Ang Yu vs Court of Appeals G.R. No.

109125 December 2, 199

!acts"
Heren pantff-pettoners (the buyers) are tenants or essees of the resdenta and
commerca propertes owned by respondents Co Un|eng (vendors). On severa
occasons before October 9, 1986, defendants nformed pantffs that they are
offerng to se the premses and are gvng them prorty to acqure the same.
Respondents offered to se the property for P6M, and pantffs counter-offered to
buy for P5M. Pantffs asked the respondents to put the offer n wrtng, n whch the
respondents acceded (to express approva or gve consent : gve n to a request or
demand). Upon recept of the offer, pantffs asked the respondents specfy the
terms and condtons of the offer to se. Snce no response was made by the
respondents, pantffs were compeed to fe the compant aganst respondents
compeng them to se the property.
The ower court decded n favor or the respondents reasonng that snce partes dd
not agree upon the terms and condtons of the proposed sae, hence there was not
contract of sae at a. Further, t rued that f the respondents decde to se the
proper for P11M or ower, then pantffs have the rght of frst refusa. Aggreved by
the decson, pantffs appeaed to CA.
The Court of Appeas affrmed the decson of the ower court wth modfcaton: In
resume, there was no meetng of the mnds between the partes concernng the sae
of the property. Absent such requrement, the cam for specfc performance w not
e. Appeants demand for actua, mora and exempary damages w kewse fa
as there exsts no |ustfabe ground for ts award." CA however granted the pantffs
the rght of frst refusa regardess f the offer prce exceeds P11M.
Pantffs appeaed wth the Supreme court but was dened for nsuffcency n form
and substance.
Whe pantff asked the SC for reconsderaton, respondents transferred the
propertes n queston to respondent Buen Reaty and Deveopment Corporaton n
consderaton of P15M.
Buen Reaty after the propertes came nto ts possesson after the ttes had been
ssued under ts name, pantffs were asked to vacate the premses. Pantffs
brought the matter to the tra court to enforce the decson rendered by the CA that
pantffs has the rght of frst refusa. The ower court ordered respondents to se
the property to pantffs for P15M. Respondents appeaed to CA.
The CA reversed the |udgment of the ower court decarng that t has no force and
effect.
Hence ths appea for certorar.
#ssue"
May a buyer (n ths case Buen Reaty) be bound by the wrt of executon by vrtue of
the notce of s pendens (whe pendng awsut), carred over on TCT No. 195816
ssued n the name of Buen Reaty, at the tme of the atters purchase of the
property on 15 November 1991 (tme when the decson of CA was st pendng
executon) from the Cu Un|engs, gven that Buen reaty s not a party to the sut
when the decson was rendered?
$el%"
No. What the pettoners have been granted of n the frst pace s |ust a mere rght
of frst refusa. In the aw on saes, the so-caed "rght of frst refusa" s an
nnovatve |urdca reaton. Needess to pont out, t cannot be deemed a perfected
contract of sae under Artce 1458 of the Cv Code. Nether can the rght of frst
refusa, understood n ts norma concept, per se be brought wthn the purvew of an
opton under the second paragraph of Artce 1479, aforequoted, or possby of an
offer under Artce 1319
9
of the same Code. An opton or an offer woud requre,
among other thngs,
10
a cear certanty on both the ob|ect and the cause or
consderaton of the envsoned contract. In a rght of frst refusa, whe the ob|ect
mght be made determnate, the exercse of the rght, however, woud be dependent
not ony on the grantors eventua ntenton to enter nto a bndng |urdca reaton
wth another but aso on terms, ncudng the prce, that obvousy are yet to be ater
frmed up. Pror thereto, t can at best be so descrbed as merey beongng to a
cass of preparatory |urdca reatons governed not by contracts (snce the essenta
eements to estabsh the vncuum |urs woud st be ndefnte and nconcusve)
but by, among other aws of genera appcaton, the pertnent scattered provsons
of the Cv Code on human conduct.
Even on the premse that such rght of frst refusa has been decreed under a fna
|udgment, ke here, ts breach cannot |ustfy correspondngy an ssuance of a wrt
of executon under a |udgment that merey recognzes ts exstence, nor woud t
sancton an acton for specfc performance wthout thereby negatng the
ndspensabe eement of consensuaty n the perfecton of contracts.
11
It s not to
say, however, that the rght of frst refusa woud be nconsequenta for, such as
aready ntmated above, an un|ustfed dsregard thereof, gven, for nstance, the
crcumstances expressed n Artce 19
12
of the Cv Code, can warrant a recovery for
damages.
The fna |udgment n Cv Case No. 87-41058, t must be stressed, has merey
accorded a "rght of frst refusa" n favor of pettoners. The consequence of such a
decaraton entas no more than what has heretofore been sad. In fne, f, as t s
here so conveyed to us, pettoners are aggreved by the faure of prvate
respondents to honor the rght of frst refusa, the remedy s not a wrt of executon
on the |udgment, snce there s none to execute, but an acton for damages n a
proper forum for the purpose.
Furthermore, whether prvate respondent Buen Reaty Deveopment Corporaton,
the aeged purchaser of the property, has acted n good fath or bad fath and
whether or not t shoud, n any case, be consdered bound to respect the
regstraton of the s pendens n Cv Case No. 87-41058 are matters that must be
ndependenty addressed n approprate proceedngs. Buen Reaty, not havng been
mpeaded n Cv Case No. 87-41058, cannot be hed sub|ect to the wrt of
executon ssued by respondent |udge, et aone ousted from the ownershp and
possesson of the property, wthout frst beng duy afforded ts day n court.
&agra%o 'r%en v. Nacoco 91 ()*l 50+
!acts"
On |an 4, 1942, durng the |apanese occupaton, Tawan Tekkosho (|apanese
corporaton) acqured the pantffs property (and wth warehouse n Pandacan,
Mana) for Php140K
On Apr 4, 1946, after the beraton, the US took contro and custody of the
aforementoned enemys and under Sect 12 of the Tradng wth the Enemy Act
In the same year, the Copra Export Management Company occuped the
property under custodanshp agreement wth the Unted States Aen Property
Custodan
In August 1946, when the Copra Export Management Co. vacated the property,
the Natona Coconut Corporaton (NACOCO), the defendant, occuped t next
Sagrada Orden (pantff) fes cams on the property wth the Court of Frst
Instance of Mana and aganst the Phppne Aen Property Admnstrator
Pantff pettons that the sae of the property to Tawan Tekkosho shoud be
decared nu and vod as t was executed under duress, that the nterest of the
Aen Property Custodan be canceed, and that NACOCO be gven unt
February 28, 1949 to recover ts equpment form the property and vacate the
premse
The Repubc of the Phppnes s aowed to ntervene
CFI: the defendant (Phppne Aen Property Admnstrator) and the ntervenor
(RP) are reeased from any abty but the pantff may reserve the rght to
recover from NACOCO reasonabe rentas for the use and occupaton of the
premses
The sae of the property to the Tawan Takkesho was decared vod and the
pantff was gven the rght to recover Php3,000/month as reasonabe renta
from August 1946 (date when NACOCO occuped property) to the date NACOCO
vacates the premses
The |udgment s appeaed to the SC
#ssue"
1. Whether or not the defendant s abe to pay rent for occupyng the
property n queston
$el%"
1. The CFIs decson that the defendant shoud pay rent from August 1946 to
February 28, 1949 was reversed, costs aganst the pantff.
Ratonae:
Obgatons can ony arse from four sources: aw, contracts or quas-contracts,
crme, or neggence (Art 1089, Spansh Cv Code).
There were no aws or an express agreement between the defendant or the Aen
Property Custodan wth the pantff regardng payment of rent. The property was
acqured by the Aen Property Admnstrator through aw (Tradng wth the Enemy
Act) on the sezure of aen property and not as a successor to the nterests of the
atter. There was no contract of renta b/w them and Tawan Takkesho. NACOCO
entered possesson of the property from the Aen Property Custodan wthout any
expectaton of abty for ts use. NACOCO dd not commt any neggence or
offense, and there was no contract, mped or otherwse, entered nto, that can be
used as bass for camng rent on the property before the pantff obtaned the
|udgment annung the sae to Tawan Takkesho. The pantff has no rght to cam
rent from NACOCO.
Important Notes
Artce 1157 of the New Cv Code states that there are 5 sources of obgatons:
aws, contracts, quas-contracts, feones (acts or omssons punshed by aw), and
quas-dects..
(,'(-,.& CAR #NC., vs Comman%o &ecur*t/ -0+120 3a/ 22, 194+
!acts"
Pantff, a car deaer, entered nto a contract wth defendant, a securty agency, ts
duty s to guard the formers premses from theft, robbery, vandasm and
other unawfu acts. On a certan nght, the securty guard depoyed by the
defendant, wthout authorty nether from the pantff nor from defendant,
drove a car, whch was entrusted to the pantff by a customer for servce and
mantenance, outsde of the pantffs compound and around the cty whch
after the securty guard ost contro of, fe nto a dtch, causng t severe
damage. Pantff companed aganst the securty guard for quafed theft.
Whe the car s undergong repar, pantff rented a car for ts customer for 47
days unt the car s fxed, and took pan to repar the damaged car.
Then pantff nsttuted a cam aganst the defendant for recovery of the actua
damages t ncurred due to the unawfu act of the atters personne, ctng nter aa
the Par. 5 of the contract that defendant accepts "soe responsbty for the acts
done durng ther watch hours". Defendant on the other hand, nterposed, that t
may be abe but ts abty s mted under Par. 4 of sad contract provdng: "that
ts abty "sha not exceed one thousand (P1,000.00) pesos per guard post". To
quote the contract:
Par. 4. - Party of the Second Part (defendant) through the neggence of ts
guards, after an nvestgaton has been conducted by the Party of the Frst Part
(pantff) wheren the Party of the Second Part has been duy represented sha
assume fu responsbtes for any oss or damages that may occur to any property
of the Party of the Frst Part for whch t s accountabe, durng the watch hours of
the Party of the Second Part, provded the same s reported to the Party of the
Second Part wthn twenty-four (24) hours of the occurrence, except where such oss
or damage s due to force ma|eure, provded however that after the proper
nvestgaton to be made thereof that the guard on post s found neggent and that
the amount of the oss sha not exceed ONE THOUSAND (P1,000.00) PESOS per
guard post.
Par. 5 - The party of the Second Part assumes the responsbty for the proper
performance by the guards empoyed, of ther dutes and (sha) be soey
responsbe for the acts done durng ther watch hours, the Party of the Frst Part
beng specfcay reeased from any and a abtes to the formers empoyee or to
the thrd partes arsng from the acts or omssons done by the guard durng ther
tour of duty. ...
8
The tra court rendered |udgment n favor of the defendant mtng ts abty to
P1,000.00 under par. 4 and sad that under paragraph 5, t s the customer who
shoud brng the sut before the court.
#ssue"
Whether or not the pantff s entted to recover ts expenses from the defendant on
account of the atters empoyees unawfu act, despte the provson under
paragraph 5 t s the 3
rd
party who shoud nsttute the cam whch hed the pantff
harmess from any and a abtes of the defendants empoyees?
$el%"
Yes. 3
rd
partes, the customer n the case at bar, are not bound by the contract
between the defendant and pantff. But the pantff s n aw abe for the damages
caused the customers car, whch had been entrusted nto ts custody. Pantff
therefore was n aw |ustfed n makng good such damages and reyng n turn on
defendant to honor ts contract and ndemnfy t for such undsputed damages,
whch had been caused drecty by the unawfu and wrongfu acts of defendants
securty guard n breach of ther contract. As ordaned n Artce 1159, Cv Code,
"obgatons arsng from contracts have the force of aw between the contractng
partes and shoud be comped wth n good fath."
Pantff n aw coud not te ts customer, as per the tra courts vew, that "under
the Guard Servce Contract t was not abe for the damage but the defendant" -
snce the customer coud not hod defendant to account for the damages as he had
no prvty of contract wth defendant. Such an approach of teng the adverse party
to go to court, notwthstandng hs pany vad cam, asde from ts ethca
defcency among others, coud hardy create any goodw for pantffs busness, n
the same way that defendants baseess attempt to evade fuy dschargng ts
contractua abty to pantff cannot be expected to have brought t more busness.
Cangco vs. 3an*la Ra*lroa% 5GR 12191, 1 'ctober 19126
!acts"
Pettoner Cangco s empoyed by defendant Mana Raroad Co. n Mana, and by
vrtue of hs empoyment, he s entted free rde from hs house n San Mateo to
Mana and vce-versa. On a fatefu nght around 8:00 PM at the staton of San Mateo
where t was dmy ghted , pettoner whe aghtng the tran (though t was st
movng very sowy to the pont of stop), not knowng that there are sacks of meon
ped at the edge of the patform stepped on the ob|ects, causng hm to sp off
baance. Pantff was drawn under the car n an unconscous condton and as a
resut serousy n|ured hm. Hs arm was amputated and he was prevented from
workng. He spent approx P800 pesos for hs medca expenses.
Thereupon, he sued Mana Raroad to recover damages on the ground of
neggence of the servants and empoyees of the defendant. The CFI rued that
athough there s an apparent neggence on the part of the defendant through ts
empoyees but nevertheess, the pantff cannot recover because he had faed to
use due cauton n aghtng from the coach. Hence ths appea.
#ssue"
Whether or not Mana Raroad Company s abe to the pantff for the neggent
acts of ts empoyees, notwthstandng that pantff was aso neggent?
$el%"
Yes! Whe the pantff may have been neggent, the defendant s aso neggent.
The case fas under the category that of (1) cupa contractua, that s, contract of
carrage by provdng the passengers safe trave begnnng from the tme he
It s mportant to note that the foundaton of the ega abty of the defendant s the
contract of carrage, and that the obgaton to respond for the damage whch
pantff has suffered arses, f at a, from the breach of that contract by reason of
the faure of defendant to exercse due care n ts performance. That s to say, ts
abty s drect and mmedate, dfferng essentay, n ega vewpont from that
presumptve responsbty for the neggence of ts servants, mposed by artce
1903 of the Cv Code, whch can be rebutted by proof of the exercse of due care n
ther seecton and supervson. Artce 1903 of the Cv Code s not appcabe to
obgatons arsng ex contractu, but ony to extra-contractua obgatons - or to use
the technca form of expresson, that artce reates ony to cupa aquana and not
to cupa contractua.
respondeat superor - One who paces a powerfu automobe n the hands of a
servant whom he knows to be gnorant of the method of managng such a vehce, s
hmsef guty of an act of neggence whch makes hm abe for a the
consequences of hs mprudence.
Cupa Aquana or extra-contractua cupa
The abty arsng from extra-contractua cupa s aways based upon a vountary
act or omsson whch, wthout wfu ntent, but by mere neggence or nattenton,
has caused damage to another. From ths artce two thngs are apparent: (1) That
when an n|ury s caused by the neggence of a servant or empoyee there nstanty
arses a presumpton of aw that there was neggence on the part of the master or
empoyer ether n seecton of the servant or empoyee, or n supervson over hm
after the seecton, or both; and (2) that that presumpton s |urs tantum and not
|urs et de |ure, and consequenty, may be rebutted. It foows necessary that f the
empoyer shows to the satsfacton of the court that n seecton and supervson he
has exercsed the care and dgence of a good father of a famy, the presumpton s
overcome and he s reeved from abty.
Dstncton between non-contractua and contractua Obgaton
The fundamenta dstncton between obgatons of ths character and those whch
arse from contract, rests upon the fact that n cases of non-contractua obgaton t
s the wrongfu or neggent act or omsson tsef whch creates the vncuum |urs,
whereas n contractua reatons the vncuum |urs exsts ndependenty of the
breach of the vountary duty assumed by the partes when enterng nto the
contractua reaton.
The mere fact that a person s bound to another by contract does not reeve hm
from extra-contractua abty to such person.
Comparatve neggence - f the accdent was caused by pantffs own neggence,
no abty s mposed upon defendants neggence and pantffs neggence merey
contrbuted to hs n|ury, the damages shoud be apportoned. It s, therefore,
mportant to ascertan f defendant was n fact guty of neggence.
Test on Contrbutory neggence.
Was there anythng n the crcumstances surroundng the pantff at the tme he
aghted from the tran whch woud have admonshed a person of average prudence
that to get off the tran under the condtons then exstng was dangerous?
Gut*erre7 vs Gut*erre7 519+16
!acts"
On February 2, 1930, a passenger truck and an automobe of prvate ownershp
coded whe attemptng to pass each other on the Taon brdge on the Mana
South Road n the muncpaty of Las Pas. The dver of the car s an 18 y/o boy,
son of the cars owners. It was found by the tra court that both the boy and the
drver of the autobus were neggent by whch nether of them were wng to sow
up and gve the rght of way to the other. Pantff s the passenger of the bus who as
a resut of the ncdent fractured hs rght eg to hs damage and pre|udce. Thus,
pantff sued the boy, hs parents as owners of the car, the bus drver and ts owner
for damages. The tra court rued n favor of pantff.
Hence, ths appea.
#ssue"
How shoud cv abty be mposed upon partes n the case at bar?
$el%"
The case s deang wth the cv abty of partes for obgatons whch arse from
faut or neggence.
For the boy, t s hs father who s abe (based on cupa aquana) to the pantff
because of the foowng condtons; frst, the car was of genera use of the famy,
second, the boy was authorzed or desgnated by hs father to run the car, thrd, at
the tme of the coson the car s used for the purpose not of the chds peasure
but that of the other members of the car owners famy members. The theory of the
aw s that the runnng of the machne by a chd to carry other members of the
famy s wthn the scope of the owners busness, so that he s abe for the
neggence of the chd because of the reatonshp of master and servant.
For the chauffer and the bus owner (based on cupa contractua), ther abty rests
upon the contract (the safety that s assured by the operator upon the passenger)
whereas that degree of care expected from the chauffer s ackng.
Araneta v. De 8o/a
!acts"
Respondent De |oya, genera manager, proposed to the board of Ace Advsertsng
Corp., to send Rcardo Tayor to the US to take up speca studes n teevson. The
Board dd not act upon the proposa. Nevertheess, sent Tayor to the US.
Respondent assured Antono Araneta, a compny drector, that expenses w be
handed by other partes whch ater was confrmed through a memorandum.
Whe abroad, Tayor contnued to receve hs saares. The tems correspondng to
hs saares appeared n vouchers prepared upon orders of, and approved by, the
respondent. Pettoner Lus Araneta, sgned three of the vouchers, others sgned by
ether respondent or Vcente Araneta, the company treasurer. A tod, Ace
Advertsng dsbursed P5,043.20 on account of Tayors trave and studes.
Then a year after, Ace Advertsng fed a compant before the CFI aganst
respondent for the recovery of the tota sum dsbursed to Tayor aegng that the
trp was made wthout ts knowedge, authorty or ratfcaton.
The respondent n hs answer dened the charge and camed that the trp was
nonetheess ratfed by the companys board and at any event he had the dscreton
as genera manager to authorze the trp whch was for the companys beneft.
A thrd party compant was fe by respondent aganst, Vcente and Lus and Tayor.
Respondent proved that some of the checks to cover the expenses of Tayor were
sgned by Vcente and Lus.
In ther defense, Lus and Vcente camed that they sgned the checks n good fath
as they were approved by respondent.
The CFI rendered |udgement orderng the respondent to pay Ace for the amount
dsbursed wth nterest at a ega rate unt fu payment and dsmssed the thrd
party compant.
Respondent appeaed to CA. CA affrmed the decson of tra court wth regard to ts
decson n favor of Ace but reversed the dsmssa of the 3
rd
party compant. CA
found as a factthat Tayors trp had nether been authorzed nor ratfed by Ace. It
hed that Lus and Vcente were aso prvy to the authorzed dsbursement of
corporate mones wth the respondent. That when they approved sgned the checks,
they have gven ther stamp of approva. As t s estabshed that corporate funds
were dsbursed unauthorzed, the case s of a smpe quas-dect commtted by
them aganst the corporaton.
Hence, ths appea.
#ssue"
Whether or not pettoner s guty of quas-dect, notwthstandng that he was
occupyng a contractua poston at Ace? Otherwse stated, whether or not quas-
dect (tort) may be commtted a party n a contract?
$el%"
Yes. The exstence of a contract between the partes consttutes no bar to the
commsson of a tort by one aganst the other and the consequent recovery of
damages. Hs gut s manfest on account of, n spte of hs beng a vce-presdent
and drector of Ace, pettoner remaned passve, through out the perod of Tayors
trp and to the payment of the atters saary. As such he negected to perform hs
dutes propery to the damage of the frm of whch he was an offcer.
9arre%o vs. Garc*a an% Almar*o 192
!acts"
A head-on coson between a taxcab owned by Barredo and a carretea occurred.
The carretea was overturned and one of ts passengers, a 16-year od boy, the son
of Garca and Amaro, ded as a resut of the n|ures whch he receved. The drver
of the taxcab, a empoyee of Barredo, was prosecuted for the crme and was
convcted. When the crmna case was nsttuted, Garca and Amaro reserved ther
rght to nsttute a separate cv acton for damages. Subsequenty, Garca and
Amaro nsttuted a cv acton for damages aganst Barredo, the empoyer of the
taxcab drver.
It was found that Fontana has been found to have been prevousy voatng traffc
rues.
Barredo set up hs defense camng that beng ony subsdary abe under the RPC
and the accused not beng mputed nor ad|udged to pay damages n a cv acton,
then t s a bar for an acton aganst hm.
The CFI rued n favor of the pantff awardng them P2,000.00 aganst the Barredo.
#ssues"
Whether or not an empoyer (Barredo) shoud be hed prncpay and drecty abe
for the neggent act of hs empoyee (or for the crmna act or omsson of the
empoyee)?
Apropos the empoyee s acqutted n the crmna case and the empoyer s
exonerated as subsdary abe, w t bar the cv acton based on quas-dect a.k.a
cupa extra-contractua or cupa aquana?
Whether or not the aw s restrctve on the abty of the empoyer as subsdary to
that of the accused (confnng tsef wthn the provson of the pena code)?
$el%"
516 Yes. An empoyer (Barredo) s prncpay abe for the neggent acts (or
even crmna acts) of hs empoyee n the performance of hs dutes)
because t s presumed by aw that the empoyer (as we as the father,
guardan , etc.) commtted an act of neggence n not preventng or
avodng the damage. It s ths faut that s condemned by aw.
526 No. The reason for ths s that the cv abty of the empoyer (n the
crmna case) s grounded upon the crme commtted by ts empoyee,
whe the abty of the empoyer (n quas-dect) s competey attrbutabe
to tsef ndependent of the crmna act of the empoyee that s by not
carefuy seectng and supervsng ts empoyees. Thus:
Cuas-detos, ncude a acts n whch "any kng of faut or neggence ntervenes"
whch means even f such act or omsson has nothng to do wth the actua resutng
damage, ke, for exampe, then the owner of a tax company hres a drver who s
known to hm (or shoud have been known to hm) that the atter s guty of voatng
traffc rues. In case the drver causes damage as a resut of hs performance as a
drver, then the owner s abe for the damage, not for the act of omsson of the
drver (because t s covered by the pena code whch makes the crmna or feon
prmary abe for hs n|ury cause) but for ts neggence n empoyng the drver.
5+6 Artces 20 and 21 of the Pena Code, after dstrbutng n ther own way the
cv responsbtes among those who, for dfferent reasons, are guty of
feony or msdemeanor, make such cv responsbtes appcabe to
enterprses and estabshments for whch the guty partes render servce,
but wth subsdary character, that s to say, accordng to the wordng of the
Pena Code, n defaut of those who are crmnay responsbe. In ths
regard, the Cv Code does not concde because artce 1903 says: "The
obgaton mposed by the next precedng artce s demandabe, not ony
for persona acts and omssons, but aso for those of persons for whom
another s responsbe." (N.B. cause of abty s the bond or te between
the one who caused the n|ury and hs empoyer, father, guardan, etc.)
Among the persons enumerated are the subordnates and empoyees of
estabshments or enterprses, ether for acts durng ther servce or on the
occason of ther functons. It s for ths reason that t happens, and t s so
observed n |udca decsons, that the companes or enterprses, after
takng part n the crmna cases because of ther subsdary cv
responsbty by reason of the crme, are sued and sentenced drecty and
separatey wth regard to the obgaton, before the cv courts.
Workmen and empoyees shoud be carefuy chosen and supervsed n order to
avod n|ury to the pubc. It s the masters or empoyers who prncpay reap the
profts resutng from the servces of these servants and empoyees. It s but rght
that they shoud guarantee the atters carefu conduct for the personne and
patrmona safety of others.
We w not use the tera meanng of the aw to smother and render amost feess
a prncpe of such ancent orgn and such fu-grown deveopment as cupa
aquana or cuas-deto, whch s conserved and made endurng n artces 1902 to
1910 of the Spansh Cv Code.
N.B. It s that Bond ( n the performance of the subordnate of the act) whch w
determne whether or not the superor (empoyer, parents may be hed abe.
,l Cano vs $*ll
!acts"
Defendant Regnad H, a mnor, marred at the tme of the occurrence, ked
Agapto. He was apprehended and charged appropratey before CFI. He acqutted
on the ground that hs act was not crmna, because of "ack of ntent to k, couped
wth mstake."
Thereupon, the parents of Agapto, fed a compant for recovery of damages
aganst the defendant and hs father, the defendant Marvn H, wth whom he was
vng and gettng subsstence, for the kng by Regnad of the son of the pantffs.
Defendants fed a moton to dsmss on the grounds that: frst, the cv acton s
barred by the acqutta of Regnad, and; second, the father cannot be hed abe for
the act of hs son because the atter s aready marred at the tme of the
commsson, thus, s aready emancpated.
#ssues"
Whether or not quas-dect s restrcted to neggence and cannot appy to vountary
acts or omssons producng n|ury ( or feony)?
Whether or not a father may be hed abe for the act of hs emancpated chd
consttutng quas-dect?
$el%"
No. To repeat the Barredo case, under Artce 2177, acqutta from an accusaton of
crmna neggence, whether on reasonabe doubt or not, sha not be a bar to a
subsequent cv acton, not for cv abty arsng from crmna neggence, but for
damages due to a quas-dect or cupa aquana athough t mentons the word
"neggence" but accordng to |ustce Bocobo t must be construed accordng to "the
sprt that gveth ft- rather than that whch s tera that keth the ntent of the
awmaker shoud be observed n appyng the same." Crmna prosecuton and cv
acton are two dfferent thngs.
On the second ssue (obsoete), Yes, the father may be hed abe. Whe t s true
that marrage of a chd emancpates hm from the parenta authorty of hs parents,
what matters reay s whether or not such mnor s competey emancpated as
defned by aw. In the case at bar, hs emancpaton s ony parta for as provded by
aw he can sue and be sued n court wth the assstance of hs parents, he cannot
manage hs own propertes wthout the approva of hs parents, and thrd as n the
facts, he rees for subsstence from hs parents.
'ccena vs #cam*na 1990 5Ant*:ue6
!acts"
On May 31, 1979, heren pettoner Euogo Occena nsttuted before the Second
Muncpa Crcut Tra Court of Sbaom Antque, Crmna Case No. 1717, a crmna
compant for Grave Ora Defamaton aganst heren prvate respondent Crstna
Vegafra for aegedy openy, pubcy and macousy utterng the foowng nsutng
words and statements: "Gago kaw nga Barangay Captan, montsco, trador,
maugus, Hudas," whch, freey transated, mean: "You are a foosh Barangay
Captan, gnoramus, trator, tyrant, |udas" and other words and statements of smar
mport whch caused great and rreparabe damage and n|ury to hs person and
honor.
Accused peaded not guty. Tra ensued and |udgment was rendered fndng the
accused guty beyond reasonabe doubt for sght ora defaton sentencng her to
pay a fne of P50.00 and subsdary n case of nsovency but no damages were
awarded to pettoner as hed by the tra court.
Dsagreeng, pettoner sought reef wth the RTC whch affrmed the decson of the
MTC.
Hence, ths appea.
#ssue"
Whether or not the nstant appea shoud be dsmssed on the ground that the
decson rendered by the RTC has become fna?
Whether or not damages are warranted to pettoner?
$el%"
No. Whe the crmna aspect of the case has become fna, the cv aspect dd not
due to the tmey appea fed by pettoner wth regard to the cv aspect of the case
(Peepe vs Cooma).
Yes. Every person crmnay abe for a feony s aso cvy abe (Art. 100, RPC).
Lkewse, artce 2219 of the New Cv Code provdes that mora damages may be
recovered n be, sander or any other form of defamaton.
In the utmate anayss, what gves rse to the cv abty s reay the obgaton of
everyone to repar or to make whoe the damage caused to another by reason of hs
act or omsson, whether done ntentona or neggenty and whether or not
punshabe by aw.
9anal vs ;a%eo 1924
!acts"
Pettoner heren s one of the companants n the crmna cases fed aganst
Rosaro Caudo. Caudo s charged wth 15 separate nformaton for voaton of BP
22. Caudo peaded not guty, thus tra ensued. Pettoner moved to ntervene
through prvate prosecutor but t was re|ected by respondent |udge on the ground
that the charge s for the voaton of Batas Pambansa Bg. 22 whch does not
provde for any cv abty or ndemnty and hence, "t s not a crme aganst
property but pubc order." Pettoner fed a moton for reconsderaton but was
dened by the respondent |udge. Hence ths appea.
#ssue"
Whether or not a prvate prosecutor may ntervene n the prosecuton for voaton of
BP 22 (a speca pena aw) whch does not provde for cv abty?
Note:
Interventon of a prvate prosecutor s for the purpose of protectng the prvate
nterest of the companant to recover damages.
$el%"
Yes! Under Art. 100 of the RPC, every person crmnay abe for a feony s aso
cvy abe. Thus a person commttng a feony offends namey (1) the socety n
whch he ves n or the potca entty caed the State whose aw he had voated;
and (2) the ndvdua member of that socety whose person, rght, honor, chastty or
property was actuay or drecty n|ured or damaged by the same punshabe act or
omsson.
Whe an act or omsson s feonous because t s punshabe by aw, t gves rse to
cv abty not so much because t s a crme but because t caused damage to
another. Vewng thngs pragmatcay, we can ready see that what gves rse to the
cv abty s reay the obgaton and the mora duty of everyone to repar or make
whoe the damage caused to another by reason of hs own act or omsson, done
ntentonay or neggenty, whether or not the same be punshabe by aw. In other
words, crmna abty w gve rse to cv abty ony f the same feonous act or
omsson resuts n damage or n|ury to another and s the drect and proxmate
cause thereof. Damage or n|ury to another s evdenty the foundaton of the cv
acton. Such s not the case n crmna actons for, to be crmnay abe, t s
enough that the act or omsson companed of s punshabe, regardess of whether
or not t aso causes matera damage to another. (Sangco, Phppne Law on Torts
and Damages, 1978, Revsed Edton, pp. 246-247).
Artce 20 of the New Cv Code provdes:
"Every person who, contrary to aw, wfuy or neggenty causes
damage to another, sha ndemnfy the atter for the same."
Regardess, therefore, of whether or not a speca aw so provdes, ndemnfcaton of
the offended party may be had on account of the damage, oss or n|ury drecty
suffered as a consequence of the wrongfu act of another.
9r*c<to=n vs Amor ;*erra Devt. 199
A contract, once perfected, has the force of aw between the partes wth whch they
are bound to compy n good fath and from whch nether one may renege wthout
the consent of the other. The autonomy of contracts aows the partes to estabsh
such stpuatons, causes, terms and condtons as they may deem approprate
provded ony that they are not contrary to aw, moras, good customs, pubc order
or pubc pocy. The standard norm n the performance of ther respectve covenants
n the contract, as we as n the exercse of ther rghts thereunder, s expressed n
the cardna prncpe that the partes n that |urdca reaton must act wth |ustce,
honesty and good fath.
Southeastern Coege vs CA 1998 (Ouantum of proof; Fortutous Event)
!acts"
Prvate respondents are owners of a house at 326 Coege Road, Pasay whe
pettoner owns a four-storey schoo budng aong the same Coege Road. That on
October 11, 1989, a powerfu typhoon ht Metro Mana. Buffeted by very strong
wnds, the roof of the pettoners budng was party rpped off and bown away,
andng on and destroyng portons of the roofng of prvate respondents house.
When the typhoon had passed, an ocuar nspecton of the destroyed budng was
conducted by a team of engneers headed by the cty budng offca.
In ther report, they mputed neggence to the pettoner for the structura defect of
the budng and mproper anchorage of trusses to the roof beams to cause for the
roof be rpped off the budng, thereby causng damage to the property of
respondent.
Respondents fed an acton before the RTC for recovery of damages based on cupa
aquana. Pettoner nterposed dena of neggence and camed that the typhoon
as an Act of God s the soe cause of the damage. RTC rued n ther favor reyng on
the testmony of the Cty Engneer and the report made after the ocuar nspecton.
Pettoners appea before the CA whch affrmed the decson of the RTC.
Hence ths present appea.
#ssue"
(1) Whether the damage on the roof of the budng of prvate respondents
resutng from the mpact of the fang portons of the schoo budngs roof
rpped off by the strong wnds of typhoon "Sang", was, wthn ega
contempaton, due to fortutous event?
(2) Whether or not an ocuar nspecton s suffcent evdence to prove
neggence?
$el%"
On the frst ssue, Yes, pettoner shoud be exonerated from abty arsng from the
damage caused by the typhoon. Under Artce 1174 of the Cv Code, Except n
cases expressy specfed by the aw, or when t s otherwse decared by stpuaton,
or when the nature of the obgaton requres the assumpton of rsk, no person sha
be responsbe for those events whch coud not be foreseen, or whch, though
foreseen, were nevtabe.
In order that a fortutous event may exempt a person from abty, t s necessary
that he be free from any prevous neggence or msconduct by reason of whch the
oss may have been occasoned.
12
An act of God cannot be nvoked for the
protecton of a person who has been guty of gross neggence n not tryng to
foresta ts possbe adverse consequences. When a persons neggence concurs
wth an act of God n producng damage or n|ury to another, such person s not
exempt from abty by showng that the mmedate or proxmate cause of the
damages or n|ury was a fortutous event. When the effect s found to be party the
resut of the partcpaton of man - whether t be from actve nterventon, or
negect, or faure to act - the whoe occurrence s hereby humanzed, and removed
from the rues appcabe to acts of God.
In the case under consderaton, the ower court accorded fu credence to the
fndng of the nvestgatng team that sub|ect schoo budngs roofng had "no
suffcent anchorage to hod t n poston especay when battered by strong wnds."
Based on such fndng, the tra court mputed neggence to pettoner and ad|udged
t abe for damages to prvate respondents.
There s no queston that a typhoon or storm s a fortutous event, a natura
occurrence whch may be foreseen but s unavodabe despte any amount of
foresght, dgence or care. In order to be exempt from abty arsng from any
adverse consequence engendered thereby, there shoud have been no human
partcpaton amountng to a neggent act. In other words; the person seekng
exoneraton from abty must not be guty of neggence. Neggence, as commony
understood, s conduct whch naturay or reasonaby creates undue rsk or harm to
others. It may be the faure to observe that degree of care, precauton, and
vgance whch the crcumstances |ustfy demand, or the omsson to do somethng
whch a prudent and reasonabe man, guded by consderatons whch ordnary
reguate the conduct of human affars, woud do.
On the second ssue, t bears emphaszng that a person camng damages for the
neggence of another has the burden of provng the exstence of faut or neggence
causatve of hs n|ury or oss. The facts consttutve of neggence must be
affrmatvey estabshed by competent evdence,
19
not merey by presumptons and
concusons wthout bass n fact. Prvate respondents, n estabshng the cupabty
of pettoner, merey reed on the aforementoned report submtted by a team whch
made an ocuar nspecton of pettoners schoo budng after the typhoon. As the
term mparts, an ocuar nspecton s one by means of actua sght or vewng. What
s vsua to the eye through, s not aways refectve of the rea cause behnd.
In the present case, other than the sad ocuar nspecton, no nvestgaton was
conducted to determne the rea cause of the parta unroofng of pettoners schoo
budng.
9ar7aga vs CA 1992 5D,-AY6
!acts"
Pettoners wfe ded and her wsh s to be bured before Chrstmas.
After her death on Dec 21, 1990, n fufment of her wshes, pettoner went to
respondents store to nqure the avaabty of materas to be used n budng hs
wfes nche. Respondents empoyee advsed pettoner that to come back the
foowng mornng. That foowng mornng, pettoner made a payment of P2,100 to
secure the devery of the materas. However, the materas were not devered on
tme. Severa tmes pettoner went to respondents store to ask for the devery.
Later that day, the pettoner was forced to dsmss hs aborer snce there s nothng
to work wth for the materas dd not arrve.
Pettoner however purchased the materas from other stores.
After hs wfe was bured, he sued respondent for damages because of deay
For hs part, respondent offered a ame excuse of fortutous event that the reason
for deay s because the trucks tres were fat.
#ssue"
Whether or not respondent s guty of deay that w entte pettoner for damages,
athough t was not specfed n the nvoce the exact tme of devery?
$el%"
Yes! The aw expressy provdes that those who n the performance of ther
obgaton are guty of fraud, neggence, or deay and those who n any manner
contravene the tenor thereof, are abe for damages. (Art 1170 of the Cv Code).
The appeate court appears to have betted pettoners submsson that under the
prevang crcumstances tme was of the essence n the devery of the materas to
the grave ste. However, we fnd pettoners asserton to be anchored on sod
ground. The nche had to be constructed at the very east on the twenty-second of
December consderng that t woud take about two (2) days to fnsh the |ob f the
nterment was to take pace on the twenty-fourth of the month. Respondents deay
n the devery of the constructon materas wasted so much tme that constructon
of the tomb coud start ony on the twenty-thrd. It coud not be ready for the
schedued bura of pettoners wfe. Ths undoubtedy proonged the wake, n
addton to the fact that work at the cemetery had to be put off on Chrstmas day.
Ths case s ceary one of non-performance of a recproca obgaton.
7
In ther
contract of purchase and sae, pettoner had aready comped fuy wth what was
requred of hm as purchaser, .e., the payment of the purchase prce of P2,110.00. It
was ncumbent upon respondent to mmedatey fuf hs obgaton to dever the
goods otherwse deay woud attach.
N(C vs CA, ,C# 1921 5>uas*0Del*ct? !ortu*tous ,vent6
!acts"
ECI entered nto a contract wth NAWASA to undertake a constructon of a tunne
from Ipo Dam to Bct ncudng a materas, equpment and abor for the sad
constructon for 800 days. The pro|ect nvoved 2 phases. The frst nvoves tunne
works and the second conssts of outworks at both ends of the tunne.
As soon as ECI fnshed the tunne works n Bct, t transferred a ts equpments to
Ipo Dam to fnsh the second phase of the pro|ect.
The record shows that on November 4,1967, typhoon Wemng ht Centra Luzon,
passng through defendants (NPC) Angat Hydro-eectrc Pro|ect and Dam at po,
Norzagaray, Buacan. Strong wnds struck the pro|ect area, and heavy rans
ntermttenty fe. Due to the heavy downpour, the water n the reservor of the
Angat Dam was rsng perousy at the rate of sxty (60) centmeters per hour. To
prevent an overfow of water from the dam, snce the water eve had reached the
danger heght of 212 meters above sea eve, the defendant corporaton caused the
openng of the spway gates."
ECI sued NPC for damages. The tra court and the court of appeas found that
defendant NPC was neggent when opened the gates ony at the heght of the
typhoon hodng that t coud have opened the sp gates graduay and shoud have
done so before the typhoon came. Thus both courts awarded ECI for damages.
NPC assas the decson of the CA as beng erroneous on the grounds, nter aa, that
the oss sustaned by ECI was due to force ma|eure. It argued that the rapd rse of
water eve n the reservor due to heavy rans brought about by the typhoon s an
extraordnary occurrence that coud not have been foreseen.
On the other hand, ECI assas the decson of the court of appeas modfyng the
decson of the tra court emnatng the awardng of exempary damages.
Hence ths present appea.
#ssues"
1. Whether or not NPC s abe for damages even though the cause of the
damage s due to a force ma|eure? Otherwse stated, whether or not the
damage sustaned by ECI coud be attrbuted to NPC notwthstandng the
occurrence of a force ma|eure?
2. Whether or not ECI s entted to exempary damages?
$el%"
Yes. NPC was undoubtedy neggent because t opened the spway gates of the
Angat Dam ony at the heght of typhoon "Wemng" when t knew very we that t
was safer to have opened the same graduay and earer, as t was aso undenabe
that NPC knew of the comng typhoon at east four days before t actuay struck.
And even though the typhoon was an act of God or what we may ca force ma|eure,
NPC cannot escape abty because ts neggence was the proxmate cause of the
oss and damage. As we have rued n |uan F. Nakp & Sons v. Court of Appeas,
(144 SCRA 596, 606-607):
Thus, f upon the happenng of a fortutous event or an act of God, there
concurs a correspondng fraud, neggence, deay or voaton or contraventon
n any manner of the tenor of the obgaton as provded for n Artce 1170 of
the Cv Code, whch resuts n oss or damage, the obgor cannot escape
abty.
The prncpe emboded n the act of God doctrne strcty requres that the act
must be one occasoned excusvey by the voence of nature and human
agences are to be excuded from creatng or enterng nto the cause of the
mschef. When the effect, the cause of whch s to be consdered, s found to be
n part the resut of the partcpaton of man, whether t be from actve
nterventon or negect, or faure to act, the whoe occurrence s thereby
humanzed, as t was, and removed from the rues appcabe to the acts of God.
(1 Corpus |urs, pp. 1174-1175).
Thus, t has been hed that when the neggence of a person concurs wth an act
of God n producng a oss, such person s not exempt from abty by showng
that the mmedate cause of the damage was the act of God. To be exempt
from abty for oss because of an act of God, he must be free from any
prevous neggence or msconduct by whch the oss or damage may have been
occasoned. (Fsh & Eectve Co. v. Ph. Motors, 55 Ph. 129; Tucker v. Man 49
O.G. 4379; Lmpangco & Sons v. Yangco Steamshp Co., 34 Ph. 594, 604;
Lasam v. Smth, 45 Ph. 657).
Substanta evdence s defned as such reevant evdence as a reasonabe mnd
mght accept as adequate to support a concuson (Phppne Meta Products, Inc. v.
Court of Industra Reatons, 90 SCRA 135 |1979|; Poce Commsson v. Lood, 127
SCRA 757 |1984|; Canete v. WCC, 136 SCRA 302 |1985|)
Exempary Damages
No. As to the queston of exempary damages, we sustan the appeate court n
emnatng the same snce t found that there was no bad fath on the part of NPC
and that nether can the atters neggence be consdered gross. In Dee Hua Long
Eectrca Equpment Corp. v. Reyes, (145 SCRA 713, 719) we rued:
Nether may prvate respondent recover exempary damages snce he s
not entted to mora or compensatory damages, and agan because the
pettoner s not shown to have acted n a wanton, frauduent, reckess or
oppressve manner (Art. 2234, Cv Code; Yutuk v. Mana Eectrc Co., 2
SCRA 377; Francsco v. Government Servce Insurance System, 7 SCRA
577; Guterrez v. Vegas, 8 SCRA 527; Ar France v. Carrascoso, 18 SCRA
155; Pan Pacfc (Ph.) v. Ph. Advertsng Corp., 23 SCRA 977; Marchan v.
Mendoza, 24 SCRA 888).
Comments:
Under Art. 1170 of the Cv Code, "When those who n the performance of ther
obgatons are guty of fraud, deay, or neggence, or n any manner contravene n
the tenor of the obgaton, are abe for damages." What the provson
contempates s that there s an express obgaton between the obgor and the
obgee arsng from a contractua obgaton that must be comped wth n good
fath. And what the aforestated provson abe for damages s that breach ether
because of fraud, deay, or neggence, or contraventon to the tenor of obgaton.
Hence t shoud not be apped generay n a cases, especay n quas-dect whch
s treated specfcay by aw. In the case at bar, ECI and NPC has no pre-exstng
obgaton arsng from a contract. Athough neggence s ndubtaby present n the
case, there cannot be ocated from the facts that there s a pror obgaton arsng
form NPC and ECI. But nstead the appcabe aw n the case at bar s Art. 2176
whch provdes, "Whoever by act or omsson causes damage to another, there
beng fraud or neggence, s obged to pay for the damage done. Such faut of
neggence, f there s no pre-exstng contractua reaton between the partes, s
caed quas-dect and s governed by the provsons of ths chapter." I shoud rather
say that the Honorabe Supreme Court mspaced the appcaton of the aw.
I shoud further say that the Act of God Doctrne shoud be apped nversey to that
Rural 9an< of &ta 3ar*a (angas*nan vs CA Gr no. 110142 1999
!acts"
A Deed of Absoute Sae wth Assumpton of Mortgage was executed between
Manue Behs as vendor/assgnor and Rayandayan and Arceo as vendees/assgnees
for the sum of P250,000.00. On the same day, Rayandayan and Arceo together
wth Manue Behs executed another Agreement embodyng the rea consderaton of
the sae of the and n the sum of P2,400,000.00. Thereafter, Rayandayan and
Arceo negotated wth the prncpa stockhoder of the bank, Engr. Edberto
Natvdad n Mana, for the assumpton of the ndebtedness of Manue Behs and the
subsequent reease of the mortgage on the property by the bank.
Rayandayan and Arceo dd not show to the bank the Agreement wth Manue Behs
provdng for the rea consderaton of P2,400,000.00 for the sae of the property to
the former. Subsequenty, the bank consented to the substtuton of pantffs as
mortgage debtors n pace of Manue Behs n a Memorandum of Agreement
between prvate respondents and the bank wth restructured and berazed terms
for the payment of the mortgage debt.
Instead of the bank forecosng mmedatey for non-payment of the denquent
account, pettoner bank agreed to receve ony a parta payment of P143,000.00 by
nstament on specfed dates. After payment thereof, the bank agreed to reease
the mortgage of Manue Behs; to gve ts consent to the transfer of tte to the
prvate respondents; and to the payment of the baance of P200,000.00 under new
terms wth a new mortgage to be executed by the prvate respondents over the
same and.
However, pettoner bank dd not compy wth the MOA wth respondents because of
a supervenng event namey the protest made by Crstna Behs, wfe of Manua
Behs, aegng that she dd not consent to the negotaton made as regards the
Deed of absoute sae wth Assumpton of Mortgage by her husband wth the
respondents and that her sgnature was forged by respondents. The pettoner bank
then tod respondents to sette the matter wth Mrs. Behs.
At that pont, pettoner bank canceed ts MOA wth respondents because: frst, the
atter faed to sette the protest of Mrs. Behs; and, secondy, the terms of the
Memorandum of Agreement have not been fuy comped wth as the payments
were not made on tme on the dates fxed theren; and thrd, ther consent to the
Memorandum of Agreement was secured by the pantffs thru fraud as the Bank was
not shown the Agreement contanng the rea consderaton of P2,400.000.00 of the
sae of the and of Manue Behs to pantffs.
Thereafter, the pettoner bank returned the nta payment of P143,000.00 to
respondents.
In the mean tme, pettoner entered nto an agreement wth Hasema Bank that the
atter woud assume the mortgage of Manue Behs n consderaton of P521,765.45.
Thereafter, respondents brought the matter before the RTC whch rued that the
MOA s vad.
The case was eevated to the CA on certorar. The respondent Court affrmed the
vadty of the MOA dsmssng the cam of the respondent that ther consent to the
agreement made wth respondents to assume the mortgage of Manue Behs, and
awardng the respondents for damages.
Hence ths present appea.
#ssues:
Whether or not respondents are guty of fraud (whch woud make the contract
between respondents and pettoner vod) when t dd not show or t conceaed from
the pettoner the Agreement (between respondents and Manue Behs) the
consderaton of P2.4, and rather what was ony shown was the frst agreement wth
regard to the Deed of Sae wth Assumpton of Mortgage?
$el%"
No. Ths brngs us to the frst ssue rased by pettoner bank that the Memorandum
of Agreement s vodabe on the ground that ts consent to enter sad agreement
was vtated by fraud because prvate respondents wthhed from pettoner bank the
matera nformaton that the rea consderaton for the sae wth assumpton of
mortgage of the property by Manue Behs to Rayandayan and Arceo s
P2,400,000.00, and not P250,000.00 as represented to pettoner bank. Accordng to
pettoner bank, had t known of the rea consderaton for the sae, .e. P2.4 mon,
t woud not have consented nto enterng the Memorandum of Agreement wth
Rayandayan and Arceo as t was put n the dark as to the rea capacty and
fnanca standng of prvate respondents to assume the mortgage from Manue
Behs. Pettoner bank ponted out that t woud not have assented to the agreement,
as t coud not expect the prvate respondents to pay the bank the approxmatey
P343,000.00 mortgage debt when prvate respondents have to pay at the same tme
P2,400,000.00 to Manue Behs on the sae of the and.
The knd of fraud that w vtate a contract refers to those nsdous words or
machnatons resorted to by one of the contractng partes to nduce the other to
enter nto a contract whch wthout them he woud not have agreed to.
13
Smpy
stated, the fraud must be the determnng cause of the contract, or must have
caused the consent to be gven. It s beeved that the non-dscosure to the bank of
the purchase prce of the sae of the and between prvate respondents and Manue
Behs cannot be the "fraud" contempated by Artce 1338 of the Cv Code.
14
From
the soe reason submtted by the pettoner bank that t was kept n the dark as to
the fnanca capacty of prvate respondents, we cannot see how the omsson or
conceament of the rea purchase prce coud have nduced the bank nto gvng ts
consent to the agreement; or that the bank woud not have otherwse gven ts
consent had t known of the rea purchase prce.
The decet whch vods the contract exsts where the party who obtans the
consent does so by means of conceang or omttng to state matera facts, wth
ntent to deceve, by reason of whch omsson or conceament the other party
was nduced to gve a consent whch he woud not otherwse have gven
(Toentno, Commentares and |ursprudence on the Cv Code, Vo. IV, p. 480).
In ths case, the consderaton for the sae wth assumpton of mortgage was not
the nducement to defendant bank to gve a consent whch t woud not
otherwse have gven.
Consequenty, not a the eements of fraud vtatng consent for purposes of
annung a contract concur, to wt: (a) It was empoyed by a contractng party upon
the other; (b) It nduced the other party to enter nto the contract; (c) It was serous;
and; (d) It resuted n damages and n|ury to the party seekng annument.
18
Pettoner bank has not suffcenty shown that t was nduced to enter nto the
agreement by the non-dscosure of the purchase prce, and that the same resuted
n damages to the bank. Indeed, the genera rue s that whosoever aeges fraud or
mstake n any transacton must substantate hs aegaton, snce t s presumed
that a person takes ordnary care for hs concerns and that prvate transactons have
been far and reguar. Pettoner banks aegaton of fraud and decet have not been
estabshed suffcenty and competenty to rebut the presumpton of reguarty and
due executon of the agreement.
;elefast vs Castro 519226
!acts"
In 1956, Sofa Castro-Crouch (pantff-respondent) was vacatonng n Pangasnan n
her parents house. That same year n November, her mother, Consoacon ded. On
the day of her mothers death she addressed a teegram to her father Ignaco who
was then n the US announcng Consoacons death. The teegram was accepted by
Teefast (defendant-pettoner) n ts Dagupan offce after payment of requred fees
or charges.
The teegram never reached the addressee. Consoacon was nterred wthout her
husband and chdren besdes Sofa.
Sofa went back to the US and earned that the teegram never reached her father.
Thus, she and her sbngs and ther father sued Teefast for damages arsng from
the breach of contract by the defendant.
Pettoner-defendant Teefast nterposed that the reason why the teegram never
reached the addressee s because of "technca and atmospherc factors beyond ts
contro." It appears though that no attempt made by defendant to nform Sofa for
that matter or any reason at a that expans why the teegram reached the
addressee.
The CFI rued n favor of Sofa and her co-pantffs awardng her damages she
prayed for. Teefast appeaed before the IAC whch affrmed the decson of the CFI.
Hence ths appea.
#ssues"
Whether or not pettoner s abe for damages arsng from the breach of contract
even though that there was a technca and atmospherc factors that ead to ts
faure to compy wth terms of the contract?
$el%"
Yes. Art. 1170 of the Cv Code provdes, "Those who n the performance of ther
obgaton are guty of fraud, deay, neggence, and those who n any manner
contravene the tenor thereof, are abe for damages. Art. 2176 aso provdes that
"whoever by act or omsson causes damage to another, there beng faut or
neggence, s obged to pay for the damage done.
In the case at bar, pettoner and prvate respondent Sofa C. Crouch entered nto a
contract whereby, for a fee, pettoner undertook to send sad prvate respondents
message overseas by teegram. Ths, pettoner dd not do, despte performance by
sad prvate respondent of her obgaton by payng the requred charges. Pettoner
was therefore guty of contravenng ts obgaton to sad prvate respondent and s
thus abe for damages.
Aso, t s evdent that pettoner dd not do anythng to advse the pantff of the
crcumstances whch ead to ts faure to compy wth ts obgaton. It s apparent
that such tantamount to gross neggence. Hence bad fath.
Agcao*l* vs G&#& 1922 5Art 1119? Compensat*o 3orae? pg 1096
!acts:
In 1964, pantff Agcao apped wth the defendant GSIS to purchase a house and
ot n Markna. In the foowng year n a etter, respondent approved pettoners
appcaton wth the advse to occupy the sad house mmedatey and faure to
occupy the same from the recept of the notce, pantffs appcaton sha be
consdered dsapproved and w be awarded to another appcant.
Pantf ost no tme n occupyng the house. However, he coud not stay n t and had
to eave the foowng day because the house was nothng more than a she, n such
a state of ncompeteness that cvzed occupaton was not possbe. Agcao dd
however ask a homeess frend, a certan Vanueva, to stay n the premses as
some sort of watchman, pendng competon of the constructon of the house.
Agcao thereafter companed to the GSIS, to no ava.
The GSIS asked Agcao to pay the monthy amortzatons and other fees. Agcao
pad the frst monthy nstament and the ncdenta fees,
3
but refused to make
further payments unt and uness the GSIS competed the housng unt. What the
GSIS dd was to cance the award and requre Agcao to vacate the premses.
4
Agcao reacted by nsttutng sut n the Court of Frst Instance of Mana for specfc
performance and damages.
The CFI rued n favor of Agcao decarng the canceaton of the award ega and
vod and orderng GSIS to respect and enforce the aforesad award, and to compete
the house n queston to make the same habtabe and authorzng GSIS to coect
the monthy amortzaton ony after sad house sha have been competed.
Hence ths present appea.
GSIS argued the foowng:
1. Agcao had no rght to suspend payment of amortzatons on account of
the ncompeteness of hs housng unt, snce sad unt had been sod "n
the condton and state of competon then exstng ... (and) he s deemed
to have accepted the same n the condton he found t when he accepted
the award.
2. Perfecton of the contract of sae between t and Agcao beng condtoned
upon the atters mmedate occupancy of the house sub|ect thereof, and
the atter havng faed to compy wth the condton, no contract ever came
nto exstence between them.
#ssues"
1. Whether or not Agcao may suspend payment of amortzaton on account of the
ncompeteness of hs housng unt, snce sad unt had been sod "n the condton
and state of competon then exstng ... (and) he s deemed to have accepted the
same n the condton he found t when he accepted the award?
Whether or not there was a vad contract of sae between Agcao and GSIS?
2. Whether or not Agcao repudated hs contract wth GSIS?
$el%"
On the frst ssue, Yes, because Art. 1169 of the Cv Code provdes that "n
recproca obgatons, nether party ncurs n deay f the other does not compy or s
not ready to compy n a proper manner wth what s ncumbent upon hm."
Certany, the prestaton of the contract whch was ratfed upon approva of GSIS
(presupposng the meetng of the mnds of GSIS and Agcao) s the house and ot, on
the condton that the house shoud be habtabe. Thus: "There was then a perfected
contract of sae between the partes; there had been a meetng of the mnds upon
the purchase by Agcao of a determnate house and ot n the GSIS Housng Pro|ect
at Nangka Markna, Rza at a defnte prce payabe n amortzatons at P31.56 per
month, and from that moment the partes acqured the rght to recprocay demand
performance."
There woud be no sense to requre the awardee to mmedatey occupy and ve n a
she of a house, a structure consstng ony of four was wth openngs, and a roof,
and to theorze, as the GSIS does, that ths was what was ntended by the partes,
snce the contract dd not ceary mpose upon t the obgaton to dever a habtabe
house, s to advocate an absurdty, the creaton of an unfar stuaton. By any
ob|ectve nterpretaton of ts terms, the contract can ony be understood as
mposng on the GSIS an obgaton to dever to Agcao a reasonaby habtabe
dweng n return for hs undertakng to pay the stpuated prce. Snce GSIS dd not
fuf that obgaton, and was not wng to put the house n habtabe state, t
cannot nvoke Agcaos suspenson of payment of amortzatons as cause to cance
the contract between them. It s axomatc that "()n recproca obgatons, nether
party ncurs n deay f the other does not compy or s not ready to compy n a
proper manner wth what s ncumbent upon hm."
15
Na<p*l an% &ons @s Court of appeals 1921
!acts"
Phppne Bar Assocaton, an NGO, entered nto a contract wth UCCI on
admnstraton bass and Nakp & Sons to construct a budng; the atter w provde
the desgn and specfcatons of the sad budng. Two years after the budng s
constructed and s beng eased by PBA, an earthquake, unusuay strong ht Metro
Mana. As a resut, the budng s severey damaged (partay coapsed) whch
compeed the tenants to vacate the premses. PBA, sued UCCI and Nakp. Snce the
case nvoves a hgh degree of techncaty to ascertan the cause of acton, the tra
court apponted a Commssoner to report to hm hs fndngs.
Accordng to the Commssoner the damage s caused by:
1. Earthquake
2. defects n the pans and specfcatons prepared by the thrd-party
defendants archtects.
3. devatons from sad pans and specfcatons by the defendant contractors
4. faure of the atter to observe the requste workmanshp n the
constructon of the budng and of the contractors, archtects
5. faure of the owners to exercse the requste degree of supervson n the
constructon of sub|ect budng
The tra court agreed wth the fndngs of the Commssoner except as to the hodng
that the owner s charged wth fu nne supervson of the constructon. The Court
sees no ega or contractua bass for such concuson. Defendants appeaed the
decson of the tra court to CA.
CAs decson s to affrm the ower courts decson wth the addtona P200K
damages.
#ssue"
The pvota ssue n ths case s whether or not an act of God-an unusuay strong
earthquake-whch caused the faure of the budng, exempts from abty, partes
who are otherwse abe because of ther neggence.
$el%"
No. ART 1723 NCC
Labty of the engneer or archtect s f the budng shoud coapse wthn 15 years
because of a defect n the pans and specfcaton OR due to the defects n the
ground.
The abty of the contractor es f the budng shoud coapse w/n 15 years
because of (1) defects n the CONSTRUCTION (2) USE of materas of INFERIOR
OUALITY furnshed by contractor or (3) VIOLATION of the terms of the contract.
If the constructon was supervsed by the engneer or archtect, he sha be sodary
abe wth the contractor.
If the owner of the budng accepts the budng after t s constructed does not
mean a WAIVER of any cause of acton by reason of defects. The acton shoud be
brought wthn 10 years.
Upon the other hand, 1174 of NCC:
Except n cases expressy specfed by aw, or otherwse when t s decared n
stpuaton or when from the nature of the obgaton requres the assumpton of rsk,
no person sha be abe for those events whch coud not be foreseen, or whch,
though foreseen, were nevetabe.
Eements of 1174, fortutous event
(a) the cause of the breach of the obgaton must be ndependent of the w of
the debtor;
(b) the event must be ether unforseeabe or unavodabe;
(c) the event must be such as to render t mpossbe for the debtor to fuf hs
obgaton n a norma manner; and
(d) the debtor must be free from any partcpaton n, or aggravaton of the
n|ury to the credtor.
In any event, the reevant and ogca observatons of the tra court as affrmed by
the Court of Appeas that "whe t s not possbe to state wth certanty that the
budng woud not have coapsed were those defects not present, the fact remans
that severa budngs n the same area wthstood the earthquake to whch the
budng of the pantff was smary sub|ected," cannot be gnored.
One who neggenty creates a dangerous condton cannot escape abty for the
natura and probabe consequences thereof, athough the act of a thrd person, or an
act of God for whch he s not responsbe, ntervenes to precptate the oss.
As aready dscussed, the destructon was not purey an act of God. Truth to
te hundreds of ancent budngs n the vcnty were hardy affected by the
earthquake. Ony one thng spes out the fata dfference; gross neggence and
evdent bad fath, wthout whch the damage woud not have occurred.
A( v. Delos Angeles
!acts"
UP pettoner entered nto a contract wth ALUMCO respondent, a oggng company,
where the atter s granted a rght to cut,coect and remove tmber from the and
grant n return for a consderaton of money. But respondent ncurred unpad
account amountng to P220K and despte repeated demands, t st faed to sette
ts dues. UP sent a notce to rescnd the contract, and respondent executed an
nstrument, entted "Acknowedgment of Debt and Proposed Manner of Payments"
wheren t undertook to sette the baance on or before |une 1965 and n case of
non-fufment, UP s entted to rescnd the contract and respondent w pay P50K
as qudated damages wthout the necessty of |udca sut. UP Presdent approved
the nstrument.
Respondent constnued ts oggng operatons but agan faed to sette ts account
n addton to the ndebtedness t had prevousy acknowedged.
That o |uy 1965, UP nformed ALUMCO that t had, as of that date, consdered as
rescnded and of no further ega effect the oggng agreement that they had
entered n 1960; and on 7 September 1965, UP fed a compant aganst ALUMCOfor
the coecton or payment of the heren before stated sums of money and aegng
the facts herenbefore specfed, together wth other aegatons; t prayed for and
obtaned an order, dated 30 September 1965, for premnary attachment and
premnary n|uncton restranng ALUMCO from contnung ts oggng operatons n
the Land Grant.
Before the ssuance of the premnary n|ucton UP had taken steps to have another
concessonare take over the oggng operaton; after t advertsed ts nvtaton to
bd, the concesson was awarded to Sta. Cara Lmber sgned n Feb. 1966. In the
mean tme, ALUMCO fed a petton to en|on UP form the conductng the bddng,
the CFI e|oned UP from awardng the oggng rghts. However, the order was
receved ony after t had concuded the ts contract wth Sta. Cara.
And upon moton of ALUMCO, UP was decared n contempt and drected Sta. Cara
from exercsng oggng rghts or conductng oggng operatons n the concesson.
UP moved to reconsder the order but t was dened.
Hence ths present appea.
#ssue"
Whether or not by vrtue of the nstrument respondent executed, pettoner can
rescnd the contract upon defaut of respondent wthout |udca pronouncement?
$el%"
Yes. UP and ALUMCO had expressy stpuated n the "Acknowedgment of Debt and
Proposed Manner of Payments" that, upon defaut by the debtor ALUMCO, the
credtor (UP) has "the rght and the power to consder, the Loggng Agreement dated
2 December 1960 as rescnded wthout the necessty of any |udca sut." As to such
speca stpuaton, and n connecton wth Artce 1191 of the Cv Code, ths Court
stated n Froan vs. Pan Orenta Shppng Co., et a., L-11897, 31 October 1964, 12
SCRA 276:
"there s nothng n the aw that prohbts the partes from enterng nto agreement
that voaton of the terms of the contract woud cause canceaton thereof, even
wthout court nterventon. In other words, t s not aways necessary for the n|ured
party to resort to court for rescsson of the contract."
"Artce 1191. The power to rescnd obgatons s mped n recproca ones, n case
one of the obgors shoud not compy wth what s ncumbent upon hm.
The n|ured party may choose between the fufment and the rescsson of the
obgaton, wth the payment of damages n ether case. He may aso seek
rescsson, even after he has chosen fufment, f the atter shoud become
mpossbe.
The court sha decree the rescsson camed, uness there be |ust cause authorzng
the fxng of a perod.
Ths s understood to be wthout pre|udce to the rghts of thrd persons who have
acqured the thng, n accordance wth artces 1385 and 1388 and the Mortgage
Law. (1124)"
Of course, t must be understood that the act of party n treatng a contract as
canceed or resoved on account of nfractons by the other contractng party must
be made known to the other and s aways provsona, beng ever sub|ect to scrutny
and revew by the proper court. If the other party denes that rescsson s |ustfed, t
s free to resort to |udca acton n ts own behaf, and brng the matter to court.
Then, shoud the court, after due hearng, decde that the resouton of the contract
was not warranted, the responsbe party w be sentenced to damages; n the
contrary case, the resouton w be affrmed, and the consequent ndemnty
awarded to the party pre|udced.
In other words, the party who deems the contract voated may consder t resoved
or rescnded, and act accordngy, wthout prevous court acton, but t proceeds at
ts own rsk. For t s ony the fna |udgment of the correspondng court that w
concusvey and fnay sette whether the acton taken was or was not correct n
aw. But the aw defntey does not requre that the contractng party who beeves
tsef n|ured must frst fe sut and wat for a |udgment before takng extra|udca
steps to protect ts nterest. Otherwse, the party n|ured by the others breach w
have to passvey st and watch ts damages accumuate durng the pendency of the
sut unt the fna |udgment of rescsson s rendered when the aw tsef requres
that he shoud exercse due dgence to mnmze ts own damages (Cv Code,
Artce 2203).
Central 9an< vs CA an% ;olent*no 1925
!acts"
On Apr 1965, Isand Savngs Bank approved the oan of Supco Toentno for P80K
payabe n 3 years wth 12% nterest per annum, n consderaton of hs 100-hectare
and.
On May 1965, ony a mere P17K of the P80K was reeased by the bank and Supco
and hs wfe sgned a promssory note for the same consderaton. The bank
promsed repeatedy the reease of P63K.
On August 1965, the Monetary Board of the Centra Bank, after fndng Isand
Savngs was sufferng qudty probems, ssued a resouton prhbtng t from
makng new oans and nvestments (except nvestment n government securtes)
excudng grantng extensons and renewas of aready approved oans sub|ect to
revew by the Superntendent of Banks.
On |une 1968, after fndng that Isand savngs faed to put up the requred capta
to restore ts sovency prohbted t from dong dong busness and nstructed the
Actng Superntendent of Banks to take charge of the Banks assets.
On August 1968, Isand savngs fed an appcaton for the extra-|udca forecosure
of the rea estate mortgage coverng the 100-hectare and of Supco.
On |anuary 1979, Supco fed a petton wth the CFI for n|ucton, specfc
performance or rescsson wth damages wth premnary n|ucton aegng that
Isand Savngs faed to dever the P63K baance of the P80K oan. He prayed the
devery of P63K pus 12% ega nterest and f the same s not fufed, then the rea
estate mortgage shoud be rescnded.
Upon fng of a P5K bond, the CFI ssued a TRO en|onng Isand Savngs from
contnung wth forecosure of the mortgage.
After the tra, the CFI dsmssed the petton of Supco ordered hm to pay the P17K
oan pus 12% ega nterest and f he faed to pay the same the TRO be fted and
the forecosure may proceed.
Supco appeaed the decson to the CA whch n turn affrmed the dsmssa of hs
petton but rued that Isand Savngs can nether forecose the mortgage nor coect
the P17K oan.
Hence ths appea.
#ssues"
(1) Whether or not Supco entted to the reef of specfc performance?
(2) Whether or not Supco s abe to pay the P17K debt covered by the promssory
note?
(3) If Supcos abty to pay the P17K subssts, can hs rea estate mortgage be
forecosed to satsfy the sad amount?
$el%:
When Isand Savngs and Supco entered nto an P80K oan agreement n 1965,
they undertook recproca obgatons. In recproca obcatons, nether party ncurs
n deay when the other does not compy or s not ready to compy n a proper
manner wth what s ncumbent upon hm. So when Supco furnshed hs and on
Apr 1965 n consderaton of P80K and when Isand Savngs faed to compy the
fufment of the P80K, the atter ncurred n deay. Nether s t a vad defense when
the monetary board prohbted t from extendng new oans because t dd not
prevent t from reeasng the baance of a oan agreement prevousy contracted.
Supco then has the rght to demand specfc performance but n vew of the
consderaton that the monetary board prohbted t from dong any busness,
specfc performance can no onger be granted. In the same ne, the ony remedy
eft s rescsson of the contract but t can ony appy to the baance of P63K because
the bank s n defaut ony nsofar as such amount s concerned, as there s no doubt
that the bank faed to gve the P63,000.00. As far as the parta reease of
P17,000.00, whch Supco M. Toentno accepted and executed a promssory note to
cover t, the bank was deemed to have comped wth ts recproca obgaton to
furnsh a P17,000.00 oan. The promssory note gave rse to Supco M. Toentnos
recproca obgaton to pay the P17,000.00 oan when t fas due. Hs faure to pay
the overdue amortzatons under the promssory note made hm a party n defaut,
hence not entted to rescsson (Artce 1191 of the Cv Code). If there s a rght to
rescnd the promssory note, t sha beong to the aggreved party, that s, Isand
Savngs Bank. If Toentno had not sgned a promssory note settng the date for
payment of P17,000.00 wthn 3 years, he woud be entted to ask for rescsson of
the entre oan because he cannot possby be n defaut as there was no date for
hm to perform hs recproca obgaton to pay. Thus there s st the obgaton of
Supco to pay Isand Savngs the P17k he oaned.
However, Supcos and may not be forecosed n whoe because the 100-hectare
and was n consderaton of P80K. Snce ony P17K was gven or consttutng ony
21.25 percent, the and that may ony be forecosed shoud correspond to the
amount gven. Thus hs rea estate coverng 78.75 hectares was decared
unenforceabe.
Bulueta v. 3ar*ano GR 29+10 519226
!acts"
Zuueta and Aveana (a move drector) entered nto a Contract to Se a resdenta
house and ot for P75k payabe n 20 years, wth Aveana assumng to pay P5k of
down payment and monthy nstament payabe n advance before 5
th
of each
month, startng Dec. 1964.
It was aso stpuate that upon faure of the BUYER (Aveana) to fuf any of the
condtons, t w authorze the owner to(1) recover physca possesson of the and,
and (2) rescnd the contract, and by such (3) a payments made by the BUYER to
OWNER sha be deemed as renta payments.
Aveana faed to make payment despte severa demands. Thus compeed Zuueta
to sue Aveana for e|ectment before the Muncpa Court.
Aveana contended that that the Muncpa Court had no |ursdcton over the
nature of the acton as t nvoved the nterpretaton and/or rescsson of the
contract; that pror to the executon of the contract to se, pettoner was aready
ndebted to hm n the sum of P31,269.00 representng the cost of two moves
respondent made for pettoner and used by the atter n hs potca campagn n
1964 when pettoner ran for Congressman, as we as the cost of one 16 mmeter
pro|ector pettoner borrowed from respondent and whch had never been returned
The Muncpa Court found that respondent Aveana had faed to compy wth hs
fnanca obgatons under the contract and ordered hm to vacate the premses and
dever possesson thereof to pettoner.
Respondent Aveana appeaed to the CFI whch granted hs contenton that the
Muncpa Court had no |ursdcton to try the case, thus dsmssed t.
Hence ths appea.
#ssue"
Was the acton before the Muncpa Court of Pasg essentay for detaner and,
therefore, wthn ts excusve orgna |ursdcton, or one for rescsson or annument
of a contract, whch shoud be tgated before a Court of Frst Instance?
$el%"
The case s essentay one for rescsson of the contract.
Under those crcumstances, proof of voaton s a condton precedent to
resouton or rescsson. It s ony when the voaton has been estabshed that the
contract can be decared resoved or rescnded. Upon such rescsson, n turn, hnges
a pronouncement that possesson of the reaty has become unawfu. Thus, the basc
ssue s not possesson but one of rescsson or annument of a contract, whch s
beyond the |ursdcton of the Muncpa Court to hear and determne.
True, the contract between the partes provded for extra|udca rescsson. Ths has
ega effect, however, where the other party does not oppose t. Where t s ob|ected
to, a |udca determnaton of the ssue s st necessary.
A stpuaton enttng one party to take possesson of the and and budng f the
other party voates the contract does not ex propro vgore confer upon the former
the rght to take possesson thereof f ob|ected to wthout |udca nterventon and
determnaton. The wrt of mandamus was dened.
(ala/ #nc. vs Clave 51041 192+
!acts"
In 1965, Pettoner and prvate respondent entered nto a Contract to Se a parce
of and. In the sad contract, t provded the pettoner for automatc extra|udca
rescsson upon defaut n payment of any
monthy nstament after the apse of 90 days from the expraton of the grace
perod of one month, wthout need of notce and wth forfeture of a nstaments
pad.
Respondent Dumpt pad the downpayment and severa nstaments. The ast
payment was made on Dec. 1967.
On 1973, prvate respondent wrote pettoner offerng to update a hs overdue
accounts wth nterest, and seekng ts wrtten consent to the assgnment of hs
rghts to a certan Lourdes Dzon. Repyng pettoners nformed respondent that hs
Contract to Se had ong been rescnded pursuant to paragraph 6 of the contract,
and that the ot had aready been resod.
Ouestonng the vadty of the rescsson of the contract, respondent fed a etter
compant wth the (NHA) for reconveyance wth an aternatve prayer for refund. In
a Resouton, dated |uy 10, 1979, the NHA, fndng the rescsson vod n the
absence of ether |udca or notara demand, ordered Paay, Inc. and Aberto Onstott
n hs capacty as Presdent of the corporaton, |onty and severay, to refund
mmedatey to prvate respondent wth 12% nterest from the fng of the
compant. Pettoners Moton for Reconsderaton of sad Resouton was dened by
the NHA n ts Order dated October 23, 1979.
The case was appeaed to the Offce of the Presdent whch affrmed the
resouton of the NHA.
Hence ths present appea.
#ssues"
1. Whether notce or demand s not mandatory under the crcumstances and,
therefore, may be dspensed wth by stpuaton n a contract to se?
2. Whether pettoners may be hed abe for the refund of the nstament
payments made by respondent Nazaro M. Dumpt?
3. Whether or not pettoner Onstott the Presdent of pettoner corporaton
may be hed personay l*ableC
$el%"
1. We hod that resouton by pettoners of the contract was neffectve and
noperatve aganst prvate respondent for ack of notce of resouton.
We setted s the rue, as hed n prevous |ursprudence, that |udca acton for the
rescsson of a contract s not necessary where the contract provdes that t may be
revoked and canceed for voaton of any of ts terms and condtons. However,
even n the cted cases, there was at east a wrtten notce sent to the defauter
nformng hm of the rescsson. As stressed n Unversty of the Phppnes vs.
Wafrdo de os Angees the act of a party n treatng a contract as canceed shoud
be made known to the other. We quote the pertnent excerpt:
It must be understood that the act of a party n treatng a contract as canceed or
resoved n account of nfractons by the other contractng party must be made
known to the other and s aways provsona beng ever sub|ect to scrutny and
revew by the proper court. If the other party denes that rescsson s |ustfed t s
free to resort to |udca acton n ts own behaf, and brng the matter to court. Then,
shoud the court, after due hearng, decde that the resouton of the contract was
not warranted, the responsbe party w be sentenced to damages; n the contrary
case, the resouton w be affrmed, and the consequent ndemnty awarded to the
party pre|udced.
In other words, the party who deems the contract voated may consder t resoved
or rescnded, and act accordngy, wthout prevous court acton, but t proceeds at
ts own rsk. For t s ony the fna |udgment of the correspondng court that w
concusvey and fnay sette whether the acton taken was or was not correct n
aw. But the aw defntey does not requre that the contractng party who beeves
tsef n|ured must frst fe sut and wat for a |udgment before takng extra|udca
steps to protect ts nterest. Otherwse, the party n|ured by the others breach w
have to passvey st and watch ts damages accumuate durng the pendency of the
sut unt the fna |udgment of rescsson s rendered when the aw tsef requres
that he shoud exercse due dgence to mnmze ts own damages (Cv Code,
Artce 2203).
n every case where the extra|udca resouton s contested ony the fna award of
the court of competent |ursdcton can concusvey sette whether the resouton
was proper or not.
n case of abuse or error by the rescnder the other party s not barred from
questonng n court such abuse or error, the practca effect of the stpuaton beng
merey to transfer to the defauter the ntatve of nsttutng sut, nstead of the
rescnder.
Ths was reterated n Zuueta vs. Marano where we hed that extra|udca
rescsson has ega effect where the other party does not oppose t. Where t s
ob|ected to, a |udca determnaton of the ssue s st necessary.
The contenton that prvate respondent had waved hs rght to be notfed under
paragraph 6 of the contract s nether mertorous because t was a contract of
adheson, a standard form of pettoner corporaton, and prvate respondent had no
freedom to stpuate. A waver must be certan and unequvoca, and ntegenty
made; such waver foows ony where berty of choce has been fuy accorded.
Moreover, t s a matter of pubc pocy to protect buyers of rea estate on
nstament payments aganst onerous and oppressve condtons. Waver of notce s
one such onerous and oppressve condton to buyers of rea estate on nstament
payments
2. Yes. The payments must be returned.
ART. 1385. Rescsson creates the obgaton to return the thngs whch were the
ob|ect of the contract, together wth ther fruts, and the prce wth ts nterest;
consequenty, t can be carred out ony when he who demands rescsson can
return whatever he may be obged to restore.
Nether sham rescsson take pace when the thngs whch are the ob|ect of the
contract are egay n the possesson of thrd persons who dd not act n bad fath.
In ths case, ndemnty for damages may be demanded from the person causng the
oss.
3. We come now to the thrd and fourth ssues regardng the persona abty of
pettoner Onstott who was made |onty and severay abe wth pettoner
corporaton for refund to prvate respondent of the tota amount the atter had
pad to pettoner company. It s basc that a corporaton s nvested by aw wth a
personaty separate and dstnct from those of the persons composng t as wen
as from that of any other ega entty to whch t may be reated.
11
As a genera
rue, a corporaton may not be made to answer for acts or abtes of ts
stockhoders or those of the ega enttes to whch t may be connected and vce
versa. However, the ve of corporate fcton may be perced when t s used as a
shed to further an end subversve of |ustce
12
; or for purposes that coud not
have been ntended by the aw that created t
13
; or to defeat pubc convenence,
|ustfy wrong, protect fraud, or defend crme.
14
; or to perpetuate fraud or confuse
egtmate ssues
15
; or to crcumvent the aw or perpetuate decepton
16
; or as an
ater ego, ad|unct or busness condut for the soe beneft of the stockhoders.
We fnd no badges of fraud on pettoners part. They had teray reed, abet
mstakeny, on paragraph 6 (supra) of ts contract wth prvate respondent when t
rescnded the contract to se extra|udcay and had sod t to a thrd person.
In ths case, pettoner Onstott was made abe because he was then the Presdent
of the corporaton and he a to be the controng stockhoder. No suffcent proof
exsts on record that sad pettoner used the corporaton to defraud prvate
respondent. He cannot, therefore, be made personay abe |ust because he
"appears to be the controng stockhoder". Mere ownershp by a snge
stockhoder or by another corporaton s not of tsef suffcent ground for
dsregardng the separate corporate personaty.
18
In ths respect then, a
modfcaton of the Resouton under revew s caed for.
Angeles v. Calasan7 G.R. No. -0222+ 3arc) 12, 1925
!acts"
Heren pantffs-appeees entered nto a contract to se wth defendants-appeants
for the formers purchase of a parce of and ocated n Canta, Rza. The agreed
amount s P3,920.00 pus 7% nterest per annum. The pantffs-appeees made a
downpayment of P392.00 upon the executon of the contract and promsed to pay
the baance n monthy nstaments of P41.20 unt fuy pad. The pantffs-
appeees pad the monthy nstaments unt |uy 1966 and ther aggregate payment
aready reached P4,533.38. After severa months, due to pantffs-appeees faure
to pay the monthy nstaments despte defendants-appeants demands, the atter
canceed the contract to se pursuant to a provson n the contract whch states
that the seer (defendants-appeants) has the "rght to decare the contract
canceed and of no effect" as a consequence of faure to pay the agreed amount
pus nterests. Thus, the pantffs-appeees fed a cv acton n court to compe
defendants-appeants to execute n ther favour a fna deed of sae ctng ther
aggregate payment of P4,533.38 whch ncudes payment of nterests, taxes and
ncdenta expenses. The ower court rendered |udgement n favour of the pantffs-
appeees and a moton for reconsderaton fed by the defendants-appeants were
dened. The Court of Appeas then brought the matter to the Supreme Court as t
nvoves pure questons of aw.
#ssue"
Whether or not the contract has been automatcay and vady canceed by the
defendant-appeants (Ursua Torres Caasanz and Tomas Caasanz)
$el%"
Heren pantffs-appeees entered nto a contract to se wth defendants-appeants
for the formers purchase of a parce of and ocated n Canta, Rza. The agreed
amount s P3,920.00 pus 7% nterest per annum. The pantffs-appeees made a
downpayment of P392.00 upon the executon of the contract and promsed to pay
the baance n monthy nstaments of P41.20 unt fuy pad. The pantffs-
appeees pad the monthy nstaments unt |uy 1966 and ther aggregate payment
aready reached P4,533.38. After severa months, due to pantffs-appeees faure
to pay the monthy nstaments despte defendants-appeants demands, the atter
canceed the contract to se pursuant to a provson n the contract whch states
that the seer (defendants-appeants) has the "rght to decare the contract
canceed and of no effect" as a consequence of faure to pay the agreed amount
pus nterests. Thus, the pantffs-appeees fed a cv acton n court to compe
defendants-appeants to execute n ther favour a fna deed of sae ctng ther
aggregate payment of P4,533.38 whch ncudes payment of nterests, taxes and
ncdenta expenses. The ower court rendered |udgement n favour of the pantffs-
appeees and a moton for reconsderaton fed by the defendants-appeants were
dened. The Court of Appeas then brought the matter to the Supreme Court as t
nvoves pure questons of aw.
Ctng the case of Unversty of the Phppnes v. De os Angees (35 SCRA 102)
where t s stated that "f the other party denes that rescsson (of a contract) s
|ustfed, t s free to resort to |udca acton n ts own behaf and brng the matter to
court" and that "for t s ony the fna |udgement of the Court that w concusvey
and fnay sette the acton taken whether the acton taken was or was not correct n
aw", the Supreme Court that the rght to rescnd the contract for non performance
of one of ts stpuatons s not absoute. Furthermore, ctng Song Fo & Co. v.
Hawaan-Phppne Co., (47 Ph. 821, 827) whch states that "The genera rue s
that rescsson of a contract w not be permtted for a sght or casua breach, but
ony for such substanta and fundamenta breach as woud defeat the very ob|ect of
the partes n makng the agreement, the Court hed that the breach of the contract
s so sght and casua when the nta downpayment pus the aggregates amount s
consdered.
The Court aso cted Artce 1234 of the Cv Code whch states that: "If the
obgaton has been substantay performed n good fath, the obgor may recover
as though there had been a strct and compete fufment, ess damages suffered
by the obgee" as a provson whch mtates aganst the unatera act of the
defendants-appeants n canceng the contract.
The Court aso hed that the contract to se, beng essentay a contract of
adheson, must be construed aganst the party causng t.
Therefore, the Court rued n favour of the pantffs-appeees and dd not uphod the
canceaton of the contract. The petton of the defendants-appeants was dened
and the pantffs-appeees were ordered to pay the remanng baance and after
whch the defendants-appeants were ordered to execute a fna deed of sae n
favour of the pantffs-appeee.
GARC#A, 8R. @. C'AR; '! A((,A-&, G.R.N'. 20201,
!acts"
On Apr 15, 1977, Western Mnoco Corporaton (WMC) secured from the Phppne
Investments Systems Organzaton (PISO) two oans amountng to P2,500,000 and
P1,000,000 to be pad on May 30, 1977. On the same date, Antono Garca,|r. and
Ernest Kahn executed a surety agreement bndng themseves |onty and severay
for the payment of the P2,500,000 oan on due date. After repeated demands
wheren WMC st dd not pay the oans, Garca was sued by Lasa Deveopment
Corporaton whch the credt was assgned to by PISO, for not payng the oan as part
of the surety agreement. On May 1983, Garca moved that the compant be
dsmssed on the ground that the prncpa obgaton has been novated. He camed
that there was novaton due to the fact that there was re-structurng of the payment
scheme and thus, the exstng contract has been novated. The tra court granted
the petton of Garca but t was ater reversed by the Court of Appeas.
#ssue"
Whether or not there was ndeed novaton of the od contract or obgaton.
$el%"
The Supreme Court hed that Novaton of contract cannot be presumed. In order that
an obgaton may be extngushed by another whch substtutes the same, t s
mperatve that t be so decared n unequvoca terms, or that the od and the new
obgatons be on every pont compatbe wth each other. In every novaton, there
are four essenta requstes: 1) a prevous vad obgaton; 2) the agreement of the
partes to a new contract; 3) the extngushment of the od contract; and 4) the
vadty of the new one. Novaton requres the creaton of new contractua reatons
as we as extngushment of the od. There must be consent of a the partes to the
substtuton, resutng n the extncton of the od obgaton and the creaton of a
new vad one. The ega doctrne s that an obgaton to pay a sum of money s not
novated n a new nstrument by changng the term of payment and addng other
obgatons not ncompatbe wth the od one. It s not proper to consder an
obgaton novated as n the case at bar by the mere grantng of extenson of
payment whch dd not even ater ts essence. The Supreme Court dened the
petton of Garca and affrmed the decson of the Court of Appeas.
As*a (ro%uct*on Co. #nc. v. (ano G.R. No. -051052 8anuar/ 24, 1992
!acts"
Sometme n March 1976, prvate respondents, who camed to be the owners of a
budng constructed on a ot eased from Luco San Andres and ocated n
Vaenzuea, Buacan, offered to se the budng to the pettoners for P170,000.00.
Pettoners agreed because of prvate respondents' assurance that they w aso
assgn to the pettoners the contract of ease over the and. The above agreement
and promse were not reduced to wrtng. Prvate respondents undertook to dever
to the pettoners the deed of conveyance over the budng and the deed of
assgnment of the contract of ease wthn sxty (60) days from the date of payment
of the downpayment of P20,000.00. The baance was to be pad n monthy
nstaments. On 20 March 1976, pettoners pad the downpayment and ssued eght
(8) postdated checks drawn aganst the Equtabe Bankng Corporaton for the
payment of the eght (8) monthy nstaments.
Reyng on the good fath of prvate respondents, pettoners constructed n May
1976 a weavng factory on the eased ot. Unfortunatey, prvate respondents,
despte extensons granted, faed to compy wth ther undertakng to execute the
deed to sae and to assgn the contract despte the fact that they were abe to
encash the checks dated 30 |une and 30 |uy 1976 n the tota amount of
P30,000.00. Worse, the ot owner made t pan to pettoners that he was unwng
to gve consent to the assgnment of the ease uness pettoners agreed to certan
onerous terms, such as an ncrease n renta, or the purchase of the and at a very
unconsconabe prce. Pettoners thereafter removed ther effects from the dsputed
and and therefore fed a case for the coecton of the pad nstaments whch the
ower court dsmssed because t fas wthn the purvew of the requrements as set
forth n the Statute of Frauds. Hence, ths petton.
#ssue"
Whether or not an acton for the refund of parta payments of the purchase prce of
a budng covered by an ora agreement to se t wth an ora promse to assgn the
contract of ease on the ot where the budng s constructed s barred by the
Statute of Frauds?
$el%"
No. The statute of frauds s not appcabe because there s parta performance n
the aforementoned contract whch s the payment of consderaton n eu of the
promse of the defendants. It goes wthout sayng then, as hed n the eary case of
Amro, et a. vs. Monserrat,
17
that the statute w appy ony to executory rather
than executed contracts. Parta executon s even enough to bar the appcaton of
the statute
WHEREFORE, the petton s hereby GRANTED. The chaenged Orders of 18 Apr
1979 and 21 |une 1979 n Cv Case No. O-23593 of the court beow are hereby
ANNULLED and SET ASIDE, and the compant n sad case s hereby ordered
REINSTATED. The defaut order aganst prvate respondent Lota Lee Le Hua sha
stand and prvate respondent Aberto Dy s ordered to fe hs Answer to the
compant wth the court beow wthn ten (10) days from recept of ths decson.
Ths decson sha be mmedatey executory.
9o/sa= v #nterp)*l (romot*ons 12 &CRA 1+5
!acts"
The case s an appea by Soomon Boysaw and Afred Yuo |r. from CFI orderng them
to pay Manue Neto |r. P20k-mora damages, P5k-attys fees,; and to Interph
Promotons, Inc. and Lope Sarrea Sr.(addtona P20k for mora damages), P250k-
unreazed profts, P33,369.72-actua damages, P5k-attys fees. And costs. Facts
- May 1, 1961, Soomon Boysaw s a boxer handed by We Ketchum(w/
partner Ruskay). They sgned a contract wth Interph (represented by
Sarrea) for a match wth Gabre "Fash" Eorde for the word |unor
ghtweght champonshp.
- The stpuatons of the contract were the venue n the Rza Memora
stadum on Sept. 30-61. In case of mutuay-agreed postponement, t woud
be no more than 30 days ater. And that Boysaw woud not pror to the
match, engage n any other such contest wthout the wrtten consent of
Interph. Days ater, Eorde sgned a smar agreement wth Interph. A
suppementa agreement b/w Ketchum & Sarrea took pace.
- Boysaw on |une 9-61 fought Lous Ava n a ten-round non-tte bout hed n
Las Vegas. On |uy 2-61, he changed hs manager to |. Amado Araneta. On
|uy 31-61, Boysaw arrved n the Phppnes to get ready. On Sept. 1-61,
Araneta assgned hs managera rghts to Yuo. On Sept 2-61, Boysaw
fnay nformed Sarrea of hs presence n the country.
- Sept. 5-61 Yuo nformed Sarrea of the managera changes and readness
to compy wth the contract.
- On the same day, Sarrea wrote to the Games and Amusement Board(GAB)
of the ack of forma notfcaton of the managera rghts swtchng and that
Boysaw be caed for carfcaton.
- GAB dd act upon t by cang for conferences, and decded to schedue the
match for Nov.4-61. The USA Nat Boxng Assoc. supervsng a word-tte
fghts approved the date.
- Yuo dsagreed, and Sarrea offered to change to Oct. 28, w/n the 30-day
pd.
- Eary Oct. Yuo contacted Mamerto Besa for promoton of the match. Oct.6-
31 n one of Yuos communcaton to Besa, he sad that he was wng to
aow the Nov.4 fght, f Besa promotes t.
- The Boysaw-Eorde fght dd push through but t wasnt the contempated
fght n the contract.
- Boysaw and Yuo pettoned CFI Rza aganst Sarrea, Interph and Manue
Neto |r. (GAB charman, resps cam to have acted arbtrary) damages for
non-fufment of contract commtments.
- Tra dragged for 3 yrs because of appeants, unt Boysaw coud no onger
return (taken as eavng w/out notce to court and counse), CFI decded for
the respondents and dened a postponement & moton for new tra.
#ssues"
1) Whether or not there was a voaton of the contract stpuatons, and who was
abe? ;
2) Whether or not there was a ega ground for postponement/was Neto/GAB
reasonabe?
$el%"
1st Issue:
Yes, Yuo admtted the fact of Boysaw and Avas fght n Las Vegas and the
assgnment of the managera rghts over Boysaw to dfferent peope (novaton)
wthout PRIOR approva of Interph. Even f Yuo sent a etter, there s no showng
that Interph acceded to the substtuton |udgng from the compant n GAB. Our aw
recognzes actonabe n every contract breach.
Art.1170"those who n the performance of ther obgatons are guty of fraud,
neggence or deay, and those who n any manner contravene the terms thereof,
are abe for damages."
Art1191"the power to rescnd obgaton s mped, n recproca ones, n case one of
the obgors shoud not compy wth what s ncumbent upon hm."
Novaton whch conssts n substtutng a new debtor n the pace of the orgna one
may be made even wthout the knowedge or aganst the w of the atter, BUT NOT
WITHOUT THE CONSENT OF THE CREDITOR."Substtuton needs the consent of the
credtor because the new debtor may cause deay or prevent the fufment of the
obgaton due to nsovency or nabty. Snce the credtor s at rsk, then hs consent
must frst be secured to be bndng.
2
nd
Issue:
Yes, when the contract was unawfuy novated, the aggreved credtor s not bound
to dea wth the substtute. He has a rght to demand rescsson or refusa to
recognze the substtute. In ths case they chose to renegotate the date. The GAB
(not Neto hmsef) dd not act arbtrary when t set t to Nov. 4 because ndeed
there s a novated contract (from evdence). Anyways, Interph was wng to set t
to Oct. 28 to be w/n the 30 day perod.
-/%*a -. Geral%e7 v. Court of Appeals an% Denstar ;ravel Corporat*on
G.R. No. 10225+, !ebruar/ 2+ 51996
!acts"
Wth reference to Cv Case No. O-90-4649 of the RTC of Ouezon Cty, Pettoner
Geradez fed an acton for damages aganst Respondent Kenstar Trave Corporaton
for breach of contract wth antecedent facts as foows:
Pettoner opt a 22-day Europe tour trave package offered by Respondent
Corporaton payng 2,990 doars as consderaton. The tour dd not end up as
expected by heren pettoner, t dd not as represented n the brochure: no
European tour manager, hotes were not 1
st
cass and the Fpno tour gude who s
supposed to accompany them s a 1
st
tmer. Pettoner then fed a breach of contract
aganst Respondent Corporaton for commttng acts of representatons consttutng
fraud n contractng the obgaton.
RTC rendered |udgment orderng Respondent Corporaton to pay pettoner 500,000
as mora damages, 200,000 as nomna damages, 300,000 as exempary damages
and 50,000 as tgaton and attorneys fees (a n pesos). On appea, award for
mora and exempary damages were deeted and a reducton of nomna damages to
40,000 pesos, ths on account that the Respondent has substantay comped wth
the prestaton and no mace or bad fath s mputabe as a consequence . Hence,
the petton.
#ssue"
Whether or not prvate respondent acted n bad fath or wth gross neggence n
dschargng ts obgaton under contract.
$el%"
On the foregong consderatons, respondent court erred n deetng the award for
mora and exempary damages whch may be awarded n breaches of contract
where fraud s evdent. Prvate respondent fauted wth fraud n the nducement,
whch s empoyed by a party to a contract n securng the consent of the other.
In the case at bar, the Prvate respondent has commtted ether doo causante or
doo ncdente by makng fase msrepresentaton. Ether whch obge a person to
ndemnfy damages.
Wherefore, premses consdered, the decson of Respondent Court of Appeas s
hereby set asde, and another one rendered, orderng prvate respondent Kenstar
Trave Corporaton to pay pettoner Lyda Geradez the sums of P 100,000 by way of
mora damages, P 50,000 as exempary damages, and P 20,000 as
attorneys fees wth tgaton cost aganst prvate respondent. The nomna award of
damages s hereby deeted.
A8AE 3ARD,;#NG F D,@,-'(3,N; C'R(. @&. C'AR; '! A((,A-&
G.R. N'. 112525, &,(;,39,R 1, 1995
!acts"
Yang-Yang Merchandsng Company, a partnershp between Angeta Rodrquez and
Antono Tan, obtaned a oan of P250,000.00 from Metropotan Bank and Trust
Company, and to secure payment of the same, spouses Marca See and Lan Tan
consttuted a rea estate mortgage n favor of the sad bank over the property n the
Dstrct of Paco, Mana. The partnershp had changed ts name to A|ax Marketng
Company wthout changng ts composton and t obtaned a oan of P150,000.00
from the same bank and executed a second rea estate mortgage over the same
property. As the partnershp converted nto a corporaton and changed ts name nto
A|ax Marketng and Deveopment Corporaton wth the orgna partners and
addtona ncorporators, another oan was obtaned from the same mortgagee of
P600,000.00. In December 1980, the three oans were re-structured nto one oan
and A|ax Marketng represented by Antono Tan and Esa Tan n ther capacty as
sodary co-obgor executed a Promssory Note. The pettoner argue that a novaton
occurs when ther three oans whch are a secured by the same rea estate
property were consodated, thereby extngushng ther monetary obgatons and
reeasng the mortgaged property from abty.
#ssue"
Whether or not there s a novaton occurred when the three oans whch are a
secured by the same rea estate property were consodated nto one snge oan
under a Promssory Note?
$el%"
Novaton s the extngushment of an obgaton by the substtuton or change of the
obgaton by a subsequent one whch extngushes or modfes the frst, ether by
changng the ob|ect or prncpa condtons, or by substtutng another n pace of the
credtor. It s never presumed and w not be aowed uness t s ceary shown by
express agreement, or by acts of equa mport. Thus, to effect an ob|ectve novaton
t s mperatve that the new obgaton expressy decare that the od obgaton s
thereby extngushed, or that the new obgaton be on every pont ncompatbe wth
the new one. There s nothng n the records to show the unequvoca ntent of the
partes to novate the three oan agreements, no ndcaton of the extngushment of,
or an ncompatbty wth. In addton, the consodaton of the three oans dd not
reease the mortgaged rea estate property from abty because the mortgage
annotatons, a remaned uncanceed, ndcatng the subsstence of the rea estate
mortgage. Nether can t be vady contended that there was a change or
substtuton n the persons of ether the credtor or the debtor. The conversaton
from a partnershp to a corporaton , wthout suffcent evdence that they were
expressy reeased from ther obgatons, wth new corporate personaty, a thrd
person or new debtor wthn the context of sub|ectve novaton. Novaton purported
change n the thrd person must be cear and express. Ceary then, nether ob|ectve
nor sub|ectve novaton occurred.
-*m<et<a* &ons 3*ll*ng v. CA GG.R. No. 112509. December 1, 1995.H
!acts"
Phppne Remnants Co., Inc. consttuted the Bank of the Phppne Isands (BPI) as
ts trustee to manage, admnster, and se ts rea estate property. Pedro Reva, |r.,
a censed rea estate broker was gven forma authorty by BPI to se the ot for
P1,000.00 per sq.m. Ths arrangement was concurred n by the owners of the
Phppne Remnants. Broker Reva contacted Afonso Lm of Lmketka Sons Mng
(LSM) who agreed to buy the and. LSMs offcas and Reva were gven permsson
to enter and vew the property they were buyng (by Roando V. Aromn, BPI
Assstant Vce-Presdent). Reva formay nformed BPI that he had procured a
buyer, LSM. LSMs offcas, Afonso Lm and Abno Lmketka, went to BPI to confrm
the sae. They were entertaned by Vce-Presdent Mern Abano and Asst. Vce-
Presdent Aromn. LSM asked that the prce of P1,000.00 per sq.m. be reduced to
P900.00 whe Abano stated the prce to be P1,100.00. The partes fnay agreed
that the ot woud be sod at P1,000.00 per sq.m. to be pad n cash. Snce the
authorty to se was on a frst come, frst served and non-excusve bass, t may be
mentoned at ths |uncture that there s no dspute over LSMs beng the frst comer
and the buyer to be frst served. Notwthstandng the fna agreement to pay
P1,000.00 per sq.m. on a cash bass, Afonso Lm asked f t was possbe to pay on
terms. The bank offcas stated that there was no harm n tryng to ask for payment
on terms because n prevous transactons, the same had been aowed. It was the
understandng, however, that shoud the term payment be dsapproved, then the
prce sha be pad n cash. It was Abano who dctated the terms under whch the
nstament payment may be approved, and actng thereon, Afonso Lm, on the
same date, 11 |uy 1988, wrote BPI through Mern Abano embodyng the payment
ntay of 10% and the remanng 90% wthn a perod of 90 days. 2 or 3 days ater,
LSM earned that ts offer to pay on terms had been frozen. Afonso Lm went to BPI
on 18 |uy 1988 and tendered the fu payment to Abano. The payment was refused
because Abano stated that the authorty to se that partcuar pece of property n
Pasg had been wthdrawn from hs unt. The same check was tendered to BPI Vce-
Presdent Neson Bona who aso refused to receve payment.
An acton for specfc performance wth damages was thereupon fed on 25 August
1988 by LSM aganst BPI wth the RTC Pasg (Branch 151). In the course of the tra,
BPI nformed the tra court that t had sod the property under tgaton to Natona
Book Store (NBS) on 14 |uy 1989. The compant was thus amended to ncude NBS.
On 10 |une 1991, the tra court rendered |udgment n favor of LSM; hodng that
there was a perfected contract between LSM and BPI, and thus decared the Deed of
Sae nvovng the ot n Pasg n the name of BPI and n favor of NBS as nu and
vod; ordered the Regster of Deeds of the Provnce of Rza to cance the TCT whch
may have been ssued n favor of NBS by vrtue of the sad deed; ordered BPI upon
recept by t from LSM the fu payment to execute a Deed of Sae n favor of the
atter of the sad property at the prce of P1,000.00 per sq.m. and n defaut thereof,
the Cerk of Court s drected to execute the deed dated 14 |uy 1989; ordered the
Regster of Deeds of Pasg, upon regstraton of the sad deed, whether executed by
BPI or the Cerk of Court and payment of the correspondng fees and charges, to
cance sad TCT 493122 and to ssue, n eu thereof, another transfer certfcate of
tte n the name of LSM; ordered BPI and NBS to pay n sodum to LSM the sums of
P10,000,000.00 as actua and consequenta damages and P150,000.00 as
attorneys fees and tgaton expenses, both wth nterest at 12% per annum from
date of |udgment; on the cross-cam by the bank aganst NBS, ordered NBS to
ndemnfy the bank of whatever BPI sha have pad to LSM; dsmssed the
countercam of both BPI and NBS aganst LSM and the cross-cam of NBS aganst
BPI; wth costs aganst BPI and NBS.
Upon eevaton of the case to the Court of Appeas, the decson of the tra court
was reversed and the compant dsmssed on 12 August 1994. It was hed that no
contract of sae was perfected because there was no concurrence of the three
requstes enumerated n Artce 1318 of the Cv Code. Hence, the petton.
The Supreme Court reversed and set asde the questoned |udgment of the Court of
Appeas, and renstated the 10 |une 1991 |udgment of Branch 151 of the RTC of The
Natona Capta |udca Regon statoned n Pasg, Metro Mana except for the
award of P10,000,000.00 damages, whch was deeted.
#ssues"
1.) Was there a perfected contract
2.) Does BPI offcas have fu authorty to bnd the bank
3.) Are evdence supportng the sae competent and admssbe
4.) Does the sae of the ot to Natona Book Store characterzed by bad fath.
$el%"
The supremene court reversed and set asde the |udgment of court of appeas and
the |udgment of branch 151 of the regona tra court of the natona capta |udca
regon s renstated except for the award of P10,000,000 damages wth s hereby
deeted.
1.) Yes. The perfecton of the contract took pace when Aromn and Abano,
actng for BPI, agreed to se and Afonso Lm wth Abno Lmketka, actng
for pettoner Lmketka, agreed to buy the dsputed ot at P1,000.00 per
square meter. Asde from ths there was the earer agreement between
pettoner and the authorzed broker. There was a concurrence of offer and
acceptance, on the ob|ect, and on the cause thereof.
The fact that the deed of sae st had to be sgned and notarzed does not
mean that no contract had aready been perfected. A sae of and s vad
regardess of the form t may have been entered nto (Caude vs. Court of
Appeas, 199 SCRA 113, 119 |1991|). The requste form under Artce 1458
of the Cv Code s merey for greater effcacy or convenence and the
faure to compy therewth does not affect the vadty and bndng effect of
the act between the partes (Vtug, Compendum of Cv Law and
|ursprudence, 1993 Revsed Edton, p. 552).
2.) The aeged ack of authorty of the bank offcas actng n behaf of BPI s
not sustaned by the record. If BPI coud gve the authorty to se to a
censed broker, there s no reason to doubt the authorty to se of the two
BPI Vce-Presdents whose precse |ob n the Bank was to manage and
admnster rea estate property.
3.) Yes. Counse for respondents cross-examned pettoner's wtnesses at
ength on the contract tsef, the purchase prce, the tender of cash
payment, the authorty of Aromn and Reva, and other detas of the
tgated contract. Under the Abrenca rue (reterated n a number of cases,
among them Taosg vs. Vda. de Neba 43 SCRA 472 |1972|), even
assumng that paro evdence was ntay nadmssbe, the same became
competent and admssbe because of the cross-examnaton, whch ected
evdence provng the evdence of a perfected contract. The cross-
examnaton on the contract s deemed a waver of the defense of the
Statute of Frauds (Vtug, Compendum of Cv Law and |ursprudence, 1993
Revsed Edton, supra, p. 563).
4.) On the fourth queston of whether or not NBS s an nnocent purchaser for
vaue, the record shows that t s not. It acted n bad fath.
Respondent NBS gnored the notce of s pendens annotated on the tte
when t bought the ot. It was the wngness and desgn of NBS to buy
property aready sod to another party whch ed BPI to dshonor the
contract wth Lmketka.
@*ctor*no $ernan%e7 v. CA an% subst*tute% )e*rs of Rev. !r. -uc*o Garc*a
5Decease%6
G.R. no. -011+2, Apr*l 24, 1922
!acts"
Three parces of and were owned by Fr. Garca n Paranaque ad|onng the ands
owned by pettoner. In 1956 Hernandez and Garca had an agreement oray to set
the boundares of ther ands. The bureau of ands put up monuments to mark the
boundares as agreed by the pettoner and respondent on the same year. Then after
on 1959 Fr. Garca fed for an appcaton for regstraton of the three parces of and
under hs name. The court granted respondents appcaton, wth ths pettoner
dscovered that the 220 square meters of and ncuded n the appcaton was part
of hs property. Pettoner fed for a revew of the decree of regstraton and was
dened by the CFI. Hence, an appea was made to the CA who affrmed the decson
of the CFI decarng Fr. Garca the absoute owner of sad ands by acqustve
prescrpton, statng that pettoner had made no ob|ecton to the appcaton and
that the agreement was unenforceabe snce does not compy wth the Statute of
Frauds because t s not on wrtng and that ony 516 square meters of and was on
the deed of sae upon buyng the sad and by the pettoners parents
#ssue"
1. Whether or not there was fraud on the appcaton for regstraton of sad ands by
respondent?
2. Whether or not the agreement s vad not beng n wrtng?
3. Whether or not the pettoners rght to fe for a revew has prescrbed by hs
nacton?
$el%"
The SC upon ookng of the facts on record found out that the CA overooked on ts
factua concuson and faed to consder the same that s essenta to the ssue. On
the frst ssue, the government through the bureau of and monuments put up marks
to separate both ther estates accordng to ther agreement, whch has been atered
by the appcaton, modfyng the marks of separaton, ceary heren pettoner s a
vctm of fraud, cheated to vndcate hs cam to the and. On the second, accordng
to artce 1403 of the cv code, formaty to be n wrtng s ony requred on eases
more than 1 year or sae of property or an nterest, respondents reance on the
statute of Frauds s mspaced, further pettoners tenants are vng for a ong tme
on the dsputed ands. Therefore the agreement was vad. For the thrd, the remedy
must be gven to the pettoner beng a vctm of fraud; therefore he s entted to the
reef sought. Lasty the nformaton on the deed of sae cannot be taken nto
consderaton on ths case because t was not accurate as to the actua measure of
the estate upon purchase. Wherefore the SC reversed and set asde the decson of
the CA and decared the 220 square meters of and n the Orgna Certfcate of Tte
of respondent was nu and vod grantng the sad and to pettoner and re-ssung a
new OCT to the respondent excudng the 220 square meter and.
$'A&, #N;,RNA;#'NA- 9A#-D#NG ;,NAN;& A&&'C#A;#'N, #NC.,
vs.#N;,R3,D#A;, A((,--A;, C'AR;, C,N;,R;'IN 3ARD,;#NG C'R(.,
3AN#-A ;'I,R& D,@,-'(3,N; C'R(., AND ;$, G'@,RN3,N; &,R@#C,
#N&ARANC, &Y&;,3 5G.R. No. 45224 8une +0, 19246
!acts"
Pettoner House Internatona Budng Tenants Assocaton, Inc. (ASSOCIATION, for
short) s a domestc non-stock, non-proft cvc corporaton, whose ncorporators,
drectors and members consttute the great ma|orty of more than a hundred heads
of fames who are tenants of ong and good standng of the 14-storey House
Internatona Budng. The and and the mprovements thereon was forecosed by
GSIS, whch subsequenty sod t to Centertown Marketng Corporaton
(CENTERTOWN, for short) n a deed of condtona sae, wthout notce to the tenants
of the budng and wthout securng the pror cearance of the then Mnstry of
Human Settements.
CENTERTOWN was not authorzed by ts Artces of Incorporaton to engage n the
rea estate busness so t assgned to ts sster corporaton TOWERS, wth amost the
same ncorporators and stockhoders, a ts rghts and obgatons under the Deed of
Condtona Sae, wth the consent and approva of the GSIS.
Thereafter, heren pettoner fed a compant wth the Regona Tra Court of Mana
aganst CENTERTOWN, TOWERS and GSIS for annument of the deed of condtona
sae and the subsequent assgnment thereof by CENTERTOWN to TOWERS. The
compant aeged n part that the Deed of Condtona Sae s nu and vod ab nto
for beng utra vres, snce defendant CENTERTOWN s not quafed to acqure rea
estate property or to engage n rea estate transactons.
The court a quo and Court of Appeas dsmssed the compant. Hence, ths petton
for revew on certorar.
#ssues"
(1) Whether pettoner has the personaty to sue, on ts own, as a corporaton
representng ts members who are tenants of the House Internatona Budng, and
(2) Whether pettoner has a cause of acton aganst respondents GSIS,
CENTERTOWN and TOWERS.
$el%"
1. None. In the present case, the rea partes n nterest are the tenants of the
House Internatona Budng and not the pettoner ASSOCIATION, whch
has a personaty separate and dstnct from that of ts members.
Secton 2, Rue 3 of the Rues of Court provdes:
Sec. 2. Partes n nterest. Every acton must be prosecuted and
defended n the name of the rea party n nterest. A persons
havng an nterest n the sub|ect of the acton and n obtanng the
reef amended sha be |oned as pantffs.
Such rghts of the tenants are persona and ndvdua rghts whch can ony
be camed by the tenants who must necessary be the ndspensabe and
rea partes n nterest and certany not the pantff-appeant organzaton.
2. Appeant s not prvy to ether the deed of condtona sae or the
assgnment.
Art. 1397 of the Cv Code provdes:
Art. 1397. The acton for the annument of contracts may be
nsttuted by a who are thereby obged prncpay or subsdary.
He who has no rght n a contract s not entted to prosecute an acton for
nuty, for, accordng to the precedents estabshed by the courts, the
person who s not a party to a contract, nor has any cause of acton or
representaton from those who ntervened theren, s manfesty wthout
rght of acton and personaty such as to enabe hm to assa the vadty of
the contract.
(R,C#--AN' N,C,&#;', ,;C vs. NA;#@#DAD (ARA&, ,; A- .
G.R. No. -010105, 8une +0, 1952
!acts"
In the mornng of |anuary 28, 1964, Severna Garces and her one-year od son,
Precano Necesto, carryng vegetabes, boarded passenger auto truck or bus No.
199 of the Phppne Rabbt Bus Lnes at Agno, Pangasnan. The passenger truck,
drven by Francsco Bandone, then proceeded on ts reguar run from Agno to
Mana. After passng Mangatarem, Pangasnan truck No. 199 entered a wooden
brdge, but the front whees swerved to the rght; the drver ost contro, and after
wreckng the brdge's wooden ras, the truck fe on ts rght sde nto a creek where
water was breast deep. The mother, Severna Garces, was drowned; the son,
Precano Necesto, was n|ured, sufferng abrasons and fracture of the eft femur.
Subsequenty, actons for damages were brought drecty aganst the operator of the
bus. The atter peaded that the accdent was due to "engne or mechanca troube"
ndependent or beyond the contro of the defendants or of the drver Bandone.
After |ont tra, the Court of Frst Instance found that the bus was proceedng sowy
due to the bad condton of the road; that the accdent was caused by the fracture of
the rght steerng knucke, whch was defectve n that ts center or core was not
compact but "bubbed and ceuous", a condton that coud not be known or
ascertaned by the carrer despte the fact that reguar thrty-day nspectons were
made of the steerng knucke, snce the stee exteror was smooth and shny to the
depth of 3/16 of an nch a around; that the knuckes are desgned and
manufactured for heavy duty and may ast up to ten years; that the knucke of bus
No. 199 that broke on |anuary 28, 1954, was ast nspected on |anuary 5, 1954, and
was due to be nspected agan on February 5th. Hence, the tra court, hodng that
the accdent was excusvey due to fortutous event, dsmssed both actons. Hence
ths appea.
#ssues"
1. Whether or not the carrer s abe for the n|ures and damages
sustaned by the passengers.
2. Whether or not the cause of the accdent s that of fortutous event.
$el%"
1. Yes. The Supreme Court hed that the preponderance of authorty s n
favor of the doctrne that a passenger s entted to recover damages from
a carrer for an n|ury resutng from a defect n an appance purchased
from a manufacturer, whenever t appears that the defect woud have been
dscovered by the carrer f t had exercsed the degree of care whch under
the crcumstances was ncumbent upon t, wth regard to nspecton and
appcaton of the necessary tests. For the purposes of ths doctrne, the
manufacturer s consdered as beng n aw the agent or servant of the
carrer, as far as regards the work of constructng the appance. Accordng
to ths theory, the good repute of the manufacturer w not reeve the
carrer from abty" (10 Am. |ur. 205, s, 1324; and cases cted theren).
The ratonae of the carrer's abty s the fact that the passenger has
nether choce nor contro over the carrer n the seecton and use of the
equpment and appances n use by the carrer. Havng no prvty whatever
wth the manufacturer or vendor of the defectve equpment, the passenger
has no remedy aganst hm, whe the carrer usuay has. It s but ogca,
therefore, that the carrer, whe not n nsurer of the safety of hs
passengers, shoud nevertheess be hed to answer for the faws of hs
equpment f such faws were at a dscoverabe.
2. As to the second ssue, the record s to the effect that the ony test apped
to the steerng knucke n queston was a purey vsua nspecton every
thrty days, to see f any cracks deveoped. It nowhere appears that ether
the manufacturer or the carrer at any tme tested the steerng knucke to
ascertan whether ts strength was up to standard, or that t had no hdden
faws woud mpar that strength. Ths perodca vsua nspecton of the
steerng knucke as practced by the carrer's agents dd not measure up to
the requred ega standard of "utmost dgence of very cautous persons" -
"as far as human care and foresght can provde", and therefore that the
knucke's faure can not be consdered a fortutous event that exempts the
carrer from responsbty (Lasam vs. Smth, 45 Ph. 657; Son vs. Cebu
Autobus Co., 94 Ph., 892.).
;'-'3,' -#GA;AN @&. C'AR; '! A((,A-& G.R. No. 1+2144. !ebruar/ 12,
2002
!acts"
Pettoners Lgutan and dea Lana obtaned a oan n the amount of P120, 000.00
from respondent Securty Bank and Trust Company. As a resut, pettoners executed
a promssory note bndng them, |onty and severay, to pay the sum borrowed wth
an nterest of 15.189% per annum upon maturty and to pay a penaty of 5% every
month on the outstandng prncpa and nterest n case of defaut. Moreover, they
agreed to pay 10% of the tota amount due by way of attorneys fees f the matter
were ndorsed to a awyer for coecton or f a sut were nsttuted to enforce
payment. The obgaton matured and the bank granted an extenson to pay.
Despte severa demands, pettoners faed to sette ther debt n the amount of to
P114, 416.10. Consequenty, the bank fed a compant for recovery of the amount
due wth the Regona Tra Court (RTC).
Due to pettoners absence on a certan hearng, the court consdered the case
submtted for decson. Thereafter, pettoners fed a moton for reconsderaton;
however, the tra court dened the same and rendered a decson n favor of
respondent.
On appea, pettoners assaed the mposton of the 2% servce charge, the 5% per
month penaty charge and 10% attorney's fees. The Court of Appeas (CA) affrmed
the decson of the tra court, except on the mposton of the 2% servce charge
whch was deeted pursuant to Centra Bank Crcuar No. 783. Unsatsfed, both fed
ther respectve moton for reconsderaton. The CA found mert on respondents
contenton that Defaut generay begns from the moment the credtor demands the
performance of the obgaton. However, demand s not necessary to render the
obgor n defaut when the obgaton or the aw so provdes and consequenty,
rendered a decson n favor of respondent. Hence, pettoners fed a petton for
revew wth the Supreme Court.
#ssues"
1. Whether or not the court s correct n hodng the borrowers abe for the penaty
charge.
2. Whether or not the subsequent executon of the rea estate mortgage as securty
for the exstng oan woud have resuted n the extngushment of the orgna
contract because of novaton.
$el%"
1. A penaty cause, expressy recognzed by aw, s an accessory undertakng to
assume greater abty on the part of an obgor n case of breach of an obgaton.
It functons to strengthen the coercve force of the obgaton and to provde, n
effect, for what coud be the qudated damages resutng from such a breach. The
obgor woud then be bound to pay the stpuated ndemnty wthout the necessty
of proof on the exstence and on the measure of damages caused by the breach.
Athough a court may not at berty gnore the freedom of the partes to agree on
such terms and condtons as they see ft that contravene nether aw nor moras,
good customs, pubc order or pubc pocy, a stpuated penaty, nevertheess, may
be equtaby reduced by the courts f t s nqutous or unconsconabe or f the
prncpa obgaton has been party or rreguary comped wth.
2. The subsequent executon of the rea estate mortgage as securty for the exstng
oan woud not have resuted n the extngushment of the orgna contract of oan
because of novaton. Pettoners acknowedge that the rea estate mortgage
contract does not contan any express stpuaton by the partes ntendng t to
supersede the exstng oan agreement between the pettoners and the bank.
Respondent bank has correcty postuated that the mortgage s but an accessory
contract to secure the oan n the promssory note.
An obgaton to pay a sum of money s not extnctvey novated by a new nstrument
whch merey changes the terms of payment or addng compatbe covenants or
where the od contract s merey suppemented by the new one. When not
expressed, ncompatbty s requred so as to ensure that the partes have ndeed
ntended such novaton despte ther faure to express t n categorca terms. The
ncompatbty, to be sure, shoud take pace n any of the essenta eements of the
obgaton, .e., (1) the |urdca reaton or te, such as from a mere commodatum to
ease of thngs, or from negotorum gesto to agency, or from a mortgage to
antchress, or from a sae to one of oan; (2) the ob|ect or prncpa condtons, such
as a change of the nature of the prestaton; or (3) the sub|ects, such as the
substtuton of a debtor or the subrogaton of the credtor. Extnctve novaton does
not necessary mpy that the new agreement shoud be compete by tsef; certan
terms and condtons may be carred, expressy or by mpcaton, over to the new
obgaton.
Petton dened.
3,RCAN;#-, #N&ARANC, C'., #NC vs. $'N. C'AR; '! A((,A-& an%
R,(ARA;#'N& C'33#&&#'N. G.R. No. 2514 Apr*l 22, 1991
!acts"
On 6 February 1964, the Phppne Government represented by the Repacom n
|apan and |ose Lopez entered nto a Procurement Contract wth |apanese suppers
for the acquston of a fshng vesse, ater named M/V "|oo Lema," prced at
US$174,900.00. On 28 August 1964, pursuant to the Protoco of Devery sgned n
|apan, the "|oo Lema" was devered to |ose Lopez.
On 24 September 1964, |ose Lopez posted a bond guaranteed by pettoner
Mercante n favor of Repacom. In that bond, Lopez undertook to pay Repacom the
amount of P68,385.90 n the event of hs faure to compy wth any of hs obgatons
under the Contract of Condtona Purchase and Sae.
On 2 March 1965, Repacom and Lopez entered nto a Condtona Contract of
Purchase and Sae coverng the vesse "|oo Lema" for US$179,000.00 or ts peso
equvaent at the "preferred" rate of exchange, wthout pre|udce to re-ad|ustment
shoud the Supreme Court confrm that the mposton of the free market rate of
exchange was proper or vad. The "Terms and Condtons" of the Contract, nter
aa, provded that:
. . . shoud the Condtona Vendee fa to pay any of the yeary
nstaments when due, or utze the goods for any ega purpose
or purposes other than that for whch the goods have been
produced, or otherwse fa to compy wth any of the terms and
condtons of ths contract or wth any of the appcabe provsons
of the Reparatons aw and/or of the Rues and Reguatons
promugated pursuant thereto, then the Condtona Vendor s
hereby gven the opton to ether rescnd the contract upon notce
to the Condtona Vendee n whch case a sums aready pad by
the Condtona Vendee sha be forfeted as rentas n favor of the
Condtona Vendor, and aso that the Condtona Vendee sha
dever peacefuy to the Condtona Vendor the property, sub|ect
of ths contract or sue for specfc performance n whch case the
whoe amount remanng unpad n ths contract sha mmedatey
become due and payabe.
Among the other obgatons undertaken by Lopez under the Contract was the
postng of a performance bond n favor of Repacom to secure Lopez' compance
wth hs obgatons.
Lopez faed to pay the frst nstament wthout nterest on ts due date despte
repeated demands made on hm. Repacom then demanded payment from
Mercante but the atter aso refused to pay. Thereupon, on 28 August 1965,
Repacom confscated the Mercante bond and demanded payment of the amount of
P68,386.90 covered by the bond.
Subsequenty, Lopez posted EGCI Bond No. 65-1103 dated 20 November 1965 n the
amount of P36,906.51, ssued by Eage Guaranty Co., Inc. ("Eage") n favor of
Repacom to secure compance by Lopez of hs obgatons under the Contract of
Condtona Purchase and Sae .
The frst nstament wth nterest n the amount of P36,906.51 under the Schedue of
Payments fe due on 28 August 1966. Despte repeated demands made by
Repacom, Lopez refused to pay that nstament. Notce was sent to Eage who
kewse refused to pay. Thereupon, Repacom confscated EGCI Bond No. 65-1103.
On 14 February 1967, Repacom nsttuted an acton n the then Court of Frst
Instance of Mana aganst Mercante, Eage and |ose Lopez for the coecton of the
unpad purchase prce of the fshng vesse M/V "|oo Lema" as we as for nterest,
qudated damages, attorney's fees and costs. Ths case was, however, dsmssed
upon moton of Repacom.
Pettoner makes an ssue of the fact that the prce of the vesse was reduced as a
resut of the ssuance of the wrt. Pettoner cas attenton to the postng of the
Eage bond subsequent to the ssuance of the wrt and concudes that t was to
guarantee payment of the ten percent (10%) of the reduced prce of the vesse that
the Eage bond was posted, and that the Mercante bond was accordngy reeased.
It s further contended that pettoner's bond coud not have secured Lopez'
obgaton under the Contract of Condtona Purchase and Sae snce the atter was
concuded after pettoner's bond had been ssued. Pettoner argues that the
Mercante bond guaranteed ony the procurement contract entered nto pror to the
ssuance of the wrt of premnary n|uncton, and that the wrt of premnary
n|uncton n effect had made the Mercante bond unenforceabe.
#ssues"
1.) Does postng of another bond by Lopez consttute novaton through substtuton
of the debtor?
2.) Does reducton of prce of the vesse reeased the mercante bond?
$el%"
1.) The fact that subsequent to the executon of the Contract of Condtona
Purchase and Sae, Lopez posted another bond, the Eage bond, does not by tsef
suggest that there was a novaton of Mercante's obgaton through a substtuton
of the debtor. The genera rue s that novaton n never presumed; t must aways
be ceary and unequvocay shown.

Thus, "the mere fact that the credtor receves a
guaranty or accepts payments from a thrd person who has agreed to assume the
obgaton, when there s no agreement that the frst debtor sha be reeased from
responsbty, does not consttute novaton, and the credtor can st enforce the
obgaton aganst the orgna debtor." In the case at bar, the records do not at a
show any express ntenton of the partes to extngush the Mercante bond. The
orgna reatonshp between |ose Lopez, Mercante and Repacom remaned
unchanged despte the postng of the Eage bond, there havng been no agreement
between Repacom, |ose Lopez and Eage to reease Mercante from the atter's
obgaton under ts bond. The rue s that "n a case of sub|ectve novaton through a
change n the person of debtor, t s not enough that the |urdca reaton between
the orgna partes s extended to ncude a thrd person, as ths consttutes ony an
ncrease n the number of persons abe to the obgee. It s essenta that the od
debtor be reeased from the obgaton and the thrd person take hs pace n the
reaton. If the oder debtor s not reeased, there s no novaton; the thrd person
becomes merey a co-debtor, surety or co-surety.
2.)The Supreme court hed that It s of no moment that the purchase prce of the
vesse was reduced. The sad reducton was merey a resut of the converson of the
prce of the vesse "|oo Lema" n U.S. Doars to Phppne Pesos usng the preferred
rate of exchange nstead of the free market rate of exchange whch was orgnay
ntended by the partes. Such was merey an ad|ustment of the peso vaue of the
vesse; the doar vaue thereof remaned at US$174,900.00 and the requred
amount of the performance bond was st ten percent (10%) of US$174,900.00.
The reducton of the peso purchase prce dd not extngush Mercante's
commtments under the bond. It must be recaed that under ts bond Mercante
undertook to secure ten percent (10%) of the purchase prce of the vesse whch at
that tme was pegged at P683,859.00 after convertng the doar prce nto the
correspondng peso prce usng the free market rate of exchange. Wth the
ad|ustment of the vesse's peso prce mandated by the wrt of premnary n|uncton,
Mercante's undertakng to pay a certan number of pesos under certan condtons
was ad|usted downward but not extngushed.
&*la)*s 3<tg. v. #AC G. R. No. -04024 December 4, 1929
!acts"
De Leon sod and devered to Pettoner Sahs Mktg. varous tems of merchandse
for the tota amount of P22,213.75 payabe wthn 30 days. Upon maturty, Sahs
faed to pay ts account; after repeated demands whch after a were fute, De Leon
fed a compant for coecton before the CFI.
Sahs admtted the aegatons of ts ndebtedness to De Leon but presented as
affrmatve defenses:
1. |a debt memo| for P22,000.00 as unreazed proft of Sahs, had De Leon not
sod to Doe Phppnes Drecty ts merchandse; and
2. return of a defectve merchandse whch Sahs sod to ts cent.
The CFI confrmed Sahs' abty to De Leon but ordered to PARTIALLY OFFSET by
Sahs countercam as contaned n the debt memo. As a resut of the offset, De
Leon s entted for P13.75 to recover.
De Leon appeaed to IAC whch reversed the decson of the CFI. It hed that De Leon
s not under the obgaton NOT to se drecty to Doe Ph.; thus the countercam of
Sahs was dsmssed.
Hence ths present petton for revew on certorar.
#ssue"
Whether or Not De Leon s abe to pay Sahs for the commsson or margn for the
drect sae made by the former drecty to Doe?
Coroary, Whether or not Sahs s entted to compensaton or parta set off of ts
debt?
$el%"
No. Ths s ncessary so because there s no evdence on record from whch t can be
nferred that there was any agreement between the pettoner and prvate
respondent prohbtng the atter from seng drecty to Doe Phppnes. Snce there
s no obgaton exstng between De Leon and Sahs wth regard to seng drecty
to Doe, the atter has no rght to cam agans the former.
Absent of that obgaton w not gve rse to set off or compensaton because under
the aw "compensaton takes pace when two persons, n ther own rght, are
credtors and debtors to each other. Artce 1279 of the Cv Code provdes that: "In
order that compensaton may be proper, t s necessary: |1| that each one of the
obgors be bound prncpay, and that he be at the same tme a prncpa credtor of
the other; |2| that both debts consst n a sum of money, or f the thngs due are
consumabe, they be of the same knd, and aso of the same quaty f the atter has
been stated; |3| that the two debts be due; |4| that they be qudated and
demandabe; |5| that over nether of them there be any retenton or controversy,
commenced by thrd persons and communcated n due tme to the debtor.
When a the requstes mentoned n Art. 1279 of the Cv Code are present,
compensaton takes effect by operaton of aw, even wthout the consent or
knowedge of the credtors and debtors. 5 Artce 1279 requres, among others, that
n order that ega compensaton sha take pace, "the two debts be due" and "they
be qudated and demandabe." Compensaton s not proper where the cam of the
person assertng the set-off aganst the other s not cear nor qudated;
compensaton cannot extend to unqudated, dsputed cam exstng from breach of
contract."
Wherefore, Sahs s bound to pay De Leon for ts debt.
&' (#NG 9AN vs. C'AR; '! A((,A-&, ;,D $AA ,N;,R(R#&,& C'R(. an%
3ANA,- C. ;#'NG, G.R. No. 12055, &eptember 21, 1999
!acts"
Tek Hua Enterprses Corp. (Tek Hua), engaged n texte busness, entered nto four
(4) ease agreements wth essor Dee C. Chuan & Sons Inc. (DCCSI) for one-year
term. They provded that shoud the essee contnue to occupy the premses after
the term, the ease sha be on a month-to-month bass. When the contracts expred,
the partes dd not renew the contracts, but Tek Hua contnued to occupy the
premses. Upon the death of Tek Huas managng partner, So Pek Gok, hs
grandson, So Png Bung, and heren pettoner, occuped the warehouse for hs own
texte busness, Trendsetter Marketng. Years thereafter, prvate respondent Manue
C. Tong sent a etter to heren pettoner demandng to the vacate the premses
after temporary aowng the use of the premses due to the cose busness
reatonshp wth pettoners ate grandfather. Pettoner refused to vacate and
thereafter requested forma contracts of ease wth DCCSI n favour of Trendsetter
Marketng. Pettoner camed that after the death of hs grandfather, So Pek Gok, he
had been occupyng the premses for hs texte busness and regousy pad rent.
DCCSI acceded to pettoner's request and the ease contracts n favor of Trendsetter
were thus executed.
In the sut for n|uncton, prvate respondents pressed for the nufcaton of the
ease contracts between DCCSI and pettoner and aso camed damages. The tra
court rued n favour of respondents, annung the four Contracts of Lease between
defendants So Png Bun, dong busness under the name and stye of "Trendsetter
Marketng", and DCCSI and orderng defendant So Png Bun the payment of
attorneys fees among others. On appea by So Png Bun, the Court of Appeas
uphed the tra court, but modfed the decson by reducng the award of attorney's
fees.
#ssues"
1.) Whether or not the appeate court erred n affrmng the tra courts
decson fndng So Png Bun guty of tortuous nterference of contract.
2.) Whether or not the appeate court erred n awardng attorneys fees n
favour of prvate respondents.
$el%"
No. A duty whch the aw of torts s concerned wth s respect for the property of
others, and a cause of acton ex decto may be predcated upon an unawfu
nterference by one person of the en|oyment by the other of hs prvate property.
Ths may pertan to a stuaton where a thrd person nduces a party to renege on or
voate hs undertakng under a contract. In the case at bar, pettoner's Trendsetter
Marketng asked DCCSI to execute ease contracts n ts favor, and as a resut
pettoner deprved respondent corporaton of the atter's property rght. Ceary, and
as correcty vewed by the appeate court, the three eements of tort nterference,
to wt: (1) exstence of a vad contract; (2) knowedge on the part of the thrd
person of the exstence of contract; and (3) nterference of the thrd person s
wthout ega |ustfcaton or excuse, are present n the nstant case.
No. The recovery of attorney's fees n the concept of actua or
compensatory damages, s aowed under the crcumstances provded for n Artce
2208 of the Cv Code. One such occason s when the defendant's act or omsson
has compeed the pantff to tgate wth thrd persons or to ncur expenses to
protect hs nterest. But t was consstenty hed that the award of consderabe
damages shoud have cear factua and ega bases. In connecton wth attorney's
fees, the award shoud be commensurate to the benefts that woud have been
derved from a favorabe |udgment. In a ong ne of cases t was sad, "It s not
sound pocy to pace n penaty on the rght to tgate. To compe the defeated
party to pay the fees of counse for hs successfu opponent woud throw wde open
the door of temptaton to the opposng party and hs counse to swe the fees to
undue proportons."
,DGARD' ,. 3,ND'BA vs. $'N. A9AND#' B. ARR#,;A, (res*%*ng 8u%ge of
9ranc) @###, Court of !*rst #nstance of 3an*la, !,-#N' ;#39'-, an%
R'D'-!' &A-ABAR
G.R. No. -0+2599 8une 29, 1949
!acts"
Pettoner, Edgardo Mendoza, seeks a revew on certorar of the Orders of
respondent |udge n Cv Case No. 80803 dsmssng hs Compant for Damages
based on quas-dect aganst respondents Feno Tmbo and Rodofo Saazar.
On October 22 a three- way vehcuar accdent occurred aong Mac-Arthur Hghway,
Marao, Buacan, nvovng a Mercedes Benz owned and drven by pettoner; a
prvate |eep owned and drven by respondent Rodofo Saazar; and a grave and
sand truck owned by respondent Fepno Tmbo and drven by Fredde Montoya.
Two separate Informaton for Reckess Imprudence Causng Damage to Property
were fed aganst Rodofo Saazar and Fredde Montoya. The cause of acton was
due to how truck-drver Montoya was for causng damage to the |eep owned by
Saazar, by httng t at the rght rear porton thereby causng sad |eep to ht and
bump an oncomng car, whch happened to be pettoner's Mercedes Benz. The case
aganst |eep-owner-drver Saazar, was for causng damage to the Mercedes Benz.
The Court of Frst Instance rendered |udgment fndng the accused Fredde Montoya
guty beyond reasonabe doubt of the crme of damage to property thru reckess
mprudence. The tra Court absoved |eep-owner-drver Saazar of any abtyn
vew of ts fndngs that the coson between Saazar's |eep and pettoner's car was
the resut of the former havng been bumped from behnd by the truck drven by
Montoya. Nether was pettoner awarded damages as he was not a companant
aganst truck-drver Montoya but ony aganst |eep-owner. After the termnaton of
the crmna cases, pettoner fed a cv case aganst respondents |eep-owner-drver
Saazar and Feno Tmbo, the atter beng the owner of the grave and sand truck
drven by Montoya, for dentfcaton for the damages sustaned by hs car as a resut
of the coson. |eep-owner-drver Saazar and truck-owner Tmbo were |oned as
defendants, ether n the aternatve or n sodum. Truck-owner Tmbo fed a Moton
to Dsmss on the grounds that the Compant s barred by a pror |udgment n the
crmna cases and that t fas to state a cause of acton. An Opposton thereto was
fed by pettoner.
In an order respondent |udge dsmssed the Compant aganst truck-owner Tmbo
for reasons stated n the afore- mentoned Moton to Dsmss, pettoner sought
before ths Court the revew of that dsmssa, to whch petton we gave due
course.Upon moton of |eep-owner-drver Saazar, respondent |udge aso dsmssed
the case as aganst the former. Respondent |udge reasoned out that "whe t s true
that an ndependent cv acton for abty under Artce 2177 of the Cv Code
coud be prosecuted ndependenty of the crmna acton for the offense from whch
t arose, the New Rues of Court, whch took effect on |anuary 1, 1964, requres an
express reservaton of the cv acton to be made n the crmna acton; otherwse,
the same woud be barred pursuant to Secton 2, Rue 111. Pettoner's Moton for
Reconsderaton thereof was dened n the order dated wth respondent |udge
suggestng that the ssue be rased to a hgher Court "for a more decsve
nterpretaton of the rue.
Pettoner then fed a Suppementa Petton to revew the ast two mentoned
Orders, that requred |eep-owner-drver Saazar to fe an Answer.
#ssue"
Is the acton aganst respondents barred because of a pror |udgment?
$el%"
Pettoner's cause of acton beng based on quas-dect, respondent |udge
commtted reversbe error when he dsmssed the cv sut aganst the truck-owner,
as sad case may proceed ndependenty of the crmna proceedngs and regardess
of the resut of the atter.
The court hed- t s a we-setted rue that for a pror |udgment to consttute a bar to
a subsequent case, the foowng requstes must concur: (1) t must be a fna
|udgment; (2) t must have been rendered by a Court havng |ursdcton over the
sub|ect matter and over the partes; (3) t must be a |udgment on the merts; and (4)
there must be, between the frst and second actons, Identty of partes, Identty of
sub|ect matter and Identty of cause of acton.
It s conceded that the frst three requstes of res |udcata are present. However, we
agree wth pettoner that there s no Identty of cause of acton between the
crmna case and the cv case. Obvous s the fact that n sad crmna case truck-
drver Montoya was not prosecuted for damage to pettoner's car but for damage to
the |eep. Nether was truck-owner Tmbo a party n sad case. In fact as the tra
Court had put t "the owner of the Mercedes Benz cannot recover any damages from
the accused Fredde Montoya, he (Mendoza) beng a companant ony aganst
Rodofo Saazar n the crmna case. And more mportanty, n the crmna cases,
the cause of acton was the enforcement of the cv abty arsng from crmna
neggence under Artce of the Revsed Pena Code, whereas the cv case s based
on quas-dect under Artce 2180, n reaton to Artce 2176 of the Cv Code
Pettoner's cause of acton aganst Tmbo n the cv case s based on quas-dect s
evdent from the rectas n the compant . The court decare, therefore, that n so
far as truck-owner Tmbo s concerned, the cv case s not barred by the fact that
pettoner faed to reserve, n the crmna acton, hs rght to fe an ndependent
cv acton based on quas-dect.
T
3AR#A AN;'N#A &#GAAN, pet*t*oner, vs . R'&A -#3, -#ND, -#3, #NGR#D -#3
an% N,#- -#3, respon%ents .GG.R. No. 1+125, November 19, 1999H
!acts"
On 25 and 26 August 1990, respondent LIM ssued two Metrobank checks n favor of
pettoner SIGUAN. Upon presentment by pettoner wth the drawee bank, the
checks were dshonored for the reason "account cosed." Demands to make good
the checks proved fute. As a consequence, a crmna case for voaton of Batas
Pambansa Bg. 22 was fed by pettoner aganst LIM.
Meanwhe, on 2 |uy 1991, a Deed of Donaton conveyng the parces of and and
purportedy executed by LIM on 10 August 1989 n favor of her chdren, Lnde,
Ingrd and Ne, was regstered wth the Offce of the Regster of Deeds of Cebu Cty.
New transfer certfcates of tte were thereafter ssued n the names of the donees.
On 23 |une 1993, pettoner fed an accon pauana aganst LIM and her chdren to
rescnd the questoned Deed of Donaton and to decare as nu and vod the new
transfer certfcates of tte ssued for the ots covered by the questoned Deed, as
the same was aegedy made n bad fath and fraud of credtors. In ts decson of 31
December 1994, the tra court ordered the rescsson of the Deed and decared nu
and vod the transfer certfcates but on appea, Court of Appeas reversed sad
decson and dsmssed pettoners accon pauana. Hence, ths petton for revew
on certorar.
#ssue"
Whether or not the Deed of Donaton executed by respondent Lm be rescnded for
beng n fraud of her aeged credtor, pettoner Sguan.
$el%"
The Supreme Court resoved the ssue n the negatve. Under Artce 1381 of the
Cv Code, contracts entered nto n fraud of credtors may be rescnded ony when
the credtors cannot n any manner coect the cams due them. Aso, Artce 1383
of the same Code provdes that the acton for rescsson s but a subsdary remedy
whch cannot be nsttuted except when the party sufferng damage has no other
ega means to obtan reparaton for the same. The term "subsdary remedy" has
been defned as "the exhauston of a remedes by the pre|udced credtor to coect
cams due hm before rescsson s resorted to." It s, therefore, essenta that the
party askng for rescsson prove that he has exhausted a other ega means to
obtan satsfacton of hs cam. Pettoner nether aeged nor proved that she dd so.
On ths score, her acton for the rescsson of the questoned deed s not
mantanabe even f the fraud charged actuay dd exst."
Moreover, the Artce 1387, frst paragraph, of the Cv Code provdes: "A contracts
by vrtue of whch the debtor aenates property by gratutous tte are presumed to
have been entered nto n fraud of credtors when the donor dd not reserve
suffcent property to pay a debts contracted before the donaton. Lkewse, Artce
759 of the same Code, second paragraph, states that the donaton s aways
presumed to be n fraud of credtors when at the tme thereof the donor dd not
reserve suffcent property to pay hs debts pror to the donaton. For ths
presumpton of fraud to appy, t must be estabshed that the donor dd not eave
adequate propertes whch credtors mght have recourse for the coecton of ther
credts exstng before the executon of the donaton.
Nevertheess, a credtor need not depend soey upon the presumpton ad down n
Artces 759 and 1387 of the Cv Code. Under the thrd paragraph of Artce 1387,
the desgn to defraud may be proved n any other manner recognzed by the aw of
evdence. Thus n the consderaton of whether certan transfers are frauduent, the
Court has ad down specfc rues by whch the character of the transacton may be
determned. The foowng have been denomnated by the Court as badges of fraud:
(1) The fact that the consderaton of the conveyance s fcttous or s
nadequate;
(2) A transfer made by a debtor after sut has begun and whe t s
pendng aganst hm;
(3) A sae upon credt by an nsovent debtor;
(4) Evdence of arge ndebtedness or compete nsovency;
(5) The transfer of a or neary a of hs property by a debtor,
especay when he s nsovent or greaty embarrassed fnancay;
(6) The fact that the transfer s made between father and son, when
there are present other of the above crcumstances; and
(7) The faure of the vendee to take excusve possesson of a the
property.
Pettoner faed to dscharge the burden of provng any of the crcumstances
enumerated above or any other crcumstance from whch fraud can be nferred.
Accordngy, snce the requrements for the rescsson of a gratutous contract are
not present n ths case, pettoners acton must fa.
YOLANDA ROSELLO-BENTIR, SAMUEL PORMIDA and CHARITO PORMIDA, , vs.
HONORABLE MATEO M. LEANDA, and LEYTE GULF TRADERS, INC., . G.R. No. 128991
Apr 12, 2000
Facts:
Heren respondent entered nto a contract of ease of a parce of and wth pettoner
Bentr for a perod of twenty (20) years startng May 5, 1968. Respondent aeged
that the ease extended for another four (4) years. On May 5, 1989, heren pettoner
Bentr sod the eased property to pettoner spouses Pormada. Respondent then
questoned the sae camng ts rght of frst refusa and fed a case before the court
seekng for the reformaton of the expred contract of ease on the ground that ts
awyer accdentay faed to ncorporate n the contract of ease the verba
agreement between the partes that n case pettoner Bentr eases or ses the ot
after the expraton of the ease, respondent corporaton has the rght to equa the
hghest offer.
#ssue"
Whether the compant for reformaton of nstrument has prescrbed or not.
$el%"
Reformaton of an nstrument s that remedy n equty by means of whch a wrtten
nstrument s made or construed so as to express or conform to the rea ntenton of
the partes when some error or mstake has been commtted. An acton for
reformaton must be brought wthn the perod prescrbed by aw, otherwse, t w
be barred by the mere apse of tme. The prescrptve perod for actons based upon
a wrtten contract and for reformaton of an nstrument s ten (10) years.
Prescrpton s ntended to suppress stae and frauduent cams arsng from
transactons ke the one at bar whch facts had become so obscure from the apse
of tme or defectve memory. In the case at bar, respondent had ten (10) years from
1968, the tme when the contract of ease was executed, to fe an acton for
reformaton. Sady, t dd so ony on May 15, 1992 or twenty-four (24) years after the
cause of acton accrued, hence, ts cause of acton has become stae, hence, tme-
barred.
R#;A &AR3#NG, ,; A-. v. CR,&,NC#' DY, ,; A-. G.R. No. 1++1+
!acts"
After the death of Vaentna Unto Fores, her three chdren, |ose, Venanco, and
Svera took possesson of Lot 5734 wth each occupyng a one-thrd porton. Upon
ther death, ther chdren and grandchdren took possesson of ther respectve
shares. The other parce, Lot 4163 whch s soey regstered under the name of
Svera, was sub-dvded between Svera and |ose.
The grandchdren of |ose and now owners of one-haf of Lot 4163, sod ther haf to
the pantff Ae|andra Defno. Svera dd not ob|ect to the sae.
When Atty. Deogracas Pn, Ae|andra's awyer, to prepare the nstruments and
deeds, asked for the tte of the and, Svera Fores devered Orgna Certfcate of
Tte No. 4918-A, coverng Lot No. 5734, and not the correct tte coverng Lot 4163.
At that tme, the partes knew the ocaton of Lot 4163 but not ts OCT Number, so t
was pure mstake on part of Svera Fores.
Beevng n the error, Pn prepared a notarzed Settement of Estate and Sae that
was sgned by the partes. As a resut, OCT No. 4918-A was canceed and n eu
thereof, TCT No. 5078 was ssued n the names of Svera Fores and Ae|andra
Defno, wth one-haf share each. Svera Fores was present n a of these.
Ae|andra Defno mmedatey took possesson and ntroduced mprovements on the
purchased ot.
Two years ater, Ae|andra Defno dscovered that what was desgnated n the deed,
Lot 5734, was the wrong ot. She sought the assstance of Pn who approached
Svera and together they nqured from the Regstry of Deeds about the status of
Lot 4163. They found out that OCT No. 3129-A coverng Lot 4163 was st on fe.
Ae|andra Defno pad the necessary fees so that the tte to Lot 4163 coud be
reeased to Svera Fores, who promsed to turn t over to Pn for the reformaton
of the deed of sae. However, despte repeated demands, Svera dd not do so,
promptng Ae|andra to fe a compant for reformaton of the deed of sae wth
damages.
Svera Fores camed that she was the soe owner of Lot 4163 as shown by OCT No.
3129-A so respondents had no rght to the ot. The contract of sae ceary stated
that the property beng sod was Lot 5734, not Lot 4163. The case asted severa
years, and ther hers became the partes n the case. The tra court rued n favor of
the respondents and ordered the reformaton of the contract. Pettoners appeaed
the decson to the CA, whch affrmed the rung of the tra court. Hence ther
present petton for revew
#ssue"
Is the reformaton of the deed s proper by reason of mstake?
$el%"
Reformaton s that remedy n equty by means of whch a wrtten nstrument s
made or construed so as to express or conform to the rea ntenton of the partes.
An acton for reformaton of nstrument under ths provson of aw may prosper ony
upon the concurrence of the foowng requstes:
(1) there must have been a meetng of the mnds of the partes to the contact;
(2) the nstrument does not express the true ntenton of the partes; and
(3) the faure of the nstrument to express the true ntenton of the partes s due to
mstake, fraud, nequtabe conduct or accdent.
A of these requstes are present n ths case. There s no dspute as to the ntenton
of the partes to se the and to Ae|andra Defno but there was a mstake as to the
desgnaton of the ot ntended to be sod as stated n the Settement of Estate and
Sae.
Subsequent and contemporaneous acts of the partes as we as the evdentary
facts as proved and admtted can be refectve ntenton. The totaty of the evdence
ceary ndcates that what was ntended to be sod to Ae|andra Defno was Lot
4163 and not Lot 5734. Why woud Ae|andra occupy and possess one-haf of sad ot
f t was not the parce of and whch was the ob|ect of the sae to her? If t were true
that Svera Fores was the soe owner, she shoud have ob|ected when Ae|andra
Defno took possesson of one-haf thereof mmedatey after the sae. The other haf
beongs to her brother |ose, represented now by hs grandchdren successors-n-
nterest. As such, the atter coud rghtfuy se the and to Ae|andra Defno.
Reformaton of the nstrument s proper, and the decsons of the tra court and the
CA s sustaned.
;$, #N;,RNA;#'NA- C'R('RA;, 9AND #NC.vs.;$, #33,D#A;, A((,--A;,
C'AR; G.R. No. -019510 8une +0, 1922
!acts "
In the eary part of 1980, prvate respondent secured from pettoner's predecessors-
n-nterest, the then Investment and Underwrtng Corp. of the Phppnes and
Atrum Capta Corp., a oan n the amount of P50,000,000.00. To secure ths oan,
prvate respondent mortgaged her rea propertes n Ouapo, Mana and n San
Rafae, Buacan, whch she camed have a tota market vaue of P110,000,000.00.
Of ths oan, ony the amount of P20,000,000.00 was approved for reease. The same
amount was apped to pay her other obgatons to pettoner, bank charges and
fees. Thus, prvate respondent's cam that she dd not receve anythng from the
approved oan. On September 11, 1980, prvate respondent made a money market
pacement wth ATRIUM n the amount of P1,046,253.77 at 17% nterest per annum
for a perod of 32 days or unt October 13, 1980, ts maturty date. Meanwhe,
prvate respondent aegedy faed to pay her mortgaged ndebtedness to the bank
so that the atter refused to pay the proceeds of the money market pacement on
maturty but apped the amount nstead to the defcency n the proceeds of the
aucton sae of the mortgaged propertes. Wth Atrum beng the ony bdder, sad
propertes were sod n ts favor for ony P20,000,000.00. Pettoner cams that after
deductng ths amount, prvate respondent s st ndebted n the amount of P6.81
mon.On November 17, 1982, prvate respondent fed a compant wth the tra
court aganst pettoner for annument of the sherff's sae of the mortgaged
propertes, for the reease to her of the baance of her oan from pettoner n the
amount of P30,000,000,00, and for recovery of P1,062,063.83 representng the
proceeds of her money market nvestment and for damages. She aeges n her
compant, whch was subsequenty amended, that the mortgage s not yet due and
demandabe and accordngy the forecosure was ega; that per her oan
agreement wth pettoner she s entted to the reease to her of the baance of the
oan n the amount of P30,000,000.00; that pettoner refused to pay her the
proceeds of her money market pacement notwthstandng the fact that t has ong
become due and payabe; and that she suffered damages as a consequence of
pettoner's ega acts. In ts answer, pettoner denes prvate respondent's
aegatons and asserts among others, that t has the rght to appy or set off prvate
respondent's money market cam of P1,062,063.83. Pettoner thus nterposes
countercams for the recovery of P5,763,741.23, representng the baance of ts
defcency cam after deductng the proceeds of the money market pacement, and
for damages. The tra court subsequenty dsmssed prvate respondent's cause of
acton concernng the annument of the forecosure sae, for ack of |ursdcton, but
eft the other causes of acton to be resoved after tra. On December 15, 1983,
prvate respondent fed a moton to order pettoner to reease n her favor the sum
of P1,062,063.83, representng the proceeds of the money market pacement, at the
tme when she had aready gven her drect testmony on the merts of the case and
was beng cross-examned by counse. On February 13, 1984, respondent |udge
ssued an order grantng the moton. Pettoner fed a moton for reconsderaton to
the aforesad order, assertng among other thngs that sad moton s not verfed,
and therefore a mere scrap of paper. On March 13, 1984, pettoner fed a speca
cv acton for certorar and prohbton wth premnary n|uncton wth the Court of
Appeas. In a decson rendered on October 31, 1984, the Court of Appeas dsmssed
sad petton.
#ssue "
Whether or not there can be ega compensaton n the case at bar.
$el% "
The argument s wthout mert. Compensaton sha take pace when two persons, n
ther own rght, are credtors and debtors of each other. "When a the requstes
mentoned n Art. 1279 of the Cv Code are present, compensaton takes effect by
operaton of aw, even wthout the consent or knowedge of the debtors." Artce
1279 of the Cv Code requres among others, that n order that ega compensaton
sha take pace, "the two debts be due" and "they be qudated and demandabe."
Compensaton s not proper where the cam of the person assertng the set-off
aganst the other s not cear nor qudated; compensaton cannot extend to
unqudated, dsputed cam arsng from breach of contract. There can be no doubt
that pettoner s ndebted to prvate respondent n the amount of P1,062,063.83
representng the proceeds of her money market nvestment. Ths s admtted. But
whether prvate respondent s ndebted to pettoner n the amount of P6.81 mon
representng the defcency baance after the forecosure of the mortgage executed
to secure the oan extended to her, s vgorousy dsputed. Ths crcumstance
prevents ega compensaton from takng pace.
(#-#(#NA& 9AND v. #N;,R3,D#A;, A((,--A;, C'AR;
1
G.R. No. -014221 8une
+0, 1924
!acts"
The petoner-appeant bank and prvate respondent-appeees Doknos entered nto
a contract over a parce of and descrbed n Contract to Se No. VV-18-(a) n Vctora
Vaey Subdvson n Antpoo, Rza.
Ths s an appea by certorar from the decson
2
of the respondent court entted
"|ose W. Dokno and Carmen I. Dokno, pantffs-appeees, vs. The Manufacturers
Bank and Trust Company, whch affrmed the decson
3
of the Court of Frst Instance
wherefore the |udgment s rendered n favor of the pantffs and aganst the
defendant, orderng the defendant to dever to the pantffs the parce of and
descrbed n Contract to Se No. VV-18-(a) n the tota area of 5,936 square meters
and to execute n ther favor the necessary deed of absoute sae therefor then pay
for actua damages.
After tra, the ower court rendered a decson n prvate respondents' favor, hodng
that pettoner coud not rescnd the contract to se, because: (a) pettoner waved
the automatc rescsson cause by acceptng payment on September 1967, and by
sendng etters advsng prvate respondents of the baances due, thus, ookng
forward to recevng payments thereon; (b) n any event, unt May 18, 1977 (when
pettoner made arrangements for the acquston of addtona 870 square meters)
pettoner coud not have devered the entre area contracted for, so, nether coud
prvate respondents be abe n defaut, ctng Art. 1189 of the New Cv Code.
1
PILIPINAS BANK as Successor-In-Interest Of And/Or In substtuton to, The MANUFACTURERS
BANK AND TRUST COMPANY, pettoner-appeant
vs.
INTERMEDIATE APPELLATE COURT (Fourth Cv Cases Dvson), and |OSE W. DIOKNO and
CARMEN I. DIOKNO, respondents-appeees.
2
May 31, 1984 n CA-G.R. CV No. 67205 entted "|ose W. Dokno and Carmen I. Dokno,
pantffs-appeees, vs. The Manufacturers Bank and Trust Company, defendant-appeant.
(Penned by |ustce Porfro V. Sson concurred n by |ustces Abduwahd A. Bdn, Marceno R.
Veoso, and Desdero P. |urado.)
3
Cv Case No. 19660 (penned by |udge Gregoro G. Pneda.)
Sad Decson was affrmed on appea.
#ssue"
Whether the Petton For Revew on Certorar, rasng the man ssue of whether or
not the Contract to Se No. VV-18(a) was rescnded or canceed, under the
automatc rescsson cause contaned theren s vad.
$el%"
It was found that the petton s mertess because there s a cear WAIVER of the
stpuated rght of "automatc rescsson," as evdenced by the many extensons
granted prvate respondents by the pettoner. In a these extensons, the pettoner
never caed attenton to the provso on "automatc rescsson."
4
WHEREFORE the assaed decson s hereby AFFIRMED but the actua damages are
hereby reduced mnus whatever prvate respondents st owe the pettoner as a
resut of the contract.
#R,N, D#N' vs. $'N. AAGA&;' -. @A-,NC#A an% !RANC#&C' -. 'NG, G.R..
-0+221 8ul/ 19, 1929
!acts"
Pettoner Irene Dno s the regstered owner of a parce of and, of whch prvate
respondent, Francsco L. Ong s the adverse camant.
Prvate respondent ssued an affdavt and memorandum of qutcam wheren he
waved and renounced a hs cams, rghts and credts over and aganst the
4
Paragraph (e) of Contract to Se No. VV-18 (a): The contract sha be consdered automatcay
rescnded and canceed and of no further force and effect upon faure of the vendee to pay
when due, three or more consecutve nstaments as stpuated theren or to compy wth any of
the terms and condtons thereof, n whch case the vendor sha have rght to rese the sad
parce of and to any person nterested, forfetng payments made by the vendee as qudated
damages.
aforesad parce of and upon payment by pettoner of P90,000.00 n the foowng
manner.
(a) Downpayment of FORTY THOUSAND PESOS (P40,000.00) on or
before February 15, 1974, recept of whch (sc) hereby
acknowedged; and the future sums covered by postdated checks
n denomnatons of:
(b) TEN THOUSAND PESOS(P0,000.00)payabe or redeemabe on
or before Apr 15, 1974; and,
(c) EIGHT THOUSAND PESOS (P0,000.00) (sc) EACH payabe or
redeemabe on or before the 15th of |une, August, October,
December of 1974 and February of 1975, respectvey, and for a
tota of FORTY THOUSAND PESOS (P40,000.00),
The pettoner was abe to pay P50,000.00 n cash, but ssued 5 post-dated checks
for the remanng P40,000.00 . However, 4 of the checks were dshonored by the
bank due to nsuffcent funds and the account of pettoner beng cosed.
Respondent fed for the enforcement of the obgaton pus damages to whch
pettoner aeged that the orgna agreement of the partes as to the payment had
aready been novated and dsregarded by the partes after the ssuance of the sad
checks.
#ssue"
Whether or not the contract was novated by a change n mode of payment?
$el%"
The pettoner's contenton s untenabe. Her defense that the orgna agreement of
the partes had aready been novated and dsregarded after the ssuance of the
checks mentoned n prvate respondent's compant and after the prvate
respondent had executed and sgned the Affdavt and Memorandum of Outcam,
13
s a sham and fase defense and dd not tender an ssue that woud requre a hearng
for the recepton of evdence. It s a mere devce or scheme to avod or deay the
mmedate payment of pettoner's obgaton to the prvate respondent under the
Affdavt and Memorandum of Outcam. Thus, as apty observed by the court a quo-
A novaton under the rues of cv aw, where the term has been ntroduced
nto the modern nomencature of our common aw |ursprudence, was a
mode of extngushng one obgaton by another; the substtuton, not of a
new paper or rate but of a new obgaton n eu of an od one, the effect of
whch was to pay, dssove or otherwse dscharge t (bd).
It w be noted that the orgna contract was not actuay atered or
changed. The defendant, as a matter of fact, and for a ntents and
purposes, had ssued checks n payment of her obgaton as prestated by
the contract but asserts that the same were ssued ony to guarantee but
not as a payment n tsef, but t s not denyng the fact that one of the fve
checks were cashed, thus makng the baance of ony P32,000.00, that s
wthout menton the qudated damage of P20,000.00. The ambvaent
atttude of the defendant coud ony mean or shoud be construed as a
mere pretense to avod an mmedate demand for the payment of her
obgaton.
In order that an obgaton may be extngushed by another whch
substtutes the same, t s mperatve that t be so decared n unequvoca
terms, or that the od and new obgaton be on every pont ncompatbe
wth each other (Art. 1292-New Cv Code.)
In the present case the contract referred to dd not expressy extngush the
obgaton exstng n sad affdavt and memorandum of qutcam. On the
contrary, t expressy recognzed the obgaton between the partes and
expressy provded a method by whch the same sha be extngushed,
whch method was expressy provded n the aforementoned contract, by
means of perodca payments.
For a the foregong consderatons, the court beeves, and so hods, that
the aforementoned contract has never been atered, changed or novated.
For what the heren defendant actuay dd s not absoutey ncompatbe
wth the prestaton of the exstng contract but rather she expressy ratfed
such obgaton through the ssuance of postdated checks, some of whch
were cashed and others not for reason of nsuffcency of funds or 'account
cosed.
WHEREFORE, the petton s ths case s DISMISSED wth costs aganst
pettoner.chanrobes vrtua aw brary
($#-#((#N, C'33,RC#A- #N;,RNA;#'NA- 9AND , vs. C'AR; '! A((,A-&
an% !'RD ($#-#((#N,&, #NC. an% C#;#9AND, N.A., G.R. No. 1211+
8anuar/ 29, 2001
!acts"
These consodated pettons nvove severa frauduenty negotated checks.
Ford Phppnes drew and ssued Ctbank checks n favor of the Commssoner of
Interna Revenue as payments of ts taxes. The sad check was deposted to PCIB
and was subsequenty ceared at Centra Bank. Proceeds of the checks were never
receved by the Commssoner, but were encashed and dverted to the accounts of
members of a syndcate. The actng Commssoner of Interna Revenue offcay
nformed Ford that ts check n the amount of P4,746,114.41 was not pad to the
government or ts authorzed agent, hence, Ford has to pay the sad amount wthn
15 days from recept of the etter, Ford was forced to make second payment of ts
taxes. Thus, an acton to recover the amounts from the coectng and drawee banks
was fed.
#ssue"
Whether or not Ford has the rght to recover from the coectng bank (PCIBank) and
the drawee bank (Ctbank) the vaue of the checks ntended as payment to the
Commssoner of Interna Revenue.
Whethet or not Ford's cause of acton aready prescrbed.
$el%"
PCIB faed to verfy the authorty of Mr. Rvera to negotate the checks. The negect
of PCIB empoyees to verfy whether hs etter requestng for the repacement of the
Ctbank Check No. SN-04867 was duy authorzed, showed ack of care and
prudence requred n the crcumstances.
The mere fact that forgery was commtted by a drawer-payors confdenta
empoyee or agent, who by vrtue of hs poston had unusua factes to perpetrate
the fraud and mposng the forged paper upon the bank, does not entte the bank to
shft the oss to the drawer-payor, n the absence of some crcumstance rasng
estoppe aganst the drawer. The rue appes to checks frauduenty negotated or
dverted by the confdenta empoyees who hod them n ther possesson.
It aso shows that Ctbank as drawee bank was kewse neggent n the
performance of ts dutes. Ctbank faed to estabsh that ts payment of Fords
checks was made n due course and egay n order.
Thus, nvokng the doctrne of comparatve neggence, we are of the vew that both
PCIB and Ctbank faed n ther respectve obgatons and both were neggent n
the seecton and supervson of ther empoyees resutng n the encashment of
Ctbank Check Nos. SN 10597 AND 16508. Thus, we are constraned to hod them
equay abe for the oss of the proceeds of sad checks ssued by Ford n favor of
the CIR.
On the ssue of prescrpton, PCIB cams that the acton of Ford had prescrbed
because of ts nabty to seek |udca reef seasonaby, consderng that the aeged
neggent act took pace pror to December 19, 1977 but the reef was sought ony
n 1983, or seven years thereafter.
The statute of mtatons begns to run when the bank gves the depostor notce of
the payment, whch s ordnary when the check s returned to the aeged drawer as
a voucher wth a statement of hs account,

and an acton upon a check s ordnary
governed by the statutory perod appcabe to nstruments n wrtng.
Our aws on the matter provde that the acton upon a wrtten contract must be
brought wthn ten year from the tme the rght of acton accrues; hence, the
reckonng tme for the prescrptve perod begns when the nstrument was ssued
and the correspondng check was returned by the bank to ts depostor.
3AR#' &. ,&(#NA v. ;$, C'AR; '! A((,A-& an% R,N, G. D#AB G.R. No.
111205 8une 22, 2000
!acts"
Maro S. Espna s the regstered owner of a Condomnum Unt No. 403, Vctora
Vaey Condomnum, Vaey Gof Subdvson, Antpoo, Rza. Such ownershp s
evdenced by Condomnum Certfcate of Tte No. N-10.
On November 29, 1991, Maro S. Espna and Rene G. Daz executed a Provsona
Deed of Sae, whereby the former sod to the atter the aforesad condomnum unt
for the amount of P100,000.00 to be pad upon the executon of the contract and the
baance of P1,400,000.00 to be pad through sx (6) PCI Bank postdated checks.
Subsequenty, n a etter dated |anuary 22, 1992, Daz nformed Espna that hs
checkng account wth PCI Bank has been cosed and a new checkng account wth
the same bank s opened and that the postdated checks ssued w be repaced wth
new ones n the same bank.
On |anuary 25, 1992, Daz through hs wfe Ms. Socorro Daz pad Maro Espna
P200,000.00, acknowedged by hm as parta payment for the condomnum unt
sub|ect of ths controversy.
On |uy 26, 1992, Espna sent Daz a "Notce of Canceaton" of the Provsona Deed
of Sae. However, despte ths notce, Espna st accepted payment from Daz per
Metrobank Check No. 395694 dated and encashed on October 28, 1992 n the
amount of P100,000.00.
On February 24, 1993, Espna fed a compant for Unawfu Detaner aganst Daz
before the Muncpa Tra Court of Antpoo. The tra court rendered ts decson,
orderng Daz and a persons camng rghts under hm to vacate the condomnum
unt; to pay the tota arrears coverng the perod |uy 1991 up to the fng compant,
and to pay P7,000.00 every month thereafter as rentas unt he vacates the
premses; and to pay the attorney's fees and costs of sut. Espna may refund to Daz
the baance from P400,000.00 after deductng a of Daz tota obgatons as
specfed n the decson from recept of sad decson.
Daz appeaed to the Regona Tra Court and the sad appeate court affrmed n a
respects the decson of the tra court. Daz fed wth the Court of Appeas a petton
for revew, and the Court of Appeas reversed the appeaed decson and dsmssed
the compant for Unawfu Detaner wth costs aganst Espna. Espna fed a moton
for reconsderaton of the decson of the Court of Appeas, and ths was dened.
Hence, ths appea va petton for revew on certorar.
#ssue"
Whether or not the Court of Appeas erred n rung that the provsona deed of sae
novated the exstng contract of ease and that pettoner had no cause of acton for
e|ectment aganst respondent Daz.
$el%"
The Supreme Courts answer s no. The novaton must be ceary proved snce ts
exstence s not presumed. "In ths ght, novaton s never presumed; t must be
proven as a fact ether by express stpuaton of the partes or by mpcaton derved
from an rreconcabe ncompatbty between od and new obgatons or
contracts." Novaton takes pace ony f the partes expressy so provde, otherwse,
the orgna contract remans n force. In other words, the partes to a contract must
expressy agree that they are abrogatng ther od contract n favor of a new one.
Where there s no cear agreement to create a new contract n pace of the exstng
one, novaton cannot be presumed to take pace, uness the terms of the new
contract are fuy ncompatbe wth the former agreement on every pont. Thus, a
deed of cesson of the rght to repurchase a pece of and does not supersede a
contract of ease over the same property.
In the provsona deed of sae n ths case, after the nta down payment,
respondent's checks n payment of sx nstaments a bounced and were dshonored
upon presentment for the reason that the bank account was cosed. Consequenty,
on |uy 26, 1992, pettoner termnated the provsona deed of sae by a notara
notce of canceaton. Nonetheess, respondent Daz contnued to occupy the
premses, as essee, but faed to pay the rentas due. On October 28, 1992,
respondent made a payment of P100,000.00 that may be apped ether to the back
rentas or for the purchase of the condomnum unt. On February 13, 1993,
pettoner gave respondent a notce to vacate the premses and to pay hs back
rentas. Fang to do so, respondent's possesson became unawfu and hs evcton
was proper. Hence, on February 24, 1993, pettoner fed wth the Muncpa Tra
Court, Antpoo, Rza an acton for Unawfu Detaner aganst respondent Daz.
The respondent contends that the pettoner's subsequent acceptance of such
payment effectvey wthdrew the canceaton of the provsona sae. The Supreme
Court dd not agree. Uness the appcaton of payment s expressy ndcated, the
payment sha be apped to the obgaton most onerous to the debtor. In ths case,
the unpad rentas consttuted the more onerous obgaton of the respondent to
pettoner. As the payment dd not fuy sette the unpad rentas, pettoner's cause
of acton for e|ectment survves.
Thus, the Court of Appeas erred n rung that the payment was "addtona
payment" for the purchase of the property.
The Court grants the petton for revew on certorar, and reversed the decson of
the Court of Appeas.
NA;#'NA- ('I,R C'R('RA;#'N , vs. ,#N C$,3#CA- C'R('RA;#'N an%
($#-#((#N, #N;,RNA;#'NA- &AR,;Y C' . G.R. No. -02251 November 1,
1921
!acts"
On March 23, 1956, the Natona Power Corporaton (or NPC), after pubc bddng,
awarded to the EIN Chemca Corporaton (or (EIN), the contract formazed on Apr
19, 1956, to suppy and dever 3,691 ong tons of crude sufur n one shpment to
the Mara Crstna Fertzer Pant n Igan Cty on or before May 10, 1956, for the
prce of P374,374.91 to be pad by NPC. To guarantee ts obgaton, EIN posted a
bond from the Phppne Internatona Surety Co. n the amount of P74,874.98.
EIN obtaned from the NPC a etter of credt wth Phppne Natona Bank (PNB), New
York on May 8, 1956 amountng to US$185,794.00 wth an expry date orgnay set
for May 30, 1956 but reset by NPC upon the request of EIN to |une 30, 1956.
Antcpatng faure to dever on the contract date, EIN requested and was granted
by NPC a further extenson of the expry date of the etter of credt to September 30,
1956. On August 19, 1956, EIN devered ony 1,000 ong tons of crude sufur
ostensby due to ack of bottoms; but was pad therefor by NPC the amount of
P101,764.05. Even though t faed to dever as per contract, EIN requested to be
aowed to partcpate n another bddng to be conducted by NPC but the atter
dsquafed EIN from partcpatng n the sad bddng. The NPC nstead sued EIN for
damages for breach of contract on December 17, 1956 before the then Court of Frst
Instance of Mana, Branch XVI. The ower court dsmssed the case decarng that
EIN was not n bad fath; that, the extenson of the expry date of the etter of credt
carred wth t the extenson of the devery tme.
The NPC appeaed the tra court's decson questonng a the foregong ponts. On
the other hand, EIN aeged that NPC faed to nform t that t woud take 45 days to
shp from the U.S. Atantc ports to the Phppnes; that NPC ncurred deay n
openng the etter of credt; that, the purpose of extendng the expry date of the
etter of credt was to extend the devery tme and ths became manfest wth the
parta devery of 1,000 ong tons of crude sufur; that, t was the ntenton of the
partes for the seer to shp the crude sufur as soon as t receved notce of the
openng of the etter of credt; that t shoud have been aowed to partcpate n the
second bddng; and, that the scarcty of bottoms coud have been avoded had NPC
opened the etter of credt wthn a reasonabe tme.
#ssue"
The soe queston for Our resouton s whether or not EIN commtted a breach of
contract whch woud entte NPC to damages.
$el%"
A revew of the records shows that the contract was freey entered nto by both
partes n good fath. The provsons of the contract, however, ndcate that there s
no reatonshp between the devery date and the openng of the etter of credt
whch was anyway opened wthn a reasonabe tme after the sgnng of the
contract. The extensons of the expry dates of the etter of credt cannot, by any
means, be nterpreted as extensons of the devery date. As the terms show, no
other devery date can even be nferred. The probem of bottoms s one that s we-
known and antcpated by suppers and shppers, and NPC cannot be fauted for
such probem snce t opened the etter of credt wthn a reasonabe tme after the
sgnng of the contract. The NPC, n fact, had no duty to nform EIN of -the shppng
tme between the US Atantc ports and the Phppnes snce a shppers and
suppers are presumed to know ths as part of ther busness.
Evdenty, the EIN ceary commtted a breach of contract by fang to competey
dever on ts contract nspte of the enency of the NPC n enforcng ts rghts. Laxty
of a contractng party n the enforcement of ts rghts under the contract does not n
any manner dmnsh ts rghts thereunder.
Consderng the foregong, the Court resoved to SET ASIDE the appeaed decson,
and to render a new one drectng the appeees to pay appeant, |onty and
severay, the amount of the performance bond, the qudated damages from
August 19, 1956 up to |anuary 20, 1958 when the appeant purchased crude sufur
from other sources, and the costs.
A9& C9N v. CA GR0122190 519996
!acts"
In 1990, ABS-CBN and VIVA executed a Fm Exhbton Agreement whereby the
atter gave the former an excusve rght to exhbt 24 VIVA Fms for TV teecast.
Later, VIVA, through respondent Vncent de Rosaro, offered ABS-CBN a st of 3 fm
packages (36 ttes) from whch the atter may exercse ts rght of frst refusa under
ther agreement. ABS-CBN tcked off 10 ttes therefrom. Thereafter, n February
1992, De Rosaro offered ABS-CBN arng rghts over a package of 104 moves for
P60 mon. In Apr, 1992, De Rosaro, and Eugeno Lopez of ABS-CBN, met at a
restaurant to dscuss the package proposa. Accordng to Lopez, however, what
they agreed upon was ABS-CBNs excusve fm rghts to 14 fms for P36 mon.
De Rosaro dened the same. He nssted that the dscusson was on VIVAs offer of
104 fms for P60 mon, to whch ABSCBN ater made a counterproposa but
re|ected by VIVAs Board of Drectors. Hence, VIVA ater granted RBS the excusve
rght to ar the 104 VIVA fms, ncudng the 14 fms supposedy granted to ABS-
CBN. ABS-CBN then fed a compant for specfc performance wth prayer for
n|uncton. The RTC granted the prayer and requred ABS-CBN post a P35 mon
bond. But whe ABS-CBN was movng for reducton of the bond, RBS offered to put
up a counterbond and was aowed to post P30 mon. Later, the RTC rendered a
decson n favor of RBS and VIVA, orderng ABS-CBN to pay RBS the amount t pad
for the prnt advertsement and premum on the counterbond, mora damages,
exempary damages and attorneys fee. ABS-CBN appeaed to the Court of Appeas.
Vva and De Rosaro aso appeaed seekng mora and exempary damages and
addtona attorneys fees. The Court of Appeas affrmed the RTC decson and
sustaned the monetary awards, VIVAs and De Rosaros appeas were dened.
#ssues"
1. Whether there was a perfected contract between VIVA and ABS-CBN; and
2. Whether RBS s entted to damages and attorneys fees.
$el%"
The frst ssue s resoved aganst ABS-CBN, n the absence of the requstes to make
a vad contract. The aeged agreement on the 14 fms, f there s one, s not
bndng to VIVA as t s not manfested that De Rosaro has an authorty to bnd
VIVA. Thus, when ABS-CBN made a counter-proposa to VIVA, the same was
submtted to ts Board of Drectors, who re|ected the same. Further, the Court
agreed that the aeged agreement s not a contnuaton of the 1990 Contract as the
rght of frst refusa under the sad contract had aready been exercsed by ABS-
CBN. However, on the ssue of damages, the Court found ABS-CBN. RBS s not
entted to actua damages as the cam thereof dd not arse from that whch aows
the same to be recovered. Nether s RBS entted to attorneys fees as there s no
showng of bad fath n the other partys persstence n hs case. Aso, beng a
corporaton, RBS s not entted to mora damages as the same s awarded to
compensate actua n|ures suffered. Lasty, exempary damages cannot be awarded
n the absence of proof that ABS-CBN was nspred by mace or bad fath.
9abasa &pouses v. CA
!acts"
Spouses Babasa as vendors and Tabangao Reaty as vendee executed a contract of
"Condtona Sae of Regstered Lands" over three parces of and. The certfcates of
tte over the ots were n the name of thrd persons who had aready executed
deeds of reconveyance and dscamer n favor of the Babasa spouses. The partes
agreed that the tota purchase prce s P2.1M of whch P300K w be pad upon
sgnng of the contract and P1.8M w be pad upon the devery of cean ttes of the
ots wthn 20 months. Durng the perod of 20 months whe the Babasas are to
dever cean ttes, t was agreed that Tabangao w pay 17% of P1.8M as nterest
per annum or P20K per month as renta.
A month after the sgnng of the contract, Tabangao eased the ots to She whch
mmedatey started the constructon of a Lquefed Petroeum Gas Termna Pro|ect,
an approved zone export enterprse of the EPZ.
However, 2 days pror to the expraton of the 20-month perod, the Babasa spouses
asked for an ndefnte extenson wthn whch to dever cean ttes over the ots.
And they asked Tabango to contnue payng the monthy nterest of P20k on the
ground that the cv cases they fed for the transfer of ttes of the ots n ther
name. Tabangao refused. In retaaton the Babasa spouses executed a notarzed
unatera rescsson and demanded that She sha vacate the ots.
Tabango nsttuted an acton for specfc performance and damages to compe the
spouses to compy wth ther obgaton to dever cean ttes over the propertes on
the ground that they aready obtaned a favorabe |udgment orderng the
reconsttuton of the orgna copes of the and tte.
On the merts, Tabango obtaned a favorabe |udgment from the tra court.
Accordng to t, the 20-month perod stpuated n the contract was never meant to
be ts term such that upon ts expraton the respectve obgatons of the partes
woud be extngushed. On the contrary, the expraton thereof merey gave rse to
the rght of TABANGAO to ether rescnd the contract or to demand that the
BABASAS compy wth ther contractua obgaton to dever to t cean ttes and
regsterabe documents of sae. Hence, the unatera rescsson was vod and of no
ega effect.
Aggreved, Babasa spouses appeaed to the CA contendng that the Contract of
Condtona Sae was one of ease, not of sae. But they were unabe to convnce the
CA whch dsmssed ther appea.
Undaunted, hence ths present petton.
The spouses aver that the contract of 11 Apr 1981 was n reaty a contract of
ease, not of sae; but even assumng that t was ndeed a sae, ts nature was
condtona ony, the effcacy of whch was extngushed upon the non-happenng of
the condton, .e., non-devery of cean certfcates of tte and regsterabe
documents of sae n favor of TABANGAO wthn twenty (20) months from the sgnng
of the contract.
They aso argued that they never ntended to se ther ancestra ots but were
merey forced to do so when TABANGAO danged the threat of expropraton by the
government (through the Export Processng Zone Authorty) n the event vountary
negotatons faed.
Pettoners contend that ownershp over the three (3) ots was never transferred to
TABANGAO and that the contract of 11 Apr 1981 was rendered feess when the
20-month perod stpuated theren expred wthout them beng abe to dever cean
certfcates of tte to TABANGAO through no faut of ther own. Consequenty, ther
unatera rescsson dated 28 February 1983 shoud have been uphed as vad.
#ssues"
Whether or not the spouses can unateray rescnd the contract, on account of frst,
ther non-fufment of ther obgaton to dever the cean ttes, second, that they
were merey forced to agree because of mpendng threat that ther ots w be
exproprated va EPEZA, and thrd, the apse of the perod (20 months) and the non-
devery of the cean ttes the contract was rendered feess?
$el%"
No. The Unatera rescsson was unwarranted. Frst, the condton n the contract s
n favor of Tabangao; that s upon the devery of cean ttes, Tabangao w pay
P1.8M.
3A-9AR'&A, vs . C'AR; '! A((,A-&
!acts"
Here n pettoner was the presdent and genera manager of Phtectc Corp., a
subsdary of respondent SEADC. Beng an offcer, he was ssued a car and
membershp n the Archtectura Center.
One day he ntmdated wth the vce-charman of the BoD of respondent hs desre
to retre and he requested that hs ncentve compensaton be pad to hm as
presdent ofPhtectc. He then tendered hs resgnaton to sad VP. One of the offcer
met wth pettoner and nformed hm that he w get roughy around P395k.
Foowng hs resgnaton, the VP sent a etter-offer to pettoner statng theren
acceptance of pettoners resgnaton and advsed hm that he s entted to P251k
as hs ncentve compensaton. In the same etter, the VP proposed the satsfacton
of hs ncentve by gvng hm the car the company ssued and the membershp n
the Archtectura Center w be transferred to hm, nstead of cash. Pettoner was
requred by respondent through the VP to affx hs sgnature n the etter f he was
agreeabe to the proposa.
The etter was gven to the pettoner by the offcer who tod hm that he was
supposed to get P395k. Pettoner was dsmayed when he receved the etter-offer
and refused to sgn t as requred by respondent f he was agreeabe to t.
Two weeks ater, respondent company demanded the return the car and turn over
the membershp n the Archtectura Center.
Pettoner wrote the counse of respondent teng hm that he cannot compy wth
the demand snce he aready accepted the offer fourteen (14) days after t was
made. In hs etter, he encosed a Xerox of the orgna wth hs affxed sgnature as
requred.
Wth hs refusa, respondent nsttuted an acton for recovery wth repevn.
In hs Answer to the compant, the pettoner, as defendant theren, aeged that he
had aready agreed on March 28, 1990 to the March 14, 1990 Letter-offer of the
respondent, the pantff theren, and had notfed the sad pantff of hs
acceptance; hence, he had the rght to the possesson of the car.
After the tra, |udgment was rendered aganst pettoner. The tra court opned that
there exsted no perfected contract between the pettoner and the respondent on
the atters March 14, 1990 Letter-offer for faure of the pettoner to effectvey
notfy the respondent of hs acceptance of sad etter-offer before the respondent
wthdrew the same.
He appeaed to the CA whch affrmed the decson of the tra court.
Hence, ths present appea.
#ssues"
1. Whether or not there was a vad acceptance on hs part of the March
14, 1990 Letter-offer of the respondent?
2. Whether or not there was an effectve wthdrawa by the respondent
of sad etter-offer?
$el%"
1. No. Under Artce 1319 of the New Cv Code, the consent by a party s
manfested by the meetng of the offer and the acceptance upon the thng and the
cause whch are to consttute the contract. An offer may be reached at any tme
unt t s accepted. An offer that s not accepted does not gve rse to a consent. To
produce a contract, there must be acceptance of the offer whch may be express or
mped but must not quafy the terms of the offer. The acceptance must be
absoute, uncondtona and wthout varance of any sort from the offer.
The acceptance of an offer must be made known to the offeror.
5|27|
Uness the
offeror knows of the acceptance, there s no meetng of the mnds of the partes, no
rea concurrence of offer and acceptance.
6|28|
The offeror may wthdraw ts offer
and revoke the same before acceptance thereof by the offeree. The contract s
perfected ony from the tme an acceptance of an offer s made known to the
offeror. If an offeror prescrbes the excusve manner n whch acceptance of hs
offer sha be ndcated by the offeree, an acceptance of the offer n the manner
prescrbed w bnd the offeror. On the other hand, an attempt on the part of the
offeree to accept the offer n a dfferent manner does not bnd the offeror as the
absence of the meetng of the mnds on the atered type of acceptance.
7|29|
An offer
made nter praesentes must be accepted mmedatey. If the partes ntended that
there shoud be an express acceptance, the contract w be perfected ony upon
knowedge by the offeror of the express acceptance by the offeree of the offer. An
acceptance whch s not made n the manner prescrbed by the offeror s not
effectve but consttutes a counter-offer whch the offeror may accept or re|ect.
8|30|
The contract s not perfected f the offeror revokes or wthdraws ts offer and the
revocaton or wthdrawa of the offeror s the frst to reach the offeree.
In the case at bar, the respondent made ts offer through ts VP. On March 16, the
offcer handed over the orgna etter-offer to pettoner. The respondent requred
the pettoner to accept by affxng hs sgnature and the date n the etter offer,
thus forecosng an mped acceptance or any other mode of acceptance. And t s
for a fact that the pettoner dd not accept of re|ect the offer for he needed tme to
decde whether to accept or re|ect. Athough the pettoner cams that he had
affxed hs conformty to the etter-offer on March 28, 1990, the pettoner faed to
transmt the sad copy to the respondent. It was ony on Apr 7, 1990 when the
pettoner appended to hs etter to the respondent a copy of the sad March 14,
1990 Letter-offer bearng hs conformty that he notfed the respondent of hs
acceptance to sad offer. But then, the respondent, through Phtectc Corporaton,
had aready wthdrawn ts offer and had aready notfed the pettoner of sad
wthdrawa va respondents etter dated Apr 4, 1990 whch was devered to the
pettoner on the same day. Indubtaby, there was no contract perfected by the
partes on the March 14, 1990 Letter-offer of the respondent.
2. Yes. It s necessary so because there was no need for the respondent to
wthdraw ts offer because the pettoner had aready re|ected the respondents
offer on March 16, 1990 when the pettoner receved the orgna of the March 14,
5[27]
Jardine Davies, Inc. v. Court of Appeals, et al., 333 SCRA 689 (2000).
6[28]
Enriquez v. Sun Life Assurance, 41 Phil. 269.
7[29]
Allied Steel & Conveyors, Inc.. v. ord !otor Co"pany, 277 FEDERAL
REPORERS 2
!"
, 907 (1960).
8[30]
OLE#$#O, CO%%E#AR$ES A#D &'R$SPR'DE#CE OF (E #E)
C$*$L CODE, 1985 +"., *,l. $*, --. 462-463.
1990 Letter-offer of the respondent wthout the pettoner affxng hs sgnature on
the space therefor.
(alomar v. C!#, ()*l Ref*n*ng. 29221, Aug. +1, 1922
!acts"
Respondent started as saes promoton scheme named "Grand Sam" wheren any
person who submts to t matchng eft and rght haves of pctures of any artce
wns that artce as hs prze. Haf-pctures were found n the abes of the products
promoted. In the advertsements for sad scheme whch were pubshed n
newspapers, t was aso announced that free haf-photos of przes mght aso be
obtaned by wrtng to ts address.
Pettoner Postmaster Genera ssued "Fraud Order No. 2" aganst respondent on the
ground that the promoton s a ottery wthn the purvew of the Posta Law and
drected a ts empoyees to return to sender any ma matter addressed to
respondent.
Offended by sad order, respondent fed a compant for mandatory n|uncton wth
premnary n|uncton aganst pettoner before the CFI. Its ground s that the
promotona scheme s not a ottery because there was no consderaton nvoved.
Premnary n|uncton was ordered aganst pettoner. After due hearng, the tra
court hed that the scheme was not a ottery absent of the eement of consderaton.
Hence, ths present appea.
#ssue"
The ony ssue presented n ths case s whether or not the eement of consderaton
s present n the Grand Sam promoton of the respondent company, whch, together
wth the eements of prze and chance, consttute the "ottery" prohbted by the
Posta Law.
Pettoner argues that there s consderaton because one has to buy respondent
companys products to enabe them to partcpate n the scheme.
On the other hand, prvate respondent countered that wth or wthout ts Grand Sam
promoton, the products sub|ect of the sad saes drve are bought at the same usua
prce; wth or wthout the promoton, no person s requred to pay more than the
current cost of the sad products.
$el%"
It appears that the Phppne Refnng Company, heren appeee, resorted to two
schemes to promote the sae of ts products: Breeze Easy Money and CAMIA Lucky-
Key Hunt; both of whch envsoned the gvng away for free of certan przes
(wthout addtona consderaton) for the purchase of Breeze soap and CAMIA
cookng o. In other words, the partcpants woud get the exact vaue of the prze
for the goods pus the chance of wnnng n the scheme. No one woud be requred to
pay more than the usua prce of the products.
Ths Court has consstenty rued that a pan whereby przes can be obtaned wthout
any addtona consderaton (when a product s purchased) s not a ottery (Uy v.
Paomar, L-23248, Febuary 28, 1969; U.S. v. Baguo, 39 Ph. 862; Catex (Ph.) Inc.
v. Postmaster-Genera, 18 SCRA 247). It s thus cear that the schemes n the case at
bar are not otteres.
,NR#>A, (. &Y>A#A vs. ;$, $'N'RA9-, C'AR; '! A((,A-& AND ,DIARD
-#;;'N
!acts"
A contract of ease, Exhbt "G", entered nto by and between the
defendant and pantff's predecessors-n-nterest, has been termnated by
ts express provson appearng n paragraph 1, whch states that the ease
sha be for a perod of nne (9) years commencng on |anuary 1, 1970 and
endng on |anuary 31, 1979.August 9, 1976, the Ltton co-ownershp was
dssoved by partton (Exh. "E") and the ownershp of the Dutch Inn
Budng and the ots on whch t s but was ad|udcated to heren prvate
respondent Edward Ltton. However, the atter gave notce n wrtng (Exh.
"F") that as the new owner of sad propertes, rentas of the same shoud be
remtted to hm startng |anuary, 1977. Pettoner sgnfed hs conformty
(Exh. " F-1 ") to ths notce and accordngy pad hs rentas drecty prvate
respondent. Then pettoner wrote to respondent manfestng hs
wngness to renew the contract of ease upon ts expraton on |anuary 31,
1979 under such terms as may be agreeabe to both of them.
prvate respondent, thru counse, asked pettoner n wrtng to
vacate the premses on or before the expraton of the ease contract on
|anuary 31, 1979, and upon hs faure to vacate the premses after the
expry date of the ease contract, he shoud pay the amount of P58,685.00
per month as compensaton for the use and occupaton of the premses
Pettoner ob|ected to the amount as not beng far and reasonabe
renta, pettoner nvokng the huge nvestment he has put n the Dutch Inn
Budng from 1970 to 1979 and aso the aeged verba assurance by
pantff-apeee's predecessor-n-nterest of pettoner's prorty to renew
the ease of the premses n queston. Pettoner's refusa to vacate the
premses upon wrtten demand made by prvate respondent on February 1,
1979, prvate respondent fed the case for e|ectment based on the
expraton of the Contract of Lease
SYOUIA cams that ths case was fed prematurey consderng
that he s entted to a renewa of the contract, that one of the nducements
whch made hm enter nto a ease agreement wth pantff's predecessor-
n-nterest was the ora assurance of sad pantff's predecessor-n-nterest
that the defendant s entted to a renewa or a prorty to ease the
premses upon the expraton of the contract of ease
the pantff s now duty-bound to respect the verba assurance
gven by the pantff's predecessor to gve hm a renewa or prorty to a
new ease over the property and that defendant shoud now be made to
exercse hs opton to renew the ease. In other words, pantff shoud be
compeed to abde by the commtment made by hs predecessor-n-nterest
#ssue"
Whether or not the defendant s entted to a renewa of the contract of ease,
Exhbt "G ", whch on ts face, expred on |anuary 31, 1979. In other words, can the
aeged verba assurances of George Ltton Sr. and Gora Ltton de Ro be suffcent
bass to vary the wrtten contract and aow the defendant an extenson of the ease
contract, whch, on ts surface, aready expred on |anuary 31, 1979?
$el%"
However, under 2(e) of Artce 1403 of the Cv Code as quoted
above, the aeged ora assurance or promse of the representatves of the
Ltton Fnance & Investment Corp, that defendant shoud be gven prorty
or a renewa of Exhbt "G" cannot be enforceabe aganst pantff.
there s absoutey no room to readnto Exhbt "G" the aeged
extenson or renewa or assurance or prorty to ease after the contract
sha have expred, because the document s n tsef, compete, and no
ambqutes can be ascrbed to ts terms and nether s there any mstake or
mperfecton or faure to express the true ntent and agreement of the
partes theren, smpy because the provsons for extenson or renewa are
not found n or capabe of beng nferred from the
The testmony of the defendant that there was an ora
understandng between hm and the representatves of Ltton Fnance &
Investment Corp. to be aowed to extend or renew or be gven prorty to
ease the property at the expraton of the contract of ease on |anuary 31,
1979 s beed by hs etter to pantff dated December 1, 1978, whch s
nconsstent to what a aong sad defendant had professed
It s sgnfcant from ths porton of the etter that the defendant
never mentoned hs opton or prorty to ease the property. It s the
observaton of the court that the aeged verba assurance of George Ltton
Sr. and Gora Ltton de Ro s ony an afterthought of the defendant. It s
merey an eeventh hour defense of the defendant when the pantff
refused to renew the contract
It s noted that pettoner s among other thngs a successfu and
experenced busnessman. Consderng hs huge nvestment made on the
budng, he shoud have taken steps to protect hs nvestment wthn the
protectve mante of the aw by nsstng that the aeged verba assurance
be reduced nto wrtng. Hs faure to do so has consderaby weakened hs
cam.
Proof of the aeged verba assurance of a ease renewa cannot be
aowed both under the Paro Evdence Rue and the Statute of Frauds for
faure to put n wrtng sad aeged stpuaton. Upon the other hand We
are ncned to consder Syqua as havng constructed n good fath the
mprovements he ntroduced n the Dutch Inn Budng. Hs rghts to sad
mprovements are governed by Art. 1678 of the Cv Code, whch provdes:
Pettoner admts the fact of ownershp of the prvate respondent
over the budng n queston. As the owner, t s ony ogca that he shoud
have the freedom to choose the tenant of the premses under such terms
and condtons as may enabe hm to reaze reasonabe and far returns
therefrom. Snce pettoner stubborny refused to vacate-ate the premses
despte repeated demands of respondent, he shoud be obged to
compensate the atter such amount as may be deemed far and reasonabe
under the crcumstances.
RA3'N 3AG&AY&AY AIARD !'ANDA;#'N v. ;$, C'AR; '! A((,A-&
55992 01J14J1925
!acts"
Pettoner owns a budng whch was eased to prvate respondent. The contract of
ease was for a perod of fve years wth express provsos aganst any extenson or
renewa by mpcaton of the ease and for the revew of the renta rate at the end of
the second year of the ease and every two years thereafter. It provdes that partes
may negotate on or before 90 days pror to the expraton of the contract. The
orgna stpuated renta for P14 per square meter per month ncuded a costs n
the mantenance of the budng ke eectrcty, water, etc.
Before the end of the fourth year of the ease, pettoner notfed respondent that n
accordance wth ther contract, t woud ncrease the renta at P16 per sq. m. per
month. Meanwhe, the partes negotated for the renewa of the contract of ease.
Pettoner gave respondent the draft of the new contract provdng a renta rate of
P17. Both partes agreed substantay wth the whoe contract except on account of
arrears whch respondent shoud ony be bound to pay P14 nstead of P16 for three
months.
The second contract was consummated and agreed upon by partes. There were
dsagreements between partes as to the apparent ncrease n the expenses of the
budng and the demand by pettoner of the arrearages t camed to be entted
nto.
Before the expraton of the renewed contract of ease whch s for a perod of two
years, pettoner offered that f respondent s wng to pay ts arrearages and the
ncreased rate, t woud agree to renew the contract of ease. But the respondent
unwng to accede to pay the arrearages hodng ts poston not to pay the same,
pettoner notfed the respondent to vacate the premses.
Pettoner then nsttuted an acton for e|ectment before the Cty Court. On appea by
pettoner, the CFI affrmed but modfed the ower courts decson. On appea, the
CA affrmed the decson of the CFI as regards a renewed contract but dsmssed
pettoners cam as to payment of reasonabe compensaton. Hence, ths present
appea.
Respondent contends, as adopted by a ower courts, that after the expraton of the
renewed contract of ease, there was an mped new ease pursuant to Art. 1687 of
the Cv Code, whch thus empowers the court to fx a onger perod of ease on the
ground that the essee (respondent heren) havng occuped the premses for over
one year.
Pettoner aso camed that there was no meetng of the mnds as regards the
renewed contract of ease.
#ssues"
1. Whether or not there was a meetng of the mnd whe apparenty t
appears that partes whe negotatng were not agreeabe to the
arrearages but at the same tme the partes sgned the contract?
2. Whether or not there was an mped new ease pursuant to Art. 1687 of the
Cv Code, notwthstandng the express provsos aganst extenson or
renewa by mpcaton?
$el%"
Yes. "Durng the negotatons, athough pettoner adverted to the arrearages n
renta st due from the prvate respondent, t appears that sad cam (as regards
arrearages the partes dsagree about) had been treated as a dstnct or separate
matter such that ts resouton was not consdered a condton precedent to the
renewa under negotaton." In other words, snce the arrearages dd not pertan to
the substance of the contract, t, not a prncpa condton thereof, cannot nufy a
contract.
No. The contract expressy provded aganst renewa by mpcaton. Under Art.
1687 "If the perod for the ease has not been fxed, t s understood to be from year
to year, f the rent agreed upon s annua; from month to month, f t s monthy;
from week to week, f the rent s weeky; and from day to day, f the rent s to be
pad day. However, even though a monthy rent s pad, and no perod for the ease
has been set, the courts may fx a onger term for the ease after the essee has
occuped the premses for over one year. If the rent s weeky, the courts may
kewse determne a onger perod after the essee has been n possesson for over
sx months. In case of day rent, the courts may aso fx a onger perod after the
essee has stayed n the pace for over one month." And t must be noted that under
the renewed contract of ease, the perod was fxed to two years.
But the appeate court erred n uphodng the tra court's |udgment that after the
expraton of the two-year perod of the renewed ease on March 10, 1975, there was
an mped new ease under the provsons of Art. 1670 of the Cv Code at the same
no onger adequate renta rate of P17.00 per square meter.
NAGA ;,-,($'N, C'., #NC. 5NA;,-C'6 AND -AC#AN' 3. 3AGGAY ,
vs. ;$, C'AR; '! A((,A-& AND CA3AR#N,& &AR ## ,-,C;R#C
C''(,RA;#@,, #NC. 5CA&AR,C' ##6, G.R. No. 104112 !ebruar/ 2, 199
!acts"
Pettoner Naga Teephone Co., Inc. (NATELCO) s a teephone company n Naga Cty
whe prvate respondent Camarnes Sur II Eectrc Cooperatve, Inc. (CASURECO II) s
a prvate corporaton estabshed for the purpose of operatng an eectrc power
servce n the same cty.
On November 1, 1977, the partes entered nto a contract for the use by pettoners
n the operaton of ts teephone servce the eectrc ght posts of prvate respondent
n Naga Cty. In consderaton therefor, pettoners agreed to nsta, free of charge,
ten (10) teephone connectons for the use by prvate respondent
After the contract had been enforced for over ten (10) years, prvate respondent
fed on |anuary 2, 1989 wth the Regona Tra Court of Naga Cty aganst
pettoners for reformaton of the contract wth damages, on the ground that t s too
one-sded n favor of pettoners; that t s not n conformty wth the gudenes of
the Natona Eectrfcaton Admnstraton (NEA) whch drect that the reasonabe
compensaton for the use of the posts s P10.00 per post, per month; that after
eeven (11) years of pettoners' use of the posts, the teephone cabes strung by
them thereon have become much heaver wth the ncrease n the voume of ther
subscrbers, worsened by the fact that ther nemen bore hoes through the posts at
whch ponts those posts were broken durng typhoons; that a post now costs as
much as P2,630.00; so that |ustce and equty demand that the contract be reformed
to abosh the nequtes thereon.
Add to ths the destructon of some of pantff's poes durng typhoons ke the
strong typhoon Ssang n 1987 because of the heavy teephone cabes attached
thereto, and the escaaton of the costs of eectrc poes from 1977 to 1989, and the
concuson s ndeed neuctabe that the agreement has aready become too one-
sded n favor of appeant to the great dsadvantage of pantff, n short, the
contnued enforcement of sad contract has manfesty gone far beyond the
contempaton of pantff, so much so that t shoud now be reeased therefrom
under Art. 1267 of the New Cv Code to avod appeant's un|ust enrchment at ts
(pantff's) expense.
As second cause of acton, prvate respondent aeged that startng wth the year
1981, pettoners have used 319 posts n the towns outsde Naga Cty, wthout any
contract wth t; that at the rate of P10.00 per post, pettoners shoud pay prvate
respondent for the use thereof from 1981 up to the fng of ts compant; and that
pettoners had refused to pay prvate respondent sad amount despte demands.
And as thrd cause of acton, prvate respondent companed about the poor
servcng by pettoners of the ten (10) teephone unts whch had caused t great
nconvenence.
#ssues"
1. Whether or not the contnued enforcement of the contract between
the NAGA TELEPHONE CO., INC. (NATELCO) and CAMARINES SUR II
ELECTRIC COOPERATIVE, INC. (CASURECO II), nequtous or
dsadvantageous to the atter (CASURECO pantff) and too one-sded n
favor of former ( NATELCO defendant-appeant).
2. Whether or not the CASURECOs acton for reformaton of contract
cannot be an eement n the determnaton of the perod for prescrpton of
the acton to reform.
3. Whether or not there s potestatve about the prestatons .e.,
dependent purey on the w of ether party.
$el%:
Whe the contract appeared to be far to both partes when t was entered nto by
them, t had become dsadvantageous and unfar to CASURECO because of
subsequent events and condtons, partcuary the ncrease n the voume of the
subscrbers of NATELCO for more than ten (10) years wthout the correspondng
ncrease n the number of teephone connectons provded to CASURECO.The
contnued enforcement of the contract between the partes has, through the years
(snce 1977), become too nequtous or dsadvantageous to the CASURECO and too
one-sded n favor of defendant-appeant (NATELCO), so that a souton must be
found to reeve pantff from the contnued operaton of sad agreement and to
prevent defendant-appeant from further un|usty enrchng tsef at pantff's
expense.
Artce 1267 speaks of "servce" whch has become so dffcut. Takng nto
consderaton the ratonae behnd ths provson, the term "servce" shoud be
understood as referrng to the "performance" of the obgaton. In the present case,
the obgaton of CASURECO conssts n aowng NATELCO to use ts posts n Naga
Cty, whch s the servce contempated n sad artce. Furthermore, a bare readng
of ths artce reveas that t s not a requrement thereunder that the contract be for
future servce wth future unusua change. Accordng to Senator Arturo M. Toentno,
Artce 1267 states n our aw the doctrne of unforseen events. Ths s sad to be
based on the dscredted theory of rebus sc stantbus n pubc nternatona aw;
under ths theory, the partes stpuate n the ght of certan prevang condtons,
and once these condtons cease to exst the contract aso ceases to exst.
Consderng practca needs and the demands of equty and good fath, the
dsappearance of the bass of a contract gves rse to a rght to reef n favor of the
party pre|udced.
On the ssue of prescrpton of CASURECOs acton for reformaton of contract,
NATELCO aeged that CA's rung that the rght of acton "arose ony after sad
contract had aready become dsadvantageous and unfar to t due to subsequent
events and condtons, whch must be sometme durng the atter part of 1982 or n
1983 s erroneous. In reformaton of contracts, what s reformed s not the contract
tsef, but the nstrument embodyng the contract. It foows that whether the
contract s dsadvantageous or not s rreevant to reformaton and therefore, cannot
be an eement n the determnaton of the perod for prescrpton of the acton to
reform.
Artce 1144 of the New Cv Code provdes, nter aa, that an acton upon a wrtten
contract must be brought wthn ten (10) years from the tme the rght of acton
accrues. Ceary, the ten (10) year perod s to be reckoned from the tme the rght
of acton accrues whch s not necessary the date of executon of the contract.
Prvate respondent's rght of acton arose "sometme durng the atter part of 1982
or n 1983 when accordng to Atty. Lus Genera, |r. he was asked by (prvate
respondent's) Board of Drectors to study sad contract as t aready appeared
dsadvantageous to (prvate respondent).
Prvate respondent's cause of acton to ask for reformaton of sad contract shoud
thus be consdered to have arsen ony n 1982 or 1983, and from 1982 to |anuary 2,
1989 when the compant n ths case was fed, ten (10) years had not yet eapsed.
Regardng the ast ssue, pettoners aege that there s nothng purey potestatve
about the prestatons of ether party because pettoner's permsson for free use of
teephones s not made to depend purey on ther w, nether s prvate
respondent's permsson for free use of ts posts dependent purey on ts w.
Pettoners' aegatons must be uphed n ths regard. A potestatve condton s a
condton, the fufment of whch depends upon the soe w of the debtor, n whch
case, the condtona obgaton s vod. Based on ths defnton, CAs fndng that the
provson n the contract, to wt:
(a) That the term or perod of ths contract sha be as ong
as the party of the frst part (NATELCO) has need for the
eectrc ght posts of the party of the second part
(CASURECO) . . ..
s a potestatve condton, s correct. However, t must have overooked the other
condtons n the same provson, to wt:
. . . t beng understood that ths contract sha termnate when for
any reason whatsoever, the party of the second part (prvate
respondent) s forced to stop, abandoned (sc) ts operaton as a
pubc servce and t becomes necessary to remove the eectrc
ght post (sc);
whch are casua condtons snce they depend on chance, hazard, or the w of a
thrd person. In sum, the contract s sub|ect to mxed condtons, that s, they
depend party on the w of the debtor and party on chance, hazard or the w of a
thrd person, whch do not nvadate the aforementoned provson. Nevertheess, n
vew of our dscussons under the frst and second ssues rased by pettoners, there
s no reason to set asde the questoned decson and resouton of respondent court.
3AC;AN C,9A #N;,RNA;#'NA- A#R('R; AA;$'R#;Y , vs. C'AR; '!
A((,A-&, R,G#'NA- ;R#A- C'AR;, 9RANC$ 9, C,9A C#;Y, 3,-9A
-#39AC', -#NDA C. -'GAR;A an% RA3'N C. -'GAR;A, G.R. No. 121501
'ctober +0, 1991
!acts"
Offcers of the Natona Arport Corporaton (NAC) nformed the owners of the varous
ots surroundng the Lahug Arport that the government w purchase ther ands for
the expanson of the arport. The andowners were assured that ther propertes w
be turned to them when these are no onger beng used by the arport.
Inez Ouano, though skeptc at frst, agreed to se snce the government was gong
to exproprate the and anyway. She was aso reassured by the promse that the
and w be returned to her when t s no onger n use. The sae of Inez' propery was
covered by a Deed of Sae sgned by her and Marano Reyes representng the NAC.
The deed, however, does not contan any provson regardng Inez' rght to
repurchase the propertes. Nonetheess, durng her fetme, Inez used to remnd her
granddaughter Meba Lmbaco about the assurance by the NAC offcas that the
propertes w be returned. Inez aso made Meba understand that the atter can
recover the and hersef shoud Inez de before the proper tme arses.
Upon earnng that other andowners were abe to recover ther propertes and that
the then Pres. Aquno had ordered that the arport be transferred to Mactan, the
appeees tred to repurchase the propertes orgnay owned by ther grandmother.
However, the manager of the NAC, dened ther request because the deed of sae
coverng the propertes does not contan any condton reatng to the rght to
repurchase.
Prvate respondents thereafter fed a case for reconveyance wth the Regona Tra
Court (RTC) whch rued n ther favor. On appea to the CA, the same was affrmed
n toto.
#ssue"
Whether or not the Statute of Frauds appy n the case at bar
$el%"
NO. Under Art. 1403 of the Cv Code, a contract for the sae of rea property sha
be unenforceabe uness the same or some note or memorandum thereof be n
wrtng and subscrbed by the party charged or hs agent. Evdence of the
agreement cannot be receved wthout the wrtng, or a secondary evdence of ts
contents. In the case at bench, the deed of sae and the verba agreement aowng
the rght of repurchase shoud be consdered as an ntegra whoe. The deed of sae
reed upon by pettoner s n tsef the note or memorandum evdencng the
contract. Thus, the requrement of the Statute of Frauds has been suffcenty
comped wth. Moreover, the prncpe of the Statute of Frauds ony appes to
executory contracts and not to contracts ether partay or totay performed, as n
ths case, where the sae has been consummated; hence, the same s taken out of
the scope of the Statute of Frauds. As the deed of sae has been consummated, by
vrtue of whch, pettoner accepted some benefts thereunder, t cannot now deny
the exstence of the agreement. The Statute of Frauds was enacted for the purpose
of preventng fraud. It shoud not be made the nstrument to further them.
$e*rs of ,scanlar @s Court of Appeals GG.R. No. 119444. 'ctober 2+, 1994H
!acts"
The rghts, nterests and partcpaton of 2 parces of and, denomnated as Lot 1616
and 1617 of the Kabankaan Cadastre, was executed through a deed n favor of
Pedro Escanar and Francsco Hogado. However, on November 3, 1982 the hers
nsttuted a case for canceaton of sae aganst Escanar and Hogado because of
the atters faure to pay the baance of the purchase prce by 31 May 1979, whch
was the date stated n the Deed of Agreement as the fna date that the baance of
the purchase prce sha be pad. On September 10, 1981, Escanar and Hogado
moved to ntervene n the probate proceedngs that s beng hed to gve Nombre
and Car-an the rghts over the Car-ans share n Lots 1616 and 1617. But the
probate court rued n favor of the Car-ans to se ther respectve shares n the
estate. The case was brought to the Court of Appeas and the Supreme Court.
#ssue"
Do Escanar and Hodago st have rghts on haf of the property n queston even
after the faure to pay the amount due on tme?
$el%"
The Supreme Court rued n favor of Escanar and Hodago and remanded the case
to the RTC Negros Occdenta so that t may be determned, at the opton of Escanar
and Hodago, whch haf of the property n queston woud be thers and whch haf
woud be the Car-ans.
Among others, one of the reasons for such decson s the provson n the New Cv
Code, Artce 1592, whch provdes that "n the sae of mmovabe property, even
though t may have been stpuated that upon faure to pay the prce at the tme
agreed upon the rescsson of the contract sha of rght take pace, the vendee may
pay, even after the expraton of the perod, as ong as no demand for rescsson of
the contract has been made upon hm ether |udcay or by a notara act. After the
demand, the court may not grant hm a new term." In ths case, the seers gave a
specfc due date but dd not make any |udca demand after Escanar and Hodago
faed to pay the due amount on tme. They aso dd not execute a demand through
a notara act. Thus, the rght to of the property remans wth Escanar and
Hodago.