Petitioner, revoked its donation, it asserted that CASTEA violated the conditions in the Deed of
Donation when it leased the property to Bodega. Thus, invoking the automatic revocation clause in the
Deed of Donation, petitioner revoked, annulled and declared void the Deed of Donation. It appears from
the record that CASTEA never challenged this revocation.

Petitioner filed an action for unlawful detainer against Bodega. MTC ruled in favor of the
petitioner. On appeal, RTC reversed the MTC’s decision.

Petitioner went to CA but it disposed of the appeal on the ground that the petitioner cannot
demand that Bodega vacate the property. The CA explained that Bodega 's possession of the property is
based on its Contract of Lease with CASTEA. CASTEA, in sum, claims ownership of the property by
virtue of the Deed of Donation. According to the CA, while petitioner alleges that CASTEA violated the
conditions of the donation and thus, the automatic revocation clause applies, it should have first filed an
action for re-conveyance of the property against CASTEA. The CA theorized that judicial intervention is
necessary to ascertain if the automatic revocation clause suffices to declare the donation revoked.

ISSUE: Whether or not the automatic revocation clause applies when CASTEA leased the donated
property to Bodega Glass?

RULING:
Yes, the automatic revocation of clause applies when CASTEA leased the donated property to
Bodega Glass.

This Court has affirmed the validity of an automatic revocation clause in donations in the case of
De Luna v. Abrigo promulgated in 1990. We explained the nature of automatic revocation clauses by first
identifying the three categories of donation. In De Luna, we said that a donation may be simple,
remuneratory or onerous. A donation is simple when the cause is the donor's pure liberality. It is
remuneratory when the donor "gives something to reward past or future services or because of future
charges or burdens, when the value of said services, burdens or charges is less than the value of the
donation." A donation is onerous when it is "subject to burdens, charges, or future services equal (or
more) in value than that of the thing donated x x x." This Court found that the donation in De Luna was
onerous as it required the donee to build a chapel, a nursery, and a kindergarten. We then went on to
explain that an onerous donation is governed by the law on contracts and not by the law on donations. It is
within this context that this Court found an automatic revocation clause as valid.
 We explained in De Luna that Article 1306 of the Civil Code allows the parties "to establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to
law, morals, good customs, public order or public policy." In contracts law, parties may agree to give one
or both of them the right to rescind a contract unilaterally. This is akin to an automatic revocation clause
in an onerous donation. The jurisprudence on automatic rescission in the field of contracts law therefore
applies in an automatic revocation clause. Hence, in De Luna, we applied our rulings in University of the
Philippines v. De los Angeles and Angeles v. Calasanz where we held that an automatic rescission clause
effectively rescinds the contract upon breach without need of any judicial declaration.

MATEO ENCARNACION (Deceased), substituted by his heirs,namely: ELSA

DEPLIANENCARNACION,KRIZZA MARIE D. ENCARNACION, LORETA
ENCARNACION,CARMELITA E.STADERMAN, CORAZON S.
ENCARNACION, RIZALINA ENCARNACION-PARONG, ET AL.
vs THOMAS JOHNSON
GR NO 192285, JULY 11,2018, FIRST DIVISION, JARDELEZA J.

FACTS

On October 6, 2000, respondent filed an action for breach of contract

with prayer for damages and costs against spouses Narvin Edwarson (Narvin)
and Mary Mitchie Edwarson (also known as Mary Encarnacion; hereinafter
shall be referred to as Mary), Mateo's daughter, before the Vancouver
Registry of the Supreme Court of British Columbia, Canada. Respondent
alleged that Narvin and Mary convinced him to invest his money and personal
property in a vehicle leasing company owned by the couple, which turned out
to be a fraudulent business scheme. The couple neither deposited the promised
profits into his account nor gave an accounting or explanation as to where his
funds went.
The Supreme Court of British Columbia gave due course to
respondent's action and ordered summons to be served upon Narvin and
Mary. While service of summons was being attempted, respondent moved that
the Supreme Court of British Columbia grant him a Mareva injunction, with
ex Juris affect, to restrain Narvin and Mary from dealing with any of their
assets except as is necessary for payment of ordinary living expenses or to
carry on their ordinary business.6 On October 6, 2000, the Supreme Court of
British Columbia issued a Mareva injunction7 and authorized respondent,
among others, to obtain orders in foreign jurisdictions which would permit its
enforcement in those jurisdictions.
 On March 30, 2004, the RTC issued a Writ of Execution17 authorizing
the sheriff to attach sufficient properties belonging to Narvin and Mary to
satisfy the judgment award. On August 3, 2004, the RTC, acting on
respondent's motion to modify the Writ of Execution (to include in the writ
the properties under the name of Mateo whose title and tax declarations were
previously annotated), modified the Writ of Execution. 18 It issued an
Amended Writ ofExecution19 on September 9, 2004 authorizing the sheriff to
include the properties registered in the name of Mateo as subject of the
execution.
Subsequently, 13 levied properties not covered by certificates of title
were sold in public auction on June 23, 2004, wherein respondent placed the highest bid of Pl
0,000,000.00.20 The properties listed in the Certificate of
Sale21 were: ( 1) a coco/agricultural land covered by Tax Declaration No. 016-
0322A in the name of "Mary Mitchie Encarnacion;" and (2) a
commercial/agricultural land covered by Tax Declaration No. 007-0410AR in
the name of"Mary Mitchie E. Edwardson."

ISSUE

WON the highest bidder can own the property in an auction sale?

HELD

No. The rule is clear and inflexible: aliens are absolutely not allowed to acquire public or
private lands inthe Philippines, save only in constitutionally recognized exceptions. There is no
rule more settled than this constitutional prohibition, as more and more aliens attempt
to circumvent the provision by trying to own lands through another. In a long line of cases, we
have settled issues that directly or indirectly involve the above constitutional provision. We had
cases where aliens wanted that a particular property be declared as part of their father's
estate; that they be reimbursed the funds used in purchasing a property titled in the name of
another; that an implied trust be declared in their (aliens') favor; and that a contract of sale
be nullified !or their lack of consent.
In light of this, we nullify the auction sales conducted on June 23, 2004 and November
29, 2006 where respondent was declared the highest bidder, as well as the proceedings which led
to the acquisition of ownership by respondent over the lands involved. Article 1409(1) and (7) of
the Civil Code states that all contracts whose cause, object, or purpose is contrary to law or
public policy, and those expressly prohibited or declared void by law are inexistent and void
from the beginning. We thus remand the case back to Branch 72 of the RTC of Olongapo City, to
conduct anew the auction sale of the levied properties, and to exclude respondent from
partcipating as bidder.

.
CATHAY LAND, INC. and CATHAY METAL CORPORATION petitioners, vs AYALA LAND,
INC., AVIDA LAND CORPORATION and LAGUNA TECHNOPARK, INC., respondents.
G.R. No. 210209; August 9, 2017; Justice Del Castillo; First Division

NATURE OF THE ACTION: Motion for Execution with Application for Issuance of a Temporary
Restraining Order (TRO) and Writ of Injunction

FACTS:
Petitioners Cathay Land, Inc. and Cathay Metal Corporation own and develop a mixed-use and
multi-phase subdivision development project known as the South Forbes Golf City. On February
5, 2003, the Cathay Group filed a Complaint for easement of right of way with prayer for the
issuance of a preliminary injunction/temporary restraining order against respondents Ayala
Land, Inc., Avida Land Corporation, and Laguna Technopark, Inc., (Ayala Group) before the
Regional Trial Court (RTC), Branch 18, Tagaytay City. The Complaint alleged that the Ayala
Group unjustifiably denied passage to Cathay Group's personnel, vehicles and heavy
equipment through its properties by putting up checkpoints and constructing gates which
caused the development of the latter's South Forbes Golf City project to be interrupted and
delayed.

However, before trial could ensue, the parties executed a Compromise Agreement dated July 4,
2003 where they "mutually agreed to amicably settle all their claims as well as other claims and
causes of action that they may have against each other in relation to the [Complaint]."
Specifically, the Ayala Group granted a pedestrian, vehicular and utility easement of right of way
in favor of the Cathay Group in consideration of and subject to the latter's faithful compliance of
its undertakings in the Compromise Agreement.

Moreover, in case of breach on the part of Cathay Group, the remedies available to the Ayala
Group are as follows: first, the Ayala Group shall notify the Cathay Group of such breach; and
second, the Ayala Group can either suspend or withdraw the grant of easement of right of way
in case the Cathay Group fails to rectify such breach within 30 days from receipt of notice. Such
right may then be enforced through a writ of execution pursuant to Section 6 of the Compromise
Agreement.

The RTC approved the Compromise Agreement in its Judgment dated July 30, 2003, and
ordered the parties to strictly comply with the terms and conditions provided therein.

In 2005, the Cathay Group commenced the development of its South Forbes Golf City project.
Subsequently, however, the Ayala Group noted that Cathay Group's marketing materials for the
project showed plans to develop a thirty-hectare cyber park which will house, among others, call
center offices, and to construct high-rise buildings. The Ayala Group thus made verbal and
written demands to Cathay Group to abide by the terms and conditions of the Compromise
Agreement particularly on its undertaking not to construct high-rise buildings, but to no avail. It
also later found out that the Cathay Group had applied for a variance from a local zoning
ordinance of Silang, Cavite which then imposed a three-storey height limit on buildings to be
constructed in the area.

Thus, on July 29, 2008, the Ayala Group filed a Motion for Execution with Application for
Issuance of a Temporary Restraining Order (TRO) and Writ of Injunction before the RTC.

ISSUES:

Whether or not Cathay Group violated the compromise agreement.

RULING:

No. When the terms of the agreement are so clear and explicit that they do not justify an attempt
to read into it any alleged intention of the parties, the terms are to be understood literally just as
they appear on the face of the contract.

In this case, the records are bereft of proof to show that the parties had agreed to adopt the
definition of the term "high-rise building" found in the IRR of the Fire Code. The Compromise
Agreement, too, does not contain any provision that points to a reference to the Fire Code as to
the usage of the term. Consequently, the term "high-rise building" found therein is inapplicable
to this case because it is not in keeping with the nature and object of the Compromise
Agreement.

We simply cannot reasonably conclude, in the absence of clear language to this effect, that the
parties intended to use as reference a law that pertains to fire protection in order to define a
term in a contract relating to the construction of buildings. Rather, the term "high-rise buildings"
should be interpreted to follow its general and primary acceptation, or in other words, the
prevailing industry standards and practices as adopted by the Department of Public Works and
Highways in the IRR of the NBC, at the time the Compromise Agreement was executed.

For another, the Compromise Agreement itself contains no express prohibition pertaining to the
Cathay Group's construction of buildings which are over three storeys high in the area.

HI-LON MANUFACTURING, INC., Petitioner,

vs.
COMMISSION ON AUDIT, Respondent
G.R. No. 210669 August 1, 2017
PERALTA, J.: EN BANC
NATURE OF ACTION: This Petition for Certiorari under Rule 64, in relation to Rule 65 of the
1997 Rules of Civil Procedure, seeks to annul and set aside the Commission on Audit (COA) Decision
No. 2011-003 dated January 20, 2011, which denied HI-LON Manufacturing, Inc. 's (HI-LON) petition
for review, and affirmed with modification the Notice of Disallowance (ND) No. 2004-032 dated January
29, 2004 of COA's Legal and Adjudication Office-National Legal and Adjudication Section (LAO-
N). This Petition likewise assails COA's Decision No. 2013-212 dated December 3, 2013 which denied
HI-LON's motion for reconsideration, affirmed with finality COA Decision No. 2011-003, and required it
to refund payment made by DPWH in the amount of ₱10,461,338.00.

FACTS:

Sometime in 1978, the government, through the then Ministry of Public Works and Highways
(now DPWH), converted to a road right-of-way (RROW) a 29,690 sq. m. portion of the 89,070 sq. m.
parcel of land (subject property) located in Mayapa, Calamba, Laguna, for the Manila South Expressway
Extension Project. Philippine Polymide Industrial Corporation (PPIC) acquired the subject property. The
government neither annotated its claim or lien on the titles of CIREC, PPIC and DBP nor initiated
expropriation proceedings, much less paid just compensation to the registered owners.

APT disposed of a portion of the subject property in a public bidding. APT certified that Fibertex
was the highest bidder of PPIC and Texfiber assets for ₱370,000,000.00, and recommended to the
Committee on Privatization to award said assets to Fibertex.

On April 16, 1995, TGPI executed a Deed of Absolute Sale in favor of HI-LON over the entire
89,070 sq. m. subject property for a consideration of ₱44,535,000.00. HI-LON registered the Deed with
the Register of Deeds of Calamba, Laguna, which issued in its name TCT No. 383819. Rupert P. Quijano,
Attorney-in-Fact of HI-LON, requested assistance from the Urban Road Project Office (URPO) DPWH
for payment of just compensation for the 29,690 sq. m. portion of the subject property converted to a
RROW.

HI-LON relies on the Deed of Sale dated October 29, 1987, and insists that its predecessor-in-
interest (TGPI) acquired from the national government, through APT, the entire 89,070 sq. m. property,
which was previously registered in the name of DBP under TCT No. 151837.

ISSUE: Whether or not a judicial pronouncement is still necessary in order to have said error in the
registration of the subject property excluded from the Torrens title?
RULING:

Yes, if the terms of a contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control.

As the Deed of Sale dated October 29, 1987 is very specific that the object of the sale is the
59,380. sq. m. portion of the subject property, HILON cannot insist to have acquired more than what its
predecessor-in-interest (TGPI)acquired from APT. Article 1370 of the New Civil Code provides that if
the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulations shall control. Every contracting party is presumed to know the contents of the
contract before signing and delivering it, and that the words used therein embody the will of the parties.
Where the terms of the contract are simple and clearly appears to have been executed with all the
solemnities of the law, clear and convincing evidence is required to impugn it. Perforce, HI-LON's bare
allegation that the object of the Deed of Sale is the entire 89,070 sq. m. area of the subject property, is
self-serving and deserves short shrift.

The Court thus agrees with the COA in rejecting HI-LON's claim of ownership over the 29,690
sq. m. RROW portion of the subject property

In this case, what is being assailed by the COA when it sustained the Notice of Disallowance for
payment of just compensation is HI-LON's claim of ownership over the 29,690 sq. m. portion of the
property, and not the TCT of TGPI from which HI-LON derived its title. Granted that there is an error in
the registration of the entire 89,070 sq. m. subject property previously in the name of TGPI under TCT
No.· 156786 and currently in the name of HI-LON under TCT No. T-383819 because the 29,690 sq. m.
RROW portion belonging to the government was mistakenly included, a judicial pronouncement is still
necessary in order to have said portion excluded from the Torrens title.

The Petition for Certiorari is DENIED for lack of merit, and the Commission on Audit Decision
No. 2011-003 dated January 20, 2011 and Decision No. 2013-212 dated December 3, 2013
are AFFIRMED with MODIFICATION.
 PIONEER INSURANCE and SURETY CORPORATION vs. APL CO. PTE. LTD.
G.R. NO. 226345 02 AUGUST 2017
MENDOZA, J: SECOND DIVISION

NATURE OF THE ACTION: Complaint for sum of money

FACTS:
Chillies Export House Limited, turned over to respondent APL 250 bags of chili pepper for
transport. The shipment was loaded on board M/V Wan Hai. In turn, BSFIL, as consignee, insured the
cargo with petitioner Pioneer Insurance. The shipment arrived at the port of Manila and was temporarily
stored at North Harbor. Later on, the bags of chili were withdrawn and delivered to BSFIL. Upon receipt
thereof, it discovered that 76 bags were wet and heavily infested with molds. The shipment was declared
unfit for human. As a result, BSFIL made a formal claim against APL and Pioneer Insurance. Pioneer
Insurance paid BSFIL after evaluating the claim. Having been subrogated to all the rights and cause of
action of BSFIL, Pioneer Insurance sought payment from APL, but the latter refused. This prompted
Pioneer Insurance to file a complaint for sum of money against APL.

Pioneer Insurance filed a petition and insisted that the action filed within the one year prescriptive
period under the COGSA after BSFIL received the goods. It argues that the nine-month period provided
under the Bill of Lading was inapplicable because the Bill of Lading itself states that in the event that
such time period is found to be contrary to any law compulsorily applicable, then the period prescribed by
such law shall then apply. Pioneer Insurance is of the view that the stipulation in the Bill of Lading is
subordinate to the COGSA. It asserts that while parties are free to stipulate the terms and conditions of
their contract, the same should not be contrary to law, morals, good customs, public order, or public
policy.

ISSUE: Whether or not the nine-month period provided under the Bill of Lading is inapplicable
because the Bill of Lading is contrary to law and subordinate to the COGSA?

RULING:

Yes. It is elementary that a contract is the law between the parties and the obligations it carries
must be complied with in good faith. In Norton Resources and Development Corporation v. All Asia
Bank Corporation, the Court reiterated that when the terms of the contract are clear, its literal meaning
shall control, to wit:

The cardinal rule in the interpretation of contracts is embodied in the first paragraph of
Article 1370 of the Civil Code: if the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning of its stipulations shall
control.

After a closer perusal of the Bill of Lading, the Court finds that its provisions are clear and
unequivocal leaving no room for interpretation. In the Bill of Lading, it was categorically stated that the
carrier shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is
brought in the proper forum within nine (9) months after delivery of the goods or the date when they
should have been delivered. The same, however, is qualified in that when the said nine-month period is
contrary to any law compulsory applicable, the period prescribed by the said law shall apply.

SPOUSES FIRMO S. ROSARIO AND AGNES ANNABELLE DEAN-ROSARIO, Petitioners

vs. PRISCILLA P. ALVAR, Respondent
G.R. No. 212731 September 6, 2017
DEL CASTILLO, J.: FIRST DIVISION

NATURE OF ACTION: Complaint for Declaration of Nullity of Contract of Sale and Mortgage,
Cancellation of Transfer Certificates of Title and Issuance of new TCTs with Damages. Complaint for
Recovery of Possession,

FACTS:

Agnes executed two Deeds of Absolute Sale over the two lots in favor of Priscilla's daughter,
Evangeline Arceo (Evangeline), for the amount of P900,000.00 each. Evangeline later sold the lots to
Priscilla also for the price of P900,000.00 each. Priscilla sent a demand letter to petitioner spouses Rosario
asking them to vacate Lot 1. Petitioner spouses Rosario alleged that Priscilla deceived Agnes into signing
the Deeds of Absolute Sale in favor of Evangeline, as Agnes merely intended to renew the mortgages
over the two lots. The cases were consolidated and on April 4, 2003, the RTC rendered a Decision
granting Priscilla's complaint for recovery of possession while denying petitioner spouses Rosario's
complaint for declaration of nullity of contract of sale.
 Petitioner spouses Rosario contend that Priscilla had no legal personality to institute the judicial
foreclosure proceedings as the Deeds of Absolute Sale, which were deemed equitable mortgages, were
executed by them in favor of Evangeline, not Priscilla. They also claim that the obligation in the amount
of ₱1.8 million has no legal and factual bases as the only loan they obtained was in the amount of
₱600,000.00. Lastly, they insist that before the subject lots can be judicially foreclosed, a reformation of
the fake and simulated Deeds of Absolute Sale must first be done to enable them to present documentary
and parol evidence.

Priscilla, on the other hand, maintains that she has a legal personality to institute the foreclosure
proceedings pursuant to the November 15, 2006 Decision. The indebtedness of petitioner spouses Rosario
was also established in the said Decision, which has long attained finality. She asseverates that the loan
has not been paid and that the judicial foreclosure is not based on the old mortgages that have been
discharged, but on the Deeds of Absolute Sale, which were considered as equitable mortgages in the
November 15, 2006 Decision. As to the reformation of the instruments, Priscilla asserts that there is no
need for such reformation as the declaration in the November 15, 2006 Decision is sufficient.

CA reversed the April 4, 2003 Decision of the RTC. CA ruled that although the transfers from
Agnes to Priscilla were identified as absolute sales, the contracts are deemed equitable mortgages
pursuant to Article 1602 of the Civil Code.

ISSUE: Whether or not a reformation of the contract is required before the subject properties may be
foreclosed?

RULING:

No, The pronouncement in the November 15, 2006 Decision that the parties' intention was to
execute an equitable mortgage is sufficient reformation of such instrument.

Reformation of an instrument is a remedy in equity where a written instrument already executed

is allowed by law to be reformed or construed to express or conform to the real intention of the
parties.46 The rationale of the doctrine is that it would be unjust and inequitable to allow the enforcement
of a written instrument that does not express or reflect the real intention of the parties

In the November 15, 2006 Decision, the CA denied petitioner spouses' Complaint for declaration
of nullity of contract of sale on the ground that what was required was the reformation of the instruments,
pursuant to Article 136548 of the Civil Code.49 In ruling that the Deeds of Absolute Sale were actually
mortgages,50 the CA, in effect, had reformed the instruments based on the true intention of the parties.
Thus, the filing of a separate complaint for reformation of instrument is no longer necessary because it
would only be redundant and a waste of time.

Besides, in the November 15, 2006 Decision, the CA already declared that absent any proof that
petitioner spouses Rosario had fully paid their obligation, respondent may seek the foreclosure of the
subject lots.51

In view of the foregoing, we find no error on the part of the CA in ruling that a separate action for
reformation of instrument is no longer necessary as the declaration in the November 15, 2006 Decision
that the parties' intention was to execute an equitable mortgage is sufficient reformation of such
instrument.

WHEREFORE, the Petition is hereby DENIED.

DASMARIÑAS T. ARCAINA and MAGNANI T.

BANTA, petitioners, vs. NOEMI L. INGRAM, represented by MA.
NENETTE L. ARCHINUE, respondent.

G.R. No. 196444, February 15, 2017

Ponente: Justice Jardeleza
Third Division

Nature of the Action: Petition for Review on Certiorari

Facts:

Arcaina is the owner of Lot No. 3230 (property) located at Salvacion, Sto. Domingo,
Albay. Sometime in 2004, her attorney-in-fact, Banta, sold the property, with allegedly an area
of more or less 6,200 sq.m., to Ingram for P1,860,000. Installment payments totaling
P1,715,000.00 were made from May 2004 to February 2005. Then, petitioners executed a
Memorandum of Agreement (MOA) acknowledging the previous payments, and that Ingram still
had an obligation to pay the remaining balance of P145,000.00. They also executed deeds of
absolute sale over the property in Ingram's favor.

Subsequently, Ingram caused the property to be surveyed and discovered that Lot No.
3230 has an area of 12,000 sq. m. Banta insisted that the difference of 5,800 sq. m. remains
unsold. This was opposed by Ingram who claims that she owns the whole lot by virtue of the
sale. Thus, Archinue, on behalf of Ingram, instituted the recovery case against petitioners before
the MCTC.
 In its Order, the MCTC dismissed Ingram’s complaint for insufficiency of evidence, and
further ordered him to pay petitioners the amount of PhP145,000.00 as the remaining balance of
the contract. The MCTC declared that the survey showed that the property was 12,000 sq. m. or
more than what was stated in the deeds of sale. For Ingram to be awarded the excess 5,800 sq. m.
portion of the property, she should have presented evidence that she paid for the surplus area
consistent with Art. 1540 of the Civil Code. Accordingly, since Ingram failed to show that she
paid for the value of the excess land area, the MCTC held that she cannot claim ownership and
possession of the whole property.

On appeal, the RTC reversed and set aside the Order of the MCTC. The RTC found that
neither of the parties presented competent evidence to prove the property's actual area. Hence,
the RTC concluded that the area of Lot No. 3230 as shown by the boundaries indicated in the
deeds of sale is only 6,200 sq. m. more or less. Having sold Lot No. 3230 to Ingram, petitioners
must vacate it. In addition, the RTC held that Art. 1542, which covers sale of real estate in lump
sum, applies in this case. Having apparently sold the entire Lot No. 3230 for a lump sum,
petitioners are obligated to deliver all the land included in the boundaries of the property,
regardless of whether the real area should be greater or smaller than what is recited in the deeds
of sale.

In its Decision, the CA affirmed the RTC's ruling with modification. The CA agreed with
the RTC that the sale was made for a lump sum and not on a per-square-meter basis. The parties
merely agreed on the purchase price of P1,860,000.00 for the 6,200 sq. m. lot, with the deed of
sale providing for the specific boundaries of the property. The CA explained that in case of
conflict between the area and the boundaries of a land subject of the sale, the vendor is obliged to
deliver to the vendee everything within the boundaries (Art. 1542 of the Civil Code). Further, the
CA found the area in excess "substantial" which, to its mind, "should have not escaped the
discerning eye of an ordinary vendor of a piece of land." Thus, it held that the RTC correctly
ordered petitioners to deliver the entire property to Ingram.

Petitioners assail the CA's declaration that the sale of the property was made for a lump
sum, They insist that they sold the property on a per-square-meter basis, at the rate of
P300.00/sq. m. Since the sale was on a per-square-meter basis, petitioners argue that it is Art.
1539, and not Art. 1542 of the Civil Code, which governs.

Issues: (1) WON Lot No. 3230 was sold for a lump sum under Art. 1542.
(2) WON Art. 1542 has an exception / WON Ingram is entitled to the entire 12,000 sq.
m. for the original contract price agreed upon.

Rulings:

(1) Yes. In sales involving real estate, the parties may choose between 2 types of pricing
agreement: a unit price contract wherein the purchase price is determined by way of reference
to a stated rate per unit area (e.g., P1,000.00/sq. m.) or a lump sum contract which states a full
purchase price for an immovable the area of which may be declared based on an estimate or
where both the area and boundaries are stated (e.g., P1 million for 1,000 sq. m., etc.).
 Here, the Deeds of Sale executed by petitioners show that the property was conveyed to
Ingram at the predetermined price of P1,860,000.00. There was no indication that it was bought
on a per-square-meter basis. Thus, Art. 1542 of the Civil Code governs the sale. The provision
teaches that where both area and boundaries of the immovable are declared in a sale for a lump
sum, the area covered within the boundaries of the immovable prevails over the stated area. The
vendor is obliged to deliver all that is included within the boundaries regardless of whether the
actual area is more than what was specified in the contract of sale; and he/she shall do so without
a corresponding increase in the contract price. This is particularly true when the stated area is
qualified to be approximate only, such as when the words "more or less" were used.

(2) Yes. Although, the sale partakes of the nature of a lump sum contract, Ingram is entitled
only to the area stated in the contract of sale. The SC clarified that the rule laid down in Art.
1542 is not hard and fast and admits of an exception. It held:

"A caveat is in order, however. The use of "more or less" or similar

words in designating quantity covers only a reasonable excess or deficiency.
A vendee of land sold in gross or with the description "more or less" with
reference to its area does not thereby ipso facto take all risk of quantity in the
land. xxx”

In a lump sum contract, a vendor is generally obligated to deliver all the land covered
within the boundaries, regardless of whether the real area should be greater or smaller than that
recited in the deed. However, in case there is conflict between the area actually covered by the
boundaries and the estimated area stated in the contract of sale, he/she shall do so only when the
excess or deficiency between the former and the latter is reasonable.

In this case, the SC found the difference of 5,800 sq. m. too substantial to be considered
reasonable. It noted that only 6,200 sq. m. was agreed upon between petitioners and Ingram.
Declaring Ingram as the owner of the whole 12,000 sq. m. on the premise that this is the actual
area included in the boundaries would be ordering the delivery of almost twice the area stated in
the deeds of sale. Surely, Art. 1542 does not contemplate such an unfair situation to befall a
vendor — that he/she would be compelled to deliver double the amount that he/she originally
sold without a corresponding increase in price.

Further, at the time of the sale, Ingram and petitioners did not have knowledge of the actual area
of the land within the boundaries of the property. It is undisputed that before the survey, the
parties relied on the tax declaration covering the lot, which merely stated that it measures more
or less 6,200 sq. m. Thus, when petitioners offered the property for sale and when Ingram
accepted the offer, the object of their consent or meeting of the minds is only a 6,200 sq. m.
property. The deeds of sale merely put into writing what was agreed upon by the parties.

ATTY. REYES G. GEROMO, FLORENCIO BUENTIPO, JR.,

ERNALDO YAMBOT and LYDIA BUSTAMANTE, petitioners, vs. LA
PAZ HOUSING AND DEVELOPMENT CORPORATION and
GOVERNMENT SERVICE INSURANCE SYSTEM, respondents.
 G.R. No. 211175, January 18, 2017
Ponente: Justice Mendoza
Second Division

Nature of the Action: Petition for Review on Certiorari under Rule 45 (Breach of Warranty
Against Hidden Defects)

Facts:

Petitioners Geromo, Buentipo, Yambot, and Bustamante acquired individual housing

units of Adelina 1-A Subdivision in San Pedro, Laguna from La Paz, through GSIS financing, as
evidenced by their deeds of conditional sale. After more than 2 years of occupation, cracks
started to appear on the floor and walls of the petitioners’ houses. They requested La Paz, being
the owner/developer, to take remedial action. They collectively decided to construct a
riprap/retaining wall along the old creek believing that water could be seeping underneath the
soil and weakening the foundation of their houses. Although La Paz was of the view that it was
not required to build a retaining wall, it decided to give the petitioners ₱3,000.00 each for
expenses incurred in the construction of the said riprap/retaining wall. The petitioners claimed
that despite the retaining wall, the condition of their housing units worsened as the years passed.
When they asked La Paz to shoulder the repairs, it denied their request, explaining that the
structural defects could have been caused by the 1990 earthquake and the
renovations/improvements introduced to the units that overloaded the foundation of the original
structures.

The petitioners decided to leave their housing units in Adelina. Upon the request of
petitioners, the Municipal Engineer of San Pedro and MGB - DENR conducted an ocular
inspection of the said properties. They found that there was "differential settlement of the area
where the affected units were constructed." On the basis thereof, petitioners filed a complaint for
breach of contract with damages against La Paz and GSIS before the HLURB, asserting that La
Paz was liable for implied warranty against hidden defects and that it was negligent in building
their houses on unstable land.

The HLURB Arbiter found La Paz liable for the structural damage on petitioners' housing
units, explaining that the damage was caused by its failure to properly fill and compact the soil
on which the houses were built and to maintain a 3 meter easement from the edge of the creek as
required by law. As to GSIS, the HLURB ruled that there was no cogent reason to find it liable
for the structural defects as it merely facilitated the financing of the affected units.

Later on, the HLURB Board of Commissioners set aside the Arbiter's decision, and
denied petitioners’ Motion for Reconsideration.

Aggrieved, petitioners elevated the case to the OP, which was dismissed. On appeal, the
CA affirmed the OP ruling and found that the petitioners had no cause of action against La Paz
for breach of warranty against hidden defects as their contracts were merely contracts to sell, the
titles not having been legally passed on to the petitioners. It likewise ruled that La Paz could not
be held liable for damages as there was not enough evidence on record to prove that it acted
fraudulently and maliciously against the petitioners. The CA denied the motion for
reconsideration filed by petitioners. Hence, the present petition.

Issue: WON La Paz should be held liable for the structural defects on its implied warranty
against hidden defects.
Ruling:

Yes. Under the Civil Code, the vendor shall be answerable for warranty against hidden
defects on the thing sold under the following circumstances:

Art. 1561. The vendor shall be responsible for warranty against the hidden defects which
the thing sold may have, should they render it unfit for the use for which it is intended, or should
they diminish its fitness for such use to such an extent that, had the vendee been aware thereof,
he would not have acquired it or would have given a lower price for it; but said vendor shall not
be answerable for patent defects or those which may be visible, or for those which are not visible
if the vendee is an expert who, by reason of this trade or profession, should have known them.
(Emphasis supplied)

Art. 1566. The vendor is responsible to the vendee for any hidden faults or defects in the
thing sold, even though he was not aware thereof.

This provision shall not apply if the contrary has been stipulated and the vendor was not
aware of the hidden faults or defects in the thing sold.

For the implied warranty against hidden defects to be applicable, the following conditions
must be met:

a. Defect is Important or Serious

i. The thing sold is unfit for the use which it is intended
ii. Diminishes its fitness for such use or to such an extent that the buyer
would not have acquired it had he been aware thereof
b. Defect is Hidden
c. Defect Exists at the time of the sale
d. Buyer gives Notice of the defect to the seller within reasonable time

Here, the petitioners observed big cracks on the walls and floors of their dwellings within
two years from the time they purchased the units. The damage in their respective houses was
substantial and serious. They reported the condition of their houses to La Paz, but the latter did
not present a concrete plan of action to remedy their predicament. They also brought up the issue
of water seeping through their houses during heavy rainfall, but again La Paz failed to properly
address their concerns. The structural cracks and water seepage were evident indications that the
soil underneath the said structures could be unstable. Verily, the condition of the soil would not
be in the checklist that a potential buyer would normally inquire about from the developer
considering that it is the latter's prime obligation to ensure suitability and stability of the ground.

ARIEL G. PALACIOS, for and in behalf of the AFP Retirement and Separation Benefits System
(AFP-RSBS), Complaint, vs.
ATTY. BIENVENIDO BRAULIO M. AMORA, JR., Respondent
A.C. No. 11504 August 1, 2017
EN BANC
NATURE OF ACTION: Complaint seeking the disbarment of respondent Atty. Bienvenido Braulio M.
Amora, Jr. for alleged violation of: (1) Canon 1, Rules 1.01 to 1.03; Canon 10, Rules 10.01to10.03;
Canon 15, Rule 15.03; Canon 17; Canon 21, Rule 21.01 and 21.02 of the Code of Professional
Responsibility (CPR); (2) Section 20, Rule 138 of the Rules of Court; (3) Lawyer's Oath; and (4) Article
1491 of the Civil Code.

FACTS:

Complainant is the owner-developer of more or less 312 hectares of land estate property located
at Barangays San Vicente, San Miguel, Biluso and Lucsuhin, Municipality of Silang, Province of Cavite
(the "Riviera project"). In 1996, complainant entered into purchase agreements with several investors in
order to finance its Riviera project. One of these investors was Philippine Golf Development and
Equipment, Inc. ("Phil Golf'). Complainant retained the services of respondent of the Amora and
Associates Law Offices to represent and act as its legal counsel in connection with the Riviera project.
Complainant entered into another engagement agreement with respondent and the Amora Del Valle &
Associates Law Offices for the registration of the Riviera trademark with the Intellectual Property Office.

After complainant terminated respondent's services as its legal counsel, respondent became Phil
Golf’s representative and assignee. Respondent began pushing for the swapping of Phil Golf’s properties
with that of complainant. Respondent sent swapping proposals to his former client, herein complainant,
this time in his capacity as Phil Golf’s representative and assignee. These proposals were rejected by
complainant for being grossly disadvantageous to the latter. Respondent filed a case against its former
client, herein complainant on behalf of a subsequent client (Phil Golf) before the HLURB for alleged
breach of contract.

Due to the above actuations of respondent, complainant filed the instant action for disbarment.

ISSUE: Whether or not the respondent lawyer may validly acquire property of a client subject of
litigation by purchase?

RULING:

As a general Rule, No, a Lawyer cannot acquire property of a client subject of litigation.
Moreover, with regard to the finding of the IBP-BOG that respondent violated Article 1491 of the Civil
Code, SC have to digress. The Article reads:

Art.1491.The following persons cannot acquire by purchase, even at a public or judicial

uction,either in person or through the mediation of another:

xxxx

(5)Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other
officers and employees connected with the administration of justice, the property and
rights in litigation or levied upon an execution before the court within whose jurisdiction
or territory they exercise their respective functions; this prohibition includes the act of
acquiring by assignment and shall apply to lawyers, with respect to the property
and rights which may be the object of any litigation in which they may take part by
virtue of their profession.

xxxx (Emphasis supplied)

On this point, SC sustain the respondent's position that the prohibition contained in Article 1491 does not
apply in this case.

However, the subject properties which were acquired by respondent Amora were allegedly not in
litigation and/or object of any litigation at the time of his acquisition. For the prohibition to apply, the sale
or assignment of the property must take place during the pendency of the litigation involving the property.

HEIRS OF GILBERTO ROLDAN, et al., vs. HEIRS OF SILVELA ROLDAN, et al.,

G.R. No. 202578, September 27, 2017

Cereno, C.J. First Division

NATURE OF ACTION: Complaint for Partition and Damages

FACTS:

Natalia Magtulis owned Lot No. 4696, an agricultural land in Kalibo, Aklan, which had an area of
21,739 square meters, and was covered by Original Certificate of Title No. P-7711. Her heirs included
Gilberto Roldan and Silvela Roldan, her two children by her first marriage; and, allegedly, Leopolda
Magtulis her child with another man named Juan Aguirre. After her death in 1961, Natalia left the lot to
her children. However, Gilberto and his heirs took possession of the property to the exclusion of
respondents.

On 19 May 2003, respondents filed before the RTC a Complaint for Partition and Damages
against petitioners. The latter refused to yield the property on the ground that respondent heirs of Silvela
had already sold her share to Gilberto. During trial, petitioners failed to show any document evidencing
the sale of Silvela's share to Gilberto.

ISSUE: Whether Silvela sold her share of the property to Gilberto

RULING:

No. Petitioners argue before us that Silvela had a perfected contract of sale with Gilberto over her
shares of Lot No. 4696. That argument is obviously a question of fact, as it delves into the truth of
whether she conveyed her right in favor of her brother.

The assessment of the existence of the sale requires the calibration of the evidence on record and
the probative weight thereof. The RTC, as affirmed by the CA, already performed its function and found
that the heirs of Gilberto had not presented any document or witness to prove the fact of sale.

The factual determination of courts, when adopted and confirmed by the CA, is final
and conclusive on this Court except if unsupported by the evidence on record. In this
case, the exception does not apply, as petitioners merely alleged that Silvela "sold,
transferred and conveyed her share in the land in question to Gilberto Roldan for a
valuable consideration" without particularizing the details or referring to any proof of
the transaction. Therefore, we sustain the conclusion that she remains coowner of lot.
 RODOLFO LAYGO and WILLIE LAYGO, petitioners, vs. MUNICIPAL
MAYOR OF SOLANO, NUEVA VIZCAYA, respondent.

G.R. No. 188448, January 11, 2017

Ponente: Justice Jardeleza
Third Division

Nature of the Action: Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court

Facts:

In July 2005, Bandrang sent two letter-complaints to then Municipal Mayor Dickson and
the Sangguniang Bayan of Solano, Nueva Vizcaya, informing them of the illegal sublease she
entered into with petitioners Rodolfo Laygo and Willie Laygo over Public Market Stalls No. 77-
A, 77-B, 78-A, and 78-B, which petitioners leased from the Municipal Government. Bandrang
claimed that petitioners told her to vacate the stalls, which they subsequently subleased to
another.

In August 2005, the Sangguniang endorsed Bandrang’s letter and a copy of Resolution
No. 183-2004 to Mayor Dickson for appropriate action, since the Sanggunian has already
authorized Mayor Dickson, through said Resolution, to enforce the provision against subleasing
of stalls in the public market. Mayor Dickson replied that the stalls were constructed under a
BOT scheme, which meant that the petitioners had the right to keep their stalls until the BOT
agreement was satisfied.

Thereafter, Bandrang wrote another letter to the Sanggunian recommending the

cancellation of the lease contract between the Municipality and petitioners for violating the
provision on subleasing. The Sanggunian once again referred Bandrang’s letter to Mayor
Dickson for appropriate action. Mayor Dickson, however, did not act on Bandrang’s letter and
on the Sanggunian’s referrals. Thus, Bandrang filed a Petition for Mandamus against him and
petitioners before the RTC.

The RTC in its Resolution granted the petition, and ordered the Municipal Mayor of
Solano to implement Nos. 9 and 11 of the Contract of lease of stall between the Municipal
Government of Solano and Rodolfo and Willie Laygo. The RTC concluded that petitioners
clearly violated the terms and conditions of the lease contract.

Petitioners appealed to the CA, while then incumbent Mayor Dacayo filed a
manifestation expressing his willingness to implement the Sanggunian Resolutions. The CA
rendered Decision dismissing the appeal and affirming the finding of the RTC that the contract
between petitioners and the Municipal Government is a lease contract and, thus, Resolution No.
183-2004 applies to them. Willie Laygo filed a Motion for Reconsideration, which was denied
by the CA. Hence, this petition.
Issue: WON Sangguniang Bayan Resolution No. 183-2004 may be applied as the contract
between petitioners and the Municipal Government is one of lease.

Ruling:

Yes. There is preponderant evidence that the contract between petitioners and the
Municipal Government is one of lease.

The type of contract existing between petitioners and the Municipal Government is
disputed. The Municipal Government asserts that it is one of lease, while petitioners insist that it
is a BOT agreement. Both parties, however, failed to present the contracts which they purport to
have. It is likewise uncertain whether the contract would fall under the coverage of the Statute of
Frauds and would, thus, be only proven through written evidence. In spite of these, we find that
the Municipal Government was able to prove its claim, through secondary evidence, that its
contract with petitioners was one of lease.

We have no reason to doubt the certifications of the former mayor of Solano, Mayor
Galima, and the Municipal Planning and Development Office (MPD0) which show that the
contract of the Municipal Government with petitioners' mother, Clarita, was converted into a
BOT agreement for a time in 1992 due to the fire that razed the public market. These
certifications were presented and offered in evidence by petitioners themselves. They prove that
Clarita was allowed to construct her stalls that were destroyed using her own funds, and with the
payment of the lease rentals being suspended until she recovers the cost she spent on the
construction. The construction was, in fact, supervised by the MPDO for a period of three
months. The stalls were eventually constructed completely and awarded to Clarita. She thereafter
reoccupied the stalls under a lease contract with the Municipal Government. In fact, in his Notice
dated August 21, 2007, the Municipal Treasurer of Solano reminded petitioners of their
delinquent stall rentals from May 2006 to July 2007. As correctly posited by the Municipal
Government, if the stalls were under a BOT scheme, the Municipal Treasurer could not have
assessed petitioners of any delinquency.

Also, petitioners themselves raised, for the sake of argument, that even if the contract
may be conceded as one of lease, the municipality is nonetheless estopped from canceling the
lease contract because it subsequently accepted payment of rentals until the time of the filing of
the case.

In the same vein, the Sangguniang Bayan Resolution No. 183-2004, which quoted Items No. 9
and 11 of the lease contract on the absolute prohibition against subleasing and the possible
termination of the contract in view of back rentals or any violation of the stipulations in the
contract, is presumed to have been regularly issued. It deserves weight and our respect, absent a
showing of grave abuse of discretion on the part of the members of the Sanggunian.
HILLTOP MARKET FISH VENDORS' ASSOCIATION, INC. vs. HON. BRAULIO YARANON,
City Mayor, Baguio City, HON. GALO WEYGAN, City Councilor and Chairman Anti-Vice
Coordinating Task Force, and the CITY GOVERNMENT OF BAGUIO
G.R. No. 188057 12 July 2017
CARPIO, J: SECOND DIVISION

NATURE OF THE ACTION: Complaint for temporary restraining order

FACTS:
Hilltop and respondent City of Baguio, entered into a Contract of Lease over a lot owned by the
City of Baguio. The contract provided that the period of lease is 25 years, renewable for the same period
at the option of both parties and the annual lease rental is P25,000, with the first payment commencing
upon the issuance by the City Engineer's Office of the Certificate of full occupancy of the building to be
constructed by Hilltop on the lot. Sometime in 1975, Hilltop constructed the building even though the
City Engineer's Office did not issue a Certificate, Hilltop's members occupied the Rillera building and
conducted business in it.

The City Council of Baguio issued a resolution rescinding the contract of lease with Hilltop, for
its continued failure to comply with its obligation to complete the Rillera building and ordered the closure
of the two upper floors of the Rillera building based on the City Council's Resolution that the Rillera
building failed to comply with the minimum sanitary standards.

City Mayor Yaranon issued AO No. 30 to immediately close the Rillera building to have it
cleaned, sanitized and enclosed; to prevent illegal activities in it; and for its completion and preparation
for commercial use. Hilltop filed with the RTC a complaint and praying the concerned office to issue the
Certificate to make the contract of lease effective.

Yaranon and respondent Galo Weygan alleged that the Certificate was not issued to Hilltop
because the Rillera building was not completed, and there were no provisions for electrical and plumbing
systems or facilities for conduct of regular business. In any case, they argued that the issuance of the
Certificate shall only signal the start of payment of annual lease rental and not the effectivity of the
contract.
 The RTC found that the contract of lease automatically expired on 22 June 1999, because the
lease period of 25 years was expressly provided in the contract of lease dated 22 June 1974. The RTC did
not give weight to Hilltop's contention that the Certificate authorized it to occupy the lot because even
without the Certificate, Hilltop already occupied the lot as early as 22 June 1974 up to the present, which
is beyond the 25-year period provided in the contract of lease. The RTC further found the Rillera building
unsanitary and dangerous to those occupying it.

The CA affirmed the decision of the RTC and ruled that there was already a perfected contract of
lease: the issuance of the Certificate was imposed only on the performance of the obligations contained in
it. The CA held that Hilltop is estopped from claiming that the period of lease has not begun, since it
already occupied the Rillera building and conducted business in it even without the Certificate.

ISSUE: Whether or not the issuance of certificate of full occupancy by the City Engineer’s Office
makes the contract of lease effective.

RULING:
No, in a contract of lease, one of the parties binds himself to give to another the enjoyment or use
of a thing for a price certain, and for a period which may be definite or indefinite. Being a consensual
contract, a lease is perfected at the moment there is a meeting of the minds upon the thing and the cause
or consideration which are to constitute the contract. Thereafter, the lessor is obliged to deliver the thing
which is the object of the contract in such a condition as to render it fit for the use intended, and the lessee
is obliged to use the thing leased as a diligent father of a family, devoting it to the use stipulated or that
which may be inferred from the nature of the thing leased.

In a contract of lease, the cause or essential purpose is the use and enjoyment of the thing. The
thing or subject matter of the contract in this case was clearly identified and agreed upon as the lot where
the building would be constructed by Hilltop. The consideration were the annual lease rental and the
ownership of the building upon the termination of the lease period. Considering that Hilltop and the City
of Baguio agreed upon the essential elements of the contract, the contract of lease had been perfected.

From the moment that the contract is perfected, the parties are bound to fulfill what they have
expressly stipulated. Thus, the City of Baguio gave the use and enjoyment of its lot to Hilltop. Both the
RTC and the CA found that upon the execution of the contract on 22 June 1974, Hilltop took possession
of the lot and constructed the Rillera building on it. Thereafter, Hilltop's members occupied the Rillera
building and conducted business in it up to the present. The findings of fact of the RTC and the CA are
final and conclusive and cannot be reviewed on appeal by this Court.

Since Hilltop exercised its right as lessee based on the contract of lease and the law, it has no
basis in claiming that the contract of lease did not commence.

BP OIL AND CHEMICALS INTERNATIONAL PHILIPPINES, INC., PETITIONER, VS.

TOTAL DISTRIBUTION & LOGISTIC SYSTEMS, INC., RESPONDENTS
G.R. No. 214406 | 2017-02-06

PERALTA, J.:

Nature of the Action: Action for collection of sum of money

Facts:
TDLSI entered into an Agency Agreement (the Agreement) with BP Singapore in
September 1997, for a period of 5 years, whereby it was given the right to act as the exclusive
agent of the latter for the sales and distribution of its industrial lubricants in the PH. In return,
TDLSI was supposed to meet the target sales volume set by BP Singapore for each year of the
Agreement. In April 1998, BP Singapore assigned its rights under the Agreement to BP Oil
effective March 1998.

When TDLSI did not meet its target sales volume for the first year of the Agreement, BP
Oil, in June 1999, informed TDLSI that it was going to appoint other distributors to sell BP's
industrial lubricant products in the Philippines. TDLSI did not object, but asked for P10M as
compensation for the expenses. BP Oil did not agree to said demand.

In August 1999, TDLSI demanded from BP Oil that it be paid damages in the amount of
P40M and said that it was withholding remittance of the sales until it was paid by BP Oil. In
September 1999, BP Oil gave notice to TDLSI that it was terminating the Agreement unless it
rectified the breaches it committed within a period of 30 days. BP Oil also demanded that TDLSI
pay its outstanding obligations and return the unsold stock in its possession. After not hearing
from TDLSI, BP Oil, in October 1999, gave formal notice to TDLSI that it was terminating the
Agreement. Subsequently, BP Oil found out that TDLSI had filed a request for arbitration with
the PDRCI.

In October 2000, BP Oil sent TDLSI another letter to reiterate its demand for TDLSI to
return the unremitted collections and stocks in its possession. In April 2001, TDLSI wrote BP
Oil a letter admitting that it had in its possession collections against sales in the amount of
P27,261,305.75, receivables in the amount of P8,767,656.26 and stocks valued at P1,155,000.00.
 In July 2001, BP Oil sent TDLSI a formal demand letter for the payment of the total
amount of P36,440,351.79 representing the total amount of the collections, receivables and
stocks that it should have returned to BP Oil as of May 2001.

In April 2002, BP Oil filed the instant complaint for collection against TDLSI, raising the
following issues: 1) WON BP Oil has the right to collect the amount of P36,440,351.79 from
TDLSI together with legal interest computed from September 1999, attorney's fees and costs of
suit; and 2) WON TDLSI is justified in retaining the amounts and stocks in its possession by
virtue of the aforementioned provisions of Art. 1912-1914 the Civil Code on agency.

In its Decision dated January 21, 2011, the RTC ruled in favor of BP Oil, directing
TDLSI to pay the sum of P36,943,829.13 for the value of the stocks and the moneys received
and retained by it in its possession pursuant to the Agreement with legal interest computed at 6%
per annum from July 19, 2001 up to the finality of this decision and at 12% per annum from
finality of this decision up to the date of payment, among others.

After TDLSI elevated the case to the CA, the latter reversed and set aside the RTC
decision and found in favor of TDLSI in its Decision dated April 30, 2014, thereby dismissing
BP Oil’s complaint. Hence, the present petition.

Issue: WON BP Oil is entitled to recover from TDLSI the sum representing the total value of
the moneys, stock and accounts receivables arising from their agency agreement.

Held:
Yes, BP Oil was able to preponderantly establish its claim against TDLSI in the amount
of P36,440.351.79 for the value of the moneys, stock and accounts receivables which TDLSI
refused to deliver to BP Oil.

The complaint filed by BP Oil is an action for collection of sum of money arising from
the termination of the Agency Agreement with TDLSI. Therefore, BP Oil's cause of action is
primarily based on the alleged non-payment of outstanding debts of respondent as well as the
unremitted collections/payments and unsold stocks, despite demand, and not just on TDLSI’s
letter admitting the present value of stocks, collections and accounts receivables of TDLSI.
Anyhow, the contents of said letter were merely corroborative of the other pieces of evidence
presented BP Oil, which TDLSI failed to refute.

WILLIAM ANGIDAN SIY, vs.ALVIN TOMLIN,

G.R. No. 205998, April 24, 2017
Del Castillo, J. First Division

NATURE OF CASE: Complaint for Recovery of Possession

FACTS:

Petitioner William Anghian Siy filed before the Regional Trial Court of Quezon City (RTC) a
Complaint for Recovery of Possession with Prayer for Replevin against Frankie Domanog Ong (Ong),
Chris Centeno (Centeno), John Co Chua (Chua), and herein respondent Alvin Tomlin. The case was
docketed as Civil Case No. Q-11-69644 and assigned to RTC Branch 224.

In his Complaint, petitioner alleged that he is the owner of a 2007 model Range Rover with Plate
Number ZMG 272 which he purchased from alberto Lopez III (Lopez) on July 22, 2009; that in 2010, he
entrusted the said vehicle to Ong, a businessman who owned a second-hand car sales showroom
("Motortrend" in Katipunan, Quezon City), after the latter claimed that he had a prospective buyer
therefor; that Ong failed to remit the proceeds of the purported sale nor return the vehicle; that petitioner
later found out that the vehicle had been transferred to Chua; that in December, 2010, petitioner filed a
complaint before the Quezon City Police District's Anti-Carnapping Section; that Ong, upon learning of
the complaint, met with petitioner to arrange the return of the vehicle; that Ong still failed to surrender the
vehicle; that petitioner learned that the vehicle was being transferred to respondent; and that the vehicle
was later impounded and taken into custody by the PNP-Highway Patrol Group (HPG) at Camp Crame,
Quezon City after respondent attempted to process a PNP clearance of the vehicle with a view to
transferring ownership thereof. Petitioner thus prayed that a writ of replevin be issued for the return of the
vehicle to him, and that the defendants be ordered to pay him ₱100,000.00 atton1ey's fees and the costs of
suit.

ISSUE: Whether a Contract of Agency was created between William Sy and Frankie Ong?

RULING:
Yes. This Court is not unaware of the practice by many vehicle buyers and second-hand car
traders of not transferring registration and ownership over vehicles purchased from their original owners,
and rather instructing the latter to execute and sign in blank deeds of sale covering these vehicles, so that
these buyers and dealers may freely and readily trade or re-sell the vehicles in the second-hand car market
without difficulty. This way, multiple transfers, sales, or trades of the vehicle using these undated deeds
signed in blank become possible, until the latest purchaser decides to actually transfer the certificate of
registration in his name. For many car owners-sellers, this is an easy concession; so long as they actually
receive the sale price, they will sign sale deeds in blank and surrender them to the buyers or dealers; and
for the latter, this is convenient since they can "flip'' or re-sell the vehicles to the public many times over
with ease, using these blank deeds of sale.
 In many cases as well, busy vehicle owners selling their vehicles actually leave them, together
with all the documents of title, spare keys, and deeds of sale signed in blank, with second-hand car traders
they know and trust, in order for the latter to display these vehicles for actual viewing and inspection by
prospective buyers at their lots, warehouses, garages, or showrooms, and to enable the traders to facilitate
sales on-the-spot, as-is-where-is, without having to inconvenience the owners with random viewings and
inspections of their vehicles. For this kind of arrangement, an agency relationship is created between the
vehicle owners, as principals, and the car traders, as agents. The situation is akin to an owner of jewelry
who sells the same through an agent, who receives the jewelry in trust and offers it for sale to his/her
regular clients; if a sale is made, the agent takes payment under the obligation to remit the same to the
jewelry owner, minus the agreed commission or other compensation.

From petitioner's own account, he constituted and appointed Ong as his agent to sell the vehicle,
surrendering to the latter the vehicle, all documents of title pertaining thereto, and a deed of sale signed in
blank, with full understanding that Ong would offer and sell the same to his clients or to the public. In
return, Ong accepted the agency by his receipt of the vehicle, the blank deed of sale, and documents of
title, and when he gave bond in the form of two guarantee checks worth ₱4.95 million. All these gave
Ong the authority to act for and in behalf of petitioner. Under the Civil Code on agency, Art. 1869.
Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his
failure to repudiate the agency, knowing that another person is acting on his behalf without authority.

Agency may be oral, unless the law requires a specific form.

Art. 1870. Acceptance by the agent may also be express or implied from his acts which carry out
the agency, or from his silence or inaction according to the circumstances. (Emphasis and underscoring
supplied)

"The basis of agency is representation and the same may be constituted expressly or impliedly. In
an implied agency, the principal can be bound by the acts of the implied agent. "The same is true with an
oral agency.

Acting for and in petitioner's behalf by virtue of the implied or oral agency, Ong was thus able to
sell the vehicle to Chua, but he failed to remit the proceeds thereof to petitioner; his guarantee checks
bounced as well. This entitled petitioner to sue for estafa through abuse of confidence. This is exactly
what petitioner did: on May 18, 2011, he filed a complaint for estafa and carnapping against Ong before
the Quezon City Prosecutor's Office.
 Since Ong was able to sell the subject vehicle to Chua, petitioner thus ceased to be the owner
thereof. Nor is he entitled to the possession of the vehicle; together with his ownership, petitioner lost his
right of possession over the vehicle. His argument that respondent is a buyer in bad faith, when the latter
nonetheless proceeded with the purchase and registration of the vehicle on March 7, 2011, despite having
been apprised of petitioner's earlier November, 2010 "Failed to Return Vehicle" report filed with the
PNP-HPG, is unavailing. Petitioner had no right to file said report, as he was no longer the owner of the
vehicle at the time; indeed, his right of action is only against Ong, for collection of the proceeds of the
sale.

PEOPLE OF THE PHILIPPINES vs ESMAEL GERVERO,

FLORENCIO ARBOLONIO,
DANILO CASTIGADOR, CELSO
SOLOMON AND EDUARDO
BANES
GR NO 206725, JULY 11,2018, THIRD DIVISION, MARTIRES J.

That on or about the 25th day of November, 1991, in the Municipality of Lemery,
Province of Iloilo, Philippines, and within the jurisdiction of this Honorable Court, the above-
named accused, conspiring and confederating with one another, with deliberate intent and
decided purpose to kill, armed with firearms, they were then provided, through treachery, evident
premeditation and superior strength, did then and there, wilfully, unlawfully, and feloniously
attack, assault, shoot and hit HERNANDO VILLEGAS, JOSE VILLEGAS and BENITO
BASUG, JR.with said firearms inflicting upon said Hernando Villegas, Jose Villegas and Benito
Basug, Jr. numerous gunshot wounds on different parts of their bodies which caused their deaths
immediately thereafter.

The Regional Trial Court's Ruling

In its decision, the RTC found the accused guilty of murder. It found the testimonies of
prosecution witnesses straightforward, credible, and inaccord with the physical evidence.
With regard to the defense of fulfillment of duty, the trial court ruled that the attendant
circumstances leading to the killing of the three victims by the accused clearly showed the
absence of the two essential requisites for such defense to prosper. It declared that while it may
be initially said that the accused acted in obedience to the order of their superior to conduct foot
patrol and take up ambush position at the place of the incident, they undoubtedly exceeded in the
performance of their duties by immediately firing successive shots on the three unsuspecting
victims. The R TC observed that the accused approached their victims and mercilessly sprayed
them with bullets to completely silence them.The court a quo further held that the defense of
misencounter due to b mistake of fact was unbelievable. It noted that just a few hours before the
incident happened, Bafies, Castigador, and two other unidentified CAFGU members came to the
house of Hernando to ask for money, indicating that they knew each other; and that Gervero was
likewise bound by his testimony that he knew Hernando. Lastly, the RTC concluded that the
suddenness of the attack and the lack of opportunity for the victims to defend themselves
constituted treachery.

The Court of Appeals Ruling

In its assailed decision, the CA affirmed the conviction of the accused but modified the
aniount of damages awarded. It pronounced that even in cases of arrest, the use of unnecessary
force, the wantonly violent treatment of the offender, and the resort to dangerous means, when
such apprehension could be done otherwise, were not justified acts. The appellate court opined
that the accused were entirely careless in not first verifying the identities of the victims; such
negligence diminished the defense of mistake of fact. It added that if self-defense could be
negated by the manner it was allegedly employed, the sheer number of gunshot wounds
demonstrated the accused's mens rea.
ISSUE:

WON the accused are liable to pay damages?

HELD:

Yes. Pursuant to Art. 248 of the RPC, the penalty for murder is reclusion perpetua to
death. Applying Art. 63(2) of the RPC, the lesser of the two indivisible penalties, i.e., reclusion
perpetua, shall be imposed upon the accused-appellants in view of the absence of any mitigating
or aggravating circumstance that attended the killing of Jose, Hernando, and Benito.Following
the jurisprudence laid down by the Court in People v.Jugueta, 28 accused-appellants are ordered
to pay the heirs of Hernando Villegas, Jose Villegas, and Benito Basug, Jr. P75,000.00 as civil
indemnity,P75,000.00 as moral damages, and P75,000.00 as exemplary damages.29 It was also
ruled in Jugueta that when no documentary evidence of burial or funeral expenses is presented in
court, the amount of PS0,000.00 as temperate damages shall be awarded. In addition, interest at
the rate of six percent per annum shall be imposed on all monetary awards from the date of
finality of this decision until fully paid.

SPOUSES DIONISIO ESTRADA and JOVITA R. ESTRADA, Petitioner

vs.
PHILIPPINE RABBIT BUS LINES, INC. and EDUARDO R. SA YLAN, Respondents

G.R. No. 203902 July 19, 2017

DEL CASTILLO, J.: FIRST DIVISION

NATURE OF ACTION: This Petition for Review on Certiorari assails the May 16, 2012 Decision and
October 1, 2012 Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 95520, which partially
granted the appeal filed therewith by respondent Philippine Rabbit Bus Lines, Inc. (Philippine Rabbit)
and denied petitioners spouses Dionisio C. Estrada (Dionisio) and Jovita R. Estrada's motion for
reconsideration thereto.
Complaint for Damages

FACTS:

A mishap occurred on April 9, 2002 along the national highway in Pangasinan, between the
passenger bus driven by respondent Eduardo Saylan and owned by Philippine Rabbit Bus, Lines, Inc., and
the Isuzu truck driven by Willy U. Urez and registered in the nan1e of Rogelio Cuyton, Jr. The collision
happened at the left lane or the lane properly belonging to the Isuzu truck. Before the collision, the bus
was following closely a jeepney. When the jeepney stopped, the bus suddenly swerved to the left
encroaching upon the rightful lane of the Isuzu truck, which resulted in the collision of the two (2)
vehicles. Petitioner Dionisio Estrada, who was among the passengers of the Philippine Rabbit bus, as
evidenced by the ticket issued to him, was injured on the right arm as a consequence of the accident. His
injured right arm was amputated.

Dionisio demands for Philippine Rabbit to pay him damages for the injury he sustained.
Philippine Rabbit in its Answer9 averred that it carried Dionisio safely as far as human care and foresight
could provide with the utmost diligence of a very cautious person and with due regard for all the
circumstances prevailing. Philippine Rabbit nevertheless argued that the cause thereof was an
extraordinary circumstance independent of its driver's action or a fortuitous event.

RTC was unconvinced after it found that (1) Philippine Rabbit failed to show that it had taken all
the necessary and actual steps to thoroughly examine the qualifications of Eduardo as a driver worthy of
employment; and (2) no proof relative to the existence of company rules and regulations, instructions, and
policies affecting its drivers, as well as to their actual implementation and observance, were presented.

CA partially granted the appeal it argued that moral damages are not recoverable in an action for
damages predicated on breach of contract except when death results or when the carrier is guilty of fraud
or bad faith.

ISSUE: Whether or not moral damages are recoverable in an action for breach of contract?

RULING:

No, moral damages are not recoverable in this case.

Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendant's wrongful act or omission.

Under Article 2219 of the Civil Code, moral damages are recoverable in the following and
analogous cases: (1) a criminal offense resulting in physical injuries; (2) quasi-delicts causing physical
injuries; (3) seduction, abduction, rape or other lascivious acts; (4) adultery or concubinage; (5) illegal or
arbitrary detention or arrest; (6) illegal search; (7) libel, slander, or any other form of defamation; (8)
malicious prosecution; (9) acts mentioned in Article 309; and (1) acts and actions referred to in Articles
21, 26, 27 , 28, 29, 30, 32, 34, and 35.

Since breach of contract is not one of the items enumerated under Article 2219, moral damages,
as a general rule, are not recoverable in actions for damages predicated on breach of contract.

In this case, the fraud or bad faith that must be convincingly proved by petitioners should be one
which was committed by Philippine Rabbit in breaching its contract of carriage with Dionisio.
Unfortunately for petitioners, the Court finds no persuasive proof of such fraud or bad faith. There is no
showing here that Philippine Rabbit induced Dionisio to enter into a contract of carriage with the former
through insidious machination.