Digest Civ 2 2018

Cases to include in my case digest in civrev2
OBLIGATIONS
Sources of Obligation
Contracts
United Alloy Philippines Corporation, Spouses David C. Chua and Luten Chua vs. Untited
Coconut Planters Bank
G.R. No. 175949, January 30, 2017, Peralta, J., Second Division
Before the Court is a petition for review on certiorari seeking the reversal and setting aside of
the Decision and Resolution of the Court of Appeals (CA), dated September 21, 2006 and
December 11, 2006, respectively, in CA-G.R. CV No. 81079. The assailed Decision affirmed the
Decision of the Regional Trial Court (RTC) of Makati City, Branch 135, in Civil Case No. 01-1332,
while the questioned Resolution denied petitioners' Motion for Reconsideration.
FACTS:
Petitioner United Alloy Philippines Corporation (UNIALLOY) applied and was granted credit
accommodation by respondent United Coconut Planters Bank (UCPB) in the amount ₱50 million
evidence by a credit agreement. The credit agreement was secured by a Surety Agreement
executed by UNIALLOY Chairman, Jakob Van Der Sluis (Van Der Sluis), UNIALLOY President
David Chua and his spouse, Luten Chua (spouses Chua), and one Yang Kim Eng (Yang). 6
promissory notes were later executed by UNIALLOY in favor of UCPB.
In addition, as part of the consideration for the credit accommodation, UNIALLOY and UCPB
entered into a “lease-purchase” contract where the former assured the latter that it will
purchase several real properties which UCPB co-owns with the Development Bank of the
Philippines.
However, UNIALLOY failed to pay its loan obligations. As a consequence, UCPB filed against
UNIALLOY, the spouses Chua, Yang, and Van Der Sluis an action for sum of money with prayer
for preliminary attachment with the RTC of Makati. UCPB also unilaterally rescinded its lease-
purchase contract with UNIALLOY.
UNIALLOY filed against UCPB, UCPB Vice-President Robert Chua and Van Der Sluis a complaint
for annulment and/or reformation of contract with damages with prayer for a writ of
preliminary injunction or temporary restraining order. UNIALLOY contended that Van Der Sluis
was in cahoots with UCPB Vice-president Robert Chua in committing fraud, manipulation, and
misinterpretation to obtain the subject loan for their own benefit. UNIALLOY prayed that 3 out
of the 6 promissory notes be annulled or reformed or that it be released from its liability.
Ultimately, UNIALLOY filed an urgent motion to dismiss but the RTC of Makati denied its
motion.
Finally, UNIALLOY filed with the RTC of Makati an Omnibus motion praying for the suspension
of the proceedings of the collection case in the said court. However, the RTC of Makati denied
UNIALLOY’s motion. Subsequently, the RTC of Makati rendered judgment in the collection case
in favor of UCPB.
UNIALLOY appealed but the CA affirmed the RTC Makati’s decision. Hence, this petition.
ISSUE:
Whether or not the petitioners, together with their co-defendants Van Der Sluis and Yang, were
liable to pay respondent UCPB in the said collection case.
RULING: Yes.
Petitioners do not deny their liability under the above quoted Surety Agreement. As correctly
held by both the RTC and the CA, Article 1159 of the Civil Code expressly provides that
"[o]bligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith." The RTC as well as the CA found nothing which would
justify or excuse petitioners from non-compliance with their obligations under the contract they
have entered into. Thus, it becomes apparent that petitioners are merely attempting to evade
or, at least, delay the inevitable performance of their obligation to pay under the Surety
Agreement and the subject promissory notes which were executed in respondent's favor.
The Court notes, however, that the interest rates imposed on the subject promissory notes
were made subject to review and adjustment at the sole discretion and under the exclusive will
of UCPB. Moreover, aside from the Consolidated Statement of Account attached to the demand
letters addressed to petitioner spouses Chua and their co-defendants, no other competent
evidence was shown to prove the total amount of interest due on the above promissory notes.
In fact, based on the attached Consolidated Statement of Account, UCPB has already imposed a
24% interest rate on the total amount due on respondents' peso obligation for a short period of
six months. Settled is the rule that any contract which appears to be heavily weighed in favor of
one of the parties so as to lead to an unconscionable result is void. Any stipulation regarding
the validity or compliance of the contract which is left solely to the will of one of the parties, is
likewise, invalid.
Moreover, courts have the authority to strike down or to modify provisions in promissory notes
that grant the lenders unrestrained power to increase interest rates, penalties and other
charges at the latter's sole discretion and without giving prior notice to and securing the
consent of the borrowers. This unilateral authority is anathema to the mutuality of contracts
and enable lenders to take undue advantage of borrowers. Although the Usury Law has been
effectively repealed, courts may still reduce iniquitous or unconscionable rates charged for the
use of money. Furthermore, excessive interests, penalties and other charges not revealed in
disclosure statements issued by banks, even if stipulated in the promissory notes, cannot be
given effect under the Truth in Lending Act.
The Court, thus, finds it proper to modify the interest rates imposed on respondents' obligation.
Pursuant to the ruling in Nacar v. Gallery Frames, et. al., the sums of US$435,494.44 and
PhP26,940,950.80 due to UCPB shall earn interest at the rate of 12% per annum from the date
of default, on August, 1, 2001, until June 30, 2013 and thereafter, at the rate of 6% per annum,
from July 1, 2013 until finality of this Decision. The total amount owing to UCPB as set forth in
this Decision shall further earn legal interest at the rate of 6 % per annum from its finality until
full payment thereof, this interim period being deemed to be by then an equivalent to a
forbearance of credit.
Acts or Omissions punished by Law
PEOPLE OF THE PHILIPPINES vs. Porferio Culas y Raga
G.R. No. 211166, June 05, 2017, Perlas-Bernabe, J., First Division
In a Resolution dated July 18, 2014, the Court adopted the Decision dated July 25, 2013 of the
Court of Appeals (CA) in CA-G.R. CEB-CR HC No. 00380 finding accused-appellant Porferio Culas
y Raga (accused-appellant) guilty beyond reasonable doubt of the crime of Statutory Rape.
FACTS:
In a resolution dated July 18, 2014, the Supreme Court adopted the decision of the Court of
Appeals dated July 25, 2013 finding the accused-appellant Porferio Culas y Raga guilty beyond
reasonable doubt of the crime of Statutory Rape.
However, before an Entry of Judgment could be issued, the Bureau of Corrections informed the
Supreme Court on the accused-appellant’s death as evidence by the Certificate of Death.
Consequently, under prevailing law and jurisprudence, Article 89 (1) of the Revised Penal Code
provides for the “total extinguishment” of the criminal liability upon the death of the accused,
to wit:
Article 89. How criminal liability is totally extinguished. – Criminal liability is totally extinguished:
1. By the death of the convict, as to the personal penalties; and as
to pecuniary penalties, liability therefor is extinguished only when the death of the offender
occurs before final judgment;
xx xx
ISSUE:
Whether or not other sources of obligation may still arise upon the non-applicability of delict
due to the death of the accused.
RULING: Yes.
In People v. Layag, the Court thoroughly explained the effects of the death of an accused
pending appeal on his liabilities, as follows:
From this lengthy disquisition, we summarize our ruling herein:
1. Death of the accused pending appeal of his conviction extinguishes his criminal liability[,] as
well as the civil liability[,] based solely thereon. As opined by Justice Regalado, in this regard,
"the death of the accused prior to final judgment terminates his criminal liability and only the
civil liability directly arising from and based solely on the offense committed, i.e., civil liability ex
delicto in senso strictiore."
2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the
same may also be predicated on a source of obligation other than delict. Article 1157 of the
Civil Code enumerates these other sources of obligation from which the civil liability may arise
as a result of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) xxx
e) Quasi-delicts
3. Where the civil liability survives, as explained in Number 2 above, an action for recovery
therefor may be pursued but only by way of filing a separate civil action and subject to Section
1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate civil action may
be enforced either against the executor/administrator or the estate of the accused, depending
on the source of obligation upon which the same is based as explained above.
4. Finally, the private offended party need not fear a forfeiture of his right to file this separate
civil action by prescription, in cases where during the prosecution of the criminal action and
prior to its extinction, the private-offended party instituted together therewith the civil action.
In such case, the statute of limitations on the civil liability is deemed interrupted during the
pendency of the criminal case, conformably with provisions of Article 1155 of the Civil Code,
that should thereby avoid any apprehension on a possible privation of right by prescription.
Thus, upon accused-appellant's death pending appeal of his conviction, the criminal action is
extinguished inasmuch as there is no longer a defendant to stand as the accused; the civil
action instituted therein for the recovery of the civil liability ex delicto is ipso facto extinguished,
grounded as it is on the criminal action. However, it is well to clarify that accused-appellant's
civil liability in connection with his acts against the victim, AAA, may be based on sources other
than delicts; in which case, AAA may file a separate civil action against the estate of accused-
appellant, as may be warranted by law and procedural rules.
Quasi contracts
Georgia Osmeña-Jalandoni vs. Carmen A. Encomienda
G.R. No. 205578, March 01, 2017, Peralta, J., Second Division
This is an appeal from the Decision of the Court of Appeals, Cebu City (CA) dated March 29,
2012 and its Resolution dated December 19, 2012 in CA-G.R. CV No. 01339 which set aside the
Decision of the Cebu Regional Trial Court (RTC), Branch 57, dated January 9, 2006, dismissing
respondent Carmen Encomienda's claim for sum of money.
FACTS:
In Cebu City, Carmen Encomienda and Georgia Osmeña Jalandoni were close friends.
Encomienda narrated that Jalandoni called her (Encomienda) to ask if Jalandoni could borrow
money for the search and rescue of her children in Manila, who were allegedly taken by their
father, Luis Jalandoni and to which Encomienda handed ₱l00,000. Again, while in Manila,
Jaladoni borrowed several sums of money and another ₱1 Million from Encomienda. Jalandoni
promised that she would pay Encomienda when her money in the bank matured.
Several request were still made by Jalandoni to Encomienda to which the latter acceded. In
sum, Encomienda spent around ₱3,245,836.02 and $6,638.20 for Jalandoni. Thereafter,
Encomienda gave Jalandoni six (6) weeks to settle her debts. However, despite several
demands, no payment was made.
Jalandoni insisted that the amounts given were not in the form of loan. But during the Barangay
conciliation, a member of the Lupong Tagapamayapa attested that Jalandoni admitted having
borrowed money from Encomienda and she was willing to return it. Because no settlement was
reached, Encomienda filed a complaint.
Jalandoni’s defense was that there was never a loan that was being extended to her. She
claimed that the money was extended to her because Encomienda said she only wanted to
extend some help and that it was not a loan. That the only reason for such demand of the
payment was the refusal of Jalandoni to Encomienda when the latter wanted to fetched her at
the airport causing the latter to feel upset.
The Regional Trial Court dismissed the complaint of Encomienda.
She appealed before the Court of Appeals and it was granted and reversed the RTC’s decision.
Jalandoni filed a motion for reconsideration, but the same was denied. Hence, the instant
petition.
ISSUE:
Whether or not there was Unjust Enrichment entitling Encomienda for reimbursement.
RULING: Yes.
Jalandoni insists that she never borrowed any amount of money from Encomienda. During the
entire time that Encomienda was sending her money and paying her bills, there was not one
reference to a loan. In other words, Jalandoni would have the Court believe that Encomienda
volunteered to spend about ₱3,245,836.02 and $6,638.20 of her hard-earned money in a span
of eight (8) months for her and her family simply out of pure generosity and the kindness of her
heart, without expecting anything in return. Such presupposition is incredible, highly unusual,
and contrary to common experience, unless the benefactor is a billionaire philanthropist who
usually spends his days distributing his fortune to the needy. It is a notable fact that Jalandoni
was married to one of the richest hacienderos of Iloilo and belong to the privileged and affluent
Osmeña family, being the daughter of the late Senator Sergio Osmeña, Jr. Clearly then,
Jalandoni is not one to be a convincing object of anyone's charitable acts, especially not from
someone like Encomienda who has not been endowed with such wealth and powerful
pedigree.
Jalandoni also contends that the amounts she received from Encomienda were mostly provided
and paid without her prior knowledge and thus she could not have consented to any loan
agreement. She relies on the trial court's finding that Encomienda's claims were not supported
by any documentary evidence. It must be stressed, however, that the trial court merely found
that no documentary evidence was offered showing Jalandoni's authorization or undertaking to
pay the expenses. But the second paragraph of Article 1236 of the Civil Code provides:
xx xx xx
Whoever pays for another may demand from the debtor what he has paid, except that if he
paid without the knowledge or against the will of the debtor, he can recover only insofar as
the payment has been beneficial to the dcbtor.
Clearly, Jalandoni greatly benefited from the purportedly unauthorized payments. Thus, even if
she asseverates that Encomienda's payment of her household bills was without her knowledge
or against her will, she cannot deny the fact that the same still inured to her benefit and
Encomienda must therefore be consequently reimbursed for it. Also, when Jalandoni learned
about the payments, she did nothing to express her objection to or repudiation of the same,
within a reasonable time. Even when she claimed that she was prepared with her own money,
she still accepted the financial assistance and actually made use of it. While she asserts to have
been upset because of Encomienda's supposedly intrusive actions, she failed to protest and, in
fact, repeatedly accepted money from her and further allowed her to pay her driver, security
guard, househelp, and bills for her cellular phone, cable television, pager, gasoline, food, and
other utilities. She cannot, therefore, deny the benefits she reaped from said acts now that the
time for restitution has come. The debtor who knows that another has paid his obligation for
him and who does not repudiate it at any time, must corollarily pay the amount advanced by
such third person.
Kinds of Civil Obligation
As to Rights and Obligations of Multiple Parties - Solidary
Spouses Amado O. Ibañez and Esther R. Ibañez vs. James Harper
G.R. No. 194272, February 15, 2017, Jardeleza, J., Third Division
This is an Amended Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court assailing the Decision dated October 29, 2009 (assailed Decision) and Resolution dated
September 29, 2010 (assailed Resolution) of the Court of Appeals (CA) in CA-G.R. SP No. 98623.
The CA set aside the Orders dated August 11, 2006 and February 20, 2007and reinstated the
Order dated March 24, 2006 of the Regional Trial Court (RTC) of Manila, Branch 40, in Civil Case
No. 97-86454.
FACTS:
Spouses Amado and Esther Ibañez (spouses Ibañez) borrowed from Francisco E. Muñoz, Sr.
(Francisco), Consuelo Estrada (Consuelo) and Ma. Consuelo E. Muñoz (Ma. Consuelo) the
amount of ₱1.3 million payable in three months, with interest at the rate of 3% a month. A
Promissory note was issued by the spouses Ibañez binding themselves jointly and severally to
pay Ma. Consuelo and Consuelo the loan amount with interest.
As security, a Deed of Real Estate Mortgage was executed in favor of Ma. Consuelo and
Consuelo over a parcel of land and its improvements. The mortgage contained the same terms
as that of the promissory note. Further stipulations were agreed upon wherein Ma. Consuelo
and Consuelo shall have the right to immediately foreclose the mortgage upon such events to
wit: (1) filing by the mortgagor of any petition for insolvency or suspension of payment; and/or
(2) failure of the mortgagor to perform or comply with any covenant, agreement, term or
condition of the mortgage.
On the allegations that the conditions of the mortgage were violated and that all checks were
dishonored by the drawee, Ma. Consuelo and Consuelo applied for foreclosure of the real
estate mortgage. Thus, in the RTC, Complaint for injunction and damages with prayers for writ
of preliminary injunction and temporary restraining order against Francisco, Ma. Consuelo,
Consuelo were filed by the spouses Ibañez. The Complaint alleged that there was no reason to
proceed with the foreclosure because the real estate mortgage was novated. Furthermore, the
parties filed an Amended Compromise Agreement which the RTC approved and adopted it as
Hatol. Subsequently, Spouses Ibañez manifested that: (1) there will be a slight delay in their
compliance due to new loan requirements of the GSIS; and (2) they have executed a Real Estate
Mortgage in favor of Ma. Consuelo and Consuelo, as found in the parties' Amended
Compromise Agreement.
Atty. Bermejo, representing himself as collaborating counsel for Francisco, Ma. Consuelo and
Consuelo, alleged that the spouses Ibañez failed to comply with their obligation under the
Amended Compromise Agreement. Thus, following the terms of the Amended Compromise
Agreement, the RTC's status quo order must be lifted and a certificate of sale over the subject
property be immediately issued.
The RTC granted Atty. Bermejo's motion. It found that the spouses Ibañez have yet to pay the
amount due, in violation of the terms of the Amended Compromise Agreement. The spouses
Ibañez moved to reconsider this order which the RTC granted. Upon the death of Francisco, he
was substituted by his legal representative James Harper (James). Through the course of the
proceeding, James through atty. Bermejo, argued that the trial court erred in holding that all
the stipulations in the Hatol have been complied with to the satisfaction of all the parties.
According to James, the spouses Ibañez made it appear that only Ma. Consuelo and Consuelo
remained as parties after Francisco’s death. Since James, as legal representative of Francisco
was excluded from the Deed of Assignment, the Amended Compromise Agreement could not
have been completely complied with.
After James’ motion for reconsideration was denied by the RTC, the heirs of Francisco led by
James filed a petition for certiorari before the CA. The CA ruled that the Amended Complaint
and the Hatol identified Francisco, Ma. Consuelo and Consuelo as the creditors and the parties
who were supposed to receive the proceeds of the Amended Compromise Agreement. Since
the Deed of Assignment was executed only in favor of Ma. Consuelo and Consuelo, the loan
obligation of the spouses Ibañez to Francisco remained unsettled. The heirs of Francisco thus
retain the right to invoke paragraph 2.5 of the Compromise Agreement which provides for the
lifting of the trial court's status quo order. The CA disagreed that there was no valid substitution
of parties and noted from the records that the RTC was notified of Francisco's death on June 29,
2006. The late filing of the notice of death did not divest the RTC of jurisdiction to favorably act
on the heirs' motion to lift the status quo order and issue the writ of execution.
ISSUE:
Whether or not t in the Hatol, and the Amended Compromise Agreement it is based on, the
obligation was solidary.
RULING: No.
Here, the spouses Ibañez agreed to pay Francisco, Ma. Consuelo and Consuelo the total amount
of ₱3,000,000, with the initial payment of ₱2,000,000 to be sourced from the proceeds of a
GSIS loan and secured by the spouses Ibañez while the remaining balance of ₱1,000,000 to be
paid one year from the date of the Amended Compromise Agreement.
As correctly identified by the CA, the Amended Compromise Agreement clearly refers to the
spouses Ibañez as plaintiffs and Francisco, Consuelo and Ma. Consuelo as the defendants they
covenanted to pay. There is nothing in the Hatol, and the Amended Compromise Agreement it
is based on, which shows a declaration that the obligation created was solidary.
In any case, solidary obligations cannot be inferred lightly. They must be positively and clearly
expressed. Articles 1207 and 1208 of the Civil Code provide:
Art. 1207. The concurrence of two or more creditors or of two or more debtors in one and the
same obligation does not imply that each one of the former has a right to demand, or that
each one of the latter is bound to render, entire compliance with the prestations. There is a
solidary liability only when the obligation expressly so states, or when the law or the nature of
the obligation requires solidarity.
Art. 1208. If from the law, or the nature or the wording of the obligations to which the
preceding article refers the contrary does not appear, the credit or debt shall be presumed to
be divided into as many equal shares as there are creditors or debtors, the credits or debts
being considered distinct from one another, subject to the Rules of Court governing the
multiplicity of suits.
(Emphasis supplied.)
In this case, given that solidarity could not be inferred from the agreement, the presumption
under the law applies — the obligation is joint.
As defined in Article 1208, a joint obligation is one where there is a concurrence of several
creditors, or of several debtors, or of several debtors, or of several creditors and debtors, by
virtue of which each of the creditors has a right to demand, and each of the debtors is bound
to render compliance with his proportionate part of the prestation which constitutes the
object of the obligation. Each debtor answers only for a part of the whole liability and to each
obligee belongs only a part of the correlative rights as it is only in solidary obligations that
payment made to any one of the solidary creditors extinguishes the entire obligation. This
means that Francisco, Ma. Consuelo and Consuelo are each entitled to equal shares in the
₱3,000,000 agreed upon in the Amended Compromise Agreement and that payment to
Consuelo and Ma. Consuelo will not have the effect of discharging the obligation with respect
to Francisco.
The spouses Ibañez assigned the proceeds of the GSIS loan and executed a real estate mortgage
over the Puerto Azul property only in Ma. Consuelo and Consuelo's favour. By doing so, they did
not discharge their obligation in accordance with the terms of the Amended Compromise
Agreement and left their loan obligation to Francisco unsettled. Thus, and as correctly held by
the CA, it was gravely erroneous for the trial court to rule that all the stipulations in the Hatol
have been complied with. Under the circumstances, the obligations to Francisco, and
consequently, his heirs, have clearly not been complied with.
The trial court deprived the heirs of Francisco of the opportunity to assert their rights under the
Amended Compromise Agreement not only in its August 11, 2006 and February 20, 2007
Orders finding that the stipulations in the Amended Compromise Agreement have been
complied with to the satisfaction of all parties, but also in its June 15, 2006 Order which set
aside the March 24, 2006 Order granting the motion filed by the counsel for Francisco's heirs.
Modes of Extinguishment of Obligation
Payment or Performance
Special Forms of Payment
(Dation in Payment)
Spouses May S. Villaluz and Johnny Villaluz, Jr. vs. Land Bank of the Philippines and the
Register of Deeds for Davao City
G.R. No. 192602, January 18, 2017, Jardeleza, J., Third Division
The Civil Code sets the default rule that an agent may appoint a substitute if the principal has
not prohibited him from doing so. The issue in this petition for review on certiorari, which seeks
to set aside the Decision dated September 22, 2009 and Resolution dated May 26, 2010 of the
Court of Appeals (CA) in CA-G.R. CV No. 01307, is whether the mortgage contract executed by
the substitute is valid and binding upon the principal.
FACTS:
Paula Agsibit (Agsibit) was the chairperson of Milflores Cooperative and she needed a loan for
the expansion of her cut flowers business. She requested her daughter May S. Villaluz (May) to
provide her (Agsibit) with collateral for the said loan. Hence, May convinced her husband,
Johnny Villaluz to allow Agsibit to use their land as collateral to which the latter acceded. The
spouses Villaluz then excuted a Special Power of Attorney in favor of Agsibit authorizing her to,
among others, negotiate for the sale mortgage, or other forms of disposition a parcel of land
and to sign all documents relating to the sale, loan or mortgage, or other disposition of the
aforementioned property on behalf of the spouses Villaluz. The power of attorney neither
specified the conditions under which the special powers may be exercised nor stated the
amounts for which the subject land may be sold or mortgaged.
Sometime later, Agsibit executed her own Special Power of Attorney, appointing Milflores
Cooperative (Milflores) as attorney-in-fact in obtaining a loan from and executing a real
mortgage in favor of Land Bank of the Philippines (Land Bank). On June 21, 1996, in a
representative capacity, Milflores executed a Real Estate Mortgage in favor of Land Bank in
consideration of the ₱3 million loan to be extended by Land Bank. Milflores also executed a
Deed of Assignment of the Produce/Inventory as additional collateral for the loan. On June 25,
1996, Land Bank partially released the Loan amount and it was on October 1996 that Land Bank
released the remaining loan to Milflores.
However, Milflores failed to pay its obligation to the Land Bank prompting the latter to file a
petition for extra-judicial foreclosure sale. Land Bank won the auction sale as the sole bidder.
The Spouses Villaluz learned of the auction sale of their land, thus, they filed a complaint with
the RTC seeking to answer the question of whether Agsibit could have validly delegated her
authority as attorney-in-fact to Milflores Cooperative. RTC dismissed the complaint. On appeal,
the CA affirmed the RTC decision.
On their petition for review, one of the arguments of Spouses Villaluz was that the Special
Power of Attorney was extinguished when Milflores assigned its produce and inventory to Land
Bank as additional collateral. On the other hand Land Bank argued that the Real Estate
Mortgage can only be extinguished after the amount of the secured loan has been paid and
that the additional collateral was executed because the deed of assignment was meant to cover
any deficiency in the Real Estate Mortgage.
ISSUE:
Whether or not Special Power of Attorney was extinguished upon execution of an additional
security (Deed of Assignment of the produce/Inventory) which serves as payment of the loan of
Milflores Cooperative to Land Bank.
RULING: No.
The assignment was for the express purpose of "securing the payment of the Line/Loan,
interest and charges thereon." Nowhere in the deed can it be reasonably deduced that the
collaterals assigned by Milflores Cooperative were intended to substitute the payment of sum
of money under the loan. It was an accessory obligation to secure the principal loan obligation.
The assignment, being intended to be a mere security rather than a satisfaction of
indebtedness, is not an elation in payment under Article 1245 and did not extinguish the loan
obligation. "Dation in payment extinguishes the obligation to the extent of the value of the
thing delivered, either as agreed upon by the parties or as may be proved, unless the parties by
agreement-express or implied, or by their silence-consider the thing as equivalent to the
obligation, in which case the obligation is totally extinguished." As stated in the second
condition of the Deed of Assignment, the "Assignment shall in no way release the ASSIGNOR
from liability to pay the Line/Loan and other obligations, except only up to the extent of any
amount actually collected and paid to ASSIGNEE by virtue of or under this Assignment." Clearly,
the assignment was not intended to substitute the payment of sums of money. It is the delivery
of cash proceeds, not the execution of the Deed of Assignment, that is considered as payment.
Absent any proof of delivery of such proceeds to Land Bank, the Spouses Villaluz's claim of
payment is without basis.
Neither could the assignment have constituted payment by cession under Article 1255 for the
plain and simple reason that there was only one creditor, Land Bank. Article 1255 contemplates
the existence of two or more creditors and involves the assignment of all the debtor's property.
Special Forms of Payment
(Tender of payment and Consignation)
Philippine national Bank vs. Lilibeth Chan
G.R. No. 206037, March 13, 2017, Del Castillo, J., First Division
We resolve the Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing
the May 28, 2012 Decision and the February 21, 2013 Resolution of the Court of Appeals (CA) in
CA-G.R. SP No. 98112.
FACTS:
Respondent Lilibeth S. Chan owns a commercial building in Manila covered by a Transfer

Certificate of Title (TCT) No. 208782. The commercial building was leased to petitioner
Philippine National Bank (PNB). Meanwhile, respondent obtained a loan of ₱1,500,000.00 from
PNB secured by Real Estate Mortgage over the abovementioned leased property. The loan was
increased to ₱7,500,000.00 but respondent and PNB executed an “Amendment to the Real
Estate Mortgage by Substitution of Collateral”, where the mortgage over the leased property
was released and substituted by a mortgage over a parcel of land located in Manila, covered by
TCT No. 209631.
Sometime later, respondent filed a complaint for Unlawful Detainer before the Metropolitan
Trial Court (MeTC) against PNB alleging that PNB failed to pay its monthly rentals from October
2004 to August 2005.
On the other hand, PNB claimed that the rental proceeds from October 2004 to January 15,
2005 were applied as payment for the outstanding loan of respondent which became due and
demandable in October 2004. For the monthly rentals from January 16, 2005 to February 2006,
PNB argued that it deposited the rentals in a separate non-drawing savings account for the
benefit of the rightful party because PNB received a demand letter from a certain Lamberto
Chua who claimed to be the new owner of the leased property and that the rentals be paid to
him directly.
Subsequently, the parties agreed that the rental proceeds from October 2004 to January 15,
2005 will apply to respondent’s outstanding loan. As to the rentals due from January 16, 2005
to February 2006 which amounts to ₱1,348,643.92, PNB consigned it with the MeTC on May 31,
2006.
The MeTC ruled in favor of respondent and ordered PNB to pay the accrued rentals of
₱1,348,643.92 with interest at 6% per annum from January 16, 2005 up to March 23, 2006,
when PNB finally vacated the leased property. PNB appealed to the Regional Trial Court (RTC).
The RTC affirmed the ruling of the MeTC and one of the decision of the RTC was that
respondent was entitled to the 6% per annum because PNB incurred delay when it refused to
pay and vacate the premises despite demand. PNB filed a motion for reconsideration but it was
denied.
PNB filed a petition for review before the CA. As regard to the 6% per annum the CA ruled that
PNB merely opened a non-drawing savings account where it deposited the monthly rentals.
However, said deposit was not the consignation contemplated by law. Thus, PNB was liable to
pay the 6% legal interest per annum.
PNB filed a partial Motion for Reconsideration but the CA denied it. Hence, the present petition
for review on certiorari before the Supreme Court.
ISSUE:
Whether or not PNB properly consigned the disputed rental payments in the amount of
₱l,348,643.92 with the Office of the Clerk of Court of the Me TC resulting to PNB not liable to
pay the 6% legal interest rate.
RULING: No.
"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. It generally requires a prior
tender of payment."
Under Article 1256 of the Civil Code, consignation alone is sufficient even without a prior tender
of payment: a) when the creditor is absent or unknown or does not appear at the place of
payment; b) when he is incapacitated to receive the payment at the time it is due; c) when,
without just cause, he refuses to give a receipt; d) when two or more persons claim the same
right to collect; and e) when the title of the obligation has been lost.
For consignation to be valid, the debtor must comply with the following requirements under
the law:
1) There was a debt due;
2) Valid prior tender of payment, unless the consignation was made because of some legal
cause provided in Article 1256;
3) Previous notice of the consignation has been given to the persons interested in the
performance of the obligation;
4) The amount or thing due was placed at the disposal of the court; and,
5) After the consignation had been made, the persons interested were notified thereof.
"Failure in any of the requirements is enough ground to render a consignation ineffective.”

In the present case, the records show that: first, PNB had the obligation to pay respondent a
monthly rental of ₱116,788.44, amounting to ₱l,348,643.92, from January 16, 2005 to March
23, 2006; second, PNB had the option to pay the monthly rentals to respondent or to apply the
same as payment for respondent's loan with the bank, but PNB did neither; third, PNB instead
opened a non-drawing savings account at its Paco Branch under Account No. 202-565327-3,
where it deposited the subject monthly rentals, due to the claim of Chua of the same right to
collect the rent; and fourth, PNB consigned the amount of ₱l,348,643.92 with the Office of the
Clerk of Court of the MeTC of Manila on May 31, 2006.
Note that PNB's deposit of the subject monthly rentals in a non-drawing savings account is
not the consignation contemplated by law, precisely because it does not place the same at the
disposal of the court. Consignation is necessarily judicial; it is not allowed in venues other than
the courts. Consequently, PNB's obligation to pay rent for the period of January 16, 2005 up to
March 23, 2006 remained subsisting, as the deposit of the rentals cannot be considered to have
the effect of payment.
It is important to point out that PNB's obligation to pay the subject monthly rentals had already
fallen due and demandable before PNB consigned the rental proceeds with the MeTC on May
31, 2006. Although it is true that consignment has a retroactive effect, such payment is deemed
to have been made only at the time of the deposit of the thing in court or when it was placed at
the disposal of the judicial authority. Based on these premises, PNB's payment of the monthly
rentals can only be considered to have been made not earlier than May 31, 2006.
Given its belated consignment of the rental proceeds in court, PNB clearly defaulted in the
payment of monthly rentals to the respondent for the period January 16, 2005 up to March
23, 2006, when it finally vacated the leased property. As such, it is liable to pay interest in
accordance with Article 2209 of the Civil Code.
Article 2209 provides that if the debtor incurs delay in the performance of an obligation
consisting of the payment of a sum of money, he shall be liable to pay the interest agreed upon,
and in the absence of stipulation, the legal interest at 6% per annum. There being no stipulated
interest in this case, PNB is liable to pay legal interest at 6% per annum, from January 16, 2005
up to May 30, 2006.
Loss of the thing due or Impossibility of Performance
ILOILO JAR CORPORATION vs. COMGLASCO CORPORATION AGUILA GLASS
G.R. No. 219509, January 18, 2017, Mendoza, J., Second Division
This petition for review on certiorari seeks to reverse and set aside the January 30, 2015
Decision and June 17, 2015 Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 01475,
which overturned the February 17, 2005 Amended Order of the Regional Trial Court, Branch 37,
Iloilo City (RTC).
FACTS:
A contract of lease was entered into by petitioner Iloilo Jar Corporation (Iloilo Jar), as lessor and
Comglasco Corporation/Aguila Glass (Comglasco), as lessee. The term of the lease was for a
period of three (3) years or until August 15, 2003.
But sometime December 2001, Comglasco requested for the pre-termination of the lease
effective on the same date. Iloilo Jar rejected this request on the ground that the pre-
termination of the lease contract was not stipulated therein. However, despite denial of the
request for pre-termination Comglasco still removed all its stock, merchandise and equipment
from the leased premises and Comglasco no longer paid all the accrued rents despite several
demand letters.
A final demand letter being ignored by Comglasco, Iloilo Jar prompted to file a civil action for
breach of contract and damages before the RTC. Comglasco filed its answer and argued that
Article 1267 of the Civil Code is applicable and consequentially, releasing them of the obligation
from the lease contract. It explained that the consideration had become so difficult due to the
global and regional economic crisis that had plagued the economy.
RTC ruled in favor of Iloilo Jar. Comglasco moved for reconsideration but it was denied by the
RTC.
Comglasco appealed before the CA. The CA reversed the RTC decision. Iloilo Jar moved for
reconsideration but it was denied by the CA. Hence, the petition.
ISSUE:
Whether or not Comglasco was justified in treating the lease contract terminated due to the
economic circumstances then prevalent.
RULING: No.
To evade responsibility, Comglasco explained that by virtue of Article 1267, it was released
from the lease contract. It cited the existing global and regional economic crisis for its inability
to comply with its obligation.
Comglasco's position fails to impress because Article 1267 applies only to obligations to do and
not to obligations to give. Thus, in Philippine National Construction Corporation v. Court of
Appeals, 29 the Court expounded:
Petitioner cannot, however, successfully take refuge in the said article, since it is applicable
only to obligations "to do," and not to obligations "to give." An obligation "to do" includes all
kinds of work or service; while an obligation "to give" is a prestation which consists in the
delivery of a movable or an immovable thing in order to create a real right, or for the use of the
recipient, or for its simple possession, or in order to return it to its owner.
The obligation to pay rentals or deliver the thing in a contract of lease falls within the prestation
"to give"; xxx
Considering that Comglasco's obligation of paying rent is not an obligation to do, it could not
rightfully invoke Article 1267 of the Civil Code. Even so, its position is still without merit as
financial struggles due to an economic crisis is not enough reason for the courts to grant
reprieve from contractual obligations.
In COMGLASCO Corporation/Aguila Glass v. Santos Car Check Center Corporation, the Court
ruled that the economic crisis which may have caused therein petitioner's financial problems is
not an absolute exceptional change of circumstances that equity demands assistance for the
debtor. It is noteworthy that Comglasco was also the petitioner in the abovementioned case,
where it also involved Article 1267 to pre-terminate the lease contract.
Thus, the RTC was correct in ordering Comglasco to pay the unpaid rentals because the
affirmative defense raised by it was insufficient to free it from its obligations under the lease
contract. In addition, Iloilo Jar is entitled to attorney's fees because it incurred expenses to
protect its interest. The trial court, however, erred in awarding exemplary damages and
litigation expenses.
Compensation
Kinds of Compensation - Legal
California Manufacturing Company, Inc., vs. Advance Technology System, Inc.,
G. R. No. 202454, April 25, 2017, Sereno, CJ., First Division
Before us is a Petition for Review on Certiorari assailing the Decision of the Court of Appeals
(CA) in CA-G.R. CV No. 94409, which denied the appeal filed by California Manufacturing
Company, Inc. (CMCI) from the Decision2 of Regional Trial Court (RTC) of Pasig City, Branch 268,
in the Complaint for Sum of Money filed by Advanced Technology Systems, Inc. (ATSI) against
the former.
FACTS:
Petitioner California Manufacturing Company, Inc., (CMCI), a domestic corporation leased from
Advance Technology System, Inc., (ATSI) also a domestic corporation, a Prodopak machine
which was used to pack products in 20-ml. pouches. Both parties agreed on a monthly rental of
₱98,000 exclusive of tax. Sometime later ATSI filed a complaint for sum of money against CMCI
to collect unpaid rentals for the months of June, July, August, and September 2003. ATSI
claimed that CMCI ignored all the billings statements and its demand letter.
On the other hand, CMCI moved for the dismissal of the complaint on the ground of
extinguishment of obligation through legal compensation. CMCI averred that ATSI and
Processing Partners and Packaging Corporation (PPPC), a toll packer of CMCI products, was one
and the same. This was proven by the fact of copies of the Articles of Incorporation and General
Information Sheets (GIS). That upon the request of PPPC, through its Vice President Felicisima
Celones, CMCI advance ₱4 million as mobilization fund. CMCI likewise claimed that in a letter,
Felicisima proposed to set off PPPC's obligation to pay the mobilization fund with the rentals for
the Prodopak machine. Furthermore, CMICI argued that the proposal was binding on both PPPC
and ATSI because Felicisima was a major stockholder of the two corporation and that she was
authorized to request the offsetting of PPC’s obligation with ATSI’s receivable from CMCI. When
ATSI filed suit in November 2003, PPPC's debt arising from the mobilization fund allegedly
amounted to ₱l0,766.272.24. In sum, CMICI contended that legal compensation had set in.
RTC rendered a decision in favor of ATSI. On appeal, the CA affirmed the trial court’s ruling that
legal compensation had not set in. CMCI filed a motion for reconsideration but it was denied.
Hence, the petition.
ISSUE:
Whether or not the CA erred in affirming the ruling of the RTC that legal compensation between
ATSI's claim against CMCI on the one hand, and the latter's claim against PPPC on the other
hand, has not set in.
RULING: No. We affirm the CA Decision in toto.
Article 1279 of the Civil Code provides:
ARTICLE 1279. In order that compensation may be proper, it is necessary:
(1) That each one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are consumable, they be of
the same kind, and also of the same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor.
The law, therefore, requires that the debts be liquidated and demandable. Liquidated debts are
those whose exact amounts have already been determined.
CMCI has not presented any credible proof, or even just an exact computation, of the supposed
debt of PPPC. It claims that the mobilization fund that it had advanced to PPPC was in the
amount of P4 million. Yet, Felicisima's proposal to conduct offsetting in her letter dated 30 July
2001 pertained to a ₱3.2 million debt of PPPC to CMCI. Meanwhile, in its Answer to ATSI's
complaint, CMCI sought to set off its unpaid rentals against the alleged ₱ l0 million debt of
PPPC. The uncertainty in the supposed debt of PPPC to CMCI negates the latter's invocation of
legal compensation as justification for its non-payment of the rentals for the subject Prodopak
machine.
Novation
As to its nature: Subjective or personal
– Delegacion
Paradigm Development Corporation of the Philippines vs. Bank of the Philippine Islands
G.R. No. 191174, June 7, 2017, 3rd Division, Reyes, J.:
This is a Petition for Review on Certiorari filed under Rule 45 of the Rules of Court assailing the
Decision dated November 25, 2009 and Resolution dated February 2, 2010 of the Court of
Appeals (CA) in CA-G.R. CV No. 89755, which granted respondent Bank of the Philippine Islands'
(BPI) appeal and accordingly dismissed the complaint filed by petitioner Paradigm Development
Corporation of the Philippines (PDCP)
FACTS:
Two real estate mortgages contracts were executed by petitioner Paradigm Development
Corporation of the Philippines (PDCP) in favor of Sengkon Trading (Sengkon) in order to secure
Sengkon’s obligation amounting to ₱60 Million under the Agreement for Credit Line it took with
Far East Bank and Trust Company (FEBTC). FEBTC was acquired by herein respondent Bank of
the Philippine Islands (BPI).
In one of the communication letters during the several transactions between Sengkon and
FEBTC, the latter approved the request of the former to change its business name from
Sengkon Trading to Sengkon Trading, Inc. (STI).
Sometime later, Sengkon failed to pay its obligations. Thus, FEBTC (now BPI) wrote a demand
letter from PDCP for the alleged Credit Line and Receipt availments with principal balance of
₱244,277,199.68 plus interest and other charges which Sengkon failed to pay. During the
Negotiation stage, PDCP proposed to pay ₱50 Million which corresponds to the obligations
secured by its property, but FEBTC wanted that the obligation of Sengkon be paid in its entirety.
Said negotiations did not push through. Thus, FEBTC filed a foreclosure proceeding against the
mortgage properties of PDCP before the RTC. However, PDCP learned that FEBTC extra-
judicially foreclosed the 2 mortgages without giving notice to PDCP as mortgagor. The
mortgaged properties were sold to FEBTC as the lone bidder.
The said action by FEBTC prompted PDCP to file a Complaint for Annulment of Mortgage,
Foreclosure, Certificate of Sale and Damages with the RTC against respondent BPI as successor
in interest of the FEBTC. PDCP alleged that the real estate mortgages and the foreclosure
proceedings were null and void. Favoring PDCP, the RTC observed that the credit line secured
by PDCP’s property may only be availed within 1 year.
On the other hand, BPI alleged that the credit line was extended which PDCP denies because it
was not notified of such extension, hence, could not have consented thereto. Thus, the real
estate mortgages survive since there was no monetary obligation that needs to be secured.
The Court of Appeals reversed the RTC’s ruling on all points. Thus, this petition.
ISSUE:
Whether or not Sengkon Trading’s obligation was extinguished by novation when it changed its
business name to Sengkon Trading Inc., with the approval of FEBTC.
RULING: No.
Novation is a mode of extinguishing an obligation by changing its objects or principal

obligations, by substituting a new debtor in place of the old one, or by subrogating a third
person to the rights of the creditor. Article 1293 of the Civil Code defines novation as "consists
in substituting a new debtor in the place of the original one, [which] may be made even without
the knowledge or against the will of the latter, but not without the consent of the creditor."
However, while the consent of the creditor need not be expressed but may be inferred from
the creditor's clear and unmistakable acts, to change the person of the debtor, the former
debtor must be expressly released from the obligation, and the third person or new debtor
must assume the former's place in the contractual relation.
In the present case, PDCP failed to prove by preponderance of evidence that Sengkon was
already expressly released from the obligation and that STI assumed the former's obligation.
Again, as correctly pointed out by the CA, the Deed of Assumption of Line/Loan with Mortgage
(Deed of Assumption) which was supposed to embody STI's assumption of all the obligations of
Sengkon under the line, including but not necessarily limited to the repayment of all the
outstanding availments thereon, as well as all applicable interests and other charges, was not
signed by the parties.
Contrary to PDCP's claim, the CA's rejection of its claim of novation is not based on the absence
of the mortgagor's conformity to the Deed of Assumption. The CA's rejection is based on the
fact that the non-execution of the Deed of Assumption by Sengkon, STI and FEBTC rendered the
existence of novation doubtful because of lack of clear proof that Sengkon is being expressly
released from its obligation; that STI was already assuming Sengkon's former place in the
contractual relation; and that FEBTC is giving its conformity to this arrangement. While FEBTC
indeed approved Sengkon's request for the "change in account name" from Sengkon to STI,
such mere change in account name alone does not meet the required degree of certainty to
establish novation absent any other circumstance to bolster said conclusion.
CONTRACTS
Fundamental Characteristics/Principles of Contracts
Mutuality of Contracts - Acceleration Clause
KT CONSTRUCTION SUPPLY, INC., represented by William Go vs. PHILIPPINE SAVINGS BANK
G.R. No. 228435, June 21, 2017, Mendoza, J., Second Division
This petition for review on certiorari seeks to reverse and set aside the April 22, 2016
Decision and November 23, 2016 Resolution of the Court of Appeals (CA) in CA-G.R. CV No.
103037, which affirmed with modification the June 11, 2014 Decision of the Regional Trial
Court, Branch 133, Makati(RTC)City.
FACTS:
A loan in the amount of ₱2.5 Million was obtained by petitioner KT Construction Supply (KT
Construction) from respondent Philippine Savings Bank (PS Bank) as evidence by a promissory
note. The said note was signed by William K. Go (Go) and Nancy Go-Tan (Go-Tan) in their
capacity as Vice-President/General Manager and Secretary/Treasurer of KT Construction,
respectively. It was stipulated in the (promissory) note that the loan was payable within 60
months from November 2006 to October 2011.
On January 2011, PS Bank sent a demand letter to KT Construction asking the latter to pay its
outstanding obligation in the amount of ₱725,438. It excludes also interest, penalties, legal fees
and other charges. PS Bank filed a complaint for sum of money against KT Construction because
the latter failed to pay despite demand.
The RTC ruled in favor of PS Bank. It held that the promissory note expressly declared that the
entire obligation shall immediately become due and payable upon default in payment of any
installment.
KT Construction appealed before the CA. The CA affirmed RTC decision and held that due to the
acceleration clause, the loan became due and demandable upon KT Construction’s failure to
pay an installment.
KT Construction moved for reconsideration but it was denied by the CA. Hence, the appeal
instituted by KT Construction.
ISSUE:
Whether or not the obligation of KT Construction was already due and demandable in view of
the acceleration clause in the promissory note.
RULING: Yes.
It has long been settled that an acceleration clause is valid and produces legal effects. In the
case at bench, the promissory note explicitly stated that default in any of the installments shall
make the entire obligation due and demandable notice even without or demand. Thus, KT
Construction was erroneous in saying that PSBank's complaint was premature on the ground
that the loan was due only on October 12, 2011. KT Construction's entire loan obligation
became due and demandable when it failed to pay an installment pursuant to the acceleration
clause.
Moreover, KT Construction could not evade responsibility by claiming that it had not received
any demand letter for the payment of the loan. PSBank had sent a demand letter, dated
February 3, 2011, asking KT Construction to pay the remaining obligation within five (5) days
from receipt of the letter. More importantly, even granting that KT Construction did not receive
the demand letter, the loan still became due and demandable because the parties expressly
waived the necessity of demand.
Further, KT Construction is mistaken that it could not be held liable for the entire loan
obligation because PSBank failed to prove how many installments it had failed to pay. In Bognot
v.RR!Lending Corporation, the Court explained that once the indebtedness had been
established, the burden is on the debtor to prove payment, wit:
Jurisprudence tells us that one who pleads payment has the burden of proving it; the burden
rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment.
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.
In the case at bench, KT Construction admitted that it obtained a loan with PSBank. It,
nevertheless, averred that it had been regularly paying the loan. Thus, KT Construction could
have easily provided deposit slips and other documentary evidence to prove the fact of
payment. It, however, merely alleged that it religiously paid its obligation without presenting
any the evidence to substantiate said obligation.
Classification of Contracts
According to perfection – Formal
Kabisig Real Wealth Dev., Inc. and Fernando C. Tio vs. Young Builders Corporation
This is a Petition for Review which petitioners Kabisig Real Wealth Dev., Inc. and Fernando C.
Tio filed assailing the Court of Appeals (CA) Decision dated June 28, 2013 and Resolution dated
March 28, 2014 in CAG.R. CV No. 02945, affirming the Decision of the Regional Trial Court (RTC)
of Cebu City, Branch 12, dated July 31, 2008 in Civil Case No. CEB- 27950.
FACTS:
Kabisig Real Wealth Dev., Inc. (Kabisig), through Ferdinand Tio (Tio), contracted the services of
Young Builders Corporation (Young Builders) to supply labor, tools, equipment, and materials
for the renovation of its building in Cebu City. Young Builders finished the work and billed
Kabisig ₱4,123,320.95. However, despite numerous demands, Kabisig failed to pay. Kabisig
contended that no written contract was ever entered into between the former and Young
Builders. Kabisig also claimed that it was never informed of the estimated cost of the
renovation. This prompted Young Builders to file an action for collection of sum of money
against Kabisig.
RTC ruled in favor of Young Builders and awarded ₱4,123,320.95 as actual damages, plus 12%
per annum until it was fully paid.
Kabisig elevated the matter to the CA but the CA affirmed the decision of the RTC, with
modification. The CA deleted the award of Actual damages and instead, ordered Kabisig and Tio
to jointly pay Young Builders the amount of ₱2,400,000.00 as Temperate damages for the value
of services, rendered and materials used in the renovation of defendants-appellants building
plus 12% per annum until it was fully paid.
Young Builders and Kabisig moved for reconsideration but both were denied by the CA.
Thus, the instant petition filed by Kabisig
ISSUE:
Whether or not there was a perfected contract between Kabisig and Young Builders.
RULING: Yes
Under the Civil Code, a contract is a meeting of minds, with respect to the other, to give
something or to render some service. Article 1318 reads:
Art. 1318. 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.
Accordingly, for a contract to be valid, it must have the following essential elements: (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. Consent must exist, otherwise,
the contract is nonexistent. Consent is manifested by the meeting of the offer and the
acceptance of the thing and the cause, which are to constitute the contract. By law, a contract
of sale, is perfected at the moment there is a meeting of the minds upon the thing that is the
object of the contract and upon the price. Indeed, it is a consensual contract which is perfected
by mere consent.
Through the testimonies of both Young Builders' and Kabisig's witnesses, Tio commissioned the
company of his friend, Nelson Yu, to supply labor, tools, equipment, and materials for the
renovation of Kabisig's building into a restaurant. While Tio argues that the renovation was
actually for the benefit of his partners, Fernando Congmon, Gold En Burst Foods Co., and
Sunburst Fried Chicken, Inc., and therefore, they should be the ones who must shoulder the
cost of the renovation, said persons were never impleaded in the instant case. Moreover, all
the documents pertaining to the project, such as official receipts of payment for the building
permit application, are under the names of Kabisig and Tio.
Further, Kabisig's claim as to the absence of a written contract between it and Young Builders
simply does not hold water. It is settled that once perfected, a contract is generally binding in
whatever form, whether written or oral, it may have been entered into, provided the
aforementioned essential requisites for its validity are present. Article 1356 of the Civil Code
provides:
Art. 1356. Contracts shall be obligatory in whatever form they may have been entered into,
provided all the essential requisites for their validity are present.
xxxx
There is nothing in the law that requires a written contract for the agreement in question to be
valid and enforceable. Also, the Court notes that neither Kabisig nor Tio had objected to the
renovation work, until it was already time to settle the bill.
Kinds of Contracts as to Validity
Void or Inexistent
FACTS:
spouses Villaluz then excuted a Special Power of Attorney in favor of Agsibit authorizing her to,
On their petition for review, the spouses Villaluz argued that the Real Estate Mortgage was void
since there was no loan yet when the mortgage contract was executed.
ISSUE:
Whether or not Real Estate Mortgage was void for want of consideration since the loan was not
yet existing during the time when the mortgage was executed.
RULING: No.
Perhaps recognizing the correctness of the CA and the RTC's legal position, the Spouses Villaluz
float a new theory in their petition before us. They now seek to invalidate the Real Estate
Mortgage for want of consideration. Citing Article 1409(3), which provides that obligations
"whose cause or object did not exist at the time of the transaction" are void ab initio, the
Spouses Villaluz posit that the mortgage was void because the loan was not yet existent when
the mortgage was executed on June 21, 1996. Since the loan was released only on June 25,
1996, the mortgage executed four days earlier was without valuable consideration.
Article 1347 provides that "[a]ll things which are not outside the commerce of men, including
future things, may be the object of a contract." Under Articles 1461 and 1462, things having a
potential existence and "future goods," i.e., those that are yet to be manufactured, raised, or
acquired, may be the objects of contracts of sale. The narrow interpretation advocated by the
Spouses Villaluz would create a dissonance between Articles 1347, 1461, and 1462, on the one
hand, and Article 1409(3), on the other. A literal interpretation of the phrase "did not exist at
the time of the transaction" in Article 1409(3) would essentially defeat the clear intent and
purpose of Articles 1347, 1461, and 1462 to allow future things to be the objects of contracts.
To resolve this apparent conflict, Justice J.B.L. Reyes commented that the phrase "did not exist"
should be interpreted as "could not come into existence" because the object may legally be a
future thing. We adopt this interpretation.
The cause of the disputed Real Estate Mortgage is the loan to be obtained by Milflores
Cooperative. This is clear from the terms of the mortgage document, which expressly provides
that it is being executed in "consideration of certain loans, advances, credit lines, and other
credit facilities or accommodations obtained from [Land Bank by Milflores Cooperative] x x x in
the principal amount of [₱3,000,000]." The consideration is certainly not an impossible one
because Land Bank was capable of granting the ₱3,000,000 loan, as it in fact released one-third
of the loan a couple of days later. Although the validity of the Real Estate Mortgage is
dependent upon the validity of the loan, what is essential is that the loan contract intended to
be secured is actually perfected, not at the time of the execution of the mortgage contract vis-
a-vis the loan contract. In loan transactions, it is customary for the lender to require the
borrower to execute the security contracts prior to initial drawdown. This is understandable
since a prudent lender would not want to release its funds without the security agreements in
place. On the other hand, the borrower would not be prejudiced by mere execution of the
security contract, because unless the loan proceeds are delivered, the obligations under the
security contract will not arise. In other words, the security contract-in this case, the Real Estate
Mortgage-is conditioned upon the release of the loan amount. This suspensive condition was
satisfied when Land Bank released the first tranche of the ₱3,000,000 loan to Milflores
Cooperative on June 25, 1996, which consequently gave rise to the Spouses Villaluz's
obligations under the Real Estate Mortgage.
SALES
Rights and Obligations of the Vendor
To deliver the Object
Dasmariñas T. Arcaina and Magnani T. Banta vs. Noemi L. Ingram, represented by Ma.
Nenette L. Archinue
G.R. No. 196444, February 15, 2017, Jardeleza, J., Third Division
This is a Petition for Review on Certiorari assailing the October 26, 2010 Decision and March 17,
2011 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 107997, which affirmed with
modification the March 11, 2009 Decision of the Regional Trial Court-Branch 7 of Legazpi City
(RTC). The RTC reversed the July 31, 2008 Order of the 3rd Municipal Circuit Trial Court of Sto.
Domingo-Manito in Albay (MCTC). The MCTC dismissed for insufficiency of evidence Civil Case
No. S-241-a case for recovery of ownership and title to real property, possession and damages
with preliminary injunction (recovery case)-filed by respondent Noemi L. Ingram (Ingram)
against petitioners Dasmarinas T. Arcaina (Arcaina) and Magnani T. Banta (Banta) [collectively,
petitioners].
FACTS:
Petitioner Arcaina is the owner of property Lot No. 3230 located at Albay. Petitioner Arcaina’s
attorney-in-fact, Banta, entered into a contract of sale of property with respondent Ingram with
a contract price of ₱1,860,000.00. Together with the latter’s attorney-in-fact, respondent
Archinue, Banta showed the metes and bounds of the property and presented that the Lot No.
3230 has an area of more or less 6,200 square meters. As a consequence, Banta and
respondent Ingram executed a Memorandum of Agreement acknowledging previous payments
by respondent Ingram and still had obligation to pay a remaining balance of ₱145,000.00.
Thereafter, Deed of Absolute Sale over the property was executed in favor of respondent
Ingram.
Subsequently, Respondent Ingram caused Lot No. 3230 to be surveyed and discovered that it
has an area of 12,000 square meters. However, Banta insisted that the difference of 5,800
square meters remains unsold which respondent Ingram opposed claiming ownership over the
whole Lot by virtue of the sale. Thus, a recovery case against petitioners Banta and Arcaina was
instituted.
Respondent Ingram claimed that she was willing to pay the balance of ₱145,000.00 if
petitioners recognized her ownership over the whole property. Respondent Ingram asserted
that the sale contemplated the entire property as the boundaries of the lot were clearly stated
in the deeds of sale.
In their Answer with Counterclaim, petitioners denied the allegations and contended that the
parties agreed that only 6,200 square meters shall be sold at the rate of ₱300.00 per square
meter. For the petitioners, this was clearly shown when respondent Ingram declared only 6,200
square meters of the property for tax purposes while petitioner Arcaina declared the remaining
portion under her name with no objection from respondent Ingram.
The MCTC ruled in favor of petitioners ordering respondents to pay ₱145,000.00 as

counterclaim for the remaining balance of the contract.
On appeal, the RTC reversed and set aside the order of the MTC. The RTC held that Article 1542,
which covers sale of real estate in lump sum, applies in the case. That having apparently sold
the entire Lot No. 3230 for a lump sum, petitioner Arcaina, as the vendor, is obligated to deliver
all the land included in the boundaries of the property, regardless of whether the real area
should be greater or smaller than what is recited in the deeds of sale.
The CA affirmed the RTC’s ruling that the sale was made for a lump sum and not on a per-
square-meter basis. Thus, the CA ordered petitioners to deliver the entire property to
respondent Ingram.
ISSUE:
Whether or not petitioners are bound to deliver the entire property to respondent Ingram since
Lot No. 3230 was sold via a lump sum contract.
RULING: No.
In Del Prado v. Spouses Caballero, we were confronted with facts analogous to the present
petition. Pending the issuance of the Original Certificate of Title (OCT) in their name, Spouses
Caballero sold a parcel of land to Del Prado. The contract of sale stated both the property's
boundaries and estimated area of more or less 4,000 sq. m. Later, when the OCT was issued,
the technical description of the property appeared to be 14,457 sq. m., more or less. Del Prado
alleged that Spouses Caballero were bound to deliver all that was included in the boundaries of
the land since the sale was made for a lump sum. Although, we agreed with Del Prado that the
sale partakes of the nature of a lump sum contract, we did not apply Article 1542. In holding
that Del Prado is entitled only to the area stated in the contract of sale, we explained:
The Court, however, clarified that the rule laid down in Article 1542 is not hard and fast and
admits of an exception. It held:
"A caveat is in order, however. The use of "more or less" or similar words in designating
quantity covers only a reasonable excess or deficiency. A vendee of land sold in gross or with
the description "more or less" with reference to its area does not thereby ipso facto take all risk
of quantity in the land.
xxx
In the instant case, the deed of sale is not one of a unit price contract. The parties agreed on
the purchase price of ₱40,000.00 for a predetermined area of 4,000 sq m, more or less,
bounded on the North by Lot No. 11903, on the East by Lot No. 11908, on the South by Lot Nos.
11858 & 11912, and on the West by Lot No. 11910. In a contract of sale of land in a mass, the
specific boundaries stated in the contract must control over any other statement, with respect
to the area contained within its boundaries.
Black's Law Dictionary defines the phrase "more or less" to mean:

"About; substantially; or approximately; implying that both parties assume the risk of any
ordinary discrepancy. The words are intended to cover slight or unimportant inaccuracies in
quantity, Carter v. Finch, 186 Ark. 954, 57 S.W.2d 408; and are ordinarily to be interpreted as
taking care of unsubstantial differences or differences of small importance compared to the
whole number of items transferred."
Clearly, the discrepancy of 10,475 sq. m. cannot be considered a slight difference in quantity.
The difference in the area is obviously sizeable and too substantial to be overlooked. It is not
a reasonable excess or deficiency that should be deemed included in the deed of sale.
(Emphasis supplied; citations omitted.)
In a lump sum contract, a vendor is generally obligated to deliver all the land covered within the
boundaries, regardless of whether the real area should be greater or smaller than that recited
in the deed. However, in case there is conflict between the area actually covered by the
boundaries and the estimated area stated in the contract of sale, he/she shall do so only when
the excess or deficiency between the former and the latter is reasonable.
Applying Del Prado to the case before us, we find that the difference of 5,800 sq. m. is too
substantial to be considered reasonable. We note that only 6,200 sq. m. was agreed upon
between petitioners and Ingram. Declaring Ingram as the owner of the whole 12,000 sq. m. on
the premise that this is the actual area included in the boundaries would be ordering the
delivery of almost twice the area stated in the deeds of sale. Surely, Article 1542 does not
contemplate such an unfair situation to befall a vendor---that he/she would be compelled to
deliver double the amount that he/she originally sold without a corresponding increase in price.
In Asiain v. Jalandoni, we explained that "[a] vendee of a land when it is sold in gross or with the
description 'more or less' does not thereby ipso facto take all risk of quantity in the land. The
use of 'more or less' or similar words in designating quantity covers only a reasonable excess or
deficiency." Therefore, we rule that Ingram is entitled only to 6,200 sq. m. of the property. An
area of 5,800 sq. m. more than the area intended to be sold is not a reasonable excess that can
be deemed included in the sale.
The contract of sale is the law between Ingram and petitioners; it must be complied with in
good faith. Petitioners have already performed their obligation by delivering the 6,200 sq. m.
property. Since Ingram has yet to fulfill her end of the bargain, she must pay petitioners the
remaining balance of the contract price amounting to ₱l45,000.00.
Warranties
Philippine Steel Coating Corp., vs. Eduard Quiñones
G.R. No. 194533, April 19, 2017, Sereno, CJ., First Division
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the
Court of Appeals (CA) Decision and Resolution. The CA affirmed in toto the Regional Trial Court
(RTC) Decision in Civil Case No. A-1708 for damages.
FACTS:
Respondent Eduard Quiñones (Quiñones) filed a complaint for damages against petitioner
Philippine Steel Coating Corp., (PhilSteel). The complaint alleges that in 1994, a sales engineer
of PhilSteel by the name of Richard Lopez (Lopez), offered Quiñones their new product
specifically: primer-coated, long-span, rolled galvanized iron (G.1.) sheets. The offer was made
pursuant to the line of business of Quiñones who is the owner of Amianan Motors. Showing an
interest Quiñones asked Lopez if the primer- coated sheets were compatible with the Guilder
acrylic paint process used by Amianan Motors in the finishing of its assembled buses. Unsure of
query made by Quiñones, Lopez relayed the matter to PhilSteel’s sales Manager, Ferdinand
Angbengco who in turn guaranteed that a laboratory tests had been conducted by PhilSteel
which later proved that the two products, primer- coated sheets and Guilder acrylic paint, were
compatible. Consequentially, Quiñones was later induce to purchase the product and used it in
the manufacture of bus units.
However, in 1995, customers who bought bus units complained that the paint was breaking
and peeling off. These complaints were received by Quiñones who in turn, sent a letter-
complaint to PhilSteel invoking the warranties given by the latter. Quiñones alleged that the
damaged to the bus units was caused due to the hidden defects of the primer-coated sheets
being incompatible with the Guilder acrylic paint process used by the Amianan Motors,
contrary to the evaluations and assurances made by PhilSteel. That, because of the complaints
received, Quiñones was forced to repair the damaged buses.
On the other hand, PhilSteel contends that there was no inducement made by PhilSteel’s
representatives and that it was Quiñones who offered to purchase the subject product directly
to PhilSteel. According to PhilSteel, the breaking and peeling off the paint was caused by
Quiñones due to his erroneous painting application.
RTC ruled in favor of Quiñones. It found that the assurance made by Angbengco constituted an
express warranty under Article 1546 of the Civil Code. The CA Affirmed the Ruling of the RTC in
toto.
Petitioner PhilSteel moved for reconsideration but it was denied by the CA. Hence, the petition.
ISSUE:
Whether or not vague oral statements made by seller on the characteristics of a generic good
can be considered warranties that may be invoked to warrant payment of damages.
RULING: Yes.
This Court agrees with the CA that this is a case of express warranty under Article 1546 of the
Civil Code, which provides:
Any affirmation of fact or any promise by the seller relating to the thing is an express warranty
if the natural tendency of such affirmation or promise is to induce the buyer to purchase the
same, and if the buyer purchases the thing relying thereon. No affirmation of the value of the
thing, nor any statement purporting to be a statement of the seller's opinion only, shall be
construed as a warranty, unless the seller made such affirmation or statement as an expert and
it was relied upon by the buyer.
As held in Carrascoso, Jr. v. CA, the following requisites must be established in order to prove
that there is an express warranty in a contract of sale: (1) the express warranty must be an
affirmation of fact or any promise by the seller relating to the subject matter of the sale; (2) the
natural effect of the affirmation or promise is to induce the buyer to purchase the thing; and (3)
the buyer purchases the thing relying on that affirmation or promise.
A warranty is a statement or representation made by the seller of goods - contemporaneously

and as part of the contract of sale - that has reference to the character, quality or title of the
goods; and is issued to promise or undertake to insure that certain facts are or shall be as the
seller represents them. A warranty is not necessarily written. It may be oral as long as it is not
given as a mere opinion or judgment. Rather, it is a positive affirmation of a fact that buyers
rely upon, and that influences or induces them to purchase the product.
Contrary to the assertions of petitioner, the finding of the CA was that the former, through
Angbengco, did not simply make vague oral statements on purported warranties. Petitioner
expressly represented to respondent that the primer-coated G.I. sheets were compatible with
the acrylic paint process used by the latter on his bus units. This representation was made in
the face of respondent's express concerns regarding incompatibility. Petitioner also claimed
that the use of their product by Quiñones would cut costs. Angbengco was so certain of the
compatibility that he suggested to respondent to assemble a bus using the primer-coated sheet
and have it painted with the acrylic paint used in Amianan Motors.
At the outset, Quiñones had reservations about the compatibility of his acrylic paint primer
with the primer-coated G.I. sheets of PhilSteel. But he later surrendered his doubts about the
product after 4 to 5 meetings with Angbengco, together with the latter's subordinate Lopez.
Only after several meetings was Quiñones persuaded to buy their G.I. sheets. On 15 April 1994,
he placed an initial order for petitioner's product and, following Angbengco's instructions, had a
bus painted with acrylic paint. The results of the painting test turned out to be successful.
Satisfied with the initial success of that test, respondent made subsequent orders of the primer-
coated product and used it in Amianan Motors' mass production of bus bodies.
All in all, these "vague oral statements" were express affirmations not only of the costs that
could be saved if the buyer used PhilSteel's G.I. sheets, but also of the compatibility of those
sheets with the acrylic painting process customarily used in Amianan Motors. Angbengco did
not aimlessly utter those "vague oral statements" for nothing, but with a clear goal of
persuading Quiñones to buy PhilSteel's product.
Taken together, the oral statements of Angbengco created an express warranty. They were
positive affirmations of fact that the buyer relied on, and that induced him to buy petitioner's
primer-coated G.I. sheets.
Under Article 1546 of the Civil Code, "'[n]o affirmation of the value of the thing, nor any
statement purporting to be a statement of the seller's opinion only, shall be construed as a
warranty, unless the seller made such affirmation or statement as an expert and it was relied
upon by the buyer."
Despite its claims to the contrary, petitioner was an expert in the eyes of the buyer Quiñones.
The latter had asked if the primer-coated G.I. sheets were compatible with Amianan Motors'
acrylic painting process. Petitioner's former employee, Lopez, testified that he had to refer
Quiñones to the former's immediate supervisor, Angbengco, to answer that question. As the
sales manager of PhilSteel, Angbengco made repeated assurances and affirmations and even
invoked laboratory tests that showed compatibility. In the eyes of the buyer Quiñones, PhilSteel
- through its representative, Angbengco - was an expert whose word could be relied upon.
LEASE
Nature
Distinguished from other Contracts/Legal Relations
Rodolfo Laygo and Willie Laygo vs. Municipal Mayor of Solano, Nueva Vizcaya
This is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court from the
Decision dated December 16, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 103922 and
its Resolution dated June 19, 2009.
FACTS:
The case arose from two letter-complaints sent by Aniza Bandrang (Bandrang) to then
Municipal Mayor Santiago O. Dickson (Mayor Dickson) and the Sangguniang Bayan of Solano,
Nueva Vizacaya, informing them of the illegal sublease she entered into with petitioners
Rodolfo Laygo and Willie Laygo (petitioners) over Public Market Stalls Nos. 77-A, 77-B, 78-A,
and 78-B, which petitioners leased from the Municipal Government. Bandrang claimed that
petitioners told her to vacate the stalls, which they subsequently subleased to another.
The Sangguniang Bayan then endorsed the said letter of Bandrang and a copy of Resolution No.
183-2004 to Mayor Dickson for appropriate action. Subsequently, Mayor Dickson informed the
Sanggunian that the stalls were constructed under a Building-Operate-Transfer (BOT) scheme,
which means that the petitioners had the right to keep their stalls until the BOT agreement was
satisfied.
Thereafter, Bandrang wrote again another letter to the Sanggunian, praying and recommending
to Mayor Dickson the cancellation of the lease contract between the Municipality and
petitioners for violating the provisions on subleasing. After which, as suggested by Bandrang,
the stalls can be bidded upon anew and leased to the successful bidder. However, Mayor
Dickson did not act on the letter of Bandrang which prompted the latter to file a Mandamus
case before the RTC. But later, she amended her petition to implead petitioners. Bandrang
sought an order directing Mayor Dickson to immediately cancel the leased between the
Municipal Government and petitioners over Public Market Stall Nos. 77-A, 77-B, 78-A, and 78-B,
and to leased the vacated stalls to interested persons.
In their answer, petitioners denied that they were the lessees of Stalls 77-A and B and 78-A and
78-B. Petitioners clarified that it was their mother, Clarita Laygo (Clarita) who was the lessee of
the stalls by virtue of a BOT scheme of the Municipality. Furthermore, there was an agreement
during that time when they entered into a contract of lease with Bandrang. The agreement was
that the contract should be subjected to the consent of the other heirs of Clarita, from which
consent was never given. Thus, no subleasing to speak of. Petitioners maintained that, even
assuming that there was subleasing, the prohibition on subleasing would not apply because the
contract between the Municipality and Clarita was one under a BOT scheme. The Resolution
No. 183-2004 only covered stall holders who violated their leased contracts with the Municipal
Government. But, the petitioners maintain that their contract with the Municipal Government
was a BOT agreement and not that of a lease. Thus, said Resolution neither applied nor
enforced against petitioners. Again, petitioners claimed that even assuming that said
prohibition under the Resolution would apply to them, there was no more ground to revoke
such lease since the subleasing claimed by Bandrang had ended and the subsequent receipt by
the Municipality of payments ratified the contract with petitioners.
RTC ruled in favor of Bandrang and held that the contract between petitioners and the
Municipal Government was a lease contract.
Petitioners appealed to the CA. However, the CA dismissed the appeal and sustain the
resolution of the RTC which ruled that the contract between petitioners and the Municipal
Government was a lease contract. Thus, Resolution No. 183-2004 applies to petitioners.
Willie Laygo filed a Motion for Reconsideration but was denied by the CA. Hence, this petition.
ISSUE:
Whether or not the contract between the petitioners and the Municipal Government was one
of lease.
RULING: Yes.
The type of contract existing between petitioners and the Municipal Government is disputed.
The Municipal Government asserts that it is one of lease, while petitioners insist that it is a BOT
agreement. Both parties, however, failed to present the contracts which they purport to have.
It is likewise uncertain whether the contract would fall under the coverage of the Statute of
Frauds and would, thus, be only proven through written evidence. In spite of these, we find that
the Municipal Government was able to prove its claim, through secondary evidence, that its
contract with petitioners was one of lease.
We have no reason to doubt the certifications of the former mayor of Solano, Mayor Galima,
and the Municipal Planning and Development Office (MPDO) which show that the contract of
the Municipal Government with petitioners' mother, Clarita, was converted into a BOT
agreement for a time in 1992 due to the fire that razed the public market. These certifications
were presented and offered in evidence by petitioners themselves. They prove that Clarita was
allowed to construct her stalls that were destroyed using her own funds, and with the payment
of the lease rentals being suspended until she recovers the cost she spent on the construction.
The construction was, in fact, supervised by the MPDO for a period of three months. The stalls
were eventually constructed completely and awarded to Clarita. She thereafter reoccupied the
stalls under a lease contract with the Municipal Government. In fact, in his Notice dated August
21, 2007, the Municipal Treasurer of Solano reminded petitioners of their delinquent stall
rentals from May 2006 to July 2007. As correctly posited by the Municipal Government, if the
stalls were under a BOT scheme, the Municipal Treasurer could not have assessed petitioners of
any delinquency.
Also, petitioners themselves raised, for the sake of argument, that even if the contract may be
conceded as one of lease, the municipality is nonetheless estopped from canceling the lease
contract because it subsequently accepted payment of rentals until the time of the filing of the
case.
In the same vein, the Sangguniang Bayan Resolution No. 183-2004, which quoted Items No. 9
and 11 of the lease contract on the absolute prohibition against subleasing and the possible
termination of the contract in view of back rentals or any violation of the stipulations in the
contract, is presumed to have been regularly issued. It deserves weight and our respect, absent
a showing of grave abuse of discretion on the part of the members of the Sanggunian.
Essential Elements
Consent
Hilltop Market Fish Association, Inc., vs. Hon. Braulio Yaranon, City Mayor, Baguio City, Hon.
Galo Weygan, City Councilor and Chairman Anti-Vice Coordinating Task Force, and the City
Government of Baguio
G.R. No. 188057, July 12, 2017, Carpio, J., Second Division
This petition for review assails the Decision dated 27 November 2008 and the Resolution dated
15 May 2009 of the Court of Appeals (CA) affirming the Decision4 dated 28 September 2006 of
the Regional Trial Court of Baguio City, Branch 3 (RTC) in Civil Case No. 5994-R.
FACTS:
A contract of Lease was entered into between petitioner Hilltop Fish Vendors’ Association Inc.
(Hilltop), represented by its president Gerardo Rillera (Rillera) and respondent City of Baguio,
represented by its then Mayor Luis Lardizabal over a lot owned by the City of Baguio.
The period of lease was for 25 years renewable for the same period at the option of both
parties. The payment of the annual lease rental commenced upon the issuance by the City
Engineer’s Office of the Certificate of full occupancy (Certificate) of the building which is to be
constructed by Hilltop on the lot. Before issuance of the Certificate, the City of Baguio can
continue collecting market fees from the vendors legally occupying any portion of the building.
That upon termination of the lease period, City of Baguio will own the building without
payment or reimbursement for Hilltop’s costs.
Sometime later, Hilltop began to construct the building on the lot and was later known as the
Rillera building. The member of the Hilltop began occupying the Rillera building despite the
non-issuance of the Certificate.
Subsequently, the City Council of Baguio through its then Mayor Ernesto Bueno, issued a
Resolution rescinding the contract of lease with Hilltop because of its failure to comply with its
obligation to complete the Rillera building.
A few years after, then respondent Mayor Braulio Yaranon (Yaranon) issued an Administrative
Order (AO No. 30) which ordered the immediate closure of the Rillera building to have it
cleaned, sanitized and enclosed; to prevent illegal activities in it; and for its completion and
preparation for commercial use.
Hilltop questioned the implementation of AO No. 30 by filing with the RTC a complaint with
Very Urgent Application for Temporary Restraining Order and Writ of Preliminary Injunction
and order the concerned office to issue the Certificate to make the contract of lease effective.
Yaranon and respondent Galo Weygan alleged in their answer that the Certificate was not
issued to Hilltop because the Rillera building was not completed, and there were no provisions
for electrical and plumbing systems or facilities for conduct of regular business. They argued
that the issuance of the Certificate shall only signal the start of payment of annual lease rental
and not the effectivity of the contract. They further alleged that even without the Certificate,
the members of Hilltop occupied the Rillera building and conducted business in it that was why
Hilltop already waived the condition.
RTC ruled in favor of the City of Baguio and dismissed the complaint. The RTC did not give
weight to Hilltop’s contention that the Certificate authorized it to occupy the lot because even
without the certificate, Hilltop already occupied the lot as early as June 22, 1974 up to the
present which is beyond the 25-year period provided in the contract of lease.
The CA affirmed the decision of the RTC by ruling that there was already a perfected contract of
lease. The issuance of the certificate was only imposed on the performance of the obligation
contained in it. Further, CA denied Hilltop’s motion for reconsideration. Hence, this petition.
ISSUE:
Whether or not there was a perfected contract of lease between Hilltop and the City of Baguio.
RULING: Yes.
In a contract of lease, one of the parties binds himself to give to another the enjoyment or use
of a thing for a price certain, and for a period which may be definite or indefinite. Being a
consensual contract, a lease is perfected at the moment there is a meeting of the minds upon
the thing and the cause or consideration which are to constitute the contract. Thereafter, the
lessor is obliged to deliver the thing which is the object of the contract in such a condition as to
render it fit for the use intended, and the lessee is obliged to use the thing leased as a diligent
father of a family, devoting it to the use stipulated or that which may be inferred from the
nature of the thing leased.
In a contract of lease, the cause or essential purpose is the use and enjoyment of the thing. The
thing or subject matter of the contract in this case was clearly identified and agreed upon as the
lot where the building would be constructed by Hilltop. The consideration were the annual
lease rental and the ownership of the building upon the termination of the lease period.
Considering that Hilltop and the City of Baguio agreed upon the essential elements of the
contract, the contract of lease had been perfected.
From the moment that the contract is perfected, the parties are bound to fulfill what they have
expressly stipulated. Thus, the City of Baguio gave the use and enjoyment of its lot to Hilltop.
Both the RTC and the CA found that upon the execution of the contract on 22 June 1974, Hilltop
took possession of the lot and constructed the Rillera building on it. Thereafter, Hilltop's
members occupied the Rillera building and conducted business in it up to the present. The
findings of fact of the RTC and the CA are final and conclusive and cannot be reviewed on
appeal by this Court.
Contrary to Hilltop's contention, the issuance of the Certificate was not a suspensive condition
which determines the perfection of the contract or its effectivity. The contract of lease
specifically provides that: "x x x the annual lease rental shall be P25,000 payable within the first
30 days of each and every year; the first payment to commence immediately upon issuance by
the City Engineer's Office of the Certificate of full occupancy of the entire building to be
constructed thereon xx x." Clearly, the issuance of the Certificate is only a condition that will
make Hilltop start paying the annual lease rental to the City of Baguio. Because the Certificate
was not issued, the payment of annual lease rental did not commence. A contract constitutes
the law between the parties and they are, therefore, bound by its stipulations. If the terms of a
contract are clear and leave no doubt as to the intention of the contracting parties, the literal
meaning of its stipulations shall control.
Hilltop failed to distinguish between a condition imposed upon the perfection of the contract
and a condition imposed on the performance of an obligation. Failure to comply with the first
condition results in the failure of a contract, while the failure to comply with the second
condition only gives the other party the option either to refuse to proceed or to waive the
condition. In this case, the condition, which is the issuance of the Certificate, was imposed only
for the obligation to pay the rent to commence. Payment of the price, or the rent, in this case,
goes into the performance of the contract and has nothing to do with the perfection of the
contract.
Rights and Obligations of the Lessor and Lessee
Renato Ma. R. Peralta vs. Jose Roy Raval (G.R. No. 188467)
Jose Roy B. Raval vs. Renato Ma. R. Peralta (G.R. No. 188764)
March 29, 2017, Reyes, J., Third Division
Before the Court are consolidated petitions for review on certiorari under Rule 45 of the Rules
of Court, docketed as G.R. No. 188764 and G.R. No. 188467 and filed by Jose Roy B. Raval
(Raval) and Renato Ma. R. Peralta (Peralta), respectively. Subject of both petitions is the
Decision dated October 8, 2008 of the Court of Appeals (CA) in CA-G.R. CV No. 85685, wherein
the CA affirmed with modification the Decision dated May 17, 2005 of the Regional Trial Court
(RTC) of Laoag City, Branch 14, in the action for rescission of lease agreement, docketed as Civil
Case No. 11424-14, that was filed by Raval against Peralta.
FACTS:
The controversy involves a lease agreement over two parcels of land, Lot Nos. 9128-A and
9128-B. The owners of the subject lots namely: spouses Flaviano Arzaga Sr. and Magdalena-
Arzaga (herein Spouses Arzaga) entered into a contract of lease with Renato Ma. R. Peralta
(Peralta). The Spouses Arzaga being the lessor and Peralta being the lessee. Both parties agreed
that the term of the lease would be 40 years.
That sometime in May 1988, Flaviano Arzaga, Jr. (Flaviano Jr.), adopted son and heir of the
Spouses Arzaga, filed a complaint for annulment of lease contract with the RTC against Peralta.
Flaviano Jr. alleged that Peralta breached his obligation under the contract of lease. RTC
dismissed the complaint and later, CA affirmed the ruling of the RTC. Flaviano Jr. no longer
appealed the decision of the CA to the Supreme Court.
On July 1995, Flaviano Jr. assigned all his interests, rights and participation in the subject
properties for a consideration of ₱500,000.00 to Jose Roy Raval (Raval) via a Deed of
Assignment. However, Peralta refused to recognize the validity of the assignment to Raval by
still depositing his rental payments for the account of Flaviano Jr.
As a consequence of the deed of assignment, on August 1995, Raval demanded from Peralta
compliance with the lease contract’s terms and conditions. The counsel of Raval even wrote a
letter demanding the removal of the structures that Peralta built as this was not covered by the
lease agreement. Another letter was sent by the counsel of Raval which sought access to the
second floor of the said residential house and an updated accounting of rentals already paid.
Peralta refused to heed to the demands of the counsel of Raval to which the matter was later
referred to the barangay for conciliation.
After several more demands and another barangay conciliation came to naught, Raval filed in
1998, a complaint for rescission of lease with the RTC. He alleged that Peralta failed to comply
with the terms of the lease contact and his demands as a lessor, particularly referring to the
refusal to render an accounting of the unpaid monthly rentals and to pay monthly rentals
thereafter up to present; Refusal to vacate the second floor of the residential house; refusal to
remove the improvements illegally constructed on areas not covered by the Contract of Lease;
Refusal to operate and provide water system; and refusal to refund taxes paid by Flaviano Jr. In
sum, Raval’s complaint was for the rescission of the lease agreement and an order upon Peralta
to vacate the subject properties.
Peralta, on his counterclaim opposed the complaint asserting that notwithstanding, an

assignment, Raval did not have the right, power and authority to seek the rescission of the
contract of lease that was executed 24 years prior to the filing of the complaint. In other words,
in the petition filed by Peralta, he argued that the action for rescission has already prescribed
when Raval filed it in 1998 citing Article 1389 of the New Civil Code which provides that an
action for rescission must be filed within four years.
ISSUE:
Whether or not action for rescission filed by Raval has already prescribed.
RULING: No.
There are various provisions under the NCC that apply to rescissions of contracts. Among these
are Article 1191 on the power to rescind in reciprocal obligations, Article 1380 on contracts
validly agreed upon by parties to be rescissible, Article 1381 on rescissible contracts under the
law, Article 1389 on prescription of actions for rescission, and Article 1592 on rescission in sale
of immovable property.
It must be emphasized though that specifically on the matter of rescission of lease agreements,
Article 1659 of the NCC applies as a rule. It reads:
Article 1659. If the lessor or the lessee should not comply with the obligations set forth in
Articles 1654 and 1657, the aggrieved party may ask for the rescission of the contract and
indemnification for damages, or only the latter, allowing the contract to remain in force.
Article 1654 referred to in Article 1659 pertains to the obligations of a lessor in a lease
agreement. Article 1657, on the other hand, enumerates the obligations of a lessee, as it
provides:
Article 1657. The lessee is obliged:
(1) To pay the price of the lease according to the terms stipulated;
(2) To use the thing leased as a diligent father of a family, devoting it to the use stipulated; and
in the absence of stipulation, to that which may be inferred from the nature of the thing leased,
according to the custom of the place;
(3) To pay expenses for the deed of lease.

Given the rules that exclusively apply to leases, the other provisions of the NCC that deal with
the issue of rescission may not be applicable to contracts of lease. To illustrate, Peralta's
reference to Article 1389, when he argued that Raval' s action had already prescribed for having
been filed more 'than four years after the execution of the lease contract in 1974, is misplaced.
For the same reason, Peralta erred in arguing that Raval's action should only be deemed a
subsidiary remedy, such that it could not have been validly instituted if there were other legal
means for reparation. Article 1389 applies to rescissions in Articles 1380 and 1381, which are
distinct from rescissions of lease under Article 1659.
The limits on the application of Article 1389 was explained by the Court in Unlad Resources
Development Corporation, et al. v. Dragon, et al. The nature of an action filed under Article
1389, as well as the prescriptive period of four years that is provided under the provision, do
not apply to all rescissible contracts but are limited to specific cases, particularly:
Article 1389 specifically refers to rescissible contracts as, clearly, this provision is under the
chapter entitled "Rescissible Contracts."
In a previous case, this Court has held that Article 1389: applies to rescissible contracts, as
enumerated and defined in Articles 1380 and 1381. We must stress however, that the
"rescission" in Article 1381 is not akin to the term "rescission" in Article 1191 and Article 1592.
In Articles 1191 and 1592, the rescission is a principal action which seeks the resolution or
cancellation of the contract while in Article 1381, the action is a subsidiary one limited to cases
of rescission for lesion as enumerated in said article.
The prescriptive period applicable to rescission under Articles 1191 and 1592, is found in Article
1144, which provides that the action upon a written contract should be brought within ten
years from the time the right of action accrues. (Citation omitted and emphasis ours).
The same prescriptive period of 10 years, counted from the time that the right of action
accrues, applies in the case at bar. Raval's cause of action did not refer to Article 1389, yet one
that was based on a written contract. Thus, contrary to Peralta's insistent claim, the action for
rescission had not yet prescribed at the time of its filing in 1998. Raval's cause of action accrued
not on the date of the lease agreement's execution in 197 4, but from the time that there was a
violation and default by Peralta in his obligations under the lease agreement.
On this matter, Raval's complaint specified the violations that were allegedly committed by
Peralta as a lessee, Specifically, rescission was sought because of Peralta's alleged refusal to
render an accounting of unpaid monthly rentals, to vacate the second storey of the house, to
remove the improvements constructed on the areas not covered by the lease, to operate and
provide a water system and to refund the taxes paid by Flaviano Jr. These violations happened
either immediately prior to Raval's repeated extrajudicial demands that began in August 1995;
or after Peralta's refusal to heed to the demands. There was no indication that the violations
dated back from the first few years of the lease agreement's effectivity in the 1970s. Clearly,
the filing of the action for rescission in 1998 was within the 10-year prescriptive period that
applies to the suit.
AGENCY
Kinds of Agency
Actual Agency
Kinds of actual Agency - As to manner of creation: Express
International Exchange Bank Now Union Bank of the Philippines vs. Spouses Jerome and
Quinnie Briones, and John Doe
G.R. No. 205657, March 29, 2017, Leonen, J., Second Division
This resolves the Petition for Review on Certiorari filed by International Exchange Bank (iBank),
now Union Bank of the Philippines, assailing the Court of Appeals' September 27, 2012 Decision
and February 6, 2013 Resolution in CA-G.R. CV. No. 97453, which upheld the June 16, 2011
Decision of Branch 138, Makati City Regional Trial Court in Civil Case No. 04-557.
FACTS:
On July, 2003, spouses Jerome and Quinnie Briones (spouses Briones) took out a loan of
₱3,789,216.00 from International Exchange Bank (iBank) to purchase a BMW Z4 Roadster. The
monthly amortization for two (2) years was ₱78,942.00.
The Spouses Briones executed a promissory note with chattel mortgage that required them to
take out an insurance policy on the vehicle. The said promissory also gave iBank irrevocable
authority to file an insurance claim in case of loss or damage to the vehicle.
Sometime in November 2003, the mortgaged BMW Z4 Roadster was camapped in front of a
certain Bank in Quezon City. Said incident was reported by Jerome Briones to the Police. The
spouses Briones also declared the loss to iBank, which instructed the spouses to continue
paying the next three (3) monthly installments "as a sign of good faith," to which the spouses
complied.
After the Spouses Briones finished paying the three (3)-month installment, iBank sent them a
letter demanding full payment of the lost vehicle. The Spouses Briones submitted a notice of
claim with their insurance company, however, the claim was denied due to the delayed
reporting over the loss vehicle. This prompted iBank to file a case for replevin and/or sum of
money against the Spouses Briones and a person named John Doe alleging failure to pay the
monthly amortizations of the mortgaged vehicle.
The Regional Trial Court (RTC) dismissed iBanks complaint.
Having denied iBank’s Appeal and its motion for reconsideration by the Court of Appeals, this
prompted iBank to appeal the case to the Supreme Court.
Petitioner (iBank) asserts that it was the duty of the respondents to file a claim with the
insurance company. Thus, they should not be allowed to pass on that responsibility to
petitioner and they should be held accountable for the loan taken out on the carnapped
vehicle. Petitioner also maintains the fact that respondent Jerome's direct dealing with the
insurance company was a revocation of the agency relationship between petitioner and
respondents. Petitioner holds that respondents only shifted the blame after the insurance
company denied respondents' claim.
On the other hand, respondents (Spouses Briones) insist that when the mortgaged vehicle was
carnapped, petitioner (iBank), as the agent, should have asserted its right "to collect, demand
and proceed against the insurance company." They also argue the fact that after they had
informed petitioner of the loss of the mortgaged vehicle, they continued to pay the monthly
installment for three (3) months as compliance with petitioner's request. But, despite their
good faith compliance, still, petitioner demanded full payment from the respondent (spouses).
ISSUE:
Whether or not an agency relationship existed between the parties.

RULING: Yes.
In a contract of agency, "a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter."
Furthermore, Article 1884 of the Civil Code provides that "the agent is bound by his acceptance
to carry out the agency, and is liable for the damages which, through his non-performance, the
principal may suffer."
Rallos v. Felix Go Chan & Sons Realty Corporation lays down the elements of agency:
Out of the above given principles, sprung the creation an acceptance of the relationship of
agency whereby one party, called the principal (mandante), authorizes another, called the
agent (mandatario), to act for and in his behalf in transactions with third persons. The essential
elements of agency are: (1) there is consent, express or implied, of the parties to establish the
relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the
agent acts as a representative and not for himself; and (4) the agent acts within the scope of his
authority. (Emphasis in the original, citation omitted)
All the elements of agency exist in this case. Under the promissory note with chattel mortgage,
Spouses Briones appointed iBank as their attorney-in-fact, authorizing it to file a claim with the
insurance company if the mortgaged vehicle was lost or damaged. Petitioner was also
authorized to collect the insurance proceeds as the beneficiary of the insurance policy. Sections
6 and 22 of the promissory note state:
6. The MORTGAGOR agrees that he will cause the mortgaged property/ies to be insured against
loss or damage by accident, theft and fire . . . with an insurance company/ies acceptable to the
MORTGAGEE ...; that he will make all loss, if any, under such policy/ies payable to the
MORTGAGEE or its assigns ... [w]ith the proceeds thereon in case of loss, payable to the said
MORTGAGEE or its assigns ... shall be added to the principal indebtedness hereby secured ...
[M]ortgagor hereby further constitutes the MORTGAGEE to be its/his/her Attorney-in-Fact for
the purpose of filing claims with insurance company including but not limited to apply, sign,
follow-up and secure any documents, deeds . . . that may be required by the insurance company
to process the insurance claim ...
22. In case of loss or damage, the MORTGAGOR hereby irrevocably appoints the MORTGAGEE
or its assigns as his attorney-in-fact with full power and authority to file, follow-up, prosecute,
compromise or settle insurance claims; to sign, execute and deliver the corresponding papers,
receipt and documents to the insurance company as may be necessary to prove the claim, and
to collect from the latter the proceeds of insurance to the extent of its interest. (Emphasis
supplied, citation omitted)
The determination of agency is ultimately factual in nature and this Court sees no reason to
reverse the findings of the Regional Trial Court and the Court of Appeals. They both found the
existence of an agency relationship between the Spouses Briones and iBank, based on the
promissory note with chattel mortgage, which petitioner prepared and respondents signed.
Obligations of the Agent
To be responsible for the acts of the substitute
FACTS:
spouses Villaluz then executed a Special Power of Attorney in favor of Agsibit authorizing her to,
ISSUE:
Whether or not Agsibit, as an agent of spouses Villaluz, could validly delegate her authority to
Milflores as her attorney-in-fact.
RULING: Yes.
Articles 1892 and 1893 of the Civil Code provide the rules regarding the appointment of a
substitute by an agent:
Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing
so; but he shall be responsible for the acts of the substitute:
(1) When he was not given the power to appoint one;
(2) When he was given such power, but without designating the person, and the person
appointed was notoriously incompetent or insolvent.
All acts of the substitute appointed against the prohibition of the principal shall be void.
Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the principal may
furthermore bring an action against the substitute with respect to the obligations which the
latter has contracted under the substitution.
The law creates a presumption that an agent has the power to appoint a substitute. The
consequence of the presumption is that, upon valid appointment of a substitute by the agent,
there ipso jure arises an agency relationship between the principal and the substitute, i.e., the
substitute becomes the agent of the principal. As a result, the principal is bound by the acts of
the substitute as if these acts had been performed by the principal's appointed agent.
Concomitantly, the substitute assumes an agent's obligations to act within the scope of
authority, to act in accordance with the principal's instructions, and to carry out the
agency, among others. In order to make the presumption inoperative and relieve himself from
its effects, it is incumbent upon the principal to prohibit the agent from appointing a substitute.
Although the law presumes that the agent is authorized to appoint a substitute, it also imposes
an obligation upon the agent to exercise this power conscientiously. To protect the principal,
Article 1892 allocates responsibility to the agent for the acts of the substitute when the agent
was not expressly authorized by the principal to appoint a substitute; and, if so authorized but a
specific person is not designated, the agent appoints a substitute who is notoriously
incompetent or insolvent. In these instances, the principal has a right of action against both the
agent and the substitute if the latter commits acts prejudicial to the principal.
In the present case, the Special Power of Attorney executed by the Spouses Villaluz contains no
restrictive language indicative of an intention to prohibit Agbisit from appointing a substitute or
sub-agent. Thus, we agree with the findings of the CA and the RTC that Agbisit's appointment of
Milflores Cooperative was valid.
Modes of Extinguishment of Agency
International Exchange Bank Now Union Bank of the Philippines vs. Spouses Jerome and
Quinnie Briones, and John Doe
G.R. No. 205657, March 29, 2017, Leonen, J., Second Division
This resolves the Petition for Review on Certiorari filed by International Exchange Bank (iBank),
now Union Bank of the Philippines, assailing the Court of Appeals' September 27, 2012 Decision
and February 6, 2013 Resolution in CA-G.R. CV. No. 97453, which upheld the June 16, 2011
Decision of Branch 138, Makati City Regional Trial Court in Civil Case No. 04-557.
FACTS:
On July, 2003, spouses Jerome and Quinnie Briones (spouses Briones) took out a loan of
₱3,789,216.00 from International Exchange Bank (iBank) to purchase a BMW Z4 Roadster. The
monthly amortization for two (2) years was ₱78,942.00.
The Spouses Briones executed a promissory note with chattel mortgage that required them to
take out an insurance policy on the vehicle. The said promissory also gave iBank irrevocable
authority to file an insurance claim in case of loss or damage to the vehicle.
Sometime in November 2003, the mortgaged BMW Z4 Roadster was camapped in front of a
certain Bank in Quezon City. Said incident was reported by Jerome Briones to the Police. The
spouses Briones also declared the loss to iBank, which instructed the spouses to continue
paying the next three (3) monthly installments "as a sign of good faith," to which the spouses
complied.
After the Spouses Briones finished paying the three (3)-month installment, iBank sent them a
letter demanding full payment of the lost vehicle. The Spouses Briones submitted a notice of
claim with their insurance company, however, the claim was denied due to the delayed
reporting over the loss vehicle. This prompted iBank to file a case for replevin and/or sum of
money against the Spouses Briones and a person named John Doe alleging failure to pay the
monthly amortizations of the mortgaged vehicle.
The Regional Trial Court (RTC) dismissed iBanks complaint.
Having denied iBank’s Appeal and its motion for reconsideration by the Court of Appeals, this
prompted iBank to appeal the case to the Supreme Court.
Petitioner (iBank) asserts that it was the duty of the respondents to file a claim with the
insurance company. Thus, they should not be allowed to pass on that responsibility to
petitioner and they should be held accountable for the loan taken out on the carnapped
vehicle. Petitioner also maintains the fact that respondent Jerome's direct dealing with the
insurance company was a revocation of the agency relationship between petitioner and
respondents. Petitioner holds that respondents only shifted the blame after the insurance
company denied respondents' claim.
On the other hand, respondents (Spouses Briones) insist that when the mortgaged vehicle was
carnapped, petitioner (iBank), as the agent, should have asserted its right "to collect, demand
and proceed against the insurance company." They also argue the fact that after they had
informed petitioner of the loss of the mortgaged vehicle, they continued to pay the monthly
installment for three (3) months as compliance with petitioner's request. But, despite their
good faith compliance, still, petitioner demanded full payment from the respondent (spouses).
ISSUE:
Whether or not the Spouses Briones effectively revoked the agency granted under the
promissory note when they filed a claim with the insurance company.
RULING: No.
Revocation as a form of extinguishing an agency under Article 1924 of the Civil Code only
applies in cases of incompatibility, such as when the principal disregards or bypasses the agent
in order to deal with a third person in a way that excludes the agent.
In the case at bar, the mortgaged vehicle was camapped on November 5, 2003 and the Spouses
Briones immediately informed petitioner about the loss. The Spouses Briones continued paying
the monthly installment for the next three (3) months following the vehicle's loss to show their
good faith.
However, on March 26, 2004, petitioner demanded full payment from Spouses Briones for the
lost vehicle. The Spouses Briones were thus constrained to file a claim for loss with the
insurance company on April 30, 2004, precisely because petitioner failed to do so despite being
their agent and being authorized to file a claim under the insurance policy. Not surprisingly, the
insurance company declined the claim for belated filing.
The Spouses Briones' claim for loss cannot be seen as an implied revocation of the agency or
their way of excluding petitioner. They did not disregard or bypass petitioner when they made
an insurance claim; rather, they had no choice but to personally do it because of their agent's
negligence. This is not the implied termination or revocation of an agency provided for under
Article 1924 of the Civil Code.
While a contract of agency is generally revocable at will as it is primarily based on trust and
confidence, Article 1927 of the Civil Code provides the instances when an agency becomes
irrevocable:
Article 1927. An agency cannot be revoked if a bilateral contract depends upon it, or if it is the
means of fulfilling an obligation already contracted, or if a partner is appointed manager of a
partnership in the contract of partnership and his removal from the management is
unjustifiable.
A bilateral contract that depends upon the agency is considered an agency coupled with an
interest, making it an exception to the general rule of revocability at will. Lim v. Saban
emphasizes that when an agency is established for both the principal and the agent, an agency
coupled with an interest is created and the principal cannot revoke the agency at will.
In the promissory note with chattel mortgage, the Spouses Briones authorized petitioner to
claim, collect, and apply· the insurance proceeds towards the full satisfaction of their loan if the
mortgaged vehicle were lost or damaged. Clearly, a bilateral contract existed between the
parties, making the agency irrevocable. Petitioner was also aware of the bilateral contract; thus,
it included the designation of an irrevocable agency in the promissory note with chattel
mortgage that it prepared for the Spouses Briones to sign.
CREDIT TRANSACTIONS
Loans
Kinds of Loan – Mutuum or Simple Loan
Georgia Osmeña-Jalandoni vs. Carmen A. Encomienda
G.R. No. 205578, March 01, 2017, Peralta, J., Second Division
This is an appeal from the Decision of the Court of Appeals, Cebu City (CA) dated March 29,
2012 and its Resolution dated December 19, 2012 in CA-G.R. CV No. 01339 which set aside the
Decision of the Cebu Regional Trial Court (RTC), Branch 57, dated January 9, 2006, dismissing
respondent Carmen Encomienda's claim for sum of money.
FACTS:
In Cebu City, Carmen Encomienda and Georgia Osmeña Jalandoni were close friends.
Encomienda narrated that Jalandoni called her (Encomienda) to ask if Jalandoni could borrow
money for the search and rescue of her children in Manila, who were allegedly taken by their
father, Luis Jalandoni and to which Encomienda handed ₱l00, 000.00 Again, while in Manila,
Jalandoni borrowed several sums of money and another ₱1 Million from Encomienda. Jalandoni
promised that she would pay Encomienda when her money in the bank matured.
Several request were still made by Jalandoni to Encomienda to which the latter acceded. In
sum, Encomienda spent around ₱3,245,836.02 and $6,638.20 for Jalandoni. Thereafter,
Encomienda gave Jalandoni six (6) weeks to settle her debts. However, despite several
demands, no payment was made.
Jalandoni insisted that the amounts given were not in the form of loan. But during the Barangay
conciliation, a member of the Lupong Tagapamayapa attested that Jalandoni admitted having
borrowed money from Encomienda and she was willing to return it. Because no settlement was
reached, Encomienda filed a complaint.
Jalandoni’s defense was that there was never a loan that was being extended to her. She
claimed that the money was extended to her because Encomienda said she only wanted to
extend some help and that it was not a loan. That the only reason for such demand of the
payment was the refusal of Jalandoni to Encomienda when the latter wanted to fetched her at
the airport causing the latter to feel upset.
The Regional Trial Court dismissed the complaint of Encomienda.
She appealed before the Court of Appeals and it was granted and reversed the RTC’s decision.
Jalandoni filed a motion for reconsideration, but the same was denied. Hence, the instant
petition.
ISSUE:
Whether or not Simple Loan or mutuum exists in this case.
RULING: Yes.
The RTC likewise harped on the fact that if Encomienda really intended the amounts to be a
loan, normal human behavior would have prompted at least a handwritten acknowledgment or
a promissory note the moment she parted with her money for the purpose of granting a loan.
This would be particularly true if the loan obtained was part of a business dealing and not one
extended to a close friend who suddenly needed monetary aid. In fact, in case of loans between
friends and relatives, the absence of acknowledgment receipts or promissory notes is more
natural and real. In a similar case, the Court upheld the CA's pronouncement that the existence
of a contract of loan cannot be denied merely because it was not reduced in writing. Surely,
there can be a verbal loan. Contracts are binding between the parties, whether oral or written.
The law is explicit that contracts shall be obligatory in whatever form they may have been
entered into, provided all the essential requisites for their validity are present. A simple loan or
mutuum exists when a person receives a loan of money or any other fungible thing and
acquires its ownership. He is bound to pay to the creditor the equal amount of the same kind
and quality. Jalandoni posits that the more logical reason behind the disbursements would be
what Encomienda candidly told the trial court, that her acts were plainly an "unselfish display of
Christian help" and done out of "genuine concern for Georgia's children." However, the "display
of Christian help" is not inconsistent with the existence of a loan. Encomienda immediately
offered a helping hand when a friend asked for it. But this does not mean that she had already
waived her right to collect in the future. Indeed, when Encomienda felt that Jalandoni was
beginning to avoid her, that was when she realized that she had to protect her right to demand
payment. The fact that Encomienda kept the receipts even for the smallest amounts she had
advanced, repeatedly sent demand letters, and immediately filed the instant case when
Jalandoni stubbornly refused to heed her demands sufficiently disproves the latter’s belief that
all the sums of money she received were merely given out of charity.
Chattel and Real Estate Mortgage
Rights and Obligations of the Mortgagor [Debtor or Third Person]
Makilito B. Mahinay vs. Dura Tire & Rubber Industries, Inc.
G.R. No. 194152, June 5, 2017, Leonen, J., Second Division
This resolves a Petition for Review on Certiorari directly filed before this Court, assailing the
Judgment on the Pleadings dated April 13, 2010 and Order dated September 2, 2010 rendered
by Branch 20 of the Regional Trial Court of Cebu City in Civil Case No. CEB-33639. The trial court
dismissed the Complaint filed by Makilito B. Mahinay (Mahinay), declaring that he already lost
his right to redeem a parcel of land sold in an extrajudicial foreclosure sale.
FACTS:
A parcel of land under the name of A&A Swiss International Commercial, Inc. (A&A Swiss) was
mortgaged to Dura Tire and Rubber Industries, Inc. (Dura Tire) as security for the credit
purchases made by Move Overland Venture and Exploring, Inc. (Move Overland). The mortgage
agreement entitled Dura Tire to extrajudicially foreclose the property if Move Overland fails to
pay its credit purchases.
On June 5, 1992, A&A Swiss sold the property to Makilito B. Mahinay (Mahinay) and the latter
acknowledge that said property was mortgaged to Dura Tire.
On August 21, 1994, Mahinay sought to pay the obligation of Move Overland just to release the
property from the mortgage but Dura Tire ignored Mahinay.
It was on January 6, 1995 when Dura Tire applied for extrajudicial foreclosure of the property
because Move Overland failed to pay its credit purchases. Mahinay protested but still Sheriff
Romeo Laurel proceeded with the sale and Dura Tire was the highest Bidder. Thus, a Certificate
of Sale was issued in favor of Dura Tire and was registered on February 20, 1995. Thus, on
March 23, 1995, Mahinay filed a complaint for specific performance and annulment of auction
sale before the RTC.
RTC dismissed the complaint. On appeal, the CA on its June 16, 2006 decision held that
Mahinay, as “substitute mortgagor”, was fully aware that the property he purchased from A&A
Swiss was previously mortgaged to Dura Tire to answer for Move Overland's obligation.
Considering that Move Overland failed to pay for its credit purchases, Dura Tire had every right
to foreclose the property. Thus, appeal was dismissed. The decision of the CA later became final
and executory on August 8, 2007.
Mahinay relied on the CA’s finding that he was a “substitute mortgagor”, the former filed a
complaint for judicial declaration of right to redeem on August 24, 2007. Mahinay argued that
as the owner of the property at the time of the foreclosure, he must have the right to redeem
the property.
In its answer, Dura Tire alleged that the right of redemption had already lapsed therefore,
Mahinay could no longer redeem the property.
RTC ruled that Mahinay have the right to redeem the property but since 1 year period had
already lapsed, right of redemption could no longer be exercised by Mahinay.
Mahinay moved for a reconsideration but was denied. Thus, Mahinay filed a Petition for Review
on Certiorari. Mahinay primarily argued that the 1 year period of redemption was tolled when
he filed the Complaint for annulment of foreclosure sale on March 23, 1995 and resumed when
the June 16, 2006 Decision of the Court of Appeals became final and executory on August 8,
2007. Since he filed his Complaint for judicial declaration of right to redeem on August 24,
2007, only 16 days after August 8, 2007, Mahinay claims that he exercised his right of
redemption within the one (1)-year period under Act No. 3135.
On the other hand, Dura Tire argues that Mahinay's filing of an action for annulment of
foreclosure sale did not toll the running of the redemption period because the law does not
allow its extension. Since the one (1)-year period of redemption already lapsed, Dura Tire
maintains that Mahinay can no longer redeem the property at the bid price paid by the
purchaser.
ISSUE:
Whether or not the 1 year period of redemption was tolled when Mahinay filed his Complaint
for annulment of foreclosure sale.
RULING: No.
Contrary to Mahinay's claim, his right to redeem the mortgaged property did not arise from the
Court of Appeals' "judicial declaration" that he was a "substitute mortgagor" of A&A Swiss. By
force of law, specifically, Section 6 of Act No. 3135, Mahinay's right to redeem arose when the
mortgaged property was extrajudicially foreclosed and sold at public auction. There is no
dispute that Mahinay had a lien on the property subsequent to the mortgage. Consequently, he
had the right to buy it back from the purchaser at the sale, Dura Tire in this case, "from and at
any time within the term of one year from and after the date of the sale." Section 6 of Act No.
3135 provides:
Section 6. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or
judgment creditor of said debtor, or any person having a lien on the property subsequent to the
mortgage or deed of trust under which the property is sold, may redeem the same at any time
within the term of one year from and after the date of the sale; and such redemption shall be
governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-
six, inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the
provisions of this Act.
The "date of the sale" referred to in Section 6 is the date the certificate of sale is registered with
the Register of Deeds. This is because the sale of registered land does not '"take effect as a
conveyance, or bind the land' until it is registered.”
The right of redemption being statutory, the mortgagor may compel the purchaser to sell back
the property within the one (1)-year period under Act No. 3135. If the purchaser refuses to sell
back the property, the mortgagor may tender payment to the Sheriff who conducted the
foreclosure sale. Here, Mahinay should have tendered payment to Sheriff Laurel instead of
insisting on directly paying Move Overland's unpaid credit purchases to Dura Tire.
As early as 1956, this Court held in Mateo v. Court of Appeals that "the right of redemption ...
must ... be exercised iri the mode prescribed by the statute.” The one (1)-year period of
redemption is fixed, hence, non-extendible, to "avoid prolonged economic uncertainty over the
ownership of the thing sold.”
Since the period of redemption is fixed, it cannot be tolled or interrupted by the filing of cases
to annul the foreclosure sale or to enforce the right of redemption. "To rule otherwise ... would
constitute a dangerous precedent. A likely offshoot of such a ruling is the institution of frivolous
suits for annulment of mortgage intended merely to give the mortgagor more time to redeem
the mortgaged property."
Rights and Obligations of the Mortgagee [Creditor]
Land Bank of the Philippines vs. Lorenzo Musni, Eduardo Sonza and Spouses Ireneo and
Nenita Santos
G.R. No. 206343, February 22, 2017, Leonen, J., Second Division
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the
assailed Decision dated February 29, 2012, and the Resolution dated March 12, 2013 of the
Court of Appeals in CA GR. CV No. 92304 be nullified and set aside, and that judgment to the
complaint against petitioner be rendered dismissed. Petitioner likewise prays that the deleted
award be reinstated should the assailed Decision and Resolution be affirmed.
FACTS:
Respondent Lorenzo Musni (Musni) was the owner of the lot in Tarlac under a Transfer
Certificate of Title. He filed a complaint for reconveyance of land and cancellation of TCT
against Spouses Nenita Sonza and Ireneo Santos (Sps. Santos), Eduardo Sonza (Eduardo), and
Land Bank of the Philippines. Musni alleged that Nenita Sonza Santos (Nenita) falsified a Deed
of Sale, and caused the transfer of title of the lot in her and her brother Eduardo's names. He
claimed that the Spouses Santos and Eduardo mortgaged the lot to Land Bank as security for
their loan. Consequently, Musni was dispossessed of the lot when the Land Bank foreclosed the
property upon Nenita and Eduardo’s failure to pay their loan and titles to the foreclosed land
was consolidated in favor of Land Bank.
Musni also claimed that he filed a criminal case against Nenita and Eduardo for falsification of a
public document which the MTC rendered a decision finding Nenita guilty of the imputed crime.
On Land Bank’s part, it asserted that the transfer of the title in its name was because of a
decision rendered by the Department of Agrarian Reform Adjudication Board. It countered also
that the transaction with the Sps. Santos and Eduardo was legitimate since the authenticity of
the title was verified by the Register of Deeds.
RTC renedered its decision in favor of Musni. It also found that Land Bank was not an innocent
purchaser for value. The institution of the criminal case against Nenita should have alerted the
bank to ascertain the ownership of the lot before it foreclosed the same.
Similarly, the CA affirmed with modifications the decision of the trial court. It also held that
Land Bank was neither mortgagee in good faith nor an innocent purchaser for value for failure
to observe the due diligence required of banks.
In the Petition for Review filed by Land Bank. It reiterated that it observed good faith in the
mortgage transaction, and the foreclosure sale. That from the time the property was
mortgaged to it until the title was consolidated in its name, no one filed an adverse claim or
notice of lis pendens with the Registry of Deeds. That it had also complied with requirements of
foreclosure, including publication and posting. Moreover, petitioner contends that the
mortgage was executed before the institution of the criminal case against one of the
mortgagors. It insists that the "filing of the criminal complaint could not operate as a notice to
the whole world." Since the bank "was not a party to the case, it could not have been notified
of the existence of the criminal complaint.”
ISSUE:
Whether or not petitioner Land Bank is a mortgagee in good faith and an innocent purchaser
for value.
RULING: NO.
Petitioner is neither a mortgagee in good faith nor an innocent purchaser for value.
In Philippine Banking Corporation v. Dy, et al., this Court explained this concept in relation to
banks:
Primarily, it bears noting that the doctrine of "mortgagee in good faith" is based on the rule
that all persons dealing with property covered by a Torrens Certificate of Title are not required
to go beyond what appears on the face of the title. This is in deference to the public interest in
upholding the indefeasibility of a certificate of title as evidence of lawful ownership of the land
or of any encumbrance thereon. In the case of banks and other financial institutions, however,
greater care and due diligence are required since they are imbued with public interest, failing
which renders the mortgagees in bad faith. Thus, before approving a loan application, it is a
standard operating practice for these institutions to conduct an ocular inspection of the
property offered for mortgage and to verify the genuineness of the title to determine the real
owner(s) thereof. The apparent purpose of an ocular inspection is to protect the "true owner"
of the property as well as innocent third parties with a right, interest or claim thereon from a
usurper who may have acquired a fraudulent certificate of title thereto. (Citations omitted)
Further, in Philippine National Bank v. Corpuz:
As a rule, the Court would not expect a mortgagee to conduct an exhaustive investigation of the
history of the mortgagor's title before he extends a loan. But petitioner . . . is not an ordinary
mortgagee; it is a bank. Banks are expected to be more cautious than ordinary individuals in
dealing with lands, even registered ones, since the business of banks is imbued with public
interest. It is of judicial notice that the standard practice for banks before approving a loan is to
send a staff to the property offered as collateral and verify the genuineness of the title to
determine the real owner or owners. (Citations omitted)
Petitioner's defense that it could not have known the criminal action since it was not a party to
the case and that there was no notice of !is pendens filed by respondent Musni, is unavailing.
This Court held in Heirs of Gregorio Lopez v. Development Bank of the Philippines:
The rule on "innocent purchasers or [mortgagees] for value" is applied more strictly when the
purchaser or the mortgagee is a bank. Banks are expected to exercise higher degree of diligence
in their dealings, including those involving lands. Banks may not rely simply on the face of the
certificate of title.
Had petitioner exercised the degree of diligence required of banks, it would have ascertained
the ownership of one of the properties mortgaged to it.
Persons Liable
Vicarious Liability: Persons liable for Tortious Acts of another
John E.R. Reyes and Mervin Joseph Reyes vs. Orico Doctolero, Romeo Avila, Grandeur
Security and Services Corporation, and Makati Cinema Square
G.R. No. 185597, August 2, 2017 Jardeleza, J., Third Division
This is a petition for review on certiorari under Rule 45 of the Rules of Court challenging the
Decision dated July 25, 2008 and the Resolution dated December 5, 2008 of the Court of
Appeals (CA) in CA-G.R. CV No. 88101.
FACTS:
An altercation between respondent Orico Doctolero (Doctolero), a security guard of respondent

Grandeur Security and Services Corporation (Grandeur) and petitioners John E.R. Reyes (John)
and Mervin Joseph Reyes (Mervin) in the parking in the parking area of respondent Makati
Cinema Square (MCS).
It happened when John was driving and was approaching the entrance of the basement parking
of MCS when Doctolero stopped him to give way to outgoing cars. The act of Doctolero giving
John signal to proceed only to be stopped eventually happened twice which almost caused a
collision. When John tried to correct the mistake of Doctolero, the latter instead cursed the
former. Doctolero then tried to shoot John hitting the latter in his left leg. Mervin who tried to
rescue John was also shot in the stomach by respondent Romeo Avila (Avila), another security
guard. This time Mervin was shot inside MCS.
Grandeur on a different version, argued that, while Doctolero was on duty at the basement
parking of MCS, he saw John violating traffic rules through the basement parking. This
prompted Doctolero to stop the vehicle of John. When John alighted from the vehicle he
punched and kicked Doctolero causing the latter to draw his gun and fired a warning shot. John
ignored this and tried to wrestled Doctolero in order to get the latter’s gun causing it to fire off
and hit John’s leg. Mervin then ran after Doctolero but was shot on the stomach by security
guard Avila.
John E.R. Reyes and Mervin Joseph Reyes (herein petitioners) then filed with the Regional Trial
Court a complaint for damages against respondents Doctolero and Avila and their employer
Grandeur, charging the latter with negligence in the selection and supervision of its employees.
They likewise impleaded MCS based on their negligence in getting Grandeur’s services.
Respondents Doctolero and Avila failed to file their answer. Thus, they were declared in default.
Grandeur on its part, asserted that it exercised the required diligence in the selection and
supervision of its employees. That the shooting incident was caused by the unlawful aggression
of petitioners who took advantage of their “martial arts” skills.
MCS on the other hand, contended that it cannot be held liable for damages with regard to the
shooting incident because the injuries sustained by petitioners were caused by the acts of
respondents Doctolero and Avila, which Grandeur should be solely responsible.
RTC ruled in favor of petitioners finding respondents Doctolero and Avila liable to petitioners.
However, it dismissed the complaint filed against Grandeur. It ruled that Grandeur sufficiently
overcome the presumption of negligence.
The CA likewise affirmed RTC’s decision and also rejected petitioner’s argument that MCS
should be held liable as indirect employers of respondents. It further stated that the lack of
employer-employee relationship between respondents Doctolero and Avila and respondent
MCS bars petitioners' claim against MCS for the acts of respondents. Petitioners filed a Motion
for Reconsideration but the CA denied it. Hence, the petition.
ISSUE:
Whether or not MCS should be held vicariously liable on the shooting incident which happened
on its premises
RULING: No.
As a general rule, one is only responsible for his own act or omission. This general rule is laid
down in Article 2176 of the Civil Code, which provides:
Art. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage clone. 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 or this Chapter.
The law, however, provides for exceptions when it makes certain persons liable for the act or
omission of another. One exception is an employer who is made vicariously liable for the tort
committed by his employee under paragraph 5 of Article 2180. Here, although the employer is
not the actual tortfeasor, the law makes him vicariously liable on the basis of the civil law
principle of pater familias for failure to exercise due care and vigilance over the acts of one's
subordinates to prevent damage to another.
It must be stressed, however, that the above rule is applicable only if there is an employer-
employee relationship. This employer-employee relationship cannot be presumed but must be
sufficiently proven by the plaintiff. The plaintiff must also show that the employee was acting
within the scope of his assigned task when the tort complained of was committed. It is only
then that the defendant, as employer, may find it necessary to interpose the defense of due
diligence in the selection and supervision of employees.
In Mamaril v. The Boy Scout of the Philippines, we found that there was no employer-employee
relationship between Boy Scout of the Philippines (BSP) and the security guards assigned to it
by an agency pursuant to a Guard Service Contract. In the absence of such relationship,
vicarious liability under Article 2180 of the Civil Code cannot apply as against BSP. Similarly, we
find no employer-employee relationship between MCS and respondent guards. The guards
were merely assigned by Grandeur to secure MCS' premises pursuant to their Contract of
Guard Services. Thus, MCS cannot be held vicariously liable for damages caused by these
guards' acts or omissions.
John E.R. Reyes and Mervin Joseph Reyes vs. Orico Doctolero, Romeo Avila, Grandeur
Security and Services Corporation, and Makati Cinema Square
G.R. No. 185597, August 2, 2017 Jardeleza, J., Third Division
This is a petition for review on certiorari under Rule 45 of the Rules of Court challenging the
Decision dated July 25, 2008 and the Resolution dated December 5, 2008 of the Court of
Appeals (CA) in CA-G.R. CV No. 88101.
FACTS:
An altercation between respondent Orico Doctolero (Doctolero), a security guard of respondent

Grandeur Security and Services Corporation (Grandeur) and petitioners John E.R. Reyes (John)
and Mervin Joseph Reyes (Mervin) in the parking in the parking area of respondent Makati
Cinema Square (MCS).
It happened when John was driving and was approaching the entrance of the basement parking
of MCS when Doctolero stopped him to give way to outgoing cars. The act of Doctolero giving
John signal to proceed only to be stopped eventually happened twice which almost caused a
collision. When John tried to correct the mistake of Doctolero, the latter instead cursed the
former. Doctolero then tried to shoot John hitting the latter in his left leg. Mervin who tried to
rescue John was also shot in the stomach by respondent Romeo Avila (Avila), another security
guard. This time Mervin was shot inside MCS.
Grandeur on a different version, argued that, while Doctolero was on duty at the basement
parking of MCS, he saw John violating traffic rules through the basement parking. This
prompted Doctolero to stop the vehicle of John. When John alighted from the vehicle he
punched and kicked Doctolero causing the latter to draw his gun and fired a warning shot. John
ignored this and tried to wrestled Doctolero in order to get the latter’s gun causing it to fire off
and hit John’s leg. Mervin then ran after Doctolero but was shot on the stomach by security
guard Avila.
John E.R. Reyes and Mervin Joseph Reyes (herein petitioners) then filed with the Regional Trial
Court a complaint for damages against respondents Doctolero and Avila and their employer
Grandeur, charging the latter with negligence in the selection and supervision of its employees.
They likewise impleaded MCS based on their negligence in getting Grandeur’s services.
Respondents Doctolero and Avila failed to file their answer. Thus, they were declared in default.
Grandeur on its part, asserted that it exercised the required diligence in the selection and
supervision of its employees. That the shooting incident was caused by the unlawful aggression
of petitioners who took advantage of their “martial arts” skills.
MCS on the other hand, contended that it cannot be held liable for damages with regard to the
shooting incident because the injuries sustained by petitioners were caused by the acts of
respondents Doctolero and Avila, which Grandeur should be solely responsible.
RTC ruled in favor of petitioners finding respondents Doctolero and Avila liable to petitioners.
However, it dismissed the complaint filed against Grandeur. It ruled that Grandeur sufficiently
overcome the presumption of negligence.
The CA likewise affirmed RTC’s decision and also rejected petitioner’s argument that MCS
should be held liable as indirect employers of respondents. It further stated that the lack of
employer-employee relationship between respondents Doctolero and Avila and respondent
MCS bars petitioners' claim against MCS for the acts of respondents. Petitioners filed a Motion
for Reconsideration but the CA denied it. Hence, the petition.
ISSUE:
Whether or not Grandeur should be held vicariously liable for the damages caused by
respondents Doctolero and Avila to petitioners John and Mervin Reyes.
RULING: No.
On the other hand, paragraph 5 of Article 2180 of the Civil Code may be applicable to Grandeur,
it being undisputed that respondent guards were its employees. When the employee causes
damage due to his own negligence while performing his own duties, there arises the Juris
tantum presumption that the employer is negligent, rebuttable only by proof of observance of
the diligence of a good father of a family. The "diligence of a good father" referred to in the last
paragraph of Article 2180 means diligence in the selection and supervision of employees.
To rebut the presumption of negligence, Grandeur must prove two things: first, that it had
exercised due diligence in the selection of respondents Doctolero and Avila, and second, that
after hiring Doctolero and Avila, Grandeur had exercised due diligence in supervising them.
In Metro Manila Transit Corporation v. Court of Appeals, the Court found that "petitioner's
attempt to prove its diligentissimi patris familias in the selection and supervision of employees
through oral evidence must fail as it was unable to buttress the same with any other evidence,
object or documentary, which might obviate the apparent biased nature of the testimony."
There, the supposed clearances, results of seminars and tests which Leonardo allegedly
submitted and complied with were never presented in court despite the fact that, if true, then
they were obviously in the possession and control of Metro Manila Transit Corporation
(MMTC). Subsequently, in a different case also involving MMTC, the Court held that "in a trial
involving the issue of vicarious liability, employers must submit concrete proof, including
documentary evidence."
Unlike in the aforecited MMTC cases, the evidence presented by Grandeur consists not only in
the testimony of its HRD head but also by documentary evidence showing respondents
Doctolero's and Avila's compliance with the above hiring and selection process consisting of
their respective: (1) private security licenses; (2) NBI Clearances; (3) Medical Certificates; (4)
Police Clearances; (5) Certificate of Live Birth/Certification issued by the Local Civil Registrar
appertaining to date of birth; (6) Certificates issued by the Safety Vocational and Training
Center for satisfactory completion of the Pre-Licensing Training Course; (7) High School
Diplomas; (8) SSS Personal Data Records; (9) Barangay Clearances; (10) Court Clearance; (11)
Neuro-psychiatric result issued by Goodwill Medical Center, Inc. for Doctolero's pre-
employment screening as Security Guard/Evaluation Report by Office Chief Surgeon Army,
Headquarters, Phil. Army, Fort Bonifactio Metro-Manila for Avila showing an above-average
result and no psychotic ideations; (12) Certification from Varsitarian Security and Investigation
Agency, Inc. that Doctolero has been employed with said agency; (13) Certificate issued by
Cordova High School showing that Doctolero had completed the requirements of the courts of
Institution in Citizen Army Training-I; (14) Certification by Grandeur that Doctolero has
submitted the requirements for his application for the post of Security Guard. Thus, we agree
with the RTC and CA's evaluation that Grandeur was able to satisfactorily prove that it had
exercised due diligence in the selection of respondents Doctolero and Avila.
The question of diligent supervision, however, depends on the circumstances of employment.

Ordinarily, evidence demonstrating that the employer has exercised diligent supervision of its
employee during the performance of the latter's assigned tasks would be enough to relieve him
of the liability imposed by Article 2180 in relation to Article 2176 of the Civil Code.
Here, Grandeur's HRD head, Ungui, likewise testified on Grandeur's standard operational
procedures, showing the means by which Grandeur conducts close and regular supervision over
the security guards assigned to their various clients. Grandeur also submitted as evidence
certificates of attendance to various seminars and the memoranda both those commending
respondents for their good works and reprimanding them for violations of various company
policies. We agree with the CA that these may be considered, as they are related to the
documents and testimonies adduced during trial to show Grandeur's diligence in the
supervision of the actual work performance of its employees. Considering all the evidence
borne by the records, we find that Grandeur has sufficiently exercised the diligence of a good
father of a family in the selection and supervision of its employees. Hence, having successfully
overcome the legal presumption of negligence, it is relieved of liability from the negligent acts
of its employees, respondents Doctolero and Avila.
OUR LADY OF LOURDES HOSPITAL vs. Spouses Romeo and Regina Capanzana
G.R. No. 189218, March 22, 2017, Sereno, CJ., First Division
We resolve the instant Petition for Review on Certiorari assailing the Decision and Resolution
rendered by the Court of Appeals (CA), Second Division, in CA-G.R. CV No. 89030.
FACTS:
Regina Capanzana went into active labor and was brought to petitioner Our Lady of Lourdes
Hospital (petitioner Hospital) for an emergency caesarean section. Prior to this, she first
underwent a pre-operative physical examination where she was found fit for anesthesia. Thus,
she gave birth to a baby boy.
Several hours after her operation, Regina complained of headache, chilly sensation,
restlessness, and shortness of breath. She asked for oxygen and later became cyanotic. She was
transferred to the Intensive Care Unit (ICU) but when her condition still showed no
improvement Regina was transferred to other hospital. Thereafter, her condition resulted in
cardio pulmonary arrest and, subsequently, brain damage. Sometime later, she was discharged
but in a vegetative state.
Respondents spouses Capanzana filed a complaint for damages against petitioner Hospital,
along with co-defendants to wit: two doctors and Jane Does, the nurses on duty and was
stationed during the time when Regina was still in the petitioner hospital.
Respondent spouses imputed negligence to the two doctors but later on, they were absolved
from their liability since no negligence can be imputed against them. Respondent spouses also
claimed that nurses were negligent for not having promptly given oxygen to Regina and the
petitioner Hospital was equally negligent for not making available and accessible the oxygen
unit at that time.
Service of summons on the nurses was unsuccessful for some reason. Only defendant Florita
Ballano (Ballano), who was later proven to be a midwife and not a nurse, filed an answer.
In their defense, petitioner Hospital and defendant Ballano claimed that there was no
instruction to the hospital or the staff to place Regina in a room with standby oxygen tank. They
also claimed that the nurses on duty had promptly attended to her needs.
The RTC ruled that the nurses are liable for contributory negligence. Thus, since the trial court
only acquired jurisdiction over defendant Ballano who was among those on duty on that Day,
she was the only one held liable.
On the part of petitioner Hospital, the RTC ruled that the petitioner Hospital was able to
discharge the burden of proof that it had exercised the diligence of a good father of a family in
the selection and supervision of its employees.
Respondents Capanzana filed their appeal before the CA. The CA affirmed the RTC ruling with
modification where the nurses were still negligent but absolving defendant Ballano for it was
not shown whether defendant Ballano was even one of the nurses on duty who had attended
to Regina. The CA also noted that the execution of health care procedures and essential primary
health care is nurse’s duty, not of a midwife. On the other hand, the CA ruled against petitioner
Hospital because while there was evidence that it showed diligence in the selection and hiring
processes, there was no evidence to prove that it exercised the required diligence in the
supervision of its nurses. Also, the non-availability of an oxygen unit on the hospital floor where
Regina was amounts to gross negligence on the part of petitioner Hospital.
Only petitioner Hospital filed a Motion for Reconsideration but the CA denied it. Hence, this
petition.
ISSUE:
Whether or not petitioner Hospital could be held liable for the negligence of its nurses.
RULING: Yes.
For the negligence of its nurses, petitioner is thus liable under Article 2180 in relation to Article
2176 of the Civil Code. Under Article 2180, an employer like petitioner hospital may be held
liable for the negligence of its employees based on its responsibility under a relationship of
patria potestas. The liability of the employer under this provision is "direct and immediate; it is
not conditioned upon a prior recourse against the negligent employee or a prior showing of the
insolvency of that employee." The employer may only be relieved of responsibility upon a
showing that it exercised the diligence of a good father of a family in the selection and
supervision of its employees. The rule is that once negligence of the employee is shown, the
burden is on the employer to overcome the presumption of negligence on the latter's part by
proving observance of the required diligence.
In the instant case, there is no dispute that petitioner was the employer of the nurses who have
been found to be negligent in the performance of their duties. This fact has never been in issue.
Hence, petitioner had the burden of showing that it exercised the diligence of a good father of a
family not only in the selection of the negligent nurses, but also in their supervision.
On this point, the rulings of the RTC and the CA diverge. While the trial court found due
diligence in both the selection and the supervision of the nurses, the appellate court found that
petitioner proved due diligence only in the selection, but not in the supervision, of the nurses.
After a careful review of the records, we find that the preponderance of evidence supports the
finding of the CA that the hospital failed to discharge its burden of proving due diligence in the
supervision of its nurses and is therefore liable for their negligence. It must be emphasized that
even though it proved due diligence in the selection of its nurses, the hospital was able to
dispose of only half the burden it must overcome.
We therefore note with approval this finding of the CA:

While Lourdes Hospital adduced evidence in the selection and hiring processes of its
employees, it failed to adduce evidence showing the degree of supervision it exercised over its
nurses. In neglecting to offer such proof, or proof of similar nature, respondent [herein
petitioner] hospital failed to discharge its burden under the last paragraph of Article 2180.
Consequently, it should be held liable for the negligence of its nurses which caused damage to
Regina.
In the present case, there is no proof of actual supervision of the employees' work or actual
implementation and monitoring of consistent compliance with the rules. The testimony of
petitioner's Assistant Nursing Service Director, Lourdes H. Nicolas is belied by the actual records
of petitioner. These show that Nurses David and Padolina had been observed to be latecomers
and absentees; yet they were never sanctioned by those supposedly supervising them. While
the question of diligent supervision depends on the circumstances of employment, we find that
by the very nature of a hospital, the proper supervision of the attendance of its nurses, who are
its frontline health professionals, is crucial considering that patients' conditions can change
drastically in a matter of minutes. Petitioner's Employee Handbook recognized exactly this as it
decreed the proper procedure in availing of unavoidable absences and the commensurate
penalties of verbal reprimand, written warning, suspension from work, and dismissal in
instances of unexcused absence or tardiness. Petitioner's failure to sanction the tardiness of the
defendant nurses shows an utter lack of actual implementation and monitoring of compliance
with the rules and ultimately of supervision over its nurses.
More important, on that fatal night, it was not shown who were the actual nurses on duty and
who was supervising these nurses. Although Lourdes H. Nicolas explained in her testimony that
two nurses are assigned at the nurses' station for each shift and that they are supervised by the
head nurses or the charge nurses, the documents of petitioner show conflicting accounts of
what happened on the fateful days of 26 and 27 of December 1997.
We therefore affirm the appellate court in finding petitioner directly liable for the negligence of
its nurses under Article 2180 in relation to Article 2176 of the Civil Code.
Moral
Spouses Cristino and Edna Carbonell vs. Metropolitan Bank and Trust Company
G.R. No. 178467, April 26, 2017, Bersamin, J., Third Division
The petitioners assail the decision promulgated on December 7, 2006, whereby the Court of
Appeals (CA) affirmed with modification the decision rendered on May 22, 1998 by the Regional
Trial Court, Branch 157, in Pasig City (RTC) dismissing the petitioners' complaint in Civil Case No.
65725 for its lack of merit, and awarded attorney's fees under the respondent's counterclaim.
FACTS:
Petitioners Spouses Cristino and Edna Carbonell (petitioners) filed an action for damages
against respondent Metropolitan Bank and Trust Company (respondent) alleging that the
former had experienced emotional shock, mental anguish, public ridicule, humiliation, insults
and embarrassment during their trip to Thailand because of respondent’s release to them of
US$100 bills which later turned out to be counterfeit. Petitioners narrated that they withdrew
US$1,000.00 in US$100 notes from their dollar account at respondent’s Pateros branch; that
while in Bangkok, Thailand, they had exchanged five US$100 bills into Baht but only four of the
said bills had been accepted by the foreign exchange dealer because the fifth one was “no
good”. Unconvinced on the result, petitioners asked a companion to exchange the same bill at
Norkthon Bank in Bangkok but the bank teller informed the petitioners and their companion
that the dollar bill was fake. Consequently, the teller confiscated the US$100 bill and
threatened to report them to the police if they insisted in getting the fake dollar bill back.
Moreover, the jewelry that petitioners bought from a shop owner using four of the remaining
US$100 bills also turned out to be a counterfeit. This made the shop owner to shout that all
Filipinos are cheaters within the hearing distance of fellow travelers and several foreigners.
Upon petitioners’ return in the Philippines, they confronted the manager of the respondent in
Pateros branch regarding the fake dollar bills. The manager insisted that the dollar bills were
genuine as the bills had come from the head office. In order to settle the matter, counsel of the
petitioners had submitted said US$100 bills to the Bangko Sentral ng Pilipinas (BSP) for
examination. BSP certified that the four US$100 bills were near perfect genuine notes.
Petitioner’s counsel, through letter, also explained the unfortunate experience of petitioners
caused by respondent’s release of the fake US dollar bills to them. Thus, petitioners demanded
Moral damages of ₱10 Million and Exemplary damages and giving respondent five days to
comply with their demand or face court action.
Respondent’s counsel responded stressing that the respondent could not absolutely guarantee
the genuineness of each and every foreign currency note that passed through their system.
That like petitioners, respondent was also a victim and that it had exercised the diligence
required in dealing with the foreign currency notes and in the selection and supervision of its
employees. Respondent’s representative also offered to reinstate US$500 on petitioner’s dollar
account plus to underwrite a round-trip all-expense-paid trip to Hong Kong. However,
petitioners refused and staged a walk-out.
The RTC ruled in favor of the respondent. Petitioner appealed but the CA affirmed the judgment
of the RTC with modification. Hence, the said appeal by petitioners.
ISSUE:
Whether or not petitioners were entitled to Exemplary damages and Moral damages.
RULING: No
Nonetheless, the petitioners contend that the respondent should be liable for moral and
exemplary damages on account of their suffering the unfortunate experience abroad brought
about by their use of the fake US dollar bills withdrawn from the latter.
The contention cannot be upheld.
The relationship existing between the petitioners and the respondent that resulted from a
contract of loan was that of a creditor-debtor. Even if the law imposed a high standard on the
latter as a bank by virtue of the fiduciary nature of its banking business, bad faith or gross
negligence amounting to bad faith was absent. Hence, there simply was no legal basis for
holding the respondent liable for moral and exemplary damages. In breach of contract, moral
damages may be awarded only where the defendant acted fraudulently or in bad faith. That
was not true herein because the respondent was not shown to have acted fraudulently or in
bad faith. This is pursuant to Article 2220 of the Civil Code, to wit:
Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the
court should find that, under the circumstances, such damages are justly due. The same rule
applies to breaches of contract where defendant acted fraudulently or in bad faith.
With the respondent having established that the characteristics of the subject dollar notes had
made it difficult even for the BSP itself as the country's own currency note expert to identify the
counterfeiting with ease despite adhering to all the properly laid out standard operating
procedure and precautions in the handling of US dollar bills, holding it liable for damages in
favor of the petitioners would be highly unwarranted in the absence of proof of bad faith,
malice or fraud on its part. That it formally apologized to them and even offered to reinstate
the USD$500.00 in their account as well as to give them the all-expense-paid round trip ticket
to Hong Kong as means to assuage their inconvenience did not necessarily mean it was liable. In
civil cases, an offer of compromise is not an admission of liability, and is inadmissible as
evidence against the offeror.
Even without taking into consideration the news clippings to the effect that the US Secret
Service and Central Intelligence Agency had themselves been deceived by the 1990 series of the
US dollar notes infamously known as the "supernotes," the record had enough to show in that
regard, not the least of which was the testimony of Ms. Malabrigo as BSP's Senior Currency
Analyst about the highly deceptive nature of the subject US dollar notes and the possibility for
them to pass undetected.
Also, the petitioners' allegation of misrepresentation on the part of the respondent was
factually unsupported. They had been satisfied with the services of the respondent for about
three years prior to the incident in question. The incident was but an isolated one. Under the
law, moral damages for culpa contractual or breach of contract are recoverable only if the
defendant acted fraudulently or in bad faith, or is found guilty of gross negligence amounting to
bad faith, or in wanton disregard of his contractual obligations. The breach must be wanton,
reckless, malicious or in bad faith, oppressive or abusive. In order to maintain their action for
damages, the petitioners must establish that their injury resulted from a breach of duty that the
respondent had owed to them, that is, there must be the concurrence of injury caused to them
as the plaintiffs and legal responsibility on the part of the respondent. Underlying the award of
damages is the premise that an individual was injured in contemplation of law. In this regard,
there must first be a breach of some duty and the imposition of liability for that breach before
damages may be awarded; and the breach of such duty should be the proximate cause of the
injury. That was not so in this case.
Here, although the petitioners suffered humiliation resulting from their unwitting use of the
counterfeit US dollar bills, the respondent, by virtue of its having observed the proper protocols
and procedure in handling the US dollar bills involved, did not violate any legal duty towards
them. Being neither guilty of negligence nor remiss in its exercise of the degree of diligence
required by law or the nature of its obligation as a banking institution, the latter was not liable
for damages. Given the situation being one of damnum absque injuria, they could not be
compensated for the damage sustained.
Judith D. Darines and Joyce D. Darines vs. Eduardo Quiñones and Rolando Quitan
G.R. No. 206468, August 02, 2017, Del Castillo, J., First Division
This Petition for Review on Certiorari assails the October 29, 2012 Decision of the Court of
Appeals (CA) in CA-G.R CV No. 95638, which reversed and set aside the July 14, 2010 Decision of
the Regional Trial Court (RTC) of Baguio City, Branch 3 in Civil Case No. 6363-R for "Breach of
Contract of Carriage & Damages." Also challenged is the March 6, 2013 CA Resolution denying
the motion for reconsideration on the assailed Decision.
FACTS:
Petitioners Judith D. Darines (Judith) and her daughter, Joyce D. Darines (Joyce) boarded the
Amianan Bus Line enroute from Carmen, Rosales, Pangasinan to Baguio City. Respondent
Rolando M Quitan (Quitan) was the bus driver. While traversing along Kenon Road, the bus
crashed into a truck which was parked on the shoulder of Kenon Road. These resulted to both
vehicles being damaged; two passengers of the bus died; and the other passengers, including
petitioners, were injured. In particular, Joyce suffered cerebral concussion while Judith had and
eye wound which required an operation.
The petitioners argued that Quitan and respondent Eduardo Quiñones (Quiñones), the operator
of Amianan Bus Line, breached their contract of carriage as they failed to bring them safely to
their destination. They also contended that Quitan’s reckless and negligent driving caused the
collision. Thus, they filed a complaint and prayed for actual, moral, exemplary and temperate
damages, and costs of suit.
On the other hand, respondents Quiñones and Quitan alleged that Quitan was driving in a
careful, prudent and dutiful manner at the normal speed of 40 kilometers per hour. That the
approximate cause of the incident was the negligence of the truck driver who park the truck at
the roadside right after the curve without having installed any early warning device. They also
claimed that Quiñones observed due diligence in the selection and supervision of his employees
as he conducted seminars including those required by the government on traffic safety. That
Quitan was also a licensed professional driver and in his 12 years of experience as a driver, he
never had any incident like the one at hand.
Trial ensued and Judith testified that Quitan was driving at a very high speed resulting in a
collision with the truck parked at the shoulder of the road. Furthermore, in order to prove
actual damages, Judith presented receipts for medicine, and a summary of expenses. Included
were those incurred for the ritual dao-is. She explained that she and Joyce are Igorots, being
part of the indigenous tribe, and as their customary practice, when a member met an accident
and was released from the hospital, they butcher pigs to remove or prevent bad luck from
returning to the Family. Judith also supported her claim on moral damages by testifying that
she suffered sleepless nights since she worried about the result and possible effect of her
opration.
On the other hand, on behalf of the respondents, they presented Ernesto Benitez (Benitez) who
testified that the he bought the medicines and paid hospitalization expenses of petitioners
evidenced by the receipts submitted in court.
The RTC ruled that petitioners did not present any receipt with regard the expenses incurred
during the dao-is ritual. Also, the RTC likewise held that, as for Judith’s loss of income,
petitioners failed to substantiate the same as there was no showing that Judith’s failure to
report to work for two months was because of the incident. Thus, RTC did not award actual
damages for lack of evidence.
However, RTC awarded moral damages to petitioners basing on Judith’s testimony with regard
to her pain and suffering. Likewise, exemplary damages was awarded by way of correction and
to serve as example to common carriers to be extraordinary diligent in transporting passengers.
Attorney’s fees and costs of suit were granted because the petitioners were forced to litigate
the case.
The CA, however, reversed the trial court’s ruling by deleting the award of moral damages
because petitioners failed to prove that respondents acted fraudulently or in bad faith, as
shown by the fact that respondents paid petitioners' medical and hospitalization expenses. The
CA held that, since no moral damages was awarded, then there was no basis to grant
exemplary damages. Finally, it ruled that because moral and exemplary damages were not
granted, then the award of attorney's fees must also be deleted.
The CA denied petitioner’s motion for reconsideration. Thus, this petition.
ISSUE:
Whether or not petitioners were entitled to Moral damages and Exemplary damages.
RULING: No.
Going now to the main issue, the Court fully agrees with the CA ruling that in an action for
breach of contract, moral damages may be recovered only when a) death of a passenger
results; or b) the carrier was guilty of fraud and bad faith even if death does not result; and that
neither of these circumstances were present in the case at bar. The CA correctly held that, since
no moral damages was awarded then, there is no basis to grant exemplary damages and
attorney's fees to petitioners.
To stress, this case is one for breach of contract of carriage (culpa contractual) where it is
necessary to show the existence of the contract between the parties, and the failure of the
common carrier to transport its passenger safely to his or her destination. An action for breach
of contract differs from quasi-delicts (also referred as culpa aquiliana or culpa extra
contractual) as the latter emanate from the negligence of the tort feasor including such
instance where a person is injured in a vehicular accident by a party other than the carrier
where he is a passenger.
The principle that, in an action for breach of contract of carriage, moral damages may be
awarded only in case (1) an accident results in the death of a passenger; or (2) the carrier is
guilty of fraud or bad faith, is pursuant to Article 1764, in relation to Article 2206(3) of the Civil
Code, and Article 2220 thereof, as follows:
Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with
Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a
passenger caused by the breach of contract by a common carrier. (Emphasis supplied)
Article 2206. The amount of damages for death caused by a crime or quasi-delict shall be at
least three thousand pesos, even though there may have been mitigating circumstances. In
addition:
xxxx
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of the death of the deceased.
Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the
court should find that, under the circumstances, such damages are justly due. The same rule
applies to breaches of contract where the defendant acted fraudulently or in bad faith.
(Emphasis supplied)
Clearly, unless it is fully established (and not just lightly inferred) that negligence in an action
for breach of contract is so gross as to amount to malice, then the claim of moral damages is
without merit.
Here, petitioners impute negligence on the part of respondents when, as paying passengers,
they sustained injuries when the bus owned and operated by respondent Quiñones, and driven
by respondent Quitan, collided with another vehicle. Petitioners propounded on the negligence
of respondents, but did not discuss or impute fraud or bad faith, or such gross negligence which
would amount to bad faith, against respondents. There being neither allegation nor proof that
respondents acted in fraud or in bad faith in performing their duties arising from their contract
of carriage, they are then not liable for moral damages.
The Court also sustains the CA's finding that petitioners are not entitled to exemplary damages.
Pursuant to Articles 2229 and 2234 of the Civil Code, exemplary damages may be awarded only
in addition to moral, temperate, liquidated, or compensatory damages. Since petitioners are
not entitled to either moral, temperate, liquidated, or compensatory damages, then their claim
for exemplary damages is bereft of merit.
All told, the CA correctly ruled that petitioners are not entitled to moral and exemplary
damages as well as attorney's fees.
Spouses Jesus Fernando and Elizabeth S. Fernando vs. Northwest Airlines Inc. (G.R. No.
212038)
Northwest Airlines Inc. vs. Spouses Jesus Fernando and Elizabeth S. Fernando (G.R. No.
212043) February 08, 2017, Peralta, J., Second Division
Before us are consolidated petitions for review on certiorari under Rule 45 of the Rules of Court
assailing the Decision dated August 30, 2013 and Resolution dated March 31, 2014 of the Court
of Appeals (CA) in CA G.R. CV No. 93496 which affirmed the Decision dated September 9, 2008
of the Regional Trial Court (RTC), Branch 97, Quezon City in Civil Case No. Q-N-02-46727 finding
Northwest Airlines, Inc. (Northwest) liable for breach of contract of carriage.
FACTS:
Spouses Jesus and Elizabeth S. Fernando (Fernandos) are owners of the JB Music and JB sports
and chains of hotels and apartelles here in the Philippines. The Fernandos filed a case against
Northwest Airlines where the Fernandos were holders of Elite Platinum World Perks Card, the
highest category given to frequent flyers of the carrier. The Fernandos alleged that sometime in
December 2001, Jesus arrived at the LA Airport via Northwest Airlines Flight and presented his
document at the immigration counter, the Immigration Officer asked him to have his return
ticket be verified and validated since the date reflected thereon was August 2001. Jesus
approached a Northwest personnel named Linda Puntawongdaycha (Linda) who just glanced at
the ticket of the former without checking its status with the computer and said that the ticket
has been used and could not be considered as valid. Jesus contends otherwise stating that the
ticket remains unused and perfectly valid. As proof, he gave herein personnel his number of his
Elite Platinum World Perks Card to access the ticket control record with the airline's computer
and later verify that the ticket was still valid. However, Linda refused to check the validity of the
ticket and instead, informed the Immigration Officer that the ticket was not valid because it had
been used. As a consequence, Jesus was brought to the interrogation room where he was asked
humiliating questions for more than 2 hours and was granted only 12-day stay in the United
States instead of his usual 6 months stay. After Jesus went out of the airport, Elizabeth went to
the Northwest Ticket counter to check the status of the ticket. Later it was confirmed that the
ticket remained unused and perfectly valid. But then, a new ticket was issued to Jesus in case
similar problems would be encountered. The 12-day stay of Jesus in the US resulted to the
disruption of his scheduled plan with his family as well as his business commitments. The
Fernandos were also supposed to be scheduled to attend Musical Instrument Trade Show in LA
and Sports Equipment Trade Show in Las Vegas but then, the 12-day stay made Jesus spend
additional expenses for plane fares just to fly back to the US. Also other related expenses were
incurred.
Another incident was on their way back to the Philippines still, with the Northwest Airlines as
the carrier. Their boarding passes, tickets and other proper travel documents allowed them to
enter to the departure area and joined their business associates from Japan and the Philippines.
However, the Fernandos were stopped at the gate area by a Northwest supervisor named Linda
Tang (Tang) and demanded from the former their paper tickets (coupon type). They failed to
present the same because according to them, Northwest issued electronic tickets attached to
the boarding passes. Despite Fernandos explanation, Tang rudely pulled them out of the queue
in the presence of other passengers. To pacify the matter, Elizabeth explained that Tang should
verify their electronic tickets in her computer by just clicking and punching their Elite Platinum
World Perks Card number. However, Tang arrogantly told them that if they wanted to board
the plane, they should produce their credit cards and pay for a new tickets otherwise their
luggage would be off-loaded from the plane. So, they rushed to the Northwest Airline Ticket
counter to clarify the matter. Northwest personnel Jeanne Meyer (Meyer) assisted the
Fernandos and was able to ascertain that the Fernandos’ electronic tickets were valid and were
confirmed passengers. To avoid similar problems Meyer provided them coupon tickets and
advised them to rush back to the boarding gates as plane was about to depart. But to no avail,
the plane had already departed.
Northwest Airlines contends otherwise. As to the first incident, Northwest Customer Service
Agent was called by a US Immigration Officer to help verify the ticket of Jesus. Linda then asked
Jesus to "show" her "all the papers." Jesus only showed her the passenger receipt of his ticket
without any ticket coupon attached to it. Jesus failed also to show other documents and
relevant information with regard to his return ticket. So, Linda checked his itinerary and nothing
indicated about his flight back to Manila. Linda also checked if there was electronic ticket but
she could not find any. As a result, she gave out Jesus’ PNR to the US Immigration Officer.
As to the second incident, Tang was the one assigned at the departure area. As a protocol, Tang
scanned boarding passes and collected tickets while passengers went through the gate. When
the Fernandos presented their boarding passes, there were no tickets stapled on their boarding
passes that was why Tang asked for it. She explained that even though the Fernandos had
electronic tickets, they had made several changes on their tickets and the Fernados never had
any ticket number or information on the reservation. Tang called the supervisor at the ticket to
verify if the Fernandos had checked in and if there were any tickets found at the ticket counter
to which no such ticket was found. Thus, it was assumed that the Fernandos had checked in
without any tickets presented. Tang also checked the reservation of the Fernandos through the
computer but failed to see any electronic ticket number of any kind. Thus, she told the
Fernandos that they could purchase tickets with their credit cards and just deal with the refund
later when they find their tickets. However, the Fernandos did not agree, instead, they went to
Meyer who printed paper tickets for them, but, when they went back to the boarding gate, the
plane had departed. Northwest offered arrangements to the Fernandos that they could be
transported to Manila on the same day but they rejected the offer. Finally, Northwest booked
the Fernandos on a Northwest flight that would leave the next day.
RTC ruled in favor of the Fernandos. Both parties appealed but were denied by the CA. Motions
for reconsideration by both parties having denied by the CA, the Fernandos filed a petition for
review on certiorari which was followed by Northwest on their own petition. Thus, a
consolidated case was ordered.
ISSUE:
Whether or not from the factual circumstances prevailing, Moral damages and Exemplary
Damages should be awarded to the Fernandos.
RULING: Yes.
On the first incident, Jesus Fernando even gave the Northwest personnel the number of his
Elite Platinum World Perks Card for the latter to access the ticket control record with the
airline's computer for her to see that the ticket is still valid. But Linda Puntawongdaycha refused
to check the validity of the ticket in the computer. As a result, the Immigration Officer brought
Jesus Fernando to the interrogation room of the INS where he was interrogated for more than
two (2) hours. When he was finally cleared by the Immigration Officer, he was granted only a
twelve (12)-day stay in the United States (US), instead of the usual six (6) months.
As in fact, the RTC awarded actual or compensatory damages because of the testimony of Jesus
Fernando that he had to go back to Manila and then return again to LA, USA, two (2) days after
requiring him to purchase another round trip ticket from Northwest in the amount of $2,000.00
which was not disputed by Northwest. In ignoring Jesus Fernando's pleas to check the validity
of the tickets in the computer, the Northwest personnel exhibited an indifferent attitude
without due regard for the inconvenience and anxiety Jesus Fernando might have experienced.
As to the second incident, there was likewise fraud or bad faith on the part of Northwest when
it did not allow the Femandos to board their flight for Manila on January 29, 2002, in spite of
confirmed tickets. We need to stress that they have confirmed bookings on Northwest Airlines
NW Flight No. 001 for Narita, Japan and NW 029 for Manila. They checked in with their luggage
at LA Airport and were given their respective boarding passes for business class seats and claim
stubs for six (6) pieces of luggage. With boarding passes and electronic tickets, apparently, they
were allowed entry to the departure area; and, they eventually joined the long queue of
business class passengers along with their business associates.
However, in the presence of the other passengers, Northwest personnel Linda Tang pulled the
Fernandos out of the queue and asked for paper tickets (coupon type). Elizabeth Fernando
explained to Linda Tang that the matter could be sorted out by simply verifying their electronic
tickets in her computer and all she had to do was click and punch in their Elite Platinum World
Perks Card number. Again, the Northwest personnel refused to do so; she, instead, told them to
pay for new tickets so they could board the plane. Hence, the Femandos rushed to the
Northwest Airline Ticket counter to clarify the matter. They were assisted by Northwest
personnel Jeanne Meyer who retrieved their control number from her computer and was able
to ascertain that the Fernandos' electronic tickets were valid, and they were confirmed
passengers on both NW Flight No. 001 for Narita Japan and NW 029 for Manila on that day.
Under Article 2220 of the Civil Code of the Philippines, an award of moral damages, in breaches
of contract, is in order upon a showing that the defendant acted fraudulently or in bad faith.
Clearly, in this case, the Fernandos are entitled to an award of moral damages. The purpose of
awarding moral damages is to enable the injured party to obtain means, diversion or
amusement that will serve to alleviate the moral suffering he has undergone by reason of
defendant's culpable action. We note that even if both the CA and the RTC ruled out bad faith
on the part of Northwest, the award of "some moral damages" was recognized. Both courts
believed that considering that the Femandos are good clients of Northwest for almost ten (10)
years being Elite Platinum World Perks Card holders, and are known in their business circle,
they should have been given by Northwest the corresponding special treatment. They own
hotels and a chain of apartelles in the country, and a parking garage building in Indiana, USA.
From this perspective, We adopt the said view. We, thus, increase the award of moral damages
to the Femandos in the amount of ₱3,000,000.00.
Exemplary damages, which are awarded by way of example or correction for the public good,
may be recovered in contractual obligations, if defendant acted in wanton, fraudulent, reckless,
oppressive, or malevolent manner. They are designed by our civil law to permit the courts to
reshape behavior that is socially deleterious in its consequence by creating negative incentives
or deterrents against such behavior. Hence, given the facts and circumstances of this case, We
hold Northwest liable for the payment of exemplary damages in the amount of ₱2,000,000.00.
Santos-Yllana Realty Corporation vs. Spouses Ricardo Deang and Florentina Deang
G.R. No. 190043, June 21, 2017, Velasco, JR., J., Third Division
This petition for review under Rule 45 of the Rules of Court seeks to reverse and set aside the
June 17, 2009 Decision and October 13, 2009 Resolution of the Court of Appeals (CA) in CA-G.R.
CV No. 65768 entitled "Sps. Ricardo Deang and Florentina Deang v. Santos-Yllana Realty Corp.,
et. al.," which affirmed, with modification, the September 16, 1999 Decision of the Regional
Trial Court (RTC) of Manila, Branch 44 in Civil Case No. 98-90087, finding petitioner Santos-
Yllana Realty Corporation liable for damages to the respondents spouses Ricardo Deang and
Florentina Deang.
FACTS:
Respondent Florentina Deang (Respondent), a businesswoman, is a former lessee of stall at

Santos-Yllana Shopping Center which is owned and operated by herein petitioner, Santos-Yllana
Realty Corporation (Petitioner).
Due to Respondent’s failure to pay her rents and other charges due on the rented stall,
petitioner filed a Complaint for Ejectment with Damages against respondents (herein spouses
Deang) before the Metropolitan Trial Court (MTC) of Angeles City which rendered a decision
based on the Compromised Agreement that the parties executed.
However, due to Florentina’s failure to comply with the terms of the Compromise Agreement,
petitioner filed a Motion for Execution. Respondents objected, alleging that the amount due to
petitioner had already been paid in full. The Angeles City MTC granted the issuance of the Writ
of Execution.
Respondent moved to quash the Writ of Execution but Sheriff Sicat of the Regional Trial Court
(RTC) of Angeles City implemented the Writ of Execution and padlocked respondents’ stall
which was later reopened by the MTC due to the pendency of the Motion for Reconsideration
(MR).
Under said MR, respondents reiterated their claim that they had already paid the rental arrears
and other fees and charges due to petitioner, thus, Motion for Execution should be rendered
moot and academic. Angeles MTC, however, denied respondents MR and commanding Sheriff
Pangan (sheriff of the MTC) to immediately implement the writ and padlocked respondents’
stall to which the Sheriff complied.
Aggrieved by the implementation of the said Writ, respondents filed a Complaint for Damages
with prayer for injunctive relief against petitioner and sheriffs Sicat and Pangan before the
Manila RTC. Respondents claim to have suffered damages as a result of the illegal closure of
their stalls since important documents, checks, money, and bank books, among others, were
locked inside the stall and could not be retrieved, thereby preventing them from operating their
business, and causing their business to suffer and their goodwill to be tarnished. Respondents,
thus, prayed that judgment be rendered ordering petitioner to pay them P500,000 as actual
damages, P250,000 as moral damages, P250,000 as exemplary damages, and Pl00,000 as
attorney's fees, plus P3,000 per appearance fee per hearing.
The Manila RTC ruled in favor of respondents and awarded ACTUAL, MORAL, EXEMPLARY
DAMAGES including Attorney’s Fees plus costs of suit.
On appeal by the petitioner, the Court of Appeals (CA) found that the sheriffs failed to observe
the notice requirement mandated under Section 10( c) of Rule 39 in the implementation of the
Writ of Execution. However, the CA relieved petitioner from any fault arising out of the manner
of implementation of the Writ of Execution since there was no showing that petitioner was
complicit with the sheriffs' implementation of the Writ. Despite its finding, still, the CA held
petitioner liable for Damages to respondents except Actual Damages. It ordered petitioner
liable for MORAL and EXEMPLARY Damages and Attorney’s Fees.
Petitioner moved for reconsideration but was denied by the CA. Hence, this petition.
ISSUE:
Whether or not the CA erred in sustaining the moral and exemplary damages awarded,
including attorney's fees, despite its finding that petitioner had no participation in the
implementation of the Writ of Execution.
RULING: Yes.
Applying the foregoing disquisition in the present case, We cannot sustain the judgment
affirming petitioner's liability for damages to respondents.
Moral damages are awarded to enable the injured party to obtain means, diversions, or
amusements that will serve to alleviate the moral suffering he has undergone, by reason of the
defendant's culpable action. For a claim for moral damages to prosper, the claimant must prove
that: (1) first, there must be an injury, whether physical, mental or psychological, clearly
sustained by the claimant; (2) second, there must be culpable act or omission factually
established; (3) third, the wrongful act or omission of the defendant is the proximate cause of
the injury sustained by the claimant; and ( 4) fourth, the award of damages is predicated on any
of the cases stated in Article 2219 of the Civil Code.
As discussed, the culpable act or omission on the part of petitioner that resulted in injury to
respondents was not factually established.
The Court likewise cannot affirm petitioner's liability for exemplary damages, attorney's fees,
and cost of suit. The award of exemplary damages is proper only if respondents showed their
entitlement to moral, temperate or compensatory damages; yet, similar to the moral damages
claimed, respondents were not able to establish their entitlement. Anent the liability of
petitioners for attorney's fees and cost of suit, the same must similarly be deleted in light of the
reversal of judgment as to them.
Regrettably, the execution of the MTC judgment was tainted with irregularities that resulted in
damage to respondents. Nevertheless, under the principle of damnum absque injuria, the
legitimate exercise of a person's rights, even if it causes loss to another, does not automatically
result in an actionable injury. Petitioner must not bear the brunt of the sheriffs' misconduct in
the absence of evidence that the latter acted upon its instructions to ignore the rules of
procedure in implementing the Writ.
- Temperate
Kabisig Real Wealth Dev., Inc. and Fernando C. Tio vs. Young Builders Corporation
This is a Petition for Review which petitioners Kabisig Real Wealth Dev., Inc. and Fernando C.
Tio filed assailing the Court of Appeals (CA) Decision dated June 28, 2013 and Resolution dated
March 28, 2014 in CAG.R. CV No. 02945, affirming the Decision of the Regional Trial Court
(RTC) of Cebu City, Branch 12, dated July 31, 2008 in Civil Case No. CEB- 27950.
FACTS:
Kabisig Real Wealth Dev., Inc. (Kabisig), through Ferdinand Tio (Tio), contracted the services
of Young Builders Corporation (Young Builders) to supply labor, tools, equipment, and
materials for the renovation of its building in Cebu City. Young Builders finished the work and
billed Kabisig ₱4,123,320.95. However, despite numerous demands, Kabisig failed to pay.
Kabisig contended that no written contract was ever entered into between the former and Young
Builders. Kabisig also claimed that it was never informed of the estimated cost of the renovation.
This prompted Young Builders to file an action for collection of sum of money against Kabisig.
RTC ruled in favor of Young Builders and awarded ₱4,123,320.95 as actual damages, plus 12%
per annum until it was fully paid.
Kabisig elevated the matter to the CA but the CA affirmed the decision of the RTC, with
modification. The CA deleted the award of Actual damages and instead, ordered Kabisig and Tio
to jointly pay Young Builders the amount of ₱2,400,000.00 as Temperate damages for the value
of services, rendered and materials used in the renovation of defendants-appellants building plus
12% per annum until it was fully paid.
Young Builders and Kabisig moved for reconsideration but both were denied by the CA.
Thus, the instant petition filed by Kabisig
ISSUE:
Whether or not Kabisig is liable to Young Builders for the Actual damages claimed.
RULING: No.
Likewise, the appellate court aptly reduced the amount of damages awarded by the RTC. Under
Article 2199 of the Civil Code, actual or compensatory damages are those awarded in
satisfaction of, or in recompense for, loss or injury sustained. They proceed from a sense of
natural justice and are designed to repair the wrong that has been done, to compensate for the
injury inflicted. They either refer to the loss of what a person already possesses (dano
emergente), or the failure to receive as a benefit that which would have pertained to him (lucro
cesante), as in this case.
For an injured party to recover actual damages, however, he is required to prove the actual
amount of loss with reasonable degree of certainty premised upon competent proof and on the
best evidence available. The burden of proof is on the party who would be defeated if no
evidence would be presented on either side. He must establish his case by a preponderance of
evidence, which means that the evidence adduced by one side is superior to that of the other. In
other words, damages cannot be presumed and courts, in making an award, must point out
specific facts that could afford a basis for measuring compensatory damages. A court cannot
merely rely on speculations, conjectures, or guesswork as to the fact and amount of damages as
well as hearsay or uncorroborated testimony whose truth is suspect. A party is entitled to
adequate compensation only for such pecuniary loss actually suffered and duly proved. Indeed,
to recover actual damages, the amount of loss must not only be capable of proof but must
actually be proven with a reasonable degree of certainty, premised upon competent proof or best
evidence obtainable of its actual amount. Here, the evidence reveals that Young Builders failed
to submit any competent proof of the specific amount of actual damages being claimed. The
documents submitted by Young Builders either do not bear the name of Kabisig or Tio, their
conformity, or signature, or do not indicate in any way that the amount reflected on its face
actually refers to the renovation project.
Notwithstanding the absence of sufficient proof, Young Builders still deserves to be

recompensed for actually completing the work. In the absence of competent proof on the amount
of actual damages, the courts allow the party to receive temperate damages. Temperate or
moderate damages, which are more than nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss has been suffered but its amount cannot,
from the nature of the case, be proved with certainty.
Roberto P. Fuentes vs. People of the Philippines
G.R. No. 186421, April 17, 2017, Perlas-Bernabe, J., First Division
Assailed in this petition for review on certiorari are the Decision dated September 30, 2008 and
the Resolution dated February 16, 2009 of the Sandiganbayan in Crim. Case No. 28342, which
found petitioner Roberto P. Fuentes (Fuentes) guilty beyond reasonable doubt of violation of
Article 3 (e) of Republic Act No. (RA) 3019, entitled the "Anti-Graft and Corrupt Practices Act."
FACTS:
Mayor Roberto P. Fuentes (Fuentes), then mayor of Isabel Province of Leyte, was charged for
violating Article 3(e) of R.A. 3019. The prosecution alleged that private complainant Fe
Nepomuceno Valenzuela (Valenzuela) was the sole proprietor of Triple A Ship Chandling and
General Maritime Services (Triple A), operating in the port of Isable, Leyte since 1993 until
2001 through Business Permits issued by the LGU of Isabel.
However, in 2002, Fuentes refused to sign Triple A’s Business Permit despite the following acts:
Valenzuela’s payment of the renewal fees; that all other officers of the LGU had signed the same
signifying their approval in the Business Permit; and a Police clearance certifying that
Valenzuela had no derogatory records in the Municipality. At first, Triple A was able to carry out
its business via a temporary permits with the Port Management Office as well as the Bureau of
Customs (BOC). However, Triple A’s operations were shut down by the BOC after the latter
received Fuentes’ unnumbered Memorandum alleging Valenzuela of smuggling and drug
trading. This caused the BOC to require Valenzuela to secure a Business Permit from the LGU in
order to resume Triple A’s operation. Thus, Valenzuela wrote Fuentes pleading that she be
issued a Business Permit but Fuentes refused. Resultantly, these cause the good to spoil which
were bought in early 2002 for M/V Ace Dragon because it was prohibited from boarding the said
goods to the vessel due to lack of Business Permit and also, the suspension of its operations from
2002 to 2006. It was only in 2007 that the Business Permit was issued to Triple A.
In his defense, Fuentes averred that as early as 1999 to 2001, he had been hearing rumors that
Valenzuela was engaged in illegal activities such as smuggling and drug trading. That in 2002,
he received written reports from the Prime Movers for Peace and Progress and Isabel’s Chief of
Police confirming the said rumors. This prompted him to hold the approval of Valenzuela’s
Business Permit for Triple A and issue unnumbered Memorandum addressed to port officials and
the BOC. Fuentes also presented corroborative testimonies of other people, essentially: refuting
Valenzuela’s claim that Triple A was unable to resume operations due to lack of Business Permit
and accusing Valenzuela of pulling out her application for Business Permit from the Mayor’s
Office, which precluded Fuentes from approving the same.
The Sandiganbayan found Fuentes guilty beyond reasonable doubt of the crime charged and
ruled in favor of Valenzuela. It ruled that Fuentes, being the mayor during that time, singled out
Valenzuela’s Triple A despite the fact that the rumors relative to the illegal smuggling and drug-
related activities covered all ship chandlers operating in the port of Isabel. That Fuentes still
refused to approve Valenzuela’s Business Permit for Triple A even though clearances were
already secured from the other offices of the LGU, from the PNP itself, finding her innocent
from any illegal activities. And finally, the acts of Fuentes caused Valenzuela to shut down its
operation with regard to Triple A causing her undue injury. Thus, Sandiganbayan ordered
Fuentes to be imprisoned with perpetual disqualification from public office and to pay
Valenzuela the amount of ₱200,000.00 as nominal damages.
Fuentes moved for reconsideration but was denied. Hence, this petition.
ISSUE:
Whether or not Valenzuela was entitled to an amount of ₱200,000.00 as nominal damages
committed by Fuentes.
RULING: No.
Finally, the Court deems it proper to modify the award of damages in Valenzuela's favor. To
recapitulate, the Sandiganbayan awarded her ₱200,000.00 as nominal damages occasioned by
Fuentes's non-issuance of a Business Permit to Triple A. As defined under Article 2221 of the
Civil Code, nominal damages are "recoverable where a legal right is technically violated and
must be vindicated against an invasion that has produced no actual present loss of any kind or
where there has been a breach of contract and no substantial injury or actual damages whatsoever
have been or can be shown." In this case, however, it is clear that Valenzuela suffered some sort
of pecuniary loss due to the suspension of Triple A's ship chandling operations, albeit the amount
thereof was not proven with certainty. Thus, the award of temperate, and not nominal, damages,
is proper. The Court's pronouncement in Evangelista v. Spouses Andolong is relevant on this
matter:
In contrast, under Article 2224 [of the Civil Code], temperate or moderate damages may be
recovered when the court finds that some pecuniary loss has been suffered but its amount
cannot, from the nature of the case, be provided with certainty. This principle was
thoroughly explained in Araneta v. Bank of America [148-B Phil. 124 (1971)], which cited the
Code Commission, to wit:
The Code Commission, in explaining the concept of temperate damages under Article 2224,
makes the following comment:
In some States of the American Union, temperate damages are allowed. There are cases where
from the nature of the case, definite proof of pecuniary loss cannot be offered, although the court
is convinced that there has been such loss. For instance, injury to one's commercial credit or to
the goodwill of a business firm is often hard to show with certainty in terms of money. Should
damages be denied for that reason? The judge should be empowered to calculate moderate
damages in such cases, rather than that the plaintiff should suffer, without redress from the
defendant's wrongful act.
Given these findings, we are of the belief that temperate and not nominal damages should
have been awarded, considering that it has been established that respondent herein
suffered a loss, even if the amount thereof cannot be proven with certainty.
xxxx
Consequently, in computing the amount of temperate or moderate damages, it is usually
left to the discretion of the courts, but the amount must be reasonable, bearing in mind that
temperate damages should be more than nominal but less than compensatory.
Under these circumstances, the Court holds that the award of temperate damages in the amount
of ₱300,000.00 is proper, considering that Valenzuela's net income from the previous year, 2001,
was ₱750,000.00. Further, such amount shall earn legal interest of six percent (6%) per
annum from finality of this Decision until fully paid, in light of prevailing jurisprudence.
Reformation of Contracts
Spouses Firmo S. Rosario and Agnes Annabelle Dean-Rosario vs Priscilla P. Alvar

G.R. No. 212731, September 6, 2017, 1st Division, Del Castillo, J.:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the May 27,
2014 Decision of the Court of Appeals (CA) in CAG.R. CV No. 98928.
FACTS:
On separate dates in 1989, petitioner Agnes Annabelle Dean-Rosario (Agnes) borrowed money
from respondent Priscilla Alvar (Priscilla) secured by real estate mortgages over two parcels of
land, one of which is the residence of herein petitioner Spouses Rosario. In 1990, the mortgages
were discharged.
Two years after, Agnes executed 2 Deeds of Absolute Sale over 2 lots in favor of Priscilla’s
daughter, Evangeline Arceo (Evangeline) for the amount of P 900,000.00. Evangeline later sold
the lots to Priscilla for the same price. After 2 years from the date of sale to Evangeline, Priscilla
sent a demand letter to petitioner Spouses Rosario asking them to vacate Lot 1. This prompted
petitioner spouses Rosario to file before the RTC of Makati City a Complaint for Declaration of
Nullity of Contract of Sale and Mortgage, Cancellation of Transfer Certificates of Title and
Issuance of new TCTs with Damages against Priscilla Petitioner alleged that Priscilla deceived
Agnes into signing the Deeds of Absolute Sale in favor of Evangeline, as Agnes merely intended
to renew the mortgage over the 2 lots.
On the other hand, Priscilla filed with the RTC a Complaint for Recovery of Possession. She
claimed that she is the absolute owner of the subject lots and that Agnes sold the lots because she
was in dire need of money.
RTC rendered a Decision granting Priscilla’s complaint for declaration of nullity of contract of
sale and ordered the petitioners spouses Rosario to vacate the house and lot subject of dispute.
On appeal, the CA reversed the Decision of the RTC and ruled that although the transfers from
Agnes to Priscilla were identified as absolute sales, the contracts are deemed equitable mortgages
pursuant to Article 1602 of the Civil Code. The parties did not file a motion for reconsideration
or an appeal, hence the CA Decision became final and executory.
Thereafter, Priscilla sent a letter to Agnes demanding for the payment of her outstanding
obligation but the petitioner spouses Rosario’s failure or refusal to heed the demand, Priscilla
filed before the RTC of Makati for Judicial Foreclosure of Real Estate Mortgage. Petitioner
spouses Rosario moved for the dismissal of the Complaint but the same was denied. They then
filed a Petition for Certiorari before the CA but was also dismissed due to lack of merit. The
Supreme Court also issued a Resolution denying the Petition for Review on Certiorari filed by
petitioner spouses Rosario.
For petitioner spouses Rosario’s failure to answer within the reglementary period, Priscilla filed
a Motion to Declare Defendants in Default which the RTC granted. On appeal before the CA, the
RTC decision was affirmed with modification as to the interest rate and award of fees and
litigation expenses.
In the petition before the Supreme Court, petitioner spouses Rosario contend, among others, that
Priscilla had no legal personality to institute the judicial foreclosure proceedings as the Deeds of
Absolute Sale, which were deemed equitable mortgages. They also insist that before the subject
lots can be judicially foreclosed, a reformation of the fake and simulated Deeds of Absolute Sale
must first be done to enable them to present documentary and parol evidence.
On the other hand, Priscilla maintains that she has a legal personality to institute the foreclosure
proceedings and that the indebtedness of petitioner spouses Rosario was also established and had
long been final. As to the reformation of the instruments, Priscilla asserts that there is no need for
such reformation as the declaration in the decision is sufficient.
ISSUE:
Whether or not a reformation of the contract is required before the subject lots may be
foreclosed.
RULING:
No, the Court ruled in the negative.
Reformation of an instrument is a remedy in equity where a written instrument already executed

is allowed by law to be reformed or construed to express or conform to the real intention of the
parties. The rationale of the doctrine is that it would be unjust and inequitable to allow the
enforcement of a written instrument that does not express or reflect the real intention of the
parties.
In the November 15, 2006 Decision, the CA denied petitioner spouses' Complaint for declaration
of nullity of contract of sale on the ground that what was required was the reformation of the
instruments, pursuant to Article 1365 of the Civil Code. In ruling that the Deeds of Absolute Sale
were actually mortgages, the CA, in effect, had reformed the instruments based on the true
intention of the parties. Thus, the filing of a separate complaint for reformation of instrument is
no longer necessary because it would only be redundant and a waste of time.
Besides, in the November 15, 2006 Decision, the CA already declared that absent any proof that
petitioner spouses Rosario had fully paid their obligation, respondent may seek the foreclosure of
the subject lots.
In view of the foregoing, we find no error on the part of the CA in ruling that a separate action
for reformation of instrument is no longer necessary as the declaration in the November 15, 2006
Decision that the parties' intention was to execute an equitable mortgage is sufficient reformation
of such instrument.
Rights and Obligations of the Mortgagor [Debtor or Third Person]
Makalito B. Mahinay vs. Dura Tire and Rubber Industries, Inc.

G.R. No. 194152, June 5, 2017, Leonen, J.:
This resolves a Petition for Review on Certiorari directly filed before this Court, assailing the
Judgment on the Pleadings dated April 13, 2010 and Order dated September 2, 2010 rendered by
Branch 20 of the Regional Trial Court of Cebu City in Civil Case No. CEB-33639. The trial
court dismissed the Complaint filed by Makilito B. Mahinay (Mahinay), declaring that he
already lost his right to redeem a parcel of land sold in an extrajudicial foreclosure sale.
FACTS:
Petitioner Mahinay was the owner of the herein subject land by virtue of contract of sale. He
bought the land from A&A Swiss International Commercial, Inc. (A&A). Prior to its sale, the
property was mortgaged by A&A to Dura Tire and Rubber Industries, Inc. (Dura Tire) as
security for credit purchases to be made by Move Overland Venture and Exploring Inc. (Move
Overland). Under the mortgage agreement, Dura Tire was given the express authority to
extrajudicially foreclose the property should Move Overland fail to pay its credit purchases. This
fact was known to Mahinay and was even acknowledged by him, holding himself liable for any
claims that Dura Tire may have against Move Overland. Subsequently, Mahinay wrote Dura
Tire and requested for a statement of account of Move Overland’s credit purchases. He sought to
pay Move Overland’s obligation to release the property from mortgage, however, Dura Tire
ignored the same.
For Move Overland’s failure to pay its credit purchases, Dura Tire applied for extrajudicial
foreclosure of the property on January 6, 1995. Mahinay protested the impending sale and filed a
third-party claim. However, despite the protest, the sheriff proceeded with the sale and issued a
Certificate of Sale in favor of Dura Tire. The certificate of sale was registered in February 20,
1997. Mahinay filed a complaint for specific performance before the RTC of Cebu City but was
dismissed based on the affirmative defense of Dura Tire. On mandamus and certiorari, the CA
set aside the order of the trial court and remanded the case for further proceedings. When the
case was re-raffled and after due proceedings, the RTC ultimately dismissed Mahinay’s
complaint. It ruled that Dura Tire was entitled to foreclose the property because of Move
Overland’s unpaid credit purchases. On appeal before the CA, it dismissed the same and
reiterated the RTC ruling that Mahinay had no right to question the foreclosure of the property.
Mahinay, as “substitute mortgagor” was fully aware that the subject property was previously
mortgaged and that considering that Move Overland failed to pay its obligation, Dura Tire had
every right to foreclose the property. Consequently, Mahinay filed a Petition for Certiorari before
the SC but was also denied as well as his motion for reconsideration. Hence, the decision of the
CA became final and executory.
Relying on the CA’s finding that he was a “substitute mortgagor”, Mahinay filed a complaint for
judicial declaration of right to redeem on August 24, 2004. He argued that as the owner of the
property at the time of the foreclosure, he “must have possessed and still continues to possess the
absolute right to redeem the property”. Dura Tire countered and raised the affirmative defense of
res judicata. It also argued that the period of Mahinay’s right of redemption had already lapsed,
thus, he could not be allowed to belatedly redeem the property. Upon the parties’ move for
judgment on the pleadings, the RTC dismissed Mahinay’s complaint. His motion for
reconsideration was also denied.
On a Petition for Review on Certiorari before the SC, Mahinay maintained that he should be
allowed to redeem the property despite the lapse of 1 year from the registration of the Certificate
of Sale on February 20, 1995. Furthermore, he argued that the 1-year period of redemption was
tolled when he filed the complaint for annulment of foreclosure sale of March 23, 1995 and
resumed when the June 16, 2006 Decision of the CA became final and executory on August 8,
2007. He claims that he exercised his right of redemption within the 1-year period under Act.
No. 3135.
On the other hand, Dura Tire counters that nothing prevented Mahinay from exercising his right
of redemption within 1 year from the registration of the Certificate of Sale. It also argued that
Mahinay’s filing of an action for annulment of foreclosure sale did not toll the running of the
redemption period because the law does not allow extension, hence, Mahinay can no longer
redeem the property.
ISSUE:
Whether or not the 1-year period of redemption was tolled when Mahinay filed his Complaint for
annulment of foreclosure sale.
RULING:
No.
Contrary to Mahinay's claim, his right to redeem the mortgaged property did not arise from the
Court of Appeals' "judicial declaration" that he was a "substitute mortgagor" of A&A Swiss. By
force of law, specifically, Section 6 of Act No. 3135, Mahinay's right to redeem arose when the
mortgaged property was extrajudicially foreclosed and sold at public auction. There is no dispute
that Mahinay had a lien on the property subsequent to the mortgage. Consequently, he had the
right to buy it back from the purchaser at the sale, Dura Tire in this case, "from and at any time
within the term of one year from and after the date of the sale." Section 6 of Act No.
3135 provides:
Section 6. In all cases in which an extrajudicial sale is made under

the special power hereinbefore referred to, the debtor, his
successors in interest or any judicial creditor or judgment creditor
of said debtor, or any person having a lien on the property
subsequent to the mortgage or deed of trust under which the
property is sold, may redeem the same at any time within the term
of one year from and after the date of the sale; and such
redemption shall be governed by the provisions of sections four
hundred and sixty-four to four hundred and sixty-six, inclusive, of
the Code of Civil Procedure, in so far as these are not inconsistent
with the provisions of this Act.
The "date of the sale" referred to in Section 6 is the date the certificate of sale is registered
with the Register of Deeds. This is because the sale of registered land does not '"take effect
as a conveyance, or bind the land' until it is registered."
The right of redemption being statutory, the mortgagor may compel the purchaser to sell back the
property within the one (1)-year period under Act No. 3135. If the purchaser refuses to sell back
the property, the mortgagor may tender payment to the Sheriff who conducted the foreclosure
sale. Here, Mahinay should have tendered payment to Sheriff Laurel instead of insisting on
directly paying Move Overland's unpaid credit purchases to Dura Tire.
As early as 1956, this Court held in Mateo v. Court of Appeals that "the right of redemption ...
must ... be exercised in the mode prescribed by the statute." The one (1)-year period of
redemption is fixed, hence, non-extendible, to "avoid prolonged economic uncertainty over the
ownership of the thing sold."
Since the period of redemption is fixed, it cannot be tolled or interrupted by the filing of cases to
annul the foreclosure sale or to enforce the right of redemption. "To rule otherwise ... would
constitute a dangerous precedent. A likely offshoot of such a ruling is the institution of frivolous
suits for annulment of mortgage intended merely to give the mortgagor more time to redeem the
mortgaged property."
Here, the Certificate of Sale in favor of Dura Tire was registered on February 20, 1995. Mahinay,
as the successor-in-interest of previous owner A&A Swiss, had one (1) year from February 20,
1995, or on February 20, 1996, to exercise his right of redemption and buy back the property
from Dura Tire at the bid price of ₱950,000.00.
With Mahinay failing to redeem the property within the one (1)-year period of redemption, his
right to redeem had already lapsed. As discussed, the pendency of an action to annul the
foreclosure sale or to enforce the right to redeem does not toll the running of the period of
redemption. The trial court correctly dismissed the Complaint for judicial declaration of right to
redeem.
Land Bank of the Philippines vs. Lorenzo Musni, Eduardo Sonza and Spouses Irenea and
Nenita Santos
G.R. No. 206343, February 22, 2017, 2nd Division, Leonen, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the
assailed Decision dated February 29, 2012, and the Resolution dated March 12, 2013 of the Court
of Appeals in CA-GR. CV No. 92304 be nullified and set aside, and that judgment to the
complaint against petitioner be rendered dismissed. Petitioner likewise prays that the deleted
award be reinstated should the assailed Decision and Resolution be affirmed
FACTS:
Respondent Musni was the owner of the herein subject land. He filed before before the RTC of
Tarlac a complaint for reconveyance of land and cancellation of transfer certificate of title
covering the subject land against spouses Santos, Eduardo Sonza and Land Bank of the
Philippines (Land Bank). He alleged that Nenita falsified the Deed of Sale ad caused the transfer
of title of the lot in her name and her brother, Eduardo. He also claimed that spouses Santos and
Eduardo mortgaged the subject land to Land Bank as security for their loan and that when they
failed to pay their loan, the Land Bank foreclosed the mortgage, to his prejudice. As a result of
the foreclosure proceedings, the title of the subject land was consolidated with another foreclosed
land in the name of Land Bank. He also alleged that he filed a criminal case against Nenita and
Eduardo for falsification of public document to which Nenita was found guilty by the court.
In their Answer, spouses Santos admitted Musni’s allegation that they mortgaged the lot to Land
Bank and was eventually foreclosed due to their failure to pay the their loan. They also
confirmed that Nenita was convicted in the falsification case filed by Musni. On the other hand,
as a defense, they assert that they, spouses Santos and Eduardo, ran a lending business which,
according to them, Musni and his wife obtained a loan. As security for the loan, Musni and his
wife allegedly executed a Deed of Sale over the lot in favor of spouses Santos. As a result of
thereof, the title of the lot was transferred to Nenita and Eduardo who in turn mortgaged the said
land to Land Bank.
For its part, Land Bank claimed that the transfer of title in its name was because of a decision
rendered by the Department of Agrarian Reform and Adjudication Board, Region III. It
countered that its transaction with the spouses Santos and Eduardo was legitimate, and that it
verified the authenticity of the title with the Register of Deeds. Further, the bank loan was
secured by another lot owned by the spouses Santos, and not solely by the lot being claimed by
Musni.
The trial court rendered a decision in favor of Musni, It relied on the fact that Nenita was
convicted of falsification of the Deed of Sale. It also found that the Land Bank was not an
innocent purchaser for value and that the institution of the criminal case against Nenita should
have alerted the bank to ascertain the ownership of the lot before it foreclosed the same. Both
parties separately appealed to the Court of Appeals but it was also ruled that the sale between
Musni, and the Spouses Santos and Eduardo, was null and void since Nenita was convicted for
falsification of the Deed of Sale. Furthermore, the CA held that Land Bank was neither a
mortgagee in good faith nor an innocent purchaser for value for its failure to observe the due
diligence required of banks. Land Bank moved for reconsideration but the same was denied,
hence, this petition.
ISSUE:
Whether or not petitioner Land Bank is a mortgagee in good faith and an innocent purchaser for
value.
RULING:
The Court ruled in the negative.
Petitioner is neither a mortgagee in good faith nor an innocent purchaser for value. The
determination of whether petitioner acted in good faith is a factual matter, which cannot be raised
before this Court in a Rule 45 petition. To emphasize, "this Court is not a trier of facts and does
not normally embark on a re-examination of the evidence adduced by the parties during trial.
Although this rule admits of exceptions, the present case does not fall under any of them.
The cited case of Philippine Veterans Bank vs. Manillas is not

controlling to Land Bank's case. In the said case, [Philippine
Veterans Bank] has the right to rely on what appears on the
certificate of title because of the absence of any infirmity that
would cast cloud on the mortgagor's title. The situation is different
in the present case since the certificate of title (TCT No. 304649)
apparently shows the defect in the owner's title. As previously
stated, the title of [Eduardo and Nenita] to the subject property was
dubious because the certificate of title was issued before the
inscription of the Decision of the [Department of Agrarian Reform
Adjudication Board]. Accordingly, Land Bank cannot be
considered a mortgagee in good faith. (Citations omitted)
The Court of Appeals also found that petitioner was not an innocent purchaser for value:
Neither can We also consider [Land Bank] as an innocent purchaser for value
because the subject property was foreclosed on May 4, 1999 while the complaint
for falsification was filed on March 4, 1999.
A purchaser in good faith is one who buys property without notice that some other
person has a right to or interest in such property and pays its fair price before he
has notice of the adverse claims and interest of another person in the same
property. Clearly, the factual circumstances as afore-cited surrounding the
acquisition of the disputed property do not make [Land Bank] an innocent
purchaser for value or a purchaser in good faith. Thus, We are in accord with the
ruling of the trial court in that:
"In the instant case, the Court cannot consider the Land Bank of
the Philippines as innocent purchaser for value. With all its
resources, it could have ascertained how Nenita Sonza acquired the
land mortgaged to it and later foreclosed by it. The fact the land
(sic) was foreclosed after Criminal Case No. 4066-99 was
instituted should have warned it. The questionable ownership of
Nenita Sonza for it and its employees to obtain knowledge of the
questionable transfer of the land to Nenita Sonza. Its failure to take
the necessary steps or action shall make the bank liable for
damages. The bank shall be responsible for its and its employer
shortcomings."
Petitioner's defense that it could not have known the criminal action since it was not a party to
the case and that there was no notice of lis pendens filed by respondent Musni, is unavailing.
This Court held in Heirs of Gregorio Lopez v. Development Bank of the Philippines:
The rule on "innocent purchasers or [mortgagees] for value" is

applied more strictly when the purchaser or the mortgagee is a
bank. Banks are expected to exercise higher degree of diligence in
their dealings, including those involving lands. Banks may not rely
simply on the face of the certificate of title.
Had petitioner exercised the degree of diligence required of banks, it would have ascertained the
ownership of one of the properties mortgaged to it.
Where "the findings of fact of the trial courts are affirmed by the Court of Appeals, the same are
accorded the highest degree of respect and, generally, will not be disturbed on appeal[;] Such
findings are binding and conclusive on this Court." Accordingly, this Court finds no reason to
disturb the findings of the Court of Appeals, which affirmed the findings of the trial court, that
petitioner is neither a mortgagee in good faith nor an innocent purchaser for value.
JUDITH D. DARINES and JOYCE D. DARINES, Petitioners, vs. EDUARDO QUIÑONES and ROLANDO
QUITAN, Respondents.
G.R. No. 206468, August 2, 2017, DEL CASTILLO, J.:, FIRST DIVISION
Ibis Petition for Review on Certiorari assails the October 29, 2012 Decision of the Court of
Appeals (CA) in CA-G.R CV No. 95638, which reversed and set aside the July 14, 2010 Decision of
the Regional Trial Court (RTC) of Baguio City, Branch 3 in Civil Case No. 6363-R for "Breach of
Contract of Carriage & Damages." Also challenged is the March 6, 2013 CA Resolution denying
the motion for reconsideration on the assailed Decision.
FACTS:
Judith D. Darines (Judith) and her daughter, Joyce D. Darines (Joyce) (petitioners) alleged in
their Complaint that on December 31, 2005, they boarded the Amianan Bus Line with Plate No.
XXX as paying passengers enroute from Carmen, Rosales, Pangasinan to Baguio City.
Respondent Rolando M. Quitan (Quitan) was driving the bus at that time. While travelling on
Camp 3, Tuba, Benguet along Kennon Road, the bus crashed into a which was parked on the
shoulder of Kennon Road. As a result, both vehicles were damaged; two passengers of the bus
died; and the other passengers, including petitioners, were injured. In particular, Joyce suffered
cerebral concussion while Judith had an eye wound which required an operation.
Petitioners argued that Quitan and respondent Eduardo Quiñones (Quiñones), the operator of
Amianan Bus Line, breached their contract of carriage as they failed to bring them safely to
their destination. They also contended that Quitan's reckless and negligent driving caused the
collision. Consequently, they prayed for actual, moral, exemplary and temperate damages, and
costs of suit.
For their part, Quiñones and Quitan (respondents) countered in their Answer that, during the
December 31, 2005 incident, Quitan was driving in a careful, prudent, and dutiful manner at the
normal speed of 40 kilometers per hour. According to them, the proximate cause of the
incident was the negligence of the truck driver, Ronald C. Fernandez, who parked the truck at
the roadside right after the curve without having installed any early warning device. They also
claimed that Quiñones observed due diligence in the selection and supervision of his employees
as he conducted seminars on road safety measures; and Quitan attended such seminars
including those required by the government on traffic safety. They likewise averred that Quitan
was a licensed professional driver who, in his 12 years as a public utility driver, had not figured
in any incident like the one at hand.
To prove the actual damages that she suffered, Judith presented receipts for medicine, and a
summary of expenses, which included those incurred for the ritual dao-is. She explained that
she and Joyce are Igorots, being members of Ibaloi, Kanka.nay-ey, an indigenous tribe; and as
their customary practice, when a member who meets an accident is released from the hospital,
they butcher pigs to remove or prevent bad luck from returning to the family.
Moreover, to support her claim for moral damages, Judith testified that she suffered sleepless
nights since she worried about the result and possible effect of her operation.
ISSUES: WHETHER OR NOT THE CASE OF PETITIONERS FALL[S] UNDER ARTICLES 20, 1157, 1759,
2176, 2180 AND 2219 OF THE CIVIL CODE THEREBY ENTITLING THEM TO MORAL AND
EXEMPLARY DAMAGES AND ATTORNEY'S FEES;
HELD: No. The Court denies the Petition.
Going now to the main issue, the Court fully agrees with the CA ruling that in an action for
breach of contract, moral damages may be recovered only when a) death of a passenger
results; or b) the carrier was guilty of fraud and bad faith even if death does not result; and that
neither of these circumstances were present in the case at bar. The CA correctly held that, since
no moral damages was awarded then, there is no basis to grant exemplary damages and
attorney's fees to petitioners.
The principle that, in an action for breach of contract of carriage, moral damages may be
awarded only in case (1) an accident results in the death of a passenger; or (2) the carrier is
guilty of fraud or bad faith, is pursuant to Article 1764, in relation to Article 2206(3) of the Civil
Code, and Article 2220 thereof, as follows:
In Viluan v. Court of Appeals, and Bulante v. Chu Liante, the Court disallowed the recovery of
moral damages in actions for breach of contract for lack of showing that the common carrier
committed fraud or bad faith in performing its obligation. Similarly, in Verzosa v. Baytan, the
Court did not also grant moral damages in an action for breach of contract as there was neither
allegation nor proof that the common carrier committed fraud or bad faith. The Court declared
that "[t]o award moral damages for breach of contract, therefore, without proof of bad faith or
malice on the part of the defendant, as required by [Article 2220 of the Civil Code], would be to
violate the clear provisions of the law, and constitute unwarranted judicial legislation."
Meanwhile, in Gatchalian v. Delim, and Mr. & Mrs. Fabre, Jr. v. Court of Appeals, the Court
found the common carriers liable for breach of contract of carriage and awarded moral
damages to the injured passengers on the ground that the common carrier committed gross
negligence, which amounted to bad faith.
Clearly, unless it is fully established (and not just lightly inferred) that negligence in an action
for breach of contract is so gross as to amount to malice, then the claim of moral damages is
without merit.
Here, petitioners impute negligence on the part of respondents when, as paying passengers,
they sustained injuries when the bus owned and operated by respondent Quiñones, and driven
by respondent Quitan, collided with another vehicle. Petitioners propounded on the negligence
of respondents, but did not discuss or impute fraud or bad faith, or such gross negligence which
would amount to bad faith, against respondents. There being neither allegation nor proof that
respondents acted in fraud or in bad faith in performing their duties arising from their contract
of carriage, they are then not liable for moral damages.
All told, the CA correctly ruled that petitioners are not entitled to moral and exemplary
damages as well as attorney's fees.

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Cases to include in my case digest in civrev2

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Respondent Lilibeth S. Chan owns a commercial building in Manila covered by a Transfer

1) There was a debt due;

"Failure in any of the requirements is enough ground to render a consignation ineffective.”

ILOILO JAR CORPORATION vs. COMGLASCO CORPORATION AGUILA GLASS

G.R. No. 219509, January 18, 2017, Mendoza, J., Second Division

Kinds of Compensation - Legal

California Manufacturing Company, Inc., vs. Advance Technology System, Inc.,

G. R. No. 202454, April 25, 2017, Sereno, CJ., First Division

RULING: No. We affirm the CA Decision in toto.

Article 1279 of the Civil Code provides:

ARTICLE 1279. In order that compensation may be proper, it is necessary:

(3) That the two debts be due;

(4) That they be liquidated and demandable;

As to its nature: Subjective or personal

G.R. No. 191174, June 7, 2017, 3rd Division, Reyes, J.:

Novation is a mode of extinguishing an obligation by changing its objects or principal

Fundamental Characteristics/Principles of Contracts

Mutuality of Contracts - Acceleration Clause

KT CONSTRUCTION SUPPLY, INC., represented by William Go vs. PHILIPPINE SAVINGS BANK

According to perfection – Formal

Thus, the instant petition filed by Kabisig

Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

(3) Cause of the obligation which is established.

Rights and Obligations of the Vendor

To deliver the Object

The MCTC ruled in favor of petitioners ordering respondents to pay ₱145,000.00 as

Black's Law Dictionary defines the phrase "more or less" to mean:

Philippine Steel Coating Corp., vs. Eduard Quiñones

A warranty is a statement or representation made by the seller of goods - contemporaneously

Distinguished from other Contracts/Legal Relations

March 29, 2017, Reyes, J., Third Division

Peralta, on his counterclaim opposed the complaint asserting that notwithstanding, an

Article 1657. The lessee is obliged:

(3) To pay expenses for the deed of lease.

Kinds of actual Agency - As to manner of creation: Express

The Regional Trial Court (RTC) dismissed iBanks complaint.

Whether or not an agency relationship existed between the parties.

To be responsible for the acts of the substitute

(1) When he was not given the power to appoint one;

The Regional Trial Court (RTC) dismissed iBanks complaint.

Kinds of Loan – Mutuum or Simple Loan

Georgia Osmeña-Jalandoni vs. Carmen A. Encomienda

The Regional Trial Court dismissed the complaint of Encomienda.

Whether or not Simple Loan or mutuum exists in this case.

Rights and Obligations of the Mortgagor [Debtor or Third Person]

Makilito B. Mahinay vs. Dura Tire & Rubber Industries, Inc.