1. RAMOS VS. SARAO (461 SCRA 103), G.R. NO.

149756, FEBRUARY 11, 2005

FACTS:

Spouses Jonas Ramos and Myrna Ramos executed a contract over their conjugal house and lot in favor
of respondent for and in consideration of P1,310,430. Entitled “DEED OF SALE UNDER PACTO
DE RETRO,” the contract, inter alia, granted the Ramos spouses the option to repurchase the property
within six months plus an interest of 4.5 percent. Petitioner tendered to Sarao the amount of
P1,633,034.20 in the form of two manager’s checks, which the latter refused to accept for being
allegedly insufficient. Myrna filed a Complaint, and she deposited with the RTC two checks that Sarao
refused to accept. Sarao filed against the Ramos spouses a Petition “for consolidation of ownership in
pacto de retro sale”. Both RTC and CA dismissed petitioner’s complaint and appeal respectively in
favor of respondent Sarao.

ISSUE:

Whether or not the pacto de retro sale was in reality an equitable mortgage?

HELD:

Yes. In order to judge the intention of the contracting parties, their contemporaneous and subsequent
acts shall be principally considered (Art.1371, NCC). The contract shall be presumed to be an
equitable mortgage, in any of the following cases:(1) When the price of a sale with right to repurchase
is unusually inadequate; (2) When the vendor remains in possession as lessee or otherwise; (3) When
upon or after the expiration of the right to repurchase another instrument extending the period of
redemption or granting a new period is executed; (4) When the purchaser retains for himself a part of
the purchase price; (5) When the vendor binds himself to pay the taxes on the thing sold; (6) In any
other case where it may be fairly inferred that the real intention of the parties is that the transaction
shall secure the payment of a debt or the performance of any other obligation. (Art. 1602, NCC)

2. FILINVEST LAND, INC. VS. THE HONORABLE COURT OF APPEALS, PHILIPPINE

AMERICAN GENERAL INSURANCE COMPANY AND PACIFIC EQUIPMENT
CORPORATION, G.R. NO. 138980, SEPTEMBER 20, 2005

FACTS:

Petitioner awarded to respondent Pacific Equipment Corp (PECorp) development of its residential
subdivisions, a contract amounting to P12,470,000.00. PECorp posted two surety bonds to guarantee
faithful compliance. Both agreed that liquidated damages of P15,000/day shall be paid by PECorp in
case of delay. Petitioner claimed that PECorp failed to complete the works (94.53%) and claims for
damages. PECorp on the other hand contended that their work stopped due to failure of petitioner to
pay for certain completed portion. RTC assigned a commissioner to evaluate the claims and
counterclaims. The total amount due to PECorp was computed to be P1,881,867.66. Petitioner claimed
that liquidated damages amounted to P3,990,000.00 Both claims and counterclaims were dismissed.
Court of Appeals affirmed the ruling of RTC.
 ISSUE:

Whether or not the penalty for liquidated damages of P15,000.00 per day of delay shall be binding
upon mutual agreement of parties.

HELD:

No. As a general rule, courts are not at liberty to ignore the freedom of the parties to agree on such
terms and conditions as they see fit as long as they are not contrary to law, morals, good customs,
public order or public policy. The judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor. Even if there has been no
performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable
(Art.1229, NCC). A penalty interest of P15,000.00 per day of delay as liquidated damages or
P3,990,000.00 (representing 32% penalty of the P12,470,000.00 contract price) is unconscionable
considering that the construction was already not far from completion.

3. SAN AGUSTIN VS. COURT OF APPEALS (371 SCRA 346), G.R. NO. 121940, DECEMBER 4,
2001

FACTS:

Government Service Insurance System (GSIS) sold to a certain Macaria Vda. de Caiquep a parcel of
residential land evidenced by a Deed of Absolute Sale. The following encumbrance was annotated at
the back of the title, not to sell, convey, lease or sublease, or otherwise encumber the property. A day
after the issuance of TCT Macaria Vda. de Caiquep sold the subject lot to private respondent, Maximo
Menez, Jr., as evidenced by a Deed of Absolute Sale. Said TCT was lost, but private respondent
subsequently obtained a duplicate after judicial proceedings. Petitioner was not notified. Both RTC
and CA ruled in favor of private respondent.

ISSUE:

Whether or not the petitioner is correct in assailing that the Deed of Sale between Macaria Vda. de
Caiquep and private respondent is null and void in accordance with Par.7 Art.1409 of the New Civil
Code.

HELD:

No. Petitioner’s contention is less than meritorious. In this case, the GSIS, the proper party, has not
filed any action for the annulment of Deed of Sale between them and Macaria Vda. de Caiquep, nor
for the forfeiture of the lot in question. The contract of sale remains valid between the parties, unless
and until annulled in the proper suit filed by the rightful party, the GSIS. The said contract of sale is
binding upon the heirs of Macaria Vda. de Caiquep, including petitioner who alleges to be one of her
heirs, in line with the rule that heirs are bound by contracts entered into by their predecessors-in-
interest. Since both were aware of the existence of the stipulated condition in favor of the original
seller, GSIS, yet both entered into an agreement violating said condition and nullifying its effects, said
parties should be held in estoppel to assail and annul their own deliberate acts.
4. CATHAY PACIFIC AIRWAYS LTD. VS. VASQUEZ (399 SCRA 207), G.R. NO. 150843.
MARCH 14, 2003

FACTS:

In respondents’ return flight to Manila from Hongkong, they were deprived of their original seats in
Business Class with their companions because of overbooking. Since respondents were privileged
members, their seats were upgraded to First Class. Respondents refused but eventually persuaded to
accept it. Upon return to Manila, they demanded that they be indemnified in the amount of P1million
for the “humiliation and embarrassment” caused by its employees. Petitioner’s Country Manager failed
to respond. Respondents instituted action for damages. The RTC ruled in favor of respondents. The
Court of Appeals affirmed the RTC decision with modification in the award of damages.

ISSUES:

Whether or not the petitioners (1) breached the contract of carriage, (2) acted with fraud and (3) were
liable for damages.

HELD:

1) Yes. Although respondents have the priority of upgrading their seats, such priority may be
waived, as what respondents did. It should have not been imposed on them over their
vehement objection.

2) No. There was no evident bad faith or fraud in upgrade of seat neither on overbooking of flight
as it is within 10% tolerance.

3) Yes. Nominal damages (Art. 2221, NCC) were awarded in the amount of P5,000.00. Moral
damages (Art.2220, NCC) and attorney’s fees were set aside and deleted from the Court of
Appeals’ ruling.

5. MENDOZA VS. COURT OF APPEALS (359 SCRA 438), G.R. NO. 116710, JUNE 25, 2001

FACTS:

Respondent was granted by respondent Philippine National Bank (PNB) credit line and Letter of
Credit/Trust Receipt (LC/TR) line. As security for the credit accommodations and for those which may
thereinafter be granted, petitioner mortgaged to respondent PNB some of his properties. Petitioner later
requested for loan restructuring and issued promissory notes, which he failed to comply. Respondent
PNB extra-judicially foreclosed the real and chattel mortgages, and the mortgaged properties were sold
at public auction to respondent PNB, as highest bidder. Petitioner filed a case in the RTC contending
that foreclosure is illegal invoking promissory estoppel and secured favorable judgment. The decision
of RTC was reversed by the Court of Appeals.

ISSUE:

Whether or not the foreclosure of petitioner’s real estate and chattel mortgages were legal and valid as
opposed to promissory estoppel.
 HELD:

Yes. First, there was no promissory estoppel as the promise (of respondent bank) must be plain and
unambiguous and sufficiently specific. Second, there was no meeting of the minds leading to another
contract, hence loan was not restructured. Third, promissory notes petitioner issued were valid. Fourth,
stipulation in the mortgage, extending its scope and effect to after-acquired property is valid and
binding after the correct and valid process of extra-judicial foreclosure. Finally, record showed that
petitioner did not even attempt to tender any redemption price during the one-year redemption period.

6. BPI EXPRESS CARD CORPORATION VS. OLALIA (372 SCRA 399), G.R. NO. 131086,
DECEMBER 14, 2001

FACTS:

Respondent was issued by the petitioner a credit card under his name. Upon renewal, petitioner issued
in addition a supplementary card in the name of respondent’s wife. Respondent denies application. The
supplementary card accumulated a purchase of over P100k. Petitioner demanded payment but
respondent refused to pay. The RTC ordered respondent to pay only the purchase of its principal card
but was reversed after the filing of Motion for Reconsideration. The Court of Appeals affirmed the
original decision of the RTC.

ISSUES:

Whether or not the (1) credit card issued to respondent’s wife is valid, and (2) respondent be held
liable for its purchases.

HELD:

1) No. The issuance of the supplementary card shall only be upon payment of necessary fee and
submission of application from the principal for the purpose. Contracts of adhesion are to be
construed strictly against the party who drafted it.

2) No. Respondent should not be held liable for the purchase made under the so-called extension or
supplementary card as petitioner failed to explain why a card was issued without accomplishment
of requirements. It did not even secure specimen signatures of purported extension cardholder to
compare with charge slips. Respondent is liable only for the purchases made under his own credit
card.

7. Paguyo vs. Astorga (470 SCRA 440), G.R. No. 130982, September 16, 2005

FACTS:

Petitioners owned a five-story named Paguyo Building over the land owned by the Armas family.
Pending civil case, petitioners and Armases entered into compromise agreement for the former to
acquire the lot. In dire need of money, petitioner entered into agreement “Receipt of Earnest Money”
with herein respondent for the sale of former’s property and lot which was to be purchased from
Armases. Petitioner (Lourdes) later entered into Deed of Absolute Sale of Paguyo Building with the
 respondent, who also paid for the accrued and subsequent real property taxes. Petitioner filed
Complaint rescission of “Receipt of Earnest Money” alleging there has been fraud on the part of
respondents. The RTC and Court of Appeals ruled in favor of respondents with damages.

ISSUE:

Whether or not petitioner’s complaint for rescission is tenable.

HELD:

No. Petitioners’ contentions lack merit. For one, on top of the amount received by petitioners,
respondents had to shoulder accrued real estate taxes. For another, respondents believe it was the value
for their money inasmuch as the building stands on a lot with a lot owner reluctant to sell it. For a
third, said amount was arrived considering the depreciated value of the building in view o economic
and political uncertainties that time. Except in cases specified by law, lesion or inadequacy of cause
shall not invalidate a contract, unless there has been fraud, mistake or undue influence. (Art. 1355,
NCC) Gross inadequacy of the price does not affect a contract of sale, except as may indicate a defect
in the consent, or the parties really intended a donation or some other act of contract. (Art.1470, NCC)

8. KWOK VS. PHILIPPINE CARPET MANUFACTURING CORPORATION (457 SCRA 465),

G.R. NO. 149252, APRIL 28, 2005

FACTS:

Petitioner filed a complaint against the respondent corporation for the recovery of accumulated
vacation and sick leave credits before the NLRC. Petitioner clung to the verbal contract with Mr. Lim,
the President of the respondent corporation and his father-in-law for his claims. Petitioner obtained
favorable judgment. In their appeal, respondent averred that the position the petition held was not
entitled cash conversions of vacation and sick leave credits. The decision of the Labor Arbiter was
reversed. The Court of Appeals affirmed the reversed decision.

ISSUE:

Whether or not the verbal contract in favor of petitioner is valid.

HELD:

No. It is true that for a contract to be binding on the parties thereto, it need not be in writing unless the
law requires that such contract be in some form in order that it may be valid or enforceable or that it be
executed in a certain way, in which case that requirement is absolute and independent. (Art. 1356,
NCC) But the court disbelieved petitioner’s testimony and gave credence and probative weight to the
collective testimonies of the employees and officers of the respondent corporation, including Mr. Lim,
whom the petitioner presented as a hostile witness. Even assuming that the petitioner was entitled of
such benefits, there was no record to show the record of absences to arrive at the actual number of
leave credits. There was no conformity of such agreement with the Board and if so, such claim was
already barred by prescription under Article 291 of the Labor Code.
9. Information Technology Foundation of the Philippines vs. Commission on Elections, G.R. No.
159139, January 13, 2004

FACTS:

Petitioners were participating bidders questioning the identity and eligibility of the awarded contractor
Mega Pacific Consortium (MPC) where the competing bidder is Mega Pacific eSolutions, Inc. (MPEI)
as signed by Mr. Willy Yu of the latter. Private respondent claims that MPEI is the lead partner tied up
with other companies like SK C&C, WeSolv, Election.com and ePLDT. Respondent COMELEC
obtained copies of Memorandum of Agreements and Teaming Agreements.

ISSUE:

Whether or not there was an existence of a consortium.

HELD:

No. There was no documentary or other basis for Comelec to conclude that a consortium had actually
been formed amongst MPEI, SK C&C and WeSolv, along with Election.com and ePLDT. The
president of MPEI signing for allegedly on behalf of MPC without any further proof, did not by itself
prove the existence of the consortium. It did not show that MPEI or its president have been duly pre-
authorized by the other members of the putative consortium to represent them, to bid on their
collective behalf and, more important, to commit them jointly and severally to the bid undertakings.
The letter is purely self-serving and uncorroborated.

10. RADIOWEALTH FINANCE COMPANY vs. DEL ROSARIO 335 SCRA 288

FACTS:

Spouses Vicente & Maria Del Rosario jointly & severally executed, signed, and delivered in favor of
Radiowealth Finance Company a promissory note for P138,948.

Thereafter, respondents defaulted on the monthly installments. Despite repeated demands, they failed
to pay their obligation. Petitioner filed a complaint for the collection of sum of money before the RTC.

The trial court dismissed the complaint for the evidence presented were merely hearsay. While CA
reversed & remanded the case for further proceedings.

Petitioner claims that respondents are liable for the whole amount of their debt and the interest thereon,
after they defaulted on the monthly installments. Respondents counter that the installments were not
yet due and demandable. They theorize that the action for immediate enforcement of their obligation is
premature because its fulfillment is dependent on the sole will of the debtor. Hence, they consider that
the proper court should first fix a period for payment, pursuant to Articles 1180 and 1197 of the Civil
Code.

ISSUE:

Whether or not the installments had already become due and demandable
HELD:

Yes. The act of leaving blank space the due date of the first installment did not necessary mean that the
debtors were allowed to pay as & when they could. If this was the intention of the parties, they should
have so indicated in the promissory note. However, it did not reflect any such intention.

While the specific date on which each installment would be due was left blank, the note clearly
provided that each installment should be payable each month.

Furthermore, it also provided for an acceleration clause and a late payment penalty, both of which
showed the intention of the parties that the installment should be paid at a definite date. Had they
intended that the debtors could pay as & when they could, there would have been no need for these 2
clauses.

The installments had already become due & demandable is bolstered by the fact that respondents
started paying installments on the promissory note. The obligation of the respondents had matured &
they clearly defaulted when their checks bounced. Per the acceleration clause, the whole debt became
due one month after the date of the note because the check representing their first installment bounced.