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Issue/s:
WON the plaintiffs may bring this separate civil
action against Barredo which would effectively
make him primarily liable for damages under
Art. 1903
Ruling:
Yes. Barredo could be held primarily liable for
the actions of his employee under Art. 1903.
Ratio:
- A civil liability may exist that does not carry
with it any criminal liability. Thus, Barredo may
be rightfully sued in his capacity as the
employer of Fontanilla under Art. 1903 of the
CC.
- As a result, he faces two possible liabilities: the
first with regard to the criminal action filed
against Fontanilla where he would be
subsidiarily liable, and the second with regard
Ratio:
Ratio:
-The SC agrees with the CA that the case must
be remanded to the RTC for trial on its merits.
But the reason provided by the CA, which is that
in light of previous jurisprudence and the fact
that Art. 180 is a holdover from the Spanish era,
the school administrators should be made liable
for damages until they prove themselves
Ratio:
- The Court does not see any plausible reason as
to why vigilance should be relaxed for schools
academic in nature and increased for non-
academic ones. Moreover, the student is
considered in the custody of the school
authorities as long as he is under the
control and influence and within its premises,
whether the semester has not yet begun or has
already ended.
Issue/s:
WON Carrascoso can claim moral damages due
to Air Frances actions
Ruling:
Yes. The CAs judgment is affirmed.
Ratio:
- The following are established: first, that there
was a contract to furnish a first class seat to
Carrascoso; second, that this contract was
breached because Air France failed to give him
a first class seat; and third, there was bad faith
when Air France forced him to move after he
was already seated. Here, there is an inference
of bad faith even if it wasnt specifically
mentioned in the complaint.
- Passengers do not contract merely for
transportation. They also have the right to be
Issue/s:
1. WON the defendant agreed in the contract to
sell to the plaintiff 400,000 gallons of molasses
(rather than 300,000 gallons)
2. WON Hawaiian had the right to rescind the
contract of sale made with Song Fo because the
latter failed to pay for the molasses within the
time agreed upon
Ruling:
Facts: Issue/s:
- David Raymundo sold a parcel of land to 1. WON non-payment of the mortgage
Avelina Velarde under the following conditions: obligation resulted in a breach of the contract
Velarde to pay Raymundo P800K 2. WON the rescission (resolution) of the
Raymundo to transfer to Velarde contract by private respondents was justified
complete ownership of the land, together
with the house and other improvements Ruling:
thereon The court affirmed the assailed decision,
Velarde to assume paying the mortgage holding as justified Raymundos act of
amounting to P1.8M rescinding the contract, but ordered the
Raymundo to pay the capital gains tax restitution to Velarde of P874,150, which the
and documentary stamps latter paid as a consequence of the contract
Velarde to pay registration fees and until it was rescinded.
transfer tax
- Pending the approval of the application for the Ratio:
assumption of the mortgage obligations on the 1. Yes. This is breach. Petitioners did not merely
property, Velarde agreed to pay the mortgage stop paying the mortgage obligations; they also
obligations on the property with BPI in the failed to pay the balance of the purchase price.
name of Raymundo, in accordance with - When Velarde received notice of the banks
the terms and conditions of the said Deed of disapproval of their application to assume
Real Estate Mortgage. In violation of which, respondents mortgage, they should have paid
Velarde agreed that payments made (800k the balance of the P1.8M.
downpayment + payments on mortgage loans) - In a contract of sale, the seller obligates itself
shall be forfeited and David Raymundo shall to transfer the ownership of and deliver
resume ownership of property. a determinate thing, and the buyer to pay
- Velarde continued to pay three installments to therefor a price certain in money or its
BPI until she was notified that that the equivalent. Petitioners did not perform their
assumption of mortgage was not approved. correlative obligation of paying the contract
Because of this, Velarde ceased to pay the price in the manner agreed upon. Worse, they
mortgage and only agreed to continue if wanted private respondents to perform
Raymundo agrees to three additional conditions: obligations beyond those stipulated in the
Raymundo to deliver actual possession of contract before fulfilling their own
the property to Velarde for immediate obligation to pay the full purchase price.
occupancy
Release of the title and mortgage from 2. Yes. Rescission (resolution) in this case was
BPI justified.
Raymundo to make title available and - The right of rescission of a party to an
free from any liens and encumbrances obligation under Art. 1191 is predicated on a
Issue/s:
WON the contracts may be rescinded
Facts: Issue/s:
- Woodhouse and Halili had an agreement 1. WON Woodhouse had falsely represented
where: that he had an exclusive franchise to bottle
They shall organize a partnership for the Mission beverages
bottling and distribution of Mission soft 2. WON this false representation or fraud, if it
drinks (Woodhouse to act as industrial existed, annuls the agreement to form the
partner/manager and Halili as capitalist) partnership
Halili was to decide on matters of general
policy regarding the business, while Ruling:
Woodhouse was to attend to the
operation and development of the
bottling plant Ratio:
Plaintiff was to secure the Mission Soft 1. Yes there is false misrepresentation by
Drinks franchise for and in behalf of the Woodhouse.
proposed partnership - Halili would not have gone to California and
Plaintiff was to receive 30% of the net incurred expenses for the trip, unless he
profits of the business believed that Woodhouse did have that
- Prior to entering this agreement, Woodhouse exclusive privilege, and that the latter would be
informed the Mission Dry Corp. USA that he had able to get the same from the Mission Dry
caught the interest of a prominent financier Corporation itself. Halili believed, or was made
(Halili) in the business, who was willing to invest to believe, that Woodhouse was the grantee of
half a million dollars in the bottling and an exclusive franchise.
distribution of the said beverages. - The trial judges reason in his decision that the
- Thus, Woodhouse requested from Mission, in assistance of counsel in the making of the
order that he may close the deal with Halili, that contract made fraud improbable is untenable
the right to bottle and distribute Missions soft because the misrepresentation took place
drinks be granted to him for a limited time , before the conferences were held, hence Halili
under the condition that it will finally be already believed in the existence of
transferred to the corporation. Hence, he was Woodhouses exclusive franchise right, and they
given a thirty-day option on exclusive bottling were assisted by their lawyers only when the
and distribution rights for the Philippines" formal negotiations actually took place.
- Woodhouse and Halili signed the contract, and
days after went to US where they entered into a 2. NO, it does not annul the agreement to form
franchise agreement with Mission Dry a partnership, however.
Corporation, which granted Halili the exclusive - Article 1270 of the Spanish Civil Code
right, license, and authority to produce, bottle, distinguishes two kinds of (civil) fraud: causal
distribute, and sell Mission beverages in the fraud, which may be a ground for the
Philippines. annulment of a contract; and incidental fraud,
Ratio:
- On the tour guide: Rowena Zapanta was a
first-timer. The court did not accept Kenstars
Ruling:
Yes, the father is liable for the act of his minor
son. The truck driver and owner are also liable.
Ratio:
- With regard to the father: The guaranty given
by the father at the time the son was granted a
license to operate motor vehicles made the
father responsible for the acts of his son. Based
on these facts, pursuant to the provisions of Art.
1903 of the Civil Code, the father alone and not
the minor or the mother, would be liable for the
damages caused by the minor.
- This is a case of civil law liability of parties for
obligations which arise from fault or negligence.
At the same time, the Court took cognizance of
the common law rule on the same subject. In
the United States, it is uniformly held that the
head of a house, the owner of an automobile,
Facts: Ratio:
- Vasquez (acting manager of Natividad-Vasquez - The party liable on the contract is Natividad-
Sabani Development Co., Inc at the time the Vazquez Sabani Development Co., Inc., and not
transaction took place) and Busuego (treasurer Vazquez himself. It is well known that a
of the said corporation) jointly and severally corporation is an artificial being invested by law
obligated themselves to sell to De Borja with a personality of its own, separate and
(plaintiff) 4,000 cavans of palay at P2.10 per distinct from that of its stockholders and from
cavan, to be delivered during the month of that of its officers who manage and run its
February, 1932. affairs. Also, since the corporation was not a
- However, the said defendants, having party in the case, the complaint should have
subsequently received from the plaintiff in been dismissed.
virtue of said agreement the sum of P8, 400, - The mere fact that its personality is owing to a
delivered only 2,488 cavans of palay and legal fiction and that it necessarily has to act
refused to deliver the balance of 1,512 cavans, thru its agents, does not make the latter
notwithstanding repeated demands. personally liable on a contract duly entered into,
- Plaintiff argued that refusal to deliver said or for an act lawfully performed, by them for an
1,512 cavans of palay within the period in its behalf. Such legal fiction may be
mentioned, cost him to suffered damages in the disregarded only when an attempt is made to
sum of P1,000. use it as a cloak to hide an unlawful or
- Also, on account of the said agreement, the fraudulent purpose. No such thing has been
plaintiff delivered to the defendants 4,000 alleged or proven in this case. It has not been
empty sacks, of which they returned to the alleged nor even intimated that Vazquez
plaintiff only 2,490 and refused to deliver to the personally benefited by the contract of sale in
plaintiff the balance of 1,510 sacks or to pay question and that he is merely invoking the legal
their value amounting to P377.50; and that on fiction to avoid personal liability. Neither is it
account of such refusal the plaintiff suffered contended that he entered into said contract for
damages in the sum of P150. the corporation in bad faith and with intent to
- Defendant argued that he did not enter the defraud the plaintiff
contract in his own individual and personal - The fact that the corporation, acting thru
capacity and such agreement was entered with Vazquez as its manager, was guilty of negligence
and to the Natividad-Vasquez Sabani in the fulfillment of the contract, did not make
Development Co. Vazquez principally or even subsidiarily liable for
- RTC found Vasquez guilty, Busuego acquitted. such negligence. Since it was the corporations
CA affirmed with modification to the damages contract, its nonfulfillment, whether due to
but later set aside its own ruling and remanded negligence or fault or to any other cause, made
the case to the lower court. the corporation and not its agent liable.
- Trial Court and CA have manifestly failed to
Issue/s: distinguish between a contractual and an
Issue/s:
WON the motorman was negligent in his
operation of the car and therefore liable
Ruling:
Yes, but the court decreased the amount
recoverable by the plaintiff.
Ratio:
- If the law or contract does not state the
diligence which is to be observed in the
performance of an obligation, that which is
Issue/s:
WON the evidence shows such carelessness
or want of ordinary care on the part of the
defendant as to amount to reckless negligence
Ruling:
Yes. Therefore he is liable.
Ratio:
- Given the conditions mentioned in the facts
[location and time of incident], Barrias was
clearly charged with high degree of diligence in
the performance of his duties. It was his duty to
satisfy himself of the fact that by keeping a
sharp lookout, and to do everything in his
power to avoid the danger which is necessarily
incident to the operation of heavy street cars on
public thoroughfares in populous sections of the
city.
- By reason of public policy, extraordinary care
and diligence is expected upon carriers to
ensure the safety of passengers as well as to
avoid infliction of injuries upon pedestrians and
others on public streets and thoroughfares over
w/c these companies are authorized to run their
cars. This diligence he did not exercise.
Issue/s:
1. WON petitioner is entitled to a refund given
that it was the private respondents fault that
she missed her flight in the original tour
2. WON petitioner should be deemed more
negligent given that it was required of a
common carrier to exercise extraordinary
diligence
Ruling:
The CA decision is affirmed. Petitioner is
ordered to pay respondent P12,901, the
Issue/s:
WON Francisco may rescind the contract in
view of the delay in payment of Abella?
Issue/s:
WON the contract became void for lack of
consideration
Ruling:
The appealed judgment is affirmed.
Ratio:
- No. When the document was signed, it is
undisputable that the cause or consideration
existed, the purchase price of P450, which is
specifically stated in the document and
agreement.
- Subsequent non-payment of the price at the
time agreed upon DID NOT convert the
contract into one without cause or
consideration: a nudum pactum. The situation
was rather one in which there is failure to pay
the consideration, and the defendants right
was to demand legal interest for the delay,
Facts: Ruling:
- Plaintiffs Villaruel and defendant Manila No. They are not liable for such rentals.
Motor Co. entered into a contract in which the
former would lease to the latter three Ratio:
premises: one for an automobile showroom, - The occupation by the Japanese army was
offices and storeroom; another for an not a mere act of trespass, but a dispossession
automobile repair shop; and a 5- bedroom recognized by international and domestic law,
house for the Branch Manager. for which the lessors Villaruel were liable.
- The term of the lease was 5 years, with the - A lessor does not usually answer for a mere
option to renew for an additional 5 years. act of trespass. However, in occupying the
- The premises were conveyed to the lessee in premises, the Japanese had not merely
1940, and were enjoyed by the lessee until the trespassed, but had exercised the right to use
Japanese military occupied Bacolod in buildings as shelter for troops, the sick, the
1941.The enemy forces ousted the lessee and wounded, etc.a right recognized by
used the properties as part of their quarters international and domestic law as part of the
from 1942 to strict necessities of war.
1945. No payments for rentals were made by - Liability thus falls upon the lessors Villaruel,
the lessee during that time. because the lessee had been denied the
- Upon Bacolods liberation in 1945, American peaceful use and enjoyment of the premises.
forces occupied the buildings, paying rent to The lessees obligation to pay rentals thus also
the plaintiff. ceased during the period.
- After the Americans left, Manila Motor Co. - Thus, the lessors refusal to accept rentals
decided to renew the contract for 5 years, and was without justification, constituting mora
the parties agreed that the occupancy by the accipiendi.
US Army would not be counted as part of the - After the liberation, the lessors agreed to
said term. renew the contract for another 5 years without
- The lessors however demanded payment insisting on the payment of rentals during the
from the lessees for the time that the Japanese Japanese occupancy. This was deemed a verbal
had occupied the premises. The lessors were waiver of their right to the rentals. Since the
refused, prompting them to demand that the lessee was exempted from the obligation to
contract be rescinded. pay rentals, the lessors refusal was without
- Since the parties could not come to a just cause.
settlement, they instituted a case with the CFI - This therefore placed the lessors in default, or
of Negros Occidental. mora accipiendi, which is defined as default
- During the pendency of the case, however, a when the debtor tenders payment or
fire completely razed the properties. The performance, but the creditor refuses to accept
Villaruels thus demanded reimbursement from it without just cause (via Tolentino).
Manila Motor Co.
Notes:
The rule of indivisibility of real estate mortgage
provided for by Art. 2089 is inapplicable
because it presupposes several heirs of the
debtor or creditor which doesnt obtain in this
case.
Issue/s:
1. WON defendant is liable for the whole cost
of repair (material + labor)
2. WON plaintiff may claim moral and
temperate damages
Facts: Ratio:
- On May 19, 1952, NARIC conducted a public 1. The Court discerned that the only reason
bidding for the procurement of 20,000 metric that the contract did not push through was
tons of Burmese rice. Paz Arrieta, with the because the NARIC failed to provide the
lowest bid of $203.00 per metric ton was plaintiff with the letter of credit necessary to
awarded the contract with the NARIC. further her transaction with the rice supplier.
- The latter committed to paying the plaintiff As such, the responsibility with regard to the
through an irrevocable, confirmed and non-fulfillment of the contract was solely
assignable letter of credit in U.S. currency. the NARICs.
However, upon its filing for said letter of - The defendant- appellant had no business
credit a month with PNB it became entering into a contract whose terms it knew it
apparent that the NARIC did not have enough could not satisfy (in this case, having sufficient
credits to cover the agreed- upon amount. credit to sustain the purchase of rice through
- Taking this into consideration, the bank Arrieta).
agreed to issue the letter of credit only upon - In addition, the Court said that the amount
the deposit of half of the total sum requested owed the plaintiff for loss of profit and
by the NARIC. damages incurred ought to be expressed in
- At this point, Arrieta informed the defendant Philippines peso; $286,000.00 was owed the
that she needed the letter of credit plaintiff.
immediately because she had made an initial
payment of 5% that was subject to forfeiture if 2. The Court also ruled that the plaintiffs offer
no such letter was presented before August 4, to provide Thai rice instead did not amount to
1952. a waiver of rights because waivers are not
- The NARIC was unable to meet this presumed. They must be clearly and
requirement and the deposit made by Arrieta convincingly shown, either by express
was consequently confiscated. stipulation or acts admitting no other
- When it became clear that re-acquiring the reasonable explanation.
deposit made was not possible, Arrieta offered - These conditions were not met in the case.
to provide the NARIC with Thai rice in the same
quantity instead.
- The NARIC rejected the offer and later
contended that it amounted to a waiver of
rights with regard to the original contract.
Issue/s:
1. WON the NARIC is liable for its failure to
perform its contractual obligations with
respect to Art. 1170
Issue/s:
WON Magat had a cause of action and he was
not merely anticipating the damages
Ruling:
There is a cause of action. Thus the dismissal is
set aside and the case is remanded for further
proceedings.
Issue/s:
1. WON defendant is liable for the whole cost
of repair (material + labor)
2. WON plaintiff may claim moral and
temperate damages
Ruling:
No. The petition is dismissed, and the
challenged decision of the CA is affirmed.
Ratio:
- The general rule is that rescission requires the
existence of creditors at the time of the alleged
fraudulent transaction, and must be proved as
one of the bases of judicial pronouncement
setting aside a contract.
- The questioned deed of donation was proven
NOT to be antedated to make it appear that it
was made prior to the credit (In other words, it
Issue/s:
WON defendants UCI and Nakpil should be
exempt from liability because the earthquake
was an act of God
Ruling:
No, they should be held liable for damages.
Ratio:
- Art. 1174 of the NCC states that no person
shall be responsible for events which could not
be foreseen or which though foreseen, were
inevitable. An act of God has been defined as an
accident, due directly and exclusively to natural
causes without human intervention, which by
no amount of foresight, pains or care,
Ruling:
The lower courts decision is affirmed.
Ratio:
1. No. The Court applied the res ipsa loquitur
rule.
- The unusual event of the barge ramming into
the bridge raises a presumption of negligence
on the part of the LSC or its employees manning
the tugboats.
- Caso fortutio/force majeure are events not
foreseeable or avoidable - events that could
Issue/s:
WON the damage caused by the minors stone
throwing resulting to a broken windshield is a
fortuitous event and who should shoulder the
damage
Ruling:
Ruling:
Yes. The petition is dismissed.
Ratio:
- To constitute a caso fortuito that would
exempt a person from responsibility, three
conditions must be satisfied: (1) the event must
be independent of the human will (or rather, of
the debtor's or obligor's); (2) the occurrence
must render it impossible for the debtor to
fulfill the obligation in a normal manner; and (3)
the obligor must be free of participation in or
aggravation of the injury to the creditor.
Ruling:
No. The decision of the CA is modified with the
interest rate of 6% per annum, computed from
the time of the filing of the complaint until the
finality of the judgment. However, if it is still
unpaid thereafter, the interest rate shall be 12%
computed from the time judgment becomes
final and executory until fully satisfied.
Ratio:
- Pursuant to Art. 2209 of the CC, in obligations
consisting of payment of money and the debtor
incurs in delay, absent a stipulation on the
payment of interest, the legal interest is 6%.
Norlegen Bayona
Facts:
- Magtanggol Eusebio executed 3 promissory
notes in favour of Security Bank and Trust Co.
(SBTC) in 1983.
- All promissory notes stipulated a 23% interest
rate per annum.
- Upon maturity, Eusebio failed and refused to
pay the balance; thus SBTC filed a collection
case in RTC Makati.
- Said Court decided in favour of SBTC but
ordered Eusebio to pay the balance w/ 12%
interest per annum.
Issue/s:
WON the 23% rate of interest per annum
agreed upon by petitioner bank and
respondents is allowable and not against the
Usury Law
Ruling:
The decision of the respondent court a quo is
affirmed with the modification that the rate of
interest that should be imposed be 23% per
annum.
Ratio:
- No. CB Circular 9051 suspended the Usury Law,
thereby removing the ceiling on interest rates
for loans and forbearances.
- Lenders and borrowers agree and stipulate
interest rate. Only in the absence of such
stipulation is the Court allowed to impose the
12% interest rate.
- Since all the promissory notes were signed in
1983, then theyre all covered by CB Circular
905 (1982).
- Also, Art. 1386 of the Civil Code provides
that contracting parties may establish such
stipulations, clauses, terms and conditions as
Issue/s:
1. WON the creditor may recover the principal
in a loan with usurious interest
2. WON attorneys fees should be awarded in
plaintiffs favor
Ruling:
With the modification that the award of
attorney's fees in plaintiff's favor is deleted, and
the correction of the clerical error as to the
principal still recoverable, the appealed
judgment is affirmed.
Ratio:
1. Yes. A contract of loan with usurious interest
consists of principal stipulationto pay the
loan and accessory stipulationto pay the
interest. These are divisible.
- Art. 1420 CC provides that in case of a
divisible contract, if the illegal terms can be
separated from the legal ones, the latter may be
enforced.
Keywords:
Facts:
Issue/s:
Ruling:
Ratio:
Ruling:
The assailed CA decision is affirmed.
Ratio:
- Yes. The Court explained its ruling hence:
- The condition imposed was resolutory. The
donation of land was subject to the condition
that the property shall be used solely as part of
the campus of the proposed provincial high
school. Should the construction of the high
Keywords:
Facts:
Issue/s:
Ruling:
Ratio:
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Facts:
Issue/s:
Ruling:
Ratio:
Keywords:
Facts:
Issue/s:
Ruling:
Ratio:
Keywords:
Facts:
Issue/s:
Ruling:
Ratio:
Keywords:
Facts:
Issue/s:
Ruling:
Ratio:
Issue/s:
WON respondent could validly rescind the
contract
Ruling:
The questioned decision of the CA is reversed
and set aside, and the court ordered petitioner
to pay private respondent the balance of the
Keywords:
Facts:
Issue/s:
Ruling:
Ratio:
Keywords:
Facts:
Issue/s:
Ruling:
Ratio:
Keywords:
Facts:
Issue/s:
Ruling:
Ratio:
Keywords:
Facts:
Issue/s:
Ruling:
Ratio:
Issue/s:
1. WON the defendant agreed in the contract to
sell to the plaintiff 400,000 gallons of molasses
(rather than 300,000 gallons)
2. WON Hawaiian had the right to rescind the
contract of sale made with Song Fo because the
latter failed to pay for the molasses within the
time agreed upon
Ruling:
Ruling:
Petition denied. The assailed decision of the CA,
affirming the RTC and deleting the award of
attorney's fees is affirmed.
Issue/s:
1. WON Visayan could rescind said contract due
to failure of RJ to fulfill the condition of opening
an unconditional letter of credit for Visayan
2. WON there was implied delivery
Ruling:
Petition granted. The CAs decision is reversed.
Ratio:
1. Yes. There was to be no actual sale until the
opening, making or indorsing of the irrevocable
and unconditional letter of credit.
- Since what obtains in the case at bar is a mere
promise to sell, not a contract of sale, the
failure of the private respondent to comply with
the positive suspensive condition cannot even
be considered a breach casual or serious
Issue/s:
WON the plaintiffs had a right to pay the
remaining principal of P6,000 before Dec. 31,
1945
Ruling:
Appealed judgment is affirmed.
Facts: Ruling:
- Anite Buce leased a 56 sqm. of land in The petition was partly granted, such that the
Pandacan, Manila from the Tiongcos for a petitioner was ordered to vacate the leased
period of fifteen years from June 19791994 premises, without prejudice, however, to the
"subject to renewal for another ten (10) years, filing by the private respondents of an action for
under the same terms and conditions." the recovery of possession of the subject
- She constructed a grocery store and paid P200 property.
for rent, P400 by 1985 and P1000 by
JulyAugust 1991. She paid the P1000 rent. Ratio:
- By December 6, the Tiongcos informed her of 1. No. The Court distinguished between a
the increase to P1576.58 by January 1992 renewal of the lease contract and an extension,
thanks to the Rent Control Law (RA 877). the former obliging the creation of a new
- However, she only paid P400 in checks contract different from the old, with its new
monthly until January 1993. The Tiongcos did term, while the latter adds to the term on the
not accept the payment. force of the old contract.
- In August 1993, Buce prayed for specific - The contract did not say who had the option
performance, asking the RTC to order the to renew nor did it say for whose party would
Tiongcos to accept the payments and respect the renewal be of benefit. Therefore, the
the lease contract for 15 years and its previous ruling in Fernandez v. CA and Art. 1196
automatic renewal for another 10 years at P200 CC applies, and the contract was presumed to
per month. be for the benefit of both parties.
- The Tiongcos answered that since she paid the - Since the Tiongcos did not want a renewal, the
P1000 rent on JulyAugust 1991, and since RA contract expired in June 1994.
877 set the new rent rate at P1576.58 anyway,
they were justified in refusing to accept the 2. No. The Tiongcos did not pray for the
P400 rent. Furthermore, the 10 year renewal restoration of the premises in their
was not automatic but subject to the parties Counterclaim, nor did they file an unlawful
mutual agreement. detainer suit. Rather, they limited the issue to
- The contract expired on June 1994, and the the interpretation of the contract.
Tiongcos demanded P33,000 rent payment in - The CA went beyond the bounds of its
arrears. authority, but this does not preclude the
- On August 1995, RTC sided with Buce, citing Tiongcos from filing an action to recover the
the construction of the building and Buces possession of the property.
filing of complaint 1 year before the expiration
date as evidence that the renewal was
automatic. The CA sided with the Tiongcos
because the 10year phrase did not specify
which party had the option to renew. Without
such stipulation, the renewal of the lease
contract must be upon the agreement of both
Issue/s:
WON A period has to be fixed before JM Tuason
can be compelled to construct the street
Ruling:
No, the period was already stipulated as a
reasonable time w/in w/c to comply with the
obligation to construct and complete the
streets. Reasonable time refers to when all the
squatters are evicted.
Ratio:
- TC and CA need not fix the period because the
real issue is NOT whether a period was absent
and therefore one has to be fixed, but whether
the reasonable time stipulated had already
elapsed.
Notes:
- Joint Obligation: each obligor answers only for
a part of the whole liability.
- Solidary or Joint and Several Obligation: the
relationship between the active and passive
subjects is so close that each of them must
comply with or demand the fulfilment of the
whole obligation.
Keywords:
Facts:
Issue/s:
Ruling:
Ratio:
Ratio:
Issue/s:
WON a solidary creditor can sue the debtor
without involving his fellow solidary co-
creditors
Ruling:
The petition is granted. Quiombing may validly
enforce the collection of the construction
costs due to him and Biscocho without
involving the latter in his action against the
Saligos
Ratio:
- Yes. The court defined what solidary
obligations were, particularly stressing the point
that each solidary creditor may enforce the
Issue/s:
WON Jaring is barred from suing Alipio, despite
being a signatory to the sub lease, in an
Issue/s:
1. WON there is a legal basis for the imposition
of penalty and interest charges on penalties for
defaulting in loan payments
2. WON interest may accrue on the penalty or
compensatory interest
Ruling:
Penalty charge was reduced by the court from 2%
monthly to 12% per annum, taking into
consideration petitioners partial payments and
his offers to work out a compromise for the
Issue/s:
WON respondent is unjustly enriched at the
expense of the petitioners
Ruling:
Facts: Ratio:
- On May 19, 1952, NARIC conducted a public 1. The Court discerned that the only reason
bidding for the procurement of 20,000 metric that the contract did not push through was
tons of Burmese rice. Paz Arrieta, with the because the NARIC failed to provide the
lowest bid of $203.00 per metric ton was plaintiff with the letter of credit necessary to
awarded the contract with the NARIC. further her transaction with the rice supplier.
- The latter committed to paying the plaintiff As such, the responsibility with regard to the
through an irrevocable, confirmed and non-fulfillment of the contract was solely
assignable letter of credit in U.S. currency. the NARICs.
However, upon its filing for said letter of - The defendant- appellant had no business
credit a month with PNB it became entering into a contract whose terms it knew it
apparent that the NARIC did not have enough could not satisfy (in this case, having sufficient
credits to cover the agreed- upon amount. credit to sustain the purchase of rice through
- Taking this into consideration, the bank Arrieta).
agreed to issue the letter of credit only upon - In addition, the Court said that the amount
the deposit of half of the total sum requested owed the plaintiff for loss of profit and
by the NARIC. damages incurred ought to be expressed in
- At this point, Arrieta informed the defendant Philippines peso; $286,000.00 was owed the
that she needed the letter of credit plaintiff.
immediately because she had made an initial
payment of 5% that was subject to forfeiture if 2. The Court also ruled that the plaintiffs offer
no such letter was presented before August 4, to provide Thai rice instead did not amount to
1952. a waiver of rights because waivers are not
- The NARIC was unable to meet this presumed. They must be clearly and
requirement and the deposit made by Arrieta convincingly shown, either by express
was consequently confiscated. stipulation or acts admitting no other
- When it became clear that re-acquiring the reasonable explanation.
deposit made was not possible, Arrieta offered - These conditions were not met in the case.
to provide the NARIC with Thai rice in the same
quantity instead.
- The NARIC rejected the offer and later
contended that it amounted to a waiver of
rights with regard to the original contract.
Issue/s:
1. WON the NARIC is liable for its failure to
perform its contractual obligations with
respect to Art. 1170
Issue/s:
WON the assignment of leasehold rights
constitute a dation in payment
Ruling+Ratio:
YES.ART 1260: Before the creditor has
accepted the consignation, or before a judicial
declaration that the consignation has been
properly made, the debtor may withdraw the
thing or the sum deposited, allowing the
obligation to remain in force.
The Debtor is entitled to withdraw the deposit
Keywords: Issues:
Commercial building; lease; sublessee pays WON the CFI was correct in ruling that the
more than lessee consignation, and therefore the payments for
the rent, was valid and effective
Facts:
The plaintiff-appellee-Soco (lessor) and the Ruling:
defendant-appellant-Francisco (lessee) entered The court reversed and set aside the decision of
into a contract of lease covering a commercial the CFI, declaring said consignation invalid.
building and the lot on which it stands. The
terms involve a monthly rental of P800.00 to be Ratio:
paid over a period of 10 years, and the contract NO. In order that consignation may be effective,
is renewable for another 10 years at the option the debtor must first comply with certain
of the lessee. requirements prescribed by law. The debtor
must show
The CFI found that some time before the civil (1) that there was a debt due;
case occurred, Soco stopped sending to (2) that the consignation of the obligation had
Francisco the collector of rental payments, been made because the creditor to whom
prompting the latter to write the former a letter tender payment was made refused to accept it,
and thereafter send him payment for the or because he was absent or incapacitated, or
rentals through checks issued by the Comtrust because several persons claimed to be entitled
bank. Soco admitted having received these to receive the amount due (Art. 1176, Civil
checks, except for the ones covering payments Code);
for the months of May to August 1977. Soon (3) that previous notice of the consignation had
after, Soco learned that Francisco sub-leased a been given to the person interested in the
portion of the building to NACIDA, at a monthly performance of the obligation (Art. 1177, Civil
rental of more than P3,000.00, which is way Code);
higher than what Francisco was paying to (4) that the amount due was placed at the
Soco under their Contract of Lease. Feeling that disposal of the court (Art. 1178, Civil Code); and
she was on the losing end of the lease (5) that after the consignation had been made
agreement, she tried to look for ways and the person interested was notified thereof (Art.
means to terminate the contract. This led to her 1178, Civil Code).
filing of the illegal detainer case with the City
Court of Cebu, which ruled in her favor, but Failure in any of these requirements is enough
which ruling was thereafter reversed by the CFI. ground to render a consignation ineffective.
Further, the Court ruled that the essential
The reversal by the CFI was due to its requisites of a valid consignation must be
conclusion that there was in fact a tender of complied with fully and strictly in accordance
payment of the rentals covering the dues for with the law. Substantial compliance, which
May to August 1977 made by Francisco to Soco prompted the CFI to rule in Franciscos favour,
through Comtrust, and that since these is not enough for that would render only a
payments were not accepted by Soco, Francisco directory construction to the law.
was impelled to deposit the rentals with the The following findings led the Court to conclude
2. Francisco failed to prove that prior to the 4. Francisco failed to prove the actual deposit or
consignation, except that given in Exh. consignation of the monthly rentals
10, he notified Soco of the same; said except the two cashier's checks
notification constitutes the first notice referred to in Exhibit 12. Neither do the
required by law for a valid consignation, Debit Memorandums issued by
and its purpose is to give the creditor Comtrust Bank deducting the amounts
an opportunity to reconsider his of the checks from the account of
unjustified refusal and to accept Francisco prove payment of the
payment thereby avoiding consignation monthly rentals since these are merely
and the subsequent litigation. There is internal banking practices which are not
no factual basis for the CFIs finding that binding upon a third person such as
Francisco had tendered payment of the Soco, the lessor. What is important is
monthly rentals, since what was evident whether the checks were picked up by
from his letter to the Vice President of Francisco as per his arrangement with
Comtrust was that it was his duty to Comtrust. On this vital point, he
send someone to get the cashier's miserably failed to present any proof
check from the bank and logically, he that he complied.
has the obligation to make and tender
the check to the lessor. This he failed to Due to the foregoing, the Court held that the
do; thus, he failed to meet the third evidence is clear, competent and convincing
requisite. that Francisco has violated the terms of the
lease contract and he may, therefore, be
3. Francisco failed to prove that he notified judicially ejected from the premises of Socos
Soco of the consignation after it was building.
made, except the two made in Exh. 12,
which notification constitutes the
second notice required by law for a
valid consignation. From thetestimony
of the Comtrust Bank Comptroller,
whom Francisco presented as witness in
an attempt to prove his compliance
with the fifth requisite, it is clear that
the bank did not send notice to Soco
that the checks will be deposited in
consignation with the Clerk of Court
(the first notice) and also, that it did not
send notice to Soco that the checks
were in fact deposited (the second
notice) because no instructions were
Maye Cristobal
Keywords:
Deposit with condition
Facts:
This is an appeal from a portion decision of a
lower court requiring defendants to deposit
with the Clerk of Court P5,106.00 within 10 days
from receipt of the order. Defendants admit the
indebtedness, which had already been offered
to the plaintiff who refused to receive said
amount.
Issues/s:
WON defendants can be compelled to make the
deposit without the condition they asked
Ruling + Ratio:
NO. The right to deposit in the nature of a
consignation belongs to the debtor exclusively
and he may not be compelled to do so.
Ratio:
Private respondent's acceptance of the amount
consigned by the petitioner-debtor with a
reservation or qualification as to the
Quick Read
In a suit for illegal detainer, the lessee claimed
by way of defense that she had already
deposited her rentals with the Civil Relations
Service of the AFP. SC: NOT A VALID
CONSIGNATION.
Facts:
- Licuanan (lessor) and Pineda (lessee) entered
into a contract of lease for a unit.
- Licuanan later found that Pineda had been
occupying her garage w/o her consent and
demanded that Pineda vacate therefrom.
- Pineda sought help from the Civil Relations
Service of the AFP
- Both Licuanan and Pineda appeared before
the hearing officer
As a precautionary measure, the officer
instructed Pineda to deposit the amount due
for that month
- Licuanan sued Pineda for illegal detainer w/
damages
For failure to pay April-Sept rentals
- Pineda defense: she had already deposited her
rentals w/ the Civil Relations Service bc
Licuanan refused payment
- City Court, CFI: Licuanan complaint dismissed
Issue/s:
WON Consignation to the Civil Relations
Service, AFP is valid
Ruling:
NO, only consignation the Court (Art 1258)
and/or Bank (BP 25) is allowed.
Ratio:
Minor Issue
What the CA should have done was to just
confined itself to the principal error, which is
the duration of the extended term of the lease
fixed by the MTC and affirmed by the RTC.
MTC had authority as Art. 1670 and 1687 are
applicable
Hearings in Sandiganbayan ensued and in The Sandiganbayan set the aforesaid Urgent
1989, it issued a resolution holding: Motion for hearing. MPCP said that its lease-
1. PCGG gravely abused its purchase agreement with PIMECO has been
discretion when it passed the rescinded as early as November 1986; and that
resolution on the turn-over to PIMECO was in arrears in the payment of
GSIS/MPCP rentals in the amount of P12,378,171.06, which
2. PCGG Commissioner exceeded is more than the equivalent of three cumulative
his authority when he executed rentals at the annual rate of P3,346,269.70.
a MOA with MPCP transferring
the management and operation Sandiganbayan ruled that the consignation
of PIMECO to GSIS/ MPCP was valid and ordered MPCP to accept the
3. Said turnovers are declared null payment and issue the corresponding receipt.
and void ab initio Sandiganbayan said that when the PCGG
4. PCGG, its commissioners, sequestered the assets and records of PIMECO,
officers, representatives and including the lease-purchase agreement over
agents are permanently MPCPs meat packing plant, it assumed the duty
enjoined from implementing to preserve and conserve those assets and
the same turnovers or transfers documents while they remained in its
possession and control. To rule otherwise
In 1990, PIMECO filed a case with would be unfair to PIMECO.
Sandiganbayan against MPCP and PCGG,
alleging that from 1981 to 1985, PIMECO has
been regularly paying the annual rentals and Issue/s:
that prior to its sequestration in 1986, PIMECO 1. WON Sandiganbayan has jurisdiction
was able to pay MPCP. However, after its over MPCP even if it is not a party to
sequestration, the PCGG Management Team the case ROP v. Sabido: YES
that took over the plant became erratic and 2. WON Sandiganbayan has acquired
irregular in its payments of the annual rentals to jurisdiction over PIMECO: YES
MPCP, thus presenting the danger that PIMECO 3. WON PCGG is in estoppel because it has
may be declared in default in the payment of already admitted in its resolution that
rentals equivalent to three (3) annual the lease-purchase agreement
installments and causing the cancellation of the between MPCP and PIMECO has been
lease-purchase agreement. Hence, PIMECO rescinded: NO
prayed for a declaration that it is no longer 4. WON MPCP may be compelled to
bound by the provisions of the above-quoted accept the tendered amount of
paragraph 5 of the lease-purchase agreement. P5,000,000 by PCGG: YES
Keywords: Ratio:
Rock crushing project; industrial clearance Application of Art. 12661
PNCC claims that, based on Art. 1266, it should
Facts: be released from the lease contract because the
Private respondents leased a parcel of land to purpose of the contract did not materialize due
PNCC, to be used as premises for a rock to the abrupt change in political climate after
crushing plant and field office. The lease was to the EDSA Revolution and financial difficulties.
run for five years, with rent at a monthly rate of
P20k, paid yearly in advance. First, Art. 1266 expressly states that it is
applicable to obligations to do. The obligation in
To begin the rock crushing project, PNCC the lease to pay rentals is an obligation to give.
required industrial clearance from the Ministry
of Human Settlement, but it was only able to Second, PNCC only stated the alleged
obtain a Temporary Use Permit, valid for two uncertainties in government policies on
years unless revoked sooner by the Ministry. infrastructure projects, and failed to identify
Respondents then requested the first annual specifically the circumstances brought about by
rental of P240k. PNCC refused to pay, reasoning the change in political climate.
that the payment of rental would begin from The unforeseen event and causes mentioned by
the date of issuance of the industrial clearance, PNCC are not the legal/physical impossibilities
and not from the date of the signing of the contemplated by Art. 1266.
contract.
It also expressed the intention to terminate the Application of rebus sic stantibus2/Art. 1267
contract, because financial and technical The principle of rebus sic stantibus is said to be
difficulties had forced it to discontinue the rock the basis for Art. 12673, which enunciates the
crushing project. doctrine of unforeseen events.
However, this is not an absolute application.
While respondents insisted that PNCC perform The parties to the contract are presumed to
the obligation, because it had become due from have assumed the risks of unfavorable
the time the contract was signed, PNCC developments; therefore, only absolutely
objected and argued that it was only obligated exceptional changes of circumstance are
to pay P20k, covering the one-month period considered under this article.
from when the Temporary Use Permit was
issued up to when it expressed to respondents PNCC entered into the lease contract on Nov.
its wish to terminate the contract. 18, 1985prior to which, Sen. Benigno Aquino,
Jr. had been assassinated (1983) and Pres.
Respondents thus filed this action for specific Ferdinand Marcos had announced that snap
performance with damages against PNCC. elections would take place (Nov. 3, 1985, with
The trial court decided in the respondents the elections scheduled for 1986).
favor, ordering PNCC to pay the rentals for two
years. The Court of Appeals affirmed the lower Thus, PNCC entered into the lease with private
court. respondents in spite of being aware of the
deteriorating conditions of the country.
Notes:
Keywords: Issue/s:
Loan Agreement; printing machinery WON petitioners are liable for the payment of
the penalties and service charges on their loan,
Facts: amounting to P266,146.88. - Yes.
Petitioners entered into a Loan Agreement with
Assumption of Solidary Liability whereby they Ruling + Ratio:
were given P500,000 by private respondent. Article 1270, par. 2 provides that express
Denominated the first Industrial Guarantee and condonation must comply with the forms of
Loan Fund (IGLF), the loan was secured by a donation. Art. 748, par. 3 provides that the
chattel mortgage on the printing machinery in donation and acceptance of a movable, the
petitioners establishment. Petitioners value of which exceeds P5,000, must be made
subsequently obtained a second IGLF loan of in writing, otherwise the same shall be void.
P300,000. Additionally, under Art. 417, par. 1, obligations,
actually referring to credits, are considered
On May 17, 1986 (a year after they paid their movable property. In this case, its undisputed
first loan), petitioners made a partial payment that the alleged agreement to condone
of P50,000 on their second loan. They wrote to P266,146.88 of the second IGLF loan was never
private respondent on their proposal to settle made in writing.
their obligation, to which it replied with a
counter-offer, namely, that it would reduce the The notation full payment of IGLF loan also
penalty charges up to P1400,000 provided that doesnt bind private respondent. It merely
petitioners can pay their obligation on or before states petitioners intention in making the
July 30, 1986. payment. If private respondent really condoned
the amount in question, petitioners shouldve
On July 31, 1986, petitioners paid P410,854.47 asked for a certificate of full payment from
by means of a Pilipinas Bank check, receipt of respondent corporation, just like what they did
which was acknowledged by Destajo. This when they paid off their first loan.
amount was the sum of the principal
(P259,469.47) and the interest (P165,385) less The countersigning of the voucher by Destajo
the partial payment of P50,000. Since theres did no more than acknowledge the receipt of
still a balance of P266,146.88 left, respondent payment. She had no authority to condone any
filed a case for the collection of this plus indebtedness as her duties were limited to
interests, penalties and service charges, or, in issuing official receipts, preparing check
the alternative, for the foreclosure of the vouchers and documentation. Moreover, the
mortgaged machineries. alleged agreement was supposedly entered into
the parties sometime in July 1986, after
Petitioners claimed that they had fully paid respondent corporation had been placed under
their obligation. They contended that after receivership. As held in Villanueva v CA, the
receiving respondents letter of conditional appointment of a receiver operates to suspend
offer to reduce their penalty charges, they met the authority of a [corporation] and of its
with Carlos Sobrepenas, president of directors and officers over its property and
respondent corporation. Apparently, the latter effects, such authority being reposed in the
Keywords:
Ejectment case; lease; legal compensation
Facts:
- Ong Wan Sieng was a tenant in certain
premises owned by Gan Tion
- In 1961 Gan Tion filed ejectment case v private
respondent for alleged non- payment for 2
months of rentals.
- CFI dismissed complaint and ordered Gan Tion
to pay Ong P500 as atty's fees
- October 10 1963, Gan Tion served another
notice to Ong increasing rent to P180/m and at
the same time demanded the rents in arrears
from August 1961- October 1963 (Amounting to
P4,320)
- In the meantime, Ong was able to obtain writ
of execution of judgment of attorney's fees in
his favor.
- Gan Tion went on certiorari to CA, where he
pleaded legal compensation, claiming Ong Was
indebted to him for P4320 in unpaid rents.
- CA said that the sum of P500 couldn't be the
subject of legal compensation. Reason? a) That
they weren't creditors and debtors of each
other in their own right b) Not principal creditor
and bound prinicipally. CA said that the real
creditor of the P500 was Ong Wan Sieng's
counsel, not Ong
Issue/s:
W/N there has been legal compensation
Ratio:
- Award for attorney's fees made in favor of
Ong, not counsel, and justified by way of
indemnity for damages recoverable by Ong.
(damages for being sued?)
Keywords: Ruling:
Promissory notes; not mutually bound as Rescission granted for failure of consideration
creditors and debtors of each other
Ratio:
Facts: It is clear from the DAS that the vendor
Petitioner CKH Industrial Devt [owned by admitted the receipt of the purchase price by
deceased Cheng Kim Heng] executed a Deed of signing it thus effectively giving imprimatur to
Absolute Sale (DAS) in favour of Century-Well the provisions of the deed and cant now
for two parcels of land worth 800,000. Both challenge its veracity. However, the suitability
parties have their own version of what of the said stipulations as benchmarks for the
happened during the execution of the said intention of the contracting parties, does not
document. The only undisputed fact is the come clothed with the cloak of validity. It must
genuineness and due execution of the Deed of be remembered that agreements affecting the
Absolute Sale1. civil relationship of the contracting parties must
come under the scrutiny of the provisions of
CHKs [represented by 2nd wife Ruby Saw] law existing and effective at the time of the
version: execution of the contract. Here is where the
Saw claims that Lourdes Chong and Uy Chi Kim issue on compensation comes in.
maliciously misled her to believe that they
would pay the P800,000 as consideration when Application of the law: Art. 1279 CC2 - 1st
in fact they had no intention to pay [signed the requisite (both parties are creditors and debtors
deed w/o receiving the money bec she believed of each other) was not met.
in UCKs words]
In the instant case, there can be no valid
Century-Wells version [represented by compensation of the purchase price with the
Lourdes Chong]: obligations of Cheng Kim Heng reflected in the
Chong claims that the sale of the two parcels promissory notes, for the reason that CKH and
came about from dispute settlement, to w/c Uy Century-Well the principal contracting parties,
Chi Kim acted as a mediator, after the death of are not mutually bound as creditors and
Cheng Kim Heng. The consideration for the said debtors in their own name. A close scrutiny of
land was paid by means of off-setting or legal the promissory notes does not indicate the late
compensation in the amount of P700,000 thru Cheng, as then president of CKH, acknowledging
alleged promissory notes executed by Cheng any indebtedness to Century-Well. As worded,
Kim Heng in favor of his sons Chong Tak Choi the promissory notes reveal CKH's indebtedness
and Chong Tak Kei and payment of P100,000.00 to Chong Tak Choi and Chong Tak Kei.
in cash. CKH borrowed from Chong Tak Choi
and Chong Tak Kei the total sum of P700,000.00 There is no indication at all, that such
paying interest on P300,000.00 while the indebtedness was contracted by Cheng from
remaining P400,000.00 was interest free, and Choi and Kei as stockholders of Century-Well.
upon the death of Cheng Kim Heng, it stopped Choi and Kei, in turn, are not parties to the
making said payments. Deed of Absolute Sale. They are merely
Note:
1 That for and in consideration of the sum of
EIGHT HUNDRED THOUSAND (P800,000.00)
PESOS, Philippine Currency, paid by VENDEE to
VENDOR, receipt of which is hereby
acknowledged by the latter to its entire
satisfaction, said VENDOR, by these presents,
has SOLD, CEDED, TRANSFERRED, and
CONVEYED by way of absolute sale unto said
VENDEE, its successors and assigns, the two
parcels of land above described and any and all
improvements therein.
November 15 MEVER paid CFI Rizal P79,000 2. NO. SC ruled that Art. 1285 par. 1 applies
its liability to CONGENERIC minus the instead of par. 3.
compensation (400K 320K) Paragraph 1 states that the debtor (MEVER)
who has consented to the assignment of rights
July 1975 Perez sued MEVER for the P100,000 made by a creditor (CONGENERIC) in favor of a
remaining debt of MEVER (half of it paid on third person (Perez), cannot set up against the
August 5, 1974). assignee (Perez) the compensation which
Note:
1 Art. 1279. In order that compensation may be
proper, it is necessary:
(1) That each one of the obligors be bound
principally, and that he be at the same time a
principal creditor of the other;
(2) That both debts consist in a sum of money,
or if the things due are consumable, they be of
the same kind, and also of the same quality if
the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any
retention or controversy, commenced by third
persons and communicated in due time to the
debtor.
Issue/s:
WON De Leon is liable to pay Silahis for the
commission of his direct sale to Dole
-NO, there is nothing to show that de Leon was
obligated to compensate the outstanding
accounts of Silahis
Ruling:
IAC decision affirmed, Silahis to pay P22,200 +
costs
Ratio:
Art 1279: In order that compensation may be
proper, it is necessary:
1) That each one of the obligors be bound
Art. 1290
When all the requisites mentioned in Article
1279 are present, compensation takes effect by
operation of law, and extinguishes both debts
to the concurrent amount, even though the
creditors and debtors are not aware of the
compensation.
Since compensation takes place ipso jure, its
effects arise on the very day on which all its
requisites concur.
Doctrine:
Novation is never presumed. Either of two
things must be established: first, that the old
and new contracts are incompatible on all
points, or, second, that the will to novate is
shown by express agreement of the parties, or
may be inferred from their acts
Note:
1 ART. 1235. When the obligee accepts the
performance knowing its incompleteness or
irregularity, and without expressing any protest
or objection, the obligation is deemed fully
complied with.
2 ART. 1253. If the debt produces interest,
payment of the principal shall not be deemed to
have been made until the interests have been
recovered.
Issue/s:
WON Molino is liable for the entirety of Altos
debt
Ruling + Ratio:
While the Court admitted that the upgrade of
the credit card constituted novation because it
effectively cancelled the object of the first
contract (the initial credit card), they also took
cognizance of the fact that Molino expressly
waived discharge in case of change or novation
in the agreement regarding the use of the first
credit card. In other words, although novation
had occurred she could not be released because
the Surety Undertaking which she signed in
Note:
1Novation Defined and its Requisites (See Art.
1291). Novation is the extinguishment of an
obligation by the substitution or change of the
obligation by a subsequent one which
terminates the first, either by (1) changing the
object or principal conditions; (2) substituting
the person of the debtor; or (3) subrogating a
third person in the rights of the creditor.
Novation is extinctive when an old obligation is
terminated by the creation of a new obligation
that takes the place of the former; It is merely
modificatory when the old obligation subsists to
the extent it remains compatible with the
amendatory agreement.
For novation to take place, the following
requisites have to be met (Reyes annotations):
1. (1) an old valid obligation;
2. (2) a new valid obligation;
3. (3) a substantial difference (aliquid
novum) between the old and the new
obligations;
4. (4) capacity of the parties;
5. (5) intention to extinguish or modify
the old obligation (animus novandi).
Express and Implied Novation (See Art. 1292).
There are 2 ways which could indicate the
presence of novation and thus produce the
effect of extinguishing an obligation by another
which substitutes the same. The first is when
novation has been explicitly or expressly stated
and declared in unequivocal terms. The second
is implied novation. When the old and the new
obligations are incompatible on every point.
The test of incompatibility is whether the 2
3
Art. 3301 of the NCC - Conventional
subrogation of a third person requires the
consent of the original parties and of the third
person.
Issue/s:
WON the promissory note is valid
Ruling:
YES. There must be clear and convincing
evidence to challenge the contents of an
agreement reduced to writing
Ratio:
- Sol Ebarle admitted that there petitioner
neither harassed nor threatened them,
discounting duress. There was no
undue influence since they were neither
mentally weak nor ignorant, being graduated
General Rule:
Whoever alleges fraud or mistake in any
transaction must substantiate his allegation,
since it is presumed that a person takes
ordinary care of his concerns and that private
transactions have been fair and regular.
Issue/s:
WON the mom is liable? How about Rodolfo
and Guillermo?
Ruling:
Mom is liable. Children are liable in as much as
they benefited from the loan.
Ratio:
- No question on mom's liability. She can't use
minority as a defense since it is a personal
defense of the minors. However, such defense
will benefit her to the extent of the shares for
which minors were responsible
- At time of the signing of the loan agreement,
Guillermo was 16 and Rodolfo 18.
- Failure to disclose their minority in promissory
note does not mean that they'll not be
permitted to assent it. THERE WAS NO
JURIDICAL DUTY TO DISCLOSE INABILITY
Issue/s:
WoN the document Ratificacion De Una
Venta was a simulated contract?
Ruling:
No, the contract was valid.
Ratio:
- The argument that the contract was
simulated hinged on their allegation that the
contract was attended by fraud and
misrepresentation. The petitioners asserted
that the contract was not one for sale but for
mortgage. The court held that if the contract
were indeed attended by fraud or
misrepresentation, the contract would only
be voidable.
2. (a) There was no notice of default issued by (c) Where the guarantor holds property of the
Bormaheco to ICP which would have entitled principal as collateral surety for his personal
Bormaheco to demand payment from ICP under indemnity, he may resort to the same only
the suretyship contract. after his payment.
- The court a quo categorically stated that no - There is no doubt that the CGA was issued
evidence was presented to show that for the personal indemnity of ICP.
Bormaheco demanded payment from ICP nor Considering that the payment by ICP has never
was there any action taken by Bormaheco on been established, it follows that ICP cannot
the bond posted by ICP to guarantee the foreclose the properties.
payment of plaintiffs obligation.
- There is nothing in the records of the
proceedings to show that ICP indemnified
Bormaheco for the failure of the plaintiffs to
pay their obligation. The failure, therefore, of
Bormaheco to notify ICP in writing about SRDI's
supposed default released ICP from liability
under its surety bond.
- Consequently, ICP could not validly foreclose
the real estate mortgage executed by
petitioners in its favor since it never incurred
any liability under the surety bond.
Keywords: Loakan Airport; sole owner one of RESPONDENTS: they were made to believe that
his children only the agreement merely empowered Maximino to
represent them in conveying /44 A-C to the
Facts: government in order to minimize costs
- Mateo Carantes was the original owner of Lot Defense: They knew what they were doing and
No. 44 situated at Loakan, Baguio City. He was right of action has already prescribed
survived by his widow Ogasia and six children. TC: Date relevant to prescription period was
- Because a portion of Lot No. 44 was March 16, 1940
needed for the landing field of the Loakan
Airport, the Government instituted Issue/s:
proceedings for its expropriation. Lot was WoN the P1.00 consideration is so shocking to
divided into 44-A to 44-E. the conscience that there was in fact no
- One of his sons, herein petitioner Maximino consideration, hence rendering the agreement
Carantes, was appointed and qualified as void ab initio
judicial administrator of the estate. He filed a
project of partition wherein he listed as the Ruling:
heirs of Mateo Carantes who were entitled to No, there was proper consideration. Only
inherit the estate, himself and his brothers and total absence of cause or consideration
sisters, or the latter's surviving children renders a contract void. (Art. 1409)
Apparently because negotiations were, by that
time, under way for the purchase by the Ratio:
Government of Lots Nos. 44-B and 44-C. The sum of P1.00 appears in the document as
- Deed denominated "Assignment of Right to one of the considerations for the assignment
Inheritance" was executed by four of Mateo of inheritance. In addition and this of
Carantes children, namely, Bilad, Sianang, Lauro great legal import the document recites
and Crispino, and the heirs of Apung Carantes that the decedent Mateo Carantes had,
(also a son of Mateo who died in 1923). during his lifetime, expressed to the
- It assigned their rights to their inheritance to signatories to the contract that the property
Maximino for a consideration of P1.00 and also subject-matter thereof rightly and exclusively
contained a recital that private respondents belonged to the petitioner Maximino
have agreed to cede their rights to inherit the Carantes. This acknowledgment by the
remaining lots to Maximino, saying that this is signatories definitely constitutes valuable
with respect to Mateo having verbally consideration for the contract.
conveyed the remaining lots to Maximino From what time must fraud be deemed to
alone, and that these belonged to the latter have been discovered?
exclusively.
- Maximino sold lots 44 B and 44 C to the - Fraud is deemed to have been discovered
government, dividing the proceeds among the from March 16, 1940, the time the assignment
parties. The parties had OCT 3 cancelled and was registered in the Register of Deeds. It was
replaced with TCT 2533, in all their names as co- only after 18 years when they filed the
owners. However, when Maximino registered complaint hence action has already prescribed.
the deed of assignment, he named himself as
Facts: Ruling:
- Defendant spouses Leonardo Joaquin and No. The SC held that the petitioners failed to
Feliciana Landrito are the parents of plaintiffs prove any instances in Art 1355 and art 1470
Consolacion, Nora, Emma and Natividad as well that would invalidate the Deeds of Sale. There is
as of defendants Fidel, Tomas, Artemio, Clarita, no requirement that the price be equal to the
Felicitas, Fe, and Gavino, all surnamed exact value of the subject matter of sale.
JOAQUIN. The married Joaquin children are
joined in this action by their respective spouses. Ratio:
- Sought to be declared null and void ab initio - TC: dismissed the case; In the first place, the
are certain deeds of sale of real property testimony of the defendants, particularly that of
executed by defendant parents Leonardo the father will show that the Deeds of Sale were
Joaquin and Feliciana Landrito in favor of their all executed for valuable consideration. This
co-defendant children and the corresponding assertion must prevail over the negative
certificates of title issued in their names. allegation of plaintiffs. And then there is the
- In their complaint the petitioners aver that the argument that plaintiffs do not have a valid
Deeds of Sale are simulated and null and void cause of action against defendants since there
ab initio. can be no legitime to speak of prior to the
a) Firstly, there was no actual valid death of their parents. The court finds this
consideration for the deeds of sale xxx over contention tenable. In determining the legitime,
the properties in litis; the value of the property left at the death of
b) Secondly, assuming that there was the testator shall be considered (Art. 908 of the
consideration in the sums reflected in the New Civil Code). Hence, the legitime of a
questioned deeds, the properties are more compulsory heir is computed as of the time of
than three-fold times more valuable than the death of the decedent. Plaintiffs therefore
the measly sums appearing therein; cannot claim an impairment of their legitime
c) Thirdly, the deeds of sale do not reflect while their parents live.
and express the true intent of the parties - CA: affirmed TC decision. [Their] right to the
(vendors and vendees); and properties of their defendant parents, as
d) Fourthly, the purported sale of the compulsory heirs, is merely inchoate and vests
properties in litis was the result of a only upon the latters death. While still alive,
deliberate conspiracy designed to unjustly defendant parents are free to dispose of their
deprive the rest of the compulsory heirs properties, provided that such dispositions are
(plaintiffs herein) of their legitime. not made in fraud of creditors. The plaintiffs
- Defendants, on the other hand aver (1) that are not parties to the alleged deed of sale and
plaintiffs do not have a cause of action against are not principally or subsidiarily bound
them as well as the requisite standing and thereby; hence, they have no legal capacity to
interest to assail their titles over the properties challenge their validity.
in litis; (2) that the sales were with sufficient - The SC held that the petitioners failed to
prove any instances in Art 1355 and art 1470
Issue/s:
1) WON action for reformation was properly
raised
2) WON reformation is the proper action
Ruling:
1) NO. Garcias complaint shows no cause of
action, for it fails to allege the instrument to be
reformed does not express the real agreement
or intention of the parties.
2) NO. Perhaps the real grievance of Garcia is
that he has been led to enter into a deed of
sale through fraud or misrepresentation
Ratio:
1) The allegation of an instrument not
expressing the real agreement or intention of
the parties is essential because an action for
reformation is to make an instrument conform
Issue/s:
WON prescription has barred reformation
Ruling:
Yes. Prescription is intended to suppress stale
and fraudulent claims arising from transactions
like the one at bar which facts had become so
obscure from the lapse of time or defective
memory.
Ratio:
- In the case at bar, respondent corporation
had 10 years from 1968, the time when the
contract of lease was executed, to file an action
for reformation.
- Sadly, it did so only on May 15, 1992 or 24
years after the cause of action accrued, hence,
its cause of action has become time-barred.
Facts: Ratio
- Nov. 29, 1985 Deed of Conditional Sale w/ - Flunker accepted Rapanuts payments
Mortgage Susan Flunker will sell the land in religiously for four years. She was silent as to
Pasay for ~P43K in installments of P500 the 10% interest, but they stipulated
monthly (5th day of month) and P1000 predetermined dates to pay the monthly
semianually (June 30 & Dec. 31) with 10% installments.
interest per annum on the remaining balance - Courts liberal interpretation: 10% per
until the full amount is paid annum on the remaining balance After
- April 1986 Supplemental Agreement monthly payments are deducted, the 10%
Flunker will sell the portion of her lots for applies on the remaining principal; the
~P37K in P500 monthly installments (5th day of remaining balance is the principal and its 10%
month) without need of demand and with interest, and the monthly installments apply to
10% interest per annum on the remaining this remaining balance. Rapanut continues to
balance until the full amount is paid. Starts on pay at predetermined dates until the last
January 1986. Failure to pay an installment 3 remaining balance is paid.
months due = rescission and previous - Without need of demand applies to P500
payments to be counted as rental. monthly installment, not on 10% interest, so
- Jan. 1986 Jan. 1990 Diego Rapanut paid her silence is not justified.
P24,500 in monthly installments of P500. - Even assuming Flunker was right, she is
- Feb 13, 1990 Rapanut received a letter estopped to exercise her right to rescission
from Flunkers counsel that he failed to pay, when she failed to do so after the alleged
so contract is rescinded as of receipt thereof. default, continually accepting the payments
Flunker furthermore sued for rescission before made by Rapanut.
RTC on March. - The Court interprets Art. 1253 thus: After
- RTC & CA find for Flunker. pondering on the meaning of Article 1253, we
- Flunkers interpretation (accepted by RTC & reach the conclusion that in a contract involving
CA): P500 applies to unpaid accrued interest installment payments with interest chargeable
first. The 10% interest is to be paid every year. against the remaining balance of the obligation,
Basis: Art. 12531. RTC & CA: P10,900 unpaid it is the duty of the creditor to inform of the
interest from 19861990; Rapanut owes P23,700 in amount of interest that falls due and that he is
21 installments applying the installment payments to cover said
- Rapanuts interpretation: P500 applies to interest. Otherwise, the creditor cannot apply
payment of principal + accrued interest, the the payments to the interest and then hold the
10% interest applies to the remaining balance debtor in default for nonpayment of
and he keeps paying P500 until principal + installments on the principal.
interest is fully paid.
Basis: Contract does not specify when to pay the
10% interest; no number of years to pay
installments
Ratio:
1) YES - Art. XX of the lease agreement: