Case 191

G.R. No. 118248 April 5, 2000

DKC HOLDINGS CORPORATION,petitioner,
vs.
COURT OF APPEALS, VICTOR U. BARTOLOME and REGISTER OF DEEDS FOR METRO
MANILA, DISTRICT III, respondents.

DOCTRINE:
Nature of intransmissible rights - Among contracts which are intransmissible are those which
are purely personal, either by provision of law, such as in cases of partnerships and agency, or
by the very nature of the obligations arising therefrom, such as those requiring special personal
qualifications of the obligor. It may also be stated that contracts for the payment of money debts
are not transmitted to the heirs of a party, but constitute a charge against his estate. Thus,
where the client in a contract for professional services of a lawyer died, leaving minor heirs, and
the lawyer, instead of presenting his claim for professional services under the contract to the
probate court, substituted the minors as parties for his client, it was held that the contract could
not be enforced against the minors; the lawyer was limited to a recovery on the basis of
quantum meruit.

FACTS:
The subject of the controversy is a 14,021 square meter parcel of land located in
Malinta, Valenzuela, Metro Manila which was originally owned by private respondent Victor U.
Bartolome's deceased mother, Encarnacion Bartolome
On March 16, 1988, petitioner entered into a Contract of Lease with Option to Buy with
Encarnacion Bartolome, whereby petitioner was given the option to lease or lease with
purchase the subject land, which option must be exercised within a period of two years counted
from the signing of the Contract. In turn, petitioner undertook to pay P3,000.00 a month as
consideration for the reservation of its option. Within the two-year period, petitioner shall serve
formal written notice upon the lessor Encarnacion Bartolome of its desire to exercise its option.
The contract also provided that in case petitioner chose to lease the property, it may take actual
possession of the premises. In such an event, the lease shall be for a period of six years,
renewable for another six years, and the monthly rental fee shall be P15,000.00 for the first six
years and P18,000.00 for the next six years, in case of renewal.
Petitioner regularly paid the monthly P3,000.00 provided for by the Contract to Encarnacion until
her death in January 1990. Thereafter, petitioner coursed its payment to private respondent
Victor Bartolome, being the sole heir of Encarnacion. Victor, however, refused to accept these
payments.
Thus, on April 23, 1990, petitioner filed a complaint for specific performance and damages
against Victor
Both the lower court and the Court of Appeals held that the said contract was terminated upon
the death of Encarnacion Bartolome and did not bind Victor because he was not a party thereto.
ISSUE:
Whether or not the Contract of Lease with Option to Buy entered into by the late
Encarnacion Bartolome with petitioner was terminated upon her death..

RULING:
No. Art. 1311. Contracts take effect only between the parties, their assigns and heirs,
except in case where the rights and obligations arising from the contract are not transmissible
by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of
the property he received from the decedent.
The general rule, therefore, is that heirs are bound by contracts entered into by their
predecessors-in-interest except when the rights and obligations arising therefrom are not
transmissible by (1) their nature, (2) stipulation or (3) provision of law.
In the case at bar, there is neither contractual stipulation nor legal provision making the rights
and obligations under the contract intransmissible. More importantly, the nature of the rights and
obligations therein are, by their nature, transmissible.
The subject matter of the contract is likewise a lease, which is a property right. The death of a
party does not excuse nonperformance of a contract which involves a property right, and the
rights and obligations thereunder pass to the personal representatives of the deceased.
Similarly, nonperformance is not excused by the death of the party when the other party has a
property interest in the subject matter of the contract.
Under both Article 1311 of the Civil Code and jurisprudence, therefore, Victor is bound by the
subject Contract of Lease with Option to Buy.
Case 192

METROPOLITAN BANK and TRUST COMPANY, Petitioner,

vs.
ROGELIO REYNADO and JOSE C. ADRANDEA, Respondents.

Doctrine:
It is a hornbook doctrine in our criminal law that the criminal liability for estafa is not
affected by a compromise, for it is a public offense which must be prosecuted and punished by
the government on its own motion, even though complete reparation [has] been made of the
damage suffered by the private offended party. Since a criminal offense like estafa is committed
against the State, the private offended party may not waive or extinguish the criminal liability
that the law imposes for the commission of the crime.

Facts:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks the
reversal of the Court of Appeals’ (CA’s) Decision

On January 31, 1997, petitioner Metropolitan Bank and Trust Company charged respondents
before the Office of the City Prosecutor of Manila with the crime of estafa. In the affidavit of
petitioner’s audit officer, Antonio Ivan S. Aguirre, it was alleged that the special audit conducted
on the cash and lending operations of its Port Area branch uncovered anomalous/fraudulent
transactions perpetrated by respondents in connivance with client Universal Converter
Philippines, Inc. (Universal)
Meanwhile, petitioner and Universal entered into a Debt Settlement Agreement whereby the
latter acknowledged its indebtedness to the former.
Following the requisite preliminary investigation, Prosecutor Edad in her Resolution found
petitioner’s evidence insufficient to hold respondents liable for estafa. According to Prosecutor
Edad:
The execution of the Debt Settlement Agreement puts complainant bank in estoppel to argue
that the liability is criminal. Since the agreement was made even before the filing of this case,
the relations between the parties have change, novation has set in and prevented the incipience
of any criminal liability on the part of respondents. Thus, Prosecutor Edad recommended the
dismissal of the case.
CA affirmed the twin resolutions of the DOJ Sec, and accordingly, just as Universal cannot be
held responsible under the bills purchase transactions on account of novation, private
respondents, who acted in complicity with the former, cannot be made liable [for] the same
transactions
Issue:
Whether Or Not novation extinguish criminal liability or WON the execution of the debt
settlement agreement precluded MB from holding respondents criminally liable for estafa.

Ruling:
The Supreme Court ruled that Novation not a mode of extinguishing criminal liability for
estafa; Criminal liability for estafa not affected by compromise or novation of contract.
Thus, the doctrine that evolved from the Jurisprudence is that a compromise or settlement
entered into after the commission of the crime does not extinguish accused’s liability for estafa.
Neither will the same bar the prosecution of said crime. Accordingly, in such a situation, as in
this case, the complaint for estafa against respondents should not be dismissed just because
petitioner entered into a Debt Settlement Agreement with Universal.
Case 193

PRUDENTIAL BANK AND TRUST COMPANY (now BANK OF THE PHILIPPINE ISLANDS,)
Petitioner,
vs.
LIWAYWAY ABASOLO, Respondent.

Doctrine:
Doctrine of apparent authority that the principal is liable for the obligations contracted by
its agent.
A banking corporation is liable to innocent third persons where the representation is
made in the course of its business by an agent acting within the general scope of his authority
even though, in the particular case, the agent is secretly abusing his authority and attempting to
perpetuate fraud upon his principal or some person, for his own ultimate benefit.

Facts:
Leonor Valenzuela-Rosales inherited two parcels of land. After she passed away, her
heirs executed a Special Power of Attorney in favor of Liwayway Abasolo (respondent)
empowering her to sell the properties. Corazon Marasigan (Corazon) wanted to buy the
properties which were being sold for ₱2,448,960, but as she had no available cash, she
broached the idea of first mortgaging the properties to petitioner Prudential Bank and Trust
Company (PBTC), the proceeds of which would be paid directly to respondent. Respondent
agreed to the proposal.
On Corazon and respondent’s consultation with PBTC’s Head Office, its employee, Norberto
Mendiola, allegedly advised respondent to issue an authorization for Corazon to mortgage the
properties, and for her (respondent) to act as one of the co-makers so that the proceeds could
be released to both of them.
To guarantee the payment of the property, Corazon executed a Promissory Note for ₱2,448,960
in favor of respondent.
By respondent’s claim, Mendiola advised her to transfer the properties first to Corazon for the
immediate processing of Corazon’s loan application with assurance that the proceeds thereof
would be paid directly to her , and the obligation would be reflected in a bank guarantee.
Heeding Mendiola’s advice, respondent executed a Deed of Absolute Sale over the properties
in favor of Corazon following which were issued in the name of Corazon.
Respondent later got wind of the approval of Corazon’s loan application and the release of its
proceeds to Corazon who, despite repeated demands, failed to pay the purchase price of the
properties.
RTC and later the Court of Appeals rendered judgment in favor of respondent and against
Corazon who was made directly liable to respondent, and against petitioner who was made
subsidiarily liable in the event that Corazon fails to pay.

Issue:
Whether or not the petitioner is subsidiary liable.
Ruling:
No. In the absence of a lender-borrower relationship between petitioner and Liwayway,
there is no inherent obligation of petitioner to release the proceeds of the loan to her. For
Liwayway to prove her claim against petitioner, a clear and deliberate act of conferring a favor
upon her must be present. A written request would have sufficed to prove this, given the nature
of a banking business, not to mention the amount involved.
Since it has not been established that petitioner had an obligation to Liwayway, there is no
breach to speak of. Liwayway’s claim should only be directed against Corazon. Petitioner
cannot thus be held subsidiarily liable.

Case 194
R. MARINO CORPUS, petitioner,
vs.
COURT OF APPEALS and JUAN T. DAVID, respondents

Doctrine:

Where one has rendered services to another, and these services are accepted by the
latter, in the absence of proof that the service was rendered gratuitously, it is but just that he
should pay a reasonable remuneration therefore because 'it is a well-known principle of law,
that no one should be permitted to enrich himself to the damage of another.

Facts:
This is a petition for review on certiorari of the decision of the Court of Appeals, affirming
the decision of the court of Instance of Manila for the recovery of attorneys fees for professional
services rendered by the plaintiff, private respondent herein, to defendant, petitioner herein.

The defendant was charged administratively by several employees of the Central Bank
Export Department of which the defendant is the director. Among others, lawyering for his case
was the plaintiff. During the pendency of the case, the defendant filed a petition for certiorari but
the case was dismissed. Thus, after being remanded to the lower courts, the defendant sent a
letter and a check as a token of appreciation. But, the plaintiff did not accept. He said, since a
final favorable outcome has not yet been met, he will not accept payment, instead he asks to be
remembered after the case is finally resolved. After the resolution of the case, the defendant
denies to give the plaintiff his attorney’s fees.

Issue:
Whether or not private respondent Atty. Juan T. David is entitled to attorney's fees.

Ruling:
YES. While there was an express agreement between petitioner and respondent as
regards attorney’s fees, the facts of the case support the position of respondent that there was
at least an implied agreement for the payment of attorney’s fees. Petitioner’s act of giving the
check to the respondent indicates the petitioner's commitment to pay the former attorney’s fees.
It is patent then that respondent David agreed to render professional services to petitioner
Corpus secondarily for a professional fee.

Moreover, the payment of attorney’s fees to respondent may also be justified by virtue of the
innominate contract of facio ut des (I do and you give which is based on the principle that “no
one shall unjustly enrich himself at the expense of another.” innominate contracts have been
elevated to a codal provision in the New Civil Code by providing under Article 1307 that such
contracts shall be regulated by the stipulations of the parties, by the general provisions or
principles of obligations and contracts, by the rules governing the most analogous nominate
contracts, and by the customs of the people.