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Chuaquico Jett I.


Article 1158: Obligations derived from law are not presumed

Pelayo vs. Lauron
Petitioner Pelayo, a physician, rendered a medical assistance during the child delivery of
the daughter-in-law of the defendants. The just and equitable value of services rendered by him
was P500.00 which the defendants refused to pay without alleging any good reason. With this,
the plaintiff prayed that the judgment be entered in his favor as against the defendants for the
sum of P500.00 and costs.
The defendants denied all of the allegation of the plaintiff, contending that their
daughter-in-law had died in consequence of the child-birth, and that when she was alive, she
lived with her husband independently and in a separate house, that on the day she gave birth she
was in the house of the defendants and her stay there was accidental and due to fortuitous
WON, the father and mother in law is liable to pay the services rendered by
petitioner in assisting the child delivery of their daughter in law
NO, they are not liable but the husband of their daughter is liable
According to article 1089 of the Civil Code, obligations are created by law, by contracts,
by quasi-contracts, and by illicit acts and omissions or by those in which any kind of fault or
negligence occurs.
Obligations arising from law are not presumed. Those expressly determined in the code
or in special laws, etc., are the only demandable ones. Obligations arising from contracts have
legal force between the contracting parties and must be fulfilled in accordance with their
stipulations. (Arts. 1090 and 1091.)
The rendering of medical assistance in case of illness is comprised among the mutual
obligations to which the spouses are bound by way of mutual support.
If every obligation consists in giving, doing or not doing something (art. 1088), and
spouses are mutually bound to support each other, there can be no question but that, when either
of them by reason of illness should be in need of medical assistance, the other is under the
unavoidable obligation to furnish the necessary services of a physician in order that health may

be restored, and he or she may be freed from the sickness by which life is jeopardized; the party
bound to furnish such support is therefore liable for all expenses, including the fees of the
medical expert for his professional services.
In the face of the above legal precepts it is unquestionable that the person bound to pay
the fees due to the plaintiff for the professional services that he rendered to the daughter-in-law
of the defendants during her childbirth, is the husband of the patient and not her father and
mother- in-law, the defendants herein.
From the foregoing it may readily be understood that it was improper to have brought an
action against the defendants simply because they were the parties who called the plaintiff and
requested him to assist the patient during her difficult confinement, and also, possibly, because
they were her father and mother-in-law and the sickness occurred in their house. The defendants
were not, nor are they now, under any obligation by virtue of any legal provision, to pay the fees
claimed, nor in consequence of any contract entered into between them and the plaintiff from
which such obligation might have arisen.
De la Cruz vs. Northern Theatrical Ent.
In the year 1941 the Northern Theatrical Enterprises Inc., a domestic corporation
operated a movie house in Laoag, Ilocos Norte, and among the persons employed by it was the
plaintiff DOMINGO DE LA CRUZ, hired as a special guard whose duties were to guard the
main entrance of the cine, to maintain peace and order and to report the commission of disorders
within the premises
As such guard he carried a revolver. In the afternoon of July 4, 1941, one Benjamin
Martin wanted to crash the gate or entrance of the movie house. Infuriated by the refusal of
plaintiff De la Cruz to let him in without first providing himself with a ticket, Martin attacked
him with a bolo. De la Cruz defendant himself as best he could until he was cornered, at which
moment to save himself he shot the gate crasher, resulting in the latter's death.
He was prosecuted for the death of Martin however the court dismissed the criminal cases
filed against him. This prompted petitioner to demand from his former employer reimbursement
of his expenses but was refused, after which he filed the present action against the movie
corporation and the three members of its board of directors, to recover not only the amounts he
had paid his lawyers but also moral damages said to have been suffered, due to his worry, his
neglect of his interests and his family as well in the supervision of the cultivation of his land, a
total of P15,000.
Court of First Instance of Ilocos Norte after rejecting the theory of the plaintiff that he
was an agent of the defendants and that as such agent he was entitled to reimbursement of the

expenses incurred by him in connection with the agency (Arts. 1709-1729 of the old Civil Code),
found that plaintiff had no cause of action and dismissed the complaint without costs.
WON, petitioner is entitled of reimbursement from his former employer
NO, he is not entitled to reimbursement of the cost he incurred in the criminal case
We agree with the trial court that the relationship between the movie corporation and the
plaintiff was not that of principal and agent because the principle of representation was in no way
involved. Plaintiff was not employed to represent the defendant corporation in its dealings with
third parties. He was a mere employee hired to perform a certain specific duty or task, that of
acting as special guard and staying at the main entrance of the movie house to stop gate crashers
and to maintain peace and order within the premises.
The learned trial court in the last paragraph of its decision dismissing the complaint said
that "after studying many laws or provisions of law to find out what law is applicable to the facts
submitted and admitted by the parties, has found none and it has no other alternative than to
dismiss the complaint." The trial court is right. We confess that we are not aware of any law or
judicial authority that is directly applicable to the present case, and realizing the importance and
far-reaching effect of a ruling on the subject-matter we have searched, though vainly, for judicial
authorities and enlightenment.
All the laws and principles of law we have found, as regards master and servants, or
employer and employee, refer to cases of physical injuries, light or serious, resulting in loss of a
member of the body or of any one of the senses, or permanent physical disability or even death,
suffered in line of duty and in the course of the performance of the duties assigned to the servant
or employee, and these cases are mainly governed by the Employer's Liability Act and the
Workmen's Compensation Act. But a case involving damages caused to an employee by a
stranger or outsider while said employee was in the performance of his duties, presents a novel
question which under present legislation we are neither able nor prepared to decide in favor of
the employee.
If the employer is not legally obliged to give, legal assistance to its employee and provide
him with a lawyer, naturally said employee may not recover the amount he may have paid a
lawyer hired by him.
Had no criminal charge been filed against him, there would have been no expenses
incurred or damage suffered. So the damage suffered by plaintiff was caused rather by the
improper filing of the criminal charge, possibly at the instance of the heirs of the deceased gate
crasher and by the State through the Fiscal. We say improper filing, judging by the results of the

court proceedings, namely, acquittal. In other words, the plaintiff was innocent and blameless. If
despite his innocence and despite the absence of any criminal responsibility on his part he was
accused of homicide, then the responsibility for the improper accusation may be laid at the door
of the heirs of the deceased and the State, and so theoretically, they are the parties that may be
held responsible civilly for damages and if this is so, we fail to see now this responsibility can be
transferred to the employer who in no way intervened, much less initiated the criminal
proceedings and whose only connection or relation to the whole affairs was that he employed
plaintiff to perform a special duty or task, which task or duty was performed lawfully and
without negligence.
Damages incurred here consisting of the payment of the lawyer's fee did not flow directly
from the performance of his duties but only indirectly because there was an efficient, intervening
cause, namely, the filing of the criminal charges.
Article 1159: Contract is the law between parties
NGEI vs. Filipinas Palmoil
On December 2, 1988, the petitioner NGEI Multi-Purpose Cooperative Inc. (NGEI
Coop), a duly-registered agrarian reform workers cooperative, was awarded by the Department
of Agrarian Reform (DAR) 3,996.6940 hectares of agricultural land for palm oil plantations
located in Rosario and San Francisco, Agusan del Sur.
On March 7, 1990, NGEI Coop entered into a lease agreement with respondent Filipinas
Palmoil Plantation, Inc. (FPPI).
On January 29, 1998, the parties executed an Addendum to the Lease Agreement
(Addendum) which provided for the extension of the lease contract for another 25 years from
January 1, 2008 to December 2032. The Addendum was signed by Antonio Dayday, Chairman of
the NGEI Coop, and respondent Dennis Villareal (Villareal), the President of FPPI, and
witnessed by DAR Undersecretary Artemio Adasa
On June 20, 2002, NGEI Coop and petitioner Hernancito Ronquillo (Ronquillo) filed a
complaint for the Nullification of the Lease Agreement and the Addendum to the Lease
Agreement before the Department of Agrarian Reform Adjudication Board (DARAB) Regional
Adjudicator of San Francisco, Agusan del Sur (Regional Adjudicator)
The petitioners alleged, among others, that the Addendum was null and void because
Antonio Dayday had no authority to enter into the agreement.
Regional Adjudicator declared the Addendum as null and void for having been entered
into by Antonio Dayday without the express authority of NGEI Coop.

FPPI filed a motion for reconsideration. The Regional Adjudicator, finding merit in the
said motion, reversed his earlier decision in an Order, dated March 22, 2004. He dismissed the
complaint for the nullification of the Addendum on the grounds of prescription and lack of cause
of action. The Regional Adjudicator further opined that the Addendum was valid and binding on
both the NGEI Coop and FPPI
On May 9, 2008, the CA rendered the assailed decision upholding the validity and
binding effect of the Addendum as it was freely and voluntarily executed between the parties,
devoid of any vices of consent. The CA sustained its validity on the basis of the civil law
principle of mutuality of contracts that the parties were bound by the terms and conditions
unequivocally expressed in the addendum which was the law between them.
WON, the CA committed reversible error of law when it upheld the contract of lease
between the parties.
NO, the CA did not commit any error
The Court understands the predicament of these farmer-beneficiaries of NGEI Coop.
Under the prevailing circumstances, however, it cannot save them from the consequences of the
binding lease agreement, the Addendum. The petitioners, having freely and willingly entered into
the Addendum with FPPI, cannot and should not now be permitted to renege on their compliance
under it, based on the supposition that its terms are unconscionable. The contract must bind both
contracting parties; its validity or compliance cannot be left to the will of one of them.
It is basic that a contract is the law between the parties. Obligations arising from contracts
have the force of law between the contracting parties and should be complied with in good faith.
Unless the stipulations in a contract are contrary to law, morals, good customs, public order or
public policy, the same are binding as between the parties
The Court quotes with approval the ruling of the CA on this matter, to wit:
petitioners cannot unilaterally change the tenor of the terms and conditions of the
Addendum or cancel it altogether after having gone through the solemnities and
formalities for its perfection. In fact, the Addendum had been consummated upon
performance by the parties of the prestations and after they had already reaped the mutual
benefits arising from the contract. Mutuality is one of the characteristics of a contract,
and its validity or performance or compliance cannot be left to the will of only one of the
parties. It is a long established doctrine that the law does not relieve a party from the
effects of an unwise, foolish, or disastrous contract, entered into with all the required
formalities and with full awareness of what he was doing

It must be stressed that the Addendum was found to be a valid and binding contract. The
petitioners failed to show that the Addendums stipulated rental rates and economic benefits
violated any law or public policy. The Addendum should, therefore, be given full force and
effect, without prejudice to a renegotiation of the terms of the leasehold agreement in accordance
with the provisions of Administrative Order No. 5, Series of 1997, governing their Addendum, as
regards the contracting procedures and fixing of lease rental in lands planted to palm oil trees
MBTC vs. Rosales
PONENTE: Del Castillo

Petitioner Metrobank is a domestic banking corporation duly organized and existing
under the laws of the Philippines. Respondent Rosales is theowner of a travel agency while Yo
Yuk To is her mother.
In 2000, respondents opened a Joint Peso Account with petitioner s Pritil-Tondo Branch.
In May 2002, respondent Rosales accompanied her client Liu Chiu Fang, a Taiwanese
National applying for a retiree s visa from the Philippine Leisure and Retirement Authority
(PLRA), to petitioner s branch in Escolta to open a savings account. Since Liu Chiu Fang could
speak only in Mandarin, respondent Rosales acted as an interpreter for her.
On March 3, 2003, respondents opened with petitioner s Pritil-Tondo Branch a Joint
Dollar Account with an initial deposit of US$14,000.00.
On July 31, 2003, petitioner issued a Hold Out order against respondents accounts.
On September 3, 2003, petitioner, through its Special Audit Department Head Antonio
Ivan Aguirre, filed before the Office of the Prosecutor of Manila a criminal case for Estafa
through False Pretences, Misrepresentation, Deceit, and Use of Falsified Documents.
Respondent Rosales, however, denied taking part in the fraudulent and unauthorized
withdrawal from the dollar account of Liu Chiu Fang.
On December 15, 2003, the Office of the City Prosecutor of Manila issued a Resolution
dismissing the criminal case for lack of probable cause. On September 10, 2004, respondents
filed before the RTC of Manila a complaint for Breach of Obligation and Contract with

WON, petitioner breach its contract with respondents

YES. The Court held that Metrobank s reliance on the Hold Outin the Application
and Agreement for Deposit Account is misplaced.
Bank deposits, which are in the nature of a simple loan or mutuum, must be paid upon
demand by the depositor.
The Hold Out clause applies only if there is a valid and existing obligation arising from
any of the sources of obligation enumerated in Article 1157 of the Civil Code, to wit: law,
contracts, quasi-contracts, delict, and quasi-delict.
In this case, petitioner failed to show that respondents have an obligation to it under any
law, contract, quasi-contract, delict, or quasi-delict. And although a criminal case was filed by
petitioner against respondent Rosales, this is not enough reason for petitioner to issue a Hold Out
order as the case is still pending and no final judgment of conviction has been rendered against
respondent Rosales.
In fact, it is significant to note that at the time petitioner issued the Hold Out order, the
criminal complaint had not yet been filed. Thus, considering that respondent Rosales is not liable
under any of the five sources of obligation, there was no legal basis for petitioner to issue the
Hold Out order. Accordingly, we agree with the findings of the RTC and the CA that the Hold
Out clause does not apply in the instant case.
In view of the foregoing, the Court found that petitioner is guilty of breach of contract
when it unjustifiably refused to release respondents deposit despite demand. Having breached its
contract with respondents, petitioner is liable for damages.