MAKATI STOCK EXCHANGE V

lOMoAR cPSD| 10693234
1
MAKATI STOCK EXCHANGE v. CAMPOS
G.R. No. 138814, THIRD DIVISION, April 16, 2009, CHICO-NAZARIO, J.
CASE DIGEST
FACTS:
Miguel V. Campos instituted the SEC Case No. 02-94-4678 with the
Securities, Investigation and Clearing Department (SICD) of the Securities
Exchange Commission against Makati Stock Exchange, Inc. on February
10, 1994 which sought the nullification of the Resolution dated June 3,
1993 ofthe MKSE which allegedly denied Campos of possessing the right
to take part of allocation of Initial Public Offerings (IPO) equally, the
delivery of IPO shares that Campos allegedly deprived of, and the
payment of P2 million as moral damages, P1 million as exemplary
damages, and P500,000 as attorney’s fees and litigation expenses.
The SICD issued a Temporary Restraining Order on February 14,
1994 and a Writ of Preliminary Injunction on March 10, 1994 to prohibit
MKSE of implementing the Resolution.
MKSE filed a Motion to Dismiss Campos’s Petition in SEC Case
No. 02- 94-4678 on March 11, 1994. The SICD denied this Motion to
Dismiss in an Order on May 4, 1994.
MKSE responded by filing a petition with the SEC en banc dated
on May31, 1995 and August 14, 1995, that reversed SICD’s Orders
on March 10,
1994 and May 4, 1994.
Campos filed a Petition for Certiorari with the Court of Appeals to
annulSEC en banc’s Orders on May 31, 1995 and August 14, 1995 that
reversed SICD’s Orders.
The petition that Campos filed for Certiorari with the Court of
Appeals was granted on February 11, 1997. Which then annulled SEC en
banc’s decisions.
MKSE filed a Motion for Reconsideration of the Decision. The Motion
for Reconsideration was denied by the Court of Appeals in a Resolution
dated 18 May 1999.
Issues:
Whether SEC Case No. 02-94-4678 can state the source of
respondent’s right and/or petitioners’ obligation. (No)
Whether or not SEC Case No. 02-94-4678 sufficiently states a
cause ofaction. (No)
Ruling:
Even the Petition in SEC Case No. 02-94-4678 does allege a right and
an obligation, it failed to state the basis of his alleged right to
participate equally in the Initial Public Offerings (IPO) allocations of
Exchange, and his alleged obligation of MKSE to respect the alleged
right. The respondent’s petition merely created the position of
chairman emeritus of the Exchangebut it did not mention anything that
the court could deduce that Campos was granted by law, contract, or
any other legal source, the right.
The Petition in SEC Case No. 02-94-4678 is dismissed for failing to
statethe cause of action regardless of SEC en banc Order on August
14, 1995 overstepping its bounds by not limiting itself to the matter of
whether Campos’ Petition before the SICD sufficiently stated a cause
of action.
With the dismissal of respondent’s Petition in SEC Case No. 02-
94- 4678, the Petition is granted. The decision of Court of Appeals on
February11, 1997 and its Resolution on May 18, 1999 was reversed and
set aside. TheOrders of SEC en banc on May 31, 1995 and August 14,
1995 are reinstated.
2
ANG YU ASUNCION VS. CA
G.R. No. 109125 December 2, 1994
Facts:
A complaint for Specific Performance was filed by Ang Yu Asuncion et al.,
against Bobby Cu Unjieng and Jose Tan. The plaintiffs were tenants or lessees of
residential and commercial spaces owned by defendants in Binondo. On several
conditions defendants informed the plaintiffs that they are offering to sell the
premises and are giving them priority to acquire the same.
During negotiations, Cu Unjieng offered a price of P6- million while plaintiffs made
a counter of offer of P5-million. Plaintiff thereafter asked the defendants to put
their offer in writing to which the defendants acceded. In reply to defendants’
letter, plaintiffs wrote, asking thatthey specify the terms and conditions of the
offer to sell. When the plaintiffs did not receive any reply, they sent another letter
with the same request. Since defendants failed to specify the terms and
conditions of the offer to sell and because of information received that the
defendants were about to sell the property, plaintiffs were compelled to file the
complaint to compel defendants to sell the property to them.
The court dismissed the complaint on the ground that the parties did not agree
upon the terms and conditions of the proposed sale, hence, there was no
contact of sale atall. The Cu Unjieng spouses executed a Deed of Sale
transferring the property inquestion to Buen Realty and Development
Corporation. Buen Realty, as the new owner of the subject property, wrote to the
lessees demanding the latter to vacate the premises. In its reply, it stated that
Buen Realty and Development Corporation brought the property subject to the
notice of lis pendens.
Issue:
Can Buen Realty be bound by the writ of execution by virtue of the notice of lis
pendens?
Ruling:
No. An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil
Code).
The obligation is upon the concurrence of the essential elements thereof, viz:
(a) the vinculum juris or juridical tie which is the efficient cause established by the
various sources of obligations; (b) the object which is the prestation or conduct,
required to be observed; and (c) the subject-persons who, viewed
demandability of the obligation are the active (oblige) andthe passive (obligor)
subjects.
Among the sources of an obligation is a contract (Art. 1157), which is a meeting
of minds between two persons whereby one binds himself, with respect to the
other, to give something or to render some service.
A contract undergoes various stages that include its negotiation or preparation,
its perfection and, finally, its consummation. Until the contract is perfected, it
cannot, as an independent source of obligation, serve as a binding juridical
relation. In sales, particularly, to which the case at bench belongs, the contract
is perfected when a person, called the seller, obligates himself, for a price
certain, to deliver and to transfer ownership of a thing or right to another, called
the buyer, over which the latter agrees.
The registration of lis pendens must be independently addressed in appropriate
proceedings. Therefore, Buen Realty cannot be held subject to the writ of
execution issued by the respondent Judge, let alone ousted from the ownership
and possession of the property, without first being duly afforded its day in court.
3
Social Security System v. Moonwalk Development & Housing Corporation
G.R. No. 73345 (April 7, 1993)
Facts:
Plaintiff (SSS) approved the application of the defendant (Moonwalk) for an

interim loan. The loan was released to the Moonwalk.
Moonwalk made a payment to SSS for the loan principal released to it
The last payment made by Moonwalk was based on the Statement of
Account prepared by the SSS. After the settlement of the account, SSS issued to
Moonwalk the Release of Mortgage of Moonwalk’s mortgaged properties
In the letters to Moonwalk, SSS alleged that it committed an honest mistake in
releasing Moonwalk (in the mortgage). Moonwalk replied in a letter that it had
completely paid its obligations to SSS
Issues:
Whether or not the 12% penalty demandable even after the extinguishment of
the principal obligation
Whether or not Moonwalk was in default (mora)
Ruling:
No. Obligation was already extinguished by the payment by Moonwalk of its
indebtedness to SSS and by the latter’s act of cancelling the real estate
mortgages executed in its favor by defendant moonwalk.
What is sought to be recovered in this case is not the 12% interest on the loan but
the 12% penalty for failure to pay on time the amortization. What is sought to be
enforced therefore is a penal clause of the contract entered into between the
parties.
Penal clause is an accessory obligation which the parties attach to a principal
obligation for the purpose of insuring the performance thereof by imposing on
the debtor a special presentation in case the obligation is not fulfilled or is
irregularly or inadequately fulfilled. Accessory obligation is dependent for its
existence on the existence of a principal obligation. In the present case, the
principal obligation is the loan between the parties. The accessory obligation of
a penal clause is to enforce the main obligation of payment of the loan. If
therefore the principal obligation does not exist the penalty being accessory
cannot exist.
No. A penalty is demandable in case of non performance or late performance
of the main obligation. There must be a breach of the obligation either by total
or partial non fulfillment or there is non-fulfillment in the point of time which is
called mora or delay. There is no mora or delay unless there is a demand.
In the present case, during all the period when the principal obligation was still
subsisting, although there was late amortizations there was no demand made by
the creditor, for the payment of the penalty. Therefore up to the time of the letter
of SSS there was no demand for the payment of the penalty, hence the debtor
was no in mora in the payment of the penalty.
4
DBP VS CONFESOR
G.R. No. 48889 May 11, 1988
Facts:
On February 10, 1940, spouses Patricio Confesor and Jovita Villafuerte obtained
an agricultural loan from Agricultural and Industrial Bank, now Development
Bank of the Philippines, in the sum of P2,000, as evidenced by a promissory note
of said date whereby they bound themselves jointly and severally to pay the
amount in ten equal yearly amortizations.
As the obligation remained unpaid even after the lapse if the ten-year period,
Confesor, who was then a member of the Congress of the Philippines, executed
a second promissory note on April 11, 1961, expressly acknowledging the said
loan and promising to pay the same on or before June 15, 1961.
The spouses still failed to pay the obligation on the specified date. As a result, the
DBP filed a complaint on September 11, 1970 in the City Court of Iloilo City. The
city court ordered payment from spouses. The CFI of Iloilo reversed the decision.
Hence, this petition.
Issue:
Whether or not a promissory which was executed in consideration of a previous
promissory note which has already been barred by prescription is valid?
Ruling:
Yes, the second promissory note is valid because the said promissory note is not
a mere acknowledgement of the debt that has prescribed already. Rather, it is
a new promise to pay the debt. A new promise is a new cause of action.
Although a debt barred by prescription is enforceable, a new contract
recognizing and assuming the prescribed debt would be valid and enforceable.
Under Article 165 of the Civil Code, the husband is the administrator of the
conjugal partnership. As such administrator, all debts and obligations contracted
by the husband for the benefit of the conjugal partnership, are chargeable to
the conjugal partnership. 5 No doubt, in this case, respondent Confesor signed

the second promissory note for the benefit of the conjugal partnership. Hence
the conjugal partnership is liable for this obli gation.
WHEREFORE, the decision subject of the petition is reversed and set aside and
another decision is hereby rendered reinstating the decision of the City Court of
Iloilo City of December 27, 1976, without pronouncement as to costs in this
instance. This decision is immediately executory and no motion for extension of
time to file motion for reconsideration shall be granted.
5
ABS-CBN v. Ombudsman
(G.R. No. 133347 - April 23, 2010)
Facts:
On April 18 and 26, 1994, petitioners Eugenio Jr., Oscar and Augusto Lopez, on
behalf of ABS-CBN, executed separate affidavits charging private respondents
of Execution of Deeds by Means of Violation or Intidmidation, Estafa, Theft,
Robbery, Occupation of Real Property or Usurpation of Real Rights in Property,
and Other Deceits.
On April 5, 1999 and June 13, 2000, the respective counsel for respondents Tan
and Benedicto informed the Court of their clients’ demise. Benedicto’s counsel
filed a Notice of Death with Prayer for Dismissal moving that Benedicto be
dropped as respondent in the case for the reason that the pending criminal
cases are actions which do not survive the death of the party accused.
Petitioners opposed the move to drop Benedicto as respondent citing Torrijos v.
CA which held that “civil liability of the accused survives his death: because
death is not a valid cause for the extinguishment of civil obligations.”
Issue:
Whether or not the death of an accused extinguishes civil liabilities
Ruling:
Death of an accused pending appeal of his conviction extinguishes his criminal
liability as well as the civil liability based solely thereon. As opined by Justice
Regalado, in this regard, “the death of the accused prior to final judgment
terminates his criminal liability and only the civil liability directly arising from and
based solely on the offense committed, i.e., civil liability ex delicto in senso
strictiore.”
Corollarily, the claim for civil liability survives notwithstanding the death of
accused, if the same may also be predicated on a source of obligation other
than delict. Article 1157 of the Civil Code enumerates these other sources of
obligation from which the civil liability may arise as a result of the same act or
omission:
a) Law
b) Contracts
c) Quasi-contracts
d) x x x
e) Quasi-delicts
Where the civil liability survives, an action for recovery therefor may be pursued
but only by way of filing a separate civil action and subject to Sec. 1, Rule 11 of
the 1985 ROC. The separate civil action may be enforced either against the
executor/administrator or the estate of the accused, depending on the source
of obligation upon which the same is based.
Finally, the private offended party need not fear a forfeiture of his right to file this
separate civil action by prescription, in cases where during the prosecution of
the criminal action and prior to its extinction, the private-offended party
instituted together therewith the civil action. In such case, the statute of
limitations on the civil liability is deemed interrupted during the pendency of the
criminal case, conformably with provisions of Article 1155 of the Civil Code, that
should thereby avoid any apprehension on a possible deprivation of right by
prescription.”
Applying the foregoing rules, ABS-CBN’s insistence that the case at bench
survives because the civil liability of the respondents subsists is stripped of merit.
To begin with, there is no criminal case as yet against the respondents. The
Ombudsman did not find probable cause to prosecute respondents for various
felonies in the RPC. As such, the rule that a civil action is deemed instituted along
with the criminal action unless the offended party: (a) waives the civil action, (b)
reserves the right to institute it separately, or (c) institutes the civil action prior to
the criminal action, is not applicable.
In any event, the death of the accused necessarily calls for the dismissal of the
criminal case against him, regardless of the institution of the civil case with it. The
civil action which survives the death of the accused must hinge on other sources
of obligation provided in Article 1157 of the Civil Code. In such a case, a surviving
civil action against the accused founded on other sources of obligation must be
prosecuted in a separate civil action. In other words, civil liability based solely on
the criminal action is extinguished, and a different civil action cannot be
continued and prosecuted in the same criminal action.
6
Pelayo v. Lauron
(G.R. No. L-4089 - January 12, 1909)
Facts:
Arturo Pelayo, a physician, plaintiff was called to render medical assistance to
the defendant’s daughter-in-law, who was about to give birth. After the
consultation of Dr. Escaño, it was deemed that the operation was going to be
difficult for child birth, but regardless, Dr. Pelayo proceeded with the job of
operating on the subject and also removed the after birth. The operation went
on until morning, and on the same day, visited several times and billed the
defendants the just amoun tof P500 for the services rendered to which
defendants refused to pay. Counsel for the defendants denied all of the
allegation and alleged as a special defense, that their daughter-in-law had died
in consequence of the said childbirth, that when she was alive she lived with her
husband independently and in a separate house without any relation whatever
with them, and that, if on the day when she gave birth she was in the house of
the defendants, her stay there was accidental and due to fortuitous
circumstances. Therefore, he prayed that the defendants be absolved of the
complaint with costs against the plaintiff.
Issue:
Can the defendants be held liable to pay for the obligation?
Ruling:
No. According to article 1089 of the Civil Code, obligations are created by law,
by contracts, by quasi-contracts, and by illicitacts and omissions or by those in
which any kind of fault or negligence occurs.Obligations arising from law are not
presumed. Those expressly determined in the code or in special laws, etc.,are
the only demandable ones. Obligations arising from contracts have legal force
between the contracting parties and must be fulfilled in accordance with their
stipulations. (Arts.1090 and 1091.) The rendering of medical assistance in case of
illness was comprised among the mutual obligations to which the spouses were
bound by way of mutual support. (Arts. 142 and 143.)
If every obligation consists in giving, doing or not doing something (art. 1088),
and spouses were mutually bound to support each other, there can be no
question but that, when either of them by reason of illness should be in need of
medical assistance, the other was under the unavoidable obligation to furnish
the necessary services of a physician inorder that health may be restored, and
he or she may be freed from the sickness by which life is jeopardized.

The party bound to furnish such support was therefore liable for all expenses,
including the fees of the medical expert for his professional services.
In the face of the above legal precepts, it was unquestionable that the person
bound to pay the fees due to the plaintiff for the professional services that he
rendered to the daughter-in-law of the defendants during her childbirth, was the
husband of the patient and not her father and mother- in-law of the defendants
herein.
7
Dela Cruz v. Northern Theatrical Entertainment
95 Phil. 739
Facts:
The plaintiff, Domingo Delacruz, was working as a security guard for the
defendant, Northern Theatrical Enterprises Inc. Benjamin Martin wanted the gate
or entrance to the movie house to crash without a ticket. Martin attacked him
with a bolo, outraged by the refusal of plaintiff De la Cruz to let him in without first
supplying himself with a ticket. De la Cruz defended himself as best he could until
he was cornered, and he fired the gate crasher at that moment to save himself,
resulting in the death of the latter. On January 31, 1948, after trial, he was
ultimately acquitted of the charge. De la Cruz hired a prosecutor in both court
cases to represent him. He sought reimbursement of his expenses from his former
employer but was denied, following which he brought the present action against
the film company and the three members of its board of directors, in order to
recover not only the sums he had paid his lawyers, but also the moral damages
claimed to have been sustained, due to his concern, his neglect of his interests
and his family, as well as the supervision of the cultivation of his property, a total
of P15,000
Issue:
If the employer and the movie producer are responsible for the duty to provide
legal aid and the cost of Delacruz's expenses
Ruling:
It can be said from another viewpoint that the harm sustained by the plaintiff
due to the costs incurred by him in remunerating his lawyer is not caused by his
act of shooting the gate crasher to death, but rather by the filing of the murder
complaint that made it possible for him to defend himself with the assistance of
counsel. The shooting to death of the deceased by the plaintiff was not the
immediate cause of the damages suffered, but can only be regarded as a
remote cause, since there was not the natural and continuous sequence
needed to correct civil liability from the shooting to the damages suffered. The
employer was found to have no duty to offer free legal aid to an employee who
was forced to hire a lawyer to defend him in court for shooting and killing a gate
crasher because it was not needed by law
8
Metrobank v. Rosales
G.R. No. 183204 - January 13, 2014
Facts:
In 2000, si Ana Grace Rosales (respondent) gumawa ng joint peso-account with

her mother Yo Yuk to sa metropolitan bank (petitioner) pritil tondo branch. Then
after 2 years, in may 2002 nagsilbi syang interpreter ng kanyang client na si Liu
Chiu Fang, isang Taiwanese, para mag apply for retiree’s visa from the Philippine
Leisure and Retirement Authority (PLRA) para mag open ng savings account sa
metropolitan bank escolta branch. Then nung march 2003, gumawa ulit ng joint
dollar account si respondent with an initial deposit of 14,000$ pero after 4 months
lang ay nag issue ng “hold out order” si petitioner sa account ni respondent.
Then after 2 months, after auditing ni petitioner, nag file na sya ng kaso kay
respondent for Estafa through False Pretences, Misrepresentation, Deceit, and
Use of Falsified Documents at inakusahan na si Rosales ang responsible sa
unauthorized withdrawal of 75,000$ sa account ng client ni Rosales na si Chiu
Fang. So saan nga ba nanggaling yung accusation na ito, so ayon sa petitioner
noong feb 5 2003, si Rosales daw ay winiwithdraw yung pera ni Chiu Fang pero
di nakapag withdraw kasi walang dollar yung bank nung araw na yon so
bumalik sila kinabukasan tas don na nila na withdraw yung 75,000$. Then yung
sinasabi ko kaninang nag open ng joint dollar account si Rosales nung march
2003, sinasabi ng petitioner na yung perang dineposit noon eh yung perang na
winithdraw sa account ng client nya na si Chiu Fang kasi same yung serial
number ng pera. Dinismiss ng Office of the City Prosecutor of Manila yung
sinampang kaso ni Metropolitan bank kay Rosales due to lack of probable
cause. Then nung September 2004 si Rosales naman nagsampa ng kaso against
metropolitan bank for breach of contract, and the RTC ruled in favor of Rosales.
And CA affirmed to the ruling of RTC.
Issue:
Whether or not Metrobank breached the contract?
Ruling:
Yes, they breached the contract kasi po there is no source of obligation sa pag
issue ng metropolitan bank ng “hold out” order sa bank account ni Rosales and
it is considered as an act of bad faith since there’s no legal reason for such
order. 2nd, petitioner did not inform respondents of the reason for the "Hold Out."
Lastly, the order was issued prior to the filing of the criminal complaint. so they
are liable for moral and exemplary damages and attorney’s fees.
9. MALALIS
BILATERAL OBLIGATIONS MUST BE COMPLIED BY BOTH PARTIES
Joseph Saludaga vs. Far Eastern University

GR No. 179337; April 30, 2008
Third Division, Ynares-Santiago, J.
FACTS:
This is a petition for review under Rule 45 of the Rules of Court seeking the
indemnification of damages for failure to comply with the contract.
A sophomore law student from Far Eastern University, Petitioner Joseph Saludaga,
was shot by an on-duty security guard, Alejandro Rosete, inside the campus while
walking into the law library on August 18, 1996. Subsequently, Saludaga filed a
complaint against respondents FEU and Edilberto C. de Jesus for not complying
with their obligation to establish a safe and secure environment, as well as a
positive learning atmosphere for the students. The respondents successively filed
a Third-Party Complaint against the security agency contracted by FEU, Galaxy
Development and Management Corporation, and its president, Mariano D.
Imperial to reimburse the pronouncement that will favor the petitioner and to pay
the costs of filing the lawsuit.
The Court decided to be in favor of the petitioner; thus, FEU and Edilberto de Jesus
will need to pay jointly and severally liable to pay Joseph Saludaga for the actual
damages of P35,298.25 with an interest of 12% annually from the filing of the
complaint until it is fully paid. In addition, they will also need to pay for moral
damages of P300,000.00, exemplary damages of P500,000.00, attorney’s fees of
P100,000.00, and the cost of the suit. Furthermore, the Court also mandated
Galaxy Management and Development Corp, and Mariano Imperial to
compensate the petitioner jointly and severally with FEU and de Jesus for the
amounts mentioned above. The respondents appealed to the Court of Appeals
and were later granted, which resulted in the complaint filed by the petitioner
being dismissed. Thereafter, Saludaga filed a Motion for Reconsideration, but it
was denied, which led him to file a petition immediately.
ISSUE:
Whether or not the FEU has a contractual obligation to Joseph Saludaga?
If there is a contractual obligation, whether or not FEU is negligent in carrying out
its duties under the terms of the contract with Joseph Saludaga?
RULING:
Yes. After accepting Joseph Saludaga as a student at FEU, both parties entered
a contract, which resulted in bilateral obligations that they must abide by. The
school agrees to give the student an education that is enough to provide him
with the knowledge and skills that he needs to pursue higher education or a
career. Meanwhile, a student must comply with the requirements and rules of the
institution. It is settled that in culpa contractual, the mere proof of the existence
of the contract and the failure of its compliance justifies, prima facie, a
corresponding right of relief. In the instant case, the Court finds that, when the
petitioner was shot inside the campus by no less the security guard who was hired
to maintain peace and secure the premises, there is prima facie showing that
respondents failed to comply with their obligation to provide a safe and secure
environment to its students.
After a thorough review of the records, the honorable Court finds that
respondents failed to discharge the burden of proving that they exercised due
diligence in providing a safe learning environment for their students. They failed
to prove that they ensured that the guards assigned to the campus met the
requirements stipulated in the Security Service Agreement. Respondents also
failed to show that they undertook steps to ascertain and confirm that the security
guards assigned to them actually possess the qualifications required in the
Security Service Agreement. It was not proven that they examined the
clearances, psychiatric test results, 201 files, and other vital documents
enumerated in its contract with Galaxy. Total reliance on the security agency
about these matters or failure to check the papers stating the qualifications of the
guards is negligence on the part of respondents. A learning institution should not
be allowed to completely relinquish or abdicate security matters on its premises
to the security agency it hired. To do so would result in contracting away its
inherent obligation to ensure a safe learning environment for its students.
Article 1170 of the Civil Code provides that those who are negligent in the
performance of their obligations are liable for damages. Accordingly, for breach
of contract due to negligence in providing a safe learning environment,
respondent FEU is liable to the petitioner for damages.
Wherefore, the petition is granted. the June 29, 2007 decision of The Court of
Appeals in CA-G.R. CV No. 87050 nullifying the decision of the trial court and
dismissing the complaint as well as the August 23, 2007 resolution denying the
motion for reconsideration are reversed and set aside.
13. DOMALAON
Adille v. Court of Appeals
(G.R. No. L-44546; January 29, 1988)
Sarmiento, J.
FACTS:
The original owner of the contested land was Felisa Alzul, who had two
marriages. Petitioner Rustico Adile is her child from her first marriage, and
respondents Emetria Asejo et al. are her children from her second marriage.
Throughout her lifetime, Felisa Alzul sold the property in pacto de retro with a
three-year buyback term. Unfortunately, Felisa passed away before reacquiring
the property. During the redemption time, Rustico Adille redeemed the land at his
own cost. Afterward, under the guise of being his mother's only heir and child, he
issued a deed of extra-judicial partition. Therefore, he was able to acquire the title
in his name alone.
His half-siblings, the respondents herein, filed a lawsuit for partition and
accounting, alleging that Rustico redeemed the property in his capacity as just a
trustee of an implied trust. Therefore, he can't lay claim to the entire property as
his sole ownership. It was also revealed that one of the plaintiffs, Emeteria Asejo,
was already residing in a portion of the area; hence the defendant filed a
counterclaim demanding that she vacate the premises.
After hearing both sides' evidence, the trial judge sided with the defendant that
he had become the absolute owner and was not a trustee, thus dismissing the
case and ordering the plaintiff (the resident, Emeteria) to depart the property.
For these reasons, the plaintiffs have come to the Court of Appeals to claim that
the trial court erred in (I) declaring the defendant absolute owner of the property;
(II) not ordering the partition of the property; and (III) ordering one of the plaintiffs
who owns the portion of the property to vacate the land.
The private respondents in this case successfully petitioned the Court of Appeals
for review, and that Court found it in their favor, reversing the lower Court's
decision. The petitioner is now appealing the Court's ruling through certiorari.
ISSUE:
Whether or not may a co-owner acquire exclusive ownership over the property
held in common?
RULING:
No. The right of repurchase may be exercised by a co-owner with aspect to his
share alone. While the records show that the petitioner redeemed the property in
its entirety, shouldering the expenses therefor, that did not make him the owner
of all of it. In other words, it did not put to end the existing state of co-ownership.
While his half-brothers and sisters are, are just liable to him for reimbursement as
and for their shares in redemption expenses, he cannot claim exclusive right to
the property owned in common.
It is the view of the respondent Court that the petitioner, in taking over the
property, did so either on behalf of his co-heirs, in which event, he had constituted
himself a negotiorum gestor under Article 2144 of the Civil Code, or for his
exclusive benefit, in which case, he is guilty of fraud, and must act as trustee, the
private respondents being the beneficiaries, under the Article 1456.
15
NAPOCOR v. CA
(G.R. No. 124378 - March 8, 2005)
Facts:
Si hadi abdul carim Abdullah at carris Abdullah po ay may ari ng isang fishponds sa
Lanao del sur, then nasira po yung fishpond nila dahil po tumaas yung tubig at yung
sinasabi po nilang may dahilan non eh yung Agus regulation dam na nireregulate
ng NPC, hindi raw naregulate ng maayos ng npc yung paglabas ng tubig sa dam kaya
tumaas yung tubig na naging cause para masira yung fishpond nila Abdul and Caris.
Dahil sa nangyari nanghingi ng compensation for damages si Hadji sa NPC, pero
hindi sila dininig ng NPC kasi kailangan daw talaga nilang I-maintain yung normal
maximum lake level of 702 meter under memorandum order no. 398, so dapat daw
alam nila na pwede talagang mangyari yon sa ginawang nilang fish pond. Dahil ayaw
sila bayaran ng NPC nag file na sila Hadji at carris, sa RTC, They alleged that the
negligence and inexperience of NPC’s employees assigned to operate the Agus
Regulation Dam were the proximate causes of the damage caused to their
properties and livelihood. And ofc npc denied the allegation and pinagdiinan nila
na; hindi raw lumagpas sa 702m yung water level ng lake, hindi naging pabaya yung
kanilang mga employee, and yung fish ponds daw ng petitioner eh below the 702
water level kaya nasira yon nung tumaas ang tubig. As for the decision of lower
court, they ruled in favor of plaintiff at pinagbabayad yung NPC for damages sa
plaintiff. Dahil dito nag file petition ang NPC sa CA but CA affirmed in decision of
lower court. Kaya umabot ang kaso sa supreme court
Issue:
Whether or not the NPC is guilty of negligence in regulating the dam that cause
damages in property of private respondents?
Ruling:
Yes, The negligence of NPC as a result of its inability to maintain the level of water
in its dams which directly caused the damage to the fishponds of private
respondents. The degree of damages suffered by the latter remains unrebutted
and there exists adequate documentary evidence that the private respondents
did have fishponds in their respective locations and that these were inundated
and damaged when the water level escalated in October 1986.
In keeping the normal maximum level of the lake at 702 meters, the Court of
Appeals agreed with the trial court that when the water level rises during the rainy
season, the NPC should let more water into the Agus River to prevent flooding
and keep the water from going over the maximum level. But the petitioner didn't
do that, so the nearby estates were flooded. So, even if the fishponds were built
below the 702-meter level, NPC must still pay for the damage because it was its
job to put up and keep up the benchmarks to warn the owners of the neighboring
properties not to build fishponds below these marks. Without these points of
reference, the people who live in those areas don't know if their
improvements are in the forbidden area or not. On the other hand, without
these benchmarks, NPC has no way of knowing if the fishponds, which are at the
center of the current controversy, are really below the maximum height limit. Due
to NPC's carelessness in doing its job, private respondents will have to pay for the
damage that happened as a result.
16 Inesa
Jimenez v. City of Manila

(G.R. No. 71049 - May 29, 1987)
PARAS, J.
Facts:
In the morning of August 1974, Bernardino Jimenez, petitioner, got into an

accident after he went to Sta. Ana public market to buy bagoong, he did not
notice the uncovered opening due to flood caused by rainfall at that time that
made him fall onto that uncovered opening that resulted to pierce the left leg of
petitioner penetrating to a depth of about one and a half inches. Due to the
accident he had to be confined for 20 days at Veteran Memorial Hospital. After
his discharge, he immediately sued City of Manila and the Asiatic Integrated
Corporation, respondent, but the lower court ruled in favor of respondents due
to lack of sufficient evidence. The Intermediate Appellate Court reversed the
decision of lower court and held the Asiatic Integrated Corporation liable for
damages but absolved respondent City of Manila.
Issue:
Whether or not City of Manila should be jointly and severally liable with Asiatic
Integrated Corporation for the injuries petitioner suffered?
Ruling:
Yes, Respondent City of Manila and Asiatic Integrated Corporation being joint
tort-feasors are solidarily liable under Article 2194 of the Civil Code
As a defense against liability on the basis of a quasi-delict, one must have

exercised the diligence of a good father of a family. (Art. 1173 of the Civil
Code).There is no argument that it is the duty of the City of Manila to exercise
reasonable care to keep the public market reasonably safe for people
frequenting the place for their marketing needs. Petitioner had the right to assume
that there were no openings in the middle of the passageways and if any, that
they were adequately covered. Had the opening been covered, petitioner could
not have fallen into it. Thus the negligence of the City of Manila is the proximate
cause of the injury suffered, the City is therefore liable for the injury suffered by the
petitioner
Respondent City of Manila and Asiatic Integrated Corporation being joint tort-
feasors are solidarily liable under Article 2194 of the Civil Code. the decision of the
Court of Appeals is hereby MODIFIED, making the City of Manila and the Asiatic
Integrated Corporation solidarily liable to pay the plaintiff P221.90 actual medical
expenses, P900.00 for the amount paid for the operation and management of the
school bus, P20,000.00 as moral damages due to pain, sufferings and sleepless
nights and P10,000.00 as attorney's fees.
17
Sanchez v. Rigos
(G.R. No. L-25494 - June 14, 1972)
Facts:
1. Severina Rigos owned a parcel of land situated in the barrios of Abar and
Sibot, municipality of San Jose, province of Nueva Ecija, covered Transfer
Certificate of Title No. NT-12528.
2. Rigos and Nicolas Sanchez executed an instrument, entitled "Option to
Purchase," whereby Mrs. Rigos "agreed, promised and committed to sell"
to Sanchez, for the sum of P1,510.00, said parcel of land, within 2 years
from April 3, 1961.
3. The instrument was executed with the understanding that said option shall
be deemed "terminated and elapsed," if "Sanchez shall fail to exercise his
right to buy the property" within the stipulated period.
4. Sanchez made several tenders of full payment within the two year period,
but they were all rejected by Mrs. Rigos.
5. March 12, 1963 – Sanchez deposited the said amount with the CFI of Nueva
Ecija and commence against Mrs. Rigos an action for specific performance
and damages.
6. Mrs. Rigos, in her answer, alleged a special defense – that the contract
between the parties "is a unilateral promise to sell, and the same being
unsupported by any valuable consideration, by force of the New Civil Code,
is null and void".
7. Both parties then moved for a judgment on the pleadings.
8. TC: rendered judgment for Sanchez, ordering Mrs. Rigos to accept the sum
judicially consigned by him and to execute, in his favor, the requisite, deed
of conveyance.
Issue:
Whether or not Mrs. Rigos have an obligation to sell her property to Sanchez?
WON there is a contract to buy and sell between the parties?

Ruling:
Yes, under article 1479 of the new Civil Code ‘an option to sell,’ or ‘a promise to
buy or to sell,’ as used in said article, to be valid must be ‘supported by a
consideration distinct from the price.’ ‘an accepted unilateral promise’ can only
have a binding effect if supported by a consideration, which means that the option
can still be withdrawn, even if accepted, if the same is not supported by any
consideration. Here it is not disputed that the option is without consideration. It
can therefore be withdrawn notwithstanding the acceptance made of it by
appellee. under the ‘offer of option’ in question appellant has assumed a clear
obligation to sell its barge to appellee and the option has been exercised in
accordance with its terms, and there appears to be no valid or justifiable reason
for appellant to withdraw its offer, this Court cannot adopt a different attitude
because the law on the matter is clear.
Yes, In this case upon accepting herein petitioner’s offer a bilateral promise to sell
and to buy ensued, and the respondent ipso facto assumed the obligation of a
purchaser. He did not just get the right subsequently to buy or not to buy. It was
not a mere option then; it was bilateral contract of sale.
18
Gaisano Cagayan v. Insurance Company of North America
(G.R. NO. 147839 - June 8, 2006)
Facts:
Si Gaisano (yung petitioner) ay customer and dealer ni Intercapitol marketing

corporation (imc) yung gumagawa ng mga blue jeans and yung distributor nila dito
sa pilipinas which is yung Levi strauss phil inc (LSPI). Noong 1995, nasunog yung
store ni Gaisano, kasama yung mga ready made clothing materials na hindi nya pa
bayad na galing sa IMC and LSPI. Dahil hindi inaasahan yung nangyari and
considered as forfuitious event, ayaw nyang bayaran yung di nya pa nababayaran
sa IMC (2.1m) and LSPI(500k) because according to him he could not be held liable
because the property covered by the insurance policies were destroyed due to
fortuities event or force majeure; that respondent’s right of subrogation has no
basis inasmuch as there was no breach of contract committed by it since the loss
was due to fire which it could not prevent or foresee; that IMC and LSPI never
communicated to it that they insured their properties; that it never consented to
paying the claim of the insured. Ang naging desisyon ng trial court ay against sa IMC
and LSPI, according to RTC the fire was purely accidental; that the cause of the fire
was not attributable to the negligence of the petitioner; that it has not been
established that petitioner is the debtor of IMC and LSPI; that since the sales
invoices state that "it is further agreed that merely for purpose of securing the
payment of purchase price, the above-described merchandise remains the
property of the vendor until the purchase price is fully paid", IMC and LSPI retained
ownership of the delivered goods and must bear the loss. Then umapela yung IMC
and LSPI sa CA, this time CA ruled in favor of them, and nireverse yung decision ng
RTC at pinagbabayad si Gaisano ng 2.1m sa IMC and 500k sa LSPI. According to CA
under Article 1504 (1) of the Civil Code, to the general rule that if the thing is lost
by a fortuitous event, the risk is borne by the owner of the thing at the time the
loss under the principle of res perit domino; that petitioner's obligation to IMC and
LSPI is not the delivery of the lost goods but the payment of its unpaid account and
as such the obligation to pay is not extinguished, even if the fire is considered a
fortuitous event; that by subrogation, the insurer has the right to go against
petitioner; that, being a fire insurance with book debt endorsements, what was
insured was the vendor's interest as a creditor.
Issue:
WON the petitioner is liable for the unpaid accounts?
Ruling:
Yes, the insurance in this case is not for loss of goods by fire but for petitioner's
accounts with IMC and LSPI that remained unpaid 45 days after the fire.
Accordingly, petitioner's obligation is for the payment of money. As correctly stated
by the CA, where the obligation consists in the payment of money, the failure of
the debtor to make the payment even by reason of a fortuitous event shall not
relieve him of his liability. The rationale for this is that the rule that an obligor
should be held exempt from liability when the loss occurs thru a fortuitous event
only holds true when the obligation consists in the delivery of a determinate thing
and there is no stipulation holding him liable even in case of fortuitous event. It
does not apply when the obligation is pecuniary in nature.
Under Article 1263 of the Civil Code, "[i]n an obligation to deliver a generic thing,
the loss or destruction of anything of the same kind does not extinguish the
obligation." If the obligation is generic in the sense that the object thereof is
designated merely by its class or genus without any particular designation or
physical segregation from all others of the same class, the loss or destruction of
anything of the same kind even without the debtor's fault and before he has
incurred in delay will not have the effect of extinguishing the obligation.35 This rule
is based on the principle that the genus of a thing can never perish. Genus nunquan
perit.36 An obligation to pay money is generic; therefore, it is not excused by
fortuitous loss of any specific property of the debtor.
WHEREFORE, the petition is partly GRANTED. The assailed Decision dated October
11, 2000 and Resolution dated April 11, 2001 of the Court of Appeals in CA-G.R. CV
No. 61848 are AFFIRMED with the MODIFICATION that the order to pay the amount
of P535,613.00 to respondent is DELETED for lack of factual basis.
19
Telefast v. Castro, Sr.
(G.R. NO. 147839 - June 8, 2006)
Facts:
Yung asawa at mga anak ng respondent na si Consolacion bravo-castro ay namatay
noong Nov. 1956 sa pangasinan, kaya nagpadala si Sofia Crouch ng sulat sa pamilya
nito sa Scottburg para ipaalam na namatay na nga yung asawa at nanay nila. Yung
sulat ay natanggap ng petitioner o ng TELEFAST COMMUNICATIONS/PHILIPPINE
WIRELESS, INC pero hindi nito pinadala yung sulat sa scottburg sa pamilya ng
namatay, kaya walang kalam alam yung pamilya nung namatay kaya at hindi
nakabalik ng pilipinas para sa burol nito. Tas nung pagbalik ni Sofia sa US tsaka nya
lang nalaman na hindi natanggap yung pinadala nyang sulat kaya nagsampa sila ng
kaso sa TELEFAST COMMUNICATIONS/PHILIPPINE WIRELESS, INC arising from
breach of contract. Yung lower court ruled in favor of Sofia Crouch and other Castro
Family residing in scottburg, then ordered the defendant (now petitioner) to pay
the plaintiffs (now private respondents) for compensatory, moral, and exemplary
damages. Umapela yung defendant (now petitioner) sa CA but CA affirmed the trial
court's decision but eliminated the award of P16,000.00 as compensatory damages
to Sofia C. Crouch and the award of P1,000.00 to each of the private respondents
as exemplary damages. Pero umapela pa rin ulit yung petitioner, ayon sa kanila
hindi dapat sila maging liable sa moral damages kasi yung negligent act daw nila
was not motivated by "fraud, malice or recklessness." Pero hindi na sila dininig ng
CA
Issue:
Whether the petitioner company is liable for damages?
Ruling:
Yes, According to 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." 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 respondent and is thus
liable for damages.
We find Art. 2217 of the Civil Code applicable to the case at bar. It 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."
The decision appealed from is modified so that petitioner is held liable to private
respondents in the following amounts:
(1) P10,000.00 as moral damages, to each of private respondents;
(2) P1,000.00 as exemplary damages, to each of private respondents;
(3) P16,000.00 as compensatory damages, to private respondent Sofia C. Crouch;
(4) P5,000.00 as attorney's fees; and
(5) Costs of suit.
20. ENRIQUEZ
SANTOS VENTURA V. SANTOS
G.R. NO. 153004, NOVEMBER 5, 2004
FIRST DIVISION, J. QUISUMBING
Facts:
Noong 1990, Si Ernesto Santos (respondent), at Santos Ventura Hocorma
Foundation Inc. (SVHFI) (petitioner) ay bumuo ng isang compromise agreement
para matapos na ang kanilang mga pending litigation. Bale nakalagay sa agreement
na dapat magbayad na agad si petitioner ng 1.5m kay Santos upon the execution
of the said agreement and another 13 million in lump sump or installment for 2
years. And upon execution of this agreement din dapat withdraw-in na ni santos
yung mga civil case at yung lis pendens or pending lawsuit sa real property ni
petitioner pero bawal nilang ibenta ito hanggang di nababayaran yung balance na
13m kung ibebenta man nila dapat ipambabayad nila sa pending balance nila. After
the execution of agreement agad namang nagbayad si petitioner ng 1.5m pero may
balance pa sila ng 13m, at dinismiss din naman agad ni Santos yung mga civil case.
After 2 years upon the agreement, Binenta ni petitioner yung dalawang property
nilang subject sa lis pendens, dahil dito agad na nagdemand si Santos na bayaran
nila yung remaining balance nila pero di nila ito pinansin. Noong 1995 don na
nagsampa ng kaso si Santos against SVHFI, alleging that there was delay on the part
of petitioner in paying the balance of P13 million, sagot naman ni petitioner na
walang cause of action kasi nagbayad na raw sila ng buo kay Santos. Dinismiss ni
RTC yung petition ni respondent, kaya umapela si Santos sa CA and this time CA
ruled in favor of Santos. CA REVERSED the judgment and ordered SVHFI to pay
Santos and Riverland, Inc.: (1) legal interest on the principal amount of P13 million
at the rate of 12% per annum from the date of demand on October 28, 1992 up to
the date of actual payment of the whole obligation; and (2) P20,000 as attorney's
fees and costs of suit.
Issue:
Whether or not Santos Ventura is guilty of delay in fulfilling their obligation
to pay?
Ruling:
Yes, When respondents wrote a demand letter to petitioner on October 28, 1992,
the obligation was already due and demandable. When the petitioner failed to pay
its due obligation after the demand was made, it incurred delay. Under Article 1169
of the New Civil Code provides that Those obliged to deliver or to do something
incur in delay from the time the obligee judicially or extrajudicially demands from
them the fulfillment of their obligation.
Delay as used in this article is synonymous to default or mora which means delay
in the fulfillment of obligations. It is the non-fulfillment of the obligation with
respect to time. In the case at bar, the obligation was already due and demandable
after the lapse of the two-year period from the execution of the contract.
WHEREFORE, the petition is DENIED for lack of merit. The Decision of the Court of
Appeals are AFFIRMED. Costs against petitioner.
21. REYES
A CREDITOR CANNOT DECLARE DEFAULT IN HIS DEBTOR’S OBLIGATION

WITHOUT MAKING A DEMAND FOR ITS FULFILLMENT
General Milling Corporation vs. Sps. Librado Ramos and Remedios Ramos
G. R. No. 193723 (654 SCRA 156); July 20, 2011
Third Division, J. Velasco, Jr.
FACTS:
On August 24, 1989, the General Milling Corporation and the Spouses Librado and
Remedios Ramos entered a Growers Contract in which the former must deliver
broiler chickens to the latter in Lipa City, Batangas. The Ramoses attached a
Deed of Real Estate Mortgage over a piece of land where their conjugal home is
built. This deed contains the stipulation that the Ramoses have allowed to use
their land and its improvements as guarantee for their complete conformity with
their duty to GMC in the amount of PHP 215,000, 12% annual interest, no term.
Additionally, the Ramoses put up a bond of PHP 20,000 per 1,000 chicks delivered
by GMC. Unfortunately, the Ramoses were not able to pay their obligation
because of their losses due to GMC’s negligence and violation to the contract.
On March 31, 1997, GMC sent a letter informing the spouses that the corporation
will move for the foreclosure of the mortgaged land. On May 7, 1997, GMC
proceeded in filing a petition for Extrajudicial Foreclosure of Mortgage, foreclosed
at the amount of PHP 935,882,075 indicating their losses excluding the interest and
attorney’s fees. This was sold by public auction to GMC a month after.
Because of that, Ramoses filed a complaint to contend that the sale of their
property was null and void. They also reiterated that their deed has no fixed term.
GMC, on the other hand, insists that their move to foreclose the property was valid
as the Ramoses were not able to pay their obligations.
The RTC ruled that GMC made a premature action in foreclosing the Ramoses’
property as the obligation was still not due, voiding the foreclosure and ordering
the corporation to pay the attorney’s fees of the spouses. The CA affirmed RTC’s
decision saying that there is no demand made to fulfill the obligations and the
letter sent was only to call and discuss the obligation’s completion but overturning
the award of attorney’s fees.
ISSUE:
Whether or not there is a demand in the letter sent by GMC to the spouses that
will force them to fulfill their obligation.
RULING:
No. There is no demand made in the letter, thus the obligation of the Ramoses to
the GMC was still not due making the GMC’s move to foreclose the property not
valid.
Was there sufficient demand?

GMC asserts error on the part of the CA in finding that no demand was made on
Spouses Ramos to pay their obligation. On the contrary, it claims that its March
31, 1997 letter is akin to a demand. However, the court disagrees. According to
the CA, GMC did not make a demand on Spouses Ramos but merely requested
them to go to GMC’s office to discuss the settlement of their account. In spite of
the lack of demand made on the spouses, however, GMC proceeded with the
foreclosure proceedings. Neither was there any provision in the deed allowing
GMC to extrajudicially foreclose the mortgage without need of demand.
Indeed, Article 1169 of the Civil Code on delay requires the following: Those
obliged to deliver or to do something incur in delay from the time the obligee
judicially or extrajudicially demands from them the fulfilment of their obligation.
However, the demand by the creditor shall not be necessary in order that delay
may exist:
(1) When the obligation or the law expressly so declares;
As the contract in the instant case carries no such provision on demand not being
necessary for delay to exist, the court agrees with the appellate court that GMC
should have first made a demand on the spouses before proceeding to foreclose
the real estate mortgage.
The issue of whether demand was made before the foreclosure was effected is
essential. If demand was made and duly received by the respondents and the
latter still did not pay, then they were already in default and foreclosure was
proper. However, if demand was not made, then the loans had not yet become
due and demandable. This meant that respondents had not defaulted in their
payments and the foreclosure by petitioner was premature. Foreclosure is valid
only when the debtor is in default in the payment of his obligation.
WHEREFORE, the petition is DENIED. The CA Decision in CA-G.R. CR-H.C. No. 85400
is AFFIRMED.
22
Manuel v. CA
(G.R. No. 95469 - July 25, 1991)
Facts:
Si Manuel (petitioner) ay nangungupahan sa apartment unit nila Jesus and

Carmen de jesus. Si petitioner ay nadelay ng bayad sa upa for 3 months from
may to august kaya si respondent ay nagpadala sa kanya ng letter of demand
na bayaran niya yung balances nya at I vacate nya na yung apartment.
Nagpadala din si petitioner ng letter si petitioner stating na yung di raw nila
tinanggap yung bayad kaya diniposit muna ni Manuel yung pera sa bank acc
ng anak nya, babayaran nya raw pag nagdemand ulit si respondent, and
respondent do so. Nagpadala ulit sila ng letter demanding the payment of
unpaid rentals, nareceive naman yon ni petitioner pero imbes na bayaran ay
nagpadala ulit sya ng letter na pumunta daw si respondent sa bahay nila para
mabayaran yung upa pero hindi pumunta si respondent. RTC ruled in favour of
respondent ordering the petitioner to vacate the premises and pay the amount
of unpaid rentals, and attorney fee’s plus cost of suit. While CA denied the
petitioner of Manuel due to lack of merit.
Issue:
Whether or not De jesus spouses is guilty of Mora Acciepiendi?
Ruling:
No, The contention of petitioner that private respondents are in mora accipiendi
cannot be upheld either.1âwphi1 The failure of the owners to collect or their
refusal to accept the rentals are not valid defenses. Consignation, under such
circumstances, is necessary,17 and by this we mean one that is effected in full
compliance with the specific requirements of the law therefor. Section 5(b) of
Batas Pambansa Blg. 25, as amended, provides that in case of refusal by the lessor
to accept payment of the rental agreed upon, the lessee shall either deposit, by
way of consignation, the amount in court or in a bank in the name of and with
notice to the lessor. The failure of herein petitioner to comply with said
requirement makes the consignation defective and gives rise to a cause of action
for ejectment.18 Compliance with the requisites of a valid consignation is
mandatory. It must be complied with frilly and strictly in accordance with the law.
Substantial compliance is not enough.
petitioner evidently did not comply with the requirements for consignation
prescribed by the governing law. Consequently, as expounded by the Court of
Appeals. The failure of the petitioner to fully and strictly comply with the
requirements of consignation as aforementioned, renders nil his contention that
the private respondents have no cause of action against him, As there was no
valid consignation, payment of the more than three months rental arrearages
was not effected. Under Section 5(b) of B.P. Blg. 25, as amended, arrears in
payment of rent for three (3) months at any one time, is a ground for judicial
ejectment. For such non-payment of the petitioner to the private respondents of
the monthly rentals from May, 1987 until the case was filed on August 31, 1987, or
for more than three (3) months, there therefore existed a cause of action in favor
of the private respondent lessors against the petitioner lessee.
23. GARCIA
Antonio R. Cortes vs. Hon. Court of Appeals and
Villa Ezperaza Development Corporation
G.R. No. 126083; July 12, 2006
First Division, Ynares-Santiago, J.
FACT:
The Corporation as buyer and Cortes as seller, entered into a contract of sale over
the lot at Baclaran, Parañaque, Metro Manila with a purchase price of
P3,700,000.00. The Corporation advanced to Cortes an amount of P1,213,000.00.
In September 1983, the parties executed a Deed of Absolute Sale indicating that
the Vendee shall pay the Vendor the sum of P2,200,000.00 as a down payment
and the balance of 1,500,000.00 shall be payable within one year from the date
of execution of the instrument.
On January 14, 1985, the Corporation filed the instant case for specific
performance seeking to compel Cortes to deliver the Transfer Certificate of Titles
(TCTs) and the original copy of the Deed of Absolute Sale. According to the
Corporation, despite its readiness and ability to pay the purchase price, Cortes
refused delivery of the sought documents. Cortes, on the other hand, contended
that it was the Corporation who refused to pay the remaining balance even after
Cortes surrendered the owner’s duplicate copy of the said documents.
The Trial Court rendered a decision rescinding the contract sale and directed
Cortes to return to the Corporation the amount of P1,213,000.00 plus interest. It
stressed that having failed to pay in full the amount of the purchase price, despite
Cortes’ delivery of the documents, rescission of the contract is proper.
On appeals, the Court of Appeals reversed the decision and directed Cortes to
execute the Deed of Absolute Sale and to deliver the same to the Corporation
together with the TCTs, simultaneous with the Corporation’s payment of the
balance of the purchase price. It was found that the parties agreed that the
Corporation will fully pay the unpaid balance upon Cortes’ delivery of the three
TCTs to the Corporation. No such delivery was made as per the record, hence,
the Corporation was not negligent in the performance of its obligation and
therefore justified in not paying the balance.
ISSUE:
Whether there is delay in the performance of the parties' obligation?

RULING:
No. Under Article 1169 of the Civil Code, “From the moment one of the parties
fulfills his obligation, delay by the other begins”. Since Cortes did not perform his
part, the provision of the contract requiring the Corporation to pay in full the down
payment never acquired obligatory force.
This mutual delay of the parties cancels out the effects of default, such that it is as
if no one is guilty of delay. Thus, it will not justify the recession of the contract of
sale. The mutual inaction of Cortes and the Corporation therefore gave rise to a
compensation morae or default on the part of both parties because neither has
completed their part in their reciprocal obligation.
WHEREFORE, the petition is DENIED and the June 13, 1996, Decision of the Court
of Appeals in CA-G.R. CV No. 47856, is AFFIRMED.
24. BERNAL
Rivera v. Sps. Salvador Chua and Violeta S. Chua / Sps. Salvador Chua and
Violeta S. Chua v. Rivera
G.R. Nos. 184458 & 184472, 14 January 2015
First Division, J. Perez
FACTS:
The parties had known each other since 1973 and had been friends for a long
time. Rivera and Salvador are kumpadres, Rivera is the former godfather of the
Spouses Chua’s Son. On February 24th, 1995, the Spouses Chua granted Rivera a
₱120,000.00 loan. This transaction was evidenced by a promissory note wherein
Rivera promised to pay the Sps. Chua the sum of one hundred twenty thousand
Philippine currency on December 31, 1995, and in the event of failure to pay the
amount, agreed to pay the sum equivalent to five percent (5%) interest monthly
from the date of default (January 1, 1996) until the entire obligation is fully paid.
In 1998, Rivera issued and delivered two (2) checks. One was in October 1998 with
a check numbered 012467 and dated December 30, 1998, with the amount of ₱
25,000.00 and the other one was on December 21, 1998, with a check number
0132224, signed and dated but blank as to payee and amount. Therefore, as per
understanding by the parties, Check No. 013224 issued was in the amount of
₱133,454.00 with cash as payee. Upon being presented for payment, the two (2)
checks were dishonored for the reason "account closed.”
Sps. Chua claims in the numerous cases that have been filed that they have
consistently demanded payment from Rivera. On the other hand, Rivera disputed
being obligated under the subject promissory note and asserted its forgery in his
response. Mr. Magbojos, an NBI document examiner who served as a witness, said
that the signature in the promissory note and the standard specimen signature of
Rivera were written by one and the same person. Lastly, Rivera asserted that there
was no demand for the payment of $120,000.00 prior to the encashment of PCIB
Check No. 0132224. He signed and delivered Check No. 0132224 to the Spouses
Chua on December 21, 1998, and claimed that it should only be for the amount
of $1,300.00 from the money he had received from the saleslady of the Spouses
Chua. But Rivera failed to provide evidence for his claims. Therefore, the
Metropolitan Trial Court and Court of Appeals affirmed Spouses Chua's pecuniary
claim.
ISSUE:
Whether or not Sps. Chua’s demand is necessary to make Rivera liable for the
obligation.
RULING:
No. The demand of Sps. Chua is not necessary to make Rivera liable for the
obligation.
The Promissory Note is unequivocal about the date when the obligation falls due
and becomes demandable—31 December 1995. As of 1 January 1996, Rivera
had already incurred in delay when he failed to pay the amount of ₱120,000.00
due to the Spouses Chua on 31 December 1995 under the Promissory Note.
Article 1169 of the Civil Code explicitly provides: Those obliged to deliver or to do
something incur in delay from the time the obligee judicially or extrajudicially
demands from them the fulfillment of their obligation.
However, the demand by the creditor shall not be necessary in order that delay
may exist:
(1) when the obligation or the law expressly so declare…
There are four instances when demand is not necessary to constitute the debtor
in default: (1) when there is an express stipulation to that effect; (2) where the law
so provides; (3) when the period is the controlling motive or the principal
inducement for the creation of the obligation; and (4) where demand would be
useless.
In conclusion, until December 31, 1995, Rivera might be held accountable for the
principal sum of P120,000.00 without the need for a demand. After that, on
January 1, 1996, Rivera was forced to pay the Sps. Chua’s damages in the
amount of required interest due to his default.
WHEREFORE, the petition in G.R. No. 184458 is DENIED. The Decision of the Court
of Appeals in CA-G.R. SP No. 90609 is MODIFIED.
25 Inesa
Rodolfo G. Cruz and Esperanza Ibias vs Atty. Delfin Gruspe
G.R. No. 191431; March 13, 2013
Brion, J.
Facts:
This is a petition for review under rule 45 seeking for a sum of money due to
delayed payment against Rodolfo G Cruz and Esparanza Ibias.
Rodolfo G. Cruz, the petitioner, is the owner of the mini bus which collided with
Toyota Corolla Car owned by Atty delfin Gruspe, the respondent, driven by Arturo
Davin that completely destroyed Gruspe’s car. Cruz and Leonardo Q Ibias,
Esperanza Ibias late husband, executed a joint affidavit of Undertaking promising
jointly and severally to replace the Gruspe’s damaged car in 20 days, they would
pay the cost of Gruspe’s car amounting to ₱350,000.00, with interest at 12% per
month for any delayed payment after November 15, 1999, until fully paid. Cruz
and Leonardo failed to pay before November 15, 1999 so Gruspe filed a
complaint for collection of money against them before the RTC
Cruz and Leonardo denied the allegations, and accused Gruspe of Causal fraud
claiming that Gruspe forced them to sign the joint affidavit of undertaking without
explaining its content so that Cruz’s mini bus could be released. The RTC ruled in
favor of Gruspe and ordered Cruz and Leonardo to pay ₱220,000.00, plus 15% per
annum from November 15, 1999 until fully paid. On appeal, CA affirmed the RTC
decision, but reduced the interest rate to 12% per annum pursuant to the Joint
Affidavit of Undertaking. Cruz and Esperanza insist that they are not considered in
default under Article 1169, since Gruspe did not make any demand upon them.
Issue:
Whether or not Cruz and Esperanza have an obligation to pay the sum of money
as stated in Joint Affidavit of Undertaking to Gruspe?
Ruling:
Yes, They are liable for the payment of sum of money, but the Court made a
modification that Cruz and Esperanza shall pay the twelve percent (12%) per
annum interest imposed on the amount due.
The court affirm the decision dated July 30, 2009 and the resolution dated
February 19, 2010 of the Court of Appeals in CA-G.R. CV No. 86083, subject to the
Modification that the twelve percent (12%) per annum interest imposed on the
amount due shall accrue only from November 19, 1999, when judicial demand
was made.
The Court finds the petition partly meritorious and accordingly modifies the
judgment of the CA. Contracts are obligatory no matter what their forms may be,
whenever the essential requisites for their validity are present. In determining
whether a document is an affidavit or a contract, the Court looks beyond the title
of the document, since the denomination or title given by the parties in their
document is not conclusive of the nature of its contents. There is also no merit to
the argument of vitiated consent. An allegation of vitiated consent must be
proven by preponderance of evidence; Cruz and Leonardo failed to support their
allegation. In the absence of a finding by the lower courts that Gruspe made a
demand prior to the filing of the complaint, the interest cannot be computed
from November 15, 1999 because until a demand has been made, Cruz and
Leonardo could not be said to be in default. "In order that the debtor may be in
default, it is necessary that the following requisites be present: (1) that the
obligation be demandable and already liquidated; (2) that the debtor delays
performance; and (3) that the creditor requires the performance judicially and
extrajudicially." Default generally begins from the moment the creditor demands
the performance of the obligation. In this case, demand could be considered to
have been made upon the filing of the complaint on November 19, 1999, and it
is only from this date that the interest should be computed.
30. GARCIA
Mindanao Terminal And Brokerage Service, Inc. Petitioner vs.
Phoenix Assurance Company Of New York/Mcgee & Co., Inc.
G.R. No. 162467; May 8, 2009
Second Division, Tinga, J.
FACTS:
Mindanao Terminal and Brokerage Service, Inc., a stevedoring company is
contracted by Del Monte Philippines, Inc. to load and stow a shipment of 146,288
cartons of Philippine bananas and 15,202 cartons of pineapples belonging to Del
Monte Fresh Produce International, Inc. (Del Monte Produce) into the cargo hold
of the vessel, M/V Mistrau. Del Monte Produce insured the shipment under an
"open cargo policy " with Phoenix Assurance Company of New York (Phoenix)
and private respondent McGee & Co. Inc. (McGee).
It was discovered that some of the cargo was in bad condition when it arrived at
the port of Inchon, Korea. Marine Cargo Damage Surveyor conducted a survey
report stating that 16,069 cartons of the banana shipment and 2,185 cartons of
the pineapple shipment were so damaged that they no longer had commercial
value.
Phoenix and McGee established an action for damages against Mindanao
Terminal. On October 20, 1999, RTC held that the only participation of Mindanao
Terminal is to load the cargoes under the supervision of the ship’s officer, who
would not have accepted the cargoes and signed the foreman’s report if it was
not properly arranged and tightly secured. It was further established that
Mindanao Terminal loaded and stowed the cargoes in accordance with the
stowage plan. Accordingly, Mindanao Terminal cannot be held liable for
whatever happened to the cargoes after it had been loaded and
stowed. Moreover, it was found by the RTC that the cargoes were damaged on
account of a typhoon which the vessel had encountered during the voyage.
Phoenix and McGee appealed to the Court of Appeals. On October 29, 2003,
the same court ordered Mindanao Terminal to pay Phoenix and McGee "the total
amount of $210,265.45 plus legal interest from the filing of the complaint until fully
paid and attorney’s fees of 20% of the claim." Phoenix and McGee reiterated that
the damage in the cargoes was the result of improper stowage of Mindanao
Terminal and imposed that it is the duty of Mindanao Terminal to exercise
extraordinary diligence in loading and stowing the cargoes. Mindanao Terminal
filed a motion for reconsideration. Hence, the present petition for review.
ISSUE:
Whether Mindanao Terminal observed the degree of diligence required by law

of a stevedoring company?
RULING:
Yes. As it is clear that Mindanao Terminal, as a stevedore company, had duly
exercised the required degree of diligence in loading and stowing the cargoes,
which is the ordinary diligence of a good father of a family, the grant of the
petition is in order.
There is no specific provision of law that imposes a higher degree of diligence
than ordinary diligence for a stevedoring company or one who is charged only
with the loading and stowing of cargoes. Phoenix and McGee failed to prove by
majority of evidence that Mindanao Terminal had acted negligently.
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-
G.R. CV No. 66121 is SET ASIDE and the decision of the Regional Trial Court of
Davao City, Branch 12 in Civil Case No. 25,311.97 is hereby REINSTATED MINUS the
awards of ₱100,000.00 as attorney’s fees and ₱83,945.80 as actual damages.
37. BARLETA
A CENTRAL BANK CIRCULAR CAN NOT REPEAL A LAW. ONLY A LAW CAN
REPEAL ANOTHER LAW.
Sps. Danilo Solangon and Ursula Solangon vs. Jose Avelino Salazar
G.R. No. 125944 (360 SCRA 379); June 29, 2001
Third Division, J. Sandoval-Gutierrez
FACTS:
On August 22, 1986, spouses Solangon, petitioners, executed a deed of real

estate mortgage in which they mortgaged a parcel of land located in Sta. Maria,
Bulacan, in favor of Salazar, respondent, to secure payment of a loan of P60,000
payable within four (4) months, with interest at the rate of 6% per month. The
spouses executed two more mortgages in which they mortgaged the same
parcel of land to secure payments of two more loans: one on May 27, 1987 for a
loan of P136,512 payable within one (1) year, with interest at the legal rate and
another one on December 29, 1990 for a loan of P230,000 payable within four (4)
months, with interest at the legal rate.
An action was initiated by the spouses to prevent the foreclosure of the

mortgaged property. They alleged that they obtained only the P60,000 loan from
Salazar. The subsequent mortgages were merely continuations of the first one,
which is null and void because of its unconscionable interest rate. Moreover,
Salazar assured them that he will not foreclose the mortgage as long as they pay
the stipulated interest upon maturity or within a reasonable time thereafter. The
spouses have already paid Salazar P78,000 and P47,000 more, but the latter has
initiated foreclosure proceedings for their alleged failure to pay the loan P230,000
plus interest.
Salazar, on the other hand, claimed that the mortgages were executed to secure
the three separate loans, and that all three loans were paid except the last one.
He also denied having represented that he will not foreclose the mortgage as
long as the spouses pay interest.
The RTC rendered a judgment against the spouses and in favor of Salazar,
ordering the dismissal of the complaint. The CA affirmed the decision of the RTC,
holding that a loan secured by a real estate mortgage with an interest of 72% per
annum or 6% per month is not unconscionable.
ISSUE:
Whether or not the stipulated interest rate of 72% per annum or 6% per month is
unconscionable?
RULING:
Yes, the stipulated interest rate of 72% per annum or 6% per month is
unconscionable.
While the Usury Law ceiling on interest rates was lifted by C.B. Circular No. 905,
nothing in the said circular grants lenders carte blanche authority to raise interest
rates to levels which will either enslave their borrowers or lead to a hemorrhaging
of their assets. In Medel v. CA, the Court had the occasion to rule on this question
- whether or not the stipulated rate of interest at 5.5% per month on a loan
amounting to P500,000.00 is usurious. While decreeing that the aforementioned
interest was not usurious, the Court held that the same must be equitably reduced
for being iniquitous, unconscionable and exorbitant.
In the case at bench, the petitioners stand on a worse situation. They are required
to pay the stipulated interest rate of 6% per month or 72% per annum which is
definitely outrageous and inordinate. Surely, it is more consonant with justice that
the said interest rate be reduced equitably. An interest of 12% per annum is
deemed fair and reasonable.
WHEREFORE, the appealed decision of the Court of Appeals is AFFIRMED subject

to the MODIFICATION that the interest rate of 72% per annum is ordered reduced
to 12% per annum.
44
A party cannot cancel the
Mila A. Reyes vs. Victoria T. Tuparan

G.R. No. 188064; June 1, 2011
Second Division, Mendoza, J.
FACTS:
Reyes was an owner of a three-storey commercial building and a
residential building and lot in Karuhatan, Valenzuela City and operates a
drugstore and cosmetics store on the said building while the rest of the building is
being leased. Tuparan leased from Reyes a space on the building for her
pawnshop business which led them to be close friends. Reyes was unable to pay
the mortgage of ₱2,278,078.13 so she conditionally sold her properties to Tuparan
for ₱4,200,000.00 payable on installment basis without interest and to take the
bank loan with the following conditions: (1) The sale will be cancelled if Reyes can
find a buyer within three months and all amounts paid by Tuparan would be
refunded with six (6%) monthly interest; (2) Reyes would continue using the space
occupied by her businesses without any rent until Tuparan is fully paid; (3) There
will be a lease for fifteen years over the space Reyes occupies at ₱8,000.00
monthly; and (4) Tuparan will renew and pay for the fire insurance policies on the
two buildings following the expiration of the existing fire insurance. The parties and
the bank executed the corresponding Deed of Conditional Sale of Real Properties
with Assumption of Mortgage without written agreement on November 26, 1990.
Tuparan should pay a lump sum of ₱1.2 million in three fixed installments of
₱200,000.00 due on end of January and June and ₱800,000.00 on December 31,
1991 however Tuparan didn’t pay her obligations on their due dates, instead she
paid Reyes in small amounts and added 6% interest as compensation. Tuparan
had only paid ₱395,000.00 with a balance of ₱805,000.00 as principal and
₱466,893.25 as unpaid accumulated interest. The residential building caught fire
on 1992. Tuparan did not renew the fire insurance policy on the buildings. Tuparan
offered to pay ₱751,000.00 on September 7, 1992, as full payment on the
properties and asked to execute the corresponding deed of absolute sale on
September 2, 1992.
Tuparan argued the sale was actually a pure and absolute contract of sale
with a term period because the purchase did not depend on a future and
uncertain event so it cannot be considered as a conditional sale. Tuparan paid
the real property taxes and other miscellaneous expenses of the properties.
Tuparan prevented foreclosure on the properties by paying the mortgage of
₱2,278,078.13 plus interest and other finance charges and secured a release of
mortgage on the subject real properties including Reyes’ ancestral residential
property in Bulacan.
Reyes’ claim for the balance of the purchase price was groundless
because she did pay more than ₱4.2 million, and she had even introduced
improvements thereon worth more than ₱4.8 million. As a result of Tuparan and
Reyes’ business relationship, Reyes was able to obtain from her a loan in the
amount of ₱400,000.00 with interest and took several pieces of jewelry worth
₱120,000.00. Reyes also did not and declined to pay the monthly rental of
₱20,000.00 since November 16, 1990 for the occupancy of the ground floor of the
building.
ISSUE:
Was their arrangement a contract of sale or a contract to sell?
RULING:
The complaint for Rescission of Contract with Damages filed by Reyes is
DeniedTheir agreement is a contract to sell and not a contract of sale. The
properties still remains on the ownership of Reyes until Tuparan finishes to pay her
balance of 805,000 plus the accrued interest of the purchase price and the
obligation to the bank. Since Tuparan is still not fully paid, there is no breach of
contract because Reyes is not obliged to turn over the title yet to Tuparan. Reyes
should allow Tuparan to pay her balance because she already paid a substantial
amount of the purchace price. A recission cannot be allowed because there is
only a slight breach of contract.
51. Ros
RADIOWEALTH FINANCE COMPANY vs. SPS. VICENTE and MA. SUMILANG DEL
ROSARIO
G.R. No. 138739, July 6, 2000
Third Division, Panganiban J.
THE FACTS:
On May 2, 1991, the respondents, Vicente and Maria Sumilang Del Rosario, co-
signed and delivered a Promissory Note in the sum of ₱138,948.00 in favor of
Radiowealth Finance Company, the petitioner. According to the terms of the
note, the sum of ₱138,948.00 shall be paid in installments of ₱11,579.00 for 12
consecutive months, with a penalty fee of 2.5% per month added to each late
installment from the due date until it is entirely paid. The date for each installment,
however, is blank.
It is further understood that if any default or late payment of installment becomes
due and payable as per the note, the complete principal payment and the
remaining unpaid, including the stated payment charges, shall instantly become
due and demandable without notice or demand. If the Note is placed in the
hands of an attorney or collection agency, the spouses agree to pay, in addition
to the aggregate of the principal amount and interest due, a sum equivalent to
10% thereof as attorney's and/or collection fees, if no legal action is filed;
otherwise, the sum will be equivalent to 25% of the amount due, which shall not
be less than P500.00 plus the cost of suit and other litigation expenses, and a
further sum of 10% for liquidated damages.
The spouses then fell behind on their monthly payments. Despite repeated
demands, they failed to meet their obligations under the Promissory Note. The
petitioner then filed a complaint in the Regional Trial Court of Manila, Branch 14,
for money collection. Jasmer Famatico, petitioner's credit and collection officer,
presented in evidence the respondents' check payments, the demand letter
dated July 12, 1991, the customer's ledger card for the respondents, another
demand letter, and Metropolitan Bank dishonor slips throughout the trial.
The spouses, on the other hand, argue that the payments were not yet due and
payable. This was allegedly demonstrated by the blank space left for the start
date of the installments.
THE ISSUE:
Whether or not the installments are not yet due and demandable because of the
blank date.
THE RULING:
No, the spouses are still obligated to pay the monthly installments even if the date
is blank.
The act of leaving blank the due date of the first installment did not necessarily
mean that the spouses were allowed to pay as and 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.
On the contrary, the Note expressly stipulated that the debt should be
amortized monthly in installments of ₱11,579 for 12 consecutive months. 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.
In this case, the spouses began paying installments on the Promissory Note, even
though the checks were dishonored by their drawee bank, supporting the
judgment that the installments had already become due and demandable. Thus,
the petitioner has shown not only a cause of action against the respondents, but
also a due and demandable obligation. The spouses' responsibilities had
matured, and they clearly failed when their checks bounced. The entire amount
became due one month (April 2, 1991) after the date of the Note since the check
representing their first installment bounced.
In addition, the Note also provided that the spouses would be liable for attorney’s
fees equivalent to 25% of the amount due in case a legal action was instituted
and 10% of the same amount as liquidated damages. Liquidated damages,
however, should no longer be imposed for being unconscionable. Such damages
should also be deemed included in the 2.5% monthly penalty. Furthermore, the
Court holds that the petitioner is entitled to attorney’s fees, but only in a sum equal
to 10% of the amount due which the Court deem reasonable under the proven
facts.
WHEREFORE, the Petition is GRANTED. The appealed Decision is MODIFIED in that
the remand is SET ASIDE and the spouses are ordered TO PAY ₱138,948, plus 2.5%
penalty charge per month beginning April 2, 1991, until fully paid, and 10% of the
amount due as attorney’s fees. No costs.
79 Inesa
Swire Realty Development Corp. vs Yu
G.R. No. 207133 ; March 09, 2015
PERALTA, J
Facts:
On July 25, 1995 Jayne Yu (respondent) and Swire Realty Development

Corporation (petitioner) entered into a Contract to Sell covering one residential
condominium unit with the total contract price of P7,519,371.80, payable in equal
monthly installments until September 24, 1997. Respondent likewise purchased a
parking slot in the same condominium building for P600,000.00. Respondent paid
the full purchase price of condo unit on September 24, 1997 but the petitioner
failed to deliver the subject on time, which made the respondent file a Complaint
for Rescission of Contract with Damages before the Housing and Land Use
Regulatory Board (HLURB) Expanded National Capital Region Field Office
(ENCRFO). HLURB ENCRFO dismiss the complaint but they ordered the petitioner
to (1) To finish the subject unit as pointed out in the inspection Report, (2) To pay
[respondent] the amount of P100,000 as compensatory damages for the minor
irreversible defects in her unit [respondent], or, in the alternative, conduct the
necessary repairs on the subject unit to conform to the intended specifications;
(3) moral damages of P20,000.00; (4) Attorney’s fees of P20,000.00. Then the
respondent raised the issue to the HLURB Board of Commissioners, which granted
her complaint of rescission of the Contract to Sell.
Petitioner appealed to the Office of the President (OP) on August 7, 2007, but was
dismissed by Deputy Executive Secretary Manuel Gaite due to out of time filing of
appeal. But after they filed for reconsideration, OP granted the reconsideration
then set aside the HLURB Third Division Board of Commissioners decision, and
reinstated the HLURB ENCRFO Decision. Respondent filed an appeal to the said
decision to the CA, which granted respondent’s appeal and reversed and set
aside the Order of the OP and reinstated the decision of HLURB Board of
Commissioners.
Issue:
whether or not the rescission of the contract is proper in the instant case?
Ruling:
Yes, Basic is the rule that the right of rescission of a party to an obligation under
Article 1191 of the Civil Code is predicated on a breach of faith by the other party
who violates the reciprocity between them. The breach contemplated in the said
provision is the obligor’s failure to comply with an existing obligation. When the
obligor cannot comply with what is incumbent upon it, the obligee may seek
rescission and, in the absence of any just cause for the court to determine the
period of compliance, the court shall decree the rescission.
From the foregoing, it is evident that the report on the ocular inspection
conducted on the subject condominium project and subject unit shows that the
amenities under the approved plan have not yet been provided as of May 3,
2002, and that the subject unit has not been delivered to respondent as of August
28, 2002, which is beyond the period of development of December 1999 under
the license to sell. Incontrovertibly, petitioner had incurred delay in the
performance of its obligation amounting to breach of contract as it failed to finish
and deliver the unit to respondent within the stipulated period. The delay in the
completion of the project as well as of the delay in the delivery of the unit are
breaches of statutory and contractual obligations which entitle respondent to
rescind the contract, demand a refund and payment of damages.
Wherefore, premises considered, the instant petition is denied. The Decision dated
January 24, 2013 and Resolution dated April 30, 2013 of the Court of Appeals in
CA-G.R. SP No. 121175 are hereby AFFIRMED, with MODIFICATION that moral
damages be awarded in the amount of P20,000.00
133 Inesa
SPS. Silos v. PNB
G.R. No. 181045 - July 2, 2014
DEL CASTILLO, J
Facts:
In August 1987, Eduardo Silos and Lydia Silos, petitioner, secured a one-year
revolving credit line of ₱150,000.00 obtained from PNB, respondent, for a Real
Estate Mortgage lot in Kalibo, aklan. In July 1988, the credit line was increased to
₱1.8 million. In July 1989, a Supplement to the Existing Real Estate Mortgage7 was
executed to cover the same credit line, which was increased to ₱2.5 million and
petitioners issued eight Promissory Notes and signed a Credit Agreement that was
eventually amended in 1991. The credit agreements stipulated that the PNB may
increase or decrease the interest rates of the said loan without any prior notice to
the debtor and that the loan shall be subject to 19.5% interest per annum. The
petitioner consistently paid their 26 notes with interest that varies from 16% - 32%
without objection.
During 1997 wherein interest rates soared due to the Asian financial crisis;
petitioners outstanding promissory note for ₱2.5 million became past due, and
despite repeated demands, petitioners failed to make good on the note. Despite
demand, petitioners failed to pay the foregoing amount. Thus, PNB foreclosed on
the mortgage, and on January 14, 1999, TCTs T-14250 and T-16208 were sold to it
at auction for ₱4,324,172.96 while their total amount due is P3,620,541.60. However
petitioners filed Civil Case No. 5975 before the Regional Trial Court (RTC) against
PNB, seeking annulment of the foreclosure sale and an accounting of the PNB
credit. Petitioner claimed that they should only be liable for interest at the legal
rate of 12% since the succeeding interest rates used in their loan agreements was
left to the sole will of PNB, thus it violates the mutuality of the contract. RTC ruled
that such stipulation authorizing both the increase and decrease of interest rates
as may be applicable is valid, and granted the petitioner the refund of
₱356,589.90 representing the excess interest charged against the latter. Petitioners
appealed to the Court of Appeals, however, the CA affirmed to the RTC’s
decision with a modification of; (1) That the interest rate to be applied after the
expiration of the first 30-day interest period for PN. No. 9707237 should be 12% per
annum; (2) That the attorney’s fees of10% is valid and binding; (3) That [PNB] is
hereby ordered to reimburse [petitioners] the excess in the bid price of
₱377,505.99 which is the difference between the total amount due [PNB] and the
amount of its bid price.
Issue:
Whether or not the credit agreement violates the mutuality of the contract?
Ruling:
Yes,Any modification in the contract, such as the interest rates, must be m
ade with the consent of the contracting parties that the PNB failed to observe.
The Court grants the Petition. In order that obligations arising from contracts may
have the force of law between the parties, there must be mutuality between the
parties based on their essential equality. A contract containing a condition which
makes its fulfillment dependent exclusively upon the uncontrolled will of one of
the contracting parties, is void. The binding effect of any agreement between
parties to a contract is premised on two settled principles: (1) that any obligation
arising from contract has the force of law between the parties; and (2) that there
must be mutuality between the parties based on their essential equality. Any
contract which appears to be heavily weighed in favor of one of the parties so
as to lead to an unconscionable result is void. Any stipulation regarding the
validity or compliance of the contract which is left solely to the will of one of the
parties, is likewise, invalid.
Wherefore, premises considered, the Petition is Granted. The May 8, 2007 Decision
of the Court of Appeals in CA-G.R. CV No. 79650 is annuled and set aside.
Judgment is hereby rendered as follows: The interest rates imposed and indicated
in the 2nd up to the 26th Promissory Notes are DECLARED NULL AND VOID, and
such notes shall instead be subject to interest at the rate of twelve percent (12%)
per annum up to June 30, 2013, and starting July 1, 2013, six percent (6%) per
annum until full satisfaction; The penalty charge imposed in Promissory Note No.
9707237 shall be EXCLUDED from the amounts secured by the real estate
mortgages; The trial court’s award of one per cent (1%) attorney’s fees is
REINSTATED; The reimbursement of the excess in the bid price of ₱377,505.99,
which respondent Philippine National Bank is ordered to reimburse petitioners,
should be HELD IN ABEYANCE until the true amount owing to or owed by the
parties as against each other is determined.

MAKATI STOCK EXCHANGE V

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lOMoAR cPSD| 10693234

Plaintiff (SSS) approved the application of the defendant (Moonwalk) for an

the conjugal partnership. 5 No doubt, in this case, respondent Confesor signed

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Joseph Saludaga vs. Far Eastern University

Jimenez v. City of Manila

In the morning of August 1974, Bernardino Jimenez, petitioner, got into an

As a defense against liability on the basis of a quasi-delict, one must have

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Si Gaisano (yung petitioner) ay customer and dealer ni Intercapitol marketing

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A CREDITOR CANNOT DECLARE DEFAULT IN HIS DEBTOR’S OBLIGATION

Was there sufficient demand?

Si Manuel (petitioner) ay nangungupahan sa apartment unit nila Jesus and

Whether or not De jesus spouses is guilty of Mora Acciepiendi?

Whether there is delay in the performance of the parties' obligation?

Whether Mindanao Terminal observed the degree of diligence required by law

G.R. No. 125944 (360 SCRA 379); June 29, 2001

Third Division, J. Sandoval-Gutierrez

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An action was initiated by the spouses to prevent the foreclosure of the

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Mila A. Reyes vs. Victoria T. Tuparan

On July 25, 1995 Jayne Yu (respondent) and Swire Realty Development

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