9. Saura vs.

Sindico, 107 Phil 336

[G.R. No. L-13403. March 23, 1960.]
RAMON E. SAURA, plaintiff and appellant, v. ESTELA P. SINDICO, defendant and appellee.
Anacleto Magno for Appellant.
Espeque & Jalandoni for Appellee.

SYLLABUS

1. ELECTIONS; THE RIGHT TO PRESENT ONES CANDIDACY; PUBLIC OFFICE; NOT WITHIN COMMERCE
OF MAN. Among those that may not be the subject matter (object) of contracts are certain rights of
individuals, which the law and public policy have deemed wise to exclude from the commerce of man.
Among these are the political rights conferred upon citizens, including, but not limited to ones right to
vote, the right to present ones candidacy to the people and to be voted to public office, provided,
however, that all the qualifications prescribed by law obtain. Such rights may not, therefore, be
bargained away or surrendered for consideration by the citizen or unduly curtailed with impunity, for
they are conferred not for individual or private benefit or advantage but for the public good and
interest.
2. ID.; ID.; ID.; QUALIFICATIONS FOR PUBLIC OFFICE FIXED BY LAW NOT BY PRIVATE PARTIES.
Constitutional and statutory provisions fix the qualifications of persons who may be eligible for certain
elective public offices. Said requirements may neither be enlarged nor reduced by mere agreements
between private parties. A voter possessing all the qualifications required to fill an office may, by himself
or through a political party or group, present his candidacy without further limitations than those
provided by law.

10.Corpus vs. CA, 98 SCRA 424

Corpus vs. CA (innominate contracts)
Held: While there was no express agreement between petitioner Corpus and
respondent David as regards attorney's fees, the facts of the case support the
position of respondent David that there was at least an implied agreement for
the payment of attorney's fees.
Payment of attorney's fees to respondent David may be justified by virtue of the
innominate contract of facio ut des (I do and you give which is based on the
principle that "no one shall unjustly enrich himself at the expense of another."
Innominate contracts have been elevated to a codal provision in the New Civil
Code by providing under Article 1307 that such contracts shall be regulated by
the stipulations of the parties, by the general provisions or principles of
obligations and contracts, by the rules governing the most analogous nominate
contracts, and by the customs of the people.
WE reiterated this rule in Pacific Merchandising Corp. vs. Consolacion Insurance
& Surety Co., Inc. (73 SCRA 564 [1976]) citing the case of Perez v. Pomar, supra
thus:
Where one has rendered services to another, and these services are accepted by
the latter, in the absence of proof that the service was rendered gratuitously, it is
but just that he should pay a reasonable remuneration therefor because 'it is a

well-known principle of law, that no one should be permitted to enrich himself to

the damage of another.
Facts: David accepted the case of Corpus though there was no express
agreement regarding attorneys fees.
Corpus was administratively charged. He employed the services of David. David
won the administrative case
For Copuz. Corpus gave a check to David, but was returned by David with the
intention of getting paid after
the case is ruled with finality by the SC and Corpus gets his back salaries and
wages. (Your appreciation of the
efforts I have invested in your case is enough compensation therefor, however,
when you shall have obtained a
decision which would have finally resolved the case in your favor, remembering
me then will make me happy.
In the meantime, you will make me happier by just keeping the check) David
continued to fight for Corpus
case and got a favorable judgment. Corpus refused to pay David contending that
since David refused the first
check given by him, he gave his services gratuitously.

11.Velasco vs. CA, 95 SCRA 616

12.Kauffman vs. PNB, 41 Phil 182

Kauffman vs. PNB

Chester Cabalza recommends his visitors to please read the original & full text of
the case cited. Xie xie!
Key Words: Contracts; Stipulation pour autrui
Kauffman vs. PNB
42 Phil 182
September 29, 1921
Facts:
George A. Kauffman, was the president of a domestic corporation engaged
chiefly in the exportation of hemp from the Philippine Islands and known as the
Philippine Fiber and Produce Company, of which company the plaintiff apparently
held in his own right nearly the entire issue of capital stock. He was based in New
York City and as the president of the said company, he was entitled to receive a
dividend; as per instruction, Wicks who worked as the treasurer of the company,
went to the exchange department of PNB and requested a telegraphic transfer of
the money to Kauffman.
The PNB agreed with additional charges for the transaction. The treasurer issued
a check to PNB and it was accepted. The PNBs representative in New York sent a

message suggesting the advisability of withholding this money from Kauffman, in

view of his reluctance to accept certain bills of the company. PNB acquiesced in
this and dispatched to its NY agency a message to withhold the Kauffman
payment as suggested. Meanwhile, Wicks then informed Kauffman that his
dividends had been wired to his credit in the NY agency of PNB. So Kauffman
went to PNB office in NYC and demanded the money, however, he was refused
payment. So he filed this complaint.
Issue:
Whether or not Kauffman has a right of action against PNB?
Held:
Yes. It is a stipulation pour autrui.
Should the contract contain any stipulation in favor of a third person, he may
demand its fulfillment, provided he has given notice of his acceptance to the
person bound before the stipulation has been revoked. (Art. 1257, par. 2, Civ.
Code.) In the light of the conclusion thus stated, the right of the plaintiff to
maintain the present action is clear enough; for it is undeniable that the bank's
promise to cause a definite sum of money to be paid to the plaintiff in NYC is a
stipulation in his favor within the meaning of the paragraph above quoted; and
the circumstances under which that promise was given disclose an evident
intention on the part of the contracting parties that the plaintiff should have the
money upon demand in NYC. The recognition of this unqualified right in the
plaintiff to receive the money implies in our opinion the right in him to maintain
an action to recover it.
It will be noted that under the paragraph cited a third person seeking to enforce
compliance with a stipulation in his favor must signify his acceptance before it
has been revoked. In this case the plaintiff clearly signified his acceptance to the
bank by demanding payment; and although PNB had already directed its NY
agency to withhold payment when this demand was made, the rights of the
plaintiff cannot be considered to as there used, must be understood to imply
revocation by the mutual consent of the contracting parties, or at least by
direction of the party purchasing he exchange. Thus, it was said, "Cable
transfers, therefore, mean a method of transmitting money by cable wherein the
seller engages that he has the balance at the point on which the payment is
ordered and that on receipt of the cable directing the transfer his correspondent
at such point will make payment to the beneficiary described in the cable. All
these transaction are matters of purchase and sale create no trust relationship."

13 Bonifacio Bros vs. Mora, 20 SCRA 261

[G.R. No. L-20853. May 29, 1967.]

BONIFACIO BROS., INC., ET AL., Plaintiffs-Appellants, v. ENRIQUE MORA, ET AL.,DefendantsAppellees.
G. Magsaysay, for Plaintiffs-Appellants.
Abad Santos & Pablo for defendant-appellee H. E. Reyes, Inc.
J. P. Santilla & A. D. Hidalgo, Jr. for other Defendant-Appellee.

SYLLABUS

1. CONTRACTS; CONTRACTS TAKE EFFECT ONLY BETWEEN THE PARTIES THERETO; EXCEPTION. It is
fundamental that contracts take effect only between the parties thereto, except on some specific
instances provided by law where the contract contains some stipulation in favor of a third person (Art.
1311, Civil Code). Such stipulation is known as stipulation pour autrui or a provision in favor of a third
person not a party to the contract. Under this doctrine, a third person is allowed to avail himself of a
benefit granted to him by the terms of the contract, provided that the contracting parties have clearly
and deliberately conferred a favor upon such person (Art. 1311, Civil Code; Uy Tam, Et. Al. v. Leonard,
30 Phil.. 471). Consequently, a third person not a party to the contract has no action against the parties
thereto, and cannot generally demand the enforcement of the same (Manila Railroad Co. v. Compaia
Transatlantica, 38 Phil. 676).
2. ID.; STIPULATION POUR AUTRUI; HOW TO DETERMINE WHETHER A THIRD PERSON HAS AN
ENFORCEABLE INTEREST IN THE CONTRACT. The question of whether a third person has an
enforceable interest in a contract, must be settled by determining whether the contracting parties
intended to tender him such an interest by deliberately inserting terms in their agreement with the
avowed purpose of conferring a favor upon such third person. In this connection, this Court has laid
down the rule that the fairest test to determine whether the interest of a third person in a contract is a
stipulation pour autrui or merely an incidental interest, is to rely upon the intention of the parties as
disclosed by their contract (Uy Tam, Et. Al. v. Leonard, supra).
3. ID.; NATURE OF INSURANCE POLICY. A policy of insurance is a distinct and independent contract
between the insured and insurer, and third persons have no right either in a court of equity, or in a court
of law, to the proceeds of it, unless there be some contract of trust, expressed or implied, by the insured
and third person (Lampano v. Jose, 30 Phil. 537).

14 Florentino vs. Encarnacion, 79 SCRA 192

We find that the trial court erred in holding that the stipulation, arrangement or grant (Exhibit O-1)
is revocable at the option of the co-owners. While a stipulation in favor of a third person has no
binding effect in itself before its acceptance by the party favored, the law does not provide when
the third person must make his acceptance. As a rule, there is no time at such third person has
after the time until the stipulation is revoked. Here, We find that the Church accepted the
stipulation in its favor before it is sought to be revoked by some of the co-owners, namely the
petitioners-appellants herein. It is not disputed that from the time of the with of Doa Encarnacion
Florentino in 1941, as had always been the case since time immemorial up to a year before the
firing of their application in May 1964, the Church had been enjoying the benefits of the
stipulation. The enjoyment of benefits flowing therefrom for almost seventeen years without
question from any quarters can only be construed as an implied acceptance by the Church of the
stipulation pour autrui before its revocation.
The acceptance does not have to be in any particular form, even when the
stipulation is for the third person an act of liberality or generosity on the part of
the promisor or promise. 5

It need not be made expressly and formally. Notification of acceptance, other than
such as is involved in the making of demand, is unnecessary. 6
A trust constituted between two contracting parties for the benefit of a third person is
not subject to the rules governing donation of real property. The beneficiary of a trust
may demand performance of the obligation without having formally accepted the
benefit of the this in a public document, upon mere acquiescence in the formation of
the trust and acceptance under the second paragraph of Art. 1257 of the Civil Code. 7

Hence, the stipulation (Exhibit O-1) cannot now be revoked by any of the stipulators at their own
option. This must be so because of Article 1257, Civil Code and the cardinal rule of contracts that
it has the force of law between the parties. 8 Thus, this Court ruled in Garcia v. Rita Legarda,
Inc., 9 "Article 1309 is a virtual reproduction of Article 1256 of the Civil Code, so phrased to emphasize
that the contract must bind both parties, based on the principles (1) that obligation arising from
contracts have the force of law between the contracting parties; and (2) that there must be mutuality
between the parties based on their principle equality, to which is repugnant to have one party bound
by the contract leaving the other free therefrom."

15 Daywalt vs. La Corporacion, 39 Phil 587

[G.R. No. 13505. February 4, 1919. ]
GEO. W. DAYWALT, Plaintiff-Appellant, v. LA CORPORATION DE LOS PADRES AGUSTINOS
RECOLETOS ET. AL., Defendants-Appellees.
C.C. Cohn ahd Thos. D. Aitken, for Appellant.
Crossfield & OBrien, for Appellee.
SYLLABUS
1. CONTRACTS; DAMAGES FOR BREACH; LIABILITY OF THIRD PARTY. Whatever may be the character
of the liability, if any, which a stranger to a contract may incur by advising or assisting one of the parties
to evade performance, he cannot become more extensively liable in damages for the nonperformance of
the contract than the party in whose behalf he inter meddles.
2. ID.; ID.; MEASURE OF DAMAGES FOR BREACH OF CONTRACT. The damages recoverable upon
breach of contract are, primarily, the ordinary, natural and in a sense the necessary damage resulting
from the breach. Other damages, known as special damages, are recoverable where it appears that the
particular conditions which made such damages a probable consequence of the breach were known to
the delinquent party at the time the contract was made. This proposition must be understood with the
qualification that, if the damages are in the legal sells remote or speculative, knowledge of the special
conditions which render such damages possible will not make them recoverable. Special damages of this
character cannot be recovered unless made the subject of special stipulation.
3. ID; ID.; ID.; DAMAGES FOR BREACH OF CONTRACT FOR SALE OF LAND. The damages ordinarily
recoverable against a vendor for failure to deliver land which he has contracted to deliver is the value of
the use and occupation of the land for the tune during which it is wrongfully withheld.

16.Ong Yiu vs. CA, 91 SCRA 223

Ong Yiu vs. CA (contracts of Adhesion)
Facts: Petitioner was a frequent passenger of PAL. He travelled from Cebu to
Butuan for a case bringing his luggage that contained his documents for the

case. It was loaded to the wrong plane. Petitioner demanded the return of his
luggage and PAL complied accordingly. It was delivered to him the next day but it
was allegedly opened already and his case documents missing. Petitioner sued
for damages contending that PAL acted in bad faith. RTC gave petitioner a
favorable judgment but he appealed to CA for more damages.
On September 13, 1967, petitioner filed a Complaint against PAL for damages for breach of
contract of transportation with the Court of First Instance of Cebu, Branch V, docketed as Civil Case
No. R-10188, which PAL traversed. After due trial, the lower Court found PAL to have acted in bad
faith and with malice and declared petitioner entitled to moral damages in the sum of P80,000.00,
exemplary damages of P30,000.00, attorney's fees of P5,000.00, and costs.
Both parties appealed to the Court of Appeals petitioner in so far as he was awarded only the
sum of P80,000.00 as moral damages; and defendant because of the unfavorable judgment
rendered against it.
On August 22, 1974, the Court of Appeals,* finding that PAL was guilty only of simple negligence,
reversed the judgment of the trial Court granting petitioner moral and exemplary damages, but
ordered PAL to pay plaintiff the sum of P100.00, the baggage liability assumed by it under the
condition of carriage printed at the back of the ticket.

However, CA only granted him P100 as damages finding that PAL acted without
bad faith and petitioner not being able to declare the contents and value of his
luggage as stipulated in the PAL ticket.
Held: PAL did not act in bad faith therefore Petitioner is not granted moral and
exemplary damages; liability if PAL is limited to P100 as stipulated in the ticket.
We agree with the foregoing finding. The pertinent Condition of Carriage printed
at the back of the plane ticket reads:
8. BAGGAGE LIABILITY ... The total liability of the Carrier for lost or damaged
baggage of the passenger is LIMITED TO P100.00 for each ticket unless a
passenger declares a higher valuation in excess of P100.00, but not in excess,
however, of a total valuation of P1,000.00 and additional charges are paid
pursuant to Carrier's tariffs.
There is no dispute that petitioner did not declare any higher value for his
luggage, much less did he pay any additional transportation charge.
But petitioner argues that there is nothing in the evidence to show that he had
actually entered into a contract with PAL limiting the latter's liability for loss or
delay of the baggage of its passengers, and that Article 1750 of the Civil Code
has not been complied with.
While it may be true that petitioner had not signed the plane ticket, he is
nevertheless bound by the provisions thereof. "Such provisions have been held to
be a part of the contract of carriage, and valid and binding upon the passenger
regardless of the latter's lack of knowledge or assent to the regulation". 5 It is
what is known as a contract of "adhesion", in regards which it has been said that
contracts of adhesion wherein one party imposes a ready made form of contract
on the other, as the plane ticket in the case at bar, are contracts not entirely
prohibited. The one who adheres to the contract is in reality free to reject it
entirely; if he adheres, he gives his consent. "A contract limiting liability upon an

agreed valuation does not offend against the policy of the law forbidding one
from contracting against his own negligence.

17.Velasco vs. CA, 51 SCRA 439

18.Sanchez vs. Rigos, 45 SCRA 368
[G.R. No. L-25494. June 14, 1972.]
NICOLAS SANCHEZ, Plaintiff-Appellee, v. SEVERINA RIGOS, Defendant-Appellant.
Santiago F . Bautista for Plaintiff-Appellee.
Jesus G. Villamar, for Defendant-Appellee.

SYLLABUS

1. CIVIL LAW; CONTRACTS; CONTRACT TO BUY AND SELL; OPTION WITHOUT CONSIDERATION; CASE
AT BAR. Where both parties indicated in the instrument in the caption, as an "Option to Purchase,"
and under the provisions thereof, the defendant "agreed, promised and committed" herself to sell the
land therein described to the plaintiff for P1,510.00, but there is nothing in the contract to indicate that
her aforementioned agreement, promise and undertaking is supported by a consideration "distinct from
the price" stipulated for the sale of the land, it is not a "contract to buy and sell." It merely granted
plaintiff an "option" to buy.
2. ID.; ID.; ID.; ID.; ARTICLES 1354 AND 1479, NEW CIVIL CODE; APPLICABILITY. It should be noted
that: Article 1354 applies to contracts in general, whereas the second paragraph of Article 1479 refers to
"sales" in particular, and, more specifically, to "an accepted unilateral promise to buy or to sell."
cralaw virtua1aw library

3. ID.; ID.; REQUISITE OF A UNILATERAL PROMISE IN ORDER TO BIND PROMISOR; BURDEN OF PROOF
REST UPON PROMISEE. In order that a unilateral promise may be "binding" upon the promisor, Article
1479 requires the concurrence of a condition namely, that the promise be "supported by a consideration
distinct from the price." Accordingly, the promisee can not compel the promisor to comply with the
promise, unless the former establishes the existence of said distinct consideration. In other words, the
promisee has the burden of proving such consideration.
4. ID.; ID.; WHERE A UNILATERAL PROMISE TO SELL GENERATED TO A BILATERAL CONTRACT OF
PURCHASE AND SALE; ARTICLES 1324 AND 1479, NCC., NO DISTINCTION. This Court itself, in the
case of Atkins, Kroll & Co., Inc. v. Cua Hian Tek (102 Phil., 948), decided later than Southwestern Sugar
& Molasses Co. v. Atlantic & Pacific Co., 97 Phil., 249, saw no distinction between Articles 1324 and 1479
of the Civil Code and applied the former where a unilateral promise to sell similar to the one sued upon
was involved, treating such promise as an option which, although not binding as a contract in itself for
lack of a separate consideration, nevertheless generated a bilateral contract of purchase and sale upon
acceptance. In other words, since there may be no valid contract without a cause or consideration
promisor is not bound by his promise and may, accordingly withdraw it. Pending notice of its withdrawal,
his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a
perfected contract of sale.
5. REMEDIAL LAW; PLEADINGS AND PRACTICE; JUDGMENT ON THE PLEADINGS; IMPLIED ADMISSION.
Defendant explicitly averred in her answer, and pleaded as a special defense, the absence of said
consideration for her promise to sell and, by joining in the petition for a judgment on the pleadings,
plaintiff has impliedly admitted the truth of said averment in defendants answer.
6. STATUTORY CONSTRUCTION; INTERPRETATION OF PROVISIONS OF SAME LAW; CARDINAL RULE.
The view that an option to sell can still be withdrawn, even if accepted, if the same is not supported by
any consideration, has the advantage of avoiding a conflict between Article 1324 on the general
principles on contracts and 1479 on sales of the Civil Code, in line with the cardinal rule of

statutory construction that, in construing different provisions of one and the same law or code, such
interpretation should be favored as will reconcile or harmonize said provisions and avoid a conflict
between the same. Indeed, the presumption is that, in the process of drafting the Code, its author has
maintained a consistent philosophy or position. Moreover, the decision in Southwestern Sugar &
Molasses Co. v. Atlantic Gulf & Pacific Co., supra, holding that Article 1324 is modified by Article 1479 of
the Civil Code, in effect, considers the latter as an exception to the former, and exceptions are not
favored, unless the intention to the contrary is clear, and it is not so, insofar as said two (2) articles are
concerned. What is more, the reference, in both the second paragraph of Article 1479 and Article 1324,
to an option or promise supported by or founded upon a consideration, strongly suggests that the two
(2) provisions intended to enforce or implement the same principle.
ANTONIO, J., concurring opinion:

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1. CIVIL LAW; CONTRACTS; OPTION TO SELL; EFFECT OF ACCEPTANCE. I fully agree with the
abandonment of the view previously adhered to in Southwestern Sugar & Molasses Co. v. Atlantic Gulf
and Pacific Co. (97 Phil., 249), which holds that an option to sell can still be withdrawn, even if accepted
if the same is not supported by any consideration, and the reaffirmance of the doctrine in Atkins, Kroll &
Co. Inc. v. Cua Hian Tech (102 Phil., 948), holding that "an option implies . . . the legal obligation to
keep the offer (to sell) open for the time specified" ; that it could be withdrawn before acceptance, if
there was no consideration for the option, but once the "offer to sell" is accepted, a bilateral promise to
sell and to buy ensues, and the offeree ipso facto assumes the obligations of a purchaser.
2. ID.; ID.; ID.; OPTION WITHOUT CONSIDERATION IS A MERE OFFER TO SELL, NOT BINDING UNTIL
ACCEPTED. If the option to sell is given without a consideration, it is a mere offer to sell, which is not
binding until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding
contract of sale. The concurrence of both acts the offer and the acceptance could in such event
generate a contract.
3. ID.; ID.; ID.; WITHDRAWAL OF OFFER BEFORE ACCEPTANCE, OFFER IMPLIES AN OBLIGATION ON
THE PART OF OFFEROR. While the law permits the offeror to withdraw the offer at any time before
acceptance even before the period has expired, some writers hold the view, that the offeror can not
exercise this right in an arbitrary or capricious manner. This is upon the principle that an offer implies an
obligation on the part of the offeror to maintain it for such length of time as to permit the offeree to
decide whether to accept or not, and therefore cannot arbitrarily revoke the offer without being liable for
damages which the offeree may suffer. A contrary view would remove the stability and security of
business transactions.
4. ID.; ID.; ID.; A BILATERAL RECIPROCAL CONTRACT; CASE AT BAR. Where, as in the present case,
the trial court found that the "Plaintiff (Nicolas Sanchez) had offered the sum of P1,510.00 before any
withdrawal from the contract has been made by the Defendant (Severina Rigos)," and Rigos offer to sell
was accepted by Sanchez, before she could withdraw her offer, a bilateral reciprocal contract to sell
and to buy was generated.

19.Rural Bank of Paraaque vs. Remolado, 135 SCRA 409

[G.R. No. 62051. March 18, 1985.]
RURAL BANK OF PARAAQUE, INC., Petitioner, v. ISIDRA REMOLADO and COURT OF
APPEALS, Respondents.

SYLLABUS

1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; MORTGAGE; EXPIRATION OF PERIOD OF REDEMPTION;

RIGHT TO REPURCHASE: FAILURE TO EXERCISE THEREOF DOES NOT ENTITLE MORTGAGOR TO RELIEF.
We hold that the trial court and the Appellate Court erred in ordering the reconveyance of the
property. There was no binding agreement for its repurchase. Even on the assumption that the bank
should be bound by its commitment to allow repurchase on or before October 31, 1973, still Remolado
had no cause of action because she did not repurchase the property on that date. In the instant case,
the bank acted within its legal rights when it refused to give Remolado any extension to repurchase after
October 31, 1973. It had given her about two years to liquidate her obligation. She failed to do so.
2. CIVIL LAW; AS A RULE, EQUITY FOLLOWS THE LAW. Justice is done according to law. As a rule,

equity follows the law. There may be a moral obligation, often regarded as an equitable consideration
(meaning compassion), but if there is no enforceable legal duty, the action must fail although the
disadvantaged party deserves commiseration or sympathy. The choice between what is legally just and
what is morally just, when these two options do not coincide, is explained by Justice Moreland in Vales v.
Villa, 35 Phil. 769, 788 where he said: "Courts operate not because one person has been defeated or
overcome by another, but because he has been defeated or overcome illegally. Men may do foolish
things, make ridiculous contracts, use miserable judgment, and lose money by them - indeed, all they
have in the world; but not for that alone can the law intervene and restore. There must be, in addition, a
violation of law, the commission of what the law knows as an actionable wrong before the courts are
authorized to lay hold of the situation and remedy it."

20 C & C Commercial vs. Menor, 120 SCRA 112

[G.R. No. L-28360. January 27, 1983.]

C & C COMMERCIAL CORPORATION, Plaintiff-Appellee, v. ANTONIO C. MENOR, as Acting
General Manager of the National Waterworks and Sewerage Authority, and MEMBERS OF THE
COMMITTEE ON PRE-QUALIFICATION, NAWASA, Defendants-Appellants.
Nicolas T . Benedicto, Jr., for Plaintiff-Appellee.
Govt. Corporate Counsel, for Defendants-Appellants.

SYLLABUS

1. REMEDIAL LAW; JUDGMENT; RULING ON A MOOT ISSUE; WHEN NECESSARY; CASE AT BAR. While
the issue in the instant case had become moot because the contract to supply the Nawasa of asbestos
cement pressure pipes had already been awarded to Regal Trading Corporation in 1968 and at this late
hour it can be presumed that the contract had been fully performed and implemented, nevertheless, a
ruling on the contentions of C & C Commercial Corporation is necessary, according to the Government
Corporate Counsel, "if only to make the appellee-corporation stop playing around with our courts." For
the guidance of the bench and bar, the Supreme Court have to resolve the legal issues raised by the
Nawasa.
2. ID.; ID.; GRAVE ABUSE OF DISCRETION; AMENDMENT OF A JUDGMENT THAT HAD ALREADY BEEN
SATISFIED; CASE AT BAR. The order of Judge Cloribel of August 23, 1967 ordering Menor and the
other Nawasa officials to award within ten days from notice the contract for the supply of asbestos
cement pressure pipes to C & C Commercial Corporation as the lowest bidder was an amendment of a
judgment in Civil Case No. 66750, a mandamus case, that had already been satisfied. The case was
closed and terminated. Judge Cloribel had no right and authority to issue such an order after he had lost
jurisdiction over the case.
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3. ID.; ID.; ID.; AMENDMENT OF A JUDGMENT BY INSERTION OF AN EXTRANEOUS MATTER; CASE AT

BAR. The award of the contract to C & C Commercial Corporation was not the lis mota in Civil Case
No. 66750, a civil case before Judge Cloribel which had been executed and where the issue was whether
C & C Commercial Corporation should be allowed to take part in the bidding even if it had no tax
clearance certificate. It was an extraneous matter that could not have been injected into the case nor
resolved therein.
4. ADMINISTRATIVE LAW; PUBLIC BIDDING; ADMINISTRATIVE ORDER NO. 66 COVERS NOT ONLY THE
BIDDING BUT THE EXECUTION OF ANY CONTRACT WITH THE LOWEST BIDDER; CASE AT BAR.
Administrative Order No. 66 (promulgated after Judge Cloribel had rendered his decision on March 1,
1967) covers not only the bidding but also the "execution of any contract with" the lowest bidder. Hence,
in the case at bar, the trial court erred in holding that Administrative Order No. 66 could not be given a
retroactive effect to the bid of C & C Commercial Corporation which allegedly had been allowed to bid in
prior transactions with the Nawasa in spite of its pending tax case because at the time the said order
was issued, no award had as yet been made and when the award was to be made, the said order was
already in force.

5. ID.; ID.; AWARD OF CONTRACT; ADVERTISER NOT DUTY BOUND TO ACCEPT THE HIGHEST OR
LOWEST BIDDER; CASE AT BAR. "Advertisements for bidders are simply invitations to make
proposals, and the advertiser is not bound to accept the highest or lowest bidder, unless the contrary
appears." (Art. 1326, Civil Code). A bidder whose bid is rejected has no cause for complaint nor a right
to dispute the award to another bidder (Esguerra & Sons v. Aytona, 114 Phil. 1189; Surigao Mineral
Reservation Board v. Cloribel, L-27072, July 31, 1968, 24 SCRA 491). In the case at bar, it was not the
ministerial duty of the Nawasa officials to award the contract to C & C Commercial Corporation even if it
was the lowest bidder. The Nawasa in its addendum No. 1 to the invitation to bid dated July 6, 1966
reserved the right "to reject the bid of any bidder."
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DE CASTRO, J., dissenting:

chanrob1es virtual 1aw library

REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENTS; EFFECT OF FINAL JUDGMENT OR ORDER. For
obvious reason, appellee could not comply with the aforementioned requirement, for it is an admitted
fact that it has pending tax cases before the Bureau of Internal Revenue. It is precisely for this reason
that appellee went to court and filed Civil Case No. 66750 when appellants imposed on it (appellee) the
same or similar requirements as those found in Administrative Order No. 66, in order to have itself
declared qualified to take part in the bidding. When the lower court decided in favor of appellee by
declaring it to be qualified to so take part in the public bidding in question, the judgment must take
precedence over Administrative Order No. 66 promulgated after the judgment has become final. As may
be seen, the presidential administrative order disqualified a person, natural or juridical, who has a
pending tax case, administrative or judicial, from participating in public biddings or any contract with the
Government or any of its subdivisions, branches or instrumentalities, including government-owned or
controlled corporation. The judgment in question, on the other hand, qualified appellee to participate in
the public bidding, which necessarily includes the award to him of the corresponding contract, if found to
be the lowest bidder, otherwise taking part in the bidding would be a meaningless exercise and the
judgment, an empty victory for Appellee. The judgment has become the "law of the case," and in a true
sense, the judgment has become "property" of which it may not be deprived without due process of law.
This is exactly what Administrative Order No. 66 of the President of the Philippines would do if it is made
to apply to the instant case, for while the Court, by final judgment, qualified appellee to participate in
the bidding, the Administrative Order would disqualify said party. This would be an illegal interference on
the power of the judiciary.

21.Tang vs. CA, 90 SCRA 236

[G.R. No. L-48563. May 25, 1979]
VICENTE E. TANG, Petitioner, v. HON. COURT OF APPEALS and PHILIPPINE AMERICAN LIFE
INSURANCE COMPANY, Respondents.
Ambrosio D. Go for Petitioner.
Ferry, De la Rosa, Deligero, Salonga & Associates for Private Respondent.
SYNOPSIS
Lee See Cuat, a 61 year old widow and an illiterate who spoke only Chinese applied for an insurance on
her life. Because her answers indicated that she was healthy, the respondent company issued her a
policy, with petitioner as her beneficiary. She applied for and was issued an additional issuance on her
life. Her answers in her previous application were used in appraising her insurability for the second
insurance. Five months after the second policy was issued, she died of lung cancer.
The insurance company refused to pay on the ground that the insured was guilty of concealment and
misrepresentation. In the suit filed by petitioner against the company, the trial court dismissed the claim
because of concealment practiced by the insured. The Court of Appeals affirmed the decision.
In this petition for review, petitioner claims that because Lee See Guat was illiterate and spoke only
Chinese, she could not be held guilty of concealment because the applications for insurance were in
English and the insurer had not proved that the terms thereof had been fully explained to her, pursuant
to Art. 1332 of the Civil Code.
The Supreme Court held that Article 1332 is inapplicable in the case at bar, because the company is not
seeking to enforce the contracts and was therefore under no obligation to prove that the terms of the

contract were fully explained to the other party.

Decision of the Court of Appeals is affirmed.

SYLLABUS

1. CONTRACTS; PARTIES; BURDEN TO SHOW THAT THE TERMS OF CONTRACT HAVE BEEN EXPLAINED
TO THE PARTY WHO IS ILLITERATE. Under Article 1332, the obligation to show that the terms of the
contract had been fully explained to the party who is unable to read or understand the language of the
contract, when fraud or mistake is alleged, devolves in the party seeking to enforce it. Accordingly,
where fraud or mistake is not alleged, and the one seeking to enforce the contract is the illiterate party,
the party against whom the action is brought and who is seeking to avoid the performance of the
contract is under no obligation to prove that the terms of the contracts were fully explained to the other
party. Thus, in a life insurance contract, where the insurer is seeking to avoid its performance on the
ground of concealment on the part of the insured, the insurer is not under obligation to prove that the
terms of the contract were fully explained to the insured who has an illiterate. But even if we were to
say that the insurer is the one seeking the performance of the contract by avoiding paying the claim,
Article 1332 is inapplicable where there has been no imputation of mistake or fraud by the insured
whose personality is presented by the beneficiary.
2. INSURANCE; CONCEALMENT. A deliberate concealment on the part of the insured of material facts
about his physical condition and history entitles the insurer to rescind the contract.
ANTONIO, J., concurring:

chanrob1es virtual 1aw library

1. INSURANCE; GOOD FAITH. In a contract of insurance each party must communicate to the other,
in good faith, all facts within his knowledge which are material to the contract and which the other had
not the means of ascertaining (Sec. 27, Act 2427, as amended). A failure by the insured to disclose
conditions affecting the risk of which he is aware makes the contract violable at the option of the insurer.
2. ID.; ID.; ACTION INCONSISTENT POSITIONS. The plaintiff cannot assume inconsistent positions by
attempting to enforce the contract of insurance for the purpose of collecting the proceeds of the policy
and at the same time repudiating the contract by claiming that he exacted the same thru fraud or
mistake.

22.Lagunzad vs. Gonzales, 92 SCRA 476

CASE DIGEST ON LAGUNZAD V. GONZALES

CASE DIGEST ON LAGUNZAD V. GONZALES [92 S 476 (1979)] - An agreement whereby a film
producer would pay the heirs and relatives of Moises Padilla a sum of money inorder to depict them in
the movie which he included a love interest angle depicting the mother and a sweetheart, is not a
violation of freedom of ex-pression. While it is true that the film producer purchased the rights to the
book entitled "The Moises Padilla Story," that did not dispense with the need for prior consent and
authority from the deceased's heirs to portray publicly episodes in said deceased's life and in that of
his mother and the members of his family. As held in Schuyler v. Curtis, "a privilege may be given the
surviving relatives of a deceased person to protect his memory, but the privilege exists for the benefit
of the living, to protect their feelings and to prevent a violation of their own rights in the character and
memory of the deceased."
"Being a public figure ipso facto does not automatically destroy in toto a person's right to privacy. The
right to invade a person's privacy to disseminate public information does not extend to fictional or
novelized representation of a person, no matter how public a figure he or she may be. In the case at
bar, while it is true that petitioner exerted efforts to present a true-to-life story of Moises Padilla,
petitioner admits that he included a little romance in the film because without it, it would be a drab
story of torture and brutality."

"The right of freedom of expression, indeed, occupies a preferred position in the hierarchy of civil
liberties. However, it is limited by the clear and present danger rule and the balancing of interest test.
The latter requires the court to take conscious and detailed consideration of the interplay of interest
observable in a given situation. The interests observable in this case are the right to privacy and
freedom of expression. Taking into account the interplay of those interest, we hold that under the
particular circumstances presented, and considering the obligations in the contract, the validity of
such contract must be upheld because the limits of freedom of expression are reached when
expression touches upon matters of essentially private concern."

23 Law vs. Olympic Sawmill, 129 SCRA 439

[G.R. No. L-30771. May 28, 1984.]
LIAM LAW, Plaintiff-Appellee, v. OLYMPIC SAWMILL CO. and ELINO LEE CHI, DefendantsAppellants.
Felizardo S.M. de Guzman for Plaintiff-Appellee.
Mariano M. de Joya, for Defendants-Appellants.

SYLLABUS

1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; PRESUMPTION OF EXISTENCE AND LEGALITY OF

OBLIGATIONS; MUST BE OVERCOME BY PROOF; CASE AT BAR. Under Article 1354 of the Civil Code,
in regards to the agreement of the parties relative to the P6,000.00 obligation, "it is presumed that it
exists and is lawful, unless the debtor proves the contrary." No evidentiary hearing having been held, it
has to be concluded that defendants had not proven that the P6,000.00 obligation was illegal.
Confirming the Trial Courts finding, we view the P6,000.00 obligation as liquidated damages suffered by
plaintiff, as of March 17, 1960, representing loss of interest income, attorneys fees and incidentals.
2. MERCANTILE LAW; USURY LAW; REQUIRES DEFENDANT TO SPECIFICALLY DENY, UNDER OATH,
ALLEGATION OF USURY; REQUIREMENT DOES NOT APPLY WHERE IT IS THE DEFENDANT, NOT THE
PLAINTIFF, WHO ALLEGES USURY; CASE AT BAR. The main thrust of defendants appeal is the
allegation in their Answer that the P6,000.00 constituted usurious interest. They insist the claim of usury
should have been deemed admitted by the plaintiff as it was "not denied specifically and under oath"
pursuant to Section 1, Rule 9 of the Rules of Court and Section 9 of the Usury Law (Act 2655). The
foregoing provision envisages a complaint filed against an entity which has committed usury, for the
recovery of the usurious interest paid. In that case, if the entity sued shall not file its answer under oath
denying the allegation of usury, the defendant shall be deemed to have admitted the usury. The
provision does not apply to a case, as in the present, where it is the defendant, not the plaintiff, who is
alleging usury.
3. ID.; ID.; USURY, AT PRESENT, IS LEGALLY NON-EXISTENT, For sometime now, usury has been
legally non-existent. Interest can now be charged as lender and borrower may agree upon (Central Bank
Circular No. 905, Series of 1982, 78 Off. Gaz. 7336). The Rules of Court in regards to allegations of
usury, procedural in nature, should be considered repealed with retroactive effect.

24 Lim vs. CA, 99 SCRA 668

25 Republic vs. Castellvi, 58 SCRA 337

Facts: In 1947, the republic, through the Armed Forces of the Philippines (AFP),
entered into a lease agreement with Castelvi on a year-to-year basis. When
Castelvi gave notice to terminate the lease in 1956, the AFP refused. She then
instituted an ejectment proceeding against the AFP. In 1959, however, the
republic commenced theexpropriation proceedings for the land in question.

Issue: Whether or Not the compensation should be determined as of 1947 or

1959.
Held: The Supreme Court ruled that the taking should not be reckoned as of
1947, and that just compensation should not be determined on the basis of
the value of the property as of that year.
The requisites for taking are: 1) the expropriator must enter a private property,
2) the entry must be for more than a momentary period, 3) it must be under
warrant or color of authorities, 4) the property must be devoted for public use or
otherwise informally appropriated or injuriously affected, and 5) the utilization of
the property for public use must be such a way as to oust the owner and deprive
him of beneficial enjoyment of the property. Under Sec. 4 Rule 67 of the Rules of
Court, just compensation is to be determined as of the date of the filing of the
complaint. The Supreme Court has ruled that when the taking of the property
sought to be expropriated coincides with the commencement of
the expropriation proceedings, or takes place subsequent to the filing of the
complaint for eminent domain, the just compensation should be determined as
of the date of the filing of the complaint. In the instant case, it is undisputed that
the Republic was placed in possession of the Castelvi property, by authority of
court, on August 10, 1959. The taking of the Castelvi property for the purposes
of determining the just compensation to be paid must, therefore, be reckoned as
of June 26, 1959 when the complaint for eminent domainwas filed. There is no
basis to the contention of the Republic that a lease on a year-to-year basis can
give rise to permanent right to occupy since by express provision a lease made
for a determinate time, as was the lease of Castelvi land in the instant case,
ceases upon the day fixed, without need of a demand (Art. 1669, New Civil
Code). The Supreme Court, however, did not apply Art. 1250 of the New Civil
Code for the adjustment of the peso rate in times of extraordinary inflation or
deflation because in eminent domain casesthe obligation to pay arises from law
independent of contract.

26 Eastern Shipping Lines vs. Union, 93 SCRA 257

Facts:
MARGARINE-VERKAUFS-UNION, a corporation not engaged in business in the Philippines, was the
consignee of copra in bulk shipped from Cebu on board EASTERN SHIPPING LINESs vessel for
discharge at Hamburg, Germany. Petitioners bill of lading for the cargo provided that the contract
shall be governed by the laws of the Flag of the Ship carrying the goods. In case of average, same
shall be adjusted according to York-Antwerp Rules. While the vessel was off Gibraltar, a fire broke out
aboard the and caused water damage to the copra. EASTERN SHIPPING LINES rejected
MARGARINE-VERKAUFS-UNION GmbH s claim for payment.
Issue:

Should Article 848 of the Code of Commerce govern this case despite the bill of lading which
expressly contained for the application of the York-Antwerp Rules which provide for MARGARINEVERKAUFS-UNION GmbHs fun recovery of the damage loss?
Held:
No. We hold that the lower court correctly ruled the cited codal article to be not applicable in this
particular case for the reason that the bill of lading contains an agreement to the contrary. There is a
clear and irreconcilable inconsistency between the York-Antwerp Rules expressly adopted by the
parties as their contract under the bill of lading which sustains Easterns claim and the codal article
cited by Margarine which would bar the same.
A contract of adhesion as embodied in the printed bill of lading issued for the shipment to which the
consignee merely adhered, having no choice in the matter, and consequently, any ambiguity must be
construed against the author.

27. Sadorra vs. Sadora, 64 SCRA 310

facts:
Cabaliw was the second wife of Benigno. During their marriage, they bought 2 parcels of land. They
had a daughter Soledad. Benigno abandoned his wife Cabaliw, thus the latter filed an action in court
for support. The Court ordered Benigno to pay her P75 a month. However, Benigno did not pay and
instead sold their property to his son-in-law Soterro. The transaction was done without Isidoras
consent. Prior to the sale, Soterro already knew that there was a judgment rendered against his
father-in-law but proceeded to buy the property anyway. When Cabaliw found out, she instituted an
action along with her daughter to recover the properties.
Issue:
Is there a presumption of fraud?
Held:
Yes. Alienations by onerous title are presumed fraudulent when made by persons against whome
some judgment has been rendered or some writ of attachment has been issued. Benigno was ordered
by the Court to pay Cabaliw support and he failed to do so. Instead, he sold his properties to his sonin-law. The close relationship between Benigno and Soterro is a badge of fraud. Soterro knew about
the judgment against Benigno but proceeded to purchase the properties anyway. He cannot be said to
be a purchaser in good faith. The presumption of fraud is not overcome by the fact that the

transactions were all made in the nature of public instruments between Soterro and Benigno. The
properties sold were conjugal properties. These cannot be sold without Cabaliws consent.