CASES IN OBLIGATIONS AND CONTRACTS 1. Picant vs.

Smith 37 Phil 605 Facts: Plaintiff Amado Picart was riding on his pony on the Carlatan Bridge in San Fernando, La Union when the defendant, riding on his car, approached. Defendant blew his horn to give warning. Plaintiff moved the horse to the right instead of moving to the left, reasoning that he had no sufficient time to move to the right direction. Defendant continued to approach, and when he had gotten quite near, he quickly turned to the left. The horse was frightened that it turned his body across the bridge. His limb was broken and the rider was thrown off and got injured. The horse died. An action for damages was filed against the defendant. Issue: Whether or not the defendant in maneuvering his car in the manner above described was guilty of negligence such as gives rise to a civil obligation to repair the damage done Held: As the defendant started across the bridge, he had the right to assume that the horse and rider would pass over to the proper side; but as he moved toward the center of the bridge it was demonstrated to his eyes that this would not be done; and he must in a moment have perceived that it was too late for the horse to cross with safety in front of the moving vehicle. In the nature of things this change of situation occurred while the automobile was yet some distance away; and from this moment it was not longer within the power of the plaintiff to escape being run down by going to a place of greater safety. The control of the situation had then passed entirely to the defendant. The test by which to determine the existence of negligence in a particular case may be stated as follows: 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. Conduct is said to be negligent when a prudent man in the position of the tortfeasor would have foreseen that an effect harmful to another was sufficiently probable to warrant his foregoing the conduct or guarding against its consequences. It goes without saying that the plaintiff himself was not free from fault, for he was guilty of antecedent negligence in planting himself on the wrong side of the road. But as we have already stated, the defendant was also negligent; and in such case the problem always is to discover which agent is immediately and directly responsible. It will be noted that the negligent acts of the two parties were not contemporaneous, since the negligence of the defendant succeeded the negligence of the plaintiff by an appreciable interval. Under these circumstances the law is that the person who has the last fair chance to avoid the impending harm and fails to do so is chargeable with the consequences, without reference to the prior negligence of the other party.

2. Ongsiako vs. IAC 152 SCRA 627, GR. No. 69901,7/31/87

3. Bishop of Jaro vs. De la Pena 26 Phil 144, GR. No. 6913, 11/21/13 FACTS : The plaintiff is the trustee of a charitable bequest made for the construction of a leper hospital and that father Agustin de la Pea was the duly authorized representative of the plaintiff to receive the legacy. The defendant is the administrator of the estate of Father De la Pea. In the year 1898 the books Father De la Pea, as trustee, showed that he had on hand as such trustee the sum of P6,641, collected by him for the charitable purposes aforesaid. In the same year he deposited in his personal account P19,000 in the Hongkong and Shanghai Bank at Iloilo. Shortly thereafter and during the war of the revolution, Father De la Pea was arrested by the military authorities as a political prisoner, and while thus detained made an order on said bank in favor of the United States

Army officer under whose charge he then was for the sum thus deposited in said bank. The arrest of Father De la Pea and the confiscation of the funds in the bank were the result of the claim of the military authorities that he was an insurgent and that the funds thus deposited had been collected by him for revolutionary purposes. The money was taken from the bank by the military authorities by virtue of such order, was confiscated and turned over to the Government. While there is considerable dispute in the case over the question whether the P6,641 of trust funds was included in the P19,000 deposited as aforesaid, nevertheless, a careful examination of the case leads us to the conclusion that said trust funds were a part of the funds deposited and which were removed and confiscated by the military authorities of the United States. ISSUE : Whether or not Father de la Pea is liable for the loss of the money under his trust? RULINGS : The court, therefore, finds and declares that the money which is the subject matter of this action was deposited by Father De la Pea in the Hongkong and Shanghai Banking Corporation of Iloilo; that said money was forcibly taken from the bank by the armed forces of the United States during the war of the insurrection; and that said Father De la Pea was not responsible for its loss. Father De la Pea's liability is determined by those portions of the Civil Code which relate to obligations. (Book 4, Title 1.) Although the Civil Code states that "a person obliged to give something is also bound to preserve it with the diligence pertaining to a good father of a family" (art. 1094), it also provides, following the principle of the Roman law, major casus est, cui humana infirmitas resistere non potest, that "no one shall be liable for events which could not be foreseen, or which having been foreseen were inevitable, with the exception of the cases expressly mentioned in the law or those in which the obligation so declares." (Art. 1105.) By placing the money in the bank and mixing it with his personal funds De la Pea did not thereby assume an obligation different from that under which he would have lain if such deposit had not been made, nor did he thereby make himself liable to repay the money at all hazards. If the had been forcibly taken from his pocket or from his house by the military forces of one of the combatants during a state of war, it is clear that under the provisions of the Civil Code he would have been exempt from responsibility. The fact that he placed the trust fund in the bank in his personal account does not add to his responsibility. Such deposit did not make him a debtor who must respond at all hazards. 4. Inducel vs. De Los Santos 17 SCRA 332, G.R. No. 21060, 5/30/1966 5. Javier Security vs. Shell Craft 7 SCRA 198, GR No. 18639, 1/31/63 6. Chaves vs. Gonzales, 32 SCRA 547 GR. No. 27454, 4/30/70 FACTS: As a consequence of the public release of copies of the Hello Garci compact disc audiotapes involving a wiretapped mobile phone conversation between then-President Gloria Arroyo and Comelec Commissioner Virgilio Garcillano, respondent DOJ Secretary Gonzales warned reporters that those who had copies of the CD and those broadcasting or publishing its contents could be held liable under the Anti-Wiretapping Act. He also stated that persons possessing or airing said tapes were committing a continuing offense, subject to arrest by anybody. Finally, he stated that he had ordered the National Bureau of Investigation to go after media organizations found to have caused the spread, the playing and the printing of the contents of a tape. Meanwhile, respondent NTC warned in a press release all radio stations and TV network owners/operators that the conditions of the authorization and permits issued to them by government like the Provisional Authority and/or Certificate of Authority explicitly provides that they shall not use their stations for the broadcasting or telecasting of false information or willful misrepresentation. The NTC stated that the continuous airing or broadcast of the Hello Garci taped conversations by radio and TV stations is a continuing violation of the Anti-Wiretapping Law and the conditions of the Provisional Authority and/or Certificate of Authority. It warned that their broadcast/airing of such false information and/or willful misrepresentation shall be a just cause for the suspension, revocation and/or cancellation of the licenses or authorizations issued to the said media establishments.

Subsequently, a dialogue was held between the NTC and the Kapisanan ng mga Brodkaster sa Pilipinas (KBP) which resulted in the issuance of a Joint Press Statement which stated, among others, that the supposed wiretapped tapes should be treated with sensitivity and handled responsibly. Petitioner Chavez filed a petition under Rule 65 against respondents Secretary Gonzales and the NTC directly with the Supreme Court. ISSUES: 1. Will a purported violation of law such as the Anti-Wiretapping Law justify straitjacketing the exercise of freedom of speech and of the press? 2. Did the mere press statements of respondents DOJ Secretary and the NTC constitute a form of contentbased prior restraint that has transgressed the Constitution? HELD:

1. NO, a purported violation of law such as the Anti-Wiretapping Law will NOT justify straitjacketing the exercise of freedom of speech and of the press.
A governmental action that restricts freedom of speech or of the press based on content is given the strictest scrutiny, with the government having the burden of overcoming the presumed unconstitutionality by the clear and present danger rule. This rule applies equally to all kinds of media, including broadcast media.

Respondents, who have the burden to show that these acts do not abridge freedom of speech and of the press, failed to hurdle the clear and present danger test. [T]he great evil which government wants to prevent is the airing of a tape recording in alleged violation of the anti-wiretapping law. The records of the case at bar however are confused and confusing, and respondents evidence falls short of satisfying the clear and present danger test. Firstly, the various statements of the Press Secretary obfuscate the identity of the voices in the tape recording. Secondly, the integrity of the taped conversation is also suspect. The Press Secretary showed to the public two versions, one supposed to be a complete version and the other, an altered version. Thirdly, the evidence of the respondents on the whos and the hows of the wiretapping act is ambivalent, especially considering the tapes different versions. The identity of the wire-tappers, the manner of its commission and other related and relevant proofs are some of the invisibles of this case. Fourthly, given all these unsettled facets of the tape, it is even arguable whether its airing would violate the anti-wiretapping law.

We rule that not every violation of a law will justify straitjacketing the exercise of freedom of speech and of the press. Our laws are of different kindsand doubtless, some of them provide norms of conduct which[,] even if violated[,] have only an adverse effect on a persons private comfort but does not endanger national security. There are laws of great significance but their violation, by itself and without more, cannot support suppression of free speech and free press. In fine, violation of law is just a factor, a vital one to be sure, which should be weighed in adjudging whether to restrain freedom of speech and of the press. The totality of the injurious effects of the violation to private and public interest must be calibrated in light of the preferred status accorded by the Constitution and by related international covenants protecting freedom of speech and of the press. In calling for a careful and calibrated measurement of the circumference of all these factors to determine compliance with the clear and present danger test, the Court should not be misinterpreted as devaluing violations of law. By all means, violations of law should be vigorously prosecuted by the State for they breed their own evil consequence. But to repeat, the need to prevent their violation cannot per se trump the exercise of free speech and free press, a preferred right whose breach can lead to greater evils. For this failure of the

respondents alone to offer proof to satisfy the clear and present danger test, the Court has no option but to uphold the exercise of free speech and free press. There is no showing that the feared violation of the anti-wiretapping law clearly endangers the national security of the State.

2. YES, the mere press statements of respondents DOJ Secretary and the NTC constituted a form of content-based prior restraint that has transgressed the Constitution.
[I]t is not decisive that the press statements made by respondents were not reduced in or followed up with formal orders or circulars. It is sufficient that the press statements were made by respondents while in the exercise of their official functions. Undoubtedly, respondent Gonzales made his statements as Secretary of Justice, while the NTC issued its statement as the regulatory body of media. Any act done, such as a speech uttered, for and on behalf of the government in an official capacity is covered by the rule on prior restraint. The concept of an act does not limit itself to acts already converted to a formal order or official circular. Otherwise, the non formalization of an act into an official order or circular will result in the easy circumvention of the prohibition on prior restraint. The press statements at bar are acts that should be struck down as they constitute impermissible forms of prior restraints on the right to free speech and press. 7. Tanguilig vs. CA, 266 SCRA 78, GR. No. 117190, 1/2/97 NATURE Petition for review on certiorari of CA decision FACTS -April 1987: petitioner Jacinto M. Tanguilig doing business under the name and style J.M.T. Engineering and General Merchandising proposed to respondent Vicente Herce Jr. to construct a windmill system for him. After some negotiations they agreed on the construction of the windmill for a consideration of P60,000.00 with a one-year guaranty from the date of completion and acceptance by respondent Herce Jr. of the project. Pursuant to the agreement respondent paid petitioner adown payment of P30,000.00 and an installment payment of P15,000.00, leaving a balance of P15,000.00.-14 March 1988: due to the refusal and failure of respondent to pay the balance, petitioner filed a complaint to collect the amount. Respondents' Comments -Since the deep well formed part of the system, the P15,000 he tendered to SanPedro General Merchandising Inc. (SPGMI) should be credited to his account by petitioner.-Assuming that he owed petitioner a balance of P15,000.00, this should be offset by the defects in the windmill system which caused the structure to collapse after a strong wind hit their place. Petitioners' Counterclaim -The construction of a deep well was not included in the agreement to build the windmill system. The contract price of P60,000.00 was solely for the windmill assembly and its installation, exclusive of other incidental materials needed for the project.-He also disowned any obligation to repair or reconstruct the system and insisted that he delivered it in good and working condition to respondent who accepted the same without protest. He claims that the collapse was attributable to a typhoon, a force majeure, which relieved him of any liability. Lower Courts Ruling -RTC ruled in favor of plaintiff-petitioner: that the construction of the deep well was not part of the windmill project & that there is no clear and convincing proof that he windmill system fell down due to the defect of the construction.-CA reversed; it ruled that the construction of the deep well was included in the agreement of the

parties because the term "deep well" was mentioned in both proposals. But it rejected petitioner's claim of force majeure and ordered the latter to reconstruct the windmill in accordance with the stipulated one-year guaranty.MFR was also denied. ISSUES 1. WON the agreement to construct the windmill system included the installation of a deep well.2. WON respondent can claim that Pili of SPGMI accepted his payment on behalf of petitioner.3. WON petitioner is under obligation to reconstruct the windmill after it collapsed.4. WON private respondent is already in default in the payment of his outstandingbalance.5. Who should bear the costs of the reconstruction? HELD: Ratio NO. Where the terms of the instruments are clear and leave no doubt as totheir meaning, they should not be disturbed. In interpreting contracts, the intentionof the parties shall be accorded primordial consideration and, in case of doubt, theircontemporaneous & subsequent acts shall be principally considered. Reasoning The words "deep well" preceded by the prepositions "for" and "suitablefor" were meant only to convey the idea that the proposed windmill would be appropriate for a deep well pump with a diameter of 2 to 3 inches.-The claim of Guillermo Pili of SPGMI that Herce Jr. wrote him a letter asking him to build a deep well pump as part of the price/contract Herce had with Tanguilig is unsubstantiated. The alleged letter was never presented in court.-If indeed the deep well were part of the windmill project, the contract for its installation would have been strictly a matter between petitioner and Pili himself with the former assuming the obligation to pay the price.-If the price of P60,000.00 included the deep well, the obligation of respondent was to pay the entire amount to petitioner without prejudice to any action that Guillermo Pili or SPGMI may take, if any, against the latter.2. Ratio NO. Civil Code provisions on "payments made by a third person do not apply in the instant case as no creditor-debtor relationship has been established between the parties. Reasoning There was no contract between Pili and Tanguilig for the construction of Herces deep well. If SPGMI was really commissioned by petitioner to construct the deep well, an agreement particularly to this effect should have been entered into.3. Ratio YES. He can not claim exemption by reason of force majeure . In order for a party to claim exemption from liability by reason of fortuitous event under Art. 1174of the Civil Code the event should be the sole and proximate cause of the loss or destruction of the object of the contract. Four requisites must concur: (a) the cause of the breach of the obligation must be independent of the will of the debtor; (b) the event must be either unforeseeable or unavoidable; (c) the event must be such as 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. (Nakpil v CA)

Reasoning Petitioner failed to show that the collapse of the windmill was due solely to a fortuitous event. A strong wind in this case cannot be fortuitous unforeseeable nor unavoidable. On the contrary, a strong wind should be present in places where windmills are constructed, otherwise the windmills will not turn.-The presumption that "things have happened according to the ordinary course of nature and the ordinary habits of life"

has not been rebutted by petitioner.4. Ratio NO. Art. 1169, CC: 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. Reasoning Tanguilig has not complied with his obligation to repair the windmillsystem.5. Ratio TANGUILIG. Art. 1167, CC: if a person obliged to do something fails to do it, the same shall be executed at his cost. Reasoning When the windmill failed to function properly it became incumbent upon petitioner to institute the proper repairs in accordance with the guaranty stated in the contract. Disposition Judgment modified. Herce, Jr directed to pay balance of P15,000 with interest. Tanguilig ordered to reconstruct subject defective windmill system, in accordance with the one-year guaranty, within 3mos. from the finality of decision. 8. Cetus Development Inc vs. CA, 176 SCRA 72, GR. No. 77647, 8/7/89 NATURE Petition for review on certiorari of the decision of the CA FACTS - Respondents Ong, Teng, Liwanag, Canlas, Sudario, Nagbuya, were lessees of premises in Quiapo, Manila, originally owned by the Susana Realty. They were individual, verbal leases, on a month-to-month basis. Rental payments were made to a collector of the Susana Realty who went to the premises monthly.- Premises were sold to petitioner, Cetus Development, in 1984. The private respondents continued to pay monthly rentals to a collector sent by the petitioner from April to June, 1984. In August and September, they failed to pay because no collector came.In October, petitioner sent letters demanding they vacate the premises and payback rentals. Immediately upon receipt of the demand letters, private respondents paid arrearages, which were accepted subject to the condition that the acceptance was without prejudice to the filing of an ejectment suit. Subsequent monthly rental payments were accepted under the same condition.- For failure of the private respondents to vacate the premises as demanded in the letter, petitioner filed with the Metropolitan Trial court complaints for ejectment.- Trial court dismissed the case, and subsequently the Regional Trial Court did so, as did the CA.

ISSUES WON there exists a cause of action, when the complaints for unlawful detainer were filed considering the fact that upon demand by petitioner for payment of backrentals, respondents immediately tendered payment, which was accepted. HELD -Section 2, RoC, "Landlord to proceed against tenant only after demand." States that the right to bring an action of ejectment or unlawful detainer must be counted from the time the defendants failed to pay rent after the demand therefor. The demand required partakes of an extrajudicial remedy that must be pursued before resorting to judicial action so much so that when there is full compliance with the demand, there is no need for court action.-for purposes of bringing an ejectment suit, 2 requisites: 1) must be failure to payrent/comply with conditions of lease, and 2) must be DEMAND to both pay or to comply and vacate.- in this case, no cause of action for ejectment has accrued. NO FAILURE YET on the part of private respondents, because upon demand, they paid.**exceptions where demand is not required: (a) when obligation or law so declares;(b) when from the nature and circumstances of obligation it can be inferred that time is of the essence of the contract, (c) when demand would be useless.-without such demand, effects of default do not arise. - the petitioner's demand to vacate was PREMATURE, an exercise of a non-existing right to rescind.-Petitioner claims that its failure to send a collector is not a valid defense because sending a collector is not one of the obligations of the lessor under Article 1654: but1) it was established that it was customary for private respondents to pay the rentals through a collector, and 2) Article 1257 provides that where no agreement has been designated for the payment of rentals, the place of payment is at the domicile of the defendants. Disposition Petition for certiorari denied, CA decision affirmed 9. Vasquez vs. Ayala Corp. 443 SCRA 231, GR No. 149734, 11/19/04 NATURE Petition for Review on Certiorari FACTSApril 23, 1981, spouses Daniel Vasquez and Ma. Luisa M. Vasquez entered into a Memorandum of Agreement (MOA) with AYALA Corporation with Ayala buying from the Vazquez spouses, all of the latters shares of stock in Conduit Development, Inc.- The main asset of Conduit was a 49.9 hectare property in Ayala Alabang, Muntinlupa, which was then being developed by Conduit under a development plan where the land was divided into Villages 1, 2 and 3 of the Don Vicente Village. The development was then being undertaken for Conduit by G.P. Construction and Development Corp.-Under the MOA, Ayala was to develop the entire property, less what was defined as the Retained Area consisting of 18,736 square meters. Ayala agreed to offer 4 lots adjacent to the retained area for sale to the Vazquez spouses at the prevailing price at the time of purchase. The relevant provisions of the MOA on this point are: 5.7. The BUYER hereby commits that it will develop the Remaining Property into a first class residential subdivision of the same class a sits New Alabang Subdivision, and that it intends to complete the first phase under its amended development plan within three (3) years from the date of this Agreement. x x x5.15. The BUYER agrees to give the SELLERS a first option to purchase four developed lots next to the Retained Area at the prevailing market price at the time of the purchase.

The parties are agreed that the development plan referred to in paragraph 5.7 is not Conduits development plan, but Ayalas amended development plan which was still to be formulated as of the time of the MOA. While in the Conduit plan, the 4 lots to be offered for sale to the Vasquez Spouses were in the first phase thereof or Village 1, in the Ayala plan which was formulated a year later, it was in the third phase, or Phase II-c. -Under the MOA, the Vasquez spouses made several express warranties, as follows:3.1. The SELLERS shall deliver to the BUYER3.1.2. The true and complete list, certified by the Secretary and Treasurer of the Company showing: A list of all persons and/or entities with whom the Company has pending contracts, if any.3.1.5. Audited financial statements of the Company as at Closing date. 6. Representation and Warranties by the SELLERs The SELLERS jointly and severally represent and warrant to the BUYER that at the time of the execution of this Agreement and at the Closing:6.2.3. There are no actions, suits or proceedings pending, or to the knowledge of the SELLERS, threatened against or affecting the SELLERS with respect to the Shares or the Property; and 7.1.1 The said Audited Financial Statements shall show that on the day of Closing, the Company shall own the Remaining Property, free from all liens and encumbrances and that the Company shall have no obligation to any party except for billings payable to GP Construction & Development Corporation and advances made by Daniel Vazquez for which BUYER shall be responsible in accordance with Par. 2 of this Agreement. 7.1.2 Except to the extent reflected or reserved in the Audited Financial Statements of the Company as of Closing, and those disclosed to BUYER, the Company as of the date thereof, has no liabilities of any nature whether accrued, absolute, contingent or otherwise, including, without limitation, tax liabilities due or to become due and whether incurred in respect of or measured in respect of the Companys income prior to Closing or arising out of transactions or state of facts existing prior thereto.7.2 SELLERS do not know or have no reasonable ground to know of any basis for any assertion against the Company as at closing or any liability of any nature and in any amount not fully reflected or reserved against such Audited Financial Statements referred to above, and those disclosed to BUYER. 7.6.3 Except as otherwise disclosed to the BUYER in writing on or before the Closing, the Company is not engaged in or a party to, or to the best of the knowledge of the SELLERS, threatened with, any legal action or other proceedings before any court or administrative body, nor do the SELLERS know or have reasonable grounds to know of any basis for any such action or proceeding or of any governmental investigation relative to theCompany.7.6.4 To the knowledge of the SELLERS, no default or breach exists in the due performance and observance by the Company of any term, covenant or condition of any instrument or agreement to which the company is a party or by which it is bound, and no condition exists which, with notice or lapse of time or both, will constitute such default or breach.

-After the execution of the MOA, Ayala caused the suspension of work on Village 1of the Don Vicente Project. Ayala then received a letter from one Maximo DelRosario of Lancer General Builder Corporation informing Ayala that he was claiming the amount of P1,509,558.80 as the subcontractor of G.P. Construction.- G.P. Construction was not able to reach an amicable settlement with Lancer so Lancer sued G.P. Construction, Conduit and Ayala-G.P. Construction in turn filed a cross-claim against Ayala.-G.P. Construction and Lancer both tried to enjoin Ayala from undertaking the development of the property.-The suit was terminated on February 19, 1987, when it was dismissed with prejudice after Ayala paid both Lancer and GP Construction the total of P4,686,113.-Vasquez spouses sent several reminder letters of the approaching so-called deadline on Ayalas obligation to sell 4 lots to them.-However, no demand after April 23, 1984, was ever made by the Vasquez spouses for Ayala to sell the 4 lots.One of the letters signed by their authorized agent, Engr. Eduardo Turla, categorically stated that they expected development of Phase 1 to be completed by February 19, 1990, three years from the settlement of the legal problems witht he previous contractor.-By early 1990 Ayala finished the development of the vicinity of the 4 lots to be offered for sale.-The four lots were then offered to be sold to the Vasquez spouses at the prevailing price in 1990.-This was rejected by the Vasquez spouses who wanted to pay at 1984 prices, thereby leading to the suit below. TC ruled in favor or petitioners CA ruled in favor of respondents ISSUES Procedural WON the court should review the factual findings of the Court of Appeals as theyare in conflict with those of the trial court Substantive 1. WON AYALA Corporation is in default for failure to finish the development of thephase in question within 3 years2. WON the provisions of the MOA constitutes an option to buy for spouses Vasquez HELD Procedural YES. It is well-settled that the jurisdiction of this Court in cases brought to it from the Court of Appeals by way of petition for review under Rule 45 is limited to reviewing or revising errors of law imputed to it, its findings of fact being conclusive on this Court as a matter of general principle. However, since in the instant case there is a conflict between the factual findings of the trial court and the appellate court, particularly as regards the issues of breach of warranty, obligation to develop and incurrence of delay, we have to consider the evidence on record and resolve such factual issues as an exception to the general rule Substantive 1. NO. In order that the debtor may be in default it is necessary that the following requisites be present: (1) that the obligation be demandable and already liquidated;(2) that the debtor delays performance; and (3) that the creditor requires the performance judicially or extrajudicially.- Under Article 1193 of the Civil Code, obligations for whose fulfillment a day certain has been fixed shall be demandable only when that day comes. There was no fixed date in the MOA, and the demand letters which were mere reminders were sent even before three years could pass after the signing. Since the MOA does not specify a period for the development of the subject lots, petitioners should have petitioned the court to fix the period in accordance with Article 1197 of the Civil Code. As no such action was filed by petitioners, their complaint for specific performance was premature, the obligation not being demandable at that point. Accordingly, AYALA Corporation cannot likewise be said to have delayed performance of the obligation.Moreover, a representative of the spouses even told AYALA that the date of reckoning shall be from the date the case with lancer was finished.2. It is a mere right of first refusal and not an option contract. Although the paragraph has a definite object, i.e., the sale of subject lots, the period within which they will be offered for sale to petitioners and, necessarily, the price for which the subject lots will be sold are not specified. The phrase at the

prevailing market price at the time of the purchase connotes that there is no definite period within which AYALA Corporation is bound to reserve the subject lots for petitioners to exercise their privilege to purchase. Neither is there a fixed or determinable price at which the subject lots will be offered for sale. The price is considered certain if it may be determined with reference to another thing certain or if the determination thereof is left to the judgment of a specified person or persons. 10. Claudina vda de Villaruel, et al vs. Manila Motor Co. Inc., GR. No. 10394, 12/13/58 11. Tengco vs. CA 178 SCRA 608, GR No. 49852, 10/19/89 NATURE Review on certiorari of the decision of CA. FACTS - Lutgarda Cifra, the owner of the premises at No. 164 Int., Gov. Pascual St.,Navotas, Metro Manila leased the said property to Emilia Tengco. The contract was not in writing, hence, not recorded.- While the contract of lease was still subsisting, Lutgarda Cifra transferred the ownership of the property to Benjamin Cifra.- Tengco, despite her knowledge of this transfer, attempted to pay her rentals to the person whom she used to pay her dues. But that person refused to accept the payment as she is no longer had the authority to accept payments. Tengco, on the other hand, did not give the payment to Benjamin Cifra or consigned the amount to the court.- The record of the case shows that on 16 September 1976, Benjamin Cifra, Jr. filed an action for unlawful detainer with the MTC of Navotas to evict the peititioner , Emilia Tengco, from the said premises for her alleged failure to comply with the terms and conditions of the lease contract by failing and refusing to pay the stipulated rentals despite repeated demands. After trial, judgment was rendered against Tengco and ordered the defendant and any and all persons claiming right sunder her to vacate the premises occupied by her and to surrender possession thereof to the plaintiff. ISSUES 1. WON Benjamin Cifra, Jr. is the owner of the leased premises2. WON the lessor was guilty of mora accipiendi3. WON laches had deprived the lessor of the right to eject her considering that theComplaint was filed only in September 1976 whereas his cause of action arose sometime in February, 1974 when she defaulted in the payment of rentals HELD 1. YES. The question of whether or not private respondent is the owner of the leased premises is one of fact which is within the cognizance of the trial court whose findings thereon will not be disturbed on appeal unless there is a showing that the trial court had overlooked, misunderstood, or misapplied some fact or circumstance of weight and substance that would have affected the result of thecase.2. NO. Under the circumstances, the refusal to accept that proffered rentals is not without justification. The ownership of the property had been transferred by Lutgarda Cifra, the original lessor, to Benjamin Cifra and the person to whom payment was offered had no authority to accept payment. It should be noted that he contract of lease between the petitoner and Lutgarda Cifra, the former owner of the land, was not in writing and, hence, unrecorded. The Court has held that a contract of lease executed by the vendor, unless recorded, ceases to have effect when the property is sold, in the absence of a contrary agreement.3. NO. The tenant's mere failure to pay rent does not ipso facto make unlawful his possession of the leased premises. It is failure to pay rents after a demand therefore is made that entitles the lessor to bring an action of Unlawful Detainer, Moreover, the lessor has the privilege to waive his right to bring an action against his tenant and give the latter credit for the payment of the rents and allow him to continue indefinitely in the possession of the premises. During such period, the tenant would not be in illegal possession of the premises and the landlord can not maintain an action until after he has taken steps to convert the legal possession into an illegal

possession. Consequently, petitioner's non-payment of the rentals on the premises, notwithstanding demand made by Cifra, and her failure to avail of the remedy provided for in Article 1256 of the Civil Code, entitles private respondent to eject her from the premises. Disposition: The petition is denied.

12. Telefast Com vs. Castro Sr. 158 SCRA 445, GR No. 73867, 2/29/88 FACTS : On November 2, 1956, Consolacion Bravo-Castro, wife of plaintiff Ignacio Castro, Sr. and mother of the other plaintiffs, passed away in Lingayen, Pangasinan. On the same day, her daughter Sofia Crouch, who was then in the Philippines, addressed a telegram to plaintiff Ignacio Castro, Sr. at 685 Wanda, Scottsburg, Indiana, U.S.A., 47170 announcing Consolacion's death. The telegram was accepted by the defendant in its Dagupan office, for transmission, after payment of the required fees or charges. However, the telegram never reached its addressee. Consolacion was interred with only her daughter Sofia in attendance. Neither the husband nor any of the other children of the deceased, then all residing in the United States, returned for the burial. - When Sofia returned to the United States, she discovered that the wire she had caused the defendant to send had not been received. She and the other plaintiffs thereupon brought action for damages arising from defendant's breach of contract. The only defense of the defendant was that it was unable to transmit the telegram because of "technical and atmospheric factors beyond its control." No evidence appears on record that defendant ever made any attempt to advise the plaintiff Sofia C. Crouch as to why it could not transmit the telegram. - The CFI of Pangasinan, after trial, ordered the defendant to pay the plaintiffs damages as follows, with interest at 6% per annum: 1. Sofia C. Crouch, P31.92 and P16,000.00 as compensatory damages and P20,000.00, as moral damages. 2. Ignacio Castro Sr., P20,000.00 as moral damages. 3. Ignacio Castro Jr., P20,000.00 as moral damages. 4. Aurora Castro, P10,000.00 moral damages. 5. Salvador Castro, P10,000.00 moral damages. 6. Mario Castro, P10,000.00 moral damages. 7. Conrado Castro, P10,000 moral damages. 8. Esmeralda C. Floro, P20,000.00 moral damages. 9. Agerico Castro, P10,000.00 moral damages. 10. Rolando Castro, P10,000.00 moral damages. 11. Virgilio Castro, P10,000.00 moral damages. 12. Gloria Castro, P10,000.00 moral damages. - Defendant is also ordered to pay P5,000.00 attorney's fees, exemplary damages in the amount of P1,000.00 to each of the plaintiffs and costs. - On appeal by petitioner, the Court of Appeals affirmed the trial court's decision but eliminated the award of P16,000.00 as compensatory damages to Sofia C. Crouchrespondents, as a warning to all telegram companies to observe due diligence in transmitting the messages of their customers. Disposition Petition is DENIED. The Decision appealed from is modified so that petitioner is held liable to private respondents in the following amounts: [1] P10,000.00 as moral damages, to each of private respondents; [2] P1,000.00 as exemplary damages, to each of private respondents; [3] P16,000.00 as compensatory damages, to private respondent Sofia C. Crouch; [4] P5,000.00 as attorney's fees; and [5] Costs of suit.credit, the cancellation of the allocation and the confiscation of the 5% deposit were not effected until August 20. 1952, or, a full half month after the expiration of the deadline. And yet, even with that 15-day grace, appellant corporation was unable to make good its commitment to open the disputed letter of credit. - The appellee endeavored, but failed, to restore the cancelled Burmese rice allocation. When the futility of reinstating the same became apparent, she offered to substitute Thailand rice instead to the defendant NARIC, communicating at the same time that the offer was "a solution which should be beneficial to the NARIC and to us at the same time." This offer for substitution, however,

was rejected by the appellant in a resolution dated November 15, 1952. Appellee sent a letter to the appellant, demanding compensation for the damages caused her in the sum of $286,000.00, U.S. currency, representing unrealized profit. The demand having been rejected, she instituted this case now on appeal. ISSUE : WON the lower court erred in holding NARIC liable for damages for breach of contract. HELD : YES. We do not think the appellant corporation can refute the fact that had it been able to put up the 50 c/o marginal cash deposit demanded by the bank, then the letter of credit would have been approved, opened and released as early as August 4, 1952. The letter of the Philippine National Bank to the NARIC was plain and explicit that as of the said date, appellant's it "application for a letter of credit . . . has been approved by the Board of Directors with the condition that 50% marginal cash deposit be paid and that drafts are to be paid upon presentment." The liability of the appellant, however, stems not alone from this failure or inability to satisfy the requirements of the bank. Its culpability arises from its willful and deliberate assumption of contractual obligations even as it was well aware of its financial incapacity to undertake the presentation. - A number of logical inferences may be drawn from NARICs admission. First, that the appellant knew the bank requirements for opening letters of credit; second, that appellant also knew it could not meet those requirements. When, therefore, despite this awareness that it was financially incompetent to open a letter of credit immediately, appellant agreed in paragraph 8 of the contract to pay immediately "by means of an irrevocable, confirmed and assignable letter of credit," it must be similarly be held to have bound itself too answer for all and every consequences that would result from the representation. - In relation to the aforequoted observation of the trial court, We would like to make reference also to Article 1170 of the Civil Code which provides: "Those who in the performance of their obligation are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable in damages. Under this provision, not only debtors guilty of fraud, negligence or default in the performance of obligations are decreed liable: in general, every debtor who fails in the performance of his obligations is bound to indemnify for the losses and damages caused thereby. The phrase "in any manner contravene the tenor" of the obligation includes any illicit act which impairs the strict and faithful fulfillment of the obligation, or every kind of defective performance. (IV Tolentino, Civil Code of the Philippines, citing authorities, p. 103.) 13. Sarmiento vs. Sps Luis Sun Cabrido, 401 SCRA 122, GR. No. 141258, 4/9/03 NATURE: Petition for review on certiorari of a decision of the Court of Appeals FACTS: Tomasa Sarmientos friend, Dra. Virginia Lao, requested her to find someone toreset a pair of diamond earrings into two gold rings. Sarmiento sent Tita Payag withthe earrings to Dingdings Jewelry Shop, owned and managed by spouses Luis and Rose Cabrido, which accepted the job order for P400. Petitioner provided 12 grams of gold to be used in crafting the pair of ring settings. After 3 days, Payag delivered to the jewelry shop one of the diamond earrings which was earlier appraised as worth .33 carat and almost perfect in cut and clarity. Respondent Marilou Sun went on to dismount the diamond from original settings. Unsuccessful, she asked their gold smith, Zenon Santos, to do it. He removed the diamond by twisting the setting with a pair of pliers, breaking the gem in the process. Petitioner required the respondents to replace the diamond with the same size and quality. When they refused, the petitioner was forced to buy a replacement in the amount of P30,000.Rose Cabrido, manager, denied having any transaction with Payag whom she met only after the latter came to seek compensation

for the broken piece of jewelry. Marilou, on the other hand, admitted knowing Payag to avail their services and recalled that when Santos broke the jewelry, Payag turned to her for reimbursement thinking she was the owner. Santos also recalled that Payag requested him to dismount what appeared to him as sapphire and that the stone accidentally broke. He denied being an employee of the Jewelry shop. The MTCC of Tagbilaran City rendered a decision in favor of the petitioner. On appeal, Respondents conceded to the existence of an agreement for crafting a pair of gold rings mounted with diamonds but denied they had obligation to dismount the diamonds from the original setting. Petitioner claims that dismounting the diamonds from the original setting was part of the obligation assumed by respondents under the contract of service. The RTC ruled in favor of the respondents. CA affirmed the judgment of the RTC. ISSUES 1. WON dismounting of the diamond from its original setting was part of theobligation2. WON respondents are liable for damages3. WON respondents are liable for moral damages HELD 1. YES . The contemporaneous and subsequent acts of the parties reveal the scope of obligation assumed by the jewelry shop to reset the pair of earrings. Reasoning Marilou expressed no reservation regarding the dismounting of the diamonds. She could have instructed Payag to have the diamonds dismounted first, but instead, she readily accepted the job order and charged P400. After the new settings were completed, she called petitioner to bring the diamond earrings to be reset. She examined one of them and went on to dismount the diamond from the original setting. After failing to do the same, she delegated it to the gold smith. Having acted the way she did, she cannot deny that the dismounting was part of the shops obligation to reset the pair of earrings. 2. YES . Those who, in the performance of their obligations are guilty of fraud,negligence or delay and those who in any manner contravene the tenor thereof, are liable for damages. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. Reasoning Santos acted negligently in dismounting the diamond from its original setting. Instead of using a miniature wire, which is the practice of the trade, he used a pair of pliers. Marilou examined the diamond before dismounting and found the same to be in order. The subsequent breakage could only have been caused by Santos negligence in using the wrong equipment. Res ipsa loquitur. Facts show that Marilou, who has transacted with Payag on at least 10 occasions, and Santos, who has been accepting job referrals through respondents for 6 mos. now, are employed at the jewelry shop. The jewelry shop failed to perform its obligation with the ordinary diligence required by the circumstances.

3. YES. Moral damages may be awarded in a breach of contract when there is proof that defendant acted in bad faith, or was guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual obligation. Reasoning Santos was a goldsmith for more than 40 years. He should have known that using a pair of pliers would have entailed unnecessary risk of breakage. The gross negligence of their employee makes the respondents liable of moral damages. Disposition Petition was granted and CA decision was reversed. Respondents wereordered to pay P30,000 as actual damages and P10,000 as moral damages