Professional Documents
Culture Documents
Oblicon Compilation of Cases
Oblicon Compilation of Cases
A.
LAW
1.
2.
3.
4.
5.
6.
RULING:
Yes. In permitting the recovery money lost at play, Act No. 1757 has
introduced modifications in the application of Articles 1798, 1801, and 1305 of
the Civil Code.
The first two of these articles relate to gambling contracts, while article
1305 treats of the nullity of contracts proceeding from a vicious or illicit
consideration. Taking all these provisions together, it must be apparent that the
obligation to return money lost at play has a decided affinity to contractual
obligation; and the Court believes that it could, without violence to the
doctrines of the civil law, be held that such obligations is an innominate quasicontract.
RULING:
No. The Court held that the rendering of medical assistance is one of the
obligations to which spouses are bound by mutual support, expressly
determined by law and readily demanded. Therefore, there was no obligation
on the part of the in-laws but rather on the part of the husband who is not a
party.
Thus, decision affirmed.
FACTS:
On November 23, 1906, Arturo Pelayo, a physician, filed a complaint
against Marcelo and Juana Abella. He alleged that on October 13, 1906 at
night, Pelayo was called to the house of the defendants to assist their daughterin-law who was about to give birth to a child. Unfortunately, the daughter-inlaw died as a consequence of said childbirth. Thus, the defendant refuses to
pay. The defendants argue that their daughter-in-law lived with her husband
independently and in a separate house without any relation, that her stay there
was accidental and due to fortuitous event.
ISSUE:
Whether or not the defendants should be held liable for the fees
demanded by the plaintiff upon rendering medical assistance to the defendants
daughter-in-law.
ISSUE:
Whether or not the detention of the alleged chicks valid and
recognized under the law?
RULING:
No, because ASJ Corporation must give due to the Evangelista
Spouses in paying the installment, thus, it must not delay the delivery of
the chicks. Thus, under the law, they are obliged to pay damages with
each other for the breach of the obligation.
Therefore, in a contract of service, each party must be in good faith
in the performance of their obligation, thus when the petitioner had
detained the hatched eggs of the respondents spouses, it is an
implication of putting prejudice to the business of the spouses due to the
delay of paying installment to the petitioner.
No. The petitioner being a lawyer must know the legal procedure
for the recovery of possession of the alleged mortgaged property in
which said procedure must be conducted through judicial action.
Furthermore, the petitioner acted in malice and intent to cause damage
to the respondent when even without probable cause, he still instituted
an act against the law on mortgage.
expose him to ridicule and shame. Mr. Reyes version of the story was
unsupported, failing to present any witness to back his story. Ms. Lim, not
having abused her right to ask Mr. Reyes to leave the party to which he was not
invited, cannot be made liable for damages under Articles 19 and 21 of the Civil
Code. Necessarily, neither can her employer, Hotel Nikko, be held liable as its
liability springs from that of its employees.
When a right is exercised in a manner which does not conform with the
norms enshrined in Article 19 and results in damage to another, a legal wrong
is thereby committed for which the wrongdoer must be responsible. Article 21
states that any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for the damage.
Without proof of any ill-motive on her part, Ms. Lims act cannot amount
to abusive conduct.
The maxim Volenti Non Fit Injuria (self-inflicted injury) was upheld by
the Court, that is, to which a person assents is not esteemed in law as injury,
that consent to injury precludes the recovery of damages by one who has
knowingly and voluntarily exposed himself to danger.
result the jeep turned turtle. Sherwin Carpitanos died as a result of the injuries
he sustained from the accident.
The trial court ordered the defendants, St. Marys Academy principally
liable and the parents of James Daniel as subsidiarily liable for damages.
The Court of Appeals affirmed the decision of the trial court. The Court
of Appeals held petitioner St. Marys Academy liable for the death of Sherwin
Carpitanos under Articles 218 and 219 of the Family Code, pointing out that
petitioner was negligent in allowing a minor to drive and in not having a
teacher accompany the minor students in the jeep.
ISSUE:
Whether or not the appellant St. Marys Academy is principally liable for
damages for the death of Sherwin.
SOURCES OF OBLIGATIONS
a. CONTRACTS
1.
2.
3.
4.
5.
6.
7.
RULING:
No. Under Article 219 of the Family Code, if the person under custody is
a minor, those exercising special parental authority are principally and
solidarily liable for damages caused by the acts or omissions of the
unemancipated minor while under their supervision, instruction, or custody.
However, for petitioner to be liable, there must be a finding that the act
or omission considered as negligent was the proximate cause of the injury
caused because the negligence must have a causal connection to the accident.
Respondents Daniel spouses and Villanueva admitted that the immediate
cause of the accident was not the negligence of petitioner or the reckless
driving of James Daniel II, but the detachment of the steering wheel guide of
the jeep.
Hence, liability for the accident, whether caused by the negligence of the
minor driver or mechanical detachment of the steering wheel guide of the jeep,
must be pinned on the minors parents primarily. The negligence of petitioner
St. Marys Academy was only a remote cause of the accident. Between the
remote cause and the injury, there intervened the negligence of the minors
parents or the detachment of the steering wheel guide of the jeep. Considering
that the negligence of the minor driver or the detachment of the steering wheel
guide of the jeep owned by respondent Villanueva was an event over which
petitioner St. Marys Academy had no control, and which was the proximate
cause of the accident, petitioner may not be held liable for the death resulting
from such accident.
FACTS:
TSPI Corporation entered into a Collective Bargaining Agreement
with the corporation Union for the increase of salary for the latters
members for the year 2000 to 2002 starting from January 2000. thus, the
increased in salary was materialized on January 1, 2000. However, on
October 6, 2000, the Regional Tripartite Wage and production Board
raised daily minimum wage from P 223.50 to P 250.00 starting
November 1, 2000. Conformably, the wages of the 17 probationary
employees were increased to P250.00 and became regular employees
therefore receiving another 10% increase in salary. In January 2001,
TSPIC implemented the new wage rates as mandated by the CBA. As a
result, the nine employees who were senior to the 17 recently
FACTS:
its custody. However, this material situation does not exist in the present case
for, as earlier indicated, the assailants of Carlitos were not students of the
PSBA, for whose acts the school could be made liable. But it does not
necessarily follow that PSBA is absolved form liability.
When an academic institution accepts students for enrollment, there is
established a contract between them, resulting in bilateral obligations which
both parties is bound to comply with. For its part, the school undertakes to
provide the student with an education that would presumably suffice to equip
him with the necessary tools and skills to pursue higher education or a
profession. This includes ensuring the safety of the students while in the school
premises. On the other hand, the student covenants to abide by the school's
academic requirements and observe its rules and regulations.
Failing on its contractual and implied duty to ensure the safety of their
student, PSBA is therefore held liable for his death.
Petition denied.
In any case, the Court is convinced that the findings and conclusions of
the court a quo and the RTC are in order. These courts uniformly found that,
under the terms of the contract of lease, the respondent, as the owner-lessor of
the premises, had reserved its right to approve the sublease of the same. The
petitioner, having voluntarily given its consent thereto, was bound by this
stipulation. And, having failed to pay the monthly rentals, the petitioner is
deemed to have violated the terms of the contract, warranting its ejectment
from the leased premises. The Court finds no cogent reason to depart from this
factual disquisition of the courts below in view of the rule that findings of facts
of the trial courts are, as a general rule, binding on this Court. The petition is
DENIED.
CONTRACT AS A SOURCE OF OBLIGATION
AYALA CORPORATION
VS. ROSA DIANA REALTY
346 SCRA 633
FACTS:
In April 1976, appellant-petitioner entered into a transaction with Manuel
Sy and Sy Ka Kieng where former sold a lot in Salcedo Village in Makati. The
deed of sale had some encumbrances contained in the Special Conditions of
Sale (SCS) and Deed of Restrictions (DR), which should be followed by the
vendees. The stipulations in the SCS are:
2) a building proposal must be submitted to Ayala which must be in accordance
with the DR,
3) the construction of the building must be completed on or before 1979, and
4) that there will be no resale of the lot.
The DR specified the limits in height and floor area of the building to be
constructed. However, Sy and Kieng, failed to build a building but nonetheless
with the permission of Ayala, the vendees sold the said lot to the respondent,
Rosa Diana Realty. Respondent Company agreed to abode by the SCS and the
DR stipulations. Prior to the construction, Rosa Diana submitted a building
plan to Ayala complying with the DR but it also passed a different building plan
to the building administrator of Makati, which did not comply with the
stipulations in the DR. While the building, The Peak, was being constructed,
Ayala filed a case praying that: 1) Rosa Diana, be compelled to comply with the
DR and build the building in accordance with the building plan submitted to
Ayala; or 2) on the alternative, the rescission of the deed of sale.
The trial court ruled in favor of the respondent and thus, Rosa Diana was
able to complete the construction of The Peak. Undeterred, Ayala filed before
the Register of Deeds (RD) of Makati a cause of annotation lis pendens. RD
refused to grant Ayala such registration for in the lower court; the case is of
personal action for a specific performance and/or rescission. However, the
Land Registration Authority (LRA) reversed RDs ruling. The appellate court
upheld the RDs ruling stating that the case before the trial court is a personal
action for the cause of action arises from the alleged violation of the DR. The
trial court sustained the respondents point saying that Ayala was guilty of
abandonment and/or estoppels due to its failure to enforce the terms of the DR
and SCS against Sy and Kieng. Ayala discriminately chose which obligor would
be made to follow certain conditions, which is not fair and legal. On appeal, the
CA affirmed the lower courts ruling. Hence, this petition.
ISSUE:
Whether or not Rosa Diana committed a breach of contract.
RULING:
Yes, the Supreme Court ruled that Rosa Diana committed a breach of
contract by submitting a building plan to Ayala complying with the DR and
submitting a different building plan to the building administrator of Makati,
which did not comply with the stipulations in the DR.
Contractual Obligations between parties have the force of law between
them and absent any allegation that the same are contrary to law, morals, good
customs, public order or public policy, they must complied with in good faith.
Thus, the assailed decision of the Court of Appeals is reversed and set
aside.
ISSUE:
Whether or not the contract was properly rescinded.
Whether or not Bricktown properly forfeited the payments of Amor
Tierra.
RULING:
The contract between Bricktown and Amor Tierra was validly rescinded
because of the failure of the latter to pay the agreed amounts stipulated in the
contract on the proper date even after the sixty-days grace period.
Furthermore, the records showed that private respondent corporation paid less
than the amount agreed upon. The Supreme Court also added that such
cancellation must be respected. It may also be noteworthy to add that in a
contract to sell, the non-payment of the purchase price can prevent the
obligation to convey title from acquiring any obligatory force.
On the second issue, the Supreme Court ruled that since the private
respondent did not actually possessed the property under the contract, the
petitioner is then ordered to return to private respondent the amount remitted.
However, to adjudge any interest payment by petitioners on the amount to be
thus refunded, private respondent should not be allowed to totally free itself
from its own breach.
Both agreed that the cost or repairs would amount to P60,000.00 and that the
amount of P340,000.00 shall be returned to petitioner. However, respondents
returned only the amount of P200,000.00 leaving a balance of P140,000.00.
Notwithstanding repeated demands, respondents averred that the true and
actual damage amounted to P298,738.90.
On August 10, 1990, petitioner and respondents entered into a contract
to sell denominated as Memorandum of Agreement to sell whereby the latter
agreed to sell to the former the leased property in the amount of
P45,611,000.00. The said Memorandum of Agreement to sell granted the
owner (respondents) the option to rescind the same upon failure of the buyer to
pay any of the first six installments with the corresponding obligation to return
to the buyer the amount paid by the buyer in excess of the down payment as
stated in paragraphs 7 and 9 of the Memorandum of Agreement. Pilipinas
Hino, Inc. remitted on August 10, 1990 to the respondents the amount of
P1,811,000.00 as down payment. Subsequently, petitioner paid the first and
second installments in the amount of P1,800,000.00 and P5,250,000.00,
respectively, totaling the down payment of P7,050,000.00.
Unfortunately, petitioner failed to pay the third installment and
subsequent installments. Respondents decided to rescind and terminate the
contract and promised to return to petitioner all the amounts paid in excess of
the down payment after deducing the interest due from third to sixth
installments, inclusive. From the amount of P7,050,000.00 due to be returned
to the petitioner, respondents deducted P924,000.00 as interest and
P220,000.00 as rent for the period from February 15 to March 15, 1991,
returning to the petitioner the amount of P5,906,000.00 only.
After trial, the lower court rendered judgment stating that the petitioner
has no cause of action to demand the return of the balance of the deposits in
the amount P140,000.00 and the respondents have the legal right to demand
accrued interest on the unpaid installments in the amount of P924,00.00. The
Court of Appeals affirmed the decision of the trial court. Hence, this petition.
ISSUE:
Whether or not the petitioner is entitled to demand the balance of the
deposits in the amount of P140,000.00 and to the return of the amount of
P924,000.00.
RULING:
The Supreme Court held that the petitioner failed to prove his first cause
of action that the damages to the leased property amounted to more than
FACTS:
The respondent Primetown Property Corporation entered into
contract weith the petitioner Titan-Ikeda Construction Corporation for
the structural works of a 32-storey prime tower. After the construction of
the tower, respondent again awarded to the petitioner the amount of P
130,000,000.00 for the towers architectural design and structure.
Howevere, in 1994, the respondent entered inot a contract of sale of the
tower in favor of the petitioner in a manner called full-swapping. Since
the respondent had allegedly constructed almost one third of the project
as weel as selling some units to third persons unknown to the petitioner.
Integrated Inc. took over the project, thus the petitioner is demanding
for the return of its advanced payment in the amount of P2, 000,000.00
as weel as the keys of the unit.
ISSUE:
Whether or not the petitioner is entitled to damages.
a. QUASI CONTRACTS
1.
2.
3.
4.
5.
RULING:
No, because in a contract necessarily that there is a meeting of the
minds of the parties in which this will be the binding law upon them.
Thus, in a reciprocal obligation. Both parties are obliged to perform their
obligation simultaneously and in good faith. In this case, petitioner,
Titan-Ikeda can not recover damages because it was found out there was
no solutio indebiti or mistake in payment in this case since the latter is
just entitled to the actual services it rendered to the respondent and thus
it is ordered to return the condominium units to the respondent.
QUASI-CONTRACT AS A SOURCE OF OBLIGATION
PADCOM CONDOMINIUM CORPORATION, petitioner,
VS. ORTIGAS CENTER ASSOCIATION, INC., respondent
G.R. No. 146807
May 9, 2002
382 SCRA 222
FACTS:
Petitioner PADCOM CONDOMINIUM CORPORATION (PADCOM) bought
a land from Tierra Development Corporation with terms and conditions among
which is that the transferee and its successor-in-interest must become members
of an Association for realty owners and long-term lessees at Ortigas Center.
The Ortigas Center Association (OCA) which was subsequently formed levies
membership dues of P2,700.00 per month to all members. Petitioner refused to
pay the membership dues on the ground that it did not become automatic
member of the Association when it bought the land. Herein respondent OCA
filed a civil case for recovery of the amounts due, which was dismissed by the
Regional Trial Court and reversed on appeal. Petitioner PADCOM appealed for
review on certiorari at the Supreme Court.
ISSUE:
Whether or not petitioner PADCOM can be compelled to become a
member of the OCA and thus pay the membership dues based on the condition
of the Deed of Sale.
RULING:
PADCOM became automatically a member of the OCA by virtue of the
conditions of the Deed of Sale attached to its Title of the property. By
voluntarily buying the land with the conditions, it subscribed to such conditions
which gave rise to a quasi-contract between it and the OCA. Therefore, it could
not avoid payment of the membership dues without violating the underlying
principles of quasi-contract which provides that certain lawful, unilateral, and
voluntary act gives rise to a juridical relation between the parties to the end
that no one shall be unjustly enriched of benefited at the expense of others.
Petition denied for lack of merit.
in payment for additional electrical and civil works outside the scope of the subcontract. Petitioner refused to pay respondent Gerent.
ISSUE:
Whether or not respondent Gerent Builders, Inc. can claim a share in the
adjusted contract cost between petitioner and Surigao Coconut Development
Corporation basing its claim from its assertion that the quitclaim executed by
plaintiff-appellant is vitiated with fraud.
RULING:
Gerent Builders, Inc. cannot claim for a share in the adjusted contract
cost between petitioner and Sucodeco because petitioner was under no
obligation to disclose to respondent Gerent, a subcontractor, any price increase
in petitioners main contract with Sucodeco. Respondent Gerent is not a party
to the main contract. The subcontract between petitioner and respondent
Gerent does not require petitioner to disclose to Gerent any price increase in
the main contract. The non-disclosure by petitioner of the price increase
cannot constitute fraud or breach of any obligation on the part of petitioner.
Moreover, the record shows that the P139,720.30 representing final and
full payment of the subcontract price was paid by petitioner to respondent
Gerent based on the statement of account Gerent itself prepared and submitted
to petitioner.
Corporation, with the undertaking that the freight revenues from their charter
and operation shall be deposited with the Trust Department of Peoples Bank
and Trust Company and that disbursements made there from shall be covered
by vouchers bearing the approval of SIP. As Peoples Bank and Trust Company
and SIP were not satisfied with the amount of revenues being deposited with
the said Bank, it being suggested that diversions thereof were being made,
Gregorio A. Concon of SIP and/or Bacong and Roman Azanza of Peoples Bank
and Trust Company, organized S.A. Gacet, Inc. to manage and supervise the
operation of the vessels with Ezekiel P. Toeg as the manager thereof.
Accordingly, on August 15, 1966, a Management Contract was entered into
between SIP and GACET, Inc., placing the supervision and management of the
aforementioned vessels in the hands of GACET, Inc., which was to run for a
period of six (6) months, renewable at the will of the parties, without however,
terminating the booking agency of Interocean Shipping Corporation. Likewise,
under the terms of said Management Contract, the Peoples Bank and Trust
Company was designated as depository of all revenues coming from the
operation of the subject vessels thereby enabling it to control all expenses of
GACET, Inc., since they win all be drawn against said deposit.
During the period comprising March 16, 1967 and August 25, 1967,
GACET and Interocean in performing their obligations under said Management
Contract, contracted the services of herein plaintiff-appellee, Benjamin Pineda
doing business under the name and style "Pioneer Iron Works," to carry out
repairs, fabrication and installation of necessary parts in said vessels in order to
make them seaworthy and in good working operation. Accordingly, repairs on
the vessels were made. Labor and materials supplied in connection therewith,
amounted to P84,522.70, P18,141.75 of which was advanced by Interocean,
thereby leaving a balance of P62,095.95. For this balance, Interocean issued
three checks and the third one for P 17,377.57. When these checks were
however presented to the drawee, Peoples Bank and Trust Company, they were
dishonored as defendant Interocean stopped payment thereon.
Meanwhile and by reason of the inability of SIP and/or Bacong to pay
their mortgage indebtedness which was past due since 1964, the mortgagee
Peoples Bank and Trust Company threatened to foreclose the mortgage on said
vessels.
In order to avoid the inconvenience and expense of imminent
foreclosure proceedings, SIP and/or Bacong sold said vessels to Peoples Bank
by way of dacion en pago.
On October 1, 1968, plaintiff instituted the present action (Civil Case No.
74379) before the Court of First Instance of Manila, seeking to recover from
SIP, GACET, Interocean and the Peoples Bank and 'Trust Company the principal
sum of P62,095.92 with interests thereon from the respective dates of each
repair order until the same is fully paid, which amount was allegedly the total
unpaid balance of the cost of repairs, fabrication and installation of necessary
parts carried out by the said plaintiff on the a forenamed vessels.
Answering the complaint, defendants Peoples Bank and Trust Co., now
Bank of P.I. and Southern Industrial Projects, Inc. (SIP) alleged that the
abovementioned claim is the personal responsibility of Interocean Shipping
Corporation and/or Gacet, Inc. and deny liability thereof Defendant Bacong
Shipping Company, S.A.
there was no intention on the part of People's Bank (now Bank of P.I.) to assume
responsibility y for these obligations at the time of the sale of the vessels, there
is no sense in executing said Deed of Confirmation together with the deeds of
sale and the stipulations there under would be pointless.
Finally, it is
indisputable that the repairs made on the vessels ultimately redounded to the
benefit of the new owner for without said repairs, those vessels would not be
seaworthy. Under Art. 2142 of the Civil Code, such acts "give rise to the
juridical relation of quasi-contract to the end that no one shall be unjustly
enriched or benefited at the expense of another."
had not been secured by the pledge. It was further alleged that their failure to
pay their loan was excused because the Petitioner State itself had prevented the
satisfaction of the obligation.
On January 29, 1985, the trial court rendered a decision in favor of the
plaintiff ordering State to immediately release the pledge and to deliver to
respondents the share of stock upon payment of the loan. The CA affirmed in
toto the decision of the trial court.
ISSUES:
Whether or not the phrase upon payment in the trial courts decision
means upon payment of spouses loan in the principal amount of P110,000.00
alone without interest, penalties and other charges.
Whether or not the conditions to be complied with by the debtor desirous
of being released from his obligation in cases where the creditor unjustly
refuses to accept payment have been met by the spouses Aquino.
RULING:
Anent the 1st issue, NO. The phrase upon payment as held by the
Supreme Court means upon payment of the amount of P110,000.000 plus
seventeen percent (17%) per annum regular interest computed from the time of
maturity of the plaintiffs loan and until full payment of such principal and
interest to defendants. For respondent spouses to continue in possession of the
principal of the loan amounting to P110,000.00 and to continue to use the same
after maturity of the loan without payment of regular or monetary interest,
would constitute unjust enrichment on the part of the respondent spouses at
the expense of petitioner State even though the spouses had not been guilty of
mora.
With respect to the 2nd issue, NO. The conditions had not been complied
with. Article 1256 of the civil code states that: If the creditor to whom tender
of payment has been made refuses without just cause to accept it, the debtor
shall be released from responsibility by consignation of the thing or sum due.
Where the creditor unjustly refuses to accept payment, the debtor desirous of
being released from his obligation must comply with two (2) conditions, viz: (a)
tender of payment; and (b) consignation of the sum due. Tender of payment
must be accompanied or followed by consignation in order that the effects of
payment may be produced. Thus, in Llamas v. Abaya, the Supreme Court
stressed that a written tender of payment alone, without consignation in court
of the sum due, does not suspend the accruing of regular or monetary interest.
In the instant case, respondent spouses Aquino, while they are properly
SOURCES OF OBLIGATIONS:
D.
DELICTS
1.
2.
3.
4.
5.
6.
7.
8.
ISSUE:
Whether the award of damages was properly made.
RULING:
No, because the Supreme Court declared that the crime committed
was four count of simple rape only and not qualified rape because the
special aggravating circumstances of minority and relationship must be
alleged in the information but the prosecution failed to do so. Since it is
not included, four counts of simple rape should be undertaken. The
penalty imposed then should be reclusion perpetua. The appellate court
also correctly affirmed the award by the trial court of P200,000.00 for
moral damages. Moral damages are automatically granted to rape victim.
However, the award of civil indemnity is reduced to P200,000.00 in the
amount of P50,000.00 for each count of simple rape is automatically
granted.
When Christian returned in the afternoon, he was asked to get inside. As soon
as he alighted from the taxi, his hands were tied by Johnny Balalio and was
handed to a certain Pedro, the accused Peter Doe who has not been arrested.
Christian was taken to accused Rosauro and shortly afterwards, the latter was
seen lugging with him a big carton box from which blood was dripping.
Accused Jimmy Ponce saw Rosauro hand the carton-wrapped lifeless body of
Christian inside the carnapped FX taxi. Before leaving with the lifeless body of
Christian loaded in the taxi, accused Sia gave P3,000.00 each to Jimmy Ponce,
Johnny Balalio and Pedro and admonished them not to say anything about
what happened. The ring taken from Christian was given to accused Jimmy
Ponce by Rosauro Sia.
On August 26, 1995, the lifeless body of Christian Bermudez was found
and retrieved from a fishpond in Meycauayan, Bulacan. This fact was broadcast
over the radio and, after hearing the same, Agripina Bermudez went to see the
lifeless body retrieved from the fishpond and confirmed it to be that of
Christian, whom she claims is her eldest son who was earning about P650.00 a
day as a taxi driver.
ISSUE:
Whether or not the trial court is correct in awarding the damages to the
heirs of the victim.
RULING:
The Court finds no reason to reverse the ruling of the court a quo insofar
as the crimes were committed. Anent the civil indemnity award, this Court
finds the amount of P50,000.00 as death indemnity proper, following prevailing
jurisprudence and in line with controlling policy. Award of civil indemnity may
be granted without any need of proof other than the death of the victim.
The victims heirs are likewise entitled to moral damages, pegged at
P50,000.00 by controlling case law, taking into consideration the pain and
anguish of the victims family brought about by his death. However, the award
of P200,000.00 as burial and other expenses incurred in connection with the
death of the victim must be deleted. The records are bereft of any receipt or
voucher to justify the trial courts award of burial and other expenses incurred
in connection with the victims death.
The trial court was correct in awarding damages for loss of earning
capacity despite the non-availability of documentary evidence.
Damages
representing net earning capacity have been awarded by the Court based on
testimony in several cases. However, the amount of the trial courts award
needs to be recomputed and modified accordingly.
In determining the amount of lost income, the following must be taken
into account: (1) the number of years for which the victim would otherwise have
lived; and (2) the rate of the loss sustained by the heirs of the deceased. The
second variable is computed by multiplying the life expectancy by the net
earnings of the deceased, meaning total earnings less expenses necessary in
the creation of such earnings or income less living and other incidental
expenses. Considering that there is no proof of living expenses of the deceased,
net earnings are computed at fifty percent (50%) of the gross earnings. The
formula used by this Court in computing loss of earning capacity is:
Net Earning Capacity
= [2/3 x (80 age at time of death) x (gross
annual income reasonable and necessary living expenses)]
In this case, the Court notes that the victim was 27 years old at the time
of his death and his mother testified that as a driver of the Tamaraw FX taxi, he
was earning P650.00 a day. Hence, the damages payable for the loss of the
victims earning capacity is computed thus:
Gross Annual Earnings = P650 x 261 working days in a year
=
Net Earning Capacity
P169,650.00
35.33 x 84,825.00
P2,996,867.20
Based on the foregoing computation, the award of the trial court with
regard to lost income is thus modified accordingly.
2001 Aug 20
FACTS:
On November 20, 1996 at around 7:00 in the evening, Vicente Ganongan
Jr. and Roderick Litorco went to their friends boarding house on Honeymoon
Road, Baguio City. Thereat, Vicente Ganongan, Roderick Litorco, Regie
Daodaoan, Rex Tabanganay, Jeffrey Alimani and Florencio Dagson agreed to
drink gin in Sangatan Store. After two (2) hours, the group decided to go home.
They went down Honeymoon road towards Rimando road to get a taxi for
Litorco. Upon noticing that Litorco could not carry himself, they decided to
bring him to their boarding house. Dagson assisted Litorco and walked ahead
of Ganongan, Daodaoan, Tabanganay and Alimani. As the latter four neared the
Garcia store along Honeymoon road, Carlos Garcia, with three companions, told
them to stop, pointing a gun at them. Hearing the commotion, Dagson who was
walking about 5 to 7 meters ahead with Litorco rushed to the boarding house
and sought help. When Dagson came back, he was with Oliver Alimani, Arman
Alimani and Dexter Daggay. When they arrived, they saw Garcia pointing a gun
at the group of Ganongan, Daodaoan, Tabanganay and Jeffrey Alimani. Oliver
Alimani approached Garcia who in turn pointed his gun at Oliver and identified
himself as barangay kagawad. At this time, Carlos Doctolero Sr. was standing
at the edge of Honeymoon road. He then put his arm over Daodaoans
shoulder.
Daoadaoan shoved Doctoleros hand and retreated.
Doctolero
stepped back and fired twice at Daodaoan but missed. Tabanganay asked
Daodaoan if he was hit and upon answering that he was not, Tabanganay
shouted at his friends to run. When Ganongan turned around to run, Doctolero
fired at him, hitting him twice. Oliver Alimani came to Ganongans aid when
the latter yelled that he was hit. Thereafter, they hailed a taxi and rushed
Ganongan to Saint Louis University Hospital where he expired.
Accused-appellant was convicted of murder after appreciating the
aggravating circumstance of treachery. He was sentenced to suffer the penalty
of reclusion perpetua and was ordered to indemnify the heirs of Ganongan the
amounts of P50,000.00 as civil indemnity, P227,808.00 as actual damages, and
P300,000.00 as moral damages plus costs.
ISSUE:
Whether or not the accused was guilty of murder and the damages
awarded to the heirs were proper.
RULING:
No. Since treachery was not proven to be resent in this case, the court
deemed it proper to convict the accused of the crime of homicide, instead of
ISSUE:
Whether or not the court a quos award of civil liability is reasonable
based on the circumstances of the crime and whether circumstancial evidence
is sufficient to warrant a conviction.
RULING:
With regard to the civil indemnity, the trial court awarded only
P75,000.00. Current jurisprudence has fixed at P100,000.00 the civil indemnity
in cases of rape with homicide, which is fully justified and properly
commensurate with the seriousness of that special complex crime.
As regards to the sufficiency of circumstantial evidence to warrant
conviction, the Court held that the absence of direct evidence, however, does
not preclude the conviction of a person accused of the complex crime of rape
with homicide. Circumstantial evidence can be as potent as direct evidence to
sustain a conviction provided that there is a concurrence of all the requisites
prescribed in Section 5, Rule 133 of the Revised Rules on Evidence, thus:
Circumstantial Evidence, when sufficient.- Circumstantial evidence is sufficient
for conviction if: (a) There is more than one circumstance; (b) The facts from
which the inferences are derived are proven; and (c) The combination of all the
circumstances is such as to produce a conviction beyond a reasonable doubt.
Likewise this Court has held that an accused can be convicted based on
circumstantial evidence if the circumstances proven constitute an unbroken
chain which leads to a fair and reasonable conclusion pointing to the accused,
to the exclusion of all others, as the guilty person.
Thus, the appealed decision convicting Rolly Abulencia of the crime of
rape with homicide and sentencing him to suffer the penalty of death, is
affirmed with modification insofar as the civil aspect is concerned. Appellant is
thus ordered to pay the heirs of Rebelyn Garcia P100,000.00 as civil indemnity;
P50,000.00 as moral damages; P25,000.00 as exemplary damages; and
P6,425.00 as actual damages.
criminal case to file an independent civil action did not preclude them from
choosing to file a civil action for quasi-delict.
The appellant precisely made a reservation to file an independent civil
action. In fact, even without such a reservation, the Court allowed the injured
party in the criminal case which resulted in the acquittal of the accused to
recover damages based on quasi-delict.
On July 28, 1969, the plaintiffs-appellants filed a civil case for damages
against Domingo Pontino y Tacorda and Cordova Ng Sun Kwan.
It does not follow that a person who is not criminally liable is also free
from civil liability. While the guilt of the accused in a criminal prosecution must
be established beyond reasonable doubt, only a preponderance of evidence is
required in a civil action for damages (Article 29, Civil Code). The judgment of
acquittal extinguishes the civil liability of the accused only when it includes a
declaration that the facts from which the civil liability might arise did not exist.
Finding that the plaintiffs instituted the action "on the assumption that
defendant Pontino's negligence in the accident of May 10, 1969 constituted a
quasi-delict," the trial court stated that plaintiffs had already elected to treat
the accident as a "crime" by reserving in the criminal case their right to file a
separate civil action. That being so, the trial court decided to order the
dismissal of the complaint against defendant Cordova Ng Sun Kwan and to
suspend the hearing of the case against Domingo Pontino until after the
criminal case for Homicide Through Reckless Imprudence is finally terminated.
ISSUE:
Whether or not the present action is based on quasi-delict under the Civil
Code and therefore could proceed independently of the criminal case for
homicide thru reckless imprudence.
RULING:
In cases of negligence, the injured party or his heirs has the choice
between an action to enforce the civil liability arising from crime under Article
100 of the Revised Penal Code and an action for quasi-delict under Article 21762194 of the Civil Code.
If a party chooses the latter, he may hold the employer solidarily liable
for the negligent act of his employee, subject to the employer's defense of
exercise of the diligence of a good father of the family.
In the case at bar, the action filed by appellant was an action for damages
based on quasi-delict. The fact that appellants reserved their right in the
the Batangas City electric light system, the civil action for recovery of civil
liability arising from the offense charged was impliedly instituted with the
criminal action both before the City Court of Batangas City and the Court of
First Instance of Batangas.
The extinction of criminal liability whether by prescription or by the bar
of double jeopardy does not carry with it the extinction of civil liability arising
from the offense charged.
In the present case, accused Manuel Opulencia freely admitted during
the police investigation having stolen electric current through the installation
and use of unauthorized electrical connections or devices. While the accused
pleaded not guilty before the City Court of Batangas City, he did not deny
having appropriated electric power. However, there is no evidence in the
record as to the amount or value of the electric power appropriated by Manuel
Opulencia, the criminal informations having been dismissed both by the City
Court and by the Court of First Instance (from which dismissals the Batangas
City electric light system could not have appealed) before trial could begin.
Accordingly, the related civil action which has not been waived expressly or
impliedly, should be remanded to the Court of First Instance of Batangas City
for reception of evidence on the amount or value of the electric power
appropriated and converted by Manuel Opulencia and rendition of judgment
conformably with such evidence.
turtle twice resulting to the death Ruben Nicolas passenger of the said
automobile.
liable for his negligent and reckless act of driving his car which was the
proximate cause of the vehicular accident, and sentenced him to indemnify
plaintiff-appellants in the amount of P74,400.00 for the death of Ruben Nicolas.
In its decision dated June 30, 1988, promulgated on August 4, 1988, the
trial court decided the criminal case in favor of Manantan.
Subsequently, the private respondent spouses Nicolas filed their notice of
appeal on the civil aspect of the trial courts judgment. The Nicolas spouses
prayed that the decision appealed from be modified and that the appellee be
ordered to pay indemnity and damages. On its decision, the Court of Appeals
decided in favor of the private respondents. In finding petitioner civil liability,
the court a quo noted that at the time the accident occurred, Manantan was in a
state of intoxication, due to his having consume all in all a total amount of at
least twelve bottles of beer between 9 a.m. to 11 p.m.
The petitioner moved for reconsideration but the appellate court denied
the motion.
ISSUE:
Whether or not the acquittal of the accused also extinguished his civil
liability.
RULING:
NO. Our law recognizes two kinds of acquittal, with different effects on
the civil liability of the accused. First is an acquittal on the ground that the
accused is not the author of the act or omission complained of as a felony. This
instance closes the door to civil liability, for a person who has been found not to
be the perpetrator of any act or omission cannot and can never be held liable
for such act or omission. There being no delict, civil liability ex delicto is out of
the question, and the civil action, if any, which will be instituted must be based
on ground other than the delict complained of. The second instance is an
acquittal based on reasonable doubt on the guilt of the accused. In this case,
even if the guilt of the accused has not been satisfactorily established, he is not
exempt from civil liability which may be proved by preponderance of evidence
only.
In the case at bar, the accuseds acquittal is based on reasonable doubt.
The decision of the trial court did not state in clear and equivocal terms that
petitioner was not recklessly imprudent or negligent. Hence, impliedly, the trial
court acquitted him on reasonable doubt.
Since civil liability is not
extinguished in criminal cases if the accused acquittal is based on reasonable
doubt, the decision of the Court of Appeals finding that the defendant is civilly
SOURCES OF OBLIGATIONS
E.
QUASI-DELICTS
1.
2.
3.
4.
5.
6.
7.
8.
quasi delict or culpa aquiliana (primary) and the parties injured are free to
choice which course to take.
In the instant case, the negligent act of Fontanilla produced two liabilities
of Barredo. First, a subsidiary one because of the civil liability of Fontanilla
arising from the latters criminal negligence; and second, Barredos primary
and direct responsibility arising from his presumed negligence as an employer
in the selection of his employees or their supervision, under Art. 1903 of the
Civil Code.
The parties instituted an action for damages under Art. 1903 of the Civil
Code.
Barredo was found guilty of negligence for carelessly employing
Fontanilla, who had been caught several times for violation of the Automobile
Law and speeding violation. Thus, the petition is denied. Barredo must
indemnify plaintiffs under the provisions of Art. 1903 of the Civil Code.
QUASI-DELICT AS A SOURCE OF OBLIGATION
Yes. There was negligence on the part of the respondent when the
latter failed to put and used an early warning device because it was
found out that there was no early warning device being prescribed by
law that was used by the driver in order to warn incoming vehicle.
Furthermore, the proximate cause of the accident was due to the
position of the trailer where it covered a cemented part of the road, thus
confused and made trick way for other vehicles to pass by. Thus the
respondent is declared liable due to violation of road rules and
regulations.
Under the Motor Vehicle law, it was declared that the registered
owner of any vehicle is primary land directly liable for any injury it incurs
while it is being operated. Thus, even the petitioner claimed that he was
no longer the present owner of the car, still the registry was under his
name, thus it is presumed that he still possesses the car and that the
damages caused by the car be charge against him being the registered
owner. The primary function of Motor vehicle registration is to identify
the owner so that if any accident happens, or that any damage or injury
is caused by the vehicle, responsibility therefore can be fixed on a
definite individual, the registered owner.
RULING:
Yes. The petitioner is liable for the injury suffered by Sunga. Under
Article 1756 of the New Civil Code, it provides that common carriers are
presumed to have been at fault or to have acted negligently unless they
prove that they observed extraordinary diligence as defined in Arts. 1733
and 1755 of the Code. This provision necessarily shifts to the common
carrier the burden of proof.
In this case, the law presumes that any injury suffered by a
passenger of the jeep is deemed to be due to the negligence of the driver.
This is a case on Culpa Contractual where there was pre-existing
obligations and that the fault is incidental to the performance of the
obligation. Thus, it was clearly observed that the petitioner has
negligence in the conduct of his duty when he allowed Sunga to seat in
the rear portion of the jeep which is prone to accident.
QUASI-DELICT AS A SOURCE OF OBLIGATION
LUDO AND LUYM CORPORATION, petitioner,
VS. COURT OF APPEALS, GABISAN SHIPPING LINES, INC.
and/or ANSELMO OLASIMAN, respondents.
G.R. No. 125483
February 1, 2001
351 SCRA 35
FACTS:
Private respondent Anselmo Olasiman, as captain, was maneuvering the
ship MV Miguela owned by respondent Gabisan Shipping lines, at the pier
owned by petitioner Ludo and Luym Corporation when it rammed the pile
cluster damaging it and deforming the cable wires wound around it.
In an action for recovery of damages filed by Petitioner, the Regional
Trial Court ruled against respondents for incompetence and negligence. In an
appeal the Court of Appeals reversed the lower courts decision, saying that the
petitioners witness Naval was incompetent to testify on the negligence of the
crew and that petitioners evidence did not positively identify that MV Miguela
caused the damage.
Thus, petitioner filed this petition for review.
ISSUE:
Whether or not the private respondents are responsible for the damage
done to the pier by the ship based on the doctrine of RES IPSA LOQUITOR.
RULING:
The Supreme Court sustained the Regional Trial Court decision partly on
the ground that the incompetence of eyewitness Naval was not an assigned
error at the appellate court.
The doctrine of RES IPSA LOQUITOR says that when the thing that
causes the damage is in the control and management of the respondent, and in
the ordinary course of things the accident does not happen if those who have
the management use proper care, it affords reasonable evidence, in the absence
of explanation, that the accident arose from want of care. The principle applies
here. The MV Miguela was in the exclusive control of respondent Olasiman,
and aside from petitioners witness testimony that the vessel rammed the pile
cluster, respondent did not show persuasively other possible causes of the
damage.
Therefore, respondents were responsible for the damage.
is granted and the decision of the Regional Trial Court reinstated.
Petition
was then dragged into the nearby Question Tailoring Shop, thus, causing
damage to the said tailoring shop, and its driver, Eduardo Eden, sustained
injuries as a result of the incident.
Private respondent, as owner of the taxi, filed a damage suit against
petitioner, Thermochem Incorporated, as the owner of the Nissan Pathfinder,
and its driver, petitioner Jerome Castro.
After trial, the lower court adjudged petitioner Castro negligent and
ordered petitioners, jointly and severally, to pay private respondent actual,
compensatory and exemplary damages plus attorney's fees and costs of suit.
On appeal, the Court of Appeals affirmed the judgment of the court a
quo. Hence, this petition for review on certiorari.
ISSUE:
Whether or not the petitioners are liable based on quasi-delict.
RULING:
Yes. The Court held that the driver of the oncoming Nissan Pathfinder
vehicle was liable and the driver of the U-turning taxicab was contributorily
liable.
From petitioner Castro's testimonial admissions, it is established that he
was driving at a speed faster than 50 kilometers per hour. But as he allegedly
stepped on the brake, it locked causing his Nissan Pathfinder to skid to the left
and consequently hit the taxicab. The sudden malfunction of the vehicle's
brake system is the usual excuse of drivers involved in collisions which are the
result of speedy driving. Malfunction or loss of brake is not a fortuitous event.
The owner and his driver are presumed to know about the conditions of the
vehicle and is duty bound to take care thereof with the diligence of a good
father of the family. A mechanically defective vehicle should avoid the streets.
Moreover, the record shows that the Nissan Pathfinder was on the wrong
lane when the collision occurred. This was a disregard of traffic safety rules.
The law considers what would be reckless, blameworthy or negligent in a man
of ordinary diligence and prudence and determines liability by that.
As mentioned earlier, the driver of the taxi is contributorily liable. Uturns are not generally advisable particularly on major streets. The driver of the
taxi ought to have known that vehicles coming from the Rosario bridge are on a
downhill slope. Obviously, there was lack of foresight on his part, making him
contributorily liable.
Considering the contributory negligence of the driver of private
respondent's taxi, the award of P47,850.00, for the repair of the taxi, should be
reduced in half. All other awards for damages are deleted for lack of merit.
on until he was almost upon the horse. When the defendant exposed the horse
and rider to this danger he was negligent in the eye of the law.
Conduct is said to be negligent when a prudent man in the position of the
tortfeasor would have foreseen that an effect harmful to another was
sufficiently probable to warrant his foregoing the conduct or guarding against
its consequences. Applying this test to the conduct of the defendant, it is clear
that negligence is established. A prudent man, laced in the position o the
defendant, would have recognized that the course which he was pursuing was
fraught with risk, and would therefore have foreseen harm to the horse and
rider as a reasonable consequence of that course. Under these circumstances
the law imposed on the defendant the duty to guard against the threatened
harm.
The plaintiff on the other hand was guilty of antecedent negligence in
planting himself on the wrong side o the road. The negligent acts of the two
arties were not contemporaneous, since the negligence of the defendant
succeeded the negligence of the plaintiff by an appreciable interval. Under
these circumstances, the law is that the person who has the last fair chance to
avoid the impending harm and fails to do is chargeable wit the consequences,
without reference to the prior negligence of the other party.
In sum, though the plaintiff was guilty of negligence or being on the
wrong side of the bridge, the defendant was civilly liable as he had fair chance
to avoid the accident.
because the term "deep well" was mentioned in both proposals. His motion for
reconsideration having been denied by the Court of Appeals, petitioner now
seeks relief from the Supreme Court.
ISSUES:
Whether or not petitioner is obliged to construct the deep well and is
obliged to repair the windmills.
RULING:
On the first issue, the Supreme Court held that petitioner is not obliged
to construct the deep well, sustaining the trial court to be correct that said
deep well is not stipulated in their contract. Notably, nowhere in either proposal
is the installation of a deep well mentioned, even remotely. Neither is there an
itemization or description of the materials to be used in constructing the deep
well. There is absolutely no mention in the two (2) documents that a deep well
pump is a component of the proposed windmill system.
In order for a party to claim exemption from liability by reason of
fortuitous event under Art. 1174 of the Civil Code the event should be the sole
and proximate cause of the loss or destruction of the object of the contract. In
Nakpil vs. Court of Appeals, four (4) requisites must concur: (a) the cause of the
breach of the obligation must be independent of the will of the debtor; (b) the
event must be either unforeseeable or unavoidable; (c) the event must be such
as to render it impossible for the debtor to fulfill his obligation in a normal
manner; and, (d) the debtor must be free from any participation in or
aggravation of the injury to the creditor.
Petitioner failed to show that the collapse of the windmill was due solely
to a fortuitous event. Interestingly, the evidence does not disclose that there
was actually a typhoon on the day the windmill collapsed. Petitioner merely
stated that there was a "strong wind." But a strong wind in this case cannot be
fortuitous, unforeseeable or unavoidable. On the contrary, a strong wind should
be present in places where windmills are constructed, otherwise the windmills
will not turn.
2.
RULING:
Anent the 1st issue, YES. No fraud was employed by herein petitioner.
Felix Francisco could not be considered to have been deceived into
signing the subject deed of assignment. The kind of fraud that will vitiate a
contract refers to those insidious words or machinations resorted to by one of
the contracting parties to induce the other to enter into a contract which
without them he would not have agreed to. It must have a determining
influence on the consent of the victim. The will of the victim, in effect, is
maliciously vitiated by means of a false appearance of reality.
In the case at bench, manifestations of fraud are non-existent.
Resultantly, the Assignment of Hereditary Rights executed by Felix Francisco in
favor of herein petitioner is valid and effective. Furthermore, the allegations of
fraud, deception, gross misrepresentation, or undue influence were not
established by full, clear and convincing evidence. The finding of the trial court
as to its existence or non-existence is final and cannot be reviewed save only
when the finding id clearly shown to be erroneous.
Anent the 2nd issue, YES. The fraud that vitiates a contract refers to
those insidious words or machinations resorted to by one of the contracting
parties to induce the other to enter into a contract which without them he
would not have agreed to. In the case at bench, no such fraud was employed by
herein petitioner. Clearly, Felix Francisco executed the document voluntarily
and freely basing it on the Trial Courts findings. The finding of the Trial Court
as to the existence of fraud is final and cannot be reviewed save only when the
finding is clearly shown to be erroneous.
Anent the 3rd issue, YES. It cannot be denied that a compromise
agreement was entered into by the parties in that case in order to end the suit
already filed in court. The same was approved by the court, cannot and should
not be disturbed except for vices of consent or forgery, it being the obvious
purpose of such compromise agreement to settle, once and for all, the claims of
the parties, and bar all future disputes and controversies thereon.
BREACH OF OBLIGATIIONS: CAUSES AND EFFECTS (Art. 1167, CC)
LEGASPI OIL CO., INC., petitioner,
VS. THE COURT OF APPEALS and BERNARD OSERAOS, respondents
G.R. No. 96505
July 1, 1993
224 SCRA 213
FACTS:
Respondent Bernard Oseraos acting through his authorized agents, had
several transactions with appellee Legaspi Oil Co. for the sale of copra to the
latter. The price at which appellant sells the copra varies from time to time,
depending on the prevailing market price when the contract is entered into.
One of his authorized agents, Jose Llover, had previous transactions with
appellee for the sale and delivery of copra. The records show that he concluded
a sale for 70 tons of copra at P95.00 per 100 kilos on May 27, 1975 and another
sale for 30 tons of P102.00 per 100 kilos on September 23, 1975. Subsequently,
on November 6, 1975, another designated agent signed a contract in behalf of
appellant for the sale of 100 tons of copra at P79.00 per 100 kilos with delivery
terms of 25 days effective December 15, 1975. At this point, it must be noted
that the price of copra had been fluctuating (going up and down), indicating its
unsteady position in the market.
On February 16, 1976, appellant's agent Jose Llover signed a contract for
the sale of 100 tons of copra at P82.00 per 100 kilos with delivery terms of 20
days effective March 8, 1976. As compared to appellant's transaction on
November 6, 1975, the current price agreed upon is slightly higher than the
last contract. In all these contracts though, the selling price had always been
stated as "total price" rather than per 100 kilos. However, the parties have
understood the same to be per 100 kilos in their previous transactions.
After the period to deliver had lapsed, appellant sold only 46,334 kilos of
copra thus leaving a balance of 53,666 kilos as per running account card.
Accordingly, demands were made upon appellant to deliver the balance with a
final warning embodied in a letter dated October 6, 1976, that failure to deliver
will mean cancellation of the contract, the balance to be purchased at open
market and the price differential to be charged against appellant. On October
22, 1976, since there was still no compliance, appellee exercised its option
under the contract and purchased the undelivered balance from the open
market at the prevailing price of P168.00 per 100 kilos, or a price differential of
P86.00 per 100 kilos, a net loss of P46,152.76 chargeable against appellant.
Under Article 1170 of the Civil Code of the Philippines, those who in the
performance of their obligation are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor thereof, are liable for damages.
Pursuant to said article, private respondent is liable for damages.
ISSUE:
Whether or not private respondent Oseraos is liable for damages arising
from fraud or bad faith in deliberately breaching the contract of sale entered
into by the parties.
In case of fraud, bad faith, malice, or wanton attitude, the guilty party is
liable for all damages, which may be reasonably attributed to the nonperformance of the obligation. On account of private respondent's deliberate
breach of his contractual obligation, petitioner was compelled to buy the
balance of 53,666 kilos of copra in the open market at the then prevailing price
of P168 per 100 kilograms thereby paying P46,152.76 more than he would have
paid had private respondent completed delivery of the copra as agreed upon.
RULING:
Yes. The private respondent is guilty of fraud in the performance of his
obligation under the sales contract whereunder he bound himself to deliver to
petitioner 100 metric tons of copra within twenty (20) days from March 8, 1976.
However within the delivery period, Oseraos delivered only 46,334 kilograms of
copra to petitioner, leaving an undelivered thus a balance of 53,666 kilograms.
Petitioner made repeated demands upon private respondent to comply with his
contractual undertaking to deliver the balance of 53,666 kilograms but private
respondent elected to ignore the same.
In a letter dated October 6, 1976, petitioner made a final demand with a
warning that, should private respondent fail to complete delivery of the balance
of 53,666 kilograms of copra, petitioner would purchase the balance at the open
market and charge the price differential to private respondent. Still private
respondent failed to fulfill his contractual obligation to deliver the remaining
53,666 kilograms of copra. On October 22, 1976, since there was still no
compliance by private respondent, petitioner exercised its right under the
ISSUE:
Whether or not the letter of PNEI on September 28, 1984 to PNB
MADECOR was a demand letter.
RULING:
The Supreme Court observed that petitioners obligation to PNEI appears
to be payable on demand. Petitioner is obligated to pay the amount stated in
the promissory note upon receipt of a notice to pay from PNEI. Henceforth, if
petitioner fails to pay after such notice, the obligation will earn an interest of 18
percentum per annum.
The records showed that the letter was not a demand letter but one that
merely informed petitioner of the conveyance of a certain portion of its
obligation to PNEI per a dacion en pago arrangement between PNEI and PNB,
and the unpaid balance of obligation after deducting the amount conveyed to
PNB. The letter only connotes that PNEI was advising petitioner to settle the
matter of implementing the earlier arrangement with PNB.
internment on December 24, 1990. He paid for the materials purchased but the
circumstances of delivery with the specific date (December 22), time (8 A.M.),
and place (Memorial Cemetery, Dasmarinas) were not indicated in the invoice
receipts but were verbally acknowledged by the store attendant. Respondent
was not able to deliver the materials on the specified date and time which
resulted to the delay in the construction of the niche and consequently to the
delay in the internment of petitioners wife. The delay caused the inability of the
petitioner to accede to the dying wishes of his wife that she be buried on the
24th of the month. She was buried 2 and days later, after Christmas.
ISSUE:
Whether or not the respondent is liable for damages due to his nonperformance of his obligation to deliver the materials on the specified date and
time.
RULING:
Yes, private respondent is liable for damages. Respondents contention
in the appellate court that he did not incur delay in the performance of his
obligation to deliver the thing sold to petitioner since the time of delivery was
not indicated in the invoice receipt covering the sale could not be sustained in
view of the positive verbal commitment of the respondents employee. It was
no longer necessary to indicate the time of delivery. Respondent was negligent
and incurred delay in the performance of his contractual obligations.
Respondent had no right to manipulate petitioners timetable and substitute it
with his own.
Therefore, he is liable for moral damage for causing further anguish and
pain, and suffering to the family of petitioner especially during Christmas day,
and for exemplary damages for not performing his obligation under the
business contract.
RULING:
Both the trial and appellate courts were correct in sustaining the claim of
private respondent anchored on estopped or waiver by acceptance of delayed
payments under Article 1235 of the Civil Code in that:
When the obligee accepts the performance, knowing its incompleteness or
irregularity, and without expressing any protest or objection, the obligation is
deemed fully complied with.
considering that the heirs of Juan Galicia, Sr. accommodated private
respondently by accepting the latters delayed payments not only beyond the
grace periods but also during the pendency of the case for specific
performance. Indeed, the right to rescind is not absolute and will not be
granted where there has been substantial compliance by partial payments. By
and large, petitioners actuation is susceptible of but one construction-that they
are now estopped from reneging from their commitment on account of
acceptance of benefits arising from overdue accounts of private respondent.
Now, as to the issue of whether payments had in fact been made, there is
no doubt that the second installment was actually paid to the heirs of Juan
Galicia, Sr. due to Josefina Tayags admission in judicio that the sum of
P10,000.00 was fully liquidated. It is thus erroneous for petitioners to suppose
that the evidence in the records do not support this conclusion. A contrario,
when the court of origin, as well as the appellate court, emphasized the frank
representation along this line of Josefina Tayag before the trial court,
petitioners chose to remain completely mute even at this stage despite the
opportunity accorded to them, for clarification. Consequently, the prejudicial
aftermath of Josefina Tayags spontaneous reaction may no longer be
obliterated on the basis of estoppel.
Insofar as the third item of the contract is concerned, it may be recalled
that respondent court applied Article 1186 of the Civil Code on constructive
fulfillment which petitioners claim should not have been appreciated because
they are the obliges while the proviso in point speaks of the obligor.
But, petitioners must concede that in a reciprocal obligation like a contract of
purchase, both parties are mutually obligors and also obliges, and any of the
contracting parties may, upon non-fulfillment by the other privy of his part of
the prestation, rescind the contract or seek fulfillment (Article 1191, Civil
Code).
FACTS:
FACTS:
On 5 April 1982, respondent spouses Rafael and Refugio Aquino pledged
certain shares of stock to petitioner State Investment House Inc. (State) in
order to secure a loan of P120,000.00. Prior to the execution of the pledge,
respondent spouses Jose and Marcelina Aquino signed an agreement with
petitioner State for the latters purchase of receivables amounting to
P375,000.00. When the 1st Account fell due, respondent spouses paid the same
partly with their own funds and partly from the proceeds of another loan which
they obtained also from petitioner State designated as the 2 nd Account. This
new loan was secured by the same pledge agreement executed in relation to
the 1st Account. When the new loan matured, State demanded payment.
Respondents expressed willingness to pay, requesting that upon payment, the
shares of stock pledged be released. Petitioner State denied the request on the
ground that the loan which it had extended to the spouses Jose and Marcelina
Aquino has remained unpaid.
On 29, June 1984, Atty. Rolando Salonga sent to respondent spouses a
Notice of Notarial Sale stating that upon request of State and by virtue of the
pledge agreement, he would sell at public auction the shares of stock pledged
to State. This prompted respondents to file a case before the Regional Trial
Court of Quezon City alleging that the intended foreclosure sale was illegal
because from the time the obligation under the 2 nd Account became due, they
had been able and willing to pay the same, but petitioner had insisted that
respondents pay even the loan account of Jose and Marcelino Aquino, which
had not been secured by the pledge. It was further alleged that their failure to
pay their loan was excused because the Petitioner State itself had prevented the
satisfaction of the obligation.
On January 29, 1985, the trial court rendered a decision in favor of the
plaintiff ordering State to immediately release the pledge and to deliver to
respondents the share of stock upon payment of the loan. The CA affirmed in
toto the decision of the trial court.
ISSUE:
Whether or not the conditions to be complied with by the debtor desirous
of being released from his obligation in cases where the creditor unjustly
refuses to accept payment have been met by the spouses Aquino.
RULING:
NO. The conditions had not been complied with. Article 1256 of the civil
code states that: If the creditor to whom tender of payment has been made
refuses without just cause to accept it, the debtor shall be released from
responsibility by consignation of the thing or sum due. Where the creditor
unjustly refuses to accept payment, the debtor desirous of being released from
his obligation must comply with two (2) conditions, viz: (a) tender of payment;
and (b) consignation of the sum due. Tender of payment must be accompanied
or followed by consignation in order that the effects of payment may be
produced. Thus, in Llamas v. Abaya, the Supreme Court stressed that a written
tender of payment alone, without consignation in court of the sum due, does not
suspend the accruing of regular or monetary interest. In the instant case,
respondent spouses Aquino, while they are properly regarded as having made a
written tender of payment to petitioner state, failed to consign in court the
amount due at the time of the maturity of the 2 nd Account No. It follows that
their obligation to pay principal-cum-regular or monetary interest under the
terms and conditions of the said Account was not extinguished by such tender
of payment alone.
On September 27, 1993, the petitioner filed with the RTC of Bulacan a
compliant of specific performance with preliminary injunction.
Petitioner
assailed the decision of the municipal trial court that it was violative of her
right to due process and for being in contrary with the intentions of RA 6552
regarding the protection of buyers of lots on installments.
She further
deposited the amount of P18,000.00 with the clerk of court to cover the balance
of the total cost of the contested lot. She also posted a cash bond of P50,000.00
and on November 4, 1993, the trial court issued a writ of preliminary injunction
on the assailed decision of the municipal trial court.
On February 6, 1995, the trial court rendered a decision favoring the
petitioner, making the preliminary injunction permanent, ordering the plaintiff
to pay the defendant P103,090.70 corresponding to the outstanding obligation
under the contract executed which consists of the principal together with
interest and surcharges, plus interest thereon at the rate of 18% per annum in
accordance with the contracts provision, ordering the defendant to pay the
plaintiff P10,000.00 by way of attorneys fees and costs of suit.
On February 21, 1995, Fernando filed a motion for reconsideration and
the supplement thereto.
According to the trial court, the transaction was an absolute sale, making
the petitioner the owner of the contested lot upon actual and constructive
delivery thereof. Therefore, Fernando was divested of ownership and cannot
recover the same unless the contract is rescinded pursuant to Article 1592 of
the Civil Code which requires a judicial or notarial demand. Since there had
been no rescission, petitioner cannot be evicted.
Regarding the issue of delay, the trial court pointed out that the plaintiff
defaulted in the payment of the amortization due and therefore she should be
liable for the payment of the interest and penalties.
The trial court disregarded the petitioners claim that she gave a down
payment of P10,000.00 at the time of the execution of the contract. The trial
court relied on the statement of account and the summary prepared by the
respondent to determine the liability of the petitioner for the payment of the
liabilities and penalties. The trial court held that the petitioners consignation
on the amount of P18,000.00 did not produce a legal effect since it was not
undertaken in accordance with Articles 1176, 1177 and 1178 of the Civil Code.
The Court of Appeals affirmed in toto the trial courts decision; hence, this
petition.
Installment Buyer Protection Act) which recognizes not only the right of the
seller to cancel the contract upon non-payment off an installment by the buyer
but also rights of the buyer in case of cancellation.
ISSUES:
1. Whether or not the transaction was an absolute and not a conditional
sale.
2. Whether or not there was proper cancellation of the contract to sell.
3. Whether or not there was delay on the petitioners part in the payment of
the monthly amortization.
RULING:
1. NO, the transaction was not an absolute sale; rather, it was a conditional
sale. The very intention of the parties was to reserve the ownership of the land
in the seller (Fernando) until the buyer has paid the total purchase price. First,
the contract to sell makes the sale, cession and conveyance subject to
conditions set forth on the contract. Second, what was transferred was
possession and not ownership. Finally, the land is covered by the Torrens title,
the act of registration of the deed of sale was the operative act that could
transfer ownership over the lot. No deed could be registered in the case at bar
since as stipulated in the contract, such deed shall be executed upon
completion of payment by Leao.
3. YES, there was delay on the petitioners part to pay the monthly
amortizations. Article 1169 of the Civil Code provides that in reciprocal
obligations, neither party incurs in delay if the other does not comply or is not
ready to comply in a proper manner with what is incumbent upon him. From
the moment one of the parties fulfills his obligation, delay by the other begins.
the peso rate against the US dollar, which at the time of the execution of the
contract was P14.00.
On March 15, 1990, the Duray spouses signified their intention to Roque
Bacus, one the decedents heirs, that they were willing and ready to purchase
the property under the option to buy clause. On March 30, 1990, due to the
heirs refusal to sell the property to the respondents, Durays adverse claim was
annotated by the Register of Deeds of Cebu.
On April 5, 1990, Duray filed a complaint for specific performance
against the heirs of the decedent with the Lupon Tagapamayapa of their
barangay, asking that he be allowed to purchase the land agreed upon in the
contract with the decedent.
Having failed to come to an agreement, the private respondents filed a
complaint before the trial court, praying that the heirs: a) execute a deed of
sale over the subject property in favor of them; b) receive the payment of the
purchase price; and c) pay the damages.
Petitioners alleged that prior to the death of the decedent, respondents
conveyed to them their lack of interest to but the subject land for want of
sufficient funds. They even requested the respondents to pay in full the
purchase price but the respondents refused.
On October 30, 1990, private respondents manifested in court that they
caused the issuance of a cashiers check in the amount of P 650,000 payable too
petitioners at anytime upon demand. On August 31, 1991, trail court rendered
its decision, favoring the private respondents. On appeal, the Court of appeals
denied the motion of the petitioners.
Petitioners ratiocinated that they cannot be compelled to sell the
disputed property by virtue of the nonfulfillment of the obligation under the
option contract of the private respondents. Respondents argued that the
petitioners are unclear if Rule 65 or 45 of the Rules of Court govern their
petition.
Further, that questions of fact, which were actually raised by the
petitioners, cannot be entertained by the Supreme Court in a petition for
review.
Nonetheless, if the claim must be under Rule 45, the respondents opted
to exercise their option to buy as contained in the contract.
ISSUES:
1.
Whether or not when the respondents opted to buy the property, were
they already required to deliver the money or consign it in court before the
execution of the deed of transfer.
2.
Whether or not the private respondents incurred in delay when they did
not deliver the purchase price or consign it in court or before the expiration of
the contract.
RULING:
1.
NO, the petitioners were not required to deliver the money or consign it
in court. Obligations under an option to buy are reciprocal obligations. The
performance of one obligation is conditioned on the simultaneous fulfillment of
the other obligation. In an option to buy, the payment of the purchase price by
the creditor is contingent upon the execution and delivery of a deed of sale by
the debtor. In the case at bar, the respondents were not yet obliged to make
actual payment. Consequently, since the obligation was not yet due,
consignation in court of the purchase price was not yet required.
2.
NO, the private respondents did not incur delay when they did not deliver
the purchase price or consign it in court or before the expiration of the
contract. Consignation is the act of depositing the thing due with the court or
judicial authorities whenever the creditor cannot accept or refuses to accept
payment and it requires a prior tender of payment. Petitioners contention that
private respondents failed to comply with their obligation under the option to
buy because they failed to actually deliver the purchase price or consign it in
court before the contract expired is not tenable. Ergo, the private respondents
did not incur any delay when they did not yet deliver payment or make
consignation before the expiration of the contract. In reciprocal obligations,
neither party incurs delay if the other does not comply or is not ready to comply
in a proper manner with what is incumbent upon him. Only from the moment
one of the parties fulfills his obligation, does delay by the other begins.
In the case at bar, as early as March 15, 1990, respondents
communicated with the petitioners that they intended to exercise their
exclusive right to buy the parcel of land stipulated in the contract but which
was not given due course by the petitioners unless there is delivery of the sum
of money. As there was no compliance with what was incumbent upon the
petitioners under the option to but, private respondents had not incurred in
delay when the cashiers check was issued even after the contract expired.
The instant petition is denied and the Court of Appeals decision is
affirmed.
Eventually, the lower court rendered its judgment after due hearing and
trial. It ordered Integrated to pay P763,101.70 while it also ordered Fil-Anchor
to pay Integrated moral damages and compensatory damages of P790,324.30
for the unrealized income of Integrated when Fil-Anchor failed to deliver the
reams of papers it needed for the printing of books. However, the CA affirmed
the decision of the lower court with respect only to Integrated liabilities and not
with Fil-Anchors liability to pay moral and compensatory damages.
ISSUES:
Whether or not private respondent violated the order agreement.
Whether or not private respondent is liable for petitioners breach of
contract with Philacor.
RULING:
Anent the 1st issue, NO. The transaction between the parties is a contract
of sale whereby Fil-Anchor obligates itself to deliver printing paper to
Integrated which, in turn, binds itself to pay a sum of money. Both parties
conceded that the order agreement gives rise to reciprocal obligations such
that the obligation of one is dependent upon the obligation of the other.
Reciprocal obligations are to be performed simultaneously, so that the
performance of one is conditioned upon the simultaneous fulfillment of the
other. Fil-Anchor undertakes to deliver printing paper of various quantities
subject to petitioners corresponding obligation to pay, on a maximum 90-day
credit, for the materials. Petitioner Integrated did not fulfill its side of the
contract as its last payment in August 1981 could only cover materials covered
by delivery invoices dated September and October of 1980. Consequently, FilAnchors suspension of its deliveries to petitioner whenever the latter failed to
pay on time is legally justified. Fil-Anchor has the right to cease making further
delivery; hence, it did not violate the order agreement. On the contrary, it was
Integrated which breached the agreement as it failed to pay on time the
materials delivered by private respondent.
Anent the 2nd issue, NO. Fil-Anchor cannot be held liable under the
contracts entered into by petitioner with Philacor because it is not a party to
said agreements. It is also not a contract pour autriu. The contracts could not
affect third persons like private respondent because of the basic civil law
principle of relativity of contracts which provides that contracts can only bind
the parties who entered into it, and it cannot favor or prejudice a third person,
even if he is aware of such contract and has acted with knowledge thereof.
The Supreme Court did not subscribe to the petitioners view that the
Memorandum Agreement was a contract to sell. There is nothing contained in
the MOA from which it can reasonably be deduced that the parties intended to
enter into a contract to sell, i.e. one whereby the prospective seller would
explicitly reserve the transfer of title to the prospective buyer, meaning, the
prospective seller does not as yet agree or consent to transfer ownership of the
property subject of the contract to sell until the full payment of the price, such
payment being a positive suspensive condition, the failure of which is not
considered a breach, casual or serious, but simply an event which prevented
the obligation from acquiring any obligatory force.
There is clearly no express reservation of title made by the petitioners
over the property, or any provision which would impose non-payment of the
price as a condition for the contracts entering into force. Although the
memorandum agreement was also denominated as a "Contract to Sell", it held
that the parties contemplated a contract of sale. A deed of sale is absolute in
nature although denominated a conditional sale in the absence of a stipulation
reserving title in the petitioners until full payment of the purchase price. In
such cases, ownership of the thing sold passes to the vendee upon actual or
constructive delivery thereof.
The mere fact that the obligation of the
respondent to pay the balance of the purchase price was made subject to the
condition that the petitioners first deliver the reconstituted title of the house
and lot does not make the contract a contract to sell for such condition is not
inconsistent with a contract of sale.
The property in dispute, being an immovable property, is governed by
Article 1592 of the NCC, which needs the judicial or notarial act for its
rescission. It is not disputed that the petitioners did not make a judicial or
notarial demand for rescission. The November 20, 1989 letter of the petitioners
informing the respondent of the automatic rescission of the agreement did not
amount to a demand for rescission, as it was not notarized. It was also made
five days after the respondents attempt to make the payment of the purchase
price. This offer to pay prior to the demand for rescission is sufficient to defeat
the petitioners right under article 1592 of the Civil Code.
Besides, the Memorandum Agreement between the parties did not
contain a clause expressly authorizing the automatic cancellation of the
contract without court intervention in the event that the terms thereof were
violated. A seller cannot unilaterally and extrajudicially rescind a contract of
sale where there is no express stipulation authorizing him to extrajudicially
rescind. Neither was there a judicial demand for the rescission thereof.
Thus, when the respondent filed his complaint for specific performance,
the agreement was still in force inasmuch as the contract was not yet
rescinded.
At any rate, considering that the six-month period was merely an
approximation of the time it would take to reconstitute the lost title and was not
a condition imposed on the perfection of the contract and considering further
that the delay in payment was only thirty days which was caused by the
respondents justified but mistaken belief that an extension to pay was granted
to him, the Court agreed with the CAs ruling that the delay of one month in
payment was a mere casual breach that would not entitle the respondents to
rescind the contract. RESCISSION of a contract will not be permitted for a
slight or casual breach, but only such substantial and fundamental breach as
would defeat the very object of the parties in making the agreement.
On August 25, 1995, Dr. Gueco was served summons and was fetched by
the sheriff and representative of the bank for a meeting in the bank premises.
The bank demanded payment of the amount of P184,000.00 which represents
the unpaid balance for the car loan which was lowered to P154,000.00 after
negotiations and recomputations. As a result of the non-payment of the
reduced amount on that date, the car was detained within the banks
compound.
On August 28, 1995, Dr. Gueco further renegotiated for the reduction of
the outstanding loan to P150,000.00.
On August 29, 1995, Dr. Gueco delivered a managers check in the
amount of P150,000.00 but the car was not released because of his refusal to
sign the JOINT Motion to Dismiss.
After several demand letters and meetings with bank representatives, the
respondents initiated a civil action for damages which was dismissed for lack of
merit.
On appeal, the RTC ruled in favor of the Spouses, pointing out that there
was a meeting of the minds between the petitioner and the respondents as to
the reduction of the amount of indebtedness and the release of the car but said
agreement did not include the signing of the Joint Motion to Dismiss as a
condition sine qua non for the effectivity of the compromise.
On appeal, the Court of Appeals affirmed in toto the lower courts
decision.
Hence, the petitioner comes to the Supreme Court by way of certiorari.
ISSUES:
Whether or not there was no agreement with respect to the execution of the
Joint Motion to Dismiss as a condition for the compromise agreement.
Whether or not the respondents should be granted moral, exemplary
damages and attorneys fees.
Whether or not the Court of Appeals erred in holding that the petitioner
return the subject car to the respondents, without making any provision for the
issuance of the new managers/ cashiers check by the respondents in favor of
the petitioner in lieu of the original cashiers check that already became stale.
RULING:
1. NO, there was no agreement with respect to the execution of the Joint
Motion to Dismiss as a condition for the compromise agreement.
Petitioner has the burden of proof that the oral compromise entered into
by the parties included the stipulation that the parties would joint file a motion
to dismiss. Factual findings of the lower court and the appellate court found no
evidence to acknowledge the contestation of the petitioner bank that there was
indeed such an agreement. Further, the only findings was that the
agreement between the parties was merely regarding the lowering of the price
and not anent the Joint Motion to Dismiss.
2. NO, the respondents are not entitled to the damages awarded by the Court
of Appeals. In awarding the damages, both the trial and appellate courts found
out that there was fraud, when in the findings of the Supreme Court, there was
none. Fraud is the deliberate intention to cause damage or prejudice. It is the
voluntary execution of a wrongful act, or the willful omission. Knowing and
intending the effects which naturally and necessarily arise from such act or
omission. There was no fraud on the part of the petitioner bank in requiring the
respondent to sign the joint motion to dismiss.
3. YES, the Court of Appeals committed the error anent the 3 rd issue.
Respondents contend that the petitioner should return the car or its value and
that the latter, due to its own negligence, should suffer the loss occasioned of
the fact that the check had become stale. Respondents aver that the delivery of
the managers check produced the effect of payment; thus, petitioner was
negligent in opting not to deposit or use said check. The Court is not
persuaded.
A stale check is one which has not been presented for payment within a
reasonable time after its issue. It is valueless, and should not be paid.
In the case at bar, the check involved is not an ordinary bill of exchange
but a managers check which is drawn by the bank manager upon the bank
itself. In this case, the Gueco spouses have not alleged or shown that they or
the bank which issued the managers check has suffered damage or loss by the
delay or non-presentment. There is no doubt that the petitioner bank held on
the check and refused to encash the same because of the controversy
surrounding the signing of the joint motion to dismiss. Hence, the Court is of
the opinion that there is no bad faith or negligence.
Inc. The Deputy Commissioner then rejected the draft decision of the Collector
of Customs.
GQ GARMENTS, Inc., and AGFHA, Inc., filed a joint motion for
reconsideration. Convinced that the evidence presented established the legal
existence of GQ GARMENTS, Inc., and finding that a resolution passed by the
Board of Directors of GQ GARMENTS, Inc., ratified the waiver of its president,
the Collector of Customs in another draft decision granted the joint motion. The
Office of the Commissioner of Customs, however, disapproved the new draft
decision and denied the release of the goods. In deference to the directive of
the Commissioner, the District Collector of Customs ordered the forfeiture of
the shipment. AGFHA, Inc., interposed an appeal to the Office of the
Commissioner of Customs but was dismissed.
AGFHA, Inc., therefore, filed a petition for review with the Court of Tax
Appeals questioning the forfeiture of the bales of textile cloth. Finding merit in
the plea of appellants, the Court of Tax Appeals granted the petition and
ordered the release of the goods to AGFHA, Inc., however, the Commissioner of
Customs then challenged before the Court of Appeals the decision of the tax
court but was dismissed for lack of merit. The appellate court ruled that the
Bureau of Customs has failed to satisfy its burden of proving fraud on the part
of the importer or consignee. The Court of Appeals attributed the error in
indicating GQ GARMENTS, Inc., instead of AGFHA, Inc., in the Inward Foreign
Manifest as being the consignee of the subject shipment to the shipping agent.
It also noted the finding of the tax court that GQ GARMENTS, Inc., was, in fact,
a registered importer. The BOC instituted the instant petition for review under
Rule 45 of the Revised Rules of Court assailing the affirmance by the Court of
Appeals of the tax court's decision.
ISSUE:
Whether or not AGFHA, Inc. committed fraud in the importation of bales
of cloth.
RULING:
The requisites for the forfeiture of goods under the Tariff and Customs
Code are: (a) the wrongful making by the owner, importer, exporter or
consignee of any declaration or affidavit, or the wrongful making or delivery by
the same person of any invoice, letter or paper - all touching on the importation
or exportation of merchandise; (b) the falsity of such declaration, affidavit,
invoice, letter
or paper; and (c) an intention on the part of the importer/consignee to evade
the payment of the duties due.
Petitioner asserts that all of these requisites are present in this case. It
contends that it did not presume fraud, rather the events positively point to the
existence of fraud. On the other hand, AGFHA, Inc. maintains that there has
only been an inadvertent error and not an intentional wrongful declaration by
the shipper to evade payment of any tax due.
Fraud must be proved to justify forfeiture. It must be actual, amounting
to intentional wrong-doing with the clear purpose of avoiding the tax. Mere
negligence is not equivalent to the fraud contemplated by law. What is here
involved is an honest mistake, not even directly attributable to private
respondent, which will not deprive the government of its right to collect the
proper tax. The Collector of Customs, Court of Tax Appeals and the Court of
Appeals are unanimous in concluding that no fraud has been committed by
AGFHA, Inc. in the importation of the bales of cloth. Therefore, the forfeiture
cannot be justified.
Petition denied. Decision affirmed.
cracked. Zuiga was rushed to the Quezon City General Hospital where he was
given medical attention, but due to the massive injuries sustained, he
succumbed shortly thereafter.
A complaint against petitioner and her driver for damages was filed at
the Regional Trial Court of Malolos City.
In her answer, the petitioner
vehemently denied the material allegations of the complaint. She tried to shift
the blame upon the victim, theorizing that Herminigildo bumped into her bus,
while avoiding an unidentified woman who was chasing him. Furthermore, she
alleged that she was not liable for any damages because she exercised the
proper diligence of a good father of a family both in the selection and
supervision of her bus driver.
The trial court rendered its decision holding petitioner and her driver
liable for the untimely death of Zuiga and to indemnify his legal heirs, the
herein respondents. The Court of Appeals affirmed the said decision of the
RTC. Petitioner duly moved for reconsideration, but her motion was denied for
lack of merit.
ISSUE:
Whether or not the petitioner exercised the diligence of a good father of
a family in the selection and supervision of her employees thus absolving her
from any liability.
RULING:
YES. Whether a person is negligent or not is a question of fact. It was
Venturinas reckless and imprudent driving of petitioners bus, which is the
proximate cause of the victims death. It is thus evident that petitioner did not
exercise the diligence of a good father of a family in the selection and
supervision of her employees. The law governing petitioners liability, as the
employer of bus driver Venturina is Article 2180 of the Civil Code. The
diligence of a good father means diligence in the selection and supervision of
employees. Thus, when an employee, while performing his duties, causes
damage to persons or property due to his own negligence, there arises the juris
tantum presumption that the employer is negligent, either in the selection of
the employee or in the supervision over him after the selection.
The
presumption juris tantum that there was negligence in the selection of her bus
driver remains unrebutted.
Having failed to rebut the legal presumption of negligence in the
selection and supervision of her driver is responsible for damages, the basis of
the liability being the relationship of pater familias or on the employers own
negligence.
After hearing, the trial court ruled in favor of respondent Borja and held
petitioner liable for damages and loss of income. On appeal, the same ruling
was also upheld. Hence this petition.
ISSUE:
Whether or not the RTC and the Court of Appeals labored under a
misapprehension of facts regarding the negligence committed.
RULING:
Petitioner avers that both lower courts labored under a misapprehension
of the facts. It claims that the documents adduced in the RTC conclusively
revealed that the explosion that caused the fire on M/T King Family had
originated from the barge ITTC-101. However, the Supreme Court find no
cogent reason to overturn factual findings of the RTC and the Court of Appeals
since such findings were supported by substantial evidences.
Negligence is a conduct that creates undue risk of harm to another. It is
the failure to observe that degree of care, precaution and vigilance that the
circumstances justly demand, whereby that other person suffers injury.
Petitioners vessel was carrying chemical cargo -- alkyl benzene and methyl
methacrylate monomer.
While knowing that their vessel was carrying
dangerous inflammable chemicals, its officers and crew failed to take all the
necessary precautions to prevent an accident. Petitioner was, therefore,
negligent.
The three elements of QUASI-DELICT are:
1.
damages suffered by the plaintiff,
2.
fault or negligence of the defendant, and
3.
the connection of cause and effect between the fault or
negligence of the defendant and the damages inflicted on the
plaintiff.
All these elements were established in this case.
As a result of the fire and the explosion during the unloading of the
chemicals from petitioners vessel, Respondent Borja suffered the following
damage: and injuries: (1) chemical burns of the face and arms; (2) inhalation of
fumes from burning chemicals; (3) exposure to the elements while floating in
sea water for about three (3) hours; (4) homonymous hemianopsia or blurring of
the right eye [which was of] possible toxic origin; and (5) cerebral infract with
neo-vascularization, left occipital region with right sided headache and the
blurring of vision of right eye.
CULPA CONTRACTUAL
1.
2.
3.
4.
5.
6.
7.
8.
FACTS:
Petitioners Annabelle M. Tuazon and Almer R. Abing worked as branch
managers of the Wendy's food chains. In Wendys Biggie Size It! Crew
Challenge" promotion contest, branches managed by petitioners won first and
second places, respectively. Because of its success, respondent had a second
run of the contest from April 26 to July 4, 1999. The Meycauayan branch won
again. The MCU Caloocan branch failed to make it among the winners. Before
the announcement of the third round winners, management received reports
that as early as the first round of the contest, the Meycauayan, MCU Caloocan,
Tandang Sora and Fairview branches cheated. An internal investigation ensued.
Petitioners were summoned to the main office regarding the reported anomaly.
Petitioners denied there was cheating. Immediately thereafter, petitioners were
notified, in writing, of hearings and of their immediate suspension. Thereafter,
petitioners were dismissed.
ISSUE:
Is the respondent guilty of illegal suspension and dismissal in the case at
bench?
RULING:
There is no denying that petitioners were managerial employees. They executed
management policies, they had the power to hire personnel and assign them
tasks; and discipline the employees in their branch. They recommended actions
on employees to the head office.Article 212 (m) of the Labor Code defines a
managerial employee as one who is vested with powers or prerogatives to lay
down and execute management policies and/or hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees. Consequently, as managerial
employees, in the case of petitioners, the mere existence of grounds for the loss
of trust and confidence justify their dismissal. Pursuant to our ruling in Caoile v.
RULING:
Article 1170 of the Civil Code provides: Those who in the performance of
their obligations are guilty of fraud, negligence, or delay, and those who in any
manner contravene the tenor thereof, are liable for damages. In culpa
contractual, the mere proof of the existence of the contract and the failure of its
compliance justify, prima facie, a corresponding right of relief. The law,
recognizing the obligatory force of contracts, will not permit a party to be set
free from liability for any kind of misperformance of the contractual
undertaking or a contravention of the tenor thereof.
Considering the public utility of RCPIs business and its contractual obligation
to transmit messages, it should exercise due diligence to ascertain that
messages are delivered to the persons at the given address and should provide
a system whereby in cases of undelivered messages the sender is given notice
of non-delivery. Messages sent by cable or wireless means are usually more
important and urgent than those which can wait for the mail. RCPI argues,
however, against the presence of urgency in the delivery of the telegram, as
well as the basis for the award of moral damages. RCPIs arguments fail. For it
is its breach of contract upon which its liability is, it bears repeating, anchored.
Since RCPI breached its contract, the presumption is that it was at fault or
negligent. It, however, failed to rebut this presumption. For breach of contract
then, RCPI is liable to Grace for damages. RCPIs liability as an employer could
of course be avoided if it could prove that it observed the diligence of a good
father of a family to prevent damage.
CULPA CONTRACTUAL
VICTORY LINER, INC. vs. GAMMAD
G.R. No. 159636. NOVEMBER 25, 2004
FACTS:
Marie Grace Pagulayan-Gammad was on board an air-conditioned Victory
Liner bus bound for Tuguegarao, Cagayan from Manila. At about 3:00 a.m., the
bus while running at a high speed fell on a ravine which resulted in the death of
Marie Grace and physical injuries to other passengers. On May 14, 1996,
respondent heirs of the deceased filed a complaint for damages arising from
culpa contractual against petitioner. In its answer, the petitioner claimed that
the incident was purely accidental and that it has always exercised
extraordinary diligence in its 50 years of operation.
ISSUE:
Whether petitioner should be held liable for breach of contract of
carriage.
RULING:
Petitioner was correctly found liable for breach of contract of carriage. A
common carrier is bound to carry its passengers safely as far as human care
and foresight can provide, using the utmost diligence of very cautious persons,
with due regard to all the circumstances. In a contract of carriage, it is
presumed that the common carrier was at fault or was negligent when a
passenger dies or is injured. Unless the presumption is rebutted, the court need
not even make an express finding of fault or negligence on the part of the
common carrier. This statutory presumption may only be overcome by evidence
that the carrier exercised extraordinary diligence.
In the instant case, there is no evidence to rebut the statutory
presumption that the proximate cause of Marie Graces death was the
negligence of petitioner. Hence, the courts below correctly ruled that petitioner
was guilty of breach of contract of carriage.
CULPA CONTRACTUAL
FGU INSURANCE CORP. vs. G.P. SARMIENTO TRUCKING
CORPORATION
G.R. No. 141910. AUGUST 6, 2002
FACTS:
CULPA CONTRACTUAL
LRTA vs. NAVIDAD
G.R. No. 145804. FEBRUARY 6, 2003
FACTS:
On 14 October 1993, in the evening, Nicanor Navidad, then drunk,
entered the EDSA LRT station. While Navidad was standing on the platform
near the LRT tracks, Junelito Escartin, the security guard assigned to the area
approached Navidad. A misunderstanding or an altercation between the two
apparently ensued that led to a fist fight. No evidence, however, was adduced
to indicate how the fight started or who, between the two, delivered the first
blow or how Navidad later fell on the LRT tracks. At the exact moment that
Navidad fell, an LRT train, operated by petitioner Rodolfo Roman, was coming
in. Navidad was struck by the moving train, and he was killed instantaneously.
The widow of Nicanor, along with her children, filed a complaint for damages
against Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit
Organization, Inc. (Metro Transit), and Prudent for the death of her husband.
LRTA and Roman filed a counterclaim against Navidad and a cross-claim
against Escartin and Prudent. Prudent, in its answer, denied liability and
averred that it had exercised due diligence in the selection and supervision of
its security guards.
ISSUE:
Who, if any, is liable for damages in relation to the death of Navidad?
RULING:
The foundation of LRTAs liability is the contract of carriage and its
obligation to indemnify the victim arises from the breach of that contract by
reason of its failure to exercise the high diligence required of the common
carrier. In the discharge of its commitment to ensure the safety of passengers,
a carrier may choose to hire its own employees or avail itself of the services of
an outsider or an independent firm to undertake the task. In either case, the
CULPA CONTRACTUAL
RODZSSEN SUPPLY CO. INC. VS. FAR EAST BANK & TRUST CO.
GR No. 109087
May 9, 2001
357 SCRA 618
FACTS:
Petitioner Rodzssen Supply opened a letter of credit with respondent Far
East Bank for the payment of 5 loaders bought by petitioner from Ekman and
Co. The letter of credit had a validity of 30 days to expire February 15, 1979
but was subsequently extended to October 16, 1979. Three of the loaders were
delivered to the petitioner and was paid by respondent. The two remaining
loaders were delivered to the petitioner belatedly but were still accepted by
petitioner on the ground that it was bound to do so under the trust receipt
arrangement with respondent bank.
The bank paid the two remaining loaders five months after the expiration
of the credit on March 1980. Petitioner refused to pay the P76,000 for the two
loaders since the bank paid for them beyond the expiration of the letter of
credit. Both the RTC and the CA ruled for the respondent. Thus, this petition
for review.
ISSUE:
Is the petitioner liable to pay respondent bank when the bank paid
Ekman only after 5 months beyond the expiration of the letter of credit?
RULING:
In the invitation for graduation the name of the plaintiff appeared as one
of the candidates. At the foot of the list of the names of the candidates there
appeared however the following annotation:
CULPA CONTRACTUAL
UNIVERSITY OF THE EAST, VS. ROMEO A. JADER,
2000 Feb 17
G.R. No. 132344
FACTS:
Plaintiff was enrolled in the defendants' College of Law from 1984 up to
1988. In the first semester of his last year (School year 1987-1988), he failed to
take the regular final examination in Practice Court I for which he was given an
incomplete grade. He enrolled for the second semester as fourth year law
student and on February 1, 1988 he filed an application for the removal of the
incomplete grade given him by Professor Carlos Ortega which was approved by
Dean Celedonio Tiongson after payment of the required fee. He took the
examination on March 28, 1988. On May 30, 1988, Professor Carlos Ortega
submitted his grade. It was a grade of five (5).
The plaintiff's name appeared in the Tentative List of Candidates for
graduation for the Degree of Bachelor of Laws (LL.B) as of Second Semester
(1987-1988) with the following annotation:
"JADER ROMEO A.
Def. Conflict of Laws - x-1-87-88, Practice Court I - Inc., 1-87-88. C-1 to submit
transcript with S.O.
The college dean is the senior officer responsible for the operation of an
academic program, enforcement of rules and regulations, and the supervision of
faculty and student services. He must see to it that his own professors and
teachers, regardless of their status or position outside of the university, must
comply with the rules set by the latter. The negligent act of a professor who
fails to observe the rules of the school, for instance by not promptly submitting
a student's grade, is not only imputable to the professor but is an act of the
school, being his employer.
CULPA CONTRACTUAL
ISSUE:
Whether or not the petitioner is liable for the loss of a certain amount of
alkyl benzene.
RULING:
Yes. The negligence of the obligor in the performance of the obligation
renders him liable for damages for the resulting loss suffered by the obligee.
The Supreme Court did not find that the trial court erred in holding the
petitioner liable because of its failure to exercise due diligence which is
governed by the Standard Operation Procedure in Handling Liquid Bulk Survey.
Although the cessation of the pumping operation in this case was not
voluntarily requested by the pumping operation in this case was not voluntarily
requested by the pumping operation in this case was not voluntarily requested
by the consignee, but was due to mechanical problems with the pump, there is
greater reason to comply with the SOP. The petitioner assigned surveyor
disregarded SOP and left the pump site without leaving any instruction or
directive with the barge pump operators.
The petition was dismissed.
CULPA CONTRACTUAL
CULPA ACQUILIANA
1.
2.
3.
further held that even if the maneuver chosen by petitioner was a wrong move,
it cannot be held liable as the cause of the damage sustained by respondent was
typhoon Katring, which is an act of God.
On appeal to the Court of Appeals, the decision of the trial court was
reversed and set aside. It found Capt. Jusep guilty of negligence in deciding to
transfer the vessel to the North Harbor only at 8:35 a.m. of October 21, 1994
and thus held petitioner liable for damages.
ISSUE:
Whether or not petitioner is solidarily liable under Article 2180 of the Civil
Code for the quasi-delict committed by Capt. Jusep.
RULING:
The Court of Appeals was correct in holding that Capt. Jusep was negligent
in deciding to transfer the vessel only at 8:35 in the morning of October 21,
1994.
As early as 12:00 midnight of October 20, 1994, he received a report from
his radio head operator in Japan that a typhoon was going to hit Manila after 8
hours. This, notwithstanding, he did nothing, until 8:35 in the morning of
October 21, 1994, when he decided to seek shelter at the North Harbor, which
unfortunately was already congested. The finding of negligence cannot be
rebutted upon proof that the ship could not have sought refuge at the North
Harbor even if the transfer was done earlier. It is not the speculative success or
failure of a decision that determines the existence of negligence in the present
case, but the failure to take immediate and appropriate action under the
circumstances. Capt. Jusep, despite knowledge that the typhoon was to hit
Manila in 8 hours, complacently waited for the lapse of more than 8 hours
thinking that the typhoon might change direction. He cannot claim that he
waited for the sun to rise instead of moving the vessel at midnight immediately
after receiving the report because of the difficulty of traveling at night. The
hour of 8:35 a.m. is way past sunrise. Furthermore, he did not transfer as soon
as the sun rose because, according to him, it was not very cloudy and there was
no weather disturbance yet.
When he ignored the weather report notwithstanding reasonable foresight
of harm, Capt. Jusep showed an inexcusable lack of care and caution which an
ordinary prudent person would have observed in the same situation. Had he
moved the vessel earlier, he could have had greater chances of finding a space
at the North Harbor considering that the Navotas Port where they docked was
very near North Harbor. Even if the latter was already congested, he would
still have time to seek refuge in other ports.
The instant petition is denied.
CULPA ACQUILIANA
PHILIPPINE COMMERCIAL INTERNATIONAL BANK (formerly INSULAR
BANK OF ASIA AND AMERICA), petitioner,
VS. COURT OF APPEALS and FORD PHILIPPINES, INC.
and CITIBANK, N.A., respondents
2001 Jan 29
350 SCRA 446
FACTS:
The consolidated petitions herein involve several fraudulently negotiated
checks. The original actions a quo were instituted by Ford Philippines to
recover from the drawee bank, CITIBANK, N.A. (Citibank) and collecting bank,
Philippine Commercial International Bank (PCIBank), the value of several
checks payable to the Commissioner of Internal Revenue, which were
embezzled allegedly by an organized syndicate.
G.R. Nos. 121413 and 121479 are twin petitions for review of the March
27, 1995 Decision of the Court of Appeals in CA-G.R. CV No. 25017, entitled
Ford Philippines, Inc. vs. Citibank, N.A. and Insular Bank of Asia and America
(now Philippine Commercial International Bank), and the August 8, 1995
Resolution ordering the collecting bank, Philippine Commercial International
Bank, to pay the amount of Citibank Check No. SN-04867.
In G.R. No. 128604, petitioner Ford Philippines assails the October 15,
1996 Decision of the Court of Appeals and its March 5, 1997 Resolution in CAG.R. No. 28430 entitled "Ford Philippines, Inc. vs. Citibank, N.A. and Philippine
Commercial International Bank," affirming in toto the judgment of the trial
court holding the defendant drawee bank, Citibank, N.A., solely liable to pay the
amount of P12,163,298.10 as damages for the misapplied proceeds of the
plaintiffs Citibank Check Numbers SN-10597 and 16508.
ISSUE:
Whether or not the petitioner Ford has the right to recover from the
collecting bank (PCIBank) and the drawee bank (Citibank) the value of the
checks intended as payment to the Commissioner of Internal Revenue.
RULING:
In G.R. Nos. 121413 and 121479, the Court held that banking business
requires that the one who first cashes and negotiates the check must take some
precautions to learn whether or not it is genuine. And if the one cashing the
check through indifference or other circumstance assists the forger in
committing the fraud, he should not be permitted to retain the proceeds of the
check from the drawee whose sole fault was that it did not discover the forgery
or the defect in the title of the person negotiating the instrument before paying
the check. For this reason, a bank which cashes a check drawn upon another
bank, without requiring proof as to the identity of persons presenting it, or
making inquiries with regard to them, cannot hold the proceeds against the
drawee when the proceeds of the checks were afterwards diverted to the hands
of a third party.
In such cases the drawee bank has a right to believe that the cashing
bank (or the collecting bank) had, by the usual proper investigation, satisfied
itself of the authenticity of the negotiation of the checks. Thus, one who
encashed a check which had been forged or diverted and in turn received
payment thereon from the drawee, is guilty of negligence which proximately
contributed to the success of the fraud practiced on the drawee bank. The
latter may recover from the holder the money paid on the check. Having
established that the collecting banks negligence is the proximate cause of the
loss,
the Court concludes that PCIBank is liable in the amount corresponding to the
proceeds of Citibank Check No. SN-04867.
In G.R. No. 128604, the pro-manager of San Andres Branch of PCIBank,
Remberto Castro, received Citibank Check Numbers SN 10597 and 16508. He
passed the checks to a co-conspirator, an Assistant Manager of PCIBanks
Meralco Branch, who helped Castro open a Checking account of a fictitious
person named "Reynaldo Reyes."
Castro deposited a worthless Bank of
America Check in exactly the same amount of Ford checks.
The syndicate tampered with the checks and succeeded in replacing the
worthless checks and the eventual encashment of Citibank Check Nos. SN
10597 and 16508. The PCIBank Pro-manager, Castro, and his co-conspirator
Assistant Manager apparently performed their activities using facilities in their
official capacity or authority but for their personal and private gain or benefit.
A bank holding out its officers and agents as worthy of confidence will not be
permitted to profit by the frauds these officers or agents were enabled to
FACTS:
SMC entered into a Time Charter Party Agreement (TCPA) with Julius
Ouano, of J. Ouano Marine Services. Under the terms of the agreement, SMC
chartered the M/V Doa Roberta for a period of two years for the purpose of
transporting SMCs beverage products from its Mandaue City plant to various
points in Visayas and Mindanao. The TCPA provided, among others, that the
Ouano, the owner, warrants that the vessel is seaworthy and that there shall be
no employer-employee relations between the owner and/or its vessels crew on
one hand and the charterer on the other. The crew of the vessel shall continue
to be under the employ, control and supervision of the owner.
shall be borne, by the owner; the owner further covenants to hold the charterer
free from all claims and liabilities arising out of the acts of the crew and the
condition of the vessel; the owner shall be responsible to the charterer for
damages and losses arising from the incompetence and/or negligence of, and/or
the failure to observe the required extra-ordinary diligence by the crew.
On November 11, 1990, SMC issued sailing orders to the Master of the
MN Doa Roberta, Captain Inguito. Inguito obtained the necessary sailing
clearance from the Philippine Coast Guard. The vessel left Mandaue City at
6:00 a.rn. of November 12. At 4:00 a.m., typhoon Ruping was spotted. At 7:00
a.m., SMC Radio Operator Moreno contacted Inguito through the radio and
advised him to take shelter. Inguito replied that they will proceed since the
typhoon was far away from them, and that the winds were in their favor. At
2:00 p.m., Moreno again communicated with Inguito and advised him to take
shelter. The captain responded that they can manage. Moreno again contacted
Inguito at 4:00 p.m. and reiterated the advice that it will be difficult to take
shelter after passing Balicasag Island because they were approaching an open
sea. Still, the captain refused to heed his advice.
At 11:40 p.m, Moreno made a series of calls to the M/V Doa Roberta but
he failed to get in touch with anyone in the vessel. At 1:15 a.m. of November
13, Inguito called Moreno over the radio and requested him to contact the son
of Julius Ouano because they needed a helicopter to rescue them. At 2:30 a.m.
of November 13, 1990, the M/V Doa Roberta sank. Out of the 25 officers and
crew on board the vessel, only five survived.
On November 24, 1990, Julius Ouano, in lieu of the captain who perished
in the sea tragedy, filed a Marine Protest. The heirs of the deceased captain
and crew, as well as the survivors, of the ill-fated M/V Doa Roberta filed a
complaint for tort against SMC and Julius Ouano before the RTC. Julius Ouano
alleged that the proximate cause of the loss of the vessel and its officers and
crew was the fault and negligence of SMC, which had complete control and
disposal of the vessel as charterer and which issued the sailing order for its
departure despite being forewarned of the impending typhoon. Thus, he prayed
that SMC indemnify him for the cost of the vessel and the unrealized rentals
and earnings thereof. SMC argued that the proximate cause of the sinking was
Ouanos breach of his obligation to provide SMC with a seaworthy vessel duly
manned by competent crew. SMC interposed counterclaims against Ouano for
the value of the cargo lost in the sea tragedy.
The trial court ruled that the proximate cause of the loss of the M/V Doa
Roberta was attributable to SMC and was ordered and sentenced to pay to the
heirs of the deceased crew. The CA modified the decision appealed from,
declaring defendant-appellants SMC and Julian C. Ouano jointly and severally
liable to plaintiffs-appellees, except to the heirs of Capt. Inguito.
ISSUE:
Whether or not the finding of the appellate court was in order.
RULING:
Under the terms of the TCPA between the parties, the charterer, SMC,
should be free from liability for any loss or damage sustained during the
voyage, unless it be shown that the same was due
to its fault or negligence. The evidence does not show that SMC or its
employees were amiss in their duties. SMCs Radio Operator Moreno, who was
tasked to monitor every shipment of its cargo, zealously contacted and advised
Capt. Inguito to take shelter from typhoon Ruping.
In contrast to the care exercised by Moreno, Rico Ouano tried to
communicate with the captain only after receiving the S.O.S. message. Neither
Ouano nor his son was available during the entire time that the vessel set out
and encountered foul weather. Considering that the charter was a contract of
affreightment, the shipowner had the clear duty to ensure the safe carriage and
arrival of goods transported on board its vessels. More specifically, Ouano
expressly warranted in the TCPA that his vessel was seaworthy. For a vessel to
be seaworthy, it must be adequately equipped for the voyage and manned with
a sufficient number of competent officers and crew.
The proximate cause of the sinking of the vessel was the gross failure of
the captain of the vessel to observe due care and to heed SMCs advice to take
shelter. Gilbert Gonsaga, Chief Engineer of Doa Roberta, testified that the
ship sank at 2:30 in the early morning of November 13th. On the other hand,
from the time the vessel left the port of Mandaue at six oclock in the morning,
Captain Sabiniano Inguito was able to contact the radio operator of SMC. He
was fully apprised of typhoon "Ruping" and its strength. Due diligence dictated
that at any time before the vessel was in distress, he should have taken shelter
in order to safeguard the vessel and its crew.
Ouano is vicariously liable for the negligent acts of his employee, Capt.
Inguito. Under Articles 2176 and 2180 of the Civil Code, owners and managers
are responsible for damages caused by the negligence of a servant or an
employee, the master or employer is presumed to be negligent either in the
selection or in the supervision of that employee. This presumption may be
overcome only by satisfactorily showing that the employer exercised the care
and the diligence of a good father of a family in the selection and the
supervision of its employee.
Ouano miserably failed to overcome the
presumption of his negligence. He failed to present proof that he exercised the
due diligence of a bonus paterfamilias in the selection and supervision of the
captain of the M/V Doa Roberta. Hence, he is vicariously liable for the loss of
lives and property occasioned by the lack of care and negligence of his
employee.
SMC is not liable for the losses. The contention that it was the issuance
of the sailing order by SMC which was the proximate cause of the sinking is
untenable. The fact that there was an approaching typhoon is of no moment. It
appears that on one previous occasion, SMC issued a sailing order to the
captain of the M/V Doa Roberta, but the vessel cancelled its voyage due to
typhoon. Likewise, it appears from the records that SMC issued the sailing
order on November 11, 1990, before typhoon "Ruping" was first spotted at 4:00
a.m. of November 12, 1990.
Consequently, Ouano should answer for the loss of lives and damages
suffered by the heirs of the officers and crew who perished on board the M/V
Doa Roberta, except Captain Sabiniano Inguito. The award of damages
granted by the CA is affirmed only against Ouano, who should also indemnify
SMC for the cost of the lost cargo, in the total amount of P10,278,542.40.
Solidary
Employee
vs.
Independent
Liability
of
Employer
and/or
RULING:
While the appellate court agreed that Soriano was negligent, it also
found Macasasa negligent for speeding, such that he was unable to avoid
hitting the victim. It observed that Sorianos own negligence did not
preclude recovery for damages from Macasasas negligence. It further
held that since petitioner failed to present evidenced to the contrary and
conformably with Article 2180 of the Civil Code, the presumption of
negligence of the employer in the selection and supervision of employees
stood.
The records show that Macasasa violated two traffic rules under
the Land Transportation and Office Code. Under Article 2185 of the Civil
Code, a person driving a motor vehicle is presumed negligent if at the
time of the mishap, he was violating traffic regulations.
Further, under Article 2180, employers are liable for the damages
caused by their employees acting within the scope of their assigned
tasks. The liability arises due to the presumed negligence of the
employers in supervising their employees unless they prove that they
observed all the diligence of a good father of a family to prevent the
damage. In this case petitioner is held primarily and solidarily liable for
the damages caused by Macasasa.
However, Article 2179 states that when the plaintiffs own
negligence was the immediate and proximate cause of his injury, he
cannot recover damages. But if his negligence was only contributory, the
immediate and proximate cause of the injury being the defendants lack
of due care, the plaintiff may recover damages, but the court shall
mitigate the damages awarded.
Ruling that Soriano was guilty of contributory negligence for not
using the pedestrian overpass, 20% reduction of the amount of the
damages awarded was awarded to petitioner.
ISSUE:
Whether or not petitioner is liable for damages.
GR No. 141538
FACTS:
Country Bus Lines passenger bus collided with a tricycle. Tricycle
driver Tuazon filed a complaint for damages against Mrs. Cerezo, as
owner of the bus line, her husband Attorney Juan Cerezo, and bus driver
Danilo A. Foronda.
After considering Tuazons testimonial and documentary evidence,
the trial court ruled in Tuazons favor.
The trial court made no
pronouncement on Forondas liability because there was no service of
summons on him. The trial court did not hold Atty. Cerezo liable as
Tuazon failed to show that Mrs. Cerezos business benefited the family,
pursuant to Article 121(3) of the Family Code. The trial court held Mrs.
Cerezo solely liable for the damages sustained by Tuazon arising from
the negligence of Mrs. Cerezos employee, pursuant to Article 2180 of
the Civil Code.
ISSUE:
Whether petitioner is solidarily liable.
RULING:
Contrary to Mrs. Cerezos assertion, Foronda is not an
indispensable party to the case. An indispensable party is one whose
interest is affected by the courts action in the litigation, and without
whom no final resolution of the case is possible. However, Mrs. Cerezos
liability as an employer in an action for a quasi-delict is not only solidary,
it is also primary and direct. Foronda is not an indispensable party to the
final resolution of Tuazons action for damages against Mrs. Cerezo.
The responsibility of two or more persons who are liable for a
quasi-delict is solidary. Where there is a solidary obligation on the part of
debtors, as in this case, each debtor is liable for the entire obligation.
Hence, each debtor is liable to pay for the entire obligation in full. There
is no merger or renunciation of rights, but only mutual representation.
Where the obligation of the parties is solidary, either of the parties is
indispensable, and the other is not even a necessary party because
RULING:
Article 2176 states that whoever by act or omission causes
damage to another, there being fault or negligence, is obliged to pay for
the damages done. Such fault or negligence, if there is no pre-existing
contractual relationship between the parties, is called a quasi-delict
Obviously, petitioners employee was grossly negligent in selling
respondent domicrum, instead of the prescribed diamicron. Considering
that a fatal mistake could be a matter of life and death for a buying
patient, the employee should have been very cautious in dispensing
medicines.
Petitioner contends that the proximate cause of the accident was
respondents negligence in driving. The court disagrees. The accident
could have not occurred had petitioners employee been careful in
reading the prescription.
Article 2180 in complementing the preceding article states that
the obligation imposed by articles 2176 is demandable not only for ones
own acts or omissions, but also for those of persons for whom one is
responsible
It is thus clear that the employer of a negligent employee is liable
for the damages caused by the latter. When an injury is caused by the
negligence of an employee, there instantly arises a presumption of the
law that there has been negligence on the part of the employer either in
the selection of the employee or the supervision over him, after such
selection. The presumption, however, may be rebutted by a clear
showing on the part of the employer that he has exercised the care and
diligence of a good father of a family in the selection and supervision of
his employee.
In this case, petitioner failed to prove such exercised of due
diligence of a good father of a family in the selection and supervision of
employee, thus making the petitioner solidarily liable for the damages.
FACTS:
Evangeline Tangco (Evangeline) went to Ecology Bank, Katipunan
Branch, Quezon City, to renew her time deposit per advise of the bank's
cashier as she would sign a specimen card. Evangeline, a duly licensed
firearm holder with corresponding permit to carry the same outside her
residence, approached security guard Pajarillo, who was stationed
outside the bank, and pulled out her firearm from her bag to deposit the
same for safekeeping. Suddenly, Pajarillo shot Evangeline with his
service shotgun hitting her in the abdomen instantly causing her death.
Respondent filed a complaint for damages against Pajarillo for
negligently shooting Evangeline and against Safeguard for failing to
observe the diligence of a good father of a family to prevent the damage
committed by its security guard.
Petitioners denied the material allegations in the complaint and
alleged that Safeguard exercised the diligence of a good father of a
family in the selection and supervision of Pajarillo; that Evangeline's
death was not due to Pajarillo's negligence as the latter acted only in
self-defense.
The RTC found respondents to be entitled to damages. It rejected
Pajarillo's claim that he merely acted in self-defense. The RTC also found
Safeguard as employer of Pajarillo to be jointly and severally liable with
Pajarillo. It ruled that while it may be conceded that Safeguard had
perhaps exercised care in the selection of its employees, particularly of
Pajarillo, there was no sufficient evidence to show that Safeguard
exercised the diligence of a good father of a family in the supervision of
its employee.
ISSUES:
1. Whether Pajarillo is guilty of negligence in shooting Evangeline;
and
with such force that the car was pushed beyond the edge of the road to
the ricefield.
In the present case, petitioners presented several documents in
evidence to show the various tests and pre-qualification requirements
imposed upon petitioner Pleyto before his hiring as a driver by PRBL.
However, no documentary evidence was presented to prove that
petitioner PRBL exercised due diligence in the supervision of its
employees, including Pleyto. Citing precedents, the Court of Appeals
opined,
In order that the defense of due diligence in the selection and
supervision of employees may be deemed sufficient and plausible, it is
not enough for the employer to emptily invoke the existence of company
guidelines and policies on hiring and supervision. As the negligence of
the employee gives rise to the presumption of negligence on the part of
the employer, the latter has the burden of proving that it has been
diligent not only in the selection of employees but also in the actual
supervision of their work. The mere allegation of the existence of hiring
procedures and supervisory policies without anything more is decidedly
not sufficient to overcome such presumption.
ISSUE:
Did petitioner observed the proper diligence of a good father of a
family?
RULING:
The negligence and fault of appellant driver is manifest. He
overtook the tricycle despite the oncoming car only fifty (50) meters
away from him. Defendant-appellants claim that he was driving at a
mere 30 to 35 kilometers per hour does not deserve credence as it would
have been easy to stop or properly maneuver the bus at this speed. The
speed of the bus, the drizzle that made the road slippery, and the
proximity of the car coming from the opposite direction were duly
established by the evidence.
The speed at which the bus traveled,
inappropriate in the light of the aforementioned circumstances, is
evident from the fact despite the application of the brakes, the bus still
bumped the tricycle, and then proceeded to collide with the incoming car
It held that this was a case of quasi-delict, there being no preexisting contractual relationship between the parties. The court a quo
then found the petitioner directly and primarily liable as Venturinas
employer pursuant to Article 2180 of the Civil Code as she failed to
present evidence to prove that she has observed the diligence of a good
father of a family in the selection and supervision of her employees.
Art. 2180 states that the obligation imposed by Article 2176 is
demandable not only for ones own acts or omissions, but also for those
of persons for whom one is responsible
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of their
assigned tasks, even though the former are not engaged in any business
or industry.
Petitioner contends that as an employer, she observed the proper
diligence of a good father of a family, both in the selection and
supervision of her driver and therefore, is relieved from any liability for
the latters misdeed. To support her claim, she points out that when
Venturina applied with her as a driver in January 1992, she required him
to produce not just his drivers license, but also clearances from the
National Bureau of Investigation (NBI), the Philippine National Police,
and the barangay where he resides. She also required him to present his
Social Security System (SSS) Number prior to accepting him for
employment. She likewise stresses that she inquired from Venturinas
previous employer about his employment record, and only hired him
after it was shown to her satisfaction that he had no blot upon his record.
In sum, petitioners liability to private respondents for the
negligent and imprudent acts of her driver, Venturina, under Article 2180
of the Civil Code is both manifest and clear. Petitioner, having failed to
rebut the legal presumption of negligence in the selection and
supervision of her driver, is responsible for damages, the basis of the
liability being the relationship of pater familias or on the employers own
negligence.
Quasi-delictual liability even in the existence of a contract
between parties
1. REGINO VS. PANGASINAN COLLEGES, supra
2. YHT VS CA, 451 S 638
FACTS:
McLoughlin arrived from Australia and registered with Tropicana.
He rented a safety deposit box as it was his practice to rent a safety
deposit box every time he registered at Tropicana in previous trips. As a
tourist, McLoughlin was aware of the procedure observed by Tropicana
relative to its safety deposit boxes. The safety deposit box could only be
opened through the use of two keys, one of which is given to the
registered guest, and the other remaining in the possession of the
management of the hotel. When a registered guest wished to open his
safety deposit box, he alone could personally request the management
who then would assign one of its employees to accompany the guest and
assist him in opening the safety deposit box with the two keys.
However, when he returned coming from a trip, he noticed that his
money in the envelope was lacking and that the jewelries were gone.
ISSUE:
Whether petitioner is liable for the loss of the personal properties
of respondent.
RULING:
Under Article 1170 of the New Civil Code, those who, in the
performance of their obligations, are guilty of negligence, are liable for
damages. Article 2180 provides that the owners and managers of an
establishment or enterprise are likewise responsible for damages caused
by their employees in the service of the branches in which the latter are
employed or on the occasion of their functions. Also, this Court has ruled
that if an employee is found negligent, it is presumed that the employer
was negligent in selecting and/or supervising him for it is hard for the
victim to prove the negligence of such employer.
Thus, given the fact
that the loss of McLoughlins money was consummated through the
negligence of Tropicanas employees in allowing Tan to open the safety
deposit box without the guests consent, both the assisting employees
and YHT Realty Corporation itself, as owner and operator of Tropicana,
should be held solidarily liable.
RAMOS VS. CA
GR No. 124354
FACTS:
Plaintiff Erlinda Ramos was a robust woman Except for occasional
complaints of discomfort due to pains allegedly caused by the presence
of a stone in her gall bladder. Because the discomforts somehow
interfered with her normal ways, she sought professional advice. She
was advised to undergo an operation for the removal of a stone in her
gall bladder. Through the intercession of a mutual friend, Dr. Buenviaje
she and her husband Rogelio met for the first time Dr. Orlino one of the
defendants in this case, on June 10, 1985. They agreed that their date at
the operating table at the DLSMC (another defendant. Dr. Hosaka
decided that she should undergo a "cholecystectomy" operation after
examining the documents (findings from the Capitol Medical Center, FEU
Hospital and DLSMC) presented to him. Rogelio E. Ramos, however,
asked Dr. Hosaka to look for a good anesthesiologist. Dr. Hosaka, in
turn, assured Rogelio that he will get a good anesthesiologist. Dr.
Hosaka charged a fee of P16,000.00, which was to include the
anesthesiologist's fee and which was to be paid after the operation. A day
before the scheduled date of operation, she was admitted at one of the
rooms of the DLSMC, located along E. Rodriguez Avenue, Quezon City.
At around 7:30 A.M. of June 17, 1985 and while still in her room,
she was prepared for the operation by the hospital staff. Her sister-inlaw, Herminda Cruz, who was the Dean of the College of Nursing at the
Capitol Medical Center, was also there for moral support. Herminda was
allowed to stay inside the operating room.
At around 9:30 A.M., Dr. Gutierrez reached a nearby phone to look
for Dr. Hosaka who was not yet in Dr. Gutierrez thereafter informed
Herminda Cruz about the prospect of a delay in the arrival of Dr. Hosaka.
Herminda then went back to the patient who asked, "Mindy, wala pa ba
ang Doctor"? The former replied, "Huwag kang mag-alaala, darating na
iyon. Thereafter, Herminda went out of the operating room and informed
the patient's husband, Rogelio, that the doctor was not yet around.
At about 12:15 P.M., Herminda Cruz, who was inside the operating
room with the patient, heard somebody say that "Dr. Hosaka is already
here." She then saw people inside the operating room "moving, doing
this and that, preparing the patient for the operation" As she held the
hand of Erlinda Ramos, she then saw Dr. Gutierrez intubating the hapless
patient. She thereafter heard Dr. Gutierrez say, "ang hirap ma-intubate
nito, mali yata ang pagkakapasok. O lumalaki ang tiyan", because of the
remarks of Dra. Gutierrez, she focused her attention on what Dr.
Gutierrez was doing. She thereafter noticed bluish discoloration of the
nailbeds of the left hand of the hapless Erlinda even as Dr. Hosaka
approached her. She then heard Dr. Hosaka issue an order for someone
to call Dr. Calderon, another anesthesiologist. After Dr. Calderon arrived
at the operating room, she saw this anesthesiologist trying to intubate
the patient. The patient's nailbed became bluish and the patient was
placed in a trendelenburg position - a position where the head of the
patient is placed in a position lower than her feet which is an indication
that there is a decrease of blood supply to the patient's brain.
Immediately thereafter, she went out of the operating room, and she told
Rogelio E. Ramos "that something wrong was happening". Dr. Calderon
was then able to intubate the patient.
Meanwhile, Rogelio, who was outside the operating room, saw a
respiratory machine being rushed towards the door of the operating
room. He also saw several doctors rushing towards the operating room.
When informed by Herminda Cruz that something wrong was happening,
he told her (Herminda) to be back with the patient inside the operating
room.Herminda immediately rushed back, and saw that the patient was
still in trendelenburg position. At almost 3:00 P.M. of that fateful day, she
saw the patient taken to the Intensive Care Unit (ICU). Doctors Gutierrez
and Hosaka were also asked by the hospital to explain what happened to
the patient. The doctors explained that the patient had bronchospasm.
Erlinda Ramos stayed at the ICU for a month. About four months
thereafter the patient was released from the hospital.
ISSUE:
1. Whether the respondent doctors are negligent.
2. Whether the respondent doctors and the hospital are solidarily
liable.
RULING:
Res ipsa loquitur is a Latin phrase which literally means "the thing
or the transaction speaks for itself." The phrase "res ipsa loquitur" is a
maxim for the rule that the fact of the occurrence of an injury, taken with
the surrounding circumstances, may permit an inference or raise a
presumption of negligence, or make out a plaintiff's prima facie case, and
present a question of fact for defendant to meet with an explanation
At the time of submission, Erlinda was neurologically sound and,
except for a few minor discomforts, was likewise physically fit in mind
and body. However, during the administration of anesthesia and prior to
the performance of cholecystectomy she suffered irreparable damage to
her brain. Thus, without undergoing surgery, she went out of the
operating room already decerebrate and totally incapacitated. Obviously,
brain damage, which Erlinda sustained, is an injury which does not
normally occur in the process of a gall bladder operation. In fact, this
kind of situation does not happen in the absence of negligence of
someone in the administration of anesthesia and in the use of
endotracheal tube. Normally, a person being put under anesthesia is not
rendered decerebrate as a consequence of administering such anesthesia
if the proper procedure was followed. Furthermore, the instruments
used in the administration of anesthesia, including the endotracheal
tube, were all under the exclusive control of private respondents, who
are the physicians-in-charge. Likewise, petitioner Erlinda could not have
been guilty of contributory negligence because she was under the
influence of anesthetics which rendered her unconscious.
With regard to Dra. Gutierrez, we find her negligent in the care of
Erlinda during the anesthesia phase.
As borne by the records,
respondent Dra. Gutierrez failed to properly intubate the patient.
The Court finds that she omitted to exercise reasonable care in not
only intubating the patient, but also in not repeating the administration
of atropine without due regard to the fact that the patient was inside the
operating room for almost three (3) hours. For after she committed a
mistake in intubating the patient, the patient's nailbed became bluish
and the patient, thereafter, was placed in trendelenburg position,
because of the decrease of blood supply to the patient's brain. The
evidence further shows that the hapless patient suffered brain damage
because of the absence of oxygen in her (patient's) brain for
approximately four to five minutes which, in turn, caused the patient to
become comatose.
On the part of Dr. Orlino Hosaka, this Court finds that he is liable
for the acts of Dr. Perfecta Gutierrez whom he had chosen to administer
anesthesia on the patient as part of his obligation to provide the patient a
`good anesthesiologist', and for arriving for the scheduled operation
almost three (3) hours late.
On the part of DLSMC (the hospital), this Court finds that it is
liable for the acts of negligence of the doctors in their `practice of
medicine' in the operating room. Moreover, the hospital is liable for
failing through its responsible officials, to cancel the scheduled operation
after Dr. Hosaka inexcusably failed to arrive on time.
In having held thus, this Court rejects the defense raised by
defendants that they have acted with due care and prudence in
rendering medical services to plaintiff-patient. For if the patient was
properly intubated as claimed by them, the patient would not have
become comatose. And, the fact that another anesthesiologist was called
to try to intubate the patient after her (the patient's) nailbed turned
bluish, belie their claim. Furthermore, the defendants should have
rescheduled the operation to a later date. This, they should have done, if
defendants acted with due care and prudence as the patient's case was
an elective, not an emergency case.
Wherefore judgment is rendered in favor of the plaintiffs and
against the defendants. Accordingly, the latter are ordered to pay, jointly
and severally.
through its personnel, readily accommodated the patient and updated Dr.
Estrada of the patients condition. Second, CMC made Rogelio sign a
consent forms printed in CMC letterhead. And third, Dr. Estradas
referral to Dr. Espinola, who then was the Head of the Obstetrics and
Gynecology Department of CMC.
Wherefore the court finds respondent Capitol Medical Center
vicariously liable for the negligence of Dr. Oscar Estrada.
Medical Malpractice/ Medical Negligence Cases
found a piece of gauze protruding from her vagina. Dr. Ampil saw
immediately informed. He proceeded to Natividads house where he
extracted by hand a piece of gauze. Natividad sought the treatment of
Polymedic General Hospital thereat Dr. Gutierrez detected a foreign
object in her vagina - a foul-smelling gauze which infected her vaginal
vault. A recto-vaginal fistula had formed in her reproductive organ which
forced stool to excrete in her vagina. Another surgical operation was
performed upon her.
Spouses Agana filed a complaint against PSI (owner of Medical
City), Dr. Ampil and Dr. Fuentes. The Trial Court found the respondents
jointly and severally liable. The CA affirmed said decision with
modification that Dr. Fuentes was dismissed.
ISSUE:
Whether the Court of Appeals erred in absolving Dr. Fuentes of any
liability.
RULING:
It was duly established that Dr. Ampil was the lead surgeon during
the operation of Natividad. He requested the assistance of Dr. Fuentes
only to perform hysterectomy when he (Dr. Ampil) found that the
malignancy in her sigmoid area had spread to her left ovary. Dr. Fuentes
performed the surgery and thereafter reported and showed his work to
Dr. Ampil. The latter examined it and finding everything to be in order,
allowed Dr. Fuentes to leave the operating room. Dr. Ampil then resumed
operating on Natividad. He was about to finish the procedure when the
attending nurses informed him that two pieces of gauze were missing. A
"diligent search" was conducted, but the misplaced gauzes were not
found. Dr. Ampil then directed that the incision be closed. During this
entire period, Dr. Fuentes was no longer in the operating room and had,
in fact, left the hospital.
Under the "Captain of the Ship" rule, the operating surgeon is the
person in complete charge of the surgery room and all personnel
connected with the operation. Their duty is to obey his orders. As stated
before, Dr. Ampil was the lead surgeon. In other words, he was the
"Captain of the Ship." That he discharged such role is evident from his
Malicious Prosecution
1. DIAZ VS. DAVAO LIGHT, 4 APRIL 2007
2. YASONNA VS. DE RAMOS, 440 S 154
ULPA CRIMINAL
PEOPLE VS. DE LOS SANTOS
G.R. No. 131588
March 27, 2001
355 SCRA 415
FACTS:
As part of the Special Counter Insurgency Operation Unit Training held
at Camp Damilag, Manolo Fortich, Bukidnon, several members of the Philippine
National Police were undergoing an endurance run on October 5, 1995 which
started at 2:20 am. The PNP trainees were divided into three columns and
were wearing black t-shirts, bl;ack short pants, and green and black combat
shoes. There were two rear guards assigned to each rear column. Their duty
was to jog backwards facing the oncoming vehicles and give hand signals for
other vehicles. From Alae to Maitum Highway, Puerto, Cagayan de Oro City,
about 20 vehicles passed them, all of which slowed down and took the left
portion of the road when signaled to do so.
While they were negotiating Maitum Highway, they saw an Isuzu Elf
truck coming at high speed towards them. The vehicle lights were in the high
beam. At a distance of 100 meters, the rear security guards started waving
their hands for the vehicle to take the other side of the road, but the vehicle just
kept its speed, apparently ignoring their signals and coming closer and closer
to them. The rear guards told their co-trainees to retract. The guards
jumped in different directions. They saw their co-trainees being hit by the said
vehicle, falling like dominoes one after the other. Some were thrown, and
others were overrun by the vehicle. The driver, Glenn de los Santos did not
reduce his speed even after hitting the first and second columns.
After arraignment and trial, the court convicted accused-appellant guilty
of complex crime of multiple murder, multiple frustrated murder and multiple
attempted murder, with the use of motor vehicle as the qualifying circumstance.
ISSUE:
Whether or not the incident was a product of a malicious intent on the
part of accused-appellant
RULING:
The Supreme Court held that the incident, tragic though it was in the
light of the number of persons killed and seriously injured, was an accident
than of a malicious intent on Glenns part. Glenn showed an inexcusable lack of
precaution. Since the place of the incident was foggy and dark, he should have
observed due care in accordance with the conduct of a reasonably prudent man,
such as by slackening his speed, applying his brakes, or turning to the left side
even if it would mean entering the opposite lane.
defendant even used as a defense that the petitioner was delayed in delivering
the taximeters when the former was apprehended by U.S. Navy Exchange for
not complying with their agreement. As a consequence, petitioner filed a case
against the defendant but respondent judge dismissed such petition in a minute
order for lack of cause of action.
ISSUE:
Whether or not petitioner has a cause of action against the defendant for
the latters contravention of the terms of contract.
RULING:
Article 1170 of the Civil Code provides:
2.
FACTS:
Eulalio Mistica, predecessor-in-interest of herein petitioner, is the owner
of the parcel of land which was leased to respondent Bernardinio Naguiat.
Mistica entered into a contract to sell with respondent over a portion of
the aforementioned lot containing an area of 200 square meters.
This
agreement was reduced to writing in a document. Pursuant to said agreement,
respondent gave a down payment of P2,000. He made another partial payment
of P1,000 on February 8, 1980. He failed to make any payments thereafter.
Mistica died sometime in October 1986.
On December 4,1991, petitioner filed a complaint for rescission alleging,
among others that the failure and refusal of respondent to pay the balance of
the purchase price constitute a violation of the contract which established her
to rescind the same. That respondent have been in possession of the subject
matter, should be ordered to vacate and surrender possession of the same.
ISSUE:
Whether or not the Court of Appeals erred in the application of Article
1191 of the Civil Code, as it ruled that there is no breach of obligation in spite
of the lapse of their stipulated period and the failure of the respondent to pay.
RULING:
NO. The failure of respondent to pay the value of the purchase price
within ten (10) years from execution of the deed did not amount to a substantial
breach.
In the agreement, it was stipulated that payment could be made even
after ten (10) years from execution provided that the vendee paid 12% interest.
The stipulation of the parties constitute the law between them, thus court have
no alternative but to enforce them as agreed upon and written. Thus, the
Supreme Court ruled that the Court of Appeals did not commit an error in
deciding this issue.
RULING:
An option is a contract granting a privilege to buy or sell within an
agreed time and at a determined price. It is a separate and distinct contract
from that which the parties may enter into upon the consummation of the
option. It must be supported by consideration. However, the March 15, 1985
letter sent by the COS through their lawyer to Custodio reveals that the parties
entered into a perfected contract of sale and not an option contract.
A contract of sale is a consensual contract and is perfected at the
moment there is a meeting of the minds upon the thing which is the object of
the contract and upon the price.
From that moment the parties may
reciprocally demand performance subject to the provisions of the law governing
the form of contracts.
The elements of a valid contract of sale under Article 1458 of the Civil
Code are (1) consent or meeting of the minds; (2) determinate subject matter;
and (3) price certain in money or its equivalent. As evidenced by the March 15,
1985 letter, all three elements of a contract of sale are present in the
transaction between the petitioners and respondent.
Custodios offer to
purchase the Beata property, subject of the sale at a price of $100,000.00 was
accepted by the Cos. Even the manner of payment of the price was set forth in
the letter. Earnest money in the amounts of US$1,000.00 and P40,000.00 was
already received by the Cos. Under Article 1482 of the Civil Code, earnest
money given in a sale transaction is considered part of the purchase price and
proof of the perfection of the sale.
Despite the fact that Custodios failure to pay the amounts of
US$40,000.00 and US$60,000.00 on or before December 4, 1984 and January
5, 1985 respectively was a breach of her obligation under Article 1191 of the
Civil Code, the Cos did not sue for either specific performance or rescission of
the contract. The Cos were of the mistaken belief that Custodio had lost her
option over the Beata property when she failed to pay the remaining balance
of $70,000.00 pursuant to their August 8, 1986 letter. In the absence of an
express stipulation authorizing the sellers to extrajudicially rescind the contract
of sale, the Cos cannot unilaterally and extrajudicially rescind the contract of
sale.
Accordingly, Custodio acted well within her rights when she attempted to
pay the remaining balance of $70,000.00 to complete the sum owed of
$100,000.00 as the contract was still subsisting at that time. When the Cos
refused to accept said payment and to deliver the Beata property, Custodio
immediately sued for the rescission of the contract of sale and prayed for the
return of the $30,000.00 she had initially paid.
Under Article 1385 of the Civil Code, rescission creates the obligation to
return the things, which were the object of the contract, but such rescission can
only be carried out when the one who demands rescission can return whatever
he may be obliged to restore. This principle has been applied to rescission of
reciprocal obligations under Article 1191 of the Civil Code. The Court of
Appeals therefore did not err in ordering the Cos to return the amount of
$30,000.00 to Custodio after ordering the rescission of the contract of sale over
the property.
Since it has been shown that the appellee who was not in default, was
willing to perform part of the contract while the appellants were not, rescission
of the contract is in order. The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not comply with what is
incumbent upon him, (Article 1191, same Code). Rescission creates the
obligation to return the things which were the object of the contract, together
with their fruits, and the price with its interest x x x x (Article 1385, same
Code).
In the case at bar, the property involved has not been delivered to the
appellee. She has therefore nothing to return to the appellants. The price
received by the appellants has to be returned to the appellee as aptly ruled by
the lower court, for such is a consequence of rescission, which is to restore the
parties in their former situations.
Petition denied. Decision affirmed.
FACTS:
The petitioner contends that (a) under the terms of the Bill of
Assignment, exh. A, the respondent Magdalo V. Francisco ceded and
transferred to the petitioner not only the right to the use of the formula
for Mafran sauce but also the formula itself, because this, allegedly, was
the intention of the parties; (b) that on the basis of the entire evidence on
record and as found by the trial court, the petitioner did not dismiss the
respondent Francisco because he was, and still is, a member of the board
of directors, a stockholder, and an officer of the petitioner corporation,
and that as such, had actual knowledge of the resumption of production
by the petitioner, but that despite such knowledge, he refused to report
back for work notwithstanding the petitioner's call for him to do so; (c)
that the private respondents are not entitled to rescind the Bill of
Assignment; and (d) that the evidence on record shows that the
respondent Francisco was the one not ready, willing and able to comply
with his obligations under the Bill of Assignment, in the sense that he not
only irregularly reported for work but also failed to assign, transfer and
convey to the petitioner of the said deed of conveyance.
ISSUE:
Whether respondent Francisco ceded to the petitioner merely the
use of the formula for Mafran sauce and not the formula itself.
RULING:
The Court concluded that what was actually ceded and transferred was
only the use of the Mafran sauce formula. The fact that the trademark
"Mafran" was duly registered in the name of the petitioner pursuant to
for the period from 9 December 1964 to 15 July 1965, in the amount of
P61,133.74, in addition to the indebtedness that it had previously
acknowledged.
That on 19 July 1965, petitioner UP informed respondent ALUMCO
that it had, as of that date, considered as rescinded and of no further
legal effect the logging agreement that they had entered in 1960.
That before the issuance of the aforesaid preliminary injunction UP
had taken steps to have another concessionaire take over the logging
operation, and the concession was awarded to Sta. Clara Lumber
Company, Inc.
ISSUE:
Whether petitioner U.P. can treat its contract with ALUMCO
rescinded, and may disregard the same before any judicial
pronouncement to that effect.
RULING:
Respondent ALUMCO contended, and the lower court, in issuing
the injunction order of 25 February 1966. apparently sustained it
(although the order expresses no specific findings in this regard), that it
is only after a final court decree declaring the contract rescinded for
violation of its terms that U.P. could disregard ALUMCO's rights under
the contract and treat the agreement as breached and of no force or
effect.
UP and ALUMCO had expressly stipulated in the "Acknowledgment
of Debt and Proposed Manner of Payments" that, upon default by the
debtor ALUMCO, the creditor (UP) has "the right and the power to
consider the Logging Agreement dated 2 December 1960 as rescinded
without the necessity of any judicial suit." "There is nothing in the law
that prohibits the parties from entering into agreement that violation of
the terms of the contract would cause cancellation thereof, even without
court intervention. In other words, it is not always necessary for the
injured party to resort to court for rescission of the contract."
In other words, the party who deems the contract violated may
consider it resolved or rescinded, and act accordingly, without previous
court action, but it proceeds at its own risk. For it is only the final
FACTS:
Spouses Francisco obtained the services of DEAC Construction,
Inc. to construct a 3-storey residential building with mezzanine and roof
deck on their lot for a contract price of 3.5M. as agreed upon, a
downpayment of 2M should be paid upon signing of the construct of
construction, and the remaining balance of 1.5M was to be paid in two
equal installments. To undertake the said project, DEAC engaged the
services of a sub-contractor, Vigor Construction and Development
Corporation, but allegedly without the spouses knowledge and consent.
Even prior to the execution of the contract, spouses Francisco had
paid the downpayment. However, the said construction commenced
although DEAC had not yet obtained the necessary building permit for
the proposed construction and that the contractor deviated from the
approved plans.
Spouses Francisco demanded DEAC to comply with the approved
plan, otherwise, they would be compelled to invoke legal remedies. Work
stoppage was issued against Lino Francisco pursuant to the previous
Notice of Violations. The plaintiffs then file civil case for Rescission of
Contract and Damages against DEAC.
ISSUE:
Whether or not spouses Francisco may rescind the contract.
RULING:
Article 1191 of the Civil Code provides that the power to rescind
obligations is implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him. The rescission
referred to in this article, more appropriately referred to a resolution, is
not predicated on injury to economic interests on the part of the party
plaintiff, but of breach of faith by the defendant which is violative of the
reciprocity between the parties.
Given the fact that the construction in this case is already 75%
complete, that trial court was correct in ordering partial rescission of the
portion of the construction. Equitable considerations justify rescission of
the portion of the obligation which has not been delivered
RIGHT TO RESOLVE/RESCIND: REQUISITES
cause them substantial damages. Respondent remained firm in her refusal, and
demanded that petitioners stop using the lots as a transloading station to
service the Victorias Milling Company unless they pay the full purchase price.
In a letter-reply dated April 5, 1991, petitioners assured respondent of their
readiness to pay the balance but reminded respondent of her obligation to
redeem the lots from mortgage with the Philippine National Bank (PNB).
Petitioners gave respondent ten (10) days within which to do so.
On April 10, 1991, respondent Administratrix wrote petitioners informing
them that the PNB had agreed to release the lots from mortgage. She
demanded payment of the balance of the purchase price. Enclosed with the
demand letter was the PNBs letter of approval dated April 8, 1991. Petitioners
demanded that respondent show the clean titles to the lots first before they pay
the balance of the purchase price. Respondent merely reiterated the demand
for payment. Petitioners stood pat on their demand.
On May 28, 1991, respondent Administratrix executed a Deed of
Rescission rescinding the MOA. In their Letter dated June 13, 1991, petitioners,
through counsel, formally demanded the production of the titles to the lots
before they pay the balance of the purchase price. The demand was ignored.
Consequently, on June 19, 1991, petitioners filed a complaint against
respondents for breach of contract, specific performance and damages before
the RTC-Bacolod City. The trial court decided the case in favor of respondents.
Petitioners filed a petition for review before the Court of Appeals. The Court of
Appeals affirmed the trial courts decision but deleted the award for moral
damages on the ground that petitioners were not guilty of bad faith in refusing
to pay the balance of the purchase price.
ISSUE:
Whether there is legal, or even a factual, ground for the rescission of the
Memorandum of Agreement.
RULING:
There is no legal basis for the rescission. The remedy of rescission under
Art. 1191 of the Civil Code is predicated on a breach of faith by the other party
that violates the reciprocity between them. The court have held in numerous
cases that the remedy does not apply to contracts to sell.
In Santos v. Court of Appeals, in a contract to sell, title remains with the
vendor and does not pass on to the vendee until the purchase price is paid in
full. Thus, in a contract to sell, the payment of the purchase price is a positive
suspensive condition. Failure to pay the price agreed upon is not a mere
breach, casual or serious, but a situation that prevents the obligation of the
vendor to convey title from acquiring an obligatory force. This is entirely
different from the situation in a contract of sale, where non-payment of the
price is a negative resolutory condition. The effects in law are not identical. In a
contract of sale, the vendor has lost ownership of the thing sold and cannot
recover it, unless the contract of sale is rescinded and set aside. In a contract to
sell, however, the vendor remains the owner for as long as the vendee has not
complied fully with the condition of paying the purchase price. If the vendor
should eject the vendee for failure to meet the condition precedent, he is
enforcing the contract and not rescinding it.
The MOA between petitioners and respondents is a conditional contract
to sell. Ownership over the lots is not to pass to the petitioners until full
payment of the purchase price. Petitioners obligation to pay, in turn, is
conditioned upon the release of the lots from mortgage with the PNB to be
secured by the respondents. Although there was no express provision regarding
reserved ownership until full payment of the purchase price, the intent of the
parties in this regard is evident from the provision that a deed of absolute sale
shall be executed only when the lots have been released from mortgage and the
balance paid by petitioners. Since ownership has not been transferred, no
further legal action need have been taken by the respondents, except an action
to recover possession in case petitioners refuse to voluntarily surrender the
lots.
The records show that the lots were finally released from
mortgage in July 1991. Petitioners have always expressed readiness to
pay the balance of the purchase price once that is achieved. Hence,
petitioners should be allowed to pay the balance now, if they so desire,
since it is established that respondents demand for them to pay in April
1991 was premature. However, petitioners may not demand production
by the respondents of the titles to the lots as a condition for their
payment. It was not required under the MOA. The MOA merely states
that petitioners shall pay the balance upon approval by the PNB of the
release of the lots from mortgage. Petitioners may not add further
conditions now. Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good
faith.
Thus, the petiotion is GRANTED, an the assailed decision is
REVERSED and SET ASIDE.
failed to comply with their obligation to acquire the lot from the Armas
family despite the full financial support of respondents. Nevertheless, the
parties maintained their business relationship under the terms and
conditions of the above-mentioned Receipt of Earnest Money.
RIGHT TO RESOLVE/RESCIND: REQUISITES
to deliver and install the remainder despite demands for him to do so.
Thus, it is petitioner who breached the contract.
The petitioner therefore, has failed to comply with his prestations
under his contract with respondent, the latter is vested by law with the
right to rescind the parties agreement, conformably with Article 1191 of
the Civil Code.
However, the right to rescind a contract for non-performance of its
stipulations is not absolute. The general rule is that rescission of a
contract will not be permitted for a slight or casual breach, but only for
such substantial and fundamental violations as would defeat the very
object of the parties in making the agreement. Contrary to petitioners
asseveration, the breach he committed cannot, by any measure, be
considered as slight or casual. For petitioners failure to make
complete delivery and installation way beyond the time stipulated
despite respondents demands, is doubtless a substantial and
fundamental breach, more so when viewed in the light of the large
amount of money respondent had to pay another contractor to complete
petitioners unfinished work.
Likewise, contrary to petitioners claim, it cannot be said that he
had no inkling whatsoever of respondents recourse to rescission. True,
the act of a party in treating a contract as cancelled or resolved on
account of infractions by the other party must be made known to the
other. In the case, however, petitioner cannot feign ignorance of
respondents intention to rescind, fully aware, as he was, of his noncompliance with what was incumbent upon him, not to mention the
several letters respondent sent to him demanding compliance with his
obligation. It is thus proper that respondent acted well within its rights
in unilaterally terminating its contract with petitioner and in entering
into a new one with a third person in order to minimize its losses,
without prior need of resorting to judicial action.
WHEREFORE, the petition is DENIED and the assailed Decision
and Resolution of the appellate court AFFIRMED.
PLDT cannot shield itself from the notice of lis pendens because all that
it had at the time of its inscription was an Agreement to Buy and Sell
with Carrascoso, which in effect is a mere contract to sell that did not
pass to it the ownership of the property. Ownership was retained by
Carrascoso which El Dorado may very well recover through its action for
rescission.
The appellate courts decision ordering the rescission of the March 23,
1972 Deed of Sale of Real Property between El Dorado and Carrascoso
being in order, mutual restitution follows to put back the parties to their
original situation prior to the consummation of the contract. Between
Carrascoso and PLDT/PLDTAC, the former acted in bad faith while the
latter acted in good faith. This is so because it was Carrascosos refusal
to pay his just debt to El Dorado that caused PLDT/PLDTAC to suffer
pecuniary losses. Therefore, Carrascoso should return to PLDT/PLDTAC
the P3,000,000.00 price of the farm plus legal interest from receipt
thereof until paid.
The exercise of the power to rescind extinguishes the obligatory
relation as if it had never been created, the extinction having a
retroactive effect. The rescission is equivalent to invalidating and
unmaking the juridical tie, leaving things in their status before the
celebration of the contract.
Where a contract is rescinded, it is the duty of the court to require
both parties to surrender that which they have respectively received and
to place each other as far as practicable in his original situation, the
rescission has the effect of abrogating the contract in all parts.
The April 6, 1977 and May 30, 1977 Deeds of Absolute Sale being
subject to the notice of lis pendens, and as the Court affirms the
declaration by the appellate court of the rescission of the Deed of Sale
executed by El Dorado in favor of Carrascoso, possession of the 1,000
hectare portion of the property should be turned over by PLDT to El
Dorado.
EFFECTS OF RESOLUTION/RESCISSION
1.
2.
3.
4.
5.
6.
7.
8.
PERLA PALMA GIL, VICENTE HIZON, JR., and ANGEL PALMA GIL
VS. HON. COURT OF APPEALS, HEIRS OF EMILIO MATULAC,
CONSTANCIO MAGLANA, AGAPITO PACETES & The REGISTER OF
DEEDS OF DAVAO CITY
G.R. No. 127206
September 12, 2003
411 SCRA 19
FACTS:
Concepcion Palma Gil, and her sister, Nieves Palma Gil, married to Angel
Villarica, were the co-owners of a parcel of commercial land with an area of 829
square meters in Davao City. The spouses Angel and Nieves Villarica had
constructed a two-storey commercial building on the property.
On October 13, 1953, Concepcion filed a complaint against her sister
Nieves with the then Court of First Instance of Davao City for specific
performance, to compel the defendant to cede and deliver to her an undivided
portion of the said property with an area of 256.2 square meters. After due
proceedings, the court rendered judgment on April 7, 1954 in favor of
Concepcion, ordering the defendant to deliver to the plaintiff an undivided
portion of the said property with an area of 256.2 square meters.
Nieves appealed to the Court of Appeals which affirmed the assailed
decision. The court issued a writ of execution. Nieves, however, refused to
execute the requisite deed in favor of her sister.
On April 27, 1956, the court issued an order authorizing ex-officio Sheriff
Eriberto Unson to execute the requisite deed of transfer to the plaintiff over an
undivided portion of the property with a total area of 256.2 square meters.
Instead of doing so, the sheriff had the property subdivided into four lots
namely, Lot 59-C-1, with an area of 218 square meters; Lot 59-C-2, with an area
of 38 square meters; Lot 59-C-3, with an area of 14 square meters; and Lot 59C-4, with an area of 560 square meters, all covered by a subdivision plan. The
sheriff thereafter executed a Deed of Transfer to Concepcion over Lot 59-C-1
and Lot 59-C-2 with a total area of 256.2 square meters.
On October 24, 1956, Concepcion executed a deed of absolute sale over
Lot 59-C-1 in favor of Iluminada Pacetes for a purchase price of P21,600.00
upon which P7,500.00 is to be paid upon signing of the contract and the
balance of P14,100.00 to be paid upon delivery of the Title. On March 16,
1966, spouses Iluminada Pacetes and Agapito Pacetes executed a deed of
absolute sale over the disputed lots in favor Constancio Maglana. And on April
22, 1980, Maglana ewecuted a deed of sale in favor of Emilio Matulac for the
purchase price of P150,000.00. And on August 4, 1959, Concepcion died,
leaving all her obligations to her heirs including the petitioners.
On June 11, 1993, the trial court rendered judgment in favor of the
defendants. The trial court ruled that this Court had affirmed, in G.R. No.
85538 and G.R. No. L-60690, the sales of the property from Concepcion Palma
ISSUE:
Whether or not the trial court erred in not declaring the sale of the
properties in question from Iluminada Pacetes to Constancio Maglana, thence,
from Constancio Maglana to Emilio Matulac NULL and VOID for there was
delay incurred by Concepcion in not delivering the Title of the subject lands to
Pacetes.
RULING:
Article 1191 in tandem with Article 1592 of the New Civil Code are
central to the issues at bar. Under the last paragraph of Article 1169 of the
New Civil Code, in reciprocal obligations, neither party incurs in delay if the
other does not comply or is not ready to comply in a proper manner with what
is incumbent upon him.
From the moment one of the parties fulfills his obligation, delay in the
other begins. Thus, reciprocal obligations are to be performed simultaneously
so that the performance of one is conditioned upon the simultaneous fulfillment
of the other. The right of rescission of a party to an obligation under Article
1191 of the New Civil Code is predicated on a breach of faith by the other party
that violates the reciprocity between them.
The petitioners therefore, as successors-in-interest of the vendor, are not
the injured parties entitled to a rescission of the deed of absolute sale. It was
Concepcions heirs, including the petitioners, who were obliged to deliver to the
vendee a certificate of title over the property under the latters name, free from
all liens and encumbrances within 120 days from the execution of the deed of
absolute sale on October 24, 1956, but had failed to comply with the obligation.
Furthermore, the consignation by the vendee of the purchase price of the
property is sufficient to defeat the right of the petitioners to demand for a
rescission of the said deed of absolute sale.
The petition for review was denied for lack of merit.
EFFECTS OF RESOLUTION/RESCISSION
ISSUE:
Whether or not the trial courts September 6, 1984 judgment ordering
the rescission of the deed of absolute sale with partial assumption of mortgage
executed by petitioners and respondents is proper.
RULING:
YES. The payment by Emilio of the redemption price to the GSIS was
made pending appeal by the respondents from the trial courts order and
concealed said payment to petitioners. The respondents appealed the decision
before the CA which was subsequently dismissed for failure to pay the requisite
docket fees. Neither did respondents file any motion for reconsideration for the
dismissal of the appeal. Consequently, the trial courts decision became final
and executory.
With the rescission of the deed of sale, the rights of Emilio Geli under
said deed to redeem the property had been extinguished. The petitioners
cannot even be compelled to subrogate the respondents to their right under the
real estate mortgage over the property which the petitioners executed in favor
of GSIS since the payment of the redemption price was made without the
knowledge of the petitioners. The respondents, however, are entitled to be
reimbursed by the petitioners to the extent that the latter were benefited.
In sum, respondents are obliged to vacate the subject property. The
decision of the CA is reversed and set aside. The petitioners are obliged to
return the amount of P67,701.04 to be deducted from the amount due the
petitioners under said trial courts decision.
EFFECTS OF RESOLUTION/RESCISSION
REYES VS. LIM
G. R. No. 134241
August 11, 2003
408 SCRA 560
FACTS:
Petitioner David Reyes, as seller, and Jose Lim, as buyer, entered into a
contract to sell a parcel of land located along F.B. Harrison Street, Pasay City
on November 7, 1994. Harrison Lumber occupied the property as lessee with a
ordered to deposit the P10 million down payment with the cashier of the trial
court and the court granted this motion.
The trial court denied Reyes motion to set aside the order dated March
6, 1997. On October 3, 1997, the court denied Reyes motion for
reconsideration and ordered Reyes to deposit the P10 million down payment on
or before October 30, 1997. Reyes file a petition for certiorari with the Court of
Appeals but the appellate court dismissed the petition for lack of merit.
ISSUE:
Whether or not the petitioner should deposit the P10 million down
payment to the custody of the trial court as an effect of rescission of the
Contract to Sell
RULING:
The Supreme Court held that an action for rescission could prosper only
if the party demanding rescission can return whatever he may be obliged to
restore should the court grant the rescission. The trial court in the exercise of
its equity jurisdiction may validly order the deposit of P10 million down
payment in court. The purpose of the exercise of equity jurisdiction in this case
is to prevent unjust enrichment and to ensure restitution. Reyes is seeking
rescission of the Contract to Sell.
To subscribe top Reyes contention will unjustly enrich Reyes at the
expense of Lim. Reyes sold to Line One Foods Corporation the property. Reyes
cannot claim ownership of the P10 million down payment because Reyes had
already sold to another buyer the property for which Lim made the down
payment. The Supreme Court find the equities weigh heavily in favor of Lim,
who paid the P10 million down payment in good faith only to discover later that
Reyes had subsequently sold the property to another buyer.
Hence, the appealed decision of the appellate court is affirmed and the
petition is dismissed.
EFFECTS OF RESOLUTION/RESCISSION
ISSUE:
Whether Court of Appeals erred in ruling that the Pre-Subscription
Agreement of the parties may be rescinded under Article 1191 of the New Civil
Code.
RULING:
No. The Court of Appeals did not err in ruling that the "Pre-Subscription
Agreement" of the parties dated August 15, 1994 may be rescinded under
Article 1191 of the New Civil Code.The Ongs illustrate reciprocity in the
following manner: In a contract of sale, the correlative duty of the obligation of
the seller to deliver the property is the obligation of the buyer to pay the agreed
price. In
the case at bar, the correlative obligation of the Tius to let the Ongs have and
exercise the functions of the positions of President and Secretary is the
obligation of the Ongs to let the Tius have and exercise the functions of VicePresident and Treasurer. Moreover, the Ongs are now estopped from denying
the applicability of Art. 1191 to the present controversy. the Ongs allege that
rescission is applicable only to reciprocal obligations and the "Pre-Subscription
Agreement" does not provide for reciprocity, hence, the remedy of rescission is
not available.
The Ongs cited the case of Songcuan vs. IAC, to illustrate their point
that "As in the Songcuan case, there are here two (2) separate and distinct
obligations each independent of the other the obligation to subscribe to, and to
pay, 50% of the increased capital stock of FLADC; and the obligation to install
the Ongs and the Tius as members of the Board of Directors and to certain
corporate positions, but only after the Ongs and the Tius have subscribed each
to 50% of the increased capital stock of FLADC." In this petition, in lieu of Art.
1191, the Ongs invoke Articles 1156 and 1159 of the New Civil Code which
state
"Art. 1156. An obligation is a juridical necessity to give, to do or not to do.
"Art. 1159. Obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith."
and that should there be any violation, those who failed to fulfill their
obligations should be required to perform their obligations under the
agreement.Contrary to the Ongs' assertion, the Songcuan case does not apply
squarely to this case.
In the Songcuan case, the Court ruled that Art. 1191 to rescind the right
of the Alviars to repurchase does not apply because their corresponding
obligations can hardly be called reciprocal because the obligation of the Alviars
to lease to Songcuan the subject premise arises only after the latter had
reconveyed the realties to them. On the other hand, in the instant case, the
obligations of the two (2) groups to pay 50% of the increased capital stock of
FLADC and to install them as members of the Board of Directors and to certain
corporate positions are simultaneous and arise upon the execution of the presubscription agreement.
The Ongs illustrate reciprocity in the following manner: In a contract of
sale, the correlative duty of the obligation of the seller to deliver the property is
the obligation of the buyer to pay the agreed price. In the case at bar, the
correlative obligation of the Tius to let the Ongs have and exercise the functions
of the positions of President and Secretary is the obligation of the Ongs to let
the Tius have and exercise the functions of Vice-President and Treasurer.
EFFECTS OF RESOLUTION/RESCISSION
EQUATORIAL REALTY DEVELOPMENT, INC. VS. MAYFAIR THEATER,
INC.
GR No. 133879
November 21, 2001
FACTS:
In June 1967, Carmelo & Bauerman, Inc. entered into a Contract of Lease
with Mayfair Theater for a parcel of land with 2-storey building for 20 years.
Two years later in March, 1969, Carmelo entered into a second Contract with
Mayfair for another portion of the property also for 20 years. In both contracts,
Mayfair was given the right-of-first refusal to purchase the properties. However,
on July 30, 1978, within the 20-year period, Carmelo sold the same properties
to Equatorial for P11,300,000.
Mayfair sued Equatorial for specific
performance and annulment of the Deed of Absolute Sate with Carmelo. The
trial court ruled in favor of Mayfair but was reversed by the CA. The Supreme
Court, however, upheld the trial court, for which Mayfair filed a motion for
execution. The Deed of Absolute Sale was rescinded and the lot was registered
in the name of Mayfair.
Is the right of first refusal granted to Mayfair through the lease contracts
with Carmelo superior to that of Equatorial, and therefore a bar to the
consummation of the Deed of Absolute Sale between Carmelo and
Equatorial?
RULING:
1.
No. Equatorial did not obtain right of ownership over the property
when it entered into the Deed of Absolute Sale. Ownership of the property
which the buyer acquires only upon the delivery of the thing to him. There is
delivery if the thing sold is placed in the control and possession of the vendee.
While the execution of a public instrument of sale is recognized by law as the
equivalent of delivery of the thing sold, such constructive or symbolic delivery,
being only presumptive, is deemed negated by the failure of the vendee to take
actual possession of the property sold. Since Mayfair was in actual possession
of the property by virtue of the lease contract with Carmelo, there was no
consummation of the sale, and therefore, Equatorial did not get ownership right
(real right).
2.
The Deed of Absolute Sale entered into by Carmelo and Equatorial
was a violation of the right of first refusal granted by Carmelo to Mayfair. The
execution of the deed of absolute sale as a form of constructive delivery is a
legal fiction. It holds true only if there is no legal impediment that may prevent
the passing of the property from the vendor to the vendee. The right of first
refusal held by Mayfair was such legal impediment. Therefore, there was no
transfer of ownership from Camelot to Equatorial.
Dissenting opinion:
The Deed of Absolute Sale was deemed a rescissible contract and should
remain valid until rescinded. Since the Deed was not actually rescinded in the
decision of the mother case, then it was valid until it is rescinded in a proper
court decision. Since there was no actual rescission of the contract, then
Equatorial was deemed the own of the property from the signing of the Deed to
the time the property was legally transferred to Mayfair.
EFFECTS OF RESOLUTION/RESCISSION
Spouses MARIANO Z. VELARDE and AVELINA D. VELARDE
VS. COURT OF APPEALS, DAVID A. RAYMUNDO and GEORGE
RAYMUNDO
2001 Jul 11
G.R. No. 108346
FACTS:
David Raymundo is the absolute and registered owner of a parcel of land,
together with the house and other improvements thereon, located at 1918
Kamias St., Dasmarias Village, Makati and covered by TCT No. 142177.
Defendant George Raymundo is Davids father who negotiated with plaintiffs
Avelina and Mariano Velarde for the sale of said property, which was, however,
under lease.
On August 8, 1986, a Deed of Sale with Assumption of Mortgage was
executed by defendant David Raymundo, as vendor, in favor of plaintiff Avelina
Velarde, as vendee, with terms and conditions one of which is:
That as part of the consideration of this sale, the VENDEE hereby assumes to
pay the mortgage obligations on the property herein sold in the amount of ONE
MILLION EIGHT HUNDRED THOUSAND PESOS (P1,800,000.00), Philippine
currency, in favor of Bank of the Philippine Islands, in the name of the
VENDOR, and further agrees to strictly and faithfully comply with all the terms
and conditions appearing in the Real Estate Mortgage signed and executed by
the VENDOR in favor of BPI, including interests and other charges for late
payment levied by the Bank, as if the same were originally signed and executed
by the VENDEE.
The Vendee herby agreed that until such time as her assumption of the
mortgage obligations on the property purchased is approved by the mortgagee
bank, the Bank of the Philippine Islands, she shall continue to pay the said loan
in accordance with the terms and conditions of the Deed of Real Estate
Mortgage in the name of Mr. David A. Raymundo, the original Mortgagor. And
further agrees That, in the event there is violation in any of the terms and
conditions of the said Deed of Real Estate Mortgage, that the downpayment of
P800,000.00, plus all payments made with the Bank of the Philippine Islands on
the mortgage loan, shall be forfeited in favor of Mr. David A. Raymundo, as and
by way of liquidated damages, without necessity of notice or any judicial
declaration to that effect, and Mr. David A Raymundo shall resume total and
complete ownership and possession of the property sold by way of Deed of Sale
with Assumption of Mortgage, and the same shall be deemed automatically
cancelled and be of no further force or effect, in the same manner as if (the)
same had never been executed or entered into.
Plaintiffs were advised that the Application for Assumption of Mortgage
with BPI was not approved. This prompted plaintiffs not to make any further
payment. Defendants, thru counsel, wrote plaintiffs informing the latter that
their non-payment to the mortgage bank constituted non-performance of their
obligation
Plaintiffs, thru counsel, responded, that they are willing to pay the
balance in cash not later than January 21, 1987 provided: (a) there is deliver
actual possession of the property to her not later than January 15, 1987 for her
immediate occupancy; (b) defendant cause the release of title and mortgage
from the Bank of P.I. and make the title available and free from any liens and
encumbrances; and (c) defendant must execute an absolute deed of sale in
plaintiffs favor free from any liens or encumbrances not later than January 21,
1987.
On January 8, 1987, defendants sent plaintiffs a notarial notice of
cancellation/rescission of the intended sale of the subject property allegedly
due to the latters failure to comply with the terms and conditions of the Deed
of Sale with Assumption of Mortgage
ISSUE:
Whether or not rescission should be granted in the case at bar.
RULING:
The right of rescission of a party to an obligation under Article 1191 of
the Civil Code is predicated on a breach of faith by the other party who violates
the reciprocity between them. The breach contemplated in the said provision is
the obligors failure to comply with an existing obligation. When the obligor
cannot comply with what is incumbent upon it, the obligee may seek rescission
and, in the absence of any just cause for the court to determine the period of
compliance, the court shall decree the rescission.
In the present case, private respondents validly exercised their right to
rescind the contract, because of the failure of petitioners to comply with their
obligation to pay the balance of the purchase price. Indubitably, the latter
violated the very essence of reciprocity in the contract of sale, a violation that
consequently gave rise to private respondents right to rescind the same in
accordance with law.
True, petitioners expressed their willingness to pay the balance of the
purchase price one month after it became due; however, this was not equivalent
to actual payment as would constitute a faithful compliance of their reciprocal
obligation. Moreover, the offer to pay was conditioned on the performance by
private respondents of additional burdens that had not been agreed upon in the
original contract. Thus, it cannot be said that the breach committed by
petitioners was merely slight or casual as would preclude the exercise of the
right to rescind.
In the instant case, the breach committed did not merely consist of a
slight delay in payment or an irregularity; such breach would not normally
defeat the intention of the parties to the contract. Here, petitioners not only
failed to pay the P1.8 million balance, but they also imposed upon private
respondents new obligations as preconditions to the performance of their own
obligation. In effect, the qualified offer to pay was a repudiation of an existing
obligation, which was legally due and demandable under the contract of sale.
Hence, private respondents were left with the legal option of seeking rescission
to protect their own interest.
EFFECTS OF RESOLUTION/RESCISSION
ASUNCION VS. EVANGELISTA
G.R. No. 133491
October 13, 1999
316 SCRA 848
FACTS:
Private respondent has been operating a piggery since 1970, which was
under the trade name of Embassy Farms. In 1981, private respondents wife,
together with three others, organized Embassy Farms, Inc. and registered it
with the Securirties and Exchange Commission. Private respondent was the
majority stockholder of the corporation, president and chief executive officer.
On September 9, 1980, he borrowed P500,000.00 from Paluwagan ng Bayan
Savings and Loan Association to use as working capital for the farm. He
executed a real estate mortgage on three of his properties as security for the
loan. On November 4, 1981, he mortgaged ten titles more in favor of PAIC
Savings and Mortgage Bank as security for another loan in the amount of
P1,712,000.00. On February 16, 1982, he obtained another loan in the amount
of P844,625.78 from Mercator Finance Corporation. It was secured by a real
estate mortgage on five other landholdings of private respondent, all situated in
Bulacan.
However, he defaulted in his loan payments. By June 1984, private
respondent debt had ballooned to almost six million pesos in overdue principal
payments, interests, penalties and other financial charges. On August 2, 1984,
petitioner and private respondent executed a Memorandum of Agreement that
states that petitioner will pay all of the loans of respondent provided that the
latter will transfer the title of the farm and properties, which were mortgaged
in favor of the petitioner.
The petitioner was able to pay partially the loans of respondent from the
three creditors as compliance to the MOA. For his part, private respondent was
obligated under the MOA to execute, sign, and deliver any and all documents
necessary for the transfer and conveyance of the mortgaged properties as well
as of the farm. However, more than a year after signing the MOA, the
landholdings of the respondent still remained titled in his name. Neither did he
inform said mortgages of the transfer of his lands.
On April 10, 1986, petitioner filed in the RTC a compliant for rescission of
the MOA with a prayer for damages. The trial court ruled in favor of the private
respondent. On July 12, 1994, a copy of the decision of the trial court was sent
by registered mail to petitioners counsel however, unknown to petitioner, his
counsel died while the case was pending. On February 2, 1998, CA affirmed the
decision of the trial court and ordered its immediate execution. Petitioners
motion for reconsideration was likewise denied.
ISSUE:
Whether or not rescission of the MOA is a valid remedy for the petitioner.
RULING:
Yes. Article 1191 of the Civil Code governs the situation where there is
non-compliance by one party in case of reciprocal obligations.
The Supreme Court found that private respondent failed to perform his
substantial obligations under the MOA. Hence, petitioner sought the rescission
of the agreement and ceased infusing capital into the piggery business of
private respondent. He later justified his refusal to execute any deed of sale
and deliver the certificates of stock by accusing petitioner of having failed to
assume his debts.
The Court holds that the respondents insistence that petitioner execute a
formal assumption of mortgage independent and separate from his own
execution of a deed of cases is legally untenable, considering that a recorded
real estate mortgage is a lien inseparable from the property mortgaged and
until discharged, it follows the property.
The Court holds, in fine, that the MOA entered into by petitioner and
private respondent should indeed be rescinded. The respondent appellate court
erred in assessing damages against petitioner for his refusal to fully pay private
respondents overdue loans. Such refusal was justified, considering that private
respondent was the first to refuse to deliver to petitioner the lands and
certificates of stock that were the consideration for the almost 6M in debt that
petitioner was to assume and pay.
The effect of rescission is also provided in Article 1385 of the Civil Code.
The instant petition was granted. Decisions of the lower and appellate
courts were reversed and set aside. The MOA entered into by the parties is
declared rescinded.
EFFECTS OF RESOLUTION/RESCISSION
FACTS:
Petitioners William Uy and Rodel Roxas are agents authorized to sell
eight (8) parcels of land by the owners thereof. By virtue of such authority,
petitioners offered to sell the lands, located in Tuba, Tadiangan, Benguet to
respondent National Housing Authority (NHA) to be utilized and developed as a
housing project.
On February 14, 1989, NHA approved the acquisition of the said parcels
of land with an area of 31.8231 hectares at the cost of P23.867 million,
pursuant to which the parties executed a series of Deeds of Absolute Sale
covering the subject lands. Of the eight parcels of lands, however, only five
were paid for by the NHA because of the report it received from the Land
Geosciences Bureau of the Department of Environment and Natural Resources
that the remaining area is located at an active landslide area and therefore, not
suitable for development into a housing project. NHA eventually cancelled the
sale over the remaining three (3) parcels of land.
On March 9, 1992, petitioners filed a complaint for damages. After trial,
the RTC of Quezon City rendered the cancellation of contract to be justified and
awarded P1.255 million as damages in favor of petitioners.
Upon appeal by petitioners, the Court of Appeals reversed the decision
and entered a new one dismissing the complaint including the award of
damages.
The motion for reconsideration having been denied, petitioners seek
relief from this court contending, inter alia, that the CA erred in declaring that
NHA had any legal basis to rescind the subject sale.
ISSUE:
Whether or not the contention of petitioner is correct.
RULING:
NO. Petitioners confuse the cancellation of the contract by the NHA as a
rescission of the contract under Article 1191 of the Civil Code. The right to
rescission is predicated on a breach of faith by the other party that violates the
reciprocity between them. The power to rescind is given to the injured party.
In this case, the NHA did not rescind the contract. Indeed, it did not have the
right to do so for the other parties to the contract, the vendors did not commit
any breach of their obligation. The NHA did not suffer any injury. The
cancellation was not therefore a rescission under Article 1191. Rather, it was
based on the negation of the cause arising from the realization that the lands,
which were the objects of the sale, were not suitable for housing.
KINDS OF DAMAGES:
1.
2.
3.
Joson, Jr. Petitioner and its driver were held liable jointly and severally for
damages as follows: a. P50,000.00 as death indemnity; b. P88,339.00 for
actual damages; c. P200,000.00 for moral damages;
d. P50,000.00 as
exemplary damages; e. thirty percent (30%) as attorneys fees of whatever
amount that can be collected by the plaintiff; and f. the costs of the suit.
On appeal, the decision was affirmed by the Court of Appeals, with the
modification that the award of attorneys fees was fixed at P50,000.00.
ISSUES:
1. Whether or not the CA erred in affirming the appealed decision of the
RTC granting P200,000.00 as moral damages which is double the P100,000.00
as prayed for by the private respondents in their complaint and in granting
actual damages not supported by official receipts and spent way beyond the
burial of the deceased victim.
2. Whether or not the affirmation by the CA of the appealed decision of
the RTC granting the award of moral and exemplary damages and attorneys
fees which were not proved and considering that there is no finding of bad faith
and gross negligence on the part of the petitioner was not established, is in
accord with law and jurisprudence.
RULING:
The Court found the appealed decision to be in order.
Article 2176 provides: Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual relation between
the parties, is called a quasi-delict and is governed by the provisions of this
Chapter. Article 2180 provides for the solidary liability of an employer for the
quasi-delict committed by an employee. The responsibility of employers for the
negligence of their employees in the performance of their duties is primary and,
therefore, the injured party may recover from the employers directly, regardless
of the solvency of their employees.
Employers may be relieved of responsibility for the negligent acts of their
employees acting within the scope of their assigned task only if they can show
that "they observed all the diligence of a good father of a family to prevent
damage." For this purpose, they have the burden of proving that they have
indeed exercised such diligence, both in the selection of the employee and in
the supervision of the performance of his duties.
EFFECTS OF RESOLUTION/RESCISSION
GOVERNMENT SERVICE INSURANCE SYSTEM
VS. SPOUSES GONZALO and MATILDE LABUNG-DEANG
G.R. No. 135644
September 17, 2001
365 SCRA 341
FACTS:
Sometime in December 1969, the spouses Deang obtained a housing loan
from the GSIS in the amount of eight thousand five hundred pesos (P8,500.00).
Under the agreement, the loan was to mature on December 23, 1979. The loan
was secured by a real estate mortgage constituted over the spouses property.
As required by the mortgage deed, the spouses Daeng deposited the owners
duplicate copy of the title with the GSIS.
On January 19, 1979, eleven (11) months before the maturity of the loan,
the spouses Deang settled their debt with the GSIS and requested for the
release of the owners duplicate copy of the title since they intended to secure a
loan from a private lender and use the land covered by it as collateral security
for the loan of fifty thousand pesos (P50,000.00) which they applied for with
one Milagros Runes. They would use the proceeds of the loan applied for the
renovation of the spouses residential house and for business. However,
personnel of the GSIS were not able to release the owners duplicate of the title
as it could not be found despite diligent search.
Satisfied that the owners duplicate copy of the title was really lost, in
1979, GSIS commenced the reconstitution proceedings with the Court of First
Instance of Pampanga for the issuance of a new owners copy of the same.
On June 22, 1979, GSIS issued a certificate of release of mortgage. On
June 26, 1979, after the completion of judicial proceedings, GSIS finally secured
and released the reconstituted copy of the owners duplicate of Transfer
Certificate of Title No. 14926-R to the spouses Deang.
On July 6, 1979, the spouses Deang filed with the Court of First Instance,
Angeles City a complaint against GSIS for damages, claiming that as result of
the delay in releasing the duplicate copy of the owners title, they were unable
to secure a loan from Milagros Runes, the proceeds of which could have been
used in defraying the estimated cost of the renovation of their residential house
and which could have been invested in some profitable business undertaking.
The trial court rendered decision in favor of the spouses Labung-Deang.
The Court of Appeals also affirmed the decision of the lower court.
ISSUE:
Whether or not GSIS is liable for damages.
RULING:
Under the facts, there was a pre-existing contract between the parties.
GSIS and the spouses Deang had a loan agreement secured by a real estate
mortgage. The duty to return the owners duplicate copy of title arose as soon
as the mortgage was released. Negligence is obvious as the owners duplicate
copy could not be returned to the owners. Thus, GSIS is liable for damages.
On the other hand, it is also apparent that the spouses Deang suffered
financial damage because of the loss of the owners duplicate copy of the title.
Temperate damages may be granted on the amount of P20, 000.00 as a
reasonable amount considering that GSIS spent for the reconstitution of the
owners duplicate copy of the title.
Wherefore the petition is denied.
EFFECTS OF RESOLUTION/RESCISSION
BPI INVESTMENT CORPORATION, petitioner,
VS. D. G. CARREON COMMERCIAL CORPORATION, DANIEL G.
CARREON, AURORA J. CARREON, AND JOSEFA M. JECIEL, respondents
2001 Nov 29
371 SCRA 58
FACTS:
Petitioner BPI Investment Corporation (BPI Investments), formerly
known as Ayala Investment and Development Corporation, was engaged in
money market operations. Respondent D. G. Commercial Corporation was a
client of petitioner and started its money market placements in September,
1978. The individual respondents, spouses Daniel and Aurora Carreon and
Josefa M. Jeceil also placed with BPI Investments their personal money in
money market placements.
notice. And since the complaint was filed only in 1997, more than four (4) years
after registration, the action is thereby barred by prescription.
ISSUES:
Whether or not the action for the rescission of the deed of donation has
prescribed, and whether or not accion pauliana/ rescission of the deed of
donation is proper.
RULING:
NO for the first issue. Although the Civil Code provides that The action
to claim rescission must be commenced within four (4) years is silent as to
where the prescriptive period would commence, the general rule is such shall
be reckoned from the moment the cause of action accrues; i.e., the legal
possibility of bringing the action.
Since accion pauliana is an action of last resort after all other legal
remedies have been exhausted and have been proven futile, in the case at bar,
it was only in February 25, 1997, barely a month from discovering that
petitioner Khe Hong Cheng had no other property to satisfy the judgment
award against him that the action for rescission accrued. So the contention of
Khe Hong Cheng that the action accrued from the time of the constructive
notice; i.e., December 27, 1989, the date that the deed of donation was
registered, is untenable.
YES for the second issue. For an accion pauliana to accrue, the
following requisites must concur: first, the plaintiff asking for rescission has a
credit prior to the alienation, although demandable late. Second, that the
debtor has made a subsequent contract conveying a patrimonial benefit to a
third person. Third, that the creditor has no other legal remedy to satisfy his
claim; but would benefit by rescission of the conveyance to the third person.
Fourth, that the act being impugned is fraudulent, and fifth, that the third
person who received the property conveyed, if by onerous title, has been an
accomplice in the fraud. All the above enumerated elements are presents in the
case at bar.
3.
the articles pledged with it and could not be made liable for an event
that is fortuitous.
After trial ,the RTC rendered its Decision dismissing respondents
complaint as well as petitioners counterclaim. The RTC held that
robbery is a fortuitous event which exempts the victim from liability for
the loss and under Art. 1174 of the Civil Code. It further held that the
corresponding diligence required of a pawnshop is that it should take
steps to secure and protect the pledged items and should take steps to
insure itself against the loss of articles which are entrusted to its
custody as it derives earnings from the pawnshop trade which petitioners
failed to do and that robberies and hold-ups are foreseeable risks in that
those engaged in the pawnshop business are expected to foresee.
ISSUE:
Whether petitioners are liable for the loss of the pawned articles
in their possession.
RULING:
Fortuitous events by definition are extraordinary events not
foreseeable or avoidable. It is therefore, not enough that the event
should not have been foreseen or anticipated, as is commonly believed
but it must be one impossible to foresee or to avoid. The mere difficulty
to foresee the happening is not impossibility to foresee the same.
To constitute a fortuitous event, the following elements must
concur: (a) the cause of the unforeseen and unexpected occurrence or of
the failure of the debtor to comply with obligations must be independent
of human will; (b) it must be impossible to foresee the event that
constitutes the caso fortuito or, if it can be foreseen, it must be
impossible to avoid; (c) the occurrence must be such as to render it
impossible for the debtor to fulfill obligations in a normal manner; and,
(d) the obligor must be free from any participation in the aggravation of
the injury or loss.
The burden of proving that the loss was due to a fortuitous event
rests on him who invokes it. And, in order for a fortuitous event to
exempt one from liability, it is necessary that one has committed no
negligence or misconduct that may have occasioned the loss.
It has been held that an act of God cannot be invoked to protect a
person who has failed to take steps to forestall the possible adverse
consequences of such a loss. One's negligence may have concurred with
an act of God in producing damage and injury to another; nonetheless,
showing that the immediate or proximate cause of the damage or injury
was a fortuitous event would not exempt one from liability. When the
effect is found to be partly the result of a person's participation -whether by active intervention, neglect or failure to act -- the whole
occurrence is humanized and removed from the rules applicable to acts
of God.
Petitioner Sicam had testified that there was a security guard in
their pawnshop at the time of the robbery and that when he started the
pawnshop business in 1983, he thought of opening a vault with the
nearby bank for the purpose of safekeeping the valuables but was
discouraged by the Central Bank since pawned articles should only be
stored in a vault inside the pawnshop. The very measures which
petitioners had allegedly adopted show that to them the possibility of
robbery was not only foreseeable, but actually foreseen and anticipated.
The testimony, in effect, contradicts petitioners defense of fortuitous
event. Moreover, petitioners failed to show that they were free from any
negligence by which the loss of the pawned jewelry may have been
occasioned.
Robbery per se, just like carnapping, is not a fortuitous event. It
does not foreclose the possibility of negligence on the part of herein
petitioners. The presentation of the police report of the Paraaque Police
Station on the robbery committed based on the report of petitioners'
employees is not sufficient to establish robbery. Such report also does
not prove that petitioners were not at fault. Also, the robbery in this case
took place in 1987 when robbery was already prevalent and petitioners
in fact had already foreseen it as they wanted to deposit the pawn with a
termination of the lease, the ownership and title to the building thus
constructed on the said lots would automatically transfer to the lessor, even
without any implementing document therefor. Real estate taxes on the land
would be borne by the lessor while that on the building, by the lessee, but the
latter was authorized to advance the money needed to meet the lessors'
obligations such as the payment of real estate taxes on their lots. The lessors
would deduct from the monthly rental due all such advances made by the
lessee.
The construction of the building was not met on the date agreed upon
due to the assassination of the then Senator Benigno Aquino Jr. It was claimed
that increase in the value of the materials was a fortuitous event, which the
lower courts did not consider as such.
ISSUE:
Whether or not the assassination of Senator Benigno Aquino Jr., which
caused inflation, was a fortuitous event.
RULING:
The Supreme Court found no merit in petitioners submission that the
assassination of the late Senator Benigno Aquino, Jr. was a fortuitous event that
justified a modification of the terms of the lease contract.
A fortuitous event is that which could not be foreseen, or which even if
foreseen, was inevitable. To exempt the obligor from liability for a breach of an
obligation due to an "act of God", the following requisites must concur: (a) the
cause of the breach of the obligation must be independent of the will of the
debtor; (b) the event must be either unforeseeable or unavoidable; (c) the event
must be such as to render it impossible for the debtor to fulfill his obligation in
a normal manner; and (d) the debtor must be free from any participation in, or
aggravation of the injury to the creditor.
In the case under scrutiny, the assassination of Senator Aquino may
indeed be considered a fortuitous event. However, the said incident per se
could not have caused the delay in the construction of the building. What might
have caused the delay was the resulting escalation of prices of commodities
including construction materials. Be that as it may, there is no merit in
Huibonhoa's argument that the inflation borne by the Filipinos in 1983 justified
the delayed accrual of monthly rental, the reduction of its amount and the
extension of the lease by three (3) years.
Civil Code, so that the parties could be restored to their status prior to the
execution of the lease contract.
Third, the event must be such as to render it impossible for the debtor to fulfill
his obligation in a normal manner. And fourth, the debtor must be free from
any participation in, or aggravation of, the injury to the creditor. In this case,
all the mentioned requisites are present.
2. NO. The fortuitous event that happened in this case could not warrant a
termination of the service contract; but rather, it only temporarily suspends the
performance of the obligation. The unilateral termination therefore shifted on
petitioners part when it unreasonably refused to continue its services.
registration of his car and the request was graciously attended to. Afterwards,
respondent rode on the car of petitioner with petitioners driver to the office of
the provincial commander. Along the way, some mischievous boys stoned the
car and its windshield was broken. Respondent chased and was able to catch
one of the boys and took him to petitioner. The petitioner, however, did not file
charges against the boy and his parents because the stone throwing was merely
accidental and due to force majeure. Respondent refused to pay the windshield
himself, even after petitioner tried to settle and even asked respondents wife to
convince her husband, since the same due to force majeure.
Petitioner prevailed in the trial court.
was filed.
ISSUE:
Whether or not the respondent is liable for the broken windshield of
petitioners car.
RULING:
The damage to the windshield caused by the mischievous boys was a
fortuitous event resulting in a loss, which must be borne by the owner of the
car.
Article 1174 of the Civil Code provides that if the nature of the obligation
requires the assumption risk, compels the conclusion that in the absence of a
legal provision or an express covenant, no one should be held to account for
fortuitous cases.
Where the risk is quite evident such that the possibility of danger is not
only foreseeable, but also actually foreseen, then it could be said that the
nature of the obligation is such that a party could rightfully be deemed to have
assumed it. It is not enough therefore that the event should not have been
foreseen or anticipated, but it must be one impossible to foresee or to avoid in
order that a party may be said to have assumed the risk resulting from the
nature of the obligation itself.
In the case, there is no assumption of risk by the borrower of a car to
respond to damages for the broken windshield caused by an accidental stonethrowing incident by boys playing along the road. Decision reversed as to the
liability of respondent.
EFFECTS OF FORTUITOUS EVENT UPON OBLIGATIONS
Bachelor Express vs CA
GR. NO. 85691, July 31, 1990
FACTS:
On 1 August 1980, Bus 800, owned by Bachelor Express, Inc. and
driven by Cresencio Rivera, came from Davao City on its way to Cagayan
de Oro City passing Butuan City. While at Tabon-Tabon, Butuan City, the
bus picked up a passenger. About 15 minutes later, a passenger at the
rear portion suddenly stabbed a PC soldier which caused commotion and
panic among the passengers. When the bus stopped, passengers
Ornominio Beter and Narcisa Rautraut were found lying down the road,
the former already dead as a result of head injuries and the latter also
suffering from severe injuries which caused her death later. The
passenger-assailant alighted from the bus and ran toward the bushes but
was killed by the police.
Thereafter, the heirs of Ornomino Beter and Narcisa Rautraut
(Ricardo Beter and Sergia Beter are the parents of Ornominio while
Teofilo Rautraut and Zotera Rautraut are the parents of Narcisa) filed a
complaint for sum of money against Bachelor Express, its alleged
owner Samson Yasay, and the driver Rivera. After due trial, the trial
court issued an order dated 8 August 1985 dismissing the complaint. The
CA however reversed the RTC decision.
ISSUES:
1. Whether or not the case at bar is within the context of force
majeure.
2. Should the petitioner be absolved from liability for the death of
its passengers?
RULING:
captain already knew that they were within the typhoon zone and despite the
fact that they were kept posted about the weather conditions. They failed to
exercise that extraordinary diligence required from them, explicitly mandated
by the law, for the safety of the passengers.
EFFECTS OF FORTUITOUS EVENT UPON OBLIGATIONS
YOBIDO VS. COURT OF APPEALS
281 SCRA 01
G.R. No. 113003
Oct. 17, 1997
FACTS:
On April 26, 1988, spouses Tito and Leny Tumboy and their minor
children named Ardee and Jasmin, boarded at Mangagoy , Surigao Del Sur, a
Yobido Liner bus bound for Davao City. Along Picop Road in Km. 17, Sta.Maria,
Agusan del Sur, the left front tire of the bus exploded. The bus fell into a ravine
around three (3) feet from the road and struck a tree. The incident resulted in
the death of 28-year-old Tito Tumboy and physical injuries to other passengers.
On Nov. 21, 1988, a complaint for breach of contract of carriage, damages and
attorneys fees was filed by Leny and her children against Alberta Yobido, the
owner of the bus, and Cresencio Yobido, its driver, before the Regional Trial
Court of Davao City. When the defendants therein filed their answer to the
complaint, they raised the affirmative defense of caso fortuito. They also filed a
third-party complaint against Philippine Surety and Insurance, Inc. This thirdparty defendant filed an answer with compulsory counterclaim. At the pre-trial
conference, the parties agreed to a stipulation of facts.
On August 29, 1991, the lower court rendered a decision dismissing the
action for lack of merit. On the issue of whether or not the tire blowout was a
caso fortuito, it found that the falling of the bus to the cliff was a result of no
other outside factor than the tire bolw-out. It held that the ruling in the La
Mallorca and Pampanga Bus Co. v. De Jesus that a tire blowout is a mechanical
defect of the conveyance or a fault in its equipment which was easily
discoverable if the bus had been subjected to a more thorough or rigid check-up
before it took to the road that morning is inapplicable to this case. It reasoned
out that in said case. It reasoned out that in said case, it was found that the
blowout was caused by the established fact that the inner tube of the left front
tire was pressed between the inner circle of the left wheel and the rim which
had slipped out of the left wheel . In this case, however, the cause of the
explosion remains a mystery until at present. As such, the court added, the
he found that he had a lacerated wound on his right palm and injuries on his
left arm, right thigh and on his back. Because of his shock and injuries, he
went back to Danao City but on the way, he discovered that his "Omega" wrist
watch was lost. Upon his arrival in Danao City, he immediately entered the
Danao City Hospital to attend to his injuries, and also requested his father-inlaw to proceed immediately to the place of the accident and look for the watch.
In spite of the efforts of his father-in-law, the wrist watch could no longer be
found.
ISSUE:
Whether or not the accident that happened was due to a fortuitous event,
thereby, absolving the respondents from any obligation.
RULING:
NO. The accident was not due to a fortuitous event. There are specific
acts of negligence on the part of the respondents. The passenger jeepney
turned turtle and jumped into a ditch immediately after its right rear tire
exploded. It was running at a very high speed before the accident and was
overloaded. The petitioner stated that there were three (3) passengers in the
front seat and fourteen (14) passengers in the rear.
While the tire that blew-up was still good because the grooves were still
visible, this does not make the explosion of the tire a fortuitous event. No
evidence was presented to show that the accident was due to adverse road
conditions or that precautions were taken by the jeepney driver to avert
possible accidents. The blowing-up of the tire, therefore, could have been
caused by too much air pressure and aggravated by the fact that the jeepney
was overloaded and speeding at the time of the accident.
The accident was caused either through the negligence of the driver or
because of mechanical defects in the tire. Common carriers are obliged to
supervise their drivers and ensure that they follow rules and regulations such
as not to overload their vehicles, not to exceed safe and legal speed limits, and
to know the correct measures to take when a tire blows up.
The source of a common carrier's legal liability is the contract of
carriage, and by entering into the said contract, it binds itself to carry the
passengers safely as far as human care and foresight can provide, using the
utmost diligence of a very cautious person, with a due regard for all the
circumstances.
The driver and the owner of the vehicle are liable for damages.
ISSUE:
Whether the loss of the cargo was due to the occurrence of a natural
disaster, and if so, whether such natural disaster was the sole and proximate
cause of the loss or whether private respondents were partly to blame for
failing to exercise due diligence to prevent the loss of the cargo.
RULING:
Common carriers, from the nature of their business and for reasons of
public policy, are mandated to observe extraordinary diligence in the vigilance
over the goods and for the safety of the passengers transported by them. Owing
to this high degree of diligence required of them, common carriers, as a general
rule, are presumed to have been at fault or negligent if the goods transported
by them are lost, destroyed or if the same deteriorated.
The parties do not dispute that on the day the M/V Peatheray Patrick-G
sunk, said vessel encountered strong winds and huge waves ranging from six to
ten feet in height. The vessel listed at the port side and eventually sunk at
Cawit Point, Cortes, Surigao del Sur.
In the case at bar, it was adequately shown that before the M/V
Peatheray Patrick-G left the port of Mandaue City, the Captain confirmed with
the Coast Guard that the weather condition would permit the safe travel of the
vessel to Bislig, Surigao del Sur. Thus, he could not be expected to have
foreseen the unfavorable weather condition that awaited the vessel in Cortes,
Surigao del Sur. It was the presence of the strong winds and enormous waves
which caused the vessel to list, keel over, and consequently lose the cargo
contained therein. The appellate court likewise found that there was no
negligence on the part of the crew of the M/V Peatheray Patrick-G. Since the
presence of strong winds and enormous waves at Cortes, Surigao del Sur on
March 3, 1987 was shown to be the proximate and only cause of the sinking of
the M/V Peatheray Patrick-G and the loss of the cargo belonging to San Miguel
Corporation, private respondents cannot be held liable for the said loss.
FACTS:
On February 1991 a verbal agreement was entered into between
Ephraim Morillo and Mindex Resources Corporation fro the lease of the
formers 6x6 10-wheeler cargo truck for use in Mindexs mining operations in
Oriental Mindoro at a stipulated rental of P300.00 per hour for a minimum of 8
hours a day or a total of P2,400.00 daily. Mindex was paying its rentals until
April 10, 1991. On April 11, unidentified persons burned the truck while it was
parked unattended at San Teodoro, Oriental Mindoro due to mechanical
trouble. Upon learning the burning incident, Morillo offered to sell the truck to
Mindex but the latter refused. Instead, it replaced the vehicles burned tires
and had it towed to a shop for repair and overhauling. On April 15, 1991,
Morillo sent a letter to Mindex proposing that he will entrust the said vehicle in
the amount of P275,000.00 that is its cost price without charging for the
encumbrance of P76,800.00.
Mindex responded by a hand written letter expressing their reservations
on the above demands due to their tight financial situation. However, he made
counter offers which state that they will pay the rental of the 6x6 truck in the
amount of P76,000.00, repair and overhaul the truck on their own expenses and
return it to Morillo on good running condition after repair. April 18, Morillo
replied that he will relinquish to Mindex the damaged truck; that he is
amenable to receive the rental in the amount of P76, 000.00; and that Mindex
will pay P50,000.00 monthly until the balance of P275,000.00 is fully paid.
Except for his acceptance of the proffered P76,000.00 unpaid rentals. Morillos
stand has not been changed as he merely lowered the first payment on the
P275,000.00 valuation of the truck from P150,000.00 to P50,000.00.
The parties had since remain intransigent and so on August, Morillo
pulled out the truck from the repair shop of Mindex and had it repaired
elsewhere for which he spent the amount of P132,750.00. The RTC found
petitioner responsible fro the destruction of loss of the leased 6x6 truck and
ordered it to pay respondent P76,000.00 as balance of the unpaid rental for the
6x6 truck with interest of 12%, P132,750.00 representing the cost of repair and
overhaul of the truck with interest of 12% until fully paid; and P20,000.00 as
attorneys fees.
The appellate court sustained RTCs finding. The CA found petitioner
was not without fault for the loss and destruction of the truck and thus liable
therefore. However, it modified the 12% interest on the P76,000.00 rentals and
P132,750.00 repair cost to 6% per annum form June 22, 1994 to the date of
finality of the said decision. It affirmed the award of attorneys fees.
ISSUE:
Whether or not the CA is correct in finding the petitioner liable due to
negligence and cannot be exonerated due to the defense of fortuitous event.
RULING:
YES. As stated by the Court of Appeals, the burning of the subject truck
was impossible to foresee, but not impossible to avoid. Mindex could have
prevented the incident by immediately towing the truck to a motor shop for
repair.
In this case, petitioner was found negligent and thus liable for the loss or
destruction of the leased truck. Article 1174 of the Civil Code states that, No
person shall be responsible for a fortuitous event that could not be foreseen or,
though foreseen, was inevitable. In other words, there must be an exclusion of
human intervention form the cause of injury on loss. In this case, the
petitioner is contributory negligent to the incident.
Decision was denied. Deleting attorneys fees, modified the RTC and CAs
decision.
could seriously hamper PHIBROs ability to supply the needed coal unless a
strike-free clause is incorporated in the charter party or the contract of
carriage. In order to hasten the transfer of coal, PHIBRO proposed to
NAPOCOR that they equally share the burden of a strike-free clause.
NAPOCOR refused. On August 6, 1987, PHIBRO received from NAPOCOR a
confirmed and workable letter of credit. Instead of delivering the coal on or
before the thirtieth day after receipt of the Letter of Credit, as agreed upon by
the parties in the July contract, PHIBRO effected its first shipment only on
November 17, 1987.
Consequently, in October 1987, NAPOCOR once more advertised for the
delivery of coal to its Calaca thermal plant. PHIBRO participated anew in this
subsequent bidding but its application was denied for not meeting the minimum
requirements. However, PHIBRO found that the real reason for the disapproval
was its purported failure to satisfy NAPOCORs demand for damages due to the
delay in the delivery of the first coal shipment. Thus, PHIBRO filed an action
for damages with application for injunction against NAPOCOR with the
Regional Trial Court, Branch 57, Makati City. In its complaint, PHIBRO alleged
that NAPOCORs act of disqualifying it in the October 1987 bidding and in all
subsequent biddings was tainted with malice and bad faith. PHIBRO prayed for
actual, moral and exemplary damages and attorneys fees.
On the other hand NAPOCOR averred that the strikes in Australia could
not be invoked as reason for the delay in the delivery of coal because PHIBRO
itself admitted that as of July 28, 1987 those strikes had already ceased.
Furthermore, NAPOCOR claimed that due to PHIBROs failure to deliver the
coal on time, it was compelled to purchase coal from ASEA at a higher price.
NAPOCOR claimed for actual damages in the amount of P12,436,185.73,
representing the increase in the price of coal, and a claim of P500,000.00 as
litigation expenses.
On January 16, 1992, the trial court rendered a decision in favor of
PHIBRO. Unsatisfied, NAPOCOR elevated the case to the Court of Appeals
which affirmed in toto the latters decision. Hence, this present petition.
ISSUE:
Whether or not the lower court erred in holding that PHIBROs delay in
the delivery of imported coal was due to force majeure.
RULING:
It was disclosed from the records of the case that what prevented
PHIBRO from complying with its obligation under the July 1987 contract was
the industrial disputes which besieged Australia during that time. The Civil
Code provides that no person shall be responsible for those events which could
not be foreseeen, or which, though foreseen, were inevitable. This means that
when an obligor is unable to fulfill his obligation because of a fortuitous event
or force majeure, he cannot be held liable for damages for non-performance.
In addition to the above legal precept, it is worthy to note that PHIBRO
and NAPOCOR explicitly agreed in Section XVII of the Bidding Terms and
Specifications that neither seller (PHIBRO) nor buyer (NAPOCOR) shall be
liable for any delay in or failure of the performance of its obligations, other than
the payment of money due, if any such delay or failure is due to Force
Majeure. Strikes then are undoubtedly included in the force majeure clause
of the Bidding Terms and Specifications.
owner to different parts of the country failed prompting the former to file a
petition for the issuance of owners duplicate copy to replace the lost one.
During the hearing, only Menez and counsel were present because the
Register of Deeds and the Provincial Prosecutor were not notified. The trial
court granted his petition after Menez presented his evidence ex parte. San
Agustin claimed this was the first time he became aware of the case of his aunt
Ma. Vda de Caiquep and the present occupant of the property. He filed A
Motion to Reopen Reconstitution Proceedings but RTC denied said motion.
Petitioner moved for motion for reconsideration but was again denied.
ISSUE:
Whether or not petitioner is bound by the contract entered into by his
predecessor-in-interest.
RULING:
Yes, petitioner is bound by contracts entered into by his predecessors-ininterest. Heirs are bound by contracts entered into by their predecessors-ininterest. In this case, the GSIS has not filed any action for the annulment of
Deed of Absolute Sale of the lot the latter sold to Caiquep, nor the forfeiture of
the lot in question.
In the Courts view, the contract of sale remains valid between the
parties, unless and until annulled in the proper suit filed by the rightful party,
the GSIS. For now, the said contract of sale is binding upon the heirs of
Macaria Vda de Caiquep., including petitioner who alleges to be one of her
heirs, in line with the rule that heirs are bound by contracts entered into by
their predecessors-in-interest.
The assignment of the contracts to sell falls within the purview of the Act.
The term credit has been defined to - "(c) x x x mean any loan, mortgage, deed
of trust, advance, or discount; any conditional sales contract, any contract to
sell, or sale or contract of sale of property or service, either for present or
future delivery, under which, part or all of the price is payable subsequent to
the making of such sale or contract; any rental-purchase contract; any option,
demand, lien, pledge, or other claim against, or for the delivery of, property or
money, any purchase, or other acquisition of or any credit upon the security of,
any obligation or claim arising out of the foregoing; and any transaction or
series of transactions having a similar purpose or effect.
An assignment of credit is an act of transferring, either onerously or
gratuitously, the right of an assignor to an assignee who would then be capable
of proceeding against the debtor for enforcement or satisfaction of the credit.
The transfer of rights takes place upon perfection of the contract, and
ownership of the right, including all appurtenant accessory rights, is thereupon
acquired by the assignee. The assignment binds the debtor only upon acquiring
knowledge of the assignment but he is entitled, even then, to raise against the
assignee the same defenses he could set up against the assignor. Where the
assignment is on account of pure liberality on the part of the assignor, the rules
on donation would likewise be pertinent; where valuable consideration is
involved, the assignment partakes of the nature of a contract of sale or
purchase.
Upon an assignment of a contract to sell, the assignee is effectively
subrogated in place of the assignor and in a position to enforce the contract to
sell to the same extent as the assignor could.
An insistence of petitioners that the subject transaction should be
considered a simple loan since private respondent did not communicate with
the debtors, condominium unit buyers, to collect payment from them, is
untenable. In an assignment of credit, the consent of the debtor is not essential
for its perfection, his knowledge thereof or lack of it affecting only the
efficaciousness or inefficaciousness of any payment he might make.
The assignment, it might be pointed out, was "with recourse," and default
in the payment of installments had been duly established when petitioner
corporation foreclosed on the mortgaged parcels of land. The resort to
foreclosure of the mortgaged properties did not preclude private respondent
from collecting interest from the assigned Contracts To Sell from the time of
foreclosure to the redemption of the foreclosed property. The imposition of
E.O. 407 can neither affect appellant's obligation under the deed of
conditional sale. Under the said law, appellant is required to transfer to the
Republic of the Philippines "all lands foreclosed" effective June 10, 1990.
Under the facts obtaining, the subject property has ceased to belong to the
mass of foreclosed property failing within the reach of said law. The property
has already been sold to herein appellees even before the said E.O. has been
enacted. On this same reason, the Court held that they need not delve on the
applicability of DBP Circular No. 11.
The Court ruled in favor of private respondents.
In conditional
obligations, the acquisition of rights, as well as the extinguishment or loss of
those already acquired, shall depend upon the happening of the event which
constitutes the condition. The deed of conditional sale between petitioner and
private respondents was executed on 6 April 1984. Private respondents had
religiously paid the agreed installments on the property until they completed
payment on 6 April 1990. Petitioner, in fact, allowed private respondents to
fulfill the condition of effecting full payment, and invoked Section 6 of Rep. Act
6657 only after private respondents, having fully paid the repurchase price,
demanded the execution of a Deed of Sale in their favor.
The Court ruled that the trial court and CA have correctly ruled that
neither Sec. 6 of Rep. Act 6657 nor Sec. 1 of E.O. 407 was intended to impair
the obligation of contract petitioner had much earlier concluded with private
respondents. Petitioner cannot invoke the last paragraph of Sec. 6 of Rep. Act
6657 to set aside its obligations already existing prior to its enactment. In the
first place, said last paragraph clearly deals with "any sale, lease, management
The petition was DENIED, and the decision of the CA was AFFIRMED
with the MODIFICATION that attorney's fees and nominal damages awarded to
private respondent were DELETED.
SUSPENSIVE CONDITIONS MEANING
1.
2.
3.
'1.......The terms of this Contract is for a period of one year upon the
signing thereof. After the period of this Contract, the LESSEE shall purchase
the property on the agreeable price of One Million Pesos (P1,000,000.00)
payable within Two (2) Years period with an interest of 12% per annum subject
to the devalued amount of the Philippine Peso, according to the following
schedule of payment: Upon the execution of the Deed of Sale 50% - and
thereafter 25% every six (6) months thereafter, payable within the first ten (10)
days of the beginning of each period of six (6) months.
'2.......The LESSEE shall pay by way of annual rental an amount
equivalent to Two Thousand Five Hundred (P2,500.00) Pesos per hectare, upon
the signing of this contract on Dec. 1, 1983.
'9.......The LESSORS hereby commit themselves and shall undertake to
obtain a separate and distinct T.C.T. over the herein leased portion to the
LESSEE within a reasonable period of time which shall not in any case exceed
four (4) years, after which a new Contract shall be executed by the herein
parties which shall be the same in all respects with this Contract of
Lease/Purchase insofar as the terms and conditions are concerned.
The defendant Gonzales paid the P2,500.00 per hectare or P15,000.00
annual rental on the half-portion of the property in accordance with the second
provision of the Contract of Lease/Purchase and thereafter took possession of
the property, installing thereon the defendant Jesus Sambrano as his caretaker.
The defendant Gonzales did not, however, exercise his option to purchase the
property immediately after the expiration of the one-year lease on November
30, 1984. He remained in possession of the property without paying the
purchase price provided for in the Contract of Lease/Purchase and without
paying any further rentals thereon.
A letter was sent by one of the plaintiffs-heirs Ricardo Cruz to
defendant Gonzales informing him of the lessors' decision to rescind
Contract of Lease/Purchase due to a breach thereof committed by
defendant. The letter also served as a demand on the defendant to vacate
premises within 10 days from receipt of said letter.
the
the
the
the
The record shows that at the time the contract was executed, the land in
question was still registered in the name of Bernardina Calixto and Severo
Cruz, respondents' predecessors-in-interest. There is no showing whether
respondents were the only heirs of Severo Cruz or whether the other half of the
land in the name of Bernardina Calixto was adjudicated to them by any means.
In fact, they admit that extrajudicial proceedings were still ongoing. Hence,
when the Contract of Lease/Purchase was executed, there was no assurance
that the respondents were indeed the owners of the specific portion of the lot
that petitioner wanted to buy, and if so, in what concept and to what extent.
Thus, the clear intent of the ninth paragraph was for respondents to
obtain a separate and distinct TCT in their names. This was necessary to enable
them to show their ownership of the stipulated portion of the land and their
concomitant right to dispose of it. Absent any title in their names, they could
not have sold the disputed parcel of land.
SUSPENSIVE CONDITIONS: MEANING
INSULAR LIFE ASSURANCE COMPANY, LTD., INSULAR SAVINGS BANK
and JACINTO D. JIMENEZ
VS. ROBERT YOUNG, GABRIEL LA'O II, ARTHUR TAN, LOPE JUBAN, JR.,
MARIA LOURDES ONGPIN, ANTONIO ONGPIN, ELSIE DIZON, YOLANDA
BAYER, CECILIA VIRAY, MANUEL VIRAY and JOSE VITO BORROMEO
2002 Jan 16
G.R. No. 140964
FACTS:
In December, 1987, respondent Robert Young, together with his
associates and co-respondents, acquired by purchase Home Bankers Savings
and Trust Co., now petitioner Insular Savings Bank ("the Bank," for brevity),
from the Licaros family for P65,000,000.00. Young and his group obtained 55%
equity in the Bank, while Jorge Go and his group owned the remaining 45%.
However, Araneta backed out from the intended sale and demanded the
return of his downpayment.
On October 1, 1991, Insular Life and Insular Life Pension Fund formally
informed Young of their intention to acquire 30% and 12%, respectively, of the
Bank's outstanding shares, subject to due diligence audit and proper
documentation. On October 9, 1991, Insular Life and Young, authorized to
represent the other stockholders, entered into a Memorandum of Agreement
(MOA), wherein Insular Life and its Pension Fund agreed to purchase 830,860
common shares and 311,572 common shares, respectively, for a total
consideration of P198,000,000.00.
Under its terms, the MOA is subject to
Young's representations and warranties that, as of September 30, 1991, the
Bank has (a) a total outstanding paid-in capital of P157,714,900.00, (b) a total
net worth of P114,801,539.00, and (c) total
loans with doubtful recovery of P60,000,000.00. The MOA is also subject to
these "condition precedents": (1) Young shall infuse additional capital of
P50,000,000.00 into the Bank, and (2) Insular Life and its Pension Fund shall
undertake a due diligence audit on the Bank to determine whether the
provision for P60,000,000.00 doubtful account made by Young is sufficient.
On October 21, 1991, Young signed a letter prepared by Atty. Jacinto
Jimenez, counsel of Insular Life, addressed to Mr. Vicente R. Ayllon, Chairman
of the Bank's Board of Directors, stating that due to business reverses, he shall
not be able to pay his obligations under the Credit Agreement between him and
Insular Life. Consequently, Young "unconditionally and irrevocably waive(s) the
benefit of the period" of the loan (up to December 26, 1991) and Insular "may
consider (his) obligations thereunder as defaulted." He likewise interposes no
objection to Insular Life's exercise of its rights under the said agreement.
Forthwith, Insular Life instructed its counsel to foreclose the pledge
constituted upon the shares. The latter then sent Young a notice informing him
of the sale of the shares in a public auction scheduled on October 28, 1991, and
in the event that the shares are not sold, a second auction sale shall be held the
next day, October 29.
From October 31, 1991 to December 27, 1991, Insular Life invested a
total of P325,000,000.00 in the Bank. Meanwhile, on November 27, 1991, its
Board of Directors, during its meeting, accepted the resignation of Young as
President. On January 7, 1992, Young and his associates filed with the Regional
Trial Court (RTC), Branch 142, Makati City, a complaint against the Bank,
Insular Life and its counsel, Atty. Jacinto Jimenez, petitioners, for annulment of
notarial sale, specific performance and damages, docketed as Civil Case No. 92049.
The complaint alleges, inter alia, that the notarial sale conducted by
petitioner Atty. Jacinto Jimenez is void as it does not comply with the
requirement of notice of the second auction sale; that Young was forced by the
officers of Insular Life to sign letters to enable them to have control of the
Bank; that under the MOA, Insular Life should apply the purchase price of
P198,000,000.00 (corresponding to the 55% of the outstanding capital stock of
the Bank) to Young's loan of P200,000,000.00 and pay the latter
RULING:
The Supreme Court ruled in favor of petitioner. It found that the
conditional sale agreement is officious and ineffectual. First, it was not
consummated. Second, it was not registered and duly annotated on the
Transfer Certificate of Title (No. 12357) covering the subject property. Third, it
was executed about eight (8) years after the execution of the real estate
mortgage over the subject property.
FACTS:
Eulalio Mistica, predecessor-in-interest of herein petitioner, is the owner
of a parcel of land, and a portion thereof was leased to Bernardino sometime in
1970. On April 5, 1979, Eulalio Mistica entered into a contract to sell with
Bernardino over a portion of the aforementioned lot containing an area of 200
square meters. This agreement was reduced to writing in a Kasulatan.
Pursuant to said agreement, Bernardino gave a downpayment of P2,000.00 and
another partial payment of P1,000.00 on February 7, 1980. However, he failed
to make any payments thereafter. Eulalio Mistica died sometime in October
1986.
To emphasize, the mortgagee (United Savings Bank) did not give its
consent to the change of debtor. It is a fundamental axiom in the law on
contracts that a person not a party to an agreement cannot be affected thereby.
Worse, not only was the conditional sale agreement executed without the
consent of the mortgagee-creditor, United Savings Bank, the same was also a
material breach of the stipulations of the real estate mortgage over the subject
property. The conditions of the conditional sale agreement were not fulfilled,
constrained to litigate where she incurred expenses for attorneys fees and
litigation expenses.
On the other hand, respondents contended that the contract couldnt be
rescinded on the ground that it clearly stipulates that in case of failure to pay
the balance as stipulated, a yearly interest of 12% is to be paid. Bernardino
likewise alleged that sometime in October 1986, during the wake of the late
Eulalio Mistica, he offered to pay the remaining balance to petitioner but the
latter refused and hence, there is no breach or violation committed by them and
no damages could yet be incurred by the late Eulalio Mistica, his heirs or
assigns pursuant to the said document; that he is presently the owner in fee
simple of the subject lot having acquired the same by virtue of a Free Patent
Title duly awarded to him by the Bureau of Lands; and that his title and
ownership had already become indefeasible and incontrovertible.
As
counterclaim, respondents pray for moral damages in the amount of
P50,000.00; exemplary damages in the amount of P30,000.00; attorneys fees in
the amount of P10,000.00 and other litigation expenses.
The trial court dismissed the complaint and ordered the petitioner to pay
the respondents attorneys fee and the cost of suit while ordering the
respondents to pay the heirs of the petitioner the balance of the purchase price
and reconveyance of the extra area of 58 square meters from the land in
question.
Disallowing rescission, the Court of Appeals held that respondents did
not breach the Contract of Sale. It explained that the conclusion of the ten-year
period was not a resolutory term, because the Contract had stipulated that
payment, with interest of 12 percent, could still be made if respondents failed
to pay within the period.
Petitioner did not disprove the allegation of
respondents that they had tendered payment of the balance of the purchase
price during her husbands funeral, which was well within the ten-year period.
Moreover, rescission would be unjust to respondents, because they had already
transferred the land title to their names. The proper recourse, the CA held, was
to order them to pay the balance of the purchase price, with 12 percent
interest. As to the matter of the extra 58 square meters, the CA held that its
reconveyance was no longer feasible, because it had been included in the title
issued to them. The appellate court ruled that the only remedy available was to
order them to pay petitioner the fair market value of the usurped portion.
ISSUE:
Whether or not there is a potestative suspensive condition in the
Kasulatan.
RULING:
The failure of respondents to pay the balance of the purchase price
within ten years from the execution of the Deed did not amount to a substantial
breach. It was stipulated that payment could be made even after ten years
from the execution of the Contract, provided the vendee paid 12 percent
interest.
Moreover, it is undisputed that during the ten-year period, petitioner and
her deceased husband never made any demand for the balance of the purchase
price. Petitioner even refused the payment tendered by respondents during her
husbands funeral, thus showing that she was not exactly blameless for the
lapse of the ten-year period. Had she accepted the tender, payment would have
been made well within the agreed period.
If petitioner would like to impress upon the Court that the parties
intended otherwise, she has to show competent proof to support her contention.
Instead, she argues that the period cannot be extended beyond ten years,
because to do so would convert the buyers obligation to a purely potestative
obligation that would annul the contract under Article 1182 of the Civil Code.
The Code prohibits purely potestative, suspensive, conditional obligations
that depend on the whims of the debtor, because such obligations are usually
not meant to be fulfilled. Indeed, to allow the fulfillment of conditions to
depend exclusively on the debtors will would be to sanction illusory
obligations. The Kasulatan does not allow such thing. First, nowhere is it
stated in the Deed that payment of the purchase price is dependent upon
whether respondents want to pay it or not. Second, the fact that they already
made partial payment thereof only shows that the parties intended to be bound
by the Kasulatan.
Affirmed with the modification that the payment for the extra 58-square
meter lot included in respondents title is deleted.
POTESTATIVE SUSPENSIVE CONDITIONS (Art. 1182, CC)
HERMOSA VS. LONGARA
93 PHIL 971
FACTS:
Intestate Fernando Hermosa, Sr. asked for three (3) credit advances from
respondent Epifanio M. Longara. Two (2) of said credit advances were made
during his lifetime and in his favor and in his son while the last credit was made
after his death and in favor of his grandson. Evidences show that said credits
were asked by the intestate on condition that their payment should be made by
him, as soon as he receives funds derived from the sale of his property in
Spain.
After the intestates death and upon authorization of the probate court,
the administration of the intestates property, his wife, sold the property and
the same was paid for subsequently. As a consequence, respondent filed an
action for the payment of the aforesaid credits which was upheld by the lower
court and by the Court of Appeals.
However, the same was contested by herein petitioners, heirs of the
intestate, on the ground that the obligation contracted by the intestate was
subject to a condition exclusively dependent upon the will of the debtor
condicion potestiva and therefore null and void, in accordance with article 1115
of the Old Civil Code.
ISSUE:
Whether or not the condition made in the obligation is a purely
suspensive condition dependent or potestative upon the exclusive will of the
debtor.
RULING:
NO, the condition of the obligation was that the payment was to be made
as soon as he (obligor) receives funds from the sale of his property in Spain.
The will to sell on the part of the debtor (intestate) was present in fact or
presumed legally to exist although the price and other condition thereof were
still within his discretion and final approval. But in addition to this acceptability
of the sale to him (obligor), there were still other conditions that had to concur
to effect the sale, mainly that of the presence of a buyer, ready, able and willing
to purchase the property under the condition demanded by the vendor.
POTESTATIVE SUSPENSIVE CONDITIONS (Art. 1182, CC)
FACTS:
On June 1, 1948, Damasa Crisostomo applied for 200 shares of
stock worth PhP100.00 each at Quezon Colleges, Inc. Within her letter of
application, she stipulated, You will find (Babayaran kong lahat
pagkatapos na ako ay makapag-pahuli ng isda) pesos as my initial
payment and the balance payable in accordance with law and the rules
and regulations of the Quezon College. Damasa died on October 26,
1948. Since no payment was rendered on the subscription made in the
foregoing letter, Quezon College presented a claim of PhP20,000.00 on
her intestate proceedings. The petitioner administrator of the estate
then contests the validity of said proceedings?
ISSUE:
Is the condition laid down by Damasa Crisostomo valid?
RULING:
There is nothing in the record to show that the Quezon College,
Inc. accepted the term of payment suggested by Damasa Crisostomo, or
that if there was any acceptance the same came to her knowledge during
her lifetime. As the application of Damasa Crisostomo is obviously at
variance with the terms evidenced in the form letter issued by the
Quezon College, Inc., there was absolute necessity on the part of the
College to express its agreement to Damasa's offer in order to bind the
latter. Conversely, said acceptance was essential, because it would be
unfair to immediately obligate the Quezon College, Inc. under Damasa's
promise to pay the price of the subscription after she had caused fish to
be caught. Thus, it cannot be said that the letter ripened into a contract.
Indeed, the need for express acceptance on the part of the Quezon
College, Inc. becomes the more imperative, in view of the proposal of
Damasa Crisostomo to pay the value of the subscription after she has
harvested fish, a condition obviously dependent upon her sole will and,
therefore, facultative in nature, rendering the obligation void. Under the
Civil Code it is provided that if the fulfillment of the condition should
depend upon the exclusive will of the debtor, the conditional obligation
shall be void.
the appellate court affirmed with modification the decision of the lower court.
Hence, this petition.
ISSUE:
Whether or not the private respondents non-compliance with essential
precondition justified the cancellation of the contract.
RULING:
The Supreme Court held that the nature of the transaction between the
petitioner company and the private respondent is a mere contract to sell, and
not a contract of sale. The petitioner companys obligation is subject to a
positive suspensive condition, which is the private respondents opening,
making or indorsing of an irrevocable and unconditional letter of credit. The
failure of the private respondent to comply with the positive suspensive
condition cannot even be considered a breach but simply an event that
prevented the obligation of petitioner company to convey title from acquiring
binding force. Hence, the petition is granted and the assailed decision is
reversed.
POSITIVE SUSPENSIVE CONDITIONS (Art. 1184, CC)
LEANO VS. COURT OF APPEALS
369 SCRA 36
G.R. No.129018
Nov. 15, 2001
FACTS:
On November 13, 1985, Hermogenes Fernando, as vendor and Carmelita
Leano, as vendee executed a contract to sell involving a piece of land, Lot No.
876-B, with an area of 431 square meters, located at Sto.Cristo, Baliuag,
Bulacan.
In the contract, Carmelita Leano bound herself to pay Hermogenes
Fernandez the sum of one hundred and fifty pesos (P107,750.00) as the total
purchase price of the lot.
The contract also provided for a grace period of one month within which
to make payments, together with the one corresponding the month of grace.
Should the month of grace be expired without the installments for both months
having been satisfied, an interest of 18% per annum will be charged on the
unpaid installments.
Should a period of (90) ninety days elapse from the expiration of the
grace period without the overdue and unpaid installments having been paid
with the corresponding interests up to that date, respondent Fernando, as
vendor, was authorized to declare the contract cancelled and to dispose of the
parcel of land, as if the contract had not been entered into. The payments
made, together with all the improvements made on the premises, shall be
considered as rents paid for the use and occupation of the premises and as
liquidated damages.
The lower court issued an Order directing the counsel for the four heirs
and other heirs of Teresita R. Sandejas to move for the appointment of a new
administrator within fifteen (15) days from receipt of this Order.
condition -- court approval of the sale. They assert that because this condition
had not been satisfied, their obligation to deliver the disputed parcels of land
was converted into a money claim.
Heirs Sixto, Roberto, Antonio and Benjamin, all surnamed Sandejas, filed
a Motion for Reconsideration and the appointment of another administrator, Mr.
Sixto Sandejas in lieu of respondent Lina stating that it was only lately that Mr.
Sixto Sandejas, a son and heir, expressed his willingness to act as a new
administrator. Thereafter, respondent Lina filed his Manifestation and Counter
Motion alleging that he had no objection to the appointment of Sixto Sandejas
as administrator provided that Sixto Sandejas be also appointed as
administrator of the intestate estate of his father, Eliodoro P. Sandejas, Sr. The
lower court granted the said Motion and substituted Alex Lina with Sixto
Sandejas as petitioner in the said Petitions.
After the payment of the
administrator's bond and approval thereof by the court, Administrator Sixto
Sandejas took his oath as administrator of the estate of the deceased Remedios
R. Sandejas and Eliodoro P. Sandejas and was likewise issued Letters of
Administration on the same.
CIR VS PRIMETOWN
GR No. 162155. August 28, 2007
FACTS:
On March 11, 1999, Gilbert Yap, vice chair of respondent
Primetown Property Group, Inc., applied for the refund or credit of
income tax respondent paid in 1997. According to Yap, because
respondent suffered losses, it was not liable for income taxes.
Nevertheless, respondent paid its quarterly corporate income tax and
remitted creditable withholding tax from real estate sales to the BIR in
the total amount of P26,318,398.32. Therefore, respondent was entitled
to tax refund or tax credit.
On May 13, 1999, revenue officer Elizabeth Y. Santos required
respondent to submit additional documents to support its claim.
Respondent complied but its claim was not acted upon. Thus, on April 14,
2000, it filed a petition for review in the Court of Tax Appeals (CTA). On
December 15, 2000, the CTA dismissed the petition as it was filed beyond
the two-year prescriptive period for filing a judicial claim for tax refund
or tax credit. Respondents now assail that decision for dismissal of the
CTA.
ISSUE:
What is the expiration period for the filing of the action?
RULING:
Both Article 13 of the Civil Code and Section 31, Chapter VIII,
Book I of the Administrative Code of 1987 deal with the same subject
matter the computation of legal periods. Under the Civil Code, a year
is equivalent to 365 days whether it be a regular year or a leap year.
Under the Administrative Code of 1987, however, a year is composed of
12 calendar months. Needless to state, under the Administrative Code of
1987, the number of days is irrelevant.
There obviously exists a manifest incompatibility in the manner of
computing legal periods under the Civil Code and the Administrative
Code of 1987. For this reason, we hold that Section 31, Chapter VIII,
Book I of the Administrative Code of 1987, being the more recent law,
governs the computation of legal periods. Lex posteriori derogat priori.
Following this formula, respondents petition (filed on April 14,
2000) was filed on the last day of the 24 th calendar month from the day
respondent filed its final adjusted return. Hence, it was filed within the
reglementary period.
PERIOD OR TERM, MEANING AND DEFINITION
compared to
NAMARCO vs Tecson
GR No. L-29131.
August 27, 1969
FACTS:
On a previous court case, the CFI rendered judgment:
(a) Ordering the defendants Miguel D. Tecson and Alto Surety
Insurance Co., Inc. to pay jointly and severally plaintiff PRATRA the sum
of P7,200.00 plus 7% interest from May 25, 1960 until the amount is fully
paid, plus P500.00 for attorney's fees, and plus costs;
(b) ordering defendant Miguel D. Tecson to indemnify his codefendant Alto Surety & Insurance Co., Inc. on the cross-claim for all the
amounts it would be made to pay in this decision, in case defendant Alto
Surety & Insurance Co., Inc. pay the amount adjudged to plaintiff in this
decision. From the date of such payment defendant Miguel D. Tecson
would pay the Alto Surety & Insurance Co., Inc., interest at 12% per
annum until Miguel D. Tecson has fully reimbursed plaintiff of the said
amount.
Defendant Miguel Tecson seeks the dismissal of the complaint on
the ground of lack of jurisdiction and prescription. This case was filed
exactly on December 21, 1965 but more than ten years have passed a
year is a period of 365 days (Art. 13, CCP). Plaintiff forgot that 1960,
1964 were both leap years so that when this present case was filed it was
filed two days too late.
ISSUE:
Should the complaint be dismissed on the grounds of prescription?
RULING:
In the language of this Court, in People vs. Del Rosario, with the
approval of the Civil Code of the Philippines (Republic Act 386) ... we
have reverted to the provisions of the Spanish Civil Code in accordance
with which a month is to be considered as the regular 30-day month ...
and not the solar or civil month," with the particularity that, whereas the
Spanish Code merely mentioned "months, days or nights," ours has
added thereto the term "years" and explicitly ordains that "it shall be
understood that years are of three hundred sixty-five days."
The decision was affirmed.
wrote a letter to plaintiff (Alcantara) advising him that, effective May 11, 1960,
his temporary designation as Technical Assistant to the Administrative Officer
was made permanent and as Assistant to the Administrative Officer of the Lirag
Textile Mills, Inc. As of May 11, 1960, plaintiff received a salary of P400.00 and
allowance of P100.00 per month.
Plaintiff's tenure of employment, per defendant Lirag Textile Mills, Inc.'s
above letter of May 9, 1960 was to be 'for an indefinite period, unless sooner
terminated by reason of voluntary resignation or by virtue of a valid cause or
causes'.
On March 4, 1960, per letter of defendant Lirag Textile Mills, Inc. of that
date, signed by its Executive Vice President and General Manager, plaintiff was
advised that effective November 15, 1960 he (Alcantara) was promoted to the
position of Assistant Administrative Officer. Subsequently, on July 22, 1961,
defendant Lirag Textile Mills, Inc. wrote plaintiff (Alcantara) a letter advising
him that because the company 'has suffered some serious reverses, both in
terms of pecuniary loss and in market opportunities,' the company was
terminating his services and effecting his separation from defendant
corporation effective at the close of working hours of August 22, 1961.
Because of this, plaintiff Alcantara filed a complaint before the Regional
Trial Court against defendant Lirag Textile Mills Inc. for illegal dismissal as in
accordance with the employment contract between herein then plaintiff and
then defendant.
Respondent Court of Appeals affirmed the decision of the lower court in
Civil Case No. 6884 principally its conclusion that the trial court did not commit
any error in its evaluation of the evidence when it found that it was not true
that petitioner Lirag Textile Mills (then defendant) suffered pecuniary loss and
in market opportunities which it used as a justification to terminate the services
of plaintiff Alcantara; that it was not also true that the latter suffered from lack
of skill; that, therefore, there was a violation of the written contract of
employment executed by and between petitioners and private respondent
Alcantara; that petitioner (then defendant) Felix Lirag was responsible for
inducing private respondent Alcantara to leave his employment with the
Philippine Chamber of Industries where he was holding a permanent position
and to accept employment with petitioner (then defendant) Lirag Textile Mills;
and that appellee Alcantara was correctly awarded moral damages and
attorney's fees.
ISSUE:
Whether or not there has been a violation of the written contract for a
period of employment between petitioner and private respondent.
RULING:
The contract of employment was for an indefinite period as it shall
continue without ending, subject to a resolutory period, unless sooner
terminated by reason of voluntary resignation or by virtue of a valid cause or
causes (the resolutory period).
There is an indefinite period of time for employment agreed upon by and
between petitioners and the private respondent, subject only to the resolutory
period agreed upon which may end the indeterminate period of employment,
namely voluntary resignation on the part of private respondent Alcantara or
termination of employment at the option of petitioner Lirag Textile Mills, but for
a "valid cause or causes". It necessarily follows that if the petitioner-employer
Lirag Textile Mills terminates the employment without a "valid cause or
causes", as it admittedly did, it committed a breach of the contract of
employment executed by and between the parties.
The measure of an
employer's liability provided for in Republic Act 1052, as amended by R. A.
1787, is solely intended for contracts of employment without a stipulated
period. It cannot possibly apply as a limitation to an employer's liability in
cases where the employer commits a breach of contract by violating an
indefinite period of employment expressly agreed upon through his wrongful
act of terminating said employment without any valid cause or causes, which
act may even amount to bad faith on the employer's part.
The "indefinite period" of employment expressly agreed upon by and
between the parties in this case is really a resolutory period because the
employment is bound to terminate on a future "day certain" such as the
employee's resignation or employer's termination of employment upon a valid
cause or causes, like death of the employee or termination of employer's
corporate existence, although it may not be known when.
It is clear that petitioner Lirag Textile Mills, Inc. violated the contract of
employment with private respondent Alcantara when the former terminated his
services without a valid cause. The act was attended with bad faith and deceit
because said petitioner made false allegations of a supposed valid cause
knowing them to be false, thus making itself liable for payment of actual, moral
and exemplary damages, plus attorneys fees to private respondent Alcantara.
Petitioner Lirag Textile Mills, Inc. cannot with impunity be allowed the absolute
and unilateral power to terminate without valid cause a contract of employment
with a definite period it voluntarily entered into merely on the basis of its whim
or caprice and under the false pretense of financial distress.
DISTINCTIONS: CONDITION VS. PERIOD/TERM
DAGUHOY ENTERPRISES, INC. VS. PONCE
96 Phil 15
FACTS:
In the year 1950, defendant-appellant Domingo Ponce was chairman and
manager and his son Buhay M. Ponce was secretary-treasurer of the plaintiff
corporation Daguhoy Enterprises, Inc. On June 24, Rita L. Ponce, wife of
Domingo, executed in favor of plaintiff corporation a deed of mortgage over a
parcel of land including the improvements thereon to secure the payment of a
loan of P5, 000 granted to her by said corporation, payable within six years with
interests at 12% annum. On March 10, 1951, Rita L. Ponce with the consent of
her husband Domingo executed another mortgage deed amending the first one,
whereby the loan was increased from P5,000 to P6,190, the terms and
conditions of the mortgage remaining the same. Rita and Domingo presented
the two mortgage deeds for registration in the office of the register of deeds for
registrations in the office of the register of deeds, but the said register advised
the two to cure the defects and furnish the necessary data. Instead of
complying with the suggestion and requirements, the two withdrew the two
mortgage deeds and then mortgaged the same parcel of land in favor of the
Rehabilitation Finance Corporation (RFC) to secure a loan.
Potenciano Gapol, the majority stockholder in the corporation, upon
learning that the deeds of mortgage were not registered and that they were
withdrawn from the office of the register of deeds and the land covered by the
two deeds was again mortgaged to RFC, he filed a civil case against the
respondents, not only for the amount of the loan of P6,190 but for other sums,
possibly on the theory that the loan in question was granted by Domingo and
Buhay as officers of the corporation.
To account for the amount of the loan, Domingo and his son filed in court
a check of RFC in the amount of P6,190 and an interesr of P266.10 in favor of
the company. Thereafter, Gapol petitioned the court for permission to withdraw
the amounts as payment of the loan. But because the defendants opposed said
petition, the court denied it. Gapol, agreeing to the cancellation of the
mortgage as soon as the amounts are withdrawn and deposited with the Bank
of America, in the name of the company, filed a second petition for withdrawal.
However, the defendants failed to agree, thus it was again denied.
ISSUE:
Whether or not the sum in the form of an RFC check and some interest
deposited in the civil case may be withdrawn to satisfy the judgment and to pay
the loan of P6,190 and part of the interest due.
RULING:
Yes. Although the original loan of P5,000 including the increase of
P1,190 was payable within six years from June 1950 and so did not become due
and payable until 1956, the trial court held that under article 1198 of the Civil
Code, the debtor lost the benefit of the period by reason of her failure to give
the security in the form of the two deeds of mortgage and register them,
including defendants act in withdrawing said two deeds from the office of the
register of deeds and then mortgaging the same property in favor of the RFC;
and so the obligation became pure and without any condition and consequently,
the loan became due and immediately demandable. Likewise, even if the
defendants had already deposited a certain amount in favor of the corporation,
they are not yet relieved from the payment of interests from the time of the
deposit because the loan is not yet paid.
up to December 31, 1916 within which to make a study of and decide whether
he would construct a sugar central or mill with a capacity of milling 300 tons of
sugar cane every 24 hours and setting forth the mutual obligations and
undertakings of such central and the planters and the terms and conditions
under which the sugar cane produced by said planters would be milled in the
event of the construction of such sugar central by Ossorio. Such central was in
fact constructed by said Ossorio in Manapla, Negros Occidental, through the
North Negros Sugar Co., Inc., where after the standard form of milling
contracts were executed.
ISSUE:
The fact that the contracts make reference to "first milling" does not
make the period of thirty (30) years one of thirty (30) milling years. The term
"first milling" used in the contracts under consideration was for the purpose of
reckoning the thirty-year period stipulated therein. Even if the thirty-year
period provided for in the contracts be construed as milling years, the
deduction or extension of six (6) years would not be justified. At most on the
last year of the thirty-year period stipulated in the contracts the delivery of
sugar cane could be extended up to a time when all the amount of sugar cane
raised and harvested should have been delivered to the appellant's mill as
agreed upon.
After the liberation, the North Negros Sugar Co., Inc. did not reconstruct
its destroyed central at Manapla, Negros Occidental, and in 1946, it advised the
North Negros Planters Association, Inc. that it had made arrangements with the
respondent Victorias Milling Co., Inc. for said respondent corporation to mill
the sugar cane produced by the planters of Manapla and Cadiz holding milling
contracts with it. Thus, after the war, all the sugar cane produced by the
planters of petitioner associations, in Manapla, Cadiz, as well as in Victorias,
who held milling contracts, were milled in only one central, that of the
respondent corporation at Victorias. Beginning with the year 1948, and in the
following years, when the planters-members of the North Negros Planters
Association, Inc. considered that the stipulated 30-year period of their milling
contracts executed in the year 1918 had already expired and terminated in the
crop year 1947-1948, and the planters-members of the Victorias Planters
Association, Inc. likewise considered the stipulated 30-year period of their
milling contracts, as having likewise expired and terminated in the crop year
1948-1949, under the pertinent provisions of the standard milling contract.
Notwithstanding the repeated representations made by the herein petitioners
with the respondent corporation, the herein respondent has refused and still
refuses to accede to the same, contending that under the provisions of the
milling contract.
Whether or not the trial court erred in rendering its disputed decision,
favoring the petitioner.
RULING:
NO. Fortuitous event relieves the obligor from fulfilling a contractual
obligation.
cannot later on demand its fulfillment. The performance of what the law has
written off cannot be demanded and required. The prayer that the plaintiffs be
compelled to deliver sugar cane to the appellant for six (6) years more to make
up for what they failed to deliver during those trying years, the fulfillment of
which was impossible, if granted, would in effect be an extension of the term of
the contracts entered into by and between the parties.
POTESTATIVE PERIOD
1.
2.
3.
lessees to pay the increased monthly rentals in the amount of P3,500.00, the
lessor through its counsel in a letter dated April 10, 1990 demanded that the
lessees vacate the premises and pay the amount of P7,000.00 corresponding to
the months of February and March, 1990.
The lessees exerted effort to pay the rentals due for the months of
February and March 1990 at the monthly rate stipulated in the contract but was
refused by the lessor so that on May 2, 1990, they instituted before the
Metropolitan Trial Court of Manila, Branch 16 a case for consignation.
The trial judge in the consignation case issued an order allowing the
plaintiffs therein to deposit with the City Treasurer of Manila the amount of
P33,480.28 for Co Tong and the amount of P32,710.32 for Tan Te Gutierrez
representing their respective rentals for thirteen (13) months from February,
1990 to January, 1991.
More than six (6) months from the filing of the case for consignation, the
lessor instituted an ejectment suit against the lessees before the Metropolitan
Trial Court of Manila Branch 20. The court in its decision dismissed the
ejectment suit for lack of merit. Regional Trial Court is constrained to reverse
the appealed decision and ordered another judgment to be entered in favor of
appellant. This was, however, reversed by the Court of Appeals
ISSUE:
Whether or not the subject contract of lease did not provide for a definite
period hence it falls under the ambit of Art. 1687 of the NCC, making the
agreement effective on a month-to-month basis since rental payments are made
monthly
RULING:
No. The Court held that Art. 1687 finds no application in the case at bar.
The lease contract between petitioner and respondents is with a period
subject to a resolutory condition. Art. 1687 provides that if the period for the
lease has not been fixed, it is understood to be from year to year, if the rent
agreed upon is annual; from month to month, if it is monthly; from week to
week, if the rent is weekly; and from day to day, if the rent is to be paid daily.
However, even though a monthly rent is paid, and no period for the lease has
been set, the courts may fix a longer term for the lease after the lessee has
occupied the premises for over one year.
If the rent is weekly, the courts may likewise determine a longer period
after the lessee has been in possession for over six months. In case of daily
rent, the courts may also fix a longer period after the lessee has stayed in the
place for over one month. The wording of the agreement is unequivocal: The
lease period shall continue for an indefinite period provided the lessee is up-todate in the payment of his monthly rentals. The condition imposed in order
that the contract shall remain effective is that the lessee is up-to-date in his
monthly payments. It is undisputed that the lessees Gutierrez and Co Tong
religiously paid their rent at the increasing rate of 20% annually.
The
agreement between the lessor and the lessees are therefore still subsisting,
with the original terms and conditions agreed upon, when the petitioner
unilaterally increased the rental payment to more than 20% or P3,500.00 a
month.
POTESTATIVE PERIOD
BORROMEO VS. CA
47 SCRA 65
FACTS:
Before the year 1933, Jose A. Villamor was a distributor of lumber
belonging to Mr. Miller who was the agent of the Insular Lumber Company in
Cebu City.
Defendant being a friend and former classmate of plaintiff,
Borromeo, used to borrow from the latter certain amounts from time to time.
On one occasion with some pressing obligation to settle with Mr. Miller,
defendant borrowed from plaintiff a large sum of money for which he
mortgaged his land and house in Cebu City. Mr. Miller filed civil action against
the defendant and attached his properties including those mortgaged to
plaintiff, inasmuch as the deed of mortgage in favor of plaintiff could not be
registered because it was not properly drawn up. Plaintiff then pressed the
defendant for the settlement of his obligation, but defendant instead offered to
execute a document promising to pay his indebtedness even after the lapse of
ten (10) years.
Liquidation was made and defendant was found to be indebted to plaintiff
in the sum of P7,220, for which defendant signed a promissory note on
November 29, 1933 with interest at the rate of 12% per annum, agreeing to
pay-as soon as I have money. The note further stipulates that defendant
hereby relinquish, renounce, or otherwise waive my rights to the prescriptions
established by our Code of Civil Procedure for the collection or recovery of the
above sum of P7,220.
ISSUE:
Whether or not prescription extinguished the obligation.
RULING:
NO. The obligation in this case is one which is subject to a potestative
condition, one which is dependent solely on the will of the debtor. The
statement as soon as I have money is the condition which is dependent on the
debtors will. Although this condition is void, it has been relied upon by the
creditor resulting to the delayed filing of the action.
Prescription in this case cannot be applied strictly for it will result to
grave injustice on the part of the creditor. For as was also made clear therein,
there had been since then verbal requests on the part of the creditor made to
the debtor for the settlement of the loan. Furthermore, plaintiff did not file any
complaint against the defendant within ten (10) years from the execution of the
document as there was no property registered in defendants name who
furthermore assured him that he could collect even after the lapse of ten years.
The debtor is therefore liable for the amount of the obligation plus interests.
ISSUE:
Whether or not the action has already prescribed.
RULING:
NO. The words as soon as possible in the promissory notes denote that
such is an obligation subject to a potestative condition. Article 1128 of the Civil
Code provides:
If the obligation does not specify a term, but it is to be inferred from its nature
and circumstances that it was intended to grant the debtor time for its
performance, the period of the term shall be fixed by the court.
The action to ask the court to fix the period has already prescribed in
accordance with section 43 (1) of the Code of Civil Procedure. This period of
prescription is ten (10) years, which has already elapsed from the execution of
the promissory notes until the filing of the action on June 1, 1934. The action
which should be brought in accordance with Article 1128 is different from the
action for the recovery of the amount of the notes, although the effects of both
are the same, being, like other civil actions, subject to the rules of prescription.
BALUYUT VS POBLETE
GR No. 144435.
February 6, 2007
FACTS:
On July 20, 1981, Guillermina Baluyut, mortgaged her house to
secure a loan in the amount of PhP850,000.00 from the spouses Eulogio
and Salud Poblete. The load was set to mature in one month. After a
month had passed, she was unable to pay her indebtedness which led the
spouses to extrajudicially foreclose the mortgage. The property was then
sold on Auction to the Poblete spouses who asked Baluyut to vacate the
premises. Baluyut instead filed an action for annulment of mortgage. His
claim was rejected by the RTC and the CA. Petitioner claims that based
on the testimony of Atty. Edwina Mendoza that the maturity of the loan
which she incurred is only for one year.
ISSUE:
Is petitioners contention tenable?
RULING:
Evidence of a prior or contemporaneous verbal agreement is
generally not admissible to vary, contradict or defeat the operation of a
valid contract. In the instant case, aside from the testimony of Atty.
Mendoza, no other evidence was presented to prove that the real date of
maturity is one year.
The terms that were thusly reduced to writing is deemed to contain
all the terms agreed upon and no evidence of such terms can be admitted
other than the contents of the agreement itself. The promissory note is
the law between petitioner and private respondents and it clearly states
that the loan shall mature in one month from date of the said Promissory
Note.
MALAYAN REALTY VS UY
GR No. 163763. November 10, 2006
FACTS:
discretionary review on the part of the Labor Arbiter nor of the NLRC so
long, of course, as violation of law or merely arbitrary and malicious
action is not shown. As found by the NLRC, the private respondents
decision to close the plant was a result of a study conducted which
established that the most prudent course of action for the private
respondent was to stop operations in said plants and transfer production
to other more modern and technologically advanced plants of private
respondent.
OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS
FACTS:
Ernesto V. Santos and Santos Ventura Hocorma Foundation, Inc. (SVHFI)
were the plaintiff and defendant, respectively, in several civil cases filed in
different courts in the Philippines. On October 26, 1990, the parties executed a
Compromise Agreement which amicably ended all their pending litigations.
The pertinent portions of the Agreement read as follows:
1.
Defendant Foundation shall pay Plaintiff Santos P14.5 Million in the
following manner:
a) P1.5 Million immediately upon the execution of this agreement; and, b) the
balance of P13 Million shall be paid, whether in one lump sum or in
installments, at the discretion of the Foundation, within a period of not more
than two (2) years from the execution of this agreement; provided, however,
that in the event that the Foundation does not pay the whole or any part of such
balance, the same shall be paid with the corresponding portion of the land or
real properties subject of the aforesaid cases and previously covered by the
notices of lis pendens, under such terms and conditions as to area, valuation,
and location mutually acceptable to both parties; but in no case shall the
payment of such balance be later than two (2) years from the date of this
agreement; otherwise, payment of any unpaid portion shall only be in the form
of land aforesaid;
petitioner, which were formerly subjects of the lis pendens. Petitioner, however,
filed numerous motions to block the enforcement of the said writ. The
challenge of the execution of the aforesaid compromise judgment even reached
the Supreme Court. All these efforts, however, were futile.
On November 22, 1994, petitioners real properties located in Mabalacat,
Pampanga were auctioned. In the said auction, Riverland, Inc. was the highest
bidder for P12 million and it was issued a Certificate of Sale covering the real
properties subject of the auction sale. Subsequently, another auction sale was
held on February 8, 1995, for the sale of real properties of petitioner in Bacolod
City. Again, Riverland, Inc. was the highest bidder. The Certificates of Sale
issued for both properties provided for the right of redemption within one year
from the date of registration of the said properties.
On June 2, 1995, Santos and Riverland Inc. filed a Complaint for
Declaratory Relief and Damages alleging that there was delay on the part of
petitioner in paying the balance of P13 million. They further alleged that under
the Compromise Agreement, the obligation became due on October 26, 1992,
but payment of the remaining P12 million was effected only on November 22,
1994. Thus, respondents prayed that petitioner be ordered to pay legal interest
on the obligation, penalty, attorneys fees and costs of litigation. Furthermore,
they prayed that the aforesaid sales be declared final and not subject to legal
redemption.
In its Answer, petitioner countered that respondents have no cause of
action against it since it had fully paid its obligation to the latter. It further
claimed that the alleged delay in the payment of the balance was due to its valid
exercise of its rights to protect its interests as provided under the Rules.
Petitioner counterclaimed for attorneys fees and exemplary damages.
On October 4, 1996, the trial court rendered a Decision dismissing herein
respondents complaint and ordering them to pay attorneys fees and exemplary
damages to petitioner. Respondents then appealed to the Court of Appeals.
The appellate court reversed the ruling of the trial court.
ISSUE:
Whether or not the Court of Appeals was correct in its decision, reversing
the trial courts decision, regarding the legal interest of herein respondents on
aforementioned properties.
RULING:
The Supreme Court held the decision of the Court of Appeals correct. A
compromise is a contract whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to one already commenced. It is an
agreement between two or more persons, who, for preventing or putting an end
to a lawsuit, adjust their difficulties by mutual consent in the manner which
they agree on, and which everyone of them prefers in the hope of gaining,
balanced by the danger of losing. The general rule is that a compromise has
upon the parties the effect and authority of res judicata, with respect to the
matter definitely stated therein, or which by implication from its terms should
be deemed to have been included therein. This holds true even if the
agreement has not been judicially approved.
In the case at bar, the Compromise Agreement was entered into by the
parties on October 26, 1990. It was judicially approved on September 30, 1991.
Applying existing jurisprudence, the compromise agreement as a consensual
contract became binding between the parties upon its execution and not upon
its court approval. From the time a compromise is validly entered into, it
becomes the source of the rights and obligations of the parties thereto. The
purpose of the compromise is precisely to replace and terminate controverted
claims. In accordance with the compromise agreement, the respondents asked
for the dismissal of the pending civil cases. The petitioner, on the other hand,
paid the initial P1.5 million upon the execution of the agreement. This act of
the petitioner showed that it acknowledges that the agreement was
immediately executory and enforceable upon its execution. As to the remaining
P13 million, the terms and conditions of the compromise agreement are clear
and unambiguous.
The two-year period must be counted from October 26, 1990, the date of
execution of the compromise agreement, and not on the judicial approval of the
compromise agreement on September 30, 1991. When respondents wrote a
demand letter to petitioner on October 28, 1992, the obligation was already due
and demandable. When the petitioner failed to pay its due obligation after the
demand was made, it incurred delay. Article 1169 of the New Civil Code
provides:
Those obliged to deliver or to do something incur in delay from the time
the obligee judicially or extrajudicially demands from them the fulfillment of
their obligation.
Delay as used in this article is synonymous to default or mora which
means delay in the fulfillment of obligations. It is the non-fulfillment of the
MANUEL D. MELOTINDOS
VS. MELECIO TOBIAS, represented by JOSEFINA PINEDA
G.R. No. 146658
28 October 2002
391 SCRA 299
FACTS:
Eighty-seven-year old petitioner, Atty. Manuel D. Melontindos, was the
lessee of the ground floor of a house in Malate, Manila. He had been renting
the place since 1983 on a month-to-month basis from its owner, respondent
Melecio Tobias, who was then residing in Canada.
Sometime in the last quarter of 1995, owing to his sickly mother who
needed constant medical attention and filial care, respondent demanded from
petitioner either to pay an increased rate of monthly rentals or else to vacate
the place so he and his mother could use the house during her regular medical
check-up in Manila. For two (2) years nothing came out of the demand to
vacate, hence, in 1997 respondent insisted upon raising the rental fee once
again.
On 1 June 1998 respondent asked petitioner to restore the premises to
him for some essential repairs of its dilapidated structure. This time he did not
offer petitioner anymore the option to pay higher rentals. The renovation of the
house was commenced but had to stop midway because petitioner refused to
vacate the portion he was occupying and worse he neglected to pay for the
lease for four (4) months from May to August 1998. Hence for the second time,
or on 19 October 1998, respondent demanded the payment of the rental arrears
as well as the restoration of the house to him. On 3 February 1999, since
petitioner was insisting on keeping possession of the house but did not pay the
rental for January 1999, although he had settled the arrears of four (4) months,
respondent was compelled to file a complaint for ejectment.
The MeTC of Manila decided the ejectment complaint in favor of
respondent and ordered petitioner to vacate the leased premises and to pay
rental arrears in the amount of P60,000.00 as of December 1998 and P6,000.00
for every month thereafter until he finally restored possession thereof to
respondent plus attorneys fees of P15,000.00 and the costs of suit. The RTC of
Manila upheld in toto the MeTC Decision and denied the subsequent motion for
reconsideration for failure to set the date of hearing thereof not later than ten
(10) days from its filing. Petitioners recourse to the Court of Appeals by
petition for review was also unsuccessful since the assailed Decision was
affirmed in its entirety as the ensuing motion for reconsideration thereof was
denied for late filling, i.e., the motion was filed only on 30 October 2000 beyond
the fifteen (15) day period from his receipt of the CA Decision on 9 October
2000 as shown by the registry return receipt.
ISSUE:
Whether or not the lower courts erred in their rulings.
RULING:
It is not only the evidence on record but petitioners pleadings
themselves that confirm his default in paying the rental fees for more than
three (3) months in 1999 and 1998 prior to the filing of the ejectment
complaint. There is also sufficient basis for the courts a quo to conclude that
respondent desperately needed the property in good faith for his own family
and for the repair and renovation of the house standing thereon. These facts
represent legal grounds to eject a tenant.
The Petition for Review is DENIED for lack of merit.
pay it precluded the possibility of a mutual renewal. Third, the fact that the
lessor allowed the lessee to introduce improvements on the property was
indicative, not of the formers intention to extend the contract automatically,
but merely of its obedience to its express terms allowing the improvements.
After all, at the expiration of the lease, those improvements were to become its
property.
As to the contention that it is not fair to eject respondents from the
premises after only five years, considering the value of the improvements they
introduced therein, suffice it to say that they did so with the knowledge of the
risk -- the contract had plainly provided for a five-year lease period.
Parties are free to enter into any contractual stipulation, provided it is
not illegal or contrary to public morals. When such agreement, freely and
voluntarily entered into, turns out to be disadvantageous to a party, the courts
cannot rescue it without crossing the constitutional right to contract. They are
not authorized to extricate parties from the necessary consequences of their
acts, and the fact that the contractual stipulations may turn out to be financially
disadvantageous will not relieve the latter of their obligations.
Petition granted. Decision set aside. Respondents ordered to vacate the
premises, to restore peaceful possession thereof to petitioner, and to pay
accrued rentals.
Some three (3) months before the expiration of the stipulated period, or
more precisely on April 20, 1976, Alegre was given a copy of the report filed by
Brent School with the Department of Labor advising of the termination of his
services effective on July 16, 1976.
Alegre objected to this termination of his employment contending that
since his services were necessary and desirable in the usual business of his
employer, and his employment had lasted for five (5) years, he had acquired the
status of a regular employee and could not be removed except for valid cause.
ISSUE:
Whether or not Alegres contention is tenable.
RULING:
NO. The provisions of the Labor Code recognize the existence and
legality of term employments. The case at bar is one which involves term
employment.
Therefore, Alegres employment was terminated upon the
expiration of his last contract with Brent School on July 16, 1976 without the
necessity of any notice. The advance written advice given the Department of
Labor with copy to said petitioner was a mere reminder of the impending
expiration of his contract, not a letter of termination, nor an application for
clearance to terminate which needed the approval of the Department of Labor
to make the termination of his services effective. In any case, such clearance
should properly have been given, not denied.
OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS
LOURDES VALERIO LIM VS. PEOPLE OF THE PHILIPPINES
G.R. No. L-34338
November 21, 1984
133 SCRA 333
FACTS:
On January 10, 1966, Lim (Appellant) went to the house of Maria Ayroso
and proposed to sell Ayroso's tobacco. Ayroso agreed to the proposition of the
appellant to sell her tobacco consisting of 615 kilos at P1.30 a kilo. The
appellant was to receive the overprice for which she could sell the tobacco.
Of the total value of P799.50, the appellant had paid to Ayroso only
P240.00, and this was paid on three different times. Demands for the payment
of the balance of the value of the tobacco were made upon the appellant by
Ayroso, and particularly by her sister, Salud Bantug. Salud Bantug further
testified that she had gone to the house of the appellant several times, but the
appellant often eluded her; and that the 'camarin' of the appellant was empty.
Although the appellant denied that demands for payment were made upon her,
it is a fact that on October 19, 1966, she wrote a letter to Salud Bantug stating
that she could not pay in full the amount of P799.50 because it is also hard to
demand payment from her suki in the market of Cabanatuan. Pursuant to
this letter, the appellant sent a money order for P100.00 on October 24, 1967,
and another for P50.00 on March 8, 1967; and she paid P90.00 on April 18,
1967 or a total of P240.00. As no further amount was paid, the complainant
filed a complaint against the appellant for estafa.
ISSUE:
Whether or not the Article 1197 of the Civil Code can be applied in this
case
RULING:
NO. It is clear in the agreement that the proceeds of the sale of the
tobacco should be turned over to the complainant as soon as the same was sold,
or, that the obligation was immediately demandable as soon as the tobacco was
disposed of. Hence, Article 1197 of the New Civil Code, which provides that the
courts may fix the duration of the obligation if it does not fix a period, does not
apply.
Anent the argument that petitioner was not an agent because the
agreement does not say that she would be paid the commission if the goods
were sold, the fact that appellant received the tobacco to be sold at P1.30 per
kilo and the proceeds to be given to complainant as soon as it was sold, strongly
negates transfer of ownership of the goods to the petitioner. The agreement
constituted her as an agent with the obligation to return the tobacco if the same
was not sold.
OBLIGATIONS WITH A TERM OR PERIOD: EFFECTS
PACIFIC BANKING CORPORATION VS. COURT of APPEALS
G. R. No. 45656
May 5, 1989
1958, PBC sold the 1, 000 shares of stocks of Insular Farms to Pacific Farms.
The latter then sold its shares of stocks to its own stockholders, who constituted
themselves as stockholders of Insular Farms and then resold back to Pacific
Farms Inc. all of Insular Farms assets except for a certificate of public
convenience to operate an ice plant. On September 28, 1959, Hart filed
another case for recovery of sum of money comprising his investments and
earnings.
The trial court rendered a decision ordering Pacific Farms Inc. to pay
Joseph Hart for unpaid salaries and for loans made by private respondents to
Insular Farms, Inc. the private respondents, dissatisfied with the decision,
appealed to the Court of Appeals.
The appellate court modified the lower
courts decision, directing Pacific Banking Corporation to pay Joseph Hart
P100,000.00, subject to reimbursement from Babst.
ISSUES:
Whether or not the sale by the petitioner bank of the shares of stocks of
private respondent on March 21, 1958 is valid since the shares of stocks had
been pledged to insure an extension of the period to pay the July installment.
Whether or not the Court may fix a period in the parties agreement to
extend the payment of the loan, including the installment which was due on or
before July 1957 it being imprecise.
RULING:
The Supreme Court held that since there was an agreement to extend
indefinitely the payment of the installment of P50,000.00 in July 1957 as
provided in the promissory note, consequently, petitioner Pacific Banking
Corporation was precluded form enforcing the payment of the said installment
of July 1957, before the expiration of the indefinite period of extension, which
period had to be fixed by the court as provided in Article 1197 of the Civil Code.
Hence, the disputed foreclosure and subsequent sale was premature.
Wherefore, the petition is dismissed.
YES. In case the period of extension is not precise, the provisions of
Article 1197 of the Civil Code should apply. The pledge executed as collateral
security no longer contained a provision on installment due on or before July
1957. The pledge constituted on February 19, 1958 on the shares of stocks of
Insular was sufficient consideration for the extension, considering that pledge
FACTS:
On February 27 1904, Anastasio Alano, Jlose Alano and Florencio Alano
executed in favor of the plaintiff, Dra. Marcela Marino a document stipulating
that the Alanos as testamentary heirs of deceased Rev. Anastacio Cruz, would
pay the sum of P2,730.50 within one (1) year with interest of 12 percent per
annum representing the amount of debt incurred by Cruz. Moreover, the
agreement provided that the Alanos are to convey the house and lot bequeathed
to them by Cruz in the event of failure to pay the debt in money at its maturity.
No part of interest or principal due has been paid except the sum of P200
paid in 1908 by Anastacio Alano. In 1912, Anastasio died intestate. On August
8, 1914, CFI of Batangas appointed Crisanto Javier as administrator of
Anastasios estate. On March 17, 1916, the plaintiffs filed the complaint against
Florencio, Jose and Crisanto praying that unless defendants pay the debt for the
recovery of which the action was brought, they be required to convey to
plaintiffs the house and lot described in the agreement, that the property be
appraised and if its value is found to be less than the amount of the debt, with
accrued interest at the stipulation rate, judgment be rendered in favor of the
plaintiffs for the balance.
ISSUE:
Whether or not the agreement that the defendant-appellant, at the
maturity of the debt, will pay the sum of the money lent by the appellees or will
transfer the rights to the ownership and possession of the house and lot
bequeathed to the former by the testator in favor of the appellees, is valid.
RULING:
YES, this stipulation is valid because it is simply an alternative obligation,
which is expressly allowed by law. The agreement to convey the house and lot
on an appraised value in the event of failure to pay the debt in money at its
maturity is valid. It is simply an undertaking that if debt is not paid in money, it
will be paid in another way. The agreement is not open to the objection that the
agreement is pacto comisorio. It is not an attempt to permit the creditor to
declare the forfeiture of the security upon the failure of the debtor to pay at its
maturity. It is simply provided that if the debt is not paid in money, it shall be
paid by the transfer of the property at a valuation. Such an agreement
unrecorded, creates no right in rem, but as between the parties, it is perfectly
valid and specific performance by its terms may be enforced unless prevented
by the creation of superior rights in favor of third persons.
The contract is not susceptible of the interpretation that the title to the
house and lot in question was to be transferred to the creditor ipso facto upon
the mere failure of the debtors to pay the debt at its maturity. The obligations
assumed by the debtors were in the alternative, and they had the right to elect
which they would perform. The conduct of parties shows that it was not their
understanding that the right to discharge the obligation by the payment of the
money was lost to the debtors by their failure to pay the debt at its maturity.
The plaintiff accepted the payment from Anastacio in 1908, several years after
the debt matured.
It is quite clear therefore that under the terms of the contract, and the
parties themselves have interpreted it, the liability of the defendant as to the
conveyance of the house and lot is subsidiary and conditional, being dependent
upon their failure to pay the debt in money. It must follow therefore that if the
action to recover the debt was prescribed, the action to compel a conveyance of
the house and lot is likewise barred, as the agreement to make such
conveyance was not an independent principal undertaking, but merely a
subsidiary alternative pact relating to the method by which the debt must be
paid.
ALTERNATIVE OBLIGATION: MEANING AND DEFINITION
ONG GUAN CUAN AND
THE BANK OF THE PHILIPPINE ISLANDS, Plaintiff-appellees
VS. CENTURY INSURANCE COMPANY, defendant-appelant
46 SCRA 592
GR No. 22738
46 P 592
FACTS:
A building of plaintiff Ong Guan Cuan was insured with defendant
Century Insurance Company (Century) against fire for P30,000 as well as the
merchandise therein for P15,000. On February 28 1923, the building and the
merchandise were burned while the policies issued were in force. Under the
conditions of the policies, the defendant may at its option reinstate or replace
the destroyed property instead of paying for the amount of the loss and that it is
not bound to reinstate exactly or completely the damaged property.
Hence the defendant appealed from the judgment and prayed that it be
permitted to rebuild the house as provided in the conditions of the insurance
policies.
FACTS:
ISSUE:
Whether or not defendant Century may be allowed to rebuild the house
as its option instead of payment of the insured value as stipulated in the
insurance policies.
RULING:
NO. The conditions in the insurance policies that the parties entered into
allowed Century to either pay the insured value of the house, or rebuild it
making the obligation of the company an alternative one. In alternative
obligations, the debtor, Century, must notify the creditor of his election stating
which of the two prestations it is disposed to fulfill. The objective is to give the
creditor opportunity to give consent or deny the election of the debtor. Only
after said notice shall election take legal effect when consented by the creditor
(Article 120 Civil Code) or if impugned by the latter when declared proper by a
competent court. In the instant case, appellant company did not give formal
notice of its election to rebuild the house and the proposed reconstruction of
the house was rejected by the creditor.
The plaintiff has been laboring along for several years in an unsuccessful
legal battle with the defendants, springing from his claim to be the owner of the
property involved in the receivership. This cause of action is founded upon the
contract and the claim put forth by the plaintiff is to have the five parcels
adjudge to him in lieu of another parcel formerly supposed to contain one
thousand trees between him and certain of the Martinez heirs. By this contract,
Reyes was to be given the parcel described in clause 8, but in a proviso to said
clause, the parties contracting with Reyes agreed to assure to him certain other
land containing an equivalent number of trees in case he should so elect. The
litigation shows that the plaintiff elected to take and hold the parcel described
in clause 8, and his right thereto has all along been recognized in the
dispositions made by the court with respect to said land. Thus, Reyes must be
taken to have elected to take that particular parcel and he is now estopped
from asserting a contrary election to take the five parcels of land described in
his complaint.
However, the title of the parcel is in the heirs of Inocente Martinez and it
does not appear that they have transferred said title to Reyes.
ISSUE:
Whether or not Reyes is entitled to the damages against the partys
signatory to the contract of March 5, 1921 for the value of the said property.
RULING:
Yes. The claim of the defendants to the interest of P8,000 from July 31,
1926 cannot be conceded as the judgment itself bears interest at the lawful rate
from the date the same was rendered. The Martinez heirs are ordered to
procure the sufficient deed conveying to appellant Estanislao Reyes the parcels
of land mentioned in paragraph 8 of the contract. The judgment against Reyes
in favor of the Martinez heirs is enjoined.
ALTERNATIVE VS. FACULTATIVE OBLIGATION
QUIZANA VS. REDUGERIO
94 PHIL. 922
FACTS:
This is an appeal to the Court from a decision rendered by the Court of
the First Instance of Marinduque, wherein the defendant Gaudencio Redugerio
was to pay the plaintiff Martina Quizana the sum of P550 with the interest from
the time of the filing of the complaint and from an order of the same court
proportionate part of the debt, and the creditor is entitled to demand only a
proportionate part of the credit from each debtor. The well-entrenched rule is
that solidary obligations cannot be inferred lightly. They must be positively and
clearly expressed. A liability is solidary only when the obligation expressly so
states, when the law so provides or when the nature of the obligation so
requires.
In the dispositive portion of the January 31, 1984 Decision of the trial
court, the word solidary neither appears nor can it be inferred therefrom. The
fallo merely stated that the following respondents were liable: Pacific Lloyd
Corporation, Thomas H. Van Sebille, Carlos M. Farrales and Federico C. Lim.
Under the circumstances, the liability is joint, as provided by the Civil Code,
which we quote: Art. 1208. If from the law, or the nature or the wording of
the obligations to which the preceding article refers[,] the contrary does not
appear, the credit or debt shall be presumed to be divided into as many equal
shares as there are creditors or debtors x x x. Hence the execution must
conform with that which is ordained or decreed in the dispositive portion of the
decision.
Petitioner maintains that the Court of Appeals improperly and incorrectly
disregarded the body of the trial courts Decision, which clearly stated as
follows: To support the Promissory Note, a Continuing Suretyship Agreement
was executed by the defendants, Federico C. Lim, Carlos M. Farrales and
Thomas H. Van Sebille, in favor of the plaintiff corporation, to the effect that if
Pacific Lloyd Corporation cannot pay the amount loaned by plaintiff to said
corporation, then Federico C. Lim, Carlos M. Farrales and Thomas H. Van
Sebille will hold themselves jointly and severally together with defendant
Pacific Lloyd Corporation to answer for the payment of said obligation.
The only exception when the body of a decision prevails over the fallo is
when the inevitable conclusion from the former is that there was a glaring error
in the latter, in which case the body of the decision will prevail. In this
instance, there was no clear declaration in the body of the January 31, 1984
Decision to warrant a conclusion that there was an error in the fallo. Nowhere
in the former can we find a definite declaration of the trial court that, indeed,
respondents liability was solidary. If petitioner had doubted this point, it
should have filed a motion for reconsideration before the finality of the Decision
of the trial court.
SOLIDARY OBLIGATIONS: HOW CREATED
1.
2.
3.
4.
CDCP VS ESTRELLA
GR No. 147791. September 8, 2006
FACTS:
On December 29, 1978, respondents Rebecca G. Estrella and her
granddaughter, Rachel E. Fletcher, boarded in San Pablo City, a BLTB
bus bound for Pasay City. However, they never reached their destination
because their bus was rammed from behind by a tractor-truck of CDCP
in the South Expressway. The strong impact pushed forward their seats
and pinned their knees to the seats in front of them. They regained
consciousness only when rescuers created a hole in the bus and
extricated their legs from under the seats. They suffered physical injuries
as a result. Thereafter, respondents filed a Complaint for damages
against CDCP, BLTB, Espiridion Payunan, Jr. and Wilfredo Datinguinoo
before the Regional Trial Court of Manila, Branch 13.
ISSUE:
Are the accused jointly or solidarily liable?
RULING:
The case filed by respondents against petitioner is an action
for culpa aquiliana or quasi-delict under Article 2176 of the Civil Code.
The liability for the negligent conduct of the subordinate is direct and
primary, but is subject to the defense of due diligence in the selection
and supervision of the employee. In the instant case, the trial court found
that petitioner failed to prove that it exercised the diligence of a good
father of a family in the selection and supervision of Payunan, Jr.
It is well-settled in Fabre, Jr. v. Court of Appeals, that the
owner of the other vehicle which collided with a common carrier is
solidarily liable to the injured passenger of the same. The Peitition was
thusly DENIED.
The petition is denied. Although the Agreement does not state that
payment of the entire obligation is an essential condition for
reimbursement, RGC and Gervel cannot automatically claim for
indemnity from Qua because Qua himself is liable directly to Metrobank
and PDCP. The elements of novation are not established in the instant
case. Contrary to RGC and Gervels claim, payment of any amount will
not automatically result in reimbursement. If a solidary debtor pays the
obligation in part, he can recover reimbursement from the co-debtors
only in so far as his payment exceeded his share in the obligation. This is
precisely because if a solidary debtor pays an amount equal to his
proportionate share in the obligation, then he in effects pays only what is
due from him. If the debtor pays less than his share in the obligation, he
cannot demand reimbursement because his payment is less than his
actual debt.
SOLIDARY OBLIGATIONS: HOW CREATED
INDUSTRIAL MANAGEMENT VS. NLRC
331 SCRA 640
FACTS:
In September 1984, private respondents Enrique Sulit, Socorro Mahinay,
Esmeralco Pegarido, Tita Bacusimo, Nierre, Virginia Bagus, Nemenzo, Dariogo
and Roberto filed a complaint with the DOLE, Regional Arbitration Branch
No.111 in Cebu City against Filipinas Carbon Mining Corp, Genardo Sicaty,
Gonzales, Dhin Gin, Lo Kuan Chin petitioner Industrial Management
Development Corporation for payment of separation pay and unpaid wages.
Labor Arbiter judgment-ordering Filipinas, Gonzales, Lo Kuan Chin to
pay complainant Enrique Sulit total amount of P82,800.00.
ISSUES:
(1) Whether payment of the entire obligation is an essential
condition for reimbursement; and (2) Whether there was no novation.
RULING:
ISSUE:
should also be extinguished, as provided for by Article 2080 of the Civil Code on
guarantors. The Regional Trial Court and the Court of Appeals rejected his
petitions and so a petition for review on certiorari was filed with the Supreme
Court.
ISSUE:
Whether or not the petitioner is solidary co-maker of the promissory note
in issue and not merely a guarantor.
RULING:
The Supreme Court held that the petitioner signed the promissory note
as a solidary co-maker and not as a guarantor. A solidary or joint and several
obligation is one in which each debtor is liable for the entire obligation, and
each creditor is entitled to demand the whole obligation. On the other hand,
Article 2047 of the Civil Code states:
By guaranty a person, called the guarantor, binds himself to the creditor to
fulfill the obligation of the principal debtor in case the latter should fail to do
so.
If a person binds himself solidarily with the principal debtor, the
provisions of Section 4, Chapter 3, Title I of this Book shall be observed. In
such a case the contract is called a suretyship. While a guarantor may bind
himself solidarily with the principal debtor, the liability of a guarantor is
different from that of a solidary debtor. Thus, Tolentino explains:
A guarantor who binds himself in solidum with the principal debtor under the
provisions of the second paragraph does not become a solidary co-debtor to all
intents and purposes. There is a difference between a solidary co-debtor and a
fiador in solidum (surety). The latter, outside of the liability he assumes to pay
the debt before the property of the principal debtor has been exhausted, retains
all the other rights, actions and benefits which pertain to him by reason of the
fiansa; while a solidary co-debtor has no other rights than those bestowed upon
him in Section 4, Chapter 3, Title I, Book IV of the Civil Code.
Section 4, Chapter 3, Title I, Book IV of the Civil Code states the law on joint
and several obligations. Under Art. 1207 thereof, when there are two or more
debtors in one and the same obligation, the presumption is that the obligation is
joint so that each of the debtors is liable only for a proportionate
part of the debt. There is a solidary liability only when the obligation expressly
so states, when the law so provides or when the nature of the obligation so
requires.
Because the promissory note involved in this case expressly states that
the three signatories therein are jointly and severally liable, any one, some or
all of them may be proceeded against for the entire obligation. The choice is
left to the solidary creditor to determine against whom he will enforce
collection. Consequently, the dismissal of the case against Judge Pontanosas
may not be deemed as having discharged petitioner from liability as well. As
regards Naybe, suffice it to say that the court never acquired jurisdiction over
him. Petitioner, therefore, may only have recourse against his co-makers, as
provided by law.
ACTIVE SOLIDARITY OR MUTUAL AGENCY: EFFECTS
PHILIPPINE BLOOMING MILLS VS. COURT OF APPEALS
413 SCRA 445
OCTOBER 15, 2003
FACTS:
Alfredo Ching (Ching) was the Senior Vice President of Philippine
Blooming Mills, Inc. (PBM). In his personal capacity and not as a corporate
officer, Ching signed a Deed of Suretyship dated 21 July 1977 binding himself
solidarily liable together with the debtor PBM.
On March 24 and August 6 1980, Traders Royal Bank (TRB) granted PBM
letters of Credit on application of Ching in his capacity as Senior Vice President
of PBM. Ching later accomplished and delivered to TRB trust receipts, which
acknowledged receipt in trust for TRB of the merchandise subject of the letters
of credit. Under the trust receipts, PBM had the right to sell the merchandise
for cash with the obligation to turn over the entire proceeds of the sale to TRB
as payment of PBMs indebtedness.
Ching further executed an Undertaking for each trust receipt, which
uniformly granted the TRB the right to take possession of the goods at any time
to protect the TRBs interests.
On 27 April 1981, PBM obtained a P3, 500,000 trust loan from TRB.
Ching signed as co-maker in the notarized Promissory Note evidencing said
loan.
PBM defaulted in its payment of the two (2) trust receipts as well as the
trust loan.
On 1 April 1982, PBM and Ching filed a petition for suspension of
payments with the Securities and Exchange Commission (SEC). The petition
sought to suspend payment of PBMs obligations and prayed that the SEC allow
PBM to continue its normal business operations free from the interference of its
creditors. One of the listed creditors of PBM was TRB.
On 9 July 1982, the SEC placed all of PBMs assets, liabilities, and
obligations under the rehabilitation receivership of Kalaw, Escaler and
Associates.
On 13 May 1983, ten months after the SEC placed PBM under
rehabilitation receivership, TRB filed with the trial court a complaint for
collection against PBM and Ching.
TRB asked the trial court to order
defendants to pay solidarily the indebtedness of PBM.
On 25 May 1983, TRB moved to withdraw the complaint against PBM on
the ground that the SEC had already placed PBM under receivership. The trial
court thus dismissed the complaint against PBM.
On 23 July 1983, PBM and Ching also moved to dismiss the complaint on
the ground that the trial court had no jurisdiction over the subject matter of the
case. PBM and Ching invoked the assumption of jurisdiction by the SEC over
all of PBMs assets and liabilities.
The trial court denied the motion to dismiss with respect to Ching and
affirmed its dismissal of the case with respect to PBM. The trial court stressed
that TRB was holding Ching liable under the Deed of Suretyship. As Chings
obligation was solidary, the trial court ruled that TRB could proceed against
Ching as surety upon default of the principal debtor PBM.
Upon the trial courts denial of his Motion for Reconsideration, Ching
filed a Petition for Certiorari and Prohibition before the Court of Appeals. The
appellate court granted Chings petition and ordered the dismissal of the case.
The appellate court ruled that SEC assumed jurisdiction over Ching and PBM to
the exclusion of courts or tribunals of coordinate rank.
TRB assailed the Court of Appeals decision before the Supreme Court.
In Traders Royal Bank v. Court of Appeals, the highest tribunal upheld the TRB
and ruled that Ching was merely a nominal party in the SEC case. Creditors
may sue individual sureties of debtor corporations, like Ching, in a separate
proceeding before regular courts despite the pendency of a case before the SEC
involving the debtor corporation.
In his Answer dated 6 November 1989, Ching denied liability as surety
and accommodation co-maker of PBM. He claimed that the SEC had already
issued a decision approving a revised rehabilitation plan for PBMs creditors.
He further claimed that even as a surety, he has the right to the defenses
personal to PBM. Thus, his liability as surety would attach only if, after the
rehabilitation of payments scheduled under the rehabilitation plan, there would
remain a balance of PBMs debt to TRB.
The trial court ruled that Ching is liable to TB under the Deed of
Suretyship. On appeal, the Court of Appeals affirmed the decision of the lower
court. The Court of Appeals denied Chings Motion for Reconsideration for lack
of merit.
ISSUES:
Whether or not Ching is liable for obligations PBM contracted after the
execution of the Deed of Suretyship.
Whether or not Chings liability is limited to the amount stated in PBMs
rehabilitation plan.
RULING:
Ching is liable for credit obligations contracted by PBM against TRB
before and after the execution of the 21 July 1977 Deed of Suretyship. This is
evident from the tenor of the deed itself, referring to amounts PBM may now
be indebted or may hereafter become indebted to TRB. The law expressly
allows a suretyship for future debts as provided for in Article 2053 of the Civil
Code. Under the Civil Code, a guaranty may be given to secure even future
debts; the amount of which may not be known at the time the guaranty is
executed. A continuing guaranty is one which is not limited to a single
transaction, but which contemplates a future course of dealing, covering a
series of transactions, generally for an indefinite time or until revoked.
Anent the second issue, in granting the loan to PBM, TRB required
Chings surety precisely to insure full recovery of the loan in case PBM becomes
insolvent or fails to pay in full. Ching cannot invoke Article 1222 of the Civil
Code. Thus, Ching cannot use PBMs failure to pay in full as justification for his
own reduced liability to TRB. TRB, as creditor, has the right under the surety to
proceed against Ching for the entire amount of PBMs loan. This is clear from
Article 1216 of the Civil Code, which states that: the creditor may proceed
against any one of the solidary debtors or some or all of them simultaneously.
The demand made against one of them shall not be an obstacle to those which
may subsequently be directed against the others, so long as the debt has not
been fully collected.
situated were granted uniform monetary awards and that the decision
did not include the basis of the computation of the amount of the award.
Eparwa also filed an appeal before the NLRC. For its part, Eparwa
questioned its liability for the security guards claims and the awarded
cross-claim amounts. The NLRC found that the security guards are
entitled to wage differentials and premium for holiday and rest day work.
Although the NLRC held Eparwa and LDCU solidarily liable for the wage
differentials and premium for holiday and rest day work, the NLRC did
not require Eparwa to reimburse LDCU for its payments to the security
guards. Eparwa and LDCU again filed separate motions for partial
reconsideration. In its Resolution NLRC declared that although Eparwa
and LDCU are solidarily liable to the security guards for the monetary
award, LDCU alone is ultimately liable.
LDCU filed a petition for certiorari before the appellate court
assailing the NLRCs decision. The appellate court granted LDCUs
petition and reinstated the Labor Arbiters decision. The appellate court
also allowed LDCU to claim reimbursement from Eparwa.
The
appellate
court
denied
Eparwas
motion
for
reconsideration.Hence, this petition.
ISSUE:
Is LDCU alone ultimately liable to the security guards for the wage
differentials and premium for holiday and rest day pay?
RULING:
Articles 106, 107 and 109 of the Labor Code read:
Art. 106. Contractor or subcontractor. Whenever an employer
enters into a contract with another person for the performance of the
formers work, the employees of the contractor and of the latters
subcontractor, if any, shall be paid in accordance with the provisions of
this Code.Article 107. Indirect employer. The provisions of the
immediately preceding Article shall likewise apply to any person,
partnership, association or corporation which, not being an employer,
contracts with an independent contractor for the performance of any
work, task, job or project.
ISSUE:
Whether or not the money claim of PCIB should be dismissed and
prosecuted against the estate of the late Tanjuatco.
RULING:
From the evidence presented, there can be no dispute that Carlos
Dimayuga bound himself jointly and severally with Pedro C. Tanjuatco, now
deceased, to pay the obligation with PCIB in the amount of P10,000.00 plus
10% interest per annum. In addition, as above stated, in case of non-payment,
they undertook among others to jointly and severally authorize respondent
bank, at its option to apply to the payment of this note, any and all funds,
securities, real or personal properties, etc. belonging to anyone or all of them.
Otherwise stated, the promissory note in question provides in unmistakable
language that the obligation of petitioner Dimayuga is joint and several with
Pedro C. Tanjuatco.
It is well settled under the law and jurisprudence that when the
obligation is solidary, the creditor may bring his action in toto against the
debtors obligated in solidum. As expressly allowed by Article 1216 of the Civil
Code, the creditor may proceed against any one of the solidary debtors or some
or all of them simultaneously. "Hence, there is nothing improper in the
creditor's filing of an action against the surviving solidary debtors alone,
instead of instituting a proceeding for the settlement of the estate of the
deceased debtor wherein his claim could be filed." The notice is undoubtedly
left to the solidary creditor to determine against whom he will enforce
collection.
Court of Appeals decision reversed and set aside. Trial court decision
affirmed.
EFFECTS OF PASSIVE SOLIDARITY/MUTUAL GUARANTY
CERNA VS. COURT OF APPEALS
220 SCRA 517
MARCH 30, 1993
FACTS:
Celerino Delgado and Conrad Leviste entered into a loan agreement on
or about October 16, 1972, which was evidenced by a promissory note. On the
same date, Delgado executed a chattel mortgage over a jeep owned by him.
Lot 3-B on July 31, 1982 to Maximino, Jr., for which reason the latter was issued
TCT No. 293701 by the Register of Deeds of Quezon City. When Romeo found
out about the sale to Maximino, Jr., he and his wife Eliza locked Maximino, Jr.
out of the house. On August 4, 1983, Maximino, Jr. brought an action for
recovery of possession and damages with prayer for writs of preliminary
injunction and mandatory injunction with the RTC of Quezon City.
On
December 12, 1986, the trial court ruled in favor of Maximino, Jr. In CA-G.R. CV
No. 12932, the CA affirmed the decision of the trial court. On June 15, 1988,
Romeo in turn filed, on behalf of the estate of Maximino, Sr., the present case
for annulment of sale with damages against Natividad and Maximino, Jr. The
case was filed in the RTC of Quezon City. Romeo sought the declaration of
nullity of the sale made on January 29, 1970 to Natividad and that made on July
31, 1982 to Maximino, Jr. on the ground that both sales were void for lack of
consideration. On March 1, 1990, Natividad and Maximino, Jr. filed a thirdparty complaint against the spouses Romeo and Eliza. They alleged that Lot 3,
which was included in the Deed of Absolute Sale of January 29, 1970 to
Natividad, had been surreptitiously appropriated by Romeo by securing for
himself a new title in his name. They alleged that Lot 3 is being leased by the
spouses Romeo and Eliza to third persons.
In the trial court, it rendered a decision declaring the nullity of the Deed
of Sale dated January 29, 1970 except as to lots 3, 3-b, 13 and 14 which had
passed on to third persons. On motion for reconsideration, the trial court
modified its decision. On appeal to the Court of Appelas, the decision of the
trial court was modified in the sense that the titles to Lot 3 (in the name of
Romeo Nazareno) and Lot 3-B ( in the name of Maximino Nazareno, Jr.), as well
as to Lots 10 and 11 were cancelled and ordered restored to the estate of
Maximino, Sr.
ISSUE:
Whether or not the the Deed of Absolute Sale on January 29, 1970 is an
indivisible contract founded on an indivisible obligation
RULING:
An obligation is indivisible when it cannot be validly performed in parts,
whatever may be the nature of the thing which is the object thereof. The
indivisibility refers to the prestation and not to the object thereof. In the
present case, the Deed of Sale of January 29, 1970 supposedly conveyed the six
lots to Natividad. The obligation is clearly indivisible because the performance
of the contract cannot be done in parts; otherwise the value of what is
transferred is diminished. Petitioners are therefore mistaken in basing the
KINDS OF PENALTIES:
1.
2.
FACTS:
Petitioners Alonzo and Sison alleged that they are the registered owners
of a parcel of land located at Lot 3, Block 11, M. Agoncillo St., Novaliches,
Quezon City, evidenced by TCT No. 152153. At around June 1996, petitioners
discovered that a portion on the left side of the parcel of land was occupied by
the respondents San Juan, without their knowledge or consent. A demand
letter was sent to the respondents requiring them to vacate the said premises,
but they refused to comply. Petitioners then filed a complaint against the
respondents. During the pendency of the case, the parties agreed to enter into
a Compromise Agreement which the trial court approved in a judgment by
compromise dated May 7, 1997. In the Compromise Agreement, it was
expressly stipulated that should any two of the installments of the purchase
price be not paid by the respondents, the said agreement shall be considered
null and void. Alleging that the respondents failed to abide by the provisions of
the Compromise Agreement by their failure to pay the amounts due thereon,
petitioners then filed an Amended Motion for Execution. Petitioners alleged
that the respondents failed to pay the installments for July 31, 1997 and August
31, 1997 on their due dates, thus the Compromise Agreement submitted by the
parties became null and void. With this, the trial court found no reason to
direct the issuance of the writ of execution and denied the petitioners
Amended Motion for Execution.
Petitioners filed their motion for
reconsideration to which the respondents opposed. The trial court likewise
denied the petitioners motion for reconsideration.
ISSUE:
Whether or not the petitioners have a right to enforce the provision on
Compromise Agreement by asking for the issuance of a writ of execution
because of the failure of the respondents to pay.
RULING:
The Supreme Court held that the items 11 and 12 of the Compromise
Agreement provided, in clear terms, that in case of failure to pay on the part of
the respondents, they shall vacate and surrender possession of the land that
they are occupying and the petitioners shall be entitled to obtain immediately
from the trial court the corresponding writ of execution for the ejectment of the
respondents. This provision must be upheld, because the Agreement
supplanted the complaint itself. When the parties entered into a Compromise
Agreement, the original action for recovery of possession was set aside and the
action was changed to a monetary obligation. Once approved judicially, the
Compromise Agreement cannot and must not be disturbed except for vices of
consent or forgery. For failure of the respondents to abide by the judicial
compromise, petitioners are vested with the absolute right under the law and
the agreement to enforce it by asking for the issuance of the writ of execution.
Doctrinally, a Compromise Agreement is immediately final and executory.
Petitioners course of action, asking for the issuance of a writ of execution was
in accordance with the very stipulation in the agreement that the lower court
could not change. Hence, the petition is granted.
KINDS OF PENALTIES:
JESUS T. DAVID, petitioner.
VS. THE COURT OF APPEALS HON. EDGARDO P. CRUZ, MELCHOR P.
PENA AND VALENTIN AFABLE, JR. respondents
G.R. NO. 115821
OCTOBER 13, 1999
FACTS:
The RTC of Manila, Branch 27, with Judge Ricardo Diaz, then presiding,
issued a writ of attachment over real properties covered by TCT Nos. 80718
and 10281 of private respondents. In his decision Judge Diaz ordered private
respondent Afable to pay petitioner until fully paid. Respondent Afable appealed
to the Court of Appeals and then to the Supreme Court. In both instances, the
decision of the lower court was affirmed. Entries of judgment were made and
the record of the case was remanded to Branch 27 presided at that time by
respondent Judge Cruz. Petitioners elevated said orders to the Court of Appeals
in a petition for certiorari, prohibition and mandamus. However, respondent
appellate court dismissed the petiton.
ISSUE:
Whether or not respondent appellate court erred in affirming the
respondent Judges order for the payment of simple interest only rather than
the compounded interest.
RULING:
Petitioner insists that in computing the interest due should be computed
at 6% on the principal sum pursuant to Article 2209 and then interest on the
legal interest should also be computed in accordance with the language of
article 2212 of the Civil Code. In view of this means Compound interest.
In cases where no interest had been stipulated by the parties, no accrued
conventional interest could further earn interest upon judicial demand.
The instant petition is denied. The decision of the Court of Appeals is
affirmed.
OBLIGATIONS WITH A PENAL CLAUSE:
PENALTIES VS.
INTEREST
1. MACALALAG VS. PEOPLE, 511 S 400
2. TAN VS. CA, 367 S 571
3. EASTERN SHIPPING VS. CA, 234 S 78
ISSUE:
Did respondents violate the Rules of Court?
RULING:
By serving notices of garnishment on Citibank, N.A., HSBC and
PNB, Sheriff Regalado violated EPCIBs right to choose which property
may be levied upon to be sold at auction for the satisfaction of the
judgment debt. Thus, it is clear that when EPCIB offered its real
properties, it exercised its option because it cannot immediately pay the
full amount stated in the writ of execution and all lawful fees in cash,
certified bank check or any other mode of payment acceptable to the
judgment obligee.
In the case at bar, EPCIB cannot immediately pay by way of
Managers Check so it exercised its option to choose and offered its real
properties. With the exercise of the option, Sheriff Regalado should have
ceased serving notices of garnishment and discontinued their
implementation. This is not true in the instant case. Sheriff Regalado
was adamant in his posture even if real properties have been offered
which were sufficient to satisfy the judgment debt.
under such terms agreed by the Bank and the NSBCI, using or mortgaging the
real estate properties registered in the name of its President and Chairman of
the Board Petitioner Eduardo R. Dee as collateral; and authorizing petitionerspouses to secure the loan and to sign any and all documents which may be
required by Respondent PNB, and that petitioner-spouses shall act as sureties
or co-obligors who shall be jointly and severally liable with Petitioner NSBCI for
the payment of any [and all] obligations.
On August 15, 1989, Resolution No. 77 was approved by granting the
request of Respondent PNB thru its Board NSBCI for an P8 Million loan broken
down into a revolving credit line of P7.7M and an unadvised line of P0.3M for
additional operating and working capital to mobilize its various construction
projects. The loan of Petitioner NSBCI was secured by a first mortgage on the
following: a) three (3) parcels of residential land located at Mangaldan,
Pangasinan; b) six (6) parcels of residential land situated at San Fabian,
Pangasinan; and c) a residential lot and improvements thereon located at
Mangaldan. The loan was further secured by the joint and several signatures of
Petitioners Eduardo Dee and Arcelita Marquez Dee, who signed as
accommodation-mortgagors since all the collaterals were owned by them and
registered in their names.
Moreover Petitioner NSBCI executed three
promissory notes. In addition, petitioner corporation also signed the Credit
Agreement dated August 31, 1989 relating to the revolving credit line of P7.7
Million x x x and the Credit Agreement dated September 5, 1989 to support the
unadvised line of P300,000.00.
On September 6, 1991, Petitioner Eduardo Dee wrote the PNB Branch
Manager reiterating his proposals for the settlement of Petitioner NSBCIs past
due loan account amounting to P7,019,231.33. Petitioner Eduardo Dee later
tendered four (4) post-dated Interbank checks aggregating P1,111,306.67 in
favor of Respondent PNB
Upon presentment, however, x x x check nos. 03500087 and 03500088
dated September 29 and October 29, 1991 were dishonored by the drawee
bank and returned due to a stop payment order from petitioners. On
November 12, 1991, PNBs Mr. Carcamo wrote Petitioner Eduardo Dee
informing him that unless the dishonored checks were made good, said PNB
branch shall recall its recommendation to the Head Office for the restructuring
of the loan account and refer the matter to its legal counsel for legal action.
Petitioners did not heed respondents warning and as a result, the PNB
Dagupan Branch sent demand letters to Petitioner NSBCI at its office address
at 1611 ERDC Building, E. Rodriguez Sr. Avenue, Quezon City, asking it to settle
its past due loan account.
POLOTAN VS CA
GR No. 119379. September 25, 1998
FACTS:
Private respondent Security Diners International Corporation
(Diners Club), a credit card company, extends credit accomodations to its
cardholders for the purchase of goods and other services from member
establishments. Said goods and services are reimbursed later on by
cardholders upon proper billing. Petitioner Rodelo G. Polotan, Sr. applied
for membership and credit accmodations with Diners Club in October
1985. The application form contained terms and conditions governing
the use and availment of the Diners Club card, among which is for the
cardholder to pay all charges made through the use of said card within
the period indicated in the statement of account and any remaining
unpaid balance to earn 3% interest per annum plus prime rate of
Security Bank & Trust Company. Notably, in the application form
submitted by petitioner, Ofricano Canlas obligated himself to pay jointly
and severally with petitioner the latters obligation to private
respondent.
Upon acceptance of his application, petitioner was issued Diners
Club card No. 3651-212766-3005. As of May 8, 1987, petitioner incurred
credit charges plus appropriate interest and service charges in the
aggregate amount of P33,819.84 which had become due and
demandable. Demands for payment made against petitioner proved
futile. Hence, private respondent filed a Complaint for Collection of Sum
of Money against petitioner before the lower court.
ISSUE:
Is petitioner liable for payment of credit charges plus interest and
service charges?
RULING:
A contract of adhesion is one in which one of the contracting
parties imposes a ready-made form of contract which the other party
may accept or reject, but cannot modify. One party prepares the
stipulation in the contract, while the other party merely affixes his
signature or his adhesion thereto, giving no room for negotiation and
depriving the latter of the opportunity to bargain on equal footing.
Nevertheless, these types of contracts have been declared as binding as
ordinary contracts, the reason being that the party who adheres to the
contract is free to reject it entirely.
In this case, petitioner, in effect, claims that the subject contract is
one-sided in that the contract allows for the escalation of interests, but
does not provide for a downward adjustment of the same in violation of
Central Bank Circular 905. Admittedly, the second paragraph of the
questioned proviso which provides that the Cardholder hereby
authorizes Security Diners to correspondingly increase the rate of such
interest in the event of changes in prevailing market rates x x x is an
escalation clause. However, it cannot be said to be dependent solely on
the will of private respondent as it is also dependent on the prevailing
market rates.
Escalation clauses are not basically wrong or legally objectionable as
long as they are not solely potestative but based on reasonable and
valid grounds. Obviously, the fluctuation in the market rates is beyond
the control of private respondent.
REDUCTION OF CONVENTIONAL PENALTIES
FACTS:
The Philippine National Bank (PNB) assails the Decision of the
Court of Appeals dated 15 May 2005, rendered in CA-G.R. CV No. 79094
which, among others, declared null and void the interest rate imposed by
PNB on the loan obtained from it by respondents and the consequent
extrajudicial foreclosure of the properties offered as security for the
loan.
Respondents Encina spouses acquired several loans from PNB from
which it failed to pay within due time. Encina avers that there ought to
be longer gestation periods on its part being engaged in a business of
agricultural character.
ISSUE:
Was there a violation of the Usury Law?
RULING:
As borne by the records, the Encina spouses never challenged the
validity of their loan and the accessory contracts with PNB on the ground
that they violated the principle of mutuality of contracts in view of the
provision therein that the interest rate shall be set by management.
Their only contention concerning the interest rate was that the charges
imposed by the bank violated the Usury Law. This was the essence of the
second cause of action alleged in the complaint.
It should be definitively ruled in this regard that the Usury Law had
been rendered legally ineffective by Resolution No. 224 dated 3
December 1982 of the Monetary Board of the Central Bank, and later by
Central Bank Circular No. 905 which took effect on 1 January 1983 and
removed the ceiling on interest rates for secured and unsecured loans
regardless of maturity. The effect of these circulars is to allow the parties
to agree on any interest that may be charged on a loan. The virtual
repeal of the Usury Law is within the range of judicial notice which
courts are bound to take into account. After all, the fundamental tenet is
that the law is deemed part of the contract. Thus, the trial court was
correct in ruling that the second cause of action was without basis.
REDUCTION OF CONVENTIONAL PENALTIES
IMPERIAL VS. JAUCIAN
427 SCRA 517
2004 Apr 14
FACTS:
The present controversy arose from a case for collection of money, filed
by Alex A. Jaucian against Restituta Imperial, on October 26, 1989. The
complaint alleges, inter alia, that defendant obtained from plaintiff six (6)
separate loans for which the former executed in favor of the latter six (6)
separate promissory notes and issued several checks as guarantee for payment.
When the said loans became overdue and unpaid, especially when the
defendants checks were dishonored, plaintiff made repeated oral and written
demands for payment.
The loans were covered by six (6) separate promissory notes executed by
defendant. The face value of each promissory notes is bigger [than] the amount
released to defendant because said face value already included the interest
from date of note to date of maturity. Said promissory notes indicate the
interest of 16% per month, date of issue, due date, the corresponding
guarantee checks issued by defendant, penalties and attorneys fees. The trial
courts clear and detailed computation of petitioners outstanding obligation to
respondent was affirmed by the CA for being convincing and satisfactory.
However, the CA held that without judicial inquiry, it was improper for the RTC
to rule on the constitutionality of Section 1, Central Bank Circular No. 905,
Series of 1982.
ISSUES:
Whether or not the penalties charged per month is in the guise of hidden
interest.
Whether or not the reduction of attorneys fees by the RTC is reasonable.
RULING:
Iniquitous and unconscionable stipulations on interest rates, penalties
and attorneys fees are contrary to morals. Consequently, courts are granted
authority to reduce them equitably. If reasonably exercised, such authority
shall not be disturbed by appellate courts.
Article 1229 of the Civil Code states thus:
The judge shall equitably reduce the penalty when the principal obligation has
been partly or irregularly complied with by the debtor. Even if there has been
no performance, the penalty may also be reduced by the courts if it is iniquitous
or unconscionable.
In exercising this power to determine what is iniquitous and
unconscionable, courts must consider the circumstances of each case. What
may be iniquitous and unconscionable in one may be totally just and equitable
in another. In the present case, iniquitous and unconscionable was the parties
stipulated penalty charge of 5 percent per month or 60 percent per annum, in
addition to regular interests and attorneys fees. Also, there was partial
performance by petitioner when she remitted P116,540 as partial payment of
her principal obligation of P320,000. Under the circumstances, the trial court
was justified in reducing the stipulated penalty charge to the more equitable
rate of 14 percent per annum.The Promissory Note carried a stipulation for
attorneys fees of 25 percent of the principal amount and accrued interests.
Strictly speaking, this covenant on attorneys fees is different from that
mentioned in and regulated by the Rules of Court. Rather, the attorneys fees
here are in the nature of liquidated damages and the stipulation therefor is
aptly called a penal clause. So long as the stipulation does not contravene the
law, morals, public order or public policy, it is binding upon the obligor. It is the
litigant, not the counsel, who is the judgment creditor entitled to enforce the
judgment by execution.
Nevertheless, it appears that petitioners failure to comply fully with her
obligation was not motivated by ill will or malice. The twenty-nine partial
payments she made were a manifestation of her good faith. Again, Article 1229
of the Civil Code specifically empowers the judge to reduce the civil penalty
equitably, when the principal obligation has been partly or irregularly complied
with. Upon this premise, we hold that the RTCs reduction of attorneys fees -from 25 percent to 10 percent of the total amount due and payable -- is
reasonable.
RULING:
The petition for review is denied. Petitioners tender of payment is
valid. The amount consigned however can no longer be withdrawn
because respondents prayer in his answer that the amount consigned be
awarded to him is equivalent to an acceptance of the consignation, which
has the effect of extinguishing petitioners obligation. The amount
consigned with the trial court can no longer be withdrawn by petitioner
because respondents prayer in his answer that the amount consigned be
awarded to him is equivalent to an acceptance of the consignation, which
has the effect of extinguishing petitioners obligation.
Moreover,
petitioner failed to manifest his intention to comply with the Agreement
And Undertaking by delivering the necessary documents and the lot
subject of the sale to respondent in exchange for the amount deposited.
Withdrawal of the money consigned would enrich petitioner and unjustly
prejudice respondent.
possession to him. Private respondent refused on the ground that it was, at the
time, contesting petitioners acquisition of the parcels of land in question in an
action for annulment of sale, redemption and damages.
Petitioner filed an action for ejectment before the MTC. He asked, inter
alia, for the imposition of the contractually stipulated penalty of P5,000 per day
of delay in surrendering the possession of the property to him. On September
3, 1996, the trial court decided the case in favor of petitioner. On appeal to the
RTC, the MTC decision was affirmed in toto. The CA rendered its assailed
decision affirming the decision of the trial court, with the modification that the
penalty imposed upon private respondent for the delay in turning over the
leased property to petitioner was reduced from P 5,000 to P 1000 per day.
ISSUE:
Whether or not the Court of Appeals erred in reducing the penalty
awarded by the trial court, the same having been stipulated by the parties.
RULING:
No. Generally, courts are not at liberty to ignore the freedom of the
parties to agree on such terms and conditions as they see fit as long as they are
not contrary to law, morals, good customs, public order or public policy.
Nevertheless, courts may equitably reduce a stipulated penalty in the contract
if it is iniquitous or unconscionable, or if the principal obligation has been
partly or irregularly complied with. This power of the courts is explicitly
sanctioned by Article 1229 of the Civil Code which provides:
Article 1229. The judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor. Even if
there has been no performance, the penalty may also be reduced by the courts
if it is iniquitous or unconscionable.
The question of whether a penalty is reasonable or iniquitous is
addressed to the sound discretion of the court and depends on several factors,
including, but not limited to, the following: the type, extent and purpose of the
penalty, the nature of the obligation, the mode of breach and its consequences,
the supervening realities, the standing and relationship of the parties.
In this case, the stipulated penalty was reduced by the appellate court for
being unconscionable and iniquitous. Petition denied; CA decision affirmed.
money brought about by the radical devaluation and decrease in the purchasing
power of the peso.
ISSUE:
Whether or not the penalty is reasonable and not iniquitous.
RULING:
NO, the penalty is not unreasonable. The Court held that the question of
whether a penalty is reasonable or iniquitous can be partly subjective and
partly objective. Its resolution would depend on such factors as, but not
necessarily confide to, the type, extent and purpose of the penalty, the nature of
the obligation, the mode of breach and its consequences, the supervening
realities, the standing and relationship of the parties, and the like, the
application of which, by and large, is addressed to the sound discretion of the
court. In Rizal Commercial Banking Corp. v. Court of Appeals, for example, the
Court has tempered the penalty charges after taking into account the debtors
pitiful situation and its offer to settle the entire obligation with the creditor
bank. The stipulated penalty might likewise be reduced when a partial or
irregular payment is made by the payment. The stipulated penalty might even
be deleted such as when there has been substantial performance in good faith
by the obligor, when the penalty clause itself suffers from fatal infirmity, and
when exceptional circumstances so exist as to warrant it. In the case at bar,
given the circumstances, not to mention the repeated acts of breach by
petitioners of their contractual obligation, this Court sees no cogent ground to
change the ruling of the appellate court.
REDUCTION OF CONVENTIONAL PENALTIES
PASCUAL VS. RAMOS
384 S 105
FACTS:
Ramos alleged that on 3 June 1987, for and in consideration of
P150,000, the Spouses Pascual executed in his favor a Deed of Absolute
Sale with Right to Repurchase over two parcels of land and the
improvements thereon located in Bambang, Bulacan, Bulacan. This
document was annotated at the back of the title. The Pascuals did not
exercise their right to repurchase the property within the stipulated oneyear period; hence, Ramos prayed that the title or ownership over the
subject parcels of land and improvements thereon be consolidated in his
favor.
In their Answer, the Pascuals admitted having signed the Deed of
Absolute Sale with Right to Repurchase for a consideration of P150, 000
but averred that what the parties had actually agreed upon and entered
into was a real estate mortgage. They further alleged that there was no
agreement limiting the period within which to exercise the right to
repurchase and that they had even overpaid Ramos. The trial court found
that the transaction between the parties was actually a loan in the
amount of P150,000, the payment of which was secured by a mortgage of
the property covered by TCT No. 305626. It also found that the Pascuals
had made payments in the total sum of P344,000, and that with interest
at 7% per annum, they had overpaid the loan by P141,500. Accordingly,
in its Decision of 15 March 1995 the trial court ruled in favor of the
defendants. The Pascuals interposed the following defenses: (a) the trial
court had no jurisdiction over the subject or nature of the petition; (b)
Ramos had no legal capacity to sue; (c) the cause of action, if any, was
barred by the statute of limitations; (d) the petition stated no cause of
action; (e) the claim or demand set forth in Ramoss pleading had been
paid, waived, abandoned, or otherwise extinguished; and (f) Ramos has
not complied with the required confrontation and conciliation before the
barangay.
The Court of Appeals affirmed in toto the trial courts Orders of 5
June 1995 and 7 September 1995.
ISSUE:
RULING:
when they entered into the agreement with Ramos. Neither is there a
showing that in their contractual relations with Ramos, the Pascuals
were at a disadvantage on account of their moral dependence, ignorance,
mental weakness, tender age or other handicap, which would entitle
them to the vigilant protection of the courts as mandated by Article 24 of
the Civil Code.
REDUCTION OF CONVENTIONAL PENALTIES
FIRST METRO INVESTMENT petitioner,
VS. ESTE DEL SOL MOUNTAIN RESERVE, INC, respondent
369 SCRA 99
FACTS:
Petitioner FMIC granted respondent Este del Sol a loan of Seven Million
Three Hundred Eighty-Five Thousand Five Hundred Pesos (P7,385,500.00) to
finance the construction and development of the Este del Sol Mountain Reserve,
a sports/resort complex project. Under the terms of the Loan Agreement, the
proceeds of the loan were to be released on staggered basis. Interest on the
loan was pegged at sixteen (16%) percent per annum based on the diminishing
balance. The loan was payable in thirty-six (36) equal and consecutive monthly
amortizations to commence at the beginning of the thirteenth month from the
date of the first release in accordance with the Schedule of Amortization. In
case of default, an acceleration clause was, among others, provided and the
amount due was made subject to a twenty (20%) percent one-time penalty on
the amount due and such amount shall bear interest at the highest rate
permitted by law from the date of default until full payment thereof plus
liquidated damages at the rate of two (2%) percent per month compounded
quarterly on the unpaid balance and accrued interests together with all the
penalties, fees, expenses or charges thereon until the unpaid balance is fully
paid, plus attorneys fees equivalent to twenty-five (25%) percent of the sum
sought to be recovered, which in no case shall be less than Twenty Thousand
Pesos (P20,000.00) if the services of a lawyer were hired. In accordance with
the terms of the Loan Agreement, respondent Este del Sol executed several
documents as security for payment, among them, (a) a Real Estate Mortgage
and (b) individual Continuing Suretyship agreements by co-respondents
Valentin S. Daez, Jr., et al. Respondent Este del Sol also executed, as provided
for by the Loan Agreement, an Underwriting Agreement whereby petitioner
FMIC shall underwrite on a best-efforts basis the public offering of 120,000
common shares of respondent Este del Sols capital stock for a one-time
underwriting fee of P200,000.00.
The Underwriting Agreement also provided that for supervising the
public offering of the shares, respondent Este del Sol shall pay petitioner FMIC
an annual supervision fee of 200,000.00 per annum for a period of four
consecutive years.
The Underwriting Agreement also stipulated for the
payment by respondent Este del Sol to petitioner FMIC a consultancy fee of
P332,500.00 per annum for a period of four consecutive years. Simultaneous
with the execution of and in accordance with the terms of the Underwriting
Agreement, a Consultancy Agreement was also executed on January 31, 1978
whereby respondent Este del Sol engaged the services of petitioner FMIC for a
fee as consultant to render general consultancy services. Since respondent
Este del Sol failed to meet the schedule of repayment in accordance with a
revised Schedule of Amortization, it appeared to have incurred a total
obligation of P12,679,630.98 per the petitioners Statement of Account dated
June 23, 1980.
Accordingly, petitioner FMIC caused the extrajudicial
foreclosure of the real estate mortgage on June 23, 1980. At the public auction,
petitioner FMIC was the highest bidder of the mortgaged properties for
P9,000,000.00. Failing to secure from the individual respondents, the payment
of the alleged deficiency balance, petitioner instituted the instant collection suit
to collect the alleged deficiency balance of P6,863,297.73 plus interest thereon
at 21% percent per annum from June 24, 1980 until fully paid, and 25% percent
thereof as and for attorneys fees and costs.
The trial court rendered its decision in favor of petitioner FMIC.
reversed the challenged decision of the trial court.
CA
ISSUE:
Whether or not the appellate court erred in reversing the decision of the
trial court as regards to the payment of penalties.
RULING:
No. First, Central Bank Circular No. 905 did not repeal nor in any way
amend the Usury Law but simply suspended the latters effectivity. Thus,
retroactive application of a Central Bank Circular cannot, and should not, be
presumed. Second, several facts and circumstances taken altogether show that
the Underwriting and Consultancy Agreements were simply cloaks or devices to
cover an illegal scheme employed by petitioner FMIC to conceal and collect
excessively usurious interest. The Underwriting and Consultancy Agreements
which were executed and delivered contemporaneously with the Loan
Agreement on January 31, 1978 were exacted by petitioner FMIC as essential
conditions for the grant of the loan. An apparently lawful loan is usurious when
it is intended that additional compensation for the loan be disguised by an
ostensibly unrelated contract providing for payment by
the borrower for the lenders services which are of little value or which are not
in fact to be rendered, such as in the instant case. In this connection, Article
1957 of the New Civil Code clearly provides that: Art. 1957. Contracts and
stipulations, under any cloak or device whatever, intended to circumvent the
laws against usury shall be void. The borrower may recover in accordance with
the laws on usury. In usurious loans, the entire obligation does not become
void because of an agreement for usurious interest; the unpaid principal debt
still stands and remains valid but the stipulation as to the usurious interest is
void, consequently, the debt is to be considered without stipulation as to the
interest.
Thus, the Court agrees with the factual findings and conclusion of the
appellate court, wherein it held that the stipulated penalties, liquidated
damages and attorneys fees, excessive, iniquitous and unconscionable.
Accordingly, the 20% penalty on the amount due and 10% of the proceeds of the
foreclosure sale as attorneys fees would suffice to compensate the appellee,
especially so because there is no clear showing that the appellee hired the
services of counsel to effect the foreclosure; it engaged counsel only when it
was seeking the recovery of the alleged deficiency.
Attorneys fees as provided in penal clauses are in the nature of
liquidated damages. So long as such stipulation does not contravene any law,
morals, or public order, it is binding upon the parties. Nonetheless, courts are
empowered to reduce the amount of attorneys fees if the same is iniquitous or
unconscionable.[46] Articles 1229 and 2227 of the New Civil Code provide
that: Art. 1229. The judge shall equitably reduce the penalty when the
principal obligation has been partly or irregularly complied with by the debtor.
Even if there has been no performance, the penalty may also be reduced by the
courts if it is iniquitous or unconscionable. Art. 2227. Liquidated damages,
whether intended as an indemnity or a penalty, shall be equitably reduced if
they are iniquitous or unconscionable.
In the case at bar, the amount of Three Million One Hundred Eighty-Eight
Thousand Six Hundred Thirty Pesos and Seventy-Five Centavos (P3,188,630.75)
for the stipulated attorneys fees equivalent to twenty-five (25%) percent of the
alleged amount due, as of the date of the auction sale on June 23, 1980, is
manifestly exorbitant and unconscionable. Accordingly, we agree with the
appellate court that a reduction of the attorneys fees to ten (10%) percent is
appropriate and reasonable under the facts and circumstances of this case.
actual damages would include the interest and penalties the creditor may have
had to pay on its own from its funding source. In this case, NNRMC was only
able to prove that it incurred the amounts of P5,995.83 as opening charges on
the two Letters of Credit and an additional P1,911.85 as amendment charges on
the same Letters of Credit. Other than that, NNRMC failed to prove it had
suffered actual damages resulting from the nondelivery of the specified buri
midribs and rattan poles. In fact, what it allegedly suffered are what it calls
Foregone Interest Income and Foregone Profit from the two Letters of
Credit. Such could not be considered as actual damages.
The Court agreed with the following observation of the Court of Appeals:
Necessarily, We discern some merit in the second assignment of error.
The trial court erred in holding the appellant liable for P908,966.72 in
damages. The said unitemized amounts and various types of damages is too
much and has to be reduced within reasonable limits. As already elaborated
upon in connection with the first assignment of error, the amount of liquidated
damages has to be lessened to P150,000.00. But the charges of P5,995.83 and
P1,911.85 on the two letters of credit involved should be reimbursed by
appellant. As regards the alleged forgone profits of P206,943.00 testified on by
Jose Victorioso as the profit appellee could have realized had appellant been
able to supply the goods in question, we consider such amount of expected
profit highly conjectural and speculative. The aforesaid testimony regarding
the matter of profits is utterly lacking of the requisite details on how such huge
amount of profits could be made possible. Plaintiff-appellees witness did not
detail out how such huge amount of gain could have been derived from the
would-be exportation of buri midribs and rattan poles. Well-entrenched is the
doctrine that actual, compensatory and consequential damages must be proved,
and cannot be presumed. If, as in this case, the proof adduced thereon is flimsy
and insufficient, no damages will be allowed. Verily, the testimonial evidence
on alleged unrealized profits earlier referred to is not enough to warrant the
award of damages appealed from. It is too scanty, vague and unspecified to
induce faith and reliance. Absent the needed quantum of proof, We are of the
sense that, apart from the aforestated amount of liquidated damages and
reimbursement of the charges paid by appellee for the unutilized letters of
credit, no other damages can be granted.
MEDEL VS CA
G.R. No. 131622 November 27, 1998
FACTS:
The Medel spouses obtained several loans of which they were unable to
pay in full. On July 23, 1986, Servando and Leticia with the latter's
husband, Dr. Rafael Medel, consolidated all their previous unpaid loans
totaling P440,000.00, and sought from Veronica another loan in the
amount of P60,000.00, bringing their indebtedness to a total of
P500,000.00, payable on August 23, 1986. They executed a promissory
note indicating payment for the balance.
On maturity of the loan, the borrowers failed to pay the
indebtedness of P500,000.00, plus interests and penalties, evidenced by
the above-quoted promissory note. On February 20, 1990, Veronica R.
Gonzales, joined by her husband Danilo G. Gonzales, filed with the
Regional Trial Court of Bulacan, Branch 16, at Malolos, Bulacan, a
complaint for collection of the full amount of the loan including interests
and other charges.
ISSUE:
What is the interest that must be collected on the instant case?
RULING:
Basically, the issue revolves on the validity of the interest rate
stipulated upon. Thus, the question presented is whether or not the
stipulated rate of interest at 5.5% per month on the loan in the sum of
P500,000.00, that plaintiffs extended to the defendants is usurious. In
other words, is the Usury Law still effective, or has it been repealed by
Central Bank Circular No. 905, adopted on December 22, 1982, pursuant
to its powers under P.D. No. 116, as amended by P.D. No. 1684?
We agree with petitioners that the stipulated rate of interest at
5.5% per month on the P500,000.00 loan is excessive, iniquitous,
unconscionable and exorbitant. However, we can not consider the rate
"usurious" because this Court has consistently held that Circular No. 905
of the Central Bank, adopted on December 22, 1982, has expressly
removed the interest ceilings prescribed by the Usury Law and that the
Usury Law is now "legally inexistent".
Nevertheless, we find the interest at 5.5% per month, or 66% per
annum, stipulated upon by the parties in the promissory note iniquitous
or unconscionable, and, hence, contrary to morals ("contra bonos
mores"), if not against the law. 20 The stipulation is void. The courts shall
reduce equitably liquidated damages, whether intended as an indemnity
or a penalty if they are iniquitous or unconscionable.
Consequently, the Court of Appeals erred in upholding the
stipulation of the parties. Rather, we agree with the trial court that,
under the circumstances, interest at 12% per annum, and an additional
1% a month penalty charge as liquidated damages may be more
reasonable.
REDUCTION OF CONVENTIONAL PENALTIES
FACTS:
This is a Petition for Review on certiorari of the Resolution of the Hon.
respondent Judge Valeriano P. Tomol, Jr. of the then Court of First Instance of
Cebu-Branch XI, an action for Recovery of Damages for injury to Person and
Loss of Property. The petitioners prayed for the setting aside of the said
Resolution and for a declaration that the judgment in their favor should bear
legal interest at the rate of twelve (12%) percent per annum pursuant to
Central Bank Circular No. 416 dated July 29, 1974. The appellate court
affirmed the decision but made certain modifications. The said decision having
become final on October 24, 1980, the case was remanded to the lower court
for execution and this is where the controversy started. In the computation of
the "legal interest" decreed in the judgment sought to be executed, petitioners
claim that the "legal interest" should be at the rate of twelve (12%) percent per
annum, invoking in support of their aforesaid submission, Central Bank of the
Philippines Circular No. 416. Upon the other hand, private respondents Shell
and Michael, Incorporated insist that said legal interest should be at the rate of
six (6%) percent per annum only, pursuant to and by authority of Article 2209 of
the New Civil Code in relation to Articles 2210 and 2211 thereof.
ISSUE:
Whether or not the petition is with merit.
RULING:
No. The petition is devoid of merit. Consequently, its dismissal is in
order. Central Bank Circular No. 416 which took effect on July 29, 1974 was
issued and promulgated by the Monetary Board pursuant to the authority
granted to the Central Bank by P.D. No. 116, which amended Act No. 2655,
otherwise known as the Usury Law.
Acting pursuant to this grant of authority, the Monetary Board increased
the rate of legal interest from that of six (6%) percent per annum originally
allowed under Section I of Act No. 2655 to twelve (12%) percent per annum.
It will be noted that Act No. 2655 deals with interest on (1) loans; (2)
forbearances of any money, goods, or credits; and (3) rate allowed in
judgments.Hence, not all money judgments are included in the said act. The
judgments spoken of and referred to are Judgments in litigations involving
loans or forbearance of any 'money, goods or credits. Any other kind of
monetary judgment which has nothing to do with, nor involving loans or
forbearance of any money, goods or credits does not fall within the coverage of
the said law for it is not within the ambit of the authority granted to the Central
Bank. The Monetary Board may not tread on forbidden grounds. It cannot
rewrite other laws. That function is vested solely with the legislative authority.
It is axiomatic in legal hermeneutics that statutes should be construed as a
whole and not as a series of disconnected articles and phrases. In the absence
of a clear contrary intention, words and phrases in statutes should not be
interpreted in isolation from one another. A word or phrase in a statute is
always used in association with other words or phrases and its meaning may
thus be modified or restricted by the latter.
The instant petition is without merit, the same is DISMISSED with costs
against petitioners.
MEANING OF PAYMENT / PERFORMANCE (ART. 1232-1261, CC)
SONNY LO, petitioner, vs. KJS ECO-FORMWORK SYSTEM PHIL., INC.,
respondent
2003 Oct 8
G.R. No. 149420
413 SCRA 182
FACTS:
Respondent KJS ECO-FORMWORK System Phil., Inc. is a corporation
engaged in the sale of steel scaffoldings, while petitioner Sonny L. Lo, doing
business under the name and style Sans Enterprises, is a building contractor.
On February 22, 1990, petitioner ordered scaffolding equipments from
respondent worth P540,425.80. He paid a downpayment in the amount of
P150,000.00. The balance was made payable in ten monthly installments.
Respondent delivered the scaffoldings to petitioner. Petitioner was able
to pay the first two monthly installments. His business, however, encountered
financial difficulties and he was unable to settle his obligation to respondent
despite oral and written demands made against him.
On October 11, 1990, petitioner and respondent executed a Deed of
Assignment, whereby petitioner assigned to respondent his receivables in the
amount of P335,462.14 from Jomero Realty Corporation.
However, when respondent tried to collect the said credit from Jomero
Realty Corporation, the latter refused to honor the Deed of Assignment because
it claimed that petitioner was also indebted to it. On November 26, 1990,
respondent sent a letter to petitioner demanding payment of his obligation, but
petitioner refused to pay claiming that his obligation had been extinguished
when they executed the Deed of Assignment.
Consequently, on January 10, 1991, respondent filed an action for
recovery of a sum of money against the petitioner before the Regional Trial
Court of Makati, Branch 147, which was docketed as Civil Case No. 91-074.
During the trial, petitioner argued that his obligation was extinguished
with the execution of the Deed of Assignment of credit. Respondent, for its
part, presented the testimony of its employee, Almeda Baaga, who testified
that Jomero Realty refused to honor the assignment of credit because it claimed
that petitioner had an outstanding indebtedness to it.
On August 25, 1994, the trial court rendered a decision dismissing the
complaint on the ground that the assignment of credit extinguished the
obligation. Respondent appealed the decision to the Court of Appeals. On April
19, 2001, the appellate court rendered a decision reversing the appealed
Decision and enters judgment ordering defendant-appellee Sonny Lo to pay the
plaintiff-appellant KJS ECO-FORMWORK SYSTEM PHILIPPINES, INC. Three
Hundred Thirty Five Thousand Four Hundred Sixty-Two and 14/100
(P335,462.14) with legal interest of 6% per annum from January 10, 1991 (filing
of the Complaint) until fully paid and attorneys fees equivalent to 10% of the
amount due and costs of the suit.
In finding that the Deed of Assignment did not extinguish the obligation
of the petitioner to the respondent, the Court of Appeals held that (1) petitioner
failed to comply with his warranty under the Deed; (2) the object of the Deed
did not exist at the time of the transaction, rendering it void pursuant to Article
1409 of the Civil Code; and (3) petitioner violated the terms of the Deed of
Assignment when he failed to execute and do all acts and deeds as shall be
necessary to effectually enable the respondent to recover the collectibles.
Petitioner filed a motion for reconsideration of the said decision, which
was denied by the Court of Appeals. Hence, this petition for review.
ISSUE:
Whether or not the Court Of Appeals erred in holding that the deed of
assignment did not extinguish petitioners obligation on the wrong notion that
petitioner failed to comply with his warranty thereunder.
RULING:
FACTS:
Petitioner is a domestic corporation while US Lines is a foreign
corporation engaged in overseas shipping. It was made applicable that
consignees who fail to take delivery of their containerized cargo within
the 10-day free period are liable to pay demurrage charges. On June 22,
1981, US Lines filed a suit against petitioner seeking payment of
demurrage charges plus interest and damages. Petitioner incurred
P94,000 which the latter refused to pay despite repeated demands.
Petitioner disclaims liability alleging that it has never entered into a
contract nor signed an agreement to be bound by it. RTC ruled that
petitioner is liable to respondent and all be computed as of the date of
payment in accordance with Article 1250 of the Civil Code. CA affirmed
the decision.
ISSUE:
Whether the re-computation of the judgment award in accordance
with Article 1250 of the Civil Code proper
RULING:
An appeal, the Court of Appeals reduced the interest and it ruled that the
basis of the conversion of petitioners liability in its peso equivalent should be
the prevailing rate at the time of payment and not the rate on the date of the
foreign judgment.
ISSUE:
Whether or not the basis for the payment of the amount due is the value
of the currency at the time of the establishment of the obligation.
RULING:
NO, the rule that the value of currency at the time of the establishment of
the obligation shall be the basis of payment finds application only when there is
an official pronouncement or declaration of the existence of an extraordinary
inflation or deflation. Hence, petitioners contention that Article 1250 of the
Civil Code which provides that in case of an extra ordinary inflation or
deflation of the currency stipulated should supervene, the value of the currency
at the time of establishment of the obligation shall be the basis of payment,
unless there is an agreement to the contrary shall apply in this case is
untenable.
RULING:
Petitioners offer to pay is clearly not the payment contemplated in the
contract. While he might have tendered payment through a check, this is not
considered payment until the check is encashed. Besides, a mere tender of
payment is not sufficient. Consignation is essential to extinguish petitioner's
obligation to pay the purchase price.
The Supreme Court also affirmed the decision of the Court of Appeals
where the respondents have the right to rescind the contract on the ground
that there is failure on the part of the petitioners to pay the balance within ten
days upon the conveyance of the Court of the Title of Land to respondents.
Thus, private respondents are under no obligation, and may not be compelled,
to convey title to petitioner and receive the full purchase price.
RULING:
The ruling applies the statutory provisions which lay down the rule
that a check is not legal tender and that a creditor may validly refuse
payment by check, whether it be a managers check, cashiers or
personal check. The decision of the court of Appeals is affirmed.
OBLIGATIONS TO PAY MONEY
v. COURT OF
FACTS:
In March 1968, DBP granted to private respondents an industrial
loan in the amount of P2,500,000 P500,000 n cash and P2,000,000 in
DBP Progress Bank. It was evidenced by a promissory note and secured
by a mortgage executed by respondents over their present and future
properties. Another loan was granted by DBP in the for of a 5-year
revolving guarantee to P1,700,000. In 1975, the outstanding accounts
wth DBP was restructured in view of failure to pay. Amounting to
P4,655,992.35 were consolidated into a single account. On the other
hand, all accrued interest and charges due amounting to P3,074,672.21
were denominated as Notes Taken for Interests and evidenced by a
separate promissory note. For failure to comply with its obligation, DBP
initiated foreclosure proceedings upon its computation that respondents
loans were arrears by P62,954,473.68. Respondents contended that the
collection was unconscionable if not unlawful or usurious . RTC, as
affirmed by the CA, ruled in favor of the respondents.
ISSUE:
Whether the prestation to collect by the DBP is unconscionable or
usurious
RULING:
It cannot be determined whether DBP in fact applied an interest
rate higher than what is prescribed under the law. Assuming it did
exceed 12% in addition to the other penalties stipulated in the note, this
should be stricken out for being usurious.
The petition is partly granted. Decision of the court of Appeals is
reversed and set aside. The case is remanded o the trial court for the
determination of the total amount of the respondents obligation based
on the promissory notes, according to the interest rate agreed upon by
the parties on the interest rate of 12% per annum, whichever is lower.
INSTRUMENTS/EVIDENCES OF CREDIT
METROBANK v. CABLZO
G.R. No. 154469
December 6, 2006
FACTS:
Respondent Cabilzo was one of the Metrobanks client who
maintained a current account. On November 12, 199, Cabilzo issued a
Metrobank check payable to cash in the amount of P1,000 and was paid
to a certain Mr. Marquez. The check was oresented to Westmont Bank or
payment and in turn indorsed to etrobank for appropriate clearing. It
was discovered that the amount withdrawn wa P91,000, thus, the check
was altered. Cabilzo re-credit the amount of P91,000 to his account but
Metrobank refused to comply despite demands. RTC ordered Metrobank
to pay the sum of P90,000 to Cabilzo. Court of Appeals affirmed the
decision with modification.
ISSUE:
Whether holding Metrobank, as
drawee bank, liable for the
alternations on the subject check bearing the authentic signature of the
drawer thereof
RULING:
ISSUE:
Whether the amount of rentals due the petitioners should be
adjusted by reason of extraordinary inflation or devaluation
RULING:
Petitioners are stopped from shifting to respondent the burden of
paying the VAT. 6th Condition states that respondent can only be held
liable for new taxes imposed after the effectivity of the contract of lease,
after 1977, VAT cannot be considered a new tax. Neither can
petitioners legitimately demand rental adjustment because of
extraordinary inflation or devaluation. Absent an official pronouncement
or declaration by competent authorities of its existence, its effects are
not to be applied.
Petition is denied. CA decision is affirmed.
SIMPLICIO PALANCA
VS. ULYSSIS GUIDES joined by her husband LORENZO GUIDES
February 28, 2005
452 SCRA 461
FACTS:
On August 23, 1983, Simplicio Palanca executed a Contract to Sell a
parcel of land on installment with a certain Josefa Jopson for P11, 250.00.
Jopson paid the petitioner in the amount of P1, 650 as her down payment,
leaving a balance of P9, 600.00. Sometime in December 1983, Jopson assigned
and transferred all her rights and interests over the property in question in
favor of the respondent Ulyssis Guides.
In the deed of transfer, respondent undertook to assume the balance of
Jopsons account and to pay the same in accordance with the terms and
conditions of the Contract to Sell.
After reimbursing Jopson P1,650.00,
respondent acquired possession of the lot and paid petitioner the stipulated
amortizations which were in turn acknowledged by petitioner through receipts
issued in the name of respondent. Believing that she had fully paid the
purchase price of the lot, respondent verified the status of the lot with the
Register of Deeds, only to find out that title thereto was not in the name of the
the obligation is deemed fully complied with, is in point. Thus, when petitioner
accepted respondents installment payments despite the alleged charges
incurred by the latter, and without any showing that he protested the
irregularity of such payment, nor demanded the payment of the alleged
charges, respondents liability, if any for said charges, is deemed fully satisfied.
The petition is denied.
FACTS:
Petitioner Jose V. Lagon is a businessman and owner of a commercial
building in Tacurong, Sultan Kudarat. Respondent HOOVEN on the other is a
domestic corporation known to be the biggest manufacturer and installer of
aluminum materials in the country with branch office at E. Quirino Avenue,
Davao City.
Sometime in April 1981 Lagon and HOOVEN entered into two (2)
contracts, both denominated Proposal, whereby for a total consideration of
P104, 870.00 HOOVEN agreed to sell and install various aluminum materials in
Lagons commercial building in Tacurong, Sultan Kudarat. Upon execution of
the contracts, Lagon paid HOOVEN P48,000.00 in advance.
Lagon, in his answer, denied liability and averred that HOOVEN was the
party guilty of breach of contract by failing to deliver and install some of the
materials specified in the proposals; that as a consequence he was compelled to
procure the undelivered materials from other sources; that as regards the
materials duly delivered and installed by HOOVEN, they were fully paid. He
counterclaimed for actual, moral, exemplary, temperate and nominal damages,
as well as for attorneys fees and expenses of litigation.
ISSUE:
Whether or not all the materials specified in the contracts had been
delivered and installed by respondent in petitioners commercial building in
Tacurong, Sultan Kudarat.
RULING:
Firstly, the quantity of materials and the amounts sated in the delivery
receipts do not tally with those in the invoices covering them, notwithstanding
that, according to HOOVEN OIC Alberto Villanueva, the invoices were based
merely on the delivery receipts.
Secondly, the total value of the materials as reflected in all the invoices is
P117, 329.00 while under the delivery receipts it is only P112, 870.50, or a
difference of P4,458.00
Even more strange is the fact that HOOVEN instituted the present action
for collection of sum of money against Lagon only on 24 February 1987, or
more than five (5) years after the supposed completion of the project. Indeed, it
is contrary to common experience that a creditor would take its own sweet time
in collecting its credit, more so in this case when the amount involved is not
miniscule but substantial.
All the delivery receipts did not appear to have been signed by petitioner
or his duly authorized representative acknowledging receipt of the materials
listed therein. A closer examination of the receipts clearly showed that the
deliveries were made to a certain Jose Rubin, claimed to be petitioners driver,
Armando Lagon, and a certain bookkeeper. Unfortunately for HOOVEN, the
identities of these persons were never been established, and there is no way of
determining now whether they were indeed authorized representatives of
petitioner.
WHEREFORE, the assailed Decision of the Court of Appeals dated 28
April 1997 is MODIFIED. Petitioner Jose V. Lagon is ordered to pay respondent
Hooven Comalco Industries, Inc., P6, 377.66 representing the value of the
ISSUE:
Whether BPI can demand the payment of the loan despite the existence
of the Holdout Agreement and whether BPI is still liable to the private
respondents on the account subject of the withdrawal by the heirs of Velasco.
RULING:
Yes, for both issues.
Regarding the first, the Holdout Agreement
conferred on CBTC the power, not the duty, to set off the loan from the account
subject of the Agreement. When BPI demanded payment of the loan from
Eastern, it exercised its right to collect payment based on the promissory note,
and disregarded its option under the Holdout Agreement. Therefore, its
demand was in the correct order.
Regarding the second issue, BPI was the debtor and Eastern was the
creditor with respect to the joint checking account. Therefore, BPI was obliged
to return the amount of the said account only to the creditor. When it allowed
the withdrawal of the balance of the account by the heirs of Velasco, it made
the payment to the wrong party. The law provides that payment made by the
debtor to the wrong party does not extinguish its obligation to the creditor who
is without fault or negligence. Therefore, BPI was still liable to the true
creditor, Eastern.
morals, good customs or public policy. The person claiming moral damages
must prove the existence of bad faith by clear and convincing evidence for the
law always presumes good faith. It is not enough that one merely suffered
sleepless nights, mental anguish, serious anxiety as the result of the actuations
of the other party. Invariably, such action must be shown to have been willfully
done in bad faith or with ill-motive, and bad faith or ill motive under the law
cannot be presumed but must be established with clear and convincing
evidence. Private respondent predicated his claim for such damages on his own
allegations of sleepless nights and mental anguish, without establishing bad
faith, fraud or ill motive as legal basis therefor.
ISSUE:
Whether or not respondent incurred delay in performing its
obligation under the contract of sale
RULING:
By accepting the cylinders when they were delivered to the
warehouse, petitioner waived the claimed delay in the delivery of
said items. Supreme Court geld that time was not of the essence.
There having been no failure on the part of the respondent to
perform its obligations, the power to rescind the contract is
unavailing to the petitioner.
Petition is denied. Court of appeals decision is affirmed.
AQUINTEY
v. SPOUSES TIBONG
G.R. No. 166704,December 20, 2006
FACTS:
On July 24,1997, petitioner obtained a loan fro the
respondent in the amount of P3,925,000 evidenced by a promissory
note and secured by two deeds of chattel mortgage covering two
dump trucks
and a bull dozer . Petitioner defaulted entire
obligation became due and demandable. A deed of assignment was
drafted by the respondent on October 6, 2000 and March 8, 2001
respectively. Petitioners completed the delivery of heavy equipment
mentioned in the deed of assignment to respondent which accepted
the same without protest or objection. Respondent manifested to
admit an amended complaint for the seizure and delivery of two
more heavy equipment which are covered under the second deed
of the chattel mortgage. RTC ruled that the deed of assignment and
the petitioners delivery of the heavy equipment effectively
extinguished the petitioners obligation and respondent as stopped.
CA reversed the decision ordering the petitioner the outstanding
debt of P4,275,919.69 plus interests.
ISSUE:
Did the Deed of Assignment operate to extinguish petitioners
debt to the respondent such that the replevin suit could
no longer prosper?
FACTS:
On May 6, 1999, petitioner Aquintey filed before RTC Baguio,
a complaint for sum of money and damages against respondents.
Agrifina alleged that Felicidad secured loans from her on several
occasions at monthly interest rates of 6% to 7%. Despite demands,
spouses Tibong failed to pay their outstanding loans of
P773,000,00 exclusive of interests. However, spouses Tiong alleged
that they had executed deeds of assignment in favor of Agrifina
amounting to P546,459 and that their debtors had executed
promissory notes in favor of Agrifina. Spouses insisted that by
virtue of these documents, Agrifina became the new collector of
their debts. Agrifina was able to collect the total amount of
P301,000 from Felicdads debtors. She tried to collect the balance
of Felicidad and when the latter reneged on her promise, Agrifina
filed a complaint in the office of the barangay for the collection of
P773,000.00. There was no settlement. RTC favored Agrifina. Court
of Appeals affirmed the decision with modification ordering
defendant to pay the balance of total indebtedness in the amount of
P51,341,00 plus 6% per month.
RULING:
ISSUE:
RULING:
A public auction was held on February 4, 1981. MBTC was the highest
bidder for P1,067,344.35. A certificate of sale was issued and was registered
with the Register of Deeds on February 23, 1981. Meanwhile, Graciano Jayme
died, survived by his widow Mamerta and their children. As a result of the
foreclosure, Gracianos heirs filed a civil complaint, in January of 1982, for
Annulment of Contract with Damages with Prayer for Issuance of Preliminary
Injunction, against respondent Asiancars, its officers and incorporators and
MBTC. Later, in 1999, Mamerta Jayme also passed away.
The trial court ruled that the REM is valid and binding upon the Jaymes.
The CA affirmed with modifications. Both the trial and appellate courts found
that no fraud attended the execution of the deed of mortgage. The Motion for
Reconsideration was denied.
ISSUE:
Whether or not the dacion en pago by Asiancars in favor of MBTC is valid
and binding despite the stipulation in the lease contract that ownership of the
building will vest on the Jaymes at the termination of the lease.
RULING:
YES. The alienation of the building by Asiancars in favor of MBTC for the
partial satisfaction of its indebtedness is valid.
The ownership of the building had been effectively in the name of the
lessee-mortgagor (Asiancars), though with the provision that said ownership be
transferred to the Jaymes upon termination of the lease or the voluntary
surrender of the premises. The lease was constituted on January 8, 1973 and
was to expire 20 years thereafter, or on January 8, 1993. The alienation via
dacion en pago was made by Asiancars to MBTC on December 18, 1980, during
the subsistence of the lease. At this point, the mortgagor, Asiancars, could
validly exercise rights of ownership, including the right to alienate it, as it did
to MBTC.
Dacion en pago is the delivery and transmission of ownership of a thing
by the debtor to the creditor as an accepted equivalent of the performance of
the obligation. It is a special mode of payment where the debtor offers another
thing to the creditor who accepts it as equivalent of payment of an outstanding
debt. The undertaking really partakes in one sense of the nature of sale, that is
the creditor is really buying the thing or property of the debtor, payment for
which is to be charged against
the debtors debt. As such, the essential elements of a contract of sale, namely,
consent, object certain, and cause or consideration must be present. In its
modern concept, what actually takes place in dacion en pago is an objective
novation of the obligation where the thing offered as an accepted equivalent of
the performance of an obligation is considered as the object of the contract of
sale, while the debt is considered as the purchase price. In any case, common
consent is an essential prerequisite, be it sale or novation, to have the effect of
totally extinguishing the debt or obligation. Private respondent MBTC is
ordered to pay petitioners rentals in the total amount of P602,083.33, with six
(6) percent interest per annum until fully paid.
respondent, having learned that the amount remitted to petitioner exceeded the
amount covered by the Deed of Assignment, wrote a letter to petitioner,
requesting a refund of said excess.
Petitioner, acting on said request, made a refund in the amount of
P900,000.00 plus in favor of private respondent. The latter, believing that it
was entitled to a larger amount by way of refund, wrote petitioner anew,
demanding the refund of the remaining amount. In response thereto, petitioner
informed private respondent that the amount not returned (P510,550.63)
represented interest and service charges at the rate of 18% per annum on the
unpaid and overdue account of respondent from June 1, 1980 to July 31, 1981.
Thus, on September 13, 1982, private respondent filed a complaint
against petitioner in the Regional Trial Court of Manila, to collect the sum of
P510,550.63.00.
Petitioner (defendant in the trial court) filed its answer, reiterating that
the amount not returned represented interest and service charges on the
unpaid and overdue account at the rate of 18% per annum. It was further
alleged that the collection of said interest and service charges is sanctioned by
law, and is in accordance with the terms and conditions of the sale of petroleum
products to respondent, which was made with the conformity of said private
respondent who had accepted the validity of said interest and service charges.
On November 7, 1983, the trial court rendered its decision dismissing the
complaint, as well as the counterclaim filed by defendant therein. Private
respondent (plaintiff) appealed to the Intermediate Appellate Court (IAC). On
August 27, 1985, a decision was rendered by the said appellate court reversing
the decision of the trial court, and ordering petitioner to return the amount of
P510,550.63 to private respondent.
ISSUE:
Whether or not there is a valid dation in payment in this case.
RULING:
The Supreme Court ruled that the Deed of Assignment executed by the
parties on July 31, 1980 is not a dation in payment and did not totally extinguish
respondent's obligations as stated therein.
The then Intermediate Appellate Court ruled that the three (3) requisites
of dacion en pago are all present in the instant case, and concluded that the
and the clause "and other avturbo fuel lifting and deliveries that ASSIGNOR
may from time to time receive from the ASSIGNEE".
The terms of the Deed of Assignment being clear, the literal meaning of
its stipulations should control. In the construction of an instrument where
there are several provisions or particulars, such a construction is, if possible, to
be adopted as will give effect to all.
Likewise, the then Intermediate Appellate Court failed to take into
consideration the subsequent acts of the parties which clearly show that they
did not intend the Deed of Assignment to totally extinguish the obligation: (1)
After the execution of the Deed of Assignment on July 31, 1980, petitioner
continued to charge respondent with interest on its overdue account up to
January 31, 1981. This was pursuant to the Deed of Assignment which provides
for respondent's obligation for "applicable interest charges on overdue
account". The charges for interest were made every month and not once did
respondent question or take exception to the interest; and (2) In its letter of
February 16, 1981, respondent addressed the following request to petitioner:
In order to judge the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally considered (Art.
1253, Civil Code). The foregoing subsequent acts of the parties clearly show
that they did not intend the Deed of Assignment to have the effect of totally
extinguishing the obligations of private respondent without payment of the
applicable interest charges on the overdue account.
Finally, the payment of applicable interest charges on overdue account,
separate from the principal obligation of P4,072,682.13 was expressly
stipulated in the Deed of Assignment. The law provides that "if the debt
produces interest, payment of the principal shall not be deemed to have been
made until the interests have been covered." (Art. 1253, Civil Code).
FACTS:
At the core of the present controversy are two parcels of land measuring
a total of 2,147 square meters, with an office building constructed thereon.
Petitioner acquired the subject parcels of land in an auction sale on November
9, 1995 for P20,170,000 from the Land Bank of the Philippines (Land Bank).
Private respondent National Onion Growers Cooperative Marketing Association,
Inc., an agricultural cooperative, was the occupant of the disputed parcels of
land under a subsisting contract of lease with Land Bank. The lease was valid
until December 31, 1995. Upon the expiration of the lease contract, petitioner
demanded that private respondent vacate the leased premises and surrender its
possession to him. Private respondent refused on the ground that it was, at the
time, contesting petitioners acquisition of the parcels of land in question in an
action for annulment of sale, redemption and damages.
Petitioner filed an action for ejectment before the MTC. He asked, inter
alia, for the imposition of the contractually stipulated penalty of P5,000 per day
of delay in surrendering the possession of the property to him. On September
3, 1996, the trial court decided the case in favor of petitioner. On appeal to the
RTC, the MTC decision was affirmed in toto. The CA rendered its assailed
decision affirming the decision of the trial court, with the modification that the
penalty imposed upon private respondent for the delay in turning over the
leased property to petitioner was reduced from P 5,000 to P 1000 per day.
ISSUE:
Whether or not the Court of Appeals erred in reducing the penalty
awarded by the trial court, the same having been stipulated by the parties.
RULING:
No. Generally, courts are not at liberty to ignore the freedom of the
parties to agree on such terms and conditions as they see fit as long as they are
not contrary to law, morals, good customs, public order or public policy.
Nevertheless, courts may equitably reduce a stipulated penalty in the contract
if it is iniquitous or unconscionable, or if the principal obligation has been
partly or irregularly complied with. This power of the courts is explicitly
sanctioned by Article 1229 of the Civil Code which provides:
Article 1229. The judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor. Even if
there has been no performance, the penalty may also be reduced by the courts
if it is iniquitous or unconscionable.
fifteen (15) days from the receipt of the letter, it would cause the cancellation of
the lease contract.
RULING:
Respondents offer to partially satisfy their accounts is not
enough to extinguish their obligation. Respondents cannot substitute or
apply as their payment the value of the chicks and by-products they
expect to derive because it is necessary that all the debts be paid for the
same kind. The petition is partly granted. The Court of Appeals decision
is modified.
APPLICATION OF PAYMENTS
PACULDO VS. REGALADO
345 SCRA 134
FACTS:
On December 27, 1990, petitioner Nereo Paculdo and respondent
Bonifacio Regalado entered into a contract of lease over a parcel of land with a
wet market building, located at Fairview Park, Quezon City. The contract was
for twenty five (25) years, commencing on January 1, 1991 and ending on
December 27, 2015. For the first five (5) years of the contract beginning
December 27, 1990, Nereo would pay a monthly rental of P450,000, payable
within the first five (5) days of each month with a 2% penalty for every month of
late payment.
Aside from the above lease, petitioner leased eleven (11) other property
from the respondent, ten (10) of which were located within the Fairview
compound, while the eleventh was located along Quirino Highway Quezon City.
Petitioner also purchased from respondent eight (8) units of heavy equipment
and vehicles in the aggregate amount of Php 1, 020,000.
On account of petitioners failure to pay P361, 895.55 in rental for the
month of May, 1992, and the monthly rental of P450, 000.00 for the months of
June and July 1992, the respondent sent two demand letters to petitioner
demanding payment of the back rentals, and if no payment was made within
As provided in Article 1252 of the Civil Code, the right to specify which
among his various obligations to the same creditor is to be satisfied first rest
with the debtor.
In the case at bar, at the time petitioner made the payment, he made it
clear to respondent that they were to be applied to his rental obligations on the
Fairview wet market property. Though he entered into various contracts and
obligations with respondent, all the payments made, about P11,000,000.00
were to be applied to rental and security deposit on the Fairview wet market
property. However, respondent applied a big portion of the amount paid by
petitioner to the satisfaction of an obligation which was not yet due and
demandable- the payment of the eight heavy equipments.
Under the law, if the debtor did not declare at the time he made the
payment to which of his debts with the creditor the payment is to be applied,
the law provided the guideline; i.e. no payment is to be applied to a debt which
is not yet due and the payment has to be applied first to the debt which is most
onerous to the debtor.
The lease over the Fairview wet market is the most onerous to the
petitioner in the case at bar.
Consequently, the petition is granted.
APPLICATION OF PAYMENTS
CHINA BANKING CORPORATION, ATTYS. REYNALDO M. CABUSORA
and RENATO C. TAGUIAM, petitioners,
VS. COURT OF APPEALS, HON. PEDRO T. SANTIAGO, SPS. SO CHING
and CRISTINA SO, and NATIVE WEST INTERNATIONAL TRADING
CORP., respondents
1996 December 05
G.R. No. 121158
FACTS:
China Banking Corporation (China Bank) extended several loans to
Native West International Trading Corporation (Native West) and to So Ching,
Native West's president. Native West in turn executed promissory notes in favor
of China Bank. So Ching, with the marital consent of his wife, Cristina So,
additionally executed two mortgages over their properties, viz., a real estate
mortgage executed on July 27, 1989 covering a parcel of land situated in
Cubao, Quezon City, under TCT No. 277797, and another executed on August
10, 1989 covering a parcel of land located in Mandaluyong, under TCT No.
5363. The promissory notes matured and despite due demands by China Bank
neither private respondents Native West nor So Ching paid. Pursuant to a
provision embodied in the two mortgage contracts, China Bank filed petitions
for the extra-judicial foreclosure of the mortgaged properties before Notary
Public Atty. Renato E. Taguiam for TCT No. 277797, and Notary Public Atty.
Reynaldo M. Cabusora for TCT No. 5363, copies of which were given to the
spouses So Ching and Cristina So. After due notice and publication, the
notaries public scheduled the foreclosure sale of the spouses' real estate
properties on April 13, 1993. Eight days before the foreclosure sale, however,
private respondents filed a complaint with the Regional Trial Court for
accounting with damages and with temporary restraining order against
petitioners alleging several grounds, including Violation of Article 1308 of the
Civil Code. On April 7, 1993, the trial court issued a temporary restraining
order to enjoin the foreclosure sale.
Petitioners moved for reconsideration, but it was denied in an Order
dated September 23, 1993. To annul the trial court's Orders of April 28, 1993
and September 23, 1993, petitioners elevated the case through certiorari and
prohibition before public respondent Court of Appeals. In a decision dated
January 17, 1995, respondent Court of Appeals held that Administrative
Circular No. 3 is the governing rule in extra-judicial foreclosure of mortgage,
which circular petitioners however failed to follow, and with respect to the
publication of the notice of the auction sale, the provisions of P.D. No. 1079 is
the applicable statute, which decree petitioners similarly failed to obey.
Respondent Court of Appeals did not pass upon the other issues and confined
its additional lengthy discussion on the validity of the trial court's issuance of
the preliminary injunction, finding the same neither capricious nor whimsical
exercise of judgment that could amount to grave abuse of discretion. The Court
of Appeals accordingly dismissed the petition, as well as petitioners' subsequent
motion for reconsideration. Hence, the instant petition under Rule 45 of the
Rules of Court reiterating the grounds raised before respondent court.
ISSUE:
Whether or not there was a correct application of payment in this case.
RULING:
which the mortgage may stand as security if from the four corners of the
instrument the intent to secure future and other indebtedness can be gathered.
The allegations stated are a clear admission that they were unable to
settle to the fullest their obligation. Foreclosure is valid where the debtors, as
in this case, are in default in the payment of their obligation. The essence of a
contract of mortgage indebtedness is that a property has been identified or set
apart from the mass of the property of the debtor-mortgagor as security for the
payment of money or the fulfillment of an obligation to answer the amount of
indebtedness, in case of default of payment. It is a settled rule that in a real
estate mortgage when the obligation is not paid when due, the mortgagee has
the right to foreclose the mortgage and to have the property seized and sold in
view of applying the proceeds to the payment of the obligation. In fact, aside
from the mortgage contracts, the promissory notes executed to evidence the
loans also authorize the mortgagee to foreclose on the mortgages. Thus: . . .
CHINA BANKING CORPORATION is hereby authorized to sell at public or
private sales such securities or things of value for the purpose of applying their
proceeds to such payments.
And while private respondents aver that they have already paid ten
million pesos, an allegation which has still to be settled before the trial court,
the same cannot be utilized as a shield to enjoin the foreclosure sale. A
mortgage given to secure advancements, is a continuing security and is not
discharged by repayment of the amount named in the mortgage, until the full
amount of the advancements are paid.
APPLICATION OF PAYMENTS
MOBIL OIL PHILIPPINES, INC., and CALTEX (PHILS.), INC., petitioners
VS. HON. COURT OF APPEALS and
CONTINENTAL CEMENT CORPORATION, respondents
G.R. No. 103052
23 May 2003
FACTS:
The petition for review on certiorari in the case at bar seeks the reversal
of the decision of the Court of Appeals, affirming that 2 of the Regional Trial
Court (RTC), Branch 101, of Quezon City, which found herein petitioners Mobil
Oil Philippines, Inc., and Caltex Philippines, Inc., jointly and severally liable to
private respondent Continental Cement Corporation in the amount of eight
million pesos (P8,000,000.00) for actual damages, plus ten percent (10%)
thereof by way of attorneys fees, for having delivered water-contaminated
bunker fuel oil to the serious prejudice and damage of the cement firm.
Sometime in May 1982, petitioner Mobil Oil Philippines, Inc. (MOPI), a
firm engaged in the marketing of petroleum products to industrial users,
entered into a supply agreement with private respondent Continental Cement
Corporation (CCC), a cement producer, under which the former would supply
the latters industrial fuel oil (IFO) or bunker fuel oil (BFO) requirements. MOPI
extended to CCC an unsecured credit line of P2,000,000.00 against which
CCCs purchases of oil could initially be charged.
MOPI had a hauling contract with Century Freight Services (CFS)
whereby CFS undertook the delivery of Mobil products to designated
consignees of MOPI. During the period starting from 12 July to 07 October
1982, MOPI made a total of sixty-seven deliveries of BFO, each delivery
consisting of 20,000 liters, to CCCs cement factory in Norzagaray, Bulacan. On
08 October 1982, CCC discovered that what should have been MOPIs 20,000
BFO delivery to CCCs Norzagaray plant, through CFSs lorry truck, was, in
fact, pure water. CCC at once informed MOPI of this anomaly and of its
intention to meanwhile hold in abeyance all payments due to MOPI on its
previous deliveries until such time as the parties would have ascertained that
those deliveries were not themselves adulterated. CCC suggested that MOPIs
storage tank in the Norzagaray plant be likewise investigated for possible
contamination.
Alleging in the complaint it ultimately filed with the RTC that its factory
equipment broke down from 19 to 22 September 1982 due to the utilization of
the water-contaminated BFO supplied by MOPI; that on 23 September 1982, its
plant operations had to be stopped completely; and that it was able to resume
operations only after essential repairs had been undertaken on 02 October
1982; CCC sought to recover consequential damages from MOPI. In answer,
MOPI averred that CCC had accepted each delivery of BFO in accordance with
the procedure for testing and acceptance of BFO deliveries; that it was only on
08 October 1982 that CCC brought to its attention the alleged anomalous
delivery of 20,000 liters of BFO under invoice No. 47587 through Mariano
Riveras lorry truck; that when the delivery was being inspected by CCCs
representatives, the truck driver and helper fled; that Rivera acknowledged full
liability for such delivery; that Rivera promised to pay the amount of
P42,730.00 for the 20,000 liters of BFO delivered; and that MOPI agreed to the
water draining activity solely for the purpose of maintaining good business
relations with CCC but not to admit any liability therefore. In its compulsory
counterclaim, MOPI claimed that CCC had an outstanding obligation to it, as of
30 November 1982, in the amount of P1,096,238.51, and that as a consequence
of the frivolous and malicious suit: which besmirched MOPIs reputation, it
suffered moral damages of not less than P10,000,000.00, exemplary damages of
the same amount, and the incurrence of attorneys fees.
ISSUES:
Whether or not Petitioner Mobil is stopped from claiming that no Mobil
BFO remained unused by Continental on 22 October 1982; and that the
deliveries of BFO made by Mobil to Continental before 8 October 1982 were not
contaminated with water.
Whether or not Petitioners can be held liable for the contaminated BFO
delivered on 8 October 1982 on the ground that Country Freight Service, as
carrier-hauler, was an agent of Mobil.
RULING:
The claim that the Court of Appeals conveniently made an inference that
the subject Continental storage tank contained Mobil BFO deliveries only
because Mobil and Continental agreed to jointly examine the same, and that
the appellate court had so misapprehended the facts, is unacceptable. The
factual finding that deliveries previous to 08 October 1982 were adulterated
BFO was supported by the 22 October 1982 joint undertaking.
This
document, witnessed and signed by representatives of both MOPUI and CCC,
clearly showed that a detailed verification of water contained on all BFO
delivered by MOBIL OIL PHILS., INC., except those that have already been
used in cement operation by CCC,: was undertaken.
Implicit from this
statement was that there still was at the time an availability of BFO in the
storage tank designated by CCC for past Mobil deliveries. The same could be
said of the second water draining process, evidence by the second joint
undertaking. Although done without the participation of MOPI, the latter,
nonetheless, was notified of the counting thrice, the last of which had
indicated that failure on MOPIs part to send a representative would be
tantamount to a waiver of its right to participate therein.
The appellate court may not thus be faulted for holding that petitioners
and barred from questioning the results of water draining processes conducted
on the MOPI tank in the CCC plant site, in the same manner that MOPI may not
belatedly question the testing procedure theretofore adopted. MOPI cannot be
allowed to turn its back to its own acts (or inactions) to the prejudice of CCC,
which, in good faith, relied upon MOPIs conduct.
CFS was the contractor of MOPI, not CCC, and the contracted price of
the BFO that CCC paid to MOPI included hauling charges. The presumption
laid down under Article 1523 of the Civil Code that delivery to the carrier
should be deemed to be delivery to the buyer would have no application where,
such as in this case, the sale itself specifically called for delivery by the seller to
the buyer at the latters place of business.
secured by the same lot and building. Under the contract, Benos
could redeem the property within 18 months from the date of
execution by returning the contract price, otherwise, the sale
would become irrevocable. After paying the P150,000, Lawilao took
possession of the property, restructured it twicw, eventually the
loan become due and demandable. On August 14, 2000, a son of
Benos and Lawilao paid the bankl but the bank refused. Lawilao
filed for consignation against the bank and deposited the amount of
P159,000.00. RTC declared Lawilao of the ownership of the subject
property, which was affirmed by the Court of Appeals.
ISSUE:
RULING:
1.
2.
3.
4.
5.
6.
signed it. Thereafter, Tomas Siatianum issued the checks in the total amount of
P37,642.72 to private respondent.
FACTS:
Private respondent Mar-ick Investment Corporation is the exclusive and
registered owner of Mar-ick Subdivision in Barrio Buli, Cainta, Rizal. On May
29, 1961, private respondent entered into six agreements with petitioner
People's Industrial and Commercial Corporation sell to petitioner six
subdivision lots. Five of the agreements, involving similarly stipulate that the
petitioner agreed to pay private respondent for each lot, the amount of
P7,333.20 with a down payment of P480.00. The balance of P6,853.20 shall be
payable in 120 equal monthly installments of P57.11 every 30th of the month,
for a period of ten years. With respect to Lot No. 8, the parties agreed to the
purchase price of P7,730.00 with a down payment of P506.00 and equal
monthly installments of P60.20.
Private respondent received but did not encash those checks. Instead
filed in the trial court a complaint for accion publiciana de posesion against
petitioner and Tomas Siatianum, as president and majority stockholder of
petitioner.
After ten years, however, petitioner still had not fully paid for the six lots;
it had paid only the down payment and eight installments, even after private
respondent had given petitioner a grace period of four months to pay the
arrears. As of May 1, 1980, the total amount due to private respondent under
the contract was P214,418.00.
In his letter of March 30, 1980 to Mr. Tomas Siatianum, who signed the
agreements for petitioner, private respondent's counsel protested petitioner's
encroachment upon a portion of its subdivision. It added that petitioner had
failed to abide by its promise to remove the encroachment, or to purchase the
lots involved "at the current price or pay the rentals on the basis of the total
area occupied, all within a short period of time." It also demanded the removal
of the illegal constructions on the property that had prejudiced the subdivision
and its neighbors.
After a series of negotiations between the parties, they agreed to enter
into a new contract to sell 8 involving seven lots. The contract stipulates that
the previous contracts involving the same lots "have been cancelled due to the
failure of the purchaser to pay the stipulated installments." It states further
that the new contract was entered into "to avoid litigation, considering that the
purchaser has already made use of the premises since 1981 to the present
without paying the stipulated installments." The parties agreed that the
contract price would be P423,250.00 with a down payment of P42,325.00
payable upon the signing of the contract and the balance of P380,925.00
payable in forty-eight equal monthly amortization payments of P7,935.94. The
new contract bears the date of October 11, 1983 but neither of the parties
The lower court rendered a decision finding that the original agreements
of the parties were validly cancelled in accordance with provision No. 9 of each
agreement. The parties did not enter into a new they did not sign the draft
contract. Receipt by private respondent of the five checks could not amount to
perfection of the contract because private respondent never encashed and
benefited from those checks, they represented the deposit under the new
contract because petitioner failed to prove that those were monthly
installments that private respondent refused to accept. Thus, the fact that the
parties tried to negotiate a new Contract indicated that they considered the
first contract as "already cancelled." This decision was affirmed by the Court of
Appeals.
ISSUE:
Whether there was a tender of payment and consignation in the case.
RULING:
The parties' failure to agree on a fundamental provision of the contract
was aggravated by petitioner's failure to deposit the installments agreed upon.
Neither did it attempt to make a consignation of the installments. As held in
the Adelfa Properties case:
"The mere sending of a letter by the vendee expressing the intention to pay,
without the accompanying payment, is not considered a valid tender of
payment. Besides, a mere tender of payment is not sufficient to compel private
respondents to deliver the property and execute the deed of absolute sale. It is
consignation which is essential in order to extinguish petitioner's obligation to
pay the balance of the purchase price. The rule is different in case of an option
contract or in legal redemption or in a sale with right to repurchase, wherein
consignation is not necessary because these cases involve an exercise of a right
or privilege (to buy, redeem or repurchase) rather than the discharge of an
obligation, hence tender of payment would be sufficient to preserve the right or
privilege. This is because the provisions on consignation are not applicable
when there is no obligation to pay. A contract to sell, as in the case before us,
requiring "petitioner Eternal Gardens [to] deposit whatever amounts are due
from it under the Land Development Agreement with a reputable bank to be
designated by the respondent court."
In the case, petitioner did not lift a finger towards the performance of the
contract other than the tender of down payment. There is no record that it
even bothered to tender payment of the installments or to amend the contract
to reflect the true intention of the parties as regards the number of lots to be
sold. Indeed, by petitioner's inaction, private respondent may not be judicially
enjoined to validate a contract that the former appeared to have taken for
granted. As in the earlier agreements, petitioner ignored opportunities to
resuscitate a contract to sell that were rendered moribund and inoperative by
its inaction.
The trial court dismissed the cases and the appellate court affirmed
insofar as it dismissed the claims of the intervenors, including the Maysilo
Estate, and the titles of NPUM to the subject parcel of land were declared valid;
and the trial court's decision favor of the Singson heirs was reversed and set
aside. Through the resolution issued by the Supreme Court resolution, the
Court of Appeals proceeded with the disposition of the case and required the
parties to appear at a scheduled hearing on June 16, 1994, "with counsel and
accountants, as well as books of accounts and related records,' to determine the
remaining accrued rights and liabilities of said parties."
purchase price and all expenses incident to their reconveyance. After the sale
the vendee a retro took physical possession of the properties and paid the taxes
thereon.
The otherwise inconsequential sale became controversial when 2 of the 3
parcels were again sold on 24 December 1958 by Francisco Tazal for P420.00 in
favor of petitioners predecessor-in-interest Blas Rayos without first availing of
his right to repurchase the properties.
In the meantime, on 1 September 1959 the conventional right of
redemption in favor of spouses Francisco and Asuncion Tazal expired without
the right being exercised by either the Tazal spouses or the vendee Blas Rayos.
After the expiration of the redemption period, Francisco Tazal attempted
to repurchase the properties from Mamerto Reyes by asserting that the 1
September 1957 deed of sale with right of repurchase was actually an equitable
mortgage and offering the amount of P724.00 to pay for the alleged debt. But
Mamerto Reyes refused the tender of payment and vigorously claimed that
their agreement was not an equitable mortgage.
On 9 May 1960 Francisco Tazal filed a complaint with the Court of First
Instance of Pangasinan against Mamerto Reyes for the declaration of the 1
September 1957 transaction as a contract of equitable mortgage. He also
prayed for an order requiring defendant Mamerto Reyes to accept the amount
of P724.00 which he had deposited on 31 May 1960 with the trial court as full
payment for his debt, and canceling the supposed mortgage on the 3 parcels of
land with the execution of the corresponding documents of reconveyance in his
favor. Defendant denied plaintiffs allegations and maintained that their
contract was a sale with right of repurchase that had long expired.
On 22 June 1961 Francisco Tazal again sold the third parcel of land
previously purchased by Mamerto Reyes to petitioner-spouses Teofilo and
Simeona Rayos for P400.00. On 1 July 1961 petitioner-spouses bought from
Blas Rayos for P400.00 the 2 lots that Tazal had sold at the first instance to
Mamerto Reyes and thereafter to Blas Rayos. Curiously, these contracts of sale
in favor of petitioner-spouses were perfected while the aforementioned case
was pending before the trial court.
ISSUE:
Whether or not the consignation made by the petitioners is valid.
RULING:
In order that consignation may be effective the debtor must show that (a)
there was a debt due; (b) the consignation of the obligation had been made
because the creditor to whom a valid tender of payment was made refused to
accept it; (c) previous notice of the consignation had been given to the person
interested in the performance of the obligation; (d) the amount due was placed
at the disposal of the court; and, (e) after the consignation had been made the
person interested was notified thereof.
In the instant case, petitioners failed, first, to offer a valid and
unconditional tender of payment; second, to notify respondents of the intention
to deposit the amount with the court; and third, to show the acceptance by the
creditor of the amount deposited as full settlement of the obligation, or in the
alternative, a declaration by the court of the validity of the consignation. The
failure of petitioners to comply with any of these requirements rendered the
consignation ineffective.
Mamerto Reyes was therefore within his right to refuse the tender of
payment offered by petitioners because it was conditional upon his waiver of
the two (2)-year redemption period stipulated in the deed of sale with right to
repurchase.
Wherefore, the petition for review is denied.
The check was drawn from petitioners current account maintained with Bank
of the Philippine Islands (BPI) main branch at Makati City. On June 17, 1991,
private respondents wife deposited the check with Rizal Commercial Banking
Corp. (RCBC) in Puerto Princesa, Palawan. BPI dishonored the check, that the
check is subject of an investigation. BPI took custody of the check pending an
investigation of several counterfeit checks drawn against CIFCs checking
account. BPI used the check to trace the perpetrators of the forgery.
Immediately, private respondent notified CIFC of the dishonored check and
demanded that he be paid in cash. CIFC denied the request and instead
instructed private respondent to wait for its ongoing bank reconciliation with
BPI. Private respondent made a formal demand of his money market placement.
In turn, CIFC promised to replace the check but required an impossible
condition that the original check must first be surrendered.
On February 25, 1992, Alegre filed a complaint for recovery of sum of
money against petitioner. On July 13, 1992, CIFC sought to recover its lost
funds and formally filed against BPI a separate civil action for collection of a
sum of money with RTC- Makati Branch. It alleged that BPI unlawfully deducted
from CIFCs checking account, counterfeit checks amounting to P1, 724, 364.
58. The action included the prayer to collect the amount of the check paid to
Alegre but dishonored by BPI. CIFC in its response to Alegres complaint filed
for leaver of court and impleaded BPI to enforce a right, for contribution and
indemnity. The court granted CIFCs motion but upon the motion to dismiss the
third-party complaint filed by BPI, the court dismissed the third-party
complaint. During the hearing, BPI through its Manager, testified that on July
16, 1993, BPI encashed and deducted the said amount from the account of
CIFC, but the proceeds, as well as the check remained in BPIs custody. This
was alleged in accordance with the Compromise Agreement it entered with
CIFC to end the litigation in RTC-Makati Branch. On July 27, 1993, BPI filed a
separate collection suit against Alegre, alleging that he had connived with other
persons to forge several checks of BPIs client, amounting to P1, 724, 364.58.
On September 27, 1993, RTC-Makati Branch rendered its judgment in favor of
private respondent. CIFC appealed from the said decision, but the appellate
court affirmed in toto the decision of the lower court.
ISSUE:
Whether or not the petitioner is still liable for the payment of check even
though BPI accepted the instrument
RULING:
The Supreme Court held that the money market transaction between the
petitioner and private respondent is in the nature of loan. In a loan transaction,
the obligation to pay a sum certain in money may be paid in money, which is the
legal tender or, by the use of a check. A check is not a legal tender, and
therefore cannot constitute valid tender of payment. In effect, CIFC has not yet
tendered a valid payment of its obligation to the private respondent. Tender of
payment involves a positive and unconditional act by the obligor of offering
legal tender currency as payment to the obligee for the formers obligation and
demanding that the latter accept the same. Tender of payment cannot be
presumed by a mere inference from surrounding circumstances. Hence, CIFC is
still liable for the payment of the check.
Wherefore, the assailed decision is affirmed and the petition is denied.
TENDER OF PAYMENT OR CONSIGNATION
DOLORES LIGAYA DE MESA, petitioner, vs. THE COURT OF APPEALS,
OSSA HOUSE, INC. AND DEVELOPMENT BANK OF THE
PHILIPPINES,respondents
G.R. No. 106467-68
October 19, 1999
FACTS:
Petitioner Dolores Ligaya de Mesa owns several parcels of land in
Makati, Pasay City, Cavite, and General Santos City which were mortgaged to
the Development Bank of the Philippines (DBP) as security for a loan she
obtained from the bank. Failing to pay her mortgage debt, all her mortgaged
properties were foreclosed and sold at public auction held on different days.
On April 30, 1977, the Makar property was sold and the corresponding
certificate of sale inscribed on March 10, 1978. On August 25, 1977, the Naic,
Cavite property was sold and the certificate of sale registered on the same day.
On August 30, 1977, the two (2) parcels of land in Makati were sold at public
auction and the certificate of sale was inscribed on November 25, 1977. And on
January 12, 1978, the three (3) parcels of land in Pasay City were also sold and
the certificate of sale was recorded on the same date. In all the said auction
sales, DBP was the winning bidder.
On October 23, 1978, Mrs. de Mesa, under a Deed of Sale with Assumption
of Mortgage, sold the foreclosed properties to private respondent OSSA under
the condition that the latter was to assume the payment of the mortgage debt
by the repurchase of all the properties mortgaged on installment basis, with an
initial payment of P90,000.00 representing 20% of the total obligation.
On March 11, 1981, petitioner de Mesa notified private respondent OSSA
that she was rescinding the Deed of Sale with Assumption of Mortgage she
executed in favor of the latter on the ground that OSSA failed to comply with
the terms and conditions of their agreement, particularly the payment of
installments to the Development Bank of the Philippines, the discharge and
cancellation of the mortgage on the property listed in item IV of the first
whereas clause, and the payment of the balance of more or less P45,000.00 to
petitioner, representing the difference between the purchase price of subject
properties and the actual obligation to the DBP.
On August 5, 1981, DBP refused to accept the 9th quarterly installment
paid by OSSA, prompting the latter to file against DBP and the petitioner, on
August 11, 1981, Civil Case No. 42381 for specific performance and
consignation, with the then Court of First Instance of Pasig, Rizal, depositing in
said case the amount of P15,824.92.
After trial, the lower court came out with a Decision for the private
respondent OSSA. The petitioner appealed to the Court of Appeals which
handed down on March 31, 1992, its decision modifying the challenged
decision.
ISSUE:
Whether or not the Court erred in ruling that the mandatory
requirements of the Civil Code on consignation can be waived by the trial court
or whether or not the requirements of Articles 1256 to 1261 can be 'relaxed' or
'substantially complied with'.
RULING:
Petitioner argues that there was no notice to her regarding OSSA's
consignation of the amounts corresponding to the 12th up to the 20th quarterly
installments. The records, however, show that several tenders of payment were
consistently turned down by the petitioner, so much so that the respondent
OSSA found it pointless to keep on making formal tenders of payment and
serving notices of consignation to petitioner. Moreover, in a motion dated May
7, 1987, OSSA prayed before the lower court that it be allowed to deposit by
way of consignation all the quarterly installments, without
making formal tenders of payment and serving notice of consignation, which
prayer was granted by the trial court in the Order dated July 3, 1982. The
motion and the subsequent court order served on the petitioner in the
consignation proceedings sufficiently served as notice to petitioner of OSSA's
willingness to pay the quarterly installments and the consignation of such
payments with the court. For reasons of equity, the procedural requirements of
consignation are deemed substantially complied with in the present case.
FACTS:
Petitioner also insists that there was no valid tender of payment because
the amount tendered was P34,363.08, not P51,243.26, and assuming ex gratia
argumenti that it was the correct amount, the tender thereof was still not valid,
the same having been made by check. This claim, however, does not accord
with the records on hand. Thus, the Court of Appeals ratiocinated:
"The 'Deed of Sale with Assumption of Mortgage', was for a consideration
of P500,000.00, from which shall be deducted de Mesas's outstanding
obligation, with the DBP pegged as of May 10, 1978, by the parties themselves,
at P455,636.92. This amount of P455,636.92 owing DBP, is what OSSA agreed
to assume. What remained to be paid de Mesa was P44,636.08, but OSSA made
an advance payment of P10,000.00, hence the remaining amount payable to de
Mesa is P34,363.08, which OSSA tendered in cash. It is thus beyond cavil that
the respondent OSSA tendered the correct amount, the tender of which was in
cash and not by check, as theorized by petitioner.
The Court of Appeals erred not in affirming the decision of the trial court
of origin.
The petition is DENIED and the assailed Decision of the Court of Appeals
in CA-G.R. Nos. 19145 and 19156 dated March 31, 1992 AFFIRMED.
ORTIGAS & CO., LIMITED PARTNERSHIP VS. FEATI BANK AND TRUST
CO.
G.R. No. L-24670
December 14, 1979
FACTS:
Plaintiff is a limited partnership and defendant Feati Bank and Trust Co.,
is a corporation duly organized and existing in accordance with the laws of the
Philippines. Plaintiff is engaged in real estate business, developing and selling
lots to the public, particularly the Highway Hills Subdivision along EDSA,
Mandaluyong, Rizal. On March 4, 1952, plaintiff, as vendor, and Augusto
Padilla and Natividad Angeles, as vendees, entered into separate agreements of
sale on installments over two parcels of land. On July 19, 1962, the said
vendees transferred their rights and interests over the aforesaid lots in favor of
one Emma Chavez. Upon completion of payment of the purchase price, the
plaintiff executed the corresponding deeds of sale in favor of Emma Chavez.
Both the agreements (of sale on installment) and the deeds of sale contained
some stipulations or restrictions which were later annotated in TCT Nos.
101509 and 101511 of the Register of Deeds of Rizal, covering the said lots and
issued in the name of Emma Chavez. Eventually, defendant-appellee acquired
Lots Nos. 5 and 6, with TCT Nos. 101613 and 106092 issued in its name,
respectively and the building restrictions were also annotated therein.
Defendant-appellee bought Lot No. 5 directly from Emma Chavez, "free from all
liens and encumbrances as stated in Annex 'D', 5 while Lot No. 6 was acquired
from Republic Flour Mills through a "Deed of Exchange," Annex "E". TCT No.
101719 in the name of Republic Flour Mills likewise contained the same
restrictions, although defendant-appellee claims that Republic Flour Mills
purchased the said Lot No. 6 "in good faith. free from all liens and
encumbrances," as stated in the Deed of Sale, Annex "F" between it and Emma
Chavez.
Plaintiff-appellant claims that the restrictions annotated on TCT Nos.
101509, 101511, 101719, 101613, and 106092 were imposed as part of its
general building scheme designed for the beautification and development of the
Highway Hills Subdivision which forms part of the big landed estate of plaintiffappellant where commercial and industrial sites are also designated or
established.
Defendant-appellee, upon the other hand, maintains that the area along
the western part of EDSA from Shaw Boulevard to Pasig River, has been
declared a commercial and industrial zone, per Resolution No. 27, dated
With regard to the contention that said resolution cannot nullify the
contractual obligations assumed by the defendant-appellee referring to the
restrictions incorporated in the deeds of sale and later in the corresponding
Transfer Certificates of Title issued to defendant-appellee, it should be stressed,
that while non-impairment of contracts is constitutionally guaranteed, the rule
is not absolute, since it has to be reconciled with the legitimate exercise of
police power.
Resolution No. 27, s-1960 declaring the western part of highway , now
EDSA, from Shaw Boulevard to the Pasig River as an industrial and commercial
FACTS:
Private respondent Santiago A. Guerrero was President and Chairman of
"Guerrero Transport Services", a single proprietorship. Sometime in 1972,
Guerrero Transport Services won a bid for the operation of a fleet of taxicabs
within the Subic Naval Base, in Olongapo. As highest bidder, Guerrero was to
"provide radio-controlled taxi service within the U.S. Naval Base, Subic Bay,
utilizing as demand requires . . . 160 operational taxis consisting of four wheel,
four-door, four passenger, radio controlled, meter controlled, sedans, not more
than one year . . . "
On September 22, 1972, with the advent of martial law, President
Ferdinand E. Marcos issued Letter of Instruction No. 1.
On September 25, 1972, pursuant to the aforequoted Letter of
Instruction, the Radio Control Office issued Administrative Circular No. 4:
Subject: Suspending the acceptance and processing of applications for radio
station construction permits and for permits to own and/or possess radio
transmitters or transceivers.
On September 25, 1972, Guerrero and Victorino D. Magat, as General
Manager of Spectrum Electronic Laboratories, a single proprietorship,
executed a letter-contract for the purchase of transceivers at a quoted price of
US$77,620.59, FOB Yokohoma. Victorino was to deliver the transceivers within
60 to 90 days after receiving notice from Guerrero of the assigned radio
frequency, "taking note of Government Regulations. The contract was signed
and Victorino contacted his Japanese supplier, Koide & Co., Ltd. and placed an
order for the transceivers.
On September 29, 1972, Navy Exchange Officer, A. G. Mason confirmed
that Guerrero won the bid for the commercial transportation contract. On
October 4, 1972, middle man and broker Isidro Q. Aligada of Reliance Group
Engineers, Inc. , wrote Victorino, informing him that a radio frequency was not
yet assigned to Guerrero and that government regulations might complicate the
importation of the transceivers. However, in the same letter, Victorino was
advised to advise his supplier "to proceed (with) production pending frequency
information." Victorino was also assured of Guerrero's financial capability to
comply with the contract. On October 6, 1972, Guerrero informed Aligada of
the frequency number assigned by Subic Naval Base authorities. Aligada was
instructed to "proceed with the order thru Spectrum Electronics Laboratories."
On October 7, 1972, Aligada informed Magat of the assigned frequency number.
Aligada also advised Victorino to "proceed with the order upon receipt of letter
of credit." On January 10, 1973, Guerrero applied for a letter of credit with the
Metropolitan Bank and Trust Company. This application was not pursued.
private respondent should also be ordered to pay the monthly bills for the use
of the telephones also in Naga City.
And taking into consideration the
guidelines of the NEA on the rental of posts by telephone companies and the
increase in the costs of such posts, the trial court opined that a monthly rental
of P10.00 for each post of private respondent used by petitioners is reasonable,
which rental it should pay from the filing of the complaint in this case on
January 2, 1989. And in like manner, private respondent should pay petitioners
from the same date its monthly bills for the use and transfers of its telephones
in Naga City at the same rate that the public are paying.
On private respondent's second cause of action, the trial court found that
the contract does not mention anything about the use by petitioners of private
respondent's posts outside Naga City. Therefore, the trial court held that for
reason of equity, the contract should be reformed by including therein the
provision that for the use of private respondent's posts outside Naga City,
petitioners should pay a monthly rental of P10.00 per post, the payment to start
on the date this case was filed, or on January 2, 1989, and private respondent
should also pay petitioners the monthly dues on its telephone connections
located outside Naga City beginning January, 1989. And with respect to private
respondent's third cause of action, the trial court found the claim not
sufficiently proved.
The Court of Appeals affirmed the decision of the trial court, but based
on different grounds to wit: (1) that Article 1267 of the New Civil Code is
applicable and (2) that the contract was subject to a potestative condition which
rendered said condition void.
ISSUE:
Whether or not the principle of Rebus Sic Stantibus is applicable in the
case at bar.
RULING:
No. Article 1267 speaks of "service" which has become so difficult.
Taking into consideration the rationale behind this provision, the term "service"
should be understood as referring to the "performance" of the obligation.
In the present case, the obligation of private respondent consists in
allowing petitioners to use its posts in Naga City, which is the service
contemplated in said article. Furthermore, a bare reading of this article reveals
that it is not a requirement thereunder that the contract be for future service
FACTS:
The case is an appeal taken from an order of the First Instance of Manila
dated May 19, 1950, setting aside the writs of execution and garnishment
issued to the sheriff of Manila commanding him to levy on two (2) checks, one
for P9,028.50, and another for P24,546.00, payable to Fred M. Harden which
were then in possession of the receiver appointed in case involving the
liquidation of the conjugal partnership of the spouses Fred M. Harden and
Esperanza P. de Harden.
On August 26, 1948, plaintiff filed an action against the defendant for the
collection of P113,837.17, with interest thereon from the filing of the complaint,
which represents fifty (50) per cent of the reduction plaintiff was able to secure
from the Collector of Internal Revenue in the amount of unpaid taxes claimed to
be due from the defendant. Defendant acknowledged this claim and prayed
that judgment be rendered accordingly. The receiver in the liquidation of case
No. R-59634 and the wife of the defendant, Esperanza P. de Harden, filed an
answer in intervention claiming that the amount sought by the plaintiff was
exorbitant and prayed that it be reduced to 10 per cent of the rebate. By
reason of the acquiescence of the defendant to the claim on one hand, and the
opposition of the receiver and of the wife on the other, an amicable settlement
was concluded by the plaintiff and the intervenor whereby it was agreed that
the sum of P22,767.43 be paid to the plaintiff from the funds under the control
of the receiver "and the balance of P91,069.74 shall be charged exclusively
against the defendant Fred M. Harden from whatever share he may still have in
the conjugal partnership between him and Esperanza P. de Harden after the
final liquidation and partition thereof, without pronouncement as to costs and
interests." The court rendered judgment in accordance with this stipulation.
Almost one year thereafter, plaintiff filed a motion for the issuance of a
writ of execution to satisfy the balance of P91, 069.74, which was favorably
acted upon. At that time the receiver had in his possession two (2) checks
payable to Fred M. Harden amounting to P33,574.50, representing part of the
proceeds of the sale of two (2) lots belonging to the conjugal partnership which
was ordered by the court upon the joint petition of the spouses in order that
they may have funds with which to defray their living and other similar
expenses. One-half of the proceeds was given to Mrs. Harden. The sheriff
attempted to garnish these two (2) checks acting upon the writ of execution
secured by the plaintiff, but the receivership court quashed the writ, stating
however in the order that it will be without prejudice to the right of Francisco
Dalupan to attach the money of the defendant Fred M. Harden, after the same
has been delivered to the latter. When said checks were delivered to the latter.
ISSUE:
Whether or not the proffer made by the plaintiff to the defendant is
binding.
RULING:
YES, the proffer made by the plaintiff to the defendant to the effect that
in the event you lose your case with your wife, Mrs. Esperanza P. de Harden,
and that after adjudication of the conjugal property what is left with you will
not be sufficient for your livelihood. I shall be pleased to write off as bad debt
the balance of your account in the sum of P42, 069.74. This proffer was
contained in a letter sent by the plaintiff to the defendant on March 23, 1949,
which was accepted expressly by Fred M. Harden. Harden regarded this proffer
as a binding obligation and acted accordingly, and for plaintiff to say now that
proffer is but a mere gesture of generosity or an act of Christian charity without
any binding legal effect is unfair to say at least. This is an added circumstance,
which confirms the Courts view that the understanding between the plaintiff
and the defendant is really to defer payment of the balance of the claim until
after the final liquidation of the conjugal partnership.
IMPLIED CONDONATION PRESUMPTION OF DELIVERY
LEONIDES LOPEZ LISO, plaintiff-appellee,
VS. MANUEL TAMBUNTING, defendant-appellant
1916 January 19
G.R. No. 9806
33 PHIL 226
FACTS:
These proceedings were brought to recover from the defendant the sum
of P2,000, amount of the fees, which, according to the complaint, are owing for
professional medical services rendered by the plaintiff to a daughter of the
defendant from March 10 to July 15, 1913, which fees the defendant refused to
pay, notwithstanding the demands therefor made upon him by the plaintiff. The
defendant denied the allegations of the complaint, and furthermore alleged that
the obligation which the plaintiff endeavored to compel him to fulfill was
already extinguished.
The Court of First Instance of Manila, after hearing the evidence
introduced by both parties, rendered judgment on December 17, 1913, ordering
the defendant to pay to the plaintiff the sum of P700, without express finding as
to costs. The defendant, after entering a motion for a new trial, which was
denied, appealed from said judgment and forwarded to this court the proper bill
of exceptions.
ISSUE:
Whether or not the obligation alleged in the complaint has already been
extinguished.
RULING:
No, the Supreme Court ruled that the obligation has not been
extinguished. The receipt signed by the plaintiff, for P700, the amount of his
fees he endeavored to collect from the defendant after he had finished
rendering the services in question was in the latter's possession, and this fact
was alleged by him as proof that he had already paid said fees to the plaintiff.
The court, after hearing the testimony, reached the conclusion that,
notwithstanding that the defendant was in possession of the receipt, the said
P700 had not been paid to the plaintiff.
Number 8 of section 334 of the Code of Civil Procedure provides as a
legal presumption "that an obligation delivered up to the debtor has been paid."
Article 1188 of the Civil Code also provides that the voluntary surrender by a
creditor to his debtor, of a private instrument proving a credit, implies the
renunciation of the right of action against the debtor; and article 1189
prescribes that whenever the private instrument which evidences the debt is in
the possession of the debtor, it will be presumed that the creditor delivered it of
his own free will, unless the contrary is proven.
But the legal presumption established by the foregoing provisions of law
cannot stand if sufficient proof is adduced against it. In the case at bar the trial
court correctly held that there was sufficient evidence to the contrary, in view
of the preponderance thereof in favor of the plaintiff and of the circumstances
connected with the defendant's possession of said receipt. Furthermore, in
order that such a presumption may be taken into account, it is necessary, as
stated in the laws cited, that the evidence of the obligation be delivered up to
the debtor and that the delivery of the instrument proving the credit be made
voluntarily by the creditor to the debtor. In the present case, it cannot be said
that these circumstances concurred, inasmuch as when the plaintiff sent the
receipt to the defendant for the purpose of collecting his fee, it was not his
intention that that document should remain in the possession of the defendant
if the latter did not forthwith pay the amount specified therein.
By reason of the foregoing, the Court affirmed the judgment appealed
from, with the costs of this instance against the appellant.
FACTS:
On February 1, 1919, plaintiffs and defendant entered into a contract of
partnership, for the construction and exploitation of a railroad line from the
"San Isidro" and "Palma" centrals to the place known as "Nandong." The
original capital stipulated was P150, 000. It was covenanted that the parties
should pay this amount in equal parts and the plaintiffs were entrusted with the
administration of the partnership. The agreed capital of P150,000, however, did
not prove sufficient, as the expenses up to May 15, 1920, had reached the
amount of P226,092.92, presented by the administrator and O.K.'d by the
defendant.
January 29, 1920, the defendant entered into a contract of sale with
Venancio Concepcion, Phil. C. Whitaker, and Eusebio R. de Luzuriaga, whereby
he sold to the latter the estate and central known as "Palma" with its running
business, as well as all the improvements, machineries and buildings, real and
personal properties, rights, choices in action and interests, including the sugar
plantation of the harvest year of 1920 to 1921, covering all the property of the
vendor. This contract was executed before a notary public of Iloilo.
Before the delivery to the purchasers of the hacienda thus sold, Eusebio
R. de Luzuriaga renounced all his rights under the contract of January 29, 1920,
in favor of Messrs. Venancio Concepcion and Phil. C. Whitaker. This gave rise
to the fact that on July 17, 1920, Venancio Concepcion and Phil. C. Whitaker
and the herein defendant executed before Mr. Antonio Sanz, a notary public in
and for the City of Manila, another deed of absolute sale of the said "Palma"
Estate for the amount of P1,695,961.90, of which the vendor received at the
time of executing the deed the amount of P945,861.90, and the balance was
payable by installments in the form and manner stipulated in the contract. The
purchasers guaranteed the unpaid balance of the purchase price by a first and
special mortgage in favor of the vendor upon the hacienda and the central with
all the improvements, buildings, machineries, and appurtenances then existing
on the said hacienda.
Phil. C. Whitaker and Venancio Concepcion mortgaged unto the plaintiffs what
they had bought from the plaintiffs and also what they had bought from
Salvador Serra. If Messrs. Phil. C. Whitaker and Venancio Concepcion had
purchased something from Mr. Salvador Serra, the herein defendant, regarding
the railroad line, it was undoubtedly the one-half thereof pertaining to Mr.
Salvador Serra. This clearly shows that the rights and titles transferred by the
plaintiffs to Phil. C. Whitaker and Venancio Concepcion were only those they
had over the other half of the railroad line. Therefore, as already stated, since
there was no novation of the contract between the plaintiffs and the defendant,
as regards the obligation of the latter to pay the former one-half of the cost of
the construction of the said railroad line, and since the plaintiffs did not include
in the sale, the credit that they had against the defendant, the allegation that
the obligation of the defendant became extinguished by the merger of the rights
of creditor and debtor by the purchase of Messrs. Phil. C. Whitaker and
Venancio Concepcion is wholly untenable.
CONFUSION OR MERGER OR RIGHTS
YEK TONG LIN VS. YUSINGCO
64 PHIL 473
FACTS:
The defendant Pelagio Yusingco was the owner of the steamship Yusingco
and, as such, he executed, on November 19, 1927, a power of attorney in favor
of Yu Seguios to administer, lease, mortgage and sell his properties, including
his vessels or steamships. Yu Seguios, acting as such attorneys in fact of Pelagio
Yusingco, mortgaged to the plaintiff Yek Tong Lin Fire & Marine Insurance Co.,
Ltd., with the approval of the Bureau of Customs, the steamship Yusingco
belonging to the defendant, to answer for any amount that said plaintiff might
pay in the name of the defendant on account of a promissory note for P45, 000
executed by it.
One year and some months later, or in February, 1930, and in April, 1931,
the steamship Yusingco needed some repairs which were made by the
Earnshaw Docks & Honolulu Iron Works upon petition of A. Yusingco Hermanos
which, according to documentary evidence of record, was co-owner of Pelagio
Yusingco. The repairs were made upon the guaranty of the defendant and
appellant Vicente Madrigal at a cost of P8,244.66.
When neither A. Yusingco Hermanos nor Pelagio Yusingco could pay said
sum to the Earnshaw Docks & Honolulu Iron Works, the defendant and
appellant Vicente Madrigal had to make payment thereof with the stipulated
interest thereon, which was at the rate of 9 per cent per annum, on March 9,
1932, because he was bound thereto by reason of the bond filed by him, the
payment then made by him having amounted to P8,777.60. Some days later,
when said defendant discovered that he was not to be reimbursed for the
repairs made on the steamship Yusingco, he brought an action against his codefendant Pelagio Yusingco and A. Yusingco Hermanos to compel them to
reimburse him, which resulted in a judgment favorable to him and adverse to
the Yusingcos, as the latter were ordered to pay him the sum of P3,269.66 plus
interest thereon at said rate of 9 per cent per annum from May 6, 1931, with
the costs of the suit. It was provided in the judgment that upon failure of the
Yusingcos to pay the above-stated amounts to Vicente Madrigal, a writ of
execution would be issued in order to have the steamship Yusingco sold at
public auction for the purpose of satisfying said amounts with the proceeds
thereof.
Inasmuch as neither the defendant Pelagio Yusingco nor A. Yusingco
Hermanos paid the amount of the judgment rendered in civil case No. 41654, in
favor of the defendant and appellant Vicente Madrigal, the latter sought and
obtained from the Court of First Instance, which tried the case, the issuance of
the corresponding writ of execution. However, before the sale of the steamship
Yusingco, by virtue of the writ of execution so issued, was carried out, the
plaintiff and appellant filed with the defendant sheriff a third party claim
demanding said ship for himself, alleging that it had been mortgaged to him
long before the issuance of said writ and, therefore, he was entitled to the
possession thereof. The defendant sheriff then informed the defendant and
appellant Vicente Madrigal that if he wished to have the execution sought by
him carried out, he should file the indemnity bond required by section 451 of
Act No. 190. This was done by Vicente Madrigal, but in order to prevent him
and the sheriff from proceeding with the execution, the plaintiff and appellant
instituted this case in the court of origin and asked for the issuance of a writ of
preliminary injunction addressed to said two defendants to restrain them from
selling the steamship Yusingco at public auction. The writ of preliminary
injunction, which was issued on August 19, 1932, was later dissolved, the
defendant and appellant Vicente Madrigal having filed a bond of P5,000. This
left the preliminary injunction unimpaired and valid for the sale of the
steamship Yusingco at public auction. For this reason, said ship was sold at
public auction on September 19, 1932, and was purchased, under the
circumstances, by the plaintiff and appellant itself, which was the highest
bidder, having made the highest bid of P12,000. Of said amount, the defendant
sheriff turned over P10,195 to Vicente Madrigal in payment of his judgment
credit. It is said sum of P10,195 which the lower court ordered Vicente
Madrigal to turn over to the plaintiff.
ISSUE:
Whether or not the credit of the plaintiff, as mortgaged creditor of
Pedagio Yusingco, is superior to that of Vicente Madrigal, as judgment creditor
of said Pelagio Yusingco and A. Yusingco Hermones.
RULING:
NO, the defendant and appellant Vicente Madrigal enjoy preference in
the payment of his judgment credit.
After the steamship Yusingco had been sold by virtue of the judicial writ
issued in civil case No. 41654 for the execution of the judgment rendered in
favor of Vicente Madrigal, the only right left to the plaintiff was to collect its
mortgage credit from the purchaser thereof at public auction, inasmuch as the
rule is that a mortgage directly and immediately subjects the property on which
it is imposed, whoever its possessor may be, to the fulfillment of the obligation
for the security of which it was created (Article 1876, Civil Code); but it so
happens that it can not take such steps now because it was the purchaser of the
steamship Yusingco at public auction, and it was so with full knowledge that it
had a mortgage credit on said vessel. Obligations are extinguished by the
merger of the rights of the creditor and debtor (Articles 1156 and 1192, Civil
Code).
COMPENSATION REQUISITES
1.
2.
3.
E.G.V. REALTY V CA
G.R.No. 120236 July 20, 1999
FACTS
can take place. Unless admitted by a debtor himself, the conclusion that
he is in truth indebted to another cannot be definitely and finally
pronounced, no matter how convinced he may be from the examination
of the pertinent records of the validity of that conclusion the
indebtedness must be one that is admitted by the alleged debtor or
pronounced by final judgment of a competent court or in this case by the
Commission.
There can be no doubt that Unisphere is indebted to the
Corporation for its unpaid monthly dues in the amount of P13,142.67.
This is admitted.
COMPENSATION REQUISITES
AEROSPACE CHEMICAL V CA
g.r.no. 108129 september 23, 1999
FACTS
On June 27, 1986, petitioner Aerospace Industries, Inc. (Aerospace)
purchased five hundred (500) metric tons of sulfuric acid from private
respondent Philippine Phosphate Fertilizer Corporation (Philphos).
Initially set beginning July 1986, the agreement provided that the buyer
shall pay its purchases in equivalent Philippine currency value, five days
prior to the shipment date. Petitioner as buyer committed to secure the
means of transport to pick-up the purchases from private respondent's
loadports. Per agreement, one hundred metric tons (100 MT) of sulfuric
acid should be taken from Basay, Negros Oriental storage tank, while the
remaining four hundred metric tons (400 MT) should be retrieved from
Sangi, Cebu. On December 18, 1986, M/T Sultan Kayumanggi docked at
Sangi, Cebu, but withdrew only 157.51 MT of sulfuric acid. Again, the
vessel tilted. Further loading was aborted. Two survey reports conducted
by the Societe Generale de Surveillance (SGS) Far East Limited, dated
December 17, 1986 and January 2, 1987, attested to these occurrences.
Later, on a date not specified in the record, M/T Sultan Kayumanggi sank
with a total of 227.51 MT of sulfuric acid on board. Petitioner chartered
another vessel, M/T Don Victor, with a capacity of approximately 500
MT.6 [TSN, September 1, 1989, pp. 28-29.] On January 26 and March 20,
1987, Melecio Hernandez, acting for the petitioner, addressed letters to
private respondent, concerning additional orders of sulfuric acid to
replace its sunken purchases.
ISSUE
Should expenses for the storage and preservation of the purchased
fungible goods, namely sulfuric acid, be on seller's account pursuant to
Article 1504 of the Civil Code?
RULING
Petitioner tries to exempt itself from paying rental expenses and
other damages by arguing that expenses for the preservation of fungible
goods must be assumed by the seller. Rental expenses of storing sulfuric
acid should be at private respondent's account until ownership is
transferred, according to petitioner. However, the general rule that
before delivery, the risk of loss is borne by the seller who is still the
owner, is not applicable in this case because petitioner had incurred
delay in the performance of its obligation. Article 1504 of the Civil Code
clearly states: "Unless otherwise agreed, the goods remain at the seller's
risk until the ownership therein is transferred to the buyer, but when the
ownership therein is transferred to the buyer the goods are at the
buyer's risk whether actual delivery has been made or not, except that:
(2) Where actual delivery has been delayed through the fault of either
the buyer or seller the goods are at the risk of the party at fault."
On this score, we quote with approval the findings of the appellate
court, thus: The defendant [herein private respondent] was not remiss in
reminding the plaintiff that it would have to bear the said expenses for
failure to lift the commodity for an unreasonable length of time.But even
assuming that the plaintiff did not consent to be so bound, the provisions
of Civil Code come in to make it liable for the damages sought by the
defendant.
COMPENSATION REQUISITES
APODACA V NLRC
commitment by the latter to pay any commission to the former involving the
sale of sprockets to Dole Philippines, Inc. in the amount of P111,000.00.
Indeed, such document can be taken as self-serving with no probative
value absent a showing or at the very least an inference, that the party sought
to be bound assented to its contents or showed conformity thereto. Thus the
questioned decision of respondent appellate court is hereby affirmed.
COMPENSATION LEGAL; WHEN PROHIBITED
ISSUE:
Whether or not private respondent is liable to the petitioner for the
commission or margin for the direct sale which the former concluded and
consummated with Dole Philippines, Incorporated without coursing the same
through herein petitioner.
RULING:
It must be remembered that compensation takes place when two persons,
in their own right, are creditors and debtors to each other. Article 1279 of the
Civil Code provides that: "In order that compensation may be proper, it is
necessary: [1] that each one of the obligors be bound principally, and that he be
at the same time a principal creditor of the other; [2] that both debts consist in
a sum of money, or if the things due are consumable, they be of the same kind,
and also of the same quality if the latter has been stated; [3] that the two debts
be due; [4] that they be liquidated and demandable; [5] that over neither of
them there be any retention or controversy, commenced by third persons and
communicated in due time to the debtor."
Undoubtedly, petitioner admits the validity of its outstanding accounts
with private respondent in the amount of P22,213.75 as contained in its answer.
But whether private respondent is liable to pay the petitioner a 20% margin or
commission on the subject sale to Dole Philippines, Inc. is vigorously disputed.
This circumstance prevents legal compensation from taking place.
The Court agrees with respondent appellate court that there is no
evidence on record from which it can be inferred that there was any agreement
between the petitioner and private respondent prohibiting the latter from
selling directly to Dole Philippines, Incorporated. Definitely, it cannot be
asserted that the debit memo was a contract binding between the parties
considering that the same, as correctly found by the appellate court, was not
signed by private respondent nor was there any mention therein of any
ENGRACIO FRANCIA
VS. INTERMEDIATE APPELLATE COURT and HO FERNANDEZ
G.R. No. L-67649
June 28, 1988
162 SCRA 753
FACTS:
Engracio Francia is the registered owner of a residential lot, 328 square
meters, and a two-story house built upon it situated at Barrio San Isidro, now
District of Sta. Clara, Pasay City, Metro Manila. On October 15, 1977, a 125
square meter portion of Francia's property was expropriated by the Republic of
the Philippines for the sum of P4,116.00 representing the estimated amount
equivalent to the assessed value of the aforesaid portion. Since 1963 up to
1977 inclusive, Francia failed to pay his real estate taxes. Thus, on December
5, 1977, his property was sold at public auction pursuant to Section 73 of
Presidential Decree No. 464 known as the Real Property Tax Code in order to
satisfy a tax delinquency of P2,400.00. Ho Fernandez was the highest bidder for
the property. On March 20, 1979, Francia filed a complaint to annul the auction
sale. He later amended his complaint on January 24, 1980. The petitioner
seeks to set aside the auction sale of his property which took place on
December 5, 1977, and to allow him to recover a 203 square meter lot which
was sold at public auction to Ho Fernandez and ordered titled in the latter's
name. He further averred that his tax delinquency of P2,400.00 has been
extinguished by legal compensation since the government owed him P4, 116.00
when a portion of his land was expropriated.
The lower court rendered a decision in favor Fernandez which was
affirmed by the Intermediate Appellate Court . Hence, this petition for review.
ISSUE:
Whether or not the tax delinquency of Francia has been extinguished by
legal compensation.
RULING:
There is no legal basis for the contention. By legal compensation,
obligations of persons, who in their own right are reciprocally debtors and
creditors of each other, are extinguished (Art. 1278, Civil Code).
The
circumstances of the case do not satisfy the requirements provided by Article
1279, to wit: (1) that each one of the obligors be bound principally and that he
be at the same time a principal creditor of the other; (2) that the two debts be
due.
The Court had consistently ruled that there can be no off-setting of taxes
against the claims that the taxpayer may have against the government. A
person cannot refuse to pay a tax on the ground that the government owes him
an amount equal to or greater than the tax being collected. The collection of a
tax cannot await the results of a lawsuit against the government. In addition, a
taxpayer cannot refuse to pay his tax when called upon by the collector because
he has a claim against the governmental body not included in the tax levy.
There are also other factors which compelled the Court to rule against
the petitioner. The tax was due to the city government while the expropriation
was effected by the national government. Moreover, the amount of P4,116.00
paid by the national government for the 125 square meter portion of his lot was
deposited with the Philippine National Bank long before the sale at public
auction of his remaining property. Notice of the deposit dated September 28,
1977 was received by the petitioner on September 30, 1977. The petitioner
admitted in his testimony that he knew about the P4,116.00 deposited with the
bank but he did not withdraw it. It would have been an easy matter to
withdraw P2,400.00 from the deposit so that he could pay the tax obligation
thus aborting the sale at public auction.
The petition for review was dismissed.
COMPENSATION REQUISITES
TRINIDAD V ACAPULCO
G.R.No. 147477 June 27, 2006
FACTS
AQUINTEY V. TIBONG
G.R. No. 166704 December 20, 2006
FACTS
On May 6, 1999, petitioner Agrifina Aquintey filed before the RTC
of Baguio City, a complaint for sum of money and damages against the
respondents, spouses Felicidad and Rico Tibong. Agrifina alleged that
Felicidad had secured loans from her on several occasions, at monthly
interest rates of 6% to 7%. Despite demands, the spouses Tibong failed
to pay their outstanding loan, amounting to P773,000.00 exclusive of
interests.
In their Answer with Counterclaim, spouses Tibong admitted that
they had secured loans from Agrifina. The proceeds of the loan were
then re-lent to other borrowers at higher interest rates. They, likewise,
alleged that they had executed deeds of assignment in favor of Agrifina,
and that their debtors had executed promissory notes in Agrifinas favor.
According to the spouses Tibong, this resulted in a novation of the
2.
3.
4.
5.
6.
7.
SWAGMAN V CA
G.R.No. 161135 April 8, 2005
FACTS
Sometime in 1996 and 1997, petitioner Swagman Hotels and Travel, Inc.,
through Atty. Leonor L. Infante and Rodney David Hegerty, its president
and vice-president, respectively, obtained from private respondent Neal
B. Christian loans evidenced by three promissory notes dated 7 August
1996, 14 March 1997, and 14 July 1997. Each of the promissory notes is
in the amount of US$50,000 payable after three years from its date with
an interest of 15% per annum payable every three months. In a letter
dated 16 December 1998, Christian informed the petitioner corporation
that he was terminating the loans and demanded from the latter payment
in the total amount of US$150,000 plus unpaid interests in the total
amount of US$13,500. On 2 February 1999, private respondent Christian
filed with the Regional Trial Court of Baguio City, Branch 59, a complaint
for a sum of money and damages against the petitioner corporation,
Hegerty, and Atty. Infante. The petitioner corporation, together with its
president and vice-president, filed an Answer raising as defenses lack of
cause of action and novation of the principal obligations. According to
them, Christian had no cause of action because the three promissory
notes were not yet due and demandable.
ISSUE
Where there is a valid novation, may the original terms of contract which
has been novated still prevail?
HELD
The receipts, as well as private respondents summary of payments, lend
credence to petitioners claim that the payments were for the principal
loans and that the interests on the three consolidated loans were waived
by the private respondent during the undisputed renegotiation of the
loans on account of the business reverses suffered by the petitioner at
the time.
There was therefore a novation of the terms of the three promissory
notes in that the interest was waived and the principal was payable in
monthly installments of US$750. Alterations of the terms and conditions
of the obligation would generally result only in modificatory novation
unless such terms and conditions are considered to be the essence of the
obligation itself.[25] The resulting novation in this case was, therefore,
of the modificatory type, not the extinctive type, since the obligation to
pay a sum of money remains in force.
Thus, since the petitioner did not renege on its obligation to pay the
monthly installments conformably with their new agreement and even
continued paying during the pendency of the case, the private
respondent had no cause of action to file the complaint. It is only upon
petitioners default in the payment of the monthly amortizations that a
cause of action would arise and give the private respondent a right to
maintain an action against the petitioner.
NOVATION: SUBJECTIVE NOVATION; SUBROGATION OF THE RIGHTS OF
THE CREDITOR (LEGAL VS. CONVENTIONAL)
AZOLLA FARMS V CA
G.R.No. 138085 November 11, 2004
FACTS
Petitioner Francis R. Yuseco, Jr., is the Chairman, President and
Chief Operating Officer of petitioner Azolla Farms International
Philippines. In 1982, Azolla Farms undertook to participate in the
National Azolla Production Program wherein it will purchase all the
Azolla produced by the Azolla beneficiaries in the amount not exceeding
the peso value of all the inputs provided to them. The project also
involves the then Ministry of Agriculture, the Kilusang Kabuhayan at
OCAMPO-PAULE V CA
G.R.No. 145872 February 4, 2002
FACTS
REYES V CA
june 26, 2002
FACTS
This petition arose from a civil case for collection of a sum of
money with preliminary attachment filed by respondent Pablo V. Reyes
against his first cousin petitioner Arsenio R. Reyes and spouse Nieves S.
Reyes. According to private respondent, petitioner-spouses borrowed
from him P600,000.00 with interest at five percent (5%) per month,
which totalled P1,726,250.00 at the time of filing of the Complaint. The
loan was to be used supposedly to buy a lot in Paraaque. It was
evidenced by an acknowledgment receipt dated 15 July 1990 signed by
the petitioner-spouses Arsenio R. Reyes and Nieves S. Reyes and witness
Romeo Rueda.
In their Answer petitioners admitted their loan from respondent but
averred that there was a novation so that the amount loaned was actually
converted into respondent's contribution to a partnership formed
between them on 23 March 1990.
ISSUE
Whether or not there was novation in the instant case?
RULING
For novation to take place, the following requisites must concur:
(a) there must be a previous valid obligation; (b) there must be an
agreement of the parties concerned to a new contract; (c) there must be
the extinguishment of the old contract; and, (d) there must be the
validity of the new contract.
In the case at bar, the third requisite is not present. The parties did
agree that the amount loaned would be converted into respondent's
contribution to the partnership, but this conversion did not extinguish
the
loan
obligation.
The
date
when
the
acknowledgment
receipt/promissory note was made negates the claim that the loan
agreement was extinguished through novation since the note was made
while the partnership was in existence.
Significantly, novation is never presumed. It must appear by
express agreement of the parties, or by their acts that are too clear and
unequivocal to be mistaken for anything else. An obligation to pay a sum
of money is not novated in a new instrument wherein the old is ratified
by changing only the terms of payment and adding other obligations not
incompatible with the old one, or wherein the old contract is merely
supplemented by the new one.
NOVATION: SUBJECTIVE NOVATION; SUBROGATION OF THE RIGHTS OF
THE CREDITOR (LEGAL VS. CONVENTIONAL)
MESINA V. GARCIA
G.R. No. 168035 November 30, 2006
FACTS
Atty. Honorio Valisno Garcia and Felicisima Mesina, during their
lifetime, enstered into a Contract to Sell over a lot consisting of 235
square meters, situated at Diversion Road, Sangitan, Cabanatuan City,
covered and embraced by TCT No. T-31643 in the name of Felicisima
Mesina which title was eventually cancelled and TCT No. T-78881 was
issued in the name of herein petitioners. The Contract to Sell provides
that the cost of the lot is P70.00 per square meter for a total amount of
P16,450.00; payable within a period not to exceed 7 years at an interest
rate of 12% per annum, in successive monthly installments of P260.85
per month, starting May 1977. Thereafter, the succeeding monthly
installments are to be paid within the first week of every month, at the
residence of the vendor at Quezon City, with all unpaid monthly
installments earning an interest of 1% per month. Instituting this case
at bar, respondent asserts that despite the full
payment made on 7
February 1984 for the consideration of the subject lot, petitioners
refused to issue the necessary Deed of Sale to effect the transfer of the
property to her.
ISSUE
Whether
prescribed?
RULING
or
not
respondents
cause
of
action
had
already
HEIRS OF GAUDIANE V CA
G.R.No. 119879 March 11, 2004
FACTS
The lot in controversy is Lot 4389 located at Dumaguete City and
covered by Original Certificate of Title No. 2986-A (OCT 2986-A) in the
names of co-owners Felix and Juana Gaudiane. Felix died in 1943 while
his sister Juana died in 1939. Herein respondents are the descendants of
Felix while petitioners are the descendants of Juana.
ISSUE
Whether the court gravely erred in not giving due course to the
claim of petitioners and legal effect of prescription and laches adverted
by defendants-appellants in their answer and affirmative defenses proven
during the hearing by documentary and testimonial evidence.
RULING
As a general rule, ownership over titled property cannot be lost
through prescription.[12] Petitioners, however, invoke our ruling in
Tambot vs. Court of Appeals[13] which held that titled property may be
acquired through prescription by a person who possessed the same for
36 years without any objection from the registered owner who was
obviously guilty of laches.
Petitioners claim is already rendered moot by our ruling barring
petitioners from raising the defense of exclusive ownership due to res
judicata. Even assuming arguendo that petitioners are not so barred,
their contention is erroneous. As correctly observed by the appellate
court.
As explained earlier, only Lot No. 4156 was sold. It was through
this misrepresentation that appellees predecessor-in-interest succeeded
LAUREANO V CA
G.R.No. 114776 February 2, 2000
FACTS;
Petitioner was employed in the singapore airlines limited as the
pilot captain of B-707. Sometime in 1982, defendant, hit by a recession,
initiated cost-cutting measures. Seventeen expatriate captains in the
Airbus fleet were found in excess of the defendant's requirement.
Consequently, defendant informed its expatriate pilots including plaintiff
of the situation and advised them to take advance leaves. Realizing that
the recession would not be for a short time, defendant decided to
terminate its excess personnel. It did not, however, immediately
terminate it's A-300 pilots. It reviewed their qualifications for possible
promotion to the B-747 fleet. Among the 17 excess Airbus pilots
reviewed, twelve were found qualified. Unfortunately, plaintiff was not
one of the twelve. Aggrieved, plaintiff on June 29, 1983, instituted a case
for illegal dismissal before the Labor Arbiter. Defendant moved to
dismiss on jurisdictional grounds. Before said motion was resolved, the
complaint was withdrawn.
ISSUE
;
What is the prescriptive period for money claims arising from
employer-employee relationship?
RULING;
Article 291. Money claims. - All money claims arising from
employee-employer relations accruing during the effectivity of this Code
shall be filed within three (3) years from the time the cause of action
accrued; otherwise they shall be forever barred.
Whether or not the CA erred when it held that the cause of action
of the private respondents accrued on October 30, 1978 and the filing of
their complaint for annulment of their contracts in 1085 was not yet
barred by the prescription/
ISSUE:
RULING:
FACTS:
Elsa Arcilla and her husband, Calvin Arcilla secured on three
occasions, loans from the Banco Filipino Savings and Mortgage bank in
the amount of Php.107,946.00 as evidenced by the Promissory Note
executed by the spouses in favor of the said bank. To secure payment of
said loans, the spouses executed Real Estate Mortgages in favor of the
appellants (Banco Filipino) over their parcels of land. The appellee
spouses failed to pay their monthly amortization to appellant. On
petitioner herein filed only 24 years in the first action and 43 years in the
second filing of the 2nd action.
The action for reconveyance on the alleged excess of 33, 607
square meter mistakenly included in the title was also prescribed Article
1456 of the Civil Code states, if property is acquired through mistake or
fraud, the person obtaining it is, by force of law, considered a trustee of
an implied trust for the benefits of the person from whom the property
comes, if within 10 years such action for reconveyance has not been
executed.
EXTINCTIVE PRESCRIPTION: INTERRUPTION
Mendoza, and after his demise, his son, Romeo, continued to occupy the
premises and thus incurred a total of P44,011.25 as unpaid rentals from
January 1, 1989 to July 31, 1996; that on July 16, 1996, Manotok made a
demand on Benjamin Mendoza to pay the rental arrears and to vacate
the premises within fifteen (15) days from receipt of the demand letter;
that despite receipt of the letter and after the expiration of the 15-day
period, the Mendozas refused to vacate the property and to pay the
rentals. The complaint prayed that the court order Mendoza and those
claiming rights under him to vacate the premises and deliver possession
thereof to Manotok, and to pay the unpaid rentals from January 1, 1989
to July 31, 1996 plus P875.75 per month starting August 1, 1996, subject
to such increase allowed by law, until he finally vacates the premise.
ISSUE:
Whether or not the Honorable Court of Appeals committed error in
giving efficacy to a lease contract signed in 1988 when the alleged
signatory was already dead since 1986.
RULING:
This is a case for unlawful detainer. It appears that respondent
corporation leased the property subject of this case to petitioners
father. After expiration of the lease, petitioner continued to occupy the
property but failed to pay the rentals. On July 16, 1996, respondent
corporation made a demand on petitioner to vacate the premises and to
pay their arrears.
An action for unlawful detainer may be filed when possession by a
landlord, vendor, vendee or other person of any land or building is
unlawfully withheld after the expiration or termination of the right to
hold possession by virtue of a contract, express or implied. The only issue
to be resolved in an unlawful detainer case is physical or material
possession of the property involved, independent of any claim of
ownership by any of the parties involved. In the case at bar, petitioner
lost his right to possess the property upon demand by respondent
corporation to vacate the rented lot. Petitioner cannot now refute the
PCI Bank Managers Check No. 69007, dated October 22, 1992. All these
are indicia that petitioner treated the Customers Agreement as a valid
and binding contract.
HELD:
R.A. No. 8042 explicitly prohibits the substitution or alteration to
the prejudice of the worker, of employment contracts already approved
and verified by the Department of Labor and Employment (DOLE) from
the time of actual signing thereof by the parties up to and including the
period of the expiration of the same without the approval of the DOLE.
The subsequently executed side agreement of an overseas contract
worker with her foreign employer which reduced her salary below the
amount approved by the POEA is void because it is against our existing
laws, morals and public policy.
The said side agreement cannot
supersede her standard employment contract approved by the POEA.
Petitioners contention that respondent is guilty of laches is
without basis. Laches has been defined as the failure of or neglect for an
unreasonable and unexplained length of time to do that which by
exercising due diligence, could or should have been done earlier, or to
assert a right within reasonable time, warranting a presumption that the
party entitled thereto has either abandoned it or declined to assert it.
Thus, the doctrine of laches presumes that the party guilty of negligence
had the opportunity to do what should have been done, but failed to do
so. Conversely, if the said party did not have the occasion to assert the
right, then, he can not be adjudged guilty of laches. Laches is not
concerned with the mere lapse of time; rather, the party must have been
afforded an opportunity to pursue his claim in order that the delay may
sufficiently constitute laches.
In the instant case, respondent filed his claim within the three-year
prescriptive period for the filing of money claims set forth in Article 291
of the Labor Code from the time the cause of action accrued. Thus, we
find that the doctrine of laches finds no application in this case.
FACTS:
These consolidated cases involve a prime lot consisting of
4,399,322 square meters, known as the Diliman Estate, situated in
Quezon City. On this 439 hectares of prime land now stand the following:
the Quezon City Hall, Philippine Science High School, Quezon Memorial
Circle, Visayas Avenue, Ninoy Aquino Parks and Wildlife, portions of UP
Village and East Triangle, the entire Project 6 and Vasha Village,
Veterans Memorial Hospital and golf course, Department of Agriculture,
Department of Environment and Natural Resources, Sugar Regulatory
Administration, Philippine Tobacco Administration, Land Registration
Authority, Philcoa Building, Bureau of Telecommunications, Agricultural
Training Institute building, Pagasa Village, San Francisco School, Quezon
City Hospital, portions of Project 7, Mindanao Avenue subdivision, part of
Bago Bantay resettlement project, SM City North EDSA, part of Phil-Am
Life Homes compound and four-fifths of North Triangle. This large estate
was the subject of a petition for judicial reconstitution originally filed by
Eulalio Ragua in 1964, which gave rise to protracted legal battles
between the affected parties, lasting more than thirty-five (35) years.
ISSUE:
Whether estoppel by laches exists on the part of petitioner
HELD:
Petitioners filed the petition for reconstitution of OCT 632 nineteen
(19) years after the title was allegedly lost or destroyed. We thus
consider petitioners guilty of laches. Laches is negligence or omission to
assert a right within a reasonable time, warranting the presumption that
RULING:
The Court found no compelling reasons to disturb the assailed
decision. All things studiedly viewed in proper perspective, the Court
are of the opinion, and so rule, that whatever debts or loans mortgagor
Chia contracted with Metrobank after September 4, 1980, without the
conformity of plaintiff-appellee, could not be adjudged as part of the
mortgage debt the latter so assumed. We are persuaded that the
contrary ruling on this point in Our October 24, 1994 decision would be
unfair and unjust to plaintiff-appellee because, before buying subject
property and assuming the mortgage debt thereon, the latter inquired
from Metrobank about the exact amount of the mortgage debt involved.
Petitioner METROBANK is estopped from refusing the discharge of
the real estate mortgage on the claim that the subject property still
secures "other unliquidated past due loans."
ESTOPPEL BY DEED
1.
2.
3.
4.
5.
6.
From the time Lot 903-A was subdivided and Marianos six children
-- including Concepcion -- took possession as owners of their respective
portions, no whimper of protest from petitioner was heard until 1963. By
his acts as well as by his omissions, Miguel led Mariano and the latters
heirs, including Concepcion, to believe that Petitioner Cuenco respected
the ownership rights of respondent over Lot 903-A-6. That Mariano
acted and relied on Miguels tacit recognition of his ownership thereof is
evident from his will, executed in 1963. Indeed, as early as 1947, long
before Mariano made his will in 1963, Lot 903-A -- situated along Juana
Osmea Extension, Kamputhaw, Cebu City, near the Cebu Provincial
Capitol -- had been subdivided and distributed to his six children in his
first marriage. Having induced him and his heirs to believe that Lot 903A-6 had already been distributed to Concepcion as her own, petitioner is
estopped from asserting the contrary and claiming ownership thereof.
The principle of estoppel in pais applies when -- by ones acts,
representations, admissions, or silence when there is a need to speak out
-- one, intentionally or through culpable negligence, induces another to
believe certain facts to exist; and the latter rightfully relies and acts on
such belief, so as to be prejudiced if the former is permitted to deny the
existence of those facts.
Petitioner claims that respondents action is already barred by
laches. Laches is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to it
has either abandoned or declined to assert it.[40] In the present case,
respondent has persistently asserted her right to Lot 903-A-6 against
petitioner. Concepcion was in possession as owner of the property from
1949 to 1969. When Miguel took steps to have it separately titled in his
name, despite the fact that she had the owners duplicate copy of TCT
No. RT-6999 -- the title covering the entire Lot 903-A -- she had her
adverse claim annotated on the title in 1967. When petitioner ousted her
from her possession of the lot by tearing down her wire fence in 1969,
the Senate President, the Speaker and the Supreme Court, by the
designation of such officials to the NCC, intended to mislead petitioner
just so he would accept the position of NCC Chair. Estoppel must be
unequivocal and intentional. Moreover, petitioner himself admits that the
principle of estoppel does not operate against the Government in the
exercise of its sovereign powers.
Third, as ground for the referral of the case to the Court En Banc,
petitioner submits that our decision in this case modified or reversed
doctrines rendered by this Court, which can only be done by the Court
En Banc.It is argued that by designating three of its then incumbent
members to the NCC, the Court took the position that the NCC was not a
public office. The argument is a bit of a stretch. Section 4 (3), Article VIII
of the Constitution provides that no doctrine or principle of law laid
down by the court in a decision rendered en banc or in division may be
modified or reversed except by the court sitting en banc. In designating
three of its incumbent members to the NCC, the Court did not render a
decision, in the context of said constitutional provision, which
contemplates an actual case. Much less did the Court, by such
designation, articulate any doctrine or principle of law. Invoking the
same provision, petitioner asserts that the decision in this case reversed
or modified Macalino vs. Sandiganbayan, holding that the Assistant
Manager of the Treasury Division and the Head of the Loans
Administration & Insurance Section of the Philippine National
Construction Corporation (PNCC) is not a public officer under Republic
Act No. 3019. This contention also has no merit. The rationale for the
ruling in Macalino is that the PNCC has no original charter as it was
incorporated under the general law on corporations. However, as we
pointed out in our decision, a conclusion that EXPOCORP is a
government-owned or controlled corporation would not alter the
outcome of this case because petitioners position and functions as Chief
Executive Officer of EXPOCORP are by virtue of his being Chairman of
the NCC. The other issues raised by petitioner are mere reiterations of
his earlier arguments. The Court, however, remains unswayed thereby.
ESTOPPEL IN PAIS
RULING:
266 SCRA 71
FACTS:
On 23 September 1986 respondent Contractors Equipment
Corporation (CEC) instituted an action for a sum of money against
petitioner Roblett Industrial Construction Corporation (RICC) before the
Regional Trial Court of Makati alleging that in 1985 it leased to the latter
various construction equipment which it used in its projects. As a result
RICC incurred unpaid accounts amounting to P342,909.38.
On 19 December 1985 RICC through its Assistant Vice President
for Finance Candelario S. Aller Jr. entered into an Agreement with CEC
where it confirmed petitioner's account. As an off-setting arrangement
respondent received from petitioner construction materials worth
P115,000.00 thus reducing petitioner's balance to P227,909.38.
A day before the execution of their Agreement, or on 18 December
1985, RICC paid CEC P10,000.00 in postdated checks which when
deposited were dishonored. As a consequence the latter debited the
amount to petitioner's account of P227,909.38 thus increasing its
balance to P237,909.38.
On 24 July 1986 Mariano R. Manaligod, Jr., General Manager of
CEC, sent a letter of demand to petitioner through its Vice President for
Finance regarding the latter's overdue account of P237,909.38 and
sought settlement thereof on or before 31 July 1986. In reply, petitioner
requested for thirty (30) days to have enough time to look for funds to
substantially settle its account.
Traversing the allegations of respondent, Candelario S. Aller Jr.
declared that he signed the Agreement with the real intention of having
proof of payment. In fact Baltazar Banlot, Vice President for Finance of
petitioner, claimed that after deliberation and audit it appeared that
petitioner overpaid respondent by P12,000.00 on the basis of the latter's
Equipment Daily Time Reports for 2 May to 14 June 1985 which reflected
a total obligation of only P103,000.00. He claimed however that the
Agreement was not approved by the Board and that he did not authorize
Aller Jr. to sign thereon.
On rebuttal, Manaligod Jr. declared that petitioner had received a
statement of account covering the period from 28 March to 12 July 1985
in the amount of P376,350.18 which it never questioned. From this
amount P3,440.80, based on respondent's account with petitioner and
P30,000.00, representing payments made by the latter, were deducted
thus leaving a balance of P342,909.38 as mentioned in the Agreement.
On 19 December 1990 the trial court rendered judgment ordering
petitioner to pay respondent
ISSUE:
parties, its validity or compliance cannot be left to the will of one of them
(Art. 1308, New Civil Code).
5.)ESTOPPEL BY LACHES
1.
2.
3.
4.
5.
6.
7.
them.
FACTS:
RULING:
Yes. It must be emphasized that the same agreement was used by
plaintiff as the basis for claiming defendant's obligation of P237,909.38
and also used by defendant as the same basis for its alleged payment in
full of its obligation to plaintiff. But while plaintiff treats the entire
agreement as valid, defendant wants the court to treat that portion
which treats of the offsetting of P115,000.00 as valid, whereas it
considers the other terms and conditions as "onerous, illegal and want of
prior consent and Board approval." This Court cannot agree to
defendant's contention. It must be stressed that defendant's answer was
not made under oath, and therefore, the genuineness and due execution
of the agreement which was the basis for plaintiff's claim is deemed
admitted (Section 8, Rule 8, Rules of Court). Such admission, under the
principle of estoppel, is rendered conclusive upon defendant and cannot
be denied or disproved as against plaintiff (Art. 1431, Civil Code). Either
the agreement is valid or void. It must be treated as a whole and not to
be divided into parts and consider only those provisions which favor one
party (in this case the defendant). Contracts must bind both contracting
ISSUE:
Whether equitable estoppel can be appreciated in favor of
petitioner
HELD:
The degree of diligence required of a reasonable man in the
exercise of his tasks and the performance of his duties has been faithfully
complied with by Cabilzo. In fact, he was wary enough that he filled with
asterisks the spaces between and after the amounts, not only those
stated in words, but also those in numerical figures, in order to prevent
any fraudulent insertion, but unfortunately, the check was still
successfully altered, indorsed by the collecting bank, and cleared by the
The Contract to sell provides that the cost of the lot is P70.00 per
square
meter for a total amount of P16, 450.00; payable within a
period not to exceed seven (7) years at an interest rate of 12% per
annum, in successive monthly installments of P260.85 per month,
starting May 1977. Thereafter, the succeeding monthly installments are
to be paid within the first week of every month, at the residence of the
vendor at Quezon City, with all unpaid monthly installments earning an
interest of one percent (1%) per month.
The Contract also stipulated, among others, that: Should the
spouses Garcia fail to pay five (5) successive monthly installments,
Felicisima Mesina shall have a right to rescind the Contract to Sell. All
paid installments to be recomputed as rental for usage of lot shall be at
the rate of P100.00 a month and that Felicisima Mesina shall have the
further option to return the downpayment plus whatever balance spouses
Garcia paid,
thereby rescinding the Contract to Sell. Upon rescission
of the Contract to sell,
spouses Garcia agree to remove all the
improvements built on the lot within three (3) months from rescission of
this contract, spouses Garcia shouldering all expenses of said removal.
Instituting this case at bar, respondent asserts that despite the full
payment made on February 7, 1984 for the consideration of the subject
lot, petitioners refused to issue the necessary Deed of Sale to effect the
transfer of the property to her
ISSUES:
Whether respondents cause of action had already prescribed
Whether petitioners are in estoppel
HELD:
In the case at bar, as pointed out by the Court of Appeals, the right
of action of the respondent accrued on the date that the full and final
payment of the contract price was made. Accordingly, as the full
payment of the purchase price on the subject Contract to Sell had been
effected on 7 February 1984 thus, respondent had from said date until
RULING:
ESTOPPEL BY LACHES
ESTOPPEL BY LACHES
check
for
another
P250,000.00
FACTS:
ESTOPPEL BY LACHES
CA set aside the decision of the trial court and directed petitioner
to pay respondent the amount of P1,863,081.53. Petitioners motion for
reconsideration was denied Hence, the instant petition.
ISSUE:
ESTOPPEL BY LACHES
RULING:
Yes. It is well-established that the payment of docket fees within
the prescribed period is mandatory for the perfection of an appeal. This
is so because a court acquires jurisdiction over the subject matter of the
action only upon the payment of the correct amount of docket fees
regardless of the actual date of filing of the case in court. The payment of
the full amount of the docket fee is a sine qua non requirement for the
perfection of an appeal. The court acquires jurisdiction over the case
only upon the payment of the prescribed docket fees.
In the case at bar, the respondent seasonably filed the notice of appeal
but it paid the docket fees one (1) month after the lapse of the appeal
period. As admitted by the respondent, the last day for filing the notice
of appeal was on March 29, 1999, but it paid the docket fees only on
April 30, 1999 because of oversight. Obviously, at the time the said
docket fees were paid, the decision appealed from has long attained
finality and no longer appealable.
Respondents contention that the petitioner is now estopped from
raising the issue of late payment of the docket fee because of his failure
to assail promptly the trial courts order approving the notice of appeal
and accepting the appeal fee, is untenable. Estoppel by laches arises
from the negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either
has abandoned or declined to assert it. In the case at bar, petitioner
raised at the first instance the non-payment of the docket fee in its
motion for reconsideration before the trial court. Petitioner reiterated its
objection in the motion to dismiss before the appellate court and finally,
in the instant petition. Plainly, petitioner cannot be faulted for being
remiss in asserting its rights considering that it vigorously registered a
persistent and consistent objection to the Court of Appeals assumption
of jurisdiction at all stages of the proceedings.
ESTOPPEL BY LACHES
The Regional Trial Court, however, declared the said affidavit as spurious
because Hipolito was already dead when the alleged transfer was made
to Filomena Larena.
On appeal, the Court of Appeals declared that respondents had
never lost their right to the land in question as they were the heirs to
whom the property had descended upon the death of the original
claimant and possessor.
ISSUE:
Whether or not Filomena Larena acquired the subject property by
means of sale, prescription, and/or laches.
RULING:
No, Filomena did not acquire said property by means of sale,
prescription and/or laches. First, the tax declarations are not a
conclusive evidence of ownership, but a proof that the holder has a claim
of title over the property. It is good indicia of possession in the concept of
owner. It may strengthen Aquilinas bona fide claim of acquisition of
ownership. However, petitioners failed to present the evidence needed to
tack the date of possession on the property in question.
Second, acquisitive prescription is a mode of acquiring ownership
by a possessor through the requisite lapse of time. Since the claims of
purchase were unsubstantiated, petitioners acts of possessory character
have been merely tolerated by the owner. Hence, it did not constitute
possession. Moreover, there is lack of just title on the part of Aquilina
and therefore, ordinary acquisitive prescription of ten (10) years as
provided under Article 1134 of the Civil Code cannot be applied. Under
Article 1137 of the Civil Code, the lapse of time required for extraordinary acquisitive prescription is thirty (30) years, and records show
that the lapse of time was only twenty-seven (27) yearsa period that
was short of three (3) years, when the complaint was filed.
STOPPEL BY LACHES
in the Regional Trial Court of Manila, where they alleged that the two
deeds of sale were simulated for lack of consideration. The petitioner on
the other hand denied the material allegations in the complaint and that
she further alleged that the respondents right to reconveyance was
already barred by prescription and laches considering the fact that from
the date of sale from Rosa to Salvador up to his death, more or less
twelve (12) years had lapsed, and from his death up to the filing of the
case for reconveyance, four (4) years has elapsed. In other words, it took
respondents about sixteen (16) years to file the case. Moreover,
petitioner argues that an action to annul a contract for lack of
consideration prescribes in ten (10) years and even assuming that the
cause of action has not prescribed, respondents are guilty of laches for
their inaction for a long period of time.
The trial court decided in favor of private respondents in as much
as the deeds of sale were fictitious, the action to assail the same does not
prescribe.
Upon appeal, the Court of Appeals affirmed the trial courts
decision. It held that the subject deeds of sale did not confer upon
Salvador the ownership over the subject property, because even after the
sale, the original vendors remained in dominion, control, and possession
thereof.
ISSUE:
Whether or not the cause of action of the respondents had
prescribed and/or barred by laches.
RULING:
No, the cause of action by the respondents had not prescribed nor
is it barred by laches.
First, the right to file an action for the reconveyance of the subject
property to the estate of Rosalia has not prescribed since deeds of sale
were simulated and fictitious. The complaint amounts to a declaration of
2.
3.
4.
5.
6.
7.
8.
ARTURO M. TOLENTINO
VS. THE SECRETARY OF FINANCE and THE COMMISSIONER OF
INTERNAL REVENUE
1994 Aug 25
G.R. No. 115455
235 SCRA 630
FACTS:
The valued-added tax (VAT) is levied on the sale, barter or exchange of
goods and properties as well as on the sale or exchange of services. It is
equivalent to 10% of the gross selling price or gross value in money of goods or
properties sold, bartered or exchanged or of the gross receipts from the sale or
exchange of services. Republic Act No. 7716 seeks to widen the tax base of the
existing VAT system and enhance its administration by amending the National
Internal Revenue Code.
The Chamber of Real Estate and Builders Association (CREBA) contends
that the imposition of VAT on sales and leases by virtue of contracts entered
into prior to the effectivity of the law would violate the constitutional provision
of non-impairment of contracts.
ISSUE:
Whether R.A. No. 7716 is unconstitutional on ground that it violates the
contract clause under Art. III, sec 10 of the Bill of Rights.
RULING:
No. The Supreme Court the contention of CREBA, that the imposition of
the VAT on the sales and leases of real estate by virtue of contracts entered into
prior to the effectivity of the law would violate the constitutional provision of
non-impairment of contracts, is only slightly less abstract but nonetheless
hypothetical. It is enough to say that the parties to a contract cannot, through
the exercise of prophetic discernment, fetter the exercise of the taxing power of
the State. For not only are existing laws read into contracts in order to fix
obligations as between parties, but the reservation of essential attributes of
sovereign power is also read into contracts as a basic postulate of the legal
order. The policy of protecting contracts against impairment presupposes the
maintenance of a government which retains adequate authority to secure the
peace and good order of society. In truth, the Contract Clause has never been
thought as a limitation on the exercise of the State's power of taxation save only
where a tax exemption has been granted for a valid consideration.
Such is not the case of PAL in G.R. No. 115852, and the Court does not
understand it to make this claim. Rather, its position, as discussed above, is
that the removal of its tax exemption cannot be made by a general, but only by
a specific, law.
Further, the Supreme Court held the validity of Republic Act No. 7716 in
its formal and substantive aspects as this has been raised in the various cases
before it. To sum up, the Court holds:
(1) That the procedural requirements of the Constitution have been
complied with by Congress in the enactment of the statute;
(2) That judicial inquiry whether the formal requirements for the
enactment of statutes - beyond those prescribed by the Constitution have been observed is precluded by the principle of separation of powers;
(3) That the law does not abridge freedom of speech, expression or the
press, nor interfere with the free exercise of religion, nor deny to any of
the parties the right to an education; and
(4) That, in view of the absence of a factual foundation of record, claims
that the law is regressive, oppressive and confiscatory and that it violates
vested rights protected under the Contract Clause are prematurely
raised and do not justify the grant of prospective relief by writ of
prohibition.
WHEREFORE, the petitions are DISMISSED.
AUTONOMY OF CONTRACTS
FACTS:
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo
Wellcome Philippines, Inc. (Glaxo) as medical representative on October
24, 1995, after Tecson had undergone training and orientation.
Thereafter, Tecson signed a contract of employment which stipulates,
among others, that he agrees to study and abide by existing company
rules; to disclose to management any existing or future relationship by
consanguinity or affinity with co-employees or employees of competing
drug companies and should management find that such relationship
poses a possible conflict of interest, to resign from the company.
The Employee Code of Conduct of Glaxo similarly provides that an
employee is expected to inform management of any existing or future
relationship by consanguinity or affinity with co-employees or employees
of competing drug companies. If management perceives a conflict of
interest or a potential conflict between such relationship and the
employees employment with the company, the management and the
employee will explore the possibility of a transfer to another department
in a non-counterchecking position or preparation for employment
outside the company after six months. Tecson was initially assigned to
market Glaxos products in the Camarines Sur-Camarines Norte sales
area. Subsequently, Tecson entered into a romantic relationship with
Bettsy, an employee of Astra Pharmaceuticals (Astra), a competitor of
Glaxo. Bettsy was Astras Branch Coordinator in Albay. She supervised
the district managers and medical representatives of her company and
prepared marketing strategies for Astra in that area.
Even before they got married, Tecson received several reminders from
his District Manager regarding the conflict of interest which his
relationship with Bettsy might engender. Still, Tec son married Bettsy in
September 1998. Tecson was later reassigned at Butuan-Surigao-Agusan
area to prevent conflict of interest but he refused and argued that he was
constructively dismissed.
ISSUE:
AUTONOMY OF CONTRACTS
relevant market for this purpose includes the full range of selling
opportunities reasonably open to rivals, namely, all the product and
geographic sales they may readily compete for, using easily convertible
plants and marketing organizations.
Applying the preceding principles to the case at bar, there is
nothing invalid or contrary to public policy either in the objectives
sought to be attained by paragraph 5, i.e., the exclusivity clause, in
prohibiting respondent Luna, and all other Avon supervisors, from selling
products other than those manufactured by petitioner Avon.
Having held that the exclusivity clause as embodied in paragraph
5 of the Supervisors Agreement is valid and not against public policy, we
now pass to a consideration of respondent Lunas objections to the
validity of her termination as provided for under paragraph 6 of the
Supervisors Agreement giving petitioner Avon the right to terminate or
cancel such contract. The paragraph 6 or the termination clause
therein expressly provides that:
The Company and the Supervisor mutually agree:
6)
Either party may terminate this agreement at will, with or
without cause, at any time upon notice to the other.
In the case at bar, the termination clause of the Supervisors
Agreement clearly provides for two ways of terminating and/or canceling
the contract. One mode does not exclude the other. The contract
provided that it can be terminated or cancelled for cause, it also stated
that it can be terminated without cause, both at any time and after
written notice. Thus, whether or not the termination or cancellation of
the Supervisors Agreement was for cause, is immaterial. The only
requirement is that of notice to the other party. When petitioner Avon
chose to terminate the contract, for cause, respondent Luna was duly
notified thereof.
Worth stressing is that the right to unilaterally terminate or cancel
the Supervisors Agreement with or without cause is equally available to
respondent Luna, subject to the same notice requirement. Obviously, no
advantage is taken against each other by the contracting parties.
to time and place, The Court is of the opinion, and so decide, that such
limitation is legal and reasonable and not contrary to public policy,
otherwise, the autonomy of the contract will be subverted.
AUTONOMY OF CONTRACTS
ARWOOD INDUSTRIES, INC. VS. D.M. CONSUNJI, INC.
G.R No. 142277
December 11, 2002
394 SCRA 11
FACTS:
Petitioner Arwood Industries and resppndent DM Consunji, as owner and
contractor, respectively, entered into a Civil, Structural and Architectural Works
Agreement on February 6, 1989 for the construction of petitioners Westwood
Condominium at No. 23 Eisenhower St. Greenhills, San Juan, Metro Manila. The
contract price for the project aggregated to P20,800,000.00
Despite completion of the project, the amount of P962,434.78 remained
unpaid by petitioner. Demands were made by respondent for petitioner to pay
went unheeded.
Thus, on August 13, 1993, respondent filed a complaint for the recovery
of the balance of the contract price and for damages against petitioner. It
prayed for the payment of the a) amount of P962, 434.78 with interest of 2%
per month or a fraction thereof, from November 1990 up to the time of
payment; b) the payment of P250, 000 as attorneys fees and litigation
expenses; c) amount of P150, 000 as exemplary damages and d) costs of suit.
The trial court and the Court of Appelas ruled in favor of DM Consunji.
Hence, this petition.
ISSUE:
Whether or not the trial court and the CA correctly granted the
imposition of the monetary interest of 2% per month on the amount of P962,434
RULING:
The Agreement or the contract between the parties is the formal
expression of the parties rights, duties, and obligations. It is the best evidence
of the intention of the parties. Thus, when the terms of an agreement have
AUTONOMY OF CONTRACTS
SPOUSES SILVESTRE and CELIA PASCUAL VS. RODRIGO RAMOS
G. R. No. 144712
FACTS:
On June 3, 1987, spouses Silvestre and Celia Pascual executed in favor of
Rodrigo Ramos a Deed of Absolute Sale with Right to Repurchase over two
parcels of land located in Bambang, Bulacan, Bulacan for and in consideration
of P150,000.00. The Pascuals did not exercixe their right to repurchase the
property within the stipulated one-year period; thus, Ramos filed with the trial
court a petition that the title or ownership over the subject parcels and
improvements thereon be consolidated in his favor. In their answer, the
Pascuals averred that what the parties had actually agreed upon and entered
into was a real estate mortgage and that they had even overpaid Ramos. The
Pascuals prayed that Ramos be ordered to execute a Deed of Cancellation,
Release or Discharge of the Absolute Sale with Right to Repurchase or a Deed
of Real Estate Mortgage and for the award of damages. Among the documents
offered in evidence by Ramos during the trial was a document denominated as
Sinumpaang Salaysay signed by Ramos and Silvestre Pascual, but not
7% per month was voluntarily agreed upon by Ramos and the Pascuals. There
is nothing from the records and no allegation showing that petitioners were
victims of fraud when they entered into the agreement with Ramos. With the
suspension of the Usury Law and the removal of interest ceiling, the parties are
free to stipulate the interest to be imposed on loans. Absent any evidence of
fraud, undue influence, or any vice of consent exercised by Ramos on the
Pascuals, the interest agreed upon them is binding upon them. The Court is not
in a position to impose upon parties contractual stipulations different from what
they have agreed upon. The Court cannot supplant the interest rate, which was
reduced to 5% per month without opposition on the part of Ramos.
Hence, the Pascuals are liable for 5% interest per month from June 3,
1987 to April 3, 1995. The assailed decision is therefore affirmed and the
petition is denied.
OBLIGATORY FORCE OF CONTRACTS
MAXIMA HEMEDES, petitioner,
VS. THE HONORABLE COURT OF APPEALS, DOMINIUM REALTY AND
CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES, and R & B
INSURANCE CORPORATION, respondents
G.R. No. 108472
October 8, 1999
FACTS:
The instant controversy involves a question of ownership over an
unregistered parcel of land, identified as Lot No. 6, plan Psu-111331, with an
area of 21,773 square meters, situated in Sala, Cabuyao, Laguna. It was
originally owned by the late Jose Hemedes, father of Maxima Hemedes and
Enrique D. Hemedes. On March 22, 1947 Jose Hemedes executed a document
entitled Donation Inter Vivos With Resolutory Conditions whereby he
conveyed ownership over the subject land, together with all its improvements,
in favor of his third wife, Justa Kausapin. Maxima Hemedes, through her
counsel, filed an application for registration and confirmation of title over the
subject unregistered land. Subsequently, Original Certificate of Title (OCT) No.
(0-941) 0-198 was issued in the name of Maxima Hemedes married to Raul
Rodriguez by the Registry of Deeds of Laguna on June 8, 1962, with the
annotation that Justa Kausapin shall have the usufructuary rights over the
parcel of land herein described during her lifetime or widowhood.
it occurs to one of them to allege some defect therein as a reason for annulling
it, the alleged defect must be conclusively proven, since the validity and
fulfillment of contracts cannot be left to the will of one of the contracting
parties.
In upholding the deed of conveyance in favor of Maxima Hemedes, the
Court must concomitantly rule that Enrique D. Hemedes and his transferee,
Dominium, did not acquire any rights over the subject property.
Justa Kausapin sought to transfer to her stepson exactly what she had
earlier transferred to Maxima Hemedes he ownership of the subject property
pursuant to the first condition stipulated in the deed of donation executed by
her husband. Thus, the donation in favor of Enrique D. Hemedes is null and
void for the purported object thereof did not exist at the time of the transfer,
having already been transferred to his sister.
Similarly, the sale of the subject property by Enrique D. Hemedes to
Dominium is also a nullity for the latter cannot acquire more rights than its
predecessor-in-interest and is definitely not an innocent purchaser for value
since Enrique D. Hemedes did not present any certificate of title upon which it
relied.
The Court upheld petitioner R & B Insurances assertion of ownership
over the property in dispute, as evidenced by TCT No. 41985, subject to the
usufructuary rights of Justa Kausapin, which encumbrance has been properly
annotated upon the said certificate of title.
VILLEGAS VS. CA
EQUATORIAL REALTY VS. CARMELO
PUP VS. CA
LITONJUA VS. L &R
FACTS:
Before September 6, 1973, Lot B-3-A, with an area of 4 hectares
was registered under TCT No. 68641 in the names of Ciriaco D. Andres
and Henson Caigas. This land was also declared for real estate taxation
under Tax Declaration No. C2-4442. On September 6, 1973, Andres and
Caigas, with the consent of their respective spouses, Anita Barrientos
and Consolacion Tobias, sold the land to Fortune Tobacco Corporation for
P60,000.00. Simultaneously, they executed a joint affidavit declaring that
they had no tenants on said lot. On the same date, the sale was
registered in the Office of the Register of Deeds of Isabela. TCT No.
68641 was cancelled and TCT No. T-68737 was issued in Fortunes name.
On August 6, 1976, Andres and Caigas executed a Deed of Reconveyance
of the same lot in favor of Filomena Domingo, the mother of Joselito
Villegas, defendant in the case before the trial court. Although no title
was mentioned in this deed, Domingo succeeded in registering this
document in the Office of the Register of Deeds on August 6, 1976,
causing the latter to issue TCT No. T-91864 in her name. It appears in
this title that the same was a transfer from TCT No. T-68641. On April
13, 1981, Domingo declared the lot for real estate taxation under Tax
Declaration No. 10-5633. On December 4, 1976, the Office of the
Register of Deeds of Isabela was burned together with all titles in the
office. On December 17, 1976, the original of TCT No. T-91864 was
administratively reconstituted by the Register of Deeds. On June 2, 1979,
a Deed of Absolute Sale of a portion of 20,000 square meters of Lot B-3-A
was executed by Filomena Domingo in favor of Villegas for a
consideration of P1,000.00. This document was registered on June 3,
1981 and as a result TCT No. T-131807 was issued by the Register of
Deeds to Villegas. On the same date, the technical description of Lot B-3A-2 was registered and TCT No. T-131808 was issued in the name of
Domingo. On January 22, 1991, this document was registered and TCT
No. 154962 was issued to the defendant, Joselito Villegas.
On April 10, 1991, the trial court upon a petition filed by Fortune
ordered the reconstitution of the original of TCT No. T-68737. After trial
on the merits, the trial court rendered its assailed decision in favor of
Fortune Tobacco, declaring it to be entitled to the property. Petitioners
thus appealed this decision to the Court of Appeals, which affirmed the
trial courts decision.
ISSUES:
Whether or not the Court of Appeals was correct in affirming the
trial courts decision.
RULING:
Even if Fortune had validly acquired the subject property, it would
still be barred from asserting title because of laches. The failure or
neglect, for an unreasonable length of time to do that which by
exercising due diligence could or should have been done earlier
constitutes laches. It is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to
assert it has either abandoned it or declined to assert it. While it is by
express provision of law that no title to registered land in derogation of
that of the registered owner shall be acquired by prescription or adverse
possession, it is likewise an enshrined rule that even a registered owner
may be barred from recovering possession of property by virtue of
laches.
Hence, petition was GRANTED and the Decision of the Court of
Appeals was REVERSED.
Four years later, on July 30, 1978, Carmelo sold its entire C.M.
Recto Avenue land and building, which included the leased premises
housing the Maxim and Miramar theatres, to Equatorial by virtue of a
Deed of Absolute Sale, for the total sum of P11,300,000.00.
In September 1978, Mayfair instituted the action a quo for specific
performance and annulment of the sale of the leased premises to
Equatorial. It dismissed the complaint with costs against the plaintiff.
The Court of Appeals reversed the decision of the trial court.
RULING:
Whether or not the decision of the Court of Appeals decision was
correct.
RULING:
The Court agrees with the Court of Appeals that the aforecited
contractual stipulation provides for a right of first refusal in favor of
Mayfair. It is not an option clause or an option contract. It is a contract of
a right of first refusal.
As early as 1916, in the case of Beaumont vs. Prieto, unequivocal
was our characterization of an option contract as one necessarily
involving the choice granted to another for a distinct and separate
consideration as to whether or not to purchase a determinate thing at a
predetermined fixed price.
Further, what Carmelo and Mayfair agreed to, by executing the two
lease contracts, was that Mayfair will have the right of first refusal in the
event Carmelo sells the leased premises. It is undisputed that Carmelo
did recognize this right of Mayfair, for it informed the latter of its
intention to sell the said property in 1974. There was an exchange of
letters evidencing the offer and counter-offers made by both parties.
Carmelo, however, did not pursue the exercise to its logical end. While it
initially recognized Mayfairs right of first refusal, Carmelo violated such
right when without affording its negotiations with Mayfair the full
for a term of ten years, renewable for another ten years under the same
terms and conditions. In consequence of the agreement, FIRESTONE
constructed on the leased premises several warehouses and other
improvements needed for the fabrication of ceramic products. Three and
a half years later, FIRESTONE entered into a second contract of lease
with NDC over the latter's four-unit pre-fabricated reparation steel
warehouse stored in Daliao, Davao. FIRESTONE agreed to ship the
warehouse to Manila for eventual assembly within the NDC compound.
The second contract, denominated as Contract No. C-26-68, was for
similar use as a ceramic manufacturing plant and was agreed expressly
to be "co-extensive with the lease of LESSEE with LESSOR on the 2.60
hectare-lot. The parties signed a similar contract concerning a six-unit
pre-fabricated steel warehouse which, as agreed upon by the parties,
would expire on 2 December 1978. Prior to the expiration of the
aforementioned contract, FIRESTONE wrote NDC requesting for an
extension of their lease agreement. Consequently, the Board of Directors
of NDC adopted the Resolution extending the term of the lease, subject
to several conditions among which was that in the event NDC "with the
approval of higher authorities, decide to dispose and sell these
properties including the lot, priority should be given to the LESSEE". In
pursuance of the resolution, the parties entered into a new agreement
for a ten-year lease of the property, renewable for another ten years,
expressly granting FIRESTONE the first option to purchase the leased
premises in the event that it decided "to dispose and sell these properties
including the lot.
The parties' lessor-lessee relationship went smoothly until early
1988 when FIRESTONE, cognizant of the impending expiration of their
lease agreement with NDC, informed the latter through several letters
and telephone calls that it was renewing its lease over the property.
While its letter of 17 March 1988 was answered by Antonio A. Henson,
General Manager of NDC, who promised immediate action on the matter,
the rest of its communications remained unacknowledged. FIRESTONE's
predicament worsened when rumors of NDC's supposed plans to dispose
of the subject property in favor of petitioner Polytechnic University of the
Philippines came to its knowledge. Forthwith, FIRESTONE served notice
on NDC conveying its desire to purchase the property in the exercise of
its contractual right of first refusal. Apprehensive that its interest in the
property would be disregarded, FIRESTONE instituted an action for
Contrary to what petitioners PUP and NDC propose, there is not just one
party involved in the questioned transaction. Petitioners NDC and PUP
have their respective charters and therefore each possesses a separate
and distinct individual personality.
Hence, the petition was denied.
SPS. LITONJUA vs. L & R CORPORATION
G.R. No. 130722. December 9, 1999
320 SCRA 405
ISSUE:
This stems from loans obtained by the spouses Litonjua from L&R
Corporation in the aggregate sum of P400,000.00; P200,000.00 of which
was obtained on August 6, 1974 and the remaining P200,000.00 obtained
on March 27, 1978. The loans were secured by a mortgage constituted by
the spouses upon their two parcels of land and the improvements
thereon The mortgage was duly registered with the Register of Deeds.
Spouses Litonjua sold to Philippine White House Auto Supply, Inc.
(PWHAS) the parcels of land they had previously mortgaged to L & R
Corporation for the sum of P430,000.00. Meanwhile, with the spouses
Litonjua having defaulted in the payment of their loans, L & R
Corporation initiated extrajudicial foreclosure proceedings with the ExOficio Sheriff of Quezon City. The mortgaged properties were sold at
public auction to L & R Corporation as the only bidder for the amount of
P221,624.58.
The Deputy Sheriff informed L & R Corporation of the payment by
PWHAS of the full redemption price and advised it that it can claim the
payment upon surrender of its owners duplicate certificates of title. The
spouses Litonjua presented for registration the Certificate of Redemption
issued in their favor to the Register of Deeds of Quezon City. The
Certificate also informed L & R Corporation of the fact of redemption
and directed the latter to surrender the owners duplicate certificates of
title within five days.
On April 22, 1981, L & R Corporation wrote a letter to the Sheriff, copy
furnished to the Register of Deeds, stating: (1) that the sale of the
mortgaged properties to PWHAS was without its consent, in
contravention of paragraphs 8 and 9 of their Deed of Real Estate
Mortgage; and (2) that it was not the spouses Litonjua, but PWHAS, who
FACTS:
MUTUALITY OF CONTRACT
judgment debt. Thus, it is clear that when EPCIB offered its real
properties, it exercised its option because it cannot immediately pay the
full amount stated in the writ of execution and all lawful fees in cash,
certified bank check or any other mode of payment acceptable to the
judgment obligee.
In the case at bar, EPCIB cannot immediately pay by way of
Managers Check so it exercised its option to choose and offered its real
properties. With the exercise of the option, Sheriff Regalado should have
ceased serving notices of garnishment and discontinued their
implementation. This is not true in the instant case. Sheriff Regalado
was adamant in his posture even if real properties have been offered
which were sufficient to satisfy the judgment debt.
accordance with the park standards. The construction shall be under the
close supervision of the Park Superintendent.
The mortal remains of Dios husband, father and daughter were
interred in the lot at her own expense, without the knowledge and
intervention of SFMPI..
In October 1986, Dio informed SFMPI, through its president and
controlling stockholder, Mildred F. Tantoco, that she was planning to
build a mausoleum on her lot and sought the approval thereof. Dio
showed to Tantoco the plans and project specifications accomplished by
her private contractor at an estimated cost of P60,000.00. The plans and
specifications were approved, but Tantoco insisted that the mausoleum
be built by it or its agents at a minimum cost of P100,000.00 as provided
in Rule 69 of the Rules and Regulations the SFMPI issued on May 25,
1972. The total amount excluded certain specific designs in the approved
plan which if included would cost Dio much more. Dio, through counsel,
demanded that she be allowed to construct the mausoleum within 10
days, otherwise, she would be impelled to file the necessary action/s
against SFMPI and Tantoco. Dio filed a Complaint for Injunction with
Damages against SFMPI and Tantoco before the RTC. She averred that
she was not aware of Rule 69 of the SFMPI Rules and Regulations; the
amount of P100,000.00 as construction cost of the mausoleum was
unconscionable and oppressive. She prayed that, after trial, judgment be
rendered in her favor, granting a final injunction perpetually restraining
defendants from enforcing the invalid Rule 69 of SFMPIs Rules for
Memorial Work in the Mausoleum of the Park or from refusing or
preventing the construction of any improvement upon her property in the
park. The court issued a cease and desist order against defendants.
The trial court rendered judgment in favor of defendants. On
appeal, the CA affirmed the decision of the trial court.
Plaintiffs allegation that she was not aware of the said Rules and
Regulations lacks credence. Admittedly, in her Complaint and during the
trial, plaintiff testified that she informed the defendants of her intention
to construct a mausoleum. Even counsel for the plaintiff, who is the son
of the plaintiff, informed the Court during the trial in this case that her
mother, the plaintiff herein, informed the defendants of her plan to
construct and erect a mausoleum. This act of the plaintiff clearly shows
that she was fully aware of the said rules and regulations otherwise she
should not consult, inform and seek permission from the defendants of
her intention to build a mausoleum if she is not barred by the rules and
regulations to do the same. When she signed the contract with the
defendants, she was estopped to question and attack the legality of said
contract later on.
Further, a contract of adhesion, wherein one party imposes a
readymade form of contract on the other, is not strictly against the law. A
contract of adhesion is as binding as ordinary contracts, the reason being
that the party who adheres to the contract is free to reject it entirely.
Contrary to petitioners contention, not every contract of adhesion is an
invalid agreement.
Thus, the petition was denied.
ISSUE:
Whether or not petitioner had knowledge of Rule 69 of SFMPI
Rules and Regulations for memorial works in the mausoleum areas of the
park when the Pre-Need Purchase Agreement and the Deed of Sale was
executed and whether the said rule is valid and binding upon petitioner.
RULING:
service agreements to the effect that - Venue of all suits arising from
this Agreement or any other suit directly or indirectly arising from the
relationship between PILTEL and subscriber shall be in the proper courts
of Makati, Metro Manila. Subscriber hereby expressly waives any other
venues. The Regional Trial Court of Iligan City, Lanao del Norte, denied
petitioners motion to dismiss and required it to file an answer within 15
days from receipt thereof.
Petitioner filed a petition for certiorari before the Court of Appeals.
The Court of Appeals saw no merit in the petition and affirmed the
assailed orders of the trial court.
Hence, the petition was granted by the Court and the decision of
the Court of Appeals is reversed and set aside. The Civil Case pending
before the Regional Trial Court of Iligan City, Branch 4, was DISMISSED
without prejudice to the filing of an appropriate complaint by respondent
against petitioner with the court of proper venue.
ISSUE:
Whether or not the Court of Appeals erred in affirming the orders
of the trial court.
RULING:
The contract herein involved is a contract of adhesion. But such an
agreement is not per se inefficacious. The rule instead is that, should
there be ambiguities in a contract of adhesion, such ambiguities are to
be construed against the party that prepared it. If, however, the
stipulations are not obscure, but are clear and leave no doubt on the
intention of the parties, the literal meaning of its stipulations must be
held controlling. A contract of adhesion is just as binding as ordinary
contracts. It is true that this Court has, on occasion, struck down such
contracts as being assailable when the weaker party is left with no
choice by the dominant bargaining party and is thus completely deprived
of an opportunity to bargain effectively. Nevertheless, contracts of
adhesion are not prohibited even as the courts remain careful in
scrutinizing the factual circumstances underlying each case to determine
the respective claims of contending parties on their efficacy. In the case
at bar, respondent secured 6 subscription contracts for cellular phones
on various dates. It would be difficult to assume that, during each of
those times, respondent had no sufficient opportunity to read and go
over the terms and conditions embodied in the agreements. Respondent
continued, in fact, to acquire in the pursuit of his business subsequent
subscriptions and remained a subscriber of petitioner for quite
sometime.
FACTS:
On January 27, 1990, plaintiff Gilda C. Mejia shipped thru defendant,
Philippine Airlines, one (1) unit microwave oven under PAL Air Waybill No. 0-791013008-3, with a gross weight of 33 kilograms from San Francisco, U.S.A. to
Manila, Philippines.
Upon arrival, however, of said article in Manila,
Philippines, plaintiff discovered that its front glass door was broken and the
damage rendered it unserviceable. Demands both oral and written were made
by plaintiff against the defendant for the reimbursement of the value of the
damaged microwave oven, and transportation charges paid by plaintiff to
defendant company. But these demands fell on deaf ears. This is because,
according to petitioner, was filed out of time under paragraph 12, a (1) of the
Air Waybill which provides: "(a) the person entitled to delivery must make a
complaint to the carrier in writing in case: (1) of visible damage to the goods,
immediately after discovery of the damage and at the latest within 14 days from
the receipt of the goods.
On September 25, 1990, Gilda C. Mejia filed an action for damages
against the petitioner in the lower court. The latter rendered a decision
rendering PAL liable to pay, actual, moral and exemplary damages as well as
attorneys fees. On appeal, the Court of Appeals similarly ruled in favor of
private respondent by affirming in full the trial court's judgment, with costs
against petitioner.
ISSUE:
Manuelita, as extension card holder. The spouses were given credit limit of P10,
000.00. They often exceeded this credit limit without protest from BCC.
On August 9, 1989, Manuelitas bag was snatched from her as she was
shopping at the greenbelt mall in Makati, Metro Manila. Among the items
inside the bag was her BECC credit card. That same night she informed, by
telephone, BECC of the loss. The call was received by BECC offices through a
certain Gina Banzon. This was followed by a letter dated August 30, 1989. She
also surrendered Luis credit card and requested for replacement cards. In her
letter, Manuelita stated that she shall not be responsible for any and all
charges incurred [through the use of the lost card] After August 29, 1989.
However, when Luis received his monthly billing statement from BECC
dated September 20,1989, the charges included amounts for purchases were
made, one amounting to P2,350.05 and the other, P607.50. Manuelita received
a billing statement dated October 20,1989 which required her to immediately
pay the total amount of P3,197.70 covering the same (unauthorized) purchases.
Manuelita wrote again BECC disclaiming responsibility for those charges,
which were made after she had served BECC with notice of loss of her card.
However, BECC, in a letter dated July 13, 1990, pointed to Luis the
following stipulation in their contract:
In his reply dated July 18, 1990, Luis stressed that the contract BECC
was referring to was a contract of adhesion and warned that if BECC insisted
on charging him and his wife for the unauthorized purchases, they will sue
BECC continued to bill the spouses for said purchases.
The trial court only opined that the only purpose for the suspension of
the spouses credit privileges was to compel them to pay for the unauthorized
purchases. The trial court ruled that the latter portion of the condition in the
parties contract, which states the liability for purchases made after a card is
lost or stolen shall be for the account of the cardholder until after notice of the
lost or theft has been given to BECC and after the latter has informed its
member establishments, is void for being contrary to public policy and for being
dependent upon the sole will of the debtor.
ISSUE:
Whether or not the Court of Appeals gravely erred in relying on the case
of Serra v. Court of appeals, 229 SCRA 60, because unlike that case, petitioners
have no chance at all to contest the stipulations appearing in the credit card
FACTS:
Salas, Jr. was the registered owner of a vast tract of land in Lipa
City, Batangas spanning 1,484,354 square meters. On May 15, 1987, he
entered into an Owner-Contractor Agreement with respondent Laperal
Realty Corporation to render and provide complete (horizontal)
construction services on his land. On September 23, 1988, Salas, Jr.
executed a Special Power of Attorney in favor of respondent Laperal
Realty to exercise general control, supervision and management of the
sale of his land, for cash or on installment basis. On June 10, 1989, Salas,
Jr. left his home in the morning for a business trip to Nueva Ecija. He
never returned.On August 6, 1996, Teresita Diaz Salas filed with the
Regional Trial Court a verified petition for the declaration of presumptive
death of her husband, Salas, Jr., who had then been missing for more
than seven (7) years. It was granted on December 12, 1996.
Meantime, respondent Laperal Realty subdivided the land of Salas,
Jr. and sold subdivided portions thereof to respondents Rockway Real
Estate Corporation and South Ridge Village, Inc. on February 22, 1990;
to respondent spouses Abrajano and Lava and Oscar Dacillo on June 27,
1991; and to respondents Eduardo Vacuna, Florante de la Cruz and Jesus
Vicente Capalan on June 4, 1996.
On February 3, 1998, petitioners as heirs of Salas, Jr. filed in the
Regional Trial Court a Complaint for declaration of nullity of sale,
reconveyance, cancellation of contract, accounting and damages against
herein respondents. Laperal Realty filed a Motion to Dismiss on the
ground that petitioners failed to submit their grievance to arbitration as
required under Article VI of the Agreement. Spouses Abrajano and Lava
and respondent Dacillo filed a Joint Answer with Counterclaim and
Crossclaim praying for dismissal of petitioners Complaint for the same
reason.
The trial court issued an Order dismissing petitioners Complaint
for non-compliance with the arbitration clause.
ISSUE:
Whether or not the trial court erred in dismissing the complaint.
RULING:
ISSUE:
Whether or not the Court of Appeals erred in affirming the trial
courts decision.
RULING:
There can be no other conclusion than the respondents are indeed
the procuring cause of the sale. If not for the respondents, Lee would not
have known about the mango plantation being sold by the
petitioners. The sale was consummated. The bank had profited from such
transaction. It would certainly be iniquitous if the respondents would not
be rewarded their commission pursuant to the letter of authority. Hence,
the Court of Appeals decision is affirmed.
ENFORCEABILITY
with Moreman Builders Co., Inc. They agreed that the construction would be
finished not later than December 22, 1977. Respondent purchased various
construction materials and equipment in Manila. Moreman, in turn, deposited
them in the warehouse of Wilson and Lily Chan, herein petitioners. The deposit
was free of charge. Unfortunately, Moreman failed to finish the construction of
the hotel at the stipulated time. Hence, on February 1, 1978, respondent filed
with the then CFI an action for rescission and damages against Moreman. On
November 28, 1978, the CFI rendered its Decision rescinding the contract
between Moreman and respondent and awarding to the latter P445,000.00 as
actual, moral and liquidated damages; P20,000.00 representing the increase in
the construction materials; and P35,000.00 as attorneys fees. Moreman
interposed an appeal to the Court of Appeals but the same was dismissed on
March 7, 1989 for being dilatory. He elevated the case to this Court via a
petition for review on certiorari. In a Decision dated February 21, 1990, the
Court denied the petition. On April 23, 1990 an Entry of Judgment was issued.
Meanwhile, during the pendency of the case, respondent ordered
petitioners to return to him the construction materials and equipment which
Moreman deposited in their warehouse. Petitioners, however, told them that
Moreman withdrew those construction materials in 1977. Hence, on December
11, 1985, respondent filed with the RTC an action for damages with an
application for a writ of preliminary attachment against petitioners.
ISSUE:
Whether or not respondent have the right to demand the release of the
said materials and equipment or claim for damages.
RULING:
At the outset, the case should have been dismissed outright by the trial
court because of patent procedural infirmities. Even without such serious
procedural flaw, the case should also be dismissed for utter lack of merit.
Under Article 1311 of the Civil Code, contracts are binding upon the parties
(and their assigns and heirs) who execute them. When there is no privity of
contract, there is likewise no obligation or liability to speak about and thus no
cause of action arises. Specifically, in an action against the depositary, the
burden is on the plaintiff to prove the bailment or deposit and the performance
of conditions precedent to the right of action. A depositary is obliged to return
the thing to the depositor, or to his heirs or successors, or to the person who
may have been designated in the contract.
In the present case, the record is bereft of any contract of deposit, oral or
written, between petitioners and respondent. If at all, it was only between
petitioners and Moreman. And granting arguendo that there was indeed a
contract of deposit between petitioners and Moreman, it is still incumbent upon
respondent to prove its existence and that it was executed in his favor.
However, respondent miserably failed to do so. The only pieces of evidence
respondent presented to prove the contract of deposit were the delivery
receipts. Significantly, they are unsigned and not duly received or authenticated
by either Moreman, petitioners or respondent or any of their authorized
representatives. Hence, those delivery receipts have no probative value at all.
While our laws grant a person the remedial right to prosecute or institute a civil
action against another for the enforcement or protection of a right, or the
prevention or redress of a wrong, every cause of action ex-contractu must be
founded upon a contract, oral or written, express or implied. Moreover,
respondent also failed to prove that there were construction materials and
equipment in petitioners warehouse at the time he made a demand for their
return. Considering that respondent failed to prove (1) the existence of any
contract of deposit between him and petitioners, nor between the latter and
Moreman in his favor, and (2) that there were construction materials in
petitioners warehouse at the time of respondents demand to return the same,
we hold that petitioners have no corresponding obligation or liability to
respondent with respect to those construction materials.
that plaintiffs and their ascendants are owners since memory can no
longer recall of that parcel of riceland known Sitio Libis, Barrio Cruz-na-Ligas,
Quezon City (now Diliman, Quezon City), while the members of the plaintiff
Association and their ascendants have possessed since time immemorial openly,
adversely, continuously and also in the concept of an owner, the rest of the area
embraced by and within the Barrio Cruz-na-Ligas, Diliman, Quezon City;
that since October 1972, the claims of the plaintiffs and/or members of
plaintiff Association have been the subject of quasi-judicial proceedings and
administrative investigations in the different branches of the government
penultimately resulting in the issuance of that Indorsement dated May 7, 1975
by the Bureau of Lands, and ultimately, in the issuance of the Indorsement of
February 12, 1985, by the office of the President of the Rep. of the Philippines
confirming the rights of the bonafide residents of Barrio Cruz-na-Ligas to the
parcel of land they have been possessing or occupying;
that defendant UP, pursuant to the said Indorsement from the Office of
the President of the Rep. of the Philippines, issued that Reply Indorsement
wherein it approved the donation of about 9.2 hectares of the site, directly to
the residents of Brgy. Krus Na Ligas. After several negotiations with the
residents, the area was increased to 15.8 hectares (158,379 square meters);
FACTS:
Petitioners are residents of Barangay Cruz-na-Ligas. Diliman, Quezon
City. The Cruz-na-Ligas Homesite Association, Inc. is a non-stock corporation of
which petitioners and other residents of Barangay Cruz-na-Ligas are members.
Petitioners filed a complaint for specific performance and damages
against private respondent University of the Philippines before the RTC of
Quezon City.
The complaint was later on amended to include private
respondent Quezon City government as defendant. As amended, the complaint
alleged:
UP,
the
the
the
This contention has no merit. The trial courts ruling on this point was
made in connection with petitioners application for a writ of preliminary
injunction to stop respondent UP from ejecting petitioners. The trial court
denied injunction on the ground that the donation had already been revoked
and therefore petitioners had no clear legal right to be protected. It is evident
that the trial courts ruling on this question was only tentative, without
prejudice to the final resolution of the question after the presentation by the
parties of their evidence.
The court of origin which tried the suit for specific performance on
account of the herein petitioners reluctance to abide by the covenant, ruled in
favor of the vendee while respondent court practically agreed with the trial
court except as to the amount to be paid to petitioners and the refund to private
respondent are concerned.
ISSUE:
The issue is whether or not petitioners prayer for the rescission of the
deed can prosper.
RULING:
The Supreme Court affirmed the decision of the lower courts.
The suggestion of petitioners that the covenant must be cancelled in the
light of private respondents so-called breach seems to overlook petitioners
demeanor who, instead of immediately filing the case precisely to rescind the
instrument because of non-compliance, allowed private respondent to effect
numerous payments posterior to the grace periods provided in the contract.
This apathy of petitioners, who even permitted private respondent to take the
initiative in filing the suit for specific performance against them, is akin to
waiver of abandonment of the right to rescind.
STAGES
IN
THE
EXECUTION
CONSUMMATION/TERMINATION
OF
CONTRACT
However, before President Ramos could have signed the said contract,
there was a change in the Administration and EXECOM. Said change caused
the passage of the law, the Clean Air Act, prohibiting the incineration of
garbage and thus, against the contents of said contract. The Philippine
Government, through the MMDA Chairman, declared said contract inexistent
for several reasons. Herein respondent filed a suit against petitioner. The
Regional Trial Court ruled in favor of the respondent. Instead of filing an appeal
to the decision, petitioner filed a writ of certiorari on the Court of Appeals,
which the latter granted. The Regional Trial Court declared its decision final
and executory, for which the petitioner appealed to the CA, which the CA
denied such appeal and affirming RTCs decision.
ISSUE:
Whether or not a valid contract is existing between herein petitioner and
respondent.
RULING:
Under Article 1305 of the Civil Code, a contract is a meeting of minds
between two persons whereby one binds himself, with respect to the other, to
give something or to render some service. A contract undergoes three distinct
stages
preparation or negotiation, its perfection, and finally, its
consummation. Negotiation begins from the time the prospective contracting
parties manifest their interest in the contract and ends at the moment of
agreement of the parties. The perfection or birth of the contract takes place
when the parties agree upon the essential elements of the contract. The last
stage is the consummation of the contract wherein the parties fulfill or perform
the terms agreed upon in the contract, culminating in the extinguishment
thereof. Article 1315 of the Civil Code, provides that a contract is perfected by
mere consent. Consent, on the other hand, is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute
the contract. In the case at bar, the signing and execution of the contract by the
parties clearly show that, as between the parties, there was a concurrence of
offer and acceptance with respect to the material details of the contract,
thereby giving rise to the perfection of the contract. The execution and signing
of the contract is not disputed by the parties. As the Court of Appeals aptly
held: Contrary to petitioners insistence that there was no perfected contract,
the meeting of the offer and acceptance upon the thing and the cause, which
are to constitute the contract (Arts. 1315 and 1319, New Civil Code), is borne
out by the records.
Admittedly, when petitioners accepted private respondents bid proposal
(offer), there was, in effect, a meeting of the minds upon the object (waste
management project) and the cause (BOT scheme). Hence, the perfection of
the contract. In City of Cebu vs. Heirs of Candido Rubi, the Supreme Court
held that the effect of an unqualified acceptance of the offer or proposal of the
bidder is to perfect a contract, upon notice of the award to the bidder.
In fact, in asserting that there is no valid and binding contract between
the parties, MMDA can only allege that there was no valid notice of award; that
the contract does not bear the signature of the President of the Philippines; and
that the conditions precedent specified in the contract were not complied with.
6.
between the parties. Mid-Pasig was not aware that Rockland deposited
the P1 million check in its account. It only learned of Rocklands check
when it received Rocklands February 2, 2001 letter. Mid-Pasig, upon
investigation, also learned that the check was deposited at the Philippine
National Bank San Juan Branch, instead of PNB Ortigas Branch where
Mid-Pasig maintains its account. Immediately, Mid-Pasig wrote Rockland
on February 6, 2001 rejecting the offer, and proposed that Rockland
apply the P1 million to its other existing lease instead. These
circumstances clearly show that there was no concurrence of Rocklands
offer and Mid-Pasigs acceptance.
2.
Mid-Pasig is also not in estoppel in pais. The doctrine of
estoppel is based on the grounds of public policy, fair dealing, good faith
and justice, and its purpose is to forbid one to speak against his own act,
representations, or commitments to the injury of one to whom they were
directed and who reasonably relied thereon. Since estoppel is based on
equity and justice, it is essential that before a person can be barred from
asserting a fact contrary to his act or conduct, it must be shown that
such act or conduct has been intended and would unjustly cause harm to
those who are misled if the principle were not applied against him.
Hence, the petition was denied.
ELEMENTS OF CONSENT: OFFER AND ACCEPTANCE
However, before President Ramos could have signed the said contract,
there was a change in the Administration and EXECOM. Said change caused
the passage of the law, the Clean Air Act, prohibiting the incineration of
garbage and thus, against the contents of said contract. The Philippine
Government, through the MMDA Chairman, declared said contract inexistent
for several reasons. Herein respondent filed a suit against petitioner. The
Regional Trial Court ruled in favor of the respondent. Instead of filing an appeal
to the decision, petitioner filed a writ of certiorari on the Court of Appeals,
which the latter granted. The Regional Trial Court declared its decision final
and executory, for which the petitioner appealed to the CA, which the CA
denied such appeal and affirming RTCs decision.
ISSUE:
Whether or not a valid contract is existing between herein
petitioner and respondent.
RULING:
Under Article 1305 of the Civil Code, a contract is a meeting of
minds between two persons whereby one binds himself, with respect to
the other, to give something or to render some service. A contract
undergoes three distinct stages- preparation or negotiation, its
perfection, and finally, its consummation. Negotiation begins from the
time the prospective contracting parties manifest their interest in the
contract and ends at the moment of agreement of the parties. The
perfection or birth of the contract takes place when the parties agree
upon the essential elements of the contract. The last stage is the
consummation of the contract wherein the parties fulfill or perform the
terms agreed upon in the contract, culminating in the extinguishment
thereof. Article 1315 of the Civil Code, provides that a contract is
perfected by mere consent. Consent, on the other hand, is manifested by
the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract. In the case at bar, the signing and
execution of the contract by the parties clearly show that, as between the
parties, there was a concurrence of offer and acceptance with respect to
the material details of the contract, thereby giving rise to the perfection
of the contract. The execution and signing of the contract is not disputed
by the parties.
As the Court of Appeals aptly held: Contrary to
petitioners insistence that there was no perfected contract, the meeting
of the offer and acceptance upon the thing and the cause, which are to
constitute the contract (Arts. 1315 and 1319, New Civil Code), is borne
out by the records.
Admittedly, when petitioners accepted private respondents bid
proposal (offer), there was, in effect, a meeting of the minds upon the
object (waste management project) and the cause (BOT scheme). Hence,
the perfection of the contract. In City of Cebu vs. Heirs of Candido Rubi,
the Supreme Court held that the effect of an unqualified acceptance of
the offer or proposal of the bidder is to perfect a contract, upon notice of
the award to the bidder.
In fact, in asserting that there is no valid and binding contract
between the parties, MMDA can only allege that there was no valid
notice of award; that the contract does not bear the signature of the
President of the Philippines; and that the conditions precedent specified
in the contract were not complied with.
In asserting that the notice of award to JANCOM is not a proper
notice of award, MMDA points to the Implementing Rules and
Regulations of Republic Act No. 6957, otherwise known as the BOT Law,
which require that i) prior to the notice of award, an Investment
Coordinating Committee clearance must first be obtained; and ii) the
notice of award indicate the time within which the awardee shall submit
the prescribed performance security, proof of commitment of equity
contributions and indications of financing resources.
Admittedly, the notice of award has not complied with these
requirements.
However, the defect was cured by the subsequent
execution of the contract entered into and signed by authorized
representatives of the parties; hence, it may not be gainsaid that there is
a perfected contract existing between the parties giving to them certain
rights and obligations (conditions precedents) in accordance with the
terms and conditions thereof. We borrow the words of the Court of
Appeals:
Reynes and the Abucay Spouses argued that for lack for consideration
there (was) no meeting of the minds) between Reynes and Montecillo. Thus,
the trial court should declare null and void ab initio Monticellos Deed of sale,
and order the cancellation of certificates of title No. 90805 in the name of
Montecillo.
In his Answer, Montecillo a bank executive with a BS Commerce degree,
claimed he was a buyer in good faith and had actually paid the P47,000.00
consideration stated on his Deed of Sale. Montecillo however admitted he still
owned Reynes a balance of P10,000.00. He also alleged that he paid P50,000.00
for the release of the chattel mortgage which he argued constituted a lien on
the Mabolo Lot. He further alleged that he paid for the real property tax as
well as the capital gains tax on the sale of the Mabolo Lot.
In their reply, Reynes and the Abucay Spouses contended that Montecillo
did not have authority to discharge the chattel mortgage especially after
Reynes revoked Montecillos Deed of Sale and gave the mortgagee a copy of the
document of revocation. Reynes and the Abucay Spouses claimed that
Montecillo secured the release of the chattel mortgage through machination.
They further asserted that Montecillo took advantage of the real property taxes
paid by the Abucay Spouses and surreptitiously caused the transfer of the title
to the Mabolo Lot in his name.
During pre-trial Montecillo claimed that the consideration for the sale of
the Mabolo Lot was the amount he paid to Cebu Iced and Cold Storage
Corporation for the mortgage debt. Of Bienvenido Jayag. Montecillo argued
that the release of the mortgage was necessary since the mortgage constituted
a lien on the Mabolo Lot.
Reynes, however stated that she had nothing to do with Jayags mortgage
debt except that the house mortgaged by Jayag stood on a portion of the
Mabolo Lot. Reynes further stated that the payment by Montecillo to release
the mortgage on Jayags house is a matter between Montecillo and
Jayag. The mortgage on the house being a chattel mortgage could not be
interpreted in any way as an encumbrance on the Mabolo Lot. Reynes further
claimed that the mortgage debt had long prescribed since the P47,000.00
mortgage debt was due for payment on January 30,1967.
ISSUE:
Whether or not there was a valid consent in the case at bar to have a valid
contract.
RULING:
offices. Even prior to November 1986, petitioner and Nida Lopez knew each
other because of Rosario Pardo, the latters sister. During their meeting,
petitioner was hesitant to accept the job because of her many out of town
commitments, and also considering that Ms. Lopez was asking that the designs
be submitted by December 1986, which was such a short notice. Ms. Lopez
insisted, however, because she really wanted petitioner to do the design for
renovation. Petitioner acceded to the request. Ms. Lopez assured her that she
would be compensated for her services. Petitioner even told Ms. Lopez that her
professional fee was P10,000.00, to which Ms. Lopez acceded.
During the November 1986 meeting between petitioner and Ms. Lopez,
there were discussions as to what was to be renovated. Ms. Lopez again
assured petitioner that the bank would pay her fees. After a few days, petitioner
requested for the blueprint of the building so that the proper design, plans and
specifications could be given to Ms. Lopez in time for the board meeting in
December 1986. Petitioner then asked her draftsman Jackie Barcelon to go to
the jobsite to make the proper measurements using the blue print. Petitioner
also did her research on the designs and individual drawings of what the bank
wanted. Petitioner hired Engineer Ortanez to make the electrical layout,
architects Frison Cruz and De Mesa to do the drafting. For the services
rendered by these individuals, petitioner paid their professional fees. Petitioner
also contacted the suppliers of the wallpaper and the sash makers for their
quotation. So come December 1986, the lay out and the design were submitted
to Ms. Lopez. She even told petitioner that she liked the designs.
Subsequently, petitioner repeatedly demanded payment for her services
but Ms. Lopez just ignored the demands. In February 1987, by chance
petitioner and Ms. Lopez saw each other in a concert at the Cultural Center of
the Philippines. Petitioner inquired about the payment for her services, Ms.
Lopez curtly replied that she was not entitled to it because her designs did not
conform to the banks policy of having a standard design, and that there was no
agreement between her and the bank.
Petitioner, through her lawyers, who wrote Ms. Lopez, demanding
payment for her professional fees in the amount of P10,000.00 which Ms. Lopez
ignored. The lawyers wrote Ms. Lopez once again demanding the return of the
blueprint copies petitioner submitted which Ms. Lopez refused to return. The
petitioner then filed at the trial court a complaint against COMBANK and Ms.
Lopez for collection of professional fees and damages.
In its answer, COMBANK stated that there was no contract between
COMBANK and petitioner; that Ms. Lopez merely invited petitioner to
participate in a bid for the renovation of the COMBANK Ermita Branch; that
any proposal was still subject to the approval of the COMBANKs head office.
The trial court rendered judgment in favor of plaintiff. On appeal, the
Court of Appeals reversed the decision. Hence, this petition.
ISSUE:
Whether or not the Court of Appeals erred in ruling that there was no
contract between petitioner and respondents, in the absence of the element of
consent.
RULING:
A contract is a meeting of the minds between two persons whereby one
binds himself to give something or to render some service to bind himself to
give something to render some service to another for consideration. There is
no contract unless the following requisites concur: 1. Consent of the
contracting parties; 2. Object certain which is the subject matter of the
contract; and 3. Cause of the obligation which is established.
In the case at bar, there was a perfected oral contract. When Ms. Lopez
and petitioner met in November 1986, and discussed the details of the work,
the first stage of the contract commenced. When they agreed to the payment of
the P10,000.00 as professional fees of petitioner and that she should give the
designs before the December 1986 board meeting of the bank, the second stage
of the contract proceeded, and when finally petitioner gave the designs to Ms.
Lopez, the contract was consummated. Petitioner believed that once she
submitted the designs she would be paid her professional fees. Ms. Lopez
assured petitioner that she would be paid.
It is familiar doctrine that if a corporation knowingly permits one of its
officers, or any other agent, to act within the scope of an apparent authority, it
holds him out to the public as possessing the power to do those acts; and thus,
the corporation will, as against anyone who has in good faith dealt with it
through such agent, be estopped from denying the agents authority.
Also, petitioner may be paid on the basis of quantum meruit. "It is
essential for the proper operation of the principle that there is an acceptance of
the benefits by one sought to be charged for the services rendered under
circumstances as reasonably to notify him that the lawyer performing the task
was expecting to be paid compensation therefor. The doctrine of quantum
meruit is a device to prevent undue enrichment based on the equitable
postulate that it is unjust for a person to retain benefit without paying for it."
The designs petitioner submitted to Ms. Lopez were not returned. Ms.
Lopez, an officer of the bank as branch manager used such designs for
presentation to the board of the bank. Thus, the designs were in fact useful to
Ms. Lopez for she did not appear to the board without any designs at the time
of the deadline set by the board.
Decision reversed and set aside. Decision of the trial court affirmed.
ELEMENTS OF CONSENT: OFFER AND ACCEPTANCE
PALATTAO VS. COURT OF APPEALS
381 SCRA 681
MAY 7, 2002
FACTS:
Petitioner Yolanda Palattao interred into a lease contract whereby she
leased to private respondent a house and a 490-square-meter lot located in
101 Caimito Road, Caloocan City, covered by Transfer Certificate of Title No.
247536 and registered in the name of petitioner. The duration of the lease
contract was for three years, commencing from January 1, 1991, to December
31, 1993, renewable at the option of the parties. The agreed monthly rental
was P7,500.00 for the first year; P 8,000.00 for the second year: and P8,500.l00
for the third year. The contract gave respondent lessee the first option to
purchase the leased property.
During the last year of the contract, the parties began negotiations for
the sale of the leased premises to private respondent. In a letter dated April 2,
1993, petitioner offered to sell to private respondents 413.28 square meters of
the leased lot at P 7,800.00 per square meter, or for the total amount of
P3,223,548.00. private respondents replied on April 15, 1993 wherein he
informed petitioner that he shall definitely exercise his option to buy the
leased property. Private respondent, however, manifested his desire to buy the
whole 490-square meters inquired from petitioner the reason why only 413.28
square meters of the leased lot were being offered for sale. In a letter dated
November 6, 1993, petitioner made a final offer to sell the lot at P 7,500.00 per
square meter with a down payment of 50% upon the signing of the contract of
conditional sale, the balance payable in one year with a monthly lease/interest
payment P 14,000.00 which must be paid on or before the fifth day every month
that the balance is still outstanding. On November 7, 1993, private respondents
accepted petitioners offer and reiterated his request for respondent accepted
petitioners offers and reiterated his request for clarification as to the size of
the lot for sale. Petitioner acknowledged private respondents acceptance of the
offer in his letter dated November 10, 1993.
Petitioner gave private respondent on or before November 24, 1993,
within which to pay the 50% downpayment in cash or managers check.
Petitioner stressed that failure to pay the downpayment on the stipulated period
will enable petitioner to freely sell her property to others. Petitioner likewise
notified private respondent, that she is no longer renewing the lease agreement
upon its expiration on December 31, 1993.
Private respondent did not accept the terms proposed by petitioner.
Neither were there any documents of sale nor payment by private respondent
of the required downpayment. Private respondent wrote a letter to petitioner on
November 29, 1993 manifesting his intention to exercise his option to renew
their lease contract for another three years, starting January 1, 1994 to
December 31, 1996. This was rejected by petitioner, reiterating that she was no
longer renewing the lease. Petitioner demanded that private respondent vacate
the premises, but the latter refused.
Hence, private respondent filed with the Regional Trial Court of
Caloocan, Branch 127, a case for specified performance, docketed as Civil Case
No, 16287, seeking to compel petitioner to sell to him the leased property.
Private respondent further prayed for the issuance of a writ preliminary
injunction to prevent petitioner from filing an ejectment case upon the
expiration of the lease contract on December 31, 1993.
During the proceedings in the specific performance case, the parties
agreed to maintain the status quo. After they failed to reach an amicable
settlement, petitioner filed the instant ejectment case before the Metropolitan
Trial Court of Caloocan City, Branch 53. In his answer, private respondent
alleged that he refused to vacate the leased premises because there was a
perfected contract of sale of the leased property between him and petitioner.
Private respondent argued that he did not abandon his option to buy the leased
property and that his proposal to renew the lease was but an alternative
proposal to the sale. He further contended that the filing of the ejectment case
violated their agreement to maintain the status quo.
ISSUE:
Whether or not there was a valid consent in the case at bar.
RULING:
There was no valid consent in the case at bar.
Contracts that are consensual in nature, like a contract of sale, are
perfected upon mere meeting of the minds. Once there is concurrence between
the offer and the acceptance upon the subject matter, consideration, and terns
of payment, a contract is produced. The offer must be certain. To convert the
offer into a contract, the acceptance must be absolute and must not qualify the
terms of the offer; it must be plain, unequivocal, unconditional, and without
variance of any sort from the proposal. A qualified acceptance, or one that
involves a new proposal, constitutes a counter-offer and is a rejection of the
original offer. Consequently, when something is desired which is not exactly is
proposed in the offer, such acceptance is not sufficient to generate consent
because any modification or variation from the terms of the offer annuals the
offer.
In the case at bar, while it is true that private respondent informed
petitioner that he is accepting the latters offer to sell the leased property, it
appears that they did not reach an agreement as to the extent of the lot subject
of the proposed sale.
Letters reveal that private respondent did not give his consent to buy
only 413.28 square meters of the leased lot, as he desired to purchase the
whole 490 square-meter- leased premises which, however, was not what was
exactly proposed in petitioners offer. Clearly, therefore, private respondents
acceptance of petitioners offer was not absolute, and will consequently not
generate consent that would perfect a contract.
On 27 May 1992, ABS-CBN filed before the RTC a complaint for specific
performance with a prayer for a writ of preliminary injunction and/or temporary
restraining order against private respondents Republic Broadcasting System
(now GMA Network Inc.) On 28 May 1992, the RTC issued a temporary
restraining order.
The RTC then rendered decision in favor of RBS and against ABS-CBN.
On appeal, the same decision was affirmed. Hence, this decision.
ISSUE:
Whether or not there exists a perfected contract between ABS-CBN and
VIVA.
RULING:
A contract is a meeting of minds between two persons whereby one
binds himself to give something or render some service to another [Art. 1305,
Civil Code.] for a consideration. There is no contract unless the following
requisites concur:
(1)
consent of the contracting parties;
(2)
object certain which is the subject of the contract; and
(3)
cause of the obligation, which is established. [Art. 1318, Civil
Code.]
A contract undergoes three stages:
(a)
preparation, conception, or generation, which is the period of
negotiation and bargaining rending at the moment of agreement of
the parties;
(b)
perfection or birth of the contract, which is the moment when the
parties come to agree on the terms of the contract; and
(c)
consummation or death, which is the fulfillment or performance of
the terms agreed upon in the contract.
Contracts that are consensual in nature are perfected upon mere meeting
of the minds. Once there is concurrence between the offer and the acceptance
upon the subject matter, consideration, and terms of payment a contract is
produced. The offer must be certain. To convert the offer into a contract, the
acceptance must be absolute and must not qualify the terms of the offer; it must
be plain, unequivocal, unconditional, and without variance of any sort from the
proposal.
A qualified acceptance, or one that involves a new proposal,
constitutes a counter-offer and is a rejection of the original offer. Consequently,
when something is desired which is not exactly what is proposed in the offer,
such acceptance is not sufficient to generate consent because any modification
or variation from the terms of the offer annuls the offer.
In the present case, when Mr. Del Rosario of Viva met Mr. Lopez of ABSCBN at the Tamarind Grill on 2 April 1992 to discuss the package of films, said
package of 104 VIVA films was VIVAs offer to ABS-CBN to enter into a new Film
Exhibition Agreement. But ABS-CBN, sent through Ms. Concio, counterproposal in the form a draft contract proposing exhibition of 53 films for a
consideration of P35 million. This counter-proposal could be nothing less than
the counter-offer of Mr. Lopez during his conference with Del Rosario at
Tamarind Grill Restaurant. Clearly, there was no acceptance of VIVAs offer, for
it was met by a counter-offer which substantially varied the terms of the offer.
Furthermore, ABS-CBN made no acceptance of VIVAs offer hence, they
underwent period of bargaining. ABS-CBN then formalized its counterproposals or counter-offer in a draft contract. VIVA through its Board of
Directors, rejected such counter-offer. Even if it be conceded arguendo that Del
Rosario had accepted the counter-offer, the acceptance did not bind VIVA, as
there was no proof whatsoever that Del Rosario had the specific authority to do
so.
WHEREFORE, the instant petition is GRANTED.
spouses signed a receipt thereafter and gave her a 10-day option period to
purchase the property. Respondent spouses informed petitioner that the subject
property was mortgaged to Emilio Ramos and Isidro Ramos. Petitioner was
asked to pay the balance of the purchase price to enable the respondent
spouses to settle their obligation with the Ramoses. Petitioner agreed to meet
respondent spouses and the Ramoses on August 5, 1978, to consummate the
transaction; however, the respondent spouses and the Ramoses did not appear,
same with their second meeting.
On August 23, 1978, petitioner allegedly gave respondent spouses three
checks for the settlement the back taxes of property. On September 5, 1978,
the agent of the respondent spouses informed petitioner that the property was
the subject of a negotiation for the sale to respondent Sunvar Realty
Development Corporation.
Petitioner alleged that it was only on September 15, 1978, that TCT No.
S-72946 covering the property was issued to respondent spouses. On the same
day, petitioner filed and Affidavit of Adverse Claim with the Office of the
Registry of Deeds of Makati, Metro Manila. The Deed of Sale between
respondent spouses and respondent Sunvar was executed on September 15,
1978 and TCT No. S-72377 was issued in favor of Sunvar on September 26,
1978 with the Adverse Claim of petitioner annotated thereon.
Respondent spouses and Sunvar filed their Answers and Answers to
Cross-Claim, respectively. On appeal, the Court of Appeals completely reversed
the decision of the trial court and ordered the Register of Deeds of Makati City
to lift the Adverse Claim and ordered petitioner to pay respondent Sunvar and
respondent spouses exemplary and nominal damages and attorneys fees.
Hence, this petition.
ISSUE:
Whether or not the agreement between petitioner and respondent
spouses was a mere option or a contract to sell.
RULING:
The Supreme Court held that the agreement between the parties was a
contract of option and not a contract to sell. An option is continuing offer or
contract by which the owner stipulates with another that the latter shall have
the right to buy the property at a fixed price within a time certain, or under, or
in compliance with, certain terms and conditions, or which gives the owner of
the property the right to sell or demand a sale. It is also sometimes called an
unaccepted offer. An option is not of itself a purchase, but merely secures the
privilege to buy. It is not a sale of property but a sale of the right to purchase.
Its distinguishing characteristic is that it imposes no binding obligation on the
person holding the option, aside from the consideration for the offer.
Hence, the assailed decision is affirmed, with the modification that the
award of nominal and exemplary damages as well as attorneys fees is deleted.
The petition is denied.
VICES OF CONSENT
1.
2.
3.
4.
5.
6.
7.
meters, more or less. The donation was registered with the Register of
Deeds.
On December 11, 1953, Peoples Bank and Trust Company filed a
Special Proceedings before the Court of First Instance to declare
Feliciano incompetent. On December 22, 1953, the trial court issued its
Order for Adjudication of Incompetency for Appointing Guardian for the
Estate and Fixing Allowance of Feliciano. The following day, the trial
court appointed Peoples Bank and Trust Company as Felicianos
guardian. Peoples Bank and Trust Company has been subsequently
renamed, and is presently known as the Bank of the Philippine Islands
(BPI).
On November 22, 1978, Feliciano and Corazon Cerezo donated
Lots 1 and 3 of their property, registered under Original Certificate of
Title (OCT) No. 18920, to their son Eulogio Catalan.
Mercedes sold the property in issue in favor of her children Delia
and Jesus Basa. The Deed of Absolute Sale was registered with the
Register of Deeds and a Tax Declaration was issued in the name of
respondents.
Feliciano and Corazon Cerezo donated Lot 2 of the aforementioned
property registered under OCT No. 18920 to their children Alex Catalan,
Librada Catalan and Zenaida Catalan. On February 14, 1983, Feliciano
and Corazon Cerezo donated Lot 4 (Plan Psu-215956) of the same OCT
No. 18920 to Eulogio and Florida Catalan.
BPI, acting as Felicianos guardian, filed a case for Declaration of
Nullity of Documents, Recovery of Possession and Ownership, as well as
damages against the herein respondents. BPI alleged that the Deed of
Absolute Donation to Mercedes was void ab initio, as Feliciano never
donated the property to Mercedes. In addition, BPI averred that even if
Feliciano had truly intended to give the property to her, the donation
would still be void, as he was not of sound mind and was therefore
incapable of giving valid consent. Thus, it claimed that if the Deed of
Absolute Donation was void ab initio, the subsequent Deed of Absolute
Sale to Delia and Jesus Basa should likewise be nullified, for Mercedes
Catalan had no right to sell the property to anyone. BPI raised doubts
about the authenticity of the deed of sale, saying that its registration
long after the death of Mercedes Catalan indicated fraud. Thus, BPI
sought remuneration for incurred damages and litigation expenses.
VICES OF CONSENT
ISSUE:
Whether said decision of the lower courts is correct.
RULING:
Petitioners questioned Felicianos capacity at the time he donated
the property, yet did not see fit to question his mental competence when
he entered into a contract of marriage with Corazon Cerezo or when he
executed deeds of donation of his other properties in their favor. The
presumption that Feliciano remained competent to execute contracts,
despite his illness, is bolstered by the existence of these other contracts.
Competency and freedom from undue influence, shown to have existed in
the other acts done or contracts executed, are presumed to continue
until the contrary is shown.
Needless to state, since the donation was valid, Mercedes had the
right to sell the property to whomever she chose. Not a shred of evidence
has been presented to prove the claim that Mercedes sale of the
property to her children was tainted with fraud or falsehood. It is of little
bearing that the Deed of Sale was registered only after the death of
Mercedes. What is material is that the sale of the property to Delia and
Jesus Basa was legal and binding at the time of its execution. Thus, the
property in question belongs to Delia and Jesus Basa.
petitioners raised the issue of prescription and laches for the first
time on appeal before this Court. It is sufficient for this Court to note
that even if the present appeal had prospered, the Deed of Donation was
FACTS:
Paulina Rigonan owned three parcels of land including the house and
warehouse on one parcel. She allegedly sold them to private
respondents, the spouses Felipe and Concepcion Rigonan, who claim to
be her relatives. In 1966, petitioners who claim to be her closest
surviving relatives, allegedly took possession of the properties by means
of stealth, force and intimidation, and refused to vacate the same.
According to defendants, the alleged deed of absolute sale was void for
being spurious as well as lacking consideration. They said that Paulina
Rigonan did not sell her properties to anyone. As her nearest surviving
kin within the fifth degree of consanguinity, they inherited the three lots
and the permanent improvements thereon when Paulina died. They said
they had been in possession of the contested properties for more than 10
years.
ISSUE:
1.) Whether or not the consideration in Deed of Sale can be used to
impugn the validity of the Contract of Sale.
2.) Whether or not the alleged Deed of Sale executed by Paulina Rigonan
in favor of the private respondents is valid.
RULING:
FACTS:
The case involves the partition of the properties of the deceased spouses
Tan Quico and Josefa Oraa. The former died on May 11, 1932 and the latter on
August 6, 1932. Both died intestate. They left some ninety six hectares of land
located in the municipality of Guinobatan and Camalig, Albay. The late spouses
were survived by four children; Cresencia, Lorenzo, Hermogenes and Elias.
Elias died on May 2, 1935, without issue. Cresencia died on December 20,
1967. She was survived by her husband, Lim Chay Sing, and children, Mariano,
Jaime, Jose Jovita, Anacoreta, Antonietta, Ruben, Benjamin and Rogelio. They
are the petitioners in the case at bench. The sad spectacle of the heirs
squabbling over the properties of their deceased parents was again replayed in
the case at bench. The protagonists were the widower and children of
Cresencia on one side, and Lorenzo and Hermogenes on the other side.
The late Cresencia and Lorenzo had contrasting educational background.
Cresencia only reached the second grade of elementary school. She could not
read or write in English. On the other hand, Lorenzo is a lawyer and a CPA.
Heirs of Cresencia alleged that since the demise of the spouses Tan Quico and
Josefa Oraa, the subject properties had been administered by respondent
Lorenzo. They claimed that before her death, Cresencia had demanded their
partition from Lorenzo. After Cresencias death, they likewise clamored for
their partition. Their effort proved fruitless.
Respondents Lorenzo and Hermogenes adamant stance against partition
is based on various contentions. Principally, they urge: 1) that the properties
had already been partitioned, albeit, orally; and 2) during her lifetime, the late
Cresencia had sold and conveyed all her interests in said properties to
respondent Lorenzo. They cited as evidence the Deed of Confirmation of Extra
Judicial Settlement of the Estate of Tan Quico and Josefa Oraa and a receipt of
payment.
ISSUE:
RULING:
FACTS:
Petitioner Corazon Ruiz is engaged in the business of buying and selling
jewelry. She obtained loans from private respondent Consuelo Torres on
different occasions and in different amounts. Prior to their maturity, the loans
were consolidated under 1 promissory note dated March 22, 1995.
The consolidated loan of P750, 000.00 was secured by a real estate
mortgage on a lot in Quezon City, covered by Transfer of Certificate of Title No.
RT-96686, and registered in the name of petitioner. The mortgage was signed
by petitioner for herself and as attorney-in-fact of her husband Rogelio. It was
executed on 20 March 1995, or 2 days before the execution of the subject
promissory note.
Thereafter, petitioner obtained 3 more loans from private respondent,
under the following promissory notes: 1) promissory note dated 21 April 1995,
in the amount of P100,000.00; 2) promissory note dated 23 May !995 in the
amount of P100,000.00, and 3) promissory note dated 21 December 1995, in
the amount of P100,000.00. These combined loans of P300,000.00 were
secured by P571,000.00 worth of jewelry pledged by petitioner to private
respondent.
From April 1995 to March 1996, petitioner paid the stipulated 3%
monthly interest on the P750,000.00 loan, amounting to P270,000. After March
1996, petitioner was unable to make interest payments as she had difficulties
collecting from her clients in her jewelry business.
VICES OF CONSENT
EPIFANIA DELA CRUZ, substituted by LAUREANA V. ALBERTO
VS. SPS. EDUARDO C. SISON and EUFEMIA S. SISON
G.R. No. 163770
February 17, 2005
FACTS:
ISSUE:
Whether or not there is undue influence in the signing of the promissory
note, which determines if foreclosure proceedings could proceed.
Epifania claimed that sometime in 1992, she discovered that her rice land
in Salomague Sur, Bugallon, Pangasinan, has been transferred and registered in
the name of her nephew, Eduardo C. Sison, without her knowledge and consent,
purportedly on the strength of a Deed of Sale she executed on November 24,
1989.
RULING:
The promissory note in question did not contain any fine print provision
which could have escaped the attention of the petitioner. Petitioner had all the
time to go over and study the stipulations embodied in the promissory note.
Aside from the March 22, 1995 promissory note for P750,000.00, three other
among the documents she signed pertaining to the transfer of her residential
land, house and camarin, in favor of Demetrio, her foster child and the brother
of Eduardo.
Respondents, spouses Eduardo and Eufemia Sison (Spouses Sison),
denied that they employed fraud or trickery in the execution of the Deed of
Sale. They claimed that they purchased the property from Epifania for
P20,000.00. They averred that Epifania could not have been deceived into
signing the Deed of Absolute Sale because it was duly notarized before Notary
Public Maximo V. Cuesta, Jr.; and they have complied with all requisites for its
registration, as evidenced by the Investigation Report by the Department of
Agrarian Reform (DAR), Affidavit of Seller/Transferor, Affidavit of
Buyer/Transferee, Certification issued by the Provincial Agrarian Reform
Officer (PARO), Letter for the Secretary of Agrarian Reform, Certificate
Authorizing Payment of Capital Gains Tax, and the payment of the registration
fees. Some of these documents even bore the signature of Epifania, proof that
she agreed to the transfer of the property.
ISSUES:
Whether the deed of absolute sale is valid.
RULING:
NO. The kind of fraud that will vitiate a contract refers to those insidious
words or machinations resorted to by one of the contracting parties to induce to
the other to enter into a contract which without them he would not have agreed
to. Simply stated, the fraud must be determining cause of the contract, or must
have caused the consent to be given. It is believed that the non-disclosure to
the bank of the purchase price of the sale of the land between private
respondents and Manuel Behis cannot be the fraud contemplated by Article
1338 of the Civil Code. From the sole reason submitted by the petitioner bank
that it was kept in the dark as to the financial capacity of private respondents,
we cannot see how the omission or concealment of the real purchase price
could have induced the bank into giving its consent to the agreement; or that
the bank would not have otherwise given its consent had it known of the real
purchase price.
Pursuant to Art. 1339 of the Code, silence or concealment, by itself, does
not constitute fraud unless there is a special duty to disclose certain facts. In
the case at bar, private respondents had no duty to do such.
ISSUE:
Whether or not there existed a fraud in the case at bar.
FACTS:
Two Senate Committees, the Senate Blue Ribbon Committee and
Committee on Accountability of Public Officers, conducted extensive public
hearings to determine the actual market value of the public lands; and found
out that the sale of such was grossly undervalued based on official documents
submitted by the proper government agencies during the investigations. It was
found out that the Public Estates Authority (PEA), under the Joint Venture
Agreement (JVA), sold to Amari Coastal Bay Development Corporation 157.84
hectares of reclaimed public lands totaling to P 1.89 B or P 1,200 per square
meter. However during the investigation process, the BIR pitted the value at P
7,800 per square meter, while the Municipal Assessor of Paraaque at P 6,000
per square meter and by the Commission on Audit (COA) at P21,333 per square
meter. Based on the official appraisal of the COA, the actual loss on the part of
the government is a gargantuan value of P 31.78 B. However, PEA justified the
purchase price based from the various appraisals of private real estate
corporations, amounting from P 500 1,000 per square meter. Further, it was
also found out that there were various offers from different private entities to
buy the reclaimed public land at a rate higher than the offer of Amari, but still,
PEA finalized the JVA with Amari. During the process of investigation, Amari
did not hide the fact that they agreed to pay huge commissions and bonuses to
various persons for professional efforts and services in successfully negotiating
and securing for Amari the JVA. The amount constituting the commissions and
bonuses totaled to a huge P 1.76 B; an indicia of great bribery.
ISSUE:
Whether or not the sale between PEA and Amari is unconstitutional.
RULING:
YES, it is unconstitutional for what was sold or alienated are lands of the
public domain. Further, the Ponce doctrine, to which the respondent seeks
refuge and sanctuary, does not fall squarely in the case.
First, the subject of the sale was a submerged land; i.e., 78% of the total
area sold by PEA to Amari is still submerged land. Submerged lands, like
foreshore lands, is of the public domain and cannot be alienated.
As
unequivocally stated in Article XII, Section 2 of the Constitution, all lands of the
public domain, waters, minerals, coals, petroleum, forces which are potential
energies, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources, with the exception of agricultural lands, are inalienable. Submerged
lands fall within the scope of such provision.
Second, in the Ponce case, the irrevocable option to purchase portions
of the foreshore lands shall be enforceable only upon reclamation, not prior to
reclamation.
In the case at bar, even without actual reclamation, the
submerged lands were immediately transferred and sold to Amari.
Third, the Ponce doctrine has been superseded by the provisions of the
Government Auditing Code, which has been bolstered by the provisions of the
Local Government Code, which states that any sale of the public land must be
made only thru a public bidding. There being no public bidding in the subject
sale of land; the amended JVA is a negotiated contract in patent violation of
such law.
Fourth, the Ponce doctrine which involved the validity to reclaim
foreshore lands based on RA 1899 (authorizing municipalities and chartered
cities to reclaim foreshore lands) is not applicable in the instant case because
what is involved in the case at bar are submerged lands.
Fifth, in the Ponce case, the City of Cebu was sanctioned to reclaim
foreshore lands under RA 1899 for it is a qualified end user government agency;
therefore, can sell patrimonial property to private parties. But PEA is not an
end user agency with respect to reclaimed lands under the amended JVA for
reclaimed lands are public and therefore are inalienable.
Finally, the Ponce case was decided under the 1935 Constitution (196566), which allowed private corporations to acquire alienable lands of the public
domain. The case at bar falls within the ambit of the 1987 Constitution which
prohibits corporations from acquiring alienable lands of the public domain.
Ergo, the submerged lands, being inalienable and outside the commerce
of man, could not be the subject of the commercial transactions specified in the
Amended JVA. Hence, the contract between Amari and the PEA is void.
REQUISITE OF CONTRACT DETERMINATE OBJECT
MELLIZA VS. CITY OF ILOILO
23 SCRA 477
FACTS:
Juliana Melliza during her lifetime owned three parcels of residential land
in Iloilo City. On 1932, she donated to the then Municipality of Iloilo a certain
lot to serve as site for the municipal hall. The donation was however revoked
by the parties for the reason that area was found inadequate to meet the
requirements of the development plan. Subsequently the said lot was divided
into several divisions.
Sometime in 1938, Juliana Melliza sold her remaining interest on the said
lot to Remedios San Villanueva. Remedios in turn transferred the rights to said
portion of land to Pio Sian Melliza. The transfer Certificate of title in Mellizas
name bears on annotation stating that a portion of said lot belongs to the
Municipality of Iloilo.
Later the City of Iloilo, which succeeds to the Municipality of Iloilo,
donated the city hall sit to the University of the Philippines, Iloilo Branch. On
1952, the University of the Philippines enclosed the site donated with a wire
fence.
Pio Sian Melliza then filed action in the Court of First Instance of Iloilo
against Iloilo City and the University of the Philippines for recovery of the
parcel of land or of its value specifically LOT 1214-B.
Petitioner contends that LOT 1214-B was not included in those lots which
were sold by Juliana Melliza to the then municipality of Iloilo and to say he
would render the Deed of Sale invalid because the law requires as an essential
element of sale, determinate object.
ISSUE:
Whether or not IF Lot 1214 B is included in the Deed of Sale, it would
render the contract invalid because the object would allegedly not be
determinate as required by law.
RULING:
NO. The requirement of the law specifically Article 1460 of the Civil
Code, that the sale must have for its object a determinate thing, is fulfilled as
long as, at the time the contract is entered into, the object of the sale is cable of
being determinate without the necessity of a new or further agreement between
the parties.
The specific mention of some of the lots plus the statement that the lots
object of the sale are the ones needed for city hall site sufficient provides a
basis, as of the time, of the execution of the contract, for rendering determinate
said lots without the need of a new further agreement of the parties.
The spouses Aurelio and Esperanza Balite were the owners of a parcel of
land at Catarman, Northern Samar. When Aurelio died intestate, his wife
Esperanza and their children inherited the subject property and became coowners thereof. In the meantime, Esperanza became ill and was in dire need of
money fro her hospital expenses. She, through her daughter, Cristeta, offered
to sell to Rodrigo Lim, her undivided share for the price of P1,000,000.00.
Esperaza and Rodrigo agreed that under the Deed of Absolute Sale, it will be
made to appear that the purchase price of the property would be P150,000.00
although the actual price agreed upon by them for the property was
P1,000,000.00. On April 16, 1996, Esperanza executed a Deed of Absolute Sale
in favor of Rodrigo. They also executed on the same day a Joint Affidavit under
which they declared that the real price of the property was P1,000,000.00
payable to Esperanza by installments. Only Esperanza and two of her children
Antonio and Cristeta knew about the said transaction. When the rest of the
children knew of the sale, they wrote to the Register of Deeds saying that their
mother did not inform them of the sale of a portion of the said property nor did
they give consent thereto. Nonetheless, Rodrigo made partial payments to
Antonio who is authorized by his mother through a Special Power of Attorney.
On October 23, 1996, Esperanza signed a letter addressed to Rodrigo
informing the latter that her children did not agree to the sale of the property
to him and that she was withdrawing all her commitments until the validity of
the sale is finally resolved. On October 31, 1996, Esperanza died intestate and
was survived by her children. Meanwhile, Rodrigo caused to be published in
the Samar Reporter the Deed of Absolute Sale.
On June 27, 1997, petitioners filed a complaint against Rodrigo with the
Regional Trial Court for the annulment of sale, quieting of title, injunction and
damages. Subsequently, Rodrigo secured a loan from the Rizal Commercial
Banking Corporation in the amount of P2,000,000.00 and executed a Real
Estate Mortgage over the property as security thereof. On motion of the
petitioners, they were granted leave to file an amended complaint impleading
the bank as additional party defendant. On March 30, 1998, the court issued an
order rejecting the amended complaint of the petitioners. Likewise, the trial
court dismissed the complaint. It held that pursuant to Article 493 of the Civil
Code, a co-owner is not invalidated by the absence of the consent of the other
co-owners. Hence, the sale by Esperanza of the property was valid; the excess
from her undivided share should be taken from the undivided shares of Cristeta
and Antonio, who expressly agreed to and benefit from the sale. The Court of
Appeals likewise held that the sale was valid and binding insofar as Esperanza
Balites undivided share of the property was concerned. It affirmed the trial
courts ruling that the lack of consent of the co-owners did not nullify the sale.
ISSUE:
Whether or not the Deed of Absolute Sale is null and void on the ground
that it is falsified; it has an unlawful cause; and it is contrary to law and/or
public policy.
RULING:
No. The contract is an example of a simulated contract. Article 1345 of
the Civil Code provides that the simulation of a contract may either be absolute
or relative. In absolute simulation, there is a colorable contract but without any
substance, because the parties have no intention to be bound by it. An
absolutely simulated contract is void, and the parties may recover from each
other what they may have given under the contract. On the other hand, if the
parties state a false cause is relatively simulated. Here, the parties real
agreement binds them. In the present case, the parties intended to be bound by
the Contract, even if it did not reflect the actual purchase price of the property.
The letter of Esperanza to respondent and petitioners admission that there was
partial payment made on the basis of the Absolute Sale reveals that the parties
intended the agreement to produce legal effect.
Since the Deed of Absolute Sale was merely relatively simulated, it
remains valid and enforceable. All the essential requisites prescribed by law
for the validity and perfection of contracts is present. However, the parties
shall be bound by their real agreement for a consideration of P1,000,000 as
reflected by their Joint Affidavit.
The petition is DENIED and the assailed decision AFFIRMED.
that he had a daily rice mill output of 400 cavans of palay and warehouse
storage capacity of 150,000 cavans of palay. His application, although
prepared by his nephew-lawyer, Rafael Suntay, was disapproved, because
at that time he was tied up with several unpaid loans.
For purposes of circumvention, he had thought of allowing Rafael
to make the application for him. Rafael prepared an absolute deed of
sale whereby Federico, for and in consideration of P20,000.00 conveyed
to Rafael said parcel of land with all its existing structures. Said deed
was notarized as Document No. 57 and recorded on Page 13 of Book 1,
Series of 1962, of the Notarial Register of Atty. Herminio V. Flores. Less
than three months after this conveyance, a counter sale was prepared
and signed by Rafael who also caused its delivery to Federico. Through
this counter conveyance, the same parcel of land with all its existing
structures was sold by Rafael back to Federico for the same
consideration of P20,000.00. Although on its face, this second deed
appears to have been notarized as Document No. 56 and recorded on
Page 15 of Book 1, Series of 1962, of the notarial register of Atty.
Herminio V. Flores, an examination thereof will show that, recorded as
Document No. 56 on Page 13, is not the said deed of sale but a certain
"real estate mortgage on a parcel of land with TCT No. 16157 to secure a
loan of P3,500.00 in favor of the Hagonoy Rural Bank."
Nowhere on page 13 of the same notarial register could be found
any entry pertaining to Rafael's deed of sale.
Testifying on this
irregularity, Atty. Flores admitted that he failed to submit to the Clerk of
Court a copy of the second deed. Neither was he able to enter the same
in his notarial register. Even Federico himself alleged in his Complaint
that, when Rafael delivered the second deed to him, it was neither dated
nor notarized.
Upon the execution and registration of the first deed, Certificate of
Title No. 0-2015 in the name of Federico was cancelled and in lieu
thereof, TCT No. T-36714 was issued in the name of Rafael. Even after
the execution of the deed, Federico remained in possession of the
property sold in concept of owner. Significantly, notwithstanding the fact
that Rafael became the titled owner of said land and rice mill, he never
made any attempt to take possession thereof at any time, while Federico
continued to exercise rights of absolute ownership over the property.
In a letter, dated August 14, 1969, Federico, through his new
counsel, Agrava & Agrava, requested that Rafael deliver his copy of TCT
No. T-36714 so that Federico could have the counter deed of sale in his
favor registered in his name. The request having been obviously turned
down, Agrava & Agrava filed a petition with the Court of First Instance of
Bulacan asking Rafael to surrender his owner's duplicate certificate of
TCT No. T-36714. In opposition thereto, Rafael chronicled the
discrepancy in the notarization of the second deed of sale upon which
said petition was premised and ultimately concluded that said deed was
a counterfeit or "at least not a public document which is sufficient to
transfer real rights according to law." On September 8, 1969, Agrava &
Agrava filed a motion to withdraw said petition, and, on September 13,
1969, the Court granted the same.
On July 8, 1970, Federico filed a complaint for reconveyance and
damages against Rafael. In his answer, Rafael scoffed at the attack
against the validity and genuineness of the sale to him of Federico's land
and rice mill. Rafael insisted that said property was "absolutely sold and
conveyed . . . for a consideration of P20,000.00, Philippine currency, and
for other valuable consideration".
While the trial court upheld the validity and genuineness of the
deed of sale executed by Federico in favor of Rafael, which deed is
referred to above as Exhibit A, it ruled that the counter-deed, referred to
as Exhibit B, executed by Rafael in favor of Federico, was simulated and
without consideration, hence, null and void ab initio.
Moreover, while the trial court adjudged Rafael as the owner of the
property in dispute, it did not go to the extent of ordering Federico to
pay back rentals for the use of the property as the court made the
evidential finding that Rafael simply allowed his uncle to have continuous
possession of the property because or their understanding that Federico
would subsequently repurchase the same.
From the aforecited decision of the trial court, both Federico and
Rafael appealed. The Court of Appeals rendered judgment affirming the
trial court's decision, with a modification that Federico was ordered to
surrender the possession of the disputed property to Rafael. Counsel of
Federico filed a motion for reconsideration of the aforecited decision.
While the motion was pending resolution, Atty. Ricardo M. Fojas entered
his appearance in behalf of the heirs of Rafael who had passed away on
November 23, 1988. Atty. Fojas prayed that said heirs be substituted as
defendants-appellants in the case. The prayer for substitution was duly
noted by the court in a resolution dated April 6, 1993. Thereafter, Atty.
GRATUITOUS CAUSE
1.
2.
FACTS:
The case began upon complaint filed by petitioner-appellant against the
widow and heirs of the late Salvador P. Lopez to recover a parcel of 51.84
hectares of land, situated in Barrio Bogac-Linot, of the municipality of Mati,
Province of Davao. Plaintiff averred to be its legal owner, pursuant to a deed of
donation of said land, executed in her favor by the late owner, Salvador P.
Lopez, on 18 May 1943. The defense interposed was that the donation was null
and void for having an illicit causa or consideration, which was plaintiff's
entering into marital relations with Salvador P. Lopez, a married man; and that
the property had been adjudicated to the appellees as heirs of Lopez by the
Court of First Instance, since 1949.
The Court of Appeals found that the deed of donation was prepared by
the Justice of the Peace of Mati, Davao, before whom it was signed and ratified
on the date aforesaid. At the time, appellant Liguez was a minor, only 16 years
of age. Salvador donated it to Liguez out of his love and affection to her. The
Court of Appeals found that when the donation was made, Lopez had been
living with the parents of appellant for barely a month; that the donation was
made in view of the desire of Salvador P. Lopez, a man of mature years to have
sexual relations with appellant Conchita Liguez; that Lopez had confessed to his
love for appellant to the instrumental witnesses, with the remark that her
parents would not allow Lopez to live with her unless he first donated the land
in question; that after the donation, Conchita Liguez and Salvador P. Lopez lived
together in the house that was built upon the latter's orders, until Lopez was
killed on July 1st, 1943, by some guerrillas who believed him to be proJapanese.
RULING:
Under Article 1274, liberality of the donor is deemed causa only in those
contracts that are of "pure" beneficence; that is to say, contracts designed
solely and exclusively to procure the welfare of the beneficiary, without any
intent of producing any satisfaction for the donor; contracts, in other words, in
which the idea of self-interest is totally absent on the part of the transferor.
It was also ascertained by the Court of Appeals that the donated land
originally belonged to the conjugal partnership of Salvador P. Lopez and his
wife, Maria Ngo; that the latter had met and berated Conchita for living
maritally with her husband, sometime during June of 1943; that the widow and
children of Lopez were in possession of the land and made improvements
thereon; that the land was assessed in the tax rolls first in the name of Lopez
and later in that of his widow; and that the need of donation was never
recorded.
Upon these facts, the Court of Appeals held that the deed of donation was
inoperative, and null and void (1) because the husband, Lopez, had no right to
donate conjugal property to the plaintiff appellant; and (2) because the donation
was tainted with illegal causa or consideration, of which donor and donee were
participants.
ISSUE:
Whether or not the deed of donation made by Lopez in favor of Liguez
was valid.
For this very reason, the same Article 1274 provides that in
remuneratory contracts, the consideration is the service or benefit for which
the remuneration is given; causa is not liberality in these cases because the
contract or conveyance is not made out of pure beneficence, but "solvendi
animo." In consonance with this view, the Court in Philippine Long Distance
Co. vs. Jeturian* G. R. L-7756, July 30, 1955, like the Supreme Court of Spain in
its decision of 16 Feb. 1899, has ruled that bonuses granted to employees to
excite their zeal and efficiency, with consequent benefit for the employer, do not
constitute donation having liberality for a consideration.
Here the facts as found by the Court of Appeals, which the Supreme
Court could not vary, demonstrate that in making the donation in question, the
late Salvador P. Lopez was not moved exclusively by the desire to benefit
appellant Conchita Liguez, but also to secure her cohabiting with him, so that
he could gratify his sexual impulses. This is clear from the confession of Lopez
to the witnesses Rodriguez and Ragay, that he was in love with appellant, but
her parents would not agree unless he donated the land in question to her.
Actually, therefore, the donation was but one part of an onerous transaction (at
Thus
to prejudice the share of the widow Maria Ngo in the conjugal partnership with
Salvador P. Lopez or the legitimes of the forced heirs of the latter.
GRATUITOUS CAUSE
PHILIPPINE BANKING CORPORATION, representing the estate of
JUSTINA SANTOS Y CANON FAUSTINO, deceased, plaintiff-appellant,
VS. LUI SHE, in her own behalf and as administratrix of the
intestate of Wong Heng, deceased, defendant-appellant
21 SCRA 52
FACTS:
Justina Santos and her sister Lorenza were the owners in common of a
piece of land in Manila. In it are two residential houses. The sisters lived in one
of the houses, while Wong Heng, a Chinese, lived with his family in the
restaurant. Wong had been a long time lessee of a portion of the property,
paying monthly rentals. On September 22, 1957, Justina became the owner of
the entire property as her sister died with no other heir.
The situation of the children and forced heirs of Lopez approximates that
of the widow. As privies of their parent, they are barred from invoking the
illegality of the donation. But their right to a legitime out of his estate is not
thereby affected, since the legitime is granted them by the law itself, over and
above the wishes of the deceased. Hence, the forced heirs are entitled to have
the donation set aside in so far as inofficious: i.e., in excess of the portion of
free disposal , computed as provided in Articles 818 and 819, and bearing in
mind that "collationable gifts" under Article 818 should include gifts made not
only in favor of the forced heirs, but even those made in favor of strangers, as
decided by the Supreme Court of Spain in its decisions of 4 May 1899 and 16
June 1902. So that in computing the legitimes, the value of the property
donated to herein appellant, Conchita Liguez, should be considered part of the
donor's estate. Only the court of origin has the requisite date to determine
whether the donation is inofficious or not. With regard to the improvements in
the land in question, the same should be governed by the rules of accession and
possession in good faith, it being undisputed that the widow and heirs of Lopez
were unaware of the donation in favor of the appellant when the improvements
were made.
On November 18, the action was filed in the CFI of Manila. The
complaint alleged that Wong obtained the contracts through fraud. Wong
denied having taken advantage of her trust in order to secure the execution of
the contracts on question. He insisted that the various contracts were freely
and voluntarily entered into by the parties.
The lower court declared all the contracts null and void with the
exception of the first, which is the contract of lease of November 15, 1957.
From this decision, both parties appealed directly to the Court. After the case
were submitted for decision, both parties died, Wong on 1962, and Justina on
1964. Wong as substituted by his wife Lui She while Justina by the Philippine
Banking Corporation.
ISSUE:
Whether or not the contracts entered into by the parties are void being in
violation of the Constitutional prohibition on transfer of lands to aliens or those
who are not citizens of the Philippines.
RULING:
YES. The Court held the lease and the rest of the contracts were
obtained with the consent of Justina freely given and voluntarily. However the
contacts are not necessarily valid on the ground that it circumvents the
Constitutional prohibition against the transfer of lands to aliens. The illicit
purpose then becomes the illegal causa, rendering the contracts void.
It does not follow from what has been said that because the parties are in
pari delicto they will be left where they are, without relief. For one thing, the
original parties who were guilty of violation of fundamental charter have died
and have since substituted by their administrators to whom it would e unjust to
impute their guilt. For another thing, Article 1416 of the Civil Code provides an
exception to the pari de licto, that when the agreement is not illegal per se but
is merely prohibited, and the prohibition of the law is designed for the
protection of the plaintiff, he may recover what he has paid or delivered.
FORM AS ESSENTIAL ELEMENT OF CONTRACTS
SONIA F. LONDRES, ARMANDO V. FUENTES, CHI-CHITA FUENTES
QUINTIA, ROBERTO V. FUENTES, LEOPOLDO V. FUENTES, OSCAR V.
FUENTES and MARILOU FUENTES ESPLANA petitioners, vs. THE
COURT OF APPEALS, THE DEPARTMENT OF PUBLIC WORKS AND
HIGHWAYS, THE DEPARTMENT OF TRANSPORTATION AND
Private respondents maintained that they are the legal owners of Lots
1333 and 1320. Julian purchased the lots from Filomena in good faith and for a
valid consideration. Private respondents explained that Julian was deaf and
dumb and as such, was placed in a disadvantageous position compared to
Filomena. Julian had to rely on the representation of other persons in his
business transactions. After the sale, Julian and Consolacion took possession of
the lots. Up to now, the spouses successors-in-interest are in possession of the
lots in the concept owners. Private respondents claimed that the alteration in
the Absolute Sale was made by Filomena to make it conform to the description
of the lot in the Absolute Sale. Private respondents filed a counterclaim with
damages.
The cross-claim of petitioners against public respondents was for the
recovery of just compensation. Petitioners claimed that during the lifetime of
Paulina, public respondents took a 3,200-square meter portion of Lot 1320. The
land was used as part of the Arnaldo Boulevard in Roxas City without any
payment of just compensation. In 1988, public respondents also appropriated a
1,786-square meter portion of Lot 1333 as a vehicular parking area for the
Roxas City Airport. Sonia, one of the petitioners, executed a deed of absolute
sale in favor of the Republic of the Philippines over this portion of Lot 1333.
According to petitioners, the vendee agreed to pay petitioners P214,320.00.
Despite demands, the vendee failed to pay the stipulated amount.
The trial court issued its decision upholding the validity of the Absolute
Sale. This was affirmed by the Court of Appeals.
ISSUE
Whether or not the notarized copy should prevail.
RULING
Among others, petitioners harp on the fact that the notarized and
registered copy of the Absolute Sale should have, been correspondingly
corrected. Petitioners believe that the notarized and archived copy should
prevail. We disagree. A contract of sale is perfected at the moment there is a
meeting of the minds upon the thing which is the object of the contract and
upon the price. Being consensual, a contract of sale has the force of law
between the contracting parties and they are expected to abide in good faith
with their respective contractual commitments. Article 1358 of the Civil Code,
which requires certain contracts to be embodied in a public instrument, is only
for convenience, and registration of the instrument is needed only to adversely
affect third parties. Formal requirements are, therefore, for the purpose of
CLARA M. BALATBAT
VS. COURT OF APPEALS and Spouses JOSE REPUYAN and AURORA
REPUYAN
G.R. No. 109410
August 28, 1996
261 SCRA 128
FACTS:
The lot in question covered by Transfer Certificate of Title No. 51330 was
acquired by plaintiff Aurelio Roque and Maria Mesina during their conjugal
union and the house constructed thereon was likewise built during their marital
union. Out of their union, plaintiff and Maria Mesina had four children. When
Maria Mesina died on August 28, 1966, the only conjugal properties left are the
house and lot above stated of which plaintiff herein, as the legal spouse, is
entitled to one-half share pro-indiviso thereof. With respect to the one-half
share pro-indiviso now forming the estate of Maria Mesina, plaintiff and the
four children, the defendants here, are each entitled to one-fifth (1/5) share proindiviso.
Aurelio Roque then entered into a contract of Absolute Sale with the
spouses Aurora and Jose Repuyan. However, on August 20, 1980, Aurelio filed a
complaint for Rescission of Contract against Spouses Repuyan for the latters
failure to pay the balance of the purchase price. A deed of absolute sale was
The lower court then rendered judgment in favor of the Spouses Repuyan
and declared the Deed of Absolute Sale as valid. On appeal by petitioner
Balatbat, the Court of Appeals affirmed the lower courts decision.
ISSUE:
Whether or not the delivery of the owners certificate of title to spouses
Repuyan by Aurelio Roque is for convenience or for validity or enforceability.
RULING:
The Supreme Court found that the sale between Aurelio and the Spouses
Repuyan is not merely for the reason that there was no delivery of the subject
property and that consideration/price was not fully paid but the sale as
consummated, hence, valid and enforceable.
The non-delivery of the possession of the subject property to the private
respondent, suffice it to say that ownership of the thing sold is acquired only
from the time of delivery thereof, either actual or constructive. Article 1498 of
the Civil Code provides that when the sale is made through a public instrument,
the execution thereof shall be equivalent to the delivery of the thing which is
the object of the contract, if from the deed the contrary does not appear or
cannot be inferred. The execution of the public instrument, without actual
delivery of the thing, transfers the ownership from the vendor to the vendee,
who may thereafter exercise the rights of an owner over the same. In the
instant case, vendor Roque delivered the owner's certificate of title to herein
private respondent. It is not necessary that vendee be physically present at
every square inch of the land bought by him, possession of the public
instrument of the land is sufficient to accord him the rights of ownership. Thus,
delivery of a parcel of land may be done by placing the vendee in control and
possession of the land (real) or by embodying the sale in a public instrument
(constructive). The provision of Article 1358 on the necessity of a public
document is only for convenience, not for validity or enforceability. It is not a
requirement for the validity of a contract of sale of a parcel of land that this be
embodied in a public instrument.
Upon learning of the acquisition of his lot, Teves formally asked the
corporation to turn over to him possession thereof or the corresponding rentals.
He stated in his demand letters that he merely allowed UPSUMCO to use his
property until its corporate dissolution; and that it was not mortgaged by
UPSUMCO with the PNB and, therefore, not included among the foreclosed
properties acquired by URSUMCO.
URSUMCO refused to heed Teves' demand, claiming that it acquired the
right to occupy the property from UPSUMCO which purchased it from Andres
Abanto; and that it was merely placed in the name of Angel Teves, as shown by
the "Deed of Transfer and Waiver of Rights and Possession" dated November
26, 1987. Under this document, UPSUMCO transferred to URSUMCO its
application for agricultural and foreshore lease. The same document partly
states that the lands subject of the foreshore and agricultural lease applications
are bounded on the north by the "titled property of Andres Abanto bought by
the transferor (UPSUMCO) but placed in the name of Angel Teves". URSUMCO
further claimed that it was UPSUMCO, not Teves, which has been paying the
corresponding realty taxes.
Consequently, Teves filed a complaint for recovery of possession of real
property with damages against URSUMCO. However, on September 4, 1992,
Teves died and was substituted by his heirs. On April 6, 1994, the RTC held that
URSUMCO has no personality to question the validity of the sale of the property
between the heirs of Andres Abanto and Angel Teves since it is not a party
thereto; that Teves' failure to have the sale registered with the Registry of
Deeds would not vitiate his right of ownership, unless a third party has
acquired the land in good faith and for value and has registered the subsequent
deed; that the list of properties acquired by URSUMCO from the PNB does not
include the disputed lot and, therefore, was not among those conveyed by
UPSUMCO to URSUMCO.
On appeal by URSUMCO, the Court of Appeals affirmed the RTC
decision, holding that the transaction between Angel Teves and Andres Abanto's
heirs is a contract of sale, not one to sell, because ownership was immediately
conveyed to the purchaser upon payment of P115,000.00. On October 29, 1996,
URSUMCO filed a motion for reconsideration but was denied by the Appellate
Court. Hence, the instant petition for review on certiorari.
ISSUE:
Whether or not the respondents have established a cause of action
against petitioner.
RULING:
No. Petitioner URSUMCO contends that respondents have no cause of
action because the "Extrajudicial Settlement of the Estate of the Deceased
Andres Abanto and Simultaneous Sale" is merely a promise to sell and not an
absolute deed of sale, hence, did not transfer ownership of the disputed lot to
Angel Teves. Assuming that the document is a contract of sale, the same is void
for lack of consideration because the total price of P115,000.00 does not
specifically refer to the registered lot making the price uncertain.
Furthermore, the transaction, being unregistered, does not bind third parties.
Petitioner's contentions lack merit. As held by the RTC and the Court of
Appeals, the transaction is not merely a contract to sell but a contract of sale.
In a contract of sale, title to the property passes to the vendee upon delivery of
the thing sold; while in a contract to sell, ownership is, by agreement, reserved
in the vendor and is not to pass to the vendee until full payment of the purchase
price. In the case at bar, the subject contract, duly notarized, provides that the
Abanto heirs sold to Teves the lot covered by TCT No. H-37. There is no
showing that the Abanto heirs merely promised to sell the said lot to Teves.
The absolute ownership over the registered land was indeed transferred
to Teves is further shown by his acts subsequent to the execution of the
contract. As found by the trial court, it was Teves, not Andres Abanto's heirs,
who allowed UPSUMCO to construct pier facilities and guesthouse on the land.
When the property was erroneously included among UPSUMCO's properties
that were transferred to petitioner URSUMCO, it was Teves, not the heirs of
Andres Abanto, who informed petitioner that he owns the same and negotiated
for an arrangement regarding its use.
Teves even furnished petitioner
documents and letters showing his ownership of the lot, such as a copy of the
"Extrajudicial Settlement of the Estate of the Deceased Andres Abanto and
Simultaneous Sale" and a certified true copy of TCT No. H-37 covering the
disputed lot. Indeed, the trial court and the Court of Appeals correctly ruled
that Teves purchased the lot from the Abanto heirs.
That the contract of sale was not registered does not affect its validity.
Being consensual in nature, it is binding between the parties, the Abanto heirs
and Teves. Article 1358 of the New Civil Code, which requires the embodiment
of certain contracts in a public instrument, is only for convenience, and the
registration of the instrument would merely affect third persons. Formalities
intended for greater efficacy or convenience or to bind third persons, if not
done, would not adversely affect the validity or enforceability of the contract
between the contracting parties themselves. Thus, by virtue of the valid sale,
Angel Teves stepped into the shoes of the heirs of Andres Abanto and acquired
all their rights to the property.
SARMING VS. DY
383 SCRA 131
JUNE 6, 2002
FACTS:
Petitioners are the succesors-in-interest of original defendant Silveria
Flores, while respondents Cresencio Dy and Ludivina Dy-Chan are the
succesors-in-interest of the original plaintiff Alejandra Delfino, the buyer of one
of the lots subject of this case. They were joined in this petition by the
successors-in-interest of Isabel, Juan, Hilario, Ruperto, Tomasa, and Luisa and
Trinidad themselves, all surnamed Flores, who were also the original plaintiffs
in the lower court. They are the descendants of Venancio and Jose, the brothers
of the original defendant Silveria Flores.
A controversy arose regarding the sale of Lot 4163 which was half-owned
by the original defendant, Silveria Flores, although it was solely registered
under her name. The other half was originally owned by Silverias brother,
Jose. On January 1956, the heirs of Jose entered into a contract with plaintiff
Alejandra Delfino, for the sale of their one-half share of Lot 4163 after offering
the same to their co-owner, Silveria, who declined for lack of money. Silveria
did not object to the sale of said portion to Alejandra.
took
Two years later, when Alejandra Delfino purchased the adjoinin portion of
the lot she had been occupying, she discovered that what was designated in the
deed, Lot 5734, was the wrong lot. Thus, Alejandra and the vendors filed for
the feformation of the Deed of Sale.
ISSUE:
Whether or not reformation is proper in this case.
RULING:
YES. Reformation is that remedy in equity by means of which a written
instrument is made or construed so as to express or inform to the real intention
of the parties.
An action for reformation of instrument under this provision of law may
prosper only upon the concurrence of the following requisites: (1) there must
have been a meeting of the minds of the parties to the contract; (2) the
instrument does not express the true intention of the parties; and (3) the failure
of the instrument to express the true intention of the parties is due to mistake,
fraud, inequitable conduct or accident.
All of these requesites are present in this case. There was a meeting of
the minds between the parties to the contract but the deed did not express the
true intention ot the parties due to the designation of the lot subject of the
deed. There is no dispute as to the intention of the parties to sell the land to
Alejandra Delfino but there was a mistake as to the designation of the lot
intended to be sold as stated in the Settlement of Estate and Sale.
REFORMATION OF INSTRUMENTS: WHEN PROHIBITED (Art. 13661367, CC)
CEBU CONTRACTORS CONSORTIUM CO., petitioner,
VS. COURT OF APPEALS and
MLFCs own evidence discloses that it offers two types of financing lease:
a direct lease and a sale- lease back. The client sells to MLFC equipment that it
owns, which will be leased back to him. The transaction between CCC and
MLFC involved the second type of financing lease.CCC argues that the sale and
lease back scheme is nothing more than an equitable mortgage and
consequently, asks for its reformation. The right of action for reformation
accrued from the date of execution of the contract of lease in 1976. This was
properly exercised by CCC when it filed its answer with counterclaim to
MLFCs complaint in 1978 and asked for the reformation of the lease contract.
Wherefore, the decision appealed from is hereby affirmed.
ISSUE:
Whether or not private respondent is entitled to the refund of the
advance payment representing his deposit for the charter of the ship provided
by petitioner.
RULING:
Yes. Private respondent is entitled to the refund of the advance payment
it made to petitioner.
There was ambiguity in the interpretation of the contract provisions as to
the date of the loading of the ship. Ambiguities in a contract are interpreted
strictly, albeit not unreasonably, against the drafter thereof when justified in
light of the operative facts and surrounding circumstances. In this case,
ambiguity must be construed strictly against ADR which drafted and caused the
inclusion of the ambiguous provisions.
The charter agreement explicitly states that February 5, 1988 is the
intended date when the ship is expected ready to load while February 16, 1988
is merely the canceling date. Considering that the subject contract contains the
foregoing express provisions, the parties have no other recourse but to apply
the literal meaning of the stipulations. The cardinal rule is that when the terms
of the contract are clear, leaving no doubt as to the intention of the parties, the
literal meaning of its stipulations is controlling.
Pursuant to the provision of Art 1191 of the Civil Code, the power to
rescind obligations is implied in reciprocal ones in case one of the obligors
should not comply with what is incumbent upon him, and the injured party may
rescind the obligation, with payment of damages. In this case the private
respondent is entitled to the return of his down payment, subject to a legal
interest of 6 percent per annum, and to the payment of damages.
INTERPRETATION OF CONTRACTS: IN CASE OF DOUBT
1.
2.
3.
4.
5.
6.
QUINTEY V.TIBONG
G.R. No. 166704, December 20, 2006
FACTS:
Agrifina Aquintey filed a complaint for sum of money and damages
against the respondents, spouses Felicidad and Rico Tibong. Agrifina
alleged that Felicidad had secured loans from her on several occasions,
at monthly interest rates. Despite demands, the spouses Tibong failed to
Partial Partition, including the property subject of this case. As the absolute
owner thereof then, Arnel Cruz had the right to enjoy and dispose of the
property, as well as the right to constitute a real estate mortgage over the same
without securing the consent of the petitioners.
In their complaint before the RTC, petitioners asserted that they coowned the properties with Arnel Cruz, as evidenced by the Memorandum of
Agreement. Hence, they argued that the mortgage was void since they did not
consent to it.
ISSUE:
Whether or not the real estate mortgage on the property then covered by
TCT No. 495225 is valid and whether the mortgaged property was the exclusive
property of Arnel Cruz when it was mortgaged.
RULING:
A reading of the provisions of the Deed of Partition, no other meaning
can be gathered other than that petitioners and Arnel Cruz had put an end to
the co-ownership. In the aforesaid deed, the shares of petitioners and Arnel
Cruzs in the mass of co-owned properties were concretely determined and
distributed to each of them. In particular, to Arnel Cruz was assigned the
disputed property. There is nothing from the words of said deed which
expressly or impliedly stated that petitioners and Arnel Cruz intended to remain
as co-owners with respect to the disputed property or to any of the properties
for that matter.
Petitioners do not question the validity or efficacy of the Deed of Partial
Partition. In fact, they admitted its existence in their pleadings and submitted it
as a part of their evidence. Thus, the deed is accorded its legal dire effect.
Since a partition legally made confers upon each heir their exclusive ownership
of the property adjudicated to him, it follows that Arnel Cruz acquired absolute
ownership over the specific parcels of land assigned to him in the Deed of
The real estate mortgage on the disputed property is valid and does not
contravene the agreement of the parties.
INTERPRETATION OF CONTRACTS: IN CASE OF DOUBT
GONZALES VS. COURT OF APPEALS
354 SCRA 8
FACTS:
Private respondents, Mr. and Mrs. Gabriel Caballero, are the registered
owneres of two parcels of land situated in Cubao, Quezon City described in
Transfer Certificate fo Title No. 247309 (Lot 1) and TCT No. 247310 (Lot 2).
The spouses residence stood in Lot 2.
RULING:
YES. Principally, the issue here is whether the contract of sale between
the parties involved Lot 1 and 2 as claimed by petitioner or only Lot 1 as private
respondents contend. In a case where we have to judge conflicting claims on
the intent of the parties, as in this instance, judicial determination of the
parties intention is mandated. Contemporaneous and subsequent acts of the
parties material to the case are to be considered.
Petitioner admits he himself caused the preparation of the deed of sale
presented before the lower court. Yet he could not explain why I referred only
to the sale of Lot 1 and not to the two lots, if the intention of the parties was
really to cover the sale of two lots. As the courts a quo observed, even if it were
true that two lots were mortgaged and were about to be foreclosed, the ads
private respondents placed in the Bulletin Today offered only Lot 1 and was
strong indication that they did not intend to sell Lot 2. The 501 sq.m. lot was
offered for P1,150.00 per sq.m. It alone would have fetched P576,150.00. The
loan still to be paid the bank was only P375,000.00 which was what petitioner
actually paid the bank. As the trial court observed, it was incomprehensible
why the spouses would part with two lots, one with a 2-storey house, and both
situated at a prime commercial district for less than the price of one lot.
Contrary to what petitioner would make us believe, the sale of Lot 1 valued at
P576,150.00 for P470,000.00, with petitioner assuming the bank loan of
P375,000.00 as well as payment of the capital gains tax, appears more
plausible.
respondent willingly entered into the Kasunduan provided that the full payment
of the purchase price will be made upon delivery to him of the title.
Respondent took possession of the property subject of the Kasunduan
and made various payments to petitioiners amountiong to P58500.00. However
upon failure of petitionere to deliver to him a separate title to the property in
the name of Julio Garcia he refused to make further payments, prompting
petitioner to file a civil action before the RTC for a rescission of the Kasunduan,
return by respondent to petitioner of the possession of the subject parcel of
land, and payment by respondent of damages in favour of petitioners.
ISSUE
Whether or not the petitioner may rescind the Kasunduan pursuant to
Article 1191 of the Civil Code for the failure of respondent to give full payment
of the balance of the purchase price.
RULING:
NO, the right of the parties are governed by the terms ands the nature of
the contract they entered. Hence, although the nature of the Kasunduan was
never places in dispute by both parties, it is necessary to ascertain whether the
Kasunduan is a contract to sell or a contract of Sale. Although both parties
have consistency referred to the Kasunduan as a contract to Sell, a careful
reading of the provision of the Kasunduan reveals that it is a contract of Sale. A
deed of sale is absolute in nature in the absence of an any stipulation reserving
title to the vendor until full payment of the purchase price. The delivery of a
separation title in the name of Julio Garcia was a condition imposed on
respondents obligation to pay the balance of the purchase price. It was not a
condition imposed in the perfection of the contract of Sale.
The rescission will not prosper since the power to rescind is only given to
the injured party. The injured party is the party who has faithfully fulfilled his
obligation. In the case at bar, the petitioners were not ready, willing and able to
comply with their obligation to deliver a separate title in the name of Julio
Garcia to respondent therefore, thy are not in a position to ask for rescission.
Failure to comply with a condition imposed on the performance of an obligation
gives the other party the option either to refuse to proceed with the sale or to
waive the condition under Art 1545 of the civil code. Hence it is the respondent
who has the option.
DOCTRINE OF COMPLEMENTARY CONTRACTS CONSTRUED
TOGETHER
1.
2.
3.
together
OF
COMPLEMENTARY
CONTRACTS
CONSTRUED
OF
COMPLEMENTARY
CONTRACTS
CONSTRUED
FACTS:
Carmelo & Bauermann, Inc. (Carmelo) used to own a parcel of land,
together with two two-storey buildings constructed thereon. On June 1, 1967,
Carmelo entered into a lease with Mayfair Theater, Inc. (Mayfair) for a period of
20 years. The lease covered a portion of the second floor and mezzanine. Two
(2) years later, Mayfair entered into a second lease with Carmelo for the lease
of another property, a part of the second floor and two spaces on the ground
floor. The lease was also for a period of twenty (20) years. Both leases
contained a provision granting Mayfair a right of first refusal to purchase the
said properties. However, on July 30, 1978, within the 20-year-lease term,
Carmelo sold the subject properties to Equatorial Realty Development, Inc.
(Equatorial) for the sum of P11.3M without their first being offered to Mayfair.
As a result, Mayfair filed a complaint for specific performance and
damages. After trial, the court ruled in favor of Equatorial. On appeal, the
Court of Appeals (CA) reversed and set aside the judgment of the lower court.
On November 21, 1996, the Supreme Court denied Equatorials petition for
review and declared the contract between Carmelo and Equatorial rescinded.
The decision became final and executory and Mayfair filed a motion for its
execution, which the court granted on April 25, 1997. However, Carmelo could
no longer be located thus Mayfair deposited with the court its payment to
Carmelo. The lower court issued a deed of reconveyance in favor of Carmelo
and issued new certificates in the name of Mayfair.
On September 18, 1997, Equatorial filed an action for the collection of
sum of money against Mayfair claiming payment of rentals or reasonable
compensation for the defendants use of the premises after its lease contracts
had expired. The lower court debunked the claim of the petitioner for unpaid
rentals, holding that the rescission of the Deed of Absolute Sale in the mother
case did not confer on Equatorial any vested or residual proprietary rights,
even in expectancy.
ISSUE:
Whether or not Equatorial may collect rentals or reasonable
compensation for Mayfairs use of subject premises after its lease contracts had
expired.
RULING:
NO. Rent is a civil fruit that belongs to the owner of the property
producing it by right of accession. Consequently and ordinarily, the rentals that
fell due from the time of the perfection of the sale to petitioner until its
rescission by final judgment should belong to the owner of the property during
that period.
Petitioner never took actual control and possession of the property sold,
in view of the respondents timely objection to the sale and continued actual
possession of the property. The objection took the form of a court action
impugning the sale that was rescinded by a judgment rendered by the Court in
the mother case. It has been held that the execution of a contract of sale as a
form of constructive delivery is a legal fiction. It holds true only when there is
no impediment that may prevent the passing of the property from the hands of
the vendor into those of the vendee. When there is such impediment, fiction
yields to reality; the delivery has not been effected. Hence, respondents
opposition to the transfer of property by way of sale to Equatorial was a legally
sufficient impediment that effectively prevented the passing of the property into
the latters hands.
Article 1386 of the Civil Code provides rescission, which creates the
obligation to return the things, which were the object of the contract, together
with their fruits, and the price with its interest, but also the rentals paid, if any,
had to be returned by the buyer.
RESCISSIBLE CONTRACTS-NATURE AND EFFECTS-MUTUAL
RESTITUTION
MARIA ANTONIA SIGUAN, petitioner,
VS. ROSA LIM, LINDE LIM, INGRID LIM and NEIL LIM,
respondents
1999 Nov 19
G.R. No. 134685
FACTS:
On 25 and 26 August 1990, Lim issued two Metrobank checks in the
sums of P300,000 and P241,668, respectively, payable to "cash."
Upon
presentment by petitioner with the drawee bank, the checks were dishonored
for the reason "account closed." Demands to make good the checks proved
futile. As a consequence, a criminal case for violation of Batas Pambansa Blg.
22, docketed as Criminal Cases Nos. 22127-28, were filed by petitioner against
LIM with Branch 23 of the Regional Trial Court (RTC) of Cebu City.
In its decision dated 29 December 1992, the court a quo convicted Lim as
charged. The case is pending before this Court for review and docketed as G.R.
No. 134685. It also appears that on 31 July 1990, Lim was convicted of estafa
by the RTC of Quezon City in Criminal Case No. Q-89-22162 filed by a certain
Victoria Suarez. This decision was affirmed by the Court of Appeals. On
appeal, however, the Supreme Court, in a decision promulgated on 7 April
1997, acquitted Lim but held her civilly liable in the amount of P169,000, as
actual damages, plus legal interest.
Meanwhile, on 2 July 1991, a Deed of Donation conveying parcels of land
and purportedly executed by Lim on 10 August 1989 in favor of her children,
Linde, Ingrid and Neil, was registered with the Office of the Register of Deeds
of Cebu City. New transfer certificates of title were thereafter issued in the
names of the donees.
On 23 June 1993, petitioner filed an accion pauliana against Lim and her
children before Branch 18 of the RTC of Cebu City to rescind the questioned
Deed of Donation and to declare as null and void the new transfer certificates of
title issued for the lots covered by the questioned Deed. The complaint was
docketed as Civil Case No. CEB-14181.
Petitioner claimed therein that
sometime in July 1991, Lim, through a Deed of Donation, fraudulently
transferred all her real property to her children in bad faith and in fraud of
creditors, including her; that Lim conspired and confederated with her children
in antedating the questioned Deed of Donation, to petitioner's and other
creditors' prejudice; and that Lim, at the time of the fraudulent conveyance, left
no sufficient properties to pay her obligations.
On the other hand, Lim denied any liability to petitioner. She claimed
that her convictions in Criminal Cases Nos. 22127-28 were erroneous, which
was the reason why she appealed said decision to the Court of Appeals. As
regards the questioned Deed of Donation, she maintained that it was not
antedated but was made in good faith at a time when she had sufficient
property. Finally, she alleged that the Deed of Donation was registered only on
2 July 1991 because she was seriously ill.
In its decision of 31 December 1994 the trial court ordered the rescission
of the questioned deed of donation; (2) declared null and void the transfer
certificates of title issued in the names of private respondents Linde, Ingrid and
Neil Lim; (3) ordered the Register of Deeds of Cebu City to cancel said titles
and to reinstate the previous titles in the name of Rosa Lim; and (4) directed
the LIMs to pay the petitioner, jointly and severally, the sum of P10,000 as
moral damages; P10,000 as attorney's fees; and P5,000 as expenses of
litigation.
legal remedy to satisfy his claim; (4) the act being impugned is fraudulent; (5)
the third person who received the property conveyed, if it is by onerous title,
has been an accomplice in the fraud.
The general rule is that rescission requires the existence of creditors at
the time of the alleged fraudulent alienation, and this must be proved as one of
the bases of the judicial pronouncement setting aside the contract. Without any
prior existing debt, there can neither be injury nor fraud. While it is necessary
that the credit of the plaintiff in the accion pauliana must exist prior to the
fraudulent alienation, the date of the judgment enforcing it is immaterial. Even
if the judgment be subsequent to the alienation, it is merely declaratory, with
retroactive effect to the date when the credit was constituted.
In the instant case, the alleged debt of Lim in favor of petitioner was
incurred in August 1990, while the deed of donation was purportedly executed
on 10 August 1989.
The Supreme Court is not convinced with the allegation of the petitioner
that the questioned deed was antedated to make it appear that it was made
prior to petitioner's credit. Notably, that deed is a public document, it having
been acknowledged before a notary public. As such, it is evidence of the fact
which gave rise to its execution and of its date, pursuant to Section 23, Rule
132 of the Rules of Court.
In the present case, the fact that the questioned Deed was registered
only on 2 July 1991 is not enough to overcome the presumption as to the
truthfulness of the statement of the date in the questioned deed, which is 10
August 1989. Petitioner's claim against Lim was constituted only in August
1990, or a year after the questioned alienation. Thus, the first two requisites
for the rescission of contracts are absent.
Even assuming arguendo that petitioner became a creditor of Lim prior
to the celebration of the contract of donation, still her action for rescission
would not fare well because the third requisite was not met. Under Article
1381 of the Civil Code, contracts entered into in fraud of creditors may be
rescinded only when the creditors cannot in any manner collect the claims due
them. Also, Article 1383 of the same Code provides that the action for
rescission is but a subsidiary remedy which cannot be instituted except when
the party suffering damage has no other legal means to obtain reparation for
the same. The term "subsidiary remedy" has been defined as "the exhaustion of
all remedies by the prejudiced creditor to collect claims due him before
rescission is resorted to." It is, therefore, essential that the party asking for
rescission prove that he has exhausted all other legal means to obtain
satisfaction of his claim. Petitioner neither alleged nor proved that she did so.
On this score, her action for the rescission of the questioned deed is not
maintainable even if the fraud charged actually did exist." The fourth requisite
for an accion pauliana to prosper is not present either.
examination thereof will show that, recorded as Document No. 56 on Page 13, is
not the said deed of sale but a certain "real estate mortgage on a parcel of land
with TCT No. 16157 to secure a loan of P3,500.00 in favor of the Hagonoy Rural
Bank."
Nowhere on page 13 of the same notarial register could be found any
entry pertaining to Rafael's deed of sale. Testifying on this irregularity, Atty.
Flores admitted that he failed to submit to the Clerk of Court a copy of the
second deed. Neither was he able to enter the same in his notarial register.
Even Federico himself alleged in his Complaint that, when Rafael delivered the
second deed to him, it was neither dated nor notarized.
Upon the execution and registration of the first deed, Certificate of Title
No. 0-2015 in the name of Federico was cancelled and in lieu thereof, TCT No.
T-36714 was issued in the name of Rafael. Even after the execution of the deed,
Federico remained in possession of the property sold in concept of owner.
Significantly, notwithstanding the fact that Rafael became the titled owner of
said land and rice mill, he never made any attempt to take possession thereof at
any time, while Federico continued to exercise rights of absolute ownership
over the property.
In a letter, dated August 14, 1969, Federico, through his new counsel,
Agrava & Agrava, requested that Rafael deliver his copy of TCT No. T-36714 so
that Federico could have the counter deed of sale in his favor registered in his
name. The request having been obviously turned down, Agrava & Agrava filed
a petition with the Court of First Instance of Bulacan asking Rafael to surrender
his owner's duplicate certificate of TCT No. T-36714. In opposition thereto,
Rafael chronicled the discrepancy in the notarization of the second deed of sale
upon which said petition was premised and ultimately concluded that said deed
was a counterfeit or "at least not a public document which is sufficient to
transfer real rights according to law." On September 8, 1969, Agrava & Agrava
filed a motion to withdraw said petition, and, on September 13, 1969, the Court
granted the same.
On July 8, 1970, Federico filed a complaint for reconveyance and
damages against Rafael. In his answer, Rafael scoffed at the attack against the
validity and genuineness of the sale to him of Federico's land and rice mill.
Rafael insisted that said property was "absolutely sold and conveyed . . . for a
consideration of P20,000.00, Philippine currency, and for other valuable
consideration".
While the trial court upheld the validity and genuineness of the deed of
sale executed by Federico in favor of Rafael, which deed is referred to above as
Exhibit A, it ruled that the counter-deed, referred to as Exhibit B, executed by
Rafael in favor of Federico, was simulated and without consideration, hence,
null and void ab initio.
Moreover, while the trial court adjudged Rafael as the owner of the
property in dispute, it did not go to the extent of ordering Federico to pay back
rentals for the use of the property as the court made the evidential finding that
Rafael simply allowed his uncle to have continuous possession of the property
because or their understanding that Federico would subsequently repurchase
the same.
From the aforecited decision of the trial court, both Federico and Rafael
appealed. The Court of Appeals rendered judgment affirming the trial court's
decision, with a modification that Federico was ordered to surrender the
possession of the disputed property to Rafael. Counsel of Federico filed a
motion for reconsideration of the aforecited decision. While the motion was
pending resolution, Atty. Ricardo M. Fojas entered his appearance in behalf of
the heirs of Rafael who had passed away on November 23, 1988. Atty. Fojas
prayed that said heirs be substituted as defendants-appellants in the case. The
prayer for substitution was duly noted by the court in a resolution dated April 6,
1993. Thereafter, Atty. Fojas filed in behalf of the heirs an opposition to the
motion for reconsideration. The parties to the case were heard on oral
argument on October 12, 1993. On December 15, 1993, the Court of Appeals
reversed itself and rendered an amended judgment.
ISSUE:
Whether or not the deed of sale executed by Federico in favor of Rafael is
simulated and fictitious and, hence, null and void.
RULING:
In the aggregate, the evidence on record demonstrate a combination of
circumstances from which may be reasonably inferred certain badges of
simulation that attach themselves to the deed of sale in question. The complete
absence of an attempt on the part of the buyer to assert his rights of ownership
over the land and rice mill in question is the most protuberant index of
simulation.
The deed of sale executed by Federico in favor of his now deceased
nephew, Rafael, is absolutely simulated and fictitious and, hence, null and void,
said parties having entered into a sale transaction to which they did not intend
to be legally bound. As no property was validly conveyed under the deed, the
second deed of sale executed by the late Rafael in favor of his uncle, should be
considered ineffective and unavailing.
The allegation of Rafael that the lapse of seven years before Federico
sought the issuance of a new title in his name necessarily makes Federico's
claim stale and unenforceable does not hold water. Federico's title was not in
the hands of a stranger or mere acquaintance; it was in the possession of his
nephew who, being his lawyer, had served him faithfully for many years.
Federico had been all the while in possession of the land covered by his title
and so there was no pressing reason for Federico to have a title in his name
issued. Even when the relationship between the late Rafael and Federico
deteriorated, and eventually ended, it is not at all strange for Federico to have
been complacent and unconcerned about the status of his title over the
disputed property since he has been possessing the same actually, openly, and
adversely, to the exclusion of Rafael. It was only when Federico needed the title
in order to obtain a collaterized loan that Federico began to attend to the task
of obtaining a title in his name over the subject land and rice mill.
Decision affirmed. Petitioners, the heirs of Rafael G. Suntay, were
ordered to reconvey to private respondent Federico G. Suntay the property
described in paragraph 2.1 of the complaint, within 10 days from the finality of
the Decision, and to surrender to him within the same period the owner's
duplicate copy of Transfer Certificate of Title No. T-36714 of the Registry of
Deeds of the Province of Bulacan. In the event that the petitioners fail or refuse
to execute the necessary deed of reconveyance as herein directed, the Clerk of
Court of the Regional Trial Court of Bulacan was ordered to execute the same
at the expense of the aforesaid heirs.
RESCISSIBLE CONTRACTS-NATURE AND EFFECTS-MUTUAL
RESTITUTION
KHE HONG CHENG, alias FELIX KHE, SANDRA JOY KHE and
RAY STEVEN KHE, petitioners,
VS. COURT OF APPEALS, HON. TEOFILO GUADIZ, RTC 147, MAKATI
CITY and PHILAM INSURANCE CO., INC., respondents
G.R. No. 144169
28 March 2001
355 SCRA 701
FACTS:
Petitioner Khe Hong Cheng, alias Felix Khe, is the owner of Butuan
Shipping Lines to which the Philippine Agricultural Trading Corporation used
its vessel M/V Prince Eric Corporation to ship 3,400 bags of Copra at Masbate
for delivery to Dipolog. Such shipping of 3, 400 bags was covered by a marine
insurance policy issued by American Home Insurance Company (eventually
Philam). However, M/V Prince Eric sank somewhere between Negros Island and
Northern Mindanao which resulted to the total loss of the shipment. Insurer
Philam paid the amount of P 354, 000.00, which is the value of the copra, to
Philippine Agricultural Trading Corporation. American Home was thereby
subrogated unto the rights of the consignee and filed a case to recover money
paid to the latter, based on breach of common carriage.
While the case was pending, Khe Hong Cheng executed deeds of
donations of parcels of land in favor of his children. As a consequence of a
favorable judgment for American Home, a writ of execution to garnish Khe
Hong Chengs property was issued but the sheriff failed to implement the same
for Chengs property were already transferred to his children. Consequently,
American home filed a case for the rescission of the deeds of donation executed
by petitioner in favor of children for such were made in fraud of his creditors.
Petitioner answered saying that the action should be dismissed for it already
prescribed. Petitioner posited that the registration of the donation was on
December 27, 1989 and such constituted constructive notice. And since the
complaint was filed only in 1997, more than four (4) years after registration, the
action is thereby barred by prescription.
ISSUE:
Whether or not the action for the rescission of the deed of donation has
prescribed.
RULING:
An accion pauliana accrues only when the creditor discovers that he has
no other legal remedy for the satisfaction of his claim against the debtor other
than an accion pauliana. The accion pauliana is an action of a last resort. For
as long as the creditor still has a remedy at law for the enforcement of his claim
against the debtor, the creditor will not have any cause of action against the
creditor for rescission of the contracts entered into by and between the debtor
and another person or persons.
Indeed, an accion pauliana presupposes a
judgment and the issuance by the trial court of a writ of execution for the
satisfaction of the judgment and the failure of the Sheriff to enforce and satisfy
the judgment of the court. It presupposes that the creditor has exhausted the
property of the debtor. The date of the decision of the trial court against the
debtor is immaterial.
What is important is that the credit of the plaintiff
antedates that of the fraudulent alienation by the debtor of his property. After
all, the decision of the trial court against the debtor will retroact to the time
when the debtor became indebted to the creditor.
Although Article 1389 of the Civil Code provides that The action to claim
rescission must be commenced within four (4) years is silent as to where the
prescriptive period would commence, the general rule is such shall be reckoned
from the moment the cause of action accrues; i.e., the legal possibility of
bringing the action. Since accion pauliana is an action of last resort after all
other legal remedies have been exhausted and have been proven futile, in the
case at bar, it was only in February 25, 1997, barely a month from discovering
that petitioner Khe Hong Cheng had no other property to satisfy the judgment
award against him that the action for rescission accrued. So the contention of
Khe Hong Cheng that the action accrued from the time of the constructive
notice; i.e., December 27, 1989, the date that the deed of donation was
registered, is untenable.
EFFECTS OF ANNULMENT OF VOIDABLE CONTRACTS
1.
2.
3.
4.
5.
6.
the trial courts dismissal of the private respondents complaint but upheld the
portion of the court a quos decision ordering the dismissal of petitioner and her
childrens counterclaim. It upheld private respondents position that Exhibit G
which is the receipt of partial payment had all the earmarks of a valid contract
of sale.
ISSUE:
Whether the receipt signed by Fortunato proves the existence of a
contract of sale between him and private respondent.
RULING:
No, the Court ruled that the records of this case betray the stance of
private respondent that Fortunato Ape entered into such an agreement with
her.
A contract of sale is a consensual contract, thus, it is perfected by mere
consent of the parties. Upon its perfection, the parties may reciprocally demand
performance, that is, the vendee may compel the transfer of the ownership and
to deliver the object of the sale while the vendor may demand the vendee to pay
the thing sold. For there to be a perfected contract of sale, however, the
following elements must be present: consent, object, and price in money or its
equivalent.
To be valid, consent: (a) should be intelligent; (b) should be free and (c)
should be spontaneous. Intelligence in consent is vitiated by error; freedom by
violence, intimidation or undue influence; spontaneity by fraud.
In this jurisdiction, the general rule is that he who alleges fraud or
mistake in a transaction must substantiate his allegation as the presumption is
that a person takes ordinary care for his concerns and that private dealings
have been entered into fairly and regularly. The exception to this rule is
provided for under Article 1332 of the Civil Code which provides that when
one of the parties is unable to read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person enforcing the
contract must show that the terms thereof have been fully explained to the
former.
In this case, as private respondent is the one seeking to enforce the
claimed contract of sale, she bears the burden of proving that the terms of the
agreement were fully explained to Fortunato Ape who was an illiterate. This
she failed to do. While she claimed in her testimony that the contents of the
receipt were made clear to Fortunato, such allegation was debunked by Andres
Flores himself when the latter took the witness stand.
Flores testified that, while he was very much aware of Fortunatos
inability to read and write in the English language, he did not bother to fully
explain to the latter the substance of the receipt (Exhibit G). He even
dismissed the idea of asking somebody else to assist Fortunato considering that
a measly sum of thirty pesos was involved. Evidently, it did not occur to Flores
that the document he himself prepared pertains to the transfer altogether of
Fortunatos property to his mother-in-law. It is precisely in situations such as
this when the wisdom of Article 1332 of the Civil Code readily becomes
apparent which is to protect a party to a contract disadvantaged by illiteracy,
ignorance, mental weakness or some other handicap. Thus, the Court annuls
the contract of sale between Fortunato and private respondent on the ground of
vitiated consent.
according to their nature, may be in keeping with good faith, usage and
law. To produce a contract, the acceptance must not qualify the terms of
the offer. However, the acceptance may be express or implied. For a
contract to arise, the acceptance must be made known to the offeror.
Accordingly, the acceptance can be withdrawn or revoked before it is
made known to the offeror.13
In the case at bar, the Contract to Sell was perfected when the
petitioners consented to the sale to the respondent of their shares in the
subject parcels of land by affixing their signatures on the said contract.
Such signatures show their acceptance of what has been stipulated in
the Contract to Sell and such acceptance was made known to respondent
corporation when the duplicate copy of the Contract to Sell was returned
to the latter bearing petitioners signatures.
EFFECTS OF ANNULMENT OF VOIDABLE CONTRACTS
m., covered by Tax Declaration (TD) Nos. 01-00495 and 01-00497, respectively.
Both were located at Barangay San Andres, Cainta, Rizal.
On January 3, 1991, petitioner Julian Francisco bought from said
landowner the first parcel, covered by TD No. 01-00495, for the price of
P1,000,000, paid in installments from November 30, 1990 to August 10, 1991.
And on March 12, 1991, petitioner bought the second parcel covered by TD No.
01-00497, for P750,000.
Contending that the contract price for the two parcels of land was
grossly inadequate, the children of Eligio, Sr., namely, Josefina Cavestany, Eligio
Herrera, Jr., and respondent Pastor Herrera, tried to negotiate with petitioner
to increase the purchase price. When petitioner refused, herein respondent
then filed a complaint for annulment of sale, with the RTC of Antipolo City. In
his complaint, respondent claimed ownership over the second parcel allegedly
by virtue of a sale in his favor since 1973. He likewise claimed that the first
parcel was subject to the co-ownership of the surviving heirs of Francisca A.
Herrera, the wife of Eligio, Sr., considering that she died intestate on April 2,
1990, before the alleged sale to petitioner. Finally, respondent also alleged that
the sale of the two lots was null and void on the ground that at the time of sale,
Eligio, Sr. was already incapacitated to give consent to a contract because he
was already afflicted with senile dementia, characterized by deteriorating
mental and physical condition including loss of memory.
The RTC rendered decision declaring the contract null and void. The
Court of Appeals affirmed the decision of the RTC, hence, this appeal.
ISSUE:
Whether or not the contract is void or merely voidable.
RULING:
A void or inexistent contract is one which has no force and effect from
the very beginning. Hence, it is as if it has never been entered into and cannot
be validated either by the passage of time or by ratification. There are two
types of void contracts: (1) those where one of the essential requisites of a valid
contract as provided for by Article 1318 of the Civil Code is totally wanting; and
(2) those declared to be so under Article 1409 of the Civil Code. By contrast, a
voidable or annullable contract is one in which the essential requisites for
validity under Article 1318 are present, but vitiated by want of capacity, error,
violence, intimidation, undue influence, or deceit.
Article 1318 of the Civil Code states that no contract exists unless there
is a concurrence of consent of the parties, object certain as subject matter, and
cause of the obligation established. Article 1327 provides that insane or
demented persons cannot give consent to a contract. But, if an insane or
demented person does enter into a contract, the legal effect is that the contract
is voidable or annullable as specifically provided in Article 1390.
Petitioners Braganza and her two sons, Rodolfo and Guillermo appears to
have received from Villa Abrille, as a loan, on October 30, 1944 P70, 000 in
Japanese war note and in consideration thereof, promised in writing to pay him
P10, 000 in legal currency on the P.I. two years after the cessation of the
present hostilities or as soon as International Exchange has been established in
the Philippines, plus 2% per annum.
In the present case, it was established that the vendor Eligio, Sr. entered
into an agreement with petitioner, but that the formers capacity to consent was
vitiated by senile dementia. Hence, we must rule that the assailed contracts are
not void or inexistent per se; rather, these are contracts that are valid and
binding unless annulled through a proper action filed in court seasonably.
ISSUE:
Whether or not petitioners are excused from complying with their
monetary obligation on account of minority of the two consigners.
RULING:
NO. Petitioners are not absolved from monetary responsibility. In
accordance with the provisions of the Civil Code, even if the contract is
unenforceable because of non-age, they shall make restitution to the extent that
they may have profited by the money they received. There is testimony that the
funds delivered to them by Abrille were used for their support during the
Japanese occupation. Such being the case, it is but fair to hold that they had
profited to the extent of the value of such money, which value has been
authoritatively established in the so-called Ballantine Schedule: in October
1944, P40.00 Japanese notes were equivalent to P1.00 of current Philippine
money.
On March 23, 1990, William Alain Mialhe, on his own behalf and on
behalf of Victoria Desbarats-Mialhe, Momique Mialhe-Sichere and Elaine
Mialhe-Lencquesaing filed a Complaint for Annulment of Sale, Reconveyance
and Damages against Republic of the Philippines and defendant Development
Bank of the Philippines before the court.
On May 25, 1990 filed its Answer denying the substantial facts allrged in
the complaint and raising, as special and affirmative defenses, that there was
no forcible take-over of the subject properties and that the amount paid to
private respondents was fair and reasonable Defendant DBP also filed its
Answer raising as Special and Affirmative Defense that action had already
prescribed.
FACTS:
Respondent is the owner of a lot and a five-door apartment constructed
thereon occupied by lessees. On December 29, 1985, respondent, assisted by
his brother, petitioner, entered into a Deed of Absolute Sale with their other
brothers (co-petitioners, represented by their father, Atty. Balguma involving
the subject property for P187, 000. 00. Consequently, respondents title to the
property was cancelled and in lieu thereof, a new TCT was issued in favor of
petitioners.
Thereafter, respondent filed with the RTC a complaint for annulment of
the above Deed of Absolute Sale on the ground that petitioners, with evident
bad faith, conspired with one another in taking advantage of his ignorance, he
being only a third grader and through insidious words and machinations, they
made him sign a document purportedly a contract of employment, which turned
out to be a Deed of Absolute Sale.
The lower court dismissed the complaint holding that respondent failed
to prove his causes of action since he admitted that: 1.) He obtained loans from
the Balgumas; 2.) He signed the Deed of Absolute Sale; and 3.) He
acknowledged selling the property and that he stopped collecting the rentals.
The said decision was however reversed by the Court of Appeals.
ISSUE:
was the largest creditor. The VOC owed the bank Php 17,000,000.00. The
PNB was securedly principally by a real and chattel mortgage in favor of
the bank on its vessels Tankerville and H.S. Everett to guarantee the
payment of sums not exceed Php 4,000,000.00
ISSUE:
Whether or not the plaintiff had failed to comply with the contract, that it
was alleged to have celebrated with the defendant and the intervenor,
that it would furnish funds to the defendant so that it could continue
operating its factory.
RUKING:
In the present instance, it is found that the Board of Directors of the PNB
had not consented to an agreement for practically unlimited backing of
the V corporation and had not ratified any promise to trhat effect made
by its general manager.
All the evidence, documentary and oral, pertinent to the issue considered
and found to disclose no binding promise, tacit, or express made by the
PNB to continue indefinitely the operation of the V corporation.
Accordingly, intervenor Whitaker is not entitled to recover damages from
the bank.
EXECUTORY VS. EXECUTED
TAN vs VILLAPAZ
475 SCRA 720 November 22, 2005
FACTS:
This appeal involves the legal right of the PNB to obtain a judgement
against Vegetable Oil Co., Inc., for Php 15,812,454 and to foreclose a
mortgage on the property of the PVOC for Php 17,000,000.00 and the
legal right of the Phil C. Whitaker as intervenor to obtain a judgement
declaring the mortgage which the PNB seeks to foreclose to be without
force and effect, requiring an accouting from the PNB of the sales of the
property and assets of the Vegetable Co. and ordering the PVOC and the
PNB to pay him the sum of Php 4,424,418.37
In 1920, the Vegetable Oil Company, found itself in financial straits. It
was in debt to the extent of approximately Php 30,000,000.00. The PNB
FACTS:
Respondent Carmelito Villapaz
issued a Philippine Bank of
Communications (PBCom) crossed check in the amount of P250,000.00,
payable to the order of petitioner Tony Tan.
The Malita, Davao del Sur Police issued an invitation-request to
petitioner Antonio Tan inviting him to appear before the Deputy Chief of
Police Office on June 27, 1994 at 9:00 oclock in the morning in
REMEDIES
SPOUSES CONSTANTE FIRME AND AZUCENA E. FIRME,
petitioners,
vs.UKAL ENTERPRISES AND DEVELOPMENT CORPORATION,
respondent.
G.R. No. 146608
October 23, 2003
FACTS:
Petitioner Spouses Firme are the registered owner of a parcel of
land located on Dahlia Avenue, Fairview Park, Quezon City.
Bukal Enterprises filed a complaint for specific performance and
damges with the trial court, aleeging that the Spouses Firme reneged on
their agreement to sell the property. The complaint asked the trial court
to order the Spouses Firme to execute the deed of sale and to delover the
title of the property to Bukal Enterpises upon payment of the agreed
purchase price.
The RTC rendered its decision against Bukal. The CA reversed and
set aside the decision of the RTC.
ISSUE:
Whether or not Statute of Frauds is applicable.
RUKING:
The CA held that partial performance of the contract of sale takes
the oral contract out of the scope of Statute of Frauds. This conclusion
arose from the appellate courts erronoues finding that there was a
perfected contract of sale. The recors shoe that there was no perfected
contract of sale. There is therefore no basis for the application of the
Stature of Frauds. The application of the Statute of Frauds presupposes
the existence of a perfected contract.
RUKING:
Article 633 of the OCC provides that figts of real property , in order
to be valid, must appear in a public document. It is settled that a
donation of real estate propter nuptias is void unless made by public
instrument.
In the instant case, the donation propter nuptias did not become
valid. Neither did it create any right because it was not made in a public
instrument. Hence, it conveyed no title to the land in question to
petitioners predecessors.
lawyers from acquiring property or rights which may be the object of any
litigation in which they may take part by virtue of their profession.
It follows that respondents title over the subject property should be
cancelled and the property reconveyed to the estate of Ricardo, the same
to be distributed to the latter?s heirs. This is without prejudice, however,
to respondent?s right to claim his attorney?s fees from the estate of
Ricardo, it being undisputed that he rendered legal services for the
latter.
VOID/ INEXISTENT CONTRACTS: WHO MAY BRING ACTION FOR
DECLARATION OF NULLITY
LA BUGAAL-BLAAN vs RAMOS
December 1, 2004
FACTS:
The Petition for Prohibition and Mandamus before the Court challenges
the constitutionality of (1) Republic Act No. [RA] 7942 (The Philippine
Mining Act of 1995); (2) its Implementing Rules and Regulations (DENR
Administrative Order No. [DAO] 96-40); and (3) the FTAA dated March
30, 1995, executed by the government with Western Mining Corporation
(Philippines), Inc. (WMCP).
On January 27, 2004, the Court en banc promulgated its Decision
granting the Petition and declaring the unconstitutionality of certain
provisions of RA 7942, DAO 96-40, as well as of the entire FTAA executed
between the government and WMCP, mainly on the finding that FTAAs
are service contracts prohibited by the 1987 Constitution.
ISSUE:
Whether or nor it is a void contract.
RULING:
Section 7.9 of the WMCP FTAA has effectively given away the State's
share without anything in exchange. Moreover, it constitutes unjust
enrichment on the part of the local and foreign stockholders in WMCP,
because by the mere act of divestment, the local and foreign
stockholders get a windfall, as their share in the net mining revenues of
WMCP is automatically increased, without having to pay anything for
it.Being grossly disadvantageous to government and detrimental to the
Filipino people, as well as violative of public policy, Section 7.9 must
therefore be stricken off as invalid.
Section 7.8(e) of the WMCP FTAA likewise is invalid, since by allowing
the sums spent by government for the benefit of the contractor to be
deductible from the State's share in net mining revenues, it results in
to him and that she was withdrawing all her commitments until the validity of
the sale is finally resolved. On October 31, 1996, Esperanza died intestate and
was survived by her children.
On June 27, 1997, petitioners filed a complaint against Rodrigo with the
Regional Trial Court of Northern Samar for Annulment of Sale, Quieting of
Title, Injunction and Damages.
The trial court dismissed the Complaint. The Court of Appeals held that
the sale was valid and binding insofar as Ezperanza Balites undivided share of
the property was concerned.
Hence, this Petition.
ISSUE:
Whether or not the heirs of Esperanza has the right to question the said
contract.
RULING:
The Supreme Court held that the petitioners cannot be permitted to
unmake the Contract voluntarily entered into by their predecessor, even if the
stated consideration included therein was for an unlawful purpose. The binding
force of a contract must be recognized as far as it is legally possible to do so.
Article 1345 of the Civil Code provides that the simulation of a contract
may either be absolute or relative. In absolute simulation, there is a colorable
contract but without any substance, because the parties have no intention to be
bound by it. An absolutely simulated contract is void, and the parties may
recover from each other what they may have given under the contract. On the
other hand, if the parties state a false cause in the contract to conceal their real
agreement, such a contract is relatively simulated. Here, the parties real
agreement binds them.
In the present case, the parties intended to be bound by the Contract,
even if it did not reflect the actual purchase price of the property. That the
parties intended the agreement to produce legal effect is revealed by the letter
of Esperanza Balite to respondent dated October 23, 1996 and petitioners
admission that there was a partial payment of P320,000 made on the basis of
the Deed of Absolute Sale. There was an intention to transfer the ownership of
over 10,000 square meters of the property. The Deed of Absolute Sale was
assailed provisions.
Stated in Article 1421, The defense of illegality of
contracts is not available to third persons whose interests are not directly
affected. The Court thus held that due process requires hearing the parties
who have a real legal interests in the MPSAs (i.e. the parties who executed
them) before the MPSAs can be reviewed, or worse, struck down by the Court.
Thus, the petitioners have no right to question the assailed provisions.
This is not the first time that the Office of the Solicitor General has taken
a position adverse to his clients like the CSC, the National Labor Relations
Commission, among others, and even the People of the Philippines. x x x"
Hence, while petitioners stand is contrary to that of the majority of the
Commissioners, still, the OSG may represent the COMELEC as long as in its
assessment, such would be for the best interest of the government. For, indeed,
in the final analysis, the client of the OSG is not the agency but no less than the
Republic of the Philippines in whom the plenum of sovereignty resides.
Moreover, it must be emphasized that petitioners are also public officials
entitled to be represented by the OSG. Under Executive Order No. 292 and
Presidential Decree No. 478, the OSG is the lawyer of the government, its
agencies and instrumentalities, and its officials or agents. Surely, this mandate
includes the three petitioners who have been impleaded as public respondents
in Special Civil Action No. Q-01-45405.
Anent the alleged breach of the doctrine of hierarchy of courts, suffice it
to say that it is not an iron-clad dictum. On several instances where this Court
was confronted with cases of national interest and of serious implications, it
never hesitated to set aside the rule and proceed with the judicial
determination of the case. The case at bar is of similar import. It is in the
interest of the State that questions relating to government contracts be settled
without delay. This is more so when the contract, as in this case, involves the
disbursement of public funds and the modernization of our countrys election
process, a project that has long been overdue.
VOID/ INEXISTENT CONTRACTS: WHO MAY BRING ACTION FOR
DECLARATION OF NULLITY
MANSUETO CUATON, petitioner,
VS. REBECCA SALUD and
COURT OF APPEALS (Special Fourteenth Division), respondents
G.R. No. 158382
January 27, 2004
FACTS:
On January 5, 1993, respondent Rebecca Salud, joined by her husband
Rolando Salud, instituted a suit for foreclosure of real estate mortgage with
damages against petitioner Mansueto Cuaton and his mother, Conchita Cuaton,
with the trial court. The trial court rendered a decision declaring the mortgage
constituted on October 31, 1991 as void, because it was executed by Mansueto
Cuaton in favor of Rebecca Salud without expressly stating that he was merely
acting as a representative of Conchita Cuaton, in whose name the mortgaged
lot was titled. The court ordered petitioner to pay Rebecca Salud, inter alia, the
loan secured by the mortgage in the amount of P1,000,000 plus a total
P610,000.00 representing interests of 10% and 8% per month for the period
February 1992 to August 1992.
Both parties filed their respective notices of appeal.
The Court of Appeals affirmed the judgment of the trial court. Petitioner
filed a motion for partial reconsideration of the trial courts decision with
respect to the award of interest in the amount of P610,000.00, arguing that the
same was iniquitous and exorbitant. This was denied by the Court of Appeals.
ISSUE:
Whether or not the excessive interest rates cannot be considered as an
issue presented for the first time on appeal.
RULING:
The contention regarding the excessive interest rates cannot be considered
as an issue presented for the first time on appeal. The records show that
petitioner raised the validity of the 10% monthly interest in his answer filed
with the trial court. To deprive him of his right to assail the imposition of
excessive interests would be to sacrifice justice to technicality. Furthermore, an
appellate court is clothed with ample authority to review rulings even if they
are not assigned as errors. This is especially so if the court finds that their
consideration is necessary in arriving at a just decision of the case before it.
The Court has consistently held that an unassigned error closely related to an
error properly assigned, or upon which a determination of the question raised
by the error properly assigned is dependent, will be considered by the appellate
court notwithstanding the failure to assign it as an error. Since respondents
pointed out the matter of interest in their Appellants Brief before the Court of
Appeals, the fairness of the imposition thereof was opened to further
evaluation. The Court therefore is empowered to review the same.
Petition granted. Decision modified. The interest rates of 10% and 8% per
month imposed by the trial court is reduced to 12% per annum, computed from
the date of the execution of the loan on October 31, 1991 until finality of this
decision. After the judgment becomes final and executory until the obligation is
satisfied, the amount due shall further earn interest at 12% per year.
Legal standing is relevant in the realm of public law. In certain instances, courts have allowed private parties to
institute actions challenging the validity of governmental action for violation of private rights or constitutional principles. In
these cases, courts apply the doctrine of legal standing by determining whether the party has a direct and personal interest
in the controversy and whether such party has sustained or is in imminent danger of sustaining an injury as a result of the act
complained of, a standard which is distinct from the concept of real party in interest. Measured by this yardstick, the
application of the doctrine on legal standing necessarily involves a preliminary consideration of the merits of the case and is
not purely a procedural issue.
Considering the nature of the controversy and the issues raised in the cases at bar, this Court affirms its ruling that
the petitioners have the requisite legal standing. The petitioners in G.R. Nos. 155001 and 155661 are employees of service
providers operating at the existing international airports and employees of MIAA while petitioners-intervenors are service
providers with existing contracts with MIAA and they will all sustain direct injury upon the implementation of the PIATCO
Contracts. The 1997 Concession Agreement and the ARCA both provide that upon the commencement of operations at the
NAIA IPT III, NAIA Passenger Terminals I and II will cease to be used as international passenger terminals. Further, the
ARCA provides:
(d) For the purpose of an orderly transition, MIAA shall not renew any expired concession agreement
relative to any service or operation currently being undertaken at the Ninoy Aquino International Airport
Passenger Terminal I, or extend any concession agreement which may expire subsequent hereto, except to the
extent that the continuation of the existing services and operations shall lapse on or before the In-Service Date.
Beyond iota of doubt, the implementation of the PIATCO Contracts, which the petitioners and petitionersintervenors denounce as unconstitutional and illegal, would deprive them of their sources of livelihood.
Under settled jurisprudence, one's employment, profession, trade, or calling is a property right and is protected
from wrongful interference. It is also self evident that the petitioning service providers stand in imminent danger of losing
legitimate business investments in the event the PIATCO Contracts are upheld.
Over and above all these, constitutional and other legal issues with far-reaching economic and social implications
are embedded in the cases at bar, hence, this Court liberally granted legal standing to the petitioning members of the House
of RepresentativesFirst, at stake is the build-operate-andtransfer contract of the countrys premier international airport with
a projected capacity of 10 million passengers a year. Second, the huge amount of investment to complete the project is
estimated to be P13,000,000,000.00. Third, the primary issues posed in the cases at bar demand a discussion and
interpretation of the Constitution, the BOT Law and its implementing rules which have not been passed upon by this Court in
previous cases. They can chart the future inflow of investment under the BOT Law.
The Court notes the bid of new parties to participate in the cases at bar as respondents-intervenors, namely, (1)
the PIATCO Employees and (2) NMTAI (collectively, the New Respondents-Intervenors). After the Courts Decision, the New
Respondents-Intervenors filed separate Motions for Reconsideration-In-Intervention alleging prejudice and direct injury.
PIATCO employees claim that they have a direct and personal interest [in the controversy]... since they stand to lose their
jobs should the governments contract with PIATCO be declared null and void. NMTAI, on the other hand, represents itself
as a corporation composed of responsible tax-paying Filipino citizens with the objective of protecting and sustaining the
rights of its members to civil liberties, decent livelihood, opportunities for social advancement, and to a good, conscientious
and honest government.
The Rules of Court govern the time of filing a Motion to Intervene. Section 2, Rule 19 provides that a Motion to
Intervene should be filed before rendition of judgment.... The New Respondents-Intervenors filed their separate motions
after a decision has been promulgated in the present cases. They have not offered any worthy explanation to justify their late
intervention. Consequently, their Motions for Reconsideration-In-Intervention are denied for the rules cannot be relaxed to
await litigants who sleep on their rights. In any event, a sideglance at these late motions will show that they hoist no novel
arguments.
FACTS:
On March 31, 1998, PAGCORs board of directors approved an
instrument denominated as Grant of Authority and Agreement for the
Operation of Sports Betting and Internet Gaming, which granted SAGE the
authority to operate and maintain Sports Betting station in PAGCORs casino
locations, and Internet Gaming facilities to service local and international
bettors, provided that to the satisfaction of PAGCOR, appropriate safeguards
and procedures are established to ensure the integrity and fairness of the
games.
Petitioner, in his capacity as member of the Senate and Chairman of the
Senate Committee on Games, Amusement and Sports, files the instant petition,
praying that the grant of authority by PAGCOR in favor of SAGE be nullified.
He maintains that PAGCOR committed grave abuse of discretion amounting to
lack or excess of jurisdiction when it authorized SAGE to operate gambling on
the internet. He contends that PAGCOR is not authorized under its legislative
franchise, P.D. 1869, to operate gambling on the internet for the simple reason
that the said decree could not have possibly contemplated internet gambling
since at the time of its enactment on July 11, 1983 the internet was yet
inexistent and gambling activities were confined exclusively to real-space.
Further, he argues that the internet, being an international network of
computers, necessarily transcends the territorial jurisdiction of the Philippines,
and the grant to SAGE of authority to operate internet gambling contravenes
the limitation in PAGCORs franchise, under Section 14 of P.D. No. 1869.
According to petitioner, internet gambling does not fall under any of the
categories of the authorized gambling activities enumerated under Section 10
of P.D. No. 1869 which grants PAGCOR the right, privilege and authority to
operate and maintain gambling casinos, clubs, and other recreation or
amusement places, sports gaming pools, within the territorial jurisdiction of the
Republic of the Philippines.
Respondents argue that petitioner does not have the requisite personal
and substantial interest to impugn the validity of PAGCORs grant of authority
to SAGE.
ISSUE:
Whether or not the petitioner has legal standing to file the instant
petition as a concerned citizen or as a member of the Philippine Senate.
RULING:
Among others, the RFP provided that bids from manufacturers, suppliers
and/or distributors forming themselves into a joint venture may be entertained,
provided that the Philippine ownership thereof shall be at least 60 percent.
Joint venture is defined in the RFP as a group of two or more manufacturers,
suppliers and/or distributors that intend to be jointly and severally responsible
or liable for a particular contract. Basically, the public bidding was to be
conducted under a two-envelope/two stage system. The bidders first envelope
or the Eligibility Envelope should establish the bidders eligibility to bid and its
qualifications to perform the acts if accepted. On the other hand, the second
envelope would be the Bid Envelope itself.
Initially intending to implement the automation during the May 11, 1998
presidential elections, Comelec eventually decided against full national
implementation and limited the automation to the Autonomous Region in
Muslim Mindanao (ARMM). However, due to the failure of the machines to
read correctly some automated ballots in one town, the poll body later ordered
their manual count for the entire Province of Sulu.
Out of the 57 bidders, the BAC found MPC and the Total Information
Management Corporation (TIMC) eligible. For technical evaluation, they were
referred to the BACs Technical Working Group (TWG) and the Department of
Science and Technology (DOST).
In the May 2001 elections, the counting and canvassing of votes for both
national and local positions were also done manually, as no additional ACMs
had been acquired for that electoral exercise allegedly because of time
constraints.
On May 29, 2003, five individuals and entities (including the herein
Petitioners Information Technology Foundation of the Philippines, represented
by its president, Alfredo M. Torres; and Ma. Corazon Akol) wrote a letter to
Comelec Chairman Benjamin Abalos Sr. They protested the award of the
Contract to Respondent MPC due to glaring irregularities in the manner in
which the bidding process had been conducted.
Citing therein the
noncompliance with eligibility as well as technical and procedural requirements
(many of which have been discussed at length in the Petition), they sought a rebidding. However, the Comelec chairman -- speaking through Atty. Jaime Paz,
his head executive assistant -- rejected the protest and declared that the award
would stand up to the strictest scrutiny.
Hence, the present Petition.
On February 17, 2003, the poll body released the Request for Proposal
(RFP) to procure the election automation machines. The Bids and Awards
Committee (BAC) of Comelec convened a pre-bid conference on February 18,
2003 and gave prospective bidders until March 10, 2003 to submit their
respective bids.
ISSUE:
Whether or not the Commission on Elections, the agency vested with the
exclusive constitutional mandate to oversee elections, gravely abused its
discretion when, in the exercise of its administrative functions, it awarded to
MPC the contract for the second phase of the comprehensive Automated
Election System.
RULING:
Yes. There is grave abuse of discretion (1) when an act is done contrary
to the Constitution, the law or jurisprudence; or (2) when it is executed
whimsically, capriciously or arbitrarily out of malice, ill will or personal bias. In
the present case, the Commission on Elections approved the assailed Resolution
and awarded the subject Contract not only in clear violation of law and
jurisprudence, but also in reckless disregard of its own bidding rules and
procedure.
For the automation of the counting and canvassing of the ballots in the
2004 elections, Comelec awarded the Contract to Mega Pacific Consortium an
entity that had not participated in the bidding. Despite this grant, the poll body
signed the actual automation Contract with Mega Pacific eSolutions, Inc., a
company that joined the bidding but had not met the eligibility requirements.
Comelec awarded this billion-peso undertaking with inexplicable haste,
without adequately checking and observing mandatory financial, technical and
legal requirements. It also accepted the proferred computer hardware and
software even if, at the time of the award, they had undeniably failed to pass
eight critical requirements designed to safeguard the integrity of elections,
especially the following three items: (a) They failed to achieve the accuracy
rating criteria of 99.9995 percent set-up by the Comelec itself, (b) They were
not able to detect previously downloaded results at various canvassing or
consolidation levels and to prevent these from being inputted again and (c)
They were unable to print the statutorily required audit trails of the
count/canvass at different levels without any loss of data
Because of the foregoing violations of law and the glaring grave abuse of
discretion committed by Comelec, the Court declared null and void the assailed
Resolution and the subject Contract. The illegal, imprudent and hasty actions
of the Commission have not only desecrated legal and jurisprudential norms,
but have also cast serious doubts upon the poll bodys ability and capacity to
conduct automated elections. Truly, the pith and soul of democracy -- credible,
orderly, and peaceful elections -- has been put in jeopardy by the illegal and
gravely abusive acts of Comelec.
The letter-protest is sufficient compliance with the requirement to
exhaust administrative remedies particularly because it hews closely to the
procedure outlined in Section 55 of RA 9184. And even without that May 29,
2003 letter-protest, the Court still holds that petitioners need not exhaust
administrative remedies in the light of Paat v. Court of Appeals. Paat
enumerates the instances when the rule on exhaustion of administrative
remedies may be disregarded, as follows: (1) when there is a violation of due
process, (2) when the issue involved is purely a legal question, (3) when the
administrative action is patently illegal amounting to lack or excess of
jurisdiction, (4)
when there is estoppel on the part of the administrative
agency concerned, (5) when there is irreparable injury, (6) when the respondent
is a department secretary whose acts as an alter ego of the President bears the
implied and assumed approval of the latter, (7) when to require exhaustion of
administrative remedies would be unreasonable, (8) when it would amount to a
nullification of a claim, (9) when the subject matter is a private land in land
case proceedings, (10) when the rule does not provide a plain, speedy and
adequate remedy, and (11) when there are circumstances indicating the
urgency of judicial intervention.
The present controversy precisely falls within the exceptions listed as
Nos. (7) when to require exhaustion of administrative remedies would be
unreasonable; (10) when the rule does not provide a plain, speedy and adequate
remedy, and (11) when there are circumstances indicating the urgency of
judicial intervention. As already stated, Comelec itself made the exhaustion of
administrative remedies legally impossible or, at the very least, unreasonable.
WHEREFORE, in view of all the foregoing, the instant petition for review
is DENIED.
differentiate between the liberality of Lopez as cause and his desire as a motive.
However, motive may be regarded as cause when it predetermined the purpose
of the contract. The Court of Appeals rejected the claim of petitioner on the
ground on the rule on pari delicto embodied in Article 1912 of the Civil Code.
However, this rule cannot be applied in the case because it cannot be said that
both parties had equal guilt where petitioner was a mere minor when the
donation was made and that it was not shown that she was fully aware of the
terms of the said donation.
PROHIBITED CONTRACTS: EFFECTS AND REMEDIES IN CASE ONE
PARTY IS INNOCENT / DISADVANTAGED
PHILBANK VS. LUI SHE
21 SCRA 52
FACTS:
Justinia Santos was the owner of the property where a restaurant owned
by Weng Heng is located. Being 90 years of age, without any surviving relatives,
delivered to Weng being closed to her then, various sum of money for
safekeeping. Subsequently, she executed a contract of lease in favor of Weng
for a period of 50 years. However, the lessee was given the right to withdraw at
any time from the agreement. Subsequently, she again executed another
contract giving Weng the option to buy the premises.
The option was
conditioned on Wengs obtaining a Filipino citizenship, which however, Weng
failed to obtain. After which, Justinia again executed two other contracts,
extending the term of the lease to 99 years and another fixing the term of the
option to 50 years. However, a year later, she filed a complaint before the trial
court alleging that the various contracts were executed by her because of
machination, and inducement practiced by Weng, thereby she directed her
executor to secure the annulment of the contract.
ISSUE:
Whether or not the various contracts were void.
RULING:
Article 1308 of the Civil Code creates no impediment to the insertion in a
contract of a resolutory condition permitting the cancellation of the contract by
one of the parties. Such a stipulation does not make either the validity or the
fulfillment of the contract dependent upon the will of the party to whom It
conceded the privilege of the cancellation.
In the case, the lease for an alien for a reasonable period is valid. So is
the option giving the alien the right to buy the real property subject to the
condition that he must obtain Filipino citizenship. Since aliens residence in the
Philippines is temporary, they may be grated temporary rights such as a lease
contract which is not forbidden. However, if the alien is given not only the
lease of, but also the option to buy a piece of land by virtue of which the Filipino
owner cannot sell, or otherwise dispose of his property, this to last for 50 years,
then it becomes clear that the arrangement is a virtual transfer of ownership.
As such, the constitutional ban against alien landholding is in grave peril.
However, it does not follow that because the parties are in pari delicto,
they will be left where they are without relief. Article 1416 of the Civil Code
provides an exception when the agreement is not illegal per se but is merely
prohibited, and the prohibition by law is designed for the protection of the
plaintiff, he may, if public policy is thereby enhanced, recover what he had paid
on delivery.
RULING:
YES, the petitioner has the right to be compensated for the additional
construction applying the principle of quantum meruit. Notably, the peculiar
circumstances present in the instant case buttress petitioners claim for
compensation for the additional construction, despite the illegality and void
nature of the implied contracts forged between the MPWH and petitioners.
In this matter, it is bear stressing that, the illegality of the subject contracts
proceeds from the express declaration or prohibition of the law, and not for any
intrinsic illegality. Stated differently, the subject contracts are not illegal per
se.
ISSUE:
Whether or not the petitioner has the right to be compensated for the
public works housing project by virtue of the implied contract which was
verbally executed.
The Court cannot sanction an injustice so patent on its face and allow
itself to be an instrument in the perpetration thereof. Justice and equity
demands that the States cloak of invincibility against suit be shred in this
particular case and that the petitioners-contractors be duly compensated, on
the basis of quantum meruit, for the construction done on the public housing
project.
Petition is granted. Accordingly, the Commission on Audit is hereby
directed to determine as ascertain with dispatch the total compensation due
petitioners for the additional constructions on the housing project and to allow
payment thereof.
that the contract is voidable, not void or inexistent per se. Therefore, the
contracts of sale entered into by Eligio Sr. are valid and binding unless annulled
through a proper action filed in court seasonably. Furthermore, the questioned
annullable contract was rendered perfectly valid in this case because of
respondents acts of ratification. He actually received the payments on behalf
of his father further manifesting that he was agreeable to the contracts.
Similarly, respondents previous negotiation for an increase in the price bolster
that indeed there was ratification of what he himself questions as a void
contract.
purchase price, an Absolute Deed Of Sale was executed by GSIS in favor of the
Manzanilla spouses.
On May 14, 1973, the Manzanilla spouses mortgaged the property to the
Bian Rural Bank. On September 7, 1973, petitioner Ines Carpio purchased the
property from the Manzanilla spouses and agreed to assume the mortgage in
favor of Bian Rural Bank.
On November 12, 1973, private respondent Justina Campo registered her
adverse claim over the said lot.
On October 3, 1977, petitioner Carpio filed an ejectment case against
private respondent Justina Campo.
On July 31, 1979, private respondent Justina Campo (already a widow)
filed a complaint for quieting of title against the Manzanilla spouses and Ines
Carpio praying among others, for the issuance to her of a certificate of title over
the undivided one-half portion of the property.
The trial court rendered its decision in favor of Campo. The decision was
appealed by petitioners to the Court of Appeals; however it only affirmed the
decision of the trial court. Petitioners Motion for reconsideration was denied.
ISSUE:
Whether or not petitioners are under any legal duty to reconvey the
undivided one-half portion of the property to private respondent Justina Campo.
RULING:
NO, there may be a moral duty on the part of petitioners to convey the
one-half portion of the property previously sold to private respondent.
However, they are under no legal obligation to do so. Hence, the action to quiet
title filed by private respondent must fail.
NATURAL OBLIGATIONS: KINDS (1424-1430)
RURAL BANK OF PARAAQUE, INC., petitioner,
VS. ISIDRA REMOLADO and COURT OF APPEALS, respondents
1985 March 18
FACTS:
This case is about the repurchase of mortgaged property after the period
of redemption had expired. Isidra Remolado, 64, a widow, and resident of
Makati, Rizal, owned a lot with an area of 308 square meters, with a bungalow
thereon, which was leased to Beatriz Cabagnot. In 1966 she mortgaged it to
the Rural Bank of Paraaque, Inc. as security for a loan of P15,000. She paid
the loan. On April 17, 1971 she mortgaged it again to the bank. She eventually
secured loans totalling P18,000. The loans become overdue. The bank
foreclosed the mortgage on July 21, 1972 and bought the property at the
foreclosure sale for P22,192.70. The one-year, period of redemption was to
expire on August 21, 1973. On August 8, 1973 the bank advised Remolado that
she had until August 23 to redeem the property. On August 9, 1973 or 14 days
before the expiration of the one-year redemption period, the bank gave her a
statement showing that she should pay P25,491.96 for the redemption of the
property on August 23. No redemption was made on that date. On September
3, 1973 the bank consolidated its ownership over the property. Remolado's title
was cancelled. A new title, TCT No. 418737, was issued to the bank on
September 5. On September 24, 1973, the bank gave Remolado up to ten
o'clock in the morning of October 31, 1973, or 37 days, within which to
repurchase (not redeem since the period of redemption had expired) the
property. The bank did not specify the price.
On October 26, 1973 Remolado and her daughter, Patrocinio Gomez,
promised to pay the bank P33,000 on October 31 for the repurchase of the
property. Contrary to her promise, Remolado did not repurchase the property
on October 31. Five days later, or on November 5, Remolado and her daughter
delivered P33,000 cash to the bank's assistant manager as repurchase price.
The amount was returned to them the next day, November 6, 1973. At that
time, the bank was no longer willing to allow the repurchase. Remolado filed
an action to compel the bank to reconvey the property to her for P25,491.96
plus interest and other charges and to pay P35,000 as damages.
The
repurchase price was not consigned. A notice of lis pendens was registered.
On November 15, the bank sold the property to Pilar Aysip for P50,000. A new
title was issued to Aysip with an annotation of lis pendens
The trial court ordered the bank to return the property to Remolado upon
payment of the redemption price of P25,491.96 plus interest and other bank
charges and to pay her P15,000 as damages. The Appellate Court affirmed the
judgment.
ISSUE:
Whether or not the appellate court erred in reconveying the disputed
property to Remolado.
RULING:
Yes. We hold that the trial court and the Appellate Court erred in
ordering the reconveyance of the property. There was no binding agreement
for its repurchase. Even on the assumption that the bank should be bound by
its commitment to allow repurchase on or before October 31, 1973, still
Remolado had no cause of action because she did not repurchase the property
on that date.
Justice is done according to law. As a rule, equity follows the law. There
may be a moral obligation, often regarded as an equitable consideration
(meaning compassion), but if there is no enforceable legal duty, the action must
fail although the disadvantaged party deserves commiseration or sympathy.
The choice between what is legally just and what is morally just, when these
two options do not coincide, is explained by Justice Moreland in Vales vs. Villa,
35 Phil. 769, 788 where he said: "Courts operate not because one person has
been defeated or overcome by another, but because he has been defeated or
overcome illegally. Men may do foolish things, make ridiculous contracts, use
miserable judgment, and lose money by them - indeed, all they have in the
world; but not for that alone can the law intervene and restore. There must be,
in addition, a violation of law, the commission of what the law knows as an
actionable wrong before the courts are authorized to lay hold of the situation
and remedy it."
In the instant case, the bank acted within its legal rights when it refused
to give Remolado any extension to repurchase after October 31, 1973. It had
given her about two years to liquidate her obligation. She failed to do so. Thus,
the Appellate Court's judgment is reversed and set aside.
KINDS OF TRUSTS: EXPRESS TRUST VS. IMPLIED TRUST
1.
2.
3.
4.
5.
Pursuant to the same deed, transfer certificates of title were issued to the
new owners of the properties. Transfer Certificate of Title No. 394 for Lot No.
1700 was issued on February 11, 1947 in the name of private respondent but
Catalina kept it in her possession until she delivered it to him in 1949 when
private respondent got married.
Meanwhile, Benjamin constructed the family home on Lot No. 1698-B
which is adjacent to Lot No. 1700. A portion of the house occupied an area of
twenty (20) square meters, more or less, of Lot No. 1700. Benjamin also built a
concrete fence and a common gate enclosing the two (2) lots, as well as an
artesian well within Lot No. 1700.
Sometime in December, 1982, Benjamin discovered that Lot No. 1700
was registered in the name of his brother, private respondent. Believing that
the lot was co-owned by all the children of Eulogio Esconde, Benjamin
demanded his share of the lot from private respondent. However, private
respondent asserted exclusive ownership thereof pursuant to the deed of
extrajudicial partition and, in 1985 constructed a "buho" fence to segregate Lot
No. 1700 from Lot No. 1698-B.
Hence, on June 29, 1987, petitioners herein filed a complaint before the
Regional Trial Court of Bataan against private respondent for the annulment of
TCT No. 394. They further prayed that private respondent be directed to enter
into a partition agreement with them, and for damages (Civil Case No. 5552).
In its decision of July 31, 1989, the lower court dismissed the complaint
and the counterclaims. It found that the deed of extrajudicial partition was an
unenforceable contract as far as Lot No. 1700 was concerned because
petitioner Catalina Buan vda. de Esconde, as mother and judicial guardian of
her children, exceeded her authority as such in "donating" the lot to private
respondent or waiving the rights thereto of Benjamin and Elenita in favor of
private respondent. Because of the unenforceability of the deed, a trust
relationship was created with private respondent as trustee and Benjamin and
Elenita as beneficiaries
However, the lower court ruled that the action had been barred by both
prescription and laches. Lot No. 1700 having been registered in the name of
private respondent on February 11, 1947, the action to annul such title
prescribed within ten (10) years on February 11, 1957 or more than thirty (30)
years before the action was filed on June 29, 1987.
Thus, even if Art. 1963 of the old Civil Code providing for a 30-year
prescriptive period for real actions over immovable properties were to be
applied, still, the action would have prescribed on February 11, 1977. Hence,
petitioners elevated the case to the Court of Appeals which affirmed the lower
court's decision. The appellate court held that the deed of extrajudicial
partition established "an implied trust arising from the mistake of the judicial
guardian in favoring one heir by giving him a bigger share in the hereditary
property." It stressed that "an action for reconveyance based on implied or
constructive trust" prescribes in ten (10) years "counted from the registration
of the property in the sole name of the co-heir."
ISSUE:
Whether or not the action was already barred with laches and
prescription.
RULING:
Trust is the legal relationship between one person having an equitable
ownership in property and another person owning the legal title to such
property, the equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain powers by the latter.
Trusts are either express or implied. An express trust is created by the direct
and positive acts of the parties, by some writing or deed or will or by words
evidencing an intention to create a trust. No particular words are required for
the creation of an express trust, it being sufficient that a trust is clearly
intended.
On the other hand, implied trusts are those which, without being
expressed, are deducible from the nature of the transaction as matters of intent
or which are superinduced on the transaction by operation of law as matters of
equity, independently of the particular intention of the parties. In turn, implied
trusts are either resulting or constructive trusts. These two are differentiated
from each other as follows:
Resulting trusts are based on the equitable doctrine that valuable
consideration and not legal title determines the equitable title or interest and
are presumed always to have been contemplated by the parties. They arise from
the nature or circumstances of the consideration involved in a transaction
whereby one person thereby becomes invested with legal title but is obligated
in equity to hold his legal title for the benefit of another. On the other hand,
constructive trusts are created by the construction of equity in order to satisfy
the demands of justice and prevent unjust enrichment. They arise contrary to
The land, with improvements thereon, was formerly the conjugal property of the spouses Gregorio Yap and Rosario
Diez. In 1946, Gregorio Yap died, leaving his wife, private respondent Rosario Diez, and children, petitioners Jovita Yap
Ancog and Gregorio Yap, Jr., and private respondent Caridad Yap as his heirs. In 1954 and again 1958, Rosario Diez obtained
loans from the Bank of Calape, secured by a mortgage on the disputed land, which was annotated on its Original Certificate
of Title No. 622. When Rosario Diez applied again for a loan to the bank, offering the land in question as security, the banks
lawyer, Atty. Narciso de la Serna, suggested that she submit an extrajudicial settlement covering the disputed land as a
means of facilitating the approval of her application. The suggestion was accepted and on April 4, 1961, Atty. de la Serna
prepared an extrajudicial settlement, which the heirs, with the exception of petitioner Gregorio Yap, Jr., then only 15 years
old, signed. As a result, OCT No. 622 was cancelled and Transfer Certificate of Title No. 3447 (T-2411) was issued on April
13, 1961. On April 14, 1961, upon the execution of a real estate mortgage on the land, the loan was approved by the bank.
Rosario Diez exercised rights of ownership over the land. In 1985, she brought an ejectment suit against petitioner Jovita Yap
Ancogs husband and son to evict them from the ground floor of the house built on the land for failure to pay rent. Shortly
thereafter, petitioner Jovita Ancog learned that private respondent Rosario Diez had offered the land for sale.Petitioner Ancog
immediately informed her younger brother, petitioner Gregorio Yap, Jr., who was living in Davao, of their mothers plan to sell
the land. On June 6, 1985, they filed this action for partition in the Regional Trial Court of Bohol where it was docketed as
Civil Case No. 3094. As private respondent Caridad Yap was unwilling to join in the action against their mother, Caridad was
impleaded as a defendant.
Petitioners alleged that the extrajudicial instrument was simulated and therefore void. They claimed that in signing
the instrument they did not really intend to convey their interests in the property to their mother, but only to enable her to
obtain a loan on the security of the land to cover expenses for Caridads school fees and for household repairs. The trial court
rendered judgment dismissing petitioners action. It dismissed petitioners claim that the extrajudicial settlement was
simulated and held it was voluntarily signed by the parties. Observing that even without the need of having title in her name
Rosario Diez was able to obtain a loan using the land in question as collateral, the court held that the extrajudicial settlement
could not have been simulated for the purpose of enabling her to obtain another loan. Petitioners failed to overcome the
presumptive validity of the extrajudicial settlement as a public instrument.
The court instead found that petitioner Ancog had waived her right to the land, as shown by the fact that on
February 28, 1975, petitioners husband, Ildefonso Ancog, leased the property from private respondent Diez. Furthermore,
when the spouses Ancog applied for a loan to the Development Bank of the Philippines using the land in question as
collateral, they accepted an appointment from Rosario Diez as the latters attorney-in-fact.
The court also found that
the action for partition had already prescribed.On appeal, the Court of Appeals upheld the validity of the extrajudicial
settlement and sustained the trial courts dismissal of the case. The appellate court emphasized that the extrajudicial
settlement could not have been simulated in order to obtain a loan, as the new loan was merely in addition to a previous
one which private respondent Diez had been able to obtain even without an extrajudicial settlement. Neither did petitioners
adduce evidence to prove that an extrajudicial settlement was indeed required in order to obtain the additional loan. The
appellate court held that considering petitioner Jovita Yap Ancogs educational attainment (Master of Arts and Bachelor of
Laws), it was improbable that she would sign the settlement if she did not mean it to be such. Hence, this petition.
ISSUE:
Whether or not the appellate court erred in ruling that petitioner Gregorio Yap, Jr., one of the co-owners of the
litigated property, had lost his rights to the property through prescription or laches.
RULING:
In this case, the trial court and the Court of Appeals found no evidence to show that the extrajudicial settlement
was required to enable private respondent Rosario Diez to obtain a loan from the Bank of Calape. Petitioners merely claimed
that the extrajudicial settlement was demanded by the bank.To the contrary, that the heirs (Jovita Yap Ancog and Caridad
Yap) meant the extrajudicial settlement to be fully effective is shown by the fact that Rosario Diez performed acts of dominion
over the entire land, beginning with its registration, without any objection from them. Instead, petitioner Jovita Ancog
agreed to lease the land from her mother, private respondent Rosario Diez, and accepted from her a special power of attorney
to use the land in question as collateral for a loan she was applying from the DBP. Indeed, it was private respondent Diez
who paid the loan of the Ancogs in order to secure the release of the property from mortgage Petitioner Jovita Yap Ancog
contends that she could not have waived her share in the land because she is landless. For that matter, private respondent
Caridad Yap is also landless, but she signed the agreement. She testified that she did so out of filial devotion to her mother.
Thus, what the record of this case reveals is the intention of Jovita Ancog and Caridad Yap to cede their interest in the land to
their mother Rosario Diez. It is immaterial that they had been initially motivated by a desire to acquire a loan. Under Art.
1082 of the Civil Code, every act which is intended to put an end to indivision among co-heirs is deemed to be a partition
even though it should purport to be a sale, an exchange, or any other transaction.
The Supreme Court held that the Court of Appeals erred in ruling that the claim of petitioner Gregorio Yap, Jr. was
barred by laches. In accordance with Rule 74, 1 of the Rules of Court, as he did not take part in the partition, he is not
bound by the settlement. It is uncontroverted that, at the time the extrajudicial settlement was executed, Gregorio Yap, Jr.
was a minor. For this reason, he was not included or even informed of the partition. Instead, the registration of the land in
Rosario Diezs name created an implied trust in his favor by analogy to Art. 1451 of the Civil Code, which provides: When
land passes by succession to any person and he causes the legal title to be put in the name of another, a trust is established
by implication of law for the benefit of the true owner. In the case of OLaco v. Co Cho Chit, Art. 1451 was held as creating a
resulting trust, which is founded on the presumed intention of the parties. As a general rule, it arises where such may be
reasonably presumed to be the intention of the parties, as determined from the facts and circumstances existing at the time
of the transaction out of which it is sought to be established. In this case, the records disclose that the intention of the parties
to the extrajudicial settlement was to establish a trust in favor of petitioner Yap, Jr. to the extent of his share. Rosario Diez
testified that she did not claim the entire property, while Atty. de la Serna added that the partition only involved the shares of
the three participants.
A cestui que trust may make a claim under a resulting trust within 10 years from the time the trust is repudiated.
Although the registration of the land in private respondent Diezs name operated as a constructive notice of her claim of
ownership, it cannot be taken as an act of repudiation adverse to petitioner Gregorio Yap, Jr.s claim, whose share in the
property was precisely not included by the parties in the partition. Indeed, it has not been shown whether he had been
informed of her exclusive claim over the entire property before 1985 when he was notified by petitioner Jovita Yap Ancog of
their mothers plan to sell the property.This Court has ruled that for prescription to run in favor of the trustee, the trust must
be repudiated by unequivocal acts made known to the cestui que trust and proved by clear and conclusive evidence.
Furthermore, the rule that the prescriptive period should be counted from the date of issuance of the Torrens certificate of
title applies only to the remedy of reconveyance under the Property Registration Decree. Since the action brought by
petitioner Yap to claim his share was brought shortly after he was informed by Jovita Ancog of their mothers effort to sell the
property, Gregorio Yap, Jr.s claim cannot be considered barred either by prescription or by laches.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with the MODIFICATION that this case is
REMANDED to the Regional Trial Court for the determination of the claim of petitioner Gregorio Yap, Jr.
FACTS:
This is an action for recovery of possession of land and damages with a
prayer for a writ of preliminary mandatory injunction filed by private
respondents herein, spouses Ranulfo Ortiz, Jr. and Erlinda Ortiz, against
Rodolfo Morales. The complaint prayed that private respondents be declared
the lawful owners of a parcel of land and the two-storey residential building
standing thereon, and that Morales be ordered to remove whatever
improvements he constructed thereon, vacate the premises, and pay actual and
moral damages, litigation expenses, attorney's fees and costs of the suit.
Priscila Morales, one of the daughters of late Rosendo Avelino and Juana
Ricaforte, filed a motion to intervene in the case. No opposition thereto having
been filed, the motion was granted on March 4, 1988. On November 30, 1988
Rodolfo Morales passed away. The trial court allowed his substitution by his
heirs, Roda, Rosalia, Cesar and Priscila, all surnamed Morales. The trial court
rendered its decision in favor of plaintiffs, private respondents herein.
Dissatisfied with the trial court's decision, defendants heirs of Rodolfo Morales
and intervenor Priscila Morales, petitioners herein, appealed to the Court of
Appeals which in turn affirmed the decision.
ISSUE:
Whether or not Celso Avelino purchase the land in question from the
Mendiolas as a mere trustee for his parents and siblings.
RULING:
Trusts are either express or implied.
Express trusts are created by the intention of the trustor or of the
parties, while implied trusts come into being by operation of law, either through
implication of an intention to create a trust as a matter of law or through the
imposition of the trust irrespective of, and even contrary to, any such intention.
In turn, implied trusts are either resulting or constructive trusts.
Resulting trusts are based on the equitable doctrine that valuable
consideration and not legal title determines the equitable title or interest and
are presumed always to have been contemplated by the parties. They arise
from the nature or circumstances of the consideration involved in a transaction
whereby one person thereby becomes invested with legal title but is obligated
in equity to hold his legal title for the benefit of another.
names of Banco Filipinos four major stockholders, namely, Antonio Tiu, Tomas
Aguirre, Nancy Lim and Pedro Aguirre.
On August 25, 1981, respondent bank executed in favor of petitioner
TALA eleven deeds of sale transferring to the latter its branch sites. In turn,
petitioner leased these branch sites to respondent through separate contracts
of lease for a period of twenty years, renewable for another twenty years, at the
option of respondent, with a monthly rental of P12,000.00 and require
respondent bank to pay petitioner P602,500.00 as advance rentals.
That day, another lease contract was executed by the parties covering
each branch site providing for a period of eleven years, renewable for another
nine years at the option of respondent. And respondent bank was required to
pay P602,500.00 as security deposit for the performance of the terms and
conditions of the contract.
In August 1992, petitioner wrote respondent informing it of the
expiration of the 11-year lease contract. They failed to reach an agreement.
Thus, on April 14, 1994, petitioner notified respondent that the lease shall no
longer be renewed and demanded that it vacate the premises and pay the rents
in arrears amounting to P2,057,600.00. Respondent did not heed such demand,
prompting petitioner to file civil case for illegal detainer.
On February 5, 1998, the RTC rendered its Decision dismissing
petitioners complaint for ejectment for lack of merit. On appeal via a petition
for review, the Court of Appeals, on July 23, 1999, had dismissed the petition
and upholding the 20-year lease contract between the parties.
ISSUE:
Whether respondent may be ejected from the leased premises for nonpayment of rent.
RULING:
No, the Supreme Court ruled that the parties deliberately circumvented
the real estate investment limit under Sections 25(a) and 34 of the General
Banking Act. Being in pari delicto, they should suffer the consequences of their
deception by denying them any affirmative relief. Equity dictates that Tala
should not be allowed to collect rent from the Bank. Both the Bank and Tala
participated in the deceptive creation of a trust to circumvent the real estate
investment limit under Sections 25(a) and 34 of the General Banking Act.
Upholding Talas right to collect rent from the period during which the Bank
was arbitrarily closed would allow Tala to benefit from the illegal warehousing
agreement. This would result in the application of the Banks advance rentals
covering the eleventh to the twentieth years of the lease, to the rentals due for
the period during which the Bank was arbitrarily closed. With the advance
rentals already used up, and the Bank having stopped payment of the rent on
the thirteenth year of the lease or in April 1994, rentals would be due Tala from
the time the Bank stopped paying rent in April 1994 up to the expiration of the
lease period. The Bank should not be allowed to dispute the sale of its lands to
Tala nor should Tala be allowed to further collect rent from the Bank. The clean
hands doctrine will not allow the creation or the use of a juridical relation such
as a trust to subvert, directly or indirectly, the law. Neither the Bank nor Tala
came to court with clean hands; neither will obtain relief from the court as one
who seeks equity and justice must come to court with clean hands
Thus, the petition is DENIED. The challenged Decision of the Court of
Appeals dated July 23, 1999 and its Resolution dated May 16, 2000, are
REVERSED and SET ASIDE.
IMPLIED TRUSTS:
PRESCRIPTIVE PERIODS OF ACTION TO
ENFORCE IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE
1.
2.
3.
4.
5.
6.
prescribed. It ruled that a free patent issued over private land is null and void,
and produces no legal effects whatsoever. Moreover, private respondents
claim of open, public, peaceful, continuous and adverse possession of the 2
parcels of land and its illegal inclusion in the free patents of petitioners and in
their original certificates of title also amounts to an action for quieting of title
which is imprescriptible.
The action for reconveyance based on implied trust, on the other hand,
prescribes only after 10 years from 1990 and 1991 when the free patents and
the certificates of title over Lot 1017 and Lot 1015, respectively, were
registered.
Obviously the action had not prescribed when private respondents filed
their complaint against petitioners on 19 December 1995. At any rate, the
action for reconveyance in the case at bar is also significantly deemed to be an
action to quiet title for purposes of determining the prescriptive period on
account of private respondents allegations of actual possession of the disputed
lots. In such a case, the cause of action is truly imprescriptible.
Wherefore, the instant petition for review is denied.
IMPLIED TRUSTS: PRESCRIPTIVE PERIODS OF ACTION TO ENFORCE
IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE
RAMOS VS. RAMOS
61 SCRA 284
FACTS:
Spouses Martin Ramos and Candida Tanate died on October 4, 1906 and
October 26, 1880, respectively. They were survived by their 3 children.
Moreover, Martin was survived by his 7 natural children. In December 1906, a
special proceeding for the settlement of the intestate estate of said spouses was
conducted. Rafael Ramos, a brother of Martin, administered the estate for more
than 6 years. Eventually, a partition project was submitted which was signed by
the 3 legitimate children and 2 of the 7 natural children. A certain Timoteo
Zayco signed in representation of the other 5 natural children who were
minors. The partition was sworn to before a justice of peace.
The conjugal hereditary estate was appraised at P74,984.93, consisting
of 18 parcels of land, some head of cattle and the advances to the legitimate
children. thereof represented the estate of Martin. 1/3 thereof was the free
portion or P12,497.98. The shares of the 7 natural children were to be taken
from that 1/3 free portion. Indeed, the partition was made in accordance with
the Old Civil code. Thereafter, Judge Richard Campbell approved the partition
project. The court declared that the proceeding will be considered closed and
the record should be archived as soon as proof was submitted that each he3ir
had received the portion adjudicated to him.
On February 3, 1914, Judge Nepumoceno asked the administrator to
submit a report showing that the shares of the heirs had been delivered to them
as required by the previous decision. Nevertheless, the manifestation was not in
strict conformity with the terms of the judges order and with the partition
project itself. 8 lots of the Himamaylan Cadastre were registered in equal
shares in the names of Gregoria (widow of Jose Ramos) and her daughter, when
in fact the administrator was supposed to pay the cash adjudications to each of
them as enshrined in the partition project. Plaintiffs were then constrained to
bring the suit before the court seeking for the reconveyance in their favor their
corresponding participations in said parcels of land in accordance with Article
840 of the old Civil Code. Note that 1/6 of the subject lots represents the 1/3
free portion of martins shares which will eventually redound to the shares of
his 7 legally acknowledged natural children. The petitioners action was
predicated on the theory that their shares were merely held in trust by
defendants. Nonetheless, no Deed of Trust was alleged and proven. Ultimately,
the lower court dismissed the complaint on the grounds of res judicata,
prescription and laches.
ISSUE:
Whether or not the plaintiffs action was barred by prescription, laches
and res judicata to the effect that they were denied of their right to share in
their fathers estate.
RULING:
YES, there was inexcusable delay thereby making the plaintiffs action
unquestionably barred by prescription and laches and also by res judicata.
Inextricably interwoven with the questions of prescription and res judicata is
the question on the existence of a trust. It is noteworthy that the main thrust of
plaintiffs action is the alleged holding of their shares in trust by defendants.
Emanating from such, the Supreme Court elucidated on the nature of trusts and
the availability of prescription and laches to bar the action for reconveyance of
property allegedly held in trust. It is said that trust is the right, enforceable
solely in equity to the beneficial enjoyment of property, the legal title to which
is vested in another. It may either be express or implied. The latter ids further
subdivided into resulting and constructive trusts. Applying it now to the case at
bar, the plaintiffs did not prove any express trust. Neither did they specify the
kind of implied trust contemplated in their action. Therefore, its enforcement
maybe barred by laches and prescription whether they contemplate a resulting
or a constructive trust.
IMPLIED TRUSTS: PRESCRIPTIVE PERIODS OF ACTION TO ENFORCE
IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE
THE INTESTATE ESTATE OF ALEXANDER T. TY, represented by the
Administratrix, SYLVIA S. TE, petitioner,
VS. COURT OF APPEALS, HON. ILDEFONSO E. GASCON,
and ALEJANDRO B. TY, respondents
G.R. No. 112872
April 19, 2001
FACTS:
Petitioner Sylvia S. Tywas married to Alexander T. Ty, son of private
respondent Alejandro b. ty, on January 11, 1981. Alexander died of leukemia on
May 19, 1988 and was survived by his wife, petitioner Silvia, and only child,
Krizia Katrina. In the settlement of his estate, petitioner was appointed
administratrix of her late husbands intestate estate.
On November 4, 1992, petitioner filed a motion for leave to sell or
mortgage estate property in order to generate funds for the payment of
deficiency estate taxes in the sum of P4,714,560.00.
Privite respondent Alejandro Ty then filed two complaints for the
recovery of the above-mentioned property, praying for the declaration of nullity
of the deed of absolute sale of the shares of stock executed by private
respondent in favor of the deceased Alexander, praying for the recovery of the
pieces of property that were placed in the name of deceased Alexander, they
were acquired through private-respondents money, without any cause or
consideration from deceased Alexander.
The motions to dismiss were denied. Petitioner then filed petitions for
certiorari in the Courts of Appeals, which were also dismissed for lack of merit.
Thus, the present petitions now before the Court.
ISSUE:
Whether or not an express trust was created by private respondent when
he transferred the property to his son.
RULING:
Private respondent contends that the pieces of property were transferred
in the name of the deceased Alexander for the purpose of taking care of the
property for him and his siblings. Such transfer having been effected without
cause of consideration, a resulting trust was created.
WHEREFORE, the petition for certiorari in G.R. No. 112872 is
DISMISSED, having failed to show that grave abuse of discretion was
committed in declaring that the regional trial court had jurisdiction over the
case. The petition for review on certiorari in G.R. 114672 is DENIED, having
found no reversible error was committed.
IMPLIED TRUSTS: PRESCRIPTIVE PERIODS OF ACTION TO ENFORCE
IMPLIED TRUSTS: IN ACTIONS TO QUIET TITLE
VDA. DE RETUERTO VS. BARZ
372 SCRA 712
FACTS:
Petitioners are the heirs of Panfilo Retuerto, while respondents are the
heirs of Pedro Barz who is the sole heir of Juana Perez Barz. Juana Perez Barz
was the original owner of Lot No. 896 having an area of 13,160 square meters.
Before her death on April 16, 1929, Juana Perez executed a Deed of Absolute
Sale in favor of Panfilo Retuerto over a parcel of land, identified as Lot No. 896A, a subdivision of Lot No. 896, with an approximate area of 2,505 square
meters. On July 22, 1940, the Court issued an Order directing the Land
Registration Commission for the issuance of the appropriate Decree in favor of
Panfilo Retuerto over the said parcel of land. However, no such Decree was
issued as directed by the Court because, by December 8, 1941, the Second
World War ensued in the Pacific. However, Panfilo failed to secure the
appropriate decree after the war.
Sometime in 1966, Pedro Barz, as the sole heir of Juana Perez, filed and
application, with the then CFI of Cebu for the confirmation of his title over Lot
896 which included the Lot sold to Panfilo Retuerto. The Court ruled in his
favor declaring him the lawful owner of the said property, and thus Original
Certificate of Title No. 521 was issued.
Lot No. 896-A however was
continuously occupied by the petitioners. Thus, a confrontation arose and as a
result respondents filed an action on September 5, 1989 for Quieting of Title,
Damages and Attorneys Fees. In their answer, petitioners claimed that they
were the owners of a portion of the lot which was registered under the name of
Pedro Barz and therefore the issuance of the Original Certificate of Title in
Pedro Barzs name did not vest ownership but rather it merely constituted him
as a trustee under a constructive trust. Petitioners further contend that Pedro
Barz misrepresented with the land registration court that he inherited the
whole lot thereby constituting fraud on his part.
ISSUE:
Whether or not petitioners defense is tenable.
RULING:
NO, the contention is bereft of merit. Constructive trusts are created in
equity to prevent unjust enrichment, arising against one who, by fraud, duress
or abuse of confidence, obtains or holds the legal right to property which he
ought not, in equity and good conscience, to hold. Petitioners failed to
substantiate their allegation that their predecessor-in-interest had acquired any
legal right to the property subject of the present controversy. Nor had they
adduced evidence to show that the certificate of title of Pedro Barz was
obtained through fraud.
Even assuming arguendo that Pedro Barz acquired title to the property
through mistake or fraud, petitioners are nonetheless barred from filing their
claim of ownership. An action for reconveyance based on an implied or
constructive trust prescribes within ten years from the time of its creation or
upon the alleged fraudulent registration of the property. Since registration of
real property is considered a constructive notice to all persons, then the tenyear prescriptive period is reckoned from the time of such registering, filing or
entering. Thus, petitioners should have filed an action for reconveyance within
ten years from the issuance of OCT No. 521 in November 16, 1968. This, they
failed to do so.
RULING:
No.
Petitioner did not have in his possession the Certificate of
Registration of the motor vehicle and the official receipt of payment for the
same, thereby lending credence to the claim of private respondent who has
possession thereof, that he owns the subject motor vehicle. A certificate of
ISSUE:
Whether a resulting trust was intended by them in the acquisition of the
property; Whether Prescription has set in.
HELD:
I.
Express trusts are those which are created by the direct and positive acts
of the parties, by some writing or deed, or will, or by words evincing an
intention to create a trust. Implied trusts are those which, without being
express, are deducible from the nature of the transaction as matters of intent,
or which are superinduced on the transaction by operation of law as matters of
equity, independently of the particular intention of the parties. Implied trusts
may either be resulting or constructive trusts, both coming into being by
operation of law.
A resulting trust was indeed intended by the parties under Art. 1448 of
the New Civil Code which states ---"Art. 1448.
There is an implied trust when property is sold, and the legal
estate is granted to one party but the price is paid by another for the purpose of
having the beneficial interest of the property. The former is the trustee, while
the latter is the beneficiary . . ."
II.
As differentiated from constructive trusts, where the settled rule is
that prescription may supervene, in resulting trust, the rule of imprescriptibility
may apply for as long as the trustee has not repudiated the trust. Once the
resulting trust is repudiated, however, it is converted into a constructive trust
and is subject to prescription.
A resulting trust is repudiated if the following requisites concur: (a) the
trustee has performed unequivocal acts of repudiation amounting to an ouster
of the cestui qui trust; (b) such positive acts of repudiation have been made
known to the cestui qui trust; and, (c) the evidence thereon is clear and
convincing.
In Tale v. Court of Appeals, the Court categorically ruled that an action
for reconveyance based on an implied or constructive trust must perforce
prescribe in ten (10) years, and not otherwise, thereby modifying previous
decisions holding that the prescriptive period was four (4) years.
THE
END
It appears that there was a pending case, Civil Case No. 7435 of Regional
Trial Court stationed at Himamaylan, Negros Occidental. In this pending case
the intestate estate of the late Luis B. Puentevella, thru Judicial Administratrix,
Angelina L. Puentevella sold said aforementioned lots to Raul Javellana with the
condition that the vendee-promisee would not transfer his rights to said lots
without the express consent of Puentevella and that in case of the cancellation
of the contract by reason of the violation of any of the terms thereof, all
payments therefor made and all improvements introduced on the property shall
pertain to the promissor and shall be considered as rentals for the use and
occupation thereof.
the meantime, the defendants in Civil Case No. 293 with the Court of Appeals
interposed an appeal. On October 30, 1978, the Court of Appeals rendered
judgment, reversing the appealed decision in Civil Case No. 293. On April 29,
1981, judgment was entered in CA-G.R. No. 42211, and the record of the case
was remanded to the court of origin on December 22, 1981. Consequently, in
1982 the judgment in Civil Case No. 7435 was finally executed and enforced,
and petitioner was restored to the possession of the subdivision lots an May 31,
1982. It will be noted that petitioner was not in possession of the lots from
1974 to May 31, 1982.
Javellana having failed to pay the installments for a period of five years,
Civil Case No. 7435 was filed by defendant Puentevella against Raul Javellana
and the Southern Negros Colleges which was impleaded as a party defendant it
being in actual possession thereof, for the rescission of their contract to sell and
the recovery of possession of the lots and buildings with damages.
stated, petitioner was evicted from the subject subdivision lots in 1974 by virtue
of a court order in Civil Case No. 293 and reinstated to the possession thereof
only in 1982. During the period, therefore, from 1974 to 1982, seller private
respondent Angelina Echaus' warranty against eviction given to buyer
petitioner was breached though, admittedly, through no fault of her own. It
follows that during that period, 1974 to 1982, private respondent Echaus was
not in a legal position to demand compliance of the prestation of petitioner to
pay the price of said subdivision lots. In short, her right to demand payment
was suspended during that period, 1974-1982.
The prescriptive period within which to institute an action upon a written
contract is ten years (Art. 1144, Civil Code). The cause of action of private
respondent Echaus is based on the deed of sale afore-mentioned. The deed of
sale whereby private respondent Echaus transferred ownership of the
subdivision lots was executed on May 11, 1967. She filed Civil Case No. 1354
for recovery of title and damages only on October 8, 1982. From May 11, 1967
to October 8, 1982, more than fifteen (15) years elapsed. Seemingly, the 10year prescriptive period had expired before she brought her action to recover
title. However, the period 1974 to 1982 should be deducted in computing the
prescriptive period for the reason that, as above discussed, from 1974 to 1982,
private respondent Echaus was not in a legal position to initiate action against
petitioner since as afore-stated, through no fault of hers, her warranty against
eviction was breached. In the case of it was held that a court order deferring
action on the execution of judgment suspended the running of the 5-year period
for execution of a judgment. Here the execution of the judgment in Civil Case
No. 7435 was stopped by the writ of preliminary injunction issued in Civil Case
No. 293. It was only when Civil Case No. 293 was dismissed that the writ of
execution in Civil Case No. 7435 could be implemented and petitioner
Binalbagan restored to the possession of the subject lots.
Deducting eight years (1974 to 1982) from the period 1967 to 1982, only
seven years elapsed. Consequently, Civil Case No. 1354 was filed within the 10year prescriptive period. Working against petitioner's position too is the
principle against unjust enrichment, which would certainly be the result if
petitioner were allowed to own the 42 lots without full payment thereof.
WHEREFORE, the petition is DENIED and the decision of the Court of
Appeals in CA-G.R. CV No. 24635 is AFFIRMED.