1

Ang Yu Asuncion vs. CA

238 SCRA 602 | 1994

FACTS
On July 29, 1987, a Second Amended Complaint for Specific Performance was filed by Ang Yu Asuncion
and Keh Tiong, et al., against Bobby Cu Unjieng and Jose Tan before the Regional Trial Court of Manila. The
plaintiffs were tenants or lessees of residential and commercial spaces owned by defendants in Binondo, Manila. On
several conditions defendants informed the plaintiffs that they are offering to sell the premises and are giving them
priority to acquire the same. During negotiations, Bobby Cu Unjieng offered a price of P6- million while plaintiffs
made a counter of offer of P5- million. Plaintiff thereafter asked the defendants to put their offer in writing to which
the defendants acceded. In reply to defendants letter, plaintiffs wrote, asking that they specify the terms and
conditions of the offer to sell. When the plaintiffs did not receive any reply, they sent another letter with the same
request. Since defendants failed to specify the terms and conditions of the offer to sell and because of information
received that the defendants were about to sell the property, plaintiffs were compelled to file the complaint to
compel defendants to sell the property to them. The court dismissed the complaint on the ground that the parties did
not agree upon the terms and conditions of the proposed sale; hence, there was no contact of sale at all. On
November 15, 1990, the Cu Unjieng spouses executed a Deed of Sale transferring the property in question to Buen
Realty and Development Corporation. Buen Realty, as the new owner of the subject property, wrote to the lessees
demanding the latter to vacate the premises. In its reply, it stated that Buen Realty and Development Corporation
brought the property subject tothe notice of lis pendens.
ISSUE
Can Buen Realty be bound by the writ of execution by virtue of the notice of lis pendens?
RULING
No. An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil Code). The obligation
is upon the concurrence of the essential elements thereof, viz: (a) thevinculum juris or juridical tie which is the
efficient cause established by the various sources of obligations; (b) the object which is the prestation or conduct,
required to observed; and (c) the subject-persons who, viewed demandability of the obligation are the active (oblige)
and the passive (obligor) subjects. Among the sources of an obligation is a contract (Art. 1157), which is a meeting
of minds between two persons whereby one binds himself, with respect to the other, to give something or to render
some service. A contract undergoes various stages that include its negotiation or preparation, its perfection and,
finally, its consummation. Until the contract is perfected, it cannot, as an independent source of obligation, serve as
a binding juridical relation. In sales, particularly, to which the case at bench belongs, the contract is perfected when
a person, called the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or
right to another, called the buyer, over which the latter agrees. The registration of lis pendens must be independently
addressed in appropriate proceedings. Therefore, Buen Realty cannot be held subject to the writ of execution issued
by the respondent Judge, let alone ousted from the ownership and possession of the property, without first being
duly afforded its day in court.

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ROMERO vs. COURT OF APPEALS G.R. No. 107207 November 23, 1995
Facts:
Romero, a civil engineer, was engaged in the business of production, manufacture and exportation of
perlitefilter aids, permalite insulation and processed perlite ore. In 1988, he decided to put up a central warehouse
in Metro Manila. Flores and his wife offered a parcel of land measuring 1,952 square meters. The lot was covered in
a TCT in the name of private respondent Enriqueta Chua vda. de Ongsiong. Petitioner visited the property and,
except for the presence of squatters in the area, he found the place suitable for a central warehouse. Flores called on
petitioner with a proposal that should he advance the amount of P50, 000.00 which could be used in taking up an
ejectment case against the squatters, private respondent would agree to sell the property for only
P800/square meter. Romero agreed. Later, a "Deed of Conditional Sale" was executed between Flores and
Ongsiong. Purchase price = P1,561,600.00; Down payment = P50K; Balance = to be paid 45 days after
the removal of all the squatters; upon full payment, Ongsiong shall execute deed of absolute sale in favour of
Romero. Ongsiong sought to return the P50,000.00 she received from petitioner since, she said, she could not "get
rid of the squatters" on the lot. She opted to rescind the sale in view of her failure to get rid of the squatters.
Regional Trial Court of Makati rendered decision holding that private respondent had no right to
rescind the contract since it was she who "violated her obligation to eject the squatters from the subject property"
and that petitioner, being the injured party, was the party who could, under Article 1191 of the Civil Code, rescind
the agreement.
Issue:
WON there was a perfected contract of sale? YES
Held:
A sale is at once perfected when a person (the seller) obligates himself, for a price certain, to deliver
and
tot r a n s f e r o w n e r s h i p o f a s p e c i f i e d t h i n g o r r i g h t t o a n o t h e r ( t h e b u y e r ) o v e r w h i
c h t h e l a t t e r a g r e e s . (BILATERAL and RECIPROCAL CHARACTERISTIC OF SALE)
In determining the real character of the contract, the title given to it by the parties is not as much significant as its
substance. For example, a deed of sale, although denominated as a deed of conditional sale, may be treated as
absolute in nature, if title to the property sold is not reserved in the vendor or if the vendor is not granted the right to
unilaterally rescind the contract predicated on the fulfilment or non-fulfilment, as the case may be, of the prescribed
condition.
From the moment the contract is perfected, the parties are bound not only to the fulfilment of what
has been expressly stipulated but also to all the consequences which, according to their nature, may
be in keeping with good faith, usage and law. Under the agreement, private respondent is obligat ed to
evict the squatters on the property. The ejectment of the squatters is a Condition the operative act of which sets
into
motion
the
period
of c om p l i a n c e b y p e t i t i on er of h i s own obl i g a t i on , i.e. , t o p a y t h e b a l a n c e o f t h e p u r c h a
s e p r i c e . P r i v a t e respondent's failure "to remove the squatters from the property" within the stipulated period
gives petitioner the right to either refuse to proceed with the agreement or waive that condition in consonance with
Article 1545 of the Civil Code. This option clearly belongs to petitioner and not to private respondent.
There was no potestative condition on the part of Ongsiong but a "mixed" condition "dependent not on the will
o f t h e ve n d or a l on e bu t a l s o of t h i r d p e r s on s l i k e t h e s q ua t t er s a n d g ove r n m en t a g en c i e s a
n d p er s on n e l concerned."

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GUTIERREZ VS. GUTIERREZ 56 PHIL 177
FACTS:
On February 2, 1930, a passenger track and an automobile of private ownership collided while attempting to
pass each other on the Talon Bridge on the Manila South Road in Las Pinas, Rizal. The truck was driven by
Abelardo Velasco, and owned by Saturnino Cortez. The automobile was operated by Bonifacio Gutierrez, 18 years
old, and owned by Bonifacios parents, Mr. and Mrs. Manuel Gutierrez. At the time of the collision, the father was
not in the car, but the mother, together with several members of the Gutierrez family, was accommodated therein.
As a result of the collision between the truck and the automobile, Narciso Gutierrez, herein plaintiff and a passenger
in the truck suffered a fractured right leg which required medical attendance for a considerable period of time.
The owner of the passenger truck was made a defendant, although a chauffeur was driving the truck, and the
owner of the private automobile was also made a defendant, although he was not in the car, which was driven by his
18 year old son and in which members of his family were riding.

ISSUE:
Were both drivers negligent?

RULING:
Yes. The court found both drivers negligent, basing the liability of the owner of the truck to the plaintiff on
the contract of carriage; while the liability of the owner of the private automobile was based on Article 2180 of the
Civil Code. As against the owner of the truck, there was culpa contractual or negligence in the performance of a
contract, while as against the owner of the automobile there was culpa acquiliana or negligence as a source of an
obligation.
The youth Bonifacio was an incompetent chauffeur. He was driving at an excessive rate of speed, and that,
on approaching the bridge and the truck, he lost his head and so contributed by his negligence to the accident. The
guarantee given by the father at the time the son was granted a license to operate motor vehicles made the father
responsible for the acts of his son. Based on these facts, pursuant to the provisions of Article 1903, of the Civil
Code, the father alone and not the minor or the mother, would be liable for the damages caused by the minor.

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CHAVES VS. GONZALES 32 SCRA 547

FACTS:
Plaintiff Chaves delivered to defendant Gonzales a typewriter for routine cleaning and servicing. The defendant was
not able to finish the job after some time despite repeated reminders by plaintiff. Eventually, Chaves took back his
typewriter which was returned to him in shambles with some parts missing. Chaves had the typewriter fixed by
someone else which cost him a total of Php 89.85.
Subsequently, Chaves filed a case before the CFI demanding Php 90 as actual damages among others. The CFI
found for the plaintiff but ruled that the total cost of Php 89.85 should not be fully charged against the defendant and
that only the total value of the missing parts at Php 31.10 should be paid by Gonzales to Chaves.
Chaves appealed to the Supreme Court with the contention that under Article 1167 defendant should pay him the
whole cost of labor and materials that went into the repair of the machine. Gonzales, on the other hand, contended
that he is not liable at all for anything because his contract with Chaves did not contain a period and that Chaves
should have first filed a petition for the court to fix the period under 1167 of the Civil Code.

ISSUE:
Does the contract contain a period?

RULING:
Yes. Based on the facts it was clear that both parties had a perfected contract for cleaning and servicing a
typewriter; that they intended that the defendant was to finish it at some future time although such time was not
specified; and that such time had passed without the work having been accomplished. The time for compliance
having evidently expired, and there being a breach of contract by non-performance, it was academic for plaintiff to
have first petitioned the court to fix a period. Defendant cannot invoke Article 1197 of the Civil Code for he
virtually admitted non-performance by returning the typewriter that he was obliged to repair in a non-working
condition with essential parts missing. For such contravention, Gonzales is liable under Article 1167 of the Civil
Code which makes him liable for the cost of executing the obligation in a proper manner. In addition, he is likewise
liable under Article 1170 of the Code for cost of the missing parts, in the amount of Php 31.10 for in his obligation
to repair the typewriter he was bound, but failed or neglected to return it in the same condition it was when he
received it.

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AGCAOILI VS. GSIS 165S1 No. L-30056, August 30, 1988

FACTS:
The appellant Government Service Insurance System (GSIS) approved the application of the appellee
Marcelo Agcaoili for the purchase of the house and lot in the GSIS Housing Project at Nangka, Marikina, Rizal, but
said application was subject to the condition that the latter should forthwith occupy the house. Agcaoili lost no time
in occupying the house but he could not stay in it and had to leave the very next day because the house was nothing
more than a shell, in such a state that civilized occupation was not possible: ceiling, stairs, double walling, lighting
facilities, water connection, bathroom, toilet kitchen, drainage, were inexistent. Agcaoili did however asked a
homeless friend, a certain Villanueva, to stay in the premises as some sort of watchman, pending the completion of
the construction of the house. He thereafter complained to the GSIS but to no avail.
Subsequently, the GSIS asked Agcaoili to pay the monthly amortizations of P35.56 and other fees. He paid the first
monthly amortizations and incidental fees, but refused to make further payments until and unless the GSIS
completed the housing unit. Thereafter, GSIS cancelled the award and required Agcaoili to vacate the premise. The
house and lot was consequently awarded to another applicant. Agcaoili reacted by instituting suit in the Court of
First Instance of Manila for specific performance and damages. The judgment was rendered in favor of Agcaoili.
GSIS then appealed from that judgment.

ISSUE:
Was the cancellation by GSIS of the award in favor of petitioner Agcaoili just and proper?

RULING:
No. It was the duty of the GSIS, as seller, to deliver the thing sold in a condition suitable for its enjoyment by
the buyer for the purpose contemplated. There would be no sense to require the awardee to immediately occupy and
live in a shell of a house, structure consisting only of four walls with openings, and a roof. GSIS had an obligation to
deliver to Agcaoili a reasonably habitable dwelling in return for his undertaking to pay the stipulated price. Since
GSIS did not fulfill that obligation, and was not willing to put the house in habitable state, it cannot invoke
Agcaoilis suspension of payment of amortizations as cause to cancel the contract between them. It is axiomatic
that In reciprocal obligations, neither party incurs in delay if the other does not comply in a proper manner with
what is incumbent upon him.

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Barzaga v CA G.R. No. 115129 February 12, 1997
Facts: The petitioners wife was suffering from a debilitating ailment and with forewarning of her impending death,
she expressed her wish to be laid to rest before Christmas day to spare her family of the long vigils as it was almost
Christmas. After his wife passed away, petitioner bought materials from herein private respondents for the
construction of her niche. Private respondents however failed to deliver on agreed time and date despite repeated
follow-ups. The niche was completed in the afternoon of the 27th of December, and Barzaga's wife was finally laid
to rest. However, it was two-and-a-half (2-1/2) days behind schedule.
Issue: Was there delay in the performance of the private respondent's obligation?
Ruling: Yes. Since the respondent was negligent and incurred delay in the performance of his contractual
obligations, the petitioner is entitled to be indemnified for the damage he suffered as a consequence of the delay or
contractual breach. There was a specific time agreed upon for the delivery of the materials to the cemetery.
This is clearly a case of non-performance of a reciprocal obligation, as in the contract of purchase and sale, the
petitioner had already done his part, which is the payment of the price. It was incumbent upon respondent to
immediately fulfill his obligation to deliver the goods otherwise delay would attach. An award of moral damages is
incumbent in this case as the petitioner has suffered so much.

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ROBERTO C. SICAM and AGENCIA de R.C. SICAM, INC. vs. SPOUSES JORGE
G.R. No. 159617, August 8, 2007
FACTS: On different dates, Lulu Jorge pawned several pieces of jewelry with Agencia de R. C. Sicam located in
Paraaque to secure a loan.
On October 19, 1987, two armed men entered the pawnshop and took away whatever cash and jewelry were found
inside the pawnshop vault.
On the same date, Sicam sent Lulu a letter informing her of the loss of her jewelry due to the robbery incident in the
pawnshop. Respondent Lulu then wroteback expressing disbelief, then requested Sicam to prepare the pawned
jewelry for withdrawal on November 6, but Sicam failed to return the jewelry.
Lulu, joined by her husband Cesar, filed a complaint against Sicam with the RTC of Makati seeking indemnification
for the loss of pawned jewelry and payment of AD, MD and ED as well as AF.
The RTC rendered its Decision dismissing respondents complaint as well as petitioners counterclaim. Respondents
appealed the RTC Decision to the CA which reversed the RTC, ordering the appellees to pay appellants the actual
value of the lost jewelry and AF. Petitioners MR denied, hence the instant petition for review on Certiorari.
ISSUE: are the petitioners liable for the loss of the pawned articles in their possession? (Petitioners insist that they
are not liable since robbery is a fortuitous event and they are not negligent at all.)
HELD: The Decision of the CA is AFFIRMED.
YES
Article 1174 of the Civil Code provides:
Art. 1174. Except in cases expressly specified by the 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.
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.
Sicam had testified that there was a security guard in their pawnshop at the time of the robbery. He likewise testified
that when he started the pawnshop business in 1983, he thought of opening a vault with the nearby bank for the
purpose of safekeeping the valuables but was discouraged by the Central Bank since pawned articles should only be
stored in a vault inside the pawnshop. The very measures which petitioners had allegedly adopted show that to them

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the possibility of robbery was not only foreseeable, but actually foreseen and anticipated. Sicams testimony, in
effect, contradicts petitioners defense of fortuitous event.
Moreover, petitioners failed to show that they were free from any negligence by which the loss of the pawned
jewelry may have been occasioned.
Robbery per se, just like carnapping, is not a fortuitous event. It does not foreclose the possibility of negligence on
the part of herein petitioners.
Petitioners merely presented the police report of the Paraaque Police Station on the robbery committed based on
the report of petitioners employees which is not sufficient to establish robbery. Such report also does not prove that
petitioners were not at fault. On the contrary, by the very evidence of petitioners, the CA did not err in finding that
petitioners are guilty of concurrent or contributory negligence as provided in Article 1170 of the Civil Code, to wit:
Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who
in any manner contravene the tenor thereof, are liable for damages.
**
Article 2123 of the Civil Code provides that with regard to pawnshops and other establishments which are engaged
in making loans secured by pledges, the special laws and regulations concerning them shall be observed, and
subsidiarily, the provisions on pledge, mortgage and antichresis.
The provision on pledge, particularly Article 2099 of the Civil Code, provides that the creditor shall take care of the
thing pledged with the diligence of a good father of a family. This means that petitioners must take care of the
pawns the way a prudent person would as to his own property.
In this connection, Article 1173 of the Civil Code further provides:
Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the
nature of the obligation and corresponds with the circumstances of the persons, of time and of the place. When
negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2 shall apply.
If the law or contract does not state the diligence which is to be observed in the performance, that which is expected
of a good father of a family shall be required.
We expounded in Cruz v. Gangan that 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 not do. It is want of care required by the circumstances.
A review of the records clearly shows that petitioners failed to exercise reasonable care and caution that an
ordinarily prudent person would have used in the same situation. Petitioners were guilty of negligence in the
operation of their pawnshop business. Sicams testimony revealed that there were no security measures adopted by
petitioners in the operation of the pawnshop. Evidently, no sufficient precaution and vigilance were adopted by
petitioners to protect the pawnshop from unlawful intrusion. There was no clear showing that there was any security
guard at all. Or if there was one, that he had sufficient training in securing a pawnshop. Further, there is no showing
that the alleged security guard exercised all that was necessary to prevent any untoward incident or to ensure that no
suspicious individuals were allowed to enter the premises. In fact, it is even doubtful that there was a security guard,
since it is quite impossible that he would not have noticed that the robbers were armed with caliber .45 pistols each,
which were allegedly poked at the employees. Significantly, the alleged security guard was not presented at all to
corroborate petitioner Sicams claim; not one of petitioners employees who were present during the robbery
incident testified in court.

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Furthermore, petitioner Sicams admission that the vault was open at the time of robbery is clearly a proof of
petitioners failure to observe the care, precaution and vigilance that the circumstances justly demanded.
The robbery in this case happened in petitioners pawnshop and they were negligent in not exercising the
precautions justly demanded of a pawnshop.
NOTES:
We, however, do not agree with the CA when it found petitioners negligent for not taking steps to insure themselves
against loss of the pawned jewelries.
Under Section 17 of Central Bank Circular No. 374, Rules and Regulations for Pawnshops, which took effect on
July 13, 1973, and which was issued pursuant to Presidential Decree No. 114, Pawnshop Regulation Act, it is
provided that pawns pledged must be insured, to wit:
Sec. 17. Insurance of Office Building and Pawns- The place of business of a pawnshop and the pawns pledged to it
must be insured against fire and against burglary as well as for the latter(sic), by an insurance company accredited
by the Insurance Commissioner.
However, this Section was subsequently amended by CB Circular No. 764 which took effect on October 1, 1980, to
wit:
Sec. 17 Insurance of Office Building and Pawns The office building/premises and pawns of a pawnshop must be
insured against fire. (emphasis supplied).
where the requirement that insurance against burglary was deleted. Obviously, the Central Bank considered it not
feasible to require insurance of pawned articles against burglary.
The robbery in the pawnshop happened in 1987, and considering the above-quoted amendment, there is no statutory
duty imposed on petitioners to insure the pawned jewelry in which case it was error for the CA to consider it as a
factor in concluding that petitioners were negligent.
Nevertheless, the preponderance of evidence shows that petitioners failed to exercise the diligence required of them
under the Civil Code.

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Medel vs Court of Appeals, 299 SCRA 481; GR No. 131622, November 27, 1998
(Credit Transactions Loans, Usury Law, Interest Rates)
Facts: Defendants obtained a loan from Plaintiff in the amount P50, 000.00, payable in 2 months and executed a
promissory note. Plaintiff gave only the amount of P47, 000.00 to the borrowers and retained P3, 000.00 as advance
interest for 1 month at 6% per month.
Defendants obtained another loan from Defendant in the amount of P90, 000.00, payable in 2 months, at 6% interest
per month. They executed a promissory note to evidence the loan and received only P84, 000.00 out of the proceeds
of the loan.
For the third time, Defendants secured from Plaintiff another loan in the amount of P300, 000.00, maturing in 1
month, and secured by a real estate mortgage. They executed a promissory note in favor of the Plaintiff. However,
only the sum of P275, 000.00, was given to them out of the proceeds of the loan.
Upon maturity of the three promissory notes, Defendants failed to pay the indebtedness.
Defendants consolidated all their previous unpaid loans totalling P440, 000.00, and sought from Plaintiff another
loan in the amount of P60, 000.00, bringing their indebtedness to a total of P50,000.00. They executed another
promissory note in favor of Plaintiff to pay the sum of P500, 000.00 with a 5.5% interest per month plus 2% service
charge per annum, with an additional amount of 1% per month as penalty charges.
On maturity of the loan, the Defendants failed to pay the indebtedness which prompt the Plaintiffs to file with the
RTC a complaint for collection of the full amount of the loan including interests and other charges.
Declaring that the due execution and genuineness of the four promissory notes has been duly proved, the RTC ruled
that although the Usury Law had been repealed, the interest charged on the loans was unconscionable and
revolting to the conscience and ordered the payment of the amount of the first 3 loans with a 12% interest per
annum and 1% per month as penalty.
On appeal, Plaintiff-appellants argued that the promissory note, which consolidated all the unpaid loans of the
defendants, is the law that governs the parties.
The Court of Appeals ruled in favor of the Plaintiff-appellants on the ground that the Usury Law has become legally
inexistent with the promulgation by the Central Bank in 1982 of Circular No. 905, the lender and the borrower could
agree on any interest that may be charged on the loan, and ordered the Defendants to pay the Plaintiffs the sum of
P500,000, plus 5.5% per month interest and 2& service charge per annum , and 1% per month as penalty charges.
Defendants filed the present case via petition for review on certiorari.
Issue: WON the stipulated 5.5% interest rate per month on the loan in the sum of P500, 000.00 is usurious.
Held: No.
A stipulated rate of interest at 5.5% per month on the P500, 000.00 loan is excessive, iniquitous, unconscionable and
exorbitant, but it cannot be considered usurious because Central Bank Circular No. 905 has expressly removed the
interest ceilings prescribed by the Usury Law and that the Usury Law is now legally inexistent.
Doctrine: A CB Circular cannot repeal a law. Only a law can repeal another law.

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Jurisprudence provides that CB Circular did not repeal nor in a way amend the Usury Law but simply suspended the
latters effectivity (Security Bank and Trust Co vs RTC). Usury has been legally non-existent in our jurisdiction.
Interest can now be charged as lender and borrower may agree upon.
Law: Article 2227, Civil Code
The courts shall reduce equitably liquidated damages, whether intended as an indemnity or a penalty if they are
iniquitous or unconscionable.
Note: While the Usury Law ceiling on interest rates was lifted by the CB Circular 905, nothing in the said circular
could possibly be read as granting carte blanche authority to lenders to raise interest rates to levels which would
either enslave their borrowers or lead to a haemorrhaging of their assets (Almeda vs. CA, 256 SCRA 292 [1996]).

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Santos Ventura Hocorma Foundation, Inc. vs Ernesto Santos & Riverland, Inc.
G.R. No. 1530004
November 5, 2004
Facts:
Subject of the present petition for review on certiorari is the Decision, dated January 30, 2002, as well as the April 12, 2002, Resolution
of the Court of Appeals, The appellate court reversed the Decision, dated October 4, 1996, of the Regional Trial Court of Makati City,
and likewise denied petitioner's Motion for Reconsideration.
On October 26, 1990, the parties executed a Compromise Agreement which amicably ended all their pending litigations. The pertinent
portions of the Agreement, include the following: (1) Defendant Foundation shall pay Plaintiff Santos P14.5 Million on (a) P1.5 Million
immediately upon the execution of this agreement and (b) The balance of P13 Million shall be paid, whether in one lump sum or in
installments, at the discretion of the Foundation, within a period of not more than two years from the execution of this agreement; (2)
Immediately upon the execution of this agreement (and [the] receipt of the P1.5 Million), plaintiff Santos shall cause the dismissal with
prejudice of Civil Cases; (3) 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.
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, for the issuance
of a writ of execution of its compromise judgment dated September 30, 1991. The RTC granted the writ.
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, petitioner's 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.
Issues:
a)W/N the CA committed reversible error when it awarded legal interest in favor of the respondents notwithstanding the fact that neither
in the compromise agreement nor in the compromise of judgment by the judge provides for payment of interest to the respondent?
b)W/N the CA erred in awarding legal interest to the respondents although the obligation of the petitioner to the respondent is to pay a
sum of money that had been converted into an obligation to pay in kind?
c)W/N respondents are barred from demanding payment of interest by reason of the waiver provision in the compromise agreement,

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which became the law among the parties.
Held:
On October 4, 1996, the trial court rendered a Decision dismissing the respondents' complaint and ordering them to pay attorney's fees
and exemplary damages to petitioner. Respondents then appealed to the Court of Appeals.
The only issue to be resolved is whether the respondents are entitled to legal interest.
The appellate court reversed the ruling of the trial court: WHEREFORE, finding merit in the appeal, the appealed Decision is hereby
REVERSED and judgment is hereby rendered ordering appellee SVHFI to pay appellants Santos and Riverland, Inc.: (1) legal interest
on the principal amount of P13 million at the rate of 12% per annum from the date of demand on October 28, 1992 up to the date of
actual payment of the whole obligation; and (2) P20,000 as attorney's fees and costs of suit. SO ORDERED.
Delay
Delay as used in this article is synonymous to default or mora which means delay in the fulfillment of obligations. It is the nonfulfillment of the obligation with respect to time. In the case at bar, the obligation was already due and demandable after the lapse of the
two-year period from the execution of the contract. The two-year period ended on October 26, 1992. When the respondents gave a
demand letter on October 28, 1992, to the petitioner, the obligation was already due and demandable. Furthermore, the obligation is
liquidated because the debtor knows precisely how much he is to pay and when he is to pay it.
The petition lacks merit
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.
As to the remaining P13 million, the terms and conditions of the compromise agreement are clear and unambiguous. It provides that the
balance of P13 Million shall be paid, whether in one lump sum or in installments, at the discretion of the Foundation, within a period of
not more than two (2) years from the execution of this agreement.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated January 30, 2002 of the Court of Appeals and its
April 12, 2002 Resolution in CA-G.R. CV No. 55122 are AFFIRMED. Costs against petitioner. SO ORDERED

Yassers Digest ^^.