Geralice P.

Galang Law 101 (Oblicon)

2008-37456 March 6, 2023

Asynchronous Activity Digests

Title : Chaves v. Gonzales

Case Citation and Year : Chaves v. Gonzales, 32 SCRA 547 (1970)

Ponente : Reyes, J.B.L., J.

Facts : On July 1963, Chavez acquired Gonzales’s services to repair and

have the former’s typewriter cleaned and serviced. Gonzales was
not able to finish the job after some time despite repeated
reminders and merely gave assurance.

Sometime in October 1963, Gonzales asked for P6.00 from

Chavez which was given by the latter to purchase some parts for
the typewriter.

In October 26, 1963, Chavez, after getting exasperated with the

delay, went to Gonzales and asked for the return of the typewriter.
The latter delivered the typewriter which, upon checking by
Chavez, was found to have missing some parts such as the
interior cover and some screws.

On October 29, 1963, Chavez demanded the return of the missing

parts and the sum of P6.00 which Gonzales returned the following
day.

On August 29, 1964, Chavez brought to Freixas Business

Machines for it to be fixed. The entire service costed him P89.95,
including labor and materials.

On August 23, 1965, Chavez commenced an action against

Gonzales before the City Court of Manila, demanding from
Gonzales payment of the following damages:

(1) P90.00 as actual damages;

(2) P100.00 as temperate damages;
(3) P500.00 as moral damages; and
(4) P500.00 as attorney’s fees

Issue/s : Whether or not Gonzales breached his obligation under his

contract with Chavez and is therefore liable for damages

Held : Yes. The inferences from the facts are that Chavez and Gonzales
had a perfected contract for cleaning and servicing a typewriter;
that they intended that Gonzales was to finish it at some future
time although such time was not specified; and that such time had
passed without the work being accomplished, and that Gonzales
returned the typewriter unrepaired, without demanding that he
should be given more time to finish the job, or compensation for
Geralice P. Galang Law 101 (Oblicon)
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the work he had already done. This in itself is a breach of

Gonzales’s obligation to clean and service the typewriter.

Discussion : It is also clear that Gonzales contravened the tenor of the

obligation because he did not repair the typewriter, but returned it
with missing parts. Thus, he is liable for damages under Article
1167 of the Code for the cost of the execution of the obligation in
a proper manner, which was P58.75 for the repair, and under
Article 1170 for the missing parts in the amount of P31.10.

ARTICLE 1167. If a person obliged to do something fails

to do it, the same shall be executed at his cost.

This same rule shall be observed if he does it in

contravention of the tenor of the obligation. Furthermore,
it may be decreed that what has been poorly done be
undone. (1098)
Geralice P. Galang Law 101 (Oblicon)
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Title : Tanguilig v. Court of Appeals

Case Citation and Year : Tanguilig v. Court of Appeals, 266 SCRA 78 (1997)

Ponente : Belosillo, J.

Facts : In April 1987, Tanguilig proposed to respondent Herce Jr. to

construct a windmill system for him. They agreed on the
consideration of P60,000.00 with a one-year guarantee from the
date of completion and acceptance by respondent Herce Jr. of the
project.

Pursuant to the agreement, Herce Jr. paid Tanguilig a down

payment of P30,000.00 and an installment payment of P15,000,
leaving a balance of P15,000.

In March 1988: Herce Jr. refused and failed to pay the balance
within the specified period, prompting Tanguilig to file a complaint
to collect the amount.

Issue/s : (1) Whether or not the agreement to construct the windmill

system included the installation of a deep well

(2) Whether or not Tanguilig is under obligation to reconstruct the

windmill after it collapsed

Held : (1) No. Nowhere in Tanguilig’s proposal is the installation of a

deep well mentioned. While the words "deep well" and "deep well
pump" are mentioned, they merely describe the type of deep well
pump for which the proposed windmill would be suitable.

Circumstances only show that the construction of the well by

SPGMI was for the sole account of respondent and that petitioner
merely supervised the installation of the well because the windmill
was to be connected to it.

(2) Yes. In order for a party to claim exemption from liability by

reason of fortuitous event under Art. 1174 of the Civil Code the
event should be the sole and proximate cause of the destruction.

Tanguilig Jr. failed to show that the collapse of the windmill was
due solely to a fortuitous event. He merely stated that there was
a "strong wind,” but did not disclose that there was a typhoon on
the day.

A strong wind in this case cannot be fortuitous, unforeseeable nor

unavoidable. On the contrary, a strong wind should be present in
places where windmills are constructed, otherwise the windmills
will not turn.

Discussion : In reciprocal obligations, neither party incurs in delay if the other

does not comply or is not ready to comply in a proper manner with

what is incumbent upon him.
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When the windmill failed to function properly it became incumbent

upon the petitioner to institute the proper repairs in accordance
with the guarantee stated in the contract. Thus, the respondent
cannot be said to have incurred in delay; instead, it is the petitioner
who should bear the expenses for the reconstruction of the
windmill.

ARTICLE 1174. Except in cases expressly specified by

the law, or when it is otherwise declared by stipulation, or
when the nature of the obligation requires the assumption
of risk, no person shall be responsible for those events
which could not be foreseen, or which, though foreseen,
were inevitable.
Geralice P. Galang Law 101 (Oblicon)
2008-37456 March 6, 2023

Title : Mactan Cebu International Airport Authority v. Tudtud

Case Citation and Year : Mactan Cebu International Airport Authority v. Tudtud, GR
17412 (2008)

Ponente : Carpio-Morales, J.

Facts : Benjamin Tudtud et. al. were the owners of a parcel of land
designated as Lot No. 988 in Banilad Estate, Cebu City.

In 1949, the National Airports Corporation embarked on a program

to expand the Cebu Lahug Airport by acquiring through negotiated
sale or expropriation, several lots adjoining the then existing
airport.

NAC was able to acquire the land, to which a new TCT was issued
to transfer ownership to the Republic of the Philippines.

The land was later transferred to the Air Transport Office (ATO),
and later to Mactan Cebu International Airport Authority in 1990
via Republic Act No. 6958.

When the Mactan International Airport at Lapu Lapu City was

opened for commercial flights. The Cebu Lahug Airport was
closed and abandoned and a significant area thereof was
purchased by the Cebu Property Ventures, Inc. for development
as a commercial complex.

In a letter dated October 7, 1996 to the general manager of the

MCIAA, Tudtud demanded to repurchase the lot at the same price
paid at the time of the taking, without interest as no structures or
improvements having been erected thereon and the Cebu Lahug
Airport having been closed and abandoned, hence, the purpose
for which the lot was acquired no longer existed.

The demand remained unheeded which prompted the Tudtud to

file with Cebu City RTC a complaint for reconveyance and
damages with application for preliminary injunction/restraining
order against the MCIAA.

Issue/s : Whether or not Tudtud may seek rescission when MCIAA

refused to comply with its obligation to allow the former to
repurchase he expropriated land since the land was not utilized
for its intended purpose of public use.

Held : Yes. In fine, the rights and duties between the MCIAA and
respondents are governed by Article 1190 of the Civil Code which
provides: When the conditions have for their purpose the
extinguishment of an obligation to give, the parties, upon the
fulfillment of said conditions, shall return to each other what they
have received.
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2008-37456 March 6, 2023

Although earlier jurisprudence, Fery v. Municipality of Cabanatuan

it was held that the land becomes the absolute property of the
expropriator if the decree of expropriation gives to the entity a fee
simple title, it also held that if the land is expropriated for a
particular purpose with the condition that when that purpose is
ended or abandoned the property shall return to its former owner,
then the purpose is terminated or abandoned, the former owner
reacquires the property so expropriated. Moreover, the mode of
acquisition for public purpose of a land—whether by expropriation
or by contract—is not material in determining whether the
acquisition is with or without condition.

Discussion : The former owner of an expropriated land may resort to rescission

when the purpose in which the land was expropriated is
terminated or abandoned. In such rescission, the Court may order
the reconveyance of the property to the former owner.
Geralice P. Galang Law 101 (Oblicon)
2008-37456 March 6, 2023

Title : The Wellex Group Inc. v. U-Land Airlines Co., Ltd

Case Citation and Year : The Wellex Group Inc. v U-Land Airlines Co, Ltd., GR 167519
(2015)

Ponente : Leonen, J.

Facts : On May 16, 1998: Wellex and U-Land entered into a

Memorandum of Agreement (First Memorandum of Agreement) to
expand their respective airline operations which the following
stipulations:

▪ That U-Land would acquire from Wellex shares of stock

of Air Philippines International Corporation (APIC) and
Philippine Estates Corporation (PEC), enter into a joint
development agreement with PEC, and be given the
option to acquire from Wellex shares of stock of Express
Savings Bank.

▪ On the acquisition of APIC and PEC shares, the two

parties agreed that the purchase price of APIC shares and
PEC shares would be paid upon the execution of the
share purchase agreement and Wellex’s delivery of the
stock certificates covering the shares of stock.

▪ Section 9 of the agreement also included that if they were

unable to agree on the terms of the share purchase
agreement and the joint development agreement, within
40 days from signing, then the First Memorandum of
Agreement would cease to be effective.

▪ An attachment was made to the First Memorandum of

Agreement, denoted as a “Memorandum of Agreement”
(Second Memorandum of Agreement) entered by Wellex,
APIC, and Air Philippines Corporation (APC), which
contained stipulations involving share swaps that would
enable APIC to own shares of APC

On June 25, 1998, Wellex and U-Land were not able to enter into
any share purchase agreement even after the lapse of the 40-day
period on the said date.

▪ Despite the absence of a share purchase agreement, U-

Land remitted to Wellex a total of US$7,499,945.00

▪ After the receipt, Wellex delivered to U-Land stock

certificates for the APIC and PEC shares, as well as the
Transfer Certificate of Title.

On October 1, 1998, U-Land received a letter from Wellex

indicating a list of stock certificates that the latter was giving to the
former by way of “security”
Geralice P. Galang Law 101 (Oblicon)
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On July 22, 1999. through letter, U-Land demanded the return of

the US$7,499,945.00.00 and claimed that “Wellex had
unjustifiably refused to enter into the. Share Purchase
Agreement”.

On August 2, 1999, also through letter, Wellex refuted U-Land and

stated that “save for a few items, Wellex and U-Land virtually
agreed on the terms of both the share purchase agreement and
the joint development agreement.”

Issue/s : Whether or not the Court of Appeals erred in affirming the

Decision of the Regional Trial Court granting the rescission of the
First Memorandum and Agreement prayed for by U-Land

Held : No. In the case at hand, U-Land correctly sought the principal
relief of rescission or resolution under Article 1191, since the
obligations of the parties gave rise to reciprocal prestations, which
arose from the same cause: the desire of both parties to enter into
a share purchase agreement that would allow both parties to
expand their respective airline operations in the Philippines and
other neighboring countries.

Discussion : Rescission, as defined by Article 1385, mandates that the

parties must return to each other everything that they may have
received because of the contract. This pertains to rescission or
resolution under Article 1191, as well as the provisions governing
all forms of rescissible contracts. For Article 1191 to be applicable,
however, there must be reciprocal prestations as distinguished
from mutual obligations between or among the parties.

Rescission or resolution under Article 1191 is a principal action

that is immediately available to the party at the time that the
reciprocal prestation was breached. Article 1383 mandating that
rescission be deemed a subsidiary action cannot be applicable to
rescission or resolution under Article 1191.

ARTICLE 1191. The power to rescind obligations is

implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him.

The injured party may choose between the fulfillment and

the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should
become impossible.
Geralice P. Galang Law 101 (Oblicon)
2008-37456 March 6, 2023

Title : Metropolitan Bank and Trust Company v Chiok

Case Citation and Year : Metropolitan Bank and Trust Company v Chiok, GR 172652,
175302 and 175394 (2014)

Ponente : Leonardo-De Castro, J.

Facts : On July 5, 1995, Chiok bought US$1,022,288.50 from Nuguid

where Chiok deposited the three manager’s checks with an
aggregate value of P26,068,350.00 in Nuguid’s account with
petitioner bank Bank of the Philippines Islands

Nuguid failed to deliver the dollar equivalent of said three checks

as agreed upon, thereby prompting Chiok to request the payment
on the three checks be stopped.

On July 6, 1995, Chiok filed a complaint for damages with

application for ex parte restraining order and/or
preliminary injunction with the Regional Trial Court of Quezon City
against the spouses Gonzalo and Marinella Nuguid, and the
depositary banks, Asian Bank and Metrobank.

On July 25, 1995, the RTC issued an Order directing the issuance
of a writ of preliminary prohibitory injunction.

Asian Development Bank refused to honor MC Nos.025935 and

025939 in deference to the TRO when the checks were presented
for payment.

Metrobank claimed that it refused to honor CC No. 003380 and

stopped payment thereon when it received the TRO on July 6.

Jocelyn Paz of FEBTC, Cubao-Araneta Branch informed

Metrobank that the TRO was issued a day after the check was
presented for payment. She also stated that the transaction was
already consummated and FEBTC had already validly accepted
the same.

FEBTC, through a letter, informed Metrobank that the TRO

indicates the name GONZALO NUGUID as the payee of the check
when the check was, in fact, payable to GONZALO
BERNARDO—a defect which they believed should not bind the
bank.

Issue/s : Whether or not the purchaser of the manager’s checks and the
cashier’ checks has the right to have them cancelled by filing an
action for rescission of its contract with the payee

Held : No. The cause of action supplied by the above article, however,
is clearly predicated upon the reciprocity of the obligations of the
injured party and the guilty party.
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When Nuguid failed to deliver the agreed amount to Chiok, the

latter had a cause of action against Nuguid to ask for the
rescission of their contract. On the other hand, Chiok did not have
a cause of action against Metrobank and Global Bank that would
allow him to rescind the contracts of sale of the manager's or
cashier's checks, which would have resulted in the crediting of the
amounts thereof back to his accounts.

Otherwise stated, the right of rescission under Article 1191 of the

Civil Code can only be exercised in accordance with the principle
of relativity of contracts under Article 1131 of the same code.

Discussion : In several cases, this Court has ruled that under the civil law

principle of relativity of contracts under Article 1131, contracts can

only bind the parties who entered into it,and it cannot favor or
prejudice a third person, even if he is aware of such contract and
has acted with knowledge thereof. Metrobank and Global Bank
are not parties to the contract to buy foreign currency between
Chiok and Nuguid. Therefore, they are not bound by such contract
and cannot be prejudiced by the failure of Nuguid to comply with
the terms thereof.
Geralice P. Galang Law 101 (Oblicon)
2008-37456 March 6, 2023

Title : National Power Corporation. V. Court of Appeals

Case Citation and Year : National Power Corporation v. CA, GR L-47379 (1988)

Ponente : Gutierrez Jr., J

Facts : On August 4, 1964, Engineering Construction, Inc. (ECI),

executed a contract in Manila with the National Waterworks and
Sewerage Authority, whereby the former undertook to furnish all
tools, labor, equipment, and materials (not furnished by Owner),
and to construct the proposed 2nd Ipo-Bicti Tunnel, Intake and
Outlet Structures, and Appurtenant Structures, and Appurtenant
Features, at Norzagaray, Bulacan, and to complete said works
within 800 calendar days from the date the Contractor receives
the formal notice to proceed.

The project involved two major phases: the first phase comprising
the tunnel work covering a distance of 7 kilometers, passing
through the mountain, from the Ipo river, a part of Norzagaray,
Bulacan, where the Ipo Dam of the defendant National Power
Corporation is located, to Bicti; the other phase consisting of the
outworks at both ends of the tunnel.

In September 1967, The ECI completed the first major phase of

the work, namely, the tunnel excavation work.

▪ Some portions of the outworks at the Bicti site were still

under construction.

▪ As soon as ECI had finished the tunnel excavation work

at the Bicti site, all the equipment no longer needed there
were transferred to the Ipo site where some projects were
yet to be completed.

On November 4, 1967, Typhoon 'Welming' passed through the

NPC's Angat Hydro-electric Project and Dam. Due to the heavy
downpour, the water in the reservoir of the Angat Dam was rising
perilously at the rate of 60 centimeters per hour. To prevent an
overflow of water from the dam, since the water level had reached
the danger height of 212 meters above sea level, NPC caused the
opening of the spillway gates.

Petitions seek to set aside the decision of the respondent Court of

Appeals which adjudged the National Power Corporation liable for
damages against Engineering Construction, Inc. The appellate
court, however, reduced the amount of damages awarded by the
trial court.

Issue/s : (1) Whether or not the NPC is liable for damages

(2) Whether or not the Court of Appeals erred in reducing

damages awarded to ECI
Geralice P. Galang Law 101 (Oblicon)
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Held : (1) Yes. the destruction and loss of the ECI’s equipment and
facilities were not due to force majeure.

It is clear from the appellate court’s decision that based on its

findings of fact and that of the trial court’s, NPC was undoubtedly
negligent because it opened the spillway gates of the Angat Dam
only at the height of typhoon “Welming” when it knew very well
that it was safer to have opened the same gradually and earlier,
as it was also undeniable that NPC knew of the coming typhoon
at least four days before it actually struck. And even though the
typhoon was an act of God or what we may call force majeure,
NPC cannot escape liability because its negligence was the
proximate cause of the loss and damage.

(2) No. It did not err in reducing the consequential damages from
P333,200.00 to P19,000.00, where the Court ruled that it should
represent only the service of the temporary crane for one month.

The P120,000.00 bonus was also properly eliminated as the same

was granted by the trial court on the premise that it represented
ECI's lost opportunity "to earn the one month bonus from
NAWASA .

As to the question of exemplary damages, we sustain the

appellate court in eliminating the same since it found that there
was no bad faith on the part of NPC and that neither can the
latter's negligence be considered gross.

Discussion : If upon the happening of a fortuitous event or an act of God,

there concurs a corresponding fraud, negligence, delay or
violation or contravention in any manner of the tenor of the
obligation as provided for in Article 1170 of the Civil Code, which
results in loss or damage, the obligor cannot escape liability.

ARTICLE 1170. Those who in the performance of their

obligations are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor thereof,
are liable for damages.
Geralice P. Galang Law 101 (Oblicon)
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Title : Siguan v. Lim

Case Citation and Year : Siguan v. Lim, 318 SCRA 725 (1999)

Ponente : Davide, Jr., C.J.

Facts : On August 25, 1990 and August 26, 1990, Rosa Lim issued 2
Metrobank checks to satisfy her debts to Maria Antonia Siguan in
the total amount of P541,668.00.

Upon presentment by Siguan with the drawee bank, the checks

were dishonored for the reason of “account closed.”

Criminal case for 2 counts of violation of BP 22 was filed by Siguan

against Lim.

On December 29 1992, RTC convicted Lim as charged. The

conviction was affirmed by the Court of Appeals and is now
pending review the Supreme Court.

On August 10, 1989, Lim executed a Deed of Donation in favor of

her children, and the same was registered with the Office of the
Register of Deeds on July 2, 1991.

On June 23, 193, Siguan filed an accion pauliana against LIM and
her children, to rescind the questioned Deed of Donation over 4
parcels of land executed in favor of her 3 children and to declare
as null and void the new transfer certificates of title.

Issue/s : Whether or not the questioned Deed of Donation was made in

fraud of petitioner and, therefore rescissible

Held : No. The rescission required the existence of creditors at the

time of alleged fraudulent alienation, and this must be proved as
one of the bases of the judicial pronouncement setting aside the
contract.

Without prior existing debt, there can neither be injury nor fraud.
While it is necessary that the credit of the plaintiff in the accion
pauliana must exist prior to the fraudulent alienation, the date of
the judgment enforcing it is immaterial. Since Lim’s indebtedness
to Siguan was incurred a year after the execution of the Deed of
Donation, the first requirement of accion pauliana was not met.

Even assuming arguendo that petitioner became a creditor of Lim

prior to the celebration of the contract of donation, still her action
for rescission would not fare well because the third requisite was
not met.

It is essential that the party asking for rescission prove that he has
exhausted all other legal means to obtain satisfaction of his claim.
Siguan neither alleged nor proved that she did so. On his score,
her action for rescission of the questioned deed is not
maintainable even if the fraud charged actually did exist. The
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fourth requisite for an accion pauliana to prosper is not present

either: (4) the act being impugned is fraudulent. It was not
sufficiently established that the properties left behind by LIM were
not sufficient to cover her debts existing before the donation was
made.

Discussion : The general rule is that rescission requires the existence of

creditors at the time of the alleged fraudulent alienation, and this
must be proved as one of the bases of the judicial pronouncement
setting aside the contract. Without any prior existing debt, there
can neither be injury nor fraud.

The term "subsidiary remedy" has been defined as "the

exhaustion of all remedies by the prejudiced creditor to collect
claims due him before rescission is resorted to."
Geralice P. Galang Law 101 (Oblicon)
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Title : Philippine Communications Satellite Corporation v. Globe

Telecom, Inc.

Case Citation and Year : Philippine Communications Satellite Corporation v. Globe

Telecom, Inc., GR 147324 (2004)

Ponente : Tinga, J.

Facts : On May 7, 1991, Philcomsat and Globe entered into an agreement

for the former’s establishment, operation, and provision of earth
stations for exclusive use of the US Defense Communications
Agency (USDCA)

Both parties knew that the Military Bases Agreement with the RPh
and the US Government, which was the basis for US military
presence in Clark and Subic, was set to expire in 1991

On September 16, 1991, Senate adopted a resolution not to

extend its treaty with the US; subsequently ordered the withdrawal
of all US military forces from Clark and Subic by December 31,
1992

On August 6, 1992, Globe notified Philcomsat of its intention to

discontinue the use of the earth station effective 8 November 1992
in view of the withdrawal of US military personnel

Philcomsat replied on August 10, 1992, saying that it expects

Globe to pay for the rental of the stations even after the
discontinued use of the earth stations

Issue/s : Whether or not the termination of the RP-US Military Bases

Agreement, its corresponding treaty, and the subsequent
withdrawal of the US military forces from Clark and Subic
constitute force majeure which would exempt Globe from
Complying with its obligation to pay rentals under the agreement
with Philcomsat

Held : Yes. In order that Globe may be exempt from non-compliance with
its obligation to pay rentals under Section 8, the concurrence of
the following elements must be established: (1) the event must be
independent of the human will; (2) the occurrence must render it
impossible for the debtor to fulfill the obligation in a normal
manner; and (3) the obligor must be free of participation in, or
aggravation of, the injury to the creditor.

The Court agrees with the Court of Appeals and the trial court that
the abovementioned requisites are present in the instant case.
Philcomsat and Globe had no control over the non-renewal of the
term of the RP-US Military Bases Agreement when the same
expired in 1991, because the prerogative to ratify the treaty
Geralice P. Galang Law 101 (Oblicon)
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extending the life thereof belonged to the Senate. Neither did the
parties have control over the subsequent withdrawal of the US
military forces and personnel from Cubi Point in December 1992.

Discussion : Article 1174, which exempts an obligor from liability on account of

fortuitous events or force majeure, refers not only to events that
are unforeseeable, but also to those which are foreseeable, but
inevitable. A fortuitous event under Article 1174 may either be an
“act of God,” or natural occurrences such as floods or typhoons,
or an “act of man,” such as riots, strikes or wars.

ARTICLE 1174. Except in cases expressly specified by

the law, or when it is otherwise declared by stipulation, or
when the nature of the obligation requires the assumption
of risk, no person shall be responsible for those events
which could not be foreseen, or which, through foreseen,
were inevitable.