Valentina Clemente VS Court of Appeals GR No.

175483 14 October 2015

By Norbert Pagaspas

Facts:

Adela owned three (3) adjoining parcels of land in Quezon City, subdivided as Lots 32, 34 and 35-B.

Sometime in 1985 and 1987, Adela simulated the transfer of Lots 32 and Lot 34 to her two grandsons (Carlos Jr and
Dennis Shotwell).

On April 18, 1989, prior to Adela and petitioner’s departure for the United States, Adela requested Carlos Jr. and
Dennis to execute a deed of reconveyance over Lots 32 and 34 which were in fact executed and registered with the
Register of Deeds.

On April 25, 1989, Adela executed a deed of absolute sale11 over Lots 32 and 34, and their improvements, in favor
of petitioner, bearing on its face the price of ¬250,000.00. On the same day, Adela also executed a special power of
attorney (SPA) in favor of petitioner. Petitioner’s authority under the SPA included the power to administer, take
charge and manage, for Adela’s benefit, the Properties and all her other real and personal properties in the
Philippines.

When petitioner returned to the Philippines, she registered the sale over Lots 32 and 34. Soon thereafter, petitioner
sought to eject Annie and Carlos Sr who thereafter filed a complaint for reconveyance of the property. They alleged
that Adela only wanted to help petitioner travel to the United States, by making it appear that petitioner has
ownership of the Properties. They further alleged that similar to the previous simulated transfers to Carlos Jr. and
Dennis, petitioner also undertook and warranted to execute a deed of reconveyance in favor of the deceased over
the Properties, if and when Adela should demand the same.

Issue:

Whether or not the contracts of sale to petitioner were simulated

Held:

YES. The Deeds of Absolute Sale between petitioner and the late Adela Shotwell are null and void for lack of
consent and consideration. While the Deeds of Absolute Sale appear to be valid on their face, the courts are not
completely precluded to consider evidence aliunde in determining the real intent of the parties.

The Civil Code defines a contract as a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service. Article 1318 provides that there is no contract
unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the

contract; and

(3) Cause of the obligation which is established.

Here, there was no valid contract of sale between petitioner and Adela because their consent was absent. The
contract of sale was a mere simulation. Simulation takes place when the parties do not really want the contract they
have executed to produce the legal effects expressed by its wordings.

In determining the true nature of a contract, the primary test is the intention of the parties. If the words of a
contract appear to contravene the evident intention of the parties, the latter shall prevail. Such intention is
determined not only from the express terms of their agreement, but also from the contemporaneous and
subsequent acts of the parties. This is especially true in a claim of absolute simulation where a colorable contract is
executed. In ruling that the Deeds of Absolute Sale were absolutely simulated, the lower courts considered the
totality of the prior, contemporaneous and
subsequent acts of the parties such as 1) the execution of the SPA the same day the Dee the Deeds of Absolute Sale
appointing petitioner as administratrix of Adela’s properties, and) the history of simulations in favor of Carlos Jr
and Dennis.

G.R. No. 171736 July 5, 2010

PENTACAPITAL INVESTMENT CORPORATION, Petitioner, vs.
MAKILITO B. MAHINAY, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 181482
PENTACAPITAL INVESTMENT CORPORATION, Petitioner, vs.
MAKILITO B. MAHINAY, Respondent.
NACHURA, J.:

FACTS: Petitioner filed a complaint for a sum of money against respondent Makilito Mahinay based on two separate
loans obtained by the latter, a total amount of P1,936,800.00. These loans were evidenced by two promissory
notes dated February 23, 1996. Despite repeated demands, respondent failed to pay the loans, hence, the complaint.

In his Answer with Compulsory Counterclaim, respondent claimed that petitioner had no cause of action because the
promissory notes on which its complaint was based were subject to a condition that did not occur. While admitting
that he indeed signed the promissory notes, he insisted that he never took out a loan and that the notes were not
intended to be evidences of indebtedness. By way of counterclaim, respondent prayed for the payment of moral and
exemplary damages plus attorney’s fees.

Respondent explained that he was the counsel of Ciudad Real Development Inc. (CRDI). In 1994, Pentacapital Realty
Corporation offered to buy parcels of land known as the Molino Properties, owned by CRDI. As the Molino
Properties were the subject of a pending case, Pentacapital Realty paid only the down payment amounting
to P12,000,000.00. CRDI allegedly instructed Pentacapital Realty to pay the former’s creditors, including respondent
who thus received a check worth P1,715,156.90. It was further agreed that the balance would be payable upon the
submission of an Entry of Judgment showing that the case involving the Molino Properties had been decided in favor
of CRDI.

Respondent, Pentacapital Realty and CRDI allegedly agreed that respondent had a charging lien equivalent to 20% of
the total consideration of the sale in the amount of P10,277,040.00. Pending the submission of the Entry of Judgment
and as a sign of good faith, respondent purportedly returned the P1,715,156.90 check to Pentacapital Realty. However,
the Molino Properties continued to be haunted by the seemingly interminable court actions initiated by different
parties which thus prevented respondent from collecting his commission.

Admittedly, respondent earlier instituted an action for Specific Performance against Pentacapital Realty before the
RTC of Cebu City, Branch 57, praying for the payment of his commission on the sale of the Molino Properties. In
an Amended Complaint, respondent referred to the action he instituted as one of Preliminary Mandatory Injunction
instead of Specific Performance. Acting on Pentacapital Realty’s Motion to Dismiss, the RTC dismissed the case for
lack of cause of action. The dismissal became final and executory.
With the dismissal of the aforesaid case, respondent filed a Motion to Permit Supplemental Compulsory
Counterclaim. In addition to the damages that respondent prayed for in his compulsory counterclaim, he sought the
payment of his commission amounting to P10,316,640.00, plus interest at the rate of 16% per annum, as well as
attorney’s fees equivalent to 12% of his principal claim. Respondent claimed that Pentacapital Realty is a 100%
subsidiary of petitioner. Thus, although petitioner did not directly participate in the transaction between Pentacapital
Realty, CRDI and respondent, the latter’s claim against petitioner was based on the doctrine of piercing the veil of
corporate fiction. Simply stated, respondent alleged that petitioner and Pentacapital Realty are one and the same entity
belonging to the Pentacapital Group of Companies.

Over the opposition of petitioner, the RTC, in an Order dated August 22, 2002, allowed the filing of the supplemental
counterclaim. Aggrieved, petitioner sought recourse in the CA through a special civil action for certiorari, seeking to
reverse and set aside the RTC Order. On December 20, 2005, the CA rendered the assailed Decision dismissing the
petition. The appellate court sustained the allowance of the supplemental compulsory counterclaim based on the
allegations in respondent’s pleading.

After trial on the merits, the RTC rendered a decision in favor of respondent. This court, instead, finds that defendant
(respondent) was able to prove by a clear preponderance of evidence his cause of action against plaintiff as to
defendant’s compulsory and supplemental counterclaims.

On appeal, the CA, in CA-G.R. CV No. 86939, affirmed in toto the above decision. The CA found no basis for
petitioner to collect the amount demanded, there being no perfected contract of loan for lack of consideration. As
to respondent’s supplemental compulsory counterclaim, quoting the findings of the RTC, the appellate court held
that respondent was able to prove by preponderance of evidence that it was the intent of Pentacapital Group of
Companies and CRDI to give him P10,316,640.00 and P1,715,156.90.

Unsatisfied, petitioner moved for reconsideration of the aforesaid Decision, but it was denied in a Resolution 31dated
January 21, 2008. Hence, the present petition in G.R. No. 181482.

ISSUE: 1) whether the admission of respondent’s supplemental compulsory counterclaim is proper

RULING: NO. The pertinent provision of the Rules of Court is Section 6 of Rule 10, which reads:

Sec. 6. Supplemental pleadings. – Upon motion of a party, the court may, upon reasonable notice and upon such
terms as are just, permit him to serve a supplemental pleading setting forth transactions, occurrences or events which
have happened since the date of the pleading sought to be supplemented. The adverse party may plead thereto within
ten (10) days from notice of the order admitting the supplemental pleading.

As a general rule, leave will be granted to a party who desires to file a supplemental pleading that alleges any material
fact which happened or came within the party’s knowledge after the original pleading was filed, such being the office
of a supplemental pleading.

In his Motion to Permit Supplemental Compulsory Counterclaim, respondent admitted that, in his Answer with
Compulsory Counterclaim, he claimed that, as one of the corporations composing the Pentacapital Group of
Companies, petitioner is liable to him for P10,316,640.00, representing 20% attorney’s fees and share in the proceeds
of the sale transaction between Pentacapital Realty and CRDI. In the same pleading, he further admitted that he did
not include this amount in his compulsory counterclaim because he had earlier commenced another action for the
collection of the same amount against Pentacapital Realty before the RTC of Cebu. With the dismissal of the RTC-
Cebu case, there was no more legal impediment for respondent to file the supplemental counterclaim.

Moreover, in his Answer with Compulsory Counterclaim, respondent already alleged that he demanded from
Pentacapital Group of Companies to which petitioner supposedly belongs, the payment of his 20% commission. This,
in fact, was what prompted respondent to file a complaint before the RTC-Cebu for preliminary mandatory injunction
for the release of the said amount.
Given these premises, it is obvious that the alleged obligation of petitioner already existed and was known to
respondent at the time of the filing of his Answer with Counterclaim. He is, therefore, proscribed from incorporating
the same and making such demand via a supplemental pleading. The supplemental pleading must be based on
matters arising subsequent to the filing of the original pleading related to the claim or defense presented
therein, and founded on the same cause of action.

ISSUE: whether or not respondent is bound by the promissory notes.

RULING: YES.

Under Article 1354 of the Civil Code, it is presumed that consideration exists and is lawful unless the debtor proves
the contrary. Moreover, under Section 3, Rule 131 of the Rules of Court, the following are disputable presumptions:
(1) private transactions have been fair and regular; (2) the ordinary course of business has been followed; and (3) there
was sufficient consideration for a contract. A presumption may operate against an adversary who has not introduced
proof to rebut it. The effect of a legal presumption upon a burden of proof is to create the necessity of presenting
evidence to meet the legal presumption or the prima facie case created thereby, and which, if no proof to the contrary
is presented and offered, will prevail.

In the present case, as proof of his claim of lack of consideration, respondent denied under oath that he owed
petitioner a single centavo. He added that he did not apply for a loan and that when he signed the promissory notes,
they were all blank forms and all the blank spaces were to be filled up only if the sale transaction over the subject
properties would not push through because of a possible adverse decision in the civil cases involving them (the
properties). He thus posits that since the sale pushed through, the promissory notes did not become effective.

Contrary to the conclusions of the RTC and the CA, we find such proof insufficient to overcome the presumption
of consideration. The presumption that a contract has sufficient consideration cannot be overthrown by the bare,
uncorroborated and self-serving assertion of respondent that it has no consideration. The alleged lack of consideration
must be shown by preponderance of evidence

As it now appears, the promissory notes clearly stated that respondent promised to pay petitioner P1,520,000.00
and P416,800.00, plus interests and penalty charges, a year after their execution. Nowhere in the notes was it stated
that they were subject to a condition. As correctly observed by petitioner, respondent is not only a lawyer
but a law professor as well.

Respondent’s liability is not negated by the fact that he has uncollected commissions from the sale of the
Molino properties. As the records of the case show, at the time of the execution of the promissory notes, the
Molino properties were subject of various court actions commenced by different parties. Thus, the sale of
the properties and, consequently, the payment of respondent’s commissions were put on hold. The non-
payment of his commissions could very well be the reason why he obtained a loan from petitioner.

Aside from the payment of the principal obligation of P1,936,800.00, the parties agreed that respondent pay interest
at the rate of 25% from February 17, 1997 until fully paid. Such rate, however, is excessive and thus, void. Since the
stipulation on the interest rate is void, it is as if there was no express contract thereon. To be sure, courts may reduce
the interest rate as reason and equity demand. In this case, 12% interest is reasonable.

The promissory notes likewise required the payment of a penalty charge of 3% per month or 36% per
annum. However, a penalty charge of 3% per month is unconscionable; hence, we reduce it to 1% per month or 12%
per annum.

Lastly, respondent promised to pay 25% of his outstanding obligations as attorney’s fees in case of non-
payment thereof. Attorney’s fees here are in the nature of liquidated damages. As long as said stipulation
does not contravene law, morals, or public order, it is strictly binding upon respondent. Nonetheless, courts
are empowered to reduce such rate if the same is iniquitous or unconscionable pursuant to the above-quoted
provision. This sentiment is echoed in Article 2227 of the Civil Code, to wit:

Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced
if they are iniquitous or unconscionable.

Hence, we reduce the stipulated attorney’s fees from 25% to 10%.

Ong Yui vs. CA Case Digest

Ong Yui vs. Court of Appeals
(91 SCRA 223)

Facts: On august 26, 1967, Ong Yiu was a fare paying passenger of respondent PAL from Mactan, Cebu to Butuan
City wherein he was scheduled to attend a trial. As a passenger, he checked in one piece of luggae, blue maleta for
which he was issued a claim ticket. Upon arrival at Butuan City, petitioner claimed his luggage but it could not be
found. PAL Butuan sent a message to PAL Cebu which in turn sent a message to PAL Manila that same afternoon.
PAL Manila advised PAL Cebu that the luggage has been overcarried to Manila and that it would be forwarded to
PAL Cebu that same day. PAL Cebu then advised PAL Butuan that the luggage will be forwarded the following day,
on scheduled morning flight. This message was not received by PAL Butuan as all the personnel had already gone for
the day. Meanwhile, Ong Yiu was worried about the missing luggage because it contained vital documents needed for
the trial the next day so he wired PAL Cebu demanding delivery of his luggage before noon that next day or he would
hold PAL liable for damages based on gross negligence. Early morning, petitioner went to the Butuan Airport to
inquire about the luggage but did not wait for the arrival of the morning flight at 10:00am. which carried his luggage.
A certain Dagorro, a driver of a colorum car, who also used to drive the petitioner volunteered to take the luggage to
the petitioner. He revelaed that the documents were lost. Ong Yiu demanded from PAL Cebu actual and
compensatory damages as an incident of breach of contract of carriage.

Issue:

1. Whether or not PAL is guilty of only simple negligence and not gross negligence?
2. Whether the doctrine of limited liability doctrine applies in the instant case?

Held: PAL had not acted in bad faith. It exercised due diligence in looking for petitioner’s luggage which had been
miscarried. Had petitioner waited or caused someone to wait at the airport for the arrival of the morning flight which
carried his luggage, he would have been able to retrieve his luggage sooner. In the absence of a wrongful act or
omission or fraud, the petitioner is not entitled to moral damages. Neither is he entitled to exemplary damages absent
any proof that the defendant acted in a wanton, fraudulent, reckless manner.

The limited liability applies in this case. On the presumed negligence of PAL, its liability for the loss however, is
limited on the stipulation written on the back of the plane

Ticket which is P100 per baggage. The petitioner not having declared a greater value and not having called the
attention of PAL on its true value and paid the tariff therefore. The stipulation is printed in reasonably and fairly big
letters and is easily readable. Moreso, petitioner had been a frequent passenger of PAL from Cebu to Butuan City and
back and he being a lawyer and a businessman, must be fully aware of these conditions.
Weldon vs. CA

FACTS:
Petitioner drafted plans for a theater building which private respondent Cancio intended to put up. He submitted a
proposal for the supervision of the construction on commission basis which private respondent never signed.
Included is a setting up a revolving fund of P10K for the costs replenished by Cancio and the payment to petitioner
of a 10% of total costs as commission. Upon payment of the P10K, petitioner sent another proposal stipulating a
price of P600K for the construction entitled “Building Contract”. Subsequent payments were made by Cancio as per
accomplishment until he fully paid the P600K. However, petitioner still demanded payment of the commission which
Cancio refused to pay. Hence, petitioner initiated a suit for the recovery of the 10% of the total cost of construction
as commission. CFI ruled that the agreement was a contract of supervision of construction and ordered in favor of
the Petitioner, ordering Cancio to pay the commission which the CA reversed.

ISSUES:
Whether or not parties are bound by the first proposal or by the second proposal? Parties are bound by the second
proposal, Building Contract, as the first proposal containing the provision on commission was never
perfected. Subsequent payments were only made after the signing of the second proposal; thus it was the
intention of the parties to enforce such contract.

DECISION:
The first proposal is simply a proposal as it was never perfected as a contract. Only an absolute acceptance of a
definite offer manifests consent necessary to perfect a contract. The mere payment of P10K was not an unqualified
acceptance of the offer of the first proposal. The second proposal, signed by the contracting parties, has already been
consummated when the building was completed. Therefore, its validity and binding effect cannot be disputed by the
contracting parties. The subsequent payments made by Cancio only after the signing of the Building Contract prove
that it was the second proposal that was intended to be fulfilled. It cannot be said that these amounts are mere
replenishments in accordance to the first proposal. Since it is fully paid, there is no basis for the petitioner’s demand
for the commission. To allow such payment would be equivalent to changing the terms of the contract which needed
the consent of the owner of the building.

C & C Commercial vs. Menor

FACTS:
Justice Cloribel of CFI of Manila ordered the GM of NAWASA to allow petitioner to participate as a bidder for the
supply of asbestos cement pipes wherein it was the lowest bidder. Menor, the GM of Nawasa, required petitioner to
submit tax clearance certificate pursuant to Presidential Administrative Order 68. Long after Cloribel’s judgment when
he had no more jurisdiction to amend it, petitioner filed a motion wherein it prayed that Nawasa officials award the
contract for the supply of asbestos to petitioner which Cloribel granted. Subsequently, petitioner filed in LC a petition
for mandamus praying that Nawasa and Menor be restrained from awarding the contract to another bidder and be
ordered to award the same to petitioner which was denied.

Nawasa awarded the contract to Regal Trading as the lowest complying bidder which was approved by the President.
Petitioner asked this court to enjoin the implementation of the said contract.

ISSUE:
Whether the order of Judge Cloribel compelling Nawasa to award the said contract to petitioner was binding in the
part of Nawasa? No. Judge Cloribel did not just act without jurisdiction but refusal of Nawasa to grant the
contract to petitioner was likewise justified as it failed to comply with the requirement of a tax clearance
certificate. Also, what was delivered to petitioner was merely an advertisement for a bidding which does not
bind the advertiser to accept the bids.
DECISION:
Judge Cloribel acted without jurisdiction in issuing his order thus the order is void. Nawasa was likewise justified in
not awarding the contract to petitioner because it had not tax clearance certificate since it had a pending tax case in
the BIR. It is not the duty of Nawasa to award the contract to petitioner even if it was the lowest bidder, as according
to its Addendum no. 1 it reserved the right to reject the bid of any bidder; thus, petitioner has no cause to dispute the
award as it was rejected by Nawasa. Advertisements for bidders are simply invitation to make proposals and the
advertiser is not bound to accept the lowest or highest bidder unless the contrary appears.

Tang vs. CA

FACTS:
Lee See Guat, a woman who spoke only Chinese and was illitrate, applied for a life insurance with respondent
Philippine American Life Insurance. It was written in English. She again applied for an additional insurance and
because her first application has just been approved, no further medical examination was made. Thereafter, she died
of lung cancer and her nephew, the beneficiary, claimed for their face value which respondent refused to pay on
ground that insured was guilty of concealment and misrepresentation at the time she applied for the insurance policies.
The case filed by the beneficiary was denied by LC whose decision was affirmed by CA on ground that the insured
deliberately concealed material facts about her condition. Petitioner avers that because insured spoke only Chinese
and was illiterate, she could not be held guilty of concealment because insurer has not proved that the terms had been
fully explained to her.

DECISION:
The obligation to show that the terms of the contract had been fully explained devolves on the party seeking to
enforce it. Case at bar, the company is not seeking to enforce the contract; hence it was under no obligation to prove
that the terms were fully explained. Thus, Art 1332 is inapplicable in the case at bar and the insured was guilty of
concealment.

Carino vs. CA

FACTS:
Pablo Encabo applied with the Bureau of Lands to purchase a parcel of land which was part of the Tuason Estate
purchased by the Government for resale to tenants qualified to own public land in the Philippines. Encabo, through
an agent, came to an agreement with Quesada, transferring rights over the lot to the latter, conditioned on approval
by the Land Tenure Administration (LTA). LTA, unaware of the transfer of rights to Quesada, adjudicated the lot in
favor of Encabo evidenced by an Agreement to Sell. Upon knowledge of the transfer of rights of Encabo to Quesada,
LTA disapproved the same on ground that the Quesada was unqualified to acquire the lot as he is already a lot owner.
Notwithstanding, Quesada entered into possession of the lot and allowed his agent, the wife of petitioner, to occupy
the same.

Encabo executed a Deed of Sale of house and Transfer of rights, allegedly conveying to petitioner his rights over the
lot subject to approval of LTA. However, Encabo and Quesada executed a document wherein the latter alleged;y
resold to Encabo the house and rights over the lot. Petitioner filed a petition with LTA seeking the approval of the
transfer of rights pursuant to the Deed of sale of house and transfer of Rights to which Encabo objected. Essentially,
Encabo and petitioners claimed the right to purchase the lot to which LTA ruled that status quo should be maintained.
The Office of the President affirmed the same.

Thereafter, the Encabos filed with CFI an acitionto declare them the owners of the lot which the TC granted which
CA affirmed. Hence, this petition.

ISSUE:
Whether the Deed of Sale of house and Transfer of Right, on which petitioners have based their application over the
lot, is simulated and therefore an inexistent deed of sale? Yes. The inconsistencies in the testimonies of petitioner
regarding the documents, failure to produce receipts evidencing the payment to LTA, absence of the name
of the petitioners as transferee of the rights over the lot in the application filed with LTA indicates that the
agreement was indeed simulated; therefore is inexistent.

DECISION:
The parties knew that the Deed of Sale of House and Transfer of Rights was fictitious and simulated where none of
the parties intended to be bound thereby. First, the testimony of petitioner during direct examination was inconsistent
with her testimony before LTA (e.g. amount of payment to Encabos, place of the signing of the Deed); hence it shows
that no actual sale took place between the Encabos and petitioners. Second, since petitioners could not produce the
receipts evidencing the payment they made to LTA for the lots nor the Agreement to sell indicates that the agreement
was indeed simulated. Third, the names of the petitioner were never mentioned as transferees in the two application
with the LTA filed by Encabo. Fourth, the document was executed in November 1958 while petitioners asked LTA
to approve the transfer of Encabo’s rights only on 1960. Lastly, the petitioners were, as admitted by Encabo and
Quesada, meant only to be dummies to protect the money invested by Quesada to purchase the rights.

MANUEL LAGUNZAD, petitioner, vs.MARIA SOTO VDA. DE GONZALES and THE COURT OF
APPEALS, respondents.G.R. No. L-32066 August 6, 1979

FACTS
Petitioner Manuel Lagunzad, a newspaperman, began the production of a movie entitled "The Moises Padilla Story"
portraying the life of Moises Padilla, a mayoralty candidate of the Nacionalista Party for the Municipality of
Magallon, Negros Occidental and for whose murder, Governor Rafael Lacson, a member of the Liberal Party then
in power and his men were tried and convicted. The emphasis of the movie was on the public life of Moises
Padilla, there were portions which dealt with his private and family life including the portrayal in some scenes, of his
mother, Maria Soto, private respondent herein, and of one "Auring" as his girl friend. Padilla’s half sister, for and in
behalf of her mother, Vda.de Gonzales, objected to the "exploitation" of his life and demanded in writing for
certain changes, corrections and deletions in the movie. After some bargaining as to the amount to be paid
Lagunzad and Vda. de Gonzales, executed a "Licensing Agreement" whereby the latter as LICENSOR granted
Lagunzad authority and permission to exploit, use, and develop the life story of Moises Padilla for purposes of
producing the picture for consideration of P20,000.00.Lagunzad paid Vda. de Gonzales the amount of P5,000.00.
Subsequently, the movie was shown indifferent theaters all over the country. Because petitioner refused to pay any
additional amounts pursuant to the Agreement, Vda. de Gonzales instituted the present suit against him praying for
judgment in her favor ordering petitioner 1) to pay her the balance of P15,000.00, with legal interest from of the
Complaint; and 2) to render an accounting of the proceeds from the picture and to pay the corresponding 2-1/2%
royalty there from, among others. Petitioner contended in his Answer that the episodes in life of Moises Padilla
depicted in the movie were matters of public knowledge and occurred at or about the same time that the deceased
became and was a public figure; that private respondent has no property right over those incidents; that the
Licensing Agreement was without valid cause or consideration and constitutes an infringement on the constitutional
right of freedom of speech and of the press; and that he paid private respondent the amount of P5,000.00 only
because of the coercion and threat employed upon him. As a counterclaim, petitioner sought for the nullification of
the Licensing Agreement, Both the trial court and the CA ruled in favor of Vda. deGonzales.

ISSUES
Whether or not the fictionalized representation of Moises Padilla is an intrusion upon his right to privacy
notwithstanding that he was a public figure.
Whether or not Vda. de Gonzales., the mother, has any property right over the life of Moises Padilla considering
that the latter was a public figure.
Whether or not the Licensing Agreement constitutes an infringement on the constitutional right of freedom of
speech and of the press.

HELD
YES, being a public figure ipso facto does not automatically destroy in toto a person's right to privacy. The right to
invade as person's privacy to disseminate public information does not extend to a 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.
YES, Lagunzad cannot dispense with the need for prior consent and authority from the deceased 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."
NO, Lagunzad claims that as a citizen and as a newspaperman, he had the right to express his thoughts in film on
the public life of Moises Padilla without prior restraint. The right of freedom of expression, indeed, occupies a
preferred position in the "hierarchy of civil liberties." It is not, however, without limitations. One criterion for
permissible limitation on freedom of speech and of the press is the "balancing-of-interests test." The principle
requires a court to take conscious and detailed consideration of the interplay of interests observable in a given
situation or type of situation."
In the case at bar, the interest’s observable are the right to privacy asserted by respondent and the right of -freedom
of expression invoked by petitioner. Taking into account the interplay of those interests, and considering the
obligations assumed in the Licensing Agreement entered into by petitioner, the validity of such agreement will have
to be upheld particularly because the limits of freedom of expression are reached when expression touches upon
matters of essentially private concern

Liam Law vs. Olympic Sawmill

FACTS:
Plaintiff loaned P10K to defendant. When it was due, defendants failed to pay the loan and the debtors asked for an
extension of three months. Subsequently, the parties executed another loan and the payment of P10K was extended
but the obligation was increased by P6K. defendants again failed to pay, thus plaintiff instituted a collection case.
Defendant, however, claimed that the addition P6K constitutes usurious interest. TC ruled in favor of plaintiff
ordering defendants to pay tP10K plus the sum of P6K.

DECISION:
Regarding the agreement of the parties, the payment of P6K is presumed valid, unless the debtor proves the contrary.
Since, defendants failed to prove that the P6K obligation was illegal; the sum binds the defendants, representing loss
of interest income, attorney’s fees and incidentals. Regarding to the defense that the sum of P6K is a usurious interest,
Usury Law which states the recovery of the usurious interest paid, is not applicable to a case, as in the present case,
where it is the defendant and not the plaintiff who is alleging usury.