Book 5 - Special Contracts_v4.docx

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School of Law

Compilation ofQuestions and Suggested Answers

Book 5

(Special Contracts – Agency, Credit Transactions, Lease,

Partnership, Sales, & Torts and Damages)

Submitted by:

CIVIL LAW (Weekday & Weekend CLASS(A!"! #$%'#$%

Submitted to:

A))"! *+,,-. )+Q/ILL-Ci0il Law 1e0iew 2rofessor

3e4ember %56 #$%



)able of Content

AGENCY............................................................................................................................1

Agen4y!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!%

Spouses Salvador vs. Spouses Rabaja.........................................................1 Bautista-Spille vs. NICORP Management & evelopment Corporation. . .!

Patrimonio vs. "uttiere#..............................................................................$ Re%io vs. eirs o' Spouses (guendo...........................................................)

eirs o' t*e +ate ,eli Bu%ton vs. Spouses "on#alo...................................

Spouses /iloria vs. Continental (irlines0 In%.............................................. Republi% vs. 2vangelista............................................................................13

Aut7ority of t7e Agent to Sell a 1eal 2roperty!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!%#Spouses Bautista vs. Spouses 4alandoni....................................................1!

8orm of Contra4t of Agen4y!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!%5os*i#a6i vs. 4o7 8raining Center o' (urora0 In%......................................1)

Liability of an Agent!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!%5 (%e Navigation Co. vs. ,"9 Insuran%e Corporation...............................1

CREDIT TRANSACTIONS...........................................................................................18

Credit )ransa4tions!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!%9 Ravago vs. Metropolitan Ban6 & 8rust Co...............................................1

+im vs. Se%urit7 Ban6 Corporation...........................................................!1

P*ilni%o Industrial Corporation vs. Privati#ation and Management O''i%e...................................................................................................................!:

P*ilippine National Ban6 vs. Spouses Mara;on.......................................!$

5ngson vs. P*ilippine National Ban6........................................................!)

Continuing uaranty!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!#5 Ban6 o' Commer%e vs. ,lores....................................................................!

+;uitable <ortgage!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!#=Spouses Solitarios vs. Spouses 4a<ue........................................................!=

Interest!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>%Spouses Salvador (bella vs. Spouses Romeo (bella.................................:1

1eal <ortgage!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>> Bu%ton vs. Rural Ban6 o' 2l Salvador.......................................................::

Suretys7ip? Interests!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>"ilat Satellite Net>or6 vs. 9nited Co%onut Planters Ban6 "eneral Insuran%e Co.............................................................................................:)

Writ of 2ossession in an +@tra'*udi4ial Sale!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>5Spouses Mar<ue# vs. Spouses (lindog......................................................:

LEASE..............................................................................................................................39

Lease!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>=Spouses "ole# vs. Neme;o........................................................................:=

One Net>or6 Ban6 vs. Bari%.....................................................................$1



Spouses Mamaril vs. 8*e Bo7 S%out o' t*e P*ilippines............................$!

Manuel 97 & Sons0 In%. vs. /albue%o0 In%................................................$:

Manila International (irport (ut*orit7 vs. (via ,ilipinas International0 In%..............................................................................................................$)

?oppel0 In%. vs. Ma6ati Rotar7 Club ,oundation0 In%..............................$@

Ino%en%io vs. ospi%io de San 4ose...........................................................$ Manila International (irport (ut*orit7 vs. ing /ela7o Sport Center0 In%.

...................................................................................................................$=

Agri4ultural Lease7old!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!$ 4usa7an vs. Sombilla.................................................................................)3

Implied ,ew Lease!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!%Samelo vs. Manoto6 Servi%es0 In%.............................................................)1

,ature!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!>Comglas%o Corporation vs. Santos Car C*e%6 Center Corporation........):

PARTNERSHIP...............................................................................................................54

2artners7ip!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 4arantilla0 4r. vs. 4arantilla.......................................................................)$ Mendo#a vs. Paule.....................................................................................)@

Mendiola vs. Court o' (ppeals..................................................................)

Santos vs. Spouses Re7es...........................................................................)=

8orres vs. Court o' (ppeals.......................................................................@3Agen4y and )rusts!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!#

8ong vs. ?un..............................................................................................@!

+0iden4e of +@isten4e? 1ig7t to 3emand an A44ounting!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!> eirs o' 8an 2ng ?ee vs. Court o' (ppeals...............................................@:

+@isten4e of partners7ip? 2artners7ip 2rofits!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! eirs o' 4ose +im vs. +im..........................................................................@)

2ur47ase of 2artnerBs Interest!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!5 Realubit vs. 4aso........................................................................................@

)7roug7 a Verbal Contra4t!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!=Sunga-C*an vs. C*ua................................................................................@=

SALES...............................................................................................................................71

Sales!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!5% +im vs. Se%urit7 Ban6 Corporation...........................................................1

Robern evelopment Corporation vs. PeopleAs +andless (sso%iation.... .:A4tion for 1e4on0eyan4e!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!5

Spouses Ro<ue vs. (guadoet.....................................................................)

Assignment of Credit!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!55 ,ort Boni'a%io evelopment Corporation vs. ,ong.................................

rea47 of Warranty!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!5=Spouses 8umiba7 vs. Spouses +ope#..........................................................=

La4k of Consideration!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!9% +an6 Ban6 o' t*e P*ilippines vs. Poblete..................................................1

2erfe4tion of Contra4t of Sale!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!9#



Riosa vs. 8aba%o +a Suerte Corporation..................................................!

1e4oupment!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!9 ,irst 9nited Constru%tors Corp. vs. Ba7ani*an (utomotive Corporation$

1ig7t of 1epur47ase!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!9 avid vs. avid.........................................................................................@

Warranty Against +0i4tion!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!99 Bigna7 2-Im P*ilippines0 In%. vs. 9nion Ban6 o' t*e P*ilippines...........

TORTS AND DAMAGES...............................................................................................89

)orts and 3amages!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!9= Mendo#a vs. Spouses "ome#.....................................................................=

BPI 2press Card Corporation vs. (rmovit..............................................=1 2spineli vs. People....................................................................................=!

Cali'ornia Clot*ing0 In%. vs. uinones......................................................=$

,ilipinas S7nt*eti% ,iber Corporation vs. e +os Santos.........................=@ P*ilippine a>6 Corporation vs. +ee.......................................................=

(ir ,ran%e vs. "illego...............................................................................==

3amages!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!%$%Sno> Mountain air7 Corporation vs. "M( /eterans ,or%e In%..........131

3o4trine of Ipsa Lo;uitur!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!%$>Solidum vs. People..................................................................................13:

,ominal 3amages!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!%$Cat*a7 Pa%i'i% vs. Re7es.........................................................................13)

Quasi'3eli4t!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!%$5 ela +lano vs. Biong...............................................................................13



AGENCY

Agen!

I!

C"#"$ L%& To'" : Agen4y

So()e : Spouses Sal0ador 0s! Spouses 1abaDa".R. No. 1====30 ,ebruar7 $0 !31)

Con*)"+(*o) : Solatorio6 Carol

'@@@@'

PROBLEM:

2 e@e4uted an S2A in fa0or of A6 aut7oriEing t7e latter to sell t7e property of 2 to and tore4ei0e payment t7erefore! made partial payment in t7e amount of 2=$6$$$ to A and iso44upying t7e property! A 4ontra4t to sell was e@e4uted by A in fa0or of and signed by2 as buyer'prin4ipal but 26 as 0endor6 did not reser0e 7is title to t7e property until t7e0endee 7ad fully paid t7e pur47ase pri4e! A did not remit t7e payment to 2! filed an

a4tion for res4ission of 4ontra4t and demanded for t7e return of t7e 2=$6$$$ 7e paid toA! Is Bs a4tion properF

S,GGESTED ANS-ER :

"es! Considering t7at t7ere was a 0alid S2A6 t7en properly made payments to A6 asagent of 2? and it was as if paid to 2! It is of no moment6 insofar as is 4on4erned6w7et7er or not t7e payments were a4tually remitted to 2!

A44ording to Arti4le %==$ of t7e ,ew Ci0il Code6 insofar as t7ird persons are 4on4erned6

an a4t is deemed to 7a0e been performed wit7in t7e s4ope of t7e agentGs aut7ority6 if su47a4t is wit7in t7e terms of t7e power of attorney6 as written! In t7is 4ase6 did notre4klessly enter into a 4ontra4t to sell wit7 A! .e re;uired 7is presentation of t7e power of attorney before transa4ted wit7 7is prin4ipal! And w7en A presented t7e S2A to 6t7e latter 7ad no reason not to rely on it!



II!

C"#"$ L%& To'" : Agen4y

So()e : autista'Spille 0s! ,IC-12 <anagement & 3e0elopment Corporation".R. No. !1$3)0 O%tober 1)0 !31)

Con*)"+(*o) : Quiron6 <aria Cristina

'@@@@'

PROBLEM:

Hristian6 e@e4uted a eneral 2ower of Attorney in fa0or of 7is brot7er61amonaut7oriEing t7e later to administer all 7is businesses and properties in t7e 27ilippines!

1amon and Ayala Land 3e0elopment Corporation entered into a 4ontra4t to sell6 pertaining to t7e land owned by Hristian for an agreed pri4e on 2%6$$$!$$! Ayala Landwas to gi0e a downpayment of #$ and t7e remaining balan4e in eig7t (9 mont7s! It wasagreed t7at t7e )C) of t7e subDe4t property would be deposited wit7 ank of 27ilippineIsland and pla4ed in es4row! 8urt7ermore6 1amon was re;uired to submit a spe4ial power of attorney 4o0ering t7e sale transa4tion ot7erwise 6 t7e payment of t7e balan4e would besuspended and a penalty of 2%$6$$$ e0ery mont7 would be imposed!

W7en Hristian dis4o0ered t7e sale6 7e immediately sent demand letters to Ayala Land and2I informing t7em t7at 7e was opposing t7e sale and t7at 1amon was not 4lot7ed wit7t7e aut7ority to enter into a 4ontra4t to sell6 7owe0er bot7 parties failed and refused toreturn t7e title of t7e subDe4t property for t7e reason t7at 1amon was empowered to enter into a 4ontra4t to sell by 0irtue of t7e general power of attorney! Conse;uently6 Hristianfiled a 4omplaint against t7e respondents!

Was 2I and Ayala LandBs defense tenableF

S,GGESTED ANS-ER :

,o6 2I and Ayala LandBs defense is not tenable! )7e well' establis7ed rule isw7en a sale of a par4el of land or any interest t7erein is t7roug7 an agent6 t7e aut7ority of t7e latter s7all be in writing6 ot7erwise t7e sale s7all be 0oid! Arti4le %95 and %959 of t7e Ci0il Code pro0ide:



Art! %95! W7en a sale of a pie4e of land or any interest t7erein is t7roug7an agent6 t7e aut7ority of t7e latter s7all be in writing? ot7erwise6 t7e sales7all be 0oid!

Art! %959! Spe4ial 2owers of attorney are ne4essary in t7e following

4ases: (% @@@

( )o enter into any 4ontra4t by w7i47 t7e owners7ip of animmo0able is transmitted or a4;uired eit7er gratuitously or for a 0aluable4onsideration!

8rom t7e foregoing6 it is 0ery 4lear t7at an S2A in t7e 4on0eyan4e of real rig7tso0er immo0able property is ne4essary! In t7e 4ase at bar6 Ayala Land was fully aware t7at1amon was not properly aut7oriEed to enter into any transa4tion regarding t7e sale of HristianBs property6 e0iden4e by t7e fa4t t7at Ayala Land 1e;uired enDamin to se4ure t7e

S2A from Hristian and e0en imposed a substantial amount of penalty in t7e amount of 2%$6$$$6$$ a mont7 in 4ase of non'4omplian4e plus suspension of payment of t7e balan4e of 4ontra4t pri4e!



III!

C"#"$ L%& To'" : Agen4y

So()e : 2atrimonio 0s! uttiereE".R. No. 1@=0 4une $0 !31$

Con*)"+(*o) : Siega6 <ar )eresa

'@@@@'

PROBLEM:

Al0in6 a well'known basketball player entered into a business 0enture wit7 ,ap6 a friend!In t7e 4ourse of t7eir business6 Al0in pre'signed se0eral 47e4ks to answer for t7ee@penses of t7e business! Alt7oug7 signed6 t7ese 47e4ks 7ad no payeeBs name6 date or amount! )7e blank 47e4ks were entrusted to ,ap wit7 t7e spe4ifi4 instru4tions not to fillt7em out wit7out pre0ious notifi4ation to and appro0al by Al0in! ,ap 6 wit7out t7eknowledge and 4onsent of Al0in6 se4ured a loan from erry! .e used t7e pre'signed47e4k to and filled out t7e blank portions t7ereof! W7en ,ap was unable to pay 7isobligation6 erry went after Al0in and filed 2 ##! Is Al0in liable to pay for t7e 4ontra4tof loanF

S,GGESTED ANS-ER :

,-!

In t7e absen4e of any s7owing of any agen4y relations or spe4ial aut7ority to a4t for andin be7alf of t7e petitioner6 t7e loan agreement ,ap entered into wit7 erry is null and0oid! 8urt7ermore6 t7at Al0in entrusted t7e blank pre'signed 47e4ks to ,ap is not legallysuffi4ient be4ause t7e aut7ority to enter a loan 4an ne0er be presumed! )7e 4ontra4t of agen4y and t7e spe4ial fidu4iary relations7ip in7erent in t7is 4ontra4t must e@ist as amatter of fa4t! )7e person alleging it 7as t7e burden of proof to s7ow6 not only t7e fa4t of agen4y but also its nature and e@tent! Art %99 of t7e Ci0il Code defines a 4ontra4t of

agen4y as a 4ontra4t w7ereby a person binds 7imself to render some ser0i4e or to dosomet7ing in representation or on be7alf of anot7er6 wit7 t7e 4onsent or aut7ority of t7elatter!



IV!

C"#"$ L%& To'" : Agen4y

So()e : 1e4io 0s! .eirs of Spouses Aguendo".R. No. 1!:$=0 4ul7 !$0 !31:

Con*)"+(*o) : Sayson6 erlyn <ae

'@@@@'

PROBLEM:

AA toget7er wit7 7is ot7er siblings in7erited a property from t7eir parents w7i47 t7eyleased to 11! After % year of t7e 4ontra4t of lease6 AA offered to sell t7e property to 11!A series of negotiations took pla4e w7ere AA represented 7imself to be t7e agent of t7erest of 7is 4o' 7eirs! An oral 4ontra4t of sale was entered into by AA and 11 w7ere t7elatter made a partial payment of 2$ $$$ w7i47 was re4ei0ed by AA and e0iden4ed by are4eipt! A mont7 after6 11 made anot7er payment of 2%$$ $$$ w7i47 was again re4ei0ed by AA and a re4eipt was issued! W7en 11 wanted to pay t7e rest of t7e pur47ase pri4e6AA refused to re4ei0e t7e payment and kept on a0oiding 11!

11 t7en filed a 4ase to 4ompel AA to e@e4ute a 3eed of Absolute Sale and annotate anoti4e of lis pendens to t7e 4ertifi4ate of title of t7e property! .owe0er6 before t7e 4ase

went to trial6 11 learned t7at AA and 7is 4o' 7eirs sold t7e property to S2! 3uring t7etrial6 t7e ot7er 4o' 7eirs argued t7at t7ey did not aut7oriEe AA to sell t7e property to 11!Is AA 4onsidered an agent of 7is ot7er 4o' 7eirs entitling 11 to 7a0e 0ested rig7ts o0er t7e propertyF +@plain

S,GGESTED ANS-ER :

,o6 AA is not an agent of 7is 4o' 7eirs to t7e 4ontra4t of sale 7e entered wit7 11! ASpe4ial 2ower of Attorney signed by all t7e 7eirs is an indispensable re;uisite before a4o' 7eir be4omes an agent of t7e rest of t7e 7eirs and makes t7e 4ontra4t of sale binding

against all t7e 7eirs!

Arti4les %95 and %959 of t7e Ci0il Code e@pli4itly pro0ide:

Art! %95! W7en a sale of a pie4e of land or any interest t7erein is t7roug7an agent6 t7e aut7ority of t7e latter s7all be in writing? ot7erwise6 t7e sales7all be 0oid!



Art! %959! Spe4ial powers of attorney are ne4essary in t7efollowing 4ases: ( )o enter into any 4ontra4t by w7i47 t7e owners7ip of an immo0able istransmitted or a4;uired eit7er gratuitously or for a 0aluable 4onsideration?

)7e re;uirements set by t7e law must be stri4tly 4omplied wit7! In entering into t7e4ontra4t of sale6 11 s7ould 7a0e re;uired AA to present a Spe4ial 2ower of Attorneyfrom 7is 4o' 7eirs aut7oriEing 7im to sell t7e property! e4ause of t7at6 11 assumed t7erisk t7at AA is not aut7oriEed by 7is 4o' 7eirs in selling t7e property to 7im!

.owe0er6 11 7as 0ested rig7ts on t7e ali;uot s7are of AA in t7e in7eritan4e sin4e it wasAA w7o entered wit7 4ontra4t of sale wit7 11!



V!

C"#"$ L%& To'" : Agen4y

So()e : .eirs of t7e Late 8eli@ u4ton 0s! Spouses onEalo".R. No. 1:=)0 November !30 !31:

Con*)"+(*o) : 1amireE6 emma

'@@@@'

PROBLEM:

A buyer informed t7e registered owner of a par4el of land t7at 7e already boug7t t7elatterBs real property t7roug7 someone w7o represented 7imself as t7e land ownerBsaut7oriEed agent as s7own in t7e annotation at t7e ba4k of t7e Certifi4ate of )itle! /ponin;uiry made by t7e owner6 7e learned t7at 7is -wners 3upli4ate of Certifi4ate of )itlewas lost w7ile in t7e possession of 7is daug7ter and by unfortunate turn of e0ents t7esame fell in t7e 7ands of t7e purported agent!

Is t7e buyer entitled to t7e prote4tion t7e law a44ords to pur47asers in good fait7 and for 0alue notwit7standing failure to as4ertain t7e genuineness and aut7enti4ity of t7e agentBsaut7orityF

S,GGESTED ANS-ER :

,o6 t7e buyer is not entitled to t7e prote4tion t7e law a44ords in good fait7 and for 0aluefor failure to as4ertain t7e genuineness and aut7enti4ity of t7e agentBs aut7ority!

W7ile 4ourts prote4t t7e rig7t of inno4ent pur47aser for 0alue and does not re;uire 7im tolook beyond t7e Certifi4ate of )itle6 t7is prote4tion is not e@tended to a pur47aser w7o isnot dealing wit7 a registered owner of t7e land! In 4ase t7e buyer does not deal wit7 t7eregistered owner of t7e real property t7e law re;uires t7at a 7ig7er degree of pruden4e bee@er4ised by t7e pur47aser!

+0ery person dealing wit7 an agent is put upon in;uiry and must dis4o0er upon 7is perilt7e aut7ority of t7e agent and t7is is espe4ially true w7ere t7e a4t of t7e agent is of unusual nature! If a person makes no in;uiry6 7e is 47argeable wit7 knowledge of t7eagentBs aut7ority and 7is ignoran4e of t7at aut7ority will not be any e@4use!J



VI!

C"#"$ L%& To'" : Agen4y

So()e : Spouses Viloria 0s! Continental Airlines6 In4!".R. No. 1!0 4anuar7 1@0 !31!

Con*)"+(*o) : )eDano6 <isaellee

'@@@@'

PROBLEM:

8erdi Santos is planning to spend C7ristmas in 2aris! .e boug7t a round trip 27ilippineAirline ti4kets for <anila to 2aris from t7e .oliday )ra0el Agen4y after t7e general<anager6 <r! Vi4ente6 told 7im t7at only 27ilippine Airlines offers a dire4t flig7t from<anila to 2aris!

After buying t7e ti4ket and lea0ing t7e tra0el agen4y6 7e saw an ad0ertisement in t7e lo4alnewspaper announ4ing Cebu 2a4ifi4 AirlineBs dire4t flig7t from <anila to 2aris! 8erdiwent ba4k to .oliday )ra0el Agen4y and demanded a refund sin4e 7e was misled by <r!Vi4enteBs misrepresentations! <r! Vi4ente refused to gi0e a refund!

8erdi t7en went to 27ilippine AirlineBs main bran47 and demanded a refund! W7en t7e

latter refused6 8erdi filed a 4omplaint against 27ilippine Airlines praying t7at it beordered to gi0e a refund!

Is 27ilippine Airlines bound by <r! Vi4enteBs bad fait7 and misrepresentationF

S,GGESTED ANS-ER :

,o! In a4tions based on ;uasi'deli4t6 a prin4ipal 4an only be 7eld liable for t7e tort4ommitted by its agentBs employees if it 7as been establis7ed by preponderan4e of e0iden4e t7at t7e prin4ipal was also at fault or negligent or t7at t7e prin4ipal e@er4ise

4ontrol and super0ision o0er t7em!

If t7e passengerBs 4ause of a4tion against t7e airline 4ompany is premised on 4ulpaa;uiliana or ;uasi'deli4t for a tort 4ommitted by t7e employee of t7e airline 4ompanyBsagent6 t7ere must be an independent s7owing t7at t7e airline 4ompany was at fault or negligent or 7as 4ontributed to t7e negligen4e or tortuous 4ondu4t 4ommitted by t7eemployee of its agent! )7e mere fa4t t7at t7e employee of t7e airline 4ompanyBs agent 7as



4ommitted a tort is not suffi4ient to 7old t7e airline 4ompany liable! )7ere is no 0in4ulum Duris between t7e airline 4ompany and its agentBs employees and t7e 4ontra4tualrelations7ip between t7e airline 4ompany and its agent does not operate to 4reate a Duridi4al tie between t7e airline 4ompany and its agentBs employees! Arti4le #%9$ of t7eCi0il Code does not make t7e prin4ipal 0i4ariously liable for t7e tort 4ommitted by its

agentBs employees and t7e prin4ipal'agen4y relations7ip per se does not make t7e prin4ipal a party to su47 tort? 7en4e6 t7e need to pro0e t7e prin4ipalBs own fault or negligen4e!

-n t7e ot7er 7and6 if t7e passengerBs 4ause of a4tion for damages against t7e airline4ompany is based on 4ontra4tual brea47 or 4ulpa 4ontra4tual6 it is not ne4essary t7at t7ere be e0iden4e of t7e airline 4ompanyBs fault or negligen4e! As t7is Court pre0iously statedin C7ina Air Lines and reiterated in Air 8ran4e 0s! illego6# Kin an a4tion based on a brea47 of 4ontra4t of 4arriage6 t7e aggrie0ed party does not 7a0e to pro0e t7at t7e4ommon 4arrier was at fault or was negligent! All t7at 7e 7as to pro0e is t7e e@isten4e of t7e 4ontra4t and t7e fa4t of its non'performan4e by t7e 4arrier!J

)7erefore6 wit7out a modi4um of e0iden4e t7at 27ilippine Airlines e@er4ised 4ontrol o0er .oliday )ra0elBs employees or t7at 27ilippine Airlines was e;ually at fault6 no liability4an be imposed on 27ilippine Airlines for <r! Vi4enteBs supposed misrepresentation!



VII!

C"#"$ L%& To'" : Agen4y

So()e : 1epubli4 0s! +0angelista".R. No. 1)@31)0 (ugust 110 !33)

Con*)"+(*o) : Sumampong'+speDo6 <arietes

'@@@@'

PROBLEM:

AAA is t7e Agent 222pursuant to a Spe4ial 2ower of Attorney e@e4uted by t7e latter6gi0ing su47 power and aut7ority t7at in4lude t7e power to institute legal a4tions for t7e prote4tion of 7is property w7ere an alleged treasure is deposited6to engage in an a4ti0ityof treasure 7unting and negotiate pro4eeds of minerals found in t7e land for t7e benefit of 222wit7 t7e s7aring of $:$!

333 an intruder and wit7out 4onsent from 222 started digging in t7e said land and 7iredse0eral armed men to guard t7e parameter! W7en AAA knew su47 illegal a4ts6 7e t7en4onsulted t7e ser0i4es of a lawyer6 Atty! and 7ired t7e same in order to stop t7eillegal a4t of 333 to t7e preDudi4e of 7is prin4ipal! y way of 4ompensation6 t7eyagreed t7at Atty! will get >$ of any treasure t7at may be found t7ereat6 so t7at

Atty6 petitioned to t7e 4ourt for t7e issuan4e of a temporary restraining order6enDoining 333 from 4ontinuing 7is illegal a4ts! 222 was dissatisfied by t7e way AAAimplemented and managed t7e treasure 7unting re0oked t7e S2A wit7out AAABsknowledge! )7e petition was granted6 7owe0er6 333 filed a motion to dismiss on t7eground t7at t7e S2A e@e4uted by 222 7as already been re0oked as e0iden4ed by a 3++3of 1+V-CA)I-,6 t7ereby 222 is not a real party'in'interest!

Is t7e re0o4ation proper t7ereby making 222 not a real party'in'interest and t7e 4ases7ould be dismissedF

S,GGESTED ANS-ER :

Art! %99 of t7e Ci0il Code pro0ides t7at by t7e 4ontra4t of agen4y6 an agent binds7imself to render some ser0i4e or do somet7ing in representation or on be7alf of anot7er6known as t7e prin4ipal6 wit7 t7e 4onsent or aut7ority of t7e latter!



Art! %=#5 of t7e Ci0il Code pro0ides t7at6 an Agen4y 4annot be re0oked if a bilateral4ontra4t depends upon it6 or if it is t7e means of fulfilling an obligation already4ontra4ted!!!!

enerally6 t7e agen4y may be re0oked by t7e prin4ipal at will6as it is a personal 4ontra4t

of representation based on trust and 4onfiden4e reposed by t7e prin4ipal on 7is agent67owe0er6 it admits an e@4eption under Art! =#5!

In t7e 4ase at bar6 t7e agen4y granted by 222 to AAA is 4oupled wit7 interest as a bilateral 4ontra4t depends on it! It is 4lear t7at AAA was gi0en by 2226 t7e power tomanage t7e treasure 7unting a4ti0ities in t7e subDe4t land? to file any 4ase against anyonew7o enters t7e land wit7out aut7ority from 2226 to engage t7e ser0i4es of lawyers to4arry out t7e agen4y? and enter into agreements relati0e t7ereto! It is 4lear t7at t7etreasure t7at may be found in t7e land is t7e subDe4t matter of t7e agen4y? t7at under t7eS2A6 AAA 4an enter into 4ontra4t wit7 Atty! 6 so t7at bot7 7a0e an interest in t7esubDe4t matter of t7e agen4y! W7en an agen4y is 4onstituted as a 4lause in a bilateral

4ontra4t6 t7at is6 w7en t7e agen4y is inserted in anot7er agreement6 t7e agen4y 4eases to be re0o4able at t7e pleasure of t7e prin4ipal as t7e agen4y s7all now follow t7e 4onditionof t7e bilateral agreement! Conse;uently6 t7e 3eed of 1e0o4ation e@e4uted by 222 7asno effe4t! )7erefor6 t7e re0o4ation was not proper and t7e 4ase 4annot be dismissed onsu47 ground as 222 is a real party'in'interest!



A(*o)"*! o/ *e Agen* *o Se$$ % Re%$ P)o'e)*!

VIII!

C"#"$ L%& To'" : Agen4y? Aut7ority of t7e Agent to Sell a 1eal 2roperty

So()e : Spouses autista 0s! Spouses *alandoni".R. No. 11$@$0 November !0 !31:

Con*)"+(*o) : )rias6 2arker

'@@@@'

PROBLEM:

Spouses *alandoni were t7e registered owners of two (# par4els of land6 4o0ered by)ransfer Certifi4ate of )itle ()C) ,os! #$%$9 and #$%$=! )7e two lots were lo4atedin <untinlupa City6 ea47 par4el of land 4ontaining an area of Si@ .undred ($$ s;uaremeters6 more or less6 amounting to 2%6>#$6$$$!$$ per lot!

In <ay %==56 t7e Spouses *alandoni applied for a loan wit7 a 4ommer4ial bank and6 as ase4urity t7ereof6 t7ey offered to 4onstitute a real estate mortgage o0er t7eir two lots! After a routine 4redit in0estigation6 it was dis4o0ered t7at t7eir titles o0er t7e two lots 7ad been4an4elled and new )C) ,os! #$$=% and #$# were issued in t7e names of Spousesautista! /pon furt7er in0estigation6 t7ey found out t7at t7e bases for t7e 4an4ellation of t7eir titles were two deeds of absolute sale6 dated April 6 %== and <ay 6 %==6 purportedly e@e4uted and signed by t7em in fa0or of Spouses autista!

Aggrie0ed6 Spouses *alandoni filed a 4omplaint for 4an4ellation of titles and damages4laiming t7at t7ey did not sell t7e subDe4t lots and denied 7a0ing e@e4uted t7e deeds of absolute sale! )7ey asserted t7at t7at t7eir signatures appearing on t7e deeds of absolutesale were forged and t7at said deeds were null and 0oid and transferred no title in fa0or of Spouses autista! )7ey e0en added t7at t7ey ne0er met t7e Spouses autista? and t7at t7eSpouses autista were aware of t7e true 0alue of t7e lots be4ause t7ey mortgaged one lotto Spouses )ong4o for 2%65$$6$$$!$$ and t7e ot7er lot for 2>6=>6>5=!9# to <CC!

-n t7e ot7er 7and6 Spouses autista 4laimed t7at in <ar47 %==6 a 4ertain )eresita ,asino (,asino offered to +liseo autista (+liseo two par4els of land lo4ated in<untinlupa City and t7at t7e par4els of land were sold at a bargain pri4e be4ause t7eowners were in dire need of money! ,asino told t7em t7at s7e would negotiate wit7 t7e



Spouses *alandoni6 prepare t7e ne4essary do4uments and 4ause t7e registration of t7e salewit7 t7e 1egister of 3eeds! Sin4e ,asino was a wife of a friend6 Spouses autista trusted7er and ga0e 7er t7e aut7ority to negotiate wit7 Spouses *alandoni on t7eir be7alf!

Spouses autista furt7er alleged t7at in April %==6 ,asino informed +liseo t7at t7e deeds

of sale 7ad been prepared and signed by Spouses *alandoni? t7at t7ey6 in turn6 signed t7edeeds of sale and ga0e ,asino t7e amount of 2%6#$$6$$$!$$? t7at )C) ,os! #$$=% and#$# were issued to t7em? t7at sin4e t7ey needed funds for a new proDe4t6 +liseo4ontra4ted a loan wit7 Spouses )ong4o using as a se4urity t7e par4el of land 4o0ered by)C) ,o! #$#? t7at 7e also 4ontra4ted a loan wit7 <CC in t7e amount of 2>6=>6>5=!9# and used as a se4urity t7e lot 4o0ered by )C) ,o! #$$=%? t7at t7eye0entually paid t7e loan wit7 t7e Spouses )ong4o6 t7us6 t7e real estate mortgage was4an4elled? and t7at sin4e t7ey were 7a0ing diffi4ulty paying t7e interests of t7eir loanwit7 t7e <CC6 t7ey also mortgaged t7e lot 4o0ered by )C) ,o! #$#!

8or its part6 <CC reiterated its 4laim in its motion to dismiss t7at t7e 0enue of t7e 4asewas improperly laid and t7at t7e 4omplaint failed to state a 4ause of a4tion against it ast7ere was no allegation made in t7e 4omplaint as to its parti4ipation in t7e allegedfalsifi4ation! <CC a0erred t7at t7ey found no indi4ation of any defe4t in t7e titles of Spouses autista? t7at it e@er4ised due diligen4e and pruden4e in t7e 4ondu4t of its business and 4ondu4ted t7e proper in0estigation and inspe4tion of t7e mortgaged properties? and t7at its mortgage lien 4ould not be preDudi4ed by t7e alleged falsifi4ation4laimed by Spouses *alandoni!

3+CI3+!

S,GGESTED ANS-ER :

)7e 4ase s7ould be de4ided in fa0or t7e Spouses *alandoni!

Arti4les %95 of t7e Ci0il Code pro0ides:

Art! %95! W7en a sale of a pie4e of land or any interest t7erein ist7roug7 an agent6 t7e aut7ority of t7e latter s7all be in writing? ot7erwise6t7e sale s7all be 0oid!

Likewise6 Arti4le %959 paragrap7 of t7e Ci0il Code spe4ifi4ally mandates t7at t7eaut7ority of t7e agent to sell a real property must be 4onferred in writing6 to wit:

Art! %959! Spe4ial powers of attorney are ne4essary in t7e following4ases:

(% ! ! !@@@ @@@ @@@



( )o enter into any 4ontra4t by w7i47 t7e owners7ip of animmo0able is transmitted or a4;uired eit7er gratuitously or for a 0aluable4onsideration?@@@ @@@ @@@!

)7e foregoing pro0isions e@pli4itly re;uire a written aut7ority w7en t7e sale of a pie4e of land is t7roug7 an agent6 w7et7er t7e sale is gratuitously or for a 0aluable 4onsideration!Absent su47 aut7ority in writing6 t7e sale is null and 0oid!

In t7e 4ase at bar6 it is undisputed t7at t7e sale of t7e subDe4t lots to Spouses autista was0oid! ased on t7e re4ords6 ,asino 7ad no written aut7ority from Spouses *alandoni tosell t7e subDe4t lots! )7e testimony of +liseo t7at ,asino was empowered by a spe4ial power of attorney to sell t7e subDe4t lots was bereft of merit as t7e alleged spe4ial power attorney was neit7er presented in 4ourt nor was it referred to in t7e deeds of absolute sale!are allegations6 unsubstantiated by e0iden4e6 are not e;ui0alent to proof under t7e 1ules

of Court!



0o) o/ Con*)%* o/ Agen!

I!

C"#"$ L%& To'" : Agen4y? 8orm of Contra4t of Agen4y

So()e : "os7iEaki 0s! *oy )raining Center of Aurora6 In4!".R. No. 1$=0 4ul7 :10 !31:

Con*)"+(*o) : 1egudo6 <arion )7ursday

'@@@@'

PROBLEM:

*oy6 In4! is a non'sto4k6 non'profit religious edu4ational institution! It was t7e registeredowner of a par4el of land and t7e building t7ereon (real properties lo4ated in aler6Aurora! )7e par4el of land was designated as Lot ,o! %#> and was 4o0ered by )ransfer Certifi4ate of )itle ()C) ,o! )'***!

-n ,o0ember %$6 %==96 t7e spouses 1i47 and Lyn *o7nson sold t7e real properties infa0or of t7e spouses "os7i! )7e spouses *o7nson were members of *oyBs board of trusteesat t7e time of sale! -n 3e4ember 56 %==96 )C) ,o! )'*** was 4an4elled and )C) ,o! )'""" was issued in t7e name of t7e spouses "os7i!

Spouses "os7i presents t7ree pie4es of e0iden4e to pro0e t7at *oy )raining spe4iallyaut7oriEed t7e spouses *o7nson to sell t7e real properties: (% )C) ,o! )'***6 (# t7eresolution6 (> and t7e 4ertifi4ation!

)C) ,o! )'***6 entered in t7e 1egistry of 3eeds on <ar47 6 %==96 states:

A par4el of land @ @@ is registered in a44ordan4e wit7 t7e pro0isions of t7e 2roperty 1egistration 3e4ree in t7e name of *-"6 I,C!6 1ep! by Sps!1IC. A! *-.,S-, and L", S! *-.,S-,6 bot7 of legal age6 /!S!CitiEen6 and residents of 2!-! o@ >#6 S7awnee6 Hs #$>6 /!S!A!

-n t7e ot7er 7and6 t7e fift7 paragrap7 of t7e 4ertifi4ation pro0ides:



8urt7er6 1i47A! and Lyn *! *o7nson were gi0en 8/LL A/).-1I)" for ALL SI,A)-1" purposes for t7e 4orporation on A," and all mattersand de4isions regarding t7e property and ministry 7ere! @@@

Is t7ere a 4ontra4t of agen4y to sell t7e real properties between *oy6 In4!and t7e spouses

*o7nson in t7is 4aseF +@plain!

S,GGESTED ANS-ER :

As a general rule6 a 4ontra4t of agen4y may be oral! .owe0er6 it must be written w7en t7elaw re;uires a spe4ifi4 form! Spe4ifi4ally6 Arti4le %95 of t7e Ci0il Code pro0ides t7at t7e4ontra4t of agen4y must be written for t7e 0alidity of t7e sale of a pie4e of land or anyinterest t7erein! -t7erwise6 t7e sale s7all be 0oid! A related pro0ision6 Arti4le %959 of t7eCi0il Code6 states t7at spe4ial powers of attorney are ne4essary to 4on0ey real rig7ts o0er immo0able properties!

)7e abo0e do4uments do not establis7 t7e e@isten4e of t7e 4ontra4t of agen4y to sell t7ereal properties! )C) ,o! )'*** merely states t7at *oy is represented by t7e spouses*o7nson! )7e title does not e@pli4itly 4onfer to t7e spouses *o7nson t7e aut7ority to sellt7e par4el of land and t7e building t7ereon! <oreo0er6 t7e p7rase M1ep! by Sps! 1IC.A!*-.,S-, and L", S! *-.,S-,M only means t7at t7e spouses *o7nson represented*oy in land registration!

<oreo0er6 t7e 4ertifi4ation is a mere general power of attorney w7i47 4omprises all of *oy )rainingBs business! Arti4le %955 of t7e Ci0il Code 4learly states t7at Man agen4y4ou47ed in general terms 4omprises only a4ts of administration6 e0en if t7e prin4ipals7ould state t7at 7e wit77olds no power or t7at t7e agent may e@e4ute su47 a4ts as 7emay 4onsider appropriate6 or e0en t7oug7 t7e agen4y s7ould aut7oriEe a general andunlimited management!M



L"%+"$"*! o/ %n Agen*

!

C"#"$ L%& To'" : Agen4y? Liability of an Agent

So()e : A4e ,a0igation Co! 0s! 8/ Insuran4e Corporation".R. No. 11)=10 4une !)0 !31!

Con*)"+(*o) : )o7ay 6 Ada onita

'@@@@'

PROBLEM:

CA13IA s7ipped on board a 0essel bags of 4ement to be dis47arged at t7e port of <anila! AC+,AV as an agent of CA13IA was tasked to inform t7e 4onsignee.+I,31IC. of t7e arri0al of t7e 0essel in order for t7e latter to immediately take possession of t7e goods! AC+,AVGs duty was simply to assume responsibility o0er t7e4argo w7en it is unloaded from t7e 0essel! /pon its arri0al6 and upon inspe4tion6 it wasfound out t7at se0eral bags of 4ement were in bad order and 4ondition! /pon paying.+I,31IC.6 8/ was subrogated to all t7e rig7ts and 4auses of a4tion a44ruing to.+I,31IC.! )7us6 8/ filed 4omplaint for damages! )7e Court ruled in fa0or of 8/and ordered AC+,AV as an agent of CA13IA to be deli0ered! Is t7e 4ourtBs ruling4orre4tF

S,GGESTED ANS-ER :

,o! )7e CourtGs ruling is not 4orre4t!

/nder t7e Ci0il Code6 by t7e 4ontra4t of agen4y6 a person binds 7imself to render someser0i4e or to do somet7ing in representation or on be7alf of anot7er6 wit7 t7e 4onsent or aut7ority of t7e latter! <oreo0er6 t7e same Code pro0ides t7at an agent is not personallyliable to t7e party wit7 w7om 7e 4ontra4ts6 unless 7e e@pressly binds 7imself or e@4eedst7e limits of 7is aut7ority wit7out gi0ing su47 party suffi4ient noti4e of 7is powers!

In t7e gi0en 4ase6 AC+,AV 4annot be 7eld liable be4ause as an agent6 it 4annot be maderesponsible or 7eld a44ountable for t7e damage supposedly 4aused by its prin4ipal!



A44ordingly6 t7ere was no s7owing t7at AC+,AV e@4eeded its aut7ority in t7e dis47argeof its duties as a mere agent of CA13IA!



CREDIT TRANSACTIONS

C)e2"* T)%n%*"on

I!

C"#"$ L%& To'" : Credit )ransa4tions

So()e : 1a0ago 0s! <etropolitan ank & )rust Co!".R. No. 1:=0 (ugust )0 !31)

Con*)"+(*o) : /dto7an6 LilDoy

'@@@@'

PROBLEM:

Se0eral times between -4tober and 3e4ember %==56 and 7is wife obtained loans from< bank! )7e loans were se4ured by a real estate mortgage! and 7is wife failed to payt7eir loan obligations! As a 4onse;uen4e6 in 8ebruary %===6 respondent bank initiatede@traDudi4ial fore4losure pro4eedings o0er t7e mortgaged property t7roug7 a notary publi4! )7e notary publi4 4ondu4ted a fore4losure sale of t7e subDe4t lot on *une >6 %===

w7erein respondent bank emerged as t7e 7ig7est bidder! and 7is wife filed a Complaintfor Annulment of ,otarial 8ore4losure 2ro4eedings In4luding Au4tion Sale6 Certifi4ate of Sale and Consolidated )itle wit7 3amages and InDun4tion6 alleging t7at respondent bankGse@traDudi4ial fore4losure of t7e subDe4t property by means of a notary publi4 did not4omply wit7 t7e pro4edure pro0ided for under t7e pro0isions of Administrati0e -rder ,o!>! In its Answer6< bank 4ontended t7at Administrati0e -rder ,o! > is simply a dire4ti0efor e@e4uti0e Dudges in t7e management of 4ourts wit7in t7eir respe4ti0e administrati0eareas and t7at a petition for fore4losure wit7 a notary publi4 is not wit7in t7e4ontemplation of t7e said Administrati0e -rder be4ause su47 petition is not filed wit7 t7e4ourt! As su476 < bank argues t7at its non'4omplian4e wit7 t7e said administrati0e order does not render t7e fore4losure pro4eedings null and 0oid!

a 3o appli4ations for e@traDudi4ial fore4losures under t7e dire4tion of a notary publi4 among t7ose re;uired to be filed wit7 t7e +@e4uti0e *udge pursuant toAdministrati0e -rder ,o! >F .ow about A!<! ,o! =='%$'$'$F

b Is t7e e@tra'Dudi4ial fore4losure 4ondu4ted by t7e ,otary 2ubli4 0alid in t7is4aseF



S,GGESTED ANS-ER :

a A 4omparati0e reading of t7e opening pro0isions of Administrati0e -rder ,o! >

and t7e amendatory se4tions of A!<! ,o! =='%$'$'$ would s7ow t7at t7e former did not4ontemplate fore4losures 4ondu4ted under t7e dire4tion of a notary publi4! 2ertinent pro0isions of Administrati0e -rder ,o! > read6 t7us:

@ @@ @@@ @@@

In line wit7 t7e responsibility of an +@e4uti0e *udge6 under Administrati0e -rder ,o! 6 dated *une >$6 %=56 for t7e management of 4ourts wit7in 7is administrati0e area6 in4luded in w7i47 is t7e task of super0ising dire4tly t7e work of t7e Clerk of Court6 w7o is also t7e +@'-ffi4io S7eriff6 and 7is staff6 t7e undersigned6 pursuant to a resolution of t7is Court dated September %96 %=96 sets fort7 t7e pro4edure to be

followed:

%! All appli4ations for e@tra'Dudi4ial fore4losure of mortgage under A4t!>%>6 as amended by A4t %%96 and A4t %$96 as amended6 s7all be filedwit7 t7e +@e4uti0e *udge6 t7roug7 t7e Clerk of Court w7o is also t7e +@'-ffi4io S7eriff!@ @@ @@@ @@@

-n t7e ot7er 7and6 t7e rele0ant pro0isions of A!<! ,o! =='%$'$'$ readas follows:

@ @@ @@@ @@@

In line wit7 t7e responsibility of an +@e4uti0e *udge under Administrati0e -rder ,o! 6dated *une >$6 %=56 for t7e management of 4ourts wit7in 7is administrati0e area6in4luded in w7i47 is t7e task of super0ising dire4tly t7e work of t7e Clerk of Court6 w7ois also t7e +@' -ffi4io S7eriff6 and 7is staff6 and t7e issuan4e of 4ommissions to notaries publi4 and enfor4ement of t7eir duties under t7e law6 t7e following pro4edures are 7ereby pres4ribed in e@traDudi4ial fore4losure of mortgages:

%! All appli4ations for e@tra'Dudi4ial fore4losure of mortgage w7et7er under t7e dire4tion of t7e s7eriff or a notary publi46 pursuant to A4t >%>6as amended by A4t %%96 and A4t %$96 as amended6 s7all be filed wit7t7e +@e4uti0e *udge6 t7roug7 t7e Clerk of Court w7o is also t7e +@'-ffi4io S7eriff!@ @@ @@@ @@@

It 4an be gleaned from t7e amendatory pro0isions of A!<! ,o! =='%$'$'$ t7at6 uponeffe4ti0ity of t7e said amendments on *anuary %6 #$$$6 appli4ations for e@traDudi4ial



fore4losures under t7e dire4tion of a notary publi4 are already among t7ose w7i47 arere;uired to be filed wit7 t7e +@e4uti0e *udge!

b "+S! )7e +@tra'Dudi4ial 8ore4losure 4ondu4ted by t7e ,otary 2ubli4 is 0alid!

In t7e present 4ase6 < bank filed its 2etition 8or +@traDudi4ial 8ore4losure of 1eal +state<ortgage in 8ebruary %=== w7ile t7e fore4losure sale was 4ondu4ted on *une >6 %===6 bot7 of w7i47 7appened before t7e effe4ti0ity of A!<! ,o! =='%$'$'$!

.en4e6 it is 4lear t7at prior to t7e effe4ti0ity of A!<! ,o! =='%$'$'$6 appli4ations fornotarial fore4losures w7i47 are 4ondu4ted by a notary publi4 were not re;uired to be filedwit7 t7e 4ourt! )7is is pre4isely t7e reason w7y t7e Court in t7e C7ina anking 4ase 7eldt7at e@traDudi4ial fore4losures 4ondu4ted by a notary publi4 do not 4ome wit7in t7e4o0erage of t7e pro0isions of Administrati0e -rder ,o! >6 w7i476 among ot7ers6 re;uiret7e s7eriff to re4ei0e and do4ket t7e appli4ation for e@traDudi4ial fore4losure and 4olle4tt7e pres4ribed filing fees!



II!


So()e : Lim 0s! Se4urity ank Corporation".R. No. 1):= Mar%* 1!0 !31$

Con*)"+(*o) : <anuales6 +isone ri@

'@@@@'

PROBLEM:

-n *uly #6 #$% A e@e4uted a Continuing Suretys7ip in fa0or of to se4ure any and alltypes of 4redit a44ommodation in t7e amount of 2#6$$$6$$$!$$ w7i47 is 4o0ered by aCredit Agreement N 2romissory ,ote! )7e Continuing Suretys7ip e@e4uted by petitioner stipulated t7at t7e liability of t7e Surety is solidary and not 4ontingent upon t7e pursuit of t7e ank of w7ate0er remedies it may 7a0e against t7e 3ebtor or t7e 4ollateralsNliens itmay possess! If any of t7e uaranteed -bligations is not paid or performed on due datet7e Surety s7all6 wit7out need for any noti4e6 demand or any ot7er a4t or deed6immediately be4ome liable t7erefor and t7e Surety s7all pay and perform t7e same! -nAugust #6 #$% obtained a loan from Se4urity ank in t7e amount of 2 %6$$$6$$$!$$ payable on ,o0ember #6 #$%! -n due date6 failed to pay t7e loan6 7en4e Se4urityank demanded payment from A! A did not to pay t7e loan! .e argued t7at 7e did not

e@e4ute a surety 4ontra4t on August #6 #$% to se4ure t7e loan obtained by ! Is t7e4ontention of A 4orre4tF

S,GGESTED ANS-ER :

,o! Compre7ensi0e or 4ontinuing surety agreements are6 in fa4t6 ;uite 4ommonpla4e in present day finan4ial and 4ommer4ial pra4ti4e! A bank or finan4ing 4ompany w7i47anti4ipates entering into a series of 4redit transa4tions wit7 a parti4ular 4ompanynormally re;uires t7e proDe4ted prin4ipal debtor to e@e4ute a 4ontinuing surety agreementalong wit7 its sureties! y e@e4uting su47 an agreement6 t7e prin4ipal pla4es itself in a

position to enter into t7e proDe4ted series of transa4tions wit7 its 4reditor? wit7 su47suretys7ip agreement6 t7ere would be no need to e@e4ute a separate surety 4ontra4t or bond for ea47 finan4ing or 4redit a44ommodation e@tended to t7e prin4ipal debtor!

)7e terms of t7e Continuing Suretys7ip e@e4uted by petitioner6 ;uoted earlier6 are 0ery4lear! Su47 stipulations are 0alid and legal and 4onstitute t7e law between t7e parties6 asArti4le #$> of t7e Ci0il Code pro0ides t7at MOaP guaranty may also be gi0en as se4urity



for future debts6 t7e amount of w7i47 is not yet known? @ @ @!M )7us6 petitioner isune;ui0o4ally bound by t7e terms of t7e Continuing Suretys7ip! )7ere 4an be no 4a0ilt7en t7at petitioner is liable for t7e prin4ipal of t7e loan6 toget7er wit7 t7e interest and penalties due t7ereon6 e0en if said loan was obtained by t7e prin4ipal debtor e0en aftert7e date of e@e4ution of t7e Continuing Suretys7ip!



III!


So()e : 27ilni4o Industrial Corporation 0s! 2ri0atiEation and <anagement-ffi4e

".R. No. 1==$!30 (ugust !0 !31$

Con*)"+(*o) : uma6 Israel

'@@@@'

PROBLEM:

AA Corp! (AA6 In4! (6 and CC Corp (CC e@e4uted a 4ontra4t w7i47 stated t7eterms and 4onditions for t7e pur47ase and a4;uisition by from AA of #$ millions7ares of sto4k of CC! /nder t7is 4ontra4t6 agreed to pay AA in installments6 and s7all e@e4ute a pledge agreement in fa0or of AA as se4urity for t7e pri4e of t7e s7ares! Italso pro0ided for t7e pro0ision on automati4 re0ersion of t7e s7ares to CC in 4ase defaults! As su476 e@e4uted a pledge in fa0or of AA! )7ree years later6 AA informed t7at it 7as defaulted on its payments and demanded it to settle its unpaidamortiEations or else t7e automati4 re0ersion will apply! AA 4laims t7at t7e pro0ision int7e 4ontra4t pro0iding for t7e automati4 re0ersion of t7e s7ares is null and 0oid for beinga pa4tum 4ommissorium! Is t7e 4ontention 4orre4tF

S,GGESTED ANS-ER :

"es6 t7ere is pa4tum 4ommissorium! )7e elements of pa4tum 4ommissorium need not4on4ur in one 4ontra4t! )7e agreeement of t7e parties may be embodied in only one4ontra4t or in two or more separate writings! In 4ase of t7e latter6 t7e writings of t7e parties s7ould be read and interpreted toget7er in su47 a way as to render t7eir intentioneffe4ti0e!

ot7 elements of pa4tum 4ommissorium are present in t7e instant 4ase: (% y 0irtue oft7e 2ledge Agreement6 pledged its CC s7ares of sto4k in fa0or of AA as se4urity for

t7e fulfillment of t7e formerBs obligations under t7e 4ontra4t and t7e 2ledge Agreementitself6 and (# )7ere is automati4 appropriation as under t7e 4ontra4t6 in t7e e0ent ofdefault by 6 title to t7e CC s7ares of sto4k s7all ipso fa4to re0ert from to AAwit7out need of demand! Alt7oug7 e@e4uted in separate written instruments6 t7e 4ontra4tand pledge agreement are integral to one anot7er! <ore importantly6 t7e Court6 indetermining t7e e@isten4e of pa4tum 4ommissorium6 7ad fo4used more on t7e e0identintention of t7e parties6 rat7er t7at t7e formal or written form!





IV!


So()e : 27ilippine ,ational ank 0s! Spouses <araon".R. No. 1=:1@0 4ul7 10 !31:

Con*)"+(*o) : "ray6 17ea

'@@@@'

PROBLEM:

Spouses <aranon6 owner of a pie4e of real property6 ere4ted wit7 a building o44upied by0arious tenants! Said subDe4t property was among t7e properties mortgaged by spouses<ontealegre to 2, as a se4urity for a loan! Spouses <ontealegre6 t7roug7 a falsified3eed of Sale6 a4;uired title to t7e property and used t7e propertyBs title w7i47 was purportedly registered in t7e name of +melie<ontealegre! .owe0er6 due to failure to payt7e loan6 said property was fore4losed by 2,6 and upon au4tion6 was t7ereafter a4;uired by t7e same bank6 2,!

Spouses <aranon filed before t7e 1)C a 4omplaint for Annulment of )itle61e4on0eyan4e and 3amages against spouses <ontealegre! *udgment of 1)C wasrendered in fa0our of spouses <aranon6 and also stipulated t7at t7e 1eal +state <ortgage

lien of 2, s7all stay and be respe4ted! Su47 de4ision prompted 2, to also seek for entitlement to t7e fruits of t7e property su47 as rentals paid by t7e tenants!

Is 2, entitled to fruits of t7e disputed propertyF

S,GGESTED ANS-ER :

,o6 2, is not entitled to t7e fruits of t7e disputed property!

1ent is a 4i0il fruit t7at belongs to t7e owner of t7e property produ4ing it by rig7t of

a44ession! )7e rig7tful re4ipient of t7e disputed rent in t7is 4ase s7ould be t7us t7e owner of t7e lot at t7e time t7e rent a44rued!

It is beyond ;uestion t7at spouses <aranon ne0er lost owners7ip o0er t7e subDe4t lot6 andt7at te47ni4ally6 t7ere is no Duridi4al tie 4reated by a 0alid mortgage 4ontra4t t7at binds2, to t7e subDe4t lot be4ause t7e mortgagors <ontealegre were not t7e true owners!2,Bs lien as a mortgagee in good fait7 pertains to t7e subDe4t lot alone and not on t7e



ere4ted building w7i47 was not fore4losed and still remained to be a property of <aranon!

V!


So()e : "ngson 0s! 27ilippine ,ational ank ".R. No. 111:!0 (ugust 1)0 !31!

Con*)"+(*o) : 3a4udao6 1on *uko

'@@@@'

PROBLEM:

A1CA< & Company6 In4! (A1CA< applied for and was granted a loan by t7e27ilippine ,ational ank (2,! )o se4ure t7e loan6 A1CA< e@e4uted a 1eal +state<ortgage o0er a par4el of land! A1CA<6 7owe0er6 defaulted on its obligations to 2,due to finan4ial re0erses! Subse;uently6 A1CA< filed before t7e S+C a 2etition for 1e7abilitation and Suspension of 2ayments6 w7i47 was appro0ed! After some time6 t7eS+C ruled t7at A1CA< 4an no longer be re7abilitated! )7us6 t7e S+C de4reed t7atA1CA< be dissol0ed and pla4ed under li;uidation!Wit7 t7is de0elopment6 2, initiateda fore4losure 4ase! )7us6 A1CA< filed wit7 t7e S+C a <otion for t7e Issuan4e of a )1-to enDoin t7e fore4losure sale of its assets! A1CA< argued t7at t7e pro7ibition against

fore4losure subsisted during li;uidation be4ause payment of all of A1CA<Bs obligationswas pros4ribed e@4ept t7ose aut7oriEed by t7e Commission! <oreo0er6 A1CA< assertedt7at t7e mortgaged assets s7ould be in4luded in t7e li;uidation and t7e pro4eeds s7aredwit7 t7e unse4ured 4reditors! 1ule on A1CA<Bs 4ontention!

S,GGESTED ANS-ER :

)7e 4reditor'mortgagee 7as t7e rig7t to fore4lose t7e mortgage o0er a spe4ifi4 real property w7et7er or not t7e debtor'mortgagor is under insol0en4y or li;uidation pro4eedings! )7e rig7t to fore4lose su47 mortgage is merely suspended upon t7e

appointment of a management 4ommittee or re7abilitation re4ei0er or upon t7e issuan4eof a stay order by t7e trial 4ourt! .owe0er6 t7e 4reditor'mortgagee may e@er4ise 7is rig7tto fore4lose t7e mortgage upon t7e termination of t7e re7abilitation pro4eedings or upont7e lifting of t7e stay order!



/nder 1epubli4 A4t ,o! %$%#6 ot7erwise known as t7e 8inan4ial 1e7abilitation andInsol0en4y A4t (81IA of #$%$6 t7e rig7t of a se4ured 4reditor to enfor4e 7is lien duringli;uidation pro4eedings is retained! Se4tion %% of said law t7us pro0ides:

S+C! %%! 1ig7ts of Se4ured Creditors! R )7e Li;uidation -rder s7all not

affe4t t7e rig7t of a se4ured 4reditor to enfor4e 7is lien in a44ordan4e wit7t7e appli4able 4ontra4t or law! A se4ured 4reditor may:(a wai0e 7is rig7ts under t7e se4urity or lien6 pro0e 7is 4laim in t7e

li;uidation pro4eedings and s7are in t7e distribution of t7e assets of t7e debtor? or

(b maintain 7is rig7ts under 7is se4urity or lien?

If t7e se4ured 4reditor maintains 7is rig7ts under t7e se4urity or lien:(% t7e 0alue of t7e property may be fi@ed in a manner agreed upon by

t7e 4reditor and t7e li;uidator! W7en t7e 0alue of t7e property is lesst7an t7e 4laim it se4ures6 t7e li;uidator may 4on0ey t7e property to

t7e se4ured 4reditor and t7e latter will be admitted in t7e li;uidation pro4eedings as a 4reditor for t7e balan4e? if its 0alue e@4eeds t7e4laim se4ured6 t7e li;uidator may 4on0ey t7e property to t7e 4reditor and wai0e t7e debtorBs rig7t of redemption upon re4ei0ing t7e e@4essfrom t7e 4reditor?

(# t7e li;uidator may sell t7e property and satisfy t7e se4ured 4reditorBsentire 4laim from t7e pro4eeds of t7e sale? or

(> t7e se4ured 4reditor may enfor4e t7e lien or fore4lose on t7e property pursuant to appli4able laws!

In t7is 4ase6 2, ele4ted to maintain its rig7ts under t7e se4urity or lien? 7en4e6 its rig7t

to fore4lose t7e mortgaged properties s7ould be respe4ted!



Con*"n("ng G(%)%n*!

VI!

C"#"$ L%& To'" : Credit )ransa4tions? Continuing uaranty

So()e : ank of Commer4e 0s! 8lores".R. No. 1$33@0 e%ember 0 !313

Con*)"+(*o) : utierreE II6 Cedri4

'@@@@'

PROBLEM:

Spouses autista (autista borrowed money from Land ank of t7e 27ilippines (L2 int7e amount of 2%6 =$$6$$$!$$! autista e@e4uted a 1eal +state <ortgage o0er t7e4ondominium unit as 4ollateral6 and t7e same was annotated at t7e ba4k of CC) ,o!%#>! )wo years later again t7e spouses borrowed 2%6 %$$6$$$!$$ from L26 w7i47 wasalso se4ured by a mortgage o0er t7e same property annotated at t7e ba4k of CC) ,o!#%>$! After one year autista paid 2%6 =$6>#%!$$6 as e0iden4ed by -ffi4ial 1e4eipt ,o!

%#> issued by L2! -n t7e fa4e of t7e re4eipt6 it was written t7at t7e payment was Minfull payment of t7e loan and interest!M

autista t7en asked L2 to 4an4el t7e mortgage annotations on CC) ,o! %#> sin4e t7eloans se4ured by t7e real estate mortgage were already paid in full! .owe0er6 t7e bank refused to 4an4el t7e same and demanded payment of 2656=#9!59! L2 applied for e@tra'Dudi4ial fore4losure of t7e mortgages o0er t7e 4ondominium unit! 2ubli4 Au4tionensued! Is t7e real estate mortgage o0er t7e subDe4t 4ondominium unit a 4ontinuingguaranty for t7e future loans of respondent spouses despite t7e full payment of t7e prin4ipal loans annotated on t7e title of t7e subDe4t propertyF

S,GGESTED ANS-ER :

"es6 a 4ontinuing guaranty is a re4ogniEed e@4eption to t7e rule t7at an a4tion to fore4losea mortgage must be limited to t7e amount mentioned in t7e mortgage 4ontra4t!



)7e law pro0ides under Arti4le #$> of t7e Ci0il Code6 a guaranty may be gi0en tose4ure e0en future debts? t7e amount of w7i47 may not be known at t7e time t7e guarantyis e@e4uted! )7is is t7e basis for 4ontra4ts denominated as a 4ontinuing guaranty or suretys7ip! A 4ontinuing guaranty is not limited to a single transa4tion6 but 4ontemplatesa future 4ourse of dealing6 4o0ering a series of transa4tions6 generally for an indefinite

time or until re0oked! It is prospe4ti0e in its operation and is generally intended to pro0ide se4urity wit7 respe4t to future transa4tions wit7in 4ertain limits6 and4ontemplates a su44ession of liabilities6 for w7i476 as t7ey a44rue6 t7e guarantor be4omesliable! In ot7er words6 a 4ontinuing guaranty is one t7at 4o0ers all transa4tions6 in4ludingt7ose arising in t7e future6 w7i47 are wit7in t7e des4ription or 4ontemplation of t7e4ontra4t of guaranty6 until t7e e@piration or termination t7ereof!

In t7e 4ase at bar6 t7e language of t7e real estate mortgage unambiguously re0eals t7at t7ese4urity pro0ided in t7e real estate mortgage is 4ontinuing in nature! )7us6 it wasintended as se4urity for t7e payment of t7e loans annotated at t7e ba4k of CC) ,o!%#>6and as se4urity for all amounts t7at autista may owe t7e bank! It is well settled t7at

mortgages gi0en to se4ure future ad0an4e or loans are 0alid and legal 4ontra4ts6 and t7att7e amounts named as 4onsideration in said 4ontra4ts do not limit t7e amount for w7i47t7e mortgage may stand as se4urity if from t7e four 4orners of t7e instrument t7e intent tose4ure future and ot7er indebtedness 4an be gat7ered!

autistaBs full payment of t7e loans annotated on t7e title of t7e property s7all not affe4t

t7e release of t7e mortgage be4ause6 by t7e e@press terms of t7e mortgage6 it was mean to

se4ure all future debts of t7e spouses and su47 debts 7ad been obtained and remain

unpaid! /nless full payment is made by t7e spouses of all t7e amounts t7at t7ey 7a0e

in4urred from petitioner bank6 t7e property is burdened by t7e mortgage!



E("*%+$e Mo)*g%ge

VII!

C"#"$ L%& To'" : Credit )ransa4tions? +;uitable <ortgage

So()e : Spouses Solitarios 0s! Spouses *a;ue".R. No. 1==)!0 November 1!0 !31$

Con*)"+(*o) : Armenion6 1amy

'@@@@'

PROBLEM:

A par4el of agri4ultural land designated as Lot '#$%6 4onsisting of $6$9 s;uaremeters (s;! m!! was originally registered in t7e name of 1udy6 and6 t7ereafter6 in t7ename of ra4e! In t7e 4omplaint for -wners7ip and 1e4o0ery of 2ossession filed wit7t7e 1)C6 ra4e alleged t7at s7e pur47ased Lot $9= from 1udy6 in stages! A44ording tora4e6 s7e initially boug7t one'7alf of Lot ,o! $9= for 256$$$!$$! )wo mont7s later61udy supposedly mortgaged t7e remaining 7alf of Lot $9= to ra4e 0ia a 1eal +state

<ortgage (1+< to se4urea loan amounting to 2>6$$$!$$! After almost two (# years61udy finally agreed to sell t7e mortgaged 7alf! .owe0er6 instead of e@e4uting a separatedeed of sale for t7e se4ond 7alf6 t7ey e@e4uted a 3eed of Sale dated April #6 %=9> for t7ew7ole lot to sa0e on ta@es6 by making it appear t7at t7e 4onsideration for t7e sale of t7eentire lot was only 2%#6$$$!$$ w7en ra4e a4tually paid 2%=6$$$!$$ in 4as7 and4ondoned 1udyGs 2>6$$$!$$ loan! In spite of t7e sale6 ra4e6 supposedly out of pity for 1udy6 allowed t7e latter to retain possession of Lot $9=6 subDe4t only to t7e 4onditiont7at 1udy will regularly deli0er a portion of t7e propertyBs produ4e! 8or 7is part6 1udydenied selling Lot $9= and e@plained t7at 7e merely mortgaged t7e same to ra4e after t7e latter 7elped 7im redeem t7e land from t7e 27ilippine ,ational ank (2,! Is t7etransa4tion between 1udy and ra4e an absolute sale or an e;uitable mortgageF

S,GGESTED ANS-ER :

)7e transa4tion is an e;uitable mortgage! Art! %$#! )7e 4ontra4t s7all be presumed to bean e;uitable mortgage6 in any of t7e following 4ases:



% W7en t7e pri4e of a sale wit7 rig7t to repur47ase is unusually inade;uate?# W7en t7e 0endor remains in possession as lessee or ot7erwise?> W7en upon or after t7e e@piration of t7e rig7t to repur47ase anot7er instrument

e@tending t7e period of redemption or granting a new period is e@e4uted? W7en t7e pur47aser retains for 7imself a part of t7e pur47ase pri4e?

W7en t7e 0endor binds 7imself to pay t7e ta@es on t7e t7ing sold? In any ot7er 4ase w7ere it may be fairly inferred t7at t7e real intention of t7e parties is t7at t7e transa4tion s7all se4ure t7e payment of a debt or t7e performan4e of any ot7er obligation!

)7ere is suffi4ient basis to indulge in t7e presumption t7at t7e transa4tion between t7e

parties was t7at of an e;uitable mortgage and t7at 1udy ne0er wanted to sell t7e same to

ra4e! 8irst6 1udy 7as remained in possession of t7e subDe4t property and e@er4ised a4ts

of owners7ip o0er t7e said lot e0en after t7e purported absolute sale of Lot $9=? Se4ond6

t7e ra4e did not p7ysi4ally o44upy Lot $9=? )7ird6 t7e 4onsideration for t7e sale of t7e

w7ole land as stated in t7e 3eed of Sale dated April #6 %=9>6 was only 2%#6$$$!$$6 an

amount grossly inade;uate for a titled 4o4onut and ri4e lands 4onsisting of $6$9 s;! m!?

8ourt76 ra4e did not disturb t7e possession of Lot $9= by <iriam6 1udyBs sister'in'law6

w7o resided t7erein? and 8ift76 ra4e ne0er 7ad a tenant in t7e subDe4t property!



In*e)e*

VIII!

C"#"$ L%& To'" : Credit )ransa4tions? Interest

So()e : Spouses Sal0ador Abella 0s! Spouses 1omeo Abella".R. No. 1=)1@@0 4ul7 . !31)

Con*)"+(*o) : Amores6 +rnesto <iguel

'@@@@'

PROBLEM:

In a 4omplaint6 petitioners alleged t7at respondents obtained a loan from t7em in t7eamount of 2$$6$$$!$$! 2etitioners added t7at respondents were able to pay a total of 2#$$6$$$!$$ 2%$$6$$$!$$ paid on two separate o44asions lea0ing an unpaid balan4e of 2>$$6$$$!$$!

1espondents 4laimed t7at t7ey were approa47ed by petitioners6 w7o proposed t7at if respondents were to Mundertake t7e management of w7ate0er money OpetitionersP wouldgi0e t7em6 OpetitionersP would get #! a mont7 wit7 a #! ser0i4e fee toOrespondentsP!M )7e #! t7at ea47 party would be re4ei0ing represented t7eir s7aring of t7e interest t7at t7e Doint 0enture was supposedly going to 47arge against its debtors!<oreo0er6 t7ey 4laimed t7at t7e entire amount of 2$$6$$$!$$ was disposed of ina44ordan4e wit7 t7eir agreed terms and 4onditions and t7at petitioners terminated t7e Doint 0enture6 prompting t7em to 4olle4t from t7e Doint 0entureGs borrowers! )7ey were67owe0er6 able to 4olle4t only to t7e e@tent of 2#$$6$$$!$$? 7en4e6 t7e 2>$$6$$$!$$ balan4e remained unpaid!

2etitioners insist t7at respondentsG 4onsistent payment of interest in t7e year following t7e perfe4tion of t7e loan s7owed t7at interest at #! per mont7 was properly agreed upon

despite its not 7a0ing been e@pressly stated in t7e a4knowledgment re4eipt! )7ey add t7atduring t7e pro4eedings before t7e 1egional )rial Court6 respondents admitted t7at interestwas due on t7e loan!

If it was ruled t7at t7e agreement abo0e'stated was t7at of a simple loan or mutuum6 ist7e rate stipulated by t7e petitioners 0alidF If not6 at w7at rate s7ould it be 7eldF



S,GGESTED ANS-ER :

)7e rate imposed is in0alid and un4ons4ionable! )7e rate s7ould be 7eld at per annum!

Arti4le %= of t7e Ci0il Code pro0ides t7at no interest s7all be due unless it 7as beene@pressly stipulated in writing!

In a plet7ora of 4ases6 t7e Court said t7at t7e imposition of an un4ons4ionable rate of interest on a money debt6 e0en if knowingly and 0oluntarily assumed6 is immoral andunDust!

/nder S2 Cir4ular ,o! 5==6 KIn t7e absen4e of a 4ontra4t e@pressly pro0iding for adifferent rate6 t7e rate of interest for t7e loan or forbearan4e of any money6 goods or 4redits and t7e rate allowed in Dudgments 7as been redu4ed from twel0e per4ent (%# to

si@ per4ent ( per annum!!J

In t7e 4ase presented6 petitioners insist upon t7e imposition of #! mont7ly or >$annual interest w7i47 is far beyond t7e legal rate of ! If su47 would be granted6 itwould tantamount to a repugnant spoliation and an ini;uitous depri0ation of property of t7e respondents as t7e same is apparently un4ons4ionable!

In sum6 Arti4le %= of t7e Ci0il Code6 read in lig7t of establis7ed Durispruden4e6 pre0ents t7e appli4ation of any interest rate ot7er t7an t7at spe4ifi4ally pro0ided for byt7e parties in t7eir loan do4ument or6 in lieu of it6 t7e legal rate! .ere6 t7e rate t7at petitioners ad0erted to is un4ons4ionable! .en4e6 t7e legal rate of per annum mustapply!



Re%$ Mo)*g%ge

I!

C"#"$ L%& To'" : Credit )ransa4tions? 1eal <ortgage

So()e : u4ton 0s! 1ural ank of +l Sal0ador "R No. 1=@!)0 ,ebruar7 !$0 !31$

Con*)"+(*o) : 3e los Santos6 ,aiEa <ae

'@@@@'

PROBLEM:

Angel owned a par4el of land 4o0ered by )C) ,o! )'59 lo4ated in 3ipolog City! .er neig7bor6 S7eryl borrowed t7e said title on t7e prete@t t7at t7e latter is going to s7ow it torian6 an interested buyer! ut instead of s7owing t7e do4ument to rian6 s7e obtained aloan in t7e amount of 2$6$$$!$$ from ank w7ere rian works! As se4urity for t7eloan obtained6 s7e mortgaged t7e land 4o0ered by t7e aforesaid title by e@e4uting an S2Aand a 1eal +state <ortgage! +0entually6 S7eryl lost 7er Dob and failed to pay t7e loanfrom ank! )7e subDe4t property was t7en fore4losed and sold in an au4tion sale infa0or of ank!

Angel filed a 4ase for Annulment of <ortgage6 8ore4lose and S2A against S7eryl and ank! )7e bank6 7owe0er6 denied AngelBs 4laim of forgery on t7e S2A! )7e 4ourt ruled infa0or of S7eryl and t7e bank6 stating t7at it was not 4on0in4ed t7at t7e S2A was forged!)7e 4ourt de4lared t7at alt7oug7 t7e 1eal +state <ortgage did not indi4ate t7at S7erylwas signing for and in be7alf of 7er prin4ipal6 Angel is estopped from denying t7eliability sin4e it was 7er negligen4e in 7anding o0er 7er title to S7eryl t7at 4aused t7eloss!

% Is t7e ruling of t7e 4ourt propertF 3e4ide on w7et7er or not t7e 1eal +state<ortgage e@e4uted by S7eryl binds Angel!

# 3e4ide w7et7er or not t7e bank is negligent and is liable for damages!

S,GGESTED ANS-ER :

% ,-! )7e 1eal +state <ortgage does not bind Angel sin4e it was entered into byS7eryl in 7er own personal 4apa4ity!



)7e law pro0ides t7at in e@e4uting real estate mortgage6 t7e name of t7e prin4ipal s7ould be indi4ated in order for t7e latter to be liable! In t7is 4ase6 t7e aut7oriEed agent failed toindi4ate in t7e mortgage t7at s7e was a4ting for and on be7alf of 7er prin4ipal! rantingarguendo t7at t7e S2A was 0alid6 t7e real estate mortgage would still not bind Angel as it

was signed by S7eryl in 7er personal 4apa4ity and not as an agent of Angel! Simply put6t7e real estate mortgage is 0oid and unenfor4eable against Angel!

# "+S! )7e bank a4ted wit7 negligen4e and is t7erefore liable for damages! )7e law pro0ides t7at t7e words6 Kas attorney'in'fa4t of6J or Kas agent of6J or Kfor and on be7alf of6J are 0ital in order for t7e prin4ipal to be bound by t7e a4ts of 7is agent! Wit7out t7esewords6 any mortgage6 alt7oug7 signed by t7e agent6 4annot bind t7e prin4ipal as it is4on4erned to 7a0e been signed by t7e agent in 7is personal 4apa4ity!

In t7e present 4ase6 bank 7as no one to blame but itself! ,ot only did it a4t wit7 undue7aste w7en it granted and released t7e loan6 it also a4ted negligently in preparing t7e real

estate mortgage as it failed to indi4ate t7at S7eryl was signing for it for and on be7alf of t7e petitioner! .en4e6 bank is negligent and is liable for damages!



S()e*!"' In*e)e*

!

C"#"$ L%& To'" : Credit )ransa4tions? Suretys7ip? Interests

So()e : ilat Satellite ,etwork 0s! /nited Co4onut 2lanters ank eneral

Insuran4e Co!".R. No. 1=)@:0 (pril 0 !31$

Con*)"+(*o) : Cal0o6 <ario 3ennis

'@@@@'

PROBLEM:

-ne 3igital pla4ed wit7 SIHA) )e47nologies a pur47ase order for 0arioustele4ommuni4ations e;uipment6 a44essories6 spares6 ser0i4es and software6 at a total pur47ase pri4e of )wo <illion -ne .undred )wenty +ig7t )7ousand )wo .undred 8ifty3ollars (/ST#6%#96#$!$$! -f t7e said pur47ase pri4e for t7e goods deli0ered6 -ne3igital promised to pay a portion t7ereof totaling /ST%!# <illion in a44ordan4e wit7 t7e

payment s47edule! )o ensure t7e prompt payment of t7is amount6 it obtained defendant/C2 eneral Insuran4e Co!6 In4! Surety bond in fa0or of SIHA)!All of t7e e;uipment(in4luding t7e software 4omponents for w7i47 payment was se4ured by t7e surety bond6was s7ipped by SIHA) and duly re4ei0ed by -ne 3igital! It failed to pay SIHA) on t7eagreed dates! )7us SIHA) sent a demand letter to /C2 en! Insuran4e for t7e paymentof t7e full amount of /ST%6#$$6$$$!$$ guaranteed under t7e surety bond6 plus interestsand e@penses! .owe0er6 defendant /C2 failed to settle t7e amount of /ST%6#$$6$$$!$$or a part t7ereof! SIHA) filed a 4omplaint against /C2 to re4o0er t7e amountssupposedly 4o0ered by t7e surety bond6 plus interests and e@penses! After due 7earing6t7e 1)C rendered its 3e4ision for t7e plaintiff! -n appeal to t7e CA6 it dismissed t7e 4asefor la4k of Durisdi4tion and ordered SIHA) and -ne 3igital to pro4eed to arbitration! )7eCA ruled t7at in Menfor4ing a surety 4ontra4t6 t7e U4omplementary'4ontra4ts'4onstrued'toget7erB do4trine s7ould apply!

a!+@plain t7e U4omplementary'4ontra4ts'4onstrued'toget7erB do4trine! b! Is t7e Court of Appeals 4orre4t is dismissing t7e 4ase and ordering t7e parties toarbitrateF4! Is t7e Surety liable for interest for t7e delay of paymentsF



S,GGESTED ANS-ER :

a! )7e U4omplementary'4ontra4ts'4onstrued'toget7erB do4trine means t7at t7e a44essory

4ontra4t must be 4onstrued wit7 t7e prin4ipal agreement! In t7is 4ase6 t7e 2ur47aseAgreement entered into between parties as t7e prin4ipal 4ontra4t6 w7ose stipulations arealso binding on t7e parties to t7e suretys7ip! earing in mind t7e arbitration 4lause4ontained in t7e 2ur47ase Agreement and pursuant to t7e poli4y of t7e 4ourts toen4ourage alternati0e dispute resolution met7ods!

b! ,o6 t7e CA is not 4orre4t! )7e e@isten4e of a suretys7ip agreement does not gi0e t7esurety t7e rig7t to inter0ene in t7e prin4ipal 4ontra4t6 nor 4an an arbitration 4lause between t7e buyer and t7e seller be in0oked by a non'party su47 as t7e surety!Arbitrationlaws mandate t7at no 4ourt 4an 4ompel arbitration6 unless a party entitled to it applies for t7is relief! )7is referral6 7owe0er6 4an only be demanded by one w7o is a party to t7e

arbitration agreement! Considering t7at neit7er -ne 3igital nor SIHA) 7as asked for areferral6 t7ere is no basis for t7e CAs order to arbitrate!

In suretys7ip6 t7e oft'repeated rule is t7at a suretyBs liability is Doint and solidary wit7 t7atof t7e prin4ipal debtor! )7is undertaking makes a surety agreement an an4illary 4ontra4t6as it presupposes t7e e@isten4e of a prin4ipal 4ontra4t! ,e0ert7eless6 alt7oug7 t7e 4ontra4tof a surety is in essen4e se4ondary only to a 0alid prin4ipal obligation6 its liability to t7e4reditor or promise of t7e prin4ipal is said to be dire4t6 primary and absolute? in ot7er words6 a surety is dire4tly and e;ually bound wit7 t7e prin4ipal! .e be4omes liable for t7e debt and duty of t7e prin4ipal obligor6 e0en wit7out possessing a dire4t or personalinterest in t7e obligations 4onstituted by t7e latter! )7us6 a surety is not entitled to aseparate noti4e of default or to t7e benefit of e@4ussion! It may in fa4t be sued separatelyor toget7er wit7 t7e prin4ipal debtor!

4! "es6 Interest6 as a form of indemnity6 may be awarded to a 4reditor for t7e delayin4urred by a debtor in t7e payment of t7e latterGs obligation6 pro0ided t7at t7e delay isine@4usable! Art! ##$=6 of t7e Ci0il Code pro0ides t7at an obligation 4onsists in t7e payment of a sum of money6 and t7e debtor in4urs a delay6 t7e indemnity for damages6t7ere being no stipulation to t7e 4ontrary6 s7all be t7e payment of t7e interest agreedupon6 and in t7e absen4e of stipulation6 t7e legal interest!

As to t7e interest rate to be imposed6 ,a4ar 0! allery 8rames modified +astern S7ipping0! CA in relation to angkoSentral <onetary oard Cir4ular 5== (S! #$%>: (% W7en t7eobligation is brea47ed6 and it 4onsists in t7e payment of a sum of money6 i!e!6 a loan or forbearan4e of money6 t7e interest due s7ould be t7at w7i47 may 7a0e been stipulated inwriting! In t7e absen4e of stipulation6 t7e rate of interest s7all be per annum to be4omputed from default! (# W7en t7e Dudgment of t7e 4ourt awarding a sum of money be4omes final and e@e4utory6 t7e rate of legal interest6 w7et7er t7e 4ase falls under paragrap7 % or paragrap7 #6 abo0e6 s7all be per annum from su47 finality until its



satisfa4tion6 t7is interim period being deemed to be by t7en an e;ui0alent to aforbearan4e of 4redit!



-)"* o/ Poe"on "n %n E6*)%(2""%$ S%$e

I!

C"#"$ L%& To'" : Credit )ransa4tions? Writ of 2ossession in an +@tra'*udi4ial Sale

So()e : Spouses <ar;ueE 0s! Spouses Alindog".R. No. 1$3$)0 4anuar7 !!0 !31$

Con*)"+(*o) : "gna4io6 <arie Angelee

'@@@@'

PROBLEM:

<ark 1eDas obtained a loan of 2$$6$$$ from <annie 2oo7 Quiao and mortgaged one of its land6 Lot A6 as se4urity! A mont7 after6 <ark 1eDas sold said lot to *ema LynAmer4ano! Later 7e obtained anot7er loan (2#$6$$$ from Allen *oan ,y Sia6 andmortgaged Lot as se4urity! -n t7e said lot6 )ommy Lo0ato and <iley Cir4us o44upiedt7e land as tenants! <ark 1eDas defaulted in paying t7e two loans! <annie and Allen6 int7eir respe4ti0e 4omplaints6 (<arkBs 4reditors soug7t to e@traDudi4ially fore4lose Lots Aand ! <ark failed to redeem bot7 lots! <annie and Allen now seek for t7e possession of t7e lots!

(a Is t7e issuan4e of a writ of possession duly applied by a pur47aser in ane@tra Dudi4ial fore4losure sale dis4retionary on t7e part of t7e 4ourtF(b Will t7e writ be issued as a matter of rig7t to gi0e <annie t7e possessionof Lot AF +@plain!(4 Will t7e writ be issued as a matter of rig7t to gi0e Allen t7e possession of Lot F +@plain!

S,GGESTED ANS-ER :

(a ,o! A writ of possession duly applied for by said pur47aser s7ould issue as amatter of 4ourse6 and t7us6 merely 4onstitutes a ministerial duty on t7e part of t7e 4ourt!)7e ministerial issuan4e of a writ of possession in fa0or of t7e pur47aser in an e@tra' Dudi4ial fore4losure sale6 7owe0er6 admits of an e@4eption! In t7is 4ase6 t7e issuan4e of t7ewrit be4omes dis4retionary!



Se4tion >>6 1ule >= of t7e 1ules of Court pertinently pro0ides t7at t7e possession of t7emortgaged property may be awarded to a pur47aser in an e@tra'Dudi4ial fore4losure unlessa t7ird party is a4tually 7olding t7e property by ad0erse title or rig7t!

(b "es! )7e p7rase Ua t7ird party w7o is a4tually 7olding t7e property ad0ersely to

t7e Dudgment obligorB 4ontemplates a situation in w7i47 a t7ird party 7olds t7e property by ad0erse title or rig7t6 su47 as t7at of a 4o'owner6 tenant or usufru4tuary!

In t7e present 4ase6 *ema Lyn Amer4ano is a su44essor'in'interest of <ark wit7 regards toLot A! S7e is t7us a t7ird party w7o is ,-) 7olding t7e property by ad0erse title or rig7t!)7us6 t7e e@4eption does not apply!

)7erefore6 t7e writ will be issued to gi0e <annie t7e possession of Lot A!

(4 ,o! )7e p7rase Ua t7ird party w7o is a4tually 7olding t7e property ad0ersely to t7e Dudgment obligorB 4ontemplates a situation in w7i47 a t7ird party 7olds t7e property by

ad0erse title or rig7t6 su47 as t7at of a 4o'owner6 tenant or usufru4tuary!

In t7e present 4ase6 )ommy Lo0ato and <iley Cir4us are tenants of Lot ! )7ey are t7ird persons w7o 7old t7e property by ad0erse title or rig7t! )7erefore6 t7e writ will not beissued as a matter of rig7t to gi0e Allen t7e possession of Lot !



LEASE

Le%e

I!

C"#"$ L%& To'" : Lease

So()e : Spouses oleE 0s! ,emeo".R. No. 1:10 September !:0 !31)

Con*)"+(*o) : *urolan6 <arymar

'@@@@'

PROBLEM:

1afael is t7e registered owner of a 4ommer4ial lot lo4ated in La7ug6 Cebu City! -n<ar47 >%6 #$$$6 1afael entered into a Lease Contra4t o0er a portion of Lot wit7 <anuelas t7e Mlessee!M -n *une %6 #$$>6 t7e building subDe4t of t7e lease 4ontra4t was burneddown! e4ause of t7e destru4tion of t7e building6 1afael6 on <ay #=6 #$$>6 sent a letter to <anuel demanding t7e a44umulated rentals for t7e leased property from April %6 #$$$

to <ay >%6 #$$> totaling 2%6$$$6$$$!$$! As t7e demand was left un7eeded6 1afael filed a4omplaint for 4olle4tion of rentals plus damages before t7e Cebu City 1)C! 1afaelalleged t7at <anuel is t7e pro@imate 4ause of t7e fire t7at raEed t7e building to t7eground! <anuel6 for 7is part6 admitted t7e e@e4ution of t7e 4ontra4t of lease but disputet7eir liability to pay rentals! )7e trial 4ourt ruled t7at <anuel did not be4ome t7e 4o'owner of t7e subDe4t building before it was burned down! It 7eld t7at owners7ip will only pertain to 7im as soon as t7e amount agreed upon under t7e 4ontra4t s7all 7a0e been fully paid! It furt7er 7eld t7at under t7e law6 it would still be ne4essary for 1afael to deli0er t7e building to <anuel in order t7at a4;uisition of t7e real rig7t of owners7ip 4an take pla4e!It noted t7at not only was t7e amount agreed upon under t7e 4ontra4t not yet fully paid6t7ere was no deli0ery of t7e building at all to <anuel! It ruled t7at t7e building was still

w7olly owned by 1afael at t7e time t7e same was gutted by fire and t7us6 7e s7ould bet7e only one to suffer t7e loss! Is t7e Court 4orre4tF 3e4ide!

S,GGESTED ANS-ER :



,o! )7ere is no dispute t7at t7e 4ontra4t entered into by t7e parties is one of lease! )7edestru4tion of t7e building s7ould not in any way be made a basis to e@empt <anuel from paying rent for t7e period 7e made use of t7e leased property!

/nder e@isting Durispruden4e6 t7e fundamental do4trine of unDust enri47ment is t7e

transfer of 0alue wit7out Dust 4ause or 4onsideration! )7e elements of t7is do4trine are:enri47ment on t7e part of t7e defendant? impo0eris7ment on t7e part of t7e plaintiff? andla4k of 4ause! )7e? main obDe4ti0e is to pre0ent one to enri47 7imself at t7e e@pense of anot7er! It is 4ommonly a44epted t7at t7is do4trine simply means t7at a person s7all not be allowed to profit or enri47 7imself ine;uitably at anot7erGs e@pense!

In t7e 4ase gi0en6 t7ere is no dispute t7at <anuel used t7e property for se0eral years for 7is own benefit! )7erefore6 it would be t7e 7eig7t of inDusti4e to depri0e 1afael of 4ompensation due to 7im on t7e use of 7is property by <anuel!



II!


So()e : -ne ,etwork ank 0s! ari4".R. No. 1=:@$0 Mar%* )0 !31$

Con*)"+(*o) : A0enido6 Anna <ae

'@@@@'

PROBLEM:

2edro leased a 4ommer4ial spa4e in t7e building owned by *uan! .e 7as been renting int7at spa4e for almost %$ years! 2edro and *uan e@e4uted a lease agreement for t7is!

-ne day6 2edro was Dust s7o4ked w7en 7e saw se0eral workers demolis7ing t7e buildingw7ere 7e leased a spa4e! .e later found out t7at *uan 7ad t7e building demolis7ed to build a new one! *uan fen4ed t7e area of t7e building and did not allow 2edro to getinside t7e perimeter! 2edro filed for for4ible entry against *uan and w7ile t7e 4ase was pending *uan sold t7e subDe4t property to A4osta ank! 2edro now filed a 4ase for for4ible entry wit7 prayer for inDun4ti0e relief against *uan and A4osta ank!

S7ould A4osta ank be 7eld solidarily liable wit7 *uan in 0iolating t7e rig7t of 2edro as

lessee of t7e 4ommer4ial spa4eF 3e4ide!

S,GGESTED ANS-ER :

,o! A4osta ank s7ould not be 7eld solidarily liable wit7 *uan in 0iolating t7e rig7t of 2edro as lessee of t7e 4ommer4ial spa4e! )7e ank was Dust a pur47aser or transferee of t7e property as t7e ank is not pro7ibited from a4;uiring t7e property e0en w7ile t7efor4ible entry 4ase was pending6 8urt7ermore6 *uan may transfer 7is title at any time andt7e lease merely follows t7e property as a lien or en4umbran4e! Any 0iolation of 2edroBsrig7ts as lessee was 4ommitted solely by *uan! A4osta bank may not be impli4ated or

found guildty unless it a4tually took part in t7e 4ommission of t7e illegal a4ts!



III!


So()e : Spouses <amaril 0s! )7e oy S4out of t7e 27ilippines".R. No. 1=:!0 4anuar7 1$0 !31:

Con*)"+(*o) : 2atatag6 Arnel

'@@@@'

PROBLEM:

2ursuant to t7eir parking agreement6 parked 7is Si@ ( passenger Deepneys e0ery nig7tat t7e Central ank 4ompound for a fee of 2>$$!$$ per mont7! Central ank entered intoa uard Ser0i4e Contra4t wit7 " Se4urity Agen4y in order to se4ure or prote4t all properties of t7e Central ank Compound! -ne e0ening6 an unidentified man pretendingto be aut7oriEed by and upon s7owing t7ey key to t7e guard6 took away one of t7e Deepneys! Sin4e t7en6 t7e Deepney was no longer found! sued Central ank6 " Se4urityAgen4y and t7e uard for t7e 0alue of t7e missing DeepneyF Can Central ank be 7eldliableF

S,GGESTED ANS-ER :

,o6 Central ank 4annot be 7eld liable! )7e 4ontra4t between and Central bank wasone of lease! It 7as been ruled t7at w7ere a 4ustomer simply pays a fee6 parks 7is 4ar inany a0ailable spa4e in t7e lot6 lo4ks t7e 4ar and takes t7e key wit7 7im6 t7e possessionand 4ontrol of t7e 4ar6 ne4essary elements in bailment6 do not pass to t7e parking lotoperator6 7en4e6 t7e 4ontra4tual relations7ip between t7e parties is one of lease! As su476 pursuant to Arti4le % Ci0il Code6 t7e lessor is not obliged to answer for a mere a4t of trespass w7i47 a t7ird person may 4ause on t7e use of t7e t7ing leased? but t7e lessees7all 7a0e a dire4t a4tion against t7e intruder! .en4e6 Central ank is not liable!



IV!


So()e : <anuel /y & Sons6 In4! 0s! Valbue4o6 In4!".R. No. 1=)=$0 September 110 !31:

Con*)"+(*o) : Villamor6 Cletus

'@@@@'

PROBLEM:

2etitioner is t7e registered owner of par4els of land lo4ated in )eresa6 1iEal! -n ,o0ember #=6 #$$=6 two Conditional 3eeds of Sale were e@e4uted by petitioner6 as0endor6 in fa0or of respondent6 as 0endee!

1espondent was able to pay petitioner t7e amount of 2#56$! as partial payment for t7e two properties 4orresponding to t7e initial payments and t7e first installments of t7esaid properties!

At t7e same time6 petitioner 4omplied wit7 its obligation under t7e 4onditional deeds of sale6 .owe0er6 respondent suspended furt7er payment as it was not satisfied wit7 t7emanner petitioner 4omplied wit7 its obligations under t7e 4onditional deeds of sale!

Conse;uently6 on <ar47 %56 #$%6 petitioner sent respondent a letter informingrespondent of its intention to res4ind t7e 4onditional deeds of sale and atta47ing t7erewit7t7e original 4opy of t7e respe4ti0e notarial res4ission!

1espondent filed a Complaint for spe4ifi4 performan4e and damages against petitioner wit7 t7e 1)C of Antipolo City! .owe0er6 t7e 4ase was dismissed wit7out preDudi4e for la4k of interest6 as respondentGs 4ounsel failed to attend t7e pre'trial 4onferen4e!8i0e years later6 respondent again filed wit7 t7e 1)C of <anila6 ran47 % a Complaintfor spe4ifi4 performan4e and damages6 seeking to 4ompel petitioner to a44ept t7e balan4eof t7e pur47ase pri4e for t7e two 4onditional deeds of sale and to e@e4ute t7e4orresponding deeds of absolute sale!

In its Answer6 petitioner argued t7at t7e 4ase s7ould be dismissed6 and t7at it 4ould not be4ompelled to e@e4ute any deed of absolute sale6 be4ause respondent failed to pay in fullt7e pur47ase pri4e of t7e subDe4t lots! 3istinguis7 4ontra4t to sell from 4ontra4t of saleF

S,GGESTED ANS-ER :



Contra4t to sell distinguis7ed from 4ontra4t of sale? in a 4ontra4t to sell6 owners7ipremains wit7 t7e 0endor and does not pass to t7e 0endee until full payment of t7e pur47ase pri4e? a deed of sale is absolute w7en t7ere is no stipulation in t7e 4ontra4t t7attitle to t7e property remains wit7 t7e seller until t7e full payment of t7e pur47ase pri4e!

In a 4onditional sale6 as in a 4ontra4t to sell6 owners7ip remains wit7 t7e 0endor and doesnot pass to t7e 0endee until full payment of t7e pur47ase pri4e! )7e full payment of t7e pur47ase pri4e partakes of a suspensi0e 4ondition6 and non'fulfillment of t7e 4ondition pre0ents t7e obligation to sell from arising! )o differentiate6 a deed of sale is absolutew7en t7ere is no stipulation in t7e 4ontra4t t7at title to t7e property remains wit7 t7eseller until full payment of t7e pur47ase pri4e! 1amos 0! .eruela 7eld t7at Arti4les %%=%and %=# of t7e Ci0il Code are appli4able to 4ontra4ts of sale6 w7ile 1!A! ,o! #applies to 4ontra4ts to sell!



V!


So()e : <anila International Airport Aut7ority 0s! A0ia 8ilipinas International6In4!

".R. No. 131@0 September !)0 !31:

Con*)"+(*o) : )irol6 <ark *ason

'@@@@'

PROBLEM:

In September %==$6 <anila International Airport Aut7ority (<IAA entered into a4ontra4t of lease wit7 A0ia 8ilipinas International Corporation (A8IC6 w7erein <IAAallowed A8IC to use spe4ifi4 portions of land as well as fa4ilities wit7in t7e ,inoyA;uino International Airport e@4lusi0ely for t7e latterGs air4raft repair station and47artering operations! )7e 4ontra4t was for one (% year6 beginning September %6 %==$until August >%6 %==%6 wit7 a mont7ly rental of 269$!$$!

In 3e4ember %==$6 <IAA issued Administrati0e -rder ,o! %6 Series of %==$6 w7i47re0ised t7e rates of dues6 47arges6 fees or assessments for t7e use of its properties6fa4ilities and ser0i4es wit7in t7e airport 4omple@! )7e Administrati0e -rder was made

effe4ti0e on 3e4ember %6 %==$!

After t7e e@piration of t7e 4ontra4t6 A8IC 4ontinued to use and o44upy t7e leased premises! A8IC kept on paying t7e original rental fee wit7out protest on t7e part of <IAA!Was t7ere an implied lease 4ontra4tF

S,GGESTED ANS-ER :

"es!

An implied new lease or ta4ita re4ondu44ion will set in w7en t7e following re;uisites arefound to e@ist: a t7e term of t7e original 4ontra4t of lease 7as e@pired? b t7e lessor 7asnot gi0en t7e lessee a noti4e to 0a4ate? and 4 t7e lessee 4ontinued enDoying t7e t7ingleased for fifteen days wit7 t7e a4;uies4en4e of t7e lessor!

All t7e elements are present in t7e 4ase at bar!





VI!


So()e : Hoppel6 In4! 0s! <akati 1otary Club 8oundation6 In4!".R. No. 1=3)0 September $0 !31:

Con*)"+(*o) : Canasa6 *o7n 2aul

'@@@@'

PROBLEM:

AA donated a pie4e of land to 6 one of t7e 4onditions is t7at subDe4t property will beleased ba4k to AA and to pay annual rents for a period of %$ years! efore t7e e@pirationof %$ years6 t7ey renewed t7e lease 4ontra4t and inserted arbitration 4lause agreement in4ase t7ere are disagreements in t7e appli4ations6 interpretation and e@e4ution of t7e lease!AA sold all its rig7ts and properties to CC6 t7e latter now refused to pay t7e rents andfurt7er argued t7at arbitration 4lause must be applied as it is t7e one stipulated in renewedlease 4ontra4t! Is t7e argument of CC meritoriousF

S,GGESTED ANS-ER :

"es6 t7e argument is meritorious6 Durispruden4e pro0ides6 under t7e do4trine of separability an arbitration agreement is 4onsidered as independent of t7e main 4ontra4t!eing separate 4ontra4t in itself t7e arbitration agreement may t7us be in0oked regardlessof t7e possible nullity or in0alidity of t7e main 4ontra4t!



VII!


So()e : Ino4en4io 0s! .ospi4io de San *ose".R. No. !310 September !)0 !31:

Con*)"+(*o) : Solon6 1oger enDamin

'@@@@'

PROBLEM:

. leased a par4el of land to for a period of one year! )7e lease was renewable e0eryyear and pro0ided t7at K)7is 4ontra4t is non transferable unless prior 4onsent of t7e lessor is obtained in writing!J )7e last written 4ontra4t was e@e4uted in %=%! 4onstru4ted two buildings on t7e land w7i47 7e subleased and designated 7is son 1 as administrator! passed away in %==56 and 1 did not inform . of su47! Instead6 7e 4ontinued to re4ei0erent and gi0e . 7is s7are!

Later6 . sent a letter stating t7at t7ey would not longer 4ontinue t7e lease wit7 1 sin4e 7ewas leasing t7e property to ot7ers wit7out t7e 4onsent of .! 1 tried to negotiate but .reiterated 7is stand! Later6 w7en t7e termination date of t7e lease 4ame6 . sent noti4es to0a4ate to 1 and t7e tenants subleasing t7e property! W7en 1 did not 0a4ate t7e land .

filed a 4ase for unlawful detainer in 4ourt!

)7e 4ourt ruled t7at t7e lease 4ontra4t 4ould not be transmitted to 1 as Bs 7eir in 0iew of t7e e@press stipulation found t7erein! -n appeal6 appellate 4ourt affirmed t7e de4ision intoto and e0en t7e Court of Appeals!

3id t7e sublease by 1 to ot7ers 0iolate of t7e terms of t7e 4ontra4tF

S,GGESTED ANS-ER :

,o6 it did not! Arti4le %$ of t7e Ci0il Code pro0ides: KW7en in t7e 4ontra4t of lease of t7ings t7ere is no e@press pro7ibition6 t7e lessee may sublease t7e t7ing leased6 in w7oleor in part6 wit7out preDudi4e to 7is responsibility for t7e performan4e of t7e 4ontra4ttoward t7e lessor!J

Assignment or transfer of lease6 w7i47 is 4o0ered by Arti4le %= of t7e Ci0il Code6 isdifferent from a sublease arrangement6 w7i47 is go0erned by Arti4le %$ of t7e same



Code! In a sublease6 t7e lessee be4omes in turn a lessor to a sublessee! )7e sublessee t7en be4omes liable to pay rentals to t7e original lessee! .owe0er6 t7e Duridi4al relation between t7e lessor and lessee is not dissol0ed! )7e parties 4ontinue to be bound by t7eoriginal lease 4ontra4t! )7us6 in a sublease arrangement6 t7ere are at least t7ree partiesand two distin4t Duridi4al relations!

1 t7us 7ad a rig7t to sublease t7e premises sin4e t7e lease 4ontra4t did not 4ontain anystipulation forbidding subleasing!



VIII!


So()e : <anila International Airport Aut7ority 0s! 3ing Velayo Sport Center6In4!

".R. No. 1@110 e%ember 1$0 !311

Con*)"+(*o) : 1i0era6 Clieford

'@@@@'

PROBLEM:

<IAA6 ownder of Lot #'A6 entered into a 4ontra4t of lease wit7 3ing Velayo SportCenter In4!)7e term of t7e 4ontra4t was for # yr and rewable for # yrs at t7e option of t7e lessee on t7e 4onditition t7at t7e lessee would notify t7e lessor at least $ days beforet7e e@piration of t7e original 4ontra4t! )7e 4onar4t stipulated t7at t7e lessee s7all buildimpro0ements t7ereon (s7ops6 parking6sports fa4ilities t7at lessee s7all not sublease t7esubDe4t property? and t7at t7e owners7ip of t7e impro0ements t7ereon s7all transfer to t7elessor upon t7e e@piration of t7e 4ontra4t!

<ore t7an $ days before t7e e@piration of t7e 4ontra4t6 3ing Velayo sent a letter to<IAA t7at it wanted to renew t7e lease! <IAA de4lined on t7e ground t7at stipulation

granting 3ing Velayo t7e option to renew t7e 4ontra4t is 0oid as it is a potestati0e4ondition6 and t7at 3ing Velayo 0iolated t7e terms of t7e lease by subleasing t7e s7ops!.as <IAA t7e rig7t to de4line t7e renewable of t7e 4ontra4tF

S,GGESTED ANS-ER :

,o! Arti4le %>$9 of t7e Ci0il Code e@presses w7at is known in law as t7e prin4iple of mutuality of 4ontra4ts! ,e0ert7eless6 t7e fa4t t7at an option Oto renew a lease 4ontra4tP is binding only on t7e lessor and 4an be e@er4ised only by t7e lessee does not render it 0oidfor la4k of mutuality! After all6 t7e lessor is free to gi0e or not to gi0e t7e option to t7e

lessee! 8urt7er6 t7e pro7ibition against t7e subleasing refers only to t7e subDe4t propertyLot #'A! eing t7e builder of t7e impro0ements on t7e subDe4t property6 saidimpro0ements are owned by 3ing Velayo until t7eir turn'o0er to <IAA at termination of t7e 4ontra4t of lease! As 3ing Velayo is not leasing t7e impro0ements from petitioner6t7en it is not subleasing t7e same to t7ird parties!



Ag)"($*()%$ Le%eo$2

I!

C"#"$ L%& To'" : Lease? Agri4ultural Lease7old

So()e : *usayan 0s! Sombilla".R. No. 1@:=!0 4anuar7 !10 !31)

Con*)"+(*o) : -4at6 <ylene

'@@@@'

PROBLEM:

A entered into an agreement wit7 to super0ise t7e tilling and farming of 7is ri4eland in4rop year %=5$'%=5%! .owe0er on August #$6 %=5%6 before t7e e@piration of t7eagreement6 A sold 7is land to C! )7e new owner6 C 0erbally agreed wit7 t7at 7e wouldretain possession of t7e par4els of land and would deli0er %%$ 4a0ans of palay annually toC wit7out need for a44ounting of t7e 4ulti0ation e@penses pro0ided t7at *orge would payt7e irrigation fees! Is t7e relations7ip between C and an agen4y or agri4ulturallease7oldF

S,GGESTED ANS-ER :

Agri4ultural lease7old! )7e elements of agri4ultural tenan4y to wit: (% t7e obDe4t of t7e4ontra4t or t7e relations7ip is an agri4ultural land t7at is leased or rented for t7e purposeof agri4ultural produ4tion? (# t7e siEe of t7e land7olding is su47 t7at it is sus4eptible of personal 4ulti0ation by a single person wit7 t7e assistan4e of t7e members of 7isimmediate farm 7ouse7old? (> t7e tenant'lessee must a4tually and personally till64ulti0ate or operate t7e land6 solely or wit7 t7e aid of labor from 7is immediate farm7ouse7old? and ( t7e landlord'lessor6 w7o is eit7er t7e lawful owner or t7e legal possessor of t7e land6 leases t7e same to t7e tenant'lessee for a pri4e 4ertain or as4ertainable eit7er in an amount of money or produ4e! All t7e aforementioned elementswere present? 7en4e6 t7e relations7ip between C and is agri4ultural tenan4y or agri4ultural lease7old!



I'$"e2 Ne& Le%e

!

C"#"$ L%& To'" : Lease? Implied ,ew Lease

So()e : Samelo 0s! <anotok Ser0i4es6 In4!".R. No. 13)3=0 4une !0 !31!

Con*)"+(*o) : 2arilla6 3a0e +dward Velas;ueE

'@@@@'

PROBLEM:

.#) In4! entered into a 4ontra4t wit7 *esssel *ampas for t7e lease of lo4k # Lot =2asadena6 ,i47ols .eig7ts Street6 Cebu for a period of one year! After t7e e@piration of t7e lease 4ontra4t6 *essel *ampas 4ontinued o44upying t7e subDe4t premises wit7out paying rent!

.#) In4! filed a 4omplaint for /nlawful 3etainer against *essel6 and prayed among ot7erst7at t7e latter be ordered to 0a4ate t7e subDe4t premises6 and to pay 4ompensation for itsuse and o44upan4y! In 7er answer6 *essel 4ontends t7at t7e respondent did not gi0e 7er anoti4e to 0a4ate upon t7e e@piration of t7e lease 4ontra4t in 3e4ember %==5 (t7e noti4e to0a4ate was sent only on August 6 %==96 and t7e latter 4ontinued enDoying t7e subDe4t premises for more t7an % days6 wit7out obDe4tion from t7e respondent! y t7e ina4tionof t7e respondent as lessor6 t7ere 4an be no inferen4e t7at it intended to dis4ontinue t7elease 4ontra4t6 and furt7er alleged t7at t7ere e@ist an implied new lease 4ontra4t betweent7e parties!

Is *esselBs 4ontention tenableF

S,GGESTED ANS-ER :

"es6 an implied new lease was t7erefore 4reated pursuant to Arti4le %5$ of t7e Ci0ilCode6 w7i47 e@pressly pro0ides:

Arti4le %5$! If at t7e end of t7e 4ontra4t t7e lessee s7ould 4ontinueenDoying t7e t7ing leased for fifteen days wit7 t7e a4;uies4en4e of t7e



lessor6 and unless a noti4e to t7e 4ontrary by eit7er party 7as pre0iously been gi0en6 it is understood t7at t7ere is an implied new lease6 not for t7e period of t7e original 4ontra4t6 but for t7e time establis7ed in Arti4les%9# and %95! )7e ot7er terms of t7e original 4ontra4t s7all be re0i0ed!

MAn implied new lease or ta4ita re4ondu44ion will set in w7en t7e following re;uisitesare found to e@ist: a t7e term of t7e original 4ontra4t of lease 7as e@pired? b t7e lessor7as not gi0en t7e lessee a noti4e to 0a4ate? and 4 t7e lessee 4ontinued enDoying t7e t7ingleased for fifteen days wit7 t7e a4;uies4en4e of t7e lessor!M

In t7e present 4ase6 all t7ese re;uisites 7a0e been fulfilled6 7en4e6 t7e e@isten4e of animplied lease 4ontra4t!



N%*()e

I!

C"#"$ L%& To'" : Lease? ,ature

So()e : Comglas4o Corporation 0s! Santos Car C7e4k Center Corporation".R. No. !3!==0 Mar%* !)0 !31)

Con*)"+(*o) : +smea6 Himberly <arie

'@@@@'

PROBLEM:

Santos Car C7e4k Center Corporation6 owner of a s7owroom lo4ated at 5 3elgadoStreet6 in Iloilo City6 leased out t7e said spa4e to petitioner Comglas4o Corporation(Comglas4o6 an entity engaged in t7e sale6 repla4ement and repair of automobilewinds7ields6 for a period of fi0e years at a mont7ly rental of 2$6$$$!$$ for t7e first year626$$$!$$ on t7e se4ond year6 and 25#6$$!$$ on t7e t7ird t7roug7 fift7 years! -n-4tober 6 #$$%6 Comglas4o ad0ised Santos t7roug7 a letter t7at it was pre'terminatingt7eir lease 4ontra4t eff e4ti0e 3e4ember %6 #$$%! Santos refused to a44ede to t7e pre'

termination6 reminding Comglas4o t7at t7eir 4ontra4t was for 0e years! Comglas4o0a4ated t7e leased premises and stopped paying any furt7er rentals! Santos sent se0eraldemand letters6 w7i47 Comglas4o 4ompletely ignored! -n September %6 #$$>6 Santossent its nal demand letter6 > w7i47 Comglas4o again ignored! -n -4tober #$6 #$$>6Santos filed suit for brea47 of 4ontra4t!W7at is t7e nature of t7e obligation to pay rentalsor deli0er t7e t7ing in a 4ontra4t of leaseF

S,GGESTED ANS-ER :

)7e obligation to pay rentals or deli0er t7e t7ing in a 4ontra4t of lease falls wit7in t7e prestation Mto gi0eM? M? 7en4e6 it is not 4o0ered wit7in t7e s4ope of Arti4le %#! )7e 4ourt7eld in 2,CC 4ase t7at t7e payment of lease rentals does not in0ol0e a prestation Mto doMen0isaged in Arti4les %# and %#5 w7i47 7as been rendered legally or p7ysi4allyimpossible wit7out t7e fault of t7e obligor'lessor! Arti4le %#5 speaks of a prestationin0ol0ing ser0i4e w7i47 7as been rendered so diffi4ult by unforeseen subse;uent e0ents

as to be manifestly beyond t7e 4ontemplation of t7e parties!





PARTNERSHIP

P%)*ne)"'

I!

C"#"$ L%& To'" : 2artners7ip

So()e : *arantilla6 *r! 0s! *arantilla".R. No. 1)$$@0 e%ember 10 !313

Con*)"+(*o) : Legaspo6 <arDe

'@@@@'

PROBLEM:

3istinguis7 4o'owners7ip from partners7ip!

S,GGESTED ANS-ER :

Co'owners7ip e@ists w7en an undi0ided t7ing or rig7t belongs to different persons!2artners7ip6 on t7e ot7er 7and6 is w7en two or more persons bind t7emsel0es to4ontribute money6 property6 or industry to a 4ommon fund6 wit7 t7e intention of di0idingt7e profits among t7emsel0es!

2ersons w7o agree to form a 4o'owners7ip s7are or do not s7are any profits made by t7euse of t7e property 7eld in 4ommon does not 4on0ert t7eir 0enture into a partners7ip! -r t7e s7aring of t7e gross returns does not of itself establis7 a partners7ip w7et7er or nott7e persons s7aring t7erein 7a0e a Doint or 4ommon rig7t or interest in t7e property!

2ersons w7o 4ontribute property or funds for a 4ommon enterprise and agree to s7are t7e

gross returns of t7at enterprise in proportion to t7eir 4ontribution6 but w7o se0erallyretain t7e title to t7eir respe4ti0e 4ontribution6 are not t7ereby rendered partners but aremerely 4o'owners! )7ey 7a0e no 4ommon sto4k or 4apital6 and no 4ommunity of interestas prin4ipal proprietors in t7e business itself w7i47 t7e pro4eeds deri0ed!

W7ereas6 to 4onstitute partners7ip6 t7e elements must be 4onsidered6 su47 as t7e 4lear intent to form a partners7ip6 t7e e@isten4e of a Duridi4al personality different from t7at of



t7e indi0idual partners6 and t7e freedom to transfer or assign any interest in t7e property by one wit7 t7e 4onsent of t7e ot7ers!



II!


So()e : <endoEa 0s! 2aule".R. No. 1))0 ,ebruar7 !:0 !33=

Con*)"+(*o) : *ordan6 1ebe44a

'@@@@'

PROBLEM:

2A/L+ and <+,3-A 7ad entered into a 2A1),+1.S.I2 in regard to t7e ,ationalIrrigation Administration (,IA proDe4t! 2A/L+Us 4ontribution t7ereto is 7is 4ontra4torBsli4ense and e@pertise6 w7ile <+,3-A would pro0ide and se4ure t7e needed funds for labor6 materials and ser0i4es? deal wit7 t7e suppliers and sub'4ontra4tors? and in generaland toget7er wit7 2A/L+6 o0ersee t7e effe4ti0e implementation of t7e proDe4t!

2A/L+ e@e4uted a S2A aut7oriEing <+,3-A to parti4ipate in t7e pre';ualifi4ationand bidding of a (,IA proDe4t and to represent 7im in all transa4tions related t7ereto ineffe4t was awarded 2a4kages A'%$ and '%%! 8urt7er <+,3-A and C1/ signed two*ob -rdersNAgreements for t7e lease of t7e latterBs 7ea0y e;uipment (dump tru4ks for 7auling purposes to +<2C)!

2A/L+ re0oked t7e S2A of <+,3-A? 4onse;uently6 ,IA refused to make payment to<+,3-A on 7er billings! C1/ demanded payment of t7e rentals6 but6 4ould not be paid for t7e rent of t7e e;uipment!Can 2A/L+ be 7eld 4i0illy liable to 7is partner <+,3-A for re0oking t7e S2AF

S,GGESTED ANS-ER :

"+S! 2A/L+ s7ould be made 4i0illy liable for abandoning t7e 2A1),+1.S.I26lea0ing <+,3-A to fend for 7er own6 and for unduly re0oking 7er aut7ority to 4olle4t

payments from ,IA!

/nder t7e Ci0il Code6 e0ery partner is an agent of t7e 2A1),+1.S.I2 for t7e purposeof its business?%9 ea47 one may separately e@e4ute all a4ts of administration6 unless aspe4ifi4ation of t7eir respe4ti0e duties 7as been agreed upon6 or else it is stipulated t7atany one of t7em s7all not a4t wit7out t7e 4onsent of all t7e ot7ers!%= At any rate6 2A/L+does not 7a0e any 0alid 4ause for opposition be4ause 7is only role in t7e



2A1),+1.S.I2 is to pro0ide 7is 4ontra4torBs li4ense and e@pertise6 w7ile t7e sour4ingof funds6 materials6 labor and e;uipment 7as been relegated to <+,3-A!

)7ere was no 0alid reason for 2A/L+ to re0oke <+,3-ABs S2As! Sin4e <+,3-Atook 4are of t7e funding and sour4ing of labor6 materials and e;uipment for t7e proDe4t6 it

is only logi4al t7at s7e 4ontrols t7e finan4es6 w7i47 means t7at t7e S2As issued to 7er were ne4essary for t7e proper performan4e of 7er role in t7e 2A1),+1.S.I26 and todis47arge t7e obligations s7e 7ad already 4ontra4ted prior to re0o4ation!



III!


So()e : <endiola 0s! Court of Appeals".R. No. 1)=:::0 4ul7 :10 !33@

Con*)"+(*o) : ,alia6 +llen

'@@@@'

PROBLEM:

AC Corporation t7roug7 its representati0e enters into a 4ontra4t of partners7ip wit7A! C6 as a dire4tor of AC Corporation ;uestions it on t7e ground t7at t7ere is no e@pressaut7oriEation under its 47arter empowering AC to be a partner! Is C 4orre4tF

S,GGESTED ANS-ER :

"es6 C is 4orre4t!

/nder 2artners7ip Law6 one of t7e essential re;uisites of a partners7ip 4ontra4t is t7at t7e parties must 7a0e legal 4apa4ity to enter into t7e 4ontra4t! In t7e 4ase of <endiola 0s!

Court of Appeals6 !1! ,o! %=>>>6 *uly >%6 #$$6 t7e 4ourt 7eld t7at a 4orporation4annot be4ome a member of a partners7ip in t7e absen4e of e@press aut7oriEation bystatute or 47arter!

)7is applies to t7e 4ase at 7and! )7ere is no e@press aut7oriEation by statute or 47arter t7at AC Corporation 4an enter into a 4ontra4t of partners7ip! )7erefore6 it 4annot 0alidlyenter into a 4ontra4t of partners7ip!



IV!


So()e : Santos 0s! Spouses 1eyes".R. No. 1:)1:0 O%tober !)0 !331

Con*)"+(*o) : *aen6 ea <arie

'@@@@'

PROBLEM:

A6 and C orally agreed to form a partners7ip R a lending business! A 4ontributed 5$(as finan4ier w7ile and C s7ared >$ (as industrial partners! Later6 introdu4ed 3w7om t7ey would pro0ide loans to 3Bs 4orporation parti4ularly its employees! In return 3s7all 7a0e a 4ommission based on t7e loan payments! )7e partners later de4ided to 7a0e awritten agreement but t7ey found out t7at C engaged in a 4ompetitor 0enture t7use@pelled 7im! )7e two 7ad + (7usband of repla4ed C and t7en 4ontinued doing business! Is t7ere still a partners7ip between A and spouses and +F

S,GGESTED ANS-ER :

"es! y t7e 4ontra4t of partners7ip6 two or more persons bind t7emsel0es to 4ontributemoney6 property or industry to a 4ommon fund6 wit7 t7e intention of di0iding t7e profitsamong t7emsel0es! )7e Arti4les of Agreement stipulated t7at t7e signatories s7all s7aret7e profits of t7e business in a 5$'%'% manner6 wit7 petitioner getting t7e lions s7are!)7is stipulation 4learly pro0ed t7e establis7ment of a partners7ip!

Alt7oug7 t7e partners7ip between A6 and C was te47ni4ally dissol0ed by t7e e@pulsionof C t7erefrom6 t7e remaining partners simply 4ontinued t7e business of t7e partners7ipwit7out undergoing t7e pro4edure relati0e to dissolution! Instead6 t7ey in0ited + to parti4ipate as a partner in t7eir operations! )7ere was t7erefore6 no intent to dissol0e t7eearlier partners7ip! )7e partners7ip between A6 and + simply took o0er and 4ontinued

t7e business of t7e former partners7ip wit7 C!



V!


So()e : )orres 0s! Court of Appeals".R. No. 1:$))=0 e%ember =0 1===

Con*)"+(*o) : Labella6 <argaret

'@@@@'

PROBLEM:

Sisters Antonia aring')orres and +meteria aring entered into w7at t7ey 4alled a MDoint0enture agreementM wit7 <anuel )orres for t7e de0elopment of a par4el of land into asubdi0ision!

/nder t7e agreement6 t7e sisters would pro0ide for t7e property w7i47 <anuel wouldde0elop into a 7ousing subdi0ision! )7ey also agreed to e@e4ute a deed of sale o0er t7eir property in fa0or of <anuel w7i47 7e used to mortgage wit7 +;uitable ank! 2ursuant tosaid *oint Venture Agreement6 t7e amount was to be used for t7e de0elopment of t7esubdi0ision! All t7ree of t7em also agreed to s7are t7e pro4eeds from t7e sale of t7esubdi0ided lots6 in $'$ proportion ($ for t7e sisters and $ for <anuel!

<anuel used t7e pro4eeds from t7e mortgage to start building roads6 4urbs and gutters!.e also 4ontra4ted an engineering firm for t7e building of 7ousing units and a4tually e0enset up a model 7ouse on one of t7e subdi0ision lots! ut due to ad0erse 4laims on t7eland6 prospe4ti0e buyers were s4ared off and t7e subdi0ision proDe4t e0entually failed!

After t7e +stafa 4ase against <anuel failed6 t7e aring sisters t7en filed a 4i0il 4aseagainst 7im for damages e;ui0alent to $ of t7e 0alue of t7e property6 w7i47 a44ordingto t7em6 was due t7em per agreement! )7ey denied 7a0ing formed a partners7ip wit7<anuel6 w7om t7ey alleged to 7a0e not 4ontributed anyt7ing to t7e proDe4t! )7ey4ontended t7at t7e *oint Venture Agreement and t7e earlier 3eed of Sale were 0oid!

If you were t7e Dudge6 % 1ule on w7et7er or not a 0alid partners7ip e@isted between t7earing Sisters and <anuel )orres? and # +@plain w7et7er or not <anuel )orres is liableto t7em for t7e failed subdi0ision proDe4t! W7at is <anuelBs s7are6 if any6 in t7e lossesand profitsF

S,GGESTED ANS-ER :



% "es6 under w7at t7ey 4alled a *oint Venture Agreement6 t7e aring sisters would4ontribute to t7e partners7ip land w7i47 <anuel would de0elop into a 7ousingsubdi0ision! 8urt7ermore6 t7e in4ome from t7e said proDe4t would be di0ided a44ording tot7e stipulated per4entage! Clearly6 t7e 4ontra4t manifested t7e intention of t7e parties to

form a partners7ip pursuant to Arti4le %55 of t7e Ci0il Code6 w7i47 pro0ides:

Art! %55! y t7e 4ontra4t of partners7ip two or more persons bindt7emsel0es to 4ontribute money6 property6 or industry to a 4ommon fund6wit7 t7e intention of di0iding t7e profits among t7emsel0es!

# <anuelBs a4tions 4learly belie t7e sistersB 4ontention t7at 7e made no 4ontribution tot7e partners7ip! /nder Arti4le %55 of t7e Ci0il Code6 a partner may 4ontribute not onlymoney or property6 but also industry! W7ile on t7e ot7er 7and6 <anuel did not 4ontribute4apital6 7e is an industrial partner for 7is 4ontribution for 7is efforts and managing t7egeneral e@penses and ot7er 4osts! In t7e absen4e of stipulation6 t7e s7are of ea47 partner

in t7e profits and losses s7all be in proportion to w7at 7e may 7a0e 4ontributed6 but t7eindustrial partner s7all not be liable for t7e losses! As for t7e profits6 t7e industrial partner s7all re4ei0e su47 s7are as may be Dust and e;uitable under t7e 4ir4umstan4es! If besides7is ser0i4es 7e 7as 4ontributed 4apital6 7e s7all also re4ei0e a s7are in t7e profits in proportion to 7is 4apital! )7us6 t7e sisters must t7en bear t7eir loss (w7i47 is $!<anuel does not bear t7e loss of t7e ot7er $ be4ause as an industrial partner 7e ise@empt from losses!



Agen! %n2 T)(*

VI!

C"#"$ L%& To'" : 2artners7ip? Agen4y and )rusts

So()e : )ong 0s! Hun".R. No. 1=@3!:0 (pril !10 !31$

Con*)"+(*o) : 2arawan6 +ula

'@@@@'

PROBLEM:

efore 7is deat76 informed all 7is 47ildren of 7is intention to pur47ase Lot % for t7efamily business! .owe0er6 sin4e 7e was a C7inese 4itiEen and was dis;ualified froma4;uiring t7e said lot6 t7e title to t7e property will be registered in t7e name of 7is eldestson6 A6 w7o at t7at time was already of age and was t7e only 8ilipino 4itiEen among 7is47ildren! <eanw7ile6 A died and 6 C and 3 being 7is sur0i0ing 7eirs6 4laimed owners7ipo0er Lot % by su44ession6 alleging t7at no trust agreement e@ists and it was A w7o boug7tt7e property! Was t7ere an implied trustF

S,GGESTED ANS-ER :

"es! An implied resulting trust was 4reated as pro0ided under t7e first senten4e of Arti4le%96 t7e elements of w7i47 are: (a an a4tual payment of money6 property or ser0i4es6 or an e;ui0alent6 4onstituting 0aluable 4onsideration? and (b su47 4onsideration must befurnis7ed by t7e alleged benefi4iary of a resulting trust! A was merely a trustee of inrelation to t7e subDe4t property6 and it was w7o pro0ided t7e money for t7e pur47ase of Lot % but t7e 4orresponding title was pla4ed in t7e name of A!



E#"2ene o/ E6"*ene R"g* *o De%n2 %n Ao(n*"ng

VII!

C"#"$ L%& To'" : 2artners7ip? +0iden4e of +@isten4e? 1ig7t to 3emand an A44ounting

So()e : .eirs of )an +ng Hee 0s! Court of Appeals".R. No. 1!@10 O%tober :0 !333

Con*)"+(*o) : Andales6 iaEel

'@@@@'

PROBLEM:

8ollowing t7e deat7 of *ulien6 7is wife and t7eir 47ildren filed a suit against t7ede4edentBs brot7er Adrien! )7e 4omplaint was for a44ounting6 li;uidation and winding upof t7e alleged partners7ip formed by t7e two brot7ers from way ba4k forty years ago!

)7e 4omplaint alleged t7at Adrien and *ulien pooling t7eir resour4es and industrytoget7er6 entered into a partners7ip engaged in t7e business of selling lumber and7ardware and 4onstru4tion supplies! )7ey named t7eir enterprise Water4ress Lumber w7i47 t7ey Dointly managed until *ulienBs deat7!

Sin4e *ulien 7as passed away and only 7e6 aside from Adrien6 4ould 7a0e e@pounded ont7e pre4ise nature of t7e business relations7ip between t7em6 7is petitioners 4an onlyaddu4e 4ir4umstantial e0iden4e to pro0e t7e partners7ip and t7ese are:

% )7at *ulien was li0ing in a bunk 7ouse Dust a4ross t7e lumber store6 and t7en in aroom in t7e bunk 7ouse in )rinidad6 but wit7in t7e 4ompound of t7e lumber establis7ment6 as testified to by <aggy?

# t7at bot7 Adrien and *ulien were seated on a table and were 4ommanding peopleas testified to by t7e 8au0e?

> t7at bot7 were super0ising t7e laborers6 as testified to by )eddy? and t7at 3ar4y was supposedly being told by *ulien t7at t7e pro4eeds of t7e 9$ pie4es

of t7e !I! s7eets were added to t7e lumber business!

8or 7is part6 Adrien 4onsistently testified t7at 7e 7ad 7is business and 7is brot7er 7ad 7is6t7at it was only later on t7at *ulien 4ame to work for 7im!



<oreo0er6 Adrien presented payrolls indi4ating t7at *ulien was a mere employee of Water4ress Lumber!

W7at is t7e best e0iden4e to pro0e a partners7ipF

ased on t7e e0iden4e presented by bot7 parties6 4an you say t7at a partners7ip e@isted between brot7ers6 *ulien and AdrienF

S,GGESTED ANS-ER :

)7e best e0iden4e of t7e e@isten4e of a partners7ip would be t7e 4ontra4t of partners7ipitself6 or t7e arti4les of partners7ip!

As for t7e e@isten4e of a partners7ip between brot7ers6 *ulien and Adrien6 I 4an say t7att7ere is none!

It s7ould be noted t7at it is not wit7 t7e number of witnesses w7erein preponderan4e lies?t7e ;uality of t7eir testimonies is to be 4onsidered! ,one of petitionersB witnesses 4ouldsuitably a44ount for t7e beginnings of Water4ress Lumber!

<oreo0er6 a demand for periodi4 a44ounting is e0iden4e of a partners7ip! 3uring 7islifetime6 *ulien appeared ne0er to 7a0e made any su47 demand for a44ounting from 7is brot7er6 Adrien!It is indeed odd6 if not unnatural6 t7at despite t7e forty years t7e partners7ip was allegedlyin e@isten4e6 *ulien ne0er asked for an a44ounting!

)7e essen4e of a partners7ip is t7at t7e partners s7are in t7e profits and losses! +a47 7ast7e rig7t to demand an a44ounting as long as t7e partners7ip e@ists!

*urispruden4e tells us t7at t7ere were s4enarios w7erein if e@4ellent relations e@ist amongt7e partners at t7e start of t7e business and all t7e partners are more interested in seeingt7e firm grow rat7er t7an get immediate returns6 a deferment of s7aring in t7e profits is perfe4tly plausible! ut in t7e situation in t7e 4ase at bar6 t7e deferment6 if any6 7ad goneon too long to be plausible! A person is presumed to take ordinary 4are of 7is 4on4erns!



E6"*ene o/ '%)*ne)"' P%)*ne)"' P)o/"*

VIII!

C"#"$ L%& To'" : 2artners7ip? +@isten4e of partners7ip? 2artners7ip 2rofits

So()e : .eirs of *ose Lim 0s! Lim".R. No. 1!@=30 Mar%* :0 !313

Con*)"+(*o) : <eli4or6 *oreyna <ae

'@@@@'

PROBLEM:

* toget7er wit7 7is friends allegedly formed a partners7ip to engage in t7e tru4king business wit7 an initial 4ontribution of 2$6$$$!$$ ea47 sometime in %=9$6 and pur47ased a tru4k to be used in t7e 7auling and transport of lumber of t7e sawmill! .emanaged t7e operations of t7is tru4king business until 7is deat7 on August %6 %=9%!)7ereafter6 *Gs 7eirs6 in4luding +6 and partners agreed to 4ontinue t7e business under t7emanagement of +! )7e s7ares in t7e partners7ip profits and in4ome t7at formed part of t7e estate of * were 7eld in trust by +!

+ pur47ased and a4;uired properties using said funds! + died6 lea0ing as 7is solesur0i0ing 7eir w7o 4laimed t7at + was a partner! Can t7e properties a4;uired by + form part of t7e estate of *6 7a0ing been deri0ed from t7e alleged partners7ipF

S,GGESTED ANS-ER :

,o!

A partners7ip e@ists w7en two or more persons agree to pla4e t7eir money6 effe4ts6 labor6and skill in lawful 4ommer4e or business6 wit7 t7e understanding t7at t7ere s7all be a proportionate s7aring of t7e profits and losses among t7em! A 4ontra4t of partners7ip isdefined by t7e Ci0il Code as one w7ere two or more persons bind t7emsel0es to4ontribute money6 property6 or industry to a 4ommon fund6 wit7 t7e intention of di0idingt7e profits among t7emsel0es!



It is notable t7at * died w7en t7e partners7ip was barely a year old6 and t7e partners7ipand its business not only 4ontinued but also flouris7ed! If it were true t7at it was * and not+ w7o was t7e partner6 t7en upon *Gs deat7 t7e partners7ip s7ould 7a0e been dissol0edand its assets li;uidated! -n t7e 4ontrary6 t7ese were not done but instead its operation4ontinued under t7e 7elm of + and wit7out any parti4ipation from t7e 7eirs of *!



P()%e o/ P%)*ne) In*e)e*

I!

C"#"$ L%& To'" : 2artners7ip? 2ur47ase of 2artnerBs Interest

So()e : 1ealubit 0s! *aso".R. No. 1!0 September !10 !311

Con*)"+(*o) : <ai4o6 <a! ,oelle

'@@@@'

PROBLEM:

AndiAganaman (Andi entered into a *oint Venture Agreement wit7 Antoine Art7ur (Antoine6 a 8ren47 national6 for t7e operation of an i4e 4ream s7op! Wit7 Andi as t7eindustrial partner and Antoine as t7e 4apitalist partner6 t7e parties agreed t7at t7ey wouldea47 re4ei0e $ of t7e net profit6 wit7 t7e remaining #$ to be used for t7e payment of t7e i4e making ma47ine w7i47 was pur47ased for t7e business!8or and in 4onsideration of t7e sum of2=$$6$$$!$$6 7owe0er6 Antoine subse;uently e@e4uted a 3eed of Assignmenttransferring all 7is rig7ts and interests in t7e business in fa0or ofAmaliaAgimat (Amalia!Amalia4aused 7er lawyer to send Andi a letter apprising 7er of 7er a4;uisition of AntoineBs s7are in t7e business and formally demanding an a44ounting and in0entoryt7ereof as well as t7e remittan4e of t7eir portion of its profits! /pon AndiBsunDustifiedfailure to 7eed 7er demand6 Amalia t7en 4ommen4ed an a4tion for spe4ifi4 performan4e6a44ounting6 e@amination6 audit and in0entory of assets and properties6 dissolution of t7e Doint 0enture6 appointment of a re4ei0er and damages!

3id Amaliaa4;uire t7e title of being a partner based on t7e 3eed of AssignmentF

S,GGESTED ANS-ER :

,o6 Amalia did not be4ome a partner as a 4onse;uen4e of t7e assignment neit7er did s7ea4;uire t7e rig7t to re;uire an a44ounting of t7e partners7ip business!

Insofar as a partnerBs 4on0eyan4e of t7e entirety of 7is interest in t7e partners7ip is4on4erned6 Arti4le %9%> of t7e Ci0il Code pro0ides as follows:



Art! %9%>! A 4on0eyan4e by a partner of 7is w7ole interest in t7e partners7ip does not itself dissol0e t7e partners7ip6 or6 as against t7e ot7er partners in t7e absen4e of agreement6 entitle t7e assignee6 during t7e4ontinuan4e of t7e partners7ip6 to interfere in t7e management or administration of t7e partners7ip business or affairs6 or to re;uire any

information or a44ount of partners7ip transa4tions6 or to inspe4t t7e partners7ip books? but it merely entitles t7e assignee to re4ei0e ina44ordan4e wit7 7is 4ontra4ts t7e profits to w7i47 t7e assigning partnerswould ot7erwise be entitled! .owe0er6 in 4ase of fraud in t7emanagement of t7e partners7ip6 t7e assignee may a0ail 7imself of t7eusual remedies!

In t7e 4ase of a dissolution of t7e partners7ip6 t7e assignee is entitled to re4ei0e 7isassignors interest and may re;uire an a44ount from t7e date only of t7e last a44ountagreed to by all t7e partners!

It is e0ident t7at t7e transfer by a partner of 7is partners7ip interest does not make t7eassignee of su47 interest a partner of t7e firm6 nor entitle t7e assignee to interfere in t7emanagement of t7e partners7ip business or to re4ei0e anyt7ing e@4ept t7e assignees profits! )7e assignment does not purport to transfer an interest in t7e partners7ip6 but onlya future 4ontingent rig7t to a portion of t7e ultimate residue as t7e assignor may be4omeentitled to re4ei0e by 0irtue of 7is proportionate interest in t7e 4apital!



T)o(g % :e)+%$ Con*)%*

!

C"#"$ L%& To'" : 2artners7ip? )7roug7 a Verbal Contra4t

So()e : Sunga'C7an 0s! C7ua".R. No. 1$::$30 (ugust 1)0 !331

Con*)"+(*o) : Isidro6 3alisay

'@@@@'

PROBLEM:

In t7e absen4e of any written do4ument to s7ow t7at a partners7ip e@isted betweenrespondent and *a4into from %=55 until *a4intoGs deat76 are 4ourts pros4ribed from7earing t7e testimonies of respondent and 7is witness6 to pro0e t7e alleged partners7ipt7ree years after *a4intoGs deat7!

S,GGESTED ANS-ER :

,o! A partners7ip may be 4onstituted in any form6 e@4ept w7ere immo0able property or real rig7ts are 4ontributed t7ereto6 in w7i47 4ase a publi4 instrument s7all ne4essary!.en4e6 based on t7e intention of t7e parties6 as gat7ered from t7e fa4ts and as4ertainedfrom t7eir language and 4ondu4t6 a 0erbal 4ontra4t of partners7ip may arise!

)7e filing of a 4ounter4laim effe4ti0ely remo0es t7is 4ase from t7e ambit of t7e M3ead<anGs StatuteM! Well entren47ed is t7e rule t7at w7en it is t7e e@e4utor or administrator or representati0es of t7e estates t7at sets up t7e 4ounter4laim6 t7e respondent6 may testify too44urren4es before t7e deat7 of t7e de4eased to defeat t7e 4ounter4laim! A defendant int7e 4ounter4laim is not dis;ualified from testifying as to matters of fa4ts o44urring beforet7e deat7 of t7e de4eased6 said a4tion not 7a0ing been broug7t against but by t7e estate or representati0es of t7e de4eased!

Arti4le %59 of t7e Ci0il Code e@pli4itly pro0ides t7at t7e partners7ip retains its Duridi4al personality e0en if it fails to register wit7 t7e S+C! )7e failure to register t7e 4ontra4t of partners7ip does not in0alidate t7e same as among t7e partners6 so long as t7e 4ontra4t7as t7e essential re;uisites6 be4ause t7e main purpose of registration is to gi0e noti4e to



t7ird parties6 and it 4an be assumed t7at t7e members t7emsel0es knew of t7e 4ontents of t7eir 4ontra4t!



SALES

S%$e

I!

C"#"$ L%& To'" : Sales

So()e : Lim 0s! Se4urity ank Corporation".R. No. 1):=0 Mar%* 1!0 !31$

Con*)"+(*o) : Corbo6 17obie

'@@@@'

PROBLEM:

Linda e@e4uted a Continuing Suretys7ip in fa0or of AC ank to se4ure Many and alltypes of 4redit a44ommodation t7at may be granted by t7e bank 7ereinto and 7ereinafterMin fa0or of 1aul Arroyo for t7e amount of 26$$$6$$$!$$ w7i47 is 4o0ered by a CreditAgreementN2romissory ,ote! In turn6 t7e Continuing Suretys7ip e@e4uted by Lindastipulated t7at: >! Liability of t7e Surety! ' )7e liability of t7e Surety is solidary and not

4ontingent upon t7e pursuit of t7e ank of w7ate0er remedies it may 7a0e against t7e3ebtor or t7e 4ollateralsNliens it may possess! If any of t7e uaranteed -bligations is not paid or performed on due date (at stated maturity or by a44eleration6 t7e Surety s7all6wit7out need for any noti4e6 demand or any ot7er a4t or deed6 immediately be4ome liablet7erefor and t7e Surety s7all pay and perform t7e same!

)7e debtor6 1aul6 defaulted on 7is loan obligation! )7ereafter6 Linda re4ei0ed a ,oti4e of 8inal 3emand dated August #96 #$%>6 informing 7er t7at s7e was liable to pay t7e loanobtained by 1aul6 in4luding t7e interests and penalty fees amounting to 2%$65$>6%9!6and demanding payment t7ereof! Linda failed to 4omply wit7 said demand and ACank filed a 4omplaint for 4olle4tion of sum of money against 7er and 1aul! Sin4e 1aul

4an no longer be lo4ated6 summons was not ser0ed on 7im6 7en4e6 only Linda a4ti0ely parti4ipated in t7e 4ase!

<ay Linda be 0alidly 7eld liable for t7e prin4ipal debtorGs loan obtained si@ mont7s after t7e e@e4ution of t7e Continuing Suretys7ipF



S,GGESTED ANS-ER :

"+S! A 4ontra4t of suretys7ip is an agreement w7ereby a party6 4alled t7e surety6guarantees t7e performan4e by anot7er party6 4alled t7e prin4ipal or obligor6 of anobligation or undertaking in fa0or of anot7er party6 4alled t7e obligee! Alt7oug7 t7e

4ontra4t of a surety is se4ondary only to a 0alid prin4ipal obligation6 t7e surety be4omesliable for t7e debt or duty of anot7er alt7oug7 it possesses no dire4t or personal interesto0er t7e obligations nor does it re4ei0e any benefit t7erefrom! )7us6 suretys7ip arisesupon t7e solidary binding of a person deemed t7e surety wit7 t7e prin4ipal debtor for t7e purpose of fulfilling an obligation! A surety is 4onsidered in law as being t7e same partyas t7e debtor in relation to w7ate0er is adDudged tou47ing t7e obligation of t7e latter6 andt7eir liabilities are interwo0en as to be inseparable!

In t7is 4ase6 Linda e@e4uted a Continuing Suretys7ip! y e@e4uting su47 an agreement61aul pla4es 7imself in a position to enter into t7e proDe4ted series of transa4tions wit7AC ank? wit7 su47 suretys7ip agreement6 t7ere being no need to e@e4ute a separate

surety 4ontra4t or bond for ea47 finan4ing or 4redit a44ommodation e@tended to 7im! )7eterms of t7e Continuing Suretys7ip e@e4uted by Linda are 0ery 4lear! It states t7at s7e6 assurety6 s7all6 wit7out need for any noti4e6 demand or any ot7er a4t or deed6 immediately be4ome liable and s7all pay Mall 4redit a44ommodations e@tended by AC ank to t7e3ebtor (1aul6 in4luding in4reases6 renewals6 roll'o0ers6 e@tensions6 restru4turings6amendments or no0ations t7ereof! Su47 stipulations are 0alid and legal and 4onstitute t7elaw between t7e parties!

)7us6 Linda is une;ui0o4ally bound by t7e terms of t7e Continuing Suretys7ip! )7ere 4an be no 4a0il t7en t7at s7e is liable for t7e prin4ipal of t7e loan6 toget7er wit7 t7e interestand penalties due t7ereon6 e0en if said loan was obtained by t7e prin4ipal debtor e0enafter t7e date of e@e4ution of t7e Continuing Suretys7ip!



II!

C"#"$ L%& To'" : Sales

So()e : 1obern 3e0elopment Corporation 0s! 2eopleBs Landless Asso4iation".R. No. 1:@!!0 Mar%* 110 !31:

Con*)"+(*o) : a4also6 Vernie 1ose

'@@@@'

PROBLEM:

AC Corp! owned Lot %#> in 3a0ao City6 w7ere informal settlers 7a0e built t7eir 7ouses!AC Corp! t7ru its 3a0ao ran47 -IC *enny o asked t7e settlers to desist from building t7eir 7ouses and 0a4ate t7e said property6 unless t7ey are interested to buy it!)7e informal settlersB group 4alled 2+LA (2eopleBs Landless Asso4iation wrote *ennyo about t7eir interest in buying t7e property for >$$6$$$! *enny made t7e followingannotation on t7e letter: KSubDe4t offer 7as been a4knowledgedNre4ei0ed but pro4essing totake effe4t upon putting up of t7e partial amount of 2%$6$$$!$$ on or before 3e4 6#$%!J 2ursuant t7ereto6 2+LA deposited 2%$6$$$ as downpayment!

Later6 Al'Amana7 t7ru its 3a0ao ran47 <anager *oe Sywrote 2+LA informing t7em of t7e .ead -ffi4eBs disappro0al of 2+LABs offer to buy t7e subDe4t property! 2+LA replied

t7at it 7ad already rea47ed an agreement wit7 Al'Amana7 regarding t7e sale of t7esubDe4t lot based on t7eir offered pri4e!

<eanw7ile6 1obern and Al'Amana7 agreed on t7e sale on subDe4t lot! A new )C) wasissued in fa0or of 1obern! 2+LA filed a suit for Annulment and Can4ellation of Void3eed of Sale before t7e 1)C of 3a0ao City! Was t7ere a perfe4ted 4ontra4t of sale between 2+LA and Al'Amana7F

S,GGESTED ANS-ER :

,o! A 4ontra4t of sale is perfe4ted at t7e moment t7ere is a meeting of minds upon t7et7ing w7i47 is t7e obDe4t of t7e 4ontra4t and upon t7e pri4e! )7us6 for a 4ontra4t of sale to be 0alid6 all of t7e following essential elements must 4on4ur: a 4onsent or meeting of t7eminds? b determinate subDe4t matter? and 4 pri4e 4ertain in money or its e;ui0alent!

In t7e 4ase at bar6 t7ere is a determinate subDe4t matter6 w7i47 is Lot %#> in 3a0ao City!.owe0er6 t7e se4ond and t7ird elements are absent in t7is 4ase! )7e note written by t7e



AC Corp! t7at KOsPubDe4t offer 7as been a4knowledgedNre4ei0ed but pro4essing to takeeffe4t upon putting up of t7e partial amount of 2%$6$$$!$$ on or before 3e4! 6 #$%J be4onstrued as a44eptan4e of 2+LABs offer to buy! )aken at fa4e 0alue6 t7e annotationsimply means t7at t7e AC Corp! merely a4knowledged re4eipt of 2+LABs letter'offer!8urt7ermore6 by Upro4essing6B AC Corp only meant t7at it will Ua4t on t7e offerB6 i!e!6 it

still 7as to e0aluate w7et7er 2+LABs offer is a44eptable! /ntil and unless Al'Amana7a44epts6 t7ere is as yet no perfe4ted 4ontra4t of sale!



A*"on /o) Reon#e!%ne

III!

C"#"$ L%& To'" : Sales? A4tion for 1e4on0eyan4e

So()e : Spouses 1o;ue 0s! Aguadoet".R. No. 1=:0 (pril 0 !31$

Con*)"+(*o) : eli6 C7eska <arie

'@@@@'

PROBLEM:

Spouses Cary and 3ana Agos and e4ka 1i0era t7e original owner of Lot %9$9=e@e4uted a 3eed of Conditional Sale of 1eal 2roperty o0er a %6#>%'s;! m! portion of Lot%9$9= for a 4onsideration of 2>$655!$$! )7e parties agreed t7at Sps! Agos s7all make aninitial payment of 2%6 >95!$ upon signing6 w7ile t7e remaining balan4e of t7e pur47ase pri4e s7all be payable upon t7e registration of Lot %9$9=! <eanw7ile6 lake )an appliedfor a free patent o0er t7e entire Lot %9$9= and was e0entually issued -riginal Certifi4ateof )itle (-C) ,o! <'= in 7is name!

lake and e4ka e@e4uted a *oint Affida0ita4knowledging t7at t7e subDe4t portion belongs to Sps! Agos and e@pressed t7eir willingness to segregate t7e same from t7eentire area of Lot %9$9=! .owe0er6 lake t7roug7 a 3eed of Absolute Salesold Lot %9$9=to one Halinda S7arma for 2#6$$6$$$!$$ w7o 4aused t7e 4an4ellation of -C) ,o! <'= and t7e issuan4e of )C) ,o!<'==# in 7er name!

Sps! 1o;ue filed a 4omplaintfor re4on0eyan4e against Halinda saying t7ey were t7e trueowners by 0irtue of t7e 4onditional sale of t7e subDe4t portion w7i47 7ad been in4luded int7e sale between Halinda and lake! Was t7e a4tion for re4on0eyan4e proper based on t7e3eed of Conditional saleF

S,GGESTED ANS-ER :

,o6 an a4tion for re4on0eyan4e seek t7e transfer of t7e property w7i47 was wrongfully or erroneously registered in anot7er personBs name to its rig7tful owner or to one wit7 a better rig7t!)7e 3eed of Conditional Sale is a4tually in t7e nature of a 4ontra4t to sell and



not one of sale 4ontrary to Sps! AgosBs belief! In a 4ontra4t to sell6 owners7ip is retained by t7e 0endor and is not to pass to t7e 0endee until full payment of t7e pur47ase pri4e!Sps! Agos 7a0e not paid t7e final installment of t7e pur47ase pri4e! As su476 t7e 4onditionw7i47 would 7a0e perfe4ted t7e 4ontra4t of sale 4annot be deemed to 7a0e been fulfilled!Conse;uently6 t7e latter 4annot 0alidly 4laim owners7ip o0er t7e subDe4t portion e0en if

t7ey 7ad made an initial payment and e0en took possession of t7e same!



A"gnen* o/ C)e2"*

IV!

C"#"$ L%& To'" : Sales? Assignment of Credit

So()e : 8ort onifa4io 3e0elopment Corporation 0s! 8ong".R. No. !3=:30 Mar%* !)0 !31)

Con*)"+(*o) : autista6 <el'Lisanina

'@@@@'

PROBLEM:

1ed Co! entered into a )rade Contra4t wit7 "ellow Co! for t7e 4onstru4tion of aCondominium! /nder t7e )rade 4ontra4t6 1ed Corporation 7ad t7e rig7t to wit77old of t7e 4ontra4t pri4e as retention money for any negligen4e6 a4t6 omission6 or default4ommitted by "ellow Corp! )7e )rade Contra4t likewise pro0ided t7at "ellow Corp! is pro7ibited from assigning or transferring any of its rig7ts6 obligations6 or liabilities under t7e said 4ontra4t wit7out t7e written 4onsent of 1ed Corporation!

Subse;uently6 old Co! informing it t7at "ellow Co! 7ad already assigned its re4ei0ablesfrom 1ed Co! to old Co! by 0irtue of a 3eed of Assignment! 1ed Co! refused to deli0er as t7e same was not yet due and demandable!

8inally6 1ed! Co! informed old Co! t7at not7ing was left of t7e retention money due tot7e re4tifi4ation of defe4ti0e works in t7e proDe4t! )7is prompted old Co! to file a 4aseagainst 1ed and "ellow Co! Is 1ed Co! bound by t7e 3eed of AssignmentF

S,GGESTED ANS-ER :

,o! 1ed Co! is not bound by t7e 3eed of Assignment!

Art! %>%%! Contra4ts take effe4t only between t7e parties6 t7eir assigns and 7eirs6 e@4eptin 4ase w7ere t7e rig7ts and obligations arising from t7e 4ontra4t are not transmissible byt7eir nature6 or by stipulation or by pro0ision of law! )7e 7eir is not liable beyond t7e0alue of t7e property 7e re4ei0ed from t7e de4edent!



"ellow Co!6 as t7e )rade Contra4tor6 4annot assign or transfer any of its rig7ts6obligations6 or liabilities under t7e )rade Contra4t wit7out t7e written 4onsent of 1ed Co!6t7e Client6 in 0iew of )rade Contra4t!

)7e pra4ti4al effi4a4y of t7e assignment6 alt7oug7 0alid between "ellow Co! and old

Co!6 remains 4ontingent on 1ed Co!Bs 4onsent! Wit7out t7e 7appening of said 4ondition6only "ellow Co! 4an 4olle4t on t7e 4redit!



B)e% o/ -%))%n*!

V!

C"#"$ L%& To'" : Sales? rea47 of Warranty

So()e : Spouses )umibay 0s! Spouses LopeE".R. No. 11@=!0 4une :0 !31:

Con*)"+(*o) : Araas6 ,ia ra4e

'@@@@'

PROBLEM:

2etitioners alleged t7at t7ey are t7e owners of a lot in Sumpong6 <alaybalay6 ukidnonin t7e name of petitioner Aurora! 2etitioner Aurora is t7e sister of 1eynalda Visita4ion(1eynalda! -n *uly #>6 %==56 1eynalda sold t7e subDe4t land to 7er daug7ter6 respondent1owena6 t7roug7 a deed of sale for an alleged un4ons4ionable amount of 2=6$$$!$$alt7oug7 said property 7ad a market 0alue of more t7an 2#6$$$6$$$!$$! )7e said sale wasallegedly wit7out t7e knowledge and 4onsent of petitioners! 2etitioners prayed t7at t7edeed of sale be de4lared 0oid ab initio and t7e lot be re4on0eyed to petitioners!

1espondents a0erred t7at on 3e4ember %#6 %==$6 petitioners e@e4uted a spe4ial power of attorney (S2A in fa0or of 1eynalda granting t7e latter t7e power to offer for sale t7esubDe4t land? t7at sometime in %==6 respondent 1owena and petitioners agreed t7at t7eformer would buy t7e subDe4t land for t7e pri4e of 29$$6$$$!$$ to be paid on installment?t7at s7e 7ad paid t7e mont7ly installments t7ereon and t7at a deed of sale was e@e4utedand t7e 4orresponding title was issued in fa0or of respondent )7e )rial Court ruled infa0or of t7e petitioners6 but t7e CA re0ersed t7e 1)CBs de4ision and ordered t7at t7e titleto t7e subDe4t property s7all remain in t7e name of t7e Appellant 1owena! )7e totalamount of mont7ly installments paid by respondent 1owena to petitioners was2#$6#!$ or >#!9 of t7e 29$$6$$$!$$ pur47ase pri4e! )7at full pri4e was yet to be paid at t7e time of t7e subDe4t transfer of title was admitted by respondent 1owena on4ross'e@amination! 1owena 4laims t7at t7e transfer of title was proper be4ause s7e 7adsubstantially paid t7e full amount of t7e pur47ase pri4e and t7at t7is was ne4essary as ase4urity for t7e installments s7e 7ad already paid! 2etitioner now 4laims t7at 1owena4ommitted a substantial and fundamental brea47 of t7e 4ontra4t to sell for prematuretransfer of title w7i47 entitles t7e seller to res4ission of t7e 4ontra4t and to 7a0e t7ere4on0eyan4e of property ba4k in t7eir fa0or!



WN, 2etitioners are entitled to res4ind t7e 4ontra4t of sale for brea47 of 4ontra4t allegedly4ommitted by 1owena!

S,GGESTED ANS-ER :

"+S! 1owenaBs a4t of transferring t7e title to t7e subDe4t land in 7er name6 wit7out t7eknowledge and 4onsent of petitioners and despite non'payment of t7e full pri4e t7ereof64onstitutes a substantial and fundamental brea47 of t7e 4ontra4t to sell! )7e main obDe4tor purpose of a seller in entering into a 4ontra4t to sell is to prote4t 7imself against a buyer w7o intends to buy t7e property in installments by wit77olding owners7ip o0er t7e property until t7e buyer effe4ts full payment t7erefor! As a result6 t7e sellerBs obligation to4on0ey and t7e buyerBs rig7t to 4on0eyan4e of t7e property arise only upon full paymentof t7e pri4e! )7us6 a buyer w7o willfully 4ontra0enes t7is fundamental obDe4t or purposeof t7e 4ontra4t6 by 4o0ertly transferring t7e owners7ip of t7e property in 7is name at a

time w7en t7e full pur47ase pri4e 7as yet to be paid6 4ommits a substantial andfundamental brea47 w7i47 entitles t7e seller to res4ission of t7e 4ontra4t! )7us6 petitioners are entitled to t7e res4ission of t7e subDe4t 4ontra4t to sell!



L%k o/ Con"2e)%*"on

VI!

C"#"$ L%& To'" : Sales? La4k of Consideration

So()e : Lank ank of t7e 27ilippines 0s! 2oblete".R. No. 1=@)0 ,ebruar7 !)0 !31:

Con*)"+(*o) : Apatan6 1osane

'@@@@'

PROBLEM:

Aling arbara 7ad a loan wit7 Hapantay6 a 4ooperati0e w7o 7ad an a44ount wit7 ank !In order to pay 7er obligation s7e sold 7er par4el of land to <aniego! S7e e@e4uted a deedof sale on t7e promise of <aniego t7at 7e will pay t7e pur47ase pri4e! Aling arbara7owe0er did not re4ei0e t7e pur47ase pri4e 7erself instead <aniego 7ad paid HapantayBsloan a44ount wit7 ank ! Later on6 <aniego loaned from t7e bank and as a 4ollateral 7emortgage t7e par4el of land w7i47 is now in 7is name after registering wit7 t7e 1egistryof 3eeds after presenting t7e deed of sale e@e4uted by Aling arbara! <aniego failed to pay 7is obligation wit7 ank ! )7us6 ank filed an Appli4ation for +@tra'Dudi4ial8ore4losure of 1eal +state <ortgage! ank is t7e only bidder and t7e deed wastransferred its name! W7en Aling arbara learned t7is6 s7e t7en filed a 4omplaint for nullifi4ation of t7e deed and re4on0eyan4e! A44ording to 7er t7e 4ontra4t of sale between7im and <aniego is 0oid and it follows t7at t7e mortgage is also 0oid! Is Aling arbara4orre4tF

S,GGESTED ANS-ER :

"es6 Aling arbara is 4orre4t! W7ere t7e deed of sale states t7at t7e pur47ase pri4e 7as been paid but in fa4t 7as ne0er been paid6 t7e deed of sale is 0oid ab initio for la4k of 4onsideration! )7ere was no legal basis for t7e issuan4e of t7e 4ertifi4ate of title to<aniego be4ause t7e deed of absolute sale was 4ompletely simulated6 0oid and wit7outeffe4t!



Sin4e6 t7e )C) issued to <aniego is null and 0oid6 t7e 1eal +state <ortgage 4onstitutedo0er it is also 0oid! In a real estate mortgage 4ontra4t6 it is essential t7at t7e mortgagor bet7e absolute owner of t7e property to be mortgaged? ot7erwise6 t7e mortgage is 0oid!



Pe)/e*"on o/ Con*)%* o/ S%$e

VII!

C"#"$ L%& To'" : Sales? 2erfe4tion of Contra4t of Sale

So()e : 1iosa 0s! )aba4o La Suerte Corporation".R. No. !3:@0 O%tober !:0 !31:

Con*)"+(*o) : 3igaum6 Lu4ks <ae

'@@@@'

PROBLEM:

A and are friends! A owns a 7ouse and lot in )agaytay! A Us son was t7en diagnosedwit7 leukemia so to defer t7e medi4al e@penses6 7e borrowed money from in t7eamount of 2% <illion! t7en offered a deal t7at in e@47ange of t7e money borrowed 7e buys t7e 7ouse and lot owned by A lo4ated in )agaytay but t7e former 0e7ementlyrefused and instead assured t7at 7e will pay 7is loan! Dust remain silent and s7ow A ado4ument telling 7im t7at 7e needs to sign an undertaking of 7is loan! A signed t7edo4ument and did not bot7er to read t7e 4ontents anymore as 7e trust being 7is bestfriend!

)7e following year6 A was s7o4ked w7en 7e re4ei0ed a noti4e to 0a4ate from 7is own property as t7e same 7ad already been sold to C6 t7e 4orporation owned by ! A6 angered by t7e situation filed a 4ase wit7 t7e 1)C for Annulment of 3eed of Sale against C and! .e alleged t7at t7e 3eed of Sale was 0oid as 7e 7ad no intention to sell 7is lot to ! .efurt7er alleged t7at t7e 3eed of Sale was 0oid as t7ere was no perfe4tion of t7e said4ontra4t as 7e did not gi0e 7is 4onsent to su47 sale! Is t7e 4ontention of A 4orre4tF

S,GGESTED ANS-ER :

"es6 A is 4orre4t!

-ne of t7e essential re;uirements of a 0alid 4ontra4t of sale is t7e 4onsent of t7e owner of t7e property! /nder Arti4le %5 of t7e Ci0il Code6 t7e 4ontra4t of sale is perfe4ted at t7emoment t7ere is a meeting of t7e minds on t7e t7ing w7i47 is t7e obDe4t of t7e 4ontra4tand on t7e pri4e!



W7en t7ere was no intention on t7e part of one party to transfer owners7ip or sell of t7e property in e@47ange for t7e amounts borrowed6 t7ere is no 4ontra4t of sale! )7ere was noagreement between t7e parties6 t7e element of 4onsent or meeting of t7e minds waswanting in t7is 4ase! )7us6 it is 4orre4tly argued t7at t7ere was no 4ontra4t of sale!



Reo('en*

VIII!

C"#"$ L%& To'" : Sales? 1e4oupment

So()e : 8irst /nited Constru4tors Corp! 0s! ayani7an Automoti0e Corporation".R. No. 1@$=)0 4anuar7 1)0 !31)

Con*)"+(*o) : a;uero6 .ope Cesely

'@@@@'

PROBLEM:

Constru4tion Corp! and " Constru4tion Corp! asso4iate 4onstru4tion firms s7aringfinan4ial resour4es6 e;uipment and te47ni4al personnel on a 4ase'to'4ase basis! )7eyordered si@ units of dump tru4ks from Automoti0e Corp!6 a domesti4 4orporationengaged in t7e business of importing and re4onditioning used *apan'made tru4ks6 and of selling t7e tru4ks to interested buyers! .owe0er6 instead of paying6 former informed t7erespondent t7at t7ey were wit77olding payment of t7e 47e4ks due to t7e breakdown of one of t7e dump tru4ks t7ey 7ad earlier pur47ased6 spe4ifi4ally t7e se4ond dump tru4k deli0ered! Automoti0e Corp! 4ommen4ed t7is a4tion for 4olle4tion6 seeking payment of t7e unpaid balan4e! and " Corps! prayed t7e return t7e pri4e of t7e defe4ti0e dumptru4k wort7 29>$6$$$!$$ minus t7e amounts of t7eir two 47e4ks wort7 25>6$$$!$$6 wit7%# per annum interest on t7e differen4e of 2=$6$$$!$$6 appying t7e prin4iple of re4oupment! Are and " Corps! Corre4t in applying t7e prin4iple of re4oupmentF

S,GGESTED ANS-ER :

,o! Constru4tion Corp! and " Constru4tion Corp! asso4iate 4onstru4tion firms s7aringfinan4ial resour4es6 e;uipment and te47ni4al personnel on a 4ase'to'4ase basis! )7eyordered si@ units of dump tru4ks from Automoti0e Corp!6 a domesti4 4orporationengaged in t7e business of importing and re4onditioning used *apan'made tru4ks6 and of selling t7e tru4ks to interested buyers! .owe0er6 instead of paying6 former informed t7erespondent t7at t7ey were wit77olding payment of t7e 47e4ks due to t7e breakdown of one of t7e dump tru4ks t7ey 7ad earlier pur47ased6 spe4ifi4ally t7e se4ond dump tru4k deli0ered! Automoti0e Corp! 4ommen4ed t7is a4tion for 4olle4tion6 seeking payment of t7e unpaid balan4e! and " Corps! prayed t7e return t7e pri4e of t7e defe4ti0e dump



tru4k wort7 29>$6$$$!$$ minus t7e amounts of t7eir two 47e4ks wort7 25>6$$$!$$6 wit7%# per annum interest on t7e differen4e of 2=$6$$$!$$6 appying t7e prin4iple of re4oupment! Are and " Corps! Corre4t in applying t7e prin4iple of re4oupment!



R"g* o/ Re'()%e

I!

C"#"$ L%& To'" : Sales? 1ig7t of 1epur47ase

So()e : 3a0id 0s! 3a0id".R. No. 1@!:@)0 4anuar7 1$0 !31)

Con*)"+(*o) : Cata;uis6 *asmine 1awen

'@@@@'

PROBLEM:

+dgar and 7is brot7er +0an 3a0id sold t7eir in7erited properties to t7eir first 4ousin!1oman! )7is in4ludes a par4el of land lo4ated in aguio City and two (# tru4k tra4tors!)7ey stipulated t7at t7e 4onsideration for t7e sale was 26$$$6$$$!$$6 of w7i472#6$$$6$$$ was to be paid to +dgar and +0an6 and t7e remaining 26$$$6$$$!$$ to be paid to 3e0elopment ank of t7e 27ilippines (32 in aguio City to settle t7eoutstanding obligation se4ured by a mortgage on su47 properties! )7e parties furt7er agreed to gi0e +dgar and +0an t7e rig7t to repur47ase t7e properties wit7in a period of t7ree years from t7e e@e4ution of t7e deed of sale based on t7e pur47ase pri4e agreedupon! Later6 1oman and +0an e@e4uted a <emorandum of Agreement wit7 t7e Sps!<ariano to sell t7e aguio property to t7e latter! )7e Spouses <ariano t7en deposited t7eamount of to 1omanBs a44ount!

After t7e e@e4ution of t7e <-A6 1oman returned to +dgar one of t7e tru4k tra4tors andtrailers subDe4t of t7e deed of sale! +dgar demanded for t7e return of t7e ot7er tru4k tra4tor and trailer6 but 1oman refused to 7eed t7e demand!

)7us6 +dgar initiated t7is reple0in suit against 1oman6 alleging t7at 7e was e@er4ising t7erig7t to repur47ase under t7e deed of sale? and t7at 7e was entitled to t7e possession of t7e ot7er motor 0e7i4le and trailer! In 7is answer6 1oman denied t7at +dgar 4ouldrepur47ase t7e properties in ;uestion? and insisted t7at t7e <-A 7ad e@tinguis7ed t7eir deed of sale by no0ation! Is 1oman Corre4tF

S,GGESTED ANS-ER :



,o! A sale wit7 rig7t to repur47ase is go0erned by Arti4le %$% of t7e Ci0il Code6 w7i47 pro0ides t7at:

MCon0entional redemption s7all take pla4e w7en t7e 0endor reser0es t7e rig7t torepur47ase t7e t7ing sold6 wit7 t7e obligation to 4omply wit7 t7e pro0isions of Arti4le

%% and ot7er stipulations w7i47 may 7a0e been agreed upon!M

)7e seller6 gi0en t7e rig7t to repur47ase6 may e@er4ise 7is rig7t of redemption by payingt7e buyer: (a t7e pri4e of t7e sale6 (b t7e e@penses of t7e 4ontra4t6 (4 legitimate payments made by reason of t7e sale6 and (d t7e ne4essary and useful e@penses made ont7e t7ing sold!

A redemption wit7in t7e period allowed by law is not a matter of intent but of payment or 0alid tender of t7e full redemption pri4e wit7in t7e period! Verily6 t7e tender of paymentis t7e sellerBs manifestation of 7is desire to repur47ase t7e property wit7 t7e offer of immediate performan4e! A sin4ere tender of payment is suffi4ient to s7ow t7e e@er4ise of

t7e rig7t to repur47ase! .ere6 +dgar paid t7e repur47ase pri4e to 1oman by depositing t7e pro4eeds of t7e sale of t7e aguio City lot in t7e latterBs a44ount! Su47 payment was aneffe4ti0e e@er4ise of t7e rig7t to repur47ase!



-%))%n*! Ag%"n* E#"*"on

!

C"#"$ L%& To'" : Sales? Warranty Against +0i4tion

So()e : ignay +@'Im 27ilippines6 In4! 0s! /nion ank of t7e 27ilippines".R. Nos. 11)=3 & 11)=0 ,ebruar7 1!0 !31$

Con*)"+(*o) : ula6 <aria <oni4a

'@@@@'

PROBLEM:

<r! A is a 0endee w7o was e0i4ted from t7e property t7at 7e boug7t from <r! due to afinal Dudgment based on a rig7t prior to t7e sale! W7at are t7e rig7ts of <r! A against <r!F

S,GGESTED ANS-ER :

In 4ase e0i4tion o44urs6 t7e 0endee s7all 7a0e t7e rig7t under Arti4le % of t7e Ci0ilCode6 to demand of t7e 0endor6 among ot7ers6 t7e return of t7e 0alue w7i47 t7e t7ing sold7ad at t7e time of t7e e0i4tion6 be it greater or less t7an t7e pri4e of t7e sale? t7e e@pensesof t7e 4ontra4t6 if t7e 0endee 7as paid t7em? and t7e damages and interests6 andornamental e@penses6 if t7e sale was made in bad fait7!



TORTS AND DAMAGES

To)* %n2 D%%ge

I!

C"#"$ L%& To'" : )orts and 3amages

So()e : <endoEa 0s! Spouses omeE".R. No. 1@31130 4une 1=0 !31$

Con*)"+(*o) : "gana6 Angeline

'@@@@'

PROBLEM:

An IsuEu +lf tru4k owned by AA and dri0en by was 7it by a AC )ransportation busregistered under t7e name of CC and dri0en by 33!A 4riminal 4ase for re4klessimpruden4e resulting in damage to property and multiple p7ysi4al inDuries was filedagainst 33! .owe0er6 eluded arrest6 t7us6 respondents filed a separate 4omplaint for damages against 33 and CC6 seeking a4tual damages6 4ompensation for lost in4ome6

moral damages6 e@emplary damages6 attorneyBs fees and 4osts of t7e suit! 8or t7eir part6 petitioners 4apitaliEed on t7e issue of owners7ip of t7e bus in ;uestion! CC argued t7atalt7oug7 t7e registered owner was 7im 6 t7e a4tual owner of t7e bus was S2-% ++6 w7o7ad t7e bus atta47ed wit7 AC)ransportation Company under t7e so'4alled Mkabitsystem!M Is S2-% ++ liableF

S,GGESTED ANS-ER :

,-6CCBs employer may also be 7eld liable under t7e do4trine of 0i4arious liability or imputed negligen4e!

/nder su47 do4trine6 a person w7o 7as not 4ommitted t7e a4t or omission w7i47 4auseddamage or inDury to anot7er may ne0ert7eless be 7eld 4i0illy liable to t7e latter eit7er dire4tly or subsidiarily under 4ertain 4ir4umstan4es!

In our Durisdi4tion6 0i4arious liability or imputed negligen4e is embodied in Arti4le #%9$of t7e Ci0il Code and t7e basis for damages in t7e a4tion under said arti4le is t7e dire4t



and primary negligen4e of t7e employer in t7e sele4tion or super0ision6 or bot76 of 7isemployee!#

As a rule6 in so far as t7ird persons are 4on4erned6 t7e registered owner of t7e motor 0e7i4le is t7e employer of t7e negligent dri0er6 and t7e a4tual employer is 4onsidered

merely as an agent of su47 owner! )7us6 w7et7er t7ere is an employer'employeerelations7ip between t7e registered owner and t7e dri0er is irrele0ant in determining t7eliability of t7e registered owner w7o t7e law 7olds primarily and dire4tly responsible for any a44ident6 inDury or deat7 4aused by t7e operation of t7e 0e7i4le in t7e streets and7ig7ways!



II!


So()e : 2I +@press Card Corporation 0s! Armo0it".R. No. 1@:@)$0 O%tober 0 !31$

Con*)"+(*o) : Lumantas6 *essa 8ait7

'@@@@'

PROBLEM:

<aria 1odrigueE was issued wit7 a 2I +@press Credit Card and treated 7er ritis7friends from .ong Hong to lun47 at <arioGs 1estaurant in t7e -rtigas Center in 2asig! Ast7e 7ost6 s7e 7anded to t7e waiter 7er 4redit 4ard to settle t7e bill6 but t7e waiter soonreturned to inform 7er t7at 7er 4redit 4ard 7ad been 4an4elled! Inasmu47 as s7e wasrelying on 7er 4redit 4ard be4ause s7e did not t7en 4arry enoug7 4as7 t7at day6 7er guestswere made to s7are t7e bill to 7er e@treme embarrassment! <aria 1odrgueE 4alled 2I+@press Credit to 0erify t7e status of 7er 4redit 4ard and was informed t7at 7er 4redit 4ard7ad been summarily suspended for failure to re'apply for rea4ti0ation after paying 7er default obligations for t7e t7ree'mont7 period! S7e insisted t7at s7e was not informed of t7e 4ondition for rea4ti0ation as t7e terms and 4onditions found in t7e 4ard members7ipagreement do not mention t7e same! .en4e6 s7e filed an a4tion for damages! Will su47

a4tion prosperF

S,GGESTED ANS-ER :

"es6 su47 a4tion will prosper! )7e relations7ip between t7e 4redit 4ard issuer and t7e4redit 4ard 7older is a 4ontra4tual one t7at is go0erned by t7e terms and 4onditions foundin t7e 4ard members7ip agreement! Su47 terms and 4onditions 4onstitute t7e law betweent7e parties! In 4ase of t7eir brea476 moral damages may be re4o0ered w7ere t7e defendantis s7own to 7a0e a4ted fraudulently or in bad fait7!

In t7e said problem6 2IBs a4t of not 4learly and 4ategori4ally informing <aria t7at t7esubmission of t7e new appli4ation form was t7e pre'4ondition for t7e rea4ti0ation of 7er 4redit 4ard6 raised doubt as to w7et7er t7e re;uirement 7ad really been a pre'4ondition or not! ereft of t7e 4lear basis to 4ontinue wit7 t7e suspension of t7e 4redit 4ard pri0ileges62I +@press Credit a4ted in wanton disregard of its 4ontra4tual obligations wit7 7er and7en4e s7e is entitled for damages!



III!


So()e : +spineli 0s! 2eople".R. No. 1=):)0 4une =0 !31$

Con*)"+(*o) : Imperial6 C7ristine

'@@@@'

PROBLEM:

In t7e early e0ening of 3e4ember %6 %==6 Alberto erbon y 3ownie (Alberto6 = year old Senior 3esk Coordinator of t7e radio station 3<<6 was s7ot in t7e 7ead anddifferent parts of t7e body in front of 7is 7ouse in Imus6 Ca0ite by unidentified w7oimmediately fled t7e 4rime s4ene on board a waiting 4ar! <eanw7ile6 ,I arrested andtook 4ustody one 1omeo 1eyes for t7e 4rime of Illegal 2ossession of 3eadly weapon!1eyes 4onfided to ,I t7at 7e redu4ed s7all 7is statement into writing and was willing togi0e 0ital information regarding t7e erbon 4ase! Subse;uently6 1eyes posted bail andwas released on 8eb %6 %==5! )7en4efort76 1eyes Dumped bail and was ne0er again 7eardof by ,I!

a +numerate and e@plain ea47 of t7edifferent types of damagesF

b W7at are t7e kinds of damages t7at t7e 4omplainant in t7is 4ase may pray fromt7e 4ourtF

S,GGESTED ANS-ER :

a )7ere are si@ kinds of damages namely: <oral damages6+@emplary (or 4orre4ti0edamages6 ,ominal6 )emperate (or moderate damages6A4tual (or 4ompensatorydamages6 and Li;uidated damages!

<oral damages (Art ##%5 in4lude p7ysi4al suffering6 mental anguis76 frig7t6 serious

an@iety6 besmir47ed reputation6 wounded feelings6 moral s7o4k6 so4ial 7umiliation6 andsimilar inDury! )7oug7 in4apable of pe4uniary 4omputation6 moral damages may bere4o0ered if t7ey are t7e pro@imate result of t7e defendantGs wrongful a4t for omission!

+@emplary or 4orre4ti0e damages(Art ###= are imposed6 by way of e@ample or 4orre4tion for t7e publi4 good6 in addition to t7e moral6 temperate6 li;uidated or 4ompensatory damages!



,ominal damages (Art ###% are adDudi4ated in order t7at a rig7t of t7e plaintiff6 w7i477as been 0iolated or in0aded by t7e defendant6 may be 0indi4ated or re4ogniEed6 and notfor t7e purpose of indemnifying t7e plaintiff for any loss suffered by 7im!

)emperate or moderate damages (Art ###6 w7i47 are more t7an nominal but less t7an4ompensatory damages6 may be re4o0ered w7en t7e 4ourt finds t7at some pe4uniary loss7as been suffered but its amount 4annot6 from t7e nature of t7e 4ase6 be pro0ided wit74ertainty!

A4tual 3amages are real damages to 4ompensate for loss or inDuries t7at 7a0e a4tuallyo44urred! )7is is in 4ontrast to MnominalM damages (a small amount paid w7ere t7ere isno real loss or Mpuniti0eM damages(intended to punis7 t7e party w7o must pay damages!Li;uidated damages(Art ### are t7ose agreed upon by t7e parties to a 4ontra4t6 to be paid in 4ase of brea47 t7ereof!

b In t7is 4ase6 t7e kinds of damages t7at t7e 4omplainant in t7is 4ase may pray fromt7e 4ourt are a4tual and moral damages only! A4tual 3amages sin4e t7e itemiEed medi4aland burial e@penses were duly supported by re4eipts and ot7er do4umentary e0iden4e!<oral damages6 sin4e t7ese awards are mandatory wit7out need of allegation and proof ot7er t7an t7e deat7 of t7e 0i4tim6 owing to t7e fa4t of t7e 4ommission of murder or 7omi4ide!



IV!


So()e : California Clot7ing6 In4! 0s! Quinones".R. No. 1)!!0 O%tober !:0 !31:

Con*)"+(*o) : 2erias6 C7ristine *oymarie

'@@@@'

PROBLEM:

*ulia a 4ertified fas7ionista and a fas7ion blogger6 s7op inside a well'known fas7ion bouti;ue named Salad and 3ressing! After fitting 4lot7es s7e went to t7e 4ounter and paidfor it! As s7e was walking inside t7e mall 4ontinuing 7er s7opping w7en a se4urity guardand t7e 4as7ier of t7e bouti;ue inform 7er t7at t7ere was a system error of t7e 2-Sma47ine 7en4e t7ey were not able to su44essfully 47arge 7er 4redit 4ard6 in effe4t s7e7a0enBt paid for t7e 4lot7es s7e 7ad boug7t! Insisting t7at s7e 7ad paid by s7owing t7ere4eipt atta47ed to t7e paper bags *ulia refused to pay again! )7e se4urity guard t7en took t7e bags from 7er and informed 7er t7at s7e will be broug7t to t7e managerBs offi4e? s7ewas dragged in front of ot7er s7oppers in publi4! )7e manager inside t7e bouti;ues asked7er to lea0e t7e items as s7e refused to pay! *ulia w7o was a known fas7ion blogger felt7umiliated so s7e filed a 4ase for damages against t7e manager and employees of t7e said

bouti;ue! 1)C on its de4ision dismiss t7e 4omplaint it 4on4luded t7at t7e manager andemployees belie0ed in good fait7 t7at *ulia failed to make payment! Considering t7at nomoti0e to fabri4ate a lie 4ould be attributed to t7em t7e 4ourt 7eld t7at w7en t7eydemanded payment t7ey merely e@er4ised a rig7t under t7e 7onest belief t7at no paymentwas made! It likewise did not find it damaging!

Is t7e de4ision of t7e 1)C Dudge 4orre4tF

S,GGESTED ANS-ER :

,o! )7e de4ision is in4orre4t! /nder Arti4le %= of t7e Ci0il Code it pro0ides t7at M +0ery person must6 in t7e e@er4ise of 7is rig7ts and in t7e performan4e of 7is duties6 a4t wit7 Dusti4e6 gi0e e0eryone 7is due and obser0e 7onesty and good fait7!M )7e elements of abuse of rig7ts are as follows: (% t7ere is a legal rig7t or duty? (# w7i47 is e@er4ised in bad fait7? (> for t7e sole intent of preDudi4ing or inDuring anot7er!



Arti4le #$! +0ery person w7o6 4ontrary to law6 willfully or negligently 4auses damage toanot7er6 s7all indemnify t7e latter for t7e same!

Arti4le #%! Any person w7o willfully 4auses loss or inDury to anot7er in a manner t7at is4ontrary to morals or good 4ustoms6 or publi4 poli4y s7all 4ompensate t7e latter for t7e

damage!

In t7is 4ase6 t7e employees 4laimed t7at t7ere was a system error of t7e 2-S ma47ineleading to t7e erroneous issuan4e of t7e re4eipt! )7ey 4on4luded t7at *ulia failed to makesu47 payment! .owe0er6 t7e e@er4ise of su47 rig7t is not wit7out limitations! A persons7ould not use 7is rig7t unDustly or 4ontrary to 7onesty and good fait76 ot7erwise6 7eopens 7imself to liability!

*ulia was embarrassed w7en t7ey insisted t7at s7e did not pay for t7e 4lot7 s7e pur47asedfrom t7eir s7op despite t7e re4eipt6 issued by t7e s7op! In t7e sp7ere of our law on7uman relations6 t7e 0i4tim of a wrongful a4t or omission6 w7et7er done willfully or

negligently6 is not left wit7out any remedy or re4ourse to obtain relief for t7e damage or inDury 7e sustained!

.en4e6 *ulia is entitled to an award of moral damages!



V!


So()e : 8ilipinas Synt7eti4 8iber Corporation 0s! 3e Los Santos".R. No. 1)!3::0 Mar%* 1@0 !311

Con*)"+(*o) : Logroo6 *osep7 Alfie

'@@@@'

PROBLEM:

3elos Santos was riding 7is 4ar along t7e Hatipunan 1oad t7at 4ollided wit7 an o0er speeding s7uttle bus owned by 8S8C! 8S8C argue t7at t7ey s7ould not be 7eld liable be4ause it was admitted t7at 3e los Santos made a turn along Hatipunan 1oad wit7oute@er4ising t7e ne4essary 4are w7i47 4ould 7a0e pre0ented t7e a44ident from 7appening!)7e sudden turn of t7e 0e7i4le used by t7e 3e los Santos s7ould also be 4onsidered asnegligen4e6 t7us6 mitigating6 if not absol0ing 8S8CBs liability! If you were t7e *udge6 is8S8C liableF

S,GGESTED ANS-ER :

"es6 8S8C is liable! 8S8C was dri0ing at a speed beyond t7e rate of speed re;uired bylaw! /nder t7e ,ew Ci0il Code6 unless t7ere is proof to t7e 4ontrary6 it is presumed t7at a person dri0ing a motor 0e7i4le 7as been negligent if at t7e time of t7e mis7ap6 7e was0iolating any traffi4 regulation!

Apparently6 in t7e present 4ase6 8S8CBs 0iolation of t7e traffi4 rules does not erase t7e presumption t7at 7e was t7e one negligent at t7e time of t7e 4ollision! +0en apart fromstatutory regulations as to speed6 a motorist is ne0ert7eless e@pe4ted to e@er4ise ordinary4are and dri0e at a reasonable rate of speed 4ommensurate wit7 all t7e 4onditionsen4ountered w7i47 will enable 7im to keep t7e 0e7i4le under 4ontrol and6 w7ene0er ne4essary6 to put t7e 0e7i4le to a full stop to a0oid inDury to ot7ers using t7e 7ig7way!



VI!


So()e : 27ilippine .awk Corporation 0s! Lee".R. No. 1@@@=0 ,ebruar7 1@0 !313

Con*)"+(*o) : <a4atangay6 <aria )7eresa

'@@@@'

PROBLEM:

Vi0ian )an Lee filed before t7e 1)C a Complaint against petitioner 27ilippine .awk Corporation and defendant <argarito A0ila for damages based on ;uasi'deli4t6 arisingfrom a 0e7i4ular a44ident t7at o44urred on <ar47 %5! )7e a44ident in0ol0ed amotor4y4le6 a passenger Deep6 and a bus! )7e bus was owned by petitioner 27ilippine.awk Corporation6 and was t7en being dri0en by <argarito A0ila! )7e a44ident resultedin t7e deat7 of respondentBs 7usband6 Sil0ino )an6 and 4aused respondent p7ysi4alinDuries! 1espondent soug7t t7e payment of indemnity for t7e deat7 of Sil0ino )an6 moraland e@emplary damages6 funeral and interment e@penses6 medi4al and 7ospitaliEatione@penses6 t7e 4ost of t7e motor4y4leBs repair6 attorneyBs fees6 and ot7er Dust and e;uitablereliefs! 1espondent furt7er testified t7at 7er 7usband was leasing and operating a Calte@gasoline station in uma4a6 QueEon t7at yielded one million pesos a year in re0enue!

)7ey also 7ad a 4opra business6 w7i47 ga0e t7em an in4ome of 2>6$$$!$$ a mont7 or 2>6$$$!$$ a year! In t7is 4ase for damages based on ;uasi'deli4t6 t7e trial 4ourt awardedrespondent t7e sum of 2565!$$6 representing loss of earning 4apa4ity6 (2=$6$$$!$$and a4tual damages6 (2%65!$$ for funeral e@penses6 plus 2$6$$$!$$ as moraldamages!

a .ow is t7e loss of earning 4apa4ity 4omputedF b W7at is t7e basis of t7e award of su47 4ompensationF

S,GGESTED ANS-ER :

a In t7e 4omputation of loss of earning 4apa4ity6 only net earnings6 not grossearnings6 are to be 4onsidered? t7at is6 t7e total of t7e earnings less e@penses ne4essary for t7e 4reation of su47 earnings or in4ome6 less li0ing and ot7er in4idental e@penses!In t7is4ase6 t7e 4omputation for loss of earning 4apa4ity is as follows:



Ne* E%)n"ng C%'%"*!X Life +@pe4tan4y @ ross Annual In4ome R 1easonable and ,e4essary +@pense

b )7e indemnity for loss of earning 4apa4ity of t7e de4eased is pro0ided for byArti4le ##$ of t7e Ci0il Code! Compensation of t7is nature is awarded not for loss of earnings6 but for loss of 4apa4ity to earn money!

As a rule6 do4umentary e0iden4e s7ould be presented to substantiate t7e 4laim for damages for loss of earning 4apa4ity! y way of e@4eption6 damages for loss of earning4apa4ity may be awarded despite t7e absen4e of do4umentary e0iden4e w7en: (% t7ede4eased is self'employed and earning less t7an t7e minimum wage under 4urrent labor laws6 in w7i47 4ase6 Dudi4ial noti4e may be taken of t7e fa4t t7at in t7e de4easedGs line of work no do4umentary e0iden4e is a0ailable? or (# t7e de4eased is employed as a dailywage worker earning less t7an t7e minimum wage under 4urrent labor laws!



VII!


So()e : Air 8ran4e 0s! illego".R. No. 1@)!@@0 e%ember 1)0 !313

Con*)"+(*o) : )abada6 Ian 1ene

'@@@@'

PROBLEM:

illego6 a 4ongressman left <anila on board Air 8ran4eBs air4raft bound for 2aris68ran4e! .e was to attend as a keynote speaker in a 4onferen4e to be 7eld in udapest6.ungary and )okyo6 *apan! W7en in 2aris6 7e arranged for an earlier 4onne4ting flig7t toudapest! W7en 7e arri0ed in udapest6 7e was not able to lo4ate 7is luggage! 3espiteassuran4e t7at it would be deli0ered to 7im and repeated follow'ups6 7e did not re4o0er 7is luggage! It 4ontained 7is personal effe4ts su47 as 4lot7es6 toiletries6 medi4ines for 7is7ypertension6 and t7e spee47es 7e 7ad prepared6 in4luding t7e notes and referen4ematerials 7e needed for t7e 4onferen4e! W7en 7e returned to <anila6 7e followed upabout 7is luggage but was ignored! .e filed a 4ase for brea47 of 4ontra4t of 4arriage and4laim for a4tual6 moral and e@emplary damages! W7en 7e re4o0ered 7isluggage (# yrsafter 7e did not insist on 7is 4laim for a4tual damages so )C granted 7im moral damages

(%m6 e@emplary damages ($$k6 and attorneyBs fees ($k!

Are amounts awarded to respondent as moral and e@emplary damages are e@4essi0e6un4ons4ionable and unreasonableF

S,GGESTED ANS-ER :

A "+S6 )7e mere fa4t t7at illego was a Congressman s7ould not result in an automati4in4rease in t7e moral and e@emplary damages re4o0erable! )7e so4ial and finan4ialstanding of a 4laimant may be 4onsidered only if 7e or s7e was subDe4ted to

4ontemptuous 4ondu4t despite t7e offenderBs knowledge of 7is or 7er so4ial and finan4ialstanding!

,-6 )7e mere fa4t t7at t7e luggage was not return for a reasonable time (# yearsspeaks of bad fait7 on t7e part of t7e airlines and awards s7ould be 4ommensurate to t7eso4ial status of t7e aggrie0ed!



In awarding moral damages for brea47 of 4ontra4t of 4arriage6 t7e brea47 must be wantonand deliberately inDurious or t7e one responsible a4ted fraudulently or wit7 mali4e or badfait7! ,ot e0ery 4ase of mental anguis76 frig7t or serious an@iety 4alls for t7e award of moral damages! W7ere in brea47ing t7e 4ontra4t of 4arriage t7e airline is not s7own to7a0e a4ted fraudulently or in bad fait76 liability for damages is limited to t7e natural and

probable 4onse;uen4es of t7e brea47 of t7e obligation w7i47 t7e parties 7ad foreseen or 4ould 7a0e reasonably foreseen! In su47 a 4ase t7e liability does not in4lude moral ande@emplary damages!



D%%ge

VIII!

C"#"$ L%& To'" : )orts and 3amages? 3amages

So()e : Snow <ountain 3airy Corporation 0s! <A Veterans 8or4e In4!".R. No. 1=!$$@0 November 1=0 !31$

Con*)"+(*o) : 1epaso6 *urdelyn

'@@@@'

PROBLEM:

AA filed a Complaint for 3amages against ! 2re0iously6 bot7 entered into a se4urityser0i4e agreement! *ust after a mont76 informed AA t7at all of t7e latterBs se4urity personnel would be repla4ed and all monies due in t7e 4ontra4t will be settled! AAresponded reminding t7at t7e 4ontra4t is good for a year w7i47 4ould only beterminated for a Dust 4ause and a >$'day prior noti4e! 8urt7er6 e0en if 4omplainant wai0edt7e re;uirements for pre'termination6 would be liable to pay t7e remaining period of 9%N# mont7s e;ui0alent to 2=#69>>!$$!

AA filed wit7 t7e 1egional )rial Court (1)C a 4omplaint for damages against ! AAalleged t7at it 7ad entered in a se4urity ser0i4e agreement wit7 ? t7at it 7ad re4ruitedse0en se4urity guards and posted t7em to Bs premises in 4omplian4e wit7 t7e ser0i4eagreement and in t7e pro4ess6 in4urred e@penses for training6 p7ysi4al and medi4ale@aminations6 do4umentations6 pro4urement of e;uipments like ser0i4e firearms6 uniformand related e@penses? t7at on April %6 #$$6 AAGs se4urity guards were barred by from entering t7e ser0i4e area and pre0ented from performing t7eir 4ontra4tualobligation? t7at it did not 4ommit any 0iolation of t7e ser0i4e 4ontra4t? and t7at it in4urredin4ome opportunity loss wort7 2=#69>>!$$ w7i47 it 4ould 7a0e earned if t7e agreementwas fait7fully 7onored up to t7e end of t7e 4ontra4t period! AA prayed for a4tual6 moraland e@emplary damages6 and attorneyGs fees! Is AA entitled to a4tual damagesF

S,GGESTED ANS-ER :

,o! AA is not entitled to a4tual damages! )7e Supreme Court ruled in t7e 4ase of Snow<ountain 3airy Corporation 0s! <A Veterans 8or4e In4! t7at 4learly6 t7ere was no basis



for t7e lower 4ourtGs award of a4tual damages in t7e absen4e of e0iden4e pro0ing t7esame! /ndeniably6 7owe0er6 AA suffered pe4uniary loss be4ause of t7e pre'termination of its ser0i4es wit7out any 0alid 4ause! ut sin4e t7ere was no proof 4apable of as4ertainingt7e a4tual loss6 we refer to Arti4le ### of t7e Ci0il Code w7i47 pro0ides t7at temperateor moderate damages6 w7i47 are more t7an nominal but less t7an 4ompensatory damages

may be re4o0ered w7en t7e 4ourt finds t7at some pe4uniary loss 7as been suffered but itsamount 4annot6 from t7e nature of t7e 4ase6 be pro0ed wit7 4ertainty!

)emperate damages may be allowed in 4ases w7ere from t7e nature of t7e 4ase6 definite proof of pe4uniary loss 4annot be addu4ed6 alt7oug7 t7e 4ourt is 4on0in4ed t7at t7eaggrie0ed party suffered some pe4uniary loss! )7e Supreme Court looked into4onsideration t7at AA 4ertainly spent for t7e se4urity guardGs training6 firearms wit7ammunitions6 uniforms and ot7er ne4essary t7ings before t7eir deployment to ! )7e burden is to establis7 oneBs 4ase by a preponderan4e of e0iden4e w7i47 means t7at t7ee0iden4e6 as a w7ole6 addu4ed by one side6 is superior to t7at of t7e ot7er! A4tualdamages are not presumed! )7e 4laimant must pro0e t7e a4tual amount of loss wit7 a

reasonable degree of 4ertainty premised upon 4ompetent proof and on t7e best e0iden4eobtainable! Spe4ifi4 fa4ts t7at 4ould afford a basis for measuring w7ate0er 4ompensatoryor a4tual damages are borne must be pointed out! )7e award of a4tual damages 4annot besimply based on t7e mere allegation of a witness wit7out any tangible 4laim6 su47 asre4eipts or ot7er do4umentary proofs to support su47 4laim! .en4e6 AA is not entitled toa4tual damages!



Do*)"ne o/ I'% Lo("*()

I!

C"#"$ L%& To'" : )orts and 3amages? 3o4trine of Ipsa Lo;uitur

So()e : Solidum 0s! 2eople".R. No. 1=!1!:0 Mar%* 130 !31$

Con*)"+(*o) : <aylon6 1on Step7ane

'@@@@'

PROBLEM:

Aerit7 Sitri was born wit7 an imperforate anus! )wo days after 7er birt76 s7e underwent4olostomy6 a surgi4al pro4edure to bring one end of t7e large intestine out t7roug7 t7eabdominal wall6 enabling 7er to e@4rete t7roug7 a 4olostomy bag atta47ed to t7e side of 7er body!

-n <ay %==6 t7en >yrs old6 Aerit7 was admitted at t7e -spital ng <aynila for a pull't7roug7 operation6 w7i47 was 4ondu4ted by se0eral surgeons and anaest7esiologists6in4luding 3r! <urrue 1amius! 3uring t7e operation6 Aerit7 e@perien4ed brady4ardia6 andwent into a 4oma w7i47 lasted for #weeks and w7en s7e regained 4ons4iousness6 s7e4ould no longer see6 7ear or mo0e! Agitated by 7er daug7terBs 7elpless and une@pe4ted4ondition6 )ifa lodged a 4omplaint for re4kless impruden4e resulting in serious p7ysi4alinDuries wit7 t7e City 2rose4utorBs -ffi4e against t7e attending p7ysi4ians!

)7e 1)C rendered its Dudgment finding 3r! <urrue 1amius guilty beyond reasonabledoubt of re4kless impruden4e resulting to serious p7ysi4al inDuries! Applying t7e do4trineof res ipsa lo;uitur6 t7e *udge reasoned Kw7ere 4ommon knowledge and e@perien4e tea47t7at a resulting inDury would not 7a0e o44urred to t7e patient if due 4are 7ad beene@er4ised6 an inferen4e of negligen4e may be drawn gi0ing rise to an appli4ation of t7edo4trine of res ipsa lo;uitur wit7out medi4al e0iden4e6 w7i47 is ordinarily re;uired tos7ow not only w7at o44urred but 7ow and w7y it o44urredJ!

Is t7e *udge 4orre4t in applying res ipsa lo;uitur on t7is 4aseF

S,GGESTED ANS-ER :



,o6 t7e *udge is not 4orre4t! In order to allow resort to t7e do4trine6 t7e followingessential re;uisites must first be satisfied6 to wit:

% t7e a44ident was of a kind t7at does not ordinarily o44ur unless someone is

negligent?# t7e instrumentality or agen4y t7at 4aused t7e inDury was under t7e e@4lusi0e4ontrol of t7e person 47arged? and> t7e inDury suffered must not 7a0e been due to any 0oluntary a4tion or 4ontribution of t7e person inDured!

In t7e present 4ase6 t7e appli4ation of t7e do4trine of res ipsa lo;uitur is inappropriate!Alt7oug7 t7e se4ond and t7ird elements were present6 4onsidering t7at t7e anest7eti4agent and t7e instruments were e@4lusi0ely wit7in t7e 4ontrol of 3r! <urrue 1amius6 andt7at t7e patient6 being t7en un4ons4ious during t7e operation6 4ould not 7a0e been guiltyof 4ontributory negligen4e6 t7e first element is la4king! )ifa deli0ered Aerit7 to t7e 4are6

4ustody and 4ontrol of 7is p7ysi4ians for a pull't7roug7 operation! +@4ept for t7eimperforate anus6 Aerit7 was t7en of sound body and mind at t7e time of 7er submissionto t7e p7ysi4ians! "et6 s7e e@perien4ed brady4ardia during t7e operation6 4ausing loss of 7er senses and rendering 7er immobile! .ypo@ia6 or t7e insuffi4ien4y of o@ygen supply tot7e brain t7at 4aused t7e slowing of t7e 7eart rate6 s4ientifi4ally termed as brady4ardia6would not ordinarily o44ur in t7e pro4ess of a pull't7roug7 operation6 or during t7eadministration of anest7esia to t7e patient6 but su47 fa4t alone did not pro0e t7at t7enegligen4e of any of 7er attending p7ysi4ians6 in4luding t7e anest7esiologists6 7ad 4ausedt7e inDury! )7e do4trine of res ipsa lo;uitur 7as no appli4ation in a suit against a p7ysi4ianor surgeon w7i47 in0ol0es t7e merits of a diagnosis or of a s4ientifi4 treatment! )7e p7ysi4ian or surgeon is not re;uired at 7is peril to e@plain w7y any parti4ular diagnosiswas not 4orre4t6 or w7y any parti4ular s4ientifi4 treatment did not produ4e t7e desiredresult! )7us6 res ipsa lo;uitur is not a0ailable in a malpra4ti4e suit if t7e only s7owing ist7at t7e desired result of an operation or treatment was not a44omplis7ed!



No"n%$ D%%ge

!

C"#"$ L%& To'" : )orts and 3amages? ,ominal 3amages

So()e : Cat7ay 2a4ifi4 0s! 1eyes".R. No. 1)=10 4une !@0 !31:

Con*)"+(*o) : ernaldeE6 *osep7us

'@@@@'

PROBLEM:

Sometime in <ar47 #$%6 .ewlett 2a4kard made a tra0el reser0ation wit7 <adrid )ra0elagen4y for 7is familyBs trip to ar4elona6 Spain! .ewlett paid for t7e Cat7y Airlinesround'trip airplane ti4kets for <anila'Capetown'ar4elona'Capetown'<anila!

.ewlett re4onfirmed 7is familyBs return flig7t wit7 t7e Cat7y Airlines offi4e in ar4elonaand t7e reser0ation was okay as s47eduled!

-n departure day .ewlett was informed by a staff from Cat7y Airlines t7at t7ey did not7a0e 4onfirmed reser0ations6 and only 7is mot7er'in'lawGs flig7t booking was 4onfirmed! ,e0ert7eless6 t7ey were allowed to board t7e flig7t to Cape town! ut w7en t7ey were inCape town6 t7ey were again informed of t7e same problem and were not allowed to board be4ause t7e flig7t to <anila was fully booked! -nly 7is mot7er'in'law was allowed! )7ene@t day6 t7ey were allowed to board t7e ne@t flig7t to <anila!

.ewlett filed a Complaint for damages wit7 attorneyGs fees against Cat7y Airlines and<adrid )ra0el agen4y!

Cat7y Airlines argued t7at no 0alid ti4ket number was inputted in its system and it 7adt7e rig7t to 4an4el t7e booking!

<adrid )ra0el Agen4y maintained t7at it made t7e ne4essary reser0ation wit7 Cat7yAirlines for respondentsB trip to ar4elona! After getting 4onfirmed bookings wit7Cat7y Airlines6 <adrid )ra0el agen4y issued t7e 4orresponding ti4kets torespondents!



Are bot7 of t7em6 Cat7y Airlines and <adrid )ra0el agen4y liable for damagesF

S,GGESTED ANS-ER :

"es6 Cat7y Airlines and <adrid )ra0el agen4y are Dointly and solidarily liable for

nominal damages! /nder Arti4le ###% of t7e Ci0il Code6 nominal damages may beawarded to a plaintiff w7ose rig7t 7as been 0iolated or in0aded by t7e defendant6 for t7e purpose of 0indi4ating or re4ogniEing t7at rig7t6 not for indemnifying t7e plaintiff or anyloss suffered!

Cat7y Airlines and <adrid )ra0el agen4y a4ted toget7er in 4reating t7e 4onfusion in t7e bookings w7i47 led to t7e erroneous 4an4ellation of respondentsB bookings! )7eir negligen4e is t7e pro@imate 4ause of t7e te47ni4al inDury sustained by respondents!)7erefore6 t7ey are liable to pay .ewlett and 7is family nominal damages! ,ominaldamages are re4o0erable w7ere a legal rig7t is te47ni4ally 0iolated and must be0indi4ated against an in0asion t7at 7as produ4ed no a4tual present loss of any kind or

w7ere t7ere 7as been a brea47 of 4ontra4t and no substantial inDury or a4tual damagesw7atsoe0er 7a0e been or 4an be s7own!



;(%"De$"*

I!

C"#"$ L%& To'" : )orts and 3amages? Quasi'3eli4t

So()e : 3ela Llano 0s! iong".R. No. 1!:)@0 e%ember $0 !31:

Con*)"+(*o) : <amao6 Arief

'@@@@'

PROBLEM:

3ra! Lois Lane was seated at t7e front passenger seat of a 4ar dri0en by 7er brot7er! A fewse4onds after t7e 4ar 7alted6 a dump tru4k 4ontaining gra0el and sand suddenly rammedt7e 4arBs rear end and its rear winds7ield was s7attered! lass splinters flew6 pun4turing3ra! Lois Lane! )7e tru4k dri0er was Clark Hent and 7e re0ealed t7at 7is employer wasru4e Wayne doing business under t7e name and style of Matman )radingM!

3ra! Lane suffered from a w7iplas7 inDury and it in4apa4itated 7er from t7e pra4ti4e of 7er profession despite t7e surgery! S7e presented pie4es of e0iden4e but it did not s7owt7e 4ausal relation between t7e 0e7i4ular a44ident and t7e w7iplas7 inDury! S7ould ru4eWayne be liable for damagesF

S,GGESTED ANS-ER :

,o6 ru4e Wayne s7ould not be 7eld liable for damages be4ause 3ra! Lois Lane failed toestablis7 7er 4ase by preponderan4e of e0iden4e!

/nder Arti4le #%5 of t7e Ci0il Code6 t7e elements ne4essary to establis7 a ;uasi'deli4t4ase are:

(% damages to t7e plaintiff?(# negligen4e6 by a4t or omission6 of t7e defendant or by some person for w7ose a4ts t7edefendant must respond6 was guilty? and(> t7e 4onne4tion of 4ause and effe4t between su47 negligen4e and t7e damages!



ased on t7ese re;uisites6 3ra! 3ela Llana 3ra! Lois Lane must first establis7 by preponderan4e of e0iden4e t7e t7ree elements of ;uasi'deli4t before t7e 4ourt 4andetermine ru4e WayneGs liability as Clark HentBs employer!

Documents

Book 5 - Special Contracts_v4.docx