Oblicon LAW xu

8/13/2019 Oblicon LAW xu

1/63

civil law, political law, criminal law, taxation, administrative law, election law, remedial law,Philippine constitution, case digest, law notes

HOME CASE DIGEST NOTES AND LEGAL FORMS COMMENTARY GUESTBOOK

COURTESY OF SU LAW 2011

ANG YU ASUNCION VS. COURT OF APPEALS

238 SCRA 602

FACTS:

On July 29, 1987, a Second Amended Complaint for Specific Performance was filed by AngYu Asuncion and Keh Tiong, et al., against Bobby Cu Unjieng and Jose Tan before theRegional Trial Court of Manila.

The plaintiffs were tenants or lessees of residential and commercial spaces owned bydefendants in Binondo, Manila. On several conditions defendants informed the plaintiffs thatthey are offering to sell the premises and are giving them priority to acquire the same. During

negotiations, Bobby Cu Unjieng offered a price of P6-million while plaintiffs made a counter ofoffer of P5-million. Plaintiff thereafter asked the defendants to put their offer in writing to whichthe defendants acceded. In reply to defendants letter, plaintiffs wrote, asking that they specifythe terms and conditions of the offer to sell. When the plaintiffs did not receive any reply, theysent another letter with the same request.Since defendants failed to specify the terms andconditions of the offer to sell and because of information received that the defendants wereabout to sell the property, plaintiffs were compelled to file the complaint to compel defendants tosell the property to them.

The court dismissed the complaint on the ground that the parties did not agree upon theterms and conditions of the proposed sale, hence, there was no contact of sale at all.

On November 15, 1990, the Cu Unjieng spouses executed a Deed of Sale transferring theproperty in question to Buen Realty and Development Corporation. Buen Realty, as the newowner of the subject property, wrote to the lessees demanding the latter to vacate the premises.In its reply, it stated that Buen Realty and Development Corporation brought the propertysubject to the notice of lis pendens.

ISSUE:
http://subaylawco23.weebly.com/index.htmlhttp://subaylawco23.weebly.com/index.htmlhttp://subaylawco23.weebly.com/case-digest.htmlhttp://subaylawco23.weebly.com/case-digest.htmlhttp://subaylawco23.weebly.com/notes-and-legal-forms.htmlhttp://subaylawco23.weebly.com/notes-and-legal-forms.htmlhttp://subaylawco23.weebly.com/commentary.htmlhttp://subaylawco23.weebly.com/commentary.htmlhttp://subaylawco23.weebly.com/guestbook.htmlhttp://subaylawco23.weebly.com/guestbook.htmlhttp://subaylawco23.weebly.com/guestbook.htmlhttp://subaylawco23.weebly.com/commentary.htmlhttp://subaylawco23.weebly.com/notes-and-legal-forms.htmlhttp://subaylawco23.weebly.com/case-digest.htmlhttp://subaylawco23.weebly.com/index.html


2/63

Can Buen Realty be bound by the writ of execution by virtue of the notice of lis pendens?

RULING:

No.An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil Code). Theobligation is upon the concurrence of the essential elements thereof, viz:

(a) the vinculum juris or juridical tie which is the efficient cause established by the varioussources of obligations; (b) the object which is the prestation or conduct, required to observed;and (c) the subject-persons who, viewed demandability of the obligation are the active (oblige)and the passive (obligor) subjects.

Among the sources of an obligation is a contract (Art. 1157), which is a meeting of mindsbetween two persons whereby one binds himself, with respect to the other, to give something or

to render some service. A contract undergoes various stages that include its negotiation orpreparation, its perfection and, finally, its consummation.

Until the contract is perfected, it cannot, as an independent source of obligation, serve as abinding juridical relation. In sales, particularly, to which the case at bench belongs, the contractis perfected when a person, called the seller, obligates himself, for a price certain, to deliver andto transfer ownership of a thing or right to another, called the buyer, over which the latteragrees.

The registration of lis pendens must be independently addressed in appropriateproceedings.Therefore, Buen Realty cannot be held subject to the writ of execution issued bythe respondent Judge, let alone ousted from the ownership and possession of the property,

without first being duly afforded its day in court.

SAGRADA ORDEN vs. NATIONAL COCONUT CORPORATION

91 PHIL. 503

FACTS:

Plaintiff Sagrada Orden owned a piece of real property in Pandacan, Manila. During theJapanese occupation, the land was acquired by a Japanese corporation Taiwan Tekkoshho.

After the liberation, the Alien Property Custodian of the United States took possession, control,and custody of the real property. During the year 1946, the property was occupied by the CopraExport Management Company under the custodianship agreement with United States AlienProperty Custodian, and when it vacated, the property was occupied by defendant National


3/63

Coconut Corporation. Sagrada Orden made claim to the property before the Alien PropertyCustodian of the United States but was denied. So plaintiff brought an action in court to annulthe sale of property of Taiwan Tekkosho, and recover its possession. The case did not come fortrial because the parties presented a joint petition in which it is claimed by Sagrada Orden thatthe sale in favor of Taiwan Tekkosho was null and void because it was executed under threats,duress, and intimidation, and that the title be re-issued to Sagrada Orden. The court rendered

judgment releasing the defendant from liability, but reversing to the plaintiff the right to recoverfrom the defendant reasonable rentals for the use and occupation of the premises.

The present action to recover the reasonable rentals from August 1946, the date whendefendant began to occupy, to the date it vacated it. The defendant did not contest its liability forthe rentals at the rate of P3, 000 per month from February 28, 1949, but resisted the claimtherefore prior to that date. Defendant contends that it occupied the property in good faith, underno obligation to pay rentals for the use and occupation. Judgment rendered for the plaintiff torecover from the defendant the sum of P3, 000 a month, from August, 1946, to the date thedefendant vacates the premises. Thus this appeal made by defendant.

ISSUE:

Can the defendant company be held liable to pay rentals from August 1946 to the date itvacated?

RULING:

No. If defendant-appellant is liable at all, its obligations, must arise from any of the four sources

of obligations, namely, law, contract or quasi-contract, crime, or negligence. Defendant-appellant is not guilty of any offense at all, because it entered the premises and occupied it withthe permission of the entity which had the legal control and administration thereof, the AlienProperty Administration. Neither was there any negligence on its part. There was also no privitybetween the Alien Property Custodian and the Taiwan Tekkosho, which had secured thepossession of the property from the plaintiff-appellee by the use of duress, such that the AlienProperty Custodian or its permittee (defendant-appellant) may be held responsible for thesupposed illegality of the occupation of the property by the said Taiwan Tekkosho. The AlienProperty Administration had the control and administration of the property not as successor tothe interests of the enemy holder of the title, the Taiwan Tekkosho. Neither is it a trustee of theformer owner, the plaintiff-appellee herein, but a trustee of then Government of the UnitedStates, in its own right, to the exclusion of, and against the claim or title of, the enemy owner.

From August, 1946, when defendant-appellant took possession, to the late of judgment onFebruary 28, 1948, Alien Property Administration had the absolute control of the property astrustee of the Government of the United States, with power to dispose of it by sale or otherwise,as though it were the absolute owner. Therefore, even if defendant-appellant were liable to the

Alien Property Administration for rentals, these would not accrue to the benefit of the plaintiff-appellee, the owner, but to the United States Government.


4/63

PE VS INTERMEDIATE APPELLATE COURT

195 SCRA 137

FACTS:

Plaintiff spouses Francisco and Anita Pe entered into a contract to sell their 5 parcels ofland. These parcels of land were mortgaged with different banking institutions. Lots Nos. 40and 41 were mortgaged to the Philippine Veterans Bank (PVB) for P351,162.59; Lots Nos. 42and 45 were mortgaged to the Development Bank of the Philippines (DBP) for P189,322.49;and Lot No. 47 to Philippine Commercial and Industrial Bank (PCIB) for P57,000.

On September 20, 1976, the plaintiffs executed a contract to sell. The plaintiffs werepaid the total amount of 351,162.59 to PVB for lots 40 and 41. On the same date, theyexecuted in favor of Domingo Sy a deed of sale over Lots Nos. 42 and 45 after payment by thelatter of the former's account with the DBP in the amount of P189,322.49. Consequently, acontract to sell and a corresponding deed of sale covering Lot No. 47 were prepared but thedeed did not materialize as the buyers offer of P49,454.92, as payment for Lot No. 47, wasrejected by the Pe spouses, the latter insisted on the full payment of their obligation with the(PCIB) in the amount of P383,615.97 and P620,000 as the alleged consideration stipulated inthe Contract to Sell. Pe allege that the consideration of the Contract to Sell was P1,544,161.05and not P620,000.

ISSUE:

Was the contention of the plaintiffs valid?

RULING:

No. The words of the Contract to Sell were clear and left no doubt upon the trueintention of the contracting parties. The condition laid down in paragraph (2) of the contract didnot provide for an additional consideration, but only for the manner in which the considerationwas to be applied. It clearly provided that payment shall be applied to petitioners' obligationswith the bank where the respective properties were mortgaged, and upon their release,petitioners shall execute the final deed of sale. The subsequent acts of the parties conformed

with this condition. Thus, the parties should be bound by such written contract. It should alsobe noted that at the time of the execution of the Contract to Sell, the total obligation due to thePCIB as regards Lot No. 47 was only P 99,374.89. The rise of the same obligation toP383,615.96 was brought about by subsequent loans the petitioners obtained with the samebank for which the tractor and an "Offset Discharrow" were given as additional security.

Contracts are respected as the law between the contracting parties. The parties mayestablish such stipulations, clauses, terms and conditions as they may want to include. As longas such agreements are not contrary to law, morals, good customs, public policy or public order,


5/63


6/63

and the obligation imposed by law are different types. The obligations which in the Code areindicated as quasi-contracts, as well as those arising ex lege , are in the common la system,merged into the category of obligations imposed by law, and all are denominated impliedcontracts.

In the case under consideration, the duty of O Brien to refund the money which he won from theLeung Ben at gaming was a duty imposed by statute. It therefore arose ex lege . Furthermore, itwas a duty to return a certain sum which had passed from OBrien to Leung Ben. By all thecriteria which the common law supplies, this a duty in the nature of debt and is properlyclassified as an implied contract. It was well- settled by the English authorities that money lost ingambling or by lottery, if recoverable at all, can be recovered by the loser in an action ofindebitatus assumpsit for money had and received. This meant that in the common law the dutyto return money won in this way was an implied contract, or quasi-contract. The phase inquestion should be interpreted in such a way as to include all obligations, whether arising fromconsent or ex lege , because that was equivalent to eliminating all distinction between the firstand the fifth paragraphs by practically striking out the first two lines of paragraph one. TheLegislature had deliberately established this distinction, and while we may be unable to see anyreason why it should have been made, it was our duty to apply and interpret the law, and wewere not authorized under the guise of interpretation to virtually repeal part of the statute.

Nor can it be said that the relations between the parties litigant constitute a quasi-contract. Inthe first place, quasi- contracts are " lawful and purely voluntary acts by which the authorsthereof become obligated in favor of a third person. . . ." The act which gave rise to theobligation ex lege relied upon by Leung Ben in the court below is illicit an unlawful gamblinggame. In the second place, the first paragraph of section 412 of the Code of Civil Proceduredoes not authorize an attachment in actions arising out of quasi contracts , but only in actionsarising out of contract , express or implied.

SAGRADA ORDEN VS. NATIONAL COCONUT CORPORATION

91 SCRA 503

FACTS:

Petitioner, Sagrada Orden owned a land which was acquired by a Japanese corporation duringthe Japanese military occupation. After the liberation, the Alien Property Custodian tookpossession, control and custody of the land. The Copra Export Management Companyoccupied the property and when it vacated, the respondent, National Coconut Corporationoccupied it through the representation made by the Philippine Government to the Alien Property

Custodian. The property was returned to Sagrada Orden upon judgment that the contract of sale of

the property in favor of the Japanese corporation was null and void and upon payment of theconsideration it received for the property to the Philippine Alien Property Administration.Sagrada Orden was also given the right to recover from National Coconut Corporationreasonable rentals for the use and occupation of the premises.

Sagrada Orden filed an action to recover rentals from National Coconut Corporation


7/63

from the time it used and occupied the premises. National Coconut Corporation claimed that itwas willing to pay only from the time the property was returned to Sagrada Orden and notbefore, for it occupied the property in good faith, under no obligation to pay the rentals.

ISSUE:

Was National Coconut Corporation liable for rentals prior to the date the property wasreturned to Sagrada Orden?

RULING:

No. National Coconut Corporation was not liable for the rentals prior to the date theproperty was returned to Sagrada Orden. For National Coconut Corporation to be liable, its

obligation must arise from the law, contract or quasi- contract, crime or negligence as providedby Article 1157 of the Civil Code which was taken from Article 1089 of the old Civil Code. Asnone of these sources were present, National Coconut Corporation cannot be held liable.

There was also no express agreement between the entity which had legal control andadministration of the property and the National Coconut Corporation for the latter to pay rentalson the property so there was no obligation.

PELAYO VS. LAURON

12 Phil. 453

FACTS:

On November 23, 1906, a physician named Arturo Pelayo filed a complaint againstMarelo Lauron and Juana Abellana. On the night of October 13th of the same year, the plaintiffwas called to render medical assistance to the defendants daughter -in-law, who was about togie birth. After the consultation of Dr. Escao, it was deemed that the operation was going to bedifficult for child birth, but regardless, Dr. Pelayo proceeded with the job of operating on thesubject and also removed the afterbirth. The operation went on until morning, and on the sameday, visited several times and billed the defendants the just amount of P500 for the servicesrendered to which defendants refused to pay.

In answer to the complaint, counsel for the defendants denied all of the allegation andalleged as a special defense, that their daughter-in-law had died in consequence of the saidchildbirth, that when she was alive she lived with her husband independently and in a separatehouse without any relation whatever with them, and that, if on the day when she gave birth shewas in the house of the defendants, her stay their was accidental and due to fortuitouscircumstances. Therefore, he prayed that the defendants be absolved of the complaint withcosts against the plaintiff.


8/63

ISSUE:

Can the defendants be held liable to pay for the obligation?

RULING:

No. According to article 1089 of the Civil Code, obligations are created by law, bycontracts, by quasi-contracts, and by illicit acts and omissions or by those in which any kind offault or negligence occurs.

Obligations arising from law are not presumed. Those expressly determined in the code or inspecial laws, etc., are the only demandable ones. Obligations arising from contracts have legal

force between the contracting parties and must be fulfilled in accordance with their stipulations.(Arts. 1090 and 1091.)

The rendering of medical assistance in case of illness was comprised among the mutualobligations to which the spouses were bound by way of mutual support. (Arts. 142 and 143.)

If every obligation consists in giving, doing or not doing something (art. 1088), and spouseswere mutually bound to support each other, there can be no question but that, when either ofthem by reason of illness should be in need of medical assistance, the other was under theunavoidable obligation to furnish the necessary services of a physician in order that health maybe restored, and he or she may be freed from the sickness by which life is jeopardized. Theparty bound to furnish such support was therefore liable for all expenses, including the fees of

the medical expert for his professional services.

In the face of the above legal precepts, it was unquestionable that the person bound to pay thefees due to the plaintiff for the professional services that he rendered to the daughter-in-law ofthe defendants during her childbirth, was the husband of the patient and not her father andmother- in-law of the defendants herein.

DIANA VS. BATANGAS TRANSPORTATION, CO.

93 Phil 391

FACTS:

On June 21, 1945, Truck No. 14 belonging to the defendant Batangas Transportation,Co. driven by Vivencio Bristol ran into a ditch at Bay, Laguna resulting in the death of FlorenioDiana and other passengers. Plaintiffs were the heirs of Diana. Bristol was charged andconvicted of multiple homicide through reckless imprudence where he was ordered to indemnify


9/63

the heirs of the deceased in the amount of Php 2,000. When the decision became final, a writ ofexecution was issued in order that the indemnity may be , but the sheriff filed a return statingthat the accused had no visible leviable property. The present case (civil case No. 9221) wasstarted when defendant failed to pay the indemnity under its subsidiary liability under article 103of the Revised Penal Code.

Defendant filed a motion to dismiss on the ground that there was another action pendingbetween the same parties for the same cause (civil case No. 8023) in which the same plaintiffssought to recover from the same defendant the amount of P4,500 as damages resulting fromthe death of Florenio Diana, who died while on board a truck of defendant due to the negligentact ( culpa aquiliana ) of the driver Vivencio Bristol.

Plaintiffs filed a written opposition to the motion to dismiss. The lower court, having found themotion well founded, dismissed the complaint, without special pronouncement as to costs, andtheir motion for reconsideration having been denied, plaintiffs took the present appeal.

ISSUE:

Did the lower court correctly dismiss the complaint on the sole ground that there wasanother action pending between the same parties for the same cause?

RULING:

No. The present case (civil case No. 9221) stemmed from a criminal case in which thedriver of the defendant was found guilty of multiple homicide through reckless imprudence and

was ordered to pay an indemnity of P2,000 for which the defendant was made subsidiarily liableunder article 103 of the Revised Penal Code. While the other case (civil case No. 8023) was anaction for damages based on culpa aquiliana which underlies the civil liability predicated onarticles 1902 to 1910 of the old Civil Code. These two cases involved two different remedies. Asthis court aptly said: "A quasi-delict or culpa aquiliana is a separate legal institution under theCivil Code, with a substantivity all its own, and individuality that is entirely apart andindependent from a delict or crime. * * *. A distinction exists between the civil liability arisingfrom a crime and the responsibility for cuasi-delictos or culpa extra-contractual . The samenegligent act causing damages may produce civil liability arising from a crime under article 100of the Revised Penal Code, or create an action for cuasi-delito or culpa extra-contractual underarticles 1902- 1910 of the Civil Code.

It was a mistake to say that the present action should be dismissed, because of thependency of another action between the same parties involving the same cause. Evidently, bothcases involved different causes of action.

FAUSTO BARREDO VS. SEVERINO GARCIA AND TIMOTEA ALAMARIO

73 PHIL. 607


10/63

FACTS:

On the road between Malabon and Navotas, Province of Rizal, there was a head-on collisionbetween a taxi of the Malate Taxicab driven by Pedro Fontanilla and a carretela guided byPedro Dimapalis. The carretela was overturned, and one of its passengers, 16-year-old boyFaustino Garcia, suffered injuries from which he died two days later. A criminal action was filedagainst Fontanilla in the Court of First Instance of Rizal, where he was convicted and sentencedacoordingly. The court in the criminal case granted the petition that the right to bring a separatecivil action be reserved.

The respondents, Severino Garcia and Timotea Almario, parents of the deceased on March 7,1939, brought an action in the Court of First Instance of Manila against the petitioner FaustoBarredo as the sole proprietor of the Malate Taxicab and employer of Pedro Fontanilla. TheCourt of First Instance of Manila awarded damages in favor of the respondents for P2,000 pluslegal interest from the date of the complaint, which was modified by the Court of Appeals byreducing the damages to P1,000 with legal interest from the time the action was instituted. Itwas undisputed that Fontanilla s negligence was the cause of the mishap, as he was driving onthe wrong side of the road, and at high speed. As to Barredo's responsibility, the Court of

Appeals found that there was proof that Barredo as employer exercised the diligence of a goodfather of a family to prevent damage. In fact, it was shown he was careless in employingFontanilla, who had been caught several times for violation of the Automobile Law andspeeding. Defendant contended that his liability was governed by the Revised Penal Code,according to which his responsibility was only secondary, but no civil action had been broughtagainst the taxi driver.

ISSUE:

May the plaintiffs bring a separate civil action against Fausto Barredo, thus making him primarilyand directly responsible under article 1903 of the Civil Code as an employer of PedroFontanilla?

RULING:

Yes. Authorities support the proposition that a quasi-delict or "culpa aquiliana " is aseparate legal institution under the Civil Code with a substantivity all its own, and individualitythat is entirely apart and independent from delict or crime. Upon this principle and on the

wording and spirit of article 1903 of the Civil Code, the primary and direct responsibility ofemployers may be safely anchored.

It will thus be seen that while the terms of articles 1902 of the Civil Code seem to be broadenough to cover the driver's negligence in the instant case, nevertheless article 1093 limitscuasi-delitos to acts or omissions "not punishable by law." But inasmuch as article 365 of theRevised Penal Code punishes not only reckless but even simple imprudence or negligence, thefault or negligence under article 1902 of the Civil Code has apparently been crowded out. It isthis overlapping that makes the "confusion worse confounded." However, a closer study shows


11/63

that such a concurrence of scope in regard to negligent acts does not destroy the distinctionbetween the civil liability arising from a crime and the responsibility for cuasi-delitos or culpaextra-contractual. The same negligent act causing damages may produce civil liability arisingfrom a crime under article 100 of the Revised Penal Code, or create an action for cuasi-delito orculpa extra-contractual under articles 1902-1910( 2176, 2180- NCC) of the Civil Code.

GASHEM SHOOKAT BAKSH VS CA AND MARILOU T. GONZALES

GR 97336 February 19, 1993

FACTS:

Gashem Shookat Baksh, an Iranian citizen, was an exchange student taking medical course atthe Lyceum Northwestern College in Dagupan City. Private respondent, Marilou Gonzales onthe other hand, was an employee at Mabuhay Luncheonette, a high school graduate and ofgood moral character and reputation duly respected in her community.

The two met at a party on August 3, 1986 and later on became inseparable lovers. Not longafter, Baksh proposed to marry Marilou which she willingly accepted.

Even before their engagement, Baksh and private respondent were already living together. In

the course of their cohabitation, Baksh attitude towards her changed. She was maltreated. As aresult, private respondent decided to leave. Thereafter, she filed a complaint against Baksh whorenounced their marriage agreement and asked her not to live with him anymore, because hewas already married to someone living in Bacolod.

ISSUE:

Was private respondent entitled to damages?

RULING:

Yes. Article 2176 of the Civil Code, which defines a quasi-delict thus:

"Whoever by act or omission causes damage to another, there being fault or negligence, isobliged to pay for the damage done. Such fault or negligence, if there is no pre-existingcontractual relation between the parties, is called a quasi-delict and is governed by the


12/63

provisions of this Chapter."

limited to negligent acts or omissions and excludes the notion of willfulness or intent. Quasi-delict , known in Spanish legal treatises as culpa aquiliana , is a civil law concept while torts is an

Anglo-American or common law concept. Torts is much broader than culpa aquiliana because itincludes not only negligence, but international criminal acts as well such as assault and battery,false imprisonment and deceit. In the general scheme of the Philippine legal system envisionedby the Commission responsible for drafting the New Civil Code, intentional and malicious acts,with certain exceptions, are to be governed by the Revised Penal Code, while negligent acts oromissions are to be covered by Article 2176 of the Civil Code.

DIANA VS. BATANGAS TRANSPORTATION, CO.

93 PHIL 391

FACTS:

On June 21, 1945, Truck No. 14 belonging to the defendant Batangas Transportation,Co. driven by Vivencio Bristol ran into a ditch at Bay, Laguna resulting in the death of FlorenioDiana and other passengers. Plaintiffs are the heirs of Diana. Bristol was charged and convictedof multiple homicide through reckless imprudence where he was ordered to indemnify the heirsof the deceased in the amount of Php 2,000. When the decision became final, a writ ofexecution was issued in order that the indemnity may be satisfied but the sheriff filed a returnstating that the accused had no visible leviable property. The present case (civil case No. 9221)was started when defendant failed to pay the indemnity under its subsidiary liability under article103 of the Revised Penal Code.

Defendant filed a motion to dismiss on the ground that there was another action pendingbetween the same parties for the same cause (civil case No. 8023) in which the same plaintiffssought to recover from the same defendant the amount of P4,500 as damages resulting fromthe death of Florenio Diana, who died while on board a truck of defendant due to the negligentact ( culpa aquiliana ) of the driver Vivencio Bristol.

Plaintiffs filed a written opposition to the motion to dismiss. The lower court, having found themotion well founded, dismissed the complaint, without special pronouncement as to costs; andtheir motion for reconsideration having been denied, plaintiffs took the present appeal.

ISSUE:

Was the lower court correct in dismissing the complaint on the sole ground that therewas another action pending between the same parties for same cause under Rule 8, section1(d) of the Rules of Court?

RULING:


13/63

No. Rule 8, section 1 (d) allows the dismissal of a case on the ground that "there is

another action pending between the same parties for the same cause." But where the presentcase stems from a criminal case in which the river of the defendant was found guilty of multiplehomicide through reckless imprudence and was ordered to pay an indemnity of P2,000 forwhich the defendant was made subsidiarily liable under article 103 of the Revised Penal Code,while the other case (civil case No. 8023) was an action for damages based on culpa aquiliana which underlies the civil liability predicated on articles 1902 to 1910 of the old Civil Code, thetwo cases involved two different remedies and the present case should not be dismissed.

"A quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code, witha substantivity all its own, and individuality that is entirely apart and independent from a delict orcrime. * * *. A distinction exists between the civil liability arising from a crime and theresponsibility for cuasi-delictos or culpa extra-contractual . The same negligent act causing dam-ages may produce civil liability arising from a crime under article 100 of the Revised PenalCode, or create an action for cuasi-delito or culpa extra-contractual under articles 1902-1910 ofthe Civil Code.

VALENZUELA VS. CA

253 SCRA 303

FACTS:

A case was filed by Ma. Lourdes Valenzuela, which was an action to recover damages

based on quasi-delict, for serious physical injuries sustained in a vehicular accident on June 24,1990. During the accident, Valenzuelas left leg was severed up to the middle of her thigh, withonly some skin and muscle connected to the rest of the body so she had to be amputated. Shewas confined in the hospital for twenty days and was eventually fitted with an artificial leg.

The lower court found Richard Li, the person driving the Mitsubishi Lancer, guilty ofgross negligence and liable for damages under 2176 of the Civil Code. Alexander CommercialInc., Lis empl oyer, was also found jointly and severally liable.

Upon appeal, CA agreed with the decision of the lower court regarding the liability of Li.However, CA absolved the liability of Alexander Commercial Inc. CA also reduced the claim formoral damages.

Hence, both parties assailed the respondent courts decision by filing two separatepetitions.

ISSUE:


14/63

Should Alexander Commercial Inc. be held jointly and severally liable?

RULING:

Yes. The Court agreed with the CA that the relationship of the employer and employeewas not based on the principle of respondent superior, which held the master liable for acts ofthe servant, but that of pater familias, in which the liability ultimately fell upon the employer forhis failure to exercise the diligence of a good father of the family in the selection and supervisionof his employees. Under the concept of pater familias embodied by Article 2180, the employermay be relieved from any liability upon showing that he exercised the diligence of a good fatherof the family. Once the evidence is introduced showing that the employer exercised the requiredamount of care, half of the employers burden is overcome. However, the question of diligentsupervision depends on the circumstances of employment.

In the instant case, Li, as an Assistant Manager of the company, admitted that hisfunctions did not require him to scrupulously keep normal office hours as he performs social andwork-related functions. The service car assigned to Li, therefore, enabled both to put up thefront of a highly successful entity, increasing the latters goodwill before its clientele. It alsofacilitated meeting between Li and its clients by providing the former with a convenient mode oftravel. Assuming that he really came from his officemates place as Li claimed, the same couldgive rise to speculation that he and his officemate had just been from a work-related function, orthey were together to discuss sales and other work related strategies.

Moreover, Alexander Commercial Inc. had not demonstrated to the satisfaction of thecourt that it exercised the care and diligence of a good father of the family in entrusting itscompany car to Li. No allegations were made as to whether or not the company took the stepsnecessary to determine or ascertain the driving proficiency and history of Li to whom it gave fulland unlimited use of a company car. Not having been able to overcome the burden ofdemonstrating that should be absolved of liability for entrusting its company car to Li, saidcompany based on the principle of bonus pater familias, ought to be jointly and severally liablewith Li for the injuries sustained by Valenzuela during the accident.

Thus, the decision of the CA was modified with the effect of reinstating the decision ofthe RTC.

MANILA RAILROAD CO. VS. COMPANIA TRANSATLANTICA 38 Phil 875

FACTS:

SS/Alicante, belonging to Compania Transatlantica de Barcelona was transporting two


15/63

locomotive boilers for the Manila Railroad Company. The equipment of the ship for dischargingthe heavy cargo was not strong enough to handle the boilers. Compania Transatlanticacontracted the services of Atlantic gulf and Pacific Co., which had the best equipment to lift theboilers out of the ships hold. When Alicante arrived in Manila, Atlantic company sent out itsfloating crane under the charge of one Leyden. When the first boiler was being hoisted out ofthe ships hold, the boiler could not be brought out because the sling was not properly placedand the head of the boiler was caught under the edge of the hatch. The weight on the cranewas increased by a strain estimated at 15 tons with the result that the cable of the sling brokeand the bo iler fell to the bottom of the ships hold. The sling was again adjusted and the boilerwas again lifted but as it was being brought up the bolt at the end of the derrick broke and theboiler fell again. The boiler was so badly damaged that it had to be shipped back to England tobe rebuilt. The damages suffered by Manila Railroad amounted to P23,343.29. Manila Railroadthen filed an action against the Streamship Company to recover said damages. The SteamshipCompany caused Atlantic Company to be brought as co-defendant arguing that AtlanticCompany as an independent contractor, who had undertaken to discharge the boilers hadbecome responsible for the damage.

The Court of First Instance decided in favor of Manila Railroad, the plaintiff, against AtlanticCompany and absolved the Steamship Company. Manila Railroad appealed from the decisionbecause the Steamship Company was not held liable also. Atlantic Company also appealedfrom the judgment against it.

ISSUES:

1. Was the Steamship Company liable to Manila Railroad for delivering the boiler in adamaged condition?

2. Was Atlantic Company liable to the Steamship Company for the amount it may be requiredto pay the plaintiff?

1. Was Atlantic Company directly liable to plaintiff as held by the trial court?

RULING:

There was a contractual relation between the Steamship Company and Manila Railroad.There was also a contractual relation between the Steamship Company and Atlantic. But therewas no contractual relation between the Railroad Company and Atlantic Company.

There was no question that the Steamship Company was liable to Manila Railroad as it hadthe obligation to transport the boiler in a proper manner safe and securely under thecircumstances required by law and customs. The Steamship Company cannot escape liabilitysimply because it employed a competent independent contractor to discharge the boiler.

Atlantic Company claimed that it was not liable, because it had employed all the diligence ofa good father of a family and proper care in the selection of Leyden. Said argument was nottenable, because said defense was not applicable to negligence arising in the course of the


16/63

performance of a contractual obligation. The same can be said with respect to the liability of Atlantic Company upon its contract with the Steamship Company. There was a distinctionbetween negligence in the performance of a contractual obligation (culpa contractual) andnegligence considered as an independent source of obligation (culpa aquiliana). AtlanticCompany wasis liable to the Steamship Company for the damage brought upon the latter by thefailure of Atlantic Company to use due care in discharging the boiler, regardless of the fact thatthe damage was caused by the negligence of an employee who was qualified for the work, dulychose with due care.

Since there was no contract between the Railroad Company and Atlantic Company,Railroad Company can had no right of action to recover damages from Atlantic Company for thewrongful act which constituted the violation of the contract. The rights of Manila Railroad canonly be made effective through the Steamship Company with whom the contract ofaffreightment was made.

MARANAN VS PEREZ

20 SCRA 412

FACTS:

Rogelio Corachea, a passenger in a taxicab owned and operated by Pascual Perez, wasstabbed and killed by the driver, Simeon Valenzuela. Valenzuela was found guilty for homicideby the Court of First Instance and was sentenced to suffer Imprisonment and to indemnify theheirs of the deceased in the sum of P6000. While pending appeal, mother of deceased filed anaction in the Court of First Instance of Batangas to recover damages from Perez andValenzuela. Defendant Perez claimed that the death was a caso fortuito for which the carrierwas not liable. The court a quo, after trial, found for the plaintiff and awarded her P3,000 asdamages against defendant Perez. The claim against defendant Valenzuela was dismissed.From this ruling, both plaintiff and defendant Perez appealed to this Court, the former asking formore damages and the latter insisting on non-liability.

Defendant-appellant relied solely on the ruling enunciated in Gillaco vs. Manila RailroadCo. that the carrier is under no absolute liability for assaults of its employees upon thepassengers.

ISSUE:

Was the contention of the defendant valid?

RULING:

No. The attendant facts and controlling law of that case and the one at bar were very different.In the Gillaco case, the passenger was killed outside the scope and the course of duty of the


17/63

guilty employee. The Gillaco case was decided under the provisions of the Civil Code of 1889which, unlike the present Civil Code, did not impose upon common carriers absolute liability forthe safety of passengers against willful assaults or negligent acts committed by their employees.The death of the passenger in the Gillaco case was truly a fortuitous event which exempted thecarrier from liability. It is true that Art. 1105 of the old Civil Code on fortuitous events has beensubstantially reproduced in Art. 1174 of the Civil Code of the Philippines but both articles clearlyremove from their exempting effect the case where the law expressly provides for liability inspite of the occurrence of force majeure. The Civil Code provisions on the subject of CommonCarriers are new and were taken from Anglo-American Law. The basis of the carrier's liability forassaults on passengers committed by its drivers rested either on the doctrine of respondentsuperior or the principle that it was the carrier's implied duty to transport the passenger safely.Under the second view, upheld by the majority and also by the later cases, it was enough thatthe assault happens within the course of the employee's duty. It was no defense for the carrierthat the act was done in excess of authority or in disobedience of the carrier's orders. Thecarrier's liability here was absolute in the sense that it practically secured the passengers fromassaults committed by its own employees.

REPUBLIC VS. LUZON STEVEDORING CORPORATION

21 SCRA 279

FACTS:

In the early afternoon of August 17, 1960, barge L-1892, owned by the LuzonStevedoring Corporation was being towed down the Pasig River by two tugboats when the

barge rammed against one of the wooden piles of the Nagtahan bailey bridge, smashing theposts and causing the bridge to list. The river, at the time, was swollen and the current swift, onaccount of the heavy downpour in Manila and the surrounding provinces on August 15 and 16,1960.

The Republic of the Philippines sued Luzon Stevedoring for actual and consequentialdamage caused by its employees, amounting to P200,000. Defendant Corporation disclaimedliability on the grounds that it had exercised due diligence in the selection and supervision of itsemployees that the damages to the bridge were caused by force majeure, that plaintiff has nocapacity to sue, and that the Nagtahan bailey bridge is an obstruction to navigation.

After due trial, the court rendered judgment on June 11, 1963, holding the defendant liable for

the damage caused by its employees and ordering it to pay plaintiff the actual cost of the repairof the Nagtahan bailey bridge which amounted to P192,561.72, with legal interest from the dateof the filing of the complaint.

ISSUE:

Was the collision of appellant's barge with the supports or piers of the Nagtahan bridge


18/63

caused by fortuitous event or force majeure?

RULING:

Yes. Considering that the Nagtahan bridge was an immovable and stationary object anduncontrovertedly provided with adequate openings for the passage of water craft, includingbarges like of appellant's, it was undeniable that the unusual event that the barge, exclusivelycontrolled by appellant, rammed the bridge supports raises a presumption of negligence on thepart of appellant or its employees manning the barge or the tugs that towed it. For in theordinary course of events, such a thing will not happen if proper care is used. In Anglo AmericanJurisprudence, the inference arises by what is known as the "res ipsa loquitur" rule

The appellant strongly stressed the precautions taken by it on the day in question: that itassigned two of its most powerful tugboats to tow down river its barge L-1892; that it assignedto the task the more competent and experienced among its patrons, had the towlines, enginesand equipment double-checked and inspected' that it instructed its patrons to take extraprecautions; and concludes that it had done all it was called to do, and that the accident,therefore, should be held due to force majeure or fortuitous event.

These very precautions, however, completely destroyed the appellant's defense. For casofortuito or force majeure (which in law are identical in so far as they exempt an obligor fromliability) by definition, are extraordinary events not foreseeable or avoidable, "events that couldnot be foreseen, or which, though foreseen, were inevitable" (Art. 1174, Civ. Code of thePhilippines). It was, therefore, not enough that the event should not have been foreseen oranticipated, as was commonly believed but it must be one impossible to foresee or to avoid. Themere difficulty to foresee the happening was not impossibility to foresee the same. The verymeasures adopted by appellant prove that the possibility of danger was not only foreseeable,but actually foreseen, and was not caso fortuito.

TRILLANA VS QUEZON COLLEGE, INC.

93 Phil. 383

FACTS:

Damasa Crisostomo wrote a letter to the Quezon College, Inc. for the subscription of

shares of stock of the said college wherein payment was to be made through money she wasgoing to generate from fishing. However, she died and as no payment appears to have beenmade on the subscription mentioned in the foregoing letter, the Quezon College, Inc. presenteda claim before the Court of First Instance in her testate proceeding, for the collection of the saidsum of money. The claim was dismissed by the trial court on the ground that the subscription inquestion was neither registered in nor authorized by the Securities and Exchange Commission.From this order the Quezon College, Inc. appealed.


19/63

ISSUE:

Was Damasa Crisostomo liable for the claim made by Quezon Colleges, Inc?

RULING:

No. The application sent by Damasa Crisostomo to the Quezon College, Inc. waswritten on a general form indicating that an applicant will enclose an amount as initial paymentand will pay the balance in accordance with law and the rules or regulations of the College. Inthe letter actually sent by Damasa Crisostomo, she not only did not enclose any initial payment,but stated that "babayaran kong lahat pagkatapos na ako ay makapagpahuli ng isda." Theacceptance of Quezon College, Inc. was essential, because it would be unfair to immediatelyobligate the Quezon College, Inc. under Damasa's promise to pay the price of the subscriptionafter she had caused fish to be caught. In other words, the relation between DamasaCrisostomo and the Quezon College, Inc. had only thus reached the preliminary stage wherebythe latter offered its stock for subscription on the terms stated in the form letter, and Damasaapplied for subscription fixing her own plan of payment, a relation in the absence, as in thepresent case of acceptance by the Quezon College, Inc. of the counter offer of DamasaCrisostomo, that had not ripened into an enforceable contract.

The need for express acceptance on the part of the Quezon College, Inc. imperative, inview of the proposal of Damasa Crisostomo to pay the value of the subscription after she hadharvested fish, a condition obviously dependent upon her sole will and, therefore, facultative innature, rendering the obligation void, under article 1115 of the old Civil Code (1182 of NCC).

PNB VS PINEDA

197 SCRA 1

FACTS:

In 1963, the Arroyo Spouses, obtained a loan of P580,000.00 from petitioner bank topurchase 60% of the subscribed capital stock and thereby acquire the controlling interest ofprivate respondent Tayabas Cement Company, Inc. (TCC). As security for said loan, thespouses Arroyo executed a real estate mortgage over a parcel of land known as the La Vistaproperty.

TCC filed with petitioner bank an application and agreement for the establishment of aneight (8) year deferred letter of credit (L/C) for $7,000,000.00 in favor of Toyo Menka Kaisha,Ltd. of Tokyo, Japan, to cover the importation of a cement plant machinery and equipment.Upon approval of said application, the Arroyo spouses executed a Surety Agreement dated

August 5, 1964 3 and Covenant dated August 6, 1964 to secure the loan.

The imported cement plant machinery and equipment arrived from Japan and werereleased to TCC under a trust receipt agreement. Subsequently, Toyo Menka Kaisha, Ltd. made


20/63

the corresponding drawings against the L/C as scheduled, but TCC failed to remit and/or paythe corresponding amount covered by the drawings. Thus, pursuant to the agreement, PNBrepossessed the imported machinery and equipment for failure of TCC to settle its obligationsunder the L/C.

On July 18, 1975, PNB filed a petition for extra-judicial foreclosure of the real estatemortgage over the La Vista property as well as the mortgaged properties located at Isabela,Negros Occidental and covered by OCT No. RT 1615.

At the auction sale, PNB was the highest bidder with a bid price of P1,000,001.00. However,when said property was about to be awarded to PNB, the representative of the mortgagor-spouses objected and demanded from the PNB the difference between the bid price ofP1,000,001.00 and the indebtedness of P499,060.25 of the Arroyo spouses on their personalaccount. It was the contention of the spouses Arroyo's representative that the foreclosureproceedings referred only to the personal account of the mortgagor spouses without referenceto the account of TCC.

ISSUE:

Was TCC's liability extinguished by the repossession of PNB of the imported cementplant machinery and equipment?

HELD:

No. PNB's possession of the subject machinery and equipment being precisely as a

form of security for the advances given to TCC under the Letter of Credit, said possession byitself cannot be considered payment of the secured loan. Payment would legally result only afterPNB had foreclosed on said securities, sold the same, and applied the proceeds thereof toTCC's loan obligation. Mere possession does not amount to foreclosure for foreclosure denotesthe procedure adopted by the mortgagee to terminate the rights of the mortgagor on theproperty and includes the sale itself.

Neither can said repossession amount to dacion en pago. Dation in payment takes place whenproperty is alienated to the creditor in satisfaction of a debt in money and the same is governedby sales. Dation in payment is the delivery and transmission of ownership of a thing by thedebtor to the creditor as an accepted equivalent of the performance of the obligation. Asaforesaid, the repossession of the machinery and equipment in question was merely to secure

the payment of TCC's loan obligation and not for the purpose of transferring ownership thereofto PNB in satisfaction of said loan. Thus, no dacion en pago was ever accomplished.

JOSE CANGCO VS MANILA RAILROAD

38 PHIL. 768


21/63

FACTS:

Cangco, herein plaintiff, was an employee of the defendant in this case, Manila RailroadCompany. Upon the occasion in question, plaintiff was returning home by train from his dailylabors. As the train drew up to the station, plaintiff arose from his seat. As the train sloweddown, plaintiff stepped off, but one or both of his feet came in contact with a sack ofwatermelons. As a result, his feet slipped from under him and he fell violently on the platform.

The accident occurred between 7- 8 oclock on a dark night as the railroad station was lighteddimly, objects on the platform were difficult to discern especially to a person emerging from alighted car.

Plaintiff sued the defendant company for damages. The latter interposed the defense that thedirect and proximate cause of the injury suffered by the plaintiff was his own contributorynegligence in failing to wait until the train had come to a complete stop before alighting.

ISSUE:

Should Manila Railroad be held liable?

RULING:

Yes. The Supreme Court reversed the decision of the lower court holding that it was

important to note that the foundation of the legal liability of the defendant was the contract ofcarriage, and that the obligation to respond for the damage which plaintiff has suffered arises, ifat all, from the breach of that contract by reason of the failure of defendant to exercise due carein its performance. That was to say, its liability was direct and immediate, differing essentially, inlegal viewpoint from that presumptive responsibility for the negligence of its servants, imposedby article 1903 of the Civil Code, which can be rebutted by proof of the exercise of due care intheir selection and supervision. Article 1903 of the Civil Code is not applicable to obligationsarising ex contractu, but only to extra-contractual obligations, or to use the technical form ofexpression, that article relates only to culpa aquiliana and not to culpa contractual .

Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil Code,clearly points out this distinction, which was also recognized by this Court in its decision in the

case of Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. rep., 359). In commenting upon article1093 Manresa clearly points out the difference between " culpa , substantive and independent,which of itself constitutes the source of an obligation between persons not formerly connectedby any legal tie" and culpa considered as an accident in the performance of an obligationalready existing . . . ."

On the railro ad companys defense of contributory negligence on the part of Cangco, the Courtheld that the plaintiff was ignorant of the fact that the obstruction which was caused by thesacks of melds piled on the platform existed. Moreover, the place was dark or dimly lighted.


22/63

Thus, there was failure on the part of the defendant to afford to its passengers facilities for safeegress from its trains.

NIETES VS CA

46 SCRA 654

FACTS:

On October 19, 1959, Dr. Pablo Garcia and Aquilino Nietes entered into a "Contract of Leasewith Option to Buy." Dr. Garcia (lessor) is the owner of the Angeles Educational Institute whichis the subject of the lease. the stipulates, among others, the manner of payment, that the lesewill be for a period of 5 years, and the option to buy agreement for a price of P100,000.00 within

the period of the lease. Nietes was able to pay P 24,757.00 plus P5200.00 of which Dr. Garcia issued receipts.

However, Dr. Garcia sent a letter to Nietes expressing his desire to rescind the contract. Nieteson the other hand contended that he has not violated any provision on the contract and thus,expressed his desire to buy the land and building.

A year after, Nietes paid the balance of P 84,860.00 of the purchase price of theproperty. He then demanded Dr. Garcia for specific performance to execute a deed of absolutesale of the leased property in his (Nietes) favor.

ISSUE:

Can Nietes still exercise his option to buy the land and building?

RULING:

Yes. The contract didoes not say that Nietes had to pay the stipulated price of P100,000 before exercising his option to buy the property in question. Accordingly, said option is governed by Art1169, the general principles on obligations, pursuant to which:

In reciprocal obligations, neither party incurs in delay if the other does not comply or is not readyto comply in a proper manner with what is incumbent upon him. From the moment one of theparties fulfills his obligation, delay by the other begins.

In the case of an option to buy, the creditor may validly and effectively exercise his right bymerely advising the debtor of the former's decision to buy and expressing his readiness to paythe stipulated price, provided that the same is available and actually delivered to the debtor


23/63

upon execution and delivery by him of the corresponding deed of sale. Unless and until thedebtor shall have done this the creditor is not and cannot be in default in the discharge of hisobligation to pay.In other words, notice of the creditor's decision to exercise his option to buyneed not be coupled with actual payment of the price, so long as this is delivered to the ownerof the property upon performance of his part of the agreement.

UNIVERSAL FOOD CORPORATION VS. CA

33 SCRA 1

FACTS:

This is a petition for certiorari by the UFC against the CA decision of February 13, 1968declaring the BILL OF ASSIGNMENT rescinded, ordering UFC to return to Magdalo Franciscohis Mafran sauce trademark and to pay his monthly salary of P300.00 from Dec. 1, 1960 untilthe return to him of said trademark and formula.

In 1938, plaintiff Magdalo V. Francisco, Sr. discovered a formula for the manufacture ofa food seasoning (sauce) derived from banana fruits popularly known as MAFRAN sauce. Itwas used commercially since 1942, and in the same year plaintiff registered his trademark in hisname as owner and inventor with the Bureau of Patents. However, due to lack of sufficientcapital to finance the expansion of the business, in 1960, said plaintiff secured the financialassistance of Tirso T. Reyes who, after a series of negotiations, formed with others defendantUniversal Food Corporation eventually leading to the execution on May 11, 1960 of theaforequoted "Bill of Assignment" (Exhibit A or 1).

On May 31, 1960, Magdalo Francisco entered into contract with UFC stipulating among

other things that he be the Chief Chemist and Second Vice-President of UFC and shall haveabsolute control and supervision over the laboratory assistants and personnel and in thepurchase and safekeeping of the chemicals used in the preparation of said Mafran sauce andthat said positions are permanent in nature.

In line with the terms and conditions of the Bill of Assignment, Magdalo Francisco wasappointed Chief Chemist with a salary of P300.00 a month. Magdalo Francisco kept the formulaof the Mafran sauce secret to himself. Thereafter, however, due to the alleged scarcity and highprices of raw materials, on November 28, 1960, Secretary-Treasurer Ciriaco L. de Guzman ofUFC issued a Memorandum duly approved by the President and General Manager Tirso T.Reyes that only Supervisor Ricardo Francisco should be retained in the factory and that thesalary of plaintiff Magdalo V. Francisco, Sr., should be stopped for the time being until the

corporation should resume its operation. On December 3, 1960, President and GeneralManager Tirso T. Reyes, issued a memorandum to Victoriano Francisco ordering him to reportto the factory and produce "Mafran Sauce" at the rate of not less than 100 cases a day so as tocope with the orders of the corporation's various distributors and dealers, and with instructionsto take only the necessary daily employees without employing permanent employees. Again, onDecember 6, 1961, another memorandum was issued by the same President and GeneralManager instructing the Assistant Chief Chemist Ricardo Francisco, to recall all daily employeeswho are connected in the production of Mafran Sauce and also some additional daily employeesfor the production of Porky Pops. On December 29, 1960, another memorandum was issued by


24/63

the President and General Manager instructing Ricardo Francisco, as Chief Chemist, andPorfirio Zarraga, as Acting Superintendent, to produce Mafran Sauce and Porky Pops in fullswing starting January 2, 1961 with further instructions to hire daily laborers in order to copewith the full blast operation. Magdalo V. Francisco, Sr. received his salary as Chief Chemist inthe amount of P300.00 a month only until his services were terminated on November 30, 1960.On January 9 and 16, 1961, UFC, acting thru its President and General Manager, authorizedPorfirio Zarraga and Paula de Bacula to look for a buyer of the corporation including itstrademarks, formula and assets at a price of not less than P300,000.00. Due to thesesuccessive memoranda, without plaintiff Magdalo V. Francisco, Sr. being recalled back to work,he filed the present action on February 14, 1961. Then in a letter dated March 20, 1961, UFCrequested said plaintiff to report for duty, but the latter declined the request because the presentaction was already filed in court.

ISSUES:

1. Was the Bill of Assignment really one that involves transfer of the formula for Mafran sauceitself?

2. Was petitioners contention that Magdalo Francisco is not entitled to rescission valid?

RULING:

1. No. Certain provisions of the bill would lead one to believe that the formula itself wastransferred. To quote, the respondent patentee "assign, transfer and convey all its propertyrights and interest over said Mafran trademark and formula for MAFRAN SAUCE unto the Partyof the Second Part," and the last paragraph states that such "assignment, transfer andconveyance is absolute and irrevocable (and) in no case shall the PARTY OF THE First Partask, demand or sue for the surrender of its rights and interest over said MAFRAN trademarkand mafran formula."

However, a perceptive analysis of the entire instrument and the language employedthereinwould lead one to the conclusion that what was actually ceded and transferred was onlythe use of the Mafran sauce formula. This was the precise intention of the parties.

The SC had the following reasons to back up the above conclusion. First, royalty waspaid by UFC to Magdalo Francisco. Second, the formula of said Mafran sauce was neverdisclosed to anybody else. Third, the Bill acknowledged the fact that upon dissolution of saidCorporation, the patentee rights and interests of said trademark shall automatically revert backto Magdalo Francisco. Fourth, paragraph 3 of the Bill declared only the transfer of the use of

the Mafran sauce and not the formula itself which was admitted by UFC in its answer. Fifth, thefacts of the case undeniably show that what was transferred was only the use. Finally, our CivilCode allows only the least transmission of right, hence, what better way is there to show theleast transmission of right of the transfer of the use of the transfer of the formula itself.

2. No. Petitioners contention that Magdalo Franciscos petition for rescission should be deniedbecause under Article 1383 of the Civil Code of the Philippines rescission can not be demandedexcept when the party suffering damage has no other legal means to obtain reparation, was ofno merit because it is predicated on a failure to distinguish between a rescission for breach of


25/63

contract under Article 1191 of the Civil Code and a rescission by reason of lesion or economicprejudice, under Article 1381, et seq. This was a case of reciprocal obligation. Article 1191may be scanned without disclosing anywhere that the action for rescission thereunder wassubordinated to anything other than the culpable breach of his obligations by the defendant.Hence, the reparation of damages for the breach was purely secondary. Simply put, unlike Art.1383, Art. 1191 allows both the rescission and the payment for damages. Rescission is notgiven to the party as a last resort, hence, it is not subsidiary in nature.

ZULUETA VS. MARIANO111 SCRA 206

FACTS:

Petitioner Zulueta was the owner of a house and lot in Antonio Subdivision, Pasig Rizal,while private respondent is a movie director. They entered into a Contract to Sell the saidproperty of petitioner for P75,000 payable in 20 years with respondent buyer assuming to pay adown payment of P5,000 and a monthly installment of P630 payable in advance before the 5thday of the corresponding month, starting with December, 1964.

One of their stipulations was that upon failure of the buyer to fulfill any of the conditionsbeing stipulated, the buyer automatically and irrevocably authorizes owner to recover extra-

judicially, physical possession of the land, building and other improvements, which were thesubject of the said contract, and to take possession also extra-judicially whatever personalproperties may be found within the aforesaid premises from the date of said failure to answer forwhatever unfulfilled monetary obligations buyer may have with owner. Demand was alsowaived.

On the allegation that private respondent failed to comply with the monthly amortizations

stipulated in the contract, despite demands to pay and to vacate the premises, and that therebythe contract was converted into one of lease, petitioner commenced an Ejectment suit againstrespondent before the Municipal Court of Pasig, praying that judgment be rendered orderingrespondent to 1) vacate the premises; 2) pay petitioner the sum of P11, 751.30 representingrespondents balance owing as of May, 1966; 3) pay petitioner the sum of P630 every monthafter May, 1966, and costs. Private respondent contended that the Municipal Court had no

jurisdiction over the nature of the action as it involved the interpretation and/or rescission of thecontract.

ISSUE:

Was the action before the Municipal Court essentially one for rescission or annulment ofa contract?

RULING:

Yes. According to the Supreme Court, ...proof of violation is a condition precedent to


26/63

resolution or rescission. It is only when the violation has been established that the contract canbe declared resolved or rescinded. Upon such rescission in turn, hinges a pronouncement thatpossession of the realty has become unlawful.

The Supreme Court, in Nera vs. Vacante (3 SCRA 505), also said, A violation by aparty of any of the stipulations of a contract on agreement to sell real property would entitle theother party to resolved or rescind it.

Also, according to the book of Tolentino, Civil Code of the Phil., Vol. IV, 1962 ed. P. 168,citing Magdalena Estate vs. Myrick, 71 Phil. 344 (1941), extra-judicial rescission has legal effectwhen the parties does not oppose it. If it is objected to, judicial determination of the issue is stillnecessary.

With regards to the jurisdictions of inferior courts, the Supreme Court said that the CFIcorrectly ruled that the Municipal Court had no jurisdiction over the case and correctly dismissedthe appeal. However, the CFI erred in assuming original jurisdiction, in the face of the objectioninterposed by petitioner. Section 11, Rule 40, leaves no room for doubt on this point.

Section 11 of Rule 40:

Section 11. Lack of jur i sd ic t ion . A case tried by an inferior court without jurisdiction over the subjectmatter shall be dismissed on appeal by the Court of First Instance. But instead of dismissing the case, the Court ofFirst Instance may try the case on the merits, if the parties therein file their pleadings and go to trial without anyobjection to such jurisdiction.

AYSON-SIMON VS. ADAMOS AND FERIA

G.R. NO. L-39378 AUGUST 28, 1984

FACTS:

Defendants, Nicolas Adamos and Vicente Feria, purchased two lots forming part of thePiedad Estate in Quezon City, from Juan Porciuncula. Thereafter, the successors-in-interest ofthe latter filed Civil Case No. 174 for annulment of the sale and the cancellation of TCT No.69475, which had been issued to defendants-appellants by virtue of the disputed sale. TheCourt rendered a Decision annulling the saleThe said judgment was affirmed by the AppellateCourt and had attained finality.

Meanwhile, during the pendency of the case above, defendants sold the said two lots toPetitioner Generosa Ayson-Simon for Php3,800.00 plus Php800.00 for facilitating the issuanceof the new titles in favor of petitioner. Due to the failure of the defendants to deliver the saidlots, petitioner filed a civil case for specific performance. The trial court rendered judgment topetitioners favor. However, defendants could not deliver the said lots because the CA hadalready annulled the sale of the two lots in Civil Case No. 174. Thus, petitioner filed anothercivil case for the rescission of the contract. Defendants were contending that petitioner cannotchoose to rescind the contract since petitioner chose for specific performance of the obligation.

Also, even though petitioner can choose to rescind the contract, it would not be possible,


27/63

because it has already prescribed.

ISSUES:

1. Can petitioner choose to rescind the contract even after choosing for the specificperformance of the obligation?

1. Had the option to rescind the contract prescribed?

RULING:

1. Yes. The rule that the injured party can only choose between fulfillment and rescission ofthe obligation, and cannot have both, applies when the obligation is possible of fulfillment. If, as

in this case, the fulfillment has become impossible, Article 1191 allows the injured party to seekrescission even after he has chosen fulfillment.

2. No. Article 1191 of the Civil Code provides that the injured party may also seek rescission,if the fulfillment should become impossible. The cause of action to claim rescission arises whenthe fulfillment of the obligation became impossible when the Court of First Instance of QuezonCity in Civil Case No. 174 declared the sale of the land to defendants by Juan Porciuncula acomplete nullity and ordered the cancellation of Transfer Certificate of Title No. 69475 issued tothem. Since the two lots sold to plaintiff by defendants form part of the land involved in CivilCase No. 174, it became impossible for defendants to secure and deliver the titles to and thepossession of the lots to plaintiff. But plaintiff had to wait for the finality of the decision in CivilCase No. 174, According to the certification of the clerk of the Court of First Instance of Quezon

City (Exhibit "E-2"), the decision in Civil Case No. 174 became final and executory "as per entryof Judgment dated May 3, 1967 of the Court of Appeals." The action for rescission must becommenced within four years from that date, May 3, 1967. Since the complaint for rescissionwas filed on August 16, 1968, the four year period within which the action must be commencedhad not expired.

SINGSON ENCARNACION VS. BALDOMAR

77 PHIL 470

FACTS:

Vicente Singson Encarnacion leased his house to Jacinta Baldomar and her son, LefrandoFernando upon a month-to-month basis. After Manila was liberated in the last war, SingsonEncarnacio notified Baldomar and her son Fernando to vacate the house because he needed itfor his office as a result of the destruction of the building where he had his office before. Despite


28/63

the demand, the Baldomar and Fernando continued their occupancy.

The defense of Baldomar and Fernando was that the contract with Singson Encarnacionauthorized them to continue occupancy indefinitely while they should faithfully fulfill theirobligation with respect to payment of rentals. Singson Encarnacion contended that the leasehad always and since the beginning been upon a month-to-month basis.

ISSUE:

Was it tenable for Singson Encarnacion to discontinue the lease of Baldomar and her son?

RULING:

The continuance and fulfillment of the contract of lease cannot be made to depend solelyand exclusively upon the free and uncontrolled choice of the lessees between continuing payingthe rentals or not, completely depriving the owner of all say in the matter. The defense ofBaldomar and Fernando would leave to the sole and exclusive will of one of the contractingparties the validity and fulfillment of the contract of lease, within the meaning of Article 1256 ofthe Civil Code. For if this were allowed, so long as the lessee elected to continue the lease bycontinuing the payment of the rentals the owner would never be able to discontinue the lease;conversely, although the owner should desire the lease to continue, the lessee could effectivelythwart his purpose if he should prefer to terminate the contract by the simple expedient ofstopping payment of the rentals.

PHILIPPINE BANKING CORPORATION VS. LUI SHE

1967 SEPTEMBER 12

FACTS:

Justina Santos y Canon Faustino and her sister Lorenza were the owners in common of a pieceof land in Manila.

The sisters lived in one of the houses, while Wong Heng, a Chinese, lived with his family in therestaurant. Wong had been a long-time lessee of a portion of the property, having a monthlyrental of P2,620.

On September 22, 1957 Justina Santos became the owner of the entire property as her sisterdied with no other heir. Then already well advanced in years, being at the time 90 years old,blind, crippled and an invalid, she was left with no other relative to live with, but she was takencared of by Wong.

"In grateful acknowledgment of the personal services of the Lessee to her," Justina Santos


29/63

executed on November 15, 1957, a contract of lease in favor of Wong, covering the portion thenalready leased to him and another portion fronting Florentino Torres street. The lease was for50 years, although the lessee was given the right to withdraw at any time from the agreement;the monthly rental was P3,120. Ten days later (November 25), the contract was amended so asto make it cover the entire property, including the portion on which the house of Justina Santosstood, at an additional monthly rental of P360.

On December 21 she executed contract giving Wong the option to buy the leased premises forP120,000, payable within ten years at a monthly installment of P1,000. The option wasconditioned on his obtaining Philippine citizenship, a petition for which was then pending in theCourt of First Instance of Rizal.

On November 18, 1958 she executed two other contracts, one extending the term of the leaseto 99 years, and another fixing the term of the option at 50 years. Both contracts are written inTagalog. In two wills executed on August 24 and 29, 1959, she bade her legatees to respect thecontracts she had entered into with Wong, but in a codicil of a later date (November 4, 1959)she appears to have a change of heart. Claiming that the various contracts were made by herbecause of machinations and inducements practised by him, she now directed her executor tosecure the annulment of the contracts.

Both parties however died, Wong Heng on October 21, 1962 and Justina Santos on December28, 1964. Wong was substituted by his wife, Lui She, the other defendant in this case, WhileJustina Santos was substituted by the Philippine Banking Corporation. Justina Santosmaintained now reiterated by the Philippine Banking Corporation that the lease contractshould have been annulled along with the four other contracts because it lacks mutuality,among others

Paragraph 5 of the lease contract states that "The lessee may at any time withdraw from thisagreement." It is claimed that this stipulation offends article 1308 of the Civil Code whichprovides that "the contract must bind both contracting parties; its validity or compliance cannotbe left to the will of one of them."

ISSUES:

1. (OBLICON ISSUE) Was the insertion in the contract of a resolutory condition, permitting thecancellation of the contract by one of the parties, valid?

2. (RELATED, but Consitutional Issue) Was the contract between Wong (Lui She) and JustinaSantos (Phil. Banking) enforceable?

RULING:

1. Yes. In the early case of Taylor vs. Uy Tiong Piao, the Supreme Court said:

Article 1256 [now art. 1308] of the Civil Code in our opinion creates no impediment to theinsertion in a contract for personal service of a resolutory condition permitting the cancellation of


30/63

the contract by one of the parties. Such a stipulation, as can be readily seen, does not makeeither the validity or the fulfillment of the contract dependent upon the will of the party to whomis conceded the privilege of cancellation; for where the contracting parties have agreed thatsuch option shall exist, the exercise of the option is as much in the fulfillment of the contract asany other act which may have been the subject of agreement. Indeed, the cancellation of acontract in accordance with conditions agreed upon beforehand is fulfillment

Further, in the case at bar, the right of the lessee to continue the lease or to terminate it was socircumscribed by the term of the contract that it cannot be said that the continuance of the leasedepends upon his will. At any rate, even if no term had been fixed in the agreement, this casewould at most justify the fixing of a period but not the annulment of the contract.

2. No. The contract of lease, as in this case, cannot be sustained. However, to be sure, a leaseto an alien for a reasonable period was valid, so was an option giving an alien the right to buyreal property on condition that he is granted Philippine citizenship.

But if an alien was given not only a lease of, but also an option to buy, a piece of land, by virtueof which the Filipino owner cannot sell or otherwise dispose of his property, this to last for 50years, then it became clear that the arrangement was a virtual transfer of ownership wherebythe owner divested himself in stages not only of the right to enjoy the land (jus possidendi, jusutendi, jus fruendi and jus abutendi) but also of the right to dispose of it (jus disponendi) rights the sum total of which make up ownership. It was just as if today the possession istransferred, tomorrow, the use, the next day, the disposition, and so on, until ultimately all therights of which ownership is made up are consolidated in an alien. And yet this was just exactlywhat the parties in this case did within this pace of one year, with the result that Justina Santos'ownership of her property was reduced to a hollow concept. If this can be done, then theConstitutional ban against alien landholding in the Philippines, is indeed in grave peril.

The contracts in question are annulled and set aside; the land subject-matter of the contractswas ordered returned to the estate of Justina Santos as represented by the Philippine BankingCorporation.

ROMERO VS. COURT OF APPEALS

G.R. No. 107207


31/63

FACTS:

Petitioner Virgilio R. Romero was engaged in the business of production, manufactureand exportation of perlite filter aids, permalite insulation and processed perlite ore. In 1988,petitioner and his foreign partners decided to put up a central warehouse in Metro Manila on aland area of approximately 2,000 square meters.

Alfonso Flores and his wife, accompanied by a broker, offered a parcel of land measuring 1,952square meters. Petitioner visited the property and, except for the presence of squatters in thearea, he found the place suitable for a central warehouse.

Later, the Flores spouses called on petitioner with a proposal that should he advance theamount of P50,000.00 which could be used in taking up an ejectment case against thesquatters, private respondent would agree to sell the property for only P800.00 per squaremeter. Petitioner expressed his concurrence. On 09 June 1988, a contract, denominated "Deedof Conditional Sale," was executed between petitioner and private respondent.

Pursuant to the agreement, private respondent filed a complaint for ejectment against thesquatter families. Judgment was rendered ordering the defendants to vacate the premises. Thedecision was handed down beyond the 60-day period stipulated in the contract. The writ ofexecution of the judgment was issued, still later, on 30 March 1989.

In a letter, dated 07 April 1989, private respondent sought to return the P50,000.00 she receivedfrom petitioner since, she said, she could not "get rid of the squatters" on the lot. Atty. Sergio

A.F. Apostol, counsel for petitioner, in his reply of 17 April 1989, refused the tender

A few days later, private respondent, prompted by petitioner's continued refusal to accept thereturn of the P50,000.00 advance payment, filed with the Regional Trial Court of Makati, Branch133, Civil Case No. 89-4394 for rescission of the deed of "conditional" sale, plus damages, andfor the consignation of P50,000.00 cash.

The Regional Trial Court of Makatirendered its decision holding that private respondent had noright to rescind the contract since it was she who "violated her obligation to eject the squattersfrom the subject property" and that petitioner, being the injured party, was the party who could,under Article 1191 of the Civil Code, rescind the agreement. The court ruled that the provisionsin the contract relating to (a) the return/reimbursement of the P50,000.00 if the vendor were tofail in her obligation to free the property from squatters within the stipulated period or (b), uponthe other hand, the sum's forfeiture by the vendor if the vendee were to fail in paying the agreed

purchase price, amounted to "penalty clauses".

Private respondent appealed to the Court of Appeals who opined that the contract entered intoby the parties was subject to a resolutory condition, i .e ., the ejectment of the squatters from theland, the non-occurrence of which resulted in the failure of the object of the contract; that privaterespondent substantially complied with her obligation to evict the squatters; that it was petitionerwho was not ready to pay the purchase price and fulfill his part of the contract, and that theprovision requiring a mandatory return/reimbursement of the P50,000.00 in case privaterespondent would fail to eject the squatters within the 60-day period was not a penal clause.


32/63

ISSUE:

May the vendor demand the rescission of a contract for the sale of a parcel of land for acause traceable to his own failure to have the squatters on the subject property evicted withinthe contractually-stipulated period?

RULING:

No. From the moment the contract was perfected, the parties were bound not only to thefulfillment of what has been expressly stipulated but also to all the consequences which,according to their nature, may be in keeping with good faith, usage and law. Under theagreement, private respondent was obligated to evict the squatters on the property. The

ejectment of the squatters was a condition the operative act of which sets into motion the periodof compliance by petitioner of his own obligation, i .e ., to pay the balance of the purchase price.Private respondent's failure "to remove the squatters from the property" within the stipulatedperiod gives petitioner the right to either refuse to proceed with the agreement or waive thatcondition in consonance with Article 1545 of the Civil Code.This option clearly belonged topetitioner and not to private respondent.

The Court shared the opinion of the appellate court that the undertaking required of privaterespondent does not constitute a "potestative condition dependent solely on his will" that might,otherwise, be void in accordance with Article 1182 of the Civil Codebut a "mixed" condition"dependent not on the will of the vendor alone but also of third persons like the squatters andgovernment agencies and personnel concerned."The Court had hastened to add, however, that

where the so-called "potestative condition" was imposed not on the birth of the obligation, but onits fulfillment, only the obligation was avoided, leaving unaffected the obligation itself.

In contracts of sale particularly, Article 1545 of the Civil Code, aforementioned, allows theobligee to choose between proceeding with the agreement or waiving the performance of thecondition. It is this provision which is the pertinent rule in the case at bench. Here, evidently,petitioner had waived the performance of the condition imposed on private respondent to freethe property from squatters.

In any case, private respondent's action for rescission was not warranted. She was not theinjured party.The right of resolution of a party to an obligation under Article 1191 of the CivilCode was predicated on a breach of faith by the other party that violates the reciprocity between

them.It was private respondent who has failed in her obligation under the contract. Petitioner didnot breach the agreement. He had agreed, in fact, to shoulder the expenses of the execution ofthe judgment in the ejectment case and to make arrangements with the sheriff to effect suchexecution. In his letter of 23 June 1989, counsel for petitioner has tendered payment anddemanded forthwith the execution of the deed of absolute sale. Parenthetically, this offer to pay,having been made prior to the demand for rescission, assuming for the sake of argument thatsuch a demand was proper under Article 1592of the Civil Code, would likewise suffice to defeatprivate respondent's prerogative to rescind thereunder.


33/63

CLAUDINA VDA. DE VILLARUEL, ET AL. VS. MANILA MOTOR CO., INC.

104 PHIL. 926

FACTS:

On May 31, 1940, the plaintiffs Villaruel and defendant Manila Motor Co. Inc. enteredinto a contract whereby the defendant agreed to lease plaintiffs building premises.

On October 31, 1940, the leased premises were placed in the possession of the defendant untilthe invasion of 1941. The Japanese military occupied and used the property leased as part oftheir quarters from June, 1942 to March, 1945, in which no payment of rentals were made.Upon the liberation of the said city, the American forces occupied the same buildings that werevacated by the Japanese. When the United States gave up the occupancy of the premises,defendant decided to exercise their option to renew the contract, in which they agreed.However, before resuming the collection of rentals, Dr. Alfredo Villaruel upon advice demandedpayment of rentals corresponding to the time the Japanese military occupied the leasedpremises, but the defendant refused to pay. As a result plaintiff gave notice seeking therescission of the contract and the payment of rentals from June, 1942 to March, 1945; this wasrejected by the defendant. Despite the fact the defendant under new branch manager paid toplaintiff the sum of P350 for the rent, the plaintiff still demanded for rents in arrears and for therescission of the contract of lease. The plaintiff commenced an action before the CFC of Neg.Occidental against defendant company. During the pendency of the case, the leased buildingwas burned down. Because of the occurrence, plaintiffs demanded reimbursement from thedefendants, but having been refused, they filed a supplemental complaint to include a 3rd causeof action, the recovery of the value of the burned building. The trial court rendered judgment infavor of the plaintiff. Hence the defendants appeal.

ISSUE:

Is Manila Motor Co. Inc. liable for the loss of the leased premises?

RULING:

No. Clearly, the lessor's insistence upon collecting the occupation rentals for 1942-1945

was unwarranted in law. Hence, their refusal to accept the current rentals without qualificationplaced them in default (mora creditoris or accipiendi) with the result that thereafter, they had tobear all supervening risks of accidental injury or destruction of the leased premises. While notexpressly declared by the Code of 1889, this result is clearly inferable from the nature andeffects of mora.

In other words, the only effect of the failure to consign the rentals in court was that theobligation to pay them subsisted and the lessee remained liable for the amount of the unpaidcontract rent, corresponding to the period from July to November, 1946; it being undisputed


34/63

that, from December 1946 up to March 2, 1948, when the commercial buildings were burned,the defendants-appellants have paid the contract rentals at the rate of P350 per month. But thefailure to consign did not eradicate the default ( mora ) of the lessors nor the risk of loss that layupon t

Documents

Oblicon LAW xu