57. Special Services Corporation vs Centro La Paz, G.R. No.

L-44100, 28
April 1983

Facts: In 1972, a judgment was rendered in favor of petitioner Special

Services Corporation by CFI-Manila against one Alejandro Estudillo in an
action for Replevin with Sum of Money. A writ of execution was thereafter
issued but remained unsatisfied. So by virtue of an alias writ of
execution, the Sheriff of Manila levied real properties of which Alejandro
was one of the registered owners. Alejandro then moved to
dissolve/cancel the notice of levy before the scheduled auction, alleging
that he and the other owners indicated on the title that the properties
merely held in trust the properties and improvements therein in favor of
Centro La Paz. Centro also submitted a third party claim averring
exclusive ownership of the properties. The lower court then held that
although the trust was unregistered, Centro La Paz is indeed thetrue owner
of the property in dispute, and that the persons registered as owners
-including Alejandro -are merely trustees of Centro. Thus, the properties
cannot be levied upon.

Issues: Whether or not the fact of registration of ownership by the

privateindividuals bar evidence that the property is held in trust in favor of
Centro La Paz

Finding: No, it does not bar evidence that sufficiently establishes that the
registered owners of the parcels of land, all of whom are members of Centro
La Paz, hold theproperties in trust for the latter by virtue of the indubitable
documents executed even before the institution of suit. In the same manner
that real property, registered solely in the name of husband, can be proven to
be conjugal property with his wife, the fact of registration in the name
of Alejandro and others does not bar evidence to show that the related
owners hold the properties in trust for Centro La Paz. The petitioner also
could not be deemed a purchaser in good faith when it knew of Centro La
Paz' claim, particularly when the latter had filed a third party claim with the
Sheriff before the scheduled auction sale, which knowledge was equivalent to
registration of the trust.

58. Co Bun Chun vs Overseas Bank of Manila, G.R. No. L-27342, 24 May
1984

Facts: Petitioner placed with the Overseas Bank of Manila (OBM) a time
deposit of P66,000 for one year with a 4.5% interest per annum. Four days
later, he assigned to the bank the said time deposit as security for the 6-
month overdraft accounts of Henry Shoe Supply and Northwest Auto
Supply amounting to P300,000. It was a condition of the assignment that the
time deposit could not be withdrawn unless the overdraft line, interests due
thereon and expenses incurred had been fully paid. The overdraft accounts
were then liquidated only after almost a year after they became due, during
which the bank incurred 5% of the accounts or P11,444.06 as expense
for the collection of the amounts due. Hence, the respondent bank deducted
from the time deposit the said collection expense. The petitioner filed the
instant action to recover the amount contending that the bank had no
right to charge attorney's fees and expenses in the extrajudicial collection
from the time deposit, but the instant action was dismissed.

Issue: Whether or not the petitioner is correct in his contention that

making him liable for the costs of extrajudicial collection would make his
obligation as guarantor more onerous than the principal debtor and must only
be liable for interest, as given in Arts. 2054 and 2209 of the Civil Code.

Finding: No, he is incorrect. The petitioner is bound by the terms of the deed
assigning his time deposit to the bank. He was not a mere guarantor of the
overdraft account, as the assignment specifically bound him to pay expenses
incurred for the collection of the accounts. The expense charged was different
from the interest of the overdraft accounts and was a consequence of the
default of the petitioner's companies. He may, however, seek
reimbursement from the companies for what he had to pay the bank.

59. San Miguel, et al. vs Elbinias, et al., G.R. No. L-48210, 31 January
1984

Facts: The petitioner and the estate of the deceased Romeo was proceeded
against by private respondent Carmen for recovery of a 1,300 square meter
unregistered land valued at P50,000, which was then awarded to the later.
Private Carmen subsequently asked for a writ of execution which was issued
together with an order of demolition of the properties of the petitioners in the
said land. But before they could be demolished, petitioners Rafols and
San Miguel filed third party claims withthe Sheriff, with the latter
approving only that of San Miguel. Private respondent then posted the
P25,000 bond to push with the demolition. The petitioners then filed for
the issuance of a writ of preliminary injunction to stop the demolition, but was
asked by the respondent judge to also post the P50,000 bond. The
petitioners appealed the bond be reduced alleging that the bond required
must only be for the rental of the land and not for the value of the
property; the appeal was denied by the respondent judge.

Issue: Whether or not the respondent judge acted with grave abuse of
discretion in requiring petitioners to post a bond for the issuance of a
writ of preliminary injunction at P50,000 and subsequently refusing to
reduce it.

Ruling: No. The amount of the bond to be posted is discretionary upon

the trial court and should not be interfered with except in case of grave
abuse of such discretion. Hence, the trial court may fix any amount for the
bond so long as it is not done arbitrarily, capriciously, or without basis.
In the case at bar, the amount of the bond required by respondent
Judge is reasonable and justifiable under the circumstances. Firstly, in fixing
the amount of the bond at P50,000 respondent Judge took into
consideration the market value of the property which is admittedly
P50,000 and the fact that when the third-party claim of the petitioner
was given cognizance by the court, private respondent Carmen was required
to post a bond of P25,000 in order to enforce the writ of execution and the
order of demolition be implemented. Secondly, the damages which private
respondents may suffer by virtue of the issuance of the writ of
preliminary injunction are not limited to the rent due for the use and enjoyment
of the property occupied by petitioners but include those that may arise
from their inability to enjoy the ownership and possession of the property
pursuant to the final and executory decision in favor of private respondents.

60. Agapito Gutierrez vs Capital Insurance and Surety Corp., G.R.

No. L-26827, 29 June 1984

Facts: The petitioner had his jeepney insured by the respondent for
one year against passenger and third-party liability. The insurance policy
included that the authorized driver must be a holder of a valid and
subsisting professional driver's license. On May 1962, the jeepney figured
in an accident wherein one of the passengers fell off and died. The driver of
the jeepney, although duly licensed until 1963, did not have his license with
him during the accident. What he had was a carboncopy of a traffic
violation report (TVR) issued on February 1962 which required him to
report to the traffic court on March 1962. The TVR served as a
temporary operator's permit for 15 days after issuance; thus, the driver was
holding an expired permit. Thepetitioner paid the widow of the deceased
but was refused reimbursement by the respondent. The lower court and
CFI held that the driver was an authorized driver as his TVR was
coextensive with the two-year term of his confiscated license, hence this
instant case.

Issue: Whether or not an insurance covers a jeepney whose driver's

traffic violation report or temporary operator's permit had already expired

Ruling: No. Parties are bound by the stipulations in the policy. As the
insurance policy plainly fixedthe meaning of "authorized driver" . That
stipulation cannot be disregarded or rendered meaningless. It is binding
on the insured. A driver with an expired TVR or expired temporary
operator's permit is not considered an authorized driver within the
meaning of the policy, and does not make the petitioner entitled to
recovery.

61. Integrated Construction vs Hon. Relova, et al., G.R. No. 41117, 29

December 1986

Facts: The petitioners sued the respondent Metropolitan Waterworks and

Sewerage System (MWSS) for breach of contract which the Arbitration
Board, through the respondent judge, awarded to the petitioners. The
decision ordered MWSS to pay the petitioners P15,518,383.61 -less
P2,329,433.41, to be set aside as a trust fund in favor of the creditors of the
joint venture in connection with the project. Subsequently, the petitioners
agreed to give MWSS some discounts provided that MWSS pay them within
fifteen days of this agreement or up to October 17, 1972. They later agreed
to extend the period of payment of the discounted price to October 31.
MWSS, however, paid the discounted price only on December 22. Three
years thereafter, after the release of the trust fund to the satisfy their creditor's
claims, the petitioners filed a motion for execution for the balance due.
Respondent judge denied the motion on the ground that the parties had
novated the award by their subsequent agreement to the discounted price.

Issues: Whether or not the respondent judge erred in holding that the original
award was novated by the subsequent agreement granting the discounted
rate if paid on or before October 31, and barred the collection of the balance
of the original judgment-award

Finding: No. Although the tenor of the subsequent agreement in a sense

novated the judgment award there being a shortening of the period of
payment, the suspensive and conditional nature of the agreement is expressly
acknowledged and stipulated. The failure of MWSS to pay within the
stipulated period removed the very cause and reason for the agreement,
therefore remitting to the petitioners their original rights under the
judgment award. The petitioners also never acknowledged full payment
and refused MWSS' requestfor a conforme or quitclaim; thus, they cannot be
held in estoppel for now collecting the balance of the original judgment-award.

62. Luzon Surety Corp., Inc. vs Quebrar, et al., G.R. No. L-40617, 31
January 1984.

Facts: The petitioner issued two administrator's bonds in the amount of

P15,000 each to respondent Quebrar as administrator of the testate
estates of Chinsuy and Lipa in 1954. In consideration of the suretyship,
wherein the petitioner was bound jointly and severally with the respondents,
the latter executed two indemnity agreements to each pay the petitioner P300
in advance as premium thereof for every 12 months or fraction thereof
or while any renewal or substitution thereof is in effect. They also agreed to
indemnify the petitioner against any and all damages, losses, costs, stamps,
etc., including 15% of the account for attorney's fees. The respondents
paid the advance for the first year but in 1957 amended the project and
partition of accounts which was approved by the CFI. Petitioner then
demanded the payment of the premiums and stamps but in 1962, the
respondents countered with a motion for cancellation of executor's bonds as
the heirs of the estates have already received their respective shares; this
was approved by the CFI. By October 1962, the petitioner's demand
amounted to P4,872 from the last payment of the premium and stamps
made by the respondents. The lower court then allowed the recovery of
the said amount ruling that even if the respondents did not expressly
seek the renewal of the said bonds, the same were in force and effect until
their cancellation in 1962.

Issue: Whether or not the administrator's bonds were in force and effect from
and after the year that they were filed and approved by the court up to their
cancellation in 1962.
Ruling: Yes. The proper determination of the liability of the surety and
of the principal on the bond must depend primarily upon the language of
the bond itself. Having in mind the purpose and intent of the law, the surety is
then liable under the administrator's bond, for as long as the administrator
has duties to do as such administrator. Since the liability of the
sureties is co-extensive with that of the administrator and embraces the
performance of every duty he is called upon to perform in the course of
administration, it follows that the administrator is still duty bound to
respect the indemnity agreements entered into by him. The respondent
administrator did not cease his function after the approval of the
amendment of the project and partition of accounts, for administration is
for the purpose of liquidation of the estate and distribution of the residue
among the heirs and legatees. And liquidation means the determination of all
the assets of the estate and payment of all the debts and expenses. It was
found that even after in 1957, there were still debts and expenses to be paid;
thus, the bond is deemed as in effect.

63. Sps. Mariano Z. Velarde and Avelina D. Velarde vs CA (GR 108346

July 11, 2001).

FACTS: The parties herein entered into a contract ofsale over a parcel
of land owned by the private respondents. A Deed of Sale with
Assumption of Mortgage, with a balance of P1.8 million, was then
executed by the private respondents in favor of the petitioners.
Pursuant to their agreements, the petitioners paid to the bank (BPI) the
monthly mortgage payments for three (3) months; until they were advised
that their Application for Assumption of Mortgage was denied. This prompted
the plaintiffs to stop any further payment. Private respondent informed
the petitioners that such non-payment constitutes the non-fulfillment of
their obligations. Petitioners, through counsel, responded that they are willing
to pay in cash the balance subject to several conditions. Private respondents
then sent a notarial notice of cancellation/rescission of the Deed of Sale.
Petitioners filed a complaint opposing the rescission, which was dismissed,
but later reversed in their MR. The Court of Appeals reinstated the decision to
dismiss.

ISSUE: Whether or not there is a substantial breach of contract that would

entitle its rescission.

HELD: Yes. Article 1191 of the New Civil Code applies. The breach
committed did not merely consist of a slight delay in payment or an
irregularity; such breach would not normally defeat the intention of the
parties to the contract. Here, petitioners not only failed to pay the P1.8
million balance, but they also imposed upon private respondents new
obligations as preconditions to the performance of their own obligation. In
effect, the qualified offer to pay was a repudiation of an existing obligation,
which was legally due and demandable under the contract of sale.
Hence, private respondents were left with the legal option of seeking
rescission to protect their own interest. However, since the rescission
isbased on Article 1191, mutual restitution is required to bring back the
parties to their original situation prior to the inception of the contract; so as to
prevent the unjust enrichment of one party at the expense of the other.
64. Ayson-Simon vs Adamosand Feria(L-39378 Aug. 28, 1984).

FACTS: Adamos and Feria, defendants herein, purchased two lots from
Juan Porciuncula. However, Porciuncula’s successors-in-interest sought for
the cancellation of the sale, which was subsequently granted by the court.
While such case was pending, the defendants sold to Ayson Simon the lots
in question. Due to the failure of the former to deliver the said lots,
plaintiff-appellee filed a civil case for specific performance. The court ruled in
her favor, but due to the original sale of the lots to the defendants-
appellants being null and void, there is impossibility that they can comply
withtheir commitment to plaintiff. The latter then sought the rescission of the
contract plus damages.

ISSUE: Whether or not petitioner can choose to rescind the contract, even
after she had chosen the specific performance thereof.

HELD: Yes. The rule that the injured party can only choose between
fulfillment and rescission of the obligation, and cannot have both, applies
when the obligation is possible of fulfillment. If, as in this case, the fulfillment
has become impossible, Article 1191 allows the injured party to seek
rescission even after he has chosen fulfillment.