Necessito vs Paras

Facts:
Bus 199 of Philippine Rabbit was travelling from Agno, Pangasinan to Manila driven by
Francisco Bandonell. After passing Mangatarem, it entered a wooden bridge but the front
wheels swerved to the right, the driver lost control, and the bus fell into the river which was
breast deep. Passenger Severina Garces was drowned, while her son, petitioner Necesito,
suffered abrasions and a fracture. Their belongings (money, wrist watch, vegetables and cargo)
were lost.
Issue:
Whether or nor the carrier is liable for manufacturing defect of the steering knuckle?
Ruling:
It is clear that the carrier is not an insurer of the passenger’s safety. His liability rest upon
negligence, that his failure to exercise utmost degree of diligence that the law requires.
The passenger has neither choice nor control over the carrier in the selection and use of the
equipment and the appliances in use by the carrier. Having no privity whatever with the
manufacturer or vendor of the defective equipment, the passenger has no remedy against him,
while carrier usually has. It is but logical, therefore, that the carrier, while not an insurer of the
safety of his passengers, should nevertheless be held to answer for flaws of his equipment if
such cause were at all discoverable.

Agcaoili vs GSIS
Facts:
The appellant Government Service Insurance System (GSIS) approved the application of
appellee Agcaoili for the purchase of house and lot in the GSIS Housing Project at Nangka
Marikina, Rizal, with the condition that Agcaoili should occupy the said house and lot within
three days from receipt of notice otherwise the application shall be automatically disapproved
and will be awarded to another applicant. Agcaoili tried to fulfil the condition but could not
because the house was uninhabitable. The fixtures, ceilings, and even utilities were inexistent.
The appellee refused to pay the remaining instalments and fees until GSIS made the house
inhabitable but to no avail. GSIS opted to cancel the award and demand Agcaoili to vacate the
premises. Agcaoili sued GSIS in the Court of First Instance of Manila for specific performance
with damages and obtained a favourable judgement. Hence this petition for appeal by GSIS.
Issue:
Whether or not Agcaoili is entitled to specific performance with damages
Ruling:
Yes, Agcaoili is entitled to specific performance with damages. There was a perfected contract
of sale upon the purchase of the plaintiff. It was then the duty of GSIS as seller to deliver the
thing sold in a condition suitable for its enjoyment by the buyer. The house contemplated was
one that could be occupied for purpose of residence in reasonable comfort and convenience.
The records show that the plaintiff tried to fulfil the condition but found the house
uninhabitable and could not stay any longer.
In reciprocal obligations, a party incurs delay if the other does not comply or is not ready to
comply in a proper manner with what is incumbent upon him. The defendant did not fulfill its
obligation to deliver the house in a habitable state, therefore, it cannot invoke the plaintiff’s
suspension of payment as a cause to cancel the contract between them.

Lao lim vs CA
Facts
The records show that Villavicencio entered into a contract of lease with petitioner for a period
of three (3) years, that is, from 1976 to 1979. After the stipulated term expired, Villavicencio
refused to vacate the premises, hence, petitioner filed an ejectment suit against the former in
the City Court of Manila, docketed therein as Civil Case No. 051063-CV.
The case was terminated by a judicially approved compromise agreement of the parties
providing in part:
“3. That the term of the lease shall be renewed every 3years retroacting from October 1979 to
October 1982; after which the abovenamed rental shall be raised automatically by 20% every
three years for as long as defendant needed the premises and can meet and pay the said
increases, the defendant to give notice of his intent to renew sixty (60) days before the
expiration of the term;”
By reason of said compromise agreement the lease continued from 1979 to 1982, then from
1982 to 1985. On April 17, 1985, petitioner advised Villavicencio that he would no longer renew
the contract effective October, 1985.
However, on August 5, 1985, Villavicencio informed petitioner in writing of his intention to
renew the contract of lease for another term, commencing November, 1985 to October, 1988.
In reply to said letter, petitioner advised Villavicencio that he did not agree to a renewal of the
lease contract upon its expiration in October, 1985.
On January 15, 1986, because of Villavicencio's refusal to vacate the premises, petitioner filed
another ejectment suit, this time with the Metropolitan Trial Court of Manila. In its decision of
September 24, 1987, said court dismissed the complaint on the grounds that:
(1) the lease contract has not expired, being a continuous one the period whereof
depended upon the lessee's need for the premises and his ability to pay the rents; and
(2) the compromise agreement entered into in the aforesaid Civil Case No. 051063-CV
constitutes res judicata to the case before it.
Petitioner appealed to the RTC of Manila which, in its decision of January 28, 1988, affirmed the
decision of the lower court.
CA affirmed RTC and held that:
(1) the stipulation in the compromise agreement which, in its formulation, allows the lessee
to stay on the premises as long as he needs it and can pay rents is valid, being a resolutory
condition and, therefore, beyond the ambit of Article 1308 of the Civil Code; and
(2) that a compromise has the effect of res judicata.
Issue
Was the stipulation in the compromise agreement which allows the lessee to stay on the
premises as long as he needs it and can pay rents is valid?
Ruling
No. The decision of respondent CA is REVERSED and SET ASIDE.
The disputed stipulation "for as long as the defendant needed the premises and can meet and
pay said increases" is a purely potestative condition because it leaves the effectivity and
enjoyment of leasehold rights to the sole and exclusive will of the lessee.

Ang vs CA
Facts:

 Ernesto and Rosalinda Ang, brother and sister, are the owners of 3 parcels of land
located at Quezon City with an aggregate area of 2,096 sq. m which they purchased
at a price of P680,000.00

 Negotiations were undertaken for the sale of the properties between the Ang as
sellers and Lee Chuy Realty Corporation, through its president Henry Lee Chuy as
buyer.
  Lee Chuy issued in favor of Ang a check in the amount of P50,000.00 together with a
receipt embodying the terms and conditions of their agreement indicating the
agreed total price of P1,600,000.

 The accompanying receipt was not returned by Ang and instead another receipt
prepared and signed by Ang which did not state the agreed price and forwarded to
Lee Chuy.

 Ang demanded to Lee Chuy to pay the balance of the purchase price and failure to
do so will result in the cancellation of their agreement.

 Lee Chuy replied that they had been ready since December to perform its part of the
agreement while Ang had not yet complied with their undertaking to clear the
subject properties of the obstructions thereon

 Ang demanded the refund of the P 50,000.00 down payment on account of the
failure of Ang to comply with their undertaking and their subsequent withdrawal
from the sale.

 Upon the failure of the Ang to return the down payment, Lee Chuy filed a complaint
for the collection of a sum of money with damages before RTC.

 The trial court rendered its decision in favor of Ang.

 CA reversed the RTC decision and held that Ang were the ones who breached the
agreement.
Issue
1. What is the agreed price for the sale of the properties
2. Whether or not Ang breach the agreement
Ruling
1. There is no doubt that there was a perfected contract for the sale as evidenced by the
down payment of P50,000.00.

 If the price was really P2,340,000, they could have easily written the amount in the
receipt. Ang were the ones who clearly caused the obscurity when they omitted the
purchase price in the receipt they prepared and signed. Hence, such obscurity must be
construed against them.

 If the true price was P2,340,000, it would be unusual for Ang to enter into such an
agreement with Chua at a lesser purchase price. The only logical conclusion is that Ang
had intentionally omitted the price of P1,600,000 in the receipt they signed either to
 compel Lee Chuy to agree to a price increase or to enable them to back out of their
agreement notwithstanding their plan to reduce their capital gains tax liability.
* The claim of Ang is that they could no longer accept the offers from Dolora Chua because of
their previous commitment with Lee Chuy. - This pretension is not supported by the evidence.
The records show that Ang had entered into an "Agreement of Purchase or Sale" with Dolora 1
day before the date of the receipt of down payment.
* Ang also argue that the document is an agreement and not a mere offer.- We find no cogent
basis to view the same as a mere offer. It is clearly stated in the agreement that petitioners
received P20,000 from Chua as down payment with the balance of the purchase price of
P2,160,000.00 to be paid in full at the time the land shall have been cleared and that Ang bind
themselves to deliver to Chua the deed of sale upon full payment.
2. Yes, Ang is liable to refund the P 50, 000 downpayment of Lee Chuy.

 CA found that Ang breached the agreement when they failed to undertake fulfillment of
the 2 conditions; (1) that Ang will remove and clear the subject property of all occupants
and obstructions and (2) that when the property is cleared of all occupants and
obstructions, Ang shall deliver a deed of absolute sale in favor of Lee Chuy with all
pertinent papers necessary.

 However, such breach does not warrant a resolution of the contract. While it is true that
in reciprocal obligations, such as the contract of purchase and sale, the power to rescind
is implied and any of the contracting parties may, upon non-fulfillment by the other
party of his part of the obligation, resolve the contract, rescission wig not be permitted
for a slight or casual breach of the contract. Rescission may be had only for such
breaches that are so substantial and fundamental as to defeat the object of the parties
in making the agreement.

 The two conditions that were breached by petitioners are not essential for the
fulfillment of the obligations to but merely an incidental undertaking. The rescission of
the contract may not be allowed on this ground alone.

 Lee Chuy at first did not seek to rescind the contract on the basis of the non-fulfillment
of these conditions. Lee in fact sought definite advice from Ang as to when they can
comply with the conditions. Indeed, it was the failure of the Ang to comply with the
conditions of the agreement that caused the delay in the payment by Lee.

 When Ang refused to proceed with the sale unless Lee agreed to pay the higher price,
Ang thereby committed a serious breach of the agreement. There was a perfected
contract of sale and the purchase price was set at P1,600,000. Ang cannot increase the
purchase price agreed upon without the consent of private respondent. Lee had the
right to rescind the agreement.
  Since Ang had already sold the properties to Chua, they can no longer perform to deliver
the property to Lee. This is another breach of their agreement. CA aptly characterized
the actuations of Ang to be "double-dealing."

Angeles vs Calasanz
Facts:
On December 19, 1957, defendants-appellants Ursula Torres Calasanz and plaintiffs-appellees
Buenaventura Angeles and TeofilaJuani 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 executein 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
(1) Has the Contract to Sell been automatically and validly cancelled by the defendants-
appellants?
Ruling
(1) No. While it is true that par.2 of the contract obligated the plaintiffs-appellees to pay the
defendants the sum of P3,920 plus 7% interest per annum, it is likewise true that under par 12
the seller is obligated to transfer the title to the buyer upon payment of the said price
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 lopsidedness 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.

AYSON-SIMON VS. ADAMOS 131 SCRA 439

Facts
Defendants, Nicolas Adamos and Vicente Feria, purchased two lots forming part of the Piedad
Estate in Quezon City, from Juan Porciuncula. Thereafter, the successors-in-interest of the latter
filed Civil Case No. 174 for annulment of the sale and the cancellation of TCT No. 69475, which
had been issued to defendants-appellants by virtue of the disputed sale. The Court rendered a
Decision annulling the saleThe said judgment was affirmed by the Appellate Court and had
attained finality. Meanwhile, during the pendency of the case above, defendants sold the said
two lots to Petitioner GenerosaAyson-Simon for Php3,800.00 plus Php800.00 for facilitating the
issuance of the new titles in favor of petitioner. The trial court rendered judgment to
petitioner’s favor. However, defendants could not deliver the said lots because the CA had
already annulled the sale of the two lots in Civil Case No. 174.
Issue
(1) Can petitioner choose to rescind the contract even after choosing for the specific
performance of the obligation?
(2) Had the option to rescind the contract prescribed?
Ruling
(1) Yes. The rule that the injured party can only choose between fulfillment and rescission of
the obligation, and cannot have both, applies when the obligation is possible of fulfillment. If,
as in this case, the fulfillment has become impossible, Article 1191 allows the injured party to
seek rescission even after he has chosen fulfillment.
(2) No. Article 1191 of the Civil Code provides that the injured party may also seek rescission, if
the fulfillment should become impossible. The cause of action to claim rescission arises when
the fulfillment of the obligation became impossible when the Court of First Instance of Quezon
City in Civil Case No. 174 declared the sale of the land to defendants by Juan Porciuncula a
complete nullity and ordered the cancellation of Transfer Certificate of Title No. 69475 issued
to them. Since the two lots sold to plaintiff by defendants form part of the land involved in Civil
Case No. 174, it became impossible for defendants to secure and deliver the titles to and the
possession of the lots to plaintiff The action for rescission must be commenced within four
years from that date, May 3, 1967. Since the complaint for rescission was filed on August 16,
1968, the four year period within which the action must be commenced had not expired.

Borromeo vs CA
Facts
Before 1933, defendant [Jose A. Villamor] was a distributor of lumber belonging to Mr. Miller
who was the agent of the Insular Lumber Company in Cebu City. Defendant being a friend and
former classmate of plaintiff [Canuto O. Borromeo] used to borrow from the latter certain
amounts from time to time. On one occasion, defendant borrowed from plaintiff a large sum of
money for which he mortgaged his land and house in Cebu City to pay some pressing obligation
with Mr. Miller. Mr. Miller filed a civil action against the defendant and attached his properties
including those mortgaged to plaintiff, inasmuch as the deed of mortgage in favor of plaintiff
could not be registered because not properly drawn up. Plaintiff then pressed the defendant for
settlement of his obligation, but defendant instead offered to execute a document promising to
pay his indebtedness even after the lapse of ten years. Liquidation was made and defendant
was found to be indebted to plaintiff in the sum of P7,220.00, for which defendant signed a
promissory note therefor on November 29, 1933 with interest at the rate of 12% per annum,
agreeing to pay as soon as I have money'. The note further stipulate that defendant 'hereby
relinquish, renounce, or otherwise waive my rights to the prescriptions established by our Code
of Civil Procedure for the collection or recovery of the above sum of P7,220.00. At any time
even after the lapse of ten years from the date of this instrument'.
After the execution of the document, plaintiff limited himself to verbally requesting defendant
to settle his indebtedness from time to time. Plaintiff did not file any complaint against the
defendant within ten years from the execution of the document as there was no property
registered in defendant's name, who furthermore assured him that he could collect even after
the lapse of ten years. After the last war, plaintiff made various oral demands, but defendants
failed to settle his account. CFI: Villamor ordered to pay Borromeo (represented by his heirs)
the sum of P7,220.00 within ninety days from the date of the receipt of such decision with
interest at the rate of 12% per annum from the xpiration of such ninety-day period. CA:
reversed CFI ruling
Issue
Whether or not the CA erred in reversing the ruling of the CFI in finding the lack of validity of
the stipulation amounting to a waiver in line with the principle "that a person cannot renounce
future prescription"
Ruling
YES! Between two possible interpretations, that which saves rather than destroys is to be
preferred.
It is a fundamental principle in the interpretation of contracts that while ordinarily the literal
sense of the words employed is to be followed, such is not the case where they "appear to be
contrary to the evident intention of the contracting parties," which “intention shall prevail”
(Art. 1370). The terms, clauses and conditions contrary to law, morals and public order (in this
case the contested stipulation) should be separated from the valid and legal contract when
such separation can be made because they are independent of the valid contract which
expresses the will of the contracting parties.
There is nothing implausible in the view that such language renouncing the debtor's right to the
prescription established by the Code of Civil Procedure should be given the meaning, as noted
in the preceding sentence of the decision of respondent Court, that the debtor could be trusted
to pay even after the termination of the ten-year prescriptive period. (so CA should have
interpreted the stipulation based on the context of the friendship between the two parties)-
'Where an agreement founded on a legal consideration contains several promises, or a promise
to do several things, and a part only of the things to be done are illegal, the promises which, can
be separated, or the promise, so far as it can be separated, from the illegality, may be valid. The
rule is that a lawful promise made for a lawful consideration is not invalid merely because an
unlawful promise was made at the same time and for the same consideration, and this rule
applies, although the invalidity is due to violation of a statutory provision, unless the statute
expressly or by necessary implication declares the entire contract void. The first ten years after
November 29, 1933 should not be counted in determining when the action of creditor, now
represented by petitioners, could be filed. From the joint record on appeal, it is undoubted that
the complaint was filed on January 7, 1953. If the first ten-year period was to be excluded, the
creditor had until November 29, 1953 to start judicial proceedings. After deducting the first ten
year period which expired on November 29, 1943, there was the additional period of still
another ten years.29 Nor could there be any legal objection to the complaint by the creditor
Borromeo of January 7, 1953 embodying not merely the fixing of the period within which the
debtor Villamor was to pay but likewise the collection of the amount that until then was not
paid.
Wherefore, the decision of respondent Court of Appeals of March 7, 1964 is reversed, thus
giving full force and effect to the decision of the lower court of November 15, 1956. With costs
against private respondent.
Culaba vs CA
Facts
SMC sold beer products on credit to the Culaba spouses in the amount of 28,650.00 pesos.
Thereafter the petitioners made a partial payment of 3,740.00 pesos, leaving an unpaid balance
of 24,910.00. After failed demands made to the spouses, SMC filed an action for collection of a
sum of money against them.
The defendant-spouses claim that they had already payed the plaintiff in full on four separate
occasions, providing four Temporary Charge of Sales Liquidation Receipts to substantiate the
claim.
Francisco Culaba testified that he made the payments to an SMC supervisor who came in an
SMC van. The defendant in good faith, then paid to the said supervisor, and he was, in turn,
issued genuine SMC liquidation receipt.
For its part, SMC was able to publish a notice of loss in July 9, 1983 issue of Daily Express for
booklet of receipts, included in which are the receipts presented by Culaba.
Issue
The issue is whether or not the payment made to the alleged SMC supervisor by the Culaba
spouses can be considered valid.
Ruling
The petition is dismissed.
Although the alleged SMC supervisor came in a SMC van, wearing a SMC uniform and even
issued what appeared to be genuine SMC receipts, payment to the third person is not valid in
this case and the exception to the rule, Estoppel, does not apply because of the following
factors a. ) the receipts issued by the third person claiming to be a SMC supervisor were
included in the lost booklet, making it public knowledge b. ) receipts were issued in the wrong
order, i.e. one receipt bearing a higher serial number was issued ahead of a receipt with a lower
serial number c. ) collecting person’s name was left blank d. ) Culaba could not even recall the
name of the alleged supervisor

Concepcion vs Sta Ana

Facts
An action was instituted by Monico Concepcion vs. Paciencia Sta. Ana to annul the sale made by
the late Perpetua Concepcion, sister of the plaintiff, of three parcels of land with the
improvements thereon to the defendant. The complaint alleges that Perpetua Concepcion, in
connivance with the defendant and with intent to defraud the plaintiff, sold and conveyed
three parcels of land for a false and fictitious consideration to the defendant, who secured
transfer certificates of title of said lands issued under her name; and that the defendant has
been in possession of the properties sold since the death of Perpetua Concepcion, thereby
causing damages to the plaintiff in the amount of not less than two hundred (P200) pesos.
Issue
Whether or not Perpetua Concepcion has transmitted to the plaintiff any right arising from the
contract under consideration in order that he can bring an action to annul the sale voluntarily
made by her to the defendant with a false consideration
Ruling
In support of his contention that the contract of sale under consideration being a fictitious
contract or contract with a false consideration is null per se or non-existent.
Appellant’s conclusion is not correct. By stating that contracts with false consideration confer
no right and produce no legal effect.
Therefore the late Perpetua Concepcion has not transmitted to the plaintiff any right arising
from the contract of conveyance or sale of her lands to the defendant, and therefore the
plaintiff cannot file an action to annul such contract as representative of the deceased.