Makati Stock Exchange vs. Miguel V.
Campos GR
Facts:
 SEC Case No. 02-94-4678 was instituted by respondent Miguel V. Campos,, where
there stated the following:
the position of the "Chairman Emeritus" to be occupied by Mr. Miguel Campos during
his lifetime and irregardless of his continued membership in the Exchange with the
Privilege to attend all membership meetings as well as the meetings of the Board of
Governors of the Exchange, is hereby created
 IPOs are shares of corporations offered for sale to the public, prior to the listing in the
trading floor of the country’s two stock exchanges. Normally, Twenty Five Percent
(25%) of these shares are divided equally between the two stock exchanges which in
turn divide these equally among their members, who pay therefor at the offering price.
 June 3, 1993, during a meeting of the Board of Directors of respondent-corporation,
individual respondents passed a resolution to stop giving petitioner the IPOs he is
entitled to, based on the ground that these shares were allegedly benefiting Gerardo
O. Lanuza, Jr., who these individual respondents wanted to get even with, for having
filed cases before the Securities and Exchange (SEC) for their disqualification as
member of the Board of Directors of respondent corporation.
A petition against the petitioners was sought
(1) the nullification of the Resolution dated 3 June 1993 of the MKSE Board of
Directors, which allegedly deprived him of his right to participate equally in the
allocation of Initial Public Offerings (IPO) of corporations registered with MKSE;
(2) the delivery of the IPO shares he was allegedly deprived of, for which he would
pay IPO prices; and
(3) the payment of ₱2 million as moral damages, ₱1 million as exemplary damages,
and ₱500,000.00 as attorney’s fees and litigation expenses.
 SICD issued an Order granting respondent’s prayer for the issuance of a Temporary
Restraining Order to enjoin petitioners from implementing or enforcing the 3 June
1993 Resolution of the MKSE Board of Directors
 petitioners filed a Motion to Dismiss respondent’s Petition in SEC Case No. 02-94-
4678, based on the following grounds: (1) the Petition became moot due to the
cancellation of the license of MKSE; (2) the SICD had no jurisdiction over the Petition;
and (3) the Petition failed to state a cause of action
SEC en banc nullified the 10 March 1994 Order of SICD in SEC Case No. 02-94-4678
granting a Writ of Preliminary Injunction in favor of respondent and annulled the 4 May
1994 Order of SICD in SEC Case No. 02-94-4678 denying petitioners’ Motion to
Dismiss, and accordingly ordered the dismissal of respondent’s Petition before the
SICD.
Petitioners want this Court to affirm the dismissal by the SEC en banc of respondent’s
Petition in SEC Case No. 02-94-4678 for failure to state a cause of action. On the
other hand, respondent insists on the sufficiency of his Petition and seeks the
continuation of the proceedings before the SICD.
Issue:
Whether respondent’s petition states a cause of action
Ruling:
No, because a cause of action is the act or omission by which a party violates a right of
another.4 A complaint states a cause of action where it contains three essential elements of a
cause of action, namely:
(1) the legal right of the plaintiff,
(2) the correlative obligation of the defendant, and
(3) the act or omission of the defendant in violation of said legal right.
If these elements are absent, the complaint becomes vulnerable to dismissal on the ground of
failure to state a cause of action
7
An obligation is defined in the Civil Code as a juridical necessity to give, to do or not to do. 8 For
every right enjoyed by any person, there is a corresponding obligation on the part of another
person to respect such right
Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts.
Therefore, an obligation imposed on a person, and the corresponding right granted to another,
must be rooted in at least one of these five sources. The mere assertion of a right and claim of
an obligation in an initiatory pleading, whether a Complaint or Petition, without identifying the
basis or source thereof, is merely a conclusion of fact and law. A pleading should state the
ultimate facts essential to the rights of action or defense asserted, as distinguished from mere
conclusions of fact or conclusions of law.10 Thus, a Complaint or Petition filed by a person
claiming a right to the Office of the President of this Republic, but without stating the source of
his purported right, cannot be said to have sufficiently stated a cause of action
In the case at bar, although the Petition in SEC Case No. 02-94-4678 does allege respondent’s
right to subscribe to the IPOs of corporations listed in the stock market at their offering prices,
and petitioners’ obligation to continue respecting and observing such right, the Petition utterly
failed to lay down the source or basis of respondent’s right and/or petitioners’ obligation.
Respondent merely quoted in his Petition the MKSE Board Resolution, passed sometime in
1989, granting him the position of Chairman Emeritus of MKSE for life. However, there is
nothing in the said Petition from which the Court can deduce that respondent, by virtue of his
position as Chairman Emeritus of MKSE, was granted by law, contract, or any other legal
source, the right to subscribe to the IPOs of corporations listed in the stock market at their
offering prices

IPO shares was merely alleged to have been done in accord with a practice normally observed
by the members of the stock exchange

A practice or custom is, as a general rule, not a source of a legally demandable or enforceable
right
 damage suffered by the offended party. A criminal offense is committed against the People and
the offended party may not waive or extinguish the criminal liability that the law imposes for the
commission of the offense. The criminal liability for estafa already committed is not affected by
the subsequent novation of the contract

Although the novation of a contract of agency to make it one of sale may relieve an offender
from an incipient criminal liability, that did not happen here, for the partial payments and the
proposal to pay the balance the accused made during the barangay proceedings were not at all
incompatible with Degafios liability under the agency that had already attached.

NARCISO DEGAÑOS,1 Petitioner, vs.PEOPLE OF THE PHILIPPINES, Respondent

Facts:

 Accused received from Spouses Atty. Jose Bordador and Lydia Bordador gold and
pieces of jewelry worth ₱438,702.00, under express obligation to sell the same on
commission and remit the proceeds thereof or return the unsold gold and pieces of
jewelry, but the said accused, once in possession of the said merchandise and far
from complying with their aforesaid obligation
 Based on evidence , Brigida/Aida Luz was the one who gave instructions to Narciso
Degaños to get gold and jewelry from Lydia for them to sell. Luz called her to ask if
she could trust Narciso Degaños to get the pieces of jewelry from her for Aida/Brigida
Luz to sell. Lydia agreed on the condition that if they could not pay it in cash, they
should pay it after one month or return the unsold jewelry within the said period
 She delivered the said jewelry starting sometime in 1986. Everytime Narciso Degaños
got jewelry from her, he signed the receipts in her presence. They were able to pay
only up to a certain point. However, receipt nos. 614 to 745 dated from April 27, 1987
up to July 20, 1987 (Exhs. "A"-"O") were no longer paid and the accused failed to
return the jewelry covered by such receipts.
 Narciso Degaños testified, that Said transactions are usually covered by receipts
denominated as "Kasunduan at Katibayan". All the "Kasunduan at Katibayan" receipts
were issued by the private complainants and was signed by him. The phrase "for
Brigida Luz" and for "Evely Aquino" were written on the receipts so that in case he
fails to pay for the items covered therein, the private complainants would have
someone to collect from. He categorically admitted that he is the only one who was
indebted to the private complainants and out of his indebtedness, he already made
partial payments
 RTC found Degaños guilty of estafa
 Degaños contends that his agreement with the complainants relative to the items of
jewelry and gold subject of the amended information as embodied in the relevant
Kasunduan at Katibayan was a sale on credit, not a consignment to sell on
commission basis. And that his partial payments to the complainants novated his
contract with them from agency to loan, thereby converting his liability from criminal to
civil

Issue:

Whether or not the accused can be held liable for civil obligations only

Ruling:

No, because It is well settled that criminal liability for estafa is not affected by compromise or
novation of contract, for it is a public offense which must be prosecuted and punished by the
Government on its own motion even though complete reparation should have been made of the

ANG YU ASUNCION, ARTHUR GO AND KEH TIONG, petitioners,
vs.
THE HON. COURT OF APPEALS and BUEN REALTY DEVELOPMENT CORPORATION
Facts:
 Complaint for Specific Performance was filed by Ang Yu Asuncion and Keh Tiong, et
al., against Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan before the Regional
Trial Court , that plaintiffs are tenants or lessees of residential and commercial spaces
owned by defendants
 defendants informed plaintiffs that they are offering to sell the premises and are giving
them priority to acquire the same
 Bobby Cu Unjieng offered a price of P6-million while plaintiffs made a counter offer of
P5-million; that plaintiffs thereafter asked the defendants to put their offer in writing to
which request defendants acceded; that in reply to defendant's letter, plaintiffs wrote
them, asking that they specify the terms and conditions of the offer to sell; that when
plaintiffs did not receive any reply, they sent another letter with the same request
 that since defendants failed to specify the terms and conditions of the offer to sell and
because of information received that defendants were about to sell the property,
plaintiffs were compelled to file the complaint to compel defendants to sell the property
to them.
 The trial court found that defendants' offer to sell was never accepted by the plaintiffs
for the reason that the parties did not agree upon the terms and conditions of the
proposed sale, hence, there was no contract of sale at all. Nonetheless, the lower
court ruled that should the defendants subsequently offer their property for sale at a
price of P11-million or below, plaintiffs will have the right of first refusal
 judgment is hereby rendered in favor of the defendants and against the plaintiffs
summarily dismissing the complaint subject to the aforementioned condition that if the
defendants subsequently decide to offer their property for sale for a purchase price of
Eleven Million Pesos or lower, then the plaintiffs has the option to purchase the
property or of first refusal, otherwise, defendants need not offer the property to the
plaintiffs if the purchase price is higher than Eleven Million Pesos.
 plaintiffs appealed to this Court
CA-G.R. CV No. 21123.
 The decision of this Court was brought to the Supreme Court by petition for review
on certiorari. The Supreme Court denied the appeal on May 6, 1991 "for insufficiency
in form and substances
 On November 15, 1990, while CA-G.R. CV No. 21123 was pending consideration by
this Court, the Cu Unjieng spouses executed a Deed of Sale (Annex D, Petition)
transferring the property in question to herein petitioner Buen Realty and Development
Corporation
 petitioner as the new owner of the subject property wrote a letter to the lessees
demanding that the latter vacate the premises.
 the lessees wrote a reply to petitioner stating that petitioner brought the property
subject to the notice of lis pendens 
 the court ordered that defendants are hereby ordered to execute the necessary Deed
of Sale of the property in litigation in favor of plaintiffs Ang Yu Asuncion, Keh Tiong
and Arthur Go for the consideration of P15 Million pesos in recognition of plaintiffs'
right of first refusal and that a new Transfer Certificate of Title be issued in favor of the
buyer.All previous transactions involving the same property notwithstanding the
issuance of another title to Buen Realty Corporation, is hereby set aside as having
been executed in bad faith.
Issue:
Whether or not Buen Realty can be bound by the writ of execution by virtue of the notice of lis
pendens, carried over on the subject lot in the name of Buen Realty, at the time of the latter’s
purchase of the property on 15 November 1991 from the Cu Unjiengs
Ruling:
Yes, because the law on sales, the so-called “right of first refusal” is an innovative juridical
relation. Needless to pointout, it cannot be deemed a perfected contract of sale under Article
1458 of the Civil Code. In a right of first refusal, while the object might be made determinate, the
exercise of the right, however, would be dependent not only on the grantor’s eventual intention
to enter into a binding juridical relation with another but also on terms, including the  price, that
obviously are yet to be later firmed up. Prior thereto,it can at best be so described as merely
belonging to a class of preparatory juridical relations governed not
by contracts (since the essential elements to establish the vinculum juris would still be indefinite 
andinconclusive) but by, among other laws of general application, the pertinent scattered
provisions of the Civil Code on human conduct. The final judgment in Civil Case No. 87-41058, it
must be stressed, has merely accorded a “right of firs trefusal” in favor of petitioners. The
consequence of such a declaration entails no more than what has heretofore been said. In fine,
if, as it is here so conveyed to us, petitioners are aggrieved by the failure of  private respondents
to honor the right of first refusal, the remedy is not a writ of execution on the judgment, since
there is none to execute, but an action for damages in a proper forum for the purpose
in
 No, because a penal clause is an accessory obligation which the parties attach to a principal
obligation for the purpose of insuring the performance thereof by imposing on the debtor a
special presentation (generally consisting in the payment of a sum of money) in case the
obligation is not fulfilled or is irregularly or inadequately fulfilled

Now then when is the penalty demandable? A penalty is demandable in case of non
performance or late performance of the main obligation. In other words in order that the penalty
may arise there must be a breach of the obligation either by total or partial non fulfillment or
there is non fulfillment in point of time which is called mora or delay. The debtor therefore
violates the obligation in point of time if there is mora or delay. Now, there is no mora or delay
unless there is a demand. It is noteworthy that in the present case during all the period when the
principal obligation was still subsisting, although there were late amortizations there was no
demand made by the creditor, plaintiff-appellant for the payment of the penalty. Therefore up to
the time of the letter of plaintiff-appellant there was no demand for the payment of the penalty,
hence the debtor was no in mora in the payment of the penalty

The obligation of Moonwalk was fully complied with, that is, the amount loaned together with the
12% interest has been fully paid. Hence, there is no basis for demanding the penal clause since
the obligation has been extinguished.

SSS has waived the penal clause as it did not demand the same before the full obligation was
fully paid and extinguished. In fact, SSS has not lost anything under the contract since it got
back in full the amount loan as well as the interest thereof. The same thing would have
happened if the obligation was paid on time, for then the penal clause, under the terms of the
SSS vs. Moonwalk Development contract would not apply. Payment of the penalty does not mean gain or loss of SSS since it is
merely for the purpose of enforcing the performance of the main obligation, which has been fully
Facts: complied with and extinguished. Hence, the penal clause has lost its raison d' entre.
 SSS for brevity, filed a complaint against Moonwalk,alleging that the former had
committed an error in failing to compute the 12% interest due on delayed payments on
the loan of Moonwalk — resulting in a chain of errors in the application of payments
made by Moonwalk and, in an unpaid balance on the principal loan agreement in the
amount of P7,053.77 and, also in not reflecting in its statement or account an unpaid
balance on the said penalties for delayed payments in the amount of P7,517,178.21

 Moonwalk answered denying SSS' claims and asserting that SSS had the opportunity
to ascertain the truth but failed to do so.

 the trial court issued an order dismissing the complaint on the ground that the
obligation was already extinguished by the payment by Moonwalk of its indebtedness
to SSS and by the latter's act of cancelling the real estate mortgages executed in its
favor by defendant Moonwalk
 SSS raises for review in concluding that the penalties due from Moonwalk are
"deemed waived and/or barred," the appellate court disregarded the basic tenet that
waiver of a right must be express, made in a clear and unequivocal manner. There is
no evidence in the case at bar to show that SSS made a clear, positive waiver of the
penalties, made with full knowledge of the circumstances

Issue:

Is the penalty demandable even after the extinguishment of the principal obligation?

Ruling:
 d) That ASIAKONSTRUKT "shall have no right, and agrees not to use any of the
proceeds of any collections, it being agreed by the parties that [ASIAKONSTRUKT]
divests itself of all the rights, title and interest in said Receivables and the proceeds of
the collection received thereon
 The promissory notes have remained not fully paid despite their having become due
and demandable. Repeated verbal and written demands were made upon
ASIAKONSTRUKT, but to no avail. It has failed and refused, and continues to fail and
refuse, to pay its outstanding obligations to PCIBANK
 As a result of ASIAKONSTRUKT’s refusal to pay its outstanding obligations,
PCIBANK was constrained to refer the matter … to counsel and thus incur attorney’s
fees and legal costs
 that ASIAKONSTRUKT, at the time it executed the foregoing deeds of assignment,
really intended to abide by their terms and conditions, it nevertheless committed
manifest fraud when it collected the contract proceeds, and instead of remitting them
to PCIBANK, used them for its own purposes
 defendant pleads in its Answer the alleged "severe financial and currency crisis" which
hit the Philippines in July 1997, which adversely affected and ultimately put it out of
business. Defendant adds that the deeds of assignments it executed in favor of
PCIBANK were standard forms proposed by the bank as pre-condition for the release
of the loans and therefore partake of the nature of contracts of adhesion, leaving the
defendant to the alternative of "taking it or leaving it
ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION, Petitioner,  plaintiff PCIBANK filed a verified Motion for Summary Judgment, 6 therein contending
that the defenses interposed by the defendant are sham and contrived, that the
vs.
alleged financial crisis pleaded in the Answer is not a fortuitous event that would
PHILIPPINE COMMERCIAL INTERNATIONAL BANK excuse debtors from their loan obligations, nor is it an exempting circumstance under
Article 1262 of the New Civil Code where, as here, the same is attended by bad faith.
Facts:
In the same motion, PCIBANK also asserts that the deeds of assignments executed in
its favor are not contracts of adhesion, and even if they were, the same are valid.
 respondent PCIBANK filed a complaint 3 for a sum of money against petitioner
ASIAKONSTRUKT
 ASIAKONSTRUKT obtained U.S. dollar denominated credit accommodations from Issue:
PCIBANK in the amount of Four Million Four Hundred Eighty Seven Thousand U.S.
Whether the defenses interposed by the defendant would excuse debtors from their loan
dollars (US$4,487,000.00
obligations, nor is it an exempting circumstance under Article 1262 of the New Civil Code
 Prompt and faithful payment of all the foregoing promissory notes was secured by the
following deeds of assignment executed by ASIAKONSTRUKT in favor of PCIBANK Ruling:
 All the foregoing deeds of assignments stipulate, among others, the following terms
and conditions: No, because It is a fundamental rule that contracts, once perfected, bind both contracting
parties, and obligations arising therefrom have the force of law between the parties and should
a) The assignment is for the purpose of securing payment of the principal amount and be complied with in good faith. But the law recognizes exceptions to the principle of the
the interests and bank charges accruing thereon, the costs of collecting the same and obligatory force of contracts. One exception is laid down in Article 1266 of the Civil Code, which
all other expenses which PCIBANK may be put in connection with or as an incident of reads: ‘The debtor in obligations to do shall also be released when the prestation becomes
the assignment; legally or physically impossible without the fault of the obligor.

Petitioner cannot, however, successfully take refuge in the said article, since it is applicable only
b) That the assignment secures also any extension or renewal of the credit which is to obligations "to do," and not obligations "to give." An obligation "to do" includes all kinds of
the subject thereof as any and all other obligations of ASIAKONSTRUKT of whatever
work or service; while an obligation "to give" is a prestation which consists in the delivery of a
kind and nature as appear in the records of PCIBANK, which ASIAKONSTRUKT
movable or an immovable thing in order to create a real right, or for the use of the recipient, or
accepts as the final and conclusive evidence of such obligations to PCIBANK,
"whether contracted before, during or after the constitution of [the assignment for its simple possession, or in order to return it to its owner.
agreement]";

c) That PCIBANK authorizes ASIAKONSTRUKT, at the latter’s expense, to "collect

and receive for [PCIBANK] all the Receivables"; and
 case cited in our Decision, i.e. People v. Bayotas, 5 allows for the continuation of a
criminal case to prosecute civil liability based on law and is independent of the civil
liability arising from the crime

Issue:

Whether or not there are still other sources of civil of civil liability even the accused died during
the pendency of criminal case

Ruling:

Yes, it may be said that Death of an accused pending appeal of his conviction
extinguishes his criminal liability as well as the civil liability based solely thereon,
Corollarily, the claim for civil liability survives notwithstanding the death of accused, if
the same may also be predicated on a source of obligation other than delict. Article
1157 of the Civil Code enumerates these other sources of obligation from which the
civil liability may arise as a result of the same act or omission:

a) Law

b) Contracts

c) Quasi-contracts

d) xxx xxx xxx

ABS-CBN vs. Office of the Ombudsman

Facts: e) Quasi-delicts

 The illegal takeover of ABS-CBN stations, studios and facilities, and the loss and/or
damages caused to our assets occurred while Benedicto, Exequiel Garcia, Miguel
Gonzales, and Salvador Tan were in possession, control and management of the
network.
 Petitioner, alleged in their complaint-affidavits that Benedicto forced, coerced and
intimidated petitioners into signing the letter-agreement. And they effectively ratified
and advanced the validity of this letter-agreement
 Now, is a Motion for Reconsideration filed by petitioners for the absence of grave
abuse of discretion in the Ombudsman Resolution which, in turn, found no probable
cause to indict respondents for the following violations of the Revised Penal Code
which are
1. Execution of Deeds by Means of Violence or Intimidation
2. Esatfa
3. Theft
4. Robbery
5. Occupation of Real Property or Usurpation of Real Rights in Property
6. Other Deceits.
 The assailed Decision disposed of the case on two (2) points:
(1) the dropping of respondents Roberto S. Benedicto and Salvador
(Buddy) Tan as respondents in this case due to their death
(2) finding that the Ombudsman did not commit grave abuse of discretion
in dismissing petitioners’ criminal complaint against respondents
 In the main, petitioners argue that the Decision is contrary to law because: (1) the
ratification of the June 8, 1973 letter-agreement is immaterial to the determination of
respondents’ criminal liability for the aforestated felonies in the RPC; and (2) the very
 Yes, because Article 2180, the pertinent portion of which provides: "The father and, in case of
his death or incapacity, the mother, are responsible for damages caused by the minor children
who lived in their company.

For an act where mere negligence intervenes the father or mother may stand subsidiarily liable
for the damage caused by his or her son

Salen vs. Balce

Facts:

 Plaintiffs are the legitimate parents of Carlos Salen who died single from wounds
caused by Gumersindo Balce, a legitimate son of defendant. At the time, Gumersindo
Balce was also Single, a minor below 18 years of age, and was living with defendant
 As a result of Carlos Salen's death, Gumersindo Balce accused and convicted of
homicide and was sentenced to imprisonment and to pay the heirs of the deceased an
indemnity in the amount of P2,000.00
 Upon petition of plaintiff, the only heirs of the deceased, a writ of execution was issued
for the payment of the indemnity but it was returned unsatisfied because Gumersindo
Balce was insolvent and had no property in his name. Thereupon, plaintiffs demanded
upon defendant, father of Gumersindo, the payment of the indemnity the latter has
failed to pay, but defendant refused
 Defendant, in his answer, set up the defense that the law upon which plaintiffs
predicate their right to recover does not here apply for the reason that law refers to
quasi-delicts and not to criminal cases

Issue:

Whether appellee can be held subsidiary liable to pay the indemnity of P2,000.00 which his son
was sentenced to pay in the criminal case filed against him.

Ruling:

THE METROPOLITAN BANK AND TRUST COMPANY, Petitioner,
vs.
ANA GRACE ROSALES AND YO YUK TO, Respondents
Facts:
 Petitioner Metropolitan Bank and Trust Company is a domestic banking corporation
and Respondent Ana Grace Rosales is an owner of travel agency
 respondent Rosales accompanied her client Liu Chiu Fang, a Taiwanese National
petitioner’s branch in Escolta to open a savings account and later next year
respondents opened with petitioner’s Pritil-Tondo Branch
 petitioner issued a "Hold Out" order against respondents’ accounts and filed estafa
against the respondent
 Petitioner accused respondent Rosales and an unidentified woman as the ones
responsible for the unauthorized and fraudulent withdrawal of US$75,000.00 from Liu
Chiu Fang’s dollar account
 That Rosales accompanied an unidentified impostor of Liu Chiu Fang to the
bank;24 that the impostor was able to withdraw Liu Chiu Fang’s dollar deposit in the
amount of US$75,000.00; 25 that on March 3, 2003, respondents opened a dollar
account with petitioner; and that the bank later discovered that the serial numbers of
the dollar notes deposited by respondents in the amount of US$11,800.00 were the
same as those withdrawn by the impostor
 Respondent denied the allegations, the Office of the City Prosecutor of Manila issued
a Resolution dismissing the criminal case for lack of probable cause. 43 Unfazed,
petitioner moved for reconsideration.
 respondents filed before the Regional Trial Court (RTC) of Manila a Complaint 44 for
Breach of Obligation and Contract with Damages against petitioner. Since petitioner
had the obligation to return the deposits to them upon demand. Respondents alleged
that they attempted several times to withdraw their deposits but were unable to
because petitioner had placed their accounts under "Hold Out" status.45 No
explanation, however, was given by petitioner as to why it issued the "Hold Out" order
 Petitioner alleged that respondents have no cause of action because it has a valid
reason for issuing the "Hold Out" order. 49 It averred that due to the fraudulent scheme
of respondent Rosales, it was compelled to reimburse Liu Chiu Fang the amount of
US$75,000.00
 the RTC rendered a Decision55 finding petitioner liable for damages for breach of
contract.56 The RTC ruled that it is the duty of petitioner to release the deposit to
respondents as the act of withdrawal of a bank deposit is an act of demand by the
creditor.
 petitioner appealed to the CA. and CA affirmed the ruling of the RTC
 Petitioner contends that the CA erred in not applying the "Hold Out" clause stipulated
in the Application and Agreement for Deposit Account. 64 It posits that the said clause
applies to any and all kinds of obligation as it does not distinguish between obligations
arising ex contractu or ex delictu.65 Petitioner also contends that the fraud committed
by respondent Rosales was clearly established by evidence; 66 thus, it was justified in
issuing the "Hold-Out" order
 Respondents, on the other hand, argue that there is no legal basis for petitioner to
withhold their deposits because they have no monetary obligation to petitioner. 71 They
insist that petitioner miserably failed to prove its accusations against respondent
Rosales.72 In fact, no documentary evidence was presented to show that respondent
Rosales participated in the unauthorized withdrawal.
Issue:
1. whether petitioner breached its contract with respondents, and (
2. if so, whether it is liable for damages
Ruling:
1. yes, because The "Hold Out" clause applies only if there is a valid and existing
obligation arising from any of the sources of obligation enumerated in Article 1157 79 of
the Civil Code, to wit: law, contracts, quasi-contracts, delict, and quasi-delict. In this
case, petitioner failed to show that respondents have an obligation to it under any law,
contract, quasi-contract, delict, or quasi-delict. And although a criminal case was filed
by petitioner against respondent Rosales, this is not enough reason for petitioner to
issue a "Hold Out" order as the case is still pending and no final judgment of
conviction has been rendered against respondent Rosales. In fact, it is significant to
note that at the time petitioner issued the "Hold Out" order, the criminal complaint had
not yet been filed. Thus, considering that respondent Rosales is not liable under any
of the five sources of obligation, there was no legal basis for petitioner to issue the
"Hold Out" order
2. In this case, a review of the circumstances surrounding the issuance of the "Hold Out"
order reveals that petitioner issued the "Hold Out" order in bad faith. First of all, the
order was issued without any legal basis. Second, petitioner did not inform
respondents of the reason for the "Hold Out."82 Third, the order was issued prior to the
filing of the criminal complaint. Records show that the "Hold Out" order was issued on
July 31, 2003,83 while the criminal complaint was filed only on September 3, 2003. 84 All
these taken together lead us to conclude that petitioner acted in bad faith when it
breached its contract with respondents. As we see it then, respondents are entitled to
moral damages
Saludaga vs. FEU

Facts:

 Petitioner Joseph Saludaga was a sophomore law student of respondent Far Eastern
University (FEU) when he was shot by Alejandro Rosete (Rosete), one of the security
guards on duty at the school premises
 Petitioner was rushed to FEU-Dr. Nicanor Reyes Medical Foundation (FEU-NRMF)
due to the wound he sustained. 6 Meanwhile, Rosete was brought to the police station
 where he explained that the shooting was accidental. He was eventually released
considering that no formal complaint was filed against him
 Petitioner thereafter filed a complaint for damages against respondents on the ground
that they breached their obligation to provide students with a safe and secure
environment and an atmosphere conducive to learning
 Respondents, in turn, filed a Third-Party Complaint 7 against Galaxy Development and
Management Corporation (Galaxy), the agency contracted by respondent FEU to
provide security services within its premises and Mariano D. Imperial (Imperial),
Galaxy's President, to indemnify them for whatever would be adjudged in favor of
petitioner, if any; and to pay attorney's fees and cost of the suit. On the other hand,
Galaxy and Imperial filed a Fourth-Party Complaint against AFP General Insurance. 8
 trial court rendered a decision in favor of petitioner:
1. FEU and Edilberto de Jesus, in his capacity as president of FEU to pay jointly
and severally Joseph Saludaga
Ruling:
Yes, because When an academic institution accepts students for enrollment, there is
established a contract between them, resulting in bilateral obligations which both parties are
bound to comply with.
It is settled that in culpa contractual, the mere proof of the existence of the contract and the
failure of its compliance justify, prima facie, a corresponding right of relief. 15 In the instant case,
we find that, when petitioner was shot inside the campus by no less the security guard who was
hired to maintain peace and secure the premises, there is a prima facie showing that
respondents failed to comply with its obligation to provide a safe and secure environment to its
students

2. Galaxy Management and Development Corp. and its president, Col. Mariano
Imperial to indemnify jointly and severally 3rd party plaintiffs (FEU and Edilberto
de Jesus in his capacity as President of FEU) for the above-mentioned amounts

3. And the 4th party complaint is dismissed for lack of cause of action. No
pronouncement as to costs.

 Respondents appealed to the Court of Appeals, where the decision of the trial court
was reversed and set aside

 Petitioner argue that he is suing respondents for damages based on the alleged
breach of student-school contract for a safe learning environment, that When plaintiff
enrolled with defendant FEU, a contract was entered into between them. Under this
contract, defendants are supposed to ensure that adequate steps are taken to provide
an atmosphere conducive to study and ensure the safety of the plaintiff while inside
defendant FEU's premises. In the instant case, the latter breached this contract when
defendant allowed harm to befall upon the plaintiff when he was shot at by, of all
people, their security guard who was tasked to maintain peace inside the campus

Issue:

W/n the petitioner has the right to damages agaist FEU due to breach of contract based on
student-school contract for a safe learning environment

Mercado vs. Ramoy

Facts:
  National Power Corporation (NPC) filed with the MTC Quezon City a case for
ejectment against several persons allegedly illegally occupying its properties in Baesa,
Quezon City. Among the defendants in the ejectment case was Leoncio Ramoy, one
of the plaintiffs in the case at bar

 MTC Branch 36, Quezon City rendered judgment for the plaintiff [MERALCO] and
"ordering the defendants to demolish or remove the building and structures they built
on the land of the plaintiff and to vacate the premises." In the case of Leoncio Ramoy,
the Court found that he was occupying a portion of Lot to be demolished
 NPC wrote Meralco requesting for the "immediate disconnection of electric power
supply to all residential and commercial establishments beneath the NPC transmission
lines along Baesa, Quezon City
Ruling:
Yes, because Clearly, respondents' cause of action against MERALCO is anchored on  culpa
contractual or breach of contract for the latter's discontinuance of its service to respondents
under Article 1170 of the Civil Code which provides:
Article 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or
delay, and those who in any manner contravene the tenor thereof, are liable for damages.

 Meralco decided to comply with NPC's request and thereupon issued notices of "In culpa contractual x x x the mere proof of the existence of the contract and the failure of
disconnection to all establishments affected including plaintiffs Leoncio Ramoy its compliance justify, prima facie, a corresponding right of relief

 When the Meralco employees were disconnecting plaintiffs' power connection, plaintiff
Leoncio Ramoy objected by informing the Meralco foreman that his property was
outside the NPC property and pointing out the monuments showing the boundaries of
his property. However, he was threatened and told not to interfere by the armed men
who accompanied the Meralco employees. After the electric power in Ramoy's
apartment was cut off, the plaintiffs-lessees left the premises.
 During the ocular inspection ordered by the Court and attended by the parties, it was
found out that the residence of plaintiffs-spouses Leoncio and Matilde Ramoy was
indeed outside the NPC property
 The RTC decided in favor of MERALCO by dismissing herein respondents' claim for
moral damages, exemplary damages and attorney's fees. However, the RTC ordered
MERALCO to restore the electric power supply of respondents.
[B]eing a public utility vested with vital public interest, MERALCO is impressed with certain
obligations towards its customers and any omission on its part to perform such duties would be
prejudicial to its interest. For in the final analysis, the bottom line is that those who do not
exercise such prudence in the discharge of their duties shall be made to bear the consequences
of such oversight
In the present case, MERALCO wilfully caused injury to Leoncio Ramoy by withholding from him
and his tenants the supply of electricity to which they were entitled under the Service Contract.
This is contrary to public policy because, as discussed above, MERALCO, being a vital public
utility, is expected to exercise utmost care and diligence in the performance of its obligation. It
was incumbent upon MERALCO to do everything within its power to ensure that the
improvements built by respondents are within the NPC’s right of way before disconnecting their
power supply.

 Respondents then appealed to the CA, CA faulted MERALCO for not requiring from
National Power Corporation (NPC) a writ of execution or demolition and in not
coordinating with the court sheriff or other proper officer before complying with the
NPC's request. Thus, the CA held MERALCO liable for moral and exemplary
damages and attorney's fees.

 MERALCO argues that since there is a Decision of the Metropolitan Trial Court (MTC)
of Quezon City ruling that herein respondents were among the illegal occupants of the
NPC's right of way, MERALCO was justified in cutting off service to respondents.

Issue:

w/n Meralco was liable for damages towards the respondent

  Appeal from dismissing the complaint of appellant Cruz for the recovery of
improvements he has made on appellees' land and to compel appellees to convey to
him 3,000 square meters of land on three grounds: (1) failure of the complaint to state
a cause of action; (2) the cause of action of plaintiff is unenforceable under the Statute
of Frauds; and (3) the action of the plaintiff has already prescribed

 plaintiff-appellant's complaint below shows that he alleged two separate causes of

action, namely:

1. plaintiff made permanent improvements valued at P30,400.00 on said land

having an area of more or less 20 quinones and for which he also incurred
expenses in the amount of P7,781.74, and since defendants-appellees are being
benefited by said improvements, he is entitled to reimbursement from them of
said amounts

2. Cruz alleged that Tuason & Co. promised to convey him the 3,000 sq. meters of
land occupied by him which was part of the 20 quiones of land within 10 years
from the date of signing of the compromise agreement between the Deudors and
the latter as consideration of his services. The said land was not conveyed to him
by Tuason & Co.

 Defendant J. M. Tuason & Co., Inc. claimed that, insofar as the plaintiffs claim for the
reimbursement of the amounts of P38,400.00 and P7,781.74 is concerned, it is not a
privy to the plaintiff's agreement to assist the Deudors n improving the 50 quinones.
 On the other hand, the plaintiff countered that, by holding and utilizing the
improvements introduced by him, the defendants are unjustly enriching and benefiting
at the expense of the plaintiff; and that said improvements constitute a lien or charge
of the property itself
 The trial court dismissed the case on the ground that there was no cause of action.
Hence, this appeal.

ISSUE: Whether or not a presumed quasi-contract be emerged as against one part when the
subject matter thereof is already covered by a contract with another party.

HELD: From the very language of this provision, it is obvious that a presumed qauasi-contract
cannot emerge as against one party when the subject mater thereof is already covered by an
existing contract with another party. Predicated on the principle that no one should be allowed to
unjustly enrich himself at the expense of another, Article 2124 creates the legal fiction of a
quasi-contract precisely because of the absence of any actual agreement between the parties
concerned. Corollarily, if the one who claims having enriched somebody has done so pursuant
to a contract with a third party, his cause of action should be against the latter, who in turn may,
if there is any ground therefor, seek relief against the party benefited. It is essential that the act
by which the defendant is benefited must have been voluntary and unilateral on the part of the
plaintiff. As one distinguished civilian puts it, "The act is voluntary. because the actor in quasi-
contracts is not bound by any pre-existing obligation to act. It is unilateral, because it arises from
the sole will of the actor who is not previously bound by any reciprocal or bilateral agreement.
The reason why the law creates a juridical relations and imposes certain obligation is to prevent
FAUSTINO CRUZ, plaintiff-appellant, a situation where a person is able to benefit or take advantage of such lawful, voluntary and
vs. unilateral acts at the expense of said actor." In the case at bar, since appellant has a clearer and
J. M. TUASON & COMPANY, INC., and GREGORIO ARANETA, INC., defendants-appellees more direct recourse against the Deudors with whom he had entered into an agreement
regarding the improvements and expenditures made by him on the land of appellees. It Cannot
Facts:
be said, in the sense contemplated in Article 2142, that appellees have been enriched at the
expense of appellant.