Ang Yu Asuncion vs CA G.R. No.

109125, December 2, 1994

FACTS:
Petitioners allege that they are tenants or lessees of residential and commercial spaces owned by defendants in
Ongpin Street, Binondo, Manila since 1935 and that on several occasions before October 9, 1986, defendants
informed plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same. During
the negotiations, Bobby Cu Unjieng offered a price of P6-million while petitioners made a counter offer of P5-million.
On October 24, 1986, petitioners asked the respondents to specify the terms and conditions of the offer to sell.
Petitioners now raise that since respondents failed to specify the terms and conditions of the offer to sell and because
of information received that the latter were about to sell the property, plaintiffs were compelled to file the complaint to
compel defendants to sell the property to them.

The trial court found that the respondents’ offer to sell was never accepted by the petitioners for the reason that they
did not agree upon the terms and conditions of the proposed sale, hence, there was no contract of sale at all. The
Court of Appeals affirmed the decision of the lower court. This decision was brought to the Supreme Court by petition
for review on certiorari which subsequently denied the appeal on May 6, 1991 “for insufficiency in form and
substance”.

On November 15, 1990, while CA-G.R. CV No. 21123 was pending consideration by this Court, the Cu Unjieng
spouses executed a Deed of Sale transferring the property in question to herein respondent Buen Realty and
Development Corporation, for P15,000,000.00. On July 1, 1991, respondent as the new owner of the subject property
wrote a letter to the petitioners demanding that the latter vacate the premises. On July 16, 1991, the petitioners wrote
a reply to respondent corporation stating that the latter brought the property subject to the notice of lis pendens
regarding Civil Case No. 87-41058 annotated on TCT No. 105254/T-881 in the name of the Cu Unjiengs.

The lessees filed a Motion for Execution dated August 27, 1991 of the Decision in Civil Case No. 87-41058 as
modified by the Court of Appeals in CA-G.R. CV No. 21123.

On August 30, 1991, the RTC ordered the Cu Unjiengs to execute the necessary Deed of Sale of the property in
litigation in favor of plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the consideration of P15 Million pesos in
recognition of petitioners’ right of first refusal and that a new Transfer Certificate of Title be issued in favor of the
buyer. The court also set aside the title issued to Buen Realty Corporation for having been executed in bad faith. On
September 22, 1991, the Judge issued a writ of execution.

On 04 December 1991, the appellate court, on appeal to it by private respondent, set aside and declared without force
and effect the above questioned orders of the court a quo.

ISSUE
Whether or not Buen Realty can be bound by the writ of execution by virtue of the notice of lis pendens, carried over
on TCT No. 195816 issued in the name of Buen Realty, at the time of the latter’s purchase of the property on 15
November 1991 from the Cu Unjiengs.

HELD
We affirm the decision of the appellate court.

In the law on sales, the so-called “right of first refusal” is an innovative juridical relation. Needless to point out, it
cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code.
In a right of first refusal, while the object might be made determinate, the exercise of the right, however, would be
dependent not only on the grantor’s eventual intention to enter into a binding juridical relation with another but also on
terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can at best be so described as
merely belonging to a class of preparatory juridical relations governed not by contracts (since the essential elements
to establish the vinculum juris would still be indefinite and inconclusive) but by, among other laws of general
application, the pertinent scattered provisions of the Civil Code on human conduct.

The final judgment in Civil Case No. 87-41058, it must be stressed, has merely accorded a “right of first refusal” in
favor of petitioners. The consequence of such a declaration entails no more than what has heretofore been said. In
fine, if, as it is here so conveyed to us, petitioners are aggrieved by the failure of private respondents to honor the right
of first refusal, the remedy is not a writ of execution on the judgment, since there is none to execute, but an action for
damages in a proper forum for the purpose.

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Furthermore, Buen Realty, not having been impleaded in Civil Case No. 87-41058, cannot be held subject to the writ
of execution issued by respondent Judge, let alone ousted from the ownership and possession of the property, without
first being duly afforded its day in court.

G.R. No. 163512             February 28, 2007

DAISY B. TIU, Petitioner

vs.
PLATINUM PLANS PHIL., INC., Respondent.

FACTS:

Respondent Platinum Plans Philippines, Inc. is a domestic corporation engaged in the pre-need industry. From 1987
to 1989, petitioner Daisy B. Tiu was its Division Marketing Director.

On January 1, 1993, respondent re-hired petitioner as Senior Assistant Vice-President and Territorial Operations
Head in charge of its Hongkong and Asean operations. The parties executed a contract of employment valid for five
years.4

On September 16, 1995, petitioner stopped reporting for work. In November 1995, she became the Vice-President for
Sales of Professional Pension Plans, Inc., a corporation engaged also in the pre-need industry.

Consequently, respondent sued petitioner for damages before the RTC of Pasig City, Branch 261. Respondent
alleged, among others, that petitioner’s employment with Professional Pension Plans, Inc. violated the non-
involvement clause in her contract of employment, which prohibits the employee for two years in case of separation,
whether voluntary or for cause, to engage in or be involve with any pre-need corporation.

xxx

In upholding the validity of the non-involvement clause, the trial court ruled that a contract in restraint of trade is valid
provided that there is a limitation upon either time or place. In the case of the pre-need industry, the trial court found
the two-year restriction to be valid and reasonable.

On appeal, the Court of Appeals affirmed the trial court’s ruling. It reasoned that petitioner entered into the contract on
her own will and volition. Thus, she bound herself to fulfill not only what was expressly stipulated in the contract, but
also all its consequences that were not against good faith, usage, and law. The appellate court also ruled that the
stipulation prohibiting non-employment for two years was valid and enforceable considering the nature of respondent’s
business.

Petitioner moved for reconsideration but was denied.

ISSUE: Plainly stated, the core issue is whether the non-involvement clause is valid.

HELD: YES.

Conformably then with the aforementioned pronouncements, a non-involvement clause is not necessarily void for
being in restraint of trade as long as there are reasonable limitations as to time, trade, and place.

In this case, the non-involvement clause has a time limit: two years from the time petitioner’s employment with
respondent ends. It is also limited as to trade, since it only prohibits petitioner from engaging in any pre-need business
akin to respondents.

More significantly, since petitioner was the Senior Assistant Vice-President and Territorial Operations Head in charge
of respondent’s Hongkong and Asean operations, she had been privy to confidential and highly sensitive marketing
strategies of respondent’s business. To allow her to engage in a rival business soon after she leaves would make
respondent’s trade secrets vulnerable especially in a highly competitive marketing environment. In sum, we find the
non-involvement clause not contrary to public welfare and not greater than is necessary to afford a fair and reasonable
protection to respondent.13

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In any event, Article 1306 of the Civil Code provides that parties to a contract may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs,
public order, or public policy.

Article 115914 of the same Code also provides that obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. Courts cannot stipulate for the parties nor amend their
agreement where the same does not contravene law, morals, good customs, public order or public policy, for to do so
would be to alter the real intent of the parties, and would run contrary to the function of the courts to give force and
effect thereto.15 Not being contrary to public policy, the non-involvement clause, which petitioner and respondent freely
agreed upon, has the force of law between them, and thus, should be complied with in good faith. 16

Thus, as held by the trial court and the Court of Appeals, petitioner is bound to pay respondent P100,000 as liquidated
damages. While we have equitably reduced liquidated damages in certain cases, 17 we cannot do so in this case, since
it appears that even from the start, petitioner had not shown the least intention to fulfil the non-involvement clause in
good faith.

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated January 20, 2004, and the Resolution
dated May 4, 2004, of the Court of Appeals in CA-G.R. CV No. 74972, are AFFIRMED. Costs against petitioner.

SO ORDERED.

Air France vs Carrascoso

On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc., issued to
plaintiff a “first class” round trip airplane ticket from Manila to Rome. From Manila to Bangkok, plaintiff travelled in “first
class”, but at Bangkok, the Manager of the defendant airline forced plaintiff to vacate the “first class” seat that he was
occupying because there was a “white man”, who, the Manager alleged, had a “better right” to the seat. When asked
to vacate his “first class” seat, the plaintiff, as was to be expected, refused, and told defendant’s Manager that his seat
would be taken over his dead body; a commotion ensued, and they came all across to Mr. Carrascoso and pacified
Mr. Carrascoso to give his seat to the white man” and plaintiff reluctantly gave his “first class” seat in the plane.

Issue

Whether there is a breach of contract of carriage between Air France and Carrascoso that would hold Air France liable
for damages.

Ruling

Yes. Petitioner’s contract with Carrascoso is one attended with public duty. The stress of Carrascoso’s action as we
have said, is placed upon his wrongful expulsion. This is a violation of public duty by the petitioner air carrier — a case
of quasi-delict. Damages are proper.

PRUDENTIAL BANK vs. RAPANOT

GR No. 191636
JANUARY 16, 2017

FACTS:

Golden Dragon Real Estate Corporation (Golden Dragon) is the developer of Wack-Wack Twin Towers Condominium
in Mandaluyong City.  Ronald Rapanot (Ronald) bought Unit 2308-B2, on May 9, 1995.  On September 13, 1995, the
Bank of the Philippine Islands, formerly known as Prudential Bank (Bank), extended a loan to Golden Dragon in the
amount of P50,000,000.00 to be utilized by the latter as additional working capital.  To secure the loan, Golden
Dragon executed a mortgage Agreement in favor of the Bank, which had the effect of constituting a real estate
mortgage over several condominium units owned and registered under Golden Dragon’s name.  Unit 2308-B2 is
among said units subject of said mortgage agreement.

Ronald made several verbal demands for the delivery of Unit 2308-B2, being its lawful owner, but to no avail.   Hence
he filed a complaint before the Expanded National Capital Region Field Office of the Housing and Land Use
Regulatory Board (HLURB).    No settlement was arrived at before the said Office. The Arbiter rendered a decision on
July 3, 2002, in favor of Ronald, directing Golden Dragon and the Bank to deliver to Ronald the title of the
condominium unit and to pay damages and costs.
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On January 16, 2003, the Bank filed a Petition for Review with the HLURB Board Commissioner, who, in turn affirmed
the decision of the HLURB.  Thereafter the Bank went to the Office of the President, which denied its appeal declaring
that the Bank was given due process, and adopted the ruling of the HLURB.  Again, the Bank appealed to the Court of
Appeals, who in turn affirmed the decision of the HLURB.

ISSUES:

1. Whether or not the Court of Appeals erred when it affirmed the resolution of the Office of the President finding
that the Bank had been afforded due process before the HLURB; and
2. Whether the not the Court of Appeals erred when it affirmed the resolution of the Office of the President that
the Bank cannot be considered a mortgagee in good faith.

HELD: 

NO.  The Bank was not deprived of due process before the HLURB.  The Bank was able to set out its position by
participating in the preliminary hearing and the scheduled conferences before the Arbiter and even assert its special
and affirmative defenses in its Answer to Ronald’s claim.
It was a clear fact that the Arbiter merely acted in accordance with the 1996 Rules of Procedure of the HLURB when it
rendered its decision on the basis of the pleadings and records submitted by the parties. 

The mortgage agreement is null and void against Ronald, and thus cannot be enforced against him.  The Bank failed
to take note of Section 18 of Presidential Decree No. 957 which states:  no mortgage on any unit or lot shall be made
by the owner or developer without prior approval of the Authority.  The mortgage entered into by and between the
Bank and Golden Dragon violates the said provision.  Ronald, who was the buyer of the subject condominium unit,
was not notified of the mortgage before the release of the loan proceeds by the Bank.   It was an act executed against
the provisions of mandatory prohibitory laws, hence, void because of the Bank’s failure to comply with PD 957. 

G.R. No. L-30056

MARCELO AGCAOILI, Plaintiff-appellee, 
VS.
GOVERNMENT SERVICE INSURANCE SYSTEM, Defendant-appellant

Article 1191. Power to Rescind Contracts

August 30, 1988

FACTS OF THE CASE:

The appellant Government Service Insurance System (GSIS) approved the application of appellee Agcaoili for
the purchase of house and lot in the GSIS Housing Project at Nangka Marikina, Rizal, with the condition that Agcaoili
should occupy the said house and lot within three days from receipt of notice otherwise the application shall be
automatically disapproved and will be awarded to another applicant. Agcaoili tried to fulfil the condition but could not
because the house was uninhabitable. The fixtures, ceilings, and even utilities were inexistent. The appellee refused
to pay the remaining instalments and fees until GSIS made the house inhabitable but to no avail. GSIS opted to
cancel the award and demand Agcaoili to vacate the premises. Agcaoili sued GSIS in the Court of First Instance of
Manila for specific performance with damages and obtained a favourable judgement. Hence this petition for appeal by
GSIS.
ISSUE: Whether or not Agcaoili is entitled to specific performance with damages
CONCLUSION:
Yes, Agcaoili is entitled to specific performance with damages. There was a perfected contract of sale upon
the purchase of the plaintiff. It was then the duty of GSIS as seller to deliver the thing sold in a condition suitable for its
enjoyment by the buyer. The house contemplated was one that could be occupied for purpose of residence in
reasonable comfort and convenience. The records show that the plaintiff tried to fulfil the condition but found the
house uninhabitable and could not stay any longer.
In reciprocal obligations, a party incurs delay if the other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. The defendant did not fulfill its obligation to deliver the house in a habitable
state, therefore, it cannot invoke the plaintiff’s suspension of payment as a cause to cancel the contract between
them.

4
Chavez vs Gonzales April 30, 1970

Facts: On July 1963, Rosendo Chavez brought his typewriter to Fructuoso Gonzales a typewriter repairman for the
cleaning and servicing of the said typewriter but the latter was not able to finish the job. During October 1963, the
plaintiff gave the amount of P6.00 to the defendant which the latter asked from the plaintiff for the purchase of spare
parts, because of the delay of the repair the plaintiff decided to recover the typewriter to the defendant which he
wrapped it like a package. When the plaintiff reached their home he opened it and examined that some parts and
screws was lost. That on October 29, 1963 the plaintiff sent a letter to the defendant for the return of the missing parts,
the interior cover and the sum of P6.00 (Exhibit D). The following day, the defendant returned to the plaintiff some of
the missing parts, the interior cover and the P6.00. The plaintiff brought his typewriter to Freixas Business Machines
and the repair cost the amount of P89.85. He commenced this action on August 23, 1965 in the City Court of Manila,
demanding from the defendant the payment of P90.00 as actual and compensatory damages, P100.00 for temperate
damages, P500.00 for moral damages, and P500.00 as attorney’s fees. The defendant made no denials of the facts
narrated above, except the claim of the plaintiff that the cost of the repair made by Freixas Business Machines be fully
chargeable against him.

Issue: Whether or not the defendant is liable for the total cost of the repair made by Freixas Business Machines with
the plaintiff typewriter?

Ruling: No, he is not liable for the total cost of the repair made by Freixas Business Machines instead he is only liable
for the cost of the missing parts and screws. The defendant contravened the tenor of his obligation in repairing the
typewriter of the plaintiff that he fails to repair it and returned it with the missing parts, he is liable under “ART. 1167. If
a person obliged to do something fails to do it, the same shall be executed at his cost.

This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore, it may be
decreed that what has been poorly done he undone.”

Central Bank of the Philippines v. CA (1985)

Ponente: Makasiar, C.J.
Topic: Delay (Art. 1169)

Facts:
April 28, 1965 - Island Savings Bank (ISB) approved the loan application for P80,000 of Sulpicio Tolentino,
who, as a security for the loan, also executed a real estate mortgage over his 100-ha land. The approved loan
application called for P80,000 loan, repayable in semi-annual installments for a period of 3 years, with 12% interest.
May 22, 1965 – a mere P17,000 partial release of the loan was made by ISB, and Tolentino and his wife Edita
signed a promissory note for P17,000 at 12% annual interest, payable within 3 years from the date of execution of the
contract at semi-annual installments of P3,459.
An advance interest for the P80,000 loan covering a 6-mo period amounting to P4,800was deducted from the
partial release of P17,000, but this was refunded to Tolentino on July 23, 1965, after being informed by ISB that there
was no fund yet available for the release of the P63,000 balance.
Aug. 13, 1965 – the Monetary Board of the Central Bank issued Resolution No. 1049, which prohibited ISB
from making new loans and investments, after finding that it was suffering liquidity problems.
June 14, 1968 – the Monetary Board issued Resolution No. 967, which prohibited ISB from doing business in
the Philippines, after finding that it failed to put up the required capital to restore its solvency.
Aug. 1, 1968 – ISB, in view of non-payment of the P17,000 covered by the promissory note, filed an
application for the extra-judicial foreclosure of the real estate mortgage covering the 100-ha land; and the sheriff
scheduled auction.
Tolentino filed a petition with the CFI for injunction, specific performance or rescission and damages with
preliminary injunction, alleging that since ISB failed to deliver the P63,000 remaining balance of the loan, he is entitled
to specific performance by ordering ISB to deliver it with interest of 12% per annum from April 28, 1965, and if said
balance cannot be delivered, to rescind the real estate mortgage.

5
 CFI issued a TRO enjoining ISB from continuing with the foreclosure of the mortgage, however, after finding
Tolentino’s petition unmeritorious, ordered the latter to pay ISB P17,000 plus legal interest and legal charges and
lifting the TRO so the sheriff may proceed with the foreclosure.

CA, on appeal by Tolentino, modified CFI’s decision by affirming dismissal of Tolentino’s petition for specific
performance, but ruled that ISB can neither foreclose the mortgage nor collect the P17,000 loan.

SC: The parties, in the P80,000 loan agreement, undertook reciprocal obligations, wherein the obligation/promise of
each party is the consideration for that of the other; and when one party has performed or is ready and willing to
perform his part of the contract, the other party who has not performed or is not ready and willing to perform incurs in
delay (Art. 1169, CC).
When Tolentino executed a real estate mortgage, he signified his willingness to pay the P80,000 loan, and from
such date, the obligation of ISB to furnish the loan accrued. Thus, ISB’s delay started on April 28, 1965 and lasted 3
years or when Resolution No. 967 was issued prohibiting ISB from doing further business, which made it legally
impossible from ISB to furnish the P63,000 of the loan.
Resolution No. 1049 cannot interrupt the default of ISB in complying with its obligation to release the P63,000
balance because it merely prohibited ISB from making new loans and investments, not from releasing the balance of
loan agreements previously contracted.
The mere pecuniary inability to fulfill an engagement does not discharge the obligation of the contract, nor does it
constitute any defense to a decree of specific performance; and the mere fact of insolvency of a debtor is never an
excuse for the nonfulfillment of an obligation, but instead, is taken as a breach of contract.
The fact that Tolentino demanded and accepted the refund of the pre-deducted interest cannot be taken as a
waiver of his right to collect the P63,000 balance. The act of ISB in asking for the advance interest was improper
considering that only P17,000 out of the P80,000 loan was released.
The alleged discovery by ISB of the overvaluation of the loan collateral cannot exempt it from complying with its
obligation to furnish the entire P80,000 loan because bank officials/employees have the obligation to investigate the
existence and valuation of the properties being offered as a loan security before approving the loan application.

Issues/Held/Ratio
1) WON the action of Tolenitno for specific performance can prosper.  NO.
Since ISB was in default under the agreement, Tolentino may choose between specific performance or rescission,
but since ISB is now prohibited from doing further business, the only remedy left is Rescission only for the P63,000
balance of the loan.

2) WON Tolentino is liable to pay the P17,000 debt covered by the promissory note.  YES.
The bank was deemed to have complied with its reciprocal obligation to furnish a P17,000 loan. The promissory
note gave rise to Tolentino’s reciprocal obligation to pay such loan when it falls due and his failure to pay the overdue
amortizations under the promissory note made him a party in default, hence not entitled to rescission (Art. 1191, CC).
ISB has the right to rescind the promissory note, being the aggrieved party.

Since both parties were in default in the performance of their reciprocal obligations, both are liable for damages. In
case both parties have committed a breach of their reciprocal obligations, the liability of the first infractor shall be
equirably tempered by the courts (Art. 1192, CC). The liability of ISB for damages in not furnishing the entire loan is
offset by the liability of Tolentino for damages (penalties and surcharges) for not paying his overdue P17,000 debt.
Since Tolentino derived some benefit for his use of the P17,000, he should account for the interest thereon (interest
was not included in the offsetting).

3) WON Tolentino’s real estate mortgage can be foreclosed to satisfy the P17,000 if his liability to pay therefor
subsists.  NO.
The fact that when Tolentino executed his real estate mortgage, no consideration was then in existence, as there
was no debt yet because ISB had not made any release on the loan, does not make the real estate mortgage void for
lack of consideration.
It is not necessary that any consideration should pass at the time of the execution of the contract of real mortgage.
When the consideration is subsequent to the mortgage, the latter can take effect only when the debt secured by it is
created as a binding contract to pay. And when there is partial failure of consideration, the mortgage becomes
unenforceable to the extent of such failure. Where the indebtedness actually owing to the holder of the mortgage is
less than the sum named in the mortgage, the mortgage cannot be enforced for more than the actual sum due.
Since ISB failed to furnish the P63,000 balance, the real estate mortgage of Tolentino became unenforceable to
such extent. P63,000 is 78.75% of P80,000, hence the mortgage covering 100 ha is unenforceable to the extent of
78.75 ha. The mortgage covering the remainder of 21.25 ha subsists as a security for the P17,000 debt.

Judgment:
1) Tolentino is ordered to pay ISB P17,000 plus P41, 210 (12% interest per annum)

6
 2) In case Tolentino fails to pay, his real estate mortgage covering 21.25 ha shall be foreclosed to satisfy his total
indebtedness
3) The real estate mortgage covering 78.75 ha is unenforceable and ordered released in favor of Tolentino

Biblia Toledo-Banaga and Jovita Tan v CA, GR nO, 127941, January 28, 1989 (302 SCRA 331)
Buyer in Good Faith

Facts:

Petitioner Banaga filed an action for redemption of her property which was earlier foreclosed and later sold in a public
auction to the respondent. The trial court declared petitioner to have lost her right for redemption and ordered that
certificate of title be issued to the respondent which the petitioner caused an annotation of notice of lis pendens to the
title. On appeal, the CA reversed the decision and allowed the petitioner to redeem her property within a certain
period. Banaga tried to redeem the property by depositing to the trial court the amount of redemption that was
financed by her co-petitioner Tan. Respondent opposed in that she made the redemption beyond the period ordered
by the court. The lower court however upheld the redemption and ordered the Register of Deeds to cancel the
respondent’s title and issue a new title in favor of the petitioner. In a petition for certiorari before the CA by the
respondent, another notice of lis pendens was annotated to the title. CA issued a temporary restraining order to enjoin
the execution of the court order. Meanwhile, Banaga sold the property to Tan in the absolute deed of sale that
mentions the title of the property still in the name of the respondent which was not yet cancelled. Despite the lis
pendens on the title, Tan subdivided the lot into a subdivision plan which she made not in her own name but that of
the respondent. Tan then asked the Register of Deeds to issue a new title in her name. New titles were issued in
Tan’s name but carried the annotation of the two notices of lis pendens. Upon learning the new title of Tan the
respondent impleaded her in his petition. The CA later sets aside the trial court’s decision and declared the
respondent as the absolute owner of the property for failure of the petitioner to redeem the property within the period
ordered by the court. The decision was final and executory and ordered the Register of Deeds to reinstate the title in
the name of the respondent. The Register of Deeds refused alleging that Tan’s certificate must be surrendered first.
The respondent cited the register of deeds in contempt but the court denied contending that the remedy should be
consultation with the Land Registration Commissioner and in its other order denied the motion of respondent for writ of
possession holding that the remedy would be to a separate action to declare Tan’s title as void. In its motion for
certiorari and mandamus to the CA, the court set aside the two assailed orders of the trial court and declared the title
of Tan as null and void and ordered the Register of Deeds to reinstate the title in the name of the respondent.
Petitioners now argued that Tan is a buyer in good faith and raised the issue on ownership of the lot.

Issue:

Whether or not petitioner Tan is a buyer in good faith?

Ruling:

The court held that Tan is not a buyer in good faith because when the property was sold to her she was aware of the
interest of the respondent over the property. She even furnished the amount used by Banaga to redeem the property.
When she bought the property from Banaga she knows that at that time the property was not registered to the seller’s
name. The deed of sale mentioned the title which was named to the respondent. Moreover the title still carries 2
notices of lis pendens. Tan therefore cannot feign ignorance on the status of the property when she bought it.
Because Tan was also impleaded as a party to the litigation, she is bound by the decision promulgated to the subject
of such litigation. It is a settled rule that the party dealing with a registered land need not go beyond the Certificate of
Title to determine the true owner thereof so as to guard or protect her interest.  She has only to look and rely on the
entries in the Certificate of Title. By looking at the title Tan would know that the certificate is in the name of
respondent. Being a buyer in bad faith, Tan does not acquire any better right over the property. The adjudication of the
ownership in favor to the respondent includes the delivery of the possession by the defeated party to the respondent.

----------------------------

Republic v. Luzon Stevedoring (1967)

Petitioners: REPUBLIC OF THE PHILIPPINES, PLAINTIFF-APPELLEE
Respondents: LUZON STEVEDORING CORPORATION, DEFENDANT-APPELLANT
Ponente: REYES, J.B.L.
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Topic: Remedies for Breach
SUMMARY: (1-2 sentence summary of facts, issue, ratio and ruling)
FACTS:
- Barge L-1892 owned by Luzon. was being towed down the Pasig river by two tugboats "Bangus" and "Barbero” (also
owned by Luzon).
- The barge rammed against one of the wooden piles of Nagtahan bailey bridge, smashing the posts and causing the
bridge to list. At the time, the river’s current was swift and the water was high due to heavy rains in Manila.
- The Republic sued the company for the actual and consequential damages caused (P200,000).
- Luzon disclaimed liability, on the grounds that it had exercised due diligence in the selection and supervision of its
employees; that the damages to the bridge were caused by force majeure; that plaintiff has no capacity to sue; and
that the Nagtahan bailey bridge is an obstruction to navigation.
- CFI held Luzon liable for the damage caused by its employee and ordered it to pay the actual cost of the repair of the
Nagtahan bailey bridge (P192,561.72), with legal interest thereon from the date of the filing of the complaint.
- Luzon appealed directly to SC, raising questions both of fact and of law.
ISSUES:
 WON the collision of Luzon’s barge with the supports or piers of the Nagtahan bridge was in law caused by
fortuitous event or force majeure
o NO. Considering that the Nagtahan bridge was an immovable and stationary object and provided with
adequate openings for the passage of water craft, including barges, it is undeniable that the unusual
event that the barge, exclusively controlled by appellant, rammed the bridge supports raises a
presumption of negligence on Luzon’s part or its employees manning the barge or the tugs that towed
it. For in the ordinary course of events, such a thing does not happen if proper care is used. In
Anglo American Jurisprudence, the inference arises by what is known as the "res ipsa loquitur"
rule.
o Luzon strongly stresses the precautions taken by it: that it assigned two of its most powerful tugboats
to tow down river its barge; that it assigned to the task the more competent and experienced among
its patrons, had the towlines, engines and equipment double-checked and inspected; that it instructed
its patrons to take extra precautions; and concludes that it had done all it was called to do, and that
the accident, therefore, should be held due to force majeure or fortuitous event.
o These very precautions, however, completely destroy the appellant's defense. For caso fortuito
or force majeure (which in law are identical in so far as they exempt an obligor from liability) by
definition, are extraordinary events not forseeable or avoidable, "events that could not be foreseen, or
which, though foreseen, were inevitable" (A1174, NCC). It is, therefore, not enough that the event
should not have been fore seen or anticipated, as is commonly believed but it must be one
impossible to foresee or to avoid. The mere difficulty to foresee the happening is not
impossibility to foresee the same.

NOTES:
SC: when a party appeals directly to the Supreme Court, and submits his case there for decision, he is deemed to
have waived the right to dispute any finding of fact made by the trial Court. The only questions that may be raised are
those of law

Syquia v CA (Torts)

Syquia v CA G.R. No. 98695 January 27, 1993 JUAN J. SYQUIA, CORAZON C. SYQUIA, CARLOTA C. SYQUIA,
CARLOS C. SYQUIA and ANTHONY C. SYQUIA, petitioners, vs. THE HONORABLE COURT OF APPEALS, and
THE MANILA MEMORIAL PARK CEMETERY, INC., respondents.
FACTS:
1. Petitioners were the parents and siblings, respectively, of the deceased Vicente Juan Syquia. On March 5, 1979,
they filed a complaint in the then Court of First Instance against herein private respondent, Manila Memorial Park
Cemetery, Inc. for recovery of damages arising from breach of contract and/or quasi-delict.
2. According to the complaint, the petitioners and respondent to inter the remains of deceased in the Manila Memorial
Park Cemetery in the morning of July 25, 1978. They also alleged that the concrete vault encasing the coffin of the
deceased had a hole approximately three (3) inches in diameter. Upon opening the vault, it became apparent that
there was evidence of total flooding, the coffin was entirely damaged and the exposed parts of the deceased’s
remains were damaged.
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3. The complaint prayed that judgment be rendered ordering defendant-appellee to pay plaintiffs-appellants
P30,000.00 for actual damages, P500,000.00 for moral damages, etc.

DECISION OF LOWER COURTS:

1. Trial Court: dismissed the complaint. the contract between the parties did not guarantee that the cement vault would
be waterproof; that there could be no quasi-delict because the defendant was not guilty of any fault or negligence, and
because there was a pre- existing contractual relation.
Contention of the defense: "The hole had to be bored through the concrete vault because if it has no hole the vault
will (sic) float and the grave would be filled with water and the digging would caved (sic) in the earth, the earth would
caved (sic) in the (sic) fill up the grave."
2. Court of Appeals: affirmed dismissal.

ISSUE: whether the Manila Memorial Park Cemetery, Inc., breached its contract with petitioners; or, alternatively,
whether private respondent was guilty of a tort.

RULING:
NO, there was no negligent act on the part of the cemetery.

Although a pre-existing contractual relation between the parties does not preclude the existence of a culpa
aquiliana, We find no reason to disregard the respondent's Court finding that there was no negligence.
Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between
the parties, is called a quasi- delict

Syquias and the Manila Memorial Park Cemetery, Inc., entered into a contract entitled "Deed of Sale and Certificate of
Perpetual Care" on August 27, 1969. That agreement governed the relations of the parties and defined their
respective rights and obligations. Hence, had there been actual negligence on the part of the Manila Memorial Park
Cemetery, Inc., it would be held liable not for a quasi-delict  or culpa aquiliana, but for culpa contractual as provided by
Article 1170 of the Civil Code, to wit:
Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any
manner contravene the tenor thereof, are liable for damages.
There was no stipulation in the Deed of Sale and Certificate of Perpetual Care and in the Rules and Regulations of the
Manila Memorial Park Cemetery, Inc. that the vault would be waterproof.

The law defines negligence as the "omission of that diligence which is required by the nature of the obligation
and corresponds with the circumstances of the persons, of the time and of the place." In the absence of
stipulation or legal provision providing the contrary, the diligence to be observed in the performance of the
obligation is that which is expected of a good father of a family.

Private respondent has exercised the diligence of a good father of a family in preventing the accumulation of water
inside the vault which would have resulted in the caving in of earth around the grave filling the same with earth. 

Samson vs CA, 238 SCRA 397, G.R No. 108245, November 25, 1994

FACTS:
Respondent Angel Santos owner of a haberdashery store Santos & Sons, Inc., occupied a commercial unit at the
Madrigal Bldg. owned by Susana Realty Corp. for twenty years under a lease contract renewable yearly. Thus, the
contract in force between the parties provided that the term of the lease shall be one (1) year, starting on August 1,
1983 until July 31, 1984. On June 28, 1984, the lessor informed respondents that lease contract expiring on July 31,
1984 would not be renewed. Nonetheless, respondent's lease contract was extended until December 31, 1984 and
continued to occupy the leased premises beyond the extended term.

On February 5, 1985, respondent received a letter from the lessor, through its Accountant Jane F. Bartolome,
informing him of rental increase, retroactive to January 1985, pending renewal of his contract until the arrival of Ms.
Ma. Rosa Madrigal (one of the owners of Susana Realty).

On February 15, 1985, petitioner Manolo Samson agreed to buy respondent’s rights to Madrigal Bldg., provided that
petitioner will acquire all shares of Santos & Sons, Inc. to avoid breach of contract with Madrigal. Respondent also
informed petitioner that his lease contract with Madrigal was impliedly renewed and will be formally renewed when
Tanya Madrigal arrives.

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On February 20, 1985, petitioner paid P150,000.00 to respondent representing the value of improvements in the
Santos & Sons store. The balance of P150,000.00 shall be paid upon formal renewal of lease contract between
respondent and Susana Realty, a condition precedent to transfer of leasehold right of respondent to petitioner. March
1985, petitioner occupied Santos & Sons store. In July 1985, however, petitioner received a notice from Susana
Realty, addressed to Santos & Sons, Inc., directing the latter to vacate the leased premises on or before July 15, 1985
because respondent failed to renew his lease petitioner was forced to vacate the same on July 16, 1985.

Petitioner filed an action for damages. He imputed fraud and bad faith against respondent when the latter stated in his
letter-proposal that his lease contract with Susana Realty has been impliedly renewed. Petitioner claimed that this
misrepresentation induced him to purchase the store and the leasehold right. On November 29, 1990, the trial court
rendered a decision in favor of petitioner.

Respondent appealed to the Court of Appeals and on November 27, 1992, the appellate court modified the decision of
the trial court after finding that private respondent did not exercise fraud or bad faith.

ISSUES:
Whether or not private respondent Angel Santos committed fraud or bad faith in representing to petitioner that his
contract of lease over the subject premises has been impliedly renewed by Susana Realty

RULING:
Appealed decision is AFFIRMED in toto.

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 or negligence. It imports a dishonest purpose or some moral obliquity and conscious
doing of wrong. Bad faith is thus synonymous with fraud and involves a design to mislead or deceive another, not
prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive. In contracts, the
kind of fraud that will vitiate consent is one where, through insidious words or machinations of one of the contracting
parties, the other is induced to enter into a contract which, without them, he would not have agreed to. This is known
as dolo causante or causal fraud 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.

Respondent was neither guilty of fraud nor bad faith in claiming that there was implied renewal of his contract of lease
with Susana Realty. The notice from Susana Realty Accountant led private respondent to believe and conclude that
his lease contract was impliedly renewed and that formal renewal thereof would be made upon the arrival of Tanya
Madrigal. Thus, from the start, it was known to both parties that, insofar as the agreement regarding the transfer of
private respondent's leasehold right to petitioner was concerned, the object thereof relates to a future right. It is a
conditional contract recognized in civil law, the efficacy of which depends upon an expectancy — the formal renewal
of the lease contract between private respondent and Susana Realty.

CASE DIGEST : Chavez Vs Gonzales

G.R. No. 168338             February 15, 2008 FRANCISCO CHAVEZ, petitioner,  vs. RAUL M. GONZALES, in his
capacity as the Secretary of the Department of Justice; and NATIONAL TELECOMMUNICATIONS COMMISSION
(NTC), respondents.

Facts : Sometime before 6 June 2005, the radio station dzMM aired the Garci Tapes where the parties to the
conversation discussed "rigging" the results of the 2004 elections to favor President Arroyo. On 6 June 2005,
Presidential spokesperson Ignacio Bunye (Bunye) held a press conference in Malacañang Palace, where he played
before the presidential press corps two compact disc recordings of conversations between a woman and a man.
Bunye identified the woman in both recordings as President Arroyo but claimed that the contents of the second
compact disc had been "spliced" to make it appear that President Arroyo was talking to Garcillano. On 11 June 2005,
the NTC issued a press release warning radio and television stations that airing the Garci Tapes is a "cause for the
suspension, revocation and/or cancellation of the licenses or authorizations" issued to them.5 On 14 June 2005, NTC
officers met with officers of the broadcasters group, Kapisanan ng mga Broadcasters sa Pilipinas (KBP), to dispel
fears of censorship. The NTC and KBP issued a joint press statement expressing commitment to press freedom

Issue : WON the NTC warning embodied in the press release of 11 June 2005 constitutes an impermissible prior
restraint on freedom of expression

Held : When expression may be subject to prior restraint, apply in this jurisdiction to only four categories of
expression, namely: pornography, false or misleading advertisement, advocacy of imminent lawless action, and
danger to national security. All other expression is not subject to prior restrain Expression not subject to prior restraint
is protected expression or high-value expression. Any content-based prior restraint on protected expression is
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unconstitutional without exception. A protected expression means what it says – it is absolutely protected from
censorship Prior restraint on expression is content-based if the restraint is aimed at the message or idea of the
expression. Courts will subject to strict scrutiny content-based restraint. If the prior restraint is not aimed at the
message or idea of the expression, it is content-neutral even if it burdens expression The NTC action restraining the
airing of the Garci Tapes is a content-based prior restraint because it is directed at the message of the Garci Tapes.
The NTC’s claim that the Garci Tapes might contain "false information and/or willful misrepresentation," and thus
should not be publicly aired, is an admission that the restraint is content-based The public airing of the Garci Tapes is
a protected expression because it does not fall under any of the four existing categories of unprotected expression
recognized in this jurisdiction. The airing of the Garci Tapes is essentially a political expression because it exposes
that a presidential candidate had allegedly improper conversations with a COMELEC Commissioner right after the
close of voting in the last presidential elections. The content of the Garci Tapes affects gravely the sanctity of the
ballot. Public discussion on the sanctity of the ballot is indisputably a protected expression that cannot be subject to
prior restraint. Public discussion on the credibility of the electoral process is one of the highest political expressions of
any electorate, and thus deserves the utmost protection. If ever there is a hierarchy of protected expressions, political
expression would occupy the highest rank. The rule, which recognizes no exception, is that there can be no content-
based prior restraint on protected expression. On this ground alone, the NTC press release is unconstitutional. Of
course, if the courts determine that the subject matter of a wiretapping, illegal or not, endangers the security of the
State, the public airing of the tape becomes unprotected expression that may be subject to prior restraint. However,
there is no claim here by respondents that the subject matter of the Garci Tapes involves national security and publicly
airing the tapes would endanger the security of the State. The alleged violation of the Anti-Wiretapping Law is not in
itself a ground to impose a prior restraint on the airing of the Garci Tapes because the Constitution expressly prohibits
the enactment of any law, and that includes anti-wiretapping laws, curtailing freedom of expression. The only
exceptions to this rule are the four recognized categories of unprotected expression. However, the content of the
Garci Tapes does not fall under any of these categories of unprotected expression.

 
Telefast vs Castro (1988)
Facts:
In 1956, Sofia Castro-Crouch (plaintiff-respondent) was vacationing in Pangasinan in her parent’s house.That same
year in November, her mother, Consolacion died. On the day of her mother’s death she addressed a
telegram to her father Ignacio who was then in the US announcing Consolacion’s death. Thetelegram was accepted
by Telefast (defendant-petitioner) in its Dagupan office after payment of requiredfees or charges.The telegram never
reached the addressee. Consolacion was interred without her husband and childrenbesides Sofia.Sofia went back
to the US and learned that the telegram never reached her father. Thus, she and her  siblings and their
father sued Telefast for damages arising from the breach of contract by the defendant.Petitioner-defendant Telefast
interposed that the reason why the telegram never reached the addresseeis because of “technical and atmospheric
factors beyond its control.” It appears though that no attemptmade by defendant to inform Sofia for that matter
or any reason at all that explains why the telegram reached the addressee.The CFI ruled in favor of Sofia
and her co-plaintiffs awarding her damages she prayed for. Telefast appealed before the IAC
which affirmed the decision of the CFI.Hence this appeal.
Issues:
Whether or not petitioner is liable for damages arising from the breach of contract even though that therewas a
technical and atmospheric factors that lead to its failure to comply with terms of the contract?
Held:
Yes. Art. 1170 of the Civil Code provides, “Those who in the performance of their obligation are guilty of fraud,
delay, negligence, and those who in any manner contravene the tenor thereof, are liable
for damages. Art. 2176 also provides that “whoever by act or omission causes damage to another,
therebeing fault or negligence, is obliged to pay for the damage done.In the case at bar, petitioner and private
respondent Sofia C. Crouch entered into a contract whereby, for a fee, petitioner undertook to send said
private respondent’s message overseas by telegram. This,petitioner did not do, despite performance
by said private respondent of her obligation by paying the required charges. Petitioner was therefore guilty of
contravening its obligation to said private respondentand is thus liable for damages.Also, it is evident that petitioner
did not do anything to advise the plaintiff of the circumstances which leadto its failure to comply with its obligation. It is
apparent that such tantamount to gross negligence. Hencebad faith

Telefast v. Castro Digest G.R. No. 73867

Telefast v. Castro
G.R. No. 73867 February 29, 1988

Facts:

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1. The petitioner is a company engaged in transmitting telegrams. The plaintiffs are the children and spouse of
Consolacion Castro who died in the Philippines. One of the plaintiffs, Sofia sent a telegram thru Telefast to her father
and other siblings in the USA to inform about the death of their mother. Unfortunately, the deceased had already been
interred but not one from the relatives abroad was able to pay their last respects. Sofia found out upon her return in
the US that the telegram was never received. Hence the suit for damages on the ground of breach of contract. The
defendant-petitioner argues that it should only pay the actual amount paid to it.
2. The lower court ruled in favor of the plaintiffs and awarded compensatory, moral, exemplary, damages to each
of the plaintiffs with 6% interest p.a. plus attorney’s fees.  The Court of Appeals affirmed this ruling but modified and
eliminated the compensatory damages to Sofia and exemplary damages to each plaintiff, it also reduced the moral
damages for each. The petitioner appealed contending that, it can only be held liable for P 31.92, the fee or charges
paid by Sofia C. Crouch for the telegram that was never sent to the addressee, and that the moral damages should be
removed since defendant's negligent act was not motivated by "fraud, malice or recklessness.
Issue: Whether or not the award of the moral, compensatory and exemplary damages is proper.

RULING: Yes, there was a contract between the petitioner and private respondent Sofia C. Crouch whereby, for a fee,
petitioner undertook to send said private respondent's message overseas by telegram. Petitioner failed to do this
despite performance by said private respondent of her obligation by paying the required charges. Petitioner was
therefore guilty of contravening its and is thus liable for damages. This liability is not limited to actual or quantified
damages. To sustain petitioner's contrary position in this regard would result in an inequitous situation where petitioner
will only be held liable for the actual cost of a telegram fixed thirty (30) years ago.

Art. 1170 of the Civil Code provides that "those who in the performance of their obligations are guilty of fraud,
negligence or delay, and those who in any manner contravene the tenor thereof, are liable for damages." Art. 2176
also provides that "whoever by act or omission causes damage to another, there being fault or negligence, is obliged
to pay for the damage done."

Award of Moral, compensatory and exemplary damages is proper.

The petitioner's act or omission, which amounted to gross negligence, was precisely the cause of the suffering private
respondents had to undergo.  Art. 2217 of the Civil Code states: "Moral damages include physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate
results of the defendant's wrongful act or omission."

Then, the award of P16,000.00 as compensatory damages to Sofia C. Crouch representing the expenses she incurred
when she came to the Philippines from the United States to testify before the trial court. Had petitioner not been
remiss in performing its obligation, there would have been no need for this suit or for Mrs. Crouch's testimony.

The award of exemplary damages by the trial court is likewise justified for each of the private respondents, as a
warning to all telegram companies to observe due diligence in transmitting the messages of their customers.

ADORABLE VS. CA
319 SCRA 200 (1999)

Facts: P is D’s creditor. P learned that D sold his lot to A. P filed for the annulment of the sale on the ground that the
sale was fraudulently prepared or executed.

Issue: Whether P is the real party in interest.

Held: No. As creditors, P do not have material interest as to allow them to sue for rescission of the contract of sale. At
the outset, P’s right against D is only a personal right to receive payment for the loan; it is not a real right over the lot
subject of the deed of sale.

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