ObliCon Digests

Compiled by: FCSB MYCK
ANG YU ASUNCION VS. COURT OF APPEALS (238 SCRA 602)

FACTS:

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

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

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

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

ISSUE:

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

RULING:

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

(a) the vinculum juris or juridical tie which is the efficient cause established by the various sources of
FaithCamilleSulleraBriones
obligations; (b) the object which is the prestation or conduct, required to observed; and (c) the subject-
persons who, viewed demandability of the obligation are the active (oblige) and the passive (obligor)
subjects.

Among the sources of an obligation is a contract (Art. 1157), which is a meeting of minds between two
persons whereby one binds himself, with respect to the other, to give something or to render some
service. A contract undergoes various stages that include its negotiation or preparation, its perfection
and, finally, its consummation.

Until the contract is perfected, it cannot, as an independent source of obligation, serve as a binding
juridical relation. In sales, particularly, to which the case at bench belongs, the contract is perfected when
a person, called the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a
thing or right to another, called the buyer, over which the latter agrees.

The registration of lis pendens must be independently addressed in appropriate proceedings.Therefore,
Buen Realty cannot be held subject to the writ of execution issued by the respondent Judge, let alone
ousted from the ownership and possession of the property, without first being duly afforded its day in
court.
DELA RAMA vs. MENDIOLA and TITAN CONSTRUCTION (G.R. No. 135394 April 29, 2003)
Subject matter.
A subject matter is the item with respect to which the controversy has arisen, or concerning which the
wrong has been done, and it is ordinarily the right, the thing, or the contract under dispute. In the case at
bar, both the first and second actions involve the same real property.
Facts:
Petitioner sold to the government on expropriation a parcel of land, for use in the construction of the
EDSA Extension Project.
Then, undertook to sell to respondent Titan Construction Corporation a parcel of land adjacent to the one
expropriated. Then petitioner failed to comply with his obligations, prompting respondent to file for
rescission of contract. Then, a compromise agreement between the parties was effected with an
Agreement to Sell and Buy, stipulating that the respondent is waiving all his rights with the parcel of land
within which the government may return in the course of the completion of the EDSA Extension Project.
Petitioner sought the reconveyance of the unused portion of the property from the government.
Titan filed with the RTC a Petition for Declaratory Relief, Prohibition, Mandamus and Preliminary Injunction
with Prayer for Restraining Order. RTC denied for lack of merit. Titan appealed to CA. Meanwhile, Titan
filed a action for specific performance based on the compromise judgment to the RTC. This prompted
petitioner to file with the CA a Motion for Direct Contempt and to Dismiss based on Forum Shopping. It
was however dismissed by RTC, and his MR also denied. Respondent filed a motion to withdraw the
petition in CA, which was granted. Thus, the case was dismissed with finality.
The RTC held that the violation the rule on non-forum-shopping was cured when the CA dismissed with
finality the motion for declaratory relief.
Issue:
WON the specific performance case is barred by the petition for declaratory relief case on the ground of
res judicata? YES
Held:
There is res judicata where the following four essential conditions concur, viz: (1) there must be a final
judgment or order; (2) the court rendering it must have jurisdiction over the subject matter and the
parties; (3) it must be a judgment or order on the merits; and (4) there must be, between the two cases,
identity of parties, subject matter and causes of action.
No doubt, all the first three elements are satisfied. As regards the fourth condition, it is clear that there is
identity of parties in the two cases. Although the public respondents in the declaratory relief case were not
impleaded in the specific performance case, only a substantial identity is necessary to warrant the
application of res judicata. The addition or elimination of some parties does not alter the situation.
The subject matters and causes of action of the two cases are likewise identical. In the case at bar, both
the first and second actions involve the same real property. It is true that the first case was a special civil
action for declaratory relief while the second case was a civil action for specific performance. However, the
difference in form and nature of the two actions is immaterial. The philosophy behind the rule on res
judicata prohibits the parties from litigating the same issue more than once.
Respondents alleged right in both cases depends on one and the same instrument, the Agreement to Sell
and Buy. Clearly, respondents ultimate objective in instituting the two actions was to have the property
reconveyed in its favor.
The principle of res judicata requires that stability be accorded to judgments. Controversies once decided
on the merits shall remain in repose for there should be an end to litigation which, without the doctrine,
would be endless.
DECISION: Petition granted. RTC ordered to dismiss case on action for specific performance on the ground
of res judicata.
BACHRACH CORPORATION VS CA (GR 128349)
PELAYO VS. LAURON (12 Phil. 453)

FACTS:

On November 23, 1906, a physician named Arturo Pelayo filed a complaint against Marelo Lauron
and Juana Abellana. On the night of October 13th of the same year, the plaintiff was called to render
medical assistance to the defendants daughter-in-law, who was about to gie birth. After the consultation
of Dr. Escao, it was deemed that the operation was going to be difficult for child birth, but regardless, Dr.
Pelayo proceeded with the job of operating on the subject and also removed the afterbirth. The operation
went on until morning, and on the same day, visited several times and billed the defendants the just
amount of P500 for the services rendered to which defendants refused to pay.

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

ISSUE:

Can the defendants be held liable to pay for the obligation?

RULING:

No. According to article 1089 of the Civil Code, obligations are created by law, by contracts, by
quasi-contracts, and by illicit acts and omissions or by those in which any kind of fault or negligence
occurs.

Obligations arising from law are not presumed. Those expressly determined in the code or in special laws,
etc., are the only demandable ones. Obligations arising from contracts have legal force between the
contracting parties and must be fulfilled in accordance with their stipulations. (Arts. 1090 and 1091.)

The rendering of medical assistance in case of illness was comprised among the mutual obligations to
which the spouses were bound by way of mutual support. (Arts. 142 and 143.)

If every obligation consists in giving, doing or not doing something (art. 1088), and spouses were
mutually bound to support each other, there can be no question but that, when either of them by reason
of illness should be in need of medical assistance, the other was under the unavoidable obligation to
furnish the necessary services of a physician in order that health may be restored, and he or she may be
freed from the sickness by which life is jeopardized. The party bound to furnish such support was
therefore liable for all expenses, including the fees of the medical expert for his professional services.

In the face of the above legal precepts, it was unquestionable that the person bound to pay the fees due to
the plaintiff for the professional services that he rendered to the daughter-in-law of the defendants
during her childbirth, was the husband of the patient and not her father and mother- in-law of the
defendants herein.
DE LA CRUZ VS NORHTERN THEATRICAL ENTERPRISES (95 Phil 739, 1954)
EDUARDO B. MANZANO VS ANTONIO B. LAZARO (GR 173320, April 11, 2012)
WILLIAM GOLANGO CONSTRUCTION CORPORATION VS PCIB (GR 142830, March 24, 2006)

Facts:

William Golangco Construction Corporation (WGCC) and the Philippine Commercial International Bank
(PCIB) entered into a contract for the construction of the extension of PCIB Tower II on October 20, 1989.
The project included, among others, the application of a granitite wash-out finish on the exterior walls of
the building.

PCIB, with the concurrence of its consultant TCGI Engineers (TCGI), accepted the turnover of the completed
work by WGCC in a letter dated June 1, 1992. To answer for any defect arising within a period of one year,
WGCC submitted a guarantee bond dated July 1, 1992 issued by Malayan Insurance Company, Inc. in
compliance with the construction contract.

The controversy arose when portions of the granitite wash-out finish of the exterior of the building began
peeling off and falling from the walls in 1993. WGCC made minor repairs after PCIB requested it to rectify
the construction defects.
In 1994, PCIB entered into another contract with Brains and Brawn Construction and Development
Corporation to re-do the entire granitite wash-out finish after WGCC manifested that it was "not in a
position to do the new finishing work," though it was willing to share part of the cost. PCIB incurred
expenses amounting to P11,665,000 for the repair work.

PCIB filed a request for arbitration with the Construction Industry Arbitration Commission (CIAC) for the
reimbursement of its expenses for the repairs made by another contractor. It complained of WGCCs
alleged non-compliance with their contractual terms on materials and workmanship. WGCC interposed a
counterclaim for P5,777,157.84 for material cost adjustment.

The CIAC declared WGCC liable for the construction defects in the project. WGCC filed a petition for review
with the Court of Appeals (CA) which dismissed it for lack of merit. However, its motion for
reconsideration was similarly denied.
There is a question of certiorari in this case.

Issue:

Whether or not petitioner WGCC is liable for defects in the granite wash-out finish that occurred after the
lapse of one-year defects liability period provided in Art. XI of the construction contract?

Held:

The court ruled in favor of WGCC. The controversy pivots on a provision in the construction contract
referred to as the defects liability period:

Guarantee

In Article XI on Guarantee - the CONTRACTOR hereby guarantees the work stipulated in this Contract, and
shall make good any defect in materials and workmanship which [becomes] evident within one (1) year
after the final acceptance of the work. The CONTRACTOR shall leave the work in perfect order upon
completion and present the final certificate to the ENGINEER promptly.

If in the opinion of the OWNER and ENGINEER, the CONTRACTOR has failed to act promptly in rectifying
any defect in the work which appears within the period mentioned above, the OWNER and the ENGINEER
may, at their own discretion, using the Guarantee Bond amount for corrections, have the work done by
another contractor at the expense of the CONTRACTOR or his bondsmen.

However, nothing in this section shall in any way affect or relieve the CONTRACTORS responsibility to the
OWNER.

Although both parties based their arguments on the same stipulations, they reached conflicting
conclusions. A careful reading of the stipulations, however, leads us to the conclusion that WGCCs
arguments are more tenable.

Autonomy of Contracts

The autonomous nature of contracts is enunciated in Article 1306 of the Civil Code.
Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or
public policy.

Obligations arising from contracts have the force of law between the parties and should be complied with
in good faith.

The adoption of a one-year guarantee, as done by WGCC and PCIB, is established usage in the Philippines
for private and government construction contracts. However, the contract did not specify a different
period for defects in the granitite wash-out finish; hence, any defect therein should have been brought to
WGCCs attention within the one-year defects liability period in the contract.

The inclusion in a written contract for a piece of work, such as the one in question, of a provision defining
a warranty period against defects, is not uncommon. This kind of a stipulation is of particular importance
to the contractor, for as a general rule, after the lapse of the period agreed upon therein, he may no
longer be held accountable for whatever defects, deficiencies or imperfections that may be discovered in
the work executed by him.

Unfulfilled Obligations

PCIB calls our attention to Article 62.2 which provides: Notwithstanding the issue of the Defects Liability
Certificate[,] the Contractor and the Owner shall remain liable for the fulfillment of any obligation[,]
incurred under the provisions of the Contract prior to the issue of the Defects Liability Certificate[,] which
remains unperformed at the time such Defects Liability Certificate is issued[. And] for the purpose of
determining the nature and extent of any such obligation, the Contract shall be deemed to remain in force
between the parties of the Contract. (emphasis ours).

Ruling

The lower courts conjectured that the peeling off of the granitite wash-out finish was probably due to
"defective materials and workmanship." This they characterized as hidden or latent defects. WGCC does
not agree with the conclusion that the alleged defects were hidden.

First, PCIBs team of experts (who were specifically employed to detect such defects early on) supervised
WGCCs workmanship. Second, WGCC regularly submitted progress reports and photographs. Third, WGCC
worked under fair and transparent circumstances. PCIB had access to the site and it exercised reasonable
supervision over WGCCs work. Fourth, PCIB issued several "punch lists" for WGCCs compliance before the
issuance of PCIBs final certificate of acceptance. Fifth, PCIB supplied the materials for the granitite wash-
out finish. And finally, PCIBs team of experts gave their concurrence to the turnover of the project.

The purpose of the defects liability period was precisely to give PCIB additional, albeit limited, opportunity
to oblige WGCC to make good any defect, hidden or otherwise, discovered within one year.

Contrary to the CAs conclusion, the first sentence of the third paragraph of Article XI on guarantee
previously quoted did not operate as a blanket exception to the one-year guarantee period under the first
paragraph. Neither did it modify, extend, nullify or supersede the categorical terms of the defects liability
period.

Under the circumstances, there were no hidden defects for which WGCC could be held liable. Neither was
there any other defect for which PCIB made any express reservation of its rights against WGCC. Indeed, the
contract should not be interpreted to favor the one who caused the confusion, if any. The contract was
prepared by TCGI for PCIB.

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals in CA-G.R. SP No.
41152 is ANNULED and SET ASIDE.

DIO VS ST. FERDINAND MEMORIAL PARK INC (GR 169578, November 30, 2006)

FACTS:
On December 11, 1973, Teresita Dio agreed to buy, on instalment basis, a memorial lot from the St.
Ferdinand Memorial Park, Inc. (SFMPI) in Lucena City. The 36-square-meter memorial lot is particularly
described as Block 2, Section F, Lot 15. The purchase was evidenced by a Pre-Need Purchase Agreement
dated December 11, 1973 and denominated as Contract No. 384. She obliged herself to abide by all such
rules and regulations governing the SFMPI dated May 25, 1972.

SFMPI issued a Deed of Sale and Certificate of Perpetual Care dated April 1, 1974 denominated as
Contract No. 284. The ownership of Dio over the property was made subject to the rules and regulations
of SFMPI, as well as the government, including all amendments, additions and modifications that may later
be adopted. Rule 69 of the Rules reads:

Rule 69. Mausoleum building and memorials should be constructed by the Park
Personnel. Lot Owners cannot contract other contractors for the construction of the
said buildings and memorial, however, the lot owner is free to give their own design
for the mausoleum to be constructed, as long as it is in accordance with the park
standards. The construction shall be under the close supervision of the Park
Superintendent.

In the early part of October 1986, Dio informed SFMPI, through its president and controlling
stockholder, Mildred F. Tantoco, that she was planning to build a mausoleum on her lot and sought the
approval thereof.

On December 23, 1986, Dio filed a Complaint for Injunction with Damages against SFMPI and
Tantoco before the RTC of Lucena City. She averred that she was not aware of Rule 69 of the SFMPI Rules
and Regulations; the amount of P100, 000.00 as construction cost of the mausoleum was unconscionable
and oppressive. In addition Plaintiff was initially surprised by Tantocos statement because she knew that
their contract did not provide for such stipulation.

On August 3, 1995, the trial court rendered judgment in favor of defendants. Upon appeal the CA
affirmed the decision of the trial court.

ISSUE:

1. Whether or not petitioner had knowledge of Rule 69 of SFMPI Rules and Regulations for memorial
works in the mausoleum areas of the park when the Pre-Need Purchase Agreement and the Deed
of Sale was executed.

HELD:
The supreme courts declared that Basic is the principle that contracts, once perfected, bind both
contracting parties. The parties may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided these are not contrary to law, morals, good customs, public order, or
public policy. It follows that obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.

Petitioner is an experienced businesswoman. She doubtlessly dealt with numerous documents,
and is therefore presumed to know the import thereof.

We are not persuaded by petitioners claim that Rule 69 of respondents rules and regulations is
unreasonable and oppressive because the provision unduly restricts her right of ownership over the
property.

The validity or enforceability of the impugned contracts will have to be determined by the peculiar
circumstances obtaining in each case and the situation of the parties concerned. Indeed, Article 24 of the
New Civil Code provides that [in] all contractual, property or other relations, when one of the parties is at
a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age,
or other handicap, the courts must be vigilant for his protection. In this case, however, there is no reason
for the Court to apply the rule on stringent treatment towards contracts of adhesion. To reiterate, not only
is petitioner educated, she is likewise a well-known and experienced businesswoman; thus, she cannot
claim to be the weaker or disadvantaged party in the subject contracts so as to call for a strict
interpretation against respondents. Moreover, she executed the Pre-Need Purchase Agreement and Deed
of Sale without any complaint or protest. She assailed Rule 69 of the Rules and Regulations of respondent
SFMPI only when respondents rejected her request to cause the construction of the mausoleum.

WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV
No. 52311 dated May 10, 2005, and the Resolution dated September 6, 2005, are AFFIRMED. Costs
against petitioner.

BPI VS SARMIENTO (GR 146021, March 10, 2006)
PEREZ VS POMAR (G.R. No. L-1299, November 16, 1903)

Facts:
The petitioner Don Vicente Perez filed before the Court of First Instance of Laguna a complaint
asking the court to determine the amount due to him for the services he rendered in the Tabacalera
Company and that the defendant Eugenio Pomar be condemned to the payment of damages amounting to
$3,200, gold, together with the costs of suit. Prior to this event, the petitioner was asked to be an English
interpreter between the defendant and the military authorities and that after that incident, the petitioner
continued to render his services to the respondent and that he obtained passes and accompanied Pomar
upon his journeys to some of the towns in Province of Laguna( e.g conferences between the respondent
and the colonel commanding the local garrison, conferences with Captain Lemen in the town of Pilar,
major in command in Pagsanjan about the shipment of goods from Manila) and that the plaintiff was
assured by the respondent that in every rendered service to the said company, there would be such
payment. Thus, caused him to abandon his soap business and suffered damages in the sum of $3,200.
The defendant filed for dismissal of the complaint denying the allegations stated by the petitioner. He also
stated that Perez borrowed from time to time money amounting to $175 for his soap business, that Perez
purposes in accompanying him is to extend his business and mercantile relations, free transportation,
and that Perez had acted as interpreter of his own free will without any offer of payment and therefore no
legal relation between them existed.

Issue:
Whether or not the respondent is oblige to pay the continued service rendered by the petitioner.

Held:
Yes. The Court decision is that the judgement should be rendered against Don Eugenio Pomar for
the payment to the plaintiff of the sum of 200 Mexican pesos.

Ratio:
The Court ruled out that if there is a tacit and mutual consent as to the rendition of the services,
the defendant is still obliged to pay such compensation to the petitioner even if there is no written
contract entered between the two parties on the basis of quasi-contract. When one party knowingly
receives something for nothing, the courts may impose a quasi contract. Under a quasi contract, neither
party is originally intended to create an agreement. Instead, an arrangement is imposed by a judge to
rectify an occurrence of unjust enrichment. On the services rendered by the petitioner in the province of
Laguna, it follows that there was a bilateral obligation on the part of both parties because the defendant
accepted the benefit of the service rendered by the petitioner and that in turn the petitioner expected him
to pay his rendition of service. Provided in Article 22 of the Civil Code, Every person who through an act of
performance by another, or any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to him. The fact that the
defendant consented to accept an interpreter's services on various occasions, rendered in his behalf and
not considered as free, it is just that he should pay the reasonable payment because it is well-known
principle of law that no one should be permitted to enrich himself to the damage of another.
REYES VS LIM (408 SCRA 560, 2003)

Facts :
Reyes as seller and Lim as buyer had entered into a contract to sell a parcel of land. Ten
million(10,000,000.00) was initially paid by Lim upon the signing of the contract, the with a remaining
balance of 18,000,000.00 to be paid when the present occupant of the property, Harrison Lumber, vacates
the same and an Absolute Deed of Sale is executed. A penalty was to be paid by Reyes, to be taken against
the remaining balance, if the property is not vacated within a designated period. Reyes would accuse Lim
and Harrison Lumber, who had still not vacated the property, of connivance and files a civil case against
them. An offer would be made by Lim of to pay the balance, and a subsequent offer would be made by
Reyes to return the down payment. Later, it was revealed that the property had already been sold to a third
party. In the original case, Lim requested in open court that Reyes be ordered to deposit the
10,000,000.00 down payment with the RTC cashier. The trial court grants this motion. Reyes Motion to set
Aside the Order and Motion for Reconsideration would be denied by the trial court. Reyes petition for
certiotrari was denied by the CA, hence this petition. Reyes avers that the trial court erred when it ordered
the deposit of the down payment, as said deposit is not among the provisional remedies provided for in
the Rules of Court

Issue:
Is the order to deposit the down payment subject matter of the case proper considering that it is
not among the provisional remedies provided for in the Rules of Court

Ruling:
While the matter of deposit is not provided for the in the Rule of Court, this is a case when there is
a hiatus in the law. If left alone, such hiatus would result to the unjust enrichment of Reyes at the expense
of Lim. This calls for application of equity which fills the open spaces of the law. Art.9 of the Civil Code
mandates the courts to make a ruling despite the silence, obscurity or inefficiency of the laws. As the
contract between the parties can no longer be enforced, a rescission of the contract creates the obligation
to return the thing subject matter of the contract. Under Art 22, the principle that no person may unjustly
enrich himself at the expense of another applies to substantive rights and procedural remedies. As the
aggrieved party has no other actions available based on any other provision of contract or law, courts can
extend this condition to the hiatus in the Rules of Court.
RODZSSEN SUPPLY CO. INC. vs. FAR EAST BANK & TRUST CO. (G.R. No. 109087. 9 May 2001.)
Ponente: Panganiban, J.:

Facts:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the January
21, 1993 Decision2 of the CA which affirmed with modification the ruling of the RTC of Bacolod City.
On January 15, 1979, defendant Rodzssen Supply, Inc. opened with plaintiff Far East Bank and Trust Co. a
30-day domestic letter of credit, in the amount of P190,000.00 in favor of Ekman and Company, Inc.
(Ekman) for the purchase from the latter of five units of hydraulic loaders, to expire on February 15, 1979.
The three loaders were delivered to defendant for which plaintiff paid Ekman and which defendant paid
plaintiff before expiry date of LC. The remaining two loaders were delivered to defendant but the latter
refused to pay. Ekman pressed payment to plaintiff. Plaintiff paid Ekman for the two loaders and later
demanded from defendant such amount as it paid Ekman. Defendant refused payment contending that
there was a breach of contract by plaintiff who in bad faith paid Ekman, knowing that the two units of
hydraulic loaders had been delivered to defendant after the expiry date of subject LC.

Issue:
WON petitioner is liable to respondent.

Ruling:
The SC agrees with the CA that petitioner should pay respondent bank the amount the latter expended for
the equipment belatedly delivered by Ekman and voluntarily received and kept by petitioner. Equitable
considerations behoove us to allow recovery by respondent. True, it erred in paying Ekman, but petitioner
itself was not without fault in the transaction. It must be noted that the latter had voluntarily received and
kept the loaders since October 1979. When both parties to a transaction are mutually negligent in the
performance of their obligations, the fault of one cancels the negligence of the other and, as in this case,
their rights and obligations may be determined equitably under the law proscribing unjust enrichment.
PEOPLE VS CATUBIG (G.R. No. 137842, August 23, 2001)
AIR FRANCE VS RAFAEL CARRASCOSO AND CA (1996)

Facts
Rafael Carrascoso was part of a group of pilgrims leaving for Lourdes. Air France, through PAL,
issued to Carrascoso a first class round trip ticket. From Manila to Bangkok, he traveled in first class but at
Bangkok, the manager of Air France forced him to vacate his seat, because a "white man" had a "better
right" to it. He refused and even had a heated discussion with the manager but after being pacified by
fellow passengers, he reluctantly gave up the seat.
Air France asserts that the ticket does not represent the true and complete intent and agreement
of the parties, and that the issuance of a first class ticket did not guarantee a first class ride (depends
upon the availability of seats). CFI and CA disposed of this contention.

Issue and Holding
WON Carrascoso was entitled to the first class seat he claims. YES

Ratio
On CA's decision
Air France charges that CA failed to make complete findings of fact on all issues presented. SC
says that so long as CA's decision contains the facts necessary to warrant its conclusions, there is nothing
wrong in withholding any specific finding of facts with respect to the evidence for the defense.

On the seat issue
If a first-class ticket holder is not entitled to a corresponding seat, what security can a passenger have? It's
very easy to strike out the stipulations in the ticket and say that there was a contrary verbal agreement.
There was no explanation as to why he was allowed to take a first class seat before coming to Bangkok if
indeed he had no seat or if someone had a better right to it.

On contract to transport, QD, etc.
This is different in kind and degree from any other contractual obligation because of the relation which an
air carrier sustains with the public. Passengers do not contract merely for transportation as they have a
right to be treated by the employees with kindness, respect, courtesy, consideration. What happened was
a violation of public duty by Air France--a case of QD, so damages are proper. A case was cited wherein it
was said that although the relation of passenger and carrier is contractual in origin and nature, the act
that breaks the K may be also a tort.

On the issue of award of damages
Air France assails CA's award of moral damages, claiming that since Carrascoso's action is based on
breach of contract, there must be an averment of fraud or bad faith in order to avail of said award. While
there was no specific mention of "bad faith," it may be drawn from the facts and circumstances set forth.
Deficiency in the complaint, if any, was cured by evidence.

Allegations in the complaint on this issue:
1. There was a K to furnish plaintiff a first class passage covering the Bangkok-Teheran leg
2. This K was breached when Air France failed to furnish first class transpo at Bangkok
3. There was bad faith when the manager compelled Carrascoso to leave his seat after he
was already seated and to transfer to the tourist class, thereby making him suffer inconvenience,
embarrassment, humiliation, etc.
bad faith - state of mind affirmatively operating with furtive design or with some motive of self-interest or
ill will or for ulterior purposes

See NCC 21. Upon the provisions of NCC 2219 (10), moral damages are recoverable. Exemplary damages
are well awarded also, since NCC gives the court power to grant such in K and QK, with the condition that
the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.
MAKATI STOCK EXCHANGE VS CAMPOS (GR 138814, April 16, 2009)
CHAVES VS. GONZALES (32 SCRA 547)

FACTS:
Plaintiff Chaves delivered to defendant Gonzales a typewriter for routine cleaning and servicing. The
defendant was not able to finish the job after some time despite repeated reminders by plaintiff.
Eventually, Chaves took back his typewriter which was returned to him in shambles with some parts
missing. Chaves had the typewriter fixed by someone else which cost him a total of Php 89.85.

Subsequently, Chaves filed a case before the CFI demanding Php 90 as actual damages among others. The
CFI found for the plaintiff but ruled that the total cost of Php 89.85 should not be fully charged against
the defendant and that only the total value of the missing parts at Php 31.10 should be paid by Gonzales
to Chaves.

Chaves appealed to the Supreme Court with the contention that under Article 1167 defendant should pay
him the whole cost of labor and materials that went into the repair of the machine. Gonzales, on the other
hand, contended that he is not liable at all for anything because his contract with Chaves did not contain a
period and that Chaves should have first filed a petition for the court to fix the period under 1167 of the
Civil Code.

ISSUE:
Does the contract contain a period?

RULING:
Yes. Based on the facts it was clear that both parties had a perfected contract for cleaning and
servicing a typewriter; that they intended that the defendant was to finish it at some future time although
such time was not specified; and that such time had passed without the work having been accomplished.
The time for compliance having evidently expired, and there being a breach of contract by non-
performance, it was academic for plaintiff to have first petitioned the court to fix a period. Defendant
cannot invoke Article 1197 of the Civil Code for he virtually admitted non-performance by returning the
typewriter that he was obliged to repair in a non-working condition with essential parts missing. For such
contravention, Gonzales is liable under Article 1167 of the Civil Code which makes him liable for the cost
of executing the obligation in a proper manner. In addition, he is likewise liable under Article 1170 of the
Code for cost of the missing parts, in the amount of Php 31.10 for in his obligation to repair the
typewriter he was bound, but failed or neglected to return it in the same condition it was when he received
it.
PICZON VS PICZON (G.R. No. L-29139, November 15, 1974)

FACTS:

This an appeal from the decision of the Court of First Instance of Samar in its Civil Case No. 5156, entitled
Consuelo P. Piczon, et al. vs. Esteban Piczon, et al., sentencing defendants-appellees, Sosing Lobos and
Co., Inc., as principal, and Esteban Piczon, as guarantor, to pay plaintiffs-appellants "the sum of
P12,500.00 with 12% interest from August 6, 1964 until said principal amount of P12,500.00 shall have
been duly paid, and the costs."

Annex "A", the actionable document of appellants reads thus:

AGREEMENT OF LOAN

KNOW YE ALL MEN BY THESE PRESENTS:

That I, ESTEBAN PICZON, of legal age, married, Filipino, and resident of and with postal address in the
municipality of Catbalogan, Province of Samar, Philippines, in my capacity as the President of the
corporation known as the "SOSING-LOBOS and CO., INC.," as controlling stockholder, and at the same time
as guarantor for the same, do by these presents contract a loan of Twelve Thousand Five Hundred Pesos
(P12,500.00), Philippine Currency, the receipt of which is hereby acknowledged, from the "Piczon and Co.,
Inc." another corporation, the main offices of the two corporations being in Catbalogan, Samar, for which I
undertake, bind and agree to use the loan as surety cash deposit for registration with the Securities and
Exchange Commission of the incorporation papers relative to the "Sosing-Lobos and Co., Inc.," and to
return or pay the same amount with Twelve Per Cent (12%) interest per annum, commencing from the date
of execution hereof, to the "Piczon and Co., Inc., as soon as the said incorporation papers are duly
registered and the Certificate of Incorporation issued by the aforesaid Commission.

IN WITNESS WHEREOF, I hereunto signed my name in Catbalogan, Samar, Philippines, this 28th day of
September, 1956.

(signed)

Esteban Piczon

ISSUE:
Was the trial court correct in its decision that defendant will only have to pay the interest from August 6,
1964 instead of September 28, 1956?

RULING:
No. Instead of requiring appellees to pay interest at 12% only from August 6, 1964, the trial court should
have adhered to the terms of the agreement which plainly provides that Esteban Piczon had obligated
Sosing-Lobos and Co., Inc. and himself to "return or pay (to Piczon and Co., Inc.) the same amount
(P12,500.00) with Twelve Per Cent (12%) interest per annum commencing from the date of the execution
hereof", Annex A, which was on September 28, 1956. Under Article 2209 of the Civil Code "(i)f the
obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for
damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and
in the absence of stipulation, the legal interest, which is six per cent per annum." In the case at bar, the
"interest agreed upon" by the parties in Annex A was to commence from the execution of said document.

Appellees' contention that the reference in Article 2209 to delay incurred by the debtor which can serve as
the basis for liability for interest is to that defined in Article 1169 of the Civil Code is untenable. In Quiroz
vs. Tan Guinlay, 5 Phil. 675, it was held that the article cited by appellees (which was Article 1100 of the
Old Civil Code read in relation to Art. 1101) is applicable only when the obligation is to do something
other than the payment of money. And in Firestone Tire & Rubber Co. (P.I.) vs. Delgado, 104 Phil. 920, the
Court squarely ruled that if the contract stipulates from what time interest will be counted, said stipulated
time controls, and, therefore interest is payable from such time, and not from the date of the filing of the
complaint (at p. 925). Were that not the law, there would be no basis for the provision of Article 2212 of
the Civil Code providing that "(I)nterest due shall earn legal interest from the time it is judicially
demanded, although the obligation may be silent upon this point." Incidentally, appellants would have
been entitled to the benefit of this article, had they not failed to plead the same in their complaint. Their
prayer for it in their brief is much too late. Appellees had no opportunity to meet the issue squarely at the
pre-trial.
SAN LORENZO DEV CORP v CA (GR 124242, January 21, 2005)

FACTS:
Spouses Lu owned 2 parcels of land, which they purportedly sold to Babasanta. He demanded the
execution of a Final Deed of Sale in his favour so he may effect full payment of the purchase price;
however, the spouses declined to push through with the sale. They claimed that when he requested for a
discount and they refused, he rescinded the agreement. Thus, Babasanta filed a case for Specific
Performance. San Lorenzo Development Corp. (SLDC) intervened claiming that the lots have been sold to it
by virtue of a Deed of Absolute Sale with Mortgage and that it was a purchaser in good faith. Both sales
were not registered.

ISSUE:
Who has a better title, Babasanta or SLDC?

HELD:
SLDC. There was no double sale in this case because the contract in favor of Babasanta was a mere
contract to sell; hence, Art. 1544 is not applicable. The ownership of the property was not to be
transmitted in his favor until the full payment of the purchase price. There was neither actual nor
constructive delivery as his title is based on a mere receipt. Based on this alone, the right of SLDC must be
preferred.
CALEON V AGUS DEVELOPMENT CORP.

FACTS:
Agus Development Corporation is the owner of a parcel of land denominated at Lealtad,
Sampaloc, Manila, which it leased to petitioner Rita Caleon for a monthly rental of P180.00. Petitioner
constructed on the lot leased a 4-doorapartment building. Without the consent of the private respondent,
the petitioner sub-leased two of the four doors of the apartment to Roland Guevarra and Felicisima
Estrada for a monthly rental of P350.00 each. Upon learning of the sub-lease, private respondent through
counsel demanded in writing that the petitioner vacate the leased premises. Agus filed a complaint for
ejectment MTC of Manila, against the petitioner citing as ground therefor the provisions of Batas
Pambansa Blg. 25, Section 5, which is the unauthorized sub-leasing of part of the leased premises to
third persons without securing the consent of the lessorwithin the required sixty (60)-day period from the
promulgation of the new law (B.P. 25).Petitioner argued that Batas Pambansa Blg. 25 cannot be applied in
this case because there is a perfected contract of lease without any express prohibition on subleasing
which had been in effect between petitioner and private respondent long before the enactment of Batas
Pambansa Blg. 25. Therefore, the application of said law to the case at bar is unconstitutional as an
impairment of the obligation of contracts.

ISSUE:
Whether or not the Petitioners contention is correct?

RULING:
The Supreme Court Ruled that the petitioners contention is untenable. It is well settled that all
presumptions are indulged in favor of constitutionality; one who attacks a statute, alleging
unconstitutionality must prove its invalidity beyond a reasonable doubt. In fact, this Court does
notdecide questions of a constitutional nature unless thatquestion is properly raised and presented in app
ropriatecases and is necessary to a determination of the case. In any event, it is now beyond question that
the constitutional guaranty of non-impairment of obligations of contract is limited by and subject to the
exercise of police power of the state in the interest of public health, safety, morals and general welfare.
WHEREFORE, the Petition is Denied for lack of merit.
TANGUILIG VS CA (GR 117190, January 2, 1997)
Case of JACINTO TANGUILIG doing business under the name and style J.M.T. ENGINEERING AND GENERAL
MERCHANDISING vs COURT OF APPEALS and VICENTE HERCE JR.

FACTS:
Herce contracted Tanguilig to construct a windmill system for him, for consideration of 60,000.00.
Pursuant to the agreement Herce paid the downpayment of 30,000.00 and installment of 15,000.00
leaving a 15,000.00 balance.

Herce refused to pay the balance because he had already paid this amount to SPGMI which constructed a
deep well to which the windmill system was to be connected since the deepwell, and assuming that he
owed the 15,000.00 this should be offset by the defects in the windmill system which caused the structure
to collapse after strong winds hit their place. According to Tanguilig, the 60,000.00 consideration is only
for the construction of the windmill and the construction of the deepwell was not part of it. The collapse
of the windmill cannot be attributed to him as well, since he delivered it in good and working condition
and Herce accepted it without protest. Herce contested that the collapse is attributable to a typhoon, a
force majeure that relieved him of liability.

The RTC ruled in favor of Tanguilig, but this decision was overturned by the Court of Appeals which ruled
in favor of Herce

ISSUES:
Can the collapse of the windmill be attributed to force majeure? Thus, extinguishing the liability of
Tanguilig?

- Yes, in order for a party to claim exemption from liability by reason of fortuitous event under Art 1174
of the Civil Code the event should be the sole and proximate cause of the loss or destruction of the object
of the contract.
- In Nakpil vs. Court of Appeals, the S.C. held that 4 requisites must concur that there must be a (a) the
cause of the breach of the obligation must be independent of the will of debtor (b) the event must be
either unforeseeable or unavoidable; (c) the event be such to render it impossible for the debtor to fulfill
his obligation in a normal manner; and (d) the debtor must be free from any participation in or
aggravation of the injury to the creditor.
- Tanguilig merely stated that there was a strong wind, and a strong wind in this case is not fortuitous, it
was not unforeseeable nor unavoidable, places with strong winds are the perfect locations to put up a
windmill, since it needs strong winds for it to work.

HELD:
WHEREFORE, the appealed decision is MODIFIED. Respondent VICENTE HERCE JR. is directed to pay
petitioner JACINTO M. TANGUILIG the balance of P15,000.00 with interest at the legal rate from the date of
the filing of the complaint. In return, petitioner is ordered to "reconstruct subject defective windmill
system, in accordance with the one-year guaranty" and to complete the same within three (3) months from
the finality of this decision.

Obligations and Contracts Terms:

Fortuitous Events- Refers to an occurrence or happening which could not be foreseen, or even if foreseen,
is inevitable. It is necessary that the obligor is free from negligence. Fortuitous events may be produced by
two (2) general causes: (1) by Nature, such as but not limited to, earthquakes, storms, floods, epidemics,
fires, and (2) by the act of man, such as but not limited to, armed invasion, attack by bandits,
governmental prohibitions, robbery, provided that they have the force of an imposition which the
contractor or supplier could not have resisted.
PHILIPPINE CHARTER INSURANCE CORPORATION VS CENTRAL COLLEGES OF THE PHILIPPINES
(GR 180631-33, February 22, 2012)
PALMARES VS CA (GR 126490, March 31, 1998)
Facts:
Private respondent M.B. Lending Corporation extended a loan to the spouses Osmea and Merlyn
Azarraga, together with petitioner Estrella Palmares, in the amount of P30,000.00 payable on or before
May 12, 1990, with compounded interest at the rate of 6% per annum to be computed every 30 days from
the date thereof. 1 On four occasions after the execution of the promissory note and even after the loan
matured, petitioner and the Azarraga spouses were able to pay a total of P16,300.00, thereby leaving a
balance of P13,700.00. No payments were made after the last payment on September 26, 1991. 2
Consequently, on the basis of petitioner's solidary liability under the promissory note, respondent
corporation filed a complaint 3 against petitioner Palmares as the lone party-defendant, to the exclusion
of the principal debtors, allegedly by reason of the insolvency of the latter.
Issue:
WON Palmares is liable
Held:
If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3, Title I
of this Book shall be observed. In such case the contract is called a suretyship. It is a cardinal rule in the
interpretation of contracts that if the terms of a contract are clear and leave no doubt upon the intention
of the contracting parties, the literal meaning of its stipulation shall control. 13 In the case at bar,
petitioner expressly bound herself to be jointly and severally or solidarily liable with the principal maker of
the note. The terms of the contract are clear, explicit and unequivocal that petitioner's liability is that of a
surety.
BINALGBAGAN TECH INC VS CA (GR 100594, March 10, 1993)

BARZAGA VS CA (GR 115129, February 12, 1997)

Facts:
Petitioners wife died and her wish is to be buried before Christmas. After her death on Dec 21, 1990, in
fulfilment of her wishes, petitioner went to respondents store to inquire the availability of materials to be
used in building his wifes niche. Respondents employee advised petitioner that to come back the
following morning. That following morning, petitioner made a payment of P2,100 to secure the delivery of
the materials. However, the materials were not delivered on time. Several times petitioner went to
respondents store to ask for the delivery. Later that day, the petitioner was forced to dismiss his labourer
since there is nothing to work with for the materials did not arrive. Petitioner however purchased the
materials from other stores. After his wife was buried, he sued respondent for damages because of delay
For his part, respondent offered a lame excuse of fortuitous event that the reason for delay is because the
trucks tires were flat.

Issue:
Whether or not respondent is guilty of delay that will entitle petitioner for damages, although it was not
specified in the invoice the exact time of delivery?

Held:
Yes! The law expressly provides that those who in the performance of their obligation are guilty of fraud,
negligence, or delay and those who in any manner contravene the tenor thereof, are liable for
damages.(Art 1170 of the Civil Code). The appellate court appears to have belittled petitioners
submission that under the prevailing circumstances time was of the essence in the delivery of the
materials to the grave site. However, we find petitioners assertion to be anchored on solid ground. The
niche had to be constructed at the very least on the twenty-second of December considering that it would
take about two (2) days to finish the job if the interment was to take place on the twenty-fourth of the
month. Respondents delay in the delivery of the construction materials wasted so much time that
construction of the tomb could start only on the twenty-third. It could not be ready for the scheduled
burial of petitioners wife. This undoubtedly prolonged the wake, in addition to the fact that work at the
cemetery had to be put off on Christmas day. This case is clearly one of non-performance of a reciprocal
obligation. In their contract of purchase and sale, petitioner had already complied fully with what was
required of him as purchaser, i.e., the payment of the purchase price of P2, 110.00. It was incumbent
upon respondent to immediately fulfil his obligation to deliver the goods otherwise delay would attach.
FINANCIAL BUILDING CORPORATION CS RUDLIN INTERNATIONAL CORPORATION (GR 164186, October 2,
2010 and GR 164347, October 4, 2010 [consolidated])

TANGUILIG VS CA (GR 117190, January 2, 1997)
Case of JACINTO TANGUILIG doing business under the name and style J.M.T. ENGINEERING AND GENERAL
MERCHANDISING vs COURT OF APPEALS and VICENTE HERCE JR.

FACTS

Herce contracted Tanguilig to construct a windmill system for him, for consideration of 60,000.00.
Pursuant to the agreement Herce paid the downpayment of 30,000.00 and installment of 15,000.00
leaving a 15,000.00 balance.

Herce refused to pay the balance because he had already paid this amount to SPGMI which constructed a
deep well to which the windmill system was to be connected since the deepwell, and assuming that he
owed the 15,000.00 this should be offset by the defects in the windmill system which caused the structure
to collapse after strong winds hit their place. According to Tanguilig, the 60,000.00 consideration is only
for the construction of the windmill and the construction of the deepwell was not part of it. The collapse
of the windmill cannot be attributed to him as well, since he delivered it in good and working condition
and Herce accepted it without protest. Herce contested that the collapse is attributable to a typhoon, a
force majeure that relieved him of liability.

The RTC ruled in favor of Tanguilig, but this decision was overturned by the Court of Appeals which ruled
in favor of Herce

ISSUES

Can the collapse of the windmill be attributed to force majeure? Thus, extinguishing the liability of
Tanguilig?

- Yes, in order for a party to claim exemption from liability by reason of fortuitous event under Art 1174
of the Civil Code the event should be the sole and proximate cause of the loss or destruction of the object
of the contract.
- In Nakpil vs. Court of Appeals, the S.C. held that 4 requisites must concur that there must be a (a) the
cause of the breach of the obligation must be independent of the will of debtor (b) the event must be
either unforeseeable or unavoidable; (c) the event be such to render it impossible for the debtor to fulfill
his obligation in a normal manner; and (d) the debtor must be free from any participation in or
aggravation of the injury to the creditor.
- Tanguilig merely stated that there was a strong wind, and a strong wind in this case is not fortuitous, it
was not unforeseeable nor unavoidable, places with strong winds are the perfect locations to put up a
windmill, since it needs strong winds for it to work.

HELD:
WHEREFORE, the appealed decision is MODIFIED. Respondent VICENTE HERCE JR. is directed to pay
petitioner JACINTO M. TANGUILIG the balance of P15,000.00 with interest at the legal rate from the date of
the filing of the complaint. In return, petitioner is ordered to "reconstruct subject defective windmill
system, in accordance with the one-year guaranty" and to complete the same within three (3) months from
the finality of this decision.

Obligations and Contracts Terms:

Fortuitous Events- Refers to an occurrence or happening which could not be foreseen, or even if foreseen,
is inevitable. It is necessary that the obligor is free from negligence. Fortuitous events may be produced by
two (2) general causes: (1) by Nature, such as but not limited to, earthquakes, storms, floods, epidemics,
fires, and (2) by the act of man, such as but not limited to, armed invasion, attack by bandits,
governmental prohibitions, robbery, provided that they have the force of an imposition which the
contractor or supplier could not have resisted.
AEROSPACE CHEMICAL INDUSTRIES INC VS CA (GR 108129, September 23, 1999)
FAR EAST BANK & TRUST CO VS CA (GR 108164, February 23,1995)
PNB VS CA (GR 126152, September 28, 1999)
SOUTHEASTERN COLLEGE vs. CA (G.R. No. 126389 July 10, 1998)

Facts:
On October 11, 1989, powerful typhoon Saling hit Metro Manila. Buffeted by very strong winds, the
roof of Southeastern Colleges building was partly ripped off and blown away, landing on and destroying
portions of the roofing of private respondents Dimaanos house. Private respondent alleged that the
damage to their house rendered the same uninhabitable, forcing them to stay temporarily in others
houses. An ocular inspection of the destroyed building was conducted by a team of engineers headed by
the city building official. The fourth floor of subject school building was declared as a structural hazard.
Lower court awarded damages. CA affirmed but reduced damages.

Issue:
WON the damage of the PRs house resulting from the impact of the falling portions of the school
buildings roof ripped off was due to fortuitous event? NO.

Held:
Private respondents, in establishing the culpability of petitioner, merely relied on the aforementioned
report submitted by a team which made an ocular inspection of petitioners school building after the
typhoon. As the term imparts, an ocular inspection is one by means of actual sight or viewing. What is
visual to the eye through is not always reflective of the real cause behind. Petitioners obtained a permit
from the city building official before the construction of its building. Having obtained both building permit
and certificate of occupancy is prima facie evidence of the regular and proper construction of subject
school building. When part of its roof needed repairs of the damage inflicted by typhoon Saling, the city
engineer gave thego-signal for such repairs without any deviation from theoriginal design. It subsequently
authorized the use of the entire fourth floor of the same building. These only prove that subject building
suffers from no structural defect. Petitioner presented its vice president for finance and administration
who testified that an annual maintenance inspection and repair of subject school building were regularly
undertaken. Petitioner was even willing to present itsmaintenance supervisor to attest to the extent of
such regular inspection but private respondents agreed to dispense with his testimony and simply
stipulated that it would be corroborative of the vice presidents narration. Besides, no complaint regarding
any defect on the same structure has ever been lodged before his office prior to the institution of the case
atbench. It is a matter of judicial notice that typhoons arecommon occurrences in this country. If subject
school buildings roofing was not firmly anchored to its trusses, obviously, it could not have withstood
long years and several typhoons even stronger than Saling.Petitioner has not been shown negligent or at
fault regarding the construction and maintenance of its school building in question and that typhoon
Saling was the proximate cause of the damage suffered by private respondents house.
SAMSON VS COURT OF APPEALS (G.R. No. 108245, November 25, 1994)

FACTS:
J. Romero Respondent is the owner of Santos and Sons, Inc., a haberdashery store, which occupied the
subject premises of a commercial unit building, for 20 years. In 1984, the owner of the building, Susana
Realty Corp., informed respondents that the lease contract will expire on July. Nonetheless, the lease
contract of respondent was extended until December 1984. In Feb 1985, respondent was informed,
through a letter, of the increase in rentals pending renewal of his contract until the arrival of Ms. Madrigal
(Owner of Susana Realty). A few days later, petitioner offered to purchase the said store. The same month,
the petitioner paid half of the agreed price of P300K and agreed that the balance shall be paid upon
renewal of the contract. All went well for the petitioner for a few months. In July, however, he was ordered
to vacate the premises due to respondents failure in renewing his lease. Petitioner then filed an action
for damages against respondent for fraud and bad faith. The RTC ruled in favor of the petitioner. On
appeal, the CA modified the judgment of the RTC finding that the respondent did not exercised fraud,
hence, deleting the damages and attorneys fees.

ISSUES:
Whether or not Angel Santos committed fraud or bad faith in representing petitioner that his contract
of lease over the subject premises has been impliedly renewed by Susana Realty.
No.

HELD:
Under the facts proven, private respondent cannot be held guilty of fraud or bad faith when he entered
into the subject contract with petitioner. The letter sent to him in Feb1985 made respondent believed that
his lease contract was impliedly renewed and that formal renewal would be made upon the arrival of Ms
Madrigal.

Art 1338.
In contracts, the kind of fraud that will vitiate consent is one where, through insidious words or
machinations of one of the contracting parties, the other is induced to enter into a contract which, without
them, he would not have agreed to. (Dolo causante) It is quite obvious that the respondent did not act in
Bad Faith and that there was an honest mistake on the part of Angel Santos. Also, the petitioner is also
at fault for failing to exercise sufficient diligence in verifying first the status of private respondents lease.
As held by this Court in the case of Caram, Jr. vs. Laureta, the rule caveat emptor requires the purchaser to
be aware of the supposed title of the vendor and he who buys without checking the vendor's title takes all
the risks and losses consequent to such failure.
PEDRO D. DIOQUINO VS. LAUREANO (G.R. No. L-25906 May 28, 1970)

FACTS:

Attorney Pedro Dioquino is the owner of a car. He went to the office of the MVO, Masbate, to register the
same where he met the defendant Federico Laureano, a patrol officer of said MVO office. Dioquino
requested Laureano to introduce him to one of the clerks in the MVO Office, who could facilitate the
registration of his car and the request was attended to. Laureano rode on the car of Atty. Dioquino on his
way to the P.C. Barracks at Masbate. While about to reach their destination, the car driven by plaintiff's
driver and with Laureano as the sole passenger was stoned by some 'mischievous boys,' and its windshield
was broken. Laureano chased the boys and he was able to catch one of them. The plaintiff and Laureano
with the boy returned to the P.C. barracks and the father of the boy was called, but no satisfactory
arrangements were made about the damage to the windshield.

It was likewise noted in the decision now on appeal: "The defendant Federico Laureano refused to file any
charges against the boy and his parents because he thought that the stone-throwing was merely
accidental and that it was due to force majeure. So he did not want to take any action and after delaying
the settlement, after perhaps consulting a lawyer, the defendant Federico Laureano refused to pay the
windshield himself and challenged that the case be brought to court for judicial adjudication. There is no
question that the plaintiff tried to convince the defendant Federico Laureano just to pay the value of the
windshield and he even came to the extent of asking the wife to convince her husband to settle the matter
amicably but the defendant Federico Laureano refused to make any settlement, clinging [to] the belief that
he could not be held liable because a minor child threw a stone accidentally on the windshield and
therefore, the same was due to force majeure."

ISSUE:
Is Federico Laureano liable for the payment of the windshield of Atty Dioquino?

RULING:

No. The law being what it is, such a belief on the part of defendant Federico Laureano was justified. The
express language of Art. 1174 of the present Civil Code which is a restatement of Art. 1105 of the Old
Civil Code, except for the addition of the nature of an obligation requiring the assumption of risk, compels
such a conclusion. It reads thus: "Except in cases expressly specified by the law, or when it is otherwise
declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person
shall be responsible for those events which could not be, foreseen, or which, though foreseen were
inevitable." Even under the old Civil Code then, as stressed by us in the first decision dating back to 1908,
in an opinion by Justice Mapa, the rule was well-settled that in the absence of a legal provision or an
express covenant, "no one should be held to account for fortuitous cases." Its basis, as Justice Moreland
stressed, is the Roman law principle major casus est, cui humana infirmitas resistere non
potest. Authorities of repute are in agreement, more specifically concerning an obligation arising from
contract "that some extraordinary circumstance independent of the will of the obligor, or of his
employees, is an essential element of a caso fortuito." If it could be shown that such indeed was the case,
liability is ruled out. There is no requirement of "diligence beyond what human care and foresight can
provide."

The error committed by the lower court in holding defendant Federico Laureano liable appears to be thus
obvious. Its own findings of fact repel the motion that he should be made to respond in damages to the
plaintiff for the broken windshield. What happened was clearly unforeseen. It was a fortuitous event
resulting in a loss which must be borne by the owner of the car. It was misled, apparently, by the
inclusion of the exemption from the operation of such a provision of a party assuming the risk,
considering the nature of the obligation undertaken. A more careful analysis would have led the lower
court to a different and correct interpretation. The very wording of the law dispels any doubt that what is
therein contemplated is the resulting liability even if caused by a fortuitous event where the party charged
may be considered as having assumed the risk incident in the nature of the obligation to be performed. It
would be an affront, not only to the logic but to the realities of the situation, if in the light of what
transpired, as found by the lower court, defendant Federico Laureano could be held as bound to assume a
risk of this nature. There was no such obligation on his part.

The decision of the lower court of November 2, 1965 insofar as it orders defendant Federico
Laureano to pay plaintiff the amount of P30,000.00 as damages plus the payment of costs, is hereby
reversed. It is affirmed insofar as it dismissed the case against the other two defendants, Juanita Laureano
and Aida de Laureano, and declared that no moral damages should be awarded the parties.
JARCO MARKETING CORP VS CA (1999)

Facts:
Petitioner is the owner of Syvel's Department Store, Makati City. Petitioners Leonardo Kong, Jose Tiope and
Elisa Panelo are the store's branch manager, operations manager, and supervisor, respectively. Private
respondents Conrado and Criselda Aguilar are spouses and the parents of Zhieneth Aguilar.
On May 9, 1983, Criselda and Zhieneth were at the department store. Criselda was signing her credit card
slip when she heard a loud thud. She looked behind her and beheld her daughter pinned beneath the gift-
wrapping counter structure. She was crying and shouting for help. He was brought to Makati Medical
Center, where she died after 14 days. She was 6 years old.
Private respondents demanded upon petitioners the reimbursement of the hospitalization, medical bills
and wake and funeral expenses which they had incurred. Petitioners refused to pay. Consequently, private
respondents filed a complaint for damages wherein they sought the payment of P157,522.86 for actual
damages, P300,000 for moral damages, P20,000 for attorney's fees and an unspecified amount for loss of
income and exemplary damages. The trial court dismissed the complaint, ruling that the proximate cause
of the fall of the counter was Zhieneths act of clinging to it. The Court of Appeals reversed the decision of
the trial court. It found that petitioners were negligent in maintaining a structurally dangerous counter.
The counter was defective, unstable and dangerous. It also ruled that the child was absolutely incapable of
negligence or tort. Petitioners now seek for the reversal of this decision.

Issues:
(1) Whether the death of ZHIENETH was accidental or attributable to negligence
(2) In case of a finding of negligence, whether the same was attributable to private respondents for
maintaining a defective counter or to CRISELDA and ZHIENETH for failing to exercise due and reasonable
care while inside the store premises

Held:
(1) An accident pertains to an unforeseen event in which no fault or negligence attaches to the defendant.
It is "a fortuitous circumstance, event or happening; an event happening without any human agency, or if
happening wholly or partly through human agency, an event which under the circumstances is unusual or
unexpected by the person to whom it happens." On the other hand, negligence is the omission to do
something which a reasonable man, guided by those considerations which ordinarily regulate the conduct
of human affairs, would do, or the doing of something which a prudent and reasonable man would not do.
Negligence is "the failure to observe, for the protection of the interest of another person, that degree of
care, precaution and vigilance which the circumstances justly demand, whereby such other person suffers
injury." The test in determining the existence of negligence is: Did the defendant in doing the alleged
negligent act use that reasonable care and caution which an ordinarily prudent person would have used in
the same situation? If not, then he is guilty of negligence. We rule that the tragedy which befell ZHIENETH
was no accident and that ZHIENETH's death could only be attributed to negligence.
(2) It is axiomatic that matters relating to declarations of pain or suffering and statements made to a
physician are generally considered declarations and admissions. All that is required for their admissibility
as part of the res gestae is that they be made or uttered under the influence of a startling event before the
declarant had the time to think and concoct a falsehood as witnessed by the person who testified in court.
Under the circumstances thus described, it is unthinkable for ZHIENETH, a child of such tender age and in
extreme pain, to have lied to a doctor whom she trusted with her life. We therefore accord credence to
Gonzales' testimony on the matter, i.e., ZHIENETH performed no act that facilitated her tragic death. Sadly,
petitioners did, through their negligence or omission to secure or make stable the counter's base.
Without doubt, petitioner Panelo and another store supervisor were personally informed of the danger
posed by the unstable counter. Yet, neither initiated any concrete action to remedy the situation nor
ensure the safety of the store's employees and patrons as a reasonable and ordinary prudent man would
have done. Thus, as confronted by the situation petitioners miserably failed to discharge the due diligence
required of a good father of a family. Anent the negligence imputed to ZHIENETH, we apply the conclusive
presumption that favors children below nine (9) years old in that they are incapable of contributory
negligence. Even if we attribute contributory negligence to ZHIENETH and assume that she climbed over
the counter, no injury should have occurred if we accept petitioners' theory that the counter was stable
and sturdy. For if that was the truth, a frail six-year old could not have caused the counter to collapse.
The physical analysis of the counter by both the trial court and Court of Appeals and a scrutiny of the
evidence on record reveal otherwise, i.e., it was not durable after all. Shaped like an inverted "L," the
counter was heavy, huge, and its top laden with formica. It protruded towards the customer waiting area
and its base was not secured. CRISELDA too, should be absolved from any contributory negligence.
Initially, ZHIENETH held on to CRISELDA's waist, later to the latter's hand. CRISELDA momentarily released
the child's hand from her clutch when she signed her credit card slip. At this precise moment, it was
reasonable and usual for CRISELDA to let go of her child. Further, at the time ZHIENETH was pinned down
by the counter, she was just a foot away from her mother; and the gift-wrapping counter was just four
meters away from CRISELDA. The time and distance were both significant. ZHIENETH was near her mother
and did not loiter as petitioners would want to impress upon us. She even admitted to the doctor who
treated her at the hospital that she did not do anything; the counter just fell on her.
Petition DENIED. Court of Appeals decision AFFIRMED
PEOPLE VS FALLOUNA (424 SCRA 655, 2004)
PHILIPPINE AIRLINES VS CA (106 SCRA 391)

Facts:
Samson is a licensed aviator employed by the Philippine Airlines. He was partnered with another pilot
Bustamante. Samson had complained on previous occasions to PAL that Bustamante was slow in reacting
and was having lapses of poor judgment during flights. PAL however still allowed Bustamante to continue
flying.
On a certain flight, Bustamante overshot the airfield while landing the plane at the Daet airport. Samson
tried to control the plane, but did not succeed. The plane crash-landed beyond the runway into a
mangrove. Samson hit his head on the windshield due to the impact of the crash. He suffered head
injuries such as brain concussions and wounds on his forehead. To make matters worse, plaintiff was
discharged from employment. Samson then filed an action for damages against PAL.

Issue:
Whether or not PAL is liable for damages.

Held:
The Court held that PAL is liable for damages. There was gross negligence on the part of PAL because
despite the knowledge of Bustamantes condition the still allowed him to continue flying. Bustamante had
a tumor in his nasopharynx which affected his vision. As provided in Articles 1732, 1733, and 1756 of the
NCC, PAL being a common carrier should have exercised extraordinary diligence in the supervision of their
employees and utmost diligence in bringing passengers to their destination.
The court affirmed the decision of the trial court in awarDing damages. Private respondent is entitled to
P198,000.00 as unearned income or compulsory damages, P80,000.00 for moral damages, P20,000 as
attorneys fees and P5,000 as expenses for litigation. This claim of the plaintiff for loss and impairment of
earning capacity is based on the provision of Art. 2205, NCC. Even from the standpoint of the petitioner
that there is employer-employee relationship between it and private respondent arising from the contract
of employment, private respondent is still entitled to moral damages in view of the finding of bad faith or
malice, applying the provisions of Art. 2220 of the NCC.

LA MALLORCA VS CA (17 SCRA 739)

Facts:
Plaintiffs husband and wife, together with their three minor children, namely, Milagros (13), Raquel (4)
and Fe (2) boarded the Pambusco Bus No. 352 bearing plate TPU No. 757 owned and operated by La
Mallorca at San Fernando, Pampanga, bound for Anao, Mexico, Pampanga. At the time, they were carrying
with them four pieces of baggages containing their personal belonging. The conductor (half-brother of
Beltran) of the bus issued three tickets (Exhs. A, B, & C) covering the full fares of the plaintiff and their
eldest child, Milagros. No fare was charged on Raquel and Fe, since both were below the height at which
fare is charged in accordance with the appellant's rules and regulations.
After about an hour's trip and after Beltrans family got off, Mariano Beltran went back to the bus to get
the baggage he had left under one of the seats near the door while the rest was waiting on a shaded area,
he did not notice that Raquel was following him. While said Mariano Beltran was on the running board of
the bus waiting for the conductor to hand him his bayong, the bus, whose motor was not shut off while
unloading, suddenly started moving forward, evidently to resume its trip, notwithstanding the fact that the
conductor has not given the driver the customary signal to start, since said conductor was still attending
to the baggage left behind by Mariano Beltran. Incidentally, when the bus was again placed into a
complete stop, it had travelled about ten meters from the point where the plaintiffs had gotten off.
Sensing that the bus was again in motion, Mariano Beltran immediately jumped from the running board
without getting his bayong from the conductor. He landed on the side of the road almost in front of the
shaded place where he left his wife and children. At that precise time, he saw people beginning to gather
around the body of a child lying prostrate on the ground, her skull crushed, and without life. The child was
none other than his daughter Raquel, who was run over by the bus in which she rode earlier together with
her parents.

Issue:
Whether or not La Mallorca is liable for the negligence of its driver and for the death of Beltrans daughter.

Held:
La Mallorca is liable for damages. It was pointed out that even though, M. Beltrans family already alighted
from the bus, the fact that Beltran went back to the bus to retrieve his bayong, the relation of carrier-
passenger relation between La Mallorca and Beltran still subsist. It has been recognized as a rule that the
relation of carrier and passenger does not cease at the moment the passenger alights from the carrier's
vehicle at a place selected by the carrier at the point of destination, but continues until the passenger has
had a reasonable time or a reasonable opportunity to leave the carrier's premises. And, what is a
reasonable time or a reasonable delay within this rule is to be determined from all the circumstances.
In the circumstances, it cannot be claimed that the carrier's agent had exercised the "utmost diligence" of
a "very cautions person" required by Article 1755 of the Civil Code to be observed by a common carrier in
the discharge of its obligation to transport safely its passengers. In the first place, the driver, although
stopping the bus, nevertheless did not put off the engine. Secondly, he started to run the bus even before
the bus conductor gave him the signal to go and while the latter was still unloading part of the baggages
of the passengers Mariano Beltran and family. The presence of said passengers near the bus was not
unreasonable and they are, therefore, to be considered still as passengers of the carrier, entitled to the
protection under their contract of carriage.
But even assuming arguendo that the contract of carriage has already terminated, herein petitioner can be
held liable for the negligence of its driver, as ruled by the Court of Appeals, pursuant to Article 2180 of
the Civil Code. Paragraph 7 of the complaint, which reads
That aside from the aforesaid breach of contract, the death of Raquel Beltran, plaintiffs' daughter, was
caused by the negligence and want of exercise of the utmost diligence of a very cautious person on the
part of the defendants and their agent, necessary to transport plaintiffs and their daughter safely as far as
human care and foresight can provide in the operation of their vehicle.
The driver did not exercise utmost diligence required of him; hence, petitioner must be adjudged
peculiarly liable for the death of the child Raquel Beltran.
ASIAN CONSTRUCTION DEVELOPMENT CORP VS PCIB (488 SCA 192, 2006)
FIL-ESTATE VS GO (GR 165164, August 17, 2007)
Facts:
On December 29, 1995, petitioner Fil-Estate Properties, Inc. entered into a contract to sell a condominium
unit to respondent spouses Gonzalo and Consuelo Go. The spouses paid a total ofP3.4M of the full
contract price set at P3.6M.
Petitioner failed to develop the condominium project. The spouses demanded the refund of the amount
they paid, plus interest. When petitioner did not refund the spouses, the latter filed a complaint against
petitioner for reimbursement of P3.6M plus interest, attorneys fees, and expenses of litigation.
Petitioner claimed that respondents had no cause of action since the delay in the construction of the
condominium was caused by the financial crisis that hit the Asian region, a fortuitous event over which
petitioner had no control.
Issue:
WON Fil-Estate can exculpate itself from liability in its claim of caso fortuito based on the 1997 Asian
Financial Crisis? NO

Held:
In Mondragon Leisure vs. Court of Appeals, the Asian financial crisis in 1997 is not among the fortuitous
events contemplated under Article 1174 of the Civil Code.
The Asian financial crisis in 1997 was not unforeseeable and beyond the control of a business corporation.
However, a real estate enterprise engaged in the pre-selling of condominium units is concededly a master
in projections on commodities and currency movements and business risks. The fluctuating movement of
the Philippine peso in the foreign exchange market is an everyday occurrence, and fluctuations in currency
exchange rates happen every day, thus, not an instance of caso fortuito.
The delay in the construction of the building was not attributable to the Asian financial crisis which
happened in 1997 because petitioner did not even start the project in 1995 when it should have done, so
that it could have finished it in 1997, as stipulated in the contract.
Under Section 23 of P.D. No. 957, the respondents are entitled to reimbursement but only to the P3.4M
that they have paid.
VICTORIAS PLANTERS ASS., INC., ET AL. VS. VICTORIAS MILLING CO., INC. (G.R. No. L-6648 July 25,
1955)

FACTS:
The petitioners Victorias Planters Association, Inc. and North Negros Planters Association, Inc. and thr
respondent Victorias Milling Co., Inc entered into a milling contract whereby they stipulated a 30-year
period within which the sugar cane produced by the petitioner would be milled by the respondent central.
The parties also stipulated that in the event of force majuere, the contract shall be deemed suspended
during this period. The petitioner failed to deliver the sugar cane during the four years of the Japanese
occupation and the two years after liberation when the mill was being rebuilt or a total of six years.

ISSUE:
Can the petitioners be compelled to deliver sugar cane for six more years after the expiration of the 30-
year period to make up for what they failed to deliver to the respondent?

RULING:
No. Fortuitous event relieves the obligor from fulfilling the contractual obligation under Article 1174 of the
Civil Code. The stipulation in the contract that in the event of force majeure the contract shall be deemed
suspended during the said period does not mean that the happening of any of those events stops the
running of the period agreed upon. It only relieves the parties from the fulfillment of their respective
obligations during that time- the petitioner from delivering the sugar cane and the respondent central
from milling. In order that the respondent central may be entitled to demand from the petitioner the
fulfillment of their part in the contracts, the latter must have been able to perform it but failed or refused
to do so and not when they were prevented by force majeure such as war. To require the petitioners to
deliver the sugar cane which they failed to deliver during the six years is to demand from them the
fulfillment of an obligation, which was impossible of performance during the time it became due. Nemo
tenetur ed impossibilia. The respondent central not being entitled to demand from the petitioners the
performance of the latters part of the contracts under those circumstances cannot later on demand its
fulfillment. The performance of what the law has written off cannot be demanded and required. The prayer
that the petitioners be compelled to deliver sugar cannot for six years more to make up for what they
failed to deliver, the fulfillment of which was impossible, of granted, would in effect be an extension of the
terms of the contracts entered into by and between the parties.
ACE-AGRO DEVELOPMENT CORPORATION VS CA (GR 119729, January 21, 1997)
CUATON VS CA (GR 158382, January 27, 2004)
LIAM LAW VS OLYMPIC SAWMILL CO (GR L-30771, 28 May 1984)

Facts:
On 7 September 1957, Liam Law (plaintiff) loaned P10,000.00, without interest, to Olympic Sawmill Co.
and Elino Lee Chi, as the latters managing partner (defendants). The loan became ultimately due on 31
January 1960, but was not paid on that date, with the debtors asking for an extension of 3 months, or up
to 30 April 1960. On 17 March 1960, the parties executed another loan document. Payment of the
P10,000.00 was extended to 30 April 1960,but the obligation was increased by P6,000 which formed part
of the principal obligation to answer for attorneys fees, legal interest, and other cost incident thereto
to be paid unto the creditor and his successors in interest upon the termination of this agreement. The
defendants again failed to pay their obligation. On 23 September 1960, the plaintiff instituted the
collection case before the Court of First Instance of Bulacan. The defendants admitted the
P10,000.00 principal obligation, but claimed that the additional P6,000.00 constituted usurious interest.
Upon the plaintiffs application, the Trial Court issued a writ of Attachment on real and personal properties
of defendants. After the Writ of Attachment was implemented, proceedings before the Trial Court versed
principally in regards to the attachment. On 18 January 1961, an Order was issued by the Trial Court
allowing both parties to simultaneously submit a Motion for Summary Judgment. On 26 June 1961, the
Trial Court rendered decision ordering defendants to pay the plaintiff the amount of P10,000.00 plus the
further sum of P6,000.00. The defendants appealed before the then court of Appeals, which endorsed it to
the Supreme Court stating that the issue involved was one of law.

Issue [1]:
Whether the allegation of usury should be made in writing and under oath, pursuant to Section 9 of the
Usury Law.
Held [1]:
Section 9 of the Usury Law provides that the person or corporation sued shall file its answer in writing
under oath to any complaint brought or filed against said person or corporation before a competent court
to recover the money or other personal or real property, seeds or agricultural products, charged or
received in violation of the provisions of this Act. The lack of taking an oath to an answer to a complaint
will mean the admission of the facts contained in the latter. It envisages a complaint filed against an
entity which has committed usury, for the recovery of the usurious interest paid. In that case, if the entity
sued shall not file its answer under oath denying the allegation of usury, the defendant shall be deemed to
have admitted the usury. The provision does not apply to a case where it is the defendant, not the
plaintiff, who is alleging usury.

Issue [2]:
Whether the repeal of Rules of Court or any procedural law is with retroactive effect.

Held [2]:
The Court opined that the Rules of Court in regards to allegations of usury, procedural in nature, should
be considered repealed with retroactive effect. It has been previously held(People vs. Sumilang, and De
Lopez, et al. vs. Vda. de Fajardo, et al.) that statutes regulating the procedure of the courts will be
construed as applicable to actions pending and undetermined at the time of their passage. Procedural laws
are retrospective in that sense and to that extent.
Comments (required in assignment):
The last sentence of Section 11, Rule 9, of the 1997 Rules n of
usury in a complaint to recover usurious interest
similar in context to Section 9 of Usury Law, which was raised in this 1984 case (although improperly
applied). The reiteration of matters pertaining to usury in the 1997 rules is perplexing as the 1984
decision itself admits -existent; as interest can now be charged as lender
and Court in regards to allegations of usury, procedural
in nature, should be considered repealed with incongruent realities, however, are
secondary only to the fact that a mere Central Bank circular or memorandum effectively suspended the
application of the Usury Law to a degree tantamount to its repeal.
MANILA TRADING SUPPLY CO. VS. MEDINA (2 SCRA 549, 1961)

FACTS:
Mariano Medina had an account prior to May 7, 1956 with Manila Trading and Supply Co. with an
amount of P60,000 for which Medina executed a promissory note. The note provided that upon failure to
pay the installments, the remaining amount will immediately become due and payable at the option of the
holder of the note with 33.33% amount due for attorneys fees and expenses of collection.

On January 8, 1957, Manila Trading & Co. filed a complaint against Medina for failure to pay installments
from September 1956 to January 7, 1957. Medina filed an answer admitting allegations but said the
33.33% for attorneys fees were exorbitant and unconscionable. He pleaded that on January 24, 1957, an
additional P4,000 was paid so that he will not be sued and allowed to pay the balance. Upon petition of
plaintiff, a writ of attachment was issued and levied upon eleven of defendant's buses. His counterclaim
was damages for the loss of his earnings. Plaintiff denied the defense and counterclaim.

Plaintiff provided evidence of 21 payments made by defendant from June 6, 1956 to Jan. 21, 1957. The
defendant testified that he has 10 other payments with receipts but the dates and serial numbers are
unclear for it was eaten by anay. Defendant claims that his payment on Jan. 1957 gives rise to the
presumption that prior installments have been paid.

ISSUE:
Are the presented receipts genuine to raise the presumption that prior installments were paid?

RULING:
No. Appellant avers that the genuine receipts dated January, 1957 raise the presumption that prior
installments were paid. This might be true if such receipts recited that they were issued for the
installments corresponding to the month of January, 1957; but nowhere does that fact appear. And even if
such recital had been made, the resultingpresumption would only be prima facie, and the evidence before
us is clear that the payments made do not correspond to the installments falling due on the dates of the
genuine receipts.

As pointed out by the trial court, it is highly suspicious that these receipts should be mutilated precisely at
the places where the serial numbers and the year of issue must appear, while the receipts for intervening
payments recognized by the plaintiff remained intact. In addition, the numbers that Medina attributed to
them are not in sequence. It is difficult to believe that a trading company should issue receipts numbered
at random, since it would make auditing control impossible.
LEDESMA VS REALUBIN (8 SCRA 608, 1963)
ADORABLE VS CA (GR 119466, November 25, 1999)

Facts:
P is Ds creditor. P learned that D sold his lot to A. P filed for the annulment of the saleon the ground that the
sale was fraudulently prepared or executed.

Issue:
Whether P is the real party in interest.

Held:
No. As creditors, P do not have material interest as to allow them to sue for rescission of the contract of sale.
At the outset, Ps right against D is only a personal right to receive paymentfor the loan; it is not a real right over the lot subject of
the deed of sale.
INSULAR LIFE ASSURANCE CO VS TOYOTA BEL-AIR INC (GR 137884, March 28, 2008)
CORONEL VS CA (GR 103577, October 7, 1996)

Facts:
The case arose from a complaint for specific performance filed by private respondent Alcaraz against
petitioners to consummate the sale of a parcel of land in Quezon City.
On January 19, 1985, petitioners executed a Receipt of Down Payment of P50,000 in favor of plaintiff
Ramona Alcaraz, binding themselves to transfer the ownership of the land in their name from their
deceased father, afterwhich the balance of P1,190,000 shall be paid in full by Alcaraz. On February 6,
1985, the property was transferred to petitioners. On February 18, 1985, petitioners sold the property to
Mabanag. For this reason, Concepcion, Ramonas mother, filed an action for specific performance.

Issue:
Whether the contract between petitioners and private respondent was that of a conditional sale or a mere
contract to sell

Held:
Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential
elements of a contract of sale are the following: a) Consent or meeting of the minds, that is, consent to
transfer ownership in exchange for the price; b) Determinate subject matter; and c) Price certain in money
or its equivalent.
Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first
essential element is lacking. In a contract to sell, the prospective seller explicity reserves the transfer of
title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer
ownership of the property subject of the contract to sell until the happening of an event, which for present
purposes we shall take as the full payment of the purchase price. What the seller agrees or obliges himself
to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is
delivered to him. In other words the full payment of the purchase price partakes of a suspensive condition,
the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by
the prospective seller without further remedies by the prospective buyer. A contract to sell may thus be
defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of
the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said
property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full
payment of the purchase price.
A contract to sell may not even be considered as a conditional contract of sale where the seller may
likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition,
because in a conditional contract of sale, the first element of consent is present, although it is conditioned
upon the happening of a contingent event which may or may not occur. If the suspensive condition is not
fulfilled, the perfection of the contract of sale is completely abated. However, if the suspensive condition
is fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery
of the property subject of the sale to the buyer, ownership thereto automatically transfers to the buyer by
operation of law without any further act having to be performed by the seller. In a contract to sell, upon
the fulfillment of the suspensive condition which is the full payment of the purchase price, ownership will
not automatically transfer to the buyer although the property may have been previously delivered to him.
The prospective seller still has to convey title to the prospective buyer by entering into a contract of
absolute sale.
It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases
where the subject property is sold by the owner not to the party the seller contracted with, but to a third
person, as in the case at bench. In a contract to sell, there being no previous sale of the property, a third
person buying such property despite the fulfillment of the suspensive condition such as the full payment
of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer
cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the
property will transfer to the buyer after registration because there is no defect in the owner-seller's
title per se, but the latter, of course, may be used for damages by the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale
becomes absolute and this will definitely affect the seller's title thereto. In fact, if there had been previous
delivery of the subject property, the seller's ownership or title to the property is automatically transferred
to the buyer such that, the seller will no longer have any title to transfer to any third person. Such second
buyer of the property who may have had actual or constructive knowledge of such defect in the seller's
title, or at least was charged with the obligation to discover such defect, cannot be a registrant in good
faith. Such second buyer cannot defeat the first buyer's title. In case a title is issued to the second buyer,
the first buyer may seek reconveyance of the property subject of the sale.
The agreement could not have been a contract to sell because the sellers herein made no express
reservation of ownership or title to the subject parcel of land. Furthermore, the circumstance which
prevented the parties from entering into an absolute contract of sale pertained to the sellers themselves
(the certificate of title was not in their names) and not the full payment of the purchase price. Under the
established facts and circumstances of the case, the Court may safely presume that, had the certificate of
title been in the names of petitioners-sellers at that time, there would have been no reason why an
absolute contract of sale could not have been executed and consummated right there and then.
What is clearly established by the plain language of the subject document is that when the said "Receipt of
Down Payment" was prepared and signed by petitioners Romeo A. Coronel, et al., the parties had agreed
to a conditional contract of sale, consummation of which is subject only to the successful transfer of the
certificate of title from the name of petitioners' father, Constancio P. Coronel, to their names.
The provision on double sale presumes title or ownership to pass to the first buyer, the exceptions being:
(a) when the second buyer, in good faith, registers the sale ahead of the first buyer, and (b) should there
be no inscription by either of the two buyers, when the second buyer, in good faith, acquires possession
of the property ahead of the first buyer. Unless, the second buyer satisfies these requirements, title or
ownership will not transfer to him to the prejudice of the first buyer. In a case of double sale, what finds
relevance and materiality is not whether or not the second buyer was a buyer in good faith but whether or
not said second buyer registers such second sale in good faith, that is, without knowledge of any defect in
the title of the property sold. If a vendee in a double sale registers that sale after he has acquired
knowledge that there was a previous sale of the same property to a third party or that another person
claims said property in a previous sale, the registration will constitute a registration in bad faith and will
not confer upon him any right.
CENTRAL PHILIPPINE UNIVERSITY VS CA (246 SCRA 511)
FACTS:
In 1939, Don Ramon Lopez Sr. executed a deed of donation in favor of CPU together with the following
conditions:
a) The land should be utilized by CPU exclusively for the establishment & use of medical college;
b) The said college shall not sell transfer or convey to any 3rd party;
c) The said land shall be called Ramon Lopez Campus and any income from that land shall be put in the
fund to be known as Ramon Lopez Campus Fund.
However, on May 31, 1989, PR, who are the heirs of Don Ramon filed an action for annulment of donation,
reconveyance & damages against CPU for not complying with the conditions. The heirs also argued that
CPU had negotiated with the NHA to exchange the donated property with another land owned by the
latter.
Petitioner alleged that the right of private respondents to file the action had prescribed.
ISSUE:
1) WON petitioner failed to comply the resolutely conditions annotated at the back of petitioners
certificate of title without a fixed period when to comply with such conditions? YES
2) WON there is a need to fix the period for compliance of the condition? NO
HELD:
1) Under Art. 1181, on conditional obligations, the acquisition of rights as well the extinguishment or loss
of those already acquired shall depend upon the happening of the event which constitutes the
condition. Thus, when a person donates land to another on the condition that the latter would build
upon the land a school is such a resolutory one. The donation had to be valid before the fulfillment of
the condition. If there was no fulfillment with the condition such as what obtains in the instant case,
the donation may be revoked & all rights which the donee may have acquired shall be deemed lost &
extinguished.
More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the
opportunity to comply with the condition even if it be burdensome, to make the donation in its favor
forever valid. But, unfortunately, it failed to do so. Hence, there is no more need to fix the duration of a
term of the obligation when such procedure would be a mere technicality and formality and would serve
no purpose than to delay or lead to an unnecessary and expensive multiplication of suits.
Records are clear and facts are undisputed that since the execution of the deed of donation up to the time
of filing of the instant action, petitioner has failed to comply with its obligation as donee. Petitioner has
slept on its obligation for an unreasonable length of time. Hence, it is only just and equitable now to
declare the subject donation already ineffective and, for all purposes, revoked so that petitioner as donee
should now return the donated property to the heirs of the donor, private respondents herein, by means
of reconveyance.
2)
Under Art. 1197, when the obligation does not fix a period but from its nature & circumstance it can be
inferred that the period was intended, the court may fix the duration thereof because the fulfillment of the
obligation itself cannot be demanded until after the court has fixed the period for compliance therewith &
such period has arrived. However, this general rule cannot be applied in this case considering the different
set of circumstances existing more than a reasonable period of 50yrs has already been allowed to
petitioner to avail of the opportunity to comply but unfortunately, it failed to do so. Hence, there is no
need to fix a period when such procedure would be a mere technicality & formality & would serve no
purpose than to delay or load to unnecessary and expensive multiplication of suits.
Under Art. 1191, when one of the obligors cannot comply with what is incumbent upon him, the obligee
may seek rescission before the court unless there is just cause authorizing the fixing of a period. In the
absence of any just cause for the court to determine the period of compliance there is no more obstacle
for the court to decree recission.

JACINTO VS. KAPARAZ (G.R. No. 81158 May 22, 1992)

FACTS:
On 11 March 1966, petitioners and private respondents entered into an agreement under which the
private respondents agreed to sell and convey to petitioners a portion consisting of 600 square meters of
a lot located in Davao Oriental for a total amount of P1,800.00 with a downpayment of P800.00 upon
execution of the Agreement. The balance of P1,000.00 was to be paid by petitioners on installment at the
rate of P100.00 a month to the Development Bank of the Philippines to be applied to private respondents'
loan accounts. The pertinent portions of the Agreement read as follows:

6. That the PARTY OF THE FIRST PART hereby agrees, promises and binds himself to sell, cede, transfer,
and convey absolutely to the PARTY OF THE SECOND PART 600 -square meter portion of the property
together with all the improvements thereon

9. That the PARTY OF THE FIRST PART agrees and binds himself to acknowledge receipt of every and all
monthly payments remitted to the Development Bank of the Philippines by the PARTY OF THE SECOND
PART and further agrees and binds himself to execute the final deed of absolute sale of the 600 square
meters herein above referred to in favor of the PARTY OF THE SECOND PART as soon as the settlement or
partition of the estate of the deceased Narcisa Kaparaz shall have been consummated and effected, but
not later than March 31, 1967.

Upon the execution of the agreement, petitioners paid the downpayment of P800.00 and were placed in
possession of the portion described therein. As to the P1,000.00 which was to be paid directly to the DBP,
petitioners claim that they had even made an excess payment of P100.00.In view of the refusal of private
respondents to execute the deed of sale, petitioners filed against them a complaint for specific
performance with the Court of First Instance.Private respondents alleged that the sale did not materialize
because of the failure of petitioners to fulfill their promise to make timely payments on the stipulated
price to the DBP; as a result of such failure, they (private respondents) failed to secure the release of the
mortgage on the property. They then prayed for the dismissal of the case and a declaration that the
agreement is null and void.

ISSUE:
Are respondents entitled to rescind the agreement?

RULING:
No. Since in a contract of sale, the non-payment of the price is a resolutory condition, 13 the remedy of
the seller under Article 1191 of the Civil Code is to exact fulfillment or to rescind the contract. In respect,
however, to the sale of immovable property, this Article must be read together with Article 1592 of the
same Code:

Art. 1592. In the sale of immovable property, even though it may have been stipulated that upon failure to
pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee
may pay, even after the expiration of the period, as long as no demand for rescission of the contract has
been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a
new term.

In the case at bar, there was non-compliance with the requirements prescribed in there provisions. It is
not controverted that private respondents had neither filed an action for specific performance nor demand
the rescission of the agreement either judicially or by a notarial act before the filing of the complaint. It is
only in their Answer that they belatedly raised the defense of resolution of the contract pursuant to Article
1191 by reason of petitioners breach of their obligation. Moreover, the delay incurred by petitioners was
but a casual or slight breach of the agreement, which did not defeat the object of the parties in entering in
the agreement. A mere casual breach does not justify rescission. Rescission of the agreement was not
available to private respondents.
DUCUSIN VS. COURT OF APPEALS (122 SCRA 280)

FACTS:
On February 20, 1975, petitioner Agapito Ducusin leased to private respondent, Virgilio S. Baliola and his
wife a one-door apartment unit. Under the contract of lease, with pertinent stipulations one of which
states that the term of this contract shall be in a month to month basis commencing on February 19,1975
until terminated by the lessor on the ground that his children need the premises for their own use or
residence or upon any ground provided for in accordance with law; The Baliola spouses occupied the
apartment for almost two (2) years, paying its rentals when on January 18, 1977, petitioner Ducusin sent a
"Notice to Terminate Lease Contract" to private respondents Baliolas terminating the lease and giving them
until March 15, 1977 within which to vacate the premises for the reason that his two children were getting
married and will need the apartment for their own use and residence. A second letter dated February 14,
1977 was thereafter sent by Ducusin to respondents Baliolas making an inquiry on any action the latter
had taken on the previous notice to terminate the lease contract To which respondents gave no reply. On
April 14, 1977, petitioner filed an action for ejectment against the Baliola spouses and the lower courted
decided in their favor on the ground that the "defendants' contract with the plaintiff has already
terminated with the notice of termination sent by the plaintiff to the defendants on the ground that he
needs the premises for his own children." The lessees, went to the Court of Appeals on a petition for
review among others "(2) that the respondent CFI of Manila erred in finding that the need of the premises
a quo by the private respondents has been sufficiently proven by them and legally entitle them to judicially
eject the petitioners from the premises; The CA upheld the lower court decision but as to the issue:
whether the need of the immediate members of the family of the lessor of the leased premises has been
established by a preponderance of evidence, the respondent court ruled against the lessor Ducusin. Hence
this appeal to the SC.

ISSUE:
Is the termination valid in accordance to Article 1182 of the Civil Code?

RULING:
Art. 1182 states that When the fulfillment of the condition depends upon the sole will of the debtor, the
conditional obligation shall be void. If it depends upon chance or upon the will of a third person, the
obligation shall take effect in conformity with the provisions of this Code. ...

The resolutory condition in the contract of lease re: the need of the lessor's children of the leased
premises is not a condition the happening of which is dependent solely upon the will of the lessor. The
happening of the condition depends upon the will of a third person the lessor's children. Whenever the
latter require the use of the leased premises for their own needs, then the contract of lease shall be
deemed terminated. The validity of the said condition as agreed upon by the parties stands. We likewise
conclude that the intention to use the leased premises as the residence of Ducusin Jr. has been
satisfactorily and sufficiently proved by clear, strong, and substantial evidence found in the records of the
case.

Generally, the findings of fact by the Court of Appeals are deemed accepted as the basis for review of the
appellate court's decision. But this rule is not without exception such as shown in the case before Us
where the Court of Appeals reversed the findings of fact made by the trial court (the City Court of Manila)
and also the Court of First Instance, by excluding evidence supposedly hearsay when they are not
pursuant to the rules of evidence, by ignoring evidence on record that are competent, clear and
substantial and by misapprehending the facts, thereby making manifest the commission of grave abuse of
discretion on the part of the respondent appellate court and so warrants and justifies a review not only of
the law but also the facts.
RUSTAN PULP & PAPER MILLS, INC. VS. IAC and ILIGAN DIVERSIFIED PROJECTS, INC (214 SCRA 665)

FACTS:
Sometime in 1966, petitioner Rustan established a pulp and paper mill in Baloi, Lanao del Norte.
On March 20, 1967, respondent Romeo Lluch, who is a holder of a forest products license and Iligan
Diversified Projects, Inc. transmitted a letter to petitioner Rustan for the supply of raw materials by the
former to the latter. In response, petitioner Rustan proposed in the letter reply that the contract to supply
is not exclusive because Rustan shall have the option to buy from other qualified suppliers.

The prefatory business proposals culminated in the execution, during the month of April 1968, of
a contract of sale whereby Romeo Lluch agreed to sell and Rustan Pulp undertook to pay the price of
P30.00 per cubic meter of pulp wood materials to be delivered at the buyers plant in Baloi, Lanao del
Norte.

But during the test run of the pulp mill, the machinery line thereat had major defects while
deliveries of the raw materials piled up. The suppliers were then informed to stop deliveries and the letter
of similar advice was sent by petitioner to private respondent. Private respondent then clarified whether
the stoppage of delivery or termination of contract was intended, but the query was not answered by
petitioner. Despite to that, Lluch and other suppliers resumed deliveries which were still accepted by
petitioner. On January 23, 1969, the complaint for contractual breach was filed by private respondent but
was dismissed. Petitioner relied on Article 1267 of the Civil Code to defend their position. However, on
appeal to the then IAC, the judgment was rendered directing petitioners to pay private respondents, jointly
and severally, hence, this appeal for review of the decision of the then IAC.

ISSUE:
Was the right of stoppage exercised by Rustan pulp indicative of a breach of contract?

RULING:
Yes. It was indeed inconsistent for petitioners to have sent the letters calling for suspension and yet, they
in effect disregarded their own advice by accepting the deliveries from the suppliers, and so they cannot
rely on Article 1267 of the Civil Code. There is no doubt that the contract speaks loudly about petitioner
Rustan Pulps prerogative but what diminishes the legal efficacy of such right is the condition attached to
it which is independent exclusively on their will. Paragraph 7 of the contract is purely potestative
imposition and must be obliterated from the face of the contract without affecting the rest of
stipulations. It would also be unjust for the court a quo to rule that the contract of sale be temporarily
suspended until Rustan are ready to accept deliveries from the appellants. This would make the
resumption of the contract purely dependent on the will of one of the party-the appellees, and they could
always claim, as they did in the instant case, that they have more than sufficient supply of pulp wood
when in fact they have been accepting the same from other sources. Article 1182 of the Civil Code states
that, When the fulfillment of the condition depends upon the solve will of the debtor, the conditional
obligation shall be void. If it depends upon chance or upon will of a third person, the obligation shall take
effect in conformity with the provisions of this Code.

Furthermore, in line with petitioners contention, being the President and Manager of the Corporation,
they cannot be made liable to pay damages because they merely represent the interest of Rustan Pulp.
This is contemplated by Article 1897 of the New Civil Code where agents are directly responsible are
absent and wanting. Only petitioner Rustan Pulp and Paper Mills should pay moral damages and attorneys
fees.
TOMAS OSMEA VS. CENONA RAMA (14 PHIL. 99)

FACTS:
On November 15, 1890, defendant Rama executed and delivered to Victoriano Osmea a contract.
The contract stipulates that Rama received from Victoriano the sum of P200 which defendant will pay
Victoriano Osmea in sugar and pay also an interest at a rate of half a cuartillo per month. Defendant
promise that he well sell to Mr. Osmea all the sugar that he may harvest and as a guarantee pledge as a
security all his present and future property and as special security his house in Pagina.

On October 27, 1891, defendant executed another contract with Victoriano Osmea which states
that defendant asked for a loan amounting to P70, P50 of which defendant loaned to Don Peares, which
they will pay in sugar.

Sometime after the execution and delivery of the above contracts, Victoriano died. In the
settlement and division of the property of his estate the above contracts became the property of one of his
heirs, Agustina Rafols. Later, Agustina Rafols ceded to the present plaintiff Tomas Osmea all of her right
and interest in said contracts.

On March 15, 1902, plaintiff presented the contracts to the defendant for payment and she
acknowledged her responsibility upon said contracts by an endorsement which stipulates: On this date I
hereby promise,that if the house of strong materials in which I live in Pagina is sold, I will pay my
indebtedness to Don Tomas Osmea as set forth in this document.

The defendant not having paid the amount due on said contracts, the plaintiff filed an action
before the CFI of Cebu. The lower court rendered judgment in favor of the plaintiff for the sum of P200
with interest. From this judgment the defendant appealed.

ISSUE:
Is the endorsement made by defendant Rama for payment of said obligation valid?

RULING:
No. It was suggested during the discussion of the case in this court that, in the acknowledgment
above quoted of the indebtedness made by the defendant, she imposed the condition that she would pay
the obligation if she sold her house. If that statement found in her acknowledgment of the indebtedness
should be regarded as a condition, it was a condition which depended upon her exclusive will, and is
therefore, void. (Art. 1115, Civil Code.) The acknowledgment, therefore, was an absolute acknowledgment
of the obligation and was sufficient to prevent the statute of limitation from barring the action upon the
original contract.
NAGA TELEPHONE CO. INC. (NATELCO) AND LUYCIANO MAGGAY VS. COURT OF APPEALS AND CAMARINES
SUR II ELECTRIC COOPERATIVE INC. (230 SCRA 351)

FACTS:
NATELCO is a telephone company rendering local and long distance telephone service in Naga
City. While CASURECO is a private corporation established for purpose of operating and electric power
service in the same city.

In 1977, the parties entered into a contract for the use of the electric light post of CASURECO by
NATELCO in operation of its telephone service. In consideration, NATELCO agreed to install free of charge
ten-telephone connection for the use of CASURECO. The term of the contract shall be as long as NATELCO
has need for the electric light post of the CASURECO, it being understood that the same contract shall be
terminated by any reason whatsoever, if CASURECO is forced to stop or abandon its operation as a public
service.

After 10 years, CASURECO filed a case against NATELCO for the reformation of contract with
damages on the ground that it was too-one sided in favor of NATELCO. That after 11 years, the cable
strung by NATELCO was much heavier due to the increase in volume of their subscribers, worsened by the
fact that their linemen bore holes through the post at which points those post were broken during
typhoons. NATELCO used posts in the towns outside Naga without any contract or permission from
CASURECO. After filing the complaints, NATELCO had refused to pay despite the demands made.
NATELCOs answered that CASURECO did not sufficiently state the cause of action for the reformation of
contract and that it was barred by the prescription because it was filed after 10 years.

The trial court ruled in favor of CASURECO, ordering the reformation of contract and ordering
NATELCO to pay CASURECO the compensation for the use of their post in Naga. Moreover, CASURECO was
ordered to pay the monthly bills for the use of the telephones. Disagreeing with the judgment, NATELCO
appealed to the Court of Appeals. The Court of Appeals affirmed the decision.

ISSUE:
1. Was reformation of the contract a proper remedy for NASURECO?

2. Was the contract subject to potestative condition?

RULING:

1. No. NASURECO cannot correctly invoke reformation of contract as a proper remedy, because there had
been no showing of mistake or error in said contract on the part of any of the parties, so as to result in its
failure to express their true intent.

2. No. A potestative condition is a condition wherein the fulfillment of which depends upon the sole sill of
the debtor, in which conditional obligation is void. Based on the provision in the contract, the term shall
be as long as NATELCO had need for the electric post of the CASURECO, which was a potestative
condition. But it should be noted that the same provision also stated that the contract shall terminate
when for any reason whatsoever, CASURECO was to stop or abandon its operation as a public service and
it becomes necessary to remove the electric light post, which were casual condition since they depend on
chance, hazard, or the will of the third person. The contract was subject to mixed conditions, depending
partly in the will of the debtor and partly on chance or will of a third person that would not invalidate the
provision.
TAYAG VS. CA (219 SCRA 480)

FACTS:
The heirs of Juan Galicia brought an action for breach of the conditions on the deed of conveyance
executed by Juan Galicia in favor of private respondent, Albrigido Leyvaunder the following terms:
P3,000.00 is HEREBY acknowledged to have been paid upon the execution of this agreement; P10,000.00
shall be paid within ten days from and after the execution of this agreement; P10,000.00 represents the
VENDORS' indebtedness with the Philippine Veterans Bank which is hereby assumed by the VENDEE; and
P27,000.00 shall be paid within one year from and after the execution of this instrument.

There is no dispute that the sum of P3,000.00 listed as first installment was received by Juan Galicia, Sr.
According to petitioners, of the P10,000.00 to be paid within ten days from execution of the instrument,
only P9,707.00 was tendered to, and received by, them on numerous occasions from May 29, 1975, up to
November 3, 1979. Concerning private respondent's assumption of the vendors' obligation to the
Philippine Veterans Bank, the vendee paid only the sum of P6,926.41 while the difference the
indebtedness came from Celerina Labuguin. Petitioners asserted that the P27,000.00 was not paid to
them. Because of the apprehension that the heirs of Juan Galicia, Sr. are disavowing the contract inked by
their predecessor, private respondent filed the complaint for specific performance.

The trial court upheld private respondent's theory on the basis of constructive fulfillment under Article
1186 and estoppel through acceptance of piecemeal payments in line with Article 1235 of the Civil Code.
Anent the P10,000.00 specified as second installment, the lower court counted against the vendors the
candid statement of Josefina Tayag who and made the admission that the check issued as payment thereof
was nonetheless paid on a staggered basis when the check was dishonored. Regarding the third condition,
the trial court noted that plaintiff below paid more than P6,000.00 to the Philippine Veterans Bank but
Celerina Labuguin, the sister and co-vendor of Juan Galicia, Sr. paid P3,778.77 which circumstance was
construed to be a ploy under Article 1186 "for the purpose of withdrawing the title to the lot". The
acceptance by petitioners of the various payments even beyond the periods agreed upon, was perceived
by the lower court as tantamount to faithful performance of the obligation pursuant to Article 1235 of the
Civil Code. Furthermore, the trial court noted that private respondent consigned P18,520.00, an amount
sufficient to offset the remaining balance, leaving the sum of P1,315.00 to be credited to private
respondent.

ISSUE:
Were the conditions of the instrument performed by private respondent as vendee?

RULING:
YES. There is no doubt that the second installment was actually paid to the heirs of Juan Galicia, Sr. due to
Josefina Tayag's admission in judicio that the sum of P10,000.00 was fully liquidated. It is thus erroneous
for petitioners to suppose that "the evidence in the records do not support this conclusion"

Insofar as the third item of the contract is concerned, it may be recalled that respondent court applied
Article 1186 of the Civil Code on constructive fulfillment which petitioners claim should not have been
appreciated because they are the obligees while the proviso in point speaks of the obligor. But, petitioners
must concede that in a reciprocal obligation like a contract of purchase, both parties are mutually obligors
and also obliges, and any of the contracting parties may, upon non-fulfillment by the other privy of his
part of the prestation, rescind the contract or seek fulfillment (Article 1191, Civil Code). In short, it is
puerile for petitioners to say that they are the only obligees under the contract since they are also bound
as obligors to respect the stipulation in permitting private respondent to assume the loan with the
Philippine Veterans Bank which petitioners impeded when they paid the balance of said loan. As vendors,
they are supposed to execute the final deed of sale upon full payment of the balance as determined
hereafter.
ONG VS BOGNALBAL (501 SCRA 490, 2006)

Facts:
Bognalbal was an architect hired by Ong who was a businesswoman to construct her boutique. Bog agrees
to furnish labor within 45 days and owner to pay every 2 weeks based on the accomplishment of work
value. 4
th
billing came and Ong refused to pay but reason was not clear on the record. She wanted to
change Vinyl tiles to Kenzo flooring. Ong claimed Bog abandoned job.

Issue:
WON Bognalbal will be liable for abandoning job.

Held:
No. He is not liable but is not justified for doing so. 1191, it was a reciprocal obligation and there is power
to rescind it in case one doesnt comply with what is incumbent upon him. But this article should be
judicially invoked. Novation is not presumed. There must be an express stipulation. Novation a. change of
obj or principal conditions, b. substituting person of debtor c. subrogating 3
rd
person in the rights of
creditor. Liability is on the first infractor, 1192. There has been no contract novation that required Bog to
finish the Kenzo flooring before the 4
th
billing shall be paid. 1186. Condition shall be deemed fulfilled
when the obligor voluntarily prevents the fulfillment.
To do: Pay 4
th
billing. (Reciprocal-di mo ginawa di ko rin gagawin-pero sabi nga ng court hindi pa rin yun
justification, but only the first infractor shall be liable).

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ANG YU ASUNCION VS. COURT OF APPEALS (238 SCRA 602)

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