CHAPTER 1.

GENERAL PROVISIONS

1. Astrid A. Van de Brug v. Philippine National Bank, G.R. No.207004, June 06, 2018;

FACTS: The late spouses Romulus and Evelyn Aguilar used to be borrowing clients of PNB, Victoria
Branch. Their sugar crop loans, which were obtained sometime between late 1970’s and 80s, were
secured by a real estate mortgage over four parcels of land. However, for failure to pay their
obligations, the mortgage was foreclosed and ownership of the four properties was consolidated under
the name of PNB. When RA 7202 was enacted, the late Romulus Aguilar wrote PNB asking for the
reconsideration of their account based on the Sugar Restitution Law.
The RTC ruled in favor of the Aguilars, finding PNB guilty of malice and bad faith in not pursuing its
duty in helping the Aguilars of the benefits of RA 7202. Upon appeal, CA granted the appeal and
reversed the RTC decision.

ISSUE: w/n PNB has an obligation to accord the Aguilars the same treatment as it accorded the
spouses Pfleider regarding the crediting of the proceeds of their respective agricultural lots against
their respective sugar crop loans covered by RA 7202

HELD: NO. The sources of obligations under Article 1157 of the Civil Code are: (1) law; (2) contracts;
(3) quasi-contracts; (4) acts or omissions punished by law; and (5) quasi-delicts. Immediately, sources
(2), (3) and (4) are inapplicable in this case. The Aguilars are not privies to the Compromise Agreement
between PNB and the spouses Pfleider because: (1) the former are not parties thereto; (2) the principle
of relativity of contract would be violated; and (3) PNB 's freedom to enter into contracts would also be
violated if PNB would be compelled to accommodate the Aguilars.

2. Reyes v. BANCOM Dev't. Corp., G.R. No. 190286, Jan. 11, 2018
FACTS: The dispute in this case originated from a Continuing Guaranty executed in favor of
respondent Bancom by Angel E. Reyes, Sr., FlorencioReyes, Jr., Rosario R. Du, Olivia Arevalo, and the
two petitioners herein, Ramon E. Reyes and Clara R. Pastor (the Reyes Group). In the instrument, the
Reyes Group agreed to guarantee the full and due payment of obligations incurred by Marbella Realty
under an Underwriting Agreement with Bancom.

Because of Marbella’s continued failure to pay back the loan despite repeated demands, Bancom filed
a Complaint for Sum of Money against Marbella and the Reyes Group. RTC held Marbella and the Reyes
Group solidarily liable to Bancom.

ISSUE: w/n CA was correct in holding petitioners liable to Bancom

HELD: YES. As guarantors of the loans of Marbella, petitioners are liable to Bancom. Having executed a
Continuing Guaranty in favor of Bancom, petitioners are solidarily liable with marbella for the payment
of the amounts indicated on the Promissory Notes. The obligations of Marbella and the Reyes Group
under the PNs and the Continuing Guaranty are plain and unqualified. Under the PNs, Marbella
promised to pay Bancom the amounts stated on the maturity dates indicated.

3. Abrogar v. Cosmos Bottling Corp. G.R. 164749, Mar. 15, 2017

Facts:

This case involves the death of Rommel Abrogar, a participant in the "1st Pop Cola Junior Marathon"
organized by Intergames, Inc. and sponsored by Cosmos Bottling Company. During the marathon,
Rommel was bumped by a passenger jeepney and died due to severe head injuries. Rommel's parents
filed a complaint for damages against Intergames and Cosmos.

Issues: Whether or not the CA gravely erred in reversing the RTC Decision, (and) in holding that
respondent Intergames was not negligent

Held:
Yes. Negligence is the failure to observe for the protection of the interests of another person that
degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other
person suffers injury. Under Article 1173 of the Civil Code, it consists of the "omission of that diligence
which is required by the nature of the obligation and corresponds with the circumstances of the
person, of the time and of the place. The Civil Code makes liability for negligence clear under Article
2176, and Article 20.

4. Pilipinas Petroleum v. Duque, G.R. 216467, Feb. 15, 2017;

FACTS:

Pilipinas Shell Petroleum Corporation (PSPC) is a lessee of a building known as Shell House at 156
Valero Street, Salcedo Village, Makati City. On August 23, 2000, PSPC subleased a 500-meter portion
of the 2nd Floor of the Shell Building to the The Fitness Center (TFC). Thereafter, TFC encountered
problems in its business operations.
Thus, with the conformity of PSPC, TFC assigned to Fitness Consultants, Inc, (FCI) all its rights and
obligations under the contract of sublease executed by PSPC in its favor. FCI failed to pay its rentals to
PSPC. FCI subsequently issued a check, with respondents as signatories, which would supposedly cover
FCI's obligations to PSPC. However, the check was dishonored, thus, leading to the filing of a criminal
complaint against respondents for their alleged violation of BP 22.

The CA basically held that, upon acquittal, the civil liability of a corporate officer in a BP 22 case is
extinguished with the criminal liability, without prejudice to an independent civil action which may be
pursued against the corporation. Petitioner filed a motion for reconsideration, but the CA denied it in
its Resolution dated January 14, 2015.

ISSUE: Whether or not the respondents, as corporate officers, may still be held civilly liable despite
their acquittal from the criminal charge of violation of BP 22.

HELD:

No. The Court rules in the negative.

In the case of Gosiaco v. Ching, this Court enunciated the rule that a corporate officer who issues a
bouncing corporate check can only be held civilly liable when he is convicted. When a corporate officer
issues a worthless check in the corporate name he may be held personally liable for violating a penal
statute. The statute imposes criminal penalties on anyone who with intent to defraud another of
money or property, draws or issues a check on any bank with knowledge that he has no sufficient
funds in such bank to meet the check on presentment.

5. CCBPI v. Menez, G.R. 209906, Nov. 22, 2017;

Facts:
In 1995, Ernani Meñez ordered a bottle of Sprite while dining at his favorite restaurant. When he
sipped from the bottle of Sprite, he immediately tasted the repugnant taste. He vomited. He reported
the incident to the restaurant staff and the to the police. He then brought himself for medical
treatment and he had the bottle of Sprite examined. It was later found out that the content of the
bottle was kerosene. He then sued Coca-Cola Bottlers Phils., Inc. for Php7.6M in damages.
Coca-Cola moved for the dismissal of the case on the ground that Meñez failed to allege any
negligence on the part of Coca-Cola and that Meñez failed to abide by the Doctrine of Prior Resort
(exhaustion of administrative remedies) as he failed to file a case before the Bureau of Food and Drugs
(BFAD) before going to court.

ISSUE: Whether or not there is a need to exhaust administrative remedies for actions under Article
2187 of the Civil Code.

HELD: No. There is no need for a prior exhaustion of administrative remedies, or in this case referral
to the BFAD. Article 2187 unambiguously provides:
Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for
death or injuries caused by any noxious or harmful substances used, although no contractual relation
exists between them and the consumers.

Quasi-delict being the source of obligation upon which Meñez bases his cause of action for damages
against Coca-Cola, the doctrine of exhaustion of administrative remedies is not applicable. Such is not
a condition precedent required in a complaint for damages with respect to obligations arising from
quasi-delicts.

6. OSG v. Ayala Land, G.R. No. 177056, September 18, 2009, 600 SCRA 617

Facts:
Respondents Ayala Land, Robinsons, and Shangri-la maintain and operate shopping malls in various
locations in Metro Manila. Respondent SM Prime constructs, operates, and leases out commercial
buildings and other structures. The shopping malls operated or leased out by respondents have
parking facilities for all kinds of motor vehicles, either by way of parking spaces inside the mall
buildings or in separate buildings and/or adjacent lots that are solely devoted for use as parking
spaces. Respondents Ayala Land, Robinsons, and SM Prime spent for the construction of their own
parking facilities. Respondent Shangri-la is renting its parking facilities, consisting of land and building
specifically used as parking spaces, which were constructed for the lessor's account.

In 1999, the Senate conducted an investigation regarding the legality of parking fees of shopping
malls. It was held that said fees are illegal because it is contrary to National Building Code and
Consumer Act.

Issues: Whether Respondents are obligated to provide free parking spaces in their malls for the use of
their patrons or the public in general.

Ruling: No, Respondents are not obligated to provide free parking spaces and it is not contrary to the
National Building Code and Consumer Act’s policy.
The Building Code, which is the enabling law, and the Implementing Rules and Regulations do not
impose that parking spaces shall be provided by the mall owners free of charge. Absent such directive,
Respondents are under no obligation to provide them for free.

7. PADCOM v. Ortigas, G.R. No. 146807, May 9, 2002, 382 SCRA 222

Facts: Petitioner Padcom Condominium Corporation (PADCOM) owns and manages the Padilla Office
Condominium Building (PADCOM BUILDING). The land on which the building stands was originally
acquired from the Ortigas & Company, Limited Partnership, by Tierra Development Corporation (TDC)
under a Deed of Sale with a condition that the transferee and its successor-in-interest must become
members of an association for realty owners and long-term lessees in the area later known as the
Ortigas Center.

Ortigas Center Association, Inc. (ASSOCIATION) was organized to advance the interests and promote
the general welfare of the real estate owners and long-term lessees of the lots in the Ortigas Center
and sought the collection of membership dues from PADCOM. In view of PADCOM'S failure and refusal
to pay its arrears in monthly dues, the Association filed a complaint for collection of sum of money
before the trial court.

Issue: Whether or not PADCOM is unjustly enriched by the improvements made by the Association,
thus requiring the former to pay dues to the latter.

Held: Yes. The Supreme Court held that as resident and lot owner in the Ortigas area, PADCOM was
definitely benefited by the Association's acts and activities to promote the interests and welfare of
those who acquire property therein or benefit from the acts or activities of the Association.

Generally, it may be said that a quasi-contract is based on the presumed will or intent of the obligor
dictated by equity and by the principles of absolute justice. Examples of these principles are: (1) it is
presumed that a person agrees to that which will benefit him; (2) nobody wants to enrich himself
unjustly at the expense of another; or (3) one must do unto others what he would want others to do
unto him under the same circumstances.

8. MetroBank v. Rosales, G.R. No. 183204, January 13, 2014

FACTS:

Salazar Realty Corporation (SARC) filed a lawsuit against Metrobank for unlawfully foreclosing on their
properties. The case was filed before the Regional Trial Court (RTC) of Tacloban City. SARC alleged that
Metrobank initiated extrajudicial foreclosure proceedings without proper authorization and that the
mortgage agreement and foreclosure proceedings were void. SARC also claimed that Metrobank failed
to exercise due diligence in extending the loan to Tacloban RAS Construction Corporation, which was
not authorized to use SARC's properties as collateral.

Petitioner alleged that respondents have no cause of action because it has a valid reason for issuing
the "Hold Out" order. It averred that due to the fraudulent scheme of respondent Rosales, it was
compelled to reimburse Liu Chiu Fang the amount of US$75,000.0050 and to file a criminal complaint
for Estafa against respondent Rosales.

ISSUE: Whether or not the Metrobank breached its contract with respondents Rosales.

HELD: Yes. The Court held that Metrobank’s reliance on the “Hold Out” clause in the Application and
Agreement for Deposit Account is misplaced. Bank deposits, which are in the nature of a simple loan
or mutuum, must be paid upon demand by the depositor. The “Hold Out” clause applies only if there is
a valid and existing obligation arising from any of the sources of obligation enumerated in Article 1157
of the Civil Code, to wit: law, contracts, quasi-contracts, delict, and quasi-delict. In this case, petitioner
failed to show that respondents have an obligation to it under any law, contract, quasi-contract, delict,
or quasi-delict. And although a criminal case was filed by petitioner against respondent Rosales, this is
not enough reason for petitioner to issue a “Hold Out” order as the case is still pending and no final
judgment of conviction has been rendered against respondent Rosales.

9. PSBA v CA, GR 84698, Feb. 4, 1992

Facts: The Philippine School of Business Administration and its corporate officers are sued for
negligence and lack of security precautions after a student is stabbed to death on the school premises.
Private respondents sought to adjudge petitioner PSBA and its officers liable for the death of Carlitos
Bautista, a third year commerce student who was stabbed while on the premises of PSBA by elements
from outside the school. Private respondents are suing under the law on quasi-delicts alleging the
school and its officers’ negligence, recklessness and lack of safety precautions before, during, and
after the attack on the victim. Petitioners moved to dismiss the suit but were denied by the trial court.
CA affirmed.

Issue: Whether or not PSBA may be held liable under quasi-delicts.

Ruling: NO. Because the circumstances of the present case evince a contractual relation between the
PSBA and Carlitos Bautista, the rules on quasi-delict do not really govern. A perusal of Article 2176
shows that obligations arising from quasi-delicts or tort, also known as extra-contractual obligations,
arise only between parties not otherwise bound by contract, whether express or implied.

The court further explained that the rules on quasi-delicts, as stated in Articles 2176 and 2180 of the
Civil Code, do not apply in this case because there is a contractual relationship between PSBA and
Carlitos. Quasi-delicts or torts only arise between parties not bound by contract.

10. Cruz v Gruspe, GR 191431, March 13, 2013

FACTS:
On October 24, 1999, an accident occurred when the mini bus owned and operated by Rodolfo Cruz
and driven by one Arturo Davin collided with the Toyoto Corolla car of Atty. Delfin Gruspe. The latter's
car was a total wreck. The day after the accident, Cruz and Leonardo Q. Ibias went to Gruspe's office
and executed a Joint Affidavit of Undertaking, promising to replace Gruspe's damaged car within 20
days or pay the cost of the car amounting to P350,000.00 with interest at 12% per month for any
delayed payment. When Cruz and Leonardo failed to fulfill their promise, Gruspe filed a complaint for
collection of sum of money against them.

ISSUE: Whether or not Cruz and Esperanza should be considered in default.

HELD: NO. In the absence of a finding by the lower courts that Gruspe made a demand prior to the
filing of the complaint, the interest cannot be computed from November 15, 1999 because until a
demand has been made, Cruz and Leonardo could not be said to be in default. "In order that the
debtor may be in default, it is necessary that the following requisites be present: (1) that the obligation
be demandable and already liquidated; (2) that the debtor delays performance; and (3) that the
creditor requires the performance judicially and extrajudicially." Default generally begins from the
moment the creditor demands the performance of the obligation. In this case, demand could be
considered to have been made upon the filing of the complaint on November 19, 1999, and it is only
from this date that the interest should be computed.

11. ACE Foods, Inc. v. Micro Pacific, G.R. No. 200602, December 11,2013.
FACTS:
ACE Foods is a domestic corporation engaged in the trading and distribution of consumer goods, while
MTCL is engaged in the supply of computer hardware and equipment. On September 26, 2001, MTCL
sent a letter-proposal to ACE Foods for the delivery and sale of the subject products. ACE Foods
accepted the proposal and issued a Purchase Order for the products. MTCL delivered the products to
ACE Foods, but ACE Foods refused to pay the purchase price and claimed that the products were
defective. ACE Foods filed a complaint against MTCL, seeking the removal of the products from its
premises and damages for alleged breach of "after delivery services" obligations.

ISSUE: Whether or not there was a contract of sale between MTCL and ACE Foods.

HELD:

Yes, the Court explained that a contract of sale is the transfer of ownership in exchange for a price
paid or promised. In this case, ACE Foods accepted MTCL's proposal and issued a Purchase Order,
thereby creating a contract of sale. The parties have agreed to a contract of sale and not to a contract
to sell. Bearing in mind its consensual nature, a contract of sale had been perfected at the precise
moment ACE Foods, as evinced by its act of sending MTCL the Purchase Order, accepted the latter’s
proposal to sell the subject products in consideration of the purchase price of P646,464.00. From that
point in time, the reciprocal obligations of the parties already arose and consequently may be
demanded.

12. San Francisco Inn v. San Pablo City Water District, G.R. No.204639, Feb. 15, 2017;

Facts:

San Francisco Inn v. San Pablo City Water District involves a dispute between San Francisco Inn (SFI), a
hotel business establishment, and the San Pablo City Water District (SPCWD). The dispute revolves
around the imposition of production charges/fees on commercial and industrial users/operators of deep
wells in San Pablo City. SFI argues that SPCWD does not have the authority to impose such charges
without evidence that SFI's use of ground water is causing financial harm to SPCWD and impairing its
ground water source.

The RTC ruled in favor of SPCWD, declaring the imposition of production charges/fees as valid.
However, CA modified the RTC decision, stating that SPCWD had complied with the due process
requirement and had the authority to impose the charges.
Issue:

Whether or not the CA erred in upholding the right of SPCWD to impose production assessment in the
clear absence of any findings/proof

Held:

Yes. Section 39 of PD 198 Production Assessment. - In the event the board of a district finds, after
notice and hearing, that production of ground water by other entities within the district for commercial
or industrial uses in (sic) injuring or reducing the district's financial condition, the board may adopt and
levy a groundwater production assessment to compensate for such loss.

In conclusion, the Supreme Court ruled that SPCWD did not have the authority to impose production
charges/fees on San Francisco Inn (SFI) without complying with the requirements set forth in PD 198
and the Rules. The Court reversed the decision of the Court of Appeals (CA) and affirmed the decision
of the Regional Trial Court (RTC) dismissing SFI's petition.

13. Dy v. People, G.R. 189081, Aug 10, 2016;

Facts:

Gloria S. Dy, the petitioner, was the former General Manager of MCCI and was accused of estafa for
misappropriating or converting checks entrusted to her by Mandy, the President of MCCI, to pay off a
loan. The Regional Trial Court (RTC) Manila acquitted the petitioner of the estafa charges but ordered
her to pay the amount of the checks. The CA affirmed the RTC's decision, stating that the acquittal of
the petitioner does not absolve her of civil liability.

Dy filed a petition seeking the reversal of the decision of the Court of Appeals (CA) ordering her to pay
Mandy Commodities Company, Inc. (MCCI) in the amount of P21,706,281.00.

ISSUES: Whether Dy has civil liability in the criminal case of estafa when she was acquitted for failure
of the prosecution to prove all elements of the crime

RULING:
NO The Supreme Court granted the petition and reversed the decision of the Court of Appeals. The
court held that the lower courts erred when they ordered petitioner to pay her civil obligation arising
from a contract of loan in the same criminal case where she was acquitted on the ground that there
was no crime. Any contractual obligation she may have must be litigated in a separate civil action
involving the contract of loan.
The court clarified that in cases where the accused is acquitted on the ground that there is no crime,
the civil action deemed instituted with the criminal case cannot prosper precisely because there is no
delict from which any civil obligation may be sourced.

14. Locsin II v. Mekeni, G.R. 192105, Dec. 9, 2013;

Facts:
In February 2004, Mekeni offered Locsin the position of Regional Sales Manager, which included a car
plan as part of his compensation package. Locsin accepted the offer and was provided with a used
Honda Civic car, for which he made payments through salary deductions. However, Locsin resigned in
2006 and expressed his intention to purchase the service vehicle. The parties failed to agree on the
terms, leading Locsin to return the vehicle to Mekeni. Subsequently, Locsin filed a complaint seeking
the recovery of unpaid salaries, commissions, and a refund of his car plan payments. The Labor Arbiter
initially ruled in favor of Locsin, ordering Mekeni to turn over the vehicle upon payment of a certain
amount. However, the National Labor Relations Commission (NLRC) reversed the decision and only
awarded Locsin unpaid salary, sick/vacation leave pay, and commissions.
Locsin appealed to the CA, which modified the NLRC decision and denied Locsin's claim for a refund of
his car plan payments.
Issue: WON the petitioner is entitled to refund of all amounts applied to the cost of the service vehicle
under the car plan.

Held: YES, but only to his monthly contributions in the car plan agreement.

In the absence of specific terms and conditions governing the car plan agreement, the employer may
not retain the installment payments made by the employee and treat them as rents for the use of the
service vehicle. The service vehicle was used in the employer's business, and any personal benefit
obtained by the employee from its use is merely incidental. The car plan arrangement between the
parties created a quasi-contractual relation, and Mekeni may not enrich itself by charging petitioner for
the use of the vehicle.

15. Metrobank v. Absolute Management Corp.,

Facts: Metrobank deposited the AMC checks to Ayala Lumber and Hardware’s account; because of
Chua’s control over AMC’s operations, Metrobank assumed that the checks payable to AMC could be
deposited to Ayala Lumber and Hardware’s account.

Ayala Lumber and Hardware had no right to demand and receive the checks that were deposited to its
account; despite Chua’s control over AMC and Ayala Lumber and Hardware, the two entities are
distinct, and checks exclusively and expressly payable to one cannot be deposited in the account of
the other.

In its fourth-party complaint, Metrobank claims that Chua’s estate should reimburse it if it becomes
liable on the checks that it deposited to Ayala Lumber and Hardware’s account.

Issue: Whether or not Ayala Lumber must return the amount of said checks to Metrobank.

Held: Metrobank acted in a manner akin to a mistake when it deposited the AMC checks to Ayala
Lumber and Hardware’s account because it assumed that the checks payable to AMC could be
deposited to Ayala Lumber and Hardware’s account.

This fulfills the requisites of solutio indebiti. Metrobank’s fourth-party complaint falls under the quasi-
contracts enunciated in Article 2154 of the Civil Code. Article 2154 embodies the concept "solutio
indebiti" which arises when something is delivered through mistake to a person who has no right to
demand it. It obligates the latter to return what has been received through mistake. Solutio indebiti, as
defined in Article 2154 of the Civil Code, has two indispensable requisites: first, that something has
been unduly delivered through mistake; and second, that something was received when there was no
right to demand it.

16. Traders Royal Bank Employees Union v. NLRC, G.R. No. 120592

FACTS:
The petitioner, Traders Royal Bank Employees Union-Independent, entered into a retainer agreement
with the respondent, Atty. Emmanuel Noel A. Cruz, head of the E.N.A. Cruz and Associates law firm.
Under the agreement, the union agreed to pay a monthly retainer fee of P3,000.00 in exchange for the
law firm's commitment to render legal services. The law firm represented the union in a case against
their employer, Traders Royal Bank, regarding claims for holiday, mid-year, and year-end bonuses. The
case was decided in favor of the employees, and the law firm sought attorney's fees for their services.

ISSUE: Whether or not Atty. Cruz is entitled to attorney’s fees despite the P3,000.00 retainer fee?

HELD: Yes. The court's ruling is based on the principle that a lawyer is entitled to just and reasonable
compensation for services rendered. Evidently, the P3000 monthly fee in the retainer agreement
between the union and the law firm referes to a general retainer as said monthly fee covers only the
law firm’s pledge, or as expressly stated therein, its “commitment to render legal services
enumerated.”

17. De Llana v. Biong, G.R. 182356, Dec. 4, 2013;

FACTS:
On 30 March 2000, Juan dela Llana was driving a Toyota Corolla car along North Avenue, Quezon City.
His sister, Dra. dela Llana, was seated at the front passenger seat while a certain Calimlim was at the
backseat. Juan stopped the car across the Veterans Memorial Hospital when the signal turned red.
However, a dump truck containing gravel and sand suddenly rammed the car's rear end. Glass
splinters flew, puncturing Dra. Leila dela Llana. Later, her health deteriorated to the extent that she
could no longer move her left arm. Her condition did not improve despite undergoing physical therapy
by a rehabilitation medicine specialist: Dra. Rosalinda Milla. The operation released the impingement
of the nerve, but incapacitated Dra. dela Llana from the practice of her profession since June 2000
despite the surgery.

This prompted Dra. de Llana to demand from Rebecca compensation for her injuries, but the latter
refused to pay.
The RTC ruled in favor of Dra. de Llana. The CA reversed the decision of the RTC and held that Dra.
dela Llana failed to establish a reasonable connection between the vehicular accident and her whiplash
injury.

ISSUE: Whether the CA is correct in holding that Dra. dela Llana failed to establish a reasonable
connection between the vehicular accident and her whiplash injury by preponderance of evidence.

RULING: Yes, the CA is correct in holding that Dra. dela Llana failed to establish a reasonable
connection between the vehicular accident and her whiplash injury by preponderance of evidence.

The Court explained that Dra. dela Llana was not able to establish by preponderance of evidence the
elements of quasi-delict to hold Rebecca liable as Joel's employer. The Court reiterated that the one
who alleges has the burden of proving his/her allegation by preponderance of evidence of greater
weight of credible evidence. The reason for this rule is that bare allegations, unsubstantiated by
evidence, are not equivalent to proof. In short, mere allegations are not evidence.

18. Makati Stock Exchange v. Campos, G.R. 138814, Apr. 16, 2009;

FACTS: Miguel V. Campos filed a petition against the Makati Stock Exchange Board of Directors,
claiming certain resolutions deprived him of his right to participate in IPO allocation. The Securities,
Investigation and Clearing Department granted Campos a Temporary Restraining Order and a Writ of
Preliminary Injunction, but the SEC en banc nullified these orders. Campos then filed a petition for
certiorari with the Court of Appeals, which granted his petition and set aside the SEC en banc's orders.

ISSUE: Whether or not SEC Case sufficiently states a cause of action.

RULING:

No. The petition filed by Campos should be dismissed for failure to state a cause of action. A cause of
action is the act or omission by which a party violates a right of another. A complaint states a cause of
action where it contains three essential elements of a cause of action, namely: (1) the legal right of the
plaintiff, (2) the correlative obligation of the defendant, and (3) the act or omission of the defendant in
violation of said legal right. If these elements are absent, the complaint becomes vulnerable to
dismissal on the ground of failure to state a cause of action.

19. Asuncion v. CA, G.R. 109125, Dec. 2, 1994

Fact:

Petitioners filed a complaint against Unjiengs, before the Regional Trial Court alleging that Unjiengs
informed Petitioners that they are offering to sell the premises and are giving them priority to acquire
the same; that during the negotiations, Unjiengs offered a price of P6-million while Petitioners made a
counter offer of P5-million; that Petitioners thereafter asked the Unjiengs to put their offer in writing to
which request defendants acceded; that in reply to Unjiengs letter, plaintiffs asked to specify the terms
and conditions of the offer to sell; that when Petitioners did not receive any reply, they sent another
letter; that since defendants failed to specify the terms and conditions of the offer to sell and because
of information received that defendants were about to sell the property, Petitioners were compelled to
file the complaint to compel Unjiengs to sell the property to them.

Issue: Whether the plaintiff can compel defendants to execute the necessary Deed of Sale of the
property in litigation in favor of the plaintiffs who has a right of first refusal?

Held: NO, The final judgment in in favor to the plaintiff was merely a “right of first refusal”. The
consequence of such a declaration entails no more than what has heretofore been said. In fine, if, as it
is here so conveyed to us, petitioners are aggrieved by the failure of private respondents to honor the
right of first refusal, the remedy is not a writ of execution on the judgment, since there is none to
execute, but an action for damages in a proper forum for the purpose.

20. Macasaet v. COA, G.R. 83748, May 12, 1989;

FACTS:
Phil. Tourism Authority (PTA) entered into a contract for the project design development of the
proposed Zamboanga Golf and Country Club initially with Macasaet, and later on with Flavio Macasaet
& Assoc., Inc. Under the contract, PTS obliged itself to pay Macasaet a professional fee of 7% of the
actual construction cost. PTA then made periodic payments as stipulated in the contract. Upon
completion of the project, PTA paid Macasaet what it perceived to be the balance in the professional
fees.
PTA paid Supra Construction Co., main contractor, an additional sum of P3,148,198.26 representing
the escalation cost of the contract price. Upon learning of the price escalation, petitioner requested
payment of P219,302.47 additional professional fee representing 7% of P3,148,198.26. PTA denied
payment on the ground that the price escalation referred to increased cost of construction materials
and did not entail additional work on the part of petitioner as to entitle it to additional compensation.

ISSUE:
Whether or not Macasaet is entitled to additional professional fees based on the final actual project
cost.

RULING:
Yes, Macasaet is entitled to additional professional fees based on the final actual project cost.
Under Article IV of said Contract, petitioner was to be entitled to seven (7%) of the “actual construction
cost.”
The terminologies in the contract being clear, leaving no doubt as to the intention of the
contracting parties, their literal meaning control (Article 1370, Civil Code). The price
escalation cost must be deemed included in the final actual project cost and petitioner
held entitled to the payment of its additional professional fees. Obligations arising from
contract have the force of law between the contracting parties and should be complied
with in good faith (Article 1159, Civil Code).

21. People's Car Inc. v. Commando Security Service Agency, G.R.No. L-36840. May 22,
1973;
FACTS:

People’s Car entered into a contract with Commando Security to safeguard and protect the business
premises of the plaintiff from theft, pilferage, robbery, vandalism, and all other unlawful acts of any
person/s prejudicial to the interest of the plaintiff.

On April 5, 1970, around 1:00am, defendant’s security guard on duty at plaintiff’s premises, drove the
car of a customer and while driving the car lost control of it causing it to fall into a ditch, which
extensive damage besides the car rental value for a car that plaintiff had to rent and make available to
its customer, Joseph Luy, to enable him to pursue his business and occupation.
Defendant claimed that they may be liable but its liability is limited under paragraph 4 of the contract
which provides that its liability shall not exceed P1,000 per guard post for loss or damage through the
negligence of its guards during the watch hours provided that it is reported within 24 hours of the
incident.
·
ISSUE: Whether or not the defendant is obliged to indemnify the plaintiff for the entire costs as result
of the incident

HELD: Yes. Plaintiff was in law liable to its customer for the damages caused the customer’s car, which
had been entrusted into its custody. Plaintiff therefore was in law justified in making good such
damages and relying in turn on defendant to honor its contract and indemnify it for such undisputed
damages, which had been caused directly by the unlawful and wrongful acts of defendant’s security
guard in breach of their contract.

22. Pelayo v. Lauron, 12 Phil. 453

FACTS:
Petitioner Pelayo, a physician, rendered a medical assistance during the child delivery of the
daughter-in-law of the defendants. The just and equitable value of services rendered by him was
P500.00 which the defendants refused to pay without alleging any good reason. With this, the plaintiff
prayed that the judgment be entered in his favor as against the defendants for the sum of P500.00 and
costs.
The defendants denied all of the allegation of the plaintiff, contending that their daughter-in-
law had died in consequence of the child-birth, and that when she was alive, she lived with her
husband independently and in a separate house, that on the day she gave birth she was in the house
of the defendants and her stay there was accidental and due to fortuitous circumstances.
ISSUE:
Whether or not the defendants are obliged to pay the petitioner for the medical assistance
rendered to their daughter-in-law.
HELD:
According to Article 1089 of the Old Civil Code (now 1157), obligations are created by law,
by contracts, by quasi-contracts, by illicit acts and omissions or by those in which any kind of fault or
negligence occurs. Obligations arising from law are not presumed. Those expressly determined in the
Code or in special law, etc., are the only demandable ones.
In the case at bar, the obligation of the husband to furnish his wife in the indispensable
services of a physician at such critical moments is especially established by the law and the
compliance therewith is unavoidable.

23. Garcia v. Ferro Chemicals, Inc. (2014)

Facts:
Ferro Chemicals Incorporated (Ferro) is a domestic corporation duly authorized by existing law to
engage in business in the Philippines. It is represented in this action by its President, Ramon M. Garcia.
Chemical Industries of the Philippines Inc. (Chemical), on the other hand, is also a domestic
corporation duly organized and existing by virtue of Philippine laws. Antonio Garcia, one of the parties
in the instant case, is the Chairman of the Board of Directors (BOD) of Chemical and a brother of Ferro
Chemical's President, Ramon Garcia.
Antonio Garcia entered into a contract with Ferro for the purchase of the latter of 1,717,678 shares of
the latter in Chemical. Antonio, being the judgment creditor of various banks (consortium), entered
into a compromise agreement with the consortium involving said shares of stocks.
The consortium was then able to garnish 1,000,000 of the said shares for partial satisfaction of
Antonio’s obligation with them. Chemphil, feeling aggrieved then filed a collection suit against Ferro for
the value of the garnished shares.

Issue: Whether or not Antonio and Chemical should be held solidarily liable for the award of the court
in favor of Ferro for damages

Held: The Supreme Court ruled in favor of Antonio Garcia, finding no sufficient evidence to prove fraud
in the performance of his obligations.
Rolando Navarro and Chemical Industries were absolved from liability as they were not parties to the
contract and had no obligation or liability under it.It must be stressed at the onset that the sale
contract was entered by Antonio Garcia in his personal capacity and not as the President of Chemical
Industries. The imputation of liability Chemical Industries for the acts of its corporate officer and the
consequent shedding of corporate shroud cannot rest on flimsy grounds. The application of the
doctrine of piercing the veil of corporate fiction is frowned upon.

24. People of the Philippines v. Dionaldo (2015)

FACTS:

Edwin Navarro and Roderick Navarro went to the gym. was kidnapped by the respondents, Armando,
Renato, and Mariano. Respondents threatened Roderick that they will kill Edwin unless he gives the
asked ransom money and if he calls the police on them. The police assigned in the case found out that
Rodolfo, an employee of the gym, tipped off the respondents on the condition that he will get a share
of the ransom money. Edwin’s dead body was found following the arrest of the accused. The accused
averred that they were at their homes while Rodolfo claimed that he was coerced to sign an
extrajudicial confession.

ISSUE: Whether or not exemplary damages must be awarded in this case

RULING:

Yes, exemplary damages must be awarded in this case, in view of the confluence of the aforesaid
qualifying circumstances and in order to deter others from committing the same atrocious acts. In
accordance with prevailing jurisprudence, therefore, the Court awards exemplary damages in the
amount of ₱100,000.00 to the family of the kidnap victim.

25. Barredo v Garcia, 73 Phil. 607 (1942)

Facts: On May 3, 1936, there was a head-on collision between a taxi of the Malate taxicab driven by
Pedro Fontanilla and a carretela guided by Pedro Dimapilis. The carretela was over-turned, and one of
the passengers, Faustino Garcia, suffered injuries and died 2 days later. A criminal action was filed
against Fontanilla, and was convicted. The court in the criminal case granted the petition to reserve
the civil action.
The parents of a deceased man filed a civil action against Barredo, the owner of Malate Taxicab and
Fontanilla's employer, claiming he was primarily responsible for the accident. The defense argued that
Barredo's liability was a subsidiary under the RPC, and since no civil action was filed against Fontanilla,
he cannot be held responsible.

Issue: W/N plaintiffs may bring separate civil action against Fausto Barredo, thus making him primarily
and directly responsible

Ruling: In the present case, the taxi driver was found guilty of criminal negligence, so that if he had
even sued for his civil responsibility arising from the crime, he would have been held primarily liable
for civil damages, and Barredo would have been held subsidiarily liable for the same. But the plaintiffs
are directly suing Barredo, on his primary responsibility because of his own presumed negligence —
which he did not overcome — under article 1903.

Thus, there were two liabilities of Barredo: first, the subsidiary one because of the civil liability of the
taxi driver arising from the latter's criminal negligence; and, second, Barredo's primary liability as an
employer under article 1903. The plaintiffs were free to choose which course to take, and they
preferred the second remedy. The master is liable for the negligent acts of his servant.

26. Gutierrez v Gutierrez, No. 34840, September 23, 1931

FACTS:
On February 2, 1930, a passenger truck and an automobile of private ownership collided while
attempting to pass each other on a bridge. The truck was driven by the chauffeur Abelardo Velasco,
and was owned by saturnine Cortez. The automobile was being operated by Bonifacio Gutierrez, a lad
18 years of age, and was owned by Bonifacio’s father and mother, Mr. and Mrs. Manuel Gutierrez. At
the time of the collision, the father was not in the car, but the mother, together with several other
members of the Gutierrez family were accommodated therein.

The collision between the bus and the automobile resulted in Narciso Gutierrez suffering a fractured
right leg which required medical attendance for a considerable period of time.

ISSUE: Whether or not both the driver of the truck and automobile are liable for damages and
indemnification due to their negligence. What are the legal obligations of the defendants?

HELD: Bonifacio Gutierrez’s obligation arises from culpa aquiliana. On the other hand, Saturnino
Cortez’s and his chauffeur Abelardo Velasco’s obligation rise from culpa contractual. Based on these
facts, pursuant to the provisions of Art. 1903 of the Civil Code, the father alone and not the minor or
the mother would be liable for the damages caused by the minor. The liability of Saturnino Cortez, the
owner of the truck, and his chauffeur Abelardo Velasco rests on a different basis, namely, that of
contract.

27. Llana v. Biong, G.R. No. 182356, December 4, 2013

FACTS: On March 30, 2000, at around 11pm, Juan dela Llana was driving a 1997 Toyota Corolla along
North Avenue, Quezon City. His sister, Dra. dela Llana, was seated at the front passenger seat while a
certain Calimlim was at the backseat. Juan stopped the car across the Veterans Memorial Hospital
when the signal light turned red. A few seconds after the car halted, a dump truck containing gravel
and sand suddenly rammed the car’s rear end, violently pushing the car forward. Due to the impact,
the car’s rear end collapsed and its rear windshield was shattered. Glass splinters flew, puncturing Dra.
dela Llana. Apart from these minor wounds, Dra. dela Llana did not appear to have suffered from any
other visible physical injuries. It was deemed Joel Primero, the truck driver, was recklessly imprudent in
driving the truck. He is employed by Rebecca Biong, the respondent in the case. Over the next few
weeks, Dra. Dela Lllana experienced mild to moderate pain on the left side of her neck and shoulder.
The pain became more intense as days passed by. Her health deteriorated to the extent that she could
no longer move her left arm. Upon consultation, her doctor told her that she suffered from a whiplash
injury, an injury caused by the compression of the nerve running to her left arm and hand. Dr. Milla
required her to undergo physical therapy to alleviate her condition. Dra. dela Llana’s condition did not
improve despite three months of extensive physical therapy.She then underwent surgery, but said
surgery incapacitated her from the practice of her profession. Because of this, petitioner demanded
compensation from Biong, but Biong refused. Petitioner Dela Lllana sued for damages against Biong,
and alleged that she lost the mobility of her arm as a result of the vehicular accident and claimed
₱150,000 for her medical expenses, and an average monthly income of ₱30,000. of cause and effect
between such negligence and the damages. These elements show that the source of obligation in a
quasi-delict case is the breach or omission of mutual duties that civilized society imposes upon its
members, or which arise from non-contractual relations of certain members of society to others Based
on these requisites, Dra. dela Llana must first establish by preponderance of evidence the three
elements of quasi-delict before the Court determines Rebecca’s liability as Joel’s employer. She should
show the chain of causation between Joel’s reckless driving and her whiplash injury. Only after she has
laid this foundation can the presumption - that Rebecca did not exercise the diligence of a good father
of a family in the selection and supervision of Joel – arise. The burden of proving the proximate
causation between Joel’s negligence and Dra. dela Llana’s whiplash injury rests on Dra. dela Llana. She
must establish by preponderance of evidence that Joel’s negligence, in its natural and continuous
sequence, unbroken by any efficient intervening cause, produced her whiplash injury, and without
which her whiplash injury would not have occurred. In this case, petitioner Dela Llana was not able to
establish these elements of quasi-delict. The pictures she presented of the damaged car only
demonstrated the impact of the collision. Also, the medical certificate cannot be considered because it
was not admitted in evidence. Furthermore, Dra. dela Llana’s opinion that Joel’s negligence caused her
whiplash injury has no probative value. Her claim that Joel’s negligence causes her whiplash injury was
not established because of the deficiency of the presented evidence during trial. We point out in this
respect that courts cannot take judicial notice that vehicular accidents cause whiplash injuries.
The RTC ruled in favor of Dela Llana, saying that the proximate cause of her injury was the reckless
driving of Primero. The CA reversed the RTC’s ruling and said that Dela Llana failed to establish a
reasonable connection between the vehicular accident and her whiplash injury.

ISSUE: Was there an obligation on the part of respondent Rebecca Biong to pay
compensation/damages to petitioner Dela Llana? NONE.

RULING: According to Art. 2176 of the Civil Code, "Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the parties, is a quasi-delict." Under
this provision, the elements necessary to establish a quasi-delict case are:(1) damages to the plaintiff
(2) negligence, by act or omission, of the defendant or by some person for whose acts the defendant
must respond, was guilty; and (3) the connection

CHAPTER 2. NATURE AND EFFECT OF OBLIGATIONS.

CHAPTER 2. NATURE AND EFFECT OF OBLIGATIONS.

1. Orient Freight International v. Keihin-Everett Forwarding G.R. No.

191937, Aug. 9, 2017

FACTS: On October 16, 2001, Keihin-Everett entered into a Trucking Service

Agreement with Matsushita, providing trucking services for their export operations.

In April 2002, Matsushita contacted respondent about a news report on a hijacking

incident involving a truck carrying their shipment. Petitioner initially claimed that
the incident was blown out of proportion and involved only a breakdown and towing
of the truck. However, it was later discovered that 10 pallets of the shipment were
missing. Respondent conducted its own investigation and obtained a police report
confirming the hijacking. Matsushita terminated its agreement with respondent,
citing loss of confidence. Respondent demanded indemnity from petitioner, which
was refused, leading to a complaint for damages filed by respondent.

ISSUE: Whether or not Article 2176 is applicable in this case

RULING: The Supreme Court ruled that petitioner's negligence in failing to report
the hijacking incident constitutes a breach of contract.
Negligence may either result in culpa aquiliana or culpa contractual. Culpa aquiliana
is the "the wrongful or negligent act or omission which creates a vinculum juris and
gives rise to an obligation between two persons not formally bound by any other
obligation," and is governed by Article 2176 of the Civil Code. Once a breach of
contract is proved, the defendant is presumed negligent and must prove not being
at fault. In a quasi-delict, however, the complaining party has the burden of proving
the other party's negligence.

2. Cabantiang v. BPI Family Savings G.R. No. 201927, Feb. 17, 2016;

Facts: Cabanting bought a Mitsubishi Adventure from Diamond Motors on

installment basis. He also executed a Promissory note with Chattel Mortgage on the
vehicle in favor of Diamond Motors wherein the parties stipulated that in case of
failure to pay “the entire sum outstanding under this note shall immediately
become due and payable without the necessity of notice or demand which I/We
hereby waive." On the same day, Diamond motors assigned to BPI Bank all its right,
title and interest to the Promissory note.

When Cabanting failed to pay his monthly amortizations, BPI filed a case for
Replevin and damages against Cabanting.

Issues: Whether or not prior demand by the respondent bank is necessary before
the obligation of Cabating becomes due and demandable.

Ruling: No. The Supreme Court held that no prior demand was necessary.
According to the SC: Petitioners are bound by the aforementioned stipulation in the
Promissory Note with Chattel Mortgage waiving the necessity of notice and demand
to make the obligation due and payable. Petitioners therein also executed a
Promissory Note with Chattel Mortgage containing the stipulation waiving the need
for notice and demand.

The Court ruled:even assuming, for argument's sake, that no demand letter was
sent by respondent, there is really no need for it because petitioners legally waived
the necessity of notice or demand in the Promissory Note with Chattel Mortgage,
which they voluntarily and knowingly signed in favor of respondent's predecessor-
in-interest.

3. Poon v. Prime Savings, G.R. No. 183794, June 13, 2016;

FACTS:T This case involves a dispute between Spouses Jaime and Matilde Poon
(petitioners) and Prime Savings Bank (respondent) over the partial rescission of a
lease contract for a commercial building owned by the petitioners. The lease
contract was executed in 2006 for a period of 10 years, with an advance payment of
P6,000,000.

However, three years later, the respondent was placed under receivership by the
Bangko Sentral ng Pilipinas (BSP) and eventually ordered to be liquidated. As a
result, the respondent vacated the leased premises and demanded the return of the
unused advance rental amounting to P3,480,000. The petitioners refused the
demand, claiming that they were entitled to retain the remainder of the advance
rentals based on a clause in the lease contract.

ISSUE: Whether the respondent may be released from its contractual obligations
due to a fortuitous event or unforeseen event;

RULING : The Court held that the closure of the respondent's business was not a
fortuitous or unforeseen event that would release it from its contractual obligations.
The closure was a result of the respondent being placed under receivership and
eventually ordered to be liquidated by the BSP. The closure was not independent of
the respondent's will and was partly attributable to the respondent's own actions.
Therefore, the respondent cannot be released from its contractual obligations.
4. Marquez v. Elisan, G.R. No. 194642, April 06, 2015

Facts:
Marquez obtained from Elisan Credit Corporation a loan payable in weekly
installments and subject to annual interest with monthly penalties and attorney’s in
case of nonpayment.
The loan was secured by a chattel mortgage over a motor vehicle. Later on, the
petitioner obtained a second loan from the respondent for fifty-five thousand pesos.
However, when the second loan matured, the petitioner had only paid a portion of
the amount, leaving an unpaid balance. As a result, the respondent filed a
complaint for judicial foreclosure of the chattel mortgage due to the petitioner's
failure to fully pay the second loan.

Issue: Facts: whether the second loan obtained by the petitioner from the
respondent should be fully extinguished
Ruling:

No. The fact that the official receipts did not indicate whether the payments were
made for the principal or the interest does not prove that the creditor waived the
interest. There is no presumption of waiver of interest without any evidence
showing that the creditor accepted the daily instruments as payments for the
principal.

Yes. Notwithstanding the fact it was not indicated in the receipts whether the
payments were applied to the principal or the interest, such failure should not be
taken against the creditor.

5. Surviving Heirs versus Lindo, et al., G.R. No. 208232, March 10, 2014

Facts: Alfredo R. Bautista (Bautista), petitioner’s predecessor, inherited in 1983 a

free-patent land located in Davao Oriental and covered by OCT No. (1572) P-6144.A
few years later, he subdivided the property and sold it to several vendees.

On August 1994, Bautista filed a complaint for repurchase against respondents

before the RTC, anchoring his cause of action on Section 119 of Commonwealth Act
No. (CA) 141, otherwise known as the “Public Land Act,” .

During the pendency of the action, Bautista died and was substituted by petitioner,
Efipania. Respondents, Sps. Lindo entered into a compromise agreement with
petitioners, whereby they agree to cede to Epifania 3,230 sq.m..portion of the
property as well as to waive, abandon, surrender, and withdraw all claims and
counterclaims against each other.

Issue: Whether the action filed by petitioners is one involving title to or possession
of real property or any interest therein or one incapable of pecuniary estimation.

Ruling: The Court rules that the complaint to redeem a land subject of a free patent
is a civil action incapable of pecuniary estimation. It is a well-settled rule that
jurisdiction of the court is determined by the allegations in the complaint and the
character of the relief sought. In this regard, the Court, in Russell v. Vestil, wrote
that "in determining whether an action is one the subject matter of which is not
capable of pecuniary estimation this Court has adopted the criterion of first
ascertaining the nature of the principal action or remedy sought.

6. William C. Louh and Irene Louh vs Bank Of The Philippine Islands G.R.
No. 22562, March 8, 2017

Facts: Bank of the Philippine Islands (BPI) issued a credit card in William's name,
with Irene as the extension card holder. The card imposed a 3.5% finance charge
and 6% late payment charge on unpaid credit availments. The Spouses Louh failed
to pay BPI, leading to a complaint for collection of money. BPI filed a motion to
declare the Spouses Louh in default, but the Spouses Louh filed an answer more
than three months after the prescribed period. The RTC declared the Spouses Louh
in default and ordered them to pay BPI. The CA affirmed the RTC's judgment, finding
BPI had provided ample evidence, including delivery receipts, authentic copies of
SOAs, and demand letters sent by BPI.

Issue: WON the CA erred in sustaining BPI’s compliant.

Ruling:
No. BPI had offered as evidence, among others, delivery receipts pertaining to the
credit cards and the terms and conditions governing the use thereof, computer-
generated authentic copies of the SOAs, and demand letters sent by BPI, which
Spouses Louh received. The Spouses Louh slept on their rights to refute BPI’s
evidence, including the receipt of the SOAs and demand letters. BPI cannot be
made to pay for the Spouses Louh’s negligence, omission, or belated actions.
7. Rivera v. Chua, G.R. 184458, Jan. 14, 2015;

FACTS: The parties were friends and kumpadres for a long time already. Rivera
obtained a loan from the Spouses Chua evidenced by a Promissory Note amounting
to P120,000, payable on December 31, 1995.

Three years from the date of payment stipulated in the promissory note, Rivera,
issued and delivered to Spouses Chua two (2) checks drawn against his account at
Philippine Commercial International Bank (PCIB) but upon presentment for payment,
the two checks were dishonored forthe reason “account closed.”.

The Spouses Chua alleged that they have repeatedly demanded payment from
Rivera to no avail. Because of Rivera’s unjustified refusal to pay, the Spouses Chua
were constrained to file a suit before the MeTC, Branch 30, Manila.

The MeTC ruled against Rivera requiring him to pay the spouses Chua P120,000.00
plus stipulated interest at the rate of 5% per month from 1 January 1996, and legal
interest at the rate of 12% percent per annum from 11 June 1999 and was affirmed
by the RTC of Manila.

ISSUES:Whether or not a demand from spouses Chua is needed to make Rivera

liable.

RILING:
Yes, Rivera is liable under the terms of the Promissory Note that he issued. Article
1169 of the Civil Code explicitly provides that the demand by the creditor shall not
be necessary in order that delay may exist when the obligation or the law expressly
so declare.

The clause in the Promissory Note containing the stipulation of interest (letter B in
the above facts) which expressly requires the debtor (Rivera) to pay a 5% monthly
interest from the “date of default” until the entire obligation is fully paid for.
Theparties evidently agreed that the maturity of the obligation

8. Tumibay v. Spouses Lopez, G.R. No. 171692, June 3, 2013;

FACTS
The instant case involves a contract to sell between the petitioners, Spouses Delfin
and Aurora Tumibay, and the respondents, Spouses Melvin and Rowena Lopez, over
a parcel of land located in Malaybalay City, Bukidnon. The petitioners filed a
complaint for the nullity of the sale and recovery of ownership and possession of the
land. They alleged that the sale was done without their knowledge and consent and
for an unconscionable amount.
The RTC ruled in favor of the petitioners, declaring the sale void and ordering the
cancellation of the title in the name of the respondents. However, the Court of
Appeals reversed the decision of the trial court, ruling that there was a valid
contract of sale and ordering the respondents to pay the balance of the purchase
price to the petitioners.

ISSUE: W/N Petitioners and respondent entered into a contract to sell over the
subject land

RULING:
YES. The Court gives credence to the claim of the respondents that there is a
contract to sell over the subject land for the amount of ₱800,000.00 for the
following reasons: First, the payment of 23 monthly installments over the span of
almost 3 years was duly established by the evidence on record consisting of money
orders and checks payable to petitioner Aurora. As of the last monthly installment
(November 30, 1997), the payments already totaled $12,000.00.

9. Gaisano v. Insurance Company of North America, G.R. No. 147839, June

8, 2006;

FACTS:
Intercapitol Marketing Corporation (IMC) is the maker of Wrangler Blue Jeans while
Levi Strauss (Phils.) Inc. (LSPI) is the local distributor of products bearing
trademarks owned by Levi Strauss & Co. IMC and LSPI separately obtained from
Insurance Company of North America fire insurance policies for their book debt
endorsements related to their ready-made clothing materials which have been sold
or delivered to various customers and dealers of the Insured anywhere in the
Philippines which are unpaid 45 days after the time of the loss.
February 4, 1992: Insurance Company of North America filed a complaint for
damages against Gaisano Cagayan, Inc. alleges that IMC and LSPI filed their claims
under their respective fire insurance policies which it paid thus it was subrogated to
their rights.

ISSUE: Whether petitioner is liable for the unpaid accounts of IMC and LSPI.

RULING:
The Court held that the insurance policies cover the unpaid accounts of IMC and
LSPI, not the loss or destruction of the goods delivered. The Court also ruled that
the petitioner assumed the risk of loss under Article 1504 (1) of the Civil Code, as it
retained ownership of the goods only to secure payment. The Court further held
that the petitioner's obligation to pay the unpaid accounts was not extinguished by
the fortuitous event of the fire, as the obligation was pecuniary in nature.

10. Phil. Export vs. V.P. Eusebio Const. Inc., et al. G.R. No. 140047, July 13,
2004

FACTS: The case involves a service contract between a Filipino construction firm
and the Iraqi Government for the construction of a medical center in Baghdad, Iraq.
The petitioner, Philippine Export and Foreign Loan Guarantee Corporation
(Philguarantee), sought reimbursement from the respondents for the amount it paid
to Al Ahli Bank of Kuwait pursuant to a guarantee it issued for respondent V.P.
Eusebio Construction, Inc. (VPECI). The guarantee issued by Philguarantee was
secured by a deed of undertaking and a surety bond.
The construction project faced delays and difficulties, and the project owner, State
Organization of Buildings (SOB), violated the terms of the contract by not paying
75% of the billings in US dollars. Philguarantee paid the amount demanded by Al
Ahli Bank of Kuwait and sought reimbursement from the respondents.

ISSUE: Whether the petitioner is entitled to reimbursement from the respondents

for the amount it paid under the guarantee.

RULING:
The Court of Appeals affirmed the trial court's ruling that the petitioner is not
entitled to reimbursement from the respondents. The petitioner is considered a
guarantor, not a surety, based on the nature and wording of the guarantee. The
respondent contractor did not default in its obligations as the delay in the project
was primarily caused by the violations of the contract by the project owner.

11. Tanguilig v. CA, G.R. 266 SCRA 78;

FACTS:

Herce Jr. contracted petitioner Jacinto Tanguilig to construct a windmill system for
him with a one year guaranty. Respondent had paid the downpayment and an
installment payment but, failed and refused to pay the remaining balance.
Respondent alleged that the balance should be offsetby the defects in the windmill
system which caused the structure to collapse. Petitioner rejected theobligation to
repair or reconstruct the system as it was delivered in good and working condition
andclaimed that its collapse was due to a typhoon which is a fortuitous event which
relieved him of anyliability. Petitioner also alleged that the respondent was in
default in the payment of the balance andhence should bear his own loss.

Issues:

1.) Whether or not the petitioner can claim exemption from liability by reason of a
fortuitous event.

2.) Whether or not the respondent is in default in the payment of his outstanding
balance.

Held:1.) No. The petitioner failed to show that the collapse of the windmill was due
solely to a fortuitous event. The evidence did not disclose that there was actually a
typhoon on the day the windmill collapsed. Petitioner merely stated that there was
a strong wind. A strong wind in this case cannot be fortuitous - unforeseeable nor
unavoidable. On the contrary, strong wind should be present in places where
windmills are constructed, otherwise the windmills will not turn.

2.) No. In reciprocal obligations, neither party incurs in delay if the other does not
comply or is not ready to comply in a proper manner with what is incumbent upon
him. When the windmill failed to function properly. it became incumbent upon
petitioner to institute the proper repairs in accordance with the guaranty stated in
the contract. Article 1167 of the Civil Code is explicit on this point that if a person
obliged to do something fails to do it, the same shall be executed at his cost.

12. Chavez v Gonzales, 32 SCRA 547

Facts:

On July 1963, Rosendo Chavez brought his typewriter to Fructuoso Gonzales a

typewriter repairman for the cleaning and servicing of the said typewriter but the
latter was not able to finish the job. During October 1963, the plaintiff gave the
amount of P6.00 to the defendant which the latter asked from the plaintiff for the
purchase of spare parts, because of the delay of the repair the plaintiff decided to
recover the typewriter to the defendant which he wrapped it like a package. When
the plaintiff reached their home he opened it and examined that some parts and
screws was lost. That on October 29, 1963 the plaintiff sent a letter to the
defendant for the return of the missing parts, the interior cover and the sum of
P6.00 (Exhibit D). The following day, the defendant returned to the plaintiff some of
the missing parts, the interior cover and the P6.00. The plaintiff brought his
typewriter to Freixas Business Machines and the repair cost the amount of P89.85.
Chavez filed for actual and compensatory damages. The defendant made no denials
of the facts narrated above, except the claim of the plaintiff that the cost of the
repair made by Freixas Business Machines be fully chargeable against him.

Issue: Whether or not the defendant is liable for the total cost of the repair made
by Freixas Business Machines with the plaintiff typewriter?
Ruling: No, he is not liable for the total cost of the repair made by Freixas Business
Machines instead he is only liable for the cost of the missing parts and screws. The
defendant contravened the tenor of his obligation in repairing the typewriter of the
plaintiff that he fails to repair it and returned it with the missing parts, he is liable
under “ART. 1167. If a person obliged to do something fails to do it, the same shall
be executed at his cost.

13. Mackay v. Caswell (2014)

FACTS: The Caswells initially sought a quotation from Zambales II Electric

Cooperative (Zameco II) for the installation work, but eventually hired Owen who
offered a lower price. After the installation was completed, Zameco II inspected the
work and found several defects. As a result, Zameco II refused to provide electricity
to the Caswells' home until the defects were rectified. The Caswells filed a criminal
case for estafa against Owen, but he was acquitted.
Owen then filed a complaint for collection of sum of money with damages against
the Caswells, seeking payment for the remaining balance of the contract price and
damages for the filing of the estafa case. For defective and incomplete
requirements in the electrical installation system, the respondents sued the
petitioner for Estafa. Petitioner, in turn, filed a complaint for Collection of sum of
money plus Damages for the remining unpaid balance for his installation work.

Issue: whether Owen is liable to reimburse the Caswells for the expenses they
incurred to rectify the defects in the electrical installation work.

Ruling: The SC found that the Caswells had the right to require Owen to remove the
defects or execute another work, and their communication with Owen effectively
served as a demand for rectification.
The Court ruled that Owen failed to execute his work in a manner that had no
defects which destroy or lessen its value or fitness for its ordinary or stipulated use.
The Court also held that the Caswells' failure to file an action for specific
performance did not prejudice their right to reimbursement, as it would have
deprived them of hiring someone else to rectify the work and defeated the purpose
of the contracted work. The Court further ruled that the Caswells were entitled to
reimbursement for the expenses they incurred to rectify the defects, and the unpaid
compensation Owen was claiming should be set-off from the Caswells' monetary
claims supported by receipts.
14. Woodhouse v Halili, 93 Phil 526 (1953)

FACTS: On November 29, 1947, the plaintiff entered into a written agreement with
the defendant to organize a partnership for the bottling and distribution of soft
drinks. The plaintiff was to act as the industrial partner or manager, while the
defendant was the capitalist providing the necessary capital. The agreement stated
that the plaintiff was to secure the exclusive franchise for the partnership.

The plaintiff and defendant went to the United States and on December 10, 1947, a
franchise agreement was entered into between the Mission Dry Corporation and the
defendant, granting him the exclusive right to produce, bottle, distribute, and sell
Mission beverages in the Philippines. The plaintiff and defendant returned to the
Philippines and operations of the bottling plant began in February 1948. The plaintiff
demanded that the partnership papers be executed, but the defendant refused and
the plaintiff filed a complaint seeking the execution of the partnership contract, an
accounting of profits, and damages.

ISSUES: WON false representation, if it existed, annuls the agreement to form the
partnership

RULING: No. In consequence, article 1270 of the Spanish Civil Code distinguishes
two kinds of (civil) fraud, the causal fraud, which may be ground for the annulment
of a contract, and the incidental deceit, which only renders the party who employs it
liable for damages only. The Supreme Court has held that in order that fraud may
vitiate consent, it must be the causal (dolo causante), not merely the incidental
(dolo incidente) inducement to the making of the contract.
The record abounds with circumstances indicative of the fact that the principal
consideration, the main cause that induced defendant to enter into the partnership
agreement with plaintiff, was the ability of plaintiff to get the exclusive franchise to
bottle and distribute for the defendant or for the partnership.

15. Geraldez, vs. CA & Kenstar Travel Corporation, G.R. No. 108253,
February 23, 1994

FACTS:
Petitioner Lydia Geraldez came to know about respondent Kenstar Travel Corp.
through numerous advertisements found in newspapers regarding tour packages in
Europe. She then contacted Kenstar Travel to avail of a European tour package. She
chose the “Volare 3” package for her and her sister, Dolores, which covers a 22-day
tour of Europe worth $2,990.
Petitioner alleges in this complaint against Kenstar Travel that she was very
disappointed and uneasy throughout the duration of the European tour because
things turned out contrary to what was stated and promised in the brochure for the
Volare 3 package.

ISSUE: WON respondent Kenstar Travel acted with fraud by making

misrepresentations amounting to bad faith
RULING: The Supreme Court held that private respondent acted in bad faith and
committed fraudulent misrepresentations. Private respondent's choice of an
inexperienced tour guide and failure to provide a European tour manager
constituted a breach of its commitments under the tour program. Private
respondent's claim that the term "European Tour Manager" referred to an
organization was rejected, as the advertisement clearly represented it as a natural
person. Private respondent's defense of "substantial compliance" with the contract
was not accepted, as it failed to provide first-class hotels and other promised
services. Private respondent's attempt to limit its responsibility through a
contractual provision was deemed unenforceable due to fraudulent acts.
The Court awarded moral damages, exemplary damages, and attorney's fees to
petitioner.

16. Metropolitan v. Prosperity, G.R. No. 154390, March 17, 2014

FACTS: Metropolitan Fabrics, Inc. (MFI), a family corporation, owned a 5.8 hectare
industrial compound in Quezon City. MFI sought a loan from Prosperity Credit
Resources, Inc. (PCRI) in the amount of P3,443,330.52 to prevent repossession of its
boiler machine. PCRI, a family-owned corporation, agreed to lend the money.
The loan agreement was signed by MFI President Enrique Ang, his wife Natividad,
and their son Edmundo. The loan was secured by a real estate mortgage over seven
lots owned by MFI.

In September 1984, the first amortization check bounced due to MFI's business
losses. It was then that MFI allegedly learned that PCRI had filled up the blank
checks with a 35% interest rate per annum and a two-year repayment period,
instead of the agreed 24% interest rate and ten-year term.

The trial court ruled in favor of MFI, declaring the mortgage and foreclosure null and
void, and ordering the reconveyance of the properties to MFI. However, CA reversed
the decision of the RTC.

ISSUE:

1. Whether or not the absence of consent makes a contract void, not merely
voidable.
2. Whether or not an action to declare a contract void prescribes.

RULING:
The absence of consent does not make a contract void, but merely voidable. In this
case, the petitioners freely and voluntarily applied for the loan, executed the
mortgage contract, and delivered the titles of their properties to the respondents.
Their contention of absence of consent had no firm moorings and remained
unproved. The contract was voidable, not void ab initio.

The action to annul the mortgage had already prescribed. The mortgage was
registered on September 5, 1984, and the complaint was filed on October 10, 1991.
The action should have been filed within four years from the discovery of the fraud,
which is reckoned from the time the document was registered in the Register of
Deeds.

17. NPC v. CA, 161 SCRA 334;

FACTS:
On August 4, 1964, Engineering Construction, Inc. (ECI)executed a contract with the
National Waterworks and Sewerage Authority (NAWASA), whereby ECI undertook to
furnish all tools, labor, equipment, and materials (not furnished by Owner), and to
construct the proposed 2nd Ipo-Bicti Tunnel, Intake and Outlet Structures, and
Appurtenant Structures, and Appurtenant Features, at Norzagaray, Bulacan, and to
complete said works within eight hundred (800) calendar days from the date the
Contractor receives the formal notice to proceed.

Record shows that on November 4, 1967, typhoon ‘Welming’ hit Central Luzon,
passing through NPC’s Angat Hydro-electric Project and Dam at Ipo, Norzagaray,
Bulacan. To prevent an overflow of water from the dam, NPC caused the opening of
the spillway gates.

The appellate court sustained the findings of the trial court that the evidence
preponderantly established the fact that due to the negligent manner.

ISSUE: Whether or not the destruction and loss of the ECI’s equipment and facilities
were due to force majeure.

RULING:No, the destruction and loss of the ECI’s equipment and facilities were not
due to force majeure.
It is clear from the appellate court’s decision that based on its findings of fact and
that of the trial court’s, NPC was undoubtedly negligent because it opened the
spillway gates of the Angat Dam only at the height of typhoon “Welming” when it
knew very well that it was safer to have opened the same gradually and earlier. And
even though the typhoon was an act of God or what we may call force majeure, NPC
cannot escape liability because its negligence was the proximate cause of the loss
and damage.

18. PHILCOMSAT v. Globe Telecom, G.R. 147324, May 25, 2004;

FACTS: For several years prior to 1991, Globe Mckay Cable and Radio Corporation,
now Globe Telecom, Inc. (Globe),had been engaged in the coordination of the
provision of various communication facilities for the military bases of the United
States of America (US) in Clark Air Base, Angeles, Pampanga and Subic Naval Base
in Cubi Point, Zambales. The dispute arose from the termination of an agreement
for communication facilities that was entered into in 1991.

Under the agreement, Philcomsat was obligated to establish and operate an earth
station for the exclusive use of the US Defense Communications Agency (USDCA).
Globe Telecom, Inc. was responsible for paying monthly rentals for the leased circuit
involved. However, Globe Telecom, Inc. terminated the agreement in 1992 due to
the termination of the RP-US Military Bases Agreement and the withdrawal of US
military forces from Subic Naval Base.

ISSUE: Whether or not the termination of the RP-US Military Bases Agreement,
constitute force majeure which would exempt Globe from complying with its
obligation to pay rentals under its Agreement with Philcomsat.

RULING:

Yes, the termination of the RP-US Military Bases Agreement, the non-ratification of
the Treaty of Friendship, Cooperation and Security, and the consequent withdrawal
of US military forces and personnel from Cubi Point constitute force majeure which
would exempt Globe from complying
with its obligation to pay rentals under its Agreement with Philcomsat.
Clearly, the foregoing are either unforeseeable, or foreseeable but beyond the
control of the parties. There is nothing in the enumeration that runs contrary to, or
expands, the concept of a fortuitous event under Article 1174.

The CA was thus correct in ruling that the happening of such fortuitous events
rendered Globe exempt from payment of rentals for the remainder of the term of
the Agreement.
Moreover, it would be unjust to require Globe to continue paying rentals even
though Philcomsat cannot be compelled to perform its corresponding obligation
under the Agreement.

19. Victorias Planters v. Victorias Milling, G.R. No. L-6648, July25, 1955;
Facts:
Negros Occidental sugarcane farmers signed a contract with North Negros Sugar
Co. In. and Victorias Milling Co. Inc. for a sugar central to mill 300 tons of sugar
daily. The contract stipulates 30 years of milling. However, during World War II and
post-war periods, the sugar central was destroyed, preventing the farmers from
producing sugarcane.

North Central Sugar Co. Inc. arranged with planters for their produce to be milled by
Victorias Milling Co. Inc., claiming the 30-year milling contract was terminated due
to the destroyed mill. On the other hand the respondent stated that the contract
speaks of “30 years milling period” not “30 years in time” and in view of the failure
of the petitioners to produce sugarcane during the war and post war they still have
6 years milling period.

Issue: Is the occurrence of war (fortuitous event ) relieved the petitioners from
their obligation?

Held: Yes, It is impossible in this case for the petitioner to produce crops (Nemo
tenetor ad impossibilia) and the fulfillment of that impossible, if granted will amount
to the extension of the contract. Therefore the judgment appealed is affirmed.
Fortuitious event relieves the obligor from fulfilling a contractual obligation. The fact
that the contracts make reference to "first milling" does not make the period of
thirty years one of thirty milling years.

20. SBTC v. CA, 249 SCRA 206;

FACTS:
Private respondent Ysmael C. Ferrer was contracted by herein petitioners Security
Bank and Trust Company (SBTC) and Rosito C. Manhit to construct the building of
SBTC in Davao City for the price ofP1,760,000.00. Respondent Ferrer was able to
complete the construction of the building within the contracted period but he was
compelled by a drastic increase in the cost of construction materials to incur
expenses of about P300,000.00 on top of the original cost.

In March 1981, SBTC thru Assistant Vice-President Susan Guanio and a

representative of an architectural firm consulted by SBTC, verified Ferrer’s claims
for additional cost. A recommendation was then made to settle Ferrer’s claim but
only for P200,000.00. SBTC, instead of paying the recommended additional amount,
denied ever authorizing payment of any
amount beyond the original contract price. SBTC likewise denied any liability for the
additional cost based on Article IX of the building contract.

ISSUE: Whether or not petitioners are liable to pay for the increased construction
cost.

RULING:

Yes, petitioners are liable to pay for the increased construction cost.
It is not denied that private respondent incurred additional expenses in constructing
petitioner bank’s building due to a drastic and unexpected increase in construction
cost. In fact, petitioner bank admitted liability for increased cost when a
recommendation was made to settle private
respondent’s claim for P200,000.00. Private respondent’s claim for the increased
amount was adequately proven during the trial by receipts, invoices and other
supporting documents.
Under Article 1182 of the Civil Code, a conditional obligation shall be void if
its fulfillment depends upon the sole will of the debtor.

21. Khe Hong Cheng v. CA, G.R. No. 144169, March 28, 2001, 355 SCRA
701

FACTS:

The owner of the vessel is petitioner Khe Hong Cheng, also known as Felix Khe, who
owns Butuan Shipping Lines. On October 4, 1985, the Philippine Agricultural Trading
Corporation shipped 3,400 bags of copra on board the vessel M/V PRINCE ERIC,
owned by petitioner Khe Hong Cheng. The shipment was covered by a marine
insurance policy issued by American Home Insurance Company. However, the
vessel sank, resulting in the total loss of the shipment. American Home paid the
consignee the amount of P354,000.00 (the value of the copra) and filed a case to
recover the money paid to the consignee based on breach of contract of carriage.
While the case was still pending, petitioner Khe Hong Cheng executed deeds of
donations of parcels of land in favor of his children on December 20, 1989.

On February 25, 1997, respondent Philam filed a complaint for the rescission of the
deeds of donation executed by petitioner Khe Hong Cheng in favor of his children,
alleging that the deeds were executed in fraud of creditors. The trial court denied
the motion to dismiss, ruling that the action had not yet prescribed. The Court of
Appeals affirmed the trial court's decision.

ISSUE: Whether or not the action to rescind the donations has already prescribed.

Ruling: The Supreme Court ruled that the action to rescind the deeds of donation
had not yet prescribed and affirmed the decision of the Court of Appeals. The Court
held that the prescriptive period for the action to rescind the deeds of donation
commenced to run when respondent Philam discovered that it had no other legal
remedy to satisfy its claim against petitioner Khe Hong Cheng. An action to rescind
or an accion pauliana must be of last resort, availed of only after all other legal
remedies have been exhausted and proven futile. In this case, respondent Philam
filed the complaint within a month of discovering that petitioner Khe Hong Cheng
had no other property to satisfy the judgment award against him. Therefore, the
action had not yet prescribed.

22. Manila Banking Corp. v. Silverio, G.R. 132887, Aug. 11, 2005;
Facts :
The registered owner of the properties, Purificacion Ver, sold them to Ricardo C.
Silverio, Sr. in 1979. However, the sale was not registered, and the title remained
with Ver. In 1990, The Manila Banking Corporation (TMBC) filed a complaint for the
collection of a sum of money against Ricardo, Sr. and the Delta Motors Corporation.
TMBC obtained a writ of attachment on the properties, which were later sold to
Edmundo S. Silverio, the nephew of Ricardo, Sr. Edmundo filed a petition for the
cancellation of the notice of levy on attachment and writ of attachment, claiming
that the properties were already sold to him in 1989. The trial court dismissed
Edmundo's petition, ruling that the sale between Ricardo, Sr. and Edmundo was
void. However, the Court of Appeals reversed the trial court's decision, ordering the
cancellation of the notice of levy and writ of attachment.

Issue Whether or not the contract of sale between Ricardo Silverio and Edmundo
Silverio is valid?

Ruling No. The contract of sale between Ricardo Silverio and Edmundo Silverio is
not valid The Supreme Court ruled that an absolutely simulated contract, under
Article 1346 of the Civil Code, is void. It takes place when the parties do not intend
to be bound at all. The characteristic of simulation is the fact that the apparent
contract is not really desired or intended to produce legal effects or in any way alter
the juridical situation of the parties. Thus, where a person, in order to place his
property beyond the reach of his creditors, simulates a transfer of it to another, he
does not really intend to divest himself of his title and control of the property;
hence, the deed of transfer is but a sham.

23. Siguan v. Lim, G.R. No. 134685, November 19, 1999, 318 SCRA 725
Facts:
Maria Antonia Siguan filed an action pauliana against Lim, seeking to rescind
the deed on the grounds of fraudulent transfer. Siguan claimed that the
transfer was fraudulent and left Lim with insufficient properties to pay her
obligations. The trial court ruled in favor of Siguan and ordered the rescission of
the contract and the nullification of the titles in the name of Lim's children.
However, the Court of Appeals reversed the decision and dismissed the action
pauliana. The Court of Appeals held that the deed of donation was not
fraudulent and that Lim still owned sufficient properties to cover her debts.

Issue/s: Whether or not the questioned Deed of Donation was made in fraud of
petitioner and, therefore, rescissible.

Ruling:

The Supreme Court affirmed the decision of the Court of Appeals, stating that
the requirements for an accion pauliana were not met. The court held that
Siguan failed to prove that she had a credit prior to the alienation, that she had
no other legal remedy to satisfy her claim, and that the act being impugned
was fraudulent. The court also found no basis for the awards of damages,
attorney's fees, and expenses of litigation.

The court explained that for an action pauliana to prosper, the following elements
must be present: (1) the plaintiff has a credit prior to the alienation, although
demandable later; (2) the debtor has made a subsequent contract conveying a
property or right to another person; (3) the creditor has no other legal remedy to
satisfy his claim; and (4) the act being impugned is fraudulent. In this case, the
court found that Siguan failed to prove the first and third elements. She was unable
to establish that she had a credit prior to the alienation and that she had no other
legal remedy to satisfy her claim.

24. Boysaw v Interphil Promotions, 148 SCRA 364 (1987)

Facts: Solomon Boysaw, signed with Interphil Promotions, Inc., a contract to
engage Gabriel "Flash" Elorde in a boxing contest for the junior lightweight
championship of the world. Thereafter, Interphil signed Gabriel "Flash" Elorde to a
similar agreement—that is, to engage Boysaw in a title fight.

The managerial rights over Boysaw was assigned and eventually reassigned to
Alfredo Yulo, Jr. without the consent of Interphil in violation of their contract. When
informed of the change, Interphil referred the matter to the Games and Amusement
Board culminating to a decision by the board to approve a new date for the match.
Yulo protested against the new date even when another proposed date was within
the 30-day allowable postponements.
Boysaw and Yulo filed for breach of contract when the fight contemplated in the
original boxing contract did not materialize.

Issues: May the offending party in a reciprocal obligation compel the other party
for specific performance?

Ruling: No. Evidence established that the contract was violated by Boysaw when,
without the approval or consent of Interphil, he fought a boxing match in Las Vegas.
Another violation was the assignment and transfer of the managerial rights over
Boysaw without the knowledge or consent of Interphil.

While the contract imposed no penalty for such violation, this does not grant any of
the parties the unbridled liberty to breach it with impunity. Our law on contracts
recognizes the principle that actionable injury inheres in every contractual breach.

The power to rescind is given to the injured party.

51. VDA. DE MISTICA vs. SPS. NAGUIA 418 SCRA 72 (2003)

FACTS: Eulalio Mistica leased part of his Bulacan parcel to Bernardino Naguiat in
1970 and later entered a contract to sell a 200 m2 portion to Naguiat in 1979 for
P18,000. Naguiat made partial payments but ceased further payments after 1980.
Eulalio passed away in 1986, and his successor, Fidela, filed for rescission in 1991
due to Naguiat's non-payment.

ISSUE: Whether or not there is a breach of obligation warranting rescission under

Article 1191.

RULING: NO. The court ruled that there was no breach justifying rescission. The
contract established a sale, not a resolutory term, and Naguiat's failure to pay
within the stipulated ten-year period did not constitute a substantial breach. Fidela
and Eulalio did not demand payment during the specified period, and Fidela's
refusal to accept payment during Eulalio's funeral contributed to the lapse. The
issuance of a certificate of title to Naguiat did not affect Fidela's right to rescission.

52. Fil-Estate v Vertex, G.R. No. 202079, June 10, 2013

FACTS: FEGDI, a developer of Forest Hills Golf and Country Club, sold a Class “C”
Common Share to RS Asuncion, who later sold it to Vertex Sales. Despite full
payment, Vertex did not receive the stock certificate from FEGDI even after 17
months and demanded its issuance. FEGDI instructed Forest Hills to recognize
Vertex as a shareholder, but the certificate remained in FEGDI's name. Vertex filed
for rescission due to the non-issuance of the stock certificate.

ISSUE: Whether or not the delay in issuing the stock certificate constitutes a
substantial breach warranting rescission of the contract of sale.

RULING: YES. The delay in issuing the stock certificate is a substantial breach. The
delivery of the stock certificate is essential for the transfer of ownership, as stated
in Raquel-Santos v. CA and Section 69 of the Corp Code. Despite Vertex's
enjoyment of shareholder rights, the law requires specific formalities for ownership
transfer. FEGDI's failure to deliver the certificate within a reasonable time
constituted a substantial breach, justifying rescission under Article 1191 of the Civil
Code. FELI, not being a party to the contract, should be absolved from any liability.

53. BPI v. Sanchez (2014)

FACTS: Jesus V. Garcia offered to buy the Subject Property from Vicente Victor
Sanchez, and after an oral agreement, possession of the property was transferred to
Garcia. However, Garcia failed to pay the balance of the purchase price as agreed
upon and took possession of the property without the knowledge or consent of
Felisa Yap, the widow of Kenneth Nereo Sanchez. Despite demands, Garcia did not
fulfill his obligations under the agreement.

ISSUE: Whether or not the Sanchezes are guilty of negligence.

RULING: NO, the Sanchezes are not guilty of negligence. They relied upon the
assurances of Garcia after their oral agreement to sell was negotiated, and
negligence requires the omission of diligence required by the nature of the
obligation.

54. Swire Realty v. Jayne Yu (2015)

FACTS: Respondent Jayne Yu entered into a Contract to Sell with petitioner Swire
Realty Development Corporation for a residential condominium unit and a parking
lot. Despite full payment by the respondent, the petitioner failed to complete and
deliver the unit on time, leading to a Complaint for Rescission of Contract.

ISSUE: Whether or not rescission of the contract is proper in this case.

RULING: YES. Rescission is warranted under Article 1191 of the Civil Code due to the
petitioner's breach of contractual obligations by failing to complete and deliver the
unit within the stipulated period. The right to rescission arises from the obligor's
failure to fulfill its obligation, and in this case, the delay in completing the project
and delivering the unit justifies rescission, refund, and payment of damages.

55. Fong v. Duenas (2015)

FACTS: Fong and Dueñas entered into a verbal joint venture agreement to establish
a holding company, Alliance Holdings, Inc., with equal contributions. Fong remitted
P5 million, but later limited his total contribution to that amount due to Duenas's
failure to provide financial documents on the valuation of his shares. After multiple
demands, Fong decided to cancel the agreement and demanded the return of his P5
million advance. Upon failure of repayment, Fong filed a complaint against Duenas,
seeking the return of the P5 million.

ISSUE: Whether or not Duenas should return the P5 million to Fong and if both
parties are at fault for breach of contract.
RULING: YES. The joint venture agreement is deemed extinguished through
rescission under Article 1192 of the Civil Code due to mutual breach of contract.
Duenas must return the P5 million to Fong as rescission requires mutual restitution,
and keeping the contribution would unjustly enrich Duenas. No damages are
awarded to either party as per Article 1192, where each party shall bear their own
damages in case of mutual breach and the first infractor cannot be determined.

56. ASCANO-CUPINO vs. PACIFIC REHOUSE CORPORATION

FACTS: Petitioners Ascanos and respondent Pacific Rehouse Corporation entered a

Deed of Conditional Sale for a parcel of land in Cavite, with conditions including
removing occupants and submitting required documents. Despite partial payments
by Pacific and demands to fulfill obligations, Ascanos failed to comply and
expressed intent to rescind the contract. Pacific annotated an adverse claim on the
property's title and continued to demand compliance.

ISSUE: Whether or not the respondent Pacific is entitled to request specific

performance.

RULING: YES. Under Article 1191 of the Civil Code, in reciprocal obligations, the
injured party may choose between fulfillment and rescission, with the right to seek
rescission if fulfillment becomes impossible. Pacific has already partially fulfilled its
obligations while Ascanos have not. Ascanos failed to remove tenants and provide
necessary documents, breaching the contract. Therefore, Pacific, as the injured
party, is entitled to seek specific performance or rescission of the contract.

57. Vasquez v Borja, 74 Phil 560 (1944)

FACTS: Francisco de Borja entered a contract with Natividad-Vasquez Sabani

Development Co., Inc. (NVSD) to purchase 4,000 cavans of palay. However, NVSD
only delivered a portion of the agreed amount and became insolvent, causing
damages to De Borja. De Borja sued Antonio Vasquez, acting president and
manager of NVSD, for the damages incurred.

ISSUE: Whether or not Vasquez is personally liable for the damages incurred by De
Borja due to the failure of NVSD to fulfill the contract.

RULING: NO. Vasquez, acting as the manager of NVSD, cannot be held personally
liable for the damages. A corporation is a separate legal entity from its officers and
shareholders. Even if the corporation is found negligent in fulfilling the contract, it is
the corporation, not its agent, that is liable for any resulting damages. Therefore,
Vasquez cannot be held personally liable for the negligence of NVSD in fulfilling the
contract.

58. Federal Builders v Foundation Specialists, GR 194507, Sept. 8, 2014

FACTS: Federal Builders, Inc. (FBI) contracted Foundation Specialists, Inc. (FSI) for
construction work on Trafalgar Plaza. FSI filed a complaint against FBI for non-
payment of billings, seeking ₱1,635,278.91. The RTC ruled in favor of FSI, ordering
FBI to pay ₱1,024,600.00 for billings 3 and 4, but FBI appealed the imposition of
12% legal interest.

ISSUE: Whether FBI is obliged to pay 12% interest on billings 3 and 4 considering
the nature of the obligation.

RULING: NO. The 12% interest rate is excessive as the obligation does not involve a
loan or forbearance of money, but rather performance of construction services. The
Court reduced the interest rate to 6% per annum, consistent with the discretion of
the court for obligations not involving a loan or forbearance of money, as stated in
Article 2209 of the Civil Code. This provision prescribes a 6% yearly interest for
money judgments not involving a loan, good, or credit.
59. Cangco v. Manila Railroad Co., 38 Phil. 763

FACTS: Cangco, an employee of Manila Railroad Company, alighted from a train and
slipped on a sack of watermelons on the dimly lit platform, sustaining injuries. He
sued the company for damages, while the defendant claimed contributory
negligence on Cangco's part.

ISSUE: Whether or not Manila Railroad Company can be held liable for the plaintiff's
injuries.

RULING: YES. The Supreme Court held that the company's liability stemmed from
the breach of its contract of carriage, where it failed to exercise due care in
ensuring safe egress from its trains. The Court distinguished between obligations
arising from contracts and those arising from extra-contractual obligations, stating
that Article 1903 of the Civil Code applies to culpa aquiliana, not to contractual
obligations. As for contributory negligence, the Court ruled in favor of the plaintiff,
noting that he was unaware of the obstruction on the poorly lit platform, indicating
the defendant's failure to provide safe facilities for passengers.

60. Sarmiento v. Sps. Cabrido, G.R. No. 141258, April 9, 2003, 401 SCRA
122

FACTS: Tomasa Sarmiento entrusted her friend's diamond earrings to Dingding’s

Jewelry Shop, owned by Luis and Rose Cabrido, for dismounting into two gold rings.
During the process, the diamond broke due to negligence by the shop's employees.
Sarmiento demanded replacement, but the shop refused, leading to a legal
complaint.

ISSUE: Whether respondents are liable for damages due to the negligence in
dismounting the diamond earrings.

RULING: Yes, respondents are liable for damages. The evidence demonstrated
negligence in handling the diamond, leading to breakage, and the jewelry shop
failed to exercise ordinary diligence required in such situations. Res ipsa loquitur
applies as the breakage suggests negligence. As obligations from contracts have
legal force, those guilty of negligence are liable for damages. Therefore, Luis and
Rose Cabrido are ordered to pay P30,000 as actual damages and P10,000 as moral
damages to the petitioner.
61 Phil. Export vs. V.P. Eusebio Const. Inc., et al. G.R. No. 140047, July 13,
2004The Wellex Group; Inc. vs. U-Land Airlines, Co

FACTS: The State Organization of Buildings (SOB) of Iraq awarded the construction
of the Institute of Physical Therapy-Medical Rehabilitation Center in Iraq to Ayjal
Trading and Contracting Company, which entered a joint venture with 3-Plex
International, Inc. 3-Plex later transferred its rights to V.P. Eusebio Const. Inc
(VPECI). The project faced delays, and upon foreseeing the impossibility of meeting
the deadline, the joint venture worked to renew the performance bond. Despite
completing 51% of the project by March 1986, challenges remained in importing
necessary equipment and materials. Al Ahli Bank of Kuwait demanded payment of
the performance counter-guarantee, leading to a legal dispute between
Philguarantee and VPECI. The RTC and CA ruled against Philguarantee, stating that
no valid cause of action existed due to the Project owner's contract violations, lack
of valid notice, and absence of delay by the joint venture contractor.

ISSUE: Whether or not VPECI defaulted in its obligation that would justify resort to
guaranty.

RULING:
No, VPECI is not in default of its obligation that would justify resort to guaranty.

Article 1169 of the Civil Code. It emphasizes that default occurs when a party fails
to fulfill its obligations within the agreed time frame, but in reciprocal obligations,
one party doesn't incur default if the other fails to perform their part properly. The
contractor, VPECI, completed only 51.7% of the work due to the client's failure to
pay 75% of the project cost in US Dollars, necessary for importing materials. The
delay is attributed to the client's violations, not the contractor's. Moreover, the
client cannot demand full performance from the contractor until it fulfills its
payment obligation. Additionally, the effects of any delay ceased when the client
granted extensions to the contractor, and no formal demand for performance has
been made, as demand is typically necessary to initiate default proceedings.

62 SSS v Moonwalk, G.R. No. 73345. April 7, 1993

FACTS: The Social Security System (SSS) initiated a lawsuit against Moonwalk
Development & Housing Corporation (Moonwalk) and others, claiming an error in
the computation of a 12% interest on late payments regarding a loan agreement.
This purported error led to a domino effect of miscalculations, culminating in what
SSS identified as an unpaid balance on both the principal and delayed payment
penalties as of October 10, 1979. Moonwalk, disputing SSS’s claims, contended that
SSS had ample opportunity to correct these inaccuracies but failed to do so. The
trial court, after a pre-trial conference and submission of a stipulated set of facts,
dismissed SSS’s complaint. It reasoned that the obligation had been extinguished
by Moonwalk’s payments and SSS’s action of canceling the real estate mortgages.
SSS’s motion for reconsideration was denied, leading to an appeal to the
Intermediate Appellate Court, which upheld the trial court’s decision. SSS then filed
a petition for review on certiorari to the Supreme Court.

ISSUE: Whether Moonwalk’s obligations, including penalties, were extinguished

upon payment of the principal obligation and subsequent action by SSS.

RULING: The Supreme Court affirmed the decision of the Intermediate Appellate
Court, stating Moonwalk’s obligations, including penalties, were deemed
extinguished upon the full payment of the loan and the cancellation of the real
estate mortgages.

On the issue of penalty demandability: The Court determined that the penalty could
not be demanded after the extinguishment of the principal obligation, as penalties
serve to enforce performance of the main obligation, which in this case had been
fully satisfied.

63 Maybank Philippines v. Sps. Tarrosa (2015)

FACTS: On December 15, 1980, respondent Spouses Tarrosa obtained a loan from
PNB-Republic Bank, now Maybank Philippines, in the amount of P91,000.00 secured
by a real estate mortgage over a 500-square meter parcel of land situated in San
Carlos, Negros Occidental. After payment of said loan, the respondents again
obtained another loan from Maybank in the amount of P60,000.00 payable on March
11, 1984. Respondents failed to pay upon maturity. Sometime in April 1998, a Final
Demand Letter was sent by petitioner bank to respondents requiring the latter to
settle their loan obligation which already amounted to P564,679.91 inclusive of
principal, interest, and penalty charges. The spouses offered to settle it in a lesser
amount to which the bank refused. On June 25, 1998, Maybank instituted an
extrajudicial foreclosure proceeding and the subject property was eventually sold in
a public auction to Philmay Property Inc. (PPI). The spouses then filed a complaint
for declaration of nullity and invalidity of the foreclosure sale averring among others
that the second loan is an unsecured loan and that Maybank's right to foreclose had
already been prescribed.

ISSUE: When are the respondent spouses considered in default under the law?

RULING: The passage delves into the intricacies of mortgage enforcement

timelines and conditions. It explains that mortgage enforcement actions, such as
foreclosure, must be initiated within a specific timeframe—ten years from the date
the mortgagor defaults on payment—to avoid the expiration of rights due to
prescription. To establish default, certain conditions must be met: the obligation
must be demandable and clear, the debtor must delay performance, and the
creditor must formally request performance unless circumstances dictate otherwise.
Exceptions to the demand requirement include explicit agreements, legal
provisions, situations where demand would be futile, or when the time period is
integral to the obligation's creation.
In the specific case discussed, the Real Estate Mortgage agreement allowed
Maybank the option to elect foreclosure if the Tarrosas failed to fulfill their
obligations. However, this provision did not negate the need for prior demand, as
required by Article 1169 of the Civil Code. The passage concludes by stating that
Maybank's right to foreclose the mortgage only arose after issuing a final demand
letter, providing the Tarrosas with five days to settle their debt, after which
Maybank could legally pursue foreclosure.

64 Abella v Gonzaga, 55 Phil 447 (1931)

FACTS:

Cirilo Abella (plaintiff-appellee) and Mariano Gonzaga (defendant-appellant) entered

into a contract labeled as a "Special Contract of Lease" on April 15, 1921. The
contract involved a parcel of land in San Felipe Neri. The contract stated that
Gonzaga leased the land to Abella for five years, with an annual rent of P1,114.34.
The contract also included a provision stating that if Abella made the required
payments and fulfilled the conditions, Gonzaga would transfer the full ownership of
the land to Abella free of charge. Abella made the necessary payments and fulfilled
his obligations under the contract.

ISSUE:
Is the contract between Abella and Gonzaga a lease or a sale on installments?

RULING:
The court ruled that the contract between Abella and Gonzaga is a sale on
installments, not a lease. The court held that although the contract was labeled as a
lease, the intention of the parties was clearly a sale on installments. The court cited
Article 1281, paragraph 2 of the Civil Code, which states that the true intention of
the parties should prevail in interpreting contracts.The court also considered the
fact that the defendant, Gonzaga, considered himself the owner of the land when
entering into the contract. The court applied the principle that when a person who is
not the owner of a piece of land conveys it to another and subsequently acquires
title to it, the subsequent ownership gives effect to the conveyance.Therefore, the
court ruled in favor of Abella and ordered Gonzaga to transfer ownership of the land
to him, provided that the land is freed from the mortgage.

65 Foundation v Santos, GR 153004, November 4, 2004

FACTS: The present petition for review on certiorari concerns a decision and
resolution by the Court of Appeals dated January 30, 2002, and April 12, 2002,
respectively, which reversed the decision of the Regional Trial Court of Makati City
dated October 4, 1996. The case revolves around a Compromise Agreement
executed on October 26, 1990, between the parties, stipulating payment terms and
dismissal of pending civil cases. Respondent Santos moved for dismissal of the
cases and petitioner SVHFI paid P1.5 million but failed to pay the remaining P13
million. Despite efforts to block enforcement, including motions and appeals,
petitioner's properties were auctioned, with Riverland, Inc. emerging as the highest
bidder. Santos and Riverland Inc. then filed a complaint alleging delay in payment
by the petitioner.

ISSUE: W/N the CA committed reversible error when it awarded legal interest in
favor of the respondents notwithstanding the fact that neither in the compromise
agreement nor in the compromise of judgment by the judge provides for payment
of interest to the respondent?

RULING: The trial court initially dismissed the respondents' complaint and ordered
them to pay attorney's fees and exemplary damages to the petitioner. Respondents
appealed, arguing for legal interest on the principal amount.
The Court of Appeals reversed the trial court's decision, ordering the petitioner to
pay legal interest on the principal amount from the date of demand and attorney's
fees to the respondents. The delay or default in fulfilling obligations occurred after
the two-year period from the execution of the contract, with the obligation being
due and demandable by October 26, 1992. The compromise agreement entered
into by the parties on October 26, 1990, became binding upon execution, not upon
court approval, and the terms regarding the remaining P13 million were clear and
unambiguous.

66 Vasquez v Ayala Corp., GR 149734, November 19, 2004

FACTS: The Vasquez spouses entered into a Memorandum of Agreement (MOA)

with Ayala Corp. in 1981, selling their shares in Conduit Development, Inc., which
owned property in Ayala Alabang. Ayala was to develop the property, retaining a
portion (Retained Area) for the Vasquez spouses and developing the rest
(Remaining Area). Ayala agreed to offer four adjacent lots in the Remaining Area to
the spouses at the prevailing price. Legal issues delayed development, and by
1990, Ayala completed the development, offering the lots at 1990 prices, which the
Vasquez spouses rejected, insisting on 1984 prices. This led to a lawsuit.

ISSUE: Whether or not respondent incurred default or delay in the fulfillment of its
obligation.

RULING: The debtor can only be considered in default under certain conditions: (1)
the obligation must be demandable and already determined; (2) the debtor must
delay in fulfilling the obligation; and (3) the creditor must request performance
either judicially or extrajudicially. In this case, the Memorandum of Agreement
(MOA) did not specify a fixed period for the development of certain lots, so
petitioners cannot demand performance after the three-year period mentioned in
the MOA since it applies to a different aspect of the agreement. Without a specified
period, petitioners should have asked the court to determine it. Since they didn't,
their complaint for specific performance was premature, and Ayala Corp. cannot be
accused of delaying performance. Even if Ayala Corp. was obliged to develop the
lots within three years, they couldn't be deemed in delay without a formal demand.
Additionally, letters sent were mere reminders, not formal demands, and petitioners
waived the three-year period according to their agent's letter.

67 Agner v BPI, G.R. No. 182963. June 3, 2013

FACTS: Spouses Agner obtained a 800 K loan from CITIMOTORS. Spouses executed
a promissory note with chattel mortgage over a Mitsubishi vehicle in favor of
Citimotors, Inc. The contract stated that the spouses would make a monthly
payment of 17K and that 6% interest per month shall be imposed for failure to pay
each installment. The PN also stated that in case of failure to pay, the entire amount
shall be due and payable without need of prior notice or demand. Citimotors
assigned all its interests in the PN to ABN AMRO BANK, which assigned the same to
BPI FAMILY. Spouses defaulted in payment. BPI sent a demand letter to petitioners,
declaring the entire obligation as due and demandable, and requiring them to pay
570K or the surrender of the mortgaged vehicle. As the demand was unheeded, BP
filed an action for REPLEVIN and DAMAGES before MANILA RTC. A writ of Replevin
was issued; however, the vehicle was not seized. THE RTC and CA ruled for BPI.

ISSUE: W/N petitioners could be considered to have defaulted in payment for lack
of competent proof that they received the demand letter.

RULING: Even if no demand letter was sent by BPI, it's argued that there was no
need for it as the petitioner waived the necessity of notice or demand in the
promissory note (PN). According to Article 1169 of the Civil Code, one incurs in
delay or default when the obligor demands fulfillment of the obligation from the
obligee, unless demand is expressly waived by the parties. BPI's possession of the
evidence of debt suggests that the debt hasn't been discharged by payment, and
the burden of proving payment falls on the defendant. The excessive interest rate
of 6% per month should be reduced to 1% per month or 12% per year, as stipulated
interest rates of 3% per month and higher are deemed excessive, iniquitous,
unconscionable, and exorbitant by the Court.

68 Vda. de Villaruel V Manila Motor Co., 104 Phil 926 (1958)

FACTS: Plaintiffs Villaruel and Defendant Manila Motors Co. entered a lease
contract for a property, with the plaintiff leasing to the defendant for 5 years,
renewable for another 5 years. Rent was agreed upon, but during the Japanese
occupation from 1941 to 1945, no payments were made. After the American forces
occupied the property, rentals resumed. Upon the American forces' departure, the
lease was extended for another 5 years, excluding the time occupied by the US
forces. Plaintiffs demanded payment for the Japanese occupation period, but the
defendant refused, leading to a notice of lease rescission. Plaintiffs filed a lawsuit
against the defendant, which included a supplemental complaint after the leased
building burned down, seeking reimbursement and recovery for the building's value.
The trial court ruled in favor of the plaintiff, prompting the defendant's appeal.

ISSUE: WON Manila Motors Co. is liable for the loss of the leased premises
RULING: In essence, the lessor's demand for occupation rentals from 1942-1945
was legally unjustified. By refusing to accept current rentals without conditions,
they defaulted, which shifted the risk of accidental damage or destruction of the
leased premises to them. Although not explicitly stated in the Code of 1889, this
outcome is implied by the nature of default. Consequently, the lessee remained
liable for unpaid rent from July to November 1946, while the lessors bore the risk of
loss due to their default, despite the lessee's subsequent payments up to March 2,
1948, when the commercial buildings were destroyed by fire.

69 Tengco v CA, GR 49852, October 19, 1989

FACTS: On 16 September 1976, the herein private respondent, Benjamin Cifra, Jr.,
claiming to be the owner of the premises at No. 164 Int Gov. Pascual St., Navotas,
Metro Manila, which he had leased to the herein petitioner, Emilia Tengco, filed an
action for unlawful detainer with the Municipal Court of Navotas, Metro Manila to
evict the petitioner, Emilia Tengco, from the said premises for her alleged failure to
comply with the terms and conditions of the lease contract by failing and refusing to
pay the stipulated rentals despite repeated demands. After trial judgment was
rendered against the petitioner. MTC ruled in favor of Benjamin. From this
judgment, the herein petitioner appealed to the Court of First Instance of Rizal and
CA. The latter courts affirmed the decision. Hence, the present recourse. The
petitioner contends that (1) the private respondent Benjamin Cifra, Jr. is not the
owner of the leased premises; (2) the lessor was guilty of mora accipiendi; (3) the
petitioner's version of the facts is more credible than private respondent's; (4)
laches had deprived the lessor of the right to eject her; and (5) the private
respondent failed to establish a cause of action against the petitioner.

ISSUE: Whether or not the lessor was guilty of mora accipiendi.

RULING: No. Under the circumstances, the refusal to accept the proffered rentals is
not without justification. A contract of lease executed by the vendor, unless
recorded, ceases to have effect when the property is sold, in the absence of a
contrary agreement. The petitioner cannot claim ignorance of the transfer of
ownerhip of the property because, by her own account, Aurora Recto and the
private respondent, at various times, had informed her of their respective claims to
ownership of the property occupied by the petitioner. The petitioner should have
tendered payment of the rentals to the private respondent and if that was not
possible, she should have consigned such rentals in court.

70 Fil-Estate v Ronquillo, GR 185789, Jan. 13, 2014

FACTS: Petitioners Fil-Estate Properties, Inc. and Fil-Estate Network, Inc. sold a
condominium unit to Spouses Ronquillo, who paid their dues diligently. However,
construction was halted, prompting the Ronquillos to stop payments and demand a
refund. When their demands were ignored, they filed a complaint with the Housing
and Land Use Regulatory Board (HLURB), which ruled in their favor. The HLURB
ordered the petitioners to refund the Ronquillos' payments with interest and pay
additional damages and fines for violating regulations. Petitioners argued that the
1997 Asian Financial Crisis made it impossible to fulfill their obligations, but their
appeal was denied by the Office of the President and the Court of Appeals.

ISSUE: Whether or not the respondents are entitled to rescission and refund

RULING: The court ruled that the crisis couldn't excuse the breach of contract,
allowing the respondents to rescind the contract and seek refunds for payments
made, including interest and damages. The court cited Article 1191 of the New Civil
Code and Section 23 of Presidential Decree No. 957 regarding obligations and sales
of condominiums. Despite economic difficulties, the court found that the crisis
wasn't unforeseeable for a real estate enterprise engaged in pre-selling.
Additionally, the court deemed a 12% interest rate unjustifiable, reducing it to 6%.
 8
ADJUL 1 PEZA v. Philhino Sales, G.R. 185765, Sept. 28, 2016;
8
ADJUL 2 Gotesco Properties v. Spouses Fajardo, G.R. No. 201167, Feb. 27, 2013;
8
ADJUL 3 Garcia v. CA, 633 Phil. 294 (2010);
8 Universal Foods Corporation v. Court of Appeals, G.R. No. L-29155, May 13,
ADJUL 4 1970;
8
ADJUL 5 Song Fo and Co v. Hawaiian-Phil Co., 47 Phil 821;
SECURITY BANK & TRUST COMPANY and ROSITO C. MANHIT, petitioners, vs.
8 COURT OFAPPEALS and YSMAEL C. FERRER, respondents. G.R. No. 117009,
ADJUL 6 October 11, 1995,.
8
ADJUL 7 Gonzales v Heirs of Thomas, 314 SCRA 585 (1999)
8
ADJUL 8 Coronel v CA, 253 SCRA 15 (1996)
8
ADJUL 9 Parks v Prov of Tarlac, 49 Phil 142 (1926)
9
ADJUL 0 Central Philippines v CA, 246 SCRA 511 (1995)
91. Quijada vs. CA
Facts:
Petitioner donated a land to the Municipality of Talacogon with the condition that
the land be used exclusively for the proposed provincial high school. However, the
high school was never built, and the Municipality passed a resolution reverting the
land back to the donors.
Quijada sold a portion of the land to Regalado Mondejar in 1962
Issue: WON the sale made to Mondejar was valid.
Ruling: Yes, the sale made to Mondejar was valid. The court explained that the
donation was subject to a resolutory condition, meaning ownership would revert to
the donor if the condition was not fulfilled. Therefore, Quijada had the right to sell
the land to Mondejar.

92. Mactan-Cebu International Airport Authority vs. Tudtud

Facts:
MCIAA acquired a private lot for the expansion of the Cebu Lahug Airport with a
proposed agreement that the expropriated lot would be sold to the owners if Lahug
Airport would be abandoned. No structures related to the airport were ever
constructed on the lot.
Issue: WON the original owners are entitled to repurchase the land.
Ruling: Yes. Article 1190 of the Civil Code states that when the conditions of an
obligation to give are fulfilled, the parties shall return to each other what they have
received. MCIAA is obliged to reconvey the land, while the owners must return the
just compensation they received for the expropriation.

93. Lim vs. CA

Facts:
Manuel and Rosita Lim were convicted of violating B.P. Blg. 22 for issuing worthless
checks to Linton Commercial Company Inc. They claimed that the checks were
stopped due to goods not meeting their specifications.
Issue: WON they should indemnify the payee.
Ruling: Yes. The Lim spouses were ordered to indemnify Linton Commercial
Company, Inc. for the amounts stated in the checks. They were guilty of violating
B.P. Blg. 22 because they did not have sufficient funds to cover the checks at the
time of issuance and presentment.

94. Spouses Silos vs. PNB

Facts:
Spouses Eduardo and Lydia Silos entered into a loan agreement with the Philippine
National Bank. The loan agreements contained provisions allowing PNB to
unilaterally modify the interest rates based on its future policies. The petitioners
argued that these provisions violated the principle of mutuality in contracts and
public policy.
Issue: WON there is a violation of the principle of mutuality in contracts and public
policy.
Ruling: Yes. The Court emphasized the principle of mutuality in contracts, stating
that a contract containing a condition that makes its fulfillment dependent
exclusively upon the uncontrolled will of one party is void.

95. Naga Telephone vs. CA

Facts:
Petitioner and Camarines Sur II Electric Cooperative, Inc. (CASURECO II) entered into
a contract. The contract stated that it would be in effect as long as NATELCO
needed the electric light posts and would terminate if CASURECO II ceased its
operation as a public service.
After more than 10 years, CASURECO II filed a complaint for reformation of the
contract, claiming that it had become unfair and disadvantageous to them.
Issue: WON the contract between NATELCO and CASURECO II should be reformed.
Ruling: Yes. The contract had become one-sided in favor of NATELCO due to the
expansion of its business and the increase in the volume of its subscribers. The
continued enforcement of the contract had gone beyond the contemplation of
CASURECO II, and they should be released from their obligations under the contract.

96. Osmena vs. Rama

Facts:
Respondent and the petitioner entered into a contract which includes a provision for
the payment of interest.
Subsequently, they entered into a second contract. Rama acknowledged her
responsibility to pay the debts in an endorsement on the contracts stating that she
would pay if she sold her house. However, she failed to make the payments, leading
to a lawsuit.
Issue: WON Rama is liable to pay the amount due on the contracts despite her
defense of conditional acknowledgment of indebtedness.
Ruling: Yes. The court reasoned that if Rama's statement in her acknowledgment
of indebtedness, where she stated that she would pay the obligation if she sold her
house, was considered a condition, it would be void because it depended on her
exclusive will.

97. Smith Bell vs. Sotelo Matti

Facts:
Plaintiff and defendant entered into a contract whereby the former obligated
himself to sell and the latter to purchase 2 steel tanks for 21,000.00 which is to be
shipped from New York and be delivered to Manila within 34 months.
Plaintiff informed defendant of the arrival of the goods but Mr. Sotelo refused to
receive them and pay the goods stipulated. Mr. Sotelo rather, sued them for
damages because of the delay suffered.
Issue: WON Smith Bell incurred delay in the delivery of the goods.
Ruling: No. When the delivery was subjected to a condition, the fulfillment of which
depended not only upon plaintiff but also upon the will of the third persons who may
not be compelled to perform. In the case at hand, obligor has deemed to have
sufficiently performed his part of obligation. When the contract provides for delivery
“as soon as possible”, the seller is entitled to a reasonable time and does not
immediately mean that it must be delivered immediately.

98. Rustan Pulp vs. IAC

Facts:
The case involves a dispute over a contract of sale between Rustan Pulp & Paper
Mills, Inc. and Iligan Diversified Projects, Inc. The contract stipulated that Rustan
Pulp & Paper Mills had the right to stop delivery of raw materials if the supply
became sufficient, subject to re-delivery when needed.
Issue: WON Rustan's exercise of the right to stop delivery of raw materials was
valid.
Ruling: No. The condition attached to the right of stoppage, which was solely
dependent on Rustan's will, rendered the stipulation inoperative. A purely
potestative condition, such as the one in this case, must be obliterated from the
contract without affecting the rest of the stipulations.

99. Romero vs. CA

Facts:
Virgilio R. Romero, a civil engineer, entered into a conditional sale contract with
Ongsiong, the landowner. The contract stipulated that Ongsiong must evict
squatters from the property within a specified period. If Ongsiong fails to evict the
squatters within the agreed period, Romero has the right to proceed with the
purchase without the condition. Ongsiong failed to evict the squatters within the
stipulated period, leading to a legal battle over the rescission of the contract.
Issue: WON Ongsiong can demand the rescission of the contract.
Ruling: No. Ongsiong's action for rescission is not warranted because she is not the
injured party. Romero has fulfilled his obligations under the contract, while
Ongsiong has failed to evict the squatters. Romero has even offered to shoulder the
expenses of ejecting the squatters and demanded the execution of the deed of
absolute sale. Therefore, Ongsiong cannot rescind the contract and retain the
property.

100. International Hotel Corporation vs. Francisco Joaquin jr.

Facts:
Joaquin submitted a proposal to IHC to secure a foreign loan for the construction of
a hotel. IHC approved the proposal and allocated funds for the project. Joaquin
requested payment for his services, and IHC agreed to compensate him and Suarez
with shares of stock. Due to the failure to secure the loan, IHC cancelled the shares
of stock.
Issue: WON IHC should be held liable for the cancellation of the shares of stock
issued to Joaquin and Suarez.
Ruling: No. There was no evidence of intent to prevent Joaquin and Suarez from
fulfilling their obligations, so IHC should not be held liable for the cancellation of the
shares of stock. The principle of substantial performance does not apply because
the failure to secure the loan was a material breach of the contract.

101. Roman Catholic Archbishop v CA, 198 SCRA 100 (1991)

FACTS: The deceased Eusebio De Castro and Martina Rieta executed a deed of
donation over land in Kawit, Cavite in favor of Roman Catholic Archbishop of Manila,
requiring the property not to be sold within 100 years. The property was transferred
to Florencio and Soledad Ignacio through a deed of sale, with a certificate of title
issued in their name.
ISSUE: Whether or not the cause of action for the rescission of the deed of
donation has prescribed
RULING: No, The case at bar does not require an action for the revocation of a
donation under Article 764 of the Civil Code. The deed of donation allows for
automatic reversion of property if non-compliance is found. This was upheld in the
De Luna, et al. vs. Abrigo, et al. case, which held that such a stipulation grants a
party the right to rescind a contract unilaterally.
102. Clemente v. Republic, G.R. No. 220008, Feb. 20, 2019;
FACTS: Socorro T. Clemente filed a petition for review against the Republic of the
Philippines, alleging that the government failed to comply with a Deed of Donation
for a government hospital. Municipal Mayor Amado A. Clemente and his siblings
donated a one-hectare portion of their property for the construction of a hospital in
1963. The Deed of Donation specified that the property should be used solely for
hospital purposes. In 2004, Socorro filed a Complaint for Revocation of Donation,
Reconveyance, and Recovery of Possession, alleging that the Republic failed to
comply with the condition imposed in the Deed of Donation. The Court of Appeals
affirmed the RTC's decision, stating that Socorro cannot assert heirship and there
was no evidence of a judicial or extra-judicial settlement of her husband's estate.
Issue: Whether the settlement of an estate or the determination of heirs is a
necessary requirement before filing of action for revocation of donation,
reconveyance, and recovery of possession.
Ruling: The Supreme Court ruled in favor of Socorro, granting the petition. The court
found that the Clemente Siblings' donation was subject to a resolutory condition,
allowing the donor to revoke it if the donee failed to comply with its obligation to
construct a government hospital and use the property solely as a hospital site. The
court also ruled that there is no need for estate settlement before an action for
revocation can be filed by a co-owner's heir. The court ordered the cancellation of
the certificate of title and reconveyance of the property to the heirs.
103. Solante v. COA, G.R. 207348, Aug. 19, 2014;
On February 15, 2013, Solante received a Notice of Finality of Decision (NFD)
stating that the COA Decision dated February 15, 2008 and Resolution dated
November 5, 2012 have become final and executory, a copy of the Resolution
having been served on the... parties on November 9, 2012 by registered mail.
Notably, Solante never received a copy of the COA Resolution. She came to get one
only on May 8, 2013 after inquiring from the Cebu Central Post Office, which, in a
Certification of Delivery dated May 8, 2013, stated that the registered mail
containing said copy was in fact not delivered.
ISSUE
Who between the City of Mandaue and F.F. Cruz owned during the period material
the properties that were demolished.
RULING
The MOA does not stipulate ownership of structures to the City of Mandaue after six
years from the Contract of Reclamation. However, F.F. Cruz owns the structures
before the project is completed, and the payment for demolition is justified. The
COA abused its discretion.
The petition is meritorious.
104. Central Philippine University v. CA, 316 Phil 616;
Facts: In 1939, Don Ramon Lopez, Sr. donated land to Central Philippines University
for a medical college. However, in 1989, CPU's heirs filed for annulment, re-
conveyance, and damages, claiming they had not complied with the conditions and
that the university had negotiated with the National Housing Authority to exchange
the land.
Issue: whether all rights of the done are considered lost and extinguished due to the
non-fulfillment of conditions.
Ruling: The Supreme Court ruled that the petitioner failed to fulfill its obligation due
to unreasonable sleep, making the donation ineffective. The court also deemed the
conditions in the donation resolutory, extinguishing the obligation.
105. Gaite v. Fonacier, 2 SCRA 830;
Facts: Fonacier, owner of mining claims, appointed Gaite as his attorney-in-fact,
allowing him to contract with others. Gaite developed mining claims with Larap Iron
Mines. Fonacier revoked Gaite's authority, and he sold the developments to
Fonacier. Fonacier secured the sale with a surety company, but Gaite demanded
payment after the surety expired, arguing no iron ore sale had occurred.
Issue: WHETHER OR NOT THE SELLING OF THE IRON ORES IS A SUSPENSIVE
CONDITION FOR PAYING GAITE
Ruling: No. The sale is not a suspensive condition but a suspensive period or term,
supported by the contract's lack of contingency in the buyer's obligation to pay,
Gaite's insistence on a surety, and the debtor's discretion in selling the ore. Onerous
contracts favor greater reciprocity of interest, as the buyer's obligation to pay is
deemed existing compared to non-existing until the ore is sold.
106. Gonzales v. Jose, G.R. 43429, Oct. 24, 1938;
Facts: The plaintiff filed an action to recover two promissory notes from the
defendant, demanding payment of P403.55. The defendant appealed the court's
decision, arguing the complaint is uncertain and the plaintiff's cause of action is
lawful. The defendant argued the complaint is uncertain and the plaintiff has a valid
cause of action.
Issue: Whether the complaint is uncertain due to its lack of specificity about the
indebtedness incurred or demandable, and that the plaintiff's cause of action is
legal.
Ruling: The court ruled that promissory notes are governed by article 1128, as the
plaintiff intended to grant the defendant a period to pay his debts. The court must
fix this period, which has already been prescribed in accordance with section 43 (1)
of the Code of Civil Procedure. The appealed decision should be reversed, and the
defendant absolved from the complaint without special pronouncement on costs.
107. Philippine National Bank v. Lopez Vito, G.R. No. 28884, Sept. 8, 1928
Facts: The defendant-spouses mortgaged a property to secure a P24,000 loan from
the Philippine National Bank (PNB). They agreed to pay P24,000 plus interest
annually, but failed to do so. The court ordered them to pay the debt in interest,
except for the last annual installment of P2,844.88. The plaintiff reserving the right
to take action on the remaining installment.
Issue: Whether or not the trial court committed an error in holding that the 8 annual
installment of P2,844.88 is not yet demandable.
Ruling: Yes. The judgment appealed from must be modified to allow the mortgagee
to collect the entire debt, with interest, as the mortgage installments mature due to
the mortgagor's failure to pay. The contract stipulated that the mortgagors would
pay the debt in yearly installments until fully satisfied. If non-fulfillment of these
conditions occurs, the mortgagee can declare them violated and proceed to
foreclosure. The non-fulfillment renders the period ineffective and makes the
obligation demandable at the creditor's will.
108. Agoncillo v. Javier, G.R. No. L-12611, Aug. 7, 1918;
Facts: In 1904, Anastasio Alano, Jose Alano, and Florencio Alano executed a
document for Felipe Agoncillo and Marcela Mariño, promising to pay a debt within a
year with interest and mortgage a house and lot as security. The debtors failed to
pay, except for a partial payment in 1908.
Issue: WON The defendant's agreement to pay the appellees' debt or transfer
ownership of the house and lot bequeathed to them by the testator is valid.
Ruling: Yes, the stipulation is valid because it is simply an alternative obligation,
which is expressly allowed by law. The agreement to convey the house and lot on
an appraised value in the event of failure to pay the debt in money at its maturity is
valid. It is simply an undertaking that if debt is not paid in money, it will be paid in
another way.
109. Arco Pulp v. Lim, G.R. No. 206806, Jun. 25, 2014
Facts: Dan T. Lim, a supplier of scrap papers and raw materials, allegedly owed Arco
Pulp and Paper Company, Inc. $7,220,968.31 for the delivery of raw materials. Lim
claimed the company issued a postdated check as partial payment, but it was
dishonored. Arco Pulp and Paper and Eric Sy signed a memorandum of agreement,
obligated to deliver finished products to Eric Sy's Megapack Container Corporation.
Despite repeated demands, Arco Pulp and Paper did not pay. Lim filed a complaint
for collection, but the trial court dismissed the complaint, stating novation occurred.
Issue: WON the obligation between the parties was extinguished by novation.
Ruling: No, The obligation between the parties was not extinguished by novation, as
it was an alternative obligation governed by Article 1199 of the Civil Code. The
appellate court correctly identified the obligation as an alternative obligation, where
petitioner Arco Pulp and Paper would either pay the price of raw materials or deliver
finished products of equivalent value to the respondent. The trial court erroneously
ruled that the execution of the memorandum of agreement constituted a novation
of the contract.

110. AFP Retirement and Separation Benefits System v. Sanvictores, G.R. No.
207586
Facts: Sanvictores purchased a parcel of land in a subdivision project from PEPI,
formerly Antipolo Properties, Inc., after paying the required down payment. Despite
paying, Sanvictores demanded the deed of sale and transfer certificate of title. PEPI
claimed the title was with PNB due to the economic crisis. Sanvictores filed a
complaint for rescission, refund, damages, and attorney's fees. PEPI argued force
majeure and good faith, while AFPRSBS claimed it was the owner and developer.
Issue: Whether or not AFPRSBS is jointly and severally liable with PEPI to
Sanvictores.
Ruling: Yes. Art. 1207 states that the concurrence of two or more creditors or
debtors in a single obligation does not imply full compliance. Solidary liability occurs
when the obligation explicitly states or requires solidarity. In the contract, PEPI and
AFPRSBS were the "SELLER" and Sanvictores the "BUYER.

111. BPI v. Fernandez, G.R. 173134, Sept. 2, 2015;

FACTS: In 1991, Tarcila Fernandez and her husband Manuel opened joint deposit
accounts with BPI, seeking pre-termination that year. Despite presenting certificates
of deposits, BPI refused, insisting on contacting Manuel. Later, Manuel,
accompanied by others, managed to pre-terminate the accounts without presenting
certificates. BPI facilitated fund transfers to a third party's account and allowed
Manuel to withdraw using blank slips, unbeknownst to Tarcila. Tarcila filed a case
alleging BPI's bad faith.

ISSUE: Whether or not Tarcilia, as the first to demand payment from BPI, is entitled
to proceeds from the joint accounts.
RULING: Yes, according to Art 1214, payment should be made to any one of the
solidary creditors, especially if a demand has been made. BPI breached its
obligations by allowing termination without surrendering the certificates, depriving
co-depositors of their shares. BPI's bias towards Manuel and acting in bad faith were
affirmed, leading to damages and attorney’s fees awarded under Art 19 of the Civil
Code.

112. SPOUSES RODOLFO BEROT AND LILIA BEROT, petitioners, -versus-

FELIPE C. SIAPNO,

FACTS: Macaria and spouses Rodolfo and Lilla Berot obtained a loan from Siapno,
mortgaging a portion of land as security. After Macaria's death, Siapno filed for
foreclosure, leading to a dispute over jurisdiction and the nature of the obligation.
The trial court allowed foreclosure, and the CA affirmed, emphasizing the
presumption of joint obligation. However, it didn't determine if the obligation was
joint or solidary.

ISSUE: Whether or not the court erred in not holding the obligation as joint.

RULING: No, according to Article 1207 of the Civil Code, when there are multiple
debtors, the obligation is presumed to be joint unless expressly stated otherwise.
The burden of proving a solidary obligation lies with the party alleging it. Rodolfo's
testimony confirmed the loan but failed to establish solidary liability. Therefore, the
obligation remains joint unless proven otherwise with a preponderance of evidence.

113. Bognot v. RRi Lending, G.R. No. 180144, Sept. 24, 2014

FACTS: Leonardo and Rolando Bognot obtained a loan from RRI Lending, renewing it
monthly. Julieta, Rolando's wife, applied for a renewal but didn't return loan
documents or issue a new check. RRI Lending demanded payment, but Leonardo
claimed the loan was paid off in April 1997.

ISSUE: Whether the obligation was extinguished by payment, considering joint and
solidary liability.

RULING: No, as Leonardo failed to prove payment. According to Article 1207 of the
Civil Code, obligations with multiple debtors are presumed joint unless otherwise
specified. Leonardo didn't provide sufficient evidence of payment, shifting the
burden to him as the debtor. Without proof of payment, the obligation remains
outstanding, maintaining joint liability unless proven otherwise.

114. Lafarge Cement v Continental Cement, 443 SCRA 522 (2004)

FACTS: Lafarge and Continental Cement Corp (CCC) agreed to a Sale and Purchase
Agreement (SPA) for Lafarge to acquire CCC's cement business, including a clause
retaining a portion of the purchase price for potential liabilities. Despite CCC's
instructions following a Supreme Court decision, Lafarge allegedly refused to use
the retained sum for payment. CCC filed a complaint seeking release of the retained
amount, prompting petitioners to move to dismiss the complaint, citing forum
shopping, but the trial court rejected the motion. Lafarge then filed counterclaims
against CCC's major stockholder and corporate secretary, alleging damages and
bad faith in obtaining a writ of attachment.

ISSUE: Whether respondents' liability, if proven, is solidary.

RULING: Yes, as per Article 1207 of the Civil Code, obligations are generally joint,
but tort obligations are inherently solidary. Even though CCC's liability is based on
specific performance and tort, while individual respondents' liability is solely based
on tort, their liability remains solidary. Solidarity may exist even when the parties
are not bound in the same manner or under the same conditions, as stated in
Article 1211 of the Civil Code.

115. Sinamban v. China Banking Corp. (2015)

FACTS: The spouses Manalastas obtained a loan from Chinabank for their rice
milling business, with the Sinamban spouses as co-makers on two promissory notes
(PNs). Chinabank filed a complaint against both sets of spouses for failing to pay
their loan obligations. After winning an auction sale through extrajudicial foreclosure
proceedings, Chinabank sought payment of the loan deficiency from the
defendants. The RTC initially relieved the Sinamban spouses from liability but was
later modified by the CA, holding them solidarily liable with the Manalastas spouses
for the loan deficiency on the PNs they co-signed.

ISSUE: Whether the spouses Sinamban should be held solidarily liable for the loan
deficiency on the PNs they co-signed with the spouses Manalastas.

RULING: The Court affirms the CA's decision with modifications, holding the spouses
Sinamban solidarily liable for the loan deficiency on the PNs they co-signed. A co-
maker who binds himself "jointly and severally" renders himself directly and
primarily liable with the maker on the debt. Since each PN is covered by the same
mortgage security, the defendants should be held solidarily liable for the loan
deficiency. Chinabank's option to proceed against the co-debtors simultaneously is
justified, ensuring proportionate coverage by the auction proceeds.

116. LBP v. Belle (2015)

FACTS: Belle Corporation filed a Complaint against Florosa A. Bautista and the
Register of Deeds of Tagaytay City regarding a disputed property. Bautista lost
ownership due to foreclosure by the petitioner bank, and Belle Corporation sought
to include the bank in the case. Liezel's Garments, Inc., a third-party mortgagor,
became involved, claiming Bautista owned the property free from liens when the
mortgage was executed. After trial, the RTC ruled against Belle Corporation, but the
CA ordered Bautista and Liezel’s Garments to jointly pay the bank for the property
sold at auction.

ISSUE: Whether the CA erred in ordering Bautista and Liezel’s Garments to be jointly
liable to pay the bank.
RULING: Yes, as Bautista, an accommodation mortgagor, merely secured Liezel's
Garments' obligation and is not solidarily bound with them. Citing precedent, the
Court held that the signatory to the principal contract remains primarily liable, with
the liability of third-party mortgagors limited to the mortgaged property. Only
Liezel's Garments is liable to pay the bank for the amount the property was sold for
at auction.

117. Rivelisa Realty v. First Sta. Clara Builders, G.R. No. 189618. January
15, 2014.

FACTS: Rivelisa Realty and First Sta. Clara entered a Joint Venture Agreement (JVA)
for a residential subdivision project, detailing responsibilities and cost-sharing.
Disagreements arose over the project's valuation after First Sta. Clara expressed
intent to exit the JVA, leading to a lawsuit. The RTC ruled in favor of Rivelisa, but the
CA overturned it, asserting that Rivelisa should compensate First Sta. Clara for the
development works based on the principle of quantum meruit.

ISSUE: Whether First Sta. Clara is entitled to compensation.

RULING: Yes, as per the principle of quantum meruit, which allows a contractor to
recover the reasonable value of services rendered even without a written contract,
preventing unjust enrichment. Rivelisa Realty is obligated to compensate First Sta.
Clara for the work performed, as agreed upon in their correspondence. Denying
payment would result in Rivelisa's unjust enrichment, and they cannot renege on
their promise to reimburse First Sta. Clara despite the termination of the JVA.
Therefore, the CA's ruling is upheld.

118. Lam v. Kodak Phils., G.R. No. 167615, January 11, 2016;

FACTS: The Lam Spouses entered a written agreement with Kodak Philippines, Ltd.
for the purchase of three Minilab Equipment units, with postdated checks issued for
payment. After delivery of one unit, subsequent checks were dishonored, leading to
Kodak demanding return of the unit and filing a complaint. The trial court ruled in
favor of Kodak, ordering seizure of the equipment, which was upheld by the Court of
Appeals.

ISSUE: Whether the contract between the Lam Spouses and Kodak pertained to
obligations that are severable, divisible, and susceptible of partial performance
under Article 1225 of the New Civil Code.

RULING: No, the Letter Agreement contained an indivisible obligation, as discerned

from the parties' intentions and direct acts related to the package deal. Although
the Minilab Equipment units could be physically divisible, the parties' agreement
was for a single transaction covering all three units, evidenced by the terms and
discounts applied uniformly to all units. Thus, the obligation is deemed indivisible
under Article 1225 of the Civil Code.
119. Nazareno v. Court of Appeals, 397 Phil. 707 (2000)

Facts: Maximino Nazarano, Sr. and Aurea Poblete acquired properties in Quezon
City during their marriage, including Lot 3-B. After their death, their son Romeo
discovered that his sister Natividad acquired several properties through deeds of
sale. Romeo locked his brother Maximino, Jr. out of Lot 3-B, resulting in a possession
dispute. Subsequently, Romeo filed for the annulment of the sale.

Issue: Whether the deed of absolute sale executed by Maximino Nazarano, Sr. and
Aurea Poblete during their lifetime involving their conjugal properties is an
indivisible contract.

Ruling: Yes, the deed of absolute sale is an indivisible contract, and since it cannot
be validly performed in parts, it cannot be annulled by only one of them. As the suit
was filed solely by the estate of Maximino A. Nazareno, Sr., without including the
estate of Aurea Poblete, the suit must fail. The estate of Maximino A. Nazareno, Sr.
cannot annul the contract while its validity is sustained by the estate of Aurea
Poblete.

120. "William C. Louh and Irene Louh, Petitioner, -versus- Bank Of The
Philippine Islands,
Respondent. G.R. No. 22562, March 8, 2017"

Facts: BPI issued a credit card to William with Irene as the extension cardholder.
The spouses Louh made purchases using the cards but became delinquent in their
payments. BPI filed a complaint for collection of a sum of money, and the RTC
declared the spouses Louh in default, ordering them to pay BPI a specific amount
plus charges.

Issue: Whether the principal amount and attorney’s fees awarded by the RTC and
CA are excessive.

Ruling: Yes, the Court affirmed the decision but modified the principal amount,
interest rates, and attorney's fees. It deemed the interest rates and penalty charges
imposed by BPI as excessive and unconscionable. The Court reduced both the
interest and penalty charges to 12% each per annum and attorney's fees to 5% of
the total amount due, in line with previous jurisprudence.

121 Joven v. China Banking Corporation, G.R. No. 215954, Aug. 1, 2016;
FACTS: In the case, the petitioners executed three promissory notes in favor of
China Bank, agreeing to pay penalty charges and attorney's fees in case of default.
The notes were secured by a real estate mortgage. When the petitioners defaulted,
China Bank foreclosed on the mortgaged property, but the sale yielded less than
the total amount owed. China Bank then sought the deficiency balance in court,
along with penalty charges, attorney's fees, and costs of suit. The Regional Trial
Court (RTC) ruled in favor of China Bank, which was upheld by the Court of Appeals
(CA). The petitioners appealed to the Supreme Court, challenging the rulings of the
lower courts

ISSUE: Whether or not the computation of the deficient balance is correct. (NO)

RULING: In this case, the court ruled that the interest charges should be based on a
365-day year instead of the 360-day year used by China Bank. As a result, the
outstanding obligation of the petitioners was recalculated to be ₱22,234,132.93,
with China Bank having already received ₱14,500,000.00 from the foreclosure.
Therefore, the remaining balance owed by the petitioners to China Bank is
₱7,734,132.93. The court ordered the petitioners to pay this amount plus legal
interest of 12% per annum from April 19, 2004, until June 30, 2013, and 6% per
annum thereafter until fully satisfied.

122 Rivera v. Chua, G.R. No. 184458, Jan. 14, 2015;

FACTS:
Parties involved: Rodrigo Rivera and Spouses Salvador and Violeta Chu. Rivera
borrowed P120,000 from the Spouses Chua and executed a promissory note
Promissory note stated that Rivera would pay the amount on December 31, 1995,
with a 5% monthly interest in case of default Rivera issued two checks as partial
payment, but they were dishonored for "account closed" Spouses Chua filed a case
for collection of a sum of money Lower courts ruled in favor of Spouses Chua,
affirming the validity of the promissory note and awarding damages Rivera
appealed to the Court of Appeals, which affirmed his liability but reduced the
interest rate and reinstated the award of attorney's fees Rivera and Spouses Chua
both filed separate petitions for review on certiorari before the Supreme Court

ISSUE: Whether there was a valid promissory note executed by Rivera

RULING: The Supreme Court ruled in favor of Spouses Chua, affirming the validity
of the promissory note and holding Rivera liable for the principal amount plus
interest and attorney's fees. The court found Rivera's claim of forgery
unsubstantiated and upheld the lower courts' findings on the authenticity of the
promissory note. Demand was deemed unnecessary as the promissory note
specified the date of default and the obligation to pay interest. The court reduced
the interest rate from 60% to 12% per annum, considering it excessive and
unconscionable. While reinstating the award of attorney's fees, the court reduced
the amount. Additionally, the court provided a breakdown of the total amount owed
by Rivera to Spouses Chua, including applicable interest rates and the computation
of legal interest. The decision was based on findings of lower courts, terms of the
promissory note, and relevant provisions of the Civil Code.

123 Pryce Corp. v. PAGCOR, G.R. 157480, May 6, 2005;

FACTS: The case involves a contract of lease between PPC (Petitioner) and
PAGCOR (Respondent) for a casino operation in Cagayan de Oro City. Despite local
opposition, PAGCOR resumed casino operations, which were later suspended due to
protests and ultimately stopped per advice from the Office of the President.
Disputes arose regarding rental payments and termination of the lease. Both parties
filed cases for sum of money. The RTC ruled for a reduction in PPC's claim but did
not find the lease terminated earlier as PPC claimed. The Court of Appeals ruled
PAGCOR's pretermination unjustified, stating that public protests didn't exempt
PAGCOR from its contractual obligations. The contract remained effective until PPC
terminated it, after which PPC couldn't demand future rentals. Terminating the
contract released PAGCOR from future obligations.

ISSUE: Whether or not there was only a right to termination, and not rescission
thereby entitling PPC to future rentals or lease payments for the unexpired period of
its Contract of Lease between with PAGCOR

RULING: The actions and statements of PPC indicate that it never intended to
rescind the Lease Contract from the beginning. This was evident when it initially
sought to collect accrued rentals, showing a desire to enforce the contract before
termination. The termination of a contract doesn't equate to rescission; termination
means the contract remains valid until its end, while rescission renders it null from
the start. Courts respect contract terms unless they violate laws or ethics, though
they can adjust unfair penalties. In this case, PPC's termination released PAGCOR
from future obligations like rent payments, so claiming future rentals would unjustly
enrich PPC. Additionally, PAGCOR's breach stemmed from real and pressing issues,
supported by negotiations and legal actions taken to resolve problems prior to
ceasing operations.

124 Ruiz v. Court of Appeals, G. R. No. 146942, Apr. 22, 2003;

FACTS: Petitioner Corazon G. Ruiz, a jewelry trader, obtained several loans from
Consuelo Torres, totaling P1,350,000. These loans were consolidated under one
promissory note, secured by a real estate mortgage. After defaulting on payments,
Torres demanded repayment of the loans, leading to a foreclosure attempt.
However, Ruiz filed a complaint with the RTC, seeking to enjoin the foreclosure and
disputing the amount owed. The RTC sided with Ruiz, considering the loan
agreement as a unilateral contract of adhesion, imposed unfairly by Torres.

ISSUE: Whether or not the promissory note of P750,000.00 is a contract of

adhesion

RULING: The Supreme Court ruled that the promissory note in question was not a
contract of adhesion. Contracts of adhesion typically involve one party drafting
most provisions, with the other party simply adhering to them by signing. However,
in this case, the petitioner had ample opportunity to review and understand the
terms of the promissory note. Additionally, the petitioner had entered into multiple
loan transactions with the respondent, indicating that she was not forced to accept
the terms. Furthermore, the petitioner, an experienced businesswoman, should
have understood the conditions outlined in the promissory note.

125 Robes v. CFI and Millan, G.R. No. L-41093, Oct. 30, 1978;
FACTS:Robes-Francisco Realty & Development Corporation sold a parcel of land to
Lolita Millan with payment in installments. Despite Millan's compliance, the
corporation failed to execute the final deed of sale and transfer the title within the
agreed-upon timeframe. Millan filed a complaint for specific performance and
damages, citing the corporation's delay in fulfilling its obligation. The corporation
argued that the deed of sale provided for interest payments in case of delay, thus
limiting Millan's recovery. However, the court found the corporation liable for its
delay under Article 170 of the Civil Code, which mandates damages for non-
performance due to fraud, negligence, or delay. The court rejected the corporation's
argument invoking Article 1226, stating that the penalty clause did not preclude
additional damages beyond interest payments.

ISSUE: Whether or not the penal clause prevents the other party to be indemnified
more than what is agreed upon

RULING: In this excerpt, the court rejects the petitioner's argument regarding a
clause in a contract, stating it's not a penal clause because it doesn't convey any
penalty. Even without the clause, the vendee would be entitled to recover the
amount paid with legal interest. The court notes that the clause actually benefits
the petitioner. However, the vendee didn't provide evidence of actual damages, but
the court acknowledges her entitlement to nominal damages for the violation of her
rights. Exemplary damages may be awarded if the guilty party acted egregiously
and if the injured party can prove entitlement to moral, temperate, or
compensatory damages, which the vendee didn't prove in this case.

126 Cabarroguis v. Vicente, G.R. No. L-14304, Mar. 23, 1960

FACTS: On March 15, 1955, Antonia A. Cabarroguis, a registered nurse and

midwife, was a passenger in a “jeepney” owned and operated by Telesforo B.
Vicente when it collided with another vehicle in Davao City, resulting in injuries to
Cabarroguis, including permanent partial disability to her right forearm.

Vicente appealed to the Court of First Instance, which dismissed his defenses as
mere afterthoughts and ordered him to pay P1,200 with legal interest from the date
of complaint filing. Vicente then appealed to the Court of Appeals, which turned the
case over to the Supreme Court due to a legal question regarding the imposition of
interest.

ISSUE: The main legal issue concerns the applicability of interest on the principal
amount and the penalty due to the breach of the compromise agreement under
Articles 1226, 2209, 2196, 2197, and 2210 of the new Civil Code.

RULING: The Supreme Court ruled that interest cannot be imposed on the principal
obligation due to the penal clause substituting for indemnity for damages and
payment of interest, per Article 1226 of the new Civil Code. However, it stated that
interest on the penalty is applicable since both the principal obligation and the
penalty can be demanded if the debtor defaults (citing Government vs. Lim and
Luneta Motor Co. vs. Moral). The decision was modified to allow interest on the
penalty amount, affirming the lower court’s decision with this modification.
127 Lambert v Fox, G.R. No. L-7991, January 29, 1914

FACTS: Early in 1911: John R. Edgar & Co., engaged in the retail book and
stationery business was taken over by its creditors including Lambert and Fox
Lambert and Fox became the 2 largest stockholders in the new corporation called
John R. Edgar & Co., Incorporated Lambert and Fox entered into an agreement
wherein they mutually and reciprocally agree not to sell, transfer, or otherwise
dispose of any part of the stock until after 1 year from the agreement date unless
consented in writing violation: P1,000 pesos as liquidated damages. October 19,
1911: Fox sold his stock E. C. McCullough & Co. of Manila, a strong competitor sale
was made by the defendant against the protest. Foz offered to sell his shares of
stock to the Lambert for the same sum that McCullough was paying them less
P1,000, the penalty specified in the contract

ISSUE: W/N Fox should be penalized

HELD: YES. The judgment is reversed, the case remanded with instructions to
enter a judgment in favor of the plaintiff and against the defendant for P1,000, with
interest; without costs in this instance, parties expressly stipulated that the contract
should last one year regardless of the objective it should be applied, parties who are
competent to contract may make such agreements within the limitations of the law
and public policy as they desire, and that the courts will enforce them according to
their terms. The suspension of the power to sell has a beneficial purpose, results in
the protection of the corporation as well as of the individual parties to the contract,
and is reasonable as to the length of time of the suspension.

128 Robes-Francisco v. CFI, G.R. No. L-41093 October 30, 1978

FACTS: Robes-Francisco Corp. sold a parcel of land to Lolita Millan for P3,860,
payable in installments, with the final payment made on 12/22/1971 totaling
P5,193, including interests and expenses. Lolita demanded execution of the deed of
sale and issuance of Transfer Certificate of Title (TCT), which Robes-Francisco
complied with. The contract stipulated that the TCT should be transferred to Lolita
within six months of full payment, or Robes-Francisco would refund the total
amount paid plus 4% interest per annum. Robes-Francisco failed to issue the TCT
due to the land being mortgaged to GSIS, resulting in Lolita filing for specific
performance with damages. The court ordered Robes-Francisco to register the deed
of sale and secure the TCT in Lolita's name within 10 days or pay P5,193 with 4%
interest per annum until fully paid.Robes-Francisco argued that the penalty clause
in the contract replaces damages and interest payments, citing NCC 1226, as there
was no stipulation to the contrary.

ISSUE: Whether Lolita is entitled to the refund plus interest

RULING: The clause mentioned is not a penal clause but actually benefits the
company by precluding them from paying damages to Lolita. Despite Lolita's lack of
evidence on actual damages, her inability to acquire the TCT violated her rights,
entitling her to nominal damages at least. Nominal damages are awarded to
vindicate a violated right, not to indemnify losses. The stipulation in the deed of sale
regarding the refund in case of non-compliance doesn't preclude recovery of
damages, as it doesn't convey any penalty and doesn't affect Lolita's right to
recover the amount paid plus legal interest as per NCC 2209.

129 New World Developers and Management v. AMA (2015)

FACTS: New World Developers leased a building to AMA from 1998 to 2006. AMA
paid advance rental and security deposit. AMA requested rent adjustment due to
financial issues, which NWD agreed to twice. In 2004, AMA prematurely terminated
the lease due to declining enrollments and requested refund of advance rental and
security deposit. NWD demanded unpaid rent, interest, damages, and filed a
lawsuit. The RTC ordered AMA to pay various amounts. On appeal, the CA ruled
against the 3% penalty and reduced liquidated damages, citing lack of stipulation
and equitable discretion. The consolidated appeal involves two parties disputing a
court decision. NWD contends that the manner of payment termination by Piree
"smacked of gross bad faith." AMA argues that there was compensation between
unpaid and advance rentals, disputing the basis for interest and suggesting a
reduction in liquidated damages.

ISSUE: Is AMA liable to pay six months' worth of rent as liquidated damages?

RULING: The advance payment of P450,000 was not intended to be refunded to

AMA. Upon pretermination, it remained designated to cover outstanding amounts
owed.At the time of pretermination, AMA owed P466,620 in arrears. After applying
the P450,000 advance, the balance in arrears was P16,620. AMA's total liability to
NWD amounted to P1,416,480. With the advance of P450,000, the liability for
unpaid rentals would be fully extinguished, and part of the liability for liquidated
damages would be extinguished. After applying the advance, AMA would still be
liable for a total of P966,480. Interest will accrue at a rate of 6% per annum from
the date of the decision's finality until satisfaction.The Court of Appeals affirmed the
decision with modifications.

130 PNB v. Chan, G.R. No. 206037, Mar. 13, 2017;

FACTS: Lilibeth S. Chan leased her three-story commercial building to Philippine

National Bank (PNB) for five years. After the lease expired, PNB continued on a
month-to-month basis. Meanwhile, the respondent obtained a loan from PNB
secured by a real estate mortgage on the leased property. Later, they amended the
mortgage to substitute the collateral with another property. The respondent filed a
complaint for unlawful detainer when PNB vacated the premises. PNB claimed it
applied rental proceeds to the respondent's outstanding loan and also faced
demands from a purported new owner for rental payments. The Metropolitan Trial
Court (MeTC) held a hearing where they agreed to apply rental proceeds to the
loan. PNB also consigned rental amounts with the court. The Court of Appeals (CA)
ruled that PNB's deposit of rentals into a savings account didn't meet legal
consignation requirements, making PNB liable for 6% legal interest for defaulting on
rental payments.
ISSUE: Whether or not PNB improperly consigned the disputed rental payments
with the Office of the Clerk of Court of the MeTC of Manila making PNB liable to pay
legal interest prescribed under Article 2209 Civil Code.

RULING: No. The Supreme Court ruled in the negative. “Consignation is the act of
depositing the thing due with the court or judicial authorities whenever the creditor
cannot accept or refuses to accept payment. It generally requires a prior tender of
payment.”
Under Article 1256 of the Civil Code, consignation alone is sufficient even without a
prior tender of payment a) when the creditor is absent or unknown or does not
appear at the place of payment; b) when he is incapacitated to receive the payment
at the time it is due; c) when, without just cause, he refuses to give a receipt; d)
when two or more persons claim the same right to collect; and e) when the title of
the obligation has been lost.