5. HILLTOP v. YARANON et. al.

G.R. No. 188057 July 12, 2017

Facts:

On 22 June 1974, petitioner Hilltop Market Fish Vendors' Association, Inc. (Hilltop), represented by its president
Gerardo Rillera, and respondent City of Baguio, represented by its then Mayor Luis Lardizabal, entered into a Contract of Lease
with a period of 25 years over a lot owned by the City of Baguio, with an area of 568.80 square meters and located at the Hilltop
Market, Baguio City. The contract provided that the period of lease is 25 years, renewable for the same period at the option of
both parties, and the annual lease rental is Php25,000, with the first payment commencing upon the issuance by the City
Engineer's Office of the Certificate of full occupancy of the building to be constructed by Hilltop on the lot. Before the Certificate
is issued, the City of Baguio can continue collecting market fees from the vendors who are allowed to occupy any portion of the
building. At the termination of the lease period, the City of Baguio will own the building without payment or reimbursement for
Hilltop's costs. Hilltop constructed the building, thereafter known as the Rillera building, on the lot. Even though the City
Engineer's Office did not issue a Certificate, Hilltop's members occupied the Rillera building and conducted business in it.
On 16 October 1980, the City Council of Baguio, through its then Mayor Ernesto Bueno, issued Resolution No. 74-80
rescinding the contract of lease with Hilltop, for its continued failure to comply with its obligation to complete the Rillera building.
Subsequently, the City Engineer's Office issued its finding that the two upper floors of the Rillera building were unsafe for
occupancy. Thereafter, it recommended to condemn the building. Sometime in 2003, then Mayor Bernardo Vergara issued a
notice to take over the Rillera building.
On 28 February 2005, respondent then Mayor Braulio Yaranon (Yaranon) issued Administrative Order No. 030 S. 2005
(AO No. 30), ordering the City Building and Architects Office (CBAO) and Public Order and Safety Division to immediately close
the Rillera building to have it cleaned, sanitized and enclosed; to prevent illegal activities in it; and for its completion and
preparation for commercial use.

Issue:

WON the contract of lease is perfected.

Ruling:

Yes. In a contract of lease, one of the parties binds himself to give to another the enjoyment or use of a thing for a
price certain, and for a period which may be definite or indefinite. Being a consensual contract, a lease is perfected at the
moment there is a meeting of the minds upon the thing and the cause or consideration which are to constitute the
contract. Thereafter, the lessor is obliged to deliver the thing which is the object of the contract in such a condition as to render it
fit for the use intended, and the lessee is obliged to use the thing leased as a diligent father of a family, devoting it to the use
stipulated or that which may be inferred from the nature of the thing leased.

In a contract of lease, the cause or essential purpose is the use and enjoyment of the thing. The thing or subject matter
of the contract in this case was clearly identified and agreed upon as the lot where the building would be constructed by Hilltop.
The consideration were the annual lease rental and the ownership of the building upon the termination of the lease period.
Considering that Hilltop and the City of Baguio agreed upon the essential elements of the contract, the contract of lease had
been perfected.
From the moment that the contract is perfected, the parties are bound to fulfill what they have expressly stipulated.
Thus, the City of Baguio gave the use and enjoyment of its lot to Hilltop. Both the RTC and the CA found that upon the execution
of the contract on 22 June 1974, Hilltop took possession of the lot and constructed the Rillera building on it. Thereafter, Hilltop's
members occupied the Rillera building and conducted business in it up to the present. The findings of fact of the RTC and the CA
are final and conclusive and cannot be reviewed on appeal by this Court.
Since Hilltop exercised its right as lessee based on the contract of lease and the law, it has no basis in claiming that
the contract of lease did not commence.
6. GREAT ASIAN v. CA
G.R. No. 105774 April 25, 2002

Facts:

Great Asian is engaged in the business of buying and selling general merchandise, in particular household appliances.
On March 17, 1981, the board of directors of Great Asian approved a resolution authorizing its Treasurer and General Manager,
Arsenio Lim Piat, Jr. to secure a loan from Bancasia in an amount not to exceed P1.0 million. The board resolution also
authorized Arsenio to sign all papers, documents or promissory notes necessary to secure the loan. On February 10, 1982, the
board of directors of Great Asian approved a second resolution authorizing Great Asian to secure a discounting line with
Bancasia in an amount not exceeding P2.0 million. The second board resolution also designated Arsenio as the authorized
signatory to sign all instruments, documents and checks necessary to secure the discounting line.
On March 4, 1981, Tan Chong Lin signed a Surety Agreement in favor of Bancasia to guarantee, solidarily, the debts
of Great Asian to Bancasia. On January 29, 1982, Tan Chong Lin signed a Comprehensive and Continuing Surety Agreement in
favor of Bancasia to guarantee, solidarily, the debts of Great Asian to Bancasia. Thus, Tan Chong Lin signed two surety
agreements in favor of Bancasia.Great Asian, through its Treasurer and General Manager Arsenio, signed four (4) Deeds of
Assignment, assigning to Bancasia fifteen (15) postdated checks. Nine of the checks were payable to Great Asian, three were
payable to "New Asian Emp.", and the last three were payable to cash. Various customers of Great Asian issued these
postdated checks in payment for appliances and other merchandise.
Great Asian and Bancasia signed the four Deed of Assignments on different dates from January to March, 1982
covering all fifteen postdated checks which are all dishonored.Great Asian assigned the postdated checks to Bancasia at a
discount rate of less than 24% of the face value of the checks.
Arsenio endorsed all the fifteen dishonored checks by signing his name at the back of the checks. Eight of the
dishonored checks bore the endorsement of Arsenio below the stamped name of "Great Asian Sales Center", while the rest of
the dishonored checks just bore the signature of Arsenio. The drawee banks dishonored the fifteen checks on maturity when
deposited for collection by Bancasia, with any of the following as reason for the dishonor: "account closed", "payment stopped",
"account under garnishment", and "insufficiency of funds". The total amount of the fifteen dishonored checks is P1,042,005.00.
Subsequently, Bancasia sent by personal delivery a letter dated June 16, 1982 to Tan Chong Lin, notifying him of the dishonor of
the fifteen checks and demanding payment from him. Neither Great Asian nor Tan Chong Lin paid Bancasia the dishonored
checks.

Issue/s:

1. WON Arsenio had authority to execute the Deeds of Assignment and thus bind Great Asian.
2. WON Tan Chiong Lin is liable to Great Asian under the Surety Agreements.

Ruling:

1. Yes. In the ordinary course of business, a corporation can borrow funds or dispose of assets of the corporation only on
authority of the board of directors. The board of directors normally designates one or more corporate officers to sign
loan documents or deeds of assignment for the corporation. To secure a credit accommodation from Bancasia, the
board of directors of Great Asian adopted two board resolutions on different dates, the first on March 17, 1981, and the
second on February 10, 1982. Armed with the two board resolutions, Arsenio signed the Deeds of Assignment selling,
and endorsing, the fifteen checks of Great Asian to Bancasia. On the face of the Deeds of Assignment, the contracting
parties are indisputably Great Asian and Bancasia as the names of these entities are expressly mentioned therein as
the assignor and assignee, respectively.

Clearly, the discounting arrangements entered into by Arsenio under the Deeds of Assignment were the very
transactions envisioned in the two board resolutions of Great Asian to raise funds for its business. Arsenio acted
completely within the limits of his authority under the two board resolutions. Arsenio did exactly what the board of
directors of Great Asian directed and authorized him to do.

Arsenio had all the proper and necessary authority from the board of directors of Great Asian to sign the Deeds of
Assignment and to endorse the fifteen postdated checks. Arsenio signed the Deeds of Assignment as agent and
authorized signatory of Great Asian under an authority expressly granted by its board of directors. The signature of
 Arsenio on the Deeds of Assignment is effectively also the signature of the board of directors of Great Asian, binding
on the board of directors and on Great Asian itself. Evidently, Great Asian shows its bad faith in disowning the Deeds
of Assignment signed by its own Treasurer, after receiving valuable consideration for the checks assigned under the
Deeds.

2. Yes. Indisputably, Tan Chong Lin explicitly and unconditionally bound himself to pay Bancasia, solidarily with Great
Asian, if the drawers of the checks fail to pay on due date. The condition on which Tan Chong Lin’s obligation hinged
had happened. As surety, Tan Chong Lin automatically became liable for the entire obligation to the same extent as
Great Asian.

Article 1207 of the Civil Code provides, "xxx There is a solidary liability only when the obligation expressly so states, or
when the law or nature of the obligation requires solidarity." The stipulations in the Surety Agreements undeniably
mandate the solidary liability of Tan Chong Lin with Great Asian. Moreover, the stipulations in the Surety Agreements
are sufficiently broad, expressly encompassing "all the notes, drafts, bills of exchange, overdraft and other obligations
of every kind which the PRINCIPAL may now or may hereafter owe the Creditor". Consequently, Tan Chong Lin must
be held solidarily liable with Great Asian for the nonpayment of the fifteen dishonored checks, including penalty and
attorney’s fees in accordance with the Deeds of Assignment.

7. SAN FRANCISCO INN v. SAN PABLO WATER DISTRICT

G. R. 204639 February 15, 2017

Facts:

The petitioner is a hotel business establishment situated at Brgy. San Francisco Calihan, San Pablo City. In 1996,
petitioner caused the construction of two (2) deep-well pumps for the use of its business. The respondent is a local water utility
organized under Resolution No. 309, approved by the Municipal Board of the City of San Pablo, on December 17, 1973,
absorbing the former San Pablo Waterworks System and its facilities.
In 1977, the respondent promulgated the Rules Governing Groundwater Pumping and Spring Development within the
Territorial Jurisdiction of the San Pablo City Water District. On September 11, 1998, petitioner filed an application for water
permit with the National Water Resources Board (NWRB). In a letter dated November 14, 1998, the DPWH District Engineer
requested petitioner to submit clearances from the barangay chairman, the city mayor and the respondent water district. It
appears that petitioner failed to comply except the submission of a barangay clearance certificate, and a certification dated 17
November 1998, issued by the respondent's Engr. Virgilio L. Amante, respondent's Engineering and Production Division
Manager, stating among others that "the extraction of water has no adverse effect on the existing water supply and system of the
San Pablo City Water District," but "without prejudice to the water district implementation of production assessment charges in
the future."
On June 1, 1999, the respondent sent the petitioner a copy of a draft Memorandum of Agreement, regarding the
proposed imposition of production assessment fee at P0.50 per cubic meter of water drawn from the well. The petitioner [SFI],
however, did not sign the MOA. The respondent [SPCWD] in a letter dated November 9, 1999, again wrote the petitioner asking
the latter to approve and/or sign the MOA.

Issue:

WON the respondent has a right to impose production assessment upon SFI due to alleged injurious effects of the
SFI’s use of ground water.

Ruling:

No. While SPCWD had drafted a MOA on the imposition of production assessment fees upon deep well owners/users
and provided copies thereof to them, including SFI, the MOA was not supported by any resolution duly promulgated and
approved by SPCWD's Board of Directors or by any finding that there were injurious effects of SFI's deep well operation upon
the financial condition of SPCWD. For its part, SFI did not execute the MOA.
 A MOA or contract between the water district entity and the deep well operator/user is not required under the law and
the Rules. However, when a MOA is voluntarily agreed upon and executed, the obligation to pay production assessment fees on
the part of the deep well operator/user and the right of the water district entity to collect the fees arise from contract. The parties
are, therefore, legally bound to comply with their respective prestations. Unlike a MOA, which creates contractual obligations,
faithful compliance with the requirements of Section 39 of PD 198 and Section 11 of the Rules creates binding obligations arising
from law. Thus, in the absence of the requisite board resolution, SPCWD cannot legally impose any production assessment fees
upon SFI.

8. MENDIOLA v. COMMERZ
G.R. No. 200895 July 31, 2013

Facts:

Genicon, Inc. (Genicon) is a foreign corporation based in Florida, United States of America, which designs, produces,
and distributes "patented surgical instrumentation focused exclusively on laparoscopic surgery." Petitioner, a physician by
profession, entered into a contract with Genicon to be its exclusive distributor of Genicon laparoscopic instruments in the
Philippines, as evidenced by a Distribution Agreement dated 18 July 2007. Petitioner, in turn, entered into a Memorandum of
Agreement (MOA) with respondent to facilitate the marketing and sale of Genicon laparoscopic instruments in the Philippines.
Under the MOA, respondent would be compensated for ₱100,000.00 "for the use of respondent’s name, office, secretary,
invoices, official receipts and facilities x x x for every sale of a complete set of Genicon laparoscopic instruments x x x."
Respondent sent a price quotation to Pampanga Medical Specialist Hospital, Inc. (PMSHI), which thereafter agreed to
purchase a Genicon laparoscopic instrument for Two Million Six Hundred Thousand Pesos (₱2,600,000.00). Then, petitioner
ordered the laparoscopic instrument from Genicon, which in turn shipped the medical equipment to the Philippines. Respondent
undertook the release of the laparoscopic instrument from the Bureau of Customs and subsequently delivered the same to
PMSHI. From the total amount of ₱2,600,000.00 paid by PMSHI to respondent, the latter’s president Joaquin Ortega deducted
₱100,000.00 as respondent’s compensation for its services pursuant to the MOA. Respondent remitted to petitioner
₱2,430,000.00 only, instead of ₱2,500,000.00. Despite petitioner’s repeated demands, respondent failed to remit the remaining
balance of ₱70,000.00 from the proceeds of the sale of the laparoscopic instrument. Consequently, petitioner filed a collection
suit against respondent with the Metropolitan Trial Court, Branch 79, Las Piñas City (MeTC)

Issue:
WON the respondent has the right to retain the balance of the proceeds of the sale in the amount of Php 70,000.00.

Ruling:
No. There is no dispute that the ₱70,000.00 respondent withheld from petitioner formed part of the proceeds of the
sale of the Genicon laparoscopic instrument.
Respondent, however, claims that the ₱70,000.00 represents a portion of the total VAT due from the Genicon
transaction which is allegedly petitioner’s obligation under paragraph V of the MOA which states: "All taxes/expenses and
expenses related to Genicon transactions shall be the responsibility of petitioner."
Basic is the principle that a contract is the law between the parties, and its stipulations are binding on them, unless the
contract is contrary to law, morals, good customs, public order or public policy. Indeed, paragraph V of the MOA obligates
petitioner to pay the taxes due from the sale of the Genicon laparoscopic instrument. Petitioner admits that he is the one
"responsible in the payment of the EVAT and not the respondent, who merely acted as the marketer" of the Genicon
laparoscopic instrument. Hence, as between petitioner and respondent, petitioner bears the burden for the payment of VAT.