CONTRACTS:

ESSENTIAL REQUISITES
 MAESTRADO vs. COURT OF APPEALS
327 SCRA 678
FACTS:
These consolidated cases involve Lot No. 5872 and the rights of the
contending parties thereto. The lot has an area of 57.601 sq.m. and is
registered in the name of the deceased spouses Ramon and Rosario
Chaves. The spouses died intestate in 1943 and 1944, respectively. They
were survived by six heirs. To settle the estate of said spouse, Angel Chaves,
one of the heirs, initiated intestate proceedings and was appointed
administrator of said estates in the process. An inventory of the estates was
made and thereafter, the heirs agreed on a project partition. The court
approved the partition but a copy of said decision was missing. Nonetheless,
the estate was divided among the heirs. Subsequently, in 1956, the partition
case effected and the respective shares of the heirs were delivered to them.
Significantly, Lot No.5872 was not included in a number of documents.
Parties offered different explanations as to the omission of said lot in the
documents. Petitioners maintain the existence of an oral partition agreement
entered into by all heirs after the death of their parents. To set things right,
petitioners then prepared a quitclaim to confirm the alleged oral agreement.
Respondents dispute voluntariness of their consent to the quitclaims.
Six years after the execution of the quitclaims, respondents discovered that
indeed subject lot was still a common property in the name of the deceased
spouses. Eventually, an action for Quieting of Title was filed by petitioners
on December 22, 1983.
The trial court considered Lot No. 5872 as still a common property and
therefore must be divided into six parts, there being six heirs. Petitioners
appealed to the Court of Appeals which sustained the decision of the trial
court.
ISSUE:
Whether or not the action for quieting of title had already prescribed.
RULING:
The Supreme Court ruled that an action for quieting of title is
imprescriptible especially if the plaintiff is in possession of the property being
litigated. One who is in actual possession of a land, claiming to be the owner
thereof may wait until his possession is disturbed or his title is attacked
before making steps to vindicate his right because his undisturbed
possession gives him a continuing right to seek the aid of the courts to
ascertain the nature of the adverse claim and its effect on his title. Moreover,
the Court held that laches is inapplicable in this case. This is because, as
mentioned earlier, petitioners’ possession of the subject lot has rendered
their right to bring an action for quieting of title imprescriptible.

PLACEWELL INTERNATIONAL SERVICES CORP. vs. CAMOTE

G.R. No. 169973, June 26, 2006

FACTS:

Petitioner Placewell International Services Corporation (PISC)

deployed respondent Ireneo B. Camote to work as building carpenter for
SAAD Trading and Contracting Co. (SAAD) at the Kingdom of Saudi Arabia
(KSA) for a contract duration of two years, with a corresponding salary of
US$370.00 per month. At the job site, respondent was allegedly found
incompetent by his foreign employer; thus the latter decided to terminate his
services. However, respondent pleaded for his retention and consented to
accept a lower salary of SR 800.00 per month. Thus, SAAD retained
respondent until his return to the Philippines two years after.

On November 27, 2001, respondent filed a sworn Complaint for

monetary claims against petitioner alleging that when he arrived at the job
site, he and his fellow Filipino workers were required to sign another
employment contract written in Arabic under the constraints of losing their
jobs if they refused; that for the entire duration of the new contract, he
received only SR 590.00 per month; that he was not given his overtime pay
despite rendering nine hours of work everyday; that he and his co-workers
sought assistance from the Philippine Embassy but they did not succeed in
pursuing their cause of action because of difficulties in communication.

ISSUE:

Whether there is estoppel by laches

HELD:

R.A. No. 8042 explicitly prohibits the substitution or alteration to the

prejudice of the worker, of employment contracts already approved and
verified by the Department of Labor and Employment (DOLE) from the time
of actual signing thereof by the parties up to and including the period of the
expiration of the same without the approval of the DOLE. The subsequently
executed side agreement of an overseas contract worker with her foreign
employer which reduced her salary below the amount approved by the POEA
is void because it is against our existing laws, morals and public policy. The
said side agreement cannot supersede her standard employment contract
approved by the POEA.

Petitioner’s contention that respondent is guilty of laches is without

basis. Laches has been defined as the failure of or neglect for an
unreasonable and unexplained length of time to do that which by exercising
due diligence, could or should have been done earlier, or to assert a right
within reasonable time, warranting a presumption that the party entitled
thereto has either abandoned it or declined to assert it. Thus, the doctrine
of laches presumes that the party guilty of negligence had the opportunity to
do what should have been done, but failed to do so. Conversely, if the said
party did not have the occasion to assert the right, then, he can not be
adjudged guilty of laches. Laches is not concerned with the mere lapse of
time; rather, the party must have been afforded an opportunity to pursue his
claim in order that the delay may sufficiently constitute laches.

In the instant case, respondent filed his claim within the three-year
prescriptive period for the filing of money claims set forth in Article 291 of the
Labor Code from the time the cause of action accrued. Thus, we find that
the doctrine of laches finds no application in this case.

SPOUSES DEL CAMPO vs. COURT OF APPEALS

February 1, 2001
FACTS:
Salome, Consorcia, Alfredo, Maria, Rosalia, Jose, Quirico and Julita,
all surnamed Bornales, were the original co-owners of the lot in question.
On July 14, 1940, Salome sold part of her 4/16 share to Soledad
Daynolo. Thereafter, Soledad Daynolo immediately took possession of the
land described above and built a house thereon. A few years later, Soledad
and her husband, Simplicio Distajo, mortgaged the subject portion of the lot
as security for a debt to Jose Regalado, Sr. This transaction was evidenced
by a Deed of Mortgage.
On April 14, 1948, three of the eight co-owners of Lot 162, specifically,
Salome, Consorcia and Alfredo, sold 24,993 square meters of said lot to
Jose Regalado, Sr. On May 4, 1951, Simplicio Distajo, heir of Soledad
Daynolo who had since died, paid the mortgage debt and redeemed the
mortgaged portion of Lot 162 from Jose Regalado, Sr. The latter, in turn,
executed a Deed of Discharge of Mortgage in favor of Soledad’s heirs,
namely: Simplicio Distajo, Rafael Distajo and Teresita Distajo-Regalado. On
same date, the said heirs sold the redeemed portion of Lot 162 for P1,500.00
to herein petitioners, the spouses Manuel Del Campo and Salvacion
Quiachon.
ISSUE:
Whether or not the sale of the subject portion constitutes a sale of a
concrete or definite portion of land owned in common does not absolutely
deprive herein petitioners of any right or title thereto.
RULING:
There can be no doubt that the transaction entered into by Salome and
Soledad could be legally recognized in its entirety since the object of the sale
did not even exceed the ideal shares held by the former in the co-ownership.
As a matter of fact, the deed of sale executed between the parties expressly
stipulated that the portion of Lot 162 sold to Soledad would be taken from
Salome’s 4/16 undivided interest in said lot, which the latter could validly
transfer in whole or in part even without the consent of the other co-owners.
Salome’s right to sell part of her undivided interest in the co-owned property
is absolute in accordance with the well-settled doctrine that a co-owner has
full ownership of his pro-indiviso share and has the right to alienate, assign
or mortgage it, and substitute another person in its enjoyment.
 TERMINAL FACILITIES vs. PPA
378 SCRA 82

FACTS:
Before us are two (2) consolidated petitions for review, one filed by the
Terminal Facilities and Services Corporation (TEFASCO) and the other by
the Philippine Ports Authority (PPA). TEFASCO is a domestic corporation
organized and existing under the laws of the Philippines with principal place
of business at Barrio Ilang, Davao City. It is engaged in the business of
providing port and terminal facilities as well as arrastre, stevedoring and
other port-related services at its own private port at Barrio Ilang.
Sometime in 1975 TEFASCO submitted to PPA a proposal for the
construction of a specialized terminal complex with port facilities and a
provision for port services in Davao City. To ease the acute congestion in
the government ports at Sasa and Sta. Ana, Davao City, PPA welcomed the
proposal and organized an inter-agency committee to study the plan. The
committee recommended approval.
On April 21, 1976 the PPA Board of Directors passed Resolution No.
7 accepting and approving TEFASCO's project proposal.
Long after TEFASCO broke round with massive infrastructure work,
the PPA Board curiously passed on October 1, 1976 Resolution No. 50 under
which TEFASCO, without asking for one, was compelled to submit an
application for construction permit. Without the consent of TEFASCO, the
application imposed additional significant conditions.
The series of PPA impositions did not stop there. Two (2) years after
the completion of the port facilities and the commencement of TEFASCO's
port operations, or on June 10, 1978, PPA again issued to TEFASCO
another permit, under which more onerous conditions were foisted on
TEFASCO's port operations. In the purported permit appeared for the first
time the contentious provisions for ten percent (10%) government share out
of arrastre and stevedoring gross income and one hundred percent (100%)
wharfage and berthing charges.
On February 10, 1984 TEFASCO and PPA executed a Memorandum
of Agreement (MOA) providing among others for (a) acknowledgment of
TEFASCO's arrears in government share at Three Million Eight Hundred
Seven Thousand Five Hundred Sixty-Three Pesos and Seventy-Five
Centavos (P3,807,563.75) payable monthly, with default penalized by
automatic withdrawal of its commercial private port permit and permit to
operate cargo handling services; (b) reduction of government share from ten
percent (10%) to six percent (6%) on all cargo handling and related revenue
(or arrastre and stevedoring gross income); (c) opening of its pier facilities to
all commercial and third-party cargoes and vessels for a period coterminous
with its foreshore lease contract with the National Government; and, (d)
tenure of five (5) years extendible by five (5) more years for TEFASCO's
permit to operate cargo handling in its private port facilities. In return PPA
promised to issue the necessary permits for TEFASCO's port activities.
TEFASCO complied with the MOA and paid the accrued and current
government share.
On August 30, 1988 TEFASCO sued PPA and PPA Port Manager, and
Port Officer in Davao City for refund of government share it had paid and for
damages as a result of alleged illegal exaction from its clients of one hundred
percent (100%) berthing and wharfage fees. The complaint also sought to
nullify the February 10, 1984 MOA and all other PPA issuances modifying
the terms and conditions of the April 21, 1976 Resolution No. 7 above-
mentioned.
PPA appealed the decision of the trial court to the Court of Appeals.
The appellate court in its original decision recognized the validity of the
impositions and reversed in toto the decision of the trial court. TEFASCO
moved for reconsideration which the Court of Appeals found partly
meritorious. Thus the Court of Appeals in its Amended Decision partially
affirmed the RTC decision only in the sense that PPA was directed to pay
TEFASCO (1) the amounts of Fifteen Million Eight Hundred Ten Thousand
Thirty-Two Pesos and Seven Centavos (P15,810,032.07) representing fifty
percent (50%) wharfage fees and Three Million Nine Hundred Sixty-One
Thousand Nine Hundred Sixty-Four Pesos and Six Centavos
(P3,961,964.06) representing thirty percent (30%) berthing fees which
TEFASCO could have earned as private port usage fee from 1977 to 1991.
The Court of Appeals held that the one hundred percent (100%) berthing and
wharfage fees were unenforceable because they had not been approved by
the President under P.D. No. 857, and discriminatory since much lower rates
were charged in other private ports as shown by PPA issuances effective
1995 to 1997. Both PPA and TEFASCO were unsatisfied with this disposition
hence these petitions.
ISSUE:
Whether or not the collection by PPA of one hundred percent (100%)
wharfage fees and berthing charges; (c) the propriety of the award of fifty
percent (50%) wharfage fees and thirty percent (30%) berthing charges as
actual damages in favor of TEFASCO for the period from 1977 to 1991 is
valid.
RULING:
The imposition by PPA of ten percent (10%), later reduced to six
percent (6%), government share out of arrastre and stevedoring gross
income of TEFASCO is void. This exaction was never mentioned in the
contract, much less is it a binding prestation, between TEFASCO and PPA.
What was clearly stated in the terms and conditions appended to PPA
Resolution No. 7 was for TEFASCO to pay and/or secure from the proper
authorities "all fees and/or permits pertinent to the construction and operation
of the proposed project." The government share demanded and collected
from the gross income of TEFASCO from its arrastre and stevedoring
activities in TEFASCO's wholly owned port is certainly not a fee or in any
event a proper condition in a regulatory permit. Rather it is an onerous
"contractual stipulation" which finds no root or basis or reference even in the
contract aforementioned.

ROBLETT INDUSTRIAL CONSTRUCTION CORPORATION

vs. COURT OF APPEALS
266 SCRA 71

FACTS:
On 23 September 1986 respondent Contractors Equipment
Corporation (CEC) instituted an action for a sum of money against petitioner
Roblett Industrial Construction Corporation (RICC) before the Regional Trial
Court of Makati alleging that in 1985 it leased to the latter various
construction equipment which it used in its projects. As a result RICC
incurred unpaid accounts amounting to P342,909.38.
On 19 December 1985 RICC through its Assistant Vice President for
Finance Candelario S. Aller Jr. entered into an Agreement with CEC where
it confirmed petitioner's account. As an off-setting arrangement respondent
received from petitioner construction materials worth P115,000.00 thus
reducing petitioner's balance to P227,909.38.
A day before the execution of their Agreement, or on 18 December
1985, RICC paid CEC P10,000.00 in postdated checks which when
deposited were dishonored. As a consequence the latter debited the amount
to petitioner's account of P227,909.38 thus increasing its balance to
P237,909.38.
On 24 July 1986 Mariano R. Manaligod, Jr., General Manager of CEC,
sent a letter of demand to petitioner through its Vice President for Finance
regarding the latter's overdue account of P237,909.38 and sought settlement
thereof on or before 31 July 1986. In reply, petitioner requested for thirty (30)
days to have enough time to look for funds to substantially settle its account.
Traversing the allegations of respondent, Candelario S. Aller Jr.
declared that he signed the Agreement with the real intention of having proof
of payment. In fact Baltazar Banlot, Vice President for Finance of petitioner,
claimed that after deliberation and audit it appeared that petitioner overpaid
respondent by P12,000.00 on the basis of the latter's Equipment Daily Time
Reports for 2 May to 14 June 1985 which reflected a total obligation of only
P103,000.00. He claimed however that the Agreement was not approved by
the Board and that he did not authorize Aller Jr. to sign thereon.
On rebuttal, Manaligod Jr. declared that petitioner had received a
statement of account covering the period from 28 March to 12 July 1985 in
the amount of P376,350.18 which it never questioned. From this amount
P3,440.80, based on respondent's account with petitioner and P30,000.00,
representing payments made by the latter, were deducted thus leaving a
balance of P342,909.38 as mentioned in the Agreement. On 19 December
1990 the trial court rendered judgment ordering petitioner to pay respondent

ISSUE:
Whether or not the agreement between the parties is binding upon
them.

RULING:
Yes. It must be emphasized that the same agreement was used by
plaintiff as the basis for claiming defendant's obligation of P237,909.38 and
also used by defendant as the same basis for its alleged payment in full of
its obligation to plaintiff. But while plaintiff treats the entire agreement as
valid, defendant wants the court to treat that portion which treats of the
offsetting of P115,000.00 as valid, whereas it considers the other terms and
conditions as "onerous, illegal and want of prior consent and Board
approval." This Court cannot agree to defendant's contention. It must be
stressed that defendant's answer was not made under oath, and therefore,
the genuineness and due execution of the agreement which was the basis
for plaintiff's claim is deemed admitted (Section 8, Rule 8, Rules of Court).
Such admission, under the principle of estoppel, is rendered conclusive upon
defendant and cannot be denied or disproved as against plaintiff (Art. 1431,
Civil Code). Either the agreement is valid or void. It must be treated as a
whole and not to be divided into parts and consider only those provisions
which favor one party (in this case the defendant). Contracts must bind both
contracting parties, its validity or compliance cannot be left to the will of one
of them (Art. 1308, New Civil Code).
CONSENT
 SIME DARBY PILIPINAS, INC. V. GOODYEAR PHILIPPINES, INC.
GR No. 182148; June 8, 2011

FACTS:

Macgraphics leased a billboard to Sime Darby to bare its name and

logo at a monthly rental of P120, 000.00 for four years and was set to expire
on March 30, 1998. Sime Darby paid Macgraphics a total of P1.2 million
representing the ten-month deposit which the latter would apply to the last
ten months of the lease. Thereafter, Sime Darby was bought by Goodyear
for a total of P1.65 billion including the assignment of the receivables in
connection with its billboard advertising. Sime Darby then notified
Macgraphics of the assignment of the Magallanes billboard in favor of
Goodyear.

Macgraphics then sent a letter to Sime Darby, dated July 11, 1996, informing
the latter that it could not give its consent to the assignment of lease to
Goodyear and advised Goodyear that any advertising service it intended to
get from them would have to wait until after the expiration or valid pre-
termination of the lease then existing with Sime Darby. Goodyear demanded
partial rescission of deed and the refund of P1, 239,000.00value of Sime
Darby's leasehold rights over the Magallanes billboard.
Sime Darby refused and a complaint was filed by Goodyear.

ISSUE:

Whether or not the doctrine of laches can be applied in the present case

RULING:

The Court finds that the doctrine of laches cannot be applied in this
case.

Laches is the failure or neglect, for an unreasonable and unexplained 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 the presumption that the party entitled to assert
it either has abandoned or declined to assert it. There is no absolute rule as
to what constitutes laches or staleness of demand; each case is to be
determined according to its particular circumstances, with the question of
laches addressed to the sound discretion of the court. Because laches is an
equitable doctrine, its application is controlled by equitable considerations
and should not be used to defeat justice or to perpetuate fraud or injustice.

From the records, it appears that Macgraphics first learned of the assignment
when Sime Darby sent its letter-notice dated May 3, 1996. From the letters
sent by Macgraphics to Goodyear, it is apparent that Macgraphics had to
study and determine both the legal and practical implications of entertaining
Goodyear as a client. After review, Macgraphics found that consenting to the
assignment would entail the commitment of manpower and resources that it
did not foresee at the inception of the lease. It thereafter communicated its
non-conformity to the assignment. To the mind of the Court, there was never
a delay.

KINGS PROPERTIES CORP V. GALIDO

G.R. No. 170023 Nov 27, 2009

FACTS:

Kings Properties Corporation (petitioner) filed this Petition for Review

on Certiorari assailing the Court of Appeals’ Decision[2] dated 20 December
2004 in CA-G.R. CV No. 68828 as well as the Resolution[3] dated 10
October 2005 denying the Motion for Reconsideration. In the assailed
decision, the Court of Appeals reversed the Regional Trial Court’s Decision
dated 4 July 2000. This case involves an action for cancellation of certificates
of title, registration of deed of sale and issuance of certificates of title filed
by Canuto A. Galido before Branch 71 of the Regional Trial Court of Antipolo
City (trial court). On 18 April 1966, the heirs of Domingo Eniceo, namely
Rufina Eniceo and Maria Eniceo, were awarded with Homestead Patent No.
112947 consisting of four parcels of land located in San Isidro, Antipolo, Rizal
and particularly described as follows; Lot No. 1 containing an area of 96,297
square meters; Lot No. 3 containing an area of 25,170 square meters; Lot
No. 4 containing an area of 26,812 square meters; and Lot No. 5 containing
an area of 603 square meters. The Antipolo property with a total area of
14.8882 hectares was registered under Original Certificate of Title (OCT) No.
535. Subsequently a deed of sale covering the Antipolo property was
executed between Rufina Eniceo and Maria Eniceo as vendors and
respondent as vendee. They sold the Antipolo property to respondent for
P250,000. A certain Carmen Aldana delivered the owner’s duplicate copy of
OCT No. 535 to respondent.Petitioner alleges that when Maria Eniceo died
in June 1975, Rufina Eniceo and the heirs of Maria Eniceo, who continued
to occupy the Antipolo property as owners, thought that the owner’s duplicate
copy of OCT No. 535 was lost. On 5 April 1988, the Eniceo heirs registered
with the Registry of Deeds of Marikina City a Notice of Loss dated 2 April
1988 of the owner’s copy of OCT No. 535. The Eniceo heirs also filed a
petition for the issuance of a new owner’s duplicate copy of OCT No. 535
with Branch 72 of the Regional Trial Court of Antipolo, Rizal. The RTC
rendered a decision finding that the certified true copy of OCT No. 535
contained no annotation in favor of any person, corporation or entity. The
RTC ordered the Registry of Deeds to issue a second owner’s copy of OCT
No. 535 in favor of the Eniceo heirs and declared the original owner’s copy
of OCT NO. 535 cancelled and considered of no further value. Thus the
Registry of Deeds issued a second owner’s copy of OCT No. 535 in favor of
the Eniceo heirs. Petitioner states that as early as 1991, respondent knew of
the RTC decision in LRC Case No. 584-A because respondent filed a
criminal case against Rufina Eniceo and Leonila Bolinas for giving false
testimony upon a material fact during the trial of LRC Case No. 584-A.
Petitioner alleges that sometime in February 1995, Bolinas came to the office
of Alberto Tronio Jr. , petitioner’s general manager, and offered to sell the
Antipolo property. Tronio ascertained that OCT No. 535 was clean and had
no lien and encumbrances. After the necessary verification, petitioner
decided to buy the Antipolo property. On 14 March 1995, respondent caused
the annotation of his adverse claim in OCT No. 535. On 20 March 1995, the
Eniceo heirs executed a deed of absolute sale in favor of petitioner covering
lots 3 and 4 of the Antipolo property for P500,000. On the same date,
Transfer Certificate of Title (TCT) Nos. 277747 and 277120 were issued.
TCT No. 277747 covering lots 1 and 5 of the Antipolo property was registered
in the names of Rufina Eniceo, Ambrosio Eniceo, Rodolfo Calove, Fernando
Calove and Leonila Calove Bolinas. TCT No. 277120 covering lots 3 and 4
of the Antipolo property was registered in the name of petitioner. On 5 April
1995, the Eniceo heirs executed another deed of sale in favor of petitioner
covering lots 1 and 5 of the Antipolo property for P1,000,000. TCT No.
278588 was issued in the name of petitioner and TCT No. 277120 was
cancelled. On 17 August 1995, the Secretary of the Department of
Environment and Natural Resources (DENR Secretary) approved the deed
of sale between the Eniceo heirs and respondent. On 16 January 1996,
respondent filed a civil complaint with the trial court against the Eniceo heirs
and petitioner. Respondent prayed for the cancellation of the certificates of
title issued in favor of petitioner, and the registration of the deed of sale and
issuance of a new transfer certificate of title in favor of respondent. The
trial court rendered its decision dismissing the case for lack of legal and
factual basis. Respondent appealed to the Court of Appeals. On 20
December 2004, the CA rendered a decision reversing the trial court’s
decision. Aggrieved by the CA’s decision and resolution, petitioner elevated
the case before the High Court.
ISSUES:

Whether the adverse claim of respondent over the Antipolo property

should be barred by laches
Whether the deed of sale delivered to respondent should be presumed
an equitable mortgage pursuant to Article 1602(2) and 1604 of the Civil
Code.

HELD:
The contract between the Eniceo heirs and respondent executed was
a perfected contract of sale. A contract is perfected once there is consent of
the contracting parties on the object certain and on the cause of the
obligation. In the present case, the object of the sale is the Antipolo property
and the price certain is P250,000. The contract of sale has also been
consummated because the vendors and vendee have performed their
respective obligations under the contract. In a contract of sale, the seller
obligates himself to transfer the ownership of the determinate thing sold, and
to deliver the same to the buyer, who obligates himself to pay a price certain
to the seller. The execution of the notarized deed of sale and the delivery of
the owner’s duplicate copy of OCT No. 535 to respondent is tantamount to a
constructive delivery of the object of the sale. The Eniceo heirs also claimed
in their answer that the deed of sale is fake and spurious. However, as
correctly held by the CA, forgery can never be presumed. The party alleging
forgery is mandated to prove it with clear and convincing evidence. Whoever
alleges forgery has the burden of proving it. In this case, petitioner and the
Eniceo heirs failed to discharge this burden.
Petitioner contends that respondent is guilty of laches because he slept
on his rights by failing to register the sale of the Antipolo property at the
earliest possible time. Petitioner claims that despite respondent’s knowledge
of the subsequent sale in 1991, respondent still failed to have the deed of
sale registered with the Registry of Deeds. The essence of laches is the
failure or neglect, for an unreasonable and unexplained length of time, to do
that which, through due diligence, could have been done earlier, thus giving
rise to a presumption that the party entitled to assert it had either abandoned
or declined to assert it. Respondent discovered in 1991 that a new owner’s
copy of OCT No. 535 was issued to the Eniceo heirs. Respondent filed a
criminal case against the Eniceo heirs for false testimony. When respondent
learned that the Eniceo heirs were planning to sell the Antipolo property,
respondent caused the annotation of an adverse claim. On 16 January 1996,
when respondent learned that OCT No. 535 was cancelled and new TCTs
were issued, respondent filed a civil complaint with the trial court against the
Eniceo heirs and petitioner. Respondent’s actions negate petitioner’s
argument that respondent is guilty of laches. True, unrecorded sales of land
brought under Presidential Decree No. 1529 or the Property Registration
Decree (PD 1529) are effective between and binding only upon the
immediate parties. The registration required in Section 51 of PD 1529 is
intended to protect innocent third persons, that is, persons who, without
knowledge of the sale and in good faith, acquire rights to the property.
Petitioner, however, is not an innocent purchaser for value. Hence the
petition was denied.

MANIPOR vs. RICAFORT

407 SCRA 298

FACTS:

Respondent spouses Pablo and Antonia Ricafort instituted an action

for annulment of Transfer of Certificate of Title in the name of spouses
Renato and Teresita Villareal covering a 299 sq.m. lot. The Ricaforts alleged
that they are co-owners of said property together with Abelardo, the father
and predecessor of Renato as evidenced by an agreement whereby
Abelardo recognized their ownership of ½ portion of the lot. Respondents
also claim that, in violation of the agreement, Abelardo obtained during his
lifetime Original Certificate of Title over the lot without their knowledge and
consent. When Abelardo died in 1993, Renato and Teresita transferred the
title over the land in their name and were issued a TCT.
In the course of the proceedings, parties entered into a compromise
settlement wherein the Villareals admitted the genuineness and due
execution of the agreement between respondents and Abelardo. Hence,
they agreed to physically divide the lot into half. They also agreed to cause
a relocation survey and the expenses will be borne equally by them.
The trial court approved the compromise agreement but not long
thereafter, respondents filed a motion to cite the Villareals in contempt of
court for refusing to comply with the terms of the agreement. Eventually,
herein petitioners who are all siblings of Renato filed a motion for intervention
and substitution of parties alleging that spouses Renato and Teresita have
waived their interest in the disputed lot in their favor. Petitioners availed of
various remedies only to pursue the endeavor for the annulment of the
compromise judgment. Most of them were denied until they resorted to this
review before the Supreme Court.
ISSUE:
Whether or not the petitioners are estopped from seeking the
annulment of the compromise judgment.
RULING:
Yes, note that in a Sinumpaang Salaysay, petitioners admitted that
they acquiesced to have the subject lot donated and registered in Renato’s
name. In view of such admission, petitioners are estopped from denying
Renato’s absolute title to the lot. Under the principle of estoppel, an
admission or representation is rendered conclusive upon the person making
it and cannot be denied against the person relying thereon. Verily, since
petitioners admitted that they donated the lot to Renato, they cannot now be
allowed to defeat respondent’s claim by conveniently asserting that they are
co-owners of the lot. Otherwise, respondents, who rightfully relied on the
Certificate of Title, would be prejudiced by petitioner’s misleading conduct.
 SPS. EDRALIN V. PHIL. VETERANS BANK
G.R. No. 168523, March 09, 2011

FACTS:

Respondent Philippine Veterans Bank is a commercial banking

institution created under Republic Act (RA) No. 3518, as amended by RA
No. 7169. On February 5, 1976, Veterans Bank granted petitioner spouses
Fernando and Angelina Edralin a loan in the amount of Two Hundred
Seventy Thousand Pesos (P270,000.00). As security thereof, petitioners
executed a Real Estate Mortgage in favor of Veterans Bank over a real
property situated in the Municipality of Parañaque and registered in the name
of petitioner Fernando Edralin. The mortgaged property is more particularly
described in Transfer Certificate of Title (TCT) No. 204889. The REM was
registered with the Registry of Deeds of the Province of Rizal. The REM and
its subsequent amendments were all duly annotated at the back of TCT No.
204889. The Edralins failed to pay their obligation to Veterans Bank. Thus,
on June 28, 1983, Veterans Bank filed a Petition for Extrajudicial Foreclosure
of the REM with the Office of the Clerk of Court and Ex-Officio Sheriff of
Rizal. In due course it was foreclosed and a sale was held in which the Ex-
Officio Sheriff of Rizal sold the mortgaged property at public auction.
Veterans Bank emerged as the highest bidder at the said foreclosure sale
and was issued the corresponding Certificate of Sale. The said Certificate
of Sale was registered with the Registry of Deeds of the Province of Rizal
and annotated at the back of TCT No. 204889 under Entry No. 83-62953/T-
No. 43153-A. Upon the Edralins’ failure to redeem the property during the
one-year period provided under Act No. 3135, Veterans Bank acquired
absolute ownership of the subject property. Consequently, Veterans Bank
caused the consolidation of ownership of the subject property in its name on
January 19, 1994. Subsequently the Register of Deeds of Parañaque, Metro
Manila cancelled TCT No. 204889 under the name of Fernando Edralin and
replaced it with a new transfer certificate of title, TCT No. 78332, in the name
of Veterans Bank. Despite the foregoing, the Edralins failed to vacate and
surrender possession of the subject property to Veterans Bank. Thus, on
May 24, 1996, Veterans Bank filed an Ex-Parte Petition for the Issuance of
a Writ of Possession, docketed as Land Registration Case No. 06-060 before
Branch 274 of the Regional Trial Court (RTC) of Parañaque City. The same,
however, was dismissed for Veterans Bank’s failure to prosecute. Veterans
Bank again filed an Ex-Parte Petition for Issuance of Writ of Possession, this
time docketed as Land Registration Case No. 03-0121, before the RTC of
Parañaque City. Veterans Bank divulged in its Certification against Forum-
Shopping that the earlier case, LRC No. 96-060, involving the same subject
matter and parties, was dismissed. The Edralins moved to dismiss the
petition on the ground that the dismissal of LRC No. 96-060 constituted res
judicata. The trial court denied the motion to dismiss explaining that the
ground of failure to present evidence is not a determination of the merits of
the case hence does not constitute res judicata on the petition for issuance
of a writ of possession. The appellate court ruled in favor of Veterans Bank
hence the petition.

ISSUE:

Whether the consolidation of ownership of the extrajudicially

foreclosed property through a Deed of Sale is in accordance with law.

HELD:

Petitioners assail the CA's ruling that the issuance of a writ of

possession does not prescribe.[48] They maintain that Articles 1139, 1149,
and 1150 of the Civil Code regarding prescriptive periods cover all kinds of
action, which necessarily include the issuance of a writ of possession.
Petitioners posit that, for purposes of the latter, it is the five-year prescriptive
period provided in Article 1149 of the Civil Code which applies because Act
No. 3135 itself did not provide for its prescriptive period. Thus, Veterans
Bank had only five years from September 12, 1983, the date when the
Certificate of Sale was issued in its favor, to move for the issuance of a writ
of possession. Respondent argues that jurisprudence has consistently held
that a registered owner of the land, such as the buyer in an auction sale, is
entitled to a writ of possession at any time after the consolidation of
ownership.

The Court could not accept petitioners' contention. We have held

before that the purchaser's right "to request for the issuance of the writ of
possession of the land never prescribes. "The right to possess a property
merely follows the right of ownership," and it would be illogical to hold that a
person having ownership of a parcel of land is barred from seeking
possession thereof. Moreover, the provisions cited by petitioners refer to
prescription of actions. An action is "defined as an ordinary suit in a court of
justice, by which one party prosecutes another for the enforcement or
protection of a right, or the prevention or redress of a wrong." On the other
hand "a petition for the issuance of the writ, under Section 7 of Act No. 3135,
as amended, is not an ordinary action filed in court, by which one party `sues
another for the enforcement or protection of a right, or prevention or redress
of a wrong.' It is in the nature of an ex parte motion [in] which the court hears
only one side. It is taken or granted at the instance and for the benefit of one
party, and without notice to or consent by any party adversely affected.
Accordingly, upon the filing of a proper motion by the purchaser in a
foreclosure sale, and the approval of the corresponding bond, the writ of
possession issues as a matter of course and the trial court has no discretion
on this matter."Hence the Petition was denied for lack of merit. The CA
Decision dated June 10, 2005 in CA-G.R. SP No. 89248 was affirmed.
JOSELITO VILLEGAS and DOMINGA VILLEGAS vs. COURT OF
APPEALS
G.R. No. 129977. February 1, 2001

FACTS:

Before September 6, 1973, Lot B-3-A, with an area of 4 hectares was

registered under TCT No. 68641 in the names of Ciriaco D. Andres and
Henson Caigas. This land was also declared for real estate taxation under
Tax Declaration No. C2-4442. On September 6, 1973, Andres and Caigas,
with the consent of their respective spouses, Anita Barrientos and
Consolacion Tobias, sold the land to Fortune Tobacco Corporation for
P60,000.00. Simultaneously, they executed a joint affidavit declaring that
they had no tenants on said lot. On the same date, the sale was registered
in the Office of the Register of Deeds of Isabela. TCT No. 68641 was
cancelled and TCT No. T-68737 was issued in Fortune’s name. On August
6, 1976, Andres and Caigas executed a Deed of Reconveyance of the same
lot in favor of Filomena Domingo, the mother of Joselito Villegas, defendant
in the case before the trial court. Although no title was mentioned in this
deed, Domingo succeeded in registering this document in the Office of the
Register of Deeds on August 6, 1976, causing the latter to issue TCT No. T-
91864 in her name. It appears in this title that the same was a transfer from
TCT No. T-68641. On April 13, 1981, Domingo declared the lot for real estate
taxation under Tax Declaration No. 10-5633. On December 4, 1976, the
Office of the Register of Deeds of Isabela was burned together with all titles
in the office. On December 17, 1976, the original of TCT No. T-91864 was
administratively reconstituted by the Register of Deeds. On June 2, 1979, a
Deed of Absolute Sale of a portion of 20,000 square meters of Lot B-3-A was
executed by Filomena Domingo in favor of Villegas for a consideration of
P1,000.00. This document was registered on June 3, 1981 and as a result
TCT No. T-131807 was issued by the Register of Deeds to Villegas. On the
same date, the technical description of Lot B-3-A-2 was registered and TCT
No. T-131808 was issued in the name of Domingo. On January 22, 1991,
this document was registered and TCT No. 154962 was issued to the
defendant, Joselito Villegas.
On April 10, 1991, the trial court upon a petition filed by Fortune
ordered the reconstitution of the original of TCT No. T-68737. After trial on
the merits, the trial court rendered its assailed decision in favor of Fortune
Tobacco, declaring it to be entitled to the property. Petitioners thus appealed
this decision to the Court of Appeals, which affirmed the trial court’s decision.

ISSUES:
Whether or not the Court of Appeals was correct in affirming the trial
court’s decision.

RULING:
Even if Fortune had validly acquired the subject property, it would still
be barred from asserting title because of laches. The failure or neglect, for
an unreasonable length of time to do that which by exercising due diligence
could or should have been done earlier constitutes laches. It is negligence
or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it has either abandoned it or
declined to assert it. While it is by express provision of law that no title to
registered land in derogation of that of the registered owner shall be acquired
by prescription or adverse possession, it is likewise an enshrined rule that
even a registered owner may be barred from recovering possession of
property by virtue of laches.
Hence, petition was GRANTED and the Decision of the Court of Appeals
was REVERSED
OBJECT OF CONTRACT
 INTERNATIONAL FREEPORT V. DANZAS
G.R. No. 181833, January 26, 2011

FACTS:

Petitioner International Freeport Traders, Inc. (IFTI) ordered a

shipment of Toblerone chocolates and assorted confectioneries from Jacobs
Suchard Tobler Ltd. of Switzerland through its Philippine agent, Colombo
Merchants Phils., Inc., under the delivery term "F.O.B. Ex-Works." To ship
the goods, Jacobs dealt with Danmar Lines of Switzerland which issued to
Jacobs negotiable house bills of lading [1] signed by its agent, respondent
Danzas Intercontinental, Inc.. The bills of lading stated that the terms were
"F.O.B." and "freight payable at destination," with Jacobs as the shipper,
China Banking Corporation as the consignee, and IFTI as the party to be
notified of the shipment. The shipment was to be delivered at the Clark
Special Economic Zone with Manila as the port of discharge. The goods
were also covered by Letters of Credit MK-97/0467 and MK-97/0468 under
a "freight collect" arrangement.

Since Danmar did not have its own vessel, it contracted Orient
Overseas Container Line (OOCL) to ship the goods from Switzerland. OOCL
issued a non-negotiable master bill of lading, stating that the freight was
prepaid with Danmar as the shipper and Danzas as the consignee and party
to be notified. The shipment was to be delivered at Angeles City in
Pampanga. Danmar paid OOCL an arbitrary fee of US$425.00 to process
the release of the goods from the port and ship the same to Clark in Angeles
City. The fee was to cover brokerage, trucking, wharfage, arrastre, and
processing expenses.The goods were loaded on board the OOCL vessel on
April 20, 1997 and arrived at the port of Manila on May 14, 1997. Upon
learning from Danmar that the goods had been shipped, Danzas immediately
informed IFTI of its arrival. IFTI prepared the import permit needed for the
clearing and release of the goods from the Bureau of Customs and advised
Danzas on May 20, 1997 to pick up the document. Danzas got the import
permit on May 26, 1997. At the same time, it asked IFTI to surrender the
original bills of lading to secure the release of the goods, and 2) submit a
bank guarantee inasmuch as the shipment was consigned to China Banking
Corporation to assure Danzas that it will be compensated for freight and
other charges. But IFTI did not provide Danzas a bank guarantee, claiming
that letters of credit already covered the shipment. IFTI insisted that Danzas
should already endorse the import permit and bills of lading to OOCL since
the latter had been paid an arbitrary fee. But Danzas did not do this. Because
IFTI did not provide Danzas with the original bills of lading and the bank
guarantee, the latter withheld the processing of the release of the goods.
Danzas reiterated to IFTI that it could secure the release of the goods only if
IFTI submitted a bank guarantee. Ultimately, IFTI yielded to the request and
applied for a bank guarantee which was approved on May 23, 1997. It
claimed to have advised Danzas on even date of its availability for pick up
but Danzas secured it only on June 6, 1997.

On January 2, 2002, [3] the MeTC rendered a decision in favor of

Danzas and ordered IFTI to pay (1) P181,809.45 plus legal interest to be
computed from March 26, 1998 until fully paid; (2) P25,000.00 as attorney's
fees; and (3) the costs of suit. On appeal, however, the Regional Trial Court
(RTC) [4] of Parañaque City, Branch 274, dismissed the complaint. Danzas
elevated the case to the Court of Appeals (CA) which reversed the RTC
decision. The CA ruled that IFTI's fax letters dated June 10, 1997 showed
the parties engaged in negotiation stage. When IFTI heeded Danzas'
request for a bank guarantee, its action brought about a perfected contract
of lease of service. The bank guarantee, procured by IFTI, contained all the
requisites of a perfected contract. The cause of the contract was the release
of the goods from the port and its delivery at Clark; the consideration was
the compensation for the release and delivery of the goods to IFTI.

ISSUES:

Whether or not a contract of lease of service exists between IFTI and

Danzas; and
Whether or not IFTI is liable to Danzas for the costs of the delay in the
release of the goods from the port
HELD:

The facts show the existence of several contracts: one between

IFTI and Jacobs, another between Jacobs and Danmar, and still another
between Danmar and OOCL. IFTI bought chocolates and confectioneries
from Jacobs; Jacobs got Danmar to deliver the goods to its destination;
Danmar got OOCL to carry the goods for it by ship to Manila. For this
purpose, Danmar paid OOCL an arbitrary fee to process the release of the
goods from the port of Manila and deliver the same to Clark. In all these
transactions, Danzas acted as an agent of Danmar who signed the house
bills of lading in favor of Jacobs. What is clear to the Court is that, by
acceding to all the documentary requirements that Danzas imposed on it,
IFTI voluntarily accepted its services. The bank guarantee IFTI gave Danzas
assured the latter that it would eventually be paid all freight and other
charges arising from the release and delivery of the goods to it. Every
contract has the elements of consent of the contracting parties; object certain
which is the subject matter of the contract; and cause of the obligation which
is established. A contract is perfected by mere consent, which is manifested
by the meeting of the offer and the acceptance upon the thing and the cause
which are to constitute the contract.
There is no dispute that under
arbitrary shipments, imported goods are allowed to stay, free of charge, in
the port for three working days, and in the storage for five to six calendar
days. Beyond this period, storage fees, electric charges, and the
demurrage are due. Since the goods arrived at the Port of Manila on May
14, 1997, they could remain there until May 20, 1997 free of charge. The
fact that IFTI had the import permit ready by May 20, 1997 was immaterial
since it had not yet given the bank guarantee required of it. The Court is
not convinced that IFTI had the bank guarantee ready as early as May 23,
1997 for, if that were the case, surely it did not make sense for it not to
hand over such document to Danzas when the latter claimed the import
permit on May 26, 1997. Since the delay in the processing of the release of
the goods was due to IFTI's fault, the CA rightly adjudged it liable for
electric charges, demurrage, and storage fees of P122,191.75 from May
20, 1997 to June 13, 1999. Hence the Court denied the petition and
affirmed the decision dated October 25, 2007 of the Court of Appeals in
CA-G.R. SP 79597

MONTECILLO VS. REYNES

385 SCRA 244

FACTS:

Respondents Ignacia Reynes and spouses Abucay filed on June 20,

1984 a complaint for Declaration of Nullity and Quieting of Title against
petitioner Rico Montecillo. Reynes asserted that she is the owner of a lot
situated in Mabolo, Cebu City. In 1981 Reynes sold 185 square meters of
the Mabolo Lot to the Abucay Spouses who built a residential house on the
lot they bought.

Reynes alleged further that she signed a Deed of Sale of the Mabolo
Lot in favor of Montecillo. Reynes, being illiterate signed by affixing her
thumb-mark on the document. Montecillo promised to pay the agreed
P47,000.00 purchase price within one month from the signing of the Deed of
Sale. And that Montecillo failed to pay the purchase price after the lapse of
the one-month period, prompting Reynes to demand from Montecillo the
return of the Deed of Sale. Since Montecillo refused to return the Deed of
Sale, Reynes executed a document unilaterally revoking the sale and gave
a copy of the document to Montecillo.

Subsequently, on May 23, 1984 Reynes signed a Deed of Sale

transferring to the Abucay Spouses the entire Mabolo Lot, at the same time
confirming the previous sale in 1981 of a 185 square meter portion of the lot.

Reynes and the Abucay Spouses alleged that they received

information that the Register of Deeds of Cebu City issued a Certificate of
Title in the name of Montecillo for the Mabolo Lot. They argued that “for lack
for consideration there (was no meeting of the minds) between Reynes and
Montecillo. Thus, the trial court should declare null and void ab initio
Monticello’s Deed of sale, and order the cancellation of certificates of title
No. 90805 in the name of Montecillo.
 In his Answer, Montecillo a bank executive claimed he was a buyer in
good faith and had actually paid the P47,000.00 consideration stated on his
Deed of Sale. Montecillo however admitted he still owned Reynes a balance
of P10,000.00. He also alleged that he paid P50,000.00 for the release of
the chattel mortgage which he argued constituted a lien on the Mabolo Lot.
He further alleged that he paid for the real property tax as well as the capital
gains tax on the sale of the Mabolo Lot.

In their reply, Reynes and the Abucay Spouses contended that

Montecillo did not have authority to discharge the chattel mortgage
especially after Reynes revoked Montecillo’s Deed of Sale and gave the
mortgagee a copy of the document of revocation. Reynes and the Abucay
Spouses claimed that Montecillo secured the release of the chattel mortgage
through machination. They further asserted that Montecillo took advantage
of the real property taxes paid by the Abucay Spouses and surreptitiously
caused the transfer of the title to the Mabolo Lot in his name.
During pre-trial Montecillo claimed that the consideration for the sale
of the Mabolo Lot was the amount he paid to Cebu Iced and Cold Storage
Corporation for the mortgage debt of Bienvenido Jayag. Montecillo argued
that the release of the mortgage was necessary since the mortgage
constituted a lien on the Mabolo Lot.

Reynes, however stated that she had nothing to do with Jayag’s

mortgage debt except that the house mortgaged by Jayag stood on a portion
of the Mabolo Lot. Reynes further stated that the payment by Montecillo to
release the mortgage on Jayag’s house is a matter between Montecillo and
Jayag. The mortgage on the house being a chattel mortgage could not be
interpreted in any way as an encumbrance on the Mabolo Lot. Reynes
further claimed that the mortgage debt had long prescribed since the
P47,000.00 mortgage debt was due for payment on January 30,1967.

ISSUE:

Whether or not there was a valid consent in the case at bar to have a
valid contract.
RULING:

One of the three essential requisites of a valid contract is consent of

the parties on the object and cause of the contract. In a contract of sale, the
parities must agree not only on the price, but also on the manner of payment
of the price. An agreement on the price but a disagreement on the manner
of its payment will not result in consent, thus preventing the existence of a
valid contract for a lack of consent. This lack of consent is separate and
distinct for lack of consideration where the contract states that the price has
been paid when in fact it has never been paid.

Reynes expected Montecillo to pay him directly the P47, 000.00

purchase price within one month after the signing of the Deed of Sale. On
the other hand, Montecillo thought that his agreement with Reynes required
him to pay the P47,000.00-purchase price to Cebu Ice Storage to settle
Jayag’s mortgage debt. Montecillo also acknowledged a balance of P10,
000.00 in favor of Reynes although this amount is not stated in Montecillo’s
Deed of Sale. Thus, there was no consent or meeting of the minds, between
Reynes and Montecillo on the manner of payment. This prevented the
existence of a valid contract because of lack of consent.

In summary, Montecillo’s Deed of Sale is null and void ab initio not only
for lack of consideration, but also for lack of consent. The cancellation of
TCT No. 90805 in the name of Montecillo is in order as there was no valid
contract transferring ownership of the Mabolo Lot from Reynes to Montecillo.

JASMIN SOLER VS. COURT OF APPEALS

G.R. No. 123892 May 2, 2001

FACTS:

Petitioner is a professional interior designer. In November 1986, her

friend Rosario Pardo asked her to talk to Nida Lopez, who was manager of
the COMBANK Ermita Branch for they were planning to renovate the branch
offices. Even prior to November 1986, petitioner and Nida Lopez knew each
other because of Rosario Pardo, the latter’s sister. During their meeting,
petitioner was hesitant to accept the job because of her many out of town
commitments, and also considering that Ms. Lopez was asking that the
designs be submitted by December 1986, which was such a short notice.
Ms. Lopez insisted, however, because she really wanted petitioner to do the
design for renovation. Petitioner acceded to the request. Ms. Lopez assured
her that she would be compensated for her services. Petitioner even told Ms.
Lopez that her professional fee was P10,000.00, to which Ms. Lopez
acceded.

During the November 1986 meeting between petitioner and Ms. Lopez,
there were discussions as to what was to be renovated. Ms. Lopez again
assured petitioner that the bank would pay her fees. After a few days,
petitioner requested for the blueprint of the building so that the proper design,
plans and specifications could be given to Ms. Lopez in time for the board
meeting in December 1986. Petitioner then asked her draftsman Jackie
Barcelon to go to the jobsite to make the proper measurements using the
blue print. Petitioner also did her research on the designs and individual
drawings of what the bank wanted. Petitioner hired Engineer Ortanez to
make the electrical layout, architects Frison Cruz and De Mesa to do the
drafting. For the services rendered by these individuals, petitioner paid their
professional fees. Petitioner also contacted the suppliers of the wallpaper
and the sash makers for their quotation. So come December 1986, the lay
out and the design were submitted to Ms. Lopez. She even told petitioner
that she liked the designs.

Subsequently, petitioner repeatedly demanded payment for her

services but Ms. Lopez just ignored the demands. In February 1987, by
chance petitioner and Ms. Lopez saw each other in a concert at the Cultural
Center of the Philippines. Petitioner inquired about the payment for her
services, Ms. Lopez curtly replied that she was not entitled to it because her
designs did not conform to the bank’s policy of having a standard design,
and that there was no agreement between her and the bank.

Petitioner, through her lawyers, who wrote Ms. Lopez, demanding

payment for her professional fees in the amount of P10,000.00 which Ms.
Lopez ignored. The lawyers wrote Ms. Lopez once again demanding the
return of the blueprint copies petitioner submitted which Ms. Lopez refused
to return. The petitioner then filed at the trial court a complaint against
COMBANK and Ms. Lopez for collection of professional fees and damages.

In its answer, COMBANK stated that there was no contract between

COMBANK and petitioner; that Ms. Lopez merely invited petitioner to
participate in a bid for the renovation of the COMBANK Ermita Branch; that
any proposal was still subject to the approval of the COMBANK’s head office.

The trial court rendered judgment in favor of plaintiff. On appeal, the

Court of Appeals reversed the decision. Hence, this petition.

ISSUE:
Whether or not the Court of Appeals erred in ruling that there was no
contract between petitioner and respondents, in the absence of the element
of consent.

RULING:

A contract is a meeting of the minds between two persons whereby

one binds himself to give something or to render some service to bind himself
to give something to render some service to another for consideration. There
is no contract unless the following requisites concur: 1. Consent of the
contracting parties; 2. Object certain which is the subject matter of the
contract; and 3. Cause of the obligation which is established.

In the case at bar, there was a perfected oral contract. When Ms. Lopez
and petitioner met in November 1986, and discussed the details of the work,
the first stage of the contract commenced. When they agreed to the payment
of the P10,000.00 as professional fees of petitioner and that she should give
the designs before the December 1986 board meeting of the bank, the
second stage of the contract proceeded, and when finally petitioner gave the
designs to Ms. Lopez, the contract was consummated. Petitioner believed
that once she submitted the designs she would be paid her professional fees.
Ms. Lopez assured petitioner that she would be paid.
 It is familiar doctrine that if a corporation knowingly permits one of its
officers, or any other agent, to act within the scope of an apparent authority,
it holds him out to the public as possessing the power to do those acts; and
thus, the corporation will, as against anyone who has in good faith dealt with
it through such agent, be estopped from denying the agent’s authority.
Also, petitioner may be paid on the basis of quantum meruit. "It is
essential for the proper operation of the principle that there is an acceptance
of the benefits by one sought to be charged for the services rendered under
circumstances as reasonably to notify him that the lawyer performing the
task was expecting to be paid compensation therefor. The doctrine of
quantum meruit is a device to prevent undue enrichment based on the
equitable postulate that it is unjust for a person to retain benefit without
paying for it."
The designs petitioner submitted to Ms. Lopez were not returned. Ms.
Lopez, an officer of the bank as branch manager used such designs for
presentation to the board of the bank. Thus, the designs were in fact useful
to Ms. Lopez for she did not appear to the board without any designs at the
time of the deadline set by the board.
Decision reversed and set aside. Decision of the trial court affirmed.

ABS-CBN BROADCASTING CORPORATION VS. COURT OF APPEALS

301 SCRA 573
G.R. No. 128690 January 21, 1999

FACTS:

In 1990, ABS-CBN and VIVA executed a Film Exhibition Agreement

whereby Viva gave ABS-CBN an exclusive right to exhibit some Viva films.
Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-
president Charo Santos-Concio, a list of three film packages (36 title) from
which ABS-CBN may exercise its right of first refusal under the afore-said
agreement. ABS-CBN, however through Mrs. Concio, "can tick off only ten
titles" (from the list) "we can purchase" and therefore did not accept said list.
The titles ticked off by Mrs. Concio are not the subject of the case at bar
except the film "Maging Sino Ka Man."
 On February 27, 1992, defendant Del Rosario approached ABS-CBN’s
Ms. Concio, with a list consisting of 52 original movie titles (i.e., not yet aired
on television) including the 14 titles subject of the present case, as well as
104 re-runs (previously aired on television) from which ABS-CBN may
choose another 52 titles, as a total of 156 titles, proposing to sell to ABS-
CBN airing rights over this package of 52 originals and 52 re-runs for
P60,000,000.00 of which P30,000,000.00 will be in cash and
P30,000,000.00 worth of television spots.

On April 2, 1992, defendant Del Rosario and ABS-CBN’s general

manager, Eugenio Lopez III discussed the package proposal of VIVA. Mr.
Lopez testified that he and Mr. Del Rosario allegedly agreed that ABS-CBN
was granted exclusive film rights to fourteen (14) films for a total
consideration of P36 million; that he allegedly put this agreement as to the
price and number of films in a "napkin" and signed it and gave it to Mr. Del
Rosario. On the other hand, Del Rosario denied having made any agreement
with Lopez regarding the 14 Viva films; denied the existence of a napkin in
which Lopez wrote something; and insisted that what he and Lopez
discussed at the lunch meeting was Viva’s film package offer of 104 films (52
originals and 52 re-runs) for a total price of P60 million.

Del Rosario and Mr. Graciano Gozon of RBS Senior vice-president for
Finance discussed the terms and conditions of Viva’s offer to sell the 104
films, after the rejection of the same package by ABS-CBN. On the following
day, Del Rosario received a draft contract from Ms. Concio which contains a
counter-proposal of ABS-CBN on the offer made by VIVA including the right
of first refusal to 1992 Viva Films. However, the proposal was rejected by the
Board of Directors of VIVA and such was relayed to Ms. Concio.
On April 29, 1992, after the rejection of ABS-CBN and following several
negotiations and meetings defendant Del Rosario and Viva’s President
Teresita Cruz, in consideration of P60 million, signed a letter of agreement
dated April 24, 1992, granting RBS the exclusive right to air 104 Viva-
produced and/or acquired films including the fourteen films subject of the
present case.

On 27 May 1992, ABS-CBN filed before the RTC a complaint for

specific performance with a prayer for a writ of preliminary injunction and/or
temporary restraining order against private respondents Republic
Broadcasting System (now GMA Network Inc.) On 28 May 1992, the RTC
issued a temporary restraining order.

The RTC then rendered decision in favor of RBS and against ABS-
CBN. On appeal, the same decision was affirmed. Hence, this decision.

ISSUE:
Whether or not there exists a perfected contract between ABS-CBN
and VIVA.

RULING:

A contract is a meeting of minds between two persons whereby one

binds himself to give something or render some service to another [Art. 1305,
Civil Code.] for a consideration. There is no contract unless the following
requisites concur:
(1) consent of the contracting parties;
(2) object certain which is the subject of the contract; and
(3) cause of the obligation, which is established. [Art. 1318, Civil
Code.]

A contract undergoes three stages:

(a) preparation, conception, or generation, which is the period of
negotiation and bargaining rending at the moment of agreement
of the parties;
(b) perfection or birth of the contract, which is the moment when the
parties come to agree on the terms of the contract; and
(c) consummation or death, which is the fulfillment or performance
of the terms agreed upon in the contract.

In the present case, when Mr. Del Rosario of Viva met Mr. Lopez of
ABS-CBN on 2 April 1992 to discuss the package of films, said package of
104 VIVA films was VIVA’s offer to ABS-CBN to enter into a new Film
Exhibition Agreement. But ABS-CBN, sent through Ms. Concio, counter-
proposal in the form a draft contract proposing exhibition of 53 films for a
consideration of P35 million. This counter-proposal could be nothing less
than the counter-offer of Mr. Lopez during his conference with Del Rosario
at Tamarind Grill Restaurant. Clearly, there was no acceptance of VIVA’s
offer, for it was met by a counter-offer which substantially varied the terms of
the offer.

Furthermore, ABS-CBN made no acceptance of VIVA’s offer hence,

they underwent period of bargaining. ABS-CBN then formalized its counter-
proposals or counter-offer in a draft contract. VIVA through its Board of
Directors, rejected such counter-offer. Even if it be conceded arguendo that
Del Rosario had accepted the counter-offer, the acceptance did not bind
VIVA, as there was no proof whatsoever that Del Rosario had the specific
authority to do so.

The instant petition was GRANTED.

CARABEO VS DINGCO
G.R. No. 190823, April 04, 2011

FACTS:
On July 10, 1990, Domingo Carabeo (petitioner) entered into a contract
denominated as "Kasunduan sa Bilihan ng Karapatan sa Lupa" with Spouses
Norberto and Susan Dingco (respondents) whereby petitioner agreed to sell
his rights over a 648 square meter parcel of unregistered land situated in
Purok III, Tugatog, Orani, Bataan to respondents for P38,000.
Respondents tendered their initial payment of P10,000 upon signing of the
contract, the remaining balance to be paid on September 1990.
Respondents were later to claim that when they were about to hand in the
balance of the purchase price, petitioner requested them to keep it first as
he was yet to settle an on-going "squabble" over the land. Sometime in 1994,
respondents learned that the alleged problem over the land had been settled
and that petitioner had caused its registration in his name on December 21,
1993 under Transfer Certificate of Title No. 161806. They thereupon offered
to pay the balance but petitioner declined, drawing them to file a complaint
before the Katarungan Pambarangay. No settlement was reached, however,
hence, respondent filed a complaint for specific performance before the
Regional Trial Court (RTC) of Balanga, Bataan.
The trial court ruled in favor of respondents. CA affirmed RTC. Hence
this petition.
ISSUE:

Whether or not the CA erred in their decision by favoring respondents.

RULING:

The Supreme Court denied the petition. The court contends that the
KASUNDUAN which pertinent portion reads “Na ako ay may isang partial na
lupa na matatagpuan sa Purok 111, Tugatog, Orani Bataan, na may sukat
na 27 x 24 metro kuwadrado, ang nasabing lupa ay may sakop na dalawang
punong santol at isang punong mangga, kaya't ako ay nakipagkasundo sa
mag-asawang Norby Dingco at Susan Dingco na ipagbili sa kanila ang
karapatan ng nasabing lupa sa halagang P38,000.00”, That the kasunduan
did not specify the technical boundaries of the property did not render the
sale a nullity. The requirement that a sale must have for its object a
determinate thing is satisfied as long as, at the time the contract is entered
into, the object of the sale is capable of being made determinate without the
necessity of a new or further agreement between the parties. As the above-
quoted portion of the kasunduan shows, there is no doubt that the object of
the sale is determinate. In the present case, respondents are pursuing a
property right arising from the kasunduan, whereas petitioner is invoking
nullity of the kasunduan to protect his proprietary interest. Assuming
arguendo, however, that the kasunduan is deemed void, there is a corollary
obligation of petitioner to return the money paid by respondents, and since
the action involves property rights. The death of a client immediately divests
the counsel of authority. Thus, in filing a Notice of Appeal, petitioner's
counsel of record had no personality to act on behalf of the already deceased
client who, it bears reiteration, had not been substituted as a party after his
death.
COST OF CONTRACT
 UY V. COURT OF APPEALS
G.R. No. 120465, September 9, 1999

FACTS:

Being agents and authorized to sell eight (8) parcels of land by the
owners thereof, petitioners William Uy and Rodel Roxas, by virtue of such
authority, offered to sell the lands, to respondent National Housing Authority
(NHA) to be utilized and developed as a housing project. NHA approved the
acquisition of the said parcels of land with an area of 31.8231 hectares at
the cost of P23.867 million, pursuant to which the parties executed a series
of Deeds of Absolute Sale covering the subject lands. NHA eventually
cancelled the sale over three (3) parcels of land of the eight parcels of lands
because of the report it received from the Land Geosciences Bureau of the
Department of Environment and Natural Resources that the remaining area
is located at an active landslide area and therefore, not suitable for
development into a housing project.
Petitioners then filed a complaint for damages but the trial court
rendered the cancellation of contract to be justified and awarded P1.255
million as damages in favor of petitioners. Upon appeal by petitioners, the
Court of Appeals reversed the decision and entered a new one dismissing
the complaint including the award of damages.

ISSUE:
1.) Whether or not the contention of petitioner is correct.
2.) Whether or not a party’s entry into a contract affects the validity of
the contract.

RULING:

1.) The Petitioners are not correct. They confuse the cancellation of
the contract by the NHA as a rescission of the contract under Article 1191 of
the Civil Code. The right to rescission is predicated on a breach of faith by
the other party that violates the reciprocity between them. The power to
rescind 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. The NHA did not suffer any injury. The
cancellation was not therefore a rescission under Article 1191. Rather, it
was based on the negation of the cause arising from the realization that the
lands, which were the objects of the sale, were not suitable for housing.
2.) The general rule is that a party’s motives for entering into a contract
do not affect the contract. However, when the motive predetermines the
cause, the motive may be regarded as the cause. As held in Liguez v. CA,
It is well to note, however, that Manresa himself, while maintaining the
distinction and upholding the inoperativess of the motives of the parties to
determine the validity of the contract, expressly excepts from the rule those
contracts that are conditioned upon the attainment of the motives of either
party.

GENARO CORDIAL, petitioner, vs. DAVID MIRANDA, respondent.

December 14, 2000

FACTS:

David Miranda, a businessman from Angeles City, was engaged in

rattan business. Gener Buelva was the supplier of David but the former met
an accident and died. Genero Cordial and Miranda met through Buelva’s
widow, Cecilla.
They agreed that Cordial will be his supplier of rattan poles. Cordial
shipped rattan poles as to the agreed number of pieces and sizes however
Miranda refused to pay the cost of the rattan poles delivered. Miranda
alleged that there exist no privity of contract between Miranda and Cordial.
Cordial filed a complaint againt Miranda. The RTC rendered its
decision in favor of the petitioner. The CA reversed the decision of the RTC.

ISSUE:

Whether or not Statute of Frauds applies in this case.

RULING:
 The CA and respondent Miranda stress the absence of a “written
memorandum of the alleged contract between the parties”. Respondent
implicity agrues that the alleged contract is unenforceable under the Statute
of Frauds however, the statute of frauds applies only to executor and not to
completed, executed, or partially executed contracts. Thus, were one party
has performed one’s obligation, oral evidence will be admitted to prove the
agreement. In the present case, it has already been established that
petitioner had delivered the rattan poles to respondent. The contract was
partially executed, the Statute of Frauds does not apply.

Bank of the Philippine Islands vs. Benjamin Pineda

G.R.No. L-62441, December 14, 1987
156 SCRA 404

FACTS:
Through financing of Peoples Bank and Trust Company, now BPI,
three vessels were bought by Southern Industrial Project (SIP) and/or
Bacong Shipping Company. SIP is a corporation whose majority
stockholder belongs to Concon Family. Bacong Shipping Company is a
Panamanian corporation. The said vessels were mortgaged to the bank as
a security of their payment of their bank loans.
Interocean Shipping Corporation, a booking agency, handled the
operation of said vessels. It undertook the freight revenues from their
charter and operation which shall be deposited with Trust Department of
PBTC and disbursements made therefrom shall be covered by vouchers
bearing the approval of SIP.
SIP and PBTC became doubtful of the amount of revenues being
deposited with the bank as diversions of payments were being made.
Gregorio Concon of SIP and/or Bacong and Ramon Azanza of PBTC
organized SA Gacet Inc. to manage and supervise the vessels’ operation
with Ezekiel Toeg as its manager. A management contract was entered
into between SIP and Gacet Inc. placing the supervision and management
of said vessels in the hands of Gacet for a specified period, renewable at
the will of the parties without however terminating the booking agency of
Interocean Shipping Corp. Gacet and Interocean, in accordance with the
management contract, contracted services of Benjamin Pineda doing
business in the name and style Pioneer Iron Works to carry out repairs,
fabrication and installation of necessary parts in said vessels in order to
make them seaworthy and in good working condition.
Unable to pay their mortgage indebtedness to PBTC hich became
past due, SIP and/or Bacong sold said vessels to PBTC by way of dacion
en pago.Pineda filed an action against SIP, Gacet, Interocean and PBTC
for payment and interest of the cost of repairs, fabrication and installation of
necessary parts of the vessels.

ISSUE:
Who should be liable for the payment of the cost of repairs
undertaken in the subject vessels?

HELD:
The Deed of Confirmation of Obligation is but a part or corollary to the
Deeds of Sale of the vessels. In fact, specific reference thereto was made
by said Deeds of Sale as to the settlement of obligations, among which are
repairs in question. The stipulation with the Deed of Confirmation leaves
no room for doubt while the bank may indeed pay certain obligations. The
primary purpose of the contracts is the protection of the vessels. Among
them are liens on the same under which the obligation to private
respondent properly belongs.
Private respondent was paid certain sum of money and its balance
through the issuance of three checks by Interocean. Under the
circumstances, private respondent has no basis or necessity at that time to
exercise his right of retention under 1731 of the Civil Code. The checks
were dishonored thus the private respondent could not give validity to
petitioner’s argument that the former has waived or abandoned his liens on
the vessels. To pursue such view would put a premium on an act of
deception which led private respondent to believe that he will be fully paid.
Furthermore, when the checks were dishonored, it was impossible for
private respondent to enforce his liens because the vessels were already in
Japan, outside the territorial jurisdiction of Philippine waters. If there was no
intention on the part of PBTC (BPI) to assume responsibility for these
obligations at the time of the sale of the vessels, there is no sense in
executing said Deed of Confirmation together with the Deeds of Sale and
the stipulations thereunder would be pointless.
 The repairs made on the vessels ultimately redounded to the benefit
of the new owner (BPI) for without said repairs, those vessels would not be
seaworthy. Under Article 2124 of the Civil Code, such 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.The petitioner bank is
answerable to Pineda for the services contracted on the vessels.

BIENVENIDO M. CASIÑO, JR. versus THE COURT OF APPEALS

and OCTAGON REALTY DEVELOPMENT CORPORATION
G.R. No. 133803 2005 September 16

FACTS:

In its complaint, respondent alleges that on December 22,

1989, it entered into a contract with petitioner for the supply and installation
by the latter of narra wood parquet (kiln dried) to the Manila Luxury
Condominium Project, of which respondent is the developer, for a total
price of P1,158,487.00; that the contract stipulated that full delivery by
petitioner of labor and materials was in May 1990; that in accordance with
the terms of payment in the contract, respondent paid to petitioner the
amount P463,394.50, representing 40% of the total contract price; that
after delivering only 26,727.02 sq. ft. of wood parquet materials,
petitioner incurred in delay in the delivery of the remainder of 34,245.98
sq. ft.; that petitioner misrepresented to respondent that he is qualified to
do the work contracted when in truth and in fact he was not and,
furthermore, he lacked the necessary funds to execute the work as
he was totally dependent on the funds advanced to him by respondent; that
due to petitioner’s unlawful and malicious refusal to comply with its
obligations, respondent incurred actual damages in the amount of
P912,452.39 representing estimated loss on the new price, unliquidated
damages and cost of money; that in order to minimize losses, the
respondent contracted the services of Hilvano Quality Parquet and Sanding
Services to complete the petitioner’s unfinished work, respondent thereby
agreeing to pay the latter P1,198,609.30.

ISSUE:
 Whether or not the rescission of the contract by the private
respondent is valid.

RULING:

Under the 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 respondent’s
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. Thus, it is petitioner who breached the
contract. The petitioner therefore, 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, conformably with Article 1191 of the Civil
Code.

However, the right to rescind a contract for non-performance of

its stipulations is not absolute. The general rule is that rescission of a
contract will not be permitted for a slight or casual breach, but only for such
substantial and fundamental violations as would defeat the very object of
the parties in making the agreement. Contrary to petitioner’s asseveration,
the breach he committed cannot, by any measure, be considered as “slight
or casual”. For petitioner’s failure to make complete delivery and installation
way beyond the time stipulated despite respondent’s demands, is
doubtless a substantial and fundamental breach, more so when viewed in
the light of the large amount of money respondent had to pay another
contractor to complete petitioner’s unfinished work.

Likewise, contrary to petitioner’s claim, it cannot be said that he

had no inkling whatsoever of respondent’s recourse to rescission.
Petitioner cannot feign ignorance of respondent’s intention to rescind, fully
aware, as he was, of his non-compliance with what was incumbent upon
him, and not to mention the several letters respondent sent to him
demanding compliance with his obligation.

Florencia Huibonhoa vs. Court of Appeals

G.R. No. 95897, December 14, 1999
320 SCRA 625

FACTS:
On June 8, 1983, Florencia Huibonhoa entered into a memorandum
of agreement with the siblings Lim, Gojocco and Chua, stating that she will
lease from them three (3) adjacent commercial lots in Binondo, Manila. A
contract of lease was thereafter executed between the parties, where such
lease over the lots shall last for fifteen (15) years commencing on July 1,
1983 and renewable upon agreement of the parties. Further, it was agreed
in the terms and conditions of the contract, among others that: (1)
Huibonhoa was allowed to construct a four-storey building; (2) that the said
building shall be completed within eight (8) months from the date of the
execution of the contract of lease; (3) that Huibonhoa shall pay to each
lessor the sum of P 300, 000; (4) that Huibonhoa shall pay to each lessor P
15, 000.00 as monthly rentals; (6) that the obligation to start paying the
rental shall commence only upon completion of the building within the
eight-month period.
However, Huibonhoa brought an action for reformation of the
contract alleging that their true intention as to when the monthly rental
would accrue was not expressed due to mistake or accident, averring that
by reason of such, the lease contract failed to provide that should an
unforeseen event dramatically increase the cost of construction, the
monthly rental would be reduced and the term of the lease would be
extended for such duration as may be fair and equitable to both the lessor
and the lessee.

ISSUE:
Whether or not the assassination of former senator Benigno Aquino
was a fortuitous event that can thereby lead the parties to reform the
contract.
HELD:
A fortuitous event is that which could not be foreseen, or even if
foreseen, was inevitable. To exempt the obligor from liability for breach of
an obligation due to an “act of God,” the following must concur: first, the
cause of breach must be independent of the will of the obligor. Second, the
event must be unforeseeable or inevitable. Third, the event must be such
as to render it impossible for the debtor to fulfill his obligation in a normal
manner. And fourth, the debtor must be free from any participation in, or
aggravation of, the injury to the creditor. Further, inflation per se, does not
account that a fortuitous event transpired. Inflation is the sharp increase of
money or credit or both without a corresponding increase in business
transaction. There is inflation when there is an increase in the volume of
money and credit relative to available parties to the lease contract.
Ordinary diligence on the part of the parties demanded that they execute a
written agreement if indeed they wanted to enter into a new one because of
the 15-year life span of the lease affecting real property and the fact that
third persons would be affected thereby on account of the express
agreement allowing the lessee to lease the building to third parties.
However, only when an extraordinary inflation supervenes that the law
affords the parties a relief in contractual obligations. Extraordinary inflation
exists when there is a decrease or increase in the purchasing power of the
Philippine currency which is unusual or beyond the common fluctuation in
the value of said currency, and such decrease or increase could not have
been reasonably foreseen or was manifestly beyond the contemplation of
the parties at the time of the establishment of the obligation. Further, no
decrease in the peso value of such magnitude having occurred, Huibonhoa
has no valid ground to ask the Court to intervene and modify the lease
agreement to suit her purpose. Huibonhoa failed to prove by evidence, both
documentary and testimonial, that there was an extraordinary inflation from
July 1983 to February 1984. Although she repeatedly alleged that the cost
of constructing the building doubled from P 6M to P 12 M, she failed to
show by how much, for instance, the price index of goods and services had
risen during that intervening period. An extraordinary inflation cannot be
assumed. Hence, for Huibonhoa to claim exemption from liability by reason
of fortuitous event under Article 1174 of the Civil Code, she must prove that
inflation was the sole and proximate cause of the loss or destruction of the
contract or in this case, of the delay in the construction of the building.
Having failed to do so, Huibonhoa’s contention is untenable.
REFORMATION OF INSTRUMENT
 Florencia Huibonhoa vs. Court of Appeals
G.R. No. 95897, December 14, 1999
320 SCRA 625

FACTS:
On June 8, 1983, Florencia Huibonhoa entered into a memorandum
of agreement with the siblings Lim, Gojocco and Chua, stating that she will
lease from them three (3) adjacent commercial lots in Binondo, Manila. A
contract of lease was thereafter executed between the parties, where such
lease over the lots shall last for fifteen (15) years commencing on July 1,
1983 and renewable upon agreement of the parties. Further, it was agreed
in the terms and conditions of the contract, among others that: (1)
Huibonhoa was allowed to construct a four-storey building; (2) that the said
building shall be completed within eight (8) months from the date of the
execution of the contract of lease; (3) that Huibonhoa shall pay to each
lessor the sum of P 300, 000; (4) that Huibonhoa shall pay to each lessor P
15, 000.00 as monthly rentals; (6) that the obligation to start paying the
rental shall commence only upon completion of the building within the
eight-month period.
However, Huibonhoa brought an action for reformation of the
contract alleging that their true intention as to when the monthly rental
would accrue was not expressed due to mistake or accident, averring that
by reason of such, the lease contract failed to provide that should an
unforeseen event dramatically increase the cost of construction, the
monthly rental would be reduced and the term of the lease would be
extended for such duration as may be fair and equitable to both the lessor
and the lessee.

ISSUE:
Whether or not the assassination of former senator Benigno Aquino
was a fortuitous event that can thereby lead the parties to reform the
contract.

HELD:
 A fortuitous event is that which could not be foreseen, or even if
foreseen, was inevitable. To exempt the obligor from liability for breach of
an obligation due to an “act of God,” the following must concur: first, the
cause of breach must be independent of the will of the obligor. Second, the
event must be unforeseeable or inevitable. Third, the event must be such
as to render it impossible for the debtor to fulfill his obligation in a normal
manner. And fourth, the debtor must be free from any participation in, or
aggravation of, the injury to the creditor. Further, inflation per se, does not
account that a fortuitous event transpired. Inflation is the sharp increase of
money or credit or both without a corresponding increase in business
transaction. There is inflation when there is an increase in the volume of
money and credit relative to available parties to the lease contract.
Ordinary diligence on the part of the parties demanded that they execute a
written agreement if indeed they wanted to enter into a new one because of
the 15-year life span of the lease affecting real property and the fact that
third persons would be affected thereby on account of the express
agreement allowing the lessee to lease the building to third parties.
However, only when an extraordinary inflation supervenes that the law
affords the parties a relief in contractual obligations. Extraordinary inflation
exists when there is a decrease or increase in the purchasing power of the
Philippine currency which is unusual or beyond the common fluctuation in
the value of said currency, and such decrease or increase could not have
been reasonably foreseen or was manifestly beyond the contemplation of
the parties at the time of the establishment of the obligation. Further, no
decrease in the peso value of such magnitude having occurred, Huibonhoa
has no valid ground to ask the Court to intervene and modify the lease
agreement to suit her purpose. Huibonhoa failed to prove by evidence, both
documentary and testimonial, that there was an extraordinary inflation from
July 1983 to February 1984. Although she repeatedly alleged that the cost
of constructing the building doubled from P 6M to P 12 M, she failed to
show by how much, for instance, the price index of goods and services had
risen during that intervening period. An extraordinary inflation cannot be
assumed. Hence, for Huibonhoa to claim exemption from liability by reason
of fortuitous event under Article 1174 of the Civil Code, she must prove that
inflation was the sole and proximate cause of the loss or destruction of the
contract or in this case, of the delay in the construction of the building.
Having failed to do so, Huibonhoa’s contention is untenable.
 PCI vs Ng Shueng Ngor
A.M. No. P-05-1973. March 18, 2005

FACTS:

Complainant EPCIB is the defendant in Civil Case No. CEB-26983

before the Regional Trial Court (RTC), Branch 16, Cebu City, entitled, “Ng
Sheung Ngor, doing business under the name and style ‘Ken Marketing,’
Ken Appliance Division, Inc. and Benjamin Go, Plaintiffs, vs. Equitable PCI
Bank, Aimee Yu and Ben Apas, Defendants” for Annulment and/or
Reformation of Documents and Contracts.
Respondents Antonio A. Bellones and Generoso B. Regalado are the
sheriffs in Branches 9 and 16, respectively, of the RTC of Cebu City.

For garnishing accounts maintained by Equitable PCI Bank, Inc.

(EPCIB) at Citibank, N.A., and Hongkong and Shanghai Bank Corporation
(HSBC), allegedly in violation of Section 9(b) of Rule 39 of the Rules of
Court, a complaint for grave abuse of authority was filed by Atty. Paulino L.
Yusi against Sheriffs Antonio A. Bellones and Generoso B. Regalado.
There was an offer of other real property by petitioner.

ISSUE:

Did respondents violate the Rules of Court?

RULING:

By serving notices of garnishment on Citibank, N.A., HSBC and

PNB, Sheriff Regalado violated EPCIB’s right to choose which property
may be levied upon to be sold at auction for the satisfaction of the
judgment debt. Thus, it is clear that when EPCIB offered its real properties,
it exercised its option because it cannot immediately pay the full amount
stated in the writ of execution and all lawful fees in cash, certified bank
check or any other mode of payment acceptable to the judgment obligee.
 In the case at bar, EPCIB cannot immediately pay by way of
Manager’s Check so it exercised its option to choose and offered its real
properties. With the exercise of the option, Sheriff Regalado should have
ceased serving notices of garnishment and discontinued their
implementation. This is not true in the instant case. Sheriff Regalado was
adamant in his posture even if real properties have been offered which
were sufficient to satisfy the judgment debt.

G.R.NO. 171545, December 19, 2007

FACTS:

On October 7, 2001, respondents Ngor and Go filed an action for

amendment and/or reformation of documents and contracts against
Equitable and its employees. They claimed that they were induced by the
bank to avail of its peso and dollar credit facilities by offering low interests so
they accepted and signed Equitable’s proposal. They alleged that they were
unaware that the documents contained escalation clauses granting
Equitable authority to increase interest without their consent. These were
rebutted by the bank. RTC ordered the use of the 1996 dollar exchange rate
in computing respondent’s dollar-denominated loans. CA granted the Bank’s
application for injunction but the properties were sold to public auction.

ISSUE:

Whether or not there was an extraordinary deflation

RULING:

Extraordinary inflation exists when there is an unusual decrease in the

purchasing power of currency and such decrease could not be reasonably
foreseen or was beyond the contemplation of the parties at the time of the
obligation. Deflation is an inverse situation.
 Despite the devaluation of the peso, BSP never declared a situation of
extraordinary inflation. Respondents should pay their dollar denominated
loans at the exchange rate fixed by the BSP on the date of maturity.
Decision of lower courts are reversed and set aside.

NATELCO V CA
G.R.No. 107112 February 24, 1994

FACTS:

Petitioner Naga Telephone Co., Inc. (NATELCO) is a telephone

company rendering local as well as long distance service in Naga City while
private respondent Camarines Sur II Electric Cooperative, Inc. (CASURECO
II) is a private corporation established for the purpose of operating an electric
power service in the same city. On November 1, 1977, the parties entered
into a contract (Exh. "A") for the use by petitioners in the operation of its
telephone service the electric light posts of private respondent in Naga City.
In consideration therefor, petitioners agreed to install, free of charge, ten (10)
telephone connections for the use by private respondent
After the contract had been enforced for over ten (10) years, private
respondent filed on January 2, 1989 with the Regional Trial Court of Naga
City (Br. 28) C.C. No. 89-1642 against petitioners for reformation of the
contract with damages, on the ground that it is too one-sided in favor of
petitioners; that it is not in conformity with the guidelines of the National
Electrification Administration (NEA) which direct that the reasonable
compensation for the use of the posts is P10.00 per post, per month; that
after eleven (11) years of petitioners' use of the posts, the telephone cables
strung by them thereon have become much heavier with the increase in the
volume of their subscribers, worsened by the fact that their linemen bore
holes through the posts at which points those posts were broken during
typhoons.

ISUUE:

Whether respondent court erred in making a contract for the parties by

invoking Article 1267 of the New Civil Code.
RULING:

Article 1267 speaks of "service" which has become so difficult. Taking

into consideration the rationale behind this provision, 9 the term "service"
should be understood as referring to the "performance" of the obligation. In
the present case, the obligation of private respondent consists in allowing
petitioners to use its posts in Naga City, which is the service contemplated
in said article. Furthermore, a bare reading of this article reveals that it is not
a requirement thereunder that the contract be for future service with future
unusual change. According to Senator Arturo M. Tolentino, 10 Article 1267
states in our law the doctrine of unforseen events. This is said to be based
on the discredited theory of rebus sic stantibus in public international law;
under this theory, the parties stipulate in the light of certain prevailing
conditions, and once these conditions cease to exist the contract also ceases
to exist. Considering practical needs and the demands of equity and good
faith, the disappearance of the basis of a contract gives rise to a right to relief
in favor of the party prejudiced.

PCI VS NG SHUENG NGOR

A.M. No. P-05-1973. March 18, 2005

FACTS:

Complainant EPCIB is the defendant in Civil Case No. CEB-26983

before the Regional Trial Court (RTC), Branch 16, Cebu City, entitled, “Ng
Sheung Ngor, doing business under the name and style ‘Ken Marketing,’
Ken Appliance Division, Inc. and Benjamin Go, Plaintiffs, vs. Equitable PCI
Bank, Aimee Yu and Ben Apas, Defendants” for Annulment and/or
Reformation of Documents and Contracts.
Respondents Antonio A. Bellones and Generoso B. Regalado are the
sheriffs in Branches 9 and 16, respectively, of the RTC of Cebu City.
For garnishing accounts maintained by Equitable PCI Bank, Inc.
(EPCIB) at Citibank, N.A., and Hongkong and Shanghai Bank Corporation
(HSBC), allegedly in violation of Section 9(b) of Rule 39 of the Rules of Court,
a complaint for grave abuse of authority was filed by Atty. Paulino L. Yusi
against Sheriffs Antonio A. Bellones and Generoso B. Regalado. There was
an offer of other real property by petitioner.

ISSUE:

Did respondents violate the Rules of Court?

RULING:

By serving notices of garnishment on Citibank, N.A., HSBC and PNB,

Sheriff Regalado violated EPCIB’s right to choose which property may be
levied upon to be sold at auction for the satisfaction of the judgment debt.
Thus, it is clear that when EPCIB offered its real properties, it exercised its
option because it cannot immediately pay the full amount stated in the writ
of execution and all lawful fees in cash, certified bank check or any other
mode of payment acceptable to the judgment obligee.
In the case at bar, EPCIB cannot immediately pay by way of Manager’s
Check so it exercised its option to choose and offered its real
properties. With the exercise of the option, Sheriff Regalado should have
ceased serving notices of garnishment and discontinued their
implementation. This is not true in the instant case. Sheriff Regalado was
adamant in his posture even if real properties have been offered which were
sufficient to satisfy the judgment debt.
RESCISSIBLE CONTRACTS

PCI VS NG SHUENG NGOR

 A.M. No. P-05-1973. March 18, 2005

FACTS:

Complainant EPCIB is the defendant in Civil Case No. CEB-26983

before the Regional Trial Court (RTC), Branch 16, Cebu City, entitled, “Ng
Sheung Ngor, doing business under the name and style ‘Ken Marketing,’
Ken Appliance Division, Inc. and Benjamin Go, Plaintiffs, vs. Equitable PCI
Bank, Aimee Yu and Ben Apas, Defendants” for Annulment and/or
Reformation of Documents and Contracts.
Respondents Antonio A. Bellones and Generoso B. Regalado are the
sheriffs in Branches 9 and 16, respectively, of the RTC of Cebu City.
For garnishing accounts maintained by Equitable PCI Bank, Inc.
(EPCIB) at Citibank, N.A., and Hongkong and Shanghai Bank Corporation
(HSBC), allegedly in violation of Section 9(b) of Rule 39 of the Rules of Court,
a complaint for grave abuse of authority was filed by Atty. Paulino L. Yusi
against Sheriffs Antonio A. Bellones and Generoso B. Regalado. There was
an offer of other real property by petitioner.

ISSUE:

Did respondents violate the Rules of Court?

RULING:

By serving notices of garnishment on Citibank, N.A., HSBC and PNB,

Sheriff Regalado violated EPCIB’s right to choose which property may be
levied upon to be sold at auction for the satisfaction of the judgment debt.
Thus, it is clear that when EPCIB offered its real properties, it exercised its
option because it cannot immediately pay the full amount stated in the writ
of execution and all lawful fees in cash, certified bank check or any other
mode of payment acceptable to the judgment obligee.
In the case at bar, EPCIB cannot immediately pay by way of Manager’s
Check so it exercised its option to choose and offered its real
properties. With the exercise of the option, Sheriff Regalado should have
ceased serving notices of garnishment and discontinued their
implementation. This is not true in the instant case. Sheriff Regalado was
adamant in his posture even if real properties have been offered which were
sufficient to satisfy the judgment debt.

LEE VS. BANGKOK BANK PUBLIC COMPANY

G.R. No. 173349, February 09, 2011

FACTS:
Midas Diversified Export Corporation (MDEC) and Manila Home
Textile, Inc. (MHI) entered into two separate Credit Line Agreements (CLAs)
with Respondent Bangkok Bank Public Company, Limited (Bangkok Bank)
on November 29, 1995 and April 17, 1996, respectively. MDEC and MHI are
owned and controlled by the Lee family: Thelma U. Lee, Maybelle L. Lim,
Daniel U. Lee and Samuel U. Lee (Samuel). Both corporations have
interlocking directors and management led by the Lee family; and engaged
in the manufacturing and export of garments, ladies' bags and apparel.
On July 25, 1996, MDEC was likewise granted a loan facility by
Asiatrust Development Bank, Inc. (Asiatrust). This facility had an available
credit line of forty million pesos (PhP 40,000,000) for letters of credit,
advances on bills and export packing; and a separate credit line of two million
dollars (USD 2,000,000) for bills purchase.
In the meantime, in May 1997, Samuel bought several parcels of land
in Cupang, Antipolo, and later entered into a joint venture with Louisville
Realty and Development Corporation to develop the properties into a
residential subdivision, called Louisville Subdivision. These properties in
Cupang, Antipolo are the subject properties in the instant case (Antipolo
properties) and are covered by Transfer Certificate of Title.
MDEC and MHI initially had made payments with their CLAs until they
defaulted and incurred aggregate obligations to Bangkok Bank in the amount
of USD 1,998,554.60 for MDEC and USD 800,000 for MHI. Similarly, the Lee
corporations defaulted in their obligations with other creditors
On February 16, 1998, MDEC, MHI, and three other corporations
owned by the Lee family filed before the Securities and Exchange
Commission (SEC) a Consolidated Petition for the Declaration of a State of
Suspension of Payments and for Appointment of a Management
Committee/Rehabilitation Receiver.
On February 20, 1998, the SEC issued a Suspension Order enjoining
the Lee corporations from disposing of their property in any manner except
in the ordinary course of business, and from making any payments outside
the legitimate expenses of their business during the pendency of the petition.
 On July 20, 1999, Bangkok Bank filed the instant case before the RTC.
The RTC dismissed the case. However, the CA granted the appeal, and
reversed and set aside the RTC decision. Hence, this petition.
ISSUE:
Whether or not Bangkok Bank can maintain an action to rescind the
REM on the subject Antipolo properties despite its failure to exhaust all legal
remedies to satisfy its claim.

RULING:
The Supreme Court ruled that under Sec. 5.2 of RA 8799, the SEC's
original and exclusive jurisdiction over all cases enumerated under Sec. 5 of
PD 902-A was transferred to the appropriate RTC. RA 8799, Sec. 5.2,
however, expressly stated as an exception, that the "the Commission shall
retain jurisdiction over pending suspension of payment/rehabilitation cases
filed as of 30 June 2000 until finally disposed." Accordingly, the
Consolidated Petition for the Declaration of a State of Suspension of
Payments and for Appointment of a Management Committee/Rehabilitation
Receiver filed on February 16, 1998 by MDEC, MHI and three other
corporations owned by the Lee family, remained under the jurisdiction of the
SEC until finally disposed of pursuant to the last sentence of Sec. 5.2 of RA
8799.

The SEC's jurisdiction is evident from the statutorily vested power of

jurisdiction, supervision and control by the SEC over all corporations,
partnerships or associations, which are grantees of primary franchise,
license or permit issued by the government to operate in the Philippines, and
its then original and exclusive jurisdiction over petitions for suspension of
payments of said entities. Secs. 3 and 5 of PD 902-A pertinently provides:

Sec. 3. The Commission shall have absolute jurisdiction, supervision

and control over all corporations, partnerships or associations, who are
the grantees of primary franchise and/or a license or permit issued by the
government to operate in the Philippines; and in the exercise of its authority,
it shall have the power to enlist the aid and support of any and all
enforcement agencies of the government, civil or military.
Sec. 5. In addition to the regulatory and adjudicative functions of the
Securities and Exchange Commission over corporations, partnerships and
other forms of associations registered with it as expressly granted under
existing laws and decrees, it shall have original and exclusive jurisdiction to
hear and decide cases involving: (d) Petitions of corporations, partnerships
or associations to be declared in the state of suspension of payments in
cases where the corporation, partnership or association possesses sufficient
property to cover all its debts but foresees the impossibility of meeting them
when they respectively fall due or in cases where the corporation,
partnership or association has no sufficient assets to cover its liabilities, but
is under the management of a Rehabilitation Receiver or Management
Committee created pursuant to this Decree.
In sum, the Supreme Court granted the petition.

SIGUAN V. LIM
G.R. No. 134685, November 19, 1999

FACTS:

Lim issued two Metrobank checks in the sums of P300,000 and

P241,668, respectively, payable to "cash." Upon presentment by petitioner
with the drawee bank, the checks were dishonored for the reason "account
closed." Demands to make good the checks proved futile. As a
consequence, a criminal case for violation of Batas Pambansa were filed by
petitioner against Lim.
The court a quo convicted Lim as charged. The case is pending before
this Court for review and docketed as G.R. No. 134685. It also appears that
on 31 July 1990, Lim was convicted of estafa by the RTC of Quezon City in
Criminal Case No. Q-89-22162 filed by a certain Victoria Suarez. This
decision was affirmed by the Court of Appeals. On appeal, however, the
Supreme Court, in a decision promulgated on 7 April 1997, acquitted Lim but
held her civilly liable in the amount of P169,000, as actual damages, plus
legal interest.
Meanwhile, on 2 July 1991, a Deed of Donation conveying parcels of
land and purportedly executed by Lim on 10 August 1989 in favor of her
children, Linde, Ingrid and Neil, was registered with the Office of the Register
of Deeds of Cebu City. New transfer certificates of title were thereafter
issued in the names of the donees.
On 23 June 1993, petitioner filed an accion pauliana against Lim and
her children before Branch 18 of the RTC of Cebu City to rescind the
questioned Deed of Donation and to declare as null and void the new transfer
certificates of title issued for the lots covered by the questioned Deed. The
complaint was docketed as Civil Case No. CEB-14181. Petitioner claimed
therein that sometime in July 1991, Lim, through a Deed of Donation,
fraudulently transferred all her real property to her children in bad faith and
in fraud of creditors, including her; that Lim conspired and confederated with
her children in antedating the questioned Deed of Donation, to petitioner's
and other creditors' prejudice; and that Lim, at the time of the fraudulent
conveyance, left no sufficient properties to pay her obligations. On the other
hand, Lim denied any liability to petitioner. She claimed that her convictions
in Criminal Cases Nos. 22127-28 were erroneous, which was the reason why
she appealed said decision to the Court of Appeals. As regards the
questioned Deed of Donation, she maintained that it was not antedated but
was made in good faith at a time when she had sufficient property. Finally,
she alleged that the Deed of Donation was registered only on 2 July 1991
because she was seriously ill.
In its decision of 31 December 1994 the trial court ordered the
rescission of the questioned deed of donation; (2) declared null and void the
transfer certificates of title issued in the names of private respondents Linde,
Ingrid and Neil Lim; (3) ordered the Register of Deeds of Cebu City to cancel
said titles and to reinstate the previous titles in the name of Rosa Lim; and
(4) directed the LIMs to pay the petitioner, jointly and severally, the sum of
P10,000 as moral damages; P10,000 as attorney's fees; and P5,000 as
expenses of litigation.
On appeal, the Court of Appeals, in a promulgated on 20 February
1998, reversed the decision of the trial court and dismissed petitioner's
accion pauliana. It held that two of the requisites for filing an accion pauliana
were absent, namely, (1) there must be a credit existing prior to the
celebration of the contract; and (2) there must be a fraud, or at least the intent
to commit fraud, to the prejudice of the creditor seeking the rescission.
According to the Court of Appeals, the Deed of Donation, which was
executed and acknowledged before a notary public, appears on its face to
have been executed on 10 August 1989. Under Section 23 of Rule 132 of
the Rules of Court, the questioned Deed, being a public document, is
evidence of the fact which gave rise to its execution and of the date thereof.
No antedating of the Deed of Donation was made, there being no convincing
evidence on record to indicate that the notary public and the parties did
antedate it.
 Since Lim's indebtedness to petitioner was incurred in August 1990, or
a year after the execution of the Deed of Donation, the first requirement for
accion pauliana was not met.
Anent petitioner's contention that assuming that the Deed of Donation
was not antedated it was nevertheless in fraud of creditors because Victoria
Suarez became Lim’s creditor on 8 October 1987, the Court of Appeals found
the same untenable, for the rule is basic that the fraud must prejudice the
creditor seeking the rescission.
ISSUE:

Whether or not the deed of donation is valid.

RULING:

The Supreme Court upheld the validity of the deed of donation.

Article 1381 of the Civil Code enumerates the contracts which are
rescissible, and among them are "those contracts undertaken in fraud of
creditors when the latter cannot in any other manner collect the claims due
them."

The action to rescind contracts in fraud of creditors is known as accion

pauliana. For this action to prosper, the following requisites must be present:
(1) the plaintiff asking for rescission has a credit prior to the
alienation,
although demandable later;
(2) the debtor has made a subsequent contract conveying a
patrimonial
benefit to a third person;
(3) the creditor has no other legal remedy to satisfy his claim;
(4) the act being impugned is fraudulent;
(5) the third person who received the property conveyed, if it is
by onerous
title, has been an accomplice in the fraud.
The general rule is that rescission requires the existence of creditors
at the time of the alleged fraudulent alienation, and this must be proved as
one of the bases of the judicial pronouncement setting aside the contract.
Without any prior existing debt, there can neither be injury nor fraud. While
it is necessary that the credit of the plaintiff in the accion pauliana must exist
prior to the fraudulent alienation, the date of the judgment enforcing it is
immaterial. Even if the judgment be subsequent to the alienation, it is merely
declaratory, with retroactive effect to the date when the credit was
constituted.

In the instant case, the alleged debt of Lim in favor of petitioner was
incurred in August 1990, while the deed of donation was purportedly
executed on 10 August 1989.
The Supreme Court is not convinced with the allegation of the
petitioner that the questioned deed was antedated to make it appear that it
was made prior to petitioner's credit. Notably, that deed is a public
document, it having been acknowledged before a notary public. As such, it
is evidence of the fact which gave rise to its execution and of its date,
pursuant to Section 23, Rule 132 of the Rules of Court.
In the present case, the fact that the questioned Deed was registered
only on 2 July 1991 is not enough to overcome the presumption as to the
truthfulness of the statement of the date in the questioned deed, which is 10
August 1989. Petitioner's claim against Lim was constituted only in August
1990, or a year after the questioned alienation. Thus, the first two requisites
for the rescission of contracts are absent.
Even assuming arguendo that petitioner became a creditor of Lim prior
to the celebration of the contract of donation, still her action for
rescission would not fare well because the third requisite was not met.
Under Article 1381 of the Civil Code, contracts entered into in fraud of
creditors may be rescinded only when the creditors cannot in any
manner collect the claims due them. Also, Article 1383 of the same
Code provides that the action for rescission is but a subsidiary remedy
which cannot be instituted except when the party suffering damage has
no other legal means to obtain reparation for the same. The term
"subsidiary remedy" has been defined as "the exhaustion of all remedies
by the prejudiced creditor to collect claims due him before rescission is
resorted to." It is, therefore, essential that the party asking for rescission
prove that he has exhausted all other legal means to obtain satisfaction
of his claim. Petitioner neither alleged nor proved that she did so. On
 this score, her action for the rescission of the questioned deed is not
maintainable even if the fraud charged actually did exist." The fourth
requisite for an accion pauliana to prosper is not present either.

OESMER, Petitioners,
vs PARAISO DEVELOPMENT CORPORATION, Respondent.
G.R. No. 157493 February 5, 2007

FACTS:

Petitioner Ernesto to meet with a certain Sotero Lee, President of

respondent Paraiso Development Corporation, at Otani Hotel in Manila.
The said meeting was for the purpose of brokering the sale of petitioners’
properties to respondent corporation.
A Contract to Sell was drafted. A check in the amount of P100,000.00,
payable to Ernesto, was given as option money. Sometime thereafter,
Rizalino, Leonora, Bibiano, Jr., and Librado also signed the said Contract
to Sell. However, two of the brothers, Adolfo and Jesus, did not sign the
document. However petitioners informed respondent corporation about
their intention to rescind the Contract to Sell and to return the amount of
Php 100,000.00. respondent did not respond to the aforesaid letter.
Petitioners, therefore, filed a complaint for Declaration of Nullity or for
Annulment of Option Agreement or Contract to Sell with damages.
The RTC rendered its decision in favor to respondent. CA affirmed the
decision of RTC with modification.

ISSUE:

Whether ot not Contract to Sell is void considering that on of the heirs

did not sign it as to indicate its consent to be bound by its terms.

RULING:

It is well-settled that contracts are perfected by mere consent, upon

the acceptance by the offeree of the offer made by the offeror. From that
moment, the parties are bound not only to the fulfillment of what has been
expressly stipulated but also to all the consequences which, according to
their nature, may be in keeping with good faith, usage and law. To produce
a contract, the acceptance must not qualify the terms of the offer. However,
the acceptance may be express or implied. For a contract to arise, the
acceptance must be made known to the offeror. Accordingly, the
acceptance can be withdrawn or revoked before it is made known to the
offeror.

In the case at bar, the Contract to Sell was perfected when the
petitioners consented to the sale to the respondent of their shares in the
subject parcels of land by affixing their signatures on the said contract.
Such signatures show their acceptance of what has been stipulated in the
Contract to Sell and such acceptance was made known to respondent
corporation when the duplicate copy of the Contract to Sell was returned to
the latter bearing petitioners’ signatures.

RIZALINO, substituted by his heirs, JOSEFINA, ROLANDO and

FERNANDO, ERNESTO, LEONORA, BIBIANO, JR., LIBRADO and
ENRIQUETA, all surnamed OESMER, Petitioners, vs. PARAISO
DEVELOPMENT CORPORATION, Respondent.
G.R. No. 157493 February 5, 2007

FACTS:

Petitioner Ernesto to meet with a certain Sotero Lee, President of respondent

Paraiso Development Corporation, at Otani Hotel in Manila. The said
meeting was for the purpose of brokering the sale of petitioners’ properties
to respondent corporation.
A Contract to Sell was drafted. A check in the amount of P100,000.00,
payable to Ernesto, was given as option money. Sometime thereafter,
Rizalino, Leonora, Bibiano, Jr., and Librado also signed the said Contract to
Sell. However, two of the brothers, Adolfo and Jesus, did not sign the
document. However petitioners informed respondent corporation about their
intention to rescind the Contract to Sell and to return the amount of Php
100,000.00. respondent did not respond to the aforesaid letter. Petitioners,
therefore, filed a complaint for Declaration of Nullity or for Annulment of
Option Agreement or Contract to Sell with damages.
The RTC rendered its decision in favor to respondent. CA affirmed the
decision of RTC with modification.

ISSUE:

Whether ot not Contract to Sell is void considering that on of the heirs

did not sign it as to indicate its consent to be bound by its terms.

RULING:

It is well-settled that contracts are perfected by mere consent, upon the

acceptance by the offeree of the offer made by the offeror. From that
moment, the parties are bound not only to the fulfillment of what has been
expressly stipulated but also to all the consequences which, according to
their nature, may be in keeping with good faith, usage and law. To produce
a contract, the acceptance must not qualify the terms of the offer. However,
the acceptance may be express or implied. For a contract to arise, the
acceptance must be made known to the offeror. Accordingly, the acceptance
can be withdrawn or revoked before it is made known to the offeror.
In the case at bar, the Contract to Sell was perfected when the petitioners
consented to the sale to the respondent of their shares in the subject
parcels of land by affixing their signatures on the said contract. Such
signatures show their acceptance of what has been stipulated in the
Contract to Sell and such acceptance was made known to respondent
corporation when the duplicate copy of the Contract to Sell was returned to
the latter bearing petitioners’ signatures
VOIDABLE CONTRACTS
 CATALAN vs. BASA
JULY 31, 2007

FACTS:

On October 20, 1948, FELICIANO CATALAN Feliciano was

discharged from active military service. The Board of Medical Officers of the
Department of Veteran Affairs found that he was unfit to render military
service due to his “schizophrenic reaction, catatonic type, which
incapacitates him because of flattening of mood and affect, preoccupation
with worries, withdrawal, and sparse and pointless speech.”
On September 28, 1949, Feliciano married Corazon Cerezo.
On June 16, 1951, a document was executed, titled “Absolute Deed
of Donation,” wherein Feliciano allegedly donated to his sister MERCEDES
CATALAN one-half of the real property described, viz:
A parcel of land located at Barangay Basing, Binmaley, Pangasinan.
Bounded on the North by heirs of Felipe Basa; on the South by Barrio Road;
On the East by heirs of Segundo Catalan; and on the West by Roman Basa.
Containing an area of Eight Hundred One (801) square meters, more or less.
The donation was registered with the Register of Deeds.
On December 11, 1953, People’s Bank and Trust Company filed a
Special Proceedings before the Court of First Instance to declare Feliciano
incompetent. On December 22, 1953, the trial court issued its Order for
Adjudication of Incompetency for Appointing Guardian for the Estate and
Fixing Allowance of Feliciano. The following day, the trial court appointed
People’s Bank and Trust Company as Feliciano’s guardian. People’s Bank
and Trust Company has been subsequently renamed, and is presently
known as the Bank of the Philippine Islands (BPI).
On November 22, 1978, Feliciano and Corazon Cerezo donated Lots
1 and 3 of their property, registered under Original Certificate of Title (OCT)
No. 18920, to their son Eulogio Catalan.
Mercedes sold the property in issue in favor of her children Delia and
Jesus Basa. The Deed of Absolute Sale was registered with the Register of
Deeds and a Tax Declaration was issued in the name of respondents.
Feliciano and Corazon Cerezo donated Lot 2 of the aforementioned
property registered under OCT No. 18920 to their children Alex Catalan,
Librada Catalan and Zenaida Catalan. On February 14, 1983, Feliciano and
Corazon Cerezo donated Lot 4 (Plan Psu-215956) of the same OCT No.
18920 to Eulogio and Florida Catalan.
BPI, acting as Feliciano’s guardian, filed a case for Declaration of
Nullity of Documents, Recovery of Possession and Ownership, as well as
damages against the herein respondents. BPI alleged that the Deed of
Absolute Donation to Mercedes was void ab initio, as Feliciano never
donated the property to Mercedes. In addition, BPI averred that even if
Feliciano had truly intended to give the property to her, the donation would
still be void, as he was not of sound mind and was therefore incapable of
giving valid consent. Thus, it claimed that if the Deed of Absolute Donation
was void ab initio, the subsequent Deed of Absolute Sale to Delia and Jesus
Basa should likewise be nullified, for Mercedes Catalan had no right to sell
the property to anyone. BPI raised doubts about the authenticity of the deed
of sale, saying that its registration long after the death of Mercedes Catalan
indicated fraud. Thus, BPI sought remuneration for incurred damages and
litigation expenses.
On August 14, 1997, Feliciano passed away. The original complaint
was amended to substitute his heirs in lieu of BPI as complainants in Civil
Case No. 17666.
The trial court found that the evidence presented by the complainants
was insufficient to overcome the presumption that Feliciano was sane and
competent at the time he executed the deed of donation in favor of Mercedes
Catalan. Thus, the court declared, the presumption of sanity or competency
not having been duly impugned, the presumption of due execution of the
donation in question must be upheld. The Court of Appeals upheld the trial
court’s decision.

ISSUE:

Whether said decision of the lower courts is correct.

RULING:

Petitioners questioned Feliciano’s capacity at the time he donated the

property, yet did not see fit to question his mental competence when he
entered into a contract of marriage with Corazon Cerezo or when he
executed deeds of donation of his other properties in their favor. The
presumption that Feliciano remained competent to execute contracts,
despite his illness, is bolstered by the existence of these other contracts.
Competency and freedom from undue influence, shown to have existed in
the other acts done or contracts executed, are presumed to continue until
the contrary is shown.
Needless to state, since the donation was valid, Mercedes had the right
to sell the property to whomever she chose. Not a shred of evidence has
been presented to prove the claim that Mercedes’ sale of the property to her
children was tainted with fraud or falsehood. It is of little bearing that the
Deed of Sale was registered only after the death of Mercedes. What is
material is that the sale of the property to Delia and Jesus Basa was legal
and binding at the time of its execution. Thus, the property in question
belongs to Delia and Jesus Basa.

RURAL BANK OF ST. MARIA, PANGASINAN V. COURT OF APPEALS

G.R. No. 110672. September 14, 1999

FACTS:

Real Estate Mortgage as a security for loans obtained amounting to

P156 270 was executed by Manuel Behis on a land in favor of Rural Bank of
St. Maria, Pangasinan. But Manuel, being a delinquent, sold the land,
evidenced by a Deed of Absolute Sale with Assumption of Mortgage to
Rayandayan and Arceño for the sum of P250 000. On the same day,
Rayandayan and Arceño, together with Manual Behis executed another
Agreement embodying the consideration of the sale of the land in the sum of
P2.4 million. The land, however, remained in the name of Behis because
the former did not present to the Register of Deeds the contracts.
Rayandaran and Arceño presented the Deed of Absolute Sale to the
bank and negotiated with the principal stockholder of the bank for the
assumption of the indebtedness of Manuel Behis and the subsequent
release of the mortgage on the property by the bank. Rayandaran and
Arceño did not show to the bank the agreement with Manuel Behis providing
for the real consideration of P2.4 million. Subsequently, the bank consented
to the substitution of plaintiffs as mortgage debtors in place of Manuel Behis
in a Memorandum of Agreement between private respondents and the bank
with restricted and liberalized terms for the payment of the mortgage debt
including the initial payment of P143 782.22.
Due to the appearance of Christina Behis, Manuel’s wife and a co-
signatory in the mortgaged land alleging that her signature in the deed of
sale was forged, the bank discontinued to comply with the Memorandum of
Agreement considering it to be void.
In a letter, plaintiffs demanded that the bank comply with its obligation
under the Memorandum of Agreement to which the latter denied. Petitioner
bank argued that the Memorandum of Agreement is voidable on the ground
that its consent to enter said agreement was vitiated by fraud because
private respondents withheld from petitioner bank the material information
that the real consideration for the sale with assumption of mortgage of the
property by Manuel Behis to Rayandayan and Arceño is P2,400,000.00, and
not P250,000.00 as represented to petitioner bank. According to petitioner
bank, had it known for the real consideration for the sale, i.e. P2.4 million, it
would not have consented into entering the Memorandum of Agreement with
Rayandayan and Arceño as it was put in the dark as to the real capacity and
financial standing of private respondents to assume the mortgage from
Manuel Behis.

ISSUE:

Whether or not there existed a fraud in the case at bar.

RULING:

The Court ruled that there was no fraud in the case at bar. It is believed
that the non-disclosure to the bank of the purchase price of the sale of the
land between private respondents and Manuel Behis cannot be the “fraud”
contemplated by Article 1338 of the Civil Code.
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
to the other to enter into a contract which without them he would not have
agreed to. Simply stated, the fraud must be determining cause of the
contract, or must have caused the consent to be given.
 Pursuant to Art. 1339 of the Code, silence or concealment, by itself,
does not constitute fraud unless there is a special duty to disclose certain
facts. In the case at bar, private respondents had no duty to do such.
From the sole reason submitted by the petitioner bank that it was kept
in the dark as to the financial capacity of private respondents, the Court
cannot see how the omission or concealment of the real purchase price could
have induced the bank into giving its consent to the agreement; or that the
bank would not have otherwise given its consent had it known of the real
purchase price.

G.R. No. 165851 : February 02, 201

FACTS:

The property subject of this controversy pertains to a parcel of land

situated in Malolos, Bulacan, with an area of 49,139 square meters, titled in
the name of the late Rosendo Meneses, Sr., under Transfer Certificate of
Title (TCT) No. T-1749. Respondent Aurora Irene C. Vda. de Meneses is the
surviving spouse of the registered owner, Rosendo Meneses, Sr.. She was
issued Letters of Administration over the estate of her late husband. On May
17, 1995, respondent, in her capacity as administratrix of her husband's
estate, filed a Complaint for Recovery of Possession, Sum of Money and
Damages against petitioners Manuel Catindig and Silvino Roxas, Sr. before
the Regional Trial Court of Malolos, Bulacan, to recover possession over the
Masusuwi Fishpond.
Respondent alleged that in September 1975, petitioner Catindig, the
first cousin of her husband, deprived her of the possession over the
Masusuwi Fishpond, through fraud, undue influence and intimidation.
Petitioner Catindig maintained that he bought the Masusuwi Fishpond
from respondent and her children in January 1978, as evidenced by a Deed
of Absolute Sale. Catindig further argued that even assuming that
respondent was indeed divested of her possession of the Masusuwi
Fishpond by fraud, her cause of action had already prescribed considering
the lapse of about 20 years from 1975, which was allegedly the year when
she was fraudulently deprived of her possession over the property.
After trial, the trial court ruled in favor of respondent.
The CA dismissed both the petitioners' appeals and affirmed the RTC.
ISSUE:

Whether the Court of Appeals seriously and gravely erred in

disregarding the genuineness and due execution of the deed of absolute
sale.

RULING:

The Supreme Court denied the petition. The Supreme Court

is convinced that the Deed of Absolute Sale relied upon by the defendants,
petitioners herein is simulated and fictitious and has no consideration. On
its face, the Deed of Absolute sale is not complete and is not in due form. It
is a 3-page document but with several items left unfilled or left blank, like the
day the document was supposed to be entered into, the tax account numbers
of the persons appearing as signatories to the document and the names of
the witnesses. In other words, it was not witnessed by any one. More
importantly, it was not notarized.
The Court also finds no compelling reason to depart from the court a
quo's finding that respondent never received the consideration stipulated in
the simulated deed of sale. Defendant [petitioner herein] Catindig declared
that plaintiff and her children signed the instrument freely and voluntarily and
that the consideration of P150,000.00 as so stated in the document was paid
by him to plaintiff . However, it is not denied that the title to this property is
still in the name of Rosendo Meneses, Sr., and the owner's duplicate copy
of the title is still in the possession of the plaintiff.
Since it was well established that the Deed of Sale is simulated and,
therefore void, petitioners' claim that respondent's cause of action is one for
annulment of contract, which already prescribed, is unavailing, because only
voidable contracts may be annulled. On the other hand, respondent's
defense for the declaration of the inexistence of the contract does not
prescribe.

MANGAHAS VS. BROBIO

G.R. No. 183852 : October 20, 2010

FACTS:
 On January 10, 2002, Pacifico S. Brobio died intestate, leaving three
parcels of land. He was survived by his wife, respondent Eufrocina A. Brobio,
and four legitimate and three illegitimate children; petitioner Carmela Brobio
Mangahas is one of the illegitimate children.
On May 12, 2002, the heirs of the deceased executed a Deed of
Extrajudicial Settlement of Estate of the Late Pacifico Brobio with Waiver. In
the Deed, petitioner and Pacificos other children, in consideration of their
love and affection for respondent and the sum of P150,000.00, waived and
ceded their respective shares over the three parcels of land in favor of
respondent. According to petitioner, respondent promised to give her an
additional amount for her share in her fathers estate. Thus, after the signing
of the Deed, petitioner demanded from respondent the promised additional
amount, but respondent refused to pay, claiming that she had no more
money.
A year later, while processing her tax obligations with the Bureau of
Internal Revenue (BIR), respondent was required to submit an original copy
of the Deed. Left with no more original copy of the Deed, respondent
summoned petitioner to her office on May 31, 2003 and asked her to
countersign a copy of the Deed. Petitioner refused to countersign the
document, demanding that respondent first give her the additional amount
that she promised. Considering the value of the three parcels of land (which
she claimed to be worth P20M), petitioner asked for P1M, but respondent
begged her to lower the amount. Petitioner agreed to lower it to P600,000.00.
Because respondent did not have the money at that time and petitioner
refused to countersign the Deed without any assurance that the amount
would be paid, respondent executed a promissory note. Petitioner agreed to
sign the Deed when respondent signed the promissory note.
When the promissory note fell due, respondent failed and refused to
pay despite demand. Petitioner made several more demands upon
respondent but the latter kept on insisting that she had no money. On
January 28, 2004, petitioner filed a Complaint for Specific Performance with
damagesaw against respondent.
The Regional Trial Court (RTC) rendered a decision in favor of
petitioner. The CA reversed the RTC decision and dismissed the complaint.
Hence, this petition.
ISSUE:
The Honorable Court of Appeals erred in the appreciation of the facts
of this case when it found that intimidation attended the execution of the
promissory note subject of this case.
RULING:
 The Supreme Court ruled that contracts are voidable where consent
thereto is given through mistake, violence, intimidation, undue influence, or
fraud. In determining whether consent is vitiated by any of these
circumstances, courts are given a wide latitude in weighing the facts or
circumstances in a given case and in deciding in favor of what they believe
actually occurred, considering the age, physical infirmity, intelligence,
relationship, and conduct of the parties at the time of the execution of the
contract and subsequent thereto, irrespective of whether the contract is in a
public or private writing. It is alleged that mistake, violence, fraud, or
intimidation attended the execution of the promissory note. Still, respondent
insists that she was "forced" into signing the promissory note because
petitioner would not sign the document required by the BIR. The fact that
respondent may have felt compelled, under the circumstances, to execute
the promissory note will not negate the voluntariness of the act. As rightly
observed by the trial court, the execution of the promissory note in the
amount of P600,000.00 was, in fact, the product of a negotiation between
the parties. Respondent herself testified that she bargained with petitioner to
lower the amount. The remedy suggested by the CA is not the proper one
under the circumstances. An action for partition implies that the property is
still owned in common. Considering that the heirs had already executed a
deed of extrajudicial settlement and waived their shares in favor of
respondent, the properties are no longer under a state of co-ownership; there
is nothing more to be partitioned, as ownership had already been merged in
one person.
Wherefore, the decision of the CA is reversed and set aside and the
decision of the RTC is reinstated.

WILLIAM ALAIN MIAILHE, petitioner,

vs. COURT OF APPEALS and REPUBLIC OF THE PHILIPPINES,
respondents.
G.R. No. 108991 March 20, 2001

FACTS:

Petitioner, William Alain Miailhe, on his own behalf and on behalf of

Victoria Desbarats-Miailhe, Monique Miailhe-Sichere and Elaine Miailhe-
Lencquesaing filed a Complaint for Annulment of Sale, Reconveyance and
Damages against [Respondent] Republic of the Philippines and defendant
Development Bank of the Philippines.
The petitioner alleged that DBP forged, threatened and intimidated
petitioner to sell the property to DBP for the grossly low price. The RTC and
CA rendered their decision in favor of DBP and that the action is already
prescribed.

ISSUE:

Whether or not extrajudicial demands did not interrupt prescription.

RULING:

In the present case, there is as yet no obligation in existence.

Respondent has no obligation to reconvey the subject lots because of the
existing Contract of Sale. Although allegedly voidable, it is binding unless
annulled by a proper action in court.12 Not being a determinate conduct
that can be extrajudically demanded, it cannot be considered as an
obligation either. Since Article 1390 of the Civil Code states that voidable
"contracts are binding, unless they are annulled by a proper action in
court," it is clear that the defendants were not obligated to accede to any
extrajudicial demand to annul the Contract of Sale.13
NATURAL OBLIGATION
 MANZANILLA VS. CA
GR No. L-75342 March 15, 1990

FACTS:

Spouses Manzanilla sold on installment an undivided one-half portion

of their residential house and lot. At the time of the sale, the said property
was mortgaged to the Government Service Insurance System (GSIS), which
fact was known to the vendees, spouses Magdaleno and Justina Campo.
The Campo spouses took possession of the premises upon payment of the
first installment. Some payments were made to petitioners while some were
made directly to GSIS. The GSIS filed its application to foreclose the
mortgage on the property for failure of the Manzanilla spouses to pay their
monthly amortizations. The property was sold at public auction where GSIS
was the highest bidder. Two months before the expiration of the
period to redeem, the Manzanilla spouses executed a Deed of Absolute Sale
of the undivided one half portion of their property in favor of the Campo
spouses. Upon the expiration of the period to redeem without the Manzanilla
spouses exercising their right of redemption, title to the property was
consolidated in favor of the GSIS and a new title issued in its name.
The Manzanilla spouses succeeded in re-acquiring the property from
the GSIS. An Absolute Deed of Sale was executed by GSIS in favor of the
Manzanilla spouses and a new certificate of title was issued to them.

The Manzanilla spouses mortgaged the property to the Biñan Rural

Bank. Petitioner Ines Carpio purchased the property from the Manzanilla
spouses and agreed to assume the mortgage in favor of Biñan Rural Bank.

Private respondent Justina Campo registered her adverse claim over

the said portion of land with the Register of Deeds of Quezon City. On the
other hand, petitioner Ines Carpio filed an ejectment case against private
respondent Justina. Private respondent Justina Campo filed a case for
quieting of title against the Manzanilla spouses and Ines Carpio praying for
the issuance to her of a certificate of title over the undivided one-half portion
of the property in question.
ISSUE:

Whether petitioners Manzanillas are under any legal duty to reconvey

the undivided one-half portion of the property to private respondent Justina
Campo.

RULING:

In view of the failure of either the Manzanilla spouses or the Campo

spouses to redeem the property from GSIS, title to the property was
consolidated in the name of GSIS. The new title cancelled the old title in the
name of the Manzanilla spouses. GSIS at this point had a clean title free
from any lien in favor of any person including that of the Campo spouses.
Art. 1456. If property is acquired through
mistake or fraud, the person obtaining it is, by force of law, considered a
trustee of an implied trust for the benefit of the person from whom the
property comes. There was no mistake or fraud on the part of petitioners
when the subject property was re-acquired from the GSIS. The fact that they
previously sold one-half portion thereof has no more significance in this re-
acquisition. Private respondent's right over the one-half portion was
obliterated when absolute ownership and title passed on to the GSIS after
the foreclosure sale. The property as held by GSIS had a clean title. The
property that was passed on to petitioners retained that quality of title. As
regards the rights of private respondent Ines Carpio, she is a buyer in good
faith and for value. There was no showing that at the time of the sale to her
of the subject property, she knew of any lien on the property except the
mortgage in favor of the Biñan Rural Bank. No other lien was annotated on
the certificate of title. She is also not required by law to go beyond what
appears on the face of the title. When there is nothing on the certificate of
title to indicate any cloud or vice in the ownership of the property or any
encumbrances thereon, the purchaser is not to explore further than what the
Torrens Title upon its face indicates in quest for any hidden defect or
inchoate right thereof. Thus Quieting of title is dismissed.
 RURAL BANK OF PARAÑÀQUE VS REMOLADO
GR No. L-62051. March 18, 1985

FACTS:

This case is about the repurchase of mortgage property after the period
of redemption and had expired. Isidra Remolado, 64, a widow, and resident
of Makati, Rizal, owned a lot with an area of 308 square meters, with a
bungalow thereon, which was leased to Beatriz Cabagnot. On April 17, 1971
she mortgaged it again to petitioner. She eventually secured loans totalling
P18,000 (Exh. At D). the loans become overdue. The bank foreclosed the
mortagage on July 21, 1972 and bought the property at the foreclosure sale
for P22,192.70. The one-year period of redemption was to expire on August
21, 1973.
On August 9, 1973 or 14 days before the expiration of the one-year
redemption period, the bank gave her a statement showing that she should
pay P25,491.96 for the redemption of the property on August 23. No
redemption was made on that date. On September 3, 1973 the bank
consolidated its ownership over the property. Remolado's title was cancelled.
Remolado was offered a period until October 31, 1973 from which she could
repurchase the lot. She only exercised that option on November 5. Remolado
then filed an action for reconveyance which the lower courts granted her.

ISSUE:

Is Remolado entitled to reconveyance?

RULING:

There was no binding agreement for its repurchase. Even on the

assumption that the bank should be bound by its commitment to allow
repurchase on or before October 31, 1973, still Remolado had no cause of
action because she did not repurchase the property on that date.
Justice is done according to law. As a rule, equity follows the law.
There may be a moral obligation, often regarded as an equitable
consideration (meaning compassion), but if there is no enforceable legal
duty, the action must fail although the disadvantaged party deserves
commiseration or sympathy.
In the instant case, the bank acted within its legal rights when it refused
to give Remolado any extension to repurchase after October 31, 1973. It had
given her about two years to liquidate her obligation. She failed to do so. The
decision of the CA affirming the decision of the RTC was reversed.

Leung Ben vs. O’Brien

G.R. No. L-13602, April 6, 1918
38 Phil. 182

FACTS:

On December 12, 1917 an action was instituted in the CFI of Manila

by O’Brien to recover from Leung Ben the sum of P15, 000.00 alleged to
have been lost by the plaintiff to the defendant in a series of gambling,
banking and percentage games conducted during the two or three months
prior to the institution of the suit. In his verified complaint the plaintiff asked
for an attachment, under sections 424 and 412 (1) of the Code of Civil
Procedure against the property of the defendant on the ground that the
latter was about to depart from the Philippine Island with intent to defraud
his creditors. The attachment was issued and acting on the authority
thereof, the sheriff attached the sum of P15, 000.00 which had been
deposited by the defendant with the International Banking Corporation.

The defendant moved to quash the attachment; the court however,

dismissed said motion. On January 8, 1918, petitioner Leung Ben, the
defendant in that action filed his petition for writ of certiorari directed
against O’Brien and the judges of CFI. The prayer is that, the honorable
James A. Ostrand be required to certify the records for review and that the
order of attachment that had been issued should be revoked and
discharged with cost.
ISSUE:

The issue is whether or not the statutory obligation to restore money

won at gaming is an obligation from “contract, express or implied.”

HELD:

The duty of the defendant to refund the money which he won from the
plaintiff at gaming is not an obligation from “contract, express or implied”
rather it is a duty imposed by statute. Upon general principles, recognized
both in civil and common law, money lost at 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, containing numerous provisions
recognizing the right to recover money lost in gambling or in the playing of
certain games. The obligation of the defendant to restore or refund the
money which he won from the plaintiff at gaming therefore arises ex lege.

Arturo Pelayo vs. Marcelo Lauron

G.R. No. L-4089, January 12, 1909
12 Phil. 453
FACTS:

On or about October 13, 1906, the plaintiff Arturo Pelayo was called
to the house of the defendants, Marcelo Lauron and Juana Abella situated
in San Nicolas, and that upon arrival 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. Escaño, the
plaintiff found it necessary to remove the fetus by means of an operation, in
which service he was occupied until the following morning, and had visited
the patient several times. The equitable value of the services rendered by
the plaintiff was P500.00, which the defendants refused to pay. On
November 23, 1906, the plaintiff filed a complaint against the defendants
and prayed that the judgment be rendered in his favor as against the
defendants, or any of them, for the sum of P500 and costs, together with
any other relief that may be deemed proper. In answer, the defendants
denied all allegations and alleged as a special defense, that their daughter-
in-law died as a consequence of the said childbirth, and when she was still
alive she lived with her husband independently and in a separate house
and without any relation whatsoever with them, and on the day she gave
birth she was in the house of the defendants and her stay there was
accidental and due to fortuitous circumstances. Thus, the defendants
prayed that they be absolved from the complaint with costs against the
plaintiff.

The plaintiff demurred the answer and that the lower court sustained
the demurrer directing the defendants to amend their answer. In
compliance, the defendants amended their answer denying each and every
allegation contained in the complaint. The lower court rendered judgment in
favor of the defendants absolving them from the complaint.

ISSUE:
The issue is whether or not the parents-in-law are under any obligation to
pay the fees claimed by the plaintiff.

HELD:
 The defendants were not, nor are they now, under any obligation by
virtue of any legal provision, to pay the fees claimed, nor in consequence of
any contract entered into between them and the plaintiff from which such
obligation might have arisen.
The rendering of medical assistance in case of illness is comprised
among the mutual obligations to which spouses are bound by way of
mutual support. 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 the health may
be restored; the party bound to furnish such support is therefore, liable for
all the expenses, including the fees of the medical expert for his
professional services. The liability arises from the obligation, which the law
has expressly established, between married couples. It is therefore the
husband of the patient who is bound to pay for the services of the plaintiff.
The fact that it was not the husband who called the plaintiff and requested
the medical assistance for his wife is no bar to his fulfillment of such
obligation, as the defendants, in view of the imminent danger to which the
life of the patient was at that moment exposed, considered that the medical
assistance was urgently needed. Therefore, plaintiff should direct his action
against the husband of the patient, and not against her parents-in-law.

SPS. GUANIO v. MAKATI SHANGRI-LA HOTEL

GR 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.Prior to the event, Makati Shangri-La Hotel & Resort, Inc.
(respondent) scheduled an initial and final food tasting. The parties
eventually agreed on a final price ─ P1,150 per person.On July 27, 2001, the
parties finalized and signed their contract.
 Petitioners claim that during the reception, respondent’s
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 hotel’s waiters were rude
and unapologetic when confronted about the delay; and despite Alvarez’s
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. They further
claim that they brought wine and liquor in accordance with their open bar
arrangement, but these were not served to the guests who were forced to
pay for their drinks.

Petitioners thus sent a letter-complaint to the Makati Shangri-la Hotel

and Resort, Inc.and received an apologetic reply from Krister Svensson, the
hotel’s Executive Assistant Manager in charge of Food and Beverage. They
nevertheless filed a complaint for breach of contract and damages before
the RTC of Makati City. Respondents averred that it was the increase in
number of the unexpected guests that led to the shortage claimed by the
petitioners.

The RTC rendered a decision in favor of the plaintiffs and was reversed
by the CA, upon appeal, the latter holding that the proximate cause of
petitioners’ injury was an unexpected increase in their guests.

ISSUE:

Whether or not the CA correctly held that the proximate cause of

petitioners’ injury was an unexpected increase in their guests.

HELD:

The Court finds that since petitioners’ complaint arose from a contract,
the doctrine of proximate cause finds no application to it, the latter applicable
only to actions for quasi-delicts, not in actions involving breach of contract.
 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 failure, without
legal excuse, to perform any promise which forms the whole or part of the
contract. The appellate court, and even the trial court, observed that
petitioners were remiss in their obligation to inform respondent of the change
in the expected number of guests. The observation is reflected in the
records of the case. Petitioners’ failure to discharge such obligation thus
excused respondent from liability for “any damage or inconvenience”
occasioned thereby.
UNENFORCEABLE CONTRACT
 HERMOSA VS LONGARA
GR No. L-5267, October 27, 1953

FACTS:

This is an appeal by way of certiorari against a decision of the Court

of Appeals, fourth division, approving certain claims presented by Epifanio
M. Longara against the testate estate of Fernando Hermosa, Sr. The
claims are of three kinds, namely, P2,341.41 representing credit advances
made to the intestate from 1932 to 1944, P12,924.12 made to his son
Francisco Hermosa, and P3,772 made to his grandson, Fernando
Hermosa, Jr. from 1945 to 1947, after the death of the intestate, which
occurred in December, 1944. The claimant presented evidence and the
Court of Appeals found, in accordance therewith, that the intestate had
asked for the said credit advances for himself and for the members of his
family "on condition that their payment should be made by Fernando
Hermosa, Sr. as soon as he receive funds derived from the sale of his
property in Spain." 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 in October, 1947, and
the same was paid for subsequently. The Claim was filed on October 2,
1948.

ISSUE:

Does said condition a potestative condition and thusly void and

unenforceable?

RULING:
 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.
Cirumstances show that the intestate had already decided to sell his house
lest he meant to fool his creditors. But in addition of the sale to him (the
intestate-vendor), there were still other conditions that had no concur to
effect the sale, mainly that of the presence of a buyer, ready, able and
willing to purchase the property under the conditions demanded by the
intestate. 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. The Supreme Court upheld the ruling of the lower
courts.

ORDUA VS. FUENTEBELLA et. Al

G.R. No. 176841 : June 29, 2010

FACTS:

This case involves a residential lot with an area of 74 square meters

located at Fairview Subdivision, Baguio City, originally registered in the
name of Armando Gabriel, Sr. under Transfer Certificate of Title (TCT) No.
67181 of the Registry of Deeds of Baguio City.
Sometime in 1996 or thereabouts, Gabriel Sr. sold the subject lot to
petitioner Antonita Ordua, but no formal deed was executed to document the
sale. The contract price was apparently payable in installments as Antonita
remitted from time to time and Gabriel Sr. accepted partial payments. One
of the Orduas would later testify that Gabriel Sr. agreed to execute a final
deed of sale upon full payment of the purchase price.
 In 1979, Antonita and her sons, Dennis and Anthony Ordua, were
already occupying the subject lot on the basis of some arrangement
undisclosed in the records and even constructed their house thereon. They
also paid real property taxes for the house and declared it for tax purposes,
as evidenced by Tax Declaration in which they place the assessed value of
the structure at PhP 20,090.
After the death of Gabriel Sr., his son and namesake, respondent
Gabriel Jr., secured TCT No. T-71499 over the subject lot and continued
accepting payments from the petitioners. On December 12, 1996, Gabriel Jr.
wrote Antonita authorizing her to fence off the said lot and to construct a road
in the adjacent lot. On December 13, 1996, Gabriel Jr. acknowledged receipt
of a PhP 40,000 payment from petitioners. Through a letter dated May 1,
1997, Gabriel Jr. acknowledged that petitioner had so far made an aggregate
payment of PhP 65,000, leaving an outstanding balance of PhP 60,000. A
receipt Gabriel Jr. issued dated November 24, 1997 reflected a PhP 10,000
payment. Despite all those payments made for the subject lot, Gabriel Jr.
would later sell it to Bernard Banta (Bernard) obviously without the
knowledge of petitioners.
On July 3, 2001, petitioners, joined by Teresita, filed a Complaint for
Annulment of Title, Reconveyance with Damages against the respondents
before the RTC.
The RTC ruled for the respondents. The CA dismissed the appeal,
hence this petition.

ISSUE:

a. Whether or not the sale of the subject lot by Gabriel Sr. to Antonita
is unenforceable under the Statute of Frauds;
b. Whether or not such sale has adequate consideration;
c. Whether the instant action has already prescribed; and whether or
not respondents are purchasers in good faith.

RULING:

On the first issue, the court notices that Gabriel Sr., during his lifetime,
sold the subject property to Antonita, the purchase price payable on
installment basis. Gabriel Sr. appeared to have been a recipient of some
partial payments. After his death, his son duly recognized the sale by
accepting payments and issuing what may be considered as receipts
therefor. Gabriel Jr., in a gesture virtually acknowledging the petitioners'
dominion of the property, authorized them to construct a fence around it. And
no less than his wife, Teresita, testified as to the fact of sale and of payments
received. Eduardo's assertion in his Answer that "persons appeared in the
property" only after "he initiated ejectment proceedings" is clearly baseless.
On the second issue, the trial court's posture, with which the CA
effectively concurred, is patently flawed. For starters, they equated
incomplete payment of the purchase price with inadequacy of price or what
passes as lesion, when both are different civil law concepts with differing
legal consequences, the first being a ground to rescind an otherwise valid
and enforceable contract. Perceived inadequacy of price, on the other hand,
is not a sufficient ground for setting aside a sale freely entered into, save
perhaps when the inadequacy is shocking to the conscience. The Court to
be sure takes stock of the fact that the contracting parties to the 1995 or 1996
sale agreed to a purchase price of PhP 125,000 payable on installments. But
the original lot owner, Gabriel Sr., died before full payment can be effected.
Nevertheless, petitioners continued remitting payments to Gabriel, Jr., who
sold the subject lot to Bernard on June 30, 1999. Gabriel, Jr., as may be
noted, parted with the property only for PhP 50,000. On the other hand,
Bernard sold it for PhP 80,000 to Marcos and Benjamin. From the foregoing
price figures, what is abundantly clear is that what Antonita agreed to pay
Gabriel, Sr., albeit in installment, was very much more than what his son, for
the same lot, received from his buyer and the latter's buyer later. The Court,
therefore, cannot see its way clear as to how the RTC arrived at its simplistic
conclusion about the transaction between Gabriel Sr. and Antonita being
without "adequate consideration."
On the third issue, the court finds no quibbling about the fraudulent
nature of the conveyance of the subject lot effected by Gabriel Jr. in favor of
Bernard. It is understandable that after his father's death, Gabriel Jr.
inherited subject lot and for which he was issued TCT No. T-71499. Since
the Gabriel Sr. - Antonita sales transaction called for payment of the contract
price in installments, it is also understandable why the title to the property
remained with the Gabriels. And after the demise of his father, Gabriel Jr.
received payments from the Orduas and even authorized them to enclose
the subject lot with a fence. In sum, Gabriel Jr. knew fully well about the sale
and is bound by the contract as predecessor-in-interest of Gabriel Sr. over
the property thus sold. The prescriptive period for the reconveyance of
fraudulently registered real property is 10 years, reckoned from the date of
the issuance of the certificate of title, if the plaintiff is not in possession, but
imprescriptible if he is in possession of the property. Thus, one who is in
actual possession of a piece of land claiming to be the owner thereof may
wait until his possession is disturbed or his title is attacked before taking
steps to vindicate his right. As it is, petitioners' action for reconveyance is
imprescriptible.
In view of this case, the court ruled that petitioner Antonita Ordua is
recognized to have the right of ownership over subject lot covered by TCT
No. T-3276 of the Baguio Registry registered in the name of Eduardo J.
Fuentebella and therefore granted the petition and set aside the decision of
the lower court.

ROSARIO L. DE BRAGANZA, ET AL., petitioners,

vs.FERNANDO F. DE VILLA ABRILLE, respondent.
G.R. No. L-12471 April 13, 1959

FACTS:

Rosario L. de Braganza and her sons Rodolfo and Guillermo petition

for review of the Court of Appeal's decision whereby they were required
solidarily to pay Fernando F. de Villa Abrille the sum of P10,000 plus 2 %
interest from October 30, 1944. Because payment had not been made, Villa
Abrille sued them in March 1949.

The RTC and CA rendered its decision in favor of Abrile despite the
fact tht Guillermo and Rodolfo are minors.

ISSUE:

Whether or not Guillermo and Rodolfo can be held liable to pay the
loan.

RULING:

The SC held that being minors, Rodolfo and Guillermo could not be
legally bound by their obligation.These minors may not be entirely absolved
from monetary responsibility. In accordance with the provisions of Civil Code,
even if their written contact is unenforceable because of non-age, they shall
make restitution to the extent that they have profited by the money they
received. (Art. 1340) There is testimony that the funds delivered to them by
Villa Abrille were used for their support during the Japanese occupation.
Such being the case, it is but fair to hold that they had profited to the extent
of the value of such money, which value has been authoritatively established
in the so-called Ballantine Schedule: in October 1944, P40.00 Japanese
notes were equivalent to P1 of current Philippine money.

CABALES, ET. AL vs COURT OF APPEALS

August 31, 2007
FACTS:

Saturnina and her children Bonifacio, Albino, Francisco, Leonara,

Alberto and petitioner Rito inherited a parcel of land. They sold such property
to Dr. Cayetano Corrompido with a right to repurchase within 8 years.
Alberto secured a note from Dr. Corrompido in the amount of Php
300.00.
Alberto died leaving a wife and son, petitioner Nelson.
Within the 8-year redemption period, Bonifacio and Albino tendered
their payment to Dr. Corrompido. But Dr. Corrompido only released the
document of sale with pacto de retro after Saturnina paid the share of her
deceased son, Alberto, plus the note.
Saturnina and her children executed an affidavit to the effect that
petitioner Nelson would only receive the amount of Php 176.34 from
respondents-spouses when he reaches the age if 21 considering that
Saturnina paid Dr. Corrompido Php 966.66 for the obligation of petitioner
Nelson’s late father Alberto.

ISSUE:

Whether or not the slae entered into is valid and binding.

RULING:

The legal guardian only has the plenary power of administration of the
minor’s property. It does not include the power to alienation which needs
judicial authority. Thus when Saturnina, as legal guardian of petitioner Rito,
sold the latter’s pro indiviso share in subject land, she did not have the legal
authority to do so. The contarct of sale as to the pro indiviso share of
Petitioner Rito was unenforceable. However when he acknowledged receipt
of the proceeds of the sale on July24, 1986, petitioner Rito effectively ratified
it. This act of ratification rendered the sale valid and binding as to him.
MUNICIPALITY OF HAGONOY, BULACAN ET. AL. V HON. SIMEON P.
DUMDUM, JR. ET. AL
G.R. NO. 168289, 22 MARCH 2010

FACTS:
Private respondent, Emily Rose Go Ko Lim Chao, who is engaged
in buy and sell business of surplus business, equipment machineries, spare
parts and related supplies filed a complaint for collection of sum of money,
including damages against the petitioners, Municipality of
Hagonoy, Bulacan and its ormer chief executive, Mayor Felix V. Ople in his
official and personal capacity. The private respondent claimed that because
of Ople’s earnest representation that funds had already been allowed for the
project, she agreed to deliver from her personal principal business in Cebu
City twenty-one motor vehicles whose valued totaled to 5,820,000.00 php
but the petitioners here instead filed a motion to dismiss on the ground that
the claim on which the action had been brought was unenforceable under
the statute of frauds, pointing out that there was no written contract or
document that would evince the supposed agreement they entered into with
the respondent. The petitioners also filed for Motion to Dissolve and /or
Discharge the Writ of Preliminary Attachment already issued by the court
invoking immunity of the State from suit, unenforceability of contract, and
failure to substantiate the allegation of fraud. But the trial court denied all the
petitions of the petitioners; hence the petitioners brought this case to CA
believing that the trial court committed grave abuse of discretion upon issuing
two orders .
ISSUES:
Whether or not complaint is unenforceable under the Statutes of
Fraud.
Whether or not there is valid reason to deny petitioners’ motion to
dismiss the Writ of Preliminary Attachment.
HELD:
The SC held that Statute of frauds is descriptive of statutes that
require certain classes of contracts to be in writing, and that do not deprive
the parties of the right to contract with respect to the matters therein involved,
but merely regulate the formalities of the contract necessary to render its
enforceability. In other words, the Statute of fraud only lays down the method
by which the enumerated contracts maybe proved. It does not also declare
any contract invalid because they are not reduced into writing inasmuch as,
by law, contracts are obligatory in whatever form they may have been
entered into provided that all their essential requisites for validity are present.
Thus the claim of the respondent is well-substantiated.
For the second issue, the Sc held that the Writ of Preliminary
Attachment should be dismissed because it writ of attachment in this case
would only prove to be useless and unnecessary under the premises since
the property of the Municipality may not, in the event that respondent’s claim
is validated unless there has been a valid appropriation provided by law.
The petition is hereby granted in part, but affirmed the decision of
CA in CA-G.R. NO. 81888 is affirmed as it was held by the Regional Trial
Court.
VOID CONTRACTS
 HEIRS OF M. DORONIO vs. HEIR OF F. DORONIO
541 SCRA 479

FACTS:

Petitioners are the heirs of Maralino Doronio, while respondents are

the heirs of Fortunato Doronio.
The property in dispute is one of a private deed of donation propter
nuptias who was executed by Spouses Simeon Doronio and Cornelia Gante
in facor of Maralino Doronio and his wife Veronica Pico.
The heirs of Fortuanto Doronio contended that only the half of the
property was actually incorporated in the deed of donation because it stated
that Fortunato is the owner of the adjacent property. Eager to obtain the
entire property, the heirs of Marcelino filed a petition “For the Registration of
a Private Deed of Donation”. The RTC granted the petition.
The heirs of Fortunato files a pleading in the form of petition. In the
petition, they prayed that an order be issued declaring null and void the
registration of the private deed of donation.
The RTC ruled in favor of the heirs of Marcelino. The CA reversed the
decision of RTC>

ISSUE:

Whether or not the donation propter nuptias is valid.

RULING:

Article 633 of the OCC provides that figts of real property , in order to
be valid, must appear in a public document. It is settled that a donation of
real estate propter nuptias is void unless made by public instrument.
In the instant case, the donation propter nuptias did not become valid.
Neither did it create any right because it was not made in a public instrument.
Hence, it conveyed no title to the land in question to petitioner’s
predecessors.
NATIVIDAD ARIAGA VDA. DE GURREA, CARLOS GURREA, JULIETA
GURREA, TERESA GURREA-RODRIGUEZ, RICARDO GURREA, Jr.,
MA. VICTORIA GURREA-CANDEL, and RAMONA GURREA-
MONTINOLA, Petitioners,
vs ENRIQUE SUPLICO, Respondent
G.R. No. 144320 April 26, 2006

FACTS:

The petition arose from a complaint for anuulment of tilte with prayer
for preliminary injunction filed with the court of First Instance by Rosalina
Gurrea in her capacity as attorney-in-fact of the heirs of Ricardo Gurrea. The
complaint was filed against Atty. Enrique Suplico.
Atty. Suplico alleged that the property in dispurte was for the payment
of his services rendered to the late Ricardo Gurrrea which the offered to him
as payment.

ISSUE:

Whether or not petitioner’s are entitled to the cancellation of

respondent attorney’s title over the subject property and the reconveyance
thereof to the herein petitioners or to be the estate of the Late Ricardo.

RULING:

Having been established that the subject property was still the object
of litigation at the time the subject deed of Transfer of Rights and Interest
was executed, the assignment of rights and interest over the subject property
in favor of respondent is null and void for being violative of the provisions of
Article 1491 of the Civil Code which expressly prohibits lawyers from
acquiring property or rights which may be the object of any litigation in which
they may take part by virtue of their profession.
It follows that respondent’s title over the subject property should be cancelled
and the property reconveyed to the estate of Ricardo, the same to be
distributed to the latter?s heirs. This is without prejudice, however, to
respondent?s right to claim his attorney?s fees from the estate of Ricardo, it
being undisputed that he rendered legal services for the latter.

LA BUGA’AL-BLAAN vs RAMOS
December 1, 2004

FACTS:

The Petition for Prohibition and Mandamus before the Court challenges the
constitutionality of (1) Republic Act No. [RA] 7942 (The Philippine Mining Act
of 1995); (2) its Implementing Rules and Regulations (DENR Administrative
Order No. [DAO] 96-40); and (3) the FTAA dated March 30, 1995, executed
by the government with Western Mining Corporation (Philippines), Inc.
(WMCP).
On January 27, 2004, the Court en banc promulgated its Decision granting
the Petition and declaring the unconstitutionality of certain provisions of RA
7942, DAO 96-40, as well as of the entire FTAA executed between the
government and WMCP, mainly on the finding that FTAAs are service
contracts prohibited by the 1987 Constitution.

ISSUE:

Whether or nor it is a void contract.

RULING:

Section 7.9 of the WMCP FTAA has effectively given away the State's
share without anything in exchange. Moreover, it constitutes unjust
enrichment on the part of the local and foreign stockholders in WMCP,
because by the mere act of divestment, the local and foreign stockholders
get a windfall, as their share in the net mining revenues of WMCP is
automatically increased, without having to pay anything for it.Being grossly
disadvantageous to government and detrimental to the Filipino people, as
well as violative of public policy, Section 7.9 must therefore be stricken off
as invalid.
 Section 7.8(e) of the WMCP FTAA likewise is invalid, since by allowing
the sums spent by government for the benefit of the contractor to be
deductible from the State's share in net mining revenues, it results in
benefiting the contractor twice over. This constitutes unjust enrichment on
the part of the contractor, at the expense of government. For being grossly
disadvantageous and prejudicial to government and contrary to public policy,
Section 7.8(e) must also be declared without effect. It may likewise be
stricken off without affecting the rest of the FTAA.

ALFRED FRITZ FRENZEL, petitioner, vs.EDERLINA P. CATITO,

respondent.
G.R. No. 143958 July 11, 2003

FACTS:

Alfred Frenzel and Ederlina Catito had an amorous relationship which

started in King’s Cross, a night spot in Sydney.
During their relationship Alfred bought properties in the Philippines in
the name of Ederlina. Their relationship started to deteriorate when the
husband of Ederlina threatened Ederlina that he would file a bigamy case
against her for having an illicit affair with Alfred, who was also married.
Alfred filed a complaint against Ederlina for specific performance,
declaration of real and personal properties, sum of money and damages.

ISSUE:

Whether or not acquisition of a parcel of land is valid.

RULING:

The sales of three parcels of land in favor of the petitioner who is a

foreigner is illegal per se. The transactions are void ab initio because they
were entered into in violation of the Constitution. Thus, to allow the petitioner
to recover the properties or the money used in the purchase of the parcels
of land would be subversive of public policy.
 An action for recovery of what has been paid without just cause has
been designated as an accion in rem verso. This provision does not apply if,
as in this case, the action is proscribed by the Constitution or by the
application of the pari delicto doctrine. 68 It may be unfair and unjust to bar
the petitioner from filing an accion in rem verso over the subject properties,
or from recovering the money he paid for the said properties, but, as Lord
Mansfield stated in the early case of Holman vs. Johnson:69 "The objection
that a contract is immoral or illegal as between the plaintiff and the defendant,
sounds at all times very ill in the mouth of the defendant. It is not for his sake,
however, that the objection is ever allowed; but it is founded in general
principles of policy, which the defendant has the advantage of, contrary to
the real justice, as between him and the plaintiff."

AGAN vs. PIATCO

January 21, 2004

FACTS:

Asia’s Emerging Dragon Corp. (AEDC) submitted an unsolicited proposal to

the Philippine Government through the Department of Transportation and
Communication (DOTC) and Manila International Airport Authority (MIAA)
for the construction and development of the NAIA IPT III under a build-
operate-and-transfer arrangement pursuant to R.A. No. 6957, as amended
by R.A. No. 7718 (BOT Law).
The DOTC issued the notice of award for the NAIA IPT III project to the
Paircargo Consortium, which later organized into herein respondent
PIATCO.
Various petitions were filed before this Court to annul the 1997 Concession
Agreement, the ARCA and the Supplements and to prohibit the public
respondents DOTC and MIAA from implementing them.
In a decision dated May 5, 2003, this Court granted the said petitions and
declared the 1997 Concession Agreement, the ARCA and the Supplements
null and void.
Respondent PIATCO, respondent-Congressmen and respondents-
intervenors now seek the reversal of the May 5, 2003 decision and pray that
the petitions be dismissed.

ISSUE:

Whether or not the contract is valid.

RULING:

Section 19, Article XII of the 1987 Constitution mandates that the State
prohibit or regulate monopolies when public interest so requires. Monopolies
are not per se prohibited. Given its susceptibility to abuse, however, the State
has the bounden duty to regulate monopolies to protect public interest. Such
regulation may be called for, especially in sensitive areas such as the
operation of the country’s premier international airport, considering the public
interest at stake.
By virtue of the PIATCO contracts, NAIA IPT III would be the only
international passenger airport operating in the Island of Luzon, with the
exception of those already operating in Subic Bay Freeport Special
Economic Zone ("SBFSEZ"), Clark Special Economic Zone ("CSEZ") and in
Laoag City. Undeniably, the contracts would create a monopoly in the
operation of an international commercial passenger airport at the NAIA in
favor of PIATCO.
NATURAL OBLIGATION
 MANZANILLA VS. CA
GR No. L-75342 March 15, 1990

FACTS:

Spouses Manzanilla sold on installment an undivided one-half portion

of their residential house and lot. At the time of the sale, the said property
was mortgaged to the Government Service Insurance System (GSIS), which
fact was known to the vendees, spouses Magdaleno and Justina Campo.
The Campo spouses took possession of the premises upon payment of the
first installment. Some payments were made to petitioners while some were
made directly to GSIS. The GSIS filed its application to foreclose the
mortgage on the property for failure of the Manzanilla spouses to pay their
monthly amortizations. The property was sold at public auction where GSIS
was the highest bidder. Two months before the expiration of the
period to redeem, the Manzanilla spouses executed a Deed of Absolute Sale
of the undivided one half portion of their property in favor of the Campo
spouses. Upon the expiration of the period to redeem without the Manzanilla
spouses exercising their right of redemption, title to the property was
consolidated in favor of the GSIS and a new title issued in its name.
The Manzanilla spouses succeeded in re-acquiring the property from
the GSIS. An Absolute Deed of Sale was executed by GSIS in favor of the
Manzanilla spouses and a new certificate of title was issued to them.

The Manzanilla spouses mortgaged the property to the Biñan Rural

Bank. Petitioner Ines Carpio purchased the property from the Manzanilla
spouses and agreed to assume the mortgage in favor of Biñan Rural Bank.

Private respondent Justina Campo registered her adverse claim over

the said portion of land with the Register of Deeds of Quezon City. On the
other hand, petitioner Ines Carpio filed an ejectment case against private
respondent Justina. Private respondent Justina Campo filed a case for
quieting of title against the Manzanilla spouses and Ines Carpio praying for
the issuance to her of a certificate of title over the undivided one-half portion
of the property in question.
ISSUE:

Whether petitioners Manzanillas are under any legal duty to reconvey

the undivided one-half portion of the property to private respondent Justina
Campo.

RULING:

In view of the failure of either the Manzanilla spouses or the Campo

spouses to redeem the property from GSIS, title to the property was
consolidated in the name of GSIS. The new title cancelled the old title in the
name of the Manzanilla spouses. GSIS at this point had a clean title free
from any lien in favor of any person including that of the Campo spouses.
Art. 1456. If property is acquired through
mistake or fraud, the person obtaining it is, by force of law, considered a
trustee of an implied trust for the benefit of the person from whom the
property comes. There was no mistake or fraud on the part of petitioners
when the subject property was re-acquired from the GSIS. The fact that they
previously sold one-half portion thereof has no more significance in this re-
acquisition. Private respondent's right over the one-half portion was
obliterated when absolute ownership and title passed on to the GSIS after
the foreclosure sale. The property as held by GSIS had a clean title. The
property that was passed on to petitioners retained that quality of title. As
regards the rights of private respondent Ines Carpio, she is a buyer in good
faith and for value. There was no showing that at the time of the sale to her
of the subject property, she knew of any lien on the property except the
mortgage in favor of the Biñan Rural Bank. No other lien was annotated on
the certificate of title. She is also not required by law to go beyond what
appears on the face of the title. When there is nothing on the certificate of
title to indicate any cloud or vice in the ownership of the property or any
encumbrances thereon, the purchaser is not to explore further than what the
Torrens Title upon its face indicates in quest for any hidden defect or
inchoate right thereof. Thus Quieting of title is dismissed.
RURAL BANK OF PARAÑÀQUE VS REMOLADO
GR No. L-62051. March 18, 1985

FACTS:
 This case is about the repurchase of mortgage property after the period
of redemption and had expired. Isidra Remolado, 64, a widow, and resident
of Makati, Rizal, owned a lot with an area of 308 square meters, with a
bungalow thereon, which was leased to Beatriz Cabagnot. On April 17, 1971
she mortgaged it again to petitioner. She eventually secured loans totalling
P18,000 (Exh. At D). the loans become overdue. The bank foreclosed the
mortagage on July 21, 1972 and bought the property at the foreclosure sale
for P22,192.70. The one-year period of redemption was to expire on August
21, 1973.
On August 9, 1973 or 14 days before the expiration of the one-year
redemption period, the bank gave her a statement showing that she should
pay P25,491.96 for the redemption of the property on August 23. No
redemption was made on that date. On September 3, 1973 the bank
consolidated its ownership over the property. Remolado's title was cancelled.
Remolado was offered a period until October 31, 1973 from which she could
repurchase the lot. She only exercised that option on November 5. Remolado
then filed an action for reconveyance which the lower courts granted her.

ISSUE:

Is Remolado entitled to reconveyance?

RULING:

There was no binding agreement for its repurchase. Even on the

assumption that the bank should be bound by its commitment to allow
repurchase on or before October 31, 1973, still Remolado had no cause of
action because she did not repurchase the property on that date.
Justice is done according to law. As a rule, equity follows the law.
There may be a moral obligation, often regarded as an equitable
consideration (meaning compassion), but if there is no enforceable legal
duty, the action must fail although the disadvantaged party deserves
commiseration or sympathy.
In the instant case, the bank acted within its legal rights when it refused
to give Remolado any extension to repurchase after October 31, 1973. It had
given her about two years to liquidate her obligation. She failed to do so. The
decision of the CA affirming the decision of the RTC was reversed.

PROFESSIONAL SERVICES VS. AGANA

GR No. 126467 February 11, 2008

FACTS:

On April 04, 1984, Natividad Agana was admitted at the Medical City
General Hospital because of difficulty of bowel movement and bloody anal
discharge. Dr. Ampil diagnosed her to be suffering from “cancer of the
sigmoid”. Thus, Dr. Ampil, assisted by the medical staff of Medical City,
performed a surgery upon her. During the surgery, he found that the
malignancy in her sigmoid area had spread to her left ovary, necessitating
the removal of certain portions of it. Thus, Dr. Ampil obtained the consent
of Natividad’s husband to permit Dr. Fuentes to perform hysterectomy upon
Natividad. Dr. Fuentes performed and completed the hysterectomy.
Afterwards, Dr. Ampil took over, completed the operation and closed the
incision. The operation, however, appeared to be flawed as the attending
nurses entered in the corresponding Record of Operation that there were 2
lacking sponge and announced that it was searched by the surgeon but to
no avail.
After a couple of days, Natividad complained excruciating pain in her
anal region. She consulted both Dr. Ampil and Dr. Fuentes. They told her
that the pain was the natural consequence of the surgical operation
performed upon her. Dr. Ampil recommended that she consult an
oncologist to treat the cancerous nodes which were not removed. Natividad
and her husband went to the US to seek further treatment. After 4 months
she was told that she was free of cancer. They then flew back to the
Philippines. Two weeks thereafter , Natividad’s daughter found a piece of
gauze protruding from her vagina. Dr. Ampil saw immediately informed. He
proceeded to Natividad’s house where he extracted by hand a piece of
gauze. Natividad sought the treatment of Polymedic General Hospital
thereat Dr. Gutierrez detected a foreign object in her vagina - a foul-
smelling gauze which infected her vaginal vault. A recto-vaginal fistula had
formed in her reproductive organ which forced stool to excrete in her
vagina. Another surgical operation was performed upon her.
 Spouses Agana filed a complaint against PSI (owner of Medical City),
Dr. Ampil and Dr. Fuentes. The Trial Court found the respondents jointly
and severally liable. The CA affirmed said decision with modification that
Dr. Fuentes was dismissed.

ISSUE:

Whether the Court of Appeals erred in absolving Dr. Fuentes of any

liability.

RULING:

It was duly established that Dr. Ampil was the lead surgeon during
the operation of Natividad. He requested the assistance of Dr. Fuentes only
to perform hysterectomy when he (Dr. Ampil) found that the malignancy in
her sigmoid area had spread to her left ovary. Dr. Fuentes performed the
surgery and thereafter reported and showed his work to Dr. Ampil. The
latter examined it and finding everything to be in order, allowed Dr. Fuentes
to leave the operating room. Dr. Ampil then resumed operating on
Natividad. He was about to finish the procedure when the attending nurses
informed him that two pieces of gauze were missing. A "diligent search"
was conducted, but the misplaced gauzes were not found. Dr. Ampil then
directed that the incision be closed. During this entire period, Dr. Fuentes
was no longer in the operating room and had, in fact, left the hospital.
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. Clearly, the control and management of the thing which
caused the injury was in the hands of Dr. Ampil, not Dr. Fuentes.
Here, the negligence was proven to have been committed by Dr.
Ampil and not by Dr. Fuentes.

MAGAT VS. MEDIALDEA

L-37120 April 20, 1983
FACTS:

That sometime in September 1972, the defendant entered into a

contract with the U.S. Navy Exchange, Subic Bay, Philippines, for the
operation of a fleet of taxicabs, each taxicab to be provided with the
necessary taximeter and a radio transceiver for receiving and sending of
messages from mobile taxicab to fixed base stations within the Naval Base
at Subic Bay, Philippines.

ISSUE:

Whether or not there is contravention of the terms.

RULING:

After a thorough examination of the complaint at bar, We find the test

of legal sufficiency of the cause of action adequately satisfied. In a
methodical and logical sequence, the complaint recites the circumstances
that led to the perfection of the contract entered into by the parties. It
further avers that while petitioner had fulfilled his part of the bargain, private
respondent failed to comply with his correlative obligation by refusing to
open a letter of credit to cover payment of the goods ordered by him and
that consequently, petitioner suffered not only loss of his expected profits,
but moral and exemplary damages as well. From these allegations, the
essential elements of a cause of action are present, to wit: the existence of
a legal right to the plaintiff; a correlative duty of the defendant and an act or
omission of the defendant in violation of the plaintiff's right, with consequent
injury or damage to the latter for which he may maintain an action for
recovery of damages or other appropriate relief.

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.
 Article 1170 of the Civil Code provides:
"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."

The phrase "in any manner contravene the tenor" of the obligation
includes any illicit act or omission which impairs the strict and faithful
fulfillment of the obligation and every kind of defective performance.

The damages which the obligor is liable for includes not only the
value of the loss suffered by the obligee [daño emergente] but also the
profits which the latter failed to obtain [lucro cesante]. 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 nonperformance of the obligation

NATIONAL POWER CORPORATION vs. PHILIPP BROTHERS

OCEANIC, INC.
G.R. No. 126204 2001 Nov 20

FACTS:

On May 14, 1987, the National Power Corporation (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 in
Calaca, Batangas. The Philipp Brothers Oceanic, Inc. (PHIBRO)
prequalified and was allowed to participate as one of the bidders. After the
public bidding was conducted, PHIBRO’s bid was accepted. NAPOCOR’s
acceptance was conveyed in a letter dated July 8, 1987, which was
received by PHIBRO on July 15, 1987. On July 10, 1987, PHIBRO sent
word to NAPOCOR that industrial disputes might soon plague Australia, the
shipment’s point of origin, which could seriously hamper PHIBRO’s ability
to supply the needed coal. From July 23 to July 31, 1987, PHIBRO again
apprised NAPOCOR of the situation in Australia, particularly informing the
latter that the ship owners therein are not willing to load cargo unless a
“strike-free” clause is incorporated in the charter party or the contract of
carriage. In order to hasten the transfer of coal, PHIBRO proposed to
NAPOCOR that they equally share the burden of a “strike-free” clause.
NAPOCOR refused.

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. Consequently, in October 1987, NAPOCOR once
more advertised for the delivery of coal to its Calaca thermal plant.
PHIBRO participated anew in this subsequent bidding. On November 24,
1987, NAPOCOR disapproved PHIBRO’s 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 NAPOCOR’s demand for damages due to the delay in the
delivery of the first coal shipment.

ISSUE:

Whether or not the Court of Appeals gravely and seriously erred in

concluding and so holding that PHIBRO’s delay in the delivery of imported
coal was due to NAPOCOR’s alleged delay in opening a letter of credit and
to force majeure, and not to PHIBRO’s own deliberate acts and faults

RULING:

Fortuitous events may be produced by two general causes: (1)

by Nature, such as earthquakes, storms, floods, epidemics, fires, etc., and
(2) by the act of man, such as an armed invasion, attack by bandits,
governmental prohibitions, robbery, etc. The term generally applies,
broadly speaking, to natural accidents. In order that acts of man such as a
strike, may constitute fortuitous event, it is necessary that they have the
force of an imposition which the debtor could not have resisted. Hence, by
law and by stipulation of the parties, the strikes which took place in
Australia from the first week of July to the third week of September, 1987,
exempted Phibro from the effects of delay of the delivery of the shipment of
coal.

In addition, 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.”
ESTOPPEL
 METROBANK vs. CABILZO
510 SCRA 259

FACTS:

On 12 November 1994, Cabilzo issued a Metrobank Check No.

985988, payable to “CASH” and postdated on 24 November 1994 in the
amount of One Thousand Pesos (P1, 000.00). The check was drawn against
Cabilzo’s Account with Metrobank Pasong Tamo Branch under Current
Account No. 618044873-3 and was paid by Cabilzo to a certain Mr. Marquez,
as his sales commission. Subsequently, the check was presented to
Westmont Bank for payment. Westmont Bank, in turn, indorsed the check
to Metrobank for appropriate clearing. After the entries thereon were
examined, including the availability of funds and the authenticity of the
signature of the drawer, Metrobank cleared the check for encashment in
accordance with the Philippine Clearing House Corporation (PCHC) Rules.
On 16 November 1994, Cabilzo’s representative was at Metrobank
Pasong Tamo Branch to make some transaction when he was asked by bank
personnel if Cabilzo had issued a check in the amount of P91, 000.00 to
which the former replied in the negative. On the afternoon of the same date,
Cabilzo himself called Metrobank to reiterate that he did not issue a check in
the amount of P91, 000.00 and requested that the questioned check be
returned to him for verification, to which Metrobank complied. Upon receipt
of the check, Cabilzo discovered that Metrobank Check No. 985988 which
he issued on 12 November 1994 in the amount of P1, 000.00 was altered to
P91, 000.00 and the date 24 November 1994 was changed to 14 November
1994.Hence, Cabilzo demanded that Metrobank re-credit the amount of P91,
000.00 to his account. Metrobank, however, refused reasoning that it has to
refer the matter first to its Legal Division for appropriate action. Repeated
verbal demands followed but Metrobank still failed to re-credit the amount of
P91, 000.00 to Cabilzo’s account
On 30 June 1995, Cabilzo, thru counsel, finally sent a letter-demand to
Metrobank for the payment of P90, 000.00, after deducting the original value
of the check in the amount of P1, 000.00. Such written demand
notwithstanding, Metrobank still failed or refused to comply with its
obligation. Consequently, Cabilzo instituted a civil action for damages
against Metrobank before the RTC of Manila, Branch 13. In his Complaint
docketed as Civil Case No. 95-75651, Renato D. Cabilzo v. Metropolitan
Bank and Trust Company, Cabilzo prayed that in addition to his claim for
reimbursement, actual and moral damages plus costs of the suit be awarded
in his favor.

ISSUE:
Whether equitable estoppel can be appreciated in favor of petitioner

HELD:
The degree of diligence required of a reasonable man in the exercise
of his tasks and the performance of his duties has been faithfully complied
with by Cabilzo. In fact, he was wary enough that he filled with asterisks the
spaces between and after the amounts, not only those stated in words, but
also those in numerical figures, in order to prevent any fraudulent insertion,
but unfortunately, the check was still successfully altered, indorsed by the
collecting bank, and cleared by the drawee bank, and encashed by the
perpetrator of the fraud, to the damage and prejudice of Cabilzo.
Metrobank cannot lightly impute that Cabilzo was negligent and is
therefore prevented from asserting his rights under the doctrine of equitable
estoppel when the facts on record are bare of evidence to support such
conclusion. The doctrine of equitable estoppel states that when one of the
two innocent persons, each guiltless of any intentional or moral wrong, must
suffer a loss, it must be borne by the one whose erroneous conduct, either
by omission or commission, was the cause of injury. Metrobank’s reliance
on this dictum is misplaced. For one, Metrobank’s representation that it is
an innocent party is flimsy and evidently, misleading. At the same time,
Metrobank cannot asseverate that Cabilzo was negligent and this negligence
was the proximate cause of the loss in the absence of even a scintilla proof
to buttress such claim. Negligence is not presumed but must be proven by
the one who alleges it, which petitioner failed to.

JEFFERSON LIM vs. QUEENSLAND TOKYO COMMODITIES, INC.

January 4, 2002
FACTS:
Sometime in 1992, Benjamin Shia, a market analyst and trader of
Queensland, was introduced to petitioner Jefferson Lim by Marissa Bontia,
one of his employees. Marissa’s father was a former employee of Lim’s
father. Shia suggested that Lim invest in the Foreign Exchange Market,
trading U.S. dollar against the Japanese yen, British pound, Deutsche Mark
and Swiss Franc.Before investing, Lim requested Shia for proof that the
foreign exchange was really lucrative. They conducted mock tradings without
money involved. As the mock trading showed profitability, Lim decided to
invest with a marginal deposit of US$5,000 in manager’s check. The
marginal deposit represented the advance capital for his future tradings. It
was made to apply to any authorized future transactions, and answered for
any trading account against which the deposit was made, for any loss of
whatever nature, and for all obligations, which the investor would incur with
the broker. Petitioner Lim was then allowed to trade with respondent
company which was coursed through Shia by virtue of blank order forms all
signed by Lim. Respondent furnished Lim with the daily market report and
statements of transactions as evidenced by the receiving forms, some of
which were received by Lim.
Meanwhile, on October 22, 1992, respondent learned that it would take
seventeen (17) days to clear the manager’s check given by petitioner. Shia
returned the check to petitioner who informed Shia that petitioner would
rather replace the manager’s check with a traveler’s check. Shia noticed that
the traveler’s check was not indorsed but Lim told Shia that Queensland
could sign the endorsee portion. Because Shia trusted the latter’s good credit
rating, and out of ignorance, he brought the check back to the office
unsigned. Inasmuch as that was a busy Friday, the check was kept in the
drawer of respondent’s consultant. Later, the traveler’s check was deposited
with Citibank.
On October 27, 1992, Citibank informed respondent that the traveler’s
check could not be cleared unless it was duly signed by Lim, the original
purchaser of the traveler’s check. A Miss Arajo, from the accounting staff of
Queensland, returned the check to Lim for his signature, but the latter, aware
of his P44,465 loss, demanded for a liquidation of his account and said he
would get back what was left of his investment.
ISSUE:
Whether or not the CA erred in reversing the decision of the RTC
which dismissed the respondent’s complaint
RULING:
The essential elements of estoppel are: (1) conduct of a party
amounting to false representation or concealment of material facts or at least
calculated to convey the impression that the facts are otherwise than, and
inconsistent with, those which the party subsequently attempts to assert; (2)
intent, or at least expectation, that this conduct shall be acted upon by, or at
least influence, the other party; and (3) knowledge, actual or constructive, of
the real facts. ere, it is uncontested that petitioner had in fact signed the
Customer’s Agreement in the morning of October 22, 1992, knowing fully
well the nature of the contract he was entering into. The Customer’s
Agreement was duly notarized and as a public document it is evidence of the
fact, which gave rise to its execution and of the date of the latter.
Next, petitioner paid his investment deposit to respondent in the form
of a manager’s check in the amount of US$5,000 as evidenced by PCI Bank
Manager’s Check No. 69007, dated October 22, 1992. All these are indicia
that petitioner treated the Customer’s Agreement as a valid and binding
contract.

PLACEWELL INTERNATIONAL SERVICES CORP. vs. CAMOTE

G.R. No. 169973, June 26, 2006

FACTS:

Petitioner Placewell International Services Corporation (PISC)

deployed respondent Ireneo B. Camote to work as building carpenter for
SAAD Trading and Contracting Co. (SAAD) at the Kingdom of Saudi Arabia
(KSA) for a contract duration of two years, with a corresponding salary of
US$370.00 per month. At the job site, respondent was allegedly found
incompetent by his foreign employer; thus the latter decided to terminate his
services. However, respondent pleaded for his retention and consented to
accept a lower salary of SR 800.00 per month. Thus, SAAD retained
respondent until his return to the Philippines two years after.

On November 27, 2001, respondent filed a sworn Complaint for

monetary claims against petitioner alleging that when he arrived at the job
site, he and his fellow Filipino workers were required to sign another
employment contract written in Arabic under the constraints of losing their
jobs if they refused; that for the entire duration of the new contract, he
received only SR 590.00 per month; that he was not given his overtime pay
despite rendering nine hours of work everyday; that he and his co-workers
sought assistance from the Philippine Embassy but they did not succeed in
pursuing their cause of action because of difficulties in communication.

ISSUE:

Whether there is estoppel by laches

HELD:

R.A. No. 8042 explicitly prohibits the substitution or alteration to the

prejudice of the worker, of employment contracts already approved and
verified by the Department of Labor and Employment (DOLE) from the time
of actual signing thereof by the parties up to and including the period of the
expiration of the same without the approval of the DOLE. The subsequently
executed side agreement of an overseas contract worker with her foreign
employer which reduced her salary below the amount approved by the POEA
is void because it is against our existing laws, morals and public policy. The
said side agreement cannot supersede her standard employment contract
approved by the POEA.

Petitioner’s contention that respondent is guilty of laches is without

basis. Laches has been defined as the failure of or neglect for an
unreasonable and unexplained length of time to do that which by exercising
due diligence, could or should have been done earlier, or to assert a right
within reasonable time, warranting a presumption that the party entitled
thereto has either abandoned it or declined to assert it. Thus, the doctrine
of laches presumes that the party guilty of negligence had the opportunity to
do what should have been done, but failed to do so. Conversely, if the said
party did not have the occasion to assert the right, then, he can not be
adjudged guilty of laches. Laches is not concerned with the mere lapse of
time; rather, the party must have been afforded an opportunity to pursue his
claim in order that the delay may sufficiently constitute laches.

In the instant case, respondent filed his claim within the three-year
prescriptive period for the filing of money claims set forth in Article 291 of the
Labor Code from the time the cause of action accrued. Thus, we find that
the doctrine of laches finds no application in this case.

CUENCO vs. CUENCO

G.R. No. 149844, October 13, 2004

FACTS:

On September 19, 1970, the [respondent] filed the initiatory complaint

herein for specific performance against her uncle [Petitioner] Miguel Cuenco
which averred, inter alia that her father, the late Don Mariano Jesus Cuenco
(who became Senator) and said [petitioner] formed the ‘Cuenco and Cuenco
Law Offices’; that on or around August 4, 1931, the Cuenco and Cuenco Law
Offices served as lawyers in two (2) cases entitled ‘Valeriano Solon versus
Zoilo Solon’ (Civil Case 9037) and ‘Valeriano Solon versus Apolonia Solon’
(Civil Case 9040) involving a dispute among relatives over ownership of lot
903 of the Banilad Estate which is near the Cebu Provincial Capitol; that
records of said cases indicate the name of the [petitioner] alone as counsel
of record, but in truth and in fact, the real lawyer behind the success of said
cases was the influential Don Mariano Jesus Cuenco; that after winning said
cases, the awardees of Lot 903 subdivided said lot into three (3) parts as
follows:

Lot 903-A: 5,000 [square meters]: Mariano Cuenco’s attorney’s fees

Lot 903-B: 5,000 [square meters]: Miguel Cuenco’s attorney’s fees
Lot 903-C: 54,000 [square meters]: Solon’s retention

Petitioner later claimed the property after the death of his brother.

ISSUES:

Whether Petitioner is in is estoppel

Whether laches barred the right of action of respondent

HELD:
 From the time Lot 903-A was subdivided and Mariano’s six children --
including Concepcion -- took possession as owners of their respective
portions, no whimper of protest from petitioner was heard until 1963. By his
acts as well as by his omissions, Miguel led Mariano and the latter’s heirs,
including Concepcion, to believe that Petitioner Cuenco respected the
ownership rights of respondent over Lot 903-A-6. That Mariano acted and
relied on Miguel’s tacit recognition of his ownership thereof is evident from
his will, executed in 1963. Indeed, as early as 1947, long before Mariano
made his will in 1963, Lot 903-A -- situated along Juana Osmeña Extension,
Kamputhaw, Cebu City, near the Cebu Provincial Capitol -- had been
subdivided and distributed to his six children in his first marriage. Having
induced him and his heirs to believe that Lot 903-A-6 had already been
distributed to Concepcion as her own, petitioner is estopped from asserting
the contrary and claiming ownership thereof. The principle of estoppel in
pais applies when -- by one’s acts, representations, admissions, or silence
when there is a need to speak out -- one, intentionally or through culpable
negligence, induces another to believe certain facts to exist; and the latter
rightfully relies and acts on such belief, so as to be prejudiced if the former
is permitted to deny the existence of those facts.
Petitioner claims that respondent’s action is already barred by laches.
Laches is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to it has either abandoned
or declined to assert it.[40] In the present case, respondent has persistently
asserted her right to Lot 903-A-6 against petitioner. Concepcion was in
possession as owner of the property from 1949 to 1969. When Miguel took
steps to have it separately titled in his name, despite the fact that she had
the owner’s duplicate copy of TCT No. RT-6999 -- the title covering the entire
Lot 903-A -- she had her adverse claim annotated on the title in 1967. When
petitioner ousted her from her possession of the lot by tearing down her wire
fence in 1969, she commenced the present action on September 19, 1970,
to protect and assert her rights to the property. We find that she cannot be
held guilty of laches, as she did not sleep on her rights.