Nature and Effects – FE

Picart v. Smith 37 Phil 809 - negligence

Case Title: AMADO PICART, plaintiff-appellant,

vs.
FRANK SMITH, JR., defendant-appellee.
G.R. No. L-12219
March 15, 1918
Citation: PICART vs. SMITH, JR., GR No. L-12219 (2011, March 26).
https://vbdiaz.wordpress.com/2011/03/26/picart-vs-smith-jr/
Facts:
 December 12, 1912, on the Carlatan Bridge, at San Fernando, La Union. Amado Picart, the plaintiff, was
riding his pony on the wrong side of the road
 Frank Smith Jr., the defendant, blew his horn to warn Picart to move to the right lane. Additionally, he
blew his horn two more times around the middle of the bridge
 Seeing the automobile moving at a fast constant speed, Picart decided to steer his pony continually to
the far right, near the railings, as he concluded that he did not have enough time to switch lanes
 Since the pony did not show any sign of fear, Smith decided to remain at a constant pace nearing
Picart. They later on are within close proximity, to which Smith quickly maneuvered to the left. But by
doing so, Picart’s pony is suddenly frightened and turns its body across the bridge, such that both
parties collide. Picart is thrown off and is injured, while the horse is severely wounded, and
unfortunately, dies.
 An action for damages was filed against Frank Smith (the defendant)

Issue:
 Whether the defendant’s manner of maneuvering of his vehicle was a case of negligence or not. If so, it
gives rise to a civil obligation to remuneration to the damages done to the plaintiff

Held
 The plaintiff Picart, although received severe damages, was not free from fault. Picart was guilty of
antecedent negligence for planting himself in such a situation by being on the wrong side of the road.
But as previously denoted, the defendant Smith was also liable for negligence. Given the situation, it is
the utmost priority to discover who is immediately and directly responsible. Since the negligence of
Frank Smith supersedes the negligence of Amando Picart by an appreciable amount, under the “last
clear chance” law, the party that had a chance to avoid the possible collision is to pay remunerations to
the opposing party without referencing the prior fault of the other.
 Furthermore, the court of appeals charged Frank Smith, Jr. the sum of two hundred pesos (P200), with
costs of other instances for his negligence including the value of the horse, medical expenses of the
plaintiff, the loss or damage occasioned to articles of his apparel, and lawful interest on the whole to
the date of this recovery

Real v. Belo GR no. 146224, jan. 26,2007 – FE

VIRGINIA REAL vs. SISENANDO H. BELO

G.R. NO. 146224 | January 26, 2007
FACTS:
Virginia Real owned the Wasabe Fastfood stall and Sisenando H. Belo also owned and operated the BS Masters
fastfood stall, both are located at the Food Center of Philippine Women’s University (PWU). Around 7 a.m. on
January 25, 1996, a fire broke out at the Wasabe Fastfood stall and quickly spread, causing the nearby stalls,
including the respondents' stall, to burn. An investigation revealed that the cause of the fire was the leaking
fumes from the LPG stove and tank installed at the petitioner's stall.

The respondent filed a complaint for damages against petitioner before the Metropolitan Trial Court, Branch
24, Manila (MeTC), docketed as Civil Case No. 152822, alleging that petitioner failed to exercise due diligence
in the upkeep and maintenance of her cooking equipment, as well as the selection and supervision of her
employees, and that this negligence was the proximate cause of the fire.

On September 23, 1996, petitioner denied the liability, arguing that the fire was a fortuitous event and that
she exercised due diligence in selection and supervision of her personnel. On April 5, 1999, the MeTC
rendered its decision in favor of the respondent and against the petitioner ordering the latter to pay P50,000
for temperate damages, and P25,000 for attorney's and litigation fees. Dissatisfied, the petitioner filed an
appeal with the Regional Trial Court, Branch 43, Manila (RTC), docketed as Civil Case No. 99-94606, insisting
that the fire was a fortuitous event, but the RTC increased the amount of temperate damages to P80,000.

Petitioner filed a Motion for Reconsideration contending that it is unreasonable since she also incurred losses
from the fire, but it was denied by the RTC on April 12, 2000. Petitioner then filed a Petition for Review with
the CA, docketed as CA-G.R. SP No. 58799. On June 16, 2000, the CA issued a Resolution dismissing the
petition for being "procedurally flawed/deficient." On July 14, 2000, petitioner filed her Motion for
Reconsideration but it was also denied on November 27, 2000.

ISSUES:
Hence, the present petition raising the following issues:
 Whether the submitted certified true copy of the appealed decision of the Regional Trial Court as
authenticated by a court employee other than the Clerk of Court who was not around at that time said
copy was secured constitutes compliance with the Rules?
 Whether the submission of a certified true copy of the Metropolitan Trial Court's judgment is still an
indispensable requirement in filing a petition for review before the Court of Appeals despite the fact
that said judgment was already modified by the above decision of the Regional Trial Court and it is the
latter decision that is the proper subject of the petition for review?
 Whether the submission of copies of the respective position papers of the contending parties is still an
indispensable requirement in filing a petition for review before the Court of Appeals despite the fact
that the contents thereof are already quoted in the body of the verified petition and in the subject
judgment of the Metropolitan Trial Court?
 Whether the herein petitioner could be held liable for damages as a result of the fire that razed not
only her own food kiosk but also the adjacent foodstalls at the Food Center premises of the Philippine
Women's University, including that of the respondent?
 Whether the Regional Trial Court could increase the amount of damages awarded by the Metropolitan
Trial Court in favor of the respondent who has not even filed an appeal therefrom?
 Whether the fire was a fortuitous event.

HELD/RULING:
Article 1174 of the Civil Code provides that no person shall be responsible for a fortuitous event which could
not be foreseen, or which, though foreseen, was inevitable. A party’s theory of a fortuitous event is unavailing
where the circumstances show that the fire originated from leaking fumes from the LPG stove and tank
installed at a party’s fastfood stall and her employees failed to prevent the fire from spreading and destroying
the other fastfood stalls, including the respondent’s. Such circumstances do not support the petitioner's
theory of a
fortuitous event.

Whenever an employee's negligence causes damage or injury to another, there instantly arises a presumption
juris tantum that the employer failed to exercise diligentissimi patris families in the selection (culpa in
eligiendo) or supervision (culpa in vigilando) of its employees. To avoid liability for a quasi-delict committed by
his employee, an employer must overcome the presumption by presenting convincing proof that he exercised
the care and diligence of a good father of a family in the selection and supervision of his employee. In this
case, petitioner not only failed to show that she submitted proof that the LPG stove and tank in her fastfood
stall were maintained in good condition and periodically checked for defects but she also failed to submit
proof that she exercised the diligence of a good father of a family in the selection and supervision of her
employees. For failing to prove care and diligence in the maintenance of her cooking equipment and in the
selection and supervision of her employees, the necessary inference was that petitioner had been negligent.

As to the affidavits, the Court notes that they were presented by the respondent as part of the testimony of
his witness Fire Investigator Pinca and... therefore would not support the allegations of the petitioner. The CA
had committed grave abuse of discretion amounting to lack of jurisdiction in putting a premium on
technicalities at the expense of a just resolution of the case.

As to the award of temperate damages, the increase in the amount thereof by the RTC is improper. The RTC
could no longer examine the amounts awarded by the MeTC since the respondent did not appeal from the
Decision of the MeTC. It is well-settled that a party who does not appeal from the decision may not obtain any
affirmative relief from the appellate court other than what he has obtained from the lower court, if any,
whose decision is brought up on appeal.

Consequently, the petition is approved. The assailed resolutions of the Court of Appeals are reversed and set
aside. The temperate damages awarded is reduced from P80,000.00 to P50,000.00 as awarded by the MeTC.

Necesito v. Paras 104 Phil 75

Case Title: Necesito v. Paras
G.R. No. L-10605 June 30, 1958
Precillano Necesito, etc., plaintiff-appellant, vs.
Natividad Paras, et al., defendants-appellees.
REYES, J.B.L., J.:

Facts:
The plaintiff-appellant named Precillano Necesito filed a complaint against Natividad Paras, defendant-
appellees, due to the incident that happened in the morning of January 28, 1954. During that day, the bus no.
199 of the Philippine Rabbit Bus Lines driven by Francisco Bandonell, traveling from Agno, Pangasinan bound
to Manila was carrying the passengers, Severina Garces with her one year old son, Precillano Necesito, when
an accident took place. As the vehicle entered a wooden bridge, the front wheel swerved to the right and the
driver lost control. This causes the wrecking of the bridge’s wooden rails leading the wheels to fall on its right
side into a breast-deep creek. The mother drowned while his son was injured, suffering abrasions and fracture
of the left femur. Inclusively, their money, wrist watch and cargo of vegetables were all lost.

Additionally, the case was said to be involved in actions ex contractu against the owners and operators of the
common carrier with a fees totalling over P85,000 filed in the Court of First Instance of Tarlac. However, the
carrier pleaded that the incident was due to engine trouble which means that it is out of the defendant nor
the driver’s control. Later on, the trial court declared that actions dismissed for the accident were exclusively
due to a fortuitous event.

Issues:
1. Whether or not the carrier is liable for the manufacturing defect of the steering knuckle.
2. Whether or not the evidence discloses that in regard thereto the carrier exercised the diligence
required by law which is the Art. 1755, new Civil Code stating that, “A common carrier is bound to carry
the passengers safely as far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances.”

Held:
1. The court held that the carrier must be held liable for the manufacturing defect of the steering knuckle.
Due to the fact that the passengers have no relationship with the producer of the defective equipment,
it will have an obvious reason that they have no legal recourse against him while the carrier does. It is
true that the passenger has no influence over the carrier's decision to utilize tools or machines and that
neither their choice nor their control over those decisions extends to their use. Considering this, it only
makes sense that the carrier would still be held accountable for any technical flaws which were all
available for inspection.
2. The carrier is guilty under Article 1775 of the new Civil Code for failing to exercise the diligence
necessary by the said article. The court determined that the mechanical agent of the carrier's recurrent
examination of the steering knuckle did not meet the mandatory legal standard of "utmost diligence of
very cautious persons" — "as far as human care and foresight can provide." It is therefore concluded
that the damage to the knuckle cannot be recognized as a sudden and unexpected event that absolves
the carrier from liability. It is unrealistic for drivers to examine the strength of every part of their cars
before each trip. However, considering their obligations to the traveling public, it presupposes that
regular and frequent tests should be made to evaluate the condition and strength of those automobile
parts whose malfunction may potentially harm the safety of the commuters. In the case of the carrier,
the steering knuckle test was only done visually every 30 days to see whether any cracks appeared. A
visual check of the steering knuckle is not sufficient to ascertain whether or not its strength was
abnormal. The carrier should have been more conscious of the significance of the resistance of the
knuckle, that it could lead to a loss of balance and steering control of the bus and might cause a
terrible consequence for the passengers.

Therefore, due to the carrier's negligence, the court ruled that no allowance should be made. The
court based its decision on Article 2220 of the new Civil Code that in case of suits for breach of
contract, moral damages are recoverable only where the defendant acted fraudulently or in bad faith,
and there is none in the case before us. Exemplary damages, the carrier has not performed in a
"wanton, fraudulent, reckless, oppressive or malevolent manner" to warrant their award. The court
ordered Philippine Rabbit Bus Lines to compensate the following amounts to the plaintiffs-appellants.
(1) P5,000 for Precillano Necesito for the femur abrasions and fracture he suffered from the accident,
including medical and hospitalization costs. (2) P15,000 to the descendants of Severina Garces— not
only for the assets she lost during the incident and for her funeral expenditures but the income
opportunity loss and the scarcity of her protection, guidance, and company for her left behind
 offspring. (3) Lastly, P3,500 from the initial attorney's fee of the plaintiffs-appellants totaling over
P85,000. It is the only alteration issued by the court responding to the Defendants-appellees' motion
for reconsideration of the decision on September 11, 1958, regarding the plaintiffs-appellants
attorney's fees and litigation expenses. The court based its ruling on Article 1764, per Article 2206, No.
3 of the new Civil Code, which stated that in the event of an accident caused by the negligence of a
carrier, the heirs have the right to demand moral damages for mental anguish caused by the death of
the deceased, the heirs of a deceased passenger may recover moral damages, even though a
passenger who is injured but survives is not entitled to them. As a result, Severina Garces' other six
children are privileged to claim that the carrier should compensate their attorney's fees and litigation
expenses.

La Mallorca v. De Jesus 17 SCRA 23

La Mallorca v. De Jesus
17 SCRA 23

Facts:
20-year-old Lolita de Jesus was killed due to a head-on collision between a La Mallorca and Pampanga Bus
Company Inc., bus of which she was a passenger, and a freight truck traveling in the opposite direction in
Marilao Bulacan, on October 8, 1959. The cause of the collision was that the bus driver lost control of the
wheel when the left tire suddenly exploded. The petitioner stated that the blowout of the tire was a fortuitous
event. The Court made no findings of specified acts of negligence on the part of the defendant and whether
the blow-out by itself would generate liability. According to the petitioner’s evidence, the inner tube of the left
front tire was “pressed between the inner circle of the left wheel and the rim which had slipped out of the
wheel”. According to the Court, it is a mechanical defect or a fault in the equipment which would have been
discoverable if the bus had been subjected to a more thorough check-up before being used that morning. The
Court of Appeals also found out that the bus was running fast short before the accident.

Issue:

Whether or not La Mallorca and Pampanga Bus Company Inc., should be held liable for the accident caused by
a mechanical defect?

Held:

Due to the evidence found by the Court of Appeals as well as the fact that the tire that exploded was not new,
the plea of caso fortuito could not be upheld, and therefore, the petitioners were held liable for the accident.

Tasnguilig v. CA and Herce GR no. 117190 , Jan. 2, 1997

Case Title: JACINTO TANGUILIG DOING BUSINESS UNDER THE NAME AND STYLE J.M.T.
ENGINEERING AND GENERAL MERCHANDISING, PETITIONER, VS. COURT OF APPEALS
AND VICENTE HERCE JR., RESPONDENTS
Citation: Tanguilig vs CA and Herce, G.R. No. 117190, (1997, January 02)
Facts:
Around April 1987, petitioner, Jacinto M. Tanguilig under the business name and style of J.M.T. Engineering
and General Merchandising entered a contract with the respondent, Vicente Herce Jr. proposing and agreeing
on the construction of a windmill system for Php 60,000 with a one-year guaranty from the date of completion
and acceptance by the respondent. According to the contract, the respondent gave the petitioner a down
payment of P30,000.00 and a P15,000.00 installment payment, leaving a P15,000.00 balance.
On March 14, 1988, petitioner, Jacinto M. Tanguilig filed a complaint against the respondent, Vicente Herce Jr.
for non-compliance of his obligation to pay the remaining balance. The respondent denied the allegations and
claimed that he had paid the balance through San Pedro General Merchandising Inc. (SPGMI) which
constructed the deep well which he argues is part of their contract, yet the petitioner denied the inclusion of
the deep well since they solely agreed to the construction of the windmill system only, incidental materials
excluded. In addition, there is also an obligation to repair or reconstruct the windmill, the petitioner did not
claim any responsibility since he claimed the collapse as force majeure.

Later on, the trial court held the claim of the petitioner evidenced by letter proposals but the claim for force
majeure lacked evidence. The court of appeals then reversed the trial court, stating the mere mentioning of
deep well in the contract and the testimony of the witness and SPGMI proprietor, Guillermo Pili proves its
inclusion in the agreement. The petitioner sought relief from the court of appeals raising the two issues of this
case: The inclusion of the deep well in the contract of the construction of the windmill system and liability in
the reconstruction of the collapsed windmill. The first issue reversed its appellate court, but the second issue
was
sustained.

After reviewing and reconsidering the submitted pieces of evidence, it was concluded that the installation of
the deep well is not included in the agreement. It is because it was merely defined as being appropriate for
the proposed windmill and not as another part of the project. Nonetheless, the respondent still argued that
the petitioner verbally agreed to install a deep well pump through a third party which can be offset by the
contract price. The allegations lacked evidence. The connection between Pili and the respondent was also in
doubt as it is deemed unusual that given the situation, there was no written contract of any form. If SPGMI
was truthfully commissioned by the petitioner, a separate agreement would have been present. The action
and statements of the parties effectively refute the respondent’s claims. The second issue claimed as force
majeure was not rebutted as the petitioner failed to prove that the collapse happened solely because of a
natural event. Reviewing the case, it was found that no actual typhoon was disclosed and either way, the
windmill would’ve not collapsed if it was built on a strong foundation and there was no inherent defect. In the
end, the court decided that respondent Vicente Herce Jr. pay the balance with interest at a legal rate
beginning at the date of complaint filing to the petitioner, Jacinto M. Tanguilig. In addition, the petitioner is
liable for the reconstruction of the windmill in accordance with one year guarantee and completes the same
three months from the finality of the decision.

Issue:
1. Whether or not petitioner, Vicente Herce Jr. is under obligation to pay his accounts payable worth
15,000pesos to Jacinto Tanguilig (J.M.T. Engineering and General Merchandising)
2. Whether or not the petitioner, Jacinto Tanguilig (J.M.T. Engineering and General Merchandising) is
under obligation to reconstruct the windmill after it collapsed.

Held:
1. Yes, despite commissioning a part of the windmill worth P15,000 in a third party company (San Pedro
General Merchandising Inc. (SPGMI), after the interpretation of contracts with various precedents such
as Kasilag v. Rodriguez, 69 Phil. 217 (1939) it is a cardinal rule to make it in accordance with primordial
consideration and in case of doubt, the precedent Art. 1371, New Civil Code; GSIS v. Court of Appeals,
G.R. No. 52478, 30 October 1986, 145 SCRA 311; Serrano v. Court of Appeals, No. L -46357, 9 October
1985, 139 SCRA 179, made the court consider the ruling of previous cases and adopt it, thus, it proves
that the construction of a windmill system with Jacinto Tanguilig (J.M.T. Engineering and General
 Merchandising) does not include the installation of a deep well. Furthermore, lack of statements and
witnesses by the third party company that installed the deep well, led the ruling to direct Vicent Herce
Jr. to pay the petitioner Jacinto M. Tanguilig the balance of P15,000 with interest at the legal rate from
the date of the filing of the complaint.
2. Yes, due to petitioner’s failure to prove that the collapse of the windmill was due solely to a fortuitous
event such as a typhoon, it cannot claim its exemption from liability under Art. 1174 of the Civil Code
as it does not requisite article’s second clause, “b. the event must be either unforeseeable or
unavoidable”, and the strong wind merely stated by the petitioner cannot be unforeseeable as the
windmill really needs strong winds to pursue. With the failure to function properly of the said project
between the one-year guarantee, Article 1167 of the Civil Code shall be observed as Tanguilig failed to
do what he’s obliged to do, he is ordered to rebuild the same windmill at his cost within 3 months.

Kinds of Obligations

Hermosa v. Longara 93 Phil 971

Case Title: LUZ HERMOSA, as administratrix of the Intestate Estate of Fernando

Hermosa, Sr., and FERNANDO HERMOSA, JR., petitioners, vs. EPIFANIO M. LONGARA, respondent.
G.R. No. L-5267 October 27, 1953
Citation: Hermosa v. Longara, G.R. No. L-5267 (1953, October 27).
https://lawphil.net/judjuris/juri1953/oct1953/gr_l-5267_1953.html

Facts:
 An appeal by way of certiorari against the decision of the fourth division of the Court of Appeals,
approving the three kinds of claims presented by Longara (respondent) against the intestate estate of
Hermosa (petitioner). The first claim is the credit advances made to the intestate from 1932 to 1944
amounting to P2,341.41, the second claim is the credit advances of P12, 924.12 made to his son,
Francisco Hermosa, and the last claim is the advances made to his grandson, Fernando Hermosa Jr.,
from 1945 to 1947 amounting to P3,772.
 The three claims were made in December 1944 after the death of the intestate (Fernando Hermosa
Sr.).
 Advances were made “on condition that their payment should be made by Hermosa Sr. as soon as he
receives funds from the sale of his property in Spain.”

Issue:
 Whether the appeal is exclusively dependent upon the will of the debtor
 Whether the claim was the product of collusion or connivance between the administratrix and the
claimant
 Whether the third group of claims should be reversed

Held:
 The Supreme Court finds that in accordance with article 1115 of the old Civil Code, the appeal is null
and void. The debt immediately became demandable upon the happening of the condition due to
suspensive condition, the condition being “as soon as he receives funds from the sale of his property in
Spain”; which the intestate had made his creditors believe he had done so.
  The Court of Appeals found no evidence supporting the claim and the promise made by the intestate
to pay the advances implied from the fact that receipts have been preserved. Had the advances not
been made without the intention of demanding their payment later, said receipts would not have been
preserved. Advances between the intestate and claimant have also been a regularity between them
which also supports this conclusion.
 The court finds merit in this contention for two obvious reasons. First, because the obligation to furnish
support is personal and is extinguished upon the death of the person obliged to give support
(intestate) (article 150, old Civil Code), and second because upon the death of a principal (the intestate
in this case), his agent’s authority or authorization is deemed terminated (article 1732, old Civil Code).
According to the third claim of Longara, the advances for the intestate’s grandson were from 1945-
1947, after the death of the intestate in December 1944. This holds the principal not liable for the
credit advances worth P3,772, which the court allowed for reversal. The judgment appealed and
approved the claims of the appellee in the amounts of P2,341.41 and P12,942.12, and the P3,772 to be
reversed. Without costs.

Kind: Conditional Obligation

Osmena v. Rama 14 Phil 99

TOMAS OSMEÑA vs. CENONA RAMA

G.R. No. 4437 | September 9, 1909

FACTS:
On November 15, 1890, defendant Doña Cenona Rama executed and delivered to Don Victoriano Osmeña a
contract stating that she had received the sum of P200 from Don Osmeña, which she will pay in sugar in
January or February of the coming year and an interest at a rate of half a cuartillo per month on each peso
from November 15 until at the end of each June. The respondent also promised that she would sell to Don
Osmeña all the sugar that she may harvest, as a guarantee, she pledged all her present and future property, as
a special security, she would also give her house in Pagina. The contract was signed by 2 witnesses.

On October 27, 1891, the defendant executed another contract with Osmeña which stated that the defendant
asked for a loan amounting to P70, P50 of which the defendant loaned to Don Evaristo Peñares, which they
will pay in sugar. Some time after the execution and delivery of the above contracts, Don Osmeña died. In the
settlement and division of the property of his estate, the above contracts became the property of one of his
heirs, Agustina Rafols. Later, the said Agustina Rafols ceded to the present plaintiff all of her right and interest
in said contracts. On March 15, 1902, the plaintiff presented the contracts to the defendant for payment and
she acknowledged her obligations upon the said contracts by an indorsement that stipulated if her house in
Pagina would be sold, she would use the money to pay for her debts. The defendant, not having paid the
amount due on the said contracts, the plaintiff commenced an action before the Court of First Instance of
Cebu on June 26, 1906. The lower court rendered judgment in favor of the plaintiff for the sum of P200 with
interest. From this judgment, the defendant appealed.

ISSUE:
Is the proof presented during the trial in Court of First Instance (CFI) sufficient for the lower court to
acknowledge the debt of Doña Rama, provided that she imposed the condition that she would pay her debts
upon selling her house?

HELD/RULING:
Yes, the proof presented in the court is sufficient. In accordance with the provisions of Article 1115 of the Civil
Code, when the fulfillment of the condition depends on the exclusive will of other debtor, the conditional
obligation shall be null and void.

Therefore, the acknowledgment was an absolute acknowledgment of the obligation and was sufficient to
prevent the statute of limitation from barring the action upon the original contract. The lower court found
that P50 of the P70 mentioned in Exhibit B had been borrowed by the defendant, but by one Evaristo Peñares;
therefore the defendant had no responsibility for the payment of the said P50.

Trillana v. Quezon Colleges 93 Phil 383

Case: Trillana v. Quezon Colleges

G.R. No. L-5003 June 27, 1953
Nazario Trillana, administrator-appellee, vs.
Quezon College, Inc., claimant-appellant.
PARAS, J.:

Facts:
On June 1, 1948, Damasa Crisostomo sent a letter to the Board of Trustees of the Quezon College to enter a
subscription to two hundred (200) shares of their capital stock with a par value of P100 each. Herewith, she
included an initial payment, amount unknown, with a written promise to pay in accordance with the law and
the rules and regulations of the College. Damasa Crisostomo died on October 26, 1948. As no payment
appears to have been made on the subscription mentioned in the foregoing letter, the Quezon College Inc.
presented a claim for the collection of the sum of P20,000 representing the capital stock. The claim was
dismissed having
that the subscription in question was not recognized by the Securities and Exchange Commission. Quezon
College Inc. agreed to offer its stock for subscription on the terms that Damasa settled on her proposal for her
payment. Damasa Crisostomo did not enclose initial statement and stated that “babayaran kong lahat
pagkatapos na ako ay makapaghuli ng isda.’’ However, there is no such evidence that Quezon College Inc.,
concurred with this mode of payment. From this order the Quezon College, Inc. has appealed.

Issues:
1. Whether or not Damasa Crisostomo is obliged to pay the sum of P20,000 representing capital stock.
2. Whether or not an enforceable contract was formed between Damasa Crisostomo and The Quezon
College Inc.

Held:
1. Regarding the proposition of Damasa Crisostomo to settle her payment on the subscriptions she
purchased, such a condition indicates that it is reliant on her sole will therefore resulting in a nullified
obligation. Article 1115 of the old civil code states that “If the fulfillment of the condition should
depend upon the exclusive will of the debtor, the conditional obligation shall be void. If it should
depend upon chance, or upon the will of a third person, the obligation shall produce all its effects in
accordance with the provisions of this code.’’ It is therefore justified for the contingent to be null.
2. Article 1165 under the civil code of the Philippines states that “If the thing is indeterminate or generic,
he may ask that the obligation be complied with at the expense of the debtor.’’ Since the contract
formed between Damasa Crisostomo and Quezon Colleges Inc. was abolished by the Justice. The
appellee has the right to demand costs and charges from the appellant.
Taylor v. Uy Tieng Piao 43 Phil 873
Case Title: M. D. TAYLOR, PLAINTIFF-APPELLANT, VS. UY TIENG PIAO AND TAN LIUAN,
DOING BUSINESS UNDER THE FIRM NAME AND STYLE OF TAN LIUAN & COMPANY,
DEFENDANTS. UY TIENG PIAO, DEFENDANT-APPELLANT.
Citation: Taylor vs. Uy Tieng Piao, G.R. No. L-16109 (1922, October 2)

Facts:
On December 12, 1918, M.D. Taylor signed a contract with Tan Liuan and Co. as the oil factory superintendent.
The salary was to be at the rate of P600 per month during the first year and P700 per month during the
second, with electric light and water for domestic consumption, and a residence to live in, which was P60 per
month. It is stated under the 2-year contract that since the machinery required is not yet acquired; it is agreed
under the stipulation that the machinery must be installed within six months; in case of failure for any reason,
the contract
may be canceled by the other party as part of its option. However, the machinery and other necessary
equipment did not arrive within six months. The evidence shows that during the first months of 1919, the oil
business no longer promised large returns or was already unable to finance the project, which probably led to
the cancellation of the order for the machinery by choice. Effective on June 30, Uy Tieng Piao rescinds the
contract. Taylor claims that the defendant cannot admit his right to cancel since the origin of the reason
should not have been due to his will or acts. Uy Tieng Piao also appealed that he is not liable for any damages.
The plaintiff instituted this action to recover damages in the amount of P13,000, covering salary and
perquisites due and to become due under the contract.

Issue: Whether or not the defendant, Uy Tieng Piao is liable for the damages lost by the plaintiff under the
contract.

Held:
No, because the stipulation or the terms of the agreement provides the defendant the right to cancel the
contract. Article 1256 of the civil code states that when the creditor refuses to accept a payment without just
reason, the debtor shall be released from the obligation through consignation or paying the sum due. In the
case of Taylor and Uy, the judgment was modified and declared that the defendant shall pay an additional P60
to the plaintiff for the commutation of house rent for June 1919. The Court of Appeals modified and declared
that the plaintiff would be awarded P360 for the damages incurred. The subdue of P360 will also be affirmed
with interest from November 4, 1919.

PLDT v. Jeturian 97 Phil 981

PLDT v. Jeturian
97 Phil 981

Facts:
Mr. Jose S. Galvez was an employee of the Philippine Long Distance Telephone Company for thirty-three (33)
years and one (1) month until the operation of the Company was disrupted by the Japanese invasion and
occupation of the Philippines. But upon the reinstitution of the liberation of the Philippines Mr. Galvez’s pre-
war and post-war services aggregated to thirty-eight (38) years, eleven (11) months, and six (6) days, or up to
February 7, 1951, the date of his death. Gracia Vda. de Galvez, the petitioner and the widow of the late Mr.
Jose S. Galvez received an amount of P24,000 as pension and death benefits. On December 22, 1951, Crispin
Jeturian together with sixty-three (63) other persons, who also served the company before the war whose
proportionate shares in the said Employees’ Pension Plan was discontinued. Later on, the chief examiner was
ordered by the Court of Industrial Relations to liquidate the aforementioned pre-war pension plan. The report
included the name of the employees who can enjoy the Employees’ Pension fund. It included several persons
whose share was said to be P23,381.96, one of these was Jose S. Galvez, whose share amounted to
P13,028.64. But on behalf of her deceased husband, Mrs. Galvez asked the Court of Industrial Relations to
order the payment of their supposed shares. Finally, on January 8, 1959, the request of Mrs. Galvez was
granted, and the Company was asked to deposit the aforementioned amount of P23,281.96 within a specified
time.

The company petitioned the Court of Industrial Relations on April 14, 1959, asking that it not be required to
deposit the aforementioned share of Jose S. Galvez in the amount of P13,028.64 because Mrs. Galvez had
already been paid P24,000, as previously stated, and because, at the time of his death, Mr. Galvez was
receiving a monthly salary of P2,000 and, under the regulations governing the Employees' Pension Plan, he
would have only received the salary for the month in question. Thus, the total collectible amount of Mrs.
Galvez from the Company is only P1,028.64. On the grounds that the aforementioned order of September 8,
1959, which was already final and executory, had been illegally changed, Mrs. Galvez is now seeking a review
of the matter by certiorari. In the order of the court on July 8, 1959, the award was in favor of Jose. S. Galvez,
amounting to P13,028.64, which became executory and is no longer subject to alteration or modification.

Issue:
Whether or not PLDT should pay the mentioned shares of Jose S. Galvez amounting to P13,028.64, his pension
fund for being a pre-war employee, on top of the P24,000 pension and death benefits given to her widow,
Mrs. Galvez.

Held:
As PLDT’s petition was filed with the Court of Industrial Relations, a lower court, it has no authority to make
alterations or modifications to the order of January 8, 1959. Due to the lack of merit, the case ruled in favor of
Jose S. Galvez, awarding him P13,028.64 which is no longer subject to alterations or modifications.

Hanlon v. Hausermann 40 Phil. 796

R. Y. HANLON vs. JOHN W. HAUSSERMANN and A. W. BEAM
G.R. No. L-14617 | February 18, 1920

FACTS:
The mining factory of the Benguet Consolidated Mining Company, which was built on top of a partially
developed quartz mine in the sub province of Benguet, Philippine Islands, near Baguio, was severely damaged
and largely destroyed by high water in 1909, and it was fully destroyed by similar circumstances in 1911. After
that, the company was left with no working cash and no credit, which prevented it from being able to
reconstruct the facility.

Hanlon, Haussermann, Beam, and Sellner agreed that P75,000.00 would be required to repair the mine. Of
that amount, P50,000.00 would come from Hanlon who relied on Sellner who agreed to advance P50,000
through obtaining subscriptions, and P25,000.00 would come from Haussermann and Beam.

Haussermann and Beam arranged to finance the mine's rehabilitation because Hanlon was unable to raise the
P75,000.00. The corporation became profitable as a result of this new arrangement, enabling it to pay
dividends. The value of the company's stocks increased as a result.

ISSUE:
Should the defenants, Hausserman and Beam, give the collections from 24,000 shares they have sold to
Hanlon and Sellner who was unable to raise the 50,000 capital he was obliged to upon the signing of a
contract, causing the discontinuation of the project since his contribution to the total capital of 75,000 PHP
was crucial and essential to the restoration of the milling factory, the Benguet Consolidated Mining Company?

HELD/RULING:
The defendants were each compelled to give the collections from 24,000 shares corresponding to 4,800 PHP
to Hanlon and Sellner. Additionally, the dividends declared and paid in 1916 and 1917 shall be recompensed
by the defendants.

Under Paragraph II, subsection D of Exhibit A, which was the contract signed on November 5, 1913, it was
stated that in any case Sellner was unable to fulfill his obligation to obtain a total payment of 50,000 shares
subscriptions, which was stated in subsection B of the same paragraph, Beam and Hausermann shall be free
from Sellner’s obligations. Likewise, Sellner shall not be obliged to the duties of Beam and Hausermann if they
were not able to produce their payment.

This paragraph alone in the contract contradicts the ruling of this case. The defendants may be liable to the
contract itself as much as Sellner and Hanlon are liable to it, but they are not liable to the unmet obligations of
Sellner. The contract specifically said under Paragraph II, subsection D of Exhibit A that Sellner, Hausermann,
and Beam all agreed that the payment must be fully paid within six months from the date of acceptance for
which Sellner failed to do so. Thus, the defendants should not be paying any further charges to Sellner nor
Hanlon since he was the one who involved Sellner in this contract that resulted in unmet obligations.

Mina and Bacalla v. Rodriguez 40 OG 65

Mina and Bacalla v. Rodriguez
40 OG 65
Facts:
According to Rodriguez, the military designated the KMP as an enemy of the State under the Oplan Bantay
Laya, making its members the subject of extrajudicial killings and forcible disappearances. On September 6,
2009, Rodriguez was forcibly taken by four men and brought to a military camp where he was threatened and
abused. Three days after his abduction, he was forced to tell the location of the NPA camp and on the way, he
noticed a
soldier named “Matutina.” After that, the soldiers looked for and located someone named Elvis, then they
brought both of them to the mountains and threatened them to force a confession as to the location of the
NPA camp. They agreed when Rodriguez asked to let go of Elvis in exchange for him telling the location. Then
the soldiers forced him to sign documents to declare that he surrendered in the Cumao encounter, he was
beaten up when he refused so he signed a fake signature to show that he did not do it voluntarily. On
September 16, 2009, he was brought to a medical center to get a checkup regarding his bruises and
contusions. He was brought again after that to a different camp to sign a paper that states that he surrendered
and was never beaten up. The next day, his mother and brother were brought to him and they were
repeatedly told to not disclose whatever happened to the media after Rodriguez was released. Rodriguez
alongside his mother and brother was escorted to the airport but they missed their flight going to Manila.
When they arrived home on September 18, 3 in the morning, Callagan and two soldiers went to their house to
take pictures and videos of the place.

The next day, a Medical Certificate was issued by Dr. Reginaldo Pamugas which states that Rodriguez was a
victim of torture. In December 2009, he filed a petition for the Writ of Amparo and a Petition for the Writ of
Habeas Data with Prayers for Protecting Orders, Inspection of Place, and Production of Documents and
Personal Properties dated December 2, 2009. It was filed against former President Arroyo and other soldiers.
On December 15, 2009, the writs were granted after knowing that Rodriguez had been abducted, tortured,
and later released by members of the 17th Infantry Battalion of the Philippine Army. Likewise, the
respondents were ordered to file a verified return on writs. In their Return, respondents therein alleged that
Rodriguez had surrendered to the military on 28 May 2009 after he had been put under surveillance and
identified as "Ka Pepito" by former rebels. According to his military handlers, Rodriguez was a former member
of the NPA in Cagayan Valley and he wants to volt from the Association and helps the military in exchange for
his protection. He was told to sign an Oath of Loyalty and Agent’s Agreement upon his voluntary surrender on
May 28, 2009, to show his willingness to return to society and be a military asset so he acted as a double agent
and returned to the NPA to gather information. To remove the suspicions of the NPA members, he was
abducted by the military without his knowledge.

Issue/s:
1) Whether or not the petitioner, Noriel H. Rodriguez, prayer for the issuance of a temporary protection
order and inspection order shall be granted by the court.
2) Whether or not former President Gloria Macapagal Arroyo’s presidential immunity from suit can be
utilized as protection from judicial scrutiny that would assess her responsibility or accountability for
the abduction of Rodriguez.
3) Whether or not the invocation and application of command responsibility doctrine on Amparo and
habeas data proceedings will impute responsibility or accountability to former President Arroyo for
Rodriguez’s abduction.
4) Whether or not respondents in G.R. No. 191805 are responsible or accountable for the violation of
Rodriguez’s right to life, liberty, and security on account of the totality of evidence proved by
substantial evidence and the failure to conduct a fair and effective investigation.

Held:
1) Given that the privilege of the Writ of Amparo was granted to Rodriguez by the court, issuance of
temporary protection order separately from the former is not needed. Thus, the court denied the
petitioner’s prayer for such.
2) Considering that the presidential immunity from suit is only concurrent with his tenure and not his
term, such a privilege of former President Arroyo was dismissed by the court.
3) Despite allowing the command responsibility doctrine to be applied to amparo and habeas data
proceedings, Rodriguez failed to prove former President Arroyo’s responsibility or accountability for his
abduction due to a lack of substantial evidence.
4) Since Rodriguez successfully proved his allegations through substantial evidence, Gen. Ibrado, PDG.
Verzosa, Lt. Gen. Bangit, Maj. Gen. Ochoa, Brig. Gen. De Vera, 1st Lt. Matutina, and Lt. Col. Mina were
ruled by the court responsible and accountable for the violation of his rights to life, liberty, and security
on account of his abduction, torture, and detention from 6 September to 17 September 2009 and the
lack of any fair and effective official investigation as to his allegation. However, he failed to prove the
responsibility or accountability of respondents Maj. Gen. Ochoa, Cruz, Pasicolan, and Callagan through
substantial evidence.

Song Fo v. Hawaiian-Philippine Co 47 Phil 821

Case Title: Song Fo v. Hawaiian-Philippine Co.
G.R. No. 23769 September 16, 1925
Song Fo & Company, plaintiff-appellee, vs.
Hawaiian-Philippine Co., defendant-appellant.
MALCOLM, J.:
Facts:
A complaint was filed by Song Fo & Company against the Hawaiian Philippine Company with two causes of
action due to a breach of contract by the defendant. Before the plaintiff's filing, the Hawaiian Philippine
Company had agreed to deliver 300,000 gallons of molasses to the Song Fo & Company and that they shall
receive the payment at the end of each month, as stated in a written contract agreed upon by both parties
dated on October 17, 1922. Following the agreement, Song Fo & Company requested an additional supply of
100,000 gallons of molasses in addition to the company's previous consensus amounting to 400,000 gallons.
This request on the other hand, was not stated clearly in writing. However, the defendant could only deliver
55,006 gallons of molasses, which is relatively less than the agreed number of gallons, violating the said
agreement. Consequently, the plaintiff failed to pay the defendant as per the agreed period after not receiving
the agreed number of supplies from the defendant. Hence, Song Fo & Co had to source the remaining gallons
of molasses from a different supplier, resulting in higher costs. Due to the defaulted payment, this caused the
defendant to rescind and repeal the contract between the plaintiff. Furthermore, for the first cause of action
grounded on the higher costs incurred by the plaintiff, the court has ruled that the defendant, Hawaiian
Philippine Company, is required to pay an amount of P3,000, with the inclusion of legal interest dating from
October 2, 1923 until payment. Moreover, no amount is required for the second cause of action based on the
claim of loss in profits due to the breach of contract.

Issues:
1. Whether or not the trial court committed reversible error when it found out that the defendant agreed
to deliver 400,000 gallons of molasses upon the plaintiff's request.
2. Whether or not the trial court committed reversible error when it found out that the defendant had no
right to cancel the contract of sale agreed upon the supposed violation of the plaintiff.
3. Whether or not the defendant is liable for the damages to the plaintiff because of an imprudent breach
of contract done by the former.

Held:
1. Yes, the trial court has erred in confirming the total gallons of molasses agreed upon by both parties.
The Hawaiian-Philippine Company and Song Fo & Company had a written agreement that 100,000
gallons of molasses were to be added to the original order. However, the phrase “we believe that this
is possible” used in this part of the agreement was subject to free interpretation, as there was no full
confirmation of the defendant recognizing this duty, and indistinct use of language, such as “believe”
and “possible” that leaves room for further discussion. Furthermore, there seems to be
miscommunication and a lack of clarification from both ends because there seems to be an obligation,
but it was not settled completely. Solidifying this take is a letter written at the beginning stage of the
agreement between the defendant and plaintiff that states the defendant is accountable for 300,000
gallons of molasses only. This amount served as the basis for the delivery volume and price
computation, which clearly does not include the additional 100,000 gallons.
2. No, the trial court was correct in its findings about the validity and legality of the suspension of
contract done by Hawaiian-Philippine Company. Song Fo & Company agreed on an end of month
(EOM) payment schedule, but consistently failed in doing so. The plaintiff committed a breach of
contract because there was no legal justification to the failure of compliance with the terms. This
breach arises the defendant’s right to rescind their contract. Moreover, the inconsistent and late
payments of Song Fo & Company, the debtor in this situation, may appear as mora solvendi, a type of
delay.

One requisite of considering a default is a demand from the creditor, which was done extrajudicially
when the reason for the contract cessation was released through a notice. The call for a default was
proven false because Hawaiian-Philippine Company continued to receive the payments and lacked the
 immediate control over the payment schedule, meaning that the situation was acceptable.
Additionally, a rescission of a contract is only valid when there are significant breaches in contract
terms. Recognizing a few hundred pesos of late payments as an essential reason defeats the purpose
of the contract rescission.

3. Upon looking at the case, the plaintiff has filed a complaint against the defendant with two causes of
action. The first cause of action is based on the higher expenses Song Fo & Company had incurred from
sourcing their molasses supply from a different supplier after the defendant had failed to provide the
agreed amount of molasses. Because of this, the evidence provided by the plaintiff showed that Song
Fo & Company suffered a loss of P2,174.91 from sourcing the molasses from Victorias Milling
Company. The amount they had to pay the said company was higher than what it would initially cost if
the defendant supplied the product. Under this, the court has ruled the Hawaiian Company Philippines
liable for damages and was required to pay the plaintiff an amount of P3,000 with legal interest from
October 02, 1923, until payment. Furthermore, the second cause of action, on the other hand, was
based on the loss of profits due to the breach of contract by the plaintiff. The trial court has ruled that
the evidence and testimonies given by the plaintiff were insufficient and unsustainable to support their
claim that the company had suffered significant losses in their profits. As stated by the court, Mr. Song
Heng testified that the plaintiff would have earned a profit amounting to P14,948.83 if the defendant
had realized the contract. However, no further proof was presented to validate these damages,
resulting in the court dignifying Mr. Heng's testimony as a conclusion and not a proven fact. Therefore,
the court ruled that the defendant would not be liable to pay the plaintiff under the second cause of
action based on the breach of contract.

Villanueva v. Yulo L-12985 Dec. 29, 1959

Universal Food Corp. v. CA 33 SCRA 1

Universal Food Corporation, petitioner
VS
Court of Appeals, Magdalo V. Francisco, Sr. and Victoriano N. Francisco, respondents
Case Title: Universal Food Corporation vs Court of Appeals G.R. No. L-29155
Citation: Universal Food Corporation v. Court of Appeals, Francisco Sr. & Francisco, G.R. No.
L-29155 (1970, May 13). https://lawphil.net/judjuris/juri1970/may1970/gr_29155_1970.html

Facts:
 On February 14, 1968, Universal Food Corporation filed for a petition for certiorari against the decision
of the Court of Appeals wherein the dispositive portion are read as follows: "Wherefore the appealed
decision is hereby reversed; the Bill of Assignment marked Exhibit A is hereby rescinded, and
defendant is hereby ordered to return to plaintiff Magdalo V. Francisco, Sr., his Mafran sauce
trademark and formula subject-matter of Exhibit A, and to pay him his monthly salary of P300.00 from
December 1, 1960, until the return to him of said trademark and formula, plus attorney's fees in the
amount of P500.00, with costs against defendant."
 On February 14, 1961, Magdalo V. Francisco, Sr. and Victoriano V. Francisco filed with the Court of First
Instance of Manila against the Universal Food Corporation, an action for rescission of a contract
entitled "Bill of Assignment."
 On February 28, 1961, the answer further alleged that the defendant had complied with all the terms
and conditions of the Bill of Assignment and, consequently, the plaintiffs are not entitled to rescission.
  On June 25, 1962, the lower court dismissed the plaintiffs' complaint as well as the defendant's claim
for damages and attorney's fees, with costs against the former, who promptly appealed to the Court of
Appeals.
 Magdalo V. Francisco, Sr. invented a formula for a food seasoning from banana fruits that is popularly
known as MAFRAN sauce in 1938. Moreover, Magdalo registered a patent for his invention under his
name in the year 1942. Due to the lack of funds to expand the business, Magdalo secured the financial
assistance with the help of Tirso T. Reyes, and thus the Universal Food Corporation (UFC) was formed,
eventually leading to the implementation of the Bill of Assignment on May 11, 1960.
 In May 1960, a contract was formed between both parties such that Magdalo Francisco, Sr. would be
the permanent Chief Chemist with a salary of P300 a month. Tirso Reyes, President and General
Manager of UFC, requested that Magdalo allow 1 or 2 members of his family to observe the
preparation of the Mafran Sauce, such that, in case of any emergency or death, a family member can
replace his position. But Tirso’s plea was denied, and Magdalo kept the recipe to himself.
 On November 28, 1960, as claimed by UFC, there was a scarcity and increase in value of raw materials,
such that Tirso Reyes issued a memorandum that only Supervisor Ricardo Francisco be retained in the
factory, and the salary of Magdalo will be ceased for the time being until the corporation resumes its
production of the sauce.
 Five days later, on December 3, 1960, another memorandum was issued to Victoriano Francisco to
report to the factory to continue producing Mafran Sauce at a rate of 100 cases a day in order to cope
with the demands of various distributors.
 Magdalo Francisco received his salary as Chief Chemist for UFC in the amount of P300 per month up
until his services were terminated on November 30, 1960
 On January 9 and 16, 1961, Porfirio Zarraga and Paula de Bacula were then authorized to look for
potential buyers of the corporation, which includes its trademarks, formula, and assets at a price of
P300,000. Soon after, due to the successive memorandums without the consent of Magdalo, he filed
an action for rescission of the Bill of Assignment.

Issue:
 Whether the respondent, Magdalo Francisco Sr., transferred the formula of the Mafran Sauce to the
petitioner, UFC, by virtue of the terms of the Bill of Assignment?
 Whether Magdalo Francisco Sr. was dismissed as being the corporation’s chief chemist without a
justifiable cause, and in violation of paragraph 5-(A) of the Bill of Assignment.
 Whether the patentee is entitled to payment of his monthly salary of P300 from December 1, 1960
until the return to him of the trademark and formula of the Mafran Sauce.
 Whether the Court of Appeals erred in ordering the corporation to return the trademark and formula
for Mafran Sauce to the patentee.

Held
 With the observations made, the judgment of the Court of Appeals is to rescind the Bill of Assignment
and for the defendant to return and restore to the plaintiff Magdalo Francisco, Sr. the trademark and
right to use his Mafran Sauce formula. Furthermore, the defendant corporation, including all of its
assigned and successors, can be enjoined immediately from using Magdalo’s Mafran Sauce.
Additionally, the defendant is to pay Magdalo his monthly salary of P300 from December 1, 1960, until
the date of the ruling, plus the attorney's fee of P500.

Kind: Obligations With a Resolutory Period

 Recent Cases

HGC v. Manlapaz GR no. 202820 Jan. 12, 2021

Case Title: HOME GUARANTY CORPORATION, PETITIONER, VS. ELVIRA S. MANLAPAZ,
RESPONDENT.
Citation: HGC v Manlapaz, G.R. No. 202820 (2021, January 13)
Facts:
On September 20, 1995, VELI, PDB (Bank), and HGC entered into an Asset Pool for the development of the lots
in Eagle Crest Village which includes the disputed property. The Asset Pool gave VELI the authority to sell the
parcels of land, and its properties were floated and sold to investors. HGC assumed to pay a P130 million
guaranty if the Asset pool fails to service the interest due to investors or to redeem the certificates once they
mature, while the Bank served as the trustee and holder of the lot titles under the Asset Pool. On Jan. 8, 1998,
VELI entered a contract to sell with FLPPI regarding the sale of properties in the Eagle Crest Village. Five
months later, FLPPI entered a contract to sell with Manlapaz over the property in question for an amount of
P913,000. On August 19,1998, the asset pool was declared in default because of the delay in the development
of the project, and on the same day, the Bank transferred the possession of assets covered by the asset pool,
including the land in dispute, to HGC after the latter paid the amount for the guaranty call. Since VELI sold to
FLPPI a substantial portion of the properties assigned to HGC, a Memorandum of Agreement was entered into
by VELI, FPPI, and HGC on October. In the agreement, FLPPI agreed to pay the value of the properties to HGC
amounting to P 153,029,200. A contract to sell between HGC and FLPPI occurred on October 15, 1998.
However, on November 15, 2000, FLPPI failed to pay the amount to HGC, leading to HGC’s cancellation of the
contract to sell.

Manlapaz filed a complaint with the Legal Services Group (LSG) of the Housing and Land Use regulatory Board
(HLURB) as FLPPI failed to deliver the title in her favor despite paying the full amount; claiming that she was
deprived of her right to ownership on the disputed land. Manlapaz sought an award for damages and
attorney’s fees, however, the Bank, HGC, and VELI contended this, stating that Manlapaz has no cause of
action against it.

As ruled by LSG-HLURB on July 26, 2004, FLPPI has the obligation to deliver the land title to Manlapaz once full
payment has been made. LSG-HLURB further noted that Manlapaz has no cause of action against the Bank and
VELI, but has a cause of action against HGC since the latter was aware that a contract to sell exists between
VELI and FLPPI when it entered the Memorandum of Agreement, as well as its contract to sell with FLPPI.
Thus, LSG-HLURB ordered the dismissal of Manlapaz’s complaint against Planters Development Bank and VELI
due to lack of cause of action, and HGC has been made liable to execute the deed of sale and deliver the land’s
title to Manlapaz.

Manlapaz then filed a complaint again HGC in the BOC-HLURB; and on October 5, 2005, the BOC-HLURB
dismissed the filed complaint. It was ruled that FLPII was not authorized to sell the properties thus HGC is not
under any obligation to honor the contract between FLPPI and Manlapaz. Under the given circumstances, only
FLPPI is liable to the latter thus respondent FLPPI is directed to refund the amounts complainant Manlapaz
paid plus legal interest per annum from the time of the filing of this complaint.

Manlapaz filed a Motion for Reconsideration, arguing that the alleged violation by FLPPI of its contract with
HGC cannot be a valid ground to deprive her of her rights over the contested property. However, the BOC-
HLURB denied her motion in a Resolution dated October 18, 2007.

Moreover, Manlapaz filed a Notice of Appeal with the Office of the President. In a Decision dated June 26,
2009, the OP affirmed in to the October 5, 2005 Decision of the BOC-HLURB. The OP noted that HGC was not
privy to the contracts which FLPPI executed with both VELI (on January 8, 1998) and Manlapaz (on June 22,
1998) since HGC became the assignee and transferee of the properties only after the execution of the Deed of
Assignment and Conveyance on August 19, 1998. OP ruled that there was no express or implied ratification of
the first contract by FLPPI and Manlapaz in the second contract by FLPPI and HGC.

It declared that considering that no payment was made by FLPPI to HGC for TCT No. 64208, and considering
the cancellation of the contract to sell between FLPPI and HGC, the latter has no legal obligation to release the
title to the former or to any of its assigns or successors.

Manlapaz asked for reconsideration which the OP denied in a Resolution dated January 5, 2010.

Undeterred, Manlapaz appealed to the CA via Rule 43 of the Rules of Court. Then the CA, in its assailed April
20, 2012 decision granting Manlapaz's appeal, held that PD No. 957 aims to protect innocent lot buyers from
fraudulent transactions. The CA ruled that Manlapaz's full payment of the contract price justifies the execution
of the deed of absolute sale in her favor and the transfer in her name of the certificate of title covering the
subject property pursuant to Section 2555 of the said presidential decrees.

Wherefore, the petition is granted and the Office of the President's Decision dated June 26, 2009 and
Resolution dated January 5, 2010 are set aside. The Decision dated July 26, 2004 of the Legal Services Group of
the HLURB is reinstated, subject to the modification.

HGC filed a Petition for Certiorari under Rule 65 of the Rules of the Court after the Court of Appeals denied in a
June 14, 2012 Resolution HGC’s plea for reconsideration. HGC contends that it has already entered an Asset
pool with VELI and PDB prior to the execution of the contract to sell between Manlapaz and FLPPI. Evidence
shows that HGC first recorded the property’s acquisition before the Register of Deeds (RD), which supports the
assumption that a transfer of ownership shall be done to the person who acquired the property in good faith
and successfully registered it in the RD if the contested lot was subject to a double sale. HGC further argued
that it was an innocent purchaser for value as it paid a substantial amount for the properties which includes
the lot in question.

HGC contends that for FLPPI to acquire ownership and to validly convey the subject property to Manlapaz, it
had to consummate the sale of the property from HGC first by remitting the purchase price in accordance with
the contract to sell. Hence, Manlapaz is not an innocent purchaser for value since she did not exercise due
diligence in ascertaining FLPPI's ownership or interest.

Manlapaz on the other hand, insisted that she is an innocent purchaser for value and counters that HGC was
part of the Asset Pool and that VELI had authority to sell the properties, which it did through a Contract to Sell
with FLPPI. She emphasizes that her Contract to Sell dated June 22, 1998 could not have contravened the
Memorandum of Agreement dated October 8, 1998 for the simple reason that the said memorandum was not
yet in existence at that time. Additionally, she posits that she should be protected from the effects of the
transactions entered into by FLPPI, VELI and HGC as she had no participation therein.

As for the PC’s ruling, HGC availed of the wrong remedy by filing a Petition for Certiorari under Rule 65 instead
of a petition for review on certiorari under Rule 45. However, considering the foregoing observations, and
given that Manlapaz had fully paid the purchase price of the contested lot, the property should now be
transferred in her name and in order to prevent unjust enrichment and to abide by the intent of the
Memorandum of Agreement and the third contract, FLPPI should turn over Manlapaz's full payment to
HGC,with legal interest in accordance with the given rate.
Issue: Whether or not HGC should execute a deed of absolute sale and cause the transfer of title to the
disputed land in favor of Manlapaz.

Held: Yes. Despite the title of the contested lot having been transferred by the Bank to HGC’s name due to the
default of FPPI in their contract and having acquired the rights as well as the obligations to the assets under
the Asset Pool, Manlapaz is entitled to the issuance of the title in her favor given that she had paid the
purchase price in full. HGC has the obligation to transfer the property in dispute and issue the title in her
name. This is supported under Section 25 of Presidential Decree No. 957 on the issuance of title, stating that it
is the owner/seller’s obligation to deliver the title of the lot upon the full payment of the buyer. Moreover, the
default
in the Asset Pool, particularly FPPI’s failure to comply with its obligation to HGC in their contract to sell, should
not make Manlapaz suffer its consequences as noted by the Court of Appeals. PD No. 957 also protects
innocent purchasers like Manlapaz from unscrupulous owners, developers, sellers, and the like reneging on
their obligations. Furthermore, to prevent unjust enrichment and to honor the Memorandum of Agreement
and the contract to sell between HGC and FLPPI, Manlapaz’s full payment amounting to P913,000.00 should
be turned over by FLPPI to HGC, along with the corresponding annual interest as ruled by the court.

IP E-game ventures inc., v. Tan GR no. 239576 June 30,2021

IP E-GAMES VS GEORGE TAN
Case Title : IP E-GAME VENTURES, INC., PETITIONER, VS. GEORGE H. TAN, RESPONDENT.
GR 171146
June 30, 2021
Citation: CIVIL CODE OF THE PHILIPPINES ART. 1159, RODOLFO V CORAZON,Phil. American General Insurance
Co., Inc. v. Mutuc, scph. (2021, June 30). IP E-Game Ventures, Inc. Vs. George H. Tan | Supreme Court of the
Philippines. Judiciary.gov.ph. https://sc.judiciary.gov.ph/24796, Deudorv v J.MTuason&Co.Inc.(GR 171146),
Phil. American General Insurance Co., Inc. v. Mutuc ,

Facts:
 In 2010 the petitioner and the respondent agreed with the intention that ePLDT sell seventy-five
percent of the outstanding capital stocks of Digital Paradise, Inc. George Tan, the respondent, ought to
sell the petitioner's stock in Netopia worth 145 million pesos. The agreement states that the
respondent, if successful, would be rewarded with a monetary incentive and a certain number of
shares. The incentive as agreed by the parties are the following:
(a) Petitioner shall pay the amount of five million pesos in cash and;
(b) A number of stocks in Netopia that has a market value of five million pesos.
 On April 1, 2011, the sale of shares between the petitioner and ePLDT went through. At the same time,
the respondent received an amount of 3.7 million pesos. The Petitioner failed to complete the
monetary incentive lacking 1.3 million pesos and outstanding shares worth 5 million. This case falls
under "suspensive condition."
 On February 12, 2012, the respondent sent a demand letter to the petitioner and later sent another
one dated March 5, 2012.
 On July 13, 2012, the respondent sent a third letter to agree to the counter offer of a “lump sum” cash
amounting to four million pesos to settle the dispute without legal intervention.
 On August 15, 2012, the petitioner responded to the July 13, 2012 letter, asserting that it did not make
any counter-offer to reduce the monetary incentive demanded by the respondent.
 The petitioner drew reference to a letter issued to the respondent on March 19, 2012, in which it
claimed that the parties had reached a new agreement and that the monetary incentive had been
decreased from five million pesos to three point seven million due to unforeseen costs.
  The court questions the petitioner regarding the “second agreement of reducing the monetary
incentive to 3.7 million pesos”. The petitioner failed to show the court a copy of the said agreement. It
is also noted that no evidence was offered to prove that the said agreement happened.
 In the decision of Regional Trial Court Branch 133, City of Makati, the court ruled in favor of the
respondent and ordered the petitioner to pay the respondent the fixed cost of the counteroffer.
 In the ruling of the Court of Appeals, the CA affirmed the decision of the Regional Trial Court.
 In the decision, the ponente wrote that:
“The Court cannot merely rely on the petitioner's unsubstantiated allegations in the face of a
perfected contract entered freely and voluntarily by the parties. Mere allegations are not equivalent to
proof. After all, the Agreement provides that there shall be no binding change, addition, or waiver of its
provisions unless it shall be done in writing and signed by an authorized representative of each party.”

Additional references from the New Civil Code and previous cases:
 According to article 1159, “Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.”
 According to Rodolfo V. Corazon, “It is basic that a contract is the law between the parties. Obligations
arising from contracts have the force of law between the contracting parties and should be complied
with in good faith. Unless the stipulations in a contract are contrary to law, morals, good customs,
public order or public policy, the same are binding as between the parties.”
 In Phil. American General Insurance Co., Inc. v. Mutuc, “Contracts which are the private laws of the
contracting parties should be fulfilled according to the literal sense of their stipulations,”
 In Deudorv v J.M Tuason & Co. Inc. “Court does not amend or modify the obligation concerned but
merely enforces or carries out stipulations in the contract in question.”

Issue:
 According to the petitioner, the first agreement in 2010 was voided when both parties agreed to
reduce the monetary incentive to 3.7 million pesos. Are allegations without evidence by the petitioner
allowed by law?
 If the respondent agreed to such an agreement, why is there no record or proof of the said
agreement?
 Does the respondent fail to state a cause of action in his complaint?

Held:
The Supreme Court of the Philippines Third Division affirmed the decision of The Court of Appeals in CA-GR.
No. 106148 establishing the conclusion of the RTC Branch 133 of Makati City. The instant complaint
sufficiently averses the presence of the three elements of the cause of action; hence the court sees no reason
to differ from the findings of the RTC and the CA. The decision goes as follows: Petitioner IP E-Games
Ventures, Inc. is ordered to pay Respondent George H. Tan the following Four Million Pesos as Actual damages
and Thirty Thousand Pesos as attorney’s fee and Cost of the suit.

Arco Pulp and Paper and Santos v. Dan T. Lim G R no. 206806, June 25, 2014
ARCO PULP AND PAPER CO., INC. and CANDIDA A. SANTOS vs. DAN T. LIM
G.R. No. 206806 | June 25, 2014

FACTS:
Dan T. Lim works under Quality Papers & Plastic Products Enterprises that supplies scrap paper, cartons, and
other raw materials to factories in the paper mill business. From February 2007 to March 2007, he delivered
scrap papers worth PHP7,220,968.31 to Acro Pulp and Paper Company, Inc. through its Chief Executive Officer
and President, Candida A. Santos. The parties allegedly agreed on settlements on either cash or finished
products of equivalent value.

Upon delivery, Arco Pulp and Paper issued a post-dated check as initial payment dated April 18, 2007,
amounting to PHP1,487,766.68 which was dishonored for being drawn against a closed account upon Dan T.
Lim’s deposit on April 18, 2007. On the same day, Acro Pulp and Eric Sy had an agreement wherein the
company is bound to transfer finished products to Megapack Container Corporation, owned by Eric Sy, for his
account. Within the memorandum, the raw materials would be supplied by Dan T. Lim through his company.

On May 5, 2007, Dan T.Lim sent a letter to Arco Pulp and Paper demanding payment of the amount of
7,220,968.31, but no payment was made to him. On May 28,2007, Dan T. Lim filed a complaint for collection
of sums of money with the regional trial court, branch 171, Valenzuela city. Despite having submitted an
answer, Arco Pulp and Paper neglected to send a representative to the pre-trial hearing. As a result, the trial
court permitted Dan T. Lim to give his testimony in private. According to him, novation did not take place since
the memorandum of agreement between Arco Pulp and Paper and Eric Sy was an exclusive and private
agreement between them.

On January 11, 2013, the Court of Appeals issued a decision overturning and setting aside the September 19,
2008 judgment and ordering Arco Pulp and Paper to jointly and severally pay Dan T. Lim the sum of
₱7,220,968.31 with interest accruing at a rate of 12% annually from the date of demand, as well as ₱50,000 in
moral damages, ₱50,000 in exemplary damages, and ₱50,000 in attorney's fees. It also ruled that Dan T. Lim
was entitled to damages and attorney’s fees due to the bad faith exhibited by Arco Pulp and Paper in not
honoring its undertaking.

ISSUE/S:
The issues in pursuit to be resolved by the court are the following:
 The validity of the obligation on whether it has been extinguished by novation or not.
 Whether Cadia A. Santos was solidarily liable with Arco Pulp and Paper Co., Inc.
 If moral damages, exemplary damages, and attorney’s fee to deemed to be awarded.

HELD/RULING:
The court’s ruling favored the respondent, Dan T. Lim, in the AFFIRMATION of the decision in CA-G.R. CV No.
95709 and the DENIAL of the petitioners.
Within the court’s ruling are the following:
 Petitioners Arco Pulp & Paper Co., Inc. and Cadida A. Santos are hereby ordered solidarily to pay
respondent Dan T. Lim with the amount of PHP7,220,968.31 with an interest of 6% per annum at the
time of demand until finality of judgement and its full satisfaction.
 Moral damages amounting to PHP 50,000.00, exemplary damages amounting to PHP50,000.00, and
attorney’s fees amounting to PHP50,000.00 shall also be deemed granted to respondent Dan T. Lim.

Moldex Realty v. Saberon GR no. 176289, April 8, 2013

Moldex Realty v. Saberon
GR no. 176289, April 8, 2013

Facts:
Flora A. Saberon requested Moldex Realty Inc., the developer of Metrogate Subdivision in Dasmariñas, Cavite,
to reserve a lot for her as exhibited by a Reservation Application dated April 11, 1992. Flora settled to pay in
installments and started erratic payments from 1992 to 1996 with an overall amount of PHP 375,295.49. Due
to aperiodical payments, Moldex urged Flora to execute a written authorization for the sale of the lot to a new
buyer and a written request for refund of half of the made payments which Flora didn’t do. In April 1997, the
balance of Flora’s unpaid account ballooned to P576,569.89, and then Moldex sent a Notarized Notice of
Cancellation of Application and/or Contract to Sell. Flora filed a complaint to the Housing and Land Use
Regulatory Board (HLURB) Regional Field IV for the revocation of the contract to sell, recovery of all her
payments with interests, damages, and the cancellation of Moldex’s license to sell.

According to Flora, the contract to sell between her and Moldex is void from its initiation due to the violation
of Section 5 of Presidential Decree (PD) No. 957 and Section 17 when it sold the subject lot to her before it
was issued a license to sell and failed to register the contract to sell in the Registry of Deeds. In justification,
Moldex exercised its right under the Republic Act (RA) No. 6552, or the Maceda Law which canceled the
reservation Agreement/Contract to Sell and forfeited all payments made by Flora causing a default.

The past developments of this case are as follows:

1) The HLURB Arbiter proclaimed that the Contract to Sell was void due to the lack of license to sell at the
time of the contract’s perfection, ordering to refund everything Flora had paid with legal interest,
attorney’s fees, and administrative fine.
2) Rejecting Moldex contention, the HLURB Board dismissed the petition for Review and maintained the
overall Arbiter’s decision.
3) With Moldex’s appeals to the Office of the President, it upheld the finding that the contract to sell was
a nullity, and agreed with the attorney’s fees in favor of Flora as she was obliged to litigate as well as
the imposition of administrative fine in accordance to Section 38 of PD 957.
4) Eventually, Moldex sought relief and filed a Petition for Review with the Court of Appeals which was
then dismissed immediately after the court’s agreement with the findings of preceding tribunals.
5) With the denial of its plea for reconsideration, Moldex elevated the case and filed a Petition for Review
on Certiorari1 with the Supreme Court.

Issue:
Whether or not the contract to sell entered by Moldex Realty with Flora Saberon is valid and legally binding
notwithstanding the violations of the provisions of Section 5 and Section 17 of PD 957 committed by Moldex.

Held:
The petition of Moldex Realty is granted which in effect, annuls and sets aside the previous decision of the
Court of Appeals in CA- G.R. SP No. 79651. In ruling in the affirmative, the Supreme Court held that the lack of
a certificate of registration and a license to sell on the part of the subdivision developer does not result to the
nullification of the contract to sell entered into with a buyer. Although penalized, there was no mention on the
PD 957 that the failure of Moldex to register the contract to sell or the deed of conveyance resulted to the
invalidity of the contract. This makes the contract to sell entered into between Flora and Moldex valid in spite
of the violations to the provisions of PD 957. However, this doesn’t change the fact that Moldex Realty still
have to pay the penalties for its violations. Moreover, the respondent, Flora Saberon, is still entitled to a 50%
refund under the Maceda Law for the cancellation of the contract where she will receive a cash surrender
value of P187,647.75 pursuant to Section 3(b) of Republic Act No. 6552.

1
a writ or order by which a higher court reviews a decision of a lower court.

Co Chien v Sta Lucia Realty GR no. 162090, Jan 31, 2007

Case: Co Chien v Sta Lucia Realty
 G.R. No. 162090 January 31, 2007
Spouses Howard T. Co Chien and Susan Y. Co Chien, petitioners,vs.
Sta. Lucia Realty & Development Inc., , and Alson Land Corporation, respondents.
PUNO, CJ.:

Facts:
Sta. Lucia and Alsons entered to a Contract to Sell on December 1995 with the Spouses Co Chien. According to
the contract, the petitioners shall purchase 301 square meters of lot in Phase I of Eagle Ridge with a lump sum
price of P1,293,300 with half of the purchase price as downpayment upon signing the contract. The balance
shall be paid upon the delivery of the title of the land to the spouses Co Chien. The petitioners were able to
pay the downpayment of P581,535 after the 10% discount given. In the addendum of the Contract to Sell, the
10% discount given shall be forfeited and be added to the balance if the spouses Co Chien failed to pay within
seven days from notice that the title is ready for delivery. On January 1998, Sta. Lucia informed the petitioners
that the title is ready for delivery, giving them seven days to settle their balance. The spouses Co Chien tried to
negotiate for more discount or to give them better lot in Eagle Ridge. As they failed to settle their balance, the
10% discount given to them was forfeited. The spouses Co Chien sent a demand letter to Sta. Lucia on June 16,
1999 for the refund of their downpayment as the Contract to Sell was voided since Sta. Lucia had no
Certificate of Registration and License to Sell at the time of the contract execution. The spouses Co Chien
failed to hear from the respondents, they then filed a complaint against Sta. Lucia with the HLURB. On May
2001, the HLURB Arbiter ordered Sta. Lucia and Alsons to refund the downpayment of Co Chien with legal
interest from July 1999 plus P10,000 for attorney's fees. The absence of Certificate of Registration and License
to Sell resulted to the nullification of the contract. The HLURB Board reversed the Arbiter’s decision and
demanding the petitioners to settle their balance of P646,150 without penalty fees. The HLURB Board also
ordered Sta. Lucia and Alsons to pay for their violations of Section 4 and 5 of Presidential Decree 957. Spouses
Co Chien appealed to the Office of the President. On June 2003, the Office of the President attested the
decision of HLURB Board and as a result, spouses Co Chien filed a petition for Review in Court of Appeals. On
February 2004, the Court of Appeals denied their petition and affirmed the decision of the Office of the
President.

Issues:
1. Whether the absence of the Certificate of Registration and License to Sell at the time of execution
rendered the Contract to Sell and its addendum null and void.
2. Whether the petitioners are guilty of laches or estoppel.

Held:
1. P.D. 957 is a law that seeks to regulate the sale of subdivision lots and condominiums in view of the
increasing number of incidents wherein "real estate subdivision owners, developers, operators, and/or
sellers have reneged on their representations and obligations to provide and maintain properly" the
basic requirements and amenities, as well as "reports of alarming magnitude...of swindling and
fraudulent manipulations perpetrated by unscrupulous subdivision and condominium sellers and
operators."
2. P.D. 957 reveals that while the law penalizes the selling of subdivision lots and condominium units
without prior issuance of a Certificate of Registration and License to Sell by the HLURB, it does not
provide that the absence thereof will automatically render a contract, otherwise validly entered, void.
The penalty imposed by the decree is the general penalty provided for the violation of any of its
provisions. It is well-settled in this jurisdiction that the clear language of the law shall prevail. This
principle particularly enjoins strict compliance with provisions of law which are penal in nature, or
when a penalty is provided for the violation thereof. With regard to P.D. 957, nothing therein provides
 for the nullification of a contract to sell in the event that the seller, at the time the contract was
entered into, did not possess a certificate of registration and license to sell.
3. Contrary to Spouses Co Chien’s bare allegation of bad faith on the part of the private respondents, the
Court of Appeals found that at the time the Contract to Sell was executed, the applications for the
Certification and the License were already pending with the HLURB but were only issued several
months thereafter. More importantly, when Spouse Co Chien received notice of the availability of the
title to the subject property, the private respondents had long since been issued the Certificate and
License. It was in fact Spouses Co Chien who, instead of paying the balance as required in the contract,
sought to renegotiate the same, and failing therein, sought to nullify the contract a year and a half
after notice that the title to the subject property, free from any liens and encumbrance, was already
available for delivery.
4. One of the purposes of P.D. 957 is to discourage and prevent unscrupulous owners, developers, agents
and sellers from reneging on their obligations and representations to the detriment of innocent
purchasers. The law mandates HLURB to closely regulate, supervise and monitor the real estate
industry, particularly residential developments such as subdivisions and condominium projects. To this
end, P.D. 957 provides for the issuance, suspension, revocation and even the outright denial of
registration and license to developers, agents and the project itself, as well as penalties for the non-
compliance with the requirements provided therein. It does not, however, provide for the nullification
of a contract, due to the lack of registration and license at the moment of execution, which in this case
was thereafter undisputedly issued by HLURB.