41. Javier Vs.

Ca

Facts:
1. Petitioner and private respondent entered into an agreement into which Petitioner
bound himself to transfer his rights(shares of stocks) on Timberlwealth Corp to
private respondent.
2. That for and in consideration of the transfer of rights,
P e t i t i o n e r u n d e r t a k e t o p a y P r i v a t e Respondent s u b j e c t t o t h e
condition that the application of Private Respondent for an
additional area for forest concession be approved by Bureau of Forestry.
3. Private Respondent did not obtain the approval

Issue:

Wether or not an agreement may be nullified for non-performance of the conditions

stipulated therein

Held

When a contract is subject to a suspensive condition, its birth and effectivity can take
place only if and when the event which constitutes the condition happens or is fulfilled. If
the suspensive condition does not take place, the parties would stand as if the
conditional obligation had never existed.

Art. 1461 of the Civil Code, the efficacy of the sale of a mere hope or
expectancy is deemedsubject to the condition that the thing will come into existence

42. HEIRS OF PAULINO ATIENZA versus DOMINGO P. ESPIDOL, G.R. No.

180665 Aug. 11,2010

Facts: This case is about the legal consequences when a buyer in a contract to sell on
installment fails to make the next payments that he promised. On August 12, 2002 the
Atienzas and respondent Domingo P. Espidol entered into a contract called Kasunduan sa
Pagbibili ng Lupa na may Paunang-Bayad (contract to sell land with a down payment)
covering the property. They agreed on a price, payable in three instalments. When the
Atienzas demanded payment of the second installment of P 1,750,000.00 in December
2002, however, respondent Espidol could not pay it. Claiming that Espidol breached his
obligation, on February 21, 2003 the Atienzas filed a complaint for the annulment of their
agreement with damages before the Regional Trial Court (RTC) of Cabanatuan City in a
Civil Case.

Issue: Whether or not the Atienzas were entitled to the cancellation of the contract to
sell they entered into with respondent Espidol on the ground of the latters failure to pay
the second installment when it fell due.

Held: The Court declares the Kasunduan sa Pagbibili ng Lupa na may Paunang-Bayad
between petitioner Heirs of Paulino Atienza and respondent Domingo P. Espidol dated
August 12, 2002 cancelled and the Heirs obligation under it non-existent. Regarding the
right to cancel the contract for non-payment of an installment, there is need to initially
determine if what the parties had was a contract of sale or a contract to sell. In a contract
of sale, the title to the property passes to the buyer upon the delivery of the thing sold. In
a contract to sell, on the other hand, the ownership is, by agreement, retained by the seller
and is not to pass to the vendee until full payment of the purchase price. In the first place,
since Espidol failed to pay the installment on a day certain fixed in their agreement, the
Atienzas can afterwards validly cancel and ignore the contract to sell because their
obligation to sell under it did not arise. Since the suspensive condition did not arise, the
parties stood as if the conditional obligation had never existed.

43. REYES VS TUPARAN

FACTS

Petitioner Mila Reyes owns a three-storey commercial building in Valenzuela City.

Respondent, Victoria Tuparan leased a space on said building for a monthly rental of
P4, 000. Aside from being a tenant, respondent also invested in petitioner's financing
business. On June 20, 1988, Petitioner borrowed P2 Million from Farmers Savings
and Loan Bank (FSL Bank) and mortgaged the building and lot (subject real
properties). Reyes decided to sell the property for P6.5 Million to liquidate her loan
and finance her business. Respondent offered to conditionally buy the real properties
for P4.2 Million on installment basis without interest and to assume the bank loan.
The conditions are the following:

1. Sale will be cancelled if the petitioner can find a buyer of said properties
for the amount of P6.5 Million within the next three months. All payments
made by the respondent to the petitioner and the bank will be refunded to
Tuparan with an additional 6% monthly interest.

2. Petitioner Reyes will continue using the space occupied by her drug store
without rentals for the duration of the installment payments.
 3. There will be a lease for 15 years in favor of Reyes for a monthly rental
of P8, 000 after full payment has been made by the defendant.

4. The defendant will undertake the renewal and payment of the fire
insurance policies of the 2 buildings, following the expiration of the current
policies, up to the time the respondent has fully paid the purchase price.

They presented the proposal for Tuparan to assume the mortgage to FSL Bank. The
bank approved on the condition that the petitioner would remain as co-maker of the
mortgage obligation.

Petitioner's Contention

Under their Deed of Conditional Sale, the respondent is obliged to pay a lump sum of
P1.2 Million in three fixed installments. Respondent, however defaulted in the
payment of the installments. To compensate for her delayed payments, respondent
agreed to pay petitioner monthly interest. But again, respondent failed to fulfill this
obligation. The petitioner further alleged that despite her success in finding another
buyer according to their conditional sale agreement, respondent refused to cancel
their transaction. The respondent also neglected to renew the fire insurance policy of
the buildings.

Respondent's Answer

Respondent alleges that the deed of Conditional Sale of Real Property with
Assumption of Mortgage was actually a pure and absolute contract of sale with a
term period. It could not be considered a conditional sale because the performance
of the obligation therein did not depend upon a future and uncertain event. She also
averred that she was able to fully pay the loan and secure the release of the
mortgage. Since she also paid more than the P4.2 Million purchase price, rescission
could not be resorted to since the parties could no longer be restored to their original
positions.

ISSUE

Can the transaction or obligation be rescinded given that the conditions were not
satisfied?
RULING(S)

RTC

The deed of conditional sale was a contract to sell. It was of the opinion that
although the petitioner was entitled to a rescission of the contract, it could not be
permitted because her non-payment in full of the purchase price may not be
considered as substantial and fundamental breach of the contract as to defeat the
object of the parties in entering into the contract. The RTC believed that respondent
showed her sincerity and willingness to settle her obligation. Hence, it would be more
equitable to give respondent a chance to pay the balance plus interest within a given
period of time. The court ordered the respondent to pay the petitioner the unpaid
balance of the purchase price.

CA

The CA agreed with the RTC that the remedy of rescission could not apply because
the respondents failure to pay the petitioner the balance of the purchase price in the
total amount of 805,000.00 was not a breach of contract, but merely an event that
prevented the seller (petitioner) from conveying title to the purchaser (respondent).
Since respondent had already paid a substantial amount of the purchase price, it was
but right and just to allow her to pay the unpaid balance of the purchase price plus
interest.

SC

The SC agrees that the conditional sale is a contract to sell. The title and ownership
of the subject properties remains with the petitioner until the respondent fully pays
the balance of the purchase price and the assumed mortgage obligation. Without
respondents full payment, there can be no breach of contract to speak of because
petitioner has no obligation yet to turn over the title. The court agrees that a
substantial amount of the purchase price has already been paid. It is only right and
just to allow Tuparan to pay the said unpaid balance of the purchase price to Reyes.
Granting that a rescission can be permitted under Article 1191, the Court still cannot
allow it for the reason that, considering the circumstances, there was only a slight or
casual breach in the fulfillment of the obligation. The court considered fulfillment of
20% of the purchase price is NOT a substantial breach. Unless the parties stipulated
it, rescission is allowed only when the breach of the contract is substantial and
fundamental to the fulfillment of the obligation. Whether the breach is slight or
substantial is largely determined by the attendant circumstance. As for the 6%
interest, petitioner failed to substantiate her claim that the respondent committed to
pay it. Petition is denied.
44. SPS. SANTOS vs. CA
Facts:

Spouses Santos owned the house and lot in Better Living Subdivision,
Paranaque, Metro Manila. The land together with the house, was mortgaged
with the Rural Bank of Salinas, Inc., to secure a loan of P150K. The bank
sent Rosalinda Santos a letter demanding payment of P16K in unpaid interest and other
charges. Since the Santos couple had no funds, Rosalinda offered to sell the house and lot
to Carmen Caseda. After inspecting the real property, Carmen and her husband agreed.
Carmen and Rosalinda signed a document, involving the sale of the house
P350K as full amount, P54K as downpayment. Among other condition set is that
Caseda will pay the balance of the mortgage in the bank, real estate taxes and the electric
and water bills. The Casedas complied with the bank mortgage and the bills.
The Santoses, seeing that the Casedas lacked the m e a n s t o p a y t h e
remaining installments and/or amortization of the loan,
r e p o s s e s s e d t h e p r o p e r t y. T h e Santoses then collected the rentals from
the tenants. Carmen approached petitioners and offered to pay the balance of
the purchase price for the house and lot. The parties, however, could not
agree, and the deal could not push through because the Santoses wanted a higher
price.

Carmen is now praying that the Santoses execute the final deed of conveyance over the
property.

Issue:
Whether or not there was a perfected contract of sale? NO

Held:
A contract is what the law defines it to be, taking into consideration its
essential elements, and not what the contracting parties call it. Article 1458
expressly obliges the vendor to transfer ownership of the thing sold as an essential
element of a contract of sale. This is because the transfer of ownership in exchange for a
price paid or promised is the very essence of a contract of sale. There was no transfer
of ownership simultaneously with the delivery of the property purportedly
sold. The r e c o r d s c l e a r l y s h o w t h a t , n o t w i t h s t a n d i n g t h e f a c t t h a t
t h e C a s e d a s f i r s t t o o k t h e n l o s t p o s s e s s i o n o f t h e disputed house and lot,
the title to the property has remained always in the name of Rosalinda Santos. Although
the parties had agreed that the Casedas would assume the mortgage, all amortization
payments made by Carmen Caseda to the bank were in the name of Rosalinda
Santos. The foregoing circumstances categorically and clearly show that no
valid transfer of ownership was made by the Santoses to the Casedas. Absent this
essential element, their agreement cannot be deemed a contract of sale.
It was a contract to sell.

Ownership is reserved by the vendor and is not to pass until full payment of
the purchase price. This we find fully applicable and understandable in this case, given
that the property involved is a titled realty under mortgage to a bank and would require
notarial and other formalities of law before transfer thereof could be validly effected.
The CA cannot order rescission.
If the vendor should eject the vendee for failure to meet the
c o n d i t i o n p r e c e d e n t , h e i s enforcing the contract and not rescinding it.

W h e n t h e p e t i t i o n e r s i n t h e i n s t a n t c a s e repossessed the disputed house and

lot for failure of private respondents to pay the purchase price in full, they were merely
enforcing the contract and not rescinding it.

45. PARKS Vs. Province of Tarlac

FACTS:

In 1910, Concepcion Cirer and James Hill donated parcels of land to the municipality of
Tarlac on the condition that it be used absolutely and exclusively for the erection
of a central school and public parks, the work to commence within six months.
The president of the municipality of Tarlac accepted and registered the donation.

In 1921, Cirer and Hill sold the same property to George L. Parks.

Later on the, the municipality of Tarlac transferred their rights in the property to the
Province of Tarlac.
Parks filed a complaint seeking the annulment of the donation and asking that he be
declared the absolute owner of the property. Parks allege that the conditions of the
donation were not complied with.

ISSUE:

Whether or not the donation was coupled with a condition precedent? W/N the action to
revoke has prescribed?
HELD:

No. The condition to erect a school within six months is not a condition precedent. The
characteristic of a condition precedent is that the acquisiito of the right is not effected
while said condition is mot complied with or is not deemed complied with. Meanwhile
nothing is acquired and there is only an expectancy of a right. Consequently, when a
condition is imposed, the compliance of which cannot be effected except when the right
is deemed acquired, such condition cannot be a condition precedent. In the present case
the condition that a public school be erected and a public park be made of the donated
land could not be complied with except after giving effect to the donation.

The action to revoke the donation has prescribed. The prescriptive periods are: 5 years for
the revocation by the subsequent birth of children, 1 year if by reason of ingratitude. If no
special period is prescribed, 10 years, for an onerous donation following the law of
contracts and general rules on prescriptions. The donation was made in 1910, the cause of
action accrued in 1911, while the action to revoke was filed 1924, twenty three years
later.

46. Central Philippine University vs CA

FACTS:

In 1939, Don Ramon Lopez Sr. executed a deed of donation in favor of CPU together
with the following conditions:
a) The land should be utilized by CPU exclusively for the establishment & use of medical
college;
b) The said college shall not sell transfer or convey to any 3rd party;
c) The said land shall be called Ramon Lopez Campus and any income from that land
shall be put in the fund to be known as Ramon Lopez Campus Fund.

However, on May 31, 1989, PR, who are the heirs of Don Ramon filed an action for
annulment of donation, reconveyance & damages against CPU for not complying with
the conditions. The heirs also argued that CPU had negotiated with the NHA to exchange
the donated property with another land owned by the latter.

Petitioner alleged that the right of private respondents to file the action had prescribed.

ISSUE:
1) WON petitioner failed to comply the resolutely conditions annotated at the back of
petitioners certificate of title without a fixed period when to comply with such
conditions? YES
2) WON there is a need to fix the period for compliance of the condition? NO

HELD:

1)
Under Art. 1181, on conditional obligations, the acquisition of rights as well the
extinguishment or loss of those already acquired shall depend upon the happening of the
event which constitutes the condition. Thus, when a person donates land to another on the
condition that the latter would build upon the land a school is such a resolutory one. The
donation had to be valid before the fulfillment of the condition. If there was no
fulfillment with the condition such as what obtains in the instant case, the donation may
be revoked & all rights which the donee may have acquired shall be deemed lost &
extinguished.

More than a reasonable period of fifty (50) years has already been allowed petitioner to
avail of the opportunity to comply with the condition even if it be burdensome, to make
the donation in its favor forever valid. But, unfortunately, it failed to do so. Hence, there
is no more need to fix the duration of a term of the obligation when such procedure would
be a mere technicality and formality and would serve no purpose than to delay or lead to
an unnecessary and expensive multiplication of suits.

Records are clear and facts are undisputed that since the execution of the deed of
donation up to the time of filing of the instant action, petitioner has failed to comply with
its obligation as donee. Petitioner has slept on its obligation for an unreasonable length of
time. Hence, it is only just and equitable now to declare the subject donation already
ineffective and, for all purposes, revoked so that petitioner as donee should now return
the donated property to the heirs of the donor, private respondents herein, by means of
reconveyance.

2)
Under Art. 1197, when the obligation does not fix a period but from its nature &
circumstance it can be inferred that the period was intended, the court may fix the
duration thereof because the fulfillment of the obligation itself cannot be demanded until
after the court has fixed the period for compliance therewith & such period has arrived.
However, this general rule cannot be applied in this case considering the different set of
circumstances existing more than a reasonable period of 50yrs has already been allowed
to petitioner to avail of the opportunity to comply but unfortunately, it failed to do so.
Hence, there is no need to fix a period when such procedure would be a mere technicality
& formality & would serve no purpose than to delay or load to unnecessary and
expensive multiplication of suits.

Under Art. 1191, when one of the obligors cannot comply with what is incumbent upon
him, the obligee may seek rescission before the court unless there is just cause
authorizing the fixing of a period. In the absence of any just cause for the court to
determine the period of compliance there is no more obstacle for the court to decree
recission.

47. ROWENA R. SALONTE vs. COMMISSION ON AUDIT

(to be follow by Ralfh Recososa)

48. Radiowealth Finance vs. del Rosario

FACTS:

Spouses Vicente & Maria Del Rosario jointly & severally executed, signed and delivered
in favor of Radiowealth Finance Company a promissory note for P138,948.

Thereafter, respondents defaulted on the monthly installments. Despite repeated demands,

they failed to pay their obligation.

Petitioner filed a complaint for the collection of sum of money before the RTC.

Trial court dismissed the complaint for the evidence presented were merely hearsay.

CA reversed & remanded the case for further proceedings.

Petitioner claims that respondents are liable for the whole amount of their debt and the
interest thereon, after they defaulted on the monthly installments. Respondents counter
that the installments were not yet due and demandable. They theorize that the action for
immediate enforcement of their obligation is premature because its fulfillment is
dependent on the sole will of the debtor. Hence, they consider that the proper court should
first fix a period for payment, pursuant to Articles 1180 and 1197 of the Civil Code.

ISSUE:

Whether or Not the installments had already became due and demandable? YES
HELD:

The act of leaving blank space the due date of the first installment did not necessary mean
that the debtors were allowed to pay as & when they could. If this was the intention of the
parties, they should have so indicated in the promissory note. However, it did not reflect
any such intention.

While the specific date on which each installment would be due was left blank, the note
clearly provided that each installment should be payable each month.

Furthermore, it also provided for an acceleration clause and a late payment penalty, both
of which showed the intention of the parties that the installment should be paid at a
definite date. Had they intended that the debtors could pay as & when they could, there
would have been no need for these 2 clauses.

The installments had already became due & demandable is bolstered by the fact that
respondents started paying installments on the promissory note. The obligation of the
respondents had matured & they clearly defaulted when their checks bounced. Per the
acceleration clause, the whole debt became due one month after the date of the note
because the check representing their first installment bounced.

49. LIM vs PEOPLE OF The PHILIPPINES

(to be follow by Ralfh Recososa)

50. Araneta vs. Philippine Sugar Estates Development Co., Ltd.

Facts: J. M. Tuason & Co., Inc. is the owner of a land, known as the Sta. Mesa Heights
Subdivision, and covered by a Torrens title in its name. On July 1950, through Gregorio
Araneta, Inc, JM, sod a portion thereof to herein respondent to Philippine Sugar Estates
Development Co., Ltd. The parties stipulated, among in the contract of purchase and sale
with mortgage, that the buyer will build on the said parcel land the Sto. Domingo
Church and Convent. While the seller for its part will construct streets on the NE and
NW and SW sides of the land herein

Respondent was able to finish his obligation. However, herein petitioner was unable to
finish the construction of the NE side because a third-party physically occupies the
middle part thereof, refused to vacate the same; hence Respondent filed a complaint
against petitioner seeking to compel Araneta to comply with the obligation, and/or to pay
damages in the event they failed or refused to perform said obligation.
Defendants in said complaint argued that the action was premature since the obligation to
construct the streets in question was without a definite period which needs to be fixed
first by the court in a proper suit. The lower court dismissed the plaintiffs complaint.
Motion to reconsider was prayed, and that the court fix a period within which petitioner
in said case can comply in the construction of the streets.

The Lower Court issued a order granting the motion for reconsideration and amended its
previous decision, prompting defendant Araneta to reconsider but this was denied thus
appealing in the Court of Appeals. The Appellate Court declared the fixing of the period
was within the pleadings and affirmed the Lower Courts decision, hence this petition for
Certiorari.

Issue: Whether or not the fixing of the period of the Lower Court was valid and justified
base on the pleadings, the facts of the case, pursuant to Article 1197

Held: NO, there was no justification in law for the setting of the performance at any other
time than that of the eviction of the squatters occupying the land in question. And the
Trial Court and The Appellate Court were found to have committed a reversible error.
Decision appealed is reversed and the time for the performance of the obligation is fixed
at the date that all the squatters on affected areas are finally evicted from the area.

The fixing of a period by the courts under Article 1197 of the Civil Code of the
Philippines is sought to be justified on the basis that petitioner (defendant below) placed
the absence of a period in issue by pleading in its answer that the contract with
respondent Philippine Sugar Estates Development Co., Ltd. gave petitioner Gregorio
Araneta, Inc. "reasonable time within which to comply with its obligation to construct
and complete the streets" was found legally untenable.

If the contract so provided, then there was a period fixed, a "reasonable time;" and all that
the court should have done was to determine if that reasonable time had already elapsed
when suit was filed if it had passed, then the court should declare that petitioner had
breached the contract, as averred in the complaint, and fix the resulting damages.
.

51. SSS vs. Moonwalk Development & Housing Corporation

FACTS:
- Plaintiff SSS approved the application of Defendant Moonwalk fora loan of
P30,000,000 for the purpose of developing andconstructing a housing project.
- Out of P30,000,000 approved loan, the sum of P9,595,000 wasreleased to defendant
Moonwalk.
-
A third Amendment Deed of Mortgage was executed for thepayment of the amount of
P9,595,000.
-
Moonwalk made a total payment of P23,657,901.84 to SSS for theloan principal of
P12,254,700.
-
After settlement of the account, SSS issued to Moonwalk the
release of Mortgage for Moonwalks Mortgaged properties.

-
In letter to Moonwalk, SSS alleged that it committed an honestmistake in releasing
defendant.
-
That Moonwalk has still 12% penalty for failure to pay on time theamortization which is
in the penal clause of the contract.
-

Moonwalks counsel told SSS that it had completely paid its

obligation to SSS and therefore there is no recovery of any penalty.

ISSUE:
Is the penalty demandable even after the extinguishment of the principal obligation?

HELD:

No. There has been a waiver of the penal clause as it was not demanded before the full obligation was fully
paid and extinguished.
Default begins from the moment the creditor demands the performance of the obligation.

In this case, although there were late amortizations there was no demand made by SSS for the
payment of the penalty. Hence Moonwalk is not in delay in the payment of the penalty.

No delay occurred and there was no occasion when the penalty became demandable and
enforceable. Since there was no default in the performance of the main obligation-payment
of the loan- SSS was never entitled to recover any penalty.

If the demand for the payment of the penalty was made prior tothe extinguishment of the
obligation which are: 1. e principal obligation 2. The interest of 12% on the principal
obligation 3.The penalty of 12% for late payment for after demand, Moonwalk would be
in delay and therefore liable for the penalty.
52. The Bachrach Motor Co v. Espiritu

Facts:
1. This is a consolidated case(Cases no. 28497 and 28948) involving two separate sale
transactions. One made in Feb. 18, 1925 (case 28498), when the defendant earlier bought
a truck on instalment from the petitioner and said truck was mortgaged together with the
two others (no. 77197 & 92744 in the the subsequent sale transaction dated July 28, 1925.
The said two of the other trucks were also purchased (but already paid previously) from
the plaintiff. The defendant failed to pay the balance. In July 1925, defendant again
purchased another truck from Bachrach. The said truck, together with the 3 other vehicles
were mortgaged to the plaintiff to secure the remaining balance. The defendant failed to
pay the balance for the latest truck obtained.

2. It was agreed in both sales that 12% interest will be paid on the unpaid price, and in
case of the non-payment of the total debt at maturity, 25% shall be the penalty. The
defendant also signed a promissory note solidarily with his brother Rosario (acting as
intervenor), the sums secured by the mortgages. Rosario is alleged to be the owner of the
two white trucks no. 77197 & 92744 mortgaged.

3. While these two cases were pending in the lower court the mortgaged trucks were
sold by virtue of the mortgage, all of them together bringing in, after deducting the
sheriff's fees and transportation charges to Manila, the net sum of P3,269.58.

4. The lower court ordered the defendants and the intervenor to pay plaintiff in case
28497 the sum of P7,732.09 with interest at the rate of 12 per cent per annum from May
1, 1926 until fully paid, and 25 per cent thereof in addition as penalty. In case 28498, the
trial court ordered the defendant and the intervenor to pay plaintiff the sum of P4,208.28
with interest at 12 per cent per annum from December 1, 1925 until fully paid, and 25 per
cent thereon as penalty.

5. The appellants contend that trucks 77197 and 92744 were not mortgaged, because,
when the defendant signed the mortgage deeds these trucks were not included in those
documents, and were only put in later, without defendant's knowledge. Appellants also
alleged that on February 4, 1925, the defendant sold his rights in said trucks Nos. 77197
and 92744 to the intervenor, and that as the latter did not sign the mortgage deeds, such
trucks cannot be considered as mortgaged.

6. But there is positive proof that they were included at the time the defendant signed
these documents. Besides, there were presented two of defendant's letters to Hidalgo, an
employee of the plaintiff's written a few days before the transaction, acquiescing in the
inclusion of all his White trucks already paid for, in the mortgage (Exhibit H-I).
Issue: W/N the 25% penalty upon the debt in addition to the 25% p.a. is usurious

Ruling: No, Article 1152 of the Civil Code permits the agreement upon a penalty apart
from the interest. Should there be such an agreement, the penalty, as was held in the case
of Lopez vs. Hernaez (32 Phil., 631), does not include the interest, and which may be
demanded separately. The penalty is not to be added to the interest for the determination
of whether the interest exceeds the rate fixed by the law, since said rate was fixed only for
the interest. But considering that the obligation was partly performed, and making use of
the power given to the court by article 1154 of the Civil Code, this penalty is reduced to
10 per cent of the unpaid debt. The penalty is however reduced from 25 % upon the sum
owed, the defendants need pay only 10 % thereon as penalty. (Judgment appealed from is
affirmed in all other respects).

53. ROBES FRANCISCO REALTY & DEVELOPMENT Co. vs CFI

54.
55.
( to be follow by Ralfh Recososa)

56.)AGCAOILI VS GSIS

FACTS:
In this case, appellant GSIS approved an application of the appellee Agcaoili for the
purchase of a house and lot in the GSIS Housing Project at Nangka, Marikina, subject to
the condition that the latter should forthwith occupy the house, a condition that Agcaoili
tried to fulfill but could not because the house was absolutely uninhabitable. However,
Agcaoili asked a homeless friend, a certain Villanueva, to stay in the premises as some
sort of a watchman, pending completion of the construction of the house.
Agcaoili after paying the first installment and other fees, having thereafter refused to
make further payment of other stipulated installments until the GSIS had made the house
habitable, and appellant having refused to do so, opting instead to cancel the award and
demanded the vacation by Agcaoili of the premises; and the latter having sued the GSIS
in the court of First Instance of Manila for specific performance with damages and having
obtained a favorable judgement, the case was appealed by the GSIS.
ISSUE:
Whether or not Agcaoili is entitled for specific performance with damages.

HELD: Appeal of GSIS must fail.

There ws then a perfected contract of sale between the parties; there had been a
meeting of minds upon the purchase of Agcaoili of a determinate house and lot from
GSIS at a definite price which is payable in amortizations and from that moment the
parties acquired the right to reciprocally demand perfromance. It was, to be sure, the duty
of GSIS, as seller, to deliver the thing sold in a condition suitable for its enjoyment by the
buyer, in other words to deliver the house subject of the contract in a reasonably livable
state. This it failed to do.

57.) UNLAD RESOURCES DEV VS DRAGON

FACTS:
The parties entered in a memorandum of Agreement: Respondents as controlling
stockholders of the Rural Bank shall allow Unlad Resources to subscribe to a minimum
of P480, common or preferred non-voting shares of stock with a total par value of P4.8
million and pay up immediately P1.2 million for said subscription; that the respondents,
upon the signing of the said agreement shall transfer control and management of the
Rural Bank to Unlad Resources. The respondent complied with their obligation but the
petitioners did not, thus respondents filed a complaint for the rescission of the agreement
and the return of control and management of the Rural Bank from petitioners to
respondents, plus damages. RTC declared the MOA rescinded and ordered to
immediately return control and management over the Rural to respondents. Petitioners
appealed to the CA which dismissed the appeal for lack of merit.

ISSUE:
Did the RTC correctly rule for the rescision of the MOA?

RULING:
YES. Clearly, the petitioners failed to fulfill their end of the agreement, and thus,
there was just cause for rescision. With the contract thus rescinded, the parties must be
restored to the status quo ante, that is, before they entered into the Memorandum of
Agreement.
58.)BEROT VS SIAPNO

FACTS:
On May 23, 2002, Macaria Berot, and spouses Rodolfo and Lilia Berot (apellant)
obtained a loan from Felipe Siapno (apellee) in the sum of P250,000, payable within one
year together with interest thereon at the rate of 2% per annum from the date until fully
paid.
As security for the loan, appellant mortgage to appellee a portion, consisting of 147
square meters of that parcel of land with an area of 718 sq.m., situated in Banaoag,
Calasiao, Pangasinan and covered by Tax Declaration No. 1123 in the names of Macaria
and her husband Pedro Berot, deceassed. On June 23, 2003, Macaria Died.
Because of the mortgagors default, apelle filed an action against them for
foreclosure of mortgage and damages on July 15, 2004 in the Regional Trial Court.

ISSUES:
1. Whether or not the intestate estated of Macaria Berot could be a proper party by waiver
by waiver expressly or impliedly by voluntary appearance.
2. Whether or not the obligation is joint.

RULINGS:

The petition was denied for lack of merit.

Petitioners were correct when they argued that upon Macaria Berots death on 23
June 2003, her legal personality ceased, and she could no longer be impleaded as
respondent in the foreclosure suit. It is also true that her death opened to her heirs the
succession of her estate, which in this case was an intestate succession. The CA, in fact,
sustained petitioners position that a deceased persons estate has no legal personality to
be sued.
On the second issue of whether the nature of the loan obligation contracted by
petitioners is joint or solidary, the court ruled that it is joint.Under Article 1207 of the
Civil Code of the Philippines, the general rule is that when there is a concurence of two
or more debtors under a single obligation, the obligation is presumed to be joint.
59.)OLONGAPO CITY VS SUBIC WATER AND SEWERAGE CO. INC.
(to be follow by Mercy Tabuan)

HELD: The burden of proving the presence of any of these probative factors lies with the one
alleging it. Unfortunately, petitioner simply claimed that Subic Water took over OCWDs water
operations in Olongapo City. Apart from this allegation, petitioner failed to demonstrate any link
to justify the construction that Subic Water and OCWD are one and the same.
Under this evidentiary situation, the duty is to respect the separate and distinct personalities
of these two juridical entities.
The petition was denied. The writ of execution issued by RTC Ologapo in favor of Olongapo
City, is hereby confirmed to be null and void. Accordingly, the Subic Water cannot be made liable
under this writ.

60.)ESTANISLAO AND AFRICA SINAMBAN vs CHINABANK

FACTS:
On February 19, 1990, the spouses Danilo and Magdalena Manalastas executed a real
estate mortgage in favor of respondent China Banking Corp over two real estate
properties to secure a loan from Chinabank of Php 700,000 intended as working capital in
their rice milling business. During the next few years, they executed several amendments
to the mortgage contract progressively increasing their credit line secured by the
aforesaid mortgage. The spouses Manalastas executed several promissory notes in favor
of Chinabank. In the two PNs, petitioners Estanislao and Africa Sinamban signed as co-
makers.
On November 18, 1998, Chinabank filed a complaint for sum of money against the
spouses Manalastas and the spouses Sinamban before the RTC. The complaint alleged
that they reneged on their loan obligations under the PNs which the spouses Manalastas
executed in favor of Chinabank.

ISSUES:
 Whether or not the spouses Sinamban are relieved from any liability being co-makers
on the said promissory notes?

RULINGS: Yes.
A co-maker of the PN who binds himself with the maker jointly and severally
renders himself directly and primarily liable with the maker on the debt, without
reference to his solvency.
A promissory note is a solemn acknowledgement of a debt and a formal commitment
to repay it on the date and under the conditions agreed upon by the borrower and the
lender. A person who signs such an instrument is bound to honor it as a legitimate
obligation duly assumed by him through the signature he affixes thereto as token of his
good faith. If he reneges on his promise without just cause, he forfeits the sympathy and
assistance of this court and deserves instead its sharp repudiation.

61.)INDUSTRIAL MANAGEMENT INTERNATIONAL DEVELOPMENT CORP.

VS
NATIONAL LABOR RELATIONS COMMISSION
FACTS:
Private respondents filed a complaint with the DOLE against Filipinas Carbon Mining Corp,
Gerardo Sicat, Antonio Gonzales. Chin Chin Gin, Lo Kuan Chin, and petitioner INIMACO, for
payment of separation pay and unpaid wages.

The decision of the Labor Arbiter held that the respondents will pay the complainants and all
other claims were dismissed. Since there was no appeal, the Decision becomes final and
executory. A writ of execution was issued but returned unsatisfied. The LA then issued an Alias
Writ of Execution.
The petitioner then filed a Motion to Quash Alias Writ of Execution and set aside the
Decision Alleging that the Alias writ of Execution altered and changed the Decision by changing
the liability of therein respondents from joint to solidary. The motion was denied by the Labor
Arbiter.
The petitioner then filed an appeal and the NLRC dismissed the appeal holding that the Writ
of Execution be given due course in all respects.

ISSUE:
Whether or not petitioners liability is solidary or not.

RULINGS:
The court held NO. INIMACO is not solidary but merely joint and that the respondent
NLRC acted with grave abuse of discretion in upholding the Alias Writ of Execution.
A solidary or joint and several obligation is one in which each debtor is liable for the entire
obligation, and each creditor is entitled to demand the whole obligation. In a joint obligation each
obligor answers only for a part of the whole liability and to each obligee belongs only a part of
the correlative rights.
 Well-entrenched is the rule that solidary obligation cannot lightly be inferred. There is a
solidary obligation only when the obligation expressly so states, when the law so provides or
when the nature of the obligation requires.

62.)PNB vs Independent Planters Association

GR. No. L-28046, May 16,1983

Facts:
PNB assails the order of the dismissal of the lower court dismissing its complaints
against several solidary debtors on the ground that one of the defendants died during the
pendency of the case and therefore the complaint being the money claim based on a
contract should be prosecuted in the estate and intestate proceeding for the settlement of
the estate of deceased.

Issue:
Whether in an action for collection of a sum of money based on contract against all
the solidary debtors, the death of one defendant deprives the court of jurisdiction to
proceed with the case against the surviving defendants.

Held:
It is now settled that the quoted Article 1216 grants the creditor the substantive right
to seek satisfaction of his credit from one, some or all of his solidary debtors, as he deems
fit or convenient for the protection of his interests; and if, after instituting a collection suit
based on contract against some or all of them and, during its pendency, one of the
defendants dies, the court retains jurisdiction to continue the proceedings and decide the
case in respect of the surviving defendants

63.)Ronquillo vs CA
GR.no. L-55138, May 16,1983

FACTS:

Del Rosario owns a registered land adjacent to Estero Calubcub which is already dried up
due to the dumping of garbage by the sorrounding neighborhood and not by any natural
causes. Defendant now occupies said dried up land until Del Rosario, claiming ownership
over the same, required him to vacate on the basis of Article 370 of the Civil Code which
provides that riparian owner owns the dried up river bed abandoned by natural changes.

ISSUE:

Whether or not Article 370 applies

RULING: No.
The rules on alluvion do not apply to man-made or artificial accretions nor to accretions
to lands that adjoin canals or esteros or artificial drainage systems. Considering our
earlier finding that the dried-up portion of Estero Calubcub was actually caused by the
active intervention of man, it follows that Article 370 does not apply to the case at bar
and, hence, the Del Rosarios cannot be entitled thereto supposedly as riparian owners.

The dried-up portion of Estero Calubcub should thus be considered as forming part of the
land of the public domain which cannot be subject to acquisition by private ownership.

64.)Spouses Chin Kong Wong Choi and Ana Chua vs. UCPB

Facts:

Petitioner spouses Chin Kong Wong Choi and Ana O. Chua (Spouses Choi) entered
into a Contract to Sell with Primetown Property Group, Inc. (Primetown), a domestic
corporation engaged in the business of condominium construction and real estate
development. The Contract to Sell provided that Spouses Choi agreed to buy
condominium unit no. A-322 in Kiener Hills Cebu (Kiener) from Primetown for a
consideration of P1,151,718.75, with a down payment of P100,000.00 and the remaining
balance payable in 40 equal monthly installments of P26,292.97 from January 16,1997 to
16 April 2000.

On 23 April 1998, respondent United Coconut Planters Bank (UCPB),a commercial bank
duly organized and existing under the laws of the Philippines, executed a Memorandum
of Agreement and Sale of Receivables and Assignment of Rights and Interests
(Agreement) with Primetown. The Agreement provided that Primetown, in consideration
of P748,000,000.00, assigned, transferred, conveyed and set over unto [UCPB] all
Accounts Receivables accruing from [Primetowns Kiener] x x x together with the
assignment of all its rights, titles, interests and participation over the units covered by or
arising from the Contracts to Sell from which the Accounts Receivables have arisen.
Included in the assigned accounts receivable was the account of Spouses Choi, who
proved payment of one monthly amortization to UCPB on 3 February 1999.

On 11 April 2006, the Spouses Choi filed a complaint for refund ofmoney with interest
and damages against Primetown and UCPB before the Housing and Land Use Regulatory
Board (HLURB) Regional Field Office No. VI (RFO VI). Spouses Choi alleged that
despite their full payment of the purchase price, Primetown failed to finish the
construction of Kiener and to deliver the condominium unit to them.

Issue:
Whether, under the Agreement between Primetown and UCPB, UCPB assumed the
liabilities and obligations of Primetown under its contract to sell with Spouses Choi
Held:

In the present case, the Agreement between Primetown and UCPB provided that
Primetown, in consideration of P748,000,000.00, assigned,transferred, conveyed and set
over unto [UCPB] all Accounts Receivables accruing from [Primetowns Kiener] x x x
together with the assignment of all its rights, titles, interests and participation over the
units covered by or arising from the Contracts to Sell from which the Accounts
Receivables have risen.

The Agreement conveys the straight forward intention of Primetown to sell, assign,
transfer, convey and set over to UCPB the receivables, rights, titles, interests and
participation over the units covered by the contracts to sell. It explicitly excluded any and
all liabilities and obligations, which Primetown assumed under the contracts to sell.

Considering that UCPB is a mere assignee of the rights and receivables under the
Agreement, UCPB did not assume the obligations and liabilities of Primetown under its
contract to sell with Spouses Choi.

65.)Calang vs. People of the Philippines

Facts:

On April 22, 1989, Rolito Calang was driving Philtranco Bus, owned by Philtranco
along Daang Maharlika Highway in Barangay Lambao, Sta. Margarita, Samar when its
rear left side hit the front left portion of a Sarao jeep coming from the opposite direction.
As a result of the collision, Cresencio Pinohermoso, the jeeps driver, lost control of the
vehicle, and bumped and killed Jose Mabansag, a bystander who was standing along the
highways shoulder. From the point of impact, two of the jeeps passengers, Armando
Nablo and an unidentified woman, were instantly killed, while the other passengers
sustained serious physical injuries. The prosecution charged Calang with multiple
homicide, multiple serious physical injuries and damage to property thru reckless
imprudence before the Regional Trial Court and in its decision dated May 21, 2001,
found Calang guilty beyond reasonable doubt of reckless imprudence resulting to
multiple homicide, multiple physical injuries and damage to property, and sentenced him
to suffer an indeterminate penalty of thirty days of arresto menor, as minimum, to four
years and two months of prision correccional, as maximum. The RTC ordered Calang
and Philtranco, jointly and severally, to pay P50,000.00 as death indemnity to the heirs
of Armando; P50,000.00 as death indemnity to the heirs of Mabansag; and P90,083.93 as
actual damages to the private complainants.
 The petitioners appealed the RTC decision to the Court of Appeals,The CA affirmed
RTC,s decision in toto, ruled that petitioner Calang failed to exercise due care and
precaution in driving the Philtranco bus.

Issue:

Won CA was coorect in holding Philtranco & Calang jointly & severally liable.

Held:

Liability of Calang: We see no reason to overturn the lower courts finding on Calangs
culpability. The finding of negligence on his part by the trial court, affirmed by the CA, is
a question of fact that we cannot pass upon without going into factual matters touching on
the finding of negligence. In petitions for review on certiorari under Rule 45 of the
Revised Rules of Court, this Court is limited to reviewing only errors of law, not of fact,
unless the factual findings complained of are devoid of support by the evidence on
record, or the assailed judgment is based on a misapprehension of facts.

Liability of Philtranco:We, however, hold that the RTC and the CA both erred in holding
Philtranco jointly and severally liable with Calang. We emphasize that Calang was
charged criminally before the RTC. Undisputedly, Philtranco was not a direct party in this
case. Since the cause of action against Calang was based on delict, both the RTC and the
CA erred in holding Philtranco jointly and severally liable with Calang, based on quasi-
delict under Articles 2176[1] and 2180[2] of the Civil Code. Articles 2176 and 2180 of
the Civil Code pertain to the vicarious liability of an employer for quasi-delicts that an
employee has committed. Such provision of law does not apply to civil liability arising
from delict.

66.)Saura Import &. Export Co. Inc. Vs. DBP

Facts:

In July 1953 the plaintiff (hereinafter referred to as Saura, Inc.) applied to the
Rehabilitation Finance Corporation (RFC), before its conversion into DBP, for an
industrial loan of P500,000.00, to be used as follows: P250,000.00 for the construction of
a factory building (for the manufacture of jute sacks); P240,900.00 to pay the balance of
the purchase price of the jute mill machinery and equipment; and P9,100.00 as additional
working capital. RFC approved the loan to be secured by a first mortgage on the factory
buildings to be constructed, the land site thereof, and the machinery and equipment
installed. A day before the notice of approval, Saura wrote to RFC requesting
modifications of the terms to their agreement as regards the persons and entity who shall
sign the promissory notes with the company.
 The negotiations came to a standstill, Saura did not pursue matter any further.
Instead,it ask that the mortgage be cancelled. RFC cancelled the mortgage. Almost 9
years after the cancellation of Sauras mortgage with RFC, it commenced suit for
damages against now, DBP, alleging that it had failed to comply with the obligation to
release the approved loan that prevented the palintiff in complying with its own
commitments.

Issue:

Whether there was a perfected contract of loan between the parties despite Sauras
having opted to cancel the mortgage when the negotiations came to an impasse.

Held:

We hold that there was indeed a perfected consensual contract, as recognized in

Article 1934 of the Civil Code. There was undoubtedly offer and acceptance in this case:
the application of Saura, Inc. for a loan of P500,000.00 was approved by resolution of the
defendant, and the corresponding mortgage was executed and registered. But this fact
alone falls short of resolving the basic claim that the defendant failed to fulfill its
obligation and the plaintiff is therefore entitled to recover damages.

Where after approval of his loan, the borrower, instead of insisting for its
release,asked that the mortgage given as security be cancelled and the creditor acceded
thereto, the action taken by both parties was in nature of mutual desistance- what
Manresa terms mutuo desenso- which is a mode of extinguishing an obligations.It is a
concept that derives from the principle that since mutual agreement can create a contract,
mutual disagreement can cause its extinguishment.

WHEREFORE, the judgment appealed from is reversed and the complaint dismissed,
with costs against the plaintiff-appellee.

67.)Rivelisa Realty,Inc vs First Sta.Clara Builders Corp.

Facts:
On January 25, 1995, Rivelisa Realty entered into a JVA with First Sta. Clara for the
construction and development of a residential subdivision located in Cabanatuan City .
According to its terms, First Sta. Clara was to assume the horizontal development works
in the remaining 69% undeveloped portion of the project owned by Rivelisa Realty, and
complete the same within twelve months from signing. Upon its completion, 60% of the
total subdivided lots shall be transferred in the name of First Sta. Clara. Also, since 31%
of the project had been previously developed by Rivelisa Realty which was assessed to
have an aggregate worth of 10 million, it was agreed that First Sta. Clara should initially
use its own resources (in the same aggregate amount of 10m.) before it can start claiming
additional funds from the pre-sale of the 31% developed lots. 40% of the cost of
additional works not originally part of the JVA was to be shouldered by Rivelisa Realty,
while 60% by First Sta. Clara.
During the course of the project, First Sta. Clara ran out of funds after only two (2)
months of construction, Rivelisa Realty was forced to shoulder part of the payment due to
the subcontractor. First Sta. Clara manifested its intention to back out from the JVA and to
discontinue operations when Rivelisa Realty refused to advance any more funds until
60% of the project had been accomplished. Rivelisa readily agreed to release First Sta.
Clara from the project and reimburse him.
However the reimbursement remained unpaid after several demands. First Sta. Clara
filed a complaint for rescission of the JVA against Rivelisa Realty before the RTC,
claiming the payment of damages for breach of contract and delay in the performance of
an obligation.
Issue:
Whether or not the CA erred in finding that: (a) the 15-day reglementary period for
the filing of a motion for reconsideration cannot be extended; and (b) First Sta. Clara is
entitled to be compensated for the development works it had accomplished on the project.
Held:
The petition is bereft of merit.The CA Decision subject of the instant petition for
review had already attained finality in view of Rivelisa Realtys failure to file a motion
for reconsideration within the 15-day reglementary period allowed under the CAs
internal rules.

The Court concurs with the CA that First Sta. Clara is entitled to be compensated for
the development works it had accomplished on the project based on the principle of
quantum meruit. Case law instructs that under this principle, a contractor is allowed to
recover the reasonable value of the thing or services rendered despite the lack of a written
contract, in order to avoid unjust enrichment. Quantum meruit means that, in an action for
work and labor, payment shall be made in such amount as the plaintiff reasonably
deserves. The measure of recovery should relate to the reasonable value of the services
performed because the principle aims to prevent undue enrichment based on the equitable
postulate that it is unjust for a person to retain any benefit without paying for it. In this
case, it is undisputed that First Sta. Clara already performed certain works on the project.

68.)Philippine Commercial International Bank vs. Arturo Franco

Facts:

This is an action for damages filed [on September 5, 2000] by plaintiff Arturo P.
Franco against Philippine Commercial International Bank (PCIB), now known as
Equitable-PCIBank, and Equitable Banking Corp.The complaint essentially alleges,
among others, that plaintiff secured from defendant PCIB the Trust Indenture Certificates.
That despite demands, defendants refused and still refuses to return to plaintiff the trust
amounts, plus the stipulated interest.
 On June 22, 2000, he received a letter signed by defendants counsel, Curato Divina
& Partners, in effect denying plaintiffs request for payment by stating that due to the
conversion of all outstanding PCIBank trust indenture accounts into common trust
certificates, all such PCIBank trust indenture certificates have been rendered "null and
void." Plaintiff prays for the payment of the amounts under the Trust Indenture
Certificates, plus interest, moral and exemplary damages and attorneys fees.

Issue:

Whether or not the plaintiff is entitled to the relief he seeks.

Held: Petition denied.

Upon perusal of the entire case records, the Court finds no reversible error committed
by the CA in sustaining the RTC Decision. Considering the evidence at hand, both courts
have applied the law in accordance with the facts of the case.

In this case, respondent's possession of the original copies of the subject TICs
strongly supports his claim that petitioner Bank's obligation to return the principal plus
interest of the money placement has not been extinguished. The TICs in the hands of
respondent is a proof of indebtedness and a prima facie evidence that they have not been
paid. Petitioner Bank could have easily presented documentary evidence to dispute the
claim, but it did not. In its omission, it may be reasonably deduced that no evidence to
that effect really exist. Worse, the testimonies of petitioner Bank's own witnesses,
reinforce, rather than belie, respondent's allegations of non-payment.

69.)Netlink Computer Inc. Vs Eric Delmo

Facts:

On November 3, 1991, Netlink Computer, Inc. Products and Services (Netlink) hired
Eric S. Delmo (Delmo) as account manager tasked to canvass and source clients and
convince them to purchase the products and services of Netlink. Delmo worked in the
field most of the time. He and his fellow account managers were not required to
accomplish time cards to record their personal presence in the office of Netlink.He was
able to generate sales worth P35,000,000.00, more or less, from which he earned
commissions amounting to P993,558.89 and US$7,588.30.Later on Netlink issued several
memoranda detailing his supposed infractions of the companys attendance policy.
Despite the memoranda, Delmo continued to generate huge sales for Netlink.
 Despite Delmos Sales performance he was illegally and unjustly dismissed. NLRC
ruled that Delmo was legally dismissed due to just and valid cause. CA upholds NLRCs
ruling with modification with the awarding of the commission and 13th month pay.

Issue:

(1) whether or not the payment of the commissions should be in US dollars; (2) whether
or not the award of attorneys fees was warranted.

Held:

The appeal lacks merit.

1.)As a general rule, all obligations shall be paid in Philippine currency. However, the
contracting parties may stipulate that foreign currencies may be used for settling
obligations. This is pursuant to Republic Act No. 8183.which provides as follows:

Section 1. All monetary obligations shall be settled in the Philippine currency which is
legal tender in the Philippines. However, the parties may agree that the obligation
ortransaction shall be settled in any other currency at the time of payment.

2.)Finally, we affirm the following justification of the CA in granting attorney's fees to

Delmo, viz: The award of attorney's fees must, likewise, be upheld in line of (sic) the
decision of the Supreme Court in the case of Consolidated Rural Bank (Cagayan Valley),
Inc. vs. National Labor Relations Commission, 301 SCRA 223, 235, where it was held
that "in actions for recovery of wages or where an employee was forced to litigate and
thus incur expenses to protect her rights and interests, even if not so claimed, an award of
attorney's fees equivalent to ten percent (10%) of the total award is legally and morally
justifiable. There is no doubt that in the present case, the private respondent has incurred
expenses for the protection and enforcement of his right to his commissions.

70.)Elizabeth Del Carmen vs. Spouses Restituto Sabordo & Mima

Mahilum-Sabordo

Facts:

On September 3, 1974, respondents and the Suico and Flores spouses executed a
supplemental agreement whereby they affirmed that what was actually sold to
respondents were Lots 512 and 513, while Lots 506 and 514 were given to them as
usufructuaries. DBP approved the sale of rights of the Suico and Flores spouses in favor
of herein respondents. Subsequently, respondents were able to repurchase the foreclosed
properties of the Suico and Flores spouses.

On September 13, 1976, respondent Restituto Sabordo (Restituto) filed an original action
for declaratory relief with damages and prayer for a writ of preliminary injunction raising
the issue of whether or not the Suico spouses have the right to recover from respondents
Lots 506 and 514.

RTC ruled in favor of the Suico spouses directing that the latter that they have until
August 31, 1987 within which to redeem or buy back from respondents Lots 506 and 514.
On appeal, the CA, in its Decision modified the RTC decision by giving the Suico
spouses until October 31, 1990 within which to exercise their option to purchase or
redeem the subject lots from respondents by paying the sum of P127,500.00.

In the meantime, Toribio Suico (Toribio) died leaving his widow, Eufrocina, and several
others, including herein petitioner, as legal heirs. Later, they discovered that respondents
mortgaged Lots 506 and 514 with Republic Planters Bank (RPB) as security for a loan
which, subsequently, became delinquent.

Thereafter, claiming that they are ready with the payment of P127,500.00, but alleging
that they cannot determine as to whom such payment shall be made, petitioner and her
co-heirs filed a Complaint with the RTC seeking to compel herein respondents and RPB
to interplead and litigate between themselves their respective interests on the
abovementioned sum of money. The Complaint also prayed that respondents be directed
to substitute Lots 506 and 514 with other real estate properties as collateral for their
outstanding obligation with RPB and that the latter be ordered to accept the substitute
collateral and release the mortgage on Lots 506 and 514. Upon filing of their complaint,
the heirs of Toribio deposited the amount of P127,500.00 with the RTC of San Carlos
City.

Respondents filed their Answer with Counterclaim praying for the dismissal of the above
Complaint on the grounds that (1) the action for interpleader was improper since RPB is
not laying any claim on the sum of P127,500.00; (2) that the period within which the
complainants are allowed to purchase Lots 506 and 514 had already expired; (3) that
there was no valid consignation, and (4) that the case is barred by litis pendenciaor res
judicata.

RTC rendered judgment, dismissing the Complaint of petitioner and her co-heirs for lack
of merit. Respondents' Counterclaim was likewise dismissed.On appeal with CA they
contend that the judicial deposit or consignation of the amount of P127,500.00 was valid
and binding and produced the effect of payment of the purchase price of the subject lots.

In its assailed Decision, the CA denied the above appeal for lack of merit and affirmed
the disputed RTC Decision.

Issue:
 WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THE
DECISION OF THE LOWER COURT WHICH HELD THAT THE JUDICIAL
DEPOSIT OF P127,500.00 MADE BY THE SUICOS WITH THE CLERK OF COURT
OF THE RTC, SAN CARLOS CITY, IN COMPLIANCE WITH THE FINAL AND
EXECUTORY DECISION OF THE COURT OF APPEALS IN CA-G.R. CV-13785
WAS NOT VALID.

Held:

The petition lacks merit. At the outset, the Court quotes with approval the discussion
of the CA regarding the definition and nature of consignation, to wit: 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. Tender and consignation, where validly made, produces the effect of
payment and extinguishes the obligation.

It is settled that compliance with the requisites of a valid consignation is mandatory.

Failure to comply strictly with any of the requisites will render the consignation void.
One of these requisites is a valid prior tender of payment.

Under Article 1256, the only instances where prior tender of payment is excused are: (1)
when the creditor is absent or unknown, or does not appear at the place of payment; (2)
when the creditor is incapacitated to receive the payment at the time it is due; (3) when,
without just cause, the creditor refuses to give a receipt; (4) when two or more persons
claim the same right to collect; and (5) when the title of the obligation has been lost.
None of these instances are present in the instant case. Hence, the fact that the subject lots
are in danger of being foreclosed does not excuse petitioner and her co-heirs from
tendering payment to respondents, as directed by the court.

#71
Bognot V RRI Lending
Facts:
Sometime in September 1996, the petitioner and his younger brother, Rolando A. Bognot
(collectively referred to as the "Bognot siblings"), applied for and obtained a loan of Five
Hundred Thousand Pesos (P500,000.00) from RRI Lending Corporationfrom, duly
represented by its General Manager, Mr. Dario J. Bernardez (Bernardez), respondent. The
loan was evidenced by a promissory note and was secured by a post dated check5 dated
November 30, 1996. Sometime in March 1997, the petitioner applied for another loan
renewal. Several days before the loans maturity, Rolandos wife, Julieta Bognot (Mrs.
Bognot), went to the respondents office and applied for another renewal of the loan. On
the excuse that she needs to bring home the loan documents for the Bognot siblings
signatures and replacement, Mrs. Bognot asked the respondents clerk to release to her
the promissory note, the disclosure statement, and the check dated July 30, 1997. Mrs.
Bognot, however, never returned these documents nor issued a new post-dated check.
Consequently, the respondent sent the petitioner follow-up letters demanding payment of
the loan, plus interest and penalty charges. These demands went unheeded.
The respondent mainly alleged that the loan renewal payable on June 30, 1997 which the
Bognot siblings applied for remained unpaid; that before June30, 1997, Mrs. Bognot
applied for another loan extension and issued IBE Check No. 00012522 as payment for
the renewal fee; that Mrs. Bognot convinced the respondents clerk to release to her the
promissory note and the other loan documents; that since Mrs. Bognot never issued any
replacement check, no loanextension took place and the loan, originally payable on June
30, 1997, became due on this date; and despite repeated demands, the Bognot siblings
failed to pay their joint and solidary obligation.

ISSUE:
Whether the parties obligation was extinguished by: (i) payment; and (ii) novation by
substitution of debtors.

RULING:
No Evidence Was Presented to Establish the Fact of Payment
Jurisprudence tells us that one who pleads payment has the burden of proving it;17 the
burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-
payment.18 Indeed, once the existence of an indebtedness is duly established by
evidence, the burden of showing with legal certainty that the obligation has been
discharged by payment rests on the debtor.19
In the present case, the petitioner failed to satisfactorily prove that his obligation had
already been extinguished by payment. As the CA correctly noted, the petitioner failed to
present any evidence that the respondent had in fact encashed his check and applied the
proceeds to the payment of the loan. Neither did he present official receipts evidencing
payment, nor any proof that the check had been dishonored.
We note that the petitioner merely relied on the respondents cancellation and return to
him of the check dated April 1, 1997. The evidence shows that this check was issued to
secure the indebtedness. The acts imputed on the respondent, standing alone, do not
constitute sufficient evidence of payment.

#72
Rivera V Spouses Chua
Facts:
The parties were friends of long standing having known each other since 1973: Rivera
and Salvador are kumpadres, the former is the godfather of the Spouses Chuas son. On
24 February 1995, Rivera obtained a loan from the Spouses Chua in the amount of
120,000.00.
In October and December 1998, the Spouses Chua received check presumably issued by
Rivera, likewise drawn against Riveras PCIB current account. Both checks were simply
partial payment for Riveras loan in the principal amount of P120,000.00.
Upon presentment for payment, the two checks were dishonored for the reason account
closed.

As of 31 May 1999, the amount due the Spouses Chua was pegged at P366,000.00
covering the principal of P120,000.00 plus five percent (5%) interest per month from 1
January 1996 to 31 May 1999 in accordance with what's stipulated in the promisory note.
The Spouses Chua alleged that they have repeatedly demanded payment from Rivera to
no avail. Because of Riveras unjustified refusal to pay, the Spouses Chua were
constrained to file a suit on 11 June 1999.

ISSUE:
Whether or not Rivera incurred delay and is also liable for indemnification?

HELD:
Yes. We refer to the clause in the Promissory Note containing the stipulation of interest:
(It is agreed and understood that failure on my part to pay the amount of (P120,000.00)
One Hundred Twenty Thousand Pesos on December 31, 1995. (sic) I agree to pay the
sum equivalent to FIVE PERCENT (5%) interest monthly from the date of default until
the entire obligation is fully paid for) which expressly requires the debtor (Rivera) to pay
a 5% monthly interest from the date of default until the entire obligation is fully paid
for. The parties evidently agreed that the maturity of the obligation at a date certain, 31
December 1995, will give rise to the obligation to pay interest. The Promissory Note
expressly provided that after 31 December 1995, default commences and the stipulation
on payment of interest starts.

#73
THE WELLEX GROUP, INC. v. U-LAND AIRLINES, CO., LTD.
Facts:
On May 16, 1998, Wellex and U-Land entered into a Memorandum of Agreement12
(First Memorandum of Agreement) to expand their respective airline operations in Asia.
Despite the absence of a share purchase agreement, U-Land remitted to Wellex a total of
US$7,499,945.00.46 These were made in varying amounts and through the issuance of
post-dated checks. Wellex acknowledged the receipt of these remittances in a
confirmation letter addressed to U-Land dated September 30, 1998.
U-Land remitted to Wellex a total of US$7,499,945.00 because of its intent to become
involved in the aviation business in the Philippines. Despite the remittance of this
amount, no share purchase agreement was entered into by the parties.
U-Land filed a Complaint72 praying for rescission of the First Memorandum of
Agreement and damages against Wellex and for the issuance of a Writ of Preliminary
Attachment.73 From U-Lands point of view, its primary reason for purchasing APIC
shares from Wellex was APICs majority ownership of shares of stock in APC (APC
shares).74 After verification with the Securities and Exchange Commission, U-Land
discovered that APIC did not own a single share of stock in APC.75 U-Land alleged
that it repeatedly requested that the parties enter into the share purchase agreement.76 U-
Land attached the demand letter dated July 22, 1999 to the Complaint.77 However, the
40-day period lapsed, and no share purchase agreement was finalized.

ISSUE:
Whether rescission be granted and the amount paid by U-land be returned?

RULING:
Yes. Rescission, as defined by Article 1385, mandates that the parties must return to each
other everything that they may have received as a result of the contract. This pertains to
rescission or resolution under Article 1191, as well as the provisions governing all forms
of rescissible contracts.

#74
National Power Corporation V Lucman M. Ibrahim et al
Facts:
In 1978, petitioner took possession of a 21,995 square meter parcel of land in Marawi
City (subject land) for the purpose of building thereon a hydroelectric power plant
pursuant to its Agus 1 project. The subject land, while in truth a portion of a private estate
registered under Transfer Certificate of Title (TCT) No. 378-A4 in the name of herein
respondent Macapanton K. Mangondato (Mangondato),5 was occupied by petitioner
under the mistaken belief that such land is part of the vast tract of public land reserved for
its use by the government under Proclamation No. 1354, s. 1974. After more than a
decade, petitioner finally acquiesced to the fact that the subject land is private land
covered by TCT No. 378-A and consequently acknowledged Mangondatos right, as
registered owner, to receive compensation therefor. On 21 August 1992, Branch 8 of the
Marawi City RTC rendered a Decision10 in Civil Case No. 605-92 and Civil Case No.
610-92. The decision upheld petitioners right to expropriate the subject land: it denied
Mangondatos claim for reconveyance and decreed the subject land condemned in favor
of the petitioner, effective July of 1992, subject to payment by the latter of just
compensation in the amount of P21,995,000.00. Anent petitioners occupation of the
subject land from 1978 to July of 1992, on the other hand, the decision required the
former to pay rentals therefor at the rate of P15,000.00 per month with 12% interest per
annumannum.
Disagreeing with the amount of just compensation that it was adjudged to pay under the
said decision, petitioner filed an appeal with the Court of Appeals. This appeal was
docketed in the Court of Appeals as CA-G.R. CV No. 39353.
During the pendency of CA-G.R. CV No. 39353, or on 29 March 1993, herein
respondents the Ibrahims and Maruhoms12 filed before the RTC of Marawi City a
complaint13 against Mangondato and petitioner. The Ibrahims and Maruhoms submit that
since they are the real owners of the lands covered by TCT No. 378-A, they should be the
ones entitled to any rental fees or expropriation indemnity that may be found due for the
subject land.
ISSUE:
Whether or not NAPOCOR be held liable to Ibrahims and Maruhoms being the real
owners?

HELD:
No. Without the existence of bad faith, the ruling of the RTC and of the Court of Appeals
apropos petitioners remaining liability to the Ibrahims and Maruhoms becomes devoid of
legal basis. In fact, petitioners previous payment to Mangondato of the rental fees and
expropriation indemnity due the subject land pursuant to the final judgment may be
considered to have extinguished the formers obligation regardless of who between
Mangondato, on one hand, and the Ibrahims and Maruhoms, on the other, turns out to be
the real owner of the subject land.62 Either way, petitioner cannot be made liable to the
Ibrahims and Maruhoms.

#75
Azcona v. Jamandre
Facts:
Guillermo Azcona leased 80 hectares out of his 150 hectare share in Hacienda Sta. Fe in
Negros Occidental to Cirilo Jamandre. The agreed yearly rental was P7200 and the term
was for 3 agricultural years beginning 1960. On March 30, 1960, when the first annual
rent was due, petitioner was not able to deliver possession of the leased property thus he
waived payment of that rental. Respondent only entered the premises on October 26,
1960 after paying P7000, which was acknowledged by the petitioner in the receipt. On
April 6, 1961, the petitioner notified respondent that the contract of lease was deemed
cancelled for violation of the conditions of the contract. Earlier, in fact, the respondent
had been ousted from the possession of the 60 hectares of the leased premises and let
with only 20 hectares of the original area.

Issues
Whether or not the lease contract is deemed cancelled upon failure of the respondent to:
1. Attach the parcelary plan identifying the exact area subject of the contract
2. Secure approval of PNB of said contract
3. Pay the rentals

Ruling
Parcelary PlanThe correct view is that there was an agreed subject-matter, although it was
not expressly defined because the plan was not annexed and never approved. There was
still an ascertainable object because the leased premiseswere sufficiently delineated and
identified. Failure to attach the plan was imputable to the petitioner himself because he
was supposed to prepare the said plan. Nevertheless, the identification of the lease area
rendered the plan unnecessary and its absence did not nullify the agreement.PNB
ApprovalPetitioners claim that such possession was not delivered because the approval of
bythe PNB had not materialized due to respondent's neglect. Respondent was negotiating
the loan with PNB but the contract does not state upon whom fell the obligation to secure
the approval.Payment of RentPetitioner contends that the payment of P7000, which was
short of P200, was a violation of the agreement thus the contract should be deemed
cancelled. But the petitioner unqualifiedly accepted the amount. The absence of any
mention of the discrepancy in the receipt nor any protest or demand to collect the
remaining balance, meansthat petitioner acknowledged the amount as the full payment
for the rent. The SC affirms the decision of the CA and petition is denied.Note: The CA
held that the amount of P200 had been condoned but the SC viewed it as a mere reduction
of the stipulated rental in consideration of the withdrawal from the leased premises where
the petitioner intended to graze his cattle.Relevant Articles/ JurisprudenceArt 1235
When the obligee accepts the performance, knowing its incompleteness or irregularity,
and without expressing any protest or objection, the obligation is deemed fully complied
with.

#76
J.M. TUASON & CO., INC. VS. JAVIER
FACTS: On September 7, 1954, petitioner J.M. Tuason & Co., Inc. entered a contract to
sell with respondent Ligaya Javier a parcel of land known as Lot No. 28, Block No. 356,
PSD 30328, of the Sta. Mesa Heights Subdivision for the sum of Php3,691.20 with 10%
interest per annum; Php396.12 will be payable upon execution of the contract, and an
installment of Php43.92 monthly for a period of ten (10) years. It was further stipulated in
the contract, particularly the sixth paragraph, that upon failure of respondent to pay the
monthly installment, she is given a one month grace period to pay such installment
together with the monthly installment falling on the said grace period. Furthermore,
failure to pay both monthly installments, respondent will pay an additional 10% interest.
And after 90 days from the end of the grace period, petitioner can rescind the contract,
the payments made by respondent will be considered as rentals. Upon the execution of
the contract, respondent religiously paid the monthly installment until January 5, 1962.
Respondent, however, was unable to the pay the monthly installments within the grace
period which petitioner, subsequently, sent a letter to respondent on May 22, 1964 that the
contract has been rescinded and asked the respondent to vacate the said land. So, upon
failure of respondent to vacate the said land, petitioner filed an action to the Court of First
Instance of Rizal for the rescission of the contract. The CFI rendered a decision in favor
of respondent in applying Article 1592 of the New Civil Code. Hence, petitioner made an
appeal to the Supreme Court alleging that since Article 1592 of the New
Civil applies only to contracts of sale and not in contracts to sell.

ISSUE:
Did the CFI erroneously apply Article 1592 of the New Civil Code?
RULING: Yes. Regardless, however, of the propriety of applying Article 1592, petitioner
has not been denied substantial justice under Article 1234 of the New Civil Code. In this
connection, respondent religiously satisfied the monthly installments for almost eight (8)
years or up to January 5, 1962. It has been shown that respondent had already paid
Php4,134.08 as of January 5, 1962 which is beyond the stipulated amount of
Php3,691.20. Also, respondent has offered to pay all installments overdue including the
stipulated interest, attorneys fees and the costs which the CFI accordingly sentenced
respondent to pay such installment, interest, fees and costs. Thus, petitioner will be able
recover everything that was due
thereto. Under these circumstances, the SC feel that, in the interest of justice and equity,
the decision appealed from may be upheld upon the authority of Article 1234 of the New
Civil Code.

#77
SPOUSES MINIANO B. DELA CRUZ and LETA L. DELA CRUZ,
Petitioners, v. ANA MARIE CONCEPCION, Respondent.
PERALTA, J.:
FACTS:
Petitioners Miniano and Leta Dela Cruz (spouses Dela Cruz) entered into a contract to
sell with respondent Ana Marie Concepcion (Concepcion) involving a house and lot for a
consideration of PhP 2,000,000.00 payable in installments. As instructed by spousesDela
Cruz, Concepcion paid her last installment to a certain Adoracion or "Dori" Losloso.
Thus, Concepcion was able to pay the total purchase price and the title to the property
was transferred in her favor.
Notwithstanding Concepcions full payment, the spouses Dela Cruz demanded the amount
of P209,000.00 purportedly as remaining balance of the purchase price. Concepcion
refused to pay the said amount. The spouses averred that Concepcions payment to "Dori"
was not valid. Hence, spouses Dela Cruz filed a Complaint for Sum of Money with
Damages before the RTC.
In her answer, Concepcion failed to allege the defense of payment of the amount claimed
by the spouses. However, during the presentation of her evidence, she submitted a receipt
to prove that she had already paid the remaining balance.
The RTC dismissed the spouses complaint. On appeal, the CA affirmed the RTCs
decision with modification. Hence, this instant petition.

ISSUE:
II. Whether or not payment to Losloso amounts to a valid tender of payment?

HELD: Payment made to Losloso is deemed payment to the spouses Dela Cruz.
In order to extinguish said obligation, payment should be made to the proper person as set
forth in Article 1240 of the Civil Code. The Court explained in Cambroon v. City of
Butuan, cited in Republic v. De Guzman, to whom payment should be made in order to
extinguish an obligation: "In general, a payment in order to be effective to discharge an
obligation, must be made to the proper person. Thus, payment must be made to the
obligee himself or to an agent having authority, express or implied, to receive the
particular payment. Payment made to one having apparent authority to receive the money
will, as a rule, be treated as though actual authority had been given for its receipt.
Likewise, if payment is made to one who by law is authorized to act for the creditor, it
will work a discharge."
Taking into consideration the busy schedule of respondent, petitioners advised the latter
to leave the payment to a certain "Dori" who admittedly is Losloso, or to her trusted
helper. This is an express authority given to Losloso to receive payment. Thus, as shown
in the receipt signed by petitioners agent and pursuant to the authority granted by
petitioners to Losloso, payment made to the latter is deemed payment to petitioners.

#78
Aranas v. Tutaan Digest
Facts: The stocks of Universal Textile Mills (UTEX) were issued to co-defendants
Manuel and Castaneda. Subsequently, in 1971, the lower court declared that Luisa Aranas
is the rightful owner of the 400 shares of stocks at Universal Textile Mills (UTEX.
Further, it ordered that dividends in cash or stocks pertaining to the same be delivered to
Aranas. UTEX then filed a motion to clarify the phrase in said decision which states to
deliver to her all dividends appertaining to the same, whether in cash or in stocks meant
dividends properly pertaining to the plaintiffs after the courts declaration of her
ownership. The said motion was granted, where the court ordered UTEX to pay the
plaintiff the cash dividends which accrued to the stocks in question after the current
decision was rendered but the cash dividends already paid to the co-defendants before the
court decision may not be claimed by the plaintiffs.
The co-defendants filed for a new trial and the decision was the same as the the 1971
ruling. Upon appeal to the CA, the said ruling was affirmed. The lower court issued a writ
of execution in 1979 directed to UTEX to 1) cancel the certificate of stocks of the co-
defendants and issue new ones in the name of the petitioners, and 2) Pay the cash
dividends accrued from 1972 to 1979 (period from the new trial to the issuance of writ of
execution). UTEX alleged that the cash dividends had already been paid.

ISSUE: Whether or not there was valid payment

RULING: No. It is elementary that payment made by a judgment debtor to a wrong party
cannot extinguish the obligation of such debtor to its creditor. It was clear in the motion
for clarification that all dividends accruing to the said shares after the rendition of
judgement belonged to the Aranas. When UTEX paid the wrong parties, despite its
knowledge and understanding of the final judgment, it is still liable to pay Aranas as the
lawful declared owners of the said shares. The burden to recover the wrong payment is on
UTEX and cannot be passed on to the Aranas as the innocent parties.
#79
Hydro Resources Contractors vs National Irrigation Administration
Facts:
A contract was entered into between Hydro and NIA for the project of the latter. The
contract price is to be payable partly in Philippine peso and US dollars. Once the project
was being executed, there was depreciation in value of Peso resulting to price differential.
In order to resolve the issue, the administrator of NIA, Mr Tek, and Hydro made a joint
computation of the amount corresponding to the foreign currency differential. The
computation showed that NIA owed Hydro for the differential. When a demand was made
by Hydro against NIA, NIA refused to pay contending that Mr Tek has no authority to
participate into a joint computation of the foreign currency differential and that Mr Tek
has no authority to bind NIA.

Issue:
Whether or not Mr Tek has the authority to bind NIA in the joint computation of the
foreign currency differential.

Held:
The SC found out that in the course of the project, Hydro has been dealing with NIA
represented by Mr. Tek. And applying the doctrine of apparent authority, if a corporation
knowingly permits one of its officers to act within the scope of an apparent authority, it
holds him out to the public possessing the power to do those acts; and thus, the
corporation will, as against anyone who has in good faith dealt with it through such agent,
be stopped from denying the agents authority.

#80
Ponce V Honorable Court in of Appeals
FACTS: In 1969, Jesusa Afable and two others procured a loan from Nelia Ponce in the
amount of $194,016.29. In June 1969, Afable and her co-debtors executed a promissory
note in favor of Ponce in the peso equivalent of the loan amount which was P814,868.42.
The promissory note went due and was left unpaid despite demands from Ponce. This
prompted Ponce to sue Afable et al. The trial court ruled in favor of Ponce. The Court of
Appeals initially affirmed the trial court but it later reversed its decisions as it ruled that
the promissory note under consideration was payable in US dollars, and, therefore
pursuant to Republic Act 529, the transaction was illegal with neither party entitled to
recover under the in pari delicto rule.

ISSUE: Whether or not Ponce may recover.

HELD: Yes. RA 529 provides that an agreement to pay in dollars is null and void and of
no effect however what the law specifically prohibits is payment in currency other than
legal tender. It does not defeat a creditors claim for payment, as it specifically provides
that every other domestic obligation whether or not any such provision as to payment
is contained therein or made with respect thereto, shall be discharged upon payment in
any coin or currency which at the time of payment is legal tender for public and private
debts. A contrary rule would allow a person to profit or enrich himself inequitably at
anothers expense.
On the face of the promissory note, it says that it is payable in Philippine currency the
equivalent of the dollar amount loaned to Afable et al. It may likewise be pointed out that
the Promissory Note contains no provision giving the obligee the right to require
payment in a particular kind of currency other than Philippine currency, which is what
is specifically prohibited by RA No. 529. If there is any agreement to pay an obligation in
a currency other than Philippine legal tender, the same is null and void as contrary to
public policy, pursuant to Republic Act No. 529, and the most that could be demanded is
to pay said obligation in Philippine currency.

#81
KALALO VS LUZ
FACTS: Octavio Kalalo is an engineer whose services were contracted by Alfredo Luz,
an architect in 1961. Luz contracted Kalalo to work on ten projects across the country,
one of which was an in the International Rice Research Institute (IRRI) Research Center
in Los Baos, Laguna. Luz was to be paid $140,000.00 for the entire project. For Kalalos
work, Luz agreed to pay him 20% of what IRRI is going to pay or equivalent to
$28,000.00.

ISSUE: Whether or not Kalalo should be paid in US currency.

HELD: No. The agreement was forged in 1961, years before the passage of Republic Act
529 in 1950. The said law requires that payment in a particular kind of coin or currency
other than the Philippine currency shall be discharged in Philippine currency measured at
the prevailing rate of exchange at the time the obligation was incurred. Nothing in the law
however provides which rate of exchange shall be used hence it is but logical to use the
rate of exchange at the time of payment.
#82
TIBAJIA VS. COURT OF APPEALS
Facts: Eden Tan filed a suit of collection of sum of money against the spouses Tibajia.
For which, a writ of attachment was issued, the Deputy Sheriff filed a return stating that
Tibijia made a deposit in the amount of P442,750, which he subsequently garnished. RTC
ruled in favor of Eden Tan and ordered the spouses to pay her an amount in excess of
P3,000,000. Court of Appeals modified the decision by reducing the amount for damages.
Spouses Tibajia delivered to Sheriff Bolima the total money judgment of P398483.70.
Tan refused to accept the payment and insisted that the garnished funds be withdrawn to
satisfy the judgment obligation.

Issue: Whether or not payment by means of check is considered payment in legal tender.

Ruling: The ruling 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 check, cashiers or personal check. The decision of the court of Appeals is
affirmed.

#83
Roman Catholic V iac
FACTS:
July 7, 1971: A contract over the land was executed between the Roman Catholic Bishop
of Malolos (bishop) as vendor and the through its then president, Mr. Carlos F. Robes, as
vendee, stipulating for a downpayment of P23,930 and the balance of P100,000 plus 12%
interest per annum to be paid within 4 years from execution of the contract.
The contract likewise provides for cancellation, forfeiture of previous payments, and
reconveyance of the land in case of failure to pay within the period
March 12, 1973: private respondent, through its new president, Atty. Adalia Francisco,
addressed a letter 6 to Father Vasquez, parish priest of San Jose Del Monte, Bulacan,
requesting to be furnished with a copy of the subject contract and the supporting
documents
July 17, 1975: after the expiration of the stipulated period for payment, Atty. Francisco
wrote the formal request that her company be allowed to pay the principal amount of
P100,000 in 3 equal installments of 6 months each with the 1st installment and the
accrued interest of P24,000 to be paid immediately upon approval
July 29, 1975: Bishop through its counsel, Atty. Carmelo Fernandez, formally denied the
request but granted a grace period of 5 days from the receipt of the denial to pay the total
balance of P124,000
August 4, 1975: private respondent, through its president, Atty. Francisco, wrote the
counsel of the petitioner requesting an extension of 30 days from to fully settle its
account. - denied
RTC: favored Bishop declaring the down payment as forfeited

ISSUE: W/N there is tender of payment by issuance of a certified check

HELD: NO. RTC reinstated.

Tender of payment involves a positive and unconditional act by the obligor of offering
legal tender currency as payment to the obligee for the formers obligation and
demanding that the latter accept the same.
tender of payment cannot be presumed by a mere inference from surrounding
circumstances
sheer proof of sufficient available funds to meet more than the total obligation within the
grace period - NOT sufficient
On the contrary, the respondent court finds itself remiss in overlooking or taking lightly
the more important findings of fact made by the trial court which are entitled to great
weight on appeal and should be accorded full consideration and respect and should not be
disturbed unless for strong and cogent reasons
certified personal check which is not legal tender nor the currency stipulated, and
therefore, can not constitute valid tender of payment
Since a negotiable instrument is only a substitute for money and not money, the delivery
of such an instrument does not, by itself, operate as payment

#84
Papa v. Valencia
Facts:
1. The case arose from a sale of a parcel of land allegedly made to private respondent
Penarroyo by petitioner acting as attorney-in-fact of Anne Butte. The purchaser, through
Valencia, made a check payment in the amount of P40,000 and in cash, P5,000. Both
were accepted by petitioner as evidenced by various receipts. It appeared that the said
property has already been mortgaged to the bank previously together with other
properties of Butte.
2. When Butte passed away, the private respondent Penarroyo now demanded that the
title to the property be conveyed to him, however the bank refused. Hence, the filing of a
suit for specific performance by private respondents against the petitioner. The lower
court ruled in favor of the private respondents and ordered herein petitioner the
conveyance or the property or if not, its payment. The petitioner appealed the lower
court's decision alleging that the sale was not consummated as he never encashed the
check given as part of the purchase price.
3. The Court of Appeals affirmed with modifications the lower court's decision. It held
that there was a consummated sale of the subject property despite.
Issue: Whether or not the check is a valid tender of payment/Whether or not there was a
valid sale of the subject property

RULING: Yes. While it is true that the delivery of check produces payment only when
encashed (pursuant to Art. 1249, Civil Code), the rule is otherwise if the debtor is
prejudiced by the delay in presentment. (Here in this case, the petitioner now alleges that
he did not present the check, ten years after the same was paid to him as part of the
purchase price of the property.)
Check acceptance implied an undertaking of due diligence in presenting it for payment. If
the person who receives it sustains loss by want of this diligence, this will operated as
actual payment of the debt or obligation for which the check was given. The debtor
cannot now be held liable if non-presentment of the check was through the fault of the
creditor.

#85
SOLEDAD SOCO, petitioner,
vs.
HON. FRANCIS MILITANTE, Incumbent Presiding Judge of the
Court of First Instance of Cebu, Branch XII, Cebu City and REGINO
FRANCISCO, JR., respondents.

FACTS: Soco and Francisco entered into a contract of lease on January 17, 1973,
whereby Soco leased her commercial building and lot situated at Manalili Street, Cebu
City, to Francisco for a monthly rental of P 800.00 for a period of 10 years renewable for
another 10 years at the option of the lessee. It can readily be discerned from Exhibit A
(from SOCO) that paragraphs 10 and 11 appear to have been cancelled while in Exhibit
2 (from FRANCISCO) only paragraph 10 has been cancelled. Claiming that paragraph
11 of the Contract of Lease was in fact not part of the contract because it was cancelled,
Soco filed Civil Case No. R-16261 in the Court of First Instance of Cebu seeking the
annulment and/or reformation of the Contract of Lease.
Sometime before the filing of Civil Case No. R-16261 Francisco noticed that Soco did
not anymore send her collector for the payment of rentals and at times there were
payments made but no receipts were issued. This situation prompted Francisco to write
Soco the letter dated February 7, 1975 which the latter received. After writing this letter,
Francisco sent his payment for rentals by checks issued by the Commercial Bank and
Trust Company.
The factual background setting of this case clearly indicates that soon after Soco learned
that Francisco sub-leased a portion of the building to NACIDA, at a monthly rental of
more than P3,000.00 which is definitely very much higher than what Francisco was
paying to Soco under the Contract of Lease, the latter felt that she was on the losing end
of the lease agreement so she tried to look for ways and means to terminate the contract.
In view of this alleged non-payment of rental of the leased premises beginning May,
1977, Soco through her lawyer sent a letter dated November 23, 1978 to Francisco
serving notice to the latter to vacate the premises leased. In answer to this letter,
Francisco through his lawyer informed Soco and her lawyer that all payments of rental
due her were in fact paid by Commercial Bank and Trust Company through the Clerk of
Court of the City Court of Cebu. Despite this explanation, Soco filed this instant case of
Illegal Detainer.
MTC and RTC have conflicting findings. The former found that the consignation was
valid. RTC reversed and ordered the eviction of the Francisco.

ISSUE: WON there was a valid consignation of payment of the rentals.

HELD: In order that consignation may be effective, the debtor must first comply with
certain requirements prescribed by law. The debtor must show (1) that there was a debt
due; (2) that the consignation of the obligation had been made because the creditor to
whom tender of payment was made refused to accept it, or because he was absent or
incapacitated, or because several persons claimed to be entitled to receive the amount due
(Art. 1176, Civil Code); (3) that previous notice of the consignation had been given to the
person interested in the performance of the obligation (Art. 1177, Civil Code); (4) that the
amount due was placed at the disposal of the court (Art. 1178, Civil Code); and (5) that
after the consignation had been made the person interested was notified thereof (Art.
1178, Civil Code). Failure in any of these requirements is enough ground to render a
consignation ineffective. (parang wala naman tong mga to sa 1176, 1177 and 1178?)
We hold that the respondent lessee has utterly failed to prove the following requisites of a
valid consignation: First, tender of payment of the monthly rentals to the lessor. Second,
respondent lessee also failed to prove the first notice to the lessor prior to consignation,
Evidently, from this arrangement, it was the lessees duty to send someone to get the
cashiers check from the bank and logically, the lessee has the obligation to make and
tender the check to the lessor. This the lessee failed to do, which is fatal to his defense.
Third, respondent lessee likewise failed to prove the second notice, that is after
consignation has been made, to the lessor. And the fourth requisite that respondent lessee
failed to prove is the actual deposit or consignation of the monthly rentals except the two
cashiers checks referred to in Exhibit 12. As indicated earlier, not a single copy of the
official receipts issued by the Clerk of Court was presented at the trial of the case to
prove the actual deposit or consignation.
We, therefore, find and rule that the lessee has failed to prove tender of payment except
that in Exh. 10; he has failed to prove the first notice to the lessor prior to consignation
except that given in Exh. 10; he has failed to prove the second notice after consignation
except the two made in Exh. 12; and he has failed to pay the rentals for the months of
July and August, 1977 as of the time the complaint was filed for the eviction of the lessee.
We hold that the evidence is clear, competent and convincing showing that the lessee has
violated the terms of the lease contract and he may, therefore, be judicially ejected.

86.)Dalton vs. FGR and Development Corp.

FACTS: A parcel of land owned by respondent Flora R. Dayrit was leased to

petitioners
Dalton, et. al. Eventually, the land was sold to respondent FGR Realty and
Development Corporation. FGR Realty and Dayrit decided not to accept
payments from
Dalton, et. al. for the purpose of terminating the lease agreements.
Dalton, et. al. filed a complaint with the Regional Trial Court and attached was a
consignation of the rental payments. However, they failed to notify the other
party of
such action. FGR Realty and Dayrit withdrew the consigned amount with
reservation to
question the validity of the consignation.

ISSUE:Whether or not the consignation made by Dalton, et. al. is void

HELD: Petition DENIED.

Compliance with the requisites of a valid consignation is mandatory. Failure to
comply strictly with any of the requisites will render the consignation void.
Substantial
compliance is not enough. The giving of notice to the persons interested in the
performance of the obligation is mandatory. Failure to notify the persons
interested in
the performance of the obligation will render the consignation void.
Under Art. 1257 of our Civil Code, in order that 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 it is not made strictly in
consonance with the provisions which regulate payment . In said Article 1258, it is
further stated that the consignation having been made, the interested party shall
also be
notified thereof.
We hold that the essential requisites of a valid consignation must be complied
with fully and strictly in accordance with the law, Articles 1256 to 1261, New Civil
Code.
That these Articles must be accorded a mandatory construction is clearly evident
and
plain from the very language of the codal provisions themselves which require
absolute
compliance with the essential requisites therein provided. Substantial compliance
is not
enough for that would render only a directory construction to the law. The use of
the
words "shall" and "must" which are imperative, operating to impose a duty which
may be
enforced, positively indicate that all the essential requisites of a valid
consignation must
be complied with

87 IMMACULATE vs NAVARRO GR L-42230 (none)

88Spouses Cacayorinvs Armed Forces and Police
Association Mutual benefits G.R. 171298
Facts: Oscar, a member of the Armed Forces and Police Mutual Benefit Association, Inc., sought
to purchase a property owned by the latter, hence he and spouse Thelma, as borrowers, executed a
Loan and Mortgage Agreement with the Rural Bank of San Teodoro, the lender, under the
auspices of of PAG-IBIG or Home Development Mutual Funds Home Financing Program. The
rural bank then executed a letter or guaranty to AFPMBAI that the proceeds of the spouses
approved loan (P77,418.00) shall be released to the AFPMBAI after the title to the property is
transferred in the spouses name and registration of the mortgage agreement between the parties.
AFPMBAI, relying on the letter of guaranty, executed in favour of the spouses a Deed of
Absolute Sale; a new title (TCT No. 37017) was thus issued in the name of the spouses, with the
mortgage agreement annotated on it (Entry No. 3364). The PAG-IBIG loan facility did not push
through, however, and the rural bank closed and was placed under receivership of the PDIC;
AFPMBAI managed to secure possession of the title as well as the spouses loan documents.
Despite demand from AFPMBAI, the spouses failed to pay the loan.
In July, 2003, the spouses filed a complaint for Consignation of loan payment, recovery of title,
and cancellation of mortgage annotation against AFPMBAI, alleging that they were left in a
quandary as to where they should tender payment and secure cancellation of the mortgage
annotation with the closure of the rural bank. AFPMBAI filed a motion to dismiss for lack of
jurisdiction, arguing that it should be the HLURB, not the RTC who had jurisdiction over the case
as it involves a case of a subdivision buyer (the spouses) praying for specific performance of
contractual and legal obligation under PD 957. Since no prior valid tender of payment was made
by the spouses, the complaint is susceptible of dismissal. The RTC denied the motion to dismiss.
It asserted that since the action involves consignation of loan payments, the RTC has jurisdiction
to continue with the case. On petition for certiorari to the CA, the latter reversed and set aside the
RTC judgment, noting that the case involves specific performance of AFPMBAIs contractual and
statutory obligations as owner/developer of Kalikasan Mutual Homes, which makes PD 957
applicable and thus places the case within the jurisdiction of the HLURB. It said that since one of
the remedies prayed for is the delivery to petitioners of TCT No. 37017, the case is cognizable
exclusively by the HLURB.
The Issue: Whether or not the HLURB had jurisdiction over the complaint for consignation.
Ruling: The settled principle is that the allegations of the complaint determine the nature of the
action and consequently the jurisdiction of the courts. This rule applies whether or not the
plaintiff is entitled to recover upon all or some of the claims asserted therein as this is a matter
that can be resolved only after and as a result of the trial.1

Does the Complaint in Civil Case No. 3812 make out a case for consignation? It alleges that:

6.0 Not long after however, RBST2 closed shop and defendant Philippine Deposit Insurance
Corporation (PDIC) was appointed as its receiver. The plaintiffs, through a representative, made a
verbal inquiry to the PDIC regarding the payment of their loan but were told that it has no
information or record of the said loan. This made [sic] the plaintiffs in quandary as to where or
whom they will pay their loan, which they intend to pay in full, so as to cancel the annotation of
mortgage in their title.
7.0 It was discovered that the loan papers of the plaintiffs, including the duplicate original of
their title, were in the possession of defendant AFPMBAI. It was unclear though why the said
documents including the title were in the possession of AFPMBAI. These papers should have
been in RBSTs possession and given to PDIC after its closure in the latters capacity as receiver.

8.0 Plaintiffs are now intending to pay in full their real estate loan but could not decide where to
pay the same because of RBST [sic] closure and PDICs failure to locate the loan records and
title. This courts intervention is now needed in order to determine to [sic] where or whom the
loan should be paid.

9.0 Plaintiffs hereby respectfully prays [sic] for this court to allow the deposit of the amount of
Php77, 418.00 as full payment of their principal loan, excluding interest, pursuant to the Loan and
Mortgage Agreement on 4 July 1994.3
From the above allegations, it appears that the petitioners debt is outstanding; that the Rural
Banks receiver, PDIC, informed petitioners that it has no record of their loan even as it took over
the affairs of the Rural Bank, which on record is the petitioners creditor as per the July 4, 1994
Loan and Mortgage Agreement; that one way or another, AFPMBAI came into possession of the
loan documents as well as TCT No. 37017; that petitioners are ready to pay the loan in full;
however, under the circumstances, they do not know which of the two the Rural Bank or
AFPMBAI should receive full payment of the purchase price, or to whom tender of payment
must validly be made.
Under Article 1256 of the Civil Code,4 the debtor shall be released from responsibility by the
consignation of the thing or sum due, without need of prior tender of payment, when the creditor
is absent or unknown, or when he is incapacitated to receive the payment at the time it is due, or
when two or more persons claim the same right to collect, or when the title to the obligation has
been lost. Applying Article 1256 to the petitioners case as shaped by the allegations in their
Complaint, the Court finds that a case for consignation has been made out, as it now appears that
there are two entities which petitioners must deal with in order to fully secure their title to the
property: 1) the Rural Bank (through PDIC), which is the apparent creditor under the July 4, 1994
Loan and Mortgage Agreement; and 2) AFPMBAI, which is currently in possession of the loan
documents and the certificate of title, and the one making demands upon petitioners to pay.
Clearly, the allegations in the Complaint present a situation where the creditor is unknown, or that
two or more entities appear to possess the same right to collect from petitioners. Whatever
transpired between the Rural Bank or PDIC and AFPMBAI in respect of petitioners loan
account, if any, such that AFPMBAI came into possession of the loan documents and TCT No.
37017, it appears that petitioners were not informed thereof, nor made privy thereto.

Indeed, the instant case presents a unique situation where the buyer, through no fault of his own,
was able to obtain title to real property in his name even before he could pay the purchase price in
full. There appears to be no vitiated consent, nor is there any other impediment to the
consummation of their agreement, just as it appears that it would be to the best interests of all
parties to the sale that it be once and for all completed and terminated. For this reason, Civil Case
No. 3812 should at this juncture be allowed to proceed.
Moreover, petitioners position is buttressed by AFPMBAIs own admission in its Comment5 that
it made oral and written demands upon the former, which naturally aggravated their confusion as
to who was their rightful creditor to whom payment should be made the Rural Bank or
AFPMBAI. Its subsequent filing of the Motion to Dismiss runs counter to its demands to pay. If it
wanted to be paid with alacrity, then it should not have moved to dismiss Civil Case No. 3812,
which was brought precisely by the petitioners in order to be able to finally settle their obligation
in full.
Finally, the lack of prior tender of payment by the petitioners is not fatal to their consignation
case. They filed the case for the exact reason that they were at a loss as to which between the two
the Rural Bank or AFPMBAI was entitled to such a tender of payment. Besides, as earlier
stated, Article 1256 authorizes consignation alone, without need of prior tender of payment,
where the ground for consignation is that the creditor is unknown, or does not appear at the place
of payment; or is incapacitated to receive the payment at the time it is due; or when, without just
cause, he refuses to give a receipt; or when two or more persons claim the same right to collect;
or when the title of the obligation has been lost.

89SPOUSES TEOFILO and SIMEONA RAYOS, and

GEORGE RAYOSvs DONATO REYES, SATURNINO
REYES, TOMASA BUSTAMANTE and TORIBIA
CARMELO

Topic: TENDER OF PAYMENT

G.R. No. 150913 20 February 2003

Facts:
This a petition for review where the ownership of three (3) parcels of unregistered land
with an area of approximately 130,947 sq.m. situated in Brgy. Sapa, Burgos, Pangasinan,
the identities of which are not disputed.
The three (3) parcels were formerly owned by the spouses Francisco and Asuncion Tazal
who on 1 September 1957 sold them for P724.00 to respondents predecessor-in-interest,
one Mamerto Reyes, with right to repurchase within two (2) years from date thereof by
paying to the vendee the purchase price and all expenses incident to their reconveyance.
After the sale the vendee a retro took physical possession of the properties and paid the
taxes thereon.
The otherwise inconsequential sale became controversial when two (2) of the three (3)
parcels were again sold on 24 December 1958 by Francisco Tazal for P420.00 in favor of
petitioners predecessor-in-interest Blas Rayos without first availing of his right to
repurchase the properties.
After the expiration of the redemption period, Francisco Tazal attempted to repurchase
the properties from Mamerto Reyes by asserting that the 1 September 1957 deed of sale
with right of repurchase was actually an equitable mortgage and offering the amount of
P724.00 to pay for the alleged debt. But Mamerto Reyes refused the tender of payment
and vigorously claimed that their agreement was not an equitable mortgage.
Petitioners argue that the consignation of P724.00 in Civil Case No. A-245 provides the
best evidence of the repurchase of the three (3) parcels of land; that the consignation was
admitted by Mamerto Reyes himself in the stipulation of facts and approved implicitly by
the Court of First Instance when it held the 1 September 1957 transaction as a contract of
sale with right of repurchase; that respondents failed to prove the existence of other
expenses.

Issue: Whether consignation as averred by the petitioners took effect?

Held: Petitioners failed to (a) offer a valid and unconditional tender of payment; (b) notify
respondents of the intention to deposit the amount with the court; and (c) show the acceptance by
the creditor of the amount deposited as full settlement of the obligation, or in the alternative, a
declaration by the court of the validity of the consignation.
In order that consignation may be effective the debtor must show that (a) there was a debt
due; (b) the consignation of the obligation had been made because the creditor to whom a valid
tender of payment was made refused to accept it; (c) previous notice of the consignation had been
given to the person interested in the performance of the obligation; (d) the amount due was placed
at the disposal of the court; and, (e) after the consignation had been made the person interested
was notified thereof.
90CALTEX (PHILIPPINES), INC. VS.The
INTERMEDIATE APPELLATE COURT and ASIA
PACIFIC AIRWAYS, INC.
Topic: Dacion en pago/dation in payment - the conveyance of ownership of a thing as an
accepted equivalent of performance.
Facts: On January 12, 1978, private respondent Asia Pacific Airways Inc. entered into an
agreement with petitioner Caltex (Philippines) Inc., whereby petitioner agreed to supply private
respondent's aviation fuel requirements for two (2) years, covering the period from January 1,
1978 until December 31, 1979. Pursuant thereto, petitioner supplied private respondent's fuel
supply requirements.
As of June 30, 1980, private respondent had an outstanding obligation to petitioner in the total
amount of P4,072,682.13, representing the unpaid price of the fuel supplied. Private respondent
executed a Deed of Assignment dated July 31, 1980, wherein it assigned to petitioner its
receivables or refunds of Special Fund Import Payments from the National Treasury of the
Philippines to be applied as payment of the amount of P4,072,683.13. On February 12, 1981,
pursuant to the Deed of Assignment, Treasury Warrant No. B04708613 in the amount of
P5,475,294.00 representing the refund to respondent of Special Fund Import Payment on its fuel
purchases was issued by the National Treasury in favor of petitioner. Four days later, on February
16, 1981, private respondent, having learned that the amount remitted to petitioner exceeded the
amount covered by the Deed of Assignment, wrote a letter to petitioner, requesting a refund of
said excess. Petitioner informed private respondent that the amount not returned (P510,550.63)
represented interest and service charges at the rate of 18% per annum on the unpaid and overdue
account of respondent from June 1, 1980 to July 31, 1981.
The trial court dismissed the complaint and the counterclaim filed by defendant. Caltex appealed
to the IAC. On August 27, 1985, the decision of the trial court was reversed and ordered
petitioner to return the amount of P510,550.63 to private respondent.
Issue: Whether or not there is a valid dation in payment in this case.
Ruling: The SC ruled that the Deed of Assignment executed by the parties on July 31, 1980 is not
a dation in payment and did not totally extinguish respondent's obligations as stated therein. It
could easily be seen that the Deed of Assignment speaks of three obligations (1) the outstanding
obligation of P4,072,682.13 as of June 30, 1980; (2) the applicable interest charges on overdue
accounts; and (3) the other avturbo fuel lifting and deliveries that assignor (private respondent)
may from time to time receive from assignee (Petitioner). As aptly argued by petitioner, if it were
the intention of the parties to limit or fix respondent's obligation to P4,072.682.13, they should
have so stated and there would have been no need for them to qualify the statement of said
amount with the clause "as of June 30, 1980 plus any applicable interest charges on overdue
account" and the clause "and other avturbo fuel lifting and deliveries that ASSIGNOR may from
time to time receive from the ASSIGNEE".

91PNB VS PINEDA GR L-46658

Facts: Private Respondents Ignacio and Lourdes Arroyo obtained a loan from Petitioner bank and
purchased and acquired the controlling interest of Tayabas Cement Company (TCC). Thereafter,
TCC filed with petitioner bank an application and agreement for the establishment of the Letter of
Credit in favor of Tokyo Menka Kaisha, Ltd. of Tokyo, Japan to cover for the importation of a
cement plant machinery and equipment. TCC failed to remit and/or pay the corresponding
obligations. PNB notified TCC of its intention to repossess and as it later did, the imported
machinery and equipment for failure of TCC to settle its obligations under the L/C.

Issue: W/N TCC's liability has been extinguished by the possession of PNB of the imported
cement plant machinery and equipment.

Held: No. The liability is not extinguished. PNB's possession of the subject machinery and
equipment being precisely as a form of security for the advantages given to TCC under the letter
of credit. Said possession by itself cannot be considered payment of the loan secured thereby.
Mere possession does not amount to foreclosure for foreclosure denotes the procedure adopted by
the mortgagee to terminate the rights of the mortgagor on the property and includes the sale itself.

92FILINVEST Vs. PHILIPPINES ACETYLENE

FACTS: Philippine Acetylene Co. purchased from Alexander Lim a motor vehicle for P55,
000.00 to be paid in installments. As security for the payment of said promissory note, the
appellant executed a chattel mortgage over the same motor vehicle in favor of said Alexander
Lim. Then, Lim assigned to the Filinvest all his rights, title and interests in the promissory note
and chattel mortgage by virtue of a Deed of Assignment.
Philippine Acetylene defaulted in the payment of nine successive installments. When
Filinvest sent a demand letter, Phil Acetylene wrote back of its desire to return the mortgaged
property, which return shall be in full satisfaction of its indebtedness. Thus, the vehicle was
returned to the Filinvest. However, they failed to sell the motor vehicle, as there were unpaid
taxes on the said vehicle. Filinvest requested the appellant to update its account by paying the
installments in arrears and accruing interest. They also offered to deliver back the motor vehicle
to the appellant but the latter refused to accept it, so appellee instituted an action for collection of
a sum of money with damages.
According to Phil Acetylene, the delivery of the motor vehicle to Filinvest extinguished its
money obligation as it amounted to a dation in payment. Assuming arguendo that the return did
not extinguish, it was justified in refusing payment since the appellee is not entitled to recover the
same due to the breach of warranty committed by the original vendor-assignor Alexander Lim.
ISSUE: Whether or not there was dation in payment that extinguished Philippine Acetylenes
obligation?
HELD: No. The mere return of the mortgaged motor vehicle by the mortgagor does not
constitute dation in payment in the absence, express or implied of the true intention of the parties.
Dacion en pago is the transmission of the ownership of a thing by the debtor to the creditor as an
accepted equivalent of the performance of obligation. In dacion, the debtor offers another thing to
the creditor who accepts it as equivalent of payment of an outstanding debt. The undertaking
really partakes in one sense of the nature of sale, that is, the creditor is really buying the thing or
property of the debtor, payment for which is to be charged against the debtors debt. As such, the
essential elements of a contract of sale, namely, consent, object certain, and cause or
consideration must be present.
In this case, the evidence on the record fails to show that the Filinvest consented to the
mortgaged motor vehicle be construed as actual payment, more specifically dation in payment or
dacion en pago. The fact that the mortgaged motor vehicle was delivered to him does not
necessarily mean that ownership thereof, as juridically contemplated by dacion en pago, was
transferred from appellant to appellee. In the absence of clear consent of appellee to the preferred
special mode of payment, there can be no transfer of ownership of the mortgaged motor vehicle
from the appellant to appellee. If at all, only transfer of possession of the mortgaged motor
vehicle took place, for it is quite possible that appellee, as mortgagee, merely wanted to secure
possession to forestall the loss, destruction, fraudulent transfer of the vehicle to third persons, or
its being rendered valueless if left in the hands of the appellant.

93 CITIZENS SURETY vs CA

94) First United Construction Corporation and Blue Star Construction

vs. Bahanihan Automotive Corporation

FACTS:
Security Bank and Trust Company (Security Bank), a commercial banking
institution, through its Sucat Branch issued 280 certificates of time deposit
(CTDs) in favor of Angel dela Cruz who deposited with Security Bank the
total amount of P1,120,000
 Angel delivered the CTDs to Caltex for his purchase of fuel products

March 18, 1982: Angel informed Mr. Tiangco, the Sucat Branch Manager
that he lost all CTDs, submitted the required Affidavit of Loss and received
the replacement

March 25, 1982: Angel dela Cruz negotiated and obtained a loan from
Security Bank in the amount of P875,000 and executed a notarized Deed
of Assignment of Time Deposit

November, 1982: Mr. Aranas, Credit Manager of Caltex went to the Sucat
branch to verify the CTDs declared lost by Angel

November 26, 1982: Security Bank received a letter from Caltex formally
informing it of its possession of the CTDs in question and of its decision to
pre-terminate the same.

December 8, 1982: Caltex was requested by Security Bank to furnish:

o a copy of the document evidencing the guarantee agreement with

Mr. Angel dela Cruz

o the details of Mr. Angel's obligation against which Caltex proposed

to apply the time deposits

Security Bank rejected Caltex demand for payment bec. it failed to furnish
a copy of its agreement w/ Angel

April 1983, the loan of Angel dela Cruz with Security Bank matured

August 5, 1983: CTD were set-off w/ the matured loan

Caltex filed a complaint praying the bank to pay 1,120,000 plus 16%
interest

CA affirmed RTC to dismiss complaint

ISSUE:
1. W/N the CTDs are negotiable

2. W/N Caltex as holder in due course can rightfully recover on the CTDs

HELD: Petition is Denied and appealed decision is affirmed.

1. YES.
Section 1 Act No. 2031, otherwise known as the Negotiable Instruments Law,
enumerates the requisites for an instrument to become negotiable, viz:

(a) It must be in writing and signed by the maker or drawer;

(b) Must contain an unconditional promise or order to pay a sum certain in
money;
(c) Must be payable on demand, or at a fixed or determinable future time;
(d) Must be payable to order or to bearer; and -check
(e) Where the instrument is addressed to a drawee, he must be named or
otherwise indicated therein with reasonable certainty.
The documents provide that the amounts deposited shall be repayable to
the depositor

o depositor = bearer

If it was really the intention of respondent bank to pay the

amount to Angel de la Cruz only, it could have with facility
so expressed that fact in clear and categorical terms in the
documents, instead of having the word "BEARER" stamped
on the space provided for the name of the depositor in each
CTD

negotiability or non-negotiability of an instrument is determined from the

writing, that is, from the face of the instrument itself

2. NO.
although the CTDs are bearer instruments, a valid negotiation thereof for
the true purpose and agreement between it and De la Cruz, as ultimately
ascertained, requires both delivery and indorsement

o CTDs were in reality delivered to it as a security for De la Cruz'

purchases of its fuel products

o There was no negotiation in the sense of a transfer of the legal title

to the CTDs in favor of petitioner in which situation, for obvious
reasons, mere delivery of the bearer CTDs would have sufficed.

Where the holder has a lien on the instrument arising from contract, he is
deemed a holder for value to the extent of his lien.

o As such holder of collateral security, he would be a pledgee but the

requirements therefor and the effects thereof, not being provided
for by the Negotiable Instruments Law, shall be governed by the
Civil Code provisions on pledge of incorporeal rights:
Art. 2095. Incorporeal rights, evidenced by negotiable instruments, . . . may also
be pledged. The instrument proving the right pledged shall be delivered to the
creditor, and if negotiable, must be indorsed.
Art. 2096. A pledge shall not take effect against third persons if a description of
the thing pledged and the date of the pledge do not appear in a public
instrument.
Art. 1625. An assignment of credit, right or action shall produce no effect as
against third persons, unless it appears in a public instrument, or the instrument
is recorded in the Registry of Property in case the assignment involves real
property

95 UNIONBANK vs DBP GR 191555(none)

96AREZA vs EXPRESS SAVINGS BANK &

POTENCIANO GR 176697(none)

97Federal Builders, Inc. Vs Foundation Specialist, Inc.

TOPIC: Nature and Effect of Obligations

Facts:
On August 20, 1990, Federal Builders, Inc. (FBI) entered into an agreement with Foundation
Specialists, Inc. (FSI) whereby the latter, as subcontractor, undertook the construction of the
diaphragm wall, capping beam, and guide walls of the Trafalgar Plaza located at Salcedo Village,
Makati City (the Project), for a total contract price of P7,400,000.00. Under the agreement, FBI
was to pay a downpayment equivalent to 20% of the contract price and the balance, through a
progress billing every 15 days, payable not later than 1 week from presentation of the billing.
FSI then filed a complaint for Sum of Money against FBI before the RTC of Makati City seeking to
collect the amount representing Billings No. 3 and 4, with accrued interest from August 1, 1991
plus moral and exemplary damages with attorneys fees. In its complaint,FSI alleged that FBI
refused to pay said amount despite demand and its completion of 97% of the contracted works.
RTC ruled in favor of FSI ordering FBI the payment of billings 3 & 4 plus 12% legal interest from
August 30, 1991.
The CA affirmed the Decision of the lower court, but with modifications.

Issue: WoN the FBI is obliged to pay the 12 % interest of the billings 3 & 4 considering the nature
of the obligation.
Ruling:
This case, however, does not involve an acquiescence to the temporary use of a partys money
but a performance of a particular service. For transactions involving payment of indemnities in
the concept of damages arising from default in the performance of obligations in general and/or
for money judgment not involving a loan or forbearance of money, goods, or credit, the
governing provision is Art. 2209 of the Civil Code prescribing a yearly 6% interest. Thus, SC
ordered FBI to pay FSI the billings 3 and 4 plus interestreduced to only 6% per annum
considering the fact that the obligation involved herein does not partake of a loan or forbearance
of money.

98SOLINAP vs. DEL ROSARIO

Topic: Compensation

Facts:
The spouses TiburcioLutero and Asuncion Magalona, owners of the Hacienda Tambal, leased the
said hacienda to petitioner Loreto Solinap for 10 years for the stipulated rental of P50,000.00 a
year. It was further agreed in the lease contract that P25,000.00 from the rental should be paid by
Solinap to the PNB to amortize the indebtedness of the spouses Lutero. When TiburcioLutero
died, his heirs instituted the testate estate proceedings. On the basis of an order, respondents
JuanitoLutero, grandson and heir of the late Tiburcio, and his wife Hardivi R. Lutero paid the
PNB the sum of P25,000.00 as partial settlement of the deceased's obligations. Spouses Lutero
filed a motion seeking reimbursement from the petitioner. They argued that the said amount
should have been paid by petitioner to the PNB, as stipulated in the lease contract. Before the
motion could be resolved, petitioner a separate action against the spouses for collection of
P71,000.00 they borrowed from the petitioner. The spouses answered and pleaded a counterclaim
against petitioner for P125,000.00 representing unpaid rentals on Hacienda Tambal and that
petitioners purchased one-half of Hacienda Tambal. The respondent judge issued an order
granting the spouses motion for reimbursement from petitioner of the sum of P25,000.00, plus
interest. Petitioner filed a petition for certiorari before this Court, assailing the above order.
Acting on the petition, the P25,000.00 to be paid by the petitioner to the private respondent
Luteros may well be taken up in the final liquidation of the account between petitioner as lessee
and the subject estate as lessor. Thereafter the respondent Luteros filed with the respondent court
a motion raising that the amount payable to private respondents should be compensated against
the latter's indebtedness to him amounting to P71,000.00. This motion was denied by respondent
judge on the ground that the claim of Loreto Solinap against spouses was yet to be liquidated and
determined, such that the requirement in Article 1279 of the New Civil Code that both debts are
liquidated for compensation to take place has not been established by the oppositor Loreto
Solinap. Petitioner filed a motion for reconsideration of this order, but the same was denied.

Issue:
WON the obligation of petitioner to private respondents may be compensated or set-off against
the amount sought to be recovered in an action for a sum of money filed by the former against the
latter.

Ruling:
The petition is devoid of merit. The petitioner's claim against the spouses was still pending
determination by the court. This could not be categorized as liquidated credit which may properly
be set-off against his obligation. As this Court ruled in Mialhe vs. Halili "compensation cannot
take place where one's claim against the other is still the subject of court litigation. It is a
requirement, for compensation to take place, that the amount involved be certain and liquidated."
The petition was dismissed.

99BPI vs Court of Appeals GR 136202 (none)

100GAN TIONvsHON. COURT OF APPEALS

Topic:
Judgement Creditor

Facts:
Ong Wan Sieng was a tenant in certain premises owned by GanTion. In 1961 petitioner
GanTion filed an ejectment case against respondent Ong Wang Sieng, alleging the non-
payment of rents for August and September of that year. Respondent denied the allegation
and pointed out that he did offer the payment but was refused by the petitioner. The
petitioner obtained a favorable judgment in the municipal court (of Manila), but upon appeal
the Court of First Instance, on July 2, 1962, reversed the judgment and dismissed the
 complaint, and ordered the plaintiff to pay the defendant the sum of P500 as attorney's fees.
That judgment became final.
GanTion served notice to Ong Wan Sieng on 1993 that he was increasing the rent to
P180 a month, effective November 1st, and at the same time demanded the rents in arrears at
the old rate in the aggregate amount of P4,320.00, corresponding to a period from August
1961 to October 1963. However, Ong Wan Sieng was able to obtain a writ of execution of
the judgment for attorney's fees in his favor. GanTion went on certiorari to the Court of
Appeals, where he pleaded legal compensation, claiming that Ong Wan Sieng was indebted
to him in the sum of P4,320 for unpaid rents.
CA decided in favor of Ong Wan Sieng holding that although "respondent Ong is
indebted to the petitioner for unpaid rentals in an amount of more than P4,000.00," the sum
of P500 could not be the subject of legal compensation, it being a "trust fund for the benefit
of the lawyer, which would have to be turned over by the client to his counsel." The
requisites of legal compensation, namely, that the parties must be creditors and debtors of
each other in their own right (Art. 1278, Civil Code) and that each one of them must be
bound principally and at the same time be a principal creditor of the other (Art. 1279), are
not present in the instant case, since the real creditor with respect to the sum of P500 was the
defendant's counsel.
Issue:
I. whether or not there has been legal compensation between petitioner GanTion and
respondent Ong Wan Sieng.
Ruling:
This is not an accurate statement of the nature of an award for attorney's fee's. The
award is made in favor of the litigant, not of his counsel, and is justified by way of indemnity
for damages recoverable by the former in the cases enumerated in Article 2208 of the Civil
Code.1 It is the litigant, not his counsel, who is the judgment creditor and who may enforce
the judgment by execution. Such credit, therefore, may properly be the subject of legal
compensation. Quite obviously it would be unjust to compel petitioner to pay his debt for
P500 when admittedly his creditor is indebted to him for more than P4,000. Judgment of the
Court of Appeals is reversed.
101.) PHILIPPINE NATIONAL BANK
vs.
GLORIA G. VDA. DE ONG ACERO, ARNOLFO ONG ACERO & SOLEDAD ONG ACERO
CHUA

G.R. No. L-69255; February 27, 1987; NARVASA, J.

FACTS
Isabela Wood Construction & Dvpt Corp (ISABELA) has a P2 Million savings account with PNB. A
Notice of garnishment was served on PNB, followed by a CFI order directing the latter to hand over
the P1.5M to the sheriff for delivery to the ACEROs. A second judgment was rendered ordering
ISABELLA to pay compensatory damages and atty.s fees all amounting to almost P600k.

On the other hand, PNB's main thesis is that when it opened a savings account for ISABELA in the
amount of P 2M, it (PNB) became indebted to ISABELA in that amount. So that when ISABELA
itself subsequently came to be indebted to PNB on account of ISABELA's breach of the terms of
the Credit Agreement, ISABELA and PNB became at the same time creditors and debtors of each
other, compensation automatically took place between them.

PNBs alternative theory: which is that the P2M deposit had been assigned to it by ISABELA as
"collateral," although not by way of pledge; that ISABELA had explicitly authorized it to apply the
P2M deposit in payment of its indebtedness; and that PNB had in fact applied the deposit to the
payment of ISABELA's debt in concept of voluntary compensation.

ISSUE:
W/N PNBs contentions are correct, and that compensation automatically took place between the
parties thus preventing the Aceros garnishment thereof.

HELD:
NO. Article 1278 of the Civil Code provides that "Compensation shall take place when two persons,
in their own right, are creditors and debtors of each other. Such legal provision cannot apply to
PNBs advantage. PNB has no competent evidence that it is a creditor of ISABELA. All that the
documents presented by PNB prove is that a letter of credit might have been opened for ISABELA
by PNB, but not that the credit was ever availed of (by ISABELA's foreign correspondent MAN, or
that the goods thereby covered were in fact shipped, and received by ISABELA.
PNBs alternative theory, is also untenable, there being no indebtedness to PNB on ISABELA's part
which can result to any mutual set-off, or compensation. While the Credit Agreement declares it to
be ISABELA's intention to "assign to the BANK the proceeds of its contract with the Department of
Public Works it does not appear that that intention was adhered to, much less carried out. Thus,
For compensation to automatically apply by law, it must be proved by competent evidence that the
parties are the creditors and debtors of each other and property already in custodia legis cannot be
the subject of a set-off.102.) FRANCIA VS IAC
GR no. L-67649

FACTS
A portion of Engracio Francias land was expropriated by the government for P4,116.00. It also
appears that Francia failed to pay his real estate taxes amounting to P2,400.00. Thus, his property
was sold in a public auction by the City Treasurer of Pasay City. As such, the remaining portion of
his land was sold at a public auction. The highest bidder was Ho Fernandez who paid the purchase
price of P2,400.00.

Later, Francia filed a complaint to annul the auction sale on the ground that the selling price was
grossly inadequate. He further argued that his land should have never been auctioned because
the P2,400.00 he owed the government in taxes should have been set-off by the debt the
government owed him (legal compensation). He alleged that he was not paid by the government
for the expropriated portion of his land because though he knew that the payment therefor was
deposited in the Philippine National Bank, he never withdrew it.

ISSUE:
Whether or not the tax owed by Francia should be set-off by the debt owed him by the
government.

HELD:
No. By legal compensation, obligations of persons, who in their own right are reciprocally debtors
and creditors of each other, are extinguished (Art. 1278, Civil Code). This is not applicable in taxes.
There can be no off-setting of taxes against the claims that the taxpayer may have against the
government. A person cannot refuse to pay a tax on the ground that the government owes him an
amount equal to or greater than the tax collected. Further, the government already paid Francia. All
he has to do was to withdraw the money. Had he done that, he could have paid his tax obligations
even before the auction sale or could have exercised his right to redeem which he did not do.

The contention of Francia that selling price of P2,400.00 was grossly inadequate is not tenable.
The Supreme Court said: alleged gross inadequacy of price is not material when the law gives the
owner the right to redeem as when a sale is made at public auction, upon the theory that the lesser
the price, the easier it is for the owner to effect redemption. If mere inadequacy of price is held to
be a valid objection to a sale for taxes, the collection of taxes in this manner would be greatly
embarrassed, if not rendered altogether impracticable. Where land is sold for taxes, the
inadequacy of the price given is not a valid objection to the sale. This rule arises from necessity,
for, if a fair price for the land were essential to the sale, it would be useless to offer the property.
Indeed, it is notorious that the prices habitually paid by purchasers at tax sales are grossly out of
proportion to the value of the land.

103.) SYCIP vs Honorable Court of Appeals

GR no. L-38711
Facts:
Francisco Sycip agreed to buy, on installment, from Francel Realty Corporation (FRC), a
townhouse unit. Sycip issued to FRC 48 postdated checks covering 48 monthly installments. After
moving in his unit, Sycip complained to FRC regarding defects in the unit and incomplete features
of the townhouse project. FRC ignored the complaint.

-Sycip served on FRC 2 notarial notices to the effect that he was suspending his instalment
payments on the unit pending compliance with the project plans and specifications, as approved by
the Housing and Land Use Regulatory Board (HLURB).Notwithstanding the notarial notices, FRC
continued to present for encashment Sycips postdated checks in its possession. Sycip sent stop
payment orders to the bank.The bank (Citibank) advised Sycip to close his checking account to
avoid paying bank charges evry time he made a stop payment order.
Due to the closure of petitioners checking account, the drawee bank dishonoured six postdated
checks. FRC filed a complaint against petitioner for violations of BP Blg 22 involving said
dishonoured checks.
RTC and CA found petitioner guilty of violating Sec 1 of BP Blg 22 in each of the six cases.

Issue:
w/n the CA erred in affirming the conviction of petitioner for violation of the Bouncing Checks Law.

Held:
Petitioners exercise of a right of the buyer under Article 23 of PD 957 is a valid defense to the
charges against him. Sec 23 of PD 957 provides that The buyer of a townhouse unit has the right
to suspend his amortization payments, should the subdivision or condominium developer fail to
develop or complete the project in accordance with duly approved plans and specifications.
Petitioner is ACQUITTED of the charges against him under BP Blg. 22 .Under the provisions of BP
Blg 22, an offense is committed when the following elements are present: (1) the making, drawing
and issuance of any check to apply for account or for value; (2) the knowledge of the maker,
drawer, or issuer that at the time of issue he does not have sufficient funds in or credit with the
drawee bank for the payment of such check in full upon its presentment; and (3) the subsequent
dishonour of the check by the drawee bank for insufficiency of funds or credit or dishonor for the
same reason had not the drawer, without any valid cause, ordered the bank to stop payment.
Although the first element of the offense exists, the other elements have not been established
beyond reasonable doubt.

The records do not show that at the time said checks were issued, petitioner had knowledge that
his deposit or credit in the bank would be insufficient to cover them when presented for
encashment. The third element of subsequent dishonour of the checkwithout valid cause was
not established by the prosecution.

104.) MINDANAO PORTLAND CEMENT CORPORATION

vs
COURT OF APPEALS, PACWELD STEEL CORPORATION and ATTY. CASIANO P.
LAQUIHON
G.R. No. L-62169
FACTS

Atty. Casiano P. Laquihon, in behalf of Pacweld Steel Corporation filed a pleading addressed to
the latter & Mindanao Portland Cement Corporation (MPCC) entitled 'motion to direct payment of
attorney's fee to counsel' (himself ), invoking in his motion the fact that in a court decision on Sept.
14, 1976, MPCC was adjudged to pay Pacweld the sum of P10,000.00 as attorney's fees.

MPCC filed an opposition to Atty. Laquihon's motion stating that said amount is set-off by a like
sum of P10,000.00 which MPCC has collectible from Pacweld also by way of attorney's fees which
MPCC recovered from the same Court of First Instance of Manila.

Hence, an appeal from the Order of the Court of First Instance dated June 26, 1978 ordering
MINDANAO PORTLAND CEMENT CORPORATION to pay the amount of P10,000.00 attorney's
fees directly to Atty. Casiano B. Laquihon and from the Order dated August 28, 1978 denying
appellant's motion for reconsideration.

ISSUE
Whether or not that the lower court erred in not holding that the two obligations are extinguished
reciprocally by operation of law.

HELD
Yes. The appealed orders of June 26 and August 28, 1978 of the Court of First Instance are hereby
annulled and set aside. It is clear from the record that both corporations, Mindanao Portland
Cement and Pacweld Steel Corporation were creditors and debtors of each other, their debts to
each other consisting in final and executory judgments of the Court of First Instance in two (2)
separate cases, ordering the payment to each other of the sum of P10,000.00 by way of attorney's
fees. The two (2) obligations, therefore, respectively offset each other, compensation having taken
effect by operation of law and extinguished both debts to the concurrent amount of P10,000.00,
pursuant to the provisions of Arts. 1278, 1279 and 1290 of the Civil Code, since all the requisites
provided in Art. 1279 of the said Code for automatic compensation "even though the creditors and
debtors are not aware of the compensation" were duly present.

105.)THE INTERNATIONAL CORPORATE BANK INC., petitioner, --VS.--

THE IMMEDIATE APPELLATE COURT, HON. ZOILO AGUINALDO, as presiding Judge of
the Regional Trial Court of Makati, Branch 143, NATIVIDAD M. FAJARDO, and SILVINO
R. PASTRANA, as Deputy and Special Sheriff, respondents.
G.R. No. L-69560

FACTS
The private respondent secured from petitioner a loan amounting to P50M mortgaged her real
properties. Of this loan, only P20M was approved for release. Respondent made a money market
placement with ATRIUM amounting to P1,046,253.77. Meanwhile, respondent allegedly failed to
pay her mortgaged indebtedness to the bank so there was an auction on the mortgage properties,
with Atrium as the only bidder. Petitioner contends that after foreclosing the mortgage, there is still
due from private respondent as deficiency the amount of P6.81 million against which it has the right
to apply or set off private respondent's money market claim of P1,062,063.83. Petitioner interposes
counterclaims for the recovery of P5,763,741.23, representing the balance of its deficiency claim.

Hence, private respondent filed a complaint with the trial court against petitioner for annulment of
the sheriff's sale of the mortgaged properties, for the release to her of the balance of her loan from
petitioner in the amount of P30,000,000,00, and for recovery of P1,062,063.83 representing the
proceeds of her money market investment. She alleges that the mortgage is not yet due and
demandable and the foreclosure was illegal.

Issue
Whether or not there can be legal compensation in the case at bar.

HELD
No.Compensation shall take place when two persons, in their own right, are creditors and debtors
of each other. (Art. 1278, Civil Code). Compensation is not proper where the claim of the person
asserting the set-off against the other is not clear nor liquidated; compensation cannot extend to
unliquidated, disputed claim arising from breach of contract.
It must be noted that Civil Case No. 83-19717 is still pending consideration at the RTC Manila, for
annulment of Sheriffs sale on extra-judicial foreclosure of private respondent's property from which
the alleged deficiency arose. Therefore, the validity of the extrajudicial foreclosure sale and
petitioner's claim for deficiency are still in question, so much so that it is evident, that the
requirement of Article 1279 that the debts must be liquidated and demandable has not yet been
met. For this reason, legal compensation cannot take place under Article 1290 of the Civil Code.

There can be no doubt that petitioner is indebted to private respondent in the amount of
P1,062,063.83 representing the proceeds of her money market investment. But whether private
respondent is indebted to petitioner in the amount of P6.81 million representing the deficiency
balance after the foreclosure of the mortgage executed to secure the loan extended to her, is
vigorously disputed. This circumstance prevents legal compensation from taking place.

106.) MONDRAGON PERSONAL SALES, INC.,

vs.
VICTORIANO S. SOLA, JR.,
G.R. No. 174882

FACTS

Mondragon Personal Sales Inc., is engaged in selling various consumer products through a
network of sales representatives, entered into a Contract of Services with Victoriano S. Sola, Jr. for
a period of three years wherein the latter will provide service facilities, i.e., bodega cum office, to
petitioner's products, sales force and customers in General Santos City and as such, he was
entitled to commission or service fee. The agreement then came into effect when petitioner's goods
were delivered to respondent's bodega and were sold by petitioner's employees. Prior to the
execution of the contract, however, respondents wife, Lina Sola, had an existing obligation with
petitioner. Respondent obligated himself to pay on installment basis to pay his wife's account as
evidenced by his letter. Consequently, petitioner withheld the payment of respondent's service fees
and applied the same as partial payments to the debt which he obligated to pay.

Respondent filed a complaint for the rescission of the contract of services and for petitioner to
render an accounting of his service fees alleging that petitioner withheld his service fees which
resulted to suspension of his operations to minimize losses.

ISSUE:

W/N the CA erred in finding that petitioner breached its contract with respondent and that there is
no compensation in accordance to Article 1279 of the Civil Code and respondent did not assume
the obligation of his wife.

HELD:

The decisions of the Court of Appeals are REVERSED and SET ASIDE. A reading of the letter
shows that respondent becomes a co-debtor of his wife's accountabilities with petitioner.
Petitioner's act of withholding respondent's service fees/commissions and applying them to the
latter's outstanding obligation with the former is merely an acknowledgment of the legal
compensation that occurred by operation of law between the parties.

Petitioner and respondent are both principal obligors and creditors of each other. Their debts to
each other consist in a sum of money. Respondent acknowledged and bound himself to pay
petitioner a certain amount which was already due, while the service fees owing to respondent by
petitioner become due every month. Respondent's debt is liquidated and demandable, and
petitioner's payments of service fees are liquidated and demandable every month as they fall due.
Finally, there is no retention or controversy commenced by third persons over either of the debts.
Thus, legal compensation took place in this case, there is no basis for respondent to ask for
rescission since he was the first to breach their contract when he suddenly closed and padlocked
his bodega cum office occupied by petitioner.1wphi1
107.)JESUS M. MONTEMAYOR,

- versus

VICENTE D. MILLORA,

G.R. No. 168251

FACTS
Atty. Vicente D. Millora petitioner obtained a loan of P400,000.00 from Dr. Jesus M. Montemayor as
evidenced by a promissory note. The parties executed a loan contract wherein it was provided that
Vicente had already paid the amount of P100,000.00 as well as the P8,000.00 interest.
Subsequently, the interest rate was increased to P10,500.00 a month. Vicente was supposed to
pay P42,000.00 for 4 mos. interest but was able to pay only P24,000.00. Jesus made several
demands for Vicente to settle his obligation but to no avail which resulted to the filing of complaint
against the latter.

Vicente filed his Answer interposing a counterclaim for attorneys fees of not less than P500,000.00.
Vicente claimed that he handled several cases for Jesus but he was summarily dismissed from
handling them when the instant complaint for sum of money was filed.

Jesus contends that offsetting cannot be made because the judgment of the RTC failed to specify
the amount of attorneys fees. He maintains that for offsetting to apply, the two debts must be
liquidated or ascertainable. However, the trial court merely awarded to Vicente attorneys fees
based on quantum meruit without specifying the exact amount thereof.

Issue
Whether or not the absence of a specific amount in the decision representing respondents
counterclaim, the same could be validly [offset] against the specific amount of award mentioned in
the decision in favor of the petitioner.

HELD
No. The petition lacks merit. The amount of attorneys fees is ascertainable from the RTC Decision.
Thus, compensation is possible. In the instant case, both obligations are liquidated. Vicente has the
obligation to pay his debt due to Jesus. For all the legal services rendered to plaintiff, defendant
deserves to be compensated at least on a quantum meruit basis.

At the outset, it should be stressed that the RTC Decision is already final and executory. Hence, it
can no longer be the subject of an appeal. Consequently, Jesus is bound by the decision and can
no longer impugn the same. Indeed, well-settled is the rule that a decision that has attained finality
can no longer be modified even if the modification is meant to correct erroneous conclusions of fact
or law. The doctrine of finality of judgment is grounded on fundamental considerations of public
policy and sound practice, and that, at the risk of occasional errors, the judgments or orders of
courts must become final at some definite time fixed by law; otherwise, there would be no end to
litigations, thus setting to naught the main role of courts of justice which is to assist in the
enforcement of the rule of law and the maintenance of peace and order by settling justiciable
controversies with finality.

108.) ARCO PULP AND PAPER CO., INC. and CANDIDA A. SANTOS
vs.
DAN T. LIM, doing business under the name and style of QUALITY PAPERS & PLASTIC
PRODUCTS ENTERPRISES
G.R. No. 206806

FACTS
Dan T. Lim delivered scrap papers to Arco Pulp and Paper Company, Inc. through its CEO and
President, Candida A. Santos. They agreed that Arco Pulp and Paper would either pay Dan T. Lim
the value of the raw materials or deliver to him their finished products of equivalent value. Upon
delivery of the raw materials, Arco Pulp and Paper issued a post-dated check as partial payment.
However, the check was dishonored for being drawn against a closed account. On the same day,
Arco Pulp and Paper and a certain Eric Sy executed a memorandum of agreement where Arco
Pulp and Paper bound themselves to deliver their finished products to Eric Sy. According to the
memorandum, the raw materials would be supplied by Dan T. Lim.

Dan T. Lim demanded payment but to no avail which lead to the filing of complaint. The trial court
rendered a judgment in favor of Arco Pulp and Paper holding that when Arco Pulp and Paper and
Eric Sy entered into the memorandum of agreement, novation took place, which extinguished Arco
Pulp and Papers obligation to Dan T. Lim.

Issues
1. Whether the obligation between the parties was extinguished by novation
2. Whether Candida A. Santos was solidarily liable with Arco Pulp and Paper Co., Inc.
3. Whether moral damages, exemplary damages, and attorneys fees can be awarded

HELD
The petition is denied. The obligation between the parties was an alternative Obligation.
"In an alternative obligation, there is more than one object, and the fulfillment of one is sufficient,
determined by the choice of the debtor who generally has the right of election." When petitioner
Arco Pulp and Paper tendered a check to respondent in partial payment for the scrap papers, they
exercised their option to pay the price. Respondents receipt of the check and his subsequent act of
depositing it constituted his notice of petitioner Arco Pulp and Papers option to pay.The rules on
novation are outlined in Article 1291 which provides that, Obligations may be modified by: (1)
Changing their object or principal conditions; (2) Substituting the person of the debtor; (3)
Subrogating a third person in the rights of the creditor. The consent of the creditor must also be
secured for the novation to be valid. Petitioner Arco Pulp and Papers act of tendering partial
payment to respondent also conflicts with their alleged intent to pass on their obligation to Eric Sy.
When respondent sent his letter of demand to petitioner Arco Pulp and Paper, and not to Eric Sy, it
showed that the former neither acknowledged nor consented to the latter as his new debtor. Since
there was no novation, Arco Pulp and Papers obligation to respondent remains valid and existing
and is also liable for damages. Petitioner Santos was solidarily liable with Arco Pulp and Paper,
stating that she cannot be allowed to hide behind the corporate veil since she not only issued an
unfunded check but also contracted with a third party in an effort to shift Arco Pulp and Papers
liability.

109.) THE WELLEX GROUP, INC., Petitioner, v. U-LAND AIRLINES, CO., LTD.
G.R. No. 167519

FACTS

Wellex and U-Land entered into a First Memorandum of Agreement to expand their
respective airline operations in Asia. Both parties bound themselves to negotiate with
each other within a 40-day period to enter into a share purchase agreement. If no share
purchase agreement was entered into, both parties would be freed from their respective
undertakings.

At the lapse of the 40-day period, the parties failed to enter into a share purchase
agreement. However, the parties continued their wherein U-Land remitted to Wellex a
total of US$7,499,945.00.46 and in return the latter delivered to the former stock
certificates representing PEC & APIC shares and the Transfer Certificates of Titles (TCTs).
Despite that, they still failed to enter into a share purchase agreement. Communication
between the parties ceased, and no further transactions took place.

U-Land filed a Complaint praying for rescission of the First Memorandum of Agreement
and damages against Wellex and for the issuance of a Writ of Preliminary Attachment.
U-Lands primary reason for purchasing APIC shares from Wellex was APICs majority
ownership of shares of stock in APC. After verification with the SEC, U-Land discovered
that APIC did not own a single share of stock in APC.

Issue
W/N the Court of Appeals erred in affirming the Decision of the Regional Trial Court that
granted the rescission of the First Memorandum of Agreement prayed for by U-Land.

Held

The RTC and CA decisions are affirmed. Rescission or resolution under Article 1191, is a
principal action that is immediately available to the party at the time that the reciprocal
prestation was breached. Thus, respondent U-Land correctly sought the principal relief
of rescission or resolution under Article 1191. The obligations of the parties gave rise to
reciprocal prestations, which arose from the same cause: the desire of both parties to
enter into a share purchase agreement that would allow both parties to expand their
respective airline operations in the Philippines and other neighboring countries.
This Court agrees with the lower court that U Land is the injured party in this case, and
therefore is entitled to rescission, because the rescission referred to here is predicated
on the breach of faith by Wellex which breach is violative of the reciprocity between the
parties. It is noted that Wellexs misrepresentations regarding APICs not owning shares
in APC vitiates U Lands consent to the MOA. As such, petitioner Wellex is obligated to
return the remittances made by U-Land, in the same way that U-Land is obligated to
return the certificates of shares of stock and the land titles to Wellex.

110.) FORT BONIFACIO DEVELOPMENT CORPORATION, - versus -

VALENTIN FONG (GR No. 209370)

FACTS
Fort Bonifacio Development Corporation (FBDC) and MS Maxco Company Inc., entered
into a Trade Contract for the execution of the structural and partial architectural works;
under the contract the FBDC had the option to hire other contractors to rectify errors
committed by MS Maxco by reason of its negligence, omission, act, or default. It was
also prohibited from assigning or transferring any of its rights, obligations or liabilities
without the express consent of FBDC. For failure of MS Maxco comply with the Trade
Contract, FBDC had to hire other contractors and perform corrective works. FBDC
received a letter informing it that MS Maxco had already assigned its receivables from
FBDC to Valentin Fong thru a Deed of Assignment to be taken from the retention money
with the FBDC. Replying, FBDC acknowledged the 5% retention money of MS Maxco but
asserted that the same was not yet due and demandable and the subject of garnishment
by MS Maxcos creditors. Despite repeated requests, FBDC refused to release the
retention money and informed Fong that nothing was left of MS Maxcos retention
money after the rectification of the defects in the projects. Valentin then filed a
complaint against FBDC to collect the P1, 577, 115.90 before the RTC. The RTC ruled in
favour of Fong. The Court of Appeals affirmed the RTC decision, hence FBDC elevated its
case to the Supreme Court.
ISSUES
(1) Whether or not FBDC was bound by the Deed of Assignment between Fong and
MS Maxco;
(2) Whether or not it was liable to pay the amount under the Deed of Assignment.

HELD
The petition is meritorious. CA Decision and Resolution are REVERSED and SET ASIDE.
Case law states that when a person assigns his credit to another person, the latter is
deemed subrogated to the rights as well as to the obligations of the former. By virtue of
the Deed of Assignment, the assignee is deemed subrogated to the rights and
obligations of the assignor and is bound by exactly the same conditions as those which
bound the assignor. Accordingly, an assignee cannot acquire greater rights than those
pertaining to the assignor.The general rule is that an assignee of a non-negotiable chose
in action acquires no greater right than what was possessed by his assignor and simply
stands into the shoes of the latter.Applying the foregoing, the Court finds that MS
Maxco, as the Trade Contractor, cannot assign or transfer any of its rights, obligations, or
liabilities under the Trade Contract without the written consent of FBDC, the Client, in
view of Clause 19.0 on Assignment and Sub-letting of the Trade Contract between
FBDC and MS Maxco. Without any proof that FBDC had consented to the assignment,
Fong cannot validly demand from FBDC the delivery of money that was supposedly
assigned to him by MS Maxco as a portion of its retention money with FBDC. The
practical efficacy of the assignment, although valid between Fong and MS Maxco,
remains contingent on FBDCs consent,only MS Maxco, and not Fong, can collect on the
credit. Note, that this finding does not preclude any recourse that Fong may take against
MS Maxco. After all, an assignment of credit for a consideration and covering a
demandable sum of money is considered as a sale of personal property.

111.) BANK OF THE PHILIPPINE ISLANDS v. AMADOR DOMINGO,

G.R. No. 169407,
FACTS
Amador Domingo admitted that his wife bought a car and was mortgaged to Far East
Bank and Trust Company ( absorbed by BPI through a merger). He identified the Chattel
Mortgage and the Promissory Note he executed together with his wife. In connection
with the execution of this Promissory Note, his wife issued forty-eight (48) checks. The
twelve (12) checks were cleared by the bank. While they were still paying for the car,
Carmelita Gonzales got interested to buy the car and is willing to assume the mortgage.
When his wife presented to Far East Bank the Deed of Sale with Assumption of
Mortgage, the bank made no objection and returned all their postdated checks.
Carmelita Gonzales subsequently issued a check payable to Far East Bank and Trust
Company .Based on the application of payment prepared by [BPI's] witness, Carmelita
Gonzales made payments.

ISSUE
Whether or not there had been a novation of the loan obligation with chattel mortgage
of the spouses Domingo to BPI so that the spouses Domingo were released from said
obligation and Carmelita was substituted as debtor.

HELD
The Court answers in the negative and grants the Petition. The Decision and Resolution
of the Court of Appeals affirming with modification the Decision of the RTC REVERSED
and SET ASIDE. The Decision of the MeTC is REINSTATED with MODIFICATIONS. As a
general rule, since novation implies a waiver of the right the creditor had before the
novation, such waiver must be express. It should be noted that, the law requires that the
creditor should consent to the substitution of a new debtor. The acceptance by a
creditor of payments from a third person, who has assumed the obligation, will result
merely to the addition of debtors and not novation. The creditor may therefore enforce
the obligation against both debtors. It is worthy to stress that Amador, as the party
asserting novation, bears the burden of proving its existence. Amador cannot simply rely
on the failure of BPI to produce the checks if these were not actually returned to the
spouses Domingo. There is simply not enough evidence to establish the prima facie
existence of novation to shift the burden of evidence to BPI to controvert the same. The
Court is therefore convinced that there is no proof that BPI gave its clear and
unmistakable consent to release the spouses Domingo from the obligation to pay the car
loan.. Incidentally, Amador passed away during the pendency of the instant petition, and
is survived by his children. The extent of liability of Amador's heirs to BPI is limited to the
value of the estate which they inherited from Amador.
112.) LAND BANK OF THE PHILIPPINES, Petitioner v. ALFREDO ONG, Respondent.
G.R. No. 190755: November 24, 2010

FACTS
Spouses Sy obtained a 16 Million php loan from Land Bank secured by three (3)
residential lots, five (5) cargo trucks, and a warehouse. Under the loan agreement, PhP 6
million of the loan would be short-term and would mature on February 28, 1997, while
the balance of PhP 10 million would be payable in seven (7) years. The Notice of Loan
Approval dated February 22, 1996 contained an acceleration clause wherein any default
in payment of amortizations or other charges would accelerate the maturity of the loan.

They failed to pay, and they sold the three parcels of land to Alfredo Ong. When Ong
paid the remaining amount, the application for assumption of mortgage was not
approved by Land Bank. The bank learned from its credit investigation report that the
Ongs had a real estate mortgage in the amount of PhP 18,300,000 with another bank
that was past due. Thus, the bank foreclosed the properties. Ong filed an action for
recovery of the money that he paid, and won in the RTC. On appeal to the CA, it likewise
affirmed the RTC decision. Thus, Land Bank appeals to the Supreme Court.

ISSUE
Whether or not Land Bank is liable to Ong.

HELD
The petition has no merit but amount is modified with interest at 6%. Unjust enrichment
exists "when a person unjustly retains a benefit to the loss of another, or when a person
retains money or property of another against the fundamental principles of justice,
equity and good conscience."There is unjust enrichment under Art.22 of the Civil Code
when (1) a person is unjustly benefited, and (2) such benefit is derived at the expense of
or with damages to another.

Land Bank made Alfredo believe that with the payment of PhP 750,000, he would be
able to assume the mortgage of the SpousesSy. The act of receiving payment without
returning it when demanded is contrary to the adage of giving someone what is due to
him. The outcome of the application would have been different had Land Bank first
conducted the credit investigation before accepting Alfredos payment. He would have
been notified that his assumption of mortgage had been disapproved; and he would not
have taken the futile action of paying PhP 750,000. The procedure Land Bank took in
acting on Alfredos application cannot be said to have been fair and proper.

113.) Boysaw vs Interphil Promotions

113.) Boysaw vs Interphil Promotions
114.) CALIFORNIA BUS LINES, INC., vs. STATE INVESTMENT HOUSE, INC., (G.R. No.
147950)

FACTS
Delta Motors Corporation applied for financial assistance from respondent State
Investment House, Inc. (SIHI) and the latter agreed to extend a credit line to Delta for
P25M. California Bus Lines, Inc. (CBLI), purchased on installment basis 35 units of M.A.N.
Diesel Buses and 2 units of M.A.N. Diesel Conversion Engines from Delta. CBLI executed
16 promissory notes for the 35 buses. When CBLI defaulted on all payments due, it
entered into a restructuring agreement with Delta to cover its overdue obligations under
the promissory notes. Still, CBLI had not meet its obligations which prompted Delta to
threaten CBLI with the enforcement of the management takeover clause. Delta executed
a Deed of Sale assigning to SIHI 5 of the 16 promissory notes from California Bus Lines,
Inc. SIHI subsequently sent a demand letter to CBLI requiring CBLI to remit the payments
due on the five promissory notes directly to it. Thereafter, Delta and CBLI entered into a
compromise agreement in Civil Case, the injunction case before the RTC. CBLI agreed
that Delta would exercise its right to extrajudicially foreclose on the chattel mortgages
over the 35 bus units.

ISSUES
(1) W/N the Restructuring Agreement CBLI and Delta novated the five promissory notes
Delta assigned to SIHI
(2) W/N the compromise agreement between CBLI and Delta superseded and/or
discharged the subject five promissory notes.

HELD
(1) No, this Court has ruled that an agreement subsequently executed between a seller
and a buyer that provided for a different schedule and manner of payment, to
restructure the mode of payments by the buyer so that it could settle its outstanding
obligation in spite of its delinquency in payment, is not tantamount to novation. The
restructuring agreement between Delta and CBLI shows that the parties did not
expressly stipulate that the restructuring agreement novated the promissory notes.
Further, obligation is not novated by an instrument that expressly recognizes the old,
changes only the terms of payment, and adds other obligations not incompatible with
the old ones, or where the new contract merely supplements the old one.
(2) No. A compromise agreement determines the rights and obligations of only the
parties to it. Having previously assigned the five promissory notes to SIHI, Delta had no
more right to compromise the same. Deltas limited authority to collect for SIHI
stipulated in the Deed of Sale cannot be construed to include the power to compromise
CBLIs obligations in the said promissory notes. An authority to compromise, by express
provision of Article 1878 of the Civil Code, requires a special power of attorney, which is
absent in this case. The compromise agreement provided that it covered the rights &
obligations only of Delta and CBLI and that it did not refer to, nor cover the rights of, SIHI
as the new creditor of CBLI in the subject promissory notes. The assignment of five
notes operated to create a separate and independent obligation on the part of CBLI to
SIHI, distinct and separate from CBLIs obligations to Delta. And since there was a
previous revocation of Deltas authority to collect for SIHI, Delta was no longer SIHIs
collecting agent. CBLI, in turn, knew of the assignment and Deltas lack of authority to
compromise the subject notes, yet it readily agreed to the foreclosure.

115.) AJAX MARKETING & DEVELOPMENT CORPORATION, vs. HON. COURT OF

APPEALS
G.R. No. 118585

FACTS
The spouses Marcial See and Lilian Tan constituted three real estate mortgage on their
property in favor of Metrobank for the following obligations: (1) Ylang- Ylang Merchandising
Company for P 250,000.00 (2) Ajax Marketing Company (formerly Ylang- Ylang
Merchandising Company for P 150,000.00; (3) Ajax Marketing and Development Corporation
for P 600,000.00. The three loans with an aggregate amount of P 1,000,000.00 were
restructured and consolidated into 1 loan and Ajax Marketing and Development Corporation
executed a promissory.On its face, the promissory Note has these typewritten: "secured by
REM" and "9. COLLATERAL. This is wholly/partly secured by: (x) "real estate",The property
was extra-judicially foreclosed in favor of METROBANK for the P 1,000,000.00 promissory
note.Petitioners argue that a novation occurred when their three (3) loans, which are all
secured by the same real estate property consolidated into a single loan of P1million under
Promissory Note No. BDS-3605, thereby extinguishing their monetary obligations and
releasing the mortgaged property from liability.

ISSUE
W/N there was a Novation of the contract between petitioners and MetroBank that
would result in the extinguishment of petitioners liability to the bank.

HELD
Novation is never presumed. Novation will not be allowed unless it is clearly shown by
express agreement, or by acts of equal import. Thus, the new obligation should expressly
declare that the old obligation is extinguished, or that the new obligation is incompatible
with the new one. Also, to effect a subjective Novation by a change in the person of the
debtor it is necessary that the old debtor be released expressly from the obligation, and the
third person or new debtor assumes his place in the relation. There is no Novation without
such release as the third person who has assumed the debtor's obligation becomes merely a
co-debtor or surety.

In this case there is no Novation. There is nothing in the records to show the unequivocal
intent of the parties to novate the three loan agreements through the execution of
promissory Note. The provisions of promissory Note yield no indication of the
extinguishment of, or an incompatibility with, the three loan agreements secured by the real
estate mortgages. On its face, promissory Note has these words typewritten: "secured by
REM" and "9. COLLATERAL. This is wholly/partly secured by: (x) "real estate", which strongly
negates petitioners' assertion that the consolidation of the three loans effected the
discharge of the mortgaged real estate property.

The three previous loans were merely restructured and renewed to expediently make the
loans current. There was no change in the object of the prior obligations. The consolidation
of the three loans, contrary to petitioners' contention, did not release the mortgaged real
estate property from any liability because the mortgage annotations at the back of TCT in all
remained uncancelled, thus indicating the continuing subsistence of the real estate
mortgages. An action to foreclose a mortgage is usually limited to the amount mentioned in
the mortgage, but where on the four corners of the mortgage contracts, as in this case, the
intent of the contracting parties is manifest that the mortgaged property shall also answer
for future loans or advancements then the same is valid and binding between the parties.

116. Sanggunian Panlungson ng Baguio v. Jadewell Parking Systems

Corp.

Facts:
Baguio City and Jadewell Parking Systems Corporation agreed on June 26, 2000 that the latter
(Jadewell) will be in charge for the on-street parking as well as the installation of modern parking
meters (DG4S Pay and Display Parking Meter) in the City. Due to the failure to install the meters
and to remit the stipulated share of the City, the City Council through City Resolution No. 037 s.
2002 expressed its intent to rescind. Baguio City informed Jadewell through its President,
Rogelio Tan, in a letter dated September 22, 2006 of the rescission. In compliance with the
Memorandum of Agreement section 12, 60 days was given to Jadewell prior to its effectivity.
Jadewell then filed with the RTC of Baguio a petition for Certiorari, Prohibition, and Mandamus,
assailing the validity of the resolution. The RTC found the rescission unlawful. The CA affirmed.

Issues:
Is the correctness of the CAs ruling that Jadewell was deprived of due process when the Sangguniang
Panlungsod rescinded the MOA.

Held:

a.) In G.R. No. 160025, the Petition of the Sangguniang Panlungsod of Baguio City is DENIED. The
CA Decision dated 7 July 2003 in CA G.R. SP No. 74756 is hereby AFFIRMED with modification.
There is not enough evidence on record to conclude that Jadewells violations were sufficient to
justify the unilateral cancellation of the MOA by the Sangguniang Panlungsod of Baguio City; at
the same time, neither the RTC nor the CA provided a clear finding whether the breach of the
MOA by Jadewell was substantial. We affirm the CA as to the rest of its dispositions in its assailed
Decision. Nevertheless, no award of damages is hereby made in favour of Jadewell and neither is
there any pronouncement as to costs.

b.) G.R. Nos. 163052, 164107, 165564, 172216, 173043 and 174879, the Petitions of Jadewell to
cite Mayor Braulio D. Yaranon, Mayor Bernardo M. Vergara, Acting City Mayor Reinaldo A.
Bautista, Vice Mayor Betty Lourdes F. Tabanda, the members of the Sangguniang Panlungsod of
Baguio City namely: Elmer O. Datuin, Antonio R. Tabora, Edilberto B. Tenefrancia, Federico J.
Mandapat, Jr., Richard A. Carino, Faustino A. Olowan, Rufino M. Panagan, Leonardo B. Yangot, Jr.,
Rocky Thomas A. Balisong, Galo P. Weygan, Perlita L. Chan-Rondez, Jose M. Molintas, and Judge
Fernando Vil Pamintuan for indirect contempt and to disbar Sangguniang Panlungsod members
Rocky Thomas A. Balisong, Edilberto B. Tenefrancia, Faustino A. Olowan, Federico J. Mandapat,
Perlita L. Chan-Rondez, Jose M. Molintas, Melchor Carlos B. Rabanes and Mayor Braulio D.
Yaranon are all hereby DISMISSED for lack of merit. No pronouncement as to costs.

c.) We DENY the Petition of Jadewell for lack of merit in G.R. No. 172215. We likewise DENY its
prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction for
being moot and academic. No pronouncement as to costs.

d.) We DENY the Petition of Mayor Braulio D. Yaranon in G.R. No. 181488, for lack of merit and
AFFIRM the CA Decision CA-G.R. SP No. 96116. No pronouncement as to costs.

117. ) to be followed by Gladys

118.) to be followed by Gladys

119.) to be followed by Gladys

120.) to be followed by Gladys

121. VDA. DE MISTICA vs. NAGUIAT

G.R. No. 137909. December 11, 2003

Facts:

Eulalio Mistica is the owner of a parcel of land located at Malhacan, Meycauayan, Bulacan. A
portion thereof was leased to respondent Naguiat. Consequently, Mistica entered into a contract to
sell with respondent over a portion of lot containing an area of 200 sq. mtrs.

The agreement was reduced to writing in a document entitled Kasulatan sa Pagbibilihan

P 20k as the total purchase:
P 2k upon signing;
P 18k to be paid within 10yrs;
In case non payment, vendee shall pay an interest of 12% per annum.

Pursuant to said agreement, respondent gave a downpayment of P2K & made another partial
payment of P1K & thereafter failed to make any payments. Eulalio Mistica died sometime in Oct.
1986. Petitioner claims that she is entitled to rescind the Contract under Article 1191 of the Civil
Code, because respondents committed a substantial breach when they did not pay the balance of
the purchase price within the ten-year period.
Issue:
1. WON the Kasulatan was a contract to sell?
2. WON petitioner is entitled to rescind the contract?
3. WON the contract is in the nature of a potestative obligation?

Held:

1.NO. The Kasulatan was clearly a Contract of Sale. A deed of sale is considered absolute in
nature when there is neither a stipulation in the deed that title to the property sold is reserved to
the seller until the full payment of the price; nor a stipulation giving the vendor the right to
unilaterally resolve the contract the moment the buyer fails to pay within a fixed period.

2. NO. In a contract of sale, the remedy of an unpaid seller is either specific performance or
rescission. In the present case, the failure of respondents to pay the balance of the purchase price
within ten years from the execution of the Deed did not amount to a substantial breach. In the
Kasulatan, it was stipulated that payment could be made even after ten years from the execution
of the Contract, provided the vendee paid 12 percent interest. The stipulations of the contract
constitute the law between the parties; thus, courts have no alternative but to enforce them as
agreed upon and written.

Petitioner never made any demand for the balance of the purchase price. Petitioner even refused
the payment tendered by respondents during her husbands funeral, thus showing that she was not
exactly blameless for the lapse of the ten-year period. Had she accepted the tender, payment
would have been made well within the agreed period.

3. NO. The Kasulatan does not allow it to be converted to a potestative obligation. First, nowhere
is it stated in the Deed that payment of the purchase price is dependent upon whether respondents
want to pay it or not. Second, the fact that they already made partial payment thereof only shows
that the parties intended to be bound by the Kasulatan

122. PALAY VS. CLAVE

FACTS:
In 1965, Palay Inc., through its President Onstott, executed in favor of Dumpit (respondent) a
Contract to Sell a parcel of land in Antipolo, RIzal. The sale was for P23,300 with 9% interest
p.a., payable with a downpayment of P4,660 and monthly installments of P246.42 until fully paid.
Par. 6 of the contract provided for automatic extrajudicial rescission upon default in payment of
any monthly installment after the lapse of 90 days from the expiration of the grace period of a
month, without need of notice and forfeiture of all installments paid. Dumpit was able to pay the
dp and several installments amounting to P13,722.50, with the last payment made on Dec. 5,
1967 for installments up to Sept. 1967. In 1973, Dumpit requested Palay Inc to update his
overdue accounts and sought its permission to assign his rights to Dizon. However, Palay
informed him that his Contract to Sell had long been rescinded pursuant to Par. 6 and that the lot
had already been resold. Dumpit filed a complaint with the NHA for reconveyance with an
alternative prayer for refund. NHA ruled in favor of Dumpit, stating that the rescission is void for
lack of either judicial or notarial demand. Office of the President affirmed.
ISSUE:
1. W/N notice or demand may be dispensed with by stipulation in a contract to sell
2. W/N Palay should be liable for the refund of the installment payments made by Dumpit

HELD:
1. NO. Although a judicial action for rescission of a contract is not necessary where the
contract provides for its revocation and cancellation for violation of any of its terms and
condition, jurisprudence has shown that at least, there was a written notice sent to the
defaulter informing him of the rescission. Par. 6 cannot be considered a waiver of
Dumpit's right to be notified because it was a contract of adhesion. A waiver must be
certain and unequivocal and intelligently made; such waiver follows only where the
liberty of choice has been fully accorded. Moreover, the indispensability of notice of
cancellation to the buyer is protected under RA 6551. It is a matter of public policy to
protect the buyers of real estate on installment payments against onerous and oppressive
conditions. Waiver of notice is one such onerous and oppressive condition to buyers of
real estate on installment payments.

2. YES. As a consequence of the rescission of the contract, right to the lot should be
restored to Dumpit or the same should be replaced by another acceptable lot. However,
considering that the lot had been resold to a third person, Dumpit is entitled to refund of
the installments paid plus legal interest of 12%.

123.) to be followed by Gladys

124. Solar Harvest, Inc. Vs. Davao Corrugated Carton Corporation GR

No. 176858, July 26, 2010

FACTS:
In the 1st Quarter of 1998, Solar Harvest and Davao Corrugated entered into an unwritten
agreement. Solar Harvest placed orders for customized boxes for its business of exporting
bananas at USD 1.10 each. Petitioner made a full payment of USD 40,150.00. By Jan. 3, 2001
petitioner had not received any of the ordered boxes. On Feb. 19, 2001Davao Corrugated replied
that as early as April 3, 1998, order/boxes are completed and Solar Harvest failed to pick them up
from their warehouse within 30 days from completion as agreed upon. Respondent mentioned
that petitioner even placed additional order of 24,000.00 boxes, out of which, 14,000 had already
been manufactured without any advance payment from Solar Harvest. Davao Corrugated then
demanded that Solar Harvest remove boxes from their warehouse, pay balance of USD 15,400.00
for the additional boxes and P132,000 as storage fee. On August 17, 2001 Solar harvest filed
complaint against Davao Corrugated for sum of money and damages claiming that the agreement
was for the delivery of the boxes, which Davao Corrugated did not do. They further alleged that
whenever repeated follow-up was made to Davao Corrugated, they would only see sample boxes
and get promise of delivery. Due to Davao Corrugateds failure to deliver, Solar Harvest had to
cancel the order and demanded payment and/or refund which Davao Corrugated refused to pay.
Davao Corrugated counterclaimed that they had already completed production of the 36,500
boxes plus an additional 14,000 boxes (which was part of the additional 24,000 order that is
unpaid). The agreement was for Solar Harvest to pick up the boxes, which they did not do. They
even averred that on Oct. 8, 1998 Solar Harvests representative Bobby Que even went to the
warehouse to inspect and saw that indeed boxes were ready for pick up. On Feb. 20, 1999, Que
visited the factory again and said that they ought to sell the boxes to recoup some of the costs of
the14,000 additional orders because their transaction to ship the bananas did not materialize.
Solar Harvest denies that they made the additional order. On March 20, 2004, the RTC ruled in
favor of Davao Corrugated.

ISSUE:
WON Corrugated was responsible for breach of contract as Solar Harvest had not yet demanded
from it the delivery of the boxes?

HELD:
NO. The CA held that it was unthinkable that for around 2 years petitioner merely followed up
and did not demand the delivery of the boxes. Even assuming that the agreement is for delivery
by Davao Corrugated, respondent would not be liable for breach of contract as petitioner had not
yet demanded from it the delivery of the boxes. There is no error in the decision of the RTC.

125. Osmena III vs. SSS

Facts:
Osmena III and 4 other members of the Senate and SSS members seek for nullification of the
following issuances of Social Security Commission:
1. Res. No. 428, July 124, 2004- Swiss Challenge Method approved the sale of the entire equity
share of SSS to Equitable PCI bank
2. Res. 485, August 11, 2004 pertains to the timetable and instruction to bidders

SSS in order to liquefy its long term investments and diversify them into higher yielding and less
volatile investments which includes its shareholdings in EPCIB (Reason: shares in question
substantially declined in value and SSS could no longer afford to continue holding on them) in a
purchase agreement it was agreed in that SSS will sell all its EPCIB shares to BDO. COA and
DOJ (in its opinion) approved the agreement. The Bidding was made subject to the right of BDO
Capital to match the highest bid. BDO turned out to be the highest bidder. The Petitioner alleged
that BDO to buy EPCIB shares is inconsistent with the idea of public bidding. BDO and EPCIB
had a merger, all EPCIB shares were transferred to BDO.

Issue:
WON in questioning the alleged resolution can still recover the shares and subject it to a proper
bidding process.

Ruling:
No, petitioners can no longer recover the shares. The obligation to give a determinate thing is
extinguished if the object is lost without the fault of the debtor. In the very real sense, the
interplay of the ensuing factor: a) the BDO-EPCIB merger and b) the cancellation of subject
shares and their replacement by totally new common shares of BDO had rendered the erstwhile
187.84 M EPCIB shares of SSS unrecoverable in the contemplation of Civil Code provision
126. Villamar vs. Mangaoil

FACTS:
T h e p e t i t i o n e r Vi l l a m a r, t h e r e g i s t e r e d o w n e r o f t h e p r o p e r t y, e n t e r e d
i n t o a n a g r e e m e n t w i t h t h e respondent Mangaoil to purchase and sale a parcel
of land. The terms in their agreement includes the down payment of P 185,000 pesos,
which will be for the payment of a loan secured from the Rural Bank of Cauayan so that it will be
withdrawn and released from the bank and that a deed of absolute sale will b e e x e c u t e d
in favor of the respondent Mangaoil which was
c o m p l i e d b y t h e p a r t i e s , consequently, the respondent Mangaoil informed
the petitioner that he will withdraw from the agreement for the land was not yet free from
incumbrances as there were still tenants who were not willing to vacate the land without giving
them back the amount that they mortgaged the land. Also, the petitioner failed and refused,
despite repeated demands, to hand over the certificate of Title. Then, the respondent Mangaoil
demanded the refund of the down payment that he had secured with the petitioner and filed a
complaint with the RTC to rescind the contract of sale. In the response of the petitioner, she
averred that she had already complied with the obligations and caused the release of the
mortgaged land and the delivery of the certificate of Title will be facilitated by a certain Atty.
Pedro C. Antonio. The respondent insisted that h e c a n r e s c i n d t h e c o n t r a c t
for the petitioner had failed to deliver the certificate of
Title.

The RTC and the CA dismissed the complaints for upon the deed of absolute sale, there was
already a valid and constructive delivery. Hence this petition.

Issue:
1. WON the failure of delivery of the Certificate of
Title will constitute rescission of the contract.
2. WON the execution of the deed of sale of real
property is equivalent to a valid and constructive
d e l i v e r y.

HELD:
1. No. The Court held that the failure of the petitioner to comply with the
obligation to deliver to the r e s p o n d e n t t h e
p o s s e s s i o n o f t h e p r o p e r t y a n d t h e
c e r t i f i c a t e o f t h e t i t l e .
It is clear that the power to rescind obligations is implied in reciprocal
ones, in case one of the obligors should not comply with what is incumbent
upon him. The respondent cannot be deprived of his right to demand for rescission in
view of the petitioners failure to abide with item nos. 2 and 3 of the agreement. This
remains true no withstanding the absence of express stipulations in the agreement
indicating the consequences of breaches which the p a r t i e s m a y c o m m i t . T o
h o l d o t h e r w i s e w o u l d r e n d e r ' r t i c l e 11 / 1 o f t h e # # a s
useless.
2. No. As a rule, article 1498 of the NCCgenerally considers the execution of a
public instrument as constructive delivery by the seller to the buyer of the property
subject of a contract of sale. The case at b a r, h o w e v e r, f a l l s a m o n g t h e
exceptions to the foregoing rule since a mere presumptive and not
 conclusive delivery is created as the respondent failed to take material
possession of the subject property.

Even if we were to assume for arguments sake that the agreement entered into by the
contending parties does not require the delivery of the physical possession of the subject
property from the mortgagors to the r e s p o n d e n t , s t i l l , t h e p e t i t i o n e r s c l a i m
t h a t h e r e x e c u t i o n o f a n a b s o l u t e d e e d o f s a l e w a s a l r e a d y sufficient as it
already amounted to a constructive delivery of the thing sold which article 1498 of the NCC
allows, cannot stand.

127. Ayson-Simon vs. Adamos

FACTS:

On December 13, 1943, Nicolas Adamos and Vicente Feria defendants-appellants herein
purchased two lots from Juan Porciuncula. Porciunculas successor in interest sought for the
annulment and cancellation of the sale which the court a quo favorably ruled.

In the meantime during the pendency of the above mentioned case, defendants-appellants sold
to Generosa Ayson Simon the lots in question. Due to the failure of defendants appellants to
comply with their commitment to have the subdivision plan of the lots approved and to deliver
to deliver the titles and possession to Generosa, the latter filed suit for specific performance. As
a result of the sale of the lot to said defendants sppellants being null and void, there is
impossibity that they can comply with their commitment to Generosa, the latter then seek the
rescission of the contract plus damages.

The defendants-appellants contend that Generosas action had prescribed, considering that she
had only four years from May 29, 1946 to rescind the transaction.

ISSUE:

Whether or not the action to rescind the obligation has prescribed.

HELD:

Article 1191 of the Civil Code provides that an injured party may also seek rescission if the
fulfilment should have become impossible. The cause of action to claim rescission arises when
the fulfilment of the obligation became impossible when the court declared that the sale was
null and void. The Generosa cannot be assailed on the ground that she slept on her rights.
128. ANGELES VS. CALASANZ

FACTS:
On December 19, 1957, defendants-appellants Ursula Torres Calasanz and plaintiffs-appellees
Buenaventura Angeles and Teofila Juani entered into a contract to sell a piece of land located in
Cainta, Rizal for the amount of P3,920.00 plus 7% interest per annum. The plaintiffs-appellees
made a downpayment of P392.00 upon the execution of the contract. They promised to pay the
balance in monthly installments of P41.20 until fully paid, the installment being due and payable
on the 19th day of
each month. The plaintiffs-appellees paid the monthly installments until July 1966, when their
aggregate
payment already amounted to P4,533.38.

On December 7, 1966, the defendants-appellants wrote the plantiffs-appellees a letter requesting

the remittance of past due accounts. On January 28, 1967, the defendants-appellants cancelled the
said contract because the plaintiffs failed to meet subsequent payments. The plaintiffs letter with
their plea for reconsideration of the said cancellation was denied by the defendants.

The plaintiffs-appellees filed a case before the Court of First Instance to compel the defendant to
execute in their favor the final deed of sale alleging inter alia that after computing all subsequent
payments for the land in question, they found out that they have already paid the total amount
including interests, realty taxes and incidental expenses. The defendants alleged in their answer
that the plaintiffs violated par. 6 of the contract to sell when they failed and refused to pay and/or
offer to pay
monthly installments corresponding to the month of August, 1966 for more than 5 months,
thereby
constraining the defendants to cancel the said contract.
The Court of First Instance rendered judgment in favor of the plaintiffs, hence this appeal.

ISSUE:
Has the Contract to Sell been automatically and validly cancelled by the defendants-appellants?

RULING:
No. The contract to sell, being a contract of adhesion, must be construed against the party causing
it. The Supreme Court agree with the observation of the plaintiffs-appellees to the effect that the
terms of a contract must be interpreted against the party who drafted the same, especially where
such interpretation will help effect justice to buyers who, after having invested a big amount of
money, are now sought to be deprived of the same thru the prayed application of a contract clever
in its phraseology, condemnable in its lop-sidedness and injurious in its effect which, in essence,
and its entirety is most unfair to the buyers.

Thus, since the principal obligation under the contract is only P3,920.00 and the plaintiffs-
appellees have already paid an aggregate amount of P4,533.38, the courts should only order the
payment of the few remaining installments but not uphold the cancellation of the contract. Upon
payment of the balance of P671.67 without any interest thereon, the defendant must immediately
execute the final deed of sale in favor of the plaintiffs and execute the necessary transfer of
documents, as provided in par.12 of the contract.

129. UNIVERSITY OF THE PHILIPPINES VS. DE LOS

ANGELES
FACTS:
On November 2, 1960, UP and ALUMCO entered into a logging agreement whereby the
latter was granted exclusive authority to cut, collect and remove timber from the Land
Grant for a period starting from the date of agreement to December 31, 1965, extendible
for a period of 5 years by mutual agreement.

On December 8, 1964, ALUMCO incurred an unpaid account of P219,362.94. Despite

repeated
demands, ALUMCO still failed to pay, so UP sent a notice to rescind the logging
agreement. On the other hand, ALUMCO executed an instrument entitled
Acknowledgment of Debt and Proposed Manner of
Payments. It was approved by the president of UP, which stipulated the following: 3. In
the event that the payments called for are not sufficient to liquidate the foregoing
indebtedness, the balance outstanding after the said payments have been applied shall be
paid by the debtor in full no later than June 30, 1965. 5. In the event that the debtor fails
to comply with any of its promises, the Debtor agrees without reservation that Creditor
shall have the right to consider the Logging Agreement rescinded, without the necessity
of any judicial suit ALUMCO continued its logging operations, but again incurred an
unpaid account. On July 19,1965, UP informed ALUMCO that it had, as of that date,
considered
rescinded and of no further legal effect the logging agreement, and that UP had already
taken steps to have another concessionaire take over the logging operation. ALUMCO
filed a petition to enjoin UP from conducting the bidding. The lower court ruled in favor
of ALUMCO, hence, this appeal.

ISSUE:
Can petitioner UP treat its contract with ALUMCO rescinded, and may disregard the
same before any judicial pronouncement to that effect?

RULING:
Yes. In the first place, UP and ALUMCO had expressly stipulated that upon default by
the debtor, UP
has the right and the power to consider the Logging Agreement of December 2, 1960 as
rescinded without the necessity of any judicial suit. As to such special stipulation and in
connection with Article 1191 of the Civil Code, the Supreme Court, stated in Froilan vs.
Pan Oriental Shipping Co:
There is nothing in the law that prohibits the parties from entering into agreement that
violation
of the terms of the contract would cause cancellation thereof, even without court
intervention. In other words, it is not always necessary for the injured party to resort to
court for rescission of the contract.

130. UNIVERSAL FOOD CORPORATION vs. CA

FACTS:
This is a petition for certiorari by the UFC against the CA decision of February 13, 1968
declaring the BILL OF ASSIGNMENT rescinded, ordering UFC to return to Magdalo Francisco
his Mafran sauce trademark and to pay his monthly salary of P300.00 from Dec. 1, 1960 until the
return to him of said trademark and formula.

In 1938, plaintiff Magdalo V. Francisco, Sr. discovered a formula for the manufacture of a food
seasoning (sauce) derived from banana fruits popularly known as MAFRAN sauce. It was used
commercially since 1942, and in the same year plaintiff registered his trademark in his name as
owner and inventor with the
Bureau of Patents. However, due to lack of sufficient capital to finance the expansion of the
business, in 1960, said plaintiff secured the financial assistance of Tirso T. Reyes who, after a
series of negotiations, formed with others defendant Universal Food Corporation eventually
leading to the execution on May 11, 1960 of the aforequoted "Bill of Assignment" (Exhibit A or
1).
On May 31, 1960, Magdalo Francisco entered into contract with UFC stipulating among other
things that he be the Chief Chemist and Second Vice-President of UFC and shall have absolute
control and supervision over the laboratory assistants and personnel and in the purchase and
safekeeping of the chemicals used in the preparation of said Mafran sauce and that said positions
are permanent in nature.

In line with the terms and conditions of the Bill of Assignment, Magdalo Francisco was appointed
Chief Chemist with a salary of P300.00 a month. Magdalo Francisco kept the formula of the
Mafran sauce secret to himself. Thereafter, however, due to the alleged scarcity and high prices of
raw materials, on November 28, 1960, Secretary-Treasurer Ciriaco L. de Guzman of UFC issued
a Memorandum duly approved by the President and General Manager Tirso T. Reyes that only
Supervisor Ricardo Francisco should be retained in the factory and that the salary of plaintiff
Magdalo V. Francisco, Sr., should be stopped for the time being until the corporation should
resume its operation. On December 3, 1960, President and General Manager Tirso T. Reyes,
issued a memorandum to Victoriano Francisco ordering him to report to the factory and produce
"Mafran Sauce" at the rate of not less than 100 cases a day so as to cope with the orders of the
corporation's various distributors and dealers, and with instructions to take only the necessary
daily employees without employing permanent employees. Again, on December 6, 1961, another
memorandum was issued by the same President and General Manager instructing the
Assistant Chief Chemist Ricardo Francisco, to recall all daily employees who are connected in
the production of Mafran Sauce and also some additional daily employees for the production of
Porky Pops. On December 29, 1960, another memorandum was issued by the President and
General Manager instructing Ricardo Francisco, as Chief Chemist, and Porfirio Zarraga, as
Acting Superintendent, to produce Mafran Sauce and Porky Pops in full swing starting January 2,
1961 with further instructions to hire daily laborers in order to cope with the full blast operation.
Magdalo V. Francisco, Sr. received his salary as Chief Chemist in the amount of P300.00 a month
only until his services were terminated on November 30, 1960. On January 9 and 16, 1961, UFC,
acting thru its President and General Manager, authorized Porfirio Zarraga and Paula de Bacula to
look for a buyer of the corporation including its trademarks, formula and assets at a price of not
less than P300,000.00. Due to these successive memoranda, without plaintiff Magdalo V.
Francisco, Sr. being recalled back to work, he filed the present action on February 14, 1961. Then
in a letter dated March 20, 1961, UFC requested said plaintiff to report for duty, but the latter
declined the request because the present action was already filed in court.
ISSUES:
1. Was the Bill of Assignment really one that involves transfer of the formula for Mafran sauce
itself?
2. Was petitioners contention that Magdalo Francisco is not entitled to rescission valid?

RULING:
1. No. Certain provisions of the bill would lead one to believe that the formula itself was
transferred. To
quote, the respondent patentee "assign, transfer and convey all its property rights and interest
over said Mafran trademark and formula for MAFRAN SAUCE unto the Party of the Second
Part," and the last
paragraph states that such "assignment, transfer and conveyance is absolute and irrevocable (and)
in no case shall the PARTY OF THE First Part ask, demand or sue for the surrender of its rights
and interest over said MAFRAN trademark and mafran formula."

However, a perceptive analysis of the entire instrument and the language employed therein
would lead
one to the conclusion that what was actually ceded and transferred was only the use of the Mafran
sauce formula. This was the precise intention of the parties.

The SC had the following reasons to back up the above conclusion. First, royalty was paid by
UFC to
Magdalo Francisco. Second, the formula of said Mafran sauce was never disclosed to anybody
else. Third, the Bill acknowledged the fact that upon dissolution of said Corporation, the patentee
rights and interests of said trademark shall automatically revert back to Magdalo Francisco.
Fourth, paragraph 3 of the Bill declared only the transfer of the use of the Mafran sauce and not
the formula itself which was admitted by UFC in its answer. Fifth, the facts of the case
undeniably show that what was transferred was only the use. Finally, our Civil Code allows only
the least transmission of right, hence, what better way is there to show the least transmission of
right of the transfer of the use of the transfer of the formula itself.

2. No. Petitioners contention that Magdalo Franciscos petition for rescission should be denied
because under Article 1383 of the Civil Code of the Philippines rescission cannot be demanded
except when the party suffering damage has no other legal means to obtain reparation, was of no
merit because it is predicated on a failure to distinguish between a rescission for breach of
contract under Article 1191 of the Civil Code and a rescission by reason of lesion or economic
prejudice, under Article 1381, et seq. This was a case of reciprocal obligation. Article 1191 may
be scanned without disclosing anywhere that the action for rescission thereunder was
subordinated to anything other than the culpable breach of his obligations by the defendant.
Hence, the reparation of damages for the breach was purely secondary. Simply put, unlike Art.
1383, Art. 1191 allows both the rescission and the payment for damages. Rescission is not given
to the party as a last resort; hence, it is not subsidiary in nature.

131. SM LAND INC VS BAES CONVERSION AND DEVELPOMENT AUTHORITY AND

ARNEL PACIANO D CASANOVA, ESQ, IN HIS OFFICIAL CAPACITY AS PRESIDENT
AND CEO OF BCDA, G.R NO. 203655, AUGUST 13, 2014, J. VELASCO JR.

G.R. No. 203655, August 13, 2014 - SM LAND, INC., Petitioner, v. BASES CONVERSION
AND DEVELOPMENT AUTHORITY AND ARNEL PACIANO D. CASANOVA, ESQ., IN HIS
OFFICIAL CAPACITY AS PRESIDENT AND CEO OF BCDA, Respondents.
Before Us is a Petition for Certiorari, Prohibition and Mandamus under Rule 65 of the Rules of
Court, with prayer for injunctive relief, seeking to nullify and set aside the Bases Conversion and
Development Authority (BCDA) Supplemental Notice No. 5 as well as all other acts pursued in
furtherance thereof, and to order respondents to immediately conduct and complete the
Competitive Selection Process on petitioners duly accepted unsolicited proposal.

The Facts

As culled from the records, the facts are simple and undisputed.

Pursuant to Republic Act No. (RA) 7227 or the Bases Conversion and Development Act of
1992, the BCDA opened for disposition and development its Bonifacio South Property, a 33.1-
hectare expanse located at Taguig City that was once used as the command center for the
countrys military forces. Jumping on the opportunity, petitioner SM Land, Inc. (SMLI), on
December 14, 2009, submitted to the BCDA an unsolicited proposal for the development of the
lot through a public-private joint venture agreement. The proposal guaranteed the BCDA secured
payments amounting to PhP 15,985/sqm or a total of PhP 8.1 billion.

Barely three months later, the initial proposal was followed by a second one with guaranteed
secured payments of PhP 31,139/sqm, totaling PhP 20 billion. On May 4, 2010, however, SMLI
submitted its third unsolicited proposal with guaranteed secured payments amounting to PhP
32,501/sqm for a total of PhP 22.6 billion.

Thereafter, the BCDA created a Joint Venture Selection Committee (JV-SC) following the
procedures prescribed under Annex C of the Detailed Guidelines for Competitive Challenge
Procedure for Public-Private Joint Ventures (NEDA JV Guidelines) promulgated by the National
Economic Development Authority (NEDA). The said committee recommended the acceptance of
the unsolicited proposal, which recommendation was favorably acted upon by the BCDA.

Through a letter dated May 12, 2010, the BCDA communicated to petitioner its acceptance of the
unsolicited proposal. Despite its acceptance, however, the BCDA clarified that its act should not
be construed to bind the agency to enter into a joint venture agreement with the petitioner but
only constitutes an authorization granted to the JV-SC to conduct detailed negotiations with
petitioner SMLI and iron out the terms and conditions of the agreement.

Pursuant to this authorization, the JV-SC and SMLI embarked on a series of detailed negotiations,
and on July 23, 2010, SMLI submitted its final revised proposal with guaranteed secured
payments amounting to a total of PhP 25.9 billion. Afterwards, upon arriving at mutually
acceptable terms and conditions, a Certification of Successful Negotiations (Certification) was
issued by the BCDA and signed by both parties on August 6, 2010. Through the said
Certification, the BCDA undertook to subject SMLIs Original Proposal to Competitive
Challenge pursuant to Annex C and committed itself to commence the activities for the
solicitation for comparative proposals.

In an attempt to comply with its obligations, the BCDA prepared for the conduct of a Competitive
Challenge to determine whether or not there are other Private Sector Entities (PSEs) that can
match the proposal of SMLI, and concurrently ensure that the joint venture contract will be
awarded to the party that can offer the most advantageous terms in favor of the government. In
furtherance thereof, the agency issued Terms of Reference (TOR),2 which mapped out the
procedure to be followed in connection with the Competitive Challenge. Consequently, SMLI
was required, as it did, to post a proposal security in the amount of PhP 187 million, following the
prescribed procedure outlined in the TOR and the NEDA JV Guidelines.

Afterwards, the BCDA set the Pre-eligibility Conference on September 3, 2010. Invitations to
apply for eligibility and to submit comparative proposals were then duly published on August 12,
16 and 20, 2010. Hence, the pre-eligibility conference was conducted as scheduled. The
companies that participated in the conference included SMLI, as the Original Proponent, and
three (3) PSEs, namely Ayala Land, Inc., Rockwell Land Corp., and Filinvest Land, Inc.

The Issue

Without a doubt, the issue in this case boils down to whether or not the BCDA gravely abused its
discretion in issuing Supplemental Notice No. 5, in unilaterally aborting the Competitive
Challenge, and in subjecting the development of the project to public bidding.

HELD:
The Courts Ruling

The petition is impressed with merit. SMLI has the right to a completed competitive challenge
pursuant to the NEDA JV Guidelines and the Certification issued by the BCDA. The reservation
clause adverted to by the respondent cannot, in any way, prejudice said right.

Perform any and all acts necessary to carry out and complete Stage Three of the Swiss Challenge
pursuant to the provisions of the TOR and NEDA JV Guidelines, including, but not limited to,
subjecting petitioners unsolicited proposal to a competitive challenge.

In the event that SM Land, Inc. already obtained from BCDA the amount representing its
Proposal Security, SM Land, Inc. is hereby DIRECTED to re-post the Proposal Security, in the
same amount as the previous one, on the first day of the publication of the invitation for
comparative proposals, per the NEDA JV Guidelines.

SO ORDERED.
132. GIDWANI VS. PEOPLE G.R NO 195064, JANUARY 15, 2014, J SERENO

The facts:

Petitioner is the president of G.G. Sportswear Manufacturing Corporation GSMC), which is engaged in the
export of ready-to-wear clothes. GSMC secured the embroidery services of El Grande Industrial
Corporation El Grande) and issued on various dates from June 1997 to December 1997 a total of 10 Banco
de Oro (BDO) checks as payment for the latters services worth an aggregate total of 1,626,707.62.

Upon presentment, these checks were dishonored by the drawee bank for having been drawn against a
closed account.

Thus, El Grande, through counsel, sent three demand letters regarding 8 of the 10 issued checks.

On 15 October 1997,5 petitioner wrote to El Grandes counsel acknowledging receipt of the 8 October
demand letter6 and informing the latter that, on 29 August 1997, GSMC had filed a Petition with the
Securities and Exchange Commission (SEC). It was a Petition for the Declaration of a State of Suspension
of Payments, for the Approval of a Rehabilitation Plan and Appointment of a Management Committee. 7
Acting on the Petition, the SEC issued an Order 8 on 3 September 1997 ordering the suspension of all
actions, claims, and proceedings against GSMC until further order from the SEC Hearing Panel. Petitioner
attached this SEC Order to the 15 October 1997 letter. In short, GSMC did not pay El Grande.

Despite its receipt on 16 October 1997 of GSMCs letter and explanation, El Grande still presented to the
drawee bank for payment BDO Check Nos. 0000063652 and 0000063653 dated November and December
1997, respectively.

Thereafter, sometime in November 1997, El Grande filed a Complaint with the Office of the City Prosecutor
of Manila charging petitioner with eight counts of violation of Batas Pambansa Blg. 22 (B.P. 22) for the
checks covering June to October 1997. El Grande likewise filed a similar Complaint in December 1997,
covering the checks issued in November and December 1997. Corresponding Informations for the
Complaints were subsequently filed on 1 October 2001.

On appeal, the Regional Trial Court (RTC) affirmed the findings of the MTC and likewise denied the Motion
for Reconsideration of petitioner.10

Thereafter, petitioner filed with the CA a Petition for Review under Rule 42.

Petitioner filed his Motion for Partial Reconsideration on 11 October 2010, 12 raising the following as his
defenses: (1) there was no clear evidence showing that he acknowledged the Notice of Dishonor of the
two remaining checks; (2) the suspension Order of the SEC was a valid reason for stopping the payment
of the checks; and, (3) as a corporate officer, he could only be held civilly liable.

On 6 January 2011, the CA denied the motion through its assailed Resolution. 13
Hence, this Petition.

ISSUES:

THE COURT OF APPEALS ERRED IN RULING THAT THE ORDER FOR THE SUSPENSION OF PAYMENT
ISSUED BY THE SECURITIES AND EXCHANGE COMMISSION IS NOT A VALID REASON TO STOP PAYMENT
OF A CHECK EVEN IF SUCH ORDER WAS ISSUED PRIOR TO THE PRESENTMENT OF THE SUBJECT CHECKS
FOR PAYMENT;

B. THE COURT OF APPEALS ERRED IN FINDING A CORPORATE OFFICER PERSONALLY LIABLE FOR THE
CIVIL OBLIGATION OF THE CORPORATION.

HELD:

We find the appeal to be meritorious.

The elements of a violation of B.P. 22 are the following:15

1) making, drawing and issuing any check to apply on account or for value;

2) knowledge of the maker, drawer or issuer that at the time of issue he does not have sufficient funds in
or credit with the drawee bank for the payment of the check in full upon its presentment; and

3) subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit, or dishonor of
the check for the same reason had not the drawer, without any valid cause, ordered the bank to stop
payment.

WHEREFORE, in view of the foregoing, the Petition is hereby GRANTED. The Decision dated 7 September
2010 and the Resolution dated 6 January 2011 of the Court of Appeals in CA-G.R. CR No. 32642 are
REVERSED and SET ASIDE. Criminal Case Nos. 301888 and 301889 are DISMISSED, without prejudice to
the right of El Grande Industrial Corporation to file the proper civil action against G.G. Sportswear
Manufacturing Corporation for the value of the ten (10) checks.

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of the opinion of the Courts
Division.

MARIA LOURDES P. A. SERENO

Chief Justice

133. AVELINA ABARIENTOS REBUSQUILLO (SUBSTITUTED BY HEIRS,

EXCEPT EMELINDA R GUALVEZ) AND SALVADOR A. OROSCA VS SPS
DOMINGO AND EMELINDA REBUSQUILLO GUALVEZ AND THE CITY
ASSESSOR OF LEGAZPI CITY, GR NO. 204029, JUNE 4, 2014, J VELASCO
JR
AVELINA ABARIENTOS REBUSQUILLO [substituted by her heirs, except Emelinda R.
Gualvez] and SALVADOR A. OROSCO, Petitioners,vs. SPS. DOMINGO and EMELINDA
REBUSQUILLO GUALVEZ and the CITY ASSESSOR OF LEGAZPI CITY, Respondents. G.R.
No. 204029.June 4, 2014

Facts
: Petioners Avelina Abarientos Rebusquillo (Avelina) and Salvador Orosco (Salvador) filed a
Complaint for annulment and revocation of an Affidavit of Self-Adjudication and a Deed of
Absolute Sale before the court a quo. In it, petitioners alleged that Avelina was one of the children
of Eulalio Abarientos (Eulalio) and Victoria Villareal (Victoria). Eulalio died intestate on July 3,
1964, survived by his wife Victoria, six legitimate children, and one illegitimate child, namely:
(1) Avelina Abarientos-Rebusquillo, petitioner in this case; (2) Fortunata Abarientos-Orosco, the
mother of petitioner Salvador; (3) Rosalino Abarientos; (4) Juan Abarientos; (5) Feliciano
Abarientos; (6) Abraham Abarientos; and (7) Carlos Abarientos. His wife Victoria eventually
died intestate on June 30, 1983. On his death, Eulalio left behind an untitled parcel of land in
Legazpi City consisting of two thousand eight hundred sixty-nine(2,869) square meters, more or
less, which was covered by Tax Declaration ARP No. (TD) 0141. In 2001, Avelina was
supposedly made to sign two (2) documents by her daughter Emelinda Rebusquillo-Gualvez
(Emelinda) and her son-in-law Domingo Gualvez (Domingo), respondents in this case, on the
pretext that the documents were needed to facilitate the titling of the lot. It was only in 2003, so
petitioners claim, that Avelina realized that what she signed was an Affidavit of Self-
Adjudication and a Deed of Absolute Sale in favor of respondents. As respondents purportedly
ignored her when she tried to talk to them, Avelina sought the intervention of the RTC to declare
null and void the two (2) documents in order to reinstat TD0141 and so correct the injustice done
to the other heirs of Eulalio.
Issue
: Whether or not there was a simulation of contract.
Held
: The Civil Code provides: Art. 1345. Simulation of a contract may be absolute or relative. The
former takes place when the parties do not intend to be bound at all; the latter, when the parties
conceal their true agreement.
134. SPOUSES BALILA VS IAC GR. NO. L-68477 OCTOBER 29, 1987
FACTS:
Republic of the Philippines, through the Bureau of Internal Revenue, commenced an action in the
Court of First Instance (now Regional Trial Court), to collect from the spouses Antonio Pastor
and Clara Reyes-Pastor deficiency income taxes for the years 1955 to 1959 with surcharge and
monthly interest, and costs. The Pastors filed a motion to dismiss the complaint, but the motion
was denied. They filed an answer admitting there was an assessment against them for income tax
deficiency but denying liability therefor. They contended that they had availed of the tax amnesty
under P.D.s Nos. 23, 213 and 370 and had paid the corresponding amnesty taxes amounting of
their reported untaxed income under P.D. 23, and a final payment on October 26, 1973 under P.D.
370 evidenced by the Governments Official Receipt. The trial court held that the respondents had
settled their income tax deficiency for the years 1955 to 1959, not under P.D. 23 or P.D. 370, but
under P.D. 213.

The Government appealed to the Intermediate Appellant Court, alleging that the private
respondents were not qualified to avail of the tax amnesty under P.D. 213 for the benefits of that
decree are available only to persons who had no pending assessment for unpaid taxes, as provided
in Revenue Regulations Nos. 8-72 and 7-73. Since the Pastors did in fact have a pending
assessment against them, they were precluded from availing of the amnesty granted in P.D.s Nos.
23 and 213. The Government further argued that tax exemptions should be interpreted
strictissimi juris against the taxpayer. The Intermediate Appellate Court (now Court of Appeals)
rendered a decision dismissing the Governments appeal and holding that the payment of
deficiency income taxes by the Pastors under PD. No. 213, and the acceptance thereof by the
Government, operated to divest the latter of its right to further recover deficiency income taxes
from the private respondents pursuant to the existing deficiency tax assessment against them.

ISSUE:

Whether or not the tax amnesty payments made by the private respondents bar an action for
recovery of deficient income taxes under P.D.s Nos. 23, 213 and 370.

HELD:
YES. Petition for review is denied.

RATIO:

[T]he Government is estopped from collecting the difference between the deficiency tax
assessment and the amount already paid by them as amnesty tax. The finding of the appellate
court that the deficiency income taxes were paid by the Pastors, and accepted by the Government,
under P.D. 213, granting amnesty to persons who are required by law to file income tax returns
but who failed to do so, is entitled to the highest respect and may not be disturbed except under
exceptional circumstances

The rule is that in case of doubt, tax statutes are to be construed strictly against the Government
and liberally in favor of the taxpayer strictisimi juris for taxes, being burdens, are not to be
presumed beyond what the applicable statute (in this case P.D. 213) expressly and clearly
declares.

135. BATCHELDER VS THE CENTRAL BANK OF THE PHILIPPINES GR. NO.

L-25071, JULY 29, 1972

Facts:
Monetary Board Resolution No. 857 requires Filipino and American resident contractors for
constructions in U.S. military bases in the Philippines to surrender to the Central Bank their
dollar earnings under their respective contracts but were entitled to utilize 90% of their
surrendered dollars for importation at the preferred rate of commodities for use within or outside
said U.S. military bases. Resolution 695 moreover, denies their right to reacquire at the preferred
rate ninety per cent (90%) of the foreign exchange the sold or surrendered earnings to Central
Bank for the purpose of determining whether the imports against proceeds of contracts entered
into prior to April 25, 1960 are classified as dollar-to-dollar transactions or not.George
Batchelder, an American Citizen permanently residing in the Philippines who is engaged in the
Construction Business, surrendered to the Central Bank his dollar earnings amounting to U.S.
$199,966.00. He compels Central Bank of the Philippines to resell to him$170,210.60 at the
preferred rate of exchange of two Philippine pesos for one American dollar,more specifically
P2.00375 which was denied by the court.He then contended that said decision failed to consider
that if there was no contract obligating the bank to resell to him at the preferred rate, the judgment
of the lower court canand should nevertheless be sustained on the basis of there being such an
obligation arising fromlaw.
Issue:
Whether or not Central Bank has the obligation arising from law to resell theUS$154,094.56 to
Batchelder at the preferred rate.
Held:
Central Bank was intended to attain basic objectives in the field of currency and finance.
It shall be the responsibility of the Central Bank of the Philippines to administer the monetary
and banking system of the Republic. It shall be the duty of the Central Bank to use the
powersgranted to it under this Act to achieve the following objectives: (a) to maintain
monetarystability in the Philippines; (b) to preserve the international value of the peso and
theconvertibility of the peso into other freely convertible currencies; and (c) to promote a
risinglevel of production, employment and real income in the Philippines."It is, of course, true
that obligations arise from 1) law; 2) contracts; 3) quasi-contracts;4) acts or omissions punished
by law and 5) quasi-delicts. One of the sources an obligation thenis a law. A legal norm could so
require that a particular party be chargeable with a prestation orundertaking to give or to deliver
or to do or to render some service. It is an indispensablerequisite though that such a provision,
thus in fact exists. There must be a showing to that effect.As early as 1909 in Pelayo v. Lauron,
Court through Justice Torres, categorically declared:"Obligation arising from law are not
presumed." For in the language of Justice Street in LeungBen v. O'Brien, a 1918 decision, such an
obligation is "a creation of the positive law." They areordinarily traceable to code or statute. It is
true though, as noted in the motion forreconsideration following People v. Que Po Lay, that a
Central Bank circular may have the forceand effect of law, especially when issued in pursuance of
its quasi-legislative power. That of itself, however, is no justification to conclude that it has
thereby assumed an obligation.

136. SPOUSES TONGSON VS. EMERGENCY PAWNSHOP BULA, GR. 167874

JANUARY 15, 2010

SPOUSES TONGSON vs EMERGENCY PAWNSHOP BULA, INC. GR 167874

Facts:
Napala purchased from spouses Tongson their 364 square meter parcel of land situated in Davao.
The respondent prepared an Absolute Deed of Sale indicating the consideration as P 400,000 and
executed another Memorandum of Agreement in conformity with the Deed of Sale. Upon signing,
Napala paid two hundred thousand pesos in cash to spouses and issued postdated PNB check to
represent the balance. However the check was dishonored for insufficient funds. Despite demand,
Napala failed to pay or return the purchase land. The petitioners filed for the annulment of the
contract.
The trial court ordered the annulment of the contract. Furthermore, Napalas
action in giving the check constituted fraud that induced the spouses to enter in the sale.

Issue:
Whether or Not Napala employed fraud which induces the spouses to enter in the sale.

Held:
The issuance of PNB check and fraudulently representation made by Napala could not be
considered as determining cause for the sale of the subject parcel of land. A valid contract
requires occurrence of three elements. In the present, there is no dispute as regards the presence
of two requisites; namely, (a) determinate subject matter, and (b) price certain in money. As
regards the requisite which is the consent of the parties, it is clearly shown for the record that the
spouses agreed to sell the land to Napala who offered to pay the price. The fraud was not
employed during the negotiation and perfection stages of the sale, but existed in the
consummation when the parties are in the process of their respective obligations.

137. SPOUSES VICTOR AND EDNA BINUA VS. LUCIA P. ONG GR NO. 207176, JUNE
18, 2014, J REYES
FACTS:
In Criminal Case Nos. 8230 and 8465-70, Edna was convicted of Estafa upon complaint of Lucia
and sentenced to imprisonment of up to 30 years of reclusion perpetua, She was also ordered to
pay P2,285,000, with interest and damages. To avoid criminal liability, she and Victor executed
separate real estate mortgages over Victors properties worth P7,000,000.00. Edna then filed a
motion for new trial which was granted by the RTC. In its Decision, the RTC ordered Edna to pay
Lucia the amount of P2,285,000.00. It ruled that the presentation of the promissory note novated
the original agreement between them to a civil obligation. Edna, however, failed to pay the
obligation, thus Lucia extrajudicially foreclosed the properties covered by the real estate
mortgage. Edna and Victor then filed a case for Declaration of Nullity Of Mortgage Contracts,
citing that the mortgage documents were executed under duress, as they were suffering from the
effects of conviction of Edna, thus could not have freely entered into the contract. The trial court,
however, dismissed their complaint. While acknowledging that the mortgage contracts were
indeed executed under duress, it however applied Article 1335 of the Civil code, the last
paragraph of which says: A threat to enforce ones claim through competent authority, if the
claim is just and legal, does not vitiate consent. Edna profited from it, as she did not go to jail.
The spouses appealed to the Court of Appeals, which also denied it, holding that the threat of
Edna going to jail thus they were made to sign the real estate mortgages was not the intimidation
contemplated by law. Edna and Victor elevated their case to the Supreme Court.

The Supreme Court:

First, the Court must emphasize that in a Rule 45 petition for review, only questions of law may
be raised because the Court is not a trier of facts and is not to review or calibrate the evidence on
record; and when supported by substantial evidence, the findings of fact by the CA are conclusive
and binding on the parties and are not reviewable by this Court[1], unless the case falls under any
of the exceptions.[2]

In this case, the Court notes that the petitioners arguments are exact repetitions of the issues
raised in the CA, and the petitioners failed to advance any convincing reason that would alter the
resolution in this case. Not only that, the petitioners arguments are also downright inaccurate, if
not maliciously misleading.

The decisive factor in this case is the RTC-Branch 2 Decision dated February 24, 2006 in
Criminal Case Nos. 8230, 8465, 8466, 8467, 8468, 8469 & 8470. This was the decision that
overturned petitioner Ednas previous conviction for estafa and adjudged her only to be civilly
liable to the respondent. Said RTC decision is already final and executory[3], and this was not
refuted by the petitioners. The Court has consistently ruled that once a decision attains finality,
it becomes the law of the case regardless of any claim that it is erroneous. Having been rendered
by a court of competent jurisdiction acting within its authority, the judgment may no longer be
altered even at the risk of occasional legal infirmities or errors it may contain.[4] Thus, said RTC
decision bars a rehash, not only of the issues raised therein but also of other issues that might
have been raised, and this includes the existence of the promissory note upon which petitioner
Ednas exoneration rested. As a matter of fact, the RTC decision embodied petitioner Ednas own
admission that she is indebted to the respondent.
ISSUE:
The issue of whether petitioner Ednas liability under the note was, from the very beginning, civil
and not criminal in nature has no relevance in this case as the only issue to be resolved is whether
the mortgage contracts were executed under duress. Any other discussion pertinent to the RTC
decision will transgress the principle of immutability of a final judgment.

The petitioners claim that they were compelled by duress or intimidation when they executed the
mortgage contracts. According to them, they were still suffering from the effect of the
conviction of [petitioner] Edna, and could not have been freely entered into said contracts.[6]
The petitioners also allege that the respondent subsequently rammed the two (2) mortgage
contracts involving two (2) prime properties on [petitioner Victors] throat, so to speak[,] just so
to make him sign the said documents[7], and that the respondent took advantage of the
misfortune of the petitioners and was able to secure in her favor the real estate mortgages.[8]

Based on the petitioners own allegations, what the respondent did was merely inform them of
petitioner Ednas conviction in the criminal cases for estafa. It might have evoked a sense of fear
or dread on the petitioners part, but certainly there is nothing unjust, unlawful or evil in the
respondents act. The petitioners also failed to show how such information was used by the
respondent in coercing them into signing the mortgages. The petitioners must remember that
petitioner Ednas conviction was a result of a valid judicial process and even without the
respondent allegedly ramming it into petitioner Victors throat, petitioner Ednas imprisonment
would be a legal consequence of such conviction. In Callanta v. National Labor Relations
Commission[12], the Court stated that the threat to prosecute for estafa not being an unjust act,
but rather a valid and legal act to enforce a claim, cannot at all be considered as intimidation.[13]
As correctly ruled by the CA, [i]f the judgment of conviction is the only basis of the [petitioners]
in saying that their consents were vitiated, such will not suffice to nullify the real estate
mortgages and the subsequent foreclosure of the mortgaged properties. No proof was adduced to
show that [the respondent] used [force], duress, or threat to make [petitioner] Victor execute the
real estate mortgages.[14]

Finally, the petitioners assail the ten percent (10%) imposed by the RTC-Branch 2 in the criminal
cases for estafa. As previously stated, however, the decision in said case is already final and
executory.[15] The Court will not even consider the petitioners arguments on such issue for to
do so would sanction the petitioners act of subverting the immutability of a final judgment.
HELD:
Petition denied.

138. ECE REALTY AND DEVELOPMENT INC. VS. RACHEL G. MANDAP GR. NO.
196182 SEPTEMBER 1, 2014, J PERALTA.
FACTS

Herein petitioner is a corporation engaged in the building and

development of condominium units. Sometime in 1995, it started the
construction of a condominium project called Central Park Condominium
Building located along Jorge St., Pasay City. However, printed
advertisements were made indicating therein that the said project was to
be built in Makati City.3 In December 1995, respondent, agreed to buy a
unit from the above project by paying a reservation fee and, thereafter,
downpayment and monthly installments. On June 18, 1996, respondent and
the representatives of petitioner executed a Contract to Sell.4 In the
said Contract, it was indicated that the condominium project is located
in Pasay City. More than two years after the execution of the Contract
to Sell, respondent, through her counsel, wrote petitioner a letter
dated October 30, 1998 demanding the return of P422,500.00, representing
the payments she made, on the ground that she subsequently discovered
that the condominium project was being built in Pasay City and not in
Makati City as indicated in its printed advertisements.However, instead
of answering respondent's letter, petitioner sent her a written
communication dated November 30, 1998 informing her that her unit is
ready for inspection and occupancy should she decide to move in.6
Treating the letter as a form of denial of her demand for the return of
the sum she had paid to petitioner, respondent filed a complaint with
the Expanded National Capital Region Field Office (ENCRFO) of the
Housing and Land Use Regulatory Board (HLURB) seeking the annulment of
her contract with petitioner, the return of her payments, and damages.

ISSUE

The basic issue in the present case is whether petitioner was guilty of
fraud and if so, whether such fraud is sufficient ground to nullify its
contract with respondent.

HELD

WHEREFORE, the instant petition is GRANTED. The Decision and Resolution

of the Court of Appeals, dated July 21, 2010 and March 15, 2011,
respectively, are REVERSED and SET ASIDE. The September 30, 2005
Decision of the Expanded National Capital Region Field Office of the
Housing and Land Use Regulatory Board, which dismisses respondent's
complaint and directs petitioner and respondent to resume the
fulfillment of their sales contract, is REINSTATED.

139. SPOUSES FRANCISCO SIERRA 9SUBSTITUTE BY DONATO, TERESITA,

TEODORA, LORENZA, LUCINA, IMELDA, VILMA AND MILAGROS SIERRA)
AND ANTONINA SANTOS, SPOUSES ROSARIO SIERRA AND EUSEBIO
CALUMA LEYVA, AND SPOUSES SALOME SIERRA AND FELIX
GATLABAYAN (SUBSTITUTE BY BUENAVENTURA, ELPEDIO, PAULINO,
CATALINA, GREGORIO AND EDGARDO GATLABAYAN, LORETO REILLO,
FERMINA PEREGRINA, AND NIDA HASHIMOTO) VS. PAIC SAVINGS AND
MORTGAGE BANK INC GR NO. 197857, SEPTEMBER 10, 2014, J PERLAS-
BERNABE
Assailed in this petition for review on certiorari1 is the Decision2 dated June 27, 2011 of the
Court of Appeals (CA) in CA-G.R. CV No. 91999 which reversed and set aside the Decision3
dated April 24, 2006 of the Regional Trial Court of Antipolo City, Branch 74 (RTC) in Civil Case
No. 91-2153, dismissing petitioners complaint for declaration of nullity of real estate mortgage
and extrajudicial foreclosure proceedings.

The Facts

On May 31, 1983, Goldstar Conglomerates, Inc. (GCI), represented by Guillermo Zaldaga
(Zaldaga), obtained from First Summa Savings and Mortgage Bank (Summa Bank), now
respondent Paic Savings and Mortgage Bank, Inc. (PSMB),4 a loan in the amount of
P1,500,000.00 as evidenced by a Loan Agreement5 dated May 31, 1983. As security therefor,
GCI executed in favor of PSMB six (6) promissory notes6 in the aggregate amount of
P1,500,000.00 as well as a Deed of Real Estate Mortgage over a parcel of land covered by
Transfer Certificate of Title (TCT) No. 308475.7 As additional security, petitioners Francisco
Sierra, Rosario Sierra, and Spouses Felix Gatlabayan and Salome Sierra mortgaged four(4)
parcels of land in Antipolo City, covered by TCT Nos. 308476, 308477, 308478, and 308479,8
and respectively registered in their names (subject properties). Records show that after the signing
of the mortgage deed, Zaldaga gave petitioner Francisco Sierra9 four (4) managers checks with
an aggregate amount of P200,000.00, which werelater successfully encashed,10 as well as several
post-dated checks.11

Eventually, GCI defaulted in the payment of its loan to PSMB, thereby prompting the latter to
extrajudicially foreclose the mortgage on the subject properties in accordance with Act No.
3135,12 as amended, with due notice to petitioners.13 In the process, PSMB emerged as the
highest bidder in the public auction sale held on June 27, 1984 for a total bid price of
P2,467,272.66.14 Since petitioners failed to redeem the subject properties within the redemption
period, their certificates of title were cancelled and new ones were issued in PSMBs name.15

On September 16, 1991, petitioners filed a complaint16 for the declaration of nullity ofthe real
estate mortgage and its extrajudicial foreclosure, and damages against PSMB and Summa Bank
before the RTC, docketed as Civil Case No. 91-2153.
In the said complaint, petitioners averred that under pressing need of money, with very limited
education and lacking proper instructions, they fell prey to a group who misrepresented to have
connectionswith Summa Bank and, thus, could help them secure a loan.17 They were made to
believe that they applied for a loan, the proceeds of which would be released through checks
drawn against Summa Bank.18 Relying in good faith on the checks19 issued to them, petitioners
unsuspectingly signed a document denominated as Deed of Real Estate Mortgage (subject deed),
couched in highly technical legal terms, which was notinterpreted in a language/dialect known to
them, and which was not accompanied by the loan documents. However, when they presented for
payment the earliest-dated checks to the drawee bank, the same were dishonored for the reason
"Account Closed." Upon confrontation, some members of the group assured petitioners that there
was only a misunderstanding and that their certificates of titles would be returned.20
Subsequently, petitioners learned that: (a) the loan account secured by the real estate mortgage
was in the nameof another person and not in their names as they were made to understand; (b)
despite lack of special authority from them, foreclosure proceedings over the subject properties
were initiated by PSMB and not Summa Bank in whose favor the mortgage was executed; (c) the
period of redemption had already lapsed; and (d) the ownership over the subject properties had
already been consolidated in the name of PSMB.21 Petitioners likewise lamented that they were
not furnished copies of the loan and mortgage documents, or notified/apprised of the assignment
to PSMB, rendering them unable to comply with their obligations under the subject deed. They
further claimed that theywere not furnished a copy of the statement of account, which was bloated
with unconscionable and unlawful charges, assessments, and fees, nor a copy of the petition for
foreclosure prior to the precipitate extrajudicial foreclosure and auction sale which failed to
comply with the posting and notice requirements.22 In light of the foregoing, petitioners prayed
that the real estate mortgage and the subsequent foreclosure proceedings, and all derivative titles
and rights arising therefrom be declared null and void ab initio, and that the subject properties be
reconveyed back to them, with further prayer for compensatory and exemplary damages, and
attorneys fees.23

PSMB filed its answer,24 averring that PSMB and Summa Bank are one and the same entity.25 It
prayed for the dismissal of the complaint, claiming that petitioners have no cause of action
against it because it never extended any loan to them.26 PSMB maintained that: (a) it acted in
good faith with respect to the subject transactions and that petitioners action should be directed
against the group who deceived them;27 (b) the subject properties were mortgaged to securean
obligation covered by the loan agreement with GCI;28 (c) the mortgage was valid, having been
duly signed by petitioners before a notary public;29 (d) the foreclosure proceedings were regular,
having complied with the formalities required by law;30 and (e) petitioners allowed time topass
without pursuing their purported right against Summa Bank and/or PSMB.31 PSMB thereby
interposed a counterclaim for compensatory, moral and exemplary damages, and attorneys fees
for the baseless suit.32
ISSUES:
The essential issues in this case are whether or not the CA erred in: (a) ruling that petitioners were
aware that they were mere accommodation mortgagors, and (b) dismissing the complaint on the
grounds of prescription and laches.
HELD:
The Courts Ruling

The petition lacks merit.

WHEREFORE, the petition is DENIED. The Decision dated June 27, 2011 of the Court of
Appeals (CA) in CA-G.R. CV No. 91999 is hereby AFFIRMED.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice

140. SPOUSES VICTOR AND EUNA BINUA V LUCIA ONG GR NO. 207176,
JUNE 18, 2014, J REYES
FACTS:
In Criminal Case Nos. 8230 and 8465-70, Edna was convicted of Estafa upon complaint of Lucia
and sentenced to imprisonment of up to 30 years of reclusion perpetua, She was also ordered to
pay P2,285,000, with interest and damages. To avoid criminal liability, she and Victor executed
separate real estate mortgages over Victors properties worth P7,000,000.00. Edna then filed a
motion for new trial which was granted by the RTC. In its Decision, the RTC ordered Edna to pay
Lucia the amount of P2,285,000.00. It ruled that the presentation of the promissory note novated
the original agreement between them to a civil obligation. Edna, however, failed to pay the
obligation, thus Lucia extrajudicially foreclosed the properties covered by the real estate
mortgage. Edna and Victor then filed a case for Declaration of Nullity Of Mortgage Contracts,
citing that the mortgage documents were executed under duress, as they were suffering from the
effects of conviction of Edna, thus could not have freely entered into the contract. The trial court,
however, dismissed their complaint. While acknowledging that the mortgage contracts were
indeed executed under duress, it however applied Article 1335 of the Civil code, the last
paragraph of which says: A threat to enforce ones claim through competent authority, if the
claim is just and legal, does not vitiate consent. Edna profited from it, as she did not go to jail.
The spouses appealed to the Court of Appeals, which also denied it, holding that the threat of
Edna going to jail thus they were made to sign the real estate mortgages was not the intimidation
contemplated by law. Edna and Victor elevated their case to the Supreme Court.

The Supreme Court:

First, the Court must emphasize that in a Rule 45 petition for review, only questions of law may
be raised because the Court is not a trier of facts and is not to review or calibrate the evidence on
record; and when supported by substantial evidence, the findings of fact by the CA are conclusive
and binding on the parties and are not reviewable by this Court[1], unless the case falls under any
of the exceptions.[2]

In this case, the Court notes that the petitioners arguments are exact repetitions of the issues
raised in the CA, and the petitioners failed to advance any convincing reason that would alter the
resolution in this case. Not only that, the petitioners arguments are also downright inaccurate, if
not maliciously misleading.

The decisive factor in this case is the RTC-Branch 2 Decision dated February 24, 2006 in
Criminal Case Nos. 8230, 8465, 8466, 8467, 8468, 8469 & 8470. This was the decision that
overturned petitioner Ednas previous conviction for estafa and adjudged her only to be civilly
liable to the respondent. Said RTC decision is already final and executory[3], and this was not
refuted by the petitioners. The Court has consistently ruled that once a decision attains finality,
it becomes the law of the case regardless of any claim that it is erroneous. Having been rendered
by a court of competent jurisdiction acting within its authority, the judgment may no longer be
altered even at the risk of occasional legal infirmities or errors it may contain.[4] Thus, said RTC
decision bars a rehash, not only of the issues raised therein but also of other issues that might
have been raised, and this includes the existence of the promissory note upon which petitioner
Ednas exoneration rested. As a matter of fact, the RTC decision embodied petitioner Ednas own
admission that she is indebted to the respondent.
ISSUE:
The issue of whether petitioner Ednas liability under the note was, from the very beginning, civil
and not criminal in nature has no relevance in this case as the only issue to be resolved is whether
the mortgage contracts were executed under duress. Any other discussion pertinent to the RTC
decision will transgress the principle of immutability of a final judgment.

The petitioners claim that they were compelled by duress or intimidation when they executed the
mortgage contracts. According to them, they were still suffering from the effect of the
conviction of [petitioner] Edna, and could not have been freely entered into said contracts.[6]
The petitioners also allege that the respondent subsequently rammed the two (2) mortgage
contracts involving two (2) prime properties on [petitioner Victors] throat, so to speak[,] just so
to make him sign the said documents[7], and that the respondent took advantage of the
misfortune of the petitioners and was able to secure in her favor the real estate mortgages.[8]

Based on the petitioners own allegations, what the respondent did was merely inform them of
petitioner Ednas conviction in the criminal cases for estafa. It might have evoked a sense of fear
or dread on the petitioners part, but certainly there is nothing unjust, unlawful or evil in the
respondents act. The petitioners also failed to show how such information was used by the
respondent in coercing them into signing the mortgages. The petitioners must remember that
petitioner Ednas conviction was a result of a valid judicial process and even without the
respondent allegedly ramming it into petitioner Victors throat, petitioner Ednas imprisonment
would be a legal consequence of such conviction. In Callanta v. National Labor Relations
Commission[12], the Court stated that the threat to prosecute for estafa not being an unjust act,
but rather a valid and legal act to enforce a claim, cannot at all be considered as intimidation.[13]
As correctly ruled by the CA, [i]f the judgment of conviction is the only basis of the [petitioners]
in saying that their consents were vitiated, such will not suffice to nullify the real estate
mortgages and the subsequent foreclosure of the mortgaged properties. No proof was adduced to
show that [the respondent] used [force], duress, or threat to make [petitioner] Victor execute the
real estate mortgages.[14]

Finally, the petitioners assail the ten percent (10%) imposed by the RTC-Branch 2 in the criminal
cases for estafa. As previously stated, however, the decision in said case is already final and
executory.[15] The Court will not even consider the petitioners arguments on such issue for to
do so would sanction the petitioners act of subverting the immutability of a final judgment.

HELD:
Petition denied.

141. MARIANO MENDOZA AND ELVIRA LIM V SPOUSES LEONORA J

GOMEZ AND GABRIEL GOMEZ GR. NO. 160110 JUNE 18, 2014 J PEREZ.
Assailed in the present appeal by certiorari is the Decision1 dated 29 September 2003 of the
Special Fourth Division of the Court of Appeals (CA) in CA-G.R. CV No. 71877, which affirmed
with modification the Decision2 dated 31 January 2001 of the Regional Trial Court (RTC),
Branch 172, Valenzuela City in Civil Case No. 5352-V-97, and which effectively allowed the
award of actual, moral, and exemplary damages, as well as attorney's fees and costs of the suit in
favor of respondent Spouses Leonora and Gabriel Gomez (respondents).

Facts:

On 7 March 1997, an Isuzu Elf truck (Isuzu truck) with plate number UAW 582,3 owned by
respondent Leonora J. Gomez (Leonora)4 and driven by Antenojenes Perez (Perez),5 was hit by a
Mayamy Transportation bus (Mayamy bus) with temporary plate number 1376-1280,6 registered
under the name of petitioner Elvira Lim (Lim)7 and driven by petitioner Mariano C. Mendoza
(Mendoza).8

Owing to the incident, an Information for reckless imprudence resulting in damage to property
and multiple physical injuries was filed against Mendoza.9 Mendoza, however, eluded arrest,
thus, respondents filed a separate complaint for damages against Mendoza and Lim, seeking
actual damages, compensation for lost income, moral damages, exemplary damages, attorneys
fees and costs of the suit.10 This was docketed as Civil Case No. 5352-V-97.

According to PO1 Melchor F. Rosales (PO1 Rosales), investigating officer of the case, at around
5:30 a.m., the Isuzu truck, coming from Katipunan Road and heading towards E. Rodriguez, Sr.
Avenue, was travelling along the downward portion of Boni Serrano Avenue when, upon reaching
the corner of Riviera Street, fronting St. Ignatius Village, its left front portion was hit by the
Mayamy bus.11 According to PO1 Rosales, the Mayamy bus, while traversing the opposite lane,
intruded on the lane occupied by the Isuzu truck.12

PO1 Rosales also reported that Mendoza tried to escape by speeding away, but he was
apprehended in Katipunan Road corner C. P. Garcia Avenue by one Traffic Enforcer Galante and
a security guard of St. Ignatius Village.13

As a result of the incident, Perez,as well as the helpers on board the Isuzu truck, namely Melchor
V. Anla (Anla), Romeo J. Banca (Banca), and Jimmy Repisada (Repisada), sustained injuries
necessitating medical treatment amounting to P11,267.35,which amount was shouldered by
respondents. Moreover, the Isuzu truck sustained extensive damages on its cowl, chassis, lights
and steering wheel, amounting to P142,757.40.14

Additionally, respondents averred that the mishap deprived them of a daily income of P1,000.00.
Engaged in the business of buying plastic scraps and delivering them to recycling plants,
respondents claimed that the Isuzu truck was vital in the furtherance of their business.

For their part, petitioners capitalized on the issue of ownership of the bus in question.
Respondents argued that although the registered owner was Lim, the actual owner of the bus was
SPO1 Cirilo Enriquez (Enriquez), who had the bus attached with Mayamy Transportation
Company (Mayamy Transport) under the so-called "kabit system." Respondents then impleaded
both Lim and Enriquez.

Petitioners, on the other hand, presented Teresita Gutierrez (Gutierrez), whose testimony was
offered to prove that Mayamy Bus or Mayamy Transport is a business name registered under her
name, and that such business is a sole proprietorship. Such was presented by petitioners to rebut
the allegation of respondents that Mayamy Transport is a corporation;15 and to show, moreover,
that although Gutierrez is the sole proprietor of Mayamy Transport, she was not impleaded by
respondents in the case at bar.16

After weighing the evidence, the RTC found Mendoza liable for direct personal negligence under
Article 2176 of the Civil Code, and it also found Lim vicariously liable under Article 2180 of the
same Code.
As regards Lim, the RTC relied on the Certificate of Registration issued by the Land
Transportation Office on 9 December 199617 in concluding that she is the registered owner of the
bus in question. Although actually owned by Enriquez, following the established principle in
transportation law, Lim, as the registered owner, is the one who can be held liable.

Thus, the RTC disposed of the case as follows:

WHEREFORE, judgment is hereby rendered in favor of the [respondents] and against the
[petitioners]:

1. Ordering the [petitioners] except Enriquez to pay [respondents], jointly and severally, the costs
of repair of the damaged vehicle in the amount of P142,757.40;

2. Ordering the defendants except Enriquez to pay [respondents], jointly and severally, the
amount of P1,000.00 per day from March 7, 1997 up to November 1997 representing the
unrealized income of the [respondents] when the incident transpired up to the time the damaged
Isuzu truck was repaired;

3. Ordering the [petitioners] except Enriquez to pay [respondents], jointly and severally, the
amount of P100,000.00 as moral damages, plus a separate amount of P50,000.00 as exemplary
damages;

4. Ordering the [petitioners] except Enriquez to pay [respondents], jointly and severally, the
amount of P50,000.00 as attorneys fees; 5. Ordering the [petitioners] except Enriquez to pay
[respondents] the costs of suit.18

Displeased, petitioners appealed to the CA, which appeal was docketed as CA-G.R. CV No.
71877. After evaluating the damages awarded by the RTC, such were affirmed by the CA with the
exception of the award of unrealized income which the CA ordered deleted, viz:

WHEREFORE, premises considered, the appeal is PARTLY GRANTED. The judgment of the
Regional Trial Court of Valenzuela City, Branch 172 dated January 31, 2001, is MODIFIED, in
that the award of P1,000.00 per day from March 1997 up to November 1997 representing
unrealized income is DELETED. The award of P142,757.40 for the cost of repair of the damaged
vehicle, the award of P100,000.00 as moral damages, the award of P50,000.00 as exemplary
damages, the award of P50,000.00 as attorneys fees and the costs of the suit are hereby
MAINTAINED.19

ISSUES:

Unsatisfied with the CA ruling, petitioners filed an appeal by certiorari before the Court, raising
the following issues:

1. The court a quo has decided questions of substance in a way not in accord with law or with the
applicable decisions of the Supreme Court when it awarded:

a. Moral damages in spite of the fact that the [respondents] cause of action is clearly based on
quasi-delict and [respondents] did not sustain physical injuries to be entitled thereto pursuant to
Article 2219 (2) of the New Civil Code and pertinent decisions of the Supreme Court to that
effect. The court a quo erroneously concluded that the driver acted in bad faith and erroneously
applied the provision of Article 21 of the same code to justify the award for bad faith is not
consistent with quasi-delict which is founded on fault or negligence.

b. Exemplary damages in spite of the fact that there is no finding that the vehicular accident was
due to petitioner-drivers gross negligence to be entitled thereto pursuant to Article 2231 of the
New Civil Code and pertinent decisions of the Supreme Court to that effect. The factual basis of
the court a quo that "the act of the driver of the bus in attempting to escape after causing the
accident in wanton disregard of the consequences of his negligent act is such gross negligence
that justifies an award of exemplary damages" is an act after the fact which is not within the
contemplation of Article 2231 of the New Civil Code.

c. Attorneys fees in spite of the fact that the assailed decisions of the trial court and the court a
quo are bereft with jurisdictions for the award of attorneys fees pursuant to the pertinent
decisions of the Supreme Court on the matter and provision Article 2208 of the New Civil Code.
The court a quo erroneously applied the decision of the Supreme Court in Baas, Jr. vs. Court of
Appeals, 325 SCRA 259.
HELD:
The Courts Ruling

The petition is partially meritorious.

Respondents anchor their claim for damages on Mendozas negligence, banking on Article 2176
of the Civil Code, to wit:

Whoever by act or omission causes damage to another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this
Chapter.

In impleading Lim, on the other hand, respondents invoke the latters vicarious liability as
espoused in Article 2180 of the same Code:

The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions,
but also for those of persons for whom one is responsible.

WHEREFORE, premises considered, the Court Resolves to PARTIALLY GRANT the appeal by
certiorari, as follows:

1) DECLARE Mariano Mendoza and Elvira Lim solidarily liable to respondent Spouses Leonora
and Gabriel Gomez;

2) MAINTAIN the award of actual or compensatory damages in the amount of P142,757.40 for
the repair of the Isuzu Elf truck, with legal interest beginning 31 January 2001 until fully paid;

3) GRANT additional actual or compensatory damages in the amount of P11,267.35 for the
medical expenses shouldered by respondent Spouses Leonora and Gabriel Gomez, with legal
interest beginning 31 January 2001 until fully paid;

4) DELETE the award of moral damages;

5) MAINTAIN the award of exemplary damages at P50,000.00;

6) DELETE the award of attorney's fees; and

7) MAINTAIN the award of costs of suit.

SO ORDERED.

JOSE PORTUGAL PEREZ

Associate Justice

142. SPOUSES EDUARDO AND LYDIA SILOS VS PHILIPPINE NATIONAL

BANK GR. NO. 181045, JULY 2, 2014 J DEL CASTILLO
Facts:

Spouses Eduardo and Lydia Silos (petitioners) have been in business for
about two decades of operating a department store and buying and selling
of ready-to-wear apparel. Respondent Philippine National Bank (PNB) is a
banking corporation organized and existing under Philippine laws. To
secure a one-year revolving credit line of P150,000.00 obtained from
PNB, petitioners constituted in August 1987 a Real Estate Mortgage5 over
a 370- square meter lot in Kalibo, Aklan covered by Transfer Certificate
of Title No. (TCT) T-14250. In July 1988, the credit line was increased
to P1.8 million and the mortgage was correspondingly increased to P1.8
million.6 And in July 1989, a Supplement to the Existing Real Estate
Mortgage7 was executed to cover the same credit line, which was
increased to P2.5 million, and additional security was given in the form
of a 134-square meter lot covered by TCT T-16208. In addition,
petitioners issued eight Promissory Notes8 and signed a Credit
Agreement. 9 This July 1989 Credit Agreement contained a stipulation on
interest which provides as follows: 1.03. Interest. (a) The Loan shall
be subject to interest at the rate of 19.5% per annum. Interest shall be
payable in advance every one hundred twenty days at the rate prevailing
at the time of the renewal. (b) The Borrower agrees that the Bank may
modify the interest rate in the Loan depending on whatever policy the
Bank may adopt in the future, including without limitation, the shifting
from the floating interest rate system to the fixed interest rate
system, or vice versa. Where the Bank has imposed on the Loan interest
at a rate per annum, which is equal to the Banks spread over the
current floating interest rate, the Borrower hereby agrees that the Bank
may, without need of notice to the Borrower, increase or decrease its
spread over the floating interest rate at any time depending on whatever
policy it may adopt in the future. 10 (Emphases supplied) The eight
Promissory Notes, on the other hand, contained a stipulation granting
PNB the right to increase or reduce interest rates within the limits
allowed by law or by the Monetary Board.11 The Real Estate Mortgage
agreement provided the same right to increase or reduce interest rates
at any time depending on whatever policy PNB may adopt in the
future.12

ISSUES
1) Whether x x x the interest rates on petitioners outstanding
obligation were unilaterally and arbitrarily imposed by PNB;
2) Whether x x x the penalty charges were secured by the real estate
mortgage; and
3) Whether x x x the extrajudicial foreclosure and sale are valid.

HELD

WHEREFORE, premises considered, the Petition is GRANTED. The May 8, 2007

Decision of the Court of Appeals in CA-G.R. CV No. 79650 is ANNULLED and
SET ASIDE. Judgment is hereby rendered as follows:
 1. The interest rates imposed and indicated in the 2nd up to the 26th
Promissory Notes are DECLARED NULL AND VOID, and such notes shall
instead be subject to interest at the rate of twelve percent (12%) per
annum up to June 30, 2013, and starting July 1, 2013, six percent (6%)
per annum until full satisfaction;

2. The penalty charge imposed in Promissory Note No. 9707237 shall be

EXCLUDED from the amounts secured by the real estate mortgages;

3. The trial courts award of one per cent (1%) attorneys fees is
REINSTATED;

4. The case is ordered REMANDED to the Regional Trial Court, Branch 6 of

Kalibo, Aklan for the computation of overpayments made by petitioners
spouses Eduardo and Lydia Silos to respondent Philippine National Bank,
taking into consideration the foregoing dispositions, and applying the
procedure hereinabove set forth;

5. Thereafter, the trial court is ORDERED to make a determination as to

the validity of the extrajudicial foreclosure and sale, declaring the
same null and void in case of overpayment and ordering the release and
return of Transfer Certificates of Title Nos. T-14250 and TCT T-16208 to
petitioners, or ordering the delivery to the petitioners of the
difference between the bid price and the total remaining obligation of
petitioners, if any; Decision 37 G.R. No. 181045

6. In the meantime, the respondent Philippine National Bank is ENJOINED

from consolidating title to Transfer Certificates of Title Nos. T-14250
and T-16208 until all the steps in the procedure above set forth have
been taken and applied;
7. The reimbursement of the excess in the bid price of P377,505.99,
which respondent Philippine National Bank is ordered to reimburse
petitioners, should be HELD IN ABEYANCE until the true amount owing to
or owed by the parties as against each other is determined;

8. Considering that this case has been pending for such a long time and
that further proceedings, albeit uncomplicated, are required, the trial
court is ORDERED to proceed with dispatch.

143. LANDBANK VS HEIRS OF SPOUSES SORIANO GR. NO. 178312

JANUARY 30, 2012
FACTS:

Marivel Carandang and Joseph Soriano are the children of the late Sps. Jorja Rigor- Soriano and
Magin Soriano, the owners of the two parcels of land located in Macabucod, Aliaga, Nueva Ecija.
The properties became subject to Operation Land Transfer (OLT) and were valued by the Land
Bank and the Department of Agrarian Reform (DAR) at P10,000.00/hectare. Contending that
such valuation was too low compared to existing valuations of agricultural lands, the heirs
commenced an action for just compensation. They asked that a final valuation of the properties be
pegged at P1,800,000.00, based on Administrative Order No. 61, Series of 1992 and R.A. No.
6657.

The RTC ordered Land Bank to pay the heirs the amount P1,227,571.10 as just compensation.

Land Bank appealed to the CA. The CA denied the petition.

Hence, Land Bank appealed to the Supreme Court.

During the pendency of the appeal, both parties entered into an agreement re-evaluating the cost
of the parcels of land. Thus, Land Bank submitted a manifestation informing the High Court that
the parties have already filed their Joint Motion to Approve submitting their Agreement dated
November 29, 2012.

ISSUE:
Whether or not the present appeal to the Supreme Court should be dismissed?

HELD:
The appeal should be closed and terminated.

CIVIL LAW: compromise; contract

The Agreement was a compromise that the parties freely and voluntarily entered into for the
purpose of finally settling their dispute in this case. Under Art. 2028 of the Civil Code, a
compromise is a contract whereby the parties, by making reciprocal concessions, avoid a
litigation or put an end to one already commenced. Accordingly, a compromise is either judicial,
if the objective is to put an end to a pending litigation, or extrajudicial, if the objective is to avoid
a litigation.

As a contract, a compromise is perfected by mutual consent. However, a judicial compromise,

while immediately binding between the parties upon its execution, is not executory until it is
approved by the court and reduced to a judgment. The validity of a compromise is dependent
upon its compliance with the requisites and principles of contracts dictated by law. Also, the terms
and conditions of a compromise must not be contrary to law, morals, good customs, public policy
and public order. A review of the terms of the Agreement, indicates that it is a judicial
compromise because the parties intended it to terminate their pending litigation by fully settling
their dispute.

144. LAGUNZAD VS VDA DE GONZALES, GR. NO. L-32066 AUGUST 6, 1979

FACTS:
An agreement whereby a film producer would pay the heirs and relatives of Moises Padilla a sum
of money inorder to depict them in the movie which he included a love interest angle depicting
the mother and a sweetheart, is not a violation of freedom of ex-pression. While it is true that the
film producer purchased the rights to the book entitled "The Moises Padilla Story," that did not
dispense with the need for prior consent and authority from the deceased's heirs to portray
publicly episodes in said deceased's life and in that of his mother and the members of his family.
As held in Schuyler v. Curtis, "a privilege may be given the surviving relatives of a deceased
person to protect his memory, but the privilege exists for the benefit of the living, to protect their
feelings and to prevent a violation of their own rights in the character and memory of the
deceased."
"Being a public figure ipso facto does not automatically destroy in toto a person's right to privacy.
The right to invade a person's privacy to disseminate public information does not extend to
fictional or novelized representation of a person, no matter how public a figure he or she may be.
In the case at bar, while it is true that petitioner exerted efforts to present a true-to-life story of
Moises Padilla, petitioner admits that he included a little romance in the film because without it, it
would be a drab story of torture and brutality."
ISSUE:
Whether or not that the right of freedom of expression, indeed, occupies a preferred position in
the hierarchy of civil liberties.
HELD:
Taking into account the interplay of those interest, we hold that under the particular circumstances
presented, and considering the obligations in the contract, the validity of such contract must be
upheld because the limits of freedom of expression are reached when expression touches upon
matters of essentially private concern."