Professional Documents
Culture Documents
Oblicon Compilation of Cases
Oblicon Compilation of Cases
Oblicon Compilation of Cases
A.
LAW
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Yes. In permitting the recovery money lost at play, Act No. 1757 has
introduced modifications in the application of Articles 1798, 1801, and 1305 of
the Civil Code.
The first two of these articles relate to gambling contracts, while article
1305 treats of the nullity of contracts proceeding from a vicious or illicit
consideration. Taking all these provisions together, it must be apparent that the
obligation to return money lost at play has a decided affinity to contractual
obligation; and the Court believes that it could, without violence to the doctrines
of the civil law, be held that such obligations is an innominate quasi-contract.
RULING:
No. The Court held that the rendering of medical assistance is one of the
obligations to which spouses are bound by mutual support, expressly
determined by law and readily demanded. Therefore, there was no obligation on
the part of the in-laws but rather on the part of the husband who is not a party.
Thus, decision affirmed.
FACTS:
On November 23, 1906, Arturo Pelayo, a physician, filed a complaint
against Marcelo and Juana Abella. He alleged that on October 13, 1906 at night,
Pelayo was called to the house of the defendants to assist their daughter-in-law
who was about to give birth to a child. Unfortunately, the daughter-in-law died
as a consequence of said childbirth. Thus, the defendant refuses to pay. The
defendants argue that their daughter-in-law lived with her husband
independently and in a separate house without any relation, that her stay there
was accidental and due to fortuitous event.
ISSUE:
Whether or not the defendants should be held liable for the fees
demanded by the plaintiff upon rendering medical assistance to the defendants
daughter-in-law.
latter did not able to pay the installment, Davalon continued the payment
but when he became insolvent, he said that the motorcycle was taken by
Quiamcos men. However, after several years, the petitioner Ramas
together with policemen took the motorcycle without the respondents
permit and shouted that the respondent Quiamco is a thief of motorcycle.
Respondent then filed an action for damages against petitioner alleging
that petitioner is liable for unlawful taking of the motorcycle and
utterance of a defamatory remark and filing a baseless complaint. Also,
petitioners claim that they should not be held liable for petitioners
exercise of its right as seller-mortgagee to recover the mortgaged
motorcycle preliminary to the enforcement of its right to foreclose on the
mortgage in case of default.
ISSUE:
Whether or not the act of the petitioner is correct.
RULING:
No. The petitioner being a lawyer must know the legal procedure
for the recovery of possession of the alleged mortgaged property in which
said procedure must be conducted through judicial action. Furthermore,
the petitioner acted in malice and intent to cause damage to the
respondent when even without probable cause, he still instituted an act
against the law on mortgage.
FACTS:
In the evening of October 13, 1994, while drinking coffee at the lobby of
Hotel Nikko, respondent was invited by a friend, Dr. Filart to join her in a party in
celebration of the birthday of the hotels manager. During the party and when
respondent was lined-up at the buffet table, he was stopped by Ruby Lim, the
Executive Secretary of the hotel, and asked to leave the party. Shocked and
embarrassed, he tried to explain that he was invited by Dr. Filart, who was
herself a guest. Not long after, a Makati policeman approached him and
escorted him out of her party.
Code. Necessarily, neither can her employer, Hotel Nikko, be held liable as its
liability springs from that of its employees.
Ms. Lim admitted having asked respondent to leave the party but not
under the ignominious circumstances painted by Mr. Reyes, that she did the act
politely and discreetly. Mindful of the wish of the celebrant to keep the party
intimate and exclusive, she spoke to the respondent herself when she saw him
by the buffet table with no other guests in the immediate vicinity. She asked
him to leave the party after he finished eating. After she had turned to leave,
the latter screamed and made a big scene.
Without proof of any ill-motive on her part, Ms. Lims act cannot amount to
abusive conduct.
When a right is exercised in a manner which does not conform with the
norms enshrined in Article 19 and results in damage to another, a legal wrong is
thereby committed for which the wrongdoer must be responsible. Article 21
states that any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for the damage.
The maxim Volenti Non Fit Injuria (self-inflicted injury) was upheld by
the Court, that is, to which a person assents is not esteemed in law as injury,
that consent to injury precludes the recovery of damages by one who has
knowingly and voluntarily exposed himself to danger.
Dr. Filart testified that she did not want the celebrant to think that she
invited Mr. Reyes to the party.
LAW AS A SOURCE OF OBLIGATION
Respondent filed an action for actual, moral and/or exemplary damages
and attorneys fees. The lower court dismissed the complaint. On appeal, the
Court of Appeals reversed the ruling of the trial court, consequently imposing
upon Hotel Nikko moral and exemplary damages and attorneys fees. On motion
for reconsideration, the Court of Appeals affirmed its decision. Thus, this instant
petition for review.
ISSUES:
Whether or not Ms. Ruby Lim is liable under Articles 19 and 21 of the Civil
Code in asking Mr. Reyes to leave the party as he was not invited by the
celebrant thereof and whether or not Hotel Nikko, as the employer of Ms. Lim, be
solidarily liable with her.
RULING:
The Court found more credible the lower courts findings of facts. There
was no proof of motive on the part of Ms. Lim to humiliate Mr. Reyes and to
expose him to ridicule and shame. Mr. Reyes version of the story was
unsupported, failing to present any witness to back his story. Ms. Lim, not
having abused her right to ask Mr. Reyes to leave the party to which he was not
invited, cannot be made liable for damages under Articles 19 and 21 of the Civil
The Court of Appeals affirmed the decision of the trial court. The Court of
Appeals held petitioner St. Marys Academy liable for the death of Sherwin
Carpitanos under Articles 218 and 219 of the Family Code, pointing out that
petitioner was negligent in allowing a minor to drive and in not having a teacher
accompany the minor students in the jeep.
ISSUE:
Whether or not the appellant St. Marys Academy is principally liable for
damages for the death of Sherwin.
A.
CONTRACTS
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7.
RULING:
No. Under Article 219 of the Family Code, if the person under custody is a
minor, those exercising special parental authority are principally and solidarily
liable for damages caused by the acts or omissions of the unemancipated minor
while under their supervision, instruction, or custody.
However, for petitioner to be liable, there must be a finding that the act or
omission considered as negligent was the proximate cause of the injury caused
because the negligence must have a causal connection to the accident.
Respondents Daniel spouses and Villanueva admitted that the immediate
cause of the accident was not the negligence of petitioner or the reckless driving
of James Daniel II, but the detachment of the steering wheel guide of the jeep.
Hence, liability for the accident, whether caused by the negligence of the
minor driver or mechanical detachment of the steering wheel guide of the jeep,
must be pinned on the minors parents primarily. The negligence of petitioner
St. Marys Academy was only a remote cause of the accident. Between the
remote cause and the injury, there intervened the negligence of the minors
parents or the detachment of the steering wheel guide of the jeep. Considering
that the negligence of the minor driver or the detachment of the steering wheel
guide of the jeep owned by respondent Villanueva was an event over which
petitioner St. Marys Academy had no control, and which was the proximate
cause of the accident, petitioner may not be held liable for the death resulting
from such accident.
SOURCES OF OBLIGATIONS
FACTS:
TSPI Corporation entered into a Collective Bargaining Agreement
with the corporation Union for the increase of salary for the latters
members for the year 2000 to 2002 starting from January 2000. thus, the
increased in salary was materialized on January 1, 2000. However, on
October 6, 2000, the Regional Tripartite Wage and production Board
raised daily minimum wage from P 223.50 to P 250.00 starting November
1, 2000. Conformably, the wages of the 17 probationary employees were
increased to P250.00 and became regular employees therefore receiving
another 10% increase in salary. In January 2001, TSPIC implemented the
new wage rates as mandated by the CBA. As a result, the nine employees
who were senior to the 17 recently regularized employees, received less
wages. On January 19, 2001, TSPICs HRD notified the 24 employees who
are private respondents, that due to an error in the automated payroll
system, they were overpaid and the overpayment would be deducted
from their salaries starting February 2001. The Union on the other hand,
asserted that there was no error and the deduction of the alleged
overpayment constituted diminution of pay.
ISSUE:
Whether the alleged overpayment constitutes diminution of pay as
alleged by the Union.
RULING:
Yes, because it is considered that Collective Bargaining Agreement
entered into by unions and their employers are binding upon the parties
and be acted in strict compliance therewith. Thus, the CBA in this case is
the law between the employers and their employees.
Therefore, there was no overpayment when there was an increase
of salary for the members of the union simultaneous with the increasing
of minimum wage for workers in the National Capital Region. The CBA
should be followed thus, the senior employees who were first promoted as
regular employees shall be entitled for the increase in their salaries and
the same with lower rank workers.
RULING:
No, the Supreme Court declared that the act of PCST was not valid,
though, it can impose its administrative policies, necessarily, the amount
of tickets or payment shall be included or expressed in the student
handbooks given to every student before the start of the regular classes
of the semester. In this case, the fund raising project was not included in
the activities to be undertaken by the university during the semester. The
petitioner is entitled for damages due to her traumatic experience on the
acts of the university causing her to stop studying sand later transfer to
another school.
FACTS:
Petitioner Kristine Regino was a poor student enrolled at the
Pangasinan College of Science and Technology. Thus, a fund raising
project pertaining to a dance party was organized by PCST, requiring all
its students to purchase two tickets in consideration as a prerequisite for
the final exam.
February 4, 1992
FACTS:
Carlitos Bautista was a third year student at the Philippine School of
Business Administration. Assailants, who were not members of the schools
academic community, while in the premises of PSBA, stabbed Bautista to death.
This incident prompted his parents to file a suit against PSBA and its corporate
officers for damages due to their alleged negligence, recklessness and lack of
security precautions, means and methods before, during and after the attack on
the victim.
The defendants filed a motion to dismiss, claiming that the compliant
states no cause of action against them based on quasi-delicts, as the said rule
does not cover academic institutions. The trial court denied the motion to
dismiss. Their motion for reconsideration was likewise dismissed, and was
affirmed by the appellate court. Hence, the case was forwarded to the Supreme
Court.
ISSUE:
Whether or not PSBA is liable for the death of the student.
RULING:
Because the circumstances of the present case evince a contractual
relation between the PSBA and Carlitos Bautista, the rules on quasi-delict do not
really govern. A perusal of Article 2176 shows that obligations arising from
quasi-delicts or tort, also known as extra-contractual obligations, arise only
between parties not otherwise bound by contract, whether express or implied.
However, this impression has not prevented this Court from determining the
existence of a tort even when there obtains a contract.
Article 2180, in conjunction with Article 2176 of the Civil Code, establishes
the rule in in loco parentis. Article 2180 provides that the damage should have
been caused or inflicted by pupils or students of the educational institution
sought to be held liable for the acts of its pupils or students while in its custody.
However, this material situation does not exist in the present case for, as earlier
indicated, the assailants of Carlitos were not students of the PSBA, for whose
acts the school could be made liable. But it does not necessarily follow that
PSBA is absolved form liability.
When an academic institution accepts students for enrollment, there is
established a contract between them, resulting in bilateral obligations which
both parties is bound to comply with. For its part, the school undertakes to
provide the student with an education that would presumably suffice to equip
him with the necessary tools and skills to pursue higher education or a
profession. This includes ensuring the safety of the students while in the school
premises. On the other hand, the student covenants to abide by the school's
academic requirements and observe its rules and regulations.
Failing on its contractual and implied duty to ensure the safety of their
student, PSBA is therefore held liable for his death.
Petition denied.
requested that the interest charges be waived and it be given time to find a
solution to its financial problems.
After negotiations between the parties failed, the respondent, on May 27,
1997, reiterated its demand on the petitioner to pay the unpaid rentals as well
as to vacate and surrender the premises to the respondent. When the petitioner
refused to comply with its demand, the respondent filed with the Metropolitan
Trial Court (MeTC) of Makati City.
The petitioner, in its answer to the complaint, raised the defense that,
under the contract, it had the right to sublease the premises upon prior written
consent by the respondent and payment of transfer fees.
However, the
respondent, without any justifiable reason, refused to allow the petitioner to
sublease the premises.
After due proceedings, the MeTC rendered judgment in favor of the
respondent.
ISSUE:
Whether or not the contention of the petitioner is tenable.
RULING:
While petitioner pleads that a liberal, not literal, interpretation of the rules
should be our policy guidance, nevertheless procedural rules are not to be
disdained as mere technicalities.
They may not be ignored to suit the
convenience of a party. Adjective law ensures the effective enforcement of
substantive rights through the orderly and speedy administration of justice.
Rules are not intended to hamper litigants or complicate litigation. But they help
provide for a vital system of justice where suitors may be heard in the correct
form and manner, at the prescribed time in a peaceful though adversarial
confrontation before a judge whose authority litigants acknowledge. Public order
and our system of justice are well served by a conscientious observance of the
rules of procedure.
In any case, the Court is convinced that the findings and conclusions of
the court a quo and the RTC are in order. These courts uniformly found that,
under the terms of the contract of lease, the respondent, as the owner-lessor of
the premises, had reserved its right to approve the sublease of the same. The
petitioner, having voluntarily given its consent thereto, was bound by this
stipulation. And, having failed to pay the monthly rentals, the petitioner is
deemed to have violated the terms of the contract, warranting its ejectment
from the leased premises. The Court finds no cogent reason to depart from this
factual disquisition of the courts below in view of the rule that findings of facts of
the trial courts are, as a general rule, binding on this Court. The petition is
DENIED.
CONTRACT AS A SOURCE OF OBLIGATION
AYALA CORPORATION
VS. ROSA DIANA REALTY
346 SCRA 633
FACTS:
In April 1976, appellant-petitioner entered into a transaction with Manuel
Sy and Sy Ka Kieng where former sold a lot in Salcedo Village in Makati. The
deed of sale had some encumbrances contained in the Special Conditions of Sale
(SCS) and Deed of Restrictions (DR), which should be followed by the vendees.
The stipulations in the SCS are:
a building proposal must be submitted to Ayala which must be in accordance
with the DR,
the construction of the building must be completed on or before 1979, and
that there will be no resale of the lot.
The DR specified the limits in height and floor area of the building to be
constructed. However, Sy and Kieng, failed to build a building but nonetheless
with the permission of Ayala, the vendees sold the said lot to the respondent,
Rosa Diana Realty. Respondent Company agreed to abode by the SCS and the
DR stipulations. Prior to the construction, Rosa Diana submitted a building plan
to Ayala complying with the DR but it also passed a different building plan to the
building administrator of Makati, which did not comply with the stipulations in
the DR. While the building, The Peak, was being constructed, Ayala filed a
case praying that: 1) Rosa Diana, be compelled to comply with the DR and build
the building in accordance with the building plan submitted to Ayala; or 2) on the
alternative, the rescission of the deed of sale.
The trial court ruled in favor of the respondent and thus, Rosa Diana was
able to complete the construction of The Peak. Undeterred, Ayala filed before
the Register of Deeds (RD) of Makati a cause of annotation lis pendens. RD
refused to grant Ayala such registration for in the lower court; the case is of
personal action for a specific performance and/or rescission. However, the Land
Registration Authority (LRA) reversed RDs ruling. The appellate court upheld
the RDs ruling stating that the case before the trial court is a personal action for
the cause of action arises from the alleged violation of the DR. The trial court
sustained the respondents point saying that Ayala was guilty of abandonment
and/or estoppels due to its failure to enforce the terms of the DR and SCS
against Sy and Kieng. Ayala discriminately chose which obligor would be made
to follow certain conditions, which is not fair and legal. On appeal, the CA
affirmed the lower courts ruling. Hence, this petition.
ISSUE:
Whether or not Rosa Diana committed a breach of contract.
RULING:
Yes, the Supreme Court ruled that Rosa Diana committed a breach of
contract by submitting a building plan to Ayala complying with the DR and
submitting a different building plan to the building administrator of Makati, which
did not comply with the stipulations in the DR.
Contractual Obligations between parties have the force of law between
them and absent any allegation that the same are contrary to law, morals, good
customs, public order or public policy, they must complied with in good faith.
Thus, the assailed decision of the Court of Appeals is reversed and set
aside.
than the amount agreed upon. The Supreme Court also added that such
cancellation must be respected. It may also be noteworthy to add that in a
contract to sell, the non-payment of the purchase price can prevent the
obligation to convey title from acquiring any obligatory force.
On the second issue, the Supreme Court ruled that since the private
respondent did not actually possessed the property under the contract, the
petitioner is then ordered to return to private respondent the amount remitted.
However, to adjudge any interest payment by petitioners on the amount to be
thus refunded, private respondent should not be allowed to totally free itself
from its own breach.
(respondents) the option to rescind the same upon failure of the buyer to pay
any of the first six installments with the corresponding obligation to return to the
buyer the amount paid by the buyer in excess of the down payment as stated in
paragraphs 7 and 9 of the Memorandum of Agreement. Pilipinas Hino, Inc.
remitted on August 10, 1990 to the respondents the amount of P1,811,000.00 as
down payment. Subsequently, petitioner paid the first and second installments
in the amount of P1,800,000.00 and P5,250,000.00, respectively, totaling the
down payment of P7,050,000.00.
Unfortunately, petitioner failed to pay the third installment and
subsequent installments. Respondents decided to rescind and terminate the
contract and promised to return to petitioner all the amounts paid in excess of
the down payment after deducing the interest due from third to sixth
installments, inclusive. From the amount of P7,050,000.00 due to be returned to
the petitioner, respondents deducted P924,000.00 as interest and P220,000.00
as rent for the period from February 15 to March 15, 1991, returning to the
petitioner the amount of P5,906,000.00 only.
After trial, the lower court rendered judgment stating that the petitioner
has no cause of action to demand the return of the balance of the deposits in the
amount P140,000.00 and the respondents have the legal right to demand
accrued interest on the unpaid installments in the amount of P924,00.00. The
Court of Appeals affirmed the decision of the trial court. Hence, this petition.
ISSUE:
Whether or not the petitioner is entitled to demand the balance of the
deposits in the amount of P140,000.00 and to the return of the amount of
P924,000.00.
After the expiration of the contract, the petitioner and respondents made
a joint inspection of the premises to determine the extent of damages thereon.
Both agreed that the cost or repairs would amount to P60,000.00 and that the
amount of P340,000.00 shall be returned to petitioner. However, respondents
returned only the amount of P200,000.00 leaving a balance of P140,000.00.
Notwithstanding repeated demands, respondents averred that the true and
actual damage amounted to P298,738.90.
RULING:
The Supreme Court held that the petitioner failed to prove his first cause
of action that the damages to the leased property amounted to more than
P60,000.00. In contrast, respondents were able to prove their counterclaim that
the damage to the leased property amounted to P338,732.50, as testified by
their witness who is an experienced contractor. The trial court did not hold
petitioner liable for the whole amount of P384,732.50, but only for the amount of
P200,000.00.
On the other hand, the Supreme Court held that both lower and appellate
court failed to consider paragraph 9 contained in the same memorandum of
agreement entered into by the parties. Said paragraphs provides in very clear
terms that when the owner exercise their option to forfeit the down payment,
they shall return to the buyer any amount paid by the buyer in excess of the
down payment with no obligation to pay interest thereon.
The private
respondents withholding of the amount corresponding to the interest violated
the specific and clear stipulation in paragraph 9 of the said memorandum. The
parties are bound by their agreement.
Hence, the decision of the Court of Appeals is modified in that private
respondent is ordered to return to the petitioner the amount of P924,000.00
representing the accrued interest for the unpaid installments and the decision
appealed is affirmed in all other respects.
B.
QUASI CONTRACTS
1.
2.
3.
4.
5.
FACTS:
The
respondent Primetown Property Corporation entered into
contract weith the petitioner Titan-Ikeda Construction Corporation for the
structural works of a 32-storey prime tower. After the construction of the
tower, respondent again awarded to the petitioner the amount of P
130,000,000.00 for the towers architectural design and structure.
Howevere, in 1994, the respondent entered inot a contract of sale of the
tower in favor of the petitioner in a manner called full-swapping. Since the
FACTS:
Petitioner PADCOM CONDOMINIUM CORPORATION (PADCOM) bought a
land from Tierra Development Corporation with terms and conditions among
which is that the transferee and its successor-in-interest must become members
of an Association for realty owners and long-term lessees at Ortigas Center. The
Ortigas Center Association (OCA) which was subsequently formed levies
membership dues of P2,700.00 per month to all members. Petitioner refused to
pay the membership dues on the ground that it did not become automatic
member of the Association when it bought the land. Herein respondent OCA
filed a civil case for recovery of the amounts due, which was dismissed by the
Regional Trial Court and reversed on appeal. Petitioner PADCOM appealed for
review on certiorari at the Supreme Court.
ISSUE:
Whether or not petitioner PADCOM can be compelled to become a
member of the OCA and thus pay the membership dues based on the condition
of the Deed of Sale.
RULING:
PADCOM became automatically a member of the OCA by virtue of the
conditions of the Deed of Sale attached to its Title of the property. By voluntarily
buying the land with the conditions, it subscribed to such conditions which gave
rise to a quasi-contract between it and the OCA. Therefore, it could not avoid
payment of the membership dues without violating the underlying principles of
quasi-contract which provides that certain lawful, unilateral, and voluntary act
gives rise to a juridical relation between the parties to the end that no one shall
be unjustly enriched of benefited at the expense of others.
Petition denied for lack of merit.
Gerent Builders, Inc. cannot claim for a share in the adjusted contract cost
between petitioner and Sucodeco because petitioner was under no obligation to
disclose to respondent Gerent, a subcontractor, any price increase in petitioners
main contract with Sucodeco. Respondent Gerent is not a party to the main
contract. The subcontract between petitioner and respondent Gerent does not
require petitioner to disclose to Gerent any price increase in the main contract.
The non-disclosure by petitioner of the price increase cannot constitute fraud or
breach of any obligation on the part of petitioner.
Moreover, the record shows that the P139,720.30 representing final and
full payment of the subcontract price was paid by petitioner to respondent
Gerent based on the statement of account Gerent itself prepared and submitted
to petitioner.
During the period comprising March 16, 1967 and August 25, 1967,
GACET and Interocean in performing their obligations under said Management
Contract, contracted the services of herein plaintiff-appellee, Benjamin Pineda
doing business under the name and style "Pioneer Iron Works," to carry out
repairs, fabrication and installation of necessary parts in said vessels in order to
make them seaworthy and in good working operation. Accordingly, repairs on
the vessels were made. Labor and materials supplied in connection therewith,
amounted to P84,522.70, P18,141.75 of which was advanced by Interocean,
thereby leaving a balance of P62,095.95. For this balance, Interocean issued
three checks and the third one for P 17,377.57. When these checks were
however presented to the drawee, Peoples Bank and Trust Company, they were
dishonored as defendant Interocean stopped payment thereon.
Meanwhile and by reason of the inability of SIP and/or Bacong to pay their
mortgage indebtedness which was past due since 1964, the mortgagee Peoples
Bank and Trust Company threatened to foreclose the mortgage on said vessels.
In order to avoid the inconvenience and expense of imminent foreclosure
proceedings, SIP and/or Bacong sold said vessels to Peoples Bank by way of
dacion en pago.
On October 1, 1968, plaintiff instituted the present action (Civil Case No.
74379) before the Court of First Instance of Manila, seeking to recover from SIP,
GACET, Interocean and the Peoples Bank and 'Trust Company the principal sum
of P62,095.92 with interests thereon from the respective dates of each repair
order until the same is fully paid, which amount was allegedly the total unpaid
balance of the cost of repairs, fabrication and installation of necessary parts
carried out by the said plaintiff on the a forenamed vessels.
Answering the complaint, defendants Peoples Bank and Trust Co., now
Bank of P.I. and Southern Industrial Projects, Inc. (SIP) alleged that the
abovementioned claim is the personal responsibility of Interocean Shipping
Corporation and/or Gacet, Inc. and deny liability thereof Defendant Bacong
Shipping Company, S.A.
Whether or not the phrase upon payment in the trial courts decision
means upon payment of spouses loan in the principal amount of P110,000.00
alone without interest, penalties and other charges.
Whether or not the conditions to be complied with by the debtor desirous
of being released from his obligation in cases where the creditor unjustly refuses
to accept payment have been met by the spouses Aquino.
RULING:
Anent the 1st issue, NO. The phrase upon payment as held by the
Supreme Court means upon payment of the amount of P110,000.000 plus
seventeen percent (17%) per annum regular interest computed from the time of
maturity of the plaintiffs loan and until full payment of such principal and
interest to defendants. For respondent spouses to continue in possession of the
principal of the loan amounting to P110,000.00 and to continue to use the same
after maturity of the loan without payment of regular or monetary interest,
would constitute unjust enrichment on the part of the respondent spouses at the
expense of petitioner State even though the spouses had not been guilty of
mora.
With respect to the 2nd issue, NO. The conditions had not been complied
with. Article 1256 of the civil code states that: If the creditor to whom tender of
payment has been made refuses without just cause to accept it, the debtor shall
be released from responsibility by consignation of the thing or sum due. Where
the creditor unjustly refuses to accept payment, the debtor desirous of being
released from his obligation must comply with two (2) conditions, viz: (a) tender
of payment; and (b) consignation of the sum due. Tender of payment must be
accompanied or followed by consignation in order that the effects of payment
may be produced. Thus, in Llamas v. Abaya, the Supreme Court stressed that a
written tender of payment alone, without consignation in court of the sum due,
does not suspend the accruing of regular or monetary interest. In the instant
case, respondent spouses Aquino, while they are properly regarded as having
made a written tender of payment to petitioner state, failed to consign in court
the amount due at the time of the maturity of the 2nd Account No. It follows that
their obligation to pay principal-cum-regular or monetary interest under the
terms and conditions of the said Account was not extinguished by such tender of
payment alone.
SOURCES OF OBLIGATIONS:
D.
DELICTS
1.
2.
3.
4.
5.
6.
7.
8.
On August 26, 1995, the lifeless body of Christian Bermudez was found
and retrieved from a fishpond in Meycauayan, Bulacan. This fact was broadcast
over the radio and, after hearing the same, Agripina Bermudez went to see the
lifeless body retrieved from the fishpond and confirmed it to be that of Christian,
whom she claims is her eldest son who was earning about P650.00 a day as a
taxi driver.
ISSUE:
Whether or not the trial court is correct in awarding the damages to the
heirs of the victim.
RULING:
The Court finds no reason to reverse the ruling of the court a quo insofar
as the crimes were committed. Anent the civil indemnity award, this Court finds
the amount of P50,000.00 as death indemnity proper, following prevailing
jurisprudence and in line with controlling policy. Award of civil indemnity may be
granted without any need of proof other than the death of the victim.
The victims heirs are likewise entitled to moral damages, pegged at
P50,000.00 by controlling case law, taking into consideration the pain and
anguish of the victims family brought about by his death. However, the award of
P200,000.00 as burial and other expenses incurred in connection with the death
of the victim must be deleted. The records are bereft of any receipt or voucher
to justify the trial courts award of burial and other expenses incurred in
connection with the victims death.
The trial court was correct in awarding damages for loss of earning
capacity despite the non-availability of documentary evidence.
Damages
representing net earning capacity have been awarded by the Court based on
testimony in several cases. However, the amount of the trial courts award
needs to be recomputed and modified accordingly.
In determining the amount of lost income, the following must be taken
into account: (1) the number of years for which the victim would otherwise have
lived; and (2) the rate of the loss sustained by the heirs of the deceased. The
second variable is computed by multiplying the life expectancy by the net
earnings of the deceased, meaning total earnings less expenses necessary in the
creation of such earnings or income less living and other incidental expenses.
Considering that there is no proof of living expenses of the deceased, net
earnings are computed at fifty percent (50%) of the gross earnings. The formula
used by this Court in computing loss of earning capacity is:
Net Earning Capacity = [2/3 x (80 age at time of death) x (gross annual
income reasonable and necessary living expenses)]
In this case, the Court notes that the victim was 27 years old at the time
of his death and his mother testified that as a driver of the Tamaraw FX taxi, he
was earning P650.00 a day. Hence, the damages payable for the loss of the
victims earning capacity is computed thus:
Gross Annual Earnings = P650 x 261 working days in a year
=
Net Earning Capacity
P169,650.00
35.33 x 84,825.00
P2,996,867.20
Based on the foregoing computation, the award of the trial court with
regard to lost income is thus modified accordingly.
Garcia store along Honeymoon road, Carlos Garcia, with three companions, told
them to stop, pointing a gun at them. Hearing the commotion, Dagson who was
walking about 5 to 7 meters ahead with Litorco rushed to the boarding house
and sought help. When Dagson came back, he was with Oliver Alimani, Arman
Alimani and Dexter Daggay. When they arrived, they saw Garcia pointing a gun
at the group of Ganongan, Daodaoan, Tabanganay and Jeffrey Alimani. Oliver
Alimani approached Garcia who in turn pointed his gun at Oliver and identified
himself as barangay kagawad. At this time, Carlos Doctolero Sr. was standing at
the edge of Honeymoon road. He then put his arm over Daodaoans shoulder.
Daoadaoan shoved Doctoleros hand and retreated. Doctolero stepped back and
fired twice at Daodaoan but missed. Tabanganay asked Daodaoan if he was hit
and upon answering that he was not, Tabanganay shouted at his friends to run.
When Ganongan turned around to run, Doctolero fired at him, hitting him twice.
Oliver Alimani came to Ganongans aid when the latter yelled that he was hit.
Thereafter, they hailed a taxi and rushed Ganongan to Saint Louis University
Hospital where he expired.
Accused-appellant was convicted of murder after appreciating the
aggravating circumstance of treachery. He was sentenced to suffer the penalty
of reclusion perpetua and was ordered to indemnify the heirs of Ganongan the
amounts of P50,000.00 as civil indemnity, P227,808.00 as actual damages, and
P300,000.00 as moral damages plus costs.
ISSUE:
Whether or not the accused was guilty of murder and the damages
awarded to the heirs were proper.
RULING:
No. Since treachery was not proven to be resent in this case, the court
deemed it proper to convict the accused of the crime of homicide, instead of
murder thus damages were reduced to P112,413.40 representing funeral
expenses, which were duly proven and covered by receipts.
Expenses relating to the 9th day, 40th day and 1st year anniversaries
cannot be considered in the award of actual damages as these were incurred
after a considerable lapse of time from the burial of the victim. With respect to
the award of moral damages, the same is reduced to P50,000.00 in accordance
with existing jurisprudence
On July 28, 1969, the plaintiffs-appellants filed a civil case for damages
against Domingo Pontino y Tacorda and Cordova Ng Sun Kwan.
acquittal extinguishes the civil liability of the accused only when it includes a
declaration that the facts from which the civil liability might arise did not exist.
Finding that the plaintiffs instituted the action "on the assumption that
defendant Pontino's negligence in the accident of May 10, 1969 constituted a
quasi-delict," the trial court stated that plaintiffs had already elected to treat the
accident as a "crime" by reserving in the criminal case their right to file a
separate civil action. That being so, the trial court decided to order the dismissal
of the complaint against defendant Cordova Ng Sun Kwan and to suspend the
hearing of the case against Domingo Pontino until after the criminal case for
Homicide Through Reckless Imprudence is finally terminated.
ISSUE:
Whether or not the present action is based on quasi-delict under the Civil
Code and therefore could proceed independently of the criminal case for
homicide thru reckless imprudence.
RULING:
In cases of negligence, the injured party or his heirs has the choice
between an action to enforce the civil liability arising from crime under Article
100 of the Revised Penal Code and an action for quasi-delict under Article 21762194 of the Civil Code.
If a party chooses the latter, he may hold the employer solidarily liable for
the negligent act of his employee, subject to the employer's defense of exercise
of the diligence of a good father of the family.
In the case at bar, the action filed by appellant was an action for damages
based on quasi-delict. The fact that appellants reserved their right in the
criminal case to file an independent civil action did not preclude them from
choosing to file a civil action for quasi-delict.
The appellant precisely made a reservation to file an independent civil
action. In fact, even without such a reservation, the Court allowed the injured
party in the criminal case which resulted in the acquittal of the accused to
recover damages based on quasi-delict.
It does not follow that a person who is not criminally liable is also free
from civil liability. While the guilt of the accused in a criminal prosecution must
be established beyond reasonable doubt, only a preponderance of evidence is
required in a civil action for damages (Article 29, Civil Code). The judgment of
The petitioner moved for reconsideration but the appellate court denied
the motion.
ISSUE:
Whether or not the acquittal of the accused also extinguished his civil
liability.
RULING:
NO. Our law recognizes two kinds of acquittal, with different effects on
the civil liability of the accused. First is an acquittal on the ground that the
accused is not the author of the act or omission complained of as a felony. This
instance closes the door to civil liability, for a person who has been found not to
be the perpetrator of any act or omission cannot and can never be held liable for
such act or omission. There being no delict, civil liability ex delicto is out of the
question, and the civil action, if any, which will be instituted must be based on
ground other than the delict complained of. The second instance is an acquittal
based on reasonable doubt on the guilt of the accused. In this case, even if the
guilt of the accused has not been satisfactorily established, he is not exempt
from civil liability which may be proved by preponderance of evidence only.
In the case at bar, the accuseds acquittal is based on reasonable doubt.
The decision of the trial court did not state in clear and equivocal terms that
petitioner was not recklessly imprudent or negligent. Hence, impliedly, the trial
court acquitted him on reasonable doubt. Since civil liability is not extinguished
in criminal cases if the accused acquittal is based on reasonable doubt, the
decision of the Court of Appeals finding that the defendant is civilly liable for his
negligent and reckless act of driving his car which was the proximate cause of
the vehicular accident, and sentenced him to indemnify plaintiff-appellants in
the amount of P74,400.00 for the death of Ruben Nicolas.
Sept. 2, 1994
236 SCRA 239
FACTS:
Rogelio Bayotas was charged with rape and eventually convicted on June
19, 1991. While the appeal was pending, Bayotas died. The Supreme Court
dismissed the criminal aspect of the appeal; however, it required the SolicitorGeneral to comment with regard to Bayotas civil liability arising from his
commission of the offense charged.
In his comment, the Solicitor-General expressed his view that the death of
accused-appellant did not extinguish his civil liability as a result of his
commission of the offense charged. This comment was opposed by the counsel
of accused-appellant, arguing that the death of the accused while judgment of
the conviction is pending appeal extinguishes both criminal and civil penalties,
he cited in support and invoked the ruling of the Court of Appeals in People v.
Castillo, which was held that the civil obligation in a criminal case takes root in
the criminal responsibility and therefore civil liability is extinguished if accused
should die before final judgment is rendered.
ISSUE:
Whether or not the death of the accused pending appeal of his conviction
extinguishes his civil liability.
RULING:
Yes, the death of the accused pending appeal of his conviction
extinguishes his civil liability because tire liability is based solely on the criminal
act committed. Corollarily, the claim for civil liability survives notwithstanding
the death of the accused, if the same may also be predicted as one source of
obligation other than delict.
Moreover, when a defendant dies before judgment becomes executory,
'there cannot be any determination by final judgment whether or not the felony
upon which the civil action might arise exists,' for the simple reason that `there
is no party defendant.' The Rules of Court state that a judgment in a criminal
case becomes final 'after the lapse of the period for perfecting an appeal or
when the sentence has been partially or totally satisfied or served, or the
defendant has expressly waived in writing his right to appeal.'
In addition, where the civil liability does not exist independently of the
criminal responsibility, the extinction of the latter by death, ipso facto
extinguishes the former, provided, of course, that death supervenes before final
judgment. As in this case, the right to institute a separate civil action is not
reserved, the decision to be rendered must, of necessity, cover 'both the
criminal and the civil aspects of the case.' The accused died before final
judgment was rendered, thus, he is absolved of both his criminal and civil
liabilities based solely on delict or the crime committed.
Appeal dismissed.
the road at high speed, and there was no showing that Barredo exercised the
diligence of a good father of a family.
Barredos theory of defense is that Fontanillas negligence being
punishable by the Revised Penal Code, that his liability as employer is only
subsidiary liable but Fontanilla was sued for civil liability, hence, Barredo claims
that he can not be held liable.
ISSUE:
Whether or not complainants liability as employer of Fontanilla was only
subsidiary and not as primarily and directly responsible under Article 1903 of the
Civil Code.
SOURCES OF OBLIGATIONS
E.
QUASI-DELICTS
1.
2.
3.
4.
5.
6.
7.
8.
RULING:
No, the Supreme Court ruled that complainants liability is not only
subsidiary but also primary liability. The Court affirmed the decision of the Court
of Appeals which ruled that the liability sought to be imposed upon Barredo in
this action is not a civil obligation arising from a felony, but an obligation
imposed in Article 1903 of the Civil Code by reason of his negligence in the
selection or supervision of his servant or employee.
QUASI-DELICT OR CULPA AQUILIANA is a separate legal institution under
the Civil Code and is entirely distinct and independent from a delict or crime as
punished under the Revised Penal Code (RPC). In this jurisdiction, the same
negligent act causing damage may produce civil liability (subsidiary) arising from
a crime under Art. 103 of the RPC; or create an action for the quasi delict or
culpa aquiliana (primary) and the parties injured are free to choice which course
to take.
In the instant case, the negligent act of Fontanilla produced two liabilities
of Barredo. First, a subsidiary one because of the civil liability of Fontanilla
arising from the latters criminal negligence; and second, Barredos primary and
direct responsibility arising from his presumed negligence as an employer in the
selection of his employees or their supervision, under Art. 1903 of the Civil Code.
The parties instituted an action for damages under Art. 1903 of the Civil
Code.
Barredo was found guilty of negligence for carelessly employing
Fontanilla, who had been caught several times for violation of the Automobile
Law and speeding violation. Thus, the petition is denied. Barredo must
indemnify plaintiffs under the provisions of Art. 1903 of the Civil Code.
FACTS:
The victim Evangeline Tangco was depositor of Ecology Bank. She
was also a licensed-fire arm holder, thus during the incident, she was
entering the bank to renew her time deposit and along with her was her
firearm. Suddenly, the security guard of the bank, upon knowing that the
victim carries a firearm, the security guard shot the victim causing the
latters instant death. The heirs of the victim filed a criminal case against
security guard and an action against Safeguard Security for failure to
observe diligence of a goof father implied upon the act of its agent.
ISSUE:
Whether Safeguard Security can be held liable for the acts of its
agent.
RULING:
Yes. The law presumes that any injury committed either by fault or
omission of an employee reflects the negligence of the employer. In
quasi-delicts cases, in order to overcome this presumption, the employer
must prove that there was no negligence on his part in the supervision of
his employees.
It was declared that in the selection of employees and agents,
employers are required to examine them as to their qualifications,
experience and service records. Thus, due diligence on the supervision
and operation of employees includes the formulation of suitable rules and
regulations for the guidance of employees and the issuance of proper
instructions intended for the protection of the public and persons with
whom the employer has relations through his employees. Thus, in this
case, Safeguard Security committed negligence
in identifying
the
qualifications and ability of its agents.
FACTS:
Eliza Sunga was a passenger of a jeepney owned and operated by
the petitioner Calalas. Private respondent Sunga sat in the rear protion of
the jeepney where the conductor gave Sunga an extension seat. When
the jeep stopped, Sunga gave way to a passenger going outside the jeep.
However, an Isuzu Truck driven by Verene and owned by Salva,
accidentally hit Sunga causing the latter to suffer physical injuries where
the attending physician ordered a three months of rest. Sunga filed an
action for damages against the petitioner for breach of contract of
common carriage by the petitioner.
On the other hand, the petitioner Calalas filed an action against
Salva, being the owner of the truck. The lower court ruled in favor of ther
petitioner, thus the truck owner is liable for the damage to the jeep of the
petitioner.
ISSUE:
Whether the petitionerr is liable.
RULING:
Yes. The petitioner is liable for the injury suffered by Sunga. Under
Article 1756 of the New Civil Code, it provides that common carriers are
presumed to have been at fault or to have acted negligently unless they
prove that they observed extraordinary diligence as defined in Arts. 1733
and 1755 of the Code. This provision necessarily shifts to the common
carrier the burden of proof.
In this case, the law presumes that any injury suffered by a
passenger of the jeep is deemed to be due to the negligence of the driver.
This is a case on Culpa Contractual where there was pre-existing
obligations and that the fault is incidental to the performance of the
obligation. Thus, it was clearly observed that the petitioner has
negligence in the conduct of his duty when he allowed Sunga to seat in
the rear portion of the jeep which is prone to accident.
QUASI-DELICT AS A SOURCE OF OBLIGATION
cluster, respondent did not show persuasively other possible causes of the
damage.
LUDO AND LUYM CORPORATION, petitioner,
VS. COURT OF APPEALS, GABISAN SHIPPING LINES, INC.
and/or ANSELMO OLASIMAN, respondents.
G.R. No. 125483
February 1, 2001
351 SCRA 35
FACTS:
Private respondent Anselmo Olasiman, as captain, was maneuvering the
ship MV Miguela owned by respondent Gabisan Shipping lines, at the pier owned
by petitioner Ludo and Luym Corporation when it rammed the pile cluster
damaging it and deforming the cable wires wound around it.
In an action for recovery of damages filed by Petitioner, the Regional Trial
Court ruled against respondents for incompetence and negligence. In an appeal
the Court of Appeals reversed the lower courts decision, saying that the
petitioners witness Naval was incompetent to testify on the negligence of the
crew and that petitioners evidence did not positively identify that MV Miguela
caused the damage.
Thus, petitioner filed this petition for review.
ISSUE:
Whether or not the private respondents are responsible for the damage
done to the pier by the ship based on the doctrine of RES IPSA LOQUITOR.
RULING:
The Supreme Court sustained the Regional Trial Court decision partly on
the ground that the incompetence of eyewitness Naval was not an assigned
error at the appellate court.
The doctrine of RES IPSA LOQUITOR says that when the thing that causes
the damage is in the control and management of the respondent, and in the
ordinary course of things the accident does not happen if those who have the
management use proper care, it affords reasonable evidence, in the absence of
explanation, that the accident arose from want of care. The principle applies
here. The MV Miguela was in the exclusive control of respondent Olasiman, and
aside from petitioners witness testimony that the vessel rammed the pile
is
RULING:
Yes. The Court held that the driver of the oncoming Nissan Pathfinder
vehicle was liable and the driver of the U-turning taxicab was contributorily
liable.
From petitioner Castro's testimonial admissions, it is established that he
was driving at a speed faster than 50 kilometers per hour. But as he allegedly
stepped on the brake, it locked causing his Nissan Pathfinder to skid to the left
and consequently hit the taxicab. The sudden malfunction of the vehicle's brake
system is the usual excuse of drivers involved in collisions which are the result of
speedy driving. Malfunction or loss of brake is not a fortuitous event. The owner
and his driver are presumed to know about the conditions of the vehicle and is
duty bound to take care thereof with the diligence of a good father of the family.
A mechanically defective vehicle should avoid the streets.
Moreover, the record shows that the Nissan Pathfinder was on the wrong
lane when the collision occurred. This was a disregard of traffic safety rules.
The law considers what would be reckless, blameworthy or negligent in a man of
ordinary diligence and prudence and determines liability by that.
As mentioned earlier, the driver of the taxi is contributorily liable. U-turns
are not generally advisable particularly on major streets. The driver of the taxi
ought to have known that vehicles coming from the Rosario bridge are on a
downhill slope. Obviously, there was lack of foresight on his part, making him
contributorily liable.
Considering the contributory negligence of the driver of private
respondent's taxi, the award of P47,850.00, for the repair of the taxi, should be
reduced in half. All other awards for damages are deleted for lack of merit.
his horn to give warning. The plaintiff heard the warning signal but instead of
going to the let, he pulled the pony closely up against the railing on the right
side of the bridge. He averred that he thought he did not have sufficient time to
get over the other side. As the automobile approached, the defendant guided it
toward the plaintiff, without diminution to speed, assuming the horseman would
move to the other side. When he had gotten quite near, there being no
possibility o the horse getting across to the other side, the defendant quickly
turned his car sufficiently to the right to escape hitting the horse. However, the
horse was still hit and died while the rider was thrown off violently.
ISSUE:
Whether the defendant was negligent in maneuvering his car giving rise
to a civil obligation.
RULING:
Yes. The Court held that the control of the situation has shifted to the
defendant when the incident occurred. At first, he has the right to assume that
the horse and rider would pass over to the other side but as he moved to the
center, it was demonstrated that this would not be done. It was then his duty to
bring his car to an immediate stop or, seeing that there were no other person on
the bridge, to take the other side and ass sufficiently far away from the horse to
avoid the danger of collision. Instead of doing this, the defendant ran straight on
until he was almost upon the horse. When the defendant exposed the horse and
rider to this danger he was negligent in the eye of the law.
Conduct is said to be negligent when a prudent man in the position of the
tortfeasor would have foreseen that an effect harmful to another was sufficiently
probable to warrant his foregoing the conduct or guarding against its
consequences. Applying this test to the conduct of the defendant, it is clear that
negligence is established. A prudent man, laced in the position o the defendant,
would have recognized that the course which he was pursuing was fraught with
risk, and would therefore have foreseen harm to the horse and rider as a
reasonable consequence of that course. Under these circumstances the law
imposed on the defendant the duty to guard against the threatened harm.
The plaintiff on the other hand was guilty of antecedent negligence in
planting himself on the wrong side o the road. The negligent acts of the two
arties were not contemporaneous, since the negligence of the defendant
succeeded the negligence of the plaintiff by an appreciable interval. Under these
circumstances, the law is that the person who has the last fair chance to avoid
the impending harm and fails to do is chargeable wit the consequences, without
reference to the prior negligence of the other party.
In sum, though the plaintiff was guilty of negligence or being on the wrong
side of the bridge, the defendant was civilly liable as he had fair chance to avoid
the accident.
time, the law authorized HSRC to grant extensions of time for completion of
subdivision projects.
The law provides that delay may exist when the obligor fails to fulfill his
obligation within the time expressly stipulated. In this case, the HSRC extended
the period for respondent to finish the development work until 30 July 1987.
Respondent did not incur delay since the period granted him to fulfill his
obligation had not expired at the time respondent filed the action for rescission
on 27 February 1987.
Moreover petitioners hampered and interfered with respondents
development work. Petitioners also stopped respondent from selling lots and
collecting payments from lot buyers, which was the primary source of
development funds. In effect, petitioners rendered respondent incapable, or at
least made it difficult for him, to develop the subdivision within the allotted
period. In reciprocal obligations, neither party incurs in delay if the other does
not comply or is not ready to comply with what is incumbent upon him. It is only
when one of the parties fulfills his obligation that delay by the other begins.
Respondents failure to submit the monthly report cannot serve as
sufficient basis for the cancellation of the Contract. The cancellation of a
contract will not be permitted for a slight or casual breach. Only a substantial
and fundamental breach, which defeats the very object of the parties in making
the contract, will justify a cancellation. In the instant case, the development
work continued for more than two years despite the lack of a monthly report.
ISSUES:
Whether or not petitioner is obliged to construct the deep well and is
obliged to repair the windmills.
RULING:
On the first issue, the Supreme Court held that petitioner is not obliged to
construct the deep well, sustaining the trial court to be correct that said deep
well is not stipulated in their contract. Notably, nowhere in either proposal is the
installation of a deep well mentioned, even remotely. Neither is there an
itemization or description of the materials to be used in constructing the deep
well. There is absolutely no mention in the two (2) documents that a deep well
pump is a component of the proposed windmill system.
In order for a party to claim exemption from liability by reason of
fortuitous event under Art. 1174 of the Civil Code the event should be the sole
and proximate cause of the loss or destruction of the object of the contract. In
Nakpil vs. Court of Appeals, four (4) requisites must concur: (a) the cause of the
breach of the obligation must be independent of the will of the debtor; (b) the
event must be either unforeseeable or unavoidable; (c) the event must be such
RULING:
Anent the 1st issue, YES. No fraud was employed by herein petitioner.
Felix Francisco could not be considered to have been deceived into
signing the subject deed of assignment. The kind of fraud that will vitiate a
RULING:
Yes. The private respondent is guilty of fraud in the performance of his
obligation under the sales contract whereunder he bound himself to deliver to
petitioner 100 metric tons of copra within twenty (20) days from March 8, 1976.
However within the delivery period, Oseraos delivered only 46,334 kilograms of
copra to petitioner, leaving an undelivered thus a balance of 53,666 kilograms.
Petitioner made repeated demands upon private respondent to comply with his
contractual undertaking to deliver the balance of 53,666 kilograms but private
respondent elected to ignore the same.
In a letter dated October 6, 1976, petitioner made a final demand with a
warning that, should private respondent fail to complete delivery of the balance
of 53,666 kilograms of copra, petitioner would purchase the balance at the open
market and charge the price differential to private respondent. Still private
respondent failed to fulfill his contractual obligation to deliver the remaining
53,666 kilograms of copra. On October 22, 1976, since there was still no
compliance by private respondent, petitioner exercised its right under the
contract and purchased 53,666 kilograms of copra, the undelivered balance, at
the open market at the then prevailing price of P168.00 per 100 kilograms, a
price differential of P86.00 per 100 kilograms or a total price differential of
P46,152.76.
In general, fraud may be defined as the voluntary execution of a wrongful
act, or a wilfull omission, knowing and intending the effects which naturally and
necessarily arise from such act or omission; the fraud referred to in Article 1170
of the Civil Code of the Philippines is the deliberate and intentional evasion of
the normal fulfillment of obligation; it is distinguished from negligence by the
presence of deliberate intent, which is lacking in the latter. The conduct of
private respondent clearly manifests his deliberate fraudulent intent to evade his
contractual obligation for the price of copra had in the meantime more than
doubled from P82.00 to P168 per 100 kilograms.
Under Article 1170 of the Civil Code of the Philippines, those who in the
performance of their obligation are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor thereof, are liable for damages.
Pursuant to said article, private respondent is liable for damages.
In case of fraud, bad faith, malice, or wanton attitude, the guilty party is
liable for all damages, which may be reasonably attributed to the nonperformance of the obligation. On account of private respondent's deliberate
breach of his contractual obligation, petitioner was compelled to buy the balance
of 53,666 kilos of copra in the open market at the then prevailing price of P168
per 100 kilograms thereby paying P46,152.76 more than he would have paid had
private respondent completed delivery of the copra as agreed upon.
Thus, private respondent is liable to pay respondent the amount of
P46,152.76 as damages. Thus, petition granted. The trial court ruling reinstated.
BREACH OF OBLIGATIIONS: DEFAULT (Mora) (Art. 1169, CC)
TITAN-IKEDA CONSTRUCTION VS. PRIMETOWN PROPERTY
544 S 466
FACTS:
possession of the bank, and requesting a reply within five days. PNB MADECOR
received a similar notice.
RULING:
It was found that because respondent modified the MPT's
architectural design, petitioner had to adjust the scope of work. Moreover,
respondent belatedly informed petitioner of those modifications. It also
failed to deliver the concrete mix and rebars according to schedule. For
this reason, petitioner was not responsible for the project's delay. Mora or
delay is the failure to perform the obligation in due time because of dolo
(malice) or culpa (negligence). A debtor is deemed to have violated his
obligation to the creditor from the time the latter makes a demand. Once
the creditor makes a demand, the debtor incurs mora or delay.
Respondent never sent petitioner a written demand asking it to
accelerate work on the project and reduce, if not eliminate, slippage. In
view of the foregoing, we hold that petitioner did not incur delay in the
performance of its obligation.
4.
RULING:
The Supreme Court held that when the windmill failed to function
properly, it becomes incumbent upon the petitioner to institute the proper
repairs in accordance with the guaranty stated in the contract.
Hence,
respondent cannot be said to have incurred in delay; instead it is the petitioner
who should bear the expenses for the reconstruction of the windmill. Thus, the
Supreme Court ruled that respondent Herce, Jr. should pay petitioner Tanguilig
the balance of P15,000.00 and likewise ordered petitioner Tanguilig to
reconstruct subject defective windmill system, in accordance with the one-year
guaranty.
vendors obligation to the Philippine Veterans Bank, the vendee paid only the
sum of P6,926.41 while the difference of the indebtedness came from Celerina
Labuguin. Moreover, petitioners asserted that not a single centavo of the
P27,000.00 representing the remaining balance was paid to them. Because of
the apprehension that the heirs of Juan Galicia, Sr. are disavowing the contract
inked by their predecessor, private respondent filed the complaint for specific
performance.
RULING:
Both the trial and appellate courts were correct in sustaining the claim of
private respondent anchored on estopped or waiver by acceptance of delayed
payments under Article 1235 of the Civil Code in that:
ISSUE:
Whether or not private respondent correctly anchored on estopped or
waiver by acceptance of delayed payments.
FACTS:
Spouses Fernando Periquet and Petra Francisco were left childless so they
took in a son out of wedlock of Maria, Petras sister. The boy was given the
name Fernando Periquet Jr., though he was not legally adopted.
was debited from private respondent's account but was later recalled and recredited, to him. Because of the recall, the last two checks, dated February 10,
1993 and March 10, 1993, were no longer presented for payment. This was
purportedly in conformity with petitioner bank's procedure that once a client's
account was forwarded to its account representative, all remaining checks
outstanding as of the date the account was forwarded were no longer presented
for patent.
On the theory that respondent defaulted in his payments, the check
representing the payment for August 10, 1991 being unsigned, petitioner, in a
letter dated January 21, 1993, demanded from private respondent the payment
of the balance of the debt, including liquidated damages. The latter refused,
prompting petitioner to file an action for replevin and damages before the Pasay
City Regional Trial Court (RTC). Private respondent, in his Answer, interposed a
counterclaim for damages.
The RTC dismissed the petition. Likewise, the petition for appeal was
denied by the Court of Appeals. The Court of Appeals stated that the "default"
was not a case of failure to pay.
ISSUE:
Whether or not petitioners claim is meritorious.
RULING:
No. Petitioner's conduct, in the light of the circumstances of this case, can
only be described as mercenary. Petitioner had already debited the value of the
unsigned check from private respondent's account only to re-credit it much later
to him. Thereafter, petitioner encashed checks subsequently dated, and then
abruptly refused to encash the last two. More than a year after the date of the
unsigned check, petitioner, claiming delay, demanded from private respondent
payment of the value of said check and that of the last two checks, including
liquidated damages. As pointed out by the trial court, this whole controversy
could have been avoided if only petitioner bothered to call up private respondent
and ask him to sign the check. Good faith, not only in compliance with its
contractual obligations, but also in observance of the standard in human
relations, for every person "to act with justice, give everyone his due, and
observe honesty and good faith." behooved the bank to do so. Failing thus,
petitioner is liable for damages caused to private respondent. These include
moral damages for the mental anguish, serious anxiety, besmirched reputation,
wounded feelings and social humiliation suffered by the latter.
court relied on the statement of account and the summary prepared by the
respondent to determine the liability of the petitioner for the payment of the
liabilities and penalties. The trial court held that the petitioners consignation on
the amount of P18,000.00 did not produce a legal effect since it was not
undertaken in accordance with Articles 1176, 1177 and 1178 of the Civil Code.
The Court of Appeals affirmed in toto the trial courts decision; hence, this
petition.
ISSUES:
1. Whether or not the transaction was an absolute and not a conditional sale.
2. Whether or not there was proper cancellation of the contract to sell.
3. Whether or not there was delay on the petitioners part in the payment of
the monthly amortization.
RULING:
1. NO, the transaction was not an absolute sale; rather, it was a conditional
sale. The very intention of the parties was to reserve the ownership of the land
in the seller (Fernando) until the buyer has paid the total purchase price. First,
the contract to sell makes the sale, cession and conveyance subject to
conditions set forth on the contract. Second, what was transferred was
possession and not ownership. Finally, the land is covered by the Torrens title,
the act of registration of the deed of sale was the operative act that could
transfer ownership over the lot. No deed could be registered in the case at bar
since as stipulated in the contract, such deed shall be executed upon completion
of payment by Leao.
In a contract to sell real property on installments, full payment of the
purchase price is a positive suspensive condition and the failure of the payment
is not a breach but rather shall be an event that will prevent the obligation of the
seller to convey the title from acquiring any obligatory force. The transfer of
ownership and title would occur after full payment of the price.
In the case at bar, Leao did not pay the installments after April 1, 1989,
which prevented the obligation of Fernando to convey the property. It brought
into effect the cancellation provision of the contract. Article 1592 of the Civil
Code is inapplicable in the case at bar. But the provisions of RA 6552 (The
Realty Installment Buyer Protection Act) governs the case at bar which
recognizes the right of the seller to cancel the contract upon non-payment of an
installment by the buyer.
2. NO, there was no proper cancellation of the contract to sell.
Leao did not pay the installments after April 1, 1989, which prevented the
obligation of Fernando to convey the property. It brought into effect the
cancellation provision of the contract. Nevertheless, what is controlling is not
Article 1592 of the Civil Code but the provisions of RA 6552 (The Realty
Installment Buyer Protection Act) which recognizes not only the right of the seller
to cancel the contract upon non-payment off an installment by the buyer but
also rights of the buyer in case of cancellation.
Although the ejectment case operated as the notice of cancellation required
under the provisions of RA 6552, petitioner was not given the cash surrender
value of the payments that she made; hence, there was no actual cancellation of
the contract.
Consequently, petitioner Leao may still reinstate the contract by updating
the account during the grace p[period and before actual cancellation.
3. YES, there was delay on the petitioners part to pay the monthly
amortizations.
Article 1169 of the Civil Code provides that in reciprocal
obligations, neither party incurs in delay if the other does not comply or is not
ready to comply in a proper manner with what is incumbent upon him. From the
moment one of the parties fulfills his obligation, delay by the other begins.
Since respondent Fernando performed his part of the obligation by
allowing Leao to have possession over the property and the latter not having
paid the monthly amortization in accordance with the terms of the contract, the
petitioner incurred delay and therefore is liable for damages.
The Court affirmed the decision of the appellate court, in toto.
exclusive and irrevocable right to buy 2,000 square meters of the property
within five (5) years from the year of the effectivity of the contract at P200 per
square meter the rate of which shall be proportionately adjusted depending on
the peso rate against the US dollar, which at the time of the execution of the
contract was P14.00.
On March 15, 1990, the Duray spouses signified their intention to Roque
Bacus, one the decedents heirs, that they were willing and ready to purchase
the property under the option to buy clause. On March 30, 1990, due to the
heirs refusal to sell the property to the respondents, Durays adverse claim was
annotated by the Register of Deeds of Cebu.
On April 5, 1990, Duray filed a complaint for specific performance against
the heirs of the decedent with the Lupon Tagapamayapa of their barangay,
asking that he be allowed to purchase the land agreed upon in the contract with
the decedent.
Having failed to come to an agreement, the private respondents filed a
complaint before the trial court, praying that the heirs: a) execute a deed of sale
over the subject property in favor of them; b) receive the payment of the
purchase price; and c) pay the damages.
Petitioners alleged that prior to the death of the decedent, respondents
conveyed to them their lack of interest to but the subject land for want of
sufficient funds. They even requested the respondents to pay in full the
purchase price but the respondents refused.
On October 30, 1990, private respondents manifested in court that they
caused the issuance of a cashiers check in the amount of P 650,000 payable too
petitioners at anytime upon demand. On August 31, 1991, trail court rendered
its decision, favoring the private respondents. On appeal, the Court of appeals
denied the motion of the petitioners.
Nonetheless, if the claim must be under Rule 45, the respondents opted to
exercise their option to buy as contained in the contract.
due course by the petitioners unless there is delivery of the sum of money. As
there was no compliance with what was incumbent upon the petitioners under
the option to but, private respondents had not incurred in delay when the
cashiers check was issued even after the contract expired.
ISSUES:
1. Whether or not when the respondents opted to buy the property, were
they already required to deliver the money or consign it in court before
the execution of the deed of transfer.
2. Whether or not the private respondents incurred in delay when they did
not deliver the purchase price or consign it in court or before the
expiration of the contract.
RULING:
1.
NO, the petitioners were not required to deliver the money or consign it in
court. Obligations under an option to buy are reciprocal obligations. The
performance of one obligation is conditioned on the simultaneous fulfillment of
the other obligation. In an option to buy, the payment of the purchase price by
the creditor is contingent upon the execution and delivery of a deed of sale by
the debtor. In the case at bar, the respondents were not yet obliged to make
actual payment. Consequently, since the obligation was not yet due,
consignation in court of the purchase price was not yet required.
2.
NO, the private respondents did not incur delay when they did not deliver
the purchase price or consign it in court or before the expiration of the contract.
Consignation is the act of depositing the thing due with the court or judicial
authorities whenever the creditor cannot accept or refuses to accept payment
and it requires a prior tender of payment. Petitioners contention that private
respondents failed to comply with their obligation under the option to buy
because they failed to actually deliver the purchase price or consign it in court
before the contract expired is not tenable. Ergo, the private respondents did not
incur any delay when they did not yet deliver payment or make consignation
before the expiration of the contract. In reciprocal obligations, neither party
incurs delay if the other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. Only from the moment one of the
parties fulfills his obligation, does delay by the other begins.
In the case at bar, as early as March 15, 1990, respondents
communicated with the petitioners that they intended to exercise their exclusive
right to buy the parcel of land stipulated in the contract but which was not given
The Supreme Court did not subscribe to the petitioners view that the
Memorandum Agreement was a contract to sell. There is nothing contained in
the MOA from which it can reasonably be deduced that the parties intended to
enter into a contract to sell, i.e. one whereby the prospective seller would
explicitly reserve the transfer of title to the prospective buyer, meaning, the
prospective seller does not as yet agree or consent to transfer ownership of the
property subject of the contract to sell until the full payment of the price, such
payment being a positive suspensive condition, the failure of which is not
considered a breach, casual or serious, but simply an event which prevented the
obligation from acquiring any obligatory force.
There is clearly no express reservation of title made by the petitioners
over the property, or any provision which would impose non-payment of the
price as a condition for the contracts entering into force. Although the
memorandum agreement was also denominated as a "Contract to Sell", it held
that the parties contemplated a contract of sale. A deed of sale is absolute in
nature although denominated a conditional sale in the absence of a stipulation
reserving title in the petitioners until full payment of the purchase price. In such
cases, ownership of the thing sold passes to the vendee upon actual or
constructive delivery thereof.
The mere fact that the obligation of the
respondent to pay the balance of the purchase price was made subject to the
condition that the petitioners first deliver the reconstituted title of the house and
lot does not make the contract a contract to sell for such condition is not
inconsistent with a contract of sale.
The property in dispute, being an immovable property, is governed by
Article 1592 of the NCC, which needs the judicial or notarial act for its rescission.
It is not disputed that the petitioners did not make a judicial or notarial demand
for rescission. The November 20, 1989 letter of the petitioners informing the
respondent of the automatic rescission of the agreement did not amount to a
demand for rescission, as it was not notarized. It was also made five days after
the respondents attempt to make the payment of the purchase price. This offer
to pay prior to the demand for rescission is sufficient to defeat the petitioners
right under article 1592 of the Civil Code.
Besides, the Memorandum Agreement between the parties did not contain
a clause expressly authorizing the automatic cancellation of the contract without
court intervention in the event that the terms thereof were violated. A seller
cannot unilaterally and extrajudicially rescind a contract of sale where there is
no express stipulation authorizing him to extrajudicially rescind. Neither was
there a judicial demand for the rescission thereof.
Thus, when the respondent filed his complaint for specific performance,
the agreement was still in force inasmuch as the contract was not yet rescinded.
At any rate, considering that the six-month period was merely an
approximation of the time it would take to reconstitute the lost title and was not
a condition imposed on the perfection of the contract and considering further
that the delay in payment was only thirty days which was caused by the
respondents justified but mistaken belief that an extension to pay was granted
to him, the Court agreed with the CAs ruling that the delay of one month in
payment was a mere casual breach that would not entitle the respondents to
rescind the contract. RESCISSION of a contract will not be permitted for a slight
or casual breach, but only such substantial and fundamental breach as would
defeat the very object of the parties in making the agreement.
the unpaid balance for the car loan which was lowered to P154,000.00 after
negotiations and recomputations. As a result of the non-payment of the reduced
amount on that date, the car was detained within the banks compound.
On August 28, 1995, Dr. Gueco further renegotiated for the reduction of
the outstanding loan to P150,000.00.
On August 29, 1995, Dr. Gueco delivered a managers check in the
amount of P150,000.00 but the car was not released because of his refusal to
sign the JOINT Motion to Dismiss.
After several demand letters and meetings with bank representatives, the
respondents initiated a civil action for damages which was dismissed for lack of
merit.
On appeal, the RTC ruled in favor of the Spouses, pointing out that there
was a meeting of the minds between the petitioner and the respondents as to
the reduction of the amount of indebtedness and the release of the car but said
agreement did not include the signing of the Joint Motion to Dismiss as a
condition sine qua non for the effectivity of the compromise.
On appeal, the Court of Appeals affirmed in toto the lower courts
decision.
Hence, the petitioner comes to the Supreme Court by way of certiorari.
ISSUES:
Whether or not there was no agreement with respect to the execution of the
Joint Motion to Dismiss as a condition for the compromise agreement.
Whether or not the respondents should be granted moral, exemplary
damages and attorneys fees.
Whether or not the Court of Appeals erred in holding that the petitioner
return the subject car to the respondents, without making any provision for the
issuance of the new managers/ cashiers check by the respondents in favor of
the petitioner in lieu of the original cashiers check that already became stale.
RULING:
1. NO, there was no agreement with respect to the execution of the Joint Motion
to Dismiss as a condition for the compromise agreement.
Petitioner has the burden of proof that the oral compromise entered into
by the parties included the stipulation that the parties would joint file a motion to
dismiss. Factual findings of the lower court and the appellate court found no
evidence to acknowledge the contestation of the petitioner bank that there was
indeed such an agreement. Further, the only findings was that the
agreement between the parties was merely regarding the lowering of the price
and not anent the Joint Motion to Dismiss.
2. NO, the respondents are not entitled to the damages awarded by the Court of
Appeals. In awarding the damages, both the trial and appellate courts found
out that there was fraud, when in the findings of the Supreme Court, there
was none. Fraud is the deliberate intention to cause damage or prejudice. It
is the voluntary execution of a wrongful act, or the willful omission. Knowing
and intending the effects which naturally and necessarily arise from such act
or omission. There was no fraud on the part of the petitioner bank in
requiring the respondent to sign the joint motion to dismiss.
3. YES, the Court of Appeals committed the error anent the 3rd issue.
Respondents contend that the petitioner should return the car or its value
and that the latter, due to its own negligence, should suffer the loss
occasioned of the fact that the check had become stale. Respondents aver
that the delivery of the managers check produced the effect of payment;
thus, petitioner was negligent in opting not to deposit or use said check. The
Court is not persuaded.
A stale check is one which has not been presented for payment within a
reasonable time after its issue. It is valueless, and should not be paid.
In the case at bar, the check involved is not an ordinary bill of exchange
but a managers check which is drawn by the bank manager upon the bank
itself. In this case, the Gueco spouses have not alleged or shown that they or
the bank which issued the managers check has suffered damage or loss by the
delay or non-presentment. There is no doubt that the petitioner bank held on
the check and refused to encash the same because of the controversy
surrounding the signing of the joint motion to dismiss. Hence, the Court is of the
opinion that there is no bad faith or negligence.
Premises considered, the decision of the Court of appeals affirming the
Trial courts decision is set aside. Respondents are further ordered to pay the
original obligation amounting to P150,000 to the petitioner upon surrender or
existence of fraud. On the other hand, AGFHA, Inc. maintains that there has only
been an inadvertent error and not an intentional wrongful declaration by the
shipper to evade payment of any tax due.
Fraud must be proved to justify forfeiture. It must be actual, amounting to
intentional wrong-doing with the clear purpose of avoiding the tax. Mere
negligence is not equivalent to the fraud contemplated by law. What is here
involved is an honest mistake, not even directly attributable to private
respondent, which will not deprive the government of its right to collect the
proper tax. The Collector of Customs, Court of Tax Appeals and the Court of
Appeals are unanimous in concluding that no fraud has been committed by
AGFHA, Inc. in the importation of the bales of cloth. Therefore, the forfeiture
cannot be justified.
Petition denied. Decision affirmed.
A complaint against petitioner and her driver for damages was filed at the
Regional Trial Court of Malolos City. In her answer, the petitioner vehemently
denied the material allegations of the complaint. She tried to shift the blame
upon the victim, theorizing that Herminigildo bumped into her bus, while
avoiding an unidentified woman who was chasing him. Furthermore, she alleged
that she was not liable for any damages because she exercised the proper
diligence of a good father of a family both in the selection and supervision of her
bus driver.
The trial court rendered its decision holding petitioner and her driver liable
for the untimely death of Zuiga and to indemnify his legal heirs, the herein
respondents. The Court of Appeals affirmed the said decision of the RTC.
Petitioner duly moved for reconsideration, but her motion was denied for lack of
merit.
ISSUE:
Whether or not the petitioner exercised the diligence of a good father of a
family in the selection and supervision of her employees thus absolving her from
any liability.
RULING:
YES. Whether a person is negligent or not is a question of fact. It was
Venturinas reckless and imprudent driving of petitioners bus, which is the
proximate cause of the victims death. It is thus evident that petitioner did not
exercise the diligence of a good father of a family in the selection and
supervision of her employees. The law governing petitioners liability, as the
employer of bus driver Venturina is Article 2180 of the Civil Code. The diligence
of a good father means diligence in the selection and supervision of employees.
Thus, when an employee, while performing his duties, causes damage to
persons or property due to his own negligence, there arises the juris tantum
presumption that the employer is negligent, either in the selection of the
employee or in the supervision over him after the selection. The presumption
juris tantum that there was negligence in the selection of her bus driver remains
unrebutted.
After hearing, the trial court ruled in favor of respondent Borja and held
petitioner liable for damages and loss of income. On appeal, the same ruling
was also upheld. Hence this petition.
ISSUE:
Whether or not the RTC and the Court of Appeals labored under a
misapprehension of facts regarding the negligence committed.
RULING:
Petitioner avers that both lower courts labored under a misapprehension
of the facts. It claims that the documents adduced in the RTC conclusively
revealed that the explosion that caused the fire on M/T King Family had
originated from the barge ITTC-101. However, the Supreme Court find no cogent
reason to overturn factual findings of the RTC and the Court of Appeals since
such findings were supported by substantial evidences.
Negligence is a conduct that creates undue risk of harm to another. It is
the failure to observe that degree of care, precaution and vigilance that the
circumstances justly demand, whereby that other person suffers injury.
Petitioners vessel was carrying chemical cargo -- alkyl benzene and methyl
methacrylate monomer. While knowing that their vessel was carrying dangerous
inflammable chemicals, its officers and crew failed to take all the necessary
precautions to prevent an accident. Petitioner was, therefore, negligent.
The three elements of QUASI-DELICT are:
1.
damages suffered by the plaintiff,
2.
fault or negligence of the defendant, and
3.
the connection of cause and effect between the fault or
negligence of the defendant and the damages inflicted on the
plaintiff.
All these elements were established in this case.
As a result of the fire and the explosion during the unloading of the
chemicals from petitioners vessel, Respondent Borja suffered the following
damage: and injuries: (1) chemical burns of the face and arms; (2) inhalation of
fumes from burning chemicals; (3) exposure to the elements while floating in sea
water for about three (3) hours; (4) homonymous hemianopsia or blurring of the
right eye [which was of] possible toxic origin; and (5) cerebral infract with neovascularization, left occipital region with right sided headache and the blurring of
vision of right eye.
Wherefore, the Petition is partly granted.
The assailed Decision is
AFFIRMED with the following MODIFICATIONS: petitioner is ordered to pay the
heirs of the victim damages in the amount of P320,240 as loss of earning
capacity, moral damages in the amount of P100,000, plus another P50,000 as
attorneys fees.
RULING:
The Supreme Court held that it was the petitioner, not the bank, who was
negligent. Negligence is the omission to do something which a reasonable man,
guided by those considerations which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a prudent and reasonable
man would do. In the present case, it appears that petitioner accorded his
secretary unusual degree of trust and unrestricted access to his credit cards,
passbooks, check books, bank statements, including custody and possession of
cancelled checks and reconciliation of accounts.
Petitioners failure to examine his bank statements appears as the
proximate cause of his own damage. Petitioner failed to examine his bank
statements not because he was prevented by some cause in not doing so, but
because he did not pay sufficient attention to the matter. In view of Article 2179
of the New Civil Code, when the plaintiffs own negligence was the immediate
and proximate cause of his injury, no recovery could be had for damages.
Hence, the petition is dismissed.
reservoir of the Angat Dam was rising perilously at the rate of sixty (60)
centimeters per hour. To prevent an overflow of water from the dam, since the
water level had reached the danger height of 212 meters above sea level, the
defendant corporation caused the opening of the spillway gates.
The appellate court sustained the findings of the trial court that the
evidence preponderantly established the fact that due to the negligent manner
with which the spillway gates of the Angat Dam were opened, an extraordinary
large volume of water rushed out of the gates, and hit the installations and
construction works of ECI at the Ipo Site with terrific impact as a result of which
the latters stockpile of materials and supplies, camp facilities and permanent
structures and accessories were either washed away, lost or destroyed.
ISSUE:
Whether or not NAPOCOR is exempt from liability because the lost or
deterioration of ECIs facilities was due to fortuitous event.
RULING:
It is clear from the CAS ruling that the petitioner NPC was undoubtedly
negligent because it opened the spillway gates of the Angat Dam only at the
height of typhoon Welming when it knew very well that it was safer to have
opened the same gradually and earlier, as it was also undeniable that NPC knew
of the coming typhoon at least four days before it actually struck. And even
though the typhoon was an act of God or what we may call force majeure, NPC
cannot escape liability because its negligence was the proximate cause of the
loss and damage.
Petitions dismissed. Decision affirmed.
FACTS:
On August 4, 1964, plaintiff Engineering Construction, Inc., being a
successful bidder, executed a contract in Manila with National Waterworks and
Sewerage Authority (NAWASA), whereby the former undertook to furnish all
tools, labor, equipment, and materials (not furnished by Owner), and to
construct the proposed 2nd Ipo-Bicti Tunnel, Intake and Outlet Structures, and
Appurtenant Structures, and Appurtenant Features, at Norzagaray, Bulacan, and
to complete said works within eight hundred (800) calendar days from the date
the Constructor receives the formal notice to proceed.
The record shows that on November 4, 1967, typhoon Welming hit
Central Luzon, passing trough the defendants Angat Hydro-electric Project and
Dam at Ipo, Norzagaray, Bulacan. Strong winds struck the project area, and
heavy rains intermittently fell. Due to the heavy downpour, the water in the
CULPA CONTRACTUAL
1.
2.
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5.
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8.
managerial duties, unless petitioners can positively show that they were not
involved. Their position requires a high degree of responsibility that necessarily
includes unearthing of fraudulent and irregular activities. Their bare,
unsubstantiated and uncorroborated denial of any participation in the cheating
does not prove their innocence nor disprove their alleged guilt. Additionally,
some employees declared in their affidavits that the cheating was actually the
idea of the petitioners.
CULPA CONTRACTUAL
RCPI vs. VERCHEZ
G.R. No. 164349. JANUARY 31, 2006
FACTS:
Editha Hebron Verchez (Editha) was confined in the hospital due to an
ailment. Her daughter Grace immediately went to the Sorsogon Branch of RCPI
whose services she engaged to send a telegram to her sister Zenaida. As three
days after RCPI was engaged to send the telegram to Zenaida no response was
received from her, Grace sent a letter to Zenaida, this time thru JRS Delivery
Service, reprimanding her for not sending any financial aid. Immediately after
she received Graces letter, Zenaida, along with her husband left for Sorsogon.
On her arrival at Sorsogon, she disclaimed having received any telegram.
The telegram was finally delivered to Zenaida 25 days later. On inquiry from
RCPI why it took that long to deliver it, RCPI claimed that delivery was not
immediately effected due to the occurrence of circumstances which were
beyond the control and foresight of RCPI.
ISSUE:
Whether or not RCPI is negligent in the performance of its obligation.
RULING:
Article 1170 of the Civil Code provides: 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. 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. The law,
recognizing the obligatory force of contracts, will not permit a party to be set
free from liability for any kind of misperformance of the contractual undertaking
or a contravention of the tenor thereof.
Considering the public utility of RCPIs business and its contractual obligation to
transmit messages, it should exercise due diligence to ascertain that messages
are delivered to the persons at the given address and should provide a system
whereby in cases of undelivered messages the sender is given notice of nondelivery. Messages sent by cable or wireless means are usually more important
and urgent than those which can wait for the mail. RCPI argues, however,
against the presence of urgency in the delivery of the telegram, as well as the
basis for the award of moral damages. RCPIs arguments fail. For it is its breach
of contract upon which its liability is, it bears repeating, anchored. Since RCPI
breached its contract, the presumption is that it was at fault or negligent. It,
however, failed to rebut this presumption. For breach of contract then, RCPI is
liable to Grace for damages. RCPIs liability as an employer could of course be
avoided if it could prove that it observed the diligence of a good father of a
family to prevent damage.
CULPA CONTRACTUAL
VICTORY LINER, INC. vs. GAMMAD
G.R. No. 159636. NOVEMBER 25, 2004
FACTS:
Marie Grace Pagulayan-Gammad was on board an air-conditioned Victory
Liner bus bound for Tuguegarao, Cagayan from Manila. At about 3:00 a.m., the
bus while running at a high speed fell on a ravine which resulted in the death of
Marie Grace and physical injuries to other passengers. On May 14, 1996,
respondent heirs of the deceased filed a complaint for damages arising from
culpa contractual against petitioner. In its answer, the petitioner claimed that
the incident was purely accidental and that it has always exercised extraordinary
diligence in its 50 years of operation.
ISSUE:
Whether petitioner should be held liable for breach of contract of carriage.
RULING:
Petitioner was correctly found liable for breach of contract of carriage. A
common carrier is bound to carry its passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with
due regard to all the circumstances. In a contract of carriage, it is presumed
that the common carrier was at fault or was negligent when a passenger dies or
is injured. Unless the presumption is rebutted, the court need not even make an
express finding of fault or negligence on the part of the common carrier. This
statutory presumption may only be overcome by evidence that the carrier
exercised extraordinary diligence.
In the instant case, there is no evidence to rebut the statutory
presumption that the proximate cause of Marie Graces death was the
negligence of petitioner. Hence, the courts below correctly ruled that petitioner
was guilty of breach of contract of carriage.
CULPA CONTRACTUAL
FGU INSURANCE CORP. vs. G.P. SARMIENTO TRUCKING CORPORATION
G.R. No. 141910. AUGUST 6, 2002
FACTS:
G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver
refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles, from the
plant site of Concepcion Industries, Inc. to the Central Luzon Appliances in
Dagupan City. While the truck was traversing the north diversion road along
McArthur highway in Barangay Anupol, Bamban, Tarlac, it collided with an
unidentified truck, causing it to fall into a deep canal, resulting in damage to the
cargoes. FGU Insurance Corporation (FGU), an insurer of the shipment, paid to
Concepcion Industries, Inc., the value of the covered cargoes. FGU, in turn,
being the subrogee of the rights and interests of Concepcion Industries, Inc.,
sought reimbursement of the amount it had paid to the latter from GPS. Since
the trucking company failed to heed the claim, FGU filed a complaint for
damages and breach of contract of carriage against GPS and its driver Lambert
Eroles. Respondents asserted that that the cause of damage was purely
accidental.
ISSUE:
Whether or not GPS is liable for damages arising from negligence.
RULING:
In culpa contractual, upon which the action of petitioner rests as being the
subrogee of Concepcion Industries, Inc., the mere proof of the existence of the
contract and the failure of its compliance justify, prima facie, a corresponding
right of relief. Respondent trucking corporation recognizes the existence of a
contract of carriage between it and petitioner and admits that the cargoes it has
assumed to deliver have been lost or damaged while in its custody. In such a
situation, a default on, or failure of compliance with, the obligation in this case,
the delivery of the goods in its custody to the place of destination - gives rise to
a presumption of lack of care and corresponding liability on the part of the
contractual obligor the burden being on him to establish otherwise. GPS has
failed to do so.
Respondent driver, without concrete proof of his negligence or fault, may
not himself be ordered to pay petitioner. The driver, not being a party to the
contract of carriage between petitioner and defendant, may not be held liable
under the agreement. A contract can only bind the parties who have entered
into it or their successors who have assumed their personality or their juridical
position. Petitioners civil action against the driver can only be based on culpa
aquiliana, which, unlike culpa contractual, would require the claimant for
damages to prove negligence or fault on the part of the defendant.
CULPA CONTRACTUAL
LRTA vs. NAVIDAD
G.R. No. 145804. FEBRUARY 6, 2003
ISSUE:
Who, if any, is liable for damages in relation to the death of Navidad?
RULING:
The foundation of LRTAs liability is the contract of carriage and its
obligation to indemnify the victim arises from the breach of that contract by
reason of its failure to exercise the high diligence required of the common
carrier. In the discharge of its commitment to ensure the safety of passengers, a
carrier may choose to hire its own employees or avail itself of the services of an
outsider or an independent firm to undertake the task. In either case, the
common carrier is not relieved of its responsibilities under the contract of
carriage.
Regrettably for LRTA, as well as perhaps the surviving spouse and heirs of the
late Nicanor Navidad, this Court is concluded by the factual finding of the Court
of Appeals that there is nothing to link Prudent to the death of Navidad, for the
reason that the negligence of its employee, Escartin, has not been duly proven.
There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty
of any culpable act or omission, he must also be absolved from liability.
FACTS:
CULPA CONTRACTUAL
CULPA CONTRACTUAL
RODZSSEN SUPPLY CO. INC. VS. FAR EAST BANK & TRUST CO.
GR No. 109087
May 9, 2001
357 SCRA 618
FACTS:
Petitioner Rodzssen Supply opened a letter of credit with respondent Far
East Bank for the payment of 5 loaders bought by petitioner from Ekman and Co.
The letter of credit had a validity of 30 days to expire February 15, 1979 but was
subsequently extended to October 16, 1979.
Three of the loaders were
delivered to the petitioner and was paid by respondent. The two remaining
loaders were delivered to the petitioner belatedly but were still accepted by
petitioner on the ground that it was bound to do so under the trust receipt
arrangement with respondent bank.
The bank paid the two remaining loaders five months after the expiration
of the credit on March 1980. Petitioner refused to pay the P76,000 for the two
loaders since the bank paid for them beyond the expiration of the letter of
credit. Both the RTC and the CA ruled for the respondent. Thus, this petition for
review.
ISSUE:
Is the petitioner liable to pay respondent bank when the bank paid Ekman
only after 5 months beyond the expiration of the letter of credit?
RULING:
Yes. While respondent bank was negligent in paying the P76,000 to
Ekman within the validity of the letter of credit, petitioner voluntarily accepted
the late delivery of the equipment and used it for 3 years before respondent
demanded payment, without verifying the status of ownership or possession of
the loaders. By acknowledging receipt of the loaders, petitioner impliedly
accepted its obligation to pay the respondent bank even when the bank paid for
the delivery by Ekman after the expiration of the letter of credit.
When both parties are equally negligent in the performance of their
obligations under a contract, the fault of one cancels the negligent of the other.
Their rights and obligations may then be determined equally under the law
proscribing the unjust enrichment.
learned of the deficiency, he dropped his review class and was not able to take
the bar examination.
Consequently, respondent sued petitioner for damages alleging that he
suffered moral shock, mental anguish, serious anxiety, besmirched reputation,
wounded feelings and sleepless nights when he was not able to take the 1988
bar examinations arising from the latter's negligence. He prayed for an award of
moral and exemplary damages, unrealized income, attorney's fees, and costs of
suit.
ISSUE:
Whether or not respondent can claim damages from petitioner school.
RULING:
It is the contractual obligation of the school to timely inform and furnish
sufficient notice and information to each and every student as to whether he or
she had already complied with all the requirements for the conferment of a
degree or whether they would be included among those who will graduate.
Although commencement exercises are but a formal ceremony, it nonetheless is
not an ordinary occasion, since such ceremony is the educational institution's
way of announcing to the whole world that the students included in the list of
those who will be conferred a degree during the baccalaureate ceremony have
satisfied all the requirements for such degree. Prior or subsequent to the
ceremony, the school has the obligation to promptly inform the student of any
problem involving the latter's grades and performance and also most
importantly, of the procedures for remedying the same.
person/persons who may be affected by his act or omission can support a claim
for damages.
CULPA CONTRACTUAL
BAYNE ADJUSTERS AND SURVEYORS, INC. VS. COURT OF APPEALS AND
INSURANCE COMPANY OF NORTH AMERICA
323 SCRA 231
The college dean is the senior officer responsible for the operation of an
academic program, enforcement of rules and regulations, and the supervision of
faculty and student services. He must see to it that his own professors and
teachers, regardless of their status or position outside of the university, must
comply with the rules set by the latter. The negligent act of a professor who fails
to observe the rules of the school, for instance by not promptly submitting a
student's grade, is not only imputable to the professor but is an act of the
school, being his employer.
FACTS:
On May 1987, Colgate Palmolive Philippines imported alkyl benzene from
Japan valued at US $255,802.88. It is insured with private respondent Insurance
Company of North America. Petitioner was contracted by the consignee to
supervise the proper handling and discharge of the cargo from the chemical
tanker to the receiving barge until the cargo is pumped into the consignees
shore tank. When the cargo arrived, the pumping operation commenced at
2020 hours of June 27, 1987. Nevertheless, the pumping was interrupted for
several times due to mechanical problems with the pump. When the pump
broke down once again at about 1300 hours, the petitioners surveyors left the
premises without leaving any instruction with the barge foremen what to do in
event that the pump becomes operational again. No other surveyor was left in
the premises and the assigned surveyor did not seal the valves to the tank to
avoid unsupervised pumping of the cargo. Consignee asked petitioner to send
surveyor to conduct tank sounding. Thus, the petitioner sent Armando Fontilla, a
cargo surveyor, not a liquid bulk surveyor. Then after, it was agreed that
operation would resume the following day at 1030 hours. Fontanilla tried to
inform bargemen and surveyor about the agreement but he could not find them
so he left the premises. When the bargemen arrived, they found that the valves
of the tank are open and resumed pumping operation in the absence of any
instruction from the surveyor. The following morning, undetermined amount of
alkyl benzene was lost due to overflow.
settles the manner with Bayne Adjusters. Both the trial and appellate court
rendered a decision adverse to the petitioner for its failure to comply Standard
Operating Procedure for Handling Liquid Bulk Cargo.
ISSUE:
Whether or not the petitioner is liable for the loss of a certain amount of
alkyl benzene.
RULING:
Yes. The negligence of the obligor in the performance of the obligation
renders him liable for damages for the resulting loss suffered by the obligee.
The Supreme Court did not find that the trial court erred in holding the petitioner
liable because of its failure to exercise due diligence which is governed by the
Standard Operation Procedure in Handling Liquid Bulk Survey. Although the
cessation of the pumping operation in this case was not voluntarily requested by
the pumping operation in this case was not voluntarily requested by the
pumping operation in this case was not voluntarily requested by the consignee,
but was due to mechanical problems with the pump, there is greater reason to
comply with the SOP. The petitioner assigned surveyor disregarded SOP and left
the pump site without leaving any instruction or directive with the barge pump
operators.
The petition was dismissed.
CULPA CONTRACTUAL
CULPA ACQUILIANA
1.
2.
3.
FACTS:
Respondent C & A Construction, Inc. was engaged by the National Housing
Authority (NHA) to construct a deflector wall at the Vitas Reclamation Area in
Vitas, Tondo, Manila. The project was completed in 1994 but it was not formally
turned over to NHA.
On October 9, 1994, M/V Delsan Express, a ship owned and operated by
petitioner Delsan Transport Lines, Inc., anchored at the Navotas Fish Port for the
purpose of installing a cargo pump and clearing the cargo oil tank. At around
12:00 midnight of October 20, 1994, Captain Demetrio T. Jusep of M/V Delsan
Express received a report from his radio head operator in Japan that a typhoon
was going to hit Manila in about eight (8) hours. At approximately 8:35 in the
morning of October 21, 1994, Capt. Jusep tried to seek shelter at the North
Harbor but could not enter the area because it was already congested. At 10:00
a.m., Capt. Jusep decided to drop anchor at the vicinity of Vitas mouth, 4 miles
away from a Napocor power barge. At that time, the waves were already
reaching 8 to 10 feet high. Capt. Jusep ordered his crew to go full ahead to
counter the wind which was dragging the ship towards the Napocor power barge.
To avoid collision, Capt. Jusep ordered a full stop of the vessel. He succeeded in
avoiding the power barge, but when the engine was re-started and the ship was
maneuvered full astern, it hit the deflector wall constructed by respondent.
The trial court ruled that petitioner was not guilty of negligence because it
had taken all the necessary precautions to avoid the accident. Applying the
emergency rule, it absolved petitioner of liability because the latter had no
opportunity to adequately weigh the best solution to a threatening situation. It
further held that even if the maneuver chosen by petitioner was a wrong move,
it cannot be held liable as the cause of the damage sustained by respondent was
typhoon Katring, which is an act of God.
On appeal to the Court of Appeals, the decision of the trial court was
reversed and set aside. It found Capt. Jusep guilty of negligence in deciding to
transfer the vessel to the North Harbor only at 8:35 a.m. of October 21, 1994
and thus held petitioner liable for damages.
ISSUE:
Whether or not petitioner is solidarily liable under Article 2180 of the Civil
Code for the quasi-delict committed by Capt. Jusep.
RULING:
The Court of Appeals was correct in holding that Capt. Jusep was negligent in
deciding to transfer the vessel only at 8:35 in the morning of October 21, 1994.
from the drawee bank, CITIBANK, N.A. (Citibank) and collecting bank, Philippine
Commercial International Bank (PCIBank), the value of several checks payable to
the Commissioner of Internal Revenue, which were embezzled allegedly by an
organized syndicate.
G.R. Nos. 121413 and 121479 are twin petitions for review of the March
27, 1995 Decision of the Court of Appeals in CA-G.R. CV No. 25017, entitled Ford
Philippines, Inc. vs. Citibank, N.A. and Insular Bank of Asia and America (now
Philippine Commercial International Bank), and the August 8, 1995 Resolution
ordering the collecting bank, Philippine Commercial International Bank, to pay
the amount of Citibank Check No. SN-04867.
In G.R. No. 128604, petitioner Ford Philippines assails the October 15,
1996 Decision of the Court of Appeals and its March 5, 1997 Resolution in CAG.R. No. 28430 entitled "Ford Philippines, Inc. vs. Citibank, N.A. and Philippine
Commercial International Bank," affirming in toto the judgment of the trial court
holding the defendant drawee bank, Citibank, N.A., solely liable to pay the
amount of P12,163,298.10 as damages for the misapplied proceeds of the
plaintiffs Citibank Check Numbers SN-10597 and 16508.
ISSUE:
Whether or not the petitioner Ford has the right to recover from the
collecting bank (PCIBank) and the drawee bank (Citibank) the value of the
checks intended as payment to the Commissioner of Internal Revenue.
RULING:
In G.R. Nos. 121413 and 121479, the Court held that banking business
requires that the one who first cashes and negotiates the check must take some
precautions to learn whether or not it is genuine. And if the one cashing the
check through indifference or other circumstance assists the forger in
committing the fraud, he should not be permitted to retain the proceeds of the
check from the drawee whose sole fault was that it did not discover the forgery
or the defect in the title of the person negotiating the instrument before paying
the check. For this reason, a bank which cashes a check drawn upon another
bank, without requiring proof as to the identity of persons presenting it, or
making inquiries with regard to them, cannot hold the proceeds against the
drawee when the proceeds of the checks were afterwards diverted to the hands
of a third party.
In such cases the drawee bank has a right to believe that the cashing
bank (or the collecting bank) had, by the usual proper investigation, satisfied
itself of the authenticity of the negotiation of the checks. Thus, one who
encashed a check which had been forged or diverted and in turn received
payment thereon from the drawee, is guilty of negligence which proximately
contributed to the success of the fraud practiced on the drawee bank. The latter
may recover from the holder the money paid on the check. Having established
that the collecting banks negligence is the proximate cause of the loss,
the Court concludes that PCIBank is liable in the amount corresponding to the
proceeds of Citibank Check No. SN-04867.
In G.R. No. 128604, the pro-manager of San Andres Branch of PCIBank,
Remberto Castro, received Citibank Check Numbers SN 10597 and 16508. He
passed the checks to a co-conspirator, an Assistant Manager of PCIBanks
Meralco Branch, who helped Castro open a Checking account of a fictitious
person named "Reynaldo Reyes." Castro deposited a worthless Bank of America
Check in exactly the same amount of Ford checks.
The syndicate tampered with the checks and succeeded in replacing the
worthless checks and the eventual encashment of Citibank Check Nos. SN 10597
and 16508. The PCIBank Pro-manager, Castro, and his co-conspirator Assistant
Manager apparently performed their activities using facilities in their official
capacity or authority but for their personal and private gain or benefit. A bank
holding out its officers and agents as worthy of confidence will not be permitted
to profit by the frauds these officers or agents were enabled to perpetrate in the
apparent course of their employment; nor will it be permitted to shirk its
responsibility for such frauds, even though no benefit may accrue to the bank
therefrom.
For the general rule is that a bank is liable for the fraudulent acts or
representations of an officer or agent acting within the course and apparent
scope of his employment or authority. And if an officer or employee of a bank, in
his official capacity, receives money to satisfy an evidence of indebtedness
lodged with his bank for collection, the bank is liable for his misappropriation of
such sum. But in this case, responsibility for negligence does not lie on
PCIBanks shoulders alone. The evidence on record shows that Citibank as
drawee bank was likewise negligent in the performance of its duties. Citibank
failed to establish that its payment of Fords checks were made in due course
and legally in order. Citibank should have scrutinized Citibank Check Numbers
SN 10597 and 16508 before paying the amount of the proceeds thereof to the
collecting bank of the BIR.
One thing is clear from the record: the clearing
stamps at the back of Citibank Check Nos. SN 10597 and 16508 do not bear any
initials. Citibank failed to notice and verify the absence of the clearing stamps.
Had this been duly examined, the switching of the worthless checks to Citibank
Check Nos. 10597 and 16508 would have been discovered in time. For this
reason, Citibank had indeed failed to perform what was incumbent upon it, which
is to ensure that the amount of the checks should be paid only to its designated
payee.
The fact that the drawee bank did not discover the irregularity
seasonably, in our view, constitutes negligence in carrying out the banks duty to
its depositors. The point is that as a business affected with public interest and
because of the nature of its functions, the bank is under obligation to treat the
accounts of its depositors with meticulous care, always having in mind the
fiduciary nature of their relationship.
Thus, invoking the doctrine of comparative negligence, the Court is of the
view that both PCIBank and Citibank failed in their respective obligations and
both were negligent in the selection and supervision of their employees resulting
in the encashment of Citibank Check Nos. SN 10597 and 16508. Thus, the Court
is constrained to hold them equally liable for the loss of the proceeds of said
checks issued by Ford in favor of the CIR.Time and again, the Court has stressed
that banking business is so impressed with public interest where the trust and
confidence of the public in general is of paramount importance such that the
appropriate standard of diligence must be very high, if not the highest, degree of
diligence.
A banks liability as obligor is not merely vicarious but primary, wherein
the defense of exercise of due diligence in the selection and supervision of its
employees is of no moment. Banks handle daily transactions involving millions
of pesos. By the very nature of their work the degree of responsibility, care and
trustworthiness expected of their employees and officials is far greater than
those of ordinary clerks and employees. Banks are expected to exercise the
highest degree of diligence in the selection and supervision of their employees.
Thus the Decision and Resolution of the Court of Appeals in CA-G.R. CV
No. 25017, are affirmed. PCIBank, is declared solely responsible for the loss of
the proceeds of Citibank Check No. SN 04867 in the amount P4,746,114.41,
which shall be paid together with six percent (6%) interest thereon to Ford
Philippines Inc. from the date when the original complaint was filed until said
amount is fully paid. However, the Decision and Resolution of the Court of
Appeals in CA-G.R. No. 28430 are MODIFIED as follows: PCIBank and Citibank are
adjudged liable for and must share the loss, (concerning the proceeds of Citibank
Check Numbers SN 10597 and 16508 totalling P12,163,298.10) on a fifty-fifty
ratio, and each bank is ORDERED to pay Ford Philippines Inc. P6,081,649.05,
with six percent (6%) interest thereon, from the date the complaint was filed
until full payment of said amount.
CULPA ACQUILIANA
At 11:40 p.m, Moreno made a series of calls to the M/V Doa Roberta but
he failed to get in touch with anyone in the vessel. At 1:15 a.m. of November
13, Inguito called Moreno over the radio and requested him to contact the son of
Julius Ouano because they needed a helicopter to rescue them. At 2:30 a.m. of
November 13, 1990, the M/V Doa Roberta sank. Out of the 25 officers and crew
on board the vessel, only five survived.
On November 24, 1990, Julius Ouano, in lieu of the captain who perished
in the sea tragedy, filed a Marine Protest. The heirs of the deceased captain
and crew, as well as the survivors, of the ill-fated M/V Doa Roberta filed a
complaint for tort against SMC and Julius Ouano before the RTC. Julius Ouano
alleged that the proximate cause of the loss of the vessel and its officers and
crew was the fault and negligence of SMC, which had complete control and
disposal of the vessel as charterer and which issued the sailing order for its
departure despite being forewarned of the impending typhoon. Thus, he prayed
that SMC indemnify him for the cost of the vessel and the unrealized rentals and
earnings thereof. SMC argued that the proximate cause of the sinking was
Ouanos breach of his obligation to provide SMC with a seaworthy vessel duly
manned by competent crew. SMC interposed counterclaims against Ouano for
the value of the cargo lost in the sea tragedy.
The trial court ruled that the proximate cause of the loss of the M/V Doa
Roberta was attributable to SMC and was ordered and sentenced to pay to the
heirs of the deceased crew. The CA modified the decision appealed from,
declaring defendant-appellants SMC and Julian C. Ouano jointly and severally
liable to plaintiffs-appellees, except to the heirs of Capt. Inguito.
ISSUE:
Whether or not the finding of the appellate court was in order.
RULING:
Under the terms of the TCPA between the parties, the charterer, SMC,
should be free from liability for any loss or damage sustained during the voyage,
unless it be shown that the same was due
to its fault or negligence. The evidence does not show that SMC or its
employees were amiss in their duties. SMCs Radio Operator Moreno, who was
tasked to monitor every shipment of its cargo, zealously contacted and advised
Capt. Inguito to take shelter from typhoon Ruping.
In contrast to the care exercised by Moreno, Rico Ouano tried to
communicate with the captain only after receiving the S.O.S. message. Neither
Ouano nor his son was available during the entire time that the vessel set out
and encountered foul weather. Considering that the charter was a contract of
affreightment, the shipowner had the clear duty to ensure the safe carriage and
arrival of goods transported on board its vessels. More specifically, Ouano
expressly warranted in the TCPA that his vessel was seaworthy. For a vessel to
be seaworthy, it must be adequately equipped for the voyage and manned with
a sufficient number of competent officers and crew.
The proximate cause of the sinking of the vessel was the gross failure of
the captain of the vessel to observe due care and to heed SMCs advice to take
shelter. Gilbert Gonsaga, Chief Engineer of Doa Roberta, testified that the ship
sank at 2:30 in the early morning of November 13th. On the other hand, from
the time the vessel left the port of Mandaue at six oclock in the morning,
Captain Sabiniano Inguito was able to contact the radio operator of SMC. He was
fully apprised of typhoon "Ruping" and its strength. Due diligence dictated that
at any time before the vessel was in distress, he should have taken shelter in
order to safeguard the vessel and its crew.
Ouano is vicariously liable for the negligent acts of his employee, Capt.
Inguito. Under Articles 2176 and 2180 of the Civil Code, owners and managers
are responsible for damages caused by the negligence of a servant or an
employee, the master or employer is presumed to be negligent either in the
selection or in the supervision of that employee. This presumption may be
overcome only by satisfactorily showing that the employer exercised the care
and the diligence of a good father of a family in the selection and the supervision
of its employee. Ouano miserably failed to overcome the presumption of his
negligence. He failed to present proof that he exercised the due diligence of a
bonus paterfamilias in the selection and supervision of the captain of the M/V
Doa Roberta. Hence, he is vicariously liable for the loss of lives and property
occasioned by the lack of care and negligence of his employee.
SMC is not liable for the losses. The contention that it was the issuance of
the sailing order by SMC which was the proximate cause of the sinking is
untenable. The fact that there was an approaching typhoon is of no moment. It
appears that on one previous occasion, SMC issued a sailing order to the captain
of the M/V Doa Roberta, but the vessel cancelled its voyage due to typhoon.
Likewise, it appears from the records that SMC issued the sailing order on
November 11, 1990, before typhoon "Ruping" was first spotted at 4:00 a.m. of
November 12, 1990.
Consequently, Ouano should answer for the loss of lives and damages
suffered by the heirs of the officers and crew who perished on board the M/V
Doa Roberta, except Captain Sabiniano Inguito. The award of damages granted
by the CA is affirmed only against Ouano, who should also indemnify SMC for the
cost of the lost cargo, in the total amount of P10,278,542.40.
Solidary
Employee
vs.
Independent
Liability
of
Employer
and/or
ISSUE:
Whether petitioner is solidarily liable.
RULING:
Contrary to Mrs. Cerezos assertion, Foronda is not an indispensable
party to the case. An indispensable party is one whose interest is
affected by the courts action in the litigation, and without whom no final
resolution of the case is possible. However, Mrs. Cerezos liability as an
employer in an action for a quasi-delict is not only solidary, it is also
primary and direct. Foronda is not an indispensable party to the final
resolution of Tuazons action for damages against Mrs. Cerezo.
The responsibility of two or more persons who are liable for a quasidelict is solidary. Where there is a solidary obligation on the part of
debtors, as in this case, each debtor is liable for the entire obligation.
Hence, each debtor is liable to pay for the entire obligation in full. There
is no merger or renunciation of rights, but only mutual representation.
Where the obligation of the parties is solidary, either of the parties is
indispensable, and the other is not even a necessary party because
complete relief is available from either. Therefore, jurisdiction over
Foronda is not even necessary as Tuazon may collect damages from Mrs.
Cerezo alone.
Moreover, an employers liability based on a quasi-delict is primary
and direct, while the employers liability based on a delict is merely
subsidiary.
The words primary and direct, as contrasted with
subsidiary, refer to the remedy provided by law for enforcing the
obligation rather than to the character and limits of the obligation.
Although liability under Article 2180 originates from the negligent act of
the employee, the aggrieved party may sue the employer directly.
When an employee causes damage, the law presumes that the
employer has himself committed an act of negligence in not preventing or
avoiding the damage. This is the fault that the law condemns. While the
employer is civilly liable in a subsidiary capacity for the employees
criminal negligence, the employer is also civilly liable directly and
separately for his own civil negligence in failing to exercise due diligence
in selecting and supervising his employee. The idea that the employers
liability is solely subsidiary is wrong.
RULING:
Article 2176 states that whoever by act or omission causes
damage to another, there being fault or negligence, is obliged to pay for
the damages done. Such fault or negligence, if there is no pre-existing
contractual relationship between the parties, is called a quasi-delict
Obviously, petitioners employee was grossly negligent in selling
respondent domicrum, instead of the prescribed diamicron. Considering
that a fatal mistake could be a matter of life and death for a buying
patient, the employee should have been very cautious in dispensing
medicines.
Petitioner contends that the proximate cause of the accident was
respondents negligence in driving. The court disagrees. The accident
could have not occurred had petitioners employee been careful in
reading the prescription.
FACTS:
Evangeline Tangco (Evangeline) went to Ecology Bank, Katipunan
Branch, Quezon City, to renew her time deposit per advise of the bank's
cashier as she would sign a specimen card. Evangeline, a duly licensed
firearm holder with corresponding permit to carry the same outside her
residence, approached security guard Pajarillo, who was stationed outside
the bank, and pulled out her firearm from her bag to deposit the same for
safekeeping. Suddenly, Pajarillo shot Evangeline with his service shotgun
hitting her in the abdomen instantly causing her death.
Respondent filed a complaint for damages against Pajarillo for
negligently shooting Evangeline and against Safeguard for failing to
security guards which include among others, whether or not they are in
their proper post and with proper equipment, as well as regular
evaluations of the employees' performances; that the fact that Pajarillo
loaded his firearm contrary to Safeguard's operating procedure is not
sufficient basis to say that Safeguard had failed its duty of proper
supervision; that it was likewise error to say that Safeguard was negligent
in seeing to it that the procedures and policies were not properly
implemented by reason of one unfortunate event. The Supreme Court was
not convinced.
Article 2180 of the Civil Code provides: The obligation
imposed by Article 2176 is demandable not only for one's own acts or
omissions, but also for those of persons for whom one is responsible.
As the employer of Pajarillo, Safeguard is primarily and solidarily
liable for the quasi-delict committed by the former. Safeguard is
presumed to be negligent in the selection and supervision of his employee
by operation of law. This presumption may be overcome only by
satisfactorily showing that the employer exercised the care and the
diligence of a good father of a family in the selection and the supervision
of its employee. In the selection of prospective employees, employers are
required to examine them as to their qualifications, experience, and
service records. On the other hand, due diligence in the supervision of
employees includes the formulation of suitable rules and regulations for
the guidance of employees and the issuance of proper instructions
intended for the protection of the public and persons with whom the
employer has relations through his or its employees and the imposition of
necessary disciplinary measures upon employees in case of breach or as
may be warranted to ensure the performance of acts indispensable to the
business of and beneficial to their employer. To this, we add that actual
implementation and monitoring of consistent compliance with said rules
should be the constant concern of the employer, acting through
dependable supervisors who should regularly report on their supervisory
functions. To establish these factors in a trial involving the issue of
vicarious liability, employers must submit concrete proof, including
documentary evidence.
RULING:
The negligence and fault of appellant driver is manifest.
He
overtook the tricycle despite the oncoming car only fifty (50) meters away
from him. Defendant-appellants claim that he was driving at a mere 30
to 35 kilometers per hour does not deserve credence as it would have
been easy to stop or properly maneuver the bus at this speed. The speed
of the bus, the drizzle that made the road slippery, and the proximity of
the car coming from the opposite direction were duly established by the
evidence. The speed at which the bus traveled, inappropriate in the light
of the aforementioned circumstances, is evident from the fact despite the
application of the brakes, the bus still bumped the tricycle, and then
proceeded to collide with the incoming car with such force that the car
was pushed beyond the edge of the road to the ricefield.
In the present case, petitioners presented several documents in
evidence to show the various tests and pre-qualification requirements
imposed upon petitioner Pleyto before his hiring as a driver by PRBL.
However, no documentary evidence was presented to prove that
petitioner PRBL exercised due diligence in the supervision of its
employees, including Pleyto. Citing precedents, the Court of Appeals
opined,
In order that the defense of due diligence in the selection and
supervision of employees may be deemed sufficient and plausible, it is
not enough for the employer to emptily invoke the existence of company
guidelines and policies on hiring and supervision. As the negligence of
the employee gives rise to the presumption of negligence on the part of
the employer, the latter has the burden of proving that it has been
diligent not only in the selection of employees but also in the actual
supervision of their work. The mere allegation of the existence of hiring
procedures and supervisory policies without anything more is decidedly
not sufficient to overcome such presumption.
petitioner Ernesto Syki and his truck driver, Elizalde Sablayan, to pay
respondent Salvador Begasa, jointly and severally
ISSUE:
1. Whether or not petitioner is liable for the act of his employee.
2. Whether he exercised the diligence of a good father of a family.
RULING:
1. Article 2180 of the Civil Code provides:
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of their
assigned tasks, even though the former are not engaged in any business
or industry.
From the above provision, when an injury is caused by the
negligence of an employee, a legal presumption instantly arises that the
employer was negligent, either or both, in the selection and/or supervision
of his said employee duties. The said presumption may be rebutted only
by a clear showing on the part of the employer that he had exercised the
diligence of a good father of a family in the selection and supervision of
his employee. If the employer successfully overcomes the legal
presumption of negligence, he is relieved of liability. In other words, the
burden of proof is on the employer.
2. The question is: how does an employer prove that he had indeed
exercised the diligence of a good father of a family in the selection and
supervision of his employee. Making proof in its or his case, it is
paramount that the best and most complete evidence is formally entered.
In the case at bar, while there is no rule which requires that
testimonial evidence, to hold sway, must be corroborated by documentary
evidence, inasmuch as the witnesses testimonies dwelt on mere
generalities, we cannot consider the same as sufficiently persuasive proof
that there was observance of due diligence in the selection and
supervision of employees. Petitioners attempt to prove its deligentissimi
patris familias in the selection and supervision of employees through oral
evidence must fail as it was unable to buttress the same with any other
evidence, object or documentary, which might obviate the apparent
biased nature of the testimony.
already partly inside the jeepney, when petitioners driver bumped the
rear end ofrear-ended it.
Since the negligence of petitioners driver was the sole and
proximate cause of the accident, in the present case, petitioner is liable,
under Article 2180 of the Civil Code, to pay damages to respondent
Begasa for the injuries sustained by latter.
It held that this was a case of quasi-delict, there being no preexisting contractual relationship between the parties. The court a quo
then found the petitioner directly and primarily liable as Venturinas
employer pursuant to Article 2180 of the Civil Code as she failed to
present evidence to prove that she has observed the diligence of a good
father of a family in the selection and supervision of her employees.
Art. 2180 states that the obligation imposed by Article 2176 is
demandable not only for ones own acts or omissions, but also for those of
persons for whom one is responsible
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of their
assigned tasks, even though the former are not engaged in any business
or industry.
Petitioner contends that as an employer, she observed the proper
diligence of a good father of a family, both in the selection and
supervision of her driver and therefore, is relieved from any liability for
the latters misdeed. To support her claim, she points out that when
Venturina applied with her as a driver in January 1992, she required him
to produce not just his drivers license, but also clearances from the
National Bureau of Investigation (NBI), the Philippine National Police, and
the barangay where he resides. She also required him to present his
Social Security System (SSS) Number prior to accepting him for
employment. She likewise stresses that she inquired from Venturinas
previous employer about his employment record, and only hired him after
it was shown to her satisfaction that he had no blot upon his record.
In sum, petitioners liability to private respondents for the negligent
and imprudent acts of her driver, Venturina, under Article 2180 of the Civil
Code is both manifest and clear. Petitioner, having failed to rebut the
legal presumption of negligence in the selection and supervision of her
driver, is responsible for damages, the basis of the liability being the
relationship of pater familias or on the employers own negligence.
Quasi-delictual liability even in the existence of a contract
between parties
1. REGINO VS. PANGASINAN COLLEGES, supra
2. YHT VS CA, 451 S 638
Whether or not the purchased of the tickets are mandatory and are
part of the contract between school and student.
RULING:
Reciprocity of the School-Student Contract
The school-student relationship is also reciprocal. Thus, it has
consequences appurtenant to and inherent in all contracts of such kind -it gives rise to bilateral or reciprocal rights and obligations. The school
undertakes to provide students with education sufficient to enable them
to pursue higher education or a profession. On the other hand, the
students agree to abide by the academic requirements of the school and
to observe its rules and regulations.
The terms of the school-student contract are defined at the moment
of its inception -- upon enrolment of the student. Standards of academic
performance and the code of behavior and discipline are usually set forth
in manuals distributed to new students at the start of every school year.
Further, schools inform prospective enrollees the amount of fees and the
terms of payment.
In practice, students are normally required to make a down
payment upon enrollment, with the balance to be paid before every
preliminary, midterm and final examination. Their failure to pay their
financial obligation is regarded as a valid ground for the school to deny
them the opportunity to take these examinations.
The foregoing practice does not merely ensure compliance with
financial obligations; it also underlines the importance of major
examinations. Failure to take a major examination is usually fatal to the
students promotion to the next grade or to graduation. Examination
results form a significant basis for their final grades. These tests are
usually a primary and an indispensable requisite to their elevation to the
next educational level and, ultimately, to their completion of a course.
Thus, students expect that upon their payment of tuition fees,
satisfaction of the set academic standards, completion of academic
requirements and observance of school rules and regulations, the school
would reward them by recognizing their completion of the course
enrolled in.
Under Article 1170 of the New Civil Code, those who, in the
performance of their obligations, are guilty of negligence, are liable for
damages. Article 2180 provides that the owners and managers of an
establishment or enterprise are likewise responsible for damages caused
by their employees in the service of the branches in which the latter are
employed or on the occasion of their functions. Also, this Court has ruled
that if an employee is found negligent, it is presumed that the employer
was negligent in selecting and/or supervising him for it is hard for the
victim to prove the negligence of such employer.
Thus, given the fact
that the loss of McLoughlins money was consummated through the
negligence of Tropicanas employees in allowing Tan to open the safety
deposit box without the guests consent, both the assisting employees
and YHT Realty Corporation itself, as owner and operator of Tropicana,
should be held solidarily liable.
Art. 2003. The hotel-keeper cannot free himself from responsibility
by posting notices to the effect that he is not liable for the articles
brought by the guest. Any stipulation between the hotel-keeper and the
guest whereby the responsibility of the former as set forth in Articles 1998
to 2001 is suppressed or diminished shall be void.
The hotel business like the common carriers business is imbued
with public interest. The twin duty constitutes the essence of the
business. The law in turn does not allow such duty to the public to be
negated or diluted by any contrary stipulation in so-called undertakings
that ordinarily appear in prepared forms imposed by hotel keepers on
guests for their signature.
In the case at bar, the responsibility of securing the safety
deposit box was shared not only by the guest himself but also by the
management since two keys are necessary to open the safety deposit
box. Without the assistance of hotel employees, the loss would not have
occurred.
Thus, Tropicana was guilty of concurrent negligence in allowing
Tan, who was not the registered guest, to open the safety deposit box of
McLoughlin, even assuming that the latter was also guilty of negligence in
allowing another person to use his key. To rule otherwise would result in
undermining the safety of the safety deposit boxes in hotels for the
management will be given imprimatur to allow any person, under the
pretense of being a family member or a visitor of the guest, to have
access to the safety deposit box without fear of any liability that will
RAMOS VS. CA
GR No. 124354 December 29, 1999
FACTS:
Plaintiff Erlinda Ramos was a robust woman Except for occasional
complaints of discomfort due to pains allegedly caused by the presence of
a stone in her gall bladder. Because the discomforts somehow interfered
with her normal ways, she sought professional advice. She was advised
to undergo an operation for the removal of a stone in her gall bladder.
Through the intercession of a mutual friend, Dr. Buenviaje she and her
husband Rogelio met for the first time Dr. Orlino one of the defendants in
this case, on June 10, 1985. They agreed that their date at the operating
table at the DLSMC (another defendant. Dr. Hosaka decided that she
should undergo a "cholecystectomy" operation after examining the
documents (findings from the Capitol Medical Center, FEU Hospital and
DLSMC) presented to him. Rogelio E. Ramos, however, asked Dr. Hosaka
to look for a good anesthesiologist. Dr. Hosaka, in turn, assured Rogelio
that he will get a good anesthesiologist. Dr. Hosaka charged a fee of
P16,000.00, which was to include the anesthesiologist's fee and which
was to be paid after the operation. A day before the scheduled date of
operation, she was admitted at one of the rooms of the DLSMC, located
along E. Rodriguez Avenue, Quezon City.
At around 7:30 A.M. of June 17, 1985 and while still in her room, she
was prepared for the operation by the hospital staff. Her sister-in-law,
Herminda Cruz, who was the Dean of the College of Nursing at the Capitol
Medical Center, was also there for moral support. Herminda was allowed
to stay inside the operating room.
At around 9:30 A.M., Dr. Gutierrez reached a nearby phone to look
for Dr. Hosaka who was not yet in Dr. Gutierrez thereafter informed
Herminda Cruz about the prospect of a delay in the arrival of Dr. Hosaka.
Herminda then went back to the patient who asked, "Mindy, wala pa ba
ang Doctor"? The former replied, "Huwag kang mag-alaala, darating na
iyon. Thereafter, Herminda went out of the operating room and informed
the patient's husband, Rogelio, that the doctor was not yet around.
At about 12:15 P.M., Herminda Cruz, who was inside the operating
room with the patient, heard somebody say that "Dr. Hosaka is already
here." She then saw people inside the operating room "moving, doing
this and that, preparing the patient for the operation" As she held the
hand of Erlinda Ramos, she then saw Dr. Gutierrez intubating the hapless
patient. She thereafter heard Dr. Gutierrez say, "ang hirap ma-intubate
nito, mali yata ang pagkakapasok. O lumalaki ang tiyan", because of the
remarks of Dra. Gutierrez, she focused her attention on what Dr. Gutierrez
was doing. She thereafter noticed bluish discoloration of the nailbeds of
the left hand of the hapless Erlinda even as Dr. Hosaka approached her.
She then heard Dr. Hosaka issue an order for someone to call Dr.
Calderon, another anesthesiologist. After Dr. Calderon arrived at the
operating room, she saw this anesthesiologist trying to intubate the
patient. The patient's nailbed became bluish and the patient was placed
in a trendelenburg position - a position where the head of the patient is
placed in a position lower than her feet which is an indication that there is
a decrease of blood supply to the patient's brain. Immediately thereafter,
she went out of the operating room, and she told Rogelio E. Ramos "that
something wrong was happening". Dr. Calderon was then able to intubate
the patient.
Meanwhile, Rogelio, who was outside the operating room, saw a
respiratory machine being rushed towards the door of the operating room.
He also saw several doctors rushing towards the operating room. When
informed by Herminda Cruz that something wrong was happening, he told
her (Herminda) to be back with the patient inside the operating room.
Herminda immediately rushed back, and saw that the patient was
still in trendelenburg position. At almost 3:00 P.M. of that fateful day, she
saw the patient taken to the Intensive Care Unit (ICU). Doctors Gutierrez
and Hosaka were also asked by the hospital to explain what happened to
the patient. The doctors explained that the patient had bronchospasm.
Erlinda Ramos stayed at the ICU for a month. About four months
thereafter the patient was released from the hospital.
ISSUE:
1. Whether the respondent doctors are negligent.
2. Whether the respondent doctors and the hospital are solidarily
liable.
RULING:
Res ipsa loquitur is a Latin phrase which literally means "the thing
or the transaction speaks for itself." The phrase "res ipsa loquitur" is a
maxim for the rule that the fact of the occurrence of an injury, taken with
the surrounding circumstances, may permit an inference or raise a
presumption of negligence, or make out a plaintiff's prima facie case, and
present a question of fact for defendant to meet with an explanation
At the time of submission, Erlinda was neurologically sound and,
except for a few minor discomforts, was likewise physically fit in mind and
body. However, during the administration of anesthesia and prior to the
performance of cholecystectomy she suffered irreparable damage to her
brain. Thus, without undergoing surgery, she went out of the operating
room already decerebrate and totally incapacitated. Obviously, brain
damage, which Erlinda sustained, is an injury which does not normally
occur in the process of a gall bladder operation. In fact, this kind of
situation does not happen in the absence of negligence of someone in the
administration of anesthesia and in the use of endotracheal tube.
Normally, a person being put under anesthesia is not rendered
decerebrate as a consequence of administering such anesthesia if the
proper procedure was followed. Furthermore, the instruments used in the
administration of anesthesia, including the endotracheal tube, were all
under the exclusive control of private respondents, who are the
physicians-in-charge. Likewise, petitioner Erlinda could not have been
guilty of contributory negligence because she was under the influence of
anesthetics which rendered her unconscious.
test and the patients history of fever with chills for five days, taken with
the fact that typhoid fever was then prevalent, were sufficient to give
upon any doctor of reasonable skill the impression that the patient had
typhoid fever.
found. Dr. Ampil then directed that the incision be closed. During this
entire period, Dr. Fuentes was no longer in the operating room and had, in
fact, left the hospital.
Under the "Captain of the Ship" rule, the operating surgeon is the
person in complete charge of the surgery room and all personnel
connected with the operation. Their duty is to obey his orders. As stated
before, Dr. Ampil was the lead surgeon. In other words, he was the
"Captain of the Ship." That he discharged such role is evident from his
following conduct. Clearly, the control and management of the thing
which caused the injury was in the hands of Dr. Ampil, not Dr. Fuentes.
Here, the negligence was proven to have been committed by Dr.
Ampil and not by Dr. Fuentes.
FACTS:
ISSUE:
Malicious Prosecution
1. DIAZ VS. DAVAO LIGHT, 4 APRIL 2007
2. YASONNA VS. DE RAMOS, 440 S 154
from the acts of DLPC is that they were designed to harass, embarrass,
prejudice, and ruin him. He further avers that the compromise agreement
completely erased litigious matters that could necessarily arise Moreover,
Diaz asserts that the evidence he presented is sufficient to prove the
damages he suffered by reason of the malicious institution of the criminal
cases.
The court does not agree. Article 2028 of the Civil Code defines a
compromise as a contract whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to one already commenced.
The purpose of compromise is to settle the claims of the parties and bar
all future disputes and controversies. However, criminal liability is not
affected by compromise for it is a public offense which must be
prosecuted and punished by the Government on its own motion, though
complete reparation should have been made of the damages suffered by
the offended party. A criminal case 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. Moreover, a
compromise is not one of the grounds prescribed by the Revised Penal
Code for the extinction of criminal liability.
On the other hand, malicious prosecution has been defined as an
action for damages brought by or against whom a criminal prosecution,
civil suit or other legal proceeding has been instituted maliciously and
without probable cause, after the termination of such prosecution, suit, or
other proceeding in favor of the defendant therein. It is an established
rule that in order for malicious prosecution to prosper, the following
requisites must be proven by petitioner: (1) the fact of prosecution and
the further fact that the defendant (respondent) was himself the
prosecutor, and that the action finally terminated with an acquittal; (2)
that in bringing the action, the prosecutor acted without probable cause;
and (3) that the prosecutor was actuated or impelled by legal malice, that
is, by improper or sinister motive. The foregoing are necessary to
preserve a persons right to litigate which may be emasculated by the
undue
filing
of
malicious
prosecution
cases.
From the foregoing requirements, it can be inferred that malice and
want of probable cause must both be clearly established to justify an
award of damages based on malicious prosecution. DLPC was not
motivated by malicious intent or by a sinister design to unduly harass
petitioner, but only by a well-founded anxiety to protect its rights.
ISSUE:
ULPA CRIMINAL
RULING:
To constitute malicious prosecution, there must be proof that the
prosecution was prompted by a sinister design to vex or humiliate a
person, and that it was initiated deliberately by the defendant knowing
that his charges were false and groundless. Concededly, the mere act of
submitting a case to the authorities for prosecution does not make one
liable for malicious prosecution.
In this case, the records show that the sale of the property was
evidenced by a deed of sale duly notarized and registered with the local
Register of Deeds. After the execution of the deed of sale, the property
was surveyed and divided into two portions. Separate titles were then
issued in the names of Yasoa and Jovencio. Since 1973, Jovencio had
been paying the realty taxes of the portion registered in his name. In
1974, Aurea even requested Jovencio to use his portion as bond for the
temporary release of her son who was charged with malicious mischief.
Also, when Aurea borrowed money from the Rural Bank of Lumban in
1973 and the PNB in 1979, only her portion was mortgaged.
All these pieces of evidence indicate that Aurea had long acknowledged
Jovencios ownership of half of the property. Furthermore, it was only in
1993 when petitioners decided to file the estafa complaint against
respondents. If petitioners had honestly believed that they still owned the
entire property, it would not have taken them 22 years to question
Jovencios ownership of half of the property.
Malicious prosecution, both in criminal and civil cases, requires the
elements of (1) malice and (2) absence of probable cause.These two
elements are present in the present controversy. The complaint for estafa
was dismissed outright as the prosecutor did not find any probable cause
against respondents. A suit for malicious prosecution will prosper where
legal prosecution is carried out without probable cause.
FACTS:
As part of the Special Counter Insurgency Operation Unit Training held at
Camp Damilag, Manolo Fortich, Bukidnon, several members of the Philippine
National Police were undergoing an endurance run on October 5, 1995 which
started at 2:20 am. The PNP trainees were divided into three columns and were
wearing black t-shirts, bl;ack short pants, and green and black combat shoes.
There were two rear guards assigned to each rear column. Their duty was to jog
backwards facing the oncoming vehicles and give hand signals for other
vehicles. From Alae to Maitum Highway, Puerto, Cagayan de Oro City, about 20
vehicles passed them, all of which slowed down and took the left portion of the
road when signaled to do so.
While they were negotiating Maitum Highway, they saw an Isuzu Elf truck
coming at high speed towards them. The vehicle lights were in the high beam.
At a distance of 100 meters, the rear security guards started waving their hands
for the vehicle to take the other side of the road, but the vehicle just kept its
speed, apparently ignoring their signals and coming closer and closer to them.
The rear guards told their co-trainees to retract. The guards jumped in
different directions. They saw their co-trainees being hit by the said vehicle,
falling like dominoes one after the other. Some were thrown, and others were
overrun by the vehicle. The driver, Glenn de los Santos did not reduce his speed
even after hitting the first and second columns.
After arraignment and trial, the court convicted accused-appellant guilty
of complex crime of multiple murder, multiple frustrated murder and multiple
attempted murder, with the use of motor vehicle as the qualifying circumstance.
ISSUE:
Whether or not the incident was a product of a malicious intent on the
part of accused-appellant
RULING:
The Supreme Court held that the incident, tragic though it was in the light
of the number of persons killed and seriously injured, was an accident than of a
malicious intent on Glenns part. Glenn showed an inexcusable lack of
precaution. Since the place of the incident was foggy and dark, he should have
observed due care in accordance with the conduct of a reasonably prudent man,
such as by slackening his speed, applying his brakes, or turning to the left side
even if it would mean entering the opposite lane.
Wherefore, the Supreme Court convicted Glenn de Los Santos of one
complex crime of reckless imprudence resulting in multiple homicide with
serious physical injuries and less serious physical injuries and sentenced him to
suffer an indeterminate penalty of four years of prision correccional, as
minimum, to 10 years of prision mayor, as maximum; and 10 counts of reckless
imprudence resulting in slight physical injuries and sentenced for each count, to
the penalty of 2 months of arresto mayor. The awards of death indemnity for
each group of heirs of trainees are reduced to P50,000, and the awards in favor
of other victims are deleted.
but he subsequently instructed his banker not to give due course to his
application for a letter of credit and that for reasons only known to the
defendant, he fails and refuses to open the necessary letter of credit to cover
payment of the goods ordered by him. After some time, herein defendant failed
to comply with his obligation, and several demands were made by petitioner so
as to reinforce such contract, and even communicated if defendant would like to
rescind contract, but said defendant did not reply to such demands. The
defendant even used as a defense that the petitioner was delayed in delivering
the taximeters when the former was apprehended by U.S. Navy Exchange for not
complying with their agreement. As a consequence, petitioner filed a case
against the defendant but respondent judge dismissed such petition in a minute
order for lack of cause of action.
ISSUE:
Whether or not petitioner has a cause of action against the defendant for
the latters contravention of the terms of contract.
RULING:
Article 1170 of the Civil Code provides:
Those who in the performance of their obligation are guilty of fraud, negligence,
or delay, and those who in any manner contravene the tenor thereof are liable
for damages.
The phrase "in any manner contravene the tenor" of the obligation
includes any ilicit act or omission which impairs the strict and faithful fulfillment
of the obligation and every kind of defective performance. The damages which
the obligor is liable for includes not only the value of the loss suffered by the
obligee [dao emergente] but also the profits which the latter failed to obtain
[lucro cesante]. If the obligor acted in good faith, he shall be liable for those
damages that are the natural and probable consequences of the breach of the
obligation and which the parties have foreseen or could have reasonably
foreseen at the time the obligation was constituted; and in case of fraud, bad
faith, malice or wanton attitude, he shall be liable for all damages which may be
reasonably attributed to the non-performance of the obligation.
The same is true with respect to moral and exemplary damages. The
applicable legal provisions on the matter, Articles 2220 and 2232 of the Civil
Code, allow the award of such damages in breaches of contract where the
defendant acted in bad faith. To our mind, the complaint sufficiently alleges bad
faith on the part of the defendant. In fine, the Supreme Court held that on the
basis of the facts alleged in the complaint, the court could render a valid
judgment in accordance with the prayer thereof.
FACTS:
Eulalio Mistica, predecessor-in-interest of herein petitioner, is the owner of
the parcel of land which was leased to respondent Bernardinio Naguiat.
Mistica entered into a contract to sell with respondent over a portion of
the aforementioned lot containing an area of 200 square meters.
This
agreement was reduced to writing in a document. Pursuant to said agreement,
respondent gave a down payment of P2,000. He made another partial payment
of P1,000 on February 8, 1980. He failed to make any payments thereafter.
Mistica died sometime in October 1986.
On December 4,1991, petitioner filed a complaint for rescission alleging,
among others that the failure and refusal of respondent to pay the balance of
the purchase price constitute a violation of the contract which established her to
rescind the same. That respondent have been in possession of the subject
matter, should be ordered to vacate and surrender possession of the same.
ISSUE:
Whether or not the Court of Appeals erred in the application of Article
1191 of the Civil Code, as it ruled that there is no breach of obligation in spite of
the lapse of their stipulated period and the failure of the respondent to pay.
RULING:
NO. The failure of respondent to pay the value of the purchase price
within ten (10) years from execution of the deed did not amount to a substantial
breach.
Co appealed to the Court of Appeals, which affirmed the decision of the RTC.
Hence, this appeal.
ISSUE:
Whether or not the Court of Appeals erred in ordering the Cos to return
the $30,000.00 paid by Custodio pursuant to the option granted to her.
RULING:
An option is a contract granting a privilege to buy or sell within an agreed
time and at a determined price. It is a separate and distinct contract from that
which the parties may enter into upon the consummation of the option. It must
be supported by consideration. However, the March 15, 1985 letter sent by the
COS through their lawyer to Custodio reveals that the parties entered into a
perfected contract of sale and not an option contract.
A contract of sale is a consensual contract and is perfected at the moment
there is a meeting of the minds upon the thing which is the object of the contract
and upon the price. From that moment the parties may reciprocally demand
performance subject to the provisions of the law governing the form of
contracts.
The elements of a valid contract of sale under Article 1458 of the Civil
Code are (1) consent or meeting of the minds; (2) determinate subject matter;
and (3) price certain in money or its equivalent. As evidenced by the March 15,
1985 letter, all three elements of a contract of sale are present in the transaction
between the petitioners and respondent. Custodios offer to purchase the Beata
property, subject of the sale at a price of $100,000.00 was accepted by the Cos.
Even the manner of payment of the price was set forth in the letter. Earnest
money in the amounts of US$1,000.00 and P40,000.00 was already received by
the Cos. Under Article 1482 of the Civil Code, earnest money given in a sale
transaction is considered part of the purchase price and proof of the perfection
of the sale.
Despite the fact that Custodios failure to pay the amounts of
US$40,000.00 and US$60,000.00 on or before December 4, 1984 and January 5,
1985 respectively was a breach of her obligation under Article 1191 of the Civil
Code, the Cos did not sue for either specific performance or rescission of the
contract. The Cos were of the mistaken belief that Custodio had lost her
option over the Beata property when she failed to pay the remaining balance
of $70,000.00 pursuant to their August 8, 1986 letter. In the absence of an
express stipulation authorizing the sellers to extrajudicially rescind the contract
of sale, the Cos cannot unilaterally and extrajudicially rescind the contract of
sale.
Accordingly, Custodio acted well within her rights when she attempted to
pay the remaining balance of $70,000.00 to complete the sum owed of
$100,000.00 as the contract was still subsisting at that time. When the Cos
refused to accept said payment and to deliver the Beata property, Custodio
immediately sued for the rescission of the contract of sale and prayed for the
return of the $30,000.00 she had initially paid.
Under Article 1385 of the Civil Code, rescission creates the obligation to
return the things, which were the object of the contract, but such rescission can
only be carried out when the one who demands rescission can return whatever
he may be obliged to restore. This principle has been applied to rescission of
reciprocal obligations under Article 1191 of the Civil Code. The Court of Appeals
therefore did not err in ordering the Cos to return the amount of $30,000.00 to
Custodio after ordering the rescission of the contract of sale over the property.
Since it has been shown that the appellee who was not in default, was
willing to perform part of the contract while the appellants were not, rescission
of the contract is in order. The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not comply with what is
incumbent upon him, (Article 1191, same Code).
Rescission creates the
obligation to return the things which were the object of the contract, together
with their fruits, and the price with its interest x x x x (Article 1385, same Code).
In the case at bar, the property involved has not been delivered to the
appellee. She has therefore nothing to return to the appellants. The price
received by the appellants has to be returned to the appellee as aptly ruled by
the lower court, for such is a consequence of rescission, which is to restore the
parties in their former situations.
Petition denied. Decision affirmed.
2.
3.
4.
5.
6.
7.
8.
9.
RULING:
The Court concluded that what was actually ceded and transferred was
only the use of the Mafran sauce formula. The fact that the trademark
"Mafran" was duly registered in the name of the petitioner pursuant to the
Bill of Assignment, standing by itself alone, to borrow the petitioner's
language, is not sufficient proof that the respondent Francisco was
supposedly obligated to transfer and cede to the petitioner the formula
for Mafran sauce and not merely its use. For the said respondent allowed
the petitioner to register the trademark for purposes merely of the
"marketing of said project."
FACTS:
The petitioner contends that (a) under the terms of the Bill of
Assignment, exh. A, the respondent Magdalo V. Francisco ceded and
transferred to the petitioner not only the right to the use of the formula
for Mafran sauce but also the formula itself, because this, allegedly, was
the intention of the parties; (b) that on the basis of the entire evidence on
record and as found by the trial court, the petitioner did not dismiss the
respondent Francisco because he was, and still is, a member of the board
of directors, a stockholder, and an officer of the petitioner corporation,
and that as such, had actual knowledge of the resumption of production
by the petitioner, but that despite such knowledge, he refused to report
back for work notwithstanding the petitioner's call for him to do so; (c)
that the private respondents are not entitled to rescind the Bill of
Assignment; and (d) that the evidence on record shows that the
respondent Francisco was the one not ready, willing and able to comply
with his obligations under the Bill of Assignment, in the sense that he not
only irregularly reported for work but also failed to assign, transfer and
convey to the petitioner of the said deed of conveyance.
ISSUE:
Whether respondent Francisco ceded to the petitioner merely the
use of the formula for Mafran sauce and not the formula itself.
In other words, the party who deems the contract violated may
consider it resolved or rescinded, and act accordingly, without previous
court action, but it proceeds at its own risk. For it is only the final
judgment of the corresponding court that will conclusively and finally
settle whether the action taken was or was not correct in law. But the law
definitely does not require that the contracting party who believes itself
injured must first file suit and wait for a judgment before taking
extrajudicial steps to protect its interest. Otherwise, the party injured by
the other's breach will have to passively sit and watch its damages
accumulate during the pendency of the suit until the final judgment of
rescission is rendered when the law itself requires that he should exercise
due diligence to minimize its own damages.
refused on the ground that petitioners cannot use the premises until full
payment of the purchase price. Petitioners informed respondent that their
immediate use of the premises was absolutely necessary and that any delay will
cause them substantial damages. Respondent remained firm in her refusal, and
demanded that petitioners stop using the lots as a transloading station to
service the Victorias Milling Company unless they pay the full purchase price. In
a letter-reply dated April 5, 1991, petitioners assured respondent of their
readiness to pay the balance but reminded respondent of her obligation to
redeem the lots from mortgage with the Philippine National Bank (PNB).
Petitioners gave respondent ten (10) days within which to do so.
On April 10, 1991, respondent Administratrix wrote petitioners informing
them that the PNB had agreed to release the lots from mortgage. She demanded
payment of the balance of the purchase price. Enclosed with the demand letter
was the PNBs letter of approval dated April 8, 1991. Petitioners demanded that
respondent show the clean titles to the lots first before they pay the balance of
the purchase price. Respondent merely reiterated the demand for payment.
Petitioners stood pat on their demand.
On May 28, 1991, respondent Administratrix executed a Deed of
Rescission rescinding the MOA. In their Letter dated June 13, 1991, petitioners,
through counsel, formally demanded the production of the titles to the lots
before they pay the balance of the purchase price. The demand was ignored.
Consequently, on June 19, 1991, petitioners filed a complaint against
respondents for breach of contract, specific performance and damages before
the RTC-Bacolod City. The trial court decided the case in favor of respondents.
Petitioners filed a petition for review before the Court of Appeals. The Court of
Appeals affirmed the trial courts decision but deleted the award for moral
damages on the ground that petitioners were not guilty of bad faith in refusing
to pay the balance of the purchase price.
ISSUE:
Whether there is legal, or even a factual, ground for the rescission of the
Memorandum of Agreement.
RULING:
There is no legal basis for the rescission. The remedy of rescission under
Art. 1191 of the Civil Code is predicated on a breach of faith by the other party
that violates the reciprocity between them. The court have held in numerous
cases that the remedy does not apply to contracts to sell.
The records show that the lots were finally released from
mortgage in July 1991. Petitioners have always expressed readiness to
pay the balance of the purchase price once that is achieved. Hence,
petitioners should be allowed to pay the balance now, if they so desire,
since it is established that respondents demand for them to pay in April
1991 was premature. However, petitioners may not demand production
by the respondents of the titles to the lots as a condition for their
payment. It was not required under the MOA. The MOA merely states that
petitioners shall pay the balance upon approval by the PNB of the
release of the lots from mortgage. Petitioners may not add further
conditions now. Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good
faith.
ISSUE:
Whether or not the rescission of the contract by the private
respondent is valid.
RULING:
Under the contract, petitioner and respondent had respective
obligations, i.e., the former to supply and deliver the contracted volume of
narra wood parquet materials and install the same at respondents
condominium project by May, 1990, and the latter, to pay for said
materials in accordance with the terms of payment set out under the
parties agreement. But while respondent was able to fulfill that which is
incumbent upon it by making a downpayment representing 40% of the
agreed price upon the signing of the contract and even paid the first
billing of petitioner, the latter failed to comply with his contractual
commitment. For, after delivering only less than one-half of the
contracted materials, petitioner failed, by the end of the agreed period, to
deliver and install the remainder despite demands for him to do so. Thus,
it is petitioner who breached the contract.
to Buy and Sell whereby the former agreed to sell 1,000 hectares of the
property to the latter at a consideration of P3,000.00 per hectare or a
total of P3,000,000.00.
Lauro Leviste, a stockholder and member of the Board of Directors
of El Dorado, called the attention of the Board to Carrascosos failure to
pay the balance of the purchase price of the property amounting to
P1,300,000.00. Lauros desire to rescind the sale was reiterated in two
other letters addressed to the Board. Jose P. Leviste, as President of El
Dorado, later sent a letter of February 21, 1977 to Carrascoso informing
him that in view of his failure to pay the balance of the purchase price of
the property, El Dorado was seeking the rescission of the March 23, 1972
Deed of Sale of Real Property. For the failure of Carrascoso to give his
reply, Lauro and El Dorado finally filed a complaint for rescission of the
Deed of Sale. They also sought the cancellation of TCT No. T-6055 in the
name of Carrascoso and the revival of TCT No. T-93 in the name of El
Dorado, free from any liens and encumbrances.
In the meantime, Carrascoso, as vendor and PLDT, as vendee
forged on April 6, 1977 a Deed of Absolute Sale over the 1,000 hectare
portion of the property subject of their July 11, 1975 Agreement to Buy
and Sell. In turn, PLDT, by Deed of Absolute Sale conveyed the aforesaid
1,000 hectare portion of the property to its subsidiary, PLDT Agricultural
Corporation (PLDTAC), for a consideration of P3,000,000.00, the amount
of P2,620,000.00 of which was payable to PLDT upon signing of said
Deed, and P380,000.00 to Carrascoso upon issuance of title to PLDTAC.
On July 31, 1978, PLDT and PLDTAC filed an Urgent Motion for
Intervention which was granted by the trial court. PLDT and PLDTAC
thereupon filed their Answer In Intervention with Compulsory
Counterclaim and Crossclaim against Carrascoso. The RTC dismissed the
complaint. Carrascoso, PLDT and PLDTAC filed their respective appeals to
the Court of Appeals. The appellate court reversed the decision of the
trial court. Thereafter, different motions and actions were done by both
parties.
ISSUE:
Whether or not the rescission is valid.
RULING:
The right of rescission of a party to an obligation under Article 1191
is predicated on a breach of faith by the other party who violates the
reciprocity between them.
A contract of sale is a reciprocal obligation. The seller obligates
itself to transfer the ownership of and deliver a determinate thing, and
the buyer obligates itself to pay therefor a price certain in money or its
equivalent. The non-payment of the price by the buyer is a resolutory
condition which extinguishes the transaction that for a time existed, and
discharges the obligations created thereunder. Such failure to pay the
price in the manner prescribed by the contract of sale entitles the unpaid
seller to sue for collection or to rescind the contract.
In the case at bar, El Dorado already performed its obligation
through the execution of the March 23, 1972 Deed of Sale of Real
Property which effectively transferred ownership of the property to
Carrascoso. The latter, on the other hand, failed to perform his
correlative obligation of paying in full the contract price in the manner
and within the period agreed upon.
The terms of the Deed are clear and unequivocal: Carrascoso was
to pay the balance of the purchase price of the property amounting to
P1,300,000.00 plus interest thereon at the rate of 10% per annum within
a period of three (3) years from the signing of the contract on March 23,
1972. When Jose Leviste informed him that El Dorado was seeking
rescission of the contract by letter of February 21, 1977, the period given
to him within which to fully satisfy his obligation had long lapsed.
The El Dorado Board Resolution and the Affidavit of Jose Leviste
interposing no objection to Carrascosos mortgaging of the property to
any bank did not have the effect of suspending the period to fully pay the
purchase price, as expressly stipulated in the Deed, pending full payment
of any mortgage obligation of Carrascoso.
PLDT cannot shield itself from the notice of lis pendens because all that it
had at the time of its inscription was an Agreement to Buy and Sell with
Carrascoso, which in effect is a mere contract to sell that did not pass to
it the ownership of the property. Ownership was retained by Carrascoso
which El Dorado may very well recover through its action for rescission.
The appellate courts decision ordering the rescission of the March 23,
1972 Deed of Sale of Real Property between El Dorado and Carrascoso
being in order, mutual restitution follows to put back the parties to their
original situation prior to the consummation of the contract. Between
Carrascoso and PLDT/PLDTAC, the former acted in bad faith while the
latter acted in good faith. This is so because it was Carrascosos refusal
to pay his just debt to El Dorado that caused PLDT/PLDTAC to suffer
pecuniary losses. Therefore, Carrascoso should return to PLDT/PLDTAC
the P3,000,000.00 price of the farm plus legal interest from receipt
thereof until paid.
The exercise of the power to rescind extinguishes the obligatory
relation as if it had never been created, the extinction having a
retroactive effect. The rescission is equivalent to invalidating and
unmaking the juridical tie, leaving things in their status before the
celebration of the contract.
Where a contract is rescinded, it is the duty of the court to require
both parties to surrender that which they have respectively received and
to place each other as far as practicable in his original situation, the
rescission has the effect of abrogating the contract in all parts.
The April 6, 1977 and May 30, 1977 Deeds of Absolute Sale being
subject to the notice of lis pendens, and as the Court affirms the
declaration by the appellate court of the rescission of the Deed of Sale
executed by El Dorado in favor of Carrascoso, possession of the 1,000
hectare portion of the property should be turned over by PLDT to El
Dorado.
As regards the improvements introduced by PLDT on the 1,000
hectare portion of the property, a distinction should be made between
those which it built prior to the annotation of the notice of lis pendens
and those which it introduced subsequent thereto.
WHEREFORE, the petitions are DENIED.
EFFECTS OF RESOLUTION/RESCISSION
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being offered for sale. They told Niceta the ticket probably covered
jewelry once owned by the latter which jewelry had been pawned by one
Josefina Rocco. Suspecting that it was the same jewelry she had sold to
petitioner, Niceta informed the latter of this offer and suggested that
petitioner go to the Long Life pawnshop to check the matter out.
Petitioner claims she went to private respondent pawnshop, verified that
indeed her missing jewelry was pledged there and told Yu An Kiong not to
permit anyone to redeem the jewelry because she was the lawful owner
thereof. Petitioner claims that Yu An Kiong agreed.
On 9 July 1968, petitioner went to the Manila Police Department to
report the loss, and a complaint first for qualified theft and later changed
to estafa was subsequently filed against Josefina Rocco. Thereafter, a
member of the Manila Police went to the pawnshop, showed Yu An Kiong
petitioner's report and left the latter a note asking him to hold the jewelry
and notify the police in case someone should redeem the same. However,
the next day, Yu An Kiong permitted one Tomasa de Leon, exhibiting the
appropriate pawnshop ticket, to redeem the jewelry.
On 4 October 1968, petitioner filed a complaint for damages against
private respondent Long Life for failure to hold the jewelry and for
allowing its redemption without first notifying petitioner or the police.
Hon. Luis B. Reyes, rendered a decision in favor of petitioner. The decision
was however reversed on appeal and the complaint dismissed by the
public respondent Court of Appeals.
21 of the Civil Code. The circumstance that the pawn ticket stated that
the pawn was redeemable by the bearer, did not dissolve that duty. The
pawn ticket was not a negotiable instrument under the Negotiable
Instruments Law nor a negotiable document of title under Articles 1507 et
seq. of the Civil Code. If the third person Tomasa de Leon, who redeemed
the things pledged a day after petitioner and the police had notified Long
Life, claimed to be owner thereof, the prudent recourse of the pawnbroker
was to file an interpleader suit, impleading both petitioner and Tomasa de
Leon. The respondent pawnbroker was, of course, entitled to demand
payment of the loan extended on the security of the pledge before
surrendering the jewelry, upon the assumption that it had given the loan
in good faith and was not a "fence" for stolen articles and had not
conspired with the faithless Josefina Rocco or with Tomasa de Leon.
Respondent pawnbroker acted in reckless disregard of that duty in
the instant case and must bear the consequences, without prejudice to its
right to recover damages from Josefina Rocco. Hence, the trial court
correctly held that private respondent was liable to petitioner for actual
damages which corresponded to the difference in the value of the jewelry
and the amount of the loan, or the sum of P26,500.00. Petitioner is
entitled to collect the balance of the value of the jewelry, corresponding
to the amount of the loan, in an appropriate action against Josefina Rocco.
Private respondent Long Life in turn is entitled to seek reimbursement
from Josefina Rocco of the amount of the damages it must pay to
petitioner.
EFFECTS OF RESOLUTION/RESCISSION
ISSUE:
Whether or not the Court of Appeals committed reversible error in
rendering its Decision.
RULING:
Having been notified by petitioner and the police that jewelry
pawned to it was either stolen or involved in an embezzlement of the
proceeds of the pledge, private respondent pawnbroker became duty
bound to hold the things pledged and to give notice to petitioner and the
police of any effort to redeem them. Such a duty was imposed by Article
PERLA PALMA GIL, VICENTE HIZON, JR., and ANGEL PALMA GIL
VS. HON. COURT OF APPEALS, HEIRS OF EMILIO MATULAC, CONSTANCIO
MAGLANA, AGAPITO PACETES & The REGISTER OF DEEDS OF DAVAO
CITY
G.R. No. 127206
September 12, 2003
411 SCRA 19
FACTS:
Concepcion Palma Gil, and her sister, Nieves Palma Gil, married to Angel
Villarica, were the co-owners of a parcel of commercial land with an area of 829
square meters in Davao City. The spouses Angel and Nieves Villarica had
constructed a two-storey commercial building on the property.
On October 13, 1953, Concepcion filed a complaint against her sister
Nieves with the then Court of First Instance of Davao City for specific
performance, to compel the defendant to cede and deliver to her an undivided
portion of the said property with an area of 256.2 square meters. After due
proceedings, the court rendered judgment on April 7, 1954 in favor of
Concepcion, ordering the defendant to deliver to the plaintiff an undivided
portion of the said property with an area of 256.2 square meters.
Nieves appealed to the Court of Appeals which affirmed the assailed
decision. The court issued a writ of execution. Nieves, however, refused to
execute the requisite deed in favor of her sister.
On April 27, 1956, the court issued an order authorizing ex-officio Sheriff
Eriberto Unson to execute the requisite deed of transfer to the plaintiff over an
undivided portion of the property with a total area of 256.2 square meters.
Instead of doing so, the sheriff had the property subdivided into four lots namely,
Lot 59-C-1, with an area of 218 square meters; Lot 59-C-2, with an area of 38
square meters; Lot 59-C-3, with an area of 14 square meters; and Lot 59-C-4,
with an area of 560 square meters, all covered by a subdivision plan. The sheriff
thereafter executed a Deed of Transfer to Concepcion over Lot 59-C-1 and Lot
59-C-2 with a total area of 256.2 square meters.
On October 24, 1956, Concepcion executed a deed of absolute sale over
Lot 59-C-1 in favor of Iluminada Pacetes for a purchase price of P21,600.00 upon
which P7,500.00 is to be paid upon signing of the contract and the balance of
P14,100.00 to be paid upon delivery of the Title. On March 16, 1966, spouses
Iluminada Pacetes and Agapito Pacetes executed a deed of absolute sale over
the disputed lots in favor Constancio Maglana. And on April 22, 1980, Maglana
ewecuted a deed of sale in favor of Emilio Matulac for the purchase price of
P150,000.00.
And on August 4, 1959, Concepcion died, leaving all her
obligations to her heirs including the petitioners.
On June 11, 1993, the trial court rendered judgment in favor of the
defendants. The trial court ruled that this Court had affirmed, in G.R. No. 85538
and G.R. No. L-60690, the sales of the property from Concepcion Palma Gil to
Iluminada Pacetes, then to Constancio Maglana and to Emilio Matulac; hence,
the trial court was barred by the rulings of the Court. The plaintiffs appealed to
the Court of Appeals which affirmed the latters decision.
ISSUE:
Whether or not the trial court erred in not declaring the sale of the
properties in question from Iluminada Pacetes to Constancio Maglana, thence,
from Constancio Maglana to Emilio Matulac NULL and VOID for there was delay
incurred by Concepcion in not delivering the Title of the subject lands to Pacetes.
RULING:
Article 1191 in tandem with Article 1592 of the New Civil Code are central
to the issues at bar. Under the last paragraph of Article 1169 of the New Civil
Code, in reciprocal obligations, neither party incurs in delay if the other does not
comply or is not ready to comply in a proper manner with what is incumbent
upon him.
From the moment one of the parties fulfills his obligation, delay in the
other begins. Thus, reciprocal obligations are to be performed simultaneously so
that the performance of one is conditioned upon the simultaneous fulfillment of
the other. The right of rescission of a party to an obligation under Article 1191
of the New Civil Code is predicated on a breach of faith by the other party that
violates the reciprocity between them.
The petitioners therefore, as successors-in-interest of the vendor, are not
the injured parties entitled to a rescission of the deed of absolute sale. It was
Concepcions heirs, including the petitioners, who were obliged to deliver to the
vendee a certificate of title over the property under the latters name, free from
all liens and encumbrances within 120 days from the execution of the deed of
absolute sale on October 24, 1956, but had failed to comply with the obligation.
Furthermore, the consignation by the vendee of the purchase price of the
property is sufficient to defeat the right of the petitioners to demand for a
rescission of the said deed of absolute sale.
The petition for review was denied for lack of merit.
EFFECTS OF RESOLUTION/RESCISSION
SERRANO VS. COURT OF APPEALS
417 SCRA 415
FACTS
Petitioners spouses Arturo and Niceta Serrano are the owners of the
parcel of land and the house constructed thereon located in Quezon City and a
parcel of land located in Quezon City. The couple mortgaged said properties in
favor of Government Service Insurance System (GSIS) for a security loan of
P50,000. They were able to pay P18,000 on 1969. On the same year, the
spouses Serrano as vendors and respondents spouses Emilio and Evelyn Geli as
vendees executed a deed of absolute sale with partial assumption of the
mortgage for the price of P70,000. Spouses Geli paid the amount of P38,000
and the balance of P32,000 to be paid to GSIS. Emilio Geli and his children,
respondents herein, failed to settle the amount to the GSIS.
Petitioners filed a complaint for the rescission of the deed of absolute sale
with partial assumption of mortgage on September 6, 1984. The trial court
rendered a decision ordering rescission of the deed. Emilio and petitioners
appealed the decision to the Court of Appeals (CA). The GSIS foreclosed the
mortgage during the pendency of the appeal. A certificate of sale over the
property was issued in favor of the GSIS it being the highest bidder.
In 1987, Emilio paid the redemption price of P67,701.84 to GSIS.
Accordingly, the GSIS executed a deed of transfer and turned over to Emilio the
transfer certificate title (TCT) without informing Serrano and the CA. In 1991,
the CA dismissed Emilio and petitioners appeal for failure to pay the requisite
docket fees which became final and executory.
On February 15, 1994, the court granted the motion for execution of the
trial courts September 6, 1984 decision upon the motion of the petitioners
which was not implemented. Defendant filed a motion to quash on September 6,
1996 claming for the first time that he had redeemed the said properties from
GSIS in 1988 which was denied by the court.
The trial court issued an alias writ of execution upon issuance of order
granting petitioners motion. The petitioners filed with the CA a petition for
certiorari and/or prohibition praying for the nullification of the trial court orders.
CA issued an order restraining the implementation of the alias writ of execution
and the notice to vacate issued by the trial court. CA on May 12, 1998 granted
the respondents motion.
ISSUE:
Whether or not the trial courts September 6, 1984 judgment ordering the
rescission of the deed of absolute sale with partial assumption of mortgage
executed by petitioners and respondents is proper.
RULING:
YES. The payment by Emilio of the redemption price to the GSIS was
made pending appeal by the respondents from the trial courts order and
concealed said payment to petitioners. The respondents appealed the decision
before the CA which was subsequently dismissed for failure to pay the requisite
docket fees. Neither did respondents file any motion for reconsideration for the
dismissal of the appeal. Consequently, the trial courts decision became final
and executory.
With the rescission of the deed of sale, the rights of Emilio Geli under said
deed to redeem the property had been extinguished. The petitioners cannot
even be compelled to subrogate the respondents to their right under the real
estate mortgage over the property which the petitioners executed in favor of
GSIS since the payment of the redemption price was made without the
knowledge of the petitioners. The respondents, however, are entitled to be
reimbursed by the petitioners to the extent that the latter were benefited.
In sum, respondents are obliged to vacate the subject property. The
decision of the CA is reversed and set aside. The petitioners are obliged to
return the amount of P67,701.04 to be deducted from the amount due the
petitioners under said trial courts decision.
EFFECTS OF RESOLUTION/RESCISSION
REYES VS. LIM
G. R. No. 134241
August 11, 2003
408 SCRA 560
FACTS:
Petitioner David Reyes, as seller, and Jose Lim, as buyer, entered into a
contract to sell a parcel of land located along F.B. Harrison Street, Pasay City on
November 7, 1994. Harrison Lumber occupied the property as lessee with a
monthly rental of P35,000.00. The contract provided that the total consideration
for the purchase of the property is P28,000,000.00 and upon signing of the
contract, P10,000,000.00 should be paid as down payment. The balance of
P18,000,000.00 shall be paid at a bank designated by the buyer but upon the
complete vacation of all the tenants or occupants of the property. The contract
also provided that in the event, the tenants or occupants of the premises shall
not vacate the premises on March 8, 1995, the vendee shall withhold the
payment of the balance of P18,000,000.00 and the vendor agrees to pay a
penalty of 4% per month to the vendee based on the down payment of
P10,000,000.00 until the complete vacation of the premises by the tenants.
Petitioner claimed that he had informed Harrison Lumber to vacate the
property before the end of January 1995. Reyes also informed Chuy Cheng Keng
and Harrison Lumber that if they failed to vacate by March 8, 1995, he would
hold them liable for the penalty of P400,000.00 a month as provided in the
contract to sell. His complaint also alleged that Lim connived with Harrison
Lumber not to vacate the property until the P400,000.00 monthly penalty would
have accumulated and equaled the unpaid purchase price of P18,000,000.00.
Keng and Harrison Lumber denied that Lim had connived with them.
Harrison Lumber alleged that Reyes approved their request for an extension of
time to vacate the property and that as of March 1995, it had already started
transferring some of its merchandise to its new business location in Malabon.
On the other hand, Lim filed his Answer stating that he was ready and
willing to pay the balance of the purchase price on or before March 8, 1995. Lim
requested a meeting with Reyes through the latters daughter but Reyes kept
postponing them. On March 9, 1995, Reyes offered to return the P10 million
down payment to Lim because Reyes was having problems in removing the
lessee from the property. Lim rejected Reyes offer and proceeded to verify the
status of Reyes title to the property. He learned that Reyes had already sold
the property to Line One Foods Corporation on March 1, 1995 for P16,782,480.
Lim also denied conniving with Keng and Harrison Lumber.
On November 2, 1995, Reyes filed a Motion for Leave to File Amended
Complaint due to the filing by Lim of a complaint for estafa against Reyes as well
as an action for specific performance and nullification of sale and title plus
damages before another trial court.
Meanwhile, Lim prayed for the cancellation of the Contract to Sell and for
the issuance of writ of preliminary attachment against Reyes but the court
denied the writ. Lim requested on March 6, 1997 in open court that Reyes be
ordered to deposit the P10 million down payment with the cashier of the trial
court and the court granted this motion.
The trial court denied Reyes motion to set aside the order dated March 6,
1997. On October 3, 1997, the court denied Reyes motion for reconsideration
and ordered Reyes to deposit the P10 million down payment on or before
October 30, 1997. Reyes file a petition for certiorari with the Court of Appeals
but the appellate court dismissed the petition for lack of merit.
ISSUE:
Whether or not the petitioner should deposit the P10 million down
payment to the custody of the trial court as an effect of rescission of the
Contract to Sell
RULING:
The Supreme Court held that an action for rescission could prosper only if
the party demanding rescission can return whatever he may be obliged to
restore should the court grant the rescission. The trial court in the exercise of its
equity jurisdiction may validly order the deposit of P10 million down payment in
court. The purpose of the exercise of equity jurisdiction in this case is to prevent
unjust enrichment and to ensure restitution. Reyes is seeking rescission of the
Contract to Sell.
To subscribe top Reyes contention will unjustly enrich Reyes at the
expense of Lim. Reyes sold to Line One Foods Corporation the property. Reyes
cannot claim ownership of the P10 million down payment because Reyes had
already sold to another buyer the property for which Lim made the down
payment. The Supreme Court find the equities weigh heavily in favor of Lim,
who paid the P10 million down payment in good faith only to discover later that
Reyes had subsequently sold the property to another buyer.
Hence, the appealed decision of the appellate court is affirmed and the
petition is dismissed.
EFFECTS OF RESOLUTION/RESCISSION
ONG YONG, JUANITA TAN ONG, WILSON T. ONG, ANNA L. ONG, WILLIAM
T. ONG, WILLIE T. ONG, And JULIE ONG ALONZO, petitioners, VS. DAVID
S. TIU, CELY Y. TIU, MOLY YU GAW, BELEN SEE YU, D. TERENCE Y. TIU,
ISSUE:
Whether Court of Appeals erred in ruling that the Pre-Subscription
Agreement of the parties may be rescinded under Article 1191 of the New Civil
Code.
RULING:
No. The Court of Appeals did not err in ruling that the "Pre-Subscription
Agreement" of the parties dated August 15, 1994 may be rescinded under Article
1191 of the New Civil Code.The Ongs illustrate reciprocity in the following
manner: In a contract of sale, the correlative duty of the obligation of the seller
to deliver the property is the obligation of the buyer to pay the agreed price. In
the case at bar, the correlative obligation of the Tius to let the Ongs have and
exercise the functions of the positions of President and Secretary is the
obligation of the Ongs to let the Tius have and exercise the functions of VicePresident and Treasurer. Moreover, the Ongs are now estopped from denying
the applicability of Art. 1191 to the present controversy. the Ongs allege that
rescission is applicable only to reciprocal obligations and the "Pre-Subscription
Agreement" does not provide for reciprocity, hence, the remedy of rescission is
not available.
The Ongs cited the case of Songcuan vs. IAC, to illustrate their point
that "As in the Songcuan case, there are here two (2) separate and distinct
obligations each independent of the other the obligation to subscribe to, and to
pay, 50% of the increased capital stock of FLADC; and the obligation to install
the Ongs and the Tius as members of the Board of Directors and to certain
corporate positions, but only after the Ongs and the Tius have subscribed each
to 50% of the increased capital stock of FLADC." In this petition, in lieu of Art.
1191, the Ongs invoke Articles 1156 and 1159 of the New Civil Code which state
"Art. 1156.
"Art. 1159. Obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith."
and that should there be any violation, those who failed to fulfill their obligations
should be required to perform their obligations under the agreement.Contrary to
the Ongs' assertion, the Songcuan case does not apply squarely to this case.
In the Songcuan case, the Court ruled that Art. 1191 to rescind the right of
the Alviars to repurchase does not apply because their corresponding obligations
can hardly be called reciprocal because the obligation of the Alviars to lease to
Songcuan the subject premise arises only after the latter had reconveyed the
realties to them. On the other hand, in the instant case, the obligations of the
two (2) groups to pay 50% of the increased capital stock of FLADC and to install
them as members of the Board of Directors and to certain corporate positions
are simultaneous and arise upon the execution of the pre-subscription
agreement.
The Ongs illustrate reciprocity in the following manner: In a contract of
sale, the correlative duty of the obligation of the seller to deliver the property is
the obligation of the buyer to pay the agreed price. In the case at bar, the
correlative obligation of the Tius to let the Ongs have and exercise the functions
of the positions of President and Secretary is the obligation of the Ongs to let the
Tius have and exercise the functions of Vice-President and Treasurer.
EFFECTS OF RESOLUTION/RESCISSION
EQUATORIAL REALTY DEVELOPMENT, INC. VS. MAYFAIR THEATER, INC.
GR No. 133879
November 21, 2001
FACTS:
In June 1967, Carmelo & Bauerman, Inc. entered into a Contract of Lease
with Mayfair Theater for a parcel of land with 2-storey building for 20 years. Two
years later in March, 1969, Carmelo entered into a second Contract with Mayfair
for another portion of the property also for 20 years. In both contracts, Mayfair
was given the right-of-first refusal to purchase the properties. However, on July
30, 1978, within the 20-year period, Carmelo sold the same properties to
Equatorial for P11,300,000. Mayfair sued Equatorial for specific performance
and annulment of the Deed of Absolute Sate with Carmelo. The trial court ruled
in favor of Mayfair but was reversed by the CA. The Supreme Court, however,
upheld the trial court, for which Mayfair filed a motion for execution. The Deed
of Absolute Sale was rescinded and the lot was registered in the name of
Mayfair.
However, in September 1997, Equatorial filed a collection suit for a sum of
money against Mayfair claiming payment of rentals or reasonable compensation
for the use of the properties AFTER its lease contracts had expired. The trial
court ruled in favor Mayfair holding that the Deed of Absolute Sale in the mother
case DID NOT confer on Equatorial any vested or residual property rights.
Hence, the present case.
ISSUES:
1.
Did Equatorial obtain rights to the property when it entered into Deed
of Absolute Sale with Carmelo and hence, entitled to the fruits thereof?
2.
Is the right of first refusal granted to Mayfair through the lease contracts
with Carmelo superior to that of Equatorial, and therefore a bar to the
consummation of the Deed of Absolute Sale between Carmelo and
Equatorial?
RULING:
1. No. Equatorial did not obtain right of ownership over the property
when it entered into the Deed of Absolute Sale. Ownership of the
property which the buyer acquires only upon the delivery of the thing
to him. There is delivery if the thing sold is placed in the control and
possession of the vendee. While the execution of a public instrument
of sale is recognized by law as the equivalent of delivery of the thing
sold, such constructive or symbolic delivery, being only presumptive, is
deemed negated by the failure of the vendee to take actual possession
of the property sold. Since Mayfair was in actual possession of the
property by virtue of the lease contract with Carmelo, there was no
consummation of the sale, and therefore, Equatorial did not get
ownership right (real right).
2. The Deed of Absolute Sale entered into by Carmelo and Equatorial was
a violation of the right of first refusal granted by Carmelo to Mayfair.
The execution of the deed of absolute sale as a form of constructive
delivery is a legal fiction. It holds true only if there is no legal
impediment that may prevent the passing of the property from the
vendor to the vendee. The right of first refusal held by Mayfair was
such legal impediment. Therefore, there was no transfer of ownership
from Camelot to Equatorial.
Dissenting opinion:
The Deed of Absolute Sale was deemed a rescissible contract and should
remain valid until rescinded. Since the Deed was not actually rescinded in the
decision of the mother case, then it was valid until it is rescinded in a proper
court decision. Since there was no actual rescission of the contract, then
Equatorial was deemed the own of the property from the signing of the Deed to
the time the property was legally transferred to Mayfair.
EFFECTS OF RESOLUTION/RESCISSION
Spouses MARIANO Z. VELARDE and AVELINA D. VELARDE
VS. COURT OF APPEALS, DAVID A. RAYMUNDO and GEORGE RAYMUNDO
2001 Jul 11
G.R. No. 108346
FACTS:
David Raymundo is the absolute and registered owner of a parcel of land,
together with the house and other improvements thereon, located at 1918
Kamias St., Dasmarias Village, Makati and covered by TCT No. 142177.
Defendant George Raymundo is Davids father who negotiated with plaintiffs
Avelina and Mariano Velarde for the sale of said property, which was, however,
under lease.
On August 8, 1986, a Deed of Sale with Assumption of Mortgage was
executed by defendant David Raymundo, as vendor, in favor of plaintiff Avelina
Velarde, as vendee, with terms and conditions one of which is:
That as part of the consideration of this sale, the VENDEE hereby assumes to
pay the mortgage obligations on the property herein sold in the amount of ONE
MILLION EIGHT HUNDRED THOUSAND PESOS (P1,800,000.00), Philippine
currency, in favor of Bank of the Philippine Islands, in the name of the VENDOR,
and further agrees to strictly and faithfully comply with all the terms and
conditions appearing in the Real Estate Mortgage signed and executed by the
VENDOR in favor of BPI, including interests and other charges for late payment
levied by the Bank, as if the same were originally signed and executed by the
VENDEE.
The Vendee herby agreed that until such time as her assumption of the
mortgage obligations on the property purchased is approved by the mortgagee
bank, the Bank of the Philippine Islands, she shall continue to pay the said loan
in accordance with the terms and conditions of the Deed of Real Estate Mortgage
in the name of Mr. David A. Raymundo, the original Mortgagor. And further
agrees That, in the event there is violation in any of the terms and conditions of
the said Deed of Real Estate Mortgage, that the downpayment of P800,000.00,
plus all payments made with the Bank of the Philippine Islands on the mortgage
RULING:
The right of rescission of a party to an obligation under Article 1191 of the
Civil Code is predicated on a breach of faith by the other party who violates the
reciprocity between them. The breach contemplated in the said provision is the
obligors failure to comply with an existing obligation. When the obligor cannot
comply with what is incumbent upon it, the obligee may seek rescission and, in
the absence of any just cause for the court to determine the period of
compliance, the court shall decree the rescission.
In the present case, private respondents validly exercised their right to
rescind the contract, because of the failure of petitioners to comply with their
obligation to pay the balance of the purchase price. Indubitably, the latter
violated the very essence of reciprocity in the contract of sale, a violation that
consequently gave rise to private respondents right to rescind the same in
accordance with law.
True, petitioners expressed their willingness to pay the balance of the
purchase price one month after it became due; however, this was not equivalent
to actual payment as would constitute a faithful compliance of their reciprocal
obligation. Moreover, the offer to pay was conditioned on the performance by
private respondents of additional burdens that had not been agreed upon in the
original contract. Thus, it cannot be said that the breach committed by
petitioners was merely slight or casual as would preclude the exercise of the
right to rescind.
In the instant case, the breach committed did not merely consist of a
slight delay in payment or an irregularity; such breach would not normally defeat
the intention of the parties to the contract. Here, petitioners not only failed to
pay the P1.8 million balance, but they also imposed upon private respondents
new obligations as preconditions to the performance of their own obligation. In
effect, the qualified offer to pay was a repudiation of an existing obligation,
which was legally due and demandable under the contract of sale. Hence,
private respondents were left with the legal option of seeking rescission to
protect their own interest.
EFFECTS OF RESOLUTION/RESCISSION
ASUNCION VS. EVANGELISTA
G.R. No. 133491
October 13, 1999
316 SCRA 848
FACTS:
Private respondent has been operating a piggery since 1970, which was
under the trade name of Embassy Farms. In 1981, private respondents wife,
together with three others, organized Embassy Farms, Inc. and registered it with
the Securirties and Exchange Commission. Private respondent was the majority
stockholder of the corporation, president and chief executive officer. On
September 9, 1980, he borrowed P500,000.00 from Paluwagan ng Bayan
Savings and Loan Association to use as working capital for the farm. He
executed a real estate mortgage on three of his properties as security for the
loan. On November 4, 1981, he mortgaged ten titles more in favor of PAIC
Savings and Mortgage Bank as security for another loan in the amount of
P1,712,000.00. On February 16, 1982, he obtained another loan in the amount of
P844,625.78 from Mercator Finance Corporation. It was secured by a real estate
mortgage on five other landholdings of private respondent, all situated in
Bulacan.
However, he defaulted in his loan payments. By June 1984, private
respondent debt had ballooned to almost six million pesos in overdue principal
payments, interests, penalties and other financial charges. On August 2, 1984,
petitioner and private respondent executed a Memorandum of Agreement that
states that petitioner will pay all of the loans of respondent provided that the
latter will transfer the title of the farm and properties, which were mortgaged in
favor of the petitioner.
The petitioner was able to pay partially the loans of respondent from the
three creditors as compliance to the MOA. For his part, private respondent was
obligated under the MOA to execute, sign, and deliver any and all documents
necessary for the transfer and conveyance of the mortgaged properties as well
as of the farm. However, more than a year after signing the MOA, the
landholdings of the respondent still remained titled in his name. Neither did he
inform said mortgages of the transfer of his lands.
On April 10, 1986, petitioner filed in the RTC a compliant for rescission of
the MOA with a prayer for damages. The trial court ruled in favor of the private
respondent. On July 12, 1994, a copy of the decision of the trial court was sent
by registered mail to petitioners counsel however, unknown to petitioner, his
counsel died while the case was pending. On February 2, 1998, CA affirmed the
decision of the trial court and ordered its immediate execution. Petitioners
motion for reconsideration was likewise denied.
ISSUE:
Whether or not rescission of the MOA is a valid remedy for the petitioner.
RULING:
Yes. Article 1191 of the Civil Code governs the situation where there is
non-compliance by one party in case of reciprocal obligations.
The Supreme Court found that private respondent failed to perform his
substantial obligations under the MOA. Hence, petitioner sought the rescission
of the agreement and ceased infusing capital into the piggery business of private
respondent. He later justified his refusal to execute any deed of sale and deliver
the certificates of stock by accusing petitioner of having failed to assume his
debts.
The Court holds that the respondents insistence that petitioner execute a
formal assumption of mortgage independent and separate from his own
execution of a deed of cases is legally untenable, considering that a recorded
real estate mortgage is a lien inseparable from the property mortgaged and until
discharged, it follows the property.
The Court holds, in fine, that the MOA entered into by petitioner and
private respondent should indeed be rescinded. The respondent appellate court
erred in assessing damages against petitioner for his refusal to fully pay private
respondents overdue loans. Such refusal was justified, considering that private
respondent was the first to refuse to deliver to petitioner the lands and
certificates of stock that were the consideration for the almost 6M in debt that
petitioner was to assume and pay.
The effect of rescission is also provided in Article 1385 of the Civil Code.
The instant petition was granted. Decisions of the lower and appellate
courts were reversed and set aside. The MOA entered into by the parties is
declared rescinded.
EFFECTS OF RESOLUTION/RESCISSION
Petitioners William Uy and Rodel Roxas are agents authorized to sell eight
(8) parcels of land by the owners thereof. By virtue of such authority, petitioners
offered to sell the lands, located in Tuba, Tadiangan, Benguet to respondent
National Housing Authority (NHA) to be utilized and developed as a housing
project.
On February 14, 1989, NHA approved the acquisition of the said parcels of
land with an area of 31.8231 hectares at the cost of P23.867 million, pursuant to
which the parties executed a series of Deeds of Absolute Sale covering the
subject lands. Of the eight parcels of lands, however, only five were paid for by
the NHA because of the report it received from the Land Geosciences Bureau of
the Department of Environment and Natural Resources that the remaining area
is located at an active landslide area and therefore, not suitable for development
into a housing project. NHA eventually cancelled the sale over the remaining
three (3) parcels of land.
On March 9, 1992, petitioners filed a complaint for damages. After trial,
the RTC of Quezon City rendered the cancellation of contract to be justified and
awarded P1.255 million as damages in favor of petitioners.
Upon appeal by petitioners, the Court of Appeals reversed the decision
and entered a new one dismissing the complaint including the award of
damages.
The motion for reconsideration having been denied, petitioners seek relief
from this court contending, inter alia, that the CA erred in declaring that NHA
had any legal basis to rescind the subject sale.
ISSUE:
Whether or not the contention of petitioner is correct.
RULING:
NO. Petitioners confuse the cancellation of the contract by the NHA as a
rescission of the contract under Article 1191 of the Civil Code. The right to
rescission is predicated on a breach of faith by the other party that violates the
reciprocity between them. The power to rescind is given to the injured party. In
this case, the NHA did not rescind the contract. Indeed, it did not have the right
to do so for the other parties to the contract, the vendors did not commit any
breach of their obligation. The NHA did not suffer any injury. The cancellation
was not therefore a rescission under Article 1191. Rather, it was based on the
negation of the cause arising from the realization that the lands, which were the
objects of the sale, were not suitable for housing.
On appeal, the decision was affirmed by the Court of Appeals, with the
modification that the award of attorneys fees was fixed at P50,000.00.
ISSUES:
1. Whether or not the CA erred in affirming the appealed decision of the
RTC granting P200,000.00 as moral damages which is double the P100,000.00
as prayed for by the private respondents in their complaint and in granting
actual damages not supported by official receipts and spent way beyond the
burial of the deceased victim.
2. Whether or not the affirmation by the CA of the appealed decision of
the RTC granting the award of moral and exemplary damages and attorneys
fees which were not proved and considering that there is no finding of bad faith
and gross negligence on the part of the petitioner was not established, is in
accord with law and jurisprudence.
RULING:
The Court found the appealed decision to be in order.
Article 2176 provides: Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual relation between
the parties, is called a quasi-delict and is governed by the provisions of this
Chapter. Article 2180 provides for the solidary liability of an employer for the
quasi-delict committed by an employee. The responsibility of employers for the
negligence of their employees in the performance of their duties is primary and,
therefore, the injured party may recover from the employers directly, regardless
of the solvency of their employees.
Employers may be relieved of responsibility for the negligent acts of their
employees acting within the scope of their assigned task only if they can show
that "they observed all the diligence of a good father of a family to prevent
damage." For this purpose, they have the burden of proving that they have
indeed exercised such diligence, both in the selection of the employee and in the
supervision of the performance of his duties.
In the selection of prospective employees, employers are required to
examine them as to their qualifications, experience and service records. With
EFFECTS OF RESOLUTION/RESCISSION
GOVERNMENT SERVICE INSURANCE SYSTEM
VS. SPOUSES GONZALO and MATILDE LABUNG-DEANG
G.R. No. 135644
September 17, 2001
365 SCRA 341
FACTS:
Sometime in December 1969, the spouses Deang obtained a housing loan
from the GSIS in the amount of eight thousand five hundred pesos (P8,500.00).
Under the agreement, the loan was to mature on December 23, 1979. The loan
was secured by a real estate mortgage constituted over the spouses property.
As required by the mortgage deed, the spouses Daeng deposited the owners
duplicate copy of the title with the GSIS.
On January 19, 1979, eleven (11) months before the maturity of the loan,
the spouses Deang settled their debt with the GSIS and requested for the release
of the owners duplicate copy of the title since they intended to secure a loan
from a private lender and use the land covered by it as collateral security for the
loan of fifty thousand pesos (P50,000.00) which they applied for with one
Milagros Runes. They would use the proceeds of the loan applied for the
renovation of the spouses residential house and for business.
However,
personnel of the GSIS were not able to release the owners duplicate of the title
as it could not be found despite diligent search.
Satisfied that the owners duplicate copy of the title was really lost, in
1979, GSIS commenced the reconstitution proceedings with the Court of First
Instance of Pampanga for the issuance of a new owners copy of the same.
On June 22, 1979, GSIS issued a certificate of release of mortgage. On
June 26, 1979, after the completion of judicial proceedings, GSIS finally secured
and released the reconstituted copy of the owners duplicate of Transfer
Certificate of Title No. 14926-R to the spouses Deang.
On July 6, 1979, the spouses Deang filed with the Court of First Instance,
Angeles City a complaint against GSIS for damages, claiming that as result of the
delay in releasing the duplicate copy of the owners title, they were unable to
secure a loan from Milagros Runes, the proceeds of which could have been used
in defraying the estimated cost of the renovation of their residential house and
which could have been invested in some profitable business undertaking.
The trial court rendered decision in favor of the spouses Labung-Deang.
The Court of Appeals also affirmed the decision of the lower court.
ISSUE:
Whether or not GSIS is liable for damages.
RULING:
Under the facts, there was a pre-existing contract between the parties.
GSIS and the spouses Deang had a loan agreement secured by a real estate
mortgage. The duty to return the owners duplicate copy of title arose as soon
as the mortgage was released. Negligence is obvious as the owners duplicate
copy could not be returned to the owners. Thus, GSIS is liable for damages.
EFFECTS OF RESOLUTION/RESCISSION
BPI INVESTMENT CORPORATION, petitioner,
VS. D. G. CARREON COMMERCIAL CORPORATION, DANIEL G. CARREON,
AURORA J. CARREON, AND JOSEFA M. JECIEL, respondents
2001 Nov 29
371 SCRA 58
FACTS:
Petitioner BPI Investment Corporation (BPI Investments), formerly known
as Ayala Investment and Development Corporation, was engaged in money
market operations. Respondent D. G. Commercial Corporation was a client of
petitioner and started its money market placements in September, 1978. The
individual respondents, spouses Daniel and Aurora Carreon and Josefa M. Jeceil
also placed with BPI Investments their personal money in money market
placements.
On April 21, 1982, BPI Investments wrote respondents Daniel Carreon and
Aurora Carreon, demanding the return of the overpayment of P410,937.09. The
respondents asserted that there was no overpayment and asked for time to look
for the papers. Upon the request of BPI Investments, the spouses Daniel and
Aurora Carreon sent to BPI Investments a proposed memorandum of agreement,
dated May 7, 1982.
On the other hand, it is also apparent that the spouses Deang suffered
financial damage because of the loss of the owners duplicate copy of the title.
D. G. Carreon with preliminary attachment. On May 14, 1982, the trial court
issued an order for preliminary attachment after submission of affidavit of merit
to support the petition, and the posting of a bond in the amount of P200,000.00.
However, on October 8, 1982, the trial court lifted the writ of attachment. On
October 28, 1982, BPI Investments moved for reconsideration, but the trial court
denied the motion after finding the absence of double payment to the
defendants.
On July 30, 1982, respondents D. G. Carreon filed with the trial court an
answer to the complaint, with counterclaim.
D.G. Carreon asked for
compensatory damages in an amount to be proven during the trial; spouses
Daniel and Aurora Carreon asked for moral damages of P1,000,000.00 because
of the humiliation, great mental anguish, sleepless nights and deterioration of
health due to the filing of the complaint and indiscriminate and wrongful
attachment of their property, especially their residential house and payment of
their money market placement of P109,283.75. Josefa Jeceil asked for moral
damages of P500,000.00, because of sleepless nights and mental anguish, and
payment of her money market placement of P73,857.57; all defendants claimed
for exemplary damages and attorneys fees of P100,000.00.
On May 25, 1993, the trial court rendered a decision dismissing both the
complaint and the counterclaim. Both parties appealed. On July 19,1996, the
Court of Appeals affirmed the dismissal of the complaint but reversed and set
aside the dismissal of the counterclaim thereby awarding respondents damages
amounting to more than P5M in sum.
ISSUE:
Whether or not respondents are entitled to damages as awarded by Court
of Appeals.
RULING:
No. The Court found petitioner not guilty of gross negligence in the
handling of the money market placement of respondents.
Gross negligence implies a want or absence of or failure to exercise slight care
or diligence, or the entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them.
However, while petitioner BPI Investments may not be guilty of gross
negligence, it failed to prove by clear and convincing evidence that D. G.
Carreon indeed received money in excess of what was due them. The alleged
payments in the complaint were admitted by plaintiff itself to be withdrawals
from validly issued commercial papers, duly verified and signed by at least two
authorized high-ranking officers of BPI Investments.
The law on exemplary damages is found in Section 5, Chapter 3, Title
XVIII, Book IV of the Civil Code. These are imposed by way of example or
correction for the public good, in addition to moral, temperate, liquidated, or
compensatory damages. They are recoverable in criminal cases as part of the
civil liability when the crime was committed with one or more aggravating
circumstances; in quasi-delicts, if the defendant acted with gross negligence;
and in contracts and quasi-contracts, if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner.
BPI Investments did not act in a wanton, fraudulent, reckless, oppressive,
or malevolent manner, when it asked for preliminary attachment. It was just
exercising a legal option. The sheriff of the issuing court did the execution and
the attachment. Hence, BPI Investments is not to be blamed for the excessive
and wrongful attachment.
The award of moral damages and attorneys fees is also not in keeping
with existing jurisprudence. Moral damages may be awarded in a breach of
contract when the defendant acted in bad faith, or was guilty of gross negligence
amounting to bad faith, or in wanton disregard of his contractual obligation.
Finally, with the elimination of award of moral damages, so must the award of
attorneys fees be deleted. There is no doubt, however, that the damages
sustained by respondents were due to petitioners fault or negligence, short of
gross negligence.
Temperate or moderate damages may be recovered when the court finds
that some pecuniary loss has been suffered but its amount cannot, from the
nature of the case, be proved with certainty. The Court deems it prudent to
award reasonable temperate damages to respondents under the circumstances.
As to the claim for payment of the money market placement of Josefa Jeceil, the
trial court may release the deposited amount of P73,857.57 to petitioner as the
consignation was not proper or warranted.
Thus, the decision of the Court of Appeals is affirmed with modification.
The award of moral, compensatory and exemplary damages and attorneys fees
are deleted. BPI Investments is ordered to pay to the estate of Daniel G. Carreon
and Aurora J. Carreon the money market placement of P109,238.75, with legal
interest of twelve (12%) percent per annum from June 3, 1982, until fully paid; to
pay the estate of Josefa M. Jeceil, the money market placement in the amount of
P73,857.57, with legal interest at twelve (12%) percent per annum from maturity
on July 12, 1982, until fully paid. The petitioner may withdraw its deposit from
the lower court at its peril. BPI Investments is likewise ordered to pay temperate
damages to the estate of the late Daniel G. Carreon in the amount of
P300,000.00, and to the estate of Aurora J. Carreon in the amount of
P300,000.00, and to the estate of Josefa M. Jeceil in the amount of P150,000.00.
REMEDIES IN CASE OF BREACH: ACCION PAULIANA
KHE HONG CHENG VS. COURT OF APPEALS
355 SCRA 701
G.R. No. 144169
March 28, 2001
FACTS:
Petitioner Khe Hong Cheng, is the owner of Butuan Shipping Lines. Its
vessel M/V Prince Eric was used by Philippine Agricultural Trading Corporation to
ship 3,400 bags of Copra at Masbate for delivery to Dipolog. The shipment was
covered by a marine insurance policy issued by American Home Insurance
Company (eventually Philam). However, M/V Prince Eric sank, which resulted to
the total loss of the shipment. Insurer Philam paid the amount of P 354,000.00,
which is the value of the copra, to Philippine Agricultural Trading Corporation.
American Home was thereby subrogated unto the rights of the consignee and
filed a case to recover money paid to the latter, based on breach of common
carriage.
While the case was pending, Khe Hong Cheng executed deeds of
donations of parcels of land in favor of his children. As a consequence of a
favorable judgment for American Home, a writ of execution to garnish Khe Hong
Chengs property was issued. But the writ of execution could not be
implemented because Chengs property were already transferred to his children.
Consequently, American filed a case for the rescission of the deeds of donation
executed by petitioner in favor of children on the ground that they were made in
fraud of his creditors. Petitioner answered that the action should be dismissed
for it already prescribed. Petitioner posited that the registration of the donation
was on December 27, 1989 and such constituted constructive notice. And since
the complaint was filed only in 1997, more than four (4) years after registration,
the action is thereby barred by prescription.
ISSUES:
Whether or not the action for the rescission of the deed of donation has
prescribed, and whether or not accion pauliana/ rescission of the deed of
donation is proper.
RULING:
NO for the first issue. Although the Civil Code provides that The action to
claim rescission must be commenced within four (4) years is silent as to where
the prescriptive period would commence, the general rule is such shall be
reckoned from the moment the cause of action accrues; i.e., the legal possibility
of bringing the action.
Since accion pauliana is an action of last resort after all other legal
remedies have been exhausted and have been proven futile, in the case at bar,
it was only in February 25, 1997, barely a month from discovering that petitioner
Khe Hong Cheng had no other property to satisfy the judgment award against
him that the action for rescission accrued. So the contention of Khe Hong Cheng
that the action accrued from the time of the constructive notice; i.e., December
27, 1989, the date that the deed of donation was registered, is untenable.
YES for the second issue. For an accion pauliana to accrue, the following
requisites must concur: first, the plaintiff asking for rescission has a credit prior
to the alienation, although demandable late. Second, that the debtor has made
a subsequent contract conveying a patrimonial benefit to a third person. Third,
that the creditor has no other legal remedy to satisfy his claim; but would benefit
by rescission of the conveyance to the third person. Fourth, that the act being
impugned is fraudulent, and fifth, that the third person who received the
property conveyed, if by onerous title, has been an accomplice in the fraud. All
the above enumerated elements are presents in the case at bar.
August 8, 2007
FACTS:
On different dates from September to October 1987, Lulu V. Jorge
pawned several pieces of jewelry with Agencia de R. C. Sicam located at
No. 17 Aguirre Ave., BF Homes Paraaque, Metro Manila, to secure a loan
in the total amount of P59,500.00.
On October 19, 1987, two armed men entered the pawnshop and
took away whatever cash and jewelry were found inside the pawnshop
vault. Petitioner Sicam sent respondent Lulu a letter dated October 19,
1987 informing her of the loss of her jewelry due to the robbery incident
in the pawnshop. On November 2, 1987, respondent Lulu then wrote a
letter to petitioner Sicam expressing disbelief stating that when the
robbery happened, all jewelry pawned were deposited with Far East Bank
near the pawnshop since it had been the practice that before they could
withdraw, advance notice must be given to the pawnshop so it could
withdraw the jewelry from the bank. Respondent Lulu then requested
petitioner Sicam to prepare the pawned jewelry for withdrawal on
November 6, 1987 but petitioner Sicam failed to return the jewelry.
On September 28, 1988, respondent Lulu joined by her husband,
Cesar Jorge, filed a complaint against petitioner Sicam with the Regional
Trial Court of Makati seeking indemnification for the loss of pawned
jewelry and payment of actual, moral and exemplary damages as well as
attorney's fees. However, petitioner Sicam contends that he is not the real
party-in-interest as the pawnshop was incorporated on April 20, 1987 and
known as Agencia de R.C. Sicam, Inc; that petitioner corporation had
exercised due care and diligence in the safekeeping of the articles
pledged with it and could not be made liable for an event that is
fortuitous.
After trial ,the RTC rendered its Decision dismissing respondents
complaint as well as petitioners counterclaim. The RTC held that robbery
is a fortuitous event which exempts the victim from liability for the loss
and
under Art. 1174 of the Civil Code. It further held that the
corresponding diligence required of a pawnshop is that it should take
steps to secure and protect the pledged items and should take steps to
insure itself against the loss of articles which are entrusted to its custody
as it derives earnings from the pawnshop trade which petitioners failed to
do and that robberies and hold-ups are foreseeable risks in that those
engaged in the pawnshop business are expected to foresee.
ISSUE:
Whether petitioners are liable for the loss of the pawned articles in
their possession.
RULING:
Fortuitous events by definition are extraordinary events not
foreseeable or avoidable. It is therefore, not enough that the event should
not have been foreseen or anticipated, as is commonly believed but it
must be one impossible to foresee or to avoid. The mere difficulty to
foresee the happening is not impossibility to foresee the same.
To constitute a fortuitous event, the following elements must
concur: (a) the cause of the unforeseen and unexpected occurrence or of
the failure of the debtor to comply with obligations must be independent
of human will; (b) it must be impossible to foresee the event that
constitutes the caso fortuito or, if it can be foreseen, it must be impossible
to avoid; (c) the occurrence must be such as to render it impossible for
the debtor to fulfill obligations in a normal manner; and, (d) the obligor
must be free from any participation in the aggravation of the injury or
loss.
The burden of proving that the loss was due to a fortuitous event
rests on him who invokes it. And, in order for a fortuitous event to
exempt one from liability, it is necessary that one has committed no
negligence or misconduct that may have occasioned the loss.
It has been held that an act of God cannot be invoked to protect a
person who has failed to take steps to forestall the possible adverse
consequences of such a loss. One's negligence may have concurred with
an act of God in producing damage and injury to another; nonetheless,
ISSUE:
Whether or not the assassination of Senator Benigno Aquino Jr., which
caused inflation, was a fortuitous event.
RULING:
The Supreme Court found no merit in petitioners submission that the
assassination of the late Senator Benigno Aquino, Jr. was a fortuitous event that
justified a modification of the terms of the lease contract.
A fortuitous event is that which could not be foreseen, or which even if
foreseen, was inevitable. To exempt the obligor from liability for a breach of an
obligation due to an "act of God", the following requisites must concur: (a) the
cause of the breach of the obligation must be independent of the will of the
debtor; (b) the event must be either unforeseeable or unavoidable; (c) the event
must be such as to render it impossible for the debtor to fulfill his obligation in a
normal manner; and (d) the debtor must be free from any participation in, or
aggravation of the injury to the creditor.
In the case under scrutiny, the assassination of Senator Aquino may
indeed be considered a fortuitous event. However, the said incident per se could
not have caused the delay in the construction of the building. What might have
caused the delay was the resulting escalation of prices of commodities including
construction materials. Be that as it may, there is no merit in Huibonhoa's
argument that the inflation borne by the Filipinos in 1983 justified the delayed
accrual of monthly rental, the reduction of its amount and the extension of the
lease by three (3) years.
Inflation is the sharp increase of money or credit or both without a
corresponding increase in business transaction. There is inflation when there is
an increase in the volume of money and credit relative to available goods
resulting in a substantial and continuing rise in the general price level. While it
is of judicial notice that there has been a decline in the purchasing power of the
Philippine peso, this downward fall of the currency cannot be considered
unforeseeable considering that since the 1970's we have been experiencing
inflation. It is simply a universal trend that has not spared our country.
Conformably, this Court upheld the petitioner's view in Occena v. Jabson that
even a worldwide increase in prices does not constitute a sufficient cause of
action for modification of an instrument. It is only when an extraordinary
inflation supervenes that the law affords the parties a relief in contractual
obligations. In Filipino Pipe and Foundry Corporation v. NAWASA, the Court
explained extraordinary inflation thus:
which relieved the parties of their respective obligations but did not stop the
running of the period of their contract.
ISSUES:
1. Whether or not force majeure or fortuitous event is present in the case.
2. Whether or not the respondet was justified in unilaterally terminating the
contract due to a fortuitous event.
3. Whether or not the fortuitous event allows the extension of a contract.
RULING:
1. YES. Pursuant to Article 1174 of the Civil Code, Except in cases expressly
specified by law, or when it is otherwise declared by stipulation, or when the
nature of the obligation requires the assumption of risk, no person shall be
responsible for those events which could not be foreseen, or which though
foreseen, were inevitable. The requisites for an event to be considered a
fortuitous event are as follows:
First, the cause of breach must be
independent of the will of the obligor. Second, the event must be
unforeseeable or inevitable. Third, the event must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner. And
fourth, the debtor must be free from any participation in, or aggravation of,
the injury to the creditor. In this case, all the mentioned requisites are
present.
2. NO. The fortuitous event that happened in this case could not warrant a
termination of the service contract; but rather, it only temporarily suspends
the performance of the obligation. The unilateral termination therefore
shifted on petitioners part when it unreasonably refused to continue its
services.
3. NO.
ISSUE:
Whether or not the respondent is liable for the broken windshield of
petitioners car.
RULING:
The damage to the windshield caused by the mischievous boys was a
fortuitous event resulting in a loss, which must be borne by the owner of the car.
Article 1174 of the Civil Code provides that if the nature of the obligation
requires the assumption risk, compels the conclusion that in the absence of a
legal provision or an express covenant, no one should be held to account for
fortuitous cases.
Where the risk is quite evident such that the possibility of danger is not
only foreseeable, but also actually foreseen, then it could be said that the nature
of the obligation is such that a party could rightfully be deemed to have
assumed it. It is not enough therefore that the event should not have been
foreseen or anticipated, but it must be one impossible to foresee or to avoid in
order that a party may be said to have assumed the risk resulting from the
nature of the obligation itself.
In the case, there is no assumption of risk by the borrower of a car to
respond to damages for the broken windshield caused by an accidental stonethrowing incident by boys playing along the road. Decision reversed as to the
liability of respondent.
EFFECTS OF FORTUITOUS EVENT UPON OBLIGATIONS
Bachelor Express vs CA
GR. NO. 85691, July 31, 1990
FACTS:
On 1 August 1980, Bus 800, owned by Bachelor Express, Inc. and
driven by Cresencio Rivera, came from Davao City on its way to Cagayan
de Oro City passing Butuan City. While at Tabon-Tabon, Butuan City, the
On April 26, 1988, spouses Tito and Leny Tumboy and their minor children
named Ardee and Jasmin, boarded at Mangagoy , Surigao Del Sur, a Yobido Liner
bus bound for Davao City. Along Picop Road in Km. 17, Sta.Maria, Agusan del
Sur, the left front tire of the bus exploded. The bus fell into a ravine around
three (3) feet from the road and struck a tree. The incident resulted in the death
of 28-year-old Tito Tumboy and physical injuries to other passengers. On Nov.
21, 1988, a complaint for breach of contract of carriage, damages and attorneys
fees was filed by Leny and her children against Alberta Yobido, the owner of the
bus, and Cresencio Yobido, its driver, before the Regional Trial Court of Davao
City. When the defendants therein filed their answer to the complaint, they
raised the affirmative defense of caso fortuito. They also filed a third-party
complaint against Philippine Surety and Insurance, Inc.
This third-party
defendant filed an answer with compulsory counterclaim. At the pre-trial
conference, the parties agreed to a stipulation of facts.
On August 29, 1991, the lower court rendered a decision dismissing the
action for lack of merit. On the issue of whether or not the tire blowout was a
caso fortuito, it found that the falling of the bus to the cliff was a result of no
other outside factor than the tire bolw-out. It held that the ruling in the La
Mallorca and Pampanga Bus Co. v. De Jesus that a tire blowout is a mechanical
defect of the conveyance or a fault in its equipment which was easily
discoverable if the bus had been subjected to a more thorough or rigid check-up
before it took to the road that morning is inapplicable to this case. It reasoned
out that in said case. It reasoned out that in said case, it was found that the
blowout was caused by the established fact that the inner tube of the left front
tire was pressed between the inner circle of the left wheel and the rim which
had slipped out of the left wheel . In this case, however, the cause of the
explosion remains a mystery until at present. As such, the court added, the tire
blowout was a caso fortuito which is completely an extraordinary circumstance
independent of the will of the defendants who should be relieved of whatever
liability the plaintiffs may have suffered by reason of the explosion pursuant to
Article 1174 of the Civil Code.
ISSUE:
Whether or not the Trial Court erred in their findings that the tire blowout
was a caso fortuito.
RULING:
On August 23, 1193, the Court of Appeals rendered the decision reversing
the decision of the trial court. Article 1755 provides that (a) common carrier is
bound to carry the passenger safely as far as human care and foresight can
provide, using the utmost diligence very cautious persons, with a due regard for
NO. The accident was not due to a fortuitous event. There are specific
acts of negligence on the part of the respondents. The passenger jeepney
turned turtle and jumped into a ditch immediately after its right rear tire
exploded. It was running at a very high speed before the accident and was
overloaded. The petitioner stated that there were three (3) passengers in the
front seat and fourteen (14) passengers in the rear.
While the tire that blew-up was still good because the grooves were still
visible, this does not make the explosion of the tire a fortuitous event. No
evidence was presented to show that the accident was due to adverse road
conditions or that precautions were taken by the jeepney driver to avert possible
accidents. The blowing-up of the tire, therefore, could have been caused by too
much air pressure and aggravated by the fact that the jeepney was overloaded
and speeding at the time of the accident.
The accident was caused either through the negligence of the driver or
because of mechanical defects in the tire. Common carriers are obliged to
supervise their drivers and ensure that they follow rules and regulations such as
not to overload their vehicles, not to exceed safe and legal speed limits, and to
know the correct measures to take when a tire blows up.
The source of a common carrier's legal liability is the contract of carriage,
and by entering into the said contract, it binds itself to carry the passengers
safely as far as human care and foresight can provide, using the utmost
diligence of a very cautious person, with a due regard for all the circumstances.
The driver and the owner of the vehicle are liable for damages.
ISSUE:
Whether or not the accident that happened was due to a fortuitous event,
thereby, absolving the respondents from any obligation.
RULING:
2002 Mar 8
G.R. No. 135645
FACTS:
On March 1, 1987, San Miguel Corporation insured several beer bottle
cases with an aggregate value of P5,836,222.80 with petitioner Philippine
American General Insurance Company. The cargo were loaded on board the M/V
Peatheray Patrick-G to be transported from Mandaue City to Bislig, Surigao del
Sur.
After having been cleared by the Coast Guard Station in Cebu the
previous day, the vessel left the port of Mandaue City for Bislig, Surigao del Sur
on March 2, 1987. The weather was calm when the vessel started its voyage.
The following day, March 3, 1987, M/V Peatheray Patrick-G listed and
subsequently sunk off Cawit Point, Cortes, Surigao del Sur. As a consequence
thereof, the cargo belonging to San Miguel Corporation was lost. Subsequently,
San Miguel Corporation claimed the amount of its loss from petitioner.
The Court of Appeals observed respondents from any liability because the
cargo was lost due to a fortuitous event; strong winds and huge waves caused
the vessel to sink.
ISSUE:
Whether the loss of the cargo was due to the occurrence of a natural
disaster, and if so, whether such natural disaster was the sole and proximate
cause of the loss or whether private respondents were partly to blame for failing
to exercise due diligence to prevent the loss of the cargo.
RULING:
Common carriers, from the nature of their business and for reasons of
public policy, are mandated to observe extraordinary diligence in the vigilance
over the goods and for the safety of the passengers transported by them. Owing
to this high degree of diligence required of them, common carriers, as a general
rule, are presumed to have been at fault or negligent if the goods transported by
them are lost, destroyed or if the same deteriorated.
The parties do not dispute that on the day the M/V Peatheray Patrick-G
sunk, said vessel encountered strong winds and huge waves ranging from six to
ten feet in height. The vessel listed at the port side and eventually sunk at Cawit
Point, Cortes, Surigao del Sur.
In the case at bar, it was adequately shown that before the M/V Peatheray
Patrick-G left the port of Mandaue City, the Captain confirmed with the Coast
Guard that the weather condition would permit the safe travel of the vessel to
Bislig, Surigao del Sur. Thus, he could not be expected to have foreseen the
unfavorable weather condition that awaited the vessel in Cortes, Surigao del Sur.
It was the presence of the strong winds and enormous waves which caused the
vessel to list, keel over, and consequently lose the cargo contained therein. The
appellate court likewise found that there was no negligence on the part of the
crew of the M/V Peatheray Patrick-G. Since the presence of strong winds and
enormous waves at Cortes, Surigao del Sur on March 3, 1987 was shown to be
the proximate and only cause of the sinking of the M/V Peatheray Patrick-G and
the loss of the cargo belonging to San Miguel Corporation, private respondents
cannot be held liable for the said loss.
to receive the rental in the amount of P76, 000.00; and that Mindex will pay
P50,000.00 monthly until the balance of P275,000.00 is fully paid. Except for his
acceptance of the proffered P76,000.00 unpaid rentals. Morillos stand has not
been changed as he merely lowered the first payment on the P275,000.00
valuation of the truck from P150,000.00 to P50,000.00.
The parties had since remain intransigent and so on August, Morillo pulled
out the truck from the repair shop of Mindex and had it repaired elsewhere for
which he spent the amount of P132,750.00.
The RTC found petitioner
responsible fro the destruction of loss of the leased 6x6 truck and ordered it to
pay respondent P76,000.00 as balance of the unpaid rental for the 6x6 truck
with interest of 12%, P132,750.00 representing the cost of repair and overhaul
of the truck with interest of 12% until fully paid; and P20,000.00 as attorneys
fees.
The appellate court sustained RTCs finding. The CA found petitioner was
not without fault for the loss and destruction of the truck and thus liable
therefore. However, it modified the 12% interest on the P76,000.00 rentals and
P132,750.00 repair cost to 6% per annum form June 22, 1994 to the date of
finality of the said decision. It affirmed the award of attorneys fees.
ISSUE:
Whether or not the CA is correct in finding the petitioner liable due to
negligence and cannot be exonerated due to the defense of fortuitous event.
RULING:
YES. As stated by the Court of Appeals, the burning of the subject truck
was impossible to foresee, but not impossible to avoid. Mindex could have
prevented the incident by immediately towing the truck to a motor shop for
repair.
In this case, petitioner was found negligent and thus liable for the loss or
destruction of the leased truck. Article 1174 of the Civil Code states that, No
person shall be responsible for a fortuitous event that could not be foreseen or,
though foreseen, was inevitable. In other words, there must be an exclusion of
human intervention form the cause of injury on loss. In this case, the petitioner
is contributory negligent to the incident.
Decision was denied. Deleting attorneys fees, modified the RTC and CAs
decision.
On the other hand NAPOCOR averred that the strikes in Australia could not
be invoked as reason for the delay in the delivery of coal because PHIBRO itself
admitted that as of July 28, 1987 those strikes had already ceased. Furthermore,
NAPOCOR claimed that due to PHIBROs failure to deliver the coal on time, it was
compelled to purchase coal from ASEA at a higher price. NAPOCOR claimed for
actual damages in the amount of P12,436,185.73, representing the increase in
the price of coal, and a claim of P500,000.00 as litigation expenses.
On January 16, 1992, the trial court rendered a decision in favor of
PHIBRO. Unsatisfied, NAPOCOR elevated the case to the Court of Appeals which
affirmed in toto the latters decision. Hence, this present petition.
ISSUE:
Whether or not the lower court erred in holding that PHIBROs delay in the
delivery of imported coal was due to force majeure.
RULING:
It was disclosed from the records of the case that what prevented PHIBRO
from complying with its obligation under the July 1987 contract was the
industrial disputes which besieged Australia during that time. The Civil Code
provides that no person shall be responsible for those events which could not be
foreseeen, or which, though foreseen, were inevitable. This means that when an
obligor is unable to fulfill his obligation because of a fortuitous event or force
majeure, he cannot be held liable for damages for non-performance.
In addition to the above legal precept, it is worthy to note that PHIBRO
and NAPOCOR explicitly agreed in Section XVII of the Bidding Terms and
Specifications that neither seller (PHIBRO) nor buyer (NAPOCOR) shall be liable
for any delay in or failure of the performance of its obligations, other than the
payment of money due, if any such delay or failure is due to Force
Majeure. Strikes then are undoubtedly included in the force majeure clause
of the Bidding Terms and Specifications.
3.
rule that heirs are bound by contracts entered into by their predecessors-ininterest.
alleged that a proper accounting of the transaction between the parties will show
that it is the IFC who is liable to PBI.
The trial court dismissed the complaint but the Court of Appeals reversed
it. It ordered PBI to pay IFC the deficiency in the amount of P1,237,802.48 and
the monetary interests.
ISSUE:
Whether or not said Republic Act No. 5980 should govern the transaction
between petitioners and private respondent which in reality was bilateral, not
trilateral, and respondent financing company was not really subrogated in the
place of the supposed seller or assignor.
RULING:
The assignment of the contracts to sell falls within the purview of the Act.
The term credit has been defined to - "(c) x x x mean any loan, mortgage, deed
of trust, advance, or discount; any conditional sales contract, any contract to
sell, or sale or contract of sale of property or service, either for present or future
delivery, under which, part or all of the price is payable subsequent to the
making of such sale or contract; any rental-purchase contract; any option,
demand, lien, pledge, or other claim against, or for the delivery of, property or
money, any purchase, or other acquisition of or any credit upon the security of,
any obligation or claim arising out of the foregoing; and any transaction or series
of transactions having a similar purpose or effect.
An assignment of credit is an act of transferring, either onerously or
gratuitously, the right of an assignor to an assignee who would then be capable
of proceeding against the debtor for enforcement or satisfaction of the credit.
The transfer of rights takes place upon perfection of the contract, and ownership
of the right, including all appurtenant accessory rights, is thereupon acquired by
the assignee. The assignment binds the debtor only upon acquiring knowledge
of the assignment but he is entitled, even then, to raise against the assignee the
same defenses he could set up against the assignor. Where the assignment is
on account of pure liberality on the part of the assignor, the rules on donation
would likewise be pertinent; where valuable consideration is involved, the
assignment partakes of the nature of a contract of sale or purchase.
Upon an assignment of a contract to sell, the assignee is effectively
subrogated in place of the assignor and in a position to enforce the contract to
sell to the same extent as the assignor could.
FACTS:
Private respondents were the original owner of a parcel of agricultural
land covered by a TCT, with an area of 113,695 square meters, more or less. On
30 May 1977, Private respondents mortgaged said land to petitioner. When
private respondents defaulted on their obligation, petitioner foreclosed the
mortgage on the land and emerged as sole bidder in the ensuing auction sale.
Consequently, a TCT was eventually issued in petitioner's name. On 6 April 1984
petitioner and private respondents entered into a Deed of Conditional Sale
wherein petitioner agreed to reconvey the foreclosed property to private
respondents.
The Deed provided, among others, that:
the VENDEES offered to
repurchase and the VENDOR agreed to sell the above-described property,
subject to the terms and stipulations as hereinafter stipulated, for the sum of
SEVENTY THREE THOUSAND SEVEN HUNDRED ONLY (P73,700.00), with a down
payment of P8,900.00 and the balance of P64,800 shall be payable in six (6)
years on equal quarterly amortization plan at 18% interest per annum. The first
quarterly amortization of P4,470.36 shall be payable three months from the date
of the execution of the documents and all subsequent amortization shall be due
and payable every quarter thereafter. . .that, upon completion of the payment
herein stipulated and agreed, the Vendor agrees to deliver to the Vendee/s(,) his
heirs, administrators and assigns(,) a good and sufficient deed of conveyance
covering the property, subject matter of this deed of conditional sale, in
accordance with the provision of law.
On 6 April 1990, upon completing the payment of the full repurchase
price, private respondents demanded from petitioner the execution of a Deed of
Conveyance in their favor. Petitioner then informed private respondents that the
prestation to execute and deliver a deed of conveyance in their favor had
become legally impossible in view of Sec. 6 of Rep. Act 6657 (the
Comprehensive Agrarian Reform Law or CARL) approved 10 June 1988, and Sec.
1 of E.O. 407 issued 10 June 1990.
Aggrieved, private respondents filed a complaint for specific performance
with damages against petitioner before the RTC. The trial court rendered
judgment ordering defendant to execute and deliver unto plaintiffs a deed of
final sale of there land subject of their deed of conditional sale.
Dissatisfied, petitioner appealed to the CA, still insisting that its obligation
to execute a Deed of Sale in favor of private respondents had become a legal
impossibility and that the non-impairment clause of the Constitution must yield
ISSUE:
Whether or not the petitioners prestation to execute and deliver a deed of
conveyance in favor of private respondents had become legally impossible in
view of Sec. 6 of Rep. Act 6657 (the Comprehensive Agrarian Reform Law or
CARL) approved 10 June 1988, and Sec. 1 of E.O. 407 issued 10 June 1990.
RULING:
If the obligation depends upon a suspensive condition, the demandability
as well as the acquisition or effectivity of the rights arising from the obligation is
suspended pending the happening or fulfillment of the fact or event which
constitutes the condition. Once the event which constitutes the condition is
fulfilled resulting in the effectivity of the obligation, its effects retroact to the
moment when the essential elements which gave birth to the obligation have
taken place. Applying this precept to the case, the full payment by the appellee
on April 6, 1990 retracts to the time the contract of conditional sale was
executed on April 6, 1984. From that time, all elements of the contract of sale
were present. Consequently, the contract of sale was perfected. As such, the
said sale does not come under the coverage of R.A. 6657.
Despite the mandate of Sec. 1, R.A. 6657, appellant continued to accept
the payments made by the appellant until it was fully paid on April 6, 1990. All
that the appellant has to do then is to execute the final deed of sale in favor of
the appellee. Obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith.
E.O. 407 can neither affect appellant's obligation under the deed of
conditional sale. Under the said law, appellant is required to transfer to the
Republic of the Philippines "all lands foreclosed" effective June 10, 1990. Under
the facts obtaining, the subject property has ceased to belong to the mass of
foreclosed property failing within the reach of said law. The property has
already been sold to herein appellees even before the said E.O. has been
enacted. On this same reason, the Court held that they need not delve on the
applicability of DBP Circular No. 11.
The Court ruled in favor of private respondents. In conditional obligations,
the acquisition of rights, as well as the extinguishment or loss of those already
acquired, shall depend upon the happening of the event which constitutes the
condition.
The deed of conditional sale between petitioner and private
respondents was executed on 6 April 1984. Private respondents had religiously
paid the agreed installments on the property until they completed payment on 6
April 1990. Petitioner, in fact, allowed private respondents to fulfill the condition
of effecting full payment, and invoked Section 6 of Rep. Act 6657 only after
private respondents, having fully paid the repurchase price, demanded the
execution of a Deed of Sale in their favor.
The Court ruled that the trial court and CA have correctly ruled that
neither Sec. 6 of Rep. Act 6657 nor Sec. 1 of E.O. 407 was intended to impair the
obligation of contract petitioner had much earlier concluded with private
respondents. Petitioner cannot invoke the last paragraph of Sec. 6 of Rep. Act
6657 to set aside its obligations already existing prior to its enactment. In the
first place, said last paragraph clearly deals with "any sale, lease, management
contract or transfer or possession of private lands executed by the original
landowner." The original owner in this case is not the petitioner but the private
respondents. Petitioner acquired the land through foreclosure proceedings but
agreed thereafter to reconvey it to private respondents, albeit conditionally.
Sec. 6 of Rep. Act 6657 in its entirety deals with retention limits allowed by law
to small landowners. Since the property here involved is more or less ten (10)
hectares, it is then within the jurisdiction of the Department of Agrarian Reform
(DAR) to determine whether or not the property can be subjected to agrarian
reform. But this necessitates an entirely differently proceeding.
The petition was DENIED, and the decision of the CA was AFFIRMED with
the MODIFICATION that attorney's fees and nominal damages awarded to private
respondent were DELETED.
the
the
the
the
the Licaros family for P65,000,000.00. Young and his group obtained 55% equity
in the Bank, while Jorge Go and his group owned the remaining 45%.
However, Araneta backed out from the intended sale and demanded the
return of his downpayment.
On October 1, 1991, Insular Life and Insular Life Pension Fund formally
informed Young of their intention to acquire 30% and 12%, respectively, of the
Bank's outstanding shares, subject to due diligence audit and proper
documentation. On October 9, 1991, Insular Life and Young, authorized to
represent the other stockholders, entered into a Memorandum of Agreement
(MOA), wherein Insular Life and its Pension Fund agreed to purchase 830,860
common shares and 311,572 common shares, respectively, for a total
consideration of P198,000,000.00.
Under its terms, the MOA is subject to
Young's representations and warranties that, as of September 30, 1991, the
Bank has (a) a total outstanding paid-in capital of P157,714,900.00, (b) a total
net worth of P114,801,539.00, and (c) total
loans with doubtful recovery of P60,000,000.00.
The MOA is also subject to
these "condition precedents": (1) Young shall infuse additional capital of
P50,000,000.00 into the Bank, and (2) Insular Life and its Pension Fund shall
undertake a due diligence audit on the Bank to determine whether the provision
for P60,000,000.00 doubtful account made by Young is sufficient.
On October 21, 1991, Young signed a letter prepared by Atty. Jacinto
Jimenez, counsel of Insular Life, addressed to Mr. Vicente R. Ayllon, Chairman of
the Bank's Board of Directors, stating that due to business reverses, he shall not
be able to pay his obligations under the Credit Agreement between him and
Insular Life. Consequently, Young "unconditionally and irrevocably waive(s) the
benefit of the period" of the loan (up to December 26, 1991) and Insular "may
consider (his) obligations thereunder as defaulted." He likewise interposes no
objection to Insular Life's exercise of its rights under the said agreement.
Forthwith, Insular Life instructed its counsel to foreclose the pledge
constituted upon the shares. The latter then sent Young a notice informing him
of the sale of the shares in a public auction scheduled on October 28, 1991, and
in the event that the shares are not sold, a second auction sale shall be held the
next day, October 29.
From October 31, 1991 to December 27, 1991, Insular Life invested a total
of P325,000,000.00 in the Bank. Meanwhile, on November 27, 1991, its Board
of Directors, during its meeting, accepted the resignation of Young as President.
On January 7, 1992, Young and his associates filed with the Regional Trial Court
(RTC), Branch 142, Makati City, a complaint against the Bank, Insular Life and its
counsel, Atty. Jacinto Jimenez, petitioners, for annulment of notarial sale, specific
performance and damages, docketed as Civil Case No. 92-049. The complaint
alleges, inter alia, that the notarial sale conducted by petitioner Atty. Jacinto
Jimenez is void as it does not comply with the requirement of notice of the
second auction sale; that Young was forced by the officers of Insular Life to sign
letters to enable them to have control of the Bank; that under the MOA, Insular
Life should apply the purchase price of P198,000,000.00 (corresponding to the
55% of the outstanding capital stock of the Bank) to Young's loan of
P200,000,000.00 and pay the latter
P162,000,000.00, representing the
remaining 45% of its outstanding capital stock, which must be set-off against the
loans of the other respondents.
ISSUE:
Whether or not the respondent court erred in declaring the MOA dated
October 9, 1991 valid and enforceable between the parties despite respondent
Young's failure to comply with the terms and conditions thereof.
RULING:
Contrary to the findings of the Court of Appeals, the foregoing provisions
of the MOA negate the existence of a perfected contract of sale. The MOA is
merely a contract to sell since the parties therein specifically undertook to enter
into a contract of sale if the stipulated conditions are met and the representation
and warranties given by Young prove to be true. The obligation of petitioner
Insular Life to purchase, as well as the concomitant obligation of Young to
convey to it the shares, are subject to the fulfillment of the conditions contained
in the MOA. Once the conditions, representation and warranties are satisfied,
then it is incumbent upon the parties to perform their respective obligations
under the contract. Conversely, in the event that these conditions are not met
or complied with, no obligation on the part of either party arises. This is in
accord with Article 1181 of the Civil Code which provides that "(i)n conditional
obligations, the acquisition of rights, as well as the extinguishment or loss of
those already acquired, shall depend upon the happening of the event which
constitutes the condition." And when the obligation assumed by a party to a
contract is expressly subjected to a condition, the obligation cannot be enforced
against him unless the condition is complied with.
Here, the MOA provides that Young shall infuse additional capital of
P50,000,000.00 into the Bank. It likewise specifies the warranty given by Young
that the doubtful accounts of petitioner Bank amounted to P60,000,000.00 only.
However, records show that Young failed to infuse the required additional
capital. Moreover, the due diligence audit shows that Young was involved in
fraudulent schemes like check-kiting which amounted to a staggering
P344,000,000.00. This belies his representation that the doubtful accounts of
petitioner Bank amounted only to P60,000,000.00.
As a result of these
anomalous transactions, the reserves of the Bank were depleted and it had to
undergo a ten-year rehabilitation plan under the supervision of the Central Bank.
Significantly, respondents do not dispute petitioners assertion that Young
committed fraud, misrepresented the warranties and failed to comply with his
obligations under the MOA. Accordingly, no right in favor of Young's arose and
no obligation on the part of Insular Life was created.
Since no sale transpired between the parties, the Court of Appeals erred in
concluding that Insular Life purchased 55% of the total shares of the Bank under
the MOA. Consequently, its findings that the debt of Young has been fully paid
and that Insular Life is liable to pay for the remaining 45% equity have no basis.
It must be emphasized that the MOA did not convey title of the shares to Insular
Life. If ever there was delivery of the said shares to Insular Life, it was because
they were pledged by Young to Insular Life under the Credit Agreement.
It would be unfair on the part of Young to demand compliance by Insular
Life of its obligations when he himself was remiss in his own. Neither can he
feign ignorance of the stipulation in the MOA since it is presumed that he read
the same and was satisfied with its provisions before he affixed his signature
therein. The fact that no deed of sale was subsequently executed by the parties
confirms the conclusion that no sale transpired between them.
SUSPENSIVE CONDITIONS: MEANING
DIRECT FUNDERS HOLDINGS CORPORATION, petitioner,
VS. JUDGE CELSO D. LAVIA, PRESIDING JUDGE OF RTC- Pasig City,
Branch 71 and KAMBIAK Y. CHAN, JR., respondents
January 16, 2002
G. R. No. 141851
FACTS:
Herein petitioner was granted with a writ of possession. During the
hearing for the issuance of temporary restraining order filed by herein private
respondent, it was made clear to the respondent Judge that the property in
To emphasize, the mortgagee (United Savings Bank) did not give its
consent to the change of debtor. It is a fundamental axiom in the law on
contracts that a person not a party to an agreement cannot be affected thereby.
Worse, not only was the conditional sale agreement executed without the
consent of the mortgagee-creditor, United Savings Bank, the same was also a
material breach of the stipulations of the real estate mortgage over the subject
property. The conditions of the conditional sale agreement were not fulfilled,
hence, respondents claim to the subject property was as heretofore stated
ineffectual. Article 1181 of the Civil Code reads:
The trial court dismissed the complaint and ordered the petitioner to pay
the respondents attorneys fee and the cost of suit while ordering the
respondents to pay the heirs of the petitioner the balance of the purchase price
and reconveyance of the extra area of 58 square meters from the land in
question.
Disallowing rescission, the Court of Appeals held that respondents did not
breach the Contract of Sale. It explained that the conclusion of the ten-year
period was not a resolutory term, because the Contract had stipulated that
payment, with interest of 12 percent, could still be made if respondents failed to
pay within the period. Petitioner did not disprove the allegation of respondents
that they had tendered payment of the balance of the purchase price during her
husbands funeral, which was well within the ten-year period.
Moreover,
rescission would be unjust to respondents, because they had already transferred
the land title to their names. The proper recourse, the CA held, was to order
them to pay the balance of the purchase price, with 12 percent interest. As to
the matter of the extra 58 square meters, the CA held that its reconveyance was
no longer feasible, because it had been included in the title issued to them. The
appellate court ruled that the only remedy available was to order them to pay
petitioner the fair market value of the usurped portion.
ISSUE:
Whether or not there is a potestative suspensive condition in the
Kasulatan.
RULING:
The failure of respondents to pay the balance of the purchase price within
ten years from the execution of the Deed did not amount to a substantial
breach. It was stipulated that payment could be made even after ten years from
the execution of the Contract, provided the vendee paid 12 percent interest.
Moreover, it is undisputed that during the ten-year period, petitioner and
her deceased husband never made any demand for the balance of the purchase
price. Petitioner even refused the payment tendered by respondents during her
husbands funeral, thus showing that she was not exactly blameless for the lapse
of the ten-year period. Had she accepted the tender, payment would have been
made well within the agreed period.
If petitioner would like to impress upon the Court that the parties intended
otherwise, she has to show competent proof to support her contention. Instead,
she argues that the period cannot be extended beyond ten years, because to do
so would convert the buyers obligation to a purely potestative obligation that
would annul the contract under Article 1182 of the Civil Code.
The Code prohibits purely potestative, suspensive, conditional obligations
that depend on the whims of the debtor, because such obligations are usually
not meant to be fulfilled. Indeed, to allow the fulfillment of conditions to depend
exclusively on the debtors will would be to sanction illusory obligations. The
Kasulatan does not allow such thing. First, nowhere is it stated in the Deed that
payment of the purchase price is dependent upon whether respondents want to
pay it or not. Second, the fact that they already made partial payment thereof
only shows that the parties intended to be bound by the Kasulatan.
Affirmed with the modification that the payment for the extra 58-square
meter lot included in respondents title is deleted.
POTESTATIVE SUSPENSIVE CONDITIONS (Art. 1182, CC)
POTESTATIVE SUSPENSIVE CONDITIONS (Art. 1182, CC)
The trial court rendered its decision in favor of the private respondent.
The petitioner appealed from said decision to the Court of Appeals; however, the
appellate court affirmed with modification the decision of the lower court.
Hence, this petition.
ISSUE:
Whether or not the private respondents non-compliance with essential
precondition justified the cancellation of the contract.
RULING:
The Supreme Court held that the nature of the transaction between the
petitioner company and the private respondent is a mere contract to sell, and
not a contract of sale. The petitioner companys obligation is subject to a
positive suspensive condition, which is the private respondents opening, making
or indorsing of an irrevocable and unconditional letter of credit. The failure of
the private respondent to comply with the positive suspensive condition cannot
even be considered a breach but simply an event that prevented the obligation
of petitioner company to convey title from acquiring binding force. Hence, the
petition is granted and the assailed decision is reversed.
POSITIVE SUSPENSIVE CONDITIONS (Art. 1184, CC)
LEANO VS. COURT OF APPEALS
369 SCRA 36
G.R. No.129018
Nov. 15, 2001
FACTS:
On November 13, 1985, Hermogenes Fernando, as vendor and Carmelita
Leano, as vendee executed a contract to sell involving a piece of land, Lot No.
876-B, with an area of 431 square meters, located at Sto.Cristo, Baliuag,
Bulacan.
In the contract, Carmelita Leano bound herself to pay Hermogenes
Fernandez the sum of one hundred and fifty pesos (P107,750.00) as the total
purchase price of the lot.
The contract also provided for a grace period of one month within which to
make payments, together with the one corresponding the month of grace.
Should the month of grace be expired without the installments for both months
having been satisfied, an interest of 18% per annum will be charged on the
unpaid installments.
Should a period of (90) ninety days elapse from the expiration of the
grace period without the overdue and unpaid installments having been paid with
the corresponding interests up to that date, respondent Fernando, as vendor,
was authorized to declare the contract cancelled and to dispose of the parcel of
land, as if the contract had not been entered into. The payments made,
together with all the improvements made on the premises, shall be considered
as rents paid for the use and occupation of the premises and as liquidated
damages.
After the execution of the contract, Carmelita Leano made several
payments in lump sum. Thereafter, she constructed a house on the lot valued at
P800,000.00. The last payment that she made was on April 1, 1989.
On September 16, 1991, the Trial Court rendered a decision in an
ejectment case earlier filed by respondent Fernando ordering petitioner to
vacate the premises and to pay P250.00 per month by way of compensation for
the use and occupation of the property from May 27,1991 until she vacated the
premises, attorneys fees and costs of the suit. On August 24, 1993, the trial
court issued a writ of execution which was duly served on petitioner Leano.
On November 4, 1993, 1993, after petitioner Leano posted acash bond of
P50000.00, the trial court issued a writ of preliminary injunction to stay the
enforcement of the decision of the municipal trial court.
ISSUE:
Whether or not the petitioner was in delay the payment of the monthly
amortizations.
RULING:
While the contract provided that the total purchase price shall be paid in
monthly installments by claiming that the ten-year period, the same contract
specified that the purchase price shall be paid in monthly installments for which
the corresponding penalty shall be imposed in case of default. Petitioner Leano
cannot ignore the provision on payment of monthly installments by claiming that
the ten-year period within which to pay has not elapsed.
Article 1169 of the Civil Code provides that in reciprocal obligations,
neither party incurs in delay if the other does not comply or is not ready to
comply or is not ready to comply in a proper manner with what is incumbent
upon him. From the moment one of the parties fulfills his obligation, delay by
the other begins.
among others that the matter of the claim of Intervenor Lina becomes a money
claim to be filed in the estate of the late Sandejas, Sr.
The lower court issued an Order directing the counsel for the four heirs
and other heirs of Teresita R. Sandejas to move for the appointment of a new
administrator within fifteen (15) days from receipt of this Order.
Heirs Sixto, Roberto, Antonio and Benjamin, all surnamed Sandejas, filed a
Motion for Reconsideration and the appointment of another administrator, Mr.
Sixto Sandejas in lieu of respondent Lina stating that it was only lately that Mr.
Sixto Sandejas, a son and heir, expressed his willingness to act as a new
administrator. Thereafter, respondent Lina filed his Manifestation and Counter
Motion alleging that he had no objection to the appointment of Sixto Sandejas as
administrator provided that Sixto Sandejas be also appointed as administrator of
the intestate estate of his father, Eliodoro P. Sandejas, Sr. The lower court
granted the said Motion and substituted Alex Lina with Sixto Sandejas as
petitioner in the said Petitions. After the payment of the administrator's bond
and approval thereof by the court, Administrator Sixto Sandejas took his oath as
administrator of the estate of the deceased Remedios R. Sandejas and Eliodoro
P. Sandejas and was likewise issued Letters of Administration on the same.
On November 29, 1993, Intervenor filed an Omnibus Motion to approve
the deed of conditional sale executed between Plaintiff-in-lntervention Lina and
Elidioro Sandejas, Sr. on June 7, 1982; to compel the heirs of Remedios Sandejas
and Eliodoro Sandejas, Sr. thru their administrator, to execute a deed of absolute
sale in favor of Intervenor Lina pursuant to said conditional deed of sale to which
the administrator filed a Motion to Dismiss and/or Opposition to said omnibus
motion.
The lower court granted intervenor's Motion but was overturned by the
Court of Appeals.
ISSUE:
Whether or not Eliodoro P. Sandejas Sr. is legally obligated to convey title
to the property referred to in the subject document which was found to be in the
nature of a contract to sell - where the suspensive condition set forth therein,
was not complied with.
RULING:
CIR VS PRIMETOWN
GR No. 162155. August 28, 2007
FACTS:
On March 11, 1999, Gilbert Yap, vice chair of respondent Primetown
Property Group, Inc., applied for the refund or credit of income tax
respondent paid in 1997. According to Yap, because respondent suffered
losses, it was not liable for income taxes. Nevertheless, respondent paid
its quarterly corporate income tax and remitted creditable withholding tax
from real estate sales to the BIR in the total amount of P26,318,398.32.
Therefore, respondent was entitled to tax refund or tax credit.
On May 13, 1999, revenue officer Elizabeth Y. Santos required
respondent to submit additional documents to support its claim.
Respondent complied but its claim was not acted upon. Thus, on April 14,
2000, it filed a petition for review in the Court of Tax Appeals (CTA). On
December 15, 2000, the CTA dismissed the petition as it was filed beyond
the two-year prescriptive period for filing a judicial claim for tax refund or
tax credit. Respondents now assail that decision for dismissal of the CTA.
ISSUE:
What is the expiration period for the filing of the action?
RULING:
Both Article 13 of the Civil Code and Section 31, Chapter VIII,
Book I of the Administrative Code of 1987 deal with the same subject
matter the computation of legal periods. Under the Civil Code, a year is
equivalent to 365 days whether it be a regular year or a leap year. Under
the Administrative Code of 1987, however, a year is composed of 12
calendar months. Needless to state, under the Administrative Code of
1987, the number of days is irrelevant.
There obviously exists a manifest incompatibility in the manner of
computing legal periods under the Civil Code and the Administrative Code
of 1987. For this reason, we hold that Section 31, Chapter VIII, Book I of
the Administrative Code of 1987, being the more recent law, governs the
computation of legal periods. Lex posteriori derogat priori.
Following this formula, respondents petition (filed on April 14,
2000) was filed on the last day of the 24th calendar month from the day
respondent filed its final adjusted return. Hence, it was filed within the
reglementary period.
PERIOD OR TERM, MEANING AND DEFINITION
compared to
NAMARCO vs Tecson
GR No. L-29131.
August 27, 1969
FACTS:
On a previous court case, the CFI rendered judgment:
(a) Ordering the defendants Miguel D. Tecson and Alto Surety
Insurance Co., Inc. to pay jointly and severally plaintiff PRATRA the sum of
P7,200.00 plus 7% interest from May 25, 1960 until the amount is fully
paid, plus P500.00 for attorney's fees, and plus costs;
(b) ordering defendant Miguel D. Tecson to indemnify his codefendant Alto Surety & Insurance Co., Inc. on the cross-claim for all the
amounts it would be made to pay in this decision, in case defendant Alto
Surety & Insurance Co., Inc. pay the amount adjudged to plaintiff in this
decision. From the date of such payment defendant Miguel D. Tecson
would pay the Alto Surety & Insurance Co., Inc., interest at 12% per
annum until Miguel D. Tecson has fully reimbursed plaintiff of the said
amount.
Defendant Miguel Tecson seeks the dismissal of the complaint on
the ground of lack of jurisdiction and prescription. This case was filed
exactly on December 21, 1965 but more than ten years have passed a
year is a period of 365 days (Art. 13, CCP). Plaintiff forgot that 1960, 1964
were both leap years so that when this present case was filed it was filed
two days too late.
ISSUE:
Should the complaint be dismissed on the grounds of prescription?
RULING:
In the language of this Court, in People vs. Del Rosario, with the
approval of the Civil Code of the Philippines (Republic Act 386) ... we have
reverted to the provisions of the Spanish Civil Code in accordance with
which a month is to be considered as the regular 30-day month ... and not
the solar or civil month," with the particularity that, whereas the Spanish
Code merely mentioned "months, days or nights," ours has added thereto
the term "years" and explicitly ordains that "it shall be understood that
years are of three hundred sixty-five days."
The decision was affirmed.
1.
2.
3.
4.
day certain is understood to be that which must necessarily arrive, even though
it is not known when. In order that an obligation may be with a term, it is,
therefore, necessary that it should arrive, sooner or later; otherwise, if its arrival
is uncertain, the obligation is conditional.
Viewing in this light the clause on which defendant relies for the
enforcement of its right to buy the property, it would seem that it is not a term,
but a condition. Considering the first alternative, that is, until defendant shall
have obtained a loan from the National City Bank of New York, it is clear that the
granting of such loan is not definite and cannot be held to come within the terms
day certain. And if it is considered that the period given was until such time as
defendant could raise money from other sources, then it is also to be indefinite
and contingent, and so it is also a condition and not a term within the meaning
of the law. In any event, it is apparent that the fulfillment of the condition
contained in this second alternative is made to depend upon defendants
exclusive will, and viewed in this light, the plaintiffs obligation to sell did not
arise, for, under article 1115 of the old Civil Code, when the fulfillment of the
condition depends upon the exclusive will of the debtor the conditional
obligation shall be void.
Mills, Inc. As of May 11, 1960, plaintiff received a salary of P400.00 and
allowance of P100.00 per month.
Plaintiff's tenure of employment, per defendant Lirag Textile Mills, Inc.'s
above letter of May 9, 1960 was to be 'for an indefinite period, unless sooner
terminated by reason of voluntary resignation or by virtue of a valid cause or
causes'.
On March 4, 1960, per letter of defendant Lirag Textile Mills, Inc. of that
date, signed by its Executive Vice President and General Manager, plaintiff was
advised that effective November 15, 1960 he (Alcantara) was promoted to the
position of Assistant Administrative Officer. Subsequently, on July 22, 1961,
defendant Lirag Textile Mills, Inc. wrote plaintiff (Alcantara) a letter advising him
that because the company 'has suffered some serious reverses, both in terms of
pecuniary loss and in market opportunities,' the company was terminating his
services and effecting his separation from defendant corporation effective at the
close of working hours of August 22, 1961.
Because of this, plaintiff Alcantara filed a complaint before the Regional
Trial Court against defendant Lirag Textile Mills Inc. for illegal dismissal as in
accordance with the employment contract between herein then plaintiff and
then defendant.
ISSUE:
Whether or not the sum in the form of an RFC check and some interest
deposited in the civil case may be withdrawn to satisfy the judgment and to pay
the loan of P6,190 and part of the interest due.
RULING:
undertakings of such central and the planters and the terms and conditions
under which the sugar cane produced by said planters would be milled in the
event of the construction of such sugar central by Ossorio. Such central was in
fact constructed by said Ossorio in Manapla, Negros Occidental, through the
North Negros Sugar Co., Inc., where after the standard form of milling contracts
were executed.
Yes. Although the original loan of P5,000 including the increase of P1,190
was payable within six years from June 1950 and so did not become due and
payable until 1956, the trial court held that under article 1198 of the Civil Code,
the debtor lost the benefit of the period by reason of her failure to give the
security in the form of the two deeds of mortgage and register them, including
defendants act in withdrawing said two deeds from the office of the register of
deeds and then mortgaging the same property in favor of the RFC; and so the
obligation became pure and without any condition and consequently, the loan
became due and immediately demandable. Likewise, even if the defendants
had already deposited a certain amount in favor of the corporation, they are not
yet relieved from the payment of interests from the time of the deposit because
the loan is not yet paid.
After the liberation, the North Negros Sugar Co., Inc. did not reconstruct
its destroyed central at Manapla, Negros Occidental, and in 1946, it advised the
North Negros Planters Association, Inc. that it had made arrangements with the
respondent Victorias Milling Co., Inc. for said respondent corporation to mill the
sugar cane produced by the planters of Manapla and Cadiz holding milling
contracts with it. Thus, after the war, all the sugar cane produced by the
planters of petitioner associations, in Manapla, Cadiz, as well as in Victorias, who
held milling contracts, were milled in only one central, that of the respondent
corporation at Victorias. Beginning with the year 1948, and in the following
years, when the planters-members of the North Negros Planters Association, Inc.
considered that the stipulated 30-year period of their milling contracts executed
in the year 1918 had already expired and terminated in the crop year 19471948, and the planters-members of the Victorias Planters Association, Inc.
likewise considered the stipulated 30-year period of their milling contracts, as
having likewise expired and terminated in the crop year 1948-1949, under the
pertinent provisions of the standard milling contract. Notwithstanding the
repeated representations made by the herein petitioners with the respondent
corporation, the herein respondent has refused and still refuses to accede to the
same, contending that under the provisions of the milling contract.
ISSUE:
Whether or not the trial court erred in rendering its disputed decision,
favoring the petitioner.
up for what they failed to deliver during those trying years, the fulfillment of
which was impossible, if granted, would in effect be an extension of the term of
the contracts entered into by and between the parties.
RULING:
NO.
obligation.
The fact that the contracts make reference to "first milling" does not make
the period of thirty (30) years one of thirty (30) milling years. The term "first
milling" used in the contracts under consideration was for the purpose of
reckoning the thirty-year period stipulated therein. Even if the thirty-year period
provided for in the contracts be construed as milling years, the deduction or
extension of six (6) years would not be justified. At most on the last year of the
thirty-year period stipulated in the contracts the delivery of sugar cane could be
extended up to a time when all the amount of sugar cane raised and harvested
should have been delivered to the appellant's mill as agreed upon.
Further, the parties stipulated that in the event of flood, typhoon,
earthquake, or other force majeure, war, insurrection, civil commotion,
organized strike, etc., the contract shall be deemed suspended during said
period, does not mean that the happening of any of those events stops the
running of the period agreed upon. It only relieves the parties from the
fulfillment of their respective obligations during that time the planters from
delivering sugar cane and the central from milling it.
In order that the central, the herein appellant, may be entitled to demand
from the other parties the fulfillment of their part in the contracts, the latter
must have been able to perform it but failed or refused to do so and not when
they were prevented by force majeure such as war. To require the planters to
deliver the sugar cane which they failed to deliver during the four (4) years of
the Japanese occupation and the two (2) years after liberation when the mill was
being rebuilt is to demand from the obligors the fulfillment of an obligation which
was impossible of performance at the time it became due. Nemo tenetur ad
impossibilia.
The obligee not being entitled to demand from the obligors the
performance of the latters part of the contracts under those circumstances
cannot later on demand its fulfillment. The performance of what the law has
written off cannot be demanded and required. The prayer that the plaintiffs be
compelled to deliver sugar cane to the appellant for six (6) years more to make
POTESTATIVE PERIOD
1.
2.
3.
The lessees exerted effort to pay the rentals due for the months of
February and March 1990 at the monthly rate stipulated in the contract but was
refused by the lessor so that on May 2, 1990, they instituted before the
Metropolitan Trial Court of Manila, Branch 16 a case for consignation.
The trial judge in the consignation case issued an order allowing the
plaintiffs therein to deposit with the City Treasurer of Manila the amount of
P33,480.28 for Co Tong and the amount of P32,710.32 for Tan Te Gutierrez
representing their respective rentals for thirteen (13) months from February,
1990 to January, 1991.
More than six (6) months from the filing of the case for consignation, the
lessor instituted an ejectment suit against the lessees before the Metropolitan
Trial Court of Manila Branch 20. The court in its decision dismissed the ejectment
suit for lack of merit. Regional Trial Court is constrained to reverse the appealed
decision and ordered another judgment to be entered in favor of appellant. This
was, however, reversed by the Court of Appeals
ISSUE:
Whether or not the subject contract of lease did not provide for a definite
period hence it falls under the ambit of Art. 1687 of the NCC, making the
agreement effective on a month-to-month basis since rental payments are made
monthly
RULING:
No. The Court held that Art. 1687 finds no application in the case at bar.
The lease contract between petitioner and respondents is with a period
subject to a resolutory condition. Art. 1687 provides that if the period for the
lease has not been fixed, it is understood to be from year to year, if the rent
agreed upon is annual; from month to month, if it is monthly; from week to
week, if the rent is weekly; and from day to day, if the rent is to be paid daily.
However, even though a monthly rent is paid, and no period for the lease has
been set, the courts may fix a longer term for the lease after the lessee has
occupied the premises for over one year.
If the rent is weekly, the courts may likewise determine a longer period
after the lessee has been in possession for over six months. In case of daily
rent, the courts may also fix a longer period after the lessee has stayed in the
place for over one month. The wording of the agreement is unequivocal: The
lease period shall continue for an indefinite period provided the lessee is up-to-
date in the payment of his monthly rentals. The condition imposed in order
that the contract shall remain effective is that the lessee is up-to-date in his
monthly payments. It is undisputed that the lessees Gutierrez and Co Tong
religiously paid their rent at the increasing rate of 20% annually. The agreement
between the lessor and the lessees are therefore still subsisting, with the original
terms and conditions agreed upon, when the petitioner unilaterally increased the
rental payment to more than 20% or P3,500.00 a month.
POTESTATIVE PERIOD
BORROMEO VS. CA
47 SCRA 65
FACTS:
Before the year 1933, Jose A. Villamor was a distributor of lumber
belonging to Mr. Miller who was the agent of the Insular Lumber Company in
Cebu City.
Defendant being a friend and former classmate of plaintiff,
Borromeo, used to borrow from the latter certain amounts from time to time. On
one occasion with some pressing obligation to settle with Mr. Miller, defendant
borrowed from plaintiff a large sum of money for which he mortgaged his land
and house in Cebu City. Mr. Miller filed civil action against the defendant and
attached his properties including those mortgaged to plaintiff, inasmuch as the
deed of mortgage in favor of plaintiff could not be registered because it was not
properly drawn up. Plaintiff then pressed the defendant for the settlement of his
obligation, but defendant instead offered to execute a document promising to
pay his indebtedness even after the lapse of ten (10) years.
Liquidation was made and defendant was found to be indebted to plaintiff
in the sum of P7,220, for which defendant signed a promissory note on
November 29, 1933 with interest at the rate of 12% per annum, agreeing to
pay-as soon as I have money. The note further stipulates that defendant
hereby relinquish, renounce, or otherwise waive my rights to the prescriptions
established by our Code of Civil Procedure for the collection or recovery of the
above sum of P7,220.
ISSUE:
Whether or not prescription extinguished the obligation.
RULING:
If the obligation does not specify a term, but it is to be inferred from its nature
and circumstances that it was intended to grant the debtor time for its
performance, the period of the term shall be fixed by the court.
The action to ask the court to fix the period has already prescribed in
accordance with section 43 (1) of the Code of Civil Procedure. This period of
prescription is ten (10) years, which has already elapsed from the execution of
the promissory notes until the filing of the action on June 1, 1934. The action
which should be brought in accordance with Article 1128 is different from the
action for the recovery of the amount of the notes, although the effects of both
are the same, being, like other civil actions, subject to the rules of prescription.
4.
5.
6.
7.
8.
9.
BALUYUT VS POBLETE
GR No. 144435.
February 6, 2007
FACTS:
On July 20, 1981, Guillermina Baluyut, mortgaged her house to
secure a loan in the amount of PhP850,000.00 from the spouses Eulogio
and Salud Poblete. The load was set to mature in one month. After a
month had passed, she was unable to pay her indebtedness which led the
spouses to extrajudicially foreclose the mortgage. The property was then
sold on Auction to the Poblete spouses who asked Baluyut to vacate the
premises. Baluyut instead filed an action for annulment of mortgage. His
claim was rejected by the RTC and the CA. Petitioner claims that based on
the testimony of Atty. Edwina Mendoza that the maturity of the loan
which she incurred is only for one year.
ISSUE:
Is petitioners contention tenable?
RULING:
Evidence of a prior or contemporaneous verbal agreement is
generally not admissible to vary, contradict or defeat the operation of a
valid contract. In the instant case, aside from the testimony of Atty.
Mendoza, no other evidence was presented to prove that the real date of
maturity is one year.
The terms that were thusly reduced to writing is deemed to contain
all the terms agreed upon and no evidence of such terms can be admitted
other than the contents of the agreement itself. The promissory note is
the law between petitioner and private respondents and it clearly states
that the loan shall mature in one month from date of the said Promissory
Note.
MALAYAN REALTY VS UY
GR No. 163763. November 10, 2006
FACTS:
Malayan Realty, Inc. (Malayan), is the owner of an apartment unit
known as 3013 Interior No. 90 (the property), located at Nagtahan Street,
Sampaloc, Manila. In 1958, Malayan entered into a verbal lease contract
with Uy Han Yong (Uy) over the property at a monthly rental of P262.00.
The monthly rental was increased yearly starting 1989, and by 2001, the
monthly rental was P4,671.65.
(by signing herein attached corresponding documents, for such lifting); provided,
however, that in the event that defendant Foundation shall sell or dispose of any
of the lands previously subject of lis pendens, the proceeds of any such sale, or
any part thereof as may be required, shall be partially devoted to the payment
of the Foundations obligations under this agreement as may still be subsisting
and payable at the time of any such sale or sales;
XXX
5. Failure of compliance of any of the foregoing terms and conditions by either
or both parties to this agreement shall ipso facto and ipso jure automatically
entitle the aggrieved party to a writ of execution for the enforcement of this
agreement.
In compliance with the Compromise Agreement, respondent Santos
moved for the dismissal of the aforesaid civil cases. He also caused the lifting of
the notices of lis pendens on the real properties involved. For its part, petitioner
SVHFI, paid P1.5 million to respondent Santos, leaving a balance of P13 million.
Subsequently, petitioner SVHFI sold to Development Exchange Livelihood
Corporation two real properties, which were previously subjects of lis pendens.
Discovering the disposition made by the petitioner, respondent Santos sent a
letter to the petitioner demanding the payment of the remaining P13 million,
which was ignored by the latter. Meanwhile, on September 30, 1991, the
Regional Trial Court of Makati City, Branch 62, issued a Decision approving the
compromise agreement.
On October 28, 1992, respondent Santos sent another letter to petitioner
inquiring when it would pay the balance of P13 million. There was no response
from petitioner. Consequently, respondent Santos applied with the Regional
Trial Court of Makati City, Branch 62, for the issuance of a writ of execution of its
compromise judgment dated September 30, 1991. The RTC granted the writ.
Thus, on March 10, 1993, the Sheriff levied on the real properties of petitioner,
which were formerly subjects of the lis pendens. Petitioner, however, filed
numerous motions to block the enforcement of the said writ. The challenge of
the execution of the aforesaid compromise judgment even reached the Supreme
Court. All these efforts, however, were futile.
On November 22, 1994, petitioners real properties located in Mabalacat,
Pampanga were auctioned. In the said auction, Riverland, Inc. was the highest
bidder for P12 million and it was issued a Certificate of Sale covering the real
properties subject of the auction sale. Subsequently, another auction sale was
held on February 8, 1995, for the sale of real properties of petitioner in Bacolod
City. Again, Riverland, Inc. was the highest bidder. The Certificates of Sale
issued for both properties provided for the right of redemption within one year
from the date of registration of the said properties.
On June 2, 1995, Santos and Riverland Inc. filed a Complaint for
Declaratory Relief and Damages alleging that there was delay on the part of
petitioner in paying the balance of P13 million. They further alleged that under
the Compromise Agreement, the obligation became due on October 26, 1992,
but payment of the remaining P12 million was effected only on November 22,
1994. Thus, respondents prayed that petitioner be ordered to pay legal interest
on the obligation, penalty, attorneys fees and costs of litigation. Furthermore,
they prayed that the aforesaid sales be declared final and not subject to legal
redemption.
In its Answer, petitioner countered that respondents have no cause of
action against it since it had fully paid its obligation to the latter. It further
claimed that the alleged delay in the payment of the balance was due to its valid
exercise of its rights to protect its interests as provided under the Rules.
Petitioner counterclaimed for attorneys fees and exemplary damages.
On October 4, 1996, the trial court rendered a Decision dismissing herein
respondents complaint and ordering them to pay attorneys fees and exemplary
damages to petitioner. Respondents then appealed to the Court of Appeals. The
appellate court reversed the ruling of the trial court.
ISSUE:
Whether or not the Court of Appeals was correct in its decision, reversing
the trial courts decision, regarding the legal interest of herein respondents on
aforementioned properties.
RULING:
The Supreme Court held the decision of the Court of Appeals correct. A
compromise is a contract whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to one already commenced. It is an
agreement between two or more persons, who, for preventing or putting an end
to a lawsuit, adjust their difficulties by mutual consent in the manner which they
agree on, and which everyone of them prefers in the hope of gaining, balanced
by the danger of losing. The general rule is that a compromise has upon the
parties the effect and authority of res judicata, with respect to the matter
definitely stated therein, or which by implication from its terms should be
deemed to have been included therein. This holds true even if the agreement
has not been judicially approved.
In the case at bar, the Compromise Agreement was entered into by the
parties on October 26, 1990. It was judicially approved on September 30, 1991.
Applying existing jurisprudence, the compromise agreement as a consensual
contract became binding between the parties upon its execution and not upon
its court approval. From the time a compromise is validly entered into, it
becomes the source of the rights and obligations of the parties thereto. The
purpose of the compromise is precisely to replace and terminate controverted
claims. In accordance with the compromise agreement, the respondents asked
for the dismissal of the pending civil cases. The petitioner, on the other hand,
paid the initial P1.5 million upon the execution of the agreement. This act of the
petitioner showed that it acknowledges that the agreement was immediately
executory and enforceable upon its execution. As to the remaining P13 million,
the terms and conditions of the compromise agreement are clear and
unambiguous.
The two-year period must be counted from October 26, 1990, the date of
execution of the compromise agreement, and not on the judicial approval of the
compromise agreement on September 30, 1991. When respondents wrote a
demand letter to petitioner on October 28, 1992, the obligation was already due
and demandable. When the petitioner failed to pay its due obligation after the
demand was made, it incurred delay. Article 1169 of the New Civil Code
provides:
Third, the demand letter sent to the petitioner on October 28, 1992, was in
accordance with an extra-judicial demand contemplated by law.
Verily, the petitioner is liable for damages for the delay in the performance
of its obligation. This is provided for in Article 1170 of the New Civil Code. When
the debtor knows the amount and period when he is to pay, interest as damages
is generally allowed as a matter of right. The complaining party has been
deprived of funds to which he is entitled by virtue of their compromise
agreement.
The goal of compensation requires that the complainant be
compensated for the loss of use of those funds. This compensation is in the form
of interest. In the absence of agreement, the legal rate of interest shall prevail.
The legal interest for loan as forbearance of money is 12% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.
MANUEL D. MELOTINDOS
VS. MELECIO TOBIAS, represented by JOSEFINA PINEDA
G.R. No. 146658
28 October 2002
391 SCRA 299
FACTS:
Eighty-seven-year old petitioner, Atty. Manuel D. Melontindos, was the
lessee of the ground floor of a house in Malate, Manila. He had been renting the
place since 1983 on a month-to-month basis from its owner, respondent Melecio
Tobias, who was then residing in Canada.
Sometime in the last quarter of 1995, owing to his sickly mother who
needed constant medical attention and filial care, respondent demanded from
petitioner either to pay an increased rate of monthly rentals or else to vacate the
place so he and his mother could use the house during her regular medical
check-up in Manila. For two (2) years nothing came out of the demand to
vacate, hence, in 1997 respondent insisted upon raising the rental fee once
again.
On 1 June 1998 respondent asked petitioner to restore the premises to
him for some essential repairs of its dilapidated structure. This time he did not
offer petitioner anymore the option to pay higher rentals. The renovation of the
house was commenced but had to stop midway because petitioner refused to
vacate the portion he was occupying and worse he neglected to pay for the
lease for four (4) months from May to August 1998. Hence for the second time,
or on 19 October 1998, respondent demanded the payment of the rental arrears
as well as the restoration of the house to him. On 3 February 1999, since
petitioner was insisting on keeping possession of the house but did not pay the
rental for January 1999, although he had settled the arrears of four (4) months,
respondent was compelled to file a complaint for ejectment.
The MeTC of Manila decided the ejectment complaint in favor of
respondent and ordered petitioner to vacate the leased premises and to pay
rental arrears in the amount of P60,000.00 as of December 1998 and P6,000.00
for every month thereafter until he finally restored possession thereof to
respondent plus attorneys fees of P15,000.00 and the costs of suit. The RTC of
Manila upheld in toto the MeTC Decision and denied the subsequent motion for
reconsideration for failure to set the date of hearing thereof not later than ten
(10) days from its filing. Petitioners recourse to the Court of Appeals by petition
for review was also unsuccessful since the assailed Decision was affirmed in its
entirety as the ensuing motion for reconsideration thereof was denied for late
filling, i.e., the motion was filed only on 30 October 2000 beyond the fifteen (15)
day period from his receipt of the CA Decision on 9 October 2000 as shown by
the registry return receipt.
ISSUE:
Whether or not the lower courts erred in their rulings.
RULING:
Agreement. This was affirmed by the RTC. It also held that the parties had a
reciprocal obligation: unless and until petitioner presented the increased realty
tax, private respondents were not under any obligation to pay the increased
monthly rental. The decision was likewise affirmed by the Court of Appeals.
ISSUE:
Whether or not the court could still extend the term of the lease, after its
expiration.
RULING:
In general, the power of the courts to fix a longer term for a lease is
discretionary. Such power is to be exercised only in accordance with the
particular circumstances of a case: a longer term to be granted where equities
demanding extension come into play; to be denied where none appear -- always
with due deference to the parties freedom to contract. Thus, courts are not
bound to extend the lease.
Article 1675 of the Civil Code excludes cases falling under Article 1673
from those under Article 1687. Article 1673 provides among others, that the
lessor may judicially eject the lessee upon the expiration of the period agreed
upon or that, which is fixed for the duration of the leases. Where no period has
been fixed by the parties, the courts, pursuant to Article 1687, have the
potestative authority to set a longer period of lease.
In the case, the Contract of Lease provided for a fixed period of five (5)
years -- specifically from September 16, 1991 to September 15, 1996.
Because the lease period was for a determinate time, it ceased, by express
provision of Article 1669 of the Civil Code, on the day fixed, without need of a
demand. Here, the five-year period expired on September 15, 1996, whereas
the Complaint for ejectment was filed on October 6, 1996. Because there was
no longer any lease that could be extended, the MeTC, in effect, made a new
contract for the parties, a power it did not have.
As stated in Bacolod-Murcia Milling v. Banco Nacional Filipino, It is not the
province of the court to alter a contract by construction or to make a new
contract for the parties; its duty is confined to the interpretation of the one
which they have made for themselves, without regard to its wisdom or folly, as
the court cannot supply material stipulations or read into contract words which it
does not contain.
Furthermore, the extension of a lease contract must be made before the
term of the agreement expires, not after. Upon the lapse of the stipulated
period, courts cannot belatedly extend or make a new lease for the parties, even
on the basis of equity. Because the Lease Contract ended on September
15, 1996, without the parties reaching any agreement for renewal, respondents
can be ejected from the premises.
On the other hand, respondents and the lower courts argue that the
Contract of Lease provided for an automatic renewal of the lease period. Citing
Koh v. Ongsiaco and Cruz v. Alberto, the MeTC -- upheld by the RTC and the CA
-- ruled that the stipulation in the Contract of Lease providing an option to renew
should be construed in favor of and for the benefit of the lessee. This ruling has
however, been expressly reversed in Fernandez v. CA and was recently
reiterated in Heirs of Amando Dalisay v. Court of Appeals. Thus, pursuant to
Fernandez, Dalisay and Article 1196 of the Civil Code, the period of the lease
contract is deemed to have been set for the benefit of both parties. Its renewal
may be authorized only upon their mutual agreement or at their joint will. Its
continuance, effectivity or fulfillment cannot be made to depend exclusively
upon the free and uncontrolled choice of just one party. While the lessee has
the option to continue or to stop paying the rentals, the lessor cannot be
completely deprived of any say on the matter. Absent any contrary stipulation
in a reciprocal contract, the period of lease is deemed to be for the benefit of
both parties.
In the instant case, there was nothing in the aforesaid stipulation or in the
actuation of the parties that showed that they intended an automatic renewal or
extension of the term of the contract. First, demonstrating petitioners
disinterest in renewing the contract was its letter dated August 23, 1996,
demanding that respondents vacate the premises for failure to pay rentals since
1993. As a rule, the owner-lessor has the prerogative to terminate the lease
upon its expiration. Second, in the present case, the disagreement of the parties
over the increased rental rate and private respondents failure to pay it
precluded the possibility of a mutual renewal. Third, the fact that the lessor
allowed the lessee to introduce improvements on the property was indicative,
not of the formers intention to extend the contract automatically, but merely of
its obedience to its express terms allowing the improvements. After all, at the
expiration of the lease, those improvements were to become its property.
As to the contention that it is not fair to eject respondents from the
premises after only five years, considering the value of the improvements they
introduced therein, suffice it to say that they did so with the knowledge of the
risk -- the contract had plainly provided for a five-year lease period.
Parties are free to enter into any contractual stipulation, provided it is not
illegal or contrary to public morals. When such agreement, freely and voluntarily
entered into, turns out to be disadvantageous to a party, the courts cannot
rescue it without crossing the constitutional right to contract. They are not
authorized to extricate parties from the necessary consequences of their acts,
and the fact that the contractual stipulations may turn out to be financially
disadvantageous will not relieve the latter of their obligations.
Petition granted. Decision set aside. Respondents ordered to vacate the
premises, to restore peaceful possession thereof to petitioner, and to pay
accrued rentals.
ISSUE:
Whether or not Alegres contention is tenable.
RULING:
NO. The provisions of the Labor Code recognize the existence and legality
of term employments. The case at bar is one which involves term employment.
Therefore, Alegres employment was terminated upon the expiration of his last
contract with Brent School on July 16, 1976 without the necessity of any notice.
The advance written advice given the Department of Labor with copy to said
petitioner was a mere reminder of the impending expiration of his contract, not a
letter of termination, nor an application for clearance to terminate which needed
the approval of the Department of Labor to make the termination of his services
effective. In any case, such clearance should properly have been given, not
denied.
OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS
LOURDES VALERIO LIM VS. PEOPLE OF THE PHILIPPINES
G.R. No. L-34338
November 21, 1984
133 SCRA 333
FACTS:
On January 10, 1966, Lim (Appellant) went to the house of Maria Ayroso
and proposed to sell Ayroso's tobacco. Ayroso agreed to the proposition of the
appellant to sell her tobacco consisting of 615 kilos at P1.30 a kilo. The
appellant was to receive the overprice for which she could sell the tobacco.
Of the total value of P799.50, the appellant had paid to Ayroso only
P240.00, and this was paid on three different times. Demands for the payment
of the balance of the value of the tobacco were made upon the appellant by
Ayroso, and particularly by her sister, Salud Bantug. Salud Bantug further
testified that she had gone to the house of the appellant several times, but the
appellant often eluded her; and that the 'camarin' of the appellant was empty.
Although the appellant denied that demands for payment were made upon her,
it is a fact that on October 19, 1966, she wrote a letter to Salud Bantug stating
that she could not pay in full the amount of P799.50 because it is also hard to
demand payment from her suki in the market of Cabanatuan. Pursuant to this
letter, the appellant sent a money order for P100.00 on October 24, 1967, and
another for P50.00 on March 8, 1967; and she paid P90.00 on April 18, 1967 or a
ISSUE:
Whether or not the Article 1197 of the Civil Code can be applied in this
case
RULING:
NO. It is clear in the agreement that the proceeds of the sale of the
tobacco should be turned over to the complainant as soon as the same was sold,
or, that the obligation was immediately demandable as soon as the tobacco was
disposed of. Hence, Article 1197 of the New Civil Code, which provides that the
courts may fix the duration of the obligation if it does not fix a period, does not
apply.
Anent the argument that petitioner was not an agent because the
agreement does not say that she would be paid the commission if the goods
were sold, the fact that appellant received the tobacco to be sold at P1.30 per
kilo and the proceeds to be given to complainant as soon as it was sold, strongly
negates transfer of ownership of the goods to the petitioner. The agreement
constituted her as an agent with the obligation to return the tobacco if the same
was not sold.
OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS
PACIFIC BANKING CORPORATION VS. COURT of APPEALS
G. R. No. 45656
May 5, 1989
173 SCRA 102
FACTS:
On April 15, 1955, private respondents Joseph and Eleanor Hart
discovered an area consisting of 480 hectares of tidewater land in Tambac, Gulf
of Lingayen which had great potential for the cultivation of fish and saltmaking.
They organized Insular Farms, Inc., applied for and after eleven months,
obtained a lease from the Department of Agriculture for a period of 25 years,
renewable for another 25 years. Joseph Hart approached businessman John
Insular Farms, Inc. the private respondents, dissatisfied with the decision,
appealed to the Court of Appeals.
The appellate court modified the lower
courts decision, directing Pacific Banking Corporation to pay Joseph Hart
P100,000.00, subject to reimbursement from Babst.
ISSUES:
Whether or not the sale by the petitioner bank of the shares of stocks of
private respondent on March 21, 1958 is valid since the shares of stocks had
been pledged to insure an extension of the period to pay the July installment.
Whether or not the Court may fix a period in the parties agreement to
extend the payment of the loan, including the installment which was due on or
before July 1957 it being imprecise.
RULING:
The Supreme Court held that since there was an agreement to extend
indefinitely the payment of the installment of P50,000.00 in July 1957 as
provided in the promissory note, consequently, petitioner Pacific Banking
Corporation was precluded form enforcing the payment of the said installment of
July 1957, before the expiration of the indefinite period of extension, which
period had to be fixed by the court as provided in Article 1197 of the Civil Code.
Hence, the disputed foreclosure and subsequent sale was premature.
Wherefore, the petition is dismissed.
YES. In case the period of extension is not precise, the provisions of
Article 1197 of the Civil Code should apply. The pledge executed as collateral
security no longer contained a provision on installment due on or before July
1957. The pledge constituted on February 19, 1958 on the shares of stocks of
Insular was sufficient consideration for the extension, considering that pledge
was additional collateral required by the Pacific in addition to the continuing
guaranty of Carkin. Even the ledge did not provide for dates of payment of
installments; or any fixed date for maturity of the whole indebtedness.
Accordingly, the date of maturity of the indebtedness should be as may be
determined by the court under Article 1197 of the Civil Code.
ALTERNATIVE OBLIGATION: MEANING AND DEFINITION
1.
2.
FACTS:
On February 27 1904, Anastasio Alano, Jlose Alano and Florencio Alano
executed in favor of the plaintiff, Dra. Marcela Marino a document stipulating
that the Alanos as testamentary heirs of deceased Rev. Anastacio Cruz, would
pay the sum of P2,730.50 within one (1) year with interest of 12 percent per
annum representing the amount of debt incurred by Cruz. Moreover, the
agreement provided that the Alanos are to convey the house and lot bequeathed
to them by Cruz in the event of failure to pay the debt in money at its maturity.
No part of interest or principal due has been paid except the sum of P200
paid in 1908 by Anastacio Alano. In 1912, Anastasio died intestate. On August
8, 1914, CFI of Batangas appointed Crisanto Javier as administrator of
Anastasios estate. On March 17, 1916, the plaintiffs filed the complaint against
Florencio, Jose and Crisanto praying that unless defendants pay the debt for the
recovery of which the action was brought, they be required to convey to
plaintiffs the house and lot described in the agreement, that the property be
appraised and if its value is found to be less than the amount of the debt, with
accrued interest at the stipulation rate, judgment be rendered in favor of the
plaintiffs for the balance.
ISSUE:
Whether or not the agreement that the defendant-appellant, at the
maturity of the debt, will pay the sum of the money lent by the appellees or will
transfer the rights to the ownership and possession of the house and lot
bequeathed to the former by the testator in favor of the appellees, is valid.
RULING:
YES, this stipulation is valid because it is simply an alternative obligation,
which is expressly allowed by law. The agreement to convey the house and lot
on an appraised value in the event of failure to pay the debt in money at its
maturity is valid. It is simply an undertaking that if debt is not paid in money, it
will be paid in another way. The agreement is not open to the objection that the
agreement is pacto comisorio. It is not an attempt to permit the creditor to
declare the forfeiture of the security upon the failure of the debtor to pay at its
maturity. It is simply provided that if the debt is not paid in money, it shall be
paid by the transfer of the property at a valuation. Such an agreement
FACTS:
On June 3, 1944, plaintiffs filed a complaint against the original
defendant William J.B. Burke, alleging defendants unjustified refusal to
accept payment in discharge of a mortgage indebtedness in his favor, and
praying that the latter be order (1) to receive the sum of P75,920.83; (2)
to execute the corresponding deed of release of mortgage, and; (3) to pay
damages in the sum of P1,000. The Court then decided in favor of plaintiff
Legarda. After the war and the subsequent defeat of the Japanese
occupants, defendant filed a case in court claiming that plaintiff Clara de
Legarda violated her agreement with defendant, by forcing to deposit
worthless Japanese military notes when they originally agreed that the
interest was to be condoned until after the occupation and that payment
was rendered either in Philippine or English currency. Defendant was later
substituted upon death by his heir Miailhe and the Courts judged in
defendants favor. Plaintiff now assails said decision.
ISSUE:
Is the tender of payment by plaintiff valid?
RULING:
On February 17, 1943, the only currency available was the
Philippine currency, or the Japanese Military notes, because all other
currencies, including the English, were outlawed by a proclamation issued
by the Japanese Imperial Commander on January 3, 1942. The right to
election ceased to exist on the date of plaintiffs payment because it had
become legally impossible. And this is so because in alternative
obligations there is no right to choose undertakings that are impossible or
illegal. In other words, the obligation on the part of the debtor to pay the
mortgage indebtedness has since then ceased to be alternative. It
appears therefore, that the tender of payment in Japanese Military notes
was a valid tender because it was the only currency permissible at the
time and its payment was tantamount to payment in Philippine currency.
However, payment with the clerk of court did not have any legal
effect because it was made in certified check, and a check does not meet
the requirements of legal tender. Therefore, her consignation did not have
the effect of relieving her from her obligation of the defendant.
ALTERNATIVE OBLIGATION: EFFECTIVITY OF CHOICE (Art. 12012, CC)
REYES VS. MARTINEZ
55 Phil 493
FACTS:
Estanislao Reyes filed an action before the Court of First Instance of
Laguna against the Martinez heirs upon four several causes of action in which
the plaintiff seeks to recover five parcels of land, containing proximately one
thousand coconut trees, and to obtain a declaration of ownership in his favor as
against the defendants with respect to said parcels; to recover from the
defendants the sum of P9,377.50, being the alleged proceeds of some coconut
trees; to recover from the defendants the sum of P43,000, as alleged value of
the proceeds of the lands involved in the receivership in the case of Martinez vs.
Grano, to which the plaintiff supposes himself to be entitled, but which have
gone, so he claims, to the benefit of the defendants in said receivership and
lastly, to recover the sum of the P10,000 from the defendants as damages
resulting from their improper meddling in the administration of the receivership
property.
The plaintiff has been laboring along for several years in an unsuccessful
legal battle with the defendants, springing from his claim to be the owner of the
property involved in the receivership. This cause of action is founded upon the
contract and the claim put forth by the plaintiff is to have the five parcels
adjudge to him in lieu of another parcel formerly supposed to contain one
thousand trees between him and certain of the Martinez heirs. By this contract,
Reyes was to be given the parcel described in clause 8, but in a proviso to said
clause, the parties contracting with Reyes agreed to assure to him certain other
land containing an equivalent number of trees in case he should so elect. The
litigation shows that the plaintiff elected to take and hold the parcel described in
clause 8, and his right thereto has all along been recognized in the dispositions
made by the court with respect to said land. Thus, Reyes must be taken to have
elected to take that particular parcel and he is now estopped from asserting a
contrary election to take the five parcels of land described in his complaint.
However, the title of the parcel is in the heirs of Inocente Martinez and it
does not appear that they have transferred said title to Reyes.
ISSUE:
Whether or not Reyes is entitled to the damages against the partys
signatory to the contract of March 5, 1921 for the value of the said property.
RULING:
Yes. The claim of the defendants to the interest of P8,000 from July 31,
1926 cannot be conceded as the judgment itself bears interest at the lawful rate
from the date the same was rendered. The Martinez heirs are ordered to
procure the sufficient deed conveying to appellant Estanislao Reyes the parcels
of land mentioned in paragraph 8 of the contract. The judgment against Reyes
in favor of the Martinez heirs is enjoined.
ALTERNATIVE VS. FACULTATIVE OBLIGATION
QUIZANA VS. REDUGERIO
94 PHIL. 922
FACTS:
This is an appeal to the Court from a decision rendered by the Court of the
First Instance of Marinduque, wherein the defendant Gaudencio Redugerio was
to pay the plaintiff Martina Quizana the sum of P550 with the interest from the
time of the filing of the complaint and from an order of the same court denying a
motion of the defendant for the reconsideration of the judgment on the ground
that they were deprived of their day in court.
There were actionable documents attached to the complaint signed by the
defendant-appellant spouses Redugerio and Pastrado on October 4, 1948 and
containing the provision that Quizana is to be paid on January 1949 and in case
of failure, they will mortgage the coconut plantation in Sta. Cruz, Marinduque.
The defendants admitted that they offered the transfer of possession but was
eventually refused by the petitioner.
So eventually, the defendants appealed in the CFI which set the hearing
on August 16, 1951.
The first installment was duly paid, but the second installment the sub
lessees only satisfied a portion thereof, leaving an unpaid of P50,600.00.
Despite due demand, the lessees failed to comply with their obligation so that on
October 13,1989 private respondent sued Alipio and Manuel spouses for the
collection of the said amount before the RTC, and in the alternative, he prayed
for the rescission of the sublease contract should the defendant failed to pay the
balance.
Petitioner Purita moved to dismiss the case on the ground that her
husband had passed away on December 1988. She based her action on Rule 3
Section 31 of 1964 Rules of Court.
ISSUE:
Whether or not a creditor can sue the surviving spouses for the collection
of debt which is owned by the conjugal partnership of gains, and not in a
proceeding for the settlement of the estate of the decedent.
RULING:
NO, creditor cannot sue the surviving spouse of a decedent in an ordinary
proceeding for the collection of the sum of money chargeable against the
conjugal partnership and that the proper remedy is for him to file a claim in the
settlement of the estate of the decedent.
Article 161(1) states that: All debts and obligation contracted by the
husband for the benefits of the conjugal partnership, and those contracted by
the wife, also for the same purpose, in the cases where she may legally bind the
partnership.
When petitioners husband died, their conjugal partnership was
automatically dissolved and debts chargeable against it are to be paid in the
settlement of estate proceeding in accordance with Rule 73 Section 2: When
marriage dissolved by death of the husband or wife, the community property
shall be inventoried, administered and liquidated, and the debts thereof paid in
the testate or intestate proceeding of the deceased spouse. If both spouses have
died, the conjugal partnership shall be liquidated in the testate or intestate
proceeding of either.
2. The redemption period after the auction sale of the properties had long
lapsed so much [so] that the purchaser therein became the absolute owner
thereof. Thus, respondent Judge allegedly abused his discretion in setting aside
the auction sale after the redemption period had expired.
3. Respondent Judge erred in applying the presumption of a joint obligation in
the face of the conclusion of fact and law contained in the decision showing that
the obligation is solidary.
The Court of Appeals affirmed the trial courts ruling declaring null and
void (a) the auction sale of Respondent Ferrales real property and (b) the Writ of
Possession issued in consequence thereof. It held that, pursuant to the January
31, 1984 Decision of the trial court, the liability of Farrales was merely joint and
not solidary. Consequently, there was no legal basis for levying and selling
Farrales real and personal properties in order to satisfy the whole obligation.
ISSUE:
Whether or not the Court of Appeals erred when it disregarded the body of
the decision and concluded that the obligation was merely a joint obligation due
to the failure of the dispositive portion of the decision dated 31 January 1984 to
state that the obligation was joint and solidary.
RULING:
No. A solidary obligation is one in which each of the debtors is liable for
the entire obligation, and each of the creditors is entitled to demand the
satisfaction of the whole obligation from any or all of the debtors. On the other
hand, a joint obligation is one in which each debtors is liable only for a
proportionate part of the debt, and the creditor is entitled to demand only a
proportionate part of the credit from each debtor. The well-entrenched rule is
that solidary obligations cannot be inferred lightly. They must be positively and
clearly expressed. A liability is solidary only when the obligation expressly so
states, when the law so provides or when the nature of the obligation so
requires.
In the dispositive portion of the January 31, 1984 Decision of the trial
court, the word solidary neither appears nor can it be inferred therefrom. The
fallo merely stated that the following respondents were liable: Pacific Lloyd
Corporation, Thomas H. Van Sebille, Carlos M. Farrales and Federico C. Lim.
Under the circumstances, the liability is joint, as provided by the Civil Code,
which we quote: Art. 1208. If from the law, or the nature or the wording of the
obligations to which the preceding article refers[,] the contrary does not appear,
the credit or debt shall be presumed to be divided into as many equal shares as
there are creditors or debtors x x x. Hence the execution must conform with
that which is ordained or decreed in the dispositive portion of the decision.
Petitioner maintains that the Court of Appeals improperly and incorrectly
disregarded the body of the trial courts Decision, which clearly stated as follows:
To support the Promissory Note, a Continuing Suretyship Agreement was
executed by the defendants, Federico C. Lim, Carlos M. Farrales and Thomas H.
Van Sebille, in favor of the plaintiff corporation, to the effect that if Pacific Lloyd
Corporation cannot pay the amount loaned by plaintiff to said corporation, then
Federico C. Lim, Carlos M. Farrales and Thomas H. Van Sebille will hold
themselves jointly and severally together with defendant Pacific Lloyd
Corporation to answer for the payment of said obligation.
The only exception when the body of a decision prevails over the fallo is
when the inevitable conclusion from the former is that there was a glaring error
in the latter, in which case the body of the decision will prevail. In this instance,
there was no clear declaration in the body of the January 31, 1984 Decision to
warrant a conclusion that there was an error in the fallo. Nowhere in the former
can we find a definite declaration of the trial court that, indeed, respondents
liability was solidary. If petitioner had doubted this point, it should have filed a
motion for reconsideration before the finality of the Decision of the trial court.
SOLIDARY OBLIGATIONS: HOW CREATED
1.
2.
3.
4.
CDCP VS ESTRELLA
GR No. 147791. September 8, 2006
FACTS:
On December 29, 1978, respondents Rebecca G. Estrella and her
granddaughter, Rachel E. Fletcher, boarded in San Pablo City, a BLTB bus
bound for Pasay City. However, they never reached their destination
because their bus was rammed from behind by a tractor-truck of CDCP in
the South Expressway. The strong impact pushed forward their seats and
pinned their knees to the seats in front of them. They regained
consciousness only when rescuers created a hole in the bus and
extricated their legs from under the seats. They suffered physical injuries
as a result. Thereafter, respondents filed a Complaint for damages against
CDCP, BLTB, Espiridion Payunan, Jr. and Wilfredo Datinguinoo before the
Regional Trial Court of Manila, Branch 13.
ISSUE:
Are the accused jointly or solidarily liable?
RULING:
The case filed by respondents against petitioner is an action
for culpa aquiliana or quasi-delict under Article 2176 of the Civil Code. The
liability for the negligent conduct of the subordinate is direct and primary,
but is subject to the defense of due diligence in the selection and
supervision of the employee. In the instant case, the trial court found that
petitioner failed to prove that it exercised the diligence of a good father of
a family in the selection and supervision of Payunan, Jr.
It is well-settled in Fabre, Jr. v. Court of Appeals, that the
owner of the other vehicle which collided with a common carrier is
solidarily liable to the injured passenger of the same. The Peitition was
thusly DENIED.
SOLIDARY OBLIGATIONS: HOW CREATED
When it is not provided in a judgment that the defendant are liable to pay jointly
and severally a certain sum of money, none of them may be compelled to satisfy
in full said judgment.
SOLIDARY OBLIGATIONS: HOW CREATED
METRO MANILA TRANSIT CORPORATION, petitioner,
VS. THE COURT OF APPEALS and NENITA CUSTODIO, respondents.
Jun 21, 1993
G.R. No. 104408
FACTS:
Plaintiff-appellant Nenita Custodio boarded as a passenger of a public
utility jeepney, then driven by defendant Agudo Calebag and owned by his codefendant Victorino Lamayo, bound for her work at Dynetics Incorporated
located in Bicutan, Taguig, Metro Manila, where she then worked as a machine
operator. While the passenger jeepney was travelling at along DBP Avenue,
Bicutan, Taguig, Metro Manila another fast moving vehicle, a Metro Manila
Transit Corp. (MMTC) bus driven by defendant Godofredo C. Leonardo bound for
its terminal at Bicutan. As both vehicles approached the intersection of DBP
Avenue and Honeydew Road they failed to slow down and slacken their speed;
neither did they blow their horns to warn approaching vehicles.
As a
consequence, a collision between them occurred. The collision impact caused
plaintiff-appellant Nenita Custodio to hit the front windshield of the passenger
jeepney and was thrown out therefrom, falling onto the pavement unconscious
with serious physical injuries. She was brought to the Medical City Hospital
where she regained consciousness only after 1 week. Thereat, she was confined
for 24 days, and as a consequence, she was unable to work for three and one
half months 3 1/2. Defendants denied all the material allegations in the
complaint and pointed an accusing finger at each other as being the party at
fault for the negligence in the failure to exercise due diligence in the selection
and supervision of their respective employees.
By order of the trial court, defendant Calebag was declared in default for
failure to file an answer. Trial ensued after no amicable settlements were made.
The trial court found both drivers of the colliding vehicles concurrently negligent
for non-observance of appropriate traffic rules and regulations and for failure to
take the usual precautions when approaching an intersection.
As joint
tortfeasors, both drivers, as well as defendant Lamayo, were held solidarily liable
for damages sustained by plaintiff Custodio.
FACTS:
Petitioner, together with Gregorio Pantanosas Jr., and Rene Naybe, had
their obligations arouse from the signing of a promissory note amounting to P50,
000 holding themselves jointly and severally liable to private respondent
Philippine Bank of Communications, Cagayan de Oro City branch.
The
promissory note was due on May 5, 1983.
The promissors failed to fulfill their obligations despite demand by the
bank. As a consequence, an action to collect was filed with the court but was
dismissed due to failure to prosecute. Said dismissal was reconsidered by the
trial court and later ordered the sheriff to serve the summons. On January 27,
1987, the lower court dismissed the case against defendant Pantanosas as
prayed for by the private respondent herein. Meanwhile, only the summons
addressed to petitioner was served as the sheriff learned that defendant Naybe
had gone to Saudi Arabia.
Petitioner argued that said promissory note has vitiated his consent
through fraud and deceit which was later corroborated by Pantanosas for he only
signed for the amount of P5,000 on one of the copies of the promissory note,
and not the alleged amount, to buy chainsaw. He also claimed that since the
liabilities of Pantanosas and Naybe, his co-promissors, had extinguished, his
should also be extinguished, as provided for by Article 2080 of the Civil Code on
guarantors. The Regional Trial Court and the Court of Appeals rejected his
petitions and so a petition for review on certiorari was filed with the Supreme
Court.
ISSUE:
Whether or not the petitioner is solidary co-maker of the promissory note
in issue and not merely a guarantor.
RULING:
The Supreme Court held that the petitioner signed the promissory note as
a solidary co-maker and not as a guarantor. A solidary or joint and several
obligation is one in which each debtor is liable for the entire obligation, and each
creditor is entitled to demand the whole obligation. On the other hand, Article
2047 of the Civil Code states:
By guaranty a person, called the guarantor, binds himself to the creditor to
fulfill the obligation of the principal debtor in case the latter should fail to do so.
If a person binds himself solidarily with the principal debtor, the provisions
of Section 4, Chapter 3, Title I of this Book shall be observed. In such a case the
contract is called a suretyship. While a guarantor may bind himself solidarily
with the principal debtor, the liability of a guarantor is different from that of a
solidary debtor. Thus, Tolentino explains:
A guarantor who binds himself in solidum with the principal debtor under the
provisions of the second paragraph does not become a solidary co-debtor to all
intents and purposes. There is a difference between a solidary co-debtor and a
fiador in solidum (surety). The latter, outside of the liability he assumes to pay
the debt before the property of the principal debtor has been exhausted, retains
all the other rights, actions and benefits which pertain to him by reason of the
fiansa; while a solidary co-debtor has no other rights than those bestowed upon
him in Section 4, Chapter 3, Title I, Book IV of the Civil Code.
Section 4, Chapter 3, Title I, Book IV of the Civil Code states the law on joint and
several obligations. Under Art. 1207 thereof, when there are two or more
debtors in one and the same obligation, the presumption is that the obligation is
joint so that each of the debtors is liable only for a proportionate
part of the debt. There is a solidary liability only when the obligation expressly
so states, when the law so provides or when the nature of the obligation so
requires.
Because the promissory note involved in this case expressly states that
the three signatories therein are jointly and severally liable, any one, some or all
of them may be proceeded against for the entire obligation. The choice is left to
the solidary creditor to determine against whom he will enforce collection.
Consequently, the dismissal of the case against Judge Pontanosas may not be
deemed as having discharged petitioner from liability as well.
As regards
Naybe, suffice it to say that the court never acquired jurisdiction over him.
Petitioner, therefore, may only have recourse against his co-makers, as provided
by law.
ACTIVE SOLIDARITY OR MUTUAL AGENCY: EFFECTS
PHILIPPINE BLOOMING MILLS VS. COURT OF APPEALS
413 SCRA 445
OCTOBER 15, 2003
FACTS:
Alfredo Ching (Ching) was the Senior Vice President of Philippine Blooming
Mills, Inc. (PBM). In his personal capacity and not as a corporate officer, Ching
signed a Deed of Suretyship dated 21 July 1977 binding himself solidarily liable
together with the debtor PBM.
On March 24 and August 6 1980, Traders Royal Bank (TRB) granted PBM
letters of Credit on application of Ching in his capacity as Senior Vice President
of PBM. Ching later accomplished and delivered to TRB trust receipts, which
acknowledged receipt in trust for TRB of the merchandise subject of the letters
of credit. Under the trust receipts, PBM had the right to sell the merchandise for
cash with the obligation to turn over the entire proceeds of the sale to TRB as
payment of PBMs indebtedness.
Ching further executed an Undertaking for each trust receipt, which
uniformly granted the TRB the right to take possession of the goods at any time
to protect the TRBs interests.
On 27 April 1981, PBM obtained a P3, 500,000 trust loan from TRB. Ching
signed as co-maker in the notarized Promissory Note evidencing said loan.
PBM defaulted in its payment of the two (2) trust receipts as well as the
trust loan.
On 1 April 1982, PBM and Ching filed a petition for suspension of
payments with the Securities and Exchange Commission (SEC). The petition
sought to suspend payment of PBMs obligations and prayed that the SEC allow
PBM to continue its normal business operations free from the interference of its
creditors. One of the listed creditors of PBM was TRB.
On 9 July 1982, the SEC placed all of PBMs assets, liabilities, and
obligations under the rehabilitation receivership of Kalaw, Escaler and
Associates.
On 13 May 1983, ten months after the SEC placed PBM under
rehabilitation receivership, TRB filed with the trial court a complaint for collection
against PBM and Ching. TRB asked the trial court to order defendants to pay
solidarily the indebtedness of PBM.
On 25 May 1983, TRB moved to withdraw the complaint against PBM on
the ground that the SEC had already placed PBM under receivership. The trial
court thus dismissed the complaint against PBM.
On 23 July 1983, PBM and Ching also moved to dismiss the complaint on
the ground that the trial court had no jurisdiction over the subject matter of the
case. PBM and Ching invoked the assumption of jurisdiction by the SEC over all
of PBMs assets and liabilities.
The trial court denied the motion to dismiss with respect to Ching and
affirmed its dismissal of the case with respect to PBM. The trial court stressed
that TRB was holding Ching liable under the Deed of Suretyship. As Chings
obligation was solidary, the trial court ruled that TRB could proceed against
Ching as surety upon default of the principal debtor PBM.
Upon the trial courts denial of his Motion for Reconsideration, Ching filed
a Petition for Certiorari and Prohibition before the Court of Appeals. The
appellate court granted Chings petition and ordered the dismissal of the case.
The appellate court ruled that SEC assumed jurisdiction over Ching and PBM to
the exclusion of courts or tribunals of coordinate rank.
TRB assailed the Court of Appeals decision before the Supreme Court. In
Traders Royal Bank v. Court of Appeals, the highest tribunal upheld the TRB and
ruled that Ching was merely a nominal party in the SEC case. Creditors may sue
individual sureties of debtor corporations, like Ching, in a separate proceeding
before regular courts despite the pendency of a case before the SEC involving
the debtor corporation.
In his Answer dated 6 November 1989, Ching denied liability as surety and
accommodation co-maker of PBM. He claimed that the SEC had already issued a
decision approving a revised rehabilitation plan for PBMs creditors. He further
claimed that even as a surety, he has the right to the defenses personal to PBM.
Thus, his liability as surety would attach only if, after the rehabilitation of
payments scheduled under the rehabilitation plan, there would remain a balance
of PBMs debt to TRB.
The trial court ruled that Ching is liable to TB under the Deed of
Suretyship. On appeal, the Court of Appeals affirmed the decision of the lower
court. The Court of Appeals denied Chings Motion for Reconsideration for lack
of merit.
ISSUES:
Whether or not Ching is liable for obligations PBM contracted after the
execution of the Deed of Suretyship.
FACTS:
On 1 December 1997, Eparwa and LDCU, entered into a Contract for
Security Services. On 21 December 1998, 11 security guards (security
guards) whom Eparwa assigned to LDCU from 1 December 1997 to 30
November 1998, filed a complaint before the NLRC Regional Arbitration
Branch No. 10 in Cagayan de Oro City. The complaint was filed against
both Eparwa and LDCU for underpayment of salary, legal holiday pay,
13th month pay, rest day, service incentive leave, night shift differential,
overtime pay, and payment for attorneys fees.
The Labor Arbiter found that the security guards are entitled to
wage differentials and premium for holiday and rest day work. The Labor
Arbiter held Eparwa and LDCU solidarily liable pursuant to Article 109 of
the Labor Code. LDCU filed an appeal before the NLRC. LDCU agreed
with the Labor Arbiters decision on the security guards entitlement to
salary differential but challenged the propriety of the amount of the
award. LDCU alleged that security guards not similarly situated were
granted uniform monetary awards and that the decision did not include
the basis of the computation of the amount of the award.
Eparwa also filed an appeal before the NLRC. For its part, Eparwa
questioned its liability for the security guards claims and the awarded
cross-claim amounts. The NLRC found that the security guards are
entitled to wage differentials and premium for holiday and rest day work.
Although the NLRC held Eparwa and LDCU solidarily liable for the wage
differentials and premium for holiday and rest day work, the NLRC did not
require Eparwa to reimburse LDCU for its payments to the security
guards. Eparwa and LDCU again filed separate motions for partial
reconsideration. In its Resolution NLRC declared that although Eparwa
and LDCU are solidarily liable to the security guards for the monetary
award, LDCU alone is ultimately liable.
LDCU filed a petition for certiorari before the appellate court
assailing the NLRCs decision.
The appellate court granted LDCUs
petition and reinstated the Labor Arbiters decision. The appellate court
also allowed LDCU to claim reimbursement from Eparwa.
The
appellate
court
denied
Eparwas
motion
for
reconsideration.Hence, this petition.
ISSUE:
Is LDCU alone ultimately liable to the security guards for the wage
differentials and premium for holiday and rest day pay?
RULING:
Articles 106, 107 and 109 of the Labor Code read:
Art. 106. Contractor or subcontractor. Whenever an employer
enters into a contract with another person for the performance of the
formers work, the employees of the contractor and of the latters
subcontractor, if any, shall be paid in accordance with the provisions of
this Code.Article 107. Indirect employer. The provisions of the
immediately preceding Article shall likewise apply to any person,
partnership, association or corporation which, not being an employer,
contracts with an independent contractor for the performance of any
work, task, job or project.
Article 109. Solidary liability. The provisions of existing laws to
the contrary notwithstanding, every employer or indirect employer shall
be held responsible with his contractor or subcontractor for any violation
of any provision of this Code. For purposes of determining the extent of
their civil liability under this Chapter, they shall be considered as direct
employers.
This joint and several liability of the contractor and the principal is
mandated by the Labor Code to assure compliance of the provisions
therein including the statutory minimum wage [Article 99, Labor Code].
The contractor is made liable by virtue of his status as direct employer.
The principal, on the other hand, is made the indirect employer of the
contractors employees for purposes of paying the employees their wages
should the contractor be unable to pay them. This joint and several
liability facilitates, if not guarantees, payment of the workers
performance of any work, task, job or project, thus giving the workers
ample protection as mandated by the 1987 Constitution. For the security
guards, the actual source of the payment of their wage differentials and
premium for holiday and rest day work does not matter as long as they
are paid. This is the import of Eparwa and LDCUs solidary liability.
Creditors, such as the security guards, may collect from anyone of the
solidary debtors. Solidary liability does not mean that, as between
themselves, two solidary debtors are liable for only half of the payment.
Upon the default of the promissors to pay, bank filed a complaint for the
collection of a sum of money. Defendant Carlos Dimayuga, now petitioner,
however, had remitted to the respondent the P4,000.00 by way of partial
payments made from August 1, 1969 to May 7, 1970 as evidenced by
corresponding receipts thereto. These payments were nevertheless applied to
past interests, charges and partly on the principal.
The trial court held the defendants jointly and severally liable to pay the
plaintiff the sum of P9,139.60 with interest at 10% per annum until fully paid
plus P913.96 as attorneys' fees and costs against defendants. Petitioner then
filed a motion alleging that since Pedro Tanjuatco died on December 23, 1973,
the money claim of the respondents should be dismissed and prosecuted against
the estate of the late Pedro Tanjuatco as provided in Sec. 5, Rule 86, New Rules
of Court. The trial court denied the motion for lack of merit. On appeal, the
Court of Appeals dismissed the appeal for failure of the Record on Appeal to
show on its face that the appeal was timely perfected.
ISSUE:
Whether or not the money claim of PCIB should be dismissed and
prosecuted against the estate of the late Tanjuatco.
RULING:
From the evidence presented, there can be no dispute that Carlos
Dimayuga bound himself jointly and severally with Pedro C. Tanjuatco, now
deceased, to pay the obligation with PCIB in the amount of P10,000.00 plus 10%
interest per annum. In addition, as above stated, in case of non-payment, they
undertook among others to jointly and severally authorize respondent bank, at
its option to apply to the payment of this note, any and all funds, securities, real
or personal properties, etc. belonging to anyone or all of them. Otherwise
stated, the promissory note in question provides in unmistakable language that
the obligation of petitioner Dimayuga is joint and several with Pedro C.
Tanjuatco.
It is well settled under the law and jurisprudence that when the obligation
is solidary, the creditor may bring his action in toto against the debtors obligated
in solidum. As expressly allowed by Article 1216 of the Civil Code, the creditor
may proceed against any one of the solidary debtors or some or all of them
simultaneously. "Hence, there is nothing improper in the creditor's filing of an
action against the surviving solidary debtors alone, instead of instituting a
proceeding for the settlement of the estate of the deceased debtor wherein his
claim could be filed." The notice is undoubtedly left to the solidary creditor to
determine against whom he will enforce collection.
Court of Appeals decision reversed and set aside.
affirmed.
ISSUE:
Whether or not petitioner is a co-debtor of Delgado; hence, liable to pay
the loan contracted by Delgado.
RULING:
NO, petitioner is not a co-debtor of Delgado. Nowhere did it appear in the
promissory note that petitioner was a co-debtor. Article 1311 of the Civil Code is
clear that contracts take effect only between the parties Moreover, Article
1207 of the Civil Code states that there is solidary liability only when the
obligation expressly so states, or when the law or nature of the obligation so
requires. It was clear that petitioner had no part in the contract. It was
Delgado alone who signed the said agreement. Thus, nowhere could it be seen
from the agreement that petitioner was solidarily bound with Delgado for the
payment of the loan.
There is also no legal provision nor jurisprudence in our jurisdiction which
makes a third person who secures the fulfillment of anothers obligation by
mortgaging his own property solidarily bound with the principal obligor. A
chattel mortgage may be an accessory contract to a contract of loan, but that
fact alone does not make a third-party mortgagor solidarily bound with the
principal debtor in the fulfilling of the principal obligation that is, to pay the loan.
The signatory of the principal contract remains to be primarily bound. It is only
upon the default of the latter that the creditor may have recourse on the
mortgagors by foreclosing the mortgaged properties in lieu of an action for
recovery of the amount of the loan.
And the liability of the third-party
mortgagors extends only to the property mortgaged. Should there be any
deficiency, the creditor has recourse on the principal debtor.
INDIVISIBLE OBLIGATIONS:
CONVENTIONAL
KINDS OF INDIVISIBILITY:
NATURAL, LEGAL OR
Natividad and Maximino, Jr. are the petitioners in this case, while the estate of
Maximino, Sr., Romeo, and his wife Eliza Nazareno are the respondents. During
their marriage, Maximino Nazareno, Sr. and Aurea Poblete acquired properties in
Quezon City and in the Province of Cavite. Upon the reorganization of the courts
in 1983, the case was transferred to the RTC of Naic, Cavite. Romeo was
appointed administrator of his fathers estate. In the course of the intestate
proceedings, Romeo discovered that his parents had executed several deeds of
sale conveying a number of real properties in favor of his sister, Natividad. One
of the deeds involved six lots in Quezon City which were allegedly sold by
Maximino, Sr., with the consent of Aurea, to Natividad on January 29, 1970 for
the total amount of P47,800.00.
Among the lots covered by the above Deed of Sale is Lot 3-B which is
registered under TCT No. 140946. This lot had been occupied by Romeo, his
wife Eliza, and by Maximino, Jr. since 1969. Unknown to Romeo, Natividad sold
Lot 3-B on July 31, 1982 to Maximino, Jr., for which reason the latter was issued
TCT No. 293701 by the Register of Deeds of Quezon City. When Romeo found
out about the sale to Maximino, Jr., he and his wife Eliza locked Maximino, Jr. out
of the house. On August 4, 1983, Maximino, Jr. brought an action for recovery of
possession and damages with prayer for writs of preliminary injunction and
mandatory injunction with the RTC of Quezon City. On December 12, 1986, the
trial court ruled in favor of Maximino, Jr. In CA-G.R. CV No. 12932, the CA
affirmed the decision of the trial court. On June 15, 1988, Romeo in turn filed, on
behalf of the estate of Maximino, Sr., the present case for annulment of sale with
damages against Natividad and Maximino, Jr. The case was filed in the RTC of
Quezon City. Romeo sought the declaration of nullity of the sale made on
January 29, 1970 to Natividad and that made on July 31, 1982 to Maximino, Jr. on
the ground that both sales were void for lack of consideration. On March 1,
1990, Natividad and Maximino, Jr. filed a third-party complaint against the
spouses Romeo and Eliza. They alleged that Lot 3, which was included in the
Deed of Absolute Sale of January 29, 1970 to Natividad, had been surreptitiously
appropriated by Romeo by securing for himself a new title in his name. They
alleged that Lot 3 is being leased by the spouses Romeo and Eliza to third
persons.
In the trial court, it rendered a decision declaring the nullity of the Deed of
Sale dated January 29, 1970 except as to lots 3, 3-b, 13 and 14 which had
passed on to third persons. On motion for reconsideration, the trial court
modified its decision. On appeal to the Court of Appelas, the decision of the trial
court was modified in the sense that the titles to Lot 3 (in the name of Romeo
Nazareno) and Lot 3-B ( in the name of Maximino Nazareno, Jr.), as well as to
Lots 10 and 11 were cancelled and ordered restored to the estate of Maximino,
Sr.
ISSUE:
Whether or not the the Deed of Absolute Sale on January 29, 1970 is an
indivisible contract founded on an indivisible obligation
RULING:
An obligation is indivisible when it cannot be validly performed in parts,
whatever may be the nature of the thing which is the object thereof. The
indivisibility refers to the prestation and not to the object thereof. In the present
case, the Deed of Sale of January 29, 1970 supposedly conveyed the six lots to
Natividad. The obligation is clearly indivisible because the performance of the
contract cannot be done in parts; otherwise the value of what is transferred is
diminished. Petitioners are therefore mistaken in basing the indivisibility of a
contract on the number of obligors. The decision of the Court of Appeals is
AFFIRMED.
KINDS OF PENALTIES:
1.
2.
FACTS:
Petitioners Alonzo and Sison alleged that they are the registered owners
of a parcel of land located at Lot 3, Block 11, M. Agoncillo St., Novaliches,
Quezon City, evidenced by TCT No. 152153. At around June 1996, petitioners
discovered that a portion on the left side of the parcel of land was occupied by
the respondents San Juan, without their knowledge or consent. A demand letter
was sent to the respondents requiring them to vacate the said premises, but
they refused to comply.
Petitioners then filed a complaint against the
respondents. During the pendency of the case, the parties agreed to enter into
a Compromise Agreement which the trial court approved in a judgment by
compromise dated May 7, 1997.
In the Compromise Agreement, it was
expressly stipulated that should any two of the installments of the purchase
price be not paid by the respondents, the said agreement shall be considered
null and void. Alleging that the respondents failed to abide by the provisions of
the Compromise Agreement by their failure to pay the amounts due thereon,
petitioners then filed an Amended Motion for Execution. Petitioners alleged that
the respondents failed to pay the installments for July 31, 1997 and August 31,
1997 on their due dates, thus the Compromise Agreement submitted by the
parties became null and void. With this, the trial court found no reason to direct
the issuance of the writ of execution and denied the petitioners Amended
Motion for Execution. Petitioners filed their motion for reconsideration to which
the respondents opposed. The trial court likewise denied the petitioners motion
for reconsideration.
ISSUE:
Whether or not the petitioners have a right to enforce the provision on
Compromise Agreement by asking for the issuance of a writ of execution
because of the failure of the respondents to pay.
RULING:
The Supreme Court held that the items 11 and 12 of the Compromise
Agreement provided, in clear terms, that in case of failure to pay on the part of
the respondents, they shall vacate and surrender possession of the land that
they are occupying and the petitioners shall be entitled to obtain immediately
from the trial court the corresponding writ of execution for the ejectment of the
respondents. This provision must be upheld, because the Agreement supplanted
the complaint itself. When the parties entered into a Compromise Agreement,
the original action for recovery of possession was set aside and the action was
changed to a monetary obligation. Once approved judicially, the Compromise
Agreement cannot and must not be disturbed except for vices of consent or
forgery. For failure of the respondents to abide by the judicial compromise,
petitioners are vested with the absolute right under the law and the agreement
to enforce it by asking for the issuance of the writ of execution. Doctrinally, a
Compromise Agreement is immediately final and executory. Petitioners course
of action, asking for the issuance of a writ of execution was in accordance with
the very stipulation in the agreement that the lower court could not change.
Hence, the petition is granted.
KINDS OF PENALTIES:
ISSUE:
Whether petitioner`s payments over and above the value of the
said checks would free her from criminal liability.
RULING:
The Court argued that, Even if we agree with petitioner Macalalag
that the interests on her loans should not be imputed to the face value of
the checks she issued, petitioner Macalalag is still liable for Violation of
Batas Pambansa Blg. 22. Petitioner Macalalag herself declares that before
the institution of the two cases against her, she has made a total payment
of P156,000.00. Applying this amount to the first check (No. C-889835),
what will be left is P56,000.00, an amount insufficient to cover her
obligation with respect to the second check. As stated above, when
Estrella presented the checks for payment, the same were dishonored on
the ground that they were drawn against a closed account. Despite notice
of dishonor, petitioner Macalalag failed to pay the full face value of the
second check issued.
Only a full payment of the face value of the second check at the time of
its presentment or during the five-day grace period15 could have
exonerated her from criminal liability. A contrary interpretation would
defeat the purpose of Batas Pambansa Blg. 22, that of safeguarding the
interest of the banking system and the legitimate public checking account
user,16 as the drawer could very well have himself exonerated by the
mere expediency of paying a minimal fraction of the face value of the
check. Hence, the Petition is denied.
OBLIGATIONS WITH A PENAL CLAUSE: PENALTIES VS. INTEREST
TAN VS. COURT OF APPEALS
367 SCRA 571
GR NO. 116285
FACTS:
On May 14, 1978, petitioner Antonio Tan obtained two loans in the total
amount of four million pesos from respondent Cultural Center of the Philippines
(CCP), evidenced by 2 promissory notes with maturity dates on May 14, 1979
and July 6, 1979, respectively. Petitioner defaulted but later he had the loans
restructured by respondent CCP. Petitioner accordingly executed a promissory
note on August 31, 1979 in the amount of P3,411,421.32 payable in five (5)
installments. Petitioner however, failed to pay any of the supposed installments
and again offered another mode of paying restructured loan which respondent
CCP refused to consent.
On May 30, 1984, respondent wrote petitioner demanding the full
payment, within ten (10) days, from receipt of the letter, of the latters
restructured loan which as of April 30, 1984 amounted to P6, 088,735. On
August 29, 1984, respondent CCP filed with the RTC of Manila a complaint for a
collection of a sum of money. Eventually, petitioner was ordered to pay said
amount, with 25% thereof as attorneys fees and P500, 000.00 as exemplary
damages. On appeal, the Court of Appeals, reduced the attorneys fees to 5%
of the principal amount to be collected from petitioner and deleted the
exemplary damages.
Still unsatisfied with the decision, petitioner seeks for the deletion of the
attorneys fees and the reduction of the penalties.
ISSUE:
Whether or not interests and penalties may be both awarded.
RULING:
YES. Article 1226 of the New Civil Code provides that in obligations with a
penal clause, the penalty shall substitute the indemnity for damages and the
payment of interests in case of non-compliance, if there is no stipulation to the
contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the
penalty or is guilty of fraud in the fulfillment of the obligation. The penalty may
be enforced only when it is demandable in accordance with the provisions.
In the case at bar, the promissory note expressly provides for the
imposition of both interest and penalties in case of default on the part of the
petitioner in the payment of the subject restructured loan. Since the said
stipulation has the force of law between the parties and does not appear to be
inequitable or unjust, it must be respected.
OBLIGATIONS WITH A PENAL CLAUSE: PENALTIES VS. INTEREST
FACTS:
On December 4, 1981, two fiber drums of riboflavin were shipped
from Yokohama, Japan for delivery vessel `SS EASTERN COMET' owned by
defendant Eastern Shipping Lines under Bill of Lading No. YMA-8 (The
shipment was insured under plaintiff's Marine Insurance Policy No.
81/01177 for P36,382,466.38.
Upon arrival of the shipment in Manila on December 12, 1981, it
was discharged unto the custody of defendant Metro Port Services, Inc.
The latter excepted to one drum, said to be in bad order, which damage
was unknown to plaintiff. On January 7, 1982 defendant Allied Brokerage
Corporation received the shipment from defendant Metro Port Service,
Inc., one drum opened and without. On January 8 and 14, 1982, defendant
Allied Brokerage Corporation made deliveries of the shipment to the
consignees' warehouse. The latter excepted to one drum which contained
spillages, while the rest of the contents was adulterated/fake Plaintiff
contended that due to the losses/damage sustained by said drum, the
consignee suffered losses totaling P19,032.95, due to the fault and
negligence of defendants. Claims were presented against defendants who
failed and refused to pay the same "As a consequence of the losses
sustained, plaintiff was compelled to pay the consignee P19,032.95 under
the aforestated marine insurance policy, so that it became subrogated to
all the rights of action of said consignee against defendants.
ISSUE:
a.)Whether the payment of legal interest on an award for loss or
damage is to be computed from the time the complaint is filed or form the
date the decision appealed from is rendered; and b)Whether the
applicable rate of interest is twelve percent or six percent.
HELD:
When an obligation, regardless of its source, i.e., law, contracts,
quasi-contracts, delicts or quasi-delicts is breached, the contravenor can
be held liable for damages. With regard particularly to an award of
interest in the concept of actual and compensatory damages, the rate of
interest, as well as the accrual thereof, is imposed, as follows:
POLOTAN VS CA
GR No. 119379. September 25, 1998
FACTS:
Private respondent Security Diners International Corporation
(Diners Club), a credit card company, extends credit accomodations to its
cardholders for the purchase of goods and other services from member
establishments. Said goods and services are reimbursed later on by
cardholders upon proper billing. Petitioner Rodelo G. Polotan, Sr. applied
for membership and credit accmodations with Diners Club in October
1985. The application form contained terms and conditions governing the
use and availment of the Diners Club card, among which is for the
cardholder to pay all charges made through the use of said card within
the period indicated in the statement of account and any remaining
unpaid balance to earn 3% interest per annum plus prime rate of Security
Bank & Trust Company. Notably, in the application form submitted by
petitioner, Ofricano Canlas obligated himself to pay jointly and severally
with petitioner the latters obligation to private respondent.
Upon acceptance of his application, petitioner was issued Diners
Club card No. 3651-212766-3005. As of May 8, 1987, petitioner incurred
credit charges plus appropriate interest and service charges in the
3.
4.
5.
6.
7.
99
8. DOMEL TRADING VS. CA, 315 SCRA 13
9. MEDEL VS. CA, 299 S 481
10. REFORMINA VS. TOMOL, 139 SCRA 260, OCT. 11, 1985
FACTS:
The Philippine National Bank (PNB) assails the Decision of the Court
of Appeals dated 15 May 2005, rendered in CA-G.R. CV No. 79094 which,
among others, declared null and void the interest rate imposed by PNB on
the loan obtained from it by respondents and the consequent extrajudicial
foreclosure of the properties offered as security for the loan.
Respondents Encina spouses acquired several loans from PNB from
which it failed to pay within due time. Encina avers that there ought to be
longer gestation periods on its part being engaged in a business of
agricultural character.
ISSUE:
Was there a violation of the Usury Law?
RULING:
As borne by the records, the Encina spouses never challenged the
validity of their loan and the accessory contracts with PNB on the ground
that they violated the principle of mutuality of contracts in view of the
provision therein that the interest rate shall be set by management. Their
only contention concerning the interest rate was that the charges
imposed by the bank violated the Usury Law. This was the essence of the
second cause of action alleged in the complaint.
It should be definitively ruled in this regard that the Usury Law had
been rendered legally ineffective by Resolution No. 224 dated 3
December 1982 of the Monetary Board of the Central Bank, and later by
Central Bank Circular No. 905 which took effect on 1 January 1983 and
removed the ceiling on interest rates for secured and unsecured loans
regardless of maturity. The effect of these circulars is to allow the parties
to agree on any interest that may be charged on a loan. The virtual repeal
of the Usury Law is within the range of judicial notice which courts are
bound to take into account. After all, the fundamental tenet is that the law
is deemed part of the contract. Thus, the trial court was correct in ruling
that the second cause of action was without basis.
REDUCTION OF CONVENTIONAL PENALTIES
IMPERIAL VS. JAUCIAN
427 SCRA 517
2004 Apr 14
FACTS:
The present controversy arose from a case for collection of money, filed
by Alex A. Jaucian against Restituta Imperial, on October 26, 1989. The
complaint alleges, inter alia, that defendant obtained from plaintiff six (6)
separate loans for which the former executed in favor of the latter six (6)
separate promissory notes and issued several checks as guarantee for payment.
When the said loans became overdue and unpaid, especially when the
defendants checks were dishonored, plaintiff made repeated oral and written
demands for payment.
The loans were covered by six (6) separate promissory notes executed by
defendant. The face value of each promissory notes is bigger [than] the amount
released to defendant because said face value already included the interest from
date of note to date of maturity. Said promissory notes indicate the interest of
16% per month, date of issue, due date, the corresponding guarantee checks
issued by defendant, penalties and attorneys fees. The trial courts clear and
detailed computation of petitioners outstanding obligation to respondent was
affirmed by the CA for being convincing and satisfactory. However, the CA held
that without judicial inquiry, it was improper for the RTC to rule on the
constitutionality of Section 1, Central Bank Circular No. 905, Series of 1982.
ISSUES:
Whether or not the penalties charged per month is in the guise of hidden
interest.
equitably, when the principal obligation has been partly or irregularly complied
with. Upon this premise, we hold that the RTCs reduction of attorneys fees -from 25 percent to 10 percent of the total amount due and payable -- is
reasonable.
ISSUES:
(1) Whether or not there was a valid consignation; and (2) Whether
or not petitioner can withdraw the amount consigned as a matter of right?
RULING:
The petition for review is denied. Petitioners tender of payment is
valid. The amount consigned however can no longer be withdrawn
because respondents prayer in his answer that the amount consigned be
awarded to him is equivalent to an acceptance of the consignation, which
has the effect of extinguishing petitioners obligation.
The amount
consigned with the trial court can no longer be withdrawn by petitioner
because respondents prayer in his answer that the amount consigned be
awarded to him is equivalent to an acceptance of the consignation, which
has the effect of extinguishing petitioners obligation.
Moreover,
petitioner failed to manifest his intention to comply with the Agreement
And Undertaking by delivering the necessary documents and the lot
subject of the sale to respondent in exchange for the amount deposited.
Withdrawal of the money consigned would enrich petitioner and unjustly
prejudice respondent.
In this case, the stipulated penalty was reduced by the appellate court for
being unconscionable and iniquitous. Petition denied; CA decision affirmed.
The petitioner, before the Court, contended, among others that the
15.189% interest and the penalty of 3% per month or 36% per annum imposed
by private respondent bank on petitioners loan obligation are still manifestly
exorbitant, iniquitous and unconscionable. Respondent bank, which did not take
an appeal, would, however, have it that the penalty sought to be deleted by
petitioners was even insufficient to fully cover and compensate for the cost of
money brought about by the radical devaluation and decrease in the purchasing
power of the peso.
ISSUE:
Whether or not the penalty is reasonable and not iniquitous.
RULING:
NO, the penalty is not unreasonable. The Court held that the question of
whether a penalty is reasonable or iniquitous can be partly subjective and partly
objective. Its resolution would depend on such factors as, but not necessarily
confide to, the type, extent and purpose of the penalty, the nature of the
obligation, the mode of breach and its consequences, the supervening realities,
the standing and relationship of the parties, and the like, the application of
which, by and large, is addressed to the sound discretion of the court. In Rizal
Commercial Banking Corp. v. Court of Appeals, for example, the Court has
tempered the penalty charges after taking into account the debtors pitiful
situation and its offer to settle the entire obligation with the creditor bank. The
stipulated penalty might likewise be reduced when a partial or irregular payment
is made by the payment. The stipulated penalty might even be deleted such as
when there has been substantial performance in good faith by the obligor, when
the penalty clause itself suffers from fatal infirmity, and when exceptional
circumstances so exist as to warrant it. In the case at bar, given the
circumstances, not to mention the repeated acts of breach by petitioners of their
contractual obligation, this Court sees no cogent ground to change the ruling of
the appellate court.
REDUCTION OF CONVENTIONAL PENALTIES
PASCUAL VS. RAMOS
384 S 105
FACTS:
RULING:
The Pascuals are actually raising as issue the validity of the
stipulated interest rate. It must be stressed that they never raised as a
defense or as basis for their counterclaim the nullity of the stipulated
interest. While overpayment was alleged in the Answer, no ultimate facts
which constituted the basis of the overpayment was alleged. In their pretrial brief, the Pascuals made a long list of issues, but not one of them
touched on the validity of the stipulated interest rate. Their own evidence
clearly shows that they have agreed on, and have in fact paid interest at,
the rate of 7% per month.
After the trial court sustained petitioners claim that their
agreement with RAMOS was actually a loan with real estate mortgage, the
Pascuals should not be allowed to turn their back on the stipulation in that
agreement to pay interest at the rate of 7% per month. The Pascuals
should accept not only the favorable aspect of the courts declaration that
the document is actually an equitable mortgage but also the necessary
consequence of such declaration, that is, that interest on the loan as
stipulated by the parties in that same document should be paid. Besides,
when Ramos moved for a reconsideration of the 15 March 1995 Decision
of the trial court pointing out that the interest rate to be used should be
7% per month, the Pascuals never lifted a finger to oppose the claim.
Admittedly, in their Motion for Reconsideration of the Order of 5 June
1995, the Pascuals argued that the interest rate, whether it be 5% or 7%,
is exorbitant, unconscionable, unreasonable, usurious and inequitable.
However, in their Appellants Brief, the only argument raised by the
Pascuals was that Ramoss petition did not contain a prayer for general
relief and, hence, the trial court had no basis for ordering them to pay
Ramos P511,000 representing the principal and unpaid interest. It was
only in their motion for the reconsideration of the decision of the Court of
Appeals that the Pascuals made an issue of the interest rate and prayed
for its reduction to 12% per annum.
It is a basic principle in civil law that parties are bound by the
stipulations in the contracts voluntarily entered into by them. Parties are
free to stipulate terms and conditions which they deem convenient
provided they are not contrary to law, morals, good customs, public order,
or public policy.
The interest rate of 7% per month was voluntarily agreed upon by
Ramos and the Pascuals. There is nothing from the records and, in fact,
there is no allegation showing that petitioners were victims of fraud when
they entered into the agreement with Ramos. Neither is there a showing
that in their contractual relations with Ramos, the Pascuals were at a
disadvantage on account of their moral dependence, ignorance, mental
weakness, tender age or other handicap, which would entitle them to the
vigilant protection of the courts as mandated by Article 24 of the Civil
Code.
REDUCTION OF CONVENTIONAL PENALTIES
FIRST METRO INVESTMENT petitioner,
VS. ESTE DEL SOL MOUNTAIN RESERVE, INC, respondent
369 SCRA 99
FACTS:
Petitioner FMIC granted respondent Este del Sol a loan of Seven Million
Three Hundred Eighty-Five Thousand Five Hundred Pesos (P7,385,500.00) to
finance the construction and development of the Este del Sol Mountain Reserve,
a sports/resort complex project. Under the terms of the Loan Agreement, the
proceeds of the loan were to be released on staggered basis. Interest on the
loan was pegged at sixteen (16%) percent per annum based on the diminishing
balance. The loan was payable in thirty-six (36) equal and consecutive monthly
amortizations to commence at the beginning of the thirteenth month from the
date of the first release in accordance with the Schedule of Amortization. In
case of default, an acceleration clause was, among others, provided and the
amount due was made subject to a twenty (20%) percent one-time penalty on
the amount due and such amount shall bear interest at the highest rate
permitted by law from the date of default until full payment thereof plus
liquidated damages at the rate of two (2%) percent per month compounded
quarterly on the unpaid balance and accrued interests together with all the
penalties, fees, expenses or charges thereon until the unpaid balance is fully
paid, plus attorneys fees equivalent to twenty-five (25%) percent of the sum
sought to be recovered, which in no case shall be less than Twenty Thousand
Pesos (P20,000.00) if the services of a lawyer were hired. In accordance with the
terms of the Loan Agreement, respondent Este del Sol executed several
documents as security for payment, among them, (a) a Real Estate Mortgage
and (b) individual Continuing Suretyship agreements by co-respondents Valentin
S. Daez, Jr., et al. Respondent Este del Sol also executed, as provided for by the
Loan Agreement, an Underwriting Agreement whereby petitioner FMIC shall
underwrite on a best-efforts basis the public offering of 120,000 common shares
of respondent Este del Sols capital stock for a one-time underwriting fee of
P200,000.00.
The Underwriting Agreement also provided that for supervising the public
offering of the shares, respondent Este del Sol shall pay petitioner FMIC an
annual supervision fee of 200,000.00 per annum for a period of four consecutive
years.
The Underwriting Agreement also stipulated for the payment by
respondent Este del Sol to petitioner FMIC a consultancy fee of P332,500.00 per
annum for a period of four consecutive years. Simultaneous with the execution
of and in accordance with the terms of the Underwriting Agreement, a
Consultancy Agreement was also executed on January 31, 1978 whereby
respondent Este del Sol engaged the services of petitioner FMIC for a fee as
consultant to render general consultancy services. Since respondent Este del
Sol failed to meet the schedule of repayment in accordance with a revised
Schedule of Amortization, it appeared to have incurred a total obligation of
P12,679,630.98 per the petitioners Statement of Account dated June 23, 1980.
Accordingly, petitioner FMIC caused the extrajudicial foreclosure of the real
estate mortgage on June 23, 1980. At the public auction, petitioner FMIC was
the highest bidder of the mortgaged properties for P9,000,000.00. Failing to
secure from the individual respondents, the payment of the alleged deficiency
balance, petitioner instituted the instant collection suit to collect the alleged
deficiency balance of P6,863,297.73 plus interest thereon at 21% percent per
annum from June 24, 1980 until fully paid, and 25% percent thereof as and for
attorneys fees and costs.
The trial court rendered its decision in favor of petitioner FMIC.
reversed the challenged decision of the trial court.
CA
ISSUE:
Whether or not the appellate court erred in reversing the decision of the
trial court as regards to the payment of penalties.
RULING:
No. First, Central Bank Circular No. 905 did not repeal nor in any way
amend the Usury Law but simply suspended the latters effectivity. Thus,
retroactive application of a Central Bank Circular cannot, and should not, be
presumed. Second, several facts and circumstances taken altogether show that
In the case at bar, the amount of Three Million One Hundred Eighty-Eight
Thousand Six Hundred Thirty Pesos and Seventy-Five Centavos (P3,188,630.75)
for the stipulated attorneys fees equivalent to twenty-five (25%) percent of the
alleged amount due, as of the date of the auction sale on June 23, 1980, is
manifestly exorbitant and unconscionable. Accordingly, we agree with the
appellate court that a reduction of the attorneys fees to ten (10%) percent is
appropriate and reasonable under the facts and circumstances of this case.
quantity of the rattan poles from 300,000 to only 100,000 pieces while the
quantity of buri midribs remained at 22,000 bundles. Further, DOMEL undertook
to deliver the goods on or before October 31, 1981. However, no deliveries were
again made on the said date. Consequently, demands were made by NNRMC on
January 19, 1982 for the payment of damages, which demands were ignored by
DOMEL. Hence, NNRMC filed a complaint for damages before the Regional Trial
Court of Pasig. After trial, judgment was rendered in favor of plaintiff and
against defendant.
Both DOMEL and NNRMC assail the above-quoted decision in separate
petitions which have been consolidated before this Court. Based on the
pleadings submitted by the parties, this Court has resolved to give due course to
the petition and decides the same. DOMEL submits it has not breached its
contractual obligation to NNRMC inasmuch as it was the fault of the latter for not
inspecting and examining the rattan poles as well as the buri midribs already
shipped by the suppliers and stored in the formers warehouse. In short, DOMEL
claims that NNRMC must first inspect the ordered items before delivery could be
made.
ISSUE:
Whether or not the decision of the Court of Appeals in CA-G.R. CV No.
08952 which modified the decision of the lower court granting private
respondents prayer for damages, was correct.
RULING:
While the Supreme Court did not agree with the Court of Appeals that the
failure of NNRMC to conduct the inspection mitigated DOMELs liability for
liquidated damages, nevertheless, it agreed in the reduction of the amount of
liquidated damages to only P150,000.00. The amount of P2,000.00 as penalty
for every day of delay is excessive and unconscionable.
Article 1229 of the Civil Code states, thus:The judge shall equitably
reduce the penalty when the principal obligation has been partly or irregularly
complied with by the debtor. Even if there has been no performance, the
penalty may also be reduced by the courts if it is iniquitous or unconscionable.
Article 2227 of the Civil Code likewise states, thus: Liquidated damages,
whether intended as an indemnity or a penalty, shall be equitably reduced if
they are iniquitous or unconscionable.
MEDEL VS CA
G.R. No. 131622 November 27, 1998
FACTS:
The Medel spouses obtained several loans of which they were unable to
pay in full. On July 23, 1986, Servando and Leticia with the latter's
husband, Dr. Rafael Medel, consolidated all their previous unpaid loans
totaling P440,000.00, and sought from Veronica another loan in the
amount of P60,000.00, bringing their indebtedness to a total of
P500,000.00, payable on August 23, 1986. They executed a promissory
note indicating payment for the balance.
On maturity of the loan, the borrowers failed to pay the
indebtedness of P500,000.00, plus interests and penalties, evidenced by
the above-quoted promissory note. On February 20, 1990, Veronica R.
FACTS:
This is a Petition for Review on certiorari of the Resolution of the Hon.
respondent Judge Valeriano P. Tomol, Jr. of the then Court of First Instance of
Cebu-Branch XI, an action for Recovery of Damages for injury to Person and Loss
of Property. The petitioners prayed for the setting aside of the said Resolution
and for a declaration that the judgment in their favor should bear legal interest
at the rate of twelve (12%) percent per annum pursuant to Central Bank Circular
No. 416 dated July 29, 1974. The appellate court affirmed the decision but made
certain modifications. The said decision having become final on October 24,
1980, the case was remanded to the lower court for execution and this is where
the controversy started. In the computation of the "legal interest" decreed in
the judgment sought to be executed, petitioners claim that the "legal interest"
should be at the rate of twelve (12%) percent per annum, invoking in support of
their aforesaid submission, Central Bank of the Philippines Circular No. 416.
Upon the other hand, private respondents Shell and Michael, Incorporated insist
that said legal interest should be at the rate of six (6%) percent per annum only,
pursuant to and by authority of Article 2209 of the New Civil Code in relation to
Articles 2210 and 2211 thereof.
ISSUE:
Whether or not the petition is with merit.
RULING:
No. The petition is devoid of merit. Consequently, its dismissal is in order.
Central Bank Circular No. 416 which took effect on July 29, 1974 was issued and
promulgated by the Monetary Board pursuant to the authority granted to the
Central Bank by P.D. No. 116, which amended Act No. 2655, otherwise known as
the Usury Law.
Acting pursuant to this grant of authority, the Monetary Board increased
the rate of legal interest from that of six (6%) percent per annum originally
allowed under Section I of Act No. 2655 to twelve (12%) percent per annum.
It will be noted that Act No. 2655 deals with interest on (1) loans; (2)
forbearances of any money, goods, or credits; and (3) rate allowed in
judgments.Hence, not all money judgments are included in the said act. The
judgments spoken of and referred to are Judgments in litigations involving loans
or forbearance of any 'money, goods or credits. Any other kind of monetary
judgment which has nothing to do with, nor involving loans or forbearance of any
money, goods or credits does not fall within the coverage of the said law for it is
not within the ambit of the authority granted to the Central Bank. The Monetary
Board may not tread on forbidden grounds. It cannot rewrite other laws. That
function is vested solely with the legislative authority. It is axiomatic in legal
hermeneutics that statutes should be construed as a whole and not as a series of
disconnected articles and phrases. In the absence of a clear contrary intention,
words and phrases in statutes should not be interpreted in isolation from one
another. A word or phrase in a statute is always used in association with other
words or phrases and its meaning may thus be modified or restricted by the
latter.
The instant petition is without merit, the same is DISMISSED with costs
against petitioners.
MEANING OF PAYMENT / PERFORMANCE (ART. 1232-1261, CC)
SONNY LO, petitioner, vs. KJS ECO-FORMWORK SYSTEM PHIL., INC.,
respondent
2003 Oct 8
G.R. No. 149420
413 SCRA 182
FACTS:
Respondent KJS ECO-FORMWORK System Phil., Inc. is a corporation
engaged in the sale of steel scaffoldings, while petitioner Sonny L. Lo, doing
business under the name and style Sans Enterprises, is a building contractor.
On February 22, 1990, petitioner ordered scaffolding equipments from
respondent worth P540,425.80. He paid a downpayment in the amount of
P150,000.00. The balance was made payable in ten monthly installments.
Respondent delivered the scaffoldings to petitioner. Petitioner was able
to pay the first two monthly installments. His business, however, encountered
financial difficulties and he was unable to settle his obligation to respondent
despite oral and written demands made against him.
On October 11, 1990, petitioner and respondent executed a Deed of
Assignment, whereby petitioner assigned to respondent his receivables in the
amount of P335,462.14 from Jomero Realty Corporation.
However, when respondent tried to collect the said credit from Jomero
Realty Corporation, the latter refused to honor the Deed of Assignment because
it claimed that petitioner was also indebted to it. On November 26, 1990,
RULING:
The petition is without merit.
An assignment of credit is an agreement by virtue of which the owner of a
credit, known as the assignor, by a legal cause, such as sale, dacion en pago,
exchange or donation, and without the consent of the debtor, transfers his credit
and accessory rights to another, known as the assignee, who acquires the power
to enforce it to the same extent as the assignor could enforce it against the
debtor.
Corollary thereto, in dacion en pago, as a special mode of payment, the
debtor offers another thing to the creditor who accepts it as equivalent of
payment of an outstanding debt. In order that there be a valid dation in
payment, the following are the requisites: (1) There must be the performance of
the prestation in lieu of payment (animo solvendi) which may consist in the
delivery of a corporeal thing or a real right or a credit against the third person;
(2) There must be some difference between the prestation due and that which is
given in substitution (aliud pro alio); (3) There must be an agreement between
the creditor and debtor that the obligation is immediately extinguished by
reason of the performance of a prestation different from that due.
The
undertaking really partakes in one sense of the nature of sale, that is, the
creditor is really buying the thing or property of the debtor, payment for which is
to be charged against the debtors debt. As such, the vendor in good faith shall
be responsible, for the existence and legality of the credit at the time of the sale
but not for the solvency of the debtor, in specified circumstances.
Hence, it may well be that the assignment of credit, which is in the nature
of a sale of personal property, produced the effects of a dation in payment which
may extinguish the obligation. However, as in any other contract of sale, the
vendor or assignor is bound by certain warranties. More specifically, the first
paragraph of Article 1628 of the Civil Code provides:
The vendor in good faith shall be responsible for the existence and legality of the
credit at the time of the sale, unless it should have been sold as doubtful; but
not for the solvency of the debtor, unless it has been so expressly stipulated or
unless the insolvency was prior to the sale and of common knowledge.
From the above provision, petitioner, as vendor or assignor, is bound to
warrant the existence and legality of the credit at the time of the sale or
assignment. When Jomero claimed that it was no longer indebted to petitioner
since the latter also had an unpaid obligation to it, it essentially meant that its
obligation to petitioner has been extinguished by compensation. In other words,
respondent alleged the non-existence of the credit and asserted its claim to
petitioners warranty under the assignment.
Therefore, it behooved on
petitioner to make good its warranty and paid the obligation.
Furthermore, the Court found that petitioner breached his obligation
under the Deed of Assignment, to wit:
And the ASSIGNOR further agrees and stipulates as aforesaid that the said
ASSIGNOR, his heirs, executors, administrators, or assigns, shall and will at times
hereafter, at the request of said ASSIGNEE, its successors or assigns, at his cost
and expense, execute and do all such further acts and deeds as shall be
reasonably necessary to effectually enable said ASSIGNEE to recover whatever
collectibles said ASSIGNOR has in accordance with the true intent and meaning
of these presents.
The decision of the Court of Appeals was affirmed with modification that
upon finality of the Decision, the rate of legal interest shall be 12% per annum,
inasmuch as the obligation shall thereafter become equivalent to a forbearance
of credit. The award of attorneys fees is DELETED for lack of evidentiary basis.
REQUISITES OF PAYMENT/PERFORMANCE
PHILIPPINE NATIONAL BANK, petitioner,
VS. COURT OF APPEALS and LORETO TAN, respondents
April 02, 1996
G.R. No. 108630
256 SCRA 44
FACTS:
Private respondent Loreto Tan is the owner of a parcel of land in Bacolod
City. Expropriation proceedings were instituted by the government against
private respondent Tan and other property owners before a trial court in Negros
Occidental. Tan filed a motion requesting issuance of an order for the release to
him of the expropriation price of P32,480.00.
The trial court required petitioner PNB-Bacolod Branch to release to Tan
the amount of P32,480.00 deposited with it by the government. Through its
Assistant Branch Manager Juan Tagamolila, PNB issued a manager's check for
P32,480.00 and delivered the same to one Sonia Gonzaga without Tan's
knowledge, consent or authority. Sonia Gonzaga deposited it in her account with
Far East Bank and Trust Co. (FEBTC) and later on withdrew the said amount.
obligation to deliver the same to him. Under Art. 1233 of the Civil Code, a debt
shall not be understood to have been paid unless the thing or service in which
the obligation consists has been completely delivered or rendered, as the case
may be.
The burden of proof of such payment lies with the debtor. In the instant
case, neither the SPA nor the check issued by petitioner was ever presented in
court. The testimonies of petitioner's own witnesses regarding the check were
conflicting. Tagamolila testified that the check was issued to
the order of "Sonia Gonzaga as attorney-in-fact of Loreto Tan," while Elvira
Tibon, assistant cashier of PNB, stated that the check was issued to the order of
"Loreto Tan."
Furthermore, contrary to petitioner's contention that all that is needed to
be proved is the existence of the SPA, it is also necessary for evidence to be
presented regarding the nature and extent of the alleged powers and authority
granted to Sonia Gonzaga; more specifically, to determine whether the
document indeed authorized her to receive payment intended for private
respondent.
Considering that the contents of the SPA are also in issue here, the best
evidence rule applies. Hence, only the original document, which has not been
presented at all, is the best evidence of the fact as to whether or not private
respondent indeed authorized Sonia Gonzaga to receive the check from
petitioner. In the absence of such document, petitioner's arguments regarding
due payment must fail.
Decision affirmed with the modification that the award by the trial court of
P5,000.00 as attorney's fees is reinstated.
FACTS:
Petitioner is a domestic corporation while US Lines is a foreign
corporation engaged in overseas shipping. It was made applicable that
consignees who fail to take delivery of their containerized cargo within the
10-day free period are liable to pay demurrage charges. On June 22,
1981, US Lines filed a suit against petitioner seeking payment of
demurrage charges plus interest and damages. Petitioner incurred
P94,000 which the latter refused to pay despite repeated demands.
Petitioner disclaims liability alleging that it has never entered into a
contract nor signed an agreement to be bound by it. RTC ruled that
petitioner is liable to respondent and all be computed as of the date of
payment in accordance with Article 1250 of the Civil Code. CA affirmed
the decision.
ISSUE:
Whether the re-computation of the judgment award in accordance
with Article 1250 of the Civil Code proper
RULING:
An appeal, the Court of Appeals reduced the interest and it ruled that the
basis of the conversion of petitioners liability in its peso equivalent should be
the prevailing rate at the time of payment and not the rate on the date of the
foreign judgment.
ISSUE:
Whether or not the basis for the payment of the amount due is the value
of the currency at the time of the establishment of the obligation.
RULING:
NO, the rule that the value of currency at the time of the establishment of
the obligation shall be the basis of payment finds application only when there is
an official pronouncement or declaration of the existence of an extraordinary
inflation or deflation. Hence, petitioners contention that Article 1250 of the Civil
Code which provides that in case of an extra ordinary inflation or deflation of
the currency stipulated should supervene, the value of the currency at the time
of establishment of the obligation shall be the basis of payment, unless there is
an agreement to the contrary shall apply in this case is untenable.
P50,000.00 upon signing of the contract, and the balance was to be paid within
ten days from the issuance of a court order directing issuance of a decree of
registration for the property.
On December 27, 1989, the court ordered the issuance of a decree of land
registration for the subject property. The property was titled in the name of
private respondent Adelina Paredes. Private respondents then demanded
payment of the balance of the purchase price.
Petitioner then made several payments to private respondents, some
even before the court issued an order for the issuance of a decree of registration
and they also offered to pay the land through a check. Still, petitioner failed to
pay the full purchase price even after the expiration of the period set. In a letter
dated February 14, 1990, private respondents, through counsel, demanded
payment of the remaining balance, with interest and attorney's fees, within five
days from receipt of the letter. Otherwise, private respondents stated they
would consider the contract rescinded.
On February 28, 1990, petitioner made a payment of P100,000.00 to
private respondents, still insufficient to cover the full purchase price. Shortly
thereafter, in a letter dated April 17, 1990 private respondents offered to sell to
petitioner one-half of the property for all the payments the latter had made,
instead of rescinding the contract. If petitioner did not agree with the proposal,
private respondents said they would take steps to enforce the automatic
rescission of the contract. Petitioner did not accept private respondents'
proposal. Instead, in a letter dated May 2, 1990, he offered to pay the balance
in full for the entire property, plus interest and attorney's fees.
Private
respondents refused the offer.
On May 14, 1990, petitioner instituted an action for specific performance
against private respondents, alleging that he had already substantially complied
with his obligation under the contract to sell. He also averred that he had
already spent P190,000.00 in obtaining title to the property, subdividing it, and
improving its right-of-way. The lower court decided in favor of the petitioners
stating that the breach committed was only casual and slight but the Court of
Appeals reversed the ruling and favored respondents rescission of the contract
to sell.
ISSUE:
Whether or not the payment made by petitioner is one which is
contemplated on the contract.
RULING:
Petitioners offer to pay is clearly not the payment contemplated in the
contract. While he might have tendered payment through a check, this is not
considered payment until the check is encashed. Besides, a mere tender of
payment is not sufficient. Consignation is essential to extinguish petitioner's
obligation to pay the purchase price.
The Supreme Court also affirmed the decision of the Court of Appeals
where the respondents have the right to rescind the contract on the ground that
there is failure on the part of the petitioners to pay the balance within ten days
upon the conveyance of the Court of the Title of Land to respondents. Thus,
private respondents are under no obligation, and may not be compelled, to
convey title to petitioner and receive the full purchase price.
The ruling applies the statutory provisions which lay down the rule
that a check is not legal tender and that a creditor may validly refuse
payment by check, whether it be a managers check, cashiers or personal
check. The decision of the court of Appeals is affirmed.
OBLIGATIONS TO PAY MONEY
v. COURT OF
FACTS:
OBLIGATIONS TO PAY MONEY
RULING:
is obvious that Metrobank was remiss in the duty and violated that
fiduciary relationship with its clients as it appeared that there are material
alterations on the check that are visble to the naked eye but the bank
failed to detect such.
Petition is denied. Court of Appeals decision is affirmed with
modification that exemplary damages in the amount of P50,000 be
awarded.
OBLIGATIONS TO PAY MONEY: EFFECTS OF INFLATION
1. ALMEDA VS. BATHALA MKTNG., 542 S 470
2. PCI VS. NG SHEUNG NGOR, 541 S 223
METROBANK v. CABLZO
G.R. No. 154469
December 6, 2006
FACTS:
Respondent Cabilzo was one of the Metrobanks client who
maintained a current account. On November 12, 199, Cabilzo issued a
Metrobank check payable to cash in the amount of P1,000 and was paid
to a certain Mr. Marquez. The check was oresented to Westmont Bank or
payment and in turn indorsed to etrobank for appropriate clearing. It was
discovered that the amount withdrawn wa P91,000, thus, the check was
altered. Cabilzo re-credit the amount of P91,000 to his account but
Metrobank refused to comply despite demands. RTC ordered Metrobank
to pay the sum of P90,000 to Cabilzo. Court of Appeals affirmed the
decision with modification.
ISSUE:
Whether holding Metrobank, as
drawee bank, liable for the
alternations on the subject check bearing the authentic signature of the
drawer thereof
RULING:
The degree of diligence in the exercise of his tasks and the
performance of his duties have been faithfully complied with by Cabilzo. It
RULING:
Petitioners are stopped from shifting to respondent the burden of
paying the VAT. 6th Condition states that respondent can only be held
liable for new taxes imposed after the effectivity of the contract of lease,
after 1977, VAT cannot be considered a new tax. Neither can petitioners
legitimately demand rental adjustment because of extraordinary inflation
or devaluation. Absent an official pronouncement or declaration by
competent authorities of its existence, its effects are not to be applied.
Petition is denied. CA decision is affirmed.
SIMPLICIO PALANCA
VS. ULYSSIS GUIDES joined by her husband LORENZO GUIDES
February 28, 2005
452 SCRA 461
FACTS:
On August 23, 1983, Simplicio Palanca executed a Contract to Sell a
parcel of land on installment with a certain Josefa Jopson for P11, 250.00. Jopson
paid the petitioner in the amount of P1, 650 as her down payment, leaving a
balance of P9, 600.00. Sometime in December 1983, Jopson assigned and
transferred all her rights and interests over the property in question in favor of
the respondent Ulyssis Guides.
In the deed of transfer, respondent undertook to assume the balance of
Jopsons account and to pay the same in accordance with the terms and
conditions of the Contract to Sell.
After reimbursing Jopson P1,650.00,
respondent acquired possession of the lot and paid petitioner the stipulated
amortizations which were in turn acknowledged by petitioner through receipts
issued in the name of respondent. Believing that she had fully paid the purchase
price of the lot, respondent verified the status of the lot with the Register of
Deeds, only to find out that title thereto was not in the name of the petitioner as
it was covered by Transfer Certificate of Title No. 105742 issued on 26
September 1978 in the name of a certain Carissa T. de Leon. Respondent went
to petitioners office to secure the title to the lot, but petitioner informed her that
she could not as she still had unpaid accounts. Thereafter, respondent, through
demanded the payment of the alleged charges, respondents liability, if any for
said charges, is deemed fully satisfied. The petition is denied.
FACTS:
Petitioner Jose V. Lagon is a businessman and owner of a commercial
building in Tacurong, Sultan Kudarat. Respondent HOOVEN on the other is a
domestic corporation known to be the biggest manufacturer and installer of
aluminum materials in the country with branch office at E. Quirino Avenue,
Davao City.
Sometime in April 1981 Lagon and HOOVEN entered into two (2)
contracts, both denominated Proposal, whereby for a total consideration of P104,
870.00 HOOVEN agreed to sell and install various aluminum materials in Lagons
commercial building in Tacurong, Sultan Kudarat.
Upon execution of the
contracts, Lagon paid HOOVEN P48,000.00 in advance.
Lagon, in his answer, denied liability and averred that HOOVEN was the
party guilty of breach of contract by failing to deliver and install some of the
materials specified in the proposals; that as a consequence he was compelled to
procure the undelivered materials from other sources; that as regards the
materials duly delivered and installed by HOOVEN, they were fully paid. He
RULING:
Yes, for both issues.
Regarding the first, the Holdout Agreement
conferred on CBTC the power, not the duty, to set off the loan from the account
subject of the Agreement. When BPI demanded payment of the loan from
Eastern, it exercised its right to collect payment based on the promissory note,
and disregarded its option under the Holdout Agreement. Therefore, its demand
was in the correct order.
FACTS:
Private respondents Eastern Plywood Corporation and Benigno Lim as
officer of the corporation, had an AND/OR joint account with Commercial Bank
and Trust Co (CBTC), the predecessor-in-interest of petitioner Bank of the
Philippine Islands. Lim withdraw funds from such account and used it to open a
joint checking account (an AND account) with Mariano Velasco. When Velasco
died in 1977, said joint checking account had P662,522.87. By virtue of an
Indemnity Undertaking executed by Lim and as President and General Manager
of Eastern withdrew one half of this amount and deposited it to one of the
accounts of Eastern with CBTC.
Regarding the second issue, BPI was the debtor and Eastern was the
creditor with respect to the joint checking account. Therefore, BPI was obliged
to return the amount of the said account only to the creditor. When it allowed
the withdrawal of the balance of the account by the heirs of Velasco, it made the
payment to the wrong party. The law provides that payment made by the
debtor to the wrong party does not extinguish its obligation to the creditor who
is without fault or negligence. Therefore, BPI was still liable to the true creditor,
Eastern.
Eastern obtained a loan of P73,000.00 from CBTC which was not secured.
However, Eastern and CBTC executed a Holdout Agreement providing that the
loan was secured by the Holdout of the C/A No. 2310-001-42 referring to the
joint checking account of Velasco and Lim.
ISSUE:
Whether or not respondent incurred delay in performing its
obligation under the contract of sale
RULING:
FACTS:
On May 6, 1999, petitioner Aquintey filed before RTC Baguio,
a complaint for sum of money and damages against respondents.
Agrifina alleged that Felicidad secured loans from her on several
occasions at monthly interest rates of 6% to 7%. Despite demands,
spouses Tibong failed to pay their outstanding loans of P773,000,00
exclusive of interests. However, spouses Tiong alleged that they
had executed deeds of assignment in favor of Agrifina amounting
to P546,459 and that their debtors had executed promissory notes
in favor of Agrifina. Spouses insisted that by virtue of these
documents, Agrifina became the new collector of their debts.
Agrifina was able to collect the total amount of P301,000 from
Felicdads debtors. She tried to collect the balance of Felicidad and
when the latter reneged on her promise, Agrifina filed a complaint
in the office of the barangay for the collection of P773,000.00. There
was no settlement. RTC favored Agrifina. Court of Appeals affirmed
the decision with modification ordering defendant to pay the
balance of total indebtedness in the amount of P51,341,00 plus 6%
per month.
ISSUE:
RULING:
The deed of assignment was a perfected agreement which
extinguished petitioners total outstanding obligation to the
respondent. The nature of the assignment was a dacion en pago
whereby property is alienated to the creditor in the satisfaction of a
debt in money. Since the agreement was consummated by the
delivery of the last unit of heavy equipment under the deed,
petitioners are deemed to have been released from all their
obligations from the respondents.
SPECIAL FORMS OF PAYMENT: DATION EN PAGO/ DATION IN PAYMENT
The trial court ruled that the REM is valid and binding upon the Jaymes.
The CA affirmed with modifications. Both the trial and appellate courts found
that no fraud attended the execution of the deed of mortgage. The Motion for
Reconsideration was denied.
ISSUE:
Whether or not the dacion en pago by Asiancars in favor of MBTC is valid
and binding despite the stipulation in the lease contract that ownership of the
building will vest on the Jaymes at the termination of the lease.
RULING:
YES. The alienation of the building by Asiancars in favor of MBTC for the
partial satisfaction of its indebtedness is valid.
The ownership of the building had been effectively in the name of the
lessee-mortgagor (Asiancars), though with the provision that said ownership be
transferred to the Jaymes upon termination of the lease or the voluntary
surrender of the premises. The lease was constituted on January 8, 1973 and
was to expire 20 years thereafter, or on January 8, 1993. The alienation via
dacion en pago was made by Asiancars to MBTC on December 18, 1980, during
the subsistence of the lease. At this point, the mortgagor, Asiancars, could
validly exercise rights of ownership, including the right to alienate it, as it did to
MBTC.
Dacion en pago is the delivery and transmission of ownership of a thing by
the debtor to the creditor as an accepted equivalent of the performance of the
obligation. It is a special mode of payment where the debtor offers another
thing to the creditor who accepts it as equivalent of payment of an outstanding
debt. The undertaking really partakes in one sense of the nature of sale, that is
the creditor is really buying the thing or property of the debtor, payment for
which is to be charged against
the debtors debt. As such, the essential elements of a contract of sale, namely,
consent, object certain, and cause or consideration must be present. In its
modern concept, what actually takes place in dacion en pago is an objective
novation of the obligation where the thing offered as an accepted equivalent of
the performance of an obligation is considered as the object of the contract of
sale, while the debt is considered as the purchase price. In any case, common
consent is an essential prerequisite, be it sale or novation, to have the effect of
totally extinguishing the debt or obligation. Private respondent MBTC is ordered
to pay petitioners rentals in the total amount of P602,083.33, with six (6)
percent interest per annum until fully paid.
Petitioner (defendant in the trial court) filed its answer, reiterating that the
amount not returned represented interest and service charges on the unpaid
and overdue account at the rate of 18% per annum. It was further alleged that
the collection of said interest and service charges is sanctioned by law, and is in
accordance with the terms and conditions of the sale of petroleum products to
respondent, which was made with the conformity of said private respondent who
had accepted the validity of said interest and service charges.
On November 7, 1983, the trial court rendered its decision dismissing the
complaint, as well as the counterclaim filed by defendant therein. Private
respondent (plaintiff) appealed to the Intermediate Appellate Court (IAC). On
August 27, 1985, a decision was rendered by the said appellate court reversing
the decision of the trial court, and ordering petitioner to return the amount of
P510,550.63 to private respondent.
ISSUE:
Whether or not there is a valid dation in payment in this case.
RULING:
The Supreme Court ruled that the Deed of Assignment executed by the
parties on July 31, 1980 is not a dation in payment and did not totally extinguish
respondent's obligations as stated therein.
The then Intermediate Appellate Court ruled that the three (3) requisites
of dacion en pago are all present in the instant case, and concluded that the
Deed of Assignment of July 31, 1980) constitutes a dacion in payment provided
for in Article 1245 of the Civil Code which has the effect of extinguishing the
obligation, thus supporting the claim of private respondent for the return of the
amount retained by petitioner.
The Supreme Court, speaking of the concept of dation in payment, in the
case of Lopez vs. Court of Appeals, among others, stated: "'The dation in
payment extinguishes the obligation to the extent of the value of the thing
delivered, either as agreed upon by the parties or as may be proved, unless the
parties by agreement, express or implied, or by their silence, consider the thing
as equivalent to the obligation, in which case the obligation is totally
extinguished."
From the above, it is clear that a dation in payment does not necessarily
mean total extinguishment of the obligation.
The obligation is totally
extinguished only when the parties, by agreement, express or implied, or by
their silence, consider the thing as equivalent to the obligation. In the instant
case, the then Intermediate Appellate Court failed to take into account the
express recitals of the Deed of Assignment.
"That Whereas, ASSIGNOR has an outstanding obligation with ASSIGNEE in
the amount of P4,072,682.13 as of June 30, 1980, plus any applicable interest on
overdue account. Now therefore in consideration of the foregoing premises,
ASSIGNOR by virtue of these presents, does hereby irrevocably assign and
transfer unto ASSIGNEE any and all funds and/or Refund of Special Fund
Payments, including all its rights and benefits accruing out of the same, that
ASSIGNOR might be entitled to, by virtue of and pursuant to the decision in BOE
Case No. 80-123, in payment of ASSIGNOR's outstanding obligation plus any
applicable interest charges on overdue account and other avturbo fuel lifting and
deliveries that ASSIGNOR may from time to time receive from the ASSIGNEE, and
ASSIGNEE does hereby accepts such assignment in its favor."
Hence, it could easily be seen that the Deed of Assignment speaks of
three (3) obligations (1) the outstanding obligation of P4,072,682.13 as of June
30, 1980; (2) the applicable interest charges on overdue accounts; and (3) the
other avturbo fuel lifting and deliveries that assignor (private respondent) may
from time to time receive from assignee (Petitioner). As aptly argued by
petitioner, if it were the intention of the parties to limit or fix respondent's
obligation to P4,072.682.13, they should have so stated and there would have
been no need for them to qualify the statement of said amount with the clause
"as of June 30, 1980 plus any applicable interest charges on overdue account"
and the clause "and other avturbo fuel lifting and deliveries that ASSIGNOR may
from time to time receive from the ASSIGNEE".
The terms of the Deed of Assignment being clear, the literal meaning of its
stipulations should control. In the construction of an instrument where there are
several provisions or particulars, such a construction is, if possible, to be
adopted as will give effect to all.
Likewise, the then Intermediate Appellate Court failed to take into
consideration the subsequent acts of the parties which clearly show that they did
not intend the Deed of Assignment to totally extinguish the obligation: (1) After
the execution of the Deed of Assignment on July 31, 1980, petitioner continued
to charge respondent with interest on its overdue account up to January 31,
1981. This was pursuant to the Deed of Assignment which provides for
respondent's obligation for "applicable interest charges on overdue account".
The charges for interest were made every month and not once did respondent
question or take exception to the interest; and (2) In its letter of February 16,
1981, respondent addressed the following request to petitioner:
In order to judge the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally considered (Art.
1253, Civil Code). The foregoing subsequent acts of the parties clearly show that
they did not intend the Deed of Assignment to have the effect of totally
extinguishing the obligations of private respondent without payment of the
applicable interest charges on the overdue account.
Finally, the payment of applicable interest charges on overdue account,
separate from the principal obligation of P4,072,682.13 was expressly stipulated
in the Deed of Assignment. The law provides that "if the debt produces interest,
payment of the principal shall not be deemed to have been made until the
interests have been covered." (Art. 1253, Civil Code).
1.
2.
3.
4.
v. SPOUSES EFREN
FACTS:
Respondents are engaged in the large-scale business of
buying broiler eggs, hatching and selling them and egg by-products. For
incubation and hatchings, respondents availed of the hatching services of
ASJ Corp. They agreed o service fees of 80 centavos per egg. Service fees
were paid upon release. Fro consecutive times the respondents failed to
pay the fee until such time that ASJ retained the chicks demanding full
payment from the respondent. ASJ received P15,000 for partial payment
but the chicks were still not released. RTC ruling, which was affirmed by
the Court of Appeals holding that ASJ Corp and Antonio San Juan be
solidarily liable to the respondents.
Article 1229. The judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor. Even if
there has been no performance, the penalty may also be reduced by the courts
if it is iniquitous or unconscionable.
ISSUE:
Was petitioners retention of the chicks and by-products, on account
of respondents failure to pay the corresponding fees
unjustified?
RULING:
In this case, the stipulated penalty was reduced by the appellate court for
being unconscionable and iniquitous. Petition denied; CA decision affirmed.
APPLICATION OF PAYMENTS
subject of the lease contract. On the same day, respondent also filed a complaint
for ejectment against petitioner.
APPLICATION OF PAYMENTS
PACULDO VS. REGALADO
345 SCRA 134
FACTS:
On December 27, 1990, petitioner Nereo Paculdo and respondent
Bonifacio Regalado entered into a contract of lease over a parcel of land with a
wet market building, located at Fairview Park, Quezon City. The contract was for
twenty five (25) years, commencing on January 1, 1991 and ending on
December 27, 2015. For the first five (5) years of the contract beginning
December 27, 1990, Nereo would pay a monthly rental of P450,000, payable
within the first five (5) days of each month with a 2% penalty for every month of
late payment.
Aside from the above lease, petitioner leased eleven (11) other property
from the respondent, ten (10) of which were located within the Fairview
compound, while the eleventh was located along Quirino Highway Quezon City.
Petitioner also purchased from respondent eight (8) units of heavy equipment
and vehicles in the aggregate amount of Php 1, 020,000.
On account of petitioners failure to pay P361, 895.55 in rental for the
month of May, 1992, and the monthly rental of P450, 000.00 for the months of
June and July 1992, the respondent sent two demand letters to petitioner
demanding payment of the back rentals, and if no payment was made within
fifteen (15) days from the receipt of the letter, it would cause the cancellation of
the lease contract.
Without the knowledge of petitioner, on August 3, 1992, respondent
mortgaged the land subject of the lease contract, including the improvements
which petitioner introduced into the land amounting to P35, 000,000.00, to
Monte de Piedad Savings Bank, as a security for a loan.
On August 12, 1992, and the subsequent dates thereafter, respondent
refused to accept petitioners daily rental payments.
Subsequently, petitioner filed an action for injunction and damages
seeking to enjoin respondents from disturbing his possession of the property
The lower court rendered a decision in favor of the respondent, which was
affirmed in toto by the Court of Appeals.
ISSUE:
Whether or not the petitioner was truly in arrears in the payment of
rentals on the subject property at the time of the filing of the complaint for
ejectment.
RULING:
NO, the petitioner was not in arrears in the payment of rentals on the
subject property at the time of the filing of the complaint for ejectment.
As found by the lower court there was a letter sent by respondent to
herein petitioner, dated November 19, 1991, which states that petitioners
security deposit for the Quirino lot, be applied as partial payment for his account
under the subject lot as well as to the real estate taxes on the Quirino lot.
Petitioner interposed no objection, as evidenced by his signature signifying his
conformity thereto.
Meanwhile, in an earlier letter, dated July 15, 1991, respondent informed
petitioner that the payment was to be applied not only to petitioners accounts
under the subject land and the Quirino lot but also to heavy equipment bought
by the latter from respondent. Unlike in the November letter, the July letter did
not contain the signature of petitioner.
Petitioner submits that his silence is not consent but is in fact a rejection.
As provided in Article 1252 of the Civil Code, the right to specify which
among his various obligations to the same creditor is to be satisfied first rest
with the debtor.
In the case at bar, at the time petitioner made the payment, he made it
clear to respondent that they were to be applied to his rental obligations on the
Fairview wet market property. Though he entered into various contracts and
obligations with respondent, all the payments made, about P11,000,000.00 were
to be applied to rental and security deposit on the Fairview wet market property.
However, respondent applied a big portion of the amount paid by petitioner to
the satisfaction of an obligation which was not yet due and demandable- the
payment of the eight heavy equipments.
Under the law, if the debtor did not declare at the time he made the
payment to which of his debts with the creditor the payment is to be applied, the
law provided the guideline; i.e. no payment is to be applied to a debt which is
not yet due and the payment has to be applied first to the debt which is most
onerous to the debtor.
The lease over the Fairview wet market is the most onerous to the
petitioner in the case at bar.
Consequently, the petition is granted.
APPLICATION OF PAYMENTS
CHINA BANKING CORPORATION, ATTYS. REYNALDO M. CABUSORA and
RENATO C. TAGUIAM, petitioners,
VS. COURT OF APPEALS, HON. PEDRO T. SANTIAGO, SPS. SO CHING and
CRISTINA SO, and NATIVE WEST INTERNATIONAL TRADING CORP.,
respondents
1996 December 05
G.R. No. 121158
Eight days before the foreclosure sale, however, private respondents filed a
complaint with the Regional Trial Court for accounting with damages and with
temporary restraining order against petitioners alleging several grounds,
including Violation of Article 1308 of the Civil Code. On April 7, 1993, the trial
court issued a temporary restraining order to enjoin the foreclosure sale.
Petitioners moved for reconsideration, but it was denied in an Order dated
September 23, 1993. To annul the trial court's Orders of April 28, 1993 and
September 23, 1993, petitioners elevated the case through certiorari and
prohibition before public respondent Court of Appeals. In a decision dated
January 17, 1995, respondent Court of Appeals held that Administrative Circular
No. 3 is the governing rule in extra-judicial foreclosure of mortgage, which
circular petitioners however failed to follow, and with respect to the publication
of the notice of the auction sale, the provisions of P.D. No. 1079 is the applicable
statute, which decree petitioners similarly failed to obey. Respondent Court of
Appeals did not pass upon the other issues and confined its additional lengthy
discussion on the validity of the trial court's issuance of the preliminary
injunction, finding the same neither capricious nor whimsical exercise of
judgment that could amount to grave abuse of discretion. The Court of Appeals
accordingly dismissed the petition, as well as petitioners' subsequent motion for
reconsideration. Hence, the instant petition under Rule 45 of the Rules of Court
reiterating the grounds raised before respondent court.
ISSUE:
Whether or not there was a correct application of payment in this case.
FACTS:
China Banking Corporation (China Bank) extended several loans to Native
West International Trading Corporation (Native West) and to So Ching, Native
West's president. Native West in turn executed promissory notes in favor of
China Bank. So Ching, with the marital consent of his wife, Cristina So,
additionally executed two mortgages over their properties, viz., a real estate
mortgage executed on July 27, 1989 covering a parcel of land situated in Cubao,
Quezon City, under TCT No. 277797, and another executed on August 10, 1989
covering a parcel of land located in Mandaluyong, under TCT No. 5363. The
promissory notes matured and despite due demands by China Bank neither
private respondents Native West nor So Ching paid. Pursuant to a provision
embodied in the two mortgage contracts, China Bank filed petitions for the
extra-judicial foreclosure of the mortgaged properties before Notary Public Atty.
Renato E. Taguiam for TCT No. 277797, and Notary Public Atty. Reynaldo M.
Cabusora for TCT No. 5363, copies of which were given to the spouses So Ching
and Cristina So. After due notice and publication, the notaries public scheduled
the foreclosure sale of the spouses' real estate properties on April 13, 1993.
RULING:
An important task in contract interpretation is the ascertainment of the
intention of the contracting parties which is accomplished by looking at the
words they used to project that intention in their contract, i.e., all the words, not
just a particular word or two, and words in context, not words standing alone.
Indeed, Article 1374 of the Civil Code, states the various stipulations of a
contract shall be interpreted together, attributing to the doubtful ones that
sense which may result from all of them taken jointly." Applying the rule, we
find that the parties intent is to constitute the real estate properties as
continuing securities liable for future obligations beyond the amounts of P6.5
million and P3.5 million respectively stipulated in the July 27, 1989 and August
10, 1989 mortgage contracts. Thus, while the "whereas" clause initially provides
that "the mortgagee has granted, and may from time to time hereafter grant to
the mortgagors . . . credit facilities not exceeding six million five hundred
thousand pesos only (P6,500,000.00)" yet in the same clause it provides that
"the mortgagee had required the mortgagor(s) to give collateral security for the
sales such securities or things of value for the purpose of applying their
proceeds to such payments.
And while private respondents aver that they have already paid ten
million pesos, an allegation which has still to be settled before the trial court, the
same cannot be utilized as a shield to enjoin the foreclosure sale. A mortgage
given to secure advancements, is a continuing security and is not discharged by
repayment of the amount named in the mortgage, until the full amount of the
advancements are paid.
APPLICATION OF PAYMENTS
MOBIL OIL PHILIPPINES, INC., and CALTEX (PHILS.), INC., petitioners
VS. HON. COURT OF APPEALS and
CONTINENTAL CEMENT CORPORATION, respondents
G.R. No. 103052
23 May 2003
FACTS:
The petition for review on certiorari in the case at bar seeks the reversal
of the decision of the Court of Appeals, affirming that 2 of the Regional Trial
Court (RTC), Branch 101, of Quezon City, which found herein petitioners Mobil Oil
Philippines, Inc., and Caltex Philippines, Inc., jointly and severally liable to private
respondent Continental Cement Corporation in the amount of eight million pesos
(P8,000,000.00) for actual damages, plus ten percent (10%) thereof by way of
attorneys fees, for having delivered water-contaminated bunker fuel oil to the
serious prejudice and damage of the cement firm.
Sometime in May 1982, petitioner Mobil Oil Philippines, Inc. (MOPI), a firm
engaged in the marketing of petroleum products to industrial users, entered into
a supply agreement with private respondent Continental Cement Corporation
(CCC), a cement producer, under which the former would supply the latters
industrial fuel oil (IFO) or bunker fuel oil (BFO) requirements. MOPI extended to
CCC an unsecured credit line of P2,000,000.00 against which CCCs purchases of
oil could initially be charged.
Whether or not Petitioners can be held liable for the contaminated BFO
delivered on 8 October 1982 on the ground that Country Freight Service, as
carrier-hauler, was an agent of Mobil.
RULING:
The claim that the Court of Appeals conveniently made an inference that
the subject Continental storage tank contained Mobil BFO deliveries only
because Mobil and Continental agreed to jointly examine the same, and that
the appellate court had so misapprehended the facts, is unacceptable. The
factual finding that deliveries previous to 08 October 1982 were adulterated BFO
was supported by the 22 October 1982 joint undertaking. This document,
witnessed and signed by representatives of both MOPUI and CCC, clearly
showed that a detailed verification of water contained on all BFO delivered by
MOBIL OIL PHILS., INC., except those that have already been used in cement
operation by CCC,: was undertaken. Implicit from this statement was that there
still was at the time an availability of BFO in the storage tank designated by CCC
for past Mobil deliveries. The same could be said of the second water draining
process, evidence by the second joint undertaking. Although done without the
participation of MOPI, the latter, nonetheless, was notified of the counting
thrice, the last of which had indicated that failure on MOPIs part to send a
representative would be tantamount to a waiver of its right to participate
therein.
The appellate court may not thus be faulted for holding that petitioners
and barred from questioning the results of water draining processes conducted
on the MOPI tank in the CCC plant site, in the same manner that MOPI may not
belatedly question the testing procedure theretofore adopted. MOPI cannot be
allowed to turn its back to its own acts (or inactions) to the prejudice of CCC,
which, in good faith, relied upon MOPIs conduct.
CFS was the contractor of MOPI, not CCC, and the contracted price of the
BFO that CCC paid to MOPI included hauling charges. The presumption laid
down under Article 1523 of the Civil Code that delivery to the carrier should be
deemed to be delivery to the buyer would have no application where, such as in
this case, the sale itself specifically called for delivery by the seller to the buyer
at the latters place of business.
WHEREFORE, the herein questioned decision of the Court of Appeals in
AFFIRMED in toto. Costs against petitioners.
RULING:
1.
2.
3.
4.
5.
6.
respondent had given petitioner a grace period of four months to pay the
arrears. As of May 1, 1980, the total amount due to private respondent under
the contract was P214,418.00.
In his letter of March 30, 1980 to Mr. Tomas Siatianum, who signed the
agreements for petitioner, private respondent's counsel protested petitioner's
encroachment upon a portion of its subdivision. It added that petitioner had
failed to abide by its promise to remove the encroachment, or to purchase the
lots involved "at the current price or pay the rentals on the basis of the total
area occupied, all within a short period of time." It also demanded the removal
of the illegal constructions on the property that had prejudiced the subdivision
and its neighbors.
After a series of negotiations between the parties, they agreed to enter
into a new contract to sell 8 involving seven lots. The contract stipulates that
the previous contracts involving the same lots "have been cancelled due to the
failure of the purchaser to pay the stipulated installments." It states further that
the new contract was entered into "to avoid litigation, considering that the
purchaser has already made use of the premises since 1981 to the present
without paying the stipulated installments." The parties agreed that the contract
price would be P423,250.00 with a down payment of P42,325.00 payable upon
the signing of the contract and the balance of P380,925.00 payable in forty-eight
equal monthly amortization payments of P7,935.94. The new contract bears the
date of October 11, 1983 but neither of the parties signed it. Thereafter, Tomas
Siatianum issued the checks in the total amount of P37,642.72 to private
respondent.
Private respondent received but did not encash those checks. Instead filed
in the trial court a complaint for accion publiciana de posesion against petitioner
and Tomas Siatianum, as president and majority stockholder of petitioner.
The lower court rendered a decision finding that the original agreements
of the parties were validly cancelled in accordance with provision No. 9 of each
agreement. The parties did not enter into a new they did not sign the draft
contract. Receipt by private respondent of the five checks could not amount to
perfection of the contract because private respondent never encashed and
benefited from those checks, they represented the deposit under the new
contract because petitioner failed to prove that those were monthly installments
that private respondent refused to accept. Thus, the fact that the parties tried
to negotiate a new Contract indicated that they considered the first contract as
"already cancelled." This decision was affirmed by the Court of Appeals.
ISSUE:
Whether there was a tender of payment and consignation in the case.
RULING:
The parties' failure to agree on a fundamental provision of the contract
was aggravated by petitioner's failure to deposit the installments agreed upon.
Neither did it attempt to make a consignation of the installments. As held in the
Adelfa Properties case:
"The mere sending of a letter by the vendee expressing the intention to pay,
without the accompanying payment, is not considered a valid tender of
payment. Besides, a mere tender of payment is not sufficient to compel private
respondents to deliver the property and execute the deed of absolute sale. It is
consignation which is essential in order to extinguish petitioner's obligation to
pay the balance of the purchase price. The rule is different in case of an option
contract or in legal redemption or in a sale with right to repurchase, wherein
consignation is not necessary because these cases involve an exercise of a right
or privilege (to buy, redeem or repurchase) rather than the discharge of an
obligation, hence tender of payment would be sufficient to preserve the right or
privilege. This is because the provisions on consignation are not applicable
when there is no obligation to pay. A contract to sell, as in the case before us,
involves the performance of an obligation, not merely the exercise of a privilege
or a right. Consequently, performance or payment may be effected not by
tender of payment alone but by both tender and consignation."
In the case, petitioner did not lift a finger towards the performance of the
contract other than the tender of down payment. There is no record that it even
bothered to tender payment of the installments or to amend the contract to
reflect the true intention of the parties as regards the number of lots to be sold.
Indeed, by petitioner's inaction, private respondent may not be judicially
enjoined to validate a contract that the former appeared to have taken for
granted. As in the earlier agreements, petitioner ignored opportunities to
resuscitate a contract to sell that were rendered moribund and inoperative by its
inaction.
Petition denied. Decision affirmed.
TENDER OF PAYMENT OR CONSIGNATION
ETERNAL GARDENS MEMORIAL PARK CORPORATION
court declared that EGMPC has waived its right to present the records and
documents necessarily for accounting, and that it will now proceed "to the
mutual accounting required to determine the remaining accrued rights and
liabilities of the said partiesand that the Court will proceed to do what it is
required to do on the basis of the documents submitted by the NPUMC. Ms.
Angelo submitted her Report dated January 31, 1995, to which the appellate
court required the parties to comment on. EGMPC took exception to the
appellate court's having considered it to have waived its right to present
documents. Considering EGMPC's arguments, the court set a hearing date
where NPUM would present its documents "according to the Rules [of Court], and
giving the private respondent [EGMPC] the opportunity to object thereto."
ISSUE:
Whether or not EGMPC is liable for interest because there was still the
unresolved issue of ownership over the property subject of the Land
Development Agreement of October 6, 1976.
RULING:
The Supreme Court held that the argument is without merit. EGMPC
under the agreement had the obligation to remit monthly to NPUM forty percent
(40%) of its net gross collection from the development of a memorial park on
property owned by NPUM.
It also provides for the designation of a
depository/trustee bank to act as the depository/trustee for all funds collected by
EGMPC. There was no obstacle, legal or otherwise, to the compliance by EGMPC
of this provision in the contract, even on the affectation that it did not know to
whom payment was to be made.
Even disregarding the agreement, EGMPC cannot "suspend" payment on
the pretext that it did not know who among the subject property's claimants was
the rightful owner. It had a remedy under the New Civil Code of the Philippines
to give in consignation the amounts due, as these fell due.
Consignation produces the effect of payment.
The rationale for
consignation is to avoid the performance of an obligation becoming more
onerous to the debtor by reason of causes not imputable to him. For its failure
to consign the amounts due, EGMPCs obligation to NPUM necessarily became
more onerous as it became liable for interest on the amounts it failed to remit.
Thus, the Court of Appeals correctly held Eternal Gardens liable for
interest at the rate of twelve percent (12%). The withholding of the amounts
due under the agreement was tantamount to a forbearance of money.
hearing, BPI through its Manager, testified that on July 16, 1993, BPI encashed
and deducted the said amount from the account of CIFC, but the proceeds, as
well as the check remained in BPIs custody. This was alleged in accordance with
the Compromise Agreement it entered with CIFC to end the litigation in RTCMakati Branch. On July 27, 1993, BPI filed a separate collection suit against
Alegre, alleging that he had connived with other persons to forge several checks
of BPIs client, amounting to P1, 724, 364.58. On September 27, 1993, RTCMakati Branch rendered its judgment in favor of private respondent. CIFC
appealed from the said decision, but the appellate court affirmed in toto the
decision of the lower court.
ISSUE:
Whether or not the petitioner is still liable for the payment of check even
though BPI accepted the instrument
RULING:
The Supreme Court held that the money market transaction between the
petitioner and private respondent is in the nature of loan. In a loan transaction,
the obligation to pay a sum certain in money may be paid in money, which is the
legal tender or, by the use of a check. A check is not a legal tender, and
therefore cannot constitute valid tender of payment. In effect, CIFC has not yet
tendered a valid payment of its obligation to the private respondent. Tender of
payment involves a positive and unconditional act by the obligor of offering legal
tender currency as payment to the obligee for the formers obligation and
demanding that the latter accept the same. Tender of payment cannot be
presumed by a mere inference from surrounding circumstances. Hence, CIFC is
still liable for the payment of the check.
Wherefore, the assailed decision is affirmed and the petition is denied.
TENDER OF PAYMENT OR CONSIGNATION
DOLORES LIGAYA DE MESA, petitioner, vs. THE COURT OF APPEALS,
OSSA HOUSE, INC. AND DEVELOPMENT BANK OF THE
PHILIPPINES,respondents
G.R. No. 106467-68
October 19, 1999
FACTS:
Petitioner Dolores Ligaya de Mesa owns several parcels of land in Makati,
Pasay City, Cavite, and General Santos City which were mortgaged to the
Development Bank of the Philippines (DBP) as security for a loan she obtained
from the bank. Failing to pay her mortgage debt, all her mortgaged properties
were foreclosed and sold at public auction held on different days.
On April 30, 1977, the Makar property was sold and the corresponding
certificate of sale inscribed on March 10, 1978. On August 25, 1977, the Naic,
Cavite property was sold and the certificate of sale registered on the same day.
On August 30, 1977, the two (2) parcels of land in Makati were sold at public
auction and the certificate of sale was inscribed on November 25, 1977. And on
January 12, 1978, the three (3) parcels of land in Pasay City were also sold and
the certificate of sale was recorded on the same date. In all the said auction
sales, DBP was the winning bidder.
On October 23, 1978, Mrs. de Mesa, under a Deed of Sale with Assumption
of Mortgage, sold the foreclosed properties to private respondent OSSA under
the condition that the latter was to assume the payment of the mortgage debt
by the repurchase of all the properties mortgaged on installment basis, with an
initial payment of P90,000.00 representing 20% of the total obligation.
On March 11, 1981, petitioner de Mesa notified private respondent OSSA
that she was rescinding the Deed of Sale with Assumption of Mortgage she
executed in favor of the latter on the ground that OSSA failed to comply with the
terms and conditions of their agreement, particularly the payment of
installments to the Development Bank of the Philippines, the discharge and
cancellation of the mortgage on the property listed in item IV of the first whereas
clause, and the payment of the balance of more or less P45,000.00 to petitioner,
representing the difference between the purchase price of subject properties
and the actual obligation to the DBP.
On August 5, 1981, DBP refused to accept the 9th quarterly installment paid
by OSSA, prompting the latter to file against DBP and the petitioner, on August
11, 1981, Civil Case No. 42381 for specific performance and consignation, with
the then Court of First Instance of Pasig, Rizal, depositing in said case the
amount of P15,824.92.
After trial, the lower court came out with a Decision for the private
respondent OSSA. The petitioner appealed to the Court of Appeals which handed
down on March 31, 1992, its decision modifying the challenged decision.
ISSUE:
Whether or not the Court erred in ruling that the mandatory requirements
of the Civil Code on consignation can be waived by the trial court or whether or
not the requirements of Articles 1256 to 1261 can be 'relaxed' or 'substantially
complied with'.
RULING:
Petitioner argues that there was no notice to her regarding OSSA's
consignation of the amounts corresponding to the 12th up to the 20th quarterly
installments. The records, however, show that several tenders of payment were
consistently turned down by the petitioner, so much so that the respondent
OSSA found it pointless to keep on making formal tenders of payment and
serving notices of consignation to petitioner. Moreover, in a motion dated May
7, 1987, OSSA prayed before the lower court that it be allowed to deposit by way
of consignation all the quarterly installments, without
making formal tenders of payment and serving notice of consignation, which
prayer was granted by the trial court in the Order dated July 3, 1982. The
motion and the subsequent court order served on the petitioner in the
consignation proceedings sufficiently served as notice to petitioner of OSSA's
willingness to pay the quarterly installments and the consignation of such
payments with the court. For reasons of equity, the procedural requirements of
consignation are deemed substantially complied with in the present case.
Petitioner also insists that there was no valid tender of payment because
the amount tendered was P34,363.08, not P51,243.26, and assuming ex gratia
argumenti that it was the correct amount, the tender thereof was still not valid,
the same having been made by check. This claim, however, does not accord
with the records on hand. Thus, the Court of Appeals ratiocinated:
"The 'Deed of Sale with Assumption of Mortgage', was for a consideration
of P500,000.00, from which shall be deducted de Mesas's outstanding obligation,
with the DBP pegged as of May 10, 1978, by the parties themselves, at
P455,636.92. This amount of P455,636.92 owing DBP, is what OSSA agreed to
assume. What remained to be paid de Mesa was P44,636.08, but OSSA made an
advance payment of P10,000.00, hence the remaining amount payable to de
Mesa is P34,363.08, which OSSA tendered in cash. It is thus beyond cavil that
the respondent OSSA tendered the correct amount, the tender of which was in
cash and not by check, as theorized by petitioner.
The Court of Appeals erred not in affirming the decision of the trial court
of origin.
The petition is DENIED and the assailed Decision of the Court of Appeals in
CA-G.R. Nos. 19145 and 19156 dated March 31, 1992 AFFIRMED.
FACTS:
Private respondent Tropical Homes, Inc had a subdivision contract with
petitioners who are the owners of the land subject of subdivision development
by private respondent. The contract stipulated that the petitioners fixed and
sole share and participation is the land which is equivalent to forty percent of all
cash receipts from the sale of the subdivision lots. When the development costs
increased to such level not anticipated during the signing of the contract and
which threatened the financial viability of the project as assessed by the private
respondent, respondent filed at the lower court a complaint for the modification
of the terms and conditions of the contract by fixing the proper shares that
should pertain to the parties therein out of the gross proceeds from the sales of
the subdivision lots. Petitioners moved for the dismissal of the complaint for lack
of cause of action. The lower court denied the motion for dismissal which was
upheld by the CA based on the civil code provision that when the service has
become so difficult as to be manifestly beyond the contemplation of the parties,
the obligor may also be released therefrom, in whole or in part. Insisting that
the worldwide increase in prices cited by private respondent does not constitute
a sufficient cause of action for the modification of the terms and conditions of
the contract, petitioners filed the instant petition.
ISSUE:
Whether or not private respondent may demand modification of the terms
of the contract on the ground that the prestation has manifestly come beyond
the contemplation of the parties.
RULING:
With regard to the contention that said resolution cannot nullify the
contractual obligations assumed by the defendant-appellee referring to the
restrictions incorporated in the deeds of sale and later in the corresponding
Transfer Certificates of Title issued to defendant-appellee, it should be stressed,
that while non-impairment of contracts is constitutionally guaranteed, the rule is
not absolute, since it has to be reconciled with the legitimate exercise of police
power.
Resolution No. 27, s-1960 declaring the western part of highway , now
EDSA, from Shaw Boulevard to the Pasig River as an industrial and commercial
zone, was obviously passed by the Municipal Council of Mandaluyong, Rizal in
the exercise of police power to safeguard or promote the health, safety, peace,
good order and general welfare of the people in the locality. Judicial notice may
be taken of the conditions prevailing in the area, especially where lots Nos. 5
and 6 are located. The lots themselves not only front the highway; industrial and
commercial complexes have flourished about the place. EDSA, a main traffic
artery which runs through several cities and municipalities in the Metro Manila
area, supports an endless stream of traffic and the resulting activity, noise and
pollution are hardly conducive to the health, safety or welfare of the residents in
its route. Having been expressly granted the power to adopt zoning and
subdivision ordinances or regulations, the municipality of Mandaluyong, through
its Municipal 'council, was reasonably, if not perfectly, justified under the
circumstances, in passing the subject resolution.
The motives behind the passage of the questioned resolution being
reasonable, and it being a " legitimate response to a felt public need," not
whimsical or oppressive, the non-impairment of contracts clause of the
Constitution will not bar the municipality's proper exercise of the power.
It is, therefore, clear that even if the subject building restrictions were
assumed by the defendant-appellee as vendee of Lots Nos. 5 and 6, in the
corresponding deeds of sale, and later, in Transfer Certificates of Title Nos.
101613 and 106092, the contractual obligations so assumed cannot prevail over
Resolution No. 27, of the Municipality of Mandaluyong, which has validly
exercised its police power through the said resolution. Accordingly, the building
restrictions, which declare Lots Nos. 5 and 6 as residential, cannot be enforced.
1.
2.
3.
FACTS:
Private respondent Santiago A. Guerrero was President and Chairman of
"Guerrero Transport Services", a single proprietorship. Sometime in 1972,
Guerrero Transport Services won a bid for the operation of a fleet of taxicabs
within the Subic Naval Base, in Olongapo. As highest bidder, Guerrero was to
"provide radio-controlled taxi service within the U.S. Naval Base, Subic Bay,
utilizing as demand requires . . . 160 operational taxis consisting of four wheel,
four-door, four passenger, radio controlled, meter controlled, sedans, not more
than one year . . . "
On September 22, 1972, with the advent of martial law, President
Ferdinand E. Marcos issued Letter of Instruction No. 1.
On September 25, 1972, pursuant to the aforequoted Letter of Instruction,
the Radio Control Office issued Administrative Circular No. 4:
Subject:
Suspending the acceptance and processing of applications for radio station
construction permits and for permits to own and/or possess radio transmitters or
transceivers.
On September 25, 1972, Guerrero and Victorino D. Magat, as General
Manager of Spectrum Electronic Laboratories, a single proprietorship, executed a
letter-contract for the purchase of transceivers at a quoted price of
US$77,620.59, FOB Yokohoma. Victorino was to deliver the transceivers within
60 to 90 days after receiving notice from Guerrero of the assigned radio
frequency, "taking note of Government Regulations. The contract was signed
and Victorino contacted his Japanese supplier, Koide & Co., Ltd. and placed an
order for the transceivers.
On September 29, 1972, Navy Exchange Officer, A. G. Mason confirmed
that Guerrero won the bid for the commercial transportation contract. On
October 4, 1972, middle man and broker Isidro Q. Aligada of Reliance Group
Engineers, Inc. , wrote Victorino, informing him that a radio frequency was not
yet assigned to Guerrero and that government regulations might complicate the
importation of the transceivers. However, in the same letter, Victorino was
advised to advise his supplier "to proceed (with) production pending frequency
information." Victorino was also assured of Guerrero's financial capability to
comply with the contract. On October 6, 1972, Guerrero informed Aligada of the
frequency number assigned by Subic Naval Base authorities. Aligada was
instructed to "proceed with the order thru Spectrum Electronics Laboratories."
On October 7, 1972, Aligada informed Magat of the assigned frequency number.
Aligada also advised Victorino to "proceed with the order upon receipt of letter of
credit." On January 10, 1973, Guerrero applied for a letter of credit with the
Metropolitan Bank and Trust Company. This application was not pursued.
On March 27, 1973, Victorino, represented by his lawyer, Atty. Sinesio S.
Vergara, informed Guererro that the order with the Japanese supplier has not
been canceled. Should the contract be canceled, the Japanese firm would forfeit
30% of the deposit and charge a cancellation fee in an amount not yet known,
Guerrero to bear the loss. Further, should the contract be canceled, Victorino
would demand an additional amount equivalent to 10% of the contract price.
Unable to get a letter of credit from the Central Bank due to the refusal of
the Philippine government to issue a permit to import the transceivers, Guerrero
commenced operation of the taxicabs within Subic Naval Base, using radio units
borrowed from the U.S. government. Victorino thus canceled his order with his
Japanese supplier.
On May 22, 1973, Victorino filed with the Regional Trial Court, Makati a
complaint for damages arising from breach of contract against Guerrero. On
June 7, 1973, Guerrero moved to dismiss the complaint on the ground that it did
not state a cause of action. On June 16, 1973, the trial court granted the motion
and dismissed the complaint. On July 11, 1973, Victorino filed a petition for
review on certiorari with this Court assailing the dismissal of the complaint.
On April 20, 1983, the Supreme Court ruled that the complaint sufficiently
averred a cause of action. The Court set aside the order of dismissal and
remanded the case to the trial court for further proceedings. On November 27,
1984, the trial court ordered that the case be archived for failure of Victorino to
prosecute. On March 11, 1985, petitioners, Olivia, Dulce, Ma. Magnolia, Ronald
and Dennis Magat, moved to reinstate the case and to substitute Victorino in its
prosecution. Apparently, Victorino died on February 18, 1985. On April 29,
1985, the trial court granted the motion.
On July 12, 1991, the trial court decided in favor of the heirs of Victorino
and ordered Guerrero to pay temperate, moral and exemplary damages, and
attorney's fees. On August 21, 1991, Guerrero appealed to the Court of Appeals.
However it was dismissed. On October 26, 1995, the heirs of Victorino filed with
the Court of Appeals a motion for reconsideration. On March 12, 1996, the Court
of Appeals denied the motion for reconsideration.
ISSUES:
Whether or not the transceivers were contraband items prohibited by the
LOI and Administrative Circular to import; hence, the contract is void.
Whether or not the contract was breached.
RULING:
Anent the 1st issue, NO. The contract was not void ab initio. Nowhere in
the LOI and Administrative Circular is there an express ban on the importation of
transceivers. The LOI and Administrative Circular did not render radios and
transceivers illegally per se. The Administrative Circular merely ordered the
Radio Control Office to suspend the acceptance and processing of
application for permits to possess, own, transfer, purchase and sell radio
transmitters and transceivers therefore; possession and importation of the
radio transmitters and transceivers was legal provided one had the necessary
license for it. The LOI and Administrative Circular did not render the transceivers
outside the commerce of man. They were valid objects of the contract.
Anent the 2nd issue, NO. The contract was not breached. Affirming the
validity of the contract, the law provides that when the service (required by the
contract) has become so manifestly beyond the contemplation of the parties, the
obligor may also be released there from in whole or in parts. Here, Guerreros
inability to secure a letter of credit and to comply with his obligation was a direct
consequence of the denial of the permit to import. For this, he cannot be
faulted. Even if the Court assumes that there was a breach of contract,
damages cannot be awarded. Damnum absque injuria comes into the fore.
conditions of said contract of lease are as follows: a) the lease shall be for a
period of five (5) years which begins upon the issuance of permit by the Ministry
of Human Settlement and renewable at the option of the lessee under the terms
and conditions, b) the monthly rent is P20, 000.00 which shall be increased
yearly by 5% based on the monthly rate, c) the rent shall be paid yearly in
advance, and d) the property shall be used as premises of a rock crushing plan.
On January 7, 1986, petitioner obtained permit from the Ministry which
was to be valid for two (2) years unless revoked by the Ministry. Later,
respondent requested the payment of the first annual rental. But petitioner
alleged that the payment of rental should commence on the date of the issuance
of the industrial clearance not on the date of signing of the contract. It then
expressed its intention to terminate the contract and decided to cancel the
project due to financial and technical difficulties. However, petitioner refused to
accede to respondents request and reiterated their demand for the payment of
the first annual rental. But the petitioner argued that it was only obligated to
pay P20, 000.00 as rental for one month prompting private respondent to file an
action against the petitioner for specific performance with damages before the
RTC of Pasig. The trial court rendered decision in favor of private respondent.
Petitioner then appealed the decision of the trial court to the Court of Appeals
but the later affirmed the decision of the trial court and denied the motion for
reconsideration.
ISSUE:
Whether or not petitioner can avail of the benefit of Article 1267 of the
New Civil Code.
RULING:
NO. The petitioner cannot take refuge of the said article. Article 1267 of
the New Civil Code provides that when the service has become so difficult as to
manifestly beyond the contemplation of the parties, the obligor may also be
released therefrom, in whole or in part. This article, which enunciates the
doctrine of unforeseen events, is not, however an absolute application of the
principle of rebus sic stantibus, which would endanger the security of contractual
relations. The parties to the contract must be presumed to have assumed the
risks of unfavorable developments. It is therefore only in absolutely exceptional
chances of circumstances that equity demands assistance for the debtor. The
principle of rebus sic stantibus neither fits in with the facts of the case. Under
this theory, the parties stipulate in the light of certain prevailing conditions, and
once these conditions cease to exist, the contract also ceases to exist.
In this case, petitioner averred that three (3) abrupt change in the political
climate of the country after the EDSA Revolution and its poor financial condition
rendered the performance of the lease contract impractical and inimical to the
corporate survival of the petitioner. However, as held in Central Bank v. CA,
mere pecuniary inability to fulfill an engagement does not discharge a
contractual obligation, nor does it constitute a defense of an action for specific
performance.
REBUS SIC STANTIBUS
NAGA TELEPHONE CO., INC. (NATELCO) AND LUCIANO M. MAGGAY,
petitioners, VS. THE COURT OF APPEALS AND CAMARINES SUR II
ELECTRIC COOPERATIVE, INC. (CASURECO II), respondents
1994 Feb 24
230 SCRA 351
FACTS:
Petitioner Naga Telephone Co., Inc. (NATELCO) is a telephone company
rendering local as well as long distance service in Naga City while private
respondent Camarines Sur II Electric Cooperative, Inc. (CASURECO II) is a private
corporation established for the purpose of operating an electric power service in
the same city.
On November 1, 1977, the parties entered into a contract for the use by
petitioners in the operation of its telephone service the electric light posts of
private respondent in Naga City. In consideration therefor, petitioners agreed to
install, free of charge, ten (10) telephone connections for the use by private
respondent. After the contract had been enforced for over ten (10) years,
private respondent filed with the Regional Trial Court against petitioners for
reformation of the contract with damages, on the ground that it is too one-sided
in favor of petitioners; that it is not in conformity with the guidelines of the
National Electrification Administration (NEA); that after eleven (11) years of
petitioners' use of the posts, the telephone cables strung by them thereon have
become much heavier with the increase in the volume of their subscribers; that
a post now costs as much as P2,630.00; so that justice and equity demand that
the contract be reformed to abolish the inequities thereon.
As second cause of action, private respondent alleged that starting with
the year 1981, petitioners have used 319 posts outside Naga City, without any
contract with it; that at the rate of P10.00 per post, petitioners should pay
private respondent for the use thereof the total amount of P267,960.00 from
1981 up to the filing of its complaint; and that petitioners had refused to pay
private respondent said amount despite demands. And as third cause of action,
private respondent complained about the poor servicing by petitioners.
The trial court ruled, as regards private respondents first cause of action,
that the contract should be reformed by ordering petitioners to pay private
respondent compensation for the use of their posts in Naga City, while private
respondent should also be ordered to pay the monthly bills for the use of the
telephones also in Naga City. And taking into consideration the guidelines of the
NEA on the rental of posts by telephone companies and the increase in the costs
of such posts, the trial court opined that a monthly rental of P10.00 for each post
of private respondent used by petitioners is reasonable, which rental it should
pay from the filing of the complaint in this case on January 2, 1989. And in like
manner, private respondent should pay petitioners from the same date its
monthly bills for the use and transfers of its telephones in Naga City at the same
rate that the public are paying.
On private respondent's second cause of action, the trial court found that
the contract does not mention anything about the use by petitioners of private
respondent's posts outside Naga City. Therefore, the trial court held that for
reason of equity, the contract should be reformed by including therein the
provision that for the use of private respondent's posts outside Naga City,
petitioners should pay a monthly rental of P10.00 per post, the payment to start
on the date this case was filed, or on January 2, 1989, and private respondent
should also pay petitioners the monthly dues on its telephone connections
located outside Naga City beginning January, 1989. And with respect to private
respondent's third cause of action, the trial court found the claim not sufficiently
proved.
The Court of Appeals affirmed the decision of the trial court, but based on
different grounds to wit: (1) that Article 1267 of the New Civil Code is applicable
and (2) that the contract was subject to a potestative condition which rendered
said condition void.
ISSUE:
Whether or not the principle of Rebus Sic Stantibus is applicable in the
case at bar.
RULING:
essential services being rendered by both parties herein to the public and to
avoid unjust enrichment by appellant at the expense of plaintiff . . . "
Decision affirmed.
the mortgage over the two parcels of land be released and its stock inventory be
lifted and that its obligation to the bank be declared as having been fully paid.
After trial, the court a quo rendered judgment in favor of Trans-Pacific. The
appellate court which, as aforesaid, reversed the decision of the trial court.
ISSUE:
Whether or not petitioner has indeed paid in full its obligation to
respondent bank.
RULING:
No. The Court found no reversible error committed by the appellate court
in disposing of the appealed decision. As gleaned from the decision of the court
a quo, judgment was rendered in favor of petitioner on the basis of
presumptions. The above disquisition finds no factual support, however, per
review of the records. The presumption created by the Art. 1271 of the Civil
Code is not conclusive but merely prima facie. If there be no evidence to the
contrary, the presumption stands. Conversely, the presumption loses its legal
efficacy in the face of proof or evidence to the contrary.
In the case at bar, the Court finds sufficient justification to overthrow the
presumption of payment generated by the delivery of the documents evidencing
petitioners indebtedness.
It may not be amiss to add that Article 1271 of the Civil Code raises a
presumption, not of payment, but of the renunciation of the credit where more
convincing evidence would be required than what normally would be called for to
prove payment. The rationale for allowing the presumption of renunciation in
the delivery of a private instrument is that, unlike that of a public instrument,
there could be just one copy of the evidence of credit. Where several originals
are made out of a private document, the intendment of the law would thus be to
refer to the delivery only of the original rather than to the original duplicate of
which the debtor would normally retain a copy.
Petition denied
IMPLIED CONDONATION PRESUMPTION OF DELIVERY
1.
2.
the money of the defendant Fred M. Harden, after the same has been delivered
to the latter. When said checks were delivered to the latter.
ISSUE:
Whether or not the proffer made by the plaintiff to the defendant is
binding.
RULING:
YES, the proffer made by the plaintiff to the defendant to the effect that
in the event you lose your case with your wife, Mrs. Esperanza P. de Harden,
and that after adjudication of the conjugal property what is left with you will not
be sufficient for your livelihood. I shall be pleased to write off as bad debt the
balance of your account in the sum of P42, 069.74. This proffer was contained
in a letter sent by the plaintiff to the defendant on March 23, 1949, which was
accepted expressly by Fred M. Harden. Harden regarded this proffer as a binding
obligation and acted accordingly, and for plaintiff to say now that proffer is but a
mere gesture of generosity or an act of Christian charity without any binding
legal effect is unfair to say at least. This is an added circumstance, which
confirms the Courts view that the understanding between the plaintiff and the
defendant is really to defer payment of the balance of the claim until after the
final liquidation of the conjugal partnership.
IMPLIED CONDONATION PRESUMPTION OF DELIVERY
LEONIDES LOPEZ LISO, plaintiff-appellee,
VS. MANUEL TAMBUNTING, defendant-appellant
1916 January 19
G.R. No. 9806
33 PHIL 226
FACTS:
These proceedings were brought to recover from the defendant the sum
of P2,000, amount of the fees, which, according to the complaint, are owing for
professional medical services rendered by the plaintiff to a daughter of the
defendant from March 10 to July 15, 1913, which fees the defendant refused to
pay, notwithstanding the demands therefor made upon him by the plaintiff. The
defendant denied the allegations of the complaint, and furthermore alleged that
the obligation which the plaintiff endeavored to compel him to fulfill was already
extinguished.
intention that that document should remain in the possession of the defendant if
the latter did not forthwith pay the amount specified therein.
By reason of the foregoing, the Court affirmed the judgment appealed
from, with the costs of this instance against the appellant.
FACTS:
On February 1, 1919, plaintiffs and defendant entered into a contract of
partnership, for the construction and exploitation of a railroad line from the "San
Isidro" and "Palma" centrals to the place known as "Nandong." The original
capital stipulated was P150, 000. It was covenanted that the parties should pay
this amount in equal parts and the plaintiffs were entrusted with the
administration of the partnership. The agreed capital of P150,000, however, did
not prove sufficient, as the expenses up to May 15, 1920, had reached the
amount of P226,092.92, presented by the administrator and O.K.'d by the
defendant.
January 29, 1920, the defendant entered into a contract of sale with
Venancio Concepcion, Phil. C. Whitaker, and Eusebio R. de Luzuriaga, whereby
he sold to the latter the estate and central known as "Palma" with its running
business, as well as all the improvements, machineries and buildings, real and
personal properties, rights, choices in action and interests, including the sugar
plantation of the harvest year of 1920 to 1921, covering all the property of the
vendor. This contract was executed before a notary public of Iloilo.
Before the delivery to the purchasers of the hacienda thus sold, Eusebio R.
de Luzuriaga renounced all his rights under the contract of January 29, 1920, in
favor of Messrs. Venancio Concepcion and Phil. C. Whitaker. This gave rise to
the fact that on July 17, 1920, Venancio Concepcion and Phil. C. Whitaker and
the herein defendant executed before Mr. Antonio Sanz, a notary public in and
for the City of Manila, another deed of absolute sale of the said "Palma" Estate
for the amount of P1,695,961.90, of which the vendor received at the time of
executing the deed the amount of P945,861.90, and the balance was payable by
installments in the form and manner stipulated in the contract. The purchasers
guaranteed the unpaid balance of the purchase price by a first and special
mortgage in favor of the vendor upon the hacienda and the central with all the
improvements, buildings, machineries, and appurtenances then existing on the
said hacienda.
Afterwards, on January 8, 1921, Venancio Concepcion and Phil. C.
Whitaker bought from the plaintiffs the one-half of the railroad line pertaining to
the latter, executing therefore the document. The price of this sale was
P237,722.15, excluding any amount which the defendant might be owing to the
plaintiffs. Of the purchase price, Venancio Concepcion and Phil. C. Whitaker paid
the sum of P47,544.43 only. In the Deed, the plaintiffs and Concepcion and
Whitaker agreed, among other things, that the partnership "Palma" and "San
Isidro," formed by the agreement of February 1, 1919, between Serra, Lazaro
Mota, now deceased, and Juan J. Vidaurrazaga for himself and in behalf of his
brother, Felix and Dionisio Vidaurrazaga, should be dissolved upon the execution
of this contract, and that the said partnership agreement should be totally
cancelled and of no force and effect whatever.
Since the defendant Salvador Serra failed to pay one-half of the amount
expended by the plaintiffs upon the construction of the railroad line, that is,
P113,046.46, as well as Phil. C. Whitaker and Venancio Concepcion, the plaintiffs
instituted the present action praying: 1) that the deed of February 1, 1919, be
declared valid and binding; 2) that after the execution of the said document the
defendant improved economically so as to be able to pay the plaintiffs the
amount owed, but that he refused to pay either in part or in whole the said
amount notwithstanding the several demands made on him for the purpose; and
3) that the defendant be sentenced to pay plaintiffs the aforesaid sum of
P113, 046.46, with the stipulated interest at 10 per cent per annum beginning
June 4, 1920, until full payment thereof, with the costs of the present action.
Defendant set up three special defenses: 1) the novation of the contract
by the substitution of the debtor with the conformity of the creditors; 2) the
confusion of the rights of the creditor and debtor; and 3) the extinguishment of
the contract.
The court a quo in its decision held that there was a novation of the
contract by the substitution of the debtor, and therefore absolved the defendant
from the complaint with costs against the plaintiffs. With regard to the prayer
that the said contract be declared valid and binding, the court held that there
was no way of reviving the contract which the parties themselves in interest had
spontaneously and voluntarily extinguished.
ISSUES:
Whether or not there was a novation of the contract by the substitution of
the debtor with the consent of the creditor, as required by Article 1205 of the
Civil Code; and
Whether or not there was a merger of rights of debtor and creditor under
Article 1192 of the Civil Code.
RULING:
1. NO, there was no novation of the contract. It should be noted that in
order to give novation its legal effect, the law requires that the creditor
should consent to the substitution of a new debtor. This consent must be
given expressly for the reason that, since novation extinguishes the
personality of the first debtor who is to be substituted by new one, it
implies on the part of the creditor a waiver of the right that he had before
the novation which waiver must be express under the principle that
renuntiatio non praesumitur, recognized by the law in declaring that a
waiver of right may not be performed unless the will to waive is
indisputably shown by him who holds the right. The fact that Phil. C.
Whitaker and Venancio Concepcion were willing to assume the
defendant's obligation to the plaintiffs is of no avail, if the latter have not
expressly consented to the substitution of the first debtor. As has been
said, in all contracts of novation consisting in the change of the debtor,
the consent of the creditor is indispensable, pursuant to Article 1205 of
the Civil Code which reads as follows: Novation which consists in the
substitution of a new debtor in the place of the original one may be made
without the knowledge of the latter, but not without the consent of the
creditor.
2. NO, there was no merger of Rights. Another defense urged by the
defendant is the merger of the rights of debtor and creditor, whereby
under Article 1192 of the Civil Code, the obligation, the fulfillment of which
is demanded in the complaint, became extinguished. It is maintained in
appellee's brief that the debt of the defendant was transferred to Phil. C.
Whitaker and Venancio Concepcion by the document. These in turn
acquired the credit of the plaintiffs by virtue of the debt; thus, the rights of
the debtor and creditor were merged in one person. The argument would
at first seem to be incontrovertible, but if we bear in mind that the rights
and titles which the plaintiffs sold to Phil. C. Whitaker and Venancio
Concepcion refer only to one-half of the railroad line in question, it will be
seen that the credit which they had against the defendant for the amount
of one-half of the cost of construction of the said line was not included in
the sale. That the plaintiffs sold their rights and titles over one-half of the
line. The purchasers, Phil. C. Whitaker and Venancio Concepcion, to
secure the payment of the price, executed a mortgage in favor of the
plaintiffs on the same rights and titles that they had bought and also upon
what they had purchased from Mr. Salvador Serra. In other words, Phil. C.
Whitaker and Venancio Concepcion mortgaged unto the plaintiffs what
they had bought from the plaintiffs and also what they had bought from
Salvador Serra. If Messrs. Phil. C. Whitaker and Venancio Concepcion had
purchased something from Mr. Salvador Serra, the herein defendant,
regarding the railroad line, it was undoubtedly the one-half thereof
pertaining to Mr. Salvador Serra. This clearly shows that the rights and
titles transferred by the plaintiffs to Phil. C. Whitaker and Venancio
Concepcion were only those they had over the other half of the railroad
line. Therefore, as already stated, since there was no novation of the
contract between the plaintiffs and the defendant, as regards the
obligation of the latter to pay the former one-half of the cost of the
construction of the said railroad line, and since the plaintiffs did not
include in the sale, the credit that they had against the defendant, the
allegation that the obligation of the defendant became extinguished by
the merger of the rights of creditor and debtor by the purchase of Messrs.
Phil. C. Whitaker and Venancio Concepcion is wholly untenable.
CONFUSION OR MERGER OR RIGHTS
YEK TONG LIN VS. YUSINGCO
64 PHIL 473
FACTS:
The defendant Pelagio Yusingco was the owner of the steamship Yusingco
and, as such, he executed, on November 19, 1927, a power of attorney in favor
of Yu Seguios to administer, lease, mortgage and sell his properties, including
his vessels or steamships. Yu Seguios, acting as such attorneys in fact of Pelagio
Yusingco, mortgaged to the plaintiff Yek Tong Lin Fire & Marine Insurance Co.,
Ltd., with the approval of the Bureau of Customs, the steamship Yusingco
belonging to the defendant, to answer for any amount that said plaintiff might
pay in the name of the defendant on account of a promissory note for P45, 000
executed by it.
One year and some months later, or in February, 1930, and in April, 1931,
the steamship Yusingco needed some repairs which were made by the Earnshaw
Docks & Honolulu Iron Works upon petition of A. Yusingco Hermanos which,
according to documentary evidence of record, was co-owner of Pelagio Yusingco.
The repairs were made upon the guaranty of the defendant and appellant
Vicente Madrigal at a cost of P8,244.66.
When neither A. Yusingco Hermanos nor Pelagio Yusingco could pay said
sum to the Earnshaw Docks & Honolulu Iron Works, the defendant and appellant
Vicente Madrigal had to make payment thereof with the stipulated interest
thereon, which was at the rate of 9 per cent per annum, on March 9, 1932,
because he was bound thereto by reason of the bond filed by him, the payment
then made by him having amounted to P8,777.60. Some days later, when said
defendant discovered that he was not to be reimbursed for the repairs made on
the steamship Yusingco, he brought an action against his co-defendant Pelagio
Yusingco and A. Yusingco Hermanos to compel them to reimburse him, which
resulted in a judgment favorable to him and adverse to the Yusingcos, as the
latter were ordered to pay him the sum of P3,269.66 plus interest thereon at
said rate of 9 per cent per annum from May 6, 1931, with the costs of the suit. It
was provided in the judgment that upon failure of the Yusingcos to pay the
above-stated amounts to Vicente Madrigal, a writ of execution would be issued
in order to have the steamship Yusingco sold at public auction for the purpose of
satisfying said amounts with the proceeds thereof.
Inasmuch as neither the defendant Pelagio Yusingco nor A. Yusingco
Hermanos paid the amount of the judgment rendered in civil case No. 41654, in
favor of the defendant and appellant Vicente Madrigal, the latter sought and
obtained from the Court of First Instance, which tried the case, the issuance of
the corresponding writ of execution. However, before the sale of the steamship
Yusingco, by virtue of the writ of execution so issued, was carried out, the
plaintiff and appellant filed with the defendant sheriff a third party claim
demanding said ship for himself, alleging that it had been mortgaged to him long
before the issuance of said writ and, therefore, he was entitled to the possession
thereof. The defendant sheriff then informed the defendant and appellant
Vicente Madrigal that if he wished to have the execution sought by him carried
out, he should file the indemnity bond required by section 451 of Act No. 190.
This was done by Vicente Madrigal, but in order to prevent him and the sheriff
from proceeding with the execution, the plaintiff and appellant instituted this
case in the court of origin and asked for the issuance of a writ of preliminary
injunction addressed to said two defendants to restrain them from selling the
steamship Yusingco at public auction. The writ of preliminary injunction, which
was issued on August 19, 1932, was later dissolved, the defendant and appellant
Vicente Madrigal having filed a bond of P5,000. This left the preliminary
injunction unimpaired and valid for the sale of the steamship Yusingco at public
auction. For this reason, said ship was sold at public auction on September 19,
1932, and was purchased, under the circumstances, by the plaintiff and
appellant itself, which was the highest bidder, having made the highest bid of
P12,000. Of said amount, the defendant sheriff turned over P10,195 to Vicente
Madrigal in payment of his judgment credit. It is said sum of P10,195 which the
lower court ordered Vicente Madrigal to turn over to the plaintiff.
ISSUE:
Whether or not the credit of the plaintiff, as mortgaged creditor of Pedagio
Yusingco, is superior to that of Vicente Madrigal, as judgment creditor of said
Pelagio Yusingco and A. Yusingco Hermones.
RULING:
NO, the defendant and appellant Vicente Madrigal enjoy preference in the
payment of his judgment credit.
After the steamship Yusingco had been sold by virtue of the judicial writ
issued in civil case No. 41654 for the execution of the judgment rendered in
favor of Vicente Madrigal, the only right left to the plaintiff was to collect its
mortgage credit from the purchaser thereof at public auction, inasmuch as the
rule is that a mortgage directly and immediately subjects the property on which
it is imposed, whoever its possessor may be, to the fulfillment of the obligation
for the security of which it was created (Article 1876, Civil Code); but it so
happens that it can not take such steps now because it was the purchaser of the
steamship Yusingco at public auction, and it was so with full knowledge that it
had a mortgage credit on said vessel. Obligations are extinguished by the
merger of the rights of the creditor and debtor (Articles 1156 and 1192, Civil
Code).
COMPENSATION REQUISITES
1.
2.
3.
E.G.V. REALTY V CA
G.R.No. 120236 July 20, 1999
FACTS
Petitioner E.G.V. Realty Development Corporation is the
owner/developer of a seven-storey condominium building known as
Cristina Condominium. Cristina Condominium Corporation holds title to all
common areas of Cristina Condominium and is in charge of managing,
maintaining and administering the condominiums common areas and
providing for the buildings security. Respondent Unisphere International,
Inc. (hereinafter referred to as Unisphere) is the owner/occupant of Unit
301 of said condominium. On November 28, 1981, respondent
Unispheres Unit 301 was allegedly robbed of various items valued at
P6,165.00. The incident was reported to petitioner CCC. On July 25, 1982,
another robbery allegedly occurred at Unit 301 where the items carted
away were valued at P6,130.00, bringing the total value of items lost to
P12,295.00. This incident was likewise reported to petitioner CCC. On
October 5, 1982, respondent Unisphere demanded compensation and
reimbursement from petitioner CCC for the losses incurred as a result of
the robbery. On January 28, 1987, petitioners E.G.V. Realty and CCC
jointly filed a petition with the Securities and Exchange Commission (SEC)
for the collection of the unpaid monthly dues in the amount of P13,142.67
against respondent Unisphere.
ISSUE
Whether or not set-off or compensation has taken place in the
instant case.
RULING
Compensation or offset under the New Civil Code takes place only
when two persons or entities in their own rights, are creditors and debtors
of each other. (Art. 1278).
A distinction must be made between a debt and a mere claim. A
debt is an amount actually ascertained. It is a claim which has been
formally passed upon by the courts or quasi-judicial bodies to which it can
AEROSPACE CHEMICAL V CA
g.r.no. 108129 september 23, 1999
FACTS
On June 27, 1986, petitioner Aerospace Industries, Inc. (Aerospace)
purchased five hundred (500) metric tons of sulfuric acid from private
respondent Philippine Phosphate Fertilizer Corporation (Philphos). Initially
set beginning July 1986, the agreement provided that the buyer shall pay
its purchases in equivalent Philippine currency value, five days prior to
the shipment date. Petitioner as buyer committed to secure the means of
transport to pick-up the purchases from private respondent's loadports.
Per agreement, one hundred metric tons (100 MT) of sulfuric acid should
be taken from Basay, Negros Oriental storage tank, while the remaining
four hundred metric tons (400 MT) should be retrieved from Sangi, Cebu.
On December 18, 1986, M/T Sultan Kayumanggi docked at Sangi, Cebu,
but withdrew only 157.51 MT of sulfuric acid. Again, the vessel tilted.
Further loading was aborted. Two survey reports conducted by the
Societe Generale de Surveillance (SGS) Far East Limited, dated December
17, 1986 and January 2, 1987, attested to these occurrences. Later, on a
date not specified in the record, M/T Sultan Kayumanggi sank with a total
of 227.51 MT of sulfuric acid on board. Petitioner chartered another
vessel, M/T Don Victor, with a capacity of approximately 500 MT.6 [TSN,
September 1, 1989, pp. 28-29.] On January 26 and March 20, 1987,
Melecio Hernandez, acting for the petitioner, addressed letters to private
respondent, concerning additional orders of sulfuric acid to replace its
sunken purchases.
ISSUE
Should expenses for the storage and preservation of the purchased
fungible goods, namely sulfuric acid, be on seller's account pursuant to
Article 1504 of the Civil Code?
RULING
Petitioner tries to exempt itself from paying rental expenses and
other damages by arguing that expenses for the preservation of fungible
goods must be assumed by the seller. Rental expenses of storing sulfuric
acid should be at private respondent's account until ownership is
transferred, according to petitioner. However, the general rule that before
delivery, the risk of loss is borne by the seller who is still the owner, is not
applicable in this case because petitioner had incurred delay in the
performance of its obligation. Article 1504 of the Civil Code clearly states:
"Unless otherwise agreed, the goods remain at the seller's risk until the
ownership therein is transferred to the buyer, but when the ownership
therein is transferred to the buyer the goods are at the buyer's risk
whether actual delivery has been made or not, except that: (2) Where
actual delivery has been delayed through the fault of either the buyer or
seller the goods are at the risk of the party at fault."
On this score, we quote with approval the findings of the appellate
court, thus: The defendant [herein private respondent] was not remiss in
reminding the plaintiff that it would have to bear the said expenses for
failure to lift the commodity for an unreasonable length of time.But even
assuming that the plaintiff did not consent to be so bound, the provisions
of Civil Code come in to make it liable for the damages sought by the
defendant.
COMPENSATION REQUISITES
APODACA V NLRC
G.R.No. 80039 April1 8, 1989
FACTS
Petitioner was employed in respondent corporation. On August 28,
1985, respondent Jose M. Mirasol persuaded petitioner to subscribe to
P1,500 shares of respondent corporation it P100.00 per share or a total of
P150,000.00. He made an initial payment of P37,500.00. On September 1,
1975, petitioner was appointed President and General Manager of the
respondent corporation. However, on January 2, 1986, he resigned.
On December 19, 1986, petitioner instituted with the NLRC a complaint
against private respondents for the payment of his unpaid wages, his cost
of living allowance, the balance of his gasoline and representation
expenses and his bonus compensation for 1986. Petitioner and private
respondents submitted their position papers to the labor arbiter. Private
respondents admitted that there is due to petitioner the amount of
P17,060.07 but this was applied to the unpaid balance of his subscript in
the amount of P95,439.93. Petitioner questioned the set-off alleging that
there was no call or notice for the payment of unpaid subscription and
that, accordingly, the alleged obligation is not enforceable.
ISSUE
Does the National Labor Relations Commission (NLRC) have
jurisdiction to resolve a claim for non-payment of stock subscriptions to a
corporation? Assuming that it has, can an obligation arising therefrom be
offset against a money claim of an employee against the employer?
RULING
Firstly, the NLRC has no jurisdiction to determine such intracorporate dispute between the stockholder and the corporation as in the
matter of unpaid subscriptions. This controversy is within the exclusive
jurisdiction of the Securities and Exchange Commission.
Secondly, assuming arguendo that the NLRC may exercise
jurisdiction over the said subject matter under the circumstances of this
case, the unpaid subscriptions are not due and payable until a call is
On March 27, 1995, respondent filed with the trial court a motion for the
issuance of subpoenae duces tecum and ad testificandum requiring petitioner
PNB Management and Development Corp. (PNB MADECOR) to produce and
testify on certain documents pertaining to transactions between petitioner and
PNEI from 1981 to 1995. From the testimony of the representative of PNB
MADECOR, it was discovered that NAREDECO, petitioners forerunner, executed
a promissory note in favor of PNEI for P7.8 million, and that PNB MADECOR also
had receivables from PNEI in the form of unpaid rentals amounting to more than
P7.5 million. On the basis of said testimony, respondent filed with the trial court
a motion for the application of funds or properties of PNEI, its judgment debtor,
in the hands of PNB MADECOR for the satisfaction of the judgment in favor of
respondent.
The trial court issued an order garnishing the amount owed by petitioner
to PNEI under the promissory note, to satisfy the judgment against PNEI and in
favor of respondent. On appeal, the Court of Appeals affirmed the decision. The
appellate court also denied petitioners motion for reconsideration.
ISSUE:
Whether or not the Court of Appeals erred when it ruled that the requisites
for legal compensation as set forth under articles 1277 and 1278 of the civil
code do not concur in the case at bar.
RULING:
NO. Legal compensation could not have occurred because of the absence
of one requisite in this case - that both debts must be due and demandable.
As observed by the Court of Appeals, under the terms of the promissory
note, failure on the part of NAREDECO (PNB MADECOR) to pay the value of the
instrument after due notice has been made by PNEI would entitle PNEI to collect
an 18% interest per annum from date of notice of demand. Petitioner makes a
similar assertion in its petition. Petitioners obligation to PNEI appears to be
payable on demand. Petitioner is obligated to pay the amount stated in the
promissory note upon receipt of a notice to pay from PNEI. If petitioner fails to
pay after such notice, the obligation will earn an interest of 18 percent per
annum. Respondent alleges that PNEI had already demanded payment.
The Court agrees with petitioner that this letter was not one demanding
payment, but one that merely informed petitioner of (1) the conveyance of a
certain portion of its obligation to PNEI per a dacion en pago arrangement
between PNEI and PNB, and (2) the unpaid balance of its obligation after
deducting the amount conveyed to PNB. The import of this letter is not that PNEI
was demanding payment, but that PNEI was advising petitioner to settle the
matter of implementing the earlier arrangement with PNB.
Since petitioners obligation to PNEI is payable on demand, and there
being no demand made, it follows that the obligation is not yet due. Therefore,
this obligation may not be subject to compensation for lack of a requisite under
the law. Without compensation having taken place, petitioner remains obligated
to PNEI to the extent stated in the promissory note. This obligation may
undoubtedly be garnished in favor of respondent to satisfy PNEIs judgment
debt.
There is another alleged demand letter on record, dated January 24, 1990.
It was addressed to Atty. Domingo A. Santiago, Jr., Senior Vice President and
Chief Legal Counsel of PNB, and signed by Manuel Vijungco, chairman of the
Board of Directors of PNEI. In said letter, PNEI requested offsetting of accounts
between petitioner and PNEI. However, PNEIs own Assistant General Manager
for Finance at that time, Atty. Loreto N. Tang, testified that the letter was not a
demand letter. THUS, Petition denied. Decision affirmed
respondent nor was there any mention therein of any commitment by the latter
to pay any commission to the former involving the sale of sprockets to Dole
Philippines, Inc. in the amount of P111,000.00.
Indeed, such document can be taken as self-serving with no probative
value absent a showing or at the very least an inference, that the party sought
to be bound assented to its contents or showed conformity thereto. Thus the
questioned decision of respondent appellate court is hereby affirmed.
COMPENSATION LEGAL; WHEN PROHIBITED
ENGRACIO FRANCIA
VS. INTERMEDIATE APPELLATE COURT and HO FERNANDEZ
G.R. No. L-67649
June 28, 1988
162 SCRA 753
FACTS:
Engracio Francia is the registered owner of a residential lot, 328 square
meters, and a two-story house built upon it situated at Barrio San Isidro, now
District of Sta. Clara, Pasay City, Metro Manila. On October 15, 1977, a 125
square meter portion of Francia's property was expropriated by the Republic of
the Philippines for the sum of P4,116.00 representing the estimated amount
equivalent to the assessed value of the aforesaid portion. Since 1963 up to 1977
inclusive, Francia failed to pay his real estate taxes. Thus, on December 5,
1977, his property was sold at public auction pursuant to Section 73 of
Presidential Decree No. 464 known as the Real Property Tax Code in order to
satisfy a tax delinquency of P2,400.00. Ho Fernandez was the highest bidder for
the property. On March 20, 1979, Francia filed a complaint to annul the auction
sale. He later amended his complaint on January 24, 1980. The petitioner seeks
to set aside the auction sale of his property which took place on December 5,
1977, and to allow him to recover a 203 square meter lot which was sold at
public auction to Ho Fernandez and ordered titled in the latter's name. He
further averred that his tax delinquency of P2,400.00 has been extinguished by
legal compensation since the government owed him P4, 116.00 when a portion
of his land was expropriated.
The lower court rendered a decision in favor Fernandez which was
affirmed by the Intermediate Appellate Court . Hence, this petition for review.
ISSUE:
TRINIDAD V ACAPULCO
G.R.No. 147477 June 27, 2006
FACTS
On May 6, 1991, respondent Estrella Acapulco filed a Complaint
before the RTC seeking the nullification of a sale she made in favor of
petitioner Hermenegildo M. Trinidad. She alleged: Sometime in February
1991, a certain Primitivo Caete requested her to sell a Mercedes Benz for
P580,000.00. Caete also said that if respondent herself will buy the car,
Caete was willing to sell it for P500,000.00. Petitioner borrowed the car
from respondent for two days but instead of returning the car as
promised, petitioner told respondent to buy the car from Caete for
P500,000.00 and that petitioner would pay respondent after petitioner
returns from Davao.
Following petitioners instructions, respondent
requested Caete to execute a deed of sale covering the car in
respondents favor for P500,000.00 for which respondent issued three
checks in favor of Caete. Respondent thereafter executed a deed of sale
in favor of petitioner even though petitioner did not pay her any
consideration for the sale. When petitioner returned from Davao, he
refused to pay respondent the amount of P500,000.00 saying that said
amount would just be deducted from whatever outstanding obligation
respondent had with petitioner.
Due to petitioners failure to pay
respondent, the checks that respondent issued in favor of Caete
bounced, thus criminal charges were filed against her.[3] Respondent
then prayed that the deed of sale between her and petitioner be declared
null and void; that the car be returned to her; and that petitioner be
ordered to pay damages.
ISSUE
Whether or not petitioners claim for legal compensation was
already too late
RULING
The court ruled in favor of the petitioner. Compensation takes effect
by operation of law even without the consent or knowledge of the parties
concerned when all the requisites mentioned in Article 1279 of the Civil
Code are present.[26] This is in consonance with Article 1290 of the Civil
Code which provides that: Article 1290.
When all the requisites
mentioned in article 1279 are present, compensation takes effect by
operation of law, and extinguishes both debts to the concurrent amount,
even though the creditors and debtors are not aware of the
AQUINTEY V. TIBONG
G.R. No. 166704 December 20, 2006
FACTS
On May 6, 1999, petitioner Agrifina Aquintey filed before the RTC of
Baguio City, a complaint for sum of money and damages against the
respondents, spouses Felicidad and Rico Tibong. Agrifina alleged that
Felicidad had secured loans from her on several occasions, at monthly
interest rates of 6% to 7%. Despite demands, the spouses Tibong failed
to pay their outstanding loan, amounting to P773,000.00 exclusive of
interests.
In their Answer with Counterclaim, spouses Tibong admitted that
they had secured loans from Agrifina. The proceeds of the loan were then
re-lent to other borrowers at higher interest rates. They, likewise, alleged
that they had executed deeds of assignment in favor of Agrifina, and that
their debtors had executed promissory notes in Agrifinas favor. According
to the spouses Tibong, this resulted in a novation of the original obligation
3.
4.
5.
6.
7.
SWAGMAN V CA
G.R.No. 161135 April 8, 2005
FACTS
Sometime in 1996 and 1997, petitioner Swagman Hotels and Travel, Inc.,
through Atty. Leonor L. Infante and Rodney David Hegerty, its president
and vice-president, respectively, obtained from private respondent Neal
B. Christian loans evidenced by three promissory notes dated 7 August
1996, 14 March 1997, and 14 July 1997. Each of the promissory notes is
in the amount of US$50,000 payable after three years from its date with
an interest of 15% per annum payable every three months. In a letter
dated 16 December 1998, Christian informed the petitioner corporation
that he was terminating the loans and demanded from the latter payment
in the total amount of US$150,000 plus unpaid interests in the total
amount of US$13,500. On 2 February 1999, private respondent Christian
filed with the Regional Trial Court of Baguio City, Branch 59, a complaint
for a sum of money and damages against the petitioner corporation,
Hegerty, and Atty. Infante. The petitioner corporation, together with its
president and vice-president, filed an Answer raising as defenses lack of
cause of action and novation of the principal obligations. According to
them, Christian had no cause of action because the three promissory
notes were not yet due and demandable.
ISSUE
Where there is a valid novation, may the original terms of contract which
has been novated still prevail?
HELD
The receipts, as well as private respondents summary of payments, lend
credence to petitioners claim that the payments were for the principal
loans and that the interests on the three consolidated loans were waived
by the private respondent during the undisputed renegotiation of the
AZOLLA FARMS V CA
G.R.No. 138085 November 11, 2004
FACTS
Petitioner Francis R. Yuseco, Jr., is the Chairman, President and
Chief Operating Officer of petitioner Azolla Farms International Philippines.
In 1982, Azolla Farms undertook to participate in the National Azolla
Production Program wherein it will purchase all the Azolla produced by the
Azolla beneficiaries in the amount not exceeding the peso value of all the
inputs provided to them. The project also involves the then Ministry of
Agriculture, the Kilusang Kabuhayan at Kaunlaran, and the Kiwanis. To
finance its participation, petitioners applied for a loan with Credit Manila,
Inc., which the latter endorsed to its sister company, respondent Savings
trial court agreed thereto and admitted the amended complaint. On this
score, it should be noted that courts are given the discretion to allow
amendments of pleadings to conform to the evidence presented during
the trial.
NOVATION: SUBJECTIVE NOVATION; SUBROGATION OF THE RIGHTS OF THE
CREDITOR (LEGAL VS. CONVENTIONAL)
ISSUE
Whether the Restructuring Agreement dated October 7, 1981,
between petitioner CBLI and Delta Motors, Corp. novated the five
promissory notes Delta Motors, Corp. assigned to respondent SIHI.
RULING
Novation has been defined as the extinguishment of an obligation
by the substitution or change of the obligation by a subsequent one which
terminates the first, either by changing the object or principal conditions,
or by substituting the person of the debtor, or subrogating a third person
in the rights of the creditor.For novation to take place, four essential
requisites have to be met, namely, (1) a previous valid obligation; (2) an
agreement of all parties concerned to a new contract; (3) the
extinguishment of the old obligation; and (4) the birth of a valid new
obligation.
In this case, the attendant facts do not make out a case of novation.
The restructuring agreement between Delta and CBLI executed on
October 7, 1981, shows that the parties did not expressly stipulate that
the restructuring agreement novated the promissory notes. Absent an
unequivocal declaration of extinguishment of the pre-existing obligation,
only a showing of complete incompatibility between the old and the new
obligation would sustain a finding of novation by implication.
NOVATION: SUBJECTIVE NOVATION; SUBROGATION OF THE RIGHTS OF THE
CREDITOR (LEGAL VS. CONVENTIONAL)
OCAMPO-PAULE V CA
G.R.No. 145872 February 4, 2002
FACTS
During the period August, 1991 to April, 1993, petitioner received
from private complainant Felicitas M. Calilung several pieces of jewelry
with a total value of One hundred Sixty Three Thousand One hundred
ISSUE
Whether or not there was a novation of petitioners criminal liability
when she and private complainant executed the Kasunduan sa Bayaran.
REYES V CA
june 26, 2002
RULING
It is well-settled that the following requisites must be present for
novation to take place: (1) a previous valid obligation; (2) agreement of all
the parties to the new contract; (3) extinguishment of the old contract;
and (4) validity of the new one.
Novation, in its broad concept, may either be extinctive or modificatory. It
is extinctive when an old obligation is terminated by the creation of a new
obligation that takes the place of the former; it is merely modificatory
when the old obligation subsists to the extent it remains compatible with
the amendatory agreement.
The execution of the Kasunduan sa Bayaran does not constitute a
novation of the original agreement between petitioner and private
complainant. Said Kasunduan did not change the object or principal
conditions of the contract between them. The change in manner of
payment of petitioners obligation did not render the Kasunduan
incompatible with the original agreement, and hence, did not extinguish
petitioners liability to remit the proceeds of the sale of the jewelry or to
return the same to private complainant.
FACTS
This petition arose from a civil case for collection of a sum of money
with preliminary attachment filed by respondent Pablo V. Reyes against
his first cousin petitioner Arsenio R. Reyes and spouse Nieves S. Reyes.
According to private respondent, petitioner-spouses borrowed from him
P600,000.00 with interest at five percent (5%) per month, which totalled
P1,726,250.00 at the time of filing of the Complaint. The loan was to be
used supposedly to buy a lot in Paraaque. It was evidenced by an
acknowledgment receipt dated 15 July 1990 signed by the petitionerspouses Arsenio R. Reyes and Nieves S. Reyes and witness Romeo Rueda.
In their Answer petitioners admitted their loan from respondent but
averred that there was a novation so that the amount loaned was actually
converted into respondent's contribution to a partnership formed between
them on 23 March 1990.
ISSUE
Whether or not there was novation in the instant case?
RULING
For novation to take place, the following requisites must concur: (a)
there must be a previous valid obligation; (b) there must be an agreement
MESINA V. GARCIA
G.R. No. 168035 November 30, 2006
FACTS
Atty. Honorio Valisno Garcia and Felicisima Mesina, during their
lifetime, enstered into a Contract to Sell over a lot consisting of 235
square meters, situated at Diversion Road, Sangitan, Cabanatuan City,
covered and embraced by TCT No. T-31643 in the name of Felicisima
Mesina which title was eventually cancelled and TCT No. T-78881 was
issued in the name of herein petitioners. The Contract to Sell provides
that the cost of the lot is P70.00 per square meter for a total amount of
P16,450.00; payable within a period not to exceed 7 years at an interest
rate of 12% per annum, in successive monthly installments of P260.85 per
month, starting May 1977. Thereafter, the succeeding monthly
installments are to be paid within the first week of every month, at the
residence of the vendor at Quezon City, with all unpaid monthly
installments earning an interest of 1% per month. Instituting this case at
bar, respondent asserts that despite the full
payment made on 7
February 1984 for the consideration of the subject lot, petitioners refused
to issue the necessary Deed of Sale to effect the transfer of the property
to her.
ISSUE
Whether
prescribed?
or
not
respondents
cause
of
action
had
already
RULING
Article 1155 of the Civil Code is explicit that the prescriptive period
is interrupted when an action has been filed in court; when there is a
written extrajudicial demand made by the creditors; and when there is
any written acknowledgment of the debt by the debtor.
The records reveal that starting 19 April 1986 until 2 January 1997
respondent continuously demanded from the petitioners the execution of
the said Deed of Absolute Sale but the latter conjured many reasons and
HEIRS OF GAUDIANE V CA
G.R.No. 119879 March 11, 2004
FACTS
The lot in controversy is Lot 4389 located at Dumaguete City and
covered by Original Certificate of Title No. 2986-A (OCT 2986-A) in the
names of co-owners Felix and Juana Gaudiane. Felix died in 1943 while
his sister Juana died in 1939. Herein respondents are the descendants of
Felix while petitioners are the descendants of Juana.
On November 4, 1927, Felix executed a document entitled Escritura de
Compra-Venta (Escritura, for brevity) whereby he sold to his sister Juana
his one-half share in Lot No. 4156 covered by Transfer Certificate of Title
No. 3317-A.
Dumaguete City to cancel OCT 2986-A covering Lot 4389 and to issue a
new title in favor of the Isos. This was later withdrawn after respondents
predecessors-in-interest, Procopio Gaudiane and Segundo Gaudiane,
opposed it on the ground that the Isos falsified their copy of the Escritura
by erasing Lot 4156 and intercalating in its place Lot 4389.
ISSUE
Whether the court gravely erred in not giving due course to the
claim of petitioners and legal effect of prescription and laches adverted by
defendants-appellants in their answer and affirmative defenses proven
during the hearing by documentary and testimonial evidence.
RULING
As a general rule, ownership over titled property cannot be lost
through prescription.[12] Petitioners, however, invoke our ruling in
Tambot vs. Court of Appeals[13] which held that titled property may be
acquired through prescription by a person who possessed the same for 36
years without any objection from the registered owner who was obviously
guilty of laches.
Petitioners claim is already rendered moot by our ruling barring
petitioners from raising the defense of exclusive ownership due to res
judicata. Even assuming arguendo that petitioners are not so barred,
their contention is erroneous. As correctly observed by the appellate
court.
As explained earlier, only Lot No. 4156 was sold. It was through this
misrepresentation that appellees predecessor-in-interest succeeded in
withholding possession of appellees share in Lot No. 4389. Appellees
cannot, by their own fraudulent act, benefit therefrom by alleging
prescription and laches.
EXTINCTIVE PRESCRIPTION: INTERRUPTION
LAUREANO V CA
G.R.No. 114776 February 2, 2000
FACTS;
Petitioner was employed in the singapore airlines limited as the pilot
captain of B-707. Sometime in 1982, defendant, hit by a recession,
initiated cost-cutting measures. Seventeen expatriate captains in the
Airbus fleet were found in excess of the defendant's requirement.
Consequently, defendant informed its expatriate pilots including plaintiff
of the situation and advised them to take advance leaves. Realizing that
the recession would not be for a short time, defendant decided to
terminate its excess personnel. It did not, however, immediately
terminate it's A-300 pilots. It reviewed their qualifications for possible
promotion to the B-747 fleet. Among the 17 excess Airbus pilots reviewed,
twelve were found qualified. Unfortunately, plaintiff was not one of the
twelve. Aggrieved, plaintiff on June 29, 1983, instituted a case for illegal
dismissal before the Labor Arbiter. Defendant moved to dismiss on
jurisdictional grounds. Before said motion was resolved, the complaint
was withdrawn.
ISSUE
;
What is the prescriptive period for money claims arising from
employer-employee relationship?
RULING;
Article 291. Money claims. - All money claims arising from
employee-employer relations accruing during the effectivity of this Code
shall be filed within three (3) years from the time the cause of action
accrued; otherwise they shall be forever barred.
It should be noted further that Article 291 of the Labor Code is a
special law applicable to money claims arising from employer-employee
relations; thus, it necessarily prevails over Article 1144 of the Civil Code, a
general law. Basic is the rule in statutory construction that 'where two
statutes are of equal theoretical application to a particular case, the one
designed therefore should prevail.'
In the instant case, the action for damages due to illegal
termination was filed by plaintiff-appellee only on January 8, 1987 or more
than four (4) years after the effectivity date of his dismissal on November
1, 1982. Clearly, plaintiff-appellee's action has already prescribed.
RULING:
The court held that the petition is unmeritorious. Petitioners claim
that the action of the private respondents have prescribed is bereft of
merit. Under Article 1150 of the Civil Code, the time for prescription of all
kinds of action where there is no special provision which ordains
otherwise shall be counted from the day they may be brought. Thus the
period of prescription of any cause of action is reckoned only from the
date of the cause of action accrued. The period should not be made to
retroact to the date of the execution of the contract, but from the date
they received the statement of account showing the increased rate of
interest, for it was only from the moment that they discovered the
petitioners unilateral increase thereof.
The Supreme Court denied the petition and affirmed the decision of
the Court of Appeals because the time of filing has been prescribed.
Under Article 1144 of the Civil Code on Prescription based on written
contracts, the filing of action for reconveyance is within 10 years from the
time the condition in the Deed of Donation was violated. The petitioner
herein filed only 24 years in the first action and 43 years in the second
filing of the 2nd action.
The action for reconveyance on the alleged excess of 33, 607
square meter mistakenly included in the title was also prescribed Article
1456 of the Civil Code states, if property is acquired through mistake or
fraud, the person obtaining it is, by force of law, considered a trustee of
an implied trust for the benefits of the person from whom the property
comes, if within 10 years such action for reconveyance has not been
executed.
EXTINCTIVE PRESCRIPTION: INTERRUPTION
FACTS:
RULING:
These consolidated cases involve Lot No. 5872 and the rights of the
contending parties thereto. The lot has an area of 57.601 sq.m. and is
registered in the name of the deceased spouses Ramon and Rosario
Chaves. The spouses died intestate in 1943 and 1944, respectively. They
were survived by six heirs. To settle the estate of said spouse, Angel
Chaves, one of the heirs, initiated intestate proceedings and was
appointed administrator of said estates in the process. An inventory of the
estates was made and thereafter, the heirs agreed on a project partition.
The court approved the partition but a copy of said decision was missing.
Nonetheless, the estate was divided among the heirs. Subsequently, in
1956, the partition case effected and the respective shares of the heirs
were delivered to them.
Significantly, Lot No.5872 was not included in a number of
documents. Parties offered different explanations as to the omission of
said lot in the documents. Petitioners maintain the existence of an oral
partition agreement entered into by all heirs after the death of their
parents. To set things right, petitioners then prepared a quitclaim to
confirm the alleged oral agreement. Respondents dispute voluntariness of
their consent to the quitclaims.
Six years after the execution of the quitclaims, respondents discovered
that indeed subject lot was still a common property in the name of the
deceased spouses. Eventually, an action for Quieting of Title was filed by
petitioners on December 22, 1983.
The trial court considered Lot No. 5872 as still a common property
and therefore must be divided into six parts, there being six heirs.
Petitioners appealed to the Court of Appeals which sustained the decision
of the trial court.
ISSUE:
provided that should Fausto decide to sell the property, petitioner shall
have the priority right to purchase the same.
On June 17, 1991, petitioner wrote Fausto informing her of its
intention to renew the lease. However, it was Faustos daughter,
respondent Anunciacion F. Pacunayen, who replied, asking that petitioner
remove the improvements built thereon, as she is now the absolute owner
of the property. It appears that Fausto had earlier sold the property to
Pacunayen and title has already been transferred in her name. Petitioner
filed an Amended Complaint for Annulment of Deed of Sale, Specific
Performance with Damages, and Injunction
In her Answer, respondent claimed that petitioner is estopped from
assailing the validity of the deed of sale as the latter acknowledged her
ownership when it merely asked for a renewal of the lease. According to
respondent, when they met to discuss the matter, petitioner did not
demand for the exercise of its option to purchase the property, and it
even asked for grace period to vacate the premises.
ISSUE:
The contention in this case refers to petitioners priority right to
purchase, also referred to as the right of first refusal.
RULING:
When a lease contract contains a right of first refusal, the lessor is
under a legal duty to the lessee not to sell to anybody at any price until
after he has made an offer to sell to the latter at a certain price and the
lessee has failed to accept it. The lessee has a right that the lessor's first
offer shall be in his favor. Petitioners right of first refusal is an integral
and indivisible part of the contract of lease and is inseparable from the
whole contract. The consideration for the lease includes the consideration
for the right of first refusal and is built into the reciprocal obligations of
the parties.
It was erroneous for the CA to rule that the right of first refusal does
not apply when the property is sold to Faustos relative. When the terms
FACTS:
Manotok was the administrator of a parcel of land which it leased to
Benjamin Mendoza; that the contract of lease expired on December 31,
1988; that even after the expiration of the lease contract, Benjamin
Mendoza, and after his demise, his son, Romeo, continued to occupy the
premises and thus incurred a total of P44,011.25 as unpaid rentals from
January 1, 1989 to July 31, 1996; that on July 16, 1996, Manotok made a
demand on Benjamin Mendoza to pay the rental arrears and to vacate the
premises within fifteen (15) days from receipt of the demand letter; that
despite receipt of the letter and after the expiration of the 15-day period,
the Mendozas refused to vacate the property and to pay the rentals. The
complaint prayed that the court order Mendoza and those claiming rights
under him to vacate the premises and deliver possession thereof to
Manotok, and to pay the unpaid rentals from January 1, 1989 to July 31,
1996 plus P875.75 per month starting August 1, 1996, subject to such
increase allowed by law, until he finally vacates the premise.
ISSUE:
Whether or not the Honorable Court of Appeals committed error in
giving efficacy to a lease contract signed in 1988 when the alleged
signatory was already dead since 1986.
RULING:
This is a case for unlawful detainer. It appears that respondent
corporation leased the property subject of this case to petitioners father.
After expiration of the lease, petitioner continued to occupy the property
but failed to pay the rentals. On July 16, 1996, respondent corporation
made a demand on petitioner to vacate the premises and to pay their
arrears.
An action for unlawful detainer may be filed when possession by a
landlord, vendor, vendee or other person of any land or building is
unlawfully withheld after the expiration or termination of the right to hold
possession by virtue of a contract, express or implied. The only issue to
be resolved in an unlawful detainer case is physical or material possession
of the property involved, independent of any claim of ownership by any of
the parties involved. In the case at bar, petitioner lost his right to possess
the property upon demand by respondent corporation to vacate the
rented lot. Petitioner cannot now refute the existence of the lease
contract because of his prior admissions in his pleadings regarding his
status as tenant on the subject property.
investment.
FACTS:
ISSUE:
Whether or not the CA erred in reversing the decision of the RTC
which dismissed the respondents complaint
RULING:
The essential elements of estoppel are: (1) conduct of a party
amounting to false representation or concealment of material facts or at
least calculated to convey the impression that the facts are otherwise
than, and inconsistent with, those which the party subsequently attempts
to assert; (2) intent, or at least expectation, that this conduct shall be
acted upon by, or at least influence, the other party; and (3) knowledge,
actual or constructive, of the real facts. ere, it is uncontested that
petitioner had in fact signed the Customers Agreement in the morning of
October 22, 1992, knowing fully well the nature of the contract he was
entering into. The Customers Agreement was duly notarized and as a
public document it is evidence of the fact, which gave rise to its execution
and of the date of the latter.
Next, petitioner paid his investment deposit to respondent in the
form of a managers check in the amount of US$5,000 as evidenced by
PCI Bank Managers Check No. 69007, dated October 22, 1992. All these
are indicia that petitioner treated the Customers Agreement as a valid
and binding contract.
FACTS:
These consolidated cases involve a prime lot consisting of
4,399,322 square meters, known as the Diliman Estate, situated in
Quezon City. On this 439 hectares of prime land now stand the following:
the Quezon City Hall, Philippine Science High School, Quezon Memorial
Circle, Visayas Avenue, Ninoy Aquino Parks and Wildlife, portions of UP
Village and East Triangle, the entire Project 6 and Vasha Village, Veterans
Memorial Hospital and golf course, Department of Agriculture,
Department of Environment and Natural Resources, Sugar Regulatory
the sale did not even exceed the ideal shares held by the former in the
co-ownership. As a matter of fact, the deed of sale executed between the
parties expressly stipulated that the portion of Lot 162 sold to Soledad
would be taken from Salomes 4/16 undivided interest in said lot, which
the latter could validly transfer in whole or in part even without the
consent of the other co-owners. Salomes right to sell part of her
undivided interest in the co-owned property is absolute in accordance
with the well-settled doctrine that a co-owner has full ownership of his
pro-indiviso share and has the right to alienate, assign or mortgage it, and
substitute another person in its enjoyment.
4.)ESTOPPEL IN PAIS: MEANING AND REQUISITES
dispute among relatives over ownership of lot 903 of the Banilad Estate
which is near the Cebu Provincial Capitol; that records of said cases
indicate the name of the [petitioner] alone as counsel of record, but in
truth and in fact, the real lawyer behind the success of said cases was the
influential Don Mariano Jesus Cuenco; that after winning said cases, the
awardees of Lot 903 subdivided said lot into three (3) parts as follows:
Lot 903-A: 5,000 [square meters]: Mariano Cuencos attorneys fees
Lot 903-B: 5,000 [square meters]: Miguel Cuencos attorneys fees
Lot 903-C: 54,000 [square meters]: Solons retention
Petitioner later claimed the property after the death of his brother.
1.
2.
3.
4.
5.
6.
ISSUES:
Whether Petitioner is in is estoppel
Whether laches barred the right of action of respondent
HELD:
From the time Lot 903-A was subdivided and Marianos six children
-- including Concepcion -- took possession as owners of their respective
portions, no whimper of protest from petitioner was heard until 1963. By
his acts as well as by his omissions, Miguel led Mariano and the latters
heirs, including Concepcion, to believe that Petitioner Cuenco respected
the ownership rights of respondent over Lot 903-A-6. That Mariano acted
and relied on Miguels tacit recognition of his ownership thereof is evident
from his will, executed in 1963. Indeed, as early as 1947, long before
Mariano made his will in 1963, Lot 903-A -- situated along Juana Osmea
Extension, Kamputhaw, Cebu City, near the Cebu Provincial Capitol -- had
been subdivided and distributed to his six children in his first marriage.
Having induced him and his heirs to believe that Lot 903-A-6 had already
been distributed to Concepcion as her own, petitioner is estopped from
asserting the contrary and claiming ownership thereof. The principle of
estoppel in pais applies when -- by ones acts, representations,
Division and the Head of the Loans Administration & Insurance Section of
the Philippine National Construction Corporation (PNCC) is not a public
officer under Republic Act No. 3019. This contention also has no merit.
The rationale for the ruling in Macalino is that the PNCC has no original
charter as it was incorporated under the general law on corporations.
However, as we pointed out in our decision, a conclusion that EXPOCORP
is a government-owned or controlled corporation would not alter the
outcome of this case because petitioners position and functions as Chief
Executive Officer of EXPOCORP are by virtue of his being Chairman of the
NCC. The other issues raised by petitioner are mere reiterations of his
earlier arguments. The Court, however, remains unswayed thereby.
ESTOPPEL IN PAIS
ISSUE:
and wharfage fees were unenforceable because they had not been
approved by the President under P.D. No. 857, and discriminatory since
much lower rates were charged in other private ports as shown by PPA
issuances effective 1995 to 1997. Both PPA and TEFASCO were unsatisfied
with this disposition hence these petitions.
ISSUE:
Whether or not the collection by PPA of one hundred percent
(100%) wharfage fees and berthing charges; (c) the propriety of the
award of fifty percent (50%) wharfage fees and thirty percent (30%)
berthing charges as actual damages in favor of TEFASCO for the period
from 1977 to 1991 is valid.
RULING:
The imposition by PPA of ten percent (10%), later reduced to six
percent (6%), government share out of arrastre and stevedoring gross
income of TEFASCO is void. This exaction was never mentioned in the
contract, much less is it a binding prestation, between TEFASCO and PPA.
What was clearly stated in the terms and conditions appended to PPA
Resolution No. 7 was for TEFASCO to pay and/or secure from the proper
authorities "all fees and/or permits pertinent to the construction and
operation of the proposed project." The government share demanded and
collected from the gross income of TEFASCO from its arrastre and
stevedoring activities in TEFASCO's wholly owned port is certainly not a
fee or in any event a proper condition in a regulatory permit. Rather it is
an onerous "contractual stipulation" which finds no root or basis or
reference even in the contract aforementioned.
ESTOPPEL IN PAIS
RULING:
No. Respondent Court of Appeals held that there is no evidence of a
promise from respondent PNB, admittedly a banking corporation, that it
had accepted the proposals of the petitioner to have a five-year
restructuring of his overdue loan obligations. It found and held, on the
basis of the evidence adduced, that "appellee's (Mendoza)
communications were mere proposals while the bank's responses were
not categorical that the appellee's request had been favorably accepted
by the bank."
Nowhere in those letters presented by the petitioner is there a
categorical statement that respondent PNB had approved the petitioners
proposed five-year restructuring plan. It is stretching the imagination to
construe them as evidence that his proposed five-year restructuring plan
has been approved by the respondent PNB which is admittedly a banking
corporation. Only an absolute and unqualified acceptance of a definite
offer manifests the consent necessary to perfect a contract. If anything,
those correspondences only prove that the parties had not gone beyond
the preparation stage, which is the period from the start of the
negotiations until the moment just before the agreement of the parties.
The doctrine of promissory estoppel is an exception to the general
rule that a promise of future conduct does not constitute an estoppel. In
some jurisdictions, in order to make out a claim of promissory estoppel, a
party bears the burden of establishing the following elements: (1) a
promise reasonably expected to induce action or forebearance; (2) such
promise did in fact induce such action or forebearance, and (3) the party
suffered detriment as a result.
It is clear from the forgoing that the doctrine of promissory estoppel
presupposes the existence of a promise on the part of one against whom
estoppel is claimed. The promise must be plain and unambiguous and
sufficiently specific so that the Judiciary can understand the obligation
assumed and enforce the promise according to its terms. For petitioner to
claim that respondent PNB is estopped to deny the five-year restructuring
plan, he must first prove that respondent PNB had promised to approve
the plan in exchange for the submission of the proposal. As discussed
earlier, no such promise was proven, therefore, the doctrine does not
apply to the case at bar. A cause of action for promissory estoppel does
not lie where an alleged oral promise was conditional, so that reliance
upon it was not reasonable. It does not operate to create liability where it
does not otherwise exist.
ESTOPPEL IN PAIS
requested for thirty (30) days to have enough time to look for funds to
substantially settle its account.
Traversing the allegations of respondent, Candelario S. Aller Jr.
declared that he signed the Agreement with the real intention of having
proof of payment. In fact Baltazar Banlot, Vice President for Finance of
petitioner, claimed that after deliberation and audit it appeared that
petitioner overpaid respondent by P12,000.00 on the basis of the latter's
Equipment Daily Time Reports for 2 May to 14 June 1985 which reflected
a total obligation of only P103,000.00. He claimed however that the
Agreement was not approved by the Board and that he did not authorize
Aller Jr. to sign thereon.
On rebuttal, Manaligod Jr. declared that petitioner had received a
statement of account covering the period from 28 March to 12 July 1985
in the amount of P376,350.18 which it never questioned. From this
amount P3,440.80, based on respondent's account with petitioner and
P30,000.00, representing payments made by the latter, were deducted
thus leaving a balance of P342,909.38 as mentioned in the Agreement.
On 19 December 1990 the trial court rendered judgment ordering
petitioner to pay respondent
ISSUE:
5.)ESTOPPEL BY LACHES
1.
2.
3.
4.
5.
6.
7.
them.
FACTS:
RULING:
Yes. It must be emphasized that the same agreement was used by
plaintiff as the basis for claiming defendant's obligation of P237,909.38
and also used by defendant as the same basis for its alleged payment in
full of its obligation to plaintiff. But while plaintiff treats the entire
agreement as valid, defendant wants the court to treat that portion which
treats of the offsetting of P115,000.00 as valid, whereas it considers the
other terms and conditions as "onerous, illegal and want of prior consent
HELD:
The degree of diligence required of a reasonable man in the
exercise of his tasks and the performance of his duties has been faithfully
complied with by Cabilzo. In fact, he was wary enough that he filled with
asterisks the spaces between and after the amounts, not only those
stated in words, but also those in numerical figures, in order to prevent
any fraudulent insertion, but unfortunately, the check was still
successfully altered, indorsed by the collecting bank, and cleared by the
drawee bank, and encashed by the perpetrator of the fraud, to the
damage and prejudice of Cabilzo.
Metrobank cannot lightly impute that Cabilzo was negligent and is
therefore prevented from asserting his rights under the doctrine of
equitable estoppel when the facts on record are bare of evidence to
support such conclusion. The doctrine of equitable estoppel states that
when one of the two innocent persons, each guiltless of any intentional or
moral wrong, must suffer a loss, it must be borne by the one whose
erroneous conduct, either by omission or commission, was the cause of
injury. Metrobanks reliance on this dictum is misplaced. For one,
Metrobanks representation that it is an innocent party is flimsy and
evidently, misleading. At the same time, Metrobank cannot asseverate
that Cabilzo was negligent and this negligence was the proximate cause
of the loss in the absence of even a scintilla proof to buttress such claim.
Negligence is not presumed but must be proven by the one who alleges it,
which petitioner failed to.
ESTOPPEL BY LACHES
ISSUE:
Whether equitable estoppel can be appreciated in favor of
petitioner
FACTS:
demand letter to ask for the execution of those documents had they not
been induced to believe that the late payments were validly accepted and
that the purchase price had already been paid in full. There were
statements, which were made under oath, which made it crystal clear that
the late payments were accepted by the petitioners, and that the
payments corresponded to the purchase value of the subject property;
therefore, petitioners cannot deny the fact that the full payment of the
purchase value of the lot in question had in fact been made by the
respondent.
valid with respect to the other parties. The decision was reversed by the
Court of Appeals; to the appellate court, petitioners committed a fatal
error of mounting a collateral attack on the foregoing orders instead of
initiating a direct action to annul them.
ISSUE:
Whether the Court of Appeals erred in reversing the decision of the
trial court
RULING:
ESTOPPEL BY LACHES
ESTOPPEL BY LACHES
third persons. Thus, when Felipe Roque entered into a lease contract with
defendant corporation, plaintiff Efren Roque (could) no longer assert the
unregistered deed of donation and say that his father, Felipe, was no
longer the owner of the subject property at the time the lease on the
subject property was agreed upon. "The registration of the Deed of
Donation after the execution of the lease contract did not affect the latter
unless he had knowledge thereof at the time of the registration which
plaintiff had not been able to establish. Plaintiff knew very well of the
existence of the lease. He, in fact, met with the officers of the defendant
corporation at least once before he caused the registration of the deed of
donation in his favor and although the lease itself was not registered, it
remains valid considering that no third person is involved. Plaintiff cannot
be the third person because he is the successor-in-interest of his father,
Felipe Roque, the lessor, and it is a rule that contracts take effect not only
between the parties themselves but also between their assigns and heirs
(Article 1311, Civil Code) and therefore, the lease contract together with
the memorandum of agreement would be conclusive on plaintiff Efren
Roque. He is bound by the contract even if he did not participate therein.
Moreover, the agreements have been perfected and partially executed by
the receipt of his father of the downpayment and deposit totaling to
P500,000.00." The trial court ordered respondent to surrender TCT No.
109754 to the Register of Deeds of Quezon City for the annotation of the
questioned Contract of Lease and Memorandum of Agreement.
On appeal, the Court of Appeals reversed the decision of the trial
court and held to be invalid the Contract of Lease and Memorandum of
Agreement. While it shared the view expressed by the trial court that a
deed of donation would have to be registered in order to bind third
persons, the appellate court, however, concluded that petitioner was not
a lessee in good faith having had prior knowledge of the donation in favor
of respondent, and that such actual knowledge had the effect of
registration insofar as petitioner was concerned. The appellate court
based its findings largely on the testimony of Veredigno Atienza during
cross-examination.
ISSUE:
RULING:
The Court cannot accept petitioner's argument that respondent is
guilty of laches. Laches, in its real sense, is the failure or neglect, for an
unreasonable and unexplained length of time, to do that which, by
exercising due diligence, could or should have been done earlier; it is
negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has
abandoned or declined to assert it. Respondent learned of the contracts
only in February 1994 after the death of his father, and in the same year,
during November, he assailed the validity of the agreements. Hardly,
could respondent then be said to have neglected to assert his case for an
unreasonable length of time.
Neither is respondent estopped from repudiating the contracts. The
essential elements of estoppel in pais, in relation to the party sought to be
estopped, are: 1) a clear conduct amounting to false representation or
concealment of material facts or, at least, calculated to convey the
impression that the facts are otherwise than, and inconsistent with, those
which the party subsequently attempts to assert; 2) an intent or, at least,
an expectation, that this conduct shall influence, or be acted upon by, the
other party; and 3) the knowledge, actual or constructive, by him of the
real facts. With respect to the party claiming the estoppel, the conditions
he must satisfy are: 1) lack of knowledge or of the means of knowledge of
the truth as to the facts in question; 2) reliance, in good faith, upon the
conduct or statements of the party to be estopped; and 3) action or
inaction based thereon of such character as to change his position or
status calculated to cause him injury or prejudice. 12 It has not been
shown that respondent intended to conceal the actual facts concerning
the property; more importantly, petitioner has been shown not to be
totally unaware of the real ownership of the subject property. Altogether,
there is no cogent reason to reverse the Court of Appeals in its assailed
decision.
ESTOPPEL BY LACHES
FACTS:
On November 11, 1993, petitioner Meatmasters International
Corporation engaged the services of respondent Lelis Integrated
Development Corporation to undertake the construction of a
slaughterhouse and meat cutting and packing plant. The Construction
Agreement provided that the construction of petitioners slaughterhouse
should be completed by March 10, 1994. Respondent failed to finish the
construction of the said facility within the stipulated period, hence,
petitioner filed a complaint for rescission of contract and damages on
August 9, 1996 before the Regional Trial Court.
On November 23, 1998, the trial court rendered decision
RESCINDING the Construction Agreement between plaintiff Meatmaster
Intl. Corp. and defendant Lelis Integrated Devt. Corp. with both parties
shouldering their own respective damage.
A copy of the decision was received by the respondent on
December 9, 1998. A motion for reconsideration was filed by respondent
on December 22, 1998, but the same was denied. A copy of the
resolution denying the motion for reconsideration was received on March
25, 1999. Respondent filed its notice of appeal on March 29, 1999.
Initially, the trial court dismissed the appeal for failure of the
respondent to pay the requisite docket fees within the reglementary
period. Upon motion by the respondent however, the trial court
reconsidered and gave due course to the notice of appeal because
respondent paid the docket fees.
In a motion to dismiss filed before the appellate court, the petitioner
alleged that respondents appeal suffers from jurisdictional infirmity
because of late payment of docket fees.
CA set aside the decision of the trial court and directed petitioner to
pay respondent the amount of P1,863,081.53. Petitioners motion for
reconsideration was denied Hence, the instant petition.
the instant petition. Plainly, petitioner cannot be faulted for being remiss
in asserting its rights considering that it vigorously registered a persistent
and consistent objection to the Court of Appeals assumption of
jurisdiction at all stages of the proceedings.
ISSUE:
Whether or not the Court of Appeals erred in entertaining the
appeal of respondent despite the finality of the trial courts decision.
ESTOPPEL BY LACHES
RULING:
Yes. It is well-established that the payment of docket fees within the
prescribed period is mandatory for the perfection of an appeal. This is so
because a court acquires jurisdiction over the subject matter of the action
only upon the payment of the correct amount of docket fees regardless of
the actual date of filing of the case in court. The payment of the full
amount of the docket fee is a sine qua non requirement for the perfection
of an appeal. The court acquires jurisdiction over the case only upon the
payment of the prescribed docket fees.
In the case at bar, the respondent seasonably filed the notice of appeal
but it paid the docket fees one (1) month after the lapse of the appeal
period. As admitted by the respondent, the last day for filing the notice of
appeal was on March 29, 1999, but it paid the docket fees only on April
30, 1999 because of oversight. Obviously, at the time the said docket
fees were paid, the decision appealed from has long attained finality and
no longer appealable.
Respondents contention that the petitioner is now estopped from
raising the issue of late payment of the docket fee because of his failure
to assail promptly the trial courts order approving the notice of appeal
and accepting the appeal fee, is untenable. Estoppel by laches arises
from the negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either
has abandoned or declined to assert it. In the case at bar, petitioner
raised at the first instance the non-payment of the docket fee in its
motion for reconsideration before the trial court. Petitioner reiterated its
objection in the motion to dismiss before the appellate court and finally, in
Teresita have waived their interest in the disputed lot in their favor.
Petitioners availed of various remedies only to pursue the endeavor for
the annulment of the compromise judgment. Most of them were denied
until they resorted to this review before the Supreme Court.
ISSUE:
Whether or not the petitioners are estopped from seeking the
annulment of the compromise judgment.
RULING:
Yes, note that in a Sinumpaang Salaysay, petitioners admitted that
they acquiesced to have the subject lot donated and registered in
Renatos name. In view of such admission, petitioners are estopped from
denying Renatos absolute title to the lot. Under the principle of estoppel,
an admission or representation is rendered conclusive upon the person
making it and cannot be denied against the person relying thereon. Verily,
since petitioners admitted that they donated the lot to Renato, they
cannot now be allowed to defeat respondents claim by conveniently
asserting that they are co-owners of the lot. Otherwise, respondents, who
rightfully relied on the Certificate of Title, would be prejudiced by
petitioners misleading conduct.
ESTOPPEL BY LACHES
STOPPEL BY LACHES
of Rosalia. When the latter refused to pay, Zenaida filed an ejectment suit
against him with the Metropolitan Trial Court of Manila, which eventually
decided in Zenaidas favor.
On January 5, 1989, private respondent instituted an action for
reconveyance of property with preliminary injunction against petitioner in
the Regional Trial Court of Manila, where they alleged that the two deeds
of sale were simulated for lack of consideration. The petitioner on the
other hand denied the material allegations in the complaint and that she
further alleged that the respondents right to reconveyance was already
barred by prescription and laches considering the fact that from the date
of sale from Rosa to Salvador up to his death, more or less twelve (12)
years had lapsed, and from his death up to the filing of the case for
reconveyance, four (4) years has elapsed. In other words, it took
respondents about sixteen (16) years to file the case. Moreover, petitioner
argues that an action to annul a contract for lack of consideration
prescribes in ten (10) years and even assuming that the cause of action
has not prescribed, respondents are guilty of laches for their inaction for a
long period of time.
The trial court decided in favor of private respondents in as much as
the deeds of sale were fictitious, the action to assail the same does not
prescribe.
Upon appeal, the Court of Appeals affirmed the trial courts
decision. It held that the subject deeds of sale did not confer upon
Salvador the ownership over the subject property, because even after the
sale, the original vendors remained in dominion, control, and possession
thereof.
ISSUE:
Whether or not the cause of action of the respondents had
prescribed and/or barred by laches.
RULING:
No, the cause of action by the respondents had not prescribed nor is
it barred by laches.
First, the right to file an action for the reconveyance of the subject
property to the estate of Rosalia has not prescribed since deeds of sale
were simulated and fictitious. The complaint amounts to a declaration of
nullity of a void contract, which is imprescriptible. Hence, respondents
cause of action has not prescribed.
Second, neither is their action barred by laches. The elements of
laches are: 1) conduct on the part of the defendant, or of one under whom
he claims, giving rise to the situation of which the complainant seeks a
remedy; 2) delay in asserting the complainants rights, the complainant
having knowledge or notice of the defendants conduct as having been
afforded an opportunity to institute a suit; 3) lack of knowledge or notice
on the part of the defendant that the complainant would assert the right
in which he bases his suit; and 4) injury or prejudice to the defendant in
the event relief is accorded to the complainant, or the suit is not held
barred. These elements must all be proved positively. The lapse of four
(4) years is not an unreasonable delay sufficient to bar respondents
action. Moreover, the fourth (4th) element is lacking in this case. The
concept of laches is not concerned with the lapse of time but only with the
effect of unreasonable lapse. The alleged sixteen (16) years of
respondents inaction has no adverse effect on the petitioner to make
respondents guilty of laches.
ESTOPPEL BY LACHES
portion of the property (1,905 sq. m.). He held the remaining properties in
trust for his co-heirs who demanded the subdivision of the property but to
no avail. After Leons death in 1972, private respondents discovered that
the shares of Simplicio, Nicolasa, Fausta and Maria Baltazar had been
purchased by Leon through a deed of sale dated August 25, 1946 but
registered only in 1971. In July 1970, Leon also sold and partitioned the
property in favor of petitioners, his children, who thereafter secured
separate and independent titles over their respective pro- indiviso shares.
Private respondents, who are also descendants of Felipe, filed an
action for partition with annulment of documents and/or reconveyance
and damages against petitioners. They contended that Leon fraudulently
obtained the sale in his favor through machinations and false pretenses.
The RTC declared that private respondents action had been barred by res
judicata and that petitioners are the legal owners of the property in
question in accordance with the individual titles issued to them.
ISSUE:
Whether or not laches apply against the minors property that was
held in trust.
RULING:
No. At the time of the signing of the Deed of Sale of August
26,1948, private respondents Procerfina, Prosperedad, Ramon and Rosa
were minors. They could not be faulted for their failure to file a case to
recover their inheritance from their uncle Leon, since up to the age of
majority, they believed and considered Leon their co-heir administrator. It
was only in 1975, not in 1948, that they became aware of the actionable
betrayal by their uncle. Upon learning of their uncles actions, they filed
for recovery. Hence, the doctrine of stale demands formulated in Tijam
cannot be applied here. They did not sleep on their rights, contrary to
petitioners assertion.
Furthermore, when Felipe Villanueva died, an implied trust was
created by operation of law between Felipes children and Leon, their
uncle, as far as the 1/6 share of Felipe. Leons fraudulent titling of Felipes
1/6 share was a betrayal of that implied trust.
AUTONOMY OF CONTRACTS
1.
2.
3.
4.
5.
6.
7.
8.
ARTURO M. TOLENTINO
VS. THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL
REVENUE
1994 Aug 25
G.R. No. 115455
235 SCRA 630
FACTS:
The valued-added tax (VAT) is levied on the sale, barter or exchange of
goods and properties as well as on the sale or exchange of services. It is
equivalent to 10% of the gross selling price or gross value in money of goods or
properties sold, bartered or exchanged or of the gross receipts from the sale or
exchange of services. Republic Act No. 7716 seeks to widen the tax base of the
existing VAT system and enhance its administration by amending the National
Internal Revenue Code.
The Chamber of Real Estate and Builders Association (CREBA) contends
that the imposition of VAT on sales and leases by virtue of contracts entered into
prior to the effectivity of the law would violate the constitutional provision of
non-impairment of contracts.
ISSUE:
Whether R.A. No. 7716 is unconstitutional on ground that it violates the
contract clause under Art. III, sec 10 of the Bill of Rights.
RULING:
No. The Supreme Court the contention of CREBA, that the imposition of
the VAT on the sales and leases of real estate by virtue of contracts entered into
prior to the effectivity of the law would violate the constitutional provision of
non-impairment of contracts, is only slightly less abstract but nonetheless
hypothetical. It is enough to say that the parties to a contract cannot, through
the exercise of prophetic discernment, fetter the exercise of the taxing power of
the State. For not only are existing laws read into contracts in order to fix
obligations as between parties, but the reservation of essential attributes of
sovereign power is also read into contracts as a basic postulate of the legal
order. The policy of protecting contracts against impairment presupposes the
maintenance of a government which retains adequate authority to secure the
peace and good order of society. In truth, the Contract Clause has never been
thought as a limitation on the exercise of the State's power of taxation save only
where a tax exemption has been granted for a valid consideration.
Such is not the case of PAL in G.R. No. 115852, and the Court does not
understand it to make this claim. Rather, its position, as discussed above, is that
the removal of its tax exemption cannot be made by a general, but only by a
specific, law.
Further, the Supreme Court held the validity of Republic Act No. 7716 in
its formal and substantive aspects as this has been raised in the various cases
before it. To sum up, the Court holds:
(1) That the procedural requirements of the Constitution have been
complied with by Congress in the enactment of the statute;
(2) That judicial inquiry whether the formal requirements for the
enactment of statutes - beyond those prescribed by the Constitution have been observed is precluded by the principle of separation of powers;
(3) That the law does not abridge freedom of speech, expression or the
press, nor interfere with the free exercise of religion, nor deny to any of
the parties the right to an education; and
(4) That, in view of the absence of a factual foundation of record, claims
that the law is regressive, oppressive and confiscatory and that it violates
vested rights protected under the Contract Clause are prematurely raised
and do not justify the grant of prospective relief by writ of prohibition.
WHEREFORE, the petitions are DISMISSED.
AUTONOMY OF CONTRACTS
AUTONOMY OF CONTRACTS
employment for two years was valid and enforceable considering the
nature of respondents business.
ISSUE:
Whether the Court of Appeals erred in sustaining the validity of the
non-involvement clause
HELD:
In this case, the non-involvement clause has a time limit: two years
from the time petitioners employment with respondent ends. It is also
limited as to trade, since it only prohibits petitioner from engaging in any
pre-need business akin to respondents. More significantly, since
petitioner was the Senior Assistant Vice-President and Territorial
Operations Head in charge of respondents Hongkong and Asean
operations, she had been privy to confidential and highly sensitive
marketing strategies of respondents business. To allow her to engage in
a rival business soon after she leaves would make respondents trade
secrets vulnerable especially in a highly competitive marketing
environment. In sum, The Court finds the non-involvement clause not
contrary to public welfare and not greater than is necessary to afford a
fair and reasonable protection to respondent. Hence the restraint is valid
and such stipulation prevails.
AUTONOMY OF CONTRACTS
4)
That the Supervisor shall sell or offer to sell, display or promote
only and exclusively products sold by the Company.
5)
Either party may terminate this agreement at will, with or without
cause, at any time upon notice to the other.
Later, respondent Luna entered into the sales force of Sandre
Philippines which caused her termination for the alleged violation of the
terms of the contract. The trial court ruled in favor of Luna that the
contract was contrary to public policy thus the dismissal was not proper.
The Court of Appeals affirmed the decision, hence this petition.
ISSUE:
Whether the Court of Appeals erred in ruling that the Supervisors
Agreement was invalid for being contrary to public policy
1)
To purchase products from the Company exclusively for resale and
to be responsible for obtaining all permits and licenses required to sell the
products on retail.
HELD:
1)
That this agreement in no way makes the Supervisor an employee
or agent of the Company, therefore, the Supervisor has no authority to
bind the Company in any contracts with other parties.
2)
That the Supervisor is an independent retailer/dealer insofar as
the Company is concerned, and shall have the sole discretion to
determine where and how products purchased from the Company will be
sold. However, the Supervisor shall not sell such products to stores,
supermarkets or to any entity or person who sells things at a fixed place
of business.
3)
That this agreement supersedes any agreement/s between the
Company and the Supervisor.
notice to the other party. When petitioner Avon chose to terminate the
contract, for cause, respondent Luna was duly notified thereof.
Worth stressing is that the right to unilaterally terminate or cancel
the Supervisors Agreement with or without cause is equally available to
respondent Luna, subject to the same notice requirement. Obviously, no
advantage is taken against each other by the contracting parties.
Hence, the petition was granted.
AUTONOMY OF CONTRACTS
Whether or not the trial court and the CA correctly granted the imposition
of the monetary interest of 2% per month on the amount of P962,434
HELD:
RULING:
The Agreement or the contract between the parties is the formal
expression of the parties rights, duties, and obligations. It is the best evidence of
the intention of the parties. Thus, when the terms of an agreement have been
reduced to writing, it is considered as containing all the terms agreed upon and
there can be, between the parties and their successors in interest, no evidence
of such terms other than the contents of the written agreement.
AUTONOMY OF CONTRACTS
SPOUSES SILVESTRE and CELIA PASCUAL VS. RODRIGO RAMOS
G. R. No. 144712
FACTS:
On June 3, 1987, spouses Silvestre and Celia Pascual executed in favor of
Rodrigo Ramos a Deed of Absolute Sale with Right to Repurchase over two
parcels of land located in Bambang, Bulacan, Bulacan for and in consideration of
P150,000.00. The Pascuals did not exercixe their right to repurchase the
property within the stipulated one-year period; thus, Ramos filed with the trial
court a petition that the title or ownership over the subject parcels and
improvements thereon be consolidated in his favor. In their answer, the
Pascuals averred that what the parties had actually agreed upon and entered
into was a real estate mortgage and that they had even overpaid Ramos. The
Pascuals prayed that Ramos be ordered to execute a Deed of Cancellation,
Release or Discharge of the Absolute Sale with Right to Repurchase or a Deed of
Real Estate Mortgage and for the award of damages. Among the documents
offered in evidence by Ramos during the trial was a document denominated as
Sinumpaang Salaysay signed by Ramos and Silvestre Pascual, but not notarized.
On the other hand, the Pascuals presented documentary evidence consisting of
acknowledgement receipts to prove the payments they had made. The trial
court found that the transaction was actually a loan in the amount of P150, 000,
the payment of which was secured by a mortgage of the property. It also found
that the Pascuals had made payments in the total sum of P344,000, and that
with interest at 7% per annum, the Pascuals had overpaid the loan by P141,500.
The trial court rendered its decision dismissing Ramos petition and
awarding the Pascuals the sum of P141,500 as overpayments on the loan and
interests.
Ramos moved for the reconsideration of the decision, alleging that the
trial court erred in using an interest rate of 7% pert annum in the computation of
the total amount of obligation since what was expressly stipulated in the
Sinumpaang Salaysay was 7% per month. Thus the total interest due was
P643,000 was still due as interest. Adding the latter to the principal sum of
P150,000, the total amount due from the Pascuals as of April 3, 1995, was
P793,000.
Finding merit in Ramos motion for reconsideration, which was not
opposed by the Pascuals, the trial court issued an order modifying its decision. It
deleted the award of P141,500 to the Pascuals and ordered them to pay Ramos
P511,000. The trial court noted that during the trial, the Pascuals never disputed
the stipulated interest which is 7% per month. However, the court declared it is
too burdensome and onerous, thus reducing the interest rate at 5% per month.
The Pascuals filed a motion to reconsider the Order of June 5, 1995 and
Ramos opposed the motion of the Pascuals. The Pascuals appealed to the Court
of Appeals but the appellate court affirmed in toto the trial courts orders.
Hence, this petition.
ISSUE:
Whether or not the Pascuals are liable for 5% interest per month from
June 3, 1987 to April 3, 1995.
RULING:
The Supreme Court held that parties are bound by the stipulation in the
contracts voluntarily entered into by them. Parties are free to stipulate terms
and conditions which they deem convenient provided they are not contrary to
law, morals, good customs, public order or public policy. The interest rate of 7%
per month was voluntarily agreed upon by Ramos and the Pascuals. There is
nothing from the records and no allegation showing that petitioners were victims
of fraud when they entered into the agreement with Ramos.
With the
suspension of the Usury Law and the removal of interest ceiling, the parties are
free to stipulate the interest to be imposed on loans. Absent any evidence of
fraud, undue influence, or any vice of consent exercised by Ramos on the
Pascuals, the interest agreed upon them is binding upon them. The Court is not
in a position to impose upon parties contractual stipulations different from what
they have agreed upon. The Court cannot supplant the interest rate, which was
reduced to 5% per month without opposition on the part of Ramos.
Hence, the Pascuals are liable for 5% interest per month from June 3,
1987 to April 3, 1995. The assailed decision is therefore affirmed and the petition
is denied.
OBLIGATORY FORCE OF CONTRACTS
MAXIMA HEMEDES, petitioner,
VS. THE HONORABLE COURT OF APPEALS, DOMINIUM REALTY AND
CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES, and R & B
INSURANCE CORPORATION, respondents
G.R. No. 108472
October 8, 1999
FACTS:
The instant controversy involves a question of ownership over an
unregistered parcel of land, identified as Lot No. 6, plan Psu-111331, with an
area of 21,773 square meters, situated in Sala, Cabuyao, Laguna. It was
originally owned by the late Jose Hemedes, father of Maxima Hemedes and
Enrique D. Hemedes. On March 22, 1947 Jose Hemedes executed a document
entitled Donation Inter Vivos With Resolutory Conditions whereby he conveyed
ownership over the subject land, together with all its improvements, in favor of
his third wife, Justa Kausapin. Maxima Hemedes, through her counsel, filed an
application for registration and confirmation of title over the subject unregistered
land. Subsequently, Original Certificate of Title (OCT) No. (0-941) 0-198 was
issued in the name of Maxima Hemedes married to Raul Rodriguez by the
Registry of Deeds of Laguna on June 8, 1962, with the annotation that Justa
Kausapin shall have the usufructuary rights over the parcel of land herein
described during her lifetime or widowhood.
On February 28, 1979, Enrique D. Hemedes sold the property to
Dominium Realty and Construction Corporation (Dominium). On April 10, 1981,
Justa Kausapin executed an affidavit affirming the conveyance of the subject
property in favor of Enrique D. Hemedes as embodied in the Kasunduan dated
May 27, 1971, and at the same time denying the conveyance made to Maxima
Hemedes.
On August 27, 1981, Dominium and Enrique D. Hemedes filed a complaint
with the Court of First Instance of Binan, Laguna for the annulment of TCT No.
41985 issued in favor of R & b Insurance and/or the reconveyance to Dominium
of the subject property. Specifically, the complaint alleged that Dominium was
the absolute owner of the subject property by virtue of the February 28, 1979
deed of sale executed by Enrique D. Hemedes, who in turn obtained ownership
of the land from Justa Kausapin, as evidenced by the Kasunduan dated May
27, 1971. The Plaintiffs asserted that Justa Kausapin never transferred the land
to Maxima Hemedes and that Enrique D. Hemedes had no knowledge of the
registration proceedings initiated by Maxima Hemedes.
After considering the merits of the case, the trial court rendered judgment
on February 22, 1989 in favor of plaintiffs Dominium and Enrique D. Hemedes.
Both R & B Insurance and Maxima Hemedes appealed from the trial courts
decision. On September 11, 1992 the Court of Appeals affirmed the assailed
decision in toto and on December 29, 1992, it denied R & Insurances motion for
reconsideration. Thus, Maxima Hemedes and R & B Insurance filed their
respective petitions for review with this Court on November 3, 1992 and
February 22, 1993, respectively.
ISSUE:
Which of the two conveyances by Justa Kausapin, the first in favor of
Maxima Hemedes and the second in favor of Enrique D. Hemedes, effectively
transferred ownership over the subject land?
RULING:
Public respondents finding that the Deed of Conveyance of Unregistered
Real Property By Reversion executed by Justa Kausapin in favor of Maxima
Hemedes is spurious is not supported by the factual findings in this case. It is
grounded upon the mere denial of the same by Justa Kausapin.
VILLEGAS VS. CA
EQUATORIAL REALTY VS. CARMELO
PUP VS. CA
LITONJUA VS. L &R
appealed this decision to the Court of Appeals, which affirmed the trial
courts decision.
FACTS:
Before September 6, 1973, Lot B-3-A, with an area of 4 hectares
was registered under TCT No. 68641 in the names of Ciriaco D. Andres
and Henson Caigas. This land was also declared for real estate taxation
under Tax Declaration No. C2-4442. On September 6, 1973, Andres and
Caigas, with the consent of their respective spouses, Anita Barrientos and
Consolacion Tobias, sold the land to Fortune Tobacco Corporation for
P60,000.00. Simultaneously, they executed a joint affidavit declaring that
they had no tenants on said lot. On the same date, the sale was
registered in the Office of the Register of Deeds of Isabela. TCT No. 68641
was cancelled and TCT No. T-68737 was issued in Fortunes name. On
August 6, 1976, Andres and Caigas executed a Deed of Reconveyance of
the same lot in favor of Filomena Domingo, the mother of Joselito Villegas,
defendant in the case before the trial court. Although no title was
mentioned in this deed, Domingo succeeded in registering this document
in the Office of the Register of Deeds on August 6, 1976, causing the
latter to issue TCT No. T-91864 in her name. It appears in this title that
the same was a transfer from TCT No. T-68641. On April 13, 1981,
Domingo declared the lot for real estate taxation under Tax Declaration
No. 10-5633. On December 4, 1976, the Office of the Register of Deeds of
Isabela was burned together with all titles in the office. On December 17,
1976, the original of TCT No. T-91864 was administratively reconstituted
by the Register of Deeds. On June 2, 1979, a Deed of Absolute Sale of a
portion of 20,000 square meters of Lot B-3-A was executed by Filomena
Domingo in favor of Villegas for a consideration of P1,000.00. This
document was registered on June 3, 1981 and as a result TCT No. T131807 was issued by the Register of Deeds to Villegas. On the same
date, the technical description of Lot B-3-A-2 was registered and TCT No.
T-131808 was issued in the name of Domingo. On January 22, 1991, this
document was registered and TCT No. 154962 was issued to the
defendant, Joselito Villegas.
On April 10, 1991, the trial court upon a petition filed by Fortune
ordered the reconstitution of the original of TCT No. T-68737. After trial on
the merits, the trial court rendered its assailed decision in favor of Fortune
Tobacco, declaring it to be entitled to the property. Petitioners thus
ISSUES:
Whether or not the Court of Appeals was correct in affirming the
trial courts decision.
RULING:
Even if Fortune had validly acquired the subject property, it would
still be barred from asserting title because of laches. The failure or
neglect, for an unreasonable length of time to do that which by exercising
due diligence could or should have been done earlier constitutes laches. It
is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it has either
abandoned it or declined to assert it. While it is by express provision of
law that no title to registered land in derogation of that of the registered
owner shall be acquired by prescription or adverse possession, it is
likewise an enshrined rule that even a registered owner may be barred
from recovering possession of property by virtue of laches.
Hence, petition was GRANTED and the Decision of the Court of
Appeals was REVERSED.
Four years later, on July 30, 1978, Carmelo sold its entire C.M. Recto
Avenue land and building, which included the leased premises housing
the Maxim and Miramar theatres, to Equatorial by virtue of a Deed of
Absolute Sale, for the total sum of P11,300,000.00.
In September 1978, Mayfair instituted the action a quo for specific
performance and annulment of the sale of the leased premises to
Equatorial. It dismissed the complaint with costs against the plaintiff. The
Court of Appeals reversed the decision of the trial court.
RULING:
ISSUE:
This stems from loans obtained by the spouses Litonjua from L&R
Corporation in the aggregate sum of P400,000.00; P200,000.00 of which
was obtained on August 6, 1974 and the remaining P200,000.00 obtained
on March 27, 1978. The loans were secured by a mortgage constituted by
the spouses upon their two parcels of land and the improvements thereon
The mortgage was duly registered with the Register of Deeds.
Spouses Litonjua sold to Philippine White House Auto Supply, Inc.
(PWHAS) the parcels of land they had previously mortgaged to L & R
Corporation for the sum of P430,000.00. Meanwhile, with the spouses
Litonjua having defaulted in the payment of their loans, L & R Corporation
initiated extrajudicial foreclosure proceedings with the Ex-Oficio Sheriff of
Quezon City. The mortgaged properties were sold at public auction to L &
R Corporation as the only bidder for the amount of P221,624.58.
The Deputy Sheriff informed L & R Corporation of the payment by
PWHAS of the full redemption price and advised it that it can claim the
payment upon surrender of its owners duplicate certificates of title. The
spouses Litonjua presented for registration the Certificate of Redemption
issued in their favor to the Register of Deeds of Quezon City. The
Certificate also informed L & R Corporation of the fact of redemption and
directed the latter to surrender the owners duplicate certificates of title
within five days.
On April 22, 1981, L & R Corporation wrote a letter to the Sheriff, copy
furnished to the Register of Deeds, stating: (1) that the sale of the
mortgaged properties to PWHAS was without its consent, in contravention
of paragraphs 8 and 9 of their Deed of Real Estate Mortgage; and (2) that
it was not the spouses Litonjua, but PWHAS, who was seeking to redeem
the foreclosed properties, when under Articles 1236 and 1237 of the New
Civil Code, the latter had no legal personality or capacity to redeem the
same.
FACTS:
MUTUALITY OF CONTRACT
ISSUE:
Whether or not petitioner had knowledge of Rule 69 of SFMPI Rules
and Regulations for memorial works in the mausoleum areas of the park
when the Pre-Need Purchase Agreement and the Deed of Sale was
executed and whether the said rule is valid and binding upon petitioner.
RULING:
Plaintiffs allegation that she was not aware of the said Rules and
Regulations lacks credence. Admittedly, in her Complaint and during the
trial, plaintiff testified that she informed the defendants of her intention to
construct a mausoleum. Even counsel for the plaintiff, who is the son of
the plaintiff, informed the Court during the trial in this case that her
should be strictly construed against petitioner. More particularly, the court below
stated its findings thus:
Manuelita stated that she shall not be responsible for any and all charges
incurred [through the use of the lost card] After August 29, 1989.
In this case, it is seriously doubted whether plaintiff had read the printed
conditions at the back of the Air Waybill, or even if she had, if she was given a
chance to negotiate on the conditions for loading her microwave oven. Instead
she was advised by defendant's employee at San Francisco, U.S.A., that there is
no need to declare the value of her oven since it is not brand new. Further,
plaintiff testified that she immediately submitted a formal claim for P30,000.00
with defendant. But their claim was referred from one employee to another then
told to come back the next day, and the next day, until she was referred to a
certain Atty. Paco. When they got tired and frustrated of coming without a
settlement of their claim in sight, they consulted a lawyer who demanded from
defendant on August 13, 1990.
However, when Luis received his monthly billing statement from BECC
dated September 20,1989, the charges included amounts for purchases were
made, one amounting to P2,350.05 and the other, P607.50. Manuelita received a
billing statement dated October 20,1989 which required her to immediately pay
the total amount of P3,197.70 covering the same (unauthorized) purchases.
Manuelita wrote again BECC disclaiming responsibility for those charges, which
were made after she had served BECC with notice of loss of her card.
Respondent appellate court approved said findings of the trial court in this
manner: We cannot agree with defendant-appellant's above contention. Under
our jurisprudence, the Air Waybill is a contract of adhesion considering that all
the provisions thereof are prepared and drafted only by the carrier. The only
participation left of the other party is to affix his signature thereto. In the earlier
case of Angeles v. Calasanz, the Supreme Court ruled that the terms of a
contract of adhesion must be interpreted against the party who drafted the
same.
PRINCIPLE OF EQUALITY / CONTRACTS OF ADHESION
ERMITAO VS. COURT OF APPEALS
306 SCRA 218
FACTS:
Petitioner Luis Ermitao applied for a credit card from private respondent
BPI Express Card Corp. (BECC) on October 8, 1986 with his wife, Manuelita, as
extension card holder. The spouses were given credit limit of P10, 000.00. They
often exceeded this credit limit without protest from BCC.
On August 9, 1989, Manuelitas bag was snatched from her as she was
shopping at the greenbelt mall in Makati, Metro Manila. Among the items inside
the bag was her BECC credit card. That same night she informed, by telephone,
BECC of the loss. The call was received by BECC offices through a certain Gina
Banzon. This was followed by a letter dated August 30, 1989. She also
surrendered Luis credit card and requested for replacement cards. In her letter,
However, BECC, in a letter dated July 13, 1990, pointed to Luis the
following stipulation in their contract:
In his reply dated July 18, 1990, Luis stressed that the contract BECC was
referring to was a contract of adhesion and warned that if BECC insisted on
charging him and his wife for the unauthorized purchases, they will sue BECC
continued to bill the spouses for said purchases.
The trial court only opined that the only purpose for the suspension of the
spouses credit privileges was to compel them to pay for the unauthorized
purchases. The trial court ruled that the latter portion of the condition in the
parties contract, which states the liability for purchases made after a card is lost
or stolen shall be for the account of the cardholder until after notice of the lost or
theft has been given to BECC and after the latter has informed its member
establishments, is void for being contrary to public policy and for being
dependent upon the sole will of the debtor.
ISSUE:
Whether or not the Court of Appeals gravely erred in relying on the case
of Serra v. Court of appeals, 229 SCRA 60, because unlike that case, petitioners
have no chance at all to contest the stipulations appearing in the credit card
application that was drafted entirely by private respondent, thus, a clear
contract of adhesion.
RULING:
At the outset, we note that the contract between the parties in this case is
indeed a contract of adhesion, so-called because its terms are prepared by only
one party while the other party merely affixes his signature signifying his
adhesion thereto. Such contracts are not void in themselves. They are as
binding as ordinary contracts. Parties who enter in to such contracts are free to
reject the stipulations entirely.
In this case, the cardholder, Manuelita, has complied with what was
required of her under the contract with BECC, She immediately notified BECC of
loss of her card on the same day it was lost and, the following day, she sent a
written notice of the loss to BECC.
Clearly, what happened in this case was that BECC failed to notify
promptly the establishment in which the unauthorized purchases were made
with the use of Manuelitas lost card. Thus, Manuelita was being liable for those
purchases, even if there is no showing that Manuelita herself had signed for said
purchases, and after notice by her concerning her cards loss was already given
to BECC.
NON-BINDING TO THIRD PARTIES
1.
2.
3.
4.
sale of his land, for cash or on installment basis. On June 10, 1989, Salas,
Jr. left his home in the morning for a business trip to Nueva Ecija. He
never returned.On August 6, 1996, Teresita Diaz Salas filed with the
Regional Trial Court a verified petition for the declaration of presumptive
death of her husband, Salas, Jr., who had then been missing for more than
seven (7) years. It was granted on December 12, 1996.
Meantime, respondent Laperal Realty subdivided the land of Salas,
Jr. and sold subdivided portions thereof to respondents Rockway Real
Estate Corporation and South Ridge Village, Inc. on February 22, 1990; to
respondent spouses Abrajano and Lava and Oscar Dacillo on June 27,
1991; and to respondents Eduardo Vacuna, Florante de la Cruz and Jesus
Vicente Capalan on June 4, 1996.
On February 3, 1998, petitioners as heirs of Salas, Jr. filed in the
Regional Trial Court a Complaint for declaration of nullity of sale,
reconveyance, cancellation of contract, accounting and damages against
herein respondents. Laperal Realty filed a Motion to Dismiss on the ground
that petitioners failed to submit their grievance to arbitration as required
under Article VI of the Agreement. Spouses Abrajano and Lava and
respondent Dacillo filed a Joint Answer with Counterclaim and Crossclaim
praying for dismissal of petitioners Complaint for the same reason.
The trial court issued an Order dismissing petitioners Complaint for
non-compliance with the arbitration clause.
ISSUE:
Whether or not the trial court erred in dismissing the complaint.
RULING:
A submission to arbitration is a contract. As such, the Agreement,
containing the stipulation on arbitration, binds the parties thereto, as well
as their assigns and heirs. But only they. Petitioners, as heirs of Salas, Jr.,
and respondent Laperal Realty are certainly bound by the Agreement. If
respondent Laperal Realty, had assigned its rights under the Agreement
to a third party, making the former, the assignor, and the latter, the
assignee, such assignee would also be bound by the arbitration provision
since assignment involves such transfer of rights as to vest in the
assignee the power to enforce them to the same extent as the assignor
could have enforced them against the debtor or in this case, against the
It was the first time that the buyers came to know that private
respondent Eduardo Gullas was the owner of the property. Private
respondents agreed to sell the property to the Sisters of Mary, and
subsequently executed a special power of attorney in favor of Eufemia
Caete, giving her the special authority to sell, transfer and convey the
land at a fixed price of P200.00 per square meter. Attorney-in-fact Caete
executed a deed of sale in favor of the Sisters of Mary for the price of
P20,822,800.00, or at the rate of P200.00 per square meter. The buyers
subsequently paid the corresponding taxes. Thereafter, the Register of
Deeds of issued TCT No. 75981 in the name of the Sisters of Mary of
Banneaux, Inc.
Earlier, on July 3, 1992, petitioners went to see private respondent
Eduardo Gullas to claim their commission, but the latter told them that he
and his wife have already agreed to sell the property to the Sisters of
Mary. Private respondents refused to pay the brokers fee and alleged
that another group of agents was responsible for the sale of land to the
Sisters of Mary.
petitioners filed a complaint against the defendants for recovery of
their brokers fee in the sum of P1,655,412.60, as well as moral and
exemplary damages and attorneys fees. They alleged that they were the
efficient procuring cause in bringing about the sale of the property to the
Sisters of Mary, but that their efforts in consummating the sale were
frustrated by the private respondents who, in evident bad faith, malice
and in order to evade payment of brokers fee, dealt directly with the
buyer whom petitioners introduced to them. They further pointed out that
the deed of sale was undervalued obviously to evade payment of the
correct amount of capital gains tax, documentary stamps and other
internal revenue taxes.
In their answer, private respondents countered that, contrary to
petitioners claim, they were not the efficient procuring cause in bringing
about the consummation of the sale because another broker, Roberto
Pacana, introduced the property to the Sisters of Mary ahead of the
petitioners. Private respondents maintained that when petitioners
introduced the buyers to private respondent Eduardo Gullas, the former
were already decided in buying the property through Pacana, who had
been paid his commission. Private respondent Eduardo Gullas admitted
that petitioners were in his office on July 3, 1992, but only to ask for the
reimbursement of their cellular phone expenses.
ENFORCEABILITY
March 7, 1989 for being dilatory. He elevated the case to this Court via a
petition for review on certiorari. In a Decision dated February 21, 1990, the
Court denied the petition. On April 23, 1990 an Entry of Judgment was issued.
Meanwhile, during the pendency of the case, respondent ordered
petitioners to return to him the construction materials and equipment which
Moreman deposited in their warehouse. Petitioners, however, told them that
Moreman withdrew those construction materials in 1977. Hence, on December
11, 1985, respondent filed with the RTC an action for damages with an
application for a writ of preliminary attachment against petitioners.
ISSUE:
Whether or not respondent have the right to demand the release of the
said materials and equipment or claim for damages.
RULING:
At the outset, the case should have been dismissed outright by the trial
court because of patent procedural infirmities. Even without such serious
procedural flaw, the case should also be dismissed for utter lack of merit. Under
Article 1311 of the Civil Code, contracts are binding upon the parties (and their
assigns and heirs) who execute them. When there is no privity of contract, there
is likewise no obligation or liability to speak about and thus no cause of action
arises. Specifically, in an action against the depositary, the burden is on the
plaintiff to prove the bailment or deposit and the performance of conditions
precedent to the right of action. A depositary is obliged to return the thing to the
depositor, or to his heirs or successors, or to the person who may have been
designated in the contract.
In the present case, the record is bereft of any contract of deposit, oral or
written, between petitioners and respondent. If at all, it was only between
petitioners and Moreman. And granting arguendo that there was indeed a
contract of deposit between petitioners and Moreman, it is still incumbent upon
respondent to prove its existence and that it was executed in his favor.
However, respondent miserably failed to do so. The only pieces of evidence
respondent presented to prove the contract of deposit were the delivery
receipts. Significantly, they are unsigned and not duly received or authenticated
by either Moreman, petitioners or respondent or any of their authorized
representatives. Hence, those delivery receipts have no probative value at all.
While our laws grant a person the remedial right to prosecute or institute a civil
action against another for the enforcement or protection of a right, or the
prevention or redress of a wrong, every cause of action ex-contractu must be
founded upon a contract, oral or written, express or implied.
Moreover,
respondent also failed to prove that there were construction materials and
equipment in petitioners warehouse at the time he made a demand for their
return. Considering that respondent failed to prove (1) the existence of any
contract of deposit between him and petitioners, nor between the latter and
Moreman in his favor, and (2) that there were construction materials in
petitioners warehouse at the time of respondents demand to return the same,
we hold that petitioners have no corresponding obligation or liability to
respondent with respect to those construction materials.
February 12, 1985, by the office of the President of the Rep. of the Philippines
confirming the rights of the bonafide residents of Barrio Cruz-na-Ligas to the
parcel of land they have been possessing or occupying;
that defendant UP, pursuant to the said Indorsement from the Office of
the President of the Rep. of the Philippines, issued that Reply Indorsement
wherein it approved the donation of about 9.2 hectares of the site, directly to the
residents of Brgy. Krus Na Ligas. After several negotiations with the residents,
the area was increased to 15.8 hectares (158,379 square meters);
Administrative Order No. 21 declaring the deed of donation revoked and the
donated property be reverted to defendant UP.
The petitioners, then, prayed that a writ of preliminary injunction or at
least a temporary restraining order be issued, ordering defendant UP to observe
status quo; thereafter, after due notice and hearing, a writ of preliminary
injunction be issued; (a) to restrain defendant UP or to their representative from
ejecting the plaintiffs from and demolishing their improvements on the riceland
or farmland situated at Sitio Libis; (b) to order defendant UP to refrain from
executing another deed of donation in favor another person or entity and in
favor of non-bonafide residents of Barrio Cruz-na-Ligas different from the Deed
of Donation, and after trial on the merits, judgment be rendered:declaring the
Deed of Donation as valid and subsisting and ordering the defendant UP to abide
by the terms and conditions thereof.
The Court of Appeals reversed the decision of the trial court.
ISSUE:
Whether or not defendant UP could execute another deed of donation in
favor of third person.
RULING:
The Court found all the elements of a cause of action contained in the
amended complaint of petitioners. While, admittedly, petitioners were not
parties to the deed of donation, they anchor their right to seek its enforcement
upon their allegation that they are intended beneficiaries of the donation to the
Quezon City government. Art. 1311, second paragraph, of the Civil Code
provides:
If a contract should contain some stipulation in favor of a third person, he may
demand its fulfillment provided he communicated his acceptance to the obligor
before its revocation. A mere incidental benefit or interest of a person is not
sufficient. The contracting parties must have clearly and deliberately conferred
a favor upon a third person.
Under this provision of the Civil Code, the following requisites must be
present in order to have a stipulation pour autrui:(1) there must be a stipulation
in favor of a third person; (2) the stipulation must be a part, not the whole of the
contract;(3) the contracting parties must have clearly and deliberately conferred
a favor upon a third person, not a mere incidental benefit or interest; (4) the
third person must have communicated his acceptance to the obligor before its
revocation; and (5) neither of the contracting parties bears the legal
representation or authorization of the third party.
The allegations in the following paragraphs of the amended complaint are
sufficient to bring petitioners action within the purview of the second paragraph
of Art. 1311 on stipulations pour autrui:
1. Paragraph 17, that the deed of donation contains a stipulation that the
Quezon City government, as donee, is required to transfer to qualified residents
of Cruz-na-Ligas, by way of donations, the lots occupied by them;
2. The same paragraph, that this stipulation is part of conditions and obligations
imposed by UP, as donor, upon the Quezon City government, as donee;
3. Paragraphs 15 and 16, that the intent of the parties to the deed of donation
was to confer a favor upon petitioners by transferring to the latter the lots
occupied by them;
4. Paragraph 19, that conferences were held between the parties to convince UP
to surrender the certificates of title to the city government, implying that the
donation had been accepted by petitioners by demanding fulfillment thereof and
that private respondents were aware of such acceptance; and
5. All the allegations considered together from which it can be fairly inferred
that neither of private respondents acted in representation of the other; each of
the private respondents had its own obligations, in view of conferring a favor
upon petitioners.
The amended complaint further alleges that respondent UP has an
obligation to transfer the subject parcel of land to the city government so that
the latter can in turn comply with its obligations to make improvements on the
land and thereafter transfer the same to petitioners but that, in breach of this
obligation, UP failed to deliver the title to the land to the city government and
then revoked the deed of donation after the latter failed to fulfill its obligations
within the time allowed in the contract. For the purpose of determining the
sufficiency of petitioners cause of action, these allegations of the amended
complaint must be deemed to be hypothetically true. So assuming the truth of
the allegations, we hold that petitioners have a cause of action against UP.
It is hardly necessary to state that our conclusion that petitioners
complaint states a cause of action against respondents is in no wise a ruling on
the merits. That is for the trial court to determine in light of respondent UPs
defense that the donation to the Quezon City government, upon which
petitioners rely, has been validly revoked. Respondents contend, however, that
the trial court has already found that the donation (on which petitioners base
their action) has already been revoked.
This contention has no merit. The trial courts ruling on this point was
made in connection with petitioners application for a writ of preliminary
injunction to stop respondent UP from ejecting petitioners. The trial court denied
injunction on the ground that the donation had already been revoked and
therefore petitioners had no clear legal right to be protected. It is evident that
the trial courts ruling on this question was only tentative, without prejudice to
the final resolution of the question after the presentation by the parties of their
evidence.
The decision of the Court of Appeals is reversed and the case is remanded
to the RTC of Quezon City for trial on the merits.
CONTRACTS CREATING REAL RIGHTS
were secured by the real estate mortgage; that as of August 31, 1997,
their indebtedness amounted to P6,967,241.14, inclusive of the 18%
interest compounded monthly; and that petitioners refusal to settle the
same entitles the respondents to foreclose the real estate mortgage.
Petitioners filed a motion to dismiss on the ground that the
complaint states no cause of action which was denied by the RTC for lack
of merit. Petitioners admitted their loan obligations but argued that only
the original loan of P1,500,000.00 was secured by the real estate
mortgage at 18% per annum and that there was no agreement that the
same will be compounded monthly.
The RTC rendered judgment in favor of the respondents and
ordered the petitioners to pay to the Court or to the respondents the
amounts of P6,332,019.84, plus interest until fully paid, P25,000.00 as
attorneys fees, and costs of suit, within a period of 120 days from the
entry of judgment, and in case of default of such payment and upon
proper motion, the property shall be ordered sold at public auction to
satisfy the judgment.
The CA partially granted the petition and modified the RTC decision
insofar as the amount of the loan obligations secured by the real estate
mortgage. It held that by express intention of the parties, the real estate
mortgage secured the original P1,500,000.00 loan and the subsequent
loans of P150,000.00 and P500,000.00 obtained on July 1, 1992 and
September 5, 1992, respectively. As regards the loans obtained on May
31, 1992, October 29, 1992 and January 13, 1993 in the amounts of
P150,000.00, P200,000.00 and P250,000.00, respectively, the appellate
tribunal held that the parties never intended the same to be secured by
the real estate mortgage.
Hence, this petition.
ISSUE:
Whether or not petitioners must pay respondents legal interest of
12% per annum on the stipulated interest of 18% per annum, computed
from the filing of the complaint until fully paid.
RULING:
2.
initiative in filing the suit for specific performance against them, is akin to waiver
of abandonment of the right to rescind.
STAGES IN THE EXECUTION OF A CONTRACT CONSUMMATION/TERMINATION
stages
preparation or negotiation, its perfection, and finally, its
consummation. Negotiation begins from the time the prospective contracting
parties manifest their interest in the contract and ends at the moment of
agreement of the parties. The perfection or birth of the contract takes place
when the parties agree upon the essential elements of the contract. The last
stage is the consummation of the contract wherein the parties fulfill or perform
the terms agreed upon in the contract, culminating in the extinguishment
thereof. Article 1315 of the Civil Code, provides that a contract is perfected by
mere consent. Consent, on the other hand, is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute
the contract. In the case at bar, the signing and execution of the contract by the
parties clearly show that, as between the parties, there was a concurrence of
offer and acceptance with respect to the material details of the contract, thereby
giving rise to the perfection of the contract. The execution and signing of the
contract is not disputed by the parties. As the Court of Appeals aptly held:
Contrary to petitioners insistence that there was no perfected contract, the
meeting of the offer and acceptance upon the thing and the cause, which are to
constitute the contract (Arts. 1315 and 1319, New Civil Code), is borne out by
the records.
Admittedly, when petitioners accepted private respondents bid proposal
(offer), there was, in effect, a meeting of the minds upon the object (waste
management project) and the cause (BOT scheme). Hence, the perfection of the
contract. In City of Cebu vs. Heirs of Candido Rubi, the Supreme Court held that
the effect of an unqualified acceptance of the offer or proposal of the bidder is
to perfect a contract, upon notice of the award to the bidder.
In fact, in asserting that there is no valid and binding contract between
the parties, MMDA can only allege that there was no valid notice of award; that
the contract does not bear the signature of the President of the Philippines; and
that the conditions precedent specified in the contract were not complied with.
Bank and Trust Company Check No. 2930050168 for P1 million as a sign
of its good faith and readiness to enter into the lease agreement under
the certain terms and conditions stipulated in the letter. Mid-Pasig
received this letter on July 28, 2000.
In a subsequent follow-up letter dated February 2, 2001, Rockland
then said that it presumed that Mid-Pasig had accepted its offer because
the P1 million check it issued had been credited to Mid-Pasigs account on
December 5, 2000.
Mid-Pasig, however, denied it accepted Rocklands offer and
claimed that no check was attached to the said letter. It also vehemently
denied receiving the P1 million check, much less depositing it in its
account.
In its letter dated February 6, 2001, Mid-Pasig replied to Rockland
that it was only upon receipt of the latters February 2 letter that the
former came to know where the check came from and what it was for.
Nevertheless, it categorically informed Rockland that it could not
entertain the latters lease application. Mid-Pasig reiterated its refusal of
Rocklands offer in a letter dated February 13, 2001.
Rockland then filed an action for specific performance. Rockland
sought to compel Mid-Pasig to execute in Rocklands favor, a contract of
lease over a 3.1-hectare portion of Mid-Pasigs property in Pasig City.
The RTCs decision:
1. the plaintiff and the defendant have duly agreed upon a valid and
enforceable lease agreement of subject portions of defendants
properties comprising an area of 5,000 square meters, 11,000
square meters and 15,000 square meters, or a total of 31,000
square meters;
2. the principal terms and conditions of the aforesaid lease agreement
are as stated in plaintiffs June 8, 2000 letter;
3. defendant to execute a written lease contract in favor of the plaintiff
containing the principal terms and conditions mentioned in the
next-preceding paragraph, within sixty (60) days from finality of this
judgment, and likewise ordering the plaintiff to pay rent to the
defendant as specified in said terms and conditions;
4. defendant to keep and maintain the plaintiff in the peaceful
possession and enjoyment of the leased premises during the term
of said contract;
ISSUE:
Whether or not a valid contract is existing between herein petitioner
and respondent.
RULING:
Under Article 1305 of the Civil Code, a contract is a meeting of
minds between two persons whereby one binds himself, with respect to
of Republic Act No. 6957, otherwise known as the BOT Law, which require
that i) prior to the notice of award, an Investment Coordinating
Committee clearance must first be obtained; and ii) the notice of award
indicate the time within which the awardee shall submit the prescribed
performance security, proof of commitment of equity contributions and
indications of financing resources.
Admittedly, the notice of award has not complied with these
requirements.
However, the defect was cured by the subsequent
execution of the contract entered into and signed by authorized
representatives of the parties; hence, it may not be gainsaid that there is
a perfected contract existing between the parties giving to them certain
rights and obligations (conditions precedents) in accordance with the
terms and conditions thereof. We borrow the words of the Court of
Appeals:
Petitioners belabor the point that there was no valid notice of award
as to constitute acceptance of private respondents offer. They maintain
that former MMDA Chairman Oretas letter to JANCOM EC dated February
27, 1997 cannot be considered as a valid notice of award as it does not
comply with the rules implementing Rep. Act No. 6957, as amended. The
argument is untenable.
ELEMENTS OF CONSENT: OFFER AND ACCEPTANCE
Reynes alleged further that on March 1, 1984, she signed a Deed of Sale
of the Mabolo Lot in favor of Montecillo. Reynes, being illiterate signed by
affixing her thumb- mark on the document. Montecillo promised to pay the
agreed P47,000.00 purchase price within one month from the signing of the
Deed of Sale.
During pre-trial Montecillo claimed that the consideration for the sale of
the Mabolo Lot was the amount he paid to Cebu Iced and Cold Storage
Corporation for the mortgage debt. Of Bienvenido Jayag. Montecillo argued that
the release of the mortgage was necessary since the mortgage constituted a lien
on the Mabolo Lot.
Reynes further alleged that Montecillo failed to pay the purchase price
after the lapse of the one-month period, prompting Reynes to demand from
Montecillo the return of the Deed of Sale. Since Montecillo refused to return the
Deed of Sale, Reynes executed a document unilaterally revoking the sale and
gave a copy of the document to Montecillo.
Reynes, however stated that she had nothing to do with Jayags mortgage
debt except that the house mortgaged by Jayag stood on a portion of the Mabolo
Lot. Reynes further stated that the payment by Montecillo to release the
mortgage on Jayags house is a matter between Montecillo and
Jayag. The mortgage on the house being a chattel mortgage could not be
interpreted in any way as an encumbrance on the Mabolo Lot. Reynes further
claimed that the mortgage debt had long prescribed since the P47,000.00
mortgage debt was due for payment on January 30,1967.
Reynes and the Abucay Spouses alleged that on June 18, 1984 they
received information that the Register of Deeds of Cebu City issued Certificate of
Title No. 90805 in the name of Montecillo for the Mabolo Lot.
ISSUE:
Whether or not there was a valid consent in the case at bar to have a valid
contract.
Reynes and the Abucay Spouses argued that for lack for consideration
there (was) no meeting of the minds) between Reynes and Montecillo. Thus, the
trial court should declare null and void ab initio Monticellos Deed of sale, and
order the cancellation of certificates of title No. 90805 in the name of Montecillo.
RULING:
Lopez, the contract was consummated. Petitioner believed that once she
submitted the designs she would be paid her professional fees. Ms. Lopez
assured petitioner that she would be paid.
It is familiar doctrine that if a corporation knowingly permits one of its
officers, or any other agent, to act within the scope of an apparent authority, it
holds him out to the public as possessing the power to do those acts; and thus,
the corporation will, as against anyone who has in good faith dealt with it
through such agent, be estopped from denying the agents authority.
Also, petitioner may be paid on the basis of quantum meruit. "It is
essential for the proper operation of the principle that there is an acceptance of
the benefits by one sought to be charged for the services rendered under
circumstances as reasonably to notify him that the lawyer performing the task
was expecting to be paid compensation therefor. The doctrine of quantum
meruit is a device to prevent undue enrichment based on the equitable postulate
that it is unjust for a person to retain benefit without paying for it."
The designs petitioner submitted to Ms. Lopez were not returned. Ms.
Lopez, an officer of the bank as branch manager used such designs for
presentation to the board of the bank. Thus, the designs were in fact useful to
Ms. Lopez for she did not appear to the board without any designs at the time of
the deadline set by the board.
Decision reversed and set aside. Decision of the trial court affirmed.
ELEMENTS OF CONSENT: OFFER AND ACCEPTANCE
PALATTAO VS. COURT OF APPEALS
381 SCRA 681
MAY 7, 2002
FACTS:
Petitioner Yolanda Palattao interred into a lease contract whereby she
leased to private respondent a house and a 490-square-meter lot located in
101 Caimito Road, Caloocan City, covered by Transfer Certificate of Title No.
247536 and registered in the name of petitioner. The duration of the lease
contract was for three years, commencing from January 1, 1991, to December
31, 1993, renewable at the option of the parties. The agreed monthly rental was
P7,500.00 for the first year; P 8,000.00 for the second year: and P8,500.l00 for
the third year. The contract gave respondent lessee the first option to purchase
the leased property.
During the last year of the contract, the parties began negotiations for the
sale of the leased premises to private respondent. In a letter dated April 2, 1993,
petitioner offered to sell to private respondents 413.28 square meters of the
leased lot at P 7,800.00 per square meter, or for the total amount of
P3,223,548.00. private respondents replied on April 15, 1993 wherein he
informed petitioner that he shall definitely exercise his option to buy the
leased property. Private respondent, however, manifested his desire to buy the
whole 490-square meters inquired from petitioner the reason why only 413.28
square meters of the leased lot were being offered for sale. In a letter dated
November 6, 1993, petitioner made a final offer to sell the lot at P 7,500.00 per
square meter with a down payment of 50% upon the signing of the contract of
conditional sale, the balance payable in one year with a monthly lease/interest
payment P 14,000.00 which must be paid on or before the fifth day every month
that the balance is still outstanding. On November 7, 1993, private respondents
accepted petitioners offer and reiterated his request for respondent accepted
petitioners offers and reiterated his request for clarification as to the size of the
lot for sale. Petitioner acknowledged private respondents acceptance of the
offer in his letter dated November 10, 1993.
Petitioner gave private respondent on or before November 24, 1993,
within which to pay the 50% downpayment in cash or managers check.
Petitioner stressed that failure to pay the downpayment on the stipulated period
will enable petitioner to freely sell her property to others. Petitioner likewise
notified private respondent, that she is no longer renewing the lease agreement
upon its expiration on December 31, 1993.
Private respondent did not accept the terms proposed by petitioner.
Neither were there any documents of sale nor payment by private respondent of
the required downpayment. Private respondent wrote a letter to petitioner on
November 29, 1993 manifesting his intention to exercise his option to renew
their lease contract for another three years, starting January 1, 1994 to
December 31, 1996. This was rejected by petitioner, reiterating that she was no
longer renewing the lease. Petitioner demanded that private respondent vacate
the premises, but the latter refused.
Hence, private respondent filed with the Regional Trial Court of Caloocan,
Branch 127, a case for specified performance, docketed as Civil Case No, 16287,
seeking to compel petitioner to sell to him the leased property. Private
respondent further prayed for the issuance of a writ preliminary injunction to
prevent petitioner from filing an ejectment case upon the expiration of the lease
contract on December 31, 1993.
During the proceedings in the specific performance case, the parties
agreed to maintain the status quo. After they failed to reach an amicable
settlement, petitioner filed the instant ejectment case before the Metropolitan
Trial Court of Caloocan City, Branch 53. In his answer, private respondent
alleged that he refused to vacate the leased premises because there was a
perfected contract of sale of the leased property between him and petitioner.
Private respondent argued that he did not abandon his option to buy the leased
property and that his proposal to renew the lease was but an alternative
proposal to the sale. He further contended that the filing of the ejectment case
violated their agreement to maintain the status quo.
ISSUE:
Whether or not there was a valid consent in the case at bar.
RULING:
There was no valid consent in the case at bar.
Contracts that are consensual in nature, like a contract of sale, are
perfected upon mere meeting of the minds. Once there is concurrence between
the offer and the acceptance upon the subject matter, consideration, and terns
of payment, a contract is produced. The offer must be certain. To convert the
offer into a contract, the acceptance must be absolute and must not qualify the
terms of the offer; it must be plain, unequivocal, unconditional, and without
variance of any sort from the proposal. A qualified acceptance, or one that
involves a new proposal, constitutes a counter-offer and is a rejection of the
original offer. Consequently, when something is desired which is not exactly is
proposed in the offer, such acceptance is not sufficient to generate consent
because any modification or variation from the terms of the offer annuals the
offer.
In the case at bar, while it is true that private respondent informed
petitioner that he is accepting the latters offer to sell the leased property, it
appears that they did not reach an agreement as to the extent of the lot subject
of the proposed sale.
Letters reveal that private respondent did not give his consent to buy only
413.28 square meters of the leased lot, as he desired to purchase the whole 490
square-meter- leased premises which, however, was not what was exactly
napkin in which Lopez wrote something; and insisted that what he and Lopez
discussed at the lunch meeting was Vivas film package offer of 104 films (52
originals and 52 re-runs) for a total price of P60 million.
(a)
(b)
On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS Senior vicepresident for Finance discussed the terms and conditions of Vivas offer to sell
the 104 films, after the rejection of the same package by ABS-CBN. On the
following day, Del Rosario received a draft contract from Ms. Concio which
contains a counter-proposal of ABS-CBN on the offer made by VIVA including the
right of first refusal to 1992 Viva Films. However, the proposal was rejected by
the Board of Directors of VIVA and such was relayed to Ms. Concio.
On April 29, 1992, after the rejection of ABS-CBN and following several
negotiations and meetings defendant Del Rosario and Vivas President Teresita
Cruz, in consideration of P60 million, signed a letter of agreement dated April 24,
1992, granting RBS the exclusive right to air 104 Viva-produced and/or acquired
films including the fourteen (14) films subject of the present case.
On 27 May 1992, ABS-CBN filed before the RTC a complaint for specific
performance with a prayer for a writ of preliminary injunction and/or temporary
restraining order against private respondents Republic Broadcasting System
(now GMA Network Inc.) On 28 May 1992, the RTC issued a temporary
restraining order.
The RTC then rendered decision in favor of RBS and against ABS-CBN. On
appeal, the same decision was affirmed. Hence, this decision.
ISSUE:
Whether or not there exists a perfected contract between ABS-CBN and
VIVA.
RULING:
A contract is a meeting of minds between two persons whereby one binds
himself to give something or render some service to another [Art. 1305, Civil
Code.] for a consideration. There is no contract unless the following requisites
concur:
(1) consent of the contracting parties;
(2) object certain which is the subject of the contract; and
(3) cause of the obligation, which is established. [Art. 1318, Civil Code.]
A contract undergoes three stages:
(c)
Contracts that are consensual in nature are perfected upon mere meeting
of the minds. Once there is concurrence between the offer and the acceptance
upon the subject matter, consideration, and terms of payment a contract is
produced. The offer must be certain. To convert the offer into a contract, the
acceptance must be absolute and must not qualify the terms of the offer; it must
be plain, unequivocal, unconditional, and without variance of any sort from the
proposal.
A qualified acceptance, or one that involves a new proposal,
constitutes a counter-offer and is a rejection of the original offer. Consequently,
when something is desired which is not exactly what is proposed in the offer,
such acceptance is not sufficient to generate consent because any modification
or variation from the terms of the offer annuls the offer.
In the present case, when Mr. Del Rosario of Viva met Mr. Lopez of ABSCBN at the Tamarind Grill on 2 April 1992 to discuss the package of films, said
package of 104 VIVA films was VIVAs offer to ABS-CBN to enter into a new Film
Exhibition Agreement. But ABS-CBN, sent through Ms. Concio, counter-proposal
in the form a draft contract proposing exhibition of 53 films for a consideration of
P35 million. This counter-proposal could be nothing less than the counter-offer
of Mr. Lopez during his conference with Del Rosario at Tamarind Grill Restaurant.
Clearly, there was no acceptance of VIVAs offer, for it was met by a counteroffer which substantially varied the terms of the offer.
Furthermore, ABS-CBN made no acceptance of VIVAs offer hence, they
underwent period of bargaining. ABS-CBN then formalized its counter-proposals
or counter-offer in a draft contract. VIVA through its Board of Directors, rejected
such counter-offer. Even if it be conceded arguendo that Del Rosario had
accepted the counter-offer, the acceptance did not bind VIVA, as there was no
proof whatsoever that Del Rosario had the specific authority to do so.
WHEREFORE, the instant petition is GRANTED.
VICES OF CONSENT
1.
2.
3.
4.
5.
6.
7.
the other acts done or contracts executed, are presumed to continue until
the contrary is shown.
Needless to state, since the donation was valid, Mercedes had the
right to sell the property to whomever she chose. Not a shred of evidence
has been presented to prove the claim that Mercedes sale of the property
to her children was tainted with fraud or falsehood. It is of little bearing
that the Deed of Sale was registered only after the death of Mercedes.
What is material is that the sale of the property to Delia and Jesus Basa
was legal and binding at the time of its execution. Thus, the property in
question belongs to Delia and Jesus Basa.
petitioners raised the issue of prescription and laches for the first
time on appeal before this Court. It is sufficient for this Court to note that
even if the present appeal had prospered, the Deed of Donation was still a
voidable, not a void, contract. As such, it remained binding as it was not
annulled in a proper action in court within four years.
IN VIEW WHEREOF, there being no merit in the arguments of the
petitioners, the petition is DENIED. The CA decision was affirmed in toto.
VICES OF CONSENT
improvements thereon when Paulina died. They said they had been in
possession of the contested properties for more than 10 years.
ISSUE:
1.) Whether or not the consideration in Deed of Sale can be used to
impugn the validity of the Contract of Sale.
2.) Whether or not the alleged Deed of Sale executed by Paulina Rigonan
in favor of the private respondents is valid.
RULING:
1.) Consideration is the why of a contract, the essential reason which
moves the contracting parties to enter into the contract. The Court had
seen no apparent and compelling reason for her to sell the subject 9
parcels of land with a house and warehouse at a meager price of P850
only. On record, there is unrebutted testimony that Paulina as landowner
was financially well off.
She loaned money to several people.
Undisputably, the P850.00 consideration for the nine (9) parcels of land
including the house and bodega is grossly and shockingly inadequate, and
the sale is null and void ab initio.
2.) The Curt ruled in the negative. Private respondents presented only a
carbon copy of this deed. When the Register of Deeds was subpoenaed to
produce the deed, no original typewritten deed but only a carbon copy
was presented to the trial court. None of the witnesses directly testified
to prove positively and convincingly Paulinas execution of the original
deed of sale. The carbon copy did not bear her signature, but only her
alleged thumbprint. Juan Franco testified during the direct examination
that he was an instrumental witness to the deed. However, when crossexamined and shown a copy of the subject deed, he retracted and said
that said deed of sale was not the document he signed as witness.
VICES OF CONSENT
not exist or is different from what that which was really executed. The
requisites of simulation are:
(a) an outward declaration of will different from the will of the parties; (b)
the false appearance must have been intended by mutual agreement;
and (c) the purpose is to deceive third persons.
None of these were clearly shown to exist in the case at bar. The Deed of
Absolute Sale is a notarized document duly acknowledged before a notary
public. As such, it has in its favor the presumption of regularity, and it
carries the evidentiary weight conferred upon it with respect to its due
execution. It is admissible in evidence without further proof of its
authenticity and is entitled to full faith and credit upon its face.
The
burden fell upon the respondents to prove their allegations attacking the
validity and due execution of the said Deed of Absolute Sale. Respondents
failed to discharge that burden; hence, the presumption in favor of the
said deed stands.
VICES OF CONSENT
LIM VS. COURT OF APPEALS
229 SCRA 616
FACTS:
The case involves the partition of the properties of the deceased spouses
Tan Quico and Josefa Oraa. The former died on May 11, 1932 and the latter on
August 6, 1932. Both died intestate. They left some ninety six hectares of land
located in the municipality of Guinobatan and Camalig, Albay. The late spouses
were survived by four children; Cresencia, Lorenzo, Hermogenes and Elias. Elias
died on May 2, 1935, without issue. Cresencia died on December 20, 1967. She
was survived by her husband, Lim Chay Sing, and children, Mariano, Jaime, Jose
Jovita, Anacoreta, Antonietta, Ruben, Benjamin and Rogelio. They are the
petitioners in the case at bench. The sad spectacle of the heirs squabbling over
the properties of their deceased parents was again replayed in the case at
bench. The protagonists were the widower and children of Cresencia on one
side, and Lorenzo and Hermogenes on the other side.
The late Cresencia and Lorenzo had contrasting educational background.
Cresencia only reached the second grade of elementary school. She could not
read or write in English. On the other hand, Lorenzo is a lawyer and a CPA.
Heirs of Cresencia alleged that since the demise of the spouses Tan Quico and
Josefa Oraa, the subject properties had been administered by respondent
Lorenzo. They claimed that before her death, Cresencia had demanded their
partition from Lorenzo. After Cresencias death, they likewise clamored for their
partition. Their effort proved fruitless.
Respondents Lorenzo and Hermogenes adamant stance against partition
is based on various contentions. Principally, they urge: 1) that the properties
had already been partitioned, albeit, orally; and 2) during her lifetime, the late
Cresencia had sold and conveyed all her interests in said properties to
respondent Lorenzo. They cited as evidence the Deed of Confirmation of Extra
Judicial Settlement of the Estate of Tan Quico and Josefa Oraa and a receipt of
payment.
ISSUE:
Whether or not there is error in the signing of the Deed.
RULING:
with our state policy of promoting social justice. It also supplements Article 24 of
the Civil Code which calls on court to be vigilant in the protection of the rights of
those who are disadvantaged in life. In the petition at bench, the questioned
Deed is written in English, a language not understood by the late Cresencia an
illiterate.
VICES OF CONSENT:
RUIZ VS. COURT OF APPEALS
401 SCRA 410
G.R. NO. 146942
APRIL 22, 2003
FACTS:
Petitioner Corazon Ruiz is engaged in the business of buying and selling
jewelry. She obtained loans from private respondent Consuelo Torres on
different occasions and in different amounts. Prior to their maturity, the loans
were consolidated under 1 promissory note dated March 22, 1995.
The consolidated loan of P750, 000.00 was secured by a real estate
mortgage on a lot in Quezon City, covered by Transfer of Certificate of Title No.
RT-96686, and registered in the name of petitioner. The mortgage was signed by
petitioner for herself and as attorney-in-fact of her husband Rogelio. It was
executed on 20 March 1995, or 2 days before the execution of the subject
promissory note.
Thereafter, petitioner obtained 3 more loans from private respondent,
under the following promissory notes: 1) promissory note dated 21 April 1995, in
the amount of P100,000.00; 2) promissory note dated 23 May !995 in the
amount of P100,000.00, and 3) promissory note dated 21 December 1995, in the
amount of P100,000.00. These combined loans of P300,000.00 were secured by
P571,000.00 worth of jewelry pledged by petitioner to private respondent.
From April 1995 to March 1996, petitioner paid the stipulated 3% monthly
interest on the P750,000.00 loan, amounting to P270,000. After March 1996,
petitioner was unable to make interest payments as she had difficulties
collecting from her clients in her jewelry business.
Because of petitioners failure to pay the principal loan of P750,000.00, as
well as the interest payment for April 1996, private respondent demanded
payment not only of the P750,000.00 loan but also of the P300,000.00 loan.
VICES OF CONSENT
EPIFANIA DELA CRUZ, substituted by LAUREANA V. ALBERTO
VS. SPS. EDUARDO C. SISON and EUFEMIA S. SISON
G.R. No. 163770
February 17, 2005
FACTS:
Initially, the complainant in this case was Epifania S. Dela Cruz (Epifania),
but she died on November 1, 1996, while the case was pending in the Court of
Appeals. Upon her demise, she was substituted by her niece, Laureana V.
Alberto.
Epifania claimed that sometime in 1992, she discovered that her rice land
in Salomague Sur, Bugallon, Pangasinan, has been transferred and registered in
the name of her nephew, Eduardo C. Sison, without her knowledge and consent,
purportedly on the strength of a Deed of Sale she executed on November 24,
1989.
Epifania thus filed a complaint before the Regional Trial Court of Lingayen,
Pangasinan, to declare the deed of sale null and void. She alleged that Eduardo
tricked her into signing the Deed of Sale, by inserting the deed among the
documents she signed pertaining to the transfer of her residential land, house
and camarin, in favor of Demetrio, her foster child and the brother of Eduardo.
Respondents, spouses Eduardo and Eufemia Sison (Spouses Sison), denied
that they employed fraud or trickery in the execution of the Deed of Sale. They
claimed that they purchased the property from Epifania for P20,000.00. They
averred that Epifania could not have been deceived into signing the Deed of
Absolute Sale because it was duly notarized before Notary Public Maximo V.
Cuesta, Jr.; and they have complied with all requisites for its registration, as
evidenced by the Investigation Report by the Department of Agrarian Reform
(DAR), Affidavit of Seller/Transferor, Affidavit of Buyer/Transferee, Certification
issued by the Provincial Agrarian Reform Officer (PARO), Letter for the Secretary
of Agrarian Reform, Certificate Authorizing Payment of Capital Gains Tax, and
the payment of the registration fees. Some of these documents even bore the
signature of Epifania, proof that she agreed to the transfer of the property.
ISSUES:
Whether the deed of absolute sale is valid.
Whether fraud attended the execution of a contract.
RULING:
On the issue of whether fraud attended the execution of a contract is
factual in nature. Normally, this Court is bound by the appellate courts findings,
unless they are contrary to those of the trial court, in which case we may wade
into the factual dispute to settle it with finality. After a careful perusal of the
records, we sustain the Court of Appeals ruling that the Deed of Absolute Sale
dated November 24, 1989 is valid.
equivalent to the Judiciarys budget for 17 years and three times the Marcos
Swiss deposits forfeited in favor of the government as decided by the Supreme
Court. At the end, the contract was voided for Amari, the private entity, was
proven to have inveigled the Public Estates Authority to sell the reclaimed lands
without public bidding, in violation of the Government Code.
ISSUE:
Whether or not there existed a fraud in the case at bar.
FACTS:
Two Senate Committees, the Senate Blue Ribbon Committee and
Committee on Accountability of Public Officers, conducted extensive public
hearings to determine the actual market value of the public lands; and found out
that the sale of such was grossly undervalued based on official documents
submitted by the proper government agencies during the investigations. It was
found out that the Public Estates Authority (PEA), under the Joint Venture
Agreement (JVA), sold to Amari Coastal Bay Development Corporation 157.84
hectares of reclaimed public lands totaling to P 1.89 B or P 1,200 per square
meter. However during the investigation process, the BIR pitted the value at P
7,800 per square meter, while the Municipal Assessor of Paraaque at P 6,000
per square meter and by the Commission on Audit (COA) at P21,333 per square
meter. Based on the official appraisal of the COA, the actual loss on the part of
the government is a gargantuan value of P 31.78 B. However, PEA justified the
purchase price based from the various appraisals of private real estate
corporations, amounting from P 500 1,000 per square meter. Further, it was
also found out that there were various offers from different private entities to
buy the reclaimed public land at a rate higher than the offer of Amari, but still,
PEA finalized the JVA with Amari. During the process of investigation, Amari did
not hide the fact that they agreed to pay huge commissions and bonuses to
various persons for professional efforts and services in successfully negotiating
and securing for Amari the JVA. The amount constituting the commissions and
bonuses totaled to a huge P 1.76 B; an indicia of great bribery.
RULING:
NO. The kind of fraud that will vitiate a contract refers to those insidious
words or machinations resorted to by one of the contracting parties to induce to
the other to enter into a contract which without them he would not have agreed
to. Simply stated, the fraud must be determining cause of the contract, or must
have caused the consent to be given. It is believed that the non-disclosure to
the bank of the purchase price of the sale of the land between private
respondents and Manuel Behis cannot be the fraud contemplated by Article
1338 of the Civil Code. From the sole reason submitted by the petitioner bank
that it was kept in the dark as to the financial capacity of private respondents,
we cannot see how the omission or concealment of the real purchase price could
have induced the bank into giving its consent to the agreement; or that the bank
would not have otherwise given its consent had it known of the real purchase
price.
Pursuant to Art. 1339 of the Code, silence or concealment, by itself, does
not constitute fraud unless there is a special duty to disclose certain facts. In
the case at bar, private respondents had no duty to do such.
ISSUE:
Whether or not the sale between PEA and Amari is unconstitutional.
RULING:
YES, it is unconstitutional for what was sold or alienated are lands of the
public domain. Further, the Ponce doctrine, to which the respondent seeks
refuge and sanctuary, does not fall squarely in the case.
First, the subject of the sale was a submerged land; i.e., 78% of the total
area sold by PEA to Amari is still submerged land. Submerged lands, like
foreshore lands, is of the public domain and cannot be alienated.
As
unequivocally stated in Article XII, Section 2 of the Constitution, all lands of the
public domain, waters, minerals, coals, petroleum, forces which are potential
energies, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources, with the exception of agricultural lands, are inalienable. Submerged
lands fall within the scope of such provision.
Second, in the Ponce case, the irrevocable option to purchase portions
of the foreshore lands shall be enforceable only upon reclamation, not prior to
reclamation. In the case at bar, even without actual reclamation, the submerged
lands were immediately transferred and sold to Amari.
Third, the Ponce doctrine has been superseded by the provisions of the
Government Auditing Code, which has been bolstered by the provisions of the
Local Government Code, which states that any sale of the public land must be
made only thru a public bidding. There being no public bidding in the subject
sale of land; the amended JVA is a negotiated contract in patent violation of such
law.
Fourth, the Ponce doctrine which involved the validity to reclaim foreshore
lands based on RA 1899 (authorizing municipalities and chartered cities to
reclaim foreshore lands) is not applicable in the instant case because what is
involved in the case at bar are submerged lands.
Fifth, in the Ponce case, the City of Cebu was sanctioned to reclaim
foreshore lands under RA 1899 for it is a qualified end user government agency;
therefore, can sell patrimonial property to private parties. But PEA is not an end
user agency with respect to reclaimed lands under the amended JVA for
reclaimed lands are public and therefore are inalienable.
Finally, the Ponce case was decided under the 1935 Constitution (196566), which allowed private corporations to acquire alienable lands of the public
domain. The case at bar falls within the ambit of the 1987 Constitution which
prohibits corporations from acquiring alienable lands of the public domain.
Ergo, the submerged lands, being inalienable and outside the commerce
of man, could not be the subject of the commercial transactions specified in the
Amended JVA. Hence, the contract between Amari and the PEA is void.
REQUISITE OF CONTRACT DETERMINATE OBJECT
23 SCRA 477
FACTS:
Juliana Melliza during her lifetime owned three parcels of residential land
in Iloilo City. On 1932, she donated to the then Municipality of Iloilo a certain lot
to serve as site for the municipal hall. The donation was however revoked by
the parties for the reason that area was found inadequate to meet the
requirements of the development plan. Subsequently the said lot was divided
into several divisions.
Sometime in 1938, Juliana Melliza sold her remaining interest on the said
lot to Remedios San Villanueva. Remedios in turn transferred the rights to said
portion of land to Pio Sian Melliza. The transfer Certificate of title in Mellizas
name bears on annotation stating that a portion of said lot belongs to the
Municipality of Iloilo.
Later the City of Iloilo, which succeeds to the Municipality of Iloilo, donated
the city hall sit to the University of the Philippines, Iloilo Branch. On 1952, the
University of the Philippines enclosed the site donated with a wire fence.
Pio Sian Melliza then filed action in the Court of First Instance of Iloilo
against Iloilo City and the University of the Philippines for recovery of the parcel
of land or of its value specifically LOT 1214-B.
Petitioner contends that LOT 1214-B was not included in those lots which
were sold by Juliana Melliza to the then municipality of Iloilo and to say he would
render the Deed of Sale invalid because the law requires as an essential element
of sale, determinate object.
ISSUE:
Whether or not IF Lot 1214 B is included in the Deed of Sale, it would
render the contract invalid because the object would allegedly not be
determinate as required by law.
RULING:
NO. The requirement of the law specifically Article 1460 of the Civil Code,
that the sale must have for its object a determinate thing, is fulfilled as long as,
at the time the contract is entered into, the object of the sale is cable of being
determinate without the necessity of a new or further agreement between the
parties.
The specific mention of some of the lots plus the statement that the lots
object of the sale are the ones needed for city hall site sufficient provides a
basis, as of the time, of the execution of the contract, for rendering determinate
said lots without the need of a new further agreement of the parties.
may be right but in our judgment he has failed to establish his claim. Fraud must
be both alleged and proved. One fact exists in plaintiffs favor, and this is the
age and ignorance of the plaintiff who could be easily by the defendant, a man
of greater intelligence. Another fact is the inadequacy of the consideration for
the transfer which, according to the conveyance, consisted of P1 and other
valuable consideration, and which, according to the oral testimony, in reality
consisted of P107 in cash, a bill-fold, one sheet, one cow, and two carabaos.
Gross inadequacy naturally suggest fraud is some evidence thereof, so that it
may be sufficient to show it when taken in connection with other circumstances,
such as ignorance or the fact that one of the parties has an advantage over the
other. But the fact that the bargain was a hard one, coupled with mere
inadequacy of price when both parties are in a position to form an independent
judgment concerning the transaction, is not a sufficient ground for the
cancellation of a contract.
Against the plaintiff and in favor of the defendant, the Court had the
document itself executed in the presence of witnesses and before a notary
public and filed with the mining recorder. The notary public, Nicanor Sison, and
one of the attesting witnesses, Apolonio Ramos, testified to the effect that in the
presence of the plaintiff and the defendant and of the notary public and the
subscribing witnesses, the deed of sale was interpreted to the plaintiff and that
thereupon he placed his thumb mark on the document. Two finger print experts,
Dr. Charles S. Banks and A. Simkus, have declared in depositions that the thumb
mark on exhibit is that of Askay. No less than four other witnesses testified that
at various times Askay had admitted to them that he had sold the Pet Kel Mine
to Fernando A. Cosalan.
Having in mind of these circumstances, how can the plaintiff expect the
courts to nullify the deed of sale on mere suspicion? Having waited nine years
from the date when the deed was executed, nine years from the time Fernando
A. Cosalan started developing the mine, nine years from the time Askay himself
had been deprived of the possession of the mine, and nine years permitting of a
third party to obtain a contract of lease from Cosalan, how can the court
overlook plaintiff's silent acquiescence in the legal rights of the defendant? On
the facts of record, the trial judge could have done nothing less than dismiss the
action.
The Court concludes, therefore, that the complaint was properly
dismissed. As a result, judgment is affirmed
CAUSE: TRUE/REAL: SIMULATION OF CONTRACTS
HEIRS OF THE LATE SPOUSES AURELIO AND ESPERANZA BALITE VS. LIM
446 SCRA 57
FACTS:
The spouses Aurelio and Esperanza Balite were the owners of a parcel of
land at Catarman, Northern Samar. When Aurelio died intestate, his wife
Esperanza and their children inherited the subject property and became coowners thereof. In the meantime, Esperanza became ill and was in dire need of
money fro her hospital expenses. She, through her daughter, Cristeta, offered to
sell to Rodrigo Lim, her undivided share for the price of P1,000,000.00.
Esperaza and Rodrigo agreed that under the Deed of Absolute Sale, it will be
made to appear that the purchase price of the property would be P150,000.00
although the actual price agreed upon by them for the property was
P1,000,000.00. On April 16, 1996, Esperanza executed a Deed of Absolute Sale
in favor of Rodrigo. They also executed on the same day a Joint Affidavit under
which they declared that the real price of the property was P1,000,000.00
payable to Esperanza by installments. Only Esperanza and two of her children
Antonio and Cristeta knew about the said transaction. When the rest of the
children knew of the sale, they wrote to the Register of Deeds saying that their
mother did not inform them of the sale of a portion of the said property nor did
they give consent thereto. Nonetheless, Rodrigo made partial payments to
Antonio who is authorized by his mother through a Special Power of Attorney.
On October 23, 1996, Esperanza signed a letter addressed to Rodrigo
informing the latter that her children did not agree to the sale of the property to
him and that she was withdrawing all her commitments until the validity of the
sale is finally resolved. On October 31, 1996, Esperanza died intestate and was
survived by her children. Meanwhile, Rodrigo caused to be published in the
Samar Reporter the Deed of Absolute Sale.
On June 27, 1997, petitioners filed a complaint against Rodrigo with the
Regional Trial Court for the annulment of sale, quieting of title, injunction and
damages. Subsequently, Rodrigo secured a loan from the Rizal Commercial
Banking Corporation in the amount of P2,000,000.00 and executed a Real Estate
Mortgage over the property as security thereof. On motion of the petitioners,
they were granted leave to file an amended complaint impleading the bank as
additional party defendant. On March 30, 1998, the court issued an order
rejecting the amended complaint of the petitioners. Likewise, the trial court
dismissed the complaint. It held that pursuant to Article 493 of the Civil Code, a
co-owner is not invalidated by the absence of the consent of the other co-
owners. Hence, the sale by Esperanza of the property was valid; the excess from
her undivided share should be taken from the undivided shares of Cristeta and
Antonio, who expressly agreed to and benefit from the sale. The Court of
Appeals likewise held that the sale was valid and binding insofar as Esperanza
Balites undivided share of the property was concerned. It affirmed the trial
courts ruling that the lack of consent of the co-owners did not nullify the sale.
ISSUE:
Whether or not the Deed of Absolute Sale is null and void on the ground
that it is falsified; it has an unlawful cause; and it is contrary to law and/or public
policy.
RULING:
No. The contract is an example of a simulated contract. Article 1345 of
the Civil Code provides that the simulation of a contract may either be absolute
or relative. In absolute simulation, there is a colorable contract but without any
substance, because the parties have no intention to be bound by it. An
absolutely simulated contract is void, and the parties may recover from each
other what they may have given under the contract. On the other hand, if the
parties state a false cause is relatively simulated. Here, the parties real
agreement binds them. In the present case, the parties intended to be bound by
the Contract, even if it did not reflect the actual purchase price of the property.
The letter of Esperanza to respondent and petitioners admission that there was
partial payment made on the basis of the Absolute Sale reveals that the parties
intended the agreement to produce legal effect.
Since the Deed of Absolute Sale was merely relatively simulated, it
remains valid and enforceable. All the essential requisites prescribed by law for
the validity and perfection of contracts is present. However, the parties shall be
bound by their real agreement for a consideration of P1,000,000 as reflected by
their Joint Affidavit.
The petition is DENIED and the assailed decision AFFIRMED.
FACTS:
Respondent Federico Suntay is the owner of a parcel of land and a
rice mill, warehouse, and other improvements situated in the said land. A
rice miller, Federico, in a letter applied as a miller-contractor of the
National Rice and Corn Corporation (NARIC). He informed the NARIC that
he had a daily rice mill output of 400 cavans of palay and warehouse
storage capacity of 150,000 cavans of palay. His application, although
prepared by his nephew-lawyer, Rafael Suntay, was disapproved, because
at that time he was tied up with several unpaid loans.
For purposes of circumvention, he had thought of allowing Rafael to
make the application for him. Rafael prepared an absolute deed of sale
whereby Federico, for and in consideration of P20,000.00 conveyed to
Rafael said parcel of land with all its existing structures. Said deed was
notarized as Document No. 57 and recorded on Page 13 of Book 1, Series
of 1962, of the Notarial Register of Atty. Herminio V. Flores. Less than
three months after this conveyance, a counter sale was prepared and
signed by Rafael who also caused its delivery to Federico. Through this
counter conveyance, the same parcel of land with all its existing
structures was sold by Rafael back to Federico for the same consideration
of P20,000.00. Although on its face, this second deed appears to have
been notarized as Document No. 56 and recorded on Page 15 of Book 1,
Series of 1962, of the notarial register of Atty. Herminio V. Flores, an
examination thereof will show that, recorded as Document No. 56 on Page
13, is not the said deed of sale but a certain "real estate mortgage on a
parcel of land with TCT No. 16157 to secure a loan of P3,500.00 in favor of
the Hagonoy Rural Bank."
Nowhere on page 13 of the same notarial register could be found
any entry pertaining to Rafael's deed of sale.
Testifying on this
irregularity, Atty. Flores admitted that he failed to submit to the Clerk of
Court a copy of the second deed. Neither was he able to enter the same
in his notarial register. Even Federico himself alleged in his Complaint
that, when Rafael delivered the second deed to him, it was neither dated
nor notarized.
Upon the execution and registration of the first deed, Certificate of
Title No. 0-2015 in the name of Federico was cancelled and in lieu thereof,
TCT No. T-36714 was issued in the name of Rafael. Even after the
execution of the deed, Federico remained in possession of the property
between the late Rafael and Federico deteriorated, and eventually ended,
it is not at all strange for Federico to have been complacent and
unconcerned about the status of his title over the disputed property since
he has been possessing the same actually, openly, and adversely, to the
exclusion of Rafael. It was only when Federico needed the title in order to
obtain a collaterized loan that Federico began to attend to the task of
obtaining a title in his name over the subject land and rice mill.
CAUSE VS. MOTIVE
UY VS. COURT OF APPEALS
314 SCRA 69
SEPTEMBER 9, 1999
FACTS:
Petitioners William Uy and Rodel Roxas are agents authorized to sell eight
(8) parcels of land by the owners thereof. By virtue of such authority, petitioners
offered to sell the lands, located in Tuba, Tadiangan, Benguet to respondent
National Housing Authority (NHA) to be utilized and developed as a housing
project.
On February 14, 1989, NHA approved the acquisition of the said parcels of
land with an area of 31.8231 hectares at the cost of P23.867 million, pursuant to
which the parties executed a series of Deeds of Absolute Sale covering the
subject lands. Of the eight parcels of lands, however, only five were paid for by
the NHA because of the report it received from the Land Geosciences Bureau of
the Department of Environment and Natural Resources that the remaining area
is located at an active landslide area and therefore, not suitable for development
into a housing project. NHA eventually cancelled the sale over the remaining
three (3) parcels of land.
On March 9, 1992, petitioners filed a complaint for damages. After trial,
the RTC of Quezon City rendered the cancellation of contract to be justified and
awarded P1.255 million as damages in favor of petitioners.
Upon appeal by petitioners, the Court of Appeals reversed the decision
and entered a new one dismissing the complaint including the award of
damages.
The motion for reconsideration having been denied, petitioners seek relief
from this court contending, inter alia, that the CA erred in declaring that NHA
had any legal basis to rescind the subject sale.
ISSUE:
Whether or not the contention of petitioner is correct.
Whether or not a partys entry into a contract affects the validity of the
contract.
RULING:
Anent the 1st issue, NO. Petitioners confuse the cancellation of the
contract by the NHA as a rescission of the contract under Article 1191 of the Civil
Code. The right to rescission is predicated on a breach of faith by the other
party that violates the reciprocity between them. The power to rescind is given
to the injured party. In this case, the NHA did not rescind the contract. Indeed,
it did not have the right to do so for the other parties to the contract, the
vendors did not commit any breach, much less a substantial breach, of their
obligation. The NHA did not suffer any injury. The cancellation was not
therefore a rescission under Article 1191. Rather, it was based on the negation
of the cause arising from the realization that the lands, which were the objects of
the sale, were not suitable for housing.
Anent the 2nd issue, as a general rule, a partys motives for entering into a
contract do not affect the contract. However, when the motive predetermines
the cause, the motive may be regarded as the cause. As held in Liguez v. CA, ...
It is well to note, however, that Manresa himself, while maintaining the
distinction and upholding the inoperativess of the motives of the parties to
determine the validity of the contract, expressly excepts from the rule those
contracts that are conditioned upon the attainment of the motives of either
party. The same view is held by the Supreme Court of Spain, in its decisions of
Fevruary 4, 1941 and December 4, 1946, holdinmg that the motive may be
regarded as causa when it predermones the purpose of the contract.
GRATUITOUS CAUSE
1.
2.
donate conjugal property to the plaintiff appellant; and (2) because the donation
was tainted with illegal causa or consideration, of which donor and donee were
participants.
Appellant vigorously contends that the Court of First Instance as well as
the Court of Appeals erred in holding the donation void for having an illicit causa
or consideration. It is argued that under Article 1274 of the Civil Code of 1889
(which was the governing law in 1943, when the donation was executed), "in
contracts of pure beneficence the consideration is the liberality of the donor",
and that liberality per se can never be illegal, since it is neither against law or
morals or public policy.
ISSUE:
Whether or not the deed of donation made by Lopez in favor of Liguez was
valid.
RULING:
Under Article 1274, liberality of the donor is deemed causa only in those
contracts that are of "pure" beneficence; that is to say, contracts designed solely
and exclusively to procure the welfare of the beneficiary, without any intent of
producing any satisfaction for the donor; contracts, in other words, in which the
idea of self-interest is totally absent on the part of the transferor.
For this very reason, the same Article 1274 provides that in remuneratory
contracts, the consideration is the service or benefit for which the remuneration
is given; causa is not liberality in these cases because the contract or
conveyance is not made out of pure beneficence, but "solvendi animo." In
consonance with this view, the Court in Philippine Long Distance Co. vs. Jeturian*
G. R. L-7756, July 30, 1955, like the Supreme Court of Spain in its decision of 16
Feb. 1899, has ruled that bonuses granted to employees to excite their zeal and
efficiency, with consequent benefit for the employer, do not constitute donation
having liberality for a consideration.
Here the facts as found by the Court of Appeals, which the Supreme Court
could not vary, demonstrate that in making the donation in question, the late
Salvador P. Lopez was not moved exclusively by the desire to benefit appellant
Conchita Liguez, but also to secure her cohabiting with him, so that he could
gratify his sexual impulses. This is clear from the confession of Lopez to the
witnesses Rodriguez and Ragay, that he was in love with appellant, but her
parents would not agree unless he donated the land in question to her. Actually,
therefore, the donation was but one part of an onerous transaction (at least with
appellant's parents) that must be viewed in its totality. Thus considered, the
conveyance was clearly predicated upon an illicit causa.
Appellant seeks to differentiate between the alleged liberality of Lopez, as
causa for the donation in her favor, and his desire for cohabiting with appellant,
as motives that impelled him to make the donation, and quotes from Manresa
and the jurisprudence of this Court on the distinction that must be maintained
between causa and motives. It is well to note, however, that Manresa himself,
while maintaining the distinction and upholding the inoperativeness of the
motives of the parties to determine the validity of the contract, expressly
excepts from the rule those contracts that are conditioned upon the attainment
of the motives of either party.
Appellees, as successors of the late donor, being thus precluded from
pleading the defense of immorality or illegal causa of the donation, the total or
partial ineffectiveness of the same must be decided by different legal principles.
In this regard, the Court of Appeals correctly held that Lopez could not donate
the entirety of the property in litigation, to the prejudice of his wife Maria Ngo,
because said property was conjugal in character, and the right of the husband to
donate community property is strictly limited by law.
The situation of the children and forced heirs of Lopez approximates that
of the widow. As privies of their parent, they are barred from invoking the
illegality of the donation. But their right to a legitime out of his estate is not
thereby affected, since the legitime is granted them by the law itself, over and
above the wishes of the deceased. Hence, the forced heirs are entitled to have
the donation set aside in so far as inofficious: i.e., in excess of the portion of free
disposal , computed as provided in Articles 818 and 819, and bearing in mind
that "collationable gifts" under Article 818 should include gifts made not only in
favor of the forced heirs, but even those made in favor of strangers, as decided
by the Supreme Court of Spain in its decisions of 4 May 1899 and 16 June 1902.
So that in computing the legitimes, the value of the property donated to herein
appellant, Conchita Liguez, should be considered part of the donor's estate.
Only the court of origin has the requisite date to determine whether the donation
is inofficious or not. With regard to the improvements in the land in question,
the same should be governed by the rules of accession and possession in good
faith, it being undisputed that the widow and heirs of Lopez were unaware of the
donation in favor of the appellant when the improvements were made.
GRATUITOUS CAUSE
PHILIPPINE BANKING CORPORATION, representing the estate of
JUSTINA SANTOS Y CANON FAUSTINO, deceased, plaintiff-appellant,
VS. LUI SHE, in her own behalf and as administratrix of the
intestate of Wong Heng, deceased, defendant-appellant
21 SCRA 52
FACTS:
Justina Santos and her sister Lorenza were the owners in common of a
piece of land in Manila. In it are two residential houses. The sisters lived in one
of the houses, while Wong Heng, a Chinese, lived with his family in the
restaurant. Wong had been a long time lessee of a portion of the property,
paying monthly rentals. On September 22, 1957, Justina became the owner of
the entire property as her sister died with no other heir.
On November 1, 1957, Justina executed a contract of lease in favor of
Wong, covering a portion already leased to him and another portion of the
property. The lease was for 50 years, although the lessee was give the right to
withdraw at anytime from the agreement with a stipulated monthly rental.
On December 1, she executed another contract giving Wong the option to
buy the leased premises for P120,000 payable within 10 years at monthly
installment of P1,000. The option was conditioned on his obtaining Philippine
citizenship, which was then pending. His application for naturalization was
withdrawn when it was discovered that he was a resident of Rizal.
On November 18,1958, she executed two other contracts one extending
the term to 99 years and the term fixing the term of the option of 50 years. In
the two wills, she bade her legatees to respect the contract she had entered into
with Wong, but it appears to have a change of heart in a codicil. Claiming that
the various contracts were made because of her machinations and inducements
practiced by him, she now directed her executor to secure the annulment of the
contracts.
On November 18, the action was filed in the CFI of Manila. The complaint
alleged that Wong obtained the contracts through fraud. Wong denied having
taken advantage of her trust in order to secure the execution of the contracts on
question. He insisted that the various contracts were freely and voluntarily
entered into by the parties.
The lower court declared all the contracts null and void with the exception
of the first, which is the contract of lease of November 15, 1957. From this
decision, both parties appealed directly to the Court. After the case were
submitted for decision, both parties died, Wong on 1962, and Justina on 1964.
Wong as substituted by his wife Lui She while Justina by the Philippine Banking
Corporation.
ISSUE:
Whether or not the contracts entered into by the parties are void being in
violation of the Constitutional prohibition on transfer of lands to aliens or those
who are not citizens of the Philippines.
RULING:
YES. The Court held the lease and the rest of the contracts were obtained
with the consent of Justina freely given and voluntarily. However the contacts
are not necessarily valid on the ground that it circumvents the Constitutional
prohibition against the transfer of lands to aliens. The illicit purpose then
becomes the illegal causa, rendering the contracts void.
It does not follow from what has been said that because the parties are in
pari delicto they will be left where they are, without relief. For one thing, the
original parties who were guilty of violation of fundamental charter have died
and have since substituted by their administrators to whom it would e unjust to
impute their guilt. For another thing, Article 1416 of the Civil Code provides an
exception to the pari de licto, that when the agreement is not illegal per se but is
merely prohibited, and the prohibition of the law is designed for the protection of
the plaintiff, he may recover what he has paid or delivered.
FORM AS ESSENTIAL ELEMENT OF CONTRACTS
SONIA F. LONDRES, ARMANDO V. FUENTES, CHI-CHITA FUENTES
QUINTIA, ROBERTO V. FUENTES, LEOPOLDO V. FUENTES, OSCAR V.
FUENTES and MARILOU FUENTES ESPLANA petitioners, vs. THE COURT
OF APPEALS, THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS,
valid consideration. Private respondents explained that Julian was deaf and
dumb and as such, was placed in a disadvantageous position compared to
Filomena. Julian had to rely on the representation of other persons in his
business transactions. After the sale, Julian and Consolacion took possession of
the lots. Up to now, the spouses successors-in-interest are in possession of the
lots in the concept owners. Private respondents claimed that the alteration in the
Absolute Sale was made by Filomena to make it conform to the description of
the lot in the Absolute Sale. Private respondents filed a counterclaim with
damages.
The cross-claim of petitioners against public respondents was for the
recovery of just compensation. Petitioners claimed that during the lifetime of
Paulina, public respondents took a 3,200-square meter portion of Lot 1320. The
land was used as part of the Arnaldo Boulevard in Roxas City without any
payment of just compensation. In 1988, public respondents also appropriated a
1,786-square meter portion of Lot 1333 as a vehicular parking area for the Roxas
City Airport. Sonia, one of the petitioners, executed a deed of absolute sale in
favor of the Republic of the Philippines over this portion of Lot 1333. According
to petitioners, the vendee agreed to pay petitioners P214,320.00. Despite
demands, the vendee failed to pay the stipulated amount.
The trial court issued its decision upholding the validity of the Absolute
Sale. This was affirmed by the Court of Appeals.
ISSUE
Whether or not the notarized copy should prevail.
RULING
Among others, petitioners harp on the fact that the notarized and
registered copy of the Absolute Sale should have, been correspondingly
corrected. Petitioners believe that the notarized and archived copy should
prevail. We disagree. A contract of sale is perfected at the moment there is a
meeting of the minds upon the thing which is the object of the contract and upon
the price. Being consensual, a contract of sale has the force of law between the
contracting parties and they are expected to abide in good faith with their
respective contractual commitments. Article 1358 of the Civil Code, which
requires certain contracts to be embodied in a public instrument, is only for
convenience, and registration of the instrument is needed only to adversely
affect third parties. Formal requirements are, therefore, for the purpose of
binding or informing third parties. Non-compliance with formal requirements
does not adversely affect the validity of the contract or the contractual rights
and obligations of the parties.
Decision affirmed with the modification that the cross-claim against public
respondents is dismissed.
CLARA M. BALATBAT
VS. COURT OF APPEALS and Spouses JOSE REPUYAN and AURORA
REPUYAN
G.R. No. 109410
August 28, 1996
261 SCRA 128
FACTS:
The lot in question covered by Transfer Certificate of Title No. 51330 was
acquired by plaintiff Aurelio Roque and Maria Mesina during their conjugal union
and the house constructed thereon was likewise built during their marital union.
Out of their union, plaintiff and Maria Mesina had four children. When Maria
Mesina died on August 28, 1966, the only conjugal properties left are the house
and lot above stated of which plaintiff herein, as the legal spouse, is entitled to
one-half share pro-indiviso thereof. With respect to the one-half share proindiviso now forming the estate of Maria Mesina, plaintiff and the four children,
the defendants here, are each entitled to one-fifth (1/5) share pro-indiviso.
Aurelio Roque then entered into a contract of Absolute Sale with the
spouses Aurora and Jose Repuyan. However, on August 20, 1980, Aurelio filed a
complaint for Rescission of Contract against Spouses Repuyan for the latters
failure to pay the balance of the purchase price. A deed of absolute sale was
then executed on February 4, 1982 between Aurelio S. Roque, Corazon Roque,
Feliciano Roque, Severa Roque and Osmundo Roque and Clara Balatbat, married
to Alejandro Balatbat. On April 14, 1982, Clara Balatbat filed a motion for the
necessary for the perfection of the contract; and failure of the vendee to pay the
price after the execution of the contract does not make the sale null and void for
lack of consideration but results at most in default on the part of the vendee, for
which the vendor may exercise his legal remedies. Tthe petition for review is
hereby dismissed for lack of merit.
UPSUMCO with the PNB and, therefore, not included among the foreclosed
properties acquired by URSUMCO.
URSUMCO refused to heed Teves' demand, claiming that it acquired the
right to occupy the property from UPSUMCO which purchased it from Andres
Abanto; and that it was merely placed in the name of Angel Teves, as shown by
the "Deed of Transfer and Waiver of Rights and Possession" dated November 26,
1987. Under this document, UPSUMCO transferred to URSUMCO its application
for agricultural and foreshore lease. The same document partly states that the
lands subject of the foreshore and agricultural lease applications are bounded on
the north by the "titled property of Andres Abanto bought by the transferor
(UPSUMCO) but placed in the name of Angel Teves". URSUMCO further claimed
that it was UPSUMCO, not Teves, which has been paying the corresponding
realty taxes.
Consequently, Teves filed a complaint for recovery of possession of real
property with damages against URSUMCO. However, on September 4, 1992,
Teves died and was substituted by his heirs. On April 6, 1994, the RTC held that
URSUMCO has no personality to question the validity of the sale of the property
between the heirs of Andres Abanto and Angel Teves since it is not a party
thereto; that Teves' failure to have the sale registered with the Registry of Deeds
would not vitiate his right of ownership, unless a third party has acquired the
land in good faith and for value and has registered the subsequent deed; that
the list of properties acquired by URSUMCO from the PNB does not include the
disputed lot and, therefore, was not among those conveyed by UPSUMCO to
URSUMCO.
On appeal by URSUMCO, the Court of Appeals affirmed the RTC decision,
holding that the transaction between Angel Teves and Andres Abanto's heirs is a
contract of sale, not one to sell, because ownership was immediately conveyed
to the purchaser upon payment of P115,000.00. On October 29, 1996, URSUMCO
filed a motion for reconsideration but was denied by the Appellate Court. Hence,
the instant petition for review on certiorari.
ISSUE:
Whether or not the respondents have established a cause of action
against petitioner.
Upon learning of the acquisition of his lot, Teves formally asked the
corporation to turn over to him possession thereof or the corresponding rentals.
He stated in his demand letters that he merely allowed UPSUMCO to use his
property until its corporate dissolution; and that it was not mortgaged by
RULING:
SARMING VS. DY
383 SCRA 131
JUNE 6, 2002
FACTS:
Petitioners are the succesors-in-interest of original defendant Silveria
Flores, while respondents Cresencio Dy and Ludivina Dy-Chan are the succesorsin-interest of the original plaintiff Alejandra Delfino, the buyer of one of the lots
subject of this case. They were joined in this petition by the successors-ininterest of Isabel, Juan, Hilario, Ruperto, Tomasa, and Luisa and Trinidad
themselves, all surnamed Flores, who were also the original plaintiffs in the
lower court. They are the descendants of Venancio and Jose, the brothers of the
original defendant Silveria Flores.
A controversy arose regarding the sale of Lot 4163 which was half-owned
by the original defendant, Silveria Flores, although it was solely registered under
her name. The other half was originally owned by Silverias brother, Jose. On
January 1956, the heirs of Jose entered into a contract with plaintiff Alejandra
Delfino, for the sale of their one-half share of Lot 4163 after offering the same to
their co-owner, Silveria, who declined for lack of money. Silveria did not object
to the sale of said portion to Alejandra.
Atty. Deogracias Pinili, Alejandras lawyer then prepared the document of
sale. In the preparation of the document however, OCT no. 4918-A, covering Lot
5734, and not the correct title covering Lot 4163 was the one delivered to Pinili.
took
Two years later, when Alejandra Delfino purchased the adjoinin portion of
the lot she had been occupying, she discovered that what was designated in the
deed, Lot 5734, was the wrong lot. Thus, Alejandra and the vendors filed for the
feformation of the Deed of Sale.
ISSUE:
Whether or not reformation is proper in this case.
RULING:
YES. Reformation is that remedy in equity by means of which a written
instrument is made or construed so as to express or inform to the real intention
of the parties.
An action for reformation of instrument under this provision of law may
prosper only upon the concurrence of the following requisites: (1) there must
have been a meeting of the minds of the parties to the contract; (2) the
instrument does not express the true intention of the parties; and (3) the failure
of the instrument to express the true intention of the parties is due to mistake,
fraud, inequitable conduct or accident.
All of these requesites are present in this case. There was a meeting of
the minds between the parties to the contract but the deed did not express the
true intention ot the parties due to the designation of the lot subject of the deed.
There is no dispute as to the intention of the parties to sell the land to Alejandra
Delfino but there was a mistake as to the designation of the lot intended to be
sold as stated in the Settlement of Estate and Sale.
REFORMATION OF INSTRUMENTS: WHEN PROHIBITED (Art. 1366-1367,
CC)
CEBU CONTRACTORS CONSORTIUM CO., petitioner,
VS. COURT OF APPEALS and
MAKATI LEASING & FINANCE CORPORATION, respondents
G.R. No. 107199
July 22, 2003
FACTS:
The instant Petition for Review on Certiorari stems from a complaint for
collection of a sum of money with replevin filed by respondent Makati Leasing
and Finance Corporation (MLFC) against petitioner Cebu Contractors Consortium
Company (CCCC) before the Regional Trial Court of Makati.
MLFC alleges that on August 25, 1976 a lease agreement relating to
various equipment was entered into between MLFC, as lessor, and CCCC, as
lessee. The terms and conditions of the lease were defined in said agreement
and in two lease schedules of payment. To secure the lease rentals, a chattel
mortgage, and a subsequent amendment thereto, were executed in favor of
MLFC over other various equipment owned by CCCC.
On June 30, 1977, CCCC began defaulting on the lease rentals, prompting
MLFC to send demand letters. When the demand letters were not heeded, MLFC
filed a complaint for the payment of the rentals due and prayed that a writ of
replevin be issued in order to obtain possession of the equipment leased and to
foreclose on the equipment mortgaged.
CCCs position is that it is no longer indebted to MLFC because the total
amounts collected by the latter from the Ministry of Public Highways, by virtue of
the deed of assignment, and from the proceeds of the foreclosed chattels were
more than enough to cover CCCs liabilities. CCC submits that in any event, the
deed of assignment itself already freed CCC from its obligation to MLFC.
The trial court rendered decision upholding the lease agreement and
finding CCC liable to MLFC in lease rentals. On appeal, the appellate court
affirmed the trial courts decision.
ISSUE:
Whether or not respondent court erred in upholding the so- called salelease back scheme of the private respondent when the same is in reality nothing
but an equitable mortgage.
RULING:
The Court finds in favor of CCC.
MLFCs own evidence discloses that it offers two types of financing lease:
a direct lease and a sale- lease back. The client sells to MLFC equipment that it
owns, which will be leased back to him. The transaction between CCC and MLFC
involved the second type of financing lease.CCC argues that the sale and lease
back scheme is nothing more than an equitable mortgage and consequently,
asks for its reformation. The right of action for reformation accrued from the
date of execution of the contract of lease in 1976. This was properly exercised
by CCC when it filed its answer with counterclaim to MLFCs complaint in 1978
and asked for the reformation of the lease contract.
Wherefore, the decision appealed from is hereby affirmed.
because on the first place that excess was not vested in them legally as a
right because that will amount to unjust enrichment.
QUINTEY V.TIBONG
G.R. No. 166704, December 20, 2006
FACTS:
Agrifina Aquintey filed a complaint for sum of money and damages
against the respondents, spouses Felicidad and Rico Tibong. Agrifina
alleged that Felicidad had secured loans from her on several occasions, at
monthly interest rates. Despite demands, the spouses Tibong failed to
pay their outstanding loan exclusive of interests. Spouses Tibong
admitted that they had secured loans from Agrifina. The proceeds of the
loan were then re-lent to other borrowers at higher interest rates. They,
likewise, alleged that they had executed deeds of assignment in favor of
Agrifina, and that their debtors had executed promissory notes in
April 15,2005
FACTS:
Herein petitioner is the mother of her co petitioners Thelma Cruz, Gerry
Cruz and Nerissa Cruz-Tamayo, as well as Arnel Cruz, who was one of the
defendants in Civil Case No. 49466. Petitioners files said case on February 11,
1983 against Arnel Cruz and herein private respondents Summit Financing
Corporation (Summit), Victor S. Sta. Ana and Maximo C. Contreras, the last two
in their capacity as deputy sheriff and ex-officio sheriff of Rizal, respectively, and
Ramon G. Manalastas in his capacity as Acting Register of Deeds of Rizal.
The Complaint alleged that petitioners and Arnel Cruz were co-owners of a
parcel of land situated in Taytay, Rizal. Yet the property, which was then covered
by Transfer Certificate of Title (TCT) No. 495225, was registered only in the
name of Arnel Cruz. According to petitioners, the property was among the
properties they and Arnel Cruz inherited upon the death of Delfin Cruz, husband
of Adoracion Cruz.
On August 22, 1977, petitioners and Arnel Cruz executed a Deed of Partial
Partition, distributing to each of them their shares consisting of several lots
previously held by them in common. Among the properties adjudicated to
defendant Cruz was the parcel of land covered at the time by TCT No. 495225. It
is the subject of this case.
Subsequently, the same parties to the Deed of Partition agreed in writing
to share equally in the proceeds of the sale of the properties although they have
been subdivided and individually titled in the names of the former co-owners
pursuant to the Deed of Partition. This arrangement was embodied in a
Memorandum of Agreement executed on August 23, 1977 or a day after the
partition. The tenor of the Memorandum of Agreement was annotated at the
back of the TCT No. 495225 on September 1, 1977.
Sometime in January 1983, petitioner Thelma Cruz discovered that TCT
No. 514477 was issued on October 18, 1982 in the name of Summit. Upon
investigation, petitioners learned that Arnel Cruz had executed a Special Power
of Attorney on May 16, 1980 in favor of one Nelson Tamayo, husband of
petitioner Nerissa Cruz Tamayo, authorizing him to obtain a loan in the amount
of One Hundred Four Thousand Pesos from respondent Summit, to be secured by
a real estate mortgage on the subject parcel of land.
Since the loan remained outstanding on maturity, Summit instituted extrajudicial foreclosure proceedings, and at the foreclosure sale, it was declared the
brought to the spouses her buyer, herein petitioner Napoleon H. Gonzales, who
turned out to be Mrs. Lagrimas relative.
Petitioner offered to buy the vacant lot for P470,000.00.
Initially,
respondents refused to reduce their asking price. Petitioner bargained for a
lower price with the suggestion that on paper the price will be markedly lower so
the spouses would pay lower capital gains tax. Petitioner assured the spouses
this could be done since he had connections with the Bureau of Internal
Revenue. The spouses agreed to sell at P470.000.00. Petitioners paid the bank
P375,000.00, to be deducted from the purchase price. After the mortgage was
cancelled and upon release of the two titles, Gonzales asked for the deeds of
sale of the two lots and delivery of the titles to him. Defendants signed the deed
of sale covering only Lot 1 but refused to deliver its title until petitioner paid the
remaining balance of P70,000.00
This prompted petitioner to file a complaint for specific performance and
damages.
ISSUE:
Whether or not the sale involved only Lot 1 and not both Lots.
RULING:
YES. Principally, the issue here is whether the contract of sale between
the parties involved Lot 1 and 2 as claimed by petitioner or only Lot 1 as private
respondents contend. In a case where we have to judge conflicting claims on
the intent of the parties, as in this instance, judicial determination of the parties
intention is mandated. Contemporaneous and subsequent acts of the parties
material to the case are to be considered.
Petitioner admits he himself caused the preparation of the deed of sale
presented before the lower court. Yet he could not explain why I referred only to
the sale of Lot 1 and not to the two lots, if the intention of the parties was really
to cover the sale of two lots. As the courts a quo observed, even if it were true
that two lots were mortgaged and were about to be foreclosed, the ads private
respondents placed in the Bulletin Today offered only Lot 1 and was strong
indication that they did not intend to sell Lot 2. The 501 sq.m. lot was offered for
P1,150.00 per sq.m. It alone would have fetched P576,150.00. The loan still to
be paid the bank was only P375,000.00 which was what petitioner actually paid
the bank. As the trial court observed, it was incomprehensible why the spouses
would part with two lots, one with a 2-storey house, and both situated at a prime
commercial district for less than the price of one lot. Contrary to what petitioner
would make us believe, the sale of Lot 1 valued at P576,150.00 for P470,000.00,
with petitioner assuming the bank loan of P375,000.00 as well as payment of the
capital gains tax, appears more plausible.
ISSUE
Whether or not the petitioner may rescind the Kasunduan pursuant to
Article 1191 of the Civil Code for the failure of respondent to give full payment of
the balance of the purchase price.
RULING:
NO, the right of the parties are governed by the terms ands the nature of
the contract they entered. Hence, although the nature of the Kasunduan was
never places in dispute by both parties, it is necessary to ascertain whether the
Kasunduan is a contract to sell or a contract of Sale. Although both parties have
consistency referred to the Kasunduan as a contract to Sell, a careful reading of
the provision of the Kasunduan reveals that it is a contract of Sale. A deed of
sale is absolute in nature in the absence of an any stipulation reserving title to
the vendor until full payment of the purchase price. The delivery of a separation
title in the name of Julio Garcia was a condition imposed on respondents
obligation to pay the balance of the purchase price. It was not a condition
imposed in the perfection of the contract of Sale.
The rescission will not prosper since the power to rescind is only given to
the injured party. The injured party is the party who has faithfully fulfilled his
obligation. In the case at bar, the petitioners were not ready, willing and able to
comply with their obligation to deliver a separate title in the name of Julio Garcia
to respondent therefore, thy are not in a position to ask for rescission. Failure to
comply with a condition imposed on the performance of an obligation gives the
other party the option either to refuse to proceed with the sale or to waive the
condition under Art 1545 of the civil code. Hence it is the respondent who has
the option.
DOCTRINE OF COMPLEMENTARY CONTRACTS CONSTRUED
TOGETHER
1.
2.
3.
FACTS:
On September 3, 1999, petitioner filed a complaint against respondents
fo0r the collection of a deficiency amounting to P4,014,297.23 exclusive of
interest. Petitioner alleged that respondents obtained a loan from it and
executed a continuing surety agreement dated November 16, 1995 in favor of
petitioner for all loans, credits, etc., that were extended or may be extended in
the future to respondents. Petitioner granted a renewal of said loan upon
respondents request, the most recent being on January 21, 1998 as evidenced
by a promissory note renewal BD-Variable No. 8298021001 on the amount of
P3,000,000.00. it was expressly stipulated therein that the venue for any legal
action that may arise out of said promissory note shall be Makati City to the
excklusion of all other courts.
Respondent allegedly failed to pay said
obligation upon maturity. Thus petitioner foreclosed the real estate mortgage
executed by the respondents valued at P1,081,600.00 leaving a deficiency
balance of P4,014,297.23 as of August 31, 1999.
Respondents moved to dismiss the complaint on the ground of improper
venue, invoking the stipulation contained in the last paragraph of the promissory
note with respect to the restriction/exclusive venue. The trial court denied said
motion asseverating that petitioners had separate causes of action arising from
the promissory note and the continuing surety agreement. Thus, under Rule 4,
Section 2 of the 1997 Rules of Civil Procedure, as amended, venue was properly
laid in Manila. The trial court supported its order with cases where venue was
held to be permissive. A motion for reconsideration of said order was likewise
denied.
ISSUE:
Whether or not the complementary-contracts-construed
principle is applicable in the case at bar.
together
RULING:
According to this principle, an accessory contract must be read in its
entirety and together with the principal agreement. This principle is used in
construing contractual stipulations in order to arrive at their true meaning;
certain stipulations cannot be segregated and then made to control. This nosegregation principle is based on Article 1374 of the Civil Code.
The aforementioned doctrine is applicable to the present case. In capable
of standing by itself, the surety agreement can be enforced only in conjuction
with the promissory note. The latter documents the debt that is sought to be
collected in the action against the sureties.
The factual milieu of the present case shows that the surety agreement
was entered into to facilitate existing and future loan agreements. Petitioner
approved the loan covered by the promissory note, partly because of the surety
agreement that assured the payment of the principal obligation.
The
circumstances that relate to the issuance of the promissory note and the surety
agreement are so intertwined that neither one could be separated from the
other. It makes no sense to argue that the parties to the surety agreement were
not bound by the stipulations in the promissory note.
Notably, the promissory note was a contract of adhesion that petitioner
required the principal debtor to execute as a condition of the approval of the
loan. It was made in the form and language prepared by the bank. By inserting
the provision of that Makati City would be the venue for any legal action that
may arise out of the promissory note, petitioner also restricted the venue of
actions against the sureties. The legal action against the sureties arose not only
from the security agreement but also from the promissory note.
DOCTRINE OF COMPLEMENTARY CONTRACTS CONSTRUED TOGETHER
SPOUSES EFREN N. RIGOR and ZOSIMA D. RIGOR, for themselves and as
owners of CHIARA CONSTRUCTION, petitioners,
VS. CONSOLIDATED ORIX LEASING and FINANCE CORPORATION,
respondent
2002 Aug 20
FACTS:
Petitioners obtained a loan from private respondent Consolidated Orix
Leasing and Finance Corporation in the amount of P1,630,320.00. Petitioners
executed a promissory note on July 31, 1996 promising to pay the loan in 24
equal monthly installments of P67,930.00 every fifth day of the month
commencing on September 5, 1996. The promissory note also provides that
default in paying any installment renders the entire unpaid amount due and
payable. To secure payment of the loan, petitioners executed in favor of private
respondent a deed of chattel mortgage over two dump trucks.
Petitioners failed to pay several installments despite demand from private
respondent.
On January 5, 1998, private respondent sought to foreclose the chattel
mortgage by filing a complaint for Replevin with Damages against petitioners
before the Regional Trial Court of Dagupan City.After service of summons,
petitioners moved to dismiss the complaint on the ground of improper venue
based on a provision in the promissory note which states that, x x x all legal
actions arising out of this note or in connection with the chattels subject hereof
shall only be brought in or submitted to the proper court in Makati City,
Philippines. Private respondent opposed the motion to dismiss and argued that
venue was properly laid in Dagupan City where it has a branch office based on a
provision in the deed of chattel mortgage which states that, x x x in case of
litigation arising out of the transaction that gave rise to this contract, complete
jurisdiction is given the proper court of the city of Makati or any proper court
within the province of Rizal, or any court in the city, or province where the
holder/mortgagee has a branch office, waiving for this purpose any proper
venue. After a further exchange of pleadings, the Dagupan trial court denied
petitioners motion to dismiss Not satisfied with the orders, petitioners filed a
petition for certiorari before the Court of Appeals imputing grave abuse of
discretion by the Dagupan trial court in denying the motion to dismiss which was
denied.
ISSUE:
Whether or not venue was properly laid under the provisions of the chattel
mortgage contract in the light of Article 1374 of the Civil Code.
RULING:
Yes. Art. 1374 provides that the various stipulations of a contract shall be
interpreted together, attributing to the doubtful ones that sense which may
result from all of them taken jointly.
Applying the doctrine to the instant case, we cannot sustain petitioners
contentions. The promissory note and the deed of chattel mortgage must be
construed together.
Private respondent explained that its older standard
promissory notes confined venue in Makati City where it had its main office.
After it opened a branch office in Dagupan City, private respondent made
corrections in the deed of chattel mortgage, but due to oversight, failed to make
the corresponding corrections in the promissory notes. Petitioners affixed their
signatures in both contracts. The presumption is applied that a person takes
ordinary care of his concerns. It is presumed that petitioners did not sign the
deed of chattel mortgage without informing themselves of its contents. As aptly
stated in a case, they being of age and businessmen of experience, it must be
presumed that they acted with due care and have signed the documents in
question with full knowledge of their import and the obligation they were
assuming thereby. In any event, petitioners did not contest the deed of chattel
mortgage under Section 8, Rule 8 of the Revised Rules of Civil Procedure.
As held in Velasquez, this omission effectively eliminated any defense
relating to the authenticity and due execution of the deed, e.g. that the
document was spurious, counterfeit, or of different import on its face as the one
executed by the parties; or that the signatures appearing thereon were
forgeries; or that the signatures were unauthorized. Clearly, the Court of
Appeals did not err in ruling that venue was properly laid in Dagupan City as
provided in the deed of chattel mortgage. The Court holds that private
respondent is not barred from filing its case against petitioners in Dagupan City
where private respondent has a branch office as provided for in the deed of
chattel mortgage.
Petition denied.
DOCTRINE OF COMPLEMENTARY CONTRACTS CONSTRUED TOGETHER
RODOLFO P. VELASQUEZ, petitioner,
VS. COURT OF APPEALS, and PHILIPPINE COMMERCIAL INTERNATIONAL
BANK, INC., respondents
G.R. No. 124049
June 30, 1999
FACTS:
The case arose from a complaint for a sum of money with preliminary
attachment filed with the Regional Trial Court of Makati City by private
respondent Philippine Commercial International Bank (PCIB) against petitioner
Rodolfo P. Velasquez together with Mariano N. Canilao Jr., Inigo A. Nebrida, Cesar
R. Dean and Artemio L. Raymundo.
Sometime in December 1994 the Pick-up Fresh Farms, Inc. (PUFFI), of
which petitioner Velasquez was an officer and stockholder, filed an application
for a loan of P7,500,000.00 with PCIB under the government's Guarantee Fund
for Small and Medium Enterprises (GFSME). On 16 April 1985 the parties
executed the corresponding loan agreement.
As security for the loan,
promissory notes numbered TL 121231 and TL 121258 for the amounts of
P4,000,000.00 and P3,500,000.00, respectively, were signed by Inigo A. Nebrida
and Mariano N. Canilao, Jr. as officers of and for both PUFFI and Aircon and
Refrigeration Industries, Inc. (ARII). A chattel mortgage was also executed by
ARII over its equipment and machineries in favor of PCIB. Petitioner along with
Nebrida and Canilao, Jr. also executed deeds of suretyship in favor of PCIB.
Separate deeds of suretyship were further executed by Cesar R. Dean and
Artemio L. Raymundo. When PUFFI defaulted in the payment of its obligations
PCIB foreclosed the chattel mortgage. The proceeds of the sale amounted to
P678,000.00.
Thus, PCIB filed an action to recover the remaining balance of the entire
obligation including interests, penalties and other charges. Exemplary damages
and attorneys fees of 25% of the total amount due were also sought. On 9
October 1989 a writ of preliminary attachment was granted by the trial court.
On 20 June 1990 the trial court rendered a summary judgment in favor of PCIB
holding petitioner and Canilao solidarily liable to pay P7,227,624.48 plus annual
interest of 17%, and P700,000.00 as attorneys fees and the costs of suit. The
case was dismissed without prejudice with regard to the other defendants as
they were not properly served with summons. On appeal, the Court of Appeals
on 28 September 1995 affirmed in toto the RTC judgment. Petitioners motion
for reconsideration was thereafter denied. Hence this petition.
ISSUE:
Whether or not the appellate court committed reversible error in
sustaining or affirming the summary judgment despite the existence of genuine
triable issues of facts and in refusing to set aside the default order against
petitioner.
personally liable in the deed of suretyship because the loan agreement, among
others, provided to further secure the obligations of the BORROWER to the
LENDER, Messrs. Nebrida, Raymundo, Canilao, Dean and Velasquez and Aircon
and Refrigeration Ind. Inc. shall each execute a suretyship agreement in favor of
the LENDER in form and substance acceptable to the LENDER.
WHEREFORE, the petition is DENIED. The Decision of 28 September 1995
of the Court of Appeals affirming the 20 June 1990 judgment of the RTC- Br. 61,
Makati City, ordering petitioner Rodolfo P. Velasquez and Mariano N. Canilao, Jr.
to solidarily pay respondent Philippine Commercial and Industrial Bank (PCIB) the
amount of P7,227,624.48 with annual interest of 17% and attorneys fees of
P700,000.00 plus costs of suit as well as its Resolution of 19 February 1995
denying reconsideration, is AFFIRMED.
RULING:
The more appropriate doctrine in this case is that of the complementary
contracts construed together doctrine. The surety bond must be read in its
entirety and together with the contract between the NPC and the contractors.
The provisions must be construed together to arrive at their true meaning.
Certain stipulations cannot be segregated and then made to control.
That the complementary contracts construed together doctrine applies
in this case finds support in the principle that the surety contract is merely an
accessory contract and must be interpreted with its principal contract, which in
this case was the loan agreement. This doctrine closely adheres to the spirit of
Art. 1374 of the Civil Code which states that
Art. 1374. The various stipulations of a contract shall be interpreted
together, attributing to the doubtful ones that sense which may result
from all of them taken jointly.
Applying the complementary contracts construed together doctrine
leaves no doubt that it was the intention of the parties that petitioner would be
Article 1386 of the Civil Code provides rescission, which creates the
obligation to return the things, which were the object of the contract, together
with their fruits, and the price with its interest, but also the rentals paid, if any,
had to be returned by the buyer.
RESCISSIBLE CONTRACTS-NATURE AND EFFECTS-MUTUAL RESTITUTION
MARIA ANTONIA SIGUAN, petitioner,
VS. ROSA LIM, LINDE LIM, INGRID LIM and NEIL LIM, respondents
1999 Nov 19
G.R. No. 134685
FACTS:
On 25 and 26 August 1990, Lim issued two Metrobank checks in the sums
of P300,000 and P241,668, respectively, payable to "cash." Upon presentment
by petitioner with the drawee bank, the checks were dishonored for the reason
"account closed." Demands to make good the checks proved futile. As a
consequence, a criminal case for violation of Batas Pambansa Blg. 22, docketed
as Criminal Cases Nos. 22127-28, were filed by petitioner against LIM with
Branch 23 of the Regional Trial Court (RTC) of Cebu City.
In its decision dated 29 December 1992, the court a quo convicted Lim as
charged. The case is pending before this Court for review and docketed as G.R.
No. 134685. It also appears that on 31 July 1990, Lim was convicted of estafa by
the RTC of Quezon City in Criminal Case No. Q-89-22162 filed by a certain
Victoria Suarez. This decision was affirmed by the Court of Appeals. On appeal,
however, the Supreme Court, in a decision promulgated on 7 April 1997,
acquitted Lim but held her civilly liable in the amount of P169,000, as actual
damages, plus legal interest.
Meanwhile, on 2 July 1991, a Deed of Donation conveying parcels of land
and purportedly executed by Lim on 10 August 1989 in favor of her children,
Linde, Ingrid and Neil, was registered with the Office of the Register of Deeds of
Cebu City. New transfer certificates of title were thereafter issued in the names
of the donees.
On 23 June 1993, petitioner filed an accion pauliana against Lim and her
children before Branch 18 of the RTC of Cebu City to rescind the questioned
Deed of Donation and to declare as null and void the new transfer certificates of
title issued for the lots covered by the questioned Deed. The complaint was
docketed as Civil Case No. CEB-14181. Petitioner claimed therein that sometime
in July 1991, Lim, through a Deed of Donation, fraudulently transferred all her
real property to her children in bad faith and in fraud of creditors, including her;
that Lim conspired and confederated with her children in antedating the
questioned Deed of Donation, to petitioner's and other creditors' prejudice; and
that Lim, at the time of the fraudulent conveyance, left no sufficient properties
to pay her obligations.
On the other hand, Lim denied any liability to petitioner. She claimed that
her convictions in Criminal Cases Nos. 22127-28 were erroneous, which was the
reason why she appealed said decision to the Court of Appeals. As regards the
questioned Deed of Donation, she maintained that it was not antedated but was
made in good faith at a time when she had sufficient property. Finally, she
alleged that the Deed of Donation was registered only on 2 July 1991 because
she was seriously ill.
In its decision of 31 December 1994 the trial court ordered the rescission
of the questioned deed of donation; (2) declared null and void the transfer
certificates of title issued in the names of private respondents Linde, Ingrid and
Neil Lim; (3) ordered the Register of Deeds of Cebu City to cancel said titles and
to reinstate the previous titles in the name of Rosa Lim; and (4) directed the
LIMs to pay the petitioner, jointly and severally, the sum of P10,000 as moral
damages; P10,000 as attorney's fees; and P5,000 as expenses of litigation.
On appeal, the Court of Appeals, in a promulgated on 20 February 1998,
reversed the decision of the trial court and dismissed petitioner's accion
pauliana. It held that two of the requisites for filing an accion pauliana were
absent, namely, (1) there must be a credit existing prior to the celebration of the
contract; and (2) there must be a fraud, or at least the intent to commit fraud, to
the prejudice of the creditor seeking the rescission.
According to the Court of Appeals, the Deed of Donation, which was
executed and acknowledged before a notary public, appears on its face to have
been executed on 10 August 1989. Under Section 23 of Rule 132 of the Rules of
Court, the questioned Deed, being a public document, is evidence of the fact
which gave rise to its execution and of the date thereof. No antedating of the
Deed of Donation was made, there being no convincing evidence on record to
indicate that the notary public and the parties did antedate it.
Since Lim's indebtedness to petitioner was incurred in August 1990, or a
year after the execution of the Deed of Donation, the first requirement for accion
pauliana was not met.
In a letter, dated August 14, 1969, Federico, through his new counsel,
Agrava & Agrava, requested that Rafael deliver his copy of TCT No. T-36714 so
that Federico could have the counter deed of sale in his favor registered in his
name. The request having been obviously turned down, Agrava & Agrava filed a
petition with the Court of First Instance of Bulacan asking Rafael to surrender his
owner's duplicate certificate of TCT No. T-36714. In opposition thereto, Rafael
chronicled the discrepancy in the notarization of the second deed of sale upon
which said petition was premised and ultimately concluded that said deed was a
counterfeit or "at least not a public document which is sufficient to transfer real
rights according to law." On September 8, 1969, Agrava & Agrava filed a motion
to withdraw said petition, and, on September 13, 1969, the Court granted the
same.
On July 8, 1970, Federico filed a complaint for reconveyance and damages
against Rafael. In his answer, Rafael scoffed at the attack against the validity
and genuineness of the sale to him of Federico's land and rice mill. Rafael
insisted that said property was "absolutely sold and conveyed . . . for a
consideration of P20,000.00, Philippine currency, and for other valuable
consideration".
While the trial court upheld the validity and genuineness of the deed of
sale executed by Federico in favor of Rafael, which deed is referred to above as
Exhibit A, it ruled that the counter-deed, referred to as Exhibit B, executed by
Rafael in favor of Federico, was simulated and without consideration, hence, null
and void ab initio.
Moreover, while the trial court adjudged Rafael as the owner of the
property in dispute, it did not go to the extent of ordering Federico to pay back
rentals for the use of the property as the court made the evidential finding that
Rafael simply allowed his uncle to have continuous possession of the property
because or their understanding that Federico would subsequently repurchase
the same.
From the aforecited decision of the trial court, both Federico and Rafael
appealed. The Court of Appeals rendered judgment affirming the trial court's
decision, with a modification that Federico was ordered to surrender the
possession of the disputed property to Rafael. Counsel of Federico filed a motion
for reconsideration of the aforecited decision. While the motion was pending
resolution, Atty. Ricardo M. Fojas entered his appearance in behalf of the heirs of
Rafael who had passed away on November 23, 1988. Atty. Fojas prayed that
said heirs be substituted as defendants-appellants in the case. The prayer for
substitution was duly noted by the court in a resolution dated April 6, 1993.
Thereafter, Atty. Fojas filed in behalf of the heirs an opposition to the motion for
reconsideration. The parties to the case were heard on oral argument on
October 12, 1993. On December 15, 1993, the Court of Appeals reversed itself
and rendered an amended judgment.
ISSUE:
Whether or not the deed of sale executed by Federico in favor of Rafael is
simulated and fictitious and, hence, null and void.
RULING:
In the aggregate, the evidence on record demonstrate a combination of
circumstances from which may be reasonably inferred certain badges of
simulation that attach themselves to the deed of sale in question. The complete
absence of an attempt on the part of the buyer to assert his rights of ownership
over the land and rice mill in question is the most protuberant index of
simulation.
The deed of sale executed by Federico in favor of his now deceased
nephew, Rafael, is absolutely simulated and fictitious and, hence, null and void,
said parties having entered into a sale transaction to which they did not intend
to be legally bound. As no property was validly conveyed under the deed, the
second deed of sale executed by the late Rafael in favor of his uncle, should be
considered ineffective and unavailing.
The allegation of Rafael that the lapse of seven years before Federico
sought the issuance of a new title in his name necessarily makes Federico's
claim stale and unenforceable does not hold water. Federico's title was not in the
hands of a stranger or mere acquaintance; it was in the possession of his
nephew who, being his lawyer, had served him faithfully for many years.
Federico had been all the while in possession of the land covered by his title and
so there was no pressing reason for Federico to have a title in his name issued.
Even when the relationship between the late Rafael and Federico deteriorated,
and eventually ended, it is not at all strange for Federico to have been
complacent and unconcerned about the status of his title over the disputed
property since he has been possessing the same actually, openly, and adversely,
to the exclusion of Rafael. It was only when Federico needed the title in order to
obtain a collaterized loan that Federico began to attend to the task of obtaining
a title in his name over the subject land and rice mill.
Decision affirmed. Petitioners, the heirs of Rafael G. Suntay, were ordered
to reconvey to private respondent Federico G. Suntay the property described in
paragraph 2.1 of the complaint, within 10 days from the finality of the Decision,
and to surrender to him within the same period the owner's duplicate copy of
Transfer Certificate of Title No. T-36714 of the Registry of Deeds of the Province
of Bulacan. In the event that the petitioners fail or refuse to execute the
necessary deed of reconveyance as herein directed, the Clerk of Court of the
Regional Trial Court of Bulacan was ordered to execute the same at the expense
of the aforesaid heirs.
RESCISSIBLE CONTRACTS-NATURE AND EFFECTS-MUTUAL RESTITUTION
KHE HONG CHENG, alias FELIX KHE, SANDRA JOY KHE and
RAY STEVEN KHE, petitioners,
VS. COURT OF APPEALS, HON. TEOFILO GUADIZ, RTC 147, MAKATI CITY
and PHILAM INSURANCE CO., INC., respondents
G.R. No. 144169
28 March 2001
355 SCRA 701
FACTS:
Petitioner Khe Hong Cheng, alias Felix Khe, is the owner of Butuan
Shipping Lines to which the Philippine Agricultural Trading Corporation used its
vessel M/V Prince Eric Corporation to ship 3,400 bags of Copra at Masbate for
delivery to Dipolog. Such shipping of 3, 400 bags was covered by a marine
insurance policy issued by American Home Insurance Company (eventually
Philam). However, M/V Prince Eric sank somewhere between Negros Island and
Northern Mindanao which resulted to the total loss of the shipment. Insurer
Philam paid the amount of P 354, 000.00, which is the value of the copra, to
Philippine Agricultural Trading Corporation. American Home was thereby
subrogated unto the rights of the consignee and filed a case to recover money
paid to the latter, based on breach of common carriage.
While the case was pending, Khe Hong Cheng executed deeds of
donations of parcels of land in favor of his children. As a consequence of a
favorable judgment for American Home, a writ of execution to garnish Khe Hong
Chengs property was issued but the sheriff failed to implement the same for
Chengs property were already transferred to his children. Consequently,
American home filed a case for the rescission of the deeds of donation executed
by petitioner in favor of children for such were made in fraud of his creditors.
Petitioner answered saying that the action should be dismissed for it already
prescribed. Petitioner posited that the registration of the donation was on
December 27, 1989 and such constituted constructive notice. And since the
complaint was filed only in 1997, more than four (4) years after registration, the
action is thereby barred by prescription.
ISSUE:
Whether or not the action for the rescission of the deed of donation has
prescribed.
RULING:
An accion pauliana accrues only when the creditor discovers that he has
no other legal remedy for the satisfaction of his claim against the debtor other
than an accion pauliana. The accion pauliana is an action of a last resort. For
as long as the creditor still has a remedy at law for the enforcement of his claim
against the debtor, the creditor will not have any cause of action against the
creditor for rescission of the contracts entered into by and between the debtor
and another person or persons.
Indeed, an accion pauliana presupposes a
judgment and the issuance by the trial court of a writ of execution for the
satisfaction of the judgment and the failure of the Sheriff to enforce and satisfy
the judgment of the court. It presupposes that the creditor has exhausted the
property of the debtor. The date of the decision of the trial court against the
debtor is immaterial.
What is important is that the credit of the plaintiff
antedates that of the fraudulent alienation by the debtor of his property. After
all, the decision of the trial court against the debtor will retroact to the time
when the debtor became indebted to the creditor.
Although Article 1389 of the Civil Code provides that The action to claim
rescission must be commenced within four (4) years is silent as to where the
prescriptive period would commence, the general rule is such shall be reckoned
from the moment the cause of action accrues; i.e., the legal possibility of
bringing the action. Since accion pauliana is an action of last resort after all
other legal remedies have been exhausted and have been proven futile, in the
case at bar, it was only in February 25, 1997, barely a month from discovering
that petitioner Khe Hong Cheng had no other property to satisfy the judgment
award against him that the action for rescission accrued. So the contention of
Khe Hong Cheng that the action accrued from the time of the constructive
notice; i.e., December 27, 1989, the date that the deed of donation was
registered, is untenable.
EFFECTS OF ANNULMENT OF VOIDABLE CONTRACTS
1.
2.
3.
4.
5.
6.
In their reply, the private respondent and her husband alleged that they
had purchased from Fortunatos co-owners, as evidenced by various written
instruments, their respective portions of Lot No. 2319. By virtue of these sales,
they insisted that Fortunato was no longer a co-owner of Lot No. 2319 thus, his
right of redemption no longer existed.
At the trial court level, Fortunato died and was substituted by his children
named Salodada, Clarita, Narciso, Romeo, Rodrigo, Marieta, Furtunato, Jr., and
Salvador, all surnamed Ape.
During the trial, private respondent contended that her husband caused
the annotation of an adverse claim on the certificate of title of Lot No. 2319. In
addition, she and her husband had the whole Lot No. 2319 surveyed by a certain
Oscar Mascada who came up with a technical description of said piece of land.
Significantly, private respondent alleged that Fortunato was present when the
survey was conducted.
After due trial, the court a quo rendered a decision dismissing both the
complaint and the counterclaim. The Court of Appeals, reversed and set aside
the trial courts dismissal of the private respondents complaint but upheld the
portion of the court a quos decision ordering the dismissal of petitioner and her
childrens counterclaim. It upheld private respondents position that Exhibit G
which is the receipt of partial payment had all the earmarks of a valid contract of
sale.
ISSUE:
Whether the receipt signed by Fortunato proves the existence of a
contract of sale between him and private respondent.
RULING:
No, the Court ruled that the records of this case betray the stance of
private respondent that Fortunato Ape entered into such an agreement with her.
A contract of sale is a consensual contract, thus, it is perfected by mere
consent of the parties. Upon its perfection, the parties may reciprocally demand
performance, that is, the vendee may compel the transfer of the ownership and
to deliver the object of the sale while the vendor may demand the vendee to pay
the thing sold. For there to be a perfected contract of sale, however, the
following elements must be present: consent, object, and price in money or its
equivalent.
To be valid, consent: (a) should be intelligent; (b) should be free and (c)
should be spontaneous. Intelligence in consent is vitiated by error; freedom by
violence, intimidation or undue influence; spontaneity by fraud.
In this jurisdiction, the general rule is that he who alleges fraud or mistake
in a transaction must substantiate his allegation as the presumption is that a
person takes ordinary care for his concerns and that private dealings have been
entered into fairly and regularly. The exception to this rule is provided for under
Article 1332 of the Civil Code which provides that when one of the parties is
unable to read, or if the contract is in a language not understood by him, and
mistake or fraud is alleged, the person enforcing the contract must show that
the terms thereof have been fully explained to the former.
In this case, as private respondent is the one seeking to enforce the
claimed contract of sale, she bears the burden of proving that the terms of the
agreement were fully explained to Fortunato Ape who was an illiterate. This she
failed to do. While she claimed in her testimony that the contents of the receipt
were made clear to Fortunato, such allegation was debunked by Andres Flores
himself when the latter took the witness stand.
Flores testified that, while he was very much aware of Fortunatos inability
to read and write in the English language, he did not bother to fully explain to
the latter the substance of the receipt (Exhibit G). He even dismissed the idea
of asking somebody else to assist Fortunato considering that a measly sum of
thirty pesos was involved. Evidently, it did not occur to Flores that the document
he himself prepared pertains to the transfer altogether of Fortunatos property to
his mother-in-law. It is precisely in situations such as this when the wisdom of
Article 1332 of the Civil Code readily becomes apparent which is to protect a
party to a contract disadvantaged by illiteracy, ignorance, mental weakness or
some other handicap. Thus, the Court annuls the contract of sale between
Fortunato and private respondent on the ground of vitiated consent.
7. JUMALON VS. CA
when the wisdom of Article 1332 of the Civil Code readily becomes
apparent which is "to protect a party to a contract disadvantaged by
illiteracy, ignorance, mental weakness or some other handicap
EFFECTS OF ANNULMENT OF VOIDABLE CONTRACTS
JULIAN FRANCISCO, ET. AL. VS. PASTOR HERRERA
G.R. No. 139982
November 21, 2002
392 SCRA 317
FACTS:
Eligio Herrera, Sr., the father of respondent, was the owner of two parcels
of land, one consisting of 500 sq. m. and another consisting of 451 sq. m.,
covered by Tax Declaration (TD) Nos. 01-00495 and 01-00497, respectively.
Both were located at Barangay San Andres, Cainta, Rizal.
On January 3, 1991, petitioner Julian Francisco bought from said
landowner the first parcel, covered by TD No. 01-00495, for the price of
P1,000,000, paid in installments from November 30, 1990 to August 10, 1991.
And on March 12, 1991, petitioner bought the second parcel covered by TD No.
01-00497, for P750,000.
Contending that the contract price for the two parcels of land was grossly
inadequate, the children of Eligio, Sr., namely, Josefina Cavestany, Eligio Herrera,
Jr., and respondent Pastor Herrera, tried to negotiate with petitioner to increase
the purchase price. When petitioner refused, herein respondent then filed a
complaint for annulment of sale, with the RTC of Antipolo City. In his complaint,
respondent claimed ownership over the second parcel allegedly by virtue of a
sale in his favor since 1973. He likewise claimed that the first parcel was subject
to the co-ownership of the surviving heirs of Francisca A. Herrera, the wife of
Eligio, Sr., considering that she died intestate on April 2, 1990, before the
alleged sale to petitioner. Finally, respondent also alleged that the sale of the
two lots was null and void on the ground that at the time of sale, Eligio, Sr. was
already incapacitated to give consent to a contract because he was already
afflicted with senile dementia, characterized by deteriorating mental and
physical condition including loss of memory.
The RTC rendered decision declaring the contract null and void. The Court
of Appeals affirmed the decision of the RTC, hence, this appeal.
ISSUE:
Whether or not the contract is void or merely voidable.
RULING:
A void or inexistent contract is one which has no force and effect from the
very beginning. Hence, it is as if it has never been entered into and cannot be
validated either by the passage of time or by ratification. There are two types of
void contracts: (1) those where one of the essential requisites of a valid contract
as provided for by Article 1318 of the Civil Code is totally wanting; and (2) those
declared to be so under Article 1409 of the Civil Code. By contrast, a voidable or
annullable contract is one in which the essential requisites for validity under
Article 1318 are present, but vitiated by want of capacity, error, violence,
intimidation, undue influence, or deceit.
Article 1318 of the Civil Code states that no contract exists unless there is
a concurrence of consent of the parties, object certain as subject matter, and
cause of the obligation established. Article 1327 provides that insane or
demented persons cannot give consent to a contract. But, if an insane or
demented person does enter into a contract, the legal effect is that the contract
is voidable or annullable as specifically provided in Article 1390.
In the present case, it was established that the vendor Eligio, Sr. entered
into an agreement with petitioner, but that the formers capacity to consent was
vitiated by senile dementia. Hence, we must rule that the assailed contracts are
not void or inexistent per se; rather, these are contracts that are valid and
binding unless annulled through a proper action filed in court seasonably.
An annullable contract may be rendered perfectly valid by ratification,
which can be express or implied. Implied ratification may take the form of
accepting and retaining the benefits of a contract. This is what happened in this
case. As found by the trial court and the Court of Appeals, upon learning of the
sale, respondent negotiated for the increase of the purchase price while
receiving the installment payments. It was only when respondent failed to
convince petitioner to increase the price that the former instituted the complaint
for reconveyance of the properties. Clearly, respondent was agreeable to the
contracts, only he wanted to get more. Further, there is no showing that
respondent returned the payments or made an offer to do so. This bolsters the
view that indeed there was ratification.
One cannot negotiate for an increase in the price in one breath and in the
same breath contend that the contract of sale is void.
The records in this case indubitably show the lapse of the prescriptive
period, thus warranting the immediate dismissal of the Complaint.
The suit before the trial court was an action for the annulment on the
Contract of Sale on the alleged ground of vitiation of consent by intimidation.
The reconveyance of the three parcels of land, which the petitioner half-heatedly
espouses as the real nature of the action, can prosper only if and when the
Contract of Sale covering the subject lots is annulled. Thus, the reckoning period
for prescription would be that pertaining to an action for the annulment of
contract; that is, four years from the time the defect in the consent ceases.
FACTS:
On March 23, 1990, William Alain Mialhe, on his own behalf and on behalf
of Victoria Desbarats-Mialhe, Momique Mialhe-Sichere and Elaine MialheLencquesaing filed a Complaint for Annulment of Sale, Reconveyance and
Damages against Republic of the Philippines and defendant Development Bank
of the Philippines before the court.
On May 25, 1990 filed its Answer denying the substantial facts allrged in
the complaint and raising, as special and affirmative defenses, that there was no
forcible take-over of the subject properties and that the amount paid to private
respondents was fair and reasonable Defendant DBP also filed its Answer raising
as Special and Affirmative Defense that action had already prescribed.
only a third grader and through insidious words and machinations, they made
him sign a document purportedly a contract of employment, which turned out to
be a Deed of Absolute Sale.
The lower court dismissed the complaint holding that respondent failed to
prove his causes of action since he admitted that: 1.) He obtained loans from the
Balgumas; 2.) He signed the Deed of Absolute Sale; and 3.) He acknowledged
selling the property and that he stopped collecting the rentals.
The said decision was however reversed by the Court of Appeals.
Respondent and the Balguma brothers is voidable, and hereby annulled, then
the restitution of the property and its fruits to respondent is just and proper.
Therefore, the petitioners are hereby ordered to turn over to respondent
Braulio Katipunan, Jr. the rentals they received for the five-door apartment
corresponding to the period from January, 1986 up to the time the property shall
have been returned to him, with interest at the legal rate.
ISSUE:
JUMALON VS. COURT OF APPEALS
375 SCRA 175
JANUARY 30, 2002
FACTS:
On July 16, 1991, petitioner and complainant entered into a Conditional
Sales Agreement whereby the latter purchased from the former a house and lot.
On July 24, 1991, petitioner executed in favor of complainant a Deed of Absolute
Sale. Title was transferred to complainant on July 29, 1991.
Thereafter, complainant learned from neighboring residents that the
presence of high-tension wires in the subdivision where the house and lot is
located generate tremendous static electricity and produce electric sparks
whenever it rains. Upon complainants inquiries to the Meralco and HLURB, he
found out that the subject house and lot was built within the 30-meter right of
way of Meralco wherein high tension wires carrying 115, 000 volts are located
which posed serious risks on the property and its occupants.
Consequently, sometime in November 1992, complainant filed a case for
declaration of nullity or annulment of sale of real property before the R.T.C.. The
lower court dismissed the case. Thereafter, complainant filed before the HLURB
a complaint before the HLURB seeking the rescission of the Conditional Sales
Agreement and the Absolute Deed of Sale on the ground of fraud. HLURB
rendered decision in favor of complainant which was upheld by the Court of
Appeals, hence this petition.
ISSUE:
Whether or not there was fraud on the part of petitioner as to warrant the
rescission of the Conditional Sales Agreement and of the Absolute Deed of Sale.
Saturnina paid Dr. Corrompido Php 966.66 for the obligation of petitioner
Nelsons late father Alberto.
RULING:
ISSUE:
The Supreme Court found the petition without merit for it involved
questions of fact which is not reviewable unless it is within the ambit of
exceptions.
RUKING:
The legal guardian only has the plenary power of administration of
the minors property. It does not include the power to alienation which
needs judicial authority. Thus when Saturnina, as legal guardian of
petitioner Rito, sold the latters pro indiviso share in subject land, she did
not have the legal authority to do so. The contarct of sale as to the pro
indiviso share of Petitioner Rito was unenforceable. However when he
acknowledged receipt of the proceeds of the sale on July24, 1986,
petitioner Rito effectively ratified it. This act of ratification rendered the
sale valid and binding as to him.
NECESSITY OF WRITING
1. SHOEMAKER VS. LA TONDENA
2. PNB VS. PVOC
FACTS:
This appeal involves the legal right of the PNB to obtain a judgement
against Vegetable Oil Co., Inc., for Php 15,812,454 and to foreclose a
mortgage on the property of the PVOC for Php 17,000,000.00 and the
legal right of the Phil C. Whitaker as intervenor to obtain a judgement
FACTS:
not rule out petitioners securing a loan. It is pure naivete to believe that
if a businessman has such an outstanding balance in his bank account, he
would have no need to borrow a lesser amount.
In fine, as petitioners side of the case is incredible as it is
inconsistent with the principles by which men similarly situated are
governed, whereas respondents claim that the proceeds of the check,
which were admittedly received by petitioners, represented a loan
extended to petitioner Antonio Tan is credible, the preponderance of
evidence inclines on respondent.
EXECUTORY VS. EXECUTED
SPOUSES VENANCIO DAVID and PATRICIA MIRANDA DAVID and
FLORENCIA VENTURA VDA. DE BASCO, petitioners,
vs. ALEJANDRO and GUADALUPE TIONGSON, respondents.
G.R. No. 108169 August 25, 1999
FACTS:
Three sets of plaintiffs, namely spouses Ventura, spouses David and
Vda. De Basco, filed a complaint for specific performance with damges,
against private respondents spouses Tiongson, alleging that the latter
sold to them lots located in Pampanga.
The parties expressly agredd that in case of payment has been fully
paid respondents would execute an individual deed of absolute sale in
plaintiffs flavor.
The respondents demanded the executuion of a deed of sale and
issuance of certificate of titile but the respondents refused to issue the
same.
The trial court rendered its decision in favor of the respondents.
However the CA ruled that contract of sale was not been perfrected
between spouses David and/or Vda. De Basco and respondents. As with
regard to the spouses Ventura, the CA affirmed the RTC.
ISSUE:
RUKING:
RUKING:
FACTS:
During the lifetime, Felipe, owned real property, a parcel of land
situated at Estancia, Kalibo, Capiz. Upong Felipes death, ownership of the
land was passed on to his children. Pedro, on of the children, got his
share. The remaining undivided portion of the land was held in trust by
leon. His co-heirs made several seasonable and lawful demands upon him
to subdivide the partition the property, but no subdivision took place.
After the death of Leon, private respondents discovered that the
shares of four of the heirs of Felipe was purchased by Leon as evidenced
by Deed of Sale.
ISSUE:
Whether or not the appellate court erred in declaring the Deed of
Sale unenforceable against the private respondent fro being unauthorized
contract.
RUKING:
The court has ruled that the nullity of the unenforceable contract is
of a permanent nature and it will exist as long the unenforceable contract
is not duly ratifired. The mere lapse of time cannot igve efficacy to such a
contract. The defect is such that it cannot be cured except by the
subsequent ratification of the unenforceable contract by the person in
whose name the contract was executed. In the instant case, there is no
showing of any express or implied ratification of the assailed Deed of Sale
by the private respondents Procerfina, Ramon,. Prosperidad, and Rosa.
Thus, the said Deed of Sale must remain unenforceable as to them.
REMEDIES
Plaintiffs and plaintiffs-intervenors averred that they are the lessess since
1971 of a two-story residential apartment and owned by spouses Faustino
and Cresencia Tiangco. The lease was nocovered by any contract. The
lesses were renting the premises then for Php 150.00 a month and were
allegedly verbally granted by the lessors the pre-emptive right to
purchase the property if ever they decide to sell the same.
Upon the death of the spouses Tiangco, the management of the property
was adjudicated to their heirs who were represented by Eufrocina deLeon.
The lessees received a letter from de Leon advising them that the heirs of
the late spouses have already sold the property to Resencor.
The lessees filed an action f\before th RTC praying for the following: a)
rescission of the Deed of Absolute Sale between de Leon and Rocencor, b)
the defendants Rosencor/Rene Joaquin be ordered to reconvey the
property to de Leon, c) de Leon be ordered to reimburse the plaintiffs for
the repair of the property or apply the said amount as part of the
purchase of the property.
The RTC dismissed the complaint while the Ca reversed the decision of
the RTC.
ISSUE:
Whether or not a right of first refusal is indeed covered by the
provisions of the NCC on the Statute of Frauds.
RUKING:
A right of first refusal is not among those listed as unenforceable
under the statute of frauds. Furthermore, the application of Article 1403,
REMEDIES
1.
2.
3.
4.
5.
6.
7.
8.
Article 633 of the OCC provides that figts of real property , in order
to be valid, must appear in a public document. It is settled that a donation
of real estate propter nuptias is void unless made by public instrument.
In the instant case, the donation propter nuptias did not become
valid. Neither did it create any right because it was not made in a public
instrument. Hence, it conveyed no title to the land in question to
petitioners predecessors.
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lawyers from acquiring property or rights which may be the object of any
litigation in which they may take part by virtue of their profession.
It follows that respondents title over the subject property should be
cancelled and the property reconveyed to the estate of Ricardo, the same
to be distributed to the latter?s heirs. This is without prejudice, however,
to respondent?s right to claim his attorney?s fees from the estate of
Ricardo, it being undisputed that he rendered legal services for the latter.
VOID/ INEXISTENT CONTRACTS:
DECLARATION OF NULLITY
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RUKING:
RUKING:
Having been established that the subject property was still the object of
litigation at the time the subject deed of Transfer of Rights and Interest
was executed, the assignment of rights and interest over the subject
property in favor of respondent is null and void for being violative of the
provisions of Article 1491 of the Civil Code which expressly prohibits
An action for recovery of what has been paid without just cause has been
designated as an accion in rem verso. This provision does not apply if, as
in this case, the action is proscribed by the Constitution or by the
application of the pari delicto doctrine. 68 It may be unfair and unjust to
bar the petitioner from filing an accion in rem verso over the subject
properties, or from recovering the money he paid for the said properties,
but, as Lord Mansfield stated in the early case of Holman vs. Johnson:69
"The objection that a contract is immoral or illegal as between the plaintiff
and the defendant, sounds at all times very ill in the mouth of the
defendant. It is not for his sake, however, that the objection is ever
allowed; but it is founded in general principles of policy, which the
defendant has the advantage of, contrary to the real justice, as between
him and the plaintiff."
LA BUGAAL-BLAAN vs RAMOS
December 1, 2004
FACTS:
The Petition for Prohibition and Mandamus before the Court challenges
the constitutionality of (1) Republic Act No. [RA] 7942 (The Philippine
Mining Act of 1995); (2) its Implementing Rules and Regulations (DENR
Administrative Order No. [DAO] 96-40); and (3) the FTAA dated March 30,
1995, executed by the government with Western Mining Corporation
(Philippines), Inc. (WMCP).
On January 27, 2004, the Court en banc promulgated its Decision granting
the Petition and declaring the unconstitutionality of certain provisions of
RA 7942, DAO 96-40, as well as of the entire FTAA executed between the
government and WMCP, mainly on the finding that FTAAs are service
contracts prohibited by the 1987 Constitution.
ISSUE:
Whether or nor it is a void contract.
RULING:
Section 7.9 of the WMCP FTAA has effectively given away the State's
share without anything in exchange. Moreover, it constitutes unjust
enrichment on the part of the local and foreign stockholders in WMCP,
because by the mere act of divestment, the local and foreign stockholders
get a windfall, as their share in the net mining revenues of WMCP is
automatically increased, without having to pay anything for it.Being
grossly disadvantageous to government and detrimental to the Filipino
people, as well as violative of public policy, Section 7.9 must therefore be
stricken off as invalid.
Section 7.8(e) of the WMCP FTAA likewise is invalid, since by allowing the
sums spent by government for the benefit of the contractor to be
deductible from the State's share in net mining revenues, it results in
him and that she was withdrawing all her commitments until the validity of the
sale is finally resolved. On October 31, 1996, Esperanza died intestate and was
survived by her children.
On June 27, 1997, petitioners filed a complaint against Rodrigo with the
Regional Trial Court of Northern Samar for Annulment of Sale, Quieting of Title,
Injunction and Damages.
The trial court dismissed the Complaint. The Court of Appeals held that
the sale was valid and binding insofar as Ezperanza Balites undivided share of
the property was concerned.
Hence, this Petition.
ISSUE:
Whether or not the heirs of Esperanza has the right to question the said
contract.
RULING:
The Supreme Court held that the petitioners cannot be permitted to
unmake the Contract voluntarily entered into by their predecessor, even if the
stated consideration included therein was for an unlawful purpose. The binding
force of a contract must be recognized as far as it is legally possible to do so.
Article 1345 of the Civil Code provides that the simulation of a contract
may either be absolute or relative. In absolute simulation, there is a colorable
contract but without any substance, because the parties have no intention to be
bound by it. An absolutely simulated contract is void, and the parties may
recover from each other what they may have given under the contract. On the
other hand, if the parties state a false cause in the contract to conceal their real
agreement, such a contract is relatively simulated. Here, the parties real
agreement binds them.
In the present case, the parties intended to be bound by the Contract,
even if it did not reflect the actual purchase price of the property. That the
parties intended the agreement to produce legal effect is revealed by the letter
of Esperanza Balite to respondent dated October 23, 1996 and petitioners
admission that there was a partial payment of P320,000 made on the basis of
the Deed of Absolute Sale. There was an intention to transfer the ownership of
over 10,000 square meters of the property. The Deed of Absolute Sale was
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thus held that due process requires hearing the parties who have a real legal
interests in the MPSAs (i.e. the parties who executed them) before the MPSAs
can be reviewed, or worse, struck down by the Court.
Thus, the petitioners have no right to question the assailed provisions.
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but COMELEC failed to comply with the contract due to insufficiency of funds.
Respondent filed a suit against petitioner, of which respondent judge granted the
writ of prohibitory injunction to private respondent. Upon motion for
reconsideration of both parties, respondent judge granted the writ of mandatory
injunction of respondent and denying the Omnibus Motion of petitioner. Hence,
the instant petition for certiorari filed by the Office of the Solicitor General (OSG)
in behalf of then COMELEC. PHOTOKINA filed a Comment with Motion to Dismiss,
the present petition, on two procedural grounds. First, the petition violates the
doctrine of hierarchy of courts. And second, the OSG has no authority and/or
standing to file the petition considering that the petitioners have not been
authorized by the COMELEC en banc to take such action. Without the
concurrence of at least a majority of the members of the COMELEC, neither
petitioners nor the OSG could file the petition in behalf of the COMELEC.
ISSUE:
Whether or not the Office of the Solicitor-General has no authority and/or
standing to file the petition considering that the petitioners have not been
authorized by the COMELEC en banc to take such action.
RULING:
The OSG is an independent office.
Its hands are not shackled to the
cause of its client agency. In the discharge of its task, the primordial concern of
the OSG is to see to it that the best interest of the government is upheld. This is
regardless of the fact that what it perceived as the "best interest of the
government" runs counter to its client agencys position. Endowed with a broad
perspective that spans the legal interest of virtually the entire government
officialdom, the OSG may transcend the parochial concerns of a particular client
agency and instead, promote and protect the public wealth. The Supreme
Courts ruling in Orbos vs. Civil Service Commission, is relevant, thus:
"x x x It is incumbent upon him (Solicitor General) to present to the court what
he considers would legally uphold the best interest of the government although
it may run counter to a clients position. x x x."
In the present case, it appears that after the Solicitor General studied the
issues he found merit in the cause of the petitioner based on the applicable law
and jurisprudence. Thus, it is his duty to represent the petitioner as he did by
filing this petition. He cannot be disqualified from appearing for the petitioner
even if in so doing his representation runs against the interests of the CSC.
This is not the first time that the Office of the Solicitor General has taken a
position adverse to his clients like the CSC, the National Labor Relations
Commission, among others, and even the People of the Philippines. x x x"
Hence, while petitioners stand is contrary to that of the majority of the
Commissioners, still, the OSG may represent the COMELEC as long as in its
assessment, such would be for the best interest of the government. For, indeed,
in the final analysis, the client of the OSG is not the agency but no less than the
Republic of the Philippines in whom the plenum of sovereignty resides.
Moreover, it must be emphasized that petitioners are also public officials
entitled to be represented by the OSG. Under Executive Order No. 292 and
Presidential Decree No. 478, the OSG is the lawyer of the government, its
agencies and instrumentalities, and its officials or agents. Surely, this mandate
includes the three petitioners who have been impleaded as public respondents
in Special Civil Action No. Q-01-45405.
Anent the alleged breach of the doctrine of hierarchy of courts, suffice it
to say that it is not an iron-clad dictum. On several instances where this Court
was confronted with cases of national interest and of serious implications, it
never hesitated to set aside the rule and proceed with the judicial determination
of the case. The case at bar is of similar import. It is in the interest of the State
that questions relating to government contracts be settled without delay. This is
more so when the contract, as in this case, involves the disbursement of public
funds and the modernization of our countrys election process, a project that has
long been overdue.
VOID/ INEXISTENT CONTRACTS:
DECLARATION OF NULLITY
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the controversy and whether such party has sustained or is in imminent danger of sustaining an injury as a result of the act
complained of, a standard which is distinct from the concept of real party in interest. Measured by this yardstick, the
application of the doctrine on legal standing necessarily involves a preliminary consideration of the merits of the case and is
not purely a procedural issue.
Considering the nature of the controversy and the issues raised in the cases at bar, this Court affirms its ruling that
the petitioners have the requisite legal standing. The petitioners in G.R. Nos. 155001 and 155661 are employees of service
providers operating at the existing international airports and employees of MIAA while petitioners-intervenors are service
providers with existing contracts with MIAA and they will all sustain direct injury upon the implementation of the PIATCO
Contracts. The 1997 Concession Agreement and the ARCA both provide that upon the commencement of operations at the
NAIA IPT III, NAIA Passenger Terminals I and II will cease to be used as international passenger terminals. Further, the ARCA
provides:
(d) For the purpose of an orderly transition, MIAA shall not renew any expired concession agreement
relative to any service or operation currently being undertaken at the Ninoy Aquino International Airport Passenger
Terminal I, or extend any concession agreement which may expire subsequent hereto, except to the extent that
the continuation of the existing services and operations shall lapse on or before the In-Service Date.
Beyond iota of doubt, the implementation of the PIATCO Contracts, which the petitioners and petitioners-intervenors
denounce as unconstitutional and illegal, would deprive them of their sources of livelihood.
Under settled jurisprudence, one's employment, profession, trade, or calling is a property right and is protected from
wrongful interference. It is also self evident that the petitioning service providers stand in imminent danger of losing legitimate
business investments in the event the PIATCO Contracts are upheld.
Over and above all these, constitutional and other legal issues with far-reaching economic and social implications
are embedded in the cases at bar, hence, this Court liberally granted legal standing to the petitioning members of the House of
RepresentativesFirst, at stake is the build-operate-andtransfer contract of the countrys premier international airport with a
projected capacity of 10 million passengers a year. Second, the huge amount of investment to complete the project is
estimated to be P13,000,000,000.00. Third, the primary issues posed in the cases at bar demand a discussion and
interpretation of the Constitution, the BOT Law and its implementing rules which have not been passed upon by this Court in
previous cases. They can chart the future inflow of investment under the BOT Law.
The Court notes the bid of new parties to participate in the cases at bar as respondents-intervenors, namely, (1) the
PIATCO Employees and (2) NMTAI (collectively, the New Respondents-Intervenors). After the Courts Decision, the New
Respondents-Intervenors filed separate Motions for Reconsideration-In-Intervention alleging prejudice and direct injury.
PIATCO employees claim that they have a direct and personal interest [in the controversy]... since they stand to lose their jobs
should the governments contract with PIATCO be declared null and void. NMTAI, on the other hand, represents itself as a
corporation composed of responsible tax-paying Filipino citizens with the objective of protecting and sustaining the rights of
its members to civil liberties, decent livelihood, opportunities for social advancement, and to a good, conscientious and honest
government.
The Rules of Court govern the time of filing a Motion to Intervene. Section 2, Rule 19 provides that a Motion to
Intervene should be filed before rendition of judgment.... The New Respondents-Intervenors filed their separate motions after
a decision has been promulgated in the present cases. They have not offered any worthy explanation to justify their late
intervention. Consequently, their Motions for Reconsideration-In-Intervention are denied for the rules cannot be relaxed to
await litigants who sleep on their rights. In any event, a sideglance at these late motions will show that they hoist no novel
arguments.
ISSUE:
Whether or not that petitioners lack legal personality to file the cases at bar as they are not real parties in interest
who are bound principally or subsidiarily to the PIATCO Contracts.
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RULING:
The determination of whether a person may institute an action or become a party to a suit brings to fore the
concepts of real party in interest, capacity to sue and standing to sue. To the legally discerning, these three concepts are
different although commonly directed towards ensuring that only certain parties can maintain an action. As defined in the
Rules of Court, a real party in interest is the party who stands to be benefited or injured by the judgment in the suit or the
party entitled to the avails of the suit.Capacity to sue deals with a situation where a person who may have a cause of action is
disqualified from bringing a suit under applicable law or is incompetent to bring a suit or is under some legal disability that
would prevent him from maintaining an action unless represented by a guardian ad litem.
Legal standing is relevant in the realm of public law. In certain instances, courts have allowed private parties to
institute actions challenging the validity of governmental action for violation of private rights or constitutional principles. In
these cases, courts apply the doctrine of legal standing by determining whether the party has a direct and personal interest in
Initially intending to implement the automation during the May 11, 1998
presidential elections, Comelec eventually decided against full national
implementation and limited the automation to the Autonomous Region in Muslim
Mindanao (ARMM). However, due to the failure of the machines to read correctly
some automated ballots in one town, the poll body later ordered their manual
count for the entire Province of Sulu.
Out of the 57 bidders, the BAC found MPC and the Total Information
Management Corporation (TIMC) eligible. For technical evaluation, they were
referred to the BACs Technical Working Group (TWG) and the Department of
Science and Technology (DOST).
In the May 2001 elections, the counting and canvassing of votes for both
national and local positions were also done manually, as no additional ACMs had
been acquired for that electoral exercise allegedly because of time constraints.
On October 29, 2002, Comelec adopted in its Resolution 02-0170 a
modernization program for the 2004 elections. It resolved to conduct biddings
for the three (3) phases of its Automated Election System; namely, Phase I Voter Registration and Validation System; Phase II - Automated Counting and
Canvassing System; and Phase III - Electronic Transmission.
On January 24, 2003, President Macapagal-Arroyo issued EO No. 172,
which allocated the sum of P2.5 billion to fund the AES for the May 10, 2004
elections. Upon the request of Comelec, she authorized the release of an
additional P500 million.
On January 28, 2003, the Commission issued an Invitation to Apply for
Eligibility and to Bid.
On February 17, 2003, the poll body released the Request for Proposal
(RFP) to procure the election automation machines. The Bids and Awards
Committee (BAC) of Comelec convened a pre-bid conference on February 18,
2003 and gave prospective bidders until March 10, 2003 to submit their
respective bids.
Among others, the RFP provided that bids from manufacturers, suppliers
and/or distributors forming themselves into a joint venture may be entertained,
provided that the Philippine ownership thereof shall be at least 60 percent. Joint
venture is defined in the RFP as a group of two or more manufacturers,
suppliers and/or distributors that intend to be jointly and severally responsible or
liable for a particular contract. Basically, the public bidding was to be conducted
ISSUE:
Whether or not the Commission on Elections, the agency vested with the
exclusive constitutional mandate to oversee elections, gravely abused its
discretion when, in the exercise of its administrative functions, it awarded to
MPC the contract for the second phase of the comprehensive Automated Election
System.
RULING:
Yes. There is grave abuse of discretion (1) when an act is done contrary
to the Constitution, the law or jurisprudence; or (2) when it is executed
whimsically, capriciously or arbitrarily out of malice, ill will or personal bias. In
the present case, the Commission on Elections approved the assailed Resolution
and awarded the subject Contract not only in clear violation of law and
jurisprudence, but also in reckless disregard of its own bidding rules and
procedure.
For the automation of the counting and canvassing of the ballots in the
2004 elections, Comelec awarded the Contract to Mega Pacific Consortium an
entity that had not participated in the bidding. Despite this grant, the poll body
signed the actual automation Contract with Mega Pacific eSolutions, Inc., a
company that joined the bidding but had not met the eligibility requirements.
The present controversy precisely falls within the exceptions listed as Nos.
(7) when to require exhaustion of administrative remedies would be
unreasonable; (10) when the rule does not provide a plain, speedy and adequate
remedy, and (11) when there are circumstances indicating the urgency of
judicial intervention. As already stated, Comelec itself made the exhaustion of
administrative remedies legally impossible or, at the very least, unreasonable.
Because of the foregoing violations of law and the glaring grave abuse of
discretion committed by Comelec, the Court declared null and void the assailed
Resolution and the subject Contract. The illegal, imprudent and hasty actions of
the Commission have not only desecrated legal and jurisprudential norms, but
have also cast serious doubts upon the poll bodys ability and capacity to
conduct automated elections. Truly, the pith and soul of democracy -- credible,
orderly, and peaceful elections -- has been put in jeopardy by the illegal and
gravely abusive acts of Comelec.
FACTS:
Pursuant to an Agreement And Undertaking on December 3, 1993,
petitioner Teddy G. Pabugais, in consideration of the amount of P15,487,500.00,
agreed to sell to respondent Dave P. Sahijwani a lot containing 1,239 square
meters located at Jacaranda Street, North Forbes Park, Makati, Metro Manila.
Respondent paid petitioner the amount of P600,000.00 as option/reservation fee
and the balance of P14,887,500.00 to be paid within 60 days from the execution
of the contract, simultaneous with delivery of the owners duplicate Transfer
Certificate of Title in respondents name the Deed of Absolute Sale; the
Certificate of Non-Tax Delinquency on real estate taxes and Clearance on
Payment of Association Dues. The parties further agreed that failure on the part
of respondent to pay the balance of the purchase price entitles petitioner to
forfeit the P600,000.00 option/reservation fee; while non-delivery by the latter
has yet to rule on the consignations validity and the respondent had not yet
accepted the same.
ISSUE:
Whether or not assigning the amount of P672, 900.00 to Atty. De Guzman
is prohibited.
RULING:
The amount consigned with the trial court can no longer be withdrawn by
petitioner because respondents prayer in his answer that the amount consigned
be awarded to him is equivalent to an acceptance of the consignation, which has
the effect of extinguishing petitioners obligation.
Moreover, petitioner failed to manifest his intention to comply with the
Agreement And Undertaking by delivering the necessary documents and the
lot subject of the sale to respondent in exchange for the amount deposited.
Withdrawal of the money consigned would enrich petitioner and unjustly
prejudice respondent.
The withdrawal of the amount deposited in order to pay attorneys fees to
petitioners counsel, Atty. De Guzman, Jr., violates Article 1491 of the Civil Code
which forbids lawyers from acquiring by assignment, property and rights which
are the object of any litigation in which they may take part by virtue of their
profession. Furthermore, Rule 10 of the Canons of Professional Ethics provides
that the lawyer should not purchase any interest in the subject matter of the
litigation which he is conducting. The assailed transaction falls within the
prohibition because the Deed assigning the amount of P672,900.00 to Atty. De
Guzman, Jr., as part of his attorneys fees was executed during the pendency of
this case with the Court of Appeals. In his Motion to Intervene, Atty. De Guzman,
Jr., not only asserted ownership over said amount, but likewise prayed that the
same be released to him. That petitioner knowingly and voluntarily assigned the
subject amount to his counsel did not remove their agreement within the ambit
of the prohibitory provisions. To grant the withdrawal would be to sanction a
void contract.
WHEREFORE, in view of all the foregoing, the instant petition for review is
DENIED.
Whether or not the petitioner has the right to be compensated for the
public works housing project by virtue of the implied contract which was verbally
executed.
RULING:
YES, the petitioner has the right to be compensated for the additional
construction applying the principle of quantum meruit. Notably, the peculiar
circumstances present in the instant case buttress petitioners claim for
compensation for the additional construction, despite the illegality and void
nature of the implied contracts forged between the MPWH and petitioners. In
this matter, it is bear stressing that, the illegality of the subject contracts
proceeds from the express declaration or prohibition of the law, and not for any
intrinsic illegality. Stated differently, the subject contracts are not illegal per se.
The Court cannot sanction an injustice so patent on its face and allow
itself to be an instrument in the perpetration thereof. Justice and equity
demands that the States cloak of invincibility against suit be shred in this
particular case and that the petitioners-contractors be duly compensated, on the
basis of quantum meruit, for the construction done on the public housing project.
Petition is granted. Accordingly, the Commission on Audit is hereby
directed to determine as ascertain with dispatch the total compensation due
petitioners for the additional constructions on the housing project and to allow
payment thereof.
of his late wife by canceling the stock certificate in his name and issuing, in lieu
thereof, a new stock certificate in favor of his children. The Realty however,
refused.
Meanwhile, fifteen years later, Cecilia Uy and Miguel Uy filed a complaint
with the SEC for issuance of shares of stocks to the rightful owners, nullification
of shares of stock, reconveyance of the property impressed with trust and
damages. The petitioners moved to dismiss the complaint. The SEC thereafter
held that the Youngs were not shown to have been stockholders stock holders of
Gochan Realty to confer them with the legal capacity to bring and maintain their
action. That is why the case cannot be considered as an intra-corporate
controversy within the jurisdiction of the Commission. The Court of Appeals, on
appeal, held that the SEC had no jurisdiction over the case as far as the heirs of
Alice Gochan were concerned; however, it upheld the capacity of Cecilia Gochan
Uy and her spouse, Miguel Uy.
ISSUE:
Whether or not the spouses Uy have personality to file the suit before the
Security and Exchange Commission.
RULING:
YES, the spouses have the personality. As a general rule, the jurisdiction
of a court or tribunal over the subject matter is determined by the allegation in
the complaint. The spouse averment in the complaint that the purchase of her
stocks by the corporation was null and void ab initio was deemed admitted. It is
elementary that a void contract produces no effect either against or in favor of
anyone; it cannot create, modify or extinguish the juridical relations to where it
attaches. Thus, Cecilia remains a stockholder of the corporation in view of the
nullity of the contract of sale. Although she was no longer registered as a stock
holder in the corporate record, the admitted allegation in the complaint made
her still a bona fide stock holder of the corporation.
Eligio Herrera Sr. was the owner of 2 parcels of land located in Cainta,
Rizal. On January 3, 1991, petitioner Julian Francisco bought from Herrera the
first parcel of land covered by tax Declaration No. 01-00495 for P1M pain in
installments from November 30, 1990 to August 10, 1991. Eventually, Francisco
bought the second parcel of land covered by TD No. 01-00497 for P750T.
Thereafter, the children of Eligio Sr. tried to negotiate with petitioner to
increase the purchase price contending that it was grossly inadequate. When
petitioner refused, respondent Pastor Herrera, son of Eligio, filed a complaint for
annulment of sale. He claimed ownership over the second parcel of land
allegedly by virtue of a sale in his favor since 1973. Moreover, he claimed that
the first lot was subject to co-ownership of the surviving heirs of his parents
before the alleged sale to Francisco. Ultimately, Pastor alleged that the sale of
the 2 parcels of land was null and void on the ground that at the time of sale,
Eligio Sr. was already incapacitated to give consent to a contract because of
Senile Dementia which is characterized by deteriorating mental and physical
condition including loss of memory.
At variance, Francisco alleged that respondent was estopped from
assailing the sale of the lots because respondent had effectively ratified both
sales by receiving the consideration offered in each transaction.
On November 14, 1994, the trial court declared the Deeds of Sale null and
void. Francisco was ordered to return the lots in question including all
improvements. Concomitantly, Herrera was ordered to return the purchase price
of the lots sold.
ISSUE:
Whether or not the assailed contracts of sale are void or merely voidable
and hence capable of being ratified.
RULING:
YES, the Supreme Court ruled that the contracts are merely voidable or
annullable. Note that Article 1390 of the Civil Code specifically provides that
when an insane or demented person enters into a contract, the legal effect is
that the contract is voidable, not void or inexistent per se. Therefore, the
contracts of sale entered into by Eligio Sr. are valid and binding unless annulled
through a proper action filed in court seasonably. Furthermore, the questioned
annullable contract was rendered perfectly valid in this case because of
respondents acts of ratification. He actually received the payments on behalf of
his father further manifesting that he was agreeable to the contracts. Similarly,
respondents previous negotiation for an increase in the price bolster that indeed
there was ratification of what he himself questions as a void contract.
April 28, 1989 Carmen Ozamiz was already ailing and not in full possession of
her mental faculties; and that her properties having been placed in
administration, she was in effect incapacitated to contract with petitioners.
Trial on the merits ensued and the lower court ruled in favor of
petitioners. The appellate court reversed the factual findings of the trial court
and ruled that the Deed of Absolute Sale dated April 28, 1989 was a simulated
contract since the petitioners failed to prove that the consideration was actually
paid, and, furthermore, that at the time of the execution of the contract the
mental faculties of Carmen Ozamiz were already seriously impaired. Thus, the
appellate court declared that the Deed of Absolute Sale of April 28, 1989 is null
and void. It ordered the cancellation of the certificates of title issued in the
petitioners names and directed the issuance of new certificates of title in favor
of Carmen Ozamiz or her estate. The motion for reconsideration was denied.
ISSUE:
Whether or not the CA erred in ruling that the Deed of Absolute Sale dated
on April 28, 1989 was a Simulated Contract.
RULING:
YES.
Simulation is defined as "the declaration of a fictitious will,
deliberately made by agreement of the parties, in order to produce, for the
purposes of deception, the appearances of a juridical act which does not exist or
is different from what that which was really executed." The requisites of
simulation are: (a) an outward declaration of will different from the will of the
parties; (b) the false appearance must have been intended by mutual
agreement; and (c) the purpose is to deceive third persons. None of these were
clearly shown to exist in the case at bar.
Contrary to the erroneous conclusions of the appellate court, a simulated
contract cannot be inferred from the mere non-production of the checks. It was
not the burden of the petitioners to prove so. It is significant to note that the
Deed of Absolute Sale dated April 28, 1989 is a notarized document duly
acknowledged before a notary public.
As such, it has in its favor the
presumption of regularity, and it carries the evidentiary weight conferred upon it
with respect to its due execution.
It is admissible in evidence without further proof of its authenticity and is
entitled to full faith and credit upon its face.
Payment is not merely presumed from the fact that the notarized Deed of
Absolute Sale dated April 28, 1989 has gone through the regular procedure as
evidenced by the transfer certificates of title issued in petitioners names by the
Register of Deeds.
Considering that Carmen Ozamiz acknowledged, on the face of the
notarized deed, that she received the consideration at One Million Forty
Thousand Pesos (P1,040,000.00), the appellate court should not have placed too
much emphasis on the checks, the presentation of which is not really necessary.
Besides, the burden to prove alleged non-payment of the consideration of the
sale was on the respondents, not on the petitioners. Also, between its conclusion
based on inconsistent oral testimonies and a duly notarized document that
enjoys presumption of regularity, the appellate court should have given more
weight to the latter. Spoken words could be notoriously unreliable as against a
written document that speaks a uniform language.
It has been held that a person is not incapacitated to contract merely
because of advanced years or by reason of physical infirmities. Only when such
age or infirmities impair her mental faculties to such extent as to prevent her
from properly, intelligently, and fairly protecting her property rights, is she
considered incapacitated. The respondents utterly failed to show adequate proof
that at the time of the sale on April 28, 1989 Carmen Ozamiz had allegedly lost
control of her mental faculties.
A person is presumed to be of sound mind at any particular time and the
condition is presumed to continue to exist, in the absence of proof to the
contrary. Competency and freedom from undue influence, shown to have existed
in the other acts done or contracts executed, are presumed to continue until the
contrary is shown.
WHEREFORE, the instant petition is hereby GRANTED and the assailed
Decision and Resolution of the Court of Appeals are hereby REVERSED and SET
ASIDE. The Decision dated September 23, 1992 of the Regional Trial Court of
Cebu City, Branch 6, in Civil Case No. CEB-10766 is REINSTATED. No
pronouncement as to costs.
NATURAL OBLIGATIONS: KINDS (1424-1430)
1.
2.
before the expiration of the one-year redemption period, the bank gave her a
statement showing that she should pay P25,491.96 for the redemption of the
property on August 23. No redemption was made on that date. On September
3, 1973 the bank consolidated its ownership over the property. Remolado's title
was cancelled. A new title, TCT No. 418737, was issued to the bank on
September 5. On September 24, 1973, the bank gave Remolado up to ten
o'clock in the morning of October 31, 1973, or 37 days, within which to
repurchase (not redeem since the period of redemption had expired) the
property. The bank did not specify the price.
On October 26, 1973 Remolado and her daughter, Patrocinio Gomez,
promised to pay the bank P33,000 on October 31 for the repurchase of the
property. Contrary to her promise, Remolado did not repurchase the property on
October 31. Five days later, or on November 5, Remolado and her daughter
delivered P33,000 cash to the bank's assistant manager as repurchase price.
The amount was returned to them the next day, November 6, 1973. At that
time, the bank was no longer willing to allow the repurchase. Remolado filed an
action to compel the bank to reconvey the property to her for P25,491.96 plus
interest and other charges and to pay P35,000 as damages. The repurchase
price was not consigned. A notice of lis pendens was registered. On November
15, the bank sold the property to Pilar Aysip for P50,000. A new title was issued
to Aysip with an annotation of lis pendens
The trial court ordered the bank to return the property to Remolado upon
payment of the redemption price of P25,491.96 plus interest and other bank
charges and to pay her P15,000 as damages. The Appellate Court affirmed the
judgment.
ISSUE:
Whether or not the appellate court erred in reconveying the disputed
property to Remolado.
RULING:
Yes. We hold that the trial court and the Appellate Court erred in ordering
the reconveyance of the property. There was no binding agreement for its
repurchase. Even on the assumption that the bank should be bound by its
commitment to allow repurchase on or before October 31, 1973, still Remolado
had no cause of action because she did not repurchase the property on that
date.
Justice is done according to law. As a rule, equity follows the law. There
may be a moral obligation, often regarded as an equitable consideration
(meaning compassion), but if there is no enforceable legal duty, the action must
fail although the disadvantaged party deserves commiseration or sympathy.
The choice between what is legally just and what is morally just, when these two
options do not coincide, is explained by Justice Moreland in Vales vs. Villa, 35
Phil. 769, 788 where he said: "Courts operate not because one person has been
defeated or overcome by another, but because he has been defeated or
overcome illegally. Men may do foolish things, make ridiculous contracts, use
miserable judgment, and lose money by them - indeed, all they have in the
world; but not for that alone can the law intervene and restore. There must be,
in addition, a violation of law, the commission of what the law knows as an
actionable wrong before the courts are authorized to lay hold of the situation
and remedy it."
In the instant case, the bank acted within its legal rights when it refused
to give Remolado any extension to repurchase after October 31, 1973. It had
given her about two years to liquidate her obligation. She failed to do so. Thus,
the Appellate Court's judgment is reversed and set aside.
house, the swimming pool, and the fence surrounding the properties on the
understanding that the petitioners would merely hold title in trust for the
respondents beneficial interest.
Petitioner Huangs leased the property to Deltron Corporation for its official
quarters without the permission of the respondents. But later, the lessees
prohibited the use of the swimming pool by the respondents, and the Huangs
began challenging the respondents ownership of the property.
Thus,
respondents filed a complaint before the trial court for the nullification of the
deed of sale to the petitioners and the quieting of title of Lot 20.
The trial court found that the respondents were the real owners of the Lot
20 and therefore ordered the petitioners to vacate the property and to remit to
the respondents the rentals earned from Lot 20. The Court of Appeals affirmed
the lower courts decision. Hence, the instant recourse.
ISSUE:
Whether or not petitioners can claim ownership of the property registered
in their name but for which was paid by the respondents.
FACTS:
Private respondents Dolores and Aniceto Sandoval wanted to buy two lots
in Dasmarinas Village, Makati but was allowed to buy only one lot per policy of
the subdivision owner. Private respondents bought Lot 21 and registered it in
their name. Respondents also bought Lot 20 but the deed of sale was in the
name of petitioner Ricardo Huang and registered in his name. Respondents
constructed a house on Lot 21 while petitioners were allowed by respondents to
build a house on Lot 20. Petitioners were also allowed to mortgage the Lot 20 to
the SSS to secure a loan. Respondents actually financed the construction of the
RULING:
No. Respondent Sandoval provided the money for the purchase of Lot 20
but the corresponding deed of sale and transfer certificate of title were placed in
the name of petitioner Huang. Through this transaction, a resulting trust was
created. Petitioner became the trustee of Lot 20 and its improvements for the
benefit of respondent as owner. Article 1448 of the New Civil Code provides that
there is an implied trust when property is sold and the legal estate is granted to
one party but the price is paid by another for the purpose of having the
beneficial interest for the property. A resulting trust arises because of the
presumption the he who pays for a thing intends a beneficial therein for himself.
Given these provisions of law, petitioner was only a trustee of the property
in question for the benefit of the respondent who is the real owner. Therefore,
petitioner cannot claim ownership of the property even when it was registered in
his name. Thus, petition is denied. The decision of the trial court as sustained
by the Court of Appeals is affirmed, with costs against petitioners.
Sometime in December, 1982, Benjamin discovered that Lot No. 1700 was
registered in the name of his brother, private respondent. Believing that the lot
was co-owned by all the children of Eulogio Esconde, Benjamin demanded his
share of the lot from private respondent. However, private respondent asserted
exclusive ownership thereof pursuant to the deed of extrajudicial partition and,
in 1985 constructed a "buho" fence to segregate Lot No. 1700 from Lot No.
1698-B.
Hence, on June 29, 1987, petitioners herein filed a complaint before the
Regional Trial Court of Bataan against private respondent for the annulment of
TCT No. 394. They further prayed that private respondent be directed to enter
into a partition agreement with them, and for damages (Civil Case No. 5552).
In its decision of July 31, 1989, the lower court dismissed the complaint
and the counterclaims. It found that the deed of extrajudicial partition was an
unenforceable contract as far as Lot No. 1700 was concerned because petitioner
Catalina Buan vda. de Esconde, as mother and judicial guardian of her children,
exceeded her authority as such in "donating" the lot to private respondent or
waiving the rights thereto of Benjamin and Elenita in favor of private respondent.
Because of the unenforceability of the deed, a trust relationship was created
with private respondent as trustee and Benjamin and Elenita as beneficiaries
However, the lower court ruled that the action had been barred by both
prescription and laches. Lot No. 1700 having been registered in the name of
private respondent on February 11, 1947, the action to annul such title
prescribed within ten (10) years on February 11, 1957 or more than thirty (30)
years before the action was filed on June 29, 1987.
Thus, even if Art. 1963 of the old Civil Code providing for a 30-year
prescriptive period for real actions over immovable properties were to be
applied, still, the action would have prescribed on February 11, 1977. Hence,
petitioners elevated the case to the Court of Appeals which affirmed the lower
court's decision. The appellate court held that the deed of extrajudicial partition
established "an implied trust arising from the mistake of the judicial guardian in
favoring one heir by giving him a bigger share in the hereditary property." It
stressed that "an action for reconveyance based on implied or constructive
trust" prescribes in ten (10) years "counted from the registration of the property
in the sole name of the co-heir."
ISSUE:
Whether or not the action was already barred with laches and
prescription.
RULING:
Trust is the legal relationship between one person having an equitable
ownership in property and another person owning the legal title to such
property, the equitable ownership of the former entitling him to the performance
of certain duties and the exercise of certain powers by the latter. Trusts are
either express or implied. An express trust is created by the direct and positive
acts of the parties, by some writing or deed or will or by words evidencing an
intention to create a trust. No particular words are required for the creation of
an express trust, it being sufficient that a trust is clearly intended.
On the other hand, implied trusts are those which, without being
expressed, are deducible from the nature of the transaction as matters of intent
or which are superinduced on the transaction by operation of law as matters of
equity, independently of the particular intention of the parties. In turn, implied
trusts are either resulting or constructive trusts. These two are differentiated
from each other as follows:
Resulting trusts are based on the equitable doctrine that valuable
consideration and not legal title determines the equitable title or interest and are
presumed always to have been contemplated by the parties. They arise from the
nature or circumstances of the consideration involved in a transaction whereby
one person thereby becomes invested with legal title but is obligated in equity to
hold his legal title for the benefit of another. On the other hand, constructive
trusts are created by the construction of equity in order to satisfy the demands
of justice and prevent unjust enrichment. They arise contrary to intention
against one who, by fraud, duress or abuse of confidence, obtains or holds the
legal right to property which he ought not, in equity and good conscience, to
hold.
While the deed of extrajudicial partition and the registration of Lot No.
1700 occurred in 1947 when the Code of Civil Procedure or Act No. 190 was yet
in force, the Supreme Court held that the trial court correctly applied Article
1456.
A deeper analysis of Article 1456 reveals that it is not a trust in the
technical sense for in a typical trust, confidence is reposed in one person who is
named a trustee for the benefit of another who is called the cestui que trust,
respecting property which is held by the trustee for the benefit of the cestui que
trust. A constructive trust, unlike an express trust, does not emanate from, or
therein, can only be brought within ten years after the cause of such action
accrues.
Thus, in Heirs of Jose Olviga v. Court of Appeals, the Court ruled that the
ten-year prescriptive period for an action for reconveyance of real property
based on implied or constructive trust which is counted from the date of
registration of the property, applies when the plaintiff is not in possession of the
contested property. In this case, private respondent, not petitioners who
instituted the action, is in actual possession of Lot No. 1700. Having filed their
action only on June 29, 1987, petitioners' action has been barred by prescription.
Not only that. Laches has also circumscribed the action for, whether the implied
trust is constructive or resulting, this doctrine applies. 23 As regards
constructive implied trusts, the Court held in Diaz, et al. v. Gorricho and Aguado
that:
. . . in constructive trusts (that are imposed by law), there is neither promise nor
fiduciary relation; the so-called trustee does not recognize any trust and has no
intent to hold for the beneficiary; therefore, the latter is not justified in delaying
action to recover his property. It is his fault if he delays; hence, he may be
estopped by his own laches.
It is tragic that a land dispute has once again driven a wedge between
brothers. However, credit must be given to petitioner Benjamin Esconde for
resorting to all means possible in arriving at a settlement between him and his
brother in accordance with Article 222 of the Civil Code. Verbally and in two
letters, he demanded that private respondent give him and his sisters their
share in Lot No. 1700. He even reported the matter to the barangay authorities
for which three conferences were held. Unfortunately, his efforts droved
fruitless. Even the action he brought before the court was filed too late.
On the other hand, private respondent should not be unjustly enriched by
the improvements introduced by his brother on Lot No. 1700 which he himself
had tolerated. He is obliged by law to indemnify his brother, petitioner Benjamin
Esconde, for whatever expenses the latter had incurred.
KINDS OF TRUSTS: EXPRESS TRUST VS. IMPLIED TRUST
JOVITA YAP ANCOG, and GREGORIO YAP, JR., petitioners,
VS. COURT OF APPEALS, ROSARIO DIEZ, and CARIDAD YAP, respondents
G.R. No. 112260
June 30, 1997
FACTS:
The land, with improvements thereon, was formerly the conjugal property of the spouses Gregorio Yap and Rosario
Diez. In 1946, Gregorio Yap died, leaving his wife, private respondent Rosario Diez, and children, petitioners Jovita Yap Ancog
and Gregorio Yap, Jr., and private respondent Caridad Yap as his heirs. In 1954 and again 1958, Rosario Diez obtained loans
from the Bank of Calape, secured by a mortgage on the disputed land, which was annotated on its Original Certificate of Title
No. 622. When Rosario Diez applied again for a loan to the bank, offering the land in question as security, the banks lawyer,
Atty. Narciso de la Serna, suggested that she submit an extrajudicial settlement covering the disputed land as a means of
facilitating the approval of her application. The suggestion was accepted and on April 4, 1961, Atty. de la Serna prepared an
extrajudicial settlement, which the heirs, with the exception of petitioner Gregorio Yap, Jr., then only 15 years old, signed. As a
result, OCT No. 622 was cancelled and Transfer Certificate of Title No. 3447 (T-2411) was issued on April 13, 1961. On April 14,
1961, upon the execution of a real estate mortgage on the land, the loan was approved by the bank. Rosario Diez exercised
rights of ownership over the land. In 1985, she brought an ejectment suit against petitioner Jovita Yap Ancogs husband and
son to evict them from the ground floor of the house built on the land for failure to pay rent. Shortly thereafter, petitioner
Jovita Ancog learned that private respondent Rosario Diez had offered the land for sale.Petitioner Ancog immediately informed
her younger brother, petitioner Gregorio Yap, Jr., who was living in Davao, of their mothers plan to sell the land. On June 6,
1985, they filed this action for partition in the Regional Trial Court of Bohol where it was docketed as Civil Case No. 3094. As
private respondent Caridad Yap was unwilling to join in the action against their mother, Caridad was impleaded as a defendant.
Petitioners alleged that the extrajudicial instrument was simulated and therefore void. They claimed that in signing
the instrument they did not really intend to convey their interests in the property to their mother, but only to enable her to
obtain a loan on the security of the land to cover expenses for Caridads school fees and for household repairs. The trial court
rendered judgment dismissing petitioners action. It dismissed petitioners claim that the extrajudicial settlement was
simulated and held it was voluntarily signed by the parties. Observing that even without the need of having title in her name
Rosario Diez was able to obtain a loan using the land in question as collateral, the court held that the extrajudicial settlement
could not have been simulated for the purpose of enabling her to obtain another loan. Petitioners failed to overcome the
presumptive validity of the extrajudicial settlement as a public instrument.
The court instead found that petitioner Ancog had waived her right to the land, as shown by the fact that on February
28, 1975, petitioners husband, Ildefonso Ancog, leased the property from private respondent Diez. Furthermore, when the
spouses Ancog applied for a loan to the Development Bank of the Philippines using the land in question as collateral, they
accepted an appointment from Rosario Diez as the latters attorney-in-fact.
The court also found that the action for
partition had already prescribed.On appeal, the Court of Appeals upheld the validity of the extrajudicial settlement and
sustained the trial courts dismissal of the case. The appellate court emphasized that the extrajudicial settlement could not
have been simulated in order to obtain a loan, as the new loan was merely in addition to a previous one which private
respondent Diez had been able to obtain even without an extrajudicial settlement. Neither did petitioners adduce evidence to
prove that an extrajudicial settlement was indeed required in order to obtain the additional loan. The appellate court held that
considering petitioner Jovita Yap Ancogs educational attainment (Master of Arts and Bachelor of Laws), it was improbable that
she would sign the settlement if she did not mean it to be such. Hence, this petition.
ISSUE:
Whether or not the appellate court erred in ruling that petitioner Gregorio Yap, Jr., one of the co-owners of the
litigated property, had lost his rights to the property through prescription or laches.
RULING:
In this case, the trial court and the Court of Appeals found no evidence to show that the extrajudicial settlement was
required to enable private respondent Rosario Diez to obtain a loan from the Bank of Calape. Petitioners merely claimed that
the extrajudicial settlement was demanded by the bank.To the contrary, that the heirs (Jovita Yap Ancog and Caridad Yap)
meant the extrajudicial settlement to be fully effective is shown by the fact that Rosario Diez performed acts of dominion over
the entire land, beginning with its registration, without any objection from them. Instead, petitioner Jovita Ancog agreed to
lease the land from her mother, private respondent Rosario Diez, and accepted from her a special power of attorney to use the
land in question as collateral for a loan she was applying from the DBP. Indeed, it was private respondent Diez who paid the
loan of the Ancogs in order to secure the release of the property from mortgage Petitioner Jovita Yap Ancog contends that she
could not have waived her share in the land because she is landless. For that matter, private respondent Caridad Yap is also
landless, but she signed the agreement. She testified that she did so out of filial devotion to her mother. Thus, what the record
of this case reveals is the intention of Jovita Ancog and Caridad Yap to cede their interest in the land to their mother Rosario
Diez. It is immaterial that they had been initially motivated by a desire to acquire a loan. Under Art. 1082 of the Civil Code,
every act which is intended to put an end to indivision among co-heirs is deemed to be a partition even though it should
purport to be a sale, an exchange, or any other transaction.
The Supreme Court held that the Court of Appeals erred in ruling that the claim of petitioner Gregorio Yap, Jr. was
barred by laches. In accordance with Rule 74, 1 of the Rules of Court, as he did not take part in the partition, he is not bound
by the settlement. It is uncontroverted that, at the time the extrajudicial settlement was executed, Gregorio Yap, Jr. was a
minor. For this reason, he was not included or even informed of the partition. Instead, the registration of the land in Rosario
Diezs name created an implied trust in his favor by analogy to Art. 1451 of the Civil Code, which provides: When land passes
by succession to any person and he causes the legal title to be put in the name of another, a trust is established by implication
of law for the benefit of the true owner. In the case of OLaco v. Co Cho Chit, Art. 1451 was held as creating a resulting trust,
which is founded on the presumed intention of the parties. As a general rule, it arises where such may be reasonably
presumed to be the intention of the parties, as determined from the facts and circumstances existing at the time of the
transaction out of which it is sought to be established. In this case, the records disclose that the intention of the parties to the
extrajudicial settlement was to establish a trust in favor of petitioner Yap, Jr. to the extent of his share. Rosario Diez testified
that she did not claim the entire property, while Atty. de la Serna added that the partition only involved the shares of the three
participants.
A cestui que trust may make a claim under a resulting trust within 10 years from the time the trust is repudiated.
Although the registration of the land in private respondent Diezs name operated as a constructive notice of her claim of
ownership, it cannot be taken as an act of repudiation adverse to petitioner Gregorio Yap, Jr.s claim, whose share in the
property was precisely not included by the parties in the partition. Indeed, it has not been shown whether he had been
informed of her exclusive claim over the entire property before 1985 when he was notified by petitioner Jovita Yap Ancog of
their mothers plan to sell the property.This Court has ruled that for prescription to run in favor of the trustee, the trust must be
repudiated by unequivocal acts made known to the cestui que trust and proved by clear and conclusive evidence.
Furthermore, the rule that the prescriptive period should be counted from the date of issuance of the Torrens certificate of title
applies only to the remedy of reconveyance under the Property Registration Decree. Since the action brought by petitioner Yap
to claim his share was brought shortly after he was informed by Jovita Ancog of their mothers effort to sell the property,
Gregorio Yap, Jr.s claim cannot be considered barred either by prescription or by laches.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the MODIFICATION that this case is REMANDED
to the Regional Trial Court for the determination of the claim of petitioner Gregorio Yap, Jr.
Rodolfo Morales passed away. The trial court allowed his substitution by his
heirs, Roda, Rosalia, Cesar and Priscila, all surnamed Morales. The trial court
rendered its decision in favor of plaintiffs, private respondents herein.
Dissatisfied with the trial court's decision, defendants heirs of Rodolfo Morales
and intervenor Priscila Morales, petitioners herein, appealed to the Court of
Appeals which in turn affirmed the decision.
ISSUE:
Whether or not Celso Avelino purchase the land in question from the
Mendiolas as a mere trustee for his parents and siblings.
RULING:
Trusts are either express or implied.
Express trusts are created by the intention of the trustor or of the parties,
while implied trusts come into being by operation of law, either through
implication of an intention to create a trust as a matter of law or through the
imposition of the trust irrespective of, and even contrary to, any such intention.
In turn, implied trusts are either resulting or constructive trusts.
Resulting trusts are based on the equitable doctrine that valuable
consideration and not legal title determines the equitable title or interest and are
presumed always to have been contemplated by the parties. They arise from
the nature or circumstances of the consideration involved in a transaction
whereby one person thereby becomes invested with legal title but is obligated in
equity to hold his legal title for the benefit of another.
On the other hand, constructive trusts are created by the construction of
equity in order to satisfy the demands of justice and prevent unjust enrichment.
They arise contrary to intention against one who, by fraud, duress or abuse of
confidence, obtains or holds the legal right to property which he ought not, in
equity and good conscience, to hold.
In the instant case, petitioners' theory is that Rosendo Avelino owned the
money for the purchase of the property and he requested Celso, his son, to buy
the property allegedly in trust for the former. The fact remains, however, that
title to the property was conveyed to Celso. Accordingly, the situation is
governed by or falls within the exception under the third sentence of Article
1448, However, if the person to whom the title is conveyed is a child, legitimate
or illegitimate, of the one paying the price of the sale, no trust is implied by law,
it being disputably presumed that there is a gift in favor of the child.
ISSUE:
Whether respondent may be ejected from the leased premises for nonpayment of rent.
RULING:
No, the Supreme Court ruled that the parties deliberately circumvented
the real estate investment limit under Sections 25(a) and 34 of the General
Banking Act. Being in pari delicto, they should suffer the consequences of their
deception by denying them any affirmative relief. Equity dictates that Tala
should not be allowed to collect rent from the Bank. Both the Bank and Tala
participated in the deceptive creation of a trust to circumvent the real estate
investment limit under Sections 25(a) and 34 of the General Banking Act.
Upholding Talas right to collect rent from the period during which the Bank was
arbitrarily closed would allow Tala to benefit from the illegal warehousing
agreement. This would result in the application of the Banks advance rentals
covering the eleventh to the twentieth years of the lease, to the rentals due for
the period during which the Bank was arbitrarily closed. With the advance
rentals already used up, and the Bank having stopped payment of the rent on
the thirteenth year of the lease or in April 1994, rentals would be due Tala from
the time the Bank stopped paying rent in April 1994 up to the expiration of the
lease period. The Bank should not be allowed to dispute the sale of its lands to
Tala nor should Tala be allowed to further collect rent from the Bank. The clean
hands doctrine will not allow the creation or the use of a juridical relation such as
a trust to subvert, directly or indirectly, the law. Neither the Bank nor Tala came
to court with clean hands; neither will obtain relief from the court as one who
seeks equity and justice must come to court with clean hands
Thus, the petition is DENIED. The challenged Decision of the Court of
Appeals dated July 23, 1999 and its Resolution dated May 16, 2000, are
REVERSED and SET ASIDE.
IMPLIED TRUSTS:
PRESCRIPTIVE PERIODS OF ACTION
ENFORCE IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE
1.
2.
3.
4.
5.
6.
TO
the
was
the
for
was
Krizia Katrina.
In the settlement of his estate, petitioner was appointed
administratrix of her late husbands intestate estate.
On November 4, 1992, petitioner filed a motion for leave to sell or
mortgage estate property in order to generate funds for the payment of
deficiency estate taxes in the sum of P4,714,560.00.
Privite respondent Alejandro Ty then filed two complaints for the recovery
of the above-mentioned property, praying for the declaration of nullity of the
deed of absolute sale of the shares of stock executed by private respondent in
favor of the deceased Alexander, praying for the recovery of the pieces of
property that were placed in the name of deceased Alexander, they were
acquired through private-respondents money, without any cause or
consideration from deceased Alexander.
The motions to dismiss were denied. Petitioner then filed petitions for
certiorari in the Courts of Appeals, which were also dismissed for lack of merit.
Thus, the present petitions now before the Court.
ISSUE:
Whether or not an express trust was created by private respondent when
he transferred the property to his son.
RULING:
Private respondent contends that the pieces of property were transferred
in the name of the deceased Alexander for the purpose of taking care of the
property for him and his siblings. Such transfer having been effected without
cause of consideration, a resulting trust was created.
WHEREFORE, the petition for certiorari in G.R. No. 112872 is DISMISSED,
having failed to show that grave abuse of discretion was committed in declaring
that the regional trial court had jurisdiction over the case. The petition for
review on certiorari in G.R. 114672 is DENIED, having found no reversible error
was committed.
IMPLIED TRUSTS:
PRESCRIPTIVE PERIODS OF ACTION TO ENFORCE
IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE
VDA. DE RETUERTO VS. BARZ
372 SCRA 712
FACTS:
Petitioners are the heirs of Panfilo Retuerto, while respondents are the
heirs of Pedro Barz who is the sole heir of Juana Perez Barz. Juana Perez Barz
was the original owner of Lot No. 896 having an area of 13,160 square meters.
Before her death on April 16, 1929, Juana Perez executed a Deed of Absolute
Sale in favor of Panfilo Retuerto over a parcel of land, identified as Lot No. 896-A,
a subdivision of Lot No. 896, with an approximate area of 2,505 square meters.
On July 22, 1940, the Court issued an Order directing the Land Registration
Commission for the issuance of the appropriate Decree in favor of Panfilo
Retuerto over the said parcel of land. However, no such Decree was issued as
directed by the Court because, by December 8, 1941, the Second World War
ensued in the Pacific. However, Panfilo failed to secure the appropriate decree
after the war.
Sometime in 1966, Pedro Barz, as the sole heir of Juana Perez, filed and
application, with the then CFI of Cebu for the confirmation of his title over Lot
896 which included the Lot sold to Panfilo Retuerto. The Court ruled in his favor
declaring him the lawful owner of the said property, and thus Original Certificate
of Title No. 521 was issued. Lot No. 896-A however was continuously occupied
by the petitioners. Thus, a confrontation arose and as a result respondents filed
an action on September 5, 1989 for Quieting of Title, Damages and Attorneys
Fees. In their answer, petitioners claimed that they were the owners of a
portion of the lot which was registered under the name of Pedro Barz and
therefore the issuance of the Original Certificate of Title in Pedro Barzs name did
not vest ownership but rather it merely constituted him as a trustee under a
constructive trust. Petitioners further contend that Pedro Barz misrepresented
with the land registration court that he inherited the whole lot thereby
constituting fraud on his part.
ISSUE:
Whether or not petitioners defense is tenable.
RULING:
NO, the contention is bereft of merit. Constructive trusts are created in
equity to prevent unjust enrichment, arising against one who, by fraud, duress or
abuse of confidence, obtains or holds the legal right to property which he ought
not, in equity and good conscience, to hold. Petitioners failed to substantiate
their allegation that their predecessor-in-interest had acquired any legal right to
the property subject of the present controversy. Nor had they adduced evidence
to show that the certificate of title of Pedro Barz was obtained through fraud.
Even assuming arguendo that Pedro Barz acquired title to the property
through mistake or fraud, petitioners are nonetheless barred from filing their
claim of ownership. An action for reconveyance based on an implied or
constructive trust prescribes within ten years from the time of its creation or
upon the alleged fraudulent registration of the property. Since registration of
real property is considered a constructive notice to all persons, then the ten-year
prescriptive period is reckoned from the time of such registering, filing or
entering. Thus, petitioners should have filed an action for reconveyance within
ten years from the issuance of OCT No. 521 in November 16, 1968. This, they
failed to do so.
IMPLIED TRUSTS:
PRESCRIPTIVE PERIODS OF ACTION TO ENFORCE
IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE
CHIAO LIONG TAN VS. COURT OF APPEALS
228 SCRA 75
FACTS:
Petitioner Chiao Liong Tan claims to be the owner of a motor vehicle,
particularly described as Isuzu Elf van, 1976 Model that he purchased in March
1987. As owner thereof, petitioner says he has been in possession, enjoyment
and utilization of the said motor vehicle until his older brother, Tan Ban Yong,
the private respondent, took it from him.
Petitioner relies principally on the fact that the van is registered in his
name under Certificate of Registration. He claims in his testimony before the
trial court that the said motor vehicle was purchased from Balintawak Isuzu
Motor Center for a price of over P100, 000. 00; that he sent his brother to pay for
the van and the receipt fro payment was placed in his name because it was his
money that was used to pay for the vehicle; that he allowed his brother to use
the van because the latter was working for his company, the CLT Industries; and
that his brother later refused to return the van to him and appropriated the
same for himself.
On the other hand, private respondent testified that CLT Industries is a
family business that was placed in petitioners name because at that time he
was then leaving for the United Stated and petitioner remaining Filipino in the
family residing in the Philippines. When the family business needed a vehicle in
1987 for use in the deliver of machinery to its customers, he asked petitioner to
look for a vehicle and gave him the amount of P5,000.00 to be deposited as
down payment for the van, which would be available in about a month. After a
month, he himself paid the whole price out of a loan of P140, 000.00 from his
friend Tan Pit Sin. Nevertheless, respondent allowed the registration of the
vehicle in petitioners name. It was also their understanding that he would keep
the van for himself because CLT Industries was not in a position to pay him.
Hence, from the time of the purchase, he had been in possession of the vehicle
including the original registration papers thereof, but allowing petitioner from
time to time to use the van for deliveries of machinery.
After hearing, the trial court found for the private respondent. Finding no
merit in the appeal, the Court of Appeals affirmed the decision of the trail court.
ISSUE:
Whether or not the petitioner-appellant established proof of ownership
over the subject motor vehicle.
RULING:
No.
Petitioner did not have in his possession the Certificate of
Registration of the motor vehicle and the official receipt of payment for the
same, thereby lending credence to the claim of private respondent who has
possession thereof, that he owns the subject motor vehicle. A certificate of
registration of a motor vehicle in ones name indeed creates a strong
presumption of ownership. For all practical purposes, the person in whose favor
it has been issued is virtually the owner thereof unless proved otherwise. In
other words, such presumption is rebuttable by competent proof.
The New Civil Code recognizes cases of implied trusts other than those
enumerated therein. Thus, although no specific provision could be cited to apply
to the parties herein, it is undeniable that an implied trust was created when the
certificate of registration of the motor vehicle was placed in the name of the
petitioner although the price thereof was not paid by him but by private
respondent. The principle that a trustee who puts a certificate of registration in
his name cannot repudiate the trust relying on the registration is one of the wellknown limitations upon a title. A trust, which derives its strength from the
confidence one reposes on another especially between brothers, does not lose
that character simply because of what appears in a legal document.
WHEREFORE, the instant petition for review is hereby DENIED for lack of
merit.
IMPLIED TRUSTS:
PRESCRIPTIVE PERIODS OF ACTION TO ENFORCE
IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE
O'LACO VS. CO CHO CHIT
220 SCRA 656
1993 Mar 31
FACTS:
This Case involves half-sisters each claiming ownership over a parcel of
land. While petitioner Emilia O'Laco asserts that she merely left the certificate of
title covering the property with private respondent O Lay Kia for safekeeping,
the latter who is the former's older sister insists that the title was in her
possession because she and her husband bought the property from their
conjugal funds.
The trial court declared that there was no trust relation of any sort
between the sisters. The Court of Appeals ruled otherwise. Hence, the instant
petition for review on certiorari of the decision of the appellate court together
with its resolution denying reconsideration.
ISSUE:
Whether a resulting trust was intended by them in the acquisition of the
property; Whether Prescription has set in.
HELD:
I.
Express trusts are those which are created by the direct and positive acts
of the parties, by some writing or deed, or will, or by words evincing an intention
to create a trust. Implied trusts are those which, without being express, are
deducible from the nature of the transaction as matters of intent, or which are
superinduced on the transaction by operation of law as matters of equity,
independently of the particular intention of the parties. Implied trusts may
either be resulting or constructive trusts, both coming into being by operation of
law.
A resulting trust was indeed intended by the parties under Art. 1448 of the
New Civil Code which states ----
"Art. 1448.
There is an implied trust when property is sold, and the legal
estate is granted to one party but the price is paid by another for the purpose of
having the beneficial interest of the property. The former is the trustee, while
the latter is the beneficiary . . ."
II.
As differentiated from constructive trusts, where the settled rule is
that prescription may supervene, in resulting trust, the rule of imprescriptibility
may apply for as long as the trustee has not repudiated the trust. Once the
resulting trust is repudiated, however, it is converted into a constructive trust
and is subject to prescription.
A resulting trust is repudiated if the following requisites concur: (a) the
trustee has performed unequivocal acts of repudiation amounting to an ouster of
the cestui qui trust; (b) such positive acts of repudiation have been made known
to the cestui qui trust; and, (c) the evidence thereon is clear and convincing.
In Tale v. Court of Appeals, the Court categorically ruled that an action for
reconveyance based on an implied or constructive trust must perforce prescribe
in ten (10) years, and not otherwise, thereby modifying previous decisions
holding that the prescriptive period was four (4) years.
Neither the registration of the Oroquieta property in the name of
petitioner Emilia O'Laco nor the issuance of a new Torrens title in 1944 in her
name in lieu of the alleged loss of the original may be made the basis for the
commencement of the prescriptive period. For, the issuance of the Torrens title
in the name of Emilia O'Laco could not be considered adverse, much less
fraudulent. Precisely, although the property was bought by respondent-spouses,
the legal title was placed in the name of Emilia O'Laco. The transfer of the
Torrens title in her name was only in consonance with the deed of sale in her
favor. Consequently, there was no cause for any alarm on the part of
respondent-spouses. As late as 1959, or just before she got married, Emilia
continued to recognize the ownership of respondent-spouses over the Oroquieta
property.
Thus, until that point, respondent-spouses were not aware of any act of
Emilia which would convey to them the idea that she was repudiating the
resulting trust. The second requisite is therefore absent. Hence, prescription did
not begin to run until the sale of the Oroquieta property, which was clearly an
act of repudiation. But immediately after Emilia sold the Oroquieta property
which is obviously a disavowal of the resulting trust, respondent-spouses
instituted the present suit for breach of trust. Correspondingly, laches cannot lie
against them.
After all, so long as the trustee recognizes the trust, the beneficiary may
rely upon the recognition, and ordinarily will not be in fault for omitting to bring
an action to enforce his rights. There is no running of the prescriptive period if
the trustee expressly recognizes the resulting trust. Since the complaint for
breach of trust was filed by respondent-spouses two (2) months after acquiring
knowledge of the sale, the action therefore has not yet prescribed.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision
of the Court of Appeals of 9 April 1981, which reversed the trial court, is
AFFIRMED. Costs against petitioners.
THE
END
Upon the filing of the instant case for injunction and damages on January
3, 1966, an ex-parte writ of preliminary injunction was issued by the Honorable
Presiding Judge Carlos Abiera, which order, however, was elevated to the
Honorable Court of Appeals which issued a writ of preliminary injunction ordering
Judge Carlos Abiera or any other person or persons in his behalf to refrain from
further enforcing the injunction issued by him in this case and from further
issuing any other writs or prohibitions which would in any manner affect the
enforcement of the judgment rendered in Civil Case 7435, pending the finality of
the decision of the Honorable Court of Appeals in the latter case. Thus,
defendant Puentevella was restored to the possession of the lots and buildings
subject of this case. However, plaintiffs filed a petition for review with the
Supreme Court which issued a restraining order against the sale of the
properties claimed by the spouses-plaintiffs.
When the Supreme Court dissolved the aforesaid injunction issued by the
Court of Appeals, possession of the building and other property was taken from
petitioner Binalbagan and given to the third-party claimants, the de la Cruz
spouses. Petitioner Binalbagan transferred its school to another location. In the
meantime, the defendants in Civil Case No. 293 with the Court of Appeals
interposed an appeal. On October 30, 1978, the Court of Appeals rendered
judgment, reversing the appealed decision in Civil Case No. 293. On April 29,
1981, judgment was entered in CA-G.R. No. 42211, and the record of the case
was remanded to the court of origin on December 22, 1981. Consequently, in
1982 the judgment in Civil Case No. 7435 was finally executed and enforced,
and petitioner was restored to the possession of the subdivision lots an May 31,
1982. It will be noted that petitioner was not in possession of the lots from 1974
to May 31, 1982.
After petitioner Binalbagan was again placed in possession of the
subdivision lots, private respondent Angelina Echaus demanded payment from
petitioner Binalbagan for the subdivision lots, enclosing in the letter of demand a
statement of account as of September 1982 showing a total amount due of
P367,509.93, representing the price of the land and accrued interest as of that
date.
As petitioner Binalbagan failed to effect payment, private respondent
Angelina P. Echaus filed on October 8, 1982 Civil Case No. 1354 of the Regional
Trial Court of the Sixth Judicial Region stationed in Himamaylan, Negros
Occidental against petitioners for recovery of title and damages. Private
respondent Angelina P. Echaus filed an amended complaint by including her
mother, brothers, and sisters as co-plaintiffs, which was admitted by the trial
court on March 18, 1983.
The trial court rendered a decision in favor of the petitioner because of
prescription. Nonetheless, the Court of Appeals reversed said decision.
ISSUE:
Whether or not the petition is with merit.
RULING:
No. A party to a contract cannot demand performance of the other party's
obligations unless he is in a position to comply with his own obligations.
Similarly, the right to rescind a contract can be demanded only if a party thereto
is ready, willing and able to comply with his own obligations there under (Art.
1191, Civil Code).
In a contract of sale, the vendor is bound to transfer the ownership of and
deliver, as well as warrant, the thing which is the object of the sale (Art. 1495,
Civil Code); he warrants that the buyer shall, from the time ownership is passed,
have and enjoy the legal and peaceful possession of the thing. As afore-stated,
petitioner was evicted from the subject subdivision lots in 1974 by virtue of a
court order in Civil Case No. 293 and reinstated to the possession thereof only in
1982. During the period, therefore, from 1974 to 1982, seller private respondent
Angelina Echaus' warranty against eviction given to buyer petitioner was
breached though, admittedly, through no fault of her own. It follows that during
that period, 1974 to 1982, private respondent Echaus was not in a legal position
to demand compliance of the prestation of petitioner to pay the price of said
subdivision lots. In short, her right to demand payment was suspended during
that period, 1974-1982.
The prescriptive period within which to institute an action upon a written
contract is ten years (Art. 1144, Civil Code). The cause of action of private
respondent Echaus is based on the deed of sale afore-mentioned. The deed of
sale whereby private respondent Echaus transferred ownership of the
subdivision lots was executed on May 11, 1967. She filed Civil Case No. 1354 for
recovery of title and damages only on October 8, 1982. From May 11, 1967 to
October 8, 1982, more than fifteen (15) years elapsed. Seemingly, the 10-year
prescriptive period had expired before she brought her action to recover title.
However, the period 1974 to 1982 should be deducted in computing the
prescriptive period for the reason that, as above discussed, from 1974 to 1982,
private respondent Echaus was not in a legal position to initiate action against
petitioner since as afore-stated, through no fault of hers, her warranty against
eviction was breached. In the case of it was held that a court order deferring
action on the execution of judgment suspended the running of the 5-year period
for execution of a judgment. Here the execution of the judgment in Civil Case
No. 7435 was stopped by the writ of preliminary injunction issued in Civil Case
No. 293. It was only when Civil Case No. 293 was dismissed that the writ of
execution in Civil Case No. 7435 could be implemented and petitioner
Binalbagan restored to the possession of the subject lots.
Deducting eight years (1974 to 1982) from the period 1967 to 1982, only
seven years elapsed. Consequently, Civil Case No. 1354 was filed within the 10year prescriptive period.
Working against petitioner's position too is the
principle against unjust enrichment, which would certainly be the result if
petitioner were allowed to own the 42 lots without full payment thereof.
WHEREFORE, the petition is DENIED and the decision of the Court of
Appeals in CA-G.R. CV No. 24635 is AFFIRMED.