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This document summarizes five court cases related to obligations and contracts in the Philippines:
1. RCPI v. Alfonso Verchez - RCPI was found liable for damages caused by a 25-day delay in delivering an urgent telegram.
2. Barzaga v. CA - Mr. Alviar was found liable for failing to deliver construction materials by the agreed deadline, preventing a burial before Christmas.
3. Selegna Mgt. Development Corp. v. UCPB - UCPB was allowed to foreclose on loans after the court found the debtors, the Angeles spouses, were in default due to non-payment.
4. General Milling Corp
This document summarizes five court cases related to obligations and contracts in the Philippines:
1. RCPI v. Alfonso Verchez - RCPI was found liable for damages caused by a 25-day delay in delivering an urgent telegram.
2. Barzaga v. CA - Mr. Alviar was found liable for failing to deliver construction materials by the agreed deadline, preventing a burial before Christmas.
3. Selegna Mgt. Development Corp. v. UCPB - UCPB was allowed to foreclose on loans after the court found the debtors, the Angeles spouses, were in default due to non-payment.
4. General Milling Corp
This document summarizes five court cases related to obligations and contracts in the Philippines:
1. RCPI v. Alfonso Verchez - RCPI was found liable for damages caused by a 25-day delay in delivering an urgent telegram.
2. Barzaga v. CA - Mr. Alviar was found liable for failing to deliver construction materials by the agreed deadline, preventing a burial before Christmas.
3. Selegna Mgt. Development Corp. v. UCPB - UCPB was allowed to foreclose on loans after the court found the debtors, the Angeles spouses, were in default due to non-payment.
4. General Milling Corp
FACTS: • Grace obtained the services of RCPI to send a telegram to her sister Zenaida asking her to send money to their mother who was confined in a hospital in Sorsogon. o It took 25 days for the message to get to Zenaida. o Editha (mother) died. • RTC Sorsogon: Alfonso, Grace and Zenaida filed a case for DAMAGES against RCPI for the delay in the delivery of the message o Claimed that the delay in the delivery of the message contributed to their mother’s early death o RCPI claimed that the delay was caused by force majeure, and that they exercised due diligence in selecting employees; and that the contract was only between Grace (who sent the message) and them. o IFO Verchez • CA: RCPI appealed o AFFIRMED
ISSUE: W/N RCPI is liable for the delay – YES
HELD: • The liability is anchored on CULPA CONTRACTUAL or BREACH OF CONTRACT with Grace, but not the other co-plaintiffs. o Art. 1170: Those who, in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner, contravene the tenor thereof, are liable for damages. • RCPI bound itself to deliver the telegram at the shortest possible time, but it took 25 days to do it. o Force majeure – radio noise and interferences – it is necessary that there was no negligence or misconduct attributed to a person. If it could not send the message ASAP, RCPI could have at least informed Grace.
DOCTRINE: Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.
(02) BARZAGA V. CA
FACTS: • Mrs. Barzaga died of a terminal illness. Before her death, she requested that she be buried before Christmas. • On December 21, Mr. Barzaga purchased from Mr. Alviar the materials needed to construct the niche o 2 days to construct o He asked that it be delivered the following day – NOT DELIVERED • Mr. Barzaga cancelled the transaction on December 23. o Mrs. Barzaga not buried before Christmas. • RTC: Mr. Barzaga filed a case for DAMAGES against Mr. Alviar o Alviar alleged that delay was caused by a flat tire.
ISSUE: W/N Mr. Alviar is liable for delay – YES
HELD: • In this case, there was delay because of the second exception à when from the nature and circumstances of the obligation, it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract. o Excuse of Alviar was self-serving. The truck did not have a flat tire but was coming from Cavite from making a delivery.
DOCTRINE: Those obliged to deliver or to do something incur delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. Except: 1. When the obligation or the law expressly so declare; or 2. When from the nature and circumstances of the obligation, it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or 3. When demand would be useless, as when the obligor has rendered it beyond his power to perform.
(03) SELEGNA MGT. DEVELOPMENT CORP. UCPB
FACTS: • (1995) Spouses Angeles and Selegna Mgt. acquired a P70M loan from UCPB. o Security: REM over properties in Muntinlupa, Antipolo, Las Piñas, Quezon, and condo units in Makati o PN: IFO UCPB o Loan later increased to P103M with 21% interest rate per annum, to mature in 1999. • AGREEMENT: In case of failure to pay, this would constitute as a default, and would render the loan amount immediately due in full (ACCELERATION CLAUSE) o Angeles went in default. Loan ballooned to P132M. o UCPB sent demand letters. à Angeles paid P10M. à they asked to restructure the loan. • Sheriff: UCPB filed an application for EXTRAJUDICIAL FORECLOSURE OF REM o TRO granted • RTC: granted the TRO • CA: AFFIRMED the RTC decision o MR: GRANTED UCPB • Angeles averred that they had a right to injunction because UCPB never explained how the loan ballooned to P132M, that UCPB refused to give them a detailed accounting. Likewise, the P10M payment would have prevented the determination of the maturity of the obligation.
ISSUE: W/N the spouses Angeles were in default – YES
HELD: • It was clear that they were in default, based on the provisions in the CREDIT AGREEMENT WITH UCPB, which is the binding law between the parties. o It was stated in the agreement that UCPB could foreclose the mortgage in case of default. • The requisites for finding of default were present: o The obligation is demandable and liquidated § Present notwithstanding absence of accounting § “Liquidated” – amount is known or determinable upon inspection of terms and conditions, relevant PN and documentation; does not require a detailed statement of account o The debtor delays performance § Debtors failed to pay on time o The creditor judicially or extrajudicially requires the debtor’s performance § Bank sent demand letters to the spouses
DOCTRINE: Requisites for finding of DEAULT: 1. The obligation is demandable and liquidated 2. The debtor delays performance 3. The creditor judicially or extrajudicially requires the debtor’s performance
(04) GENERAL MILLING CORP V. SPS. RAMOS
FACTS: • GMC entered into a Growers Contract with spouses Ramos. o GMC was to supply broiler chickens for the spouses to raise o SECURITY: REM mortgage over a piece of RP and a surety bond • Spouses Ramos were unable to settle their account with GMC à REM eventually foreclosed o GMC highest bidder. • RTC: Spouses Ramos questioned the FORECLOSURE proceedings • CA: GMC made no demand to spouses Ramos for the full payment of the obligation o Letters à GMC did not “demand” but only requested spouses Ramos to go to their office to discuss the settlement of their account.
ISSUE: W/N GMC made a demand to spouses Ramos – NO
HELD: • Three requisites for finding of default: o The obligation is demandable and liquidated o The debtor delays performance o The creditor judicially or extrajudicially requires the debtor’s performance § ** There was no provision in the REM that GMC can foreclose without making a demand on the spouses • Art. 1169 provides that delay begins from the time the obligee judicially or extrajudicially demands the fulfillment of their obligation. However, demand is not necessary when the obligation or the law expressly so desires. o The deed of REM has no provision stating that demand is not necessary for delay to exist. GMC should have first made a demand on the spouses before proceeding to foreclose the real estate mortgage.
DOCTRINE: Art. 1169 of the Civil Code states that those obligated to deliver or to do something incur delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. Demand is necessary for delay to exist unless the contract states that no such demand is needed.
(05) SOLIDBANK CORP V. SPS. TAN
FACTS: • Spouses Tan deposited 10 checks with Solid Bank o 2 deposit slips (1 original, 1 duplicate) were received by the teller. o Passbook was left with Solidbank, and later retrieved by the spouses (for recording). • Upon retrieval, they discovered that one of the checks was missing. o Check was deposited to the account of Dolores Lagsac o Spouses demanded the amount of the missing check. • RTC: Spouses filed a claim for COLLECTION OF SUM OF MONEY
ISSUE: W/N Solidbank is liable – YES
HELD: • For failure to comply with its obligation, Solidbank is presume to have acted negligently unless they prove that they observed extraordinary diligence. • Petitioner argued that it was not negligent o It refused to produce the original copy of the deposit slip – which could have proven the claim that it didn’t receive the checks. • The business of banking is impressed with public interest and great reliance is made on the bank’s sworn profession of diligence and meticulousness in giving irreproachable service. • Court applied the doctrine of last clear chance (used in transportation laws) in the banking transaction – because the diligence required is more than that of a good family, in keeping with their responsibility to exercise the necessary care and prudence in handling their clients’ money.
DOCTRINE: Art. 1173: The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the person of the time and of the place. If the law or contract does not state the diligence which is to be observed in the performance, the same as expected of a good father of a family shall be required.
(06) PHIL. COMMUNICATIONS SATELLIT CORP. V. GLOBE TELECOM
FACTS: • Globe contracted Philcomsat for the provision of communication facilities in the US air bases in Clark and Subic o Philcomsat obliged itself to establish, operate and provide for services (earth station) to the US Defense Communications Agency o Globe promised to pay Philcomsat monthly rentals for each circuit involved. • Senate passed and adopted its resolution not to extend the use of the US military bases. o With this, Globe notified Philcomsat that it would no longer be using its facilities after December 31, 1992 (date of withdrawal of US military forces • Philcomsat demanded payment of rentals for balance of LEASE TERM despite non-use of the earth station.
ISSUE: W/N Globe is still liable to pay rentals – NO
HELD: • Philcomsat and Globe had no control over the non-renewal of the RP-US Military Base Agreement when it expired. Neither parties had control over the prerogative of the government. o Consequence: stay of US Military forces in Subic was no longer allowed. Plaintiff would no longer render service under the agreement. o It was impossible to continue the agreement without fault on the part of either party. – as such, Globe was EXEMPT from paying rentals for the remainder of the agreement. • Globe cannot be held liable for service that could not be rendered due to an act of government, which was beyond Globe’s control.
DOCTRINE:
(07) FIL-ESTATE PROPERTIES, INC., ET. AL. V. SPS. RONQUILLO
FACTS: • Spouses Ronquillo purchased a pre-selling condominium from Fil-Estate • Asian Financial Crisis – Fil-Estate construction stopped. o Spouses Ronquillo stopped paying then sought for a refund. • HLURB: Spouses filed a case for REFUND, DAMAGES and BREACH OF CONTRACT o Fil-Estate argued that the Asian Financial Crisis is a fortuitous event, which justifies the delay of its obligation
ISSUE: W/N the Asian Financial Crisis is a fortuitous event – NO
HELD: • The depreciation of the peso as a result of the financial crisis is not a fortuitous event, which will exempt petitioners from the performance of their contractual obligation. o Fluctuating movement of the peso happens everyday. • Failure to develop the condominium is SUBSTANTIAL breach which warrants a refund of amount paid, including interest. o Non-performance of the obligation is tantamount to substantial breach. Thus, rescission is proper. • Condominium Buyers Protective Decree à no installment payment made by a buyer in a condominium project shall be forfeited in favor of the owner or developer when the buyer, after due notice to the latter, desists from further payment due to the failure of the owner or developer to develop the condominium project according to the approved plans and within the time limit for complying the same. o Buyer may: § Be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest at legal rate.
DOCTRINE: The non-performance of obligor’s obligation entitles obligee to rescission under Art. 1191. The Asian Financial Crisis is not a fortuitous event.
(08) MANLAR RICE MILL, INC. V. DEYTO
FACTS: • Ang, daughter of Deyto, entered into a rice supply contract with Manlar o Ang purchased rice amounting to P3.8M • Upon presentment of payment, nine checks were dishonored: o 2 – drawn against insufficient funds o 7 – drawn against a closed account o demands were left unheeded • Manlar made oral and written demands to both Deyto and Ang à nothing happened. o Ang could not be located. • RTC: Manlar filed a complaint for SUM OF MONEY against Deyto and Ang o Complaint found them solidarily liable on the rice supply contract o Deyto COMPULSORY COUNTERCLAIM: She did not contract with Manlar. o Ang failed to answer despite summons by publication. à held in default o IFO Manlar • CA: IFO Deyto
ISSUE: W/N Deyto can be held liable for the contract entered into by Ang – NO
HELD: • The CA is correct in holding that there is no legal basis for holding Deyto solidarily liable with Ang for what she owed Manlar. o Evidence did not show that BOTH entered into the contract with Manlar. o Testimony also showed that rice was delivered to Ang. o Ang issued the checks
DOCTRINE: As a general rule, contracts affect only the parties to it, and cannot be enforced by a person or against a person who is not party thereto.
(09) TRAVELLERS’ INSURANCE & SURETY COM. V. CA
FACTS: • Feliza was on her way to hear mass when she was bumped by a taxi, which was running fast. She was seen sprawled on the side of the pavement. o Evidence showed that the strong impact of the collision threw the old woman away to the side of the pavement. • CRIM CASE: Trial court found that Dumlao was driving the taxi carelessly, recklessly and imprudently, and at a great speed than what was reasonable and proper. Moreover, the driver fled from the scene. • RTC: Feliza filed a case for DAMAGES against Abellon (owner of Lady Love Taxi) and Dumlao (driver that bumped her) o Feliza then included petitioner, as compulsory insurer of the taxi
ISSUE: W/N Traveller’s Insurance is liable for the claim – NO
HELD: • When the contract provides for indemnity against liability to third persons, then third person to whom the insured is liable can sue the insurer. • When the contract is for indemnity against actual loss or payment, then third persons cannot proceed against the insurer. o The contract, in this situation is to reimburse the insured for liability actually discharged by him through payment to third persons. • In the case at hand, there was no contract shown.
DOCTRINE:
(10) SUBIC BAY LEGEND RESORTS & CASINOS, INC. V. FERNANDEZ
FACTS: • Ludwig visited Legenda Hotel. o Footage: Ludwig exchanged $5,000 worth of chips into smaller denomenations o Since it was unusual for a Filipino to play using dollar-denominated chips, casino personnel kept a close eye on him. • After winning a game of baccarat and winning $2,000, Ludwig redeemed casino chips worth $7,200 • Days later, Ludwig and his brother Deoven entered the casino. After playing and losing, they encashed their chips, but their chips were “frozen”. o They were accosted by casino personnel and ordered to return cash in their possession. o They admitted that the chips were supplied by a casino employee. • RTC: Bernard, Ludwig and Deoven filed a complaint for RECOVERY OF SUM OF MONEY against the casino. o He claimed that the chips were obtained from a Chinese customer in his car shop. He and his brother were given $6,000 worth of chips to the casino. Thereby, hotel personnel accosted him and his brother, and confiscated the casino chips. The hotel likewise failed to return it despite demand. o Casino claimed that Bernard had no COA because the chips were stolen from the company o DECISION: Bernard had possession of the chips. Company failed to rebut the presumption that the chips were illegally possessed. • CA: AFFIRMED
ISSUE: W/N Bernard is the lawful possession of the chips – YES
HELD: • Although casino chips are not legal tender, there is no law which prohibits its use outside the casino which issues these. o While the transaction between the Chinese man and Bernard was unlikely, this is not unlawful. o Bernard would not have parted with the same if their corresponding representative equivalent was not received by them in return. • Casino chips are considered to have been exchanged with their corresponding representative value. à PRESUMPTION: Any person in possession of genuine casino chips is presumed to have paid for their representative value in exchange therefor.
DOCTRINE:
(11) PCI BANK V. FRANCO
FACTS: • Franco obtained four trust indenture certificates (TICs) from PCIB, now BDO. o TICs matured in 1987 o When he sought encashment, PCIB denied his requests. Despite demands, PCIB refused to comply. • RTC: Franco sued for DAMAGES o PCIB asserted that these were null and void due to conversion of all trust indenture accounts to trust accounts. Likewise, these were already way past their due dates, thus, obligations were already extinguished. o DECISION: IFO Franco à TICs were not yet replaced or cancelled. Thus, the obligation to pay still existed. • CA: AFFIRMED o There was no proof that the TICs were paid.
ISSUE: W/N the obligation was already extinguished – NO
HELD: • Franco’s possession of the original copies of the TICs strongly support his claim that PCIB’s obligation to return the principal plus interest has not yet been extinguished. • The TICs were are PROOF OF INDEBTEDNESS and prima facie evidence that the claim has not yet been extinguished. • When the creditor is in possession of the document of credit, he need not prove non-payment for it is presumed.
DOCTRINE: One who pleads payment has the burden of proving it. The creditor’s possession of the document of credit is evidence that the proof has not yet been paid.
(12) SPS. CACAYORIN V. AFPMBAI
FACTS: • Petitioner Oscar is a member of respondent AFPMBAI (mutual benefit association), engaged in developing low cost housing for members of the military and police. • Oscar and wife obtained a loan from the rural bank o LOAN AND MORTGAGE AGREEMENT à Bank informed AFPMBAI of the approval of the loan. o Bank closed. à AFPMBAI took possession of the LOAN DOCUMENTS and TCT of petitioner. • RTC: Petitioners filed a complaint for CONSIGNATION OF LOAN PAYMENT o AFPMBAI contended that HLURB had jurisdiction over the case
ISSUE: W/N consignation is proper -- YES
HELD: • The Court found that the consignation is proper because there were two entities which petitioners must deal with in order to fully secure their title to the property: o The RURAL BANK (through PDIC), the creditor, AND o AFPMBAI, which is in possession of the loan documents, and the one making demands. • The lack of prior tender of payment by the petitioners is not fatal to their consignation case. o They didn’t know who was entitled to the payment. o Art. 1256 of the NCC also allows consignation alone, without need for prior tender of payment, when the creditor is absent or unknown; he is incapacitated to receive the payment at the time it is due; two or more persons claim the right to collect; or the title has been lost. • Likewise, consignation is necessarily JUDICIAL, hence the jurisdiction lies with the RTC and not the HLURB.
DOCTRINE: The debtor shall be released from responsibility by the consignation of the thing or sum due, without need of prior tender of payment, when: a. The creditor is absent or unknown, or b. When he is incapacitated to receive the payment at the time it is due, or c. When two or more persons claim the same right to collect, or d. When the title to the obligation has been lost.
(13) SPS. BARREDO V. SPS. LEAÑO
FACTS: • Spouses Barredo purchased a house and lot with two LOANS o 50K from SSS payable in 25 years o 88K from Apex payable in 20 years o REM issued iFO SSS and APEX • They sold their house and lot to spouses Leaño by way of CONDITIONAL DEED OF SALE WITH ASSUMPTION OF MORTGAGE o Leaños would pay Barredos P200K à 100K DP, 100K in equal monthly payments after signing of contract o Leaños assumed mortgage until these were fully paid. à POSSESSION was surrendered to Leaños. • (2 years later) RTC: Barredos filed a complaint for RESCISSION OF CONTRACT o Ground: Leaños failed to pay the amortizations with Apex and SSS o Reply: Leaños answered that they were updated with their payments with Apex but not with SSS because of Barredo’s instructions. o Leaños likewise contended that the contract did not stipulate as a condition the full payment of the SSS and Apex mortgages
ISSUE: W/N the Barredos may rescind the contract on the ground of non-fulfillment of the prestation – NO
HELD: • The principal object of the contract was the DP of 110K and the monthly payments amounting to P100K as stipulated in the contract. o Assumption of mortgage was a collateral matter, which were a natural consequence of the sale of the mortgaged property. • To include the full payment of the obligations with the SSS and Apex as a condition would be unnecessary. o GR: When the terms of an agreement have been reduced to writing, such written agreement is deemed to contain all the terms agreed upon, and there can be, between the parties and their successors-in-interest, no evidence of such terms other than the contents of the written agreement. • Rescission due to non-compliance o The CONSIDERATION of the sale is the P200K. o Assumption of the mortgage by the Leaños is a natural consequence of their buying a mortgaged property. à Barredos also did not stand to benefit. • If Barredos were conscious of their credit standing, they should have notified Apex and SSS of the assumption of the Leaños of the mortgage.
DOCTRINE: Parties are bound by the stipulations, clauses, terms and conditions they have agreed to, which is the law between them, the only limitation being that these stipulations, clauses, terms and conditions are not contrary to law, morals, public order, or public policy.
(14) BPI V. CA
FACTS: • Reyes had two joint accounts: o Reyes with wife o Reyes with grandmother (Fernandez) § Fernandez received pension from the US which Reyes deposits in this account § Two months later, he closed this joint account and transferred the money to the joint account with his wife. • Upon learning of her death, the US Department of Treasury requested the petitioner bank for a refund. o BPI knew of Fernandez’s death o Reyes was informed that the treasury check was subject of a claim by Citibank. à he assured that he would look at the matter. He also authorized BPI VERBALLY that his other joint account could pay for the amount dishonored by the US Treasury Warrant. • Petitioner debited the joint account with his wife.
ISSUE: W/N there is legal compensation – YES
HELD: • Compensation shall take place when two persons, in their own right, are creditors and debtors of each other. o 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. o Legal compensation operates even against the will of the interested parties, and even without their consent. o EFFECT: it arises on the same day all requisites are present. • All elements present: o Obligors are bound as creditors as one another § Bank is a creditor of private respondent due to the dishonored US Treasury Warrant which was illegally transferred to his account § Reyes is a creditor of bank, as its depositor o This consists of a sum of money o These are due, liquidated and demandable o No third person is trying to claim.
DOCTRINE: Art. 1279 states that 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 are consumable, they be one of the same kind, and also the same quality if the latter has been stated; 3. That the two debts are 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.
(15) GO SINCO V. CA
FACTS: • Spouses Go Cinco obtained a loan from Maasin (MTLC) o It ballooned to 1M • PNB loan: used to pay the loan to MTLC o PNB released loan on the condition that MTLC will sign a document showing that spouses Go were to be released from their loan from MTLC o President of MTLC was outraged to find out that the properties mortgaged to MTLC were also collaterals of PNB, hence, she did not sign the deed of release/cancellation of mortgage and did not collect the PNB loan proceeds. • RTC/Sheriff: FORECLOSED the property of spouses Go Cinco • RTC: Spouses filed a case for SPECIFIC PERFORMANCE against MTLC o Foreclosure of the mortgage was no longer proper as there had already bene settlement of Manuel’s obligation IFO MTLC. They claimed that the assignment of the proceeds of the PNB loan amounted to the payment of the MTLC loan. o IFO spouses • CA: REVERSED. Ruled IFO MTLC
ISSUE: W/N the proceeds of the PNB loan may be considered as payment to the MTLC loan – YES
HELD: • In contracts of loan, the debtor is expected to deliver as payment the sum of money due to the creditor. o The rule requires acceptance by the creditor of the payment in order to extinguish the obligation. o The SPA issued by spouses Go Cinco to MTLC president stood as an authority to collect the proceeds of the already-approved PNB loan, that upon receipt of the MTLC president, would have constituted as payment of the loan. Had MTLC president signed it, the MTLC loan would have been paid. BUT she refused to collect and allow the cancellation of the mortgage. à this amounted to UNJUST REFUSAL. • Refusal is not equivalent to payment. o When creditor refuses debtor’s tender of payment, the law allows the consignation of the thing or the sum due. o Tender à has, as an effect, payment of the amount due
DOCTRINE: A refusal without just cause is not equivalent to payment; to have the effect of payment and the consequent extinguishment of the obligation to pay, the law requires the companion acts of tender of payment and consignation.
(16) DALTON V. FGR REALTY & DEV. CORP.
FACTS: • Flora Dayrit sold her property to FGR Realty. o Dalton was a lessee. o Dayrit and FGR eventually stopped receiving rental payments because they wanted to terminate the lease agreements. • RTC: Tenants consigned their payments with the RTC. o Respondents were not notified of such. o Upon their knowledge of the consignments, the respondents withdrew the amounts anyway, but reserved the right to contest the validity of the consignation. o Dalton refused to enter into a compromise the agreement.
ISSUE: W/N there is a valid consignation – NO
HELD: • The petitioner in this case did not comply with the twin-notice rule (before deposit and after deposit). As such, she could not be released to pay the obligation. • Further, the respondents reserved the right to contest the validity of the consignation of payment, another reason why the petitioner must not be released from the obligation to pay.
DOCTRINE: In order that the consignation of the thing due may release the obligor, it must first be announced to the persons interested in the fulfillment of the obligation. The consignation shall be ineffectual if not made strictly in consonance with the provisions which regulate payment Consignation shall be made by depositing the things due at the disposal of judicial authority, before whom the tender of payment shall be proved, in a proper case, and the announcement of the consignation in the other cases.
(17) LAND BANK OF THE PHIL. V. ALFREDO ONG
FACTS: • Spouses Sy obtained a loan from Landbank o SECURITY: mortgage • They could no longer pay so they sold three parcels of land to the parents of Mrs. Sy – Ong spouses o DOS: included an assumption of mortgage • The mortgage involving the two families had no infirmities but Landbank did not approve the assumption of mortgage because the Ongs had a bad credit score (another mortgage in another bank that was past due) • Property was about to be forclosed due to a Notice of Forclosure of Mortgage in the RTC in Albay • RTC: RECOVERY FOR SUM OF MONEY WITH DAMAGES o The assumption of mortgage was not perfected, but ruled under equity and justice that bank should return to Alfredo the amount he already paid plus interest (from filing of complaint) • CA: AFFIRMED
ISSUE: W/N there is a valid novation despite payment of Ongs to Landbank – NO
HELD: • NO. Both parties must agree in order for novation to take effect because novation is never presumed.
DOCTRINE: Novation must be agreed by the parties to a contract.
(18) SPS.REYES V. BPI (FSB)
FACTS: • Spouses Reyes executed an REM to secure a P15M loan with BPI o They failed to pay o Restructuring: 20 quarterly installments at 18% interest • RTC: FORECLOSURE o Spouses alleged that the restructuring agreement novated the first loan agreement because novation was without their knowledge. They were allegedly released from the mortgage. o IFO Bank • CA: AFFIRMED
ISSUE: W/N there was novation – NO
HELD: • Petitioner and bank only extended the repayment term from one year to 20 quarterly payments • There was no intention to supersede or abrogate the old loan contract secured by the REM. o Intent of new contract was to revive the old obligation after the original period expired and the loan remained unpaid.
DOCTRINE: Novation is defined as an extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which terminates the first, either by changing the object or principal conditions, or by substituting the person of the debtor, or subrogating a third person in the rights of the creditor.
CONTRACTS
(19) ODYSSEY PARK, INC. V. CA
FACTS: • ISSUE:
HELD:
DOCTRINE:
(20) SM INVESTMENTS CORP. (SMIC) V. POSADAS
FACTS: • Sy offered a JVA with Posadas village to turn Posadas Village into a commercial/residential subdivision o P70M goodwill money, plus 60.40 sharing IFO Posadas once project is implemented o Posadas responded with a letter to SM, except earnest money which should be not less than P8M, also asked details o SMIC sent a letter containing an unqualified counterproposal. SMIC submitted drawings for development. • After SMIC sent the last letter, Posadas family stated that they received more lucrative offers, and silence of SMIC tantamount to lack of interest. o Posadas denies existence of the JVA between them and SMIC
ISSUE: W/N there is a perfected JVA between SMIC and the Posadas – YES
HELD: • The several correspondence showed a perfection of a JVA between the parties • Elements of a VALID CONTRACT o Consent § There was a meeting of the minds o Object § The JVA o Cause/consideration § Goodwill money and specific sharing scheme • Respondents were well aware that the JVA was perfected. That’s why they were careful with their language when they insisted that unless SMIC would propose amending the JVA to include better terms, respondents would withhold their comments on drawings. – They did not DENY the perfection of the JVA.
DOCTRINE: A JVA agreement is perfected when there is a meeting of the minds or CONSENT; there is an object certain, and where there is a cause or consideration.
(21) BOSTON BANK OF THE PHIL. V. MANALO
FACTS: • Spouses Manalo are purported buyers of 2 banks sold by OBM o Price: 20% DP agreed upon o Spouses Manalo began construction. • Boston purchased OBM. à Boston tried to stop the construction because the spouses did not have an existing contract with OBM (predecessor) o There was no valid contract to sell since the payment of the 80% was not agreed upon. Thus, the letter-agreement was not a binding contract. • RTC: Spouses filed a complaint for DAMAGES AND SPECIFIC PERFORMANCE o Alleged that with their DP, they were entitled to a delivery of the DOAS over the covered lots. o IFO spouses • CA: upheld the RTC decision
ISSUE: W/N the letter agreement was a valid contract to sell – NO
HELD: • The contract is unenforceable because the manner of payment of the 80% was not yet agreed upon. • For a perfected contract of sale or contract to sell, there must be an agreement not only on the PRICE but also on the manner the price is to be paid by the vendee. • Price is an essential element in the formation of a binding and enforceable contract of sale. o Contract of sale in installments – it is essential that the price and down payment are agreed upon. They must also agree upon the schedule of payments of the balance of the purchase price. o In the agreement, only the payment of the DP was agreed upon. • Jurisprudence holds that if a material element of the contemplated contract is left for future negotiations, the same is too indefinite to be enforceable. As such, no legal obligation arises.
DOCTRINE: It is not enough for parties to agree on the price of the property. The parties must also agree on the manner of payment of the price to give rise to a binding and enforceable contract of sale or contract to sell. When an essential element of a contract is reserved for future agreement of parties, there is no legal obligation until such future agreement is included.
(22) JOSE AND AIDA YASON V. FAUSTINO ARCIAGA
FACTS: • Spouses Arciaga were owners of a lot covered by a TCT in Makati. o DOAS: property sold IFO spouses Yason. o Tender of initial payment of P150K. Upon payment of the balance of P115K, spouses Arciaga executed the DOAS. That day, Claudia (Arciaga) died. o Yasons had the DOAS registered. § This was registered by a certain Medina, who falsified the same, making it appear that it was sold 4 years earlier and for only P25K rather than P265K. § TCT issued IFO Yasons. • RTC: Spouses Arciaga filed a case for ANNULMENT of the TITLES o Ground: Claudia was seriously ill, weak and unable to talk, and the DOAS was falsified. o DISMISSED THE COMPLAINT • CA: REVERSED the RTC decision in an MR
ISSUE: W/N Claudia voluntarily affixed her thumbmark – YES W/N the contract of sale is valid – YES
HELD: • While Claudia was sick and bedridden, respondents failed to prove that she could no longer understand the terms of the contract and that she did not affix her thumbmark thereon. The court is convinced that consent was given by Claudia. • Mere weakness of mind alone, without imposition of fraud, is not a ground for vacating a contract. Only if there is unfairness in the transaction, such as gross inadequacy of consideration, the low degree of intellectual capacity of the party, may be taken into consideration for the purpose of showing such fraud as will afford a ground for annulling a contract.
DOCTRINE: Mere weakness of mind alone, without imposition of fraud, is not a ground for vacating a contract. Only if there is unfairness in the transaction, such as gross inadequacy of consideration, the low degree of intellectual capacity of the party, may be taken into consideration for the purpose of showing such fraud as will afford a ground for annulling a contract.
(23) MANDARIN VILLA V. CA
FACTS: • De Jesus hosted a dinner at Mandarin Villa and used his credit card. à EXPIRED o Other credit card à accepted • RTC: De Jesus filed a case against Mandarin Villa because of the embarrassment he got from the declined BANKARD credit card
ISSUE: W/N Mandarin Villa is bound to accept payment by means of credit card – YES W/N Mandarin Villa was negligent – YES
HELD: • While De Jesus may not have been party to the agreement between Bankard and Mandarin Villa, the agreement between the two parties conferred a favor upon him – STIPULATION POUR AUTRUI under Art. 1131 of the NCC. o He may demand its fulfillment provided that he communicated his acceptance before Mandarin Villa revoked it. o De Jesus offered to pay by means of his credit card – an acceptance of the stipulation, also an explicit communication of his acceptance to the obligor. • Mandarin Villa likewise did not use reasonable care and caution which an ordinary prudent man would have used in the same situation. The practice among major establishments is to accept credit card payments in lieu of cash is of judicial notice. o When Mandarin Villa accepted the credit card after verifying validity, any imputation of negligence on his part was refuted.
DOCTRINE: If a contract should contain a stipulation in favor of a third person, he may demand its fulfillment provided that he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred favor upon a third person.
(24) BPI EXPRESS CREDIT CARD CORP. V. ARMOVIT
FACTS: • Armovit is a client of BPI Express Credit Card. o She treated her British friends for lunch and paid with her credit card. She was informed that her credit card was cancelled, which caused extreme embarrassment. o Previously, she was informed by BPI (two messages) of her outstanding obligations. o She paid her credit card. • BPI contended that a reapplication was necessary for reactivation. • RTC: ARmovit sued BPI Express for DAMAGES
ISSUE: W/N BPI is liable for damages – YES
HELD: • The relationship between the credit card issuer and holder is a CONTRACTUAL one that is governed by the terms and conditions found in the membership agreement. o This is LAW between the parties. o There is nothing in the membership agreement that reveals that Armovit needed to submit her application as antecedent condition for her credit card to be taken out of the list of suspended cards. • The statements in the message sent to Armovit merely raised doubt as to whether the requirement had really been a pre-condition or not. With BPI being the party causing confusion, the interpretation of the contract could not be done in its favor. o Moreover, it was a contract of adhesion. Thus, its terms and conditions had to be construed against BPI. DOCTRINE: The relationship between the credit card issuer and holder is a contractual relationship that is governed by the terms and conditions found in the card membership agreement.
(25) ECE REALTY & DEV. INC. V. MANDAP
FACTS: • ISSUE:
HELD:
DOCTRINE:
(26) THE INSULAR LIFE ASSURANCE COMPANY LTD. V. ASSET BUILDERS CORP.
FACTS: • Insular Life invited several contractors, including respondent ABC to bid for the construction of a building in Lucena City. o ABC won, but the latter did not affix its conformity. o Insular expressly required a formal acceptance in its instruction to bidders. o Post-qualification proceedings were conducted by Insular. à no construction agreement was executed. • After conference and ground breaking, ABC withdrew its bid proposal because the paper works could not be fast tracked and the price escalated. o Insular made a counteroffer to accommodate the wage increase. – ABC still withdrew its proposal. • RTC: Insular claimed for DAMAGES against Insular o Insular claimed that there was a perfected contract.
ISSUE: W/N there was a perfected contract between Insular and ABC – NO W/N ABC can withdraw its offer prior to its receipt of the notice of award – YES
HELD: • The contract was not perfected because the acceptance was not received by ABC (offeror) o It was at the negotiation change where the parties exchanged counter-offers. o Contract is perfected upon the meeting of the counter-offers. • A party may stop negotiation and withdraw its offer or counteroffer at any time prior to its receipt of the other party’s acceptance thereof. To produce an agreement, the offer must be certain and the acceptance timely and absolute.
DOCTRINE: A contract is perfected upon the meeting of the counter-offers. Three stages of a contract: preparation or negotiation, perfection, and consummation. No contract shall arise unless its acceptance is communicated to the offeror.
(27) SERRA V. CA
FACTS: • Serra and RCBC entered into a contract of lease with option to buy of Serra’s property. Conditions: o Lease is for 25 years o Option shall be made within 10 years from execution of contract. o Price should not be greater than P210/sqm o If the bank fails to purchase, the improvements shall be forfeited IFO Serra • Before the 10-year period, RCBC expressed its intention to buy, but Serra refused to sell. • RTC: RCBC filed a case for SPECIFIC PERFORMANCE o Answer: Serra claimed there was no consideration, thus not binding.
ISSUE: W/N there was consideration distinct and separate from the price, thus making the option contract valid – YES
HELD: • Jurisprudence has taught us that an option contract is a privilege existing only in one party – the buyer. For a separate consideration paid, he is given the right to decide to purchase or not, a certain property, at anytime within the agreed period, for a fixed price. • In the present case, the consideration is even more onerous on the part of the lessee since it entails transferring of the building and/or improvements on the property to petitioner, should respondent bank fail to exercise its option within the period stipulated.
DOCTRINE: The consideration for the lessor’s obligation to sell the leased premises to the lessee, should he choose to exercise his option to purchase the same, is the obligation fo the lessee to transfer to the lessor the building and/or improvements constructed and/or made by the former, if he fails to exercise his option to buy the leased premises.
(28) SPS. SANTIAGO V. CA
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(29) REYES V. ASUNCION
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(30) LIM V. CA
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(31) GUZMAN BOCALING AND CO. V. BONNEVIE
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(32) JOVAN LAND V. CA
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(33) CHING V. GOYANKO JR.
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Facts: ● Sacobia Hills Development Corporation (Sacobia) is the developer of True North Golf and Country Club which boasts of amenities that include a golf course, clubhouse, sports complex and several vacation villas. ● Allan U. Ty wrote to Sacobia a letter expressing his intention to acquire one Class A share of True North and accordingly paid the reservation fee of P180K as evidenced by PCI Bank Check. ● Sacobia assured its prospective shareholders that the development of True North was proceeding on schedule; ○ That the golf course would be playable by October 1999; ○ That the Environmental Clearance Certificate (ECC) by the Department of Environment and Natural Resources (DENR) as well as the Permit to Sell from the Securities and Exchange Commission (SEC) should have been released by October 1997; and ○ That their registration deposits remained intact in an escrow account. Sacobia then approved the purchase application and membership of Ty for P600,000.00, subject to certain terms and conditions. The notice of approval provided the following: ● Terms and Conditions ○ Approval of an application to purchase golf/country club shares is subjected to the full payment of the total purchase price. Should the buyer opt for the deferred payment scheme, approval is subject to our receipt of a down payment of at least 30% and the balance payable in installments over a maximum of eleven (11) months from the date of application, and covered by postdated cheques. ○ Your reserved share shall be considered withdrawn and may be deemed cancelled should you fail to settle your obligation within fifteen (15) days from due date, or failure to cover the value of the postdated cheques upon their maturity, or your failure to issue the required postdated cheques. In which case, we shall reserve the right to offer the said shares to other interested parties. This also means forfeiture of 50% of the total amount you have already paid. ○ We will undertake to execute the corresponding sales documents/ Deed of Absolute Sale covering the reserved shares upon full payment of the total purchase price. The Certificate of Membership shall be issued thereafter. ● However, on January 12, 1998, Ty notified Sacobia that he is rescinding the contract and sought refund of the payments already made due to the latter’s failure to complete the project on time as promised (supposedly October 1997). ● Sacobia wrote him a letter, stating that the DENR had issued the required ECC only on March 5, 1998, and that the golf course would be ready for use by end of 1998 ( in fact ahead of promised date which is October 1999). ● Sacobia again wrote Ty advising him that the 18-hole golf course would be fully operational by summer of 1999. ● Sacobia also sought to collect from Ty his outstanding balance of P190K which was covered by five (5) post dated checks. ● However, Ty notified Sacobia that he had stopped payment on the five (5) post dated checks and reiterated his demand for the refund of his payments which amounted to P409K. ● Sacobia denied his request thus Ty filed a complaint for rescission and damages.
Issue: Whether Ty can rescind the contract and demand for damages from Sacobia for breach of contract.
Held: ● NO. Ty cannot rescind the contract and demand for damages from Sacobia for breach of contract because the contract to sell between them has not yet been perfected for failure by Ty to pay the full purchase price. ○ Ty did not pay the full purchase price which is his obligation under the contract to sell, therefore, it cannot be said that Sacobia breached its obligation. No obligations arose on its part because respondent’s non-fulfillment of the suspensive condition rendered the contract to sell ineffective and unperfected. Indeed, there can be no rescission under Article 1191 of the Civil Code because until the happening of the condition, i.e. full payment of the contract price, Sacobia’s obligation to deliver the title and object of the sale is not yet extant. A non-existent obligation cannot be subject of rescission. Article 1191 speaks of obligations already existing, which may be rescinded in case one of the obligors fails to comply with what is incumbent upon him. ● Ty’s failure to fulfill this suspensive condition prevented the perfection of the contract to sell. With an ineffective contract, Ty had not acquired the status of a shareholder but remained, at most, a prospective investor. In the absence of a juridical tie between the parties, Ty cannot claim the rights and privileges accorded to Sacobia’s full-fledged members and shareowners, including the full enjoyment of the amenities being offered. Unfortunately for Ty, he cannot avail of rescission as envisioned by Article 1191 of the Civil Code. However, he can withdraw his investment subject to the restrictions under the terms and conditions pertinent to a reneging investor.
Ty’s complaint for rescission of contract and damages is dismissed.
FACTS: • Ty wrote Sacobia Hills (Sacobia), developer of True North Country Club, a letter of his intention to acquire one Class A stock, and paying a reservation fee o P180K PCIB Check • Sacobia promised its shareholders that the golf course would be playable by October 1999, and that their membership is protected, under the following terms and conditions: • Ty notified Sacobia that he was RESCINDING the contract of sale and sought to refund payments due to the failure of Sacobia to complete the project (claimed on October 1998) o Sacobia claimed that the promise was by October 1999, but it would in fact be ready to use by the end of 1998. o Ty further assured that it was going to be fully operational by summer of 2009, and sought the payment of the balance worth P190K -- > Ty paid the check but stopped payment, wanting refund of his total payments totaling P409K. o Sacobia refused to refund payments. • RTC: Ty filed a COMPLAINT for RESCISSION AND DAMAGES
ISSUE: W/N Ty can rescind the contract and demand damages from Sacobia for breach of contract – NO
HELD: CASE DISMISSED. • Ty cannot rescind and demand for damages because the contract to sell between them had not yet been perfected due to Ty’s failure to pay the purchase price. o Failure of Ty to pay à no obligation on the part of respondent arose. Thus, no breach of contract arose. o There can be no rescission under Art. 1191 because until the happening of the condition (full payment of contract price), Sacobia’s obligation to deliver title and object was not yet extant. o Non-existent obligation cannot be subject of rescission. • Ty failed to fulfill a suspensive condition, which prevented the perfection of the contract to sell. o He was, at most, a prospective investor. o He does not have the same rights as Sacobia’s other full-fledged members and shareowners because of his failure to pay the full price.
DOCTRINE: A non-existent obligation cannot be subject of rescission.