Development Bank of the Philippines vs.
Court with its obligation to execute a deed of conveyance of
of Appeals
G.R. No. 118180, September 20, 1996
262 SCRA 245
FACTS:
Private respondents were the original owners
of a parcel of land which they mortgaged to petitioner
bank and was subsequently foreclosed for the formers
default on their obligation. Consequently, a Transfer
Certificate of Title was eventually issued in
petitioners name being the sole bidder in the auction
sale conducted during the foreclosure of said land.
Thereafter, petitioner and private respondents
entered into a Deed of Conditional Salewherein
petitioner agreed to reconvey the foreclosed property
to private respondents under the condition that
petitioner shall deliver to private respondents, their
heirs, administrators and assigns a good and
sufficient deed of conveyance covering the property,
subject matter of the said deed of conditional sale,
upon completion of payment by said private
respondents.
Upon completing the payment of the full repurchase
price, private respondents demanded from petitioner
the execution of a Deed of Conveyance in their favor.
Petitioner then informed private respondents
that the prestation to execute and deliver a deed of
conveyance in their favor had become legally
impossible in view of Sec.6 of R.A. 6657
(Comprehensive Agrarian Reform Law) approved on
June 10, 1988 and Sec.1 of E.O. 407 issued June 10,
1990. The former law annulling all sales, dispositions,
leases, management contracts or transfers of
possession of private lands executed by the original
landowner in violation of the retention limits provided
thereof upon its effectivity while the latter law
requires all government instrumentalities to
immediately execute deeds of transfer in favor of the
Republic of the Philippines as represented by the
Department of Agrarian Reform and to surrender to
the latter department all landholdings suitable for
agriculture.
Aggrieved, private respondents filed a complaint for
specific performance with damages against petitioner.
ISSUE:
The issue is whether or not said laws had
rendered legally impossible compliance by petitioner
respondent all the records of the cash advances for the
the subject land in favor of private respondents.
HELD:
It is a rule that if the obligation depends
upon a suspensive condition, the demandability as
well as the acquisition of effectivity of the rights
arising from the obligationis suspended pending the
happening or fulfillment of the fact or event which
constitutes the condition. Once the event which
constitutes the condition is fulfilled resulting in the
effectivity of the obligation, its effects retroact to the
moment when the essebtial elements which gave birth
to the obligation have taken place. Applying this
precept to the case, the fullpayment by the appellees
on April 6, 1990 retroacts to the time the contract of
conditional sale was executed on April 6, 1984. From
that time, all elements of the contract were
present.Consequently; the contract of sale was
perfected. As such, the said sale does not come under
the coverage of R.A. 6657 and E.O. 407.
Further, R.A. 6657 refers to the original
owners of said agricultural lands and petitioner is not
as such.
Maria Tomimbang v. Atty. Jose Tomimbang
GR No. 165116; August 4, 2009
Facts:
Petitioner and respondent are siblings. Their
parents donated to petitioner an eight-door
apartment located at 149 Santolan Road, Murphy,
Quezon City. Petitioner failed to obtain a loan from
PAG-IBIG Fund, hence, respondent offered to extend
a credit line to petitioner on the following conditions:
(1) petitioner shall keep a record of all the advances;
(2) petitioner shall start paying the loan upon the
completion of the renovation; (3) upon completion of
the renovation, a loan and mortgage agreement based
on the amount of the advances made shall be executed
by petitioner and respondent; and (4) the loan
agreement shall contain comfortable terms and
conditions which petitioner could have obtained from
PAG-IBIG.
A conflict between the siblings ensued leading to
a new agreement whereby petitioner was to start
making monthly payments on her loan. Upon
respondent's demand, petitioner turned over to
renovations. Subsequently, or from June to October
of 1997, petitioner made monthly payments of P18,
700.00, or a total ofP93, 500.00. Petitioner never
denied the fact that she started making such monthly
payments. Thereafter, the petitioner can no longer be
found and also stopped making the monthly
payments. Thus, a complaint was filed against the
petitioner demanding payment of the loan plus
interest. Petitioner contended that the loan is not yet
due and demandable as the renovation of the
apartment is not yet completed.
Issue:
Whether or not the loan is already due and
demandable.
Ruling:
The loan is already due and demandable due to
the subsequent agreement entered in to by the parties.
Article 1291 of the Civil Code provides, thus:
Art. 1291. Obligations may be modified by:
(1) Changing their object or principal conditions;
(2) Substituting the person of the debtor;
(3) Subrogating a third person in the rights of the
creditor.
The petitioner admitted that she started to
comply with the demand of the respondent to pay on a
monthly basis. Her partial performance of her
obligation is unmistakable proof that indeed the
original agreement between her and respondent had
been novated by the deletion of the condition that
payments shall be made only after completion of
renovations. Hence, by her very own admission and
partial performance of her obligation, there can be no
other conclusion but that under the novated
agreement, petitioner's obligation is already due and
demandable.
VDA. DE MISTICA VS NAGUIAT
418 SCRA 73 December 11, 2003
FACTS:
On April 5, 1979, Eulalio Mistica, predecessor-
in-interest of herein [petitioner], entered into a
contract to sell with [respondent] Bernardino Naguiat
over a lot. Pursuant to said agreement, respondent
gave a downpayment of P2,000.00. He made another
partial payment of P1,000.00 on February 7, 1980. He
failed to make any payments thereafter. Eulalio
Mistica died sometime in October 1986. On December
4, 1991, petitioner filed a complaint for rescission
alleging that the failure and refusal of respondents to
pay the balance of the purchase price constitutes a
violation of the contract which entitles her to rescind
the same.
ISSUE:
Is petitioner entitled to rescission of contract?
RULING:
The transaction between Eulalio Mistica and
respondents, as evidenced by the Kasulatan, was
clearly a Contract of Sale. A deed of sale is considered
absolute in nature when there is neither a stipulation
in the deed that title to the property sold is reserved to
the seller until the full payment of the price; nor a
stipulation giving the vendor the right to unilaterally
resolve the contract the moment the buyer fails to pay
within a fixed period.
In a contract of sale, the remedy of an unpaid
seller is either specific performance or rescission.
Rescission, however, is allowed only where the breach
is substantial and fundamental to the fulfillment of
the obligation. In the present case, the failure of
respondents to pay the balance of the purchase price
within ten years from the execution of the Deed did
not amount to a substantial breach.
Moreover, it is undisputed that during the ten
year period, petitioner never made any demand for
the balance of the purchase price. Petitioner even
refused the payment tendered by respondents during
her husbands funeral, thus showing she was not
exactly blameless for the lapse of the ten year period.
TRILLANA VS QUEZON COLLEGES
GR No. L-5003, June 27, 1953
FACTS:
On June 1, 1948, Damasa Crisostomo applied
for 200 shares of stock worth PhP100.00 each at
Quezon Colleges, Inc. Within her letter of application,
she stipulated, You will find (Babayaran kong lahat
pagkatapos na ako ay makapag-pahuli ng isda) pesos
as my initial payment and the balance payable in
accordance with law and the rules and regulations of
the Quezon College. Damasa died on October 26,
1948. Since no payment was rendered on the
subscription made in the foregoing letter, Quezon
College presented a claim of PhP20,000.00 on her
intestate proceedings. The petitioner administrator
of the estate then contests the validity of said
proceedings?
ISSUE:
Is the condition laid down by Damasa
Crisostomo valid?
RULING:
There is nothing in the record to show that the
Quezon College, Inc. accepted the term of payment
suggested by Damasa Crisostomo, or that if there was
any acceptance the same came to her knowledge
during her lifetime. As the application of Damasa
Crisostomo is obviously at variance with the terms
evidenced in the form letter issued by the Quezon
College, Inc., there was absolute necessity on the part
of the College to express its agreement to Damasa's
offer in order to bind the latter. Conversely, said
acceptance was essential, because it would be unfair
to immediately obligate the Quezon College, Inc.
under Damasa's promise to pay the price of the
subscription after she had caused fish to be caught.
Thus, it cannot be said that the letter ripened into a
contract.
Indeed, the need for express acceptance on the
part of the Quezon College, Inc. becomes the more
imperative, in view of the proposal of Damasa
Crisostomo to pay the value of the subscription after
she has harvested fish, a condition obviously
dependent upon her sole will and, therefore,
facultative in nature, rendering the obligation void.
Under the Civil Code it is provided that if the
fulfillment of the condition should depend upon the
exclusive will of the debtor, the conditional obligation
shall be void.
VISAYAN SAWMILL VS CA
219 SCRA 378 March 3, 1993
FACTS:
On May 1, 1983, herein plaintiff-appellee and
defendants appellants entered into a sale involving
scrap iron, subject to the condition that plaintiff
appellee will open a letter of credit in the amount of
P250,00.00 in favor of defendant-appellant
corporation on or before May 15, 1983. On May 24,
1983, plaintiff-appellee informed defendans-
appellants by telegram that the letter of credit was
opened May 12, 1983 at the BPI main office in Ayala,
but that transmittal was delayed. On May 26, 1983,
defendants-appellants received a letter advice from
the Dumaguete City Branch of BPI dated May 26,
1983, that a domestic letter of credit had been opened
in favor of Visayan Sawmill Company.
On July 19, 1983 plaintiffs then demanded that
defendants comply with the deed of sale. On July 20,
1983 defendant corporation informed plaintiffs
lawyer that it is unwilling to continue with the sale
due to plaintiffs failure to comply with the essential
preconditions of the contract.
Private respondent prayed for judgment
ordering the petitioner corporation to comply with the
contract by delivering to him the scrap iron subject
thereof.
ISSUE:
Did petitioner corporation violate the terms and
conditions of the contract?
RULING:
The petitioner corporations obligation to sell is
unequivocally subject to a positive suspensive
condition. The failure of the private respondent to
comply with the positive suspensive condition cannot
even be considered a breach casual or serious but
simply an event that prevented the obligation of
petitioner corporation to convey title from acquiring
binding force.
The letter of credit in favor of petitioner was
indisputably not in accordance with the stipulation in
the contract signed by the parties on at three counts:
(1) it was not opened, made or indorsed by the private
respondent, but by a corporation which is not a party
to the contract; (2) it was not opened with the bank
agreed upon and; (3) it is not irrevocable and
unconditional, for it is without recourse, it is set to
expire on a specific date and it stipulates certain
conditions with respect to shipment.
 Consequently, the obligation of petitioner to sell
did not arise; it therefore cannot be compelled by
specific performance to comply with its prestation.
DE LEON v. ONG
G.R. No. 170405 February 2, 2010
Facts:
On March 10, 1993, Raymundo S. De Leon
(petitioner) sold 3 parcels of land to Benita T.
Ong(respondent). The said properties were mortgaged
to a financial institution; Real Savings & Loan
Association Inc. (RSLAI). The parties then executed a
notarized deed of absolute sale with assumption of
mortgage. As indicated in the deed of mortgage, the
parties stipulated that the petitioner (de Leon) shall
execute a deed of assumption of mortgage in favor of
Ong (respondent)after full payment of the P415,000.
They also agreed that the respondent (Ong) shall
assume the mortgage. The respondent then
subsequently gave petitioner P415,000 as partial
payment. On the other hand, de Leon handed the keys
to Ong and de Leon wrote a letter to inform RSLAI
that the mortgage will be assumed by Ong. Thereafter,
the respondent took repairs and made improvements
in the properties. Subsequently, respondent learned
that the same properties were sold to a certain Viloria
after March 10, 1993 and changed the locks, rendering
the keys given to her useless. Respondent proceeded
to RSLAI but she was informed that the mortgage has
been fully paid and that the titles have been given to
the said person. Respondent then filed a complaint for
specific performance and declaration of nullity of the
second sale and damages. The petitioner contended
that respondent does not have a cause of action
against him because the sale was subject to a
condition which requires the approval of RSLAI of the
mortgage. Petitioner reiterated that they only entered
into a contract to sell. The RTC dismissed the case. On
appeal, the CA upheld the sale to respondent and
nullified the sale to Viloria. Petitioner moved for
reconsideration to the SC.
Issue:
Whether the parties entered into a contract of sale or
a contract to sell?
Held:
In a contract of sale, the seller conveys ownership of
the property to the buyer upon the perfection of the
contract. The non-payment of the price is a negative
resolutory condition. Contract to sell is subject to a
positive suspensive condition. The buyer does not
acquire ownership of the property until he fully pays
the purchase price.In the present case, the deed
executed by the parties did not show that the owner
intends to reserve ownership of the properties. The
terms and conditions affected only the manner of
payment and not the immediate transfer of
ownership. It was clear that the owner intended a sale
because he unqualifiedly delivered and transferred
ownership of the properties to the respondent
CIR VS PRIMETOWN
GR No. 162155 August 28, 2007
FACTS:
On March 11, 1999, Gilbert Yap, vice chair of
respondent Primetown Property Group, Inc., applied
for the refund or credit of income tax respondent paid
in 1997. According to Yap, because respondent
suffered losses, it was not liable for income taxes.
Nevertheless, respondent paid its quarterly corporate
income tax and remitted creditable withholding tax
from real estate sales to the BIR in the total amount of
P26,318,398.32. Therefore, respondent was entitled
to tax refund or tax credit.
On May 13, 1999, revenue officer Elizabeth Y.
Santos required respondent to submit additional
documents to support its claim. Respondent complied
but its claim was not acted upon. Thus, on April 14,
2000, it filed a petition for review in the Court of Tax
Appeals (CTA). On December 15, 2000, the CTA
dismissed the petition as it was filed beyond the two-
year prescriptive period for filing a judicial claim for
tax refund or tax credit. Respondents now assail that
decision for dismissal of the CTA.
ISSUE:
What is the expiration period for the filing of
the action?
RULING:
Both Article 13 of the Civil Code and Section 31,
Chapter VIII, Book I of the Administrative Code of
1987 deal with the same subject matter the
computation of legal periods. Under the Civil Code, a
year is equivalent to 365 days whether it be a regular
year or a leap year. Under the Administrative Code of
1987, however, a year is composed of 12 calendar
months. Needless to state, under the Administrative
Code of 1987, the number of days is irrelevant.
There obviously exists a manifest
incompatibility in the manner of computing legal
periods under the Civil Code and the Administrative
Code of 1987. For this reason, we hold that Section 31,
Chapter VIII, Book I of the Administrative Code of
1987, being the more recent law, governs the
computation of legal periods. Lex posteriori derogat
priori.
Following this formula, respondents petition
(filed on April 14, 2000) was filed on the last day of
the 24th calendar month from the day respondent
filed its final adjusted return. Hence, it was filed
within the reglementary period.
NAMARCO vs Tecson
GR No. L-29131 August 27, 1969
FACTS:
On a previous court case, the CFI rendered
judgment:
(a) Ordering the defendants Miguel D.
Tecson and Alto Surety Insurance Co., Inc. to pay
jointly and severally plaintiff PRATRA the sum of
P7,200.00 plus 7% interest from May 25, 1960 until
the amount is fully paid, plus P500.00 for attorney's
fees, and plus costs; (b) ordering defendant Miguel
D. Tecson to indemnify his co-defendant Alto Surety
& Insurance Co., Inc. on the cross-claim for all the
amounts it would be made to pay in this decision, in
case defendant Alto Surety & Insurance Co., Inc. pay
the amount adjudged to plaintiff in this decision.
From the date of such payment defendant Miguel D.
Tecson would pay the Alto Surety & Insurance Co.,
Inc., interest at 12% per annum until Miguel D.
Tecson has fully reimbursed plaintiff of the said
amount.
Defendant Miguel Tecson seeks the dismissal
of the complaint on the ground of lack of jurisdiction
and prescription. This case was filed exactly on
December 21, 1965 but more than ten years have
passed a year is a period of 365 days (Art. 13, CCP).
Plaintiff forgot that 1960, 1964 were both leap years
so that when this present case was filed it was filed
two days too late.
ISSUE:
Should the complaint be dismissed on the
grounds of prescription?
RULING:
In the language of this Court, in People vs. Del
Rosario, with the approval of the Civil Code of the
Philippines (Republic Act 386) ... we have reverted to
the provisions of the Spanish Civil Code in accordance
with which a month is to be considered as the regular
30-day month ... and not the solar or civil month,"
with the particularity that, whereas the Spanish Code
merely mentioned "months, days or nights," ours has
added thereto the term "years" and explicitly ordains
that "it shall be understood that years are of three
hundred sixty-five days."
The decision was affirmed.
Ernest Berg vs. Magdalena Estate, Inc.
G.R. No. L-3784, October 17, 1952
92 Phil 111
FACTS:
The complaint avers that plaintiff and
defendant are co-owners of said property, the former
being the owner of one-third interest and the latter of
the remaining two-thirds. The division is asked
because plaintiff and defendant are unable to agree
upon the management of the property and upon the
partition thereof.
Defendant answered setting up a special
defense and counterclaim. As a special defense,
defendant claims that on September 22, 1943, it sold
to plaintiff one-third of the property in litigation
subject to the express condition that should either
vendor or vendee decide to sell his undivided share,
the party selling would grant to the other party first an
irrevocable option to purchase the same at the sellers
price. It avers that in January 1946, plaintiff fixed the
sum of P200, 000 as the price of said share and
offered to sell it to defendant, which offer was
accepted and for the payment of said price plaintiff
gave defendant a period of time which, including the
extensions granted would expire on May 31, 1947.
Defendant claims that in spite of its acceptance of the
offer, plaintiff refused to accept the payment of the
price, and for this refusal defendant suffered damages
in the amount of P100, 000. For these reasons,
defendant asks for specific performance.
ISSUE:
Whether or not the obligation is one subject to
a term.
HELD:
The obligation is rather subject to a condition.
Under Article 1125 of the old Civil Code, obligations
with a term, for the fulfillment of which a day certain
has been fixed, shall be demandable only when the
day arrives. A day certain is understood to be that
which must necessarily arrive, even though it is not
known when. In order that an obligation may be with
a term, it is, therefore, necessary that it should arrive,
sooner or later; otherwise, if its arrival is uncertain,
the obligation is conditional.
Viewing in this light the clause on which
defendant relies for the enforcement of its right to buy
the property, it would seem that it is not a term, but a
condition. Considering the first alternative, that is,
until defendant shall have obtained a loan from the
National City Bank of New York, it is clear that the
granting of such loan is not definite and cannot be
held to come within the terms day certain. And if it
is considered that the period given was until such time
as defendant could raise money from other sources,
then it is also to be indefinite and contingent, and so it
is also a condition and not a term within the meaning
of the law. In any event, it is apparent that the
fulfillment of the condition contained in this second
alternative is made to depend upon defendants
exclusive will, and viewed in this light, the plaintiffs
obligation to sell did not arise, for, under article 1115
of the old Civil Code, when the fulfillment of the
condition depends upon the exclusive will of the
debtor the conditional obligation shall be void.
Victorias Planters vs. Victorias Milling Co. Inc.
G.R. No. L-6648, July 25, 1955
97 PHIL 318
FACTS:
From 1917 to 1934, the sugar cane planters Manapla
and Cadiz, Negros Occidental, executed identical
milling contracts, under which the sugar central
"North Negros Sugar Co. Inc." would mill the sugar
produced by the sugar cane planters of the Manapla
and Cadiz districts.
The sugar cane planters of Manapla and Cadiz, Negros
Occidental had executed a contract whereby Ossorio
was given a period up to December 31, 1916 within
which to make a study of and decide whether he
would construct a sugar central or mill with a capacity
of milling 300 tons of sugar cane every 24 hours and
setting forth the mutual obligations and undertakings
of such central and the planters and the terms and
conditions under which the sugar cane produced by
said planters would be milled in the event of the
construction of such sugar central by Ossorio. Such
central was in fact constructed by said Ossorio in
Manapla, Negros Occidental, through the North
Negros Sugar Co., Inc., where after the standard form
of milling contracts were executed.The parties cannot
stipulate as to the milling contracts executed by the
planters by Victorias, Negros Occidental, other than
as follows: 1) a number of them executed such milling
contracts with the North Negros Sugar Co., Inc.; 2)
while a number of them executed milling contracts
with the Victorias Milling Co., Inc., which was likewise
organized by Miguel J. Ossorio and which had
constructed another Central at Victorias, Negros
Occidental. Thus, after the war, all the sugar cane
produced by the planters of petitioner associations, in
Manapla, Cadiz, as well as in Victorias, who held
milling contracts, were milled in only one central, that
of the respondent corporation at Victorias. Beginning
with the year 1948, and in the following years, when
the planters-members of the North Negros Planters
Association, Inc. considered that the stipulated 30-
year period of their milling contracts executed in the
year 1918 had already expired and terminated in the
crop year 1947-1948, and the planters-members of the
Victorias Planters Association, Inc. likewise
considered the stipulated 30-year period of their
milling contracts, as having likewise expired and
terminated in the crop year 1948-1949, under the
pertinent provisions of the standard milling contract.
Notwithstanding the repeated representations made
by the herein petitioners with the respondent
corporation, the herein respondent has refused and
still refuses to accede to the same, contending that
under the provisions of the milling contract.
ISSUE:
Whether or not the trial court erred in rendering
its disputed decision, favoring the petitioner.
HELD :
The fact that the contracts make reference to
"first milling" does not make the period of thirty (30)
years one of thirty (30) milling years. The term "first
milling" used in the contracts under consideration
was for the purpose of reckoning the thirty-year
period stipulated therein. Even if the thirty-year
period provided for in the contracts be construed as
milling years, the deduction or extension of six (6)
years would not be justified. At most on the last year
of the thirty-year period stipulated in the contracts the
delivery of sugar cane could be extended up to a time
when all the amount of sugar cane raised and
harvested should have been delivered to the
appellant's mill as agreed upon. Further, the parties
stipulated that in the event of flood, typhoon,
earthquake, or other force majeure, war, insurrection,
civil commotion, organized strike, etc., the contract
shall be deemed suspended during said period, does
not mean that the happening of any of those events
stops the running of the period agreed upon. It only
relieves the parties from the fulfillment of their
respective obligations during that time the planters
from delivering sugar cane and the central from
milling it. In order that the central, the herein
appellant, may be entitled to demand from the other
parties the fulfillment of their part in the contracts,
the latter must have been able to perform it but failed
or refused to do so and not when they were prevented
by force majeure such as war. To require the planters
to deliver the sugar cane which they failed to deliver
during the four (4) years of the Japanese occupation
and the two (2) years after liberation when the mill
was being rebuilt is to demand from the obligors the
fulfillment of an obligation which was impossible of
performance at the time it became due.
JESPAJO VS CA
GR No. 113626 September 27, 2002
FACTS:
On February 1, 1985, said corporation,
represented by its President, Jesus L. Uy, entered into
separate contracts of lease with Tan Te Gutierrez and
Co Tong. Pursuant to the contract, Tan Te occupied
room No. 217 of the subject building at a monthly rent
of P847.00 while Co Teng occupied the Penthouse at a
monthly rent of P910.00. The terms of the contract
among others are the following:
PERIOD OF LEASE- The lease period
shall be effective as of February 1, 1985 and shall
continue for an indefinite period provided the lessee is
up-to-date in the payment of his monthly rentals. The
LESSEE may, at his option, terminate this contract
any time by giving sixty (60) days prior written notice
of termination to the LESSOR.
However, violation of any of the terms
and conditions of this contract shall be a sufficient
ground for termination thereof by the LESSOR.
The private respondents religiously paid the
monthly rental fees. On January 2, 1990, the lessor
corporation sent a written notice to the lessees
informing them of the formers intention to increase
the monthly rentals on the occupied premises to
P3,500.00 monthly effective February 1, 1990. The
private respondents refused payment. An ejectment
case was filed against them in court.
ISSUE:
Is the stipulation a potestative period and
hence void?
RULING:
The lease contract between petitioner and
respondents is with a period subject to a resolutory
condition. The wording of the agreement is
unequivocal. The condition imposed in order that the
contract shall remain effective is that the lessee is up-
to-date in his monthly payments. It is undisputed
that the lessees Gutierrez and Co Tong religiously paid
their rent at the increasing rate of 20% annually. The
agreement between the lessor and the lessees are
therefore still subsisting, with the original terms and
conditions agreed upon, when the petitioner
unilaterally increased the rental payment to more
than 20% or P3,500.00 a month.
The petitioner is estopped from backing out of
their representations in the contract with respondent,
that is, they may not renege on their own acts and
representations, to the prejudice of the respondents
who relied on them.
BALUYUT VS POBLETE
GR No. 144435 February 6, 2007
FACTS:
On July 20, 1981, Guillermina Baluyut,
mortgaged her house to secure a loan in the amount of
PhP850,000.00 from the spouses Eulogio and Salud
Poblete. The load was set to mature in one month.
After a month had passed, she was unable to pay her
indebtedness which led the spouses to extrajudicially
foreclose the mortgage. The property was then sold on
Auction to the Poblete spouses who asked Baluyut to
vacate the premises. Baluyut instead filed an action
for annulment of mortgage. His claim was rejected by
the RTC and the CA. Petitioner claims that based on
the testimony of Atty. Edwina Mendoza that the
maturity of the loan which she incurred is only for one
year.
ISSUE:
Is petitioners contention tenable?
RULING:
Evidence of a prior or contemporaneous verbal
agreement is generally not admissible to vary,
contradict or defeat the operation of a valid contract.
In the instant case, aside from the testimony of Atty.
Mendoza, no other evidence was presented to prove
that the real date of maturity is one year.
The terms that were thusly reduced to writing is
deemed to contain all the terms agreed upon and no
evidence of such terms can be admitted other than the
contents of the agreement itself. The promissory note
is the law between petitioner and private respondents
and it clearly states that the loan shall mature in one
month from date of the said Promissory Note.
MALAYAN REALTY VS UY
GR No. 163763 November 10, 2006
FACTS:
Malayan Realty, Inc. (Malayan), is the owner of
an apartment unit known as 3013 Interior No. 90 (the
property), located at Nagtahan Street, Sampaloc,
Manila. In 1958, Malayan entered into a verbal lease
contract with Uy Han Yong (Uy) over the property at a
monthly rental of P262.00. The monthly rental was
increased yearly starting 1989, and by 2001, the
monthly rental was P4,671.65.
On July 17, 2001, Malayan sent Uy a written
notice informing him that the lease contract would no
longer be renewed or extended upon its expiration on
August 31, 2001, and asking him to vacate and turn
over the possession of the property within five days
from August 31, 2001, or on September 5, 2001.
Despite Uys receipt of the notice on June 18, 2001, he
refused to vacate the property, prompting Malayan to
file before the Metropolitan Trial Court (MeTC) of
Manila a complaint for ejectment, docketed as Civil
Case No. 171256, and was raffled to Branch 3 thereof.
The Court ruled in favor of Uy and granted an
extension period of five years.
ISSUE:
Is respondent Uy entitled to a grant of
extension by the Court?
RULING:
The 2nd paragraph of Article 1687 provides that
in the event that the lessee has occupied the leased
premises for over a year, the courts may fix a longer
term for the lease.
The power of the courts to establish a grace period is
potestative or discretionary, depending on the
particular circumstances of the case. Thus, a longer
term may be granted where equities come into play,
and may be denied where none appears, always with
due deference to the parties freedom to contract.
In the present case, respondent has remained
in possession of the property from the time the
complaint for ejectment was filed on September 18,
2001 up to the present time. Effectively, respondents
lease has been extended for more than five years,
which time is, under the circumstances, deemed
sufficient as an extension and for him to find another
place to stay.
LL and Company Development vs. Huang
Chao Chun
G.R. No. 142378, March 7, 2000
378 SCRA 612
FACTS:
The case originated from an unlawful detainer
case filed by petitioner before the trial court alleging
that respondents Huang Chao Chun and Yang Tung
Fa violated their amended lease contract over a 1,112
square meter lot it owns, when they did not pay the
monthly rentals thereon in the total amount of
P4,322,900.00. It also alleged that the amended lease
contract already expired on September 16, 1996 but
respondents refused to surrender possession thereof
plus the improvements made thereon, and pay the
rental arrearages despite repeated demands. The
parties entered into the amended lease contract
sometime in August 1991. The same amended the
lease contract previously entered into by the parties
on August 8, 1991.
Respondent were joined by the Tsai Chun
International Resources Inc. in their answer to the
Complaint, wherein they alleged that the actual lessee
is the corporation. Respondents and the corporation
denied petitioners allegations.
The MTC dismissed the case. The MTC ruled
that the lessees could extend the contract entered into
by the parties unilaterally for another five years for
reasons of justice and equity. It also ruled that the
corporations failure to pay the monthly rentals as
they fell due was justified by the fact that petitioner
refused to honor the basis of the rental increase as
stated in their Lease Agreement. This was affirmed by
the RTC. It also held that the parties had a reciprocal
obligation: unless and until petitioner presented the
increased realty tax, private respondents were not
under any obligation to pay the increased monthly
rental. The decision was likewise affirmed by the
Court of Appeals.
ISSUE:
Whether or not the court could still extend the
term of the lease, after its expiration.
HELD:
In general, the power of the courts to fix a
longer term for a lease is discretionary. Such power is
to be exercised only in accordance with the particular
circumstances of a case: a longer term to be granted
where equities demanding extension come into play;
to be denied where none appear -- always with due
deference to the parties freedom to contract. Thus,
courts are not bound to extend the lease.
Article 1675 of the Civil Code excludes cases falling
under Article 1673 from those under Article 1687.
Article 1673 provides among others, that the lessor
may judicially eject the lessee upon the expiration of
the period agreed upon or that, which is fixed for the
duration of the leases. Where no period has been
fixed by the parties, the courts, pursuant to Article
1687, have the potestative authority to set a longer
period of lease.
In the case, the Contract of Lease provided for a fixed
period of five (5) years -- specifically from
September 16, 1991 to September 15, 1996. Because
the lease period was for a determinate time, it ceased,
by express provision of Article 1669 of the Civil Code,
on the day fixed, without need of a demand. Here,
the five-year period expired on September 15, 1996,
whereas the Complaint for ejectment was filed on
October 6, 1996. Because there was no longer any
lease that could be extended, the MeTC, in effect,
made a new contract for the parties, a power it did not
have.
Furthermore, the extension of a lease contract must
be made before the term of the agreement expires, not
after. Upon the lapse of the stipulated period, courts
cannot belatedly extend or make a new lease for the
parties, even on the basis of equity. Because the Lease
Contract ended on September 15, 1996, without the
parties reaching any agreement for renewal,
respondents can be ejected from the premises.
Felipe Agoncillo vs. Crisanto Javier
G.R. No. L-12611, August 7, 1918
38 Phil 124
FACTS:
On February 27 1904, Anastasio Alano, Jlose
Alano and Florencio Alano executed in favor of the
plaintiff, Dra. Marcela Marino a document stipulating
that the Alanos as testamentary heirs of deceased Rev.
Anastacio Cruz, would pay the sum of P2, 730.50
within one (1) year with interest of 12 percent per
annum representing the amount of debt incurred by
Cruz. Moreover, the agreement provided that the
Alanos are to convey the house and lot bequeathed to
them by Cruz in the event of failure to pay the debt in
money at its maturity.
No part of interest or principal due has been
paid except the sum of P200 paid in 1908 by
Anastacio Alano. In 1912, Anastasio died intestate. On
August 8, 1914, CFI of Batangas appointed Crisanto
Javier as administrator of Anastasios estate. On
March 17, 1916, the plaintiffs filed the complaint
against Florencio, Jose and Crisanto praying that
unless defendants pay the debt for the recovery of
which the action was brought, they be required to
convey to plaintiffs the house and lot described in the
agreement, that the property be appraised and if its
value is found to be less than the amount of the debt,
with accrued interest at the stipulation rate, judgment
be rendered in favor of the plaintiffs for the balance.
ISSUE:
The issue is whether or not the agreement that
the defendant-appellant, at the maturity of the debt,
will pay the sum of the money lent by the appellees or
will transfer the rights to the ownership and
possession of the house and lot bequeathed to the
former by the testator in favor of the appellees, is
valid.

HELD:
This stipulation is valid because it is simply an
alternative obligation, which is expressly allowed by
law. The agreement to convey the house and lot on an
appraised value in the event of failure to pay the debt
in money at its maturity is valid. It is simply an
undertaking that if debt is not paid in money, it will be
paid in another way. The agreement is not open to the
objection that the agreement is pacto comisorio. It is
not an attempt to permit the creditor to declare the
forfeiture of the security upon the failure of the debtor
to pay at its maturity. It is simply provided that if the
debt is not paid in money, it shall be paid by the
transfer of the property at a valuation. Such an
agreement unrecorded, creates no right in rem, but as
between the parties, it is perfectly valid and specific
performance by its terms may be enforced unless
prevented by the creation of superior rights in favor of
third persons.
The contract is not susceptible of the
interpretation that the title to the house and lot in
question was to be transferred to the creditor ipso
facto upon the mere failure of the debtors to pay the
debt at its maturity. The obligations assumed by the
debtors were in the alternative, and they had the right
to elect which they would perform. The conduct of
parties shows that it was not their understanding that
the right to discharge the obligation by the payment of
the money was lost to the debtors by their failure to
pay the debt at its maturity. The plaintiff accepted the
payment from Anastacio in 1908, several years after
the debt matured.
It is quite clear therefore that under the terms
of the contract, and the parties themselves have
interpreted it, the liability of the defendant as to the
conveyance of the house and lot is subsidiary and
conditional, being dependent upon their failure to pay
the debt in money. It must follow therefore that if the
action to recover the debt was prescribed, the action
to compel a conveyance of the house and lot is
likewise barred, as the agreement to make such
conveyance was not an independent principal
undertaking, but merely a subsidiary alternative pact
relating to the method by which the debt must be
paid.
Ong Guan Can vs. The Century Insurance
Company, Ltd.
G.R. No. 21196, February 6, 1924
46 Phil 592
FACTS:
A building of the plaintiff was insured against
fire by the defendant in the sum of P30,000.00 as
well as the goods and merchandise therein contained
in the sum of P15,000.00. The house and
merchandise insured were burnt early in the morning
of February 28, 1923 while the policies issued by the
defendant in favor of the plaintiff were in force.
The appellants contend that under clause 14 of the
conditions of the policies, it amay rebuild the house
burnt and although the house may be smaller, yet it
would be sufficient indemnity to the insured for the
actual loss suffered by him.
ISSUE:
Whether or not the defendant company may
perform the alternative obligation despite the fact that
the plaintiffs consent was not secured.
HELD:
It must be noted that in alternative obligations,
the debtor, the insurance company in this case, must
notify the creditor of his election, stating which of the
two prestations he is disposed to fulfill, in accordance
with the law. The object of this notice is to five the
creditor, that is , the plaintiff in the instant case,
opportunity to expr3ss his consent. The record shows
that the appellant company did not give a formal
notice of its selection to rebuild and while the
witnesses speaks of the propped reconstruction of the
house destroyed, yet the plaintiff id d not give his
assent to the proposition, for the reason that the new
house would be smaller and of materials of lower kind
than those employed in the construction of the house
destroyed.
LEGARDA VS MIAILHE
GR No. L-3435 April 28, 1951
FACTS:
On June 3, 1944, plaintiffs filed a complaint
against the original defendant William J.B. Burke,
alleging defendants unjustified refusal to accept
payment in discharge of a mortgage indebtedness in
his favor, and praying that the latter be order (1) to
receive the sum of P75,920.83; (2) to execute the
corresponding deed of release of mortgage, and; (3) to
pay damages in the sum of P1,000. The Court then
decided in favor of plaintiff Legarda. After the war and
the subsequent defeat of the Japanese occupants,
defendant filed a case in court claiming that plaintiff
Clara de Legarda violated her agreement with
defendant, by forcing to deposit worthless Japanese
military notes when they originally agreed that the
interest was to be condoned until after the occupation
and that payment was rendered either in Philippine or
English currency. Defendant was later substituted
upon death by his heir Miailhe and the Courts judged
in defendants favor. Plaintiff now assails said
decision.
ISSUE:
Is the tender of payment by plaintiff valid?
RULING:
On February 17, 1943, the only currency available
was the Philippine currency, or the Japanese Military
notes, because all other currencies, including the
English, were outlawed by a proclamation issued by
the Japanese Imperial Commander on January 3,
1942. The right to election ceased to exist on the date
of plaintiffs payment because it had become legally
impossible. And this is so because in alternative
obligations there is no right to choose undertakings
that are impossible or illegal. In other words, the
obligation on the part of the debtor to pay the
mortgage indebtedness has since then ceased to be
alternative. It appears therefore, that the tender of
payment in Japanese Military notes was a valid tender
because it was the only currency permissible at the
time and its payment was tantamount to payment in
Philippine currency.
However, payment with the clerk of court did
not have any legal effect because it was made in
certified check, and a check does not meet the
requirements of legal tender. Therefore, her
consignation did not have the effect of relieving her
from her obligation of the defendant.
ESTANISLAO REYES vs. SEBASTIANA
MARTINEZ ET AL.,
G.R. No. 32226 . DECEMBER 29, 1930.
FACTS:
Estanislao Reyes filed an action against the
Martinez heirs in which the plaintiff seeks, among
others, to recover five parcels of land, containing
approximately one thousand coconut trees, and to
obtain a declaration of ownership in his own favor as
against the defendants with respect to said parcels.
This cause of action is founded upon the contract, and
the claim by the plaintiff is to have the five parcels
adjudged to him in lieu of another parcel formerly
supposed to contain one thousand trees and described
in paragraph 8 of the contract between him and
certain of the Martinez heirs. By this contract Reyes
was to be given the parcel described in clause 8, but in
a proviso to said clause, the parties contracting with
Reyes agreed to assure to him certain other land
containing an equivalent number of trees in case he
should so elect.
ISSUE:
Whether or not Reyes is entitled to the recovery
of ownership of the five parcels of land subject of this
case.
RULING:
The prior history of the litigation shows that
Reyes elected to take and hold the parcel described in
clause 8, and his right thereto has all along been
recognized in the dispositions made by the court with
respect to said land. In our decision in Martinez vs.
Grao (51 Phil., 287, 301), it was a basal assumption
that Reyes would obtain the thousand trees referred
to; and we are of the opinion that, from various steps
taken in the prior litigation, Reyes must be taken to
have elected to take that particular parcel and he is
now estopped from asserting a contrary election to
take the five parcels of land described in paragraph IX
of his complaint.
However, the title to the parcel of land elected by
Reyes is in the heirs of Inocente Martinez and it does
not appear that they have transferred said title to
Reyes. It results therefore that Reyes now has a claim
for damages against the parties signatory to the
contract of March 5, 1921, for the value of the
aforesaid property. We therefore reach the conclusion
that Reyes should either have the land originally set
apart for him under clauses 4 and 8 of the contract,
or, in case his right thereto should fail, he should not
be required to pay the judgment for P8,000 which
was awarded to the Martinez heirs in Martinez vs.
Grao (51 Phil., 287, 302).
QUIZANA VS REDUGORIO
GR No. L-6620 May 7, 1954
FACTS:
This is an appeal to this Court from a decision
rendered by the Court of First Instance of
Marinduque, wherein the defendants-appellants are
ordered to pay the plaintiff-appellee the sum of P550,
with interest from the time of the filing of the
complaint, and from an order of the same court
denying a motion of the defendants-appellants for the
reconsideration of the judgment on the ground that
they were deprived of their day in court.
ISSUE:
What is the nature and effect of the actionable
document mentioned above?
RULING:
The decisive question at issue, therefore, is
whether the second part of the written obligation, in
which the obligors agreed and promised to deliver a
mortgage over the parcel of land described therein,
upon their failure to pay the debt on a date specified
in the proceeding paragraph, is valid and binding and
effective upon the plaintiff-appellee, the creditor. This
second part of the obligation in question is what is
known in law as a facultative obligation, defined in
available to him, only after his real property was sold
article 1206 of Civil Code of the Philippines, which
provides:
ART. 1206. When only one prestation has
been agreed upon, but the obligor may render another
in substitution, the obligation is called facultative.
There is nothing in the agreement which would
argue against its enforcement. it is not contrary to law
or public morals or public policy, and notwithstanding
the absence of any legal provision at the time it was
entered into government it, as the parties had freely
and voluntarily entered into it, there is no ground or
reason why it should not be given effect. It is a new
right which should be declared effective at once.
PH CREDIT CORP VS CA
GR No. 109648 November 22, 2001
FACTS:
PH Credit Corp., filed a case against Pacific
Lloyd Corp., Carlos Farrales, Thomas H. Van Sebille
and Federico C. Lim, for [a] sum of money. The case
was docketed as Civil Case No. 83-17751 before the
Regional Trial Court, Branch 51, Manila. After service
of summons upon the defendants, they failed to file
their answer within the reglementary period, hence
they were declared in default. PH Credit Corp., was
then allowed to present its evidence ex-parte. The
RTC judged in favor of PH Credit Corp.
On July 27, 1990, a motion for the issuance of a
writ of possession was filed and on October 12, 1990,
the same was granted. The writ of possession itself
was issued on October 26, 1990. Said order and writ
of possession are now the subject of this petition.
Petitioner claims that Respondent Judge erred in
applying the presumption of a joint obligation in the
face of the conclusion of fact and law contained in the
decision showing that the obligation is solidary.
ISSUE:
Is the petitioners contention tenable?
RULING:
The Rules of Court requires that all available
objections to a judgment or proceeding must be set up
in an Omnibus Motion assailing it; otherwise, they are
deemed waived. In the case at bar, the objection of
private respondent to his solidary liability became
at public auction. At the time his personal properties
were levied and sold, it was not evident to him that he
was being held solely liable for the monetary
judgment rendered against him and his co-
respondents. That was why his objections then did
not include those he asserted when his solidary
liability became evident.
In the dispositive portion of the January 31,
1984 Decision of the trial court, the word solidary
neither appears nor can it be inferred therefrom. The
fallo merely stated that the following respondents
were liable: Pacific Lloyd Corporation, Thomas H.
Van Sebille, Carlos M. Farrales and Federico C. Lim.
Under the circumstances, the liability is joint, as
provided by the Civil Code.
We should stress that respondents obligation is
based on the judgment rendered by the trial court.
The dispositive portion or the fallo is its decisive
resolution and is thus the subject of execution. The
other parts of the decision may be resorted to in order
to determine the ratio decidendi for the disposition.
Where there is a conflict between the dispositive part
and the opinion of the court contained in the text or
body of the decision, the former must prevail over the
latter on the theory that the dispositive portion is the
final order, while the opinion is merely a statement
ordering nothing. Hence the execution must conform
with that which is ordained or decreed in the
dispositive portion of the decision.
CDCP VS ESTRELLA
GR No. 147791 September 8, 2006
FACTS:
On December 29, 1978, respondents Rebecca
G. Estrella and her granddaughter, Rachel E. Fletcher,
boarded in San Pablo City, a BLTB bus bound for
Pasay City. However, they never reached their
destination because their bus was rammed from
behind by a tractor-truck of CDCP in the South
Expressway. The strong impact pushed forward their
seats and pinned their knees to the seats in front of
them. They regained consciousness only when
rescuers created a hole in the bus and extricated their
legs from under the seats. They suffered physical
injuries as a result. Thereafter, respondents filed a
Complaint for damages against CDCP, BLTB,
Espiridion Payunan, Jr. and Wilfredo Datinguinoo
before the Regional Trial Court of Manila, Branch 13.
ISSUE:
Are the accused jointly or solidarily liable?
RULING:
The case filed by respondents against petitioner
is an action for culpa aquiliana or quasi-delict under
Article 2176 of the Civil Code. The liability for the
negligent conduct of the subordinate is direct and
primary, but is subject to the defense of due diligence
in the selection and supervision of the employee. In
the instant case, the trial court found that petitioner
failed to prove that it exercised the diligence of a good
father of a family in the selection and supervision of
Payunan, Jr.
It is well-settled in Fabre, Jr. v. Court of
Appeals, that the owner of the other vehicle which
collided with a common carrier is solidarily liable to
the injured passenger of the same. The Peitition was
thusly DENIED.
INDUSTRIAL MANAGEMENT VS NLRC
GR No. 101723 May 11, 2000
FACTS:
This is a petition for certiorari assailing the
Resolution dated September 4, 1991 issued by the
National Labor Relations Commission in RAB-VII-
0711-84 on the alleged ground that it committed a
grave abuse of discretion amounting to lack of
jurisdiction in upholding the Alias Writ of Execution
issued by the Labor Arbiter which deviated from the
dispositive portion of the Decision dated March 10,
1987, thereby holding that the liability of the six
respondents in a case adjudicated by the NLRC is
solidary despite the absence of the word "solidary" in
the dispositive portion of the Decision, when their
liability should merely be joint.
ISSUE:
Is the petitioners liability pursuant to the
Decision of the Labor Arbiter dated March 10, 1987,
solidary or not?
RULING:
In the dispositive portion of the Labor Arbiter,
the word "solidary" does not appear. The said fallo
expressly states the following respondents therein as
liable, namely: Filipinas Carbon and Mining
Corporation, Gerardo Sicat, Antonio Gonzales,
Industrial Management Development Corporation
(petitioner INIMACO), Chiu Chin Gin, and Lo Kuan
Chin. Nor can it be inferred therefrom that the
liability of the six (6) respondents in the case below is
solidary, thus their liability should merely be joint.
Moreover, it is already a well-settled doctrine
in this jurisdiction that, when it is not provided in a
judgment that the defendants are liable to pay jointly
and severally a certain sum of money, none of them
may be compelled to satisfy in full said judgment.
Granting that the Labor Arbiter has committed a
mistake in failing to indicate in the dispositive portion
that the liability of respondents therein is solidary, the
correction -- which is substantial -- can no longer be
allowed in this case because the judgment has already
become final and executory.
METRO MANILA TRANSIT CORPORATION
vs. THE COURT OF APPEALS
G.R. No. 104408 1993 June 21, 1993
FACTS:
On August 28, 1979, plaintiff-appellant Nenita
Custodio boarded as a paying passenger a public
utility jeepney with plate No. D7 305 PUJ, then driven
by defendant Agudo Calebag and owned by his co-
defendant Victorino Lamayo, bound for her work at
Dynetics Incorporated located in Bicutan, Taguig,
Metro Manila, where she then worked as a machine
operator earning P16.25 a day. While the passenger
jeepney was travelling at (a) fast clip along DBP
Avenue, Bicutan, Taguig, Metro Manila another fast
moving vehicle, a Metro Manila Transit Corp. bus
with plate no. 3Z 307 PUB (Philippines) '79 driven by
defendant Godofredo C. Leonardo was negotiating
Honeydew Road, Bicutan, Taguig, Metro Manila
bound for its terminal at Bicutan. As both vehicles
approached the intersection of DBP Avenue and
Honeydew Road they failed to slow down and slacken
their speed; neither did they blow their horns to warn
approaching vehicles. As a consequence, a collision
between them occurred, the passenger jeepney
ramming the left side portion of the MMTC bus. The
collision impact caused plaintiff-appellant Nenita
Custodio to hit the front windshield of the passenger
jeepney and (she) was thrown out therefrom, falling
onto the pavement unconscious with serious physical
injuries. She was brought to the Medical City Hospital
where she regained consciousness only after one (1)
week. Thereat, she was confined for twenty-four (24)
days, and as a consequence, she was unable to work
for three and one half months (3 1/2).
A complaint for damages was filed by herein
private respondent, who being then a minor was
assisted by her parents, against all of therein named
defendants following their refusal to pay the expenses
incurred by the former as a result of the collision. Said
defendants denied all the material allegations in the
complaint and pointed an accusing finger at each
other as being the party at fault.
ISSUE:
Whether the evidence presented during the
trial with respect to the proof of due diligence of
petitioner MMTC in the selection and supervision of
its employees, particularly driver Leonardo, is
sufficient.
RULING:
With the allegation and subsequent proof of
negligence against the defendant driver and of an
employer-employee relation between him and his co-
defendant MMTC in this instance, the case is
undoubtedly based on a quasi-delict under Article
2180. When the employee causes damage due to his
own negligence while performing his own duties,
there arises the juris tantum presumption that the
employer is negligent, rebuttable only by proof of
observance of the diligence of a good father of a
family. For failure to rebut such legal presumption of
negligence in the selection and supervision of
employees, the employer is likewise responsible for
damages, the basis of the liability being the
relationship of pater familias or on the employer's
own negligence.
Hence, the court consistently held that where
the injury is due to the concurrent negligence of the
drivers of the colliding vehicles, the drivers and
owners of the said vehicles shall be primarily, directly
and solidarily liable for damages and it is immaterial
that one action is based on quasi-delict and the other
on culpa contractual, as the solidarity of the obligation
is justified by the very nature thereof. Hence, decision
of respondent Court of Appeals is affirmed.
INCIONG VS. COURT OF APPEALS
G.R. No. 96405, June 26, 1996
FACTS:
On February 3, 1983, petitioner Baldomero L.
Inciong, Jr. together with Rene C. Naybe and Gregorio
D. Pantanosas signed a promissory note in the
amount of P50, 000.00 holding themselves jointly
and severally liable to private respondent Philippine
Bank of Communications. The promissory note was
due on May 5, 1983. Said due date expired without the
promissors having paid their obligation.
On November 14, 1983 and on June 8, 1984,
private respondent sent petitioner telegrams
demanding payment thereof. On December 11, 1983,
private respondent also sent registered mail a final
letter of demand to Rene C. Naybe. Since both
obligors did not respond to the demand made, private
respondent filed on January 24, 1986 a complaint for
collection of the sum of P50, 000.00 against the three
(3) obligors. On January 27, 1987, the lower court
dismissed the case against defendant Pantanosas as
prayed by herein private respondent. Meanwhile, only
the summons addressed to petitioner was served for
the reason that defendant Naybe had gone to Saudi
Arabia.
The lower court rendered its decision holding
petitioner solidarily liable and to pay herein
respondent bank the amount of P50, 000.00 plus
interest thereon. Petitioner appealed the said decision
to the Court of Appeals. The respondent court,
however, affirmed the decision of the lower court. The
petitioner moved for reconsideration, which was later
on denied by the respondent Court of Appeals.
ISSUE:
Whether or not the dismissal of the
complaint against Naybe, the principal debtor, and
against Pantanosas, his co-maker, constituted a
release of his obligation.
HELD:
The dismissal of the complaint against Naybe
and Pantanosas did not constitute a release of
petitioners obligation, especially because the
dismissal of the case against Pantanosas was upon the
motion of private respondent itself. Petitioner signed
the promissory note as a solidary co-maker and not as
a guarantor. A solidary or joint and several obligation
is one in which each debtor is liable for the entire
obligation, and each creditor is entitled to demand the
whole obligation. The promissory note involved in this
case expressly states that the three signatories therein
are jointly and severally liable, any one, some or all of
them may be proceeded against for the entire
obligation. The choice is left to the solidary creditor to
determine against whom he will enforce collection
Under Article 1207 of the Civil Code, when
there are two or more debtors in one and the same
obligation, the presumption is that the obligation is
joint so that each of the debtors is liable only for a
proportionate part of the debt. There is solidary
liability only when the obligation expressly so states,
when the law so provides or when the nature of the
obligation so requires.
ESPARWA SECURITY, v. LICEO DE CAGAYAN
UNIVERSITY
G.R. No. 150402 Nov 8, 2006
FACTS:
On 1 December 1997, Eparwa and LDCU,
entered into a Contract for Security Services. On 21
December 1998, 11 security guards (security guards)
whom Eparwa assigned to LDCU from 1 December
1997 to 30 November 1998, filed a complaint before
the NLRC Regional Arbitration Branch No. 10 in
Cagayan de Oro City. The complaint was filed against
both Eparwa and LDCU for underpayment of salary,
legal holiday pay, 13th month pay, rest day, service
incentive leave, night shift differential, overtime pay,
and payment for attorneys fees.
The Labor Arbiter found that the security guards are
entitled to wage differentials and premium for holiday
and rest day work. The Labor Arbiter held Eparwa
and LDCU solidarily liable pursuant to Article 109 of
the Labor Code. LDCU filed an appeal before the
NLRC. LDCU agreed with the Labor Arbiters
decision on the security guards entitlement to salary
differential but challenged the propriety of the
amount of the award. LDCU alleged that security
guards not similarly situated were granted uniform
monetary awards and that the decision did not
include the basis of the computation of the amount of
the award.
ISSUE:
Is LDCU alone ultimately liable to the security
guards for the wage differentials and premium for
holiday and rest day pay?
RULING:
Articles 106, 107 and 109 of the Labor Code
read:Art. 106. Contractor or subcontractor.
Whenever an employer enters into a contract with
another person for the performance of the formers
work, the employees of the contractor and of the
latters subcontractor, if any, shall be paid in
accordance with the provisions of this Code.Article
107. Indirect employer. The provisions of the
immediately preceding Article shall likewise apply to
any person, partnership, association or corporation
which, not being an employer, contracts with an
independent contractor for the performance of any
work, task, job or project. Article 109. Solidary
liability. The provisions of existing laws to the
contrary notwithstanding, every employer or indirect
employer shall be held responsible with his contractor
or subcontractor for any violation of any provision of
this Code. For purposes of determining the extent of
their civil liability under this Chapter, they shall be
considered as direct employers.
This joint and several liability of the contractor
and the principal is mandated by the Labor Code to
assure compliance of the provisions therein including
the statutory minimum wage [Article 99, Labor Code].
The contractor is made liable by virtue of his status as
direct employer. The principal, on the other hand, is
made the indirect employer of the contractors
employees for purposes of paying the employees their
wages should the contractor be unable to pay them.
This joint and several liability facilitates, if not
guarantees, payment of the workers performance of
any work, task, job or project, thus giving the workers
ample protection as mandated by the 1987
Constitution. For the security guards, the actual
source of the payment of their wage differentials and
premium for holiday and rest day work does not
matter as long as they are paid. This is the import of
Eparwa and LDCUs solidary liability. Creditors, such
as the security guards, may collect from anyone of the
solidary debtors. Solidary liability does not mean
that, as between themselves, two solidary debtors are
liable for only half of the payment.
LDCUs ultimate liability comes into play because of
the expiration of the Contract for Security Services.
There is no privity of contract between the security
guards and LDCU, but LDCUs liability to the security
guards remains because of Articles 106, 107 and 109
of the Labor Code.
NAZARENO VS. COURT OF APPEALS
G.R. No. 131641, February 23, 2000
FACTS:
Maximino Nazareno, Sr. and Aurea Poblete
were husband and wife. Aurea died on April 15, 1970,
while Maximino, Sr. died on December 18, 1980. After
the death of Maximino, Sr., Romeo filed an intestate
case in the Court of First Instance of Cavite, Branch
XV, where the case was docketed as Sp. Proc. No. NC-
28. Upon the reorganization of the courts in 1983, the
case was transferred to the Regional Trial Court of
Naic, Cavite. Romeo was appointed administrator of
his fathers estate. In the course of the intestate
proceedings, Romeo discovered that his parents had
executed several deeds of sale conveying a number of
real properties in favor of his sister, Natividad. One of
the deeds involved six lots in Quezon City which were
allegedly sold by Maximino, Sr., with the consent of
Aurea, to Natividad on January 29, 1970 for the total
amount of P47,800.00.
ISSUE:
Whether or not the Deed of Absolute of Sale
can be equated as a divisible obligation.
HELD:
The Supreme court held that the Deed of
Absolute Sale is an indivisible contract founded on an
indivisible obligation. As such, it being indivisible, it
can not be annulled by only one of them. And since
this suit was filed only by the estate of Maximino A.
Nazareno, Sr. without including the estate of Aurea
Poblete, the present suit must fail. The estate of
Maximino A. Nazareno, Sr. can not cause its
annulment while its validity is sustained by the estate
of Aurea Poblete. An obligation is indivisible when it
cannot be validly performed in parts, whatever may be
the nature of the thing which is the object thereof. The
indivisibility refers to the prestation and not to the
object. The Deed of Sale of January 29, 1970
supposedly conveyed the six lots to Natividad. The
obligation is clearly indivisible because the
performance of the contract cannot be done in parts,
otherwise the value of what is transferred is
diminished. Petitioners are mistaken in basing the
indivisibility of a contract on the number of obligors.
In any case, if petitioners only point is that the estate
of Maximino, Sr. alone cannot contest the validity of
the Deed of Sale because the estate of Aurea has not
yet been settled, the argument would nonetheless be
without merit. The validity of the contract can be
questioned by anyone affected by it. A void contract is
inexistent from the beginning. Hence, even if the
estate of Maximino, Sr. alone contests the validity of
the sale, the outcome of the suit will bind the estate of
Aurea as if no sale took place at all.
ALONZO VS SAN JUAN
GR No. 137549 February 11, 2005
FACTS:
A complaint for recovery of possession was filed
by Aurelio P. Alonzo and Teresita A. Sison against
Jaime and Perlita San Juan docketed as Civil Case No.
Q-96-29415 before the Regional Trial Court (RTC) of
Quezon City, Branch 77. In their Complaint, plaintiffs
alleged that they are the registered owners of a parcel
of land. At around June of 1996, plaintiffs discovered
that a portion on the left side of the said parcel of land
with an area of one hundred twenty-five (125) square
meters, more or less, was occupied by the defendants
for more than a year, without their prior knowledge or
consent. A demand letter was sent to the defendants
in August of 1996 requiring them to vacate the
property but they refused to comply; hence, the filing
of the Complaint. During the pendency of the case,
the parties agreed to enter into a Compromise
Agreement which the trial court approved in a
Judgment.
Alleging that they failed to abide by the
provisions of the Compromise Agreement by their
failure to pay the amounts due thereon, plaintiffs sent
a letter demanding that the defendants vacate the
premises. Plaintiffs subsequently filed an Amended
Motion for Execution. Acting on the motion, the trial
court issued its Order dated 11 August 1998 denying
the motion.
ISSUE:
Is the RTC decision correct?
RULING:
In herein case, the respondents failed to
discharge their burden of proving payment. Even
assuming that payments were made, it has not been
shown to the full satisfaction of this Court whether the
payments were made specifically to satisfy
respondents obligation under the Compromise
Agreement, nor were the circumstances under which
the payments were made explained, taking into
consideration the conditions of the Compromise
Agreement.
Respondents contract with the petitioners have
the force of law between them. Respondents are thus
bound to fulfill what has been expressly stipulated
therein. Items 11 and 12 of the Compromise
Agreement provided, in clear terms, that in case of
failure to pay on the part of the respondents, they
shall vacate and surrender possession of the land that
they are occupying and the petitioners shall be
entitled to obtain immediately from the trial court the
corresponding writ of execution for the ejectment of
the respondents. This provision must be upheld,
because the Agreement supplanted the Complaint
itself. When the parties entered into a Compromise
Agreement, the original action for recovery of
possession was set aside and the action was changed
to a monetary obligation. Once approved judicially,
the Compromise Agreement can not and must not be
disturbed except for vices of consent or forgery.
Tan vs. Court f Appeals
G.R. No. 116285, October 19, 2001
367 SCRA 571
FACTS:
 On May 14, 1978, petitioner Antonio Tan
obtained two (2) loans in the total principal amount of
four (4) million pesos from respondent Cultural
Center of the Philippines (CCP), evidenced by 2
promissory notes with maturity dates on May 14, 1979
and July 6, 1979, respectively. Petitioner defaulted but
after a few partial payments he had the loans
restructured by respondent CCP, and petitioner
accordingly executed a promissory note on August 31,
1979 in the amount of P3,411,421.32 payable in five
(5) installments. Petitioner Tan, however, failed to pay
any of the supposed installments and again offered
another mode of paying restructured loan which
respondent CCP refused to consent.
On May 30, 1984, respondent, thru counsel,
wrote petitioner demanding the full payment, within
ten (10) days, from receipt of the letter, of the latters
restructured loan which as of April 30, 1984
amounted to P6, 088,735.03.
On August 29, 1984, respondent CCP filed with
the RTC of Manila a complaint for a collection of a
sum of money. Eventually, petitioner was ordered to
pay said amount, with 25% thereof as attorneys fees
and P500, 000.00 as exemplary damages. The Court
of Appeals, on appeal, reduced the attorneys fees to
5% of the principal amount to be collected from
petitioner and deleted the exemplary damages.
Still unsatisfied with the decision, petitioner
comes to this Court seeking for the deletion of the
attorneys fees and the reduction of the penalties.
ISSUE:
The issue is whether or not interests and
penalties may be both awarded in the case at bar.
HELD:
YES. Article 1226 of the New Civil Code
provides that in obligations with a penal clause, the
penalty shall substitute the indemnity for damages
and the payment of interests in case of non-
compliance, if there is no stipulation to the contrary.
Nevertheless, damages shall be paid if the obligor
refuses to pay the penalty or is guilty of fraud in the
fulfillment of the obligation. The penalty may be
enforced only when it is demandable in accordance
with the provisions of this Code. In the case at bar, the
promissory note expressly provides for the imposition
of both interest and penalties in case of default on the
part of the petitioner in the payment of the subject
restructured loan, and since the said stipulation has
the force of law between the parties and does not
appear to be inequitable or unjust, the said stipulation
must be respected.
EASTERN SHIPPING INES, INC vs. HON.
COURT OF APPEALS
G.R. No. 97412 Jul 12, 1994
FACTS:
On December 4, 1981, two fiber drums of
riboflavin were shipped from Yokohama, Japan for
delivery vessel `SS EASTERN COMET' owned by
defendant Eastern Shipping Lines under Bill of
Lading No. YMA-8 (The shipment was insured under
plaintiff's Marine Insurance Policy No. 81/01177 for
P36,382,466.38.
Upon arrival of the shipment in Manila on
December 12, 1981, it was discharged unto the custody
of defendant Metro Port Services, Inc. The latter
excepted to one drum, said to be in bad order, which
damage was unknown to plaintiff. On January 7, 1982
defendant Allied Brokerage Corporation received the
shipment from defendant Metro Port Service, Inc.,
one drum opened and without. On January 8 and 14,
1982, defendant Allied Brokerage Corporation made
deliveries of the shipment to the consignees'
warehouse. The latter excepted to one drum which
contained spillages, while the rest of the contents was
adulterated/fake Plaintiff contended that due to the
losses/damage sustained by said drum, the consignee
suffered losses totaling P19,032.95, due to the fault
and negligence of defendants. Claims were presented
against defendants who failed and refused to pay the
same "As a consequence of the losses sustained,
plaintiff was compelled to pay the consignee
P19,032.95 under the aforestated marine insurance
policy, so that it became subrogated to all the rights of
action of said consignee against defendants.
ISSUE:
a.)Whether the payment of legal interest on an award
for loss or damage is to be computed from the time
the complaint is filed or form the date the decision
appealed from is rendered; and b)Whether the
applicable rate of interest is twelve percent or six
percent.
HELD:
When an obligation, regardless of its source,
i.e., law, contracts, quasi-contracts, delicts or quasi-
delicts is breached, the contravenor can be held liable
for damages. With regard particularly to an award of
interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in
the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be that
which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be 12%
per annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to
the provisions of Article 1169 23 of the Civil Code.
2. When a obligation, not constituting a loan or
forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the
discretion of the court at the rate of 6% per annum.
No interest, however, shall be adjudged on
unliquidated claims or damages except when or until
the demand can be established with reasonable
certainty. Accordingly, where the demand is
established with reasonable certainty, the interest
shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code) but
when such certainty cannot be so reasonably
established at the time the demand is made, the
interest shall begin to run only from the date of the
judgment of the court is made (at which time the
quantification of damages may be deemed to have
been reasonably ascertained).
3. When the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 12% per annum from
such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a
forbearance of credit.
Dario Nacar vs Gallery Frames
Dario Nacar filed a labor case against Gallery Frames
and its owner Felipe Bordey, Jr. Nacar alleged that he
was dismissed without cause by Gallery Frames on
January 24, 1997. On October 15, 1998, the Labor
Arbiter (LA) found Gallery Frames guilty of illegal
dismissal hence the Arbiter awarded Nacar
P158,919.92 in damages consisting of backwages and
separation pay.
Gallery Frames appealed all the way to the Supreme
Court (SC). The Supreme Court affirmed the decision
of the Labor Arbiter and the decision became final on
May 27, 2002.
After the finality of the SC decision, Nacar filed a
motion before the LA for recomputation as he alleged
that his backwages should be computed from the time
of his illegal dismissal (January 24, 1997) until the
finality of the SC decision (May 27, 2002) with
interest. The LA denied the motion as he ruled that
the reckoning point of the computation should only be
from the time Nacar was illegally dismissed (January
24, 1997) until the decision of the LA (October 15,
1998). The LA reasoned that the said date should be
the reckoning point because Nacar did not appeal
hence as to him, that decision became final and
executory.
ISSUE: Whether or not the Labor Arbiter is correct.
HELD: No. There are two parts of a decision when it
comes to illegal dismissal cases (referring to cases
where the dismissed employee wins, or loses but wins
on appeal). The first part is the ruling that the
employee was illegally dismissed. This is immediately
final even if the employer appeals but will be
reversed if employer wins on appeal. The second part
is the ruling on the award of backwages and/or
separation pay. For backwages, it will be computed
from the date of illegal dismissal until the date of the
decision of the Labor Arbiter. But if the employer
appeals, then the end date shall be extended until the
day when the appellate courts decision shall become
final. Hence, as a consequence, the liability of the
employer, if he loses on appeal, will increase this is
just but a risk that the employer cannot avoid when it
continued to seek recourses against the Labor
Arbiters decision. This is also in accordance with
Article 279 of the Labor Code.
Anent the issue of award of interest in the form of
actual or compensatory damages, the Supreme Court
ruled that the old case of Eastern Shipping Lines vs
CA is already modified by the promulgation of the
Bangko Sentral ng Pilipinas Monetary Board
Resolution No. 796 which lowered the legal rate of
interest from 12% to 6%. Specifically, the rules on
interest are now as follows:
1. Monetary Obligations ex. Loans:
a. If stipulated in writing:
a.1. shall run from date of judicial demand (filing of
the case)
a.2. rate of interest shall be that amount stipulated
b. If not stipulated in writing
b.1. shall run from date of default (either failure to pay
upon extra-judicial demand or upon judicial demand
whichever is appropriate and subject to the provisions
of Article 1169 of the Civil Code)
b.2. rate of interest shall be 6% per annum
2. Non-Monetary Obligations (such as the case at
bar)
a. If already liquidated, rate of interest shall be 6% per
annum, demandable from date of judicial or extra-
judicial demand (Art. 1169, Civil Code)
b. If unliquidated, no interest
Except: When later on established with certainty.
Interest shall still be 6% per annum demandable from
the date of judgment because such on such date, it is
already deemed that the amount of damages is
already ascertained.
3. Compounded Interest
This is applicable to both monetary and non-
monetary obligations
6% per annum computed against award of damages
(interest) granted by the court. To be computed from
the date when the courts decision becomes final and
executory until the award is fully satisfied by the
losing party.
4. The 6% per annum rate of legal interest shall be
applied prospectively:
Final and executory judgments awarding damages
prior to July 1, 2013 shall apply the 12% rate;
Final and executory judgments awarding damages
on or after July 1, 2013 shall apply the 12% rate for
unpaid obligations until June 30, 2013; unpaid
obligations with respect to said judgments on or after
July 1, 2013 shall still incur the 6% rate.
SPS. MALLARI vs. PRUDENTIAL BANK
G.R. No. 197861. June 5, 2013. 697 SCRA 555
DOCTRINE:
Unconscionable interest rates The SC has ruled in
the following cases that the interest is
unconscionable: 3% and 3.81% per month on a P10
Million loan (Toring vs. Sps. Ganzon-Olan, 2008);
66% per annum or 5.5% per month on a P500
thousand loan (Medel vs. Court of Appeals, 1998) and;
7% and 5% or 84% and 60% per annum (Chua vs.
Timan, 2008). The Court has also ruled affirmed in a
plethora of cases that stipulated interest rates of 3%
per month and higher are excessive, unconscionable
and exorbitant.
Conscionable interest rates In this case 23% per
annum or 2% per month as agreed upon by petitioner
and respondent bank is NOT unconscionable. It is
much lower than the above mentioned
unconscionable interest rates and there is no
similarity of factual milieu.
FACTS:
[Decided 2013] In 1984, Petitioner Florentino Mallari
obtained a loan from respondent Prudential Bank in
the amount of P300,000.00. It was subject to an
interest rate of 21% per annum and, in case of default,
a penalty of 12% per annum of the total amount due
and attorneys fees equivalent of 15% of the total
amount due. This was secured by a Deed of
Assignment (DOA) over petitioner's time deposit
account. In 1989, Spouses Florentino and Aurea
Mallari obtained another loan from respondent for
P1.7 million, stipulating interest of 23% per annum
with the same penalties in case of default. This was
secured by Real Estate Mortgage (REM).
Petitioners defaulted. When computed in 1992, the
total debt was P571,218.54 and P2,991,294.82 for the
first and second loans respectively.
Respondent tried to extrajudicially foreclose the
mortgage. Petitioners on the other hand tried to
nullify the mortgage claiming that the Bank imposed
onerous terms and conditions and that the bank was
unilaterally increasing its charges and interest over
and above those stipulated. The Bank claimed that the
basis for its computation was all written in the
Promissory Notes.
The RTC ruled in favor of respondent bank. CA
affirmed.
ISSUE: Whether or not an interest rate of 23% per
annum and 12% per annum penalty is
unconscionable.
HELD:
No. The Court has also ruled affirmed in a plethora of
cases that stipulated interest rates of 3% per month
and higher are excessive, unconscionable and
exorbitant. thus, the 23% per annum interest rate
imposed on petitioners loan in this case can by no
means be considered excessive or unconscionable.
And neither is the 12% per annum penalty charge
unconscionable as the counrt found in DBP vs. Family
Foods (2009) and Ruiz vs. Court of Appeals (2003).