TABLE OF CONTENTS

Obligations

The Hongkong & Shanghai Banking Corp. vs National Steel (Performance)…. Pp. 1

Coroan vs China Banking Corporation (Soliar! "ia#ilit!)………………………… Pp. $

Sps. %onsa! an omarco vs Soli#ank ('tingishment)…… …………………….. Pp. *

Contracts

+eorg vs Hol! Trinit!

Trinit! College, -nc ('ssential 'lements)………………………………
'lements)……………………………… Pp. 

/o0ales vs ime (/elativit! of Contracts)…………………………………………………… Pp. 2

PN3C vs 4eppel Philippine Holings, -nc (3ption Contract)………………………

Contract)……………………… Pp. 567

Centr! Properties, -nc. vs Ba#iano (Breach of Contract)………………

Contract)……………………………Pp.
……………Pp. 768

Slpicio "ines, -nc vs. Sesante (Breach of Contract)…………………………………

Contract)………………………………… Pp. 8619

:ictoria, et al. vs Pilaoan (Simlate Contract)………………………………………

Contract)……………………………………… Pp. 19611

Catha! Paci;ic <ir=a!s "t. vs Sps. >ente#ella (Breach of Contract)……… Pp. 1161$

Heirs of Nativia vs %ana aricia6Nativia, et, al (:oi Contract)……..Pp. 1$61*

Tan vs Hosana (:oi or -neistent Contract)…………………………………………Pp. 1*61

/anara vs elos <ngeles (:oi or -neisten Contracts)………………………..Pp. 1612

ercees <#ella , et al. vs Heirs of >rancisca San %an…………………………

%an………………………………Pp.
……Pp. 12

Sales
Thelma /orige? vs. Sps. %aime & <rmi Sioson (Contract to Sell)……………….Pp.
Sell)……………….Pp. 15

3scar :illarta vs +aioso Talavera ('@ita#le ortgage)………………………… Pp. 17

+regorio vs Clig (/eemption)……………………………………………………

(/eemption)…………………………………………………………………Pp.
……………Pp. 18

elecio omingo vs Sps. +enaro & 'lena olina…………………………………….

olina……………………………………. Pp. $96$1

'@ita#le Savings Bank vs /osalina Paces……………………………………………….Pp.

Paces……………………………………………….Pp. $1
Lease

Heirs of +amaliel <l#ano vs Sps. /o#erto & ena /avanes

/avanes ("ease Contract)… Pp.
Pp. $$

 Agency

ra. ercees 3liver vs PS Bank & "ilia Castro (Contract of <genc!)……..…….. Pp. $*

C-<< vs Anchan (Special Po=er of <ttorne!)……………………………………… Pp. $6$5

Partnership

ichael C. +! vs <tt!. +lenn +acott (+eneral Partnership)…………………….. Pp. $56$8

Credit 

Tarcisio Calilng vs Paramont -nsrance (Simple "oan)………………………… Pp. $86$

Sps. Tan vs China Banking Corp (<pplication of Pa!ments)…………………….. Pp. $6*9

Torts and Damages

Techno evelopment vs :iking etal -nstries, -nc ('emplar!)……………...

('emplar!)…………….. . Pp. *1

Sps. Timao vs /ral Bank of San %ose ('emplar!

('emplar! amages)……………………. Pp. *$

<nna arie +ma#on vs PNB (oral an 'emplar! amages)……………….. Pp. **

Torres6ari Brokerage vs >'B itsi arine -nsrance (asi6elict) Pp. *

'/<"C3 vs Sposes Slpicio & Patricia /amos (oral an <ctal amages)
……………… Pp. *26*5

$
Lease

Heirs of +amaliel <l#ano vs Sps. /o#erto & ena /avanes

/avanes ("ease Contract)… Pp.
Pp. $$

 Agency

ra. ercees 3liver vs PS Bank & "ilia Castro (Contract of <genc!)……..…….. Pp. $*

C-<< vs Anchan (Special Po=er of <ttorne!)……………………………………… Pp. $6$5

Partnership

ichael C. +! vs <tt!. +lenn +acott (+eneral Partnership)…………………….. Pp. $56$8

Credit 

Tarcisio Calilng vs Paramont -nsrance (Simple "oan)………………………… Pp. $86$

Sps. Tan vs China Banking Corp (<pplication of Pa!ments)…………………….. Pp. $6*9

Torts and Damages

Techno evelopment vs :iking etal -nstries, -nc ('emplar!)……………...

('emplar!)…………….. . Pp. *1

Sps. Timao vs /ral Bank of San %ose ('emplar!

('emplar! amages)……………………. Pp. *$

<nna arie +ma#on vs PNB (oral an 'emplar! amages)……………….. Pp. **

Torres6ari Brokerage vs >'B itsi arine -nsrance (asi6elict) Pp. *

'/<"C3 vs Sposes Slpicio & Patricia /amos (oral an <ctal amages)
……………… Pp. *26*5

$
THE
THE HON
HON! !ON
ON " SHANSHANH
HA#A# BAN
AN!#
!#N
N CO$PO
O$PO$A
$AT#
T#ON
ON%% L#&#
L#&#TE
TED
D 's(
's(
NAT#ONAL STEEL CO$PO$AT#ON " C#T) T$*ST BAN!#N CO$PO$AT#ON
($( NO( +,-.,/% Febr0ary 1.% 12+/
3A$DELE4A% 3(

><CTSD
The Natio
Nationa
nall Steel
Steel Corpor
Corporati
ation
on (NSC)
(NSC) an
an 4lockn
4lockner
er 'ast
'ast <sia
<sia "imit
"imite
e
(4lockner) entere into an 'port Sales Contract to =hich NSC sol 1,$99 metric
tons of prime col rolle coilsto 4lockner. -n secring its pa!ment to NSC, 4lockner
applie =ith HSBC an irrevoca#le
irrevoca#le "etter of Creit amonting to 58,999 AS ollars
naming NSC as the #ene;iciar! to the "etter of Creit.

HSBC then isse an irrevoca#le "etter of Creit in favor of NSc governe #!

ACP 99 an frther stiplate that HSBC has the o#ligation to NSC pon the
presentment of the ocments liste in the "etter of Creit.

There =as
=as an amenment on the "etter
"etter of Creit an it =as
=as one t=ice. The
;irst amenment =as for the transferring of the terms of the contract from >3B ST
lligan to >3B ST anila an frther increase the amont to E88,999, =hile the
secon amenment =as for the eliver! ate of the prime col rolle coils.

The prime col rolle coils =ere loae to : Sea ragon ner China 3cean
Shipping Compan! =ith Bill of "aing No. H4+ $55991 an the same arrive in
Hong
Hong 4ong.
4ong. There
Thereaft
after
er,, NSC
NSC throg
throghh Cit!
Cit! Trst
rst facil
facilita
itate
te the collec
collectio
tion
n of its
pa!ment from 4lockner #! the "etter of Creit isse #! HSBC. Thereafter, Cit! Trst 
sent HSBC a collection 3rer as HSBC ackno=lege the receipt.

4lockner refse pa!ment neither to give an! reason of sch refsal. NSC
sent HSBC a eman letter.

-SSA'D
Fho among the parties #ear the lia#ilit! to pa! the amont state in the
"etter of CreitG

H'"D
The Cort rle #ase on the principle of -nepenence on the la= on "etters
of Creit. -n this case, HSBC has the o#ligation as it #ins itself #oth to 4lockner an
NSC as it freel! an kno=ingl!
kno=ingl! mst perform an act, =here its o#ligation arises from
the t=o sorce, >irst, it has a contractal o#ligation to 4lockner =hen it agree to
pa! NSC pon the e presentment to it of the "C #! Cit! Trst, Secon, HSBC has
the o#ligation to NSC to honor the "C. The o#ligation of HSBC to pa! NSC ner the
"C =ill stan inepenent even if 4lockner refse to pa!.

*
$OSAL#NA CA$ODAN 's( CH#NA BAN!#N CO$PO$AT#ON
($( No( 1+25.1% Febr0ary 1.% 12+/
SERENO, CJ.

><CTSD
< complaint for a sm of mone! =as ;ile against Coroan, et.al #! China
Banking Corporation in relation to the promissor! note =hich the! promise to pa!
0ointl! an severall! the amont of $.8 illion pesos. >or the secrit! of the loan, a
real estate mortgage =as eecte an a Sret! <greement in favor of China Bank 
=as eecte. The =arranties =ere mae #! the principal e#tor.
<fter the petitioners faile to pa! their loan from China Bank espite the
emans mae this case arise.

-SSA'D
Fhether /osalina is lia#le 0ointl! an severall! =ith Bar#ara an /e##eca for
the pa!ment of the loan o#ligationG

H'"D

Strictl! speaking, garant! an sret! are nearl! relate, an man! of the
principles are common to #oth. Ho=ever, ner or civil la=, the! ma! #e
istingishe thsD < sret! is sall! #on =ith his principal #! the same
instrment, eecte at the same time, an on the same consieration. He is an
original promissor an e#tor from the #eginning, an is hel, orinaril!, to kno=
ever! efalt of his principal. Asall!, he =ill not #e ischarge, either #! the mere
inlgence of the creitor to the principal, or #! =ant of notice of the efalt of the
principal, no matter ho= mch he ma! #e in0re there#!. 3n the other han, the
contract of garant! is the garantors o=n separate nertaking, in =hich the
principal oes not 0oin. -t is sall! entere into #efore or after that of the principal,
an is often spporte on a separate consieration from that spporting the
contract of the principal. The original contract of his principal is not his contract,
an he is not #on to take notice of its non6performance. He is often ischarge #!
the mere inlgence of the creitor to the principal, an is sall! not lia#le nless
noti;ie of the efalt of the principal.

Simpl! pt, a sret! is istingishe from a garant! in that a garantor is

the insrer of the solvenc! of the e#tor an ths #ins himself to pa! if the
principal is na#le to pa! =hile a sret! is the insrer of the e#t, an he o#ligates
himself to pa! if the principal oes not pa!.
Fhen /osalina af;ie her signatre to the /eal 'state ortgage as mortgagor an
to the Sret! <greement as sret! =hich covere the loan transaction represente
#! the Promissor! Note, she there#! #on herself to #e lia#le to China Bank in case


the principal e#tors, Bar#ara an /e#ecca, faile to pa!. She conse@entl! #ecame
lia#le to responent #ank for the pa!ment of the e#t of Bar#ara an /e#ecca =hen
the latter t=o actall! i not pa!.

SPO*SES FLO$ANTE E( 3ONSA) and L*46#&#NDA L( 3ONSA) and &O&A$CO

#&PO$T CO(% #NC(% 's( SOL#DBAN! CO$PO$AT#ON 7no8 &ET$OPOL#TAN BAN! 
 AND T$*ST CO&PAN)9

($( No( 12/.5:% April /% 12+/

$E)ES% 3(

>actsD
Petitioners o#taine a loan in the name of omarco from Soli Bank. The!
eecte a promissor! note an secrit! to the loan the! mortgage * parcels of
lan.

Bt #ecase of the ;inancial crisis on 17 the! =ere strggling to pa!. <s
the! efalte to pa!, Soli#ank proceee to etra 0iciall! foreclose the
mortgage.

-SSA'D

Fhether the proposal of the sposes to etingish their o#ligation #! =a! of 
acion en pago novates the mortgage contract contractG

H'"D
3n the @estion of the petitioners faile proposal to etingish their loan
o#ligations #! =a! of acion en pago, no #a faith can #e impte to Soli#ank for
refsing the offere settlement as to rener itself lia#le for moral an eemplar!
amages after opting to etra0iciall! foreclose on the mortgage. -n Tecnogas
Philippines anfactring Corporation v. Philippine National Bank, the Cort helD
acion en pago is a special moe of pa!ment =here#! the e#tor offers another
thing to the creitor =ho accepts it as e@ivalent of pa!ment of an otstaning
o#ligation. The nertaking is reall! one of sale, that is, the creitor is reall! #!ing
the thing or propert! of the e#tor, pa!ment for =hich is to #e charge against the
e#tors e#t. <s sch, the essential elements of a contract of sale, namel!, consent,
o#0ect certain, an case or consieration mst #e present. -t is onl! =hen the thing
offere as an e@ivalent is accepte #! the creitor, that novation takes place,
there#!, totall! etingishing the e#t.
3n the ;irst isse, the Cort of <ppeals i not err in rling that Tecnogas has
no clear legal right to an in0nctive relief #ecase its proposal to pa! #! =a! of 
acion en pago i not etingish its o#ligation. Anenia#l!, Tecnogas proposal to
pa! #! =a! of acion en pago =as not accepte #! PNB. Ths, the naccepte
proposal neither novates the parties mortgage contract nor sspens its eection

2
as there =as no meeting of the mins #et=een the parties on =hether the loan =ill
#e etingishe #! =a! of acion en pago. Necessaril!, pon Tecnogas efalt in its
o#ligations, the foreclosre of the /' #ecomes a matter of right on the part of PNB,
for sch is the prpose of re@iring secrit! for the loans.

BEN3#E B( EO$ 's( HOL) T$#N#T) COLLEE% #NC(

($( No( +:2.2,% 30ly 12% 12+/
PE$E4% 3(

><CTSD

The Hol! Trinit! college has a ance grop an a gran choral fone #!
Sister ealle. The grop travels aron the =orl to compete. 'nri@e? allegel!
represente sister ealle an #ooke the ance grop airplane tickets from the
petitioner. The t=o eecte a emoranm of <greement =ith ee of 
<ssignment.

-SSA'D

Fhether the parties have entere into a vali contractG

H'"D

Ies. The essential re@isites of a contract ner <rticle 1*18 of the Ne= Civil
Coe areD
( 1) Consent of the contracting partiesJ ($) 3#0ect certain =hich is the s#0ect matter
of the contractJ (*) Case of the o#ligation =hich is esta#lishe. The valiit! of the
3< is #eing assaile for a efect in consent. Aner <rticle 1**9 of the Civil Coe,
consent ma! #e vitiate #! an! of the follo=ingD (1) mistake, ($) violence, (*)
intimiation, ( ) ne in;lence, an ( 2) fra. Aner the same provision, the
contract #ecomes voia#le. There is fra =hen one part! is ince #! the other to
enter into a contract, throgh an solel! #ecase of the latters insiios =ors or
machinations. Bt not all forms of fra can vitiate consent. Aner <rticle 1**9,
fra refers to olo casante or casal fra, in =hich, prior to or simltaneos =ith
eection of a contract, one part! secres the consent of the other #! sing
eception, =ithot =hich sch consent =ol not have #een given. Sr. ealle is
presme to kno= the import of her thm#mark in the 3<. Fhile she =as inee
con;ine at the AST Hospital at that time, responent ho=ever faile to prove that Sr.
ealle =as too ill to comprehen the terms of the contract. oreover, there is
nothing in the eposition that tens to prove that Sr. ealles consent =as vitiate.
The trial cort categoricall! rle that Sr. ealle af;ie her thm#mark as
Presient of Hol! Trinit! College an therefore, responent is a part! to the 3<.
'ffectivel!, responent has control an spervision of the +rop particlarl! in the
selection, hiring an termination of the mem#ers. Sr. ealle, as Presient of Hol!

5
Trinit!, is clothe =ith sf;icient athorit! to enter into a loan agreement. Ths, an!
agreement or contract entere into #! Sr. ealle as Presient of Hol! Trinit!
College relating to the +rop #ears the consent an approval of responent. -t is
throgh these !namics that =e cannot falt petitioner for rel!ing on Sr. ealles
athorit! to transact =ith petitioner.

3*ANA 6DA( DE $O3ALES 's( &A$CEL#NO D#&E

($( NO( +:.5.,% Febr0ary +2% 12+/
PE$ALTA% 3(

><CTSD

/o0ales is a registere o=ner of a parcel of lan locate at Nasg#, Batangas.

She eecte a pacto e retro contract =ith responent to =hich =as prchase in
the amont of P$,29$,*$.19. Consiering that the eecte sale =as a pacto e
retro, /o0ales reserve the right to reprchase the propert! from responent =ith
the agreement of a perio of nine months at the same prchase price. <fter the
agree a perio to reprchase the petitioner i not reprchase the s#0ect real
propert! espite repeate emans.

The petitioner enie the eection of the pacto e retro contract =ith the
responent an arge that ever!thing p to the signatre of the notar! p#lic =as
a falsit!.

The /TC, on %l! 1$, $995 ismisse the case on the gron that the case =as
not ;ile #! a real part!6in6interest.

-SSA'D

Fhether :illamin is priv! to the contract of pacto e retro sale #et=een petitioner
an responentG

H'"D

<s a general rle, an as consistentl! rle #! this cort, the parties to a
contract are al=a!s hel as the inispensa#le part! or real parties6in6interest, onl!
parties =ho eecte a contract are #ining to sch o#ligation an its faithfl
performance, an the onl! ones =ho has the right to #ring action in case of #reach
or efalt. <s to this case, the cort properl! fon that :illamin is not a priv! to the
contract, the s#0ect pacto e retro contract cannot eten to her as she is not a real
part!6in6interest, as she in no =a! =ol pre0ice her neither #ene;it from its
procees.

7
 Correlating to the general rle on real part!6in6interest on the la= on
contracts, as to the eecte pacto e retro contract, it is the venor (petitioner) an
the venee (responent), their heirs, sccessors, an assigns have the right to #ring
sch action of consoliation of title an o=nership prsant to <rticle 1515 of the
Civil Coe.

-n the case /ep#lic v. +ri0alo, this Cort rle an e;ine =ell of =ho is a
priv! to a contract, =here thesch priv! enotes the concept of sccession =ho has
the real right to s#stitte for the contracting parties in their personal rights tie
an #one in 0icial relations #! virte of a contract.

-n the case of :illamin, she cannot personall! s#stitte for responent, as

she =as on the =rong #elief that fning the prchase of the s#0ect real propert!
conferre her an! right over the same, nless other=ise, the pacto e retro contract 
epressl! conferre her an! right over the propert!, in sch case she is consiere
#! la= as a priv!, #t a#sence of sch =ol #e ftile on her part, as she =as in no
=a! an heir, sccessor, or assign of responent.

PH#L#PP#NE NAT#ONAL O#L CO&PAN) et al( 's( !EPPEL PH#L#PP#NES

HOLD#NS% #NC(
($( No( 121252% 30ly 15% 12+/
B$#ON% 3(

><CTSD

4eppel entere into a lease agreement =ith "?on Steveoring Corporation

stating that the eleven hectares of lan locate in Baan, Batangas =ill #e lease for
the perio of $2 !ears for Php $.1 million. That, at the option of "?on Steveoring,
the rental fee col #e converte to e@it! shares in 4eppel. <fter the lapse of the
lease contract, 4eppel =as given an option to prchase, =ith the provision that the
@ali;ication of a foreign corporation to o=n properties in the Philippines as
provie for #! la= is achieve. Anfortnatel!, 4eppelKs percentage of >ilipino
o=nership =as less than =hat the la= provie for. Therefore, the lease =ol not 
#e rene=e for another t=ent! ;ive !ears an there =ill #e no option to prchase.
Nevertheless, the PN3C prchase the lan from "?on Steveoring. Fhen 4eppel
=as rea! to prchase the lan, ho=ever, PN3C refse hence the case =as ;ile.

-SSA'D

Fhether or not the option to prchase the lan given to 4eppel is vali an
spporte #! a vala#le consierationG

H'"D

8
 <n option contract is a contract =here one person (the offerorLpromissor)
grants to another person (the offereeLpromisee) the right or privilege to #! (or to
sell) a eterminate thing at a ;ie price, if he or she chooses to o so =ithin an
agree perio. <s a contract, it mst necessaril! have the essential elements of 
s#0ect matter, consent, an consieration. <lthogh an option contract is eeme a
preparator! contract to the principal contract of sale, it is separate an istinct 
therefrom, ths, its essential elements shol #e istingishe from those of a sale.
<n option contract, the s#0ect matter is the right or privilege to #! (or to sell) a
eterminate thing for a price certain, =hile in a sales contract, the s#0ect matter is
the eterminate thing itself. The consent in an option contract is the acceptance #!
the offeree of the offerorKs promise to sell (or to #!) the eterminate thing, i.e., the
offeree agrees to hol the right or privilege to #! (or to sell) =ithin a speci;ie
perio. This acceptance is ifferent from the acceptance of the offer itself =here#!
the offeree asserts his or her right or privilege to #! (or to sell), =hich constittes
as his or her consent to the sales contract. The consieration in an option contract 
ma! #e an!thing of vale, nlike in a sale =here the prchase price mst #e in
mone! or its e@ivalent. There is sf;icient consieration for a promise if there is
an! #ene;it to the offeree or an! etriment to the offeror. >or niformit! an
consistenc! in contract interpretation, the #etter rle to follo= is that the
consieration for the option contract shol #e clearl! speci;ie as sch in the
option contract or clase. 3ther=ise, the offeree mst #ear the #ren of proving
that a separate consieration for the option contract eists. +iven or ;ining that
the <greement i not categoricall! refer to an! consieration to spport 4eppelKs
option to #! an for 4eppelKs failre to present evience in this regar, =e cannot 
phol the eistence of an option contract in this case. The a#sence of a
consieration spporting the option contract, ho=ever, oes not invaliate an
offer to #! (or to sell). <n option nspporte #! a separate consieration
stans as an naccepte offer to #! (or to sell) =hich, =hen properl! accepte,
ripens into a contract to sell. <ccoringl!, =hen an option to #! or to sell is not 
spporte #! a consieration separate from the prchase price, the option
constittes as an offer to #! or to sell, =hich ma! #e =ithra=n #! the offeror at 
an! time prior to the commnication of the offereeKs acceptance. Fhen the offer is
l! accepte, a mtal promise to #! an to sell ner the ;irst paragraph of 
<rticle 17 of the Civil Coe enses an the partiesK respective o#ligations
#ecome reciprocall! emana#le. <pplie to the present case, =e ;in that the offer
to #! the lan =as timel! accepte #! 4eppel.

CENT*$) P$OPE$T#ES% #NC( 's( ED;#N 3( BAB#ANO and E&&A CONCEPC#ON

($( No( 112:,<% 30ly 5% 12+/
PE$LAS=BE$NABE% 3(