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Living @ Sense vs.

Malayan Insurance Company –

Solidary obligation of surety under surety and performance bonds.

 Sub-contractor (Principal) is not an indispensable party in an action

brought by the main contractor (Creditor) against the Insurance company
 Surety under the surety and performance bonds bound itself “jointly and
severally” liable with sub-contractor for the damages in case of contractual
breach of the Subcontract Agreement;
 Creditor’s right to collect against any of the solidary debtors; the nature of
the solidary obligation does not make one indispensable party;
 Definition of indispensable party;
 Failure to implead the principal not a ground to dismiss the action.

People vs. Layag –

Effect of the death of the accused to his criminal and civil liabilities pending the
appeal of his conviction.

 Death of the accused pending appeal to SC of his conviction for qualified

rape ipso facto extinguished his: (a) criminal liability; and (b) civil liability
ex delicto;
 Exceptions – civil liability based on a source of obligation other than the
delict survives: (a) law; (b) contracts; (c) quasi-delict; and (d) quasi-
 Remedy is to file separate civil action against the estate of the accused.

Sagun vs. Anz Global Services –

Perfected employment contract subject to suspensive condition of satisfactory
background check of a bank employee

 Perfection of the employment contract – agreement of parties upon its

terms and conditions and concurrence of the essential elements of
 Parties are free to establish conditions for their convenience provided
these are not contrary;
 Condition – future and uncertain event;
 Art. 1181 – Obligation of employer to hire is conditional when the
employment contract is subject to suspensive condition of satisfactory
background checks;
 No ER-EE relation if the condition is not met, hence, dismissal of illegal
dismissal case.
BPI vs. Mendoza -
Existence of obligation by depositor to bank due to dishonor of altered check was
proven by preponderance of evidence in the collection suit.

 Burden of proof of a party in a civil case - preponderance of evidence /

greater weight of evidence;
 Existence of obligation proven by: (a) signature of depositor in letters
acknowledging its existence and dishonor of the check/ US Treasury
warrant; (b) Promissory Note;
 Exception to the Best Evidence Rule (Rule 130, Sec. 3) – Photocopy of
 Requisites: (1) Existence and due execution – admitted by the parties; (2)
Non-production in court – confiscation by US government; nature of US
treasury warrant; (3) Absence of offeror’s bad faith;

Halili vs. Justice for Children International -

Termination clause in employment contract is not a blanket license.

 Fixed-term employment contract (1 year) with termination clause—either

party may terminate;
 Principle that law is read into every contract applies when contract is silent
on the requirement of legal cause;
 Requisites in this case: (1) legal cause; and (2) 4 weeks written notice; 1 st
requisite not complied with;
 Price vs. Innodata Phils. – contractual provision allowing employer to
pre-terminate employment contract with or without cause is invalid.

Phil. Transmarine Carriers (PTCI) vs. Pelagio –

Conditional compromise agreement—without prejudice to final disposition of the

 Satisfaction of judgment between parties during pendency of an appeal is

in nature of compromise agreement;
 Requisites: (1) Not contrary; (2) Freely and intelligently executed; (3)
Compliance with principles and requisites of contracts.
 Effect as a rule – render the case moot and academic and res judicata;
 Exception – parties prevent the certiorari case with the CA from becoming
moot and academic by inserting the agreement the clause—without
prejudice to final disposition of the case.
Republic vs. Legal Heirs of Africa –

 Stipulation in compromise agreement with PCGG in SB not a stipulation

pour autrui for failure to comply with requisites;
 Stipulation—exception to the Principle of Relativity of contracts (Art. 1311)
 Exceptions – (1) not transmissible by nature; (2) by stipulation; (3)
provision of law;
 Requisites of stipulation – (1) stipulation in favor of third person; (2)
stipulation is part (not whole) of contract; (3) parties clearly and
deliberately conferred favor (not incidental); (4) unconditional and
uncompensated; (5) third person communicated acceptance prior to
revocation; (6) parties do not represent or not authorize by the third party.