Cases: Obligations

Ang Yu Asuncion v CA
Dela Rama v Mendiola
Bachrach Corporation v CA
petitioner entered into two lease contracts with the government in the Manila Port Area, Pres Aquino
transferred the management and administration of the entire port are to the Phil Port Authority, PPA
increased Bachrach’s rental rates by 1500%; PPA filed an unlawful detainer case (won) while Bachrach
filed a specific performance case
RTC acted aptly in taking cognizance of the specific performance case as the evidence needed to
establish the cause of action in the unlawful detainer case would be the lease contract and the
violation of the lease contract while in the specific performance case what would be consequential is
evidence of the alleged compromise agreement and its breach by PPA
refusal of PPA to honor the agreement after its alleged perfection prevented Bachrach from seeking
the coercive power of the court to enforce the compromise in the unlawful detainer case thus leaving
Bachrach with but the remedy of independently initiating the specific performance case
Pelayo v Lauron
physician Pelayo filed a complaint against the Lauron and wife Abella for payment of rendered medical
assistance for their daughter during childbirth; respondent spouse claimed that she lived with her
husband independently and in a separate house and that her presence in their house was accidental
and due to fortuitous circumstances; it does not appear that a contract existed between the spouses
and the physician where they consented to bind themselves thus they cannot be compelled to pay
fees for which they have no liability
obligations arising from law are not presumed and only those expressly determined are
demandable; among the reciprocal obligations existing between a husband and wife is that of support
which is established by law
unquestionable that the person bound is the husband of the patient and not her father and mother in
law; the fact that it was not her husband who called the plaintiff and requested his assistance is no bar
to the fulfillment of the said obligation
De La Cruz v Northern Theatrical Enterprises Inc
petitioner was hired as a special guard to guard the main entrance of the cine, a gate crasher who was
refused entrance attacked him with a bolo, in self-defense petitioner shot him resulting in his death,
petitioner was charged with homicide, petitioner demanded reimbursement from respondent for
litigation expenses
case involved damages caused to an employee by a stranger or outsider while in the performance of
his duties
it is to the interest of the employer to render legal assistance to its employee as they would be
subsidiarily liable should the latter be insolvent but it is not however a legal obligation thus naturally
the employee may not recover the amount he may have paid a layer hired by him
Manzano v Lazaro
parties entered into a professional services contract which included a P200,000 bonus should
petitioner win the vice-mayoralty post in Makati City; upon victory petitioner refused to pay the
balance of compensation of P20,000 until respondent his final inventory of materials; after such
forwarding petitioner refused still until he received the liquidation of the expenses incurred during the
campaign; respondent claimed this was not part of his responsibilities and filed an action for collection
of he sum of money; petitioner argued vitiated consent for respondent claiming to be an expert and
breach of contract claiming respondent was not entitled to bond pay as he failed to show any
significant contribution or role in the electoral victory
payment for the 3-month period bar the balance f P20,000 established that indeed respondent
performed his responsibilities under the contract thus the claim of a breach of contract was merely
used as an excuse to evade payment; RTC ruled that the allegation of vitiated consent would not
justify the refusal to pay the agreed remuneration absent a court ruling of annulment; vitiated consent
does not make a contract unenforceable but merely voidable which is valid until annulled; the power to
rescind an obligation though implied must be invoked judicially and cannot be exercised solely on a
party’s own judgment ; implied ratification may take the form of accepting and retaining the benefits of
a contract; silence along with demand to make an inventory and a liquidation constitutes an effective
ratification
a contract is the law between the parties; as the three-month period stated in the contract had elapsed
and petitioner won then the respondent is entitled not only to full payment of his compensation but
also to a bonus pay
William Golangco Construction Corporation v PCIB
partied entered into a contract (containing a defects liability period) for the construction of the
 extension of PCIB Tower 2; respondent accepted the turnover and plaintiff submitted a guarantee
bond on July 1, 1992 to answer for any defect arising within a period of one year; portions of the
granitite wash-out finish of the exterior began peeling off after the lapse of the one-year defects liability
period provided in Art 9 of the construction contract and as plaintiffs were not in a position to do the
new finishing work the respondent contracted another company; PCIB filed a request for the
reimbursement of its expenses and for the repairs made by another contractor
Art 1719 of the Civil Code states that acceptance of the work by the employer relieves the contractor
of liability for any defect in the work; under the circumstances there were no hidden defects for which
plaintiff could be held liable
defects liability period provision not contrary to law, morals, good customs, public order or public
policy; the provision limiting liability for defects and fixing specific guaranty periods was not only fair
and equitable it was also necessary
obligations arising from contracts have the force of law between the parties and should be complied
with in good faith; law stresses the obligatory nature of a binding and valid agreement; court cannot
countenance an interpretation that undermines a contractual stipulation freely entered into
Dio v St. Ferdinand Memorail Park
petitioner agreed to purchase a memorial lot; such purchase was evidenced by a Pre-Need
Agreement; respondent issued a Deed of Sale and Certificate of Perpetual Care; Dio’s ownership was
made subject to the rules and regulations of SFMPI as well as the government including all
amendments, additions and modifications that may later be adopted; petitioner decided to build a
mausoleum and caused its preparation and bidding out; she informed president of her plan and sought
approval; SFMPI informed her that under Rule 69 of the SFMPI Rules and Regulations she was
prohibited from engaging an outside contractor
contracts once perfected bind both contracting parties; a contract of adhesion is as binding as
ordinary contracts as the party who adheres to it is free to reject it entirely; every contracting party is
behooved to learn and know the contents of an instrument before signing ang agreeing to it
petitioner cannot feign ignorance of the rules as what fairly puts a person on inquiry is sufficient notice;
knowledge will be imputed and may be implied from the circumstances as diligent investigation will
lead to a discovery of any right conflicting with his own; when petitioner executed the Pre-Need
Purchase Agreement and conformed to the Deed of Sale it was with full knowledge of the terms and
conditions thereof and she agreed to be bound not only by the existing rules and regs but also future
ones; the fact that she informed them is proof that she was fully aware of the rules and regulations; the
transmitting owner transfers his property by whatever title and imposes on the acquirer whatever
limitations he wishes as long as they are not contrary to the nature of ownership and not prohibited by
law
NHA v Grace Baptist Church & CA
petitioner acquired lots from respondent and entered into possession and introduced improvements
thereon; petitioner approved the sale for P430,500; respondent tendered a manager’s check for
P55,350; petitioner refused the check; respondent instituted a complaint for specific performance and
damages to demand petitioner to accept their tender of payment; CA ruled that there was indeed no
contract of sale between the two parties but ordered petitioner to sell the lots to Grace Baptist Church
controversy involves the characterization of equity in the context of contract law; equity cannot be
enforced so as to overrule positive provisions in the law; equity cannot give validity to a void contract
case involves an unperfected contract or inexistent there being no concurrence of offer and
acceptance; thus the Civil law principles governing contracts should apply;
court cannot compel the sale of subject property to Grace Baptist Church without violating its freedom
to contract; petitioner is not estopped from selling the subject lots at a price equal to their fair market
value even if it failed to expressly revoke Resolution 2126 as the principle of estoppel does not operate
against the govt for the act of its agents
respondent proceeded to introduce improvements on the disputed land despite knowledge that its
intended contract of sale had not been perfected; NHA knowingly granted the Church temporary use
of the subject properties and did not prevent the improvements; thus they both acted in bad faith
Tiu Peck v Tan King
parties voluntarily entered into the agreement to apportion or divide their businesses; by lottery Tiu
Peck gained possession of the Lumber worth P1.6M and Tan King received the Piggery worth P1M; 3
years after respondents demanded partition of the same properties; RTC held that the parcels of land
are owned in common by the parties in pro indiviso equal shares
cannot be said that there was a business partnership absent the required public instrument
constituting the partnership; may be deemed as co-owners of the real properties and the businesses
they are engaged in; no doubt however that they wanted to go their separate ways as evidenced by
the agreement which is the law between them; the fact that after signing the agreement both parties
immediately took possession of their respective shares is the most compelling evidence that there was
indeed a binding partition of the properties; contracts may not be overturned by inconclusive proof;
 title of the contract does not necessarily determine its true nature
BPI v Sarmiento
Sarmiento was the assistant manager of appellant bank’s España branch which was investigated for
several alleged anomalous transactions involving time deposits; Sarmiento was one of the suspects;
Sarmiento did not regularly report to work claiming she had been verbally directed by the VP of the
audit department to stop working while the investigation was ongoing; respondent however received
her full salary; petitioner demanded the return of them money claiming it was mistakenly paid to her
view of the lower court that appellee cannot be faulted as she was enjoined from reporting to work as
if there was no instruction then the manager should have called her attention and required her to
perform her duties and it jibes with the common practice in the business world to ensure the integrity
of the records and to avoid influence on subordinate employees who may be potential witnesses
no question that respondent was still an employee during the period in question and there was no
showing that she was even suspended; ruled that the payment of the salary to appellee was correct
and the receipt was legal thus she has no obligation to return it; there still existed an employer-
employee relationship which entitled respondent to the payment of her salary and the payment was
with the knowledge and approval of respondent’s immediate superior officers thus there can be no
mistake in payment and no solution indebiti
Perez v Pomar
petitioner filed a complaint for the courts to determine the amount due to the plaintiff for interpretation
services;
Reyes v Lim
Rodzssen Supply v Far East Bank & Trust
petitioner opened a letter of credit with respondent in favor of Ekman and Co for the purchase of 5
hydraulic loaders; respondent refused to pay for the last 2 loaders claiming breach of contract by
plaintiff who in bad faith paid Ekman knowing that the loaders were delivered after the expiry of the LC
petitioner should pay respondent for the amount expended for the equipment belatedly delivered an
voluntarily received and kept by petitioner; estoppel due to voluntary acceptance works against the
defendant who should have refused delivery or immediately offered to return the goods; certain lawful,
voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one
shall be unjustly enriched or benefitted at the expense of another; clearly the bank paid Ekman when
the former was no longer required to do so as the LC was expired and cancelled but petitioner was not
without fault; when both parties to a transaction are mutually negligent the fault of one cancels he
negligence of the other thus their rights and obligations may be determined equitably under the law
prescribing unjust enrichment
People v Catubig
father raped minor daughter; the minority and relationship are special qualifying circumstances which
should have been alleged in the complaint; convicted of simple rape; attendance of aggravating
circumstances increases the penalty as well as justifies an award of exemplary damages whether
ordinary or qualifying
Air France
Makati Stock Exchange v Campos
respondent filed with the Securities, Investigation and Clearing Department of the SEC a petition to
nullify the June 3, 1993 Resolution which allegedly deprived him of his right to participate equally in
the allocation of IPOs; petitioners filed a Motion to Dismiss on the grounds that the petition became
moot due to the cancellation of the license of MKSE, the SICD has no jurisdiction, and that the petition
failed to state a cause of action
while the petition assets a right particularly the alleged right to subscribe to the IPOs of corps listed in
the stock market and stipulates a corresponding obligation of petitioners to respect such right the
terms right and obligation do not automatically lead to the conclusion that such petition sufficiently
states a cause of action; assertion of a right and claim of an obligation without identifying the basis or
source thereof is merely a conclusion of fact and law; a pleading should state the ultimate facts
essential to the rights of action or defense asserted as distinguished from mere conclusions of fact or
conclusions of law
the Civil Code enumerates five sources: law, contract, quasi-contract, delict, quasi-delict; the
allocation of IPO shares was merely alleged to have been done in accord with a practice normally
observed; a practice or custom is not a source of a legally demandable or enforceable right as a
general; there is no such law that converts the practice of allocating IPO shares to MKSE members
into an enforceable or demandable right; SC en banc correctly dismissed the petition for failure to
state the basis for respondent’s alleged right
Piczon v Piczon
defendants were sentenced to pay plaintiffs a sum plus interest; the interest agreed upon by the
parties waste commence from the execution of Annex A, Agreement of Loan, on September 28, 1956
not when the plaintiffs made the first demand; if the contract stipulates from what time interest will be
 counted said stipulated time controls and the interest is payable from such time
defendant expressly bound himself only as guarantor and there are no circumstances in the record
from which it can be deduced that his liability could be that of a surety; inasmuch as the corporation
did not exist yet at the time of the agreement the defendant must have necessarily bound himself as
insurer
San Lorenzo Development Corp v Babasanta and CA
spouses Lu purportedly sold two parcels of land to Babasanta as evidenced by a memorandum
receipt issued by Pacita Lu; other payments amounting to P200,000 were made;
Babasanta demanded the execution of a Final Deed of Sale in his favor so he may effect full payment
of the purchase price; however, the spouses declined to push through with the sale; Babasanta filed a
case for Specific Performance; San Lorenzo Development Corporation (SLDC) alleged that the two
parcels of land involved had been sold to it in a Deed of Absolute Sale with Mortgage; certificates of
title were delivered free from any adverse claims or notice of lis pendens; alleged that it was a buyer in
good faith and for value and therefore it had a better right over the property in litigation;
agreement between Babasanta and the Spouses Lu is a contract to sell and not a contract of sale;
while there is no stipulation that the seller reserves the ownership of the property until full payment of
the price which is a distinguishing feature of a contract to sell, the subsequent acts of the parties
convince us that the Spouses Lu never intended to transfer ownership to Babasanta except upon full
payment of the purchase price; the perfected contract to sell imposed upon Babasanta the obligation
to pay the balance of the purchase price. There being an obligation to pay the price, Babasanta should
have made the proper tender of payment and consignation of the price in court as required by law
thus the obligation on the part of the sellers to convey title never acquired obligatory force; there was
no double sale in this case because the contract in favor of Babasanta was a mere contract to sell;
hence, there was neither actual nor constructive delivery as his title is based on a mere receipt thus
the right of SLDC must be preferred as at the time both deeds were executed SLDC had no
knowledge or the prior transaction and the subsequent annotation of lis pendens has no effect on the
consummated sale
Caleon v Agus Development Corp
respondent lease a parcel of land to petitioner on which the latter constructed a 4 door
apartment building; respondent sub-leased two of the four doors without the consent of respondent;
respondent demanded that petitioner vacate the leased premises and filed a case for ejectment under
BP 25 Sec 5 which is the unauthorized sub-leasing of part of the leased premises to third persons
the lease of a building would naturally include the lease of the lot; beyond dispute that petitioner in
leasing her apartment has also subleased the lot on which it is constructed which belongs to
respondent; beyond question that the constitutional guarantee of non-impairment of obligations of
contract is limited by and subject to the exercise of police power; legislation appropriate to
safeguarding vital interests may modify or abrogate contracts already in effect; BP 25 is not subject to
exploitation by the lessees for whose benefit the law was enacted as social justice cannot be invoked
to trample on the rights of property owners who are also entitled to protection under our Constitution
and laws
Chaves v Gonzales
plaintiff delivered a typewriter to respondent for cleaning and servicing; after much delay plaintiff asked
for its return; respondent delivered it in shambles and with the interior cover and some parts missing;
plaintiff had it repaired by a third party and demanded reimbursement of the total cost of P89.85
the defendant returned the typewriter cannibalized and unprepared which is a breach or contract and
did not demand for more time nor compensation for the job thus the time for compliance had evidently
expired; liable under Art 1167 of the Civil Code for the cost of executing the obligation in a proper
manner P58.75 as well as under Art 1170 for the cost of the missing parts P31.10
Tanguilig v CA & Herce Jr
petitioner proposed to respondent to construct a windmill system for him; they agreed on the
construction fro a consideration of P60,000 with a one-year guarantee from the date of completion and
acceptance; Herce paid P30,000 and an installment of P45,000; petitioner filed a complaint for the
remaining balance; respondent claimed they had already paid to San Pedro Gen Merch wo
constructed the deep well connected to the windmill and since the deep well formed part of the
system the payment he tendered to SPGMI should be credited to his account; Moreover, assuming
that he owed petitioner a balance of P15,000.00, this should be offset by the defects in the windmill
system which caused the structure to collapse after a strong wind hit their place; petitioner denied that
the construction of a deep well was included in the agreement which was solely for the windmill
assembly and its installation, exclusive of other incidental materials needed for the project and also
disowned any obligation to repair or reconstruct the system and insisted that he delivered it in good
and working condition to respondent who accepted the same without protest and its collapse was
attributable to a force majuere which relieved him of any liability
nowhere in the proposal is the installation a deep well mentioned or description of the materials to be
 used; while “deep well” is mentioned it is a cardinal rule in the interpretation of contracts that the
intention of the parties shall be accorded primordial consideration and in case of doubt
then contemporaneous and subsequent acts shall be principally considered; respondent Herce
himself paying for the deep wall to SPGMI indicated that the contract for the deep well was not part of
the windmill project but a separate agreement
petitioner failed to show that the collapse was due solely to a fortuitous event; when the windmill failed
to function properly it became incumbent upon the petitioner to institute the proper repairs thus
respondent cannot be said to have incurred in delay
respondent is to pay the balance of P15,000 with interest at the legal rate and petitioner is to
reconstruct subject defective windmill system in accordance with the 1 year guarantee within 3
months

Far East Bank v CA & Luna

respondent applied for and was accorded a FAREASTCARD; plaintiff also issued a supplemental card
upon request; the supplemental card was lost thus plaintiff’s internal security procedures entailed that
the lost card be recorded as a “hot / cancelled card” along with the principal card in its master file;
respondent tendered a despidida lunch where his card was not honored and he had to pay P588.13;
respondent demanded FEBTC pay damages; bank’s president sent a letter wherein it was admitted
that the bank failed to inform respondent of their security policy; respondent filed a complaint for
damages; RTC and CA awarded moral and exemplary damages along with attorney’s fees
moral damages may be recovered in culpa contractual where defendant is shown to have acted in bad
faith or with malice in the breach of contract; bad faith includes gross but not simple negligence;
nothing in the findings siffucinetly indicate any deliberate intent to cause harm on private respondents
neither could the negligence in failing to give notice be considered so gross as to amount to bad faith
or malice which implies a conscious and intentional design to do a wrongful act for a dishonest
purpose or moral obliquity; proof of bad faith or fraud is essential to justify moral damages in a breach
of contract
respondent’s damage claim is predicated solely on their contractual relationship as without such the
act or omission complained of cannot by itself stand as a separate cause of action or independent
actionable tort thus the rule of Air France v Carrascoso where a quasi-delict can be the cause for
breaching a contract that may permit the application of the principles on torts despite a pre-existing
contract cannot apply
however plaintiff’s failure to honor its credit card issued to respondent entitles him to recover nominal
damages under Art 2221 in order that a right which has been violated or invaded be vindicated or
recognized (not to indemnify for any loss suffered); nominal P5,000 + attorney’s fees
PNB v CA & Lily Pujol
respondent opened a “combo account” of savings and current account wherein checks drawn agains
the checking account could be charged against her savings account should the current account be
insufficient; issued a passbook which contained “Combo Deposit Plan” on its cover; on 2 occasions
private respondent had sufficient funds in her savings yet the checks were dishonored and her
account debited each time P250 as penalty charge; after realizing their mistake petitioner honored the
2nd check and re-credited her account (based on testimony of employee Pedro Lopez
petitioner cannot claim (1) that the account was not yet operational at the time the checks were issued
and (2) it placed the sign “Combo Flag” on respondent’s account out of courtesy and generosity as
 she was issued a passbook with “Combo Deposit Plan” with no qualification or condition that it would
only take effect after submission or certain requirements and petitioner failed to prove that respondent
had actual knowledge that it was not yet operational, and petitioner is considered estopped to deny
the existence of and perfection of the combination deposit agreement with respondent (estoppel in
pais / equitable estoppel arises when one, by his acts, representations, or admissions, or by his
silence when he ought to speak out, intentionally or through culpable negligence, induces another to
believe certain facts to exist and such other rightfully relies and acts on such belief so that he will be
prejudiced if the former i permitted to deny the existence of such facts
Court ruled that a bank is under obligation to treat the accounts of its depositors with meticulous
care and that responsibility arising from negligence in the performance of every kind of obligation
is demandable; damages are not intended to enrich the complaint at the expense of the defendant and
there is no hard-and fast rule in the determination of a fair amount
while petitioner’s negligence may not have been attended with malice or bad faith it caused serious
anxiety for which respondent is entitled to recover reasonable moral damages; yardstick is that it is not
palpably and scandalously excessive; affirmed P100,000 moral damages is reasonable considering the
reputation (former member of judiciary) and social standing plus rulings of similar cases + P20,000
attorney’s fees
Southeastern College v Dimaano
during typhoons Saling the roof of petitioner’s building was partly ripped and blown away landing on
and destroying portions of the roofing of respondent’s house; complaint for damages based
on culpa aquiline alleging that the damage to their house rendered it uninhabitable; trial court gave
credence to the ocular inspection report conducted by city building officials to the effect that subject
school building had a defective roofing structure (also formation of buildings - u shape- and general
direction of wind) and awarded actual and moral damages + attorney’s fees
in order that a fortuitous event may exempt a person from liability it is necessary that he be free from
any previous negligence or misconduct; no human participation amounting to a negligent act; the facts
constituting negligence must be affirmatively established by competent evidence not merely by
presumptions and conclusions without basis in fact: (1) other than the ocular inspection no
investigation was conducted to determine the real cause of the partial unroofing; (2) respondents did
not show the plans, specifications and design were defective; (3) failed to prove any substantial
deviation from approved plans and specifications; (4) failed to conclusively establish that the
construction of the building was basically flawed
typhoon Saling was the proximate cause of the damage suffered; petitioner cannot be made to answer
for a purely fortuitous event; petitioner has not been shown negligent or at fault regarding the
construction and maintenance of its school building: (1) original plans and design of the building were
approved by city building official prior to construction, (2) certification secured attesting to the
readiness for occupancy of the edifice, (3) city official gave go-signal for repairs after typhoon, (4) use
of the entire fourth floor then authorized proving no structural defect, (5) annual maintenance
inspection and repair were regularly undertaken, (6) no complaint regarding any defect had ever been
lodged prior, (7) withstood long years and several stronger typhoons
complaint before the trial court ordered dismissed and the writ of execution is set aside; respondents
ordered to return to petitioner any amount or property received
Samson v CA & Santos
subject matter is a commercial unit at the Madrigal building which respondent’s haberdashery store
occupied for almost 20 years on a yearly basis; lessor Susana Realty Corp informed respondents that
the lease which was to expire July 31, 1984 would not be renewed; the lease contract was extended to
Dec 31, 1984 but respondents continued to occupy the premises beyond the extended term; on Feb 5,
1985 respondent received a letter from lessor informing him of the increase in rentals retroactive to
January 1985 pending renewal of his contract until the arrival of Ms. Madrigal; 4 days later
petitioner offered to buy the store and his right to lease the subject premises; they agreed that the
consideration for the sale of the store and leasehold rights shall be P300,000: P150,000 paid for the
value of existing improvements and the balance of P150,000 upon the formal renewal of the
lease contract (condition precedent to the transfer of the leasehold right); in March 1985 petitioner
began occupying the store to sell own goods; in July 1985 petitioner received notice to vacate the
leased premises as private respondent failed to renew his lease; petitioner filed an action for damages
imputing fraud and bad faith; trial court rendered a decision in favor of petitioner and CA modified the
decision
bad faith is essentially a state of mind affirmatively operating with furtive design or with some motive
of ill-will; it does not simply connote bad judgment of negligence; synonymous with fraud and involves
a design to mislead or deceive another not prompted by an honest mistake as to one’s right and
duties; dolo causante ofr causal fraud is the kind of fraud that vitiates consent in contracts which is
basically a deception employed by one party prior to or simultaneous to the contract in order to secure
the consent of the other
 (1) respondent alleged that their agreement was to the effect that the balance of P150,000 shall be for
the sale of the leasehold right to be paid only after the formal renewal of the lease contract and its
actual transfer; SC sustains the CA finding that respondent was neither guilty of fraud nor bad faith as
he received a letter from lessor on Feb 5, 1985 informing him of the increase of rentals retroactive
January 1985 pending renewal of contract until arrival of Ms. Madrigal which (2) led respondent to
conclude his lease contract impliedly renewed and for formal renewal upon arrival of Madrigal (3)
respondent told petitioner that his contract was expired but he was anticipating its formal renewal thus
from the start it was known that the transfer of leasehold right is a conditional contract and relates to a
future right
rule of caveat emptor requires purchaser to be aware of the supposed title of the vendor and he who
buys without checking the vendor’s title takes all the risk and losses consequent to such failure thus
petitioner cannot now claim that he has been deceived as he failed to exercise sufficient diligence in
(1) verifying the implied renewal of the lease and (2) deferring his decision on the proposed sale until
Ms. Madrigal’s arrival
respondent cannot be held guilty of fraud or bad faith when he entered into the subject contract with
petitioner
Dioquino v Laureano
respondent was the sole passenger of plaintiff’s car being driven by the latter’s driver; the car was
stoned and its windshield broken; respondent chase down the boys and caught one who he the
brought to plaintiff to admit to the stoning; the boy’s father was called but no arrangements were
made; respondent refused to file any charges against the boy as he thought the stoning merely
accidental and due to force majuere; respondent refused to pay for the windshield himself on the belief
that he could not be liable for a minor child throwing a stone accidentally on the windshield as it was
due to force majuere; plaintiff would hold defendant accountable and included in the action the wife
(conjugal partnership would be made to respond for whatever liability would be adjudicated) and father
(being the administrator of the inheritance to which respondent could lay claim); plaintiff prevailed in
the lower court but respondents spouse and father were absolved of any responsibility
Art 1174 of the Civil Code states that no person shall be held liable for those events which could not
be foreseen or which though foreseen were inevitable; an element of caso fortuito is that an
extraordinary circumstance independent of the will of the obligor or of his employees and liability is
ruled out if such is the case; no requirement of diligence beyond what human care and foresight can
provide; no obligation on the part of respondent to assume the risk incident in the nature of the
obligation to be performed thus a resulting liability even if due to a fortuitous event; what happened
was clearly unseen thus a fortuitous event resulting in a loss which must be borne by the owner of the
car
lower court ought to have dismissed the case but it does not follow that damages should have been
awarded to respondent for the inclusion of wife and father for mistaken as the plaintiff was it cannot
be concluded that he was solely by the desire to inflict needless and unjustified vexation on them;
considering the equities of the situation plaintiff is not to be penalized further by his mistaken view of
the law
decision of lower court reversed in terms of ordering Laureano to pay damages of P30,000 + cost but
affirmed insofar as it dismissed the case agains the other two defendants

Jarco Marketing Corp v CA & Aguilar

while Criselda Aguilar was signing a credit card slip on the second floor of petitioner’s department
store she felt a sudden gust of wind and heard a loud thud; she then beheld her daughter on the floor
pinned by the bulk of the store’s gift wrapping counter; the child was rushed to the hospital where she
died 14 days after; the cause of her death was attributed to the injuries she sustained; respondents
demanded petitioners reimburse the hospitalization, medical bills, and wake and funeral expenses
which petitioners refused; respondents filed a complaint for damages;
trial court dismissed the complaint finding the preponderance of evidence favored petitioners (1)
proximate cause of the counter’s fall was the child’s act of clinging to it based on witness’ testimonies
(2) Criselda was contributorily negligent (3) counter was situated at the corner of the 2nd floor as a
precautionary measure (4) counter was higher than the child (5) it had been in existence for 15 years (6)
structure was safe and well-balanced
CA reversed the appealed judgment finding petitioners negligent in maintaining a
structurally dangerous counter (1) counter was shaped like an inverted “L” with a top wider than the
base thus neither evenly distributed nor supported by its narrow base (2) two former employees had
already brought attention to the danger the counter could cause which management ignored (3) that
the counter had been in use for some time prior to the incident is inconsequential (4) declared that the
child who was 6 was absolutely incapable of negligence or other tort and could not be made to
 account for a mere mischief or reckless act (5) absolved Criselda of negligence (6) rejected the
testimonies of witnesses of petitioners they found to be biased and prejudiced and instead gave credit
to the testimony of the disinterested witness Gonzales (res gestae- counter just fell & unstable
structure)
accident and negligence are intrinsically contradictory as an accident pertains to an unforeseen event
in which no fault or negligence attached to the defendant exercising ordinary care; SC ruled that the
tragedy which befell was no accident and that the death could only be attributable to negligence (1)
testimony of Gonzales (res gestae) as to the child performing no act which facilitated her death (2)
testimonies of 2 former employees on petitioner’s insistence to keep and maintain the structurally
unstable gift-wrapping counter (top-heavy, not nailed down) proving their negligence for failure to
remedy the situation or ensure the safety of employees and patrons as a reasonable and ordinary
prudent man would have done failing to observe the diligence required of a good father of a family (3)
a child under 9 must be conclusively presumed incapable of contributory negligence as a matter of law
(4) even if contributory negligence is assumed and that the child climbed over the counter no injury
should have occurred if the counter was stable as a frail 6 year old could not have caused the counter
to collapse (5) criselda absolved from any contribute negligence as it was reasonable and usual to let
go of the child when she signed the credit card slip & the time and distance were significant as the
child was near her mother and did not loiter
petition denied and challenged decision of the CA affirmed: P99,420.86 actual, P50,000 compensatory
damages, P100,000 moral and exemplary damages, P20,000 attorney’s fees + costs
PP v Fallorina
Vincent (victim) was playing with his kite on the roof of an abandoned karenderia; Ricardo (witness)
called on Vincent and co to come down from the roof upon seeing appellant knowing he abhorred
children playing on the roof; appellant stopped his motorcycle and shouted at them; as Vicent turned
his back to go down appellant pointed his .45 caliber pistol towards the direction of Vincet and fired a
shot; Vincent was hit and fell from the roof; apellant approached Vincent and carried the hapless body
into a tricycle and brought him to a hospital; Vincent was pronounced dead on arrival; cause of death
from the autopsy report was a gunshot would to the head; an empty shell from a .45 caliber pistol was
recovered from the crime scene; firearms identification report concluded that the empty shell matched
the .45 Thompson Auto Ordinance pistol; 3 days later Police Senior Superintendent surrendered
appellant together with his pistol; Ricardo was enrolled under the Witness Protection Program and
gave his sworn statement
appellant claims the shooting was an accident as he lost his balance causing the gun to fall to the
ground where it suddenly went off; relies on pictures to belie that the shooting was deliberate as the
gun was pointed to an oblique direction complimenting the testimony that the gunshot wound came
from somewhere behind the victim and beneath the point of entry
an accident is an occurrence that happens outside the sway of our will and although it comes about
through some act of our will it lies beyond the bounds of humanly foreseeable consequences thus if
the consequences are plainly foreseeable it will be a case of negligence
deliberate and intentional act (1) appellant refused to answer classificatory question on the pictures he
relied on to prove he shot the victim accidentally (angle) casting doubt on his allegations (2) appellant
did not see what part of the gun hit the victim (no evidence showing whether it hit a hard object when
it fell, what part of the gun hit the ground and the position of the gun when it fell) (3) appellant testified
that the chamber of his pistol was loaded with bullets and was cocked but the safety lock was on thus
it would not fire even if the trigger was pulled hard (4) trial court was witness as appellant’s counsel
himself proved that the defense preferred was incredible when counsel accidentally dropped and did
not fire nor did the safety lock move (5) appellant refused to surrender himself and his service firearm
and instead hid from investigating officers and concealed himself in his friend’s house which belies his
claim that the death of the victim was accidental and that he was not negligent as it is beyond human
comprehension that a policeman who professes innocence would come out only 3 days from the
incident and claim the victim was accidentally shot (6) testimony of Ricardo deserve credence as he
testified in a positive and straightforward manner and never wavered; drew the tricycle
and motorcycle, knew the defendant beforehand, remembered his attire, recognized the gun, identified
the shooter and named the shooter; found no ill motive as to why Ricardo would falsely testify thus
given full faith and credence (7) appellant even uttered invectives at the victim and Whilcon before he
shot the victim
charged with murder qualified by treachery (shot intentionally while his back was turned + exists when
an adult illegally attacks a child who cannot be expected to put up a defense) and sentenced to RP
and ordered to pay P49,174 actual, P50,000 moral, P50,000 civil indemnity and P25,000 exemplary;
no abuse of superior strength because absorbed; no abuse of public position because despite being a
police officer and using his service weapon he did not take advantage of his position as a policeman
when he shot the victim; not entitled to mitigating circumstance of voluntary surrender as
appellant deliberately evaded arrest and made it difficult for officers to arrest him and terminate their
 investigation
PAL v CA & Samson
on January 8, 1951 respondent flew as co-pilot on a regular flight with Captain Bustamante as
commanding pilot of a C-47 plane belonging to PAL; on attempting to land the plane Captain
Bustamante overshot the airfield due to his very slow reaction and poor judgment causing the airplane
to crash-land beyond the runway despite the diligent efforts of plaintiff to avert the accident; the jolt
caused the respondent to hit and break through the front of the windshield causing severe brain
concussion, wounds and abrasions in the forehead with intense pain and suffering; respondent alleged
that instead of providing expert and proper medical treatment called for by the nature and severity of
his injuries petitioner simply referred him to the company physician who is a general medical
practitioner; after several days he was called back to active duty as co-pilot; respondent sustained a
brain injury causing periodic dizzy spells and general debility and nervousness; plaintiff then
discharged the respondent from employment on Dec 21, 1953 on grounds of physical disability
thereby causing respondent not only to lose his job but to become physically unfit to continue as
aviator due to plaintiff’s negligence in not giving him proper medical attention; in December 1950
defendant complained through its authorized official about the slow reaction and poor judgment of
Capt Bustamante however he was allowed to continue flying
PAL claims (1) the accident was due solely and exclusively to unforeseen circumstances (2)
respondent suffered only superficial wounds and minor injuries which were promptly treated by the
plaintiff’s medical personnel (3) respondent did not suffer brain injury or cerebral concussion from the
accident since he passed the annual physical and medical examination (4) headaches and dizziness
were due to emotional disturbance caused by inability to pass the required promotional course given
by the plaintiff (5) respondent was suffering from neurosis thus plaintiff had to terminate his
employment (6) by the nature of their business as a common carrier they had to employ only pilots
who are proficient and in good mental, emotional and physical condition (7) Civil Aeronautics
Administration gave Capt. Bustamante a waiver of physical standards to enable I’m to retain his first
class airman certificate since the affliction had not in the least affected his proficiency (8) absence of
any causal connection between superficial injuries and alleged subsequent periodic spells, headaches,
and general debility (9) absence of causal connection between respondents superficial injuries and
discharge from employment
trial court sentenced plaintiff to pay a total of P273,000 affirmed by the CA modifying it by imposing a
legal rate of interest on the unearned income
SC finds (1) dizzy spells, headache and general debility to be an after-effect of the crash-landing as
supported by evidence [difficulty of company doctors in determining the cause + similar tests
conducted by the CAA which were not presented hinting those offered were hand-picked] (2)
imputation of gross negligence to PAL for allowing Capt Bustamante to fly [request of waiver of
physical standards is itself positive proof that his physical condition is short of the standard set by the
CAA and the CAA approved the request allowing him to fly only as co-pilot (3) two incidents one
month prior to Jan 8, 1951 proving his inability (4) overshooting the runway and crash-landing at the
mangrove was caused by the pilot for which acts the plaintiff must answer for damages as the law
presumes the employer negligent (5) petitioner is a common carrier and the law (art 1732) is clear in
requiring that a common carrier exercise the highest degree of care in the discharge of its duty and
business of carriage and transportation for the safety of passengers as well as the crew (6) damages
awarded respondent by the lower court are in accordance with the facts, law and jurisprudence
SC affirms the judgment of the appellate court but modified the amount of compensatory damages to
P204,000 + costs
La Mallorca v CA & Beltran
respondent spouse Beltran and their three children boarded a La Mallorca bus owned and operated by
petitioner; upon reaching Anao the bus stopped to let passengers get off; respondents alighted and
stayed on the pedestrians side of the road about 4-5 meters away from the vehicle; Mariano Beltran
returned to the bus to get his other baggage with daughter Raquel following him unnoticed; while
Beltran was on the running board the bus suddenly started moving forward thus Mariano immediately
jumped from the running board; when the bus was completely stopped it had traveled about 10 meters
from where the respondents had gotten off; people began gathering around the body of a child lying
prostrate on the ground who turned out to be Raquel who was run over; respondents filed a suit and
plaintiffs were found liable for breach of contract of carriage and sentenced to pay P3,000;
respondents appealed claiming there could be no breach of contract as the child was no longer a
passenger of the bus when she met her death and the contract had already terminated; CA found
plaintiff guilty of quasi-delict and liable for damages for the negligence of their driver and increased the
damages to P6,000
breach of contract (1) although respondents alighted from the bus it was also established that Mariano
had to return to the vehicle and when he returned the relation of passenger and carrier remained
subsisting (2) relation of carrier and passenger does not cease at the moment the passenger alights
 from the carrier’s vehicle but continues until the passenger has had a reasonable time or opportunity to
leave the carrier’s premises which is to be determined from all the circumstances, presence of said
passengers near the bus was not unreasonable and are therefore to be considered still as passengers
of the carrier entitled to protection (3) in the circumstances it cannot be claimed that that the carrier’s
agent had exercised the utmost diligence of a very cautious person required by Art 1755 to be
observed by a common carrier: did not put off the engine + started to run the bus without the go signal
+ people still on running board and near it
quasi-delict: death caused by the negligence and want of utmost diligence of a very cautious person in
the part of the plaintiffs and their agent; presentation of proof of employee’s negligence gave rise to
the presumption that the plaintiff employer did not exercise the diligence of a good father of a family in
the selection and supervision of its employees
Sec 2 of Rule 8 of the New ROC: quasi-delict while incompatible with breach of contract of carriage is
permissible to allow plaintiff (respondent) to allege causes of action in the alternative
whether compatible or not to the end that the real matter in controversy may be resolved and
determined
sentenced to pay P3,000 for death + P400 actual damages; appellate court can only pass upon and
consider questions raised and argued and the P3,000 damages was not appealed thus cannot be
increased

Asian Construction v PCIB (Fortuitous- no)

petitioner obtained credit accomodations from respondent and secured prompt and faithful payment
by executing deeds of assignment stipulating that petitioner is authorized to collect and receive
all receivables but shall have no right and frees not to use any of the proceeds as petitioners divest
themselves of all the rights, title and interest; the promissory notes remained not fully paid despite
becoming due and demandable and repeated verbal and written demands; respondent filed
a complaint alleging fraud in contracting the debt and in the performance thereof alleging
petitioner collected the contract proceeds and used them instead of remitting; petitioner claims (1) did
not fraudulently misappropriate for it own use the contract proceeds [as there are still
remaining receivables] (2) severe financial and currency crisis adversely affected them and out them
out of business (3) deeds of assignment partake of the nature of contracts of adhesion as they were
standard forms proposed as a precondition to release of loans
SC (1) plaintiffs failed to append affidavits showing the factual basis for its defenses of extraordinary
deflation showing its financial condition before and after the economic crisis and that the crisis was
the proximate cause of its financial distress (2) may have experienced financial difficulties but that
does not constitute a valid justification for petitioner to renege on its obligation to respondent (3) Art
1266 “the debtor in obligations shall be released when the presentation becomes legally or physically
impossible without the fault of the obligor” does not apply as tis refers to obligations to do only and in
this case it is an obligation to give or to deliver
plaintiff ordered to pay $4,553,446.06 with interest, P1,000,000 attorney’s fees and costs of suit
Fil-Estate Properties v Go (Fortuitous- No)
petitioner entered into a contract to sell a condominium unit to respondent spouses; spoused paid a
total of P3,439,000.07 of the full contract price set at P3,620,000; petitioner failed to develop the
condominium project thus spouses demanded a refund of the amount the paid + interest; petitioner
refused and respondents filed a complaint before the Housing and Land Use Regulatory Board for
P3,620,000 representing the lump sum price + interest, P100,000 attorney’s fees and litigation
expenses
HLURB (1) fluctuations in the value of the peso are daily occurrences which are foreseeable and its
deleterious effects avoided by economic measures (2) petitioner failed to fulfill its contractual
obligations when it discontinued the development of the condominium project thus under Art
1191 aggrieved parties may choose between fulfillment + damages or rescission + damages; as Fil-
Estate can no longer fulfill tis obligations the spouses may ask for rescission + damages
CA noted that there was no crisis in 1995 and 1996 when the project should have been started thus
petitioners cannot blame the 1997 crisis because the project should have been completed by 1997
SC (1) ruling in Asian Construction v PCIB that the 1997 financial crisis did not constitute a valid
justification to renege on obligations (2) cannot generalize that the crisis was unforeseeable and
beyond the control of a business corporation (3) a real estate enterprise engaged in pre-selling condo
units is concededly a master in projections of commodities and currency movements and business
risk (4) fluctuations in the market is an everyday occurrence and fluctuations in currency exchange
happen everyday thus not an instance of caso fortuito
petition denied and petitioners ordered to reimburse P3,439,000.07 (actual payment) at 6% interest
from the date of demand (Aug 4, 1999) and P100,000 attorney’s fees + costs
Victorias Planters v Victorias Milling (Fortuitous- yes)
 petitioners are non-stock corporations composed of sugar cane planters established as the
representative entities, in charge of taking up with the respondent corporation problems which may
come up, of the numerous sugar cane planters whose sugar cane productions were milled by the
respondent corporation; the sugarcane planters executed identical milling contracts setting forth the
terms and conditions which the sugar central “North Negros Sugar Co. Inc.” would mill the sugar
produced by the sugar cane planters; millings took place every successive crop year except the 6-year
period (last 4 years of WW2 and 2 years post-war construction); North Negros Sugar Co., Inc. did not
reconstruct its destroyed central; made arrangements with the respondent Victorias Milling Co., Inc.
for said respondent corporation to mill the sugarcane produced by the planters of Manapla and Cadiz
holding milling contracts with it; planters-members of the North Negros Planters Association, Inc.
considered that the stipulated 30-year period of their milling contracts had already expired and
terminated; 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;
repeated representations were made with respondent corporation for the negotiation and execution of
new milling contracts; respondent refused to accept the fact that the 30-year period had expired
contending the 30 years stipulated in the contract referred to 30 years of milling – not 30 years in time
and as there was no milling during 4 years of the recent war and 2 years of reconstruction then 6 years
of service still have to be rendered by petitioners
contract expired and 6-year period cannot be deducted (1) fortuitous event relieves the obligor from
fulfilling a contractual obligation (2) reference to first milling was only for the purpose of reckoning the
30-year period not to make the 30 year one of 30 milling years (3) stipulation in contract that in the
event of force majuere the contract shall be deemed suspended does not mean the running of the
period stops but that the parties are relieved from the fulfillment of their respective obligations during
that time (4) central could only be entitled to demand fulfillment if the planters were able to perform but
failed or refused to do so and not when they were prevented by force majuere such as war (5) obligee
not being entitled to demand performance under those circumstances cannot later on demand its
fulfillment (6) compulsion to deliver sugar cane for 6 more years would in effect be
an extension of there terms of the contract
Ace-Agro v CA & Cosmos (Fortuitous- no)
private repsopndent is engaged in the manufacture of soft drinks; petitioner had been cleaning soft
drink bottles and repairing wooden shells for Cosmos in respondents company premises; they entered
into service contracts renewable every year; private respondents contracted the services of Aren
Enterprises who rendered service outside the plant as petitioner could not cope with respondent’s
daily production; in April of 1990 a fire broke out destroying the area where petitioner did its work thus
work has stopped; in May petitioner asked to be allowed to resume its service but was advised that
private respondent was terminating their contract; petitioner requested that they reconsider to cushion
the sudden impact of unemployment of many of its workers; receiving no reply they informed their
employees of their termination; employees filed a complaint for illegal dismissal against petitioner
and private respondent; private respondent advised petitioner that they could resume repair of wooden
shells but that the work had to be done outside the company premises and later on that they could
then resume work inside the premises in accordance with its original contract both of which were
refused fir the additional cost and the latter for there was a pending labor case
labor case: petitioner liable for employees’ claims and ordered to reinstate and pay backwages; private
respondent absolved on the ground that there was no privity of contract
RTC: private respondent guilty and ordered to pay damages to petitioner
CA & SC: reversed and dismissed petitioner’s complaint; found it was petitioner who refused
to resume work after failing to secure a contract extension (1) unilateral termination is a mode
of extinguishment although not expressly provided for as one of the parties may free himself from the
contractual ti by his own will because of indeterminate sentence or the nature of the presentation
(2) presentation or object of their agreement had been lost of destroyed by the fire thus obligations
may be extinguished as the very basis of its existence is found wanting (3) no cause for terminating at
most only temporary suspension of work as there were still other bottles needing cleaning and
wooden shelf needing repairing (4) private respondent had reconsidered its decision to terminate and
tried to accommodate the required of petitioner (5) petitioner unjustifiably refused the offers because it
wanted an extension to make up for the period of inactivity (6) appellee was without legal ground to
refuse as it could legally insist on staying indies property it did not own nor was under lease
and could actually be held for breach of contract (7) second refusal was not due to labor case but
because they wanted an extension based on witness testimony (8) agreement is with a resolutory
period and suspension of work due to force majuere did not merit an automatic extension of the period
of the agreement as it only relieves fulfillment of obligations not stop the running of the period (9)
appellee’s refusal to resume work was a unilateral termination which is an act without basis (10) asking
for an extension is in effect asking for a new contract (11) private respondent was justified in insisting
that after the expiration of the contract the parties must negotiate a new one as they had done every
 year since they started business relations (12) their contract did not prohibit the hiring by private
respondent of another service contractor (13) facts show that although Aren Enterprises’ rate was
lower they did not affect private respondent’s business relations with petitioner
petition denied as private practitioner is blameless in petitioner’s failure to return to work after the fire
Cuaton v Salud (Usurious- reduced)
respondent instituted a suit for foreclosure of a real estate mortgage with damages; trial court
rendered a decision declaring the mortgage void because it was executed by plaintiff in favor of Salud
without expressly stating that he was merely acting as a representative of his mother, Conchita
Cuaton, in whose name the mortgage lot was titled; sole issue of the instant petition was the validity of
the 8% and 10% monthly interest imposed on the loan obligation of petitioner to respondent
although the Usury Law had been suspended lenders were not given carte blanche authority to raise
the interests rates to unconscionable levels as they are contrary to morals if not against the law; Art
1409 these contracts are inexistent and void from the beginning thus cannot be ratified nor their right
to set up their illegality as a defense be waived
petition granted: reduced to 12% per annum
Liam Law v Olympic Sawmill & Chi (Usurious- valid)
plaintiff loaned P10,000 without interest to respondents ultimately due January 31, 1960; debtors
asked for an extension of three months; on March 17, 1960 the parties executed a loan document
extending the due but increasing the obligation by P6,000; defendants admitted the P10,000
principal obligation but (1) claimed the P6,000 constituted usurious interest (2) claim of usury should
be deemed admitted by plaintiff as it was not denied specifically and under oath
judgment affirmed and defendants ordered to pay the principal of P10,000 and the P6,000 liquidated
damages (1) defendant had not proven the P6,000 was illegal (2) TC finds the P6,000 as
liquidated damages representing loss of interest income, attorney’s fees and incidentals (3) Sec 9 of
the Usury Law does not apply to a case where it is the defendant who is alleging usury (4) usury has
been legally non-existent for some time now and interest can now be charged as lender and borrower
may agree upon
Manila Trading & Supply v Medina (Presumption- no)
defendant had certain accounts with plaintiff and these accounts were consolidated for a total balance
of P60,000 for which Medina executed a promissory note providing that upon failure to pay any of the
installments the whole sum remaining then unpaid will immediately become due and payable; plaintiffs
filed a compliant claiming that debtor filed to meet the installments and thus the balance of P43,596.22
plus 12% interest and collection expenses became due and demandable; writ of attachment was
issued and levied upon 11 of defendant’s buses; evidence of defendant showed he made 21
payments; further asserted he made 10 other payments and exhibited 10 receipts alleging therefore
that he was not in default
SC affirmed rejection of genuineness and validity of disputed receipts (1) ten additional receipts
produced by the defendant were not for the payments made on the dates claimed nor are they
chargeable to the balance of the promissory note (2) contested receipted are similar to those issued
before they were changed (3) inconsistency between dates and serial numbers as they were not in
sequence (4) genuine receipts from July 23 invariably specify the amount charged to interest as well as
that credited for each payment which the disputed receipts did not contain (5) lack of
corroboration and admissions in his answer were never withdrawn nor was the answer containing
them ever amended
SC no presumption prior installments were paid (1) receipts did not recite that they were issued for the
installments corresponding to the month of January 1957 (2) resulting presumption is only prima facie
and it is clear the payments made do not correspond to the installment falling due on the dates of the
genuine receipts
defendant ordered to pay balance due of P40,102.42 + 12% interest, attorney’s fees P1,000 + costs
Ledesma v Realubin & CA (Presumption- no)
petitioner purchased on credit from respondent’s Caltex branch gasoline and motor oil on different
dates through her drivers; at the time of the trial respondent was in possession of the white copies of
the purchase invoices of the purchase months (june-sept); petitioner sent a handwritten
letter apologizing and asking for patience due to repeated verbal demands; petitioner was adjudged in
default which was set aside after petition for relief; petitioner then denied the purchases and claimed
her truck drivers did not have authority to purchase on her behalf; upon admission of drivers’ authority
to sign she testified the amounts plaintiff was collecting were duly paid attempting to prove thus by
showing the pink invoices she had in her possession
no presumption of prior payment due to October payment as respondent proved as fact that the prior
purchases were not paid and the October purchase was paid in cash, presumption pro tanto of
payment of prior obligations cannot prevail over proven fact
courts found for the defendant and ordered petitioner to pay main indebtedness at 6% interest and
attorney’s fees
Adorable v CA (Remedies of creditor- )
private respondent Saturnino Bareng was the registered owner of 2 parcels of land; petitioners were
lessees of a 200 sq.m. portion of one of the said 2 lands; Saturnino Bareng and his son, Francisco
Bareng, obtained a loan from petitioner amounting to P26,000 in consideration of which they
promised to transfer the possession and enjoyment of the fruits of Lot No. 661-E; Saturnino sold to his
son Francisco 18,500 sq.m. of lot No. 661-D-5-A which Francisco sold to private respondent Jose
Ramos 3,000 sq. m. of the lot; the portion of land being rented to petitioners was included in the
portion sold to Ramos; petitioner filed a complaint upon learning of the sale to Ramos for the
annulment of the sale on the ground that the sale was fraudulently prepared and executed claiming (1)
the sale prejudiced their interests over the property as creditors (2) they have preferential rights
to purchase the land in question as tenants
SC (1) petitioners right against respondent is only personal to receive payment for the loan and not real
over the subject lot of the deed of sale thus their right to seek payment does not in any manner attach
to a particular portion of the patrimony of the debtor (2) creditor must follow successive measures
[exhaust, exercise then rescission] before bringing an action for rescission on the basis of fraud as it is
a subsidiary remedy and cannot be instituted except when the party suffering damage has
no other legal means to obtain reparation (3) petitioners do not enjoy preference to buy the property as
they failed to show in complaint the injury that would positively result to him from the contract in which
he has not intervened (4) grant of preference under sec 1 CA 539 applies only to bona fide tenants
after expropriation or purchase by the government of the land they are occupying (5) absence of a
party during trial constitutes waiver of his right to present evidence and cross-examine the opponent’s
witnesses as petitioners counsel were duly notified and their reason insufficient
petition denied for lack of cause of action (no annulment of rescission of sale)
Insular Life v Toyota Bel-Air (Suspensive)
respondent entered into a lease contract for a lot and building owned by petitioner; upon expiration of
the lease Toyota remained in possession of the property despite repeated demands to vacate;
petitioner filed a Complain for unlawful detainer
suspensive condition (1) birth and effectivity can take place only if and when the event which
constitutes the condition happens and if it does not then the parties would stand as if the conditional
obligation never existed (2) compromise agreement clearly stipulates that it shall become valid and
binding only upon the occurrence of all the conditions in the agreement (3) issuance of 12 postdated
checks and posting of a surety bond are positive suspensive conditions the non-compliance of which
was not a breach but a situation that prevented the obligation under the compromise agreement from
acquiring obligatory force (4) petitioner cannot be compelled to comply with its obligation to end the
present obligation
SC writ of execution valid (1) petitioner has restitution of the premises (2) recover the sum of P585,640
a month as of April 15, 1997 as reasonable compensation until possession is surrendered (3)
P50,000 attorney’s fees (4) P20,000 litigation expenses
Coronel v CA (suspensive- conditional contract of sale)
plaintiff Coronel executed a document in favor of respondent Ramona Alcaraz for the sale of a parcel
of land for a total amount of P1,240,000 entitled “Receipt of Down Payment” (P50,000) which provides
that plaintiffs bind themselves to transfer in their names the transfer certificate of title and upon
presentation to immediately execute a deed of absolute sale and respondent shall immediately pay the
balance of P1,190,000; after plaintiffs transferred the title they sold the property to Catalina for
P1,580,000 after receiving P300,000; plaintiffs canceled and rescinded the contract with Ramona and
deposited the dp in the bank in trust for Ramona Alcaraz; respondent Concepcion filed complaint for
specific performance to compel petitioners to consummate the sale of a parcel of land and cause the
annotation of a notice of lis pendens on the back of the TCT; Catalina caused the annotation of
adverse claim; plaintiffs executed a Deed of Absolute Sale in favor of Catalina and a new title was
issued
conditional contract of sale (1) receipt of dp was without reservation of title until full payment thus the
interpretation is that they sold their property (2) no express reservation of ownership or title
(3) circumstance which prevented the parties from entering into an absolute contract of sale pertained
to the sellers [certificate of title not in their names] and not the full payment of the purchase price
(4) petitioners did not merely promise to sell the property as they undertook to have the titled transfer
and to immediately execute a deed of absolute sale and only then will the buyer be obliged to pay (5)
consummation was only subject to the successful transfer of the certificate of title to the names of
petitioners (6) suspensive condition was fulfilled upon transfer of title and the conditional contract of
sale became obligatory and mutually demandable (7) in double sale what is essential is that the
second buyer registers such second sale in good faith which was not the case thus the registration
was in bad faith and will not confer any right
absolute owners (1) petitioners being children of decedent are compulsory heirs (2) rights of
succession are transmitted from the moment of death (3) estopped from claiming otherwise having
 represented themselves are the true owners at the time of sale
SC (1) ordering plaintiffs to execute in favor of respondents a deed of absolute sale together will all the
improvements thereon free of all liens and encumbrances and to immediately deliver the document to
respondents (2) upon receipt respondents are ordered to pay the whole balance of P1,190,000 (3) TCT
in the name of intervenor is canceled and declared to be without force and effect (4) plaintiffs and
intervenor and all persons claiming under them are ordered to vacate subject property and deliver
possession to respondents
Central Philippine University v CA (Resolutory)
the late Don Ramon Lopez Sr executed a deed of donation in favor of plaintiffs of a parcel of land with
the following annotations (1) utilized by CPU exclusively for the establishment and use of a medical
college (2) shall not sell, transfer or convey to any third party nor in any way encumber said land (3)
land shall be called “Ramon Lopez Campus” and the college shall erect a cornerstone bearing that
name, any net income shall be put in a “Ramon Lopez Fund” to be sued for improvements of said
campus and erection of a building thereon; private respondents who are heirs of Don Lopez filed an
action for annulment of donation, reconveyance and damages alleging (1) noncompliance with the
conditions of the donation (2) petitioner had in fact negotiated with the NHA to exchange the donated
property
SC (1) donation is onerous as it was executed for a valuable consideration / imposed a burden which
is considered the equivalent of the donation itself (2) in conditional obligations the acquisition of rights
and extinguishment or loss of those already acquired shall depend upon the happening of the event
which constitutes the condition thus the condition imposed was not a condition precedent
of suspensive condition but a resolutory one, the donation had to be valid before the fulfillment of the
condition (3) the condition imposed to build a medical schoo depended upon the exclusive will of the
donee as to when the condition shall be fulfilled thus the absolute acceptance and acknowledgement
of its obligation provided in the deed of donation were sufficient to prevent the stature of limitations
from barring the action of respondents upon the original contract (4) as the period to comply with the
condition is not fixed the cause of action arises with the expiration of a reasonable period and
opportunity for petitioner to fulfill what has been charged upon it by the donor (5) it can be inferred
from the nature and circumstances that a period was intended thus the courts may fix the duration as
fulfillment cannot be demanded until the period has arrived (6) no need to fix the duration as more than
a reasonable period of 50 years has already been allowed thus there is no more obstacle to decree the
rescission claimed (7) doubts referring to incidental circumstancesof a gratuitous contract should be
resolved in favor of the least transmission of rights and interest
petition denied and petitioner is directed to reconvey to private respondents the land donated for
having slept on its obligation for an unreasonable length of time
Jacinto v Kaparaz
respondents agreed to sell and convey to petitioners a portion of a lot for P1,800 with a dp of P800
upon execution go the Agreement and the balance to be paid on installment at the rate of P100 a
month to DBP to be applied to respondents’ loan and the final deed of absolute sale to be excused
upon settlement or partition of the estate of the deceased shall have been consummated and effected;
petitioners paid P700 to DBP in excess of P1,800 after defendants received P1,200; respondents
refused to execute thedeed of sale; petitioners filed against them a complaint for specific performance
absolute contract of sale which allowed petitioners to pay the remaining balance in installments (1)
possession of the portion sold was immediately delivered to the petitioners (2) they were granted
the right to enjoy all the improvements therein (3) respondents unqualifiedly bound themselves to
execute the final deed of sale as soon as the partition or settlement of the estate is consummated and
effected (4) respondent did not reserve unto themselves the ownership of the property until full
payment (5) no stipulation giving the respondents the right to unilaterally rescind the contract the
moment the buyers fails to pay within a fixed period
specific performance (1) remedy of an unpaid seller in a contract of sale is either specific performance
or rescission (2) respondents neither filed and action for specific performance nor
demanded rescission before filing the complaint (3) respondents did not complain of delay in these
payments nor rejected the application to their account thus unjust to allow them to reject payment
after the benefited (4) respondents did not declare their intention to rescind the contract prior to filing
their answer or if they did they did not communicate such intention to petitioners (5) delay incurred
was a casual or slight breach which did not defeat the object of the parties and does not justify
rescission (6) prompt payment of monthly amortization was not a condition precedent to the execution
of the final deed and petitioners already paid 77.77% of the PP within the period stipulated
SC grants petition (1) plaintiffs declared as owners of the property (2) defendant ordered to reconvey
the property (3) defendants ordered to pay attorney’s fees + cost
Ducusin v CA & Baliola (Resolutory)
petitioner leased to respondent a 1 door apartment unit under a contract of lease which provides that
the term of the contract will be on a month to month basis until terminated by lessor on the
 ground that his children need the premises or any ground provided for in law; respondents
had occupied the apartment for almost two years when they received a “Notice to Terminate Lease
Contract” for the reason that lessor’s two children were getting married and will need the apartment for
their own use; petitioners filed an action for ejectment alleging that (1) having constructed the
apartment complex for the use and residence of his children the said unit is now needed (2) lessees
have violated the terms by subleasing (3) have not used the unit solely for residential purposes (4)
neglected to undertake repairs according to the agreement
resolutory condition (1) mere allegation of the landlord of his need of the premises constitutes a cause
for ejectment (2) condition is not dependent solely on the will of the lessor but on a third person thus
valid (3) marriage was proven (4) unit in question was the only one available
SC (1) defendant and all persons claiming possession under them to vacate the premises (2) surrender
possession thereof to plaintiff (3) defendant ordered to pay P220 monthly for reasonable compensation
for use of premises (4) defendants ordered to reimburse for use of booster pump (5) defendants to pay
for attorney’s feed and litigation expenses
Rustan Pulp v (Potestative- invalid)
parties entered into a contract of sale whereby petitioner undertook to purchase pulp wood raw
materials from respondent; contract provided that it is not exclusive as petitioner has the option to buy
from other suppliers although respondents have priority to supply & that the buyer shall have the right
to stop delivery when supply shall become sufficient until need for raw materials shall once again
become necessary provided seller is given sufficient notice; respondent began supplying materials but
during the test run of the pulp mill the machinery line had major defects; raw materials piled up thus
suppliers were informed to stop deliveries; private respondent Lluch sought to clarify whether the letter
meant stoppage of delivery or termination of contract but as the query went unanswered they resumed
deliveries
SC (1) letter shows that defendants were terminating the contract and refusing any future delivery (2)
plaintiffs had been accepting deliveries from other sources (3) unjust for the court to rule that the
contract of sale be temporarily suspended until petitioner is ready to accept deliveries as this would
make the resumption of the contract purely dependent on the will of one party thus there is a cogent
basis for respondent’s apprehension on the illusory resumption of deliveries as the prerogative
suggests a condition solely dependent upon the will of petitioners (4) a purely potestative imposition of
this character must be obliterated from the face of the contract without affecting the rest of the
stipulations considering the condition relates to the fulfillment of an existing obligation and not to its
inception (5) condition attached is solely dependent on petitioner’s will which diminishes the legal
efficacy of prerogative (6) not inclined to follow the interpretation of petitioners that the suspension of
delivery was merely temporary as the nature of the suspension is conditioned upon petitioner's
determination of the sufficiency of supplies (7) continuing to accept deliveries estops petitioners
from claiming the breakdown of machinery was an extraordinary obstacle to their compliance to
the presentation
petitioner ordered to pay moral damages and attorney’s fees
Osmeña v Rama (protestative + suspensive = void)
petitioner loaned P200 from Don Osmeña which is to be paid in sugar; she received a further loan of
P70, P50 if which she loaned to Don Peñares; plaintiff Tomas Osmeña heir of Don presented the
contracts to defendant for payment and she acknowledged her responsibility by an endorsement
promising to pay upon sale of her house; plaintiff commenced present action upon failure of defendant
to pay; defendant answered by filing a general denial and setting up the special defense of
prescription
the acknowledgment was an absolute acknowledgment of the obligation and as sufficient to prevent
the statue of limitation from barring the action upon the original contract; condition imposed in
acknowledgement depended exclusively on her will thus void
judgment in favor of plaintiff and against defendant for the sum of P200 + interest and P20 + interest
(no responsibility for the P50 loaned to Don Peñares)
Naga Telephone v CA & Camarines Sur Electric Coop (Mixed- valid)
parties entered into a contract for the use by petitioners in the operation of its telephone services the
electric light posts of private respondent in Naga City and petitioners agreed to install free of charge 10
telephone connections for use of respondents; contract provided that the term shall be as long as
petitioner has need or when respondent is forced to stop, abandon its operation; after over 10 years of
the contract’s enforcement respondent filed against petitioners for reformation of the contract with
damages on the ground the it is too one-sided in favor of petitioners claiming justice and equity
demand its reformation to abolish the inequalities thereon
Art 1267 applicable to avoid unjust enrichment (1) when the service has become so difficult as to be
manifestly beyond the contemplation of the parties the obligor may also be released therefrom in
whole or in part (2) equity dictates the reformation of an instrument in order that the true intention of
the parties may be expressed, courts do not attempt to make a new contract but to make the
 instrument express their real agreements (3) uncut to allow the enforcement of a written instrument
which does not reflect or disclose the real meeting of the minds of the parties (4) contract became
disadvantageous with the expansion of petitioners business and increase in volume of subscribers (5)
no corresponding increase in the 10 telephone connection given (6) plaintiff even started using electric
posts outside Naga and such was not provided for in the agreement (7) escalation of costs of electric
posts
mixed depends partly on the will of the debtor and partly on chance, hazard or the will of a third
person thus valid (1) potestative -as long as there is need for the electric posts; leaves the continued
effectivity of the agreement to plaintiff’s sole and exclusive will as long as respondents are in operation
(2) casual- understood that this contract shall terminate when respondents are forced to stop,
abandon its operation and it becomes necessary to remove the electric light posts; depend on chance,
hazard or the will of a third person
SC (1) contract ordered to be reformed (2) plaintiffs ordered to pay P10 per pole per month (3)
respondent to pay monthly rental for telephones at the same rate being paid by general public
Tayag v CA (Constructive fulfillment)
subject matter of present litigation is the deed of conveyance in favor of respondent Albrigido Leyva
involving the undivided 1/2 portion of a piece of land; petitioners heirs of Galicia Sr assert breach
of conditions anchored on full payment and compliance with the stipulations thereof; respondent filed
a specific performance suit on reluctance of petitioners to abide by the covenant which was ruled in
favor of buyer
constructive fulfillment (1) candid statement of petitioner Tayag that the check issued as payment
thereof was nonetheless paid on a staggered basis when the check was dishonored (2) acceptance
by petitioners of the various payments even beyond the periods agreed upon tantamount to faithful
performance and obligation deemed fully complied with (3) respondent consigned P18,520 which is
sufficient to offset the remaining balance (4) consignation alone produced the effect of payment
because it was established that two or more heirs claimed the same right to collect
estoppel (5) instead of immediately filing a case to rescind based on non-compliance petitioners
allowed respondent to effect numerous payments thus now estopped from exercising right to rescind
(6) even permitted respondent to file a suit for specific performance thus akin to waiver or
abandonment of right to rescind
petition dismissed and withdrawal of sum consigned ordered with P16,870.52 to be delivered to
petitioner and excess of P1,649.48 to be returned to respondent
Victoria Ong v Bogñalbal (Constructive fulfillment)
respondent entered into an “Owner-Contractor Agreement” with petitioner for the construction of a
proposed boutique for the consideration of P200,000 and payment shall be made by progress billing
to be collected every 2 weeks based on accomplishment of work value to be submitted by the
contractor to the owner as certified for payment by the architect assigned on site; upon submitting the
4th progress billing petitioner refused to pay; to settle the matter the party supposedly met
and respondent supposedly agreed to finish the flooring before petitioner would pay the 4th progress
billing; instead of complying respondent abandoned the project when it became apparent he could not
complete the flooring on the agreed date; respondent filed an action for the sum of money with
damages
(1) Art 1730 applies to the owner-contract agreement as the decision on satisfaction of work
accomplished is subject to the approval of a third person (2) existence of fraud or manifest error was
failed to be proven thus presumption of good faith (3) novation is never presumed, the evidence
preponderates that there had been no novation as at best it was a grudging accommodation by
respondent to continue working on the project despite petitioner’s failure to pay (4) assuming there
was novation the condition would be deemed fulfilled under Art 1186 as respondent would no longer
have the opportunity to finish the flooring if another contractor had already finished the same thus
petitioners obligation to pay is now a pure obligation (5) respondents unilateral termination of the
contract unjustified as there is nothing in the owner-contractor agreement empower either party to
rescind (6) both parties breached thus the first infractor is liable but the liability is to be equitably
tempered by the courts and since there is no novation petitioner is the first infractor for failure to pay
petitioner ordered to pay P30,950 for value of accomplished work, P13,000 for work on flooring,
P15,000 for attorney’s fees, P20,ooo moral, P25,000 exemplary + costs
Enriquez v Ramos (Fulfillment of conditions)
plaintiffs sold to respondent 20 subdivision lots for P235,056 of which only P35,056 had been paid; the
balance was to be liquidated within 2 years from the date of the execution of the deed of sale;
respondent executed a deed of mortgage in favor of petitioners to secure payment which provided
that (1) if the mortgage cannot be registered then the whole obligation shall immediately become due
and demandable (2) mortgagee shall have the right to foreclose the mortgage extrajudicially and to sell
the same to the highest bidder; court ruled in a previous case that (1) the actual price of the lots sold
was only P185,056 (2) only if and when the roads are constructed pursuant to the ordinances of
 Quezon City may the period of two years specified in the contract begin to run (3) defendant promised
to pay the realty tax in due time and register the property as soon as petitioners proceeded with the
construction of the roads; petitioners filed present case charging that defendant has yet to pay the
sum of P200,000 despite the roads being constructed and the mortgage has not been registered and
tax not been paid
SC (1) continued violation of the express terms of the contract can no longer be countenanced as the
deed of sale with mortgage makes it the excess duty of the defendant to pay the taxes, register the
mortgaged estates and contribute P50,000 for the construction of roads (2) express terms of the
mortgage the entire obligation was to become immediately due and demandable and the mortgagee
would have the option to foreclose the mortgage (3) completion of roads in question must be regarded
as having been sufficiently established based on ocular inspection of Acting City Engineer as the
subdivision is already provided with curbs, gutters and drainage facilities and the roads have already
been asphalted; nothing in Ordinance 2969 making the acceptance by Administrative Agency a
condition precedent before a street may be considered constructed, postures inordinately technical
and devoid of merit (4) nothing in Ordinance 2969 which would indicate a street may only be
considered complete when trees are panted on both sides and water facilities built as these activities
are definitely segregable from the laying out and construction of roads and cannot be deemed
included within the scope (5) filing of the case is sufficient notice of completion go the roads and
desire to be paid the purchase price and the effect of such demand retroacts to the day of constitution
of defendants obligation
defendant to pay plaintiffs P200,000 + interest + 5% of the mortgage indebtedness of attorney’s fees +
costs; failure to pay mortgage indebtedness permits sale at public auction of properties mortgages
with the proceeds applied to the satisfaction of judgment and costs of auction sale

Tan v CA & Sps Singson

respondents are the owners of a house and lot which they agreed to sell to petitioner for a price of
P1,800,000; parties signed a receipt upon advance of earnest money of P200,000 to enable
respondent to secure the cancellation of the mortgage an lien annotated on the title of the property; on
the same day of receipt of earnest money respondents started paying their mortgage loan until it was
fully paid on July 5 and DBP executed a cancellation of mortgage on July 9; respondents also paid all
the taxes due; on June 25 petititoner inquired about the status of the property and respondents told
her that the DBP was still processing their payments and preparing the deal of cancellation; the parties
agreed on an extension of 2 weeks for the execution of the deed of sale; upon execution of the deed
of cancellation respondents tried to contact petitioner but were advised that the latter was cancelling
the sale and demanding return of the earnest money; respondents insisted on performance as the title
to the house and lot now suffers no imperfection or doubt threatening to sue for specific performance;
petitioners filed a complaint for rescission with damages on the ground of substantial beach of
contract (1) mortgage on the property was not released or cancelled (2) driveway was still public land
and could not be validly transferred as it would require approval by the Secretary of Agriculture and
Natural Resources
SC (1) while power to rescind is implied it is also settled that in absence to the contrary [no stipulation
empowering unilateral termination] this power must be invoked judicially and cannot be exercised
solely on a party’s own judgment that the other has committed a breach of the obligation (2) settled
principle that rescission will not be permitted for a slight or casual breach [such as mere delay of a few
days] only for such breaches as are so substantial and fundamental as to defeat the object of the
agreement (3) private respondents had substantially complied with their undertaking of clearing the
title of the property immediately utilizing the earnest money to settle its obligations (4) time not being
of the essence in the agreement a slight delay is not sufficient ground for rescission more so when the
delay is not attributable to them as where the fulfillment of the condition does not depend on th will of
the obligor then his part of the contract is compiled with (5) despite agreement of 2 weeks extension
petitioners unilaterally stopped the sale and demanded return of earnest money (6) failure to secure
consent of Secretary not considered substantial breach as prior approval is only required for public
land (7) as the respondent is ready, willing and able to comply with their obligation and already
demanded payment of fuel amount petitioners are in delay and thus entitled to counter claim of
specific performance (8) no fraud because no evidence that seller induced the buyer through insidious
words or machinations and she was informed of the encumbrance thus the earnest money
specific performance counterclaim granted and petitioner given 90 days to pay the balance of
P1,550,000 after which respondents will sign and execute the absolute deed of sale
Velarde v CA & Raymundo
petitoners entered into a deed of sale with assumption of mortgage with private respondents paying a
dp of P800,000 and assuming the mortgage amount of P1.8M in favor of BPI; petitioner executed an
undertaking that during the pendency of the application for the assumption of the mortgage she would
 continue paying said loan in accordance with the mortgage deed and that in the event of violation she
P800,000 dp would be forfeited and the deed of sale with assumption of mortgage shall be deemed
automatically cancelled without necessity of notice or judicial declaration; after payment for 3
months the bank denied the application for assumption of mortgage thus petitioners stopped
making payments; petitioners informed respondents that they are willing to pay the balance if (1)
deliver actual possession of the property (2) cause the release of title and mortgage and make it
available without any liens or encumbrances (3) execute an absolute deed of sale; notice of
cancellation/rescission was sent to petitioners for non-performance; petitioners filed a complaint for
specific performance, nullity of cancellation, writ of possession and damages
breach of performance on reciprocal obligation (1) assumption of the mortgage is part of the obligation
of petitioner under the contract as it was part of the consideration of the sale (2) non-payment of
mortgage and subsequently non-payment of agreed price results in substantial and
fundamental violation of the contract (3) having violated the contract petitioners lost their right to its
enforcement thus cannot avail of action for specific performance (4) payment of price may still be
allowed as long as no demand for rescission has been made judicially or by notarial act which in this
case was sent (5) conditional offer to pay cannot take the place of actual payment as the additional
burdens were not agreed upon in the original contract (6) private respondents already performed their
execution through the execution of the Deed of Sale which constructively delivered possession (7)
deed of sale violated not mortgage contract thus stipulation in the latter for forfeiture of dp does not
apply and Art 1191 governs (8) rescission abrogates the contract from its inception and requires a
mutual restitution of benefits received
mutual restitution; initial and mortgage payments to be returned lest there be unjust enrichment
Siy v CA & Valdez
respondents are owners of a parcel of land and the house constructed thereon for which the parties
entered into a contract of sale; parties entered into various contract the last of which provided that
respondents agreed to receive the partial amount of P12,000 on the condition that the balance of
P4,376 is to be completely paid 45 days after the date fixed by them and damages at P20 for every
day of delay; petitioner failed to pay both the P12,000 and balance upon the deadline;
when petitioner’s loan was ready for release they requested respondent to sign the deed of absolute
sale which was refused on the ground that the latest agreement was already breached; petitioner filed
for an action of specific performance with a writ for preliminary mandatory injuction for the execution
of the deed
SC (1) no evidence that the P12,000 and P4,376 have been paid clearly constituting breach of
reciprocal contract (2) plaintiff is guilty of delay thus defendants are entitled to choose rescission
with damages after repeated failure to pay (3) petitioner asked to cancel his loan application the
abandoning his own claim for specific performance (4) damages of P4376 unwarranted as it is based
mainly on the contract’s stipulation of damages for delay and the law does not authorize the injured
party to rescind the obligation and t the same time seek its partial fulfillment under the guise of
recovering damages
petitioner ordered to vacate and pay P50 monthly rentals until he does so
UP v De Los Angeles
petitioner was given as an endowment a land grant segregated from the public domain to be operated
and developed fro the purpose of raising additional income for its support; petitioner and ALUMCO
entered into a logging agreement wherein the latter was granted exclusive authority to cut, collect and
remove timber in consideration of payment; ALUMCO incurred an unpaid account it failed to pay
despite repeated demands; ALUMCO executed an instrument entitled “Acknowledgement of Debt and
Proposed Manner of Payments” upon receiving notice that petitioner would rescind
the logging agreement; UP president approved the instrument which provided that ALUMCO agrees
without reservation that UP shall have the right and the power to consider the agreement
rescinded without the necessity of any judicial suit if ALUMCO fails to comply with any of the
undertaking of said document; ALUMCO again incurred an unpaid account and UP inform respondent
that it had considered as rescinded and of o further legal effect the logging agreement; UP filed a
complaint for collection of payment and had taken steps to have another concessionaire take over
which was awarded to Sta. Clara Lumber Co; thus ALUMCO effected a preliminary injunction,
declaration of contempt of court against UP and order directed to Sta Clara to refrain from exercising
logging right and denial or reconsideration of contempt order;
extrajudicial rescission stipulation (1) parties had expressly stipulated in the “Acknowledgement” that
UP had the right to consider the logging agreement rescinded upon default without necessity of a
judicial suit (2) nothing in the law prohibits the parties from entering into such agreement as it is not
always necessary for the injured party to resort to court for rescission of the contract (3) extrajudicial
rescission is always provisional as only final judgment will conclusively and finally settle whether the
action taken was correct in law (4) party who denies rescission is justified is free to resort to judicial
action thus whatever prejudice may have been suffered by respondent may be compensated in
 damages (5) practical effect of the stipulation is merely to transfer to the defaulter the initiative of
instituting suit (6) law does not require that the injured party must first file suit and wait for a judgment
before taking extrajudicial steps to protect its interest as the law demands he should exercise due
diligence to minimize risk
breach (1) petitioner made out a prima facie case of breach of contract and defaults in payment by
respondent to the extent that the court issued a writ of prelim injunction stopping respondent’s logging
operation and repeatedly denied its motions to lift the injunction (2 ) respondent had profited from it
operations previous to the Acknowledgement (3) excuses offered do not constitute other
face sufficient to justify non-payment
injunction and contempt order against UP set aside
Palay v NHA, Clave & Dumpit
petitioner execute din. favor of respondent a contract to sell a parcel of land for P23,000 payable with
a dp of P4,660 nd monthly installments of P246.42 until fully paid; Par 6 of the contract provided for
automatic extrajudicial rescission upon default without need of notice and with forfeiture of all
installments paid; respondent Dumpit paid P13,722.5; almost six years after the last payment
respondent offered to update all his overdue accounts with interest and sought written consent
to assign his right to a third party; petitioners informed respondent that his contract t sell had long
been rescinded pursuant to par 6 and that the lot had already been resold; resident filed a
letter complaint with NHA for reconveyance with an alternative prayer for refund
jurisdiction (1) while judicial action is not necessary even in cited case there was at least a written
notice sent to the defaulter informing him of the rescission as act of a party in treating a contract as
cancelled should be made known to the other (2) stipulation does not ex proprio vigore [by its own
force] confer the right to rescind without judicial intervention and determination if objected to (3) due to
objection court may now determine whether resolution of the contract by petitioners was warranted
ineffective (1) lack of notice for resolution renders the resolution ineffective and inoperative (2) RA 6551
underscores indispensability of notice “actual cancellation shall take effect 30 days from receipt by
buyer of notice or demand for rescission by notarial act and upon full payment of cash surrender value
(3) respondent not deemed to have waived right as it was a contract of adhesion due to lack of
freedom to stipulate, waiver must be certain and unequivocal, and intelligently made (4) matter of
public policy to protect buyers of real estate on installment payments against onerous and oppressive
conditions such as waiver of notice (5) thus respondent is entitled to refund as restoration of rights is
impossible, inequitable to allow petitioners to retain payments and at the same time appropriate the
proceeds of the second sale
corporate veil (1) general rule that a corporation may not be made to answer for the acts or liabilities of
its stockholders and vice versa (2) cannot be pierced because no evidence of fraud (3) stockholder
cannot be made to personally liable respecting separate corporate personality by merely being the
controlling stockholder
petitioner directed to refund
Camus v Price
contract of lease entered whereby petitioner grants use of lot and parcel and land to respondent for 10
years for P300 monthly for the building and P100 for the lot; contract also provided for (1) the lessee to
construct a building and insure the same which will then be immediately transferred to lessor
upon termination of the lease (2) that lessor will cause the necessary filling the vacant portion along the
river to increase its elevation and erect the necessary stone walls with barbed wires on top thereof (3)
lessor may enter upon the premises and terminate the lease and expel the lessee without notice or
demand upon default; lessee instituted a complaint for specific performance, damages and extension
of the lease due to petitioners failure to comply with filling and erecting; lessor filed an action
for unlawful detainer due to non-payment of rentals
in pari delicto (1) petitioner failed to comply with-allegedly subordinate and collateral- condition of
filling [40 cm lower] and erecting a fence [adobe stones without barbed wire] (2) respondent failed to
secure insurance and defaults in payment of rentals
contract declared extinguished (1) party to bear their own losses (2) lessee to compensate lessor for
continued possession during pendency P200 monthly until they vacate (3) building and warehouse
to automatically become property of lessor

Gaite v Fonacier
defendant was the owner of 11 iron lode mineral claims; by “Deed of Assignment” he constituted and
appointed Gaite as his attorney-in-fact to enter into a contract with any individual or juridical person
for the exploration and development o the mining claims; Gaite executed a general assignment in favor
of Larp Iron Mines a sign proprietorship which he owns on the same royalty basis; the development
and exploitation yields 24,000 metric tons if iron ore; Fonacier decided to revoke the authority given to
Gaite resulting in a “Revocation of Power of Attorney and Contract” which included the stipulation that
 petitioner would transfer all his rights and interests over the 24,000 tons of iron ore for the sum of
P75,000; P10,000 was paid upon the signing of the agreement; two bonds were put up to secure the
P65,000 balance the second of which was executed with Far Eastern Surety and Insurance Co as
additional surety and provided that (1) liability of the surety company would only attach when there had
been an actual sale of the iron ore for not less than P65,000 and (2) the liability of said company would
automatically expire 1 year after presentation of the bond; when the second bond expired the sale of
the approximately 24,000 tons had not been made nor had the balance been paid; petitioner
demanded his sureties payment claiming that defendant had lost every right to make use of
the period when their bond automatically expired; petitioner filed a complaint for the payment of
P65,000, consequential damages and attorney’s fees
defendants (1) obligation sued upon was subject to a condition that the amount would be payable out
of the first letter of credit covering the first shipment of iron ore and/or the first amount derived form
the sale (2) no sale had been made (3) thus condition had not yet been fulfilled and the obligation was
not yet due and demandable
suspensive term not condition: shipment or local sale of the iron ore to the payment (1) would be paid
upon the sale of sufficient iron ore to be effected within one year (2) words of the contract contained
no contingency in the obligation to pay “the balance of P65,000 will be paid” (3) the existence of the
obligation to pay is recognized only its maturity or demandability is deferred (4) a contract of sale
is normally commutative and onerous thus a continent charter of the obligation must clearly appear
since this is not the usual course of business (5) subordinating the payment to the sale or shipment is
tantamount to leaving the payment at the discretion of the debtor thus defendants would be able to
postpone payment indefinitely (6) rules on interpretation in case of doubt would incline the scales
in favor of the greatest reciprocity of interest which is achieved of the buyer’s obligation is deemed to
be existing
demand (1) defendants forfeited the right to compel petitioner to wait for the sale before receiving
payment because of their failure to renew the bond or replace it with an equivalent guarantee (2) failure
to renew of replace plainly impaired the securities given to petitioner (3) Gaite is not deemed to have
waived renewal due to acceptance of the surety bond knowing it would automatically expire as
petitioner would then have stood to lose and gain nothing
final ruling: due and demandable (1) sale of the ore to defendant was a sale on credit and not an
aleatory contract and the previous sale or shipment of the ore was not a suspensive condition for the
payment of the balance but was intended merely to fix the future date of payment (2) Gaite acted
within his rights in demanding payment and instituting this action one year from and after execution of
the contract as defendants forfeited any further time within which to pay or because the term of the
payment was originally of no more than 1 year
Fernandez v CA & Tanjangco
respondent (lessor) entered into a 10 year contract with of lease with petitioner (lessee) which was
"renewable for another 10 years at the option of both parties” and whatever improvements were then
existing thereon upon expiration would automatically belong to the lessor; petitioner was informed
tha the intention was not to renew the lease which petitioner replied to stating that he opted to renew
to recover all the expenses that he had incurred in the construction of a market; respondent advised
that he could not accept petitioner’s unilateral action to renew as any renewal of the contract was
possible only at the option of both parties; petitioner commenced an action alleging that petitioner was
entitled to renew the lease contract and sought to compel respondent to renew the agreement or to
ask the court to consider the original contract as renewed
mutual (1) the option must be mutually and consensually exercised and not unilaterally as was
erroneously done by the plaintiff as the defendant has the right of election (2) requirement of future
mutual agreement as to renewal was specified with adequate precision (3) renewable is noncommittal
as it does not purport to answer who is vested with the option to extend or renew nor does it preempt
the question of what the specific terms and conditions of the renewed lease shall be (4) in a reciprocal
contract such as a lease the period must be deemed to have been agreed upon for the benefit of both
parties absent language showing that the term was deliberately set for the benefit o the lessee or
lessor alone (5) alleged verbal assurance of reseal is inadmissible to qualify the terms of the written
lease agreement under the parle evidence rule thus unenforceable under the Statute of Frauds
petition denied and contract expired
Abesamis v Woodcraft Works
plaintiff entered into an agreement to purchase Philippine round logs from respondent; the contract
was due to bad weather conditions and failure of defendant to send the necessary vehicles; the parties
entered into a new contract for 1,700,000 board feet the shipment of which was to be before the end
of July but will not commence earlier than April with the option to make partial shipment; only 462,657
board feet of the agreed quantity was delivered; plaintiff filed an action for rescission of the
contract and recovery of damages P55,000 by reason of defendants failure to comply with its
obligations
 vessel furnisher (1) contract does not expressly provide which party should furnish the vessel (2)
portions of letter addressed to seller [wharfage dues, demurrage and condition of the weather and
ship’s machinery would have been of little concern to buyer if seller were the one to furnish (3)
contemporaneous and subsequent acts of the parties point unequivocally to buyer being obliged as
the vessels of the two shipments were furnished by buyer and seller requested information as to the
arrival of vessels which buyer gave accordingly (4) buyer explained at length during the trial its failure
to furnish the necessary vessels
(1) obligation was a reciprocal one with buyer to furnish the vessels and seller to furnish the logs (2)
obligation with a term (3) obligation being reciprocal and with a period neither party could demand
performance nor incur in delay before the expiration of the period (4) when the typhoon struck in May
destroying 410,000 board feet there was yet no delay thus the loss must be borne by seller (5) after the
storm seller continued its logging operations and informed buyer that logs were ready for shipment but
the vessel did not arrive thus loss of logs are to be borne by buyer as he waived the benefit of the
period by assuring seller that it would take delivery of the logs (3) by the end of July seller had
sufficient logs ready but in spite of representations buyer failed to send a vessel on the aforementioned
date and there was no evidence that it was due to circumstances beyond buyers control thus buyer
bears loss
contract declared rescinded; defendant to pay P69,685.26 damages + P5,000 attorney’s fees
Araneta v Phil Sugar Estates
respondent purchased a portion of land through petitioner and the resulting contract of purchase and
sale with mortgage stipulated that buyer shall build on the parcel of land the Sto. Domingo church and
convent while seller will construct streets so that the land will be a block surrounded by streets on all
four sides; buyer finished with the construction but seller was unable to finish one of the roads as a
third party has been occupying a middle part thereof and refused to vacate; respondent filed a
compliant to demand compliance with the obligation and/or pay damages
(1) the court should not proceed to set a period unless the complaint is first amended as what was put
in issue was not whether the court should fix the time of performance but whether the parties agreed
that the seller should have reasonable time to perform its part of the obligation (2) period cannot be
set arbitrarily as they shall determine such period as may have probably been contemplated by the
parties under the circumstances (3) contract shows the parties were fully aware that the land was
being occupied by squatters and that they must resort to legal processes the duration of which is not
under their control nor could be determined in advance (4) must have intended to defer the
performance until the squatters are duly evicted which would explain why no exact dates
were specified
time for the performance of the obligation of petitioner fixed at the date all the squatters are finally
evicted
Radiowealth Finance Co v Spouses del Rosario
respondents jointly and severally executed signed and delivered in favor of petitioners a promissory
note for P138,948; respondents defaulted on the monthly installments despite repeated
demands; petitioner filed a complaint for the collection of a sum of money; respondents theorize that
the action for immediate enforcement is premature because its fulfillment is dependent on the sole will
of the debtor and claim that the courts should first fix a period for payment
(1) act of leaving blank the due date of the first installment does not necessarily mean that the debtors
were allowed to pay as and hen they could as if this was the intent it would have been so stated in the
promissory note (2) contrarily the note expressly stipulated the debt should be monthly amortized
in installment and while the specific date was left blank it is clear that each installment should be paid
monthly (3) acceleration clause and late penalty indicate installments should be paid at a definite date
(4) respondents started paying installments even if the checks were dishonored (5) petitioner to fly
established a cause of action but also a due and demandable obligation as it had matured and
respondents clearly defaulted when their checks bounced
procedural (1) judicial admissions of the respondents established their indebtedness admitting to the
due execution of the promissory note and their only defense was the absence of an agreement on
when the installment payments were to begin (2) documents would still be admissible even if witness
shad no personal knowledge as the purpose is merely to establish the fact that the statement or
document was in fact made or to show its tenor and that is od independent relevance (3) the rues on
evidence are to be liberally construed in order to promote their objective and to assist the parties in
obtaining just, speedy and inexpensive determination of an action (4) if the demurrer is granted by the
trial court and the order of dismissal is reversed on appeal the right to present evidence is deemed
waived and movant is deemed to have elected to stand on the insufficiency of plaintiff’s case and
evidence (5) court shall proceed to render judgment on the basis of the plaintiff’s evidence (6) CA had
sufficient evidence on record to decide the collection suit as a remand is not only frowned upon it is
also logically unnecessary on the basis of facts as per the acceleration clause
respondents to pay P138,948 + 2.5% monthly penalty charge + 10% attorney’s fees
Allen v Albay and Ambos Camarines
Director of Public Lands acting for respondents duly executed a formal contract with plaintiffs of the
construction of a reinforced concrete bridge which provided for construction to be completed on or
before 4 months contractor furnished sand and gravel however time for commencement of work was
not provided for; petitioner requested for an extension to Feb 15, 1914 which was granted for a sump
of money; the bridge was completed and accepted by respondents on April 1, 1914 and plaintiff was
paid the contract price less P1,301.45; petitioner instituted an action for the purpose of recovering the
amount plus other damages
period (1) clear that respondents did intend for the completion of work to be Nov 1 not sept 1 as such
were the instructions to the Director of Public Works (2) even admitting the date of completion was
Nov 1 the contractor could not have completed the work on or before that date on account of
the quarantine and the raising of the bridge outside of the original specifications (3) conclusion
that respondents waived the contract time by their failure to deliver the steel promptly, placing the
strict quarantine on animals and the changing of plans (4) waiver operate to eliminate the definite date
from which to assess liquidated damages as where strict performance on the part of the contractor is
prevented or waived by the other party claim by the latter of fines and penalties for delay or
failure cannot be sustained (5) plaintiff in continuing the work was complicated to complete the
same within a reasonable time the liquidated damage clause not thereby restored and made
applicable to an unreasonable time (6) provinces are limited to such damage which they may
have suffered on account of unreasonable delay resulting after Feb 15
payment to petitioners as no actual damages were proven by respondents and there was certainly
no unreasonable delay prior to Feb 15 thus the respondents have no right to withhold the P1301.45;
evidence insufficient to warrant an affirmative holding that the plaintiff is entitled to recover

Ong Guan Can v BPI (Alternative)

house and merchandise insured were burnt while the policies issued by the defendant were still in
force; respondent contends that under clause 14 of the conditions of the policies it may rebuild the
house burnt as sufficient indemnity although it be smaller; this clause would make the obligation an
alternative one thus the company must notify the creditor of his election; only after the notice shall the
election take legal effect; record shows that the respondent did not give a forma notice of its election
to rebuild thus plaintiff did not give is assent to the proposition; alleged election improper; company
appealed insisting that they must be permitted to rebuild the house burnt subject to the alignment of
the street where the building was erected and be relieved from payment of the sum in which said
building was insured; SC said imposition inequitable as well as unjust to compel the plaintiff to accept
the rebuilding of a smaller house than the one burnt with. lower kind of materials without offering him
additional indemnity
lower court sentenced defendant company to pay P45,000, the value of certain policies of fire
insurance with legal interest + costs
PNB v Sta Maria (Joint)
respondent siblings executed in Maximo’s favor an SPA for the mortgage of a parcel of land jointly
owned by all of them; Valeriana also executed in favor of Maximo an SPA to borrow money and
mortgage any real estate owner by her; plaintiff filed an action for the collection of certain amounts
representing unpaid balances on two agricultural sugar crop loans due allegedly from
defendants; Maximo obtained two sugar crop loans from plaintiff bank; he secured the two loans
by executing two chattel mortgages guaranteed by surety bonds in his own name; siblings claim (1)
SPA had not given their brother the authority to borrow money but only to mortgage (2) if they
are liable then it should only be to the extent of the value of the property which they had authorized to
be given as security for the loans (3) they did not benefit whatsoever from the loan (4) bank’s only
recourse against them is to foreclose the property
SC (1) SPA to mortgage property is limited to such authority and does not bind the grantor personally
to other obligations contracted by the grantee as the authority to mortgage does to include the
authority to contract obligation (2) fundamental construction rule that where an instrument specifies
and defines powers and duties then all of such powers are limited and confined to those specified and
all other powers and duties are excluded (3) plaintiff has not made out a cause
of action against defendants except Valeriana (only joint) as to hold them liable for the unpaid balances
(4) no express ratification of defendants of the loans (5) no evidence that they had benefitted from the
crop loans as to put them in estoppel
Maximo alone with Valeriana who authorized him to borrow money must answer for said obligations;
other defendants responsibility is only that the property authored by them to be mortgaged is to be
foreclosed but they cannot be held personally liable
Palmares V CA & MB Lending Corp (Solidary)
petitioner signed as co-maker for a P30,000 loan; principal debtors defaulted after 4
 payments; respondent filed a complaint for the balance of P13,700 against petitioner as the lone party-
defendant to the exclusion of the principal debtors allegedly by reason of the solvency of the latter;
petitioner alleged (1) bad faith in suing her alone without including the principal debtors when they
were the only ones who benefited from the loan (2) “jointly and severally or solidarily liable are
technical terms not fully appreciated by an ordinary layman (3) rule is that the obligation of a surety
cannot be extended by implication beyond specified limits (4) promissory note is a contract of
adhesion since it was brought partially filled up, the contents wee never explained and her only
participation was to sign (5) any ambiguity should be construed against respondent (6) her liability
should be deemed restricted by the clause in the 3rd par to be that of a guarantor (7) cannot as yet be
compelled to pay because the principal debtors cannot be considered in default in the absence of
demand
surety thus primarily liable (1) petitioner was fully aware of her solidary liability and estopped from
asserting ignorance after admitting she voluntary affixed her signature (2) concomitant and
simultaneous compliance of petitioner’s obligation with principals show that petitioner considered
reseal equal bound by the contract (3) demand is no longer needed for delay to exist as the contract
expressly so declares (4) surety is not even entitled to be given notice of principal’s default (5)
creditor’s right to proceed against the surety exists independently of his right to proceed against the
principal (6) payment of debt then become subrogated to all the rights and remedies of the creditor (7)
no actual offer of payment only a commitment to pay if principal does not pay (8) presentation must be
fulfilled completely, has the right to insist performance in all particulars (9) failed to prove fraud as only
evidence d by own uncorroborated allegations (10) even if the promissory note were a contract of
adhesion it is not entirely prohibited because one who adheres to the contract is free to reject it
entirely thus adhering is giving consent
petitioner to pay balance + 6% interest + P10,000 af

Sesbreño v CA, Delta & Pilipinas (Not Solidary)

petitioner made a P300,000 money market placement with PhilFinance with a term of 32
days; PhilFinance issued a Certificate of Confirmation of Sale of a Delta Motor Corporation Promissory
Note, the Certificate of Securities Delivery Receipt indicating the sale of the note with notation that
said security was in the custody of Pilipinas Bank, and postdated checks drawn against the Insular
Bank of Asia and America for P304,533.33 payable on March 13, 1981; upon maturity the checks were
dishonored for having been drawn against insufficient funds; petitioner personally handed a demand
letter to Pilipinas informing the bank that his placement with PhilFinance had remained unpaid and
outstanding and that he was asking fro the physical delivery of the promissory note; Pilipinas never
released the note nor any instrument related thereto; Sesbreno learned that the security maturing on 6
April 1981 has a face value of P2,300,833.33 with PhilFinance as payee and Delta Motors as maker
and was stamped “non-negotiable” on its face; Sesbreno filed an action for damages against Delta
Motors and Pilipinas Bank; Delta Motors contents that said promissory note was not intended to be
negotiated or otherwise transferred by Philfinance as manifested by the word "non-negotiable"
stamped across the face of the Note
Delta: assignment valid (1) non-nego instrument may not be negotiated but it may be assigned or
transferred absent an express prohibition against assignment or transfer (2) even had the “letter of
assignment” set forth an explicit prohibition of transfer such cannot be invoked against a transferee of
the note who parted with valuable consideration in good faith and without notice of such prohibition (3)
consent was not necessary for the validity and enforceability of the assignment (4) conventional
subrogation was not clearly established and cannot be lightly inferred (5) issuer of a commercial paper
in the money market necessarily knows that it would expeditiously transferred without need of notice
and in practice no notice is given (6) at the time Philfinance sold its right no compensation had yet
taken place as the obligations were not yet due (7) assignment to petitioner would have prevented
compensation from taking place as PhilFinance and Delta would have ceased to be creditors and
debtors of each other (8) petitioner notified Delta of his rights as assignee after compensation by
operation o law because the offsetting instruments had both reached maturity (9) assignee acquires is
rights subject to the equities which the debtor could have set up against the original assignor before
notice of the assignment was given (10) since assigner PhilFinance could not have compelled payment
anew by Delta so is petitioner as assignee similarly disabled from collecting the portion of the note
assigned to him (11) court is compelled to uphold the defense of Delta of compensation due to failure
of petitioner and absent proof of PhilFinance to notify Delta before maturity date of the assignment
Pilipinas: custodianship breached (1) nothing in DCR that establishes an obligation to pay petitioner
P307,933.33 nor any assumption of solidary liability with Philfinance and Delta (2) petitioner failed to
point to any law which imposed such liability on respondent nor argue that the very nature of the
custodianship necessarily implies solidary liability (3) breached however its undertaking under the DCR
by failing to effect return (4) such term was never brought to the attention of petitioner at the time the
money market placement was made (5) thus runs counter to the very purpose of custodianship (6)
 inconsistent with the provisions of Art 1988 “the thing deposited must be returned to the depositor
upon demand even though a specified period or time for such return may have been fixed”
(7) petitioner as provider of funds must be safeguarded from stipulations between borrowers and
custodian banks
PhilFinance: no piercing of corporate entity (1) petitioner neither alleged nor proved that one or another
of the 3 concededly related companies used the other 2 as mere alter ego (2) or that the other 2 were
administered and managed of the benefit of 1
Pilipinas order to indemnify petitioner for damages P304,533.33 + 6% legal interest
PBC v IAC & Regala (Solidary)
defendant applied for and obtained from plaintiff a Pacificard credit card; defendant Robert, spouse of
Celia, executed a Guarantor’s Undertaking in favor of appellant Bank where he agreed to (1) jointly and
severally pay PBC upon demand any and all indebtedness, obligations, charges or liabilities due and
incurred by Celia with the use of the Pacificard (2) changes or notation in the terms and conditions in
connection with the issuance or use of the Pacificard or any extension of time to pay such obligations,
charges or liabilities, shall not in any way release him from responsibility (3) understanding is a
continuing one and shall subsist and bind I’m until the liabilities have been fully satisfied or paid; Celia
had purchased goods and services for which plaintiff advanced P92,803.98; a written demand was
sent to Robert in view o her failure to settle her accounts; a complaint was subsequently filed; Robert
claimed his liability is only limited to the credit limit of P2,000 per month
SC (1) pertinent portions of guarantor’s undertaking stated that he would be solidarily liable for any and
all indebtedness (expressly binding himself to the extent of indebtedness) and that he shall to in any
manner be released until all the liabilities are fully paid or satisfied (2) although
denominated “guarantor’s undertaking” it was in substance a contract of surety hence binding himself
solidarily with the principal debtor (3) undertaking was provided as a condition for the issuance of the
card “guarantor to assume joint and several liabilities for any and all amount arising out of the use of
the Pacificard (4) although solidarily liable with the principal debtor is different from the debtor the
former can still be liable to the same extent as the principal debtor depending on the clauses in the
contract
principles (1) all the other rights of the guarantor are not lost by becoming solidarily liable and therefore
a surety as while the liability is like that of a joint and several debtor is does not make him the debtor
but still the guarantor (2) surety may secure additional and future debts of the principal debtor the
amount of which is yet unknown
defendant condemned, jointly and severally, to pay P92,803.98 + 14% interest, 15% of pricipal
obligation for attorney’s fees and costs; counterclaim of Robert dismissed for lack of merit
Ronquillo v CA & So (Solidary)
petitioner was 1 of 4 defendants is a civil case filed by respondent for the collection of P117,498.98
representing the value of checks issued in payment of foodstuffs which were dishonored; lower court
rendered its judgment based on a compromise agreement (1) reduction to P110,000 (2) P55,000 initial
payment on or before Dec 24, 1979 (3) balance defendants individually and jointly agree to pay Jan-
June 1980; respondent filed a Motion for Execution for failure to make initial payment; petitioner and
another defendant offered to pay their pro-rata share which respondent refused but subsequently
withdrew deposit in bank; writ of execution for P82,500 against properties of all defendants singly or
jointly liable was issued; notice of sheriff’s sale was issued; petitioner filed a petition for certiorari and
prohibition realizing the actual threat to his property with the motion for reconsideration being reset;
jurisdiction (1) rule that a motion for reconsideration should precede recourse to certiorari is not
absolute and may be dispensed with (2) petitioner was faced with imminent danger of his properties
the moment his motion for reconsideration is denied thus urgency prompted recourse
solidarily- obligated themselves jointly and individually thus enforceable against one of the numerous
obligors
petition dismissed
Quiombing v CA & Francisco (Solidary)
petitioners jointly and severally bound themselves through a “Construction and Service Agreement” to
construct a house for private respondents for P137,940; Quiombing entered into a second written
agreement with respondents under which the latter acknowledged and promised to pay the balance of
the contract price; respondent signed a promissory note for P125,363.5; petitioner filed a complaint for
recovery of said amount plus charges and interests; respondents moved for the dismissal of the
complaint instead of filing an answer claiming that Biscocho was an indispensable party and therefore
should have been included as co-plaintiff; the complaint was dismissed with the court stating that
petitioners should also be considered obligors for the construction of the house thus the dispute
cannot be decided without the involvement of Biscocho whose rights will necessarily be affected;
instead of filing an amended complaint Quiombing appealed the order of dismissal arguing that (1) as
a solitary creditor he could act by himself alone in the enforcement of his claim (2) the amount due
were payable only to him under the second agreement
 SC (1) question of who should sue is a personal issue between Quiombing and Biscocho in which
respondents had no right to interfere (2) payment of the judgment debt to the complainant will be
considered payment to the other solitary creditor even if the latter was not a party to the suit thus it as
not necessary for both to file the complaint (3) suing for the recovery of the contract price is certainly a
useful act that Quiombing could do by himself (4) Art 1214 states that the debtor may pay any of
the solitary creditors but if any demand has been made by any of them then payment should be made
to him
civil case is reinstated as Biscocho need not be included as co-plaintiff thus Quiombing as
solidary creditor can enforce payment on his own; Biscocho’s participation is not at all necessary
much less indispensable
Inciong Jr v CA & Phil Ban of Communications (Solidary)
petitioner signed a promissory note with Naybe and Pantanosas holding themselves jointly and
severally liable to private respondents Phil Bank of Communications; the due date of the promissory
note expired without the promissory having paid their obligation of P50,000; respondent sent
telegrams demanding payment thereof; respondents filed a complaint for collection of the sum;
petitioner alleges that he was persuaded to act as co-maker and that he acceded with the
understanding that he would only be a co-maker for the loan of P5,000 thus it was by trickery, fraud
and misrepresentation that he was made liable alleging further that 5 copies of a blank promissory
note were brought to which on which he affixed his signature but he indicated on one copy that he
bound himself only for P5,000
(1) typewritten figure P50,000 clearly appears directly below the admitted signature (2) petitioner
signed the promissory note as a solitary co-maker not as a guarantor thus each debtor liable for
entire obligation nd each creditor can demand the whole obligation (3) as the three signatures are
solidarily liable the choice is left to the creditor to determine against whom he will enforce collection (4)
fraud was not established by clear and convincing evidence as it was evidenced by his own
uncorroborated and self-serving testimony (5) testimony on limited liability uncorroborated and cannot
prevail over the presumed regularity and fairness of the transaction (6) “rather odd” to have indicated
his supposed obligation on a copy and not the original (7) even if a limited liability had been agreed
upon it would be merely collateral between him and Naybe and therefore not binding upon the private
respondent (8) petitioner was an LLB degree holder and amor consultant who was supposed to take
due care of his concerns
petitioner to pay P50,000 + int + 6% liq + 10% lit + costs
Government v CFI & Isip (Divisible)
respondent Isip entered into a Contract and Agreement for the construction of a new Pasay City Hall
which stipulated that contractor would start the construction by stages advancing the necessary
amount needed for each stage of work and respondent would reimburse before proceeding to the next
stage; value of accomplished work amounted to P1,713,096 of which only P1,100,000 was paid;
respondent filed an action for specific performance with damages; a compromise agreement was
entered into whereby respondent would be paid the balance after furnishing petitioner a new
performance bond in proportion to the remaining value or cost of the remaining work; respondent
applied for garnishment of the PNB funds of petitioner which petitioner questioned (1) execution
sought premature (2) obligations under the compromise is reciprocal thus cannot be obliged to pay as
respondents have yet to put up the performance bond (3) Sheriff has no authority to garnish;
respondent submitted a P60,000 bond increased to P100,000 representing 20% of the cost of the
next construction stage; court ordered the enforcement of the garnishment and took possession of the
PNB deposits; respondent then sought filed a permit to serve a supplemental complaint
seeking rescission of the original contract and compromise and claiming damages of P672653.91
alleging breach of compromise; petitioners filed a petition for review on certiorari
compromise (1) purpose is to put an end to a litigation already commenced (2) execution of
compromise already commenced after asking for a writ of execution resulting in the garnishment of
Pasay City funds and now respondent is seeking to rescind (3) cannot avail of both options (4)
compromise was final and executory thus lower court had no jurisdiction to entertain supplemental
complaint (5) supplemental complaints are only meant to supply deficiencies not to substitute
bond (1) obvious parties envisioned stage by stage construction and payment (2) thus compromise is
a divisible obligation necessitating therefore a performance bond in proportion to the uncompleted
work (3) estoppel because of previous acceptance of stage proportionate bonds cannot now demand
20% bond of entire unfinished work (4) such would be tantamount to allowing petitioner to evade their
obligation under the compromise agreement (5) bond of a contractor for a public work should not be
extended beyond the reasonable intent as gathered from the purpose and language of the instrument
(6) submission of bond not a condition precedent to payment of balance P613,096 and cannot be
argued that reciprocal agreement was created in the compromise as it was established
when respondents finished some of the stages of construction
writ of enforcement and garnishment issued to be enforced by taking possession of the amount of
 P613,096 from the deposits of plaintiff in the bank and delivering them to respondent + P18392.78 af

Suatengco v Reyes
plaintiffs Suatengco approached defendant Reyes to borrow P1,336,313 to pay off their debt to
Philippine Phosphate Fertilizer Corporation; plaintiffs executed a promissory note binding themselves
jointly and severally to pay defendant the amount in 31 monthly installments however only 1 payment
of P15,000 was made; the promissory note stipulated that they unequivocally wived the necessity of
demand as well as notice of dishonor and acceleration clause; defendant filed a collection suit with
damages; plaintiffs limited their appeal to the issue of the award of attorney’s fees
RTC: “not the province of the court to alter a contract by construction or to make a new contract for
the parties; its duty is confined to the interpretation of the one which they have made for themselves
without regard to its wisdom or folly as the court cannot supply material stipulations or read into
contract words which it does not contain"; petitioners appeal to the CA was limited the issue to the
award of AF
(1) stipulation in fifth paragraph of the promissory note provided for attorney’s fees equivalent to 5% of
the total outstanding indebtedness (2) AF herein litigated are in the nature of liquidated damages thus
it constitutes a penal clause (3) awarding of 20% AF is unwarranted and contrary to law, RTC and
CA disregarded the stipulation expressly agreed upon in the PN and instead increased the award of AF
by giving weight and value to the testimony of prosecuting witness Atty. Reyes (4) oral evidence
cannot prevail over the written agreements of the parties thus courts need only to rely on the faces of
the written contracts to determine their true intention as it is presumed that they have made the
writings the only repositories and memorials of their true agreement (5) respondents assertion that the
5% AF agreed upon is intended as a minimum rate as the PN never mentioned a minimum
(6) improper to increase the award of AF despite the express stipulation contained in the said PN
which the SC deems proper under these circumstances since it is not intended to be compensation for
counsel but rather in the nature of a penalty or liquidated damages
ordered plaintiffs to pay actual damages of P1,321,313 + 12% interest, moral damages P1,000,000,
and AF 5% of the sum collected, costs of the suit
Titan Construction v Uni-Field
petitioner purchased on credit various construction supplied and materials from respondent worth
P7,620,433.12 of which petitioner failed to pay a balance of P1,404,637.42; respondent send a
demand letter to petitioner; petitioner admitted the purchases but disputed the amount claimed by
respondent
contract (1) appellant admitted the transactions and the existence of delivery receipts and invoices
which formed part of petitioner’s formal offer of evidence were not denied
(2) appellant cannot question the interest rates as these were provided in the delivery receipts and
sales invoices as such failure to contest results in admission thereof (3) contracts are perfected by
mere consent and the courts havee no alternative but to enforce them as they are agreed upon
and written there being no law or public policy against the stipulated provisions (4) binding as not a
contract of adhesion as it was freely entered into and presumed to have fun knowledge and to have
acted with due care or to have been aware of the terms and conditions of the contract
penal clause (1) AF awarded reduced as respondent has adequately protected itself from a possible
breach because of stipulations on the payment of interest, liquidated damages, and AF
(2) exorbitant because it includes principal + interest charges + accrued interest at 24% per annum
compounded yearly + liq damages (3) liq damages and AF serve the same purpose as penalty for
breach
principal P1,404,114 + interest charges P504,114 + 24% accrued interest charges + liq P324,147.94
+ AF P351,028.5 + costs
Ruiz v CA & Torres
petitioner obtained several loans from respondent consolidated under 1 promissory note for P750,000;
petitioner executed a real estate mortgage to sucre the PN; petitioner obtained 3 more loans under 3
separate PNs; amounting to P300,000 secured by P571,000 worth of jewelry; petitioner paid the
stipulated 3% monthly interest of the consolidated loan for P270,000 after which he was unable to
make interest payments; respondent demanded payment not only for the P750,000 but the
P300,000 loan as well; respondent sought the extra-judicial foreclosure of the real estate mortgage;
RTC issued a writ of preliminary injunction
not a contract of adhesion (1) PN did not contain any fine print provision which could not have been
examined (2) petitioner had all the time to study the stipulations (3) entered into not only 1 but several
loan transactions thus not compelled to accept (4) PNs contained similar terms and conditions with
little variance (5) presumed that a person takes ordinary care of his concerns thus one does not sign a
document without first informing himself of its contents and consequences
paraphernal property (1) registered in the name of Corazon alone (2) “married to Rogelio” merely
 descriptive of civil status and to to be construed to mean that her husband is also a registered owner
(3) no proof that the property was obtained during the marriage (4) acquisition of property and
registration are 2 separate acts
penalty excessive, iniquitous, unconscionable and exorbitant thus may be equitably reduced (1)
despite suspension of Usury Law the parties are not given carte blanche authority to rise interest to
levels which will enslave their borrowers or lead to a hemorrhaging of their assets (2) 1% surcharge
which is valid partakes of the nature of liquidated damages or a penal clause and is separate and
distinct from interest payment (3)
SC (1) real estate mortgage is valid despite the non-participation of petitioner’s husband (2) ordered to
pay principal + 12% per annum legal rate of interest + permissible rate of surcharge of 1% per month
without compounding + fixed amount AF P50,000 (3) foreclosure proceedings may now proceed
SSS v Moonwalk
plaintiff approved the loan of P30,000,000 to respondent; respondent executed a third amended Deed
of First Mortgage; after settlement of the account plaintiff issued to defendant the Release of
Mortgage for defendant’s mortgaged properties; plaintiff alleged it committed an honest mistake in
releasing defendant; petitioner filed a complaint alleging that defendant had committee an error
in flailing to compute the 12% interest due on delayed payment on the loan
RTC and CA dismissed the complaint on the grounds that (1) the obligation as already extinguished by
the payment of defendant of its indebtedness and by petitioner’s act of cancelling the real estate
mortgages (2) what is sought to be recovered is not the 12% interest on the loan but the penalty for
failure to pay on time the amortization
SC (1) penalty clause is an accessory obligation thus dependent on the existence of
a principal obligation (2) principal obligation is the loan between the parties which was extinguished by
the payment of P15,004,905.74 which was a complete payment as stated in the Statement of Account
(Exhibit F) (3) pursuant to such extinguishment the real estate mortgages were released therefore the
principal obligation was deemed extinguished as well as the accessory obligation (4) waiver of
the penal clause in the present case as although there were late amortizations there was no demand
made by the creditor for the payment of the penalty at the time of the extinguishment of the
obligation (5) the demand for payment of the penal clause first made on Nov 28, 1979 was ineffective
as there was nothing to demand as respondent was never in default since petitioner never compelled
performance thus it is an exercise in futility (6) does not fall under any of the exception where demand
is not necessary to render the obligor in default (7) penalty at any time can be modified by the Court as
even substantial performance under Art 1234 authorizes the Court to consider it as complete
performance minus damages (8) payment of penalty does not mean gain or loss for the plaintiff since it
is merely for the purpose of enforcing the performance of the main obligation has been fully complied
with and extinguished
petition dismissed and petitioner cannot enforce penal clause
State Investment House v CA & Malonjao
stipulation in contrast that should a receivable remain unpaid the plaintiff may impose a 3% penalty
per month at its discretion; respondents executed a real estate mortgage to secure the payment of the
receivables; checks drawn by respondents were dishonored for insufficient funds; plaintiff made
repeated written demands to make good the checks they endorsed; defendants failed to pay the value
of the checks thus petitioners undertook the foreclosure of the real estate mortgage; defendants
mortgages properties were sold to plaintiff who was the highest bidder
CA affirmed by SC disallowing the claim for deficiency (1) proceeds of the auction sale were sufficient
to cover the principal obligation including interest, penalty, and other charges (2) penalty charges
imposed by petitioner on the principal obligation were highly iniquitous and unconscionable thus may
be reduced by the courts although sanctioned by law (3) disallowance of the payment of deficiency
was in effect merely a reduction of the penalty charges and not a deletion of the penalties as
contended by the petitioner as P420,556.64 had already been paid (4) petitioner has clearly recouped
its investment and earned more that enough profit in 2 years by way of penalty charges and should
have stopped imposing the 3% penalty charges and other burdens when it had consolidated the
2 tiles of the properties it had foreclosed
judgment of CA affirmed as the principal obligation of the respondent would not have ballooned to
such horrendous amount if not for the 3% monthly penalty charge thus it is in accordance with Art
1229 to disallow the payment of deficiency as this is merely a court reduction not deletion of the
penalty charges
Solangon v Salazar
petitioners obtained 3 separate loans from respondents secured by real estate mortgage with an
interest of 6% per month; petitioner failed to pay the third loan of P230,000 + stipulated interest thus
respondent foreclosed the mortgage
3rd contract valid but interest unconscionable (1) mortgage was signed not only by Ursula but also by
her husband (2) signing a contract without knowing its contents is contrary to common experience
 thus Ursula’s uncorroborated testimony cannot be given weight (3) alleged payment of the 2nd loan is
an issue of fact which the court has no jurisdiction thus lower court’s findings are final as not under
any of the exceptions (4) parties not given carte blanche authority to raise interest rates to such levels
which will either enslave their borrowers or lead to a hemorrhaging of their assets (5) although
not usurious must be equitably reduced for being iniquitous, unconscionable and exorbitant (6)
contrary to morals if not against the law whether intended as an indemnity or a penalty
72% interest rate per annum reduced to 12%

Allen v Albay and Ambos Camarines

Director of Public Lands acting for respondents duly executed a formal contract with plaintiffs of the
construction of a reinforced concrete bridge which provided for construction to be completed on or
before 4 months contractor furnished sand and gravel however time for commencement of work was
not provided for; petitioner requested for an extension to Feb 15, 1914 which was granted for a sum
of money; the bridge was completed and accepted by respondents on April 1, 1914 and plaintiff was
paid the contract price less P1,301.45; petitioner instituted an action for the purpose of recovering the
amount plus other damages
period (1) clear that respondents did intend for the completion of work to be Nov 1 not sept 1 as such
were the instructions to the Director of Public Works (2) even admitting the date of completion was
Nov 1 the contractor could not have completed the work on or before that date on account of
the quarantine and the raising of the bridge outside of the original specifications (3) conclusion
that respondents waived the contract time by their failure to deliver the steel promptly, placing the
strict quarantine on animals and the changing of plans (4) waiver operate to eliminate the definite date
from which to assess liquidated damages as where strict performance on the part of the contractor is
prevented or waived by the other party claim by the latter of fines and penalties for delay or
failure cannot be sustained (5) plaintiff in continuing the work was complicated to complete the
same within a reasonable time the liquidated damage clause not thereby restored and made
applicable to an unreasonable time (6) provinces are limited to such damage which they may
have suffered on account of unreasonable delay resulting after Feb 15
payment to petitioners as no actual damages were proven by respondents and there was certainly
no unreasonable delay prior to Feb 15 thus the respondents have no right to withhold the P1301.45;
evidence insufficient to warrant an affirmative holding that the plaintiff is entitled to recover

Barons Marketing Corp v CA and Phelps Dodge

petitioner purchased on credit various electrical wires and cables amounting to P4,102,438.30 of
which only P300,000 as paid; respondent demanded on several occasions; petitioner requested to pay
off the balance in installments which was denied with respondent reiterating demand for full
payment; respondent filed an action for recovery
mere exercise of rights not an abuse thereof (1) respondent's right to reject petitioner’s offer to pay
in installments is guaranteed by art 1248 wherein the obligation must be performed in one act not in
parts (2) good faith is presumed and the burden to prove bad faith lies with he who alleges, allegation
that respondent wanted to terminate its agency relationship with petitioner so that respondent itself
may deal directly with Meralco was not supported by evidence (3) respondent was driven by
very legitimate reasons as it had its own cash position to protect in order to pay its own obligations (4)
in the absence of abuse of rights respondent cannot be allowed to perform its obligation under such
contract in parts (5) autonomy of contracts must be respected
exorbitant penalty (1) 25% AF constitutes a penal clause (2) express stipulation thus petitioner is
obliged to pay such penalty in addition to the 12% annual interest (3) however interest alone already
exceeds the principal debt (4) AF and collection fees are manifestly exorbitant (5) court is clothed
with ample authority to review matters even if they are not assigned as errors in their appeal
if necessary to arrive as a just decision
petitioner to pay (1) unpaid balance P3,108,000 + int (2) AF and collection fees 10% (3) costs
Manila Racing Club v Manila Jockey Club
Rafael Campos entered into a contract with respondent (Jockey) for the purchase of a parcel of land
for P1,200,000 payable in installments; the contract stipulated that should the purchased fail to
pay each installment in due time the vendor may rescind the contract and keep the amounts paid + a
clause that states the purchaser may form a corporation called the Manila Racing Club to whom he
may transfer all his rights and obligations; as the third installment became due the purchaser could not
pay thus vendor cancelled the contract and kept the amount of P100,000; petitioner was granted an
extension to revive the contract by paying but having failed the cancellation was ratified
defendants not responsible for non-compliance (1) no sufficient evidence to prove verbal promise of
Manila Jockey Club to subscribe to 1/2 of the shares of plaintiff (2) Campos himself attributes the
failure to pay to the public not responding to the expectations of the incorporators due to state of
the stock market (3) seems this is not the cause as plaintiff had subscribed shares amounting to
 P600,000 said in part and the remainder payable on demand
penal clause valid and just (1) clause regarding the forfeiture of partial payment is valid as it is a penal
clause which may be legally established by the parties (2) not contrary to law, morals or public order as
it was voluntarily and knowingly agreed upon (3) amount forfeited constitutes just 8% of the stipulated
price which is not excessive considering the profit which would have bee obtained had the contract
been complied with (4) defendants rejected other propositions to buy the property
defendants absolved
Ligutan v CA & Security Bank
petitioners obtained a P120,000 loan from respondent as 15.189% interest per annum + 5% interest
penalty per month + 10% AF if a suits instituted for collection; petitioners were granted an extension
but despite several demands they failed to settle their debt; respondent filed a complaint for recovery
of the due amount; petitioners instead of introducing their own evidence had the hearing of the case
reset on 2 consecutive occasions; trial court removed to consider their case submitted for decision
and rendered judgment in favor of respondent; petitioners interposed an appeal assailing the
imposition of service and penalty charges as well as AF
(1) default should begin from maturity date based on PN stipulating that demand is not necessary (2)
reduction of penalty charges to 3% per month as defendants partially complied with their obligation
and (3) question of whether a penalty is reasonable is partly subjective and partly objective and given
the circumstances including the repeated acts of breach by petitioners the Court sees no cogent
ground to modify the reduction (4) 15.189% can no longer be questioned and in any event on its face it
does not appear to be that excessive as it is a fundamental part f the banking business and the core of
a bank’s existence (5) 10% AF reasonable as it was agreed upon not only to answer for litigation
expenses but collection efforts as well (6) 2nd motion for reconsideration cannot be entertained as
newly-discovered evidence being invoked had actually been known to them when the case
was brought on appeal (7) acceptability of 2nd motion is not contingent upon the averment of
new grounds to assail the judgment otherwise attainment of finality of judgment might be stayed off
indefinitely
penalty reduced, interest and AF sustained

Montecillo v Reynes & Abucay (Payment: no)

Reynes sold 185 sq maters of a Mabolo lot to Abucays; Reynes then signed a Deed of Sale of
the Tablet lot in favor of Montecillo for P47,000 to be paid within 1 month form the signing; Reynes
alleged Montecillo failed to pay the purchase price despite demand; Montecillo refused to return the
Deed of Dale thus Reynes unilaterally revoked the sale ang gave a copy of the revocation to
Montecillo; Reynes signed a Deed of Sale transferring to the Abucays the entire Mabolo lot at the
same time confirming the previous sale of the 185 sq meter portion; respondents received
information that the Register of Deeds issued a Certificate of Title in the name of Montecillo thus they
filed a complaint for Declaration of Nullity and Quieting of Title
no payment: no extinguishment (1) Deed of Sale does not state that payment should be made to Cebu
Ice Storage (2) petitioner failed to adduce any evidence showing that Reynes agreed verbally or in
writing for such payment (3) payment must be made to Reynes the vendor in the sale to be effective (4)
payment to Cebu Ice Storage is not. the payment that would extinguish the obligation to Reynes under
the Deed of Sale (5) against common sense for Raynes to sell her lot only for the amount to go
to Cebu Ice Storage (6) in fact Reynes did not benefit directly or indirectly from the payment (7) Raynes
had nothing to do with Jayag’s mortgage debt to Cebu Ice Storage thus the payment could to possibly
redound to the benefit of Reynes (8) payment by the defendant to release the residential house from
the mortgage is a matter between him and Jayag and cannot by implication or deception be made to
appear as an encumbrance
no consideration, no consent: null and void (1) Art 1318 requisites include consideration or cause of
the obligation (2) Art 1352 contracts without cause produce no effect whatsoever (3) evidence
presented prove Montecillo never paid to Reynes although on its face the Deed of Sale appears
supported by a valuable consideration (4) not merely a case of failure to pay but a lack of
consideration or cause which is one of the essential requisites of a valid contract (5) failure to pay
consideration is different from lack of consideration as the former results in the right to demand
fulfillment or rescission while the latter prevents the existence of a valid contract (6) agreement of the
manner of payment is tantamount to a failure to agree on the price (7) disagreement on the manner of
payment despite agreement on the price results in lack of consent which is separate and distinct from
lack of consideration where the contract states the price has been paid when it is fact has never been
paid
petitioner denied (1) petitioner’s Deed of Sale null and void and of no force and effect (2) cancellation
 of Transfer Certificate (3) Transfer Certificate issued to plaintiffs Abucays declared as rightful vendees
(4) moral damages P20,000 + AF P2,000 + costs
PNB V CA & Tan (Payment: no)
respondent owns a parcel of land which was subject to expropriation proceedings; petitioner was
required by the trial court to release to respondent the expropriation price of P32,480 deposited by the
govt; petitioner issued a manager’s check and delivered the same to a Sonia Gonzaga without
respondent’s knowledge, consent or authority; respondent subsequently demanded payment which
was refused by petitioner on the ground that they had already paid to Gonzaga on the strength of an
SPA; Tan executed an affidavit (1) never executed any SPA in favor of Gonzaga (2) never authorized
Gonzaga (3) signed a motion for the court to issue an Order to release said sum of money to him;
respondent filed a motion with the court to require petitioner to pay the sum
no payment (1) check was never delivered to him despite obligation to deliver the same (2) Art 1233
debt shall not be understood to have been paid unless the thing has been completely delivered (3)
burden of proof lies with the debtor (4) petitioner never presented SPA which was necessary
for evidence regarding the nature and extent of the alleged powers and to determine whether
the document indeed authorized Gonzaga (5) in the absence of such documents petitioner’s
arguments regarding due payment must fail
petitioner to pay P32,480 w/ int + AF P5,000 + costs
Pagsibigan v CA & Planters Development Bank (Payment: yes ish)
petitioner obtained an agricultural loan from respondent bank for P4,500 secured by a mortgage which
was fully paid; another loan for the same amount was obtained and secured by the same parcel of
land; PN contained an acceleration clause and stipulated for an initial payment and payments every 6
months thereafter; only 4 of the subsequent payments were applied to the loan; property was
extrajudicially foreclosed for failure to pay an outstanding balance of P29,554.81; property was sold to
the bank for P8,163 and the bank thereafter claimed a deficiency; petitioner instituted an action for the
annulment of sale with damages and writ of preliminary injunction
payment (1) substantial performance under Art 1234 thus has the right to move for cancellation of
the mortgage and the release of the mortgaged property upon payment of the balance of the loan (2)
Art 1235 if the creditor accepts performance knowing its incompleteness and irregularity without
protest then the obligation is deemed compiled with (3) principal obli being extinguished the accessory
obli of mortgage is necessarily extinguished thus foreclosure is improper and invalid (4) only part of the
amount tendered was applied to the loan and the bulk was “temporarily lodged to AP since the
account was already past due” (5) neither enforced its right under the acceleration clause (waived by
receipt of delayed payment which computed penalty based on the defaulted amortization payment
instead of the entire amount of P4,500), right under Art 1253 (waived when it applied the payment to
the principal instead of the interest), nor right to foreclose under the mortgage contract (6) estoppel
since respondent made petitioner believe for over 4 years that it was applying her payment on the loan
and interest just like before (7) respondent bank took advantage of the ignorance of petitioner (8) entire
debt pursuant to an acceleration clause was earning interest and penalty charges at an exorbitant rate
of 19% each indicating bad faith
in favor of petitioner against respondent bank (1) annulment of the foreclosure sale (2) reconveyance of
the property (3) respondent forfeits balance if ever (4) moral damages P50,000 (5) exemplary damages
P20,000 (6) AF P10,000 (7) costs

Tayag v CA (Payment: yes)

subject matter of present litigation is the deed of conveyance in favor of respondent Albrigido Leyva
involving the undivided 1/2 portion of a piece of land; petitioners heirs of Galicia Sr assert breach
of conditions anchored on full payment and compliance with the stipulations thereof; respondent filed
a specific performance suit on reluctance of petitioners to abide by the covenant which was ruled in
favor of buyer
payment (1) candid statement of petitioner Tayag that the check issued as payment thereof was
nonetheless paid on a staggered basis when the check was dishonored (2) acceptance by petitioners
of the various payments even beyond the periods agreed upon tantamount to faithful performance and
obligation deemed fully complied with (3) respondent consigned P18,520 which is sufficient to offset
the remaining balance (4) consignation alone produced the effect of payment because it was
established that two or more heirs claimed the same right to collect (5) instead of immediately filing a
case to rescind based on non-compliance petitioners allowed respondent to effect numerous
payments thus now estopped from exercising right to rescind (6) even permitted respondent to file a
suit for specific performance thus akin to waiver or abandonment of right to rescind
petition dismissed and withdrawal of sum consigned ordered with P16,870.52 to be delivered to
petitioner and excess of P1,649.48 to be returned to respondent
Panganiban v Cuevas (Payment: no)
petitioner owns a camarin and lot which he sold and transferred to one Francisco Gonzales for P1,300;
 among the stipulations therein was that the vendor reserves the right to repurchase the property within
6 months and in case of failure to do so vendee will pay an additional P200 to become the absolute
owner of the property; 3 years after Gonzales sold the property to respondent for the same price and
with the same stipulation; respondent asked for and was granted in ex parts proceedings the judicial
possession of the property and notice was given to the occupants of the apartments;
respondent attempted to pay petitioner the P200 which he deposited to the court; petitioner refused to
accept the sum; respondent brought an action for ejectment against petitioner; petitioner filed a
complaint for recovery of possession as the ejectment proceedings were suspended; in petitioner’s
complaint he alleges that within the 6 months he attempted to repurchase the property but Gonzales
was absent and that he was unable to deposit the purchase price with the clerk of court on account of
the war; he also redeemed that the land was seized but repurchased
no payment (1) when respondent took judicial possession of the property by an ex party proceeding
petitioner had been in quiet and peaceful possession of the property (2) he could not therefore
be called upon to surrender possession as he had not acquired the same through unlawful or forcible
means (3) payment made by petitioner to the revolutionary govt instead of Gonzales in order to redeem
the property could not have extinguished the obligation (4) the consideration for the irrevocable and
definite sale was P1,500 (2) title does not pass unless the property is actually delivered and the
purchase price actually received (5) up to the point when respondent deposited the P200 in court for
the purpose of acquiring ownership irrevocably the property could have been redeemed (6) nothing in
the record to show that respondent tendered the payment of P200 to petitioner or that he gave notice
of his intention to deposit the said sum in court in case said tender was refused (7) there being no
evidence except the consignation and the plaintiff not being either absent or incapacitated it follows
that the consignation made did not produce the effect of releasing the debtor (8) respondent never
complied with the condition stipulated in the contract in order to acquire the ownership irrevocably (9)
up to the present date redemption of the property could have been effected for nothing was done in
the manner prescribed by law so as to have sufficient force to create a juridical status or become
res ajudicata
petitioner may repurchase the property with respondent to execute the deed of resale cancelling the
former deed of sale; otherwise to dismiss the petition

BPI V CA, Eastern Plywood & Tan (Payment: both to pay)

respondents held at least one joint bank account with CTBC; a joint checking account with Lim in the
amount of P120,000 was opened by Mariano Velasco with funds withdrawn from the account of
respondents; at the time of Velasco’s death the outstanding balance of the account was P662,522.87;
1/2 of this amount was provisionally released and transferred to one of the bank accounts of Eastern;
Eastern then obtained a P73,000 loan from CBTC and issued a negotiable promissory note payable
on demand to the order of CBTC; the lion was unsecured while the line “this loan is wholly/partly
secured by Hold-Out on 1:1…" on the joint account of Velasco and Lim with a balance of P331,261.44;
respondents and CBTC signed a Holdout Agreement as security for the Loan to the full extent of
their alleged interests conferring upon CBCT ample and sufficient power as shall be necessary to
retain said Account Balance and enable CBTC to apply the account balance for the purpose of
liquidating the loan however acceptance of the holdout shall not impair the right of CBTC to declare
the loan payable on demand at any time nor preclude the institution of an action for
recovery; meanwhile a case for the settlement of Velasco’s estate was filed for the whole balance in
the joint account with the intestate court granting the urgent motion of the heirs to withdraw the
deposit under the joint account and authorized the heirs to divide among themselves the
amount withdrawn; CBTC merged with BPI who filed a compliant demanding payment of the P73,000
PN; respondents filed a counterclaim for the return of the balance in the disputed account subject of
the Holdout Agreement and the interests thereon deducting the amount due on the PN; trial court
held the it was the duty of plaintiff to debit the account of defendants under the PN to set off the loan
and denied the counterclaim saying the said claim could not be awarded without disturbing the
resolution of the intestate court
PN (1) on its face the PN is an unconditional promise to pay (2) BPI took the note subject to the
Holdout Agreement (3) BPI as successor-in-interest had every right to demand that respondents settle
their liability (4) BPI cannot be compelled to retain and apply the deposit in the joint account to the
payment of the loan as the agreement conferred a power not a duty and generally a bank is under no
duty to make the application thus the bank has the option to exercise the right to set-off (5) agreement
itself provided that it did not preclude demand of payment or action for recovery thus providing
an alternative not exclusive method of enforcing its claim on the note
deposit (1) ordinary bank deposit thus payable on demand of the depositor (2) respondent has the
right to withdraw it or demand payment (3) BPI cannot be relieved of its duty to pay simply because it
already allowed the heirs to withdraw the whole balance as petitioner should not have allowed such
withdrawal (4) under no judicial order to do so as it merely authorized the heirs to withdraw but
 BPI was not specifically ordered to release the account (5) as ownership of the deposit remained
undetermined BPI had no right to pay to persons over than those in whose favor the obligation was
constituted or whose right or authority to receive payment is indisputable (6) payment to heirs even if
done in good faith did not extinguish the obligation to respondent who is without fault or negligence
both to pay (1) private respondents to pay the P73,000 PN with interest (2) award of P331,264.44
in favor of respondents with interest
Caltex v IAC & Asia Pacific Airways (Payment: interest deductible)
respondent entered into an agreement with petitioner for the supply of aviation fuel requirements for 2
years; respondent had an outstanding obligation to petitioner for P4,072,682.13 representing the
unpaid price of the fuel supplied; respondent executed a Deed of Assignment to settle the obligation
wherein it assigned to petitioner its receivables or refunds to be applied to the payment; responded
learned that the amount remitted to petitioner exceeded the amount covered by the Deed of
Assignment and requested a refund; petitioner informed respondent that the amount not returned
P510,550.63 represented interest and service charge at the rate of 18%; respondent filed a complaint
to collect the sum respondent alleges is sanctioned by the law and is in accordance with the terms
and conditions of the sale of petroleum products
not dacion en pago thus can impose interest and legally deduct the amount (1) Deed of Assignment is
not a dation in payment and did not totally extinguish respondent’s obligations (2) clear that a dation
in payment does not necessarily mean total extinguishment of the obligation and it is only when the
parties by express or implied agreement or silence consider the thing as equivalent to the obligation
that it is completely extinguished (3) if it were the intention to limit the obligation to P4,072,682.13 then
it would be so state and there would be no need to qualify the statement of said amount with “as of
June 30, 1980 plus any applicable interest charges on overdue account” (4) petitioner continued to
charge respondent with interest on its overdue account and not once did respondent question or take
exception to the interest (5) respondent sent a letter requesting that the interest be limited up to Dec
31, 1980 and that it be reduced 2% (6) payment of interest charges separate form the
principal obligation was expressly stipulated in the Deed of Assignment (7) Art 1253 if the debt
produced interest payment of the principal shall not be deemed to have been made until the interests
have been covered
claim of respondent for collection dismissed; petitioner to keep the interest

Far East Bank & Trust v Diaz Realty (Payment: yes)

Diaz got a loan from Pacific Banking Corp of P720,000 secured by a real estate mortgage; Allied
Banking Corp rented an office space in the building constructed on the mortgaged properties; the
parties agreed that the monthly rentals would be paid directly to the mortgagee for the lessor’s
account; FEBTC purchased the credit of Diaz but only informed the latter over a year later; Diaz
inquired about the obligation and thereafter issued an interbank check to FEBTC for P1,450,000 with
notation “Re: Full Payment of Pacific Bank Account now turn over to Far East Bank”; FEBTC did not
accept it and instead asked Diaz to deposit the amount in their Davao branch and then to change it
into a money market placement; no news was received regarding acceptance of tender of payment so
defendant filed a complaint
no novation by conventional subrogation (1) petitioner’s acquisition of respondent’s check did not
involve any changes in the original agreement neither did it vary the rights and obligations of the
parties (2) did not need debtor’s consent to transfer credit and accessory rights to another (3)
petitioner acquired all the rights of PBC against respondent thus had the right to collect the full value
of the credit
mortgage contract subsists (1) real estate mortgage and provision in the contract of lease should
subsist until full and final settlement (2) thereafter free to negotiate a renewal or end either
valid tender of payment presumed from acceptance of check and conversion into money (1) petitioner
failed to effectively rebut respondent’s evidence that it so tendered the check and that petitioner
unilaterally treated it as a deposit instead (2) the check was cleared and honored by Interbank
(3) petitioner accepted the check thereafter converted it into money and was in possession of it for
several months (4) jurisprudence doesn’t prevent a creditor from accepting a check as tender of
payment thus the creditor has the option and discretion to accept or refuse (5) fusion of intent, ability
and capability present thus definitive act of offering creditor what is due with the demand that creditor
accept the same (6) consignation not necessary as creditor did not refuse without just cause (7)
creditor did not have the right of option to accept and treat it as a deposit
(1) respondents to pay principal obligation (2) petitioner to pay AF for negligence in not immediately
informing respondent of the purchase and transfer of credit and failing to negotiate to avoid litigation

Espina v CA & Diaz

petitioner is the registered owner of Condominium Unit #403 at Victoria Valley Condominium which
 respondent is renting; petitioner executed a Provisional Contract of Sale to sell the unit for P100,000 to
be paid upon the execution of the contract and the balance to be paid through postdated checks;
respondent informed petitioner that his checking account has been closed and a new one opened with
the same checking account further stating that the postdated checks issued will be replaced; 3 days
later petitioner’s wife paid P200,000 acknowledged by petitioner as partial payment for the condo unit;
6 months later petitioner sent a Notice of Cancellation of the Provisional Deed of Sale; despite the
notice of cancellation petitioner accepted payment of P100,000; petitioner the filed a complaint for
Unlawful Detainer
SC eviction proper (1) the agreement to sell was provisional as the consideration was payable in
installments (2) no novation as it must be clearly proven as fact either by express stipulation or
implication derived from an irreconcilable incompatibility between old and new obligations or
contracts, since its existence is not presumed (3) thus a deed of cession of the right to repurchase a
piece of land does not supersede a contract of lease over the same property (4) respondent continued
to occupy the property but failed to pay the rentals due thus the final P100,000 may be applied either
to the back rentals or for the purchase of the condo (5) respondent was given notice to vacate and pay
back rentals and upon failing to do so the possession became unlawful and his eviction proper (6)
application of payment is not expressly indicated thus it shall be applied to the more onerous
obligation which is the unpaid rentals (7) as the payment did not fully settle the unpaid rentals the
cause of action for ejection survives and the CA erred in ruling that the payment was additional
payment for the purchase of the property
petition for certiorari granted (1) defendant and all persons claiming rights under him to vacate (2) pay
total arrears of P126,000 (3) pay P7,000 every month thereafter until they vacate (4) P5,000 AF (5) P300
per appearance (6) costs
plaintiff may refund to the defendant the balance from the P400,000 after deducting the total
obligations

Lopez v CA & Philamgen

petitioner (1) obtained a loan for P20,000 (2) executed a promissory note for the same amount (3)
executed a surety bond which he, as principal, and Philamgen, as surety, bound themselves jointly and
severally in favor of Prudential Bank for the payment of the loan (4) petitioner also executed an
indemnity agreement whereby he agreed to indemnify the Company and keep it indemnified and hold
the same harmless from and against any and all damages, losses, expenses of whatever kind and
nature which the Company shall or may at any time sustain or incur in consequence of having become
surety open the bond (5) executed a deed of assignment of 4,000 shares entitled “Stock Assignment
Separate from Certificate”; the loan was approved conditioned upon the posting of a surety bond;
understanding between petitioner and the Assistant EVP of Philamgen Abello and Pedrosa of
Prudential bank that id he could not pay the loan then the latter would buy the shares of stocks dn out
of the proceeds the loan would be paid; petitioner’s obligation matures without it being settled;
Prudential Bank made demands both upon Lopez and Philamgen; Philamgen sent several written
demands for petitioner to pay his note but the latter did not comply; Prudential Bank filed a case to
enforce payment; Abello and Pedrosa were approached regarding their commitment to buy the shares
and they instructed that the shares be transferred to Philamgen and committed to thereafter buy the
shares and in the meantime Philamgen will not pay the bank because it did not want payment under
the terms of the bank; the stock certificate in the name of petitioner was cancelled in lieu of another
stock certificate issued in the name of Philamgen; Philamgen was forced to pay Prudential Bank
P27,785.89 and the latter executed a subrogation receipt; Philamgen brought an action for
reimbursement against petitioner
CA (1) the transfer of the stocks in the name of Philamgen was not intended to make the latter the
owner thereof (2) assuming that Philamgen had appropriated the stocks the appropriation is null and
void as a stipulation authiorizing it is pacts commissorium and that pending payment Philamgen is
merely holding the stock as a security for the payment of petitioner’s obligation
pledge not dation (1) a transfer or property even if sufficient on its face to make an absolute
conveyance should be treated as a pledge if the debt continues in existence and is not discharged by
the transfer (2) facts and circumstances leading to the execution of the stock assignment and the
admission of Lopez in his letter “which were pledged to your good selves to secure the
obligation" prove that it is in fact a pledge (3) requirements of a pledge are satisfied as it was
constituted to secure the fulfillment of a principal obligation, the ledger is the absolute owner of the
thing pledged, and the person constituting the pledge had the free disposal of the property and in the
absence thereof he is legally authorized for the purpose (4) the things pledged is placed in the
possession of the creditor or a third person by common agreement and when the principal object
becomes due the things may be alienated for the payment to the creditor (5) debt had not matured
when petitioner alienated his shares to Philamgen as the obligation would only arise when he defaults
in his payment (6) there is no express provision in the terms of the stock assignment that the principal
 obligation (loan) is immediately extinguished by reason of such assignment and in case of doubt the
presumption is in favor of pledge being the lesser transmission of rights and interests (7) fact that the
execution of the stock assignment is accompanied by the delivery of the shares of stock duly
endorsed in blank to Philamgen is no proof that the transaction is a dation in payment (8) fact that
Philamgen had the shares of stock transferred to it in the books of the corporation and took a
certificate in its name in lieu of Lopez which was cancelled does not amount to conversion of the stock
to one's own use (9) transfer of title to incorporeal property is generally an essential part of the delivery
of the same in pledge and merely constitutes evidence of the pledgee's right of property in the thing
pledged
no novation by substitution of debtor (1) not enough to extend the juridical relation to a third person as
it is necessary that the old debtor be released from the obligation and the third person or new debtor
take his place in the relation (2) Without such release there is no novation and the third person who has
assumed the obligation of the debtor merely becomes a co-debtor or a surety (3) Since it was not
established nor shown that Lopez would be released from responsibility the same does not constitute
novation and hence, Philamgen may still enforce the obligation (4) the representation of Mr. Abello that
he and Mr. Pedrosa would buy the stocks was a purely private arrangement between them, not an
agreement between Philamgen and Lopez
final ruling (1) transaction entered into constitutes a pledge of the 40,000 shares of stock by the
petitioner-pledgor in favor of the private respondent-pledgee and not a dacion en pago (2) there was
no novation of the obligation by substitution of debtor (3) no action was taken against the two by said
respondent who chose instead to sue the petitioner on the Indemnity Agreement, it is quite clear that
this respondent has abandoned its right and interest over the pledged properties and must, therefore,
release or return the same to the petitioner-pledgor upon the latter's satisfaction of his obligation
under the Indemnity Agreement (4) no double payment because We have ruled that the shares of stock
were merely pledged (5) no unjust enrichment as the appellee could have the stocks transferred to him
anytime as long as he reimburses the plaintiff the amount it had paid to the Prudential Bank. Pending
payment, plaintiff is merely holding the certificates as a pledge or security for the payment of
defendant's obligation|
petitioner to pay P27, 785.89 with 12% interest + AF 10% of P27,785.89 + costs

Eternal Gardens Memorial Park v CA & North Philippine Union Mission

petitioner and private respondent entered into a Land Development Agreement whereby petitioner is to
develop a parcel of land owned by respondent into a memorial park subdivided into lots; later 2
claimants of the parcel of land surfaced- Maysilo Estate and the heirs of Vicente Singson; petitioner
thus filed an action for interpleader against Maysilo and NPUM; the Singson heirs in turn filed
an action for quieting of title against petitioner and respondent; the 2 cases were consolidated;
petitioner assailed the appellate courts resolution requiring petitioner to deposit whatever amounts
are due from it under the agreement with a reputable bank; the court ruled the requirement of deposit
stands; the appellate court rendered judgment in the consolidated case and dismissed the claims of
the intervenors and the titles of respondent were declared valid reversing the trial court’s decision in
favor of the Singson heirs; the accounting of the parties respective obligations was referred to the
Court’s accountant to whom the documents were to be submitted with the concurrence of the two
parties; petitioners did not submit any document to aid the appellate court thus the later declared that
they have waived their right to present and will now proceed to the mutual accounting required to
determine the remaining accrued rights and liabilities of the said parties on the basis of the documents
submitted by respondent only; respondent asked for and the appellate court issued a subpoena for
production of evidence and a subpoena to compel attendance; petitioner failed to present the
documents required by the subpoena and further filed a Denial and/or Objection to the Requests for
Admission; subsequently the accountant submitted her Report; the CA approved in its resolution the
report and accordingly ordered petitioners to pay and turn over to respondents P167,065,195 as
principal and P167,235,451 as interest
(1) contention that appellate court delegated judicial functions in appointing an accountant untenable
as while the report upon adoption became part of the appellate court's decision judicial power lies not
with the official who prepared the report but with the court itself which yields the power of approval or
rejection (2) not denied due process as given every opportunity to present its case which respondents
made full utilization of exercising the modes of discovery and the parties were allowed forums to
confer with each other’s accountants and even the court’s accountant (3) allegation that substantially if
not all the submissions of respondents were not genuine and not properly identified untenable as
petitioners acquiesced to the use of the documents and even actively participated in the discussion of
the contents and they did not object when respondent’s counsel read into the records the contents (4)
claims that petitioners were justified in withholding payment as they was still the unresolved issue of
ownership also untenable as the agreement obliged petitioner to remit monthly and it provided for the
designation of a depository bank for all funds thus there was no obstacle legal or otherwise to comply
 (5) petitioners cannot suspend payment on the pretext that it did not know who to pay to as it had a
remedy under the New Civil Code to give in consignation the amounts due as they fell due
as consignation produces the effect of payment to avoid the performance becoming more onerous (6)
failure of petitioners to consign made them liable for interest on the amounts it failed to remit (7) under
the circumstances there appears to be no plausible reason for petitioner's objections to the deposit of
the amounts in litigation after having asked for the assistance of the lower court by filing a complaint
for interpleader where the deposit of aforesaid amounts is not only required by the nature of the action
but is a contractual obligation of the petitioner under the Land Development Program (8) the essence
of an interpleader, aside from the disavowal of interest in the property in litigation on the part of the
petitioner, is the deposit of the property or funds in controversy with the court is a rule founded on
justice and equity: 'that the plaintiff may not continue to benefit from the property or funds in litigation
during the pendency of the suit at the expense of whoever will ultimately be decided as entitled
thereto.’ (9) even during the pendency of G.R. No. 73794 petitioner was required to deposit the
accruing interests with a reputable commercial bank "to avoid possible wastage of funds” yet it
instead hedged in depositing the amounts due and made obvious attempts to stay payment by filing
sundry motions and pleadings
(1) petition denied and TRO on writ of execution lifted (2) Court of Appeals correctly held Eternal
Gardens liable for 12% interest as the withholding of the amounts due under the agreement was
tantamount to a forbearance of money

Rayos v Reyes
3 parcels of land were formerly owned by Tazal who sold them for P724 to respondents’ predecessor-
in-interest with right to repurchase within 2 years by paying the purchase price and all expenses
incident to their reconveyance; buyers took physical possession of the properties and paid taxes; Tazal
sold 2 of the 3 parcels to petitioners for P420 without first availing of his right to repurchase; the
conventional right of redemption expired with Tazal having exercised his right; Tazal then attempted to
repurchase by asserting that the deed of sale with right to repurchase was actually an equitable
mortgage and offered P724; respondents’ predecessor refused the offer maintaining that their contract
was a sale with right to repurchase that had long expired; Tazal filed a complaint docketed as Civil
Case A-245; Tazal then sold the 3rd parcel; petitioners bought the 2 parcels of land from
their predecessor and the sales were perfected while Civil Case A-245 was pending; Civil Case A-245
was decided and it declared the contract a contract of sale with right to repurchase and declared
Tazal entitled to repurchase within 30 days; petitioners wrested physical possession of the disputed
properties from Reyes’ heir when their predecessor died; Tazal did nothing to repurchase believing the
consignation of P724 had perfect the repurchase of the disputed properties; respondents registered
the deed of sale with right to repurchase with the register of deeds; respondents filed a complaint for
damages and recovery of ownership and possession
(3) estoppel and laches did not bar since their predecessor-in-interest actively resisted the claim of
Tazal in Civil Case A-245
consignation invalid and ineffective (1) the deposit of P724 was done belatedly as it was after the 2
year period (2) no evidence to prove that petitioners paid at any time the repurchase price except for
the P724 deposit which did not cover the entire redemption price, as the taxes paid
constitute necessary expenses that petitioners had to reimburse, and fell short of all the
acts necessary for a valid consignation (3) petitioners failed to offer a valid and unconditional tender
of payment as it was predicated on Tazal’s argument that he was paying a debt which he could do at
any time and its ostensible purpose was to evade the stipulated redemption period thus Reyes within
his right to refuse tender of payment (4) petitioners failed to notify respondents of the intention
to deposit the amount with the court and without any announcement of the intention first being made
the consignation as a means of payment is void (5) failed to show acceptance by the creditor of the
mount deposited as full settlement of the obligation or declaration by the court of the validity of the
consignation as there is no clear and preponderant evidence that the consignation satisfied all
the requirements for validity and enforceability and Reyes vehemently contested the the propriety of
the consignation (6) it is the judgment on the complaint where the court declares that the consignation
has been properly made the will release the debtor from liability not dismissal of the case
ownership: doctrine of priority in time priority in rights (1) petitioners failed to discharge their burden of
proof that they were buyers in good faith as the burden cannot be discharged by invoking ordinary
presumption of good faith (2) Reyes’ payment of taxes prior to and at the time the sales to petitioners
were perfected confirms the precedence of respondents’ possession (3) respondents registered first
the source of their ownership and possession (4) possessed the properties at an earlier time
(1) separate Deeds of Absolute Sale by Tazal to Blas Rayos and petitioners and by Blas Rayos to
petitioners declared void (2) respondents proclaimed as absolute owners of the property in question
free from all lines and encumbrances (3) petitioners and Tazal ordered to vacate and reconvey the
lands
Badayos v CA & Lisondra
petitioner executed in favor of respondents a Deed of Sale with the Right to Repurchase on March 9,
1973 over her undivided half portion of a lot; the Deed stipulated that “Badayos has the right to
repurchase the property after 2 years from and after the execution of this contract for the same
amount of P7,400”; 2 years after the execution respondents filed an action to consolidate ownership
over the property in question alleging that the 2 year period had already elapsed but respondent never
repurchased the said property in violation of the contract of pacto de retro sale; petitioner filed a
manifestation informing the court tha the consigned on August 4, 1975 P7,400 with the Clerk of Court
in favor of respondents as payment of her obligation and/or redemption of the property in question
thus the case has become moot and academic and should be dismissed
consignation deemed a valid tender of redemption price (1) the rule is if the terms of contract are clear
and leave no doubt upon the intention the literal meaning of its stipulations shall control thus since the
contract was executed on March 9, 1973 the property can only be redeemed after March 9, 1975 (2)
period is deemed to be 4 years from execution as while the parties agreed on a period within which
the right may not be exercised they did not specify the period within which such may be exercised
thereafter however it is valid as long as it does not violate Art 1610 (3) consignation was not necessary
as the relationship was not one of debtor-creditor thus petitioner was exercising a right not dichsrging
an obligation hence a mere tender of payment is sufficient to preserve the right of a vendor a retro
petition is granted

Adelfa Properties v CA & Jimenez

private respondents and their brothers were the registered co-owners of a parcel of land; the brothers
old their 1/2 share which is the eastern portion to petitioner; subsequently a “Confirmatory
Extrajudicial Partition Agreement” was executed by the Jimenezes where the eastern portion
was adjudicated to the brothers and the western portion to respondent; petitioner expressed interest
in buying the western portion of the property thus an “Exclusive Option to Purchase” was executed
between petitioner and private respondents; before petitioner could make payments it received
summons and a copy of a complaint filed by the nephews and nieces of respondents against the
brothers and petitioner for annulment of the deed of sale and recovery of ownership; petitioner
consequently informed respondents that it would hold payment of the full purchase price and
suggested that private respondents settle the case with the kin; responded refused to heed the
suggestion and attributed the suspension of payment to “lack of word of honor”; petitioner caused to
be annotated on the title of the lot its option contract with respondent and its contract of sale with the
brothers; respondent informed petitioner’s counsel that they were cancelling the transaction;
petitioner’s counsel offered to pay the purchase price with deduction which were refused; respondents
then executed a Deed of Conditional Sale in favor of Emylene Chua one the same parcel of land;
petitioner’s counsel informed respondents through a letter that petitioner was willing to pay the
purchase price and requested the corresponding Deed of Sale be executed which was ignored by
respondents; respondent’s sent a letter to petitioner enclosing a check representing the refund of 50%
of the option money per their agreement and requested the return of the owner’s duplicate copy of
the certificate of title; upon failure to surrender respondents filed for annulment of contract with
damages
perfected contract to sell capable of being specifically enforced (1) deed of absolute sale would have
been issued only upon the payment of the balance of the purchase price and the implied agreement
that ownership shall not pass until full payment is valid as it is not required that such a stipulation be
expressly made (2) no proof that there was actual or constructive delivery (3) option sometimes called
an unaccepted offer imposes no binding obligation on the person holding the option aside from the
consideration for the offer as until acceptance it is not a contract (4) the contract is this case shows
that there is a concurrence of petitioner’s offer to buy and respondents’ acceptance thereof
(5) respondents agreed to the P50,000 dp offer by petitioner and consequently the exclusive option
was prepared thereby creating a perfected contract to sell between them (6) as respondents refused
petitioner’s offer to pay less dedications the original terms of the contract continued to be enforceable
(7) petitioners suggestion that respondents settle the civil case indicative of desire to immediately
comply with their obligation but prevented because of the filing of the civil case which it believed in
good faith rendered compliance improbable at the time (8) “lack of word of honor” indicates that
reposndent considered petitioner already bound by its obligation as they were demanding or exacting
fulfillment (9) obligation of petitioner consisted of an obligation to pay not the discretion to pay for the
property (10) an agreement is only an option when no obligation rests on the party to make any
payment except such as may be agreed on between the parties as consideration to support
the option until he has made up his mind within the time specified
earnest money (1) the alleged option money of P50,000 was actually earnest money intended to form
part of the purchase price (2) it was not distinct from the consideration but was itself a part thereof (3)
respondents failed to show that the payment of the balance of the purchase price was only a condition
 precedent to the acceptance of the offer or to exercise the right to buy (4) established that such
payment was an element of the performance of petitioner’s obligation under the contract to sell
valid suspension (1) plaintiffs were claiming to be co-owners of the entire parcel of land not only a
portion nor did their claim pertain exclusively to the eastern half adjudicated to the brothers (2)
assurance made by respondents not to worry about the case as it was pure and simple harassment is
not the assurance contemplated under the exceptive clause of Art 1590 (3) petitioner justified in
suspending payment of the balance by reason of the vindicatory action
no consignation (1) expressing intention or willingness to pay the balance of the purchase price upon
the execution of the corresponding deed of absolute sale is at most a mere notice to pay and is not
proper tender of payment (2) contract to sell involves the performance of an obligation not merely the
exercise of a right or privilege (3) performance or payment may be effected by both tender of payment
and consignation (4) consequently respondents elected and announced the rescission through
a written notice (5) judicial action is not necessary where the contract provides for automatic rescission
in case of breach as in the contract involved (5) petitioner failed to reply or protest and did not
seek redress from the court to enforce alleged right thus now estopped
final ruling: no longer compelled to sell and deliver the subject property to petitioner (1) failure to duly
effect consignation of the purchase price after the disturbance had ceased (2) contract to sell had
been validly rescinded by private respondents
petition denied (1) cancellation of the contract to sell (2) sale to intervenor Emylene Chua as valid and
binding (3) petitioner to pay damages (4) AF (5) costs

De Mesa v CA & Ossa House & DBP

petitioner owns several parcels of land which were mortgaged to the DBP as security for a loan; upon
failure to pay all her mortgaged properties were foreclosed and sold at a public auction in which DBP
was the winning bidder; petitioner requested DBP to be allowed to repurchase her foreclosed
properties; petitioner then sold the forclosed properties 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; private respondent remitted to DBP the initial payment in addition to
the P10,000 previously paid to petitioner; DBP then granted petitioners request to repurchase the
properties on an installment basis; private respondent OSSA paid up to the 8th installment which were
applied to petitioner’s obligation with DBP pursuant to the Deed of Conditional Sale; petitioner
then notified respondent OSSA that she was rescinding the Deed of Sale with Assumption of Mortgage
on the ground that respondent failed to comply with the terms and conditions of their agreement;
OSSA offered to pay petitioner P34,363.08 which the latter refused to accept; OSSA brought a
Complaint for Consignation against petitioner and deposited the amount with the court; DBP then
refused to accept the 9th quarterly installment prompting the latter to file for specific performance and
consignation depositing said installment; the two cases were consolidated; the lower court allowed
OSSA to deposit with the court a quo by way of consignation all future quarterly installments without
need of formal tenders of payment and service of notices; OSSA thus deposited the 10th to
20th installments
(1) the terms of the “Deed of Sale with Assumption of Mortgage” are clear and leave no doubt as to
what were sold thereunder (2) nowhere is it provided that what was sold was merely the right to
redeem the mortared properties and not the foreclosed properties themselves since the subject of the
sale were “all the properties decribed…” thus the provision merely speaks of the preferential right of
the latter to redeem the real properties involved (3) recognition of both the preferential right of the
petitioner to redeem the mortgaged properties and the sale of the same properties to respondent
OSSA is in consonance with the well-settled doctrine that in the construction of an instrument where
there are several provisions such a construction is if possible to be adopted as will give effect to all (4)
grant bay the DBP of petitioner’s request to repurchase redounded to the benefit of respondent the
sale of the said properties having been previously agreed upon (5) petitioner estopped from
questioning DBP’s application to her account OSSA’s initial payment as it was made in implementation
of the provision of their contract
valid consignation (1) records show that several tenders of payment were consistently turned down by
petitioner that respondent found it pointless to keep making formal tenders and serving notices (2)
lower court granted OSSA’s request to deposit by way of consignation all quarterly installments
without making formal tenders and serving notices (3) thus motion and subsequent court order served
on petitioner sufficiently served as notice (4) for reasons of equity the procedural requirements of
consignation are deemed substantially complied with (5) OSSA tendered the correct amount of
P34,363.08 which is the balance of P500,000 less De Mesa’s outstanding obligation and the advance
payment of P10,000
SC affirmed the CA ruling modifying the RTC ruling denying petition (1) consignation made by OSSA is
declared valid and proper as far as De Mesa is concerned and she is ordered to ordered to receive
 said amount consigned and pay IBP said amount (2) DBP ordered to furnish De Mesa a statement of
payments and the balance if any still due (3) De Mesa to furnish OSSA a copy of the statements (4)
DBP to execute a Deed of Absolute Sale in favor of De Mesa over the properties subject of the Deed
of Conditional Sale (5) OSSA ordered to pay De Mesa the balance if any (6) De Mesa thereafter
to execute the Deed of Absolute Sale in favor of OSSA over the properties subject of the Deed of
Absolute Sale with Assumption of Mortgage (7) ordering De Mesa to pay OSSA P10,000 AF

Yu Tek & Co v Gonzales (Loss: no, not specified or appropriated)

respondent obliged himself to deliver 600 piculs of sugar after receiving P3,000; the contract executed
stipulated that failure to deliver the sugar within the 3 months would result in the rescission of the
contract, the return of the P3,000 received and the sum of P1,200 by way of indemnity for loss and
damages; plaintiff proved that no sugar had been delivered thus judgment was rendered in its favor for
P3,000 only; both parties appealed
mere executory contract not perfected contract of sale (1) allegation that he was unable to fulfill the
contract by reason of almost total failure of his crop untenable as there was not the slightest intimation
in the contract that the sugar was to be raised by the defendant (2) parole evidence inadmissible as it
cannot serve the purpose of incorporating into the contract additional contemporaneous conditions
which are not mentioned at all in the writing unless there has been fraud or mistake (3) defendant
undertook to deliver a specified quantity of sugar within a specified time but there was no restriction
placed in the matter of of obtaining the sugar thus he was equally at liberty to purchase it on the
market or raise it himself (4) allegation that there was a perfected contract limited to the sugar he might
raise upon his own plantation and that by failure of his crop he was relieved by loss of the thing due is
faulty (5) there is a per fetched sale with regard to the thing whenever the article of sale has been
physically segregated from all other articles (6) there was no delivery under the contract and the article
sold could not be designated thus it was merely an executory contract which does not divest or
transfer the title of any determinate object and which becomes effective only when the specified goods
are thereafter appropriated to the contract and in the absence thereof only when they are delivered to
the public carriers at the place from which they are to be shipped and consigned to the person by
whom the order is given (7) merely a promise to sell and not a sale thus risk remains with seller until
the thing is segregated or appropriated and the buyer does not assume the risk of loss (8) the
defendant having defaulted the plaintiff is entitled to recover the P3,000 (9) the P1,200 is clearly
liquidated damages as the contract is clear and leaves no room for interpretation and the stipulation is
not opposed to any principles
(1) contract rescinded (2) recovery of P3,000 (3) payment of P1,200 liq
Labayen v Talisay Silay Milling Co (Loss: yes)
plaintiff possesses the Dos Hermanos hacienda while defendant is a sugar cane milling corporation;
they entered into a contract which included a stipulation that defendant would operate a permanent
railroad and shall cause the main line or branch thereof to reach the point of the plantation whenever
the contour of the land, the curves, and the elevations permit the same & in case of inability to secure,
under reasonable conditions such rights-of-way as Le Centra may require the contract shall be
suspended in part or in whole during such period of incapacity; central has not continued its railroad
through to Hacienda Dos Hermanos
(1) extension of the railroad to Hacienda Dos Hermanos would make necessary the providing of 26
curves and require a gradual elevation for a distance of 4km (2) a civil engineer testified that it was
possible but very dangerous (3) elemental that the law requires parties to do what they have agreed to
do. If a party charges himself with an obligation possible to be performed, he must abide by it unless
performance is rendered impossible by the act of God, the law, or the other party (4) Article 1272:
“Impossible things or services cannot be the subject- matter of contracts.'' And Article 1184: ''The
debtor shall also be relieved from obligations which consist in the performance of an act if fulfillment of
the undertaking becomes legally or physically impossible.” (5) contract was intended to be limited in
particular application to Haciendas where not impeded by physical impossibility. The contract was
qualified by an implied condition which, if given practical effect, results in absolving the central from its
promise. Not to sanction an exception to the general rule would run counter to public policy and the
law by forcing the performance of a contract undesirable and harmful (6) to get from the Hacienda
Esmeralda No. 2 to the Hacienda Dos Hermanos, the railroad would have to pass through
the haciendas of Esteban de la Rama. But he would not grant permission to use his land for this
purpose in 1920, and only consented to do so in 1924. Here then was a clear case of such a condition
of affairs as was contemplated by the contract (7) logically follows that the defendant can recover on
its cross-complaint as the defense to the cross-complaint is identical with the theory of the complaint
plaintiff to pay defendant P12,114
Velasco v Masa (Remission: yes)
respondent obtained a loan from petitioner payable following 1 year; the debt was set forth in a private
document; petitioner alleged that defendant obtained possession of the document of indebtedness
while he was detained as a prisoner in jail; respondent claims that he was acquitted of the charges as
it was proven that the document was delivered ago the latter for reasons of gratitude;
presumption of voluntary delivery (1) unquestionable fact duly proven that the document evidencing
the debt passed to the possession of the debtor (2) presumption that the document was voluntarily
returned if not by the order of the plaintiff but with his approval by his wife renouncing the debt and
waiving the right to collect the same for reasons of gratitude (3) no satisfactory evidence was
submitted by plaintiff to destroy said presumption and that the defendant had obtained the document
by means of coercion and trickery (4) the conclusions arrived at by the court were deduced from facts
considered duly proven adjusted to the law and the merits of the case (5) case was filed for evidently
due to some subsequent trouble which arose between them
debt presumed condoned or waived
Lopez v Tambunting (Remission: no)
action brought to recover from defendant P2,000 for the fees of professional medical expenses
rendered by plaintiff to defendants daughter; defendant denied the allegations and alleged the
obligation was already extinguished
presumption overcome (1) plaintiff asked for the sum of P700 after rendering service (2) reasonable
value of the service could only be worth P700 (3) receipt signed by petitioner in the possession of
defendant is for P700 alleging payment (4) notwithstanding the receipt the P700 had not been paid as
there was sufficient evidence to the contrary (6) legal presumptions cannot stand if there sufficient
proof is adduced against it (7) when the plaintiff sent the receipt to the defendant for the purpose of
collecting the fee it was not his intention that the receipt should remain in the possession of the
defendant if the latter did not pay the amount specified therein
ordered to pay P700
Sochayseng v Trujillo (Confusion: no)
petitioner filed a written complaint alleging the defendant is the widower of her daughter who died
without leaving a legitimate heir; her daughter left her husband’s house and her attendance, care and
subsistence caused petitioner P410 while her burial expenses cost P320 both of which plaintiff paid
for; petitioner prayed defendant be ordered to pay the P730 + costs and be ordered to settle and
partition the conjugal partnership estate
husband to pay (1) the first of these debts, P410, is not a personal and exclusive one as it pertains to
the marriage or the conjugal partnership and the widower must pay it out of the property of the
conjugal partnership (2) the debt is one that lies against him as the legal administrator of the
partnership property (3) surviving spouse is obliged to settle the conjugal partnership upon the death
of the other and in this settlement the surviving spouse and not the judicial administrator appointed is
entitled to the possession of the conjugal property until liquidation (4) error to settle the affairs of the
conjugal partnership in the special proceedings for the settlement of the wife’s estate (5) the property
acquired during the marriage amounts to P2,603 from which the wife’s paraphernal property is valued
at P1,490 less P615 representing the amount the daughter took away with her upon leaving the
conjugal home (6) from the balance of P1728 is to be deducted the P410 as it is of the nature of debts,
charges and obligations to be paid (7) as the deceased left property of her own it is improper to deduct
the funeral expenses of P320 which must then be paid not by the spouse but by the heir (7) the
balance of P1,318 constitutes the assets of the conjugal partnership which should be divided equally
among the spouses
no confusion (1) as the matter pertains not to probate hearings but to settlement of an intestate estate
in which there is only 1 party of legal age who is herein plaintiff and the demand pertains to an action
for the settlement of the legal conjugal partnership property apparently such demand is allowed
plaintiff to collect the P410 under her personal right as creditor and the P1,534 as the legitimate heir of
the deceased; defendant to pay petitioner P1,944

Yek Tong Lin v Yusingco (Confusion: yes)

defendant was the owner of a steamship and executed a special power of attorney in favor of Yu
Segioc to administer, mortgage, lease and sell his properties including the steamship Yusingco; the
latter mortgaged to plaintiff the steamship to answer for any amount the plaintiff might pay in the name
of the defendant on account of a P45,000 promissory note executed by it; the steamship needed
some repairs which were made by the Earnshaw Docks and Honolulu Iron Works upon petition of
defendant’s co-owner; the repairs were made upon the guarantee of the defendants and appellant
Vicente Madrigal at a cost of P8,244.66; when neither defendant nor his co-owner could pay the
sum the defendant and appellant Madrigal had to make payment thereof with the stipulated interest
 being bound thereto by the bond filed by him; Earnshaw then assigned its credit against
against defendant and his co-owner to defendant and appellant Madrigal by executing an instrument
registered in the Bureau of Customs; Madrigal discovered that he was not to be reimbursed and
brought an action against the Yusingcos; the CFI ordered the Yusingcos to pay a sum and upon failure
to do so ordered the sale of the steamship at public auction; before the sale petitioner filed a
claim demanding said ship for himself alleging that it had been mortgaged to them long before
the issuance of said writ and therefore they was entitled to the possession thereof; the ship was sold
and public auction and was purchased by petitioner as the highest bidder; the sheriff turned over the
sum which the lower court ordered Madrigal to turn over to the plaintiff
plaintiff contends that (1) as the repairs made on the steamship were not for the averages suffered
during its last voyage thus Madrigal cannot invoke preferential right for having paid for them as
guarantor thus the plaintiff should be entitled to recover what the latter received from the sheriff (2)
Madrigal has a right of action against the Yusingcos for the recovery of what he had paid for them as
Earnshaw assigned to him the credit it had against them after paying the obligation contracted by the
Yusingcos thus he has the right to recover the cost of the repairs and prosecute all actions belonging
to the assignor (3) it is only right to sell said vessel in accordance with law upon default in the
performance of the conditions of the mortgage contract in order to apply the proceeds to the credit (4)
the steamship was in custodia legis and could neither take possession thereof nor sell it pursuant to
the conditions of its mortgage contract (5) the only right left to the plaintiff was to collect its mortgage
credit from the purchaser thereof at public auction as the rule is that a mortgage directly and
immediately subjects the property to the fulfillment of the obligation for the security of which it was
created
ruling (1) obligations are extinguished by the merger of the rights of the creditor and debtor as the
plaintiff was the purchaser and it was so with full knowledge that it had a mortgage credit on said
vessel (2) Madrigal enjoys preference in the payment of his judgment credit with the proceeds of the
sale of the steamship by virtue of the assignment (3) the mortgage deed executed in its favor contains
a clause to the effect that if the proceeds the sale is by reason of default of performance the plaintiff
could collect its credit on other property of the debtors (4) personal property shall be applied pro rata
to the payment of the credits which enjoy special preference and a vessel is personal property
Madrigal does not need to turn over the money received from the proceeds of the auction sale the
plaintiff
Silahis v IAC & De Leon (Compensation: no)
respondent sold and delivered to petitioner merchandise covered by several invoices amounting to
P22,213.75 payable within 30 days; petitioner allegedly failed to pay thus respondent filed an action
for collection; petitioner alleged that P22,200 be debited to account for the commission they should
have received for the direct sale of petitioner in violation of their usual practice & that they should be
allowed to return the stainless steel screen found to be defective
legal compensation (1) no agreement verbal or otherwise nor was there any contractual obligation
prohibiting petitioner from directly selling (2) nothing in the debit memo obligating respondent to pay
petitioner commission although in the past the former did supply to the latter items for delivery (3)
debit memo cannot be asserted to be binding between the parties as it was not signed by respondent
and there was no mention of any commitment to pay commission (4) nothing to show that private
respondent obligated himself to set-off or compensate petitioner’s outstanding accounts with the
alleged unrealized commission from the assailed sale (5) letter written by private respondent’s counsel
denied any utilization of petitioner’s personnel and facilities in the sale (6) compensation takes place
when 2 persons in their own right are creditors and debtors to each other and takes effect by
operation of law even without the consent and knowledge of the creditors and debtors
no compensation pay P22,213.75

BPI v Reyes (Compensation: yes)

respondent opened a joint savings account with his wife at one of petitioner's branches;
respondent also held a joint savings account with his grandmother wherein he regularly deposited US
Treasury Warrants as her monthly pension; his grandmother died without the knowledge of the US
Treasury Department; she was still sent US Treasury Warrants which respondent deposited in his joint
savings account with her; thereafter he closed the savings account with his
grandmother and transferred its funds to his joint account with his wife; the Treasury Warrant was
dishonored upon the discovery that the grandmother had died 3 days prior to its issuance; the US
Dept of Treasury requested petitioner bank for a refund which caused the bank’s discovery of her
death; respondent assured the bank he would look into the matter and verbally authorized them to
debit from his other joint account the amount in the dishonored US Treasury Warrant; petitioner bank
debited the amount from his joint account with his wife; respondent then demanded restitution for the
debited amount claiming that due to such debit he was unable to withdraw his money and filed
a suit for damages; petitioners filed a counterclaim averting that they were given express verbal
 authorization to debit the questioned amount and that respondent later refused to execute a written
authority
right of petitioner bank to make the debit is clear and undoubted to prevent unjust enrichment (1)
petitioners were able to prove the verbal authority by preponderance of evidence (2)
respondents denial is uncorroborated (3) respondent stripped of credence through his past fraudulent
conduct in concealing the death and continuing to receive the pension as well as closing the
joint account with the deceased to pre-empt a refund and declaring under the penalty of perjury in the
withdrawal slip that his co-depositor is still living (4) legal compensation takes effect by operation of
law thus it’s effects arise on the very day now which all the requisites concur (5) presence of
respondents wife in the joint account does not negate the element of mutuality of the parties as she is
not a party in the case and did not object to the debit
complaint of respondent dismissed and BPI correct to debit

Diongzon v CA & PP (Novation: no)

petitioner was a sales supervisor of Filipro Incorporated thus he had authority to allow the withdrawal
of Filipro products from its warehouse for delivery to its dealers or customers to receive payment
therefor and remit the same to Filipro through its depositary bank; the area sales manager was
authorized to conduct an investigation of questionable transactions wherein the orders were unusually
big and seemed abnormal; the dealers who were supposed to have ordered the goods denied having
received the goods listed in the delivery orders signed by petitioner; petitioner presented three
postdated checks allegedly issued by the dealers in payment of the goods; the checks were
dishonored and despite notice of such and repeated demands for full payment within 5 banking days
petitioner refused to pay to the damage of said offended party in the amount of P298,119.75;
petitioner alleged that he resorted to credit riding whereby other dealers were allowed to use the
existing credit line of the authorized dealers in order to avail of goods without cash payments as this
technique was unofficially allowed by the company in order to achieve the sales targets
petitioner contends (1) that the 2 checks which had been dishonored had not been issued by him
(2) since the checks had not been issued “on account” or “for value” an essential element of BP 22
had not been established (3) [after the trial court rejected the prior defenses] petitioner advanced the
theory of novation
no novation (1) novation is not a mode of extinguishing criminal liability and criminal liability, once
incurred, cannot be compromised thus even if there was novation the liability under BP 22 was not
thereby extinguished (2) the requisites were not proven in this case (3) the transaction became a
personal undertaking of petitioner when he received the goods but made no delivery thereof
thus petitioner had an existing obligation to pay the value of the goods for which the check was issued
(4) obligation was not extinguished when the checks were dishonored and a new agreement was
reached to pay in cash as the change in the mode of paying was not a change in any of the objects
or principal conditions of the contract (5) novation does not extinguish criminal liability but may only
prevent its rise (6) the supposed new agreement never took effect as petitioner never complied with his
undertaking as the balance was never paid thus the novation theory does not apply where the offer to
pay turns out to be merely an empty promise (7) petitioner, as drawee, is presumed to have knowledge
of the insufficient funds and his failure to pay the value did not dispute the presumption (8) SC has
imposed subsidiary imprisonment on several occasions in case of insolvency
modified CA ruling (1) pay the fine of P80,647.75 (2) subsidiary imprisonment in case of insolvency
Sandico v Paras (Novation: no)
petitioners filed da motion to declare respondent in contempt of court upon failure and refusal of the
latter to to rebuild and reopen the irrigation canal; respondent judge denied the motion ruling that it is
clear from the dispositive part of the decision that there is noting to show that the defendant was
ordered to reconstruct the canal; petitioners moved for the issuance of an alias writ of execution;
respondent moved to set aside the writ alleging full satisfaction of the money judgment per agreement
when the petitioners received the sum of P4,000; respondent judge issued an order quashing the writ
and stated that the agreement of the parties novated the money judgment and there is nothing left to
be executed as the decision does not allege any other condition except for the defendants
to recognize the easement; the parties entered into an agreement, fully aware of the judgment of the
appellate court, whereby aside from providing for the reduction of the money judgment the
reconstruction of the irrigation canal is provided for; record shows that the respondent exerted efforts
to reconstruct the portion of the irrigation canal running through his land by digging a canal which
petitioners admit; still petitioners demand that it be reconstructed to its former condition; court
contends that to give the easement full force and effect demands reconstruction to its condition
before respondent closed and destroyed the same; respondent himself admitted the
original dimensions thus his attempt to rebuild partially and not in conformity with the dimensions or
the original one does not constitute satisfactory and substantial compliance with his obligation; the
 case falls under Sec 10 Rule 39 of the ROC which provides that the courts may designate some other
person to do the act ordained to be done by the judgment with the costs chargeable to the
disobedient party and that the act when done shall have the same effect as if performed by the party
himself thus the disobedient party incurs no liability for contempt; petitioners allege that their
agreement with the respondent reducing the amount constitutes neither waiver of the P2,000 nor
novation of the money judgment alleging that the reduction was subject to the condition of the
reconstruction
SC (1) payment by the respondent to the lesser amount of P4,000 accepted by the petitioner
without protest and acknowledged by them as in full satisfaction of the money judgment completely
extinguishes the debt and released the respondent from his pecuniary liability and warrants
the quashal of the writ of execution (2) essential in novation that one obligation be extinguished and
another is created and in this case no new obligation was created out of the payment o the P4,000 (3)
the receipt neither expressly nor impliedly declares that the reduction of the money judgment was
conditioned on the respondent’s reconstruction and reopening of the irrigation canal as it merely
embodies the recognition of his obligation to reconstruct
court remanded to the court a quo (1) conduct an ocular inspection of the irrigation canal to determine
accordance with the original dimensions (2) in the event of failure then order the respondent to
reconstruct the same to its former condition (3) appoint some other person to reconstruct the canal in
accordance with its original dimension at the cost of respondent

People’s Bank & Trust Company v Syvel’s Incorporated (Novation: no)

defendant executed a chattel mortgage for plaintiff in connection with a credit commercial line in the
amount of P900,000; respondents Syyap executed an undertaking in favor of plaintiffs agreeing to
guarantee absolutely and unconditionally without benefit of excursion the full and prompt payment of
any indebtedness to be incurred on the said credit line; defendant Syvel drew advances which it failed
to pay; witnessed testified that Syvel’s had disposed of all articles covered by the chattel mortgage
and did not remit the proceeds defrauding complainant bank; plaintiff filed an action for foreclosure of
the chattel mortgage; Syyap offered to execute a real estate mortgage which petitioner consented to
thus a Real Estate Mortgage was executed; in the deed of mortgage defendant admitted the
indebtedness of Syvel; a motion to dismiss without prejudice was prepared but defendants did not
want to agree if the dismissal would mean also the dismissal of their counterclaim against the plaintiff
and filed instead their own motion to dismiss on the ground that by execution of the real
estate mortgage the obligation secured by the chattel mortgage was novated and therefore petitioner’s
cause of action was extinguished
allegations in petitioner’s complaint more than justify the issuance of the writ of attachment (1) nothing
in the real estate mortgage supports defendant’s submission as the contract on its face does not show
the existence of an novation nor incompatibility as the second contract evidently indicates that the
same was executed as new additional security to the chattel mortgage previously entered into as it
states that the chattel mortgage shall remain in full force and shall not be impaired by the real estate
mortgage (2) attachment sought on the ground of actual removal of property is justified where there is
physical removal thereof by the debtor as shown by the records (3) act of debtor in taking his stock of
goods at night is sufficient to support an attachment upon the ground of the fraudulent concealment of
property for the purpose of delaying and defrauding creditors (4) plaintiff acted in good faith but also in
facts sufficient in themselves to convince an ordinary man that the defendants were obviously trying to
spirit away a portion of the stocks in order to render ineffectual at least partially any judgment that may
be rendered in favor of the plaintiff
SC affirming RTC: sentenced all the defendants to pay and should they fail to pay then it is ordered
that all the effects, materials and stocks covered by the chattel mortgages be sold at public auction
Cruz v Malolos (Novation: no)
petitioners, mother and children, executed a notarized Deed of Partial Partition where each one of
them was given a share of several parcels of registered lands; as a result the properties were actually
partitioned and the respective shares of each party adjudicated to him/her; they then executed a
Memorandum Agreement stating they are common co-owners pro-indiviso in equal shares of the
following registered real properties and that they bind themselves to share alike and receive equal
shares from the proceeds of the sale of any lot or lots; it was also stated that the agreement shall
continue to be effective until the last lot shall have been disposed or sold and the proceeds divided
equally and their respective shares shared
meanwhile respondent spouses filed against Nerissa Cruz a case for a sum of money; the latter was
condemned and ordered to pay and a writ of execution was issued; enforcing the writ the sheriff levied
upon the lands in question; the properties were sold in an execution sale to the highest bidders the
respondent spouses and the sheriff accordingly executed a Deed of Sale; Nerissa failed to exercise her
right of redemption so a final deed of sale was executed; the couple asked the court to declare the 7
titles of the lands null and void; petitioners filed a motion for leave to intervene and oppose the motion
 alleging they were coo-owners; petitioners filed for partition of real estate land against respondent
spouses
no novation (1) the DPP was not materially and substantially incompatible with the MOA as it conferred
absolute ownership of the parcels of land and the MOA merely created an obligation on her part to
share with the petitioners the proceeds of the sale of said properties thus both documents can exist
together and must be so interpreted to give life to both (2) MOA falls short of producing a novation
because it does not express a clear intent to dissolve the old obligation as a consideration for the
emergence of a new one (3) petitioners fail to show the fact that the DPP was registered is inconsistent
with the allegation that they intended to abandon it (4) intent of the parties as shown by the clear
language used prevails over post facto explanations that find no support from the words employed by
the parties or from their contemporaneous and subsequent acts showing their understanding of such
contracts (5) a subsequent agreement cannot novate or change by implication a previous one unless
the old and new contracts are on every point incompatible with each other
no co-ownership (1) obligation to share the proceeds does not necessarily impair his dominion over
the property much less make the beneficiary the co-owner thereof (2) the MOA stipulated that the
registered owner could sell the land without the consent of the other parties not in consonance
with jus disponendi which is an attribute of ownership wherein only the owner can dispose of a
property (3) the hornbook principle gains more force when 3rd parties are concerned as to requires
such persons to go beyond what is clearly written in the document is unfair and unjust (4) petitioners
were estopped from claiming co-ownership over the disputed lands because as absolute owners they
either mortgaged or sold the other properties adjudicated to the by virtue of the DPP thus denying co-
ownership by their acts
SC affirming CA dismissing the complaint (1) sale to respondents valid making them absolute owners
and no partition should be made (2) without prejudice to the claim of plaintiffs for their shares in the
proceeds of the auction sale of the lands in question against Nerissa pursuant to the Memorandum
Agreement

Quinto v PP (Novation: no)

accused received in trust from one Aurelia Cariaga pieces of jewelry upon the former’s request for the
purpose of selling the same on commission bases with the express obligation on the part of
the accused to turn over the proceeds of sale or to return the said jewelry if not sold; the accused
once in possession misappropriated, misapplied, and converted to her own personal use and benefit
the jewelry and/or the proceeds of the sale to the damage and prejudice of Cariaga in the amount of
P36,000; after the expiry of the period and the extended period Cariaga had asked for the return of the
pieces of jewelry which accused ignored thus the former filed a case for estafa
accused (1) engaged in the purchase and sale of jewelry (2) sold 1 piece to Camacho and upon failure
to pay the full amount she was brought to Cariaga and an installment payment structure was agreed
upon (3) sold 1piece to Ramos who was unable to pay the full amount and was also brought to
Cariaga to talk about the terms of payment (4) agreement between petitioner and complainant was
effectively novated when the latter consented to receive payment in installments directly from
Camacho and Ramos
no novation (1) changes alluded to by petitioner consists only in the manner of payment (2) no
substitution of debtors since the private complainant merely acquiesced to the payment but did not
give consent to enter into a new contract and the acceptance was simply necessitated by the
substantial accounts payable to complainant and because accused made herself scarce (3) 2 forms of
novation by substituting the person of the debtor and in either the consent of the creditor is
an indispensable requirement and Cariaga’s acceptance cannot be construed as sufficient to justify
extinctive novation (4) fact that the creditor receives guaranty or accepts payment from a 3rd person
who has agreed to assume the obligation does not constitute an extinctive novation absent an
agreement that the first debtor shall be released form responsibility
criminal liability (1) novation is not one of the means recognized by the RPC whereby criminal liability
can be extinguished (2) role of novation is only to either prevent the rise of criminal liability or to cast
doubt on the true nature of the original basic transaction (3) criminal liability for estafa already
committed is not affected by the subsequent novation of the contract for it is a public offense which
must be prosecuted and punished by the State in its own conation
SC affirming RTC & CA (1) civil liability of P36,000 maintained (2) guilty beyond reasonable doubt of
estafa but modifying imprisonment term