G.R. No. 167615. Jan a 11, 2016.

SPOUSES ALEXANDER and JULIE LAM, doing b ine nde

he name and le COLORKWIK LABORATORIES and
COLORKWIK PHOTO SUPPLY, pe i ione , vs. KODAK
PHILIPPINES, LTD., e ponden .

C La ; Ob ga ; I d b e Ob ga ; A b ga
d b e he ca be a d ef ed a , ha e e a be
he a e f he h g h ch he b ec he e f. The d b efe
he e a a d he b ec he e f. I Na a e . C f
A ea , 343 SCRA 637 (2000), b a b a
a a a b b a a a : A b ga
d b e he ca be a d ef ed a , ha e e a be
he a e f he h g h ch he b ec he e f. The d b efe
he e a a d he b ec he e f. I a , D
Sa Ja a 29, 1970 Na a .T
b a a b b a a a
a b a , a a a -

_______________

* SECOND DIVISION.

. 778, A A 11, 2016 97

Lam . Kodak Phili ine , L d.

. P a a ba
b a a b b .
Sa e; C ac ; C ac f Sa e; A c ac f a e e fec ed
he ee g f d a he b ec a d he ce, a d he a e a
ec ca de a d he e f a ce f he e ec e b ga f
ha . T a b a a ,
a b a a a a
a , a a a
a .A a a a
 b a , a a a a a
a b a a .
Sa e; Sa e; Re c f C ac ; Re c de A c e 1191
ha he effec f a e . R A 1191 a
a . I Ve a de . C f A ea , 361 SCRA 56
(2001): R ab a a a a
a b . . . . . Re c c ea e he
b ga e he b ec f he c ac . I ca be ca ed
he he e h de a d e c ca e ha e e he a be
b ged e e. T e c d dec a e a c ac da ce
a d a e d a h gh e e a .I ee e ae
a d e ea e he a e f f he b ga each he , b
ab ga e f he beg g a d e e he a e he ea e
a f c ac ha bee ade.
Sa e; Sa e; Sa e; Whe e c gh de A c e 1191 f
he C C de, eed be d c a ed beca e he e
e e ed ec ca b ga . W
A 1191 C C , b a
b a a b a .T
a a a a a a
a a a a b
.W a a a b a ,
a a . T
a a a
. C b a
a a a b a -

98 C A A D
Lam . Kodak Phili ine , L d.

a .S b a a a
A 1191, a
a b .
Re ed a La ; C P ced e; A ea ; Pe f Re e
Ce a ; A e f e e ce a de R e 45 ha
e a e f a . T a a a a a . A
ce a R 45 a a
a .I a a
a b . F , a
a a ab , a a
a a b C A a a .
Da age ; M a Da age ; E e a Da age ; M a da age a e
g a ed a e a e he a ffe g ffe ed b a a d e a ac f
a he , b e ded e ch he c a he defe da
e e e; E e a da age , he he ha d, a e a a ded he he
 ac a e ded b bad fa h. T a a a a a
a a a a a b . M a a a a a
a a a b a a a a a ,b
a a .I
a ab a a , , a a b
a ab - - a . E a a a ,
a ,a a a a a b ba a . I
a , a a
a a a .A , ab a
a a a a a b .

PETITION fo e ie on ce io a i of he deci ion and amended

deci ion of he Co of Appeal .
The fac a e a ed in he opinion of he Co .
Tan, Acut, Lope & Pison fo pe i ione .
Nicanor N. Lon ame & Associates fo e ponden .

. 778, A A 11, 2016 99

Lam . Kodak Phili ine , L d.

LEONEN, J.:

Thi i a Pe i ion fo Re ie on Certiorari led on Ap il 20,

2005 a ailing he Ma ch 30, 2005 Deci ion1 and Sep embe 9, 2005
Amended Deci ion2 of he Co of Appeal , hich modi ed he
3
Feb a 26, 1999 Deci ion of he Regional T ial Co b ed cing
he amo n of damage a a ded o pe i ione Spo e Ale ande
and J lie Lam (Lam Spo e ).4 The Lam Spo e a g e ha
e ponden Kodak Philippine , L d. b each of hei con ac of ale
en i le hem o damage mo e han he amo n a a ded b he
Co of Appeal .5

On Jan a 8, 1992, he Lam Spo e and Kodak Philippine ,

L d. en e ed in o an ag eemen (Le e Ag eemen ) fo he ale of
h ee (3) ni of he Kodak Minilab S em 22XL6 (Minilab
Eq ipmen ) in he amo n of P1,796,000.00 pe ni , i h he
follo ing e m :

Thi con m o e bal ag eemen fo Kodak Phil ., L d.

o p o ide Colo k ik Labo a o ie , Inc. i h h ee (3) ni
Kodak Minilab S em 22XL . . . fo o p opo ed o le in
Ri al A en e (Manila), Tag m (Da ao

_______________
 1 R , pp. 58-75. The ca e, docke ed a C.A.-G.R. CV No. 64158, a en i led
K da Phi i i e , L d. . A e a de a d J ie La .
2 Id., a p. 423.
3 Id., a pp. 76-79. The Deci ion a penned b J dge Sal ador S. Abad San o of
Branch 65 of he Regional Trial Co r , Maka i Ci .
4 Id., a pp. 74-75.
5 Id., a pp. 462, 468, 469, and 472-473.
6 Id., a p. 76. The Kodak Minilab S em 22XL i a Nori QSS 1501 i h 430-
2 Film Proce or (non-pl mbed) i h andard acce orie .
7 Id.

100

100 C A A D
Lam . Kodak Phili ine , L d.

del No e), and o e i ing M l icolo pho o co n e in

Co aba o Ci nde he follo ing e m and condi ion :
1. Said Minilab Eq ipmen package ill a ail a o al of
19% m l iple o de di co n ba ed on p e ailing eq ipmen
p ice p o ided aid eq ipmen package ill be p cha ed no
la e han J ne 30, 1992.
2. 19% M l iple O de Di co n hall be applied in he
fo m of me chandi e and deli e ed in ad ance immedia el
af e igning of he con ac .
* Al o incl de a - p package o h P61,000.00.
3. NO DOWNPAYMENT.
4. Minilab Eq ipmen Package hall be pa able in 48
mon hl in allmen a THIRTY-FIVE THOUSAND PESOS
(P35,000.00) incl i e of 24% in e e a e fo he 12
mon h ; he balance hall be e-amo i ed fo he emaining
36 mon h and he p e ailing in e e hall be applied.
5. P e ailing p ice of Kodak Minilab S em 22XL a of
Jan a 8, 1992 i a ONE MILLION SEVEN HUNDRED
NINETY-SIX THOUSAND PESOS.
6. P ice i bjec o change i ho p io no ice.
* Sec ed i h PDC ; 1 mon hl amo i a ion d e 45
da af e in alla ion[.]

On Jan a 15, 1992, Kodak Philippine , L d. deli e ed one (1)

ni of he Minilab Eq ipmen in Tag m, Da ao P o ince. The
deli e ed ni a in alled b No i ep e en a i e on Ma ch 9,
10
1992. The Lam Spo e i ed po da ed check amo n ing o
P35,000.00 each fo 12 mon h a pa men fo he deli e ed
11
ni , i h he check d e on Ma ch 31, 1992.

_______________

8 Id., a p. 94.
 9 Id., a p. 76.
10 Id.
11 Id.

101

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Lam . Kodak Phili ine , L d.

The Lam Spo e eq e ed ha Kodak Philippine , L d. no

nego ia e he check da ed Ma ch 31, 1992 allegedl d e o
in f cienc of f nd .12 The ame eq e a made fo he check
d e on Ap il 30, 1992. Ho e e , bo h check e e nego ia ed b
Kodak Philippine , L d. and e e hono ed b he depo i o bank.13
The 10 o he check e e b eq en l di hono ed af e he Lam
Spo e o de ed he depo i o bank o op pa men .14
Kodak Philippine , L d. canceled he ale and demanded ha he
Lam Spo e e n he ni i deli e ed oge he ih i
15
acce o ie . The Lam Spo e igno ed he demand b al o
e cinded he con ac h o gh he le e da ed No embe 18, 1992
on acco n of Kodak Philippine , L d. fail e o deli e he o (2)
emaining Minilab Eq ipmen ni .16
On No embe 25, 1992, Kodak Philippine , L d. led a
Complain fo eple in and/o eco e of m of mone . The ca e
a af ed o B anch 61 of he Regional T ial Co , Maka i Ci .1
The S mmon and a cop of Kodak Philippine , L d. Complain
a pe onall e ed on he Lam Spo e .1

_______________

12 Id.
13 Id.
14 Id.
15 Id., a p. 106. In he le er da ed Oc ober 14, 2002, Kodak Philippine , L d.,
hro gh co n el, demanded from he Lam Spo e he rrender of po e ion of he
deli ered ni of he Minilab Eq ipmen and i acce orie . The le er a ed ha
fail re o compl ill promp Kodak Philippine , L d. o le a ca e for reco er of
po e ion.
16 Id., a p. 68.
17 Id. In he Lam Spo e Pe i ion for Re ie , he check ere i ed in fa or of
Kodak Philippine , L d. on March 9, 1992, he ame da he r ni a deli ered,
in accordance i h he Le er Agreemen hich pro ided ha he r check o ld be
d e 45 da af er he in alla ion of he em (id., a p. 13).
18 Id., a pp. 19-20.

102
102 C A A D
Lam . Kodak Phili ine , L d.

The Lam Spo e failed o appea d ing he p e ial confe ence

and bmi hei p e ial b ief de pi e being gi en e en ion .1
Th , on J l 30, 1993, he e e decla ed in defa l .20 Kodak
Philippine , L d. p e en ed e idence e parte.21 The ial co
i ed he Deci ion in fa o of Kodak Philippine , L d. o de ing he
ei e of he Minilab Eq ipmen , hich incl ded he lone deli e ed
ni , i anda d acce o ie , and a epa a e gene a o e .22 Ba ed
on hi Deci ion, Kodak Philippine , L d. a able o ob ain a i
of ei e on Decembe 16, 1992 fo he Minilab Eq ipmen
in alled a he Lam Spo e o le in Tag m, Da ao P o ince.23
The i a enfo ced on Decembe 21, 1992, and Kodak
Philippine , L d. gained po e ion of he Minilab Eq ipmen ni ,
acce o ie , and he gene a o e .24
The Lam Spo e hen led befo e he Co of Appeal a
Pe i ion o Se A ide he O de i ed b he ial co da ed J l
30, 1993 and A g 13, 1993. The e O de e e b eq en l e
a ide b he Co of Appeal Nin h Di i ion, and he ca e a
emanded o he ial co fo p e ial.25
On Sep embe 12, 1995, an U gen Mo ion fo Inhibi ion a
led again J dge Fe nando V. Go o pe, J .,26 ho had i ed he
i of ei e.2 The g o nd fo he mo ion fo inhibi ion a no
p o ided. Ne e hele , J dge Fe nando
V. Go o pe, J . inhibi ed him elf, and he ca e a ea igned o
B anch 65 of he Regional T ial Co , Maka i Ci on Oc obe 3,
1995.2

_______________

19 Id., a p. 76.
20 Id.
21 Id.
22 Id.
23 Id., a p. 439.
24 Id., a p. 76.
25 Id.
26 Id., a p. 77.
27 Id., a p. 113.
28 Id., a p. 77.

103

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Lam . Kodak Phili ine , L d.
 In he Deci ion da ed Feb a 26, 1999, he Regional T ial
Co fo nd ha Kodak Philippine , L d. defa l ed in he
pe fo mance of i obliga ion nde i Le e Ag eemen i h he
Lam Spo e .2 I held ha Kodak Philippine , L d. fail e o
deli e o (2) o of he h ee (3) ni of he Minilab Eq ipmen
ca ed he Lam Spo e o op pa ing fo he e of he
in allmen .30 The ial co no ed ha hile he Le e Ag eemen
did no pecif a pe iod i hin hich he deli e of all ni a o
be made, he Ci il Code p o ide ea onable ime a he anda d
pe iod fo compliance:

The econd pa ag aph of A icle 1521 of he Ci il Code

p o ide :
Whe e b a con ac of ale he elle i bo nd o
end he good o he b e , b no ime fo ending
hem i ed, he elle i bo nd o end hem i hin a
ea onable ime.
Wha con i e ea onable ime i dependen on he
ci c m ance a ailing bo h on he pa of he elle and he
b e . In hi ca e, deli e of he ni a made e (5)
da af e he da e of he ag eemen . Deli e of he o he o
(2) ni , ho e e , a ne e made de pi e he lap e of a
lea h ee (3) mon h .31

Kodak Philippine , L d. failed o gi e a f cien e plana ion fo

i fail e o deli e all h ee (3) p cha ed ni i hin a ea onable
32
ime.
The ial co fo nd:

_______________

29 Id.
30 Id.
31 Id.
32 Id., a pp. 77-78.

104

104 C A A D
Lam . Kodak Phili ine , L d.

Kodak o ld ha e he co belie e ha i did no deli e

he o he o (2) ni d e o he fail e of defendan o make
good he in allmen b eq en o he econd. The co i
no con inced. First of all, he e ho ld ha e been
im l aneo deli e on acco n of he ci c m ance
o nding he an ac ion. . . . E en af e he deli e . .
. no deli e a made de pi e epea ed demand f om he
defendan and de pi e he fac no in allmen e e d e. Then
 in Ma ch and in Ap il ( h ee and fo mon h e pec i el
f om he da e of he ag eemen and he deli e ) hen he
in allmen d e e e bo h hono ed, ill no deli e a
made.
Second, al ho gh i migh be aid ha Kodak a e ing
he a e ih j one deli e de e mining
defendan capaci o pa i a no a libe o do o. I
i implici in he le e ag eemen ha deli e i hin a
ea onable ime a of he e ence and fail e o o deli e
i hin a ea onable ime and de pi e demand o ld ende he
endo in defa l .
....
Third, a lea o (2) check e e hono ed. If indeed
Kodak ef ed deli e on acco n of defendan inabili o
pa , nondeli e d ing he o (2) mon h ha pa men
e e hono ed i nj i ed.33

Ne e hele , he ial co al o led ha hen he Lam

Spo e accep ed deli e of he ni , he became liable fo he
fai al e of he good ecei ed:

On he o he hand, defendan accep ed deli e of one (1)

ni . Unde A icle 1522 of he Ci il Code, in he e en he
b e accep incomple e deli e and e he good o
deli e ed, no hen kno ing ha he e o ld no be an
f he deli e b he elle , he b e hall be liable onl fo
he fai al e o him of he good ecei ed. In o he o d , he
b e i ill liable fo he al e of he p ope ecei ed.
Defendan e e nde

_______________

33 Id.

105

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Lam . Kodak Phili ine , L d.

obliga ion o pa he amo n of he ni . Fail e of deli e

of he o he ni did no he eb gi e n o hem he igh o
pend pa men on he ni deli e ed. Indeed, in incomple e
deli e ie , he b e ha he emed of ef ing pa men
nle deli e i made. In hi ca e ho gh, pa men fo
he o ndeli e ed ni ha e no e en commenced; he
in allmen made e e fo onl one (1) ni . Hence, Kodak i
igh o e ie e he ni deli e ed.34
 The Lam Spo e e e nde obliga ion o pa fo he amo n of
one ni , and he fail e o deli e he emaining ni did no gi e
hem he igh o pend pa men fo he ni al ead deli e ed.35
Ho e e , he ial co held ha ince Kodak Philippine , L d. had
elec ed o cancel he ale and e ie e he deli e ed ni , i co ld no
longe eek pa -

_______________

34 Id., a p. 78. Ci il Code, Ar . 1522: Where he eller deli er o he b er a

q an i of good le han he con rac ed o ell, he b er ma rejec hem, b if he
b er accep or re ain he good o deli ered, kno ing ha he eller i no going o
perform he con rac in f ll, he m pa for hem a he con rac ra e. If, ho e er, he
b er ha ed or di po ed of he good deli ered before he kno ha he eller i
no going o perform hi con rac in f ll, he b er hall no be liable for more han
he fair al e o him of he good o recei ed.
Where he eller deli er o he b er a q an i of good larger han he con rac ed
o ell, he b er ma accep he good incl ded in he con rac and rejec he re . If
he b er accep he hole of he good o deli ered he m pa for hem a he
con rac ra e.
Where he eller deli er o he b er he good he con rac ed o ell mi ed ih
good of a differen de crip ion no incl ded in he con rac , he b er ma accep he
good hich are in accordance i h he con rac and rejec he re .
In he preceding o paragraph , if he bjec ma er i indi i ible, he b er ma
rejec he hole of he good .
The pro i ion of hi ar icle are bjec o an age of rade, pecial agreemen ,
or co r e of dealing be een he par ie . (n)
35 Id.

106

106 C A A D
Lam . Kodak Phili ine , L d.

men fo an de e io a ion ha he ni ma ha e ffe ed hile

nde he c od of he Lam Spo e .36
A o he gene a o e , he ial co led ha Kodak
Philippine , L d. a emp ed o mi lead he co b claiming ha i
had deli e ed he gene a o e i h i acce o ie o he Lam
Spo e , hen he e idence ho ed ha he Lam Spo e had
p cha ed i f om Da ao Ken T ading, no f om Kodak Philippine ,
L d.3 Th , he gene a o e ha Kodak Philippine , L d.
ongf ll ook f om he Lam Spo e ho ld be eplaced.3
The di po i i e po ion of he Regional T ial Co Deci ion
ead :

PREMISES CONSIDERED, he ca e i he eb di mi ed.

Plain iff i o de ed o pa he follo ing:
 1) Php130,000.00 ep e en ing he amo n of he
gene a o e , pl legal in e e a 12% per annum f om
Decembe 1992 n il f ll paid; and
2) Php1,300,000.00 a ac al e pen e in he eno a ion
of he Tag m, Da ao and Ri al A e., Manila o le .
SO ORDERED.3

On Ma ch 31, 1999, he Lam Spo e led hei No ice of Pa ial

Appeal, ai ing a an i e he Regional T ial Co fail e o o de
Kodak Philippine , L d. o pa : (1) P2,040,000 in ac al damage ;
(2) P50,000,000 in mo al damage ; (3) P20,000,000 in e empla
damage ; (4) P353,000 in a o ne fee ; and (5) P300,000 a
40
li iga ion e pen e . The Lam

_______________

36 Id.
37 Id., a p. 80.
38 Id.
39 Id.
40 Id., a p. 23.

107

. 778, A A 11, 2016 107

Lam . Kodak Phili ine , L d.

Spo e did no appeal he Regional T ial Co a a d fo he

41
gene a o e and he eno a ion e pen e .
Kodak Philippine , L d. al o led an appeal. Ho e e , he Co
of Appeal 42 di mi ed i on Decembe 16, 2002 fo Kodak
Philippine , L d. fail e o le i appellan b ief, i ho
p ej dice o he con in a ion of he Lam Spo e appeal.43 The
Co of Appeal Decembe 16, 2002 Re ol ion den ing Kodak
Philippine , L d. appeal became nal and e ec o on Jan a 4,
2003.44
In he Deci ion45 da ed Ma ch 30, 2005, he Co of Appeal
Special Fo een h Di i ion modi ed he Feb a 26, 1999
Deci ion of he Regional T ial Co :

HEREFORE, PREMISES CONSIDERED, he

A ailed Deci ion da ed 26 Feb a 1999 of he Regional
T ial Co , B anch 65 in Ci il Ca e No. 92-3442 i he eb
MODIFIED. Plain iff-appellan i o de ed o pa he
follo ing:
1. P130,000.00 ep e en ing he amo n of he gene a o
e , pl legal in e e a 12% per annum f om Decembe 1992
n il f ll paid; and
2. P440,000.00 as actual damages;
_______________

41 Id.
42 Id., a p. 129. The Re ol ion a penned b A ocia e J ice O aldo D.
Agcaoili and conc rred in b A ocia e J ice Elie er R. De Lo San o and
Regalado E. Maambong of he Thir een h Di i ion, Co r of Appeal , Manila.
43 Id.
44 Id., a p. 130. A Par ial En r of J dgmen a i ed b he Co r of Appeal
on Jan ar 4, 2003.
45 Id., a pp. 58-75. The Deci ion a penned b A ocia e J ice Andre B.
Re e , Jr. and conc rred in b A ocia e J ice L ca P. Ber amin (no an
A ocia e J ice of hi co r ) and Ro alinda A ncion-Vicen e of he Special
Fo r een h Di i ion, Co r of Appeal , Manila.

10

108 C A A D
Lam . Kodak Phili ine , L d.

3. P25,000.00 as moral damages; and

4. P50,000.00 as e emplar damages.
SO ORDERED.46 (Empha i pplied)

The Co of Appeal ag eed i h he ial co Deci ion, b

e en i el di c ed he ba i fo he modi ca ion of he
di po i i e po ion.
The Co of Appeal led ha he Le e -Ag eemen e ec ed
b he pa ie ho ed ha hei obliga ion ee cep ible of
pa ial pe fo mance.
Unde A icle 1225 of he Ne Ci il Code, hei obliga ion a e
di i ible:

In de e mining he di i ibili of an obliga ion, he

follo ing fac o ma be con ide ed, o i : (1) he ill o
in en ion of he pa ie , hich ma be e p e ed o p e med;
(2) he objec i e o p po e of he ip la ed p e a ion; (3) he
na e of he hing; and (4) p o i ion of la affec ing he
p e a ion.
Appl ing he fo egoing fac o o hi ca e, We found that
the intention of the parties is to be bound separatel for each
Minilab Equipment to be delivered as shown b the separate
purchase price for each of the item, b the acceptance of Sps.
Lam of separate deliveries for the rst Minilab Equipment and
for those of the remaining two and the separate pa ment
arrangements for each of the equipment. Unde hi p emi e,
Sp . Lam hall be liable fo he en i e amo n of he p cha e
p ice of he Minilab Eq ipmen deli e ed con ide ing ha
Kodak had al ead comple el f l lled i obliga ion o
deli e he ame. . . .
 Thi d, i i al o e iden ha he contract is one that is
severable in character as demonstrated b the separate
purchase price for each of the minilab equipment. If he pa
o be pe fo med b one pa con i in e e al di -

_______________

46 Id., a pp. 74-75.

10

. 778, A A 11, 2016 109

Lam . Kodak Phili ine , L d.

inc and epa a e i em and he p ice i appo ioned o

each of hem, he con ac ill gene all be held o be
e e able. In ch ca e, each di inc ip la ion ela ing o a
epa a e bjec ma e ill be ea ed a a epa a e con ac .
Considering this, Kodak s breach of its obligation to deliver
the other two (2) equipment cannot bar its recover for the full
pa ment of the equipment alread delivered. As far as Kodak
is concerned, it had alread full complied with its separable
obligation to deliver the rst unit of Minilab Equipment.4
(Empha i pplied)

The Co of Appeal held ha he i ance of a i of eple in

i p ope in ofa a he deli e ed Minilab Eq ipmen ni and i
anda d acce o ie a e conce ned, ince Kodak Philippine , L d.
had he igh o po e i :4

The p cha e p ice of aid eq ipmen i P1,796,000.00

hich, nde he ag eemen i pa able i h fo -eigh (48)
mon hl amo i a ion. I i ndi p ed ha Sp . Lam made
pa men hich amo n ed o T o H nd ed Se en
Tho and Pe o (P270,000.00) h o gh he follo ing check :
Me obank Check No . 00892620 and 00892621 da ed 31
Ma ch 1992 and 30 Ap il 1992 e pec i el in he amo n of
Thi -Fi e Tho and Pe o (P35,000.00) each, and BPI
Famil Check da ed 31 J l 1992 amo n ing o T o H nd ed
Tho and Pe o (P200,000.00). Thi being he ca e, Sp . Lam
a e ill liable o Kodak in he amo n of One Million Fi e
H nd ed T en -Si Tho and Pe o (P1,526,000.00), hich
i pa able in e e al mon hl amo i a ion, p an o he
Le e Ag eemen . However, Sps. Lam admitted that sometime
in Ma 1992, the had alread ordered their drawee bank to
stop the pa ment on all the other checks the had issued to
Kodak as pa ment for the Minilab Equipment delivered to
them. Clearl then, Kodak ha[d]
_______________

47 Id., a pp. 66-67, ci i g 4 Tolen ino, Ar ro, C e a ie a d J i de ce

he Ci i C de f he Phi i i e , pp. 255-257 (1995 ed.).
48 Id., a p. 64.

110

110 C A A D
Lam . Kodak Phili ine , L d.

the right to repossess the said equipment, through this

replevin suit. Sps. Lam cannot e cuse themselves from pa ing
in full the purchase price of the equipment delivered to them
on account of Kodak s breach of the contract to deliver the
other two (2) Minilab Equipment, as contemplated in the
Letter Agreement.4 (Empha i pplied)

Echoing he ling of he ial co , he Co of Appeal held

ha he liabili of he Lam Spo e o pa he emaining balance
fo he deli e ed ni i ba ed on he econd en ence of A icle
1592 of he Ne Ci il Code.50 The Lam Spo e eceip and e of
he Minilab Eq ipmen befo e he kne ha Kodak Philippine ,
L d. o ld no deli e he o (2) emaining ni ha made hem
liable fo he npaid po ion of he p cha e p ice.51
The Co of Appeal no ed ha Kodak Philippine , L d. o gh
he e ci ion of i con ac i h he Lam Spo e in he le e da ed
Oc obe 14, 1992.52 The e ci ion a ba ed on A icle 1191 of he
Ne Ci il Code, hich p o ide : The po e o e cind obliga ion
i implied in ecip ocal one , in ca e one of he obligo ho ld no
compl i h ha i inc mben pon him. 53 In i le e , Kodak
Philippine , L d. demanded ha he Lam Spo e ende he lone
deli e ed ni of Minilab Eq ipmen along i h i anda d
54
acce o ie .
The Co of Appeal like i e no ed ha he Lam Spo e
e cinded he con ac h o gh i le e da ed No embe 18, 1992 on
acco n of Kodak Philippine , L d. b each of he pa ie
ag eemen o deli e he o (2) emaining ni .55

_______________

49 Id., a pp. 64-65.

50 Id., a p. 65.
51 Id., a pp. 65-66.
52 Id., a p. 68.
53 Id.
54 Id.
55 Id.
 111

. 778, A A 11, 2016 111

Lam . Kodak Phili ine , L d.

A a e l of hi e ci ion nde A icle 1191, he Co of

Appeal led ha bo h pa ie m be e o ed o hei o iginal
i a ion, a fa a p ac icable, a if he con ac a ne e en e ed
in o. 56 The Co of Appeal a iocina ed ha A icle 1191 had he
effec of e ing i hing he obliga o ela ion a if one a ne e
5
c ea ed:

To e cind i o decla e a con ac oid in i incep ion and

o p an end o i a ho gh i ne e e e. I i no me el o
e mina e i and o elea e pa ie f om f he obliga ion o
each o he b ab oga e i f om he beginning and e o e
pa ie o ela i e po i ion hich he o ld ha e occ pied
5
had no con ac been made.

The Lam Spo e e e o de ed o elinq i h po e ion of he

Minilab Eq ipmen ni and i anda d acce o ie , hile Kodak
Philippine , L d. a o de ed o e n he amo n of P270,000.00,
ende ed b he Lam Spo e a pa ial pa men .5
A o he ac al damage o gh b he pa ie , he Co of
Appeal fo nd ha he Lam Spo e e e able o b an ia e he
follo ing:

Incen i e fee paid o M . R ale in he amo n of

P100,000.00; he ide o he con ac of lea e hich made he
Sp . Lam liable, b a of ad ance pa men , in he amo n of
P40,000.00, he ame being in ended fo he epai of he
oo ing of he lea ed p emi e ; and la l , he pa men of
P300,000.00, a comp omi e ag eemen fo he p e e mina ion
of he con ac of lea e i h R ale .60

_______________

56 Id., a p. 69.
57 Id., a p. 68.
58 Id., a p. 69.
59 Id.
60 Id., a p. 71.

112
112 C A A D
Lam . Kodak Phili ine , L d.

The o al amo n i P440,000.00. The Co of Appeal fo nd

ha all o he claim made b he Lam Spo e e e no ppo ed
b e idence, ei he h o gh of cial eceip o check pa men .61
A ega d he gene a o e imp ope l ei ed f om Kodak
Philippine , L d. on he ba i of he i of eple in, he Co of
Appeal fo nd ha he e a no ba i fo he Lam Spo e claim
fo ea onable en al of P5,000.00. I held ha he ial co a ad
of 12% in e e , in addi ion o he co of he gene a o e in he
amo n of P130,000.00, i f cien compen a ion fo ha e e
damage he Lam Spo e ffe ed on acco n of i imp ope
62
ei e.
The Co of Appeal al o led on he Lam Spo e en i lemen
o mo al and e empla damage , a ell a a o ne fee and
li iga ion e pen e :

In eeking eco e of he Minilab Eq ipmen , Kodak

canno be con ide ed o ha e manife ed bad fai h and
male olence beca e a ea lie led pon, i a ell i hin
i igh o do he ame. Ho e e , i h e pec o he ei e
of he gene a o e , he e Kodak mi ep e en ed o he co
a quo i alleged igh o e he aid i em, Kodak bad fai h
and ab e of j dicial p oce e become elf-e iden .
Con ide ing he off- e ing ci c m ance a endan , he
amo n of P25,000.00 b a of mo al damage i con ide ed
f cien .
In addi ion, o a o e e a an e ample o he p blic ha
an applica ion fo eple in ho ld no be accompanied b an
fal e claim and mi ep e en a ion, he amo n of P50,000.00
b a of e empla damage ho ld be pegged again
Kodak.

_______________

61 Id., a pp. 71-72.

62 Id., a p. 73.

113

. 778, A A 11, 2016 113

Lam . Kodak Phili ine , L d.

Wi h e pec o he a o ne fee and li iga ion e pen e ,

We nd ha he e i no ba i o a a d Sp . Lam he amo n
o gh fo .63
 Kodak Philippine , L d. mo ed fo econ ide a ion of he Co
of Appeal Deci ion, b i a denied fo lack of me i .64 Ho e e ,
he Co of Appeal no ed ha he Lam Spo e Oppo i ion
co ec l poin ed o ha he addi ional a a d of P270,000.00 made
b he ial co a no men ioned in he dec e al po ion of he
Ma ch 30, 2005 Deci ion:

Going o e he Deci ion, peci call page 12 he eof, he

Co no ed ha , in addi ion o he amo n of T o H nd ed
Se en Tho and (P270,000.00) hich plain iff-appellan
ho ld e n o he defendan -appellan , he Co al o
led ha defendan -appellan ho ld, in n, elinq i h
po e ion of he Minilab Eq ipmen and he anda d
acce o ie o plain iff-appellan . Inad e en l , he e ma e ial
i em e e no men ioned in he dec e al po ion of he
Deci
65
ion. Hence, he p ope co ec ion ho ld he ein be made.

The Lam Spo e led hi Pe i ion fo Re ie on Ap il 14,

2005. On he o he hand, Kodak Philippine , L d. led i Mo ion fo
Recon ide a ion66 befo e he Co of Appeal on Ap il 22, 2005.
While he Pe i ion fo Re ie on Certiorari led b he Lam
Spo e a pending befo e hi co , he Co of Appeal Special
Fo een h Di i ion, ac ing on Kodak Philippine , L d. Mo ion fo
Recon ide a ion, i ed he Amended Deci ion6 da ed Sep embe 9,
2005. The di po i i e po ion of he Deci ion ead :

_______________

63 Id., a pp. 73-74.

64 Id., a pp. 368-371.
65 Id., a p. 369.
66 Id., a p. 385.
67 Id., a p. 367. The Amended Deci ion a penned b A ocia e J ice Andre
B. Re e , Jr. and conc rred in b A ocia e J ice L ca P. Ber amin (no an
A ocia e J ice of hi co r ) and Ro alinda A ncion-Vicen e of he Special
Fo r een h Di i ion, Co r of Appeal , Manila.

114

114 C A A D
Lam . Kodak Phili ine , L d.

HEREFORE, p emi e con ide ed, hi Co e ol ed

ha :
A. Plain iff-appellan Mo ion fo Recon ide a ion i
he eb DENIED fo lack of me i .
B. The dec e al po ion of he 30 Ma ch 2005 Deci ion
ho ld no ead a follo :
 WHEREFORE, PREMISES CONSIDERED, he A ailed
Deci ion da ed 26 Feb a 1999 of he Regional T ial Co ,
B anch 65 in Ci il Ca e No. 92-3442 i he eb MODIFIED.
Plain iff-appellan i o de ed o pa he follo ing:
a. P270,000.00 ep e en ing he pa ial pa men
made on he Minilab eq ipmen .
b. P130,000.00 ep e en ing he amo n of he
gene a o e , pl legal in e e a 12% per annum f om
Decembe 1992 n il f ll paid;
c. P440,000.00 a ac al damage ;
d. P25,000.00 a mo al damage ; and
e. P50,000.00 a e empla damage .
Upon he o he hand, defendan -appellan a e
he eb o de ed o e n o plain iff-appellan he
Minilab eq ipmen and he anda d acce o ie
deli e ed b plain iff-appellan .
SO ORDERED.
SO ORDERED.6 (Empha i in he o iginal)

_______________

68 Id., a pp. 370-371.

115

. 778, A A 11, 2016 115

Lam . Kodak Phili ine , L d.

Upon ecei ing he Amended Deci ion of he Co of Appeal ,

Kodak Philippine , L d. led a Mo ion fo E en ion of Time o File
an Appeal b Certiorari nde R le 45 of he 1997 R le of Ci il
P oced e befo e hi co .6
Thi a docke ed a G.R. No. 169639. In he Mo ion fo
Con olida ion da ed No embe 2, 2005, he Lam Spo e mo ed
ha G.R. No. 167615 and G.R. No. 169639 be con olida ed ince
bo h in ol ed he ame pa ie , i e , an ac ion , and e en ial
fac and ci c m ance . 0
In he Re ol ion da ed No embe 16, 2005, hi co no ed he
Lam Spo e Sep embe 23 and Sep embe 30, 2005 Manife a ion
p a ing ha he Co of Appeal Sep embe 9, 2005 Amended
Deci ion be con ide ed in he e ol ion of he Pe i ion fo Re ie
on Certiorari. 1 I al o g an ed he Lam Spo e Mo ion fo
Con olida ion. 2
In he Re ol ion 3 da ed Sep embe 20, 2006, hi co
decon olida ed G.R. No. 167615 f om G.R. No. 169639 and
decla ed G.R. No. 169639 clo ed and e mina ed ince Kodak
Philippine , L d. failed o le i Pe i ion fo Re ie .

II
 We e ol e he follo ing i e :
First, he he he con ac be een pe i ione Spo e
Ale ande and J lie Lam and e ponden Kodak Philippine , L d.
pe ained o obliga ion ha a e e e able, di i ible, and cep ible
of pa ial pe fo mance nde A icle 1225 of he Ne Ci il Code;
and

_______________

69 Id., a p. 393.
70 Id., a pp. 384-388.
71 Id., a p. 383A.
72 Id., a p. 383B.
73 Id., a p. 504.

116

116 C A A D
Lam . Kodak Phili ine , L d.

Second, pon e ci ion of he con ac , ha he pa ie a e

en i led o nde A icle 1190 and A icle 1522 of he Ne Ci il
Code.
Pe i ione a g e ha he Le e Ag eemen i e ec ed i h
e ponden fo h ee (3) Minilab Eq ipmen ni a no e e able,
di i ible, and cep ible of pa ial pe fo mance. Re ponden
eco e of he deli e ed ni a nj i ed. 4
Pe i ione a e ha he obliga ion of he pa ie e e no
cep ible of pa ial pe fo mance ince he Le e Ag eemen a
fo a package deal con i ing of h ee (3) ni . 5 Fo he deli e of
he e ni , pe i ione e e obliged o pa 48 mon hl pa men ,
he o al of hich con i ed one deb . 6 Ha ing elied on
e ponden a ance ha he h ee ni o ld be deli e ed a he
ame ime, pe i ione im l aneo l en ed and eno a ed h ee
o e in an icipa ion of im l aneo ope a ion . Pe i ione a g e
ha he di i ibili of he objec doe no nece a il de e mine he
di i ibili of he obliga ion ince he la e i e ed again i
cep ibili o a pa ial pe fo mance. The a g e ha e en if he
objec i cep ible of epa a e deli e ie , he an ac ion i
indi i ible if he pa ie in ended he eali a ion of all pa of he
ag eed obliga ion.
Pe i ione ppo he claim ha i a he pa ie in en ion o
ha e an indi i ible ag eemen b a e ing ha he pa men he
made o e ponden e e in ended o be applied o he hole
0
package of h ee ni . The po da ed check e e al o in ended a
ini ial pa men fo he hole
_______________

74 Id., a pp. 446-456.

75 Id., a p. 449.
76 Id.
77 Id., a p. 450.
78 Id., a pp. 450-453.
79 Id., a pp. 30-31 and 453.
80 Id., a p. 455.

117

. 778, A A 11, 2016 117

Lam . Kodak Phili ine , L d.

package. 1 The epa a e p cha e p ice fo each i em a me el

in ended o pa ic la i e he ni p ice , no o nega e he indi i ible
na e of hei an ac ion. 2 A o he i e of deli e , pe i ione
claim ha hei accep ance of epa a e deli e ie of he ni a
olel d e o he con ain faced b e ponden , ho had ole
con ol o e deli e ma e . 3
Wi h he obliga ion being indi i ible, pe i ione a g e ha
e ponden fail e o compl i h i obliga ion o deli e he o
(2) emaining Minilab Eq ipmen ni amo n ed o a b each.
Pe i ione claim ha he b each en i led hem o he emed of
e ci ion and damage nde A icle 1191 of he Ne Ci il Code. 4
Pe i ione al o a g e ha he a e en i led o mo al damage
mo e han he P50,000.00 a a ded b he Co of Appeal ince
e ponden ongf l ac of acc ing hem of nonpa men of hei
obliga ion ca ed hem leeple nigh , men al ang i h, and
o nded feeling . 5 The f he claim ha , o e e a an e ample
fo he p blic good, he a e en i led o e empla damage a
e ponden , in making fal e allega ion , ac ed in e iden bad fai h
and in a an on, opp e i e, cap icio , and male olen manne . 6
Pe i ione al o a e ha he a e en i led o a o ne fee and
li iga ion e pen e nde A icle 2208 of he Ne Ci il Code ince
e ponden ac of b inging a i again hem a ba ele and
malicio . Thi p omp ed hem o engage he e ice of a la e .
Re ponden a g e ha he pa ie Le e Ag eemen con ained
di i ible obliga ion cep ible of pa ial pe fo mance

_______________

81 Id., a p. 456.
82 Id., a pp. 455-456.
83 Id., a p. 456.
84 Id., a p. 460.
85 Id., a p. 462.
86 Id., a pp. 468-469.
 87 Id., a pp. 472-473.

11

118 C A A D
Lam . Kodak Phili ine , L d.

a de ned b A icle 1225 of he Ne Ci il Code. In

e ponden ie , i a he in en ion of he pa ie o be bo nd
epa a el fo each indi id all p iced Minilab Eq ipmen ni o be
deli e ed o diffe en o le :

The h ee (3) Minilab Eq ipmen a e in ended b

pe i ione LAM fo in all[a] ion a hei Tag m, Da ao del
No e, S a. C , Manila and Co aba o Ci o le . Each of
he e ni [i ] independen f om one ano he , a man of
hem ma pe fo m i o n job i ho he o he . Clea l he
objec i e o p po e of he p e a ion, he obliga ion i
di i ible.
The na e of each ni of he h ee (3) Minilab Eq ipmen
i ch ha one can pe fo m i o n f nc ion , i ho
a ai ing fo he o he ni o pe fo m and comple e i job.
So m ch o, he na e of he objec of he Le e Ag eemen
i cep ible of pa ial pe fo mance, h he obliga ion i
0
di i ible.

Wi h he con ac being e e able in cha ac e , e ponden a g e

ha i pe fo med i obliga ion hen i deli e ed one ni of he
Minilab Eq ipmen . 1 Since each ni co ld pe fo m on i o n,
he e a no need o a ai he deli e of he o he ni o
2
comple e i job. Re ponden hen i of he ie ha hen
pe i ione o de ed he depo i o bank o op pa men of he i ed
check co e ing he deli e ed ni , he iola ed hei
obliga ion nde he Le e Ag eemen ince e ponden a
3
al ead en i led o f ll pa men .
Re ponden al o a g e ha pe i ione bene ed f om he e of
he Minilab Eq ipmen fo 10 mon h f om Ma ch o Decembe
1992 de pi e ha ing paid onl o (2) mon hl

_______________

88 Id., a p. 548.
89 Id., a pp. 548-549.
90 Id., a p. 549.
91 Id.
92 Id.
93 Id., a p. 550.
 11

. 778, A A 11, 2016 119

Lam . Kodak Phili ine , L d.

in allmen . 4 Re ponden a e ha he o mon hl

in allmen amo n ing o P70,000.00 ho ld be he bjec of an
off e again he amo n he Co of Appeal a a ded o
5
pe i ione .
Re ponden f he a e ha pe i ione ha e no ba i fo
claiming damage ince he ei e and eco e of he Minilab
Eq ipmen a no in bad fai h and e ponden a ell i hin i
igh . 6

III

The Le e Ag eemen con ained an indi i ible obliga ion.

Bo h pa ie el on he Le e Ag eemen a ba i of hei
e pec i e obliga ion . W i en b e ponden Jeff e T. Go and
An onio V. Mine and add e ed o pe i ione Ale ande Lam, he
Le e Ag eemen con empla ed a package deal in ol ing h ee (3)
ni of he Kodak Minilab S em 22XL, i h he follo ing e m
and condi ion :

Thi con m o e bal ag eemen fo Kodak Phil ., L d.

o p o ide Colo k ik Labo a o ie , Inc. i h h ee (3) ni
Kodak Minilab S em 22XL . . . fo o p opo ed o le in
Ri al A en e (Manila), Tag m (Da ao del No e), and o
e i ing M l icolo pho o co n e in Co aba o Ci nde he
follo ing e m and condi ion :
1. Said Minilab Eq ipmen package ill a ail a o al of
19% m l iple o de di co n ba ed on p e ailing eq ipmen
p ice p o ided aid eq ipmen package ill be p cha ed no
la e han J ne 30, 1992.
2. 19% M l iple O de Di co n hall be applied in he
fo m of me chandi e and deli e ed in ad ance immedia el
af e igning of he con ac .
* Al o incl de a - p package o h P61,000.00.

_______________

94 Id., a p. 551.
95 Id., a p. 552.
96 Id., a p. 554.
97 Id., a p. 94.

120
120 C A A D
Lam . Kodak Phili ine , L d.
3. NO DOWNPAYMENT.
4. Minilab Eq ipmen Package hall be pa able in 48
mon hl in allmen a THIRTY-FIVE THOUSAND PESOS
(P35,000.00) incl i e of 24% in e e a e fo he 12
mon h ; he balance hall be e-amo i ed fo he emaining
36 mon h and he p e ailing in e e hall be applied.
5. P e ailing p ice of Kodak Minilab S em 22XL a of
Jan a 8, 1992 i a ONE MILLION SEVEN HUNDRED
NINETY-SIX THOUSAND PESOS.
6. P ice i bjec o change i ho p io no ice.
* Sec ed i h PDC ; 1 mon hl amo i a ion d e 45
da af e in alla ion[.]

Ba ed on he fo egoing, he in en ion of he pa ie i fo he e o
be a ingle an ac ion co e ing all h ee (3) ni of he Minilab
Eq ipmen . Re ponden obliga ion a o deli e all p od c
p cha ed nde a package, and, in n, pe i ione obliga ion
a o pa fo he o al p cha e p ice, pa able in in allmen .
The in en ion of he pa ie o bind hem el e o an indi i ible
obliga ion can be f he di ce ned h o gh hei di ec ac in
ela ion o he package deal. The e a onl one ag eemen co e ing
all h ee (3) ni of he Minilab Eq ipmen and hei acce o ie .
The Le e Ag eemen peci ed onl one p po e fo he b e ,
hich a o ob ain he e ni fo h ee diffe en o le . If he
in en ion of he pa ie e e o ha e a di i ible con ac , hen
epa a e ag eemen co ld ha e been made fo each Minilab
Eq ipmen ni in ead of co e ing all h ee in one package deal.
F he mo e, he 19% m l iple o de di co n a con ained in he
Le e Ag eemen a applied o all h ee acq i ed ni . The no

_______________

98 Id.
99 Id., a p. 356. A ide from he Le er Agreemen , he 19% M l iple Order
Di co n a al o con ained in he Sample Comp a ion pplied b re ponden o
pe i ioner.

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do npa men e m con ained in he Le e Ag eemen a al o

applicable o all he Minilab Eq ipmen ni . La l , he fo h
cla e of he Le e Ag eemen clea l efe ed o he objec of he
con ac a Minilab Eq ipmen Package.
 In ling ha he con ac be een he pa ie in ended o co e
di i ible obliga ion , he Co of Appeal highligh ed: (a) he
epa a e p cha e p ice of each i em; (b) pe i ione accep ance of
epa a e deli e ie of he ni ; and (c) he epa a e pa men
a angemen fo each ni .100 Ho e e , h o gh he peci ed e m
and condi ion , he eno of he Le e Ag eemen indica ed an
in en ion fo a ingle an ac ion. Thi in en m p e ail e en
ho gh he a icle in ol ed a e ph icall epa able and capable of
being paid fo and deli e ed indi id all , con i en i h he Ne
Ci il Code:

A icle 1225. Fo he p po e of he p eceding a icle ,

obliga ion o gi e de ni e hing and ho e hich a e no
cep ible of pa ial pe fo mance hall be deemed o be
indi i ible.
When he obliga ion ha fo i objec he e ec ion of a
ce ain n mbe of da of o k, he accompli hmen of o k
b me ical ni , o analogo hing hich b hei na e
ae cep ible of pa ial pe fo mance, i hall be di i ible.
However, even though the object or service ma be
ph sicall divisible, an obligation is indivisible if so provided
b law or intended b the parties. (Empha i pplied)

In Na areno v. Court of Appeals,101 he indi i ibili of an

obliga ion i e ed again he he i can be he bjec of pa ial
pe fo mance:

An obligation is indivisible when it cannot be validl

performed in parts, whatever ma be the nature of the

_______________

100 Id., a p. 66.

101 397 Phil. 707; 343 SCRA 637 (2000) [Per J. Mendo a, Second Di i ion].

122

122 C A A D
Lam . Kodak Phili ine , L d.

thing which is the object thereof. The indivisibilit refers to

the prestation and not to the object thereof. In he p e en
ca e, he Deed of Sale of Jan a 29, 1970 ppo edl
con e ed he i lo o Na i idad. The obliga ion i clea l
indi i ible beca e he pe fo mance of he con ac canno be
done in pa , o he i e he al e of ha i an fe ed i
dimini hed. Pe i ione a e he efo e mi aken in ba ing he
indi i ibili of a con ac on he n mbe of obligo .102
(Empha i pplied, ci a ion omi ed)
 The e i no indica ion in he Le e Ag eemen ha he ni
pe i ione o de ed e e co e ed b h ee (3) epa a e an ac ion .
The fac o con ide ed b he Co of Appeal a e me e inciden of
he e ec ion of he obliga ion, hich i o deli e h ee ni of he
Minilab Eq ipmen on he pa of e ponden and pa men fo all
h ee on he pa of pe i ione . The in en ion o c ea e an indi i ible
con ac i appa en f om he bene ha he Le e Ag eemen
affo ded o bo h pa ie . Pe i ione e e gi en he 19% di co n on
acco n of a m l iple o de , i h he di co n being eq all
applicable o all ni ha he o gh o acq i e. The p o i ion on
no do npa men a al o applicable o all ni . Re ponden , in
n, a en i led o pa men of all h ee Minilab Eq ipmen ni ,
pa able b in allmen .

Wi h bo h pa ie op ing fo e ci ion of he con ac nde

A icle 1191, he Co of Appeal co ec l o de ed fo e i ion.
The con ac be een he pa ie i one of ale, he e one pa
obliga e him elf o he elf o an fe he o ne hip and deli e a
de e mina e hing, hile he o he pa a ce -

_______________

102 Id., a p. 729; pp. 655-656.

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ain p ice in mone o i eq i alen .103 A con ac of ale i

pe fec ed pon he mee ing of mind a o he objec and he p ice,
and he pa ie ma ecip ocall demand he pe fo mance of hei
e pec i e obliga ion f om ha poin on.104
The Co of Appeal co ec l no ed ha e ponden had
e cinded he pa ie Le e Ag eemen h o gh he le e da ed
Oc obe 14, 1992.105 I like i e no ed pe i ione e ci ion h o gh
106
he le e da ed No embe 18, 1992. Thi e ci ion f om bo h
pa ie i fo nded on A icle 1191 of he Ne Ci il Code:

The po e o e cind obliga ion i implied in ecip ocal

one , in ca e one of he obligo ho ld no compl i h ha
i inc mben pon him.
The inj ed pa ma choo e be een he f l lmen and
he e ci ion of he obliga ion, i h he pa men of damage
in ei he ca e. He ma al o eek e ci ion, e en af e he ha
cho en f l lmen , if he la e ho ld become impo ible.
 The co hall dec ee he e ci ion claimed, nle he e
be j ca e a ho i ing he ing of a pe iod.

Re ci ion nde A icle 1191 ha he effec of m al e i ion.

10
In Velarde v. Court of Appeals:10

_______________

103 Ci il Code, Ar . 1458. B he con rac of ale, one of he con rac ing
par ie obliga e him elf o ran fer he o ner hip of and o deli er he de ermina e
hing, and he o her o pa herefore a price cer ain in mone or i eq i alen .
104 P i ce f Ceb . Hei fR a M a e , 569 Phil. 641; 546 SCRA 315
(2008) [Per J. Ynare -San iago, Third Di i ion].
105 R , p. 68.
106 Id.
107 La e a . S id H e , I c., 499 Phil. 367; 460 SCRA 375 (2005) [Per J.
Garcia, Third Di i ion].
108 413 Phil. 360; 361 SCRA 56 (2001) [Per J. Panganiban, Third Di i ion].

124

124 C A A D
Lam . Kodak Phili ine , L d.

Re ci ion ab oga e he con ac f om i incep ion and

eq i e a m al e i ion of bene ecei ed.
....
Rescission creates the obligation to return the object of the
contract. It can be carried out onl when the one who
demands rescission can return whatever he ma be obliged to
restore. To rescind is to declare a contract void at its inception
and to put an end to it as though it never was. It is not merel
to terminate it and release the parties from further obligations
to each other, but to abrogate it from the beginning and
restore the parties to their relative positions as if no contract
has been made.10 (Empha i pplied, ci a ion omi ed)

The Co of Appeal co ec l led ha bo h pa ie m be

e o ed o hei o iginal i a ion a fa a p ac icable, a if he
con ac a ne e en e ed in o. Pe i ione m elinq i h
po e ion of he deli e ed Minilab Eq ipmen ni and acce o ie ,
hile e ponden m e n he amo n ende ed b pe i ione a
pa ial pa men fo he ni ecei ed. F he , e ponden canno
claim ha he o (2) mon hl in allmen ho ld be off e again
he amo n a a ded b he Co of Appeal o pe i ione beca e
he effec of e ci ion nde A icle 1191 i o b ing he pa ie back
o hei o iginal po i ion befo e he con ac a en e ed in o. Al o
in Velarde:
 A di c ed ea lie , he b each commi ed b pe i ione
a he nonpe fo mance of a ecip ocal obliga ion, no a
iola ion of he e m and condi ion of he mo gage con ac .
The efo e, he a oma ic e ci ion and fo fei e of pa men
cla e ip la ed in he con ac doe no appl . In ead, Ci il
Code p o i ion hall go e n and eg la e he e ol ion of
hi con o e .
Considering that the rescission of the contract is based on
Article 1191 of the Civil Code, mutual restitu-

_______________

109 Id., a pp. 363-375; pp. 69-70.

125

. 778, A A 11, 2016 125

Lam . Kodak Phili ine , L d.

tion is required to bring back the parties to their original

situation prior to the inception of the contract. Accordingl ,
the initial pa ment of P800,000 and the corresponding
mortgage pa ments in the amounts of P27,225, P23,000, and
P23,925 (totaling P874,150.00) advanced b petitioners
should be returned b private respondents, lest the latter
unjustl enrich themselves at the e pense of the former.110
(Empha i pplied)

When e ci ion i o gh nde A icle 1191 of he Ci il Code,

i need no be j diciall in oked beca e he po e o e ol e i
implied in ecip ocal obliga ion .111 The igh o e ol e allo an
inj ed pa o minimi e he damage he o he ma ffe on
acco n of he o he pa fail e o pe fo m ha i inc mben
112
pon him o he . When a pa fail o compl i h hi o he
obliga ion, he o he pa igh o e ol e he con ac i igge ed.
113
The e ol ion immedia el p od ce legal effec if he
nonpe fo ming pa doe no q e ion he e ol ion.114 Co
in e en ion onl become nece a hen he pa ho allegedl
failed o compl i h hi o he obliga ion di p e he e ol ion of
he con ac .115 Since bo h pa ie in hi ca e ha e e e ci ed hei
igh o e ol e nde A icle 1191, he e i no need fo a j dicial
dec ee befo e he e ol ion p od ce effec .

_______________

110 Id., a p. 375; p. 69.

111 J. Leonen, Conc rring Opinion in EDS Ma fac i g, I c. . Hea hchec
I e a i a , I c., G.R. No. 162802, Oc ober 9, 2013, 707 SCRA 133 [Per J.
Peral a, Third Di i ion].
 112 Id. See al o U i e i f he Phi i i e . De L A ge e , 146 Phil. 108; 35
SCRA 102 (1970) [Per J. J.B.L. Re e , Second Di i ion].
113 Id.
114 Id.
115 Id.

126

126 C A A D
Lam . Kodak Phili ine , L d.

The i e of damage i a fac al one. A pe i ion fo e ie on

certiorari nde R le 45 hall onl pe ain o q e ion of la .116 I
i no he d of hi co o ee al a e he e idence add ced
11
befo e he lo e co . F he mo e, nle he pe i ion clea l
ho ha he e i g a e ab e of di c e ion, he nding of fac of
he ial co a af med b he Co of Appeal a e concl i e
pon hi co .11 In Lor ano v. Taba ag, Jr.:11

Fo a q e ion o be one of la , he ame m no in ol e

an e amina ion of he p oba i e al e of he e idence
p e en ed b he li igan o an of hem. The e ol ion of he
i em e olel on ha he la p o ide on he gi en
e of ci c m ance . Once it is clear that the issue invites a
review of the evidence presented, the question posed is one of
fact.
....
For the same reason, we would ordinaril disregard the
petitioner s allegation as to the propriet of the award of
moral damages and attorne s fees in favor of the respondent
as it is a question of fact. Thus, questions on whether or not
there was a preponderance of evidence to justif the award of
damages or whether or not there was a causal connection
between the given set of facts and the damage suffered b the
private complainant or whether or not the act from which civil
liabilit might arise e ists are questions of fact.

_______________

116 R le of Co r , R le 45, Sec. 1.

117 F da i a . Ma a a e, 539 Phil. 279; 510 SCRA 223 (2006) [Per J.
Vela co Jr., Third Di i ion].
118 M aje-T a . We hi C ai , 540 Phil. 503; 511 SCRA 521 (2006)
[Per J. Q i mbing, Third Di i ion].
119 L a . Taba ag, J ., 681 Phil. 39; 665 SCRA 38 (2012) [Per J. Re e ,
Second Di i ion].
 127

. 778, A A 11, 2016 127

Lam . Kodak Phili ine , L d.

Essentiall , the petitioner is questioning the award of

moral damages and attorne s fees in favor of the respondent
as the same is supposedl not full supported b evidence.
However, in the nal anal sis, the question of whether the said
award is full supported b evidence is a factual question as it
would necessitate whether the evidence adduced in support of
the same has an probative value. For a question to be one of
law, it must involve no e amination of the probative value of
the evidence presented b the litigants or an of them.120
(Empha i pplied, ci a ion omi ed)

The damage a a ded b he Co of Appeal e e ppo ed

b doc men a e idence.121 Pe i ione failed o ho an ea on
h he fac al de e mina ion of he Co of Appeal m be
e ie ed, e peciall in ligh of hei fail e o p od ce eceip o
check pa men o ppo hei o he claim fo ac al damage .122
F he mo e, he ac al damage amo n ing o P2,040,000.00
being o gh b pe i ione 123 m be empe ed on acco n of hei
o n fail e o pa he e of he in allmen fo he deli e ed ni .
Thi fail e on hei pa i a b each of hei obliga ion, fo hich he
liabili of e ponden , fo i fail e o deli e he emaining ni ,
hall be eq i abl empe ed on acco n of A icle 1192 of he Ne
Ci il Code.124 In Central Bank of the Philippines v. Court of
Appeals:125

_______________

120 Id., a pp. 48-50; pp. 46-48.

121 R , pp. 70-73.
122 Id., a p. 71.
123 Id., a p. 52.
124 Ar icle 1192. In ca e bo h par ie ha e commi ed a breach of he
obliga ion, he liabili of he r infrac or hall be eq i abl empered b he co r .
If i canno be de ermined hich of he par ie r iola ed he con rac , he ame
hall be deemed e ing i hed, and each hall bear hi on damage .
125 223 Phil. 266; 139 SCRA 46 (1985) [Per CJ. Maka iar, Second Di i ion].

12

128 C A A D
 Lam . Kodak Phili ine , L d.
Since both parties were in default in the performance of
their respective reciprocal obligations, ha i , I land Sa ing
Bank failed o compl i h i obliga ion o f ni h he en i e
loan and S lpicio M. Tolen ino failed o compl i h hi
obliga ion o pa hi P17,000.00 deb i hin 3 ea a
ip la ed, the are both liable for damages.
Article 1192 of the Civil Code provides that in case both
parties have committed a breach of their reciprocal
obligations, the liabilit of the rst infractor shall be equitabl
tempered b the courts. We le ha he liabili of I land
Sa ing Bank fo damage in no f ni hing he en i e loan i
off e b he liabili of S lpicio M. Tolen ino fo damage , in
he fo m of penal ie and cha ge , fo no pa ing hi
o e d e P17,000.00 deb . The liabili of S lpicio M.
Tolen ino fo in e e on hi P17,000.00 deb hall no be
incl ded in off e ing he liabili ie of bo h pa ie . Since
S lpicio M. Tolen ino de i ed ome bene fo hi e of he
P17,000.00, i i j ha he ho ld acco n fo he in e e
he eon.126 (Empha i pplied)

The a a d fo mo al and e empla damage al o appea o be

f cien . Mo al damage a e g an ed o alle ia e he mo al
ffe ing ffe ed b a pa d e o an ac of ano he , b i i no
in ended o en ich he ic im a he defendan e pen e.12 I i no
mean o p ni h he c lpable pa and, he efo e, m al a be
12
ea onable vis- -vis he inj ca ed. E empla damage , on
he o he hand, a e a a ded hen he inj io ac i a ended b
bad fai h.12 In hi ca e, e ponden a fo nd o ha e
mi ep e en ed i igh o e

_______________

126 Id., a pp. 276-277; pp. 55-56.

127 S a no e 119.
128 Id.
129 S ba . G , 625 Phil. 159; 611 SCRA 320 (2010) [Per J. Carpio, Second
Di i ion].

12

. 778, A A 11, 2016 129

Lam . Kodak Phili ine , L d.

he gene a o e ha a ei ed. A ch, i i p ope l liable fo

e empla damage a an e ample o he p blic.130
Ho e e , he di po i i e po ion of he Co of Appeal
Amended Deci ion da ed Sep embe 9, 2005 m be modi ed o
incl de he eco e of a o ne fee and co of i in fa o of
pe i ione . In Sunbanun v. Go:131

F he mo e, e af m he a a d of e empla damage
and a o ne fee . E empla damage ma be a a ded
hen a ongf l ac i accompanied b bad fai h o hen he
defendan ac ed in a an on, f a d len , eckle , opp e i e,
o male olen manne hich o ld j if an a a d of
e empla damage nde A icle 2232 of he Ci il Code.
Since the award of e emplar damages is proper in this case,
attorne s fees and cost of the suit ma also be recovered as
provided under Article 2208 of the Civil Code.132 (Empha i
pplied, ci a ion omi ed)

Ba ed on he amo n a a ded fo mo al and e empla damage ,

i i ea onable o a a d pe i ione P20,000.00 a a o ne fee .
HEREFORE, he Pe i ion i DENIED. The Amended
Deci ion da ed Sep embe 9, 2005 i AFFIRMED
MODIFICATION. Re ponden Kodak Philippine , L d. i o de ed
o pa pe i ione Ale ande and J lie Lam:
(a) P270,000.00, ep e en ing he pa ial pa men made on
he Minilab Eq ipmen ;
(b) P130,000.00, ep e en ing he amo n of he gene a o
e , pl legal in e e a 12% per annum f om Decembe 1992
n il f ll paid;
(c) P440,000.00 a ac al damage ;

_______________

130 R , p. 74.
131 S a no e 129.
132 Id., a pp. 166-167; pp. 327-328.

130

130 C A A D
Lam . Kodak Phili ine , L d.

(d) P25,000.00 a mo al damage ;

(e) P50,000.00 a e empla damage ; and
(f) P20,000.00 a a o ne fee .

Pe i ione a e o de ed o e n he Kodak Minilab S em 22XL

ni and i anda d acce o ie o e ponden .
SO ORDERED.

Carpio (Chairperson), Brion, Del Castillo and Mendo a, JJ.,

conc .
 Petition denied, amended decision af rmed with modi cation.

The la doe no p e c ibe a fo m o e cind a con ac o ell

immo able p ope ; The la doe no eq i e no a i a ion fo a
le e o e cind a con ac o ell immo able p ope . No a i a ion
i onl eq i ed if a con ac of ale i being e cinded. (Cabrera vs.
Ysaac, 740 SCRA 612 [2014])

o0o

C g 2023 Ce a B S , I c. A g e e ed.