I.

Elements of an obligation
ASUNCION vs. CA, G.R. NO. 109125, DECEMBER 2, 1994

FACTS:
A complaint for Specific Performance was filed by Ang Yu Asuncion et al., against Bobby Cu
Unjieng and Jose Tan. The plaintiffs were tenants or lessees of residential and commercial
spaces owned by defendants in Binondo. 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, 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. Defendants filed their answer denying the material
allegations of the complaint and interposing a special defense of lack of cause of action.

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. The lower court
ruled that should the defendants subsequently offer their property for sale at a price of P11-
million or below, plaintiffs will have the right of first refusal. Aggrieved by the decision,
plaintiffs appealed to Court of Appeals which ruled that there was no meeting of the minds
between the parties concerning the sale of the property. Absent such requirement, the claim for
specific performance will not lie. The decision of this Court was brought to the Supreme Court
by petition for review on certiorari. The Supreme Court denied the appeal for insufficiency in
form and substances.
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.
Buen Realty, as the new owner of the subject property, wrote to the lessees demanding the latter
to vacate the premises. The lessees filed a Motion for Execution. The court ruled in favor of the
petitioners and ordered the defendants are hereby ordered to execute the necessary Deed of Sale
of the property in litigation in favor of plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for
the consideration of P15 Million pesos in recognition of plaintiffs' right of first refusal and that a
new Transfer Certificate of Title be issued in favor of the buyer and ruled that the issuance of
another title to Buen Realty Corporation, has been executed in bad faith. In its reply, it stated that
Buen Realty and Development Corporation brought the property subject to the notice of Lis
pendens.

ISSUE:
1. WON Buen Realty can be bound by the writ of execution by virtue of the notice of Lis
pendens, carried over on TCT No. 195816 issued in the name of Buen Realty, at the time of the
latter’s purchase of the property on 15 November 1991 from the Cu Unjiengs.

RULING:
Right of first refusal is not a perfected contract of sale under Article 1458 of the Civil Code In
the law on sales, the so-called “right of first refusal” is an innovative juridical relation. Needless
to point out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil
Code. In a right of first refusal, while the object might be made determinate, the exercise of the
right, however, would be dependent not only on the grantor’s eventual intention to enter a
binding juridical relation with another but also on terms, including the price, that obviously are
yet to be later firmed up. Prior thereto, it can at best be so described as merely belonging to a
class of preparatory juridical relations governed not by contracts (since the essential elements to
establish the vinculum juris would still be indefinite and inconclusive) but by, among other laws
of general application, the pertinent scattered provisions of the Civil Code on human conduct.

The proper action for violation of the right of first refusal is to file an action for damages and
NOT writ of execution the final judgment in Civil Case No. 87-41058, it must be stressed, has
merely accorded a “right of first refusal” in favor of petitioners (Ang Yu et. al). The consequence
of such a declaration entails no more than what has heretofore been said. In fine, if, as it is here
so conveyed to us, petitioners are aggrieved by the failure of private respondents to honor the
right of first refusal, the remedy is not a writ of execution on the judgment, since there is none to
execute, but an action for damages in a proper forum for the purpose.

Unconditional mutual promise to buy vs. Accepted unilateral promise an unconditional mutual
promise to buy and sell, as long as the object is made determinate and the price is fixed, can be
obligatory on the parties, and compliance therewith may accordingly be exacted. An accepted
unilateral promise which specifies the thing to be sold and the price to be paid, when coupled
with a valuable consideration distinct and separate from the price, is what may properly be
termed a perfected contract of option. This contract is legally binding, and in sales, it conforms
with the second paragraph of Article 1479 of the Civil Code, viz: Art. 1479. . .. An accepted
unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price. (1451a) Observe,
however, that the option is not the contract of sale itself. The optioned has the right, but not the
obligation, to buy. Once the option is exercised timely, i.e., the offer is accepted before a breach
of the option, a bilateral promise to sell and to buy ensues and both parties are then reciprocally
bound to comply with their respective undertakings.
Buen Realty cannot be ousted from the ownership and possession of the property Furthermore,
whether private respondent Buen Realty Development Corporation, the alleged purchaser of the
property, has acted in good faith or bad faith and whether or not it should, in any case, be
considered bound to respect the registration of the Lis pendens in Civil Case No. 87-41058 are
matters that must be independently addressed in appropriate proceedings. Buen Realty, not
having been impleaded in Civil on Case No. 87-41058, cannot be held subject to the writ of
execution issued by respondent Judge, let alone ousted from the ownership and possession of the
property, without first being duly afforded its day in court.

II. Classification of obligations – as to basis and enforceability (Natural Obligations

and Civil Obligations)
DBP vs. CONFESSOR, G.R. NO.L-488889 May 11, 1989

FACTS:
On February 10, 1940, spouses Patricio Confesor and Jovita Villafuerte obtained an agricultural
loan from Agricultural and Industrial Bank, now Development Bank of the Philippines, in the
sum of P2,000, as evidenced by a promissory note of said date whereby they bound themselves
jointly and severally to pay the amount in ten equal yearly amortizations.
As the obligation remained unpaid even after the lapse if the ten-year period, Confesor, who was
then a member of the Congress of the Philippines, executed a second promissory note on April
11, 1961, expressly acknowledging the said loan and promising to pay the same on or before
June 15, 1961.
The spouses still failed to pay the obligation on the specified date. As a result, the DBP filed a
complaint on September 11, 1970 in the City Court of Iloilo City. The city court ordered
payment from spouses. The CFI of Iloilo reversed the decision. Hence, this petition.

ISSUE:
Whether or not a promissory which was executed in consideration of a previous promissory note
which has already been barred by prescription is valid.

RULING:
Yes, the second promissory note is valid because the said promissory note is not a mere
acknowledgement of the debt that has prescribed already. Rather, it is a new promise to pay the
debt. A new promise is a new cause of action. Although a debt barred by prescription is
enforceable, a new contract recognizing and assuming the prescribed debt would be valid and
enforceable.

III. Sources of obligations

a) Obligations arising from law.
PELAYO V. LAURON 12 Phil. 453

FACTS:

Petitioner Pelayo, a physician, rendered a medical assistance during the child delivery of the
daughter-in-law of the defendants. The just and equitable value of services rendered by him was
P500.00 which the defendants refused to pay without alleging any good reason. With this, the
plaintiff prayed that the judgment be entered in his favor as against the defendants for the sum of
P500.00 and costs. The defendants denied all the allegation of the plaintiff, contending that their
daughter-in-law had died in consequence of the childbirth, and that when she was alive, she lived
with her husband independently and in a separate house, that on the day she gave birth she was
in the house of the defendants and her stay there was accidental and due to fortuitous
circumstances.

ISSUE:

Whether or not the defendants are obliged to pay the petitioner for the medical assistance
rendered to their daughter-in-law.

RULING:

According to Article 1089 of the Old Civil Code (now 1157). Obligations are established by law,
contracts, quasi-contracts, illegal actions, and omissions, or those involving fault or negligence.
Legal obligations are not presumed to exist. The only ones that can be demanded are those that
are specifically stated in the Code or in special law, etc. The provision of medical assistance in
the case of illness is one of the mutual obligations to which the spouses are obligated under the
law or the Code as mutual support. As a result, the husband is responsible for paying the plaintiff
for the medical help given to the defendant's daughter-in-law. In the case at hand, the law
specifically defines the husband's duty to provide his wife with the essential services of a
physician at certain crucial times, and compliance is unavoidable.

b) Obligation arising from contracts.

METROPOLITAN BANK AND TRUST COMPANY vs. ANA GRACE ROSALES AND YU
YUK TO, G.R NO. 183204, January 13, 2014

FACTS:
Petitioner Metropolitan Bank and Trust Company, a domestic banking corporation duly
organized and existing under the laws of the Philippines. Respondent Ana Grace Rosales, the
owner of a travel agency, China Golden Bridge Travel Services. And Yo Yukto, the mother of
the respondent. In 2000, respondents Ana Grace Rosales and Yo Yukto opened a joint peso
account with the petitioner’s Pritil-Tondo Branch. In May 2002, the respondent accompanied her
client, Liu Chiu Fang s Taiwanese applying for a retiree’s visa from Philippine Leisure and
Retirement Authority to the petitioner’s branch to open a savings account. Since the Taiwanese
could only speak Mandarin, the respondent acted as an interpreter for her. In March 2003, the
respondents opened a joint dollar account with an initial deposit to the petitioner’s Pritil-Tondo
Branch.
For the past years, the petitioner issued a hold out an order against the respondent’s
account. Petitioner with its special audit department head Antonio Ivan Aguirre filed before a
criminal case for estafa through deceit, misconception, and use of falsified documents. However,
respondents denied taking part in unauthorized withdrawal and fraud from the dollar account of
Liu Chiu Fang. On December 15, 2003, a criminal case issued a resolution dismissal for lack of
probable cause. The respondents filed before the RTC complaint for breach of obligation and
contract with damages.
ISSUE:
Whether Metropolitan Bank broke its contract with the respondents.
RULING:
The court holds that Metropolitan Bank that is the nature of a simple loan must be paid
upon demand by the depositors. In the given case, the petitioner neglected to show that
respondents have an obligation to it under the law. Hold out is an existing and valid obligation
arising from any sources enumerated to civil code. Though the case was filed by the petitioner
against the respondents, this is not a reason to issue hold-out order as the case is yet unsettled
and no final judgment of conviction has been given against the respondents. With the findings of
TRC and the Ca that the hold out order does not apply in the case, considering that respondent is
not liable under any of sources of obligation for there was no legal basis for the petitioner to
issue hold out the order. Therefore, the petitioner found guilty of breach of contract when it not
reasonable refused to release the respondent’s deposit despite the need. The petitioner is liable
for damages, having breached its contract with the respondents.

c) Obligations arising from quasi contract.

i. Negotiorum gestio
ADILLE vs. CA, G.R NO. L-44546 January 29,1988

FACTS:
The land in question originally belonged to one Felisa Alzul as her own private property. She
married twice in her lifetime; the first, with one Bernabe Adille, with whom she had as an only
child, herein defendant Rustico Adille; in her second marriage with one Procopio Asejo, her
children were herein plaintiffs.

Sometime in 1939, said Felisa sold the property in pacto de retro to certain 3rd persons, period of
repurchase being 3 years, but she died in 1942 without being able to redeem.

During the period of redemption, herein defendant repurchased the land, and later executed a
deed of extra-judicial partition representing himself to be the only heir and child of his mother
Felisa. He was able to secure a title in his name – OCT. No. 21137 in the name of his mother was
transferred to his name.

After some efforts of compromise had failed, his half-brothers and sisters, herein plaintiffs, filed
present case for partition with accounting on the position that he was only a trustee on an implied
trust when he redeemed. As plaintiff Emeteria Asejo was occupying a portion, defendant filed a
counterclaim for her to vacate the land.

The lower court sustaining defendant in his position that he was and became absolute owner, he
was not a trustee, dismissed case and ordered Emeteria to vacate the premises. CA reversed the
ruling of the trial court.

ISSUE:
W/N petitioner has acquired absolute ownership of the property in question?
RULING:
NO. The fact that the petitioner had succeeded in securing title over the parcel in his name did
not terminate the existing co-ownership. While his half-brothers and sisters are, as we said, liable
to him for reimbursement as and for their shares in redemption expenses, he cannot claim
exclusive right to the property owned in common. Registration of property is not a means of
acquiring ownership. It operates as a mere notice of existing title, that is, if there is one.

The petitioner must then be said to be a trustee of the property on behalf of the private
respondents. The Civil Code states:

ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force
of law, considered a trustee of an implied trust for the benefit of the person from whom the
property comes.

We agree with the respondent Court of Appeals that fraud attended the registration of the
property. The petitioner’s pretension that he was the sole heir to the land in the affidavit of
extrajudicial settlement he executed preliminary to the registration thereof betrays a clear effort
on his part to defraud his brothers and sisters and to exercise sole dominion over the property.
The aforequoted provision therefore applies.

It is the view of the respondent Court that the petitioner, in taking over the property, did so either
on behalf of his co-heirs, in which event, he had constituted himself a negotiorum gestor under
Article 2144 of the Civil Code, or for his exclusive benefit, in which case, he is guilty of fraud,
and must act as trustee, the private respondents being the beneficiaries, under the Article 1456.
The evidence, of course, points to the second alternative the petitioner having asserted claims of
exclusive ownership over the property and having acted in fraud of his co-heirs. He cannot
therefore be said to have assume the mere management of the property abandoned by his co-
heirs, the situation Article 2144 of the Code contemplates. In any case, as the respondent Court
itself affirms, the result would be the same whether it is one or the other. The petitioner would
remain liable to the Private respondents, his co-heirs.

ii. Solution indebiti

ANDRES vs. MANUFACTURERS HANOVER & TRUST CORPOTATION, G.R. NO. 82670
September 15, 1989
FACTS:
Andres, using the business name “Irene’s Wearing Apparel” was engaged in the manufacture of
ladies’ garments, children’s wear, men’s apparel and linens for local and foreign buyers. Among
its foreign buyers was Facts of the United States.
Sometime in August 1980, Facts instructed the First National State Bank (FNSB) of New Jersey
to transfer $10,000 to Irene’s Wearing Apparel via Philippine National Bank (PNB) Sta. Cruz,
Manila branch. FNSB instructed Manufacturers Hanover and Trust Corporation (Mantrust) to
affect the transfer by charging the amount to the account of FNSB with private respondent.
After Mantrust effected the transfer, the payment was not affected immediately because the
payee designated in the telex was only “Wearing Apparel.” Private respondent sent PNB another
telex stating that the payment was to be made to “Irene’s Wearing Apparel.”
On August 28, 1980, petitioner received the remittance of $10,000.
After learning about the delay, Facets informed FNSB about the situation. Facts, unaware that
petitioner had already received the remittance, informed private respondent, and amended its
instruction y asking it to affect the payment to Philippine Commercial and Industrial Bank
(PCIB) instead of PNB.
Private respondent, also unaware that petitioner had already received the remittance, instructed
PCIB to pay $10,000 to petitioner. Hence, petitioner received another $10,000 which was
charged again to the account of Facets with FNSB.
FNSB discovered that private respondent had made a duplication of remittance. Private
respondent asked petitioner to return the second remittance of $10,000 but the latter refused to do
so contending that the doctrine of solution indebiti does not apply because there was negligence
on the part of the respondents and that they were not unjustly enriched since Facets still has a
balance of $49,324.
ISSUE:
Whether or not the private respondent has the right to recover the second $10,000 remittance it
had delivered to petitioner
RULING:
Yes. Art 2154 of the New Civil Code is applicable. For this article to apply, the following
requisites must concur: 1) that he who paid was not under obligation to do so; and 2) that
payment was made by reason of an essential mistake of fact.
There was a mistake, not negligence, in the second remittance. It was evident by the fact that
both remittances have the same reference invoice number.

d) Obligations arising from delict.

NAPOCOR vs. CA, G.R NO. 124378, March 8, 2005
FACTS:
Office of the President of the Philippines issued Memorandum Order No. 398 – “Prescribing
Measures to Preserve the Lake Lanao Watershed, To Enforce the Reservation of Areas Around
the Lake Below Seven Hundred- and Two-Meters Elevation, and for Other Purposes.” Said
decree instructed the NPC to build the Agus Regulation Dam at the mouth of Agus River in
Lanao del Sur, at a normal maximum water level of Lake Lanao at 702 meters elevation.
Pursuant thereto, petitioner built and operated the said dam in 1978.

Private respondents Hadji Abdul Carim Abdullah and Caris Abdullah were owners of fishponds
in Barangay Bacong, Municipality of Marantao, Lanao del Sur, while private respondents Hadji
Ali Langco and Diamael Pangcatan had their fishponds built in Poona- Marantao, also in the
same province. All these fishponds were sited along the Lake Lanao shore.

In October and November of 1986, all the improvements were washed away when the water
level of the lake escalated, and the subject lakeshore area was flooded. Private respondents
blamed the inundation on the Agus Regulation Dam built and operated by the NPC.

In 1978. They theorized that NPC failed to increase the outflow of water even as the water level
of the lake rose due to the heavy rains.

Respondents wrote separate letters to the NPC’s Vice-President, a certain “R.B. Santos,” who
was based in Ditucalan, Iligan City. They sought assistance and compensation for the damage
suffered by each of them. NPC retorted that visible monuments and benchmarks indicating the
702-meter elevation had been established around the lake from 1974 to 1983, which should have
served as a warning to the private respondents not to introduce any improvements below the 702-
meter level as this was outlawed.

Left with no other recourse, the private respondents filed a complaint for damages before the
RTC of Marawi City

ISSUE:
Whether or not the Court of Appeals erred in affirming the trial court’s verdict that petitioner
was legally answerable for the damages endured by the private respondents.
RULING:
No, NPC is liable. With respect to its job to maintain the normal maximum level of the lake at
702 meters, the Court of Appeals, echoing the trial court, observed with alacrity that when the
water level rises due to the rainy season, the NPC ought to release more water to the Agus River
to avoid flooding and prevent the water from going over the maximum level.

In the absence of any clear explanation on what other factors could have explained the flooding
in the neighboring properties of the dam, it is fair to reasonably infer that the incident happened
because of want of care on the part of NPC to maintain the water level of the dam within the
benchmarks at the maximum normal lake elevation of 702 meters. The Court of Appeals,
echoing the trial court, observed with alacrity that when the water level rises due to the rainy
season, the NPC ought to release more water to the Agus River to avoid flooding and prevent the
water from going over the maximum level.

In the absence of any clear explanation on what other factors could have explained the flooding
in the neighboring properties of the dam, it is fair to reasonably infer that the incident happened
because of want of care on the part of NPC to maintain the water level of the dam within the
benchmark of care on the part of NPC to maintain the water level of the dam within the
benchmarks at the maximum normal lake elevation of 702 meters. An application of the doctrine
of ires ipsa loquitur, the thing speaks for itself comes to fore.

VI. Nature and effects of obligation

A. Delay
1. Mora Solvendi
SANTOS VENTURA HOCORMA FOUNDATION, INC., vs. SANTOS, G.R NO. 153004,
November 5, 2004
FACTS:
1. There are several civil cases between herein respondent (then petitioner, Ernesto Santos)
and petitioner (then respondent, Santos Ventura Hocorma Foundation, Inc., SVHFI for
brevity).
2. On October 26, 1990, Santos and SVHFI executed a Compromise Agreement which
amicable ended all their pending litigations.
3. Pertinent portions of the agreement read as follows:
 SVHFI shall pay Santos P14.5 million in the following manner:
 P 1.5 million immediately upon the execution of this agreement.
  The balance of P13 million shall be paid, whether in one lump rum or in
installments, at the discretion of the Foundation, within a period of not more than
two (2) years from the execution of this agreement.
 … Santos shall cause the dismissal with prejudice of Civil Cases…. and for
immediate lifting of the aforesaid various notices of Lis pendens on the real
properties aforementioned; … if SVHFI shall sell or dispose of any of the lands
previously subject of Lis pendens, the proceeds of any such sale, or any part
thereof as may be required, shall be partially devoted to the payment of the
Foundations obligations under this agreement as may still be subsisting and
payable at the time of any such sale or sales.
 Failure of compliance of any of the foregoing terms and conditions by either or
both parties to this agreement shall ipso facto and ipso jure automatically entitle
the aggrieved party to a write of execution for the enforcement of this agreement.
4. Santos moved for the dismissal of the aforesaid cases and caused the lifting of the notices
of Lis pendens on the real properties involved. SVHFI, paid P1.5 million to Santos,
leaving a balance of P13 million.
5. On September 30, 1991, the RTC of Makati approved the compromise agreement.
6. SVHFI sold two real properties, which were previously subjects of Lis pendens. Santos
then sent a letter to the SVHFI demanding the payment of the remaining P13 million,
which the latter ignored.
7. On October 28, 1992, Santos sent another letter to SVHFI inquiring when it would pay
the balance. There was no response from SVHFI.
8. Santos applied for the issuance of the writ of execution of its compromise agreement.
Granted by the RTC.
9. Sheriff levied on the real properties of petitioner, which were formerly subjects of the Lis
pendens.
10. On November 22, 1994, the real properties were auctioned. Riverland, Inc. was the
highest bidder and issued a Certificate of Sale covering the real properties subject of the
auction sale, provided for the right of redemption within one year from the date of
registration of properties.
11. Santos and Riverland, Inc. filed a Complaint for Declaratory Relief and Damages
alleging that there was delay on the part of the petitioner in paying the balance of P13
million. They prayed that petitioner be ordered to pay legal interest and for the sales be
declared final and not subject to legal redemption.
12. SVHFI was able to fully settle its outstanding balance on February 8, 1995.
ISSUE:
1. Whether or not the court of appeals committed reversible error when it awarded legal
interest in favor of the respondents, Mr. Santos and Riverland, Inc., notwithstanding
the fact that neither in the compromise agreement nor in the compromise judgement
of Hon. Judge Diokno provides for payment of interest to the respondent.
2. Whether or not the court of appeals erred in awarding legal interest in favor of the
respondents, Mr. Santos and Riverland, Inc., notwithstanding the fact that the
 obligation of the petitioner to respondent santos to pay a sum of money had been
converted to an obligation to pay in kind – delivery of real properties owned by the
petitioner – which had been fully performed.
3. Whether or not respondents are barred from demanding payment of interest by reason
of the waiver provision in the compromise agreement, which became the law among
the parties.
RULING:
1. Yes. In the absence of agreement, the legal rate of interest shall prevail. The legal interest
for loan as forbearance of money is 12% per annum to be computed from default.
2. Yes. A compromise has upon the parties the effect and authority of res judicata, with
respect to the matter stated therein, or which by implication from its terms should be
deemed to have been included therein. This holds true even if the agreement has not been
judicially approved.
In the present case, Compromise Agreement was entered into by the parties on
October 26, 1990. it was judicially approved on September 30, 1991. The compromise
agreement as a consensual contract became binding between the parties upon its
execution and not upon its court approval. From the time a compromise is validly
entered, it becomes the source of the rights and obligation of the parties thereto.
The two-year period must be counted from October 26, 1990, the date of
execution of the compromise agreement, and not on the judicial approval of the
compromise agreement on September 30, 1991. When the respondents wrote a demand
letter to petitioner on October 28, 1992, the obligation was already due and demandable.
When the petitioner failed to pay its due obligation after the demand was made, it
incurred delay.
The two-year period ended on October 26, 1992. The respondent gave a demand
letter on October 29, 1992, to the petitioner. The obligation is liquidated because the
debtor knows precisely how much he is to pay and when he is to pay it. The petitioner
delayed in the performance; it was able to fully settle its outstanding balance only on
February 8, 1995.

2. Mora Accipiendi

MANUEL vs. CA, G.R. NO. 95469 July 25, 1991

FACTS:
This case had its inception in a complaint for ejectment filed by herein private respondents
against herein petitioner before the Metropolitan Trial Court of Manila, docketed as Civil Case
No. 122136-CV, for non-payment of rentals on an apartment unit owned by private respondents
and rented by petitioner.
The private respondents are the owners of an apartment unit which was rented by the petitioner
on a month-to-month basis for a monthly rental of P466.00 payable in advance. The petitioner
failed to pay the corresponding rentals for the month of May 1987 up to the filing of the
complaint on August 31, 1987.
On July 9, 1987, private respondents, through their counsel, sent a demand letter to the petitioner
(Exhibit "R") requiring him to pay his rentals in arrears and to vacate the leased premises within
five (5) days from receipt thereof, otherwise private respondents will be constrained to file the
appropriate legal action against him.
The demand letter of private respondents' counsel was received by the petitioner on July 14,
1987. The private respondents did not heed the petitioner's request.
ISSUES:
Under the circumstances prevailing in this instant case, the private respondent was really in mora
accipiendi that even if no deposit or consignation had been made, said mora cannot be cured.
RULING:
No, the contention of petitioner that private respondents are in mora accipiendi cannot be upheld
either. The failure of the owners to collect or their refusal to accept the rentals are not valid
defenses. Consignation, under such circumstances, is necessary,17 and by this we mean one that
effected in full compliance with the specific requirements of the law therefor.
3. Compensatio Morae

CORTES vs. CA, G.R NO. 126083, July 12, 2006

FACTS:
The instant petition for review seeks the reversal of the June 13, 1996 Decision1 of the Court of
Appeals in CA-G.R. CV No. 47856, setting aside the June 24, 1993 Decision2 of the Regional
Trial Court of Makati, Branch 138, which rescinded the contract of sale entered by petitioner
Antonio Cortes (Cortes) and private respondent Villa Esperanza Development Corporation
(Corporation).
The antecedents show that for the purchase price of P3,700,000.00, the Corporation as buyer,
and Cortes as seller, entered a contract of sale over the lots covered by Transfer Certificate of
Title (TCT) No. 31113-A, TCT No. 31913-A and TCT No. 32013-A, located at Baclaran,
Parañaque, Metro Manila. On various dates in 1983, the Corporation advanced to Cortes the total
sum of P1,213,000.00. Sometime in September 1983, the parties executed a deed of absolute sale
containing the following terms:3.
On January 14, 1985, the Corporation filed the instant case5 for specific performance seeking to
compel Cortes to deliver the TCTs and the original copy of the Deed of Absolute Sale.
According to the Corporation, despite its readiness and ability to pay the purchase price, Cortes
refused delivery of the sought documents. It thus prayed for the award of damages, attorney's
fees and litigation expenses arising from Cortes' refusal to deliver the same documents.
On June 24, 1993, the trial court rendered a decision rescinding the sale and directed Cortes to
return to the Corporation the amount of P1,213,000.00, plus interest. It ruled that pursuant to the
contract of the parties, the Corporation should have fully paid the amount of P2,200,000.00 upon
the execution of the contract. It stressed that such is the law between the parties because the
Corporation failed to present evidence that there was another agreement that modified the terms
of payment as stated in the contract. And, having failed to pay in full the amount of
P2,200,000.00 despite Cortes' delivery of the Deed of Absolute Sale and the TCTs, rescission of
the contract is proper.
ISSUES:
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready
to comply in a proper manner with what is incumbent upon him. From the moment one of the
parties fulfills his obligation, delay by the other begins.
RULING:
No, Cortes' contention that the failure of the Corporation to act on the proposed settlement at the
pre-trial must be construed against the latter. Cortes argued that with his counsel's offer to
surrender the original Deed and the TCTs, the Corporation should have consigned the balance of
the down payment. This argument would have been correct if Cortes surrendered the Deed and
the TCTs to the Corporation.
4. When demand not necessary.
RODRIGO RIVERA VS. SPOUSES SALVADOR C. CHUA AND VIOLETA S. CHUA/
SPOUSES SALVADOR C. CHUA AND VIOLETA S. CHUA VS. RODRIGO RIVERA, G.R.
Nos. 184458/184472. January 14, 2015 (1169)

FACTS:
The gatherings were companions of long standing having known each other since 1973. In
February 1995, Rivera acquired an advance from the Spouses Chua, in the tune of P120, 000.00
encapsulated in a promissory note with specifications that disappointment with respect to Rivera
to pay the sum on December 31, 1995, he consents to pay 5% premium month to month from the
date of default (January 1, 1996). Three years have passed from the development date, when
Rivera gave two (2) checks for Chua as installment for the advance, which, upon presentment,
were disrespected for the explanation "account shut." In their assortment suit, Spouses Chua
asserted that they have consistently requested installment from Rivera without much of any
result. In his Answer, Rivera guaranteed falsification of the subject Promissory Note and denied
his obligation thereunder. From the MeTC to the CA, the financial case of Spouses Chua was
maintained.
ISSUE:
Whether or not an interest from Sps. Chua is expected to make Rivera at risk.

RULING:
The ruling is no, an interest from Sps. Chua is not expected to make Rivera responsible. Request
is not, at this point vital in light of the fact that the law is unequivocal that when the account
holder neglects to pay upon development date, when the commitment is expected and
demandable, he consequently brings about delay. Craftsmanship .1169 of the NCC states, "Those
obliged to convey or to accomplish something bring about in delay from the time the oblige
judicially or extra judicially requests from them the satisfaction of their commitment. In any
case, the interest by the leaser will not be fundamental all together that deferral may exist: It is
when the commitment or the law explicitly so announce.

B. Negligence
1. Degree of Diligence
PHOENIX ASSURANCE COMPANY OF NEW YORK, MCGEE & CO., INC., G.R. NO.
162467, May 8, 2009

Facts:
The stevedoring company Mindanao Terminal and Brokerage Service, Inc. is contracted by Del
Monte Philippines, Inc., to load and stow a shipment of fresh green Philippine bananas and fresh
pineapples belonging to DelMonte Fresh Produce International, Inc. into the cargo hold of the
vessel M/V Mistrau. Thevessel was docked at the port of Davao City and the goods were to be
transported by it to the port of Inchon, Korea in favor of consignee Taegu Industries, Inc. The
vessel set sail from the port of Davao City and arrived at the port of Inchon, Korea. It was then
discovered upon discharge that some of the cargo was in bad condition. The Marine Cargo
Damage Surveyor of Incok Loss and Average Adjuster of Korea, through its representative
ByeongYong Ahn (Byeong), surveyed the extent of the damage of the shipment. In a survey
report, it was stated that16,069 cartons of the banana shipment and2,185 cartons of the pineapple
shipment were so damaged that they no longer had commercial value. Phoenix and McGee
instituted an action for damages against Mindanao Terminal After trial, the RTC held that the
only participation of Mindanao Terminal was to loathe cargoes on board the/V Mistrauunderthe
direction and supervision of the ship’s officers, who would not have accepted the cargoes on
board the vessel and signed the foreman’s report unless they were properly arranged and tightly
secured to withstand voyage across the open seas. Accordingly, Mindanao Terminal cannot be
held liable for whatever happened to the cargoes after it had loaded and stowed them. Moreover,
citing the survey report, it was found by theRTC that the cargoes were damaged on account of a
typhoon which/V Mistrauhad encountered during the voyage. It was further held that Phoenix
and McGee had no cause of action against Mindanao Terminal because the latter, services were
contracted by DelMonte, a distinct corporation from Del Monte Produce, had no contract with
the assured DelMonte Produce. The RTC dismissed the complaint and awarded the counterclaim
of Mindanao Terminal in the amount of P83,945.80 as actual damages and P100,000.00 as
attorney’s fees.

Issues:
McGee has a cause of action against Mindanao Terminal… under Article 2176 of the Civil Code
on quasi-delict.

Ruling:
In the present case, Phoenix and McGee are not suing for damages for injuries arising from the
breach of the contract of service but from the alleged negligent manner by which Mindanao
Terminal handled the cargoes belonging to Del Monte Produce. Despite the absence of…
contractual relationship between Del Monte Produce and Mindanao Terminal, the allegation of
negligence on the part of the defendant should be sufficient to establish a cause of action arising
from quasi-delict.

C. Fortuitous event
NAKPIL & SONS v. CA, G.R. NO. L-47851 April 15, 1988

FACTS:
Private respondents – Philippine Bar Association (PBA) – a non-profit organization formed
under the corporation law decided to put up a building in Intramuros, Manila. Hired to plan the
specifications of the building were Juan Nakpil & Sons, while United Construction was hired to
construct it. The proposal was approved by the Board of Directors and signed by the President,
Ramon Ozaeta. The building was completed in 1966. In 1968, there was an unusually strong
earthquake which caused the building heavy damage, which led the building to tilt forward,
leading the tenants to vacate the premises. United Construction took remedial measures to
sustain the building. As a temporary remedial measure, the building was shored up by UCCI at
the expense of P13,661.28.

PBA filed a suit for damages against United Construction, but UCCI subsequently filed a suit
against Nakpil and Sons, alleging defects in the plans and specifications. Technical Issues in the
case were referred to Mr. Hizon, as a court appointed Commissioner. PBA moved for the
demolition of the building but was opposed. PBA eventually paid for the demolition after the
building suffered more damages in 1970 due to previous earthquakes. The Commissioner found
that there were deviations in the specifications and plans, as well as defects in the construction of
the building. The lower court agreed with the findings of the Commissioner and ordered UCCI to
pay. Court Appeals modified the decision. Hence the petition.

ISSUE:
Whether or not an act of nature (fortuitous event) exempts from liability parties who would
otherwise be due to negligence?

RULING:
According to Art. 1723 dictates that the engineer/architect and contractor are liable for damages
should the building collapse within 15 years from completion. However, Art. 1174 of the NCC
states that no person shall be responsible for events, which could not be foreseen. But to be
exempt from liability due to an act of nature, the following must occur:

1) Cause of breach must be independent of the will of the debtor

2) Event must be unforeseeable or unavoidable
3) Event must be such that it would render it impossible for the debtor to fulfill the obligation
4) Debtor must be free from any participation or aggravation of the industry to the creditor.

In the case at bar, although the damage was ultimately caused by the earthquake which was an
act of nature, the defects in the construction, as well as the deviations in the specifications and
plans aggravated the damage and lessened the preventive measures that the building would
otherwise have had.

VII. Kinds of civil obligations

A. Pure obligations
HONGKONG AND SHANGHAI BANKING CORP. vs. BROQUEZA, G.R NO. 178610
November 17, 2010 (1179)

FACT:
Petitioners Gerong and Editha Broqueza are both employees and member of respondent of
Hongkong and Shanghai Banking Corporation (HSBC). HSBCL-SRP is a retirement plan
establish by HSBC. On October 1, 1990, Editha Broqueza obtained a car loan amounting Php
175,000. On December 12, 1991, she again applied and was granted an appliance loan in the
amount of Php 24,000. On the other hand, petitioner Gerong applied and was granted an
emergency loan amount of Php 35,780 on June 2, 1993. These loans are paid through automatic
salary deduction. In 1993, a labor debate emerged between HSBC and employees. Majority of
HSBC's workers were ended, among whom are applicants Editha Broqueza and Fe Gerong.
Because of their dismissal, petitioners were not able to pay the monthly amortizations of their
individual credits. Hence, respondent HSBCL-SRP considered the accounts of petitioner’s
reprobate. Requests to pay the individual commitments were made upon retitioners, but they
failed to pay.

ISSUE:
Whether or not the loan is directly demandable.

RULING:
Yes, for obligation to pay car loan is a pure obligation because the promissory note does not
contain period. HSBCL-SRP has the right to demand immediately payment. HSBCL-SRP has
prior monthly check off Editha Broqueza's salary and once Editha defaulted in her payment,
HSBCL-SRP made an action to enforce a pure obligation.

B. Conditional obligations

1. Suspensive condition
REYES vs. TUPARAN, G.R. NO. 188064, June 1, 2011

FACTS:
Mila A. Reyes (petitioner) filed a complaint for Rescission of Contract with Damages against
Victoria T. Tuparan (respondent) before the RTC.In her Complaint, petitioner alleged, among
others, that she was the registered owner of a 1,274 square meter residential and commercial lot
located in Karuhatan, Valenzuela City, and covered by TCT No. V-4130.
Petitioner mortgaged the subject real properties to the Farmers Savings Bank and Loan Bank,
Inc. (FSL Bank) to secure a loan. Petitioner then decided to sell her real properties so she could
liquidate her bank loan and finance her businesses. As a gesture of friendship, respondent
verbally offered to conditionally buy petitioner's real properties.
The parties and FSL Bank executed the corresponding Deed of Conditional Sale of Real
Properties with Assumption of Mortgage. Due to their close personal friendship and business
relationship, both parties chose not to reduce into writing the other terms of their agreement
mentioned in paragraph 11 of the complaint.
Respondent, however, defaulted in the payment of her obligations on their due dates. Instead of
paying the amounts due in lump sum on their respective maturity dates, respondent paid
petitioner in small amounts from time to time.
Respondent countered, among others, that the tripartite agreement erroneously designated by the
petitioner as a Deed of Conditional Sale of Real Property with Assumption of Mortgage was a
pure and absolute contract of sale with a term period. It could not be considered a conditional
sale because the acquisition of contractual rights and the performance of the obligation therein
did not depend upon a future and uncertain event.
Respondent further averred that she successfully rescued the properties from a definite
foreclosure by paying the assumed mortgage plus interest and other finance charges.
The RTC handed down its decision finding that respondent failed to pay in full the total purchase
price of the subject real properties. It stated that the checks and receipts presented by respondent
refer to her payments of the mortgage obligation with FSL Bank. The RTC also considered the
Deed of Conditional Sale of Real Property with Assumption of Mortgage executed by and
among the two parties and FSL Bank a contract to sell, and not a contract of sale.
The CA rendered its decision affirming with modification the RTC Decision. The CA agreed
with the RTC that the contract entered by the parties is a contract to sell but ruled that the
remedy of rescission could not apply because the respondent's failure to pay the petitioner the
balance of the purchase was not a breach of contract, but merely an event that prevented the
seller (petitioner) from conveying title to the purchaser (respondent).

ISSUE:
Was the agreement a contract to sell and not a contract of sale?
RULING:
The Court agrees with the ruling of the courts below that the subject Deed of Conditional Sale
with Assumption of Mortgage entered by and among the two parties and FSL Bank on
November 26, 1990 is a contract to sell and not a contract of sale.
The title and ownership of the subject properties remains with the petitioner until the respondent
fully pays the balance of the purchase price and the assumed mortgage obligation. Thereafter,
FSL Bank shall then issue the corresponding deed of cancellation of mortgage and the petitioner
shall execute the corresponding deed of absolute sale in favor of the respondent.
Accordingly, the petitioner's obligation to sell the subject properties becomes demandable only
upon the happening of the positive suspensive condition, which is the respondent's full payment
of the purchase price. Without respondent's full payment, there can be no breach of contract to
speak of because petitioner has no obligation yet to turn over the title. Respondent's failure to
pay in full the purchase price is not the breach of contract contemplated under Article 1191 of
the New Civil Code but rather just an event that prevents the petitioner from being bound to
convey title to the respondent.
Thus, the Court fully agrees with the CA when it resolved: "Considering, however, that the Deed
of Conditional Sale was not cancelled by Vendor Reyes (petitioner) and that out of the total
purchase price of the subject property in the amount of?4,200,000.00, the remaining unpaid
balance of Tuparan (respondent) is only?805,000.00, a substantial amount of the purchase price
has already been paid. It is only right and just to allow Tuparan to pay the said unpaid balance of
the purchase price to Reyes."
Granting that a rescission can be permitted under Article 1191, the Court still cannot allow it for
the reason that, considering the circumstances, there was only a slight or casual breach in the
fulfillment of the obligation.
Out of the P1,200,000.00 remaining balance, respondent paid on several dates the first and
second installments of P200,000.00 each. She, however, failed to pay the third and last
installment of P800,000.00 due on December 31, 1991. Nevertheless, on August 31, 1992,
respondent, through counsel, offered to pay the amount of P751,000.00, which was rejected by
petitioner for the reason that the actual balance was P805,000.00 excluding the interest charges.
Considering that out of the total purchase price of P4,200,000.00, respondent has already paid
the substantial amount of P3,400,000.00, more or less, leaving an unpaid balance of only
P805,000.00, it is right and just to allow her to settle, within a reasonable period of time, the
balance of the unpaid purchase price. The Court agrees with the courts below that the respondent
showed her sincerity and willingness to comply with her obligation when she offered to pay the
petitioner the amount of P751,000.00. DENIED.

2. Resolutory condition
CENTRAL PHILIPPINE UNIVERSITY vs. CA, G.R NO. 112230. July 17, 1995

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”.

ISSUE:
1) WON petitioner failed to comply the resolutely conditions annotated at the back of
petitioner’s 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
RULING:

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.

3.) Under Art. 1191, when one of the obligors cannot comply with what is incumbent upon him,
the oblige 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.

C. Obligations with a period

ROWENA R. SOLANTE vs. COMMISION ON AUDIT et. al. G.R. No. 207348, August 19,
2014

FACTS:
On April 26, 1989, the City of Mandaue and F.F. Cruz and Co., Inc. (F.F. Cruz) entered a
Contract of Reclamation [4] in which F.F. Cruz, in consideration of a defined land sharing
formula thus stipulated, agreed to undertake, at its own expense, the… reclamation of 180
hectares, more or less, of foreshore and submerged lands from the Cabahug Causeway in that
city.
Subsequently, the parties inked in relation to the above project a Memorandum of Agreement
(MOA) dated October 24, 1989[5] whereby the City of Mandaue allowed F.F. Cruz to put up
structures on a portion of a parcel of land owned by the city for the use of… and to house F.F.
Cruz personnel assigned at the project site, subject to terms particularly provided in paragraphs
3, 4 and 5 of the MOA:
That [F.F. Cruz] desires to use a portion of a parcel of land of the [City of Mandaue] described
under paragraph 1 hereof to the extent of 495 square meters to be used by them in the
construction of their offices to house its personnel to supervise the Mandaue City Reclamation
Project
That the [City of Mandaue] agrees to the desire of [F.F. Cruz] to use a portion of the parcel of
land described under paragraph 1 by [F.F. Cruz] for the latter to use for the construction of their
offices to house its personnel to supervise the said Mandaue City Reclamation
Project with no rental to be paid by [F.F. Cruz] to the [City of Mandaue].
That the [City of Mandaue] and [F.F. Cruz] have agreed that upon the completion of the
Mandaue City Reclamation Project, all improvements introduced by [F.F. Cruz] to the portion of
the parcel of land owned by the [City of Mandaue] as described under paragraph 3 hereof…
existing upon the completion of the said Mandaue City Reclamation Project shall ipso facto
belong to the [City of Mandaue] in ownership as compensation for the use of said parcel of land
by [F.F. Cruz] without any rental whatsoever. (emphasis supplied)
Pursuant to the MOA, F.F. Cruz proceeded to construct the contemplated housing units and other
facilities which included a canteen and a septic tank.
Later developments saw the City of Mandaue undertaking the Metro Cebu Development Project
II (MCDP II), part of which required the widening of the Plaridel Extension Mandaue Causeway.
However, the structures and facilities built by F.F. Cruz subject of the MOA stood in the… direct
path of the road widening project. Thus, the Department of Public Works and Highways
(DPWH) and Samuel B. Darza, MCDP II project director, entered into an Agreement to
Demolish, Remove and Reconstruct Improvement dated July 23, 1997[6] with F.F. Cruz
whereby the latter would demolish the improvements outside of the boundary of the road
widening project and, in return, receive the total amount of PhP 1,084,836.42 in compensation.
Accordingly, petitioner Rowena B. Rances (now Rowena Rances-Solante), Human Resource
Management Officer III, prepared and, with the approval of Samuel B. Darza (Darza), then
issued Disbursement Voucher (DV) No. 102-07-88-97 dated July 24, 1997[7] … for PhP
1,084,836.42 in favor of F.F. Cruz. In the voucher, Solante certified that the expense covered by
it was “necessary, lawful and incurred under my direct supervision.”
The… hereafter, Darza addressed a letter-complaint to the Office of the Ombudsman, Visayas,
inviting attention to several irregularities regarding the implementation of MCDP II. The letter
was referred to the COA which then issued Assignment Order No. 2000-063 for a team to
audit… the accounts of MCDP II. Following an audit, the audit team issued Special Audit Office
(SAO) Report No. 2000-28, par. 5 of which states:
F.F. Cruz and Company, Inc. was paid P1,084,836.42 for the cost of the property affected by the
widening of Plaridel Extension, Mandaue Causeway. However, under Section 5 of its MOA with
Mandaue City, the former was no longer the lawful owner of the properties at the… time the
payment was made.
On February 15, 2013, Solante received a Notice of Finality of Decision (NFD) [14] stating that
the COA Decision dated February 15, 2008 and Resolution dated November 5, 2012 have
become final and executory, a copy of the Resolution having been served on the… parties on
November 9, 2012 by registered mail. Notably, Solante never received a copy of the COA
Resolution. She came to get one only on May 8, 2013 after inquiring from the Cebu Central Post
Office, which, in a Certification of Delivery dated May 8,… 2013,[15] stated that the registered
mail containing said copy was in fact not delivered.
ISSUE:
He resolution of the present controversy rests on the determination of a sole issue: who between
the City of Mandaue and F.F. Cruz owned during the period material the properties that were
demolished.
RULING:
The petition is meritorious. The COA and its audit team obviously misread the relevant
stipulations of the MOA in relation to the provisions on project completion and termination of
contract of the Mandaue-F.F. Cruz reclamation contract. Essentially, the COA is alleging that the
Contract of Reclamation establishes an obligation on the part of F.F. Cruz to finish the project
within the allotted period of six (6) years from contract execution in August 1989. Prescinding
from this premise, the COA would conclude… that after the six (6)-year period, F.F. Cruz is
automatically deemed to be in delay, the contract considered as completed, and the ownership of
the structures built in accordance with the MOA transferred to the City of Mandaue.CO asic
position and the arguments holding it together is untenable. On this point, the Civil Code
provision on obligations with a period is relevant. Article 1193 thereof provides: Article 1193.
Obligations for whose fulfillment a day certain has been fixed, shall be demandable only when
that day comes.
Obligations with a resolutory period take effect at once but terminate upon arrival of the day
certain. A day certain is understood to be that which must necessarily come, although it may not
be known when. If the uncertainty consists in whether the day will come or not, the obligation is
conditional, and it shall be regulated by the rules of the preceding Section. (emphasis supplied)
A plain reading of the Contract of Reclamation reveals that the six (6)-year period provided for
project completion, or, with like effect, termination of the contract was a mere estimate and
cannot be considered a period or a “day certain” in the context of the… aforequoted Art. 1193.
Put a bit differently, the lapse of six (6) years from the perfection of the subject reclamation
contract, without more, could not have automatically vested Mandaue City, under the MOA,
with ownership of the structures. Moreover, even if we consider the allotted six (6) years within
which F.F. Cruz was supposed to complete the reclamation project, the lapse thereof does not
automatically mean that F.F. Cruz was in delay. As may be noted, the City of Mandaue never
made a demand for the fulfillment of its obligation under the Contract of Reclamation.
D. Solidary obligation
SPOUSES CHIN KONG WONG CHOI AND ANA O. CHUA VS. UNITED COCONUT
PLANTERS BANK, G.R. No. 207747. March 11, 2015
FACTS:
Petitioner spouses Chin Kong Wong Choi and Ana O. Chua (Spouses Choi) entered a Contract to
Sell with Primetown Property Group, Inc. (Primetown), a domestic corporation engaged in the
business of condominium construction and real estate development. The Contract to Sell
provided that Spouses Choi agreed to buy condominium unit no. A-322 in Kiener Hills Cebu
(Kiener) from Primetown for a consideration of P1,151,718.75, with a down payment of
P100,000.00 and the remaining balance payable in 40 equal monthly installments of P26,292.97
from 16 January 1997 to 16 April 2000.

On 23 April 1998, respondent United Coconut Planters Bank (UCPB), a commercial bank duly
organized and existing under the laws of the Philippines, executed a Memorandum of Agreement
and Sale of Receivables and Assignment of Rights and Interests (Agreement) with Primetown.
The Agreement provided that Primetown, in consideration of P748,000,000.00, "assigned,
transferred, conveyed and set over unto [UCPB] all Accounts Receivables accruing from
[Primetown's Kiener] x x x together with the assignment of all its rights, titles, interests and
participation over the units covered by or arising from the Contracts to Sell from which the
Accounts Receivables have arisen." Included in the assigned accounts receivable was the account
of Spouses Choi, who proved payment of one monthly amortization to UCPB on 3 February
1999.[12]

On 11 April 2006, the Spouses Choi filed a complaint for refund of money with interest and
damages against Primetown and UCPB before the Housing and Land Use Regulatory Board
(HLURB) Regional Field Office No. VI (RFO VI). Spouses Choi alleged that despite their full
payment of the purchase price, Primetown failed to finish the construction of Kiener and to
deliver the condominium unit to them.

ISSUES:
Spouses Choi raised the following issues in this petition:

I.
 WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS GRIEVOUSLY
ERRED IN RULING THE INSTANT CASE BY SOLELY RELYING ON THE DOCTRINE
OF STARE DECISIS BY CITING THE CASES OF UCPB V. JOHN P. O'HALLORAN AND
JOSEFINA L. O'HALLORAN (CA-G.R. SP NO. 101699) (A Court of Appeals Decided Case)
AND UCPB V. FLORITA LIAM (CA-G.R. SP NO. 112195), (a Court of Appeals Decided
Case) DESPITE THE APPLICABILITY OF THE DOCTRINE OF ESTOPPEL IN THIS CASE,
WHICH IS NOT PRESENT IN THE O'HALLORAN CASE AND LIAM CASE. THE
HONORABLE COURT OF APPEALS A QUO ALSO ERRED WHEN IT DECIDED THIS
CASE BY ONLY GIVING DUE DEFERENCE TO THE DECISION OF ITS CO-DIVISION,
BUT SHOULD HAVE LOOKED UPON THE MERITS OF THE CASE BY APPLYING THE
DECISION OF THE SUPREME COURT IN THE CASE OF QUASHA ANCHETA PEÑA &
NOLASCO LAW OFFICE and LEGEND INTERNATIONAL RESORTS, LIMITED vs. THE
SPECIAL SIXTH DIVISION of the COURT OF APPEALS, KHOO BOO BOON and the Law
Firm of PICAZO BUYCO TAN FIDER & SANTOS (G.R. No. 182013, December 4, 2009).

II.

WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS GRIEVOUSLY

ERRED WHEN IT DISREGARDED THE APPLICABILITY OF THE SUPREME COURT
DECIDED CASES OF LUZON DEVELOPMENT BANK V. ANGELES CATHERINE
ENRIQUEZ (G.R. NO. 168646, JANUARY 12, 2011) AND DELTA DEVELOPMENT AND
MANAGEMENT SERVICES INC. V. ANGELES CATHERINE ENRIQUEZ AND LUZON
DEVELOPMENT BANK (G.R. NO. 168666, JANUARY 12, 2011) TO THE INSTANT CASE.
THE HONORABLE COURT OF APPEALS ALSO ERRED WHEN IT FAILED TO APPLY
THE MORE RECENT CASE OF PBCOMM VS. PRIDISONS REALTY CORPORATION
(G.R. NO. 155113, JANUARY 9, 2013) TO THE INSTANT CASE.

III.

WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS GRIEVOUSLY

ERRED BY NOT RESOLVING THE ISSUE PERTAINING TO THE EFFECT OF THE
CONTRACT DENOMINATED AS "SALE OF RECEIVABLES AND ASSIGNMENT OF
RIGHTS AND INTERESTS", WHEREIN PRIMETOWN TRANSFERRED TO
RESPONDENT UCPB THE FORMER'S RECEIVABLES, MONIES, RIGHTS, TITLES, AND
INTERESTS IN THE KIENER HILLS CONDOMINIUM PROJECT.
RULING:
The Ruling of the Court
We deny the petition.

The primordial issue to be resolved is whether, under the Agreement between Primetown and
UCPB, UCPB assumed the liabilities and obligations of Primetown under its contract to sell with
Spouses Choi.

An assignment of credit has been defined as an agreement by virtue of which the owner of a
credit, known as the assignor, by a legal cause - such as sale, dation in payment or exchange or
donation - and without need of the debtor's consent, transfers that credit and its accessory rights
to another, known as the assignee, who acquires the power to enforce it to the same extent as the
assignor could have enforced it against the debtor.[24] In every case, the obligations between
assignor and assignee will depend upon the judicial relation which is the basis of the assignment.
[25] An assignment will be construed in accordance with the rules of construction governing
contracts generally, the primary object being always to ascertain and carry out the intention of
the parties.[26] This intention is to be derived from a consideration of the whole instrument, all
parts of which should be given effect, and is to be sought in the words and language employed.
[27]

In the present case, the Agreement between Primetown and UCPB provided that Primetown, in
consideration of P748,000,000.00, "assigned, transferred, conveyed, and set over unto [UCPB]
all Accounts Receivables accruing from [Primetown's Kiener] x x x together with the assignment
of all its rights, titles, interests and participation over the units covered by or arising from the
Contracts to Sell from which the Accounts Receivables have arisen."[28]

The Agreement further stipulated that "x x x this sale/assignment is limited to the Receivables
accruing to [Primetown] from the [b]buyers of the condominium units in x x x [Kiener] and the
corresponding Assignment of Rights and Interests arising from the pertinent Contract to Sell and
does not include except for the amount not exceeding 30,000,000.00, Philippine currency, either
singly or cumulatively any and all liabilities which [Primetown] may have assumed under the
individual Contract to Sell."[29]

The Agreement conveys the straightforward intention of Primetown to "sell, assign, transfer,
convey and set over" to UCPB the receivables, rights, titles, interests and participation over the
units covered by the contracts to sell. It explicitly excluded any and all liabilities and obligations,
which Primetown assumed under the contracts to sell. The intention to exclude Primetown's
liabilities and obligations is further shown by Primetown's subsequent letters to the buyers,
which stated that "this payment arrangement shall in no way cause any amendment of the other
terms and conditions, nor the cancellation of the Contract to Sell you have executed with
[Primetown]."[30] It is a basic rule that if the terms of a contract are clear and leave no doubt
upon the intention of the parties, the literal meaning shall control.[31] The words should be
construed according to their ordinary meaning, unless something in the assignment indicates that
they are being used in a special sense.[32] Furthermore, in order to judge the intention of the
contracting parties, their contemporaneous and subsequent acts shall be principally considered.
[33]

It was not clear whether the "amount not exceeding 30,000,000.00, Philippine currency" in the
Agreement referred to receivables or liabilities.[34] Under the Rules of Court, when different
constructions of a provision are otherwise equally proper, that is to be taken which is the most
favorable to the party in whose favor the provision was made.[35] The Memorandum of
Agreement's whereas clauses provided that Primetown desired to settle its obligation with
UCPB.[36] Therefore, the tenor of the Agreement is clearly in favor of UCPB. Thus, the
excluded amount referred to receivables.

The intention to merely assign the receivables and rights of Primetown to UCPB is even
bolstered by the CA decisions in the cases of UCPB v. O'Halloran and UCPB v. Ho.

In UCPB v. O'Halloran,[39] docketed as CA-G.R. SP No. 101699, respondent O'Halloran's

accounts with Primetown were also assigned by Primetown to UCPB, under the same Agreement
as in this case. Since Primetown failed to deliver the condominium units upon full payment of
the purchase price, O'Halloran likewise sued both Primetown and UCPB for cancellation of the
contracts to sell, and the case eventually reached the CA. The CA held UCPB liable to refund the
amount it received from O'Halloran. The CA held that there is no legal, statutory, or contractual
basis to hold UCPB solidarity liable with Primetown for the full reimbursement of the payments
made by O'Halloran. The CA found that based on the Agreement, UCPB is merely the assignee
of the receivables under the contracts to sell to the extent that the assignment is a manner
adopted by which Primetown can pay its loan to the bank. The CA held that the assignment of
receivables did not make UCPB the owner or developer of the unfinished project to make it
solidarity liable with Primetown. The CA decision dated 23 July 2009 in CA-G.R. SP No.
101699 became final and executory upon Entry of Judgment on 17 August 2009 for O'Halloran
and 18 August 2009 for UCPB.

In UCPB v. Ho,[41] docketed as CA-G.R. SP No. 113446, respondent Ho was similarly situated
with O'Halloran and Spouses Choi. Upon reaching the CA, the CA considered the Agreement
between UCPB and Primetown as an assignment of credit, because: 1) the parties entered into
the Agreement without the consent of the debtor; 2) UCPB's obligation "to deliver to the buyer
the title over the condominium unit upon their full payment" signifies that the title to the
condominium unit remained with Primetown; 3) UCPB's prerogative "to rescind the contract to
sell and transfer the title of condominium unit to its name upon failure of the buyer to pay the
full purchase price" indicates that UCPB was merely given the right to transfer title in its name to
apply the property as partial payment of Primetown's obligation; and 4) the Agreement clearly
states that the assignment is limited to the receivables and does not include "any and all liabilities
which [Primetown] may have assumed under the individual contract to sell." Thus, the CA ruled
that UCPB was a mere assignee of the right of Primetown to collect on its contract to sell with
Ho. The CA, then, applied the ruling in UCPB v. O'Halloran in finding UCPB jointly liable with
Primetown only for the payments UCPB had received from Ho.

On 4 December 2013, this Court issued a Resolution denying Ho's petition for review for failure
to show any reversible error on the part of the CA. On 2 April 2014, this Court likewise denied
the motion for reconsideration with finality.[43] Thus, the 9 May 2013 Decision of the Special
Fifteenth Division of the CA in CA-G.R. SP No. 113446 became final and executory.

Considering that UCPB is a mere assignee of the rights and receivables under the Agreement,
UCPB did not assume the obligations and liabilities of Primetown under its contract to sell with
Spouses Choi.

In an assignment of credit, the vendor in good faith shall be responsible for the existence and
legality of the credit at the time of the sale.[44] In Filinvest Credit Corporation v. Philippine
Acetylene Co., Inc.,[45] the Court ruled that the assignee did not acquire the burden of unpaid
taxes over the assigned property, since what was transferred only were the rights, title, and
interest over the property.

Contrary to Spouses Choi's argument that UCPB was estopped, we find that estoppel would not
lie since UCPB's letters to the buyers only assured them of the completion of their units by the
developer.[46] UCPB did not represent to be the new owner of Kiener or that UCPB itself would
complete Kiener.

As for UCPB's alleged solidary liability, we do not find any merit in the claim of Spouses Choi
that Luzon Development Bank v. Enriquez and Philippine Bank of Communications v. Pridisons
Realty Corporation apply to the present case. Both cases involved the failure to comply with
Sections 17, 18 and 25 of Presidential Decree No. 957, which made the banks in those cases
solidarily liable. A solidary obligation cannot be inferred lightly, but exists only when expressly
stated, or the law or nature of the obligation requires it.[49]
Since there is no other ground to hold UCPB solidarily liable with Primetown and there is no
reason to depart from the ratio decidendi in UCPB v. Ho,[50] UCPB is only liable to refund
Spouses Choi the amount it indisputably received, which is P26,292.97 based on the evidence
presented by Spouses Choi.

WHEREFORE, we DENY the petition and AFFIRM with MODIFICATION the Decision dated
29 January 2013 and the Resolution dated 27 May 2013 of the Court of Appeals in CA-G.R. SP
No. 117831. We ORDER respondent United Coconut Planters Bank to RETURN to petitioner
spouses Chin Kong Wong Choi and Ana O. Chua the amount of P26,292.97, with 12% interest
per annum from the time of its receipt on 3 February 1999 until 30 June 2013, then 6% interest
per annum from 1 July 2013 until fully paid.
SO, ORDERED.

E. OBLIGATIONS WITH A PENAL CLAUSE

COUNTRY BANKERS Vs. COURT OF APPEALS 201 SCRA 458

FACTS:
Respondent and petitioner entered into a lease agreement for the term six (6) years over the
Avenue, Broadway and Capitol Theaters and the land on which they are situated. After more
than two (2) years of operation, the respondent lessor made demands for the repossession of the
said leased properties in view of the Sy's arrears in monthly rentals and non-payment of
amusement taxes.
In pursuance of their latter agreement, Sy's arrears in rental were reduced. However, the accrued
amusement tax liability of the three (3) theaters to the City Government of Cabanatuan City had
accumulated despite the fact that Sy had been deducting the amount of P4,000.00 from his
monthly rental. Sy filed the present action for reformation of the lease agreement, damages and
injunction and prayed for the issuance of a preliminary injunction to enjoin OVEC from entering
and taking possession of the three theaters.
OVEC on the other hand, alleged in its answer by way of counterclaims that by reason of Sy's
violation of the terms of the subject lease agreement and became authorized to enter and possess
the three theaters in question and to terminate said agreement. The trial court arrived at the
conclusions that Sy is not entitled to the reformation of the lease agreement and further
concluded that Sy was not entitled to the writ of preliminary injunction issued in his favor after
the commencement of the action and that the injunction bond filed by Sy is liable for whatever
damages OVEC may have suffered by reason of the injunction.

ISSUE:
Whether or not Sy is entitled to reformation of the lease agreement

RULING:
No, The Court finds no ambiguity in the provisions of the lease agreement, holding the same fair
and reasonable and therefore, should be respected and enforced as the law between the parties.
The forfeiture of the remaining deposit still in the possession of the lessor constitutes a penal
clause, which is an accessory obligation attached to a principal obligation for the purpose of
ensuring the performance thereof by imposing on the debtor a special presentation in case the
obligation is not fulfilled or is irregularly or inadequately fulfilled.
As specifically provided for in Article 1226, par. 1, New Civil Code, in obligations with a penal
clause, the penalty shall substitute the indemnity for damages and the payment of interests in
case of non-compliance with the principal obligation, subject to the following exceptions: (1)
when there is a stipulation to the contrary; (2) when the obligor is sued for refusal to pay the
agreed penalty; and (3) when the obligor is guilty of fraud.
In the case at bar, it is evident that the purpose of the penalty is to punish the obligor for non-
compliance with the principal obligation. The forfeiture clause provides that the deposit shall be
deemed forfeited, without prejudice to any other obligation still owing by the lessee to the lessor.

VIII. Extinguishment of obligations

A. Payment or performance
PHILIPPINE COMMERCIAL INTERNATIONAL BANK (now BDO UNIBANK, INC.),
ARTURO P. FRANCO, substituted by his heirs, namely: MAURICIA P. FRANCO, FLORIBEL
P. FRANCO, AND ALEXANDER P. FRANCO, G.R No. 180069, March 5, 2014 (1271)

FACTS:
Respondent who was 51 years old then decided to save up for his retirement and to invest his
hard-earned money. He chose to deposit his savings with defendant bank primarily because of
the latter’s representation that by making such investment, he was providing for his future since
his investment would be commingled, pooled, and automatically rolled over for better
investment return and which will provide for his needs upon retirement, without need for him to
take any further action. Respondent secured from the bank several Trust Indenture Certificates.

Sometime in 1995, plaintiff discovered that one of his children had leukemia and in the ensuing
hospitalization and treatment, plaintiff spent a lot of money; that because his funds were already
exhausted, plaintiff then turned to his Trust Indenture Certificates and started inquiring as to how
he could liquidate the trust. In the beginning, defendant bank constantly asked for time to look
for his records and promised to have an answer before July 15, 1998. On June 22 however,
plaintiff received a letter from defendant’s counsel denying plaintiffs request for payment by
stating that due to the conversion of all outstanding PCIBank trust indenture accounts into
common trust certificates, all such PCIBank trust indenture certificates have been rendered null
and void. Defendant also argues that the present action had already prescribed.
Plaintiff now prays for the payment of the amounts under the Trust Indenture Certificates, plus
interest, moral and exemplary damages, and attorney’s fees.
ISSUE:
Whether or not plaintiff is entitled the relief he seeks.

RULING:
Yes. Civil Law: One who pleads payment has the burden of proving it Petitioner Bank failed to
adduce any documentary evidence to establish the alleged fact that the four TICs were already
paid or cancelled, or that respondent’s participation therein was already withdrawn. With all
these findings, the CA concluded that the claim of respondent is not yet barred by prescription,
since the maturity dates of the four TICs did not terminate the express trust created between the
parties.
Jurisprudence abounds that, in civil cases, one who pleads payment has the burden of proving it.
Even where the plaintiff must allege non-payment, the general rule is that the burden rests on the
defendant to prove payment, rather than on the plaintiff to prove non-payment. When the creditor
is in possession of the document of credit, he need not prove non-payment for it is presumed.
The creditors possession of the evidence of debt is proof that the debt has not been discharged by
payment.
In this case, respondent’s possession of the original copies of the subject TICs strongly supports
his claim that petitioner Banks obligation to return the principal plus interest of the money
placement has not been extinguished. The TICs in the hands of respondent is a proof of
indebtedness and a prima facieevidence that they have not been paid. Petitioner Bank could have
easily presented documentary evidence to dispute the claim, but it did not. In its omission, it may
be reasonably deduced that no evidence to that effect really exist. Worse, the testimonies of
petitioner Banks own witnesses, reinforce, rather than belie, respondent’s allegations of non-
payment.

B. Compensation
CESAR V. AREZA and LOLITA B. AREZA vs. EXPRESS SAVINGS BANK, INC., and
MICHAEL POTENCIANO. G.R No. 176697, March 5, 2014 (1271)

FACTS:
 Petition for Review on Certiorari under Rule 45 Petitioners Cesar V. Areza and Lolita B. Areza
maintained two bank deposits with respondent Express Savings Bank’s Biñan branch They were
engaged in the business of “buy and sell” of brand new and second-hand motor vehicles. On 2
May 2000, they received an order from a certain Gerry Mambuay (Mambuay) for the purchase of
a second-hand Mitsubishi Pajero and a brand-new Honda CRV. The buyer, Mambuay, paid
petitioners with nine (9) Philippine Veterans Affairs Office (PVAO) checks payable to different
payees and drawn against the Philippine Veterans Bank (drawee), each valued at Two Hundred
Thousand Pesos (P200,000.00) for a total of One Million Eight Hundred Thousand Pesos
(P1,800,000.00). About this occasion, petitioners claimed that Michael Potenciano (Potenciano),
the branch manager of respondent Express Savings Bank (the Bank) was present during the
transaction and immediately offered the services of the Bank for the processing and eventual
crediting of the said checks to petitioners’ account. Petitioners deposited the said checks in their
savings account with the Bank. The Bank, in turn, deposited the checks with its depositary bank,
Equitable-PCI Bank, in Biñan, Laguna. Equitable-PCI Bank presented the checks to the drawee,
the Philippine Veterans Bank, which honored the checks. Potenciano informed petitioners that
the checks they deposited with the Bank were honored. He allegedly warned petitioners that the
clearing of the checks pertained only to the availability of funds and did not mean that the checks
were not infirmed. Sometime in July 2000, the subject checks were returned by PVAO to the
drawee on the ground that the amount on the face of the checks was altered from the original
amount of P4,000.00 to P200,000.00. The Bank was informed by Equitable-PCI Bank that the
drawee dishonored the checks on the ground of material alterations. The Bank insisted that they
informed petitioners of said development in August 2000 by furnishing them copies of the
documents given by its depositary bank.[7] On the other hand, petitioners maintained that the
Bank never informed them of these… developments. On 9 March 2001, petitioners issued a
check in the amount of P500,000.00. Said check was dishonored by the Bank for the reason
“Deposit Under Hold. According to petitioners, the Bank unilaterally and unlawfully put their
account with the Bank on hold Acting on the alleged arbitrary and groundless dishonoring of
their checks and the unlawful and unilateral withdrawal from their savings account, petitioners
filed a Complaint for Sum of Money with Damages against the Bank and Potenciano. Invoking
Article 1977 of the Civil Code, the trial court stated that the depositary cannot make use of the
thing deposited without the express permission of the depositor. The trial… court also held that
respondents should have observed the 24-hour clearing house rule that checks should be returned
within 24-hours after discovery of the forgery but in no event beyond the period fixed by law for
filing a legal action. In this case, petitioners deposited… the checks in May 2000, and
respondents notified them of the problems on the check three months later or in August 2000. In
sum, the trial court characterized said acts of respondents as attended with bad faith when they
debited the amount of P1,800,000.00 from the account of petitioners. Respondents filed a motion
for reconsideration while petitioners filed a motion for execution from the Decision of the RTC
on the ground that respondents’ motion for reconsideration did not conform with Section 5, Rule
16 of the Rules of Court; hence, it was a mere scrap of… paper that did not toll the running of
the period to appeal. RTC, through Pairing Judge Romeo C. De Leon granted the motion for
reconsideration, set aside the Pozas Decision, and dismissed the complaint. The trial court
awarded respondents their counterclaim of moral and exemplary damages of P100,000.00…
each. The trial court first applied the principle of liberality when it disregarded the alleged
absence of a notice of hearing in respondents’ motion for reconsideration. On the merits, the trial
court considered the relationship of the Bank and petitioners with respect to their savings account
deposits as a contract of loan with the bank as the debtor and petitioners as creditors. On appeal,
the Court of Appeals affirmed the ruling of the trial court but deleted the award of damages.
Petitioners filed the present petition for review on certiorari raising both procedural and
substantive issues.
ISSUES:
Whether or not the Honorable Court of Appeals committed a reversible error of law and grave
abuse of discretion in upholding the legality and/or propriety of the Motion for Reconsideration
filed in violation of Section 5, Rule 15 of the Rules on Civil Procedure
RULING:
Sections 5, Rule 15 of the Rules of Court states:
Section 5. Notice of hearing. The notice of hearing shall be addressed to all parties concerned
and shall specify the time and date of the hearing which must not be later than ten (10) days after
the filing of the motion.
Petitioners claim that the notice of hearing was addressed to the Clerk of Court and not to the
adverse party as the rules require. Petitioners add that the hearing on the motion for
reconsideration was scheduled beyond 10 days from the date of filing.
As held in Maturan v. Araula,[11] the rule requiring that the notice be addressed to the adverse
party has been substantially complied with when a copy of the motion for reconsideration was
furnished to the counsel of the adverse party, coupled with… the fact that the trial court acted on
said notice of hearing and as prayed for, issued an order [12] setting the hearing of the motion on
26 March 2004.
We would reiterate later that there is substantial compliance with the foregoing Rule if a copy of
the said motion for reconsideration was furnished to the counsel of the adverse party.
To recap, the drawee bank, Philippine Veterans Bank in this case, is only liable to the extent of
the check prior to alteration. Since Philippine Veterans Bank paid the altered amount of the
check, it may pass the liability back as it did, to Equitable-PCI Bank, the… collecting bank. The
collecting banks, Equitable-PCI Bank, and the Bank, are ultimately liable for the amount of the
materially altered check. It cannot further pass the liability back to the petitioners absent any
showing in the negligence on the part of the… petitioners which substantially contributed to the
loss from alteration.
Based on the foregoing, we affirm the Pozas decision only insofar as it ordered respondents to
jointly and severally pay petitioners P1,800,000.00, representing the amount withdrawn from the
latter’s account. We do not conform with said ruling regarding the finding… of bad faith on the
part of respondents, as well as its failure to observe the 24-hour clearing rule.
WHEREFORE, the petition is GRANTED.

C. Novation
LEONARDO BOGNOT vs. RRI LENDING CORPORATION, REPRESENTED BY ITS
GENERAL MANAGER, DARIO J. BERNARDEZ, G.R. No. 180144, September 24, 2014

FACT:
At some point in March 1997, the applicant applied for another advance reestablishment. He
again executed as head and marked Promissory Note No. 97-035 payable on April 1, 1997; his
co-creator was again Rolando. As security for the advance, the candidate additionally gave BPI
Check No. 0595236, postdated to April 1, 1997. In this manner, the credit was again restored
consistently (until June 30, 1997), as demonstrated by the Official Receipt No. 797 dated May 5,
1997, and the Disclosure Statement dated May 30, 1997 properly endorsed by Bernardus. The
applicant purportedly paid the recharging charges and gave a post-dated check dated June 30,
1997 as security. As had been done previously, the respondent superimposed the date "June 30,
1997" on the upper right segment of Promissory Note No. 97-035 to cause it to give the idea that
it would develop on the said date. A few days before the credit's development, Rolando's better
half, Julieta Bognot (Mrs. Bognot), went to the respondent's office and applied for another
reestablishment of the credit. She gave for the respondent Promissory Note No. 97-051, and
International Bank Exchange (IBE) Check No. 00012522, dated July 30, 1997, in the measure of
P54, 600.00 as recharging expense. On the pardon that she needs to get back the advance
archives for the Bognot kin's marks and substitution, Mrs. Bognot requested that the respondent's
assistant delivery to her the promissory note, the divulgence proclamation, and the check dated
July 30, 1997. Mrs. Bognot, in any case, stayed away forever these archives nor gave another
post-dated check. Thus, the respondent sent the applicant follow-up letters requesting installment
of the credit, in addition to intrigue and punishment charges. These requests went unnoticed. On
November 27, 1997, the respondent, through Bernardez, documented a grumbling for amount of
cash under the watchful eye of the Regional Trial Court (RTC) against the Bognot kin. The
respondent basically asserted that the credit restoration payable on June 30, 1997 which the
Bognot kin applied for stayed neglected; that before June 30, 1997, Mrs. Bognot applied for
another credit expansion and gave IBE Check No. 00012522 as installment for the
reestablishment expense; that Mrs. Bognot persuaded the respondent's assistant to delivery to her
the promissory note and the other credit archives; that since Mrs. Bognot never gave any
substitution check, no advance augmentation occurred and the credit, initially payable on June
30, 1997, got due on this date; and regardless of rehashed requests, the Bognot kin neglected to
pay their joint and solidary commitment.

ISSUE:
1. Whether the CA committed a reversible error in holding the petitioner solidarily liable with
Rolando.

2. Whether the petitioner is relieved from liability by reason of the material alteration in the
promissory note; and

3. Whether the parties' obligation was extinguished by payment; and novation by substitution of
debtors.

RULING:
When in doubt, the Court's purview in a Rule 45 request is restricted to the survey of
unadulterated inquiries of law. Appreciation of proof and request on the rightness of the re-
appraising court's real discoveries are not the elements of this Court; we are not a trier of facts.
An issue of law exists when the uncertainty or debate identifies with the use of the law on given
realities. Then again, an issue of reality exists when the uncertainty or debate identifies with
reality or misrepresentation of the gatherings' genuine allegations. As the respondent accurately
called attention to, the applicant's claims are genuine issues that are not appropriate for the
request he recorded. Without convincing reasons, the Court cannot reconsider, audit, or rethink
the proof and the lower courts' verifiable decisions. This is particularly obvious when the CA
confirmed the lower court's discoveries, as for this situation. Since the CA's discoveries of
realities insisted those of the preliminary court, they are restricting on this Court, delivering any
further authentic survey superfluous.