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238 SCRA 602


On July 29, 1987, a Second Amended Complaint for Specific Performance was filed by Ang
Yu Asuncion and Keh Tiong, et al., against Bobby Cu Unjieng and Jose Tan before the
Regional Trial Court of Manila.

The plaintiffs were tenants or lessees of residential and commercial spaces owned by
defendants in Binondo, Manila. On several conditions defendants informed the plaintiffs that
they are offering to sell the premises and are giving them priority to acquire the same. During
negotiations, Bobby Cu Unjieng offered a price of P6-million while plaintiffs made a counter of
offer of P5-million. Plaintiff thereafter asked the defendants to put their offer in writing to which
the defendants acceded. In reply to defendants letter, plaintiffs wrote, asking that they specify
the terms and conditions of the offer to sell. When the plaintiffs did not receive any reply, they
sent another letter with the same request.Since defendants failed to specify the terms and
conditions of the offer to sell and because of information received that the defendants were
about to sell the property, plaintiffs were compelled to file the complaint to compel defendants to
sell the property to them.

The court dismissed the complaint on the ground that the parties did not agree upon the
terms and conditions of the proposed sale, hence, there was no contact of sale at all.

On November 15, 1990, the Cu Unjieng spouses executed a Deed of Sale transferring the
property in question to Buen Realty and Development Corporation. Buen Realty, as the new
owner of the subject property, wrote to the lessees demanding the latter to vacate the premises.
In its reply, it stated that Buen Realty and Development Corporation brought the property
subject to the notice of lis pendens.


Can Buen Realty be bound by the writ of execution by virtue of the notice of lis pendens?


No.An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil Code). The
obligation is upon the concurrence of the essential elements thereof, viz:

(a) the vinculum juris or juridical tie which is the efficient cause established by the various
sources of obligations; (b) the object which is the prestation or conduct, required to observed;
and (c) the subject-persons who, viewed demandability of the obligation are the active (oblige)
and the passive (obligor) subjects.
Among the sources of an obligation is a contract (Art. 1157), which is a meeting of minds
between two persons whereby one binds himself, with respect to the other, to give something or
to render some service. A contract undergoes various stages that include its negotiation or
preparation, its perfection and, finally, its consummation.

Until the contract is perfected, it cannot, as an independent source of obligation, serve as a

binding juridical relation. In sales, particularly, to which the case at bench belongs, the contract
is perfected when a person, called the seller, obligates himself, for a price certain, to deliver and
to transfer ownership of a thing or right to another, called the buyer, over which the latter

The registration of lis pendens must be independently addressed in appropriate

proceedings.Therefore, Buen Realty cannot be held subject to the writ of execution issued by
the respondent Judge, let alone ousted from the ownership and possession of the property,
without first being duly afforded its day in court.

Sagrada Orden vs. Nacoco 91 Phil. 503 (1952)

Nature: appeal from judgment of CFI of Manila

Facts and Background of the Case

- On Jan 4, 1942, during the Japanese occupation, Taiwan Tekkosho (Japanese corporation)
acquired the plaintiffs property (land with warehouse in Pandacan, Manila) for Php140K
- On April 4, 1946, after the liberation, the US took control and custody of the aforementioned
enemys land under Sect 12 of the Trading with the Enemy Act
- In the same year, the Copra Export Management Company occupied the property under
custodianship agreement with the United States Alien Property Custodian
- In August 1946, when the Copra Export Management Co. vacated the property, the National
Coconut Corporation (NACOCO), the defendant, occupied it next
- Sagrada Orden (plaintiff) files claims on the property with the Court of First Instance of Manila
and against the Philippine Alien Property Administrator
- Plaintiff petitions that the sale of the property to Taiwan Tekkosho should be declared null and
void as it was executed under duress, that the interest of the Alien Property Custodian be
cancelled, and that NACOCO be given until February 28, 1949 to recover its equipment form the
property and vacate the premise
- The Republic of the Philippines is allowed to intervene
- CFI: the defendant (Philippine Alien Property Administrator) and the intervenor (RP) are
released from any liability but the plaintiff may reserve the right to recover from NACOCO
reasonable rentals for the use and occupation of the premises
- The sale of the property to the Taiwan Takkesho was declared void and the plaintiff was given
the right to recover Php3,000/month as reasonable rental from August 1946 (date when
NACOCO occupied property) to the date NACOCO vacates the premises
- the judgment is appealed to the SC

Legal Issues
1. WON the defendant is liable to pay rent for occupying the property in question

1. The CFIs decision that the defendant should pay rent from August 1946 to February 28, 1949
was reversed, costs against the plaintiff

Obligations can only arise from four sources: law, contracts or quasi-contracts, crime, or
negligence (Art 1089, Spanish Civil Code).

There were no laws or an express agreement between the defendant or the Alien Property
Custodian with the plaintiff regarding payment of rent. The property was acquired by the Alien
Property Administrator through law (Trading with the Enemy Act) on the seizure of alien
property and not as a successor to the interests of the latter. There was no contract of rental b/w
them and Taiwan Takkesho. NACOCO entered possession of the property from the Alien
Property Custodian without any expectation of liability for its use. NACOCO did not commit any
negligence or offense, and there was no contract, implied or otherwise, entered into, that can be
used as basis for claiming rent on the property before the plaintiff obtained the judgment
annulling the sale to Taiwan Takkesho. The plaintiff has no right to claim rent from NACOCO.


195 SCRA 137


Plaintiff spouses Francisco and Anita Pe entered into a contract to sell their 5 parcels of
land. These parcels of land were mortgaged with different banking institutions. Lots Nos. 40
and 41 were mortgaged to the Philippine Veterans Bank (PVB) for P351,162.59; Lots Nos. 42
and 45 were mortgaged to the Development Bank of the Philippines (DBP) for P189,322.49;
and Lot No. 47 to Philippine Commercial and Industrial Bank (PCIB) for P57,000.

On September 20, 1976, the plaintiffs executed a contract to sell. The plaintiffs were
paid the total amount of 351,162.59 to PVB for lots 40 and 41. On the same date, they
executed in favor of Domingo Sy a deed of sale over Lots Nos. 42 and 45 after payment by the
latter of the former's account with the DBP in the amount of P189,322.49. Consequently, a
contract to sell and a corresponding deed of sale covering Lot No. 47 were prepared but the
deed did not materialize as the buyers offer of P49,454.92, as payment for Lot No. 47, was
rejected by the Pe spouses, the latter insisted on the full payment of their obligation with the
(PCIB) in the amount of P383,615.97 and P620,000 as the alleged consideration stipulated in
the Contract to Sell. Pe allege that the consideration of the Contract to Sell was
P1,544,161.05 and not P620,000.


Was the contention of the plaintiffs valid?


No. The words of the Contract to Sell were clear and left no doubt upon the true
intention of the contracting parties. The condition laid down in paragraph (2) of the contract did
not provide for an additional consideration, but only for the manner in which the consideration
was to be applied. It clearly provided that payment shall be applied to petitioners' obligations
with the bank where the respective properties were mortgaged, and upon their release,
petitioners shall execute the final deed of sale. The subsequent acts of the parties conformed
with this condition. Thus, the parties should be bound by such written contract. It should also
be noted that at the time of the execution of the Contract to Sell, the total obligation due to the
PCIB as regards Lot No. 47 was only P 99,374.89. The rise of the same obligation to
P383,615.96 was brought about by subsequent loans the petitioners obtained with the same
bank for which the tractor and an "Offset Discharrow" were given as additional security.

Contracts are respected as the law between the contracting parties. The parties may
establish such stipulations, clauses, terms and conditions as they may want to include. As long
as such agreements are not contrary to law, morals, good customs, public policy or public order,
they shall have the force of law between.

Perla v Cayas 185 SCRA 741 May 28, 1990

J. Fernan

Milagros Cayas was the registered owner of a Mazda bus, insured with Perla Compania de Seguros,
Inc. (PCSI) under a policy issued on February 3, 1978. The bus encountered an accident. One victim
sued while the others entered into a settlement. He won P32,000.
Cayas filed a complaint for a sum of money and damages against PCSI in the Court of First Instance
of Cavite. The court eventually dismissed. She filed an MFR. She filed a motion to declare PCSI in
default for its failure to file an answer.
The court ordered ordering PCSI to pay Cayas P50,000 as compensation.
PCSI appealed to the Court of Appeals, which affirmed the lower court's decision.
Its motion for reconsideration having been denied, PCSI filed this petition

WON PCSIs liability is limited only to the payment made by private respondent to the victim and only
up to the amount of P12,000.00.

Held: Yes. Petition dismissed.

The insurance policy involved explicitly limits petitioner's liability to P12,000.00 per person and to
P50,000.00 per accident.
Stokes vs. Malayan- terms of the contract constitute the measure of the insurer's liability and
compliance is a condition precedent to the insured's right of recovery from the insurer.
The insurance policy placed liability for all damages arising out of death or bodily injury sustained by
one person as a result of any one accident at P12,000.00.
Section 377 of Presidential Decree No. 612, which provided that the liability of land transportation
vehicle operators for bodily injuries sustained by a passenger arising out of the use of their vehicles
shall not be less than P12,000.
Minimum liability is P12,000 per passenger. Not contrary to law, morals, good customs, public order
or public policy, said stipulation must be upheld as effective, valid and binding as between the parties.
In like manner, we rule as valid and binding upon private respondent the condition requiring her to
secure the written permission of petitioner before effecting any payment in settlement of
any claim against her. This was designed to safeguard the insurer's interest against collusion between
the insured and the claimants.
It being specifically required that petitioner's written consent be first secured before any payment in
settlement of any claim could be made. Cayas is precluded from seeking reimbursement of the
payments made to the three other passangers in view of her failure to comply with the condition
contained in the insurance policy.
Clearly, the fundamental principle that contracts are respected as the law between the contracting
parties finds applicationin the present case.
In Phil. American General Insurance Co., Inc vs. Mutuc, we ruled that contracts which are the private
laws of the contracting parties should be fulfilled according to the literal sense of their stipulations, if
their terms are clear and leave no room for doubt as to the intention of the contracting parties, for
contracts are obligatory, no matter what form they may be, whenever the essential requisites for their
validity are present.
Although Milagros Cayas was able to prove a total loss of only P44,000.00, petitioner was made liable
for the amount of P50,000.00, the maximum liability. This was wrong. An insurance indemnity, being
merely an assistance or restitution insofar as can be fairly ascertained, cannot be availed of by
any accident victim or claimant as an instrument of enrichment.


G.R. No. 156841. June 30, 2005

Facts: GF Equity hired Valenzona as Head Coach of the Alaska basketball team in the Philippine
Basketball Association under a Contract of Employment where GF Equity would pay Valenzona the sum
of P35,000.00 monthly. While the employment period agreed upon was for two years commencing, the
last sentence of paragraph 3 of the contract carried the following condition: 3. x x x If at any time during
the contract, the COACH, in the sole opinion of the CORPORATION, fails to exhibit sufficient skill or
competitive ability to coach the team, the CORPORATION may terminate this contract. The caveat
notwithstanding, Valenzona still acceded to the terms of the contract. Thereafter, Valenzona was
terminated as coach of the Alaska team. Valenzona demanded from GF Equity payment of compensation
arising from the arbitrary and unilateral termination of his employment. GF Equity, however, refused the
claim. Valenzona thus filed before the RTC Manila a complaint against GF Equity for breach of contract
with damages. The trial court, upholding the validity of the assailed provision of the contract, dismissed
the complaint.

Issue: Whether the questioned last sentence of paragraph 3 is violative of the principle of mutuality of

Held: Mutuality is one of the characteristics of a contract, its validity or performance or compliance of
which cannot be left to the will of only one of the parties. The ultimate purpose of the mutuality principle
is thus to nullify a contract containing a condition which makes its fulfillment or pre-termination
dependent exclusively upon the uncontrolled will of one of the contracting parties. In the case at bar, the
contract incorporates in paragraph 3 the right of GF Equity to pre-terminate the contract. The assailed
condition clearly transgresses the principle of mutuality of contracts. GF Equity was given an unbridled
prerogative to pre-terminate the contract irrespective of the soundness, fairness or reasonableness, or
even lack of basis of its opinion. The assailed stipulation being violative of the mutuality principle
underlying Article 1308 of the Civil Code, it is null and void.


93 Phil 391

On June 21, 1945, Truck No. 14 belonging to the defendant Batangas Transportation,
Co. driven by Vivencio Bristol ran into a ditch at Bay, Laguna resulting in the death of Florenio
Diana and other passengers. Plaintiffs were the heirs of Diana. Bristol was charged and
convicted of multiple homicide through reckless imprudence where he was ordered to indemnify
the heirs of the deceased in the amount of Php 2,000. When the decision became final, a writ of
execution was issued in order that the indemnity may be , but the sheriff filed a return stating
that the accused had no visible leviable property. The present case (civil case No. 9221) was
started when defendant failed to pay the indemnity under its subsidiary liability under article 103
of the Revised Penal Code.

Defendant filed a motion to dismiss on the ground that there was another action pending
between the same parties for the same cause (civil case No. 8023) in which the same plaintiffs
sought to recover from the same defendant the amount of P4,500 as damages resulting from
the death of Florenio Diana, who died while on board a truck of defendant due to the negligent
act (culpa aquiliana) of the driver Vivencio Bristol.

Plaintiffs filed a written opposition to the motion to dismiss. The lower court, having found the
motion well founded, dismissed the complaint, without special pronouncement as to costs, and
their motion for reconsideration having been denied, plaintiffs took the present appeal.


Did the lower court correctly dismiss the complaint on the sole ground that there was
another action pending between the same parties for the same cause?


No. The present case (civil case No. 9221) stemmed from a criminal case in which the
driver of the defendant was found guilty of multiple homicide through reckless imprudence and
was ordered to pay an indemnity of P2,000 for which the defendant was made subsidiarily liable
under article 103 of the Revised Penal Code. While the other case (civil case No. 8023) was an
action for damages based on culpa aquiliana which underlies the civil liability predicated on
articles 1902 to 1910 of the old Civil Code. These two cases involved two different remedies. As
this court aptly said: "A quasi-delict or culpa aquiliana is a separate legal institution under the
Civil Code, with a substantivity all its own, and individuality that is entirely apart and
independent from a delict or crime. * * *. A distinction exists between the civil liability arising
from a crime and the responsibility for cuasi-delictos or culpa extra-contractual. The same
negligent act causing damages may produce civil liability arising from a crime under article 100
of the Revised Penal Code, or create an action for cuasi-delito or culpa extra-contractual under
articles 1902-1910 of the Civil Code.

It was a mistake to say that the present action should be dismissed, because of the
pendency of another action between the same parties involving the same cause. Evidently, both
cases involved different causes of action.