Ang Yu vs Court of Appeals G.R. No. 109125 December 2, 199 !

acts" Herein plaintiff-petitioners (the buyers) are tenants or lessees of the residential and commercial properties owned by respondents Co Unjieng (vendors). On several occasions before October ! " #$! defendants informed plaintiffs that they are offering to sell the premises and are giving them priority to ac%uire the same. &espondents offered to sell the property for '$(! and plaintiffs counter-offered to buy for ')(. 'laintiffs as*ed the respondents to put the offer in writing! in which the respondents acceded (to e+press approval or give consent , give in to a re%uest or demand). Upon receipt of the offer! plaintiffs as*ed the respondents specify the terms and conditions of the offer to sell. -ince no response was made by the respondents! plaintiffs were compelled to file the complaint against respondents compelling them to sell the property. .he lower court decided in favor or the respondents reasoning that since parties did not agree upon the terms and conditions of the proposed sale! hence there was not contract of sale at all. /urther! it ruled that if the respondents decide to sell the proper for '""( or lower! then plaintiffs have the right of first refusal. 0ggrieved by the decision! plaintiffs appealed to C0. .he Court of 0ppeals affirmed the decision of the lower court with modification, 1n resume! there was no meeting of the minds between the parties concerning the sale of the property. 0bsent such re%uirement! the claim for specific performance will not lie. 0ppellants2 demand for actual! moral and e+emplary damages will li*ewise fail as there e+ists no justifiable ground for its award.3 C0 however granted the plaintiffs the right of first refusal regardless if the offer price e+ceeds '""(. 'laintiffs appealed with the -upreme court but was denied for insufficiency in form and substance. 4hile plaintiff as*ed the -C for reconsideration! respondents transferred the properties in %uestion to respondent 5uen &ealty and 6evelopment Corporation in consideration of '")(. 5uen &ealty after the properties came into its possession after the titles had been issued under its name! plaintiffs were as*ed to vacate the premises. 'laintiffs brought the matter to the trial court to enforce the decision rendered by the C0 that plaintiffs has the right of first refusal. .he lower court ordered respondents to sell the property to plaintiffs for '")(. &espondents appealed to C0. .he C0 reversed the judgment of the lower court declaring that it has no force and effect. Hence this appeal for certiorari. #ssue" (ay a buyer (in this case 5uen &ealty) be bound by the writ of e+ecution by virtue of the notice of lis pendens (while pending lawsuit)! carried over on .C. 7o. " )#"$ issued in the name of 5uen &ealty! at the time of the latter2s purchase of the property on ") 7ovember " " (time when the decision of C0 was still pending e+ecution) from the Cu Unjiengs! given that 5uen realty is not a party to the suit when the decision was rendered8 $el%" 7o. 4hat the petitioners have been granted of in the first place is just a mere 9right of first refusal2. 1n the law on sales! the so-called :right of first refusal3 is an innovative juridical relation. 7eedless to point out! it cannot be deemed a perfected contract of sale under 0rticle ";)# of the Civil Code. 7either can the right of first refusal! understood in its normal concept! per se be brought within the purview of an option under the second paragraph of 0rticle ";< ! afore%uoted! or possibly of an offer under 0rticle "=" of the same Code. 0n option or an offer would re%uire! among other things! "> a clear certainty on both the object and the cause or consideration of the envisioned contract. 1n a right of first refusal! while the object might be made determinate! the e+ercise of the right! however! would be dependent not only on the grantor2s eventual intention to enter into a binding juridical relation with another but also on terms! including the price! that obviously are yet to be later firmed up. 'rior thereto! it can at best be so described as merely belonging to a class of preparatory juridical relations governed not by contracts (since the essential elements to establish the vinculum juris would still be indefinite and inconclusive) but by! among other laws of general application! the pertinent scattered provisions of the Civil Code on human conduct. ?ven on the premise that such right of first refusal has been decreed under a final judgment! li*e here! its breach cannot justify correspondingly an issuance of a writ of e+ecution under a judgment that merely recogni@es its e+istence! nor would it sanction an action for specific performance without thereby negating the indispensable element of consensuality in the perfection of contracts. "" 1t is not to say! however! that the right of first refusal would be inconse%uential for! such as already intimated above! an unjustified

disregard thereof! given! for instance! the circumstances e+pressed in 0rticle " warrant a recovery for damages.

"A

of the Civil Code! can

.he final judgment in Civil Case 7o. #<-;">)#! it must be stressed! has merely accorded a :right of first refusal3 in favor of petitioners. .he conse%uence of such a declaration entails no more than what has heretofore been said. 1n fine! if! as it is here so conveyed to us! petitioners are aggrieved by the failure of private respondents to honor the right of first refusal! the remedy is not a writ of e+ecution on the judgment! since there is none to e+ecute! but an action for damages in a proper forum for the purpose. /urthermore! whether private respondent 5uen &ealty 6evelopment Corporation! the alleged purchaser of the property! has acted in good faith or bad faith and whether or not it should! in any case! be considered bound to respect the registration of the lis pendens in Civil Case 7o. #<-;">)# are matters that must be independently addressed in appropriate proceedings. 5uen &ealty! not having been impleaded in Civil Case 7o. #<-;">)#! cannot be held subject to the writ of e+ecution issued by respondent Budge! let alone ousted from the ownership and possession of the property! without first being duly afforded its day in court.

&agra%o 'r%en v. Nacoco 91 ()*l 50+ !acts" On Ban ;! " ;A! during the Bapanese occupation! .aiwan .e**osho (Bapanese corporation) ac%uired the plaintiff2s property (land with warehouse in 'andacan! (anila) for 'hp";>C On 0pril ;! " ;$! after the liberation! the U- too* control and custody of the aforementioned enemy2s land under -ect "A of the .rading with the ?nemy 0ct 1n the same year! the Copra ?+port (anagement Company occupied the property under custodianship agreement with the United -tates 0lien 'roperty Custodian 1n 0ugust " ;$! when the Copra ?+port (anagement Co. vacated the property! the 7ational Coconut Corporation (70COCO)! the defendant! occupied it ne+t -agrada Orden (plaintiff) files claims on the property with the Court of /irst 1nstance of (anila and against the 'hilippine 0lien 'roperty 0dministrator 'laintiff petitions that the sale of the property to .aiwan .e**osho should be declared null and void as it was e+ecuted under duress! that the interest of the 0lien 'roperty Custodian be cancelled! and that 70COCO be given until /ebruary A#! " ; to recover its e%uipment form the property and vacate the premise .he &epublic of the 'hilippines is allowed to intervene C/1, the defendant ('hilippine 0lien 'roperty 0dministrator) and the intervenor (&') are released from any liability but the plaintiff may reserve the right to recover from 70COCO reasonable rentals for the use and occupation of the premises .he sale of the property to the .aiwan .a**esho was declared void and the plaintiff was given the right to recover 'hp=!>>>Dmonth as reasonable rental from 0ugust " ;$ (date when 70COCO occupied property) to the date 70COCO vacates the premises .he judgment is appealed to the -C

#ssue" ". 4hether or not the defendant is liable to pay rent for occupying the property in %uestion $el%" ". .he C/12s decision that the defendant should pay rent from 0ugust " ;$ to /ebruary A#! " ; was reversed! costs against the plaintiff. &ationale, Obligations can only arise from four sources, law! contracts or %uasi-contracts! crime! or negligence (0rt "># ! -panish Civil Code). .here were no laws or an e+press agreement between the defendant or the 0lien 'roperty Custodian with the plaintiff regarding payment of rent. .he property was ac%uired by the 0lien 'roperty 0dministrator through law (.rading with the ?nemy 0ct) on the sei@ure of alien property and not as a successor to the interests of the latter. .here was no contract of rental bDw them and .aiwan .a**esho. 70COCO entered possession of the property from the 0lien 'roperty Custodian without any e+pectation of liability for its use. 70COCO did not commit any negligence or offense! and there was no contract! implied or otherwise! entered into! that can be used as basis for claiming rent on the property before the plaintiff obtained the judgment annulling the sale to .aiwan .a**esho. .he plaintiff has no right to claim rent from 70COCO.

1mportant 7otes 0rticle "")< of the 7ew Civil Code states that there are ) sources of obligations, laws! contracts! %uasicontracts! felonies (acts or omissions punished by law)! and %uasi-delicts.. (,'(-,.& CAR #NC., vs Comman%o &ecur*t/ -0+12 0 3a/ 22, 194+ !acts" 'laintiff! a car dealer! entered into a contract with defendant! a security agency! its duty is to guard the former2s premises from theft! robbery! vandalism and other unlawful acts. On a certain night! the security guard deployed by the defendant! without authority neither from the plaintiff nor from defendant! drove a car! which was entrusted to the plaintiff by a customer for service and maintenance! outside of the plaintiff2s compound and around the city which after the security guard lost control of! fell into a ditch! causing it severe damage. 'laintiff complained against the security guard for %ualified theft. 4hile the car is undergoing repair! plaintiff rented a car for its customer for ;< days until the car is fi+ed! and too* pain to repair the damaged car. .hen plaintiff instituted a claim against the defendant for recovery of the actual damages it incurred due to the unlawful act of the latter2s personnel! citing inter alia the 'ar. ) of the contract that defendant accepts :sole responsibility for the acts done during their watch hours3. 6efendant on the other hand! interposed! that it may be liable but its liability is limited under 'ar. ; of said contract providing, :that its liability :shall not e+ceed one thousand ('"!>>>.>>) pesos per guard post3. .o %uote the contract, 9'ar. ;. E 'arty of the -econd 'art (defendant) through the negligence of its guards! after an investigation has been conducted by the 'arty of the /irst 'art (plaintiff) wherein the 'arty of the -econd 'art has been duly represented shall assume full responsibilities for any loss or damages that may occur to any property of the 'arty of the /irst 'art for which it is accountable! during the watch hours of the 'arty of the -econd 'art! provided the same is reported to the 'arty of the -econd 'art within twenty-four (A;) hours of the occurrence! e+cept where such loss or damage is due to force majeure! provided however that after the proper investigation to be made thereof that the guard on post is found negligent and that the amount of the loss shall not e+ceed O7? .HOU-076 ('"!>>>.>>) '?-O- per guard post.2 9'ar. ) E .he party of the -econd 'art assumes the responsibility for the proper performance by the guards employed! of their duties and (shall) be solely responsible for the acts done during their watch hours! the 'arty of the /irst 'art being specifically released from any and all liabilities to the former2s employee or to the third parties arising from the acts or omissions done by the guard during their tour of duty.2 ... # .he trial court rendered judgment in favor of the defendant limiting its liability to '"!>>>.>> under par. ; and said that under paragraph )! it is the customer who should bring the suit before the court. #ssue" 4hether or not the plaintiff is entitled to recover its e+penses from the defendant on account of the latter2s employee2s unlawful act! despite the provision under paragraph ) it is the = rd party who should institute the claim which held the plaintiff harmless from any and all liabilities of the defendant2s employees8 $el%" Fes. =rd parties! the customer in the case at bar! are not bound by the contract between the defendant and plaintiff. 5ut the plaintiff is in law liable for the damages caused the customer2s car! which had been entrusted into its custody. 'laintiff therefore was in law justified in ma*ing good such damages and relying in turn on defendant to honor its contract and indemnify it for such undisputed damages! which had been caused directly by the unlawful and wrongful acts of defendant2s security guard in breach of their contract. 0s ordained in 0rticle "") ! Civil Code! :obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.3 'laintiff in law could not tell its customer! as per the trial court2s view! that :under the Guard -ervice Contract it was not liable for the damage but the defendant3 E since the customer could not hold defendant to account for the damages as he had no privity of contract with defendant. -uch an approach of telling the adverse party to go to court! notwithstanding his plainly valid claim! aside from its ethical deficiency among others! could hardly create any goodwill for plaintiff2s business! in the same way that

defendant2s baseless attempt to evade fully discharging its contractual liability to plaintiff cannot be e+pected to have brought it more business.

Cangco vs. 3an*la Ra*lroa% 5GR 12191, 1 'ctober 19126 !acts" 'etitioner Cangco is employed by defendant (anila &ailroad Co. in (anila! and by virtue of his employment! he is entitled free ride from his house in -an (ateo to (anila and vice-versa. On a fateful night around #,>> '( at the station of -an (ateo where it was dimly lighted ! petitioner while alighting the train (though it was still moving very slowly to the point of stop)! not *nowing that there are sac*s of melon piled at the edge of the platform stepped on the objects! causing him to slip off balance. 'laintiff was drawn under the car in an unconscious condition and as a result seriously injured him. His arm was amputated and he was prevented from wor*ing. He spent appro+ '#>> pesos for his medical e+penses. .hereupon! he sued (anila &ailroad to recover damages on the ground of negligence of the servants and employees of the defendant. .he C/1 ruled that although there is an apparent negligence on the part of the defendant through its employees but nevertheless! the plaintiff cannot recover because he had failed to use due caution in alighting from the coach. Hence this appeal. #ssue" 4hether or not (anila &ailroad Company is liable to the plaintiff for the negligent acts of its employees! notwithstanding that plaintiff was also negligent8 $el%" FesH 4hile the plaintiff may have been negligent! the defendant is also negligent. .he case falls under the category that of (") culpa contractual! that is! contract of carriage by providing the passengers safe travel beginning from the time he 1t is important to note that the foundation of the legal liability of the defendant is the contract of carriage! and that the obligation to respond for the damage which plaintiff has suffered arises! if at all! from the breach of that contract by reason of the failure of defendant to e+ercise due care in its performance. .hat is to say! its liability is direct and immediate! differing essentially! in legal viewpoint from that presumptive responsibility for the negligence of its servants! imposed by article " >= of the Civil Code! which can be rebutted by proof of the e+ercise of due care in their selection and supervision. 0rticle " >= of the Civil Code is not applicable to obligations arising e+ contractu! but only to e+tra-contractual obligations E or to use the technical form of e+pression! that article relates only to culpa a%uiliana and not to culpa contractual. respondeat superior - One who places a powerful automobile in the hands of a servant whom he *nows to be ignorant of the method of managing such a vehicle! is himself guilty of an act of negligence which ma*es him liable for all the conse%uences of his imprudence. Culpa 0%uiliana or e+tra-contractual culpa .he liability arising from e+tra-contractual culpa is always based upon a voluntary act or omission which! without willful intent! but by mere negligence or inattention! has caused damage to another. /rom this article two things are apparent, (") .hat when an injury is caused by the negligence of a servant or employee there instantly arises a presumption of law that there was negligence on the part of the master or employer either in selection of the servant or employee! or in supervision over him after the selection! or bothI and (A) that that presumption is juris tantum and not juris et de jure! and conse%uently! may be rebutted. 1t follows necessarily that if the employer shows to the satisfaction of the court that in selection and supervision he has e+ercised the care and diligence of a good father of a family! the presumption is overcome and he is relieved from liability. 6istinction between non-contractual and contractual Obligation .he fundamental distinction between obligations of this character and those which arise from contract! rests upon the fact that in cases of non-contractual obligation it is the wrongful or negligent act or omission itself which creates the vinculum juris! whereas in contractual relations the vinculum juris e+ists

independently of the breach of the voluntary duty assumed by the parties when entering into the contractual relation. .he mere fact that a person is bound to another by contract does not relieve him from e+tra-contractual liability to such person. Comparative negligence - if the accident was caused by plaintiff2s own negligence! no liability is imposed upon defendant2s negligence and plaintiff2s negligence merely contributed to his injury! the damages should be apportioned. 1t is! therefore! important to ascertain if defendant was in fact guilty of negligence. .est on Contributory negligence. 4as there anything in the circumstances surrounding the plaintiff at the time he alighted from the train which would have admonished a person of average prudence that to get off the train under the conditions then e+isting was dangerous8

Gut*erre7 vs Gut*erre7 519+16

!acts" On /ebruary A! " =>! a passenger truc* and an automobile of private ownership collided while attempting to pass each other on the .alon bridge on the (anila -outh &oad in the municipality of Jas 'iKas. .he diver of the car is an "# yDo boy! son of the car2s owners. 1t was found by the trial court that both the boy and the driver of the autobus were negligent by which neither of them were willing to slow up and give the right of way to the other. 'laintiff is the passenger of the bus who as a result of the incident fractured his right leg to his damage and prejudice. .hus! plaintiff sued the boy! his parents as owners of the car! the bus driver and its owner for damages. .he trial court ruled in favor of plaintiff. Hence! this appeal. #ssue" How should civil liability be imposed upon parties in the case at bar8 $el%" .he case is dealing with the civil liability of parties for obligations which arise from fault or negligence. /or the boy! it is his father who is liable (based on culpa a%uiliana) to the plaintiff because of the following conditionsI first! the car was of general use of the family! second! the boy was authori@ed or designated by his father to run the car! third! at the time of the collision the car is used for the purpose not of the child2s pleasure but that of the other members of the car owner2s family members. .he theory of the law is that the running of the machine by a child to carry other members of the family is within the scope of the owner2s business! so that he is liable for the negligence of the child because of the relationship of master and servant. /or the chauffer and the bus owner (based on culpa contractual)! their liability rests upon the contract (the safety that is assured by the operator upon the passenger) whereas that degree of care e+pected from the chauffer is lac*ing.

Araneta v. De 8o/a

!acts" &espondent 6e Boya! general manager! proposed to the board of 0ce 0dvsertising Corp.! to send &icardo .aylor to the U- to ta*e up special studies in television. .he 5oard did not act upon the proposal. 7evertheless! sent .aylor to the U-. &espondent assured 0ntonio 0raneta! a compny director! that e+penses will be handled by other parties which later was confirmed through a memorandum. 4hile abroad! .aylor continued to receive his salaries. .he items corresponding to his salaries appeared in vouchers prepared upon orders of! and approved by! the respondent. 'etitioner Juis 0raneta! signed three of the vouchers! others signed by either respondent or Licente 0raneta! the company treasurer. 0ll told! 0ce 0dvertising disbursed ')!>;=.A> on account of .aylor2s travel and studies. .hen a year after! 0ce 0dvertising filed a complaint before the C/1 against respondent for the recovery of the total sum disbursed to .aylor alleging that the trip was made without its *nowledge! authority or ratification. .he respondent in his answer denied the charge and claimed that the trip was nonetheless ratified by the company2s board and at any event he had the discretion as general manager to authori@e the trip which was for the company2s benefit. 0 third party complaint was file by respondent against! Licente and Juis and .aylor. &espondent proved that some of the chec*s to cover the e+penses of .aylor were signed by Licente and Juis. 1n their defense! Juis and Licente claimed that they signed the chec*s in good faith as they were approved by respondent. .he C/1 rendered judgement ordering the respondent to pay 0ce for the amount disbursed with interest at a legal rate until full payment and dismissed the third party complaint. &espondent appealed to C0. C0 affirmed the decision of trial court with regard to its decision in favor of 0ce but reversed the dismissal of the =rd party complaint. C0 found as a factthat .aylor2s trip had neither been authori@ed nor ratified by 0ce. 1t held that Juis and Licente were also privy to the authori@ed disbursement of corporate monies with the respondent. .hat when they approved signed the chec*s! they have given their stamp of approval. 0s it is established that corporate funds were disbursed unauthori@ed! the case is of a simple %uasi-delict committed by them against the corporation. Hence! this appeal. #ssue" 4hether or not petitioner is guilty of %uasi-delict! notwithstanding that he was occupying a contractual position at 0ce8 Otherwise stated! whether or not %uasi-delict (tort) may be committed a party in a contract8 $el%" Fes. .he e+istence of a contract between the parties constitutes no bar to the commission of a tort by one against the other and the conse%uent recovery of damages. His guilt is manifest on account of! in spite of his being a vice-president and director of 0ce! petitioner remained passive! through out the period of .aylor2s trip and to the payment of the latter2s salary. 0s such he neglected to perform his duties properly to the damage of the firm of which he was an officer.

Barredo vs. Garcia and Almario 1942

!acts" 0 head-on collision between a ta+icab owned by 5arredo and a carretela occurred. .he carretela was overturned and one of its passengers! a "$-year old boy! the son of Garcia and 0lmario! died as a result of the injuries which he received. .he driver of the ta+icab! a employee of 5arredo! was prosecuted for the crime and was convicted. 4hen the criminal case was instituted! Garcia and 0lmario reserved their right to institute a separate civil action for damages. -ubse%uently! Garcia and 0lmario instituted a civil action for damages against 5arredo! the employer of the ta+icab driver. 1t was found that /ontanilla has been found to have been previously violating traffic rules. 5arredo set up his defense claiming that being only subsidiarily liable under the &'C and the accused not being imputed nor adjudged to pay damages in a civil action! then it is a bar for an action against him. .he C/1 ruled in favor of the plaintiff awarding them 'A!>>>.>> against the 5arredo. #ssues" 4hether or not an employer (5arredo) should be held principally and directly liable for the negligent act of his employee (or for the criminal act or omission of the employee)8 0propos the employee is ac%uitted in the criminal case and the employer is e+onerated as subsidiary liable! will it bar the civil action based on %uasi-delict a.*.a culpa e+tra-contractual or culpa a%uiliana8 4hether or not the law is restrictive on the liability of the employer as subsidiary to that of the accused (confining itself within the provision of the penal code)8 $el%" 516 Fes. 0n employer (5arredo) is principally liable for the negligent acts (or even criminal acts) of his employee in the performance of his duties) because it is presumed by law that the employer (as well as the father! guardian ! etc.) committed an act of negligence in not preventing or avoiding the damage. 1t is this fault that is condemned by law. 526 7o. .he reason for this is that the civil liability of the employer (in the criminal case) is grounded upon the crime committed by its employee! while the liability of the employer (in %uasi-delict) is completely attributable to itself independent of the criminal act of the employee that is by not carefully selecting and supervising its employees. .hus, Cuasi-delitos! include all acts in which :any *ing of fault or negligence intervenes3 which means even if such act or omission has nothing to do with the actual resulting damage! li*e! for e+ample! then the owner of a ta+i company hires a driver who is *nown to him (or should have been *nown to him) that the latter is guilty of violating traffic rules. 1n case the driver causes damage as a result of his performance as a driver! then the owner is liable for the damage! not for the act of omission of the driver (because it is covered by the penal code which ma*es the criminal or felon primarily liable for his injury cause) but for its negligence in employing the driver. 5+6 0rticles A> and A" of the 'enal Code! after distributing in their own way the civil responsibilities among those who! for different reasons! are guilty of felony or misdemeanor! ma*e such civil responsibilities applicable to enterprises and establishments for which the guilty parties render service! but with subsidiary character! that is to say! according to the wording of the 'enal Code! in default of those who are criminally responsible. 1n this regard! the Civil Code does not coincide because article " >= says, :.he obligation imposed by the ne+t preceding article is demandable! not only for personal acts and omissions! but also for those of persons for whom another is responsible.3 (7.5. cause of liability is the bond or tie between the one who caused the injury and his employer! father! guardian! etc.) 0mong the persons enumerated are the subordinates and employees of establishments or enterprises! either for acts during their service or on the occasion of their functions. 1t is for this reason that it happens! and it is so observed in judicial decisions! that the companies or enterprises! after ta*ing part in the criminal cases because of their subsidiary civil responsibility by reason of the crime! are sued and sentenced directly and separately with regard to the obligation! before the civil courts. 4or*men and employees should be carefully chosen and supervised in order to avoid injury to the public. 1t is the masters or employers who principally reap the profits resulting from the services of these servants and employees. 1t is but right that they should guarantee the latter2s careful conduct for the personnel and patrimonial safety of others.

4e will not use the literal meaning of the law to smother and render almost lifeless a principle of such ancient origin and such full-grown development as culpa a%uiliana or cuasi-delito! which is conserved and made enduring in articles " >A to " "> of the -panish Civil Code. 7.5. 1t is that 5ond ( in the performance of the subordinate of the act) which will determine whether or not the superior (employer! parents may be held liable.

,l Cano vs $*ll !acts" 6efendant &eginald Hill! a minor! married at the time of the occurrence! *illed 0gapito. He was apprehended and charged appropriately before C/1. He ac%uitted on the ground that his act was not criminal! because of :lac* of intent to *ill! coupled with mista*e.3 .hereupon! the parents of 0gapito! filed a complaint for recovery of damages against the defendant and his father! the defendant (arvin Hill! with whom he was living and getting subsistence! for the *illing by &eginald of the son of the plaintiffs. 6efendants filed a motion to dismiss on the grounds that, first! the civil action is barred by the ac%uittal of &eginald! andI second! the father cannot be held liable for the act of his son because the latter is already married at the time of the commission! thus! is already emancipated. #ssues" 4hether or not %uasi-delict is restricted to negligence and cannot apply to voluntary acts or omissions producing injury ( or felony)8 4hether or not a father may be held liable for the act of his emancipated child constituting %uasi-delict8 $el%" 7o. .o repeat the 5arredo case! under 0rticle A"<<! ac%uittal from an accusation of criminal negligence! whether on reasonable doubt or not! shall not be a bar to a subse%uent civil action! not for civil liability arising from criminal negligence! but for damages due to a %uasi-delict or 9culpa a%uiliana2 although it mentions the word :negligence3 but according to Bustice 5ocobo it must be construed according to :the spirit that giveth lift- rather than that which is literal that *illeth the intent of the lawma*er should be observed in applying the same.3 Criminal prosecution and civil action are two different things. On the second issue (obsolete)! Fes! the father may be held liable. 4hile it is true that marriage of a child emancipates him from the parental authority of his parents! what matters really is whether or not such minor is completely emancipated as defined by law. 1n the case at bar! his emancipation is only partial for as provided by law he can sue and be sued in court with the assistance of his parents! he cannot manage his own properties without the approval of his parents! and third as in the facts! he relies for subsistence from his parents.

'ccena vs #cam*na 1990 5Ant*9ue6 !acts" On (ay ="! " < ! herein petitioner ?ulogio Occena instituted before the -econd (unicipal Circuit .rial Court of -ibalom 0nti%ue! Criminal Case 7o. "<"<! a criminal complaint for Grave Oral 6efamation against herein private respondent Cristina Legafria for allegedly openly! publicly and maliciously uttering the following insulting words and statements, :Gago i*aw nga 5arangay Captain! montisco! traidor! malugus! Hudas!3 which! freely translated! mean, :Fou are a foolish 5arangay Captain! ignoramus! traitor! tyrant! Budas3 and other words and statements of similar import which caused great and irreparable damage and injury to his person and honor. 0ccused pleaded not guilty. .rial ensued and judgment was rendered finding the accused guilty beyond reasonable doubt for slight oral deflation sentencing her to pay a fine of ')>.>> and subsidiary in case of insolvency but no damages were awarded to petitioner as held by the trial court. 6isagreeing! petitioner sought relief with the &.C which affirmed the decision of the (.C. Hence! this appeal. #ssue" 4hether or not the instant appeal should be dismissed on the ground that the decision rendered by the &.C has become final8 4hether or not damages are warranted to petitioner8 $el%" 7o. 4hile the criminal aspect of the case has become final! the civil aspect did not due to the timely appeal filed by petitioner with regard to the civil aspect of the case ('eeple vs Coloma). Fes. ?very person criminally liable for a felony is also civilly liable (0rt. ">>! &'C). Ji*ewise! article AA" of the 7ew Civil Code provides that moral damages may be recovered in libel! slander or any other form of defamation. 1n the ultimate analysis! what gives rise to the civil liability is really the obligation of everyone to repair or to ma*e whole the damage caused to another by reason of his act or omission! whether done intentional or negligently and whether or not punishable by law.

:anal vs ;a%eo 1924 !acts" 'etitioner herein is one of the complainants in the criminal cases filed against &osario Claudio. Claudio is charged with ") separate information for violation of 5' AA. Claudio pleaded not guilty! thus trial ensued. 'etitioner moved to intervene through private prosecutor but it was rejected by respondent judge on the ground that the charge is for the violation of 5atas 'ambansa 5lg. AA which does not provide for any civil liability or indemnity and hence! :it is not a crime against property but public order.3 'etitioner filed a motion for reconsideration but was denied by the respondent judge. Hence this appeal. #ssue" 4hether or not a private prosecutor may intervene in the prosecution for violation of 5' AA (a special penal law) which does not provide for civil liability8 7ote, 1ntervention of a private prosecutor is for the purpose of protecting the private interest of the complainant to recover damages. $el%" FesH Under 0rt. ">> of the &'C! 9every person criminally liable for a felony is also civilly liable.2 .hus a person committing a felony offends namely (") the society in which he lives in or the political entity called the -tate whose law he had violatedI and (A) the individual member of that society whose person! right! honor! chastity or property was actually or directly injured or damaged by the same punishable act or omission. 4hile an act or omission is felonious because it is punishable by law! it gives rise to civil liability not so much because it is a crime but because it caused damage to another. Liewing things pragmatically! we can readily see that what gives rise to the civil liability is really the obligation and the moral duty of everyone to repair or ma*e whole the damage caused to another by reason of his own act or omission! done intentionally or negligently! whether or not the same be punishable by law. 1n other words! criminal liability will give rise to civil liability only if the same felonious act or omission results in damage or injury to another and is the direct and pro+imate cause thereof. 6amage or injury to another is evidently the foundation of the civil action. -uch is not the case in criminal actions for! to be criminally liable! it is enough that the act or omission complained of is punishable! regardless of whether or not it also causes material damage to another. (-angco! 'hilippine Jaw on .orts and 6amages! " <#! &evised ?dition! pp. A;$-A;<). 0rticle A> of the 7ew Civil Code provides, :?very person who! contrary to law! wilfully or negligently causes damage to another! shall indemnify the latter for the same.3 &egardless! therefore! of whether or not a special law so provides! indemnification of the offended party may be had on account of the damage! loss or injury directly suffered as a conse%uence of the wrongful act of another.

:r*c<to=n vs Amor ;*erra Devt. 199 0 contract! once perfected! has the force of law between the parties with which they are bound to comply in good faith and from which neither one may renege without the consent of the other. .he autonomy of contracts allows the parties to establish such stipulations! clauses! terms and conditions as they may deem appropriate provided only that they are not contrary to law! morals! good customs! public order or public policy. .he standard norm in the performance of their respective covenants in the contract! as well as in the e+ercise of their rights thereunder! is e+pressed in the cardinal principle that the parties in that juridical relation must act with justice! honesty and good faith. -outheastern College vs C0 " # (Muantum of proofI /ortuitous ?vent) !acts" 'rivate respondents are owners of a house at =A$ College &oad! 'asay while petitioner owns a fourstorey school building along the same College &oad. .hat on October ""! " # ! a powerful typhoon hit (etro (anila. 5uffeted by very strong winds! the roof of the petitioner2s building was partly ripped off and blown away! landing on and destroying portions of the roofing of private respondents2 house. 4hen the typhoon had passed! an ocular inspection of the destroyed building was conducted by a team of engineers headed by the city building official. 1n their report! they imputed negligence to the petitioner for the structural defect of the building and improper anchorage of trusses to the roof beams to cause for the roof be ripped off the building! thereby causing damage to the property of respondent. &espondents filed an action before the &.C for recovery of damages based on culpa a%uiliana. 'etitioner interposed denial of negligence and claimed that the typhoon as an 0ct of God is the sole cause of the damage. &.C ruled in their favor relying on the testimony of the City ?ngineer and the report made after the ocular inspection. 'etitioners appeal before the C0 which affirmed the decision of the &.C. Hence this present appeal. #ssue" (") 4hether the damage on the roof of the building of private respondents resulting from the impact of the falling portions of the school building2s roof ripped off by the strong winds of typhoon :-aling3! was! within legal contemplation! due to fortuitous event8 (A) 4hether or not an ocular inspection is sufficient evidence to prove negligence8 $el%" On the first issue! Fes! petitioner should be e+onerated from liability arising from the damage caused by the typhoon. Under 0rticle ""<; of the Civil Code! ?+cept in cases e+pressly specified by the law! or when it is otherwise declared by stipulation! or when the nature of the obligation re%uires the assumption of ris*! no person shall be responsible for those events which could not be foreseen! or which! though foreseen! were inevitable. 1n order that a fortuitous event may e+empt a person from liability! it is necessary that he be free from any previous negligence or misconduct by reason of which the loss may have been occasioned. "A 0n act of God cannot be invo*ed for the protection of a person who has been guilty of gross negligence in not trying to forestall its possible adverse conse%uences. 4hen a person2s negligence concurs with an act of God in producing damage or injury to another! such person is not e+empt from liability by showing that the immediate or pro+imate cause of the damages or injury was a fortuitous event. 4hen the effect is found to be partly the result of the participation of man E whether it be from active intervention! or neglect! or failure to act E the whole occurrence is hereby humani@ed! and removed from the rules applicable to acts of God. 1n the case under consideration! the lower court accorded full credence to the finding of the investigating team that subject school building2s roofing had :no sufficient anchorage to hold it in position especially when battered by strong winds.3 5ased on such finding! the trial court imputed negligence to petitioner and adjudged it liable for damages to private respondents. .here is no %uestion that a typhoon or storm is a fortuitous event! a natural occurrence which may be foreseen but is unavoidable despite any amount of foresight! diligence or care. 1n order to be e+empt from liability arising from any adverse conse%uence engendered thereby! there should have been no human participation amounting to a negligent act. 1n other wordsI the person see*ing e+oneration from liability must not be guilty of negligence. 7egligence! as commonly understood! is conduct which naturally or

reasonably creates undue ris* or harm to others. 1t may be the failure to observe that degree of care! precaution! and vigilance which the circumstances justify demand! or the omission to do something which a prudent and reasonable man! guided by considerations which ordinarily regulate the conduct of human affairs! would do. On the second issue! it bears emphasi@ing that a person claiming damages for the negligence of another has the burden of proving the e+istence of fault or negligence causative of his injury or loss. .he facts constitutive of negligence must be affirmatively established by competent evidence! " not merely by presumptions and conclusions without basis in fact. 'rivate respondents! in establishing the culpability of petitioner! merely relied on the aforementioned report submitted by a team which made an ocular inspection of petitioner2s school building after the typhoon. 0s the term imparts! an ocular inspection is one by means of actual sight or viewing. 4hat is visual to the eye through! is not always reflective of the real cause behind. 1n the present case! other than the said ocular inspection! no investigation was conducted to determine the real cause of the partial unroofing of petitioner2s school building.

:ar7aga vs CA 1992 5D,-AY6 !acts" 'etitioner2s wife died and her wish is to be buried before Christmas. 0fter her death on 6ec A"! " >! in fulfillment of her wishes! petitioner went to respondent2s store to in%uire the availability of materials to be used in building his wife2s niche. &espondent2s employee advised petitioner that to come bac* the following morning. .hat following morning! petitioner made a payment of 'A!">> to secure the delivery of the materials. However! the materials were not delivered on time. -everal times petitioner went to respondent2s store to as* for the delivery. Jater that day! the petitioner was forced to dismiss his laborer since there is nothing to wor* with for the materials did not arrive. 'etitioner however purchased the materials from other stores. 0fter his wife was buried! he sued respondent for damages because of delay /or his part! respondent offered a lame e+cuse of fortuitous event that the reason for delay is because the truc*s tires were flat. #ssue" 4hether or not respondent is guilty of delay that will entitle petitioner for damages! although it was not specified in the invoice the e+act time of delivery8 $el%" FesH .he law e+pressly provides that those who in the performance of their obligation are guilty of fraud! negligence! or delay and those who in any manner contravene the tenor thereof! are liable for damages. (0rt ""<> of the Civil Code). .he appellate court appears to have belittled petitioner2s submission that under the prevailing circumstances time was of the essence in the delivery of the materials to the grave site. However! we find petitioner2s assertion to be anchored on solid ground. .he niche had to be constructed at the very least on the twenty-second of 6ecember considering that it would ta*e about two (A) days to finish the job if the interment was to ta*e place on the twenty-fourth of the month. &espondent2s delay in the delivery of the construction materials wasted so much time that construction of the tomb could start only on the twentythird. 1t could not be ready for the scheduled burial of petitioner2s wife. .his undoubtedly prolonged the wa*e! in addition to the fact that wor* at the cemetery had to be put off on Christmas day. .his case is clearly one of non-performance of a reciprocal obligation. < 1n their contract of purchase and sale! petitioner had already complied fully with what was re%uired of him as purchaser! i.e.! the payment of the purchase price of 'A!"">.>>. 1t was incumbent upon respondent to immediately fulfill his obligation to deliver the goods otherwise delay would attach.

N(C vs CA, ,C# 1921 5>uas*0Del*ct? !ortu*tous ,vent6 !acts" ?C1 entered into a contract with 7040-0 to underta*e a construction of a tunnel from 1po 6am to 5icti including all materials! e%uipment and labor for the said construction for #>> days. .he project involved A phases. .he first involves tunnel wor*s and the second consists of outwor*s at both ends of the tunnel. 0s soon as ?C1 finished the tunnel wor*s in 5icti! it transferred all its e%uipments to 1po 6am to finish the second phase of the project. .he record shows that on 7ovember ;!" $<! typhoon 94elming2 hit Central Ju@on! passing through defendant2s (7'C) 0ngat Hydro-electric 'roject and 6am at lpo! 7or@agaray! 5ulacan. -trong winds struc* the project area! and heavy rains intermittently fell. 6ue to the heavy downpour! the water in the reservoir of the 0ngat 6am was rising perilously at the rate of si+ty ($>) centimeters per hour. .o prevent an overflow of water from the dam! since the water level had reached the danger height of A"A meters above sea level! the defendant corporation caused the opening of the spillway gates.3 ?C1 sued 7'C for damages. .he trial court and the court of appeals found that defendant 7'C was negligent when opened the gates only at the height of the typhoon holding that it could have opened the spill gates gradually and should have done so before the 9typhoon2 came. .hus both courts awarded ?C1 for damages. 7'C assails the decision of the C0 as being erroneous on the grounds! inter alia! that the loss sustained by ?C1 was due to force majeure. 1t argued that the rapid rise of water level in the reservoir due to heavy rains brought about by the typhoon is an e+traordinary occurrence that could not have been foreseen. On the other hand! ?C1 assails the decision of the court of appeals modifying the decision of the trial court eliminating the awarding of e+emplary damages. Hence this present appeal. #ssues" ". 4hether or not 7'C is liable for damages even though the cause of the damage is due to a force majeure8 Otherwise stated! whether or not the damage sustained by ?C1 could be attributed to 7'C notwithstanding the occurrence of a force majeure8 A. 4hether or not ?C1 is entitled to e+emplary damages8 $el%" Fes. 7'C was undoubtedly negligent because it opened the spillway gates of the 0ngat 6am only at the height of typhoon :4elming3 when it *new very well that it was safer to have opened the same gradually and earlier! as it was also undeniable that 7'C *new of the coming typhoon at least four days before it actually struc*. 0nd even though the typhoon was an act of God or what we may call force majeure! 7'C cannot escape liability because its negligence was the pro+imate cause of the loss and damage. 0s we have ruled in Buan /. 7a*pil N -ons v. Court of 0ppeals! (";; -C&0 ) $! $>$-$><), .hus! if upon the happening of a fortuitous event or an act of God! there concurs a corresponding fraud! negligence! delay or violation or contravention in any manner of the tenor of the obligation as provided for in 0rticle ""<> of the Civil Code! which results in loss or damage! the obligor cannot escape liability. .he principle embodied in the act of God doctrine strictly re%uires that the act must be one occasioned e+clusively by the violence of nature and human agencies are to be e+cluded from creating or entering into the cause of the mischief. 4hen the effect! the cause of which is to be considered! is found to be in part the result of the participation of man! whether it be from active intervention or neglect! or failure to act! the whole occurrence is thereby humani@ed! as it was! and removed from the rules applicable to the acts of God. (" Corpus Buris! pp. ""<;-""<)). .hus! it has been held that when the negligence of a person concurs with an act of God in producing a loss! such person is not e+empt from liability by showing that the immediate cause of the damage was the act of God. .o be e+empt from liability for loss because of an act of God! he must be free from any previous negligence or misconduct by which the loss or damage may have been occasioned. (/ish N ?lective Co. v. 'hil. (otors! )) 'hil. "A I .uc*er v. (ilan ; O.G. ;=< I Jimpangco N -ons v. Fangco -teamship Co.! =; 'hil. ) ;! $>;I Jasam v. -mith! ;) 'hil. $)<). -ubstantial evidence is defined as such relevant evidence as a reasonable mind might accept as ade%uate to support a conclusion ('hilippine (etal 'roducts! 1nc. v. Court of 1ndustrial &elations! > -C&0 "=) O" < PI 'olice Commission v. Jood! "A< -C&0 <)< O" #;PI Canete v. 4CC! "=$ -C&0 =>A O" #)P)

?+emplary 6amages 7o. 0s to the %uestion of e+emplary damages! we sustain the appellate court in eliminating the same since it found that there was no bad faith on the part of 7'C and that neither can the latter2s negligence be considered gross. 1n 6ee Hua Jiong ?lectrical ?%uipment Corp. v. &eyes! (";) -C&0 <"=! <" ) we ruled, 7either may private respondent recover e+emplary damages since he is not entitled to moral or compensatory damages! and again because the petitioner is not shown to have acted in a wanton! fraudulent! rec*less or oppressive manner (0rt. AA=;! Civil CodeI Futu* v. (anila ?lectric Co.! A -C&0 =<<I /rancisco v. Government -ervice 1nsurance -ystem! < -C&0 )<<I Gutierre@ v. Lillegas! # -C&0 )A<I 0ir /rance v. Carrascoso! "# -C&0 "))I 'an 'acific ('hil.) v. 'hil. 0dvertising Corp.! A= -C&0 <<I (archan v. (endo@a! A; -C&0 ###). Comments, Under 0rt. ""<> of the Civil Code! :4hen those who in the performance of their obligations are guilty of fraud! delay! or negligence! or in any manner contravene in the tenor of the obligation! are liable for damages.3 4hat the provision contemplates is that there is an e+press obligation between the obligor and the obligee arising from a contractual obligation that must be complied with in good faith. 0nd what the aforestated provision liable for damages is that breach either because of fraud! delay! or negligence! or contravention to the tenor of obligation. Hence it should not be applied generally in all cases! especially in %uasi-delict which is treated specifically by law. 1n the case at bar! ?C1 and 7'C has no pre-e+isting obligation arising from a contract. 0lthough negligence is indubitably present in the case! there cannot be located from the facts that there is a prior obligation arising form 7'C and ?C1. 5ut instead the applicable law in the case at bar is 0rt. A"<$ which provides! :4hoever by act or omission causes damage to another! there being fraud or negligence! is obliged to pay for the damage done. -uch fault of negligence! if there is no pre-e+isting contractual relation between the parties! is called %uasi-delict and is governed by the provisions of this chapter.3 1 should rather say that the Honorable -upreme Court misplaced the application of the law. 1 should further say that the 0ct of God 6octrine should be applied inversely to that

Rural :an< of &ta 3ar*a (angas*nan vs CA Gr no. 110142 1999

!acts" 0 6eed of 0bsolute -ale with 0ssumption of (ortgage was e+ecuted between (anuel 5ehis as vendorDassignor and &ayandayan and 0rceKo as vendeesDassignees for the sum of 'A)>!>>>.>>. On the same day! &ayandayan and 0rceKo together with (anuel 5ehis e+ecuted another 0greement embodying the real consideration of the sale of the land in the sum of 'A!;>>!>>>.>>. .hereafter! &ayandayan and 0rceKo negotiated with the principal stoc*holder of the ban*! ?ngr. ?dilberto 7atividad in (anila! for the assumption of the indebtedness of (anuel 5ehis and the subse%uent release of the mortgage on the property by the ban*. &ayandayan and 0rceKo did not show to the ban* the 0greement with (anuel 5ehis providing for the real consideration of 'A!;>>!>>>.>> for the sale of the property to the former. -ubse%uently! the ban* consented to the substitution of plaintiffs as mortgage debtors in place of (anuel 5ehis in a (emorandum of 0greement between private respondents and the ban* with restructured and liberali@ed terms for the payment of the mortgage debt. 1nstead of the ban* foreclosing immediately for non-payment of the delin%uent account! petitioner ban* agreed to receive only a partial payment of '";=!>>>.>> by installment on specified dates. 0fter payment thereof! the ban* agreed to release the mortgage of (anuel 5ehisI to give its consent to the transfer of title to the private respondentsI and to the payment of the balance of 'A>>!>>>.>> under new terms with a new mortgage to be e+ecuted by the private respondents over the same land. However! petitioner ban* did not comply with the (O0 with respondents because of a supervening event namely the protest made by Cristina 5ehis! wife of (anual 5ehis! alleging that she did not consent to the negotiation made as regards the 6eed of absolute sale with 0ssumption of (ortgage by her husband with the respondents and that her signature was forged by respondents. .he petitioner ban* then told respondents to settle the matter with (rs. 5ehis. 0t that point! petitioner ban* cancelled its (O0 with respondents because, first! the latter failed to settle the protest of (rs. 5ehisI and! secondly! the terms of the (emorandum of 0greement have not been fully complied with as the payments were not made on time on the dates fi+ed thereinI and third! their consent to the (emorandum of 0greement was secured by the plaintiffs thru fraud as the 5an* was not shown the 0greement containing the real consideration of 'A!;>>.>>>.>> of the sale of the land of (anuel 5ehis to plaintiffs. .hereafter! the petitioner ban* returned the initial payment of '";=!>>>.>> to respondents. 1n the mean time! petitioner entered into an agreement with Halsema 5an* that the latter would assume the mortgage of (anuel 5ehis in consideration of ')A"!<$).;). .hereafter! respondents brought the matter before the &.C which ruled that the (O0 is valid. .he case was elevated to the C0 on certiorari. .he respondent Court affirmed the validity of the (O0 dismissing the claim of the respondent that their consent to the agreement made with respondents to assume the mortgage of (anuel 5ehis! and awarding the respondents for damages. Hence this present appeal. #ssues, 4hether or not respondents are guilty of fraud (which would ma*e the contract between respondents and petitioner viod) when it did not show or it concealed from the petitioner the 0greement (between respondents and (anuel 5ehis) the consideration of 'A.;! and rather what was only shown was the first agreement with regard to the 6eed of -ale with 0ssumption of (ortgage8 $el%" 7o. .his brings us to the first issue raised by petitioner ban* that the (emorandum of 0greement is voidable on the ground that its consent to enter said agreement was vitiated by fraud because private respondents withheld from petitioner ban* the material information that the real consideration for the sale with assumption of mortgage of the property by (anuel 5ehis to &ayandayan and 0rceKo is 'A!;>>!>>>.>>! and not 'A)>!>>>.>> as represented to petitioner ban*. 0ccording to petitioner ban*! had it *nown of the real consideration for the sale! i.e. 'A.; million! it would not have consented into entering the (emorandum of 0greement with &ayandayan and 0rceKo as it was put in the dar* as to the real capacity and financial standing of private respondents to assume the mortgage from (anuel 5ehis. 'etitioner ban* pointed out that it would not have assented to the agreement! as it could not e+pect the private respondents to pay the ban* the appro+imately '=;=!>>>.>> mortgage debt when private respondents have to pay at the same time 'A!;>>!>>>.>> to (anuel 5ehis on the sale of the land.

.he *ind of fraud that will vitiate a contract refers to those insidious words or machinations resorted to by one of the contracting parties to induce the other to enter into a contract which without them he would not have agreed to. "= -imply stated! the fraud must be the determining cause of the contract! or must have caused the consent to be given. 1t is believed that the non-disclosure to the ban* of the purchase price of the sale of the land between private respondents and (anuel 5ehis cannot be the :fraud3 contemplated by 0rticle "==# of the Civil Code. "; /rom the sole reason submitted by the petitioner ban* that it was *ept in the dar* as to the financial capacity of private respondents! we cannot see how the omission or concealment of the real purchase price could have induced the ban* into giving its consent to the agreementI or that the ban* would not have otherwise given its consent had it *nown of the real purchase price. .he deceit which voids the contract e+ists where the party who obtains the consent does so by means of concealing or omitting to state material facts! with intent to deceive! by reason of which omission or concealment the other party was induced to give a consent which he would not otherwise have given (.olentino! Commentaries and Burisprudence on the Civil Code! Lol. 1L! p. ;#>). 1n this case! the consideration for the sale with assumption of mortgage was not the inducement to defendant ban* to give a consent which it would not otherwise have given. Conse%uently! not all the elements of fraud vitiating consent for purposes of annulling a contract concur! to wit, (a) 1t was employed by a contracting party upon the otherI (b) 1t induced the other party to enter into the contractI (c) 1t was seriousI andI (d) 1t resulted in damages and injury to the party see*ing annulment. "# 'etitioner ban* has not sufficiently shown that it was induced to enter into the agreement by the non-disclosure of the purchase price! and that the same resulted in damages to the ban*. 1ndeed! the general rule is that whosoever alleges fraud or mista*e in any transaction must substantiate his allegation! since it is presumed that a person ta*es ordinary care for his concerns and that private transactions have been fair and regular. 'etitioner ban*2s allegation of fraud and deceit have not been established sufficiently and competently to rebut the presumption of regularity and due e+ecution of the agreement.

;elefast vs Castro 519226

!acts" 1n " )$! -ofia Castro-Crouch (plaintiff-respondent) was vacationing in 'angasinan in her parent2s house. .hat same year in 7ovember! her mother! Consolacion died. On the day of her mother2s death she addressed a telegram to her father 1gnacio who was then in the U- announcing Consolacion2s death. .he telegram was accepted by .elefast (defendant-petitioner) in its 6agupan office after payment of re%uired fees or charges. .he telegram never reached the addressee. Consolacion was interred without her husband and children besides -ofia. -ofia went bac* to the U- and learned that the telegram never reached her father. .hus! she and her siblings and their father sued .elefast for damages arising from the breach of contract by the defendant. 'etitioner-defendant .elefast interposed that the reason why the telegram never reached the addressee is because of :technical and atmospheric factors beyond its control.3 1t appears though that no attempt made by defendant to inform -ofia for that matter or any reason at all that e+plains why the telegram reached the addressee. .he C/1 ruled in favor of -ofia and her co-plaintiffs awarding her damages she prayed for. .elefast appealed before the 10C which affirmed the decision of the C/1. Hence this appeal. #ssues" 4hether or not petitioner is liable for damages arising from the breach of contract even though that there was a technical and atmospheric factors that lead to its failure to comply with terms of the contract8 $el%" Fes. 0rt. ""<> of the Civil Code provides! :.hose who in the performance of their obligation are guilty of fraud! delay! negligence! and those who in any manner contravene the tenor thereof! are liable for damages. 0rt. A"<$ 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. 1n the case at bar! petitioner and private respondent -ofia C. Crouch entered into a contract whereby! for a fee! petitioner undertoo* to send said private respondent2s message overseas by telegram. .his! petitioner did not do! despite performance by said private respondent of her obligation by paying the re%uired charges. 'etitioner was therefore guilty of contravening its obligation to said private respondent and is thus liable for damages. 0lso! it is evident that petitioner did not do anything to advise the plaintiff of the circumstances which lead to its failure to comply with its obligation. 1t is apparent that such tantamount to gross negligence. Hence bad faith.

Agcao*l* vs G&#& 1922 5Art 1119? Compensat*o 3orae? pg 1096 !acts,

1n " $;! plaintiff 0gcaoili applied with the defendant G-1- to purchase a house and lot in (ari*ina. 1n the following year in a letter! respondent approved petitioner2s application with the advise 9to occupy the said house immediately2 and 9failure to occupy the same from the receipt of the notice! plaintiff2s application shall be considered disapproved and will be awarded to another applicant.2 'laintif lost no time in occupying the house. However! he could not stay in it and had to leave the following day because the house was nothing more than a shell! in such a state of incompleteness that civili@ed occupation was not possible. 0gcaoili did however as* a homeless friend! a certain Lillanueva! to stay in the premises as some sort of watchman! pending completion of the construction of the house. 0gcaoili thereafter complained to the G-1-! to no avail. .he G-1- as*ed 0gcaoili to pay the monthly amorti@ations and other fees. 0gcaoili paid the first monthly installment and the incidental fees! = but refused to ma*e further payments until and unless the G-1completed the housing unit. 4hat the G-1- did was to cancel the award and re%uire 0gcaoili to vacate the premises. ; 0gcaoili reacted by instituting suit in the Court of /irst 1nstance of (anila for specific performance and damages. .he C/1 ruled in favor of 0gcaoili declaring the cancellation of the award illegal and viod and ordering G-1- to respect and enforce the aforesaid award! and to complete the house in %uestion to ma*e the same habitable and authori@ing G-1- to collect the monthly amorti@ation only after said house shall have been completed. Hence this present appeal. G-1- argued the following, ". 0gcaoili had no right to suspend payment of amorti@ations on account of the incompleteness of his housing unit! since said unit had been sold :in the condition and state of completion then e+isting ... (and) he is deemed to have accepted the same in the condition he found it when he accepted the award. A. 'erfection of the contract of sale between it and 0gcaoili being conditioned upon the latter2s immediate occupancy of the house subject thereof! and the latter having failed to comply with the condition! no contract ever came into e+istence between them. #ssues" ". 4hether or not 0gcaoli may suspend payment of amorti@ation on account of the incompleteness of his housing unit! since said unit had been sold :in the condition and state of completion then e+isting ... (and) he is deemed to have accepted the same in the condition he found it when he accepted the award8 4hether or not there was a valid contract of sale between 0gcaoili and G-1-8 A. 4hether or not 0gcaolili repudiated his contract with G-1-8 $el%" On the first issue! Fes! because 0rt. ""$ of the Civil Code provides that :in reciprocal obligations! neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him.3 Certainly! the prestation of the contract which was ratified upon approval of G-1(presupposing the meeting of the minds of G-1- and 0gcaoli) is the house and lot! on the condition that the house should be habitable. .hus, :.here was then a perfected contract of sale between the partiesI there had been a meeting of the minds upon the purchase by 0gcaoili of a determinate house and lot in the G-1- Housing 'roject at 7ang*a (ari*ina! &i@al at a definite price payable in amorti@ations at '=".)$ per month! and from that moment the parties ac%uired the right to reciprocally demand performance.3 .here would be no sense to re%uire the awardee to immediately occupy and live in a shell of a house! a structure consisting only of four walls with openings! and a roof! and to theori@e! as the G-1- does! that this was what was intended by the parties! since the contract did not clearly impose upon it the obligation to deliver a habitable house! is to advocate an absurdity! the creation of an unfair situation. 5y any objective interpretation of its terms! the contract can only be understood as imposing on the G-1- an obligation to deliver to 0gcaoili a reasonably habitable dwelling in return for his underta*ing to pay the stipulated price. -ince G-1- did not fulfill that obligation! and was not willing to put the house in habitable state! it cannot invo*e 0gcaoili2s suspension of payment of amorti@ations as cause to cancel the contract between them. 1t is a+iomatic that :(i)n reciprocal obligations! neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him.3 ")

Na<p*l an% &ons @s Court of appeals 1921 !acts"

'hilippine 5ar 0ssociation! an 7GO! entered into a contract with UCC1 on administration basis and 7a*pil N -ons to construct a buildingI the latter will provide the design and specifications of the said building. .wo years after the building is constructed and is being leased by '50! an earth%ua*e! unusually strong hit (etro (anila. 0s a result! the building is severely damaged (partially collapsed) which compelled the tenants to vacate the premises. '50! sued UCC1 and 7a*pil. -ince the case involves a high degree of technicality to ascertain the cause of action! the trial court appointed a Commissioner to report to him his findings. 0ccording to the Commissioner the damage is caused by, ". ?arth%ua*e A. defects in the plans and specifications prepared by the third-party defendants2 architects. =. deviations from said plans and specifications by the defendant contractors ;. failure of the latter to observe the re%uisite wor*manship in the construction of the building and of the contractors! architects ). failure of the owners to e+ercise the re%uisite degree of supervision in the construction of subject building .he trial court agreed with the findings of the Commissioner e+cept as to the holding that the owner is charged with full nine supervision of the construction. .he Court sees no legal or contractual basis for such conclusion. 6efendants appealed the decision of the trial court to C0. C02s decision is to affirm the lower courts decision with the additional 'A>>C damages. #ssue" .he pivotal issue in this case is whether or not an act of God-an unusually strong earth%ua*e-which caused the failure of the building! e+empts from liability! parties who are otherwise liable because of their negligence. $el%" 7o. 0&. "<A= 7CC Jiability of the engineer or architect is if the building should collapse within ") years because of a defect in the plans and specification O& due to the defects in the ground. .he liability of the contractor lies if the building should collapse wDin ") years because of (") defects in the CO7-.&UC.1O7 (A) U-? of materials of 17/?&1O& MU0J1.F furnished by contractor or (=) L1OJ0.1O7 of the terms of the contract. 1f the construction was supervised by the engineer or architect! he shall be solidarily liable with the contractor. 1f the owner of the building accepts the building after it is constructed does not mean a 401L?& of any cause of action by reason of defects. .he action should be brought within "> years. Upon the other hand! ""<; of 7CC, ?+cept in cases e+pressly specified by law! or otherwise when it is declared in stipulation or when from the nature of the obligation re%uires the assumption of ris*! no person shall be liable for those events which could not be foreseen! or which! though foreseen! were ineveitable. ?lements of ""<;! fortuitous event (a) the cause of the breach of the obligation must be independent of the will of the debtorI (b) the event must be either unforseeable or unavoidableI (c) the event must be such as to render it impossible for the debtor to fulfill his obligation in a normal mannerI and (d) the debtor must be free from any participation in! or aggravation of the injury to the creditor. 1n any event! the relevant and logical observations of the trial court as affirmed by the Court of 0ppeals that :while it is not possible to state with certainty that the building would not have collapsed were those defects not present! the fact remains that several buildings in the same area withstood the earth%ua*e to which the building of the plaintiff was similarly subjected!3 cannot be ignored. One who negligently creates a dangerous condition cannot escape liability for the natural and probable conse%uences thereof! although the act of a third person! or an act of God for which he is not responsible! intervenes to precipitate the loss.

0s already discussed! the destruction was not purely an act of God. .ruth to tell hundreds of ancient buildings in the vicinity were hardly affected by the earth%ua*e. Only one thing spells out the fatal differenceI gross negligence and evident bad faith! without which the damage would not have occurred.

A( v. Delos Angeles !acts" U' petitioner entered into a contract with 0JU(CO respondent! a logging company! where the latter is granted a right to cut!collect and remove timber from the land grant in return for a consideration of money. 5ut respondent incurred unpaid account amounting to 'AA>C and despite repeated demands! it still failed to settle its dues. U' sent a notice to rescind the contract! and respondent e+ecuted an instrument!

entitled :0c*nowledgment of 6ebt and 'roposed (anner of 'ayments3 wherein it undertoo* to settle the balance on or before Bune " $) and in case of non-fulfillment! U' is entitled to rescind the contract and respondent will pay ')>C as li%uidated damages without the necessity of judicial suit. U' 'resident approved the instrument. &espondent constinued its logging operations but again failled to settle its account in addition to the indebtedness it had previously ac*nowledged. .hat o Buly " $)! U' informed 0JU(CO that it had! as of that date! considered as rescinded and of no further legal effect the logging agreement that they had entered in " $>I and on < -eptember " $)! U' filed a complaint against 0JU(COfor the collection or payment of the herein before stated sums of money and alleging the facts hereinbefore specified! together with other allegationsI it prayed for and obtained an order! dated => -eptember " $)! for preliminary attachment and preliminary injunction restraining 0JU(CO from continuing its logging operations in the Jand Grant. 5efore the issuance of the preliminary injuction U' had ta*en steps to have another concessionaire ta*e over the logging operationI after it advertised its invitation to bid! the concession was awarded to -ta. Clara Jmber signed in /eb. " $$. 1n the mean time! 0JU(CO filed a petition to enjoin U' form the conducting the bidding! the C/1 ejoined U' from awarding the logging rights. However! the order was received only after it had concluded the its contract with -ta. Clara. 0nd upon motion of 0JU(CO! U' was declared in contempt and directed -ta. Clara from e+ercising logging rights or conducting logging operations in the concession. U' moved to reconsider the order but it was denied. Hence this present appeal. #ssue" 4hether or not by virtue of the instrument respondent e+ecuted! petitioner can rescind the contract upon default of respondent without judicial pronouncement8 $el%" Fes. U' and 0JU(CO had e+pressly stipulated in the :0c*nowledgment of 6ebt and 'roposed (anner of 'ayments3 that! upon default by the debtor 0JU(CO! the creditor (U') has :the right and the power to consider! the Jogging 0greement dated A 6ecember " $> as rescinded without the necessity of any judicial suit.3 0s to such special stipulation! and in connection with 0rticle "" " of the Civil Code! this Court stated in /roilan vs. 'an Oriental -hipping Co.! et al.! J-""# <! =" October " $;! "A -C&0 A<$, :there is nothing in the law that prohibits the parties from entering into agreement that violation of the terms of the contract would cause cancellation thereof! even without court intervention. 1n other words! it is not always necessary for the injured party to resort to court for rescission of the contract.3 :0rticle "" ". .he power to rescind obligations is implied in reciprocal ones! in case one of the obligors should not comply with what is incumbent upon him. .he injured party may choose between the fulfillment and the rescission of the obligation! with the payment of damages in either case. He may also see* rescission! even after he has chosen fulfillment! if the latter should become impossible. .he court shall decree the rescission claimed! unless there be just cause authori@ing the fi+ing of a period. .his is understood to be without prejudice to the rights of third persons who have ac%uired the thing! in accordance with articles "=#) and "=## and the (ortgage Jaw. (""A;)3 Of course! it must be understood that the act of party in treating a contract as cancelled or resolved on account of infractions by the other contracting party must be made *nown to the other and is always provisional! being ever subject to scrutiny and review by the proper court. 1f the other party denies that rescission is justified! it is free to resort to judicial action in its own behalf! and bring the matter to court. .hen! should the court! after due hearing! decide that the resolution of the contract was not warranted! the responsible party will be sentenced to damagesI in the contrary case! the resolution will be affirmed! and the conse%uent indemnity awarded to the party prejudiced. 1n other words! the party who deems the contract violated may consider it resolved or rescinded! and act accordingly! without previous court action! but it proceeds at its own ris*. /or it is only the final judgment of the corresponding court that will conclusively and finally settle whether the action ta*en was or was not correct in law. 5ut the law definitely does not re%uire that the contracting party who believes itself injured must first file suit and wait for a judgment before ta*ing e+trajudicial steps to protect its interest. Otherwise! the party injured by the other2s breach will have to passively sit and watch its damages accumulate during the pendency of the suit until the final judgment of rescission is rendered when the law

itself re%uires that he should e+ercise due diligence to minimi@e its own damages (Civil Code! 0rticle AA>=).

Central :an< vs CA an% ;olent*no 1925 !acts" On 0pril " $)! 1sland -avings 5an* approved the loan of -ulpicio .olentino for '#>C payable in = years with "AQ interest per annum! in consideration of his ">>-hectare land. On (ay " $)! only a mere '"<C of the '#>C was released by the ban* and -ulipicio and his wife signed a promissory note for the same consideration. .he ban* promised repeatedly the release of '$=C.

On 0ugust " $)! the (onetary 5oard of the Central 5an*! after finding 1sland -avings was suffering li%uidity problems! issued a resolution prhibiting it from ma*ing new loans and investments (e+cept investment in government securities) e+cluding granting e+tensions and renewals of already approved loans subject to review by the -uperintendent of 5an*s. On Bune " $#! after finding that 1sland savings failed to put up the re%uired capital to restore its solvency prohibited it from doing diong business and instructed the 0cting -uperintendent of 5an*s to ta*e charge of the 5an*2s assets. On 0ugust " $#! 1sland savings filed an application for the e+tra-judicial foreclosure of the real estate mortgage covering the ">>-hectare land of -ulpicio. On Banuary " < ! -ulpicio filed a petition with the C/1 for injuction! specific performance or rescission with damages with preliminary injuction alleging that 1sland -avings failed to deliver the '$=C balance of the '#>C loan. He prayed the delivery of '$=C plus "AQ legal interest and if the same is not fulfilled! then the real estate mortgage should be rescinded. Upon filing of a ')C bond! the C/1 issued a .&O enjoining 1sland -avings from continuing with foreclosure of the mortgage. 0fter the trial! the C/1 dismissed the petition of -ulpicio ordered him to pay the '"<C loan plus "AQ legal interest and if he failed to pay the same the .&O be lifted and the foreclosure may proceed. -ulpicio appealed the decision to the C0 which in turn affirmed the dismissal of his petition but ruled that 1sland -avings can neither foreclose the mortgage nor collect the '"<C loan. Hence this appeal. #ssues" (") 4hether or not -ulpicio entitled to the relief of specific performance8 (A) 4hether or not -ulpicio is liable to pay the '"<C debt covered by the promissory note8 (=) 1f -ulpicio2s liability to pay the '"<C subsists! can his real estate mortgage be foreclosed to satisfy the said amount8 $el%, 4hen 1sland -avings and -ulpicio entered into an '#>C loan agreement in " $)! they undertoo* reciprocal obligations. 1n reciprocal oblications! neither party incurs in delay when the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. -o when -ulpicio furnished his land on 0pril " $) in consideration of '#>C and when 1sland -avings failed to comply the fulfillment of the '#>C! the latter incurred in delay. 7either is it a valid defense when the monetary board prohibited it from e+tending new loans because it did not prevent it from releasing the balance of a loan agreement previously contracted. -ulpicio then has the right to demand specific performance but in view of the consideration that the monetary board prohibited it from doing any business! specific performance can no longer be granted. 1n the same line! the only remedy left is rescission of the contract but it can only apply to the balance of '$=C because the ban* is in default only insofar as such amount is concerned! as there is no doubt that the ban* failed to give the '$=!>>>.>>. 0s far as the partial release of '"<!>>>.>>! which -ulpicio (. .olentino accepted and e+ecuted a promissory note to cover it! the ban* was deemed to have complied with its reciprocal obligation to furnish a '"<!>>>.>> loan. .he promissory note gave rise to -ulpicio (. .olentino2s reciprocal obligation to pay the '"<!>>>.>> loan when it falls due. His failure to pay the overdue amorti@ations under the promissory note made him a party in default! hence not entitled to rescission (0rticle "" " of the Civil Code). 1f there is a right to rescind the promissory note! it shall belong to the aggrieved party! that is! 1sland -avings 5an*. 1f .olentino had not signed a promissory note setting the date for payment of '"<!>>>.>> within = years! he would be entitled to as* for rescission of the entire loan because he cannot possibly be in default as there was no date for him to perform his reciprocal obligation to pay. .hus there is still the obligation of -ulpicio to pay 1sland -avings the '"<* he loaned. However! -ulpicio2s land may not be foreclosed in whole because the ">>-hectare land was in consideration of '#>C. -ince only '"<C was given or constituting only A".A) percent! the land that may only be foreclosed should correspond to the amount given. .hus his real estate covering <#.<) hectares was declared unenforceable.

Bulueta v. 3ar*ano GR 29+10 519226 !acts" Rulueta and 0vellana (a movie director) entered into a Contract to -ell a residential house and lot for '<)* payable in A> years! with 0vellana assuming to pay ')* of down payment and monthly installment payable in advance before )th of each month! starting 6ec. " $;.

1t was also stipulate that upon failure of the 5UF?& (0vellana) to fulfill any of the conditions! it will authori@e the owner to(") recover physical possession of the land! and (A) rescind the contract! and by such (=) all payments made by the 5UF?& to O47?& shall be deemed as rental payments. 0vellana failed to ma*e payment despite several demands. .hus compelled Rulueta to sue 0vellana for ejectment before the (unicipal Court. 0vellana contended that that the (unicipal Court had no jurisdiction over the nature of the action as it involved the interpretation andDor rescission of the contractI that prior to the e+ecution of the contract to sell! petitioner was already indebted to him in the sum of '="!A$ .>> representing the cost of two movies respondent made for petitioner and used by the latter in his political campaign in " $; when petitioner ran for Congressman! as well as the cost of one "$ millimeter projector petitioner borrowed from respondent and which had never been returned .he (unicipal Court found that respondent 0vellana had failed to comply with his financial obligations under the contract and ordered him to vacate the premises and deliver possession thereof to petitioner. &espondent 0vellana appealed to the C/1 which granted his contention that the (unicipal Court had no jurisdiction to try the case! thus dismissed it. Hence this appeal. #ssue" 4as the action before the (unicipal Court of 'asig essentially for detainer and! therefore! within its e+clusive original jurisdiction! or one for rescission or annulment of a contract! which should be litigated before a Court of /irst 1nstance8 $el%" .he case is essentially one for rescission of the contract. Under those circumstances! proof of violation is a condition precedent to resolution or rescission. 1t is only when the violation has been established that the contract can be declared resolved or rescinded. Upon such rescission! in turn! hinges a pronouncement that possession of the realty has become unlawful. .hus! the basic issue is not possession but one of rescission or annulment of a contract! which is beyond the jurisdiction of the (unicipal Court to hear and determine. .rue! the contract between the parties provided for e+trajudicial rescission. .his has legal effect! however! where the other party does not oppose it. 4here it is objected to! a judicial determination of the issue is still necessary. 0 stipulation entitling one party to ta*e possession of the land and building if the other party violates the contract does not e+ proprio vigore confer upon the former the right to ta*e possession thereof if objected to without judicial intervention and2 determination. .he writ of mandamus was denied.

(ala/ #nc. vs Clave 51041 192+ !acts" 1n " $)! 'etitioner and private respondent entered into a Contract to -ell a parcel of land. 1n the said contract! it provided the petitioner for automatic e+trajudicial rescission upon default in payment of any monthly installment after the lapse of > days from the e+piration of the grace period of one month! without need of notice and with forfeiture of all installments paid.

&espondent 6umpit paid the downpayment and several installments. .he last payment was made on 6ec. " $<. On " <=! private respondent wrote petitioner offering to update all his overdue accounts with interest! and see*ing its written consent to the assignment of his rights to a certain Jourdes 6i@on. &eplying petitioners informed respondent that his Contract to -ell had long been rescinded pursuant to paragraph $ of the contract! and that the lot had already been resold. Muestioning the validity of the rescission of the contract! respondent filed a letter complaint with the (7H0) for reconveyance with an alternative prayer for refund. 1n a &esolution! dated Buly ">! " < ! the 7H0! finding the rescission void in the absence of either judicial or notarial demand! ordered 'alay! 1nc. and 0lberto Onstott in his capacity as 'resident of the corporation! jointly and severally! to refund immediately to private respondent with "AQ interest from the filing of the complaint. 'etitioners2 (otion for &econsideration of said &esolution was denied by the 7H0 in its Order dated October A=! " < . .he case was appealed to the Office of the 'resident which affirmed the resolution of the 7H0. Hence this present appeal. #ssues" ". 4hether notice or demand is not mandatory under the circumstances and! therefore! may be dispensed with by stipulation in a contract to sell8 A. 4hether petitioners may be held liable for the refund of the installment payments made by respondent 7a@ario (. 6umpit8 =. 4hether or not petitioner Onstott the 'resident of petitioner corporation may be held personally l*ableC $el%"

".4e hold that resolution by petitioners of the contract was ineffective and inoperative against private respondent for lac* of notice of resolution. 4ell settled is the rule! as held in previous jurisprudence! that judicial action for the rescission of a contract is not necessary where the contract provides that it may be revo*ed and cancelled for violation of any of its terms and conditions. However! even in the cited cases! there was at least a written notice sent to the defaulter informing him of the rescission. 0s stressed in University of the 'hilippines vs. 4alfrido de los 0ngeles the act of a party in treating a contract as cancelled should be made *nown to the other. 4e %uote the pertinent e+cerpt, 1t must be understood that the act of a party in treating a contract as cancelled or resolved in account of infractions by the other contracting party must be made *nown to the other and is always provisional being ever subject to scrutiny and review by the proper court. 1f the other party denies that rescission is justified it is free to resort to judicial action in its own behalf! and bring the matter to court. .hen! should the court! after due hearing! decide that the resolution of the contract was not warranted! the responsible party will be sentenced to damagesI in the contrary case! the resolution will be affirmed! and the conse%uent indemnity awarded to the party prejudiced. 1n other words! the party who deems the contract violated may consider it resolved or rescinded! and act accordingly! without previous court action! but it proceeds at its own ris*. /or it is only the final judgment of the corresponding court that will conclusively and finally settle whether the action ta*en was or was not correct in law. 5ut the law definitely does not re%uire that the contracting party who believes itself injured must first file suit and wait for a judgment before ta*ing e+trajudicial steps to protect its interest. Otherwise! the party injured by the other2s breach will have to passively sit and watch its damages accumulate during the pendency of the suit until the final judgment of rescission is rendered when the law itself re%uires that he should e+ercise due diligence to minimi@e its own damages (Civil Code! 0rticle AA>=). in every case where the e+trajudicial resolution is contested only the final award of the court of competent jurisdiction can conclusively settle whether the resolution was proper or not. in case of abuse or error by the rescinder the other party is not barred from %uestioning in court such abuse or error! the practical effect of the stipulation being merely to transfer to the defaulter the initiative of instituting suit! instead of the rescinder.

.his was reiterated in Rulueta vs. (ariano where we held that e+trajudicial rescission has legal effect where the other party does not oppose it. 4here it is objected to! a judicial determination of the issue is still necessary. .he contention that private respondent had waived his right to be notified under paragraph $ of the contract is neither meritorious because it was a contract of adhesion! a standard form of petitioner corporation! and private respondent had no freedom to stipulate. 0 waiver must be certain and une%uivocal! and intelligently madeI such waiver follows only where liberty of choice has been fully accorded. (oreover! it is a matter of public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions. 4aiver of notice is one such onerous and oppressive condition to buyers of real estate on installment payments A. Fes. .he payments must be returned. 0&.. "=#). &escission creates the obligation to return the things which were the object of the contract! together with their fruits! and the price with its interestI conse%uently! it can be carried out only when he who demands rescission can return whatever he may be obliged to restore. 7either sham rescission ta*e place when the things which are the object of the contract are legally in the possession of third persons who did not act in bad faith. 1n this case! indemnity for damages may be demanded from the person causing the loss. =.4e come now to the third and fourth issues regarding the personal liability of petitioner Onstott who was made jointly and severally liable with petitioner corporation for refund to private respondent of the total amount the latter had paid to petitioner company. 1t is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as wen as from that of any other legal entity to which it may be related. "" 0s a general rule! a corporation may not be made to answer for acts or liabilities of its stoc*holders or those of the legal entities to which it may be connected and vice versa. However! the veil of corporate fiction may be pierced when it is used as a shield to further an end subversive of justice "A I or for purposes that could not have been intended by the law that created it "= I or to defeat public convenience! justify wrong! protect fraud! or defend crime. "; I or to perpetuate fraud or confuse legitimate issues ") I or to circumvent the law or perpetuate deception "$ I or as an alter ego! adjunct or business conduit for the sole benefit of the stoc*holders. 4e find no badges of fraud on petitioners2 part. .hey had literally relied! albeit mista*enly! on paragraph $ (supra) of its contract with private respondent when it rescinded the contract to sell e+trajudicially and had sold it to a third person. 1n this case! petitioner Onstott was made liable because he was then the 'resident of the corporation and he a to be the controlling stoc*holder. 7o sufficient proof e+ists on record that said petitioner used the corporation to defraud private respondent. He cannot! therefore! be made personally liable just because he :appears to be the controlling stoc*holder3. (ere ownership by a single stoc*holder or by another corporation is not of itself sufficient ground for disregarding the separate corporate personality. "# 1n this respect then! a modification of the &esolution under review is called for.

Angeles v. Calasan7 G.R. No. -0 222+ 3arc) 12, 1925 !acts" Herein plaintiffs-appellees entered into a contract to sell with defendants-appellants for the former2s purchase of a parcel of land located in Cainta! &i@al. .he agreed amount is '=! A>.>> plus <Q interest per annum. .he plaintiffs-appellees made a downpayment of '= A.>> upon the e+ecution of the contract and promised to pay the balance in monthly installments of ';".A> until fully paid. .he plaintiffsappellees paid the monthly instalments until Buly " $$ and their aggregate payment already reached

';!)==.=#. 0fter several months! due to plaintiffs-appellees failure to pay the monthly installments despite defendants-appellants demands! the latter cancelled the contract to sell pursuant to a provision in the contract which states that the seller (defendants-appellants) has the :right to declare the contract cancelled and of no effect3 as a conse%uence of failure to pay the agreed amount plus interests. .hus! the plaintiffs-appellees filed a civil action in court to compel defendants-appellants to e+ecute in their favour a final deed of sale citing their aggregate payment of ';!)==.=# which includes payment of interests! ta+es and incidental e+penses. .he lower court rendered judgement in favour of the plaintiffsappellees and a motion for reconsideration filed by the defendants-appellants were denied. .he Court of 0ppeals then brought the matter to the -upreme Court as it involves pure %uestions of law. #ssue" 4hether or not the contract has been automatically and validly cancelled by the defendant-appellants (Ursula .orres Calasan@ and .omas Calasan@) $el%" Herein plaintiffs-appellees entered into a contract to sell with defendants-appellants for the former2s purchase of a parcel of land located in Cainta! &i@al. .he agreed amount is '=! A>.>> plus <Q interest per annum. .he plaintiffs-appellees made a downpayment of '= A.>> upon the e+ecution of the contract and promised to pay the balance in monthly installments of ';".A> until fully paid. .he plaintiffsappellees paid the monthly instalments until Buly " $$ and their aggregate payment already reached ';!)==.=#. 0fter several months! due to plaintiffs-appellees failure to pay the monthly installments despite defendants-appellants demands! the latter cancelled the contract to sell pursuant to a provision in the contract which states that the seller (defendants-appellants) has the :right to declare the contract cancelled and of no effect3 as a conse%uence of failure to pay the agreed amount plus interests. .hus! the plaintiffs-appellees filed a civil action in court to compel defendants-appellants to e+ecute in their favour a final deed of sale citing their aggregate payment of ';!)==.=# which includes payment of interests! ta+es and incidental e+penses. .he lower court rendered judgement in favour of the plaintiffsappellees and a motion for reconsideration filed by the defendants-appellants were denied. .he Court of 0ppeals then brought the matter to the -upreme Court as it involves pure %uestions of law. Citing the case of University of the 'hilippines v. 6e los 0ngeles (=) -C&0 ">A) where it is stated that :if the other party denies that rescission (of a contract) is justified! it is free to resort to judicial action in its own behalf and bring the matter to court3 and that :for it is only the final judgement of the Court that will conclusively and finally settle the action ta*en whether the action ta*en was or was not correct in law3! the -upreme Court that the right to rescind the contract for non performance of one of its stipulations is not absolute. /urthermore! citing -ong /o N Co. v. Hawaiian-'hilippine Co.! (;< 'hil. #A"! #A<) which states that :.he general rule is that rescission of a contract will not be permitted for a slight or casual breach! but only for such substantial and fundamental breach as would defeat the very object of the parties in ma*ing the agreement! the Court held that the breach of the contract is so slight and casual when the initial downpayment plus the aggregates amount is considered. .he Court also cited 0rticle "A=; of the Civil Code which states that, :1f the obligation has been substantially performed in good faith! the obligor may recover as though there had been a strict and complete fulfillment! less damages suffered by the obligee3 as a provision which militates against the unilateral act of the defendants-appellants in cancelling the contract. .he Court also held that the contract to sell! being essentially a contract of adhesion! must be construed against the party causing it. .herefore! the Court ruled in favour of the plaintiffs-appellees and did not uphold the cancellation of the contract. .he petition of the defendants-appellants was denied and the plaintiffs-appellees were ordered to pay the remaining balance and after which the defendants-appellants were ordered to e+ecute a final deed of sale in favour of the plaintiffs-appellee.

GARC#A, 8R. @. C'AR; '! A((,A-&, G.R.N'. 20201, !acts" On 0pril ")! " <<! 4estern (inolco Corporation (4(C) secured from the 'hilippine 1nvestments -ystems Organi@ation ('1-O) two loans amounting to 'A!)>>!>>> and '"!>>>!>>> to be paid on (ay =>! " <<. On the same date! 0ntonio Garcia!jr. and ?rnest Cahn e+ecuted a surety agreement binding themselves jointly and severally for the payment of the 'A!)>>!>>> loan on due date. 0fter repeated demands wherein 4(C still did not pay the loans! Garcia was sued by Jasal 6evelopment Corporation which the credit was assigned to by '1-O! for not paying the loan as part of the surety agreement. On

(ay " #=! Garcia moved that the complaint be dismissed on the ground that the principal obligation has been novated. He claimed that there was novation due to the fact that there was re-structuring of the payment scheme and thus! the e+isting contract has been novated. .he trial court granted the petition of Garcia but it was later reversed by the Court of 0ppeals. #ssue" 4hether or not there was indeed novation of the old contract or obligation. $el%" .he -upreme Court held that 7ovation of contract cannot be presumed. 1n order that an obligation may be e+tinguished by another which substitutes the same! it is imperative that it be so declared in une%uivocal terms! or that the old and the new obligations be on every point compatible with each other. 1n every novation! there are four essential re%uisites, ") a previous valid obligationI A) the agreement of the parties to a new contractI =) the e+tinguishment of the old contractI and ;) the validity of the new one. 7ovation re%uires the creation of new contractual relations as well as e+tinguishment of the old. .here must be consent of all the parties to the substitution! resulting in the e+tinction of the old obligation and the creation of a new valid one. .he legal doctrine is that an obligation to pay a sum of money is not novated in a new instrument by changing the term of payment and adding other obligations not incompatible with the old one. 1t is not proper to consider an obligation novated as in the case at bar by the mere granting of e+tension of payment which did not even alter its essence. .he -upreme Court denied the petition of Garcia and affirmed the decision of the Court of 0ppeals.

As*a (ro%uct*on Co. #nc. v. (ano G.R. No. -051052 8anuar/ 24, 1992 !acts" -ometime in (arch " <$! private respondents! who claimed to be the owners of a building constructed on a lot leased from Jucio -an 0ndres and located in Lalen@uela! 5ulacan! offered to sell the building to the petitioners for '"<>!>>>.>>. 'etitioners agreed because of private respondentsS assurance that they will also assign to the petitioners the contract of lease over the land. .he above agreement and promise were not reduced to writing. 'rivate respondents undertoo* to deliver to the petitioners the deed of conveyance

over the building and the deed of assignment of the contract of lease within si+ty ($>) days from the date of payment of the downpayment of 'A>!>>>.>>. .he balance was to be paid in monthly installments. On A> (arch " <$! petitioners paid the downpayment and issued eight (#) postdated chec*s drawn against the ?%uitable 5an*ing Corporation for the payment of the eight (#) monthly instalments. &elying on the good faith of private respondents! petitioners constructed in (ay " <$ a weaving factory on the leased lot. Unfortunately! private respondents! despite e+tensions granted! failed to comply with their underta*ing to e+ecute the deed to sale and to assign the contract despite the fact that they were able to encash the chec*s dated => Bune and => Buly " <$ in the total amount of '=>!>>>.>>. 4orse! the lot owner made it plain to petitioners that he was unwilling to give consent to the assignment of the lease unless petitioners agreed to certain onerous terms! such as an increase in rental! or the purchase of the land at a very unconscionable price. 'etitioners thereafter removed their effects from the disputed land and therefore filed a case for the collection of the paid instalments which the lower court dismissed because it falls within the purview of the re%uirements as set forth in the -tatute of /rauds. Hence! this petition. #ssue" 4hether or not an action for the refund of partial payments of the purchase price of a building covered by an oral agreement to sell it with an oral promise to assign the contract of lease on the lot where the building is constructed is barred by the -tatute of /rauds8 $el%" 7o. .he statute of frauds is not applicable because there is partial performance in the aforementioned contract which is the payment of consideration in lieu of the promise of the defendants. 1t goes without saying then! as held in the early case of 0lmirol! et al. vs. (onserrat! "< that the statute will apply only to e+ecutory rather than e+ecuted contracts. 'artial e+ecution is even enough to bar the application of the statute 4H?&?/O&?! the petition is hereby G&07.?6. .he challenged Orders of "# 0pril " < and A" Bune " < in Civil Case 7o. M-A=) = of the court below are hereby 077UJJ?6 and -?. 0-16?! and the complaint in said case is hereby ordered &?17-.0.?6. .he default order against private respondent Jolita Jee Je Hua shall stand and private respondent 0lberto 6y is ordered to file his 0nswer to the complaint with the court below within ten (">) days from receipt of this decision. .his decision shall be immediately e+ecutory.

:o/sa= v #nterp)*l (romot*ons 1 2 &CRA 1+5 !acts" .he case is an appeal by -olomon 5oysaw and 0lfred Fulo Br. from C/1 ordering them to pay (anuel 7ieto Br. 'A>*-moral damages! ')*-atty2s fees!I and to 1nterphil 'romotions! 1nc. and Jope -arreal -r. (additional 'A>* for moral damages)! 'A)>*-unreali@ed profits! '==!=$ .<A-actual damages! ')*-atty2s fees. 0nd costs. /acts

(ay "! " $"! -olomon 5oysaw is a bo+er handled by 4illie Cetchum(wD partner &us*ay). .hey signed a contract with 1nterphil (represented by -arreal) for a match with Gabriel :/lash3 ?lorde for the world junior lightweight championship. .he stipulations of the contract were the venue in the &i@al (emorial stadium on -ept. =>-$". 1n case of mutually-agreed postponement! it would be no more than => days later. 0nd that 5oysaw would not prior to the match! engage in any other such contest without the written consent of 1nterphil. 6ays later! ?lorde signed a similar agreement with 1nterphil. 0 supplemental agreement bDw Cetchum N -arreal too* place. 5oysaw on Bune -$" fought Jouis 0vila in a ten-round non-title bout held in Jas Legas. On Buly A-$"! he changed his manager to B. 0mado 0raneta. On Buly ="-$"! 5oysaw arrived in the 'hilippines to get ready. On -ept. "-$"! 0raneta assigned his managerial rights to Fulo. On -ept A-$"! 5oysaw finally informed -arreal of his presence in the country. -ept. )-$" Fulo informed -arreal of the managerial changes and readiness to comply with the contract. On the same day! -arreal wrote to the Games and 0musement 5oard(G05) of the lac* of formal notification of the managerial rights switching and that 5oysaw be called for clarification. G05 did act upon it by calling for conferences! and decided to schedule the match for 7ov.;-$". .he U-0 7at2l 5o+ing 0ssoc. supervising all world-title fights approved the date. Fulo disagreed! and -arreal offered to change to Oct. A#! wDin the =>-day pd. ?arly Oct. Fulo contacted (amerto 5esa for promotion of the match. Oct.$-=" in one of Fulo2s communication to 5esa! he said that he was willing to allow the 7ov.; fight! if 5esa promotes it. .he 5oysaw-?lorde fight did push through but it wasn2t the contemplated fight in the contract. 5oysaw and Fulo petitioned C/1 &i@al against -arreal! 1nterphil and (anuel 7ieto Br. (G05 chairman! resps claim to have acted arbitrarily) damages for non-fulfillment of contract commitments. .rial dragged for = yrs because of appellants! until 5oysaw could no longer return (ta*en as leaving wDout notice to court and counsel)! C/1 decided for the respondents and denied a postponement N motion for new trial.

#ssues" ") 4hether or not there was a violation of the contract stipulations! and who was liable8 I A) 4hether or not there was a legal ground for postponementDwas 7ietoDG05 reasonable8 $el%" "st 1ssue, Fes! Fulo admitted the fact of 5oysaw and 0vila2s fight in Jas Legas and the assignment of the managerial rights over 5oysaw to different people (novation) without '&1O& approval of 1nterphil. ?ven if Fulo sent a letter! there is no showing that 1nterphil acceded to the substitution judging from the complaint in G05. Our law recogni@es actionable in every contract breach. 0rt.""<>3those who in the performance of their obligations are guilty of fraud! negligence or delay! and those who in any manner contravene the terms thereof! are liable for damages.3 0rt"" "3the power to rescind obligation is implied! in reciprocal ones! in case one of the obligors should not comply with what is incumbent upon him.3 7ovation which consists in substituting a new debtor in the place of the original one may be made even without the *nowledge or against the will of the latter! 5U. 7O. 41.HOU. .H? CO7-?7. O/ .H? C&?61.O&.3-ubstitution needs the consent of the creditor because the new debtor may cause delay or prevent the fulfillment of the obligation due to insolvency or inability. -ince the creditor is at ris*! then his consent must first be secured to be binding. And 1ssue, Fes! when the contract was unlawfully novated! the aggrieved creditor is not bound to deal with the substitute. He has a right to demand rescission or refusal to recogni@e the substitute. 1n this case they chose to renegotiate the date. .he G05 (not 7ieto himself) did not act arbitrarily when it set it to 7ov. ;

because indeed there is a novated contract (from evidence). 0nyways! 1nterphil was willing to set it to Oct. A# to be wDin the => day period.

-/%*a -. Geral%e7 v. Court of Appeals an% Denstar ;ravel Corporat*on G.R. No. 10225+, !ebruar/ 2+ 5199 6 !acts"

4ith reference to Civil Case 7o. M- >-;$; of the &.C of Mue@on City! 'etitioner Geralde@ filed an action for damages against &espondent Censtar .ravel Corporation for breach of contract with antecedent facts as follows, 'etitioner opt a AA-day ?urope tour travel pac*age offered by &espondent Corporation paying A! > dollars as consideration. .he tour did not end up as e+pected by herein petitioner! it did not as represented in the brochure, no ?uropean tour manager! hotels were not " st class and the /ilipino tour guide who is supposed to accompany them is a " st timer. 'etitioner then filed a breach of contract against &espondent Corporation for committing acts of representations constituting fraud in contracting the obligation. &.C rendered judgment ordering &espondent Corporation to pay petitioner )>>!>>> as moral damages! A>>!>>> as nominal damages! =>>!>>> as e+emplary damages and )>!>>> as litigation and attorney2s fees (all in pesos). On appeal! award for moral and e+emplary damages were deleted and a reduction of nominal damages to ;>!>>> pesos! this on account that the &espondent has substantially complied with the prestation and no malice or bad faith is imputable as a conse%uence . Hence! the petition. #ssue" 4hether or not private respondent acted in bad faith or with gross negligence in discharging it2s obligation under contract. $el%" On the foregoing considerations! respondent court erred in deleting the award for moral and e+emplary damages which may be awarded in breaches of contract where fraud is evident. 'rivate respondent faulted with fraud in the inducement! which is employed by a party to a contract in securing the consent of the other. 1n the case at bar! the 'rivate respondent has committed either dolo causante or dolo incidente by ma*ing false misrepresentation. ?ither which oblige a person to indemnify damages. 4herefore! premises considered! the decision of &espondent Court of 0ppeals is hereby set aside! and another one rendered! ordering private respondent Censtar .ravel Corporation to pay petitioner Jydia Geralde@ the sums of ' ">>!>>> by way of moral damages! ' )>!>>> as e+emplary damages! and ' A>!>>> as attorney2s fees with litigation cost against private respondent. .he nominal award of damages is hereby deleted.

A8AE 3ARD,;#NG F D,@,-'(3,N; C'R(. @&. C'AR; '! A((,A-& G.R. N'. 112525, &,(;,3:,R 1 , 1995 !acts"

Flang-Flang (erchandising Company! a partnership between 0ngelita &odri%ue@ and 0ntonio .an! obtained a loan of 'A)>!>>>.>> from (etropolitan 5an* and .rust Company! and to secure payment of the same! spouses (arcial -ee and Jilian .an constituted a real estate mortgage in favor of the said ban* over the property in the 6istrict of 'aco! (anila. .he partnership had changed its name to 0ja+ (ar*eting Company without changing its composition and it obtained a loan of '")>!>>>.>> from the same ban* and e+ecuted a second real estate mortgage over the same property. 0s the partnership converted into a corporation and changed its name into 0ja+ (ar*eting and 6evelopment Corporation with the original partners and additional incorporators! another loan was obtained from the same mortgagee of '$>>!>>>.>>. 1n 6ecember " #>! the three loans were re-structured into one loan and 0ja+ (ar*eting represented by 0ntonio .an and ?lisa .an in their capacity as solidary co-obligor e+ecuted a 'romissory 7ote. .he petitioner argue that a novation occurs when their three loans which are all secured by the same real estate property were consolidated! thereby e+tinguishing their monetary obligations and releasing the mortgaged property from liability. #ssue" 4hether or not there is a novation occurred when the three loans which are all secured by the same real estate property were consolidated into one single loan under a 'romissory 7ote8 $el%" 7ovation is the e+tinguishment of an obligation by the substitution or change of the obligation by a subse%uent one which e+tinguishes or modifies the first! either by changing the object or principal conditions! or by substituting another in place of the creditor. 1t is never presumed and will not be allowed unless it is clearly shown by e+press agreement! or by acts of e%ual import. .hus! to effect an objective novation it is imperative that the new obligation e+pressly declare that the old obligation is thereby e+tinguished! or that the new obligation be on every point incompatible with the new one. .here is nothing in the records to show the une%uivocal intent of the parties to novate the three loan agreements! no indication of the e+tinguishment of! or an incompatibility with. 1n addition! the consolidation of the three loans did not release the mortgaged real estate property from liability because the mortgage annotations! all remained uncancelled! indicating the subsistence of the real estate mortgage. 7either can it be validly contended that there was a change or substitution in the persons of either the creditor or the debtor. .he conversation from a partnership to a corporation ! without sufficient evidence that they were e+pressly released from their obligations! with new corporate personality! a third person or new debtor within the conte+t of subjective novation. 7ovation purported change in the third person must be clear and e+press. Clearly then! neither objective nor subjective novation occurred.

-*m<et<a* &ons 3*ll*ng v. CA GG.R. No. 112509. December 1, 1995.H !acts"

'hilippine &emnants Co.! 1nc. constituted the 5an* of the 'hilippine 1slands (5'1) as its trustee to manage! administer! and sell its real estate property. 'edro &evilla! Br.! a licensed real estate bro*er was given formal authority by 5'1 to sell the lot for '"!>>>.>> per s%.m. .his arrangement was concurred in by the owners of the 'hilippine &emnants. 5ro*er &evilla contacted 0lfonso Jim of Jim*et*ai -ons (illing (J-() who agreed to buy the land. J-(2s officials and &evilla were given permission to enter and view the property they were buying (by &olando L. 0romin! 5'1 0ssistant Lice-'resident). &evilla formally informed 5'1 that he had procured a buyer! J-(. J-(2s officials! 0lfonso Jim and 0lbino Jim*et*ai! went to 5'1 to confirm the sale. .hey were entertained by Lice-'resident (erlin 0lbano and 0sst. Lice'resident 0romin. J-( as*ed that the price of '"!>>>.>> per s%.m. be reduced to ' >>.>> while 0lbano stated the price to be '"!">>.>>. .he parties finally agreed that the lot would be sold at '"!>>>.>> per s%.m. to be paid in cash. -ince the authority to sell was on a first come! first served and non-e+clusive basis! it may be mentioned at this juncture that there is no dispute over J-(2s being the first comer and the buyer to be first served. 7otwithstanding the final agreement to pay '"!>>>.>> per s%.m. on a cash basis! 0lfonso Jim as*ed if it was possible to pay on terms. .he ban* officials stated that there was no harm in trying to as* for payment on terms because in previous transactions! the same had been allowed. 1t was the understanding! however! that should the term payment be disapproved! then the price shall be paid in cash. 1t was 0lbano who dictated the terms under which the installment payment may be approved! and acting thereon! 0lfonso Jim! on the same date! "" Buly " ##! wrote 5'1 through (erlin 0lbano embodying the payment initially of ">Q and the remaining >Q within a period of > days. A or = days later! J-( learned that its offer to pay on terms had been fro@en. 0lfonso Jim went to 5'1 on "# Buly " ## and tendered the full payment to 0lbano. .he payment was refused because 0lbano stated that the authority to sell that particular piece of property in 'asig had been withdrawn from his unit. .he same chec* was tendered to 5'1 Lice-'resident 7elson 5ona who also refused to receive payment. 0n action for specific performance with damages was thereupon filed on A) 0ugust " ## by J-( against 5'1 with the &.C 'asig (5ranch ")"). 1n the course of the trial! 5'1 informed the trial court that it had sold the property under litigation to 7ational 5oo* -tore (75-) on "; Buly " # . .he complaint was thus amended to include 75-. On "> Bune " "! the trial court rendered judgment in favor of J-(I holding that there was a perfected contract between J-( and 5'1! and thus declared the 6eed of -ale involving the lot in 'asig in the name of 5'1 and in favor of 75- as null and voidI ordered the &egister of 6eeds of the 'rovince of &i@al to cancel the .C. which may have been issued in favor of 75- by virtue of the said deedI ordered 5'1 upon receipt by it from J-( the full payment to e+ecute a 6eed of -ale in favor of the latter of the said property at the price of '"!>>>.>> per s%.m. and in default thereof! the Cler* of Court is directed to e+ecute the deed dated "; Buly " # I ordered the &egister of 6eeds of 'asig! upon registration of the said deed! whether e+ecuted by 5'1 or the Cler* of Court and payment of the corresponding fees and charges! to cancel said .C. ; ="AA and to issue! in lieu thereof! another transfer certificate of title in the name of J-(I ordered 5'1 and 75- to pay in solidum to J-( the sums of '">!>>>!>>>.>> as actual and conse%uential damages and '")>!>>>.>> as attorney2s fees and litigation e+penses! both with interest at "AQ per annum from date of judgmentI on the cross-claim by the ban* against 75-! ordered 75- to indemnify the ban* of whatever 5'1 shall have paid to J-(I dismissed the counterclaim of both 5'1 and 75- against J-( and the cross-claim of 75- against 5'1I with costs against 5'1 and 75-. Upon elevation of the case to the Court of 0ppeals! the decision of the trial court was reversed and the complaint dismissed on "A 0ugust " ;. 1t was held that no contract of sale was perfected because there was no concurrence of the three re%uisites enumerated in 0rticle "="# of the Civil Code. Hence! the petition. .he -upreme Court reversed and set aside the %uestioned judgment of the Court of 0ppeals! and reinstated the "> Bune " " judgment of 5ranch ")" of the &.C of .he 7ational Capital Budicial &egion stationed in 'asig! (etro (anila e+cept for the award of '">!>>>!>>>.>> damages! which was deleted.

#ssues" ".) 4as there a perfected contract A.) 6oes 5'1 officials have full authority to bind the ban*

=.) 0re evidence supporting the sale competent and admissible ;.) 6oes the sale of the lot to 7ational 5oo* -tore characteri@ed by bad faith.

$el%" .he supremene court reversed and set aside the judgment of court of appeals and the judgment of branch ")" of the regional trial court of the national capital judicial region is reinstated e+cept for the award of '">!>>>!>>> damages with is hereby deleted. ".) Fes. .he perfection of the contract too* place when 0romin and 0lbano! acting for 5'1! agreed to sell and 0lfonso Jim with 0lbino Jim*et*ai! acting for petitioner Jim*et*ai! agreed to buy the disputed lot at '"!>>>.>> per s%uare meter. 0side from this there was the earlier agreement between petitioner and the authori@ed bro*er. .here was a concurrence of offer and acceptance! on the object! and on the cause thereof. .he fact that the deed of sale still had to be signed and notari@ed does not mean that no contract had already been perfected. 0 sale of land is valid regardless of the form it may have been entered into (Claudel vs. Court of 0ppeals! " -C&0 ""=! "" O" "P). .he re%uisite form under 0rticle ";)# of the Civil Code is merely for greater efficacy or convenience and the failure to comply therewith does not affect the validity and binding effect of the act between the parties (Litug! Compendium of Civil Jaw and Burisprudence! " = &evised ?dition! p. ))A). A.) .he alleged lac* of authority of the ban* officials acting in behalf of 5'1 is not sustained by the record. 1f 5'1 could give the authority to sell to a licensed bro*er! there is no reason to doubt the authority to sell of the two 5'1 Lice-'residents whose precise job in the 5an* was to manage and administer real estate property. =.) Fes. Counsel for respondents cross-e+amined petitionerSs witnesses at length on the contract itself! the purchase price! the tender of cash payment! the authority of 0romin and &evilla! and other details of the litigated contract. Under the 0brenica rule (reiterated in a number of cases! among them .alosig vs. Lda. de 7ieba ;= -C&0 ;<A O" <AP)! even assuming that parol evidence was initially inadmissible! the same became competent and admissible because of the crosse+amination! which elicited evidence proving the evidence of a perfected contract. .he crosse+amination on the contract is deemed a waiver of the defense of the -tatute of /rauds (Litug! Compendium of Civil Jaw and Burisprudence! " = &evised ?dition! supra! p. )$=). ;.) On the fourth %uestion of whether or not 75- is an innocent purchaser for value! the record shows that it is not. 1t acted in bad faith. &espondent 75- ignored the notice of lis pendens annotated on the title when it bought the lot. 1t was the willingness and design of 75- to buy property already sold to another party which led 5'1 to dishonor the contract with Jim*et*ai.

@*ctor*no $ernan%e7 v. CA an% subst*tute% )e*rs of Rev. !r. -uc*o Garc*a 5Decease%6 G.R. no. -0 11+2, Apr*l 24, 1922 !acts"

.hree parcels of land were owned by /r. Garcia in 'arana%ue adjoining the lands owned by petitioner. 1n " )$ Hernande@ and Garcia had an agreement orally to set the boundaries of their lands. .he bureau of lands put up monuments to mar* the boundaries as agreed by the petitioner and respondent on the same year. .hen after on " ) /r. Garcia filed for an application for registration of the three parcels of land under his name. .he court granted respondent2s application! with this petitioner discovered that the AA> s%uare meters of land included in the application was part of his property. 'etitioner filed for a review of the decree of registration and was denied by the C/1. Hence! an appeal was made to the C0 who affirmed the decision of the C/1 declaring /r. Garcia the absolute owner of said lands by ac%uisitive prescription! stating that petitioner had made no objection to the application and that the agreement was unenforceable since does not comply with the -tatute of /rauds because it is not on writing and that only )"$ s%uare meters of land was on the deed of sale upon buying the said land by the petitioner2s parents #ssue" ". 4hether or not there was fraud on the application for registration of said lands by respondent8 A. 4hether or not the agreement is valid not being in writing8 =. 4hether or not the petitioner2s right to file for a review has prescribed by his inaction8 $el%" .he -C upon loo*ing of the facts on record found out that the C0 overloo*ed on its factual conclusion and failed to consider the same that is essential to the issue. On the first issue! the government through the bureau of land monuments put up mar*s to separate both their estates according to their agreement! which has been altered by the application! modifying the mar*s of separation! clearly herein petitioner is a victim of fraud! cheated to vindicate his claim to the land. On the second! according to article ";>= of the civil code! formality to be in writing is only re%uired on leases more than " year or sale of property or an interest! respondents reliance on the statute of /rauds is misplaced! further petitioner2s tenants are living for a long time on the disputed lands. .herefore the agreement was valid. /or the third! the remedy must be given to the petitioner being a victim of fraudI therefore he is entitled to the relief sought. Jastly the information on the deed of sale cannot be ta*en into consideration on this case because it was not accurate as to the actual measure of the estate upon purchase. 4herefore the -C reversed and set aside the decision of the C0 and declared the AA> s%uare meters of land in the Original Certificate of .itle of respondent was null and void granting the said land to petitioner and re-issuing a new OC. to the respondent e+cluding the AA> s%uare meter land.

$'A&, #N;,RNA;#'NA- :A#-D#NG ;,NAN;& A&&'C#A;#'N, #NC., vs.#N;,R3,D#A;, A((,--A;, C'AR;, C,N;,R;'IN 3ARD,;#NG C'R(., 3AN#-A ;'I,R& D,@,-'(3,N; C'R(., AND ;$, G'@,RN3,N; &,R@#C, #N&ARANC, &Y&;,3 5G.R. No. 45224 8une +0, 19246 !acts"

'etitioner House 1nternational 5uilding .enants 0ssociation! 1nc. (0--OC10.1O7! for short) is a domestic non-stoc*! non-profit civic corporation! whose incorporators! directors and members constitute the great majority of more than a hundred heads of families who are tenants of long and good standing of the ";storey House 1nternational 5uilding. .he land and the improvements thereon was foreclosed by G-1-! which subse%uently sold it to Centertown (ar*eting Corporation (C?7.?&.O47! for short) in a deed of conditional sale! without notice to the tenants of the building and without securing the prior clearance of the then (inistry of Human -ettlements. C?7.?&.O47 was not authori@ed by its 0rticles of 1ncorporation to engage in the real estate business so it assigned to its sister corporation .O4?&-! with almost the same incorporators and stoc*holders! all its rights and obligations under the 6eed of Conditional -ale! with the consent and approval of the G-1-. .hereafter! herein petitioner filed a complaint with the &egional .rial Court of (anila against C?7.?&.O47! .O4?&- and G-1- for annulment of the deed of conditional sale and the subse%uent assignment thereof by C?7.?&.O47 to .O4?&-. .he complaint alleged in part that the 6eed of Conditional -ale is null and void ab initio for being ultra vires! since defendant C?7.?&.O47 is not %ualified to ac%uire real estate property or to engage in real estate transactions. .he court a %uo and Court of 0ppeals dismissed the complaint. Hence! this petition for review on certiorari. #ssues" (") 4hether petitioner has the personality to sue! on its own! as a corporation representing its members who are tenants of the House 1nternational 5uilding! and (A) 4hether petitioner has a cause of action against respondents G-1-! C?7.?&.O47 and .O4?&-. $el%" ". 7one. 1n the present case! the real parties in interest are the tenants of the House 1nternational 5uilding and not the petitioner 0--OC10.1O7! which has a personality separate and distinct from that of its members. -ection A! &ule = of the &ules of Court provides, -ec. A. 'arties in interest. ?very action must be prosecuted and defended in the name of the real party in interest. 0ll persons having an interest in the subject of the action and in obtaining the relief amended shall be joined as plaintiffs. -uch rights of the tenants are personal and individual rights which can only be claimed by the tenants who must necessarily be the indispensable and real parties in interest and certainly not the plaintiff-appellant organi@ation. A. 0ppellant is not privy to either the deed of conditional sale or the assignment. 0rt. "= < of the Civil Code provides, 0rt. "= <. .he action for the annulment of contracts may be instituted by all who are thereby obliged principally or subsidiarily. He who has no right in a contract is not entitled to prosecute an action for nullity! for! according to the precedents established by the courts! the person who is not a party to a contract! nor has any cause of action or representation from those who intervened therein! is manifestly without right of action and personality such as to enable him to assail the validity of the contract.

(R,C#--AN' N,C,&#;', ,;C vs.NA;#@#DAD (ARA&, ,; A- . G.R. No. -010105, 8une +0, 1952 !acts"

1n the morning of Banuary A#! " $;! -everina Garces and her one-year old son! 'recillano 7ecesito! carrying vegetables! boarded passenger auto truc* or bus 7o. " of the 'hilippine &abbit 5us Jines at 0gno! 'angasinan. .he passenger truc*! driven by /rancisco 5andonell! then proceeded on its regular run from 0gno to (anila. 0fter passing (angatarem! 'angasinan truc* 7o. " entered a wooden bridge! but the front wheels swerved to the rightI the driver lost control! and after wrec*ing the bridgeSs wooden rails! the truc* fell on its right side into a cree* where water was breast deep. .he mother! -everina Garces! was drownedI the son! 'recillano 7ecesito! was injured! suffering abrasions and fracture of the left femur. -ubse%uently! actions for damages were brought directly against the operator of the bus. .he latter pleaded that the accident was due to Tengine or mechanical troubleT independent or beyond the control of the defendants or of the driver 5andonell. 0fter joint trial! the Court of /irst 1nstance found that the bus was proceeding slowly due to the bad condition of the roadI that the accident was caused by the fracture of the right steering *nuc*le! which was defective in that its center or core was not compact but Tbubbled and cellulousT! a condition that could not be *nown or ascertained by the carrier despite the fact that regular thirty-day inspections were made of the steering *nuc*le! since the steel e+terior was smooth and shiny to the depth of =D"$ of an inch all aroundI that the *nuc*les are designed and manufactured for heavy duty and may last up to ten yearsI that the *nuc*le of bus 7o. " that bro*e on Banuary A#! " );! was last inspected on Banuary )! " );! and was due to be inspected again on /ebruary )th. Hence! the trial court! holding that the accident was e+clusively due to fortuitous event! dismissed both actions. Hence this appeal. #ssues" ". 4hether or not the carrier is liable for the injuries and damages sustained by the passengers. A. 4hether or not the cause of the accident is that of fortuitous event. $el%" ". Fes. .he -upreme Court held that the preponderance of authority is in favor of the doctrine that a passenger is entitled to recover damages from a carrier for an injury resulting from a defect in an appliance purchased from a manufacturer! whenever it appears that the defect would have been discovered by the carrier if it had e+ercised the degree of care which under the circumstances was incumbent upon it! with regard to inspection and application of the necessary tests. /or the purposes of this doctrine! the manufacturer is considered as being in law the agent or servant of the carrier! as far as regards the wor* of constructing the appliance. 0ccording to this theory! the good repute of the manufacturer will not relieve the carrier from liabilityT ("> 0m. Bur. A>)! s! "=A;I and cases cited therein). .he rationale of the carrierSs liability is the fact that the passenger has neither choice nor control over the carrier in the selection and use of the e%uipment and appliances in use by the carrier. Having no privity whatever with the manufacturer or vendor of the defective e%uipment! the passenger has no remedy against him! while the carrier usually has. 1t is but logical! therefore! that the carrier! while not in insurer of the safety of his passengers! should nevertheless be held to answer for the flaws of his e%uipment if such flaws were at all discoverable. A. 0s to the second issue! the record is to the effect that the only test applied to the steering *nuc*le in %uestion was a purely visual inspection every thirty days! to see if any crac*s developed. 1t nowhere appears that either the manufacturer or the carrier at any time tested the steering *nuc*le to ascertain whether its strength was up to standard! or that it had no hidden flaws would impair that strength. .his periodical visual inspection of the steering *nuc*le as practiced by the carrierSs agents did not measure up to the re%uired legal standard of Tutmost diligence of very cautious personsT - Tas far as human care and foresight can provideT! and therefore that the *nuc*leSs failure can not be considered a fortuitous event that e+empts the carrier from responsibility (Jasam vs. -mith! ;) 'hil. $)<I -on vs. Cebu 0utobus Co.! ; 'hil.! # A.). ;'-'3,' -#GA;AN @&. C'AR; '! A((,A-& G.R. No. 1+2144. !ebruar/ 12, 2002 !acts"

'etitioners Jigutan and dela Jlana obtained a loan in the amount of '"A>! >>>.>> from respondent -ecurity 5an* and .rust Company. 0s a result! petitioners e+ecuted a promissory note binding them! jointly and severally! to pay the sum borrowed with an interest of ")."# Q per annum upon maturity and to pay a penalty of )Q every month on the outstanding principal and interest in case of default. (oreover! they agreed to pay ">Q of the total amount due by way of attorney2s fees if the matter were indorsed to a lawyer for collection or if a suit were instituted to enforce payment. .he obligation matured and the ban* granted an e+tension to pay. 6espite several demands! petitioners failed to settle their debt in the amount of to '"";! ;"$.">. Conse%uently! the ban* filed a complaint for recovery of the amount due with the &egional .rial Court (&.C). 6ue to petitioners2 absence on a certain hearing! the court considered the case submitted for decision. .hereafter! petitioners filed a motion for reconsiderationI however! the trial court denied the same and rendered a decision in favor of respondent. On appeal! petitioners assailed the imposition of the AQ service charge! the )Q per month penalty charge and ">Q attorneySs fees. .he Court of 0ppeals (C0) affirmed the decision of the trial court! e+cept on the imposition of the AQ service charge which was deleted pursuant to Central 5an* Circular 7o. <#=. Unsatisfied! both filed their respective motion for reconsideration. .he C0 found merit on respondent2s contention that 6efault generally begins from the moment the creditor demands the performance of the obligation. However! demand is not necessary to render the obligor in default when the obligation or the law so provides and conse%uently! rendered a decision in favor of respondent. Hence! petitioners2 filed a petition for review with the -upreme Court. #ssues" ".4hether or not the court is correct in holding the borrowers liable for the penalty charge. A.4hether or not the subse%uent e+ecution of the real estate mortgage as security for the e+isting loan would have resulted in the e+tinguishment of the original contract because of novation. $el%" ". 0 penalty clause! e+pressly recogni@ed by law! is an accessory underta*ing to assume greater liability on the part of an obligor in case of breach of an obligation. 1t functions to strengthen the coercive force of the obligation and to provide! in effect! for what could be the li%uidated damages resulting from such a breach. .he obligor would then be bound to pay the stipulated indemnity without the necessity of proof on the e+istence and on the measure of damages caused by the breach. 0lthough a court may not at liberty ignore the freedom of the parties to agree on such terms and conditions as they see fit that contravene neither law nor morals! good customs! public order or public policy! a stipulated penalty! nevertheless! may be e%uitably reduced by the courts if it is ini%uitous or unconscionable or if the principal obligation has been partly or irregularly complied with. A. .he subse%uent e+ecution of the real estate mortgage as security for the e+isting loan would not have resulted in the e+tinguishment of the original contract of loan because of novation. 'etitioners ac*nowledge that the real estate mortgage contract does not contain any e+press stipulation by the parties intending it to supersede the e+isting loan agreement between the petitioners and the ban*. &espondent ban* has correctly postulated that the mortgage is but an accessory contract to secure the loan in the promissory note. 0n obligation to pay a sum of money is not e+tinctively novated by a new instrument which merely changes the terms of payment or adding compatible covenants or where the old contract is merely supplemented by the new one. 4hen not e+pressed! incompatibility is re%uired so as to ensure that the parties have indeed intended such novation despite their failure to e+press it in categorical terms. .he incompatibility! to be sure! should ta*e place in any of the essential elements of the obligation! i.e.! (") the juridical relation or tie! such as from a mere commodatum to lease of things! or from negotiorum gestio to agency! or from a mortgage to antichresis! or from a sale to one of loanI (A) the object or principal conditions! such as a change of the nature of the prestationI or (=) the subjects! such as the substitution of a debtor or the subrogation of the creditor. ?+tinctive novation does not necessarily imply that the new agreement should

be complete by itselfI certain terms and conditions may be carried! e+pressly or by implication! over to the new obligation. 'etition denied.

3,RCAN;#-, #N&ARANC, C'., #NC vs.$'N. C'AR; '! A((,A-& an% R,(ARA;#'N& C'33#&&#'N. G.R. No. 251 4 Apr*l 22, 1991 !acts"

On $ /ebruary " $;! the 'hilippine Government represented by the &epacom in Bapan and Bose Jope@ entered into a 'rocurement Contract with Bapanese suppliers for the ac%uisition of a fishing vessel! later named (DL TBolo Jema!T priced at U-U"<;! >>.>>. On A# 0ugust " $;! pursuant to the 'rotocol of 6elivery signed in Bapan! the TBolo JemaT was delivered to Bose Jope@. On A; -eptember " $;! Bose Jope@ posted a bond guaranteed by petitioner (ercantile in favor of &epacom. 1n that bond! Jope@ undertoo* to pay &epacom the amount of '$#!=#). > in the event of his failure to comply with any of his obligations under the Contract of Conditional 'urchase and -ale. On A (arch " $)! &epacom and Jope@ entered into a Conditional Contract of 'urchase and -ale covering the vessel TBolo JemaT for U-U"< !>>>.>> or its peso e%uivalent at the TpreferredT rate of e+change! without prejudice to re-adjustment should the -upreme Court confirm that the imposition of the free mar*et rate of e+change was proper or valid. .he T.erms and ConditionsT of the Contract! inter alia! provided that, . . . should the Conditional Lendee fail to pay any of the yearly installments when due! or utili@e the goods for any illegal purpose or purposes other than that for which the goods have been produced! or otherwise fail to comply with any of the terms and conditions of this contract or with any of the applicable provisions of the &eparations law andDor of the &ules and &egulations promulgated pursuant thereto! then the Conditional Lendor is hereby given the option to either rescind the contract upon notice to the Conditional Lendee in which case all sums already paid by the Conditional Lendee shall be forfeited as rentals in favor of the Conditional Lendor! and also that the Conditional Lendee shall deliver peacefully to the Conditional Lendor the property! subject of this contract or sue for specific performance in which case the whole amount remaining unpaid in this contract shall immediately become due and payable. 0mong the other obligations underta*en by Jope@ under the Contract was the posting of a performance bond in favor of &epacom to secure Jope@S compliance with his obligations. Jope@ failed to pay the first installment without interest on its due date despite repeated demands made on him. &epacom then demanded payment from (ercantile but the latter also refused to pay. .hereupon! on A# 0ugust " $)! &epacom confiscated the (ercantile bond and demanded payment of the amount of '$#!=#$. > covered by the bond. -ubse%uently! Jope@ posted ?GC1 5ond 7o. $)-"">= dated A> 7ovember " $) in the amount of '=$! >$.)"! issued by ?agle Guaranty Co.! 1nc. (T?agleT) in favor of &epacom to secure compliance by Jope@ of his obligations under the Contract of Conditional 'urchase and -ale . .he first installment with interest in the amount of '=$! >$.)" under the -chedule of 'ayments fell due on A# 0ugust " $$. 6espite repeated demands made by &epacom! Jope@ refused to pay that installment. 7otice was sent to ?agle who li*ewise refused to pay. .hereupon! &epacom confiscated ?GC1 5ond 7o. $)-"">=. On "; /ebruary " $<! &epacom instituted an action in the then Court of /irst 1nstance of (anila against (ercantile! ?agle and Bose Jope@ for the collection of the unpaid purchase price of the fishing vessel (DL TBolo JemaT as well as for interest! li%uidated damages! attorneySs fees and costs. .his case was! however! dismissed upon motion of &epacom. 'etitioner ma*es an issue of the fact that the price of the vessel was reduced as a result of the issuance of the writ. 'etitioner calls attention to the posting of the ?agle bond subse%uent to the issuance of the writ and concludes that it was to guarantee payment of the ten percent (">Q) of the reduced price of the vessel that the ?agle bond was posted! and that the (ercantile bond was accordingly released. 1t is further contended that petitionerSs bond could not have secured Jope@S obligation under the Contract of Conditional 'urchase and -ale since the latter was concluded after petitionerSs bond had been issued. 'etitioner argues that the (ercantile bond guaranteed only the procurement contract entered into prior to the issuance of the writ of preliminary injunction! and that the writ of preliminary injunction in effect had made the (ercantile bond unenforceable.

#ssues" ".) 6oes posting of another bond by Jope@ constitute novation through substitution of the debtor8 A.) 6oes reduction of price of the vessel released the mercantile bond8

$el%" ".) .he fact that subse%uent to the e+ecution of the Contract of Conditional 'urchase and -ale! Jope@ posted another bond! the ?agle bond! does not by itself suggest that there was a novation of (ercantileSs obligation through a substitution of the debtor. .he general rule is that novation in never presumedI it must always be clearly and une%uivocally shown. .hus! Tthe mere fact that the creditor receives a guaranty or accepts payments from a third person who has agreed to assume the obligation! when there is no agreement that the first debtor shall be released from responsibility! does not constitute novation! and the creditor can still enforce the obligation against the original debtor.T 1n the case at bar! the records do not at all show any e+press intention of the parties to e+tinguish the (ercantile bond. .he original relationship between Bose Jope@! (ercantile and &epacom remained unchanged despite the posting of the ?agle bond! there having been no agreement between &epacom! Bose Jope@ and ?agle to release (ercantile from the latterSs obligation under its bond. .he rule is that Tin a case of subjective novation through a change in the person of debtor! it is not enough that the juridical relation between the original parties is e+tended to include a third person! as this constitutes only an increase in the number of persons liable to the obligee. 1t is essential that the old debtor be released from the obligation and the third person ta*e his place in the relation. 1f the older debtor is not released! there is no novationI the third person becomes merely a co-debtor! surety or co-surety. A.).he -upreme court held that 1t is of no moment that the purchase price of the vessel was reduced. .he said reduction was merely a result of the conversion of the price of the vessel TBolo JemaT in U.-. 6ollars to 'hilippine 'esos using the preferred rate of e+change instead of the free mar*et rate of e+change which was originally intended by the parties. -uch was merely an adjustment of the peso value of the vesselI the dollar value thereof remained at U-U"<;! >>.>> and the re%uired amount of the performance bond was still ten percent (">Q) of U-U"<;! >>.>>. .he reduction of the peso purchase price did not e+tinguish (ercantileSs commitments under the bond. 1t must be recalled that under its bond (ercantile undertoo* to secure ten percent (">Q) of the purchase price of the vessel which at that time was pegged at '$#=!#) .>> after converting the dollar price into the corresponding peso price using the free mar*et rate of e+change. 4ith the adjustment of the vesselSs peso price mandated by the writ of preliminary injunction! (ercantileSs underta*ing to pay a certain number of pesos under certain conditions was adjusted downward but not e+tinguished.

&*la)*s 3<tg. v. #AC G. R. No. -04 024 December 4, 1929 !acts"

6e Jeon sold and delivered to 'etitioner -ilahis (*tg. various items of merchandise for the total amount of 'AA!A"=.<) payable within => days. Upon maturity! -ilahis failed to pay its accountI after repeated demands which after all were futile! 6e Jeon filed a complaint for collection before the C/1. -ilahis admitted the allegations of its indebtedness to 6e Jeon but presented as affirmative defenses, ". Oa debit memoP for 'AA!>>>.>> as unreali@ed profit of -ilahis! had 6e Jeon not sold to 6ole 'hilippines 6irectly its merchandiseI and A. return of a defective merchandise which -ilahis sold to its client. .he C/1 confirmed -ilahisS liability to 6e Jeon but ordered to '0&.10JJF O//-?. by -ilahis counterclaim as contained in the debit memo. 0s a result of the offset! 6e Jeon is entitled for '"=.<) to recover. 6e Jeon appealed to 10C which reversed the decision of the C/1. 1t held that 6e Jeon is not under the obligation 7O. to sell directly to 6ole 'hi.I thus the counterclaim of -ilahis was dismissed. Hence this present petition for review on certiorari. #ssue" 4hether or 7ot 6e Jeon is liable to pay -ilahis for the commission or margin for the direct sale made by the former directly to 6ole8 Corollarily! 4hether or not -ilahis is entitled to compensation or partial set off of its debt8 $el%" 7o. .his is ncessarily so because there is no evidence on record from which it can be inferred that there was any agreement between the petitioner and private respondent prohibiting the latter from selling directly to 6ole 'hilippines. -ince there is no obligation e+isting between 6e Jeon and -ilahis with regard to selling directly to 6ole! the latter has no right to claim agains the former. 0bsent of that obligation will not give rise to set off or compensation because under the law Tcompensation ta*es place when two persons! in their own right! are creditors and debtors to each other. 0rticle "A< of the Civil Code provides that, T1n order that compensation may be proper! it is necessary, O"P that each one of the obligors be bound principally! and that he be at the same time a principal creditor of the otherI OAP that both debts consist in a sum of money! or if the things due are consumable! they be of the same *ind! and also of the same %uality if the latter has been statedI O=P that the two debts be dueI O;P that they be li%uidated and demandableI O)P that over neither of them there be any retention or controversy! commenced by third persons and communicated in due time to the debtor. 4hen all the re%uisites mentioned in 0rt. "A< of the Civil Code are present! compensation ta*es effect by operation of law! even without the consent or *nowledge of the creditors and debtors. ) 0rticle "A< re%uires! among others! that in order that legal compensation shall ta*e place! Tthe two debts be dueT and Tthey be li%uidated and demandable.T Compensation is not proper where the claim of the person asserting the set-off against the other is not clear nor li%uidatedI compensation cannot e+tend to unli%uidated! disputed claim e+isting from breach of contract.T 4herefore! -ilahis is bound to pay 6e Jeon for its debt.

&' (#NG :AN vs. C'AR; '! A((,A-&, ;,D $AA ,N;,R(R#&,& C'R(. an% 3ANA,- C. ;#'NG, G.R. No. 12055 , &eptember 21, 1999 !acts"

.e* Hua ?nterprises Corp. (.e* Hua)! engaged in te+tile business! entered into four (;) lease agreements with lessor 6ee C. Chuan N -ons 1nc. (6CC-1) for one-year term. .hey provided that should the lessee continue to occupy the premises after the term! the lease shall be on a month-to-month basis. 4hen the contracts e+pired! the parties did not renew the contracts! but .e* Hua continued to occupy the premises. Upon the death of .e* Hua2s managing partner! -o 'e* Gio*! his grandson! -o 'ing 5ung! and herein petitioner! occupied the warehouse for his own te+tile business! .rendsetter (ar*eting. Fears thereafter! private respondent (anuel C. .iong sent a letter to herein petitioner demanding to the vacate the premises after temporarily allowing the use of the premises due to the close business relationship with petitioner2s late grandfather. 'etitioner refused to vacate and thereafter re%uested formal contracts of lease with 6CC-1 in favour of .rendsetter (ar*eting. 'etitioner claimed that after the death of his grandfather! -o 'e* Gio*! he had been occupying the premises for his te+tile business and religiously paid rent. 6CC-1 acceded to petitionerSs re%uest and the lease contracts in favor of .rendsetter were thus e+ecuted. 1n the suit for injunction! private respondents pressed for the nullification of the lease contracts between 6CC-1 and petitioner and also claimed damages. .he trial court ruled in favour of respondents! annulling the four Contracts of Jease between defendants -o 'ing 5un! doing business under the name and style of T.rendsetter (ar*etingT! and 6CC-1 and ordering defendant -o 'ing 5un the payment of attorney2s fees among others. On appeal by -o 'ing 5un! the Court of 0ppeals upheld the trial court! but modified the decision by reducing the award of attorneySs fees. #ssues" ".) 4hether or not the appellate court erred in affirming the trial court2s decision finding -o 'ing 5un guilty of tortuous interference of contract. A.) 4hether or not the appellate court erred in awarding attorney2s fees in favour of private respondents. $el%" 7o. 0 duty which the law of torts is concerned with is respect for the property of others! and a cause of action e+ delicto may be predicated upon an unlawful interference by one person of the enjoyment by the other of his private property. .his may pertain to a situation where a third person induces a party to renege on or violate his underta*ing under a contract. 1n the case at bar! petitionerSs .rendsetter (ar*eting as*ed 6CC-1 to e+ecute lease contracts in its favor! and as a result petitioner deprived respondent corporation of the latterSs property right. Clearly! and as correctly viewed by the appellate court! the three elements of tort interference! to wit, (") e+istence of a valid contractI (A) *nowledge on the part of the third person of the e+istence of contractI and (=) interference of the third person is without legal justification or e+cuse! are present in the instant case. 7o. .he recovery of attorneySs fees in the concept of actual or compensatory damages! is allowed under the circumstances provided for in 0rticle AA># of the Civil Code. One such occasion is when the defendantSs act or omission has compelled the plaintiff to litigate with third persons or to incur e+penses to protect his interest. 5ut it was consistently held that the award of considerable damages should have clear factual and legal bases. 1n connection with attorneySs fees! the award should be commensurate to the benefits that would have been derived from a favorable judgment. 1n a long line of cases it was said! T1t is not sound policy to place in penalty on the right to litigate. .o compel the defeated party to pay the fees of counsel for his successful opponent would throw wide open the door of temptation to the opposing party and his counsel to swell the fees to undue proportions.T

,DGARD' ,. 3,ND'BA vs. $'N. A:AND#' B. ARR#,;A, (res*%*ng 8u%ge of :ranc) @###, Court of !*rst #nstance of 3an*la, !,-#N' ;#3:'-, an% R'D'-!' &A-ABAR G.R. No. -0+2599 8une 29, 1949

!acts" 'etitioner! ?dgardo (endo@a! see*s a review on certiorari of the Orders of respondent Budge in Civil Case 7o. #>#>= dismissing his Complaint for 6amages based on %uasi-delict against respondents /elino .imbol and &odolfo -ala@ar. On October AA a three- way vehicular accident occurred along (ac-0rthur Highway! (arilao! 5ulacan! involving a (ercedes 5en@ owned and driven by petitionerI a private jeep owned and driven by respondent &odolfo -ala@arI and a gravel and sand truc* owned by respondent /elipino .imbol and driven by /reddie (ontoya. .wo separate 1nformation for &ec*less 1mprudence Causing 6amage to 'roperty were filed against &odolfo -ala@ar and /reddie (ontoya. .he cause of action was due to how truc*-driver (ontoya was for causing damage to the jeep owned by -ala@ar! by hitting it at the right rear portion thereby causing said jeep to hit and bump an oncoming car! which happened to be petitionerSs (ercedes 5en@. .he case against jeep-owner-driver -ala@ar! was for causing damage to the (ercedes 5en@. .he Court of /irst 1nstance rendered judgment finding the accused /reddie (ontoya guilty beyond reasonable doubt of the crime of damage to property thru rec*less imprudence. .he trial Court absolved jeep-owner-driver -ala@ar of any liabilityin view of its findings that the collision between -ala@arSs jeep and petitionerSs car was the result of the former having been bumped from behind by the truc* driven by (ontoya. 7either was petitioner awarded damages as he was not a complainant against truc*-driver (ontoya but only against jeep-owner. 0fter the termination of the criminal cases! petitioner filed a civil case against respondents jeep-owner-driver -ala@ar and /elino .imbol! the latter being the owner of the gravel and sand truc* driven by (ontoya! for identification for the damages sustained by his car as a result of the collision. Beep-owner-driver -ala@ar and truc*-owner .imbol were joined as defendants! either in the alternative or in solidum. .ruc*-owner .imbol filed a (otion to 6ismiss on the grounds that the Complaint is barred by a prior judgment in the criminal cases and that it fails to state a cause of action. 0n Opposition thereto was filed by petitioner. 1n an order respondent Budge dismissed the Complaint against truc*-owner .imbol for reasons stated in the afore- mentioned (otion to 6ismiss! petitioner sought before this Court the review of that dismissal! to which petition we gave due course.Upon motion of jeep-owner-driver -ala@ar! respondent Budge also dismissed the case as against the former. &espondent Budge reasoned out that Twhile it is true that an independent civil action for liability under 0rticle A"<< of the Civil Code could be prosecuted independently of the criminal action for the offense from which it arose! the 7ew &ules of Court! which too* effect on Banuary "! " $;! re%uires an e+press reservation of the civil action to be made in the criminal actionI otherwise! the same would be barred pursuant to -ection A! &ule """. 'etitionerSs (otion for &econsideration thereof was denied in the order dated with respondent Budge suggesting that the issue be raised to a higher Court Tfor a more decisive interpretation of the rule. 'etitioner then filed a -upplemental 'etition to review the last two mentioned Orders! that re%uired jeepowner-driver -ala@ar to file an 0nswer. #ssue" 1s the action against respondents barred because of a prior judgment8 $el%" 'etitionerSs cause of action being based on %uasi-delict! respondent Budge committed reversible error when he dismissed the civil suit against the truc*-owner! as said case may proceed independently of the criminal proceedings and regardless of the result of the latter. .he court held- it is a well-settled rule that for a prior judgment to constitute a bar to a subse%uent case! the following re%uisites must concur, (") it must be a final judgmentI (A) it must have been rendered by a Court having jurisdiction over the subject matter and over the partiesI (=) it must be a judgment on the meritsI and (;) there must be! between the first and second actions! 1dentity of parties! 1dentity of subject matter and 1dentity of cause of action. 1t is conceded that the first three re%uisites of res judicata are present. However! we agree with petitioner that there is no 1dentity of cause of action between the criminal case and the civil case. Obvious is the fact that in said criminal case truc*-driver (ontoya was not prosecuted for damage to petitionerSs car but for damage to the jeep. 7either was truc*-owner .imbol a party in said case. 1n fact as the trial Court had put it Tthe owner of the (ercedes 5en@ cannot recover any damages from the accused /reddie (ontoya! he ((endo@a) being a complainant only against &odolfo -ala@ar in the criminal case. 0nd more importantly! in the criminal cases! the cause of action was the enforcement of the civil liability arising from criminal

negligence under 0rticle l of the &evised 'enal Code! whereas the civil case is based on %uasi-delict under 0rticle A"#>! in relation to 0rticle A"<$ of the Civil Code 'etitionerSs cause of action against .imbol in the civil case is based on %uasi-delict is evident from the recitals in the complaint . .he court declare! therefore! that in so far as truc*-owner .imbol is concerned! the civil case is not barred by the fact that petitioner failed to reserve! in the criminal action! his right to file an independent civil action based on %uasi-delict.

3AR#A AN;'N#A &#GAAN, pet*t*oner, vs. R'&A -#3, -#ND, -#3, #NGR#D -#3 an% N,#- -#3, respon%ents.GG.R. No. 1+ 125, November 19, 1999H !acts"

On A) and A$ 0ugust " >! respondent J1( issued two (etroban* chec*s in favor of petitioner -1GU07. Upon presentment by petitioner with the drawee ban*! the chec*s were dishonored for the reason :account closed.3 6emands to ma*e good the chec*s proved futile. 0s a conse%uence! a criminal case for violation of 5atas 'ambansa 5lg. AA was filed by petitioner against J1(. (eanwhile! on A Buly " "! a 6eed of 6onation conveying the parcels of land and purportedly e+ecuted by J1( on "> 0ugust " # in favor of her children! Jinde! 1ngrid and 7eil! was registered with the Office of the &egister of 6eeds of Cebu City. 7ew transfer certificates of title were thereafter issued in the names of the donees. On A= Bune " =! petitioner filed an accion pauliana against J1( and her children to rescind the %uestioned 6eed of 6onation and to declare as null and void the new transfer certificates of title issued for the lots covered by the %uestioned 6eed! as the same was allegedly made in bad faith and fraud of creditors. 1n its decision of =" 6ecember " ;! the trial court ordered the rescission of the 6eed and declared null and void the transfer certificates but on appeal! Court of 0ppeals reversed said decision and dismissed petitioner2s accion pauliana. Hence! this petition for review on certiorari. #ssue" 4hether or not the 6eed of 6onation e+ecuted by respondent Jim be rescinded for being in fraud of her alleged creditor! petitioner -iguan. $el%" .he -upreme Court resolved the issue in the negative. Under 0rticle "=#" of the Civil Code! contracts entered into in fraud of creditors may be rescinded only when the creditors cannot in any manner collect the claims due them. 0lso! 0rticle "=#= of the same Code provides that the action for rescission is but a subsidiary remedy which cannot be instituted e+cept when the party suffering damage has no other legal means to obtain reparation for the same. .he term :subsidiary remedy3 has been defined as :the e+haustion of all remedies by the prejudiced creditor to collect claims due him before rescission is resorted to.3 1t is! therefore! essential that the party as*ing for rescission prove that he has e+hausted all other legal means to obtain satisfaction of his claim. 'etitioner neither alleged nor proved that she did so. On this score! her action for the rescission of the %uestioned deed is not maintainable even if the fraud charged actually did e+ist.3 (oreover! the 0rticle "=#<! first paragraph! of the Civil Code provides, :0ll contracts by virtue of which the debtor alienates property by gratuitous title are presumed to have been entered into in fraud of creditors when the donor did not reserve sufficient property to pay all debts contracted before the donation. Ji*ewise! 0rticle <) of the same Code! second paragraph! states that the donation is always presumed to be in fraud of creditors when at the time thereof the donor did not reserve sufficient property to pay his debts prior to the donation. /or this presumption of fraud to apply! it must be established that the donor did not leave ade%uate properties which creditors might have recourse for the collection of their credits e+isting before the e+ecution of the donation. 7evertheless! a creditor need not depend solely upon the presumption laid down in 0rticles <) and "=#< of the Civil Code. Under the third paragraph of 0rticle "=#<! the design to defraud may be proved in any other manner recogni@ed by the law of evidence. .hus in the consideration of whether certain transfers are fraudulent! the Court has laid down specific rules by which the character of the transaction may be determined. .he following have been denominated by the Court as badges of fraud, (") (A) (=) (;) ()) ($) .he fact that the consideration of the conveyance is fictitious or is inade%uateI 0 transfer made by a debtor after suit has begun and while it is pending against himI 0 sale upon credit by an insolvent debtorI ?vidence of large indebtedness or complete insolvencyI .he transfer of all or nearly all of his property by a debtor! especially when he is insolvent or greatly embarrassed financiallyI .he fact that the transfer is made between father and son! when there are present other of the above circumstancesI and

(<)

.he failure of the vendee to ta*e e+clusive possession of all the property.

'etitioner failed to discharge the burden of proving any of the circumstances enumerated above or any other circumstance from which fraud can be inferred. 0ccordingly! since the re%uirements for the rescission of a gratuitous contract are not present in this case! petitioner2s action must fail.

FOJ0760 &O-?JJO-5?7.1&! -0(U?J 'O&(160 and CH0&1.O 'O&(160! ! vs. HO7O&05J? (0.?O (. J?0760! and J?F.? GUJ/ .&06?&-! 17C.! . G.&. 7o. "A# " 0pril "A! A>>> /acts,

Herein respondent entered into a contract of lease of a parcel of land with petitioner 5entir for a period of twenty (A>) years starting (ay )! " $#. &espondent alleged that the lease e+tended for another four (;) years. On (ay )! " # ! herein petitioner 5entir sold the leased property to petitioner spouses 'ormada. &espondent then %uestioned the sale claiming its right of first refusal and filed a case before the court see*ing for the reformation of the e+pired contract of lease on the ground that its lawyer accidentally failed to incorporate in the contract of lease the verbal agreement between the parties that in case petitioner 5entir leases or sells the lot after the e+piration of the lease! respondent corporation has the right to e%ual the highest offer. #ssue" 4hether the complaint for reformation of instrument has prescribed or not. $el%" &eformation of an instrument is that remedy in e%uity by means of which a written instrument is made or construed so as to e+press or conform to the real intention of the parties when some error or mista*e has been committed. 0n action for reformation must be brought within the period prescribed by law! otherwise! it will be barred by the mere lapse of time. .he prescriptive period for actions based upon a written contract and for reformation of an instrument is ten (">) years. 'rescription is intended to suppress stale and fraudulent claims arising from transactions li*e the one at bar which facts had become so obscure from the lapse of time or defective memory. 1n the case at bar! respondent had ten (">) years from " $#! the time when the contract of lease was e+ecuted! to file an action for reformation. -adly! it did so only on (ay ")! " A or twenty-four (A;) years after the cause of action accrued! hence! its cause of action has become stale! hence! time-barred.

R#;A &AR3#NG, ,; A-. v. CR,&,NC#' DY, ,; A-. G.R. No. 1++1 + !acts" 0fter the death of Lalentina Unto /lores! her three children! Bose! Lenancio! and -ilveria too* possession of Jot )<=; with each occupying a one-third portion. Upon their death! their children and grandchildren

too* possession of their respective shares. .he other parcel! Jot ;"$= which is solely registered under the name of -ilveria! was sub-divided between -ilveria and Bose. .he grandchildren of Bose and now owners of one-half of Jot ;"$=! sold their half to the plaintiff 0lejandra 6elfino. -ilveria did not object to the sale. 4hen 0tty. 6eogracias 'inili! 0lejandraSs lawyer! to prepare the instruments and deeds! as*ed for the title of the land! -ilveria /lores delivered Original Certificate of .itle 7o. ; "#-0! covering Jot 7o. )<=;! and not the correct title covering Jot ;"$=. 0t that time! the parties *new the location of Jot ;"$= but not its OC. 7umber! so it was pure mista*e on part of -ilveria /lores. 5elieving in the error! 'inili prepared a notari@ed -ettlement of ?state and -ale that was signed by the parties. 0s a result! OC. 7o. ; "#-0 was cancelled and in lieu thereof! .C. 7o. )><# was issued in the names of -ilveria /lores and 0lejandra 6elfino! with one-half share each. -ilveria /lores was present in all of these. 0lejandra 6elfino immediately too* possession and introduced improvements on the purchased lot. .wo years later! 0lejandra 6elfino discovered that what was designated in the deed! Jot )<=;! was the wrong lot. -he sought the assistance of 'inili who approached -ilveria and together they in%uired from the &egistry of 6eeds about the status of Jot ;"$=. .hey found out that OC. 7o. ="A -0 covering Jot ;"$= was still on file. 0lejandra 6elfino paid the necessary fees so that the title to Jot ;"$= could be released to -ilveria /lores! who promised to turn it over to 'inili for the reformation of the deed of sale. However! despite repeated demands! -ilveria did not do so! prompting 0lejandra to file a complaint for reformation of the deed of sale with damages. -ilveria /lores claimed that she was the sole owner of Jot ;"$= as shown by OC. 7o. ="A -0 so respondents had no right to the lot. .he contract of sale clearly stated that the property being sold was Jot )<=;! not Jot ;"$=. .he case lasted several years! and their heirs became the parties in the case. .he trial court ruled in favor of the respondents and ordered the reformation of the contract. 'etitioners appealed the decision to the C0! which affirmed the ruling of the trial court. Hence their present petition for review #ssue" 1s the reformation of the deed is proper by reason of mista*e8 $el%" &eformation is that remedy in e%uity by means of which a written instrument is made or construed so as to e+press or conform to the real intention of the parties. 0n action for reformation of instrument under this provision of law may prosper only upon the concurrence of the following re%uisites, (") there must have been a meeting of the minds of the parties to the contactI (A) the instrument does not e+press the true intention of the partiesI and (=) the failure of the instrument to e+press the true intention of the parties is due to mista*e! fraud! ine%uitable conduct or accident. 0ll of these re%uisites are present in this case. .here is no dispute as to the intention of the parties to sell the land to 0lejandra 6elfino but there was a mista*e as to the designation of the lot intended to be sold as stated in the -ettlement of ?state and -ale. -ubse%uent and contemporaneous acts of the parties as well as the evidentiary facts as proved and admitted can be reflective intention. .he totality of the evidence clearly indicates that what was intended to be sold to 0lejandra 6elfino was Jot ;"$= and not Jot )<=;. 4hy would 0lejandra occupy and possess one-half of said lot if it was not the parcel of land which was the object of the sale to her8 1f it were true that -ilveria /lores was the sole owner! she should have objected when 0lejandra 6elfino too* possession of one-half thereof immediately after the sale. .he other half belongs to her brother Bose! represented now by his grandchildren successors-in-interest. 0s such! the latter could rightfully sell the land to 0lejandra 6elfino. &eformation of the instrument is proper! and the decisions of the trial court and the C0 is sustained. ;$, #N;,RNA;#'NA- C'R('RA;, :AND #NC.vs.;$, #33,D#A;, A((,--A;, C'AR; G.R. No. -019510 8une +0, 1922 !acts"

1n the early part of " #>! private respondent secured from petitionerSs predecessors-in-interest! the then 1nvestment and Underwriting Corp. of the 'hilippines and 0trium Capital Corp.! a loan in the amount of ')>!>>>!>>>.>>. .o secure this loan! private respondent mortgaged her real properties in Muiapo! (anila and in -an &afael! 5ulacan! which she claimed have a total mar*et value of '"">!>>>!>>>.>>. Of this loan! only the amount of 'A>!>>>!>>>.>> was approved for release. .he same amount was applied to pay her other obligations to petitioner! ban* charges and fees. .hus! private respondentSs claim that she did not receive anything from the approved loan. On -eptember ""! " #>! private respondent made a money mar*et placement with 0.&1U( in the amount of '"!>;$!A)=.<< at "<Q interest per annum for a period of =A days or until October "=! " #>! its maturity date. (eanwhile! private respondent allegedly failed to pay her mortgaged indebtedness to the ban* so that the latter refused to pay the proceeds of the money mar*et placement on maturity but applied the amount instead to the deficiency in the proceeds of the auction sale of the mortgaged properties. 4ith 0trium being the only bidder! said properties were sold in its favor for only 'A>!>>>!>>>.>>. 'etitioner claims that after deducting this amount! private respondent is still indebted in the amount of '$.#" million.On 7ovember "<! " #A! private respondent filed a complaint with the trial court against petitioner for annulment of the sheriffSs sale of the mortgaged properties! for the release to her of the balance of her loan from petitioner in the amount of '=>!>>>!>>>!>>! and for recovery of '"!>$A!>$=.#= representing the proceeds of her money mar*et investment and for damages. -he alleges in her complaint! which was subse%uently amended! that the mortgage is not yet due and demandable and accordingly the foreclosure was illegalI that per her loan agreement with petitioner she is entitled to the release to her of the balance of the loan in the amount of '=>!>>>!>>>.>>I that petitioner refused to pay her the proceeds of her money mar*et placement notwithstanding the fact that it has long become due and payableI and that she suffered damages as a conse%uence of petitionerSs illegal acts. 1n its answer! petitioner denies private respondentSs allegations and asserts among others! that it has the right to apply or set off private respondentSs money mar*et claim of '"!>$A!>$=.#=. 'etitioner thus interposes counterclaims for the recovery of ')!<$=!<;".A=! representing the balance of its deficiency claim after deducting the proceeds of the money mar*et placement! and for damages. .he trial court subse%uently dismissed private respondentSs cause of action concerning the annulment of the foreclosure sale! for lac* of jurisdiction! but left the other causes of action to be resolved after trial. On 6ecember ")! " #=! private respondent filed a motion to order petitioner to release in her favor the sum of '"!>$A!>$=.#=! representing the proceeds of the money mar*et placement! at the time when she had already given her direct testimony on the merits of the case and was being cross-e+amined by counsel. On /ebruary "=! " #;! respondent judge issued an order granting the motion. 'etitioner filed a motion for reconsideration to the aforesaid order! asserting among other things that said motion is not verified! and therefore a mere scrap of paper. On (arch "=! " #;! petitioner filed a special civil action for certiorari and prohibition with preliminary injunction with the Court of 0ppeals. 1n a decision rendered on October ="! " #;! the Court of 0ppeals dismissed said petition. #ssue" 4hether or not there can be legal compensation in the case at bar. $el%" .he argument is without merit. Compensation shall ta*e place when two persons! in their own right! are creditors and debtors of each other. T4hen all the re%uisites mentioned in 0rt. "A< of the Civil Code are present! compensation ta*es effect by operation of law! even without the consent or *nowledge of the debtors.T 0rticle "A< of the Civil Code re%uires among others! that in order that legal compensation shall ta*e place! Tthe two debts be dueT and Tthey be li%uidated and demandable.T Compensation is not proper where the claim of the person asserting the set-off against the other is not clear nor li%uidatedI compensation cannot e+tend to unli%uidated! disputed claim arising from breach of contract. .here can be no doubt that petitioner is indebted to private respondent in the amount of '"!>$A!>$=.#= representing the proceeds of her money mar*et investment. .his is admitted. 5ut whether private respondent is indebted to petitioner in the amount of '$.#" million representing the deficiency balance after the foreclosure of the mortgage e+ecuted to secure the loan e+tended to her! is vigorously disputed. .his circumstance prevents legal compensation from ta*ing place. (#-#(#NA& :AND v. #N;,R3,D#A;, A((,--A;, C'AR; 1G.R. No. -014221 8une +0, 1924 !acts"
1

PILIPINAS BANK as Successor-In-Interest Of And/Or In substitution to, The MANU A!TU"#"S BANK AN$ T"UST !OMPAN%, &etitionera&&e''ant (s) INT#"M#$IAT# APP#LLAT# !OU"T * ourth !i(i' !ases $i(ision+, and ,OS# -) $IOKNO and !A"M#N I) $IOKNO, res&ondents-a&&e''ees)

.he petioner-appellant ban* and private respondent-appellees 6io*no2s entered into a contract over a parcel of land described in Contract to -ell 7o. LL-"#-(a) in Lictoria Lalley -ubdivision in 0ntipolo! &i@al. .his is an appeal by certiorari from the decision A of the respondent court entitled TBose 4. 6io*no and Carmen 1. 6io*no! plaintiffs-appellees! vs. .he (anufacturers 5an* and .rust Company! which affirmed the decision= of the Court of /irst 1nstance wherefore the judgment is rendered in favor of the plaintiffs and against the defendant! ordering the defendant to deliver to the plaintiffs the parcel of land described in Contract to -ell 7o. LL-"#-(a) in the total area of )! =$ s%uare meters and to e+ecute in their favor the necessary deed of absolute sale therefor then pay for actual damages. 0fter trial! the lower court rendered a decision in private respondentsS favor! holding that petitioner could not rescind the contract to sell! because, (a) petitioner waived the automatic rescission clause by accepting payment on -eptember " $<! and by sending letters advising private respondents of the balances due! thus! loo*ing forward to receiving payments thereonI (b) in any event! until (ay "#! " << (when petitioner made arrangements for the ac%uisition of additional #<> s%uare meters) petitioner could not have delivered the entire area contracted for! so! neither could private respondents be liable in default! citing 0rt. ""# of the 7ew Civil Code. -aid 6ecision was affirmed on appeal. #ssue" 4hether the 'etition /or &eview on Certiorari! raising the main issue of whether or not the Contract to -ell 7o. LL-"#(a) was rescinded or cancelled! under the automatic rescission clause contained therein is valid. $el%" 1t was found that the petition is meritless because there is a clear 401L?& of the stipulated right of Tautomatic rescission!T as evidenced by the many e+tensions granted private respondents by the petitioner. 1n all these e+tensions! the petitioner never called attention to the proviso on Tautomatic rescission.T ; 4H?&?/O&? the assailed decision is hereby 0//1&(?6 but the actual damages are hereby reduced minus whatever private respondents still owe the petitioner as a result of the contract.

#R,N, D#N' vs. $'N. AAGA&;' -. @A-,NC#A an% !RANC#&C' -. 'NG, G.R.. -0 +221 8ul/ 19, 1929 !acts"

Ma/ 01, 1123 in !A-4)") !5 No) 67.89 entit'ed :,ose -) $io;no and !ar<en I) $io;no, &'aintiffs-a&&e''ees, (s) The Manufacturers Ban; and Trust !o<&an/, defendant-a&&e''ant)*Penned b/ ,ustice Porfirio 5) Sison concurred in b/ ,ustices Abdu'=ahid A) Bidin, Marce'ino ") 5e'oso, and $esiderio P) ,urado)+
0 3

!i(i' !ase No) 11668 *&enned b/ ,ud>e 4re>orio 4) Pineda)+

Para>ra&h *e+ of !ontract to Se'' No) 55-12 *a+? The contract sha'' be considered auto<atica''/ rescinded and cance''ed and of no further force and effect u&on fai'ure of the (endee to &a/ =hen due, three or <ore consecuti(e insta''<ents as sti&u'ated therein or to co<&'/ =ith an/ of the ter<s and conditions thereof, in =hich case the (endor sha'' ha(e ri>ht to rese'' the said &arce' of 'and to an/ &erson interested, forfeitin> &a/<ents <ade b/ the (endee as 'i@uidated da<a>es)

'etitioner 1rene 6ino is the registered owner of a parcel of land! of which private respondent! /rancisco J. Ong is the adverse claimant. 'rivate respondent issued an affidavit and memorandum of %uitclaim wherein he waived and renounced all his claims! rights and credits over and against the aforesaid parcel of land upon payment by petitioner of ' >!>>>.>> in the following manner. (a) 6ownpayment of /O&.F .HOU-076 '?-O- (';>!>>>.>>) on or before /ebruary ")! " <;! receipt of which (sic) hereby ac*nowledgedI and the future sums covered by postdated chec*s in denominations of, (b) .?7 .HOU-076 '?-O-('l>!>>>.>>)payable or redeemable on or before 0pril ")! " <;I and! (c) ?1GH. .HOU-076 '?-O- ('l>!>>>.>>) (sic) ?0CH payable or redeemable on or before the ")th of Bune! 0ugust! October! 6ecember of " <; and /ebruary of " <)! respectively! and for a total of /O&.F .HOU-076 '?-O- (';>!>>>.>>)! .he petitioner was able to pay ')>!>>>.>> in cash! but issued ) post-dated chec*s for the remaining ';>!>>>.>> . However! ; of the chec*s were dishonored by the ban* due to insufficient funds and the account of petitioner being closed. &espondent filed for the enforcement of the obligation plus damages to which petitioner alleged that the original agreement of the parties as to the payment had already been novated and disregarded by the parties after the issuance of the said chec*s. #ssue" 4hether or not the contract was novated by a change in mode of payment8 $el%" .he petitionerSs contention is untenable. Her defense that the original agreement of the parties had already been novated and disregarded after the issuance of the chec*s mentioned in private respondentSs complaint and after the private respondent had e+ecuted and signed the 0ffidavit and (emorandum of Muitclaim! "= is a sham and false defense and did not tender an issue that would re%uire a hearing for the reception of evidence. 1t is a mere device or scheme to avoid or delay the immediate payment of petitionerSs obligation to the private respondent under the 0ffidavit and (emorandum of Muitclaim. .hus! as aptly observed by the court a %uo0 novation under the rules of civil law! where the term has been introduced into the modern nomenclature of our common law jurisprudence! was a mode of e+tinguishing one obligation by anotherI the substitution! not of a new paper or rate but of a new obligation in lieu of an old one! the effect of which was to pay! dissolve or otherwise discharge it (ibid). 1t will be noted that the original contract was not actually altered or changed. .he defendant! as a matter of fact! and for all intents and purposes! had issued chec*s in payment of her obligation as prestated by the contract but asserts that the same were issued only to guarantee but not as a payment in itself! but it is not denying the fact that one of the five chec*s were cashed! thus ma*ing the balance of only '=A!>>>.>>! that is without mention the li%uidated damage of 'A>!>>>.>>. .he ambivalent attitude of the defendant could only mean or should be construed as a mere pretense to avoid an immediate demand for the payment of her obligation. 1n order that an obligation may be e+tinguished by another which substitutes the same! it is imperative that it be so declared in une%uivocal terms! or that the old and new obligation be on every point incompatible with each other (0rt. "A A-7ew Civil Code.) 1n the present case the contract referred to did not e+pressly e+tinguish the obligation e+isting in said affidavit and memorandum of %uitclaim. On the contrary! it e+pressly recogni@ed the obligation between the parties and e+pressly provided a method by which the same shall be e+tinguished! which method was e+pressly provided in the aforementioned contract! by means of periodical payments. /or all the foregoing considerations! the court believes! and so holds! that the aforementioned contract has never been altered! changed or novated. /or what the herein defendant actually did is not absolutely incompatible with the prestation of the e+isting contract but rather she e+pressly ratified such obligation through the issuance of postdated chec*s! some of which were cashed and others not for reason of insufficiency of funds or Saccount closed.

4H?&?/O&?! the petition is this case is 61-(1--?6 with costs against petitioner.chanrobles virtual law library

($#-#((#N, C'33,RC#A- #N;,RNA;#'NA- :AND , vs. C'AR; '! A((,A-& an% !'RD ($#-#((#N,&, #NC. an% C#;#:AND, N.A., G.R. No. 121 1+ 8anuar/ 29, 2001 !acts"

.hese consolidated petitions involve several fraudulently negotiated chec*s. /ord 'hilippines drew and issued Citiban* chec*s in favor of the Commissioner of 1nternal &evenue as payments of its ta+es. .he said chec* was deposited to 'C15 and was subse%uently cleared at Central 5an*. 'roceeds of the chec*s were never received by the Commissioner! but were encashed and diverted to the accounts of members of a syndicate. .he acting Commissioner of 1nternal &evenue officially informed /ord that its chec* in the amount of ';!<;$!"";.;" was not paid to the government or its authori@ed agent! hence! /ord has to pay the said amount within ") days from receipt of the letter! /ord was forced to ma*e second payment of its ta+es. .hus! an action to recover the amounts from the collecting and drawee ban*s was filed. #ssue" 4hether or not /ord has the right to recover from the collecting ban* ('C15an*) and the drawee ban* (Citiban*) the value of the chec*s intended as payment to the Commissioner of 1nternal &evenue. 4hethet or not /ordSs cause of action already prescribed. $el%" 'C15 failed to verify the authority of (r. &ivera to negotiate the chec*s. .he neglect of 'C15 employees to verify whether his letter re%uesting for the replacement of the Citiban* Chec* 7o. -7->;#$< was duly authori@ed! showed lac* of care and prudence re%uired in the circumstances. .he mere fact that forgery was committed by a drawer-payor2s confidential employee or agent! who by virtue of his position had unusual facilities to perpetrate the fraud and imposing the forged paper upon the ban*! does not entitle the ban* to shift the loss to the drawer-payor! in the absence of some circumstance raising estoppel against the drawer. .he rule applies to chec*s fraudulently negotiated or diverted by the confidential employees who hold them in their possession. 1t also shows that Citiban* as drawee ban* was li*ewise negligent in the performance of its duties. Citiban* failed to establish that its payment of /ord2s chec*s was made in due course and legally in order. .hus! invo*ing the doctrine of comparative negligence! we are of the view that both 'C15 and Citiban* failed in their respective obligations and both were negligent in the selection and supervision of their employees resulting in the encashment of Citiban* Chec* 7os. -7 ">) < 076 "$)>#. .hus! we are constrained to hold them e%ually liable for the loss of the proceeds of said chec*s issued by /ord in favor of the C1&. On the issue of prescription! 'C15 claims that the action of /ord had prescribed because of its inability to see* judicial relief seasonably! considering that the alleged negligent act too* place prior to 6ecember " ! " << but the relief was sought only in " #=! or seven years thereafter. .he statute of limitations begins to run when the ban* gives the depositor notice of the payment! which is ordinarily when the chec* is returned to the alleged drawer as a voucher with a statement of his account! and an action upon a chec* is ordinarily governed by the statutory period applicable to instruments in writing. Our laws on the matter provide that the action upon a written contract must be brought within ten year from the time the right of action accruesI hence! the rec*oning time for the prescriptive period begins when the instrument was issued and the corresponding chec* was returned by the ban* to its depositor.

3AR#' &. ,&(#NA v. ;$, C'AR; '! A((,A-& an% R,N, G. D#AB G.R. No. 111205 8une 22, 2000 !acts"

(ario -. ?spina is the registered owner of a Condominium Unit 7o. ;>=! Lictoria Lalley Condominium! Lalley Golf -ubdivision! 0ntipolo! &i@al. -uch ownership is evidenced by Condominium Certificate of .itle 7o. 7-">. On 7ovember A ! " "! (ario -. ?spina and &ene G. 6ia@ e+ecuted a 'rovisional 6eed of -ale! whereby the former sold to the latter the aforesaid condominium unit for the amount of '">>!>>>.>> to be paid upon the e+ecution of the contract and the balance of '"!;>>!>>>.>> to be paid through si+ ($) 'C1 5an* postdated chec*s. -ubse%uently! in a letter dated Banuary AA! " A! 6ia@ informed ?spina that his chec*ing account with 'C1 5an* has been closed and a new chec*ing account with the same ban* is opened and that the postdated chec*s issued will be replaced with new ones in the same ban*. On Banuary A)! " A! 6ia@ through his wife (s. -ocorro 6ia@ paid (ario ?spina 'A>>!>>>.>>! ac*nowledged by him as partial payment for the condominium unit subject of this controversy. On Buly A$! " A! ?spina sent 6ia@ a T7otice of CancellationT of the 'rovisional 6eed of -ale. However! despite this notice! ?spina still accepted payment from 6ia@ per (etroban* Chec* 7o. = )$ ; dated and encashed on October A#! " A in the amount of '">>!>>>.>>. On /ebruary A;! " =! ?spina filed a complaint for Unlawful 6etainer against 6ia@ before the (unicipal .rial Court of 0ntipolo. .he trial court rendered its decision! ordering 6ia@ and all persons claiming rights under him to vacate the condominium unitI to pay the total arrears covering the period Buly " " up to the filing complaint! and to pay '<!>>>.>> every month thereafter as rentals unit he vacates the premisesI and to pay the attorneySs fees and costs of suit. ?spina may refund to 6ia@ the balance from ';>>!>>>.>> after deducting all of 6ia@2 total obligations as specified in the decision from receipt of said decision. 6ia@ appealed to the &egional .rial Court and the said appellate court affirmed in all respects the decision of the trial court. 6ia@ filed with the Court of 0ppeals a petition for review! and the Court of 0ppeals reversed the appealed decision and dismissed the complaint for Unlawful 6etainer with costs against ?spina. ?spina filed a motion for reconsideration of the decision of the Court of 0ppeals! and this was denied. Hence! this appeal via petition for review on certiorari. #ssue" 4hether or not the Court of 0ppeals erred in ruling that the provisional deed of sale novated the e+isting contract of lease and that petitioner had no cause of action for ejectment against respondent 6ia@. $el%" .he -upreme Court2s answer is no. .he novation must be clearly proved since its e+istence is not presumed. T1n this light! novation is never presumedI it must be proven as a fact either by e+press stipulation of the parties or by implication derived from an irreconcilable incompatibility between old and new obligations or contracts.T 7ovation ta*es place only if the parties e+pressly so provide! otherwise! the original contract remains in force. 1n other words! the parties to a contract must e+pressly agree that they are abrogating their old contract in favor of a new one. 4here there is no clear agreement to create a new contract in place of the e+isting one! novation cannot be presumed to ta*e place! unless the terms of the new contract are fully incompatible with the former agreement on every point. .hus! a deed of cession of the right to repurchase a piece of land does not supersede a contract of lease over the same property. 1n the provisional deed of sale in this case! after the initial down payment! respondentSs chec*s in payment of si+ installments all bounced and were dishonored upon presentment for the reason that the ban* account was closed. Conse%uently! on Buly A$! " A! petitioner terminated the provisional deed of sale by a notarial notice of cancellation. 7onetheless! respondent 6ia@ continued to occupy the premises! as lessee! but failed to pay the rentals due. On October A#! " A! respondent made a payment of '">>!>>>.>> that may be applied either to the bac* rentals or for the purchase of the condominium unit. On /ebruary "=! " =! petitioner gave respondent a notice to vacate the premises and to pay his bac* rentals. /ailing to do so! respondentSs possession became unlawful and his eviction was proper. Hence! on /ebruary A;! " =! petitioner filed with the (unicipal .rial Court! 0ntipolo! &i@al an action for Unlawful 6etainer against respondent 6ia@.

.he respondent contends that the petitionerSs subse%uent acceptance of such payment effectively withdrew the cancellation of the provisional sale. .he -upreme Court did not agree. Unless the application of payment is e+pressly indicated! the payment shall be applied to the obligation most onerous to the debtor. 1n this case! the unpaid rentals constituted the more onerous obligation of the respondent to petitioner. 0s the payment did not fully settle the unpaid rentals! petitionerSs cause of action for ejectment survives. .hus! the Court of 0ppeals erred in ruling that the payment was Tadditional paymentT for the purchase of the property. .he Court grants the petition for review on certiorari! and reversed the decision of the Court of 0ppeals.

NA;#'NA- ('I,R C'R('RA;#'N, vs.,#N C$,3#CA- C'R('RA;#'N #N;,RNA;#'NA- &AR,;Y C'. G.R. No. -02 251 November 1 , 1921 !acts"

an% ($#-#((#N,

On (arch A=! " )$! the 7ational 'ower Corporation (or 7'C)! after public bidding! awarded to the ?17 Chemical Corporation (or (?17)! the contract formali@ed on 0pril " ! " )$! to supply and deliver =!$ " long tons of crude sulfur in one shipment to the (aria Cristina /ertili@er 'lant in 1ligan City on or before (ay ">! " )$! for the price of '=<;!=<;. " to be paid by 7'C. .o guarantee its obligation! ?17 posted a bond from the 'hilippine 1nternational -urety Co. in the amount of '<;!#<;. #. ?17 obtained from the 7'C a letter of credit with 'hilippine 7ational 5an* ('75)! 7ew For* on (ay #! " )$ amounting to U-U"#)!< ;.>> with an e+piry date originally set for (ay =>! " )$ but reset by 7'C upon the re%uest of ?17 to Bune =>! " )$. 0nticipating failure to deliver on the contract date! ?17 re%uested and was granted by 7'C a further e+tension of the e+piry date of the letter of credit to -eptember =>! " )$. On 0ugust " ! " )$! ?17 delivered only "!>>> long tons of crude sulfur ostensibly due to lac* of bottomsI but was paid therefor by 7'C the amount of '">"!<$;.>). ?ven though it failed to deliver as per contract! ?17 re%uested to be allowed to participate in another bidding to be conducted by 7'C but the latter dis%ualified ?17 from participating in the said bidding. .he 7'C instead sued ?17 for damages for breach of contract on 6ecember "<! " )$ before the then Court of /irst 1nstance of (anila! 5ranch VL1. .he lower court dismissed the case declaring that ?17 was not in bad faithI that! the e+tension of the e+piry date of the letter of credit carried with it the e+tension of the delivery time. .he 7'C appealed the trial courtSs decision %uestioning all the foregoing points. On the other hand! ?17 alleged that 7'C failed to inform it that it would ta*e ;) days to ship from the U.-. 0tlantic ports to the 'hilippinesI that 7'C incurred delay in opening the letter of creditI that! the purpose of e+tending the e+piry date of the letter of credit was to e+tend the delivery time and this became manifest with the partial delivery of "!>>> long tons of crude sulfurI that! it was the intention of the parties for the seller to ship the crude sulfur as soon as it received notice of the opening of the letter of creditI that it should have been allowed to participate in the second biddingI and! that the scarcity of bottoms could have been avoided had 7'C opened the letter of credit within a reasonable time. #ssue" .he sole %uestion for Our resolution is whether or not ?17 committed a breach of contract which would entitle 7'C to damages. $el%" 0 review of the records shows that the contract was freely entered into by both parties in good faith. .he provisions of the contract! however! indicate that there is no relationship between the delivery date and the opening of the letter of credit which was anyway opened within a reasonable time after the signing of the contract. .he e+tensions of the e+piry dates of the letter of credit cannot! by any means! be interpreted as e+tensions of the delivery date. 0s the terms show! no other delivery date can even be inferred. .he problem of bottoms is one that is well-*nown and anticipated by suppliers and shippers! and 7'C cannot be faulted for such problem since it opened the letter of credit within a reasonable time after the signing of the contract. .he 7'C! in fact! had no duty to inform ?17 of -the shipping time between the U- 0tlantic ports and the 'hilippines since all shippers and suppliers are presumed to *now this as part of their business. ?vidently! the ?17 clearly committed a breach of contract by failing to completely deliver on its contract inspite of the leniency of the 7'C in enforcing its rights. Ja+ity of a contracting party in the enforcement of its rights under the contract does not in any manner diminish its rights thereunder. Considering the foregoing! the Court resolved to -?. 0-16? the appealed decision! and to render a new one directing the appellees to pay appellant! jointly and severally! the amount of the performance bond! the li%uidated damages from 0ugust " ! " )$ up to Banuary A>! " )# when the appellant purchased crude sulfur from other sources! and the costs.

A:& C:N v. CA GR0122190 519996 !acts" 1n " >! 05--C57 and L1L0 e+ecuted a /ilm ?+hibition 0greement whereby the latter gave the former

an e+clusive right to e+hibit A; L1L0 /ilms for .L telecast. Jater! L1L0! through respondent Lincent del &osario! offered 05--C57 a list of = film pac*ages (=$ titles) from which the latter may e+ercise its right of first refusal under their agreement. 05--C57 tic*ed off "> titles therefrom. .hereafter! in /ebruary " A! 6el &osario offered 05--C57 airing rights over a pac*age of ">; movies for '$> million. 1n 0pril! " A! 6el &osario! and ?ugenio Jope@ of 05--C57! met at a restaurant to discuss the pac*age proposal. 0ccording to Jope@! however! what they agreed upon was 05--C572s e+clusive film rights to "; films for '=$ million. 6el &osario denied the same. He insisted that the discussion was on L1L02s offer of ">; films for '$> million! to which 05-C57 later made a counterproposal but rejected by L1L02s 5oard of 6irectors. Hence! L1L0 later granted &5- the e+clusive right to air the ">; L1L0 films! including the "; films supposedly granted to 05--C57. 05--C57 then filed a complaint for specific performance with prayer for injunction. .he &.C granted the prayer and re%uired 05--C57 post a '=) million bond. 5ut while 05--C57 was moving for reduction of the bond! &5- offered to put up a counterbond and was allowed to post '=> million. Jater! the &.C rendered a decision in favor of &5- and L1L0! ordering 05-C57 to pay &5- the amount it paid for the print advertisement and premium on the counterbond! moral damages! e+emplary damages and attorney2s fee. 05--C57 appealed to the Court of 0ppeals. Liva and 6el &osario also appealed see*ing moral and e+emplary damages and additional attorney2s fees. .he Court of 0ppeals affirmed the &.C decision and sustained the monetary awards! L1L02s and 6el &osario2s appeals were denied. #ssues" ". 4hether there was a perfected contract between L1L0 and 05--C57I and A. 4hether &5- is entitled to damages and attorney2s fees. $el%" .he first issue is resolved against 05--C57! in the absence of the re%uisites to ma*e a valid contract. .he alleged agreement on the "; films! if there is one! is not binding to L1L0 as it is not manifested that 6el &osario has an authority to bind L1L0. .hus! when 05--C57 made a counter-proposal to L1L0! the same was submitted to its 5oard of 6irectors! who rejected the same. /urther! the Court agreed that the alleged agreement is not a continuation of the " > Contract as the right of first refusal under the said contract had already been e+ercised by 05--C57. However! on the issue of damages! the Court found 05--C57. &5- is not entitled to actual damages as the claim thereof did not arise from that which allows the same to be recovered. 7either is &5- entitled to attorney2s fees as there is no showing of bad faith in the other party2s persistence in his case. 0lso! being a corporation! &5- is not entitled to moral damages as the same is awarded to compensate actual injuries suffered. Jastly! e+emplary damages cannot be awarded in the absence of proof that 05--C57 was inspired by malice or bad faith.

:abasa &pouses v. CA !acts"

-pouses 5abasa as vendors and .abangao &ealty as vendee e+ecuted a contract of :Conditional -ale of &egistered Jands3 over three parcels of land. .he certificates of title over the lots were in the name of third persons who had already e+ecuted deeds of reconveyance and disclaimer in favor of the 5abasa spouses. .he parties agreed that the total purchase price is 'A."( of which '=>>C will be paid upon signing of the contract and '".#( will be paid upon the delivery of clean titles of the lots within A> months. 6uring the period of A> months while the 5abasas are to deliver clean titles! it was agreed that .abangao will pay "<Q of '".#( as interest per annum or 'A>C per month as rental. 0 month after the signing of the contract! .abangao leased the lots to -hell which immediately started the construction of a Ji%uefied 'etroleum Gas .erminal 'roject! an approved @one e+port enterprise of the ?'R. However! A days prior to the e+piration of the A>-month period! the 5abasa spouses as*ed for an indefinite e+tension within which to deliver clean titles over the lots. 0nd they as*ed .abango to continue paying the monthly interest of 'A>* on the ground that the civil cases they filed for the transfer of titles of the lots in their name. .abangao refused. 1n retaliation the 5abasa spouses e+ecuted a notari@ed unilateral rescission and demanded that -hell shall vacate the lots. .abango instituted an action for specific performance and damages to compel the spouses to comply with their obligation to deliver clean titles over the properties on the ground that they already obtained a favorable judgment ordering the reconstitution of the original copies of the land title. On the merits! .abango obtained a favorable judgment from the trial court. 0ccording to it! the A>-month period stipulated in the contract was never meant to be its term such that upon its e+piration the respective obligations of the parties would be e+tinguished. On the contrary! the e+piration thereof merely gave rise to the right of .0507G0O to either rescind the contract or to demand that the 5050-0comply with their contractual obligation to deliver to it clean titles and registerable documents of sale. Hence! the unilateral rescission was void and of no legal effect. 0ggrieved! 5abasa spouses appealed to the C0 contending that the Contract of Conditional -ale was one of lease! not of sale. 5ut they were unable to convince the C0 which dismissed their appeal. Undaunted! hence this present petition. .he spouses aver that the contract of "" 0pril " #" was in reality a contract of lease! not of saleI but even assuming that it was indeed a sale! its nature was conditional only! the efficacy of which was e+tinguished upon the non-happening of the condition! i.e.! non-delivery of clean certificates of title and registerable documents of sale in favor of .0507G0O within twenty (A>) months from the signing of the contract. .hey also argued that they never intended to sell their ancestral lots but were merely forced to do so when .0507G0O dangled the threat of e+propriation by the government (through the ?+port 'rocessing Rone 0uthority) in the event voluntary negotiations failed. 'etitioners contend that ownership over the three (=) lots was never transferred to .0507G0O and that the contract of "" 0pril " #" was rendered lifeless when the A>-month period stipulated therein e+pired without them being able to deliver clean certificates of title to .0507G0O through no fault of their own. Conse%uently! their unilateral rescission dated A# /ebruary " #= should have been upheld as valid. #ssues" 4hether or not the spouses can unilaterally rescind the contract! on account of first! their non-fulfillment of their obligation to deliver the clean titles! second! that they were merely forced to agree because of impending threat that their lots will be e+propriated via ?'?R0! and third! the lapse of the period (A> months) and the non-delivery of the clean titles the contract was rendered lifeless8

$el%"

7o. .he Unilateral rescission was unwarranted. /irst! the condition in the contract is in favor of .abangaoI that is upon the delivery of clean titles! .abangao will pay '".#(.

3A-:AR'&A, vs. C'AR; '! A((,A-&

!acts" Here in petitioner was the president and general manager of 'hiltectic Corp.! a subsidiary of respondent -?06C. 5eing an officer! he was issued a car and membership in the 0rchitectural Center. One day he intimidated with the vice-chairman of the 5o6 of respondent his desire to retire and he re%uested that his incentive compensation be paid to him as president of'hiltectic. He then tendered his resignation to said L'. One of the officer met with petitioner and informed him that he will get roughly around '= )*. /ollowing his resignation! the L' sent a letter-offer to petitioner stating therein acceptance of petitioner2s resignation and advised him that he is entitled to 'A)"* as his incentive compensation. 1n the same letter! the L' proposed the satisfaction of his incentive by giving him the car the company issued and the membership in the 0rchitectural Center will be transferred to him! instead of cash. 'etitioner was re%uired by respondent through the L' to affi+ his signature in the letter if he was agreeable to the proposal. .he letter was given to the petitioner by the officer who told him that he was supposed to get '= )*. 'etitioner was dismayed when he received the letter-offer and refused to sign it as re%uired by respondent if he was agreeable to it. .wo wee*s later! respondent company demanded the return the car and turn over the membership in the 0rchitectural Center. 'etitioner wrote the counsel of respondent telling him that he cannot comply with the demand since he already accepted the offer fourteen (";) days after it was made. 1n his letter! he enclosed a Vero+ of the original with his affi+ed signature as re%uired. 4ith his refusal! respondent instituted an action for recovery with replevin. 1n his 0nswer to the complaint! the petitioner! as defendant therein! alleged that he had already agreed on (arch A#! " > to the (arch ";! " > Jetter-offer of the respondent! the plaintiff therein! and had notified the said plaintiff of his acceptanceI hence! he had the right to the possession of the car. 0fter the trial! judgment was rendered against petitioner. .he trial court opined that there e+isted no perfected contract between the petitioner and the respondent on the latter2s (arch ";! " > Jetter-offer for failure of the petitioner to effectively notify the respondent of his acceptance of said letter-offer before the respondent withdrew the same. He appealed to the C0 which affirmed the decision of the trial court. Hence! this present appeal. #ssues" ". 4hether or not there was a valid acceptance on his part of the (arch ";! " the respondent8 > Jetter-offer of

A. 4hether or not there was an effective withdrawal by the respondent of said letter-offer8 $el%" ". 7o. Under 0rticle "=" of the 7ew Civil Code! the consent by a party is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. 0n offer may be reached at any time until it is accepted. 0n offer that is not accepted does not give rise to a consent. .o produce a contract! there must be acceptance of the offer which may be e+press or implied but must not %ualify the terms of the offer. .he acceptance must be absolute! unconditional and without variance of any sort from the offer.

.he acceptance of an offer must be made *nown to the offeror. )OA<P Unless the offeror *nows of the acceptance! there is no meeting of the minds of the parties! no real concurrence of offer and acceptance.$OA#P .he offeror may withdraw its offer and revo*e the same before acceptance thereof by the offeree. .he contract is perfected only from the time an acceptance of an offer is made *nown to the offeror. 1f an offeror prescribes the e+clusive manner in which acceptance of his offer shall be indicated by the offeree! an acceptance of the offer in the manner prescribed will bind the offeror. On the other hand! an attempt on the part of the offeree to accept the offer in a different manner does not bind the offeror as the absence of the meeting of the minds on the altered type of acceptance. <OA P 0n offer made inter praesentes must be accepted immediately. 1f the parties intended that there should be an e+press acceptance! the contract will be perfected only upon *nowledge by the offeror of the e+press acceptance by the offeree of the offer. 0n acceptance which is not made in the manner prescribed by the offeror is not effective but constitutes a counter-offer which the offeror may accept or reject. #O=>P .he contract is not perfected if the offeror revo*es or withdraws its offer and the revocation or withdrawal of the offeror is the first to reach the offeree. 1n the case at bar! the respondent made its offer through its L'. On (arch "$! the officer handed over the original letter-offer to petitioner. .he respondent re%uired the petitioner to accept by affi+ing his signature and the date in the letter offer! thus foreclosing an implied acceptance or any other mode of acceptance. 0nd it is for a fact that the petitioner did not accept of reject the offer for he needed time to decide whether to accept or reject. 0lthough the petitioner claims that he had affi+ed his conformity to the letter-offer on (arch A#! " >! the petitioner failed to transmit the said copy to the respondent. 1t was only on 0pril <! " > when the petitioner appended to his letter to the respondent a copy of the said (arch ";! " > Jetter-offer bearing his conformity that he notified the respondent of his acceptance to said offer. 5ut then! the respondent! through 'hiltectic Corporation! had already withdrawn its offer and had already notified the petitioner of said withdrawal via respondent2s letter dated 0pril ;! " > which was delivered to the petitioner on the same day. 1ndubitably! there was no contract perfected by the parties on the (arch ";! " > Jetter-offer of the respondent. A. Fes. 1t is necessarily so because there was no need for the respondent to withdraw its offer because the petitioner had already rejected the respondent2s offer on (arch "$! " > when the petitioner received the original of the (arch ";! " > Jetter-offer of the respondent without the petitioner affi+ing his signature on the space therefor.

(alomar v. C!#, ()*l Ref*n*ng. 29221, Aug. +1, 1922

5[27] 6[28] 7[29] 8[30]

Jardine Davies, Inc. v. Court of Appeals, et al., 333 SCRA 689 (2000). Enriquez v. Sun Life Assurance, 41 Phil. 269. Allied Steel & Conveyors, Inc.. v. ord !otor Co"pany, 277 FEDERAL REPOR ERS 2!", 907 (1960).

OLE# $#O, CO%%E# AR$ES A#D &'R$SPR'DE#CE OF (E #E) C$*$L CODE, 1985 +"., *,l. $*, --. 462-463.

!acts" &espondent started as sales promotion scheme named :Grand -lam3 wherein any person who submits to it matching left and right halves of pictures of any article wins that article as his pri@e. Half-pictures were found in the labels of the products promoted. 1n the advertisements for said scheme which were published in newspapers! it was also announced that free half-photos of pri@es might also be obtained by writing to its address. 'etitioner 'ostmaster General issued :/raud Order 7o. A3 against respondent on the ground that the promotion is a lottery within the purview of the 'ostal Jaw and directed all its employees to return to sender any mail matter addressed to respondent. Offended by said order! respondent filed a complaint for mandatory injunction with preliminary injunction against petitioner before the C/1. 1ts ground is that the promotional scheme is not a lottery because there was no consideration involved. 'reliminary injunction was ordered against petitioner. 0fter due hearing! the trial court held that the scheme was not a lottery absent of the element of consideration. Hence! this present appeal. #ssue" .he only issue presented in this case is whether or not the element of consideration is present in the Grand -lam promotion of the respondent company! which! together with the elements of pri@e and chance! constitute the TlotteryT prohibited by the 'ostal Jaw. 'etitioner argues that there is consideration because one has to buy respondent company2s products to enable them to participate in the scheme. On the other hand! private respondent countered that with or without its Grand -lam promotion! the products subject of the said sales drive are bought at the same usual priceI with or without the promotion! no person is re%uired to pay more than the current cost of the said products. $el%" 1t appears that the 'hilippine &efining Company! herein appellee! resorted to two schemes to promote the sale of its products, 5ree@e ?asy (oney and C0(10 Juc*y-Cey HuntI both of which envisioned the giving away for free of certain pri@es (without additional consideration) for the purchase of 5ree@e soap and C0(10 coo*ing oil. 1n other words! the participants would get the e+act value of the pri@e for the goods plus the chance of winning in the scheme. 7o one would be re%uired to pay more than the usual price of the products. .his Court has consistently ruled that a plan whereby pri@es can be obtained without any additional consideration (when a product is purchased) is not a lottery (Uy v. 'alomar! J-A=A;#! /ebuary A#! " $ I U.-. v. 5aguio! = 'hil. #$AI Calte+ ('hil.) 1nc. v. 'ostmaster-General! "# -C&0 A;<). 1t is thus clear that the schemes in the case at bar are not lotteries.

,NR#>A, (. &Y>A#A vs. ;$, $'N'RA:-, C'AR; '! A((,A-& AND ,DIARD -#;;'N

!acts" 0 contract of lease! ?+hibit TGT! entered into by and between the defendant and plaintiffSs predecessors-in-interest! has been terminated by its e+press provision appearing in paragraph "! which states that the lease shall be for a period of nine ( ) years commencing on Banuary "! " <> and ending on Banuary ="! " < .0ugust ! " <$! the Jitton co-ownership was dissolved by partition (?+h. T?T) and the ownership of the 6utch 1nn 5uilding and the lots on which it is built was adjudicated to herein private respondent ?dward Jitton. However! the latter gave notice in writing (?+h. T/T) that as the new owner of said properties! rentals of the same should be remitted to him starting Banuary! " <<. 'etitioner signified his conformity (?+h. T /-" T) to this notice and accordingly paid his rentals directly private respondent. .hen petitioner wrote to respondent manifesting his willingness to renew the contract of lease upon its e+piration on Banuary ="! " < under such terms as may be agreeable to both of them.

private respondent! thru counsel! as*ed petitioner in writing to vacate the premises on or before the e+piration of the lease contract on Banuary ="! " < ! and upon his failure to vacate the premises after the e+piry date of the lease contract! he should pay the amount of ')#!$#).>> per month as compensation for the use and occupation of the premises 'etitioner objected to the amount as not being fair and reasonable rental! petitioner invo*ing the huge investment he has put in the 6utch 1nn 5uilding from " <> to " < and also the alleged verbal assurance by plaintiff-apelleeSs predecessor-in-interest of petitionerSs priority to renew the lease of the premises in %uestion. 'etitionerSs refusal to vacate the premises upon written demand made by private respondent on /ebruary "! " < ! private respondent filed the case for ejectment based on the e+piration of the Contract of Jease -FMU10 claims that this case was filed prematurely considering that he is entitled to a renewal of the contract! that one of the inducements which made him enter into a lease agreement with plaintiffSs predecessor-in-interest was the oral assurance of said plaintiffSs predecessor-in-interest that the defendant is entitled to a renewal or a priority to lease the premises upon the e+piration of the contract of lease the plaintiff is now duty-bound to respect the verbal assurance given by the plaintiffSs predecessor to give him a renewal or priority to a new lease over the property and that defendant should now be made to e+ercise his option to renew the lease. 1n other words! plaintiff should be compelled to abide by the commitment made by his predecessor-in-interest #ssue" 4hether or not the defendant is entitled to a renewal of the contract of lease! ?+hibit TG T! which on its face! e+pired on Banuary ="! " < . 1n other words! can the alleged verbal assurances of George Jitton -r. and Gloria Jitton del &io be sufficient basis to vary the written contract and allow the defendant an e+tension of the lease contract! which! on its surface! already e+pired on Banuary ="! " < 8 $el%" However! under A(e) of 0rticle ";>= of the Civil Code as %uoted above! the alleged oral assurance or promise of the representatives of the Jitton /inance N 1nvestment Corp! that defendant should be given priority or a renewal of ?+hibit TGT cannot be enforceable against plaintiff. there is absolutely no room to readinto ?+hibit TGT the alleged e+tension or renewal or assurance or priority to lease after the contract shall have e+pired! because the document is in itself! complete! and no ambi%uities can be ascribed to its terms and neither is there any mista*e or imperfection or failure to e+press the true intent and agreement of the parties therein! simply because the provisions for e+tension or renewal are not found in or capable of being inferred from the .he testimony of the defendant that there was an oral understanding between him and the representatives of Jitton /inance N 1nvestment Corp. to be allowed to e+tend or renew or be given priority to lease the property at the e+piration of the contract of lease on Banuary ="! " <

is belied by his letter to plaintiff dated 6ecember "! " <#! which is inconsistent to what all along said defendant had professed 1t is significant from this portion of the letter that the defendant never mentioned his option or priority to lease the property. 1t is the observation of the court that the alleged verbal assurance of George Jitton -r. and Gloria Jitton del &io is only an afterthought of the defendant. 1t is merely an eleventh hour defense of the defendant when the plaintiff refused to renew the contract 1t is noted that petitioner is among other things a successfull and e+perienced businessman. Considering his huge investment made on the building! he should have ta*en steps to protect his investment within the protective mantle of the law by insisting that the alleged verbal assurance be reduced into writing. His failure to do so has considerably wea*ened his claim. 'roof of the alleged verbal assurance of a lease renewal cannot be allowed both under the 'arol ?vidence &ule and the -tatute of /rauds for failure to put in writing said alleged stipulation. Upon the other hand 4e are inclined to consider -y%uia as having constructed in good faith the improvements he introduced in the 6utch 1nn 5uilding. His rights to said improvements are governed by 0rt. "$<# of the Civil Code! which provides, 'etitioner admits the fact of ownership of the private respondent over the building in %uestion. 0s the owner! it is only logical that he should have the freedom to choose the tenant of the premises under such terms and conditions as may enable him to reali@e reasonable and fair returns therefrom. -ince petitioner stubbornly refused to vacate-ate the premises despite repeated demands of respondent! he should be obliged to compensate the latter such amount as may be deemed fair and reasonable under the circumstances.

RA3'N 3AG&AY&AY AIARD !'ANDA;#'N v. ;$, C'AR; '! A((,A-& 55992 01J14J1925 !acts" 'etitioner owns a building which was leased to private respondent. .he contract of lease was for a period of five years with e+press provisos against any e+tension or renewal by implication of the lease and for the review of the rental rate at the end of the second year of the lease and every two years thereafter. 1t provides that parties may negotiate on or before > days prior to the e+piration of the contract. .he original stipulated rental for '"; per s%uare meter per month included all costs in the maintenance of the building li*e electricity! water! etc. 5efore the end of the fourth year of the lease! petitioner notified respondent that in accordance with their contract! it would increase the rental at '"$ per s%. m. per month. (eanwhile! the parties negotiated for the renewal of the contract of lease. 'etitioner gave respondent the draft of the new contract providing a rental rate of '"<. 5oth parties agreed substantially with the whole contract e+cept on account of arrears which respondent should only be bound to pay '"; instead of '"$ for three months. .he second contract was consummated and agreed upon by parties. .here were disagreements between parties as to the apparent increase in the e+penses of the building and the demand by petitioner of the arrearages it claimed to be entitled into. 5efore the e+piration of the renewed contract of lease which is for a period of two years! petitioner offered that if respondent is willing to pay its arrearages and the increased rate! it would agree to renew the contract of lease. 5ut the respondent unwilling to accede to pay the arrearages holding its position not to pay the same! petitioner notified the respondent to vacate the premises. 'etitioner then instituted an action for ejectment before the City Court. On appeal by petitioner! the C/1 affirmed but modified the lower court2s decision. On appeal! the C0 affirmed the decision of the C/1 as regards a renewed contract but dismissed petitioner2s claim as to payment of reasonable compensation. Hence! this present appeal. &espondent contends! as adopted by all lower courts! that after the e+piration of the renewed contract of lease! there was an implied new lease pursuant to 0rt. "$#< of the Civil Code! which thus empowers the court to fi+ a longer period of lease on the ground that the lessee (respondent herein) having occupied the premises for over one year. 'etitioner also claimed that there was no meeting of the minds as regards the renewed contract of lease. #ssues" ". 4hether or not there was a meeting of the mind while apparently it appears that parties while negotiating were not agreeable to the arrearages but at the same time the parties signed the contract8 A. 4hether or not there was an implied new lease pursuant to 0rt. "$#< of the Civil Code! notwithstanding the e+press provisos against e+tension or renewal by implication8 $el%" Fes. T6uring the negotiations! although petitioner adverted to the arrearages in rental still due from the private respondent! it appears that said claim (as regards arrearages the parties disagree about) had been treated as a distinct or separate matter such that its resolution was not considered a condition precedent to the renewal under negotiation.T 1n other words! since the arrearages did not pertain to the substance of the contract! it! not a principal condition thereof! cannot nullify a contract. 7o. .he contract e+pressly provided against renewal by implication. Under 0rt. "$#< :1f the period for the lease has not been fi+ed! it is understood to be from year to year! if the rent agreed upon is annualI from month to month! if it is monthlyI from wee* to wee*! if the rent is wee*lyI and from day to day! if the rent is to be paid daily. However! even though a monthly rent is paid! and no period for the lease has been set! the courts may fi+ a longer term for the lease after the lessee has occupied the premises for over one year. 1f the rent is wee*ly! the courts may li*ewise determine a longer period after the lessee has been in possession for over si+ months. 1n case of daily rent! the courts may also fi+ a longer period after the

lessee has stayed in the place for over one month.3 0nd it must be noted that under the renewed contract of lease! the period was fi+ed to two years.

5ut the appellate court erred in upholding the trial courtSs judgment that after the e+piration of the twoyear period of the renewed lease on (arch ">! " <)! there was an implied new lease under the provisions of 0rt. "$<> of the Civil Code at the same no longer ade%uate rental rate of '"<.>> per s%uare meter.

NAGA ;,-,($'N, C'., #NC. 5NA;,-C'6 AND -AC#AN' 3. 3AGGAY , vs.;$, C'AR; '! A((,A-& AND CA3AR#N,& &AR ## ,-,C;R#C C''(,RA;#@,, #NC. 5CA&AR,C' ##6, G.R. No. 104112 !ebruar/ 2 , 199 !acts" 'etitioner 7aga .elephone Co.! 1nc. (70.?JCO) is a telephone company in 7aga City while private respondent Camarines -ur 11 ?lectric Cooperative! 1nc. (C0-U&?CO 11) is a private corporation established for the purpose of operating an electric power service in the same city. On 7ovember "! " <<! the parties entered into a contract for the use by petitioners in the operation of its telephone service the electric light posts of private respondent in 7aga City. 1n consideration therefor! petitioners agreed to install! free of charge! ten (">) telephone connections for the use by private respondent 0fter the contract had been enforced for over ten (">) years! private respondent filed on Banuary A! " # with the &egional .rial Court of 7aga City against petitioners for reformation of the contract with damages! on the ground that it is too one-sided in favor of petitionersI that it is not in conformity with the guidelines of the 7ational ?lectrification 0dministration (7?0) which direct that the reasonable compensation for the use of the posts is '">.>> per post! per monthI that after eleven ("") years of petitionersS use of the posts! the telephone cables strung by them thereon have become much heavier with the increase in the volume of their subscribers! worsened by the fact that their linemen bore holes through the posts at which points those posts were bro*en during typhoonsI that a post now costs as much as 'A!$=>.>>I so that justice and e%uity demand that the contract be reformed to abolish the ine%uities thereon. 0dd to this the destruction of some of plaintiffSs poles during typhoons li*e the strong typhoon -isang in " #< because of the heavy telephone cables attached thereto! and the escalation of the costs of electric poles from " << to " # ! and the conclusion is indeed ineluctable that the agreement has already become too one-sided in favor of appellant to the great disadvantage of plaintiff! in short! the continued enforcement of said contract has manifestly gone far beyond the contemplation of plaintiff! so much so that it should now be released therefrom under 0rt. "A$< of the 7ew Civil Code to avoid appellantSs unjust enrichment at its (plaintiffSs) e+pense. 0s second cause of action! private respondent alleged that starting with the year " #"! petitioners have used =" posts in the towns outside 7aga City! without any contract with itI that at the rate of '">.>> per post! petitioners should pay private respondent for the use thereof from " #" up to the filing of its complaintI and that petitioners had refused to pay private respondent said amount despite demands. 0nd as third cause of action! private respondent complained about the poor servicing by petitioners of the ten (">) telephone units which had caused it great inconvenience. #ssues" ". 4hether or not the continued enforcement of the contract between the 70G0 .?J?'HO7? CO.! 17C. (70.?JCO) and C0(0&17?- -U& 11 ?J?C.&1C COO'?&0.1L?! 17C. (C0-U&?CO 11)! ine%uitous or disadvantageous to the latter (C0-U&?CO plaintiff) and too one-sided in favor of former ( 70.?JCO defendant-appellant). A. 4hether or not the C0-U&?CO2s action for reformation of contract cannot be an element in the determination of the period for prescription of the action to reform. =. 4hether or not there is potestative about the prestations i.e.! dependent purely on the will of either party. $el%, 4hile the contract appeared to be fair to both parties when it was entered into by them! it had become disadvantageous and unfair to C0-U&?CO because of subse%uent events and conditions! particularly the increase in the volume of the subscribers of 70.?JCO for more than ten (">) years without the corresponding increase in the number of telephone connections provided to C0-U&?CO..he continued

enforcement of the contract between the parties has! through the years (since " <<)! become too ine%uitous or disadvantageous to the C0-U&?CO and too one-sided in favor of defendant-appellant (70.?JCO)! so that a solution must be found to relieve plaintiff from the continued operation of said agreement and to prevent defendant-appellant from further unjustly enriching itself at plaintiffSs e+pense. 0rticle "A$< spea*s of TserviceT which has become so difficult. .a*ing into consideration the rationale behind this provision! the term TserviceT should be understood as referring to the TperformanceT of the obligation. 1n the present case! the obligation of C0-U&?CO consists in allowing 70.?JCO to use its posts in 7aga City! which is the service contemplated in said article. /urthermore! a bare reading of this article reveals that it is not a re%uirement thereunder that the contract be for future service with future unusual change. 0ccording to -enator 0rturo (. .olentino! 0rticle "A$< states in our law the doctrine of unforseen events. .his is said to be based on the discredited theory of rebus sic stantibus in public international lawI under this theory! the parties stipulate in the light of certain prevailing conditions! and once these conditions cease to e+ist the contract also ceases to e+ist. Considering practical needs and the demands of e%uity and good faith! the disappearance of the basis of a contract gives rise to a right to relief in favor of the party prejudiced. On the issue of prescription of C0-U&?CO2s action for reformation of contract! 70.?JCO alleged that C0Ss ruling that the right of action Tarose only after said contract had already become disadvantageous and unfair to it due to subse%uent events and conditions! which must be sometime during the latter part of " #A or in " #= is erroneous. 1n reformation of contracts! what is reformed is not the contract itself! but the instrument embodying the contract. 1t follows that whether the contract is disadvantageous or not is irrelevant to reformation and therefore! cannot be an element in the determination of the period for prescription of the action to reform. 0rticle "";; of the 7ew Civil Code provides! inter alia! that an action upon a written contract must be brought within ten (">) years from the time the right of action accrues. Clearly! the ten (">) year period is to be rec*oned from the time the right of action accrues which is not necessarily the date of e+ecution of the contract. 'rivate respondentSs right of action arose Tsometime during the latter part of " #A or in " #= when according to 0tty. Juis General! Br. he was as*ed by (private respondentSs) 5oard of 6irectors to study said contract as it already appeared disadvantageous to (private respondent). 'rivate respondentSs cause of action to as* for reformation of said contract should thus be considered to have arisen only in " #A or " #=! and from " #A to Banuary A! " # when the complaint in this case was filed! ten (">) years had not yet elapsed. &egarding the last issue! petitioners allege that there is nothing purely potestative about the prestations of either party because petitionerSs permission for free use of telephones is not made to depend purely on their will! neither is private respondentSs permission for free use of its posts dependent purely on its will. 'etitionersS allegations must be upheld in this regard. 0 potestative condition is a condition! the fulfillment of which depends upon the sole will of the debtor! in which case! the conditional obligation is void. 5ased on this definition! C02s finding that the provision in the contract! to wit, (a) .hat the term or period of this contract shall be as long as the party of the first part (70.?JCO) has need for the electric light posts of the party of the second part (C0-U&?CO) . . .. is a potestative condition! is correct. However! it must have overloo*ed the other conditions in the same provision! to wit, . . . it being understood that this contract shall terminate when for any reason whatsoever! the party of the second part (private respondent) is forced to stop! abandoned (sic) its operation as a public service and it becomes necessary to remove the electric light post (sic)I which are casual conditions since they depend on chance! ha@ard! or the will of a third person. 1n sum! the contract is subject to mi+ed conditions! that is! they depend partly on the will of the debtor and partly on chance! ha@ard or the will of a third person! which do not invalidate the aforementioned provision. 7evertheless! in view of our discussions under the first and second issues raised by petitioners! there is no reason to set aside the %uestioned decision and resolution of respondent court.

3AC;AN C,:A #N;,RNA;#'NA- A#R('R; AA;$'R#;Y , vs. C'AR; '! A((,A-&, R,G#'NA;R#A- C'AR;, :RANC$ 9, C,:A C#;Y, 3,-:A -#3:AC', -#NDA C. -'GAR;A an% RA3'N C. -'GAR;A, G.R. No. 121501 'ctober +0, 1991 !acts" Officers of the 7ational 0irport Corporation (70C) informed the owners of the various lots surrounding the Jahug 0irport that the government will purchase their lands for the e+pansion of the airport. .he landowners were assured that their properties will be turned to them when these are no longer being used by the airport. 1ne@ Ouano! though s*eptic at first! agreed to sell since the government was going to e+propriate the land anyway. -he was also reassured by the promise that the land will be returned to her when it is no longer in use. .he sale of 1ne@S properly was covered by a 6eed of -ale signed by her and (ariano &eyes representing the 70C. .he deed! however! does not contain any provision regarding 1ne@S right to repurchase the properties. 7onetheless! during her lifetime! 1ne@ used to remind her granddaughter (elba Jimbaco about the assurance by the 70C officials that the properties will be returned. 1ne@ also made (elba understand that the latter can recover the land herself should 1ne@ die before the proper time arises. Upon learning that other landowners were able to recover their properties and that the then 'res. 0%uino had ordered that the airport be transferred to (actan! the appellees tried to repurchase the properties originally owned by their grandmother. However! the manager of the 70C! denied their re%uest because the deed of sale covering the properties does not contain any condition relating to the right to repurchase. 'rivate respondents thereafter filed a case for reconveyance with the &egional .rial Court (&.C) which ruled in their favor. On appeal to the C0! the same was affirmed in toto. #ssue" 4hether or not the -tatute of /rauds apply in the case at bar $el%" 7O. Under 0rt. ";>= of the Civil Code! a contract for the sale of real property shall be unenforceable unless the same or some note or memorandum thereof be in writing and subscribed by the party charged or his agent. ?vidence of the agreement cannot be received without the writing! or a secondary evidence of its contents. 1n the case at bench! the deed of sale and the verbal agreement allowing the right of repurchase should be considered as an integral whole. .he deed of sale relied upon by petitioner is in itself the note or memorandum evidencing the contract. .hus! the re%uirement of the -tatute of /rauds has been sufficiently complied with. (oreover! the principle of the -tatute of /rauds only applies to e+ecutory contracts and not to contracts either partially or totally performed! as in this case! where the sale has been consummatedI hence! the same is ta*en out of the scope of the -tatute of /rauds. 0s the deed of sale has been consummated! by virtue of which! petitioner accepted some benefits thereunder! it cannot now deny the e+istence of the agreement. .he -tatute of /rauds was enacted for the purpose of preventing fraud. 1t should not be made the instrument to further them.

$e*rs of ,scanlar @s Court of Appeals GG.R. No. 119444. 'ctober 2+, 1994H !acts" .he rights! interests and participation of A parcels of land! denominated as Jot "$"$ and "$"< of the Caban*alan Cadastre! was e+ecuted through a deed in favor of 'edro ?scanlar and /rancisco Holgado. However! on 7ovember =! " #A the heirs instituted a case for cancellation of sale against ?scanlar and Holgado because of the latter2s failure to pay the balance of the purchase price by =" (ay " < ! which was the date stated in the 6eed of 0greement as the final date that the balance of the purchase price shall be paid. On -eptember ">! " #"! ?scanlar and Holgado moved to intervene in the probate proceedings that is being held to give 7ombre and Cari-an the rights over the Cari-ans2 share in Jots "$"$ and "$"<. 5ut the probate court ruled in favor of the Cari-ans to sell their respective shares in the estate. .he case was brought to the Court of 0ppeals and the -upreme Court. #ssue" 6o ?scanlar and Hodalgo still have rights on half of the property in %uestion even after the failure to pay the amount due on time8 $el%" .he -upreme Court ruled in favor of ?scanlar and Hodalgo and remanded the case to the &.C 7egros Occidental so that it may be determined! at the option of ?scanlar and Hodalgo! which half of the property in %uestion would be theirs and which half would be the Cari-ans2. 0mong others! one of the reasons for such decision is the provision in the 7ew Civil Code! 0rticle ") A! which provides that :in the sale of immovable property! even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right ta*e place! the vendee may pay! even after the e+piration of the period! as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. 0fter the demand! the court may not grant him a new term.3 1n this case! the sellers gave a specific due date but did not ma*e any judicial demand after ?scanlar and Hodalgo failed to pay the due amount on time. .hey also did not e+ecute a demand through a notarial act. .hus! the right to W of the property remains with ?scanlar and Hodalgo.