OSG V. AYALA LAND INC.

FACTS:

Respondents operate or lease out shopping malls that have parking facilities. The people that use said
facilities are required to pay parking fees by the respondents. Senate committees conducted an
investigation to determine the legality of said practice which the same found to be against the National
Building Code. Respondents then received an information from various government agencies enjoining
them from collecting parking fees and later a civil case against them. Respondents argued that the same
constitutes undue taking of private property. OSG argues that the same is implemented in view of public
welfare more specifically to ease traffic congestion. The RTC ruled in favor of the respondents. Hence
petition for certiorari.

ISSUE:

Whether or not the respondents are obligated to provide for free parking to its consumers and the public.

RULING:

No. Respondents are not obligated to provide for free parking to the people.

Article 1158 of the Civil Code provides that “Obligations derived from law are not presumed. Only those
expressly determined in this Code or in special laws are demandable, and shall be regulated by the
precepts of the law which establishes them; and as to what has not been foreseen, by the provisions of
this Book”.

The court does not agree to the petitioner’s reliance on the National Building Code as the same does not
expressly provide that respondents are required to provide free parking to the public. Moreover, the court
holds that the code regulates buildings and not traffic congestion. Police power is a power to regulate but
not to confiscate. The OSG’s contention is a deprivation of private property and falls under eminent
domain which requires just compensation. Thus, the RTC decision is affirmed and petition is dismissed
for lack of merit.

PADCOM CONDOMINIUM CORPORATION VS. ORTIGAS CENTER ASSOCIATION, INC.

Facts:

Petitioner Padcom Condominium Corporation (PADCOM) owns and manages the Padilla Office
Condominium Building (PADCOM BUILDING). The land on which the building stands was originally
acquired from the Ortigas & Company, Limited Partnership, by Tierra Development Corporation (TDC)
under a Deed of Sale with a condition that the transferee and its successor-in-interest must become
members of an association for realty owners and long-term lessees in the area later known as the Ortigas
Center. Subsequently, the said lot, together with the improvements thereon, was conveyed by TDC in
favor of PADCOM in a Deed of Transfer.

Thereafter, respondent Ortigas Center Association, Inc. (ASSOCIATION) was organized to advance the
interests and promote the general welfare of the real estate owners and long-term lessees of the lots in
the Ortigas Center and sought the collection of membership dues from PADCOM. In view of PADCOM'S
failure and refusal to pay its arrears in monthly dues, the Association filed a complaint for collection of
sum of money before the trial court, but the same was dismissed. On appeal, the Court of Appeals
reversed and set aside the trial court's dismissal. Hence, this petition.
Issue:

Whether or not PADCOM is unjustly enriched by the improvements made by the Association, thus
requiring the former to pay dues to the latter.

Held:

Yes. The Supreme Court held that as resident and lot owner in the Ortigas area, PADCOM was
definitely benefited by the Association's acts and activities to promote the interests and welfare of those
who acquire property therein or benefit from the acts or activities of the Association.

Generally, it may be said that a quasi-contract is based on the presumed will or intent of the obligor
dictated by equity and by the principles of absolute justice. Examples of these principles are: (1) it is
presumed that a person agrees to that which will benefit him; (2) nobody wants to enrich himself unjustly
at the expense of another; or (3) one must do unto others what he would want others to do unto him
under the same circumstances

METROPOLITAN BANK VS. ABSOLUTE MANAGEMENT CORP.

Facts: Metrobank deposited the AMC checks to Ayala Lumber and Hardware’s account; because of
Chua’s control over AMC’s operations, Metrobank assumed that the checks payable to AMC could be
deposited to Ayala Lumber and Hardware’s account.

Ayala Lumber and Hardware had no right to demand and receive the checks that were deposited to its
account; despite Chua’s control over AMC and Ayala Lumber and Hardware, the two entities are distinct,
and checks exclusively and expressly payable to one cannot be deposited in the account of the other.

In its fourth-party complaint, Metrobank claims that Chua’s estate should reimburse it if it becomes liable
on the checks that it deposited to Ayala Lumber and Hardware’s account.

Issue: Whether or not Ayala Lumber must return the amount of said checks to Metrobank.

Held: Metrobank acted in a manner akin to a mistake when it deposited the AMC checks to Ayala Lumber
and Hardware’s account because it assumed that the checks payable to AMC could be deposited to
Ayala Lumber and Hardware’s account. This disjunct created an obligation on the part of Ayala Lumber
and Hardware, through its sole proprietor, Chua, to return the amount of these checks to Metrobank.
 CATHAY PACIFIC AIRWAYS v. Reyes

FACTS:

Cathay is a common carrier engaged in transporting passenger and goods by air. Spouses
Vazquez are Gold Card Members of its Marc Polo Club. The Spouses, with two friends and a maid went
to HongKong for business. Spouses have the Business class boarding passes and economy class for the
maid. When boarding, the ground stewardess declared a seat change from Business class to First Class
for the Vazquez. The Spouses refused but after insistence by the stewardess, the spouses gave in. When
the arrived in Manila, spouses demanded to be indemnified in the amount of one million “ for the
humiliation and embarrassment” caused by the employee. RTC ruled for the Vazquez ordering Cathay
Airways to pay the spouses, stating further that there was a breach of contract not because of
overbooking but because the latter pushed through with the upgrading despite objections of the spouses.

ISSUE:

Is an involuntary upgrading of an airline’s accommodation at no extra costs cause a breach of

contract of carriage?

RULING:

The Vazquezes are aware of the privileges, but such privileges may be waived. Spouses should
have been consulted first. It should not have been imposed on them over their vehement objection. By
insisting of the upgrade, Pacific Airways breached its contract of carriage with the Vazquezes. Nominal
damages are adjudicated in order that the right of the plaintiff, which have been violated may be
vindicated or recognized and not for indemnifying the plaintiff for any loss suffered by him.

Petition is partly granted. Court of Appeals’ decision is modified. Moral damages deleted, nominal
damages reduced to P5,000.

MENDOZA VS. ARRIETA

Facts:On October 22, 1969, a three-way vehicular accident occurred along Mac-Arthur Highway, Marilao
Bulacan involving Mercedes Benz Owner/ petitioner, Edgardo Mendoza, and respondents jeepney driver
Salazar and truck driver Montoya. This resulted in the filing of two separate Informations of Reckless
Imprudence resulting to Damage to Property. The first one being a Php 1604.00 Criminal case against
truck driver Montoya for hitting Salazar’s jeepney at the right rear portion causing the jeep to hit
Mendoza’s Mercedes, and the second Criminal Case was against jeepney driver Salazar for hitting the
Benz in the amount of Php 8,890.00.

Issue: Can Timbol be sued for damages by Mendoza after termination of criminal cases? – YES.

Should the Civil Case against jeepney driver Salazar be dismissed? YES.

RULING: Timbol can be sued for damages.

No reservation need be made in the criminal case, it being substantive in character and is not within the
power of the Supreme Court to promulgate. Even if it were not substantive but adjective, it cannot stand
because of its inconsistency with Article 2177, an enactment of the legislature superseding the Rule of
1940.
 PSBA VS. COURT OF APPEALS

FACTS: Carlitos Bautista is a junior college student enrolled in the Philippine School of Business
Administration (PSBA). Unfortunately, he was killed in a stabbing incident that occurred inside the school
premises. The assailant is an outsider to the school.

Defendants argued, however, that they are not covered by Article 2180 of the New Civil Code, under
which they are sued. They asserted that the cause of action is hinged on quasi-delict, which requires that
there be no contract between the parties. However, their son’s enrolment in the school evinces the
existence of a contract. Therefore, they sought to dismiss the petition, which was denied by the trial court
and the Court of Appeals (CA).

ISSUES:

Is PSBA civilly liable under Art. 2180? NO.

Should the case be dismissed? NO.

Ruling: The relationship between the educational institution and the deceased arose from a contract.
Therefore, the former cannot be held liable under Art. 2180 of the New Civil Code, as the said provision
governs quasi-delicts, which is extra-contractual.

AMADORA VS. CA

FACTS: Alfredo Amadora, while in the auditorium of the school, was mortally hit by a gun by Pablito
Daffon resulting to the former’s death. Daffon was convicted of homicide through reckless imprudence.
The victim’s parents, herein petitioners, filed a civil action for damages against Colegio de San Jose-
Recoletos, its rectors, high school principal, dean of boys, the physics teacher together with Daffon and 2
other students. Complaints against the students were dropped. Respondent Court absolved the
defendants completely and reversed CFI Cebu’s decision for the following reasons: 1. Since the school
was an academic institution of learning and not a school of arts and trades 2. That students were not in
the custody of the school since the semester has already ended

Petitioners on other hand claimed their son was under school custody because he went to school to
comply with a requirement for graduation (submission of Physics reports).

ISSUE: WON Collegio de San Jose-Recoletos should be held liable.

HELD: The time Alfredo was fatally shot, he was in the custody of the authorities of the school
notwithstanding classes had formally ended when the incident happened. It was immaterial if he was in
the school auditorium to finish his physics requirement. What was important is that he was there for a
legitimate purpose. On the other hand, the rector, high school principal and the dean of boys cannot be
held liable because none of them was the teacher-in-charge as defined in the provision.
 PEOPLE VS. ABUNGAN (TBD)

ARTURO PELAYO VS. MARCELO LAURON

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. 

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. 

LEUNG BEN VS. P. J. O’BRIEN, JAMES A. OSTRAND and GEO. R. HARVEY, Judges of First
Instance of the City of Manila

FACTS: On December 12, 1917, an action was instituted in the Court of First Instance of Manila by P.J.
O’Brien to recover of Leung Ben the sum of P15,000, all alleged to have been lost by the plaintiff to the
defendant in a series of gambling, banking, and percentage games conducted during the two or three
months prior to the institution of the suit. The plaintiff asked for an attachment against the property of the
defendant, on the ground that the latter was about to depart from the Philippines with intent to defraud his
creditors. This attachment was issued. The provision of law under which this attachment was issued
requires that there should be a cause of action arising upon contract, express or implied. The contention
of the petitioner is that the statutory action to recover money lost at gaming is not such an action as is
contemplated in this provision, and he insists that the original complaint shows on its face that the remedy
of attachment is not available in aid thereof; that the Court of First Instance acted in excess of its
jurisdiction in granting the writ of attachment; that the petitioner has no plain, speedy, and adequate
remedy by appeal or otherwise; and that consequently the writ of certiorari supplies the appropriate
remedy for this relief.

ISSUE: Whether or not the statutory obligation to restore money won at gaming is an obligation arising
from contract, express or implied.

RULING: 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.

DR. OLIVER VS. PSB

This is a petition for review on certiorari seeking to reverse and set aside the October 25, 2013
Decision1and the September 12, 2014 Resolution 2 of the Court of Appeals (CA) in CA-G.R. CV No.
95656, which reversed the July 22, 2010 Order 3 of the Regional Trial Court, Branch 276, Muntinlupa City
(RTC) in Civil Case No. 99-278, a case for injunction and damages.
Petitioner Mercedes Oliver (Oliver) was a depositor of respondent Philippine Savings Bank (PSBank) with
account number 2812-07991-6. Respondent Lilia Castro (Castro) was the Assistant Vice President of
PSBank and the Acting Branch Manager of PSBank San Pedro, Laguna.

ISSUE: WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO
HOLD THAT THE RESPONDENTS ARE JOINTLY AND SEVERALLY LIABLE TO THE PETITIONER
FOR DAMAGES.

Ruling: In this case, Oliver and Castro had a business agreement wherein Oliver would obtain loans from
the bank, through the help of Castro as its branch manager; and after acquiring the loan proceeds, Castro
would lend the acquired amount to prospective borrowers who were waiting for the actual release of their
loan proceeds. Oliver would gain 4% to 5% interest per month from the loan proceeds of her borrowers,
while Castro would earn a commission of 10% from the interests. Clearly, an agency was formed because
Castro bound herself to render some service in representation or on behalf of Oliver, in the furtherance of
their business pursuit.

ABELLA VS. HEIRS OF F. SAN JUAN

Facts: Francisca C. San Juan (Francisca), was a tenant to a parcel of land consisting of six thousand
(6,000) square meters owned by petitioners, and located at Balatas, Naga City, Camarines Sur (Balatas
property). The portion was covered by Certificate of Land Transfer (CLT) No. 843 (159301) issued on
October 18, 1973.2

On January 28, 1981, Dr. Manuel Abella (Dr. Abella) and Francisca entered into an Agreement 3 whereby
the Balatas property will be exchanged with a 6,000-square meter agricultural lot situated at San Rafael,
Cararayan, Naga City (Cararayan property). The parties agreed that in addition to the Cararayan
property, Francisca shall receive from Dr. Abella the amount of P5,250.00 as disturbance compensation
and a 120-square meter home lot situated at Balatas, Naga City.

Issue: w/n the agreement did not affect the right or interest of Francisca as a tenant?

Ruling:
The assailed Decision of the CA dated October 16, 2007 and Resolution dated April 14, 2008
are AFFIRMED with the MODIFICATION that respondents should return to the petitioners the 6,000-
square meter parcel of land located in Cararayan, Naga City, Camarines Sur, and the amount of
P5,250.00 with legal interest computed at the rate of 6% per annum reckoned from the finality of this
judgment until fully paid. This case is remanded to the Regional Trial Court, Branch 23, Naga City for the
determination of the fair market value of the Balatas home lot at the time of donation.

VILLARROEL VS ESTRADA 71 PHIL 140 (1940)

Facts: The mother of the John Villarroel owed money from the spouses Estrada in the amount of P1,000
payable after 7 years. When the spouses Estrada died, leaving as sole heir Bernandino Estrada, Villaroel
was made to sign a document regarding the debt. Estrada then instituted an action to recover the P1,000
debt. The CFO of Laguna decided in favor of Estrada, condemning Villarroel to pay the full amount with
legal interest of 12% per year. Villaroel appealed.

Issue: Whether or not, even if the original debt has already prescribed, Estrada still has the right to
recover.
Held: As a general rule, if the debt has already prescribed, it can no longer be recovered. However, in the
case at bar, there was a novation by the parties, whereby Villarroel agreed to assume the fulfillment of the
obligation. As a prescribed debt constitutes a moral or natural obligation as such, it can be the cause or
consideration for a new obligation in novation.

FISHER VS. ROBB

Facts: John C. Robb met A.O. Fisher in a business trip in Shanghai. The two becameacquainted through
friends and exchanged knowledge regarding dog racing. Plaintiff asmanager of a dog racing course,
became interested with the business of the PhilippineGreyhound Club, Inc., in Manila and later informed
defendant of his interest to subscribe and bea stockholder of said business. He sent his first installment
via Manila telegram. Later, saidbusiness was later change to The Philippine Racing Club, and upon
asking for the second installment from plaintiff, he said he already did send the second installment.The
defendant endeavored to save the investment of those who had subscribed to the Philippine Greyhound
Club, Inc., by having the Philippine Racing Club acquire the remaining assets of the Philippine Greyhound
Club, Inc. Through exchange of letters, the plaintiff-appellee wrote the defendant-appellant requiring him
to return the entire amount paid by him to the Philippine Greyhound Club, Inc., Upon receiving this letter,
the defendant-appellant answered the plaintiff-appellee for any loss which he might have suffered in
connection with the Philippine GreyhoundClub, Inc., in the same way that he could not expect anyone to
reimburse him for his own losseswhich were much more than those of the plaintiff-appellee

Issues: Whether a moral obligation will sustain an express executory promise?Held: No. Defendant
although was morally responsible because of the failure of the enterprise,is not the consideration required
by article 1261 of the Civil Code as an essential element for thelegal existence of an promise.Judgment is
reversed and the costs to the plaintiff.

Ruling: NO. Defendant, although morally responsible because of the failure of the enterprise, is not a
consideration under Article 1261 of the Civil Code as an essential element for the legal existence for an
onerous contract which could bind the promisor to comply with his promise.
 EQUITABLE BANKING

CORPORATION v.CALDERON

Facts: Jose Calderon, a prominent businessman, applied and was issued anEquitable International Visa
card which can be used for both peso and dollartransactions within and outside the Philippines. In its
dollar transactions, respondentis required to maintain a dollar account with a minimum deposit of $3,
000.00, thebalance shall serve as a credit limit. In one of his trips to Hongkong, together with afriend, he
went to a Gucci Department Store where he tried to purchase severalGucci items (which amounted to
HK$4,030.00 or equivalent to US$523.00) using hisVisa card.

Issue:

Whether or not the Court of Appeals erred in holding that the respondent isentitled to moral damages
notwithstanding its finding that petitioner’s actions havenot been attended with any malice or bad faith?

Ruling:

In law, moral damages include physical suffering, mental anguish, fright,serious anxiety, besmirched
reputation, wounded feelings, moral shock, socialhumiliation and similar injury. However, to be entitled to
the award thereof, it is notenough that one merely suffered sleepless nights, mental anguish or
seriousanxiety as a result of the actuations of the other party

DOMINGO GONZALO VS. JOHN TARNATE

FACTS: In the 1950’s, Nena Recio (Nena), the mother of Reman Recio (petitioner), leased from the
respondents Altamiranos a parcel of land with improvements, situated at No. 39 10 de Julio Street (now
Esteban Mayo Street), Lipa City, Batangas. The said land has an area of more or less eighty-nine square
meters and fifty square decimeters (89.50 sq m), and is found at the northern portion of two (2) parcels of
land covered by Transfer Certificate of Title (TCT) Nos. 66009 and 66010 of the Registry of Deeds of Lipa
City. The Altamiranos inherited the subject land from their deceased parents, the spouses Aguedo
Altamirano and Maria Valduvia Nena used the ground floor of the subject property as a retail store for
grains and the upper floor as the family’s residence.

ISSUES:Is the verbal contract of sale between Alejandro and the petitioner valid?

HELD: Yes A valid contract of sale requires: (a) a meeting of minds of the parties to transfer ownership of
the thing sold in exchange for a price; (b) the subject matter, which must be a possible thing; and (c) the
price certain in money or its equivalent. In the instant case, all these elements are present.

TAN VS. NITAFAN

Facts:  Private respondent K.T. Lim was charged with violation of B.P. 22. He moved to quash the
Information of the ground that the facts charged did not constitute a felony as B.P. 22 was
unconstitutional and that the check he issued was a memorandum check which was in the nature of a
promissory note, perforce, civil in nature. Judge Nitafan, ruling that B.P. 22 on which the Information was
based was unconstitutional, issued the questioned Order quashing the Information. Hence, the appeal.

Issue:  Is a memorandum check within the coverage of B.P. 22?

Held:  A memorandum check is in the form of an ordinary check, with the word "memorandum", "memo"
or "mem" written across its face, signifying that the maker or drawer engages to pay the bona fide holder
absolutely, without any condition concerning its presentment. Such a check is an evidence of debt against
the drawer, and although may not be intended to be presented, has the same effect as an ordinary check,
and if passed to the third person, will be valid in his hands like any other check.

SEVERINO SALEN and ELENA SALBANERA vs. JOSE BALCE

Facts: Plaintiffs are the legitimate parents of Carlos Salen who died from wounds caused by Gumersindo
Balce, a legitimate son of defendant who was then single, 18 yrs old and was living with defendant. As a
result of C. Salen's death, G. Balce was accused and convicted of homicide and was sentenced to
imprisonment and to pay the amount of P2,000.00. Plaintiffs brought this action against defendant before
CFI to recover the sum of P2,000.00, with legal interest. Defendant, in his answer, set up the defense that
the law upon which plaintiffs predicate their right to recover does not here apply for the reason that law
refers to quasi-delicts and not to criminal cases. CFI sustained the theory of defendant.

Issue: WON appellee can be held subsidiary liable to pay the indemnity in accordance with Art. 2180 of
the CC.

Ruling: Judgment reversed.
Art 2180 CC applies in the case at bar. To hold otherwise would result in the absurdity that while for an
act where mere negligence intervenes the father or mother may stand subsidiarily liable for the damage
caused by his or her son, no liability would attach if the damage is caused with criminal intent. Verily, the
void that apparently exists in the RPC (art.101) is subserved by this particular provision of our CC, as may
be gleaned from some recent decisions of the SC which cover equal or identical cases.

SALUDAGA V.S. FAR EASTERN UNIVERSITY

Facts: It is the obligation of any college institution to provide a safe and secure environment for every
student. As for the students, they have the obligation to give back the respect for their respective colleges
and to excel and do well with the institution’s goals. Far Eastern University failed to comply with their
obligation when a student of theirs, whose name is Joseph Saludaga was shot inside the campus by their
security guard named Alejandro Rosete. The victim petitioned a case against FEU and Edilberto C. De
Jesus, president of FEU. The University also failed to check the qualifications of the security guards hired
through Galaxy, the third party which hires security guards for the university. From there, there are also
complaints for Galaxy being the first employers of Rosete. It is also said that the safety of the university
should not only be within the hands of the security guards. Damages are taken by Saludaga by surprised
including physical and moral damages obtained from the said accidental shooting by Rosete who claimed
that it was an accident.

Issues: Whether Far Eastern University failed to comply with their obligation in implementing a safe and
secure learning environment.

Held: The court dismissed the the petitioner’s complaints for Edilberto C. De Jesus as well as the
counterclaims of the respondents. The Regional Trial Court of Manila found FEU to be liable for the
damages and a breach of their obligation to the petitioner. FEU was ordered to pay actual damage of
35,298.25, plus 6%interest per annum from the filing of the case until the finality of decision. After the
execution, the rate shall be 12& per annum until its satisfaction. FEU was ordered to pay temperate
damages in the amount of P20,000.00. Moral damage for P100,000.00, attorney’s fees and litigation
expense for 50,000.00

Galaxy was and its presidents were ordered to jointly and severely pay the respondent FEU damages
equivalent to the amount awarded to Saludaga.
 ANSAY VS NATIONAL DEVELOPMENT COMPANY

FACTS: On July 25, 1956, Primitivo Ansay et al filed against the Board of Directors of the National
Development Company in the Court of First Instance of Manila a complaint praying for a 20% Christmas
bonus for the years 1954 and 1955.

Appellants contend that there exists a cause of action in their complaint because their claim rests on
moral grounds or what in brief is defined by law as a natural obligation.

ISSUE: Whether or not the Christmas bonus is demandable.

HELD: No, it is not demandable. Appellants admit that appellees are not under legal obligation to give
such claimed bonus and such grant only arises from a moral obligation or natural obligation. However,
natural obligation is only enforceable with the presence of the element of voluntary fulfillment by the
obligor. In the case at bar, there has been no voluntary performance on the part of the appellees. Hence,
the bonus is not demandable.

EQUATORIAL V. MAYFAIR

FACTS: Carmelo owned a parcel of land with two 2-storey buildings located at Claro M Recto Avenue,
Manila. The said building is leased to Mayfair specifically the portion of the 2nd floor, the two spaces at
the ground floor and the mezzanine area. Based on their contract, it stated that,

That if the LESSOR should desire to sell the leased premises, the LESSEE shall be given 30-days
exclusive option to purchase the same.

In the event, however, that the leased premises is sold to someone other than the LESSEE, the LESSOR
is bound and obligated, as it hereby binds and obligates itself, to stipulate in the Deed of Sale hereof that
the purchaser shall recognize this lease and be bound by all the terms and conditions thereof.

Carmelo informed the President of Mayfair they were selling the entire Claro M. Recto property and a
certain Mr. Araneta was offering to buy the whole property and asked if Mayfair was willing to buy the
property. Mayfair send a letter to Carmelo, to which the latter did not reply. On their second letter Mayfair
informed Carmelo off their interest in acquiring the entire building and other improvements if the price is
reasonable.

Four years later, Carmelo sold its entire property, which included the leased premises of Mayfair, to
Equatorial.

ISSUE: Whether the Contract of Sale between Equatorial and Carmelo is valid.

HELD: The Court hold that no option to purchase has been granted to Mayfair under the said lease
contracts. That the contractual grant given is the right of first refusal to Mayfair. What Carmelo and
Mayfair agreed to, by executing the two lease contracts, was that Mayfair will have the right of first refusal
in the event Carmelo sells the leased premises. Carmelo violated such right when without prior notice to
Mayfair, the entire property was sold to Equatorial.

Equatorial is a buyer in bad faith, thus it renders the sale of the property in question rescissible. The fact
that Equatorial was aware of the lease contracts because its lawyers had, prior to the sale, studied the
said contracts, and it bought the property with notice and full knowledge that Mayfair had a right to or
interest in the property superior to its own. Carmelo and Equatorial took unconscientious advantage of
Mayfair. As such, Equatorial cannot tenably claim to be a purchaser in good faith, and, therefore,
rescission lies.

NORKIS DISTRIBUTORS, INC. vs. COURT OF

FACTS:Petitioner Norkis Distributors, Inc. is the distributor of Yamaha motorcycles in Negros Occidental.
OnSeptember 20, 1979, private respondent Alberto Nepales bought trom the Norkis Bacolod branch
abrand new Yamaha Wonderbike motorcycle Model YL2DX. The price of P7,500.00 was payable
bymeans of a Letter of Guaranty from the DBP, which Norkis agreed to accept. Credit was extended
toNepales for the price of the motorcycle payable by DBP upon release of his motorcycle loan. As
securityfor the loan, Nepales would execute a chattel mortgage on the motorcycle in favor of DBP.
Petitionerissued a sales invoice which Nepales signed in conformity with the terms of the sale. In
themeantime, however, the motorcycle remained in Norkis' possession. On January 22, 1980,
themotorcycle was delivered to a certain Julian Nepales, allegedly the agent of Alberto Nepales.
Themotorcycle met an accident on February 3, 1980 at Binalbagan, Negros Occidental. An
investigationconducted by the DBP revealed that the unit was being driven by a certain Zacarias Payba
atthe timeof the accident. The unit was a total wreck was returned.On March 20, 1980, DBP released the
proceeds of private respondent's motorcycle loan to Norkis in thetotal sum of P7,500. As the price of the
motorcycle later increased to P7,828 in March, 1980, Nepalespaid the difference of P328 and demanded
the delivery of the motorcycle. When Norkis could not deliver,he filed an action for specific performance
with damages against Norkis in the RTC of Negros Occidental.He alleged that Norkis failed to deliver the
motorcycle which he purchased, thereby causing himdamages. Norkis answered that the motorcycle had
already been delivered to private respondent beforethe accident, hence, the risk of loss or damage had
tobe borne by him as owner of the unit.

ISSUE:Whether or not there has been a transfer of ownership of the motorcycle to Alberto
Nepales.HELD:No.The issuance of a sales invoice does not prove transfer of ownership of the thing sold
to the buyer. Aninvoice is nothing more than a detailed statement of the nature, quantity and cost of the
thing sold andhas been considered not a bill of sale. In all forms of delivery, it is necessary that the act of
deliverywhether constructive or actual, be coupled with the intention of delivering the thing. The act,
without theintention, is insufficient.When the motorcycle was registered by Norkis in the name of private
respondent,Norkis did not intend yet to transfer the title or ownership to Nepales, but only to facilitate the
executionof a chattel mortgage in favor of the DBP for the release of the buyer's motorcycle loan.

ALFRED HAHN, petitioner, vs. COURT OF APPEALS and BAYERISCHE MOTOREN

WERKEAKTIENGESELLSCHAFT (BMW), respondents. January 22, 1997Mendoza, J.

Facts:1.Alfred Hahn is a Filipino citizen doing business under the name and style "Hahn-
Manila."2.Bayerische Motoren Werke Aktiengesellschaft (BMW) is a nonresident foreign
corporationexisting under the laws of the former Federal Republic of Germany, with principal office
atMunich, Germany.3.In 1963, Hahn executed in favor of BMW a Deed of Assignment with Special Power
of Attorney which essentially, makes Hahn as the exclusive dealer of BMW in the Philippines.Moreover, it
stated there that Hahn and BMW “shall continue business relations as has beenusual in the past without
a formal contract."4.In 1993, BMW and Columbia Motors Corp (CMC) had a meeting which would grant
CMCexclusive dealership of BMW cars.5.Hahn was informed later that BMW was dissatisfied with how it
carrying its business.However, BMW expressed willingness to continue business relations with the
petitioner onthe basis of a "standard BMW importer" contract, otherwise, it said, if this was notacceptable
to petitioner, BMW would have no alternative but to terminate petitioner'sexclusive dealership effective
June 30, 1993.6.Hahn protested alleging that such termination is a breach of the Deed of Assignment.
Hahninsisted that as long as the assignment of its trademark and device subsisted, he remainedBMW's
exclusive dealer in the Philippines because the assignment was made inconsideration of the exclusive
dealership.7.BMW, however, went on to terminate its dealership with Hahn.8.Hahn filed a complaint for
specific performance and damages in the RTC. RTC issued a writpreliminary injunction.9.BMW appealed
to the CA. CA reversed on the ground that Hahn is not an agent of BMW andthat BMW is “not doing
business in the Phils.” By virtue of the latter, the writ of preliminaryinjunction should not have been issued
since RTC did not have jurisdiction over it

.Issues1.W/N Hahn is agent or a distributor (or broker) in the Philippines of BMW.

He is an agent.2.W/N BMW is doing business here in the Philippines.

YESHeld/Ratio:1.There is nothing to support the appellate court's finding that Hahn solicited orders alone
andfor his own account and without "interference from, let alone direction of, BMW. To thecontrary, Hahn
claimed he took orders for BMW cars and transmitted them to BMW.

Uponreceipt of the orders, BMW fixed the down payment and pricing charges, notifiedHahn of the
scheduled production month for the orders, and reconfirmed theorders by signing and returning to Hahn
the acceptance sheets. Payment wasmade by the buyer directly to BMW. Title to cars purchased passed
directly to thebuyer and Hahn never paid for the purchase price of BMW cars sold in thePhilippines. Hahn
was credited with a commission equal to 14% of the purchaseprice upon the invoicing of a vehicle order
by BMW.

Upon confirmation in writing thatthe vehicles had been registered in the Philippines and serviced by him,
Hahn received anadditional 3% of the full purchase price. Hahn performed after-sale services,
including,warranty services, for which he received reimbursement from BMW. All orders were oninvoices
and forms of BMW
 CHAVEZ VS GONZALES

FACTS: Sometime before 6 June 2005, the radio station dzMM aired the Garci Tapes where the parties
to the conversation discussed “rigging” the results of the 2004 elections to favor President Arroyo. On 6
June 2005, Presidential spokesperson Bunye held a press conference in Malacañang Palace, where he
played before the presidential press corps two compact disc recordings of conversations between a
woman and a man. Bunye identified the woman in both recordings as President Arroyo but claimed that
the contents of the second compact disc had been “spliced” to make it appear that President Arroyo was
talking to Garcillano.

However, on 9 June 2005, Bunye backtracked and stated that the woman’s voice in the compact discs
was not President Arroyo’s after all.3 Meanwhile, other individuals went public, claiming possession of the
genuine copy of the Garci Tapes. Respondent Gonzalez ordered the NBI to investigate media
organizations which aired the Garci Tapes for possible violation of Republic Act No. 4200 or the Anti-
Wiretapping Law.

On 11 June 2005, the NTC issued a press release warning radio and television stations that airing the
Garci Tapes is a ” cause for the suspension, revocation and/or cancellation of the licenses or
authorizations” issued to them. On 14 June 2005, NTC officers met with officers of the broadcasters
group KBP, to dispel fears of censorship. The NTC and KBP issued a joint press statement expressing
commitment to press freedom

On 21 June 2005, petitioner Francisco I. Chavez (petitioner), as citizen, filed this petition to nullify the
“acts, issuances, and orders” of the NTC and respondent Gonzalez (respondents) on the following
grounds: (1) respondents’ conduct violated freedom of expression and the right of the people to
information on matters of public concern under Section 7, Article III of the Constitution, and (2) the NTC
acted ultra vires when it warned radio and television stations against airing the Garci Tapes.

ISSUE: The principal issue for resolution is whether the NTC warning embodied in the press release of 11
June 2005 constitutes an impermissible prior restraint on freedom of expression.

Standing to File Petition

Petitioner has standing to file this petition. When the issue involves freedom of expression, as in the
present case, any citizen has the right to bring suit to question the constitutionality of a government action
in violation of freedom of expression, whether or not the government action is directed at such citizen.
Freedom of expression, being fundamental to the preservation of a free, open and democratic society, is
of transcendental importance that must be defended by every patriotic citizen at the earliest opportunity.
Woodhouse v Halili

July 31, 1953, 93 Phil. 526

WOODHOUSE VS. HALILI

FACTS: On November 29, 1947, plaintiff Woodhouse entered into a written agreement with defendant
Halili for a partnership for the bottling and distribution of Mission soft drinks, plaintiff to act as industrial
partner or manager, and the defendant as a capitalist. The plaintiff was to secure the Mission Soft Drinks
franchise for and in behalf of the proposed partnership and that the plaintiff was to receive 30 per cent of
the net profits of the business.

Prior to the agreement, plaintiff had informed the Mission Dry Corporation that he had interested a
prominent financier who was willing to invest in the bottling and distribution of the said beverages, and
requested, in order that he may close the deal with him, that the right to bottle and distribute be granted
him for a limited time under the condition that it will finally be transferred to the corporation. Pursuant to
this request, plaintiff was given thirty days option on exclusive bottling and distribution rights.

Plaintiff prayed for the execution of the contract of partnership; accounting of profits and share thereof of
30 percent with damages. The Defendant on the other hand claims that the defendant’s consent to the
agreement, was secured by false representation of plaintiff that he was the owner, or was about to
become owner of an exclusive bottling franchise. Further, he contended that plaintiff did not secure the
franchise but was given to defendant himself. He also filed a counterclaim for damages.

ISSUE: WON false representation, if it existed, annuls the agreement to form the partnership

RULING: No. Article 1270 of the Spanish Civil Code distinguishes two kinds of (civil) fraud, the causal
fraud, which may be ground for the annulment of a contract, and the incidental deceit, which only renders
the party who employs it liable for damages only. The Supreme Court has held that in order that fraud
may vitiate consent, it must be the causal (dolo causante), not merely the incidental (dolo incidente)
inducement to the making of the contract.

If ever the plaintiff was guilty of a false representation, this was not the causal consideration that led
plaintiff to enter into the partnership agreement. The main cause that induced defendant to enter into the
partnership agreement with plaintiff, was the ability of plaintiff to get the exclusive franchise to bottle and
distribute for the defendant or for the partnership.

OCCENA VS. JABSON

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: If the prayer of the private respondent is to be released from its contractual obligations on
account of the fact that the prestation has become beyond the contemplation of the parties, then private
respondent can rely on said provision of the civil code. But the prayer of the private respondent was for
the modification of their valid contract. The above-cited civil code provision does not grant the court the
power to remake, modify, or revise the contract or to fix the division of the shares between the parties as
contractually stipulated with the force of law between the parties. Therefore, private respondent’s
complaint for modification of its contract with petitioner must be dismissed. The decision of respondent
court is reversed.

PLDT VS. JETURIAN

Facts: PLDT adopted in 1923 a Plan for Emloyees Pension. In 1945 the BOD adopted a resolution
discontinuing the pension plan. Hence this action of Resp.

Issue: WON the pre-war employees are entitled to the pension.

Held: Yes. But with the exception of those who died or left before the outbreak of the war. The pension
plan was not a gratuity but an inducement for employees to continue indefinitely in service. The plan
ripened into a binding contract upon its implied acceptance of the employees. Acceptance is inferred from
their entering the employ of the company and staying after the plan was made known. PLDT argues that it
can only be held liable under the conditions expressly set in the pension plan. But the Court held that the
Company that violated the contract with its employees, by discontinuing the plan without their consent, is
not in the position to insist upon the terms of the very contract they have breached

RONQUILLO V. COURT OF APPEALS

FACTS: Del Rosario owns a registered land adjacent to Estero Calubcub which is already dried up due to
the dumping of garbage by the sorrounding neighborhood and not by any natural causes. Defendant now
occupies said dried up land until Del Rosario, claiming ownership over the same, required him to vacate
on the basis of Article 370 of the Civil Code which provides that riparian owner owns the dried up river
bed abandoned by natural changes.

ISSUE: Whether or not Article 370 applies.

RULING: No. The rules on alluvion do not apply to man-made or artificial accretions nor to accretions to
lands that adjoin canals or esteros or artificial drainage systems. Considering our earlier finding that the
dried-up portion of Estero Calubcub was actually caused by the active intervention of man, it follows that
Article 370 does not apply to the case at bar and, hence, the Del Rosarios cannot be entitled thereto
supposedly as riparian owners.
 GENERAL MILLING CORP. VS. SPOUSES RAMOS, GR 193723, JULY 20, 2011DOCTRINE:

Facts: General Milling Corporation (GMC) entered into a Growers Contract with spouses Librado and
Remedios Ramos (Spouses Ramos). Under the contract, GMC was to supply broiler chickens for the
spouses to raise on their land. To guarantee full compliance, the Growers Contract was accompanied by
a Deed of Real Estate Mortgage over a piece of real property and a surety bond. Spouses Ramos
eventually were unable to settle their account with GMC. The property was extrajudicially foreclosed and
GMC was the highest bidder. Spouses Ramos questioned the validity of the foreclosure proceedings. The
CA found that GMC made no demand to spouses Ramos for the full payment of their obligation. A perusal
of the letters presented and offered as evidence by defendant-appellant GMC did not “demand” but only
request spouses Ramos to go to the office of GMC to “discuss” the settlement of their account.

Issue:

WON GMC made sufficient demand to the spouses Ramos to fulfill their obligation - NO

Held:

No. There are three requisites necessary for a finding of default. First, the obligation is demandable and
liquidated; second, the debtor delays performance; and third, the creditor judicially or extrajudicially
requires the debtor's performance. According to the CA, GMC did not make a demand on Spouses
Ramos but merely requested them to go to GMCs office to discuss the settlement of their account. In
spite of the lack of demand made on the spouses, however, GMC proceeded with the foreclosure
proceedings. Neither was there any provision in the Deed of Real Estate Mortgage allowing GMC to
extrajudicially foreclose the mortgage without need of demand.Article 1169 of the Civil Code states that:
those obligated to deliver or to do something incur in delay from the time the obligee judicially or
extrajudicially demands from them the fulfillment of their obligation. However, the demand by the creditor
shall not be necessary in order that delay may exist, when the obligation or the law expressly so declares.
The Deed of Real Estate Mortgage (contract) in the instant case has no such provision stating that
demand is not necessary for delay to exist. GMC should have first made a demand on the spouses before
proceeding to foreclose the real estate mortgage.

PAN PACIFIC SERVICE CONTRACTORS, INC. and RICARDO F. DEL ROSARIO, Petitioners,
vs.EQUITABLE PCI BANK

Facts: Pan Pacific Service Contractors, Inc. (Pan Pacific) is engaged in contracting mechanical works on
airconditioning system. On 24 November 1989, Pan Pacific, through its President, Ricardo F. Del Rosario
(Del Rosario), entered into a contract of mechanical works (Contract) with respondent for
P20,688,800. Pan Pacific and respondent also agreed on nine change orders for P2,622,610.30.
Thus, the total consideration for the whole project was P23,311,410.30.

Issue:Whether the CA, in awarding the unpaid balance of the price adjustment, erred in fixing the
interest rate at 12% instead of the 18% bank lending rate.

Held:Under Article 2209 of the Civil Code, the appropriate measure for damages in case of delay in
discharging an obligation consisting of the payment of a sum of money is the payment of penalty interest
at the rate agreed upon in the contract of the parties. In the absence of a stipulation of a particular rate of
penalty interest, payment of additional interest at a rate equal to the regular monetary
interest becomes due and payable. Finally, if no regular interest had been agreed upon by the contracting
parties, then the damages payable will consist of payment of legal interest which is 6%, or in the case of
loans or forbearances of money, 12% per annum. It is only when the parties to a contract have failed to fix
the rate of interest or when such amount is unwarranted that the Court will apply the 12% interest per
annum on a loan or forbearance of money.

DEVELOPMENT BANK OF THE PHILIPPINES vs. BONIFACIO SANZ MACEDA, JR.

FACTS: July 28, 1976, herein plaintiff Bonifacio Maceda, Jr. obtained a loan from the defendant DBP
inthe amount of

₱7.3 million to finance the expansion of the Old Gran Hotel in Leyte. Upon approval of the said loan,
plaintiff Maceda executed a promissory note and a mortgage of real estate. Project cost of

the New Gran Hotel was ₱10.5M. DBP fixed a debt equity ratio of 70%

-30%, corresponding to DBP and

Maceda’s respective infusion in the hotel project. Maceda’s equity infusion was ₱2.93M, or 30% of
₱10.5M. The DBP Governor at that time, Recio Garcia, in

-charge of loans for hotels, allegedly imposedthe condition that DBP would choose the building
contractor, namely, Moreman Builders Co. Thecontractor would directly receive the loan releases from
DBP, after verification by DBP of theconstruction progress. The period of loan availment was 360 days
from the date of initial release of theloan. Similarly, suppliers of equipment and furnishings for the hotel
were also to be paid directly by DBP.The construction deadline was set for December 22, 1977

ISSUE: (1)

WON the Honorable Court of Appeals was correct in upholding the trial court:

In imposing interest on the unreleased portion of the loan;

For the return of interests paid on the loan already released to Maceda

(2)

WON the damages awarded in favor of Maceda are unreasonable and excessive.

RULING:

In this case, the trial court and the appellate court should have required DBP, as creditor under the
loanagreement, to lend Maceda the amount needed to finish the construction of the hotel. The trial
courtand the appellate court thus erred in requiring DBP to pay Maceda

₱ 17,547,510.90 to finish theconstruction of the hotel.The trial court and appellate court find credit in the
finding that DBP actively connived with thecontractor in the anomalous loan releases. As found by the
RTC, the records show that checks were drawn only in the name of Moreman and plaintiff’s conformity to
fund releases were solicited by DBP after the fact of release, not before. Direct releases to the plaintiff,
instead of Moreman, began onlyafter Moreman was discharged as contractor

PHILCOMSAT VS. GLOBE TELECOM

FACTS: On 07 May 1991, Philcomsat and Globe entered into an Agreement whereby Philcomsat
obligated itself to establish, operate and provide an IBS Standard B earth station (earth station) within
Cubi Point for the exclusive use of the USDCA. The term of the contract was for 60 months, or five (5)
years. In turn, Globe promised to pay Philcomsat monthly rentals for each leased circuit involved. At the
time of the execution of the Agreement, both parties knew that the Military Bases Agreement between the
Republic of the Philippines and the US (RP-US Military Bases Agreement) was to expire. Under Section
25, Article XVIII of the 1987 Constitution, foreign military bases, troops or facilities, which include those
located at the US Naval Facility in Cubi Point, shall not be allowed in the Philippines unless a new treaty
is duly concurred in by the Senate and ratified by a majority of the votes cast by the people in a national
referendum when the Congress so requires, and such new treaty is recognized as such by the US
Government.

Subsequently, Philcomsat installed and established the earth station at Cubi Point and the USDCA made
use of the same.

On 16 September 1991, the Senate passed and adopted a resolution expressing its decision not to
concur in the ratification of the Treaty of Friendship, Cooperation and Security and its Supplementary
Agreements that was supposed to extend the term of the use by the US of Subic Naval Base, among
others.

In a letter dated 06 August 1992, Globe notified Philcomsat of its intention to discontinue the use of the
earth station in view of the withdrawal of US military personnel from Subic Naval Base after the
termination of the RP-US Military Bases Agreement. Globe invoked as basis for the letter of termination
Section 8 (Default) of the Agreement.

ISSUE: Whether or not the non-ratification by the Senate of the Treaty of Friendship, Cooperation and
Security and its Supplementary Agreements constitutes force majeure (fortuitous event) which exempts
Globe from complying with its obligations under the Agreement.

RULING: Yes. Globe asserts that Section 8 of the Agreement is not contrary to Article 1174 of the Civil
Code because said provision does not prohibit parties to a contract from providing for other instances
when they would be exempt from fulfilling their contractual obligations. Globe also claims that the
termination of the RP-US Military Bases Agreement constitutes force majeure and exempts it from
complying with its obligations under the Agreement.

Philcomsat and Globe agreed in Section 8 of the Agreement that the following events shall be deemed
events constituting force majeure:

1. Any law, order, regulation, direction or request of the Philippine Government;

2. Strikes or other labor difficulties;

3. Insurrection;

4. Riots;

5. National emergencies;

6. War;

7. Acts of public enemies;

8. Fire, floods, typhoons or other catastrophies or acts of God;

9. Other circumstances beyond the control of the parties.

Article 1174, which exempts an obligor from liability on account of fortuitous events or force majeure,
refers not only to events that are unforeseeable, but also to those which are foreseeable, but inevitable:

Art. 1174. Except in cases 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.

LORENZO SHIPPING VS. BJ MARTHEL

FACTS: Petitioner Lorenzo Shipping is engaged in coastwise shipping and owns the cargo M/V
Dadiangas Express. BJ Marthel is engaged in trading, marketing an dselling various industrial
commodities. Lorenzo Shipping ordered for the second time cylinder lines from the respondent stating the
term of payment to be 25% upon delivery, the balance payable in 5 bi-monthly equal installments, no
again stating the date of the cylinder’s delivery. It was allegedly paid through post dated checks but the
same was dishonored due to insufficiency of funds. Despite due demands by the respondent, petitioner
falied contending that time was of the essence in the delivery of the cylinders and that there was a delay
since the respondent committed said items “ within two months after receipt of fir order”. RTC held
respondents bound to the quotation with respect to the term of payment, which was reversed by the Court
of appeals ordering appellee to pay appellant P954,000 plus interest. There was no delay since there was
no demand.

ISSUE: Whether or not respondent incurred delay in performing its obligation under the contract of sale

RULING: By accepting the cylinders when they were delivered to the warehouse, petitioner waived the
claimed delay in the delivery of said items. Supreme Court geld that time was not of the essence. There
having been no failure on the part of the respondent to perform its obligations, the power to rescind the
contract is unavailing to the petitioner.

COCA-COLA BOTTLERS PHILIPPINES, INC. vs. CA and MS. LYDIA GERONIMO

FACTS: Private respondent was the proprietress of Kindergarten Wonderland Canteen in Dagupan City.
In August 1989, some parents of the students complained to her that the Coke and Sprite soft drinks sold
by her contained fiber-like matter and other foreign substances. She brought the said bottles for
examination to DOH and it was found out that the soft drinks “are adulterated.” As a result, her per day
sales of soft drinks severely plummeted that she had to close her shop on 12 December 1989 for losses.
She demanded damages from petitioner before the RTC which dismissed the same on motion by
petitioner based on the ground of Prescription. On appeal, the CA annulled the orders of the RTC.

ISSUE: WON the action for damages by the proprietress against the soft drinks manufacturer should be
treated as one for breach of implied warranty under article 1561 of the CC which prescribes after six
months from delivery of the thing sold.

RULING: Petition Denied.

The SC agrees with the CA’s conclusion that the cause of action in the case at bar is found on quasi-
delict under Article 1146 of the CC which prescribes in four years and not on breach of warranty under
article 1562 of the same code. This is supported by the allegations in the complaint which makes
reference to the reckless and negligent manufacture of "adulterated food items intended to be sold for
public consumption."

Santos Ventura Hocorma Foundation, Inc. vs. Ernesto V. Santos

FACTS: On October 26, 1990, the parties executed a Compromise Agreement wherein Foundation shall
pay Santos P14.5 Million in the following manner: (a) P1.5 Million immediately upon the execution of this
agreement; and (b) the balance of P13 Million shall be paid, whether in 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.

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. 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.

ISSUE: Whether or not SVHFI incurred in delay based on the compromise agreement and thereby liable
for legal interest

RULING: Yes. SVHFI is liable for legal interest as penalty on account of delay. 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. Article 1169 of the New
Civil Code provides that those obliged to deliver or to do something incur in delay from the time the
obligee judicially or extrajudicially demands from them the fulfillment of their obligation.

BACOLOD-MURCIA MILLING V. COURT OF APPEALS

Facts: Bacolod-Murcia Milling Co., Inc.(BMMC) is the owner and operator of the sugar central in Bacolod.

Alonso Gatuslao (Gatuslao) is a registered plantor of the Bacolod-Muria Mill District.

BMMC and Gatuslao executed an “Extension and Modification of Milling Contract.

From crop year 1957-1958 up to crop year 1967-1968, Gatuslao has been milling all the sugarcane grown
and produced with the Mill of BMMC.

From crop year 1920-21 to crop year 1967-68, the canes of planters adhered to the mill of BMMC were
transported from the plantation to the mill by means of cane cars and through railway system operated by
BMMC.

BMMC has been hauling planter Gatuslao’s sugar cane to its mill or factory continuously until crop year
1967 – 1968.
The milling contract between BMMC and owners of the hacienda Helvetica expired at the end of the
1964-1965 crop year.

The portion of the railway traversing the hacienda Helvetica was closed as per decision of the court.

The use of the railroad tracks(traversing hacienda Helvetica) was temporarily allowed due to the
intervention of the President of the Philippines, which is until 1967-1978 milling season only.

Gatuslao loaded their cut cranes on trucks provided by the Bacolod-Murcia Agricultural Cooperative
Marketing Association, Inc. (B-MACMA) during 1968-1969 crop year.

BMMC had not been able to use its cane cars and railway system for the cargo crop year 1968-1989.

Issue/s: Whether or not the termination of petitioner’s right of way over the hacienda Helvetica caused by
the expiration of its amended milling contracts with the landowners of the land in question is fortuitous
event or force majeure which will exempt petitioner BMMC from fulfillment of its contractual obligation.

Whether or not BMMC was able to provide adequate and efficient transportation facilities of the canes of
Gatuslao and the other planters milling with BMMC during the crop year 1968-69.

Ruling: No. The terms of the milling contracts were clear and undoubtedly there was no reason for BMMC
to expect otherwise. The closure of any portion of the railroad track, not necessarily in the hacienda
Helvetica but in any of the properties whose owners decided not to renew their milling contracts with the
Central upon their expiration, was foreseeable and inevitable.

Despite its awareness that the conventional contract of lease would expire in crop year 1964-1965 and
that refusal on the part of any one of the landowners to renew their milling contracts and the
corresponding use of the right of way on their lands would render impossible compliance of its
commitments, BMMC took a calculated risk that all the landowners would renew their contracts.

It was established that after Gatuslao had cut his sugarcanes for hauling, no trailers arrived and when two
trailers finally arrived on October 1968 after several unheeded requests, they were left on the national
highway about one kilometer away from the loading station, the means of transportation provided by
BMMC is very inadequate to answer the needs of Gatuslao.