02 Case Digests - Kinds of Civil Obligations

Kinds of Civil Obligations - Case Digests
Pay v. Palanca, G.R. No. L-29900 - Rabena 1
Smith Bell v. Sotelo Matti, G.R. No. L-16570 - Abad 2
Chavez v. Gonzales, G.R. No. 168338 - Bringuelo 5
Encarnacion v. Baldomar, G.R. No. L-264 - Omnes 6
Eleizegui v. Lawn Tennis Club, G.R. No. 967 - Del Prado 8
Philbanking v. Lui She, G.R. No. L-17587 - Guevarra 9
Lim v. People, G.R. No. L-34338 - Arre 12
Araneta, Inc. v. Phil. Sugar Estates, G.R. No. L-22558 - Fonacier 13
Millare v. Hernando, G.R. No. L-55480 - De Castro 16
Arco Pulp and Paper Co., Inc. and Santos v. Lim, G.R. No. 206806 - Josol 18
Ronquillo v. CA, G.R. No. L-55138 - Calo 19
Malayan Insurance v. CA, G.R. No. L-36413 - Flores 20
PNB v. Independent Planters, G.R. No. L-28046 - Hernando 22
Calang and Philtranco v. People, G.R. No. 190696 - Roma 24
Ruks Konsult and Construction v. Adworld Sign and Advertising Corp. and Transworld Media Ads,
G.R. No. 204866 - De Castro 25
TMBI v. Feb Mitsui and Manalastas, G.R. No. 194121 - Floreza 27
Sanico and Castro v. Colipano, G.R. No. 209969 - Guevarra 30
Sps. Lam v. KODAK PHILIPPINES, G.R. No. 167615 - Roma 32
Robes-Francisco v. CFI, G.R. No. L-41093 - Alfonso 33
Bachrach v. Espiritu, G.R. No. 28497 - Fonacier 34
Pamintuan v. CA, G.R. No. L-26339 - Del Rosario 35
Castillo v. Security Bank, et. al., G.R. No. 196118 - Hernando 36
Sps. Poon v. PRIME SAVINGS BANK, G.R. No. 183794 - Calo 36
Pay v. Palanca, G.R. No. L-29900 - Rabena

[TOPIC FROM OUTLINE]
IN THE MATTER OF THE INTESTATE OF JUSTO PALANCA, Deceased, GEORGE PAY, petitioner-appellant, vs.
SEGUNDINA CHUA VDA. DE PALANCA, oppositor-appellee.
June 28, 1974 No. L-29900 FERNANDO, J.
1
Recit Ready Synopsis
Really really short case
Relevant Provisions/Concepts/Doctrines
A promissory note payable “on demand” is immediately due and demandable; action thereon prescribes within ten
years. - The obligation being due and demandable, it would appear that the filing of the suit after fifteen years was
much too late. For again, according to the Civil Code, which is based on Section 43 of Act No. 90, the prescriptive
period for a written contract is that of ten years. This is another instance where this Court has consistently
adhered to the express language of the applicable norm.
FACTS
Petitioner George Pay is a creditor of the Late Justo Palanca who died in Manila on July 3, 1963. The claim of the
petitioner is based on a promissory note dated January 30, 1952, whereby the late Justo Palanca and Rosa
Gonzales Vda. de Carlos Palanca promised to pay George Pay the amount of P26,900.00, with interest thereon at
the rate of 12% per annum.
The promissory note, dated January 30, 1962, is worded thus: " `For value received from time to time since 1947,
we [jointly and severally promise to] pay to Mr. [George Pay] at his office at the China Banking Corporation the sum
of [Twenty Six Thousand Nine Hundred Pesos] (P26,900.00), with interest thereon at the rate of 12% per annum
upon receipt by either of the undersigned of cash payment from the Estate of the late Don Carlos Palanca or upon
demand'
ISSUE
Whether the creditor is barred by prescription in his attempt to collect on a promissory note executed more than
fifteen years earlier with the debtor sued promising to pay either upon receipt by him of his share from a certain
estate or upon demand
RULING
Yes. He is barred by prescription. From the manner in which the promissory note was executed, it would appear
that petitioner was hopeful that the satisfaction of his credit could be realized either through the debtor sued
receiving cash payment from the estate of the late Carlos Palanca presumptively as one of the heirs, or, as
expressed therein, "upon demand." What is undeniable is that on August 26, 1967, more than fifteen years after the
execution of the promissory note on January 30, 1952, this petition was filed. Article 1179 of the Civil Code
provides: "Every obligation whose performance does not depend upon a future or uncertain event, or upon a past
event unknown to the parties, is demandable at once." The obligation being due and demandable, it would appear
that the filing of the suit after fifteen years was much too late. For again, according to the Civil Code, which is based
on Section 43 of Act No. 190, the prescriptive period for a written contract is that of ten years.
Additional Notes
Smith Bell v. Sotelo Matti, G.R. No. L-16570 - Abad

Kinds of Civil Obligations; As to perfection and extinguishment; conditional
SMITH, BELL & CO., LTD., plaintiff-appellant, vs. VICENTE SOTELO MATTI, defendant-appellant.
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March 9, 1922 G.R. No. L-16570 Romualdez, J.
Plaintiff corporation undertook to sell and deliver equipment for Mr. Sotelo but no definite dates were
fixed for the delivery. The periods were couched in ambiguous terms such as “within 3 or 4 months”, “in
the month of September or as soon as possible”, and “approximate delivery with 90 days-This is not
guaranteed.” When the goods arrived, Mr. Sotelo refused to receive them and to pay the prices. Mr.
Sotelo then sued for damages because of the delay suffered.
The issue in this case is whether the obligations are one with a period or a condition. The obligations are
conditional. The Court cannot but conclude that the term which the parties attempted to fix is so uncertain
that one cannot tell whether those articles could be brought to Manila or not. Thus, the obligations were
regarded as conditional.
Stemming from the above, another issue is whether Smith Bell incurred delay in the delivery of the goods
to Mr. Sotelo. The court ruled No; that Smith Bell was not in delay. The obligor will be deemed to have
sufficiently performed his part of the obligation, if he has done all that was in his power, even if the
condition has not been fulfilled in reality.
Art. 1193, Civil Code

Obligations for whose fulfillment a day certain has been fixed, shall be demandable only when that day comes.
A day certain is understood to be that which must necessarily come, although it may not be known when.
If the uncertainty consists in whether the day will come or not, the obligation is conditional.
---- In this case, the uncertainties in the terms of the obligations necessitate that these are conditional ones.
FACTS
● In August, 1918, the plaintiff corporation and the defendant, Mr. Vicente Sotelo, entered into
contracts whereby the former obligated itself to sell, and the latter to purchase from it the
following, which were delivered with the dates below:
Items/Products Prices Delivery date under the Actual date of delivery

promissory note
2 steel tanks P21,000 “to be shipped from New April 27, 1919
York to Manila within 3 or
4 months”
2 expellers P25,000/each “to be shipped from San October 26, 1918

Francisco in the month of
September, 1918 or as
soon as possible”
2 electric motors P2,000/each “Approximate delivery February 27, 1919

within 90 days—This is
not guaranteed”
In all these contracts, there is a final clause as follows:

The sellers are not responsible for delays caused by fires, riots on land or on the sea,
strikes or other causes known as "Force Majeure" entirely beyond the control of the sellers
or their representatives.
● Plaintiff corporation notified the defendant, Mr. Sotelo, of the arrival of these goods, but Mr. Sotelo
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refused to receive them and to pay the prices stipulated.
● The plaintiff brought suit against the defendant, based on four separate causes of action, alleging,
among other facts, that it immediately notified the defendant of the arrival of the goods, and asked
instructions from him as to the delivery thereof, and that the defendant refused to receive any of
them and to pay their price.
● Defendant’s counterclaim was that, as a consequence of the plaintiff's delay in making delivery of
the goods, which the intervenor intended to use in the manufacture of coconut oil, the intervenor
suffered damages in the sums of one hundred sixteen thousand seven hundred eighty-three
pesos and ninety-one centavos (P116,783.91) for the nondelivery of the tanks, and twenty-one
thousand two hundred and fifty pesos (P21,250) on account of the expellers and the motors not
having arrived in due time.
● Lower court absolved the defendants from the complaint insofar as the tanks and the electric
motors were concerned, but rendered judgment against them, ordering them to "receive the
aforesaid expellers and pay the plaintiff the sum of fifty thousand pesos with legal interest.
ISSUE
1. Whether the obligations in the case are one with a period or a condition? [Conditional obligations]
2. Whether under the contracts entered into and the circumstances at the time, Smith Bell incurred delay in the
delivery of the goods? [No delay]
RULING
1. Conditional obligations. From the record it appears that these contracts were executed at the time of the
world war when there existed rigid restrictions on the export from the United States of articles like the
machinery in question, and maritime, as well as railroad, transportation was difficult, which fact was known to
the parties; hence clauses were inserted in the contracts, regarding "Government regulations, railroad
embargoes, lack of vessel space, the exigencies of the requirements of the United States Government," in
connection with the tanks and "Priority Certificate, subject to the United State Government requirements," with
respect to the motors. At the time of the execution of the contracts, the parties were not unmindful of the
contingency of the United States Government not allowing the export of the goods, nor of the fact that the
other foreseen circumstances therein stated might prevent it.
Considering these contracts in the light of the civil law, we cannot but conclude that the term which the
parties attempted to fix is so uncertain that one cannot tell just whether, as a matter of fact, those articles
could be brought to Manila or not. If that is the case, as we think it is, the obligations must be regarded as
conditional.
2. No, Smith Bell did not incur delay. In cases like this, which are not expressly provided for, but impliedly
covered, by the Civil Code, the obligor will be deemed to have sufficiently performed his part of the
obligation, if he has done all that was in his power, even if the condition has not been fulfilled in reality.
Additional Notes
Chavez v. Gonzales, G.R. No. 168338 - Bringuelo

Kinds of Civil Obligations; As to perfection and extinguishment; conditional
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ROSENDO O. CHAVES, Plaintiff-Appellant, v. FRUCTUOSO GONZALES, Defendant-Appellee.
April 30, 1970. G.R. No. L-27454* Reyes, J.B.L.
Chavez delivered a typewriter to Gonzales for cleaning and servicing, but the latter returned the said typewriter "in
shambles" instead. Chavez had to have the typewriter fixed in another shop which cost him P89.10. Chavez
demanded that Gonzales should pay her the same amount, but Gonzales argued that Chavez did not fix a period
wherein he should comply with the contract. The Court held that Gonzales cannot invoke Article 1197 of the Civil
Code for he virtually admitted non-performance by returning the typewriter that he was obliged to repair in a non-
working condition, with essential parts missing. The fixing of a period would thus be a mere formality and would
serve no purpose. Thus, he has to pay the whole P89.95 (amount of labor and service + cost of missing parts), with
interest at the legal rate from the filing of the complaint.
ART. 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 he undone.
ART 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.
ART 1197. If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a
period was intended, the courts may fix the duration thereof. The courts shall also fix the duration of the period
when it depends upon the will of the debtor.
"Gonzales cannot invoke Article 1197 of the Civil Code for he virtually admitted non-performance by returning the
typewriter that he was obliged to repair in a non-working condition, with essential parts missing."
FACTS
● Chavez delivered a portable typewriter to Gonzales, a typewriter repairer, for cleaning.

● Gonzales was not able to finish the job after some time despite repeated reminders made by the plaintiff.
● Gonzales merely gave assurances, but failed to comply with the same.
● Gonzales asked from the plaintiff the sum of P6.00 for the purchase of spare parts. Chavez paid the same.
● Upset with the delay of the repair of the typewriter, Chavez went to Gonzales' house and asked for the
return of the typewriter.
● Gonzales returned the typewriter in a wrapped package.
● When Chavez got home, Gonzales examined the typewriter and found it in shambles--with the interior cover
and some parts and screws missing.
● Chavez sent a letter to the defendant formally demanding the return of the missing parts, the interior cover
and the sum of P6.00.
● The following day, Gonzales returned to the plaintiff some of the missing parts, the interior cover and the
P6.00.
● Chavez had his typewriter repaired by Freixas Business Machines instead, which cost him P89.85,
including labor and materials.
● Chavez commenced an action, demanding payment for damages.
● City Court of Manila: Instead of P89.85, missing parts had a total value of only P31.10. Judgment
rendered orders payment of P31.10.
● Chavez appealed. He said that the Court only awarded the value of the missing parts of the typewriter,
instead of the whole cost of labor and materials that went into the repair of the machine.
● Gonzales' argument: He is not liable at all, not even for the sum of P31.10, because his contract did not
contain a period. Chavez should have first filed a petition to fix the period, under Article 1197 of the Civil
Code, within which Gonzales would comply with the contract before he could be held liable for breach of
contract.
ISSUE
5
Whether or not defendant should pay damages to plaintiff for non-performance
RULING
Chavez and Gonzales had a perfected contract for cleaning and servicing a typewriter. They intended that Gonzales
should finish it at some future time, although the time was not specified; and that such time had passed without the
work having been accomplished. Gonzales even returned the typewriter cannibalized and unrepaired, which in itself
is a breach of his obligation, without demanding that he should be given more time to finish the job, or
compensation for the work he had already done.
The time for compliance having evidently expired, and there being a breach of contract by non-performance, it was
academic for Chavez to have first petitioned the court to fix a period for the performance of the contract before filing
his complaint in this case.
However, Gonzales cannot invoke Article 1197 of the Civil Code for he virtually admitted non-performance by
returning the typewriter that he was obliged to repair in a non-working condition, with essential parts missing. The
fixing of a period would thus be a mere formality and would serve no purpose than to delay.
It is clear that the Gonzales contravened the tenor of his obligation by returning the typewriter "in shambles",
according to the appealed decision. For such contravention, he is liable under Article 1167 of the Civil Code.
The cost of the execution of the obligation in this case should be the cost of the labor or service expended in the
repair of the typewriter, which is in the amount of P58.75. because the obligation or contract was to repair it.
Gonzales is also liable under Article 1170 of the Code, for the cost of the missing parts, in the amount of P31.10. He
was bound in his obligation to repair the typewriter, but he failed or neglected to return it in the same condition it
was when he received it.
Thus, he has to pay a total of P89.85, with interest at the legal rate from the filing of the complaint.
Additional Notes
Encarnacion v. Baldomar, G.R. No. L-264 - Omnes

Kinds of Civil Obligation
VICENTE SINGSON ENCARNACION, plaintiff and appellee, vs. JACINTA BALDOMAR ET AL., defendants and
appellants. Singson Encarnacion vs. Baldomar,,
October 4, 1946 No. L-264 77 Phil. 470 Hilado J;
This case is an appeal from a judgement of the CFI Manila. Encarnacion, the owner of the house located in Legarda
St. Manila, leased the said property six years ago to a certain Jacinta Balmador and her son, Lefanto Fernando.
After Manila was liberated in the last war specifically on March 16 and April 7 1945, Encarnacion notified the
defendants that they need to vacate the house as he will be using the said property as offices. Defendants insisted
to continue their occupancy. They argued that they have a contract of lease celebrated between the plaintiff, thus,
they are authorized to occupy the property indefinitely.
6
VALIDITY AND FULFILLMENT CANNOT BE LEFT TO EXCLUSIVE WILL OF LESSEE.—The continuance and
fulfillment of the contract of lease cannot be made to depend solely and exclusively upon the free and uncontrolled
choice of the lessees between continuing paying the rentals or not, completely depriving the owner of all say in the
matter.
FACTS
Encarnacion, owner of the house (589 Legarda St. Manila), some six years ago leased said house to Jacinta
Baldomar, upon a month-to-month basis for the monthly rental of P35. After Manila was liberated in the last war,
plaintiff Singson Encarnacion notified defendants to vacate the house on or before April 15, 1945, because plaintiff
needed it for his offices as a result of the destruction of the building where said plaintiff had said offices before.
Despite this demand, defendants insisted on continuing their occupancy. Plaintiff filed this case against the
defendants in Municipal Court of Manila. Defendants opposed stating that the contract which they had celebrated
with plaintiff since the beginning authorized them to continue occupying the house indefinitely . Singson
Encarnacion contended that the lease had always and since the beginning been upon a month-to-month basis.
ISSUE
Whether or not the contract of lease clearly allowed the defendants to continue occupying the house indefinitely.
RULING
No.
The defense thus set up by defendant Lefrado Fernando would leave to the sole and exclusive will of one of the
contracting parties (defendants in this case) the validity and fulfillment of the contract of lease, within the meaning of
article 1256 of the Civil Code, since the continuance and fulfillment of the contract would then depend solely and
exclusively upon their free and uncontrolled choice between continuing paying the rentals or not, completely
depriving the owner of all say in the matter.
If this defense were to be allowed, so long as defendants elected to continue the lease by continuing the payment of
the rentals, the owner would never be able to discontinue it; conversely, although the owner should desire the lease
to continue, the lessees could effectively thwart his purpose if they should prefer to terminate the contract by the
simple expedient of stopping payment of the rentals. This, of course, is prohibited by the aforesaid article of the Civil
Code.
Additional Notes
Eleizegui v. Lawn Tennis Club, G.R. No. 967 - Del Prado

Kinds of Civil Obligations: As to Perfection and Extinguishment
DARIO AND GAUDENCIO ELEIZEGUI, plaintiffs-appellees,

vs.
THE MANILA LAWN TENNIS CLUB, defendant-appellant
7
May 19, 1903 G.R. No. 967 ARELLANO, C. J.:
The parties in this case have agreed upon a term hence Art. 1581 is inapplicable. The legal term cannot be applied
under Art 1581 as it appears that there was actually an agreement between the parties as to the duration of the
lease,albeit implied that the lease is to be dependent upon the will of the lessee. It would be absurd to accept the
argument of the plaintiff that the contract was terminated atits notice, given this implication.The duration of the lease
does not depend solely upon the will of the Lessee (defendant). It cannot be concluded that the termination of the
contract is to be left completely at the will of the lessee simply because it has been stipulated that its duration is to
be left to his will.
Article 1581 of the Civil Code, fixing legal terms for leases in which no conventional term is stipulated, has no
application to a lease whose termination is expressly left to the will of the lessee.
The term of a lease whose termination is expressly left to the will of the lessee must be fixed by the courts
according to the character and conditions of the mutual undertakings, in an action brought for that purpose, in
accordance with article 1128 of the Civil Code.
FACTS
A contract of lease was executed on January 25, 1980 over a piece of land owned by the plaintiffs Eleizegui
(Lessor) to the Manila Lawn Tennis Club, an English association (represented by Mr. Williamson) for a fixed
consideration of P25 per month and accordingly, to last at the will of the lessee. Under the contract, the lessee can
make improvements deemed desirable for the comfort and amusement of its members. It appeared that the
plaintiffs terminated the lease right on the first month. The defendant is in the belief that there can be no other mode
of terminating the lease than by its own will, as what they believe has been stipulated.
As a result the plaintiff filed a case for unlawful detainer for the restitution of the land claiming that article 1569 of the
Civil Code provided that a lessor may judicially dispossess the lessee upon the expiration of the conventional term
or of the legal term; the conventional term — that is, the one agreed upon by the parties; the legal term, in defect of
the conventional, fixed for leases by articles 1577 and 1581. The Plaintiffs argued that the duration of the lease
depends upon the will of the lessor on the basis of Art. 1581 which provides that, "When the term has not been fixed
for the lease, it is understood to be for years when an annual rental has been fixed, for months when the rent is
monthly. . . ." The second clause of the contract provides as follows: "The rent of the said land is fixed at 25 pesos
per month."
The lower court ruled in favor of the Plaintiffs on the basis of Article 1581 of the Civil Code, the law which was in
force at the time the contract was entered into. It is of the opinion that the contract of lease was terminated by the
notice given by the plaintiff. The judgment was entered upon the theory of the expiration of a legal term which does
not exist, as the case requires that a term be fixed by the courts under the provisions of article 1128 with respect to
obligations which, as is the present, are terminable at the will of the obligee.
ISSUE
Whether or not the parties have agreed upon the duration of the lease.
RULING
YES, the parties have agreed upon a term hence Art. 1581 is inapplicable.
The legal term cannot be applied under Art 1581 as it appears that there was actually an agreement between the
parties as to the duration of the lease, albeit implied that the lease is to be dependent upon the will of the lessee. It
would be absurd to accept the argument of the plaintiff that the contract was terminated at its notice, given this
implication.
Interestingly, the contract should not be understood as one stipulated as a life tenancy, and still less as a perpetual
lease since the terms of the contract express nothing to this effect, even if they implied this idea. If the lease could
last during such time as the lessee might see fit, because it has been so stipulated by the lessor, it would last, first,
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as long as the will of the lessee — that is, all his life; second, during all the time that he may have succession,
inasmuch as he who contracts does so for himself and his heirs. (Art. 1257 of the Civil Code.) The lease in question
does not fall within any of the cases in which the rights and obligations arising from a contract can not be
transmitted to heirs, either by its nature, by agreement, or by provision of law. Moreover, being a lease, then it must
be for a determinate period. (Art. 1543.) By its very nature it must be temporary, just as by reason of its nature, an
emphyteusis must be perpetual, or for an unlimited period. (Art. 1608.)
Additional Notes
Philbanking v. Lui She, G.R. No. L-17587 - Guevarra

Kinds of Civil Obligations as to Perfection and Extinguishment
PHILIPPINE BANKING CORPORATION, representing the estate of

JUSTINA SANTOS Y CANON FAUSTINO, deceased, plaintiff-appellant,
vs. LUI SHE, in her own behalf and as administratrix of the intestate
of Wong Heng, deceased, defendant-appellant.
September 12, 1967 G.R. No. L-17587 Castro, J.
No impediment is created by the insertion in a contract for personal service of a resolutory condition
permitting the cancellation of the contract by one of the parties. Such a stipulation does not make either the
validity or the fulfillment of the contract dependent upon the will of the party to whom is conceded the privilege of
cancellation.
Where the contracting parties have agreed that such option shall exist, the exercise of the option is as much in the
fulfillment of the contract as any other act which may have been the subject of agreement. Indeed, the cancellation
of a contract in accordance with conditions agreed upon beforehand is fulfillment.
A provision in a lease contract that the lessee, at any time before he erected any building on the land, might rescind
the lease, is not a violation of Article 1256 (now Article 1308) of the Civil Code.
Article 1308 of the Civil Code: The contract must bind both contracting parties; its validity or compliance cannot be
left to the will of one of them.
FACTS
Justina Santos y Canon Faustino, and her sister Lorenza, were the common owners of a piece of land in Manila. On
the land are two residential houses with entrance on the Florentino Torres street, and the Hen Wah Restaurant with
entrance on the Rizal Avenue. The sisters lived in one of the houses, while Wong Heng, a Chinese, lived with his
family in the restaurant. Wong had been a long-time lessee of a portion of the property.
Justina became the owner of the entire property as her sister died with no other heir. At that time, Justina was
already 90 years old, blind, crippled and an invalid. She was left with no other relative to live with. Her only
companions in the house were her 17 dogs and eight maids. Her existence was brightened every now and then by
the visits of Wong’s four children who had become the joy of her life.
9
Wong himself was the trusted man to whom Justina delivered various amounts for safekeeping, including rentals
from her property at the corner of Ongpin and Salazar streets and the rentals which Wong himself paid as lessee of
a part of the Rizal Avenue property. Wong also look care of the payment, in her behalf, of taxes, lawyers’ fees,
funeral expenses, masses, salaries of maids and security guard, and her household expenses. Justina then
executed a contract of lease in favor of Wong, covering the portion then already leased to him and another
portion fronting the Florentino Torres street. The lease was for 50 years, although the lessee was given the
right to withdraw at any time from the agreement.
10 days later, the contract was amended, so as to make it cover the entire property, including the portion on which
the house of Justina stood, at an additional monthly rental. Justina then executed another contract, giving Wong the
option to buy the leased premises for P120,000, payable within ten years at a monthly installment of P1,000.
Justina then executed two other contracts: one extending the term of the lease to 99 years, and another fixing the
term of the option at 50 years.
After the execution of several other contracts, she appeared to have a change of heart. Claiming that the various
contracts were made by her because of machinations and inducements practised by Wong, she now directed her
executor to secure the annulment of the contracts. Justina then filed an action in the Court of First Instance of
Manila. The complaint alleged that the contracts were obtained by Wong “through fraud, misrepresentation,
inequitable conduct, undue influence and abuse of confidence and trust of and by taking advantage of the
helplessness of the [Justina] and were made to circumvent the constitutional prohibition prohibiting aliens from
acquiring lands in the Philippines and also of the Philippine Naturalization Laws.” The court was asked to direct the
Register of Deeds of Manila to cancel the registration of the contracts.
In his answer, Wong admitted that he enjoyed Justina’s trust and confidence. However, he denied having taken
advantage of her trust in order to secure the execution of the contracts. Wong insisted that the various contracts
were freely and voluntarily entered into by the parties.
The lower court then ruled that the documents mentioned in the first cause of action, except the the lease contract,
are null and void. Both parties appealed to the Court of Appeals, and after the case was submitted, both Justina and
Wong died. Wong was substituted by his wife, Lui She, while Justina was substituted by the Philippine Banking
Corporation. Philippine Banking Corporation maintained that the lease contract should have been annulled along
with the four other contracts because it lacks mutuality. This is because it included a portion which, at the time, was
in custodia legis, as the contract was obtained in violation of the fiduciary relations of the parties. Furthermore, it is
claimed that Justina’s consent was obtained through undue influence, fraud and misrepresentation. The lease
contract, like the rest of the contracts, is absolutely simulated.
Paragraph 5 of the lease contract states that “the lessee may at any time withdraw from this agreement.” It
is claimed that this stipulation offends Article 1308 of the Civil Code which provides that “the contract must
bind both contracting parties; its validity or compliance cannot be left to the will of one of them.”
ISSUE
Whether or not the lease agreement executed by Justina is invalid for lack of mutuality, as there is a resolutory
condition permitting the cancellation of the contract by Wong
RULING
NO, THE LEASE AGREEMENT EXECUTED BY JUSTINA IS NOT INVALID.
Citing the case of Taylor v. Uy Tiong Piao, the Supreme Court ruled that Article 1256 (now Article 1308) of the Civil
Code creates no impediment to the insertion in a contract for personal service of a resolutory condition permitting
the cancellation of the contract by one of the parties. Such a stipulation does not make either the validity or the
fulfillment of the contract dependent upon the will of the party to whom is conceded the privilege of cancellation.
Where the contracting parties have agreed that such option shall exist, the exercise of the option is as much in the
fulfillment of the contract as any other act which may have been the subject of agreement. Indeed, the cancellation
of a contract in accordance with conditions agreed upon beforehand is fulfillment.
In Melencio v. Dy Tiao Lay, it was held that a provision in a lease contract that the lessee, at any time before he
erected any building on the land, might rescind the lease, is not a violation of Article 1256 (now Article 1308) of the
Civil Code.
The case of Singson Encarnacion v. Baldomar cannot be cited in support of the claim of want of mutuality, because
10
of a difference in factual setting. In that case, the lessees argued that they could occupy the premises as long as
they paid the rent. This contention is untenable, because if this defense were to be allowed, so long as the lessees
elected to continue the lease by continuing the payment of the rentals, the owner would never be able to
discontinue it. Conversely, although the owner should desire the lease to continue, the lessees could effectively
thwart his purpose if they should prefer to terminate the contract by the simple expedient of stopping payment of the
rentals.
In contrast with the case at bar, the right of the lessee to continue the lease or to terminate it is limited by the term of
the contract. Because of the term of the contract, it cannot be said that the continuance of the lease depends upon
the lessee’s will. At any rate, even if no term had been fixed in the agreement, this case would at most justify the
fixing of a period, but not the annulment of the contract.
Additional Notes
There is no merit in the claim that as the portion of the property formerly owned by the Lorenza, sister of Justina,
was still in the process of settlement in the probate court at the time it was leased, the lease is invalid as to such
portion. Justina became the owner of the entire property upon the death of Lorenza, by force of Article 777 of the
Civil Code. Hence, when she leased the property, she did so already as owner thereof.
It is argued that Wong completely dominated Justina’s life and affairs that the contracts express not her will, but only
his. Justina’s counsel cites the testimony of Atty. Tomas Yumol, who said that he prepared the lease contract on the
basis of the data given to him by Wong and that she told him that “whatever Mr. Wong wants must be followed.”
Wong might indeed have supplied the data which Yumol embodied in the lease contract, but to say this still does
not detract from the binding force of the contract. The contract was fully explained to Justina by her own lawyer.
One incident, related by the same witness, makes clear that she voluntarily consented to the lease contract. This
witness said that the original term fixed for the lease was 99 years, but that as Wong doubted the validity of a lease
for that length of time, he tried to persuade Justina to enter instead into a lease on a month-to-month basis.
However, Justina herself was firm and unyielding, as instead of heeding the advice of the lawyer, she ordered him,
“just follow Mr. Wong Heng.” There was no undue influence. Justina gave her consent freely and voluntarily.
The contracts show nothing that is necessarily illegal, but considered collectively, they reveal an insidious pattern to
subvert by indirection what the Constitution directly prohibits. To be sure, a lease to an alien for a reasonable
period is valid. So is an option giving an alien the right to buy real property on condition that he is granted Philippine
citizenship. However, if an alien is given not only a lease of, but also an option to buy, a piece of land, by virtue of
which the Filipino owner cannot sell or otherwise dispose of his property, this to last for 50 years, then it becomes
clear that the arrangement is a virtual transfer of ownership whereby the owner divests himself in stages not only of
the right to enjoy the land (jus possidendi, jus utendi, jus fruendi and jus abutendi) but also of the right to dispose of
it (jus disponendi) — rights the sum total of which make up ownership.
Lim v. People, G.R. No. L-34338 - Arre

Kinds of Civil Obligations (As to perfection & extinguishment)
LOURDES VALERIO LIM, petitioner, vs.

PEOPLE OF THE PHILIPPINES, respondent.
November 21, 1984 G.R. No. L-34338 RELOVA, J.
Lourdes Lim proposed to Maria Ayroso to sell the latter’s tobacco consisting of 615 kilos. Ayroso agreed to the
proposition and the agreement was written down stating that Lourdes has received tobacco from Ayroso that is to
be sold at P1.30 per kilo by Lourdes and proceeds amounting to P799.50 shall be given to Ayroso as soon as it’s
sold. However, out of the P799.50, only P240.00 was given by Lourdes to Ayroso, and after failed efforts to retrieve
the balance, Ayroso filed for estafa against Lourdes. In this case, Lourdes contends that the agreement between
her and Ayroso does not fix a period hence, the courts may fix a duration. However, based on the written agreement
between Lourdes and Ayroso, the Court held that the proceeds are immediately demandable as soon as the
tobacco was disposed of, hence court may not fix a duration on their agreement.
11
Article 1197, NCC:
If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was
intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the debtor.
In every case, the courts shall determine such period as may under the circumstances have been probably
contemplated by the parties.
Once fixed by the courts, the period cannot be changed by them.
FACTS
Lourdes Lim (petitioner) is a businesswoman. On January 10, 1966, the Lourdes went to the house of Maria Ayroso
(respondent) and proposed to sell Ayroso's tobacco. Ayroso agreed to the proposition of Lourdes to sell her tobacco
consisting of 615 kilos at P1.30 a kilo. Lourdes was to receive the overprice for which she could sell the tobacco.
This agreement was made in the presence of Ayroso’’s sister, Salud G. Bantug. Salvador Bantug drew the
document, Exh. A, dated January 10, 1966, which reads:
'To Whom It May Concern:

This is to certify that I have received from Mrs. Maria de Guzman Vda. de Ayroso, of Gapan, Nueva Ecija, six
hundred fifteen kilos of leaf tobacco to be sold at P1.30 per kilo. The proceed in the amount of Seven Hundred
Ninety Nine Pesos and 50/100 (P799.50) will be given to her as soon as it was sold.'
Of the total value of P799.50, Lourdes had paid to Ayroso only P240.00, and this was paid on three different times:
1. P100.00 - October 24, 1967
2. P50.00 - March 8, 1967
3. P90.00 - April 18, 1967
Demands for the payment of the balance of the value of the tobacco were made upon Lourdes by Ayroso,
and particularly by her sister, Salud Bantug. Salud Bantug further testified that she had gone to the house of the
appellant several times, but the appellant often eluded her; and that the 'camarin' of the appellant was empty.
As no further amount was paid, Ayroso filed a complaint of estafa against Lourdes. The lower courts found Lourdes
guilty of estafa.
Lourdes theorizes:
● that the obligation between her and Ayroso does not fix a period, but from its nature and circumstances it
can be inferred that period was intended to which case the only action that can be maintained is a petition
to ask the court to fix the duration thereof;
● that Exh. A gives rise to an obligation wherein the duration of the period depends upon the will of the debtor
in which case the only action that can be maintained is a petition to ask the court to fix the duration of the
period;
● that what she and Ayroso have is a contract of sale.
ISSUE
WON the agreement between Lourdes and Ayroso fixed a period?

Can the court fix the duration of the obligation?
RULING
It is clear in the agreement, Exhibit "A", that the proceeds of the sale of the tobacco should be turned over to Ayroso
as soon as the same was sold, or, that the obligation was immediately demandable as soon as the tobacco was
disposed of. Hence, Article 1197 of the New Civil Code, which provides that the courts may fix the duration of the
obligation if it does not fix a period, does not apply.
Additional Notes
Court held that it’s impossible that the agreement was a contract of sale, it’s a contract of agency because the
proceeds are supposed to be given to Ayrso as soon as it was sold.The act effort of Lourdes to go Ayroso means
she intended to make a profit out of the transaction. If it was really a contract of sale, no such effort should have
been made, instead Ayroso would deliver the tobacco to Lourdes. Clearly, the agreement constituted her as an
agent with the obligation to return the tobacco if the same was not sold.
12
Araneta, Inc. v. Phil. Sugar Estates, G.R. No. L-22558 - Fonacier
Obligation with a term or period

GREGORIO ARANETA, INC., petitioner, vs. THE PHILIPPINE SUGAR ESTATES
DEVELOPMENT Co., LTD., respondent
G.R. No. L-22558

May 31, 1967 REYES, J.B.L., J.:
Petitioner Araneta inc sold a portion of its parcel of land to respondent Phil Sugar Estate Dev Co. Their stipulation is
that the buyer will build on the said parcel of land the Sto. Domingo Church and Convent, while the seller will clear
the block surrounding the lot. Petitioner failed to comply due to squatter occupants who refused to vacate. Trial
court and CA fixed the period for the petitioner’s specific performance to two years (art 1197 NCC). SC held that no
justification in law for setting the date of performance at any other time than that of the eviction of the squatters
occupying the land in question. the circumstances admit no other reasonable view; and this very indefiniteness is
what explains why the agreement did not specify any exact periods or dates of performance.
Article 1197 of the New Civil Code involves a two-step process. The court must first determine that the obligation
does not fix a period (or that the period depends upon the debtor's will) and that the intention of the parties, as may
be inferred from the nature and circumstances of the obligation, is to have a period for its performance. The second
step is to ascertain the period probably contemplated by the parties. The court cannot arbitrarily fix a period out of
thin air.
If the contract so provided, then there was a period fixed, a "reasonable time;" and all that the court should have
done was to determine if that reasonable time had already elapsed when suit was filed if it had passed, then the
court should declare that petitioner had breached the contract, as averred in the complaint, and fix the resulting
damages. On the other hand, if the reasonable time had not yet elapsed, the court perforce was bound to dismiss the action
for being premature. But in no case can it be logically held that under the plea above quoted, the intervention of the court to fix
the period for performance was warranted, for Article 1197 is precisely predicated on the absence of any period fixed by the
parties.
FACTS
· J. M. Tuason & Co., Inc. is the owner of a big tract of land situated in Quezon City, otherwise known as
the Sta. Mesa Heights Subdivision, and covered by a Torrens title in its name.
· On July 28, 1950, through Gregorio Araneta, Inc., it (Tuason & Co.) sold a portion thereof with an area
of 43,034.4 square meters, more or less, for the sum of P430,514.00, to Philippine Sugar Estates
Development Co., Ltd. The parties stipulated, among others, in the contract of purchase and sale with
mortgage, that the buyer will—
"Build on the said parcel of land the Sto. Domingo Church and Convent"
while the seller for its part will—
"Construct streets on the NE and NW and SW sides of the land herein sold so that the latter will be a block
surrounded by streets on all four sides; and the street on the NE side shall be named 'Sto. Domingo Avenue';"
13
· The buyer, Philippine Sugar Estates Development Co., Ltd., finished the construction of Sto. Domingo
Church and Convent, but the seller, Gregorio Araneta, Inc., which began constructing the streets, is
unable to finish the construction of the street in the Northeast side (named Sto. Domingo Avenue)
because a certain third-party, by the name of Manuel Abundo, who has been physically occupying a
middle part thereof, refused to vacate the same;
· hence, on May 7, 1958, Philippine Sugar Estates Development Co., Ltd. filed its complaint against J. M.
Tuason & Co., Inc. and Gregorio Araneta, Inc., in the above stated court of first instance, seeking to
compel the latter to comply with their obligation, as stipulated in the abovementioned deed of sale,
and/or to pay damages in the event they failed or refused to perform said obligation.
· Respondent filed a complaint for specific performance against petitioner. In their answer, JM Tuason &
Co., and petitioner Gregorio Araneta, Inc. alleged that the action was premature since its obligation was
without a definite period which needs to be fixed first by the court in a proper suit.
· The trial court dismissed the complaint. Upon reconsideration, the trial court fixed the period to two
years from notice.
· On appeal, the CA affirmed that the fixing of the period was well within the pleadings.
ISSUE
WON the contract between the parties did not contain a period which justifies the trial and appellate court to fix the
same
RULING
No. Neither of the courts below seems to have noticed that, on the hypothesis stated, what the answer put in issue
was not whether the court should fix the time of performance, but whether or not the parties agreed that the
petitioner should have reasonable time to perform its part of the bargain. If the contract so provided, then there was
a period fixed, a "reasonable time;" and all that the court should have done was to determine if that reasonable time
had already elapsed when suit was filed if it had passed, then the court should declare that petitioner had breached
the contract, as averred in the complaint, and fix the resulting damages. On the other hand, if the reasonable time
had not yet elapsed, the court perforce was bound to dismiss the action for being premature. But in no case can it
be logically held that under the plea above quoted, the intervention of the court to fix the period for performance was
warranted, for Article 1197 is precisely predicated on the absence of any period fixed by the parties.
Even on the assumption that the court should have found that no reasonable time or no period at all had been fixed
(and the trial court's amended decision nowhere declared any such fact) still, the complaint not having sought that
the Court should set a period, the court could not proceed to do so unless the complaint in as first amended; for the
original decision is clear that the complaint proceeded on the theory that the period for performance had already
elapsed, that the contract had been breached and defendant was already answerable in damages.
Granting, however, that it lay within the Court's power to fix the period of performance, still the amended decision is
defective in that no basis is stated to support the conclusion that the period should be set at two years after finality
of the judgment. The list paragraph of Article 1197 is clear that the period cannot be set arbitrarily. The law
expressly prescribes that — the Court shall determine such period as may under the circumstances been probably
contemplated by the parties.
All that the trial court's amended decision (Rec. on Appeal, p. 124) says in this respect is that "the proven facts
precisely warrant the fixing of such a period," a statement manifestly insufficient to explain how the two period given
to petitioner herein was arrived at.
It must be recalled that Article 1197 of the Civil Code involves a two-step process. The Court must first determine
that "the obligation does not fix a period" (or that the period is made to depend upon the will of the debtor)," but from
the nature and the circumstances it can be inferred that a period was intended" (Art. 1197, pars. 1 and 2). This
preliminary point settled, the Court must then proceed to the second step, and decide what period was "probably
14
contemplated by the parties" (Do., par. 3). So that, ultimately, the Court cannot fix a period merely because in its
opinion it is or should be reasonable, but must set the time that the parties are shown to have intended. As the
record stands, the trial Court appears to have pulled the two-year period set in its decision out of thin air, since no
circumstances are mentioned to support it. Plainly, this is not warranted by the Civil Code.
In this connection, it is to be borne in mind that the contract shows that the parties were fully aware that the land
described therein was occupied by squatters, because the fact is expressly mentioned therein (Rec. on Appeal,
Petitioner's Appendix B, pp. 12-13). As the parties must have known that they could not take the law into their own
hands, but must resort to legal processes in evicting the squatters, they must have realized that the duration of the
suits to be brought would not be under their control nor could the same be determined in advance. The conclusion
is thus forced that the parties must have intended to defer the performance of the obligations under the contract
until the squatters were duly evicted, as contended by the petitioner Gregorio Araneta, Inc.
The Court of Appeals objected to this conclusion that it would render the date of performance indefinite. Yet, the
circumstances admit no other reasonable view; and this very indefiniteness is what explains why the agreement did
not specify any exact periods or dates of performance.
It follows that there is no justification in law for the setting the date of performance at any other time than that of the
eviction of the squatters occupying the land in question; and in not so holding, both the trial Court and the Court of
Appeals committed reversible error. It is not denied that the case against one of the squatters, Abundo, was still
pending in the Court of Appeals when its decision in this case was rendered.
If the contract so provided, then there was a period fixed, a "reasonable time;" and all that the court should have
done was to determine if that reasonable time had already elapsed when suit was filed if it had passed, then the
court should declare that petitioner had breached the contract, as averred in the complaint, and fix the resulting
damages. On the other hand, if the reasonable time had not yet elapsed, the court perforce was bound to dismiss
the action for being premature. But in no case can it be logically held that under the plea above quoted, the
intervention of the court to fix the period for performance was warranted, for Article 1197 is precisely predicated on
the absence of any period fixed by the parties.
Additional Notes
Millare v. Hernando, G.R. No. L-55480 - De Castro

PACIFICA MILLARE, petitioner, vs. HON. HAROLD M. HERNANDO, In his capacity as Presiding Judge,
Court of Instance of Abra, Second Judicial District, Branch I, ANTONIO CO and ELSA CO, respondents.
June 30, 1987 G.R. No. L-55480 FELICIANO, J.
Mrs. Millare wanted to increase her monthly rental rate to her lessees from 350p to 1,200p to Co spouses. Co
spouses negotiated to lower it to 700p in which Mrs. Millare didn’t give a definite response to and so the Co spouses
implied that there was a renewal of contract. A few months after the expiry date of the contract, Mrs. Millare sent
demand letters to the spouses to leave the premises since she has no intention of renewing the contract of lease.
Co spouses filed a complaint and the respondent judge ruled in their favor and ordered the renewal of lease at a
monthly rental rate of 700p. Hence this petition. The SC, in disappointment, reversed the respondent judge’s
decision since contracts and agreements are supposed to be consensual, not imposed by judges.
15
Doctrine: If contracts are imposed by a judge who draws upon his own private notions of what morals, good
customs, justice, equity and public policy demand, the resulting "agreement" cannot, by definition, be consensual
or contractual in nature. It would also follow that such coerced terms and conditions cannot be the law as between
the parties themselves. Contracts spring from the volition of the parties. That volition cannot be supplied by a
judge and a judge who pretends to do so, acts tyrannically, arbitrarily and in excess of his jurisdiction.
Article 1670 NCC: “If at the end of the contract the lessee should continue enjoying the thing left for 15 days with the
acquiescence of the lessor and unless a notice to the contrary by either party has previously been given. It is understood that
there is an implied new lease, not for the period of the original contract but for the time established in Articles 1682 and 1687.
The other terms of the original contract shall be revived.”
Article 1197 NCC: “If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a
period was intended, the courts may fix the duration thereof. The courts shall also fix the duration of the period when it depends
upon the will of the debtor. In every case, the courts shall determine such period as may, under the circumstances, have been
probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by them.”
FACTS
● In 1975, five-year Contract of Lease was executed between petitioner Pacifica Millare as lessor and private
respondent, Co spouses, as lessee. Petitioner agreed to rent out to the Co spouses the "People's
Restaurant", a commercial establishment in Abra, for a monthly rate of P350.00. And this written agreement
was scheduled to expire on 31 May 1980 or 5 years after.
● Fast forward to May 1980, petitioner informed them that they could continue leasing the People's
Restaurant so long as they were amenable to paying rentals of P1,200.00 a month.
● In response, a counteroffer of P700.00 a month was made by the Co spouses. At this point, petitioner
allegedly stated that the amount of monthly rentals could be resolved at a later time since "the matter is
simple among us", which alleged remark was supposedly taken by the spouses Co to mean that the
Contract of Lease had been renewed, prompting them to continue occupying the subject premises and to
forego their search for a substitute place to rent. In contrast, petitioner flatly denied ever having considered,
much less offered, a renewal of the Contract of Lease.
● Then in July 1980, Mrs. Millare wrote the Co spouses requesting them to vacate the leased premises as
she had no intention of renewing the Contract of Lease which had, in the meantime, already expired.
● This led to a series of suits between them: Co spouses files a complaint which seeks to order Mrs. Millare to
renew their contract of lease at a rental rate of 700p while Mrs. Millare files an ejectment case against them.
● Respondent judge Hernando ruled in favor of the Co spouses and ordered the renewal of lease with their
desired rental rate as well - 700p.
● Hence, Mrs. Millare filed the instant Petition.
ISSUE
Did the trial court err in ordering the renewal of the Contract of Lease for a five-year term at 700 pesos monthly?
YES.
RULING
YES. Respondent judge erred in his decision as it has no basis in law or in fact. He cited Articles 1197 and
1670 of the Civil Code to sustain the "Judgment by Default" by which he ordered the renewal of the lease for
another term of five years and fixed monthly rentals at P700.00 a month. Article 1197 of the Civil Code provides as
follows:
“If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended,
the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the debtor.
In every case, the courts shall determine such period as may, under the circumstances, have been probably contemplated by
the parties. Once fixed by the courts, the period cannot be changed by them.”
The first paragraph of Article 1197 is inapplicable because the Contract of Lease did in fact fix an original period of
five years, which had expired. It is also clear from paragraph 13 of their Contract of Lease that the parties reserved
to themselves the faculty of agreeing upon the period of the renewal contract. The second paragraph of Article 1197
is equally clearly inapplicable since the duration of the renewal period was not left to the will of the lessee alone, but
rather to the will of both the lessor and the lessee. Most importantly, Article 1197 applies only where a contract of
16
lease clearly exists. Here, the contract was not renewed at all, there was in fact no contract at all the period of which
could have been fixed.
While Article 1670 of the Civil Code reads:
“If at the end of the contract the lessee should continue enjoying the thing left for 15 days with the acquiescence of the lessor
and unless a notice to the contrary by either party has previously been given. It is understood that there is an implied new lease,
not for the period of the original contract but for the time established in Articles 1682 and 1687. The other terms of the original
contract shall be revived.”
The respondents themselves do not pretend that the continued occupancy of the leased premises after 31 May
1980 (the expiration date) was subject to the approval of the lessor. The implied new lease could not possibly have
a period of five years, but rather would have been a month-to-month lease since the rentals (under the original
contract) were payable on a monthly basis. At the latest, an implied new lease (if had one arisen) would have
expired as of the end of July 1980 in view of the WRITTEN DEMANDS served by the petitioner upon the private
respondents to vacate the previously leased premises.
Therefore, respondent judge's decision requiring renewal of the lease has no basis in law or in fact. Contractual
terms and conditions created by a court for two parties are a contradiction in terms. If they are imposed by a judge
who draws upon his own private notions of what morals, good customs, justice, equity and public policy" demand,
the resulting "agreement" cannot be consensual or contractual in nature. It would also follow that such
coerced terms and conditions cannot be the law as between the parties themselves. Contracts spring from the
volition of the parties. That volition cannot be supplied by a judge and a judge who pretends to do so, acts
tyrannically, arbitrarily and in excess of his jurisdiction.
DP: WHEREFORE, the Petition for Certiorari, Prohibition and mandamus is granted.
Additional Notes
Arco Pulp and Paper Co., Inc. and Santos v. Lim, G.R. No. 206806 - Josol
Plurality of Prestation
Arco Pulp and Paper Co., Inc. and Santos v. Lim
June 25, 2014 G.R. No. 206806 Leonen, J.
FACTS
Dan T. Lim, under the name Quality Papers & Plastic Products Enterprises, entered into a contract with Candida A.
Santos, the Chief Executive Officer and President of Arco Pulp and Paper Co., Inc., that in exchange for supplying
scrap papers, cartons, and other raw materials worth PHP7,220,968.31, the latter would either pay Dan T. Lim the
value of he raw materials or deliver to him their finished products of equivalent value. On April 18, 2007, Lim
received a post-dated check in the amount of PHP1,487,766.68 when he delivered the raw materials, but this check
bounced for being drawn from a closed account. On the same day, Arco Pulp and Paper and a certain Eric Sy
17
executed a memorandum of agreement where Arco Pulp and Paper bound themselves to deliver their finished
products to Megapack Container Corporation, owned by Eric Sy, for his account. According to the memorandum,
the raw materials would be supplied by Dan T. Lim, through his company, Quality Paper and Plastic Products.
However, Lim was not made aware of such agreement and sent a letter to Arco Pulp demanding payment of the
amount of PHP7,220,968.31, but no payment was made to him. Hence, he filed a complaint for collection of money
to the RTC of Valenzuela City.
ISSUE
W/N the obligation between Arco Pulp Paper and Lim is an alternative obligation.
RULING
The obligation between the parties was an alternative obligation. xxx "In an alternative obligation, there is more than
one object, and the fulfillment of one is sufficient, determined by the choice of the debtor who generally has the right
of election." The right of election is extinguished when the party who may exercise that option categorically and
unequivocally makes his or her choice known. The choice of the debtor must also be communicated to the creditor
who must receive notice of it xxx
According to the factual findings of the trial court and the appellate court, the original contract between the parties
was for respondent to deliver scrap papers worth PHP7,220,968.31 to petitioner Arco Pulp and Paper. The payment
for this delivery became petitioner Arco Pulp and Paper's obligation. By agreement, petitioner Arco Pulp and Paper,
as the debtor, had the option to either (1) pay the price or (2) deliver the finished products of equivalent value to
respondent.
When petitioner Arco Pulp and Paper tendered a check to respondent in partial payment for the scrap papers, they
exercised their option to pay the price. Respondent's receipt of the check and his subsequent act of depositing it
constituted his notice of petitioner Arco Pulp and Paper's option to pay.
This choice was also shown by the terms of the memorandum of agreement, which was executed on the same day.
The memorandum declared in clear terms that the delivery of petitioner Arco Pulp and Paper's finished products
would be to a third person, thereby extinguishing the option to deliver the finished products of equivalent value to
respondent.
Additional Notes
Ronquillo v. CA, G.R. No. L-55138 - Calo

ERNESTO V. RONQUILLO, petitioner, Vs. HONORABLE COURT OF APPEALS AND ANTONIO P. SO,
respondents. Gloria A. Fortun for petitioner. Roselino Reyes Isler for respondents.
September 28, 1984 G.R. No. L-55138 CUEVAS, J.:
18
FACTS
Ernesto Ronquillo (“Ronquillo”) was one of four defendants in a Civil Case filed by respondent Antonio So (“So”) for
the collection of P117,498.98, the value of the check issued by the said defendant in payment for foodstuffs
delivered to and received by them. The said checks were dishonored by the drawee bank.
The lower court rendered a decision based on the compromise agreement by the parities. The agreement reduced
the claim to P110,000 and bound the defendants to initially pay P55,000 of the debt before December 24, 1978. The
defendants agreed to pay the balance “individually and jointly” within a period of six months or before June 30,
1980.
So filed a Motion for Execution on the ground that the defendants failed to make the initial payment of P55,000 as
provided in the abovementioned decision.
Ronquillo opposed the motion for execution alleging that his inability to make the payment was due to So’s own act
of making himself inaccessible.
Ronquillo tendered the amount of P13,750 as his share of the P55,000 initial payment. Another defendant, Pilar
Tan (“Tan”) offered to pay the same amount. Because So refused to accept their payments, demanding the full
initial payment. Ronquillo and Tan deposited the amount with the court.
The court ordered the issuance of a writ of execution for the balance of the initial amount payable to the two other
defendants.
So sought the reconsideration of the Order and prayed for the execution of the decision in its entirety against all
defendants, jointly and severally.
It was opposed the motion arguing that the lower court held that the liability of the 4 defendants was not expressly
declared to be solidary, consequently each defendant is obliged to pay only his own pro-rata or 1/4 of the amount
due and payable. A writ of execution was issued by the court for the payment of P82,500 [P55,000 (balance from
the whole debt) + 27500 (unpaid shares of initial payment from two other defendants or P13,750 + P13750)] against
the properties of the defendants including Ronquillo, “singly or jointly liable.” The sheriff issued a notice for the sale
of certain furniture and appliances found in Ronquillo’s residence to satisfy the sum of P82,500.
ISSUE
W/N the liability of the 4 defendants including Ronquillo solidary.
RULING
Yes. The pertinent provisions are Art. 12071 and Art. 1208. 2 By the terms of the compromise agreement and the
decision based upon it, the defendants obligated themselves to pay their obligation “individually and jointly.” An
agreement to be “individually liable” undoubtedly creates a several obligation. A several obligation is one by which
one individual binds himself to perform the whole obligation.
The term "individually" has the same meaning as "collectively", "separately", "distinctively", respectively or
"severally". An agreement to be "individually liable" undoubtedly creates a several obligation, and a
"several obligation is one by which one individual binds himself to perform the whole obligation
19
Additional Notes
Malayan Insurance v. CA, G.R. No. L-36413 - Flores

Kinds of obligation as to rights and obligations of multiple parties; solidary liability; contract of insurance
MALAYAN INSURANCE CO., INC. , petitioner, vs. THE HON. COURT OF APPEALS (THIRD DIVISION) MARTIN
C. VALLEJOS, SIO CHOY, SAN LEON RICE MILL, INC. and PANGASINAN TRANSPORTATION CO., INC.,
respondents
September 26, 1988 G.R. No. L-36413 PADILLA, J
Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the
vehicle, could have, by the use of due diligence, prevented the misfortune it is disputably presumed that a driver
was negligent, if he had been found guilty of reckless driving or violating traffic regulations at least twice within the
next preceding two months.
"If the owner was not in the motor vehicle, the provisions of article 2180 are applicable."
"Art. 2180. The obligation imposed by article 2176 is demandable not only for one's own acts or omissions, but also
for those of persons for whom one is responsible.
xxx xxx xxx
"Employers shall be liable for the damages caused by their employees and household helpers acting within the
scope of their assigned tasks, even though the former are not engaged in any business or industry.
xxx xxx xxx
"The responsibility treated in this article shall cease when the persons herein mentioned proved that they observed
all the diligence of a good father of a family to prevent damage."
Article 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary.
Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors
offer to pay, the creditor may choose which offer to accept.
"He who made the payment may claim from his co-debtors only the share which corresponds to each, with the
interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening
period may be demanded.
FACTS
1. Malayan Insurance Co., Inc., issued in favor of private respondent Sio Choy Private Car Insurance, effective
from 18 April 1967 to 18 April 1968, covering a Willys jeep. The insurance coverage was for "own damage"
not to exceed P600.00 and "third-party liability" in the amount of P20,000.00.
2. During the effectivity of said insurance policy, the insured jeep, while being driven by one Juan P.
Campollo, an employee of the respondent San Leon Rice Mill, Inc., collided with a passenger bus belonging
to the respondent Pangasinan Transportation Co., Inc. (PANTRANCO, for short), causing damage to the
insured vehicle and injuries to the driver, Juan P. Campollo, and the respondent Martin C. Vallejos, who
20
was riding in the ill-fated jeep.
3. Martin C. Vallejos filed an action for damages against Sio Choy, Malayan Insurance Co., Inc. and the
PANTRANCO before the Court of First Instance of Pangasinan. He prayed therein that the defendants be
ordered to pay him, jointly and severally, the amount of P15,000.00, as reimbursement for medical and
hospital expenses; P6,000.00, for lost income; P51,000.00 as actual, moral and compensatory damages;
and P5,000.00, for attorney's fees.
Contention of the parties:

a. PANTRANCO claimed that the driver of Sio Choy was negligent in driving the jeep; and that PANTRANCO
observed the diligence of a good father of a family to prevent damage, especially in the selection and
supervision of its employees and in the maintenance of its motor vehicles. It prayed that it be absolved from
any and all liability.
b. Defendant Sio Choy and the petitioner insurance company, in their answer, also denied liability to the
plaintiff, claiming that the fault in the accident was solely imputable to the PANTRANCO.
c. Sio Choy, however, later filed a cross-claim against the herein petitioner wherein he alleged that he had
actually paid the plaintiff, Martin C. Vallejos, the amount of P5,000.00 for hospitalization and other
expenses, and, in his cross-claim against the herein petitioner, he alleged that the petitioner had issued in
his favor a private car comprehensive policy wherein the insurance company obligated itself to indemnify
Sio Choy, as insured, for the damage to his motor vehicle, as well as for any liability to third persons arising
out of any accident during the effectivity of such insurance contract, which policy was in full force and effect
when the vehicular accident complained of occurred. He prayed that he be reimbursed by the insurance
company for the amount that he may be ordered to pay.
d. Petitioner Malayan Insurance filed a third-party complaint against the San Leon Rice Mill, Inc. for the
reason that the person driving the jeep of Sio Choy, at the time of the accident, was an employee of the San
Leon Rice Mill and not an employee of Sio Choy; and that, as the San Leon Rice Mill, Inc. is the employer of
the deceased driver, Juan P. Campollo, it should be liable for the acts of its employee, pursuant to Art. 2180
of the Civil Code. The herein petitioner prayed that judgment be rendered against the San Leon Rice Mill,
Inc., making it liable for the amounts claimed by the plaintiff and/or ordering said San Leon Rice Mill, Inc. to
reimburse and indemnify the petitioner for any sum that it may be ordered to pay the plaintiff.
CFI Ruling: "... judgment is hereby rendered in favor of the plaintiff and against Sio Choy and Malayan Insurance
Co., Inc., and third-party defendant San Leon Rice Mill, Inc. xxx The above-named parties against whom this
judgment is rendered are hereby held jointly and severally liable. With respect, however, to Malayan Insurance Co.,
Inc., its liability will be up to only P20,000.00"
CA: Affirmed the judgment of the trial court that Sio Choy, the San Leon Rice Mill, Inc. and the Malayan Insurance
Co., Inc. Are jointly and severally liable for the damages awarded to the plaintiff Martin C. Vallejos. It ruled,
however, that the San Leon Rice Mill, Inc. has no obligation to indemnify or reimburse the petitioner insurance
company for whatever amount it has been ordered to pay on its policy, since the San Leon Rice Mill, Inc. is not
privy to the contract of insurance between Sio Choy and the insurance company.
ISSUE
1. Whether or not petitioner Malayan Insurance and respondents Sio Choy and San Leon Rice Mill, Inc. are
"solidarily liable" to respondent Vallejos.
2. Whether or not petitioner shall be entitled to reimbursement by respondent San Leon Rice Mill, Inc. for the whole
or part of whatever the former may pay on the P20,000.00 it has been adjudged to pay respondent Vallejos.
RULING
1. No, the petitioner is not solidarily liable with the respondents to Vallejos. Only respondents Sio Choy and
San Leon Rice Mill, Inc., (to the exclusion of the petitioner) that are solidarily liable to respondent Vallejos
for the damages awarded to Vallejos.
Liability (source of obligation) of the Sio Choy and San Leon Rice Mill to Vallejos
a. Respondent Sio Choy is made liable to said plaintiff as owner of the ill-fated Willys jeep, pursuant to Article
2184.
b. The basis of liability of respondent San Leon Rice Mill, Inc. to plaintiff Vallejos, the former being the
employer of the driver of the Willys jeep at the time of the motor vehicle mishap, is Article 2180 of the Civil
Code
c. It thus appears that respondents Sio Choy and San Leon Rice Mill, Inc. are the principal tortfeasors who are
primarily liable to respondent Vallejos. The law states that the responsibility of two or more persons who are
liable for a quasi-delict is solidary. (Art. 2194)
The basis of petitioner's liability is its insurance contract with respondent Sio Choy. If petitioner is adjudged
to pay respondent Vallejos in the amount of not more than P20,000.00, this is on account of its being the insurer of
21
respondent Sio Choy under the third party liability clause included in the private car comprehensive policy existing
between petitioner and respondent Sio Choy at the time of the complained vehicular accident. While it is true that
where the insurance contract provides for indemnity against liability to third persons, such third persons
can directly sue the insurer, however, the direct liability of the insurer under indemnity contracts against
third party liability does not mean that the insurer can be held solidarily liable with the insured and/or the
other parties found at fault. The liability of the insurer is based on contract; that of the insured is based on
tort.
1. In the case at bar, petitioner as insurer of Sio Choy, is liable to respondent Vallejos, but it cannot, as
incorrectly held by the trial court, be made "solidarily" liable with the two principal tortfeasors. For if
petitioner-insurer were solidarily liable with said two (2) respondents by reason of the indemnity
contract against third party liability this will result in a violation of the principles underlying
solidary obligation and insurance contracts.
2. In solidary obligation, the creditor may enforce the entire obligation against one of the solidary debtors. On
the other hand, insurance is defined as "a contract whereby one undertakes for a consideration to indemnify
another against loss, damage, or liability arising from an unknown or contingent event."
3. (The Court in illustrating the absurdity of the CFI's ruling) In the context of a solidary obligation, petitioner
may be compelled by respondent Vallejos to pay the entire obligation of P29,013.00, notwithstanding the
qualification made by the trial court. But, how can petitioner be obliged to pay the entire obligation when the
amount stated in its insurance policy with respondent Sio Choy for indemnity against third party liability is
only P20,000.00? Moreover, the qualification made in the decision of the trial court to the effect that
petitioner is sentenced to pay up to P20,000.00 only when the obligation to pay P29,103.00 is made
solidary, is an evident breach of the concept of a solidary obligation.
2.Yes, the petitioner is entitled to the reimbursement by San Leon Rice Mill. The appellate court overlooked
the principle of subrogation in insurance contracts.
a. Subrogation is a normal incident of indemnity insurance. Upon payment of the loss, the insurer is entitled to
be subrogated pro tanto (to such extent) to any right of action which the insured may have against the third
person whose negligence or wrongful act caused the loss
b. When the insurance company pays for the loss, such payment operates as an equitable assignment to the
insurer of the property and all remedies which the insured may have for the recovery thereof. That right is
not dependent upon, nor does it grow out of, any privity of contractor upon written assignment of claim, and
payment to the insured makes the insurer an assignee in equity
c. It follows, therefore, that petitioner, upon paying respondent Vallejos the amount of not exceeding
P20,000.00, shall become the subrogee of the insured, the respondent Sio Choy; as such, it is subrogated
to whatever rights the latter has against respondent San Leon Rice Mill, Inc. Article 1217 of the Civil Code
gives to a solidary debtor who has paid the entire obligation the right to be reimbursed by his co-debtors for
the share which corresponds to each.
d. In accordance with Article 1217, petitioner, upon payment to respondent Vallejos and thereby becoming the
subrogee of solidary debtor Sio Choy, is entitled to reimbursement from respondent San Leon Rice Mill, Inc.
PNB v. Independent Planters, G.R. No. L-28046 - Hernando

[D.3. As to Rights and Obligations of Multiple Parties]
PHILIPPINE NATIONAL BANK, plaintiff-appellant, vs. INDEPENDENT PLANTERS ASSOCIATION, INC.,

ANTONIO DIMAYUGA, DELFIN FAJARDO, CEFERINO VALENCIA, MOISES CARANDANG, LUCIANO
CASTILLO, AURELIO VALENCIA, LAURO LEVISTE, GAVINO GONZALES, LOPE GEVANA and BONIFACIO
LAUREANA, defendants-appellees.
May 16, 1983 G.R. No. L-28046 May 16, 1983
22
FACTS
Philippine National Bank (PNB) filed a complaint against several solidary debtors for the collection of a sum of
money on the ground that one of the defendants, Ceferino Valencia, died during the pendency of the case. PNB
argues that the complaint, being a money claim based on contract, should be prosecuted in the testate or intestate
proceeding for the settlement of the estate of Valencia pursuant to Sec. 6, Rule 68 of the Rules of Court.
SEC. 6. Solidary obligation of decedent.— the obligation of the decedent is solidary with another debtor, the
claim shall be filed against the decedent as if he were the only debtor, without prejudice to the right of the
estate to recover contribution from the other debtor. In a joint obligation of the decedent, the claim shall be confined
to the portion belonging to him.
Lower court dismissed. Now they bring the case to the SC, invoking their right of recourse against one, some or all
of the solidary debtors under Art. 1216 of the Civil Code, thus:
ART. 1216. The creditor may proceed against any one of the solidary debtors or some or all of them
simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently
be directed against the others, so long as the debt has not been fully collected.
ISSUE
W/N in an action for collection of a sum of money based on contract against all the solidary debtors, the death of
one defendant deprives the court of jurisdiction to proceed with the case against the surviving defendants?
RULING
YES. Art. 1216 of the Civil Code grants the creditor the substantive right to seek satisfaction of his credit from
one, some or all of his solidary debtors, as he deems fit or convenient for the protection of his interests. If, after
instituting a collection suit based on contract against some or all of them, one of them dies, the court retains
jurisdiction to continue the proceedings and decide the case in respect of the surviving defendants.
Manila Surety & Fidelity Co., Inc. vs. Villarama; PNB v. Asuncion – Sec. 6, Rule 86 of the ROC provides the
procedure that the creditor could pursue should he desire to go against the deceased debtor: where two persons
are solidarily bound for the same debt and one of them dies, the whole indebtedness can be proved against the
estate of the latter, the deceased’s liability being absolute and primary; and if the claim is not presented within the
time prescribed by law, the same will be barred as against the estate. The Court, however, clarified that such
procedure is not a condition precedent before an action against the surviving solidary debtors can be filed. There is
nothing improper in the creditor’s filing of an action against the surviving solidary debtors alone. The
provision merely sets up the procedure in enforcing collection in case a creditor chooses to pursue his
claim against the estate of the deceased solidary, debtor.
Additional Notes
Calang and Philtranco v. People, G.R. No. 190696 - Roma

ROLITO CALANG and PHILTRANCO SERVICE ENTERPRISES, INC., Petitioners,
vs.
23
PEOPLE OF THE PHILIPPINES, Respondent.
August 3, 2010 G.R. No. 190696 BRION, J.:
Articles 2176 and 2180 of the Civil Code pertain to the vicarious liability of an employer for quasi-delicts that
an employee has committed. Such provision of law does not apply to civil liability arising from delict.
FACTS
Rolito Calang was driving Philtranco Bus No. 7001, owned by Philtranco along a highway in Samar when it hit
the Sarao jeep coming from the opposite direction. As a result, Pinohermos, the jeep’s driver, lost control of
the jeep and bumped and killed Mabansag, a bystander along the highway’s shoulder. Armando Nablo and an
unidentified woman, two of the jeep’s passengers, were killed, while other passengers sustained serious
physical injuries.
The RTC found Calang guilty beyond reasonable doubt of reckless imprudence resulting to multiple homicide,
multiple physical injuries and damage to property. The RTC ordered Calang and Philtranco to pay jointly and
severally as death indemnity to heirs of Armando, death indemnity to heirs of Mabansag and actual damages
to the private complainants. The respondents appealed to the CA but affirmed the RTC’s decision as a whole.
ISSUE
Whether or not Philtranco was correctly held to pay jointly and severally because of the guilty criminal charge of
Calang, the bus driver under Philtranco’s employ.
RULING
The SC ruled that RTC and CA erred in holding Philtanco jointly and severally liable with Calang. The SC
emphasized that Calang was charged criminally. Since the cause of action against Calang was based on delict,
both the courts erred in holding Philtranco jointly and severally liable with Calang based on quasi-delicts under Art.
2176 and 2180 of the Civil Code. These articles pertain to liability of employers for quasi-delicts that an employee
has committed. Such provisions does not apply to civil liability arising from delict.
Philtranco’s liability may only be subsidiary. Art. 102 and 103 of the RPC states the subsidiary civil liability of
innkeepers, tavernkeepers and proprietors of establishments, as follows:
RPC Art. 102 - In default of the persons criminally liable, innkeepers, tavernkeepers, and any other persons or
corporations shall be civilly liable for crimes committed in their establishments, in all cases where a violation of
municipal ordinances or some general or special police regulations shall have been committed by them or
their employees.
Innkeepers are also subsidiary liable for the restitution of goods taken by robbery or theft within their houses
from guests lodging therein, or for the payment of the value thereof, provided that such guests shall have
notified in advance the innkeeper himself, or the person representing him, of the deposit of such goods within
the inn; and shall furthermore have followed the directions which such innkeeper or his representative may
have given them with respect to the care of and vigilance over such goods. No liability shall attach in case of
robbery with violence against or intimidation of persons unless committed by the innkeeper’s employees.
24
RPC Art. 103 - The subsidiary liability established in the next preceding article shall also apply to employers,
teachers, persons, and corporations engaged in any kind of industry for felonies committed by their servants,
pupils, workmen, apprentices, or employees in the discharge of their duties.
The SC held that Philtranco’s liability should only be subsidiary as the employer of Calang since Calang was
charged criminally.
Additional Notes
Ruks Konsult and Construction v. Adworld Sign and Advertising Corp. and
Transworld Media Ads, G.R. No. 204866 - De Castro
3. As to Rights and Obligations of Multiple Parties
RUKS KONSULT AND CONSTRUCTION, Petitioner, vs. ADWORLD SIGN AND ADVERTISING CORPORATION
and TRANSWORLD MEDIA ADS, INC., Respondents.
January 21, 2015 G.R. No. 204866 PERLAS-BERNABE, J.
Both companies, Transworld and Ruks, are jointly and severally liable under Art. 2194 to Adworld for committing
negligent acts which resulted to the impairment and misalignment of Adworld’s billboard structure: Transworld’s
initial construction of its billboard’s lower structure without the proper foundation, and that of Ruks’s finishing
its upper structure and just merely assuming that Transworld would reinforce the weak foundation are the two
(2) successive acts which were the direct and proximate cause of the damages sustained by Adworld. Worse,
both Transworld and Ruks were fully aware that the foundation for the former’s billboard was weak; yet,
neither of them took any positive step to reinforce the same.
1. NCC. Article 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary.
2. Joint tortfeasors are those who command, instigate, promote, encourage, advise, countenance, cooperate
in, aid or abet the commission of a tort, or approve of it after it is done, if done for their benefit. They are
also referred to as those who act together in committing wrong or whose acts, if independent of each other,
unite in causing a single injury.
FACTS
In 2003, a billboard structure owned by Transworld and rented/used by Comark Intl Corporation (Comark) collapsed
and crashed against Adworld’s billboard structure located at EDSA which resulted to an impaired foundation and
misalignment. With this, Adworld demanded from them via letter for payment of repairs of its billboard as well as
loss of rental income.
Adworld resorted to filing a complaint when its demand letters went unheeded. In Transworld’s counterclaim, it
averred that the collapse of its billboard structure was due to extraordinarily strong winds that occurred instantly and
unexpectedly, and maintained that the damage caused to Adworld’s billboard structure was hardly noticeable.
Transworld likewise filed a Third-Party Complaint against Ruks, the company which built the collapsed billboard
structure, for building a poor foundation. While Comark denied liability for the damages.
Then for Ruks, it admitted that it entered into a contract with Transworld for the construction of the latter’s billboard
structure, but denied liability for the damages caused by its collapse. It contended that when Transworld hired its
25
services, there was already an existing foundation for the billboard and that it merely finished the structure.
RTC: It ruled in Adworld’s favor, and declared Transworld and Ruks jointly and severally liable to Adworld. It
found both Transworld and Ruks negligent in the construction of the collapsed billboard as they both knew that the
foundation supporting the same was weak and would pose danger to the safety of the motorists and the other
adjacent properties, such as Adworld’s billboard, and yet, they did not do anything to remedy the situation. In
particular, Transworld was made aware by Ruks that the initial construction of the lower structure of its billboard did
not have the proper foundation and would require additional columns and pedestals to support the structure but
Ruks still proceeded with the construction and assumed that Transworld would reinforce its lower structure.
CA: denied the appeals of Ruks and Trandworld and affirmed the ruling of the RTC. It adhered to the RTC’s finding
of negligence on the part of Transworld and Ruks. It found that Transworld failed to ensure that Ruks will comply
with the approved plans and specifications of the structure, and that Ruks continued to install and finish the billboard
structure despite the knowledge that there were no adequate columns to support the same.
Ruks files this petition before the SC (Transworld’s petition was outright denied for failure to file the intended petition
for review on certiorari within the extended reglementary period. This was declared final and executory).
ISSUE
Whether or not the CA correctly affirmed the ruling of the RTC declaring Ruks jointly and severally liable with
Transworld for damages sustained by Adworld. YES.
RULING
YES. The Court sees no cogent reason to deviate from the findings of the RTC and the CA and their uniform
conclusion that both Transworld and Ruks committed acts resulting in the collapse of the former’s billboard, which in
turn, caused damage to the adjacent billboard of Adworld.
Under Article 2194 of the Civil Code, joint tortfeasors are solidarily liable for the resulting damage. In other
words, joint tortfeasors are each liable as principals, to the same extent and in the same manner as if they
had performed the wrongful act themselves (check doctrine for joint tortfeasors).
Transworld’s construction of its billboard’s lower structure without the proper foundation, and that of Ruks’s finishing
its upper structure and just merely assuming that Transworld would reinforce the weak foundation are the two (2)
successive acts which were the direct and proximate cause of the damages sustained by Adworld. Worse, both
Transworld and Ruks were fully aware that the foundation for the former’s billboard was weak; yet, neither of them
took any positive step to reinforce the same. They merely relied on each other’s word that repairs would be done to
such foundation, but none was done at all.
Clearly, the foregoing circumstances show that both Transworld and Ruks are guilty of negligence in the
construction of the former’s billboard, and perforce, should be held liable for its collapse and the resulting damage to
Adworld’s billboard structure. As joint tortfeasors, therefore, they are solidarily liable to Adworld.
DP: WHEREFORE, the petition is DENIED.
TMBI v. Feb Mitsui and Manalastas, G.R. No. 194121 - Floreza

TORRES-MADRID BROKERAGE, INC. v. FEB MITSUI MARINE INSURANCE CO., INC. and BENJAMIN P.
MANALASTAS doing business under the name of BMT TRUCKING SERVICES
July 11, 2016 GR No. 194121 Brion, J.
A shipment of various electronic goods from Thailand and Malaysia arrived at the Port of Manila for Sony. Previous
to the arrival, Sony had engaged the services of TMBI to facilitate and deliver the shipment from the port to its
26
warehouse in Biñan, Laguna. TMBI, with the acquiescence of Sony, subcontracted the services of Trucking
Services to transport the shipment. 4 trucks set out to deliver the goods but only 3 arrived at Sony’s Biñan
warehouse. TMBI notified Sony of the loss. It also sent BMT a letter demanding payment for the lost shipment. BMT
refused to pay, insisting that the goods were "hijacked." In the meantime, Sony filed an insurance claim with the
Mitsui, the insurer of the goods. Mitsui paid P7,293,386 for the value of the lost goods and became subrogated to
Sony’s rights. Mitsui then sent TMBI a demand letter for payment of the lost goods. TMBI refused to pay Mitsui’s
claim, thus, Mitsui filed a complaint against TMBI. In TMBI’s reply, it impleaded BMT and prayed that in the event
that it is held liable for loss, it should be reimbursed by BMT. Both RTC and CA found TMBI and BMT joint and
solidarily liable to pay Mitsui.
Are TMBI and BMT solidarily liable for the payment of the goods? — NO. TMBI and BMT are not solidarity liable to
Mitsui. MBI’s liability to Mitsui does NOT stem from a quasi-delict (culpa aquiliana) but from its breach of
contract (culpa contractual). The tie that binds TMBI with Mitsui is contractual, albeit one that passed on to Mitsui
as a result of TMBI's contract of carriage with Sony to which Mitsui had been subrogated as an insurer who had
paid Sony's insurance claim. The legal reality that results from this contractual tie precludes the application
of quasi-delict based Article 2194.
The legal reality that results from the contractual tie in this case precludes the application of
quasi-delict. Thus, parties would not be solidary liable as joint tortfeasors.
FACTS
1. Sony engaged the services of Torres Madrid Brokerage (TMBI) to facilitate, process, withdraw, and deliver the
shipment of various electronic goods from Thailand at the port of Manila to its warehouse in Biñan, Laguna.
2. With the consent of Sony, TMBI, in turn, subcontracted the services of BMT Trucking services as it did not own
any trucks.
3. 4 BMT trucks picked up the shipment from the port on Oct. 7, 2000.
- However, BMT scheduled the delivery on October 9, 2000 because of the truck ban, and because the
following day was a Sunday.
4. BMT scheduled delivery on October 9. However, morning of said date, only 3 trucks arrived at Sony’s Biñan
warehouse. The 4th truck was seen abandoned along Diversion Road in Filinvest, Alabang, Muntinlupa City at 12
noon wherein both the driver Rufo Lapesura and the shipments were missing.
5. TMBI notified Sony of the loss, and sent BMT a letter demanding payment for the lost shipment. BMT refused to
pay, insisting that the goods were hijacked.
6. Sony filed an insurance claim with Mitsui, where Mitsui paid Sony P7,293,386. After being subrogated to Sony’s
rights, Mitsui filed a complaint against TMBI.
7. In TMBI’s reply, it impleaded BMT and prayed that in the event that it is held liable for loss, it should be
reimbursed by BMT.
8. Both RTC and CA found TMBI and BMT joint and solidarily liable to pay Mitsui being joint tortfeasors.
TMBI’s arguments:
TMBI insists that the hijacking was a fortuitous event and should not be held liable. It also denies being a
common carrier because it does not own any trucks to transport shipment and does not offer transport
services to the public for a sum; insisting that they are merely brokers who process paperwork to the entry
of Sony’s goods. It should be BMT that should be responsible as it had full control and custody of the cargo.
BMT’s arguments:
BMT insists that it observed the required standard of care. Like the petitioner, BMT maintains that the
hijacking was a fortuitous event - a force majeure - that exonerates it from liability.
ISSUE
Whether or not TMBI and BMT are solidarily liable for the payment of the goods.
RULING
27
NO. TMBI and BMT are not solidarity liable to Mitsui. MBI’s liability to Mitsui does NOT stem from a quasi-delict
(culpa aquiliana) but from its breach of contract (culpa contractual). The tie that binds TMBI with Mitsui is
contractual, albeit one that passed on to Mitsui as a result of TMBI's contract of carriage with Sony to which Mitsui
had been subrogated as an insurer who had paid Sony's insurance claim. The legal reality that results from this
contractual tie precludes the application of quasi-delict based Article 2194.
The RTC ruling was based on Article 2194 of the Civil Code:
Art. 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary.
However, this is the incorrect rule to apply.

BMT is NOT directly liable to Mitsui for the loss of the cargo. While it is undisputed that the cargo was lost
under the actual custody of BMT, no direct contractual relationship existed between Sony/Mitsui and BMT. If
at all, Mitsui's cause of action against BMT could only arise from quasi-delict, as a third party suffering
damage from the action of another due to the latter's fault or negligence, pursuant to Article 2176 of the Civil
Code.
In breach of contract or culpa contractual, the plaintiff only needs to establish the existence of the contract
and the obligor's failure to perform his obligation. It is not necessary for the plaintiff to prove or even allege
that the obligor's non-compliance was due to fault or negligence because Article 1735 already presumes
that the common carrier is negligent. The common carrier can only free itself from liability by proving that it
observed extraordinary diligence. It cannot discharge this liability by shifting the blame on its agents or
servants.
On the other hand, the plaintiff in quasi-delict culpa aquiliana must clearly establish the defendant's fault or
negligence because this is the very basis of the action. Moreover, if the injury to the plaintiff resulted from
the act or omission of the defendant's employee or servant, the defendant may absolve himself by proving
that he observed the diligence of a good father of a family to prevent the damage.
In the present case, Mitsui's action is solely premised on TMBl's breach of contract. Mitsui did not even sue BMT,
much less prove any negligence on its part. If BMT has entered the picture at all, it is because TMBI sued it for
reimbursement for the liability that TMBI might incur from its contract of carriage with Sony/Mitsui. Accordingly, there
is no basis to directly hold BMT liable to Mitsui for quasi-delict.
In these lights, TMBI is liable to Sony/Mitsui for breaching the contract of carriage. In turn, TMBI is entitled to
reimbursement from BMT due to the latter's own breach of its contract of carriage with TMBI.
DISPOSITIVE: WHEREFORE, the Court hereby ORDERS petitioner Torres-Madrid Brokerage, Inc. to pay the
respondent FEB Mitsui Marine Insurance Co., Inc. the following:
a. Actual damages in the amount of PHP7,293,386.23 plus legal interest from the time the complaint was filed
until it is fully paid;
b. Attorney's fees in the amount of PHP200,000.00; and
c. Costs of suit.
Respondent Benjamin P. Manalastas is in turn ORDERED to REIMBURSE Torres-Madrid Brokerage, Inc. of the
above-mentioned amounts.
Additional Notes
W/N the theft or the robbery of goods is considered a fortuitous event which will absolve a common carrier
from liability? – NO.
● Common carriers are persons, corporations, firms or associations engaged in the business of
transporting passengers or goods or both, by land, water or air, for compensation, offering their
services to the public. By the nature of their business and for reasons of public policy, they are bound to
observe extraordinary diligence in the vigilance over the goods and in the safety of their
passengers.
● As long as an entity holds itself to the public for the transport of goods as a business, it is considered a
common carrier regardless of whether it owns the vehicle used or has to actually hire one.
● TMBI, the common carrier should be held responsible for the loss, destruction, or deterioration of the goods
28
is transports UNLESS it results from:
1. Flood, storm, earthquake, lightning, or other natural disaster or calamity;

2. Act of the public enemy in war, whether international or civil;
3. Act of omission of the shipper or owner of the goods;
4. The character of the goods or defects in the packing or in the containers;
5. Order or act of competent public authority.
● For all other cases, such as theft or robbery, a common carrier is presumed to have been at fault or
to have acted negligently, unless it can prove that it observed extraordinary diligence.
● Simply put, the theft or the robbery of goods is not considered a fortuitous event of a force majeure.
● Nevertheless, a common carrier may absolve itself of liability for a resulting loss:
o If it proves that it exercised extraordinary diligence in transporting and safekeeping the goods; or
o If it stipulated with the shipper/owner of the goods to limit its liability for the loss, destruction, or
deterioration of the goods to a degree less than extraordinary diligence.
● However, a stipulation diminishing or dispensing with the common carrier’s liability for acts
committed by thieves or robbers who do not act with grave or irresistible threat, violence, or force is
void under Art. 1745 of the Civil Code for being contrary to public policy.
o Jurisprudence, too, has expanded Article 1734's five exemptions. De Guzman v. Court of Appeals
interpreted Article 1745 to mean that a robbery attended by "grave or irresistible threat, violence or force" is
a fortuitous event that absolves the common carrier from liability.
● Under Art. 1736, a common carrier’s extraordinary responsibility over the shipper's goods lasts from
the time these goods are unconditionally placed in the possession of, and received by, the carrier
for transportation, until they are delivered, actually or constructively, by the carrier to the
consignee.
● In this case, instead of showing that it had acted with extraordinary diligence, TMBI simply argued
that it was not a common carrier bound to observe extraordinary diligence. Its failure to
successfully establish this premise carries with it the presumption of fault or negligence, thus
rendering it liable to Sony/Mitsui for breach of contract.
W/N BMT is liable to TMBI for breach of their contract of carriage? – YES.
● This is not to say that TMBI must absorb the loss. By subcontracting the cargo delivery to BMT, TMBI
entered into its own contract of carriage with a fellow common carrier.
● Following Art. 1735, BMT is presumed to be at fault. Since BMT failed to prove that it observed
extraordinary diligence in the performance of its obligation to TMBI, it is liable to TMBI for breach of
their contract of carriage.
● In these lights, TMBI is liable to Sony (subrogated by Mitsui) for breaching the contract of carriage. In turn,
TMBI is entitled to reimbursement from BMT due to the latter's own breach of its contract of carriage with
TMBI.
o The proverbial buck stops with BMT who may either:
a. Absorb the loss; or
b. Proceed after its missing driver, the suspected culprit, pursuant to Art.
2181.
Sanico and Castro v. Colipano, G.R. No. 209969 - Guevarra

As to Rights and Obligations of Multiple Parties
JOSE SANICO AND VICENTE CASTRO, Petitioners, v. WERHERLINA P. COLIPANO, Respondent.
September 27, 2017 G.R. No. 209969 Caguioa, J.
29
ARTICLE 1173 OF THE CIVIL CODE: Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735 and 1745,
Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles
1755 and 1756.
ARTICLE 1755 OF THE CIVIL CODE: 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.
ARTICLE 1756 OF THE CIVIL CODE: In case of death of or injuries to passengers, common carriers are presumed
to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as
prescribed in articles 1733 and 1755.
ARTICLE 1759 OF THE CIVIL CODE: Common carriers are liable for the death of or injuries to passengers through
the negligence or willful acts of the former's employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father
of a family in the selection and supervision of their employees.
FACTS
Werherlina Colipano (Colipano) filed a complaint on January 7, 1997 for breach of contract of carriage and
damages against Jose Sanico (Sanico) and Vicente Castro (Castro).
COLIPANO’S CONTENTIONS
In her complaint, Colipano claimed that around 4:00 P.M. of December 25, 1993, Christmas Day, she and her
daughter were paying passengers in the jeepney operated by Sanico, which was driven by Castro. Colipano
claimed she was made to sit on an empty beer case at the edge of the rear entrance/exit of the jeepney, with her
sleeping child on her lap. At an uphill incline in the road to Natimao-an, Carmen, Cebu, the jeepney slid backwards
because it did not have the power to reach the top.
Colipano pushed both her feet against the step board to prevent herself and her child from being thrown out of the
exit. However, because the step board was wet, her left foot slipped and got crushed between the step board and a
coconut tree that the jeepney bumped, causing the jeepney to stop its backward movement. Colipano’s leg was
badly injured and was eventually amputated. Colipano prayed for actual damages, loss of income, moral damages,
exemplary damages, and attorney’s fees.
SANICO AND CASTRO’S CONTENTIONS
In their answer, Sanico and Castro admitted that Colipano’s leg was crushed and amputated, but they claimed that
it was Colipano’s fault that her leg was crushed. They admitted that the jeepney slid backwards because the
jeepney lost power. The conductor then instructed everyone not to panic, but Colipano tried to disembark and her
foot got caught in between the step board and the coconut tree.
Sanico claimed that he paid for all the hospital and medical expenses of Colipano, and that Colipano eventually
freely and voluntarily executed an Affidavit of Desistance and Release of Claim.
RTC: After trial, the RTC found that Sanico and Castro breached the contract of carriage between them and
Colipano, but only awarded actual and compensatory damages in favor of Colipano.
CA: Only Sanico and Castro appealed to the CA, which affirmed the decision of the RTC, but with modifications.
ISSUE
30
Whether or not Sanico and Castro breached the contract of carriage with Colipano
RULING
ONLY SANICO BREACHED THE CONTRACT OF CARRIAGE WITH COLIPANO. SANICO IS LIABLE AS THE
OPERATOR AND THE OWNER OF A COMMON CARRIER.
Both the CA and RTC found Sanico and Castro jointly and severally liable. However, this is erroneous
because only Sanico was the party to the contract of carriage with Colipano. Since the cause of action is
based on a breach of a contract of carriage, the liability of Sanico is direct as the contract is between him
and Colipano. Castro, being merely the driver of Sanico’s jeepney, cannot be made liable as he is not a
party to the contract of carriage.
A complaint for breach of a contract of carriage is dismissible as against the employee who was driving the bus,
because the parties to the contract of carriage are only the passenger, the bus owner, and the operator.
Although Castro was driving the jeepney, he was a mere employee of Sanico, who was the operator and
owner of the jeepney. The obligation to carry Colipano safely to her destination was with Sanico.
In fact, the elements of a contract of carriage existed between Colipano and Sanico:
1. CONSENT: As shown when Castro, as employee of Sanico, accepted Colipano as a passenger when he
allowed Colipano to board the jeepney, and as to Colipano, when she boarded the jeepney;
2. CAUSE OR CONSIDERATION: When Colipano, for her part, paid her fare; and
3. OBJECT: The transportation of Colipano from the place of departure to the place of destination.
The Civil Code requires common carriers to observe extraordinary diligence in safely transporting their passengers,
pursuant to Article 1733 of the Civil Code. This extraordinary diligence, under Article 1755, means that
common carriers have the obligation to carry passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. In
case of death of or injury to their passengers, Article 1756 provides that common carriers are presumed to have
been at fault or negligent, and this presumption can be overcome only by proof of the extraordinary diligence
exercised to ensure the safety of the passengers.
When Colipano’s leg was injured while she was a passenger in Sanico’s jeepney, the presumption of fault or
negligence on Sanico’s part arose. He had the burden to prove that he exercised the extraordinary diligence
required of him. He failed to do this.
In the case at bar, as the CA correctly held, for the driver, Castro, to allow a seat extension made of an empty
case of beer clearly indicates lack of prudence. Permitting Colipano to occupy an improvised seat in the rear
portion of the jeepney, with a child on her lap to boot, exposed her and her child in a peril greater than that to which
the other passengers were exposed.
The CA also correctly held that the defense of engine failure, instead of exonerating Sanico, only aggravated his
already precarious position. The engine failure “hinted lack of regular check and maintenance to ensure that the
engine is at its best, considering that the jeepney regularly passes through a mountainous area.” This failure to
ensure that the jeepney can safely transport passengers through its route which required navigation
through a mountainous area is proof of fault on Sanico’s part. In the face of such evidence, there is no
question as to Sanico’s fault or negligence.
Common carriers may also be liable for damages when they contravene the tenor of their obligations. The phrase
“in any manner contravene the tenor” of the obligation includes any illicit act or omission which impairs the strict and
faithful fulfillment of the obligation and every kind of defective performance. There is no question here that making
Colipano sit on the empty beer case was a clear showing of how Sanico contravened the tenor of his
obligation to safely transport Colipano from the place of departure to the place of destination as far as
human care and foresight can provide, using the utmost diligence of very cautious persons, and with due
regard for all the circumstances.
The only defenses available to common carriers are:

1. Proof that they observed extraordinary diligence as prescribed (Article 1756); and
2. Proof that the injury or death was brought about by an event which could not be foreseen, or which, though
foreseen, were inevitable,” or a fortuitous event (Article 1174).
The Supreme Court finds that neither of these defenses obtain. Thus, Sanico is liable for damages to Colipano
because of the injury that Colipano suffered as a passenger of Sanico's jeepney.
31
Additional Notes
THE AFFIDAVIT OF DESISTANCE AND RELEASE OF CLAIM IS VOID. Such waiver is against public policy.
AMOUNT OF COMPENSATORY DAMAGES GRANTED IS INCORRECT. The CA erred when it used Colipano's
age at the time she testified as basis for computing the loss of earning capacity. The loss of earning capacity
commenced when Colipano's leg was crushed on December 25, 1993. Given that Colipano was 30 years old when
she testified on October 14, 1997, she was roughly 27 years old on December 25, 1993 when the injury was
sustained.
SANICO IS LIABLE TO PAY INTEREST. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate
of 6% per annum. Further, upon finality of the judgment awarding a sum of money, the rate of interest shall be 12%
per annum from such finality until satisfaction because the interim period is considered a forbearance of credit. The
rate of legal interest for loans or forbearance of any money, goods or credits and the rate allowed in judgments was
lowered from 12% to 6%. Thus, the applicable rate of interest to the award of damages to Colipano is 6%.
Sps. Lam v. KODAK PHILIPPINES, G.R. No. 167615 - Roma

[Complete Title]
[Date] [Case Number] [Ponente]
FACTS
ISSUE
RULING
Additional Notes
32
Robes-Francisco v. CFI, G.R. No. L-41093 - Alfonso
[Complete Title]
FACTS
ISSUE
RULING
Additional Notes
Bachrach v. Espiritu, G.R. No. 28497 - Fonacier

[Complete Title]
33
FACTS
ISSUE
RULING
Additional Notes
Pamintuan v. CA, G.R. No. L-26339 - Del Rosario

[Complete Title]
34
FACTS
ISSUE
RULING
Additional Notes
Castillo v. Security Bank, et. al., G.R. No. 196118 - Hernando

[Complete Title]
FACTS
ISSUE
35
RULING
Additional Notes
Sps. Poon v. PRIME SAVINGS BANK, G.R. No. 183794 - Calo

[Complete Title]
FACTS
ISSUE
RULING
Additional Notes
36
37

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Kinds of Civil Obligations - Case Digests

Pay v. Palanca, G.R. No. L-29900 - Rabena 1

Smith Bell v. Sotelo Matti, G.R. No. L-16570 - Abad 2

Chavez v. Gonzales, G.R. No. 168338 - Bringuelo 5

Encarnacion v. Baldomar, G.R. No. L-264 - Omnes 6

Eleizegui v. Lawn Tennis Club, G.R. No. 967 - Del Prado 8

Philbanking v. Lui She, G.R. No. L-17587 - Guevarra 9

Lim v. People, G.R. No. L-34338 - Arre 12

Araneta, Inc. v. Phil. Sugar Estates, G.R. No. L-22558 - Fonacier 13

Millare v. Hernando, G.R. No. L-55480 - De Castro 16

Ronquillo v. CA, G.R. No. L-55138 - Calo 19

Malayan Insurance v. CA, G.R. No. L-36413 - Flores 20

PNB v. Independent Planters, G.R. No. L-28046 - Hernando 22

Calang and Philtranco v. People, G.R. No. 190696 - Roma 24

TMBI v. Feb Mitsui and Manalastas, G.R. No. 194121 - Floreza 27

Sanico and Castro v. Colipano, G.R. No. 209969 - Guevarra 30

Sps. Lam v. KODAK PHILIPPINES, G.R. No. 167615 - Roma 32

Robes-Francisco v. CFI, G.R. No. L-41093 - Alfonso 33

Bachrach v. Espiritu, G.R. No. 28497 - Fonacier 34

Pamintuan v. CA, G.R. No. L-26339 - Del Rosario 35

Castillo v. Security Bank, et. al., G.R. No. 196118 - Hernando 36

Sps. Poon v. PRIME SAVINGS BANK, G.R. No. 183794 - Calo 36

Pay v. Palanca, G.R. No. L-29900 - Rabena

June 28, 1974 No. L-29900 FERNANDO, J.

Really really short case

Smith Bell v. Sotelo Matti, G.R. No. L-16570 - Abad

Recit Ready Synopsis

Art. 1193, Civil Code

Items/Products Prices Delivery date under the Actual date of delivery

2 expellers P25,000/each “to be shipped from San October 26, 1918

2 electric motors P2,000/each “Approximate delivery February 27, 1919

In all these contracts, there is a final clause as follows:

Chavez v. Gonzales, G.R. No. 168338 - Bringuelo

April 30, 1970. G.R. No. L-27454* Reyes, J.B.L.

Recit Ready Synopsis

● Chavez delivered a portable typewriter to Gonzales, a typewriter repairer, for cleaning.

Encarnacion v. Baldomar, G.R. No. L-264 - Omnes

October 4, 1946 No. L-264 77 Phil. 470 Hilado J;

Recit Ready Synopsis

Eleizegui v. Lawn Tennis Club, G.R. No. 967 - Del Prado

DARIO AND GAUDENCIO ELEIZEGUI, plaintiffs-appellees,

Recit Ready Synopsis

Philbanking v. Lui She, G.R. No. L-17587 - Guevarra

PHILIPPINE BANKING CORPORATION, representing the estate of

September 12, 1967 G.R. No. L-17587 Castro, J.

Recit Ready Synopsis

NO, THE LEASE AGREEMENT EXECUTED BY JUSTINA IS NOT INVALID.

Lim v. People, G.R. No. L-34338 - Arre

LOURDES VALERIO LIM, petitioner, vs.

November 21, 1984 G.R. No. L-34338 RELOVA, J.

Recit Ready Synopsis

'To Whom It May Concern:

WON the agreement between Lourdes and Ayroso fixed a period?

Obligation with a term or period

G.R. No. L-22558

Recit Ready Synopsis

while the seller for its part will—

Millare v. Hernando, G.R. No. L-55480 - De Castro

June 30, 1987 G.R. No. L-55480 FELICIANO, J.

Recit Ready Synopsis