G.R. No. 118367 - January 5, 1998.

DEVELOPMENT BANK OF THE PHILIPPINES,

petitioner, v. COURT OF APPEALS and LYDIA CUBA,

respondents.

DAVIDE, JR., J.:

FACTS

Plaintiff is a grantee of a Fishpond Lease Agreement and it obtained from

DBP three separate loans. Plaintiff failed to pay her loan on the scheduled
dates. Without foreclosure proceedings, defendant DBP appropriated the
leasehold Rights of over the fishpond then executed a Deed of Conditional Sale
of the Leasehold Rights in favor of plaintiff over the same fishpond. In the
negotiation for repurchase, plaintiff addressed two letters to the Manager DBP.
After the Deed of Conditional Sale was executed in favor of plaintiff, a new
Fishpond Lease Agreement was issued by the Ministry of Agriculture and Food
but the plaintiff failed to pay the amortizations. Defendant DBP thereafter sent
a Notice of Rescission thru Notarial. Defendant took possession of the
Leasehold Rights, advertised the public bidding to dispose of the property and
thereafter executed a Deed of Conditional Sale in favor of defendant Agripina
Caperal. Plaintiff filed complaint against DBP and Caperal. The trial court
ruled in favor of the plaintiff while the appellate court ordered DBP to turn over
possession of the property to Caperal as lawful holder of the leasehold rights
and to pay the plaintiff the amounts of P1,067,500 as actual damages; P50,000
as moral damages; and P50,000 as attorney's fees.

ISSUE

Whether the assignment of leasehold rights was a mortgage contract, not

amounting to novation, cession under Art. 1255 of Civil Code, nor a Dation
under Art. 1254

HELD

YES, the assignment of leasehold rights was a mortgage contract. We find

no merit in DBPs contention that there is novation since the obligation to pay a
sum of money remained, and the assignment merely served as security for the
loans covered by the promissory notes. Likewise, there is no cession considering
that article 1255 contemplates the existence of two or more creditors and
involves the assignment of all the debtor's property, but in the case only DBP is
the creditor. Furtheremore, the assignment, being in its essence a mortgage,
was but a security and not a satisfaction of indebtedness so there is no Dation
as defined in Article 1254.

G.R. No. 154127. December 8, 2003.

ROMEO C. GARCIA, petitioner, vs. DIONISIO V.
LLAMAS, respondent.

PANGANIBAN, J.:

FACTS

This case started out as a complaint for sum of money and damages by
Dionisio Llamas against Romeo Garcia and Eduardo de Jesus. Petitioner
borrowed P400,000.00 from respondent; that, on the same day, they executed a
promissory note wherein they bound themselves jointly and severally to pay the
loan; that the loan has long been overdue and, despite repeated demands, they
have failed and refused to pay it. Resisting the complaint, Petitioner Garcia
averred that he assumed no liability under the promissory note because he
signed it merely as an accommodation party for De Jesus; and, alternatively,
that he is relieved from any liability arising from the note inasmuch as the loan
had been paid by de Jesus by means of a check and the issuance of such and
the respondents acceptance thereof novated or superseded the note.

ISSUES

Whether there was novation in the obligation

HELD

NO novation took place. For novation to take place, the following

requisites must concur: there must be a previous valid obligation; the parties
concerned must agree to a new contract; the old contract must be
extinguished; and there must be a valid new contract. Applying the foregoing to
the instant case, the Court held that no novation took place. The parties did
not unequivocally declare that the old obligation had been extinguished.
Moreover, it must be noted that for novation to be valid and legal, the law
requires that the creditor expressly consent to the substitution of a new debtor.
Having made himself jointly and severally liable with De Jesus, petitioner is
therefore liable for the entire obligation.
G.R. No. 128448. February 1, 2001.
SPOUSES ALEJANDRO MIRASOL and LILIA E.
MIRASOL, petitioners, vs. THE COURT OF APPEALS,
PHILIPPINE NATIONAL BANK, and PHILIPPINE
EXCHANGE CO., INC., respondents.

QUISUMBING, J.:

FACTS

The Mirasols are sugarland owners and planters. Private respondent

Philippine National Bank financed the Mirasols' sugar production venture.
Under said scheme, the Mirasols signed Credit Agreements, a Chattel Mortgage
on Standing Crops, and a Real Estate Mortgage in favor of PNB. The Chattel
Mortgage empowered PNB as the petitioners' attorney-in-fact to negotiate and
to sell the latter's sugar in both domestic and export markets and to apply the
proceeds to the payment of their obligations to it. PNB continued to finance the
sugar production of the Mirasols. These crop loans and similar obligations were
secured by real estate mortgages and chattel mortgages. Believing that the
proceeds of their sugar sales to PNB were more than enough to pay their
obligations, petitioners asked PNB for an accounting. PNB ignored the request.
PNB then asked petitioners to settle their due and demandable accounts. As a
result, petitioners on August 4, 1977, conveyed to PNB real properties by way of
dacion en pago. On August 10, 1982, the balance of outstanding sugar crop
and other loans owed by petitioners stood at P15,964,252.93. Despite
demands, the Mirasols failed to settle said due and demandable accounts. PNB
then proceeded to extrajudicially foreclose the mortgaged properties but still
had a deficiency claim of P12,551,252.93.

ISSUES
 Whether the Honorable Court of Appeals committed manifest error in
upholding the validity of the foreclosure on petitioners property and in
upholding the validity of the dacion en pago in this case.

HELD

The Court finds petitioners' arguments unpersuasive. Both the lower

court and the appellate court found that the Mirasols admitted that they were
indebted to PNB in the sum stated in the latter's counterclaim. 26 Petitioners
nonetheless insist that the same can be offset by the unliquidated amounts
owed them by PNB for crop years 1973-74 and 1974-75. Petitioners' argument
has no basis in law. For legal compensation to take place, the requirements set
forth in Articles 1278 and 1279 of the Civil Code must be present. In the
present case, set-off or compensation cannot take place between the parties
because: first, neither of the parties are mutually creditors and debtors of each
other; second, compensation cannot take place where one claim, as in the
instant case, is still the subject of litigation, as the same cannot be deemed
liquidated.

G.R. No. 156846. February 23, 2004.

TEDDY G. PABUGAIS, petitioner, vs. DAVE P.

SAHIJWANI, respondent.

YNARES-SANTIAGO, J.:

FACTS

Petitioner Pabugais, in consideration of the amount of P15,487,500.00,

agreed to sell to respondent Sahijwani a lot containing 1,239 square meters.
Respondent paid petitioner the amount of P600,000.00 as option/reservation
fee and the balance to be paid within 60 days from the execution of the
contract, simultaneous with delivery of the owner's duplicate Transfer
Certificate of Title, Deed of Absolute Sale; the Certificate of Non-Tax
Delinquency on real estate taxes and Clearance on Payment of Association
Dues. The parties further agreed that failure on the part of respondent to pay
the balance of the purchase price entitles petitioner to forfeit the P600,000.00
option/reservation fee; while non-delivery by the latter of the necessary
documents obliges him to return to respondent the said option/reservation fee
with interest at 18% per annum. Petitioner failed to deliver the required
documents. In compliance with their agreement, he returned to respondent the
latter's P600,000.00 option/reservation fee by way of Far East Bank & Trust
Company which was, however, dishonored. Petitioner avers that he wrote a
letter saying saying that he is consigning the amount tendered with the RTC
Makati City. On the other hand, respondent admitted that his office received
petitioner's letter but claimed that there was no valid tender of payment
because no check was tendered.

ISSUES

1 Whether there was a valid consignation

2. Whether the petitioner can withdraw the amount consigned as a matter of

right

HELD

1. YES. Consignation is the act of depositing the thing due with the court or
judicial authorities whenever the creditor cannot accept or refuses to accept
payment and it generally requires a prior tender of payment. In this case,there
is a valid consignation as there is a valid tender of payment in an amount
sufficient to extinguish the obligation.

2. NO. Withdrawal of the money consigned would enrich petitioner and

unjustly prejudice respondent. Article 1260 is not applicable here. It provides
that Once the consignation has been duly made, the debtor may ask the judge
to order the cancellation of the obligation. The instant petition for review is
DENIED and the petitioner's obligation to respondent under paragraph 5 of the
"Agreement And Undertaking" as having been extinguished, is AFFIRMED.

G.R. No. 123855. November 20, 2000.*

NEREO J. PACULDO, petitioner, vs. BONIFACIO C.
REGALADO, respondent.

PARDO, J:

FACTS

Petitioner and respondent entered into a lease contract over a 16,478

square meter property. Petitioner also leased from respondent eleven other
properties and purchased from the same respondent eight units of heavy
equipment and vehicles. Petitioner failed to pay rentals for the wet market
property for May, June, and July 1992. Respondent demanded for the payment
of the due rent with advise that if payment is not received within fifteen days
the lease contract will be cancelled. Petitioner tried to pay on a daily basis
respondent refused to accept the same. Petitioner then filed an action for
injunction and damages seeking to enjoin respondent from disturbing his
possession of the leased property. Respondent, on the other hand, filed an
ejectment case against the petitioner. MTC ruled in favor of the respondent and
ordered the petitioner to vacate the prmeises. RTC which subsequently
affirmed the MTC decision en toto.

ISSUE

Whether the petitioner was truly in arrears in the payment of the rentals
on the subject property at the time of the filing of the complaint for ejectment

HELD

NO. There was no clear assent from the petitioner to the change in the
manner of application of payment. The silence of the petitioner with regard the
request of the respondent with regard the application of the rental did not
mean that he consented thereto. Assuming further that petitioner did not
choose the obligation to be first satisfied, giving the respondent the right to
apply the payments to the other obligations of the petitioner, Article 1252 of the
Civil Code provides that no payment shall be made to a debt not yet due and
that payment must be first applied to the debt most onerous to the debtor
under Article 1254. The decision of the Court of Appeals was based on a
misapprehension of the facts and the law on the application of payment.
Hence, the ejectment case subject of the instant petition must be dismissed,
without prejudice to the determination and settlement of the money claims of
the parties inter se.

G.R. No. 100290. June 4, 1993.

NORBERTO TIBAJIA, JR. and CARMEN TIBAJIA,
petitioners, vs. THE HONORABLE COURT OF APPEALS
and EDEN TAN, respondents.

PADILLA, J.:

FACTS

Case No. 54863 was a suit for collection of a sum of money filed by Eden
Tan against the Tibajia spouses. A writ of attachment was issued by the trial
court and the Deputy Sheriff filed a return stating that a deposit made by the
Tibajia Spouses had been garnished by him. On 10 March 1988, RTC Branch
151 of Pasig rendered its decision ordering the Tibajia spouses to pay her an
amount in excess of P300,000.00. On appeal, the Court of Appeals modified
the decision by reducing the award of moral and exemplary damages. The
decision having become final, Eden Tan filed the corresponding motion for
execution. On 14 December 1990, the Tibajia spouses delivered to Deputy
Sheriff Eduardo Bolima the total money judgment. Private respondent refused
to accept the payment made by the Tibajia spouses and instead insisted that
the garnished funds deposited with the cashier of the RTC Manila be
withdrawn to satisfy the judgment obligation. Petitioners filed a motion to lift
the writ of execution on the ground that the judgment debt had already been
paid. However, the motion was denied by the trial court on the ground that
payment in cashiers check is not payment in legal tender and that payment
was made by a third party other than the defendant.

ISSUE

Whether payment by means of check is considered payment in legal

tender as required by the Civil Code, Republic Act No. 529, and the Central
Bank Act.

HELD

NO. In the recent cases of Philippine Airlines, Inc. vs. Court of Appeals and
Roman Catholic Bishop of Malolos, Inc. vs. Intermediate Appellate Court, this
Court held that a check, whether a managers check or ordinary check, is not
legal tender, and an offer of a check in payment of a debt is not a valid tender
of payment and may be refused receipt by the obligee or
creditor. The ruling in these two (2) cases merely applies the statutory
provisions which lay down the rule that a check is not legal tender and that a
creditor may validly refuse payment by check, whether it be a managers,
cashiers or personal check. WHEREFORE, the petition is DENIED.

G.R. No. 104726. February 11, 1999.

VICTOR YAM & YEK SUN LENT, doing business under
the name and style of Philippine Printing Works,
petitioners, vs. THE COURT OF APPEALS and MANPHIL
INVESTMENT CORPORATION, respondents.

MENDOZA, J.:

The parties in this case entered into a Loan Agreement with Assumption
of Solidary Liability whereby petitioners were given a loan of P500,000.00 by
private respondent. The contract provided for the payment of 12% annual
interest, 2% monthly penalty, 1 1/2% monthly service charge, and 10%
attorneys fees. The loan was secured by a chattel mortgage on the printing
machinery in petitioners establishment. Petitioners subsequently obtained a
second loan evidenced by two promissory notes. The deed of chattel mortgage
was amended correspondingly. Private respondent was placed under
receivership by the Central Bank and Ricardo Lirio and Cristina Destajo were
appointed as receiver and in-house examiner, respectively. Petitioners made a
partial payment of P50,000.00 on the second loan. They later wrote private
respondent a letter proposing to settle their obligation. Private respondent
replied that it would reduce the penalty charges up to P140,000.00, provided
petitioners can pay their obligation on or before July 30,1986. The private
respondent sent two demand letters to petitioners seeking payment of the
balance of P266,146.88. As petitioners did not respond, private respondent
filed for the foreclosure of the mortgaged machineries. Petitioners claimed that
they had fully paid their obligation to private respondent. Petitioners added
that this fact of full payment is reflected in the voucher accompanying the
Pilipinas Bank check they issued, which bore the notation full payment of
IGLF loan.

ISSUE

Whether petitioners are liable for the payment of the penalties and
service charges on their loan.

HELD

YES. The answer is in the affirmative. Art. 1270, par. 2 of the Civil Code
provides that express condonation must comply with the forms of donation.
Art. 748, par. 3 provides that the donation and acceptance of a movable, the
value of which exceeds P5,000.00, must be made in writing, otherwise the
same shall be void. In this connection, under Art. 417, par. 1, obligations,
actually referring to credits, are considered movable property. In the case at
bar, it is undisputed that the alleged agreement to condone P266,146.88 of the
second IGLF loan was not reduced in writing. Wherefore, the decision of the
Court of Appeals is AFFIRMED.

G.R. No. L-15645. January 31, 1964.

PAZ P. ARRIETA and VITALIADO ARRIETA, plaintiffsappellees,
vs. NATIONAL RICE AND CORN
CORPORATION, defendant-appellant, MANILA
UNDERWRITERS INSURANCE CO., INC., defendantappellee.

REGALA, J.:

FACTS

Paz Arrieta, a rice dealer/importer, participated in a public bidding held

by the National Rice and Corn Corporation (NARIC). Arrieta was the lowest
bidder hence she won the bidding. So a contract was made whereby Arrieta is
to deliver the rice supply and NARIC is to pay for the imported rice by means
of an irrevocable, confirmed and assignable letter of credit in U.S. currency in
favor of the Arrieta and/or supplier in Burma, immediately. Arrieta then
proceeded to contact her supplier in Burma to arranged the sale of the 20k
metric ton of Burmese Rice. Arrieta promised Setkya that he will be paid by
NARIC on August 4, 1952. Arrieta also made a P200,000.00 as advance
payment to Setkya. Meanwhile, NARIC tried to open a letter of credit ion the
amount of $3,614,000.00 with the Philippine National Bank. PNB agreed to
open the letter of credit but only on the condition that NARIC deposits 50% of
the said amount. NARIC failed to do this and the letter of credit was not opened
when the obligation to pay Setkya became due. Because of this, Arrieta lost the
opportunity to profit from the sale as the agreement was eventually forfeited.
Her 5% deposit was likewise forfeited pursuant to Burma laws.

ISSUE

Whether or not Arrieta is entitled to damages.

HELD

Yes. It is clear upon the records that the sole and principal reason for the
cancellation of the allocation contracted by Arrieta in Rangoon, Burma, was
the failure of the letter of credit to be opened with the contemplated period. In
the premises, however, a minor modification must be effected in the dispositio
portion of the decision appealed from insofar as it expresses the amount of
damages in U.S. currency and not in Philippine Peso. Republic Act 529
specifically requires the discharge of obligations only "in any coin or currency
which at the time of payment is legal tender for public and private debts." In
view of that law, therefore, the award should be converted into and expressed in
Philippine Peso. UPON ALL THE FOREGOING, the decision appealed from is
hereby affirmed, with the sole modification that the award should be converted
into the Philippine peso at the rate of exchange prevailing at the time the
obligation was incurred or on July 1, 1952 when the contract was executed.

G.R. No. 61594. September 28, 1990.

PAKISTAN INTERNATIONAL
AIRLINES CORPORATION v.
OPLE

FELICIANO, J.:

FACTS: Petitioner executed in two separate contracts of employment, one with

private respondent Ethelynne B. Farrales and the other with private
respondent Ma. M.C. Mamasig. The contracts provided that it shall be for a
period of three years, but can be extended by the mutual consent of the
parties; PIA reserves the right to terminate the agreement at any time by giving
notice in writing or by paying the wages equivalent to one month's salary; and
the agreement shall be construed and governed under and by the laws of
Pakistan. Prior to the expiration of the contracts of employment, PIA sent
separate letters to private respondents advising both that their services as
flight stewardesses would be terminated. Private respondents jointly instituted
a complaint for illegal dismissal and non-payment of company benefits and
bonuses, with the then Ministry of Labor and Employment ("MOLE"). Director
Estrella ordered the reinstatement of private respondents with other benefits
due to them. On appeal, Hon. Leogardo Jr., adopted the findings of the
Regional Director. In the instant Petition for Certiorari, petitioner PIA assails
the award for having been issued in disregard and in violation of petitioner's
rights under the employment contracts with private respondents.

ISSUE: Whether PIA can invoke paragraphs 5 and 6 of its contract of

employment with private respondents on the ground that its relationship with
them was governed by the provisions of its contract rather than by the general
provisions of the Labor Code

RULING: No. Paragraph 5 of that employment contract was inconsistent with

Articles 280 and 281 of the Labor Code as they existed at the time the contract
of employment was entered into, and hence refused to give effect to said
paragraph 5. A contract freely entered into should, of course, be respected, as
PIA argues, since a contract is the law between the parties. The principle of
party autonomy in contracts is not, however, an absolute principle. The rule in
Article 1306, of our Civil Code is that the contracting parties may establish
such stipulations as they may deem convenient, "provided they are not
contrary to law, morals, good customs, public order or public policy." In this
case, it is thus necessary to appraise the contractual provisions invoked by
petitioner PIA in terms of their consistency with applicable Philippine law and
regulations. The Court held that, such provision of the contract, being
inconsistent with our labor laws, must not be enforced.

G.R. No. 153674. December 20, 2006.

AVON COSMETICS, INC., v
LUNA

CHICO-NAZARIO, J.:
FACTS: The present petition stemmed from a complaint filed by herein
respondent Luna alleging that she began working for Beautifont. Sometime in
1978, Avon, herein petitioner, acquired and took over the management and
operations of Beautifon. Nonetheless, respondent Luna continued working for
said successor company. Petitioner and respondent entered into an agreement
where they mutually agree among others: that the Supervisor shall sell or offer
to sell, display or promote only and exclusively products sold by the Company;
and either party may terminate this agreement at will, with or without cause,
at any time upon notice to the other. Respondent Luna was invited by a former
Avon employee who was then currently a Sales Manager of Sandr Philippines.
Respondent Luna began selling Sandr products to other Avon employees and
friends. She requested a law firm to render a legal opinion as to the legal
consequence of the Supervisor's Agreement she executed with petitioner Avon.
In response to her query, a lawyer of the firm opined that the Supervisor's
Agreement was "contrary to law and public policy which opinion was
disseminated to her colleagues. As a result, petitioner Avon notified respondent
of the termination. Aggrieved, respondent Luna filed a complaint for damages
which judgment is rendered in her favor. On appeal, the appellate court
affirmed the decision of the trial court.

ISSUE: a) whether or not paragraph 5 and 6 of the Supervisor's Agreement is

void for being violative of law and public policy

RULING: Applying the preceding principles to the case at bar, there is nothing
invalid or contrary to public policy either in the objectives sought to be attained
by paragraph 5, i.e., the exclusivity clause, in prohibiting respondent Luna,
and all other Avon supervisors, from selling products other than those
manufactured by petitioner Avon. Accordingly, a contract duly executed is the
law between the parties, and they are obliged to comply fully and not selectively
with its terms. A contract of adhesion is no exception. On the issue of
termination, worth stressing is that the right to unilaterally terminate or cancel
the Supervisor's Agreement with or without cause is equally available to
respondent Luna, subject to the same notice requirement. Obviously, no
advantage is taken against each other by the contracting parties.
WHEREFORE, in view of the foregoing, the instant petition is GRANTED.
G.R. No. 193178. May 30, 2011.
PHILIPPINE SAVINGS BANK
v. SPOUSES CASTILLO

NACHURA, J.:

FACTS: Respondent spouses Castillo were the registered owners of a lot

covered by TCT No. 233242. Respondent spouses Capati and Lobo were the
registered owners of another lot, covered by TCT No. 227858. Respondents
obtained a loan, with real estate mortgage, from petitioner Philippine Savings
Bank, as evidenced by a Promissory Note with a face value of P2,500,000.00.
Respondents regularly paid their amortizations until they defaulted due to
financial constraints. Petitioner sent them demand letters. Respondents failed
to pay. Thus, petitioner initiated an extrajudicial foreclosure sale of the
mortgaged properties. Being the mortgagee, petitioner no longer paid the said
amount but rather credited it to the loan amortizations. Respondents failed to
redeem the property within the one-year redemption period. However, Alfredo
Castillo sent a letter to petitioner requesting for an extension of 60 days so that
they could redeem the properties, offering P3,000,000.00 as redemption price
but respondents still failed to redeem the properties. Respondents filed a case
for Reformation of Instruments, Declaration of Nullity of Notarial Foreclosure
Proceedings and Certificate of Sale, Cancellation of Annotations. The RTC held
that the increases are unreasonable, and arbitrary, and the foreclosure was
void ab initio. The CA modified the decision of the RTC.

ISSUE: Whether the interest rates are unreasonable for being violative of the
principle of mutuality of contracts?
RULING: Yes. The unilateral determination and imposition of the increased
rates is violative of the principle of mutuality of contracts under Article 1308 of
the Civil Code, which provides that "the contract must bind both contracting
parties; its validity or compliance cannot be left to the will of one of them." A
perusal of the Promissory Note will readily show that the increase or decrease
of interest rates hinges solely on the discretion of petitioner. It does not require
the conformity of the maker before a new interest rate could be enforced. Any
contract which appears to be heavily weighed in favor of one of the parties so as
to lead to an unconscionable result, thus partaking of the nature of a contract
of adhesion, is void. Any stipulation regarding the validity or compliance of the
contract left solely to the will of one of the parties is likewise invalid.

G.R. No. 118248. April 5, 2000.

DKC HOLDINGS CORP. v.
COURT OF APPEALS

YNARES-SANTIAGO, J.:

FACTS: Petitioner entered into a Contract of Lease with Option to Buy with
Encarnacion Bartolome. Petitioner undertook to pay P3,000.00 a month as
consideration for the reservation of its option. The contract also provided that
in case petitioner chose to lease the property, it may take actual possession of
the premises. Petitioner regularly paid the reservation fee to Encarnacion until
her death. Thereafter, petitioner paid the reservation fees to private respondent,
being the sole heir of Encarnacion. Private respondent, however, refused to
accept these payments. Petitioner thus opened a savings account with the
China Banking Corporation in the name of private respondent and deposited
therein the rental and reservation fees. When petitioner tried to register and
annotate the contract on the title of the subject property, the respondent
Register of Deeds refused to register or annotate the same. Hence, petitioner
filed a complaint for specific performance and damages against private
respondent and the Register of Deeds, before the RTC. After trial on the merits,
the court dismissed the complaint. On appeal, the CA affirmed in toto the
decision of the trial court. Hence, this petition.

ISSUE: Whether the Contract of Lease with Option to Buy entered into by the
late Encarnacion Bartolome binds her sole heir, Victor, even after her demise.

RULING: Yes. In the case at bar, there is neither contractual stipulation nor
legal provision making the rights and obligations under the contract
intransmissible. More importantly, the nature of the rights and obligations
therein are, by their nature, transmissible. Under both Article 1311 of the Civil
Code, therefore, Victor is bound by the subject Contract of Lease with Option to
Buy. That being resolved, the court ruled that the petitioner had complied with
its obligations under the contract and with the requisites to exercise its option.
It appears, therefore, that the exercise by petitioner of its option to lease the
subject property was made in accordance with the contractual provisions.
WHEREFORE, in view of the foregoing, the instant Petition for Review is
GRANTED.
G.R. No. 179382. January 14, 2013.
SPOUSES MAMARIL v.
THE BOY SCOUT OF THE PHILIPPINES

PERLAS-BERNABE, J.:

FACTS: Spouses Mamaril are jeepney operators since 1971. They would park
their six passenger jeepneys every night at the Boy Scout of the Philippines'
compound for a fee of P300.00 per month for each unit. One of the vehicles was
missing and was never recovered. According to the security guards Pea and
Gaddi of AIB Security Agency, Inc., a male person who looked familiar to them
took the subject vehicle out of the compound. Spouses Mamaril filed a
complaint for damages before the RTC. In its Answer, BSP denied any liability
contending that not only did Spouses Mamaril directly deal with AIB with
respect to the manner by which the parked vehicles would be handled, but the
parking ticket itself expressly stated that the "Management shall not be
responsible for loss of vehicle or any of its accessories or article left therein." It
also claimed that Sps. Mamaril erroneously relied on the Guard Service
Contract. After due proceedings, the RTC rendered a decision in favor of
Spouses Mamaril. The CA affirmed the finding of negligence on the part of
security guards Pea and Gaddi. However, it absolved BSP from any liability,
holding that the Guard Service Contract is purely between BSP and AIB.

ISSUE: Whether BSP should be held liable for the loss of their vehicle based on
the Guard Service Contract and the parking ticket it issued.

RULING: The petition lacks merit. Article 1311 of the Civil Code states that x x
x If a contract should contain some stipulation in favor of a third person, he
may demand its fulfillment provided 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 a favor upon a third person. Thus, it is undisputed that Spouses
Mamaril are not parties to the Guard Service Contract. Neither did the subject
agreement contain any stipulation pour autrui. And even if there was, they did
not convey any acceptance thereof. Thus, under the principle of relativity of
contracts, they cannot validly claim any rights or favor under the said
agreement. WHEREFORE, premises considered, the instant petition is
DENIED.

G.R. No. 118509. December 1, 1995.

LIMKETKAI SONS MILLING, INC.,
v. COURT OF APPEALS

MELO, J.:

FACTS: Branch 151 of the Regional Trial Court of the National Capital Region
stationed in Pasig ruled that there was a perfected contract of sale petitioner
and BPI. It stated that there was mutual consent between the parties; the
subject matter is definite; and the consideration was determined. It concluded
that all the elements of a consensual contract are attendant. It ordered the
cancellation of a sale effected by BPI to respondent National Book Store (NBS)
while the case was pending and the nullification of a title issued in favor of said
respondent NBS. Upon elevation of the case to the Court of Appeals, it was held
that no contract of sale was perfected because there was no concurrence of the
three requisites enumerated in Article 1318 of the Civil Code. The decision of
the trial court was reversed and the complaint dismissed. Hence, the instant
petition.

ISSUE: Whether there was a perfected contract between petitioner Limketkai

Sons Milling, Inc. and respondent Bank of the Philippine Islands.

RULING: Yes. There was a perfected contract between petitioner and

respondent. The phases that a contract goes through may be summarized as
follows: a. preparation, conception or generation, which is the period of
negotiation and bargaining; perfection or birth of the contract; and
consummation or death. In the case at bar, the negotiation or preparation
stage of the sale started with the authority given by Philippine Remnants to BPI
to sell the lot; followed by the authority given by BPI; the offer to sell to
Limketkai; the inspection of the property; and finally the negotiations with
Aromin and Albano at the BPI offices. The perfection of the contract took place
when Aromin and Albano, acting agreed to sell and Lim with Limketkai, agreed
to buy the disputed. There was a concurrence of offer and acceptance, on the
object, and on the cause thereof. Prescinding from the above, we rule that
there was a perfected contract between BPI and petitioner Limketkai.
WHEREFORE, the questioned judgment of the Court of Appeals is hereby
REVERSED and SET ASIDE.

G.R. No. 125761. April 30, 2003.

SALVADOR P. MALBAROSA
v. HON. COURT OF APPEALS

CALLEJO, SR., J.:

FACTS: Petitioner Malbarosa was was the president and general manager of
Philtectic Corporation. The respondent assigned to the petitioner one of its
vehicles covered by Certificate of Registration No. 04275865. With the refusal of
the petitioner to return the vehicle, the respondent, as plaintiff, filed a
complaint against the petitioner. The respondent ordered by the trial court to
return the subject car assigned to him by respondent for his failure to agree on
the letter-offer of the respondent for an incentive compensation in the amount
of P251,057.67, in order that the said car shall be transferred to him. The trial
court ruled that there existed no perfected contract between the petitioner and
the respondent for failure of the petitioner to effectively notify the respondent of
his acceptance of the letter-offer before the respondent withdrew the same. The
Court of Appeals (CA) affirmed the decision of the trial court. Hence, this
petition for review on certiorari.

ISSUES: (a) whether or not there was a valid acceptance on his part of the
March 14, 1990 Letter-offer of the respondent; and (b) whether or not there was
an effective withdrawal by the respondent of said letter-offer.

RULING: The petition is dismissed. Anent the first issue, Under Article 1319 of
the New Civil Code, the consent by a party is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute
the contract. An offer may be reached at any time until it is accepted. An offer
that is not accepted does not give rise to a consent. The contract does not come
into existence. To produce a contract, there must be acceptance of the offer
which may be express or implied but must not qualify the terms of the offer.
The acceptance must be absolute, unconditional and without variance of any
sort from the offer. On the second issue, the acceptance of an offer must be
made known to the offeror. Unless the offeror knows of the acceptance, there is
no meeting of the minds of the parties, no real concurrence of offer and
acceptance. The offeror may withdraw its offer and revoke the same before
acceptance thereof by the offeree. The contract is perfected only from the time
an acceptance of an offer is made known to the offeror. IN LIGHT OF ALL THE
FOREGOING, the petition is dismissed.
G.R. No. L-25494. June 14, 1972.
SANCHEZ v. RIGOS

CONCEPCION, J.:

FACTS: Plaintiff Sanchez and defendant Rigos executed an instrument, entitled

"Option to Purchase," whereby Mrs. Rigos agreed to sell to Sanchez, a parcel of
land situated in the barrios of Abar and Sibot, municipality of San Jose,
province of Nueva Ecija, within two years from said date with the
understanding that said option shall be deemed "terminated and elapsed," if
"Sanchez shall fail to exercise his right to buy the property" within the
stipulated period.
Defendant Rigos contended that the contract between them was only a
unilateral promise to sell, and the same being unsupported by any valuable
consideration, by force of the New Civil Code, is null and void." Plaintiff
Sanchez, on the other hand, alleged in his compliant that, by virtue of the
option under consideration, "defendant agreed and committed to sell" and "the
plaintiff agreed and committed to buy" the land described in the option. The
lower court rendered judgment in favor of Sanchez and ordered Rigos to accept
the sum Sanchez judicially consigned, and to execute in his favor the requisite
deed of conveyance. The Court of Appeals certified the case at bar to the
Supreme Court for it involves a question purely of law.
ISSUE: Whether there was a valid contract to sell between the parties.

RULING: No. The Supreme Court affirmed the lower courts decision. The
instrument executed in 1961 is not a "contract to buy and sell," but merely
granted plaintiff an "option" to buy. The option did not impose upon plaintiff
Sanchez the obligation to purchase defendant Rigos' property. The lower court
relied upon Article 1354 of the Civil Code when it presumed the existence of
said consideration, but the said Article only applies to contracts in
general. However, it is not Article 1354 but the Article 1479 of the same Code
which is controlling in the case at bar because the latters 2nd paragraph refers
to "sales" in particular, and, more specifically, to "an accepted unilateral
promise to buy or to sell." Since there may be no valid contract without a cause
or consideration, the promisor is not bound by his promise and may,
accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise
partakes, however, of the nature of an offer to sell which, if accepted, results in
a perfected contract of sale. WHEREFORE, the decision appealed from is
hereby affirmed, with costs against defendant-appellant.

G.R. No. 111238. January 25, 1995.

ADELFA PROPERTIES, INC.,
v. COURT OF APPEALS

REGALADO, J.:
FACTS: Private respondents and their brothers, Jose and Dominador Jimenez,
were the registered co-owners of a parcel of land. Jose and Dominador sold
their share, specifically the eastern portion to petitioner pursuant to a
"Kasulatan sa Bilihan ng Lupa." Thereafter, herein petitioner expressed interest
in buying the western portion of the property from private respondents.
Accordingly, an exclusive Option to Purchase was executed between Adelfa
and Private respondents and an option money of 50,000 was given to the latter.
A new owners copy of the certificate of title was issued but was kept by Adelfas
counsel, Atty. Bernardo. Before Adelfa could make payments, it received
summons as a case was filed against Jose and Dominador and Adelfa, because
of a complaint in a civil case by the nephews and nieces of private respondents
herein. A few days after, private respondents executed a Deed of Conditional
Sale in favor of Chua, over the same parcel of land. The offer of Adelfa to pay
the purchase price was ignored by private respondents. Private respondents
sent a letter to Adelfa enclosing therein a check representing the refund of half
the option money and requested Adelfa to return the owners duplicate copy of
Salud. Adelfa failed to surrender the certificate of title, hence the private
respondents filed a civil case for annulment of contract with damages. The trial
court directed the cancellation of the exclusive option to purchase. On appeal,
respondent CA affirmed in toto the decision of the RTC hence this petition.

ISSUES: a) Whether the agreement entered into by petitioner and private

respondents was strictly an option contract; and b) whether the option period
had not lapsed, private respondents could not unilaterally and prematurely
terminate the option period;

RULING: The alleged option contract as a contract to sell, rather than a

contract of sale. The distinction between the two is important for in contract of
sale, the title passes to the vendee upon the delivery of the thing sold; whereas
in a contract to sell, by agreement the ownership is reserved in the vendor and
is not to pass until the full payment of the price. The parties never intended to
transfer ownership to Adelfa Properties to completion of payment of the
purchase price, this is inferred by the fact that the exclusive option to
purchase, although it provided for automatic rescission of the contract and
partial forfeiture of the amount already paid in case of default, does not
mention that Adelfa Properties is obliged to return possession or ownership of
the property as a consequence of non-payment. By reason of petitioner's failure
to comply with its obligation, private respondents elected to resort to and did
announce the rescission of the contract. That written notice of rescission is
deemed sufficient under the circumstances. In the case at bar, the silence of
the petitioner thereon suggests an admission of the veracity and validity of
private respondents' claim.

G.R. No. L-12471. April 13, 1959.

DE BRAGANZA, ET AL., v.
DE VILLA ABRILLE

BENGZON, J.:

FACTS: The above petitioners received from Abrille a loan amounting to

P70,000 in Japanese war notes and in consideration thereof, promised in
writing to pay him P10,000 "in legal currency of the Philippine Islands in two
years after the cessation of the present hostilities or as soon as International
Exchange has been established in the Philippines", plus 2% per annum.
Because payment had not been made, Abrille sued them. In their answer
before the Manila court of first Instance, defendants claimed to have received
P40,000 only--instead of P70,000 as plaintiff asserted. They also averred that
Guillermo and Rodolfo were minors when they signed the promissory notte.
After hearing the parties and their evidence, said court rendered judgment,
which the appellate court affirmed, in the terms above described. There can be
no question about the responsibility of Braganza because the minority of her
consigners does not release her from liability; since it is a personal defense of
the minors. However, such defense will benefit her the extent of the shares for
which such minors may be responsible. However, the Court of Appeals found
Guillermo and Rodolfo liable because they did not make it appear in the
promissory note that they were not yet of legal age.

ISSUE: Whether the boys, who were 16 and 18 respectively, are to be bound by
the contract of loan they have signed.
RULING: The Court cannot agree to the Conclusions of the CA. From the
minor's failure to disclose their minority in the same promissory note they
signed, it does not follow as a legal proposition, that they will not be permitted
thereafter to assert it. They had no juridical duty to disclose their inability. The
Court held that on this point, being minors, Rodolfo and Guillermo Braganza
could not be legally bound by their signatures. Upon the other hand, these
minors may not be entirely absolved from monetary responsibility. In
accordance with Art. 1340 of the Civil Code, even if their written contract is
unenforceable because of non-age, they shall make restitution to the extent
that they may have profited by the money they received. Accordingly, the
appealed decision should be modified in the sense that Rosario Braganza shall
pay 1/3 of P10,000 plus 2% interest from October 1944; and Rodolfo and
Guillermo Braganza shall pay jointly to the same creditor the total amount of
P1,166.67 plus 6% interest beginning March 7, 1949, when the complaint was
filed.