| CASES IN:CIVIL LAW pbc oe og | Wills and Succession | LEGITIME, Reserva Troncal I A property becomes reservable only when ar ascendant who inherits from | his ‘descendant any properly which the latter may have acquired by gratuitous title from another ascendant or a brother or sister; Article 891 | grants a personal right of reservation only to the relatives up to:the third degree from whom the reservable properties came ” Maria Mendoza, et al. v. Julia Policarpié Delos Santos, et al. G.R. No. 176422, March 20, 2013 Reyes, J. pe i “FACTS: Petitioners, grandchildren of Placido, anci Dominga. Mendoza; filed an aclion Jor Recovery of Possession by Reserva Troncal, Cancellation of TCT and Reconveyance, claiming that the subject properties should have been teserved by respondent Julia Delos Santos in their bohalf and must now revert back to them. The RTC of Bulacan, granted theit action but thé CA reversed and set 4, aside RTC decision and dismissed the complaint fled: by petitioners. Hence, this Pettion. for ¥ Review on Certiorari gy & ; + Thé faots show that three (3) parcels of land located in’ Sta:‘Matia, Bulacan, are in'the name of {fespondent Julia Delos Santos, except for one tand (Lot No. 1646-B) which is in the name of fespondent bul co-owned by Victoria Pantaleon, who bought one-half of the property from {Petitioner Maria Mendoza and her siblings € : ‘ Petitioners alleged that the properties’ were’ part of Placido and Dominga’s properties that were subject of an oral partition and subsequenlly’adjudicated to their uncle, Exequiel. After Exequiel's ‘death, it passed on to his spouse, Leonor, and’his only daughter, Gregoria. After: Leonor’s death, her share went to-Gregoria. Gregoria died'intgstate and without'issue, They claimed that after: Gregoria’s death, respondent, who is Leonor's sister, adjudicated unto herself all these properties a8 the sole surviving heir of Leonor and Gregoria. Hence, petitioners clalim that the properties should have been reserved by respondent in their behalf and must now revert back to them, applying Art. 894 of the Civil Code on reserva troncal . Respondent, however, denies any obligation to reserve the properties as these id nol originate {rom petitioners’ familial line and were not criginally owned by Placido and Dominga. According to + fespondent, the properties were bought by Exequiel and-Antonio from a certain Alfonso Ramos. It appears, however, that it was only Exequiel who was in possession of the properties, ISSUES: 4. Are the properties in dispute reservable properties? 2, Ave the peiltioners entiled'o a reservation of these properties?San Beds College of Law 2014 Centralized Bar Operations HELD: 4.NO. A property becomes reservable only when an ascendant who inherits from his descendant any property which the latter may have acquired by gratuitous tile rom enathet ascendant or » brother or sister, is obliged to reserve such property as he may have acquired by operation ofa {orthe benefit of relatives who are within the 3rd degree and who belong tothe ine from when Such property came. As appled‘in the case, the ownership ofthe properties should be reokoned only from Exequiel sincé he is the ascendant from where the first transmission occurred, or from . \whom Gregori inherited the properties in dispute, The law does nol go farther than seen aScendanUbroter/siser in determining the neal character of the property. What's pertinent that Exequiel ovmed the properties and he isthe ascendant fram whom the propertse ir dispute originally came. Gregoria, on tha other hand endant who received the properties from Exequiel by gratuitous title. sf Bet! grants @ personal right of reservation ‘only to the. relatives up to the thitd degree from. whom. the reservable propsitiee came. the only [pooanized exemptions in the case of nephews and rie3és-o the prepostus, who have the ight {6 represont their ascendants ‘(fathers and mothets):.who, are the. brothers/sisters of the #epositus and relatives within te thr degree. Inthe cabe of Julia's collateral relationship with @goria, ascent is to be made ftom Gregoria to her mother Leonor (one line/degree), then to the Tat aneestr, thats, Julia and Leonors parents (second lineldegree), and then descent to a, her aunt (third lineldegree)..Thus, Juia''s Gregore's colateal relative within the ting egtee and nother ascendant. ||» : i NATURE AND EFFECT OF OBLIGATIONS; Delay Contractor's default pertains to his fail coy count of tremendous delays in executing the scheduled work activities ie J Plus Asia Development Corporation v..Litilit G.R: No. 199650, June 26, 2013 Villarama, Jr., J. 'y Assurance Corporation FACTS: : Martin Mabunay entered into a construction. ‘agreement with petitioner J Plus Corporation to build a 7 dom condominium/hotel: Respondent Uitity Assurance Corp, acted as a surely by Providing a * Perfotmance Bond equivalent to 20% down payhnent However, upon inspection, only 31;39% of the project was completed. Because of this, Chairman Lee-of J Plus Corporation terminated the coftract and filed for arbitration with damages. Mabunay contended however that the delay tas caused by the retrofiting and other works ordered by Mr. Lee, 68 @ to substantially perform the work’| CASES IN CIVIL LAW Fhe Construction Industy Arbitrary Commission held Respondent and Mabuhay joint and severally lable, The Ci overturned said decision holding that Mabunay has nota al incured delay, pointing "| Out that the obligation to perform or complete the project was not yet demandable when peliloner ‘Terminated the conrac, beéause the agreed completion date was stil more than one month away, .__ Since the. parties contemplated delay in the completion ofthe entire project, the CA concludee that the false of the contractor to catch up with schedule of work activites did not constitu delay Giving rise to the contractor's liability for damages. Hence this petition ISSUES: 1, Was Mabunay already in delay when Mr, Lée, 2. Can respondent Utility Assurai 6 Comp: bel HELD: . 1.YES. Mabunay was already in Gelay when IMri‘Lee: terminated the contract.The Court did not Sustain the CA's interpretation as.it is inconsistent with the lerms of the Corfstnicion Agreement. Article 1374 of, the Civil! Cede requires that the various Stipulations ofa contract shall be interpreted together, attributing to'the doubtfur ones that sense which may result from all of them tken jointly soo The contractor's default in this case pertains to‘his failuré.to. substantially perform the work on account of tremendous delays in executing the scheduled work activilies. Where a party to a building construction contrac fas to comply wit'the duty imposed by the térms of the contract, 2 breach results for which aa action.may, intained'to recover the damages sustained thereby, and of course, a breach'occurs whéte'the contractor inexcusably fils to perform substantially i “accordance with the (erms'of the Contract, Regan + coun 2,VES. Respondent Utlity Assurance.Corps'iable for tne delay caused by Mabunay. As ruled by the CA. the Performancé Bond guaranteed the ‘ul and faithful compliance of Mabunay's obligations under the Construction Agreement and thal nowhere inlaw or jurisprudence dove it state that the obligation or undertaking by a surety may Be apportioned. NATURE AND EFFECT OF OBLIGATIONS, ‘Fortuitous Event Fluctuating movement of the Philippine peso in the foreign exchange ; Market is an everyday occurrence and not an instance of fortuitous event ; Fil-Estate Properties; inc. and Fil-Estate Network, Inc. v. Spouses Conrado and Maria Victoria Ronquillo GR. No. 185798, January 13, 2014 Perez; J. PACTS: Petitioner Fil-Estale Properties, inc is the owner and developer of the Central Park Place Tower while co-petitioner.Fil-Estate;Network, Inc. is its authorized marketing agent, Respondent'Spouses Ronquilo purchased from peiitioners a condominium unit al Cental Park Place Tower fot a pre. Selling contract price of about § millon pesos. As agreed upon, respondents paid the full 69.‘San Beds Coitege'o€ Law 2014 Centralized Bar Operations downpayment. of about 1.5 millon pesos and had been paying the P63,963.33 monthly. amortizations until September 1998,'- : Upon ‘learning that construction works had stopped, respondents likewise. stopped paying their monthly amortization. Claiming to have paid a total of P2,198,949.96 to petitioners, respondents through two (2) successive letters, demanded a full rofund of their payment with interest. When their demands went unheeded, respondents filed @ Complaint for Refund and Damages beloré the Housing and Land Use Regulatory Board (HLURB). Both the HLURB and the CA fuled in favor of respondent spouses for two reasons.’ Firs, petitioners’ failure to. develop:the condominium project is @ substantial breach of their obligation, Second, Asian financial crisis does nol’constitute a'fortltous:event which could excuse petitioners fromthe performance of their obligatio =f “ 4 ISSUE* . ‘ Does the Asian financial crisis constitute’ a fortuitous ‘event performing thelr obligations’? HELD: a NOssThe: Asian financiat ‘crisis is nota fortutousevent'that“would excuse petitioners from peifotming their contractual obligatidn. > : it that would excuse petitioners from The: Court cited the previous rulings:of Asian Construstion: and Cevelopment Corporation v Phlpie Commercial international Bank and’ Mondragon: Leisure. and Resorts Corporation ‘Codi of Appeals holding that the 1997:Asian financial crisis did not constitute a valid justification to renifje on obligations. The. Court added:that @-real estate. enterprise engaged in the pre-selling of. onifominium unis is concedetlly a: master in projections on commodities and currency movements ‘and business risks. The fluctuating: movement of the’ Philippine peso in the foreign exchange market is an everyday occurrence, and fluctuations inicurrency exchange rates happen everyday, thus, not. an'instance of caso fortulto, AS’ a result of the--breach committed by petitioners, respondents are entitled to rescindithe contract and-lo be refunded the amount of amortizations paid including interest and damages, ‘NATURE AND EFFECT OF OBLIGATIONS; Fortuitous Event To be considered as fortuitous event, it is not enough that the event should net have been foreseen or anticipated, but it must be one impossible to foresee of to avoid “Metro Concast Steel Corp., Sps. Jose S. Dychiao and Tiuoh Yan, Sps. ‘Guillermo and Mercedes: Dychiao and Sps. Vicente and Filomena Dychiao v. Allied Bank Corporation G.R: No. 177921; December 4, 2013 Perla-Bernabe, J. FACTS: e Metro Concast, through ‘its officers, herein individual petitioners, obtained several loans from 79CASES IN CIVIL LAW. _— respondent Allied: Bank. Petitioners failed to ‘settle thelr obligations, hence, Allied Bank fled a Complaint for collection of sum of money. In order to settle their debts with Alied Bank, petitioners offered their remaining assets/equipment for sale but since there were no takers, the equipment Was reduced into serap metal over the years. : In 2002, Peakstar Oil Corpération (Peakstar) expressed interest in buying the scrap. meta Eventually, with the alleged conformity of Allied Bank, through Ally..Saw, a Memorandum of Agreement (MoA) was drawn between Melo Concast and Peakstar, under which Peakstar. obligated itself to purchase the scrap metal for about 34 milion pesos. Peakstar reneged on all its obligations under the Moa. Petitioners essentially argue! thal thet loant‘eblgalions :10/7Alied Bank had already béen * extinguished due to Peakstar's failure to perform its own obligat Metro Concasl pursuant to the MoA. Petitioners classify Peakstar’s default as. form of force majeure in the’sense that they have, beyond their Control, lost the funds they expected'to’have received from the Peakstar (due to the Moa) which they would, fn turn, use to pay:their‘own loan‘ obligations to Allied Bank. They further state thal Alied: Bank was equally bound by it's MoA With Peakstar since its agent, Ally. Saw, actively represented it during’ ions andfexecution of the said j 2greement, ‘ISSUE: ae 1: Was Peakstars default inthe MOA a fo of force maj " HELD: 1! NO. Fortuitous events by: definitionaré!extordinary events not foreseeable or avoidable, It is ‘therefore, not enough that'the:event Should inot have-been foreseen or’ anticipated, but it must be one’ impossible to foresee''cr to avoid, The mere’ difficulty 0 foresee the happening is not impossibility to foresee the sathe, White it may be argued that Peaistar's breach of the MoA was unforseen by pelitioners, the same Us clearly nat "impossible" to foresee’ or even an event which is independent of human will” Nelther has it been shown that said occurtene8 tehidered it-impossible for petitioners to pay their loan obligations to Aled Bank and thus, negates the former's force majeure theory altogether. In any Case, the performance’ or breach of the MoA bears no relation fo the performance or breach of the subject loan transactions, they being separate and distinct sources of obligations. nSan Beds College of Law 2014 Centralized Bar Operations PURE AND CONDITIONAL OBLIGATIONS, Constructive Fulfillment A suspensive condition. giving rise to an obligation is an essential requisite of the doctrine of constructive fulfilment Carlos Lim, et al, v. Development Bank of the Philippines G.R. No. 177050, July 01, 2013 Del Castillo, J. FACTS: On November 24, 1969, peiitionérs obtained a loan of P40,000.00 from respondent DBP to finance thelr cattle: raising business. On the same day, they executed a Promissory Note undertaking to pay the anriual amortization with an interest and penalty charge. in 1970, petitioners with five olher persons. obtained another loan from’ DBP in the-amount 6{;72980,000.00. They also executed a Promissory Note promising to pay'the loan annually T¢ 2‘the loans, petitioners. executed a \Worigage in favor of DBP over 10 real properties 'n 1977, their business collapsed and they failed to pay the.loan amortizations. in 1978, petitioners made @ partial payment. In 1992, petitioners received @ Notice of Foreclosure.” Pelitioners assent 'o the proposal of the. OBP-for the ‘estructuring-of the’ loan: The Restructuring: Agreement was approved by the Regional Credit Committee subject, to ddilinal conditions. No compliance was made by the petitioners, After another extension ‘gh ie! DBP to the petitioners; DBP cancelled the Restructuring Agreemént-due to. peliloners' failure to comply with the conditions within{g Feasonable time. On July 11,4894, the Ex-Officio Sheiff.conducted public auction sale of the’ mortgaged properties for the satisfaction’ of petitionéts’total. obligations. DBP was the highest bidder. Ex-Oificio Sheriff issued the Shefif?'s Certificate: of Extra-Judicial Sale in favor of DaPEvErng 11 parcels of land." |." : Patiiohers then filed a Complaint against DBP: for Annulment of Foréelosure and-Damages with Prayer for Issuance’ of a Writ of Preliminary! Injunction’ and/or’ Temporary Restraining Order. Petitioners, relying on the Principle! of ‘Constructive’ Fulfilment, alleged that DBP's acts and omissions prevented ther from fulfilling their‘ obligalion;:thus, they prayed that they be discharged ‘rom their obligation ad thatthe foreclosure of the mortgaged properties be declared void. ISSUE: CE ibeg oe 's the obligation extinguished or discharged? HELD: NO: The Promissory Notes became due and démandable as early as 1972 and 1976, The only ‘eason the mortgaged properties werd not foreclosed in 1977 was because of the restralning order ~ from the court. It was only in 1989 that petitioners, tried to negotiate the selllemient of their loan obligations. And although DBP could have foreclosed the TMortgaged properties, it instead agreed. to restructure the loan. Article 1186 of the Civil Code, which states that-“the condition shall be deemed fulfilod when the obligor voluntarily prevents its fulfilment,” does not apply in this case, viz: Arficle 4186 enunciates the doctrine of constructive fulfilment of suspensive conditions, which applies when the following nCASES IN CIVIL LAW three requisites. concur, viz: (1) The condition is suspensive; (2) The obligor actually prevents the {fulfilment of the condition; and (3) He acts voluntarily, ‘Suspensive condition is one the happening of which gives rise to the obligation. It will be irational for any Bank to provide @ Suspensive condition in the Promissory Nole or: the Restructuring Agreement that will alow the debtor-promissor to be freed from the duty to pay the loan without paying it PURE AND CONDITIONAL OBLIGATIONS, Reciprocal Obligations The operative act‘which produces the rescission of the contract is. the decree of the court and not the mere act of the vendor Eds Manufacturing, Inc. v.Healthch einiational Inc. -G.R, No, 162802, October 9, : Noes Peralta, J. # FACTS: Respondent Healtcheck Inteimational inc, (HCI.is engaged: in the’ business’ of providing prepaid health and medical insurance coverage lo its clients through, ts accredited hospitals and inedical clinics, which includes. De La Salle Universal ical:.Cenler (DLSUMC).° Petitioner. Eds Manufacturing, Inc., (EMI) entered into, a contract with AC! to ‘provide, the former's employees of the medical insurance, ee ; “Hl notified EMI that its accreditation with DLSUMC. was.suspended ind advised EMI to avail of the services of nearby accredited institutions. EMF workers :complained that DLSUMC and even alter hospitals and clinics were nol honouring their medical cards. This prompted EMI to-formally “ofr the rescission of the ‘contract vith HCI through a letter. However, EMI failed to collect all the “Thedical cards from their ‘employees: tar Irrender, them to. HCI, Consequently, some of the ‘workers continued to utilize:the cards. HCl pre-empted EMI's threat. of legal action’by fing a case’ befote the RTC for unlawful pre- termination of contracts. EMI contended that'they, cannot be ‘heldiable because it already validly rescinded the contract. Sa ‘ a : ISSUE: Was there a valid rescission of contract? HELD: % NO. There was no valid rescission. Under the third paragraph of Article 1191 of the Civil Code, "he Court shall decree the rescission claimed, unless there be just-cause authorizing the fixing of a periods" The party entiled to rescind should apply to the court for a decree of rescission. The right Carina be exercised solely on a party's own judgment that the other committed a. breach of the Obligation. The operative act which produces the resolution of the contract is the decree of the durt and not the-mere act of the vendor. Since a judicial or notarial act is required by law for a valid rescission to take place; the letter waltlsn by respondent declaring his intention to rescind did not operate fo validly rescind the contract. BSain Beda College of Lary _._2014 Centralized Bar Operations Moreover, it is ‘evident. that’ EMI had nol rescinded: the contract at all. Despite EMI's Pronouncement, it failed fo surrender the HMO cards of ils employees although this was required by the Agreement, and allowed them to continue using them beyond the date of the rescission, The Continued use by them of their privileges ‘undér the contratt, with the apparent consent of EMI, bolies any Intention to cancel or rescind i, even as they fet that they ought to have received more than what they got. Hence, although a ground exists to validly réscind the contract between the partes, it appears that EMI failed to judicially rescind the same. ~ PURE AND CONDITIONAL OBLIGATIONS, Reciprocal Obligations In reciprocal obligations, neither'party incutsvin.delay if the other.does not comply .or. is not ready to comply in ‘a’ proper’ manner with what is inéumbent upon him. ‘ E Consolidated Industrial Gases, Inc. v. Alabang Medical Center. G.R. No. 181983, November 13, 2013, Reyes, J. FACTS: Consolidated Industial Gases, Inc. (CiGl) is a domestic, corporation engaged in the business of selling jAdustrial gases and insialing centralized medical'and vacuum pipeline system, Respondent Alabanl#’Medical Center (AMC), of the other hand, is a-domestic corporation operating a hospital business, CIGI, as contractor and AMC, as owner, entered into a contract whereby the former bound itself to provide labor and materials for the installation of a medical gas pipeline system for the flrseseeond and third floors’ (Phase installalion-project) of the hospital. The herein jegal controvetsy arose after the parties ¢ntered into another agreement for the continuation of the centralized medical oxygen and vacuun\ ‘pipeline system in the hospital's fourth & fifth floors (Phase 2 Installation project) at the cost!of 2,267;344.42, CIGI forthwith commenced installation works for Phase 2 while AMC paid the partial amount of One Million Pésos (P1,000,000,00) with the agreement that the balance shall be paid: through. progress billing and.withinfiteen (15) days from the date of receipt of the original invoice sent by CIGI CIGI sent, the completion billig for the’ Unpaid balance of Rt,267,344.42 lor the Phase 2 installation project. When the sales invoice was left unheeded, CIGI sent’a demand letter to AMC however, they stil failed to pay thus prompting CIGI Io fle a collection suit before the RTC CIGI claimed that. AMC’s obligation 19 pay the outstanding balance of the contract price for the, Phase 2 installation project is already due and demandable. AMC averred that ifs obligation to pay. the balance of. the contract price hag not yet accrued because CIG} still has-not turned over a “complete and functional medical oxygen and vacuum pipeline system The RTC ruled in favor of CIGI. The CA reversed the RTC’s judgment. The CA ruled that it was CIGI who breached the contract when it failed to complete the project and:to tun over a fully functional centralized medical oxygen and-vacuum pipeline system‘CASES IN CIVIL LAW ISSUE: ‘Is CIGI's demand for. payment upon AMG proper? HELD: NO. The Couit has painstakingly evaluated the records of the'case and based thereon, thete can. be no other conclusion than that CIGI's allegations failed to mustet merit ‘The subject installation contrpcts bear the features of reciprocal obligations. "Reciprocal obligations are those which arise from the same cause, and in which each party is a debtor and a cteditor of thé other, such that the obligation of one is dependent upon the obligation of the other: They are to be performed simultaneously, so that the performance of one is conditioned upon the simultaneous « fulfilment of the other." In reviprocal obligations’ neither pary incurs in delay if the other does not comply or is not ready. to comply ih what is incumbent upon him, From the moment one of the parties fulfills his obligation, delay by the other begins Being reciprocal in nature, the respective obligations of AMC and CiGI are dependent’ upon the performance of the other of ifs erid of the deal such that any clainyof delay of non-performance can, only prosper if the complaining party has faithfully complied with its own obligation From the foregoing, itis clear that AMC's obligation to:pay and: CIG!'s right fo demand the unpaid if balance for the Phase 2 installation project have not yet accrued: EXTINGUISHMENT OF, OBLIGATIONS, -Tender of . Payment “and | sSonsignation : 4:Tender of payment does not produce any legal effects if not accompanied by actual payment or followed by consignation # Sps. Namael and Lourdes Bonrostro v. Sps. Juan and-Constancia Luna 2 GR. No. 172346, July 24, 2013 ' Del Castillo, J. i FACTS: Petitioner Sps. Namael and. Lourder Bonrostro were vendees: in a Contract to Sell with: vendor Tespondent Constantia Luna, Sps. Luna filed a Complaint for Rescission of Contract and Damages against the spouses Bonrostro praying for the rescission of the contract and. delivery of possession of the subject property but was denied. On appeal, CA affirmed the decision but modified the amounts’ to be paid by petitioners. Petitioners then filed a. Partial Motion for Reconsideration * questioning said modifications but it was denied, hence; this Petition for Review.on Certiorari Buyer respondent Conslancia entered into a Contract to Sel with Bliss Development Corporation involving a house and lot. A year later, ‘Constancia, this time as the seller, entered into another Contract to Sell with petitioner Lourdes Bontostro of the same property with the stipulation that if vendee fails to pay the second installment, she will pay @ 2% interest and if she fails to pay the two installments, tre contact shall be rescinded. Lourdes failed to pay any ofthe stipulated subsequent amortization: paymients, excdpt for the down payment, Spouses Bonrostro, on the other handSan Beda College of Lawy 2014 Centralized Bar Operations averted they were willing to settle the obligation and even asked for a. 60-day extension but Constantia did not show up at their rendezvous, ISSUE: : |s there a tender of payment to watrant the suspension of interest? HELD: NO. Tender of payment "is the manifestation by the debtor of a desiré to comply with or pay an obligation" while consignation is the deposit of the (proper amount with a judictal authority) in accordance with rules prescribed by law, after the tender of payment has been refused or because Of circumstances which render direct payment to the creditor impossible or inadvisable. When the tender of payment is not accompanied’by the mean 6tipayment, and the debtor did not také any i tidtisUspended from the time of such i ore immediate step to make 2 consignation, then“interest iis. tender. 8 Peliioners did not:resort to consignation of the payment With the proper cour despite knowledge that under the contract, non-payment of the installmentson the agreed date would make them liable for interest thereon: They erroneously assumedthat, their notice to-pay would excuse them from paying interest: Their-claimed tender of payment did’ not produce any effect whalsoever because il was not accompanied by alual payment or followed by consignation. Hence, it dd not suspépd the running of interest. 3 EXTINGUISHMENT OF OBLIGATIONS, Compensation by Operation of Law For, compensation to apply, the following'requisites must be present: (1) that:they are both..debtorg iand:creditors. of each other; (2) both ‘debts consist in a sum of money;:(3):both debts are due; (4) both debts are liquidated and demandable;jahd (5) rleither‘ofi the debts are subject of a controversy commenced by’ " E ‘Adelalda Soriano v. People:of thai G.R. No. 181692, August 14,:2013 Vitlarama, Jr., J. . FACTS: st ils Evelyn Alagdo, daughter of private complainant Consolation Alagao, as borrower-morigagor, executed a "Contract of Loan Secured ‘by Real Estate Mortgage with’ Special. Power to. Sell Mortgage Property without Judicial Proceedings" in favor of petitioner, Adelaida Soriano, as lender- morigagee. The instrument provides for a P40,000 loan secured by a parcel-of land:-located in Don Carlos, Bukidnon, registered in Evelyn's name: It ikewise provides that the.loan was to be paid two years from the date of execution of the contract, or on February 18, 1996, and that Evelyn agrees to give: petitioner % of every harvest from her cornland until the full amount of the loan has been Paid, starting from the first harvest. Based on-Alagao’s testimony, the first harvest was made oniy in September 1994, Petitioner, ont the other hand, claims that from the time the loan was oblained Until September 1994, there were already four harvests. During pre-trial, it was admitted. by Consolacion that she received P51,730 instead of only P40, 000 as stipulated in the contract of {oan in the form of fertiizers and cash advances,CASES IN CIVIL LAW nan RE PIE IATA A e NS SERENE Subsequently, Consolacion delivered 398 sacks of torn grains to petilonér. Petitioner prepared a voucher indicating that Consolacion had received: the amount ‘of P85,607- as. full payment. “ Consolacion signed said voucher even if she only received P3,000. According to Consolacion, 64 Of, the 398 sacks will serve as partiat payment of her P40,000 loan with petitioner while the temaining balance will come from the P85,607 cash she was Supposed to receive as payment for the com grains delivered so She can redeem her daughter's land tile Consolacion filed a criminal case against petitioner Soriano for the ‘crime of estafa-before the Regional Trial Court.of Misamis Oriental. The RTC rendered a decision finding petitioner guilty beyond reasonable doubt of the crime of estafa, However, the petitioner's conviction was set aside by the CA. The CA held in the absence of deceit, petitioner's liability is only, civil . {n determining petitioner's civil lgblitythe CA’decuicted from“P85,807 — the total value of the 398 sacks of com grains delivered to'petii 3,000 pelitionet Hid paid Alagao and the P7,800 which the CA consideted as the value of the'64 sacks of corn grains which’ Alagao inletded ag partial payment for the P40,000 loan, thus leaving the balance of P74,807. Dissatisfied, petitioner is now before this Court questicnirg her civ iabilty ASSUE: ae : lls the principle of set-off or compensation applicable? “HELD: : ; Pe YES. Compensation is-a mode of extinguishing to'the concurrent amount, the debls of persons sawho in their own right are creditars. and debtors ofeach other: The object of compensation is the ‘evention of unnecessary suits arid: payments'through the mutual extinction by operation of law of ;ncurring debls. Article 1279 ofthe. Civil Code provides for the. requisites for compensation to take effect. This Court rules that' all thé“above requisites. for compensation are present in the instant case, {0 wit: (1) petitioner and Alagao' are’ debtors‘and creditors of each other; (2) both, debts consist in a sum of money; f both debts are due; (4) both debts are liquidated and demandable: and (5) neither of the debis'are subject of a:controversy. commenced: by a third person. With the Presence of all the requisites: mentioned in’Article 1279, legal compensation took effect by ‘operation of law as provided in Article 4290 of the Civil Code. EXTINGUISHMENT OF OBLIGATIONS, Novation In order that an obligation may. be extinguished by another that substitutes the former, it is imperative that the extinguishment be so declared: in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other : Narciso Degafos v. People of the Philippines G.R. No. 162826, October 14, 2013 Bersamin, J. FACTS: Brigada Luz and Narciso Dégafios were charged with Estafa under Art. 315, par. 1(b) of the RPC. The accused allegedly received from: Sps. Alty, Jose Bordador and Lydia Bordador gold and 7Han Beda College of Law __ 2014 Centralized Bar Operations ‘pleo8s of jewelry worth P 438,702.00, under express obligation to sel he same on commission an remit the proceeds thereof or return the unsold gold and pieces of jewelry. ‘ Prior to the institution of the instant ¢ase, a separate civil action for the recovery of sum of money ‘was filed by private complainants where the RTC found'both of the accused liable, CA and SC affirmed the lower court's decision. Sometime i 1994, while the said civil case was pénding, the private complainants instituted the pre'sent case against the accused. Lydia Bordador testified that she,dellyered the sald jewelry starting sometime in 1986 as evidenced by several documents entitled ‘Katlbayan at Kasunduan’, Everytime Degafios got jewelry from her, he signed the receiats in her presente..However; receipt nos. 616 to 745 were no longer paid and the accused failed to retuin the jewelky covered by such receipts. Degaiios admitted thal he is the only one who was indebted to private complainants and out of fis indebtedne’s, he already made partial payments in the amount of P53, 307.00. He now'claims thal such payments povated his contrat with private complainants fram agency to. loan. thereby converting his lability from criminal to civil, ISSUE: Was théfe novation? ee HESD! waked NO: The partial payments made by Degafios and his Purported agreement to pay the remaining abtigalions did not equate to a novaton.of the-original contractual relationship of agency lo one‘of # sale, ; In order that an obligation may be’ extinguished iby-another that’substitutes the forrner, it is imperative that the extinguishment be:So.declared in unequivocal terms, or that the olé and the new obligations be on every point! incompatible with each other. The’ changes alluded to by. petitioner consists only in the rie payment. There was really no substitution of debtors since private complainant merely acquiescpd:to the payment but did not give her consent to enter into a new contract. Thie novation theory may perhaps apily prior to the filing ofthe criminal information in court by the. state prosecutors because up to that time the orginal ust relation may be converted by the parlies into.an ordinary creditor-debtor situation, thereby placing the complainant in estoppel to insist on the original trust. But ater the justice authorities have taken cognizance of the crime ahd insltuted action in cour, the offended party may no longer divest the prosecution of its: power to-exact'the criminal. fabilty, as-distinguished from the civil. The orime being an offense against the state, only the latter can renounce it. Hence, the role of novation may only be to either prevent the rise of crimirial lability or fo cast doubt on the true nature ofthe original basic transaction.CASES IN CIVIL LAW EXTINGUISHMENT OF OBLIGATIONS, Novation Novation to be given its legai effect requires that the creditor should ‘consent to the substitution of a new debtor and. the old debtor be released ‘from its obligation S.C. Megaworld Construction and Development Corporation v. Engr. Luis U. Parada G.R. No. 183804, September 11, 2013 Reyes, J. ——+ FACTS: S.C. Megaworld Construction and Devélopment:Corporation (petitioner) bought electrical lighting materials from Gentile Industties, ‘a *sole! proprietorshio. owned:iby Engineer Luis U. Parada (respondent), forits Read-Rite project. The petitioner Was unable to pay for the above purchase on due date, but. blamed it on its failure to collect.under its sub-contract with the Enviro: Kleen Technologies, ine: (Enviro Kleen). it was however able to persuade Enviro Kleen to agree to settle its above purchase, but afer parttally paying the’ respondent; Enviro Kleen stopped making further Payments. Respondent filed a suitin'the RTC to opllect from the petitioner the said balance, plus damages, costs and expenses. : The petitioner in its answer denied liability, Claiming that it. was téleased trom its indebledriess to tt respondent by reason of the novation of their contrac which, It reasoned, took place when the taller accepted the partial payment of Enviro Kleen in its’behalf, and thereby acquiesced to the Substitution’ of Enviro Kleen as the new debtor ‘in the’ peliloner’s place, The RTC rendered jddgment in favor of respondent. The'CA concurred withthe decision of the RTC, ‘ASSUE: Was there @ novation. of the contract between the parties through substitution of the debtor, which resulted in the release of the petitioner from its obligation to pay the respondent? HELD: NO. In‘otder to change the person of the, debtor, the, forme? debtor must be expressly released from the obligation, and the third person or new debtor must assume the former's place in the contractual relation, Article 1293 speaks of substitution of the debtor, which may either be in the form of expromision or delegacion, as seems to be the case here: In both cases, the old: debtor must be released from the obligation, otherwise, there is no valid novation. From the circumstances of this case, no clear and unequivocal consent by the respondent to the release of the petitioner from the obligation to pay the cost of thelighting materials. In fact; from.the letters of the respondent to Enviro Kleen, it can be said that he retained.his option to go after the > petiloner if Enviro'Kleen failed to settle the petitioner's debt The fact thal Enviro Kleen Téchnologies,-Inc. made payments to the respondent and the lalter accepted it: does not ipso facto result in novation.-Novation to be given ils legal effect reauires that 79‘San Born College of Law eau 2014 Centralized Bar Operations: the creditor ‘should consent to the substitution of a new debtor and the old debtor be released from __ ts obligation (Art. 1293, New Civil Code), EXTINGUISHMENT OF OBLIGATIONS, Novation There is no novation when the proposed substituted parties did not agree to the assignment of its obligations under the contract Philippine Reclamation Authority (Formerly Known as The Public Estates Authority) v. Romago; Incorporated G.R.No. 174665, September 18, 2013 Abad, J. FACTS: ka Congress enacted Republic Act 1227, in and Development Authority (BCDA). Pursuant to'this law, portions of Fort Bonifacio were ‘set aside for the Heritage Park Project, aimed at: converting a 105-hectare land: into“a' worid class memorial park in order to generate funds forthe BCDA, +s | ; ; BCDA entered inio a Memorandum of Agreement (MOA) wih the! Philippine Reclamation Authority (PRA), designating it as the Project Manager. Subsequehyithe:BCDA, ‘PRA, and the Philippine National Bank (PNB) executed a Pool Formation:Trust Agteement (PETA). Atter public bidding, the PRA aWarded the outdoor electrical and lighting:works “octthe ark to.tespondent Romago, Inc. (Romago) with which it entered into a Construction: Age +: Meanie, the partes tothe PFTA otganize to take Gver. the management of :the: pr consequent’ lermination of its serv contract with it, Romago filed with “t complaint seeking to collec its claims Management (Phils), Inc, (RMI, ISSUE:; RLY \s PRA liate to Romago under the Consirdtign’Afesment despite the sutisequent turnover of the Hefitage Park Project to the HPMC? HELD: YES. PRA's liability under ifs contract with Romago had not been extinguished by novation. In novalion, a ‘subsequent obligation extinguishes a previous one through substitulion either by changing the abject or principal condltions, by substituting another in-place of the debtor, or by subrogating_a third person into the rights of the creditor. Novation requires (1) the existence of a previous. valid’ obligation; (2) the agreement of .all. parties to the new contract; (3) the extinguishment ofthe old contract; and (4) the validity of the new one. the Heritage Patk Management Corporation (HPMC) ject. The PRA immediately informed Romago of the Si:Because the HPMC refused.to recognize the PRA's 'Coristruction Industry Arbitration Commission (GIAC) a plustin rest from the PRA, HPMC, and Rosehilis Memorial 80CASES IN CIVIL LAW There js no novation in this case since the proposed substituted parties did not agree to the PRA’s supposed assignment of its obligations under the: contract for the electical and light works at Heritage Park to'the HPMC. The latter definitely and clearly rejected the PRA's assignment of its Nabllty under that contract to thie PMC. Romago tried to follow up its claims with the HPMC, not Because of any inew contrac it entered into with the latter, but simply because the PRA told it that the HPMC would henceforth assume the PRA’s liability under is contract with Romago, Hence, PRA is stil liable to Romig’ Under the Construction Agreement despite the subsequent umover of the Heritage Park Project to the HPMC. CONTRACTS, Relativity ono, qurauag It is a basic principle in}taw ithat:cont ract had entered.into it; it cannot favor or prejudice'a third person ‘Mantar Rice Mill, Inc., v, Lourdes L. Deyto, doing business under thé trade name “J.D. Grains Center” and Jennelitadeyto Ang, a.k.a. “Janet Ang” G.R. No. 191189, January'29, 2014 Del Castillo, J. :can:bind only the parties who FACTS: - Petitioner Manlar Rice Mil Inc, (Maniar), is engag grains. Respondent Lourdes L.;Deyto (Deylo) dog S$ Linder the: trade namie "JD Grains Center” and is likewise ‘engaged in the business! of’ milling and selling of grains. Respondent Jefnelita Deyto Ang or Janet Ang,(Ang) is Deyto's'daughter aid, prior to her alleged absconding, operated her own rice trading 1ess through her own store, "Janel ‘Commercial Store’: Ang enlered into rice supply contract ‘with’ Manlar, with thie former purchasing rice from the latter affounting to P3,843,220.00. The transaction was covered by nine postdated checks issued by ‘Ang from her personal banklchecking ‘accolnt, Allthe checks were'dishonored for having been ‘drawn against insufficient funds ‘and for‘being: drawn against a closed account. Manlar made oral and written demands upon both Deyto and'Ang, which went unheeded. Maniat filed a Complaint for sum of:mponey against Deyto.and Ang before the Regional Trial Court (RTC) of Quezon City, The Complaint ésseiitiallsought to hold Deylo and Ang solidaiy lable on the rice supply contract. 88.0f'tice milling and selling of The trial court ruled that both defendants should be held solidarily liable for the unpaid and utstanding Manlar account. Upon appeal to the Court of Appeals,.the CA concluded that there is ‘no legal basis to hold Deyto solidarly liable with Ang for what the latter may owe Manlar. The CA Conceded that if Ang indeed contracted with Manlar, she did so on her ovin; the evidence failed to indicate that Deyto had any participation in the supposed transactions between her daughter and Manlar. Petitioner thus filed a Petition for Review on-Certiorar to the Supreme Cout. ISSUE: 's the Court of Appeals correct jn concluding that there is no legal basis to hold-Deyto solidaily liable with Ang'for what the latterimay owe Maniar? 81