Dizon v.
Gaborro judgement, failure to do so within the said period will forfeit his right to redeem
Facts:
Petitioner, Jose Dizon is the owner of 3 parcels of land to which he
mortgaged to secure a loan with DBP (1st mortgage) in the sum of P38 000 and
PNB to secure his indebtedness in said bank for P93 831.91. Dizon defaulted to
DBP, thus the latter foreclosed the property, won the auction and a Certificate
of Sale was executed in their favor . Petitioner however had the right to recover
said property within 1 year from date of foreclosure.
Later, petitioner and respondent met. Gaborro, herein respondent,
became interested in the lands of Dizon. Both parties entered into a Deed of
Sale with Assumption of Mortgage wherein respondent will pay petitioner the
amount of P131 831.91 and assume the mortgage of such property from DBP
and PNB. Moreover, petitioner has the right to repurchase such property after 5
years from date of sale sale upon reimbursement of the amount paid by the
respondent plus interest.
After execution of the conditional sale, respondent made
improvements to the land and paid the taxes thereon. Later, petitioner wrote
respondent that he is now ready to redeem the property and reimburse
Gaborro of what he has paid to the banks BUT not the other expenses the
latter incurred. Gaborro did not agree, hence petitioner filed a complaint
alleging that the two deeds entered into by the parties were in fact a single
transaction and did not express the true intention of the parties. He prayed
that Gaborro be ordered to accept the reimbursement, surrender possession of
the land, make an accounting for the fruits of the land respondent benefited
from and pay him damages.
Respondent denied the allegations and filed a counterclaim for
damages.
Lower court ruled in favor of respondent saying that petitioners action
has prescribed as it has been more than 5 years since the date execution of
sale.
CA affirmed the decision with modification that petitioner is required to
reimburse respondent with interest within ONE year from the date of
Cui VS Arellano
the property. Hence this review for certiorari.
Issue:
WON the “Deed of Sale with Assumption of Mortgage" and the "Option
to Purchase Real Estate," executed by both parties constitute an absolute sale
or merely an equitable mortgage.
Held:
In the light of the foreclosure proceedings and sale of the properties, a
legal point of primary importance here, as well as other relevant facts and
circumstances, We agree with the findings of the trial and appellate courts that
the true intention of the parties is that respondent Gaborro would assume and
pay the indebtedness of petitioner Dizon to DBP and PNB, and in consideration
therefor, respondent Gaborro was given the possession, the enjoyment and use
of the lands until petitioner can reimburse fully the respondent the amounts
paid by the latter to DBP and PNB, to accomplish the following ends: (a)
payment of the bank obligations; (b) make the lands productive for the benefit
of the possessor, respondent Gaborro; (c) assure the return of the land to the
original owner, petitioner Dizon, thus rendering equity and fairness to all
parties concerned.
In view of all these considerations, the law and jurisprudence, and the
facts established, We find that the agreement between petitioner Dizon and
respondent Gaborro is one of those innominate contracts under Art. 1307 of
the New Civil Code whereby petitioner and respondent agreed "to give and to
do" certain rights and obligations
Petitioner Dizon has the right to to reacquire the lands within 1 year by
refunding respondent Gaborro the amount the latter has actually paid of the
principal amount ONLY excluding the interests and land taxes. At the same
time, to promote fairness and equity, the Court ruled that petitioner is not
entitled to an accounting for the fruits and income from the lands because
petitioner cannot have both benefits and the two may be said to offset each
other.
CA ruling is affirmed with modification
Facts:
 Emeterio Cui was a law student at the Arellano University. He finished
the first three years of his law degree at said law school. He was an academic
scholar and so at the end of every semester he was being refunded his tuition
fee.Meanwhile, in 1949, the Director of Private Schools issued a Memorandum
ordering schools not to hold back the credentials of former student scholars
who choose to transfer to other schools if said students fail to pay their tuition.
The Memorandum states that the amount in tuition and other fees
corresponding to these scholarships should not be subsequently charged to the
recipient students when they decide to quit school or to transfer to another
institution. Scholarships should not be offered merely to attract and keep
students in a school.
In 1951, Cui and Arellano University entered into an agreement
whereby Cui agreed to waive his right to transfer to another school unless he
would refund the school the scholarship granted to him.But then when Cui was
about to be a senior student, he decided to transfer to Abad Santos Law
School. He finished his law degree at Abad Santos.
GSIS VS CA
FACTS:
Petitioner GSIS conducted a lottery draw for the allocation of lots and
housing units in Project 8-C of GSIS Village. Private respondent Esperanza
Leuterio won and was issued a Certificate of Acknowledgment to purchase the
subject house and lot.
The parties entered into a Deed of Conditional Sale evidencing the
conveyance of the subject property and all improvements thereon to the
Leuterio spouses for the purchase price of P19,740.00, payable over a fifteen-
year period, in 180 equal monthly installments of P168.53 each.
After the land development and the housing construction,
petitioner's Board of Trustees increased the purchase price.
 Petitioner: The new price was based on the alleged final cost of
construction of the GSIS Village. It is noted that, on the face of the
Leuterio's Conditional Deed of Sale is the marginal notation
"subject to adjustment pending approval of the Board of
Trustees."
 Private Respondents: The said notation was not in the Deed when
they signed it.
 RTC: The trial court found that the appended words were inserted into
the document without the knowledge or consent of the Leuterio
spouses.
In order to take the 1953 bar exams, Cui must obtain his transcripts from
Arellano University but the latter refused to issue his credentials unless he pay
them back the amount of his scholarship. Cui paid in protest.
ISSUE: Whether or not the contract between Cui and Arellano University is
valid.
HELD: No. The contract is not valid for being contrary to public policy. The
waiver was repugnant to sound morality and civic honesty. The policy
enunciated in the Memorandum issued by the Director of Private Schools is
sound policy. Scholarships are awarded in recognition of merit not to keep
outstanding students in school to bolster its prestige. In the understanding of
Arellano University, scholarships award is a business scheme designed to
increase the business potential of an education institution. Such understanding
is not only inconsistent with sound policy but also good morals. Arellano
University is hence ordered to refund what Cui paid with interest.
PS: Relate it to Article 1306 which states what may be stipulated in contracts.
In this case, what relates is the idea of scholarship being used as a scheme to
attract students and to increase the business potential of an education
institution
Meanwhile, after years of diligently paying the monthly amortizations and real
estate taxes on the subject property, the private respondents spouses
informed petitioner that the payments for the property had been completed,
and hence, the execution of an absolute deed of sale in their favor was in
order. They filed a Complaint for Specific Performance With Damages to
compel petitioner to execute in private respondent's favor, the final Deed of
Sale over the subject property.
ISSUE: WON the spouses Leuterio agreed to the notation "subject to
adjustment pending approval of the Board of Trustees" appearing on
the margin of the parties' Conditional Deed of Sale.
HELD:
NO. This court is not a trier of facts, the findings of the lower court are
binding. Likewise, the petitioner’s answer admitted that the omission of the
notation was an honest mistake on the part of the clerk who typed the
document.
Quite clearly, therefore, the purchase price mutually agreed upon by
the parties was P19,740.00. The spouses Leuterio did not give their consent for
petitioner to make a unilateral upward adjustment of this purchase price
depending on the final cost of construction of the subject house and lot. It is
illegal for petitioner to claim this prerogative, for Article 1473 of the Civil Code
provides that "the fixing of the price can never be left to the discretion of one
of the contracting parties . . . ."
MANILA RAILROAD VS COMPANIA TRANSATLANTICA
FACTS:
The steamship Alicante owned by Compania Transatlantica arrived in
Manila with two locomotive boilers aboard, the property of Manila Railroad. The
equipment of the ship cannot discharge the heavy cargo, hence they employed
the Atlantic, Gulf, and Pacific Company. The service to be performed by the
Atlantic Company consisted in bringing its oating crane alongside the Alicante ,
lifting the boilers out of the ship's hold, and transferring them to a barge which
would be placed ready to receive them.
The boiler, being too heavy for the crane sent by Atlantic, fell to the
bottom of the ship’s hold. It was so badly damaged that it had to be reshipped
to England where it was rebuilt, and afterwards was returned to Manila. The
Railroad Company's damage by reason of the cost of repairs, expenses, and
loss of the use of the boiler proved to be P22,343.29.
To recover these damages the present action was instituted by the
Railroad Company against the Steamship Company. The latter caused the
Atlantic Company to be brought in as a codefendant, and insisted that
whatever liability existed should be xed upon the Atlantic Company as an
independent contractor who had undertaken to discharge the boilers and had
become responsible for such damage as had been done.
Defense of Atlantic Company:
 by the terms of the engagement in accordance with which the Atlantic
Company agreed to render the service, all risk incident to the
discharge of the boilers was assumed by the Steamship Company;
 Atlantic Company should be absolved under the last paragraph of
article 1903 of the Civil Code, inasmuch as it had used due care in the

SO PING BUN VS CA
selection of the employee whose negligent act caused the damage in
question.
ISSUE:
 WON Atlantic Company is also liable to pay Manila Railroad for
the damages.
HELD:
NO, Atlantic Company is not liable to pay Manila Railroad. A contracting
company which undertakes to remove freight from a ship's hold, subject to
certain conditions defined in a contract made with the steamship company, is
not liable to the owner of freight for damage done thereto in the lifting
operations. In such case the owner of the freight must look for redress to the
ship's company and for lack of privity cannot maintain an action on the
contract made between the ship's company and the other.
The remedy is for the Steamship Company is to go against Atlantic, as
they are also liable to Steamship.
 On their first defense, the Atlantic Company was bound by its
undertaking to use due care and that the exemption was intended to
cover accidents due to hidden defects in the apparatus or other
unforeseeable occurrences NOT the immediate personal negligence of
the party in charge of the operations. It was proven that the damage
was caused by negligence of the person in charge of the operation.
 Art. 1903 was not applicable, because the obligation was created by
contract. Article 1903 is exclusively concerned with cases where the
negligence arises in the absence of agreement.
FACTS:
In 1963, Tek Hua Trading Co, through its managing partner, So Pek
Giok, entered into lease agreements with lessor Dee C. Chuan & Sons Inc. Tek
Hua used the areas to store its textiles. The contracts each had a one-year
term. They provided that should the lessee continue to occupy the premises
after the term, the lease shall be on a month-to-month basis.
When the contracts expired, the parties did not renew the contracts, but
Tek Hua continued to occupy the premises. In 1976, Tek Hua Trading Co. was
dissolved. Later, the original members of Tek Hua Trading Co. including Manuel
C. Tiong, formed Tek Hua Enterprising Corp., herein respondent corporation.
So Pek Giok, managing partner of Tek Hua Trading, died in 1986. So Pek
Gioks grandson, petitioner So Ping Bun, occupied the warehouse for his own
textile business, Trendsetter Marketing.
When asked to vacate, petitioner refused. Petitioner requested formal
contracts of lease with DCCSI in favor Trendsetter Marketing. So Ping Bun
claimed that after the death of his grandfather, So Pek Giok, he had been
occupying the premises for his textile business and religiously paid rent. DCCSI
acceded to petitioners request. The lease contracts in favor of Trendsetter were
executed.
In the suit for injunction, private respondents pressed for the nullification
of the lease contracts. They also claimed damages.
ISSUE: WON So Ping Bun is guilty of tortuous interference.
HELD:
YES. The elements of tort interference are: (1) existence of a valid contract; (2)
knowledge on the part of the third person of the existence of contract; and (3)
interference of the third person is without legal justification or excuse. A duty
which the law of torts is concerned with its respect for the property of others,
and a cause of action ex delicto may be predicated upon an unlawful
interference by one person of the enjoyment by the other of his private
property. This may pertain to a situation where a third person induces a party
to renege on or violate his undertaking under a contract. In the case before us,
petitioner's Trendsetter Marketing asked DCCSI to execute lease contracts in its
favor, and as a result petitioner deprived respondent corporation of the latter's
property right. Clearly, and as correctly viewed by the appellate court, the
three elements of tort interference above-mentioned are present in the instant
case.
Bustamante vs Rosel Digest
Facts:
Respondent Rosel entered into a loan agreement with petitioner
spouses Bustamante wherein the latter borrowed P100,000 payable in 2 years.
To guarantee payment, the spouses put as collateral 70 sq m of their lot
inclusive of the apartment therein. In the event of borrowers default, contract
states the lender has the option to buy or purchase the collateral for P200,000.
When the loan was about to mature on March 1, 1989, respondents
proposed to buy the said portion at the pre-set price. Petitioners, however,
refused and requested for extension of time to pay the loan. On the due date,
petitioners tendered payment of the loan to respondents which the latter
refused to accept. On March 4, 1990, respondents sent a demand letter asking
petitioner to sell the collateral pursuant to the option to buy embodied in the
loan agreement. Prior to that, they filed with the RTC an action for specific
performance in February.
Issue:
Is the respondent justified in compelling petitioners to sell the portion
of the lot pursuant to the stipulation in the loan?
Held: No as doing so is tantamount to pactum commissorium. The elements
of pactum commissorium are as follows: (1) there should be a property
mortgaged by way of security for the payment of the principal obligation, and
(2) there should be a stipulation for automatic appropriation by the creditor of
the thing mortgaged in case of non-payment of the principal obligation within
the stipulated period.
In this case, the intent to appropriate the property given as collateral in
favor of the creditor appears to be evident, for the debtor is obliged to dispose
of the collateral at the pre-agreed consideration amounting to practically the
same amount as the loan. In effect, the creditor acquires the collateral in the
event of non payment of the loan. This is within the concept of pactum
commissorium. Such stipulation is void.
Coquia v Fieldmen’s Insurance Co.
G.R. No. L-23276 November 29, 1968
Lessons Applicable: stipulation pour autrui (Insurance)
FACTS:
 December 1, 1961: Fieldmen's Insurance Company, Inc. issued in favor
of the Manila Yellow Taxicab Co., Inc. (Manila) from December 1, 1961 to
December 1, 1962
 February 10, 1962: A taxicab of Manila driven by Carlito Coquia, met a
vehicular accident at Mangaldan, Pangasinana and died
 The insured filed a claim for P5,000 in which Fieldmen's replied with an
offer to pay P2,000 by way of compromise
 The insured rejected it and countered with P4,000
 September 18, 1962: Carlito's parents filed a complaint against the
Company for collection
 The company pleaded lack of cause of action
 RTC: ordered to pay the parents
ISSUE: W/N there is a stipulation pour autrui that exempts the general rule that
the parents are not a party to the contract
Constantino v Espiritu
(1971, Dizon)
FACTS:
 Constantino had by a fictitious deed of absolute sale conveyed to
Espiritu (on October 30, 1953, for a consideration of P8K) the two-
storey house and 4 subdivision lots covered by Transfer Certificate of
Title issued by the Register of Deeds of Rizal in the name of Pastor
Constantino, married to Honorata Geukeko with the understanding that
Espiritu would hold the properties in trust for their illegitimate son,
Pastor Constantino, Jr., still unborn at the time of the conveyance
 Espiritu thereafter mortgaged said properties to the Republic Savings
Bank of Manila twice to secure payment of two loans, one of P3K and
the other of P2K, after that she offered the properties for sale
 Constantino then prayed for the issuance of a writ of preliminary
injunction to restrain Espiritu and her representatives from further
alienating or disposing of the properties, and for judgment ordering her
to execute a deed of absolute sale of said properties in favor of their
son
 As a result of the conveyance, the TCT in Constantino's name was
cancelled and a new one was issued in Espiritu's name.
 Espiritu moved to dismiss the complaint on the ground that it stated no
cause of action because Pastor Constantino, Jr., the beneficiary of the
alleged trust, was not included as party-plaintiff, and on the further
ground that cause of action was unenforceable under the Statute of
Frauds.
 Constantino argued that the Statute of Frauds does not apply to
trustee
 The trial court dismissed the complaint, with costs.
ISSUES:
HELD: YES. RTC affirmed.
 There is a stipulation that the Company "will indemnify any authorized
Driver who is driving the Motor Vehicle" of the Insured and, in the event of
death of said driver, the Company shall, likewise, "indemnify his personal
representatives."
 typical of contracts pour autrui, this character being made more
manifest by the fact that the deceased driver paid 50% of the
corresponding premiums, which were deducted from his weekly
commissions
 expressly stipulated and declared that it shall be a condition precedent
to any right of action or suit upon this Policy that the award by such
arbitrator, arbitrators or umpire of the amount of the Company's liability
hereunder if disputed shall be first obtained
 both parties from the inception of their dispute proceeded in entire
disregard of the provisions of the contract relating to arbitration
 conduct was as effective a rejection of the right to arbitrate
 WoN the contract of sale entered into by Constantino and Espiritu was
subject to the agreement that Espiritu would hold the properties in
trust for their unborn child – SC doesn't answer, question of fact
 WoN the contract in question is not enforceable by action by reason of
the provisions of the Statute of Frauds –YES
HELD:
 Question of fact. Espiritu may raise it in her answer for the lower court
to determine after trial. The contract between Constantino and Espiritu
was a contract pour autrui, although couched in the form of a deed of
absolute sale. Constantino's action was, in effect, one for specific
performance. That one of the parties to a contract is entitled to bring
an action for its enforcement or to prevent its breach is too clear to
need any extensive discussion. The contract contained a stipulation
pour autrui amplifies this settled rule only in the sense that the third
person for whose benefit the contract was entered into may also
demand its fulfillment provided he had communicated his acceptance
thereof to the obligor before the stipulation in his favor is revoked. The
amended complaint submitted by Constantino to the lower court
impleaded the beneficiary under the contract as a party co-plaintiff,
thus it is clear that the three parties concerned therewith would, as a
result, be before the court and the latter's adjudication would be
complete and binding upon them.
 YES. The contention that the contract in question is not enforceable by
action by reason of the provisions of the Statute of Frauds does not
appear to be unquestionable, it being clear upon the facts alleged in
the amended complaint that the contract between the parties had
already been partially performed by the execution of the deed of sale,
the action brought below being only for the enforcement of another
phase thereof, namely, the execution by Espiritu of a deed of
conveyance in favor of the beneficiary thereunder.
The appealed order is set aside and the case is remanded to the lower court
for further proceedings in accordance with law.
LEONCIO GABRIEL v. MONTE DE PIEDAD Y CAJA DE AHORROS and CA
Facts: Chattel mortgage executed by Leoncio in favour of Monte de Piedad
was valid for not being contrary to public policy, the law and morals, absent
proof.
> Chattel Mortgage (December 13, 1932) where Leoncio Gabriel, appraiser of
jewels in the pawnshop of Monte de Piedad, promised to pay P14,679,07 (the
value of the deficiencies due to erroneous appraisal of the pawned jewels),
payable by P300/m
> Alleged failure to pay
> Termination of Leoncio allegedly without cause and notice
> SUIT by Monte de Piedad against Leoncio for payment of the debt where the
mortgage was insufficient
> Contention of Leoncio:
(1) the chattel mortgage was void because
(a) it is contrary to law, morals and public policy;
(b) he was made to sign it against his will and through
misrepresentation where E. Marco (Director-General) signed in behalf
of Monte de Piedad without the latter’s authority,
(c) the subject matter and considerations of the mortgage do not exist,
and
(d) the payments already made allegedly for the mortgage were in fact
his salaries;
(2) his acquittal in a criminal case that used the chattel mortgage as evidence
of his liability was a bar to the present civil case
Held:
> Chattel Mortgage does not violate the law, morals or public policy
> Chattel Mortgage does not lack consideration > It was executed voluntarily
to guarantee the deficiencies resulting from his erroneous appraisals of the
jewels
(CA Held) > Thus, a preexisting admitted liability is a good
consideration for a promise
> EXCEPTIONS: if the inadequacy of the consideration is so gross as to amount
to fraud, oppression or undue influence, or when statutes require the
consideration to be adequate
> Compliance with the Act 1508, Chattel Mortgage Law, Section 5 > Marco
signed as Director-Manager with confirmation from the administration > Law
on chattel mortgage contracts only need substantial compliance and not literal
> No res judicata where acquittal in criminal case bars the present civil case >
No identity of subject matter and no dependence of the civil to the criminal
>> Public Policy
> A contract which is neither prohibited by law nor condemned by
judicial decision, nor contrary to public morals, contravenes no public policy >
Violative of public policy if the contract has for its consideration a tendency to
injure the public, or if it is against the public good, or if it contravenes some
established interests of society, or is inconsistent with sound policy and good
morals, or tends clearly to undermine the security of individual rights, whether
of personal liability or of private property
>> Consideration
> right, interest, benefit, or advantage conferred upon the promisor,
to which he is otherwise not lawfully entitled, or any detriment, prejudice, loss,
or disadvantage suffered or undertaken by the promise other than to such as
he is at the time of consent bound to suffer
Fallo:
We do not find it necessary to discuss the last assignment of error.
The petition is hereby dismissed and the judgment sought to be reviewed
is affirmed, with costs against the petitioner. So ordered.