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SAINT LOUIS UNIVERSITY

Obligations and Contracts


Case Book



Cabson, Claire
Ignacio, Regine
Kiwang, Chesty Joy
Pocais, Laurice
Poserio, Chrissan Mae
Abad, Kendal
Paraan, Brian Jonathan
Vehemente, Joseph Harvey

March 7, 2014
Table of Contents
MARIANO UN OCAMPO III v PEOPLE OF THE PHILIPPINES ......................................................................... 18
LEUNG BEN v P. J. O'BRIEN ......................................................................................................................... 20
ARTURO PELAYO v MARCELO LAURON ET AL. ............................................................................................ 22
ASJ CORPORATION AND ANTONIO SAN JUAN v SPS. EFREN & MAURA EVANGELISTA .............................. 24
ERNESTO RAMAS UYPITCHING and RAMAS UYPITCHING SONS, INC., v. ERNESTO QUIAMCO .................. 26
NIKKO HOTEL MANILA GARDEN and RUBY LIM vs ROBERTO REYES, a.k.a. AMAY BISAYA, .................... 29
ST. MARYS ACADEMY vs. WILLIAM CARPITANOS and LUCIA S. CARPITANOS et al. .................................. 32
SPOUSES LUIGI M. GUANIO and ANNA HERNANDEZ-GUANIO v. MAKATI SHANGRI-LA ............................ 34
TSPIC CORPORATION v TSPIC EMPLOYEES UNION (FFW) .......................................................................... 36
KHRISTINE REA M. REGINO v PANGASINAN COLLEGES OF SCIENCE AND TECHNOLOGY ........................... 38
PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION v. COURT OF APPEALS ............................................ 40
Cosmo Entertainment Mgmt, Inc. vs. La Ville Commercial Corporation .................................................. 42
AYALA CORP v. ROSA-DIANA REALTY AND DEVT. CORP. ........................................................................... 44
BRICKTOWN DEVELOPMENT CORP. vs. AMOR TIERRA DEVELOPMENT CORP. .......................................... 46
PILIPINAS HINO, INC. vs. COURT OF APPEALS ............................................................................................. 48
ARTURO SARTE FLORES vs. SPS ENRICO L. LINDO, JR. and EDNA C. LINDO ................................................ 50
PHILIPPINE REALTY AND HOLDINGS CORPORATION vs. LEY CONST. AND DEVT CORP ............................. 53
Titan-Ikeda Construction v Primetown Property ........................................................................................ 57
PADCOM CONDO v ORTIGAS ASSOC CENTER ............................................................................................ 61
State Investment vs. Court of Appeals ........................................................................................................ 65
People v Nufrashir Hashim.......................................................................................................................... 67
FELIXBERTO A. ABELLANA VS. PEOPLE ........................................................................................................ 69
PEOPLE vs. EDWIN MALICSI ........................................................................................................................ 71
PEOPLE vs. ROSAURO SIA ............................................................................................................................ 73
PEOPLE OF THE PHILIPPINES vs. LUDOVICO C. DOCTOLERO ...................................................................... 76
PEOPLE vs. ROLLY ABULENCIA ................................................................................................................... 78
REYNALDO BERMUDEZ, SR and ADONITA YABUT BERMUDEZ v. JUDGE A. MELENCIO-HERRERA ............ 79
PEOPLE OF THE PHILIPPINES vs. Hon. Judge BENJAMIN RELOVA ............................................................... 82
GEORGE MANANTAN vs. THE COURT OF APPEALS..................................................................................... 84
PEOPLE OF THE PHILIPPINES vs. ROGELIO BAYOTAS .................................................................................. 87
FAUSTO BARREDO vs. SEVERINO GARCIA ................................................................................................... 89
OSCAR DEL CARMEN, JR., vs. GERONIMO BACOY ...................................................................................... 93
LUDO AND LUYM CORPORATION vs. COURT OF APPEALS ......................................................................... 96
THERMOCHEM INC vs. LEONORA NAVAL and CA ....................................................................................... 99
PHILIPPINE HAWK CORP vs VIVIAN TAN LEE ........................................................................................... 101
DY TEBAN TRADING, INC. vs. JOSE CHING ................................................................................................ 104
SAFEGUARD SECURITY AGENCY INC vs. LAURO TANGCO et al ................................................................ 107
NOSTRADAMUS VILLANUEVA vs. PRISCILLA R. DOMINGO and LEANDRO LUIS R. DOMINGO ................. 110
VICENTE CALALAS vs. FRANCISCO SALVA ................................................................................................. 112
AMADO PICART vs. FRANK SMITH, JR. ...................................................................................................... 115
DURBAN APARTMENTS CORP vs PIONEER INSURANCE AND SURETY CORP ............................................ 117
JOSE LAGON vs. HOOVEN COMALCO INDUSTRIES INC ............................................................................ 119
SPS LORENZO G. FRANCISCO and LORENZA D. FRANCISCO vs. COURT OF APPEALS ............................... 121
JACINTO TANGUILIG vs. COURT OF APPEALS and VICENTE HERCE JR. ..................................................... 123
DR. FERNANDO PERIQUET, JR. vs. HEIRS OF THE LATE FELIX R. FRANCISCO ............................................ 126
LEGASPI OIL CO. INC. vs CA and BERNARD OSERAOS ............................................................................... 128
PHILIPPINE CHARTER INSURANCE CORPORATION v CENTRAL COLLEGES OF THE PHILIPPINES............... 130
Titan-Ikeda Construction v Primetown Property ...................................................................................... 133
PNB MADECOR vs. GERARDO C. UY .......................................................................................................... 137
IGNACIO BARZAGA vs. COURT OF APPEALS and ANGELITO ALVIAR ......................................................... 139
JOSEFINA TAYAG et al v COURT OF APPEALS ............................................................................................ 141
DR. FERNANDO PERIQUET, JR vs. HEIRS OF FRANCISCO .......................................................................... 143
ARMAND O. RAQUEL-SANTOS vs CA and FINVEST SECURITIES CO., INC .................................................. 145
RCBC vs. CA and FELIPE LUSTRE ................................................................................................................ 147
BPI INVESTMENT CORPORATION vs. CA and ALS MGMT & DEVT CORP .................................................. 149
CARMELITA LEAO vs. CA and HERMOGENES FERNANDO ...................................................................... 151
HEIRS OF LUIS BACUS vs. CA and SPS FAUSTINO DURAY and VICTORIANA DURAY ................................. 153
INTEGRATED PACKAGING CORP vs. CA and FIL-ANCHOR PAPER CO., INC. .............................................. 155
ROBERTO Z. LAFORTEZA et al vs. ALONZO MACHUCA ............................................................................. 157
RODOLFO N. REGALA vs. FEDERICO P. CARIN ........................................................................................... 160
THE INTERNATIONAL CORPORATE BANK (UNION BANK) vs. SPS. FRANCIS S. GUECO and MA. LUZ E.
GUECO ....................................................................................................................................................... 162
REPUBLIC vs. THE COURT OF TAX APPEALS and AGFHA, INCORPORATED ............................................... 164
Antonio Diaz vs. Davao Light and Power Co., Inc...................................................................................... 166
Ms. Violeta Yasona vs. De Ramos ............................................................................................................. 169
Asian Terminals, Inc., vs. Philam Insurance Co., Inc. ................................................................................ 171
Cecilia Yambao vs. Melchorita Zuniga et al. ............................................................................................. 173
Smith Bell Dodwell Shipping Agency Corporation vs. Catalino Borja and International to Wage and
Transport Corporation .............................................................................................................................. 175
Ramon Ilusorio vs. Court of Appeals and The Manila Banking Corporation ............................................. 177
National Power Corporation vs. Court of Appeals and Engineering Construction, Inc. ........................... 179
Anabelle Muaje-Tuazon and Almer Abing vs. Wenphil Corporation, et al. .............................................. 181
Radio Communication of the Philippines, Inc. vs. Alfonso Verchez, et al. ................................................ 183
Victory Liner, Inc. vs. Rosalito Gammad, et al .......................................................................................... 185
FGU Insurance Corporation vs. G.P Sarmiento Trucking Corporation and Lambert Eroles...................... 187
Light Rail Transit Authority & Rodolfo Roman vs. Marjorie Navidad, et al............................................... 189
Rodzssen Supply Co., Inc. vs. Far East Bank & Trust Co. ........................................................................... 191
University of the East vs. Romeo Jader ..................................................................................................... 193
Bayne Adjusters and Surveyors, Inc. vs. Court of Appeals and Insurance Company of North America ... 195
Delsan Transport Lines, Inc. vs. C & A Construction, Inc. ......................................................................... 197
Philippine Commercial International Bank vs. Court of Appeals, et al ..................................................... 199
San Miguel Corporation vs. Heirs of Sabiniano Inguito and Julius Ouano ................................................ 201
Heirs of Jose Marcial Ochoa, et al. vs. G & S Transport Corporation........................................................ 203
Alfredo Pacis and Cleopatra Pacis vs. Jerome Jovanne Morales .............................................................. 205
Philippine Hawk Corporation vs. Vivian Tan Lee ...................................................................................... 207
Mercury Drug Corporation and Rolando Del Rosario vs. Spouses Richard Huang, et al. ......................... 208
Flordeliza Mendoza vs. Mutya Soriano, et al. ........................................................................................... 210
Hermana R. Cerezo vs. David Tuazon ....................................................................................................... 212
Filcar Transport Services vs. Jose Espinas ................................................................................................. 214
FEB Leasing and Finance Corporation vs. Spouses Sergio Baylon, et al. .................................................. 216
Filipinas Synthetic Fiber Corporation vs. Wilfredo De Los Santos, et al. .................................................. 218
Viron Transportation Co., Inc. vs. Alberto Delos Santos y Natividad and Rudy Samidan ......................... 220
Mercury Drug Corporation vs. Sebastian Baking ...................................................................................... 222
Safeguard Security Agency, Inc., and Admer Pajarillo vs. Lauro Tangco, et al. ........................................ 224
Ernesto Pleyto and Philippine Rabbit Bus Lines, Inc. vs. Maria Lomboy and Carmela Lomboy ............... 226
Viron Transportation Co., Inc. vs. Alberto Delos Santos y Natividad and Rudy Samidan ......................... 228
Ernesto Syki vs. Salvador Begasa .............................................................................................................. 230
Cecilia Yambao vs. Melchorita Zuniga, et al ............................................................................................. 232
Mindanao Terminal and Brokerage Service, Inc. vs. Phoenix Assurance Company of New York/ MCGEE &
Co., Inc....................................................................................................................................................... 234
YHT Realty Corporation, Erlinda Lainez and Anicia Payam vs. Court of Appeals and Maurice McLoughlin
.................................................................................................................................................................. 236
Rogelio Ramos, et al vs. Court of Appeals, et al. ...................................................................................... 239
Leah Alesna Reyes, et al vs. Sisters of Mercy Hospital, et al..................................................................... 242
Rogelio Nogales, et al vs. Capitol Medical Center, et al............................................................................ 245
Professional Services, Inc., Juan Fuentes, Miguel Ampil vs. Natividad and Enrique Agana ..................... 247
Professional Services, Inc. vs. Court of Appeals, Natividad and Enrique Agana ....................................... 250
Dr. Milagros Cantre vs. Spouses John David Go and Nora Go .................................................................. 252
Dr. Rubi Li vs. Spouses Reynaldo and Lina Soliman, as parents/heirs of deceased Angelica Soliman ..... 254
People of the Philippines vs. Glenn De Los Santos ................................................................................... 257
L.G. Foods Corporation and Victorino Gabor, Vice-President and General Manager vs. Hon. Philadelfa
Pagapong-Agraviador, in her capacity as Presiding Judge of Regional Trial Court, Branch 43, Bacolod City,
and Spouses Florentino and Theresa Vallejera ......................................................................................... 260
Victorino Magat vs. Hon. Leo Medialdea and Santiago Guerrero ............................................................ 262
Fidela Del Castillo Vda. De Mistica vs. Spouses Bernardino Naguiat and Maria Paulina Gerona-Naguiat
.................................................................................................................................................................. 264
Spouses Henry Co and Elizabeth Co and Melody Co vs. Court of Appeals, et al ...................................... 266
Heirs of Sofia Quirong, represented by Romeo Quirong vs. Development Bank of the Philippines ........ 268
Heirs of Ramon Gaite, et al vs. the Plaza, Inc. and FGU Insurance Corporation....................................... 270
Solar Harvest, Inc. vs. Davao Corrugated Carton Corporation ................................................................. 273
Mila Reyes vs. Victoria Tuparan ................................................................................................................ 275
G.G. Sportswear MFG. Corporation vs. World Class Properties, Inc. ....................................................... 278
Valentin Movido, substituted by Marginito Movido vs. Luis Reyes Pastor .............................................. 280
Spouses Carmen Tongson and Jose Tongson, et al vs. Emergency Pawnshop Bula, Inc. and Danilo Napala
.................................................................................................................................................................. 282
Bonifacio Sanz Maceda, Jr. vs. Development Bank of the Philippines...................................................... 284
Armando Raquel-Santos and Annalissa Mallari vs. Court of Appeals and Finvest Securities Co., Inc. ..... 286
Spouses Lino Francisco & Guia Francisco vs. DEAC Construction, Inc. and Geomar Dadula .................... 288
Spouses Felipe and Leticia Cannu vs. Spouses Gil and Fernandina Galang and National Home Mortgage
Finance Corporation ................................................................................................................................. 291
Generoso Villanueva and Raul Villanueva, Jr. vs. Estate of Gerardo Gonzaga/Ma. Villa Gonzaga, in her
capacity as Administratrix ......................................................................................................................... 293
Spouses Domingo and Lourdes Paguyo vs, Pierre Astorga and St. Andrew Realty, Inc. .......................... 295
Bienvenido Casino, Jr. vs. Court of Appeals and Octagon Realty Development Corporation .................. 298
Fernando Carrascoso, Jr. vs. Court of Appeal, et al. ................................................................................. 300
Goldenrod, Inc. vs. Court of Appeals, et al. .............................................................................................. 303
Roberto Serrano vs. Court of Appeals, et al.............................................................................................. 306
Perla Palma Gil, Vicente Hizon, Jr., and Angel Palma Gil vs. Court of Appeals, et al. ............................... 308
David Reyes vs Jose Lim ............................................................................................................................ 310
Ong Yong, et. al. vs David Tiu .................................................................................................................... 312
Equatorial Realty Devt Inc. vs Mayfair Theater, Inc. ................................................................................ 314
Sps. Mariano and Avelina Velarde vs Court of Appeals ............................................................................ 316
Alexander Asuncion vs Eduardo Evangelista ............................................................................................ 318
William Uy vs Court of Appeals ................................................................................................................. 320
Constancia Tamayo, et. al. vs Rosalia Abad Senora, et. al. ....................................................................... 322
Leticia Tan, et. al. vs OMC Carriers, Inc. .................................................................................................... 324
Victory Liner, Inc. vs Heirs of Andres Malecdan ....................................................................................... 326
GSIS vs Sps. Gonzalo and Matilde Labung-Deang ..................................................................................... 329
BPI Investment Corp. vs DG Carreon Commercial Corp. .......................................................................... 331
Khe Kong Cheng vs Court of Appeals ........................................................................................................ 333
Philippine Realty and Holdings Corp. vs Ley Construction and Development Corp. ................................ 335
Megaworld Globus Asia, Inc. vs Mila Tanseco .......................................................................................... 337
Roberto Sicam vs Lulu Jorge ..................................................................................................................... 339
Florencia Huibonhua vs Court of Appeals ................................................................................................. 341
Ace-Agro Development Corp. vs Court of Appeals ................................................................................... 343
Pedro Dioquino vs Federico Laureano, et. al. ........................................................................................... 345
Bachelor Express, Inc. vs Court of Appeals ............................................................................................... 347
Pedro Vasquez, et. al. vs Court of Appeals ............................................................................................... 349
Alberta & Cresencio Yobido vs Court of Appeals ...................................................................................... 351
Roberto Juntilla vs Clemente Fontanar ..................................................................................................... 353
PhilAm Gen Insurance Co. vs MGG Marine Services, Inc. ......................................................................... 355
Mindex Resourced Development vs Ephraim Morillo .............................................................................. 357
NAPOCOR vs Philipp Brothers Oceanic, Inc. ............................................................................................. 359
William Ong Genato vs Benjamin Bayhon, et. al. ..................................................................................... 361
Union Bank of the Philippines vs Edmund Santibaez ............................................................................. 363
Jesus San Agustin vs Court of Appeals ...................................................................................................... 365
Project Builders, Inc. vs Court of Appeals ................................................................................................. 367
Hong Kong and Shanghai Banking Corp. (HSBC) vs Sps. Broqueza ........................................................... 369
Development Bank of the Philippines vs Court of Appeals ...................................................................... 371
Maria Soledad Tomimbang vs Atty. Jose Tomimbang .............................................................................. 372
Felix Gonzales vs Heirs of Cruz .................................................................................................................. 374
Insular Life Assurance Company vs Robert Young, et. al. ......................................................................... 376
Direct Funders Holdings Corp. vs Judge Celso Lavia ............................................................................... 378
Fidela Vda. de Mistica vs Sps. Naguiat ...................................................................................................... 380
Luz Hermosa vs Epifanio Longara ............................................................................................................. 382
Nazario Trillana vs Quezon College, Inc. ................................................................................................... 384
Visayan Sawmill Company, Inc. vs Court of Appeals ................................................................................ 386
Carmelita Leao vs Court of Appeals ........................................................................................................ 388
Raymundo De Leon vs Benita Ong ............................................................................................................ 390
Heirs of Remedios Sandejas vs Alex Lina .................................................................................................. 392
Commissioner of Internal Revenue vs Primetown Property Group ......................................................... 394
National Marketing Corp. (NAMARCO) vs. Tecson, et. al. ........................................................................ 396
Ernest Berg vs Magdalena Estate, Inc. ...................................................................................................... 398
Lirag Textile Mills, Inc. vs Court of Appeals .............................................................................................. 400
Daguhoy Enterprises, Inc. vs Rita Ponce ................................................................................................... 402
Victoria Planters Association, Inc. vs Victorias Milling Co., Inc. ................................................................ 404
Jespajo Realty Corporation vs Court of Appeals ....................................................................................... 406
Pilar Borromeo et. al. vs Court of appeals ................................................................................................ 408
Benito Gonzales vs Florentino de Jose ...................................................................................................... 410
Guillermina Baluyut vs Eulogio Poblete et. al. .......................................................................................... 412
Malayan Realty, Inc. vs Uy Han Yong ........................................................................................................ 414
Kasapian ng Malayang Manggagawa sa Coca-Cola vs Court of Appeals .................................................. 416
Zenaida Santos vs Santos et. al. ................................................................................................................ 418
Manuel Melotindos vs Melecio Tobias ..................................................................................................... 420
LL and Company Development vs Huang Chao Chun ............................................................................... 422
Brent School, Inc. vs Ronaldo Zamora ...................................................................................................... 424
Lourdes Valerio Lim vs People of the Philippines ..................................................................................... 426
Pacific Banking Corporation vs Court of Appeals ...................................................................................... 428
Felipe Agoncillo vs Crisanto Javier ............................................................................................................ 430
Ong Guan Can vs The Century Incurance Co., Ltd. ................................................................................... 432
Clara Tambunting de Legards, et. al. vs Victoria Desbarats Miailhe ......................................................... 434
Alejandro Reyes vs Francisco Martinez .................................................................................................... 436
Martina Quizana vs Gaudencio Redugerio ............................................................................................... 437
Marsman vs. Philippine Geoanalytics ....................................................................................................... 439
Purita Alipio vs. the Court of Appeals and Romeo G. Jaring ..................................................................... 441
PH Credit Corporation vs. Court of Appeals and Carlos M. Ferrales ........................................................ 442
Construction Development Corporation of the Philippines vs. Rebecca G. Estrella, et. al. ..................... 443
Republic Glass Corporation and Gervel Inc., vs. Lawrence C. Qua ........................................................... 445
Industrial Management International Development Corp. (INIMACO) vs National Laabor Relations
Commission ............................................................................................................................................... 447
Metro Manila Transit Coprporation vs Court of Appeals ......................................................................... 449
Baldomero Inciong, Jr. vs Court of Appeals and Philippine Bank of Communications ............................. 451
Philippine Blooming Mill, Inc. vs Court of Appeals ................................................................................... 452
Queensland Tokyo Commodities, Inc. vs Thomas George ........................................................................ 455
Shrimp-Specialist vs. Fuji-Triumph Agri-Industrial Corporation ............................................................... 457
Asset Builders Corporation vs. Stronghold Insurance Company, Inc. ....................................................... 459
Eparwa Security and Janitorial Services, Inc. vs Liceo de Cagayan University .......................................... 461
P.T. Cerna Corporation vs Court of Appeals ............................................................................................. 463
Natividad P. Nazareno vs Court of Appeals .............................................................................................. 465
Aurelio P. Alonzo vs Jaime and Perlita San Juan ....................................................................................... 467
Jesus T. David vs. Court of Appeals ........................................................................................................... 470
Republic of the Philippines vs. Thi Thu Thuy T. De Guzman ..................................................................... 472
Jose Marques and Maxilite Technologies, Inc. vs Far East Bank and Trust Company .............................. 474
PRISMA Construction and Development Corporation vs Arthur F. Menchavez ....................................... 476
Theresa Macalalag vs People of the Philippines ....................................................................................... 478
Antonio Tan vs. Court of Appeals ............................................................................................................. 479
Eastern Shipping Lines, Inc. vs Court of Appeals ...................................................................................... 481
Rodelo G. Polotan, Sr. vs Court of Appeals ............................................................................................... 483
New Sampaguita Builders Construction, Inc. (NSBCI) vs Philippine National Bank .................................. 484
Dario Nacar vs Gallery Frames and/or Felipe Bordey, Jr. ......................................................................... 486
Land Bank of the Philippines vs Alfredo Ong ............................................................................................ 488
Spouses Florentino T. Mallari and Aurea V. Mallari vs Prudential Bank (now Bank of the Philippine
Islands) ...................................................................................................................................................... 491
RGM Industries vs United Pacific Capital Corporation ............................................................................. 493
Philippine National Bank vs Spouses Wilfredo and Estela Encina ............................................................ 495
Restituta M. Imperial vs Alexa Jaucian ..................................................................................................... 497
Teddy G. Pabugais vs Dave P. Sahijwani ................................................................................................... 499
Antonio Lo vs Court of Appeals ................................................................................................................. 501
Tolomeo Ligutan vs Court of Appeals ....................................................................................................... 503
Spouses Silvestre vs Rodrigo V. Ramos ..................................................................................................... 505
First Metro Investment Corporation vs Este del Sol Mountain Reserve .................................................. 507
DOMEL Trading Corporation vs Court of Appeals ..................................................................................... 509
Leticia Y. Medel, et. al. vs Court of Appeals .............................................................................................. 511
Pacita F. Reformina vs The Honorable Valeriano P. Tomol ...................................................................... 513
Sonny Lo vs KJS Eco-Formwork System Phil., Inc. ..................................................................................... 515
Philippine National Bank vs Court of Appeals and Loreto Tan ................................................................. 517
Cathay Pacific Airways, Ltd. Vs Spouses Daniel Vazquez and Maria Luisa Madrigal Vazquez .................. 519
Citibank, N.A. and Investors Finance Corporation vs Modesta R. Sabeniano ......................................... 521
Telengtan Brothers & Sons, INC. vs. United States Lines.......................................................................... 523
C.F. Sharp & Co., Inc. vs Northwest Airlines, Inc. ...................................................................................... 525
Albert R. Padilla vs Spouses Floresco Paredes and Adelina Paredes ........................................................ 526
Norberto Tibajia, Jr. and Armen Tibajia vs Court of Appeals .................................................................... 528
Development Bank of the Philippines vs Court of Appeals ...................................................................... 530
Vitarich Corporation vs. Chona Losin ........................................................................................................ 532
Metropolitan Bank and Trust Company vs Renato D. Cabilzo .................................................................. 534
Almeda vs Bathala Marketing ................................................................................................................... 536
Simplicio A. Palanca vs Ulyssis Guides ...................................................................................................... 538
PHILIPPINE COMMERCIAL INTERNATIONAL BANK (formerly INSULAR BANK OF ASIA AND AMERICA) vs.
COURT OF APPEALS ................................................................................................................................... 540
Jose V. Lagon vs Hooven Comalco Industries, Inc. .................................................................................... 542
Audion Electric Co., Inc. vs National Labor Relations Commission ........................................................... 544
BINALBAGAN VS. CA.................................................................................................................................. 546
LORENZO SHIPPING COMPANY v. BJ MARTHEL INTERNATIONAL ............................................................ 548
LUZON DEVELOPMENT BANK vs. ENRIQUEZ ............................................................................................ 549
ESTANISLAO REYES vs. SEBASTIANA MARTINEZ ET AL., ........................................................................... 551
AGRIFINA AQUINTEY vs. SPOUSES FELICIDAD AND RICO TIBONG............................................................ 553
MAMENTA Vda. De JAYME vs. CA ............................................................................................................ 555
Caltex vs. IAC ............................................................................................................................................. 557
Lo vs. CA .................................................................................................................................................... 559
ASJ Corporation vs. Evangelista ................................................................................................................ 561
Paculdo vs. Regalado ................................................................................................................................ 563
CBC vs. CA ................................................................................................................................................. 565
Mobil vs. CA .............................................................................................................................................. 567
Sps. Bonrostro vs. Sps. Luna ..................................................................................................................... 568
Dalton vs. FGR Reality and Development Corp. ........................................................................................ 570
Benos vs. Lawilao ...................................................................................................................................... 572
Peoples Industrial vs. CA .......................................................................................................................... 574
Eternal Gardens vs. CA .............................................................................................................................. 576
Rayos vs. Reyes ......................................................................................................................................... 577
Cebu International vs. CA .......................................................................................................................... 579
De Mesa vs. CA .......................................................................................................................................... 581
Occena vs. CA ............................................................................................................................................ 583
Ortigas vs Feati Bank ................................................................................................................................. 585
So vs. Food Fest Land, Inc. ........................................................................................................................ 587
Magat vs. CA ............................................................................................................................................. 589
PNCC vs. CA ............................................................................................................................................... 591
NATELCO vs. CA ......................................................................................................................................... 593
Reyna vs. COA ........................................................................................................................................... 594
Trans Pacific vs. CA .................................................................................................................................... 596
Dalupan vs. Harden ................................................................................................................................... 598
Lopez Liso vs. Tambunting ........................................................................................................................ 600
Testate Estate of Mota vs. Serra ............................................................................................................... 601
Yek Tong Lim Fire vs. Yusingco .................................................................................................................. 603
EGV Realty vs. CA ...................................................................................................................................... 604
AEROSPACE CHEMICAL INDUSTRIES, INC. vs. COURT OF APPEALS .......................................................... 606
ERNESTO M. APODACA vs. NATIONAL LABOR RELATIONS COMMISSION ................................................ 609
SPOUSES VICTORIANO CHUNG and DEBBIE CHUNG vs. ULANDAY CONSTRUCTION, INC. ....................... 611
MONDRAGON PERSONAL SALES, INC. vs. VICTORIANO S. SOLA, JR. ........................................................ 613
INSULAR INVESTMENT AND TRUST CORPORATION vs. CAPITAL ONE EQUITIES CORP. .......................... 615
SELWYN F. LAO and EDGAR MANANSALA vs. SPECIAL PLANS, INC. ......................................................... 617
UNITED PLANTERS SUGAR MILLING CO., INC., (UPSUMCO) vs. CA .......................................................... 619
SILAHIS MARKETING CORPORATION vs. IAC ............................................................................................. 622
ENGRACIO FRANCIA vs. IAC ...................................................................................................................... 624
HERMENEGILDO M. TRINIDAD vs. ESTRELLA ACAPULCO ......................................................................... 626
HEIRS OF SERVANDO FRANCO vs. SPOUSES VERONICA AND DANILO GONZALES ................................... 628
CAROLINA HERNANDEZ-NIEVERA vs. WILFREDO HERNANDEZ ................................................................ 630
ST. JAMES COLLEGE OF PARAAQUE vs. EQUITABLE PCI BANK ............................................................... 633
MARIA SOLEDAD TOMIMBANG vs. ATTY. JOSE TOMIMBANG ................................................................. 636
MINDANAO SAVINGS AND LOAN ASSOCIATION, INC. vs. EDWARD WILLKOM ........................................ 638
AGRIFINA AQUINTEY vs. SPOUSES FELICIDAD AND RICO TIBONG............................................................ 640
ASIAN TERMINALS, INC. vs. PHILAM INSURANCE CO., INC. ...................................................................... 642
LOADMASTERS CUSTOMS SERVICES, INC. vs. GLODEL BROKERAGE CORPORATION ............................... 643
METROPOLITAN BANK AND TRUST COMPANY vs. RURAL BANK OF GERONA, INC.................................. 645
SWAGMAN HOTELS AND TRAVEL, INC. vs. CA .......................................................................................... 647
AZOLLA FARMS and FRANCISCO R. YUSECO vs. CA .................................................................................. 649
CALIFORNIA BUS LINES, INC. vs. STATE INVESTMENT HOUSE, INC. ......................................................... 651
GLORIA OCAMPO-PAULE vs. CA ................................................................................................................ 654
SPOUSES ARSENIO R. REYES and NIEVES S. REYES vs. CA ......................................................................... 656
SPOUSES FLORANTE and LAARNI BAUTISTA vs. PILAR DEVELOPMENT CORPORATION ........................... 658
EVADEL REALTY and DEVELOPMENT CORPORATION vs. SPOUSES ANTERO AND VIRGINIA SORIANO .... 660
FRANCISCO L. ROSARIO, JR. vs. LELLANI DE GUZMAN .............................................................................. 662
VECTOR SHIPPING CORPORATION vs. AMERICAN HOME ASSURANCE COMPANY .................................. 664
ERNESTO VILLEZA vs. GERMAN MANAGEMENT AND SERVICES ............................................................... 666
INSURANCE OF THE PHILIPPINE ISLANDS CORPORATION vs. SPOUSES VIDAL S. GREGORIO and JULITA
GREGORIO ................................................................................................................................................. 668
ROMEO D. MARIANO vs. PETRON CORPORATION ................................................................................... 670
SPOUSES PATRICIO and MYRNA BERNALES vs. HEIRS OF JULIAN SAMBAAN ........................................... 672
B & I REALTY CO., INC., petitioner, vs. TEODORO CASPE .......................................................................... 674
Felicisima Mesina vs. Atty. Honorio Valisno Garcia .................................................................................. 676
Heirs of Gaudiane vs. Court of Appeals .................................................................................................... 678
Menandro Laureano vs CA ........................................................................................................................ 680
Banco Filipino Savings vs Court of Appeals ............................................................................................... 681
MARIA VDA. DE DELGADO vs. COURT OF APPEALS .................................................................................. 683
Josefa Maestrado vs. CA ........................................................................................................................... 685
F.A.T. KEE COMPUTER SYSTEMS vs. ONLINE NETWORKS INTERNATIONAL ............................................. 686
Tanay Recreation vs Catalina Fausto ........................................................................................................ 688
Danilo Mendoza vs CA .............................................................................................................................. 689
Jefferson Lim vs. Queensland Tokyo ......................................................................................................... 691
Placewell International vs. Ireneo Camote ............................................................................................... 693
Heirs of Ragua vs. CA ................................................................................................................................ 695
Metropolitan Bank vs Court of Appeals .................................................................................................... 697
Spouses Manuel vs. CA ............................................................................................................................. 699
Miguel Cuenco vs. Concepcion cuenco ..................................................................................................... 701
Spouses Hanopol vs SM ............................................................................................................................ 702
Terminal Facilities vs. PPA ......................................................................................................................... 704
Mendoza vs. Court of Appeals .................................................................................................................. 706
Roblett Industrial Construction vs. CA ...................................................................................................... 709
Sime Darby Inc. vs. Good Year Philippines ................................................................................................ 711
Kings Properties Corporation vs. Galido ................................................................................................... 713
Metrobank vs. Cabilzo............................................................................................................................... 716
Mesina vs. Garcia ...................................................................................................................................... 718
Pahamatong vs PNB .................................................................................................................................. 720
Shoppers Paradise Corporation vs. Efren Roques ................................................................................... 721
Meatmaster vs Lelis Integrated ................................................................................................................ 724
Larena vs. Mapili ..................................................................................................................................... 726
Santos vs Santos ..................................................................................................................................... 728
Villanueva-Mijares vs CA ........................................................................................................................ 730
Garcia vs. Villar .......................................................................................................................................... 731
Spouses Edralin vs Philippine Veterans Bank ........................................................................................... 733
University Physicians Services vs. Marian Clinics ...................................................................................... 735
MARTIN vs DBS BANK Philippines, INC. .................................................................................................... 737
Heirs of Zabala vs. CA ................................................................................................................................ 739
DUNCAN ASSOCIATION OF DETAILMAN PTGW vs. GLAXOWELLCOM PHILIPPINES ................................. 740
Star Paper vs. Simbol ................................................................................................................................ 742
Tiu vs. Platinum Plans Philippines ............................................................................................................. 744
Avon Cosmetics vs Luna ............................................................................................................................ 746
Del Castillo vs. Richmond .......................................................................................................................... 749
ARWOOD INDUSTRIES, INC. vs. DM CONSUNJI, INC. ................................................................................ 750
Sps. Tecklo v Rural Bank of Pamplona ...................................................................................................... 751
Banate vs. Philippine Countryside ............................................................................................................ 753
Pascual vs. Ramos ..................................................................................................................................... 755
Chua Tee Dee vs. Ca .................................................................................................................................. 757
G.C Garments vs. Miranda ........................................................................................................................ 759
Barcero vs Capitol Development .............................................................................................................. 761
Maxima Hemedes vs. CA ........................................................................................................................... 762
PUP vs. Golden Horizon ............................................................................................................................ 764
Joselito and Dominga Villegas vs. CA ........................................................................................................ 767
EQUATORIAL REALTY DEVELOPMENT, INC. & CARMELO & BAUERMANN, INC vs. MAYFAIR THEATER, INC
.................................................................................................................................................................. 769
PUP V CA ................................................................................................................................................... 771
Sps. Litonjua vs. L & R Corporation ........................................................................................................... 774
Josefa VS. Zhandong Trading Corporation ................................................................................................ 776
Saludo vs. Security Bank ........................................................................................................................... 777
PCI VS NG Sheung Ngor ............................................................................................................................. 779
Teresita Dio vs. St. Ferdinand Memorial Park ........................................................................................... 780
PILITEL vs. Delfino Tecson ......................................................................................................................... 782
PAL vs. CA .................................................................................................................................................. 783
ERMITAO VS. COURT OF APPEALS .......................................................................................................... 784
Uniwide vs Titan-Ikeda .............................................................................................................................. 786
Heirs of Augusto Salas, Jr. vs. Laperal ....................................................................................................... 788
BIENVENIDO R. MEDRANO and IBAAN RURAL BANK vs. COURT OF APPEALS, PACITA G. BORBON,
JOSEFINA E. ANTONIO and ESTELA A. FLOR .............................................................................................. 790
MANUEL B. TAN, GREGG M. TECSON and ALEXANDER SALDAA vs. EDUARDO R. GULLAS and NORMA S.
GULLAS ...................................................................................................................................................... 792
JESUS M. GOZUN vs. JOSE TEOFILO T. MERCADO a.k.a. DON PEPITO MERCADO ................................... 794
STA. LUCIA REALTY & DEVELOPMENT, INC. vs. SPOUSES FRANCISCO & EMELIA BUENAVENTURA ......... 796
JOSEPH CHAN, WILSON CHAN and LILY CHAN vs. BONIFACIO S. MACEDA, JR. ........................................ 798
TIMOTEO BALUYOT, JAIME BENITO, BENIGNO EUGENIO, ROLANDO GONZALES, FORTUNATO FULGENCIO
and CRUZ-NA-LIGAS HOMESITE ASSOCIATION, INC. vs. THE HONORABLE COURT OF APPEALS, THE
QUEZON CITY GOVERNMENT and UNIVERSITY OF THE PHILIPPINES ....................................................... 800
SPOUSES ADELINA S. CUYCO and FELICIANO U. CUYCO vs. SPOUSES RENATO CUYCO and FILIPINA
CUYCO ....................................................................................................................................................... 802
ALLAN C. GO, doing business under the name and style, ACG Express Liner vs. MORTIMER F. CORDERO
.................................................................................................................................................................. 804
HERMINIO TAYAG vs. AMANCIA LACSON, ROSENDO LACSON, ANTONIO LACSON, JUAN LACSON,
TEODISIA LACSON-ESPINOSA and THE COURT OF APPEALS ..................................................................... 806
SO PING BUN vs. COURT OF APPEALS, TEK HUA ENTERPRISING CORP. and MANUEL C. TIONG ............. 808
INTERNATIONAL FREEPORT TRADERS, INC. vs. DANZAS INTERCONTINENTAL, INC. ................................ 809
ROCKLAND CONSTRUCTION COMPANY, INC. vs. MID-PASIG LAND DEVELOPMENT CORPORATION ...... 811
METROPOLITAN MANILA DEVELOPMENT AUTHORITY vs. JANCOM ENVIRONMENTAL CORPORATION and
JANCOM INTERNATIONAL DEVELOPMENT PROJECTS PTY. LIMITED OF AUSTRALIA ............................... 813
ROCKLAND CONSTRUCTION COMPANY, INC. vs. MID-PASIG LAND DEVELOPMENT CORPORATION ...... 815
MANILA METAL CONTAINER CORPORATION vs. PHILIPPINE NATIONAL BANK ........................................ 817
RIDO MONTECILLO vs. IGNACIA REYNES and SPOUSES REDEMPTOR and ELISA ABUCAY ....................... 819
JASMIN SOLER vs. COURT OF APPEALS, COMMERCIAL BANK OF MANILA, and NIDA LOPEZ .................. 821
YOLANDA PALATTAO vs. THE COURT OF APPEALS, HON. ANTONIO J. FINEZA, as Presiding Judge of the
Regional Trial Court of Caloocan City, Branch 131 and MARCELO CO...................................................... 823
ABS-CBN BROADCASTING CORPORATION vs. HONORABLE COURT OF APPEALS, REPUBLIC
BROADCASTING CORP., VIVA PRODUCTIONS, INC., and VICENTE DEL ROSARIO ..................................... 825
LOURDES ONG LIMSON vs. COURT OF APPEALS, SPOUSES LORENZO DE VERA and ASUNCION SANTOS-DE
VERA, TOMAS CUENCA, JR., and SUNVAR REALTY DEVELOPMENT CORPORATION ................................ 827
REYNALDO VILLANUEVA vs. PHILIPPINE NATIONAL BANK (PNB) ............................................................. 829
CORAZON CATALAN, et. al. vs. JOSE BASA, et.al. ...................................................................................... 831
EUGENIO DOMINGO, CRISPIN MANGABAT and SAMUEL CAPALUNGAN vs. HON. COURT OF APPEALS,
FELIPE C. RIGONAN and CONCEPCION R. RIGONAN ................................................................................. 833
MARIO J. MENDEZONA and TERESITA M. MENDEZONA, et. al. vs. JULIO H. OZAMIZ, et.al. .................... 836
MARIANO T. LIM, et. al. vs. COURT OF APPEALS, LORENZO O. TAN and HERMOGENES O. TAN ............. 838
CORAZON G. RUIZ vs. COURT OF APPEALS and CONSUELO TORRES ........................................................ 840
EPIFANIA DELA CRUZ, substituted by LAUREANA V. ALBERTO vs. SPS. EDUARDO C. SISON and EUFEMIA S.
SISON ......................................................................................................................................................... 842
RURAL BANK OF STA. MARIA, PANGASINAN vs. THE HONORABLE COURT OF APPEALS, ROSARIO R.
RAYANDAYAN, CARMEN R.ARCEO ......................................................................................................... 843
DOMINGO CARABEO vs. SPOUSES NORBERTO and SUSAN DINGCO ....................................................... 845
FRANCISCO I. CHAVEZ vs. PUBLIC ESTATES AUTHORITY and AMARI COASTAL BAY DEVELOPMENT
CORPORATION .......................................................................................................................................... 846
DOMINGO CARABEO vs. SPOUSES NORBERTO and SUSAN DINGCO ....................................................... 848
PIO SIAN MELLIZA vs. CITY OF ILOILO, UNIVERSITY OF THE PHILIPPINES and THE COURT APPEALS ....... 849
MANUEL CATINDIG, represented by his legal representative EMILIANO CATINDIG-RODRIGO vs. AURORA
IRENE VDA. DE MENESES .......................................................................................................................... 851
ANTHONY ORDUA, DENNIS ORDUA, and ANTONITA ORDUA vs. EDUARDO J. FUENTEBELLA, MARCOS
S. CID, BENJAMIN F. CID, BERNARD G. BANTA, and ARMANDO GABRIEL, JR. .......................................... 852
CARMELA BROBIO MANGAHAS vs. EUFROCINA A. BROBIO ..................................................................... 853
GOLDEN APPLE REALTY AND DEVELOPMENT CORPORATION and ROSVIBON REALTY CORPORATION vs.
SIERRA GRANDE REALTY CORPORATION, MANPHIL INVESTMENT CORPORATION, RENAN V. SANTOS and
PATRICIO MAMARIL .................................................................................................................................. 855
ASKAY vs. FERNANDO A. COSALAN ........................................................................................................... 857
HEIRS OF THE LATE SPOUSES AURELIO AND ESPERANZA BALITE; Namely, ANTONIO T. BALITE, FLOR T.
BALITE-ZAMAR, VISITACION T. BALITE-DIFUNTORUM, PEDRO T. BALITE, PABLO T. BALITE, GASPAR T.
BALITE, CRISTETA T. BALITE and AURELIO T. BALITE JR., All Represented by GASPAR T. BALITE vs.
RODRIGO N. LIM ....................................................................................................................................... 858
RAFAEL G. SUNTAY, substituted by his heirs, namely: ROSARIO, RAFAEL, JR., APOLINARIO, RAYMUND,
MARIA VICTORIA, MARIA ROSARIO and MARIA LOURDES, all surnamed SUNTAY vs. THE HON. COURT OF
APPEALS and FEDERICO C. SUNTAY .......................................................................................................... 860
WILLIAM UY and RODEL ROXAS vs. COURT OF APPEALS, HON. ROBERT BALAO and NATIONAL HOUSING
AUTHORITY ............................................................................................................................................... 862
PENTACAPITAL INVESTMENT CORPORATION vs. MAKILITO B. MAHINAY................................................ 864
HEIRS OF RAMON C. GAITE, CYNTHIA GOROSTIZA GAITE and RHOGEN BUILDERS vs. THE PLAZA, INC. and
FGU INSURANCE CORPORATION .............................................................................................................. 866
HICOBLINO M. CATLY (Deceased), Substituted by his wife, LOURDES A. CATLY vs. WILLIAM NAVARRO,
ISAGANI NAVARRO, BELEN DOLLETON, FLORENTINO ARCIAGA, BARTOLOME PATUGA, DIONISIO
IGNACIO, BERNARDINO ARGANA, AND ERLINDA ARGANA-DELA CRUZ, and AYALA LAND, INC. ............. 868
CONCHITA LIGUEZ vs. THE HONORABLE COURT OF APPEALS, MARIA NGO VDA. DE LOPEZ, ET AL. ....... 870
PHILIPPINE BANKING CORPORATION, representing the estate of JUSTINA SANTOS Y CANON FAUSTINO,
deceased vs. LUI SHE in her own behalf and as administratrix of the intestate estate of Wong Heng,
deceased ................................................................................................................................................... 872
SONIA F. LONDRES, ARMANDO V. FUENTES, CHI-CHITA FUENTES QUINTIA, ROBERTO V. FUENTES,
LEOPOLDO V. FUENTES, OSCAR V. FUENTES and MARILOU FUENTES ESPLANA vs. THE COURT OF
APPEALS, THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, THE DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, ELENA ALOVERA SANTOS and CONSOLACION ALIVIO
ALOVERA ................................................................................................................................................... 874
SPS. ANTONIO & LETICIA VEGA vs. SOCIAL SECURITY SYSTEM (SSS) & PILAR DEVELOPMENT
CORPORATION .......................................................................................................................................... 876
CLARA M. BALATBAT vs. COURT OF APPEALS and Spouses JOSE REPUYAN and AURORA REPUYAN ...... 878
UNIVERSAL ROBINA SUGAR MILLING CORPORATION vs. HEIRS OF ANGEL TEVES................................... 879
RITA SARMING, et.al. vs. CRESENCIO DY, et.al. ........................................................................................ 881
CEBU CONTRACTORS CONSORTIUM CO. vs. COURT OF APPEALS and MAKATI LEASING & FINANCE
CORPORATION .......................................................................................................................................... 883
ADR SHIPPING SERVICES, INC. vs. MARCELINO GALLARDO and THE HONORABLE COURT OF APPEALS . 885
VALENTIN MOVIDO, substituted by MARGINITO MOVIDO vs. LUIS REYES PASTOR ................................ 887
TSPIC CORPORATION vs. TSPIC EMPLOYEES UNION (FFW), representing MARIA FE FLORES, et.al. ........ 889
SPS. RAFAEL P. ESTANISLAO AND ZENAIDA ESTANISLAO vs. EAST WEST BANKING ................................. 891
AGRIFINA AQUINTEY vs. SPOUSES FELICIDAD AND RICO TIBONG ............................................................ 893
ADORACION E. CRUZ, THELMA DEBBIE E. CRUZ, GERRY E. CRUZ and NERISSA CRUZ-TAMAYO vs. THE
HONORABLE COURT OF APPEALS, SUMMIT FINANCING CORP., VICTOR S. STA. ANA, MAXIMO C.
CONTRERAS, RAMON G. MANALASTAS, and VICENTE TORRES ................................................................ 895
NAPOLEON H. GONZALES vs. HONORABLE COURT OF APPEALS AND SPOUSES GABRIEL AND LUZVIMINDA
CABALLERO ............................................................................................................................................... 897
JUANA ALMIRA, RENATO GARCIA, ROGELIO GARCIA, RODOLFO GARCIA, ROSITA GARCIA, RHODORA
GARCIA, ROSALINDA GARCIA, ROLANDO GARCIA and RAFAEL GARCIA Represented in this suit by
EDGARDO ALVAREZ vs. COURT OF APPEALS AND FEDERICO BRIONES .................................................... 899
PHILIPPINE BANK OF COMMUNICATIONS vs. ELENA LIM, RAMON CALDERON, and TRI-ORO
INTERNATIONAL TRADING & MANUFACTURING CORPORATION ............................................................ 901
SPOUSES EFREN N. RIGOR and ZOSIMA D. RIGOR, for themselves and as owners of CHIARA
CONSTRUCTION vs. CONSOLIDATED ORIX LEASING and FINANCE CORPORATION .................................. 902
RODOLFO P. VELASQUEZ vs. COURT OF APPEALS, and PHILIPPINE COMMERCIAL INTERNATIONAL BANK,
INC. ............................................................................................................................................................ 904
HEIRS OF SOFIA QUIRONG, Represented by ROMEO P. QUIRONG vs. DEVELOPMENT BANK OF THE
PHILIPPINES ............................................................................................................................................... 906
SAMUEL U. LEE and PAULINE LEE and ASIATRUST DEVELOPMENT BANK, INC. vs. BANGKOK BANK PUBLIC
COMPANY, LIMITED .................................................................................................................................. 908
EQUATORIAL REALTY DEVELOPMENT, Inc. vs. MAYFAIR THEATER, Inc. .................................................. 911
MARIA ANTONIA SIGUAN vs. ROSA LIM, LINDE LIM, INGRID LIM and NEIL LIM ...................................... 913
KHE HONG v. COURT OF APPEALS ............................................................................................................ 915
SUNTAY v. COURT OF APPEALS ................................................................................................................. 917
MANGAHAS v. BROBIO ............................................................................................................................. 919
HERNANDEZ v. HERNANDEZ ..................................................................................................................... 921
FUENTES v ROCA ....................................................................................................................................... 923
ASSOCIATED BANK v. MONTANO ET.AL.................................................................................................... 925
WILLIAM ALAIN MIAILHE v. COURT OF APPEALS ...................................................................................... 927
FIRST PHILIPPINE HOLDINGS CORPORATION v. TRANS MIDDLE EAST EQUITIES INC. .............................. 928
SANCHEZ v. MAPALAD .............................................................................................................................. 930
OESMER v. PARAISO DEVELOPMENT CORPORATION ............................................................................... 932
PERPETUA VDA. DE APE v. COURT OF APPEALS........................................................................................ 934
JULIAN FRANCISCO v. PASTOR HERRERA .................................................................................................. 936
ROSARIO L. DE BRAGANZA v. FERNANDO F. DE VILLA ABRILLE ................................................................ 938
MIGUEL KATIPUNAN v. BRAULIO KATIPUNAN, JR. ................................................................................... 939
NILO R. JUMALON v.COURT OF APPEALS .................................................................................................. 941
CABALES, ET. AL vs COURT OF APPEALS ................................................................................................... 942
ANUNCIACION VDA. DE OUANO v. REPUBLIC OF THE PHILIPPINES ......................................................... 943
SHOEMAKER v. LA TONDENA .................................................................................................................... 945
PNB v. PHILIPPINE VEGETABLE OIL COMPANY ......................................................................................... 946
ANUNCIACION VDA. DE OUANO v. REPUBLIC OF THE PHILIPPINES ......................................................... 948
MUNICIPALITY OF HAGONOY v. DUMDUM .............................................................................................. 950
TAN v. VILLAPAZ ........................................................................................................................................ 952
SPOUSES DAVID v. TIONGSON ................................................................................................................. 954
GENARO CORDIAL v. DAVID MIRANDA ..................................................................................................... 955
VILLANUEVA-MIJARES v. THE COURT OF APPEALS ................................................................................... 956
ROSENCOR v. INQUING ............................................................................................................................. 957
FIRME v.BUKAL .......................................................................................................................................... 959
HEIRS OF M. DORONIO v. HEIR OF F. DORONIO ...................................................................................... 960
GURREA v SUPLICO ................................................................................................................................... 961
FRENZEL v. CATITO .................................................................................................................................... 963
LA BUGAAL-BLAAN v. RAMOS .................................................................................................................. 965
AGAN v. PIATCO ........................................................................................................................................ 967
COMMISSION ON ELECTIONS v. JUDGE MA. LUISA QUIJANO-PADILLA ................................................... 969
SENATOR ROBERT S. JAWORSKI v. PAGCOR ............................................................................................. 971
OESMER v . PARAISO DEVELOPMENT CORPORATION .............................................................................. 972
HEIRS OF BALITE v. RODRIGO N. LIM ........................................................................................................ 974
PINEDA v. COURT OF APPEALS .................................................................................................................. 976
CRUZ vs. BANCOM FINANCE CORPORATION ............................................................................................ 978
CUATON v. REBECCA SALUD ..................................................................................................................... 980
INFOTECH v. COMELEC ............................................................................................................................. 982
PABUGAIS v. SAHIJWANI ........................................................................................................................... 984
LIGUEZ v. COURT OF APPEALS .................................................................................................................. 987
PHILIPPINE BANKING CORPORATION v. LUI SHE ...................................................................................... 989
VIGILAR v. AQUINO ................................................................................................................................... 990
EPG CONSTRUCTION v. VIGILAR ............................................................................................................... 992
GO CHAN v YOUNG ................................................................................................................................... 994
FRANCISCO v. HERRERA ............................................................................................................................ 996
MENDEZONA v. OZAMIZ ........................................................................................................................... 998
MANZANILLA v. CA ................................................................................................................................. 1000
RURAL BANK OF PARAQUE v. REMOLADO......................................................................................... 1002
COJUANGCO v. REPUBLIC ....................................................................................................................... 1004
RINGOR v. RINGOR .................................................................................................................................. 1006
SALVADOR v. CA ...................................................................................................................................... 1008
SPOUSES RICARDO AND MILAGROS HUANG v. COURT OF APPEALS ..................................................... 1009
VDA. DE ESCONDE v. COURT OF APPEALS .............................................................................................. 1011
TALA REALTY SERVICES CORPORATION vs. BANCO FILIPINO SAVINGS AND MORTGAGE BANK ............ 1012
HEIRS OF MEDINA v. COURT OF APPEALS ............................................................................................... 1016
FILIPINAS PORT SERVICES vs. GO ............................................................................................................ 1020
MENDIZABEL v. APAO ............................................................................................................................. 1023
VDA. DE GUALBERTO v. GO..................................................................................................................... 1026
HEIRS OF YAP v. Court of Appeals ........................................................................................................... 1028
HEIRS OF KIONOSALA v. DACUT .............................................................................................................. 1030
RAMOS v. RAMOS ................................................................................................................................... 1032
THE INTESTATE ESTATE OF TY vs. COURT OF APPEALS ........................................................................... 1034
VDA. DE RETUERTO v. BARZ .................................................................................................................... 1036
CHIA LIONG TAN v. COURT OF APPEALS ................................................................................................. 1038
EILIA OLACO v. CO CHO CHIT ................................................................................................................. 1040


MARIANO UN OCAMPO III v PEOPLE OF THE PHILIPPINES
G.R Nos. 156547-51. February 4, 2008

FACTS:
The Department of Budget and Management (DBM) released National Aid for Local
Government Units (NALGU) funds in the total amount of P100 million to the Province of
Tarlac. The NALGU is a fund set aside in the General Appropriations Act to assist local
governments in their various projects and services.
Petitioner Ocampo, provincial governor of Tarlac from February 22, 1988 up to June 30,
1992, loaned out P56.6 million of the P100 million to the Lingkod Tarlac Foundation, Inc.
(LTFI) for the implementation of various livelihood projects. The loan was made
pursuant to a Memorandum of Agreement (MOA) entered into by the Province of
Tarlac, represented by petitioner Ocampo, and LTFI, represented by petitioner Flores,
on August 8, 1988.
How the P56.6 million released to LTFI was utilized became the subject matter of 25
criminal cases.
Petitioner Ocampo, as governor of Tarlac, neglected to set up safeguards for the proper
handling of the NALGU funds in the hands of LTFI which resulted in the disappearance of
P1,132,739 and P58,000 of the said funds.
Petitioners presented five documents to show that LTFIs obligations to the Province of
Tarlac, in the amount of P56.6 million, have been extinguished: the Tripartite
Memorandum of Agreement (TMOA) executed by the Province of Tarlac, LTFI and the
Barangay Unity for Industrial and Leadership Development (BUILD) Foundation
whereby the liability of LTFI in favor of the Province of Tarlac was transferred and
assumed by BUILD in the total amount of P40 million; Deed of Assignment between
Tarlac and LTFI whereby the latter assigned its loan portfolios (including interests and
certificates of time deposit), the Juki embroidery machines and other assignable
documents to the Province of Tarlac in the total amount of P16,618,403.



ISSUE: Whether the amount loaned was private in nature.

Held: Yes.
The MOA shows that LTFI is allowed to borrow funds directly from the Provincial Government
to fund Lingkod Tarlac Foundation projects provided the projects are livelihood projects under
the Rural Industrialization Can Happen Program. Moreover, the agreement stipulates under
the Conditions for Release of Funds that the Province of Tarlac shall release in lump sum the
appropriate funds for the approved projects covered by individual loan documents upon signing
of the respective loan agreement
Art. 1953 of the Civil Code provides that [a] person who receives a loan of money or any other
fungible thing acquires the ownership thereof, and is bound to pay to the creditor an equal
amount of the same kind and quality.
Hence, petitioner Ocampo correctly argued that the NALGU funds shed their public character
when they were lent to LTFI as it acquired ownership of the funds with an obligation to repay
the Province of Tarlac the amount borrowed. The relationship between the Province of Tarlac
and the LTFI is that of a creditor and debtor. Failure to pay the indebtedness would give rise to
a collection suit.






























LEUNG BEN v P. J. O'BRIEN
G.R. No. L-13602 April 6, 1918


Facts:

PJ O Brien instituted an action for recovery of the money in the amount of 15,000
which he won from Leung Ben in a series of gambling, banking and percentage games
conducted ruing the two or three months prior to the institution of the suit.

In his verified complaint the OBrien asked for an attachment, under section 424, and
412 (1) of the Code of Civil Procedure, against the property of Leung Ben, on the ground
that the latter was about to depart from the Philippine islands with intent to defraud his
creditors. This attachment was issued; and acting under the authority thereof, the
sheriff attached the sum of P15,000 which had been deposited by the herein plaintiff
with the International Banking Corporation


The contention of the petitioner is that the statutory action to recover money lost at
gaming is that the statutory action to recover money lost at gaming is no such an action
as is contemplated in this provision, and he therefore insists that the original complaint
shows on its face that the remedy of attachment is not available in aid thereof; that the
Court of First Instance acted in excess of its jurisdiction in granting the writ of
attachment

Issue: Whether or not the statutory obligation to restore money won at gaming
an obligation arising from "contract, express or implied.



Held:
Upon general principles, recognize both the civil and common law, money lost in gaming
and voluntarily paid by the loser to the winner cannot in the absence of statute, be
recovered in a civil action. But Act No. 1757 of the Philippine Commission, which defines
and penalizes several forms of gambling, contains numerous provisions recognizing the
right to recover money lost in gambling or in the playing of certain games (secs. 6, 7, 8,
9, 11). The original complaint in the action in the Court of First Instance is not clear as to
the particular section of Act No. 1757 under which the action is brought, but it is alleged
that the money was lost at gambling, banking, and percentage game in which the
defendant was banker. It must therefore be assumed that the action is based upon the
right of recovery given in Section 7 of said Act, which declares that an action may be
brought against the banker by any person losing money at a banking or percentage
game.
In the case now under consideration the duty of the defendant to refund the money
which he won from the plaintiff at gaming is a duty imposed by statute. It therefore
arises ex lege. Furthermore, it is a duty to return a certain sum which had passed from
the plaintiff to the defendant. By all the criteria which the common law supplies, this a
duty in the nature of debt and is properly classified as an implied contract. It is well-
settled by the English authorities that money lost in gambling or by lottery, if
recoverable at all, can be recovered by the loser in an action of indebitatus assumpsit
for money had and received. This means that in the common law the duty to return
money won in this way is an implied contract, or quasi-contract.
It is no argument to say in reply to this that the obligation here recognized is called an
implied contract merely because the remedy commonly used in suing upon ordinary
contract can be here used, or that the law adopted the fiction of promise in order to
bring the obligation within the scope of the action of assumpsit. Such statements fail to
express the true import of the phenomenon. Before the remedy was the idea; and the
use of the remedy could not have been approved if it had not been for historical
antecedents which made the recognition of this remedy at one logical and proper.
Furthermore, it should not be forgotten that the question is not how this duty but what
sort of obligation did the author of the Code of Civil Procedure intend to describe when
he sued the term implied contract in section 412.

















ARTURO PELAYO v MARCELO LAURON ET AL.
G.R. No. L-4089 January 12, 1909

FACTS:
On the 23rd of November, 1906, Arturo Pelayo, a physician residing in Cebu, filed a
complaint against Marcelo Lauron and Juana Abella setting forth that on or about the
13th of October of said year, at night, the plaintiff was called to the house of the
defendants, situated in San Nicolas, he was requested by them to render medical
assistance to their daughter-in-law who was about to give birth to a child; after
consultation with the attending physician, Dr. Escao, it was found necessary, on
account of the difficult birth, to remove the fetus by means of forceps which operation
was performed by the plaintiff, who also had to remove the afterbirth.

The just and equitable value of the services rendered by him was P500, which the
defendants refuse to pay without alleging any good reason therefor;

In answer to the complaint counsel for the defendants denied all of the allegation
therein contained and alleged as a special defense, that their daughter-in-law had died
in consequence of the said childbirth, and that when she was alive she lived with her
husband independently and in a separate house without any relation whatever with
them, and that, if on the day when she gave birth she was in the house of the
defendants, her stay there was accidental and due to fortuitous circumstances

ISSUE: Whether or not the defendants are liable to pay the professional fee.
HELD:
Obligations arising from law are not presumed. Those expressly determined in the code
or in special laws, etc., are the only demandable ones. Obligations arising from contracts
have legal force between the contracting parties and must be fulfilled in accordance
with their stipulations. (Arts. 1090 and 1091.)
The rendering of medical assistance in case of illness is comprised among the mutual
obligations to which the spouses are bound by way of mutual support. (Arts. 142 and
143.)
If every obligation consists in giving, doing or not doing something (art. 1088), and
spouses are mutually bound to support each other, there can be no question but that,
when either of them by reason of illness should be in need of medical assistance, the
other is under the unavoidable obligation to furnish the necessary services of a
physician in order that health may be restored, and he or she may be freed from the
sickness by which life is jeopardized; the party bound to furnish such support is
therefore liable for all expenses, including the fees of the medical expert for his
professional services. This liability originates from the above-cited mutual obligation
which the law has expressly established between the married couple.
In the face of the above legal precepts it is unquestionable that the person bound to pay
the fees due to the plaintiff for the professional services that he rendered to the
daughter-in-law of the defendants during her childbirth, is the husband of the patient
and not her father and mother- in-law, the defendants herein. The fact that it was not
the husband who called the plaintiff and requested his assistance for his wife is no bar
to the fulfillment of the said obligation, as the defendants, in view of the imminent
danger, to which the life of the patient was at that moment exposed, considered that
medical assistance was urgently needed, and the obligation of the husband to furnish
his wife in the indispensable services of a physician at such critical moments is specially
established by the law, as has been seen, and compliance therewith is unavoidable;
therefore, the plaintiff, who believes that he is entitled to recover his fees, must direct
his action against the husband who is under obligation to furnish medical assistance to
his lawful wife in such an emergency.

























ASJ CORPORATION AND ANTONIO SAN JUAN v SPS.
EFREN & MAURA EVANGELISTA
G.R. NO. 158086 February 14, 2008

FACTS:

Respondents, under the name and style of R.M. Sy Chicks, are engaged in the large-scale
business of buying broiler eggs, hatching them, and selling their hatchlings (chicks) and
egg by-products in Bulacan and Nueva Ecija. For the incubation and hatching of these
eggs, respondents availed of the hatchery services of ASJ Corp., a corporation duly
registered in the name of San Juan and his family.

On February 3, 1993, respondent Efren went to the hatchery to pick up the chicks and
by-products covered by Setting Report No. 108, but San Juan refused to release the
same due to respondents failure to settle accrued service fees on several setting
reports starting from Setting Report No. 90. Nevertheless, San Juan accepted from
Efren 10,245 eggs covered by Setting Report No. 113 and P15,000.00 in cash as partial
payment for the accrued service fees.

On February 10, 1993, Efren returned to the hatchery to pick up the chicks and by-
products, but San Juan again refused to release the same unless respondents fully settle
their accounts. In the afternoon of the same day, respondent Maura, with her son
Anselmo, tendered P15,000.00 to San Juan, and tried to claim the chicks and by-
products. She explained that she was unable to pay their balance because she was
hospitalized for an undisclosed ailment. San Juan accepted the P15,000.00, but insisted
on the full settlement of respondents accounts before releasing the chicks and by-
products.

Believing firmly that the total value of the eggs delivered was more than sufficient to
cover the outstanding balance, Maura promised to settle their accounts only upon
proper accounting by San Juan. San Juan disliked the idea and threatened to impound
their vehicle and detain them at the hatchery compound if they should come back
unprepared to fully settle their accounts with him.

ISSUE: Whether or not petitioners retention of the chicks and by-products on account of
respondents failure to pay the corresponding service fees unjustified.
HELD:
Under Article 1248 of the Civil Code, the creditor cannot be compelled to accept partial
payments from the debtor, unless there is an express stipulation to that effect. More so,
respondents cannot substitute or apply as their payment the value of the chicks and by-
products they expect to derive because it is necessary that all the debts be for the same kind,
generally of a monetary character. Needless to say, there was no valid application of payment
in this case.
Furthermore, it was respondents who violated the very essence of reciprocity in contracts,
consequently giving rise to petitioners right of retention. This case is clearly one among the
species of non-performance of a reciprocal obligation. Reciprocal obligations are those which
arise from the same cause, wherein each party is a debtor and a creditor of the other, such that
the performance of one is conditioned upon the simultaneous fulfillment of the other. From the
moment one of the parties fulfills his obligation, delay by the other party begins.
Nonetheless, San Juans subsequent acts of threatening respondents should not remain among
those treated with impunity. Under Article 19 of the Civil Code, an act constitutes an abuse of
right if the following elements are present: (a) the existence of a legal right or duty; (b) which is
exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another. Here, while
petitioners had the right to withhold delivery, the high-handed and oppressive acts of
petitioners, as aptly found by the two courts below, had no legal leg to stand on. We need not
weigh the corresponding pieces of evidence all over again because factual findings of the trial
court, when adopted and confirmed by the appellate court, are binding and conclusive and will
not be disturbed on appeal
Since it was established that respondents suffered some pecuniary loss anchored on
petitioners abuse of rights, although the exact amount of actual damages cannot be
ascertained, temperate damages are recoverable.
[b X (d X e) + c X (d X f)] = Temperate Damages
b and c - representing the average rates of conversion of broiler eggs into hatched chicks and
egg by-products as tabulated by the trial court based on available statistical data which was
unrebutted by petitioners (41% and 17%).d- 68,784 eggs, or the total number of broiler eggs
under Setting Report Nos. 109 to 113; and e and f- P14.00 and P1.20, or the then unit market
price of the chicks and by-products, respectively.
41% X (68,784 eggs X P14) = P394,820.16
17% X (68,784 eggs X P1.20) = P 14,031.94
[P394,820.16 + P14,031.94] = P408,852.10








ERNESTO RAMAS UYPITCHING and RAMAS UYPITCHING SONS,
INC., v. ERNESTO QUIAMCO
G.R. No. 146322 December 6, 2006
FACTS:

In 1982, respondent Ernesto C. Quiamco was approached by Juan Davalan, Josefino
Gabutero and Raul Generoso to amicably settle the civil aspect of a criminal case for
robbery filed by Quiamco against them. They surrendered to him a red Honda XL-100
motorcycle and a photocopy of its certificate of registration. Respondent asked for the
original certificate of registration but the three accused never came to see him again.

It turned out that, in October 1981, the motorcycle had been sold on installment basis
to Gabutero by petitioner Ramas Uypitching Sons, Inc., a family-owned corporation
managed by petitioner Atty. Ernesto Ramas Uypitching. To secure its payment, the
motorcycle was mortgaged to petitioner-corporation.


When Gabutero could no longer pay the installments, Davalan assumed the obligation
and continued the payments. In September 1982, however, Davalan stopped paying the
remaining installments and told petitioner corporations collector, Wilfredo Verao, that
the motorcycle had allegedly been taken by respondents men.

Nine years later, on January 26, 1991, petitioner Uypitching, accompanied by policemen,
went to Avesco-AVNE Enterprises to recover the motorcycle. Uypitching uttered that
Quiamco is a thief and he took the motorcycle and left.


On February 18, 1991, petitioner Uypitching filed a criminal complaint for qualified theft
and/or violation of the Anti-Fencing Law against respondent in the Office of the City
Prosecutor of Dumaguete City. Respondent moved for dismissal because the complaint
did not charge an offense as he had neither stolen nor bought the motorcycle. The
Office of the City Prosecutor dismissed the complaint and denied petitioner Uypitchings
subsequent motion for reconsideration.

Respondent filed an action for damages against petitioners in the RTC of Dumaguete
City, Negros Oriental, Branch 37. He sought to hold the petitioners liable for the
following: (1) unlawful taking of the motorcycle; (2) utterance of a defamatory remark
(that respondent was a thief) and (3) precipitate filing of a baseless and malicious
complaint. These acts humiliated and embarrassed the respondent and injured his
reputation and integrity.


RTC Ruling: Petitioner Uypitching was motivated with malice and ill will when he called
respondent a thief, took the motorcycle in an abusive manner and filed a baseless
complaint for qualified theft and/or violation of the Anti-Fencing Law. Petitioners acts
were found to be contrary to Articles 19 and 20 of the Civil Code. Hence, the trial court
held petitioners liable to respondent for P500,000 moral damages, P200,000 exemplary
damages and P50,000 attorneys fees plus costs.

CA Ruling: Affirmed the trial courts decision with modification, reducing the award of
moral and exemplary damages to P300,000 and P100,000, respectively. Petitioners
sought reconsideration but it was denied

ISSUE: Whether or not petitioner abused the right of respondent


HELD:
Petitioner corporation failed to bring the proper civil action necessary to acquire legal
possession of the motorcycle. Instead, petitioner Uypitching descended on respondents
establishment with his policemen and ordered the seizure of the motorcycle without a
search warrant or court order. Worse, in the course of the illegal seizure of the motorcycle,
petitioner Uypitching even mouthed a slanderous statement.
No doubt, petitioner corporation, acting through its co-petitioner Uypitching, blatantly
disregarded the lawful procedure for the enforcement of its right, to the prejudice of
respondent. Petitioners acts violated the law as well as public morals, and transgressed the
proper norms of human relations.
The basic principle of human relations, embodied in Article 19 of the Civil Code,
provides:
Art. 19. Every person must in the exercise of his rights and in the performance of his
duties, act with justice, give every one his due, and observe honesty and good faith.
Article 19, also known as the principle of abuse of right, prescribes that a person should
not use his right unjustly or contrary to honesty and good faith, otherwise he opens himself
to liability. It seeks to preclude the use of, or the tendency to use, a legal right (or duty) as a
means to unjust ends.
There is an abuse of right when it is exercised solely to prejudice or injure another. The
exercise of a right must be in accordance with the purpose for which it was established and
must not be excessive or unduly harsh; there must be no intention to harm another.
Otherwise, liability for damages to the injured party will attach.
In this case, the manner by which the motorcycle was taken at petitioners instance was not
only attended by bad faith but also contrary to the procedure laid down by law. Considered
in conjunction with the defamatory statement, petitioners exercise of the right to recover
the mortgaged vehicle was utterly prejudicial and injurious to respondent. On the other
hand, the precipitate act of filing an unfounded complaint could not in any way be
considered to be in accordance with the purpose for which the right to prosecute a crime
was established. Thus, the totality of petitioners actions showed a calculated design to
embarrass, humiliate and publicly ridicule respondent. Petitioners acted in an excessively
harsh fashion to the prejudice of respondent. Contrary to law, petitioners willfully caused
damage to respondent. Hence, they should indemnify him.







NIKKO HOTEL MANILA GARDEN and RUBY LIM vs ROBERTO
REYES, a.k.a. AMAY BISAYA,
[G.R. No. 154259. February 28, 2005] 452 S 352

FACTS:
Roberto Reyes alleged that he was humiliated by Ruby Lim during the party of the hotel
manager Mr. Masakazu Tsuruoka. In a loud voice and within the presence and hearing
of the other guests who were making a queue at the buffet table, Ruby Lim told him to
leave the party (huwag ka nang kumain, hindi ka imbitado, bumaba ka na lang).

Mr. Reyes tried to explain that he was invited by Dr. Filart. Dr. Filart, who was within
hearing distance, however, completely ignored him thus adding to his shame and
humiliation. Not long after, while he was still recovering from the traumatic experience,
a Makati policeman approached and asked him to step out of the hotel. Like a common
criminal, he was escorted out of the party by the policeman. Claiming damages, Mr.
Reyes asked for One Million Pesos actual damages, One Million Pesos moral and/or
exemplary damages and Two Hundred Thousand Pesos attorneys fees.

Ruby Lim, for her part, admitted having asked Mr. Reyes to leave the party but not
under the ignominious circumstance painted by the latter. Ms. Lim narrated that she
was the Hotels Executive Secretary for the past twenty (20) years. One of her functions
included organizing the birthday party of the hotels former General Manager, Mr.
Tsuruoka.

Ruby Lim claims that she asked Reyes to leave courteously prior, therefor, inquiring
about his presence from Dr. Filarts sister Zenaida Fruto and she affirmed that her sister
did not invite him which Dr.Filart assented to during the trial that she did not invite
Reyes he merely offered to carry the fruit basket and started having a conversation with
Capt.Batung.

Issues:
1. Whether or not Ruby Lim acted abusively in asking Roberto Reyes, a.k.a. Amay Bisaya,
to leave the party where he was not invited by the celebrant thereof
2. . Parenthetically, and if Ruby Lim were so liable, whether or not Hotel Nikko, as her
employer, is solidarily liable with her.
Held:
1. In the absence of any proof of motive on the part of Ms. Lim to humiliate Mr. Reyes and
expose him to ridicule and shame, it is highly unlikely that she would shout at him from
a very close distance. Ms. Lim having been in the hotel business for twenty years
wherein being polite and discreet are virtues to be emulated, the testimony of Mr.
Reyes that she acted to the contrary does not inspire belief and is indeed incredible.
Thus, the lower court was correct in observing that
Considering the closeness of defendant Lim to plaintiff when the request for the latter
to leave the party was made such that they nearly kissed each other, the request was
meant to be heard by him only and there could have been no intention on her part to
cause embarrassment to him. It was plaintiffs reaction to the request that must have
made the other guests aware of what transpired between them.
Moreover, another problem with Mr. Reyess version of the story is that it is
unsupported. It is a basic rule in civil cases that he who alleges proves. Mr. Reyes,
however, had not presented any witness to back his story up. All his witnesses Danny
Rodinas, Pepito Guerrero and Alexander Silva - proved only that it was Dr. Filart who
invited him to the party.
Ms. Lim, not having abused her right to ask Mr. Reyes to leave the party to which he was
not invited, cannot be made liable to pay for damages under Articles 19 and 21 of the
Civil Code. Necessarily, neither can her employer, Hotel Nikko, be held liable as its
liability springs from that of its employee.
Article 19, known to contain what is commonly referred to as the principle of abuse of
rights, is not a panacea for all human hurts and social grievances. Article 19 states:
Art. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
Elsewhere, we explained that when a right is exercised in a manner which does not
conform with the norms enshrined in Article 19 and results in damage to another, a
legal wrong is thereby committed for which the wrongdoer must be responsible. The
object of this article, therefore, is to set certain standards which must be observed not
only in the exercise of ones rights but also in the performance of ones duties. These
standards are the following: act with justice, give everyone his due and observe honesty
and good faith. Its antithesis, necessarily, is any act evincing bad faith or intent to
injure.
Its elements are the following:
(1) There is a legal right or duty;
(2) which is exercised in bad faith;
(3) for the sole intent of prejudicing or injuring another.
When Article 19 is violated, an action for damages is proper under Articles 20 or 21 of
the Civil Code. Article 20 pertains to damages arising from a violation of law which does
not obtain herein as Ms. Lim was perfectly within her right to ask Mr. Reyes to leave.
Article 21, on the other hand, states:
Art. 21. Any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for the damage.
Article 21 refers to acts contra bonus mores and has the following elements: (1) There is
an act which is legal;
(2) but which is contrary to morals, good custom, public order, or public policy; and
(3) it is done with intent to injure.
A common theme runs through Articles 19 and 21, and that is, the act complained of
must be intentional.
2. Petitioners Lim and Hotel Nikko contend that pursuant to the doctrine of volenti non fit
injuria, they cannot be made liable for damages as respondent Reyes assumed the risk
of being asked to leave (and being embarrassed and humiliated in the process) as he
was a gate-crasher.

The doctrine of volenti non fit injuria (to which a person assents is not esteemed in law
as injury) refers to self-inflicted injury or to the consent to injury which precludes the
recovery of damages by one who has knowingly and voluntarily exposed himself to
danger, even if he is not negligent in doing so. As formulated by petitioners, however,
this doctrine does not find application to the case at bar because even if respondent
Reyes assumed the risk of being asked to leave the party, petitioners, under Articles 19
and 21 of the New Civil Code, were still under obligation to treat him fairly in order not
to expose him to unnecessary ridicule and shame.


ST. MARYS ACADEMY vs. WILLIAM CARPITANOS and LUCIA S.
CARPITANOS et al.
[G.R. No. 143363. February 6, 2002]

Facts:
From 13 to 20 February 1995, defendant-appellant St. Marys Academy of Dipolog City
conducted an enrollment drive for the school year 1995-1996. A facet of the enrollment
campaign was the visitation of schools from where prospective enrollees were studying.

As a student of St. Marys Academy, Sherwin Carpitanos was part of the campaigning
group. Accordingly, on the fateful day, Sherwin, along with other high school students
were riding in a Mitsubishi jeep owned by defendant Vivencio Villanueva on their way to
Larayan Elementary School, Larayan, Dapitan City. The jeep was driven by James Daniel
II then 15 years old and a student of the same school. Allegedly, the latter drove the
jeep in a reckless manner and as a result the jeep turned turtle. Sherwin Carpitanos
died as a result of the injuries he sustained from the accident.


RTC & CA Ruling: Petioner is ordered to pay damages to the parents of the deceased
Issue: Whether or not St. Marys Academy should he held primarily liable.
Held:
Under Article 218 of the Family Code, the following shall have special parental authority over a
minor child while under their supervision, instruction or custody: (1) the school, its
administrators and teachers; or (2) the individual, entity or institution engaged in child care.
This special parental authority and responsibility applies to all authorized activities, whether
inside or outside the premises of the school, entity or institution. Thus, such authority and
responsibility applies to field trips, excursions and other affairs of the pupils and students
outside the school premises whenever authorized by the school or its teachers.
Under Article 219 of the Family Code, if the person under custody is a minor, those exercising
special parental authority are principally and solidarily liable for damages caused by the acts or
omissions of the unemancipated minor while under their supervision, instruction, or custody.
However, for petitioner to be liable, there must be a finding that the act or omission considered
as negligent was the proximate cause of the injury caused because the negligence must have a
causal connection to the accident.
In order that there may be a recovery for an injury, however, it must be shown that the injury
for which recovery is sought must be the legitimate consequence of the wrong done; the
connection between the negligence and the injury must be a direct and natural sequence of
events, unbroken by intervening efficient causes. In other words, the negligence must be the
proximate cause of the injury. For, negligence, no matter in what it consists, cannot create a
right of action unless it is the proximate cause of the injury complained of. And the proximate
cause of an injury is that cause, which, in natural and continuous sequence, unbroken by any
efficient intervening cause, produces the injury, and without which the result would not have
occurred.
In this case, the respondents failed to show that the negligence of petitioner was the proximate
cause (is that cause, which, in natural and continuous sequence, unbroken by any efficient
intervening cause, produces the injury, and without which the result would not have occurred
of) the death of the victim.
Respondents Daniel spouses and Villanueva admitted that the immediate cause of the accident
was not the negligence of petitioner or the reckless driving of James Daniel II, but the
detachment of the steering wheel guide of the jeep.
Significantly, respondents did not present any evidence to show that the proximate cause of
the accident was the negligence of the school authorities, or the reckless driving of James
Daniel II. Hence, the respondents reliance on Article 219 of the Family Code that those given
the authority and responsibility under the preceding Article shall be principally and solidarily
liable for damages caused by acts or omissions of the unemancipated minor was unfounded.
Further, there was no evidence that petitioner school allowed the minor James Daniel II to drive
the jeep of respondent Vivencio Villanueva. It was Ched Villanueva, grandson of respondent
Vivencio Villanueva, who had possession and control of the jeep. He was driving the vehicle
and he allowed James Daniel II, a minor, to drive the jeep at the time of the accident.
Hence, liability for the accident, whether caused by the negligence of the minor driver or
mechanical detachment of the steering wheel guide of the jeep, must be pinned on the minors
parents primarily. The negligence of petitioner St. Marys Academy was only a remote cause of
the accident. Between the remote cause and the injury, there intervened the negligence of the
minors parents or the detachment of the steering wheel guide of the jeep.














SPOUSES LUIGI M. GUANIO and ANNA HERNANDEZ-GUANIO v.
MAKATI SHANGRI-LA
G.R. No. 190601 February 7, 2011


Facts:
For their wedding reception on July 28, 2001, spouses Luigi M. Guanio and Anna
Hernandez-Guanio (petitioners) booked at the Shangri-la Hotel Makati (the hotel).

Petitioners claim that during the reception, respondents representatives, Catering
Director Bea Marquez and Sales Manager Tessa Alvarez, did not show up despite their
assurance that they would; their guests complained of the delay in the service of the
dinner; certain items listed in the published menu were unavailable; the hotels waiters
were rude and unapologetic when confronted about the delay; and despite Alvarezs
promise that there would be no charge for the extension of the reception beyond 12:00
midnight, they were billed and paid P8,000 per hour for the three-hour extension of the
event up to 4:00 A.M. the next day.

Petitioners thus sent a letter-complaint to the Makati Shangri-la Hotel and Resort, Inc.
(respondent) and received an apologetic reply from Krister Svensson, the hotels
Executive Assistant Manager in charge of Food and Beverage. They nevertheless filed a
complaint for breach of contract and damages before the Regional Trial Court (RTC) of
Makati City.


RTC Ruling: The trial court observed that from the tenor of the letter . . . the
defendant[-herein respondent] admits that the services the plaintiff[-herein petitioners]
received were unacceptable and definitely not up to their standards.

CA Ruling: reversed the trial courts decision, it holding that the proximate cause of
petitioners injury was an unexpected increase in their guests
Issue: Whether or not there is breach of contract.
Held:
The pertinent provisions of the Banquet and Meeting Services Contract between
the parties read:
4.5. The ENGAGER must inform the HOTEL at least forty eight (48) hours
before the scheduled date and time of the Function of any change in the
minimum guaranteed covers. In the absence of such notice, paragraph 4.3 shall
apply in the event of under attendance. In case the actual number of attendees
exceed the minimum guaranteed number by ten percent (10%), the HOTEL shall
not in any way be held liable for any damage or inconvenience which may be
caused thereby. The ENGAGER shall also undertake to advise the guests of the
situation and take positive steps to remedy the same.
Breach of contract is defined as the failure without legal reason to comply with the
terms of a contract. It is also defined as the [f]ailure, without legal excuse, to perform
any promise which forms the whole or part of the contract.
The exculpatory clause notwithstanding, the Court notes that respondent could have managed
the situation better, it being held in high esteem in the hotel and service industry. Given
respondents vast experience, it is safe to presume that this is not its first encounter with
booked events exceeding the guaranteed cover. It is not audacious to expect that certain
measures have been placed in case this predicament crops up. That regardless of these
measures, respondent still received complaints as in the present case, does not amuse.
Respondent admitted that three hotel functions coincided with petitioners reception. To the
Court, the delay in service might have been avoided or minimized if respondent exercised
prescience in scheduling events. No less than quality service should be delivered especially in
events which possibility of repetition is close to nil. Petitioners are not expected to get married
twice in their lifetimes.
In the present petition, under considerations of equity, the Court deems it just to award the
amount of P50,000.00 by way of nominal damages to petitioners, for the discomfiture that they
were subjected to during to the event. The Court recognizes that every person is entitled to
respect of his dignity, personality, privacy and peace of mind. Respondents lack of prudence is
an affront to this right.

















TSPIC CORPORATION v TSPIC EMPLOYEES UNION (FFW)
G.R. No. 163419 545 S 215

Facts:
In 1999, TSPIC and the Union entered into a Collective Bargaining Agreement (CBA) for
the years 2000 to 2004. The CBA included a provision on yearly salary increases starting
January 2000 until January 2002.

The CBA also provided that employees who acquire regular employment status within
the year but after the effectivity of a particular salary increase shall receive a
proportionate part of the increase upon attainment of their regular status.


Then on October 6, 2000, the Regional Tripartite Wage and Productivity Board, National
Capital Region, issued Wage Order No. NCR-08 (WO No. 8) which raised the daily
minimum wage from PhP 223.50 to PhP 250 effective November 1, 2000. Conformably,
the wages of 17 probationary employees, were increased to PhP 250.00 effective
November 1, 2000.

In January 2001, TSPIC implemented the new wage rates as mandated by the CBA. As a
result, the nine employees (first group), who were senior to the above-listed recently
regularized employees, received less wages.


On January 19, 2001, a few weeks after the salary increase for the year 2001 became
effective, TSPICs Human Resources Department notified 24 employees, namely: Maria
Fe Flores, Janice Olaguir, Rachel Novillas, Fe Capistrano, Jerico Alipit, Amy Durias, Glen
Batula, Claire Evelyn Velez, Ser John Hernandez, Nimfa Anilao, Rose Subardiaga, Valerie
Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete,
Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida
Comullo, and Marie Ann Delos Santos, that due to an error in the automated payroll
system, they were overpaid and the overpayment would be deducted from their salaries
in a staggered basis, starting February 2001. TSPIC explained that the correction of the
erroneous computation was based on the crediting provision of Sec. 1, Art. X of the CBA.

Issue: Whether or not CBA is legal and binding among the parties.
Held:
It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties
and they are obliged to comply with its provisions. We said so in Honda Phils., Inc. v. Samahan
ng Malayang Manggagawa sa Honda:
A collective bargaining agreement or CBA refers to the negotiated contract between a
legitimate labor organization and the employer concerning wages, hours of work and all
other terms and conditions of employment in a bargaining unit. As in all contracts, the
parties in a CBA may establish such stipulations, clauses, terms and conditions as they
may deem convenient provided these are not contrary to law, morals, good customs,
public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes
the law between the parties and compliance therewith is mandated by the express policy
of the law.
As a general rule, in the interpretation of a contract, the intention of the parties is to be
pursued. Littera necat spiritus vivificat. An instrument must be interpreted according to the
intention of the parties. It is the duty of the courts to place a practical and realistic
construction upon it, giving due consideration to the context in which it is negotiated and the
purpose which it is intended to serve. Absurd and illogical interpretations should also be
avoided.
TSPIC granted the salary increases under the condition that any wage order that may be
subsequently issued shall be credited against the previously granted increase. The intention of
the parties is clear: As long as an employee is qualified to receive the 12% increase in salary, the
employee shall be granted the increase; and as long as an employee is granted the 12%
increase, the amount shall be credited against any wage order issued after WO No. 7.

KHRISTINE REA M. REGINO v PANGASINAN COLLEGES OF SCIENCE
AND TECHNOLOGY
[G.R. No. 156109. November 18, 2004]

Facts:
Petitioner Khristine Rea M. Regino was a first year computer science student at
Respondent Pangasinan Colleges of Science and Technology (PCST).
In February 2002, PCST held a fund raising campaign dubbed the Rave Party and Dance
Revolution, the proceeds of which were to go to the construction of the schools tennis
and volleyball courts. Each student was required to pay for two tickets at the price of
P100 each. The project was allegedly implemented by recompensing students who
purchased tickets with additional points in their test scores; those who refused to pay
were denied the opportunity to take the final examinations.
Financially strapped and prohibited by her religion from attending dance parties and
celebrations, Regino refused to pay for the tickets. On March 14 and March 15, 2002,
the scheduled dates of the final examinations in logic and statistics, her teachers --
Respondents Rachelle A. Gamurot and Elissa Baladad -- allegedly disallowed her from
taking the tests. According to petitioner, Gamurot made her sit out her logic class while
her classmates were taking their examinations.

Issue: Whether or not respondent has an obligation to petitioner arising from contract.

Held:
The school-student relationship is also reciprocal. Thus, it has consequences appurtenant to
and inherent in all contracts of such kind -- it gives rise to bilateral or reciprocal rights and
obligations. The school undertakes to provide students with education sufficient to enable
them to pursue higher education or a profession. On the other hand, the students agree to
abide by the academic requirements of the school and to observe its rules and regulations.
The terms of the school-student contract are defined at the moment of its inception -- upon
enrolment of the student. Standards of academic performance and the code of behavior and
discipline are usually set forth in manuals distributed to new students at the start of every
school year. Further, schools inform prospective enrollees the amount of fees and the terms of
payment.
In practice, students are normally required to make a down payment upon enrollment, with the
balance to be paid before every preliminary, midterm and final examination. Their failure to
pay their financial obligation is regarded as a valid ground for the school to deny them the
opportunity to take these examinations.
The foregoing practice does not merely ensure compliance with financial obligations; it also
underlines the importance of major examinations. Failure to take a major examination is
usually fatal to the students promotion to the next grade or to graduation. Examination results
form a significant basis for their final grades. These tests are usually a primary and an
indispensable requisite to their elevation to the next educational level and, ultimately, to their
completion of a course.
Thus, students expect that upon their payment of tuition fees, satisfaction of the set academic
standards, completion of academic requirements and observance of school rules and
regulations, the school would reward them by recognizing their completion of the course
enrolled in.
The acts of respondents supposedly caused her extreme humiliation, mental agony and
demoralization of unimaginable proportions in violation of Articles 19, 21 and 26 of the Civil
Code. These provisions of the law state thus:
Article 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
Article 21. Any person who wilfully causes loss or injury to another in a manner that is contrary
to morals, good customs or public policy shall compensate the latter for the damage.
Article 26. Every person shall respect the dignity, personality, privacy and peace of mind of his
neighbors and other persons. The following and similar acts, though they may not constitute a
criminal offense, shall produce a cause of action for damages, prevention and other relief:
(1) Prying into the privacy of anothers residence;
(2) Meddling with or disturbing the private life or family relations of another;
(3) Intriguing to cause another to be alienated from his friends;
(4) Vexing or humiliating another on account of his beliefs, lowly station in
life, place of birth, physical defect, or other personal condition.
Generally, liability for tort arises only between parties not otherwise bound by a contract. An
academic institution, however, may be held liable for tort even if it has an existing contract with
its students, since the act that violated the contract may also be a tort.


PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION v. COURT OF
APPEALS
G.R. No. 84698, February 4, 1992
FACTS:
A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while
on the second-floor premises of the Philippine School of Business Administration (PSBA)
prompted the parents of the deceased to file suit in the Regional Trial Court of Manila
for damages against the said PSBA and its corporate officers.
At the time of his death, Carlitos was enrolled in the third year commerce course at the
PSBA. It was established that his assailants were not members of the school's academic
community but were elements from outside the school. Substantially, the plaintiffs (now
private respondents) sought to adjudge them liable for the victim's untimely demise due
to their alleged negligence, recklessness and lack of security precautions, means and
methods before, during and after the attack on the victim.
Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that
since they are presumably sued under Article 2180 of the Civil Code, the complaint
states no cause of action against them, as jurisprudence on the subject is to the effect
that academic institutions, such as the PSBA, are beyond the ambit of the rule in the
afore-stated article.
The respondent trial court, however, overruled petitioners contention and thru an
order dated 8 December 1987, denied their motion to dismiss. Said decision of the
respondent appellate court was primarily anchored on the law of quasi-delicts, as
enunciated in Articles 2176 and 2180 of the Civil Code.
Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in
loco parentis. It had been stressed that the law (Article 2180) plainly provides that the
damage should have been caused or inflicted by pupils or students of the educational
institution sought to be held liable for the acts of its pupils or students while in its
custody. However, this material situation does not exist in the present case for the
assailants of Carlitos were not students of the PSBA, for whose acts the school could be
made liable.

ISSUE:
Whether or not petitioner incurs civil liability as regards the death of their student.

HELD:
It does not necessarily follow. When an academic institution accepts students for enrollment,
there is established a contract between them, resulting in bilateral obligations which both
parties are bound to comply with. For its part, the school undertakes to provide the student
with an education that would presumably suffice to equip him with the necessary tools and
skills to pursue higher education or a profession. On the other hand, the student covenants to
abide by the school's academic requirements and observe its rules and regulations.Institutions
of learning must also meet the implicit or "built-in" obligation of providing their students with
an atmosphere that promotes or assists in attaining its primary undertaking of imparting
knowledge.
Certainly, no student can absorb the intricacies of physics or higher mathematics or explore the
realm of the arts and other sciences where there looms around the school premises a constant
threat to life and limb. Necessarily, the school must ensure that adequate steps are taken to
maintain peace and order within the campus premises and to prevent the breakdown thereof.
Because the circumstances of the present case evince a contractual relation between the PSBA
and Carlitos Bautista, the rules on quasi-delict do not apply.
However, there is, as yet, no finding that the contract between the school and Bautista had
been breached thru the former's negligence in providing proper security measures. Even if
there be a finding of negligence, the same could give rise generally to a breach of contractual
obligation only. Using the test of Cangco, supra, the negligence of the school would not be
relevant absent a contract. In fact, that negligence becomes material only because of the
contractual relation between PSBA and Bautista. In other words, a contractual relation is a
condition sine qua non to the school's liability. The negligence of the school cannot exist
independently of the contract, unless the negligence occurs under the circumstances set out in
Article 21 of the Civil Code.












Cosmo Entertainment Mgmt, Inc. vs. La Ville Commercial
Corporation

G.R. No. 152801, August 20, 2004

437 SCRA 145

FACTS:
The respondent, La Ville Commercial Corporation, is the registered owner of a parcel of
land covered by TCT No. 174250 of the Registry of Deeds of Makati City together with
the commercial building thereon situated at the corner of Kalayaan and Neptune Streets
in Makati City.

On March 17, 1993, it entered into a Contract of Lease with petitioner Cosmo
Entertainment Management, Inc. over the subject property for a period of seven years
with a monthly rental of P250 per square meter of the floor area of the building and a
security deposit equivalent to three monthly rentals in the amount of P447, 000.00 to
guarantee the faithful compliance of the terms and conditions of the lease agreement.
Upon execution of the contract, the petitioner took possession of the subject property.

The petitioner, however, suffered business reverses and was constrained to stop
operations in September 1996. Thereafter, the petitioner defaulted in its rental
payments. Consequently, the respondent made a demand on the petitioner to vacate
the premises as well as to pay the accrued rentals plus interests which, as of January 31,
1997, amounted to P740, 478.91. In reply to the demand, the petitioner averred that its
unpaid rentals amounted to P698, 500 only and since it made a security deposit of P419,
100 with the respondent, the said amount should be applied to the unpaid rentals;
hence, the outstanding accounts payable would only be P279, 400. The respondent
requested that the interest charges be waived and it be given time to find a solution to
its financial problems.

After negotiations between the parties failed, the respondent, on May 27, 1997,
reiterated its demand on the petitioner to pay the unpaid rentals as well as to vacate
and surrender the premises to the respondent. When the petitioner refused to comply
with its demand, the respondent filed with the Metropolitan Trial Court of Makati City a
complaint for illegal detainer. The petitioner, in its answer to the complaint, raised the
defense that, under the contract, it had the right to sublease the premises upon prior
written consent by the respondent and payment of transfer fees. However, the
respondent, without any justifiable reason, refused to allow the petitioner to sublease
the premises.

ISSUE: Whether or not the petitioner has the right to sublease the premises.

HELD:
The Court is convinced that the findings and conclusions of the court a quo and the RTC are in
order. These courts uniformly found that, under the terms of the contract of lease, the
respondent, as the owner-lessor of the premises, had reserved its right to approve the sublease
of the same. The petitioner, having voluntarily given its consent thereto, was bound by this
stipulation. And, having failed to pay the monthly rentals, the petitioner is deemed to have
violated the terms of the contract, warranting its ejectment from the leased premises. The
Court finds no cogent reason to depart from this factual disquisition of the courts below in view
of the rule that findings of facts of the trial courts are, as a general rule, binding on this Court.













AYALA CORP v. ROSA-DIANA REALTY AND DEVT. CORP.
[G.R. No. 134284. December 1, 2000] 346 S 663
Facts:
Petitioner Ayala Corporation (hereinafter referred to as Ayala) was the registered owner
of a parcel of land located in Alfaro Street, Salcedo Village, Makati City with an area of
840 square meters.
On April 20, 1976, Ayala sold the lot to Manuel Sy married to Vilma Po and Sy Ka Kieng
married to Rosa Chan. The Deed of Sale executed between Ayala and the buyers
contained Special Conditions of Sale and Deed Restrictions. Among the Special
Conditions of Sale were:
a) the vendees shall build on the lot and submit the building plans to the vendor
before September 30, 1976 for the latters approval
b) the construction of the building shall start on or before March 30, 1977 and
completed before 1979. Before such completion, neither the deed of sale shall be
registered nor the title released even if the purchase price shall have been fully
paid
c) there shall be no resale of the property
The Deed Restrictions, on the other hand, contained the stipulation that the gross floor
area of the building to be constructed shall not be more than five (5) times the lot area
and the total height shall not exceed forty two (42) meters. The restrictions were to
expire in the year 2025.
Manuel Sy and Sy Ka Kieng, in April 1989, were able to sell the lot to respondent Rosa-
Diana Realty and Development Corporation (hereinafter referred to as Rosa-Diana) with
Ayalas approval.
Rosa-Diana submitted to the building official of Makati another set of building plans for
The Peak which were substantially different from those that it earlier submitted to
Ayala for approval. While the building plans which Rosa-Diana submitted to Ayala for
approval envisioned a 24-meter high, seven (7) storey condominium project. Needless
to say, while the first set of building plans complied with the deed restrictions, the latter
set exceeded the same.


During the construction of Rosa-Dianas condominium project, Ayala filed an action with
the Regional Trial Court (RTC) of Makati, Branch 139 for specific performance, with
application for a writ of preliminary injunction/temporary restraining order against
Rosa-Diana Realty seeking to compel the latter to comply with the contractual
obligations under the deed of restrictions annotated on its title as well as with the
building plans it submitted to the latter. In the alternative, Ayala prayed for rescission
of the sale of the subject lot to Rosa- Diana Realty.
Issue: Whether or not stipulations of a contract is legal and binding.
Held:
Contractual obligations between parties have the force of law between them and absent any
allegation that the same are contrary to law, morals, good customs, public order or public
policy, they must be complied with in good faith. Hence, Article 1159 of the New Civil Code
provides
Obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith.
It was inappropriate therefore for the trial court to rule that in the absence of any authority or
confirmation from the Board of Directors of respondent Rosa-Diana, its Chairman and the
President cannot validly enter into an undertaking relative to the construction of the building
on the lot within one year from July 27, 1989 and in accordance with the deed restrictions.
Curiously, while the trial court stated that it cannot be presumed that the Chairman and the
President can validly bind respondent Rosa-Diana to enter into the aforesaid Undertaking in
the absence of any authority or confirmation from the Board of Directors, the trial court held
that the ordinary presumption of regularity of business transactions is applicable as regards the
Deed of Sale which was executed by Manuel Sy and Sy Ka Kieng and respondent Rosa-Diana. In
the light of the fact that respondent Rosa-Diana never alleged in its Answer that its president
and chairman were not authorized to execute the Undertaking, the aforesaid ruling of the trial
court is without factual and legal basis and surprising to say the least.
The fact alone that respondent Rosa-Diana conveniently prepared two sets of building plans -
with one set which fully conformed to the Deed Restrictions and another in gross violation of
the same - should have cautioned the trial court to conclude that respondent Rosa-Diana was
under the erroneous impression that the Deed Restrictions were no longer enforceable and
that it never intended to be bound by the Undertaking signed by its President and Chairman.
We reiterate that contractual obligations have the force of law between parties and unless the
same are contrary to public policy morals and good customs, they must be complied by the
parties in good faith.


BRICKTOWN DEVELOPMENT CORP. vs. AMOR TIERRA
DEVELOPMENT CORP.
G.R. No. 112182 December 12, 1994

Facts:
On 31 March 1981, Bricktown Development Corporation (herein petitioner corporation),
represented by its President and co-petitioner Mariano Z. Velarde, executed two
Contracts to Sell in favor of Amor Tierra Development Corporation (herein private
respondent), represented in these acts by its Vice-President, Moises G. Petilla, covering
a total of 96 residential lots.
Private respondent was only able to pay petitioner corporation the sum of P1,334,443.2.
In the meanwhile, however, the parties continued to negotiate for a possible
modification of their agreement, although nothing conclusive would appear to have
ultimately been arrived at.
Petitioner corporation, through its legal counsel, sent private respondent a "Notice of
Cancellation of Contract" on account of the latter's continued failure to pay the
installment due 30 June 1981 and the interest on the unpaid balance of the stipulated
initial payment. Petitioner corporation advised private respondent, however, that it
(private respondent) still had the right to pay its arrearages within 30 days from receipt
of the notice "otherwise the actual cancellation of the contract (would) take place."

Several months later, or on 26 September 1983, private respondent, through counsel,
demanded (Exh. "E") the refund of private respondent's various payments to petitioner
corporation, allegedly "amounting to P2,455,497.71," with interest within fifteen days
from receipt of said letter, or, in lieu of a cash payment, to assign to private respondent
an equivalent number of unencumbered lots at the same price fixed in the contracts.
Issue: Whether or not the contract is validly rescinded.
Held:
Admittedly, the terms of payment agreed upon by the parties were not met by private
respondent. Of a total selling price of P21,639,875.00, private respondent was only able to
remit the sum of P1,334,443.21 which was even short of the stipulated initial payment of
P2,200,000.00. No additional payments, it would seem, were made. A notice of cancellation
was ultimately made months after the lapse of the contracted grace period. Paragraph 15 of
the Contracts to Sell provided thusly:
15. Should the PURCHASER fail to pay when due any of the installments
mentioned in stipulation No. 1 above, the OWNER shall grant the purchaser a
sixty (60)-day grace period within which to pay the amount/s due, and should the
PURCHASER still fail to pay the due amount/s within the 60-day grace period, the
PURCHASER shall have the right to ex-parte cancel or rescind this contract,
provided, however, that the actual cancellation or rescission shall take effect only
after the lapse of thirty (30) days from the date of receipt by the PURCHASER of
the notice of cancellation of this contract or the demand for its rescission by a
notarial act, and thereafter, the OWNER shall have the right to resell the lot/s
subject hereof to another buyer and all payments made, together with all
improvements introduced on the aforementioned lot/s shall be forfeited in favor
of the OWNER as liquidated damages, and in this connection, the PURCHASER
obligates itself to peacefully vacate the aforesaid lot/s without necessity of notice
or demand by the OWNER.
3

A grace period is a right, not an obligation, of the debtor. When unconditionally conferred, such
as in this case, the grace period is effective without further need of demand either calling for
the payment of the obligation or for honoring the right. The grace period must not be likened
to an obligation, the non-payment of which, under Article 1169 of the Civil Code, would
generally still require judicial or extrajudicial demand before "default" can be said to arise.
4

Verily, in the case at bench, the sixty-day grace period under the terms of the contracts to sell
became ipso facto operative from the moment the due payments were not met at their stated
maturities. On this score, the provisions of Article 1169 of the Civil Code would find no
relevance whatsoever.
The cancellation of the contracts to sell by petitioner corporation accords with the contractual
covenants of the parties, and such cancellation must be respected. It may be noteworthy to add
that in a contract to sell, the
non-payment of the purchase price (which is normally the condition for the final sale) can
prevent the obligation to convey title from acquiring any obligatory force (Roque vs. Lapuz, 96
SCRA 741; Agustin vs. Court of Appeals, 186 SCRA 375).
The forfeiture of the payments thus far remitted under the cancelled contracts in question,
given the factual findings of both the trial court and the appellate court, must be viewed
differently. While clearly insufficient to justify a foreclosure of the right of petitioner
corporation to rescind or cancel its contracts with private respondent, the series of events and
circumstances described by said courts to have prevailed in the interim between the parties,
however, warrant some favorable consideration by this Court.


PILIPINAS HINO, INC. vs. COURT OF APPEALS
[G.R. No. 126570. August 18, 2000] 338 S 335

Facts:
A contract of lease was entered into between herein parties, under which the
defendants, as lessors, leased real property located at Bigaa, Balagtas, Bulacan, to
herein plaintiff for a term of two (2) years, from 16 August 1989 to 15 August 1991.
Pursuant to the contract of lease, plaintiff-lessee deposited with the defendants-lessors
the amount of Four Hundred Thousand (P400,000.00) Pesos to answer for repairs and
damages that may be caused by the lessee on the leased premises during the period of
the lease.
After the expiration of the lease contract, the plaintiff and defendants made a joint
inspection of the premises to determine the extent of the damages thereon, both
agreed that the cost of repairs would amount to P60,000.00 and that the amount of
P340,000.00 shall then be returned by the defendants to plaintiff. However, defendants
returned to plaintiff only the amount of P200,000.00, still having a balance of
P140,000.00.
Notwithstanding repeated demands, defendants unjustifiably refused to return the
balance of P140,000.00 holding that the true and actual damage on the lease premises
amounted to P298,738.90.
It is stated in paragraph 6 in the Memorandum of Agreement that an interest equivalent
to three (3%) percent per thirty days period shall be imposed on any installment due but
not paid for the duration of the delay.
Plaintiff's request to return the amount of P924,000.00 to which defendants however
refused for reasons that the said amount represents interest due and demandable from
the plaintiff when it incurred the delay which by virtue of legal compensation, was set-
off by operation of law and the said amount was rightfully deducted from the amount of
P7,050,000.00.

Since plaintiff failed to pay the third and subsequent installments, defendants' right to
the 3% interest, therefore, readily accrued and became demandable at the time of the
non-payment. The grace period granted to the plaintiff likewise lapsed. Consequently,
the defendants decided to, and in fact did in a letter dated 20 November 1990,
terminate the contract to sell. The defendants as agreed upon returned to the plaintiff
the amount of P5,906,000.00 representing the amount due to the plaintiff as
reimbursement of the installments for the 1st and 2nd installments. Considering that
the plaintiff has failed to pay the installments due on time, the interest in the amount of
P924,000.00 was charged against the plaintiff (which interest, in turn, represents the
unproductive use of the money which should have been made by the defendants had
the payment been made on time). The amount of P220,000.00 was likewise deducted
by the defendants representing rentals for the period. Thus, only the amount of
P5,906,000.00 was rightfully returned by the defendants.

Issues: Does private respondent have the right to retain the P924,000.00 representing the
interest due for the unpaid installments, despite the fact that the respondent has exercised
his option to rescind the memorandum of agreement?

Held: No.
It may be conceded, as the trial court endeavored to rationalize, that for failure of the buyer to
pay the installments, private respondents were consequently deprived of the productive use
of the supposed money they should have received as per contract. However, the private
respondents withholding of the amount corresponding to the interest violated the specific and
clear stipulation in paragraph 9 of the memorandum of agreement that except for the
downpayment, all amounts paid shall be returned to the buyer with no obligation to pay
interest thereon. The parties are bound by their agreement. Thus, Article 1159 of the Civil
Code expressly provides:
Obligation arising from contracts have the force of law between the contracting parties and
should be complied with in good faith.
Paragraph 9 of the memorandum of agreement between the parties, not being contrary to law,
morals, good customs, public policy, or public order has therefore the force of law between the
parties. Aside from equity considerations, the lower courts failed to provide a basis for the
retention by the respondent of the interest. Equity is applied only in the absence of, and never
against, statutory law or judicial rules of procedure. The memorandum of agreement, being the
law between the parties, must therefore, govern.
The distinction between contracts of sale and contracts to sell with reserved title has been
recognized by this Court in repeated decisions upholding the power of promisors under
contracts to sell in case of failure of the other party to complete payment, to extrajudicially
terminate the operation of the contract, refuse conveyance and retain the sums or installments
already received, where such rights are expressly provided for, as in the case at bar.
Sadly for private respondents, our ruling in the above case defeats rather than sustains their
claim. While this Court recognizes that in contracts to sell even if the contract is terminated the
seller can retain the sums already received or paid, such can be done only if it is expressly
provided for in the contract. Such proviso is not contained in the memorandum of agreement,
as what is merely provided for in paragraphs 7 and 9 is the retention of the downpayment.
ARTURO SARTE FLORES vs. SPS ENRICO L. LINDO, JR. and EDNA C.
LINDO
G.R. No. 183984 April 13, 2011

Facts:
On 31 October 1995, Edna Lindo (Edna) obtained a loan from Arturo Flores (petitioner)
amounting to P400,000 payable on 1 December 1995 with 3% compounded monthly
interest and 3% surcharge in case of late payment. To secure the loan, Edna executed a
Deed of Real Estate Mortgage

(the Deed) covering a property in the name of Edna and
her husband Enrico (Enrico) Lindo, Jr. (collectively, respondents). Edna also signed a
Promissory Note and the Deed for herself and for Enrico as his attorney-in-fact.
Edna issued three checks as partial payments for the loan. All checks were dishonored
for insufficiency of funds, prompting petitioner to file a Complaint for Foreclosure of
Mortgage with Damages against respondents.
In its 30 September 2003 Decision, the RTC, Branch 33 ruled that petitioner was not
entitled to judicial foreclosure of the mortgage. The RTC, Branch 33 found that the Deed
was executed by Edna without the consent and authority of Enrico. The RTC, Branch 33
noted that the Deed was executed on 31 October 1995 while the Special Power of
Attorney (SPA) executed by Enrico was only dated 4 November 1995.
The RTC, Branch 33 further ruled that petitioner was not precluded from recovering the
loan from Edna as he could file a personal action against her. However, the RTC, Branch
33 ruled that it had no jurisdiction over the personal action which should be filed in the
place where the plaintiff or the defendant resides in accordance with Section 2, Rule 4
of the Revised Rules on Civil Procedure.
On 8 September 2004, petitioner filed a Complaint for Sum of Money with Damages
against respondents.
Issue: Whether or not petitioner has a valid cause of action grounded on unjust enrichment.
Held:
The rule is that a mortgage-creditor has a single cause of action against a mortgagor-debtor,
that is, to recover the debt. The mortgage-creditor has the option of either filing a personal
action for collection of sum of money or instituting a real action to foreclose on the mortgage
security. An election of the first bars recourse to the second, otherwise there would be
multiplicity of suits in which the debtor would be tossed from one venue to another depending
on the location of the mortgaged properties and the residence of the parties.
Article 124 of the Family Code provides:
Art. 124. The administration and enjoyment of the conjugal partnership property shall belong
to both spouses jointly. In case of disagreement, the husbands decision shall prevail, subject to
recourse to the court by the wife for proper remedy, which must be availed of within five years
from the date of contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include disposition or encumbrance without authority of
the court or the written consent of the other spouse. In the absence of such authority or
consent the disposition or encumbrance shall be void. However, the transaction shall be
construed as a continuing offer on the part of the consenting spouse and the third person, and
may be perfected as a binding contract upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn by either or both offerors.
In this case, the Promissory Note and the Deed of Real Estate Mortgage were executed on 31
October 1995. The Special Power of Attorney was executed on 4 November 1995. The
execution of the SPA is the acceptance by the other spouse that perfected the continuing offer
as a binding contract between the parties, making the Deed of Real Estate Mortgage a valid
contract.
Nevertheless, petitioner still has a remedy under the law.
In Chieng v. Santos, this Court ruled that a mortgage-creditor may institute against the
mortgage-debtor either a personal action for debt or a real action to foreclose the mortgage.
The Court ruled that the remedies are alternative and not cumulative and held that the filing of
a criminal action for violation of Batas Pambansa Blg. 22 was in effect a collection suit or a suit
for the recovery of the mortgage-debt. In that case, however, this Court pro hac vice, ruled that
respondents could still be held liable for the balance of the loan, applying the principle that no
person may unjustly enrich himself at the expense of another.
The principle of unjust enrichment is provided under Article 22 of the Civil Code which provides:
Art. 22. Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or
legal ground, shall return the same to him.
There is unjust enrichment "when a person unjustly retains a benefit to the loss of another, or
when a person retains money or property of another against the fundamental principles of
justice, equity and good conscience." The principle of unjust enrichment requires two
conditions: (1) that a person is benefited without a valid basis or justification, and (2) that such
benefit is derived at the expense of another.
The main objective of the principle against unjust enrichment is to prevent one from enriching
himself at the expense of another without just cause or consideration. The principle is
applicable in this case considering that Edna admitted obtaining a loan from petitioners, and
the same has not been fully paid without just cause. The Deed was declared void erroneously at
the instance of Edna, first when she raised it as a defense before the RTC, Branch 33 and
second, when she filed an action for declaratory relief before the RTC, Branch 93. Petitioner
could not be expected to ask the RTC, Branch 33 for an alternative remedy, as what the Court
of Appeals ruled that he should have done, because the RTC, Branch 33 already stated that it
had no jurisdiction over any personal action that petitioner might have against Edna.
Considering the circumstances of this case, the principle against unjust enrichment, being a
substantive law, should prevail over the procedural rule on multiplicity of suits. The Court of
Appeals, in the assailed decision, found that Edna admitted the loan, except that she claimed it
only amounted to P340,000. Edna should not be allowed to unjustly enrich herself because of
the erroneous decisions of the two trial courts when she questioned the validity of the Deed.













PHILIPPINE REALTY AND HOLDINGS CORPORATION vs. LEY
CONST. AND DEVT CORP
G. R. No. 165548 June 13, 2011

Facts
Sometime between April 1988 and October 1989, the two corporations entered into
four major construction projects. Ley Construction and Development Corporation
(LCDC) was the project contractor for the construction of several buildings for Philippine
Realty & Holdings Corporation (PRHC), the project owner. Engineer Dennis Abcede
(Abcede) was the project construction manager of PRHC, while Joselito Santos (Santos)
was its general manager and vice-president for operations.

Under the Contract Agreement: ARTICLE IV The Contract Price shall not be
subject to escalation except due to work addition, (approved by the OWNER and
the ARCHITECT) and to official increase in minimum wage as covered by the
Labor Adjustment Clause below. All costs and expenses over and above the
Contract Price except as provided in Article V hereof shall be for the account of
the CONTRACTOR. It is understood that there shall be no escalation on the price
of materials.


LCDC explained that the unanticipated delay in construction was due mainly to the
sudden, unexpected hike in the prices of cement and other construction materials. It
claimed that, without a corresponding increase in the fixed prices found in the
agreements, it would be impossible for it to finish the construction of the Tektite
Building. The board of directors turned down the request for an escalation agreement.
Neither PRHC nor Abcede gave notice to LCDC of the alleged denial of the proposal.


However, on 9 August 1991 Abcede sent a formal letter to LCDC, asking for its
conformity, to the effect that should it infuse P36 million into the project, a contract
price escalation for the same amount would be granted in its favor by PRHC .
Notwithstanding the absence of a signature above PRHCs name, LCDC proceeded with
the construction of the Tektite Building, expending the entire amount necessary to
complete the project. From August to December 1991, it infused amounts totaling P
38,248,463.92.

In a letter dated 8 September 1992, when 96.43% of Tektite Building had been
completed, LCDC requested the release of the P 36 million escalation price. PRHC did
not reply. LCDC, through counsel, demanded payment of the agreed escalation price of
P 36 million. In its reply on 16 February 1993, PRHC suddenly denied any liability for the
escalation price. In the same letter, it claimed that LCDC had incurred 111 days of delay
in the construction of the Tektite Building and demanded that the latter pay P
39,326,817.15 as liquidated damages.
Issue: Whether or not PRHC is liable to pay LCDC for the escalation price.
Held:
LCDC additionally argues that a subsequent escalation agreement was validly entered into,
even on the following assumptions: (a) that Abcede and Santos had no authority to agree to the
escalation of the contract price without the approval of the board of directors; and (b) that the
7 December 1992 letter cannot be construed as an acknowledgment by PRHC that it owed LCDC
P36 million. It posits that the actions of Abcede and Santos, assuming they were beyond the
authority given to them by PRHC which they were representing, still bound PRHC under the
doctrine of apparent authority. 1[42] Thus, the lack of authority on their part should not be
used to prejudice it, considering that the two were clothed with apparent authority to execute
such agreements. In addition, PRHC is allegedly barred by promissory estoppel from denying
the claims of the other corporation.
In Yao Ka Sin Trading v. Court of Appeals, et al,.1[43] this Court discussed the applicable rules
on the doctrine of apparent authority, to wit:
The rule is of course settled that [a]lthough an officer or agent acts without, or
in excess of, his actual authority if he acts within the scope of an apparent
authority with which the corporation has clothed him by holding him out or
permitting him to appear as having such authority, the corporation is bound
thereby in favor of a person who deals with him in good faith in reliance on such
apparent authority, as where an officer is allowed to exercise a particular
authority with respect to the business, or a particular branch of it, continuously
and publicly, for a considerable time. Also, if a private corporation intentionally
or negligently clothes its officers or agents with apparent power to perform acts
for it, the corporation will be estopped to deny that such apparent authority is
real, as to innocent third persons dealing in good faith with such officers or
agents. 1[44]
Consequently, the escalation agreement entered into by LCDC and Abcede is a valid agreement
that PRHC is obligated to comply with. This escalation agreement whether written or verbal
has lifted, through novation, the prohibition contained in the Tektite Building Agreement.
In Peoples Aircargo and Warehousing Co. Inc. v. Court of Appeals, et al.,1[45] we held that
apparent authority is derived not merely from practice:
Its existence may be ascertained through (1) the general manner in which the
corporation holds out an officer or agent as having the power to act or, in other
words, the apparent authority to act in general, with which it clothes him; or (2)
the acquiescence in his acts of a particular nature, with actual or constructive
knowledge thereof, whether within or beyond the scope of his ordinary powers.
In order for novation to take place, the concurrence of the following requisites is indispensable:
1. There must be a previous valid obligation.
2. The parties concerned must agree to a new contract.
3. The old contract must be extinguished.
4. There must be a valid new contract.
All the aforementioned requisites are present in this case. The obligation of both parties not to
increase the contract price in the Tektite Building Agreement was extinguished, and a new
obligation increasing the old contract price by P 36 million was created by the parties to take its
place.
What makes this Court believe that it is incorrect to allow PRHC to escape liability for the
escalation price is the fact that LCDC was never informed of the board of directors supposed
non-approval of the escalation agreement until it was too late. Instead, PRHC, for its own
benefit, waited for the former to finish infusing the entire amount into the construction of the
building before informing it that the said agreement had never been approved by the board of
directors. LCDC diligently informed PRHC each month of the partial amounts the former infused
into the project. PRHC must be deemed estopped from denying the existence of the escalation
agreement for having allowed LCDC to continue infusing additional money spending for its own
project, when it could have promptly notified LCDC of the alleged disapproval of the proposed
escalation price by its board of directors.
This liability of PRHC, however, has a ceiling. The escalation agreement entered into was for P
36 millionthe maximum amount that LCDC contracted itself to infuse and that PRHC agreed
to reimburse. Thus, the Court of Appeals was correct in ruling that the P 2,248,463.92 infused
by LCDC over and above the P 36 million should be for its account, since PRHC never agreed to
pay anything beyond the latter amount. While PRHC benefited from this excess infusion, this
did not result in its unjust enrichment, as defined by law.
Unjust enrichment exists when a person unjustly retains a benefit to the loss of another, or
when a person retains money or property of another against the fundamental principles of
justice, equity and good conscience. Under Art. 22 of the Civil Code, there is unjust enrichment
when (1) a person is unjustly benefited, and (2) such benefit is derived at the expense of or with
damages to another. The term is further defined thus:
Unjust enrichment is a term used to depict result or effect of failure to make
remuneration of or for property or benefits received under circumstances that
give rise to legal or equitable obligation to account for them; to be entitled to
remuneration, one must confer benefit by mistake, fraud, coercion, or request.
In order for an unjust enrichment claim to prosper, one must not only prove that the other
party benefited from ones efforts or the obligations of others; it must also be shown that the
other party was unjustly enriched in the sense that the term unjustly could mean illegally or
unlawfully.1[52] LCDC was aware that the escalation agreement was limited to P36 million. It
is not entitled to remuneration of the excess, since it did not confer this benefit by mistake,
fraud, coercion, or request. Rather, it voluntarily infused the excess amount with full knowledge
that PRHC had no obligation to reimburse it.














Titan-Ikeda Construction v Primetown Property
G.R. No. 158768 February 12, 2008 544 S 466

Facts:
In 1992, respondent Primetown Property Group, Inc. awarded the contract for the
structural works of its 32-storey Makati Prime Tower (MPT) to petitioner Titan-Ikeda
Construction and Development Corporation. The parties formalized their agreement in a
construction contract.
On June 30, 1994, respondent executed a deed of sale (covering 114 condominium units
and 20 parking slots of the MPT collectively valued by the parties at P112,416,716.88) in
favor of petitioner pursuant to the full-swapping payment provision of the
supplemental agreement. Shortly thereafter, petitioner sold some o In September 1995,
respondent engaged the services of Integratech, Inc. (ITI), an engineering consultancy
firm, to evaluate the progress of the project. In its September 7, 1995 report, ITI
informed respondent that petitioner, at that point, had only accomplished 31.89% of
the project f its units to third persons.
Records showed that respondent did not merely take over the supervision of the project
but took full control thereof
Petitioner consequently conducted an inventory. On the basis thereof, petitioner
demanded from respondent the payment of its balance amounting to P1,779,744.85.
petitioner demanded from respondent the delivery of MPT's management certificate
and the keys to the condominium units and the payment of its (respondent's) balance.
Because respondent ignored petitioner's demand, petitioner, on December 9, 1996,
filed a complaint for specific performance in the Housing and Land Use Regulatory
Board (HLURB).
While the complaint for specific performance was pending in the HLURB, respondent
sent a demand letter to petitioner asking it to reimburse the actual costs incurred in
finishing the project (or P69,785,923.47).1[30] In view of the pendency of the HLURB
case, petitioner did not heed respondent's demands.
During trial, the RTC found that because respondent modified the MPT's architectural
design, petitioner had to adjust the scope of work. Moreover, respondent belatedly
informed petitioner of those modifications. It also failed to deliver the concrete mix and
rebars according to schedule. For this reason, petitioner was not responsible for the
project's delay
The appellate court found that respondent fully performed its obligation when it
executed the June 30, 1994 deed of absolute sale in favor of petitioner. Moreover, ITI's
report clearly established that petitioner had completed only 48.71% of the project as of
October 12, 1995, the takeover date. Not only did it incur delay in the performance of
its obligation but petitioner also failed to finish the project. The CA ruled that
respondent was entitled to recover the value of the unfinished portion of the project
under the principle of unjust enrichment
Issue:
1. Whether or not petitioner is obliged to return the excess from the overpayment to
respondent.
2. Whether or not petitioner is in delay in the performance of the obligation.
Held:
1. Because the parties agreed to extinguish the supplemental agreement, they were no
longer required to fully perform their respective obligations. Petitioner was relieved of
its obligation to complete the project while respondent was freed of its obligation to
pay the entire contract price. However, respondent, by executing the June 30, 1994
deed of absolute sale, was deemed to have paid P112,416,716.88. Nevertheless,
because petitioner applied part of what it received to respondents outstanding
liabilities, it admitted overpayment.
Because petitioner acknowledged that it had been overpaid, it was obliged to return the excess
to respondent. Embodying the principle of solutio indebiti, Article 2154 of the Civil Code
provides:

Article 2154. If something is received when there is no right to demand it and it
was unduly delivered through mistake, the obligation to return it arises.
For the extra-contractual obligation of solutio indebiti to arise, the following
requisites must be proven:
1. the absence of a right to collect the excess sums and
2. the payment was made by mistake.
With regard to the first requisite, because the supplemental agreement had been extinguished
by the mutual agreement of the parties, petitioner became entitled only to the cost of services
it actually rendered (i.e., that fraction of the project cost in proportion to the percentage of its
actual accomplishment in the project). It was not entitled to the excess (or extent of
overpayment).
On the second requisite, Article 2163 of the Civil Code provides:
Article 2163. It is presumed that there was a mistake in the payment if
something which had never been due or had already been paid was delivered;
but, he from whom the return is claimed may prove that the delivery was made
out of liberality or for any other just cause. (emphasis supplied)
In this instance, respondent paid part of the contract price under the assumption that
petitioner would complete the project within the stipulated period. However, after the
supplemental agreement was extinguished, petitioner ceased working on the project.
Therefore, the compensation petitioner received in excess of the cost of its actual
accomplishment as of October 12, 1995 was never due. The condominium units and parking
slots corresponding to the said excess were mistakenly delivered by respondent and were
therefore not due to petitioner.

Stated simply, respondent erroneously delivered excess units to petitioner and the
latter, pursuant to Article 2154, was obliged to the return them to respondent. Article 2160 of
the Civil Code provides:
Article 2160. He who in good faith accepts an undue payment of a thing
certain and determinate shall only be responsible for the impairment or loss of
the same or its accessories and accessions insofar as he has thereby been
benefited. If he has alienated it, he shall return the price or assign the action to
collect the sum.
One who receives payment by mistake in good faith is, as a general rule, only liable to return
the thing delivered. If he benefited therefrom, he is also liable for the impairment or loss of the
thing delivered and its accessories and accessions. If he sold the thing delivered, he should
either deliver the proceeds of the sale or assign the action to collect to the other party.
Under Article 2160 in relation to Article 2154, it should return to respondent the condominium
units and parking slots in excess of the value of its actual accomplishment (i.e., the amount due
to it) as of October 12, 1995. If these properties include units and/or slots already sold to third
persons, petitioner shall deliver the proceeds of the sale thereof or assign the actions for
collection to respondent as required by Article 2160.
2. Mora or delay is the failure to perform the obligation in due time because of dolo
(malice) or culpa (negligence). A debtor is deemed to have violated his obligation to the
creditor from the time the latter makes a demand. Once the creditor makes a demand,
the debtor incurs mora or delay.
The construction contract provided a procedure for protesting delay:
Article XIV
DELAYS AND ABANDONMENT
15.1. If at any time during the effectivity of this contract, [PETITIONER] shall
incur unreasonable delay or slippages of more than fifteen percent (15%) of the
scheduled work program, [RESPONDENT] should notify [PETITIONER] in writing
to accelerate the work and reduce, if not erase, slippage.
Respondent never sent petitioner a written demand asking it to accelerate work on the project
and reduce, if not eliminate, slippage. If delay had truly been the reason why respondent took
over the project, it would have sent a written demand as required by the construction contract.
Moreover, according to the October 12, 1995 letter-agreement, respondent took over the
project for the sole reason that such move was part of its (respondent's) long-term plan.
Respondent, on the other hand, relied on ITI's September 7, 1995 report. The construction
contract named GEMM, not ITI, as construction manager. Because petitioner did not consent to
the change of the designated construction manager, ITI's September 7, 1995 report could not
bind it.













PADCOM CONDO v ORTIGAS ASSOC CENTER
G.R. No. 146807. May 9, 2002

Facts:
Petitioner Padcom Condominium Corporation (hereafter PADCOM) owns and manages
the Padilla Office Condominium Building (PADCOM Building). The land on which the
building stands was originally acquired from the Ortigas & Company, Limited
Partnership (OCLP), by Tierra Development Corporation (TDC) under a Deed of Sale
dated 4 September 1974. Among the terms and conditions in the deed of sale was the
requirement that the transferee and its successor-in-interest must become members of
an association for realty owners and long-term lessees in the area later known as the
Ortigas Center. Subsequently, the said lot, together with improvements thereon, was
conveyed by TDC in favor of PADCOM in a Deed of Transfer dated 25 February 1975.

In 1982, respondent Ortigas Center Association, Inc. (hereafter the Association) was
organized to advance the interests and promote the general welfare of the real estate
owners and long-term lessees of lots in the Ortigas Center. It sought the collection of
membership dues in the amount of two thousand seven hundred twenty-four pesos and
forty centavos (P2,724.40) per month from PADCOM. The corporate books showed that
PADCOM owed the Association P639,961.47, representing membership dues, interests
and penalty charges from April 1983 to June 1993. The letters exchanged between the
parties through the years showed repeated demands for payment, requests for
extensions of payment, and even a settlement scheme proposed by PADCOM in
September 1990.


The Association averred that purchasers of lands within the Ortigas Center complex
from OCLP are obligated under their contracts of sale to become members of the
Association. This obligation was allegedly passed on to PADCOM when it bought the lot
from TDC, its predecessor-in-interest.

In its answer, PADCOM contended that it is a non-stock, non-profit association, and for
it to become a special member of the Association, it should first apply for and be
accepted for membership by the latters Board of Directors. No automatic membership
was apparently contemplated in the Associations By-laws. PADCOM added that it could
not be compelled to become a member without violating its right to freedom of
association. And since it was not a member of the Association, it was not liable for
membership dues, interests and penalties.
Issue: Whether or not PADCOM is liable to pay the membership fees.
Held:
Having ruled that PADCOM is a member of the Association, it is obligated to pay its dues
incidental thereto. Article 1159 of the Civil Code mandates:
Art. 1159. Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith.
Assuming in gratis argumenti that PADCOM is not a member of the Association, it cannot evade
payment without violating the equitable principles underlying quasi-contracts. Article 2142 of
the Civil Code provides:
Art. 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of
quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of
another.
Generally, it may be said that a quasi-contract is based on the presumed will or intent of the
obligor dictated by equity and by the principles of absolute justice. Examples of these
principles are: (1) it is presumed that a person agrees to that which will benefit him; (2) nobody
wants to enrich himself unjustly at the expense of another; or (3) one must do unto others
what he would want others to do unto him under the same circumstances.
As resident and lot owner in the Ortigas area, PADCOM was definitely benefited by the
Associations acts and activities to promote the interests and welfare of those who acquire
property therein or benefit from the acts or activities of the Association.
MC Engineering v CA 380 S 116
[G.R. No. 104047. April 3, 2002]
MC ENGINEERING, INC., petitioner, vs. THE COURT OF APPEALS, GERENT BUILDERS, INC. and
STRONGHOLD INSURANCE CO., INC., respondents.
Facts:
On October 29, 1984, Mc Engineering, Inc. and Surigao Coconut Development
Corporation (Sucodeco, for short) signed a contract, for the restoration of the latters
building, land improvement, electrical, and mechanical equipment located at Lipata,
Surigao City, which was damaged by typhoon Nitang.

The next day, on October 30, 1984 defendant Mc Engineering and plaintiff Gerent
Builders, Inc. entered into an agreement wherein defendant subcontracted to plaintiff
the restoration of the buildings and land improvement phase of its contract with
Sucodeco but defendant retained for itself the restoration of the electrical and
mechanical works. The subcontracted work covered the restoration of the buildings and
improvement for P1,665,000.00.


On January 2, 1985, plaintiff received from defendant the amount of P1,339,720.00* as
full payment of the sub-contract price, after deducting earlier payments made by
defendant to plaintiff, as evidenced by the affidavit executed by plaintiffs president,
wherein the latter acknowledged complete satisfaction for such payment.

Nevertheless, plaintiff is still claiming from defendant the sum of P632,590.13 as its
share in the adjusted contract cost in the amount of P854,851.51, alleging that the sub-
contract is subject to the readjustment provided for in Section VII of the agreement, and
also the sum of P166,252.00 in payment for additional electrical and civil works outside
the scope of the sub-contract.


Petitioner refused to pay respondent Gerent. Thus, on March 21, 1985, respondent
Gerent filed the complaint against petitioner. Nevertheless, plaintiff is still claiming
from defendant the sum of P632,590.13 as its share in the adjusted contract cost in the
amount of P854,851.51, alleging that the sub-contract is subject to the readjustment
provided for in Section VII of the agreement, and also the sum of P166,252.00 in
payment for additional electrical and civil works outside the scope of the sub-contract
which plaintiff had earlier forwarded to defendant.
Issue: Whether or not respondent has a share in the increase of the subcontract price.
Held:
Respondent Gerent claims that petitioner cannot be allowed to evade its lawful obligation
arising from the subcontract, citing the well-known principle of law against unjust enrichment.
Article 22 of the Civil Code provides that [e]very person who through an act or performance by
another, or by any other means, acquires or comes into possession of something at the expense
of the latter without just or legal ground, shall return the same to him.
Two conditions must generally concur before the rule on unjust enrichment can apply, namely:
(a) a person is unjustly benefited, and (b) such benefit is derived at anothers expense or
damage.
Such a situation does not exist in this case. The benefit or profit derived by petitioner neither
comes from respondent Gerent nor makes the Gerent any poorer. The profit derived by
petitioner comes from Sucodeco by virtue of the main contract to which respondent Gerent is
not a party. Respondent Gerents rights under the subcontract are not diminished in any way,
and Gerent remains fully compensated according to the terms of its own subcontract. The
profit derived by petitioner is neither unjust, nor made at the expense of respondent Gerent.
That a main contractor is able to secure a price increase from the project owner does not
automatically result in a corresponding price increase to the subcontractor in the absence of an
agreement to the contrary. In this case, there is no stipulation in the subcontract that
respondent Gerent will automatically receive 74% of whatever price increase petitioner may
obtain in the civil works portion of the main contract. Neither has the subcontract been
changed to reflect a higher subcontract price.
In a subcontract transaction, the benefit of a main contractor is not unjust even if it does less
work, and earns more profit, than the subcontractor. The subcontractor should be satisfied
with its own profit, even though less than the main contractors, because that is what it
bargained for and contracted with the main contractor. Article 22 of the Civil Code is not
intended to insure that every party to a commercial transaction receives a profit corresponding
to its effort and contribution. If a subcontractor knowingly agrees to receive a profit less than
its proportionate contribution, that is its own lookout. The fact that a subcontractor accepts
less does not make it dumb for that may be the only way to beat its competitors. The winning
subcontractor cannot be allowed to later on demand a higher price after bagging the contract
and beating competitors who asked for higher prices. Even if the subcontractor incurs a loss
because of its low price, it cannot invoke Article 22 of the Civil Code to save it from financial
loss. Article 22 is not a safety net against bad or overly bold business decisions.
Under the foregoing circumstances, we hold that Gerent is not entitled to any share in the price
increase in the main contract. Whatever price increase petitioner obtained in the main
contract, whether for the civil works portion or otherwise, was solely for the benefit of
petitioner.







State Investment vs. Court of Appeals
G.R. No. 90676, June 19, 1991 198 SCRA 392

FACTS:
Respondent spouses Rafael and Refugio Aquino pledged certain shares of stock to
petitioner State Investment House Inc. in order to secure a loan of P120, 000.00. Prior to
the execution of the pledge, respondent spouses Jose and Marcelina Aquino signed an
agreement with Petitioner for the latters purchase of receivables amounting to P375,
000.00.

When the 1st Account fell due, respondent spouses paid the same partly with their own
funds and partly from the proceeds of another loan which they obtained also from
Petitioner designated as the 2nd Account. This new loan was secured by the same
pledge agreement executed in relation to the 1st Account. When the new loan matured,
State demanded payment. Respondents expressed willingness to pay, requesting that
upon payment, the shares of stock pledged be released. State denied the request on the
ground that the loan which it had extended to the spouses Jose and Marcelina Aquino
has remained unpaid.


On 29, June 1984, Atty. Rolando Salonga sent to respondent spouses a Notice of
Notarial Sale stating that upon request of State and by virtue of the pledge agreement,
he would sell at public auction the shares of stock pledged to State. This prompted
respondents to file a case before the Regional Trial Court of Quezon City alleging that
the intended foreclosure sale was illegal because from the time the obligation under the
2nd Account became due, they had been able and willing to pay the same, but
petitioner had insisted that respondents pay even the loan account of Jose and
Marcelino Aquino, which had not been secured by the pledge. It was further alleged
that their failure to pay their loan was excused because State itself had prevented the
satisfaction of the obligation.

On January 29, 1985, the trial court rendered a decision in favor of the plaintiff ordering
State to immediately release the pledge and to deliver to respondents the share of stock
upon payment of the loan. The Court of Appeals affirmed in toto the decision of the trial
court.

ISSUE: Whether or not the conditions to be complied with by the debtor desirous of being
released from his obligation in cases where the creditor unjustly refuses to accept payment
have been met by the spouses Aquino.

HELD:

The conditions had not been complied with. Article 1256 of the civil code states that: If the
creditor to whom tender of payment has been made refuses without just cause to accept it, the
debtor shall be released from responsibility by consignation of the thing or sum due. Where
the creditor unjustly refuses to accept payment, the debtor desirous of being released from his
obligation must comply with two (2) conditions: (a) tender of payment; and (b) consignation of
the sum due. Tender of payment must be accompanied or followed by consignation in order
that the effects of payment may be produced. In the instant case, respondent spouses Aquino,
while they are properly regarded as having made a written tender of payment to petitioner
state, failed to consign in court the amount due at the time of the maturity of the 2nd Account
No. It follows that their obligation to pay principal-cum-regular or monetary interest under the
terms and conditions of the said Account was not extinguished by such tender of payment
alone.










People v Nufrashir Hashim
G.R. No. 194255 June 13, 2012

Facts:
Accused-appellant Bernadette Pansacala a.k.a Neneng Awid, together with co-accused
Nurfrasir Hashim y Saraban a.k.a Franz/Frans, Makdul Jamad y Bukin a.k.a. Macky, a
certain Tas and a certain Jun for the crime of illegal recruitment as defined under
Section 6 in relation to Section 7(b) of Republic Act. No. (R.A.) 8042 or the Migrant
Workers and Overseas Filipinos Act of 1995.

The prosecution alleged that, BBB was forced on numerous occasions to have sexual
intercourse with Franz at his bidding, even in the presence of other people. She
followed his orders for fear that he would inflict physical harm on her.


Private complainants were not aware of the circumstances surrounding their
employment at the Golden Lotus. It was only after they agreed to stay there for
employment that they were forced to become sex workers to earn money and pay off
the debts they incurred from their travel from Zamboanga City to Labuan, Malaysia.

From 21 June 2003 to 13 July 2003, AAA and BBB worked as prostituted women. Each of
the girls would be booked to a customer for the whole night for 300 Ringgit at a certain
hotel near the Golden Lotus. Meanwhile, during the day, they would be hired by
customers for a short time for 150 Ringgit in one of the rooms of the Golden Lotus.
The girls were told that they would be made to pay a fine of 150 Ringgit if they refused
to have sexual intercourse with the customers.
Issue: Whether or not accused are obliged to pay for damages.
Held:
On 12 May 2003, Congress passed R.A. 9208 or the Anti-Trafficking in Persons Act. This law was
approved on 26 May 2003. Ironically, only a few days after, private complainants found
themselves in a situation that this law had sought to prevent.
In People v. Lalli, we increased the amount of moral and exemplary damages from 50,000 to
500,000 and from 50,000 to 100,000, respectively, having convicted the accused therein of
the crime of trafficking in persons. In so doing, we said:
The Civil Code describes moral damages in Article 2217:
Art. 2217. Moral damages include physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendant's wrongful act for omission.
Exemplary damages, on the other hand, are awarded in addition
to the payment of moral damages, by way of example or correction for
the public good, as stated in the Civil Code:
Art. 2229. Exemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition to the moral,
temperate, liquidated or compensatory damages.
Art. 2230. In criminal offenses, exemplary damages as a part of the
civil liability may be imposed when the crime was committed with one or
more aggravating circumstances. Such damages are separate and distinct
from fines and shall be paid to the offended party.
The payment of 500,000 as moral damages and 100,000 as exemplary
damages for the crime of Trafficking in Persons as a Prostitute finds basis in
Article 2219 of the Civil Code, which states:
Art. 2219. Moral damages may be recovered in the following and
analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32,
34, and 35.
The parents of the female seduced, abducted, raped, or abused, referred
to in No. 3 of this article, may also recover moral damages.

FELIXBERTO A. ABELLANA VS. PEOPLE
[G.R. No. 174654 : August 17, 2011]

Facts:
In 1985, petitioner extended a loan to private respondents spouses Diaga and Saapia
Alonto (spouses Alonto), secured by a Deed of Real Estate Mortgage over Lot Nos. 6471
and 6472 located in Cebu City. Subsequently, or in 1987, petitioner prepared a Deed of
Absolute Sale conveying said lots to him. The Deed of Absolute Sale was signed by
spouses Alonto in Manila. However, it was notarized in Cebu City allegedly without the
spouses Alonto appearing before the notary public. Thereafter, petitioner caused the
transfer of the titles to his name and sold the lots to third persons.

On August 12, 1999,

an Information

was filed charging petitioner with Estafa through
Falsification of Public Document.

RTC Ruling: Based on the evidence presented by both parties, the trial court found that
petitioner did not intend to defraud the spouses Alonto; that after the latter failed to
pay their obligation, petitioner prepared a Deed of Absolute Sale which the spouses
Alonto actually signed; but that the Deed of Absolute Sale was notarized without the
spouses Alonto personally appearing before the notary public. From these, the trial
court concluded that petitioner can only be held guilty of Falsification of a Public
Document by a private individual under Article 172(1)in relation to Article 171(2) of the
Revised Penal Code (RPC) and not estafa through falsification of public document as
charged in the Information.


CA Ruling: the CA opined that the conviction of the petitioner for an offense not alleged
in the Information or one not necessarily included in the offense charged violated his
constitutional right to be informed of the nature and cause of the accusation against
him.
Issue: Whether or not the accused can still be held civilly liable despite the acquittal from an
offense charged different from the Information.
Held:
In Banal v. Tadeo, Jr., we elucidated on the civil liability of the accused despite his exoneration
in this wise:
While 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. Viewing things
pragmatically, we can readily see that what gives rise to the civil liability is really the obligation
and moral duty of everyone to repair or make 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.
Simply stated, civil liability arises when one, by reason of his own act or omission, done
intentionally or negligently, causes damage to another. Hence, for petitioner to be civilly liable
to spouses Alonto, it must be proven that the acts he committed had caused damage to the
spouses.

Based on the records of the case, we find that the acts allegedly committed by the petitioner
did not cause any damage to spouses Alonto.

First, the Information charged petitioner with fraudulently making it appear that the spouses
Alonto affixed their signatures in the Deed of Absolute Sale thereby facilitating the transfer of
the subject properties in his favor. However, after the presentation of the parties' respective
evidence, the trial court found that the charge was without basis as the spouses Alonto indeed
signed the document and that their signatures were genuine and not forged.

Second, even assuming that the spouses Alonto did not personally appear before the notary
public for the notarization of the Deed of Absolute Sale, the same does not necessarily nullify or
render void ab initio the parties' transaction. Such non-appearance is not sufficient to
overcome the presumption of the truthfulness of the statements contained in the deed. "To
overcome the presumption, there must be sufficient, clear and convincing evidence as to
exclude all reasonable controversy as to the falsity of the [deed]. In the absence of such proof,
the deed must be upheld." And since the defective notarization does not ipso facto invalidate
the Deed of Absolute Sale, the transfer of said properties from spouses Alonto to petitioner
remains valid. Hence, when on the basis of said Deed of Absolute Sale, petitioner caused the
cancellation of spouses Alonto's title and the issuance of new ones under his name, and
thereafter sold the same to third persons, no damage resulted to the spouses Alonto.

Moreover, we cannot sustain the alternative sentence imposed upon the petitioner, to wit: to
institute an action for the recovery of the properties of spouses Alonto or to pay them actual
and other kinds of damages. First, it has absolutely no basis in view of the trial court's finding
that the signatures of the spouses Alonto in the Deed of Absolute Sale are genuine and not
forged. Second, "[s]entences should not be in the alternative. There is nothing in the law
which permits courts to impose sentences in the alternative." While a judge has the discretion
of imposing one or another penalty, he cannot impose both in the alternative.


PEOPLE vs. EDWIN MALICSI
G.R. No. 175833 January 29, 2008 543 S 93

Facts:
AAA was raped by her uncle the accused-appellant three times, once when she was
thirteen and thrice when she was fifteen years old. She was threatened to not say
anything to her parents.

In the house of Malicsi her cousin saw them and he told the odious incident to AAAs
mother. It was confirmed by medical findings that AAA lost her virginity there were
lacerations in the hymen.


Malicsi refuted the allegations against him saying that she consented to the sexual
intercourse and that they were sweethearts and that her lack of outcry and tenacious
resistance signify that it was consensual.
Issue: Whether or not there is a civil obligation arising from the crime of rape.
The Court of Appeals was correct in affirming with modification the ruling of the trial court that
four counts of rape were clearly established by the prosecution witnesses. The findings and
observations of the trial court on the credibility of the prosecution witnesses are binding and
conclusive on the appellate court unless some facts or circumstances of weight and substance
have been overlooked, misapprehended or misinterpreted.
This Court is not persuaded by appellants contention that the lack of outcry, lack of tenacious
resistance, and delay in reporting the incidents signify that the sexual encounters were
consensual
First, appellant exercised moral ascendancy over AAA, being AAAs uncle. Second, appellant had
instilled fear upon AAAs young mind during the sexual assaults by using a knife and threatening
to kill her. These circumstances have led AAA to keep her ordeals in secret until her mother
learned of the incidents from AAAs cousin. This Court declared in People v. Garcia:
[R]ape is committed when intimidation is used on the victim and this includes the moral
kind of intimidation or coercion. Intimidation is a relative term, depending on the age,
size and strength of the parties, and their relationship with each other. It can be
addressed to the mind as well. Moreover, the intimidation must be viewed in the light
of the victims perception and judgment at the time of rape and not by any hard and
fast rule. It is therefore enough that it produces fear fear that if the victim does not
yield to the lustful demands of the accused, something would happen to her at the
moment or thereafter.
AAAs tender age and appellants moral ascendancy made AAA subservient to appellants
sexual desires. This psychological predicament explains why AAA did not give any outcry or
offer any resistance when appellant was raping her. Moreover, the physical differences
between appellant, who was a man in his early 30s then, and AAA, a 13 and 15-year-old girl
during the rape incidents, afforded appellant the greater advantage such that no amount of
resistance from AAA could have overcome the coercive physical force of appellant.
The appellate court also correctly affirmed the award by the trial court of P200,000 in moral
damages. Moral damages are automatically granted to the rape victim without presentation of
further proof other than the commission of the crime.
Civil indemnity in the amount of P50,000 for each count of simple rape is automatically granted
once the fact of rape is established.











PEOPLE vs. ROSAURO SIA
[G.R. No. 137457. November 21, 2001]

Facts:
Christian Bermudez was beaten to death and the taxicab he was driving was taken by
the assailants. His lifeless body, wrapped in a carton box, was recovered several days
later in a fishpond in Meycauayan, Bulacan. For the felonies, the above-named accused
were indicted for violation of R.A. 6539, otherwise known as the Anti-Carnapping Law,
and Murder

The taxi was last seen at the vicinity of the Pegasus Night Club in Quezon City at about
10:30 p.m. on the said date with an unidentified passenger who surfaced later as the
accused Rosauro Sia, whose true name is allegedly Antonio Labrador (Mang Tony) and
who resides at San Francisco Del Monte. Accused Rosauro Sia appears to have gypped
driver Christian Bermudez to service him the following day (August 24, 1995) in the
morning and to be paid P150.00 per hour .


In their lone assigned error, accused-appellants contend in sum that the extra-judicial
confessions of accused Rosauro Sia and Johnny Balalio, which the trial court heavily
relied upon, are inadmissible in evidence since they were executed in violation of their
right to counsel.

Issue: Whether or not accused should be acquitted based on inadmissibility of extrajudicial
confession.

Held:
Direct evidence of the commission of the crime is not the only matrix wherefrom a court may
draw its conclusions and findings of guilt. The rules on evidence and case law sustain the
conviction of the accused through circumstantial evidence when the following requisites
concur: (1) there must be more than one circumstance; (2) the facts from which the inferences
are derived are proven; and (3) the combination of all circumstances is such as to produce a
conviction beyond reasonable doubt of the guilt of the accused.
First, when the police apprehended accused Rosauro Sia while he was in possession of the
carnapped vehicle, he immediately pointed to accused-appellants as his accomplices in taking
away the victims vehicle
By way of exception, the testimony of a co-conspirator may, even if uncorroborated, be
sufficient as when it is shown to be sincere in itself, because given unhesitatingly and in a
straightforward manner, and is full of details which by their nature could not have been the
result of deliberate afterthought
Second, defense witness Porferio Fernando testified that accused-appellants were with Rosauro
Sia from August 25-28, 1995
Third, upon his arrest, accused-appellant Jimmy Ponce voluntarily surrendered to the police
authorities a ring admittedly belonging to the victim
In the absence of an explanation of how one has come into the possession of stolen effects
belonging to a person wounded and treacherously killed, he must necessarily be considered the
author of the aggression and death of the said person and of the robbery committed on him.
Anent the civil indemnity award, this Court finds the amount of P50,000.00 as death indemnity
proper, following prevailing jurisprudence and in line with controlling policy. The award of civil
indemnity may be granted without any need of proof other than the death of the victim.
Though not awarded by the trial court, the victims heirs are likewise entitled to moral
damages, pegged at P50,000.00 by controlling case law. The award of P200,000.00 as burial and
other expenses incurred in connection with the death of the victim must be deleted. The
records are bereft of any receipt or voucher to justify the trial courts award of burial and other
expenses incurred in connection with the victims death. The rule is that every pecuniary loss
must be established by credible evidence before it may be awarded
In determining the amount of lost income, the following must be taken into account: (1) the
number of years for which the victim would otherwise have lived; and (2) the rate of the loss
sustained by the heirs of the deceased. The second variable is computed by multiplying the life
expectancy by the net earnings of the deceased, meaning total earnings less expenses
necessary in the creation of such earnings or income less living and other incidental expenses.
Considering that there is no proof of living expenses of the deceased, net earnings are
computed at fifty percent (50%) of the gross earnings. The formula used by this Court in
computing loss of earning capacity is:
Net Earning Capacity = [2/3 x (80 age at time of death) x (gross annual income
reasonable and necessary living expenses)]
In this case, the Court notes that the victim was 27 years old at the time of his death and his
mother testified that as a driver of the Tamaraw FX taxi, he was earning P650.00 a day. Hence,
the damages payable for the loss of the victims earning capacity is computed thus:
Gross Annual Earnings = P650 x 261 working days in a year
= P169,650.00
Net Earning Capacity = 2/3 x (80-27) x [P169,650.00 P84,825.00]
= 35.33 x 84,825.00
= P2,996,867.20














PEOPLE OF THE PHILIPPINES vs. LUDOVICO C. DOCTOLERO
G.R. No. 34386 February 7, 1991

Facts:
The evidence for the prosecution tend to show that the three (3) accused, Ludovico,
Conrado and Virgilio, all surnamed Doctolero, were responsible for the death(s) of
Epifania Escosio and Lolita de Guzman, and in inflicting physical injuries to (sic) Jonathan
Oviedo. And immediately thereafter, with their father and co-accused, Antonio
Doctolero, they hacked Marcelo Doctolero, with their bolos which caused the death of
the latter.
According to Marcial Sagun, at about 6:30 in the evening on November 8, 1970, he and
his wife, Maria Oviedo-Sagun and Lolita de Guzman-Oviedo (sister-in-law of Maria
Oviedo-Sagun) were on their way home to Barrio Binday. They came from the field
where they bundled their harvests. Upon reaching a crossing of the road in Bo. Binday
they met the accused Ludovico Doctolero who, without warning and without cause or
reason, held the left shoulder of Marcial Sagun with his left hand and struck Marcial
Sagun with a bolo.
Paciencia Sagun-Diamoy (sister of Marcial Sagun) testified that she saw the three
accused hacked Marcelo repeatedly with their bolos and that when Marcia Sagun was
about to go home to get her children the accused hit 81-year old Epifania Escosio and
Jonathan.
In their defense, they averred that it was a case of self-defense that Marcelo and his
brother in law Antonio Oviedo hit struck Ludovico ergo boloing Maria to escape.
During the pendency of this appeal Virgilio died.
Issue: Whether or not the accused Virgilios civil liability is extinguished upon his death.
Held:
The court below, however, erred in the penalty imposed for the physical injuries inflicted on
Jonathan Oviedo. The child required medical attention for fifteen (15) days, hence the liability
of appellants therefor is for less serious physical injuries punished with arresto mayor under
Article 265 of the Revised Penal Code. There being no modifying circumstances, a penalty of
twenty (20) days of arresto menor should be imposed for said offense on appellant Conrado
Doctolero as an accomplice.
The death of appellant Virgilio Doctolero during the pendency of this appeal terminated only
his criminal liability but not his civil liability.
27
Also, while the death indemnity has been
increased to P50,000.00 under current case law, the same should not apply to Ludovico
Doctolero, he having heretofore withdrawn his appeal and the judgment rendered by the trial
court having long since become final and executory with respect to him.



















PEOPLE vs. ROLLY ABULENCIA
G.R. No. 138403. August 22, 2001

Facts:
On August 4, 1998, a cold-blooded ravager, Rolly Abulencia y Coyos, preyed on ten-year
old Rebelyn Garcia.
In the early morning of the following day, Rebelyns lifeless, naked body was found
floating at the Colobong creek in San Manuel, Pangasinan, with marks of bruises, burns
and injuries manifesting that she was defiled and later drowned to death.
Abulencia invited the victims brother to a drinking spree and thereafter went out to buy
dilis Rebelyn tagged along and they were never seen again.
Abulencia surrendered to the police saying that she followed him all the way to the
market where he decided he no longer wanted to buy dilis. Exasperated, he told her to
go home because he will go to San Manuel. When they were crossing the bridge she ran
towards him and tripped causing her to fall.
RTC Ruling: civil indemnity of 75,000.
Issue: Whether or not damages should be modified.
Held:
With regard to the civil indemnity, the trial court awarded only P75,000.00 Current
jurisprudence has fixed at P100,000.00 the civil indemnity in cases of rape with homicide, which
is fully justified and properly commensurate with the seriousness of that special complex crime.
The trial court did not award moral damages to the victims family. Based on prevailing
jurisprudence, however, moral damages may be awarded to the heirs of the victim without
need for pleading or proof of its basis for their mental, physical and psychological sufferings are
too obvious to still require their recital at the trial. Hence, moral damages in the amount of
P50,000.00 must be awarded.
In People vs. Lagarto, we held that attendant circumstances may be considered to determine
civil liability. Thus, in view of the evident cruelty inflicted upon Rebelyn, as shown by the
multiple burns and contusions on her body, we grant the award of exemplary damages in the
amount of P25,000.00.

REYNALDO BERMUDEZ, SR and ADONITA YABUT BERMUDEZ v.
JUDGE A. MELENCIO-HERRERA
G.R. No. L-32055 February 26, 1988
Facts:
A cargo truck, driven by Domingo Pontino and owned by Cordova Ng Sun Kwan, bumped
a jeep on which Rogelio, a six-year old son of plaintiffs-appellants, was riding. The boy
sustained injuries which caused his death. As a result, Criminal Case No.92944 for
Homicide Through Reckless Imprudence was filed against Domingo Pontino by the
Manila City Fiscal's Office. Plaintiffs-appellants filed on July 27,1969 in the said criminal
case "A Reservation to File Separate Civil Action."

On July 28,1969, the plaintiffs-appellants filed a civil case for damages with the Court of
First Instance of Manila . Finding that the plaintiffs instituted the action "on the
assumption that defendant Pontino's negligence in the accident of May 10, 1969
constituted a quasi-delict," the trial court stated that plaintiffs had already elected to
treat the accident as a "crime" by reserving in the criminal case their right to file a
separate civil action.


Issue: Whether the civil action filed by the plaintiffs-appellants is founded on crime or on quasi-
delict.

Held:
In Joaquin vs. Aniceto, the Court held:
The issue in this case is: May an employee's primary civil liability for crime and
his employer's subsidiary liability therefor be proved in a separate civil action
even while the criminal case against the employee is still pending?
To begin with, obligations arise from law, contract, quasi-contract, crime and
quasi-delict. According to appellant, her action is one to enforce the civil liability
arising from crime. With respect to obligations arising from crimes, Article 1161
of the New Civil Code provides:
Civil obligations arising from criminal offenses shall be governed
by the penal laws, subject to the provisions of article 21 77, and of
the pertinent provisions of Chapter 2, Preliminary, Title, on
Human Relations, and of Title XVIII of this book, regulating
damages.
It is now settled that for an employer to be subsidiarily liable, the
following requisites must be present: (1) that an employee has
committed a crime in the discharge of his duties; (2) that said
employee is insolvent and has not satisfied his civil liability; (3)
that the employer is engaged in some kind of industry. (1 Padilla,
Criminal Law, Revised Penal Code 794 [1964])
Without the conviction of the employee, the employer cannot be subsidiarily
liable.
In cases of negligence, the injured party or his heirs has the choice between an action to
enforce the civil liability arising from crime under Article 100 of the Revised Penal Code and an
action for quasi- delict under Article 2176-2194 of the Civil Code. If a party chooses the latter,
he may hold the employer solidarity liable for the negligent act of his employee, subject to the
employer's defense of exercise of the diligence of a good father of the family.
In the case at bar, the action filed b appellant was an action for damages based on quasi-delict.
The fact that appellants reserved their right in the criminal case to file an independent civil
action did not preclude them from choosing to file a civil action for quasi-delict.
The appellants invoke the provisions of Sections 1 and 2 of Rule 111 of the Rules of Court,
which provide:
Section 1. Institution of criminal and civil action. When a criminal action is
instituted, the civil action for recovery of civil liability arising from the offense
charged is impliedly instituted with the criminal action, unless the offended party
expressly waives the civil action or reserves his right to institute it separately.
Section 2. Independent civil action.-In the cases provided for in Articles 31, 32,
33, 34 and 2177 of the Civil Code of the Philippines, an independent civil action
entirely separate and distinct from the criminal action, may be brought by the
injured party during the pendency of the criminal case, provided the right is
reserved as required in the preceding section. Such civil action shall proceed
independently of the criminal prosecution, and shall require only a
preponderance of evidence.
Article 2177 of the Civil Code, cited in Section 2, of Rule 111, provides that
Article 2177. Responsibility for fault or negligence under the preceding article is
entirely separate and distinct from the civil liability arising from negligence under
the Penal Code. But the plaintiff cannot recover damages twice for the same act
or omission of the defendant.
The appellant precisely made a reservation to file an independent civil action in accordance
with the provisions of Section 2 of Rule 111, Rules of Court. In fact, even without such a
reservation, we have allowed the injured party in the criminal 1 case which resulted in the
acquittal of the accused to recover damages based on quasi-delict.

In People vs. Ligon, G.R. No. 74041, we held:
However, it does not follow that a person who is not criminally liable is also free
from civil liability. While the guilt of the accused in a criminal prosecution must
be established beyond reasonable doubt, only a preponderance of evidence is
required in a civil action for damages (Article 29, Civil Code). The judgment of
acquittal extinguishes the civil liability of the accused only when it includes a
declaration that the facts from which the civil liability might arise did not exist
(Padilla vs. Court of Appeals, 129 SCRA 559).










PEOPLE OF THE PHILIPPINES vs. Hon. Judge BENJAMIN RELOVA
G.R. No. L-45129 March 6, 1987

Facts:
On 1 February 1975, members of the Batangas City Police together with personnel of
the Batangas Electric Light System, equipped with a search warrant searched and
examined the premises of the Opulencia Carpena Ice Plant and Cold Storage owned and
operated by the private respondent Manuel Opulencia.

The police discovered that electric wiring, devices and contraptions had been installed,
without the necessary authority from the city government, and "architecturally
concealed inside the walls of the building."


These electric devices and contraptions were, in the allegation of the petitioner
"designed purposely to lower or decrease the readings of electric current consumption
in the electric meter of the said electric [ice and cold storage] plant.

The accused Manuel Opulencia pleaded not guilty to the above information. On 2
February 1976, he filed a motion to dismiss the information upon the grounds that the
crime there charged had already prescribed and that the civil indemnity there sought to
be recovered was beyond the jurisdiction of the Batangas City Court to award which was
awarded, it appearing that the offense charged was a light felony which prescribes two
months from the time of discovery thereof, and it appearing further that the
information was filed by the fiscal more than nine months after discovery of the offense
charged in February 1975.
Fourteen (14) days later, another information against Manuel Opulencia, this time for
theft of electric power under Article 308 in relation to Article 309, paragraph (1), of the
Revised Penal Code.

Before he could be arraigned thereon, Manuel Opulencia filed a Motion to Quash
alleging that he had been previously acquitted of the offense charged in the second
information and that the filing thereof was violative of his constitutional right against
double jeopardy.

Issue: Whether or not the extinction of criminal liability carries with it the extinction of civil
liability proceeding from prescription and/or double jeopardy.
Held:
The civil liability aspects of this case are another matter. Because no reservation of the right to
file a separate civil action was made by the Batangas City electric light system, the civil action
for recovery of civil liability arising from the offense charged was impliedly instituted with the
criminal action both before the City Court of Batangas City and the Court of First Instance of
Batangas. The extinction of criminal liability whether by prescription or by the bar of double
jeopardy does not carry with it the extinction of civil liability arising from the offense charged.
In the present case, as we noted earlier, accused Manuel Opulencia freely admitted during the
police investigation having stolen electric current through the installation and use of
unauthorized elctrical connections or devices. While the accused pleaded not guilty before the
City Court of Batangas City, he did not deny having appropriated electric power. However,
there is no evidence in the record as to the amount or value of the electric power appropriated
by Manuel Opulencia, the criminal informations having been dismissed both by the City Court
and by the Court of First Instance (from which dismissals the Batangas City electric light system
could not have appealed) before trial could begin. Accordingly, the related civil action which
has not been waived expressly or impliedly, should be remanded to the Court of First Instance
of Batangas City for reception of evidence on the amount or value of the electric power
appropriated and converted by Manuel Opulencia and rendition of judgment conformably with
such evidence.










GEORGE MANANTAN vs. THE COURT OF APPEALS
[G.R. No. 107125. January 29, 2001]

Facts:
The accused was driving at a speed of about 40 kilometers per hour along the Maharlika
Highway at Malvar, Santiago, Isabela, at the middle portion of the highway (although
according to Charles Cudamon, the car was running at a speed of 80 to 90 kilometers
per hours on [the] wrong lane of the highway because the car was overtaking a tricycle)
when they met a passenger jeepney with bright lights on. The accused immediately
tried to swerve the car to the right and move his body away from the steering wheel but
he was not able to avoid the oncoming vehicle and the two vehicles collided with each
other at the center of the road.

As a result of the collision the car turned turtle twice and landed on its top at the side of
the highway immediately at the approach of the street going to the Flores Clinic while
the jeep swerved across the road so that one half front portion landed on the lane of
the car while the back half portion was at its right lane five meters away from the point
of impact.


Petitioner George Manantan was acquitted by the trial court of homicide through
reckless imprudence without a ruling on his civil liability. On appeal from the civil aspect
of the judgment , the appellate court found petitioner Manantan civilly liable and
ordered him to indemnify private respondents Marcelino Nicolas and Maria Nicolas
P104,400.00 representing loss of support, P50,000.00 as death indemnity, and moral
damages of P20,000.00 or a total of P174,400.00 for the death of their son, Ruben
Nicolas.


Issues:
1. Whether or not the petitioner should be civilly liable despite that his guilt was not
proven beyond reasonable doubt.
2. Whether or not the filing fee is included as part of recovery of damages and that
damages should be paid eventhough not alleged in the Information.
Held:

1. Our law recognizes two kinds of acquittal, with different effects on the civil liability of
the accused.
First is an acquittal on the ground that the accused is not the author of the act or
omission complained of. This instance closes the door to civil liability, for a person who
has been found to be not the perpetrator of any act or omission cannot and can never
be held liable for such act or omission. There being no delict, civil liability ex delicto is
out of the question, and the civil action, if any, which may be instituted must be based
on grounds other than the delict complained of. This is the situation contemplated in
Rule 111 of the Rules of Court.
The second instance is an acquittal based on reasonable doubt on the guilt of the
accused. In this case, even if the guilt of the accused has not been satisfactorily
established, he is not exempt from civil liability which may be proved by preponderance
of evidence only. This is the situation contemplated in Article 29 of the Civil Code where
the civil action for damages is for the same act or omission. Although the two actions
have different purposes, the matters discussed in the civil case are similar to those
discussed in the criminal case. However, the judgment in the criminal proceeding
cannot be read in evidence in the civil action to establish any fact there determined,
even though both actions involve the same act or omission. The reason for this rule is
that the parties are not the same and secondarily, different rules of evidence are
applicable. Hence, notwithstanding herein petitioners acquittal, the Court of Appeals in
determining whether Article 29 applied, was not precluded from looking into the
question of petitioners negligence or reckless imprudence.

2. At the time of the filing of the information in 1983, the implied institution of civil actions
with criminal actions was governed by Rule 111, Section 1 of the 1964 Rules of Court. As
correctly pointed out by private respondents, under said rule, it was not required that
the damages sought by the offended party be stated in the complaint or information.
With the adoption of the 1985 Rules of Criminal Procedure, and the amendment of Rule
111, Section 1 of the 1985 Rules of Criminal Procedure by a resolution of this Court
dated July 7, 1988, it is now required that:
When the offended party seeks to enforce civil liability against the accused by way of moral,
nominal, temperate or exemplary damages, the filing fees for such civil action as provided in
these Rules shall constitute a first lien on the judgment except in an award for actual
damages.
In cases wherein the amount of damages, other than actual, is alleged in the complaint or
information, the corresponding filing fees shall be paid by the offended party upon the filing
thereof in court for trial.
Thus, where the civil action is impliedly instituted together with the criminal action, the
actual damages claimed by the offended parties, as in this case, are not included in the
computation of the filing fees. Filing fees are to be paid only if other items of damages such
as moral, nominal, temperate, or exemplary damages are alleged in the complaint or
information, or if they are not so alleged, shall constitute a first lien on the judgment.
Recall that the information in Criminal Case No. 066 contained no specific allegations of
damages. Considering that the Rules of Criminal Procedure effectively guarantee that the
filing fees for the award of damages are a first lien on the judgment, the effect of the
enforcement of said lien must retroact to the institution of the criminal action. The filing
fees are deemed paid from the filing of the criminal complaint or information. We
therefore find no basis for petitioners allegations that the filing fees were not paid or
improperly paid and that the appellate court acquired no jurisdiction.













PEOPLE OF THE PHILIPPINES vs. ROGELIO BAYOTAS
G.R. No. 102007 September 2, 1994

Facts:
Rogelio Bayotas y Cordova was charged with Rape and eventually convicted thereof on
June 19, 1991 in a decision penned by Judge Manuel E. Autajay. Pending appeal of his
conviction, Bayotas died on February 4, 1992 at the National Bilibid Hospital.
Consequently, the Supreme Court in its Resolution of May 20, 1992 dismissed the
criminal aspect of the appeal. However, it required the Solicitor General to file its
comment with regard to Bayotas' civil liability arising from his commission of the offense
charged.
In his comment, the Solicitor General expressed his view that the death of accused-
appellant did not extinguish his civil liability as a result of his commission of the offense
charged. The Solicitor General, relying on the case of People v. Sendaydiego, insists that
the appeal should still be resolved for the purpose of reviewing his conviction by the
lower court on which the civil liability is based.
Counsel for the accused-appellant, on the other hand, opposed the view of the Solicitor
General arguing that the death of the accused while judgment of conviction is pending
appeal extinguishes both his criminal and civil penalties. In support of his position, said
counsel invoked the ruling of the Court of Appeals in People v. Castillo and Ocfemia
2

which held that the civil obligation in a criminal case takes root in the criminal liability
and, therefore, civil liability is extinguished if accused should die before final judgment is
rendered.

Issue: Does death of the accused pending appeal of his conviction extinguish his civil liability?

Held: Yes.
1. Death of the accused pending appeal of his conviction extinguishes his criminal liability as
well as the civil liability based solely thereon. As opined by Justice Regalado, in this regard, "the
death of the accused prior to final judgment terminates his criminal liability and only the civil
liability directly arising from and based solely on the offense committed, i.e., civil liability ex
delicto in senso strictiore."
2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the
same may also be predicated on a source of obligation other than delict. Article 1157 of the
Civil Code enumerates these other sources of obligation from which the civil liability may arise
as a result of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) . . .
e) Quasi-delicts
3. Where the civil liability survives, as explained in Number 2 above, an action for recovery
therefor may be pursued but only by way of filing a separate civil action and subject to Section
1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate civil action may
be enforced either against the executor/administrator or the estate of the accused, depending
on the source of obligation upon which the same is based as explained above.
4. Finally, the private offended party need not fear a forfeiture of his right to file this separate
civil action by prescription, in cases where during the prosecution of the criminal action and
prior to its extinction, the private-offended party instituted together therewith the civil action.
In such case, the statute of limitations on the civil liability is deemed interrupted during the
pendency of the criminal case, conformably with provisions of Article 1155
21
of the Civil Code,
that should thereby avoid any apprehension on a possible privation of right by prescription.
22

Applying this set of rules to the case at bench, we hold that the death of appellant Bayotas
extinguished his criminal liability and the civil liability based solely on the act complained of,
i.e., rape.









FAUSTO BARREDO vs. SEVERINO GARCIA
G.R. No. L-48006 July 8, 1942

Facts:
At about half past one in the morning of May 3, 1936, on the road between Malabon
and Navotas, Province of Rizal, there was a head-on collision between a taxi of the
Malate Taxicab driven by Pedro Fontanilla and a carretela guided by Pedro Dimapalis.
The carretela was overturned, and one of its passengers, 16-year-old boy Faustino
Garcia, suffered injuries from which he died two days later.
Severino Garcia and Timotea Almario, parents of the deceased on March 7, 1939,
brought an action in the Court of First Instance of Manila against Fausto Barredo as the
sole proprietor of the Malate Taxicab and employer of Pedro Fontanilla., the Court of
First Instance of Manila awarded damages in favor of the plaintiffs for P2,000 plus legal
interest from the date of the complaint.
This decision was modified by the Court of Appeals by reducing the damages to P1,000
with legal interest from the time the action was instituted. It is undisputed that
Fontanilla 's negligence was the cause of the mishap, as he was driving on the wrong
side of the road, and at high speed. As to Barredo's responsibility, the Court of Appeals
found:
... It is admitted that defendant is Fontanilla's employer. There is proof that he
exercised the diligence of a good father of a family to prevent damage. In fact it
is shown he was careless in employing Fontanilla who had been caught several
times for violation of the Automobile Law and speeding -- violation which
appeared in the records of the Bureau of Public Works available to be public and
to himself. Therefore, he must indemnify plaintiffs under the provisions of article
1903 of the Civil Code.

Issue: Whether the plaintiffs may bring this separate civil action against Fausto Barredo, thus
making him primarily and directly, responsible under article 1903 of the Civil Code as an
employer of Pedro Fontanilla.
Held:
Article 1903 of the Civil Code not only establishes liability in cases of negligence, but also
provides when the liability shall cease. It says:
"The liability referred to in this article shall cease when the persons mentioned
therein prove that they employed all the diligence of a good father of a family to
avoid the damage."
From this article two things are apparent: (1) That 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 matter or employer either in the selection of
the servant or employee, or in supervision over him after the selection, or both; and (2)
that presumption is juris tantum and not juris et de jure, and consequently, may be
rebutted. It follows necessarily that if the employer shows to the satisfaction of the
court that in selection and supervision he has exercised the care and diligence of a good
father of a family, the presumption is overcome and he is relieve from liability.
This theory bases the responsibility of the master ultimately on his own negligence and
not on that of his servant.
This Court, applying article 1903 and following the rule in Bahia vs. Litonjua and Leynes, said in
part (p. 41) that:
The master is liable for the negligent acts of his servant where he is the owner or
director of a business or enterprise and the negligent acts are committed while the
servant is engaged in his master's employment as such owner.
The foregoing authorities clearly demonstrate the separate individuality of cuasi-delitos or
culpa aquiliana under the Civil Code. Specifically they show that there is a distinction between
civil liability arising from criminal negligence (governed by the Penal Code) and responsibility for
fault or negligence under articles 1902 to 1910 of the Civil Code, and that the same negligent
act may produce either a civil liability arising from a crime under the Penal Code, or a separate
responsibility for fault or negligence under articles 1902 to 1910 of the Civil Code. Still more
concretely, the authorities above cited render it inescapable to conclude that the employer
in this case the defendant-petitioner is primarily and directly liable under article 1903 of the
Civil Code.
Firstly, the Revised Penal Code in article 365 punishes not only reckless but also simple
negligence. If we were to hold that articles 1902 to 1910 of the Civil Code refer only to fault or
negligence not punished by law, according to the literal import of article 1093 of the Civil Code,
the legal institution of culpa aquiliana would have very little scope and application in actual life.
Death or injury to persons and damage to property through any degree of negligence even
the slightest would have to be indemnified only through the principle of civil liability arising
from a crime. In such a state of affairs, what sphere would remain for cuasi-delito or culpa
aquiliana? We are loath to impute to the lawmaker any intention to bring about a situation so
absurd and anomalous. Nor are we, in the interpretation of the laws, disposed to uphold the
letter that killeth rather than the spirit that giveth life. We 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 aquiliana or cuasi-delito, which is conserved and made enduring
in articles 1902 to 1910 of the Spanish Civil Code.
Secondly, to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is
required, while in a civil case, preponderance of evidence is sufficient to make the defendant
pay in damages. There are numerous cases of criminal negligence which can not be shown
beyond reasonable doubt, but can be proved by a preponderance of evidence. In such cases,
the defendant can and should be made responsible in a civil action under articles 1902 to 1910
of the Civil Code. Otherwise, there would be many instances of unvindicated civil wrongs. Ubi
jus ibi remedium.
Thirdly, to hold that there is only one way to make defendant's liability effective, and that is, to
sue the driver and exhaust his (the latter's) property first, would be tantamount to compelling
the plaintiff to follow a devious and cumbersome method of obtaining relief. True, there is such
a remedy under our laws, but there is also a more expeditious way, which is based on the
primary and direct responsibility of the defendant under article 1903 of the Civil Code. Our view
of the law is more likely to facilitate remedy for civil wrongs, because the procedure indicated
by the defendant is wasteful and productive of delay, it being a matter of common knowledge
that professional drivers of taxis and similar public conveyance usually do not have sufficient
means with which to pay damages. Why, then, should the plaintiff be required in all cases to go
through this roundabout, unnecessary, and probably useless procedure? In construing the laws,
courts have endeavored to shorten and facilitate the pathways of right and justice.
At this juncture, it should be said that the primary and direct responsibility of employers and
their presumed negligence are principles calculated to protect society. Workmen and
employees should be carefully chosen and supervised in order to avoid injury to the public. It is
the masters or employers who principally reap the profits resulting from the services of these
servants and employees. It is but right that they should guarantee the latter's careful conduct
for the personnel and patrimonial safety of others. As Theilhard has said, "they should reproach
themselves, at least, some for their weakness, others for their poor selection and all for their
negligence." And according to Manresa, "It is much more equitable and just that such
responsibility should fall upon the principal or director who could have chosen a careful and
prudent employee, and not upon the injured person who could not exercise such selection and
who used such employee because of his confidence in the principal or director." (Vol. 12, p.
622, 2nd Ed.) Many jurists also base this primary responsibility of the employer on the principle
of representation of the principal by the agent. Thus, Oyuelos says in the work already cited
(Vol. 7, p. 747) that before third persons the employer and employee "vienen a ser como una
sola personalidad, por refundicion de la del dependiente en la de quien le emplea y utiliza."
("become as one personality by the merging of the person of the employee in that of him who
employs and utilizes him.")
Fourthly, because of the broad sweep of the provisions of both the Penal Code and the Civil
Code on this subject, which has given rise to the overlapping or concurrence of spheres already
discussed, and for lack of understanding of the character and efficacy of the action for culpa
aquiliana, there has grown up a common practice to seek damages only by virtue of the civil
responsibility arising from a crime, forgetting that there is another remedy, which is by invoking
articles 1902-1910 of the Civil Code. Although this habitual method is allowed by our laws, it
has nevertheless rendered practically useless and nugatory the more expeditious and effective
remedy based on culpa aquiliana or culpa extra-contractual. This will, it is believed, make for
the better safeguarding of private rights because it re-establishes an ancient and additional
remedy, and for the further reason that an independent civil action, not depending on the
issues, limitations and results of a criminal prosecution, and entirely directed by the party
wronged or his counsel, is more likely to secure adequate and efficacious redress.















OSCAR DEL CARMEN, JR., vs. GERONIMO BACOY
G.R. No. 173870 April 25, 2012

Facts:
At dawn on New Years Day of 1993, Emilia Bacoy Monsalud (Emilia), along with her spouse
Leonardo Monsalud, Sr. and their daughter Glenda Monsalud, were on their way home from a
Christmas party they attended in Poblacion, Sominot, Zamboanga Del Sur. Upon reaching Purok
Paglaom in Sominot, they were run over by a Fuso passenger jeep bearing plate number UV-
PEK-600 that was being driven by Allan Maglasang (Allan). The jeep was registered in the name
of petitioner Oscar del Carmen, Jr. (Oscar Jr.) and used as a public utility vehicle plying the
Molave, Zamboanga del Sur to Sominot, Zamboanga del Sur and vice versa route.
During the pendency of said criminal case, Emilias father, Geronimo Bacoy (Geronimo), in
behalf of the six minor children of the Monsaluds, filed an independent civil action for damages
based on culpa aquiliana.
Defendants refused to assume civil liability for the victims deaths. Oscar Sr. averred that the
Monsaluds have no cause of action against them because he and his wife do not own the jeep
and that they were never the employers of Allan. For his part, Oscar Jr. claimed to be a victim
himself. He alleged that Allan and his friends stole his jeep while it was parked beside his
drivers rented house to take it for a joyride.

Issues:
1. Whether or not damage arising from negligence is attributable to Oscar Jr.
2. Whether or not the registered owner of the vehicle should be liable for damages based
on quasi-delict.
Held:
1. Under the doctrine of res ipsa loquitur, [w]here the thing that caused the injury complained of
is shown to be under the management of the defendant or his servants; and the accident, in the
ordinary course of things, would not happen if those who had management or control used
proper care, it affords reasonable evidence in the absence of a sufficient, reasonable and
logical explanation by defendant that the accident arose from or was caused by the
defendants want of care. Res ipsa loquitur is merely evidentiary, a mode of proof, or a mere
procedural convenience, since it furnishes a substitute for, and relieves a plaintiff of, the burden
of producing a specific proof of negligence. It recognizes that parties may establish prima facie
negligence without direct proof, thus, it allows the principle to substitute for specific proof of
negligence. It permits the plaintiff to present along with proof of the accident, enough of the
attending circumstances to invoke the doctrine, create an inference or presumption of
negligence and thereby place on the defendant the burden of proving that there was no
negligence on his part. The doctrine is based partly on the theory that the defendant in
charge of the instrumentality which causes the injury either knows the cause of the accident or
has the best opportunity of ascertaining it while the plaintiff has no such knowledge, and is
therefore compelled to allege negligence in general terms.
The requisites of the doctrine of res ipsa loquitur as established by jurisprudence are as follows:
1) the accident is of a kind which does not ordinarily occur unless someone is
negligent;
2) the cause of the injury was under the exclusive control of the person in
charge and
3) the injury suffered must not have been due to any voluntary action or
contribution on the part of the person injured.

The above requisites are all present in this case.
First, no person just walking along the road would suddenly be sideswiped and run over by
an on-rushing vehicle unless the one in charge of the said vehicle had been negligent.
Second, the jeep which caused the injury was under the exclusive control of Oscar Jr. as its
owner. When Oscar Jr. entrusted the ignition key to Rodrigo, he had the power to instruct him
with regard to the specific restrictions of the jeeps use, including who or who may not drive it.
As he is aware that the jeep may run without the ignition key, he also has the responsibility to
park it safely and securely and to instruct his driver Rodrigo to observe the same precaution.
Lastly, there was no showing that the death of the victims was due to any voluntary action or
contribution on their part.
2. The contention is no longer novel. In Aguilar Sr. v. Commercial Savings Bank, the car of therein
respondent bank caused the death of Conrado Aguilar, Jr. while being driven by its assistant vice
president. Despite Article 2180, we still held the bank liable for damages for the accident as said
provision should defer to the settled doctrine concerning accidents involving registered motor
vehicles, i.e., that the registered owner of any vehicle, even if not used for public service, would
primarily be responsible to the public or to third persons for injuries caused the latter while the
vehicle was being driven on the highways or streets. We have already ratiocinated that:
The main aim of motor vehicle registration is to identify the owner so that if any
accident happens, or that any damage or injury is caused by the vehicle on the public
highways, responsibility therefor can be fixed on a definite individual, the registered
owner. Instances are numerous where vehicles running on public highways caused
accidents or injuries to pedestrians or other vehicles without positive identification of
the owner or drivers, or with very scant means of identification. It is to forestall these
circumstances, so inconvenient or prejudicial to the public, that the motor vehicle
registration is primarily ordained, in the interest of the determination of persons
responsible for damages or injuries caused on public highways.
Absent the circumstance of unauthorized use or that the subject vehicle was stolen which are
valid defenses available to a registered owner, Oscar Jr. cannot escape liability for quasi-delict
resulting from his jeeps use.















LUDO AND LUYM CORPORATION vs. COURT OF APPEALS
G.R. No. 125483. February 1, 2001
Facts:
Petitioner Ludo & Luym Corporation is a domestic corporation engaged in copra
processing with plant and business offices in Cebu City. Private Respondent Gabisan
Shipping Lines was the registered owner and operator of the motor vessel MV Miguela,
while the other private respondent, Anselmo Olasiman, was its captain.
On May 21, 1990, at around 1:30 P.M., while MV Miguela was docking at petitioners
wharf, it rammed and destroyed a fender pile cluster. Petitioner demanded damages
from private respondents. The latter refused. Hence, petitioner filed a complaint for
damages before the Regional Trial Court of Cebu.
Ireneo Naval, petitioners employee, guided the vessel to its docking place. After the
guide (small rope) was thrown from the vessel and while the petitioners security guard
was pulling the big rope to be tied to the bolar, MV Miguela did not slow down. The
crew did not release the vessels anchor. Naval shouted Reverse to the vessels crew,
but it was too late when the latter responded, for the vessel already rammed the pile
cluster.
Private respondents denied the incident and the damage. Their witnesses claimed that
the damage, if any, must have occurred prior to their arrival and caused by another
vessel or by ordinary wear and tear. They averred that MV Miguela started to slow
down at 100 meters and the crew stopped the engine at 50 meters from the pier; that
Capt. Anselmo Olasiman did not order the anchors release and chief mate Manuel
Gabisan did not hear Naval shout Reverse. Respondents claimed that Naval had no
business in the vessels maneuvering.
RTC Ruling: it found that it was able to prove by preponderance of evidence that MV
Miguela rammed and damaged the pile cluster; that petitioners witnesses, Naval and
Espina, actually saw the incident; that respondents failed to refute the testimony of
marine surveyor Degamo and skin diver Alferez on the damages; that the officers and
crew of MV Miguela were negligent; and that respondents are solidarily liable for the
damages.
CA Ruling: petitioners eyewitness Naval was incompetent to testify on the negligence of
the crew and officers of MV Miguela; that there were other vessels that used the wharf
for berthing and petitioners evidence did not positively prove that it was MV Miguela
that rammed the pile cluster; that the photographs of the pile cluster taken after the
incident showed no visible damages; that, as shown by private respondents witness,
there were seashells and seaweeds directly under the uprooted post, which indicated
that the breaking happened a long time ago.
Issue: Whether or not the doctrine of res ipsa loquitor is applicable.
Held:
Petitioner argues that the Court of Appeals erred when it reversed the trial court for the latters
heavy reliance on Navals testimony. The appellate court overlooked the fact that aside from
Navals testimony, the trial court also relied on the principle of res ipsa loquitur to establish
private respondents negligence.
The doctrine of res ipsa loquitur was explained in Batiquin vs. Court of Appeals, 258 SCRA 334
(1996), thus:
1. Where the thing which causes injury is shown to be under the management of the
defendant, and
2. the accident is such as in the ordinary course of things does not happen if those who
have the management use proper care, it affords reasonable evidence, in the absence of
an explanation by the defendant,
3. that the accident arose from want of care.
The doctrine recognizes that parties may establish prima facie negligence without direct
proof and allows the principle to substitute for specific proof of negligence. This is
invoked when under the circumstances, direct evidence is absent and not readily
available.
In our view, all the requisites for recourse to this doctrine exist.
First, MV Miguela was under the exclusive control of its officers and crew. Petitioner did not
have direct evidence on what transpired within as the officers and crew maneuvered the vessel
to its berthing place. We note the Court of Appeals finding that Naval and Espina were not
knowledgeable on the vessels maneuverings, and could not testify on the negligence of the
officers and crew.
Second, aside from the testimony that MV Miguela rammed the cluster pile, private respondent
did not show persuasively other possible causes of the damage.
Applying now the above, there exists a presumption of negligence against private respondents
which we opine the latter failed to overcome. Additionally, petitioner presented tangible proof
that demonstrated private respondents negligence. As testified by Capt. Olasiman, from
command of slow ahead to stop engine, the vessel will still travel 100 meters before it
finally stops. However, he ordered stop engine when the vessel was only 50 meters from the
pier. Further, he testified that before the vessel is put to slow astern, the engine has to be
restarted. However, Olasiman can not estimate how long it takes before the engine goes to
slow astern after the engine is restarted. From these declarations, the conclusion is that it was
already too late when the captain ordered reverse. By then, the vessel was only 4 meters from
the pier and thus rammed it.
Respondent companys negligence consists in allowing incompetent crew to man its vessel. As
shown also by petitioner, both Captain Olasiman and Chief Mate Gabisan did not have a formal
training in marine navigation. The former was a mere elementary graduate while the latter is a
high school graduate. Their experience in navigation was only as a watchman and a
quartermaster, respectively.


















THERMOCHEM INC vs. LEONORA NAVAL and CA
G.R. No. 131541. October 20, 2000

Facts:
(O)n May 10, 1992, at around 12:00 o'clock midnight, Eduardo Edem was driving
a "Luring Taxi" along Ortigas Avenue, near Rosario, Pasig, going towards Cainta.
Prior to the collision, the taxicab was parked along the right side of Ortigas
Avenue, not far from the Rosario Bridge, to unload a passenger.

Thereafter, the driver executed a U-turn to traverse the same road, going to the
direction of EDSA. At this point, the Nissan Pathfinder traveling along the same
road going to the direction of Cainta collided with the taxicab.


The point of impact was so great that the taxicab was hit in the middle portion
and was pushed sideward, causing the driver to lose control of the vehicle. The
taxicab was then dragged into the nearby Question Tailoring Shop, thus, causing
damage to the said tailoring shop, and its driver, Eduardo Eden, sustained
injuries as a result of the incident.
Issue: Whether or not petitioner should be held liable for damages.
Held:
Malfunction or loss of brake is not a fortuitous event. Between the owner and his driver,
on the one hand, and third parties such as commuters, drivers and pedestrians, on the
other, the former is presumed to know about the conditions of his vehicle and is duty
bound to take care thereof with the diligence of a good father of the family. A
mechanically defective vehicle should avoid the streets. As petitioner's vehicle was
moving downhill, the driver should have slowed down since a downhill drive would
naturally cause the vehicle to accelerate. Moreover, the record shows that the Nissan
Pathfinder was on the wrong lane when the collision occurred. This was a disregard of
traffic safety rules. The law considers what would be reckless, blameworthy or negligent
in a man of ordinary diligence and prudence and determines liability by that. Even
assuming arguendo that loss of brakes is an act of God, by reason of their negligence,
the fortuitous event became humanized, rendering the Nissan driver liable for the
ensuing damages.
As mentioned earlier, the driver of the taxi is contributorily liable. U-turns are not generally
advisable particularly on major streets. The taxi was hit on its side which means that it had not
yet fully made a turn to the other lane. The driver of the taxi ought to have known that vehicles
coming from the Rosario bridge are on a downhill slope. Obviously, there was lack of foresight
on his part, making him contributorily liable. Most public utility drivers disregard signs and
traffic rules especially during the night when traffic enforcers manning the streets disappear
with the light. In driving vehicles, the primary concern should be the safety not only of the
driver or his passengers, but also his fellow motorists.
Considering the contributory negligence of the driver of private respondent's taxi, the
award of P47,850.00, for the repair of the taxi, should be reduced in half (P23,925.00
jointly and severally). All other awards for damages are deleted for lack of merit.














PHILIPPINE HAWK CORP vs VIVIAN TAN LEE
G.R. No. 166869 February 16, 2010

Facts:
The accident involved a motorcycle, a passenger jeep, and a bus with Body No. 119. The
bus was owned by petitioner Philippine Hawk Corporation, and was then being driven
by Margarito Avila.
On March 17, 1991, she was riding on their motorcycle in tandem with her husband,
who was on the wheel, at a place after a Caltex gasoline station in Barangay
Buensoceso, Gumaca, Quezon. They were on a stop position at the side of the highway;
and when they were about to make a turn, she saw a bus running at fast speed coming
toward them, and then the bus hit a jeep parked on the roadside, and their motorcycle
as well.
She lost consciousness and was brought to the hospital. Respondents husband died
due to the vehicular accident. The immediate cause of his death was massive cerebral
hemorrhage.
For the defense, Margarito Avila, the driver of petitioners bus, testified that he was
driving his bus at 60 kilometers per hour on the Maharlika Highway. When they were
at Barangay Buensoceso, Gumaca, Quezon, a motorcycle ran from his left side of the
highway, and as the bus came near, the motorcycle crossed the path of the bus, and so
he turned the bus to the right. He heard a loud banging sound. From his side mirror, he
saw that the motorcycle turned turtle (bumaliktad). He did not stop to help out of
fear for his life, but drove on and surrendered to the police. He denied that he bumped
the motorcycle.
RTC Ruling: if the bus were on the right side of the highway, and Margarito Avila turned
his bus to the right in an attempt to avoid hitting the motorcyle, then the bus would not
have hit the passenger jeep, which was then parked on the left side of the road. The fact
that the bus also hit the passenger jeep showed that the bus must have been running
from the right lane to the left lane of the highway, which caused the collision with the
motorcycle and the passenger jeep parked on the left side of the road. RTC held
petitioner bus company liable for failing to exercise the diligence of a good father of the
family in the selection and supervision of Avila, having failed to sufficiently inculcate in
him discipline and correct behavior on the road.
CA Ruling: (a) P168,019.55 as actual damages; (b) P10,000.00 as temperate damages; (c)
P100,000.00 as moral damages; (d) P590,000.00 as unearned income; and (e)
P50,000.00 as civil indemnity.
Issue:
(1) whether or not negligence may be attributed to petitioners driver, and whether
negligence on his part was the proximate cause of the accident, resulting in the death of Silvino
Tan and causing physical injuries to respondent;
(2) whether or not the damages awarded by respondent Court of Appeals are proper.

Held:
(1) Foreseeability is the fundamental test of negligence. To be negligent, a defendant must have
acted or failed to act in such a way that an ordinary reasonable man would have realized that
certain interests of certain persons were unreasonably subjected to a general but definite class
of risks
Whenever an employees negligence causes damage or injury to another, there instantly arises
a presumption that the employer failed to exercise the due diligence of a good father of the
family in the selection or supervision of its employees. To avoid liability for a quasi-delict
committed by his employee, an employer must overcome the presumption by presenting
convincing proof that he exercised the care and diligence of a good father of a family in the
selection and supervision of his employee.
(2) As a rule, documentary evidence should be presented to substantiate the claim for damages
for loss of earning capacity.
By way of exception, damages for loss of earning capacity may be awarded despite the
absence of documentary evidence when:
(1) the deceased is self-employed and earning less than the minimum wage under
current labor laws, in which case, judicial notice may be taken of the fact that in the
deceased's line of work no documentary evidence is available; or
(2) the deceased is employed as a daily wage worker earning less than the minimum
wage under current labor laws
In the computation of loss of earning capacity, only net earnings, not gross earnings, are to be
considered; that is, the total of the earnings less expenses necessary for the creation of such
earnings or income, less living and other incidental expenses. In the absence of documentary
evidence, it is reasonable to peg necessary expenses for the lease and operation of the gasoline
station at 80 percent of the gross income, and peg living expenses at 50 percent of the net
income (gross income less necessary expenses).
Net Earning Capacity= Life Expectancy x Gross Annual Income Reasonable and
Necessary Expenses
Life expectancy= 2/3 x (80 minus age of deceased victim at time of death)
Reasonable and necessary expenses= 80% of GAI
Living expenses= 50% of net income
NEC= [{(2/3 x (80-65)} x {1,000,000- (80% x P 1M)}- (50% of Net Income)]
NEC= [{(2/3 x (15)} x {P200,000}- (50% x 200,000)]
NEC= 10 x 100,000 = 1,000,000.00
Actual damages must be substantiated by documentary evidence, such as receipts, in order to
prove expenses incurred as a result of the death of the victim
Moreover, the Court of Appeals correctly sustained the award of moral damages in the amount
of P50,000.00 for the death of respondents husband. Moral damages are not intended to
enrich a plaintiff at the expense of the defendant. They are awarded to allow the plaintiff to
obtain means, diversions or amusements that will serve to alleviate the moral suffering he/she
has undergone due to the defendants culpable action and must, perforce, be proportional to
the suffering inflicted
Under Art. 2224 of the Civil Code, temperate damages may be recovered when the court finds
that some pecuniary loss has been suffered but its amount cannot, from the nature of the case,
be proved with certainty. The cost of the repair of the motorcycle was prayed for by
respondent in her Complaint. However, the evidence presented was merely a job estimate of
the cost of the motorcycles repair amounting to P17, 829.00. The Court of Appeals aptly held
that there was no doubt that the damage caused on the motorcycle was due to the negligence
of petitioners driver.
Under Art. 2219 of the Civil Code, moral damages may be recovered in quasi-delicts causing
physical injuries. However, the award of P50,000.00 should be reduced to P30,000.00 in
accordance with prevailing jurisprudence.
Further, the Court of Appeals correctly awarded respondent civil indemnity for the death of her
husband, which has been fixed by current jurisprudence at P50,000.00. The award is proper
under Art. 2206 of the Civil Code.




DY TEBAN TRADING, INC. vs. JOSE CHING
G.R. No. 161803 February 4, 2008

Facts
On July 4, 1995, at around 4:45 a.m., Rogelio Ortiz, with helper Romeo Catamora, was
driving a Nissan van owned by petitioner Dy Teban Trading, Inc. along the National
Highway in Barangay Sumilihon, Butuan City, going to Surigao City.
A Joana Paula passenger bus was cruising on the opposite lane towards the van. In
between the two vehicles was a parked prime mover with a trailer, owned by private
respondent Liberty Forest, Inc.
The night before, at around 10:00 p.m., the prime mover with trailer suffered a tire
blowout. The driver, private respondent Cresilito Limbaga, parked the prime mover
askew occupying a substantial portion of the national highway, on the lane of the
passenger bus. He parked the prime mover with trailer at the shoulder of the road with
the left wheels still on the cemented highway and the right wheels on the sand and
gravel shoulder of the highway. The prime mover was not equipped with triangular,
collapsible reflectorized plates, the early warning device required under Letter of
Instruction No. 229. As substitute, Limbaga placed a banana trunk with leaves on the
front and the rear portion of the prime mover to warn incoming motorists. It is alleged
that Limbaga likewise placed kerosene lighted tin cans on the front and rear of the
trailer.
To avoid hitting the parked prime mover occupying its lane, the incoming passenger bus
swerved to the right, onto the lane of the approaching Nissan van. Ortiz saw two bright
and glaring headlights and the approaching passenger bus. He pumped his break slowly,
swerved to the left to avoid the oncoming bus but the van hit the front of the stationary
prime mover. The passenger bus hit the rear of the prime mover.
Ortiz and Catamora only suffered minor injuries. The Nissan van, however, became
inoperable as a result of the incident.

The RTC held that the proximate cause of the three-way vehicular collision was
improper parking of the prime mover on the national highway and the absence of an
early warning device on the vehicle.
The CA held that the proximate cause of the vehicular collision was the failure of the
Nissan van to give way or yield to the right of way of the passenger bus.
Issue: Whether or not the prime mover is liable for the damages suffered by the Nissan van.
Held:
Article 2176 of the Civil Code provides that whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-
delict.
To sustain a claim based on quasi-delict, the following requisites must concur:
(a) damage suffered by plaintiff;
(b) fault or negligence of defendant; and
(c) connection of cause and effect between the fault or negligence of defendant and the
damage incurred by plaintiff.

Negligence is defined as the failure to observe for the protection of the interests of another
person that degree of care, precaution, and vigilance which the circumstances justly demand,
whereby such other person suffers injury.

Private respondent Limbaga was negligent in parking the prime mover on the national highway.
Private respondent Liberty Forest, Inc. was also negligent in failing to supervise Limbaga and in
ensuring that the prime mover was in proper condition.

Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken
by any efficient intervening cause, produces the injury, and without which the result would not
have occurred. More comprehensively, proximate cause is that cause acting first and producing
the injury, either immediately or by setting other events in motion, all constituting a natural
and continuous chain of events, each having a close causal connection with its immediate
predecessor, the final event in the chain immediately effecting the injury as natural and
probable result of the cause which first acted, under such circumstances that the person
responsible for the first event should, as an ordinarily prudent and intelligent person, have
reasonable ground to expect at the moment of his act or default that an injury to some person
might probably result therefrom.

Here, We agree with the RTC that the damage caused to the Nissan van was a natural and
probable result of the improper parking of the prime mover with trailer. As discussed, the
skewed parking of the prime mover posed a serious risk to oncoming motorists. Limbaga failed
to prevent or minimize that risk. The skewed parking of the prime mover triggered the series of
events that led to the collision, particularly the swerving of the passenger bus and the Nissan
van.

Even granting that the passenger bus was at fault, its fault will not necessarily absolve private
respondents from liability. If at fault, the passenger bus will be a joint tortfeasor along with
private respondents. The liability of joint tortfeasors is joint and solidary. This means that
petitioner may hold either of them liable for damages from the collision.

In Philippine National Construction Corporation v. Court of Appeals,1[31] this Court held:

where the concurrent or successive negligent acts or omission of two or more persons,
although acting independently of each other, are, in combination, the direct and
proximate cause of a single injury to a third person and it is impossible to determine in
what proportion each contributed to the injury, either is responsible for the whole
injury, even though his act alone might not have caused the entire injury

In Far Eastern Shipping Company v. Court of Appeals, the Court declared that the liability
of joint tortfeasors is joint and solidary, to wit:

Where several causes producing an injury are concurrent and each is an efficient
cause without which the injury would not have happened, the injury may be
attributed to all or any of the causes and recovery may be had against any or all
of the responsible persons although under the circumstances of the case, it may
appear that one of them was more culpable, and that the duty owed by them to
the injured person was not the same. No actors negligence ceases to be a
proximate cause merely because it does not exceed the negligence of other
actors. Each wrongdoer is responsible for the entire result and is liable as
though his acts were the sole cause of the injury.










SAFEGUARD SECURITY AGENCY INC vs. LAURO TANGCO et al
G.R. No. 165732 December 14, 2006 511 S 67


Facts:
On November 3, 1997, at about 2:50 p.m., Evangeline Tangco (Evangeline) went to
Ecology Bank, Katipunan Branch, Quezon City, to renew her time deposit per advise of
the bank's cashier as she would sign a specimen card.

Evangeline, a duly licensed firearm holder with corresponding permit to carry the same
outside her residence, approached security guard Pajarillo, who was stationed outside
the bank, and pulled out her firearm from her bag to deposit the same for safekeeping.
Suddenly, Pajarillo shot Evangeline with his service shotgun hitting her in the abdomen
instantly causing her death.

A complaint for damages against Pajarillo for negligently shooting Evangeline and
against Safeguard for failing to observe the diligence of a good father of a family to
prevent the damage committed by its security guard.

In their Answer, petitioners denied the material allegations in the complaint and alleged
that Safeguard exercised the diligence of a good father of a family in the selection and
supervision of Pajarillo; that Evangeline's death was not due to Pajarillo's negligence as
the latter acted only in self-defense.

Issues: Whether (1) quasi-delict only covers negligent acts and not intentional; and (2)
Safeguard should be held solidarily liable for the damages awarded to respondents.

Held:

(1)No.
An act or omission causing damage to another may give rise to two separate civil liabilities on
the part of the offender, i.e., (1) civil liability ex delicto, under Article 100 of the Revised Penal
Code; and (2) independent civil liabilities, such as those:

(a) not arising from an act or omission complained of as a felony, e.g., culpa contractual
or obligations arising from law under Article 31 of the Civil Code, intentional torts under
Articles 32 and 34, and culpa aquiliana under Article 2176 of the Civil Code; or

(b) where the injured party is granted a right to file an action independent and distinct
from the criminal action under Article 33 of the Civil Code. Either of these liabilities may
be enforced against the offender subject to the caveat under Article 2177 of the Civil
Code that the offended party cannot recover damages twice for the same act or
omission or under both causes.
ARTICLE 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is
no pre-existing contractual relation between the parties is called a quasi-delict and is
governed by the provisions of this Chapter.
The scope of Article 2176 is not limited to acts or omissions resulting from negligence. In Dulay
v. Court of Appeals,
17
we held:
Article 2176, where it refers to "fault or negligence," covers not only acts "not punishable by
law" but also acts criminal in character, whether intentional and voluntary or negligent.
Consequently, a separate civil action lies against the offender in a criminal act, whether or not
he is criminally prosecuted and found guilty or acquitted, provided that the offended party is
not allowed, if he is actually charged also criminally, to recover damages on both scores, and
would be entitled in such eventuality only to the bigger award of the two, assuming the awards
made in the two cases vary. In other words, the extinction of civil liability referred to in Par. (e)
of Section 3, Rule 111, refers exclusively to civil liability founded on Article 100 of the Revised
Penal Code, whereas the civil liability for the same act considered as quasi-delict only and not
as a crime is not extinguished even by a declaration in the criminal case that the criminal act
charged has not happened or has not been committed by the accused. Briefly stated, We here
hold, in reiteration of Garcia, that culpa aquiliana includes voluntary and negligent acts which
may be punishable by law."
The civil action filed by respondents was not derived from the criminal liability of Pajarillo in the
criminal case but one based on culpa aquiliana or quasi-delict which is separate and distinct
from the civil liability arising from crime. The source of the obligation sought to be enforced in
the civil case is a quasi-delict not an act or omission punishable by law.
(2) Yes.
Article 2180 of the Civil Code provides:
Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own
acts or omissions, but also for those of persons for whom one is responsible.
x x x x
Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are not
engaged in any business or industry.
x x x x
The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage.
As the employer of Pajarillo, Safeguard is primarily and solidarily liable for the quasi-delict
committed by the former. Safeguard is presumed to be negligent in the selection and
supervision of his employee by operation of law. This presumption may be overcome only by
satisfactorily showing that the employer exercised the care and the diligence of a good father of
a family in the selection and the supervision of its employee.
In the selection of prospective employees, employers are required to examine them as to their
qualifications, experience, and service records. On the other hand, due diligence in the
supervision of employees includes the formulation of suitable rules and regulations for the
guidance of employees and the issuance of proper instructions intended for the protection of
the public and persons with whom the employer has relations through his or its employees and
the imposition of necessary disciplinary measures upon employees in case of breach or as may
be warranted to ensure the performance of acts indispensable to the business of and beneficial
to their employer. To this, we add that actual implementation and monitoring of consistent
compliance with said rules should be the constant concern of the employer, acting through
dependable supervisors who should regularly report on their supervisory functions. To establish
these factors in a trial involving the issue of vicarious liability, employers must submit concrete
proof, including documentary evidence.
The RTC did not err in ruling that Safeguard fell short of the diligence required in the
supervision of its employee, particularly Pajarillo, it had also been established during Camero's
cross-examination that Pajarillo was not aware of such rules and regulations. Notwithstanding
Camero's clarification on his re-direct examination that these company rules and regulations
are lesson plans as a basis of guidelines of the instructors during classroom instructions and not
necessary to give students copy of the same the records do not show that Pajarillo had
attended such classroom instructions. The records also failed to show that there was adequate
training and continuous evaluation of the security guard's performance.




NOSTRADAMUS VILLANUEVA vs. PRISCILLA R. DOMINGO and
LEANDRO LUIS R. DOMINGO
G.R. No. 144274. September 20, 2004 438 S 485


Facts:
[Respondent] Priscilla R. Domingo is the registered owner of a silver Mitsubishi Lancer
Car model 1980 bearing plate No. NDW 781 91 with [co-respondent] Leandro Luis R.
Domingo as authorized driver. [Petitioner] Nostradamus Villanueva was then the
registered owner of a green Mitsubishi Lancer bearing Plate No. PHK 201 91.
On 22 October 1991, following a green traffic light, [respondent] Priscilla Domingos
silver Lancer car with Plate No. NDW 781 91 then driven by [co-respondent] Leandro
Luis R. Domingo was cruising along the middle lane of South Superhighway at moderate
speed from north to south. Suddenly, a green Mitsubishi Lancer with plate No. PHK 201
91 driven by Renato Dela Cruz Ocfemia darted from Vito Cruz Street towards the South
Superhighway directly into the path of NDW 781 91 thereby hitting and bumping its left
front portion. As a result of the impact, NDW 781 91 hit two (2) parked vehicles at the
roadside, the second hitting another parked car in front of it.
Per Traffic Accident Report prepared by Traffic Investigator Pfc. Patrocinio N. Acido,
Renato dela Cruz Ocfemia was driving with expired license and positive for alcoholic
breath. Hence, Manila Assistant City Prosecutor Oscar A. Pascua recommended the
filing of information for reckless imprudence resulting to (sic) damage to property and
physical injuries
[Petitioner] Nostradamus Villanueva claimed that he was no longer the owner of the
car at the time of the mishap because it was swapped with a Pajero owned by Albert
Jaucian/Auto Palace Car Exchange. For her part, Linda Gonzales declared that her
presence at the scene of the accident was upon the request of the actual owner of the
Mitsubishi Lancer (PHK 201 91) [Albert Jaucian] for whom she had been working as
agent/seller. On the other hand, Auto Palace Car Exchange represented by Albert
Jaucian claimed that he was not the registered owner of the car. Moreover, it could not
be held subsidiary liable as employer of Ocfemia because the latter was off-duty as
utility employee at the time of the incident. Neither was Ocfemia performing a duty
related to his employment.
Issue: May the registered owner of a motor vehicle be held liable for damages arising from a
vehicular accident involving his motor vehicle while being operated by the employee of its
buyer without the latters consent and knowledge?

Held: Yes
We have consistently ruled that the registered owner of any vehicle is directly and primarily
responsible to the public and third persons while it is being operated. The rationale behind
such doctrine was explained way back in 1957 in Erezo vs. Jepte:
The principle upon which this doctrine is based is that in dealing with vehicles registered
under the Public Service Law, the public has the right to assume or presume that the
registered owner is the actual owner thereof, for it would be difficult for the public to
enforce the actions that they may have for injuries caused to them by the vehicles being
negligently operated if the public should be required to prove who the actual owner is.
How would the public or third persons know against whom to enforce their rights in case
of subsequent transfers of the vehicles? We do not imply by his doctrine, however, that
the registered owner may not recover whatever amount he had paid by virtue of his
liability to third persons from the person to whom he had actually sold, assigned or
conveyed the vehicle.
The Revised Motor Vehicle Law (Act No. 3992, as amended) provides that no vehicle may be
used or operated upon any public highway unless the same is property registered. It has been
stated that the system of licensing and the requirement that each machine must carry a
registration number, conspicuously displayed, is one of the precautions taken to reduce the
danger of injury to pedestrians and other travelers from the careless management of
automobiles. And to furnish a means of ascertaining the identity of persons violating the laws
and ordinances, regulating the speed and operation of machines upon the highways (2 R.C.L.
1176). Not only are vehicles to be registered and that no motor vehicles are to be used or
operated without being properly registered for the current year, but that dealers in motor
vehicles shall furnish thee Motor Vehicles Office a report showing the name and address of
each purchaser of motor vehicle during the previous month and the manufacturers serial
number and motor number. (Section 5(c), Act No. 3992, as amended.)
One of the principal purposes of motor vehicles legislation is identification of the vehicle and of
the operator, in case of accident; and another is that the knowledge that means of detection
are always available may act as a deterrent from lax observance of the law and of the rules of
conservative and safe operation. Whatever purpose there may be in these statutes, it is
subordinate at the last to the primary purpose of rendering it certain that the violator of the
law or of the rules of safety shall not escape because of lack of means to discover him.

In synthesis, we hold that the registered owner, the defendant-appellant herein, is primarily
responsible for the damage caused to the vehicle of the plaintiff-appellee, but he (defendant-
appellant) has a right to be indemnified by the real or actual owner of the amount that he may
be required to pay as damage for the injury caused to the plaintiff-appellant.


VICENTE CALALAS vs. FRANCISCO SALVA
G.R. No. 122039. May 31, 2000
Facts:

Private respondent Eliza Jujeurche G. Sunga, took a passenger jeepney owned and
operated by petitioner Vicente Calalas. As the jeepney was filled to capacity of about 24
passengers, Sunga was given by the conductor an "extension seat," a wooden stool at
the back of the door at the rear end of the vehicle.

The jeepney stopped to let a passenger off. As she was seated at the rear of the vehicle,
Sunga gave way to the outgoing passenger. Just as she was doing so, an Isuzu truck
driven by Iglecerio Verena and owned by Francisco Salva bumped the left rear portion of
the jeepney. As a result, Sunga was injured.

On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging
violation of the contract of carriage by the former in failing to exercise the diligence
required of him as a common carrier.

Calalas, on the other hand, filed a third-party complaint against Francisco Salva, the
owner of the Isuzu truck.
The lower court rendered judgment against Salva as third-party defendant and absolved
Calalas of liability, holding that it was the driver of the Isuzu truck who was responsible
for the accident.
On appeal to the Court of Appeals, the ruling of the lower court was reversed on the
ground that Sungas cause of action was based on a contract of carriage, not quasi-
delict, and that the common carrier failed to exercise the diligence required under the
Civil Code.

Issue:
(1) Whether petitioner is liable based on breach of contract of carriage.
(2) Whether petitioners liability be extinguished grounded on caso fortuito
Held:
(1)Yes.
The first, quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as its source
the negligence of the tortfeasor. The second, breach of contract or culpa contractual, is
premised upon the negligence in the performance of a contractual obligation.
Consequently, in quasi-delict, the negligence or fault should be clearly established because it is
the basis of the action, whereas in breach of contract, the action can be prosecuted merely by
proving the existence of the contract and the fact that the obligor, in this case the common
carrier, failed to transport his passenger safely to his destination. In case of death or injuries to
passengers, Art. 1756 of the Civil Code provides that common carriers are presumed to have
been at fault or to have acted negligently unless they prove that they observed extraordinary
diligence as defined in Arts. 1733 and 1755 of the Code.

It is immaterial that the proximate cause of the collision between the jeepney and the truck
was the negligence of the truck driver. The doctrine of proximate cause is applicable only in
actions for quasi-delict, not in actions involving breach of contract. The doctrine is a device for
imputing liability to a person where there is no relation between him and another party. In such
a case, the obligation is created by law itself. But, where there is a pre-existing contractual
relation between the parties, it is the parties themselves who create the obligation, and the
function of the law is merely to regulate the relation thus created. Insofar as contracts of
carriage are concerned, some aspects regulated by the Civil Code are those respecting the
diligence required of common carriers with regard to the safety of passengers as well as the
presumption of negligence in cases of death or injury to passengers. It provides: Slxsc
Art. 1733. Common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence in the vigilance over
the goods and for the safety of the passengers transported by them, according
to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed
in articles 1734, 1735, and 1746, Nos. 5,6, and 7, while the extraordinary
diligence for the safety of the passengers is further set forth in articles 1755 and
1756.
Art. 1755. A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances.
Art. 1756. In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as prescribed by articles 1733 and
1755.
Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight could
provide, using the utmost diligence of very cautious persons, with due regard for all the
circumstances" as required by Art. 1755? We do not think so. Several factors militate against
petitioners contention.
First, the jeepney was not properly parked, its rear portion being exposed about two meters
from the broad shoulders of the highway, and facing the middle of the highway in a diagonal
angle. This is a violation of the R.A. No. 4136, as amended, or the Land Transportation and
Traffic Code, which provides:
Sec. 54. Obstruction of Traffic. - No person shall drive his motor vehicle in such a
manner as to obstruct or impede the passage of any vehicle, nor, while
discharging or taking on passengers or loading or unloading freight, obstruct the
free passage of other vehicles on the highway.
Second, it is undisputed that petitioners driver took in more passengers than the allowed
seating capacity of the jeepney, a violation of 32(a) of the same law. It provides: Mesm
Exceeding registered capacity. - No person operating any motor vehicle shall
allow more passengers or more freight or cargo in his vehicle than its registered
capacity.
(2)NO.

A caso fortuito is an event which could not be foreseen, or which, though foreseen, was
inevitable. This requires that the following requirements be present:
(a) the cause of the breach is independent of the debtors will;
(b) the event is unforeseeable or unavoidable;
(c) the event is such as to render it impossible for the debtor to fulfill his obligation in a
normal manner, and
(d) the debtor did not take part in causing the injury to the creditor.1[4] Petitioner
should have foreseen the danger of parking his jeepney with its body protruding two
meters into the highway.






AMADO PICART vs. FRANK SMITH, JR.
G.R. No. L-12219 March 15, 1918 37 P 183

Facts:

The accident occurred in the narrow Carlatan Bridge La Union.

The defendant while approaching the bridge saw the plaintiff riding on his horse. He
gave a warning signal and continued without decreasing his speed. When he had gotten
quite near, there being then no possibility of the horse getting across to the other side,
the defendant quickly turned his car sufficiently to the right to escape hitting the horse
alongside of the railing where it as then standing; but in so doing the automobile passed
in such close proximity to the animal that it became frightened and turned its body
across the bridge with its head toward the railing. In so doing, it as struck on the hock of
the left hind leg by the flange of the car and the limb was broken. The horse fell and its
rider was thrown off with some violence.

Issue: Whether or not defendant should be held liable given that he had the last clear chance.


Held:
Stated in these terms, the proper criterion for determining the existence of negligence in a
given case is this: Conduct is said to be negligent when a prudent man in the position of the
tortfeasor would have foreseen that an effect harmful to another was sufficiently probable to
warrant his foregoing conduct or guarding against its consequences.
Applying this test to the conduct of the defendant in the present case we think that negligence
is clearly established. A prudent man, placed in the position of the defendant, would in our
opinion, have recognized that the course which he was pursuing was fraught with risk, and
would therefore have foreseen harm to the horse and the rider as reasonable consequence of
that course. Under these circumstances the law imposed on the defendant the duty to guard
against the threatened harm.
It goes without saying that the plaintiff himself was not free from fault, for he was guilty of
antecedent negligence in planting himself on the wrong side of the road. But as we have
already stated, the defendant was also negligent; and in such case the problem always is to
discover which agent is immediately and directly responsible. It will be noted that the negligent
acts of the two parties were not contemporaneous, since the negligence of the defendant
succeeded the negligence of the plaintiff by an appreciable interval. Under these circumstances
the law is that the person who has the last fair chance to avoid the impending harm and fails to
do so is chargeable with the consequences, without reference to the prior negligence of the
other party.


























DURBAN APARTMENTS CORP vs PIONEER INSURANCE AND
SURETY CORP
G.R. No. 179419 January 12, 2011

Facts:
On July 22, 2003, [respondent] Pioneer Insurance and Surety Corporation x x x, by right
of subrogation, filed [with the RTC of Makati City] a Complaint for Recovery of Damages
against [petitioner] Durban Apartments Corporation.
[Respondent averred] that: it is the insurer for loss and damage of Jeffrey S. Sees [the
insureds] 2001 Suzuki Grand Vitara in the amount of P1,175,000.00;
See arrived and checked in at the City Garden Hotel in Makati corner Kalayaan Avenues,
Makati City before midnight, and its parking attendant, defendant x x x Justimbaste got
the key to said Vitara from See to park it.
O]n May 1, 2002, at about 1:00 oclock in the morning, See was awakened in his room
by [a] telephone call from the Hotel Chief Security Officer who informed him that his
Vitara was carnapped while it was parked unattended at the parking area of Equitable
PCI Bank along Makati Avenue between the hours of 12:00 [a.m.] and 1:00 [a.m.];
Durban Apartments and [defendant] Justimbaste filed their Answer with Compulsory
Counterclaim alleging that: See did not check in at its hotel, on the contrary, he was a
guest of a certain Ching Montero defendant Justimbaste did not get the ignition key of
Sees Vitara, on the contrary, it was See who requested a parking attendant to park the
Vitara at any available parking space, and it was parked at the Equitable Bank parking
area, which was within Sees view, while he and Montero were waiting in front of the
hotel;

Issue: Whether or not petitioner is liable for Sees vehicle.
Held:
Article 1962, in relation to Article 1998, of the Civil Code defines a contract of deposit and a
necessary deposit made by persons in hotels or inns:

Art. 1962. A deposit is constituted from the moment a person receives a
thing belonging to another, with the obligation of safely keeping it and returning
the same. If the safekeeping of the thing delivered is not the principal purpose of
the contract, there is no deposit but some other contract.

Art. 1998. The deposit of effects made by travelers in hotels or inns shall
also be regarded as necessary. The keepers of hotels or inns shall be responsible
for them as depositaries, provided that notice was given to them, or to their
employees, of the effects brought by the guests and that, on the part of the
latter, they take the precautions which said hotel-keepers or their substitutes
advised relative to the care and vigilance of their effects.


Plainly, from the facts found by the lower courts, the insured See deposited his vehicle
for safekeeping with petitioner, through the latters employee, Justimbaste. In turn,
Justimbaste issued a claim stub to See. Thus, the contract of deposit was perfected from Sees
delivery, when he handed over to Justimbaste the keys to his vehicle, which Justimbaste
received with the obligation of safely keeping and returning it. Ultimately, petitioner is liable for
the loss of Sees vehicle.













JOSE LAGON vs. HOOVEN COMALCO INDUSTRIES INC
[G.R. No. 135657. January 17, 2001] 349 S 363

Facts:
Petitioner Jose V. Lagon is a businessman and owner of a commercial building in
Tacurong, Sultan Kudarat. Respondent HOOVEN on the other hand is a domestic
corporation known to be the biggest manufacturer and installer of aluminum materials.
Sometime in April 1981 Lagon and HOOVEN entered into two (2) contracts, both
denominated Proposal, whereby for a total consideration of P104,870.00 HOOVEN
agreed to sell and install various aluminum materials in Lagons commercial building in
Tacurong, Sultan Kudarat.1[3] Upon execution of the contracts, Lagon paid HOOVEN
P48,00.00 in advance.
On 24 February 1987 respondent HOOVEN commenced an action for sum of money
with damages and attorneys fees against petitioner Lagon. HOOVEN alleged in its
complaint that on different occasions, it delivered and installed several construction
materials in the commercial building of Lagon pursuant to their contracts; that the total
cost of the labor and materials amounted to P117,329.00 out of which P69,329.00
remained unpaid even after the completion of the project; and, despite repeated
demands, Lagon failed and refused to liquidate his indebtedness.
Lagon, in his answer, denied liability and averred that HOOVEN was the party guilty of
breach of contract by failing to deliver and install some of the materials specified in the
proposals; that as a consequence he was compelled to procure the undelivered
materials from other sources; that as regards the materials duly delivered and installed
by HOOVEN, they were fully paid.
The trial court conducted an ocular inspection of Lagons commercial building. In due
course the trial court rendered a decision partly on the basis of the result of the ocular
inspection finding the total actual deliveries and installations made by HOOVEN cost
P87,140.00. Deducting therefrom P48,000.00 which Lagon paid in advance upon
execution of their contracts with no further payments appearing to have been made
thereafter, only P39,140.00 remained unpaid and where Lagon incurred in delay.
Issue: Whether or not the alleged authorized representative of Lagon is a party to receive the
delivery.
Held:
If, as claimed by HOOVEN, all the materials were completely delivered and installed in
petitioners building as early as August 1981, why then would it demand partial payment only
two (2) years later? This circumstance is very significant especially considering that under the
Proposals the terms of payment should be 50% down "and the balance to be paid in full" upon
completion. Moreover, it is surprising that the partial payment demanded was only "to cover
operation costs." As correctly observed by petitioner, demand for payment of operation costs is
typical of a still on-going project where the contractor needs funds to defray his expenses. If
there was complete installation, why would respondent demand payment for operation costs
only? Why not enforce the whole amount of indebtedness? All these clearly suggest that there
was no full and complete delivery and installation of materials ordered by petitioner.
All the delivery receipts did not appear to have been signed by petitioner or his duly authorized
representative acknowledging receipt of the materials listed therein. A closer examination of
the receipts clearly showed that the deliveries were made to a certain Jose Rubin, claimed to be
petitioners driver, Armando Lagon, and a certain bookkeeper. Unfortunately for HOOVEN, the
identities of these persons were never been established, and there is no way of determining
now whether they were indeed authorized representatives of petitioner. Paragraph 3 of each
Proposal is explicit on this point -
The sellers responsibility ends with delivery of the merchandise to carrier in good condition, to
buyer, or to buyers authorized "Receiver/Depository" named on the face of this proposal.
As above specifically stated, deliveries must be made to the buyer or his duly authorized
representative named in the contracts. In other words, unless the buyer specifically designated
someone to receive the delivery of materials and his name is written on the Proposals opposite
the words "Authorized Receiver/Depository," the seller is under obligation to deliver to the
buyer only and to no other person; otherwise, the delivery would be invalid and the seller
would not be discharged from liability. In the present case, petitioner did not name any person
in the Proposals who would receive the deliveries in his behalf, which meant that HOOVEN was
bound to deliver exclusively to petitioner.
Notwithstanding the breach of contract by respondent in failing to deliver and install in the
premises of petitioner all the stipulated materials, we nevertheless accede to the right of
respondent to recover the unpaid balance from petitioner for the materials actually delivered.





SPS LORENZO G. FRANCISCO and LORENZA D. FRANCISCO vs.
COURT OF APPEALS
G. R. No. 118749. April 25, 2003 401 S 594
Facts:
On 3 February 1984, the spouses Lorenzo and Lorenza Francisco (petitioners) and
Engineer Bienvenido C. Mercado (respondent) entered into a Contract of
Development (Contract) for the development into a subdivision of several parcels of
land in Pampanga.

Under the Contract, respondent agreed to undertake at his expense the development
work for the Franda Village Subdivision. Respondent committed to complete the
construction within 27 months. Respondent also advanced P200,000.00 for the initial
expenses of the development work. In return, respondent would receive 50% of the
total gross sales of the subdivision lots and other income of the subdivision.
Respondent also enjoyed the exclusive and irrevocable authority to manage, control and
supervise the sales of the lots within the subdivision. The Contract required respondent
to submit to petitioners, within the first 15 days of every month, a report on payments
collected from lot buyers with copies of all the contracts to sell. However, respondent
failed to submit the monthly report.


Within the 27-month period granted to respondent, petitioners also contracted a
certain Nicasio Rosales, Sr. (Rosales) to undertake the partial development of the
subdivision. On 16 July 1986, Rosales submitted his accomplishment report. On the
same day, petitioners demanded that respondent submit within 15 days an accounting
of his operation of the subdivision from the beginning of the project up to 15 July 1986.
Petitioners also requested for copies of contracts to sell, receipts of collections and
receipts of disbursements for development expenses.

Respondent secured from the Human Settlements Regulatory Commission (HSRC) an
extension of time to finish the subdivision development until 30 July 1987. On 8 August
1986, petitioners instructed respondent to stop selling subdivision lots and collecting
payments from lot buyers. Petitioners also demanded the turnover to them of all
official receipts in the name of Franda Village Subdivision. Nonetheless, respondent
continued to collect payments from lot buyers until September 1986.


On 20 January 1987, petitioners granted respondent an authority1[8] to resume the sale
of subdivision lots and the collection of payments subject to the following conditions:
(1) all collections shall be deposited in a joint account with China Banking Corporation,
San Fernando, Pampanga branch; (2) withdrawals shall be limited to 50% of the total
collections or to respondent's share, which can only be used for development expenses,
and any withdrawal shall be subject to the approval of petitioners; (3) only Franda
Village Subdivision receipts, duly countersigned by petitioners, shall be used; (4)
collections shall be subject to a weekly or monthly audit; and (5) any violation of these
conditions shall result in the automatic cancellation of the authority.

Respondent informed HSRC that he had stopped development work on the subdivision
because the conditional authority issued by petitioners violated the Contract.
Respondent attributed the delay in the development of the subdivision to petitioners
who contracted the services of another person during the effectivity of the Contract.
Petitioners also stopped respondent, without justification, from selling the lots and
collecting payments from lot buyers.

Issue: Whether or not contract should be rescinded by reason of delay made by petitioners.

Held:
The law provides that delay may exist when the obligor fails to fulfill his obligation within the
time expressly stipulated.1[25] In this case, the HSRC extended the period for respondent to
finish the development work until 30 July 1987. Respondent did not incur delay since the
period granted him to fulfill his obligation had not expired at the time respondent filed the
action for rescission on 27 February 1987.
Petitioners hampered and interfered with respondents development work. Petitioners also
stopped respondent from selling lots and collecting payments from lot buyers, which was the
primary source of development funds. In effect, petitioners rendered respondent incapable, or
at least made it difficult for him, to develop the subdivision within the allotted period. In
reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready
to comply with what is incumbent upon him. It is only when one of the parties fulfills his
obligation that delay by the other begins.
Respondents non-submission of the monthly report was merely a slight infraction of the
Contract. Respondents failure to submit the monthly report cannot serve as sufficient basis for
the cancellation of the Contract. The cancellation of a contract will not be permitted for a slight
or casual breach. Only a substantial and fundamental breach, which defeats the very object of
the parties in making the contract, will justify a cancellation. In the instant case, the
development work continued for more than two years despite the lack of a monthly report.

JACINTO TANGUILIG vs. COURT OF APPEALS and VICENTE HERCE
JR.
[G.R. No. 117190. January 2, 1997]

Facts:

Sometime in April 1987 petitioner Jacinto M. Tanguilig doing business under the name
and style J. M. T. Engineering and General Merchandising proposed to respondent
Vicente Herce Jr. to construct a windmill system for him. After some negotiations they
agreed on the construction of the windmill for a consideration of P60,000.00 with a
one-year guaranty from the date of completion and acceptance by respondent Herce Jr.
of the project. Pursuant to the agreement respondent paid petitioner a down payment
of P30,000.00 and an installment payment of P15,000.00, leaving a balance of
P15,000.00.

On 14 March 1988, due to the refusal and failure of respondent to pay the balance,
petitioner filed a complaint to collect the amount.

In his Answer before the trial court respondent denied the claim saying that he had
already paid this amount to the San Pedro General Merchandising Inc. (SPGMI) which
constructed the deep well to which the windmill system was to be connected.
According to respondent, since the deep well formed part of the system the payment he
tendered to SPGMI should be credited to his account by petitioner.

Moreover, assuming that he owed petitioner a balance of P15,000.00, this should be
offset by the defects in the windmill system which caused the structure to collapse after
a strong wind hit their place.


Petitioner denied that the construction of a deep well was included in the agreement to
build the windmill system, for the contract price of P60,000.00 was solely for the
windmill assembly and its installation, exclusive of other incidental materials needed for
the project. He also disowned any obligation to repair or reconstruct the system and
insisted that he delivered it in good and working condition to respondent who accepted
the same without protest. Besides, its collapse was attributable to a typhoon, a force
majeure, which relieved him of any liability.
Issues:
1. Whether or not deep well is included in the contract.
2. Whether or not petitioner should be held liable for the replacement or repair.
3. Whether or not SPGMI is a authorized to receive the unpaid amount.

Held:

(1) Notably, nowhere in either proposal is the installation of a deep well mentioned, even
remotely. Neither is there an itemization or description of the materials to be used in
constructing the deep well. There is absolutely no mention in the two (2) documents
that a deep well pump is a component of the proposed windmill system. The contract
prices fixed in both proposals cover only the features specifically described therein and
no other. While the words "deep well" and "deep well pump" are mentioned in both,
these do not indicate that a deep well is part of the windmill system. They merely
describe the type of deep well pump for which the proposed windmill would be
suitable. As correctly pointed out by petitioner, the words "deep well" preceded by the
prepositions "for" and "suitable for" were meant only to convey the idea that the
proposed windmill would be appropriate for a deep well pump with a diameter of 2 to 3
inches. For if the real intent of petitioner was to include a deep well in the agreement
to construct a windmill, he would have used instead the conjunctions "and" or "with."
Since the terms of the instruments are clear and leave no doubt as to their meaning
they should not be disturbed.
Moreover, it is a cardinal rule in the interpretation of contracts that the intention
of the parties shall be accorded primordial consideration and, in case of doubt, their
contemporaneous and subsequent acts shall be principally considered.

(2) While the law is clear that "payment shall be made to the person in whose favor
the obligation has been constituted, or his successor in interest, or

any person

authorized

to

receive it. It does not appear from the record that Pili and/or SPGMI
was so authorized.

Respondent cannot claim the benefit of the law concerning "payments made by a third
person." The Civil Code provisions do not apply in the instant case because no creditor-
debtor relationship between petitioner and Guillermo Pili and/or SPGMI has been
established regarding the construction of the deep well. Specifically, witness Pili did not
testify that he entered into a contract with petitioner for the construction of
respondent's deep well. If SPGMI was really commissioned by petitioner to construct
the deep well, an agreement particularly to this effect should have been entered into.

(3) In a long line of cases this Court has consistently held that in order for a party to claim
exemption from liability by reason of fortuitous event under Art. 1174 of the Civil Code
the event should be the sole and proximate cause of the loss or destruction of the
object of the contract. In Nakpil vs. Court of Appeals, four (4) requisites must concur:
(a) the cause of the breach of the obligation must be independent of the will of
the debtor;
(b) the event must be either unforeseeable or unavoidable;
(c) the event must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner; and,
(d) the debtor must be free from any participation in or aggravation of the injury
to the creditor.

Petitioner failed to show that the collapse of the windmill was due solely to a fortuitous
event. Interestingly, the evidence does not disclose that there was actually a typhoon
on the day the windmill collapsed. Petitioner merely stated that there was a "strong
wind." But a strong wind in this case cannot be fortuitous - unforeseeable nor
unavoidable. On the contrary, a strong wind should be present in places where
windmills are constructed, otherwise the windmills will not turn.

The appellate court correctly observed that "given the newly-constructed windmill
system, the same would not have collapsed had there been no inherent defect in it
which could only be attributable to the appellee. It emphasized that respondent had
in his favor the presumption that "things have happened according to the ordinary
course of nature and the ordinary habits of life." This presumption has not been
rebutted by petitioner.













DR. FERNANDO PERIQUET, JR. vs. HEIRS OF THE LATE FELIX R.
FRANCISCO
G.R. No. L-69996 December 5, 1994 ( 238 S 697)

Facts:

Spouses Fernando Periquet and Petra Francisco were left childless after the death of
their only child, Elvira,

so they took in a son, herein petitioner, out of wedlock

of Marta
Francisco-Reyes, sister of Petra. Though he was not legally adopted, the boy was given
the name Fernando Periquet, Jr. and was reared to manhood by the spouses Periquet.

On March 20, 1966, Fernando Periquet died. He left a will dated March 28, 1940
wherein he named his wife Petra as his universal heir.

A few days before her death, Petra asked her lawyer to prepare her last will and
testament. However, she died before she could sign it. In the said will, Petra left her
estate to petitioner, Fernando Periquet, Jr. and provided for certain legacies for her
brothers and sisters.

An affidavit was executed by Petras successors-in-interest in favor of petitioner but
Felix Francisco retracted and alleged that the assignment was vitiated by fraud that he
was forced.


Issue: Whether or not the assignment of interest is void.

The kind 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. It must have a determining influence on the
consent of the victim. The will of the victim, in effect, is maliciously vitiated by means of a false
appearance of reality.

First, the assignment was executed and signed freely and voluntarily by Felix Francisco in order
to honor, respect and give full effect to the last wishes of his deceased sister, Petra.

Second, there was valid cause or consideration in the execution of the assignment of hereditary
rights. Contrary to the trial court's finding that the amount of P10,000.00 as promised by Dr.
Fernando Periquet, Jr. to Felix Francisco is the cause or considereation of the assignment, we
find and so rule that it was the generosity or liberality of Felix Francisco that impelled him to
execute the questioned instrument. Pure beneficence, not monetary consideration, was the
moving force because Felix wanted to respect the wishes of a deceased sibling.

Third, the allegation of fraud is an afterthought on the part of the assignor, Felix Francisco who
filed the instant case to annul the deed of assignment on the ground of fraud only in 1970,
almost four (4) years after he executed the instrument.
Clearly, Felix slept on his rights and allowed laches to set in. This is fatal to his case. Laches is
failure or neglect, for an unreasonable length of time to do that which by exercising due
diligence could or should have been done, earlier; it is negligence or omission to assert a right
within a reasonable time warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it.


Well-settled is the rule that a compromise agreement, once approved by the court, cannot and
should not be disturbed except for vices of consent or forgery, it being the obvious purpose of
such compromise agreement to settle, once and for all, the claims of the parties, and bar all
future disputes and controversies thereon.

A compromise agreement cannot bind persons who
are not parties thereto.

Neither would a person not party to a compromise agreement be
entitled to enforce the same.

Similarly, a person who is not a party to an agreement, as in this
case, cannot seek the amendment or modification of the same. Neither can a court of law rule
that the compromise agreement be amended and modified pursuant only to the wishes of a
person not party to the said agreement.










LEGASPI OIL CO. INC. vs CA and BERNARD OSERAOS
G.R. No. 96505 July 1, 1993 (224 S 213)

Facts

The price at which Oseraos sells the copra varies from time to time, depending on the
prevailing market price when the contract is entered into. One of his authorized agents,
Jose Llover, had previous transactions with Oseraos for the sale and delivery of copra.
On November 6, 1975, another designated agent signed a contract in behalf of Legaspi
Oil Inc. for the sale of 100 tons of copra at P79.00 per 100 kilos with the delivery terms
of 25 days effective December 15, 1975 (Exhibit G-2). At this point, it must be noted that
the price of copra had been fluctuating (going up and down), indicating its unsteady
position in the market.
On February 16, 1976, appellant's agent Jose Llover signed contract No. 3804 for the
sale of 100 tons of copra at P82.00 per 100 kilos with delivery terms of 20 days.
As compared to appellant's transaction on November 6, 1975, the current price agreed
upon is slightly higher than the last contract. In all these contracts though, the selling
price had always been stated as "total price" rather than per 100 kilos. However, the
parties had understood the same to be per 100 kilos in their previous transactions.
After the period to deliver had lapsed, appellant sold only 46,334 kilos of copra thus
leaving a balance of 53,666 kilos.
Accordingly, demands were made upon appellant to deliver the balance with a final
warning embodied in a letter dated October 6, 1976, that failure to deliver will mean
cancellation of the contract, the balance to be purchased at open market and the price
differential to be charged against appellant.
On October 22, 1976, since there was still no compliance, appellee exercised its option
under the contract and purchased the undelivered balance from the open market at the
prevailing price of P168.00 per 100 kilos, or a price differential of P86.00 per 100 kilos, a
net loss of P46,152.76 chargeable against appellant.
Issue: Whether the overpriced amount should be paid by appellant due to breach arising from
fraud or bad faith.

Held: Yes.

In general, fraud may be defined as the voluntary execution of a wrongful act, or a wilfull
omission, knowing and intending the effects which naturally and necessarily arise from such act
or omission; the fraud referred to in Article 1170 of the Civil Code of the Philippines is the
deliberate and intentional evasion of the normal fulfillment of obligation; it is distinguished
from negligence by the presence of deliberate intent, which is lacking in the latter.

The conduct of private respondent clearly manifests his deliberate fraudulent intent to evade
his contractual obligation for the price of copra had in the meantime more than doubled from
P82.00 to P168 per 100 kilograms. Under Article 1170 of the Civil Code of the Philippines, 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. Pursuant to said
article, private respondent is liable for damages.
The next point of inquiry, therefore, is the amount of damages which private respondent is
liable to pay petitioner. As aforementioned, on account of private respondent's deliberate
breach of his contractual obligation, petitioner was compelled to buy the balance of 53,666
kilos of copra in the open market at the then prevailing price of P168 per 100 kilograms thereby
paying P46,152.76 more than he would have paid had private respondent completed delivery
of the copra as agreed upon. Thus, private respondent is liable to pay respondent the amount
of P46,152.76 as damages. In case of fraud, bad faith, malice, or wanton attitude, the guilty
party is liable for all damages which may be reasonably attributed to the non performance of
the obligation (Magat vs. Medialdea, 121 SCRA 418 [1983]).



















PHILIPPINE CHARTER INSURANCE CORPORATION v CENTRAL
COLLEGES OF THE PHILIPPINES
G.R. Nos. 180631-33 February 22, 2012

Facts:
On May 16, 2000, Central Colleges of the Philippines (CCP), an educational institution,
contracted the services of Dynamic Planners and Construction Corporation (DPCC) to be
its general contractor for the construction of its five (5)-storey school building with a
total contract price of P248,000,000.00.

As embodied in a Contract Agreement, the construction of the entire building would be
done in two phases with each phase valued at P124,000,000.00.


To guarantee the fulfillment of the obligation, DPCC posted three (3) bonds, all issued by
the Philippine Charter Insurance Corporation (PCIC).

The Phase 1 of the project was completed without issue. Thereafter, CCP paid DPCC
P14,880,000.00 or 12% of the agreed price of P124,000,000.00 with a check dated
March 14, 2002 as downpayment for the Phase 2 of the project.


The Phase 2 of the project, however, encountered numerous delays. When CCP audited
DPCC on July 25, 2003, only 47% of the work to be done was actually finished.

On November 6, 2003, CCP notified DPCC and PCIC that only 51% of the project was
completed, which was way behind the construction schedule, prompting it to declare
the occurrence of default against DPCC. It formally requested PCIC to remit the
proceeds of the bonds.


CCP notified PCIC that because of DPCCs inability to complete the project on time, it
decided to terminate its contract with the latter and to continue the construction on its
own.

Eventually, negotiations to continue on with the construction between CCP and DPCC
reached a dead end. CCP hired another contractor to work on the school site.


On August 20, 2004, PCIC denied CCPs claims against the three bonds.
Issues:
1. Whether or not PCIC incurred delay.
2. Whether or not PCIC is held liable for the surety bonds.
Held

1. Article 1169 of the New Civil Code provides:
Those obliged to deliver or to do something incur in delay from the time the obligee
judicially or extrajudicially demands from them the fulfillment of their obligation.
The civil law concept of delay or default commences from the time the obligor demands,
judicially or extrajudicially, the fulfillment of the obligation from the obligee. In legal
parlance, demand is the assertion of a legal or procedural right.1[43] Hence, DPCC
incurred delay from the time CCP called its attention that it had breached the contract
and extrajudicially demanded the fulfillment of its commitment against the bonds.

It is the obligors culpable delay, not merely the time element, which gives the obligee
the right to seek the performance of the obligation. As such, CCPs cause of action
accrued from the time that DPCC became in culpable delay as contemplated in the
surety and performance bonds.

2. Upon notice of default of obligor DPCC, PCICs liability, as surety, was already attached.
A surety under Article 2047 of the New Civil Code solidarily binds itself with the principal
debtor to assure the fulfillment of the obligation:

Art. 2047. By guaranty a person, called the guarantor, binds himself to
the creditor to fulfill the obligation of the principal debtor in case the latter
should fail to do so.

If a person binds himself solidarily with the principal debtor, the
provisions of Section 4, Chapter 3, Title I of this Book shall be observed. In such
case the contract is called a suretyship
Having acted as a surety, PCIC is duty bound to perform what it has guaranteed on its
surety and performance bonds, all of which are callable on demand, occasioned by its
principals default.

















Titan-Ikeda Construction v Primetown Property
G.R. No. 158768 February 12, 2008 544 S 466

Facts:
In 1992, respondent Primetown Property Group, Inc. awarded the contract for the
structural works of its 32-storey Makati Prime Tower (MPT) to petitioner Titan-Ikeda
Construction and Development Corporation. The parties formalized their agreement in a
construction contract.
On June 30, 1994, respondent executed a deed of sale (covering 114 condominium units
and 20 parking slots of the MPT collectively valued by the parties at P112,416,716.88) in
favor of petitioner pursuant to the full-swapping payment provision of the
supplemental agreement. Shortly thereafter, petitioner sold some o In September 1995,
respondent engaged the services of Integratech, Inc. (ITI), an engineering consultancy
firm, to evaluate the progress of the project. In its September 7, 1995 report, ITI
informed respondent that petitioner, at that point, had only accomplished 31.89% of
the project f its units to third persons.
Records showed that respondent did not merely take over the supervision of the project
but took full control thereof
Petitioner consequently conducted an inventory. On the basis thereof, petitioner
demanded from respondent the payment of its balance amounting to P1,779,744.85.
petitioner demanded from respondent the delivery of MPT's management certificate
and the keys to the condominium units and the payment of its (respondent's) balance.
Because respondent ignored petitioner's demand, petitioner, on December 9, 1996,
filed a complaint for specific performance in the Housing and Land Use Regulatory
Board (HLURB).
While the complaint for specific performance was pending in the HLURB, respondent
sent a demand letter to petitioner asking it to reimburse the actual costs incurred in
finishing the project (or P69,785,923.47).1[30] In view of the pendency of the HLURB
case, petitioner did not heed respondent's demands.
During trial, the RTC found that because respondent modified the MPT's architectural
design, petitioner had to adjust the scope of work. Moreover, respondent belatedly
informed petitioner of those modifications. It also failed to deliver the concrete mix and
rebars according to schedule. For this reason, petitioner was not responsible for the
project's delay
The appellate court found that respondent fully performed its obligation when it
executed the June 30, 1994 deed of absolute sale in favor of petitioner. Moreover, ITI's
report clearly established that petitioner had completed only 48.71% of the project as of
October 12, 1995, the takeover date. Not only did it incur delay in the performance of
its obligation but petitioner also failed to finish the project. The CA ruled that
respondent was entitled to recover the value of the unfinished portion of the project
under the principle of unjust enrichment
Issue:
1. Whether or not petitioner is obliged to return the excess from the overpayment to
respondent.
2. Whether or not petitioner is in delay in the performance of the obligation.
Held:
1. Because the parties agreed to extinguish the supplemental agreement, they were no
longer required to fully perform their respective obligations. Petitioner was relieved of
its obligation to complete the project while respondent was freed of its obligation to
pay the entire contract price. However, respondent, by executing the June 30, 1994
deed of absolute sale, was deemed to have paid P112,416,716.88. Nevertheless,
because petitioner applied part of what it received to respondents outstanding
liabilities, it admitted overpayment.
Because petitioner acknowledged that it had been overpaid, it was obliged to return the
excess to respondent. Embodying the principle of solutio indebiti, Article 2154 of the
Civil Code provides:

Article 2154. If something is received when there is no right to demand it and it
was unduly delivered through mistake, the obligation to return it arises.
For the extra-contractual obligation of solutio indebiti to arise, the following
requisites must be proven:
1. the absence of a right to collect the excess sums and
2. the payment was made by mistake.
With regard to the first requisite, because the supplemental agreement had been
extinguished by the mutual agreement of the parties, petitioner became entitled only to
the cost of services it actually rendered (i.e., that fraction of the project cost in
proportion to the percentage of its actual accomplishment in the project). It was not
entitled to the excess (or extent of overpayment).
On the second requisite, Article 2163 of the Civil Code provides:
Article 2163. It is presumed that there was a mistake in the payment if
something which had never been due or had already been paid was delivered;
but, he from whom the return is claimed may prove that the delivery was made
out of liberality or for any other just cause. (emphasis supplied)
In this instance, respondent paid part of the contract price under the assumption that
petitioner would complete the project within the stipulated period. However, after the
supplemental agreement was extinguished, petitioner ceased working on the project.
Therefore, the compensation petitioner received in excess of the cost of its actual
accomplishment as of October 12, 1995 was never due. The condominium units and
parking slots corresponding to the said excess were mistakenly delivered by respondent
and were therefore not due to petitioner.

Stated simply, respondent erroneously delivered excess units to petitioner and the
latter, pursuant to Article 2154, was obliged to the return them to respondent. Article
2160 of the Civil Code provides:
Article 2160. He who in good faith accepts an undue payment of a thing
certain and determinate shall only be responsible for the impairment or loss of
the same or its accessories and accessions insofar as he has thereby been
benefited. If he has alienated it, he shall return the price or assign the action to
collect the sum.
One who receives payment by mistake in good faith is, as a general rule, only liable to return
the thing delivered. If he benefited therefrom, he is also liable for the impairment or loss of the
thing delivered and its accessories and accessions. If he sold the thing delivered, he should
either deliver the proceeds of the sale or assign the action to collect to the other party.
Under Article 2160 in relation to Article 2154, it should return to respondent the condominium
units and parking slots in excess of the value of its actual accomplishment (i.e., the amount due
to it) as of October 12, 1995. If these properties include units and/or slots already sold to third
persons, petitioner shall deliver the proceeds of the sale thereof or assign the actions for
collection to respondent as required by Article 2160.
2. Mora or delay is the failure to perform the obligation in due time because of dolo
(malice) or culpa (negligence). A debtor is deemed to have violated his obligation to the
creditor from the time the latter makes a demand. Once the creditor makes a demand,
the debtor incurs mora or delay.
The construction contract provided a procedure for protesting delay:
Article XIV
DELAYS AND ABANDONMENT
15.1. If at any time during the effectivity of this contract, [PETITIONER] shall
incur unreasonable delay or slippages of more than fifteen percent (15%) of the
scheduled work program, [RESPONDENT] should notify [PETITIONER] in writing
to accelerate the work and reduce, if not erase, slippage.
Respondent never sent petitioner a written demand asking it to accelerate work on the
project and reduce, if not eliminate, slippage. If delay had truly been the reason why
respondent took over the project, it would have sent a written demand as required by
the construction contract. Moreover, according to the October 12, 1995 letter-
agreement, respondent took over the project for the sole reason that such move was
part of its (respondent's) long-term plan.
Respondent, on the other hand, relied on ITI's September 7, 1995 report. The
construction contract named GEMM, not ITI, as construction manager. Because
petitioner did not consent to the change of the designated construction manager, ITI's
September 7, 1995 report could not bind it.











PNB MADECOR vs. GERARDO C. UY
G.R. No. 129598. August 15, 2001 363 S 128
Facts:
Guillermo Uy, doing business under the name G.U. Enterprises, assigned to respondent
Gerardo Uy his receivables due from Pantranco North Express Inc. (PNEI) amounting to
P4,660,558.00.

On January 23, 1995, Gerardo Uy filed with the RTC a collection suit with an application
for the issuance of a writ of preliminary attachment against PNEI. He sought to collect
from PNEI the amount of P8,397,440.00. He alleged that PNEI was guilty of fraud in
contracting the obligation sued upon, hence his prayer for a writ of preliminary
attachment.


PNB MADECOR claimed PNEI has not been paying its rentals from October 1990 to
March 24, 1994 -- when it (PNEI) vacated the property. As of the latter date, PNB
MADECORs receivables against PNEI amounted to P8,784,227.48, representing
accumulated rentals, inclusive of interest;

On the other hand, PNB MADECOR has payables to PNEI in the amount of P7,884,000.00
as evidenced by a promissory note executed on October 31, 1982 by then NAREDECO in
favor of PNEI;


PNB MADECOR and PNEI are therefore creditors and debtors of each other; and by force
of the law on compensation, both obligations of PNB MADECOR and PNEI are already
considered extinguished to the concurrent amount or up to P7,884,000.00 so that PNEI
is still obligated to pay PNB MADECOR the amount of P900,227.48.

Respondent alleges that PNEI had already demanded payment. The alleged demand
letter reads in part:
We wish to inform you that as of August 31, 1984 your outstanding accounts
amounted to P10,376,078.67, inclusive of interest.
In accordance with our previous arrangement, we have conveyed in favor of the
Philippine National Bank P7,884,921.10 of said receivables from you. With this
conveyance, the unpaid balance of your account will be P2,491,157.57.
To forestall further accrual of interest, we request that you take up with PNB the
implementation of said arrangement.

Issue: Whether or not the letter constitutes extrajudicial demand.
Held:
We agree with petitioner that this letter was not one demanding payment, but one that merely
informed petitioner of (1) the conveyance of a certain portion of its obligation to PNEI per a
dacion en pago arrangement between PNEI and PNB, and (2) the unpaid balance of its
obligation after deducting the amount conveyed to PNB. The import of this letter is not that
PNEI was demanding payment, but that PNEI was advising petitioner to settle the matter of
implementing the earlier arrangement with PNB.
Apart from the aforecited letter, no other demand letter appears on record, nor has any of the
parties adverted to another demand letter.
Since petitioners obligation to PNEI is payable on demand, and there being no demand made,
it follows that the obligation is not yet due. Therefore, this obligation may not be subject to
compensation for lack of a requisite under the law. Without compensation having taken place,
petitioner remains obligated to PNEI to the extent stated in the promissory note. This
obligation may undoubtedly be garnished in favor of respondent to satisfy PNEIs judgment
debt.









IGNACIO BARZAGA vs. COURT OF APPEALS and ANGELITO ALVIAR
G.R. No. 115129. February 12, 1997] 268 S 105
Facts:
Barzaga ordered costruction materials from Alviar for the construction of his wifes
niche and told the storekeeper, Boncales, that it has to be delivered at the Memorial
Cemetery in Dasmarias, Cavite, by eight o'clock that morning since his hired workers
were already at the burial site and time was of the essence. Marina Boncales agreed to
deliver the items at the designated time, date and place. With this assurance, Barzaga
purchased the materials and paid in full the amount of P2,110.00. Thereafter he joined
his workers at the cemetery, which was only a kilometer away, to await the delivery.

The construction materials did not arrive at eight o'clock as promised. At nine o' clock,
the delivery was still nowhere in sight. Barzaga returned to the hardware store to
inquire about the delay. Boncales assured him that although the delivery truck was not
yet around it had already left the garage and that as soon as it arrived the materials
would be brought over to the cemetery in no time at all.


After hours of waiting - which seemed interminable to him - Barzaga became extremely
upset. He decided to dismiss his laborers for the day.

On 21 January 1991, tormented perhaps by his inability to fulfill his wife's dying wish,
Barzaga wrote private respondent Alviar demanding recompense for the damage he
suffered. Alviar did not respond. Consequently, petitioner sued him before the
Regional Trial Court.


Resisting petitioner's claim, private respondent contended that legal delay could not be
validly ascribed to him because no specific time of delivery was agreed upon between
them. He pointed out that the invoices evidencing the sale did not contain any
stipulation as to the exact time of delivery and that assuming that the materials were
not delivered within the period desired by petitioner, the delivery truck suffered a flat
tire on the way to the store to pick up the materials.

According to Alviar, it was this obstinate refusal of petitioner to accept delivery that
caused the delay in the construction of the niche and the consequent failure of the
family to inter their loved one on the twenty-fourth of December, and that, if at all, it
was petitioner and no other who brought about all his personal woes.

Issue: Whether or not there has been delay in the absence of demand.

Held:
An assiduous scrutiny of the record convinces us that respondent Angelito Alviar was negligent
and incurred in delay in the performance of his contractual obligation. This sufficiently entitles
petitioner Ignacio Barzaga to be indemnified for the damage he suffered as a consequence of
delay or a contractual breach. The law expressly 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.
This case is clearly one of non-performance of a reciprocal obligation. In their contract of
purchase and sale, petitioner had already complied fully with what was required of him as
purchaser, i.e., the payment of the purchase price of P2,110.00. It was incumbent upon
respondent to immediately fulfill his obligation to deliver the goods otherwise delay would
attach.












JOSEFINA TAYAG et al v COURT OF APPEALS
G.R. No. 96053 March 3, 1993

Facts:
The deed of conveyance executed on May 28, 1975 by Juan Galicia, Sr., prior to his
demise in 1979, and Celerina Labuguin, in favor of Albrigido Leyva involving the
undivided one-half portion of a piece of land is the subject matter of the present
litigation between the heirs of Juan Galicia, Sr. who assert breach of the conditions as
against private respondent's claim anchored on full payment and compliance with the
stipulations thereof. For the sum of P50,000.00 under the following terms:
1. The sum of PESOS: THREE THOUSAND (P3,000.00) is HEREBY acknowledged to
have been paid upon the execution of this agreement;
2. The sum of PESOS: TEN THOUSAND (P10,000.00) shall be paid within ten (10)
days from and after the execution of this agreement;
3. The sum of PESOS: TEN THOUSAND (P10,000.00) represents the VENDORS'
indebtedness with the Philippine Veterans Bank which is hereby assumed by the
VENDEE; and
4. The balance of PESOS: TWENTY SEVEN THOUSAND (P27,000.00.) shall be paid
within one (1) year from and after the execution of this instrument. (p. 53, Rollo)
There is no dispute that the sum of P3,000.00 listed as first installment was received by
Juan Galicia, Sr. According to petitioners, of the P10,000.00 to be paid within ten days
from execution of the instrument, only P9,707.00 was tendered to, and received by,
them on numerous occasions from May 29, 1975, up to November 3, 1979. Concerning
private respondent's assumption of the vendors' obligation to the Philippine Veterans
Bank, the vendee paid only the sum of P6,926.41 while the difference the indebtedness
came from Celerina Labuguin. Moreover, petitioners asserted that not a single centavo
of the P27,000.00 representing the remaining balance was paid to them.

Issue: Whether or not the contract may be rescinded due to breach.
Held:
The suggestion of petitioners that the covenant must be cancelled in the light of private
respondent's so-called breach seems to overlook petitioners' demeanor who, instead of
immediately filing the case precisely to rescind the instrument because of non-compliance,
allowed private respondent to effect numerous payments posterior to the grace periods
provided in the contract. This apathy of petitioners who even permitted private respondent to
take the initiative in filing the suit for specific performance against them, is akin to waiver or
abandonment of the right to rescind normally conferred by Article 1191 of the Civil Code.
In Development Bank of the Philippines vs. Sarandi:
In a perfected contract of sale of land under an agreed schedule of payments,
while the parties may mutually oblige each other to compel the specific
performance of the monthly amortization plan, and upon failure of the buyer to
make the payment, the seller has the right to ask for a rescission of the contract
under Art. 1191 of the Civil Code, this shall be deemed waived by acceptance of
posterior payments.

















DR. FERNANDO PERIQUET, JR vs. HEIRS OF FRANCISCO
G.R. No. L-69996 December 5, 1994 ( 238 S 697)

Facts:

Spouses Fernando Periquet and Petra Francisco were left childless after the death of
their only child, Elvira,

so they took in a son, herein petitioner, out of wedlock

of Marta
Francisco-Reyes, sister of Petra. Though he was not legally adopted, the boy was given
the name Fernando Periquet, Jr. and was reared to manhood by the spouses Periquet.

On March 20, 1966, Fernando Periquet died. He left a will dated March 28, 1940
wherein he named his wife Petra as his universal heir.

A few days before her death, Petra asked her lawyer to prepare her last will and
testament. However, she died before she could sign it. In the said will, Petra left her
estate to petitioner, Fernando Periquet, Jr. and provided for certain legacies for her
brothers and sisters.

An affidavit was executed by Petras successors-in-interest in favor of petitioner but
Felix Francisco retracted and alleged that the assignment was vitiated by fraud that he
was forced.


Issue: Whether or not the assignment of interest is void.

The kind 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.
13
It must have a determining influence on the
consent of the victim.
14
The will of the victim, in effect, is maliciously vitiated by means of a
false appearance of reality.

First, the assignment was executed and signed freely and voluntarily by Felix Francisco in order
to honor, respect and give full effect to the last wishes of his deceased sister, Petra.

Second, there was valid cause or consideration in the execution of the assignment of hereditary
rights. Contrary to the trial court's finding that the amount of P10,000.00 as promised by Dr.
Fernando Periquet, Jr. to Felix Francisco is the cause or considereation of the assignment, we
find and so rule that it was the generosity or liberality of Felix Francisco that impelled him to
execute the questioned instrument. Pure beneficence, not monetary consideration, was the
moving force because Felix wanted to respect the wishes of a deceased sibling.

Third, the allegation of fraud is an afterthought on the part of the assignor, Felix Francisco who
filed the instant case to annul the deed of assignment on the ground of fraud only in 1970,
almost four (4) years after he executed the instrument.
Clearly, Felix slept on his rights and allowed laches to set in. This is fatal to his case. Laches is
failure or neglect, for an unreasonable length of time to do that which by exercising due
diligence could or should have been done, earlier; it is negligence or omission to assert a right
within a reasonable time warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it.


Well-settled is the rule that a compromise agreement, once approved by the court, cannot and
should not be disturbed except for vices of consent or forgery, it being the obvious purpose of
such compromise agreement to settle, once and for all, the claims of the parties, and bar all
future disputes and controversies thereon.
27
A compromise agreement cannot bind persons
who are not parties thereto.
28
Neither would a person not party to a compromise agreement
be entitled to enforce the same.
29
Similarly, a person who is not a party to an agreement, as in
this case, cannot seek the amendment or modification of the same. Neither can a court of law
rule that the compromise agreement be amended and modified pursuant only to the wishes of
a person not party to the said agreement.











ARMAND O. RAQUEL-SANTOS vs CA and FINVEST SECURITIES CO.,
INC
G.R. No. 174986 July 7, 2009
Facts:
Finvest is a stock brokerage corporation duly organized under Philippine laws and is a
member of the PSE with one membership seat pledged to the latter. Armand O. Raquel-
Santos (Raquel-Santos) was Finvests President and nominee to the PSE from February
20, 1990 to July 16, 1998.1[3] Annalissa Mallari (Mallari) was Finvests Administrative
Officer until December 31, 1998.

In the course of its trading operations, Finvest incurred liabilities to PSE representing
fines and penalties for non-payment of its clearing house obligations. PSE also received
reports that Finvest was not meeting its obligations to its clients. Consequently, PSE
indefinitely suspended Finvest from trading. The Securities and Exchange Commission
(SEC) also suspended its license as broker.

Finvest was duly informed of the SECs decision and was advised to refrain from making
any payment, delivery of securities, or selling or otherwise encumbering any of its assets
without PSEs approval.

In its Letter of February 23, 1999, PSE informed Finvest that it would only issue a written
clearance after Finvest had settled its obligations to PSE and paid all acknowledged
liabilities to various clients.

On April 21, 1999, PSE again sent a demand letter to Finvest, reminding the latter of the
March 31, 1999 deadline.

Pursuant to its Pledge Agreement with Finvest. Finvest protested the imposition of the
deadline for being arbitrary on the ground that the claims against it had not yet been
established.

Issue: Whether or not Finvest is already in default.


Held:
Under the law on contracts, mora solvendi or debtors default is defined as a delay in the
fulfillment of an obligation, by reason of a cause imputable to the debtor. There are three
requisites necessary for a finding of default. First, the obligation is demandable and liquidated;
second, the debtor delays performance; and third, the creditor judicially or extrajudicially
requires the debtors performance.
In the present petition, PSE insists that Finvests liability for fines, penalties and charges has
been established, determined and substantiated, hence, liquidated.
They plainly show that the parties were negotiating to determine the exact amount of Finvests
obligations to PSE, during which period PSE repeatedly moved the deadlines it imposed for
Finvest to pay the fines, penalties and charges, apparently to allow for more time to thresh
out the details of the computation of said penalties. In the middle of those talks, PSE
unceremoniously took steps to sell the pledged seat at public auction, without allowing the
negotiations to come to a conclusion. This sudden decision of PSE deprived Finvest a sporting
chance to settle its accountabilities before forfeiting its seat in the stock exchange. Without
that seat, Finvest will lose its standing to trade and do business in the stock exchange.
A debt is liquidated when the amount is known or is determinable by inspection of the terms
and conditions of relevant documents. Under the attendant circumstances, it cannot be said
that Finvests debt is liquidated. At the time PSE left the negotiating table, the exact amount of
Finvests fines, penalties and charges was still in dispute and as yet undetermined.
Consequently, Finvest cannot be deemed to have incurred in delay in the payment of its
obligations to PSE. It cannot be made to pay an obligation the amount of which was not fully
explained to it. The public sale of the pledged seat would, thus, be premature.











RCBC vs. CA and FELIPE LUSTRE
[G.R. No. 133107. March 25, 1999] 305 S 449

Facts :
On March 10, 1993, private respondent Atty. Felipe Lustre purchased a Toyota Corolla
from Toyota Shaw, Inc. for which he made a down payment of P164,620.00, the balance
of the purchase price to be paid in 24 equal monthly installments.
Private respondent thus issued 24 postdated checks for the amount of P14,976.00 each.
The first was dated April 10, 1991; subsequent checks were dated every 10
th
day of each
succeeding month.
To secure the balance, private respondent executed a promissory note and a contract of
chattel mortgage over the vehicle in favor of Toyota Shaw, Inc. The contract of chattel
mortgage, in paragraph 11 thereof, provided for an acceleration clause stating that
should the mortgagor default in the payment of any installment, the whole amount
remaining unpaid shall become due. In addition, the mortgagor shall be liable for 25%
of the principal due as liquidated damages.
All the checks dated April 10, 1991 to January 10, 1993 were thereafter encashed and
debited by RCBC from private respondent's account, except for RCBC Check No. 279805
representing the payment for August 10, 1991, which was unsigned.
Previously, the amount represented by RCBC Check No. 279805 was debited from
private respondent's account but was later recalled and re-credited to him. Because of
the recall, the last two checks, dated February 10, 1993 and March 10, 1993, were no
longer presented for payment. This was purportedly in conformity with petitioner
bank's procedure that once a client's account was forwarded to its account
representative, all remaining checks outstanding as of the date the account was
forwarded were no longer presented for payment.
On the theory that respondent defaulted in his payments, the check representing the
payment for August 10, 1991 being unsigned, petitioner, in a letter dated January 21,
1993, demanded from private respondent the payment of the balance of the debt,
including liquidated damages.


Issue: Whether or not the respondent is in default.

Held:
Article 1170 of the Civil Code states that those who in the performance of their obligations are
guilty of delay are liable for damages. The delay in the performance of the obligation, however,
must be either malicious or negligent. Thus, assuming that private respondent was guilty of
delay in the payment of the value of the unsigned check, private respondent cannot be held
liable for damages. There is no imputation, much less evidence, that private respondent acted
with malice or negligence in failing to sign the check. Indeed, we agree with the Court of
Appeals' finding that such omission was mere "inadvertence" on the part of private respondent.
The "default" was therefore not a case of failure to pay, the check being sufficiently funded,
and which amount was in fact already debitted [sic] from appellee's account by the appellant
bank which subsequently re-credited the amount to defendant-appellee's account for lack of
signature. All these actions RCBC did on its own without notifying defendant until sixteen (16)
months later when it wrote its demand letter dated January 21, 1993.
Clearly, appellant bank was remiss in the performance of its functions for it could have easily
called the defendant's attention to the lack of signature on the check and sent the check to, or
summoned, the latter to affix his signature.






















BPI INVESTMENT CORPORATION vs. CA and ALS MGMT & DEVT
CORP
G.R. No. 133632. February 15, 2002

Facts
Frank Roa obtained a loan at an interest rate of 16 1/4% per annum from Ayala
Investment and Development Corporation (AIDC), the predecessor of petitioner BPIIC,
for the construction of a house on his lot. Said house and lot were mortgaged to AIDC to
secure the loan.

Sometime in 1980, Roa sold the house and lot to private respondents ALS and Antonio
Litonjua for P850,000. They paid P350,000 in cash and assumed the P500,000 balance of
Roas indebtedness with AIDC. The latter, however, was not willing to extend the old
interest rate to private respondents and proposed to grant them a new loan of P500,000
to be applied to Roas debt and secured by the same property, at an interest rate of 20%
per annum and service fee of 1% per annum on the outstanding principal balance
payable within ten years in equal monthly amortization of P9,996.58 and penalty
interest at the rate of 21% per annum per day from the date the amortization became
due and payable.


On August 13, 1982, ALS and Litonjua updated Roas arrearages by paying BPIIC the sum
of P190,601.35. This reduced Roas principal balance to P457,204.90 which, in turn, was
liquidated when BPIIC applied thereto the proceeds of private respondents loan of
P500,000.

In June 1984, BPIIC instituted foreclosure proceedings against private respondents on
the ground that they failed to pay the mortgage indebtedness which from May 1, 1981
to June 30, 1984, amounted to (P475,585.31).


ALS and Litonjua alleged, among others, that they were not in arrears in their payment,
but in fact made an overpayment. They maintained that they should not be made to
pay amortization before the actual release of the P500,000 loan in August and
September 1982. Further, out of the P500,000 loan, only the total amount of
P464,351.77 was released to private respondents. Hence, applying the effects of legal
compensation, the balance of P35,648.23 should be applied to the initial monthly
amortization for the loan.

Issue: Whether or not contract of loan is a reciprocal obligation and that respondent is in
default.
Held:
A loan contract is not a consensual contract but a real contract. It is perfected only upon the
delivery of the object of the contract.
In the present case, the loan contract between BPI, on the one hand, and ALS and Litonjua, on
the other, was perfected only on September 13, 1982, the date of the second release of the
loan. Following the intentions of the parties on the commencement of the monthly
amortization, as found by the Court of Appeals, private respondents obligation to pay
commenced only on October 13, 1982, a month after the perfection of the contract.
We also agree with private respondents that a contract of loan involves a reciprocal obligation,
wherein the obligation or promise of each party is the consideration for that of the other. As
averred by private respondents, the promise of BPIIC to extend and deliver the loan is upon the
consideration that ALS and Litonjua shall pay the monthly amortization commencing on May 1,
1981, one month after the supposed release of the loan. It is a basic principle in reciprocal
obligations that 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. Only when a party has
performed his part of the contract can he demand that the other party also fulfills his own
obligation and if the latter fails, default sets in. Consequently, petitioner could only demand for
the payment of the monthly amortization after September 13, 1982 for it was only then when it
complied with its obligation under the loan contract. Therefore, in computing the amount due
as of the date when BPIIC extrajudicially caused the foreclosure of the mortgage, the starting
date is October 13, 1982 and not May 1, 1981.








CARMELITA LEAO vs. CA and HERMOGENES FERNANDO
G.R. No. 129018 November 15, 2001

Facts
On November 13, 1985, Hermogenes Fernando, as vendor and Carmelita Leao, as
vendee executed a contract to sell. In the contract, Carmelita Leao bound herself to
pay Hermogenes Fernando the sum of one hundred seven thousand and seven hundred
and fifty pesos (P107,750.00) as the total purchase price of the lot. P10,775.00 as DOWN
PAYMENT the balance (P96,975.00) shall be paid within a period of TEN (10) years at a
monthly amortization of P1,747.30 to begin from December 7, 1985 with interest at
eighteen per cent (18%) per annum based on balances.
The contract also provided for a grace period of one month within which to make
payments, together with the one corresponding to the month of grace. Should the
month of grace expire without the installments for both months having been satisfied,
an interest of 18% per annum will be charged on the unpaid installments.
After the execution of the contract, Carmelita Leao made several payments in lump
sum.
7
Thereafter, she constructed a house on the lot valued at P800,000. The last
payment that she made was on April 1, 1989.
On September 16, 1991, the trial court rendered a decision in an ejectment case
9
earlier
filed by respondent Fernando ordering petitioner Leao to vacate the premises and to
pay P250.00 per month by way of compensation for the use and occupation of the
property from May 27, 1991 until she vacated the premises, attorney's fees and costs of
the suit.

Issue: Whether petitioner was in delay in the payment of the monthly amortizations.

Held:
While the contract provided that the total purchase price was payable within a ten-year period,
the same contract specified that the purchase price shall be paid in monthly installments for
which the corresponding penalty shall be imposed in case of default. Petitioner Leao cannot
ignore the provision on the payment of monthly installments by claiming that the ten-year
period within which to pay has not elapsed.
Article 1169 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. From the moment one of the parties fulfills his obligation, delay by the
other begins.
In the case at bar, respondent Fernando performed his part of the obligation by allowing
petitioner Leao to continue in possession and use of the property. Clearly, when petitioner
Leao did not pay the monthly amortizations in accordance with the terms of the contract, she
was in delay and liable for damages.

However, we agree with the trial court that the default
committed by petitioner Leao in respect of the obligation could be compensated by the
interest and surcharges imposed upon her under the contract in question.
It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear and
leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulation shall control. Thus, as there is no ambiguity in the language of the contract, there is
no room for construction, only compliance













HEIRS OF LUIS BACUS vs. CA and SPS FAUSTINO DURAY and
VICTORIANA DURAY
G.R. No. 127695. December 3, 2001 371 S 295

Facts:
Luis Bacus leased to private respondent Faustino Duray a parcel of agricultural land in
Bulacao, Talisay, Cebu.
The lease was for six years, ending May 31, 1990. The contract contained an option to
buy clause. Under said option, the lessee had the exclusive and irrevocable right to buy
2,000 square meters of the property within five years from a year after the effectivity of
the contract, at P200 per square meter.
Close to the expiration of the contract, Luis Bacus died on October 10, 1989. Thereafter,
on March 15, 1990, the Duray spouses informed Roque Bacus, one of the heirs of Luis
Bacus, that they were willing and ready to purchase the property under the option to
buy clause.
Due to the refusal of petitioners to sell the property, Faustino Durays adverse claim
Duray filed a complaint for specific performance against the heirs of Luis Bacus asking
that he be allowed to purchase the lot specifically referred to in the lease contract with
option to buy.
Petitioners alleged that before Luis Bacus death, private respondents conveyed to them
the formers lack of interest to exercise their option because of insufficiency of funds,
but they were surprised to learn of private respondents demand. In turn, they
requested private respondents to pay the purchase price in full but the latter refused.


Issues: Whether or not private respondent incurred delay.

Held:

Obligations under an option to buy are reciprocal obligations. The performance of one
obligation is conditioned on the simultaneous fulfillment of the other obligation. In other
words, in an option to buy, the payment of the purchase price by the creditor is contingent
upon the execution and delivery of a deed of sale by the debtor. In this case, when private
respondents opted to buy the property, their obligation was to advise petitioners of their
decision and their readiness to pay the price. They were not yet obliged to make actual
payment. Only upon petitioners actual execution and delivery of the deed of sale were they
required to pay. As earlier stated, the latter was contingent upon the former.

In Nietes vs. Court of Appeals, 46 SCRA 654 (1972), we held that notice of the creditors decision
to exercise his option to buy need not be coupled with actual payment of the price, so long as
this is delivered to the owner of the property upon performance of his part of the agreement.
Consequently, since the obligation was not yet due, consignation in court of the purchase price
was not yet required.
Consignation is the act of depositing the thing due with the court or judicial authorities
whenever the creditor cannot accept or refuses to accept payment and it generally requires a
prior tender of payment. In instances, where no debt is due and owing, consignation is not
proper. Therefore, petitioners contention that private respondents failed to comply with their
obligation under the option to buy because they failed to actually deliver the purchase price or
consign it in court before the contract expired and before they execute a deed, has no leg to
stand on.
Corollary, private respondents did not incur in delay when they did not yet deliver payment nor
make a consignation before the expiration of the contract. 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. Only from the moment one of the parties fulfills his
obligation, does delay by the other begin.














INTEGRATED PACKAGING CORP vs. CA and FIL-ANCHOR PAPER CO.,
INC.
G.R. No. 115117. June 8, 2000

Facts
Petitioner and private respondent executed on May 5, 1978, an order agreement
whereby private respondent bound itself to deliver to petitioner 3,450 reams of printing
paper, coated, 2 sides basis, 80 lbs., 38" x 23", short grain, worth P1,040,060.00 u
Petitioner entered into a contract with Philippine Appliance Corporation (Philacor) to
print three volumes of "Philacor Cultural Books."
As of July 30, 1979, private respondent had delivered to petitioner 1,097 reams of
printing paper out of the total 3,450 reams stated in the agreement. Petitioner alleged it
wrote private respondent to immediately deliver the balance because further delay
would greatly prejudice petitioner.
From June 5, 1980 and until July 23, 1981, private respondent delivered again to
petitioner various quantities of printing paper amounting to P766,101.70. However,
petitioner encountered difficulties paying private respondent said amount. Accordingly,
private respondent made a formal demand upon petitioner to settle the outstanding
account. On July 23 and 31, 1981 and August 27, 1981, petitioner made partial
payments totalling P97,200.00 which was applied to its back accounts.
Meanwhile, petitioner entered into an additional printing contract with Philacor.
Unfortunately, petitioner failed to fully comply with its contract with Philacor for the
printing of books VIII, IX, X and XI. Thus, Philacor demanded compensation from
petitioner for the delay and damage it suffered on account of petitioners failure.
Private respondent filed a collection suit against petitioner for the sum of P766,101.70,
representing the unpaid purchase price of printing paper bought by petitioner on credit.
In its answer, petitioner denied the material allegations of the complaint. By way of
petitioner alleged that private respondent was able to deliver only 1,097 reams of
printing paper which was short of 2,875 reams, in total disregard of their agreement;
that private respondent failed to deliver the balance of the printing paper despite
demand therefor, hence, petitioner suffered actual damages and failed to realize
expected profits; and that petitioners complaint was prematurely filed.

Issue: Whether or not private respondent committed delay in the performance of the
obligation.

Held:
The transaction between the parties is a contract of sale whereby private respondent (seller)
obligates itself to deliver printing paper to petitioner (buyer) which, in turn, binds itself to pay
therefor a sum of money or its equivalent (price). Both parties concede that the order
agreement gives rise to a reciprocal obligation such that the obligation of one is dependent
upon the obligation of the other. Reciprocal obligations are to be performed simultaneously, so
that the performance of one is conditioned upon the simultaneous fulfillment of the other.
Thus, private respondent undertakes to deliver printing paper of various quantities subject to
petitioners corresponding obligation to pay, on a maximum 90-day credit, for these materials.
Note that in the contract, petitioner is not even required to make any deposit, down payment
or advance payment, hence, the undertaking of private respondent to deliver the materials is
conditional upon payment by petitioner within the prescribed period. Clearly, petitioner did not
fulfill its side of the contract as its last payment
There is no dispute that the agreement provides for the delivery of printing paper on different
dates and a separate price has been agreed upon for each delivery. It is also admitted that it is
the standard practice of the parties that the materials be paid within a minimum period of
thirty (30) days and a maximum of ninety (90) days from each delivery. Accordingly, the private
respondents suspension of its deliveries to petitioner whenever the latter failed to pay on
time, as in this case, is legally justified under the second paragraph of Article 1583 of the Civil
Code which provides that:
"When there is a contract of sale of goods to be delivered by stated installments,
which are to be separately paid for, and the seller makes defective deliveries in
respect of one or more installments, or the buyer neglects or refuses without
just cause to take delivery of or pay for one or more installments, it depends in
each case on the terms of the contract and the circumstances of the case,
whether the breach of contract is so material as to justify the injured party in
refusing to proceed further and suing for damages for breach of the entire
contract, or whether the breach is severable, giving rise to a claim for
compensation but not to a right to treat the whole contract as broken."
(Emphasis supplied)

In this case, as found a quo petitioners evidence failed to establish that it had paid for the
printing paper covered by the delivery invoices on time. Consequently, private respondent has
the right to cease making further delivery, hence the private respondent did not violate the
order agreement. On the contrary, it was petitioner which breached the agreement as it failed
to pay on time the materials delivered by private respondent. Respondent appellate court
correctly ruled that private respondent did not violate the order agreement.

ROBERTO Z. LAFORTEZA et al vs. ALONZO MACHUCA
[G.R. No. 137552. June 16, 2000]
Facts:
An SPA was signed by some of the heirs in favor of Roberto and Gonzalo.
They used the SPA to sell the subject property for 630,000; 30,000 as earnest money
which shall be forfeited in favor of the defendants if the sale was not effected due to the
fault of the plaintiff and upon full payment of the unpaid balance the TCT. Upon
issuance by the proper Court of the new title, the BUYER-LESSEE shall be notified in
writing and said BUYER-LESSEE shall have thirty (30) days to produce the balance of
P600,000.00 which shall be paid to the SELLER-LESSORS upon the execution of the
Extrajudicial Settlement with sale.

Plaintiff sent the defendant heirs a letter requesting for an extension of the THIRTY (30)
DAYS deadline up to November 15, 1989 within which to produce the balance of SIX
HUNDRED THOUSAND PESOS (P600,000.00)
Defendant Roberto Z. Laforteza, assisted by his counsel Atty. Romeo L. Gutierrez, signed
his conformity to the plaintiffs letter request. The extension, however, does not appear
to have been approved by Gonzalo Z. Laforteza.
On November 15, 1989, plaintiff informed the defendant heirs, through defendant
Roberto Z. Laforteza, that he already had the balance of P600,000.00
However, the defendants, refused to accept the balance. Defendant Roberto Z.
Laforteza had told him that the subject property was no longer for sale.

Issue: Whether or not the memorandum of agreement constitutes reciprocal obligations.

Held:
A contract of sale is a consensual contract and is perfected at the moment there is a meeting of
the minds upon the thing which is the object of the contract and upon the price. From that
moment the parties may reciprocally demand performance subject to the provisions of the law
governing the form of contracts. The elements of a valid contract of sale under Article 1458 of
the Civil Code are (1) consent or meeting of the minds; (2) determinate subject matter and (3)
price certain in money or its equivalent.
The six-month period during which the respondent would be in possession of the property as
lessee, was clearly not a period within which to exercise an option. An option is a contract
granting a privilege to buy or sell within an agreed time and at a determined price. An option
contract is a separate and distinct contract from that which the parties may enter into upon the
consummation of the option. An option must be supported by consideration. An option
contract is governed by the second paragraph of Article 1479 of the Civil Code, which reads:
"Article 1479. xxx
An accepted unilateral promise to buy or to sell a determinate thing for a price
certain is binding upon the promissor if the promise is supported by a
consideration distinct from the price."
In the present case, the six-month period merely delayed the demandability of the contract of
sale and did not determine its perfection for after the expiration of the six-month period, there
was an absolute obligation on the part of the petitioners and the respondent to comply with
the terms of the sale. The parties made a "reasonable estimate" that the reconstitution of the
lost title of the house and lot would take approximately six months and thus presumed that
after six months, both parties would be able to comply with what was reciprocally incumbent
upon them. The fact that after the expiration of the six-month period, the respondent would
retain possession of the house and lot without need of paying rentals for the use therefor,
clearly indicated that the parties contemplated that ownership over the property would already
be transferred by that time.
Failure to comply with the first condition results in the failure of a contract, while the failure to
comply with the second condition only gives the other party the option either to refuse to
proceed with the sale or to waive the condition. Thus, Art. 1545 of the Civil Code states:
"Art. 1545. Where the obligation of either party to a contract of sale is subject to
any condition which is not performed, such party may refuse to proceed with the
contract or he may waive performance of the condition. If the other party has
promised that the condition should happen or be performed, such first
mentioned party may also treat the nonperformance of the condition as a
breach of warranty.
Where the ownership in the things has not passed, the buyer may treat the
fulfillment by the seller of his obligation to deliver the same as described and as
warranted expressly or by implication in the contract of sale as a condition of the
obligation of the buyer to perform his promise to accept and pay for the thing.
In the case at bar, there was already a perfected contract. The condition was imposed only on
the performance of the obligations contained therein. Considering however that the title was
eventually "reconstituted" and that the petitioners admit their ability to execute the
extrajudicial settlement of their fathers estate, the respondent had a right to demand
fulfillment of the petitioners obligation to deliver and transfer ownership of the house and lot.
Earnest money is something of value to show that the buyer was really in earnest, and given to
the seller to bind the bargain. Whenever earnest money is given in a contract of sale, it is
considered as part of the purchase price and proof of the perfection of the contract.
We do not subscribe to the petitioners view that the Memorandum Agreement was a contract
to sell. There is nothing contained in the Memorandum Agreement from which it can
reasonably be deduced that the parties intended to enter into a contract to sell, i.e. one
whereby the prospective seller would explicitly reserve the transfer of title to the prospective
buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership
of the property subject of the contract to sell until the full payment of the price, such payment
being a positive suspensive condition, the failure of which is not considered a breach, casual or
serious, but simply an event which prevented the obligation from acquiring any obligatory
force. There is clearly no express reservation of title made by the petitioners over the property,
or any provision which would impose non-payment of the price as a condition for the contracts
entering into force.






















RODOLFO N. REGALA vs. FEDERICO P. CARIN
G.R. No. 188715 April 6, 2011

Facts:
Petitioner and respondent are adjacent neighbors.
When petitioner decided to renovate his one storey residence by constructing a second
floor, he under the guise of merely building an extension to his residence, approached
respondent sometime in May 1998 for permission to bore a hole through a perimeter
wall shared by both their respective properties, to which respondent verbally consented
on condition that petitioner would clean the area affected by the work.
Petitioners real intention was to build a second floor, in fact with a terrace atop the
dividing wall.

In the course of the construction of the second floor, respondent and his wife Marietta
suffered from the dust and dirt which fell on their property.

Petitioner, denying respondents allegations, claimed in his Answer that he was the sole
and exclusive owner of the wall referred to as a perimeter wall, the same having been
built within the confines of his property and being part and parcel of the house and lot
package he purchased from the developer.

The trial court declared that, apart from the fact that petitioner knowingly commenced
the renovation of his house without the requisite building permit from the City
Engineers Office, he misrepresented to respondent his true intent of introducing
renovations. For, it found that instead of just boring a hole in the perimeter wall as
originally proposed, petitioner divided the wall into several sections to serve as a
foundation for his firewall (which ended up higher than the perimeter wall) and the
second storey of his house.

Issue: Whether there is fraud as a source of damages.


Held: Yes. Petitioner is liable to pay respondent P25,000 as nominal damages.

In fine, an award of moral damages calls for the presentation of 1) evidence of besmirched
reputation or physical, mental or psychological suffering sustained by the claimant; 2) a
culpable act or omission factually established; 3) proof that the wrongful act or omission of the
defendant is the proximate cause of the damages sustained by the claimant; and 4) the proof
that the act is predicated on any of the instances expressed or envisioned by Article 2219 and
Article 2220 of the Civil Code.
Respondent failed to establish by clear and convincing evidence that the injuries he sustained
were the proximate effect of petitioners act or omission. It thus becomes necessary to instead
look into the manner by which petitioner carried out his renovations to determine whether this
was directly responsible for any distress respondent may have suffered since the law requires
that a wrongful or illegal act or omission must have preceded the damages sustained by the
claimant.
Malice or bad faith implies a conscious and intentional design to do a wrongful act for a
dishonest purpose or moral obliquity; it is different from the negative idea of negligence in that
malice or bad faith contemplates a state of mind affirmatively operating with furtive design or
ill will. While the Court harbors no doubt that the incidents which gave rise to this dispute have
brought anxiety and anguish to respondent, it is unconvinced that the damage inflicted upon
respondents property was malicious or willful, an element crucial to merit an award of moral
damages under Article 2220 of the Civil Code.
Petitioner, however, cannot steer clear from any liability whatsoever. Respondent and his
familys rights to the peaceful enjoyment of their property have, at the very least, been
inconvenienced from the incident borne of petitioners construction work. Any pecuniary loss
or damage suffered by respondent cannot be established as the records are bereft of any
factual evidence to establish the same. Nominal damages may thus be adjudicated in order
that a right of the plaintiff, respondent herein, which has been violated or invaded by the
defendant, petitioner herein, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.










THE INTERNATIONAL CORPORATE BANK (UNION BANK) vs. SPS.
FRANCIS S. GUECO and MA. LUZ E. GUECO
G.R. No. 141968. February 12, 2001 351 S 516

Facts:
The respondents Gueco Spouses obtained a loan from petitioner International
Corporate Bank (now Union Bank of the Philippines) to purchase a car a Nissan Sentra.

In consideration thereof, the Spouses executed promissory notes which were payable in
monthly installments and chattel mortgage over the car to serve as security for the
notes.

The Spouses defaulted in payment of installments.

Desi Tomas, the Banks Assistant Vice President demanded payment of the amount of
P184,000.00 which represents the unpaid balance for the car loan. After some
negotiations and computation, the amount was lowered to P154,000.00, However, as a
result of the non-payment of the reduced amount on that date, the car was detained
inside the banks compound.


Dr. Gueco went to the bank and talked with its Administrative Support. The negotiations
resulted in the further reduction of the outstanding loan to P150,000.00.

Dr. Gueco delivered a managers check in the amount of P150,000.00 but the car was
not released because of his refusal to sign the Joint Motion to Dismiss. It is the
contention of the Gueco spouses and their counsel that Dr. Gueco need not sign the
motion for joint dismissal considering that they had not yet filed their Answer.
Petitioner, however, insisted that the joint motion to dismiss is standard operating
procedure in their bank to effect a compromise and to preclude future filing of claims,
counterclaims or suits for damages.

Issue: Whether the signing of the joint motion to dismiss is fraudulent.
Held: No.
Fraud has been defined as the deliberate intention to cause damage or prejudice. It is the
voluntary execution of a wrongful act, or a willful omission, knowing and intending the effects
which naturally and necessarily arise from such act or omission; the fraud referred to in Article
1170 of the Civil Code is the deliberate and intentional evasion of the normal fulfillment of
obligation.
We fail to see how the act of the petitioner bank in requiring the respondent to sign the joint
motion to dismiss could constitute as fraud. True, petitioner may have been remiss in
informing Dr. Gueco that the signing of a joint motion to dismiss is a standard operating
procedure of petitioner bank. However, this can not in anyway have prejudiced Dr. Gueco.
The motion to dismiss was in fact also for the benefit of Dr. Gueco, as the case filed by
petitioner against it before the lower court would be dismissed with prejudice. The whole point
of the parties entering into the compromise agreement was in order that Dr. Gueco would pay
his outstanding account and in return petitioner would return the car and drop the case for
money and replevin before the Metropolitan Trial Court. The joint motion to dismiss was but a
natural consequence of the compromise agreement and simply stated that Dr. Gueco had fully
settled his obligation, hence, the dismissal of the case.
The law presumes good faith. Dr. Gueco failed to present an iota of evidence to overcome this
presumption. In fact, the act of petitioner bank in lowering the debt of Dr. Gueco from
P184,000.00 to P150,000.00 is indicative of its good faith and sincere desire to settle the case. If
respondent did suffer any damage, as a result of the withholding of his car by petitioner, he has
only himself to blame. Necessarily, the claim for exemplary damages must fail. In no way, may
the conduct of petitioner be characterized as wanton, fraudulent, reckless, oppressive or
malevolent










REPUBLIC vs. THE COURT OF TAX APPEALS and AGFHA,
INCORPORATED
G.R. No. 139050. October 2, 2001 366 S 489

Facts:
A shipment of bales of textile gray cloth arrived at the Manila International Container
Port (MICP).

AGFHA, Incorporated, is the consignee of the shipment. Forthwith, the shipping agent,
FIL-JAPAN, requested for an amendment of the Inward Foreign Manifest so as to correct
the name of the consignee from that of GQ GARMENTS, Inc., to that of AGFHA, Inc.

FIL-JAPAN forwarded to AGFHA, Inc., the amended Inward Foreign Manifest which the
latter, in turn, submitted to the MICP Law Division. The MICP indorsed the document to
the Customs Intelligence Investigation Services (CIIS). The CIIS placed the subject
shipment under hold on the ground that GQ GARMENTS, Inc., could not be located in its
given address at 244 Escolta Street, Binondo, Manila, and was thus suspected to be a
fictitious firm.


The Collector of Customs came up with a draft decision ordering the lifting of the
warrant of seizure and detention on the basis of its findings that GQ GARMENTS, Inc.,
was not a fictitious corporation and that there was a valid waiver of rights over the bales
of cloth by GQ GARMENTS, Inc., in favor of AGFHA, Inc.


The draft decision was submitted to the Deputy Commissioner for clearance and
approval, who, in turn, transmitted it to the CIIS for comment. The CIIS opposed the
draft decision, insisting that GQ GARMENTS, Inc., was a fictitious corporation.



Issue: Whether or not there is fraud in the forfeiture of the merchandise by petitioner
Held:
The requisites for the forfeiture of goods under Section 2530(f), in relation to (1) (3-5), of the
Tariff and Customs Code are: (a) the wrongful making by the owner, importer, exporter or
consignee of any declaration or affidavit, or the wrongful making or delivery by the same
person of any invoice, letter or paper - all touching on the importation or exportation of
merchandise; (b) the falsity of such declaration, affidavit, invoice, letter or paper; and (c) an
intention on the part of the importer/consignee to evade the payment of the duties due.
Petitioner asserts that all of these requisites are present in this case. It contends that it did not
presume fraud, rather the events positively point to the existence of fraud. Private respondent
AGFHA, Inc., on the other hand, maintains that there has only been an inadvertent error and
not an intentional wrongful declaration by the shipper to evade payment of any tax due. The
resolution of this issue would entail a reevaluation of the attendant circumstances, a matter
that cannot be freely undertaken by this Tribunal. It has been a settled rule that the Supreme
Court is not a trier of facts. Findings of the appellate court are generally binding and cannot be
disturbed by this Court unless it is sufficiently shown that there has been no evidence on record
to support such findings. The assessment made by the appellate court carry even more weight
when it is consistent with that of the trial court. Consonantly, the factual determination of the
Court of Tax Appeals, when supported by substantial evidence, will not be reversed on appeal
unless it is clear that the said court has committed gross error in the process.
The Collector of Customs, Court of Tax Appeals and the Court of Appeals are unanimous in
concluding that no fraud has been committed by private respondent in the importation of the
bales of cloth. The records do appear to sustain this conclusion.
Fraud must be proved to justify forfeiture. It must be actual, amounting to intentional wrong-
doing with the clear purpose of avoiding the tax. Forfeiture is not favored in law nor in equity.
Mere negligence is not equivalent to the fraud contemplated by law. What is here involved is
an honest mistake, not even directly attributable to private respondent, which will not deprive
the government of its right to collect the proper tax. The conclusion of the appellate court,
being consistent with the evidence on record and not contrary to law and jurisprudence, hardly
can be overturned by this Court.

Antonio Diaz vs. Davao Light and Power Co., Inc.
G.R. No. 160959
April 3, 2007
Facts:
DLPC sent a Notice of Disconnection to Diaz and Co., Inc. informing it that the hotels
unpaid electric consumption bill amounted to P190,111.02. It also warned that if the
amount was not paid, DLPC would be impelled to discontinue its service. Since Diaz and
Co., Inc. ignored the letter, Meter No. 36510 was disconnected.
Meanwhile, the National Food Authority (NFA) established its KADIWA store at C.M.
Recto Avenue, Davao City. It leased a portion of the ground floor of the Imperial Hotel
Building from Diaz and Co., Inc. NFA/KADIWA also applied for electricity service with
DLPC, and a contract was later executed between the parties.
The Kadiwa Center IV closed, and NFA/KADIWA vacated the Doa Segunda Building. In a
letter, NFA/KADIWA Provincial Manager, Roberta R. Melendres, informed DLPC that the
light and power connection of NFA/KADIWA would be left behind; its right to the
connection would be transferred to Diaz. She also informed DLPC that the P1,020.00
deposit of NFA/KADIWA for the power connection had been refunded to it by Diaz.
Diaz informed respondent Manuel Orig that he had leased the untenanted portions of
the Doa Segunda Building from Diaz and Co., Inc., and requested that a new electrical
connection for the building in his name be installed, separate from the one assigned to
him by NFA which was denied by DLPC. Diaz filed a petition for mandamus before the
RTC, Davao City.
The portion of the building formerly leased by NFA/KADIWA was leased to Matias
Mendiola. Because he needed more electricity than what could be provided by the
existing electrical wirings, Mendiola opted to change the electrical installation from a
one-phase meter to a three-phase meter connection. Mendiolas application was
approved by DLPC. DLPC and Mendiola executed a service Contract for electricity
service.
Diaz filed an application for preliminary injunction to enjoin DLPC from disconnecting
the electric connections to Meter No. 84738. Also, an Inter-Office Memo, signed by
Officer-in-Charge, Rebecca Madrid, was issued to all security guards of the Doa
Segunda Building who were ordered to prevent anyone from disturbing Meter No.
84738. Because of this, DLPC failed to substitute its single-phase meter with a three-
phase meter. DLPCs linemen thus installed the three-phase meter without removing
the single-phase meter.
The RTC denied the motion for issuance of a writ of injunction filed by Diaz. He moved
for a reconsideration, which was, however, denied. DLPC then removed its single-phase
meter which rendered almost half of the building without power. That same day, Diaz
went to the DLPC building and threw stones at it, breaking four glass windows in the
process. He then bought his own electric meter, Meter No. 86673509, had it calibrated
by the Board of Energy, and unilaterally replaced Meter No. 84738. The electricity in the
building was then restored.
Diaz filed a Complaint for Damages with Prayer for Preliminary Prohibitory and
Mandatory Injunction and Restraining Order before the RTC, Davao City. In the said
complaint, Diaz claimed that DLPC arbitrarily and illegally removed Meter No. 84738 in
violation of their business franchise and Article 19 of the New Civil Code, and had
threatened to remove Meter No. 86673509. The RTC denied the motion and ordered
Diaz to immediately remove Meter No. 86673509 and disconnect the electrical wirings
he had unilaterally connected to the upper floor rooms. Diaz filed a motion for
reconsideration but was denied.
Undaunted, DLPC filed a criminal complaint against Diaz for Violation of P.D. 401, as
amended by B.P. Blg. 876 with the City Prosecutors Office, Davao City but the same was
denied and the motion for reconsideration was likewise denied.
Diaz, Ramos, and Arguellas, as complainants, filed a criminal complaint with the Office
of the Provincial Fiscal of Davao del Norte charging the officers of DLPC with estafa
through falsification of public documents. The RTC dismissed the case.
The officers of DLPC filed a Complaint before the RTC, Cebu City, for damages and
attorneys fees against the defendants for malicious prosecution.
Issue:
Whether or not DLPC acted in bad faith in instituting the criminal cases against Diaz.
Held:
Malicious prosecution has been defined as an action for damages brought by or against whom a
criminal prosecution, civil suit or other legal proceeding has been instituted maliciously and
without probable cause, after the termination of such prosecution, suit, or other proceeding in
favor of the defendant therein. It is an established rule that in order for malicious prosecution
to prosper, the following requisites must be proven by petitioner: (1) the fact of prosecution
and the further fact that the defendant (respondent) was himself the prosecutor, and that the
action finally terminated with an acquittal; (2) that in bringing the action, the prosecutor acted
without probable cause; and (3) that the prosecutor was actuated or impelled by legal malice,
that is, by improper or sinister motive. The foregoing are necessary to preserve a persons right
to litigate which may be emasculated by the undue filing of malicious prosecution cases. From
the foregoing requirements, it can be inferred that malice and want of probable cause must
both be clearly established to justify an award of damages based on malicious prosecution.
Thus, the element of malice and the absence of probable cause must be proved. There must be
proof that the prosecution was prompted by a sinister design to vex and humiliate a person,
and that it was initiated deliberately knowing that the charge was false and baseless to entitle
the victims to damages. The two elements must simultaneously exist; otherwise, the presence
of probable cause signifies, as a legal consequence, the absence of malice. In the instant case, it
is evident that respondent DLPC was not motivated by malicious intent or by a sinister design to
unduly harass petitioner, but only by a well-founded anxiety to protect its rights. Respondent
DLPC cannot therefore be faulted in availing of the remedies provided for by law.













Ms. Violeta Yasona vs. De Ramos
G.R. No. 156339
October 6, 2004
Facts:
Aurea Yasoa and her son, Saturnino, went to the house of Jovencio de Ramos to ask for
financial assistance in paying their loans to Philippine National Bank (PNB), otherwise
their residential house and lot would be foreclosed.
Jovencio paid Aureas bank loan. As agreed upon, Aurea executed a deed of absolute
sale in favor of Jovencio over half of the lot consisting of 123 square meters.
Twenty-two years later, Aurea filed an estafa complaint against brothers Jovencio and
Rodencio de Ramos on the ground that she was deceived by them when she asked for
their assistance in 1971 concerning her mortgaged property. Aurea averred that she
never sold any portion of her property to Jovencio and never executed a deed of sale.
Assistant Provincial Prosecutor Rodrigo B. Zayenis dismissed the criminal complaint for
estafa for lack of evidence. On account of this dismissal, Jovencio and Rodencio filed a
complaint for damages on the ground of malicious prosecution with the Regional Trial
Court of Sta. Cruz. They alleged that the filing of the estafa complaint against them was
done with malice and it caused irreparable injury to their reputation, as Aurea knew
fully well that she had already sold half of the property to Jovencio. The trial court
rendered a decision in favor of Jovencio and Rodencio which was affirmed by the CA.
Hence, the instant petition.
ISSUE:
Whether or not the filing of the criminal complaint for estafa by petitioners against
respondents constituted malicious prosecution.
HELD:
In this jurisdiction, the term malicious prosecution has been defined as an action for damages
brought by one against whom a criminal prosecution, civil suit, or other legal proceeding has
been instituted maliciously and without probable cause, after the termination of such
prosecution, suit, or other proceeding in favor of the defendant therein. To constitute malicious
prosecution, there must be proof that the prosecution was prompted by a sinister design to vex
or humiliate a person, and that it was initiated deliberately by the defendant knowing that his
charges were false and groundless. Concededly, the mere act of submitting a case to the
authorities for prosecution does not make one liable for malicious prosecution.
Malicious prosecution, both in criminal and civil cases, requires the elements of (1) malice and
(2) absence of probable cause. These two elements are present in the present controversy.
Petitioners were completely aware that Jovencio was the rightful owner of the lot covered by
TCT No. 73251, clearly signifying that they were impelled by malice and avarice in bringing the
unfounded action. That there was no probable cause at all for the filing of the estafa case
against respondents led to the dismissal of the charges filed by petitioners with the Provincial
Prosecutors Office in Siniloan, Laguna. A suit for malicious prosecution will prosper where legal
prosecution is carried out without probable cause.















Asian Terminals, Inc., vs. Philam Insurance Co., Inc.
G.R. No. 181163
July 24, 2013
Facts:
Nichimen Corporation shipped to Universal Motors Corporation (Universal Motors) 219
packages containing 120 units of brand new Nissan Pickup Truck Double Cab 4x2 model,
without engine, tires and batteries, on board the vessel S/S Calayan Iris from Japan to
Manila. The shipment, was insured with Philam against all risks.
The carrying vessel arrived at the port of Manila and when the shipment was unloaded
by the staff of ATI, it was found that the package marked as 03-245-42K/1 was in bad
order. The cargoes were stored for temporary safekeeping inside CFS Warehouse in Pier
No. 5.
The shipment was withdrawn by R.F. Revilla Customs Brokerage, Inc., the authorized
broker of Universal Motors, and delivered to the latters warehouse in Mandaluyong
City. Upon the request of Universal Motors, a bad order survey was conducted on the
cargoes and it was found that one Frame Axle Sub without LWR was deeply dented on
the buffle plate while six Frame Assembly with Bush were deformed and misaligned.
Owing to the extent of the damage to said cargoes, Universal Motors declared them a
total loss.
Universal Motors filed a formal claim for damages in the amount of P643,963.84 against
Westwind, ATIand R.F. Revilla Customs Brokerage, Inc. When Universal Motors
demands remained unheeded, it sought reparation from and was compensated in the
sum of P633,957.15 by Philam. Accordingly, Universal Motors issued a Subrogation
Receipt in favor of Philam.
Philam, as subrogee of Universal Motors, filed a Complaint for damages against
Westwind, ATI and R.F. Revilla Customs Brokerage, Inc. before the RTC of Makati City,
Branch 148.
On September 24, 1999, the RTC rendered judgment in favor of Philam and ordered
Westwind and ATI to pay Philam, jointly and severally, the sum of P633,957.15.
On appeal, the CA affirmed with modification the ruling of the RTC. The appellate court
directed Westwind and ATI to pay Philam, jointly and severally, the amount
of P190,684.48 with interest at the rate of 12% per annum until fully paid, attorneys
fees of P47,671 and litigation expenses.
ISSUE:
Whether or not Westwind and ATI are jointly and severally liable.
HELD:
Common carriers, from the nature of their business and for reasons of public policy, are bound
to observe extraordinary diligence in the vigilance over the goods transported by them. Subject
to certain exceptions enumerated under Article 1734of the Civil Code, common carriers are
responsible for the loss, destruction, or deterioration of the goods. The extraordinary
responsibility of the common carrier lasts from the time the goods are unconditionally placed in
the possession of, and received by the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee, or to the person who has a right to
receive them.
It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain
under the custody of the carrier. Since the damage to the cargo was incurred during the
discharge of the shipment and while under the supervision of the carrier, the latter is liable for
the damage caused to the cargo.This is not to say, however, that petitioner ATI is without
liability for the damaged cargo.
While it is true that an arrastre operator and a carrier may not be held solidarily liable at all
times, the facts of these cases show that apart from ATIs stevedores being directly in charge of
the physical unloading of the cargo, its foreman picked the cable sling that was used to hoist
the packages for transfer to the dock. Moreover, the fact that 218 of the 219 packages were
unloaded with the same sling unharmed is telling of the inadequate care with which ATIs
stevedore handled and discharged Case No. 03-245-42K/1.







Cecilia Yambao vs. Melchorita Zuniga et al.
G.R. No. 146173
December 11, 2003
Facts:
The bus owned by the petitioner was being driven by her driver, one Ceferino G.
Venturina along the northbound lane of Epifanio delos Santos Avenue (EDSA), within the
vicinity of Bagong Barrio, Kalookan City. With Venturina was the bus conductor,
Fernando Dumaliang. Suddenly, the bus bumped Herminigildo Zuiga, a pedestrian.
Such was the force of the impact that the left side of the front windshield of the bus was
cracked. Zuiga was rushed to the Quezon City General Hospital where he was given
medical attention, but due to the massive injuries sustained, he succumbed shortly
thereafter.
Private respondents, as heirs of the victim, filed a Complaint against petitioner and her
driver, Venturina, for damages at the RTC of Malolos City. The complaint essentially
alleged that Venturina drove the bus in a reckless, careless and imprudent manner, in
violation of traffic rules and regulations, without due regard to public safety, thus
resulting in the victims premature death.
The trial court rendered judgment in favor of the plaintiffs which was affirmed by the
appellate court. Yambao then duly moved for reconsideration, but her motion was
denied for want of merit. Hence, this petition for review.
Issue:
Whether or not petitioner exercised the diligence of a good father of a family in the selection
and supervision of her employees, thus absolving her from any liability.
Held:
Case law teaches that for an employer to have exercised the diligence of a good father of a
family, he should not be satisfied with the applicants mere possession of a professional drivers
license; he must also carefully examine the applicant for employment as to his qualifications,
his experience and record of service. Petitioner failed to present convincing proof that she went
to this extent of verifying Venturinas qualifications, safety record, and driving history. The
presumption juris tantum that there was negligence in the selection of her bus driver, thus,
remains unrebutted.
Nor did petitioner show that she exercised due supervision over Venturina after his selection.
Petitioner did not present any proof that she drafted and implemented training programs and
guidelines on road safety for her employees. In fact, the record is bare of any showing that
petitioner required Venturina to attend periodic seminars on road safety and traffic efficiency.
Hence, petitioner cannot claim exemption from any liability arising from the recklessness or
negligence of Venturina.


















Smith Bell Dodwell Shipping Agency Corporation vs. Catalino Borja
and International to Wage and Transport Corporation
G.R. No. 143008
June 10, 2002
Facts:
Smith Bell filed a written request with the Bureau of Customs for the attendance of the
latters inspection team on vessel M/T King Family which was due to arrive at the port of
Manila.
While M/T King Family was unloading chemicals unto two (2) barges ITTC 101 and CLC-
1002 owned by respondent ITTC, a sudden explosion occurred setting the vessels afire.
Upon hearing the explosion, Borja, who was at that time inside the cabin preparing
reports, ran outside to check what happened. Again, another explosion was heard.
Seeing the fire and fearing for his life, Borja hurriedly jumped over board to save
himself. However, the water was likewise on fire due mainly to the spilled chemicals.
Despite the tremendous heat, Borja swam his way for one hour until he was rescued by
the people living in the squatters area and sent to San Juan De Dios Hospital.
After weeks of intensive care at the hospital, his attending physician diagnosed Borja to
be permanently disabled due to the incident. Borja made demands against Smith Bell
and ITTC for the damages caused by the explosion. However, both denied liabilities and
attributed to each other negligence.
The trial court ruled in favor of Respondent Borja and held petitioner liable for damages
and loss of income. On appeal, the CA affirmed the decision of the lower court. Hence,
this Petition.
Issue:
Whether or not petitioner can be held liable for the injuries suffered by Borja.
Held:
Negligence is conduct that creates undue risk of harm to another. It is the failure to observe
that degree of care, precaution and vigilance that the circumstances justly demand, whereby
that other person suffers injury. Petitioners vessel was carrying chemical cargo - alkyl benzene
and methyl methacrylate monomer. While knowing that their vessel was carrying dangerous
inflammable chemicals, its officers and crew failed to take all the necessary precautions to
prevent an accident. Petitioner was, therefore, negligent.
Hence, the owner or the person in possession and control of a vessel and the vessel are liable
for all natural and proximate damage caused to persons and property by reason of negligent
management or navigation.


















Ramon Ilusorio vs. Court of Appeals and The Manila Banking
Corporation
G.R. No. 139130
November 27, 2002
Facts:
Eugenio, the secretary of petitioner, was able to encash and deposit to her personal
account about seventeen (17) checks drawn against the account of the petitioner at the
respondent bank, with an aggregate amount of P119,634.34. Petitioner did not bother
to check his statement of account until a business partner apprised him that he saw
Eugenio use his credit cards. Petitioner fired Eugenio immediately, and instituted a
criminal action against her for estafa thru falsification before the Office of the Provincial
Fiscal of Rizal. Private respondent, through an affidavit executed by its employee, Mr.
Dante Razon, also lodged a complaint for estafa thru falsification of commercial
documents against Eugenio on the basis of petitioners statement that his signatures in
the checks were forged.
Petitioner then requested the respondent bank to credit back and restore to its account
the value of the checks which were wrongfully encashed but respondent bank refused.
Hence, petitioner filed the instant case.
Issue:
Whether or not petitioner has a cause of action against private respondent.
HELD:
Petitioner has no cause of action against Manila Bank. To be entitled to damages, petitioner
has the burden of proving negligence on the part of the bank for failure to detect the
discrepancy in the signatures on the checks. It is incumbent upon petitioner to establish the
fact of forgery, i.e., by submitting his specimen signatures and comparing them with those on
the questioned checks. Curiously though, petitioner failed to submit additional specimen
signatures as requested by the National Bureau of Investigation from which to draw a
conclusive finding regarding forgery.
As borne by the records, it was petitioner, not the bank, who was negligent. Negligence is the
omission to do something which a reasonable man, guided by those considerations which
ordinarily regulate the conduct of human affairs, would do, or the doing of something which a
prudent and reasonable man would do. In the present case, it appears that petitioner accorded
his secretary unusual degree of trust and unrestricted access to his credit cards, passbooks,
check books, bank statements, including custody and possession of cancelled checks and
reconciliation of accounts.


















National Power Corporation vs. Court of Appeals and Engineering
Construction, Inc.
G.R. No. L-47379
May 16, 1988
Facts:
Respondent Engineering Construction, Inc., being a successful bidder, executed a
contract in Manila with the National Waterworks and Sewerage Authority (NAWASA),
whereby the former undertook to furnish all tools, labor, equipment, and materials (not
furnished by Owner), and to construct the proposed 2nd lpo-Bicti Tunnel, Intake and
Outlet Structures, and Appurtenant Structures, and Appurtenant Features, at
Norzagaray, Bulacan, and to complete said works within eight hundred (800) calendar
days from the date the Contractor receives the formal notice to proceed.
The respondent corporation already had completed the first major phase of the work,
namely, the tunnel excavation work. Some portions of the outworks at the Bicti site
were still under construction. As soon as the plaintiff corporation had finished the
tunnel excavation work at the Bicti site, all the equipment no longer needed there were
transferred to the Ipo site where some projects were yet to be completed.
The record shows that typhoon Welming hit Central Luzon, passing through defendant's
Angat Hydro-electric Project and Dam at lpo, Norzagaray, Bulacan. Strong winds struck
the project area, and heavy rains intermittently fell. Due to the heavy downpour, the
water in the reservoir of the Angat Dam was rising perilously at the rate of sixty (60)
centimeters per hour. To prevent an overflow of water from the dam, since the water
level had reached the danger height of 212 meters above sea level, the petitioner
corporation caused the opening of the spillway gates.
The appellate court sustained the findings of the trial court that the evidence
preponderantly established the fact that due to the negligent manner with which the
spillway gates of the Angat Dam were opened, an extraordinary large volume of water
rushed out of the gates, and hit the installations and construction works of ECI at the
lope site with terrific impact, as a result of which the latter's stockpile of materials and
supplies, camp facilities and permanent structures and accessories either washed away,
lost or destroyed.

Issue:
Whether or not petitioner can be held liable for the loss and damage of ECIs stockpile of
materials and supplies, camp facilities and permanent structures and accessories.
Held:
Petitioner NPC was undoubtedly negligent because it opened the spillway gates of the Angat
Dam only at the height of typhoon Welming when it knew very well that it was safer to have
opened the same gradually and earlier, as it was also undeniable that NPC knew of the coming
typhoon at least four days before it actually struck. And even though the typhoon was an act of
God or what we may call force majeure, NPC cannot escape liability because its negligence was
the proximate cause of the loss and damage.
Thus, 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 exempt from liability by showing that the immediate cause
of the damage was the act of God. To be exempt 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.











Anabelle Muaje-Tuazon and Almer Abing vs. Wenphil Corporation,
et al.
G.R. No. 162447
December 27, 2006
Facts:
Abing was assigned to the SM North Edsa Annex branch while Tuazon was assigned to
the Meycauayan branch. Before the announcement of the third round winners,
management received reports that as early as the first round of the contest, the
Meycauayan, MCU Caloocan, Tandang Sora and Fairview branches cheated. An internal
investigation ensued.
Petitioners were summoned to the main office regarding the reported anomaly.
Petitioners denied there was cheating. Immediately thereafter, petitioners were
notified, in writing, of hearings and of their immediate suspension. Thereafter,
petitioners were dismissed.
Petitioners filed, with the Regional Arbitration Branch, a complaint for illegal suspension
and dismissal against respondent Wenphil Corporation and its General Manager,
Elizabeth P. Orbita. Petitioners insisted that they were innocent of the accusations and
were dismissed without cause. In their defense, respondents maintained that
petitioners were terminated for dishonesty amounting to serious misconduct and willful
breach of trust.
The Labor Arbiter ruled in favor of the petitioners.
Respondents appealed to the National Labor Relations Commission (NLRC), which
affirmed with modification the decision of the Labor Arbiter.
Denied reconsideration, respondents elevated the case to the Court of Appeals, which
found substantial proof of petitioners' misconduct. Petitioners moved for
reconsideration but the same was denied. Hence, this petition.
Issue:
Whether or not petitioners were illegally dismissed.
Held:
In the present case, the tape receipts presented by respondents showed that there were
anomalies committed in the branches managed by the petitioners. On the principle of
respondeat superior or command responsibility alone, petitioners may be held liable for
negligence in the performance of their managerial duties, unless petitioners can positively show
that they were not involved. Their position requires a high degree of responsibility that
necessarily includes unearthing of fraudulent and irregular activities. Their bare,
unsubstantiated and uncorroborated denial of any participation in the cheating does not prove
their innocence nor disprove their alleged guilt. Additionally, some employees declared in their
affidavits that the cheating was actually the idea of the petitioners.
Petitioners make much of the fact that the affidavits were executed only after the investigation.
This is of no moment. For even without the affidavits, sufficient basis exists for respondents'
loss of trust and confidence on the petitioners as managerial officers.















Radio Communication of the Philippines, Inc. vs. Alfonso Verchez, et
al.
G.R. No. 164349
January 31, 2006
Facts:
Editha Hebron Verchez (Editha) was confined at the Sorsogon Provincial Hospital due to
an ailment. On even date, her daughter Grace Verchez-Infante (Grace) immediately
went to the Sorsogon Branch of the Radio Communications of the Philippines, Inc. (RCPI)
whose services she engaged to send a telegram to her sister Zenaida Verchez-Catibog
(Zenaida) who was residing at 18 Legal St., GSIS Village, Quezon City reading: Send check
money Mommy hospital. For RCPIs services, Grace paid P10.50 for which she was
issued a receipt.
As three days after RCPI was engaged to send the telegram to Zenaida no response was
received from her, Grace sent a letter to Zenaida, this time thru JRS Delivery Service,
reprimanding her for not sending any financial aid.
Immediately after she received Graces letter, Zenaida, along with her husband
Fortunato Catibog, left for Sorsogon. On her arrival at Sorsogon, she disclaimed having
received any telegram.
The telegram was finally delivered to Zenaida 25 days later.
Verchez, along with his daughters Grace and Zenaida and their respective spouses, filed
a complaint against RCPI before the Regional Trial Court (RTC) of Sorsogon for damages.
The RTC rendered a decision in favor of respondents.
On appeal, the Court of Appeals affirmed the trial courts decision.
Issue:
Whether or not petitioner is negligent in its failure to deliver the telegram within the shortest
possible time
Held:
In the case at bar, RCPI bound itself to deliver the telegram within the shortest possible time. It
took 25 days, however, for RCPI to deliver it.
Assuming arguendo that fortuitous circumstances prevented RCPI from delivering the telegram
at the soonest possible time, it should have at least informed Grace of the non-transmission
and the non-delivery so that she could have taken steps to remedy the situation. But it did not.
There lies the fault or negligence.
People depend on telecommunications companies in times of deep emotional stress or pressing
financial needs. Knowing that messages about the illnesses or deaths of loved ones, births or
marriages in a family, important business transactions, and notices of conferences or meetings
as in this case, are coursed through the petitioner and similar corporations, it is incumbent
upon them to exercise a greater amount of care and concern than that shown in this case.
Every reasonable effort to inform senders of the non-delivery of messages should be
undertaken.














Victory Liner, Inc. vs. Rosalito Gammad, et al
G.R. No. 159636
November 25, 2004
Facts:
Marie Grace Pagulayan-Gammad, respondents wife, was on board an air-conditioned
Victory Liner bus bound for Tuguegarao, Cagayan from Manila. The bus while running at
a high speed fell on a ravine somewhere in Barangay Baliling, Sta. Fe, Nueva Vizcaya,
which resulted in the death of Marie Grace and physical injuries to other passengers.
Respondent heirs of the deceased filed a complaint for damages arising from culpa
contractual against petitioner. In its answer, the petitioner claimed that the incident
was purely accidental and that it has always exercised extraordinary diligence in its 50
years of operation.
At the pre-trial, petitioner did not want to admit the proposed stipulation that the
deceased was a passenger of the Victory Liner Bus which fell on the ravine and that she
was issued Passenger Ticket No. 977785. Respondents, for their part, did not accept
petitioners proposal to pay P50,000.00.
The trial court rendered its decision in favor of respondents.
On appeal by petitioner, the Court of Appeals affirmed the decision of the trial court.
Hence, this petition.
Issue:
Whether or not petitioner should be held liable for breach of contract of carriage
Held:
A common carrier is bound to carry its passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with due regard to all the
circumstances. In a contract of carriage, it is presumed that the common carrier was at fault or
was negligent when a passenger dies or is injured. Unless the presumption is rebutted, the
court need not even make an express finding of fault or negligence on the part of the common
carrier. This statutory presumption may only be overcome by evidence that the carrier
exercised extraordinary diligence.
In the instant case, there is no evidence to rebut the statutory presumption that the proximate
cause of Marie Graces death was the negligence of petitioner.
Article 1764 in relation to Article 2206 of the Civil Code, holds the common carrier in breach of
its contract of carriage that results in the death of a passenger liable to pay the following: (1)
indemnity for death, (2) indemnity for loss of earning capacity, and (3) moral damages.


















FGU Insurance Corporation vs. G.P Sarmiento Trucking Corporation
and Lambert Eroles
G.R. No. 141910
August 6, 2002
Facts:
G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver thirty (30) units of
Condura S.D. white refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles,
from the plant site of Concepcion Industries, Inc., along South Superhighway in Alabang,
Metro Manila, to the Central Luzon Appliances in Dagupan City. While the truck was
traversing the north diversion road along McArthur highway in Barangay Anupol,
Bamban, Tarlac, it collided with an unidentified truck, causing it to fall into a deep canal,
resulting in damage to the cargoes.
FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion
Industries, Inc., the value of the covered cargoes in the sum of P204,450.00. FGU, in
turn, being the subrogee of the rights and interests of Concepcion Industries, Inc.,
sought reimbursement of the amount it had paid to the latter from GPS. Since the
trucking company failed to heed the claim, FGU filed a complaint for damages and
breach of contract of carriage against GPS and its driver Lambert Eroles with the
Regional Trial Court, Branch 66, of Makati City.
The RTC rendered a decision in favor of respondents. On appeal, the CA affirmed the
decision of the trial court and the motion for reconsideration was likewise denied.
Hence, this petition.
Issue:
Whether or not respondent GPS, either as a common carrier or a private carrier, may be
presumed to have been negligent when the goods it undertook to transport safely were
subsequently damaged while in its protective custody and possession.
Held:
Respondent trucking corporation recognizes the existence of a contract of carriage between it
and petitioners assured, and admits that the cargoes it has assumed to deliver have been lost
or damaged while in its custody. In such a situation, a default on, or failure of compliance with,
the obligation in this case, the delivery of the goods in its custody to the place of destination -
gives rise to a presumption of lack of care and corresponding liability on the part of the
contractual obligor the burden being on him to establish otherwise. GPS has failed to do so.
Respondent driver, on the other hand, without concrete proof of his negligence or fault, may
not himself be ordered to pay petitioner. The driver, not being a party to the contract of
carriage between petitioners principal and defendant, may not be held liable under the
agreement. A contract can only bind the parties who have entered into it or their successors
who have assumed their personality or their juridical position. Consonantly with the axiom res
inter alios acta aliis neque nocet prodest, such contract can neither favor nor prejudice a third
person. Petitioners civil action against the driver can only be based on culpa aquiliana, which,
unlike culpa contractual, would require the claimant for damages to prove negligence or fault
on the part of the defendant.














Light Rail Transit Authority & Rodolfo Roman vs. Marjorie Navidad,
et al.
G.R. No. 145804
February 6, 2003
Facts:
Nicanor Navidad, then drunk, entered the EDSA LRT station after purchasing a token
(representing payment of the fare). While Navidad was standing on the platform near
the LRT tracks, Junelito Escartin, the security guard assigned to the area approached
Navidad. A misunderstanding or an altercation between the two apparently ensued that
led to a fist fight. No evidence, however, was adduced to indicate how the fight started
or who, between the two, delivered the first blow or how Navidad later fell on the LRT
tracks. At the exact moment that Navidad fell, an LRT train, operated by petitioner
Rodolfo Roman, was coming in. Navidad was struck by the moving train, and he was
killed instantaneously.
The widow of Nicanor, herein respondent Marjorie Navidad, along with her children,
filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the
Metro Transit Organization, Inc. (Metro Transit), and Prudent for the death of her
husband. LRTA and Roman filed a counterclaim against Navidad and a cross-claim
against Escartin and Prudent. Prudent, in its answer, denied liability and averred that it
had exercised due diligence in the selection and supervision of its security guards.
The trial court rendered its decision in favor of the respondent. On appeal, The CA
affirmed the decision of the trial court with modification that Prudent is exonerated
from liability. Petitioners filed a motion for reconsideration but was denied. Hence, this
petition.
Issue:
Whether or not petitioners are liable for the death of Nicanor.
Held:
The foundation of LRTAs liability is the contract of carriage and its obligation to indemnify the
victim arises from the breach of that contract by reason of its failure to exercise the high
diligence required of the common carrier. In the discharge of its commitment to ensure the
safety of passengers, a carrier may choose to hire its own employees or avail itself of the
services of an outsider or an independent firm to undertake the task. In either case, the
common carrier is not relieved of its responsibilities under the contract of carriage.
On the part of Prudent, there is nothing to link (Prudent) to the death of Nicanor, for the reason
that the negligence of its employee, Escartin, has not been duly proven.
There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any
culpable act or omission, he must also be absolved from liability. Needless to say, the
contractual tie between the LRT and Navidad is not itself a juridical relation between the latter
and Roman; thus, Roman can be made liable only for his own fault or negligence.
















Rodzssen Supply Co., Inc. vs. Far East Bank & Trust Co.
G.R. No. 109087
May 9, 2001
Facts:
Rodzssen Supply, Inc. opened with Far East Bank and Trust Co. a 30-day domestic letter
of credit in the amount of P190,000.00 in favor of Ekman and Company, Inc. (Ekman) for
the purchase from the latter of five units of hydraulic loaders.
The three units of the hydraulic loaders were delivered to petitioner for which
respondent paid Ekman the sum of P114,000.00, which amount petitioner paid
respondent before the expiry date of the LC.
The shipment of the remaining two units of hydraulic loaders valued at P76,000.00 sent
by Ekman was readily received by respondent before the expiry date of the subject LC.
Upon Ekmans presentation of the documents for the P76,000.00 representing final
negotiation on the LC before the expiry date, and after a series of negotiations,
respondent paid to Ekman the amount of P76,000.00; and that upon respondents
demand from petitioner to pay for said amount (P76,000.00), petitioner refused to pay
without any valid reason. Respondent prays for judgment ordering defendant to pay
the abovementioned P76,000.00 plus due interest thereon.
The RTC rendered a decision in favor of the respondent. On appeal, the CA affirmed the
decision of the trial court. Hence, this petition.
Issue:
Whether or not petitioner is liable to respondent.
Held:
Petitioner should pay respondent bank the amount the latter expended for the equipment
belatedly delivered by Ekman and voluntarily received and kept by petitioner.
Respondent banks right to seek recovery from petitioner is anchored, not upon the
inefficacious Letter of Credit, but on Article 2142 of the Civil Code which reads as follows:
Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract
to the end that no one shall be unjustly enriched or benefited at the expense of another.
When both parties to a transaction are mutually negligent in the performance of their
obligations, the fault of one cancels the negligence of the other and, as in this case, their rights
and obligations may be determined equitably under the law proscribing unjust enrichment.



















University of the East vs. Romeo Jader
G.R. No. 132344
February 17, 2000
Facts:
Plaintiff was enrolled in the defendants College of Law from 1984 up to 1988. In the
first semester of his last year, he failed to take the regular final examination in Practice
Court 1 for which he was given an incomplete grade. He enrolled for the second
semester as fourth year law student and he filed an application for the removal of the
incomplete grade given him by Professor Carlos Ortega which was approved by Dean
Tiongson. Professor Ortega submitted his grade.
The plaintiffs name appeared in the tentative list of candidates for graduation for the
Degree of Bachelor of Laws.
The plaintiff attended the investiture ceremonies. He tendered a blow-out that evening
which was attended by neighbors, friends and relatives who wished him good luck in the
forthcoming bar examinations.
He took a leave of absence without pay from his job and enrolled at the pre-bar review
class in FEU. Having learned of the deficiency he dropped his review class and was not
able to take the bar examination.
Respondent sued petitioner for damages alleging that he suffered moral shock, mental
anguish, serious anxiety, besmirched reputation, wounded feelings and sleepless nights
when he was not able to take the 1988 bar examinations arising from the latters
negligence.
The trial court rendered a decision in favor of the plaintiff. The CA, on appeal, affirmed
the decision of the trial court. Hence, this petition.
Issue:
Whether or not petitioner is negligent.
Held:
Petitioner, in belatedly informing respondent of the result of the removal examination,
particularly at a time when he had already commenced preparing for the bar exams, cannot be
said to have been acting in good faith. Absence of good faith must be sufficiently established
for a successful prosecution by the aggrieved party in a suit for abuse of right under Article 19
of the Civil Code.
Considering further, that the institution of learning involved herein is a university which s
engaged in legal education, it should have practiced what it inculcates in its students, more
specifically the principle of good dealings.
Educational institutions are duty-bound to inform the students of their academic status and not
wait for the latter to inquire from the former. The conscious indifference of a person to the
rights or welfare of the person/persons who may be affected by his act or omission can support
a claim for damages.
Petitioners liability arose from its failure to promptly inform respondent of the result of an
examination and in misleading the latter into believing that he had satisfied all requirements for
the course.















Bayne Adjusters and Surveyors, Inc. vs. Court of Appeals and
Insurance Company of North America
G. R. No. 116332
January 25, 2000
Facts:
Colgate Palmolive Philippine, Inc., imported alkyl benzene from Japan valued at
US$255,802.88. The said liquid cargo was insured with herein private respondent
Insurance Company of North America against all risk for its full value. Petitioner Bayne
Adjusters and Surveyors Inc., was contracted by the consignee to supervise the proper
handling and discharge of the cargo from the chemical tanker to a receiving barge until
the cargo is pumped into the consignees shore tank.
When the cargo arrived in Manila petitioners surveyor supervised the transfer of the
cargo from the chemical tanker to the receiving barge. Pumping of the liquid cargo from
the barge to the consignees tank was interrupted several times due to mechanical
problems with the pump.
When the pump broke down once again, the petitioners surveyor left the premises
without leaving any instruction with the barge foreman what to do in the event that the
pump becomes operational again. No other surveyor was left in the premises and the
assigned surveyor did not seal the valves leading to the tank to avoid unsupervised
pumping of the cargo.
Later that day, the consignee asked the petitioner to send a surveyor to conduct tank
sounding. Petitioner sent Amado Fontillas, a cargo surveyor, not a liquid bulk surveyor,
to the premises and it was agreed that pumping operation would resume the following
day.
Fontillas tried to inform both the barge men and the assigned surveyor of the scheduled
resumption of pumping operation but he could not find them so he left the premises.
When the barge men arrived in the early evening, they found the valves of the tank
open and resumed pumping operation in the absence of any instruction from the
surveyor to the contrary.
The following morning it was found that an undetermined amount of alkyl benzene was
lost due to overflow. The consignee filed a claim with the private respondent insurance
corporation for the value of the lost liquid cargo. A compromise quantity of 67.649MT of
alkyl benzene was agreed to have been lost in the overflow and respondent insurance
corporation agreed to pay the consignee the net amount of P811,609.53. Private
respondent instituted an action for collection of sum of money as subrogee of the
consignee after failure to extrajudicially settle the matter with Bayne Adjusters.
Both the trial court and the appellate court found the petitioners failure to comply with
the Standard Operating Procedure for Handling Liquid Bulk Cargo when pumping
operation is suspended as the proximate cause of the loss.
Issue:
Whether or not petitioner is negligent.
Held:
The negligence of the obligor in the performance of the obligation renders him liable for
damages for the resulting loss suffered by the obligee. Fault or negligence of the obligor
consists in his failure to exercise due care and prudence in the performance of the obligation as
the nature of the obligation so demands. The factual findings and conclusions of the trial and
appellate court when supported by substantial evidence are entitled to great respect and will
not be disturbed on appeal except on very strong and cogent grounds.
The petitioners failure to closely supervise the discharge of the cargo in accordance with
accepted guidelines is the proximate cause of the loss. There is no cogent reason to overturn
the legal conclusion reached by the lower courts that the petitioner is negligent in the
performance of its duty as a marine superintendent surveyor under the Standard Operating
Procedure in handling liquid cargo and held the petitioner liable for damages for the loss of the
cargo.








Delsan Transport Lines, Inc. vs. C & A Construction, Inc.
G.R. No. 156034
October 1, 2003
Facts:
M/V Delsan Express, a ship owned and operated by petitioner Delsan Transport Lines,
Inc., anchored at the Navotas Fish Port for the purpose of installing a cargo pump and
clearing the cargo oil tank. Captain Demetrio T. Jusep of M/V Delsan Express received a
report from his radio head operator in Japan that a typhoon was going to hit Manila.
Capt. Jusep tried to seek shelter at the North Harbor but could not enter the area
because it was already congested. Capt. Jusep decided to drop anchor at the vicinity of
Vitas mouth, 4 miles away from a Napocor power barge. At that time, the waves were
already reaching 8 to 10 feet high. Capt. Jusep ordered his crew to go full ahead to
counter the wind which was dragging the ship towards the Napocor power barge. To
avoid collision, Capt. Jusep ordered a full stop of the vessel. He succeeded in avoiding
the power barge, but when the engine was re-started and the ship was maneuvered full
astern, it hit the deflector wall constructed by respondent. The damage caused by the
incident amounted to P456,198.24.
Respondent demanded payment of the damage from petitioner but the latter refused to
pay. Consequently, respondent filed a complaint for damages with the Regional Trial
Court of Manila, Branch 46. In its answer, petitioner claimed that the damage was
caused by a fortuitous event.
The complaint filed by respondent was dismissed. The trial court ruled that petitioner
was not guilty of negligence because it had taken all the necessary precautions to avoid
the accident.
On appeal to the Court of Appeals, the decision of the trial court was reversed and set
aside. It found Capt. Jusep guilty of negligence. Hence, this petition.
Issue:
Whether or not petitioner can be held liable for the negligence of Captain Jusep.
Held:
When Capt. Jusep ignored the weather report notwithstanding reasonable foresight of harm,
he showed an inexcusable lack of care and caution which an ordinary prudent person would
have observed in the same situation. Had he moved the vessel earlier, he could have had
greater chances of finding a space at the North Harbor considering that the Navotas Port where
they docked was very near North Harbor. Even if the latter was already congested, he would
still have time to seek refuge in other ports.
In the case at bar, however, petitioner presented no evidence that it formulated
rules/guidelines for the proper performance of functions of its employees and that it strictly
implemented and monitored compliance therewith. Failing to discharge the burden, petitioner
should therefore be held liable for the negligent act of Capt. Jusep.

















Philippine Commercial International Bank vs. Court of Appeals, et al
G.R. No. 121413
January 29, 2001
Facts:
Ford had been maintaining a checking account with Citibank; that Citibank Check No.
SN-04867 which was drawn and issued by the plaintiff in favor of the Commissioner of
Internal Revenue was a crossed check in that, on its face were two parallel lines and
written in between said lines was the phrase Payee's Account Only, and that Citibank
paid the full face value of the check in the amount of P4,746,114.41 to the defendant
IBAA.
Citibank Check No. SN-04867, together with the Revenue Tax Receipt No. 18747002,
was deposited with petitioner IBAA, through its Ermita Branch. The latter accepted the
check and sent it to the Central Clearing House for clearing on the same day. Thereafter,
IBAA presented the check for payment to Citibank and the latter paid the face value of
the check in the amount of P4,746,114.41. Consequently, the amount of P4,746,114.41
was debited in respondents account with the defendant Citibank and the check was
returned to the respondent.
Upon verification, respondent discovered that its Citibank Check No. SN-04867 in the
amount of P4,746,114.41 was not paid to the Commissioner of Internal Revenue. The
respondent notified the latter that in case it will be re-assessed by the BIR for the
payment of the taxes covered by the said checks, then respondent shall hold the IBAA
and Citibank liable for reimbursement of the face value of the same. Both denied
liability and refused to pay.
IBAA was merged with the Philippine Commercial International Bank (PCI Bank) with the
latter as the surviving entity.
An investigation by the NBI revealed that Citibank Check No. SN-04867 was recalled by
Godofredo Rivera, the General Ledger Accountant of Ford. He purportedly needed to
hold back the check because there was an error in the computation of the tax due to the
BIR. With Rivera's instruction, PCIBank replaced the check with two of its own
Manager's Checks (MCs). Alleged members of a syndicate later deposited the two MCs
with the Pacific Banking Corporation.
The trial court rendered its decision in favor of respondent which was affirmed by the
appellate court. Hence, this petition.
Issue:
Whether or not PCIBank is liable for negligence.
Held:
PCIBank failed to verify the authority of Mr. Rivera to negotiate the checks. The neglect of
PCIBank employees to verify whether his letter requesting for the replacement of the Citibank
Check No. SN-04867 was duly authorized, showed lack of care and prudence required in the
circumstances.
Banking business requires that the one who first cashes and negotiates the check must take
some percautions to learn whether or not it is genuine. And if the one cashing the check
through indifference or othe circumstance assists the forger in committing the fraud, he should
not be permitted to retain the proceeds of the check from the drawee whose sole fault was
that it did not discover the forgery or the defect in the title of the person negotiating the
instrument before paying the check. For this reason, a bank which cashes a check drawn upon
another bank, without requiring proof as to the identity of persons presenting it, or making
inquiries with regard to them, cannot hold the proceeds against the drawee when the proceeds
of the checks were afterwards diverted to the hands of a third party. In such cases the drawee
bank has a right to believe that the cashing bank (or the collecting bank) had, by the usual
proper investigation, satisfied itself of the authenticity of the negotiation of the checks. Thus,
one who encashed a check which had been forged or diverted and in turn received payment
thereon from the drawee, is guilty of negligence which proximately contributed to the success
of the fraud practiced on the drawee bank. The latter may recover from the holder the money
paid on the check.
Having established that the collecting bank's negligence is the proximate cause of the loss,
PCIBank is liable in the amount corresponding to the proceeds of Citibank Check No. SN-04867.







San Miguel Corporation vs. Heirs of Sabiniano Inguito and Julius
Ouano
G.R. No. 141716
July 4, 2002
Facts:
San Miguel Corporation entered into a Time Charter Party Agreement with Julius Ouano,
doing business under the name and style J. Ouano Marine Services.
During the term of the charter, SMC issued sailing orders to the Master of the MN Doa
Roberta, Captain Sabiniano Inguito.
SMC Radio Operator Rogelio P. Moreno contacted Captain Inguito through the radio and
advised him to take shelter. Captain Inguito replied that they will proceed since the
typhoon was far away from them, and that the winds were in their favor.
Moreno again communicated with Captain Inguito and advised him to take shelter. The
captain responded that they can manage. Hearing this, Moreno immediately tried to get
in touch with Rico Ouano to tell him that Captain Inguito did not heed their advice.
However, Rico Ouano was out of his office, so Moreno left the message with the
secretary.
Captain Inguito called Moreno over the radio and requested him to contact Rico Ouano,
son of Julius Ouano, because they needed a helicopter to rescue them.
The M/V Doa Roberta sank. Out of the 25 officers and crew on board the vessel, only
five survived.
The heirs of the deceased captain and crew, as well as the survivors, of the ill-fated M/V
Doa Roberta filed a complaint for tort against San Miguel Corporation and Julius
Ouano.
Julius Ouano filed an answer with cross-claim, alleging that the proximate cause of the
loss of the vessel and its officers and crew was the fault and negligence of SMC, which
had complete control and disposal of the vessel as charterer and which issued the
sailing order for its departure despite being forewarned of the impending typhoon.
Thus, he prayed that SMC indemnify him for the cost of the vessel and the unrealized
rentals and earnings thereof.
In its answer to the complaint and answer to the cross-claim, SMC countered that it was
Ouano who had the control, supervision and responsibilities over the navigation of the
vessel. This notwithstanding, and despite his knowledge of the incoming typhoon,
Ouano never bothered to initiate contact with his vessel.
The court a quo rendered judgment finding that the proximate cause of the loss of the
M/V Doa Roberta was attributable to SMC. On appeal, the CA rendered a decision
modifying the trial courts decision declaring SMC and Julian Ouano jointly and severally
liable to heirs of the deceased and survivors of the M/V Doa Roberta except to the
heirs of Capt. Sabiniano Inguito.
SMC and Ouano filed separate motions for reconsideration, which were denied by the
Court of Appeals for lack of merit. Hence, this petition.
Issue:
Whether or not petitioner is negligent.
Held:
It is very clear that Captain Sabiniano Inguito had sufficient time within which to secure his men
and the vessel. But he waited until the vessel was already in distress to seek help in saving his
men and the vessel. In any event, Capt. Inguito had full control and responsibility, whether to
follow a sailing order or to take shelter when already at sea. In fact, there was an incident when
a sailing order was issued by SMC to Inguito but he decided not to proceed with the voyage
because of a tropical storm.
Ouano miserably failed to overcome the presumption of his negligence. He failed to present
proof that he exercised the due diligence of a bonus paterfamilias in the selection and
supervision of the captain of the M/V Doa Roberta. Hence, he is vicariously liable for the loss
of lives and property occasioned by the lack of care and negligence of his employee.
SMC is not liable for the losses. The contention that it was the issuance of the sailing order by
SMC which was the proximate cause of the sinking is untenable. The fact that there was an
approaching typhoon is of no moment. It appears that on one previous occasion, SMC issued a
sailing order to the captain of the M/V Doa Roberta, but the vessel cancelled its voyage due to
typhoon. Likewise, it appears from the records that SMC issued the sailing order before
typhoon Ruping was first spotted on that day.





Heirs of Jose Marcial Ochoa, et al. vs. G & S Transport Corporation
G.R. No. 170071
July 16, 2012
Facts:
A Complaint for Damages was filed by the heirs against G & S with the Regional Trial
Court (RTC), Pasig City, Branch 164 on account of Jose Marcials death while onboard a
taxicab owned and operated by G & S.
The RTC adjudged G & S guilty of breach of contract of carriage and ordered it to pay the
heirs for damages.
On appeal, the Court of Appeals (CA) affirmed the RTC Decision but with the
modifications that the awards for loss of income in the amount of P6,537,244.96 be
deleted and that moral damages be reduced to P200,000.00.
The deletion was ordered on the ground that the income certificate issued by Jose
Marcials employer, the United States Agency for International Development (USAID), is
self-serving, unreliable and biased, and that the same was not supported by competent
evidence such as income tax returns or receipts. A Motion for Reconsideration was filed
but it was denied by the court. Hence, this petition.
Issue:
Whether or not respondent is liable to the heirs.
Held:
It is true that before a private document offered as authentic be received in evidence, its due
execution and authenticity must first be proved. However, it must be remembered that this
requirement of authentication only pertains to private documents and does not apply to public
documents, these being admissible without further proof of their due execution or
genuineness. Two reasons may be advanced in support of this rule, namely: said documents
have been executed in the proper registry and are presumed to be valid and genuine until the
contrary is shown by clear and convincing proof; and, second, because public documents are
authenticated by the official signature and seals which they bear and of which seals, courts may
take judicial notice. Hence, in the presentation of public documents as evidence, due execution
and authenticity thereof are already presumed.
And, there being no clear and sufficient evidence presented by G & S to overcome the
presumptions, the RTC is correct when it admitted in evidence the said document. The USAID
Certification could very well be used as basis for the award for loss of income to the heirs.
G & S failed to overcome the presumption that the common carrier is at fault or is negligent
when a passenger dies or is injured.


















Alfredo Pacis and Cleopatra Pacis vs. Jerome Jovanne Morales
G.R. No. 169467
February 25, 2010
Facts:
Alfred Dennis Pacis, then 17 years old and a first year student at the Baguio
Colleges Foundation taking up BS Computer Science, died due to a gunshot
wound in the head which he sustained while he was at the Top Gun Firearm[s]
and Ammunition[s] Store located at Upper Mabini Street, Baguio City. The gun
store was owned and operated by defendant Jerome Jovanne Morales.
The bullet which killed Alfred Dennis Pacis was fired from a gun brought in by a
customer of the gun store for repair.
Defendant Morales was in Manila at the time. His employee Armando Jarnague,
who was the regular caretaker of the gun store was also not around. He left
earlier and requested sales agents Matibag and Herbolario to look after the gun
store while he and defendant Morales were away. Jarnague entrusted to
Matibag and Herbolario a bunch of keys used in the gun store which included the
key to the drawer where the fatal gun was kept.
It appears that Matibag and Herbolario later brought out the gun from the
drawer and placed it on top of the table. Attracted by the sight of the gun, the
young Alfred Dennis Pacis got hold of the same. Matibag asked Alfred Dennis
Pacis to return the gun. The latter followed and handed the gun to Matibag. It
went off, the bullet hitting the young Alfred in the head.
A criminal case for homicide was filed against Matibag before branch VII of this
Court. Matibag, however, was acquitted of the charge against him because of the
exempting circumstance of accident under Art. 12, par. 4 of the Revised Penal
Code.
The trial court rendered its decision in favor of petitioners.
Respondent appealed to the Court of Appeals. The Court of Appeals reversed the
trial courts Decision and absolved respondent from civil liability under Article
2180 of the Civil Code.
Petitioners filed a motion for reconsideration, which the Court of Appeals
denied. Hence, this petition.

Issue:
Whether or not respondent is liable for the death of Alfred Pacis.
Held:
As a gun store owner, respondent is presumed to be knowledgeable about firearms safety and
should have known never to keep a loaded weapon in his store to avoid unreasonable risk of
harm or injury to others. Respondent has the duty to ensure that all the guns in his store are
not loaded. Firearms should be stored unloaded and separate from ammunition when the
firearms are not needed for ready-access defensive use. With more reason, guns accepted by
the store for repair should not be loaded precisely because they are defective and may cause
an accidental discharge such as what happened in this case. Respondent was clearly negligent
when he accepted the gun for repair and placed it inside the drawer without ensuring first that
it was not loaded. In the first place, the defective gun should have been stored in a vault.
Before accepting the defective gun for repair, respondent should have made sure that it was
not loaded to prevent any untoward accident. Indeed, respondent should never accept a
firearm from another person, until the cylinder or action is open and he has personally checked
that the weapon is completely unloaded. For failing to insure that the gun was not loaded,
respondent himself was negligent.
Clearly, respondent did not exercise the degree of care and diligence required of a good father
of a family, much less the degree of care required of someone dealing with dangerous
weapons, as would exempt him from liability in this case.









Philippine Hawk Corporation vs. Vivian Tan Lee
G.R. No. 166869
February 16, 2010
Facts:
Respondent Vivian Tan Lee filed before the RTC of Quezon City a Complaint against
petitioner Philippine Hawk Corporation and defendant Margarito Avila for damages
based on quasi-delict, arising from a vehicular accident that occurred in Barangay
Buensoceso, Gumaca, Quezon. The accident resulted in the death of respondents
husband, Silvino Tan, and caused respondent physical injuries.
In its Answer, petitioner denied liability for the vehicular accident, alleging that the
immediate and proximate cause of the accident was the recklessness or lack of caution
of Silvino Tan. Petitioner asserted that it exercised the diligence of a good father of the
family in the selection and supervision of its employees, including Margarito Avila.
The trial court rendered judgment against petitioner and defendant Margarito Avila.
On appeal, the Court of Appeals affirmed the decision of the trial court with
modification in the award of damages.
Issue:
Whether or not petitioner is liable to respondent for damages.
Held:
Whenever an employees negligence causes damage or injury to another, there instantly arises
a presumption that the employer failed to exercise the due diligence of a good father of the
family in the selection or supervision of its employees. To avoid liability for a quasi-delict
committed by his employee, an employer must overcome the presumption by presenting
convincing proof that he exercised the care and diligence of a good father of a family in the
selection and supervision of his employee.
Petitioner is liable to respondent, since it failed to exercise the diligence of a good father of the
family in the selection and supervision of its bus driver, Margarito Avila, for having failed to
sufficiently inculcate in him discipline and correct behavior on the road. Indeed, petitioners
tests were concentrated on the ability to drive and physical fitness to do so. It also did not
know that Avila had been previously involved in sideswiping incidents.
Mercury Drug Corporation and Rolando Del Rosario vs. Spouses
Richard Huang, et al.
G.R. No. 172122
June 22, 2007
Facts:
Petitioner Mercury Drug Corporation (Mercury Drug) is the registered owner of a six-
wheeler 1990 Mitsubishi Truck with plate number PRE 641 (truck). It has in its employ
petitioner Rolando J. del Rosario as driver. Respondent spouses Richard and Carmen
Huang are the parents of respondent Stephen Huang and own the red 1991 Toyota
Corolla GLI Sedan with plate number PTT 775 (car).
These two vehicles figured in a road accident within the municipality of Taguig, Metro
Manila. Respondent Stephen Huang was driving the car, weighing 1,450 kg., while
petitioner Del Rosario was driving the truck, weighing 14,058 kg. Both were traversing
the C-5 Highway, north bound, coming from the general direction of Alabang going to
Pasig City. The car was on the left innermost lane while the truck was on the next lane
to its right, when the truck suddenly swerved to its left and slammed into the front right
side of the car. The collision hurled the car over the island where it hit a lamppost, spun
around and landed on the opposite lane. The truck also hit a lamppost, ran over the car
and zigzagged towards, and finally stopped in front of Buellah Land Church.
The car, valued at P300,000.00, was a total wreck. Respondent Stephen Huang
sustained massive injuries to his spinal cord, head, face, and lung. Despite a series of
operations, respondent Stephen Huang is paralyzed for life from his chest down and
requires continuous medical and rehabilitation treatment.
Respondents fault petitioner Del Rosario for committing gross negligence and reckless
imprudence while driving, and petitioner Mercury Drug for failing to exercise the
diligence of a good father of a family in the selection and supervision of its driver.
The trial court found petitioners Mercury Drug and Del Rosario jointly and severally
liable to pay respondents actual, compensatory, moral and exemplary damages,
attorneys fees, and litigation expenses.
The Court of Appeals affirmed the decision of the trial court but reduced the award of
moral damages to P1,000,000.00. The appellate court also denied the motion for
reconsideration filed by petitioners. Hence, this appeal.

Issue:
Whether or not petitioner is liable to respondents.
Held:
The liability of the employer under Art. 2180 of the Civil Code is direct or immediate. It is not
conditioned on a prior recourse against the negligent employee, or a prior showing of
insolvency of such employee. It is also joint and solidary with the employee.
To be relieved of liability, petitioner Mercury Drug should show that it exercised the diligence of
a good father of a family, both in the selection of the employee and in the supervision of the
performance of his duties. Thus, in the selection of its prospective employees, the employer is
required to examine them as to their qualifications, experience, and service records. With
respect to the supervision of its employees, the employer should formulate standard operating
procedures, monitor their implementation, and impose disciplinary measures for their breach.
To establish compliance with these requirements, employers must submit concrete proof,
including documentary evidence.
Petitioner Mercury Drug failed to show that it exercised due diligence on the supervision and
discipline over its employees. In fact, on the day of the accident, petitioner Del Rosario was
driving without a license. He was holding a TVR for reckless driving. He testified that he
reported the incident to his superior, but nothing was done about it. He was not suspended or
reprimanded. No disciplinary action whatsoever was taken against petitioner Del Rosario.
Petitioner Mercury Drug has failed to discharge its burden of proving that it exercised due
diligence in the selection and supervision of its employee, petitioner Del Rosario.








Flordeliza Mendoza vs. Mutya Soriano, et al.
G.R. No. 164012
June 8, 2007
Facts:
Sonny Soriano, while crossing Commonwealth Avenue near Luzon Avenue in Quezon
City, was hit by a speeding Tamaraw FX driven by Lomer Macasasa. Soriano was thrown
five meters away, while the vehicle only stopped some 25 meters from the point of
impact. Gerard Villaspin, one of Sorianos companions, asked Macasasa to bring Soriano
to the hospital, but after checking out the scene of the incident, Macasasa returned to
the FX, only to flee. A school bus brought Soriano to East Avenue Medical Center where
he later died. Subsequently, the Quezon City Prosecutor recommended the filing of a
criminal case for reckless imprudence resulting to homicide against Macasasa.
Respondents Mutya Soriano and Julie Ann Soriano, Sorianos wife and daughter,
respectively, filed a complaint for damages against Macasasa and petitioner Flordeliza
Mendoza, the registered owner of the vehicle.
In her answer, petitioner Mendoza maintained that she was not liable since as owner of
the vehicle, she had exercised the diligence of a good father of a family over her
employee, Macasasa. Upon respondents motion, the complaint for damages against
Macasasa was dismissed.
After trial, the trial court also dismissed the complaint against petitioner. It found
Soriano negligent for crossing Commonwealth Avenue by using a small gap in the
islands fencing rather than the pedestrian overpass.
Respondents appealed. The Court of Appeals reversed the trial courts decision. Hence,
this appeal.
Issue:
Whether or not petitioner is liable for damages.
Held:
While respondents could recover damages from Macasasa in a criminal case and petitioner
could become subsidiarily liable, still petitioner, as owner and employer, is directly and
separately civilly liable for her failure to exercise due diligence in supervising Macasasa. The
damage suit is for the quasi-delict of petitioner, as owner and employer, and not for the delict
of Macasasa, as driver and employee.
In this case, petitioner is primarily and solidarily liable for the damages caused by Macasasa.
Respondents could recover directly from petitioner since petitioner failed to prove that she
exercised the diligence of a good father of a family in supervising Macasasa.




















Hermana R. Cerezo vs. David Tuazon
G.R. No. 141538
March 23, 2004
Facts:
A Country Bus Lines passenger bus with plate number NYA 241 collided with a tricycle
bearing plate number TC RV 126 along Captain M. Palo Street, Sta. Ines, Mabalacat,
Pampanga. Tricycle driver Tuazon filed a complaint for damages against Mrs. Cerezo, as
owner of the bus line, her husband Attorney Juan Cerezo, and bus driver Danilo A.
Foronda.
At the time of the incident, Tuazon was in his proper lane when Foronda, being then the
driver and person in charge of the Country Bus with plate number NYA 241 without
taking the necessary precaution to prevent loss of lives or injuries, his negligence,
carelessness and imprudence resulted to severe damage to the tricycle and serious
physical injuries to Tuazon thus making him unable to walk and becoming disabled, with
his thumb and middle finger on the left hand being cut.
Tuazon filed a motion to litigate as a pauper.
The trial court rendered a decision in favor of Tuazon. On appeal, the CA affirmed the
decision of the trial court.
Issue:
Whether or not Cerezo is liable for damages.
Held:
The responsibility of two or more persons who are liable for a quasi-delict is solidary. Where
there is a solidary obligation on the part of debtors, as in this case, each debtor is liable for the
entire obligation. Hence, each debtor is liable to pay for the entire obligation in full. There is
no merger or renunciation of rights, but only mutual representation. Where the obligation of
the parties is solidary, either of the parties is indispensable, and the other is not even a
necessary party because complete relief is available from either. Therefore, jurisdiction over
Foronda is not even necessary as Tuazon may collect damages from Mrs. Cerezo alone.
Moreover, an employers liability based on a quasi-delict is primary and direct, while the
employers liability based on a delict is merely subsidiary. The words primary and direct, as
contrasted with subsidiary, refer to the remedy provided by law for enforcing the obligation
rather than to the character and limits of the obligation. Although liability under Article 2180
originates from the negligent act of the employee, the aggrieved party may sue the employer
directly. When an employee causes damage, the law presumes that the employer has himself
committed an act of negligence in not preventing or avoiding the damage. This is the fault that
the law condemns. While the employer is civilly liable in a subsidiary capacity for the
employees criminal negligence, the employer is also civilly liable directly and separately for his
own civil negligence in failing to exercise due diligence in selecting and supervising his
employee. The idea that the employers liability is solely subsidiary is wrong.


















Filcar Transport Services vs. Jose Espinas
G.R. No. 174156
June 20, 2012
Facts:
Respondent Jose A. Espinas was driving his car along Leon Guinto Street in Manila. Upon
reaching the intersection of Leon Guinto and President Quirino Streets, Espinas stopped
his car. When the signal light turned green, he proceeded to cross the intersection. He
was already in the middle of the intersection when another car, traversing President
Quirino Street and going to Roxas Boulevard, suddenly hit and bumped his car. As a
result of the impact, Espinas car turned clockwise. The other car escaped from the
scene of the incident, but Espinas was able to get its plate number.
Espinas sent several letters to Filcar and to its President and General Manager Carmen
Flor, demanding payment for the damages sustained by his car. Espinas filed a
complaint for damages against Filcar and Carmen Flor before the Metropolitan Trial
Court of Manila.
Filcar denied any liability to Espinas and claimed that the incident was not due to its
fault or negligence since Floresca was not its employee but that of Atty. Flor. Filcar and
Carmen Flor both said that they always exercised the due diligence required of a good
father of a family in leasing or assigning their vehicles to third parties.
The MeTC ruled in favor of Espinas, and ordered Filcar and Carmen Flor, jointly and
severally, to pay Espinas.
The Regional Trial Court of Manila, Branch 20, in the exercise of its appellate
jurisdiction, affirmed the MeTC decision.
On appeal, the CA partly granted the petition in CA-G.R. SP No. 86603; it modified the
RTC decision by ruling that Carmen Flor, President and General Manager of Filcar, is not
personally liable to Espinas.
Filcar filed a motion for reconsideration which the CA denied. Hence, this petition.
Issue:
Whether the driver of the motor vehicle, Floresca, is an employee of Filcar is irrelevant in
arriving at the conclusion that Filcar is primarily and directly liable for the damages sustained by
Espinas.

Held:
While Republic Act No. 4136 or the Land Transportation and Traffic Code does not contain any
provision on the liability of registered owners in case of motor vehicle mishaps, Article 2176, in
relation with Article 2180, of the Civil Code imposes an obligation upon Filcar, as registered
owner, to answer for the damages caused to Espinas car. This interpretation is consistent with
the strong public policy of maintaining road safety, thereby reinforcing the aim of the State to
promote the responsible operation of motor vehicles by its citizens.
This does not mean, however, that Filcar is left without any recourse against the actual
employer of the driver and the driver himself. Under the civil law principle of unjust
enrichment, the registered owner of the motor vehicle has a right to be indemnified by the
actual employer of the driver of the amount that he may be required to pay as damages for the
injury caused to another.
The set-up may be inconvenient for the registered owner of the motor vehicle, but the
inconvenience cannot outweigh the more important public policy being advanced by the law in
this case which is the protection of innocent persons who may be victims of reckless drivers and
irresponsible motor vehicle owners.












FEB Leasing and Finance Corporation vs. Spouses Sergio Baylon, et
al.
G.R. No. 181398
June 29, 2011
Facts:
An Isuzu oil tanker running along Del Monte Avenue in Quezon City and bearing plate
number TDY 712 hit Loretta, daughter of respondent spouses Baylon. At the time of the
accident, the oil tanker was registered in the name of petitioner FEB Leasing and
Finance Corporation (petitioner). The oil tanker was leased to BG Hauler, Inc. (BG
Hauler) and was being driven by the latters driver, Manuel Y. Estilloso. The oil tanker
was insured by FGU Insurance Corp. (FGU Insurance).
Petitioner claimed that the spouses Baylon had no cause of action against it because
under its lease contract with BG Hauler, petitioner was not liable for any loss, damage,
or injury that the leased oil tanker might cause. Petitioner claimed that no employer-
employee relationship existed between petitioner and the driver.
BG Hauler alleged that neither do the spouses Baylon have a cause of action against it
since the oil tanker was not registered in its name. BG Hauler contended that the victim
was guilty of contributory negligence in crossing the street.
For its part, FGU Insurance averred that the victim was guilty of contributory negligence.
FGU Insurance concluded that the spouses Baylon could not expect to be paid the full
amount of their claims.
The RTC found that the death of Loretta was due to the negligent act of the driver. The
RTC held that BG Hauler, as the employer, was solidarily liable with the driver. The RTC
further held that petitioner, as the registered owner of the oil tanker, was also solidarily
liable.
The RTC found that since FGU Insurance already paid the amount of P450,000.00 to the
spouses Baylon, BG Hauler, and petitioner, the insurers obligation has been
satisfactorily fulfilled. The RTC thus dismissed the cross-claim of BG Hauler against FGU
Insurance.
The Court of Appeals affirmed the RTC Decision but with the modification that the
award of attorneys fees be deleted for being speculative.
Dissatisfied, petitioner and BG Hauler, joined by the driver, filed two separate motions
for reconsideration. The Court of Appeals denied both motions for lack of merit.
Unconvinced, petitioner alone filed the present petition for review on certiorari
impleading the spouses Baylon, BG Hauler, and the driver as respondents.
Issue:
Whether or not the registered owner of a financially leased vehicle remains liable for loss,
damage, or injury caused by the vehicle notwithstanding an exemption provision in the
financial lease contract.
Held:
Well-settled is the rule that the registered owner of the vehicle is liable for quasi-delicts
resulting from its use. Thus, even if the vehicle has already been sold, leased, or transferred to
another person at the time the vehicle figured in an accident, the registered vehicle owner
would still be liable for damages caused by the accident. The sale, transfer or lease of the
vehicle, which is not registered with the Land Transportation Office, will not bind third persons
aggrieved in an accident involving the vehicle. The compulsory motor vehicle registration
underscores the importance of registering the vehicle in the name of the actual owner.
In this case, petitioner admits that it is the registered owner of the oil tanker that figured in an
accident causing the death of Loretta. As the registered owner, it cannot escape liability for the
loss arising out of negligence in the operation of the oil tanker. Its liability remains even if at the
time of the accident, the oil tanker was leased to BG Hauler and was being driven by the latters
driver, and despite a provision in the lease contract exonerating the registered owner from
liability.








Filipinas Synthetic Fiber Corporation vs. Wilfredo De Los Santos, et
al.
G.R. No. 152033
March 16, 2011
Facts:
On that same night, at the request of Wilfredo, his brother Armando de los Santos
(Armando), husband of respondent Carmina Vda. de los Santos, went to the Rizal
Theater to fetch Teresa Elena after the latter's performance. He drove a 1980 Mitsubishi
Galant Sigma (Galant Sigma) with Plate No. NSL 559, a company car assigned to
Wilfredo.
Two other members of the cast of Woman of the Year, namely, Annabel Vilches
(Annabel) and Jerome Macuja, joined Teresa Elena in the Galant Sigma.
While travelling along the Katipunan Road (White Plains), the Galant Sigma collided with
the shuttle bus owned by petitioner and driven by Alfredo S. Mejia (Mejia), an employee
of petitioner. The Galant Sigma was dragged about 12 meters from the point of impact,
across the White Plains Road landing near the perimeter fence of Camp Aguinaldo,
where the Galant Sigma burst into flames and burned to death beyond recognition all
four occupants of the car.
A criminal charge for reckless imprudence resulting in damage to property with multiple
homicide was brought against Mejia, which was decided in favor of Mejia. The family of
Annabel filed a civil case against petitioner and Mejia.
After trial on the merits, the RTC decided in favor of herein respondents.
Petitioner appealed to the CA. The CA affirmed the decision of the trial court. Hence,
this petition.
Issue:
Whether or not petitioner is liable for the negligent act of the driver.
Held:
Under Article 2180 of the New Civil Code, when an injury is caused by the negligence of the
employee, there instantly arises a presumption of law that there was negligence on the part of
the master or employer either in the selection of the servant or employee, or in supervision
over him after selection or both. The liability of the employer under Article 2180 is direct and
immediate; it is not conditioned upon prior recourse against the negligent employee and a prior
showing of the insolvency of such employee. Therefore, it is incumbent upon the private
respondents (in this case, the petitioner) to prove that they exercised the diligence of a good
father of a family in the selection and supervision of their employee.
Fylsin did not even sufficiently prove that it exercised the required supervision of Mejia by
ensuring rest periods, particularly for its night shift drivers who are working on a time when
most of us are usually taking rest. As correctly argued by the plaintiffs-appellees, this is
significant because the accident happened at 11:30 p.m., when the shuttle bus was under the
control of a driver having no passenger at all. Despite, the lateness of the hour and the darkness
of the surrounding area, the bus was travelling at a speed of 70 kilometers per hour.
In view of the absence of sufficient proof of its exercise of due diligence, Filsyn cannot escape
its solidary liability as the owner of the wayward bus and the employer of the negligent driver
of the wayward bus.













Viron Transportation Co., Inc. vs. Alberto Delos Santos y Natividad
and Rudy Samidan
G.R. No. 138296
November 22, 2000
Facts:
Plaintiff, a public utility transportation company, is the registered owner of Viron Transit
Bus No. 1080, with Plate No. TB-AVC-332; while the defendant Rudy Samidan is the
registered owner of the Forward Cargo Truck with Plate No. TDY-524 which, at the time
of the vehicular accident in question, was driven and operated by the defendant Alberto
delos Santos y Natividad.
The aforesaid bus was driven by plaintiffs regular driver Wilfredo Villanueva along
MacArthur Highway within the vicinity of Barangay Parsolingan, Gerona, Tarlac coming
from the North en route to its destination in Manila. It was following the Forward Cargo
Truck proceeding from the same direction then being driven, as aforesaid, by the
defendant Alberto delos Santos. The cargo truck swerved to the right shoulder of the
road and, while about to be overtaken by the bus, again swerved to the left to occupy
its lane. It was at that instance that the collision occurred, the left front side of the truck
collided with the right front side of the bus causing the two vehicles substantial
damages.
After trial, the lower court dismissed petitioners complaint and sustained the private
respondents counterclaim for damages.
Not satisfied therewith, petitioner appealed to the Court of Appeals which as mentioned
at the outset affirmed in toto the decision of the lower court. Its motion for
reconsideration has been denied. Hence, this petition.
Issue:
Whether or not petitioner is liable for the negligent acts of Wilfredo.
Held:
It is plain to see that the fault or negligence was attributable to the driver of the Viron
passenger bus. In any event, it is doctrinally entrenched that the assessment of the trial judge
as to the issue of credibility binds the appellate court because he is in a better position to
decide the issue, having heard the witnesses and observed their deportment and manner of
testifying during the trial, except when the trial court has plainly overlooked certain facts of
substance and value, that, if considered, might affect the result of the case, or where the
assessment is clearly shown to be arbitrary. Petitioner has not shown this case to fall under the
exception.
In fine, when the employee causes damage due to his own negligence while performing his own
duties, there arises the juris tantum presumption that the employer is negligent, rebuttable
only by proof of observance of the diligence of a good father of a family. Petitioner, through its
witnesses, namely, Danilo Azardon, a shop supervisor and Fernando Mallare, an administrative
officer, failed to rebut such legal presumption of negligence in the selection and supervision of
employees, thus, petitioner as the employer is responsible for damages, the basis of the
liability being the relationship of pater familias or on the employers own negligence. Hence,
with the allegations and subsequent proof of negligence against the bus driver of petitioner,
the lower courts correctly adjudged petitioner liable for damages.















Mercury Drug Corporation vs. Sebastian Baking
G.R. No. 156037
May 25, 2007
Facts:
Sebastian M. Baking, respondent, went to the clinic of Dr. Cesar Sy for a medical check-
up. On the following day, after undergoing an ECG, blood, and hematology examinations
and urinalysis, Dr. Sy found that respondents blood sugar and triglyceride were above
normal levels. Dr. Sy then gave respondent two medical prescriptions Diamicron for
his blood sugar and Benalize tablets for his triglyceride.
Respondent then proceeded to petitioner Mercury Drug Corporation (Alabang Branch)
to buy the prescribed medicines. However, the saleslady misread the prescription for
Diamicron as a prescription for Dormicum. Thus, what was sold to respondent was
Dormicum, a potent sleeping tablet.
Unaware that what was given to him was the wrong medicine, respondent took one pill
of Dormicum on three consecutive days.
On the third day he took the medicine, respondent figured in a vehicular accident. The
car he was driving collided with the car of one Josie Peralta. Respondent fell asleep
while driving. He could not remember anything about the collision nor felt its impact.
Suspecting that the tablet he took may have a bearing on his physical and mental state
at the time of the collision, respondent returned to Dr. Sys clinic. Upon being shown
the medicine, Dr. Sy was shocked to find that what was sold to respondent was
Dormicum, instead of the prescribed Diamicron.
Respondent filed with the Regional Trial Court (RTC), Branch 80 of Quezon City a
complaint for damages against petitioner. After hearing, the trial court rendered a
decision in favor of respondent.
On appeal, the Court of Appeals, affirmed in toto the RTC judgment. Petitioner filed a
motion for reconsideration but it was denied. Hence, this petition.
Issue:
Whether or not petitioner was negligent, and if so, whether such negligence was the proximate
cause of respondents accident.

Held:
It is generally recognized that the drugstore business is imbued with public interest. The health
and safety of the people will be put into jeopardy if drugstore employees will not exercise the
highest degree of care and diligence in selling medicines.
Obviously, petitioners employee was grossly negligent in selling to respondent Dormicum,
instead of the prescribed Diamicron. Considering that a fatal mistake could be a matter of life
and death for a buying patient, the said employee should have been very cautious in dispensing
medicines. She should have verified whether the medicine she gave respondent was indeed the
one prescribed by his physician. The care required must be commensurate with the danger
involved, and the skill employed must correspond with the superior knowledge of the business
which the law demands.
The vehicular accident could not have occurred had petitioners employee been careful in
reading Dr. Sys prescription. Without the potent effects of Dormicum, a sleeping tablet, it was
unlikely that respondent would fall asleep while driving his car, resulting in a collision.












Safeguard Security Agency, Inc., and Admer Pajarillo vs. Lauro
Tangco, et al.
G.R. No. 165732
December 14, 2006
Facts:
Evangeline Tangco (Evangeline) went to Ecology Bank, Katipunan Branch, Quezon City,
to renew her time deposit per advise of the bank's cashier as she would sign a specimen
card. Evangeline, a duly licensed firearm holder with corresponding permit to carry the
same outside her residence, approached security guard Pajarillo, who was stationed
outside the bank, and pulled out her firearm from her bag to deposit the same for
safekeeping. Suddenly, Pajarillo shot Evangeline with his service shotgun hitting her in
the abdomen instantly causing her death.
Lauro Tangco, Evangeline's husband, together with his six minor children (respondents)
filed with the Regional Trial Court (RTC) of Quezon City, a criminal case of Homicide
against Pajarillo. Respondents reserved their right to file a separate civil action in the
said criminal case. The RTC of Quezon City subsequently convicted Pajarillo of Homicide.
On appeal to the CA, the RTC decision was affirmed with modification as to the penalty.
Meanwhile, respondents filed with RTC, Branch 273, Marikina City, a complaint for
damages against Pajarillo for negligently shooting Evangeline and against Safeguard for
failing to observe the diligence of a good father of a family to prevent the damage
committed by its security guard.
In their Answer, petitioners denied the material allegations in the complaint and alleged
that Safeguard exercised the diligence of a good father of a family in the selection and
supervision of Pajarillo; that Evangeline's death was not due to Pajarillo's negligence as
the latter acted only in self-defense.
Trial thereafter ensued. The RTC rendered a decision in favor of respondent.
Petitioners appealed the RTC decision to the CA. The CA rendered a decision affirming
with modification that Safeguard Security Agency, Inc.'s civil liability is only subsidiary.
Petitioners filed their Motion for Reconsideration but the CA denied the motion. Hence,
this petition.


Issue:
Whether or not Safeguard should be held solidarily liable for the damages awarded to
respondents.
Held:
Pajarillo failed to substantiate his claim that Evangeline was seen roaming outside the vicinity of
the bank and acting suspiciously prior to the shooting incident. Evangeline's death was merely
due to Pajarillo's negligence in shooting her on his imagined threat that Evangeline will rob the
bank.
As the employer of Pajarillo, Safeguard is primarily and solidarily liable for the quasi-delict
committed by the former. Safeguard is presumed to be negligent in the selection and
supervision of his employee by operation of law. This presumption may be overcome only by
satisfactorily showing that the employer exercised the care and the diligence of a good father of
a family in the selection and the supervision of its employee.
The records failed to show that there was adequate training and continuous evaluation of the
security guard's performance. Pajarillo had only attended an in-service training conducted by
Toyota Sta. Rosa, his first assignment as security guard of Safeguard, which was in collaboration
with Safeguard. It was established that the concept of such training was purely on security of
equipments to be guarded and protection of the life of the employees.
It had not been established that after Pajarillo's training in Toyota, Safeguard had ever
conducted further training of Pajarillo when he was later assigned to guard a bank which has a
different nature of business with that of Toyota. In fact, Pajarillo testified that being on duty in
a bank is different from being on duty in a factory since a bank is a very sensitive area.







Ernesto Pleyto and Philippine Rabbit Bus Lines, Inc. vs. Maria
Lomboy and Carmela Lomboy
G.R. No. 148737
June 16, 2004
Facts:
PRBL Bus No. 1539, with Plate No. CVD 556, driven by petitioner Pleyto, was traveling
along MacArthur Highway in Gerona, Tarlac bound for Vigan, Ilocos Sur. It was drizzling
that morning and the macadam road was wet. Right in front of the bus, headed north,
was the tricycle with Plate No. CX 7844, owned and driven by one Rodolfo Esguerra.
According to Rolly Orpilla, a witness and one of the bus passengers, Pleyto tried to
overtake Esguerras tricycle but hit it instead. Pleyto then swerved into the left opposite
lane. Coming down the lane, some fifty meters away, was a southbound Mitsubishi
Lancer car, with Plate No. PRS 941, driven by Arnulfo Asuncion. The car was headed for
Manila with some passengers. Seated beside Arnulfo was his brother-in-law, Ricardo
Lomboy, while in the back seat were Ricardos 18-year old daughter Carmela and her
friend, one Rhino Daba. PRBL Bus No. 1539 smashed head-on the car, killing Arnulfo
and Ricardo instantly. Carmela and Rhino suffered injuries, but only Carmela required
hospitalization.
Petitioners PRBL and Ernesto Pleyto both claimed that the bus was running slowly at the
time of the accident. They pointed out that Bus No. 1539 had been inspected by driver
Pleyto and examined by a mechanic prior to the trip, in accordance with the companys
standard operating procedure. It was found in good working condition.
The trial court rendered a decision in favor of respondents.
On appeal, the CA affirmed with modification the decision of the trial court by reducing
the award of damages. Petitioners then moved for reconsideration, but the appellate
court denied it. Hence, the instant petition.
Issue:
Whether or not petitioner was negligent.
Held:
Petitioner Pleyto violated traffic rules and regulations when he overtook the tricycle despite the
presence of an oncoming car in the other lane. Article 2185 of the Civil Code lays down the
presumption that a person driving a motor vehicle has been negligent if at the time of the
mishap, he was violating any traffic regulation. As found by both the Court of Appeals and the
trial court, petitioners failed to present any convincing proof rebutting such presumption.
A driver abandoning his proper lane for the purpose of overtaking another vehicle in an
ordinary situation has the duty to see to it that the road is clear and not to proceed if he cannot
do so in safety. When a motor vehicle is approaching or rounding a curve, there is special
necessity for keeping to the right side of the road and the driver does not have the right to
drive on the left hand side relying upon having time to turn to the right if a car approaching
from the opposite direction comes into view.
In the present case, petitioners presented several documents in evidence to show the various
tests and pre-qualification requirements imposed upon petitioner Pleyto before his hiring as a
driver by PRBL. However, no documentary evidence was presented to prove that petitioner
PRBL exercised due diligence in the supervision of its employees, including Pleyto.













Viron Transportation Co., Inc. vs. Alberto Delos Santos y Natividad
and Rudy Samidan
G.R. No. 138296
November 22, 2000
Facts:
Plaintiff, a public utility transportation company, is the registered owner of Viron Transit
Bus No. 1080, with Plate No. TB-AVC-332; while the defendant Rudy Samidan is the
registered owner of the Forward Cargo Truck with Plate No. TDY-524 which, at the time
of the vehicular accident in question, was driven and operated by the defendant Alberto
delos Santos y Natividad.
The aforesaid bus was driven by plaintiffs regular driver Wilfredo Villanueva along
MacArthur Highway within the vicinity of Barangay Parsolingan, Gerona, Tarlac coming
from the North en route to its destination in Manila. It was following the Forward Cargo
Truck proceeding from the same direction then being driven, as aforesaid, by the
defendant Alberto delos Santos. The cargo truck swerved to the right shoulder of the
road and, while about to be overtaken by the bus, again swerved to the left to occupy
its lane. It was at that instance that the collision occurred, the left front side of the truck
collided with the right front side of the bus causing the two vehicles substantial
damages.
After trial, the lower court dismissed petitioners complaint and sustained the private
respondents counterclaim for damages.
Not satisfied therewith, petitioner appealed to the Court of Appeals which as mentioned
at the outset affirmed in toto the decision of the lower court. Its motion for
reconsideration has been denied. Hence, this petition.
Issue:
Whether or not petitioner is liable for the negligent acts of Wilfredo.
Held:
It is plain to see that the fault or negligence was attributable to the driver of the Viron
passenger bus. In any event, it is doctrinally entrenched that the assessment of the trial judge
as to the issue of credibility binds the appellate court because he is in a better position to
decide the issue, having heard the witnesses and observed their deportment and manner of
testifying during the trial, except when the trial court has plainly overlooked certain facts of
substance and value, that, if considered, might affect the result of the case, or where the
assessment is clearly shown to be arbitrary. Petitioner has not shown this case to fall under the
exception.
In fine, when the employee causes damage due to his own negligence while performing his own
duties, there arises the juris tantum presumption that the employer is negligent, rebuttable
only by proof of observance of the diligence of a good father of a family. Petitioner, through its
witnesses, namely, Danilo Azardon, a shop supervisor and Fernando Mallare, an administrative
officer, failed to rebut such legal presumption of negligence in the selection and supervision of
employees, thus, petitioner as the employer is responsible for damages, the basis of the
liability being the relationship of pater familias or on the employers own negligence. Hence,
with the allegations and subsequent proof of negligence against the bus driver of petitioner,
the lower courts correctly adjudged petitioner liable for damages.















Ernesto Syki vs. Salvador Begasa
G.R. No. 149149
October 23, 2003
Facts:
Respondent Salvador Begasa and his three companions flagged down a passenger
jeepney driven by Joaquin Espina and owned by Aurora Pisuena. While respondent was
boarding the passenger jeepney (his right foot already inside while his left foot still on
the boarding step of the passenger jeepney), a truck driven by Elizalde Sablayan and
owned by petitioner Ernesto Syki bumped the rear end of the passenger jeepney.
Respondent fell and fractured his left thigh bone (femur). He also suffered lacerations
and abrasions in his left leg.
Respondent filed a complaint for damages for breach of common carriers contractual
obligations and quasi-delict against Aurora Pisuena, the owner of the passenger jeepney
herein petitioner Ernesto Syki, the owner of the truck and Elizalde Sablayan, the driver
of the truck.
After hearing, the trial court dismissed the complaint against Aurora Pisuena, the owner
and operator of the passenger jeepney but ordered petitioner Ernesto Syki and his truck
driver, Elizalde Sablayan, to pay respondent Salvador Begasa, jointly and severally,
actual and moral damages plus attorneys fees.
Petitioner Syki and his driver appealed to the Court of Appeals. However, the appellate
court found no reversible error in the decision of the trial court and affirmed the same
in toto. The appellate court also denied their motion for reconsideration. Hence, this
petition.
Issue:
Whether or not petitioner had exercised the diligence of a good father of a family in the
selection and supervision of his employee.
Held:
When an injury is caused by the negligence of an employee, a legal presumption instantly arises
that the employer was negligent, either or both, in the selection and/or supervision of his
employee. The said presumption may be rebutted only by a clear showing on the part of the
employer that he had exercised the diligence of a good father of a family in the selection and
supervision of his employee. If the employer successfully overcomes the legal presumption of
negligence, he is relieved of liability. In other words, the burden of proof is on the employer.
The failure of the defendant company to produce in court any record or other documentary
proof tending to establish that it had exercised all the diligence of a good father of a family in
the selection and supervision of its drivers and buses, notwithstanding the calls therefore by
both the trial court and the opposing counsel, argues strongly against its pretensions.


















Cecilia Yambao vs. Melchorita Zuniga, et al
G.R. No. 146173
December 11, 2003
Facts:
The bus owned by the petitioner was being driven by her driver, one Ceferino G.
Venturina along the northbound lane of Epifanio delos Santos Avenue (EDSA), within the
vicinity of Bagong Barrio, Kalookan City. With Venturina was the bus conductor,
Fernando Dumaliang. Suddenly, the bus bumped Herminigildo Zuiga, a pedestrian.
Such was the force of the impact that the left side of the front windshield of the bus was
cracked. Zuiga was rushed to the Quezon City General Hospital where he was given
medical attention, but due to the massive injuries sustained, he succumbed shortly
thereafter.
Private respondents, as heirs of the victim, filed a Complaint against petitioner and her
driver, Venturina, for damages, The complaint essentially alleged that Venturina drove
the bus in a reckless, careless and imprudent manner, in violation of traffic rules and
regulations, without due regard to public safety, thus resulting in the victims premature
death.
The petitioner vehemently denied the material allegations of the complaint. She tried
to shift the blame for the accident upon the victim, theorizing that Herminigildo
bumped into her bus, while avoiding an unidentified woman who was chasing him. She
further alleged that she was not liable for any damages because as an employer, she
exercised the proper diligence of a good father of a family, both in the selection and
supervision of her bus driver.
The trial court rendered judgment in favor of the private respondents.
On appeal, the CA affirmed the decision of the trial court. Yambao then duly moved for
reconsideration, but her motion was denied for want of merit. Hence, this petition for
review.
Issue:
Whether or not petitioner exercised the diligence of a good father of a family in the selection
and supervision of her employees, thus absolving her from any liability.

Held:
Petitioner failed to present convincing proof that she went to this extent of verifying
Venturinas qualifications, safety record, and driving history. The presumption juris tantum that
there was negligence in the selection of her bus driver, thus, remains unrebutted.
Nor did petitioner show that she exercised due supervision over Venturina after his selection.
For as pointed out by the Court of Appeals, petitioner did not present any proof that she
drafted and implemented training programs and guidelines on road safety for her employees.
In fact, the record is bare of any showing that petitioner required Venturina to attend periodic
seminars on road safety and traffic efficiency. Hence, petitioner cannot claim exemption from
any liability arising from the recklessness or negligence of Venturina.















Mindanao Terminal and Brokerage Service, Inc. vs. Phoenix
Assurance Company of New York/ MCGEE & Co., Inc.
G.R. No. 162467
May 8, 2009
Facts:
Del Monte Philippines, Inc. (Del Monte) contracted petitioner Mindanao Terminal and
Brokerage Service, Inc. (Mindanao Terminal), a stevedoring company, to load and stow a
shipment of 146,288 cartons of fresh green Philippine bananas and 15,202 cartons of
fresh pineapples belonging to Del Monte Fresh Produce International, Inc. (Del Monte
Produce) into the cargo hold of the vessel M/V Mistrau. The vessel was docked at the
port of Davao City and the goods were to be transported by it to the port of Inchon,
Korea in favor of consignee Taegu Industries, Inc. Del Monte Produce insured the
shipment under an open cargo policy with private respondent Phoenix Assurance
Company of New York (Phoenix), a non-life insurance company, and private respondent
McGee & Co. Inc. (McGee), the underwriting manager/agent of Phoenix.
Mindanao Terminal loaded and stowed the cargoes aboard the M/V Mistrau. The vessel
set sail from the port of Davao City and arrived at the port of Inchon, Korea. It was then
discovered upon discharge that some of the cargo was in bad condition. The Marine
Cargo Damage Surveyor of Incok Loss and Average Adjuster of Korea, through its
representative Byeong Yong Ahn (Byeong), surveyed the extent of the damage of the
shipment. In a survey report, it was stated that 16,069 cartons of the banana shipment
and 2,185 cartons of the pineapple shipment were so damaged that they no longer had
commercial value.
Del Monte Produce filed a claim under the open cargo policy for the damages to its
shipment. McGees Marine Claims Insurance Adjuster evaluated the claim and
recommended that payment in the amount of $210,266.43 be made. A check for the
recommended amount was sent to Del Monte Produce; the latter then issued a
subrogation receipt to Phoenix and McGee.
Phoenix and McGee instituted an action for damages against Mindanao Terminal in the
Regional Trial Court (RTC) of Davao City, Branch 12. The RTC dismissed the complaint
and awarded the counterclaim of Mindanao Terminal.
Phoenix and McGee appealed to the Court of Appeals. The appellate court reversed and
set aside the decision of the RTC.
Mindanao Terminal filed a motion for reconsideration, which the Court of Appeals
denied. Hence, this present petition for review.
Issue:
Whether or not Mindanao Terminal observed the degree of diligence required by law of a
stevedoring company.
Held:
Phoenix and McGee failed to prove by preponderance of evidence that Mindanao Terminal had
acted negligently.
Mindanao Terminal loaded and stowed the cargoes of Del Monte Produce aboard the M/V
Mistrau in accordance with the stowage plan, a guide for the area assignments of the goods in
the vessels hold, prepared by Del Monte Produce and the officers of M/V Mistrau. The loading
and stowing was done under the direction and supervision of the ship officers. The vessels
officer would order the closing of the hatches only if the loading was done correctly after a final
inspection. The said ship officers would not have accepted the cargoes on board the vessel if
they were not properly arranged and tightly secured to withstand the voyage in open seas.
They would order the stevedore to rectify any error in its loading and stowing. A foremans
report, as proof of work done on board the vessel, was prepared by the checkers of Mindanao
Terminal and concurred in by the Chief Officer of M/V Mistrau after they were satisfied that the
cargoes were properly loaded.









YHT Realty Corporation, Erlinda Lainez and Anicia Payam vs. Court
of Appeals and Maurice McLoughlin
G.R. No. 126780
February 17, 2005
Facts:
McLoughlin arrived from Australia and registered with Tropicana. He rented a safety
deposit box as it was his practice to rent a safety deposit box every time he registered at
Tropicana in previous trips. As a tourist, McLoughlin was aware of the procedure
observed by Tropicana relative to its safety deposit boxes. The safety deposit box could
only be opened through the use of two keys, one of which is given to the registered
guest, and the other remaining in the possession of the management of the hotel.
When a registered guest wished to open his safety deposit box, he alone could
personally request the management who then would assign one of its employees to
accompany the guest and assist him in opening the safety deposit box with the two
keys.
After returning to Manila, he checked out of Tropicana and left for Australia. When he
arrived in Australia, he discovered that the envelope with Ten Thousand US Dollars
(US$10,000.00) was short of Five Thousand US Dollars (US$5,000). He also noticed that
the jewelry which he bought in Hongkong and stored in the safety deposit box upon his
return to Tropicana was likewise missing, except for a diamond bracelet.
When McLoughlin came back to the Philippines, he asked Lainez if some money and/or
jewelry which he had lost were found and returned to her or to the management.
However, Lainez told him that no one in the hotel found such things and none were
turned over to the management. He again registered at Tropicana and rented a safety
deposit box. He noticed that in the envelope containing Fifteen Thousand US Dollars
(US$15,000.00), Two Thousand US Dollars (US$2,000.00) were missing and in the
envelope previously containing Ten Thousand Australian Dollars (AUS$10,000.00), Four
Thousand Five Hundred Australian Dollars (AUS$4,500.00) were missing.
When McLoughlin discovered the loss, he immediately confronted Lainez and Payam
who admitted that Tan opened the safety deposit box with the key assigned to him.
McLoughlin went up to his room where Tan was staying and confronted her. Tan
admitted that she had stolen McLoughlins key and was able to open the safety deposit
box with the assistance of Lopez, Payam and Lainez. Lopez also told McLoughlin that Tan
stole the key assigned to McLoughlin while the latter was asleep.
Meetings were held between McLoughlin and his lawyer which resulted to the filing of a
complaint for damages against YHT Realty Corporation, Lopez, Lainez, Payam and Tan
(defendants) for the loss of McLoughlins money. After filing the complaint, McLoughlin
left again for Australia to attend to an urgent business matter. Tan and Lopez, however,
were not served with summons, and trial proceeded with only Lainez, Payam and YHT
Realty Corporation as defendants.
After trial, the RTC of Manila rendered judgment in favor of McLoughlin. The trial court
found that defendants acted with gross negligence in the performance and exercise of
their duties and obligations as innkeepers and were therefore liable to answer for the
losses incurred by McLoughlin.
The Court of Appeals affirmed the disquisitions made by the lower court except as to
the amount of damages awarded. Petitioners filed a motion for reconsideration but was
denied. Hence, this petition.
Issue:
Whether or not a hotel may evade liability for the loss of items left with it for safekeeping by its
guests, by having these guests execute written waivers holding the establishment or its
employees free from blame for such loss in light of Article 2003 of the Civil Code which voids
such waivers.
Held:
In the case at bar, the responsibility of securing the safety deposit box was shared not only by
the guest himself but also by the management since two keys are necessary to open the safety
deposit box. Without the assistance of hotel employees, the loss would not have occurred.
Thus, Tropicana was guilty of concurrent negligence in allowing Tan, who was not the
registered guest, to open the safety deposit box of McLoughlin, even assuming that the latter
was also guilty of negligence in allowing another person to use his key. To rule otherwise would
result in undermining the safety of the safety deposit boxes in hotels for the management will
be given imprimatur to allow any person, under the pretense of being a family member or a
visitor of the guest, to have access to the safety deposit box without fear of any liability that will
attach thereafter in case such person turns out to be a complete stranger. This will allow the
hotel to evade responsibility for any liability incurred by its employees in conspiracy with the
guests relatives and visitors.
Petitioners contend that McLoughlins case was mounted on the theory of contract, but the
trial court and the appellate court upheld the grant of the claims of the latter on the basis of
tort. There is nothing anomalous in how the lower courts decided the controversy for this Court
has pronounced a jurisprudential rule that tort liability can exist even if there are already
contractual relations. The act that breaks the contract may also be tort.





















Rogelio Ramos, et al vs. Court of Appeals, et al.
G.R. No. 124354
April 11, 2002
Facts:
Petitioner Erlinda Ramos, after seeking professional medical help, was advised to
undergo an operation for the removal of a stone in her gall bladder (cholecystectomy).
She was referred to Dr. Hosaka, a surgeon, who agreed to perform the operation on her.
Since neither petitioner Erlinda nor her husband, petitioner Rogelio, knew of any
anesthesiologist, Dr. Hosaka recommended to them the services of Dr. Gutierrez.
Petitioner Erlinda was admitted to the DLSMC the day before the scheduled operation.
By 7:30 in the morning of the following day, petitioner Erlinda was already being
prepared for operation. Upon the request of petitioner Erlinda, her sister-in-law,
Herminda Cruz, who was then Dean of the College of Nursing at the Capitol Medical
Center, was allowed to accompany her inside the operating room.
Dr. Hosaka had not yet arrived so Dr. Gutierrez tried to get in touch with him by phone.
Thereafter, Dr. Gutierrez informed Cruz that the operation might be delayed due to the
late arrival of Dr. Hosaka.
When Dr. Hosaka was still not around, petitioner Rogelio already wanted to pull out his
wife from the operating room. He met Dr. Garcia, who remarked that he was also tired
of waiting for Dr. Hosaka. Dr. Hosaka finally arrived at the hospital more than three (3)
hours after the scheduled operation.
Cruz, who was then still inside the operating room, heard about Dr. Hosakas arrival.
While she held the hand of Erlinda, Cruz saw Dr. Gutierrez trying to intubate the patient.
Cruz noticed a bluish discoloration of Erlindas nailbeds on her left hand. She (Cruz) then
heard Dr. Hosaka instruct someone to call Dr. Calderon, another anesthesiologist.
When he arrived, Dr. Calderon attempted to intubate the patient. The nailbeds of the
patient remained bluish, thus, she was placed in a trendelenburg position a position
where the head of the patient is placed in a position lower than her feet. At this point,
Cruz went out of the operating room to express her concern to petitioner Rogelio that
Erlindas operation was not going well.
Cruz quickly rushed back to the operating room and saw that the patient was still in
trendelenburg position. The doctors explained to petitioner Rogelio that his wife had
bronchospasm. Erlinda stayed in the ICU for a month. She was released from the
hospital only four months later. Since the ill-fated operation, Erlinda remained in
comatose condition until she died on August 3, 1999.
Petitioners filed with the Regional Trial Court of Quezon City a civil case for damages
against private respondents. After due trial, the court a quo rendered judgment in favor
of petitioners. Essentially, the trial court found that private respondents were negligent
in the performance of their duties to Erlinda. On appeal by private respondents, the
Court of Appeals reversed the trial courts decision and directed petitioners to pay their
unpaid medical bills to private respondents.
Issue:
Whether or not the doctrine of res ipsa loquitur applies to the case.
Held:
The doctrine of res ipsa loquitur is appropriate in the case at bar. The damage sustained by
Erlinda in her brain prior to a scheduled gall bladder operation presents a case for the
application of res ipsa loquitur.
In the present case, Erlinda submitted herself for cholecystectomy and expected a routine
general surgery to be performed on her gall bladder. On that fateful day she delivered her
person over to the care, custody and control of private respondents who exercised complete
and exclusive control over her. At the time of submission, Erlinda was neurologically sound
and, except for a few minor discomforts, was likewise physically fit in mind and body. However,
during the administration of anesthesia and prior to the performance of cholecystectomy she
suffered irreparable damage to her brain. Thus, without undergoing surgery, she went out of
the operating room already decerebrate and totally incapacitated. Obviously, brain damage,
which Erlinda sustained, is an injury which does not normally occur in the process of a gall
bladder operation. In fact, this kind of situation does not happen in the absence of negligence
of someone in the administration of anesthesia and in the use of endotracheal tube. Normally,
a person being put under anesthesia is not rendered decerebrate as a consequence of
administering such anesthesia if the proper procedure was followed. Furthermore, the
instruments used in the administration of anesthesia, including the endotracheal tube, were all
under the exclusive control of private respondents, who are the physicians-in-charge. Likewise,
petitioner Erlinda could not have been guilty of contributory negligence because she was under
the influence of anesthetics which rendered her unconscious.
Considering that a sound and unaffected member of the body (the brain) is injured or
destroyed while the patient is unconscious and under the immediate and exclusive control of
the physicians, we hold that a practical administration of justice dictates the application of res
ipsa loquitur. Upon these facts and under these circumstances the Court would be able to say,
as a matter of common knowledge and observation, if negligence attended the management
and care of the patient. Moreover, the liability of the physicians and the hospital in this case is
not predicated upon an alleged failure to secure the desired results of an operation nor on an
alleged lack of skill in the diagnosis or treatment as in fact no operation or treatment was ever
performed on Erlinda. Thus, upon all these initial determination a case is made out for the
application of the doctrine of res ipsa loquitur.



















Leah Alesna Reyes, et al vs. Sisters of Mercy Hospital, et al
G.R. No. 130547
October 3, 2000
Facts:
Petitioner Leah Alesna Reyes is the wife of the late Jorge Reyes. The other petitioners,
namely, Rose Nahdja, Johnny, Lloyd, and Kristine, all surnamed Reyes, were their
children. Five days before his death, Jorge had been suffering from a recurring fever
with chills. After he failed to get relief from some home medication he was taking, which
consisted of analgesic, antipyretic, and antibiotics, he decided to see the doctor.
He was taken to the Mercy Community Clinic by his wife. He was attended to by
respondent Dr. Marlyn Rico, resident physician and admitting physician on duty, who
gave Jorge a physical examination and took his medical history. She noted that at the
time of his admission, Jorge was conscious, ambulatory, oriented, coherent, and with
respiratory distress. Typhoid fever was then prevalent in the locality, as the clinic had
been getting from 15 to 20 cases of typhoid per month. Suspecting that Jorge could be
suffering from this disease, Dr. Rico ordered a Widal Test, a standard test for typhoid
fever, to be performed on Jorge. Blood count, routine urinalysis, stool examination, and
malarial smear were also made. After about an hour, the medical technician submitted
the results of the test from which Dr. Rico concluded that Jorge was positive for typhoid
fever. As her shift was only up to 5:00 p.m., Dr. Rico indorsed Jorge to respondent Dr.
Marvie Blanes.
Dr. Marvie Blanes attended to Jorge at around six in the evening. She also took Jorges
history and gave him a physical examination. Like Dr. Rico, her impression was that
Jorge had typhoid fever. Antibiotics being the accepted treatment for typhoid fever, she
ordered that a compatibility test with the antibiotic chloromycetin be done on Jorge.
Said test was administered by nurse Josephine Pagente who also gave the patient a
dose of triglobe. As she did not observe any adverse reaction by the patient to
chloromycetin, Dr. Blanes ordered the first five hundred milligrams of said antibiotic to
be administered on Jorge at around 9:00 p.m. A second dose was administered on Jorge
about three hours later just before midnight.
Dr. Blanes was called as Jorges temperature rose to 41C. The patient also experienced
chills and exhibited respiratory distress, nausea, vomiting, and convulsions. Dr. Blanes
put him under oxygen, used a suction machine, and administered hydrocortisone,
temporarily easing the patients convulsions. When he regained consciousness, the
patient was asked by Dr. Blanes whether he had a previous heart ailment or had
suffered from chest pains in the past. Jorge replied he did not. After about 15 minutes,
however, Jorge again started to vomit, showed restlessness, and his convulsions
returned. Dr. Blanes re-applied the emergency measures taken before and, in addition,
valium was administered. Jorge, however, did not respond to the treatment and slipped
into cyanosis, a bluish or purplish discoloration of the skin or mucous membrane due to
deficient oxygenation of the blood. At around 2:00 a.m., Jorge died.
Petitioners filed before the Regional Trial Court of Cebu City a complaint for damages
against respondents Sisters of Mercy, Sister Rose Palacio, Dr. Marvie Blanes, Dr. Marlyn
Rico, and nurse Josephine Pagente. Petitioners amended their complaint to implead
respondent Mercy Community Clinic as additional defendant and to drop the name of
Josephine Pagente as defendant since she was no longer connected with respondent
hospital. Their principal contention was that Jorge did not die of typhoid fever. Instead,
his death was due to the wrongful administration of chloromycetin.
The trial court rendered its decision absolving respondents from the charges of
negligence and dismissing petitioners action for damages. The trial court likewise
dismissed respondents counterclaim, holding that, in seeking damages from
respondents, petitioners were impelled by the honest belief that Jorges death was due
to the latters negligence.
Petitioners brought the matter to the Court of Appeals. The Court of Appeals affirmed
the decision of the trial court.
Hence this petition.
Issue:
Whether or not petitioners have established specific acts of negligence allegedly committed by
respondent doctors.
Held:
The petitioners were not able to establish the specific acts of negligence allegedly committed
by respondent doctors.
The two doctors presented by respondents clearly were experts on the subject. They vouched
for the correctness of Dr. Marlyn Ricos diagnosis. Dr. Peter Gotiong, a diplomate whose
specialization is infectious diseases and microbiology and an associate professor at the
Southwestern University College of Medicine and the Gullas College of Medicine, testified that
he has already treated over a thousand cases of typhoid fever. According to him, when a case of
typhoid fever is suspected, the Widal test is normally used, and if the 1:320 results of the Widal
test on Jorge Reyes had been presented to him along with the patients history, his impression
would also be that the patient was suffering from typhoid fever. As to the treatment of the
disease, he stated that chloromycetin was the drug of choice. He also explained that despite
the measures taken by respondent doctors and the intravenous administration of two doses of
chloromycetin, complications of the disease could not be discounted.
Indeed, the standard contemplated is not what is actually the average merit among all known
practitioners from the best to the worst and from the most to the least experienced, but the
reasonable average merit among the ordinarily good physicians. Here, Dr. Marlyn Rico did not
depart from the reasonable standard recommended by the experts as she in fact observed the
due care required under the circumstances. Though the Widal test is not conclusive, it remains
a standard diagnostic test for typhoid fever and, in the present case, greater accuracy through
repeated testing was rendered unobtainable by the early death of the patient. The results of
the Widal test and the patients history of fever with chills for five days, taken with the fact that
typhoid fever was then prevalent as indicated by the fact that the clinic had been getting about
15 to 20 typhoid cases a month, were sufficient to give upon any doctor of reasonable skill the
impression that Jorge Reyes had typhoid fever.














Rogelio Nogales, et al vs. Capitol Medical Center, et al.
G.R. No. 142625
December 19, 2006
Facts:
Pregnant with her fourth child, Corazon Nogales, who was then 37 years old, was under
the exclusive prenatal care of Dr. Oscar Estrada beginning on her fourth month of
pregnancy. While Corazon was on her last trimester of pregnancy, Dr. Estrada noted an
increase in her blood pressure and development of leg edema indicating preeclampsia,
which is a dangerous complication of pregnancy.
During the course of the delivery, Dr. Estrada, assisted by Dr. Villaflor, applied low
forceps to extract Corazons baby. In the process, a 1.0 x 2.5 cm. piece of cervical tissue
was allegedly torn. The baby came out in an apnic, cyanotic, weak and injured
condition. Consequently, the baby had to be intubated and resuscitated by Dr. Enriquez
and Dr. Payumo.
Corazon began to manifest moderate vaginal bleeding which rapidly became profuse.
Corazons blood pressure dropped from 130/80 to 60/40 within five minutes. There
was continuous profuse vaginal bleeding. The assisting nurse administered hemacel
through a gauge 19 needle as a side drip to the ongoing intravenous injection of
dextrose.
Upon being informed that Corazon was bleeding profusely, Dr. Espinola ordered
immediate hysterectomy. Rogelio was made to sign a Consent to Operation. Despite Dr.
Espinolas efforts, Corazon. The cause of death was hemorrhage, post partum.
Petitioners filed a complaint for damages with the Regional Trial Court of Manila against
CMC, Dr. Estrada, Dr. Villaflor, Dr. Uy, Dr. Enriquez, Dr. Lacson, Dr. Espinola, and a
certain Nurse J. Dumlao for the death of Corazon. Petitioners mainly contended that
defendant physicians and CMC personnel were negligent in the treatment and
management of Corazons condition. Petitioners charged CMC with negligence in the
selection and supervision of defendant physicians and hospital staff.
After more than 11 years of trial, the trial court rendered judgment finding Dr. Estrada
solely liable for damages.
Petitioners appealed the trial courts decision. Petitioners claimed that aside from Dr.
Estrada, the remaining respondents should be held equally liable for negligence.
Petitioners pointed out the extent of each respondents alleged liability.
The Court of Appeals affirmed the decision of the trial court. Petitioners filed a motion
for reconsideration but was denied by the Court of Appeals. Hence, this petition.
Issue:
Whether or not CMC is vicariously liable for the negligence of Dr. Estrada.
Held:
In general, a hospital is not liable for the negligence of an independent contractor-physician.
There is, however, an exception to this principle. The hospital may be liable if the physician is
the ostensible agent of the hospital. This exception is also known as the doctrine of apparent
authority.
CMCs defense that all it did was to extend to Corazon its facilities is untenable. The Court
cannot close its eyes to the reality that hospitals, such as CMC, are in the business of treatment.
Even simple negligence is not subject to blanket release in favor of establishments like hospitals
but may only mitigate liability depending on the circumstances. When a person needing urgent
medical attention rushes to a hospital, he cannot bargain on equal footing with the hospital on
the terms of admission and operation. Such a person is literally at the mercy of the hospital.
There can be no clearer example of a contract of adhesion than one arising from such a dire
situation. Thus, the release forms of CMC cannot relieve CMC from liability for the negligent
medical treatment of Corazon.










Professional Services, Inc., Juan Fuentes, Miguel Ampil vs. Natividad
and Enrique Agana
G.R. No. 126297
January 31, 2007
Facts:
Natividad Agana was rushed to the Medical City General Hospital (Medical City Hospital)
because of difficulty of bowel movement and bloody anal discharge. After a series of
medical examinations, Dr. Miguel Ampil, diagnosed her to be suffering from cancer of
the sigmoid.
Dr. Ampil, assisted by the medical staff of the Medical City Hospital, performed an
anterior resection surgery on Natividad. He found that the malignancy in her sigmoid
area had spread on her left ovary, necessitating the removal of certain portions of it.
Thus, Dr. Ampil obtained the consent of Natividads husband, Enrique Agana, to permit
Dr. Juan Fuentes, to perform hysterectomy on her.
After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over, completed the
operation and closed the incision.
However, the operation appeared to be flawed.
Natividad was released from the hospital. After a couple of days, Natividad complained
of excruciating pain in her anal region. She consulted both Dr. Ampil and Dr. Fuentes
about it. They told her that the pain was the natural consequence of the surgery. Dr.
Ampil then recommended that she consult an oncologist to examine the cancerous
nodes which were not removed during the operation.
Natividad, accompanied by her husband, went to the United States to seek further
treatment. After four months of consultations and laboratory examinations, Natividad
was told she was free of cancer. Hence, she was advised to return to the Philippines.
Natividad flew back to the Philippines, still suffering from pains. Two weeks thereafter,
her daughter found a piece of gauze protruding from her vagina. Upon being informed
about it, Dr. Ampil proceeded to her house where he managed to extract by hand a
piece of gauze measuring 1.5 inches in width. He then assured her that the pains would
soon vanish.
Dr. Ampils assurance did not come true. Instead, the pains intensified, prompting
Natividad to seek treatment at the Polymedic General Hospital. While confined there,
Dr. Ramon Gutierrez detected the presence of another foreign object in her vagina -- a
foul-smelling gauze measuring 1.5 inches in width which badly infected her vaginal
vault. A recto-vaginal fistula had formed in her reproductive organs which forced stool
to excrete through the vagina. Another surgical operation was needed to remedy the
damage. Thus, in October 1984, Natividad underwent another surgery.
Natividad and her husband filed with the RTC, Branch 96, Quezon City a complaint for
damages against the Professional Services, Inc. (PSI), owner of the Medical City Hospital,
Dr. Ampil, and Dr. Fuentes. They alleged that the latter are liable for negligence for
leaving two pieces of gauze inside Natividads body and malpractice for concealing their
acts of negligence.
Pending the outcome of the above cases, Natividad died and was duly substituted by
her children.
The RTC rendered its Decision in favor of the Aganas, finding PSI, Dr. Ampil and Dr.
Fuentes liable for negligence and malpractice.
The Court of Appeals rendered a decision affirming the findings of the trial court. Hence,
this petition.
Issue:
Whether or not petitioners are liable for negligence and malpractice.
Held:
Dr. Ampil did not inform Natividad about the missing two pieces of gauze. Worse, he even
misled her that the pain she was experiencing was the ordinary consequence of her operation.
Had he been more candid, Natividad could have taken the immediate and appropriate medical
remedy to remove the gauzes from her body. What was initially an act of negligence by Dr.
Ampil has ripened into a deliberate wrongful act of deceiving his patient.
Under the Captain of the Ship rule, the operating surgeon is the person in complete charge of
the surgery room and all personnel connected with the operation. Their duty is to obey his
orders. As stated before, Dr. Ampil was the lead surgeon. In other words, he was the Captain of
the Ship. That he discharged such role is evident from his following conduct: (1) calling Dr.
Fuentes to perform a hysterectomy; (2) examining the work of Dr. Fuentes and finding it in
order; (3) granting Dr. Fuentes permission to leave; and (4) ordering the closure of the incision.
It was this act of ordering the closure of the incision notwithstanding that two pieces of gauze
remained unaccounted for, that caused injury to Natividads body. Clearly, the control and
management of the thing which caused the injury was in the hands of Dr. Ampil, not Dr.
Fuentes.
In the present case, it was duly established that PSI operates the Medical City Hospital for the
purpose and under the concept of providing comprehensive medical services to the public.
Accordingly, it has the duty to exercise reasonable care to protect from harm all patients
admitted into its facility for medical treatment. Unfortunately, PSI failed to perform such duty.
Not only did PSI breach its duties to oversee or supervise all persons who practice medicine
within its walls, it also failed to take an active step in fixing the negligence committed. This
renders PSI, not only vicariously liable for the negligence of Dr. Ampil under Article 2180 of the
Civil Code, but also directly liable for its own negligence under Article 2176.
Once a physician undertakes the treatment and care of a patient, the law imposes on him
certain obligations. In order to escape liability, he must possess that reasonable degree of
learning, skill and experience required by his profession. At the same time, he must apply
reasonable care and diligence in the exercise of his skill and the application of his knowledge,
and exert his best judgment.














Professional Services, Inc. vs. Court of Appeals, Natividad and
Enrique Agana
G.R. No. 126297
February 2, 2010
Facts:
PSI, together with Dr. Miguel Ampil (Dr. Ampil) and Dr. Juan Fuentes (Dr. Fuentes), was
impleaded by Enrique Agana and Natividad Agana (later substituted by her heirs), in a
complaint for damages filed in the Regional Trial Court (RTC) of Quezon City, Branch 96,
for the injuries suffered by Natividad when Dr. Ampil and Dr. Fuentes neglected to
remove from her body two gauzes which were used in the surgery they performed on at
the Medical City General Hospital. PSI was impleaded as owner, operator and manager
of the hospital.
The RTC held PSI solidarily liable with Dr. Ampil and Dr. Fuentes for damages. On appeal,
the Court of Appeals, absolved Dr. Fuentes but affirmed the liability of Dr. Ampil and PSI,
subject to the right of PSI to claim reimbursement from Dr. Ampil.
On petition for review, the SC, affirmed the CA decision. Hence, this motion for
reconsideration.
Issue:
Whether or not petitioner can be held liable for the negligence of Dr. Ampil.
Held:
Control as a determinative factor in testing the employer-employee relationship between
doctor and hospital under which the hospital could be held vicariously liable to a patient in
medical negligence cases is a requisite fact to be established by preponderance of evidence.
Here, there was insufficient evidence that PSI exercised the power of control or wielded such
power over the means and the details of the specific process by which Dr. Ampil applied his
skills in the treatment of Natividad.
There is ample evidence that the hospital (PSI) held out to the patient (Natividad) that the
doctor (Dr. Ampil) was its agent. Present are the two factors that determine apparent authority:
first, the hospital's implied manifestation to the patient which led the latter to conclude that
the doctor was the hospital's agent; and second, the patients reliance upon the conduct of the
hospital and the doctor, consistent with ordinary care and prudence.
PSI barred itself from arguing in its second motion for reconsideration that the concept of
corporate responsibility was not yet in existence at the time Natividad underwent treatment;
and that if it had any corporate responsibility, the same was limited to reporting the missing
gauzes and did not include taking an active step in fixing the negligence committed. An
admission made in the pleading cannot be controverted by the party making such admission
and is conclusive as to him, and all proofs submitted by him contrary thereto or inconsistent
therewith should be ignored, whether or not objection is interposed by a party.
The Court therefore maintain the ruling that PSI is vicariously liable for the negligence of Dr.
Ampil as its ostensible agent.















Dr. Milagros Cantre vs. Spouses John David Go and Nora Go
G.R. No. 160889
April 27, 2007
Facts:
Nora gave birth to her fourth child, a baby boy. However, suffered profuse bleeding
inside her womb due to some parts of the placenta which were not completely expelled
from her womb after delivery. Consequently, Nora suffered hypovolemic shock,
resulting in a drop in her blood pressure to 40 over 0. Petitioner and the assisting
resident physician performed various medical procedures to stop the bleeding and to
restore Noras blood pressure. Nora remained unconscious until she recovered.
While in the recovery room, her husband, respondent John David Z. Go noticed a fresh
gaping wound two and a half (2 ) by three and a half (3 ) inches in the inner portion
of her left arm, close to the armpit. He asked the nurses what caused the injury. He was
informed it was a burn. John David filed a request for investigation. Petitioner said the
blood pressure cuff caused the injury.
Noras injury was referred to a plastic surgeon at the Dr. Jesus Delgado Memorial
Hospital for skin grafting. Her wound was covered with skin sourced from her abdomen,
which consequently bore a scar as well.
Unfortunately, Noras arm would never be the same. Aside from the unsightly mark, the
pain in her left arm remains. When sleeping, she has to cradle her wounded arm. Her
movements now are also restricted. Her children cannot play with the left side of her
body as they might accidentally bump the injured arm, which aches at the slightest
touch.
Respondent spouses filed a complaint for damages against petitioner, Dr. Abad, and the
hospital. The trial court rendered a decision in favor of respondents.
Petitioner, Dr. Abad, and the hospital all appealed to the Court of Appeals, which
affirmed with modification the trial court decision.
Petitioners motion for reconsideration was denied by the Court of Appeals. Hence, the
instant petition.
Issue:
Whether or not petitioner liable for the injury suffered by respondent Nora Go.

Held:
In cases involving medical negligence, the doctrine of res ipsa loquitur allows the mere
existence of an injury to justify a presumption of negligence on the part of the person who
controls the instrument causing the injury, provided that the following requisites concur:
1. The accident is of a kind which ordinarily does not occur in the absence of someones
negligence;
2. It is caused by an instrumentality within the exclusive control of the defendant or
defendants; and
3. The possibility of contributing conduct which would make the plaintiff responsible is
eliminated.
As to the first requirement, the gaping wound on Noras arm is certainly not an ordinary
occurrence in the act of delivering a baby, far removed as the arm is from the organs involved
in the process of giving birth. Such injury could not have happened unless negligence had set in
somewhere.
Second, whether the injury was caused by the droplight or by the blood pressure cuff is of no
moment. Both instruments are deemed within the exclusive control of the physician in charge
under the "captain of the ship" doctrine. This doctrine holds the surgeon in charge of an
operation liable for the negligence of his assistants during the time when those assistants are
under the surgeons control. In this particular case, it can be logically inferred that petitioner,
the senior consultant in charge during the delivery of Noras baby, exercised control over the
assistants assigned to both the use of the droplight and the taking of Noras blood pressure.
Hence, the use of the droplight and the blood pressure cuff is also within petitioners exclusive
control.
Third, the gaping wound on Noras left arm, by its very nature and considering her condition,
could only be caused by something external to her and outside her control as she was
unconscious while in hypovolemic shock. Hence, Nora could not, by any stretch of the
imagination, have contributed to her own injury.
Based on the foregoing, the presumption that petitioner was negligent in the exercise of her
profession stands unrebutted.

Dr. Rubi Li vs. Spouses Reynaldo and Lina Soliman, as parents/heirs
of deceased Angelica Soliman
G.R. No. 165279
June 7, 2011
Facts:
Respondents 11-year old daughter, Angelica Soliman, underwent a biopsy of the mass
located in her lower extremity at the St. Lukes Medical Center (SLMC). Results showed
that Angelica was suffering from osteosarcoma, osteoblastic type, a high-grade (highly
malignant) cancer of the bone which usually afflicts teenage children. Following this
diagnosis and as primary intervention, Angelicas right leg was amputated by Dr. Jaime
Tamayo in order to remove the tumor. As adjuvant treatment to eliminate any
remaining cancer cells, and hence minimize the chances of recurrence and prevent the
disease from spreading to other parts of the patients body (metastasis), chemotherapy
was suggested by Dr. Tamayo. Dr. Tamayo referred Angelica to another doctor at
SLMC, herein petitioner Dr. Rubi Li, a medical oncologist.
Angelica was admitted to SLMC. However, just eleven (11) days after the (intravenous)
administration of the first cycle of the chemotherapy regimen. Because SLMC refused
to release a death certificate without full payment of their hospital bill, respondents
brought the cadaver of Angelica to the Philippine National Police (PNP) Crime
Laboratory at Camp Crame for post-mortem examination. The Medico-Legal Report
issued by said institution indicated the cause of death as Hypovolemic shock secondary
to multiple organ hemorrhages and Disseminated Intravascular Coagulation.
Respondents filed a damage suit against petitioner, Dr. Leo Marbella, Mr. Jose Ledesma,
a certain Dr. Arriete and SLMC. Respondents charged them with negligence and
disregard of Angelicas safety, health and welfare by their careless administration of the
chemotherapy drugs, their failure to observe the essential precautions in detecting early
the symptoms of fatal blood platelet decrease and stopping early on the chemotherapy,
which bleeding led to hypovolemic shock that caused Angelicas untimely demise.
In her answer, petitioner denied having been negligent in administering the
chemotherapy drugs to Angelica and asserted that she had fully explained to
respondents how the chemotherapy will affect not only the cancer cells but also the
patients normal body parts, including the lowering of white and red blood cells and
platelets.
In dismissing the complaint, the trial court held that petitioner was not liable for
damages as she observed the best known procedures and employed her highest skill
and knowledge in the administration of chemotherapy drugs on Angelica but despite all
efforts said patient died.
Respondents appealed to the CA which, while concurring with the trial courts finding
that there was no negligence committed by the petitioner in the administration of
chemotherapy treatment to Angelica, found that petitioner as her attending physician
failed to fully explain to the respondents all the known side effects of chemotherapy.
The CA ruled that petitioner is negligent in not informing respondent other side effects
which gravely affected their child and therefore petitioner is liable for damages.
Petitioner filed a motion for partial reconsideration which the appellate court denied.
Hence, this petition.
Issue:
Whether or not the petitioner can be held liable for failure to fully disclose serious side effects
to the parents of the child patient who died while undergoing chemotherapy, despite the
absence of finding that petitioner was negligent in administering the said treatment.
Held:
Examining the evidence on record, we hold that there was adequate disclosure of material risks
inherent in the chemotherapy procedure performed with the consent of Angelicas parents.
Respondents could not have been unaware in the course of initial treatment and amputation of
Angelicas lower extremity, that her immune system was already weak on account of the
malignant tumor in her knee. When petitioner informed the respondents beforehand of the
side effects of chemotherapy which includes lowered counts of white and red blood cells,
decrease in blood platelets, possible kidney or heart damage and skin darkening, there is
reasonable expectation on the part of the doctor that the respondents understood very well
that the severity of these side effects will not be the same for all patients undergoing the
procedure. In other words, by the nature of the disease itself, each patients reaction to the
chemical agents even with pre-treatment laboratory tests cannot be precisely determined by
the physician. That death can possibly result from complications of the treatment or the
underlying cancer itself, immediately or sometime after the administration of chemotherapy
drugs, is a risk that cannot be ruled out, as with most other major medical procedures, but such
conclusion can be reasonably drawn from the general side effects of chemotherapy already
disclosed.
As a physician, petitioner can reasonably expect the respondents to have considered the
variables in the recommended treatment for their daughter afflicted with a life-threatening
illness. On the other hand, it is difficult to give credence to respondents claim that petitioner
told them of 95% chance of recovery for their daughter, as it was unlikely for doctors like
petitioner who were dealing with grave conditions such as cancer to have falsely assured
patients of chemotherapys success rate. Besides, informed consent laws in other countries
generally require only a reasonable explanation of potential harms, so specific disclosures such
as statistical data, may not be legally necessary.



















People of the Philippines vs. Glenn De Los Santos
G.R. No. 131588
March 27, 2001
Facts:
Accused-appellant, with deliberate intent to kill, taking advantage of his driven motor
vehicle, an Isuzu Elf, and with treachery, killed and inflicted mortal wounds from behind
in a sudden and unexpected manner with the use of a vehicle members of the Philippine
National Police (PNP), undergoing a Special Training Course (Scout Class 07-95), wearing
black T-shirts and black short pants, performing an Endurance Run of 35 kilometers
coming from their camp in Manolo Fortich, Bukidnon, heading to Regional Training
Headquarters in Camp Alagar, Cagayan de Oro City. The accused proceeded to operate
his driven vehicle (an Isuzu Elf) on high speed directly towards the joggers, thus forcing
the rear guards to throw themselves to a nearby canal, to avoid injuries, then hitting,
bumping, or ramming the first four (4) victims, causing the bodies to be thrown towards
the windshields of said Isuzu Elf, breaking said windshield, and upon being aware that
bodies of the victims flew on the windshield of his driven vehicle, instead of applying his
brake, continued to travel on a high speed, this time putting off its headlights, thus
hitting the succeeding joggers on said 1st line, as a result thereof the 11 person were
killed on the spot.
While another trainee/victim, Antonio Palomino Mino, died few days after the incident,
while the following eleven (11) other trainee/victims were seriously wounded, the
accused thus performing all the acts of execution which would produce the crime of
Murder as a consequence but nevertheless did not produce it by reason of some cause
other than said accuseds spontaneous desistance, that is, by the timely and able
medical assistance rendered on the victims which prevented their death.
The evidence for the prosecution disclose that the Special Counter Insurgency Operation
Unit Training held at Camp Damilag, Manolo Fortich, Bukidnon, started on 1 September
1995 and was to end on 15 October 1995. The last phase of the training was the
endurance run from said Camp to Camp Alagar, Cagayan de Oro City. The run on 5
October 1995 started at 2:20 a.m. The PNP trainees were divided into three columns:
the first and second of which had 22 trainees each, and the third had 21. The trainees
were wearing black T-shirts, black short pants, and green and black combat shoes. At
the start of the run, a Hummer vehicle tailed the jogging trainees. When they reached
Alae, the driver of the Hummer vehicle was instructed to dispatch advanced security at
strategic locations in Carmen Hill. Since the jogging trainees were occupying the right
lane of the highway, two rear security guards were assigned to each rear column. Their
duty was to jog backwards facing the oncoming vehicles and give hand signals for other
vehicles to take the left lane.
Prosecution witnesses Lemuel Y. Pangca and Weldon Sacro testified that they were
assigned as rear guards of the first column. They recalled that from Alae to Maitum
Highway, Puerto, Cagayan de Oro City, about 20 vehicles passed them, all of which
slowed down and took the left portion of the road when signaled to do so.
While they were negotiating Maitum Highway, they saw an Isuzu Elf truck coming at
high speed towards them. The vehicle lights were in the high beam. At a distance of
100 meters, the rear security guards started waving their hands for the vehicle to take
the other side of the road, but the vehicle just kept its speed, apparently ignoring their
signals and coming closer and closer to them. Realizing that the vehicle would hit them,
the rear guards told their co-trainees to retract. The guards forthwith jumped in
different directions. Lemuel and Weldon saw their co-trainees being hit by the said
vehicle, falling like dominoes one after the other. Some were thrown, and others were
overrun by the vehicle. The driver did not reduce his speed even after hitting the first
and second columns. The guards then stopped oncoming vehicles to prevent their
comrades from being hit again.
The trial court judge, together with the City Prosecutor, GLENN and his counsel,
conducted an ocular inspection of the place where the incident happened.
The trial court convicted GLENN of the complex crime of multiple murder, multiple
frustrated murder and multiple attempted murder, with the use of motor vehicle as the
qualifying circumstance. It sentenced him to suffer the penalty of death and ordered
him to indemnify each group of the heirs of the deceased in the amount of P75,000;
each of the victims of frustrated murder in the amount of P30,000; and each of the
victims of attempted murder in the amount of P10,000. Hence, this automatic review.
Issue:
Whether or not accused-appelant is guilty of the criminal act and whether he is civilly liable for
the act commited.
Held:
The incident, tragic though it was in light of the number of persons killed and seriously injured,
was an accident and not an intentional felony. It is significant to note that there is no shred of
evidence that GLENN had an axe to grind against the police trainees that would drive him into
deliberately hitting them with intent to kill.
Considering that the incident was not a product of a malicious intent but rather the result of a
single act of reckless driving, GLENN should be held guilty of the complex crime of reckless
imprudence resulting in multiple homicide with serious physical injuries and less serious
physical injuries.
As far as the award of damages is concerned, the court find a necessity to modify the same.
Conformably with current jurisprudence, the court reduced the trial courts award of death
indemnity from P75,000 to P50,000 for each group of heirs of the trainees killed. Likewise, for
lack of factual basis, the awards of P30,000 to each of those who suffered serious physical
injuries and of P10,000 to each of those who suffered minor physical injuries is deleted.
















L.G. Foods Corporation and Victorino Gabor, Vice-President and
General Manager vs. Hon. Philadelfa Pagapong-Agraviador, in her
capacity as Presiding Judge of Regional Trial Court, Branch 43,
Bacolod City, and Spouses Florentino and Theresa Vallejera
G.R. No. 158995
September 26, 2006
Facts:
Charles Vallereja, a 7-year old son of the spouses Florentino Vallejera and Theresa
Vallejera, was hit by a Ford Fiera van owned by the petitioners and driven at the time by
their employee, Vincent Norman Yeneza y Ferrer. Charles died as a result of the
accident.
An Information for Reckless Imprudence Resulting to Homicide was filed against the
driver before the Municipal Trial Court in Cities (MTCC), Bacolod City.
Unfortunately, before the trial could be concluded, the accused driver committed
suicide, evidently bothered by conscience and remorse. On account thereof, the MTCC,
dismissed the criminal case.
In the RTC of Bacolod City, the spouses Vallejera filed a complaint for damages against
the petitioners as employers of the deceased driver, basically alleging that as such
employers, they failed to exercise due diligence in the selection and supervision of their
employees.
Petitioner prayed in their Answer for the dismissal of the complaint for lack of cause of
action on the part of the Vallejera couple.
The trial court denied the motion to dismiss for lack of merit and set the case for pre-
trial. With their motion for reconsideration having been denied by the same court, the
petitioners then went on certiorari to the CA.
The CA denied the petition and upheld the trial court.
Issue:
Whether or not the spouses Vallejeras has cause of action against petitioner.


Held:
Here, the complaint sufficiently alleged that the death of the couples minor son was caused
by the negligent act of the petitioners driver; and that the petitioners themselves were civilly
liable for the negligence of their driver for failing to exercise the necessary diligence required of
a good father of the family in the selection and supervision of their employee, the driver, which
diligence, if exercised, would have prevented said accident.
Had the respondent spouses elected to sue the petitioners based on Article 103 of the
Revised Penal Code, they would have alleged that the guilt of the driver had been proven
beyond reasonable doubt; that such accused driver is insolvent; that it is the subsidiary liability
of the defendant petitioners as employers to pay for the damage done by their employee
(driver) based on the principle that every person criminally liable is also civilly liable. Since there
was no conviction in the criminal case against the driver, precisely because death intervened
prior to the termination of the criminal proceedings, the spouses recourse was, therefore, to
sue the petitioners for their direct and primary liability based on quasi-delict.













Victorino Magat vs. Hon. Leo Medialdea and Santiago Guerrero
G.R. No. L-37120
April 20, 1983
Facts:
Isidro Q. Aligada, also acting as agent of the defendant, made representations with the
plaintiff herein to the effect that defendant desired to procure from Japan thru the
plaintiff herein the needed radio transceivers and to this end, Isidro Q. Aligada secured a
firm offer in writing.
Believing that the defendant would faithfully fulfill his contract with the plaintiff,
considering his signed conformity, the plaintiff took steps to advise the Japanese entity
entrusted with the manufacture of the items to the effect that the contract between the
defendant and the plaintiff has been perfected and that advice with regards to radio
frequency would follow as soon as same is received by the plaintiff from the defendant.
It has come to the knowledge of the plaintiff that the defendant has been operating his
taxicabs without the required radio transceivers and when the U.S. Navy Authorities of
Subic Bay, Philippines, were pressing defendant for compliance with his commitments
with respect to the installations of radio transceivers on his taxicabs, he impliedly laid
the blame for the delay upon the plaintiff, thus destroying the reputation of the plaintiff
with the said Naval Authorities of Subic Bay, Philippines, with whom plaintiff transacts
business;
Plaintiff wrote a letter thru his counsel to ascertain from the defendant as to whether it
is his intention to fulfill his part of the agreement with the plaintiff herein or whether he
desired to have the contract between them definitely cancelled, but defendant did not
even have the courtesy to answer plaintiff's demand.
The defendant entered into a contract with the plaintiff without the least intention of
faithfully complying with his obligation, he did so only in order to obtain the concession
from the U.S. Navy Exchange, Subic Bay, Philippines, of operating a fleet of taxicabs
inside the U.S. Naval Base to his financial benefit and at the expense and prejudice of
third parties such as the plaintiff.
That in view of the defendant's failure to fulfill his contractual obligations with the
plaintiff herein, the plaintiff will suffer damages.
Respondent Guerrero filed a motion to dismiss said complaint for lack of cause of
action.
The respondent judge, over petitioner's opposition, issued a minute order dismissing
the complaint.
Issue:
Whether or not respondent can be held liable for damages.
Held:
Indisputably, the parties, both businessmen, entered into the aforesaid contract with the
evident intention of deriving some profits therefrom. Upon breach of the contract by either of
them, the other would necessarily suffer loss of his expected profits. Since the loss comes into
being at the very moment of breach, such loss is real, fixed and vested and, therefore,
recoverable under the law.
The damages which the obligor is liable for includes not only the value of the loss suffered by
the obligee but also the profits which the latter failed to obtain. If the obligor acted in good
faith, he shall be liable for those damages that are the natural and probable consequences of
the breach of the obligation and which the parties have foreseen or could have reasonably
foreseen at the time the obligation was constituted; and in case of fraud, bad faith, malice or
wanton attitude, he shall be liable for all damages which may be reasonably attributed to the
non-performance of the obligation.
On the basis of the facts alleged in the complaint, the court rendered a valid judgment in
accordance with the prayer thereof.







Fidela Del Castillo Vda. De Mistica vs. Spouses Bernardino Naguiat
and Maria Paulina Gerona-Naguiat
G.R. No. 137909
December 11, 2003
Facts:
Eulalio Mistica, predecessor-in-interest of petitioner, is the owner of a parcel of land
located at Malhacan, Meycauayan, Bulacan. A portion thereof was leased to
Respondent Bernardino Naguiat.
Respondent Bernardino Naguiat gave a downpayment of P2,000.00. He made another
partial payment of P1,000.00. He failed to make any payments thereafter.
Eulalio Mistica died.
Petitioner filed a complaint for rescission alleging that the failure and refusal of
respondents to pay the balance of the purchase price constitutes a violation of the
contract which entitles her to rescind the same.
Respondents contended that the contract cannot be rescinded on the ground that it
clearly stipulates that in case of failure to pay the balance as stipulated, a yearly interest
of 12% is to be paid.
Respondents also filed a motion to dismiss which was denied by the court. The motion
for reconsideration was likewise denied.
The trial court rendered a decision in favor of petitioner.
On appeal, the CA held that respondents did not breach the Contract of Sale. The
appellate court ruled that the only remedy available was to order them to pay petitioner
the fair market value of the usurped portion. Hence, this Petition.
Issue:
Whether or not petitioner can rescind the contract.
Held:
In a contract of sale, the remedy of an unpaid seller is either specific performance or rescission.
Under Article 1191 of the Civil Code, the right to rescind an obligation is predicated on the
violation of the reciprocity between parties, brought about by a breach of faith by one of them.
Rescission, however, is allowed only where the breach is substantial and fundamental to the
fulfillment of the obligation.
In the present case, the failure of respondents to pay the balance of the purchase price within
ten years from the execution of the Deed did not amount to a substantial breach. In the
Kasulatan, it was stipulated that payment could be made even after ten years from the
execution of the Contract, provided the vendee paid 12 percent interest. The stipulations of
the contract constitute the law between the parties; thus, courts have no alternative but to
enforce them as agreed upon and written.


















Spouses Henry Co and Elizabeth Co and Melody Co vs. Court of
Appeals, et al
G.R. No. 112330
August 17, 1999
Facts:
Plaintiff entered into a verbal contract with defendant for her purchase of the latters
house and lot located at 316 Beata St., New Alabang Village, Muntinlupa, Metro Manila,
for and in consideration of the sum of $100,000.00. One week thereafter, and shortly
before she left for the United States, plaintiff paid to the defendants the amounts of
$1,000.00 and P40,000.00 as earnest money, in order that the same may be reserved
for her purchase, said earnest money to be deducted from the total purchase price.
Defendants counsel, Atty. Leopoldo Cotaco, wrote a letter to the plaintiff demanding
that she pay the balance of $70,000.00 and not receiving any response thereto, said
lawyer wrote another letter to plaintiff, informing her that she has lost her option to
purchase the property subject of this case and offered to sell her another property.
Atty. Estrella O. Laysa, counsel for plaintiff, wrote a letter to Atty. Leopoldo Cotaco
informing him that plaintiff is now ready to pay the remaining balance to complete the
sum of $100,000.00, the agreed amount as selling price and for that reason, plaintiff
filed the instant complaint.
The Regional Trial Court (RTC) ruled in favor of private respondent Adoracion Custodio
(CUSTODIO) and ordered the petitioner spouses Henry and Elizabeth Co (COS) to refund
the amount of $30,000.00 in CUSTODIOs favor.
Not satisfied with the decision, the COS appealed to the Court of Appeals which
affirmed the decision of the RTC. Hence, this appeal.
Issue:
Whether or not the contract entered into by the parties can be rescinded.
Held:
Since it has been shown that the appellee who was not in default, was willing to perform part of
the contract while the appellants were not, rescission of the contract is in order. The power to
rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply
with what is incumbent upon him, (Article 1191, same Code). Rescission creates the obligation
to return the things which were the object of the contract, together with their fruits, and the
price with its interest x x x x (Article 1385, same Code).
In the case at bar, the property involved has not been delivered to the appellee. She has
therefore nothing to return to the appellants. The price received by the appellants has to be
returned to the appellee as aptly ruled by the lower court, for such is a consequence of
rescission, which is to restore the parties in their former situations.



















Heirs of Sofia Quirong, represented by Romeo Quirong vs.
Development Bank of the Philippines
G.R. No. 173441
December 3, 2009
Facts:
When the late Emilio Dalope died, he left a 589-square meter untitled lot in Sta.
Barbara, Pangasinan, to his wife, Felisa Dalope (Felisa) and their nine children, one of
whom was Rosa Dalope-Funcion. To enable Rosa and her husband Antonio Funcion (the
Funcions) get a loan from respondent Development Bank of the Philippines (DBP), Felisa
sold the whole lot to the Funcions. With the deed of sale in their favor and the tax
declaration transferred in their names, the Funcions mortgaged the lot with the DBP.

After the Funcions failed to pay their loan, the DBP foreclosed the mortgage on the lot
and consolidated ownership in its name.

Four years later, the DBP conditionally sold the lot to Sofia Quirong for the price of
P78,000.00. In their contract of sale, Sofia Quirong waived any warranty against
eviction. The contract provided that the DBP did not guarantee possession of the
property and that it would not be liable for any lien or encumbrance on the same.
Quirong gave a down payment of P14,000.00.

Two months after that sale, Felisa and her eight children (collectively, the Dalopes) filed
an action for partition and declaration of nullity of documents with damages against the
DBP and the Funcions before the Regional Trial Court (RTC) of Dagupan City, Branch 42.

Notwithstanding the suit, the DBP executed a deed of absolute sale of the subject lot in
Sofia Quirongs favor. The deed of sale carried substantially the same waiver of
warranty against eviction and of any adverse lien or encumbrance.

Sofia Quirong having since died, her heirs (petitioner Quirong heirs) filed an answer in
intervention in which they asked the RTC to award the lot to them and, should it instead
be given to the Dalopes, to allow the Quirong heirs to recover the lots value from the
DBP. But, because the heirs failed to file a formal offer of evidence, the trial court did
not rule on the merits of their claim to the lot and, alternatively, to relief from the DBP.
The RTC rendered a decision, declaring the DBPs sale to Sofia Quirong valid only with
respect to the shares of Felisa and Rosa Funcion in the property. It declared Felisas sale
to the Funcions, the latters mortgage to the DBP, and the latters sale to Sofia Quirong
void insofar as they prejudiced the shares of the eight other children of Emilio and Felisa
who were each entitled to a tenth share in the subject lot.
The Quirong heirs filed the present action against the DBP before the RTC of Dagupan
City, Branch 44, for rescission of the contract of sale between Sofia Quirong, their
predecessor, and the DBP and praying for the reimbursement of the price of P78,000.00
that she paid the bank plus damages.
The RTC rendered a decision, rescinding the sale between Sofia Quirong and the DBP
and ordering the latter to return to the Quirong heirs the P78,000.00 Sofia Quirong paid
the bank.
On appeal by the DBP, the Court of Appeals (CA) reversed the RTC decision and
dismissed the heirs action on the ground of prescription. Hence, this petition.
Issue:
Whether or not the Quirong heirs action for rescission of respondent DBPs sale of the subject
property to Sofia Quirong was already barred by prescription.
Held:
An action for rescission, which is based on a subsequent economic loss suffered by the buyer,
was precisely the action that the Quirong heirs took against the DBP. Consequently, it
prescribed as Article 1389 provides in four years from the time the action accrued. Since it
accrued on January 28, 1993 when the decision became final and executory and ousted the
heirs from a substantial portion of the lot, the latter had only until January 28, 1997 within
which to file their action for rescission. Given that they filed their action on June 10, 1998, they
did so beyond the four-year period.


Heirs of Ramon Gaite, et al vs. the Plaza, Inc. and FGU Insurance
Corporation
G.R. No. 177685
January 26, 2011
Facts:
The Plaza, Inc. (The Plaza), a corporation engaged in the restaurant business, through its
President, Jose C. Reyes, entered into a contract with Rhogen Builders (Rhogen),
represented by Ramon C. Gaite, for the construction of a restaurant building in Greenbelt,
Makati, Metro Manila for the price of P7,600,000.00.
To secure Rhogens compliance with its obligation under the contract, Gaite and FGU
Insurance Corporation (FGU) executed a surety bond in the amount of P1,155,000.00 in
favor of The Plaza. The Plaza paid P1,155,000.00 less withholding taxes as down payment
to Gaite. Thereafter, Rhogen commenced construction of the restaurant building.
Engineer Angelito Z. Gonzales, the Acting Building Official of the Municipality of Makati,
ordered Gaite to cease and desist from continuing with the construction of the building
for violation of Sections 301 and 302 of the National Building Code (P.D. 1096) and its
implementing rules and regulations.
Engr. Gonzales informed Gaite that the building permit for the construction of the
restaurant was revoked for non-compliance with the provisions of the National Building
Code and for the additional temporary construction without permit.
Gaite notified Reyes that he is suspending all construction works until Reyes and the
Project Manager cooperate to resolve the issue he had raised to address the problem.
This was followed by another letter in which Gaite expressed his sentiments on their
aborted project and reiterated that they can still resolve the matter with cooperation
from the side of The Plaza.
However, Gaite informed The Plaza that he is terminating their contract based on the
Contractors Right to Stop Work or Terminate Contracts as provided for in the General
Conditions of the Contract. In his letter, Gaite accused Reyes of not cooperating with
Rhogen in solving the problem concerning the revocation of the building permits, which
he described as a minor problem. Additionally, Gaite demanded the payment of
P63,058.50 from The Plaza representing the work that has already been completed by
Rhogen.
The Plaza, through Reyes, countered that it will hold Gaite and Rhogen fully responsible
for failure to comply with the terms of the contract and to deliver the finished structure
on the stipulated date. Reyes argued that the down payment made by The Plaza was
more than enough to cover Rhogens expenses.
The Plaza notified Gaite that it could no longer credit any payment to Rhogen for the
work it had completed because the evaluation of the extent, condition, and cost of work
done revealed that in addition to the violations committed during the construction of
the building, the structure was not in accordance with plans approved by the
government and accepted by Ayala. Hence, The Plaza demanded the reimbursement of
the down payment, the cost of uprooting or removal of the defective structures, the
value of owner-furnished materials, and payment of liquidated damages.
Branch 63 of the RTC Makati rendered its decision granting the claims of The Plaza
against Rhogen, the Gaites and FGU, and the cross-claim of FGU against Rhogen and the
Gaites.
The CA affirmed the Decision of the trial court but modified the award of damages. The
motion for reconsideration of the decision was denied. Hence, this appeal.
Issue:
Whether or not petitioners are liable for breach of contract.
Held:
Rhogen committed a serious breach of its contract with The Plaza, which justified the latter in
terminating the contract. Petitioners are thus liable for damages for having breached their
contract with respondent The Plaza. Article 1170 of the Civil Code provides that those who in the
performance of their obligations are guilty of fraud, negligence or delay and those who in any
manner contravene the tenor thereof are liable for damages.
Under the principle of quantum meruit, a contractor is allowed to recover the reasonable value
of the thing or services rendered despite the lack of a written contract, in order to avoid unjust
enrichment. Quantum meruit means that in an action for work and labor, payment shall be
made in such amount as the plaintiff reasonably deserves. To deny payment for a building
almost completed and already occupied would be to permit unjust enrichment at the expense
of the contractor.
Rhogen failed to finish even a substantial portion of the works due to the stoppage order issued
just two months from the start of construction. Despite the down payment received from The
Plaza, Rhogen, upon evaluation of the Project Manager, was able to complete a meager
percentage much lower than that claimed by it under the first progress billing. Moreover, after
it relinquished the project, the site inspection appraisal jointly conducted by the Project
Manager, Building Inspector Engr. Gregory and representatives from FGU and Rhogen, Rhogen
was found to have executed the works not in accordance with the approved plans or failed to
seek prior approval of the Municipal Engineer. Article 1167 of the Civil Code is explicit on this
point that if a person obliged to do something fails to do it, the same shall be executed at his
cost.




















Solar Harvest, Inc. vs. Davao Corrugated Carton Corporation
G.R. No. 176868
July 26, 2010
Facts:
Petitioner, Solar Harvest, Inc., entered into an agreement with respondent, Davao
Corrugated Carton Corporation, for the purchase of corrugated carton boxes,
specifically designed for petitioners business of exporting fresh bananas, at US$1.10
each. The agreement was not reduced into writing. To get the production underway,
petitioner deposited, US$40,150.00 in respondents US Dollar Savings Account with
Westmont Bank, as full payment for the ordered boxes.
Despite such payment, petitioner did not receive any boxes from respondent. Petitioner
wrote a demand letter for reimbursement of the amount paid. Respondent replied that
the boxes had been completed and that petitioner failed to pick them up from the
formers warehouse 30 days from completion, as agreed upon. Respondent mentioned
that petitioner even placed an additional order of 24,000 boxes, out of which, 14,000
had been manufactured without any advanced payment from petitioner. Respondent
then demanded petitioner to remove the boxes from the factory and to pay the balance
of US$15,400.00 for the additional boxes and P132,000.00 as storage fee.
Petitioner filed a Complaint for sum of money and damages against respondent. The
Complaint averred that the parties agreed that the boxes will be delivered within 30
days from payment but respondent failed to manufacture and deliver the boxes within
such time.
The Regional Trial Court (RTC) ruled that respondent did not commit any breach of faith
that would justify rescission of the contract and the consequent reimbursement of the
amount paid by petitioner. The RTC said that respondent was able to produce the
ordered boxes but petitioner failed to obtain possession thereof because its ship did not
arrive.
On appeal, the appellate court affirmed the decision of the trial court.
Petitioner moved for reconsideration, but the motion was denied by the CA. Hence, this
petition.
Issue:
Whether or not respondent has breached its obligation and whether rescission of the obligation
is the proper remedy.
Held:
In reciprocal obligations, as in a contract of sale, the general rule is that the fulfillment of the
parties respective obligations should be simultaneous. Hence, no demand is generally
necessary because, once a party fulfills his obligation and the other party does not fulfill his, the
latter automatically incurs in delay. But when different dates for performance of the
obligations are fixed, the default for each obligation must be determined by the rules given in
the first paragraph of the present article, that is, the other party would incur in delay only from
the moment the other party demands fulfillment of the formers obligation. Thus, even in
reciprocal obligations, if the period for the fulfillment of the obligation is fixed, demand upon
the obligee is still necessary before the obligor can be considered in default and before a cause
of action for rescission will accrue.
Evident from the records and even from the allegations in the complaint was the lack of
demand by petitioner upon respondent to fulfill its obligation to manufacture and deliver the
boxes. The Complaint only alleged that petitioner made a follow-up upon respondent, which,
however, would not qualify as a demand for the fulfillment of the obligation. Petitioners
witness also testified that they made a follow-up of the boxes, but not a demand. Note is taken
of the fact that, with respect to their claim for reimbursement, the Complaint alleged and the
witness testified that a demand letter was sent to respondent. Without a previous demand for
the fulfillment of the obligation, petitioner would not have a cause of action for rescission
against respondent as the latter would not yet be considered in breach of its contractual
obligation.
In sum, the Court finds that petitioner failed to establish a cause of action for rescission, the
evidence having shown that respondent did not commit any breach of its contractual
obligation.








Mila Reyes vs. Victoria Tuparan
G.R. No. 188064
June 1, 2011
Facts:
Mila A. Reyes (petitioner) filed a complaint for Rescission of Contract with Damages
against Victoria T. Tuparan (respondent) before the RTC. In her Complaint, petitioner
alleged, among others, that she was the registered owner of a 1,274 square meter
residential and commercial lot located in Karuhatan, Valenzuela City; that on that
property, she put up a three-storey commercial building known as RBJ Building and a
residential apartment building; and that she had been operating a drugstore and
cosmetics store on the ground floor of RBJ Building where she also had been residing
while the other areas of the buildings including the sidewalks were being leased and
occupied by tenants and street vendors.
Respondent leased from petitioner a space on the ground floor of the RBJ Building for
her pawnshop business for a monthly rental of 4,000.00.
Petitioner mortgaged the subject real properties to the Farmers Savings Bank and Loan
Bank, Inc. (FSL Bank) to secure a loan of 2,000,000.00 payable in installments.
Petitioners outstanding account on the mortgage reached 2,278,078.13. Petitioner
then decided to sell her real properties for at least 6,500,000.00 so she could liquidate
her bank loan and finance her businesses. As a gesture of friendship, respondent
verbally offered to conditionally buy petitioners real properties for 4,200,000.00
payable on installment basis without interest and to assume the bank loan.
After petitioners verbal acceptance of all the conditions/concessions, both parties
worked together to obtain FSL Banks approval for respondent to assume her
(petitioners) outstanding bank account. The assumption would be part of respondents
purchase price for petitioners mortgaged real properties. FSL Bank approved their
proposal on the condition that petitioner would sign or remain as co-maker for the
mortgage obligation assumed by respondent.
The parties and FSL Bank executed the corresponding Deed of Conditional Sale of Real
Properties with Assumption of Mortgage. Due to their close personal friendship and
business relationship, both parties chose not to reduce into writing the other terms of
their agreement. Besides, FSL Bank did not want to incorporate in the Deed of
Conditional Sale of Real Properties with Assumption of Mortgage any other side
agreement between petitioner and respondent.
Respondent, however, defaulted in the payment of her obligations on their due dates.
Instead of paying the amounts due in lump sum on their respective maturity dates,
respondent paid petitioner in small amounts from time to time.
Petitioner further averred that despite her success in finding a prospective buyer for the
subject real properties within the 3-month period agreed upon, respondent reneged on
her promise to allow the cancellation of their deed of conditional sale. Instead,
respondent became interested in owning the subject real properties and even wanted
to convert the entire property into a modern commercial complex. Nonetheless, she
consented because respondent repeatedly professed friendship and assured her that all
their verbal side agreement would be honoured.
The residential building was gutted by fire which caused the petitioner to lose rental
income in the amount of 8,000.00 a month.
The RTC handed down its decision finding that respondent failed to pay in full the 4.2
million total purchase price of the subject real properties leaving a balance of
805,000.00.
The CA rendered its decision affirming with modification the RTC Decision. The CA
agreed with the RTC that the contract entered into by the parties is a contract to sell but
ruled that the remedy of rescission could not apply because the respondents failure to
pay the petitioner the balance of the purchase price in the total amount of 805,000.00
was not a breach of contract, but merely an event that prevented the seller (petitioner)
from conveying title to the purchaser (respondent).

Issue:
Whether or not the obligation between the parties can be rescinded.
Held:
Granting that a rescission can be permitted under Article 1191, the Court still cannot allow it for
the reason that, considering the circumstances, there was only a slight or casual breach in the
fulfillment of the obligation.
Unless the parties stipulated it, rescission is allowed only when the breach of the contract is
substantial and fundamental to the fulfillment of the obligation. Whether the breach is slight or
substantial is largely determined by the attendant circumstances.
From the records, it cannot be denied that respondent paid to FSL Bank petitioners mortgage
obligation in the amount of 2,278,078.13, which formed part of the purchase price of the
subject property. Likewise, it is not disputed that respondent paid directly to petitioner the
amount of 721,921.87 representing the additional payment for the purchase of the subject
property. Clearly, out of the total price of 4,200,000.00, respondent was able to pay the total
amount of 3,000,000.00, leaving a balance of 1,200,000.00 payable in three (3) installments.
Out of the 1,200,000.00 remaining balance, respondent paid on several dates the first and
second installments of 200,000.00 each. She, however, failed to pay the third and last
installment of 800,000.00. Nevertheless, respondent, through counsel, offered to pay the
amount of 751,000.00, which was rejected by petitioner for the reason that the actual balance
was 805,000.00 excluding the interest charges.
Considering that out of the total purchase price of 4,200,000.00, respondent has already paid
the substantial amount of 3,400,000.00, more or less, leaving an unpaid balance of only
805,000.00, it is right and just to allow her to settle, within a reasonable period of time, the
balance of the unpaid purchase price. The Court agrees that the respondent showed her
sincerity and willingness to comply with her obligation when she offered to pay the petitioner
the amount of 751,000.00.













G.G. Sportswear MFG. Corporation vs. World Class Properties, Inc.
G.R. No. 182720
March 2, 2010
Facts:
Petitioner offered to purchase the 38
th
floor penthouse unit and 16 parking slots for 32
cars in World Class condominium for the discounted , pre-selling price of P89, 624,
272.82.
GG Sportswear timely paid its installments due.
GG Sportswear requested the return of the outstanding postdated checks it previously
delivered to World Class because GG Sportswear intended to replace these old checks
with ne ones from the corporations new bank. World Class acceded, but suggested the
execution of a new reservation agreement to reflect the arrangement involving the
replacement checks, with the retention of the other terms and conditions of the Old
Agreement.
GG Sportswear delivered the replacement checks and paid the installment payment
which had been delayed for two months. World Class in turn issued a second
Reservation Agreement, which it transmitted to GG Sportswear for the latters
conformity. World Class also sent GG Sportswear a provisional Contract to Sell, which
stated that the condominium project would be ready for turnover to the buyer not later
than December 25, 1998.
GG Sportswear filed a Complaint with the HLURB claiming a refund of the installment
payments made to World Class because it was dissatisfied with the completion date
found in the Contract to Sell.
The HLURB rendered a decision rescinding the Agreement, after finding that the World
Class violated Sections 4 and 5 of P.D. No. 957 by entering into the Agreement without
the required Certificate of Registration and License to Sell.
World Class appealed to the HLURB Board of Commissioners. The Board modified the
Arbiters decision by ruling that the Agreement could no longer be rescinded for lack of
a CR/LS because World Class had already been issued a license to Sell before the
complaint was filed. Notwithstanding this pronouncement, the Board still awarded a
refund in petitioners favor.
On appeal to the CA, the CA rendered a decision in favor of World Class. Hence, this
petition.
Issue:
Whether or not rescission is allowed in the case.
Held:
Unless the parties stipulated it, rescission is allowed only when the breach of the contract is
substantial and fundamental to the fulfillment of the obligation. Whether the breach is slight or
substantial is largely determined by the attendant circumstances. Petitioner anchors its claim
for rescission of a reservation agreement for the purchase of units and parking slots in a
condominium property being developed by World Class, on to grounds: a) its dissatisfaction
with the completion date; and b) the lack of the Contract to Sell. However, petitioner cannot
claim that it did not know the time-frame for the projects completion when it entered into the
Agreement with respondent.
Moreover, the provisional Contract to Sell that accompanied the second reservation agreement
explicitly provided that the condominium project would be ready for turnover no later than
December 15, 1998, a clear expression of the projects completion date. Having known the date,
the fact of the dissatisfaction with it does not constitute a breach so substantial as to render
the Agreement rescissible.
Even if it had been unhappy with the completion date, this ground, standing alone, is not
sufficient basis to rescind the Agreement; unhappiness is a state of mind, not a defect available
in law as a basis to rescind a contract.









Valentin Movido, substituted by Marginito Movido vs. Luis Reyes
Pastor
G.R. No. 172279
February 11, 2010
Facts:
Respondent Luis Reyes Pastor filed a complaint for specific performance in the Regional
Trial Court (RTC) of Imus, Cavite, praying that petitioner Valentin Movido be compelled
to cause the survey of a parcel of land subject of their contract to sell.
In his complaint, respondent alleged that he and petitioner executed a kasunduan sa
bilihan ng lupa where the latter agreed to sell a parcel of land located in Paliparan,
Dasmarias, Cavite with an area of some 21,000 sq. m. out of the 22,731 sq. m.
Respondent further alleged that another kasunduan was later executed supplementing
the kasunduan sa bilihan ng lupa. It provided that, if a Napocor power line traversed the
subject lot, the purchase price would be lowered to P200/sq. m. beyond the distance of
15 meters on both sides from the center of the power line while the portion within a
distance of 15 meters on both sides from the center of the power line would not be
paid.
Respondent alleged that he already paid petitioner P5 million out of the original
purchase price of P8.4 million stated in the kasunduan sa bilihan ng lupa. He was willing
and ready to pay the balance of the purchase price but due to petitioners refusal to
have the property surveyed despite incessant demands, his unpaid balance could not be
determined with certainty.
In his answer, petitioner alleged that the original negotiation for the sale of his property
involved the entire area of 22,731 sq. m. However, as respondent was not sure whether
a Napocor power line traversed the property, they then executed the kasunduan. After
respondent personally inspected the property, a final agreementthe kasunduan sa
bilihan ng lupawas executed where the area to be sold was 21,000 sq. m. for P400/sq.
m. for a total sum of P8.4 million. The final agreement also listed a schedule of
payments of the purchase price and included a penalty clause in case of default.
Petitioner also charged respondent with delay in paying several installments due and did
not pay the 7
th
installment in the amount of P1 million. This was allegedly a material
breach because they agreed that the survey of the property would only be done after
respondent would have paid the 7
th
installment. Due to respondents failure to fulfill his
obligations, petitioner claimed that he had no choice except to rescind the kasunduan sa
bilihan ng lupa. He, however, was willing to reimburse 50% of whatever respondent had
paid him so far.
After hearing, the RTC ruled in favor of petitioner and held that the kasunduan preceded
the kasunduan sa bilihan ng lupa. Thus, the RTC dismissed the complaint of respondent
for lack of merit and/or cause of action.
On appeal, the Court of Appeals reversed the decision of the RTC. Hence, this petition.
Issue:
Whether or not respondent has breach its obligation which gives rise to the rescission of the
obligation.
Held:
Rescission is only allowed when the breach is so substantial and fundamental as to defeat the
object of the parties in entering into the contract. There is no such substantial or material
breach.
It is true that respondent failed to pay the 7
th
and 8
th
installments of the purchase price.
However, considering the circumstances of the instant case, particularly the provisions of the
kasunduan, respondent cannot be deemed to have committed a serious breach. In the first
place, respondent was not in default as petitioner never made a demand for payment.
Moreover, the kasunduan sa bilihan ng lupa and the kasunduan should both be given effect
rather than be declared conflicting, if there is a way of reconciling them. Petitioner and
respondent would not have entered into either of the agreements if they did not intend to be
bound or governed by them. Indeed, taken together, the two agreements actually constitute a
single contract pertaining to the sale of a land to respondent by petitioner. Their stipulations
must therefore be interpreted together, attributing to the doubtful ones that sense that may
result from all of them taken jointly. Their proper construction must be one that gives effect to
all.





Spouses Carmen Tongson and Jose Tongson, et al vs. Emergency
Pawnshop Bula, Inc. and Danilo Napala
G.R. No. 167874
January 15, 2010
Facts:
Napala offered to purchase from the Spouses Tongson their 364-square meter parcel of
land, situated in Davao City and for P3,000,000. Finding the offer acceptable, the
Spouses Tongson executed with Napala a Memorandum of Agreement.
Respondents lawyer Atty. Petronilo A. Raganas, Jr. prepared a Deed of Absolute Sale
indicating the consideration as only P400,000. When Carmen Tongson noticed that the
consideration was very low, she complained and called the attention of Napala but the
latter told her not to worry as he would be the one to pay for the taxes and she would
receive the net amount of P3,000,000.
To conform with the consideration stated in the Deed of Absolute Sale, the parties
executed another Memorandum of Agreement, which allegedly replaced the first
Memorandum of Agreement, showing that the selling price of the land was only
P400,000.
Upon signing the Deed of Absolute Sale, Napala paid P200,000 in cash to the Spouses
Tongson and issued a postdated Philippine National Bank (PNB) check in the amount of
P2,800,000, representing the remaining balance of the purchase price of the subject
property.
When presented for payment, the PNB check was dishonored for the reason Drawn
Against Insufficient Funds. Despite the Spouses Tongson's repeated demands to either
pay the full value of the check or to return the subject parcel of land, Napala failed to do
either. Left with no other recourse, the Spouses Tongson filed with the Regional Trial
Court, Branch 16, Davao City a Complaint for Annulment of Contract and Damages with
a Prayer for the Issuance of a Temporary Restraining Order and a Writ of Preliminary
Injunction.
In their Answer, respondents countered that Napala had already delivered to the
Spouses Tongson the amount of P2,800,000 representing the face value of the PNB
check, as evidenced by a receipt issued by the Spouses Tongson. Respondents pointed
out that the Spouses Tongson never returned the PNB check claiming that it was
misplaced. Respondents asserted that the payment they made rendered the filing of
the complaint baseless.
The trial court rendered a decision in favor of petitioner.
Respondents appealed to the Court of Appeals.
The Court of Appeals agreed with the trial courts finding that Napala employed fraud
when he misrepresented to the Spouses Tongson that the PNB check in the amount of
P2,800,000 would be properly funded at its maturity. However, the Court of Appeals
found that the issuance and delivery of the PNB check and fraudulent representation
made by Napala could not be considered as the determining cause for the sale of the
subject parcel of land. Hence, such fraud could not be made the basis for annulling the
contract of sale.
The Spouses Tongson filed a partial motion for reconsideration which was denied by the
Court of Appeals. Hence, this petition.
Issue:
Whether or not the contract of sale can be annulled based on the fraud employed by Napala.
Held:
However, while no causal fraud attended the execution of the sales contract, there is fraud in
its general sense, which involves a false representation of a fact, when Napala inveigled the
Spouses Tongson to accept the postdated PNB check on the representation that the check
would be sufficiently funded at its maturity. In other words, the fraud surfaced when Napala
issued the worthless check to the Spouses Tongson, which is definitely not during the
negotiation and perfection stages of the sale. Rather, the fraud existed in the consummation
stage of the sale when the parties are in the process of performing their respective obligations
under the perfected contract of sale.
Indisputably, the Spouses Tongson as the sellers had already performed their obligation of
executing the Deed of Sale, which led to the cancellation of their title in favor of EPBI.
Respondents as the buyers, on the other hand, failed to perform their correlative obligation of
paying the full amount of the contract price. While Napala paid P200, 000 cash to the Spouses
Tongson as partial payment, Napala issued an insufficiently funded PNB check to pay the
remaining balance of P2.8 million. Despite repeated demands and the filing of the complaint,
Napala failed to pay the P2.8 million until the present. Clearly, respondents committed a
substantial breach of their reciprocal obligation, entitling the Spouses Tongson to the rescission
of the sales contract.


Bonifacio Sanz Maceda, Jr. vs. Development Bank of the Philippines
G.R. No. 174979
August 11, 2010
Facts:
Plaintiff Bonifacio Maceda, Jr. (Maceda) obtained a loan from the defendant DBP
in the amount of P7.3 million to finance the expansion of the Old Gran Hotel in
Leyte. Upon approval of said loan, plaintiff Maceda executed a promissory note
and a mortgage of real estate. Project cost of the New Gran Hotel was P10.5M.
DBP fixed a debt-equity ratio of 70%-30%, corresponding to DBP and Macedas
respective infusion in the hotel project. Macedas equity infusion was P2.93M,
or 30% of P10.5M. The DBP Governor at that time, Recio Garcia, in-charge of
loans for hotels, allegedly imposed the condition that DBP would choose the
building contractor, namely, Moreman Builders Co. (Moreman). The contractor
would directly receive the loan releases from DBP, after verification by DBP of
the construction progress. The period of loan availment was 360 days from date
of initial release of the loan. Similarly, suppliers of equipment and furnishings
for the hotel were also to be paid directly by DBP.
Maceda filed a complaint for Rescission of the building contract with Damages
against the contractor Moreman, before the then Manila Court of First Instance
Branch 39.. In its decision, the CFI rescinded the building contract, suspended
the period of availment, allowed Maceda to himself take over construction, and
directed DBP to release to Maceda the sum of P1.003M, which had previously
been approved for release.
Maceda also instituted the case a quo for Specific Performance with Damages
against defendant DBP before the Makati RTC in 1984.
Macedas complaint before the Makati RTC alleged that DBP conspired with the
contractor, Moreman, by approving anomalous loan releases to the latter
despite exaggerated charges and valuation made by said contractor on the hotel
project. In effect, it was alleged that despite only a 15% accomplishment which
should have cost only P700,000.00, the contractor, thru the active connivance of
the DBP, was able to rake in a total of P3,174,358.38 or 60% of the cost of the
projected hotel building. When plaintiff Maceda himself tried to resume the
completion and construction of the hotel project, after the building contract with
Moreman was already rescinded by the CFI Manila, defendant allegedly blocked
efforts of the plaintiff by delaying the release of funds from his loan with the DBP
and imposing onerous conditions which made it difficult for plaintiff to pursue
the construction of the New Gran Hotel. It was further alleged that due to such
delays on the part of the DBP, the period of availment of the loan expired
without the plaintiffs having availed of the total approved amount of their loan.
The construction of the hotel was never finished. Finally, DBP allegedly
threatened to foreclose the mortgaged properties of the plaintiff.

The trial court promulgated its Decision in favor of Maceda.
On appeal, the appellate court rendered its Decision which affirmed the order of
the trial court.
The appellate court denied Macedas and DBPs Motions for Reconsideration for
lack of merit. Macedas Motion for Execution Pending Appeal was likewise
denied.
Issue:
Whether or not the contract entered into by the parties can be rescinded.
Held:
Maceda put in cash equity worth P6,153,398.05. Under Article 1191 of the Civil Code, the
aggrieved party has a choice between specific performance and rescission with damages in
either case. However, if specific performance becomes impractical or impossible, the court
may order rescission with damages to the injured party. After the lapse of more than 30 years,
it is now impossible to implement the loan agreement as it was written, considering the
absence of evidence as to the rising costs of construction, as well as the obvious changes in
market conditions on the viability of the operations of the hotel. The court deems it equitable
and practicable to rescind the obligation of DBP to deliver the balance of the loan proceeds to
Maceda. In exchange, DBP must pay Maceda the value of Macedas cash equity of
P6,153,398.05 by way of actual damages, plus the applicable interest rate. The present ruling
comes within the purview of Macedas and DBPs prayers for other reliefs, just or equitable
under the premises.



Armando Raquel-Santos and Annalissa Mallari vs. Court of Appeals
and Finvest Securities Co., Inc.
G.R. No. 175071
July 7, 2009
Facts:
Finvest is a stock brokerage corporation duly organized under Philippine laws and is a
member of the PSE with one membership seat pledged to the latter. Armand O. Raquel-
Santos (Raquel-Santos) was Finvests President and nominee to the PSE from February
20, 1990 to July 16, 1998. Annalissa Mallari (Mallari) was Finvests Administrative Officer
until December 31, 1998.
Respondent Finvests cause of action against petitioners was for accounting and
damages, arising from the allegedly missing stock certificates. In relation to such cause
of action, Finvest alleged in the Complaint that petitioners had sole authority and
custody of the stock certificates and that they took undue advantage of their positions
in diverting to their personal benefit the proceeds from the sale of the shares of stock.
Finvest, therefore, prayed that Raquel-Santos and Mallari be held jointly and severally
liable to account for and/or to pay for all missing stock certificates and payables listed in
the Complaint and for any other subsequent claims and the corresponding profits that
could have accrued to the corporation; and damages that the corporation may sustain
by reason of and/or in relation to such missing or unaccounted stock certificates,
payables, and any other subsequent claims.
Issue:
Whether or not rescission is the proper remedy in the case.
Held:
The right of a party to rescission under Article 1191 of the Civil Code is predicated on a breach
of faith by the other party who violates the reciprocity between them. In a contract of sale, the
seller obligates itself to transfer the ownership of and deliver a determinate thing, and the
buyer to pay therefor a price certain in money or its equivalent. In some contracts of sale, such
as the sale of real property, prior physical delivery of the thing sold or its representation is not
legally required, as the execution of the Deed of Sale effectively transfers ownership of the
property to the buyer through constructive delivery. Hence, delivery of the certificate of title
covering the real property is not necessary to transfer ownership.
In the sale of shares of stock, physical delivery of a stock certificate is one of the essential
requisites for the transfer of ownership of the stocks purchased.
For a valid transfer of stocks, the requirements are as follows: (a) there must be delivery of the
stock certificate; (b) the certificate must be endorsed by the owner or his attorney-in-fact or
other persons legally authorized to make the transfer; and (c) to be valid against third parties,
the transfer must be recorded in the books of the corporation.
Clearly, Finvests failure to deliver the stock certificates representing the shares of stock
purchased by TMEI and Garcia amounted to a substantial breach of their contract which gave
rise to a right to rescind the sale.
Mutual restitution entails the return of the benefits that each party may have received as a
result of the contract. In this case, it is the purchase price that Finvest must return. The amount
paid was sufficiently proven by the buy confirmation receipts, vouchers, and official/provisional
receipts that respondents presented in evidence. In addition, the law awards damages to the
injured party, which could be in the form of interest on the price paid, as the trial court did in
this case.












Spouses Lino Francisco & Guia Francisco vs. DEAC Construction, Inc.
and Geomar Dadula
G.R. No. 171312
February 4, 2008
Facts:
Plaintiffs-appellees Lino Francisco and Guia Francisco obtained the services of
defendant-appellant DEAC Construction, Inc. (DEAC) to construct a 3-storey
residential building with mezzanine and roof deck on their lot located at 118
Pampanga Street, Gagalangin, Tondo, Manila for a contract price of
P3,500,000.00. As agreed upon, a downpayment of P2,000,000.00 should be
paid upon signing of the contract of construction, and the remaining balance of
P1,500,000.00 was to be paid in two equal installments: the first installment of
P750,000.00 should be paid upon completion of the foundation structure and
the ground floor, which amount would be used primarily for the construction of
the second floor to the roof deck while the final amount of P750,000.00 should
be paid upon completion of the second floor up to the roof deck structure to
defray the expenses necessary for finishing and completion of the building. To
undertake the said project, DEAC engaged the services of a sub-contractor, Vigor
Construction and Development Corporation, but allegedly without the plaintiffs-
appellees knowledge and consent.

Even prior to the execution of the contract, the plaintiffs-appellees had paid the
downpayment of P2,000,000.00. The amount of P200,000.00 was again paid to
DEAC followed by the payment of P550,000.00. Plaintiff-appellant Guia
Francisco likewise paid the amount of P80,000.00 for the requested additional
works on the project.

The construction of the residential building commenced in although DEAC, upon
which the obligation pertained, had not yet obtained the necessary building
permit for the proposed construction. It was on this basis that the owner Lino
Francisco was charged with violation of Section 301, Chapter 3 (Illegal
Construction) of [P.D. No.] 1096 otherwise known as the National Building Code
of the Philippines with the Metropolitan Trial Court of Manila, Branch 12.
A Work Stoppage Order was issued against the plaintiff-appellee Lino Francisco
pursuant to the previous Notice of Violations. Having learned of such order, the
plaintiffs-appellees allegedly immediately proceeded to the Office of the Building
Official of Manila to explain that DEAC was the one responsible for such
violations, and that the deviations of the approved plan being imputed against
Lino Francisco were unilateral acts of DEAC. They also filed a complaint for Non-
Compliance of the Building Plan, Illegal Construction, abandonment and other
violations of the Building Code against DEAC with the said Office. The said
complaint was endorsed to the City Prosecutor of Manila which culminated in
the filing of a criminal case against Geomar A. Dadula and DEAC project engineer
Leoncio C. Alambra for deviation and violation of specification plan.

The plaintiffs-appellees also filed a case for Rescission of Contract and Damages
with the Regional Trial Court of Manila, Branch 28, against DEAC and its
President Geomar A. Dadula.

Issue:
Whether or not petitioner can rescind the contract.
Held:
Article 1191 of the Civil Code provides that the power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not comply with what is incumbent upon
him. The rescission referred to in this article, more appropriately referred to as resolution, is
not predicated on injury to economic interests on the part of the party plaintiff, but of breach
of faith by the defendant which is violative of the reciprocity between the parties. The right to
rescind may be waived, expressly or impliedly.
The Spouses Francisco, in their letter to respondents, complained, among others, about the
belated release of the building permit, the unauthorized corrections in the building plan, the
forgery of petitioner Guia Franciscos signature on the building plan, and the deletion of the
open space/patio in the actual construction of the project. The filing of a criminal case against
respondent Dadula and the subsequent filing of this civil case for rescission and damages within
a reasonable time after the Spouses Francisco had learned that construction of their building
commenced without the necessary building permit and discovered that there were deviations
from the building plan demonstrate the vigilance with which they guarded their rights. The
appellate courts conclusion that the Spouses Francisco should be deemed to have waived their
right to seek rescission is clearly unfounded.
Finally, given the fact that the construction in this case is already 75% complete, the trial court
was correct in ordering partial rescission only of the undelivered or unfinished portion of the
construction. Equitable considerations justify rescission of the portion of the obligation which
had not been delivered.


















Spouses Felipe and Leticia Cannu vs. Spouses Gil and Fernandina
Galang and National Home Mortgage Finance Corporation
G.R. No. 139523
May 26, 2005
Facts:
Respondents-spouses Gil and Fernandina Galang obtained a loan from Fortune Savings
& Loan Association for P173,800.00 to purchase a house and lot located at Pulang Lupa,
Las Pias, with an area of 150 square meters. To secure payment, a real estate mortgage
was constituted on the said house and lot in favor of Fortune Savings & Loan
Association. In early 1990, NHMFC purchased the mortgage loan of respondents-
spouses from Fortune Savings & Loan Association for P173,800.00.
Petitioner Leticia Cannu agreed to buy the property for P120,000.00 and to assume the
balance of the mortgage obligations with the NHMFC and with CERF Realty (the
Developer of the property).
A Deed of Sale with Assumption of Mortgage Obligation was made and entered into by
and between spouses Fernandina and Gil Galang (vendors) and spouses Leticia and
Felipe Cannu (vendees) over the house and lot in question
Petitioners immediately took possession and occupied the house and lot.
Petitioners paid the equity or second mortgage to CERF Realty.
Despite requests from Adelina R. Timbang and Fernandina Galang to pay the balance of
P45,000.00 or in the alternative to vacate the property in question, petitioners refused
to do so.
Petitioner Leticia Cannu informed Mr. Fermin T. Arzaga, Vice President, Fund
Management Group of the NHMFC, that the ownership rights over the land in the
names of respondents-spouses had been ceded and transferred to her and her husband
per Deed of Sale with Assumption of Mortgage, and that they were obligated to assume
the mortgage and pay the remaining unpaid loan balance. Petitioners formal
assumption of mortgage was not approved by the NHMFC.
Because the Cannus failed to fully comply with their obligations, respondent Fernandina
Galang, paid P233,957.64 as full payment of her remaining mortgage loan with NHMFC.
Petitioners opposed the release of the certificate of title in favor of respondents-
spouses insisting that the subject property had already been sold to them.
Consequently, the NHMFC held in abeyance the release of said TCT.
Thereupon, a Complaint for Specific Performance and Damages was filed asking, among
other things, that petitioners (plaintiffs therein) be declared the owners of the property
involved subject to reimbursements of the amount made by respondents-spouses
(defendants therein) in preterminating the mortgage loan with NHMFC.
After trial, the lower court rendered its decision in favor of respondents.
A Motion for Reconsideration was filed, but same was denied. Petitioners appealed the
decision of the RTC to the Court of Appeals. The CA affirmed the decision of the trial
court.
The motion for reconsideration filed by petitioners was denied by the CA. Hence, this
Petition for Certiorari.
Issue:
Whether or not petitioners breach of the obligation was substantial.
Held:
Rescission will not be permitted for a slight or casual breach of the contract. Rescission may be
had only for such breaches that are substantial and fundamental as to defeat the object of the
parties in making the agreement. The question of whether a breach of contract is substantial
depends upon the attending circumstances and not merely on the percentage of the amount
not paid.
In the case at bar, we find petitioners failure to pay the remaining balance of P45,000.00 to be
substantial. Even assuming arguendo that only said amount was left out of the supposed
consideration of P250,000.00, or eighteen (18%) percent thereof, this percentage is still
substantial. Taken together with the fact that the last payment made eighteen months before
the respondent Fernandina Galang paid the outstanding balance of the mortgage loan with
NHMFC, the intention of petitioners to renege on their obligation is utterly clear.
The fact that petitioners tendered a Managers Check to respondents-spouses Galang in the
amount of P278,957.00 seven months after the filing of this case is of no moment. Tender of
payment does not by itself produce legal payment, unless it is completed by consignation. Their
failure to fulfill their obligation gave the respondents-spouses Galang the right to rescission.


Generoso Villanueva and Raul Villanueva, Jr. vs. Estate of Gerardo
Gonzaga/Ma. Villa Gonzaga, in her capacity as Administratrix
G.R. No. 157318
August 9, 2006
Facts:
Petitioners Generoso Villanueva and Raul Villanueva, Jr., business entrepreneurs
engaged in the operation of transloading stations and sugar trading, and respondent
Estate of Gerardo L. Gonzaga, represented by its Judicial Administratrix, respondent Ma.
Villa J. Gonzaga, executed a MOA .
As stipulated in the agreement, petitioners introduced improvements after paying
P291,600.00 constituting sixty (60%) percent of the total purchase price of the lots.
Petitioners then requested permission from respondent Administratrix to use the
premises for the next milling season. Respondent refused on the ground that petitioners
cannot use the premises until full payment of the purchase price. Petitioners informed
respondent that their immediate use of the premises was absolutely necessary and that
any delay will cause them substantial damages. Respondent remained firm in her
refusal, and demanded that petitioners stop using the lots as a transloading station to
service the Victorias Milling Company unless they pay the full purchase price. In a letter-
reply dated April 5, 1991, petitioners assured respondent of their readiness to pay the
balance but reminded respondent of her obligation to redeem the lots from mortgage
with the Philippine National Bank (PNB). Petitioners gave respondent ten (10) days
within which to do so.
Respondent Administratrix wrote petitioners informing them that the PNB had agreed
to release the lots from mortgage. She demanded payment of the balance of the
purchase price.
In their letter-reply, petitioners demanded that respondent show the clean titles to the
lots first before they pay the balance of the purchase price. Respondent merely
reiterated the demand for payment. Petitioners stood pat on their demand.
Respondent Administratrix executed a Deed of Rescission rescinding the MOA on two
grounds: (1) petitioners failed to pay the balance of the purchase price despite notice of
the lots release from mortgage, and (2) petitioners violated the MOA by using the lots
as a transloading station without permission from the respondents.
The trial court decided the case in favor of respondents.
Petitioners filed a petition for review before the Court of Appeals. The Court of Appeals
affirmed the trial courts decision but deleted the award for moral damages on the
ground that petitioners were not guilty of bad faith in refusing to pay the balance of the
purchase price. Hence, this petition.
Issue:
Whether or not there is legal, or even a factual, ground for the rescission of the Memorandum
of Agreement.
Held:
There is no legal basis for the rescission. The remedy of rescission under Art. 1191 of the Civil
Code is predicated on a breach of faith by the other party that violates the reciprocity between
them. We have held in numerous cases that the remedy does not apply to contracts to sell.
The MOA between petitioners and respondents is a conditional contract to sell. Ownership over
the lots is not to pass to the petitioners until full payment of the purchase price. Petitioners
obligation to pay, in turn, is conditioned upon the release of the lots from mortgage with the
PNB to be secured by the respondents. Although there was no express provision regarding
reserved ownership until full payment of the purchase price, the intent of the parties in this
regard is evident from the provision that a deed of absolute sale shall be executed only when
the lots have been released from mortgage and the balance paid by petitioners. Since
ownership has not been transferred, no further legal action need have been taken by the
respondents, except an action to recover possession in case petitioners refuse to voluntarily
surrender the lots.
The records show that the lots were finally released from mortgage in July 1991. Petitioners
have always expressed readiness to pay the balance of the purchase price once that is achieved.
Hence, petitioners should be allowed to pay the balance now, if they so desire, since it is
established that respondents demand for them to pay in April 1991 was premature. However,
petitioners may not demand production by the respondents of the titles to the lots as a
condition for their payment. It was not required under the MOA. The MOA merely states that
petitioners shall pay the balance "upon approval by the PNB of the release of the lots" from
mortgage. Petitioners may not add further conditions now. Obligations arising from contracts
have the force of law between the contracting parties and should be complied with in good
faith.

Spouses Domingo and Lourdes Paguyo vs, Pierre Astorga and St.
Andrew Realty, Inc.
G.R. No. 130982
September 16, 2005
Facts:
Spouses Domingo Paguyo and Lourdes Paguyo, were the owners of a small five-storey
building known as the Paguyo Building located at Makati Avenue, corner Valdez Street,
Makati City. With one (1) unit per floor, the building has an average area of 100 square
meters per floor and is constructed on a land belonging to the Armas family.
In order for the petitioners to complete their title and ownership over the lot in
question, there was an urgent need to make complete payment to the Armases, which
at that time stood at P917,470.00 considering that petitioners had previously made
partial payments to the Armases.
Petitioner Lourdes Paguyo entered into an agreement captioned as Receipt of Earnest
Money with respondent Pierre Astorga, for the sale of the formers property consisting
of the lot which was to be purchased from the Armases, together with the
improvements thereon, particularly, the existing building known as the Paguyo Building.
However, contrary to their express representation with respect to the subject lot,
petitioners failed to comply with their obligation to acquire the lot from the Armas
family despite the full financial support of respondents. Nevertheless, the parties
maintained their business relationship under the terms and conditions of the Receipt of
Earnest Money.
Petitioners asked for and were given by respondents an additional P50,000.00 to meet
the formers urgent need for money in connection with their construction business.
Due also to the urgent necessity of obtaining money to finance their construction
business, petitioner Lourdes Paguyo, who was also the attorney-in-fact of her husband,
proposed to the respondents the separate sale of the building in question while she
continued to work on the acquisition of the lot from the Armas family, assuring the
respondents that she would succeed in doing so.
Aware of the risk of buying an improvement on the lot of a third party who appeared
ambivalent on whether to dispose their property in favor of the respondents,
respondents took a big business gamble and, relying on the assurance of petitioners
that they would eventually acquire the lot and transfer the same to respondents in
accordance with their undertaking in the Receipt of Earnest Money, respondents agreed
to petitioner Lourdes Paguyos proposal to buy the building first. The parties executed
the four documents in question namely, the Deed of Absolute Sale of the Paguyo
Building, the Mutual Undertaking, the Deed of Real Estate Mortgage, and the Deed of
Assignment of Rights and Interest. Simultaneously with the signing of the four
documents, respondents paid petitioners the additional amount of P500,000.00.
Thereafter, the respondents renamed the Paguyo Building into GINZA Bldg. and
registered the same in the name of respondent St. Andrew Realty, Inc. at the Makati
Assessors Office after paying accrued real estate taxes in the total amount of
P169,174.95. Since 1990, respondents paid the real estate taxes on subject building as
registered owners thereof. Further, respondents obtained fire insurance and applied for
the conversion of Paguyo Building into a condominium. All of these acts of ownership
exercised by respondents over the building were with the express knowledge and
consent of the petitioners.
Pursuant to their agreement contained in the aforecited documents, particularly in the
Mutual Undertaking, respondent company filed an ejectment case and obtained a
favorable decision against petitioners in the Metropolitan Trial Court (MeTC) of Makati.
Petitioners filed a Complaint for the rescission of the Receipt of Earnest Money with the
undertaking to return the sum of P763,890.50. They also sought the rescission of the
Deed of Real Estate Mortgage, the Mutual Undertaking, the Deed of Absolute Sale of
Building, and the Deed of Assignment of Rights and Interest.
After trial, the RTC ruled in favor of respondents.
On appeal, the Court of Appeals promulgated its decision affirming the decision of the
trial court. Hence, this petition.
Issue:
Whether or not petitioner has the right to rescind the contract.
Held:
Petitioners herein failed to prove any of the instances mentioned in Articles 1355 and 1470 of
the Civil Code, which would invalidate, or even affect, the Deed of Sale of the Building and the
related documents. Indeed, there is no requirement that the price be equal to the exact value
of the subject matter of sale.

In the case at bar, petitioners pray for rescission of the Deed of Sale of the building and offer to
repay the purchase price after their liquidity position would have improved and after
respondents would have refurbished the building, updated the real property taxes, and turned
the building into a profitable business venture. The Supreme Court, however, will not allow
itself to be an instrument to the dissolution of contract validly entered into. A party should not,
after its opportunity to enjoy the benefits of an agreement, be allowed to later disown the
arrangement when the terms thereof ultimately would prove to operate against its hopeful
expectations.


















Bienvenido Casino, Jr. vs. Court of Appeals and Octagon Realty
Development Corporation
G.R. No. 133803
September 16, 2005
Facts:
In the Regional Trial Court at Pasig City, respondent Octagon Realty Development
Corporation, a corporation duly organized and existing under Philippine laws, filed a
complaint for rescission of contract with damages against petitioner Bienvenido M.
Casio, Jr., owner and proprietor of the Casio Wood Parquet and Sanding Services,
relative to the parties agreement for the supply and installation by petitioner of narra
wood parquet ordered by respondent.
The trial court, upon a finding that petitioner is the one who breached the parties
agreement, rendered judgment in favor of respondent.
On petitioners appeal to the Court of Appeals, the appellate court affirmed that of the
trial court but modified the same by reducing the amount of damages awarded. A
motion for reconsideration was filed but the same was denied. Hence, this petition.
Issue:
Whether or not the contract entered into between the parties can be rescinded.
Held:
It is undisputed that under their contract, petitioner and respondent had respective obligations,
i.e., the former to supply and deliver the contracted volume of narra wood parquet materials
and install the same at respondents condominium project by May, 1990, and the latter, to pay
for said materials in accordance with the terms of payment set out under the parties
agreement. But while respondent was able to fulfill that which is incumbent upon it by making
a downpayment representing 40% of the agreed price upon the signing of the contract and
even paid the first billing of petitioner, the latter failed to comply with his contractual
commitment. For, after delivering only less than one-half of the contracted materials, petitioner
failed, by the end of the agreed period, to deliver and install the remainder despite demands
for him to do so. Doubtless, it is petitioner who breached the contract.
With the reality that petitioner has failed to comply with his prestations under his contract
with respondent, the latter is vested by law with the right to rescind the parties agreement.
In fine, respondent acted well within its rights in unilaterally terminating its contract with
petitioner and in entering into a new one with a third person in order to minimize its losses,
without prior need of resorting to judicial action.




















Fernando Carrascoso, Jr. vs. Court of Appeal, et al.
G.R. No. 123672
December 14, 2005
Facts:
By a Deed of Sale of Real Property, El Dorado, through Feliciano Leviste, sold the
property to Fernando O. Carrascoso, Jr. (Carrascoso).
Carrascoso and his wife Marlene executed a Real Estate Mortgage over the property in
favor of Home Savings Bank (HSB) to secure a loan in the amount of P1,000,000.00. Of
this amount, P290,000.00 was paid to Philippine National Bank to release the mortgage
priorly constituted on the property and P210,000.00 was paid to El Dorado pursuant to
the terms and conditions of the Deed of Sale.
The real estate mortgage in favor of HSB was amended to include an additional three
year loan of P70,000.00 as requested by the spouses Carrascoso. The Amendment of
Real Estate Mortgage was also annotated on TCT No. T-6055 as Entry No. 15486.
The 3-year period for Carrascoso to fully pay for the property passed without him having
complied therewith.
Carrascoso and the Philippine Long Distance Telephone Company (PLDT), through its
President Ramon Cojuangco, executed an Agreement to Buy and Sell whereby the
former agreed to sell 1,000 hectares of the property to the latter at a consideration of
P3,000.00 per hectare or a total of P3,000,000.00.
Lauro Leviste (Lauro), a stockholder and member of the Board of Directors of El Dorado,
through his counsel, Atty. Benjamin Aquino, called the attention of the Board to
Carrascosos failure to pay the balance of the purchase price of the property amounting
to P1,300,000.00.
Lauros desire to rescind the sale was reiterated in two other letters addressed to the
Board.
Jose P. Leviste, as President of El Dorado, later sent a letter of to Carrascoso informing
him that in view of his failure to pay the balance of the purchase price of the property,
El Dorado was seeking the rescission of the Deed of Sale of Real Property.
Lauro and El Dorado finally filed a complaint for rescission of the Deed of Sale of Real
Property between El Dorado and Carrascoso with damages before the Court of First
Instance (CFI) of Occidental Mindoro.

Lauro and El Dorado also sought the cancellation of TCT No. T-6055 in the name of
Carrascoso and the revival of TCT No. T-93 in the name of El Dorado, free from any liens
and encumbrances.
Carrascoso, as vendor and PLDT, as vendee forged a Deed of Absolute Sale over the
1,000 hectare portion of the property subject of their Agreement to Buy and Sell.
In turn, PLDT, by Deed of Absolute Sale conveyed the aforesaid 1,000 hectare portion of
the property to its subsidiary, PLDT Agricultural Corporation (PLDTAC), for a
consideration of P3,000,000.00, the amount of P2,620,000.00 of which was payable to
PLDT upon signing of said Deed, and P380,000.00 to Carrascoso upon issuance of title to
PLDTAC.
Branch 45 of the San Jose Occidental Mindoro Regional Trial Court to which the CFI has
been renamed, dismissed the complaint on the ground of prematurity.
Lauro, in the meantime, died, hence, a Motion for Substitution of Party was filed praying
that his heirs, represented by Conrad C. Leviste, be substituted as respondents. The
Motion was granted.
Issue:
Whether or not there is breach of contract on the part of Carrascoso.
Held:
A contract of sale is a reciprocal obligation. The seller obligates itself to transfer the ownership
of and deliver a determinate thing, and the buyer obligates itself to pay therefor a price certain
in money or its equivalent. The non-payment of the price by the buyer is a resolutory
condition which extinguishes the transaction that for a time existed, and discharges the
obligations created thereunder. Such failure to pay the price in the manner prescribed by the
contract of sale entitles the unpaid seller to sue for collection or to rescind the contract.
In the case at bar, El Dorado already performed its obligation through the execution of the
Deed of Sale of Real Property which effectively transferred ownership of the property to
Carrascoso. The latter, on the other hand, failed to perform his correlative obligation of paying
in full the contract price in the manner and within the period agreed upon.
The terms of the Deed are clear and unequivocal: Carrascoso was to pay the balance of the
purchase price of the property amounting to P1,300,000.00 plus interest thereon at the rate of
10% per annum within a period of three (3) years from the signing of the contract. When Jose
Leviste informed him that El Dorado was seeking rescission of the contract by letter, the period
given to him within which to fully satisfy his obligation had long lapsed.
The El Dorado Board Resolution and the Affidavit of Jose Leviste interposing no objection to
Carrascosos mortgaging of the property to any bank did not have the effect of suspending the
period to fully pay the purchase price, as expressly stipulated in the Deed, pending full
payment of any mortgage obligation of Carrascoso.
Respecting Carrascosos insistence that he was granted verbal extensions within which to pay
the balance of the purchase price of the property by El Dorados directors and officers Jose and
Angel Leviste, the Court finds the same unsubstantiated by the evidence on record.


















Goldenrod, Inc. vs. Court of Appeals, et al.
G.R. No. 126812
November 24, 1998
Facts:
Pio Barretto and Sons, Inc. (BARRETTO & SONS) owned forty-three (43) parcels of
registered land with a total area of 18,500 square meters located at Carlos Palanca St.,
Quiapo, Manila, which were mortgaged with the United Coconut Planters Bank (UCPB).
The obligation of the corporation with UCPB remained unpaid making foreclosure of the
mortgage imminent.
Goldenrod, Inc. (GOLDENROD), offered to buy the property from BARRETTO & SONS.
When the term of existence of BARRETTO & SONS expired, all its assets and liabilities
including the property located in Quiapo were transferred to respondent Pio Barretto
Realty Development, Inc. (BARRETTO REALTY). Petitioners offer to buy the property
resulted in its agreement with respondent BARRETTO REALTY that petitioner would pay
the following amounts: (a) P24.5 million representing the outstanding obligations of
BARRETTO REALTY with UCPB on 30 June 1988, the deadline set by the bank for
payment; and, (b) P20 million which was the balance of the purchase price of the
property to be paid in installments within a 3-year period with interest at 18% per
annum.
Petitioner did not pay UCPB the P24.5 million loan obligation of BARRETTO REALTY on
the deadline set for payment; instead, it asked for an extension of one (1) month to
settle the obligation, which the bank granted. Petitioner requested another extension of
sixty (60) days to pay the loan.This time the bank demurred.
Petitioner sought reconsideration of the denial by the bank of its request for extension
of sixty (60) days by asking for a shorter period of thirty (30) days. This was again
denied by UCPB.
Respondent BARRETTO REALTY sold to Asiaworld Trade Center Phils., Inc. (ASIAWORLD),
Lot 2, one of the two (2) consolidated lots, for the price of P23 million. Respondent
BARRETTO REALTY executed a deed transferring by way of dacion the property
reconsolidated as Lot 1 in favor of UCPB, which in turn sold the property to ASIAWORLD
for P24 million.
Logarta again wrote respondent Que demanding the return of the earnest money to
GOLDENROD. Petitioner through its lawyer reiterated its demand, but the same
remained unheeded by private respondents. This prompted petitioner to file a
complaint with the Regional Trial Court of Manila against private respondents for the
return of the amount of P1 million and the payment of damages including lost interests
or profits. In their answer, private respondents contended that it was the agreement
of the parties that the earnest money of P1 million would be forfeited to answer for
losses and damages that might be suffered by private respondents in case of failure by
petitioner to comply with the terms of their purchase agreement.
The trial court rendered a decision in favor of petitioner.
Dissatisfied with the decision of the trial court, private respondents appealed to the
Court of Appeals which reversed the trial court and ordered the dismissal of the
complaint. Hence, this petition.
Issue:
Whether or not the seller of real estate can keep the earnest money to answer for damages in
the event the sale fails due to the fault of the prospective buyer.
Held:
Under Art. 1482 of the Civil Code, whenever earnest money is given in a contract of sale, it shall
be considered as part of the purchase price and as proof of the perfection of the contract.
Petitioner clearly stated without any objection from private respondents that the earnest
money was intended to form part of the purchase price. It was an advance payment which
must be deducted from the total price. Hence, the parties could not have intended that the
earnest money or advance payment would be forfeited when the buyer should fail to pay the
balance of the price, especially in the absence of a clear and express agreement thereon. By
reason of its failure to make payment petitioner, through its agent, informed private
respondents that it would no longer push through with the sale. In other words, petitioner
resorted to extrajudicial rescission of its agreement with private respondents.
Article 1385 of the Civil Code provides that rescission creates the obligation to return the things
which were the object of the contract together with their fruits and interest. The vendor is
therefore obliged to return the purchase price paid to him by the buyer if the latter rescinds the
sale, or when the transaction was called off and the subject property had already been sold to a
third person, as what obtained in this case. Therefore, by virtue of the extrajudicial rescission of
the contract to sell by petitioner without opposition from private respondents who, in turn,
sold the property to other persons, private respondent BARRETTO REALTY, as the vendor, had
the obligation to return the earnest money of P1,000,000.00 plus legal interest from the date it
received notice of rescission from petitioner, i.e., 30 August 1988, up to the date of the return
or payment. It would be most inequitable if respondent BARRETTO REALTY would be allowed
to retain petitioners payment of P1,000,000.00 and at the same time appropriate the proceeds
of the second sale made to another.























Roberto Serrano vs. Court of Appeals, et al.
G.R. No. 139420
August 15, 2001
Facts:
Respondent Maersk-Filipinas Crewing, Inc., the local agent of respondent foreign
corporation A.P. Moller, deployed petitioner Serrano as a seaman to Liberian, British
and Danish ships. As petitioner was on board a ship most of the time, respondent
Maersk offered to send portions of petitioners salary to his family in the Philippines.
The amounts would be sent by money order. Petitioner agreed, he instructed
respondent Maersk to send money orders to his family. Respondent Maersk deducted
the amounts of these money orders totaling HK$4,600.00 and 1,050.00 Sterling Pounds
from petitioner's salary. Respondent Maersk, it is also alleged, deducted various
amounts from his salary for Danish Social Security System (SSS), welfare contributions,
ship club, and SSS Medicare.
It appears that petitioner's family failed to receive the money orders petitioner sent
through respondent Maersk. Upon learning this in, petitioner demanded that
respondent Maersk pay him the amounts the latter deducted from his salary.
Respondent Maersk assured him that they would look into the matter, then assigned
him again to board one of their vessels.
Petitioner wrote to respondent Maersk demanding immediate payment to him of the
total amount of the money orders deducted from his salary. Respondent A.P. Moller
replied to petitioner that they keep accounting documents only for a certain number of
years, thus data on his money claims were no longer available. Likewise, it was claimed
that it had no outstanding money orders. A.P. Moller declined petitioner's demand for
payment.
Petitioner filed a complaint for collection of the total amount of the unsent money
orders and illegal salary deductions against the respondent Maersk in the Philippine
Overseas Employment Agency (POEA). The case was transferred to the NLRC where
Labor Arbiter Arthur Amansec ruled in favor of petitioner.
Respondent Maersk appealed to the NLRC the Labor Arbiter's grant of the claim for the
amount of unsent money orders. The NLRC reversed and set side Labor Arbiter
Amansec's decision and dismissed the case on the ground of prescription.
Petitioner filed a motion for reconsideration of the NLRC decision. It was denied for lack
of merit.
Petitioner sought recourse in the Court of Appeals. The appellate court dismissed his
petition for having been filed out of time. Hence, this petition.
Issue:
Whether or not the claim of the petitioner has prescribed.
Held:
Petitioner's cause of action accrued upon respondent Maersk's definite denial of his money
claims following this Court's ruling in the similar case of Baliwag Transit , Inc. v. Ople.
It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of
the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation
on the part of the named defendant to respect or not to violate such right; and (3) an act or
omission on the part of such defendant violative of the right of the plaintiff or constituting a
breach of the obligation of the defendant to the plaintiff.
The problem in the case at bar is with the third element as the first two are deemed
established.
The facts in the case at bar are similar to the Baliwag case. Petitioner repeatedly demanded
payment from respondent Maersk, respondent Maersk warded off these demands by saying
that it would look into the matter until years passed by. Serrano finally demanded in writing
payment of the unsent money orders. Then and only then was the claim categorically denied
by respondent A.P. Moller. Following the Baliwag Transit ruling, petitioners cause of action
accrued only upon respondent A.P. Moller's definite denial of his claim. Having filed his action
five (5) months thereafter, it was filed within the three-year (3) prescriptive period provided in
Article 291 of the Labor Code.







Perla Palma Gil, Vicente Hizon, Jr., and Angel Palma Gil vs. Court of
Appeals, et al.
G.R. No. 127206
September 12, 2003
Facts:
Concepcion Palma Gil, and her sister, Nieves Palma Gil, married to Angel Villarica, were
the co-owners of a parcel of commercial land with an area of 829 square meters located
in Davao City. The spouses Angel and Nieves Villarica had constructed a two-storey
commercial building on the property.
Concepcion filed a complaint against her sister Nieves with the then Court of First
Instance of Davao City, for specific performance, to compel the defendant to cede and
deliver to her an undivided portion of the said property with an area of 256.2 square
meters. After due proceedings, the court rendered judgment in favor of Concepcion,
ordering the defendant to deliver to the plaintiff an undivided portion of the said
property with an area of 256.2 square meters.
Nieves appealed to the Court of Appeals which affirmed the assailed decision. In due
course, the decision became final and executory. On motion of the plaintiff
(Concepcion), the court issued a writ of execution. Nieves, however, refused to execute
the requisite deed in favor of her sister. Concepcion executed a deed of absolute sale in
favor of Iluminada Pacetes. In the said deed, the area of Lot 59-C-1 appeared as 256
square meters although under the subdivision plan, the area of the property was only
218 square meters.
Concepcion filed a complaint for unlawful detainer against the spouses Angel and
Nieves Villarica with the Municipal Trial Court. The court rendered judgment in favor of
the plaintiff and against the defendants.
The decision became final and executory but the plaintiff did not file any motion for a
writ of execution.
The spouses Angel and Nieves Villarica filed a complaint against the sheriff and
Concepcion with the Court of First Instance of Davao City for the nullification of the
deed of transfer executed by the sheriff.
The spouses Angel and Nieves Villarica executed a real estate mortgage over the said lot
in favor of Prudential Bank as security for a loan. Concepcion died intestate and was
survived by Nieves Villarica and her nephews and nieces. Iluminada filed a motion 1160
for her substitution as party-plaintiff in lieu of the deceased Concepcion. The court
issued an order granting the motion.
Iluminada Pacetes and Agapito Pacetes executed a deed of absolute sale over the same
lots in favor of Constancio B. Maglana for P110,000.00. The spouses-vendors undertook
to secure title over the lots under the name of the vendee within ninety days.
Issue:
Whether or not petitioner can rescind the contract.
Held:
Iluminada was not yet obliged on August 8, 1977 to pay the balance of the purchase price of the
property, but as a sign of good faith, she nevertheless consigned the amount of P11,983.00,
part of the balance of the purchase price of P14,000.00, with the court in Civil Case No. 1160.
The court accepted the consignation and she was issued receipts therefor. Still, the heirs of
Concepcion Gil, including the petitioners, failed to deliver the said title to the vendee.
Iluminada was compelled to file, at her expense, a petition with the RTC docketed as
Miscellaneous Case No. 4715 for the issuance of an owners duplicate of TCT No. 7450 covering
the property sold which was granted by the court on March 22, 1978. It was only on May 9,
1978 that Iluminada managed to secure TCT No. 61514 over the property under her name.
Upon the failure of the heirs to comply with the decedents prestation, Iluminada Pacetes was
impelled to resort to legal means to protect her rights and interests.
The petitioners, as successors-in-interest of the vendor, are not the injured parties entitled to a
rescission of the deed of absolute sale. It was Concepcions heirs, including the petitioners, who
were obliged to deliver to the vendee a certificate of title over the property under the latters
name, free from all liens and encumbrances within 120 days from the execution of the deed of
absolute sale, but had failed to comply with the obligation.
The consignation by the vendee of the purchase price of the property is sufficient to defeat the
right of the petitioners to demand for a rescission of the said deed of absolute sale.
It bears stressing that when the vendee consigned part of the purchase price with the Court
and secured title over the property in her name, the heirs of Concepcion, including the
petitioners, had not yet sent any notarial demand for the rescission of the deed of absolute sale
to the vendee, or filed any action for the rescission of the said deed with the appropriate court.
Although the vendee consigned with the Court only the amount of P11,983.00, P2,017.00 short
of the purchase price of P14,000.00, it cannot be claimed that Concepcion was an unpaid seller
because under the deed of sale, she was still obligated to transfer the property in the name of
the vendee, which she failed to do so.
David Reyes vs Jose Lim
GR No. 134241
August 11, 2003

Facts:
Petitioner David Reyes filed before the trial court a complaint alleging that Reyes as
seller and Lim as buyer entered into a contract to sell a parcel of land located along F.B.
Harrison Street, Pasay City. Harrison Lumber occupied the Property as lessee with a
monthly rental of P35,000.
The complaint claimed that Reyes had informed Harrison Lumber to vacate the Property
before the end of January 1995.
On 31 May 1995, Lim stated that he was ready and willing to pay the balance of the
purchase price on or before 8 March 1995.
On 9 March 1995, Reyes offered to return the P10 million down payment to Lim
because Reyes was having problems in removing the lessee from the Property. Lim
learned that Reyes had already sold the Property to Line One Foods Corporation on 1
March 1995 for P16,782,840.
Lim requested in open court that Reyes be ordered to deposit the P10 million down
payment with the cashier of the Regional Trial Court of Paraaque. The trial court
granted this motion.
The trial court ruled that an action for rescission could prosper only if the party
demanding rescission can return whatever he may be obliged to restore should the
court grant the rescission.

Issue:
Whether or not the CA erred in finding the trial court could issue the questioned orders on
grounds of equity

Held:
The principle that no person may unjustly enrich himself at the expense of another is embodied
in Article 221 of the Civil Code. This principle applies not only to substantive rights but also to
procedural remedies. One condition for invoking this principle is that the aggrieved party has no
other action based on contract, quasi-contract, crime, quasi-delict or any other provision of law.
Courts can extend this condition to the hiatus in the Rules of Court where the aggrieved party,
during the pendency of the case, has no other recourse based on the provisional remedies of
the Rules of Court.

Thus, a court may not permit a seller to retain, pendente lite, money paid by a buyer if the seller
himself seeks rescission of the sale because he has subsequently sold the same property to
another buyer. By seeking rescission, a seller necessarily offers to return what he has received
from the buyer. Such a seller may not take back his offer if the court deems it equitable, to
prevent unjust enrichment and ensure restitution, to put the money in judicial deposit. In this
case, it was just, equitable and proper for the trial court to order the deposit of the P10 million
down payment to prevent unjust enrichment by Reyes at the expense of Lim.

The SC affirmed the decision of the CA.











Ong Yong, et. al. vs David Tiu
GR. No. 144476 & 144629
February 1, 2002

Facts:
First Landlink Asia Development Corporation (FLADC) was then fully owned by the Tiu
Group. In order to recover from its floundering finances, the Ong Group were invited by
the Tius to invest in FLADC. By the Pre-Subscription Agreement, both parties agreed to
maintain equal shareholdings in FLADC with the Ongs investing cash while the Tius
contributing property.
Masagana Telamart, Inc. executed a Deed of Assignment over the 1,902.30 square
meter property in favor of FLADC.
The controversy between the two parties arose when the Ongs refused to credit the
number of FLADC shares in the name of Masagana Telamart, Inc.; also when they
refused to credit the number of FLADC shares in favor of the Tius; and when David S. Tiu
and Cely Y. Tiu were proscribed from assuming and performing their duties as Vice-
President and Treasurer, respectively of FLADC. These became the basis of the Tius'
unilateral rescission of the Pre-Subscription Agreement on February 23, 1996.
The SEC confirmed the rescission. The Ca affirmed the SEC decision with modifications.

Issue:
Whether or not the CA erred in ordering the liquidation of FLADC instead of merely ordering
the restitution of the parties respective investments

Held:
The Court of Appeals in its Resolution of August 17, 2000, clarified thus:
"xxx. While the Court in the case at bench ordered the rescission of the Pre-Subscription
Agreement, it did not, however, order restitution of what the parties contributed pursuant
thereto. What the Court ordered was the liquidation of FLADC in accordance with the actual
amount of investment each party made in FLADC. Restitution and liquidation are two different
things. Liquidation includes both the profits and losses each party derived within the duration
of their respective investment. Contrary therefore to Willie Ong's contention that the Ongs will
simply receive a return of their money without any fruits or interest, the decision assures them
that they (the Ong and Tiu Groups) will have a bountiful return of their respective investments
derived from the profits of the corporation."

Restoration of the parties to their relative position which they would have occupied had no
contract ever been made is not practicable nor possible because we cannot turn back the hands
of time when the mall was only "nearing completion" in 1994, when the mall was not fully
tenanted yet and they had an existing loan of P190 million with PNB with an interest of 19% per
annum. But the Masagana Citimall is now completely constructed/finished, the P190 million
loan fully paid without their having to pay enormous interest, and the Tius cannot deny that the
Ongs are partly to be credited for the success of the venture. What the Tius want the Court to
order would have been fair and just had there been no fault on their part.














Equatorial Realty Devt Inc. vs Mayfair Theater, Inc.
GR No. 106063
November 21, 1996

Facts:
Carmelo owned a parcel of land, together with two 2-storey buildings constructed
thereon. Carmelo entered into two contracts of lease with Mayfair for the latter's lease
of a portion of Carmelo's property for use by Mayfair as a motion picture theater and for
a term of 20 years.
Both contracts of lease provide that if the lessor should desire to sell the leased
presmises, the lessee shall be given 30 days exclusive option to purchase the same. In
the event that the leased premises is sold to someone other than the lessee, the lessor
is bound and obligated to stipulate in the Deed of Sale that the purchaser shall
recognize this lease and be bound by all the terms and conditions thereof.
Sometime in August 1974, Mr. Henry Pascal of Carmelo informed Mr. Henry Yang,
President of Mayfair, that Carmelo was selling the said property.
On September 18, 1974, Mayfair sent another letter to Carmelo offering to buy the
entire building if the price is reasonable. However, both Carmelo and Equatorial
questioned the authenticity of the second letter.
Four years later Carmelo sold its entire C.M. Recto Avenue land and building, which
included the leased premises housing the "Maxim" and "Miramar" theatres, to
Equatorial by virtue of a Deed of Absolute Sale.
In September 1978, Mayfair instituted the action for specific performance and
annulment of the sale of the leased premises to Equatorial.

Issue:
Whether or not the option clause in the contracts of lease is actually a right of first refusal
proviso

Held:
The SC agrees with the respondent Court of Appeals that the aforecited contractual stipulation
provides for a right of first refusal in favor of Mayfair. It is not an option clause or an option
contract. It is a contract of a right of first refusal. An option is a contract granting a privilege to
buy or sell within an agreed time and at a determined price. It is a separate and distinct
contract from that which the parties may enter into upon the consummation of the option. It
must be supported by consideration. In the instant case, the right of first refusal is an integral
part of the contracts of lease.

The consideration is built into the reciprocal obligations of the parties. Since Equatorial is a
buyer in bad faith, this finding renders the sale to it of the property in question rescissible. We
agree with respondent Appellate Court that the records bear out the fact that Equatorial was
aware of the lease contracts because its lawyers had, prior to the sale, studied the said
contracts. As such, Equatorial cannot tenably claim to be a purchaser in good faith, and,
therefore, rescission lies.














Sps. Mariano and Avelina Velarde vs Court of Appeals
GR No. 108346
July 11, 2001

Facts:
David Raymundo (private respondent) is the absolute and registered owner of a parcel
of land, together with the house and other improvements thereon.
George Raymundo is Davids father who negotiated with plaintiffs Avelina and Mariano
Velarde (petitioners) for the sale of said property, which was, however, under lease.
On August 8, 1986, a Deed of Sale with Assumption of Mortgage was executed by
defendant David Raymundo, as vendor, in favor of plaintiff Avelina Velarde, as vendee.
On January 8, 1987, defendants sent plaintiffs a notarial notice of cancellation/rescission
of the intended sale of the subject property allegedly due to the latters failure to
comply with the terms and conditions of the Deed of Sale with Assumption of Mortgage
and the Undertaking.
Consequently, petitioners filed on February 9, 1987 a Complaint against private
respondents for specific performance, nullity of cancellation, writ of possession and
damages.

Issue:
Whether or not the CA erred in holding that the rescission of the contract by private
respondent was justified

Held:
The right of rescission of a party to an obligation under Article 1191 of the Civil Code is
predicated on a breach of faith by the other party who violates the reciprocity between them.
The breach contemplated in the said provision is the obligors failure to comply with an existing
obligation. When the obligor cannot comply with what is incumbent upon it, the obligee may
seek rescission and, in the absence of any just cause for the court to determine the period of
compliance, the court shall decree the rescission.

In the present case, private respondents validly exercised their right to rescind the contract,
because of the failure of petitioners to comply with their obligation to pay the balance of the
purchase price. Indubitably, the latter violated the very essence of reciprocity in the contract of
sale, a violation that consequently gave rise to private respondents right to rescind the same in
accordance with law



















Alexander Asuncion vs Eduardo Evangelista
GR No. 133491
October 13, 1999

Facts:
Since 1970, private respondent has been operating a piggery on his landholdings under
the trade name Embassy Farms as a single proprietorship. Private respondent obtained
several loans and mortgaged several properties to use as working capital for Embassy
Farm.
On August 2, 1984, petitioner and private respondent executed a Memorandum of
Agreement. The total amount thus paid by petitioner to private respondent and
invested in Embassy Farms, Inc. as of August 1985 was P3,194,941.88.
As to the shares of stock, it was incumbent upon private respondent to endorse and
deliver them to petitioner so he could also have them transferred in his name, but
private respondent never did. He refused to honor his obligations under the
Memorandum of Agreement and even countered with a demand letter of his own.
On April 10, 1986, petitioner filed in the Regional Trial Court a complaint for rescission
of the Memorandum of Agreement with a prayer for damages.

Issue:
Whether or not the memorandum of agreement executed between Asunction and Evangelista
was in the nature of a Contract of Sale

Held:
The SC held that private respondent failed to perform his substantial obligations under the
Memorandum of Agreement. Private respondent later justified his refusal to execute any deed
of sale and deliver the certificates of stock by accusing petitioner of having failed to assume his
debts. The SC holds that private respondent's insistence that petitioner execute a formal
assumption of mortgage independent and separate from his own execution of a deed of sale is
legally untenable, considering that a recorded real estate mortgage is a lien inseparable from
the property mortgaged and until discharged, it follows the property. In his testimony, private
respondent stated that he would be committing economic suicide if he executed a deed of sale
because he would then be transferring his lands to petitioner without the latter first assuming
his loan obligations. This posturing is puerile. Even without a formal assumption of mortgage,
the mortgage follows the property whoever the possessor may be. It is an elementary principle
in civil law that a real mortgage subsists notwithstanding changes of ownership and all
subsequent purchases of the property must respect the mortgage, whether the transfer to
them be with or without the consent of the mortgagee.



















William Uy vs Court of Appeals
GR No. 120465
September 9, 1999

Facts:
Petitioners are agents authorized to sell eight parcels of land by the owners thereof. By
virtue of such authority, petitioners offered to sell the lands, located in Tuba, Benguet to
respondent National Housing Authority (NHA) to be utilized and developed as a housing
project.
On February 14, 1989, the NHA Board passed a resolution approving the acquisition of
said lands, pursuant to which the parties executed a series of Deeds of Absolute Sale
covering the subject lands.
On 22 November 1991, the NHA issued a resolution cancelling the sale over the three
parcels of land. The NHA subsequently offered the amount of P1.225 million to the
landowners as daos perjuicios.
On 9 March 1992, petitioners filed a Complaint for Damages against NHA.
The RTC rendered a decision declaring the cancellation of the contract to be justified.
Upon appeal by petitioners, the Court of Appeals reversed the decision of the trial court
and entered a new one dismissing the complaint.

Issue:
Whether or not the respondent NHA had any legal basis for rescinding the sale

Held:
Petitioners confuse the cancellation of the contract by the NHA as a rescission of the contract
under Article 1191 of the Civil Code. The right of rescission or, more accurately, resolution, of a
party to an obligation under Article 1191 is predicated on a breach of faith by the other party
that violates the reciprocity between them. The power to rescind, therefore, is given to the
injured party.

In this case, the NHA did not rescind the contract. Indeed, it did not have the right to do so for
the other parties to the contract, the vendors, did not commit any breach, much less a
substantial breach, of their obligation. Their obligation was merely to deliver the parcels of
land to the NHA, an obligation that they fulfilled. The NHA did not suffer any injury by the
performance thereof.

The cancellation, therefore, was not a rescission under Article 1191. Rather, the cancellation
was based on the negation of the cause arising from the realization that the lands, which were
the object of the sale, were not suitable for housing.

















Constancia Tamayo, et. al. vs Rosalia Abad Senora, et. al.
GR No. 176946
November 15, 2010

Facts:
Antonieto M. Seora, then 43 years old and a police chief inspector of the PNP, was
riding a motorcycle and crossing the intersection of Sucat Road towards Filipinas
Avenue, when a tricycle allegedly bumped his motorcycle from behind.
As a result, the motorcycle was pushed into the path of an Isuzu Elf Van (delivery van).
The delivery van ran over Seora, while his motorcycle was thrown a few meters away.
He was recovered underneath the delivery van and rushed to the Medical Center of
Paraaque, where he was pronounced dead on arrival.
The tricycle was driven by Amparo, who testified that it was the delivery van that
bumped Seoras motorcycle. The delivery van, on the other hand, was driven by Elmer
O. Polloso and registered in the name of Cirilo Tamayo. While trial was ongoing, his wife,
petitioner Constancia testified that it was Cirilo who hired their drivers and claimed
that, as employer, her husband exercised the due diligence of a good father of a family
in the selection, hiring, and supervision of his employees, including driver Polloso.
The RTC found Polloso guilty of negligence and held Amparo similarly guilty of
negligence. In addition, the RTC found Cirilo to be solidarily liable for Seoras death.
The RTC modified the formula in determining life expectancy, 2/3 x (80 age of victim at
the time of death). The RTC considered the retirement age of the members of the PNP,
which was 55 years old. Thus, the formula that the RTC used was 2/3 x (55 age of the
victim at the time of death).
On appeal, the CA affirmed the RTCs decision, but modified the finding on the
deceaseds net earning capacity. The CA used the formula:
Net earning capacity = life expectancy x gross annual income less
living expenses
with life expectancy computed as 3/4
2/3 x (80 - age of deceased)
and living expenses fixed at half of the victims gross income.
Thus, Seoras net earning capacity was computed to be P1,887,847.00.

Issue:
Whether or not the award for damages is proper

Held:
The CA correctly modified the RTCs computation. The RTC had misapplied the formula
generally used by the courts to determine net earning capacity, which is, to wit:

Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living
expenses).

Life expectancy shall be computed by applying the formula (2/3 x [80 - age at death]) adopted
from the American Expectancy Table of Mortality or the Actuarial of Combined Experience
Table of Mortality. Hence, the RTC erred in modifying the formula and using the retirement age
of the members of the PNP instead of "80."

On the other hand, gross annual income requires the presentation of documentary evidence for
the purpose of proving the victims annual income. The victims heirs presented in evidence
Seoras pay slip from the PNP, showing him to have had a gross monthly salary of P12,754.00.
Meanwhile, the victims net income was correctly pegged at 50% of his gross income in the
absence of proof as regards the victims living expenses. Consequently, the Court sustains the
award of P1,887,847.00 as damages for loss of earning capacity. All other aspects of the
assailed Decision are affirmed.






Leticia Tan, et. al. vs OMC Carriers, Inc.
GR No. 190521
January 12, 2011

Facts:
Arambala was driving a truck with a trailer owned by OMC when he noticed that the
truck had suddenly lost its brakes. Both he and his companion jumped out and
abandoned the truck. Driverless, the truck rammed into the house and tailoring shop
owned by petitioner Leticia Tan and her husband Celedonio Tan, instantly killing
Celedonio who was standing at the doorway of the house at the time
The petitioners claimed that the respondents should be held liable for the actual
damages that they suffered, which include the damage to their properties, the funeral
expenses they incurred for Celedonio Tans burial, as well as the loss of his earning
capacity.
The respondents denied any liability for the collision, essentially claiming that the
damage to the petitioners was caused by a fortuitous event, since the truck skidded due
to the slippery condition of the road caused by spilled motor oil.
The RTC found OMC and Arambala jointly and severally liable to the petitioners for
damages. The CA affirmed the RTCs findings, however, the CA modified the damages
awarded to the petitioners by reducing the actual damages awarded from P355,895.00
to P72,295.00 since only the latter amount was duly supported by official receipts.

Issue:
Whether or not the CA erred in modifying the RTCs awarded damages

Held:
The petitioners do not deny that they did not submit any receipt to support their claim for
actual damages to prove the monetary value of the damage caused to the house and tailoring
shop when the truck rammed into them. Thus, no actual damages for the destruction to
petitioner Leticia Tans house and tailoring shop can be awarded. Nonetheless, absent
competent proof on the actual damages suffered, a party still has the option of claiming
temperate damages, which may be allowed in cases where, from the nature of the case,
definite proof of pecuniary loss cannot be adduced although the court is convinced that the
aggrieved party suffered some pecuniary loss. The CA was correct in disallowing the award of
actual damages for loss of earning capacity. As a rule, documentary evidence should be
presented to substantiate the claim for loss of earning capacity. By way of exception, damages
for loss of earning capacity may be awarded despite the absence of documentary evidence
when: (1) the deceased is self-employed and earning less than the minimum wage under
current labor laws, in which case, judicial notice may be taken of the fact that in the deceased's
line of work, no documentary evidence is available; or (2) the deceased is employed as a daily
wage worker earning less than the minimum wage under current labor laws.


















Victory Liner, Inc. vs Heirs of Andres Malecdan
GR No. 154278
December 27, 2002

Facts:
Andres Malecdan was a 75 year-old farmer. On July 15, 1994 while Andres was crossing
the National Highway on his way home from the farm, a Dalin Liner bus on the
southbound lane stopped to allow him and his carabao to pass.

However, as Andres was crossing the highway, a bus of petitioner Victory Liner, driven
by Ricardo C. Joson, Jr., bypassed the Dalin bus. In so doing, respondent hit the old man
and the carabao on which he was riding. As a result, Andres Malecdan was thrown off
the carabao, while the beast toppled over. The Victory Liner bus sped past the old man,
while the Dalin bus proceeded to its destination without helping him.

Subsequently, a criminal complaint for reckless imprudence resulting in homicide and
damage to property was filed against the Victory Liner bus driver Ricardo Joson, Jr.

The RTC found the driver guilty of gross negligence in the operation of his vehicle and
Victory Liner, Inc. also guilty of gross negligence in the selection and supervision of
Joson, Jr. Petitioner and its driver were held liable for damages in the amounts of:
a. P50,000.00 as death indemnity;
b. P88,339.00 for actual damages;
c. P200,000.00 for moral damages;
d. P50,000.00 as exemplary damages;
e. Thirty percent (30%) as attorneys fees of whatever amount that can be collected by
the plaintiff;
f. The costs of the suit

On appeal, the decision was affirmed by the Court of Appeals, with the modification
that the award of attorneys fees was fixed at P50,000.00.

Issue:
Whether or not the affirmation by the CA of the appealed decision of the RTC granting the
award of moral and exemplary damages and attorneys fees is in accord with law and
jurisprudence

Held:
To justify an award of actual damages, there should be proof of the actual amount of loss
incurred in connection with the death, wake or burial of the victim. We cannot take into
account receipts showing expenses incurred some time after the burial of the victim, such as
expenses relating to the 9
th
day, 40
th
day and 1
st
year death anniversaries. In this case, the trial
court awarded P88,339.00 as actual damages. While these were duly supported by receipts,
these included the amount of P5,900.00, the cost of one pig which had been butchered for the
9
th
day death anniversary of the deceased. This item cannot be allowed. We, therefore, reduce
the amount of actual damages to P82,439.00.00. The award of P200,000.00 for moral damages
should likewise be reduced. The trial court found that the wife and children of the deceased
underwent intense moral suffering as a result of the latters death. Under Art. 2206 of the
Civil Code, the spouse, legitimate children and illegitimate descendants and ascendants of the
deceased may demand moral damages for mental anguish by reason of the death of the
deceased. Under the circumstances of this case an award of P100,000.00 would be in keeping
with the purpose of the law in allowing moral damages.

On the other hand, the award of P50,000.00 for indemnity is in accordance with current rulings
of the Court.

Exemplary damages are imposed not to enrich one party or impoverish another but to serve as
a deterrent against or as a negative incentive to curb socially deleterious actions. In this case,
petitioners driver Joson, Jr. was grossly negligent in driving at such a high speed along the
national highway and overtaking another vehicle which had stopped to allow a pedestrian to
cross. Worse, after the accident, Joson, Jr. did not stop the bus to help the victim. Under the
circumstances, we believe that the trial courts award of P50,000.00 as exemplary damages is
proper. Finally, private respondents are entitled to attorneys fees




















GSIS vs Sps. Gonzalo and Matilde Labung-Deang
GR No. 135644
September 17, 2001

Facts:
The spouses Deang obtained a housing loan from the GSIS. As required by the mortgage
deed, the spouses Deang deposited the owners duplicate copy of the title with the
GSIS.
Eleven months before the maturity of the loan, the spouses Deang settled their debt
with the GSIS and requested for the release of the owners duplicate copy of the title
However, personnel of the GSIS were not able to release the owners duplicate of the
title as it could not be found. GSIS commenced the reconstitution proceedings for the
issuance of a new owners copy of the same.
The spouses Deang filed a complaint against GSIS for damages, claiming that as result of
the delay in releasing the duplicate copy of the owners title, they were unable to secure
a loan which could have been used in defraying the estimated cost of the renovation of
their residential house and which could have been invested in some profitable business
undertaking
The RTC rendered a decision ruling for the spouses Deang. The CA affirmed the assailed
judgment.

Issue:
Whether the GSIS, as a GOCC primarily performing governmental functions, is liable for a
negligent act of its employee acting within the scope of his assigned tasks

Held:
Under the facts, there was a pre-existing contract between the parties. GSIS and the spouses
Deang had a loan agreement secured by a real estate mortgage. The duty to return the owners
duplicate copy of title arose as soon as the mortgage was released. GSIS insists that it was
under no obligation to return the owners duplicate copy of the title immediately. This
insistence is not warranted. Negligence is obvious as the owners duplicate copy could not be
returned to the owners.

There is likewise no factual basis for an award of actual damages. Actual damages to be
compensable must be proven by clear evidence. A court cannot rely on speculation, conjecture
or guess work as to the fact and amount of damages, but must depend on actual proof.

However, it is also apparent that the spouses Deang suffered financial damage because of the
loss of the owners duplicate copy of the title. Temperate damages may be granted. The award
of twenty thousand pesos (P20,000.00) in temperate damages is reasonable considering that
GSIS spent for the reconstitution of the owners duplicate copy of the title.
















BPI Investment Corp. vs DG Carreon Commercial Corp.
GR No. 126524
November 29, 2001

Facts:
On November 15, 1979, D. G. Carreon Commercial Corporation placed with BPI
Investments P318,981.59 in money market placement with a maturity term of thirty two
days, or up to December 17, 1979, at a maturity value of P323,518.22. BPI Investments
issued the corresponding sales order slip for straight sale and confirmation slip.
BPI Investments claimed that roll overs were subsequently made from maturing
payments on which BPI Investments had made over payments at a total amount of
P410,937.09
BPI Investments wrote respondents Daniel Carreon and Aurora Carreon, demanding the
return of the overpayment of P410,937.09. The respondents asserted that there was no
overpayment and asked for time to look for the papers. Upon the request of BPI
Investments, the spouses Daniel and Aurora Carreon sent to BPI Investments a
proposed memorandum of agreement
On May 10, 1982, BPI Investments, without responding to the memorandum and
proposal of D. G. Carreon filed with the Court of First Instance a complaint for recovery
of a sum of money against D. G. Carreon with preliminary attachment.
The RTC dismissed the petition and the counterclaim. The CA reversed the dismissal of
the counterclaim of defendants and ordering plaintiff to pay for damages.

Issue:
Whether the Court of Appeals awarded excessive moral and exemplary damages as well as
attorneys fees to respondents

Held:
While petitioner BPI Investments may not be guilty of gross negligence, it failed to prove by
clear and convincing evidence that D. G. Carreon indeed received money in excess of what was
due them. BPI Investments did not act in a wanton, fraudulent, reckless, oppressive, or
malevolent manner, when it asked for preliminary attachment. It was just exercising a legal
option. The sheriff of the issuing court did the execution and the attachment. Hence, BPI
Investments is not to be blamed for the excessive and wrongful attachment.

As to the finding of the appellate court that the filing of the case aggravated and eventually
caused the death of two of the respondents, we agree with the petitioner that such correlation
is bereft of basis and is far fetched.

The award of moral damages and attorneys fees is also not in keeping with existing
jurisprudence. Moral damages may be awarded in a breach of contract when the defendant
acted in bad faith, or was guilty of gross negligence amounting to bad faith, or in wanton
disregard of his contractual obligation. Finally, with the elimination of award of moral
damages, so must the award of attorneys fees be deleted.

Temperate or moderate damages may be recovered when the court finds that some pecuniary
loss has been suffered but its amount cannot, from the nature of the case, be proved with
certainty. The Court deems it prudent to award reasonable temperate damages to respondents
under the circumstances










Khe Kong Cheng vs Court of Appeals
GR No. 144169
March 28, 2001

Facts:
On October 4, 1985, the Philippine Agricultural Trading Corporation shipped on board
the vessel M/V PRINCE ERIC, owned by petitioner, 3,400 bags of copra at Masbate for
delivery to Dipolog City. The said shipment of copra was covered by a marine insurance
policy issued by American Home Insurance Company (respondent Philam's assured).
M/V PRINCE ERIC, however, sank somewhere between Negros Island and Northeastern
Mindanao, resulting in the total loss of the shipment. Because of the loss, the insurer,
American Home, paid the amount of P354,000.00 (the value of the copra) to the
consignee.
Having been subrogated into the rights of the consignee, American Home instituted a
Civil Case in the RTC to recover the money paid to the consignee, based on breach of
contract of carriage
While the case was still pending petitioner executed deeds of donations of parcels of
land in favor of his children, herein co-petitioners Sandra Joy and Ray Steven.
The trial court rendered judgment against petitioner Khe Hong Cheng. When the sheriff,
accompanied by counsel of respondent Philam, went to Butuan City on January 17,
1997, to enforce the alias writ of execution, they discovered that petitioner Khe Hong
Cheng no longer had any property and that he had conveyed the subject properties to
his children.
Philam filed a complaint with the Regional Trial Court of Makati City, Branch 147, for the
rescission of the deeds of donation executed by petitioner Khe Hong Cheng in favor of
his children and for the nullification of their titles

Issue:
When did the four (4) year prescriptive period as provided for in Article 1389 of the Civil Code
for respondent Philam to file its action for rescission of the subject deeds of donation
commence to run

Held:
Article 1389 of the Civil Code simply provides that, The action to claim rescission must be
commenced within four years. Since this provision of law is silent as to when the prescriptive
period would commence, the general rule, i.e, from the moment the cause of action accrues,
therefore, applies. Article 1150 of the Civil Code is particularly instructive:
Art. 1150. The time for prescription for all kinds of actions, when there is no special provision
which ordains otherwise, shall be counted from the day they may be brought.

For an accion pauliana to accrue, the following requisites must concur:
1) That the plaintiff asking for rescission has a credit prior to the alienation, although
demandable later;
2) That the debtor has made a subsequent contract conveying a patrimonial benefit to a third
person;
3) That the creditor has no other legal remedy to satisfy his claim, but would benefit by
rescission of the conveyance to the third person;
4) That the act being impugned is fraudulent;
5) That the third person who received the property conveyed, if by onerous title, has been an
accomplice in the fraud

An accion pauliana thus presupposes the following:
1) A judgment;
2) the issuance by the trial court of a writ of execution for the satisfaction of the judgment, and
3) the failure of the sheriff to enforce and satisfy the judgment of the court.





Philippine Realty and Holdings Corp. vs Ley Construction and
Development Corp.
GR No. 165548 & 167879
June 13, 2011

Facts:
The Ley Construction and Development Corporation (LCDC) and Philippine Realty &
Holdings Corporation (PRHC), entered into four major construction projects. Engineer
Dennis Abcede was the project construction manager of PRHC.
In the course of the construction of the Tektite Building, it became evident to both
parties that LCDC would not be able to finish the project within the agreed period. LCDC
explained that the unanticipated delay in construction was due mainly to the sudden,
unexpected hike in the prices of cement and other construction materials.
Abcede asked LCDC to advance the amount necessary to complete construction. Its
president acceded, on the absolute condition that it be allowed to escalate the contract
price. The board of directors turned down the request for an escalation agreement.
Neither PRHC nor Abcede gave notice to LCDC of the alleged denial of the proposal.
Notwithstanding the absence of a signature above PRHCs name, LCDC proceeded with
the construction of the Tektite Building, expending the entire amount necessary to
complete the project. LCDC religiously submitted to PRHC monthly reports that
contained the amounts of infusion it made from the period August 1991 to December
1991. PRHC never replied to any of these monthly reports.
On 16 February 1993, PRHC suddenly denied any liability for the escalation price. In the
same letter, it claimed that LCDC had incurred 111 days of delay in the construction of
the Tektite Building.
LCDC countered that there were many times when its requests for time extension
although due to reasonable causes sanctioned by the construction agreement such as
power failures, water supply interruption, and scarcity of construction materials were
unreasonably reduced to shorter periods by PRHC.
Seeking to recover all the above-mentioned amounts, LCDC filed a Complaint with
Application for the Issuance of a Writ of Preliminary Attachment

Issue:
Whether or not LCDC is not liable for liquidated damages for delay in the construction of the
buildings for PRHC

Held:
A perusal of the construction agreements shows that the parties never agreed to make LCDC
liable even in cases of force majeure. Neither was the assumption of risk required. Thus, in the
occurrence of events that could not be foreseen, or though foreseen were inevitable, neither
party should be held responsible.

Under Article 1174 of the Civil Code, to exempt the obligor from liability for a breach of an
obligation due to an act of God or force majeure, the following must concur:
(a) the cause of the breach of the obligation must be independent of the will of the debtor; (b)
the event must be either unforseeable or unavoidable; (c) the event must be such as to render
it impossible for the debtor to fulfill his obligation in a normal manner; and (d) the debtor must
be free from any participation in, or aggravation of the injury to the creditor.

The shortage in supplies and cement may be characterized as force majeure. In the present
case, hardware stores did not have enough cement available in their supplies or stocks at the
time of the construction in the 1990s. Likewise, typhoons, power failures and interruptions of
water supply all clearly fall under force majeure. Since LCDC could not possibly continue
constructing the building under the circumstances prevailing, it cannot be held liable for any
delay that resulted from the causes aforementioned.

Further, PRHC is barred by the doctrine of promissory estoppel from denying that it agreed, and
even promised, to hold LCDC free and clear of any liquidated damages. Abcede and Santos also
promised that the latter corporation would not be held liable for liquidated damages even for a
single day of delay despite the non-approval of the requests for extension.





Megaworld Globus Asia, Inc. vs Mila Tanseco
GR no. 181206
October 19, 2009

Facts:
On July 7, 1995, petitioner Megaworld Globus Asia, Inc. and respondent Tanseco
entered into a Contract to Buy and Sell a condominium unit at a pre-selling project, The
Salcedo Park.
The contract stipulated that the construction of the project and the units purchased
shall be completed and delivered not later than October 31, 1998 with additional grace
period of 6 months within which to complete the project barring delays due to fire,
earthquakes, the elements, acts of God, war, civil disturbances, strikes or other labor
disturbances, government and economic controls making it, among others, impossible
or difficult to obtain the necessary materials, acts of third person, or any other cause or
conditions beyond the control of the seller.
A few days shy of three years later, Megaworld, by notice of turnover, informed Tanseco
that the unit was ready for inspection preparatory to delivery. Tanseco replied through
counsel that in view of Megaworlds failure to deliver the unit on time, she was
demanding the return of the total installment payment she had made, with interest at
12% per annum from April 30, 1999, the expiration of the six-month grace period.
Tanseco pointed out that none of the excepted causes of delay existed.
In its Answer, Megaworld attributed the delay to the 1997 Asian financial crisis which
was beyond its control; and argued that default had not set in, Tanseco not having made
any judicial or extrajudicial demand for delivery before receipt of the notice of turnover.

Issue:
Whether or not force majeure was present and that it would warrant the application of April
30, 1999 as an alternative date

Held:
Article 1174 of the Civil Code provides: Except in cases expressly specified by the law, or when it
is otherwise declared by stipulation, or when the nature of the obligation requires the
assumption of risk, no person shall be responsible for those events which could not be
foreseen, or which, though foreseen, were inevitable

The Court cannot generalize the 1997 Asian financial crisis to be unforeseeable and beyond the
control of a business corporation. A real estate enterprise engaged in the pre-selling of
condominium units is concededly a master in projections on commodities and currency
movements, as well as business risks. The fluctuating movement of the Philippine peso in the
foreign exchange market is an everyday occurrence, hence, not an instance of caso fortuito.
Megaworlds excuse for its delay does not thus lie.

















Roberto Sicam vs Lulu Jorge
GR No. 159617
August 8, 2007

Facts:
Lulu Jorge pawned several pieces of jewelry with Agencia de R. C. Sicam. On October 19,
1987, two armed men entered the pawnshop and took away whatever cash and jewelry
were found inside the pawnshop vault. Petitioner Sicam sent respondent Lulu a letter
informing her of the loss of her jewelry due to the robbery incident in the pawnshop.
On November 2, 1987, respondent Lulu then wrote a letter to petitioner Sicam
expressing disbelief stating that when the robbery happened, all jewelry pawned were
deposited with Far East Bank. Respondent Lulu then requested petitioner Sicam to
prepare the pawned jewelry for withdrawal but petitioner Sicam failed to return the
jewelry.
On September 28, 1988, respondent Lulu joined by her husband, Cesar Jorge, filed a
complaint against petitioner Sicam seeking indemnification for the loss of pawned
jewelry.
The RTC ruled that petitioner corporation could not be held liable for the loss of the
pawned jewelry since it had not been rebutted by respondents that the loss of the
pledged pieces of jewelry in the possession of the corporation was occasioned by armed
robbery; that robbery is a fortuitous event which exempts the victim from liability for
the loss.
The CA held that the corresponding diligence required of a pawnshop is that it should
take steps to secure and protect the pledged items and should take steps to insure itself
against the loss of articles which are entrusted to its custody as it derives earnings from
the pawnshop trade which petitioners failed to do.

Issue:
Whether or not the pawnshop is exempted from liability for the loss due to fortuitous event

Held:
The burden of proving that the loss was due to a fortuitous event rests on him who invokes it.
And, in order for a fortuitous event to exempt one from liability, it is necessary that one has
committed no negligence or misconduct that may have occasioned the loss.

Petitioner Sicam had testified that there was a security guard in their pawnshop at the time of
the robbery. He likewise testified that when he started the pawnshop business in 1983, he
thought of opening a vault with the nearby bank for the purpose of safekeeping the valuables
but was discouraged by the Central Bank since pawned articles should only be stored in a vault
inside the pawnshop. The very measures which petitioners had allegedly adopted show that to
them the possibility of robbery was not only foreseeable, but actually foreseen and anticipated.
Petitioner Sicams testimony, in effect, contradicts petitioners defense of fortuitous event.
















Florencia Huibonhua vs Court of Appeals
GR Nos. 95897 and 102604
December 14, 1999

Facts:
Huibonhoa entered into a memorandum of agreement with the Gojocco siblings
stipulating that Huibonhoa would lease from them 3 adjacent commercial lots. The
parties inked a contract of lease in which the lessee undertook to complete the
construction of a 4-storey building within 8 months from the date of the execution of
the contract of lease.
During the construction of the building, former Senator Benigno Aquino, Jr. was
assassinated. The consequent hoarding of construction materials and increase in
interest rates allegedly affected adversely the construction of the building such that
Huibonhoa failed to complete the same within the stipulated eight-month period.
Under the contract, Huibonhoa was supposed to start paying rental in March 1984 but
she failed to do so. Consequently, the Gojoccos made several verbal demands upon
Huibonhoa for the payment of rental arrearages and, for her to vacate the leased
premises.
Huibonhoa brought an action for reformation of contract. The RTC held that Huibonhoa
had not presented clear and convincing evidence to justify the reformation of the lease
contract. It considered as misplaced her contention that the Aquino assassination was
an accident within the purview of Art. 1359 of the Civil Code.

Issue:
Whether or not the assassination of former Senator Benigno Aquino, Jr should be considered a
fortuitous event

Held:
A fortuitous event is that which could not be foreseen, or which even if foreseen, was
inevitable. In the case under scrutiny, the assassination of Senator Aquino may indeed be
considered a fortuitous event. However, the said incident per se could not have caused the
delay in the construction of the building. What might have caused the delay was the resulting
escalation of prices of commodities including construction materials. Be that as it may, there is
no merit in Huibonhoas argument that the inflation borne by the Filipinos in 1983 justified the
delayed accrual of monthly rental, the reduction of its amount and the extension of the lease
by three (3) years.

Inflation is the sharp increase of money or credit or both without a corresponding increase in
business transaction. While it is of judicial notice that there has been a decline in the
purchasing power of the Philippine peso, this downward fall of the currency cannot be
considered unforeseeable considering that since the 1970s we have been experiencing
inflation. It is simply a universal trend that has not spared our country.

















Ace-Agro Development Corp. vs Court of Appeals
GR No. 119729
January 21, 1997

Facts:
Since 1979 petitioner Ace-Agro Development Corp. had been cleaning soft drink bottles
and repairing wooden shells for Cosmos, rendering its services within the company
premises.
On April 25, 1990, fire broke out in private respondents plant, destroying, among other
places, the area where petitioner did its work. As a result, petitioners work was
stopped.
On May 15, 1990, petitioner asked private respondent to allow it to resume its service,
but petitioner was advised that on account of the fire, private respondent was
terminating their contract.
Petitioner requested private respondent to reconsider its decision and allow petitioner
to resume its work in order to cushion the sudden impact of the unemployment of
many of its workers. As it received no reply from private respondent, petitioner
informed its employees of the termination of their employment.
In response, private respondent advised petitioner that the latter could resume the
repair of wooden shells under terms similar to those contained in its contract but work
had to be done outside the company premises. Petitioner refused the offer.
On January 3, 1991, petitioner brought this case against private respondent for breach
of contract and damages. The RTC found private respondent guilty of breach of contract
and ordered it to pay damages to petitioner. The appellate court found that it was
petitioner which had refused to resume work, after failing to secure an extension of its
contract.

Issue:
Whether or not the respondent was justified in unilaterally terminating the contract on account
of force majeure

Held:
The stipulation that in the event of a fortuitous event or force majeure the contract shall be
deemed suspended during the said period does not mean that the happening of any of those
events stops the running of the period the contract has been agreed upon to run. It only
relieves the parties from the fulfillment of their respective obligations during that time. If
during six of the thirty years fixed as the duration of a contract, one of the parties is prevented
by force majeure to perform his obligation during those years, he cannot after the expiration of
the thirty-year period, be compelled to perform his obligation for six more years to make up for
what he failed to perform during the said six years, because it would in effect be an extension
of the term of the contract. The contract is stipulated to run for thirty years, and the period
expires on the thirtieth year; the period of six years during which performance by one of the
parties is prevented by force majeure cannot be deducted from the period stipulated.

The Court of Appeals was right that petitioner had no basis for refusing private respondents
offer unless petitioner was allowed to carry out its work in the company premises. That
petitioner would incur additional cost for transportation was not a good reason for its refusal.
Petitioner has not shown that on August 28, 1990, when it was notified of the private
respondents offer, the latters premises had so far been restored so as to permit petitioner to
resume work there. In fact, even when petitioner was finally allowed to resume work within the
plant, it was not in the former work place but in a new one, which shows that private
respondents reason for not granting petitioners request was not just a pretext.











Pedro Dioquino vs Federico Laureano, et. al.
GR No. L-25906
May 28, 1970

Facts:
Attorney Pedro Dioquino, a practicing lawyer of Masbate, is the owner of a car. On
March 31, 1964, he went to the office of the MVO, Masbate, to register the same. On
his way to the P.C. Barracks, the car, driven by plaintiff's driver and with defendant
Federico Laureano as the sole passenger, was stoned by some 'mischievous boys' and its
windshield was broken. One of the boys was caught and taken to Atty. Dioquino.
The defendant Federico Laureano refused to file any charges against the boy and his
parents because he thought that the stone-throwing was merely accidental and that it
was due to force majeure.
Defendant Federico Laureano refused to pay the windshield himself and challenged that
the case be brought to court for judicial adjudication. The plaintiff tried to convince
Laureano just to pay the value of the windshield but Laureano refused to make any
settlement, clinging to the belief that he could not be held liable because a minor child
threw a stone accidentally on the windshield and therefore, the same was due to force
majeure.

Issue:
Whether or not the damage on Atty. Dioquinos car was caused by force majeure

Held:
Authorities of repute are in agreement, more specifically concerning an obligation arising from
contract "that some extraordinary circumstance independent of the will of the obligor, or of his
employees, is an essential element of a caso fortuito."

If it could be shown that such indeed
was the case, liability is ruled out. There is no requirement of "diligence beyond what human
care and foresight can provide."

The error committed by the lower court in holding defendant Federico Laureano liable appears
to be thus obvious. Its own findings of fact repel the motion that he should be made to respond
in damages to the plaintiff for the broken windshield. What happened was clearly unforeseen.
It was a fortuitous event resulting in a loss which must be borne by the owner of the car. An
element of reasonableness in the law would be manifestly lacking if, on the circumstances as
thus disclosed, legal responsibility could be imputed to an individual in the situation of
defendant Laureano. Art. 1174 of the Civil Code guards against the possibility of its being visited
with such a reproach. Unfortunately, the lower court was of a different mind and thus failed to
heed its command.


















Bachelor Express, Inc. vs Court of Appeals
Gr No. 85691
July 31, 1990

Facts:
The evidence shows that a passenger suddenly stabbed a PC soldier in a bus owned by
petitioner which caused commotion and panic among the passengers.
When the bus stopped, passengers Ornominio Beter and Narcisa Rautraut were found
lying down the road, the former already dead as a result of head injuries and the latter
also suffering from severe injuries which caused her death later. The passenger assailant
alighted from the bus and ran toward the bushes but was killed by the police.
Thereafter, the heirs of Ornominio Beter and Narcisa Rautraut filed a complaint for
"sum of money" against Bachelor Express, Inc. its alleged owner Samson Yasay and the
driver Rivera.
In their answer, the petitioners denied liability for the death of Ornominio Beter and
Narcisa Rautraut. They alleged that:
(a)the driver was able to transport his passengers safely to their respective places of
destination except Ornominio Beter and Narcisa Rautraut who jumped off the bus
without the knowledge and consent, much less, the fault of the driver and conductor
(b) the defendants in this case the defendant corporation had exercised due diligence in
the choice of its employees to avoid as much as possible accidents;

Issue:
Whether or not the stabbing incident constitutes a fortuitous event, thus absolving petitioner
of any liability

Held:
The running amuck of the passenger was the proximate cause of the incident as it triggered off
a commotion and panic among the passengers such that the passengers started running to the
sole exit shoving each other resulting in the falling off the bus by passengers Beter and Rautraut
causing them fatal injuries. The sudden act of the passenger who stabbed another passenger in
the bus is within the context of force majeure. However, in order that a common carrier may be
absolved from liability in case of force majeure, it is not enough that the accident was caused by
force majeure. The common carrier must still prove that it was not negligent in causing the
injuries resulting from such accident. Considering the factual findings of the Court of Appeals-
the bus driver did not immediately stop the bus at the height of the commotion; the bus was
speeding from a full stop; the victims fell from the bus door when it was opened or gave way
while the bus was still running; the conductor panicked and blew his whistle after people had
already fallen off the bus; and the bus was not properly equipped with doors in accordance
with law-it is clear that the petitioners have failed to overcome the presumption of fault and
negligence found in the law governing common carriers.

















Pedro Vasquez, et. al. vs Court of Appeals
GR No. L-42926
September 13, 1985

Facts:
When the inter-island vessel MV "Pioneer Cebu" left the Port of Manila in the early
morning of May 15, 1966 bound for Cebu, it had on board the spouses Alfonso Vasquez
and Filipinas Bagaipo and a four-year old boy, Mario Marlon Vasquez, among her
passengers.
The MV "Pioneer Cebu" encountered typhoon "Klaring" and struck a reef on the
southern part of Malapascua Island, located somewhere north of the island of Cebu and
subsequently sunk. The aforementioned passengers were unheard from since then.
When the vessel left Manila, its officers were already aware of the typhoon Klaring
building up somewhere in Mindanao. There being no typhoon signals on the route from
Manila to Cebu, and the vessel having been cleared by the Customs authorities, the MV
"Pioneer Cebu" left on its voyage to Cebu despite the typhoon.
Due to the loss of their children, petitioners sued for damages before the Court of First
Instance of Manila
Respondent defended on the plea of force majeure, and the extinction of its liability by
the actual total loss of the vessel. The RTC awarded damages to plaintiffs. The CA
reversed the RTCs judgment and absolved private respondent from liability.

Issue:
Whether or not the defense of private respondent of a fortuitous event is tenable

Held:
Under the circumstances, while, indeed, the typhoon was an inevitable occurrence, yet, having
been kept posted on the course of the typhoon by weather bulletins at intervals of six hours,
the captain and crew were well aware of the risk they were taking as they hopped from island
to island from Romblon up to Tanguingui. They held frequent conferences, and oblivious of the
utmost diligence required of very cautious persons, they decided to take a calculated risk. In so
doing, they failed to observe that extraordinary diligence required of them explicitly by law for
the safety of the passengers transported by them with due regard for an circumstances and
unnecessarily exposed the vessel and passengers to the tragic mishap. They failed to overcome
that presumption of fault or negligence that arises in cases of death or injuries to passengers.

Despite the total loss of the vessel therefore, its insurance answers for the damages that a
shipowner or agent may be held liable for by reason of the death of its passengers. The CAs
judgment was reversed by the Supreme Court.




































Alberta & Cresencio Yobido vs Court of Appeals
GR No. 113003
October 17, 1997

Facts:
Spouses Tito and Leny Tumboy and their minor children boarded a Yobido Liner bus.
Along the way, the left front tire of the bus exploded. The bus fell into a ravine around 3
feet from the road and struck a tree. The incident resulted in the death of Tito Tumboy
and physical injuries to other passengers.

A complaint for breach of contract of carriage, damages and attorneys fees was filed by
Leny and her children against Alberta Yobido, the owner of the bus, and Cresencio
Yobido, its driver.

For their part, the defendants tried to establish that the accident was due to a fortuitous
event. Abundio Salce, who was the bus conductor when the incident happened, testified
that the 42-seater bus was not full as there were only 32 passengers. He added that the
bus was running at a speed of 60 to 50 and that it was going slow because of the
zigzag road. He affirmed that the left front tire that exploded was a brand new tire
that he mounted on the bus only five 5 days before the incident.

The RTC dismissed the action for lack of merit. The CA reversed the decision of the RTC.

Issue:
Whether or not the accident can be attributed to a fortuitous event

Held:
Under the circumstances of this case, the explosion of the new tire may not be considered a
fortuitous event. There are human factors involved in the situation. The fact that the tire was
new did not imply that it was entirely free from manufacturing defects or that it was properly
mounted on the vehicle. Neither may the fact that the tire bought and used in the vehicle is of
a brand name noted for quality, resulting in the conclusion that it could not explode within five
days use. Be that as it may, it is settled that an accident caused either by defects in the
automobile or through the negligence of its driver is not a caso fortuito that would exempt the
carrier from liability for damages.

Moreover, a common carrier may not be absolved from liability in case of force majeure or
fortuitous event alone. The common carrier must still prove that it was not negligent in causing
the death or injury resulting from an accident. Having failed to discharge its duty to overthrow
the presumption of negligence with clear and convincing evidence, petitioners are hereby held
liable for damages.

The SC affirmed the decision of the CA with modifications.














Roberto Juntilla vs Clemente Fontanar
GR No. L-45637
May 31, 1985

Facts:
The plaintiff was a passenger of the public utility jeepney on the course of the trip from
Danao City to Cebu City. The jeepney was driven by defendant Berfol Camoro. It was
registered under the franchise of defendant Clemente Fontanar but was actually owned
by defendant Fernando Banzon.
When the jeepney reached Mandaue City, the right rear tire exploded causing the
vehicle to turn turtle. In the process, the plaintiff who was sitting at the front seat was
thrown out of the vehicle. Upon landing on the ground, the plaintiff momentarily lost
consciousness. When he came to his senses, he found that he had a lacerated wound on
his right palm. Aside from this, he suffered injuries on his left arm, right thigh and on his
back.
Petitioner Roberto Juntilla filed for breach of contract with damages against Clemente
Fontanar, Fernando Banzon and Berfol Camoro.
The respondents filed their answer, alleging that the accident that caused losses to the
petitioner was beyond the control of the respondents taking into account that the tire
that exploded was newly bought and was only slightly used at the time it blew up.

Issue:
Whether or not the accident in question was due to a fortuitous event

Held:
In the case at bar, there are specific acts of negligence on the part of the respondents. The
records show that the passenger jeepney turned turtle and jumped into a ditch immediately
after its right rear tire exploded. The evidence shows that the passenger jeepney was running at
a very fast speed before the accident. We agree with the observation of the petitioner that a
public utility jeep running at a regular and safe speed will not jump into a ditch when its right
rear tire blows up. There is also evidence to show that the passenger jeepney was overloaded
at the time of the accident. The petitioner stated that there were three (3) passengers in the
front seat and fourteen (14) passengers in the rear.

While it may be true that the tire that blew-up was still good because the grooves of the tire
were still visible, this fact alone does not make the explosion of the tire a fortuitous event. No
evidence was presented to show that the accident was due to adverse road conditions or that
precautions were taken by the jeepney driver to compensate for any conditions liable to cause
accidents. The sudden blowing-up, therefore, could have been caused by too much air pressure
injected into the tire coupled by the fact that the jeepney was overloaded and speeding at the
time of the accident.


















PhilAm Gen Insurance Co. vs MGG Marine Services, Inc.
GR No. 135645
March 8, 2002

Facts:
San Miguel Corporation insured several beer bottle cases with petitioner Philippine
American General Insurance Company. The cargo were loaded on board the M/V
Peatheray Patrick-G. On March 3, 1987 M/V Peatheray Patrick-G subsequently sunk off
Cawit Point, Cortes, Surigao del Sur. As a consequence thereof, the cargo belonging to
San Miguel Corporation was lost.
Thereafter, petitioner paid San Miguel Corporation the full amount of P5,836,222.80
pursuant to the terms of their insurance contract.
Petitioner as subrogee of San Miguel Corp. filed a case for collection against private
respondents to recover the amount it paid to San Miguel Corp. for the loss of the latter's
cargo.
The Board of Marine Inquiry found that the cause of the sinking of the vessel was the
existence of strong winds and enormous waves in Surigao del Sur, a fortuitous event
that could not have been for seen at the time the M/V Peatheray Patrick-G left the port
of Mandaue City.
The RTC found private respondents solidarily liable for the loss of San Miguel
Corporation's cargo. The CA reversed the RTCs decision based on the findings of the
Board.

Issue:
Whether or not the findings of the Board of Marine Inquiry, which stated that the sinking of the
vessel was due to a fortuitous event, should be appreciated in deciding the case

Held:
Although the Board of Marine Inquiry ruled only on the administrative liability of the captain
and crew of the M/V Peatheray Patrick-G, it had to conduct a thorough investigation of the
circumstances surrounding the sinking of the vessel and the loss of its cargo in order to
determine their responsibility, if any. The results of its investigation as embodied in its decision
on the administrative case clearly indicate that the loss of the cargo was due solely to the
attendance of strong winds and huge waves which caused the vessel accumulate water, tilt to
the port side and to eventually keel over. There was thus no error on the part of the Court of
Appeals in relying on the factual findings of the Board of Marine Inquiry, for such factual
findings, being supported by substantial evidence are persuasive, considering that said
administrative body is an expert in matters concerning marine casualties.

Since the presence of strong winds and enormous waves at Cortes, Surigao del Sur on March 3,
1987 was shown to be the proximate and only cause of the sinking of the M/V Peatheray
Patrick-G and the loss of the cargo belonging to San Miguel Corporation, private respondents
cannot be held liable for the said loss.
















Mindex Resourced Development vs Ephraim Morillo
GR No. 138123
March 12, 2002

Facts:
A verbal agreement was entered into between Ephraim Morillo and Mindex Resources
Corporation for the lease of the formers 6 x 6 ten-wheeler cargo truck for use in
MINDEXs mining operations.
Unknown to Morillo, the truck was burned by unidentified persons while it was parked
unattended due to mechanical trouble. Upon learning of the burning incident Morillo
sent a letter to Mr. Arni Isberg, the Finance Manager of MINDEX for the payment of the
damaged vehicle.
MINDEX responded with the counter offers to (a) pay the rental of the 6 x 6 truck in the
amount of P76,000.00, (b) repair and overhaul the truck on their own expenses and; (c)
return it to Morillo in good running condition after repair.
Morillo replied, (a) that he will relinquish to MINDEX the damaged truck; (b) that he is
amenable to receive the rental in the amount of P76,000.00; and (c) that MINDEX will
pay fifty thousand pesos (P50,000.00) monthly until the balance of P275,000.00 is fully
paid.
The RTC found petitioner responsible for the destruction or loss of the leased 6 x 6
truck. The appellate court sustained the RTCs finding.

Issue:
Whether or not the petitioner failed to overcome the presumption of negligence against it
considering that the facts show that the burning of the truck was a fortuitous event

Held:
In order for a fortuitous event to exempt one from liability, it is necessary that one has
committed no negligence or misconduct that may have occasioned the loss. A review of the
records clearly shows that petitioner failed to exercise reasonable care and caution that an
ordinarily prudent person would have used in the same situation.

As can be gleaned from the testimony of witness Roxas, who testified that the truck was left in
the place where it had engine trouble for 2 weeks, petitioner failed to employ reasonable
foresight, diligence and care that would have exempted it from liability resulting from the
burning of the truck. Negligence, as commonly understood, is that conduct that naturally or
reasonably creates undue risk or harm to others. It may be a failure to observe that degree of
care, precaution or vigilance that the circumstances justly demand; or to do any other act that
would be done by a prudent and reasonable person, who is guided by considerations that
ordinarily regulate the conduct of human affairs.


















NAPOCOR vs Philipp Brothers Oceanic, Inc.
GR No. 126204
November 20, 2001

Facts:
NAPOCOR issued invitations to bid for the supply and delivery of 120,000 metric tons of
imported coal for its Batangas Coal-Fired Thermal Power Plant. After the public bidding
was conducted, Philipp Brothers Oceanic, Inc.s (PHIBRO) bid was accepted.

On July 10, 1987, PHIBRO sent word to NAPOCOR that industrial disputes might soon
plague Australia, the shipments point of origin, which could seriously hamper PHIBROs
ability to supply the needed coal.

On August 6, 1987, PHIBRO received from NAPOCOR a confirmed and workable letter of
credit. Instead of delivering the coal on or before the thirtieth day after receipt of the
Letter of Credit, as agreed upon by the parties in the July contract, PHIBRO effected its
first shipment only on November 17, 1987.

In October 1987, NAPOCOR once more advertised for the delivery of coal to its Calaca
thermal plant. PHIBRO participated anew in this subsequent bidding. NAPOCOR
disapproved PHIBROs application for pre-qualification to bid for not meeting the
minimum requirements. Upon further inquiry, PHIBRO found that the real reason for
the disapproval was its purported failure to satisfy NAPOCORs demand for damages
due to the delay in the delivery of the first coal shipment.

This prompted PHIBRO to file an action for damages with application for injunction
against NAPOCOR. In its answer, NAPOCOR averred that the strikes in Australia could
not be invoked as reason for the delay in the delivery of coal because PHIBRO itself
admitted that as of July 28, 1987 those strikes had already ceased.

The RTC rendered a decision in favour of PHIBRO. The Court of Appeals rendered a
Decision affirming in toto the Decision of the Regional Trial Court.

Issue:
Whether or not the Court of Appeals erred in concluding that PHIBROs delay in the delivery of
imported coal was due to NAPOCORs alleged delay in opening a letter of credit and to force
majeure, and not to PHIBROs own deliberate acts and faults

Held:
The Court of Appeals is justified in sustaining the Regional Trial Courts decision exonerating
PHIBRO from any liability for damages to NAPOCOR as it was clearly established from the
evidence, testimonial and documentary, that what prevented PHIBRO from complying with its
obligation under the July 1987 contract was the industrial disputes which besieged Australia
during that time. Extant in our Civil Code is the rule that no person shall be responsible for
those events which could not be foreseeen, or which, though foreseen, were inevitable. This
means that when an obligor is unable to fulfill his obligation because of a fortuitous event or
force majeure, he cannot be held liable for damages for non-performance.

In addition to the above legal precept, it is worthy to note that PHIBRO and NAPOCOR explicitly
agreed in Section XVII of the Bidding Terms and Specifications that neither seller (PHIBRO)
nor buyer (NAPOCOR) shall be liable for any delay in or failure of the performance of its
obligations, other than the payment of money due, if any such delay or failure is due to Force
Majeure. Specifically, they defined force majeure as any disabling cause beyond the control
of and without fault or negligence of the party, which causes may include but are not restricted
to Acts of God or of the public enemy; acts of the Government in either its sovereign or
contractual capacity; governmental restrictions; strikes, fires, floods, wars, typhoons, storms,
epidemics and quarantine restrictions.

The law is clear and so is the contract between NAPOCOR and PHIBRO. Therefore, the SC has
no reason to rule otherwise.


William Ong Genato vs Benjamin Bayhon, et. al.
GR No. 171035
August 24, 2009

Facts:
Respondent Benjamin Bayhon obtained from the petitioner a loan amounting to PhP
1,000,000.00; that to cover the loan, he executed a Deed of Real Estate Mortgage over
the property covered by TCT No. 38052.
Respondent filed for the reconstitution of TCT No. 38052. Petitioner William Ong
Genato filed an Answer in Intervention and attached a copy of an alleged dacion en
pago covering said lot. Respondent assailed the dacion en pago as a forgery alleging that
neither he nor his wife, who had died 3 years earlier, had executed it.
With respect to the dacion en pago, the trial court held that at the time of the execution
of the REM, the wife of respondent, Amparo Mercado, was already dead. It concluded
that the said lot could not have been validly mortgaged by the respondent alone; the
deed of mortgage was not enforceable and only served as evidence of the obligation of
the respondent.
The CA held that both the dacion en pago and the real estate mortgage as being
simulated or fictitious contracts. The CA held further that while the principal obligation
is valid, the death of respondent Benjamin Bayhon extinguished it. The heirs could not
be ordered to pay the debts left by the deceased.

Issue:
Whether or not the obligation of the respondent may be transmitted to his heirs

Held:
As a general rule, obligations derived from a contract are transmissible. Article 1311, par.1 of
the Civil Code provides: Contracts take effect only between the parties, their assigns and heirs,
except in case where the rights and obligations arising from the contract are not transmissible
by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value
of the property he received from the decedent.

While in our successional system the responsibility of the heirs for the debts of their decedent
cannot exceed the value of the inheritance they receive from him, the principle remains intact
that these heirs succeed not only to the rights of the deceased but also to his obligations. The
loan in this case was contracted by respondent. He died while the case was pending before the
Court of Appeals. While he may no longer be compelled to pay the loan, the debt subsists
against his estate. No property or portion of the inheritance may be transmitted to his heirs
unless the debt has first been satisfied. Notably, throughout the appellate stage of this case,
the estate has been amply represented by the heirs of the deceased.


















Union Bank of the Philippines vs Edmund Santibaez
GR No. 149926
February 23, 2005

Facts:
The First Countryside Credit Corporation (FCCC) and Efraim Santibaez entered into a
loan agreement which was intended for the payment of the purchase price of one Ford
Tractor. Efraim and his son, Edmund, executed a promissory note in favor of the FCCC.
Aside from such promissory note, they also signed a Continuing Guaranty Agreement.
Sometime in February 1981, Efraim died, leaving a holographic will. During the
pendency of the testate proceedings, the surviving heirs, Edmund and his sister
Florence, executed a Joint Agreement wherein they agreed to divide between
themselves and take possession of the 3 tractors. Each of them was to assume the
indebtedness of their late father to FCCC, corresponding to the tractor respectively
taken by them.
A Deed of Assignment with Assumption of Liabilities was executed between FCCC and
Union Savings and Mortgage Bank, wherein the FCCC assigned all its assets and liabilities
to USMB.
Demand letters for the settlement of his account were sent by petitioner Union Bank of
the Philippines to Edmund, but the latter refused to pay. Thus, the petitioner filed a
Complaint for sum of money against the heirs of Efraim Santibaez, Edmund and
Florence. Florence alleged that the loan documents did not bind her since she was not a
party thereto.

Issue:
Whether or not respondents can, in fact, be held jointly and severally liable with the principal
debtor the late Efraim Santibaez

Held:
Perusing the joint agreement, it provides that the heirs as parties thereto have agreed to
divide between themselves and take possession and use the above-described chattel and each
of them to assume the indebtedness corresponding to the chattel taken as herein after stated
which is in favor of First Countryside Credit Corp. The assumption of liability was conditioned
upon the happening of an event, that is, that each heir shall take possession and use of their
respective share under the agreement. It was made dependent on the validity of the partition,
and that they were to assume the indebtedness corresponding to the chattel that they were
each to receive. The partition being invalid as earlier discussed, the heirs in effect did not
receive any such tractor. It follows then that the assumption of liability cannot be given any
force and effect. Perusing the records of the case, nothing therein could hold private
respondent Florence S. Ariola accountable for any liability incurred by her late father. The
documentary evidence presented, particularly the promissory notes and the continuing
guaranty agreement, were executed and signed only by the late Efraim Santibaez and his son
Edmund.




















Jesus San Agustin vs Court of Appeals
GR No. 121940
December 4, 2001

Facts:
GSIS sold to a certain Macaria Vda. de Caiquep, a parcel of residential land of the GSIS
Low Cost Housing Project (GSIS-LCHP). A day after the issuance of the TCT Macaria Vda.
de Caiquep sold the subject lot to private respondent, Maximo Menez, Jr.
Sometime in 1979, for being suspected as a subversive, an Arrest, Search and Seizure
Order (ASSO) was issued against private respondent. He was detained for 2 years.
When released, another order for his re-arrest was issued so he hid in Mindanao for
until March 1984.
In December of 1990, he discovered that the subject TCT was missing. An Affidavit of
Loss was filed and a petition was filed for the issuance of owners duplicate copy of TCT
No. 436465 to replace the lost one. To show he was the owner of the contested lot, he
showed the Deed of Absolute Sale.
The trial court granted Menez petition in its decision. However, on October 13, 1992,
herein petitioner, Jesus San Agustin, claimed that this was the first time he became
aware of the case of her aunt, Macaria Vda. de Caiquep who, according to him, died
sometime in 1974. Claiming that he was the present occupant of the property and the
heir of Macaria, he filed his Motion to Reopen Reconstitution Proceedings

Issue:
Whether or not the petitioner, as heir of the original owner, is entitled to notice

Held:
Here, petitioner does not appear to have an interest in the property based on the
memorandum of encumbrances annotated at the back of the title. His claim that he is an heir
(nephew) of the original owner of the lot covered by the disputed lot and the present occupant
thereof is not annotated in the said memorandum of encumbrances. Neither was his claim
entered on the Certificate of Titles in the name of their original/former owners on file with the
Register of Deeds at the time of the filing or pendency of LRC Case No. R-4659. Clearly,
petitioner is not entitled to notice.

According to the SC, the contract of sale remains valid between the parties, unless and until
annulled in the proper suit filed by the rightful party, the GSIS. For now, the said contract of
sale is binding upon the heirs of Macaria Vda. de Caiquep, including petitioner who alleges to
be one of her heirs, in line with the rule that heirs are bound by contracts entered into by their
predecessors-in-interest. However, absent the proper action taken by the GSIS as the original
vendor referred to, the contract between petitioners predecessor-in-interest and private
respondent deserves to be upheld.


















Project Builders, Inc. vs Court of Appeals
GR No. 99433
June 19, 2001

Facts:
Industrial Finance Corporation (IFC) and defendant PBI entered into an agreement
whereby it was agreed that IFC would provide a maximum amount of P2,000,000.00
On June 15, 1976, the same parties entered into an agreement whereby it was agreed
that PBIs credit line with plaintiff be increased to P5,000,000.00. To secure compliance
with the terms and conditions of the agreement, defendants on the executed a Deed of
Real Estate Mortgage in favor of plaintiff.
When defendants allegedly defaulted in the payment of the subject account, plaintiff
foreclosed the mortgage and plaintiff was the highest bidder in the amount of
P3,500,000.00. The foreclosed property was redeemed a year later, but after application
of the redemption payment, plaintiff claims that there is still a deficiency in the amount
of P1,323,053.08, hence, this complaint.

Issue:
Whether or not the agreement forged by petitioners and private respondent is a simple loan or
a financing transaction governed by the provisions of Republic Act No. 5980.

Held:
An assignment of credit is an act of transferring, either onerously or gratuitously, the right of an
assignor to an assignee who would then be capable of proceeding against the debtor for
enforcement or satisfaction of the credit. The transfer of rights takes place upon perfection of
the contract, and ownership of the right, including all appurtenant accessory rights, is
thereupon acquired by the assignee. The assignment binds the debtor only upon acquiring
knowledge of the assignment but he is entitled, even then, to raise against the assignee the
same defenses he could set up against the assignor. Where the assignment is on account of
pure liberality on the part of the assignor, the rules on donation would likewise be pertinent;
where valuable consideration is involved, the assignment partakes of the nature of a contract of
sale or purchase.
Upon an assignment of a contract to sell, the assignee is effectively subrogated in place of the
assignor and in a position to enforce the contract to sell to the same extent as the assignor
could. An insistence of petitioners that the subject transaction should be considered a simple
loan since private respondent did not communicate with the debtors, condominium unit
buyers, to collect payment from them, is untenable. In an assignment of credit, the consent of
the debtor is not essential for its perfection, his knowledge thereof or lack of it affecting only
the efficaciousness or inefficaciousness of any payment he might make.



















Hong Kong and Shanghai Banking Corp. (HSBC) vs Sps. Broqueza
GR No. 178610
November 17, 2010

Facts:
Petitioners Gerong and Broqueza are employees of HSBC. They are also members of
respondent HSBC, Ltd. Staff Retirement Plan. Petitioner Editha Broqueza obtained a car
loan and an appliance loan. On the other hand, petitioner Gerong applied and was
granted an emergency loan. These loans are paid through automatic salary deduction.
Meanwhile in 1993, a labor dispute arose between HSBC and its employees. Majority of
HSBCs employees were terminated, among whom are petitioners Editha Broqueza and
Fe Gerong. Because of their dismissal, petitioners were not able to pay the monthly
amortizations of their respective loans. Thus, respondent HSBCL-SRP considered the
accounts of petitioners delinquent.
Demands to pay the respective obligations were made upon petitioners, but they failed
to pay. HSBCL-SRP filed civil cases against Gerong and the spouses Boqueza for recovery
and collection of sums of money.

Issue:
Whether or not the Sps. Broquezas obligation to pay HSBCL-SRP is a pure obligation

Held:
In ruling for HSBCL-SRP, the first paragraph of Art. 1179 of the Civil Code applies thus:
Every obligation whose performance does not depend upon a future or uncertain event, or
upon a past event unknown to the parties, is demandable at once.

The RTC is correct in ruling that since the Promissory Notes do not contain a period, HSBCL-SRP
has the right to demand immediate payment. The spouses Broquezas obligation to pay HSBCL-
SRP is a pure obligation. The fact that HSBCL-SRP was content with the prior monthly check-off
from Editha Broquezas salary is of no moment. Once Editha Broqueza defaulted in her
monthly payment, HSBCL-SRP made a demand to enforce a pure obligation. A definite amount
is paid to HSBCL-SRP on a specific date. Editha Broqueza authorized HSBCL-SRP to make
deductions from her payroll until her loans are fully paid. Editha Broqueza, however, defaulted
in her monthly loan payment due to her dismissal. Despite the spouses Broquezas
protestations, the payroll deduction is merely a convenient mode of payment and not the sole
source of payment for the loans. HSBCL-SRP never agreed that the loans will be paid only
through salary deductions. Neither did HSBCL-SRP agree that if Editha Broqueza ceases to be
an employee of HSBC, her obligation to pay the loans will be suspended. HSBCL-SRP can
immediately demand payment of the loans at anytime because the obligation to pay has no
period. Moreover, the spouses Broqueza have already incurred in default in paying the
monthly installments.































Development Bank of the Philippines vs Court of Appeals
262 SCRA 245

Facts:
Private respondents are original owners of a parcel of land in Ozamis City. They
mortgaged said land to DBP. When private respondents defaulted on their obligation,
petitioner foreclosed the mortgage on the land and emerged as sole bidder in the
ensuing auction sale.
On April 6, 1984, DBP & PR entered into a deed of conditional sale where DBP agreed to
convey the foreclosed property to them.
On April 6, 1990, upon completing the payment of the full repurchase price DBP, private
respondents demanded the execution of the deed of conveyance in their favor.
However, DBP denied the execution & delivery because it had become illegally
impossible in view of sec. 6 of RA 6657 (CARL) that upon effectivity of this act, any sale
lease, management contract / transfer of possession of private / lands executed by the
original land owner in violation of this act shall be null & void.

Issue:
Whether or not the execution and delivery of conveyance is legally impossible

Held:
According to Manresa, it is a rule that if the obligation depends upon a suspensive condition,
the demandability as well as the acquisition or effectivity of the rights arising from the
obligation is suspended pending the happening or fulfillment of the fact or event which
constitutes the condition. Once the event which constitutes the condition is fulfilled resulting in
the effectivity of the obligation, its effects retroact to the moment when the essential elements
which gave birth to the obligation have taken place.

Applying this precept to the case, the full payment by the appellee on April 6, 1990 retroacts to
the time the contract of conditional sale was executed on April 6, 1984. From that time, all
elements of the contract of sale were present. Consequently, the contract of sale was
perfected. As such, the said sale does not come under the coverage of R.A. 6657.

Under Art 1181, in conditional obligations, the acquisition of rights as well as the
extinguishment or loss of those already acquired depend upon the happening of the event
which constitutes the conditions. The deed of conditional sale between petitioner and private
respondent was executed on April 6 1984. Since private respondent had religiously paid the
agreed installment on the property until April 6, 1990, private respondent is entitled to the
land.


Maria Soledad Tomimbang vs Atty. Jose Tomimbang
GR No. 165116
August 4, 2009

Facts:
Petitioner and respondent are siblings. Their parents donated to petitioner an eight-
door apartment with the condition that during the parents' lifetime, they shall retain
control over the property and petitioner shall be the administrator thereof.
Petitioner failed to obtain a loan from PAG-IBIG Fund, hence, respondent offered to
extend a credit line to petitioner. Petitioner accepted respondent's offer. Renovations
on Units B to G were completed, and the work has just started on Unit A when an
altercation broke out between herein parties. Respondent and petitioner entered into a
new agreement whereby petitioner was to start making monthly payments on her loan.
In 1997, a quarrel also occurred between respondent and another sister, Maricion.
Petitioner left Unit H and could no longer be found. Renovations on Unit A were
discontinued when her whereabouts could not be located. She also stopped making
monthly payments and ignored the demand letter sent by respondent's counsel.
Respondent filed a Complaint against petitioner, demanding the latter to pay the former
the net amount of P3,989,802.25 plus interest of 12% per annum from date of default.
Petitioner contends that the loan is not yet due and demandable because the
suspensive condition the completion of the renovation of the apartment units - has
not yet been fulfilled.

Issue:
Whether or not petitioners obligation is due and demandable

Held:
The evidence on record clearly shows that after renovation of seven out of the eight apartment
units had been completed, petitioner and respondent agreed that the former shall already start
making monthly payments on the loan even if renovation on the last unit (Unit A) was still
pending. Genaro Tomimbang, the younger brother of herein parties, testified that a meeting
was held among petitioner, respondent, himself and their eldest sister Maricion, sometime
during the first or second quarter of 1997, wherein respondent demanded payment of the loan,
and petitioner agreed to pay. Indeed, petitioner began to make monthly payments from June to
October of 1997 totalling P93,500.00. In fact, petitioner even admitted in her Answer with
Counterclaim that she had "started to make payments to plaintiff [herein respondent] as the
same was in accord with her commitment to pay whenever she was able; x x x ."

Evidently, by virtue of the subsequent agreement, the parties mutually dispensed with the
condition that petitioner shall only begin paying after the completion of all renovations. There
was, in effect, a modificatory or partial novation, of petitioner's obligation.

















Felix Gonzales vs Heirs of Cruz
GR No. 131784
September 16, 1999

Facts:
Paula Ao Cruz together with the heirs of Thomas and Paula Cruz entered into a
Contract of Lease/Purchase with Felix L. Gonzales, the sole proprietor and manager of
Felgon Farms. The contract of Lease/Purchase contains the following provisions:

1.The terms of this Contract is for a period of one year upon the signing thereof. After the
period of this Contract, the LESSEE shall purchase the property on the agreeable price of One
Million Pesos
xxx xxx xxx
9.The LESSORS hereby commit themselves and shall undertake to obtain a separate and
distinct T.C.T. over the herein leased portion to the LESSEE within a reasonable period of
time which shall not in any case exceed four (4) years, after which a new Contract shall be
executed by the herein parties which shall be the same in all respects with this Contract of
Lease/Purchase insofar as the terms and conditions are concerned.

Gonzales paid the annual rental on the half-portion of the property and thereafter took
possession of the property, installing Jesus Sambrano as his caretaker
Gonzales did not, however, exercise his option to purchase the property immediately
after the expiration of the one-year lease on November 30, 1984. He remained in
possession of the property without paying the purchase price provided for in the
Contract of Lease/Purchase and without paying any further rentals thereon
A letter was sent by Ricardo Cruz to Gonzales informing him of the lessors decision to
rescind the Contract of Lease/Purchase due to a breach committed by the defendant.
Gonzales refused to vacate the property and continued possession and claimed that the
property subject of the Contract of Lease/Purchase is currently the subject of an Extra-
Judicial Partition. Title to the property remains in the name of the respondents
predecessors-in-interest, Bernardina Calixto and Severo Cruz

Issue:
Whether or not paragraph 9 of the contract is a condition precedent before the defendant is to
pay the down payment

Held:
Paragraph 9 of the contract clearly indicates that the lessors-plaintiffs shall obtain a Transfer
Certificate of Title in the name of the lessee within 4 years before a new contract is to be
entered into under the same terms and conditions as the original Contract of Lease/Purchase.
Thus, before a deed of Sale can be entered into between the plaintiffs and the defendant, the
plaintiffs have to obtain the Transfer Certificate of Title in favor of the defendant. Article 1181
of the New Civil Code states that: In conditional obligations, the acquisition of rights, as well as
the extinguishment or loss of those already acquired, shall depend upon the happening of the
event which constitutes the condition. When the obligation assumed by a party to a contract is
expressly subjected to a condition, the obligation cannot be enforced against him unless the
condition is complied with.

The Court has held that when the obligation assumed by a party to a contract is expressly
subjected to a condition, the obligation cannot be enforced against him unless the condition is
complied with. Furthermore, the obligatory force of a conditional obligation is subordinated
to the happening of a future and uncertain event, so that if that event does not take place, the
parties would stand as if the conditional obligation had never existed.

In the same vein, respondents cannot rescind the contract, because they have not caused the
transfer of the TCT to their names, which is a condition precedent to petitioners obligation.
This Court has held that there can be no rescission (or more properly, resolution) of an
obligation as yet non-existent, because the suspensive condition has not happened.





Insular Life Assurance Company vs Robert Young, et. al.
GR No. 140964 & 142267
January 16, 2002

Facts:
Respondent Robert Young, together with his associates and co-respondents acquired by
purchase Home Bankers Savings and Trust Co., now petitioner Insular Savings Bank.
On December, 1990, Benito Araneta, a stockholder of the Bank, signified his intention to
purchase 99.82% of its outstanding capital stock, subject to the condition that the
ownership of all the shares will be consolidated in Young's name
In order to carry out the intended sale to Araneta, Young bought from Jorge Go and his
group their 45% equity in the Bank. In order to pay this amount, Young obtained a
short-term loan of from International Corporate Bank to finance the purchase. However,
Araneta backed out from the intended sale and demanded the return of his
downpayment.
Through the intervention of Asian Oceanic, Young and Insular Life entered into a Credit
Agreement. Under its provisions, Insular Life extended a loan to Young in the amount of
P200,000,000.00. To secure the loan, Young, acting in his behalf and as attorney-in-fact
of the other stockholders, executed on the same day a Deed of Pledge which
represented 99.82% of the outstanding capital stock of the Bank. The next day, he also
executed a promissory note in favor of Insular Life in the same amount with an interest
rate of 26% per annum to mature 120 days from execution.
On October 21, 1991, Young signed a letter prepared by Atty. Jacinto Jimenez, counsel
of Insular Life, stating that due to business reverses, he shall not be able to pay his
obligations under the Credit Agreement between him and Insular Life and that Insular
may consider his obligations defaulted.
Insular Life instructed its counsel to foreclose the pledge constituted upon the shares.
The latter then sent Young a notice informing him of the sale of the shares in a public
auction.
Young and his associates filed with the RTC a complaint against the Bank, Insular Life
and its counsel, Atty. Jacinto Jimenez, for annulment of notarial sale, specific
performance and damages alleging that the notarial sale conducted by petitioner Atty.
Jacinto Jimenez is void as it does not comply with the requirement of notice of the
second auction sale.

Issue:
Whether or not the MOA is valid and enforceable between the parties despite respondent
Young's failure to comply with its terms and conditions

Held:
Petitioners contend that the MOA is not enforceable considering that Robert Young committed
fraud, misrepresented the warranties and failed to comply with his obligations.

The MOA is merely a contract to sell since the parties therein specifically undertook to enter
into a contract of sale if the stipulated conditions are met and the representation and
warranties given by Young prove to be true.

In Mortel vs. Kassco, Inc., the SC held:
In contracts subject to a suspensive condition, the birth or effectivity of such contracts only
takes place if and when the event constituting the condition happens or is fulfilled, and if the
suspensive condition does not take place or is not fulfilled, the parties would stand as if the
conditional obligation had never existed.

It must be emphasized that the MOA did not convey title of the shares to Insular Life. If ever
there was delivery of the said shares to Insular Life, it was because they were pledged by Young
to Insular Life under the Credit Agreement.

It would be unfair on the part of Young to demand compliance by Insular Life of its obligations
when he himself was remiss in his own. Neither can he feign ignorance of the stipulation in the
MOA since it is presumed that he read the same and was satisfied with its provisions before he
affixed his signature therein. The fact that no deed of sale was subsequently executed by the
parties confirms the conclusion that no sale transpired between them.



Direct Funders Holdings Corp. vs Judge Celso Lavia
GR No. 141851
January 16, 2002

Facts:
During the hearing for the issuance of temporary restraining order, it was made clear to
the respondent Judge that the property in question was occupied by the petitioner by
virtue of a writ of possession issued by the RTC in a petition for the issuance of writ of
possession thereof way back on October 23, 1997.
Despite the lawful order of a coordinate and co-equal court, the respondent Judge
issued the questioned orders to restore possession to private respondent Chan, alleging
an obviously grave abuse of discretion, tantamount to lack of jurisdiction
On January 21, 1998, the respondent Judge issued the questioned order granting the
issuance of a writ of preliminary injunction who subsequently denied the petitioners
motion to dismiss and supplemental motion to dismiss and the very urgent motion for
reconsideration
Petitioner filed with the Court of Appeals a petition for certiorari and prohibition
assailing the trial courts issuance of a writ of preliminary injunction. The CA
promulgated a decision dismissing the petition ruling that the trial court had jurisdiction
to issue the injunction that did not interfere with the writ of possession of a coordinate
court.

Issue:
Whether or not the CA erred in affirming the trial courts ruling issuing a writ of injunction
restraining a writ of possession in another case to place respondent back in possession of the
subject property

Held:
The conditional sale agreement was the only document that the respondent presented during
the summary hearing of the application for a temporary restraining order before the RTC. The
SC found that the conditional sale agreement is officious and ineffectual. First, it was not
consummated. Second, it was not registered and duly annotated on the Transfer Certificate of
Title (No. 12357) covering the subject property. Third, it was executed about eight (8) years
after the execution of the real estate mortgage over the subject property.

To emphasize, the mortgagee (United Savings Bank) did not give its consent to the change of
debtor. It is a fundamental axiom in the law on contracts that a person not a party to an
agreement cannot be affected thereby. Worse, not only was the conditional sale agreement
executed without the consent of the mortgagee-creditor, United Savings Bank, the same was
also a material breach of the stipulations of the real estate mortgage over the subject property.
The conditions of the conditional sale agreement were not fulfilled, hence, respondents claim
to the subject property was ineffectual.
















Fidela Vda. de Mistica vs Sps. Naguiat
GR No. 137909
December 11, 2003

Facts:
Eulalio Mistica, predecessor-in-interest of herein petitioner, is the owner of a parcel of
land. A portion thereof was leased to respondent Bernardino Naguiat sometime in 1970.
On 5 April 1979, Eulalio Mistica entered into a contract to sell with respondent
Bernardino Naguiat over a portion of the aforementioned lot containing an area of 200
square meters.
Pursuant to said agreement, Naguiat gave a downpayment of P2,000.00. He made
another partial payment of P1,000.00 on 7 February 1980. He failed to make any
payments thereafter. Eulalio Mistica died sometime in October 1986.
On 4 December 1991, petitioner filed a complaint for rescission alleging that the failure
and refusal of respondents to pay the balance of the purchase price constitutes a
violation of the contract which entitles her to rescind the same.
Respondent Naguiat alleged that sometime in October 1986, during the wake of the late
Eulalio Mistica, he offered to pay the remaining balance to petitioner but the latter
refused and hence, there is no breach or violation committed by them and no damages
could yet be incurred by the late Eulalio Mistica, his heirs or assigns pursuant to the said
document

Issue:
Whether or not there is a breach of obligation between the parties

Held:
In the present case, the failure of respondents to pay the balance of the purchase price within
ten years from the execution of the Deed did not amount to a substantial breach. In the
Kasulatan, it was stipulated that payment could be made even after ten years from the
execution of the Contract, provided the vendee paid 12 percent interest. Petitioner argues that
the period cannot be extended beyond ten years, because to do so would convert the buyers
obligation to a purely potestative obligation that would annul the contract.

This contention is untenable. The Code prohibits purely potestative, suspensive, conditional
obligations that depend on the whims of the debtor, because such obligations are usually not
meant to be fulfilled. Indeed, to allow the fulfillment of conditions to depend exclusively on
the debtors will would be to sanction illusory obligations. The Kasulatan does not allow
such thing. First, nowhere is it stated in the Deed that payment of the purchase price is
dependent upon whether respondents want to pay it or not. Second, the fact that they already
made partial payment thereof only shows that the parties intended to be bound by the
Kasulatan.

















Luz Hermosa vs Epifanio Longara
GR No. L-5267
October 27, 1953

Facts:
Epifanio M. Longara made 3 claims against the testate estate of Fernando Hermosa,
namely:
(a) P2,341.41 representing credit advances made to the intestate from 1932 to 1944,
(b) P12,924.12 made to his son Francisco Hermosa, and
(c) P3,772 made to his grandson, Fernando Hermosa, Jr. from 1945 to 1947, after the
death of the intestate, which occurred in December, 1944.
Claimant had testified without opposition that the credit advances were to be "payable
as soon as Fernando Hermosa, Sr.'s property in Spain was sold and he receive money
derived from the sale."
The Court of Appeals held that payment of the advances did not become due until the
administratrix received the sum of P20,000 from the buyer of the property. Upon
authorization of the probate court, the same was paid for subsequently. The Claim was
filed on October 2, 1948.
It is contended on the appeal that the obligation contracted by the intestate was subject
to a condition exclusively dependent upon the will of the debtor (a condicion
potestativa) and therefore null and void, in accordance with article 1115 of the old Civil
Code.

Issue:
Whether the obligation contracted by the intestate is null and void

Held:
A careful consideration of the condition upon which payment of the sums advanced was made
to depend, "as soon as he (intestate) receive funds derived from the sale of his property in
Spain," discloses the fact that the condition in question does not depend exclusively upon the
will of the debtor, but also upon other circumstances beyond his power or control. If the
condition were "if he decides to sell his house." or "if he likes to pay the sums advanced," or
any other condition of similar import implying that upon him (the debtor) alone payment would
depend, the condition would be protestativa, dependent exclusively upon his will or discretion.

It is evident, therefore, that the condition of the obligation was not a purely protestative one,
depending exclusively upon the will of the intestate, but a mixed one, depending partly upon
the will of intestate and partly upon chance, i.e., the presence of a buyer of the property for the
price and under the conditions desired by the intestate. The obligation is clearly governed by
the second sentence of article 1115 of the old Civil Code. The condition is, besides, a suspensive
condition, upon the happening of which the obligation to pay is made dependent. And upon the
happening of the condition, the debt became immediately due and demandable.














Nazario Trillana vs Quezon College, Inc.
GR No. L-5003
June 27, 1953

Facts:
Damasa Crisostomo sent a letter to the Board of trustees of the Quezon College
subscribing to 200 shares of capital stock of P100 each.
In the letter, she also wrote: Enclosed you will find (Babayaran kong lahat pagkatapos
na ako ay makapag-pahuli ng isda) pesos as my initial payment and the balance payable
in accordance with law and the rules and regulations of the Quezon College.
Damasa Crisostomo died on October 26, 1948. As no payment appears to have been
made on the subscription mentioned in the foregoing letter, the Quezon College, Inc.
presented a claim before the Court of First Instance of Bulacan in her testate
proceeding, for the collection of the sum of P20,000, representing the value of the
subscription to the capital stock.
This claim was opposed by the administrator of the estate, and the Court of First
Instance of Bulacan, after hearing issued an order dismissing the claim of the Quezon
College, Inc. on the ground that the subscription in question was neither registered in
nor authorized by the Securities and Exchange Commission.

Issue:
Whether or not Damasas obligation to Quezon College, Inc. is valid

Held:
As the application of Damasa Crisostomo is obviously at variance with the terms evidenced in
the form letter issued by the Quezon College, Inc., there was absolute necessity on the part of
the College to express its agreement to Damasa's offer in order to bind the latter.
Indeed, the need for express acceptance on the part of the Quezon College, Inc. becomes the
more imperative, in view of the proposal of Damasa Crisostomo to pay the value of the
subscription after she has harvested fish, a condition obviously dependent upon her sole will
and, therefore, facultative in nature, rendering the obligation void, under article 1115 of the old
Civil Code which provides as follows: "If the fulfillment of the condition should depend upon the
exclusive will of the debtor, the conditional obligation shall be void. If it should depend upon
chance, or upon the will of a third person, the obligation shall produce all its effects in
accordance with the provisions of this code." It cannot be argued that the condition solely is
void, because it would have served to create the obligation to pay, unlike a case wherein only
the potestative condition was held void because it referred merely to the fulfillment of an
already existing indebtedness.



















Visayan Sawmill Company, Inc. vs Court of Appeals
GR No. 83851
March 3, 1993

Facts:
Ang Tay (Visayan Sawmill) and Ramon Hibionada (RJH Trading) entered into a sale
involving scrap iron located at the stockyard of defendant-appellant corporation (RJH
Trading) subject to the condition that plaintiff-appellee will open a letter of credit in the
amount of P250,000.00 in favor of defendant-appellant corporation on or before May
15, 1983
Ang Tay, through his men, started to gather scrap iron at the defendant-appellant's
premises, proceeding with such endeavor until May 30 when defendants-appellants
allegedly directed Ang Tays men to desist from pursuing the work in view of an alleged
case filed against the latter by a certain Alberto Pursuelo.
On July 19, 1983, Ang Tay sent a series of telegrams stating that the case filed against
him by Pursuelo had been dismissed and demanding that RJH Trading comply with the
deed of sale, otherwise a case will be filed against them.
In reply to those telegrams, Hibionada's lawyer informed Ang Tays lawyer that RJH
Trading is unwilling to continue with the sale due to Ang Tays failure to comply with
essential pre-conditions of the contract.

Issue:
Whether or not the contract executed by the parties cancelled and terminated before the
Complaint was filed by anyone of the parties

Held:
In the agreement in question the seller bound and promised itself to sell the scrap iron upon
the fulfillment by the private respondent of his obligation to make or indorse an irrevocable
and unconditional letter of credit in payment of the purchase price.

The petitioner corporation's obligation to sell is unequivocally subject to a positive suspensive
condition, i.e., the private respondent's opening, making or indorsing of an irrevocable and
unconditional letter of credit. The former agreed to deliver the scrap iron only upon payment of
the purchase price by means of an irrevocable and unconditional letter of credit. Otherwise
stated, the contract is not one of sale where the buyer acquired ownership over the property
subject to the resolutory condition that the purchase price would be paid after delivery. Thus,
there was to be no actual sale until the opening, making or indorsing of the irrevocable and
unconditional letter of credit. Since what obtains in the case at bar is a mere promise to sell,
the failure of the private respondent to comply with the positive suspensive condition cannot
even be considered a breach casual or serious but simply an event that prevented the
obligation of petitioner corporation to convey title from acquiring binding force.




















Carmelita Leao vs Court of Appeals
GR No. 129018
November 15, 2001

Facts:
Hermogenes Fernando, as vendor and Carmelita Leao, as vendee executed a contract
to sell involving a piece of land. The contract stipulated that P10,775.00 shall be paid as
down payment for the lot, and the balance of P96,975.00 shall be paid within a period
of 10 years with a monthly amortization of P1,747.30 to begin from December 7, 1985
with interest at 18% per annum based on balances.
The contract also provided that should a period of 90 days elapse from the expiration of
the grace period without the overdue and unpaid installments having been paid with
the corresponding interests up to that date, respondent Fernando, as vendor, was
authorized to declare the contract cancelled and to dispose of the parcel of land, as if
the contract had not been entered into.
Carmelita Leao made several payments in lump sum.

Thereafter, she constructed a
house on the lot. The last payment that she made was on April 1, 1989.
On September 16, 1991, the trial court rendered a decision in an ejectment case earlier
filed by respondent Fernando ordering petitioner Leao to vacate the premises.

Issue:
Whether or not the transaction between the parties is a conditional sale

Held:
First, the contract to sell makes the sale, cession and conveyance "subject to conditions" set
forth in the contract to sell. Second, what was transferred was the possession of the property,
not ownership. Finally, the ownership of the lot was not transferred to Carmelita Leao. As the
land is covered by a torrens title, the act of registration of the deed of sale was the operative
act that could transfer ownership over the lot.

In a contract to sell real property on installments, the full payment of the purchase price is a
positive suspensive condition, the failure of which is not considered a breach, casual or serious,
but simply an event that prevented the obligation of the vendor to convey title from acquiring
any obligatory force. The transfer of ownership and title would occur after full payment of the
price. As petitioner Leao was not given then cash surrender value of the payments that she
made, there was still no actual cancellation of the contract. Consequently, petitioner Leao
may still reinstate the contract by updating the account during the grace period and before
actual cancellation. Should petitioner Leao wish to reinstate the contract, she would have to
update her accounts with respondent Fernando in accordance with the statement of account
39

which amount was P183,687.00.

















Raymundo De Leon vs Benita Ong
GR No. 170405
February 2, 2010

Facts:
Petitioner sold three parcels of land to respondent Benita Ong. As these properties were
mortgaged to Real Savings and Loan Association, Incorporated (RSLAI), petitioner and
respondent executed a notarized deed of absolute sale with assumption of mortgage
Pursuant to this deed, respondent gave petitioner P415,500 as partial payment.
Petitioner, on the other hand, handed the keys to the properties and wrote a letter
informing RSLAI of the sale and authorizing it to accept payment from respondent and
release the certificates of title
Respondent later learned that petitioner sold the same properties to one Leona Viloria
and changed the locks, rendering the keys he gave her useless. Respondent proceeded
to RSLAI to inquire about the credit investigation. However, she was informed that
petitioner had already paid the amount due and had taken back the certificates of title.
Respondent filed a complaint for specific performance, declaration of nullity of the
second sale and damages against petitioner and Viloria. Petitioner claimed that since
the transaction was subject to a condition (i.e., that RSLAI approve the assumption of
mortgage), they only entered into a contract to sell. Inasmuch as respondent did apply
for a loan from RSLAI, the condition did not arise.
The RTC ruled that it was a contract to sell while the CA held that it was a contract of
sale.

Issue:
Whether or not the obligation arose from a contract to sell

Held:
In a contract of sale, the seller conveys ownership of the property to the buyer upon the
perfection of the contract. Should the buyer default in the payment of the purchase price, the
seller may either sue for the collection thereof or have the contract judicially resolved and set
aside. On the other hand, a contract to sell is subject to a positive suspensive condition. The
buyer does not acquire ownership of the property until he fully pays the purchase price. For this
reason, if the buyer defaults in the payment thereof, the seller can only sue for damages.

In this instance, petitioner executed a notarized deed of absolute sale in favor of respondent.
Moreover, not only did petitioner turn over the keys to the properties to respondent, he also
authorized RSLAI to receive payment from respondent and release his certificates of title to her.
The totality of petitioners acts clearly indicates that he had unqualifiedly delivered and
transferred ownership of the properties to respondent. Clearly, it was a contract of sale the
parties entered into.

















Heirs of Remedios Sandejas vs Alex Lina
GR No. 141634
February 5, 2001

Facts:
Eliodoro Sandejas, Sr. was appointed by the lower court as administrator of the estate
of his wife, the late Remedios Sandejas.
An Omnibus Pleading for motion to intervene was filed by Alex Lina alleging that
Eliodoro, in his capacity as seller, bound and obligated himself, his heirs, administrators,
and assigns, to sell absolutely and in their entirety 4 parcels of land which formed part
of the estate of the late Remedios Sandejas
On January 7, 1985, the counsel for Eliodoro filed a Manifestation that the
administrator, Eliodoro Sandejas, died sometime in November 1984.
The lower court issued an Order directing that the counsel for the heirs of Teresita
Sandejas to move for the appointment of a new administrator. However, there was no
appearance of the aforenamed heirs.
Alex A. Lina filed a Motion for his appointment as a new administrator of the Intestate
Estate of Remedios R. Sandejas stating that he has not received any motion on the part
of the heirs for the appointment of a new administrator. The lower court granted the
said motion.
On August 28, 1986, the heirs filed a Motion for Reconsideration and the appointment
of another administrator Sixto Sandejas, in lieu of Alex Lina. The lower court granted the
said Motion and substituted Alex Lina with Sixto Sandejas
On November 29, 1993, Lina filed an Omnibus Motion (a) to approve the deed of
conditional sale executed between him and Eliodioro Sandejas, Sr. on June 7, 1982; (b)
to compel the heirs of Remedios Sandejas and Eliodoro Sandejas, Sr. to execute a deed
of absolute sale in favor of Lina pursuant to said conditional deed of sale to which the
administrator filed a Motion to Dismiss
The lower court granted Linas motion. The CA overturned the RTC ruling holding that
the contract between Eliodoro Sandejas Sr. and respondent was merely a contract to
sell, not a perfected contract of sale.

Issue:
Whether or not the CA erred in ordering the conveyance of the disputed 3/5 of the parcels of
land, despite the nonfulfillment of the suspensive condition (ie. court approval of the sale)

Held:
Petitioners admit that the agreement between the deceased Eliodoro Sandejas Sr. and
respondent was a contract to sell. Not exactly. In a contract to sell, the payment of the
purchase price is a positive suspensive condition. The vendors obligation to convey the title
does not become effective in case of failure to pay.

On the other hand, the agreement between Eliodoro Sr. and respondent is subject to a
suspensive condition -- the procurement of a court approval, not full payment. There was no
reservation of ownership in the agreement. In accordance with paragraph 1 of the Receipt,
petitioners were supposed to deed the disputed lots over to respondent. This they could do
upon the courts approval, even before full payment. Hence, their contract was a conditional
sale, rather than a contract to sell as determined by the CA.

When a contract is subject to a suspensive condition, its birth or effectivity can take place only
if and when the condition happens or is fulfilled.Thus, the intestate courts grant of the Motion
for Approval of the sale filed by respondent resulted in petitioners obligation to execute the
Deed of Sale of the disputed lots in his favor. The condition having been satisfied, the contract
was perfected. Henceforth, the parties were bound to fulfill what they had expressly agreed
upon.









Commissioner of Internal Revenue vs Primetown Property Group
GR No. 162155
August 28, 2007

Facts:
Gilbert Yap, vice chair of respondent Primetown Property Group, Inc., applied for the
refund or credit of income tax respondent paid in 1997.
According to Yap, because respondent suffered losses, it was not liable for income
taxes. Nevertheless, respondent paid its quarterly corporate income tax and remitted
creditable withholding tax from real estate sales to the BIR in the total amount of
P26,318,398.32. Therefore, respondent was entitled to tax refund or tax credit
Revenue officer Elizabeth Y. Santos required respondent to submit additional
documents to support its claim. Respondent complied but its claim was not acted upon.
Thus, on April 14, 2000, it filed a petition for review in the Court of Tax Appeals.
On May 13, 1999, the CTA dismissed the petition as it was filed beyond the two-year
prescriptive period for filing a judicial claim for tax refund or tax credit. The CTA found
that respondent filed its final adjusted return on April 14, 1998. Thus, its right to claim a
refund or credit commenced on that date.
On August 1, 2003, the CA reversed and set aside the decision of the CTA. It ruled that
Article 13 of the Civil Code did not distinguish between a regular year and a leap year.

Issue:
Whether or not Primetown filed its petition for review within the 2-year prescriptive period

Held:
Both Article 13 of the Civil Code and Section 31, Chapter VIII, Book I of the Administrative Code
of 1987 deal with the same subject matter the computation of legal periods. Under the Civil
Code, a year is equivalent to 365 days whether it be a regular year or a leap year. Under the
Administrative Code of 1987, however, a year is composed of 12 calendar months. Needless to
state, under the Administrative Code of 1987, the number of days is irrelevant. There obviously
exists a manifest incompatibility in the manner of computing legal periods under the Civil Code
and the Administrative Code of 1987. For this reason, we hold that Section 31, Chapter VIII,
Book I of the Administrative Code of 1987, being the more recent law, governs the computation
of legal periods. Lex posteriori derogat priori.

The SC held that respondent's petition (filed on April 14, 2000) was filed on the last day of the
24
th
calendar month from the day respondent filed its final adjusted return. Hence, it was filed
within the reglementary period.


















National Marketing Corp. (NAMARCO) vs. Tecson, et. al.
GR No. L-29131
August 27, 1969

Facts:
On November 14, 1955, the Court of First Instance of Manila rendered judgment, in the
case of Price Stabilization Corporation vs. Miguel D. Tecson and Alto Surety and
Insurance Co., Inc. ordering the defendants Tecson and Alto Surety Insurance Co., Inc. to
pay jointly and severally PRATRA the sum of P7,200.00 and for Tecson to indemnify Alto
Surety Insurance Co., Inc. on the cross-claim for all the amounts it would be made to pay
in the decision.
Copy of this decision was, on November 21, 1955, served upon the defendants in said
case. On December 21, 1965, the National Marketing Corporation, as successor to all
the properties, assets, rights, and choses in action of the Price Stabilization Corporation,
as plaintiff in that case and judgment creditor therein, filed, with the same court, a
complaint against the same defendants, for the revival of the judgment rendered in said
Case.
Defendant Miguel D. Tecson moved to dismiss said complaint, upon the ground of lack
of jurisdiction over the subject matter and prescription of action. The complaint was
then dismissed by the CFI.

Issue:
Whether or not the present action for the revival of a judgment is barred by the statute of
limitations

Held:
Plaintiff-appellant alleges that it was December 21, 1965, but appellee Tecson maintains
otherwise, because "when the laws speak of years ... it shall be understood that years are of
three hundred sixty-five days each" according to Art. 13 of our Civil Code and, 1960 and
1964 being leap years, the month of February in both had 29 days, so that ten (10) years of 365
days each, or an aggregate of 3,650 days, from December 21, 1955, expired on December 19,
1965.

Pursuant to Art. 1144(3) of our Civil Code, an action upon a judgment "must be brought within
ten years from the time the right of action accrues," which, in the language of Art. 1152 of the
same Code, "commences from the time the judgment sought to be revived has become final."
This, in turn, took place on December 21, 1955, or thirty (30) days from notice of the judgment
which was received by the defendants herein on November 21, 1955 no appeal having
been taken therefrom.

The issue is thus confined to the date on which ten (10) years from
December 21, 1955 expired.

The order appealed from was affirmed by the SC.
















Ernest Berg vs Magdalena Estate, Inc.
GR No. L-3784
October 17, 1952

Facts:
The complaint avers that plaintiff and defendant are co-owners of said property, the
former being the owner of one-third interest and the latter of the remaining two-thirds.
Defendant claims that on September 22, 1943, it sold to plaintiff one-third of the
property in litigation subject to the express condition that should either vendor or
vendee decide to sell his or its undivided share, the party selling would grant to the
other part first an irrevocable option to purchase the same at the seller's price.
Plaintiff filed a reply stating that the transaction referred to by the defendant relative to
the property in litigation is not supported by any n