TABLE OF CONTENTS

I.

OBLIGATIONS
v DEVELOPMENT BANK OF THE PHILIPPINES (DBP) vs. GUARIA
AGRICULTURAL AND REALTY DEVELOPMENT CORPORATION,
G.R. No. 160758
January 15, 2014
Subject matter: (Default)
v CONSOLIDATED INDUSTRIAL GASES, INC. vs. ALABANG
MEDICAL CENTER
G.R. No. 181983
November 13, 2013
Subject matter: (Reciprocal Obligations)
v PLANTERS DEVELOPMENT BANK vs. SPOUSES ERNESTO LOPEZ
and FLORENTINA LOPEZ substituted by JOSEPH WILFRED
JOVEN JOSEPH GILBERT JOVEN and MARLYN JOVEN
G.R. No. 186332
October 23, 2013
Subject matter: (Breach of Obligation)
v FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE NETWORK, INC.,
vs. SPOUSES CONRADO AND MARIA VICTORIA RONQUILLO
G.R. No. 185798
Date: Jan. 13, 2014
Subject matter: (Breach of Obligation)
v VECTOR
SHIPPING
CORPORATION
ASSURANCE
G.R. No. 159213
July 3, 2013
Subject matter: (Subrogation)

vs. AMERICAN

HOME

v S.C.
MEGAWORLD
CONSTRUCTION
AND
DEVELOPMENT
CORPORATION vs. ENGR. LUIS U. PARADA, REPRESENTED BY
ENGR. LEONARDO A. PARADA OF GENLITE INDUSTRIES
G.R. No. 183804
September 11, 2013
Subject matter: (Novation)
v METRO CONCAST STEEL CORPORATION, SPOUSES JOSE S.
DYCHIAO AND TIU OH YAN, SPOUSES GUILLERMO AND
MERCEDES DYCHIAO, AND SPOUSES VICENTE AND FILOMENA
DYCHIAO vs. ALLIED BANK CORPORATION
G.R. No. 177921
December 4, 2013
Subject matter: (Extinguishment of Obligation)
II.

CONTRACTS
v PHILIPPINE NATIONAL BANK vs. TERESITA TAN DEE, ET AL.
G.R. No. 182128
February 19, 2014
Subject matter: (Relativity of Contracts)

v CERILA J. CALANASAN, REPRESENTED BY TEODORA J.

CALANASAN AS ATTORNEY-IN-FACT vs. SPOUSES VIRGILIO
DOLORITO AND EVELYN C. DOLORITO
G.R. No. 171937
November 25, 2013
Subject matter: (Classification of Contracts)
v SANDOVAL SHIPYARDS, INC. AND RIMPORT INDUSTRIES, INC.
REPRESENTED BY ENGR. REYNALDO G. IMPORTANTE vs.
PHILIPPINE MERCHANT MARINE ACADEMY (PMMA)
G.R. No. 188633
April 10, 2013
Subject matter: (Rescission)
v SANGGUNIANG
PANLUNGSOD
NG
BAGUIO
vs. JADEWELL PARKING SYSTEMS CORPORATION
G.R. No. 160025
April 23, 2014
Subject matter: (Rescission)

CITY

v DOMINGO GONZALO vs. JOHN TARNATE JR.

G.R. No. 160600
January 15, 2014
Subject matter: (Pari Delicto)
v PHILIPPINE COMMERCIAL INTERNATIONAL BANK (NOW BDO
UNIBANK, INC.) vs. ARTURO P. FRANCO, SUBSTITUTED BY HIS
HEIRS, NAMELY: MAURICIA P. FRANCO, FLORIBEL P. FRANCO,
AND ALEXANDER P. FRANCO
G.R. No. 180069
March 5, 2014
Subject matter: (Extinguishment of Contracts)
III.

SALES
v ALI AKANG vs. MUNICIPALITY OF ISULAN, SULTAN KUDARAT
PROVINCE, REPRESENTED BY ITS MUNICIPAL MAYOR AND
MUNICIPAL
VICE
MAYOR
AND
MUNICIPAL
COUNCILORS/KAGAWADS
G.R. No. 186014
June 26, 2013
Subject matter: (Contract to Sell)
v ROLANDO M. MENDIOLA vs. COMMERZ TRADING INT'L., INC.
G.R. No. 200895
July 31, 2013
Subject matter: (Contract of Sale)
v SKUNAC CORPORATION AND ALFONSO F. ENRIQUEZ vs. ROBERTO S.
SYLIANTENG, ET AL.
G.R. No. 205879
April 23, 2014
Subject matter: (Double sale)
v ACE FOODS, INC., vs. MICRO PACIFIC TECHNOLOGIES CO., LTD.
G.R. No. 200602
December 11, 2013
Subject matter: (Contract of Sale)

IV.

DEPOSIT
v THE METROPOLITAN BANK AND TRUST COMPANY vs. ANA GRACE
ROSALES AND YO YUK TO
G.R. No. 183204
January 13, 2014
Subject matter: (Deposit)

V.

ALEATORY CONTRACTS INSURANCE, GAMBLING, LIFE ANNUITY

v FORTUNE MEDICARE vs. DAVID ROBERT U. AMORIN
G.R. No.: 195872
Date: Mar. 12, 2014
Subject matter: (Contract of Adhesion)

VI.

AGENCY
v NICANORA G. BUCTON (DECEASED), SUBSTITUTED BY
REQUILDA B. YRAY, vs. RURAL BANK OF EL SALVADOR, INC.,
MISAMIS ORIENTAL, AND REYNALDO CUYONG, vs. ERLINDA
CONCEPCION AND HER HUSBAND AND AGNES BUCTON LUGOD
G.R. No. 179625
February 24, 2014
Subject matter: (SPA)

VII.

TRUSTS
v SE JUAN TONG, ET AL, vs. GO TIAT KUN, ET
G.R. No. 196023
April 21, 2014
Subject matter: (Sales)

VIII.

EXTRA-CONTRACTUAL OBLIGATIONS

v DR. FILOTEO A. ALANO vs. ZENAIDA MAGUD-LOGMAO

G.R. No. 175540
Date: April 7, 2014
Subject matter: (Quasi-delict)
v CATHAY PACIFIC AIRWAYS vs. JUANITA REYES, WILFREDO
REYES, MICHAEL ROY REYES, SIXTA LAPUZ, and SAMPAGUITA
TRAVEL CORP.
G.R. No. 185891
June 26, 2013
Subject matter: (Quasi-delict)
IX.

DAMAGES
v MAGSAYSAY MARITIME CORPORATION vs. OSCAR D. CHIN, JR.
G.R. No. 199022
April 7, 2014
Subject matter: (Moral and Exemplary Damages)
v ONE NETWORK RURAL BANK, INC. vs. DANILO G. BARIC
G.R. No. 193684
March 5, 2014
Subject matter: (Nominal Damages)

DEVELOPMENT BANK OF THE PHILIPPINES (DBP) vs.

GUARIA AGRICULTURAL AND REALTY DEVELOPMENT
CORPORATION,
G.R. No. 160758
January 15, 2014
Facts:
In July 1976, Guaria Corporation applied for a loan from DBP to finance the
development of its resort complex situated in Trapiche, Oton, Iloilo. The loan, in the
amount of P3,387,000.00, was approved on August 5, 1976. Guaria Corporation
executed a promissory note that would be due on November 3, 1988. On October 5,
1976, Guaria Corporation executed a real estate mortgage over several real
properties in favor of DBP as security for the repayment of the loan and then a
chattel mortgage over the personal properties existing at the resort complex and
those yet to be acquired out of the proceeds of the loan, also to secure the
performance of the obligation. Prior to the release of the loan, DBP required Guaria
Corporation to put up a cash equity of P1,470,951.00 for the construction of the
buildings and other improvements on the resort complex. The loan was released in
several instalments, and Guaria Corporation used the proceeds to defray the cost of
additional improvements in the resort complex.
Guaria Corporation demanded the release of the balance of the loan, but
DBP refused. Instead, DBP directly paid some suppliers of Guaria Corporation over
the latter's objection. DBP found upon inspection of the resort project, its
developments and improvements that Guaria Corporation had not completed the
construction works.7In a letter dated February 27, 1978,8 and a telegram dated June
9, 1978,9 DBP thus demanded that Guaria Corporation expedite the completion of
the project, and warned that it would initiate foreclosure proceedings should Guaria
Corporation not do so.
Issue:
Whether or not the foreclosure was correct?
Held:
Considering that it had yet to release the entire proceeds of the loan, DBP
could not yet make an effective demand for payment upon Guaria Corporation to
perform its obligation under the loan. According to Development Bank of the
Philippines v. Licuanan, it would only be when a demand to pay had been made and
was subsequently refused that a borrower could be considered in default, and the
lender could obtain the right to collect the debt or to foreclose the mortgage. Having
found and pronounced that the extrajudicial foreclosure by DBP was premature, and
that the ensuing foreclosure sale was void and ineffectual, the Court affirms the
order for the restoration of possession to Guarina Corporation and the payment of

reasonable rentals for the use of the resort. The CA properly held that the premature
and invalid foreclosure had unjustly dispossessed Guarina Corporation of its
properties. Consequently, the restoration of possession and the payment of
reasonable rentals were in accordance with Article 561 of the Civil Code, which
expressly states that one who recovers, according to law, possession unjustly lost
shall be deemed for all purposes which may redound to his benefit to have enjoyed it
without interruption.
It is true that loans are often secured by a mortgage constituted on real or
personal property to protect the creditors interest in case of the default of the
debtor. By its nature, however, a mortgage remains an accessory contract dependent
on the principal obligation, such that enforcement of the mortgage contract will
depend on whether or not there has been a violation of the principal obligation. While
a creditor and a debtor could regulate the order in which they should comply with
their reciprocal obligations, it is presupposed that in a loan the lender should perform
its obligation the release of the full loan amount before it could demand that the
borrower repay the loaned amount.
Being a banking institution, DBP owed it to Guaria Corporation to exercise
the highest degree of diligence, as well as to observe the high standards of integrity
and performance in all its transactions because its business was imbued with public
interest. The high standards were also necessary to ensure public confidence in the
banking system, for, according to Philippine National Bank v. Pike: The stability of
banks largely depends on the confidence of the people in the honesty and efficiency
of banks.

CONSOLIDATED INDUSTRIAL GASES, INC. vs. ALABANG

MEDICAL CENTER
G.R. No. 181983
November 13, 2013

Facts:
Consolidated Industrial Gases, Inc. (CIGI) is a domestic corporation engaged
in the business of selling industrial gases and installing centralized medical and
vacuum pipeline system. Alabang Medical Center AMC, is a domestic corporation
operating a hospital business. CIGI, as contractor and Alabang Medical Center AMC,
as owner, entered into a contract whereby the former bound itself to provide labor
and materials for the installation of a medical gas pipeline system for the hospital for
the contract price of P9,856,725.18 for Phase 1, which AMC duly paid in full.
The herein legal controversy arose after the parties entered into another
agreement,this time for the continuation of the centralized medical oxygen and
vacuum pipeline system in the hospitals fourth and fifth floors (Phase 2 installation
project) at the cost of P2,267,344.42.
This second contract followed the same terms and conditions of the contract
for the Phase1 installation project. CIGI forthwith commenced installation works for
Phase 2 while AMC paid the partial amount of P1,000,000.00 with the agreement
that the balance shall be paid through progress billing and within fifteen days from
the date of receipt of the original invoice sent by CIGI.
On August 4, 1997, CIGI sent AMC Charge Sales Invoice as completion billing
for the unpaid balance of P1,267,344.42 for the Phase 2 installation project. When
the sales invoice was left unheeded, CIGI sent a demand letter to AMC. AMC,
however, still failed to pay thus prompting CIGI to file a collection suit before the RTC.
CIGI claimed that AMCs obligation to pay the outstanding balance of the
contract price for the Phase 2 installation project is already due and demandable
pursuant to Article II, page 4 of the contract stating that the project shall be paid
through progress billing within fifteen days from the date of receipt of original invoice.
AMC averred that its obligation to pay the balance of the contract price has
not yet accrued because CIGI still has not turned over a complete and functional
medical oxygen and vacuum pipeline system.
RTC rendered its Decision wherein it adjudged AMC to have breached the
contract for failure to perform its obligation of paying the remaining balance of the
contract price. AMC appealed to the CA which granted the appeal and reversed the
RTC judgment. The CA ruled that it was CIGI who breached the contract when it failed
to complete the project and to turn over a fully functional centralized medical oxygen
and vacuum pipeline system.

Issue:
Whether or not CIGIs demand for payment upon AMC is proper.

Held:
No. The subject installation contracts bear the features of reciprocal
obligations. Reciprocal obligations are those which arise from the same cause, and in
which each party is a debtor and a creditor of the other, such that the obligation of
one is dependent upon the obligation of the other. They are to be performed
simultaneously, so that the performance of one is conditioned upon the
simultaneous fulfillment of the other. In reciprocal obligations, neither party incurs in
delay if the other does not comply or is not ready to comply in a proper manner with
what is incumbent upon him.
From the moment one of the parties fulfills his obligation, delay by the other
begins. Being reciprocal in nature, the respective obligations of AMC and CIGI are
dependent upon the performance of the other of its end of the deal such that any
claim of delay or non-performance can only prosper if the complaining party has
faithfully complied with its own obligation.
In reciprocal obligations, before a party can demand the performance of the
obligation of the other, the former must also perform its own obligation. For its failure
to turn over a complete project in accordance with the terms and conditions of the
installation contracts, CIGI cannot demand for the payment of the contract price
balance from AMC, which, in turn, cannot legally be ordered to pay. Otherwise, AMC
will be effectively forced to accept an incomplete performance contrary to Article
1248 of the Civil Code which states that "unless there is an express stipulation to
that effect, the creditor cannot be compelled partially to receive the prestations in
which the obligation consists."
Considering that AMCs obligation to pay the balance of the contract price did
not accrue, the stipulated interest thereon also did not begin to run.

PLANTERS DEVELOPMENT BANK vs. SPOUSES ERNESTO

LOPEZ and FLORENTINA LOPEZ substituted by JOSEPH
WILFRED JOVEN JOSEPH GILBERT JOVEN and MARLYN JOVEN
G.R. No. 186332
October 23, 2013
Facts:
Sometime in 1983, the spouses Emesto and Florentina Lopez applied for and
obtained a real estate loan in the amount of 3,000,000.00 from Planters Bank. To
secure the payment of the loan, the spouses Lopez mortgaged a parcel of land
covered by Transfer Certificate of Title No. T-16233.
On July 21, 1983, the parties signed an amendment to the loan agreement.
Accordingly, the interest rate was increased to twenty-three percent (23%) p.a. and
the term of the loan was shortened to three years. On March 9, 1984, the parties
executed a second amendment to the loan agreement. The interest rate was further
increased to twenty-five percent (25%) p.a. The contract also provided that releases
on the loan shall be subject to Planters Banks availability of funds. Since the
Philippine economy deteriorated the price of the materials and the cost of labor
escalated. To finish the project, the spouses Lopez obtained an additional loan in the
amount of P1,200,000.00 from Planters Bank.
On April 25, 1984, they entered into a third amendment to the loan
agreement. The amount of the loan and the interest rate were increased to
P4,200,000.00 and twenty-seven percent (27%) p.a., respectively. The spouses
Lopez failed to avail the full amount of the loan because Planters Bank refused to
release the remaining amount of P700,000.00. On October 13, 1984, the spouses
Lopez filed against Planters Bank complaint for rescission of the loan agreements
and for damages with the Regional Trial Court (RTC) of Makati City.
In a decision dated August 18, 1997, the RTC ruled in Planters Banks favor. It
held that the spouses Lopez had no right to rescind the loan agreements because
they were not the injured parties. On November 27, 2006, the CA reversed the RTC
ruling. It held that Planters Banks refusal to release the loan was a substantial
breach of the contract.
Issue:
Whether Planters Bank is liable for substantial breach in the loan agreement
thus giving ground for rescission.
Held:
NO. The CAs conclusion that rescission is not proper. Planters Bank indeed
incurred in delay by not complying with its obligation to make further loan releases.

Its refusal to release the remaining balance, however, was merely a slight or casual
breach as shown below. In other words, its breach was not sufficiently fundamental
to defeat the object of the parties in entering into the loan agreement. The wellsettled rule is that rescission will not be permitted for a slight or casual breach of the
contract. The question of whether a breach of contract is substantial depends upon
the attending circumstances.
The factual circumstances of this case lead us to the conclusion that Planters
Bank substantially complied with its obligation. To reiterate, Planters Bank released
P3,500,000.00 of the P4,200,000.00 loan. Only the amount of P700,000.00 was
not released. This constitutes 16.66% of the entire loan. Moreover, the progress
report dated May 30, 1984 states that 85% of the six-story building was already
completed by the spouses Lopez. It is also erroneous to solely impute the noncompletion of the building to Planters Bank. Planters Bank is not an insurer of the
buildings construction.
Even assuming that Planters Bank substantially breached its obligation, the
fourth paragraph of Article 1191 of the Civil Code expressly provides that rescission
is without prejudice to the rights of third persons who have acquired the thing, in
accordance with Article 1385 of the Civil Code. In turn, Article 1385 states that
rescission cannot take place when the things which are the object of the contract are
legally in the possession of third persons who did not act in bad faith.
In the present case, the mortgaged properties had already been foreclosed.
They were already sold to the highest bidder at a public auction. We recognize that
transferees pendente lite are proper, but not indispensable, parties in this case, as
they would, in any event, be bound by the judgment against Planters Bank. However,
the respondents did not overcome the presumption that the buyers bought the
foreclosed properties in good faith. The spouses Lopez did not cause the annotation
of notice of lis pendens at the back of the title of the mortgaged lot. Moreover, the
respondents did not adduce any evidence that would show that the buyers bought
the property with actual knowledge of the pendency of the present case.
Furthermore, the spouses Lopezs failure to pay the overdue loan made them parties
in default, not entitled to rescission under Article 1191 of the Civil Code.

FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE NETWORK,

INC., vs. SPOUSES CONRADO AND MARIA VICTORIA
RONQUILLO
G.R. No. 185798
Date: Jan. 13, 2014
Facts:
Petitioner Fil-Estate Properties, Inc. is the owner and developer of the Central
Park Place Tower while Fil-Estate Network, Inc. is its authorized marketing agent.
Spouses Conrado and Maria Victoria Ronquillo bought from petitioners an 82-square
meter condominium unit at Central Park Place Tower in Mandaluyong City for a preselling contract price of P5,174,000.00. Ronquillos executed and signed a
Reservation Application Agreement and deposited P200,000.00 as reservation fee.
They paid the full downpayment and had been paying monthly amortizations until
September 1998. Upon knowing that construction works had stopped, they also
stopped paying their monthly amortization. Claiming to have made a payment,
Ronquillos demanded a full refund of their payment with interest. Respondents then
filed a Complaint for Refund and Damages before the Housing and Land Use
Regulatory Board (HLURB).
Petitioners asserted the delay in construction to the 1997 Asian financial
crisis. They denied committing fraud or misrepresentation.
Issue:
Whether or not the Asian financial crisis constitute a fortuitous event which
would justify delay by petitioners in the performance of their contractual obligation.
Held:
No. The Asian financial crisis is not a fortuitous event. As a result of the
breach committed by petitioners, respondents may rescind the contract and ask for
refund the amount of amortizations paid including interest and damages; Petitioners
are likewise obligated to pay attorneys fees and the administrative fine.

VECTOR SHIPPING CORPORATION vs. AMERICAN HOME

ASSURANCE
G.R. No. 159213
July 3, 2013
Facts:
Vector was the operator of the motor tanker M/T Vector, while Soriano was
the registered owner of the M/T Vector. On September 30, 1987, Caltex entered into
a contract of Affreightment with Vector for the transport of Caltexs petroleum cargo
through the M/T Vector. Caltex insured the petroleum cargo with respondent. In the
evening of December 20, 1987, the M/T Vector and the M/V Doa Paz, the latter a
vessel owned and operated by Sulpicio Lines, Inc., collided in the open sea near
Dumali Point in Tablas Strait, which led to the sinking of both vessels. On July 12,
1988, respondent indemnified Caltex for the loss of the petroleum cargo in the full
amount of P7,455,421.08.
On March 5, 1992, respondent filed a complaint against Vector, Soriano, and
Sulpicio Lines, Inc. to recover the full amount of P7,455,421.08 it paid to Caltex. The
RTC issued a resolution dismissing Civil Case stating that this action is upon a
quasidelict and as such must be commenced within four 4 years from the day they
may be brought. The tort complained of in this case occurred on 20 December 1987.
The action arising therefrom would under the law prescribe, unless interrupted, on
20 December 1991. The action not having been interrupted, had already prescribed.
Respondent appealed to the CA, which promulgated its assailed decision on
July 22, 2003 reversing the RTC. Although thereby absolving Sulpicio Lines, Inc. of
any liability to respondent, the CA held Vector and Soriano jointly and severally liable
to respondent for the reimbursement of the amount of P7,455,421.08 paid to Caltex
Respondent sought the partial reconsideration of the decision of the CA,
contending that Sulpicio Lines, Inc. should also be held jointly liable with Vector and
Soriano for the actual damages awarded.
Issues:
Whether this action of respondent was already barred by prescription for
bringing it only on March 5, 1992. A related issue concerns the proper determination
of the nature of the cause of action as arising either from a quasidelict or a breach
of contract.
Held:
We concur with the CAs ruling that respondents action did not yet prescribe.
Article 1144. The following actions must be brought within ten years from the time
the cause of action accrues: (1) Upon a written contract; (2) Upon an obligation
created by law; (3) Upon a judgment.

We find and hold that that the present action was not upon a written contract,
but upon an obligation created by law. Hence, it came under Article 1144 (2) of the
Civil Code. This is because the subrogation of respondent to the rights of Caltex as
the insured was by virtue of the express provision of law embodied in Article 2207 of
the Civil Code.
The juridical situation arising under Article 2207 of the Civil Code is well
explained in Pan Malayan Insurance Corporation v. Court of Appeals, as follows:
Article 2207 of the Civil Code is founded on the well settled principle of
subrogation. If the insured property is destroyed or damaged through the fault or
negligence of a party other than the assured, then the insurer, upon payment to the
assured, will be subrogated to the rights of the assured to recover from the
wrongdoer to the extent that the insurer has been obligated to pay. Payment by the
insurer to the assured operates as an equitable assignment to the former of all
remedies which the latter may have against the third party whose negligence or
wrongful act caused the loss. The right of subrogation is not dependent upon, nor
does it grow out of, any privity of contract or upon written assignment of claim. It
accrues simply upon payment of the insurance claim by the insurer [Compania
Maritima v. Insurance Company of North America, G.R. No. L18965, October 30,
1964, 12 SCRA 213;
Verily, the contract of affreightment that Caltex and Vector entered into did
not give rise to the legal obligation of Vector and Soriano to pay the demand for
reimbursement by respondent because it concerned only the agreement for the
transport of Caltexs petroleum cargo. As the Court has aptly put it in Pan Malayan
Insurance Corporation v. Court of Appeals, supra, respondents right of subrogation
pursuant to Article 2207, supra, was "not dependent upon, nor did it grow out of, any
privity of contract or upon written assignment of claim but accrued simply upon
payment of the insurance claim by the insurer."
Considering that the cause of action accrued as of the time respondent
actually indemnified Caltex in the amount of P7,455,421.08 on July 12, 1988, the
action was not yet barred by the time of the filing of its complaint on March 5, 1992,
which was well within the 10year period prescribed by Article 1144 of the Civil Code.
The insistence by Vector and Soriano that the running of the prescriptive
period was not interrupted because of the failure of respondent to serve any
extrajudicial demand was rendered inconsequential by our foregoing finding that
respondents cause of action was not based on a quasidelict that prescribed in four
years from the date of the collision on December 20, 1987, as the RTC
misappreciated, but on an obligation created by law, for which the law fixed a longer
prescriptive period of ten years from the accrual of the action.

S.C. MEGAWORLD CONSTRUCTION AND DEVELOPMENT

CORPORATION vs. ENGR. LUIS U. PARADA, REPRESENTED BY
ENGR. LEONARDO A. PARADA OF GENLITE INDUSTRIES
G.R. No. 183804
September 11, 2013
Facts:
S.C. Megaworld Construction and Development Corporation bought electrical
lighting materials from Genlite Industries, a sole proprietorship owned by Engineer
Luis U. Parada for its Read-Rite project in Canlubang, Laguna. The petitioner was
unable to pay for the above purchase on due date, but blamed it on its failure to
collect under its sub-contract with the Enviro Kleen Technologies, Inc. It was however
able to persuade Enviro Kleen to agree to settle its above purchase, but after paying
the respondent P250,000.00 on June 2, 1999, Enviro Kleen stopped making further
payments, leaving an outstanding balance of P816,627.00. It also ignored the
various demands of the respondent, who then filed a suit in the RTC, docketed as
Civil Case No. Q-01-45212, to collect from the petitioner the said balance, plus
damages, costs and expenses.
The petitioner in its answer denied liability, claiming that it was released from
its indebtedness to the respondent by reason of the novation of their contract, which,
it reasoned, took place when the latter accepted the partial payment of Enviro Kleen
in its behalf, and thereby acquiesced to the substitution of Enviro Kleen as the new
debtor in the petitioners place.
After trial, the RTC rendered judgment6 on May 28, 2004 in favor of the
respondent. On appeal, the CA affirmed the decision of the RTC in toto.
Issue:
Whether there was a novation between the parties through substitution of the
debtor.
Held:
No. Novation is a mode of extinguishing an obligation by changing its objects
or principal obligations, by substituting a new debtor in place of the old one, or by
subrogating a third person to the rights of the creditor. It is the substitution of a new
contract, debt, or obligation for an existing one between the same or different
parties.
Thus, in order to change the person of the debtor, the former debtor must be
expressly released from the obligation, and the third person or new debtor must
assume the formers place in the contractual relation. Article 1293 speaks of
substitution of the debtor, which may either be in the form of expromision or

delegacion, as seems to be the case here. In both cases, the old debtor must be
released from the obligation, otherwise, there is no valid novation.
From the circumstances obtaining below, we can infer no clear and
unequivocal consent by the respondent to the release of the petitioner from the
obligation to pay the cost of the lighting materials. In fact, from the letters of the
respondent to Enviro Kleen, it can be said that he retained his option to go after the
petitioner if Enviro Kleen failed to settle the petitioners debt.

METRO CONCAST STEEL CORPORATION, SPOUSES JOSE S.

DYCHIAO AND TIU OH YAN, SPOUSES GUILLERMO AND
MERCEDES DYCHIAO, AND SPOUSES VICENTE AND FILOMENA
DYCHIAO vs. ALLIED BANK CORPORATION
G.R. No. 177921
December 4, 2013
Facts:
Metro Concast, a domestic corporation engaged in the business of
manufacturing steel, through its officers, herein petitioners, obtained several loans
from Allied Bank covered by a promissory note and separate letters of credit/trust
receipts. Petitioners failed to pay, hence, Allied Bank, through counsel, sent them
demand letters, seeking payment of the total amount of P51, 064,093.62, but to no
avail. As a result, they prompted to file a complaint for collection of sum of money
before the RTC.
Petitioners offered the sale of Metro Concasts remaining assets, consisting of
machineries and equipment, to Allied Bank, which the latter, however, refused.
Instead, Allied Bank advised them to sell the equipment and apply the proceeds of
the sale to their outstanding obligations. Accordingly, petitioners offered the
equipment for sale, but since there were no takers, the equipment was reduced into
scrap metal over the years. Peakstar Oil Corporation expressed interest in buying the
scrap metal. Unfortunately, they reneged on all their obligations under the MoA.
In this regard, petitioners asseverated that: (a) their failure to pay their
outstanding loan obligations to Allied Bank must be considered as force majeure;
and (b) since Allied Bank was the party that accepted the terms and conditions of
payment proposed by Peakstar, petitioners must therefore be deemed to have
settled their obligations to Allied Bank. The RTC dismissed the complaint. Upon
appeal, CA reversed and set aside the RTC ruling.
Issue:
Whether or not the obligation has been extinguished by force majeure
Held:
No. The Court dispelled the notion that the MoA would have any relevance to
the performance of petitioners obligations to Allied Bank. The MoA is a sale of assets
contract, while petitioners obligations to Allied Bank arose from various loan
transactions. Absent any showing that the terms and conditions of the latter
transactions have been, in any way, modified or novated by the terms and conditions
in the MoA, said contracts should be treated separately and distinctly from each

other, such that the existence, performance or breach of one would not depend on
the existence, performance or breach of the other.
While it may be argued that Peakstar's breach of the MoA was unforeseen by
petitioners, the same is clearly not "impossible" to foresee or even an event which is
"independent of human will." Neither has it been shown that said occurrence
rendered it impossible for petitioners to pay their loan obligations to Allied Bank and
thus, negates the formers force majeure theory altogether. In any case, as earlier
stated, the performance or breach of the MoA bears no relation to the performance
or breach of the subject loan transactions, they being separate and distinct sources
of obligation. The fact of the matter is that petitioners' loan obligations to Allied Bank
remain subsisting for the basic reason that the former has not been able to prove
that the same had already been paid or, in any way, extinguished.

PHILIPPINE NATIONAL BANK vs. TERESITA TAN DEE, ET AL.

G.R. No. 182128
February 19, 2014
Facts:
Teresita Tan Dee (Dee) bought from respondent Prime East Properties Inc.
(PEPI) on an installment basis a residential lot located in Binangonan, Rizal.
Subsequently, PEPI assigned its rights over a 213,093-sq m property on August 1996
to respondent Armed Forces of the Philippines-Retirement and Separation Benefits
System, Inc. (AFP-RSBS), which included the property purchased by Dee.
Thereafter, PEPI obtained a P205,000,000.00 loan from petitioner Philippine
National Bank (petitioner), secured by a mortgage over several properties, including
Dees property. The mortgage was cleared by the Housing and Land Use Regulatory
Board (HLURB) on September 18, 1996.
After Dees full payment of the purchase price, a deed of sale was executed by
respondents PEPI and AFP-RSBS on July 1998 in Dees favor. Consequently, Dee
sought from the petitioner the delivery of the owners duplicate title over the
property, to no avail. Thus, she filed with the HLURB a complaint for specific
performance to compel delivery of TCT No. 619608 by the petitioner, PEPI and
AFP-RSBS, among others. In its Decision dated May 21, 2003, the HLURB ruled in
favor of Dee.
Issue:
Whether Dee is entitled to the TCT of the subject property
Held:
The petitioner is correct in arguing that it is not obliged to perform any of the
undertaking of respondent PEPI and AFP-RSBS in its transactions with Dee because it
is not a privy thereto. The basic principle of relativity of contracts is that contracts
can only bind the parties who entered into it, and cannot favor or prejudice a third
person, even if he is aware of such contract and has acted with knowledge thereof.
Note that at the time PEPI mortgaged the property to the petitioner, the
prevailing contract between respondents PEPI and Dee was still the Contract to Sell,
as Dee was yet to fully pay the purchase price of the property. On this point, PEPI
was acting fully well within its right when it mortgaged the property to the petitioner,
for in a contract to sell, ownership is retained by the seller and is not to pass until full
payment of the purchase price. In other words, at the time of the mortgage, PEPI was
still the owner of the property. Thus, there is a valid mortgage.
Nevertheless, despite the apparent validity of the mortgage between the
petitioner and PEPI, the former is still bound to respect the transactions between

respondents PEPI and Dee. The petitioner was well aware that the properties
mortgaged by PEPI were also the subject of existing contracts to sell with other
buyers. While it may be that the petitioner is protected by Act No. 3135, as
amended, it cannot claim any superior right as against the installment buyers. This is
because the contract between the respondents is protected by P.D. No. 957, a social
justice measure enacted primarily to protect innocent lot buyers.

CERILA J. CALANASAN, REPRESENTED BY TEODORA J.

CALANASAN AS ATTORNEY-IN-FACT vs. SPOUSES VIRGILIO
DOLORITO AND EVELYN C. DOLORITO
G.R. No. 171937
November 25, 2013
Facts:
The petitioner, Cerila J. Calanasan, took care of her orphan niece, respondent
Evelyn C. Dolorita, since the latter was a child. When Evelyn was already married to
respondent Virgilio Dolorita, the petitioner donated to Evelyn a parcel of land which
had earlier been mortgaged for Pl5,000.00. It was conditioned that Evelyn must
redeem the land and the petitioner was entitled to possess and enjoy the property as
long as she lived. Evelyn signified her acceptance of the donation and its terms in the
same deed. She then redeemed the property, had the title of the land transferred to
her name, and granted the petitioner usufructuary rights. Soon thereafter, the donor
complained with the Regional Trial Court that Evelyn had committed acts of
ingratitude against her and as such, she prayed that her donation in favor of her
niece be revoked.
The RTC dismissed the complaint stating that Article 765 of the New Civil
Code did not apply because the ungrateful acts were committed against Teodora, the
donors sister, and not against the donor, the petitioner. Equally important, the
perpetrator of the ungrateful acts was not Evelyn, but her husband Virgilio.
On appeal, the CA affirmed the RTC ruling but on a different legal ground. The
CA, after legal analysis, found that the donation was inter vivos and onerous.
Therefore, the deed of donation must be treated as an ordinary contract and Article
765 of the New Civil Code finds no relevance.
Issue:
Whether or not the rules on ordinary contracts would apply to onerous
donations
Held:
Donations with an onerous cause shall be governed by the rules on contracts.
We agree with the CA that since the donation imposed on the donee the burden of
redeeming the property for P15,000.00, the donation was onerous. As an
endowment for a valuable consideration, it partakes of the nature of an ordinary
contract; hence, the rules of contract will govern and Article 765 of the New Civil
Code finds no application with respect to the onerous portion of the donation.
Insofar as the value of the land exceeds the redemption price paid for by the
donee, a donation exists, and the legal provisions on donation apply. Nevertheless,

despite the applicability of the provisions on donation to the gratuitous portion, the
petitioner may not dissolve the donation. She has no factual and legal basis for its
revocation, as aptly established by the RTC. First, the ungrateful acts were committed
not by the donee; it was her husband who committed them. Second, the ungrateful
acts were perpetrated not against the donor; it was the petitioner's sister who
received the alleged ill treatments. These twin considerations place the case out of
the purview of Article 765 of the New Civil Code.

SANDOVAL SHIPYARDS, INC. AND RIMPORT INDUSTRIES, INC.

REPRESENTED BY ENGR. REYNALDO G. IMPORTANTE vs.
PHILIPPINE MERCHANT MARINE ACADEMY (PMMA)
G.R. No. 188633
April 10, 2013
Facts:
Philippine Merchant Marine Academy entered into a Ship Building Contract
with Sandoval Shipyards, Inc. through the latter's agent, Rimport Industries, Inc. on
19 December 1994. These lifeboats should have 45-HP Gray Marine diesel engines
and should be delivered within 45 working days from the date of the contract-signing
and payment of the mobilization/organization fund. Respondent, for its part, would
pay petitioners P1,685,200 in installments based on the progress accomplishment
of the work as stated in the contract.
As agreed upon, respondent paid petitioners P236,694.00 on 08 March 1995
as mobilization fund for the lifeboats; P504,947.20 on 15 March 1995 for its first
progress billing; and P386,600.00 on 25 March 1995 as final payment for the
lifeboats. On 10 August 1995, Angel Rosario, who claimed to have been verbally
authorized by its president, allegedly received the lifeboats at the Philippine Navy
Wharf in good order and condition.
An inspection team checked whether the work specifications had been
complied with. The team found that petitioners did not perform in conformity with the
approved plan. For these reasons, respondents dean submitted a report and
recommendation to the president of petitioners stating the latters construction
violations and asking for rectification. Despite repeated demands from respondent,
petitioners refused to deliver the lifeboats that would comply with the agreed plans
and specifications. As a result, respondent filed a Complaint for Rescission of
Contract with Damages against petitioners before the RTC, and trial ensued.
The RTC held that although the caption of the Complaint was "Rescission of
Contract with Damages," the allegations in the body were for breach of contract.
Petitioners were found to have violated the contract by installing surplus diesel
engines, contrary to the agreed plan and specifications. The CA ruled that petitioners
indeed committed a clear substantial breach of the contract, which warranted its
rescission. Rescission requires a mutual restoration of benefits received. However,
petitioners failed to deliver the lifeboats; their alleged delivery to Rosario was invalid,
as he was not a duly authorized representative named in the contract. Hence,
petitioners could not compel respondent to return something it never had possession
or custody of.
Issue:

Whether or not the case is for rescission and not damages or breach of
contract
Held:
The Court denies the Petition. Both the RTC and the CA found that petitioners
violated the terms of the contract by installing surplus diesel engines, contrary to the
agreed plans and specifications, and by failing to deliver the lifeboats within the
agreed time. The breach was found to be substantial and sufficient to warrant a
rescission of the contract. Rescission entails a mutual restitution of benefits
received. An injured party who has chosen rescission is also entitled to the payment
of damages. The factual circumstances, however, rendered mutual restitution
impossible. Both the RTC and the CA found that petitioners delivered the lifeboats to
Rosario. Although he was an engineer of respondent, it never authorized him to
receive the lifeboats from petitioners. Hence, as the delivery to Rosario was invalid, it
was as if respondent never received the lifeboats. As it never received the object of
the contract, it cannot return the object. Unfortunately, the same thing cannot be
said of petitioners. They admit that they received a total amount of P1,516,680 from
respondent as payment for the construction of the lifeboats. For this reason, they
should return the same amount to respondent.

SANGGUNIANG PANLUNGSOD NG BAGUIO CITY

vs. JADEWELL PARKING SYSTEMS CORPORATION
G.R. No. 160025
April 23, 2014
Facts:
On 1 March 1999, Jadewell proposed the privatization of the administration of
on-street parking in Baguio City using Schlumbergers DG4S Pay and Display Parking
Meter (hereinafter "DG4S P&D"), which it touted as "technologically advanced, up to
the level of more progressive countries and which would make the city as the first
and only city in the Philippines, if not in Asia, to have metered parking as an
important part of its traffic and parking system.
On 26 June 2000, the MOA was finally executed between Jadewell and the
City of Baguio. In September of 2000, Jadewell began to mobilize and take over the
parking facilities at the Ganza/Burnham Park area. Around this time, questions arose
regarding the compliance by Jadewell with the provisions of the MOA.
Ultimately, Jadewell was able to install no more than 14 parking meters in
three (3) areas of Baguio City: six (6) on Session Road, five (5) on Harrison Road and
three (3) on Lake Drive. At the time that these meters were installed, there were
already verbal complaints being raised against Jadewell by the Sanggunian for the
following alleged violations such as failure to install parking meters for each parking
space as specified in Section 3-F of Ordinance No. 003-2000 among others.
On 19 February 2002, the Sanggunian passed Resolution 37, expressing its
intent to rescind the MOA with Jadewell. However, City Mayor of Baguio, Bernardo M.
Vergara, vetoed Resolution stating that it was premature for the Sangguniang
Panlungsod to rescind the MOA, because the latter provides for a minimum period of
five years before the right of rescission can be exercised; and, that the right of
Jadewell to due process was violated due to the lack of opportunity to hear the
latters side. The Sanggunian, nevertheless, resolved through a Resolution to
override the veto of the City Mayor.
Jadewell denied the breach and commenced an action before the Regional
Trial Court (RTC) of Baguio, questioning the validity of the MOAs revocation. The RTC
found the rescission unlawful. While pending on appeal, on 22 September 2006, City
Legal Officer Rabanes wrote a letter to Jadewell, through its President, Mr. Rogelio
Tan, informing Jadewell of Resolution No. 204, Series of 2006, which rescinded the
MOA, and ordering it to stop operations within 60 days from notice. This letter was
received on the same day it was issued; hence, the 60-day period lapsed on 22
November 2006. This notice, together with the resolution, constituted the second act
of rescission of the MOA by the city officials of Baguio.

Issue:
Whether or not the rescission was valid?
Held:
YES. The rescission had taken effect and the MOA between the City and
Jadewell legally ceased to exist on 22 November 2006, 60 days had lapsed from
receipt of the letter dated 22 September 2006, informing Jadewell of the decision of
the City of Baguio to rescind the MOA under Section 12 thereof. Section 12 of the
said MOA requires that notice of the intention to rescind be given 60 days prior to the
effectivity of the rescission. Jadewell has not questioned the legal efficacy of this
notice. It has brought this matter of a second rescission to the Courts attention only
as a matter of contumacious behavior on the part of the respondents.
Rescission under Article 1191 takes place through either of two modes: (1)
through an extrajudicial declaration of rescission; or (2) upon the grant of a judicial
decree of rescission.
Extrajudicial declaration of rescission is recognized as a power which does not
require judicial intervention. If the rescission is not opposed, extrajudicial declaration
of rescission produces legal effect such that the injured party is already relieved from
performing the undertaking. However, the power of declaring extrajudicial rescission
conferred upon the injured party is regulated by the Civil Code. If the extrajudicial
rescission is impugned by the other party, it shall be subject to a judicial
determination where court action must be taken, and the function of the court is to
declare the rescission as having been properly or improperly made, or to give a
period within which the debtor must perform the obligation alleged to be breached. A
unilateral cancellation of a contract may be questioned in courts by the affected
party to determine whether or not cancellation is warranted. Thus, in an extrajudicial
decree of rescission, revocation cannot be completely exercised solely on a partys
own judgment that the other has committed a breach of the obligation but always
subject to the right of the other party to judicially impugn such decision.
It is important to contextualize that the agreement entered into by the City of
Baguio with Jadewell is the embodiment of a grant of franchise imbued with public
interest and is not merely an agreement between two private parties. It is in the view
of the SC that the first act of rescission by the City of Baguio may be valid even if
there is a stipulation against it within the first five years of the MOAs existence.
Article 1191 of the New Civil Code provides a party the right to rescind the agreement
and clearly overrides any stipulation to the contrary. However, the grounds that would
serve as basis to the application of the said article must be clearly established.
The objectives of the Sanggunian Panlungsod, as well as its intention to
rescind the MOA; because it deems to no longer serve the interest of the City of
Baguio, are clearly an exercise of its legislative or administrative function.

DOMINGO GONZALO vs. JOHN TARNATE JR.

G.R. No. 160600
January 15, 2014

Facts:
After the Department of Public Works and Highways (DPWH) had awarded the
contract for the improvement of the Sadsadan-Maba-ay Section of the Mountain
Province-Benguet Road to Gonzalo Construction, petitioner Domingo Gonzalo
(Gonzalo) subcontracted to respondent John Tarnate, Jr. (Tarnate) on October 15,
1997, the supply of materials and labor for the project under the latters business
known as JNT Aggregates. Their agreement stipulated, among others, that Tarnate
would pay to Gonzalo eight percent and four percent of the contract price,
respectively, upon Tarnate s first and second billing in the project. In furtherance of
their agreement, Gonzalo executed a deed of assignment whereby he, as the
contractor, was assigning to Tarnate an amount equivalent to 10% of the total
collection from the DPWH for the project. This 10% retention fee (equivalent to
P233,526.13) was the rent for Tarnates equipment that had been utilized in the
project. Gonzalo further authorized Tarnate to use the official receipt of Gonzalo
Construction in the processing of the documents relative to the collection of the 10%
retention fee and in encashing the check to be issued by the DPWH for that purpose.
The deed of assignment was submitted to the DPWH on April 15, 1999. During the
processing of the documents for the retention fee, however, Tarnate learned that
Gonzalo had unilaterally rescinded the deed of assignment by means of an affidavit
of cancellation of deed of assignment dated April 19, 1999 filed in the DPWH on April
22, 1999; and that the disbursement voucher for the 10% retention fee had then
been issued in the name of Gonzalo, and the retention fee released to him.
Tarnate demanded the payment of the retention fee from Gonzalo, but to no
avail. Thus, he brought this suit against Gonzalo on September 13, 1999 in the
Regional Trial Court (RTC) in Mountain Province to recover the retention fee of
P233,526.13, moral and exemplary damages for breach of contract, and attorneys
fees. In his answer, Gonzalo admitted the deed of assignment and the authority given
therein to Tarnate, but averred that the project had not been fully implemented
because of its cancellation by the DPWH, and that he had then revoked the deed of
assignment. He insisted that the assignment could not stand independently due to
its being a mere product of the subcontract that had been based on his contract with
the DPWH; and that Tarnate, having been fully aware of the illegality and
ineffectuality of the deed of assignment from the time of its execution, could not go
to court with unclean hands to invoke any right based on the invalid deed of
assignment or on the product of such deed of assignment.
Issue:
Whether or not the rule of in pari delicto should apply.

Held:
NO. According to Article 1412 (1) of the Civil Code, the guilty parties to an
illegal contract cannot recover from one another and are not entitled to an
affirmative relief because they are in pari delicto or in equal fault. The doctrine of in
pari delicto is a universal doctrine that holds that no action arises, in equity or at law,
from an illegal contract; no suit can be maintained for its specific performance, or to
recover the property agreed to be sold or delivered, or the money agreed to be paid,
or damages for its violation; and where the parties are in pari delicto, no affirmative
relief of any kind will be given to one against the other. Nonetheless, the application
of the doctrine of in pari delicto is not always rigid. An accepted exception arises
when its application contravenes well-established public policy. In this jurisdiction,
public policy has been defined as that principle of the law which holds that no
subject or citizen can lawfully do that which has a tendency to be injurious to the
public or against the public good.
Unjust enrichment exists, according to Hulst v. PR Builders, Inc. "when a
person unjustly retains a benefit at the loss of another, or when a person retains
money or property of another against the fundamental principles of justice, equity
and good conscience." The prevention of unjust enrichment is a recognized public
policy of the State, for Article 22 of the Civil Code explicitly provides that "Every
person who through an act of performance by another, or any other means, acquires
or comes into possession of something at the expense of the latter without just or
legal ground, shall return the same to him." It is well to note that Article 22 "is part of
the chapter of the Civil Code on Human Relations, the provisions of which were
formulated as basic principles to be observed for the rightful relationship between
human beings and for the stability of the social order; designed to indicate certain
norms that spring from the fountain of good conscience; guides for human conduct
that should run as golden threads through society to the end that law may approach
its supreme ideal which is the sway and dominance of justice."
There is no question that Tarnate provided the equipment, labor and
materials for the project in compliance with his obligations under the subcontract
and the deed of assignment; and that it was Gonzalo as the contractor who received
the payment for his contract with the DPWH as well as the 10% retention fee that
should have been paid to Tarnate pursuant to the deed of assignment. Considering
that Gonzalo refused despite demands to deliver to Tarnate the stipulated 10%
retention fee that would have compensated the latter for the use of his equipment in
the project, Gonzalo would be unjustly enriched at the expense of Tarnate if the latter
was to be barred from recovering because of the rigid application of the doctrine of in
pari delicto.

PHILIPPINE COMMERCIAL INTERNATIONAL BANK (NOW BDO

UNIBANK, INC.) vs. ARTURO P. FRANCO, SUBSTITUTED BY HIS
HEIRS, NAMELY: MAURICIA P. FRANCO, FLORIBEL P. FRANCO,
AND ALEXANDER P. FRANCO
G.R. No. 180069
March 5, 2014

Facts:
This is an action for damages filed [on September 5, 2000] by plaintiff Arturo
P. Franco against Philippine Commercial International Bank (PCIB), now known as
Equitable-PCIBank, and Equitable Banking Corp. The complaint essentially alleges,
among others, that plaintiff secured from defendant PCIB several Trust Indenture
Certificates.
Despite demands, defendants refused and still refuses to return to plaintiff
the trust amounts, plus the stipulated interest. In all of the trust transactions that
defendant PCIB had entered into with the plaintiff, defendant PCIB represented to
plaintiff that in making the trust investment, plaintiff was actually providing for his
future since the money invested was going to be managed and administered by their
PCIB-Trust Services Group and will be commingled, pooled and automatically rolledover for better investment return. Believing the representation of the bank, the
plaintiff invested his lifetime savings in the hope that the defendant bank.
Sometime in 1995, plaintiff discovered that one of his children had leukemia
and in the ensuing hospitalization and treatment, his funds were exhausted, thus,
plaintiff then turned to his Trust Indenture Certificates and started inquiring as to
how he could liquidate the trust. In the beginning, defendant bank constantly asked
for time to look for his records, at one time on June 18, 1998, promising to have an
answer before July 15, 1998, then writing plaintiff on May 18, 2000 saying that the
bank had coordinated with their Branch and Trust Department but that it might
take some time to retrieve their records and that to plaintiffs surprise, on June 22,
2000, he received a letter signed by defendants counsel, Curato Divina &
Partners, in effect denying plaintiffs request for payment by stating that due to
the conversion of all outstanding PCIBank trust indenture accounts into common
trust certificates, all such PCIBank trust indenture certificates have been rendered
null and void.
Plaintiff prays for the payment of the amounts under the Trust Indenture
Certificates, plus interest, moral and exemplary damages and attorneys fees. In
their Answer, defendants admit the issuance by defendant PCIB of the Trust
Indenture Certificates subject matter of the complaint, but deny the allegation that
the investments subject of the Trust Indenture Certificates are automatically rolled-

over as such certificates have their own fixed term and maturity date, and that the
present action had already prescribed.
The RTC ruled in favor of plaintiff and ordering defendant Philippine
Commercial International Bank, now known as Equitable-PCIBank to pay. On appeal,
the CA affirmed the RTC ruling.
Issue:
Whether the RTC and the CA erred in deciding in favor of the plaintiff.
Held:
Upon perusal of the entire case records, the Court finds no reversible error
committed by the CA in sustaining the RTC Decision. Considering the evidence at
hand, both courts have applied the law in accordance with the facts of the case.
Jurisprudence abounds that, in civil cases, one who pleads payment has the burden
of proving it. Even where the plaintiff must allege non-payment, the general rule is
that the burden rests on the defendant to prove payment, rather than on the plaintiff
to prove non-payment.
Jurisprudence abounds that, in civil cases, one who pleads payment has the
burden of proving it. Even where the plaintiff must allege non-payment, the general
rule is that the burden rests on the defendant to prove payment, rather than on the
plaintiff to prove non-payment. When the creditor is in possession of the document of
credit, he need not prove non-payment for it is presumed. The creditor's possession
of the evidence of debt is proof that the debt has not been discharged by payment. In
this case, respondent's possession of the original copies of the subject TICs strongly
supports his claim that petitioner Bank's obligation to return the principal plus
interest of the money placement has not been extinguished. The TICs in the hands of
respondent is a proof of indebtedness and a prima facie evidence that they have not
been paid. Petitioner Bank could have easily presented documentary evidence to
dispute the claim, but it did not.

ALI AKANG vs. MUNICIPALITY OF ISULAN, SULTAN KUDARAT

PROVINCE, REPRESENTED BY ITS MUNICIPAL MAYOR AND
MUNICIPAL VICE MAYOR AND MUNICIPAL
COUNCILORS/KAGAWADS
G.R. No. 186014
June 26, 2013
Facts:
Ali Akang is the registered owner of Lot located at Kalawag III, Isulan, Sultan
Kudarat, covered by Transfer Certificate of Title (TCT) with an area of 20,030 square
meters. Sometime in 1962, a two-hectare portion of the property was sold by the
petitioner to the Municipality of Isulan, Province of Sultan Kudarat through then
Isulan Mayor Datu Ampatuan under a Deed of Sale executed on July 18, 1962.
The respondent immediately took possession of the property and began
construction of the municipal building. Thirty-nine years later or on October 26, 2001,
the petitioner, together with his wife, Patao Talipasan, filed a civil action for Recovery
of Possession of Subject Property and/or Quieting of Title thereon and Damages
against the respondent, represented by its Municipal Mayor, et al. In his complaint,
the petitioner alleged that the agreement was one to sell, which was not
consummated as the purchase price was not paid. The respondent denied the
petitioners allegations, claiming that the petitioners cause of action was already
barred by laches; that the Deed of Sale was valid; and that it has been in open,
continuous and exclusive possession of the property for forty (40) years.
The RTC rendered judgment in favor of the petitioner. The RTC construed the
Deed of Sale as a contract to sell, based on the wording of the contract, which
allegedly showed that the consideration was still to be paid and delivered on some
future date a characteristic of a contract to sell. The CA reversed the ruling of the
RTC and upheld the validity of the sale. It ruled that the Deed of Sale is not a mere
contract to sell but a perfected contract of sale. There was no express reservation of
ownership of title by the petitioner and the fact that there was yet no payment at the
time of the sale does not affect the validity or prevent the perfection of the sale
Issue:
Whether or not the Deed of Sale dated July 18,1962 is a valid and perfected
contract of sale.
Held:
A contract of sale is defined under Article 1458 of the Civil Code, by the
contract of sale, one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other to pay therefore a
price certain in money or its equivalent. The elements of a contract of sale are: (a)

consent or meeting of the minds, that is, consent to transfer ownership in exchange
for the price; (b) determinate subject matter; and (c) price certain in money or its
equivalent.
A contract to sell, on the other hand, is defined by Article 1479 of the Civil
Code, a bilateral contract whereby the prospective seller, while expressly reserving
the ownership of the subject property despite delivery thereof to the prospective
buyer, binds himself to sell the said property exclusively to the prospective buyer
upon fulfillment of the condition agreed upon, that is, full payment of the purchase
price.
The Deed of Sale executed by the petitioner and the respondent is a perfected
contract of sale, all its elements being present. There was mutual agreement
between them to enter into the sale, as shown by their free and voluntary signing of
the contract. There was also an absolute transfer of ownership of the property by the
petitioner to the respondent as shown in the stipulation: I petitioner hereby sell,
transfer, cede, convey and assign as by these presents do have sold, transferred,
ceded, conveyed and assigned.
There was also a determinate subject matter, that is, the two-hectare parcel of
land as described in the Deed of Sale. Lastly, the price or consideration is at Three
Thousand Pesos (P3,000.00), which was to be paid after the execution of the
contract. The fact that no express reservation of ownership or title to the property can
be found in the Deed of Sale bolsters the absence of such intent, and the contract,
therefore, could not be one to sell. Had the intention of the petitioner been otherwise,
he could have: (1) immediately sought judicial recourse to prevent further
construction of the municipal building; or (2) taken legal action to contest the
agreement. The petitioner did not opt to undertake any of such recourses.

ROLANDO M. MENDIOLA vs. COMMERZ TRADING INT'L., INC.

G.R. No. 200895
July 31, 2013
Facts:
Genicon, Inc. (Genicon) is a foreign corporation which designs, produces, and
distributes patented surgical instrumentation focused exclusively on laparoscopic
surgery. Rolando Mendiola, a physician, entered into a contract with Genicon to be its
exclusive distributor of Genicon laparoscopic instruments in the Philippines, as
evidenced by a Distribution Agreement dated 18 July 2007. Petitioner, in turn,
entered into a Memorandum of Agreement (MOA) with respondent to facilitate the
marketing and sale of Genicon laparoscopic instruments in the Philippines. Under the
MOA, respondent would be compensated for P100,000.00 "for the use of
respondents name, office, secretary, invoices, official receipts and facilities for every
sale of a complete set of Genicon laparoscopic instruments .
Respondent sent a price quotation to Pampanga Medical Specialist Hospital,
Inc. (PMSHI), which thereafter agreed to purchase a Genicon laparoscopic instrument
for Two Million Six Hundred Thousand Pesos. Then, petitioner ordered the
laparoscopic instrument from Genicon, which in turn shipped the medical equipment
to the Philippines. Respondent undertook the release of the laparoscopic instrument
from the Bureau of Customs and subsequently delivered the same to PMSHI.
Respondent remitted to petitioner P2,430,000.00 only, instead of P2,500,000.00.
Despite petitioners repeated demands, respondent failed to remit the remaining
balance of P70,000.00 from the proceeds of the sale of the laparoscopic instrument.
Consequently, petitioner filed a collection suit against respondent.
The MeTC ruled in favor of petitioner. The Court held that respondent has no
right to retain the P70,000.00. Respondent had been duly compensated for its work
done. CA reversed the RTCs award of interest and attorneys fees. Hence this
petition.
Issue:
Whether or not respondent has the right to retain the balance of the proceeds
of the sale in the amount of P 70,000.00.
Held:
The court denies the petition. There is no dispute that the P70,000.00
respondent withheld from petitioner formed part of the proceeds of the sale of the
Genicon laparoscopic instrument. Basic is the principle that a contract is the law
between the parties, and its stipulations are binding on them, unless the contract is
contrary to law, morals, good customs, public order or public policy. Indeed,
paragraph V of the MOA obligates petitioner to pay the taxes due from the sale of the
Genicon laparoscopic instrument. Petitioner admits that he is the one responsible in

the payment of the EVAT and not the respondent, who merely acted as the marketer
of the Genicon laparoscopic instrument. Hence, as between petitioner and
respondent, petitioner bears the burden for the payment of VAT.
Thus, since respondent, as the seller on record, will be liable for the payment
of the VAT based on the official receipt it issued, we shall allow respondent to retain
the P70,000.00 only for the purpose of paying forthwith, if it has not done so yet, this
amount to the BIR as the estimated tax due on the subject sale.

SKUNAC CORPORATION AND ALFONSO F. ENRIQUEZ vs. ROBERTO S.

SYLIANTENG, ET AL.
G.R. No. 205879
April 23, 2014
Facts:
The civil cases involved two (2) parcels of land identified as Lot 1and Lot 2
both situated along Wilson Street, Greenhills, San Juan City which are portions of a
parcel of land previously registered in the name of Luis A. Pujalte on October 29,
1945 and covered by Transfer Certificate of Title ("TCT") No. (-78865) (-2668) -93165
("Mother Title") of the Register of Deeds for the City of Manila.
Plaintiffs-appellants Roberto S. Sylianteng and Caesar S. Sylianteng base their
claim of ownership over the subject lots a Deed of Absolute Sale executed in their
favor by their mother, Emerenciana Sylianteng, on June 27, 1983. Appellants further
allege that Emerenciana acquired the lots from the late Luis Pujalte through a Deed
of Sale dated June 20, 1958. Then, when she sold the lots to appellants, TCT was
issued in their names.
Skunac Corporation and Alfonso F. Enriquez, claim that a certain Romeo
Pujalte who was declared as the sole heir of Luis Pujalte, caused the reconstitution of
the Mother Title resulting to its cancellation and the issuance of TCT No. 5760-R in
his favor. Romeo Pujalte then allegedly sold the lots to Skunac and Enriquez in 1992.
Respondents contend that they have a better right to the lots in question
because the transactions conveying the same to them preceded those claimed by
petitioners as source of the latter's titles. Respondents further assert that petitioners
could not be considered as innocent purchasers in good faith and for value because
they had prior notice of the previous transactions as stated in the memorandum of
encumbrances annotated on the titles covering the subject lots. Petitioners, for their
part, maintain that [respondents] acquired the lots under questionable
circumstances it appearing that there was no copy of the Deed of Sale, between
Emerenciana and Luis Pujalte, on file with the Office of the Register of Deeds.
Issues:
1. Whether or not respondents' predecessor-in-interest, Emerenciana, validly
acquired the subject lots from Luis
2. Whether or not respondents, in turn, validly acquired the same lots from
Emerenciana.
Held:
The Court rules in the affirmative, but takes exception to the CA's and RTC's
application of Article 1544 of the Civil Code.

Reliance by the trial and appellate courts on Article 1544 of the Civil Code is
misplaced. The said provision has no application in cases where the sales involved
were initiated not by just one but two vendors. In the present case, the subject lots
were sold to petitioners and respondents by two different vendors Emerenciana
and Romeo Pujalte (Romeo). Hence, Article 1544 of the Civil Code is not applicable.
Nonetheless, Emerenciana's acquisition of the subject lots from Luis and her
subsequent sale of the same to respondents are valid and lawful.
It is a settled rule that when two certificates of title are issued to different
persons covering the same land in whole or in part, the earlier in date must prevail,
and, in case of successive registrations where more than one certificate is issued
over the land, the person holding a prior certificate is entitled to the land as against a
person who relies on a subsequent certificate. The titles of respondents, having
emanated from an older title, should thus be upheld.
It is true that a person dealing with registered land need not go beyond the
title. However, it is equally true that such person is charged with notice of the
burdens and claims which are annotated on the title.

ACE FOODS, INC., vs. MICRO PACIFIC TECHNOLOGIES CO.,

LTD.
G.R. No. 200602
December 11, 2013
Facts:
ACE Foods is a domestic corporation engaged in the trading and distribution
of consumer goods in wholesale and retail bases, while MTCL is one engaged in the
supply of computer hardware and equipment.
On September 26, 2001, MTCL sent a letter-proposal for the delivery and sale
of the subject products to be installed at various offices of ACE Foods
Foods accepted MTCLs proposal and accordingly issued Purchase Order No.
100023 (Purchase Order) for the subject products amounting to P646,464.00
(purchase price). Thereafter, or on March 4, 2002, MTCL delivered the said products
to ACE Foods as reflected in Invoice No. 7733 (Invoice Receipt). The fine print of the
invoice states, inter alia, that "[t]itle to sold property is reserved in MICROPACIFIC
TECHNOLOGIES CO., LTD. until full compliance of the terms and conditions of above
and payment of the price"
MTCLs demands against ACE Foods to pay the purchase price, however,
remained unheeded. Instead of paying the purchase price, ACE Foods sent MTCL a
Letter dated September 19, 2002, stating that it "ha[s] been returning the [subject
products] to [MTCL] thru [its] sales representative Mr. Mark Anteola who has agreed
to pull out the said [products] but had failed to do so up to now."
ACE Foods lodged a Complaint since MTCL breached its "after
services" obligations to it. MTCL maintained that it had duly complied
obligations to ACE Foods and that the subject products were in good
condition when they were delivered, installed and configured in ACE
premises.

delivery
with its
working
Foodss

The RTC rendered a Decision, stating that it was a contract to sell. The CA
reversed and set aside the RTCs ruling stating that the agreement between the
parties is in the nature of a contract of sale
Issue:
Whether ACE and MTCL entered a contract of a sale.
Held:
Yes. The very essence of a contract of sale is the transfer of ownership in
exchange for a price paid or promised. Corollary thereto, a contract of sale is

classified as a consensual contract, which means that the sale is perfected by mere
consent. No particular form is required for its validity. Upon perfection of the contract,
the parties may reciprocally demand performance, i.e., the vendee may compel
transfer of ownership of the object of the sale, and the vendor may require the
vendee to pay the thing sold.
In contrast, a contract to sell is defined as a bilateral contract whereby the
prospective seller, while expressly reserving the ownership of the property despite
delivery thereof to the prospective buyer, binds himself to sell the property exclusively
to the prospective buyer upon fulfillment of the condition agreed upon, i.e., the full
payment of the purchase price. A contract to sell may not even be considered as a
conditional contract of sale where the seller may likewise reserve title to the property
subject of the sale until the fulfillment of a suspensive condition, because in a
conditional contract of sale, the first element of consent is present, although it is
conditioned upon the happening of a contingent event which may or may not occur.
In this case, the Court concurs with the CA that the parties have agreed to a
contract of sale and not to a contract to sell as adjudged by the RTC. Bearing in mind
its consensual nature, a contract of sale had been perfected at the precise moment
ACE Foods, as evinced by its act of sending MTCL the Purchase Order, accepted the
latters proposal to sell the subject products in consideration of the purchase price of
P646,464.00. From that point in time, the reciprocal obligations of the parties i.e.,
on the one hand, of MTCL to deliver the said products to ACE Foods, and, on the
other hand, of ACE Foods to pay the purchase price therefor within thirty (30) days
from delivery already arose and consequently may be demanded.

THE METROPOLITAN BANK AND TRUST COMPANY vs. ANA

GRACE ROSALES AND YO YUK TO
G.R. No. 183204
January 13, 2014
Facts:
China Golden Bridge Travel Services, a travel agency owned by Ana Grace
Rosales whose mother is Yo Yuk To. They opened a Joint Peso Account with
Metrobanks Pritil-Tondo Branch which had a balance of P2,515,693.52. In May
2002, respondent Rosales accompanied her client Liu Chiu Fang, a Taiwanese
National applying for a retirees visa from the Philippine Leisure and Retirement
Authority (PLRA), to petitioners branch in Escolta to open a savings account, as
required by the PLRA.Since Liu Chiu Fang could speak only in Mandarin, respondent
Rosales acted as an interpreter for her. On March 3, 2003, respondents opened with
petitioners Pritil-Tondo Branch a Joint Dollar Account with an initial deposit of
US$14,000.00.
On July 31, 2003, petitioner issued a "Hold Out" order against respondents
accounts. They filed before the Regional Trial Court (RTC) of Manila a Complaint for
Breach of Obligation and Contract with Damages against petitioner. Metrobank
asserted that there was a Hold Out Clause" provided for in the Deposit Account
Agreement entered by the same stating that the Bank is hereby authorized to
withhold as security for any and all obligations with the Bank, all monies, properties
or securities of the Depositor now in or which may hereafter come into the
possession or under the control of the Bank, whether left with the Bank for
safekeeping or otherwise"
Issue:
Whether or not Metrobank breached its contract with respondent.
Held:
Yes. Bank deposits, which are in the nature of a simple loan or mutuum, must
be paid upon demand by the depositor. The Hold Out Clause applies only if there is
a valid and existing obligation arising from any of the sources of obligation
enumerated in Article 1157 of the Civil Code. Petitioner failed to show that there was
an existing obligation between the same and the respondents. Notwithstanding the
criminal case filed by petitioner against respondent Rosales, it was not justified on
the part of petitioner to issue a Hold Out order as the case is still pending and no
final judgment of conviction has been rendered against respondent Rosales. At the
time petitioner issued the Hold Out order, the criminal complaint had not yet been
filed. Considering that respondent Rosales is not liable under any of the five sources
of obligation, there was no legal basis for petitioner to issue the Hold Out order. The
Hold Out clause does not apply in the instant case.

FORTUNE MEDICARE vs. DAVID ROBERT U. AMORIN

G.R. No.: 195872
Date: Mar. 12, 2014
Facts:
David Robert U. Amorin (Amorin) was a cardholder/member of Fortune
Medicare, Inc. (Fortune Care), a corporation engaged in providing health
maintenance services to its members. The terms of Amorin's medical coverage were
provided in a Corporate Health Program Contract4 (Health Care Contract) which was
executed on January 6, 2000 by Fortune Care and the House of Representatives,
where Amorin was a permanent employee.
While on vacation in Honolulu, Hawaii, United States of America (U.S.A.) in
May 1999, Amorin underwent an emergency surgery, specifically appendectomy, at
the St. Francis Medical Center, causing him to incur professional and hospitalization
expenses of US$7,242.35 and US$1,777.79, respectively which he attempted to
recover from Fortune Care the full amount thereof upon his return to Manila, but the
company merely approved a reimbursement ofP12,151.36, an amount that was
based on the average cost of appendectomy, net of medicare deduction, if the
procedure were performed in an accredited hospital in Metro Manila.
He requested reimbursement based on the stipulation which states that if the
emergency confinement occurs in a foreign territory, Fortune Care will be obligated to
reimburse or pay eighty (80%) percent of the approved standard charges which shall
cover the hospitalization costs and professional fees but Fortune Care denied
Amorins request
The RTC dismissed the complaint for breach of contract with damages. On
appeal however, the CA reversed the ruling of the RTC pointing out that health care
agreements such as the subject Health Care Contract, being like insurance contracts,
must be liberally construed in favor of the subscriber. In case its provisions are
doubtful or reasonably susceptible of two interpretations, the construction conferring
coverage is to be adopted and exclusionary clauses of doubtful import should be
strictly construed against the provider.
Issue:
Whether or not Fortune Care is still liable to Amorin.
Held:
Yes. We emphasize that for purposes of determining the liability of a health
care provider to its members, jurisprudence holds that a health care agreement is in
the nature of non-life insurance, which is primarily a contract of indemnity. Once the
member incurs hospital, medical or any other expense arising from sickness, injury or

other stipulated contingent, the health care provider must pay for the same to the
extent agreed upon under the contract.
To aid in the interpretation of health care agreements, the Court laid down the
following guidelines in Philamcare Health Systems v. CA:
When the terms of insurance contract contain limitations on liability, courts
should construe them in such a way as to preclude the insurer from non-compliance
with his obligation. Being a contract of adhesion, the terms of an insurance contract
are to be construed strictly against the party which prepared the contract the
insurer. By reason of the exclusive control of the insurance company over the terms
and phraseology of the insurance contract, ambiguity must be strictly interpreted
against the insurer and liberally in favor of the insured, especially to avoid forfeiture.
This is equally applicable to Health Care Agreements. The phraseology used in
medical or hospital service contracts, such as the one at bar, must be liberally
construed in favor of the subscriber, and if doubtful or reasonably susceptible of two
interpretations the construction conferring coverage is to be adopted, and
exclusionary clauses of doubtful import should be strictly construed against the
provider.

NICANORA G. BUCTON (DECEASED), SUBSTITUTED BY

REQUILDA B. YRAY, vs. RURAL BANK OF EL SALVADOR, INC.,
MISAMIS ORIENTAL, AND REYNALDO CUYONG, vs. ERLINDA
CONCEPCION AND HER HUSBAND AND AGNES BUCTON LUGOD
G.R. No. 179625
February 24, 2014
Facts:
On April 29, 1988, petitioner Nicanora G. Bucton filed with the Regional Trial
Court (RTC) of Cagayan de Oro a case for Annulment of Mortgage, Foreclosure, and
Special Power of Attorney (SPA) against Erlinda Concepcion (Concepcion) and
respondents Rural Bank of El Salvador, Misamis Oriental, and Sheriff Reynaldo
Cuyong
Petitioner alleged that she is the owner of a parcel of land and that
Concepcion borrowed the title on the pretext that she was going to show it to an
interested buyer; that Concepcion obtained a loan in the amount of P30,000.00 from
respondent bank; that as security for the loan, Concepcion mortgaged petitioners
house and lot to respondent bank using a SPA allegedly executed by petitioner in
favor of Concepcion; that Concepcion failed to pay the loan; that petitioners house
and lot were foreclosed by respondent sheriff without a Notice of Extra-Judicial
Foreclosure or Notice of Auction Sale; and that petitioners house and lot were sold in
an auction sale in favor of respondent bank.
Respondent bank claimed that it would not have granted the loan and
accepted the mortgage were it not for the assurance of Concepcion and Lugod that
the SPA was valid, prompting them to file a 3rd party complaint praying that in case it
be adjudged liable, it should be reimbursed by third-party defendants.
Petitioner insists that the SPA was forged, saying that ever since she got
married, she no longer used her maiden name, Nicanora Gabar, in signing
documents. In addition, petitioner presented Emma Nagac who testified that when
she was at Concepcions boutique, she was asked by the latter to sign as a witness
to the SPA, that when she signed the SPA, the signatures of petitioner and her
husband had already been affixed; and that Lugod instructed her not to tell petitioner
about the SPA.
The RTC sustained the claim and opined that the respondent bank should
have conducted a thorough inquiry on the authenticity of the SPA considering that
petitioners residence certificate was not indicated in the acknowledgement of the
SPA. The CA was not convinced and reversed the ruling of the RTC.
Issue:
Whether or not Bucton was bound by the SPA.

Held:
NO. As early as the case of Philippine Sugar Estates Development Co. v.
Poizat, we already ruled that "in order to bind the principal by a deed executed by an
agent, the deed must upon its face purport to be made, signed and sealed in the
name of the principal." The mere fact that the agent was authorized to mortgage the
property is not sufficient to bind the principal, unless the deed was executed and
signed by the agent for and on behalf of his principal.
Similarly, in this case, the authorized agent failed to indicate in the mortgage
that she was acting for and on behalf of her principal. The Real Estate Mortgage,
explicitly shows on its face, that it was signed by Concepcion in her own name and in
her own personal capacity. In fact, there is nothing in the document to show that she
was acting or signing as an agent of petitioner. Thus, consistent with the law on
agency and established jurisprudence, petitioner cannot be bound by the acts of
Concepcion.
In light of the foregoing, there is no need to delve on the issues of forgery of
the SPA and the nullity of the foreclosure sale. For even if the SPA was valid, the Real
Estate Mortgage would still not bind petitioner as it was signed by Concepcion in her
personal capacity and not as an agent of petitioner. Simply put, the Real Estate
Mortgage is void and unenforceable against petitioner.
We need not belabor that the words "as attorney-in-fact of," "as agent of," or
"for and on behalf of," are vital in order for the principal to be bound by the acts of his
agent. Without these words, any mortgage, although signed by the agent, cannot bind
the principal as it is considered to have been signed by the agent in his personal
capacity.

JOSE JUAN TONG, ET AL, vs. GO TIAT KUN, ET

G.R. No. 196023
April 21, 2014
Facts:
Sometime in 1957, Juan Tong had a meeting with all his children to inform
them of his intention to purchase Lot 998 to be used for the familys lumber business
called "Juan Tong Lumber" However, since he was a Chinese citizen and was
disqualified from acquiring the said lot, the title to the property will be registered in
the name of his eldest son, Luis, Sr., who at that time was already of age and was the
only Filipino citizen among his children. He then bought Lot 998 from the heirs of
Jose Ascencio and TCT No. 10346 was issued by the Register of Deeds in the name
of Luis, Sr. Sy Un and Juan Tong died then Luis, Sr. died and the respondents, being
his surviving heirs, claimed ownership over Lot 998 by succession, alleging that no
trust agreement exists and it was Luis, Sr. who bought Lot 998. They executed a
Deed of Extra-Judicial Settlement of Estate of Luis, Sr., adjudicating unto themselves
Lot 998 and claiming that the said lot is the conjugal property of Luis, Sr., and his
wife, which the Juvenile and Domestic Relations Court of Iloilo City approved. To
protect their rights, the petitioners filed an action for Annulment of Sales, Titles,
Reconveyance and Damages of Lot. The trial court ruled5 in favor of the petitioners
which were later affirmed by the CA6 and this Court7 on appeal. Consequently, Lot
998-B was reconveyed to the petitioners
The trial court found that Luis Sr. was a mere trustee, and not the owner of
Lot 998, and the beneficial interest over said property remained in Juan Tong and
subsequently in the Juan Tong Lumber, Inc. The trust is further established by the
fact that Luis Sr., during his lifetime: (1) did not build a house or any structure
thereon or make use of the property in any manner; (2) resided with his family
together with his parents, brothers and sisters in Juan Tong building in front of the
said lot; (3) have acquired a residential property at Ledesco Village, La Paz, Iloilo City
and other places, where his heirs now reside; and (4) did not exercised any other act
of ownership over the said lot. Since the respondents were not the owners of Lot
998-A, they could not appropriate the property unto themselves, much less convey
the same unto third persons. Thus, any document executed by them adjudicating
unto themselves or conveying in favor of each other Lot 998-A, as well as the titles
issued in their favor as a consequence of those documents, are invalid.
Issue:
Whether or not there an implied resulting trust constituted over Lot 998 when
Juan Tong purchased the property and registered it in the name of Luis, Sr.?

Held:
A review of the records shows an intention to create a trust between the
parties. Although Lot 998 was titled in the name of Luis, Sr., the circumstances
surrounding the acquisition of the subject property eloquently speak of the intent
that the equitable or beneficial ownership of the property should belong to the Juan
Tong family.
The principle of a resulting trust is based on the equitable doctrine that
valuable consideration and not legal title determines the equitable title or interest
and are presumed always to have been contemplated by the parties. They arise from
the nature or circumstances of the consideration involved in a transaction whereby
one person thereby becomes invested with legal title but is obligated in equity to hold
his legal title for the benefit of another.
Implied resulting trusts do not prescribe except when the trustee repudiates
the trust. Further, the action to reconvey does not prescribe so long as the property
stands in the name of the trustee.

DR. FILOTEO A. ALANO vs. ZENAIDA MAGUD-LOGMAO

G.R. No. 175540
Date: April 7, 2014
Facts:
On March 1, 1988, Arnelito Lugmoso, recorded as Angelito Lugmao, was
brought to the East Avenue Medical Center (EAMC) by two sidewalk vendors because
he fell from the overpass near the Farmers Market in Cubao, Quezon City. Lugmoso
was immediately attended to and given the necessary medical treatment.
It turned out after searching that he had no relatives around. Thereafter, Dr. Enrique
T. Ona, Chairman of the Department of Surgery, observed that the severity of the
brain injury of Lugmoso manifested symptoms of brain death and he requested the
Laboratory Section to conduct a tissue typing and tissue cross-matching examination,
so that should Lugmoso expire he could be a suitable organ donor.
On March 3, 1988, at about 7:00 oclock in the morning, Dr. Ona was
informed that Lugmoso had then been pronounced brain dead. Upon learning that he
was indeed a suitable organ donor, Dr. Ona asked to locate his relatives to obtain
their consent. Extensive search for the relatives of Lugmoso yielded no positive result
and since time was of the essence, Dr. Ona requested Dr. Filoteo A. Alano, to
authorize the removal of specific organs from the body of Lugmoso for
transplantation purposes. Dr. Ona likewise instructed to secure permission for the
planned organ retrieval and transplantation from the Medico-Legal Office of the
National Bureau of Investigation (NBI), on the assumption that the incident which
lead to the brain injury and death of Lugmoso was a medico legal case.
Arlen Logmao, a brother of Arnelito, upon receiving the news from Aida, went
to La Funeraria Oro, where he saw Arnelito inside a cheap casket. He filed with the
court a quo a complaint for damages alleging that defendants conspired to remove
the organs of Arnelito while the latter was still alive and that they concealed his true
identity. After finding petitioner liable for a quasi-delict, the Regional Trial Court of
Quezon City (RTC) ordered petitioner to pay respondent P188,740.90 as actual
damages; P500,000.00 as moral damages; P500,000.00 as exemplary
damages; P300,000.00 as attorney's fees; and costs of suit. Petitioner appealed to
the CA.
Issue:
Whether or not respondent's sufferings were brought about by petitioner's
alleged negligence in granting authorization for the removal or retrieval of the
internal organs of respondent's son who had been declared brain dead.

Held:
No. Petitioner instructed his subordinates to "make certain" that "all
reasonable efforts" are exerted to locate the patient's next of kin, even enumerating
ways in which to ensure that notices of the death of the patient would reach said
relatives. It also clearly stated that permission or authorization to retrieve and
remove the internal organs of the deceased was being given ONLY IF the provisions
of the applicable law had been complied with. Such instructions reveal that petitioner
acted prudently by directing his subordinates to exhaust all reasonable means of
locating the relatives of the deceased. He could not have made his directives any
clearer. He even specifically mentioned that permission is only being granted IF the
Department of Surgery has complied with all the requirements of the law. Verily,
petitioner could not have been faulted for having full confidence in the ability of the
doctors in the Department of Surgery to comprehend the instructions, obeying all his
directives, and acting only in accordance with the requirements of the law.
Finding petitioner liable for damages is improper. It should be emphasized
that the internal organs of the deceased were removed only after he had been
declared brain dead; thus, the emotional pain suffered by respondent due to the
death of her son cannot in any way be attributed to petitioner. Neither can the Court
find evidence on record to show that respondent's emotional suffering at the sight of
the pitiful state in which she found her son's lifeless body be categorically attributed
to petitioner's conduct.

CATHAY PACIFIC AIRWAYS vs. JUANITA REYES, WILFREDO

REYES, MICHAEL ROY REYES, SIXTA LAPUZ, and SAMPAGUITA
TRAVEL CORP.
G.R. No. 185891
June 26, 2013
Facts:
Sometime in March 1997, respondent Wilfredo Reyes (Wilfredo) made a
travel reservation with Sampaguita Travel for his familys trip to Adelaide, Australia
scheduled from 12 April 1997 to 4 May 1997. Upon booking and confirmation of
their flight schedule, Wilfredo paid for the airfare and was issued four (4) Cathay
Pacific round-trip airplane tickets for Manila-HongKong-Adelaide-HongKong-Manila.
On 12 April 1997, Wilfredo, together with his wife Juanita Reyes (Juanita), son
Michael Roy Reyes (Michael) and mother-in-law Sixta Lapuz (Sixta), flew to Adelaide,
Australia without a hitch.
One week before they were scheduled to fly back home, Wilfredo reconfirmed
his familys return flight with the Cathay Pacific office in Adelaide. They were advised
that the reservation was "still okay as scheduled."
On the day of their scheduled departure from Adelaide, Wilfredo and his family
arrived at the airport on time. When the airport check-in counter opened, Wilfredo
was informed by a staff from Cathay Pacific that the Reyeses did not have confirmed
reservations, and only Sixtas flight booking was confirmed. Nevertheless, they were
allowed to board the flight to HongKong due to adamant pleas from Wilfredo. When
they arrived in HongKong, they were again informed of the same problem.
Unfortunately this time, the Reyeses were not allowed to board because the flight to
Manila was fully booked. Only Sixta was allowed to proceed to Manila from
HongKong. On the following day, the Reyeses were finally allowed to board the next
flight bound for Manila.
Upon arriving in the Philippines, Wilfredo went to Sampaguita Travel to report
the incident. He was informed by Sampaguita Travel that it was actually Cathay
Pacific which cancelled their bookings.
On 16 June 1997, respondents as passengers, through counsel, sent a letter
to Cathay Pacific advising the latter of the incident and demanding payment of
damages. After a series of exchanges and with no resolution in sight, respondents
filed a Complaint for damages against Cathay Pacific and Sampaguita Travel. Cathay
Pacific assails the award of nominal damages in favor of respondents on the ground
that its action of cancelling the flight bookings was justifiable. Cathay Pacific reveals
that upon investigation, the respondents had no confirmed bookings for their return
flights. Hence, it was not obligated to transport the respondents. In fact, Cathay

Pacific adds, it exhibited good faith in accommodating the respondents despite

holding unconfirmed bookings.
Issue:
Whether Reyes cause of action stems from quasi-delict.
Held:
Respondents cause of action against Cathay Pacific stemmed from a breach
of contract of carriage. It is beyond dispute that respondents were holders of Cathay
Pacific airplane tickets and they made the booking through Sampaguita Travel.
Article 1370 of the Civil Code mandates that "if the terms of a contract are
clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulations shall control." Under Section 9, Rule 130 of the Rules of
Court, once the terms of an agreement have been reduced to writing, it is deemed to
contain all the terms agreed upon by the parties and no evidence of such terms other
than the contents of the written agreement shall be admissible.
The terms of the agreement of appellants and appellee Cathay Pacific
embodied in the tickets issued by the latter to the former are plain appellee Cathay
Pacific will transport appellants to Adelaide, Australia from Manila via Hongkong on
12 April 1991 and back to Manila from Adelaide, Australia also via Hongkong on 4
May 1997. In addition, the tickets reveal that all appellants have confirmed bookings
for their flight to Adelaide, Australia and back to Manila as manifested by the words
"Ok" indicated therein. Arlene Ansay, appellee Cathay Pacifics Reservation
Supervisor, validated this fact in her testimony saying that the return flights of all
appellants to the Philippines on 4 May 1997 were confirmed as appearing on the
tickets.
Indubitably, when appellee Cathay Pacific initially refused to transport
appellants to the Philippines on 4 May 1997 due to the latters lack of reservation, it
has, in effect, breached their contract of carriage. Appellants, however, were
eventually accommodated and transported by appellee Cathay Pacific to Manila.

MAGSAYSAY MARITIME CORPORATION vs. OSCAR D. CHIN, JR.

G.R. No. 199022
April 7, 2014
Facts:
Thome Ship Management Pte. Ltd., hired respondent Oscar D. Chin, Jr. to
work for nine months as able seaman on board MV Star Siranger.
On October 22, 1996 Chin sustained injuries while working on his job aboard
the vessel. Dr. Solan of Wilmington, North Carolina, USA, examined him on November
29, 1996 and found him to have suffered from lumbosacral strain due to heavy
lifting of pressurized machine. Chin underwent a surgical procedure called
laminectomy and discectomy L4L5. On August 6, 1998 Chin filed a claim for
disability with Pandiman Phils., Inc. which is the local agent of P & I Club of which
Magsaysay Maritime is a member. Pandiman offered US$30,000.00 as disability
compensation which Chin accepted on August 6, 1998. He then executed a Release
and Quitclaim in favor of Magsaysay Maritime.
On September 29, 1998 Chin filed a complaint with the National Labor
Relations Commission (NLRC), claiming underpayment of disability benefits and
attorneys fees. He later amended his complaint to include claims for damages.
The Labor Arbiter dismissed Chins complaint for lack of merit. The NLRC
affirmed the dismissal on May 17, 2001. On appeal, however, the Court of Appeals
(CA) reversed the dismissal and ruled that Chin was entitled to permanent total
disability benefit of US$60,000.00. On September 28, 2004 petitioner Magsaysay
paid the deficiency award of US$30,000.00 in full and final settlement of Chins
disability compensation claim. On February 26, 2007, however, the Labor Arbiter
rendered a Decision ordering it to pay Chin: a) P19,279.75 as reimbursement for
medical expenses; b) US$147,026.43 as loss of future wages; c) P200,000.00 as
moral damages; d) P75,000.00 as exemplary damages; and e) 10% of the total
award as attorneys fees.
On November 25, 2008 the NLRC modified the Labor Arbiters Decision by
deleting the awards of loss of future wages and moral and exemplary damages for
lack of factual and legal bases. On appeal, the CA reversed the NLRCs Decision and
ordered the reinstatement of the Labor Arbiters Decision, hence, this petition.
Issue:
Whether or not the CA erred in affirming the Labor Arbiters award of loss of
future earnings on top of his disability benefits as well as awards of moral and
exemplary damages and attorneys fees.
Held:
Definitely, the Labor Arbiters award of loss of earning is unwarranted since
Chin had already been given disability compensation for loss of earning capacity. An

additional award for loss of earnings will result in double recovery. In a catena of
cases, the Court has consistently ruled that disability should not be understood more
on its medical significance but on the loss of earning capacity. Permanent total
disability means disablement of an employee to earn wages in the same kind of
work, or work of similar nature that he was trained for or accustomed to perform, or
any kind of work which a person of his mentality and attainment could do. Disability,
therefore, is not synonymous with "sickness" or "illness." What is compensated is
ones incapacity to work resulting in the impairment of his earning capacity.
In awarding damages for loss of earning capacity, the Labor Arbiter relies on
the rulings in Villa Rey Transit v. Court of Appeals and Baliwag Transit, Inc. v. Court of
Appeals. But these cases involve essentially claims for damages arising from
quasidelict. The present case, on the other hand, involves a claim for disability
benefits under Chins contract of employment and the governing POEA set standards
of recovery. The longstanding rule is that loss of earning is recoverable if the action
is based on the quasidelict provision of Article 2206 of the Civil Code.
While the Labor Arbiter can grant moral and exemplary damages, the amounts
he fixed in this case are quite excessive in the absence of evidence to prove the
degree of moral suffering or injury that Chin suffered. It has been held that in order to
arrive at a judicious approximation of emotional or moral injury, competent and
substantial proof of the suffering experienced must be laid before the court. It is
worthy to stress that moral damages are awarded as compensation for actual injury
suffered and not as a penalty. The Court believes that an award of P30,000.00 as
moral damages is commensurate to the anxiety and inconvenience that Chin
suffered.
As for exemplary damages, the award of P25,000.00 is already sufficient to
discourage petitioner Magsaysay from entering into iniquitous agreements with its
employees that violate their right to collect the amounts to which they are entitled
under the law. Exemplary damages are imposed not to enrich one party or impoverish
another but to serve as a deterrent against or as a negative incentive to curb socially
deleterious actions.

ONE NETWORK RURAL BANK, INC. vs. DANILO G. BARIC

G.R. No. 193684
March 5, 2014
Facts:
Jaime Palado (Palado) was the registered owner of real property with a
building containing commercial spaces for lease at Barangay Piapi, Davao City and
covered by Transfer Certificate of Title No. 231531. Respondent Danilo G. Baric was
a lessee therein, operating a barber shop on one of the commercial spaces. The
lease was governed by a written agreement. In December 2000, Baric received a
written notice from Palado demanding the return of the leased commercial
space within 40 days from December 15, 2000.
In February 2001, Baric filed a case for forcible entry with prayer for injunctive
relief against Palado and herein petitioner One Network Rural Bank, Inc. (Network
Bank). He alleged that on December 2000, Palado sent him a notice to vacate
the premises; that he filed a Complaint with the Barangay Chairman of Piapi; that on
January 29, 2001, Palado enclosed and fenced the premises and thus prevented
him from entering and using the same; that he reported the incident to the police and
caused the same to be recorded in the police blotter; that he was thus excluded
from the leased premises by means of strategy, violence, force and threat. In its
Answer, Network Bank essentially claimed that as a buyer in good faith and new
owner of the subject property, it should not be made liable.
The MTCC rendered its Decision dismissing Barics Complaint for forcible
entry. The RTC sustained the MTCC Decision in its totality. Reversing the lower courts,
the CA held that Palado was guilty of forcible entry in that while Palados notice to
vacate required Baric to vacate the premises within 40 days, the latter was granted,
under the agreement, the right to at least four months advance notice. With regards
to Network Bank, the CA declared that the issue of its being a purchaser in good or
bad faith was not material, since Network Banks purchase of the property was
subject to all liens and encumbrances found thereon, and the bank merely stepped
into the shoes of the former owner.
Issue:
Whether Network Bank should be held solidarily liable with Palado for
payment of nominal damages.
Held:
While the Petition does not squarely address the true issue involved, it is
nonetheless evident that the CA gravely erred in holding Network Bank solidarily
liable with Palado for the payment of nominal damages.

Under Article 2221 of the Civil Code, nominal damages may be awarded to a
plaintiff whose right has been violated or invaded by the defendant, for the purpose
of vindicating or recognizing that right, not for indemnifying the plaintiff for any loss
suffered."
Network Bank did not violate any of Baric's rights; it was merely a purchaser
or transferee of the property. Surely, it is not prohibited from acquiring the property
even while the forcible entry case was pending, because as the registered owner of
the subject property, Palado may transfer his title at any time and the lease merely
follows the property as a lien or encumbrance. Any invasion or violation of Baric's
rights as lessee was committed solely by Palado, and Network Bank may not be
implicated or found guilty unless it actually took part in the commission of illegal acts,
which does not appear to be so from the evidence on record.