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WRIGHT V. MANILA ELECTRIC CO.

(1914)
Plaintiff Appellant: E.M. Wright
Defendant Appellee: Manila Electric Co.
Topic: Basic Elements Torts; General Cases

FACTS:
1. Manila Electric maintains an electric street railway in Caloocan. The tracks of this railway
were situated at the front of Wrights house in such a way that Wright had to pass
through these tracks to get inside his house.
2. Aug 8, 1909: Wright was driving home via a calesa. His horse, while crossing the tracks,
stumbled upon them, causing the cart to strike one of the rails with great force. As a
result, Wright was thrown off the cart and was injured.
o The tracks were above ground at the time and the ties, on which the tracks rested,
were projected from one-third to one half of their depth, which amounted to the
tops of the rails protruding above the level of the street at a height of 5 6 inches.
3. It was admitted that Manila Electric was negligent in maintaining the tracks but it
contended that Wright was equally negligent as he was intoxicated during the time of
the accident. Moreover, they claim that it was Wrights intoxication that caused the
accident.
RTC: Both parties are negligent but defendants negligence was greater; P1000 in damages
awarded.
The defendant appealed as to its liability, arguing that Wrights intoxication was the
cause of the accident.
On the other hand, the plaintiff appealed with the position that the damages were
insufficient, considering the circumstances.

ISSUES:
1. WON the plaintiff was negligent (NO)
2. WON the extent of plaintiffs negligence was enough to absolve defendant of liability
(MOOT due to first issue)

RATIO:
1. The plaintiff was NOT negligent.
Defendant claims that had Wright been sober, the accident in question would not
have occurred.
However, the trial court was errant in holding that plaintiff was negligent.
o Mere intoxication is not negligence per se, nor does it establish by itself a lack of
ordinary care.
o A mans intoxication or sobriety is immaterial if no lack of ordinary care or
prudence can be imputed to him.
o Also, there is no degree of higher care required of a drunken man for his own
protection, as compared to that of a sober man; both are held to the same
standards.
o Apart from Wrights intoxication, the trial court did not have any other basis for
holding Wright to be negligent.
o That a sober man would not have gotten into the accident that Wright did was
merely a conjecture not warranted by facts and is merely speculation and
guesswork.
2. Plaintiff being not guilty of negligence, the issue is moot.

DISPOSITIVE: Judgement affirmed.


PROFESSIONAL SERVICES INC V. AGANA (2007)
Petitioner-Defendant: Professional Services Inc. (PSI)
Respondents-Plaintiff: Natividad and Enrique Agana
Topic: Basic Elements of Torts; Specific Cases

FACTS:
1. Natividad was rushed to the Medical City General Hospital, as she was complaining of
difficulty in bowel movement and the presence of blood in her anal discharge.
2. Dr. Miguel Ampil, after a series of medical examinations, diagnosed her to be suffering
from cancer of the sigmoid. He later performed an anterior resection surgery on
Natividad and found that the malignancy in her sigmoid area had spread to her ovaries,
requiring its removal via a hysterectomy. Dr. Ampil acquired Enriques (Natividads
spouse) consent for him and Dr. Fuentes to perform the procedure.
3. Apr 11, 1984: Dr. Fuentes first performed the hysterectomy and then left the operation
to be continued and finished by Dr. Ampil. However, the surgery did not end well as
there were two sponges that were left inside the body of Natividad. Both were not
found even after a search was conducted. The surgery was concluded without their
removal. This fact was recorded by the nurses in the Record of Operation.
4. Apr 24, 1984: Natividad was released from the hospital. The medical bills amounted to
P60,000.
5. However, after a couple of days, Natividad complained of immense pain from her anal
region and consulted the two doctors. They told her it was a natural consequence of the
procedure. Dr. Ampil further recommended that she see an oncologist about the
remaining cancerous nodes that were not removed during her operation.
6. May 1984: Natividad and Enrique flew to the US for further treatment. For four months,
she underwent examinations and consultations. She was told that she was cancer-free
and recommended her to go back home.
7. August 1984: Natividad flew back home but was still suffering from pains. Two weeks
later, her daughter found a piece of the sponge/gauze protruding from her vagina. Dr.
Ampil proceeded to her house and removed it by hand. The gauze had a width of 1.5
inches. After this, he assured her that the pain would vanish.
8. On the contrary, the pains intensified, forcing Natividad to go to Polymedic General
Hospital. Dr. Ramon Gutierrez, the attending physician there, detected another foreign
object in her vagina: the second sponge/gauze which badly infected her vaginal vault,
forming a recto-vaginal fistula in her reproductive organs. Surgery was again required to
repair the damage, which Natividad underwent in Oct 1984.
9. Nov 1984: Natividad and her spouse filed a complaint for damages against PSI, Dr. Ampil
and Dr. Fuentes. They alleged that they were liable for negligence (for leaving the two
pieces of gauze inside Natividads body) and for malpractice (for concealing this fact
against her).
o Natividad also filed a complaint against the two doctors in the Professional
Regulation Commission for gross negligence and malpractice. However, only the case
against Dr. Fuentes proceeded as they were not able to acquire jurisdiction over Dr.
Ampil, who was in the US at the time.
10. Pending the resolution of the cases, Natividad passed away. She was substituted by her
children.

RTC: Petitioner-defendants liable. Actual damages ($19,900 + P4,800 + P45,802), moral damages
(P2 million), exemplary damages (P300k) and attorneys fees (P250k) were awarded, with legal
interest.
The petitioner defendants appealed the RTC decision.
Meanwhile, the Aganas filed for a motion for a partial execution of the RTC decision,
which the court granted. The sheriff, in pursuance of the motion, levied upon certain
properties of Dr. Ampil and gave the proceeds (P450k) to the Aganas.
After they received the money, the Aganas, and PSI and Dr. Fuentes entered into an
agreement to suspend the execution of the RTC Decision. However, not long after, the
Aganas again filed for a motion for execution of the RTC decision.
As a result, Dr. Fuentes filed with the CA a petition for certiorari and prohibition, with a
prayer for preliminary injunction. The CA later granted the prayer for injunctive relief.
The petition was consolidated with the earlier appeal.

PRC: Case against Dr. Fuentes dismissed; prosecution was unable to show that it was Dr.
Fuentes who left the 2 pieces of gauze in Natividads body.

CA: PSI and Dr. Ampil liable while Dr. Fuentes is not liable.
The CA held that (a) PSI was vicariously liable for Dr. Ampil and is estopped from raising
the defense that he is not their employee, (b) it is solidarily liable with Dr. Ampil, and (c)
PSI was not entitled counterclaim against the Aganas.
Dr. Ampil filed for a motion for reconsideration but was denied by the CA.
Thus the parties appealed:
o PSI: contended that Dr. Ampil was only an independent contractor and hence,
should be held liable alone.
o Aganas: CA erred in absolving Dr. Fuentes, invoking the res ipsa loquitur; the
finding of the pieces of gauze are prima facie proof that they had been negligent
o Dr. Ampil: contended that he should not be held liable for the finding of the
pieces of gauze since there could have been other probable causes: (a) it was
Dr. Fuentes who used the gauzes, (b) the nurses failed to properly count the
gauzes used, and (c) it was the medical intervention of the doctors in the US
that caused it

ISSUES:
1. WON the CA erred in holding Dr. Ampil liable (NO)
2. WON the CA erred in absolving Dr. Fuentes of any liability (NO)
3. WON PSI may be held solidarily liable with Dr. Ampil (YES)

RATIO:
1. CA was correct; Dr. Ampil is liable
The arguments of Dr. Ampil are purely conjecture and without factual basis.
Moreover, he did not submit any evidence as to the truthfulness of these claims.
The fact is that Dr. Ampil finished the surgery without the removal of the
sponges/gauzes
o An operation that requires placing of the sponges in the incision is not complete
until they have been removed, and it has been settled that leaving them and
other foreign substances in the wound after the incision has been closed is at
least prima facie negligence by the operating surgeon. Some legal authorities
even consider this as negligence per se.
o The Court recognizes that Dr. Ampil might have been forced by the circumstances
to finish the surgeries without removing the gauzes. However, this created an
obligation for him to inform the patient and to advise her of what should be done
to relieve the effects of such foreign substance being in her body.
o However, Dr. Ampil did NOT inform Natividad about the gauzes. What was worse
is that he even tried to mislead her as to the pain she experienced from the
foreign substance in her body. To the Court, what was initially a negligent act
became a deliberate act of deception; it is now a clear case of medical negligence
as all elements were present:
Duty: Dr. Ampil had the duty to remove the gauzes from Natividads body
Breach: Dr. Ampil failed in removing the gauzes
Injury: Natividad felt pain and required further expense to remedy the
problem
Proximate Cause: Natividads injury can be traced back to Dr. Ampils
decision to close the incision despite the gauzes still being inside of Natividad
Moreover, Dr. Ampils concealment aggravated the injury to Natividad and
her family.
2. CA was correct; Dr. Fuentes is not liable.
The Aganas argue that under the doctrine of res ipsa loquitur, Dr. Fuentes is clearly
liable.
Res ipsa loquitur = the thing speaks for itself
o The fact of the occurrence of the injury, taken with the surrounding
circumstances, may permit an inference of raise a presumption of negligence OR
make out a plaintiffs prima facie case and present a question of fact for
defendant to meet with an explanation.
o Requisites: (a) occurrence of an injury, (b) the thing which caused the injury was
under the control and management of the defendant, (c) the occurrence was such
that in the ordinary course of things, would not have happened if those who had
control or management used proper care, and (d) the absence of an explanation
by the defendant
Of the element, the most instrumental is the third one, the control and management
of the thing, which caused the injury. This element the Court found missing for Dr.
Fuentes to be held liable.
While Dr. Fuentes performed the hysterectomy first, Dr. Ampil took over and had the
opportunity to review his work, which he found satisfactory and allowed Dr. Fuentes
to leave the operating room. Dr. Ampil then resumed the operation. He was about to
finish but then the matter of the gauzes came up. A search was conducted but they
were not found. Dr. Ampil then decided to close up the incision, despite that fact.
Under the Captain of the Ship rule, the operating surgeon is the person in the
complete charge of the surgery room and all personnel connected with the
operation; their duty is to obey his orders.
o Dr. Ampil was the lead surgeon in this case.
o As he was the one who had control, Dr. Fuentes could not be held liable.
o Furthermore, it was the directive of Dr. Ampil to close up the incision despite the
missing gauzes that was determined to be the proximate cause of the injury.
Obiter: Under our jurisdiction, res ipsa loquitur is not a part of substantial law and
does not confer a separate ground for liability but is only a rule in evidence. Mere
invocation and application of the doctrine will not dispense with the requirement of
proof of negligence.
3. Yes, PSI is solidarily liable with Dr. Ampils negligence
Historically, hospitals were charitable institutions. But over time, this charitable
nature became more business and profit-oriented.
o Along with this change was the increase in a hospitals liability. Many courts now
allow claims for a hospitals vicarious liability through the related doctrines of
respondeat superior, apparent authority, ostensible authority and agency by
estoppel
o In our jurisdiction, this is embodied in NCC Art. 2180, the rule governing vicarious
liability, under which owners are held liable for damage caused by their
employees.
Even then, professionals (such as doctors, dentists and pharmacists) do not fall under
the ambit of the word employees in Art. 2180.
o This is under the traditional notion that the very nature of the field of medicine is
so complex that physicians are generally free to exercise their own skill and
judgment without interference from the hospital.
o This was upheld in the case of Schloendorff v. Society of New York Hospital.
However, this doctrine was overturned in Bing v. Thunig, now making applicable the
doctrine of respondeat superior to hospitals.
In our jurisdiction, Ramos v. CA is the controlling doctrine. In that case, it is held that
an employer-employee relationship, in effect, exists between the hospital and
visiting physicians. As PSI is considered the employer of Dr. Ampil, it is solidarily
liable. Hence, NCC Art. 2180 applies.
Apart from Ramos, PSIs liability also rests on the basis of agency by estoppel and
corporate negligence.
o Agency by estoppel: liability is imposed not as a result of a contractual relation
but rather because of the actions of a principal/employer in somehow misleading
the public into believing that the relationship or principals /employers authority
over the agent/employee exists.
As PSI publicly displayed that Dr. Ampil and Dr. Fuentes was one of their
accredited physicians. It is now estopped from passing the blame to both of
them.
o Corporate negligence: in the context of hospital liability, there are certain duties
expected of hospitalsto monitor and review the medical services being provided
within its walls.
Not only did PSI breach its duties to oversee or supervise all persons who
practice medicine within its walls, it also failed to take an active step in fixing
the negligence committed.
4. Obiter: Once a physician undertakes the treatment and care of a patient, the law
imposes on him certain obligations. In order to escape liability, he must possess that
reasonable degree of learning, skill and experience required by his profession. At the
same time, he must apply reasonable care and diligence in the exercise of his skill and
the application of his knowledge and exert his best judgment.

DISPOSITIVE: CA affirmed.

PROFESSIONAL SERVICES INC. V. AGANA (2008)
Petitioner: Professional Services, Inc. (PSI)
Respondents: Natividad and Enrique Agana
Topic: Basic Elements of Torts; Specific Cases

FACTS:
1. (See the 2007 case facts for reference)
2. PSI is now filing a motion for reconsideration from the 2007 Decision of the Court.
3. PSI now contends that:
First, there was no employer-employee relationship between PSI and Dr. Ampil;
hence, the vicarious liability of owners/employers for their employees under NCC
Art. 2180 is inapplicable. PSI points out that the case that the Court used as basis,
Ramos v. CA, was overturned in its 2002 resolution. It now argues that its case should
be overturned as well, as a result.
Second, they cannot be held liable under the doctrines of respondeat superior,
ostensible agency or agency by estoppel because it was not proven by the evidence
that Natividad relied on the representation of the hospirtal in engaging the services
of Dr. Ampil.
Lastly, PSI contends that the doctrine of corporate negligence is inapplicable as the
proximate cause is not from their own action but from Dr. Ampils negligence.

ISSUES:
1. WON NCC ART. 2180 applies in the case (YES)
2. WON estoppel by agency is applicable (YES)
3. WON the doctrine of corporate negligence applies (YES)

RATIO:
1. The application of NCC Art. 2180 is correct.
While the Court held in the 2002 Resolution of Ramos v. CA that there was no
employer-employee relationship in that case, it did not reverse its holding in the
original decision that hospitals and consultants have an employer-employee
relationship.
PSI only made a general denial of responsibility, when it maintained that consultants,
like Dr. Ampil, are independent contractors and not employees.
o That being said, the Court holds that even if Dr. Ampil was an independent
contractor, it would still be liable.
o As the Court held in Nograles et al v. Capitol Medical Center, that the doctrine of
apparent authority is an exception to the general rule that hospitals are not liable
for the negligence of an independent contractor-physician. There are two factors
to the doctrine:
First factor: focuses on the hospitals manifestations and is sometimes
described as an inquiry whether the hospital acted in a manner which would
lead a reasonable person to conclude that the individual who was alleged to
be negligent was an employee or agent of the hospital.
In this regard, the hospital need NOT make express representations to the
patient that the treating physician is an employee of the hospital; rather,
a representation may be general and implied.
Second factor: focuses on the patients reliance. It is sometimes
characterized as an inquiry on whether the plaintiff acted in reliance upon
the conduct of the hospital or its agent consistent ordinary care and
prudence.
2. Agency by estoppel is applicable.
While PSI maintains that Natividad did not rely on the representation of the hospital
that Dr. Ampil was their employee, the Aganas categorically testified that knew Dr.
Ampil to be a staff member of the Medical City, which they know as a prominent and
known hospital.
The question in whether agency by estoppel applies in a case is whether the principal
has, by his voluntary act, placed the agent in such a situation where a person of
ordinary prudence, conversant with business usages and the nature of this particular
business, is justified in presuming that such agent has authority to perform the
particular act in question.
In this case, the answer is yes. PSI is now estopped from shifting the blame slowly to
Dr. Ampil. The act of PSI displaying Dr. Ampils name at the public directory in the
hospitals lobby amounts to it announcing that they provide services through the
physicians listed there.
3. There is liability on PSIs part through corporate negligence.
The responsibility of the hospital includes the proper supervision of the members of
its medical staff. The hospital has the duty to make a reasonable effort to monitor
and oversee the treatment prescribed and administered by the physicians practicing
in its premises.
The hospital, in not conducting an immediate investigation on the missing gauzes
considering that they were informed of the gauzes, constitutes a breach of its
corporate responsibility. By remaining silent and committing inaction makes them
not only vicariously liable under NCC Art. 2180, but also directly liable under NCC Art.
2176.

DISPOSITIVE: Motion denied.

PROFESSIONAL SERVICES INC. v. AGANA (2010)
Petitioner: Professional Services Inc. (PSI)
Respondent: Natividad and Enrique Agana
Topic: Basic Elements of Torts; Specific Cases

FACTS:
1. See facts from 2007 Decision and 2008 Resolution
2. With leave of the Court, PSI filed a second motion for reconsideration of the 2007 and
2008 decisions. This time, other hospitals (Manila Medical Services, Asian Hospital Inc,
and Private Hospital Association of the Philippines) all sought to intervene in the case
for the reason that the decision could adversely affect the financial viability of private
hospital and drive up the cost of healthcare in the country.
3. The PSI is now arguing the following:
First, the declaration in the past resolutions as to the existence of an employer-
employee relationship should be set aside as for being inconsistent with or contrary
to the trial courts decision who found that no such relationship existed and that the
doctors are independent contractors.
Second, that the Aganas specifically engaged Dr. Ampil as their doctor and did not
specifically look to the Medical City for care and support and that they made this
choice since Dr. Ampil is their friend and neighbor.
Lastly, that they are not guilty of corporate negligence since the proximate cause of
Natividads injury was not through their actions but through Dr. Ampil.

ISSUES:
1. WON PSI is liable under Art. 2180, as Dr. Ampils employer.
2. WON agency by estoppel is applicable to hold PSI liable
3. WON PSI is guilty of corporate negligence


RATIO:
1. The issue is academic.
As a juridical entity, a hospital does not practice medicine.
Instead, it does so indirectly through its doctors, surgeons and other medical
practitioners. Through them, three legal relationships crisscross: (a) between the
hospital and the doctor, (b) between the hospital and the patient, and (c) between
the patient and the doctor.
o When a employer-employee relationship exists, the employer-employee
relationship maybe held vicariously liable under NCC Art. 2176(quasi-delict).
o If there is no such relationship, he may still be held liable under Art. 2176, in
relation to Art. 1431 (estoppel) and Art. 1869 (implied agency).
As for determining whether an employer-employee relationship exists, the Court
employs the control test.
o In this case, there was power of control on the hospitals part as the work of all
practitioners in the emergency room, operating room or any department or ward
is monitored by nursing supervisors, charge nurses and orderlies.
HOWEVER, the Court did realize that the Aganas did not question the finding of the
trial court that the no employer-employee relationship.
o The Court did find that there was insufficient evidence as to the existence of the
power of control on the hospitals part vis a vis Dr. Ampil.
Thus whatever discussion on the matter is purely academic.
2. However, the PSI is still liable under the estoppel by agency doctrine.
The two factors of estoppel by agency are present: first, the hospital did impliedly
manifest that Dr. Ampil was its agent and second, the patient, with no want for
ordinary care or prudence, did rely on the conduct of the hospital and the doctor.
Testimony reveals that Enrique, in choosing Dr. Ampil, was significantly influenced by
the fact that Dr. Ampil was affiliated with the Medical City General Hospital.
PSIs record also reveals that the Aganas signed a consent for hospital care, which
states that treatment may be given as may be deemed necessary by the physicians
of this hospital. This statement reinforces the public impression that Dr. Ampil was
indeed a physician of the hospital.
3. PSI is liable, pro hac vice (for this case only), through corporate negligence
PSI argued that had Natividad also revealed to them about the pain she felt after the
operation and not only to Dr. Ampil, they would have been obliged to act on the
matter.
The Court finds this argument significant for four reasons:
o First, the statement constitutes judicial admission by PSI that while it had no
power to control the means or method of Dr. Ampils work, it had the power to
review or cause the review of his work, especially if there was something irregular
in the medical procedures conducted inside its walls.
o Second, it is an admission that it takes the Captain of the Ship duty from the
lead surgeon for the purpose of ensuring the safety of the patients availing
themselves of its services
o Third, PSI defined its corporate conduct under this case: (a) that it had a corporate
responsibility to attend to Natividad after the operation, (b) the extent of its
responsibility goes beyond the mere reporting of the missing gauzes, and (c) its
duty included determining and correcting Dr. Ampils negligence.
o Lastly, PSI barred himself from arguing that such corporate responsibility did not
exist at the time of the operation.
The question now is whether PSI measured up to its own standards.
o In its defense, PSI said that Dr. Ampil assumed responsibility of informing
Natividad about the missing gauzes in her body.
o PSI also claims that Natividad did not show any discomfort and did not even
inform the hospital about her discomfort.
The Court finds the defenses of PSI unacceptable.
o While Dr. Ampil had the primary responsibility, PSI imposed upon itself a separate
and independent responsibility of initiating the inquiry into the missing gauzes,
the purpose of which is to pinpoint any lapse in procedure that led to the gauze
count discrepancy. Dr. Ampils failure to inform Natividad did not release PSI from
its own responsibility.
o It should have not also waited for Natividad to complain as it already had
knowledge of what transpired through the operation.
o However, the liability established on PSIs part is pro hac vice (for this case only),
and does not serve as a precedent for other hospitals. Its liability arises from an
implied agency with Dr. Ampil and its admitted corporate responsibility to
Natividad.

DISPOSITIVE: P15 million in damages awarded, with 12% interest per annum. Motion denied.

FILINVEST CREDIT V. CA (1989)
Petitioner: Filinvest Credit Corporation
Public Respondent: Court of Appeals
Private Respondent: Jose Sy Bang and Iluminada Tan-Sy Bang
Topic: Basic Elements of Torts; Specific Cases (Waiver)

FACTS:
1. Jose and Iluminada were engaged in the sale of gravel produced from crushed rocks and
used for construction purposes.
2. They engaged one Ruben Mercurio, the proprietor of Gemini Motor Sales in Lucena City,
to look for a rock crusher. Ruben referred them to Rizal Consolidated Corporation,
which had for sale such a machine.
The machine was labeled to have in good running condition and capable of
processing 20-40 tons of rock.
3. Oscar Sy Bang, Joses brother, went to inspect the said machine. Oscar was satisfied
with the inspection and so the private respondents signified their intent to purchase the
same machine.
4. However, given their financial state, they acquired the assistance of FILINVEST Credit
Corporation. The corporation agreed under the following terms: that there will be a
lease of the machine, with an option to purchase upon the termination of the lease. In
turn, the private respondents will execute a real estate mortgage in favor the
corporation
5. A contract of lease was subsequently entered into with the following terms:
The lease period is two years starting from July 5, 1981.
The installments are P10,000 for the first 3 months, P23,000 for the next 6 months
and P24,800 for the remaining 15 months.
After the end of the lease period, the machine would be owned by the private
respondents.
The contract also included a general waiver of warranties in the favor of the
petitioner.
6. The private respondents then issued an initial check of P150,550 and 24 postdated
check. They also executed a real estate mortgage as required by the corporation. In
turn, the corporation delivered the rock crusher (Jul 1981)
7. Three months after the delivery, however, the privates respondents claimed that they
were only able to test the machine that month and discovered that it could only handle
5 tons instead of 20-40 tons as it was claimed. Eventually, they stopped the payments
through the postdated checks.
8. With the private respondents nonpayment, the corporation foreclosed the mortgages.
The private respondents were given a notice of the Auction Sale.
9. The private respondents filed a case for the rescission of the lease, annulment of the
mortgage and for injunction of the auction sale, with damages. A TRO was granted to
postpone the sale.

RTC: Injunction made permanent, contract of lease rescinded, and mortgage annulled, with
attorneys fees and costs against Filinvest.

CA: RTC affirmed.
ISSUES:
1. WON the petitioner is liable (NO)
2. WON the there is a cause of action against the petitioner (YES)

RATIO:
1. No, there is no liability on the petitioners part.
It was the private respondents who made an inspection of the machine before they
chose it and sought the financial assistance of the petitioner, a fact not denied by the
private respondents.
Considering that the private respondents have more knowledge of the machine
through their line of business and having the opportunity to inspect the machine in
question, they are now disallowed from complaining about the deficiency of the
machine.
The rule is that between two parties, he who by his negligence caused the loss shall
bear the same.
Moreover, part of the contract of lease was a general waiver of warranties. In signing
the contract, the private respondents agreed to absolve the corporation of any
liability arising from the defects or deficiencies of the machine
o Under the principle of caveat emptor (buyer beware), a buyer is expected to
check for defects and cannot return such product if defects are later on
discovered, particularly if its return is not covered by or stipulated in a contract or
warranty.
o For the Court to hold the waiver as invalid, it would be impairing the obligation of
contracts, which is prohibited.
o Besides, there is no ambiguity in the wording of the warranty as to validate the
Court in striking it out.
2. Yes, the private respondents have a cause of action.
While Filinvest argues that the cause of action of respondents are with the Rizal
Consolidated Corporation, the private respondents have a valid cause of action with
them.
It even contends that under NCC Art. 1571 (6 month prescription on sales, after the
delivery of the thing sold), the cause of action has prescribed.
Petitioners defenses notwithstanding, the Court holds that there is a valid cause of
action.
o The one who purchased the machine from Rizal Consolidated Corporation was
petitioner. The ownership was effectively transferred to it. It was what allowed
petitioner to enter into the lease agreement with private respondents in the first
place.
Obiter: The contract in question is not actually a lease but one of sale. The rule is
that the law and intent of the parties is what defines the nature of the contract. The
apparent intent of the parties in this case is to have the so-called rent be the
installments. And upon the completion of the installments, the machine will be
conveyed to the ownership of private respondents.