Compiled Digests in ObliCon

Compilation of Cases in Obligations and Contracts
Prepared by LLB 1-4 (2nd semester 09-10)
Article 1158 Manila Trading and Supply Co. vs. Santos Saez 66 Phil. 2 ! "acts# Manila Trading and Supply Co., the plaintiff sold to Santos Saez, the defendant a determinate equipment. There was an unpaid balance amounting to P2,2 . . !efendant e"ecuted 2 promissory notes, the first three installments for P#$ each and the others for P# payable on the #%th day of e&ery month beginning 'o&ember #%, #()) and mortgage the said equiptment as a security.The defendant failed to pay any of the promissory notes, the plaintiff attached the chattel mortgage and was sold in public auction in accordance with *ct 'o.#$ + for P, . in fa&or of the plaintiff as the highest bidder. !efendant still owed the plaintiff for P#,+(,.$$. The plaintiff filed an action for the payment of the unpaid balance. The defendant claimed that the plaintiff-s action will not prosper because it is contrary to *ct 'o..#22. The lower court fa&ored the plaintiff, hence this appeal was filed. $ssue# /hether or not the plaintiff had a right to a deficiency in conformity with the Chattel Mortgage 0aw1*ct 'o..#2223 %&'$()# The court held that *ct 'o..#22 has no application with this case otherwise it would be gi&en a retroacti&e effect. The said act is not applicable to this case for the reason that the mortgage which ga&e rise to the plaintiff-s requirements was e"ecuted on 4ctober ), #()) and the aforesaid act too5 effect on !ecember (, #()). The action is the correlati&e of a right and is nothing more than a remedy conceded by law to protect. 6f the plaintiff was entitled to the deficiency, 7udgment under *ct 'o #$ +, this right already e"isted when *ct 'o..#22 was appro&ed and cannot be effected by the prohibition contained in the latter *ct. The court did not err in declaring **ct 'o..#22 to be inapplicable and in ruling that the plaintiff is entitled to the deficiency 77udgment in accordance with *ct 'o.#$ +.
Article 115* Pichel vs. Alonzo 111 SC%A +1 "acts# This case originated in the lower Court as an action for the annulment of a 8!eed of Sale8 dated *ugust #., #(%+ and e"ecuted by Prudencio *lonzo, as &endor, in fa&or of 0uis Pichel, as &endee, in&ol&ing property awarded to the former by the Philippine 9o&ernment under :epublic *ct 'o. .,,. That the sale of the coconut fruits are for all the fruits on the aforementioned parcel of land presently found therein as well as for future fruits to be
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produced on the said parcel of land during the years period; which shall commence to run as of S<PT<M=<: #$,#(%+; up to >*'?*:@ #, #(,%. 6n >uly #(,2, defendant for the first time since the e"ecution of the deed of sale in his fa&or, caused the har&est of the fruit of the coconut trees in the land. $ssue# /hether or not the agreement in question is denominated by the parties as a deed of sale of fruits of the coconut trees found in the &endorAs land or it actually is, for all legal intents and purposes, a contract of lease of the land itself3 ,eld# The Supreme Court ruled that construction or interpretation of the document in question is not called for. * perusal of the deed fails to disclose any ambiguity or obscurity in its pro&isions, nor is there doubt as to the real intention of the contracting parties. The terms of the agreement are clear and unequi&ocal, hence the literal and plain meaning thereof should be obser&ed. Such is the mandate of the Ci&il Code of the Philippines which pro&ides thatB *rt. #), . 6f the terms of a contract are clear and lea&e no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control ... . Pursuant to the aforeCquoted legal pro&ision, the first and fundamental duty of the courts is the application of the contract according to its e"press terms, interpretation being resorted to only when such literal application is impossible. ( The pro&isions of the contract itself and its characteristics go&ern its nature. . Simply and directly stated, the 8!eed of Sale dated *ugust #., #(%+ is precisely what it purports to be. 6t is a document e&idencing the agreement of herein parties for the sale of coconut fruits of 0ot 'o. 2#, and not for the lease of the land itself as found by the lower Court. 6n clear and e"press terms, the document defines the ob7ect of the contract thusB 8the herein sale of the coconut fruits are for the fruits on the aforementioned parcel of land during the years 1from2 S<PT<M=<: #$, #(%+; up to >*'?*:@ #, #(,%.8 Moreo&er, as petitioner correctly asserts, the document in question e"presses a &alid contract of sale. 6t has the essential elements of a contract of sale as defined under *rticle #.+$ of the 'ew Ci&il Code which pro&ides thusB *rt. #.$+. =y the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deli&er a determinate thing, and the other to pay therefor a price certain in money or its equi&alent.
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-illia. /llendor0 vs. $ra A1raha.son 8 Phil. 585 "acts# Derein plaintiff 4llendorf and defendant *brahamson made and entered into Contract of *greement. The first part hereby agrees to employ the defendant and the party of the second obliges himself to wor5 for the plaintiff within the period of two years. !efendant obligates and binds himself to de&ote his entire time, attention, energies and industry on the promotion of the furtherance of the business and interest of the party. Eailure on the said duty shall entitle the plaintiff to discharge and dismiss the defendant. The second part of the contract further binds the party that he will not enter whether directly or indirectly to engage in a similar or competiti&e business. ?nder the term of this agreement, the plaintiff left the employment due to illness and went to ?.S. *fter his departure, the defendant returns to Manila as the Manager of the Philippine ?nderwear Company. !efendant admits that both firms turn out the same class of goods and those they are e"ported to the same mar5et. Dowe&er, he alleged that the said contract with the plaintiff was &oid for it &iolates the right for free trade. $ssue# /hether or not the contract is &oid due to the &iolation of the rights of trade. ,eld# 'o, the contract was not &oid as constituting an unreasonable restraint of trade. The rule is that the obligations created by contracts ha&e the force of law between the contracting parties and must be enforce in accordance with their tenor. The only limitation upon the freedom of contractual agreement is that the facts established shall not contrary to law, morals or public order. The industry of counsel failed to disco&er direct e"pression of the legislati&e which will prohibits such.
Article 1161 2erna1e Castillo3 et al. vs. The ,onora1le Court o0 Appeals3 et al. 1!6 SC%A 5*1 "acts# This is a petition for re&iew on certiorari where petitioners see5 for the renewal of the Court of *ppeals decision affirming the dismissal of the Court of Eirst 6nstance of the complaint for damages filed by petitioners against the respondents >uanito :osario and Cresencia :osario. 4n May 2, #(%$, petitioner =ernabe Castillo 1in his own behalf, and in behalf of Serapion Castillo who has since then become deceased, and <ulogio Castillo, his minor child2 and 9enerosa 9alang Castillo figured in a &ehicular accident with pri&ate respondents >uanito :osario and Cresencia :osario at =agac, Fillasis, Pangasinan causing in7uries to their persons and damages to their respecti&e &ehicles. The parties ha&e their own &ersion of what actually happened on that fateful day. <ach party is pointing to the negligence by the other as the pro"imate cause of the accident.
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/hile the case was pending in the Court of Eirst 6nstance of Manila, the Pro&incial Eiscal of Pangasinan file an information dated September 2(. #(%$ against >uanito :osario for double physical in7uries, double less serious physical in7uries, and damage to property thru rec5less imprudence in the Court of Eirst 6nstance of ?rdaneta. :osario was prosecuted and con&icted in the criminal case. Castillo then appealed to the Court of *ppeals which rendered a decision acquitting him from the crime charged on the ground that his guilt has not been pro&ed beyond reasonable doubt. 4n the other hand, the Court of Eirst 6nstance of Manila rendered a decision on the basis of the testimonies and e&idence submitted by the petitioners as well as the records of the case, dismissing the complain of the petitioners against pri&ate respondents as well as the counterclaim of pri&ate respondents against the petitioners. 4n >anuary 2., #(,), petitioners appealed to the Court of *ppeals which then affirmed the decision of the Court of Eirst 6nstance of Manila as it found no negligence committed by >uanito :osario to warrant an award of damages to the petitioners. Dence, the present petition for re&iew on certiorari. $ssue# /hether or not the 7udgement of acquittal e"tinguishes ci&il liability based on the same incident. %uling# @es. The Court of *ppealsA findings that the collision was not due to the negligence of >uanito :osario but =ernabe CastilloAs own act of dri&ing was actually the pro"imate cause of the collision. /ith such findings and citing the cases Corpus &s Pa7e, 2+ SC:* # %2, # %., # %,; Earaon &s Priela, 2. SC:* $+2, $+); !e Soriano &s *lbornoz, (+ Phil. ,+$, ,+,,++; Tan &s Standard Facuum 4il Co., (# Phil. %,2, %,$, the Court of *ppeals e"onerated :osario from the ci&il liability on the ground that the alleged negligence did not e"ist. Petition denied. 'o pronouncement as to costs.
Article 1162 Padua vs. %o1les 66 SC%A +85 "acts# The citation of the case was a negligent act, homicide through rec5less imprudence filed to dri&er :omeo Punzalan and defendants C appellees as subsidiary liable, which gi&e rise to two separate liabilities, namely 1#2 the ci&il liability arising from crime or culpa criminal and 122 the liability arising from ci&il negligence or so called culpa aquiliana. $ssue#/hether or not that negligent act of Punzalan gi&es rise to the two separate and independent liabilities. ,eld# 6t is by now settled beyond all ca&il as to dispense with the citation of 7urisprudence, that a negligent act such as that committed by Punzalan gi&es rise to at least two separate
and independent 5inds of liabilities, 1#2 the ci&il liability arising from crime or culpa criminal and 122 the liability arising from ci&il negligence or the soCcalled culpa aquiliana. These two concepts of fault are so distinct from each other that e"oneration from one does not result in e"oneration from the other. *d7ecti&ely and substanti&ely, they can be prosecuted separately and independently of each other, although *rticle 2#,, of the Ci&il Code precludes reco&ery of damages twice for the same negligent act or omission, which means that should there be &arying amounts awarded in two separate cases, the plaintiff may reco&er, in effect, only the bigger amount. That is to say, if the plaintiff has already been ordered paid an amount in one case and in the other case the amount ad7udged is bigger, he shall be entitled in the second case only to the e"cess o&er the one fi"ed in the first case, but if he has already been paid a bigger amount in the first case, he may not reco&er anymore in the second case. Thus, in the case at bar, inasmuch as Punzalan had already been sentenced to pay the herein petitioners the amounts abo&eCstated, in the subsequent criminal case, he could not be ad7udged to pay a higher amount.
Article 116 4 1166 Agcaoili vs. )S$S 165 SC%A 1 "actsB 6n this case, appellant 9S6S appro&ed an application of the appellee *gcaoli for the purchase of a house and lot in the 9S6S Dousing Pro7ect at 'ang5a, Mari5ina, sub7ect to the condition that the latter should forthwith occupy the house, a condition that *gcaoli tried to fulfill but could not because the house was absolutely uninhabitable. Dowe&er, *gcaoli as5 a homeless friend, a certain Fillanue&a, to stay in the premises as some sort of watchman, pending completion of the construction of the house. *gcaoli after paying the first installment and other fees, ha&ing thereafter refused to ma5e further payment of other stipulated installments until 9S6S had made the house habitable; and appellant ha&ing refused to do so, opting instead to cancel the award and demanded the &acation by *gcaoli of the premises; and the latter ha&ing sued the 9S6S in the Court of Eirst 6nstance of Manila for specific performance with damages and ha&ing obtained a fa&orable 7udgment, the cases was appealed by the 9S6S. $ssue# /hether or not *gcaoli is entitled for specific performance with damages. ,eldB *ppeal of 9S6S must fail. There was then a perfected contract of sale between the parties; there had been a meeting of minds upon the purchase by *gcaoli of a determinate house and lot from 9S6S at a definite price which is payable in amortizations and from that moment the parties acquired the right to reciprocally demand performance. 6t was, to be sure, the duty of the 9S6S, as seller, to
deli&er the thing soled in acondition suitable for its en7oyment by the buyer, in other words to deli&er the house sub7ect of the contract in a reasonably li&able state. This it failed to do. Since 9S6S failed to fulfill its obligation, and was not willing to put the house in a habitable state, it cannot in&o5e *gcaoli-s suspension of payment as cause to cancel the contract between them. 6n recipient obligation, neither party incur in delay of the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. 'or may the 9S6S succeed in 7ustifying its cancellation of the award by the claim tha *gcaoli had not complied with the condition of occupying the house within three 1)2 days. The record shows that *gcaoli did try to fulfill the condition. Einally appellant ha&ing caused the ambiguity as the e"act prestation of the agreement, the question of interpretation arising therefrom, should be resol&ed against it.
"rancisco )uttierez %epide vs. A0zetius and A0zetius * Phil. 1*5 "acts# The sub7ect of specific performance, with reference to its common law and ci&il law status, is to be considered on this appeal. The particular action is for the specific performance of a contract for the sale and purchase of seal estate. The plaintiff is the owner of a certain parcel of realty, the defendants made a proposition to the plaintiff for the purchase of this property. The property was to be mortgaged to the plaintiff to rescue the payment of this balance. The plaintiff proceeded to ha&e sur&ey made of the land and to prepare the deed and mortgage. <"penses where incurred for these purposes. The deed was ready when the defendants were notified to appear and sign the same but they failed to this and wrote a letter to plaintiff. Plaintiff was, and still is, willing to e"ecute the deed in accordance with the terms agreed upon with the defendants. *ccordingly, plaintiff, in his action in the court of Eirst 6nstance of the City of Manila, as5ed 7udgment against the defendants condemning them to sign the deed and mortgage to the land in question, and to pay the purchase price stipulated with costs. $ssue# /hether or not the defendants are able to perform the contract is a matter of defense, and there is no special defense on that sub7ect in the answer. %uling# The 7udgment then was in fa&or of the defendants, dismissing the plaintiff-s complaint, without pre7udice to any other remedy which the plaintiff might ha&e, and without any finding as to the costs. The plaintiff and appellant bases his argument or articles #2$., #2$+, #2,+, #.$ , and #2,( of the Ci&il Code. The pro&isions of the fi&e articles first cited and others that could be
mentioned merely tend to corroborate what is selfCe&ident, namely, the e"istence of a &alid contract between the parties. 6ndisputably, there has been an offer and an acceptance, and all that remained to effectuate the contract was the e"ecution of the deed and the mortgage. Dere we ha&e presented a good and &alid contract, bilateral in character, and free from all taint of fraud. The stability or commercial transaction requires that the rights of the seller be protected 7ust as effecti&ely as the right of the buyer. 6f this plaintiff had refused to comply with the contract, specific performance of the obligation could ha&e been as5ed by the defendants. >ust as surely should the plaintiff who has li&ed up to his bargain and who has been put to e"pense to do so, be permitted to coerce the defendant into going through with the contract. The e"cuse of the defendants is that they do not now ha&e the money to pay the first installment. 6n other words, they plead impossibility of performance. The rule of equity 7urisprudence in such a case is that mere pecuniary inability to fulfill an engagement does not discharge the obligation of the contract, nor does it constitute any defense to a decree for specific performance. >udgment re&ersed.
Por.ellosa vs. 'and Tenure Ad.inistration 1 SC%A !5 "acts# The lot in contro&ersy is a part of the Santa Clara <state on which many families ha&e settled through the consent of its owner, each paid a rental. 6n May #(.#, the said <state was acquired by the 9o&ernment G was entrusted to an office 5nown as the :ural Progress *dmin., which was later abolished G its functions was transferred to the =ureau of 0ands. :ecently, such duties was gi&en to the 0and Tenure *dministration. The plaintiff acquired by purchase the right of occupation of the lot in question from Ficente San >ose, predecessorCinCinterest. *fter the purchase of the Santa Clara <state by the 9o&ernment, the plaintiffs were allowed to ma5e payments on account of the purchase price of the lot, as fenced, included two hundred 12 2 sq.m. Thereafter, the plaintiffs found out that the lot had been subdi&ided into two 122 smaller lots, 'o. .. and ,+. 0ot 'o. .. had been sold to Dermino 9uzman. The plaintiffs then filed a complaint to compel the !irector of 0ands to e"ecute a !eed of Sale in their fa&or G declare null and &oid the !eed of Sale of 0ot 'o. .., e"ecuted in fa&or of respondent Demino. The trial court rendered 7udgment in fa&or of plaintiff, but was re&ersed by the Court of *ppeals, dismissing the petitioner-s complaint. Dence, this petition. $ssue# /hether or not the plaintiffs are entitled to purchase from the 9o&ernment the lot, allegedly includes 2 sq.m.
,eld# The 7udgment under re&iew was affirmed. The lot on which San >ose-s house stood had not been specified, nor had the boundaries thereof been mentioned. Significantly, the plaintiff cannot show a contract whereby the :ural Progress *dmin., has sold or promised to sell them a lot of 2 sq.m. * party claiming a right granted or created by law must pro&e his claim by competent e&idence. De must rely on the strength of his e&idence and not on the wea5ness of that of his opponent. Moreo&er the !eed of Sale allegedly e"ecuted by Ficente San >ose in fa&or of Pornellosa is a mere pri&ate document and does not conclusi&ely establish their right to the parcel of land. *cts and contracts which ha&e for their sub7ect the creation, transmission, modification or e"tinguishment of real rights o&er immo&able property must appear in a public document.
Article 116! 41168 Chaves vs. %osales 2 SC%A 5*! "acts# Cha&ez is an owner of a typewriter and he as5ed 9onzales to fi" his typewriter for him. Dowe&er, 9onzales was not able to accomplish his obligation of fi"ing the said typewriter. 6n accordance with this e&ent, Cha&ez as5ed 9onzales to return the typewriter to him which the latter did wrapped in a pac5age. Dowe&er, Cha&ez disco&ered that there were missing parts of the typewriter. *fter this incident, Cha&ez as5ed another person to repair the typewriter for him and this time the typewiter was fi"ed and Cha&ez pad for the repair as well as for the missing parts of the typewriter. $ssue# /hether or not Cha&ez can as5 for the payment of the full price of the repair made by the other person as well payment for the missing parts. ,eld# The court held that under the law Cha&ez in entitled for reimbursement for the full price of the repair for the typewriter as well as for the missing parts. ?nder the law, in the obligation to do if the obligor fails to do his obligation; the creditor can as5 for damages plus the price of the repair which the obligor failed to do. 6n the instant case at bar, the obligor 9onzales failed to do his obligation thus he is required by law to pay the full price of repair made by another person in the fulfillment of his supposed obligation plus the price of the missing parts of the typewriter. Dence, this court order 9onzales to pay the full price of the repair as well as the missing parts of the typewriter.
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Article 116* %ose Pac6ing Co. vs. Court o0 Appeals 16! SC%A 5* EactsB This is a petition for re&iew on certiorari of the decision of the Court of *ppeals in C*C9.:. 'o. .)# (+C#2 promulgated on !ecember #%, # , . 4n !ecember #2, #(%2 respondent ban5 Philippine Commercial and 6ndustrial =an5 1PC6=2 appro&ed a letter request by petitioner for the reacti&ation of its o&erdraft line of P$ , . , discounting line of P# , . and a letter of creditCtrust receipt line of P$$ , . as well as an application for loan of P) , . on fully secured real estate and chattel mortgage and on the further condition that respondent PC6= appoint its e"ecuti&e &iceC president :oberto S. =enedicto as its representati&e in petitioner-s board of directors. 4n 'o&ember ), #(%$ the 'ational 6n&estment and !e&elopment 1'6!C2, appro&ed a P2.% million loan application of petitioner with certain conditions. The '6!C released to petitioner the amount of P # , . . Petitioner purchased fi&e 1$2 parcels of land in Pasig, :izal ma5ing down payment thereon. *ugust ), #(%% and 4ctober $,, #(%%, respondent PC6= appro&ed additional accommodations to petitioner consisting of P ,# , . loan for the payment of the balance of the purchase price of those lots in Pasig. Dowe&er, PC6= released only P ) , . of the P ,# , . on appro&ed loan for the payment of the Pasig lands and some P ) , . for operating capital. 4n >une 2( #(%,, the !e&elopment =an5 of the Philippines appro&ed on application by petitioner for a loan of P #,+. , . and a guarantee for H %$2,%+2. for the purchase of can ma5ing equipment. Petitioner ad&ised respondent PC6= of the a&ailability of P + , . to partially pay off its account and requested the release of the titles to the Pasig lots for deli&ery to the !=P. 4n >anuary $, #(%+ respondent PC6= filed a complaint against petitioner and :ene Inecht, its president for the collection of petitioner-s indebtedness to respondent ban5. The PC6= ga&e petitioner notice that it would cause the real estate mortgage to be foreclosed at an auction sale. Petitioner filed a complaint in the Court of Eirst 6nstance of :izal to en7oin respondents PC6= and the sheriff from the proceeding with the foreclosure sale, and to as5 the lower court to fi" a new period for the payment of the obligations of petitioner to PC6=. The lower court issued an order denying the petition. The petitioner filed with respondent Court of *ppeals a petition for certiorari with application for restraining order and preliminary in7unction. Dence, the petition is also denied.
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$ssue# /hether or not pri&ate respondent ha&e the right to the e"traC7udicial foreclosure sale of petitioner-s mortgaged properties before trial on the merits. ,eld# 1#2 The decision of the Court of *ppeals is :<F<:S<! insofar as it sustained 1a2 the lower court-s denial of petitioner-s application for preliminary in7unction and 1b2 the &alidity of the foreclosure sale; 122 the lower court is ordered to proceed with the trial on the merits of the main case together with a determination of e"actly how much are petitioner-s liabilities in fa&or of respondent ban5 PC6= so that proper measures may be ta5en for their e&entual liquidation; 1)2 the preliminary 6n7unction issued by this Court on *pril 2+, #(,# remains in force until the merits of the main case are resol&ed; and 1.2 the motion of respondent ban5 dated *pril #, #(+#, for lea&e to lease the real properties in custodia legis is denied. The loans of petitioner corporation from respondent ban5 were supposed to become due only at the time that if recei&es from the '6!C and P!CP the proceeds of the appro&ed scheme. *s it is, the conditions did not happen. Eor an obligation to become due there must generally a demand. !efault generally begins from the moment the creditor demands the performance of the obligation. /ithout such demand, 7udicial or e"traC7udicial, the effects o0 de0ault 7ill not arise.
2ayla v. Silang Tra00ic Co. ! Phil. +55 "acts# Petitioner 1subscriber2 entered into an agreement with respondent 1seller2 regarding the purchase of fifteen 1#$2 shares of capital stoc5 by the former from the latter for the sum of P#, $ . . Said agreement has with it certain terms and conditions, among which are cases where the subscriber shall fail to pay the installments or to perform the conditions or if said shares shall be attached or le&ied upon by creditors of the subscriber, said shares are to be automatically re&erted to the seller and the payments already made are to be forfeited in fa&or of the seller. 4n or before >uly )#, #(),, petitioners failed to pay the installment due that day resulting for the automatic forfeiture of the payments they already made. 4n the other hand, on *ugust#, #(),, the respondent corporation issued a resolution was authorizing the refund of the installments already paid by their subscribers. Said resolution was issued by respondent for the purpose of terminating the pending ci&il case in&ol&ing the &alidity of the shares in question which was subsequently dismissed. =ased on the said resolution, the petitioners instituted an action for the reco&ery of the sum of money which they ha&e paid se&erally to the corporation. The corporation set up a defense stating that said resolution was no longer applicable to the petitioners since their shares was already re&erted in fa&or of the seller due
to their failure to pay on the due date long before the resolution was issued. Moreo&er, another resolution was issued by the corporation on *ugust 22, 2(), re&o5ing and cancelling the earlier resolution. The trial court issued an order against the petitioners; and on appeal, the C* affirmed the decision of the trial court with some modifications as to the cancellation of the petitioner-s subscription which was re&ersed by said appellate court. Dence, an appeal by both parties for certiorari. $ssues# #. /4' the said contract is a subscription or a sale of stoc5 2. /4' under the contract between the parties the failure of the purchaser to pay any of the quarterly installments on the purchase price automatically gi&e rise to the forfeitures of the amount already paid and the re&ersions of the shares to the corporation. ). /4' the resolution of *ugust #, #(), is &alid. ,eldB >udgment against the defendant. /hether a particular contract is a subscription or a sale of stoc5 is a matter of construction and depends upon its terms and the intention of the parties. 6t should be noted that the agreement entered into by the parties in this case is entitled J*greement for 6nstallment Sales of Shares in the Silang Traffic Company, 6nc.K 6t also appears that in the ci&il case which was earlier dismissed, the CE6 mentioned the right of the corporation to sell the shares of stoc5 to the person named in the resolution, including the petitioner, was impugned by the petitioners in the said case, who claimed a preferred right to buy said shares. This shows that said contract is simply a contract of purchase and sale. * purchase is an independent agreement between indi&idual and the corporation to buy shares of stoc5 from it at a stipulated price; different from that of a subscription which is a mutual agreement of the subscribers to ta5e and pay for the stoc5 of the corporation. /ith regards to the second issue, the pro&ision regarding interest on deferred payments would not ha&e been inserted if it had been the intention of the parties to pro&ide for automatic forfeiture and cancellation of the contract. Moreo&er, the contract did not specifically pro&ide that the failure of the purchaser to pay any installments would gi&e rise to forfeiture and cancellation without the necessity of any demand from the seller. ?nder article ## of the Ci&il Code 1'ow art. ##%( of the 'CC2 persons obliged to deli&er or do something are not in default until the moment the creditor demands of them, 7udicially or e"tra7udicially, the fulfillment of their obligation, unless the law e"pressly pro&ides that demand is no longer necessary in order that default may arise, or if the time of deli&ery or ser&ice is a controlling moti&e for the establishment of contract. *s to the third issue, the resolution which was made for the good of the corporation and for the termination of the ci&il case benefited other petitioners. 6t would be an un7ust discrimination to deny the same benefit to the herein petitioners.
Article 11!5 Arrieta3 et al. vs. (ational %ice and Corn Corp. 15 SC%A !* "acts# This is a appeal of the defendantCappellant '*:6C from the decision of the trial court, awarding to the plaintiffsCappellees the amount of H2+%, . as damages for breach of contract and dismissing the counterclaim and third party complaint of the defendantC appellant '*:6C. 4n May #(,#($2, plaintiffCappellee participated in the public bidding called by the '*:6C for the supply of 2 , metric tons of =urmese rice. *s her bid of H2 ). per metric ton was the lowest, she was awarded for the contract. PlaintiffCappellee Paz P. *rrieta and the appellant corporation entered into a contract of sale of rice, under the terms of which the former obligated herself to deli&er the latter 2 , metric tons of =urmese :ice at H2 ). per metric ton, C6E Manila. 6n turn, the defendant corporation committed itself to pay for the imported rice Jby means of an irre&ocable, confirmed and assignable letter of credit in ?.S. currency in fa&or of the plaintiffCappellee and Lor supplier in =urma, immediately.K !espite the commitments to pay immediately, it was only on >uly ) ,#($2, or afull month from the e"ecution of the contract, that the defendant Corp. too5 the first step to open a letter of credit. 4n *ugust ., #($2, the ban5 informed the appellant corporation that its application, Jfor a letter of credit has been appro&ed with the condition that $ M marginal cash deposit be paid and that drafts are to be paid upon presentment.K Eurthermore, the =an5 represent that it Jwill hold your application in abeyance pending compliance with the abo&e stated requirement.K 6t turned out that the appellant corporation was not in any financial position to meet the condition, '*:6C bluntly confessed to the appellee. Consequently, the credit instrument applied for was opened only on September +, #($2. *s a result of the delay, the allocation of the appellees supplier in :angoon was cancelled. $ssue# /hether or not the appellant failure to open immediately the letter of credit in dispute amounted to a breach of the contract of >uly #, #($2 for which it may be held liable in damages. %uling# it is clear upon the records that the sale and principal reason for the cancellation of the allocation contracted by the appellee herein in :angoon, =urma, was the the failure of the letter of credit to be opened with the contemplated period. This failure must, therefore, be ta5en as the immediate cause for the consequent damage which resulted.
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Secondly, from the correspondence and communications which form part of the record of this case, it is clear that what singularly delayed the opening of the stipulated letter of credit and which, in turn, caused the cancellation of the allocation in =urma, was the inability of the appellant corporation to meet the condition imposed by the =an5 for granting the same. The liability of the appellant, howe&er stems not alone from the failure or inability to satisfy the requirements of the ban5. 6ts culpability arises from its willful and deliberate assumption of contractual obligations e&en as it was well aware of its financial incapacity to underta5e the presentation. ?nder the pro&ision of *rticle ##, of the Ci&il Code, not only debtors guilty of fraud, negligence or defaults in the performance of obligations are decreed liable; in general, e&ery debtor who fails in the performance of his obligations is bound to indemnify for the losses and damages caused. The decision appealed from is hereby affirmed.
Meralco vs. Court o0 Appeals 15! SC%A 2+ "acts# To reco&er the damages due to embarrassment, humiliation, hurt pride, and wounded feelings inflicted by the petitionerCappellant during the disconnection of the respondent-s electrical ser&ice; the latter filed a complaint at Court of Eirst 6nstance of Manila. The court ordered the petitioner to rendered # , pesos to the respondents as payment for damages. Dence, petitioner filed a petitioned in the Court of *ppeals, but the court denied the petition. Erom the facts adopted by the Court of *ppeals, it was found that the respondents are clients of the petitioner. The respondents stated that the petitioner did not pro&ide any notice before the disconnection, that it must be compulsory to the plaintiff to issue disconnection notice. The petitioner disputed the respondents- statement stating that it has the right to disconnect the electric ser&ice of the delinquent customer, for they formerly stated that the respondents failed to pay the bill in a gi&en time. $ssue# /hether or not Court of *ppeals committed gra&e abuse of discretion in affirming the Trial Court-s decision. ,eld# There is no abuse of discretion in the part of the respondent court in affirming the assailed decision of the CE6 Manila. The right to disconnect the electric ser&ice of a delinquent customer shall be accompanied by a gi&en notice .+ hours in ad&ances as pro&ided for in Section (, of the :e&ised 4rder 'o. # of the Public Ser&ice Commission. 6n accordance with the pre&ious rulings, failure to gi&e such prior notice amounts to a tort. *nd since, petitioner M<:*0C4 in this particular case disregarded the rule on .+Chour notice
Page 14
prior to disconnection which is protected by law, petitioner is liable for damages according to *rticle ##, of the ci&il code, therefore, the respondents are entitled to claim damages. *rticle ##, states that, JThose who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contra&ene the tenor thereof, are liable for damages.K
Article 11!+ &niversity o0 Santo Tho.as vs. 8escals 8 Phil. 26! "acts# * house in 6ntramuros, was sub7ected, e"clusi&e of the land on which it as erected, to a censo in fa&or of the ?ni&ersity of Santo Thomas. The censo was created in a public document, duly registered, wherein the &alue of the capital was e"pressly stipulated, and the pension to paid on account thereof was fi"ed. 4ne Sal&ador Earre bought the house and the land on which it stood, apparently in ignorance of the censo to which the house was sub7ected and refused to recognize the rights of the ?ni&ersity in the premises. The ?ni&ersity instituted an action, wherein, upon appeal to this court, the right of the ?ni&ersity in and to the censo was maintained, and 7udgment was entered against Earer for the amount of the payments due thereunder. $ssue# /hether or not the deterioration and decay in the materials of which a building is constructed, incident to the lapse of time, are causes embraced within the terms Jforce ma7eure or by a fortuitous e&entK. ,eld# The deterioration and decay in the materials of which a building is constructed, incident to the lapse of time, are causes embraced within the term Jforce ma7eure or fortuitous e&entK as those terms are used in article #%2$ of the code, and in support of our ruling it will be sufficient to insert here some e"tracts from the commentaries upon this article of the code by the learned Spanish author Manresa. J=y the words force ma7eure or fortuitous e&ent used in the first paragraph of article #%2$, as already stated, the law alludes to e&ery cause independent of the will of the annuitant, of e&ery fault on his part. There is nothing else to do but to so admit, not only because the code opposes to the annuitant no other defense e"cept fortuitous e&ent and fault, without ma5ing other distinctions, but also because in reality e&ery cause foreign, if that term maybe used, to the annuitant, 7uridically and reasonably demands the same solution, and because all these causes can be reduced to a fortuitous e&ent, or to force ma7eure. /e conclude that the 7udgment entered in the court below should be affirmed, with the costs of this instance against the appellant. So ordered.
Paci0ic 9egeta1le /il Corporation vs Angel Singzon ).%. '4!*1! "acts# *ppeal from the decision of the CE6 of 0eyte dismissing the case holding that the plaintiff, a foreign corporation, had no personality to institute the present case e&en if it afterwards obtained a license to transact business because this belated act did not ha&e the effect of curing the defect e"isted when the case was instituted. $ssue# /hether or not the CE6 of 0eyte committed a gra&e abuse of discretion in dismissing the case. ,eld# @es. The 7udgment of the CE6 is re&ersed and a new one will be entered ordering the appellee to pay the appellant the sum of P#$,,,% . plus interest from the filing of the complaint, and the costs.
Article 11!6 ,ill vs. 9eloso 1 Phil. 165 "acts# 6t is belie&ed that defendant Ma"ima Ch. Feloso is indebted to !amasa :icablanca, her sisterCinClaw and widow of Potenciano Ch. Feloso, with the amount of P+, . 6t is also belie&ed that !omingo Eranco, defendant-s sonCinClaw and minor child of :icablanca, had the latter sign a blan5 document for the purpose of compelling her to e"ecute a document regarding the ac5nowledgment of the abo&ementioned debt in his behalf. The guardian of Eranco, named 0e&ering, according to the latter, is the one who compelled the defendant to sign the said document on Eranco-s behalf. 0ater on, the document that was signed by the defendant turned out to be a document containing a different tenor which states that the defendant had e"ecuted the said document for &alue of the goods that they recei&ed in 0a Cooperati&e Eilipina which they 1the defendant and her husband2 are bound to pay 7ointly and se&erally to Michael and Co., for the sum of P%, )#(.)). 0e&ering, as the guardian of the minor children of !amasa :icablanca, commenced proceedings against the defendant for the reco&ery of the sum of P+, . The defendant, in turn, pray for the annulment of the contract with Michael and Co. on the grounds of deceit and error committed by her sonCinC law Eranco who was then a deceased. $ssue# /hether or not the alleged deceit caused by Eranco may be a ground for the annulment of the contract. %uling# The 7udgment is against defendant. The deceit, in order that it may annul the consent, must be that which the law defines as a cause. *ccording to *rticle #2%( of the Ci&il Code 1now *rticle #))+ of the 'ew Ci&il Code2, Jthere is deceit, when by words or insidious machinations on the part of one of the
contracting parties, the other is induced to e"ecute a contract which without them he would not ha&e made.K !omingo Eranco is not one of the contracting parties who may ha&e deceitfully induced the other contracting party, Michael and Co., to e"ecute the contract. The one and the other contracting parties, to whom the law refers, are the acti&e and the passi&e sub7ects of the obligation, the party of the first part and the party of the second part who e"ecute the contract. The acti&e sub7ect and the party of the first part of the promissory note in question is Michael and Co., and the passi&e sub7ect and the party of the second part are Ma"ima Ch. Feloso and !omingo Eranco; two, or they be more, who are one single sub7ect, one single party. !omingo Eranco is not one contracting party with regard to Ma"ima Ch. Feloso as the other contracting party. They both are but one single contracting party in contractual relation with, Michael and Co. !omingo Eranco, li5e any other person who might ha&e been able to induce Ma"ima Ch. Feloso to act in the manner she is said to ha&e done, under the influence of deceit, would be for this purpose, but a third person. There would then be not deceit on the part of the one of the contracting parties e"ercised upon the other contracting party, but deceit practiced by a third person.
Article 11!8 Azzaraga vs. %odriguez * Phil. 6 ! "acts# !ecember )#, #+(+, the defendant :odriguez e"ecuted in fa&or of :egino :amirez a document whereby he bound himself to pay the latter on the #$th of May, #+((, the a sum of money, which Eray 0esmes Perez owed the said :amirez, who, in payment of a debt to the plaintiff. *zarraga, indorsed assigned to the latter the said document from the defendant, :odriguez, for the abo&eCstated sum, for account of his indebtedness. $ssue# /hether the transfer of rights was &alid. ,eld# The court held that the assignment or transfer of the credit in question, made by :amirez, the creditor is &alid, and notwithstanding the fact that the cause or consideration of the transfer is not stated in the indorsement, it must be presumed that one e"ists and that it is a lawful one, unless file debtor should pro&e the contrary which he has not done in this case.
Article 11!* "loriano vs 8elgado 1 Phil 15+ "acts# 4n >anuary 2 , #( ,, <steban !elgado and :egina =ertumen issued a promissory note to ?rbano Eloriano stating that they promise to pay the sum of #,)$2.+ pesos for the balance standing with an interest of # M per annum. !espite demands made by Eloriano,
the amount has not been paid, for which reason the plaintiff as5ed the court to enter 7udgment against defendants on #,th Eebruary #( ,. The Court sentenced the defendants to pay the sum plus interest, with costs. The defendants appeared but did not answer the complaint. 4n the 22nd of March #( ,, the defendants held to be in default and entered 7udgment ordering the defendants to pay the amount plus interests with costs. 4n (th of *pril, defendant !elgado, alone and on behalf of his wife, appealed said 7udgment as5ing the court simply to e"empt themsel&es from said 7udgment, hence this certiorari. $ssue# /hether or not the 7udgment appealed from is in accordance with the law. ,eld# @es. #. *s to the nature and character of the obligationB /hen an obligation is pure, simple and unconditional and no particular day had been fi"ed for its fulfillment of the same may be demanded ten days after it is contracted. The plaintiff filed his complaint 2, days after the obligation was e"ecuted. The payment had been demandable, and the debtors ha&e no right to as5 for further e"tension. The document of indebtedness is pure, simple and unconditional; there e"ists no reason that would e"empt the debtors from compliance. 2. *ccording to the mutual character of the obligationB Sentencing the debtors to pay their obligation 7ointly is in accordance with *rticle ##), and ##)+ of the Ci&il Code. ). There-s no error charging only the husband in default. The plaintiff only made an error in his writing. Complaint was filed against both of them, and they were both summoned. The husband is the natural representati&e of his wife; therefore they are both in default. >udgment affirmed.
Testate :state o0 Mota vs. Serra +! Phil. +6+ "acts# 4n Eebruary #, #(#(, Testate <state of 0azaro Mota, deceased, et al., plaintiffs and Sal&ador Serra, defendant, entered into a contract of part partnership for construction and e"ploitation of railroad line from San 6sidro and Palma Centrals to the place 5nown as 'andong. The defendant entered into a contract of Sale with Fenancio Concepcion, Phil. C. /hita5er and <usebio :. 0uzuriaga for the estate and central 5nown as Palma co&ering all the property of the &endor. =efore the deli&ery to the purchasers of the hacienda, 0uzuriaga renounced all his rights in fa&or of his coC&endees. This ga&e rise to another deed of sale of Palma for P #,%($,(%#.( , of which defendant recei&ed P (.$,+%#.( and the balance was payable by installment and guaranteed by a especial mortgage upon the hacienda. 4n >anuary +,#(2#, Concepcion and /hita5er bought from the plaintiffs the oneChalf of the railroad line and formed an agreement that the partnership
of PalLLma and San 6sidro be dissol&ed. Dacienda Palma became the property of /hita5er and Concepcion, howe&er they failed to pay the defendant the unpaid balance. Serra foreclosed. Since the defendant failed to pay onehalf of the amount e"pended by the plaintiffs upon the construction of railroad line that is P ##), .%..% as well as the balance of the &endees, the plaintiffs instituted this action. The lower court fa&ored the defendant and held that there was a no&ation. Plaintiffs ha&e appealed from this 7udgment. $ssue# /hether or not there was a no&ation of the contract by the substitution of the debtor with the consent of the creditor3 ,eld# There was nothing to show the e"press consent, the manifest and deliberate intention of the plaintiffs to e"empt the defendant from his obligations. The plaintiffs were not a party to the transfer of the defendant of his Dacienda to /hita5er and Concepcion. There is no record that would show any stipulation that the obligation of the defendant was no&ated with the consent of the creditor. The intention of the parties must clearly result from the terms of the agreement on by a full discharge of the original debt. 'o&ation by substitution of a new debtor can ta5e place without the consent of the debtor, but the delegation does not operate a no&ation unless the creditor has e"pressly declared that he intends to discharge with delegating debtor and the delegating debtor was not in open failure or insol&ency at the time. The mere indication by a debtor of a person who is to pay in his place does not operate a no&ation. Thus, the 7udgment appealed from is re&ersed and defendant is hereby sentenced to pay the plaintiff P ##), .%. % with interest.
Article 1185 Patente vs /.ega ).%. '4++ "acts# 4n May ., #(.,, :oman 4mega sold his agricultural land to Salud Patente, under a pacto de retro sale. 4n 2.th of *ugust #(.(, :oman 4mega e"ecuted a promissory note, promising to pay his indebtedness amounting to #,% pesos , to her, her heirs, assigns and successors as soon as possible or as soon as he has the money. That, he will pay the whole amount before he e"ercises his right of repurchase of his agricultural land. 4n the promissory note, no definite term is fi"ed and that its performance is left to the will of the debtor. $ssue# /hether of not the court has 7urisdiction to ta5e cognizance of the case and to fi" a definite term for the payment of the indebtedness.
Page 19
,eld# @es. Promissory notes are go&erned by *rticle ##2+ of the Ci&il Code, because under the terms thereof the plaintiff intended to grant the defendant a period within which to pay his debts. *s the promissory notes do not fi" this period, it is for the court to fi" the same.
Article 1181 )eorge '. Par6s vs. Province o0 Tarlac +* Phil. 1+2 "actsB 4n 4ctober #+, #(# , Conception Cirer and >ames Dill, the owners of parcel of land 'o. 2 referred to in the complaint, donated it perpetually to the Municipality of Tarlac, sub7ect to the condition that it will be absolutely and e"clusi&ely for the erection of a central school and the other for a public par5, the wor5 to commence in both cases within the period of si" months from the date of the ratification by the parties of the document e&idencing the donation. The donation was accepted by Mr. Santiago de >esus in the same document on behalf of the municipal council of Tarlac of which he was the municipal president and subsequently transferred the title to this property to the Pro&ince of Tarlac. 4n >anuary #$, #(2#, Conception Cirer and >ames Dill sold this parcel of land to herein plaintiff 9eorge 0. Par5s. The plaintiff alleging that the condition of the donation had not been complied with and in&o5ing the sale of this parcel of land made by Corception Cirer and >ames Dill in his fa&or, brought this action against the Pro&ince of Tarlac, the Municipality of Tarlac, Corception Cirer and >ames Dill and prayed that he be declared the absolute owner entitled to the possession of this parcel of land. The 0ower Court dismissed the complaint. $ssueB/hether or not the plaintiff, 9eorge 0. Par5s, has a right of action to reco&er the parcel of land from the Pro&ince of Tarlac on the ground that the condition imposed is a suspensi&e or condition precedent and therefore, the said municipality had ne&er acquired a right thereto since the condition was ne&er performed. ,eld# The Supreme Court ruled that the contention of the appellant that a condition precedent ha&ing been imposed in the donation and the same not ha&ing been complied with, the donation ne&er became effecti&e is without merit and erroneous. The characteristic of a condition precedent is that the acquisition of the right is not effected while said condition is not complied with or is not deemed complied with. Meanwhile, nothing is acquired and there is only an e"pectancy of right. Consequently, when a condition is imposed, the compliance of which cannot be effected e"cept when the right is deemed acquired, such a condition cannot be a condition precedent but a condition subsequent or resolutory condition.
(atividad vs. )a1ino 6 Phil. 66 "acts# The testator Sal&ador y :eyes contracted a &alid and legal marriage with *nselma 'icasio, who died in #+%+, lea&ing a daughter named Diginia who married Clemente 'ati&idad. Diginia Sal&ador died in #(#), sur&i&ed by two children <milio and Purificacion, both surnamed 'ati&idad y Sal&ador. Tiburcio Sal&ador disposed of all his property in the manner recorded in the will e"ecuted in legal form on 'o&ember (, #(#., instituting as sole heirs his grandchildren <milio and Purificacion, both surnamed 'ati&idad y Sal&ador. 6n the si"th clause of this will the testator left to =asilia 9abino the legacy mentioned therein. 0iterally, this clause is as followsB 6 bequeath to !oNa =asilia 9abino the ownership and dominion of the urban property, consisting of a house and lot situated on Calle 0a&ezares of the said district of San 'icolas and designated by 'o. $2 , and in addition ele&en meters by two meters of the lot designated by 'o. .#(, situated on Calle Madrid. This portion shall be ta5en from that part of the lot which is ad7acent to the rear of said property 'o. $2 . 6f the said legatee should die, 0orenzo Sal&ador shall be obliged to deli&er this house, together with the lot on which it stands, to my grandson <milio 'ati&idad, upon payment by the latter to the former of the sum of four thousand pesos 1P., 2, Philippine currency. The e"ecutor of the estate of the decedent is the decedentAs own heir, <milio 'ati&idad, who in due season and by counsel presented to the court for its appro&al a proposed partition of the property pertaining to the estate, stating that ad7udication to the legatee 1=asilia2 a usufruct only of the property at 'o. $2 Calle 0a&ezares, and a general legacy in fa&or of 0orenzo Sal&ador of the sum of P., whene&er =asilia should die; but that the ownership of the property upon which this right and legacy are established belongs to the heir <milio 'ati&idad, which was questioned by =asilia, saying that ownership and dominion, instead of usufruct only, of said property be ad7udicated to the ob7ectorClegatee, her. >udge of the Court of Eirst 6nstance of Manila, interpreting the true wishes of the testator, e"pressed the opinion that the ownership and dominion of the property mentioned in clause % of the will should be awarded to =asilia 9abino, sub7ect to the reser&ation made in behalf of 0orenzo Sal&ador and <milio 'ati&idad. $ssue# /hat construction must be gi&en to the abo&eCquoted si"th clause of the will e"ecuted by Tiburcio Sal&ador3 ,eld# * person is entirely free to ma5e his will in such manner as may best please him, pro&ided the testamentary pro&isions conform to law and meet its requirements. De may impose conditions, either with respect to the institution of heirs or to the designation of legatees, and, when the conditions imposed upon the former or the latter do not fall within the pro&isions of those articles of the Ci&il Code touching heirs and legatees, they shall be go&erned by the rules therein prescribed for conditional obligations.
6n the si"th clause of the will e"ecuted by the decedent Tiburcio Sal&ador y :eyes, he bequeathed to =asilia 9abino the ownership and dominion of the property therein specified as to its location and other circumstances, on condition that if the legatee should die 0orenzo Sal&ador would be obliged, upon the payment of P., by the testatorAs grandson and heir <milio 'ati&idad, to hand o&er this property to the latter. The condition imposed by the testator in the double legacy mentioned depends upon the happening of the e&ent constituting the condition, to wit, the death of the legatee =asilia 9abino, a perfectly legal condition according to article ###. of the Ci&il code, as it is not impossible of performance and is not contrary to law or public morals, as pro&ided in article ###% of said code. 6t cannot be understood that the legacy con&eyed only the usufruct of the property because the plain and literal meaning of the words employed by the testator in the said clause si"th clearly shows beyond all doubt the e"press wished of the testator. 6t is constant rule or 7urisprudence that in matters of last wills and testaments the testatorAs will is the law. Petition denied.
'ichauco vs. "igueras ,er.anos ! Phil.
"acts# This is an appeal from a 7udgment in fa&or of the plaintiff who brought an action to reco&er the hire for two lorchas calle the Chata and the 0olin for the month of *ugust, #( $. The defendants admitted their responsibility for the rental of these lorchas for the days of that month upon which they were actual use O that is, for twentyCthree and twentyCse&en days, respecti&ely O and on demand made formal tender of the amount of the rental claimed for those days; but they deny their responsibility for those days of the month during which they did not ma5e use of lorchas and left them at the disposal of the plaintiff. The PuartermasterAs !epartment of the *rmy of the ?nited States ad&ertises semiannually for proposals to furnish lighterage for its use in the port of Manila. The ser&ice required is di&ided into two classes, regular and emergency. The price paid for emergency ser&ice is naturally higher than that paid for regular ser&ice wherein the lorcha are steadily employed for the entire contract period of si" months. The aggregate tonnage required by the department is so great that no single lorcha owner could fill the entire contract without the aid of other owners, and the defendants, who had at that time a bid for the contract for the semiannual period from >uly # to !ecember )#, #( $, entered into a contract with the plaintiff on the 2 th of *pril, #( $. Thereafter on the 2(th of *pril, #( $, they entered into an amended contract. 4n the #st of >uly the plaintiff lorchas Chata and 0olin were furnished to the quartermaster under the defendantsA contract for the emergency ser&ice, and were thus employed in that ser&ice for the first twentyCthree and
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twentyCse&en days of *ugust, when they were released by the quartermaster, and the plaintiff immediately notified by the defendants that they were at his disposal. Plaintiff claims that defendants made use of these lorchas, under the terms of the abo&e set out contract of *pril 2 , as amended by the contract of *pril 2(, and therefore that defendants are responsible to him for hire of the lorchas for e&ery day of the month at the per diem emergency rate paid by the quartermaster on the days when the boat was in use. $ssue# /hether or not defendants should pay those days of the month during which they did not ma5e use of lorchas and left them at the disposal of the plaintiff. ,eld# /e do not thin5 that the plaintiff, on whom rests the burden of proof, succeeded in establishing this contention. The amendment to the contract between the plaintiff and defendant was e"pressly conditioned on defendantsA being the successful bidders at the letting of May 2, #( $, and it cannot be doubted that the amendment became of no force or effect when the result of the letting was announced, for it is manifest that thereafter neither party could base a claim against the other on a failure to e"ecute its terms, unless it was gi&en new life by a new agreement, either e"press or implied. 6n conditional obligations, the acquisition of rights, as well as the e"tinction or loss of those already acquired, shall depend upon the e&ent constituting the condition. 1*rt. ###. of the Ci&il Code.2 6t is said, howe&er, that e&en though the obligation of the conditional amendment was e"tinguished by defendantsA failure to secure the entire lighterage contract or to secure it at the time specified in the condition, ne&ertheless the defendants, by ta5ing and using these lorchas for the purpose of carrying out their contract with the quartermaster without any new agreement the obligation with the plaintiffs, impliedly and tacitly assumed the obligation of the original contract together with the amendment, so that their use of the lorcha was sub7ect to its terms. /e do not thin5 we are entitled to draw such an inference from the use of these boats in the months of >uly and *ugust. The 7udgment of the trial court should be and is hereby re&ersed, without special condemnation of costs in this instance, and after the e"piration of twenty days the cause will be returned to the trial court wherein it originated.
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Article 1182 /s.ena v %a.a 1+ Phil. ** "acts# 4n the #$th of 'o&ember #+( , Cenona :ama e"ecuted a contract to Fictoriano 4smena, which states that she owes 4smena the sum of 2 pesos, which she will pay in sugar plus interest. *s a guarantee, :ama pledged as a security all her present and future property and as a special security her house in which she li&es. 4' the 2,ht of 4ctober #+(#, another contract was e"ecuted , for further loan amounting to , pesos, wherein she loaned $ pesos to Penares, lea&ing her only 2 pesos. 4smena died sometime after the e"ecution and deli&ery of the said contract. *fter the settlement and di&ision of his estate, the said contract became the property of *gustina :afols, his heir. 4n the #$th of March #( 2, the plaintiff presented the contracts to defendant for payment and she ac5nowledged her responsibility, thus, e"ecuting another contract promising the plaintiff to pay, if her house is sold. 4n the 2%th of >une, #( %, the defendant failed to pay her obligations, the plaintiff filed a complaint in court. The defendant answered by filing a general denial and setting up the special defense of prescription. *fter the hearing of e&idence, the court rendered its 7udgment in fa&or of the plaintiff. 4rdering the defendant to pay 2 pesos plus interests and 2 pesos plus interests on both at the rate of #+ Q per annum. The defendant appealed. $ssue# /hether of not the lower court erred in its 7udgment, as the appellant alleges, there-s insufficiency of e&idences to support its findings. ,eld# 'o. 6n the ac5nowledgment of the indebtedness made by the defendant, she imposed the condition that she would pay the obligation if she sold her home. 6f the statement found in her ac5nowledgment of the indebtedness should be regarded as a condition, it was a condition which depended upon her e"clusi&e will and is therefore &oid. The ac5nowledgment therefore was an absolute ac5nowledgment of the obligation and was sufficient to pre&ent the statute of limitation from barring the action upon the original contract.
Trillana vs ;uezon College ).%. '452+5 "acts# !amasa Crisostomo subscribed 2 shares of capital stoc5 with a par &alue of P# each through a letter sent to the =oard of Trustees of the Puezon College, enclosed with the letter are a sum of money as her initial payment and her assurance of full payment after she har&ested fish. 4n 4ctober 2%, #(.+, !amasa Crisostomo passed away. *s no payment
appears to ha&e been made on the subscription mentioned in the foregoing letter, the Puezon College, 6nc. presented a claim before the CE6 of =ulacan in her testate proceeding, for the collection of the sum of P2 , , representing the &alue of the subscription to the capital stoc5 of the Puezon College, 6nc. which was then opposed by the administrator of the estate. $ssue# /hether or not the condition entered into by both parties are &alid. ,eld# 'o, ?nder article ###$ of the old Ci&il Code which pro&ides as followsB 86f the fulfillment of the condition should depend upon the e"clusi&e will of the debtor, the conditional obligation shall be &oid.K
Article 118 'uneta v A1ad 6! Phil.2 6 "acts# The plaintiff sought to reco&er a sum of money plus interest and attorney-s fees for balance due on four promissory notes e"ecuted by the dependant. The complaint sued for a writ of attachment which was issued, !efendant petitioned that the attachment be lifted and to that effect a counterbond was tendered by the terms of which the sureties J7ointly and se&erally bind themsel&es to answer for the defendants liability under the condition thatB a2 in case the plaintiff reco&ered 7udgment the defendant will on demand redeli&er the attached properties to be applied to the payment of the 7udgment, or b2 in default thereof that the defendant and sureties will on demand pay the plaintiff the full &alue of the released property. The lower court granted this petition and issued an order for the dissolution of the writ. Thereafter, dependant died, his attorney mo&ed for the dismissal of the case. The trial court acceded to this motion and the plaintiff-s motion for reconsideration ha&ing been denied. The instant appeal was ta5en. $ssues# #. /hether or not the plaintiff has a cause of action 2. /hether of not *bad-s sureties are still bound. ,eld# #. 'o more cause of action and the case was rightly dismissed in accordance with Section ##( of *ct 'o. #( , the action being for money and pending when the defendant died. *nd the pro&ision of Section , of *ct 'o. #( which readsB J all actions commenced against the deceased person, for the reco&ery of money, debt or damages and pending at the time the committee are appointed, shall be discontinued and the property be discharged from the attachment. 2. 'o. =ecause the condition has became a legal impossibility because the plaintiff can ne&er win the case ha&ing been dismissed.
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Article 118! ,er.osa vs. 'ongara ).%. '4526! "acts# This is an appeal by way of certiorari against a decision of the Court of *ppeals, appro&ing certain claims presented by <pifanio M. 0ongara against the testate estate of Eernando Dermosa, Sr. The claims are of three 5inds, namely, P 2,).#..# representing credit ad&ances made to the intestate from #()2 to #(.., P #2,(2..#2 made to his son Erancisco Dermosa, and P ),,,2. made to his grandson, Eernando Dermosa >r. from #(.$ to ##(.,, after the death of the intestate, which occurred in !ecember #(... The claimant presented e&idence and the Court of *ppeals found, that the intestate had as5ed for the said credit ad&ances for himself and for the members of his family Jon condition that their payment should be made by Eernando Dermosa, Sr. as soon as he recei&es funds deri&ed from the sale of his property in Spain J. Claimant had testified without opposition that the credit ad&ances were to be Jpayable as soon as Eernando Dermosa. Sr.-s property in Spain was sold and he recei&ed money deri&ed from the saleK. The Court of *ppeals held that payment of the ad&ances did not become due until administrati" recei&ed the sum of P 2 , . from the buyer of the property. $ssue# /hether or not the obligation contracted by the intestate was sub7ect to a condition e"clusi&ely dependent upon the will of the debtor 1a condicion potestati&a2 and therefore null and &oid. ,eld# The 7udgment appealed from is hereby affirmed in so far as it appro&es the claims of appellee in the amounts of P 2,).# and P #2,(.2.#2, and re&ersed as to that P ),,,2. . The condition upon which payment of the sums ad&anced was made to depend. Jas soon as he 1intestate2 recei&e funds deri&ed from the sale of his property in Spain,K discloses the fact that the condition in question does not depend e"clusi&ely upon the will of the debtor, but also upon their circumstances beyond his power or control. The condition is suspensi&e condition, upon the happening of which the obligation to pay is made dependent and upon the happening of the condition, the debt became immediately due and demandable only when the house was sold and the proceeds recei&ed in the islands, the action to reco&er the same only accrued, within the meaning of the statute of limitations, on date the money became a&ailable here hence the action to reco&er the ad&ances has not yet prescribed.
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:nri<ue vs. %a.os ! SC%A 116 "acts# This case is a direct appeal from an order of the Court of Eirst 6nstance of :izal 1Puezon City2, dated !ecember ), #(%), re&ersing its decision dated 4ctober +, #(%) in fa&or of the plaintiffsCappellants in an action for foreclosure of real estate mortgage. This is the second time that the herein party litigants ha&e come to this Court on basically the same causes of action affecting the same deed of sale with real estate mortgage co&enanted between them. The plaintiffsCappellant a&erred that on 'o&ember 2., #($+ they sold to the defendantC appellee Socorro :amos a 2 subdi&ision lots in Puezon City for the sum of P 2)$, $% of which only P )$, $% had been paid. AThe balance of P2 , was to be liquidated within two years from the date of the e"ecution of the deed of sale, with interest at si" percent for the first year and twel&e percent thereafter until fully paid. To secure the payment of that balance, the defendantCappellee e"ecuted in the same document a deed of mortgage in fa&or of the &endors on se&eral parcels of land &ariously situated in Puezon City, Pampanga and =ulacan. *ccording to the plaintiffsCappellants, the defendantCappellee &iolated the terms of their agreement in the following respectsB #. 6nspite of repeated demands, the defendantCappellee refused to pay the sum of P2 within the stipulated period; 2. The mortgage, on the =ulacan property was ne&er registered and ). The realty ta" for #($( on the lots mortgaged were not paid by the defendantCappellee. The court upheld the findings of the This Court upheld the findings and conclusions of the trial court which ruled that the actual price of the lots sold to the defendantCappellee was only P#+$, $% instead of P2)$, $%, and that only if and when the roads shall ha&e been constructed pursuant to the ordinances of Puezon City 8may the period of two years specified in the contract begin to run.8 /ith reference to the nonCpayment of the #($( realty ta" and the nonCregistration of the mortgaged =ulacan estate, this Court held that 8aside from being minor matters, the appear sufficient, e"plained in the brief of defendantC appellee.8 The defendantCappellee had stated that she applied her bac5pay certificates to the payment of her realty and income ta"es but as she had not yet recei&ed said certificates the payment of the ta"es was delayed. 4n the other hand the registration of the =ulacan property could not be ?nder ta5en because it was then still registered in both her name in the name of coCowner. The defendantCappellee promised that she would pay the ta"es in due time and underta5e the needed segregation and the ,
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annotation of the lien of the mortgage on the =ulacan property as soon as the &endors proceeded with the construction of the roads on the purchased lots. 'ow returning to the case at bar, the plaintiffsCappellants charged on May ., #(%) before the Court of Eirst 6nstance of :izal 1Puezon City2 that the defendantCappellee has not yet paid the sum of P2 , despite the fact that the roads on the questioned lots were completed on May (, #(% ; that the mortgage on the =ulacan property has not yet been registered; and that the realty ta"es corresponding to the years #($( to #(%) on the mortgaged lots had not been paid. The defendantCappellee contended that e&en if the roads in question ha&e already been constructed in accordance with the mentioned ordinance, still her obligation to pay the sum of P2 , has not yet arisen as no pre&ious notice and demand for payment has been made on her. $ssue# /hether or not the lac5 of pre&ious notice and demand for payment will not gi&e rise the defendantCappelleeAs obligation of paying the sum of P 2 , . ,eld# The court held that as to the alleged lac5 of pre&ious notice completion and demand for payment, the filing of the case below is sufficient notice to the defendantCappellee of the completion of the roads in question and of the plaintiffsCappelleeAs desire to be paid the purchase price of the questioned lots. The effect of such demand retroacts to the day of the constitution of the defendantCappelleeAs obligation. Thus, *rticle ##+, pro&ides the 8The effects of a conditional obligation to gi&e, once the condition has been fulfilled, shall retroact to the day of the constitution obligation...8 The contacted obligation of the defendantCappellee under the facts of the case at bar was to pay the balance of P2 , within two years from the date the roads in question are completed. *ccordingly the order of the court a quo dated !ecember ), #(%) is set aside, and 7udgment is hereby rendered ordering the defendantC appellee to pay to the plaintiffsCappellants, within ninety 1( 2 days from the finality of this decision, the following B #. The sum of P2 , representing the unpaid balance of her contractual obligation;
2. 6nterest thereon, as stipulated in the deed of sale with mortgage, at the rate of %M per annum from May (, #(% up to May (, #(%#, and, thereafter, #2M interest per annum until the principal amount shall ha&e been fully paid; ). *n amount equi&alent to $M of the mortgage indebtedness of attorneyAs fees; and .. The costs. Should the defendantCappellee fail to pay the aforementioned mortgage indebtedness within the period granted in this decision, and the properties mortgaged shall be sold at public
auction and the proceeds thereof shall be applied to the satisfaction of this 7udgement and the costs of the auction sale. Costs against the defendantCappellee.
Article 1188 = 11*1 2orro.eo vs. "ranco 5 Phil. +* "acts# *n agreement to sell a property owned by defendantsCappellees, namely frame houses with nipa roofs built upon lots, to plaintiffCappellant with the corresponding set of conditions wherein each party is set to fulfill. 4ne of the conditions as pro&ided for in the agreement is that plaintiff be gi&en si" months from the date of the e"ecution of the instrument to complete the documents for said property. Dowe&er, plaintiff failed to comply with the condition, hence, with liberty defendants disposed the property as they may deemed fit. Plaintiff instituted a complaint in the Court of Eirst 6nstance praying that 7udgment be rendered in his fa&or and against the defendants. !efendants in their answer stated that the plaintiff has failed to comply with the conditions under which the promise to sell the property to him was made. $ssue# /hether or not plaintiff has the right to compel the defendants to carry out their agreement to sell notwithstanding his failure to comply with the condition in the agreement. ,eld# @es, plaintiff has the right to do so. The agreement on the part of plaintiff as set out in clause 1c2, to complete the title papers to the said property within the si" months, is not a condition subsequent of the obligation to sell. 6t is only a mere incidental stipulation which the parties saw fit to include in the agreement. =eing not contrary to law, public morals, or public policy, unable to complete the title papers of the said property does not pre&ent performance of sale. The stipulation is incidental and not inherent to the agreement or promise to sell. *lso, The contract in question contains mutual obligations and is considered bilateral in nature. 6n this regard, the obligation to buy the property in question is correlati&e with the obligation to sell it. Plaintiff to perfect the papers to the property within si" 1%2 months is not correlati&e to obligation to sell the property. Dence the stipulation in the agreement does not create reciprocal rights and therefore, defendants do not ha&e the right to cancel the obligation. *s state in the case, one obligation is entirely independent of the other. The latter obligation is not subordinate to nor does it depend upon the fulfillment of the obligation to perfect the title deeds to the property.
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Dence, the 7udgment of the lower court is :<F<:S<!. !efendants are directed to sell to the plaintiff the two houses and lots upon which they stand under the terms and conditions as pro&ided for in the agreement.
Cortez vs. 2i1ano and 2era.o +1 Phil. 2*8 "acts# Petioner *nacleta Cortez acquired an hacienda from her deceased husband and applies for the registration of the hacienda in her name. se&eral oppositors appeared among them were respondents =ibano and =eramo. The court rendered 7udgment decreeing the registration of the hacienda in the name of the petitioner and o&erruled the opposition of the respondents. 6n the beginning this hacienda did not ha&e the area the registration of which is now as5ed, but, it grew in e"tent due to the acquisition, by its original owners of the ad7acent parcel, among which are those claimed by the oppositors herein respondents. /ith respect to the parcel claimed by =ibano, it appears from the e&idence that :odriguez and :amirez purchased this parcel from =ibano for P$ . *lthough in this document it is stated that =ibano recei&ed the price, the ne"t day :amirez signed another document, in which he stated that by agreement of the parties the price was not deli&ered to =ibano, but was paid to him when he needed it which was denied by =ibano and declared that what happened was that the day after the sale of his lands, he demanded the payment of the price, but instead of paying him, they gi&e him a document. *nd the truth is that the purchase price has not yet been paid to the &endor. ,eld# *lthough the contract was perfect and produced the effect of transmitting to the purchaser the ownership of the land sold, this ownership, howe&er was still dependent upon the payment of the price. *s the obligation in a contract of purchase and sale is reciprocal, any of the contracting parties may, upon nonCfulfillment by the other party of his part of the obligation, resol&e the contract 1*rt. ##2., Ci&il Code2. The agreed price not ha&ing as yet been paid to the &endor, the effect of the sale was still sub7ect by e"press pro&ision of law, to this resolutory condition. Dence, the ownership acquired by the purchasers is still limited by the right of =ibano to as5 for the resolution of the sale. *nd this limitation upon the right of the petitioner is a charge susceptible of registration. The registration of this parcel in the name of the applicant is proper, but sub7ect to this charge. >udgment modified.
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Angeles vs. Calasanz 1 5 SC%A 2 "actsB !efendantsCappellants ?rsula Torres Calansanz and Tomas Calansanz and plaintiffC appelles =uena&entura *ngeles and Teofila >uani entered into a contract to sell a piece of land located in Cainta, :izal for the amount of P),(2 . plus ,M interest per annum. The latter paid the down payment of P)(2. upon the e"ecution of the contract. They promised to pay the balance in monthly installments of P.#.2 until fully paid, the installments being due and payable on the #(th day of each month. The payment already amounted to P., $)).)+. !efendantsCappellants cancelled the said contract for failure of subsequent payments. $ssue# /hether or not the contract to sell has been automatically and &alidly cancelled by the defendantsCappellants. ,eld# The contract entered into by the parties has some characteristics of a contract of adhesion. Dence, it must be construed against the party causing it. Since the principal obligation under the contract is on P),(2 . and the plaintiffsCappellees ha&e already paid an aggregate amount of P.,$)).)+, the court should only order the payment of the few remaining installments but not uphold the cancellation of the contract.
Article 11*2 Central 2an6 vs. CA 1 * SC%A +6 "acts# 6sland Sa&ings =an5 upon fa&orable recommendation of its legal department appro&ed the loan application for P+ , . of Sulpicio Tolentino, who as a security loan e"ecuted on the same day a real estate mortgage o&er his # hectare land. The appro&ed loan application called for a lump sum P+ , . loan repayable in semiCannual installments for a period of ) years with #2M interest. * mere P#,, . was made by the =an5. Tolentino and his wife <ditha signed the promissory note for P#,, . at #2M interest payable within )years from the date of e"ecution of the contract at semiCannual installments. The =an5, thru its Fice President and Treasurer promised repeatedly the release of the P%), . balance. The Monetary =oard of the Central =an5 after finding 6sland Sa&ings =an5 was suffering liquidity problem issued :esolution which prohibits the =an5 from doing business in Philippines and instructed the *cting Superintendent =an5 to ta5e charge. Tolentino filed a petition with the Court of first 6nstance of *gusan but the court rendered its decision against petitioner while the Court of *ppeal modified the said decision affirming on the dismissal of Tolentino-s petition. Dence, this petition for re&iew is instituted. $ssue# /hether or not the action of Tolentino-s petition would prosper.
,eld# @es, 6sland Sa&ings =an5 was in default in not fulfilling the reciprocal obligation under the loan agreement. Tolentino under *rticle ##(# of the Ci&il Code may choose between specific performance or recission with damages in either case. =ut since 6sland Sa&ings =an5 is now prohibited from doing further business by Monetary =oard :esolution, it cannot be granted said specific performance in fa&or of Tolentino. :escission is the only alternati&e left. The rescission is only for the balance of %), . balance of + , . loan. The promissory note ga&e rise to Tolentino-s reciprocal obligation to pay #,, . . Dis failure to pay o&erdue amortization under the promissory note made him a party in default. Meanwhile, *rt.##(2 of the Ci&il Code pro&ides that in case both parties ha&e committed a breach in their reciprocal obligation the liability of the first infraction shall be equitable tempered by the court. Thus, the liability of 6sland Sa&ings =an5 for damages is offset by the liability of Tolentino in the form of penalties and sub charges for not paying his debts.
Article 11* S.ith3 2ell > Co. vs. Sotelo Matii ++ Phil. 8!+ "acts# 6n *ugust, #(#+, the plaintiff corporation and the defendant, Mr. Ficente Sotelo, entered into contracts whereby the former obligated itself to sell two steel tan5s, two e"pellers, and two electric motors to the latter. *s to the tan5s, the agreement was that the deli&ery was to be made within three or four months, but the seller shall not be responsible for delays caused by fires, riots on land or on sea, stri5es or other causes 5nown as Eorce Ma7eure. /ith regard to the e"pellers, he contract says within the month of September, #(#+, or as soon as possible. *nd with reference to the motors, appro"imate deli&ery within ninety days but not guaranteed. The tan5s arri&ed at Manila on *pril, #(#(; the e"pellers on 4ctober 2%, #(#+, and the motors of Eebruary 2,, #(#(. The plaintiff notified the defendant of the arri&al of the said goods but the latter refused to recei&e them and pay the prices. This caused the plaintiff to file a suit against defendant. The defendant, in turn, denied the allegations of the plaintiff, stating that it was only on May, #(#( when plaintiff infirmed them that the tan5s ha&e arri&ed. The Trial court rendered a decision absol&ing the defendant insofar as the tan5s and motors are concerned but it rendered a decision against the defendant with regards to the recei&ing of the goods. Dence, an appeal by both parties. $ssue# /hether or not under the contracts entered into and the circumstances established in the record, the plaintiff has fulfilled, in due time, it obligation to bring the goods in question to Manila.
Page 32
%uling# >udgment appealed from is modified and defendant is sentenced to accept the goods form the plaintiff. The obligation must be regarded as conditional. The fulfillment of the condition, in this case, depends not only upon the will of the plaintiff but also that of the third person. *ccording to article ##2$ of the Ci&il Code 1now art. ##() of the 'CC2, J4bligations for the performance of which a day certain has been fi"ed shall be demandable only when the day arri&es; * day certain must be understood to be one which must necessarily arri&e, e&en though its date be un5nown; 6f the uncertainty should consists at the arri&al or nonCarri&al of the day, the obligation is conditional..K Time is regarded as unessential in this 5ind of contract, though the deli&ery must be made within the reasonable time. Moreo&er, the obligor will be deemed to ha&e sufficiently performed his part of the obligation, if he has done all that was in his power, e&en if the condition has not been fulfilled in reality. 6t is sufficient in the record that the plaintiff has made all the efforts it could possibly be e"pected to ma5e under the circumstances, to bring the goods in question to Manila.
&ll.an vs. ,ernaez 25 Phil. 6* "acts# This is an *PP<*0 from a 7udgment of the Court of Eirst 6nstance of 4ccidental 'egros. The complaint has for its ob7ect the collection of a debt contracted by Ficente Dernaez in fa&or of Eeli" ?llman on *pril $, #( , amounting to ),$2$ pesos Me"ican currency, to be paid, says Dernaez, 8as soon as 6 recei&e the portion that as an heir must come to me from the estate of >uana <spinosa, widow of Dernaez; without pre7udice to paying on it, during the time that may elapse until 6 get possession of said property, interests at si" per cent a year, but not, howe&er, compound interest.8 That the defendant did on >anuary $, #(#), cede, alienate, and con&ey to :osendo Dernaez for the sum of twentyfi&e thousand pesos 1P2$, 2 Philippine currency, all his rights and rights of action in the property left by the deceased >uana <spinosa. The Court of Eirst 6nstance of 4ccidental 'egros decided the case by sentencing the defendant to pay to the plaintiff P),$2$, with interest at % per cent a year from *pril $, #(#). =ut on a rehearing requested by the plaintiff the court again rendered 7udgment, amending the portion relating to the interest, and sentenced the defendant to pay interest on the debt on the basis of % per cent a year from *pril $, #( , and the costs. $ssue# /hen will the period of prescription start3 ,eld# The right of action for nullity shall only last four years. The right of action was not e"ercised from *pril $, #( $, until >une 2, #(#), nor was any mo&e made during this time.
=ut a right of action that has not yet arisen cannot prescribe. 6n time obligations, as that at bar, to pay 8as soon as 6 recei&e the portion that as an heir must come to me from the estate of >uana <spinosa,8 the right of action only arises when the date fi"ed has arri&ed; the obligation is enforcible only when the day comes. This day arri&ed on >anuary 2$, #(#), when the defendant sold to :osendo Dernaez his right to inherit from >uana <spinosa and recei&ed from him P2$, , 7ust as if he had recei&ed same from that estate.
(ational 2an6 vs. 'opez 9ito +2 Phil.+1 "actsB This action was brought for the reco&ery of a mortgage credit. 4n >uly 2$, #(#+, the defendant spouses, Ela&iano 0opez and Ma"imina del Castillo mortgaged realty located inn the Pro&ince of 4ccidental 'egros to secure the payment of a loan of P 2., granted by the plaintiff, the Philippine 'ational =an5 1P'=2. The defendants bound themsel&es to pay the loan with interest in ten annual installments of P ),% 2.%. each payable on or before >uly #+th of each year from; the date of said contract. !efendants failed to pay the sums corresponding to the si" yearly installments and interest thereon, hence, the plaintiff instituted this action. The trial court rendered 7udgment ordering the defendants to pay the plaintiff the sum of P #),. ..#+ with +M interest reser&ing to plaintiff the proper action on last installment and interest thereon. $ssueB /hether or not the trial court committed an error in adding that the eight annual installment of P 2,++..++ is not yet demandable3 %uling# The defendants right to a&ail themsel&es of the periods was by the will of the contracting parties themsel&es made sub7ect to the resolutory conditioned contained in paragraph $ of the mortgage contract. 6t has resolutory effects, since its fulfillment resol&es the period and lea&es the creditor at liberty to demand the performance of the debtors obligations and to proud to foreclosure of mortgage. Dowe&er, this court ruled that the mortgage installments in question ha&e matured by the failure of the mortgagor to pay, the mortgagee may collect the uncle with law. /herefore, the trial court erred and its 7udgment is hereby modified in fa&or of the plaintiff.
Article 11*6 Sar.iento vs. 9illasenor + Phil. 885 "acts# 4n *ugust 2+, #((#, the defendant loaned the plaintiffs the sum of P#,$ with interest at the rate of 2$ per cent per annum for the term of one year. To guarantee this loan, the plaintiffs pledged certain 7ewelries, which the contracting parties appraised at P., . This loan is e&idenced by two documents.
The plaintiffs allege that at the maturity of this loan, *ugust )#, #(#2, the plaintiff <usebio M. FillaseNor, being unable to pay the loan, obtained from the defendant an e"tension, with the condition that the loan was to continue, drawing interest at the rate of 2$ per cent per annum, so long as the security gi&en was sufficient to co&er the capital and the accrued interest. 6n the month of *ugust, #(#(, the plaintiff FillaseNor, went to the house of the defendant and offered to pay the loan and redeem the 7ewels, ta5ing with him, for this purpose, the sum of P##, , but the defendant then informed them that the time for the redemption had already elapsed. The plaintiffs renewed their offer to redeem the 7ewelry by paying the loan, but met with the same reply. The defendant alleges, in his defense, that upon the maturity of the loan, *ugust )#, #(#2, he requested the plaintiff, FillaseNor, to secure the money, pay the loan and redeem the 7ewels; that one month thereafter, the plaintiff, Eilomena Sarmiento, went to his house and offered to sell him the 7ewels pledged for P), ; Eilomena Sarmiento, went bac5 to the house of the defendant who then paid her the sum of P#,#2$, which was the balance remaining of the P), after deducting the plaintiffAs loan. $ssue# /hether or not defendant is bound to return the 7ewels or their &alue 1P#2, 2 to plaintiffs, and the plaintiffs ha&e the right to demand the same upon the payment by them of the sum of P#,$ , plus the interest thereon at the rate of 2$ per cent per annum ,eld# 6t appears that the defendant possessed these 7ewels originally, as a pledge to secure the payment of a loan stated in writing, the mere testimony of the defendant to the effect that later they were sold to him by the plaintiff, Sarmiento, against the positi&e testimony of the latter that she did not ma5e any such sale, requires a strong corroboration to be accepted. !efendant has not sufficiently established, by his e&idence, the fact of the purchase of the 7ewels, but also that there is a circumstance tending to show the contrary, which is the fact that up to the trial of this cause the defendant continued in possession of the documents, <"hibits * and #, e&idencing the loan and the pledge. 6f the defendant really bought these 7ewels, it seems natural that Eilomena would ha&e demanded the surrender of the documents e&idencing the loan and the pledge, and the defendant would ha&e returned them to plaintiff. Erom the foregoing it follows that, as the 7ewels in question were in the possession of the defendant to secure the payment of a loan and the defendant ha&ing subsequently e"tended the term of the loan indefinitely, and so long as the &alue of the 7ewels pledged was sufficient to secure the payment of the capital and the accrued interest, the defendant is bound to return the 7ewels or their &alue 1P#2, 2 to plaintiffs, and the plaintiffs ha&e the right to demand the same upon the payment by them of the sum of P#,$ , plus the interest thereon at the rate of 2$ per cent per annum from *ugust 2+, #(##.
Page 35
Ponce 8e 'eon vs. Sy?uco ).%. '4
16
"acts# The plaintiff obtained from defendant Sy7uco on May $, #(.., a loan of P2 , and on >uly )#, #(.., another loan of P#%, , payable within one year from May $, #(.+.8 4n 'o&ember #$, #(.., the plaintiff offered to pay the entire indebtedness plus all the interest up to the date of maturity. ?pon Sy7ucoAs refusal to accept the tendered payment, the plaintiff deposited the amount with the cler5 of the Court of Eirst 6nstance of Manila and instituted the present action to compel Sy7uco to accept payment. The records of the case were destroyed during the war, but they were duly reconstituted after the liberation. The trial court sentenced the plaintiff to pay Sy7uco the defendant the sum of P#+, as principal and the further sum of P$,#) as interest thereon from *ugust %, #(.., to May $, #(.(, or total sum of P2),#) , representing the whole indebtedness plus all the interest from *ugust %, #(.., to May $, #(.(, computed according to the =allantyne scale of &alues, with interest thereon at the rate of %M per annum from May %, #(.(, until said amount is paid in full, with costs against the plaintiff. Erom this 7udgment Sy7uco has appealed, claiming his right to be paid the sum of P2#%, , actual Philippine currency, plus P2 , , as penalty agreed upon in the contract. $ssue# /hether or not the consignation made by the plaintiff &alid in the light of the law and the stipulations agreed upon in the two promissory notes signed by the plaintiff3 ,eld# The Supreme Court held in the negati&e. 6n order that consignation may be effecti&e, the debtor must first comply with certain requirements prescribed by law. The debtor must show 1#2 that there was a debt due; 122 that the consignation of the obligation had been made because the creditor to whom tender of payment was made refused to accept it, or because he was absent for incapacitated, or because se&eral persons claimed to be entitled to recei&e the amount due 1*rt. ##,%, Ci&il Code2; 1)2 that pre&ious notice of the consignation ha&e been gi&en to the person interested in the performance of the obligation 1*rt. ##,,, Ci&il Code2; 1.2 that the amount due was placed at the disposal of the court 1*rt ##,+, Ci&il Code2; and 1$2 that after the consignation had been made the person interested was notified thereof 1*rt. ##,+, Ci&il Code2. /hile it is admitted a debt e"isted, that the consignation was made because of the refusal of the creditor to accept it, and the filing of the complaint to compel its acceptance on the part of the creditor can be considered sufficient notice of the consignation to the creditor, ne&ertheless, it appears that at least two of the abo&e requirements ha&e not been complied with. Thus, it appears that plaintiff, before ma5ing the consignation with the cler5 of the court, failed to gi&e pre&ious notice thereof to the person interested in the performance of the obligation. 6t also appears that the obligation was not yet due and demandable when the money was consigned, because, as already stated, by the &ery e"press pro&isions of the document e&idencing the same, the obligation was to be paid within one year after May $,
#(.+, and the consignation was made before this period matured. The failure of these two requirements is enough ground to render the consignation ineffecti&e. *nd it cannot be contended that plaintiff is 7ustified in accelerating the payment of the obligation because he was willing to pay the interests due up to the date of its maturity, because, under the law, in a monetary obligation contracted with a period, the presumption is that the same is deemed constituted in fa&or of both the creditor and the debtor unless from its tenor or from other circumstances it appears that the period has been established for the benefit of either one of them.
Article 11*! 8elgado and "igueroa v. A.ena1ar 16 Phil. +5 "acts# Some time prior to ##th of Eebruary, #( +, there had been &arious transactions carried on between the plaintiffs and the defendants whereby the defendant was indebted to the plaintiffs in &arious sums of the rent and use of a certain hacienda, the property of the plaintiffs. * settlement was made ac5nowledging the indebtedness in fa&or of the plaintiffs in the sum of P2, 2%#. . Such obligation to pay is pure, simple and unconditional. 'o date was fi"ed for its fulfillment. Dowe&er, a demand by the plaintiffs was made after May $, #( + when the obligatio n was finally signed. !efendant failed to pay which resulted for an action which was instituted by the plaintiffs to reco&er the abo&ementioned sum of money from the defendant. The CE6 of 'egros 4ccidental rendered a 7udgment in fa&or of the plaintiffs. !efendant, in turn, appealed on the grounds that the action was prematurely brought and that promissory note which he ha&e issued is null and &oid for the reason that the internalCre&enue stamps are not affi"ed thereto, as required by section $+ of *ct. 'o. ##+(. $ssue# #. /4' there was an implied intention of granting the defendant an e"tension of time to pay his debt. 2. /4' failure to affi" the required stamp in the document will render such document null and &oid. ,eldB The appealed 7udgment is affirmed. ?nder the pro&ision of the Ci&il Code now in force, the plaintiffs could ha&e demanded the payment of this obligation at once, inasmuch as it has not been shown, neither can it be inferred from the nature and circumstances of the obligation, that it was the intention of the plaintiffs to grant the defendant an e"tension of time.
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*ccording to paragraphs #, 2 and ## of section ##% of *ct. 'o. ##+(, it was the duty of the defendant, as ma5er of the promissory note, to pay for the stamps and affi" the same thereto at the time of the ma5ing and signing of the said note. The defendant failed to comply with this pro&ision of law and he now see5s to ta5e ad&antage of his own wrong by insisting that the said promissory note has no legal &alue.
Article 11*8 Ti.1ol vs. Martin ).%. '4 +6* "acts# 6n *ugust, #(.(, in the court of first instance of Manila, =ernardo P. Timbol sued the defendant spouses to reco&er the &alue of eight promissory notes, si" e"ecuted on different dates in #(.. and two in >anuary #(.$. The first two were payable in *pril and >uly #(.$, but the rest were due 8si"ty days after the declaration of peace in the Philippines.8 !efendants were intending to dispose of their properties in the Philippines and thereafter return to *merica, the plaintiff obtained a writ of preliminary attachment. 6n&o5ing the moratorium orders, :epublic *ct 'o. ).2 and se&eral decisions of this Court, the defendants mo&ed for dismissal of the complaint. The court dismissed the case, hence this appeal. PlaintiffAs argument is the proposition that the period for the performance of defendantsA obligation in the different promissory notes, or the 8terms8 thereof were superseded by the Moratorium 0aw, which in itself is a 8term8. This term for defendants,Cplaintiff contendsC has been lost to them, in accordance with the aforesaid article ##2( of the Ci&il Code 1#. 6f, after contracting the obligation, it should appear that he is insol&ent, unless he gi&es security for the debt R R R.8 2, for the reason that they became insol&ent. $ssueB /hether the debtors lost the benefit of the period. ,eldB The court held that the theory of wai&er or forfeiture may not be properly sustained. Eirstly, article ##2( ob&iously contemplates a period fi"ed by the contracting parties. The moratorium law was not so fi"ed. 6t was not e&en foreseen by the parties at the time they entered into the contract. Secondly, under article ##2( of the Ci&il Code the insol&ency must be one occurring after the term was fi"ed. Dere there is no proof that defendants became insol&ent after the promulgation of the moratorium orders. Thirdly, the insol&ency of the debtor could not rightly be pleaded in a&oidance of the moratorium, because the general inability of debtors to satisfy their obligations, their temporary insol&ency so to spea5, was precisely the raison dAetre for the suspension of collection suits. *nd it would be plain inconsistency to declare that the debtorAs financial difficulties depri&e him automatically of the benefits of the moratorium statute.
Article 11** Agoncillo vs. @avier 8 Phil. +2+ "actsB This action was brought on March #,, #(#%, based on a document e"ecuted on Eebruary 2,, #( ., in which the defendants promised to pay the plaintiffs the sum of P2, ,) .$ within one year, with #2M interest per annum, and in case of insol&ency of the debtors Jwe cede by &irtue of these presents the said house and lot which is gi&en in mortgage, transferring all our rights and ownership and possession of the lotK. This action is to compel the defendants to pay the debt, and if they fail to do so, to con&ey the house and lot. The defendants claim that the action is barred by prescription. $ssue# /hether or not the action is barred by prescription. ,eldB @es. The agreement to con&ey the house and lot at an appraised &aluation in the e&ent of failure to pay the debt in money at its maturity is perfectly &alid. 6t is simply an underta5ing that if the debt is not paid in money, it will be paid in another way. The contract is not susceptible of the interpretation that the title of the house and lot questioned was to be transferred to the creditor ipso facto upon mere failure of the debtors to pay the debt at its maturity. The obligations assumed by the debtors were alternati&e, and they ha&e the right to elect which they would perform. 6t is quite clear therefore, that under the terms of the contract, the liability of the defendants as to the con&eyance of the house and lot is subsidiary and conditional, being dependent upon their failure to pay the debt in money. 6t must follow therefore that if an action to reco&er the debt has prescribed, the action to compel a con&eyance of the house and lot is li5ewise barred, as the agreement to ma5e such con&eyance was not an independent principal underta5ing, but merely a subsidiary alternati&e pact relating to the method by which the debt might be paid.
/ng )uan Can vs. Century $nsurance Co. +6 Phil. 5*2 "acts# The action was commenced in the Court of Eirst 6nstance of the City of 6loilo on the #$th day of May, #(2). 6ts purpose was to reco&er an amount due on the policy of insurance issued by the defendant to the plaintiff. 4n the same day a copy of the complaint was ser&ed upon the defendant, through its duly authorized representati&e in the City of 6loilo, Messrs. *ndrew G Co. The defendant filed its appearance with the cler5 of the court on the ,th day of >une, #(2). The notice of appearance, it is alleged and not denied, was mailed at the City of Manila on the 2d day of >une, #(2). 4n the $th day of >une, #(2), the attorneys for the plaintiff presented a motion praying that a 7udgment by default be rendered against the defendant. Said motion was granted on the same day, and a 7udgment by default was duly entered. 4n the +th day of >une, #(2), the defendant, through its attorneys, filed a motion praying that the 7udge set aside said 7udgment by default and permit the defendant to answer.
Said motion recited that the said notice of appearance was mailed at the City of Manila on the 2nd day of >une, #(2), and that the steamship Fizcaya, carrying mails, including the letter containing the notice of appearance on the 2d day of >une, did not arri&e at 6loilo in the usual course until after the time had e"pired for filing its appearance, or on the ,th day of >une, #(2), due to the fact that said ship encountered a storm at sea. The lower court denied said motion on the ##th day of >une, #(2), to which order the defendant duly e"pected, and later presented another motion to the same effect, alleging and asserting that it had a &alid and meritorious defense to the cause of action presented by the plaintiff. 0ater the second motion was also denied, to which the defendant also e"cepted. Some further proceedings were had in the lower court concerning the 7udgment by default, which ha&e no importance in the consideration of the question presented. $ssue# -hether or not the 7udgment by default rendered by the lower court should be set aside and annulled ,eld# Erom the 7udgment by default of the lower court the defendant appealed and now alleges that it committed an error in not granting the motions to set aside said 7udgment and permit the defendant to answer. 6t is admitted that the plaintiff and defendant resided in the same pro&ince. ?nder paragraph 2 of section )(2 of *ct 'o. #( it became the duty of the defendant to appear within twenty days from the ser&ice of the summons. The summons was ser&ed on the #$th day of May. The twenty days within which the defendant was required to appear e"pired on the $th day of >une. 'o appearance was filed by the defendant until perhaps the ,th day of >une. 6t is admitted that the defendant mailed its appearance in the City of Manila on the 2d day of >une, #(2). 6t is also a fact that mail, in the ordinary course, will arri&e at 6loilo from Manila in two days. The defendant mailed its appearance at a time when in the ordinary course of e&ents it would ha&e reached the hand of the cler5 of the court on or before the e"piration of the time within which it was obliged to ma5e its appearance. The reason that the appearance did not reach its destination was due to a fact o&er which the defendant had no control. The failure to ma5e the appearance within the time prescribed by law was due to no fault of the defendant. The defendant e&idently made an honest effort to comply with the law. To render a 7udgment against it under these circumstances would be to render a 7udgment against it without gi&ing it an opportunity to be heard. 6t has been frequently decided that, if pleadings or other papers essential to a case are entrusted to the mails in due season and under proper precaution and are lost or miscarried, it will be ground for &acating a 7udgment by default. * delay of mail, such as occurred in the present case, in our opinion amounts to accident or surprise for which 7udgments by default may be set aside, especially when the defendant shows by affida&it or otherwise that he has a &alid and meritorious defense. The time fi"ed for filing papers in a cause is generally directory and the court always has it in its power, in
the e"ercise of a proper discretion, to e"tend the time fi"ed by law whene&er the ends of 7ustice would seem to demand such an e"tension. Considering the causes which pre&ented the defendant from ma5ing its appearance within the time prescribed by subparagraph 2 of article )(2 of *ct 'o. #( and considering its showing that, if permitted to answer, it has a meritorious defense, we are of the opinion, and so decide, that the 7udgment by default rendered by the lower court should be and is hereby set aside, and it is hereby ordered and decreed that the defendantAs appearance be admitted and that it be gi&en ten days in which to answer from notice of this decision.
Article 1255 Molina vs. 8ela %iva 6 Phil. 122 "acts#Parties to this suit made a contract by the terms of which the plaintiff agreed to sell to the defendant the business in which he was engaged. =eing agreed that an in&entory should at once be made for the purpose of determining what the property to be con&eyed was and the price. The in&entory ha&ing been made, the parties e"ecuted another contract by which the plaintiff sold to the defendant property which was described the agreement. The purchase price of the property which was described and the defendant paid to the plaintiff at the time of ma5ing the contract partial of it and agreed to pay the remainder with in one year. !ela :i&a was insol&ent and that there was a danger that the property would determine unless a recei&er was appointed. 6t is alleged that the plaintiff by &irtue of the said contract had a lien upon the property in question and that unless a recei&er was appointed there was danger that the property would deteriorate. The plaintiff as5ed that a recei&er be appointed in accordance with pro&ision #),.. The court made an order appointing a recei&er which ga&e rise to this petition. $ssue# /hether or not there is &alid action in appointing a recei&er in relation with *rticle #2 of the ci&il code. ,eldB 'o, The Court The contracts in question were simply contracts of purchase and sale. The ownership of the property described therein was completely transfered to the purchaser and the seller retained no interest therein nor lien thereon. 6n relation to this property he stood any other creditor of the purchaser so far as this 5ind of an action is concerned. =eing a simple creditor of the defendant with no lien or interest upon any specific property of the debtor none of the pro&ision in Section #,. of the ci&il Code relating to appointment of recei&ers apply.
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Article 1251 %eyes vs Martinez 55 Phil. +*2 "acts# This action was instituted on March #+, #(2,, in the Court of Eirst 6nstance of the Pro&ince of 0aguna by <stanislao :eyes against the Martinez heirs upon four se&eral causes of action in which the plaintiff see5s, first, to reco&er fi&e parcels of land, containing appro"imately one thousand coconut trees and to obtain a declaration of ownership in his own fa&or as against the defendants with respect to said parcels; secondly, to reco&er from the defendants the sum of P(,),,.$ , being the alleged proceeds of some #,+% coconut trees which, prior to >uly )#, #(2%, had been applied to the benefit of said defendants; thirdly, to reco&er from the defendants the sum of P.), , as the alleged &alue of the proceeds of the lands in&ol&ed in the recei&ership in the case of Martinez &s. 9raNo, 9. :. 'o. 2,%+$, to which the plaintiff supposes himself to be entitled, but which ha&e gone, so he claims, to the benefit of the defendants in said recei&ership; and fourthly, to reco&er the sum of P# , from the defendants as damages resulting from their improper meddling in the administration of the recei&ership property. Erom this 7udgment both parties appealed. $ssue# /hether or not the claim of the dependant can be conceded. ,eld# 6n &iew of the conclusion reached in Martinez &s. 9raNo 1$# Phil., 2+,2, as well as in &iew of the solution reached in the case now before us, the claim of the defendants, as appellants, to the interest on the sum of P+, from >uly )#, #(2%, cannot be conceded, as the 7udgment itself bears interest at the lawful rate from the date the same was rendered.
Article 125! = 1258 Agoncillo vs. @avier 8 Phil. +2+ "acts# This action was brought on March #,, #(#%, based on a document e"ecuted on Eebruary 2,, #( ., in which the defendants promised to pay the plaintiffs the sum of P2, ,) .$ within one year, with #2M interest per annum, and in case of insol&ency of the debtors Jwe cede by &irtue of these presents the said house and lot which is gi&en in mortgage, transferring all our rights and ownership and possession of the lotK. This action is to compel the defendants to pay the debt, and if they fail to do so, to con&ey the house and lot. The defendants claim that the action is barred by prescription. $ssueB /hether or not the action is barred by prescription. ,eld# @es. The agreement to con&ey the house and lot at an appraised &aluation in the e&ent of failure to pay the debt in money at its maturity is perfectly &alid. 6t is simply an underta5ing that if the debt is not paid in money, it will be paid in another way. The contract
is not susceptible of the interpretation that the title of the house and lot questioned was to be transferred to the creditor ipso facto upon mere failure of the debtors to pay the debt at its maturity. The obligations assumed by the debtors were alternati&e, and they ha&e the right to elect which they would perform. 6t is quite clear therefore, that under the terms of the contract, the liability of the defendants as to the con&eyance of the house and lot is subsidiary and conditional, being dependent upon their failure to pay the debt in money. 6t must follow therefore that if an action to reco&er the debt has prescribed, the action to compel a con&eyance of the house and lot is li5ewise barred, as the agreement to ma5e such con&eyance was not an independent principal underta5ing, but merely a subsidiary alternati&e pact relating to the method by which the debt might be paid.
Article 1211 $nchausti > Co. vs. Aulo + Phil. *!8 "actsB Teodoro @ulo, property owner of 6loilo, has been borrowing money from the firm of 6nchausti G Company under specific conditions. This money has been used to culti&ate his haciendas in 'egros 4ccidental. Teodoro @ulo died testate and left his wife whom ha&e died later and other legitimate children including the defendant as administrators of his estates. There remaining of the marriage the following legitimate childrenB Pedro, Erancisco, Teodoro, Manuel, 9regorio, Mariano, Carmen, Concepcion, and >ose @ulo y :egalado. 4f these children Concepcion and >ose were minors, while Teodoro was mentally incompetent. They held the property in common and ha&e continued their current account with the plaintiff under the name Di7os de T. @ulo. 4n *ugust #2, #( (, the defendant in representation of his brothers including his brother Manuel, and their own behalf Pedro, Erancisco, Carmen and Concepcion, the latter being of age, ratified an instrument on their indebtedness towards plaintiff all the documents e"ecuted by them before. 6n this document, they ha&e se&erally and 7ointly ac5nowledged and admitted their indebtedness to the plaintiff at the amount of P2$),..$..2 with an interest of ten percent per annum and payable within fi&e installments. Payment begins on >une ) , #( and ends on >une ) , #(#.. *lso part of the stipulation that the abo&ementioned instrument shall be ratified by their brother Mariano @u5o :egalado but failed to do so. Moreo&er, the brothers and sisters did not pay the first installment of the obligation. Dence, plaintiff instituted an action at CE6 6loilo against defendant for the payment of P2$),..$..2 plus interest. 4n May #2, #(##, Erancisco, Manuel, and Carmen @ulo y :egalado e"ecuted in fa&or of plaintiff another instrument of indebtedness whereby the debt is reduce to P22$, with an interest of % per centum per annum payable by eight installments starting on >une ) , #(## and ends at >une ) , #(#(. The trial court ruled in fa&or of defendant without pre7udice to the plaintiffAs bringing within the proper time another suit for his proportional part of the 7oint debt. Dence
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plaintiff appealed decision; one of the a&erments is that the court erred in considering the contract of May #2, #(##, as constituting a no&ation of that of *ugust #2, #( (. $ssueB a2 /hether or not plaintiff can sue defendant alone and by doing that it lost its right by the second agreement e"ecuted; and, b2 /hether or not the contract with the three aforesaid obligors constitutes no&ation of the first notarial instrument e"ecuted by % debtors being the sub7ect matter of litigation. ,eld# *s to the first issue, the law pro&ides that obligations in solidum or in con7oint or solidary obligations, the creditor can bring an action against any solidary debtors to fulfill the obligation. *nd e&en so the plaintiff stipulated &arious installments and conditions as it did with the second instrument of May #2, #(##, the solidarity stipulated in the instrument of *ugust #2, #( ( is not bro5en. Solidarity may e"ist e&en though the debtors are not bound in the same manner and for the same periods and under the same conditions 1*rt. ##. 2. /ith respect to the third issue, the contract of May #2, #(##, does not constitute a no&ation of the former one. 6n order that an obligation may be e"tinguished by another which substitutes it, it is necessary that it should be so e"pressly declared or that the old and the new be incompatible in all points 1Ci&il Code, article #2 .2. The contract of May #2, #(## does not e"pressly pro&ide for the substitution of the first. There also e"ist no incompatibility between the old and the new obligation. *s pro&ided for in the pre&ious cases, Jthe legal doctrine that an obligation to pay a sum of money is not no&ated in a new instrument wherein the old is ratified, by changing only the term of payment and adding other obligations not incompatible with the old oneK. *lthough, the contract of May #2, #(## did not no&ate that of *ugust #2, #( (, it has affected the case filed by plaintiff with respect to the payment for the sum of P2$),..$..2. Dence by &irtue of remission, plaintiff can only reco&er the amount stated in the second contract granted to the granted to the three of the solidary debtors. *s regards to the payment, he can pay only P##2,$ of which is due or already matured. Dence, defendant cannot allege the prematurity of debt since when the lawsuit is instituted, the obligation for the first installment of the contract if *ugust #2, #( ( has already matured and due to the solidarity of the obligation he is liable to pay the whole obligation. *n e"ception would be the shares of Erancisco, Manuel, and Carmen @ulo, none of the installments payable under their obligation, contracted later had yet matured. The personal defense of Erancisco, Manuel, and Carmen @ulo 8as to the part of the debt for which they were responsible8 can be used by 9regorio @ulo as a defense for paying the whole obligation. The part of the debt for which these three are responsible is threeCsi"ths of P22$, or P##2,$ , which is not yet demandable due to the e"ecution of the second contract. Dence, defendant can only pay the half portion of the obligation that is demandable at that time. This is in consonance with *rt. #..+ which states that, JThe solidary debtor may utilize against the claims of the
creditor of the defenses arising from the nature of the obligation and those which are personal to him. Those personally pertaining to the others may be employed by him only with regard to the share of the debt for which the latter may be liableK. Therefore, defendant cannot be made to pay the whole obligation because he has been benefited by remission made by the plaintiff to three of his co debtors. The 7udgment appealed has been re&ersed.
Article 121! @oseph vs. 2autista 1!5 SC%A 5+5 "acts# Petitioner prays in this appeal by certiorari for the annulment and setting aside the order, dated >uly +, #(,$, dismissing petitioner-s complaint, as well as the order dated *ugust 22, #(,$, denying his motion for reconsideration of said dismissal, both issued by respondent >udge Crispin F. =autista of the former Court of Eirst 6nstance of =ulacan, =ranch ###. :espondent Patrocinio Perez is the owner of a cargo truc5 for con&eying cargoes and passengers for a consideration from !agupan City to Manila. 4n >anuary #2 #(,), said cargo truc5 dri&en by defendant !omingo Filla was on its way to Falenzuela, =ulacan from Pangasinan. Petitioner, with a cargo truc5 at !agupan City after paying the sum of P (. as one way fare to Falenzuela, =ulacan. !efendant !omingo Filla tried to o&er ta5e a tricycle li5ewise proceeding in the same direction. *t about the same time, a pic5Cup truc5 supposedly owned by respondent 0azaro Fillanue&a, tried to o&erta5e the cargo truc5 which was on the process of o&erta5ing the tricycle thereby forcing the cargo truc5 to &eer towards the shoulder of the road and to ram a mango tree. *s a result, petitioner sustained a bone fracture in one of his legs. Petitioner filed a complaint for damages against respondent Patrocinio Perez,a s owner of the cargo truc5, based o the breach of contract of carriage, and against respondents *ntonio Sioson and 0azaro Fillanue&a,a s owner and dri&er respecti&ely, of the pic5Cup truc5, based on quasiCdelict. 4n September 2,, #(,., respondents 0azaro Fillanue&a, *lberto Cardeno, *ntonio Siason, and >acinto Pagaringan, thru their insurer, 6nsurance Corporation of the Philippines, paid petitioner-s claim for in7uries sustained in the amount of P #,) . . Petitioner e"ecuted a release of claim releasing from liability the following parties. 4n !ecember 2 #(,., respondents 0azaro Fillanue&a, *lberto Cardeno and their insurer, paid respondent Patrocinio Perez- claim for damages to her cargo in the amount of P ,,.2 .%#.
:espondent Perez, filed 4pposition Crossdefs and Counter Motion to dismiss considering that all the respondents are solidarity liable to herein petitioner. The respondent >udge issued the order dismissing the case and a motion for the reconsideration was denied. $ssue# /hether or not the payment made by some of the solidary debtors and their subsequent release from liability results in the release from liability of the other solidary debtors. ,eld# The challenged orders of the respondent >udge are hereby *EE6:M<!. The 7udgment on the compromise agreement under the cause of action based on quasiCdelict is not a bar to cause of action for breach of contract of carriage, is untenable. The singleness of a cause of action lies in the singleness of the delict or wrong &iolating the rights of one person. 6f only one in7ury resulted from se&eral wrongful acts only one cause of action arises. The respondents ha&ing been found to be solidary liable to petitioner, the full payment made by some of the solidary debtors and their subsequent release from any and all liability to petitioner.
Article 1218 = 1222 The Chinese Cha.1er o0 Co..erce vs. Pua Te Ching 16 Phil. +56 "acts# 6n the Court of Eirst 6nstance of Manila, the plaintiff had prosecuted three suits against Pua Te Ching, all for the reco&ery of a sum of money. The court decided by them by 7udging that Pua Te Ching should pay the amounts claimed. Pua Te Ching, for the purpose of staying the e"ecution of the 7udgment rendered, during the pendency of the appeal, presented as sureties in the three aforesaid cases, Pua Ti, of Calle :osario 'o. #$ , and >ose Temprado @ap Chatco, of Calle Sagasta, San Eernando, Pampanga, e"ecuted the proper bondsB 6n case 'o. %).,, for P),,+.; in 'o. %).+, for P.. ; and in 'o. %).(, for P#, , 8for which payments well and truly made,8 the bond reads, 8we, the appellant and the sureties, 7ointly and se&erally bind oursel&es,8 it being e"pressly stipulated 8that the appellant and the sureties are held and firmly bound to the appellee, 7ointly and se&erally, in the sum e"pressed in each bond, to secure the fulfillment and payment of the 7udgment so appealed, together with the costs, in case the same should be affirmed, in whole or in part, or in case the 7udgment should become effecti&e on account of the appellantAs ha&ing abandoned or withdrawn the appeal, or in case it should be dismissed or declared to be improperly allowed.
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The appeal ha&ing been heard by this court, which rendered a decision affirming the 7udgment of the lower court and, while the latter was about to proceed with the e"ecution of the said 7udgment, the sureties >ose Tempardo @ap Chatco and Pua Ti set forthB That Pua Te Ching died intestate on September 2, #( (, and the decision of this court was rendered after his death; that the estate of the late Pua Te Ching was in the course of administration; and that, therefore, the decision of the Supreme Court was null and of no &alue, it ha&ing been pronounced against a person already dead, and that an e"ecution thereof could not be issued against the said Pua Te Ching. The lower court decided that, notwithstanding the death of the principal surety, the sureties who subscribed the bond were liable for the amount of the 7udgment entered 8that the 7udgment entered in these cases against the defendant Pua Te Ching and in fa&or of the plaintiff shall be e"tensi&e against the sureties who subscribed the bond, named Pua Ti and >ose Temprado @ap Chatco, 7ointly and se&erally, and e"ecution shall issue on the said 7udgments. Dowe&er, these sureties filed their appeal alleging error against the 7udgment and they in&o5e sections ections ##( and ..+ of the Code of Ci&il Procedure, the pro&isions of which, especially those of sections ..+, may be in&o5ed by the sureties in their fa&or by &irtue of the pro&isions of articles ##.+ and #+$), in relation to article #+22, of the Ci&il Code. $ssue# /hether or not the sureties Pua Ti and @ap Chatco ha&e set up against the creditor any e"ception which pertains to the principal debtor, Pua Te Ching, and which may be inherent to the debt in accordance with article ##.+ of the 'ew Ci&il Code. ,eld# The court held that it is useless to allege the impropriety of an e"ecution of a 7udgment against the estate of a person deceased when it is not a question of such an e"ecution against the estate of a deceased person. The court also held that the pro&isions contained in articles ##.+ and #+$) of the Ci&il Code do not apply to the sureties, the appellants; and the 7udgment of the trial court, which finds the sureties liable for the payment of the debt, put into e"ecution by &irtue of final decision, is entirely in accord with the law. Since the record does not show that it is question of the e"ecution of a 7udgment entered after the death of the principal debtor and no proof whatsoe&er e"ists of this fact, nor e&en of the fact ofthe death of the principal debtor. Dence, this court decided that notwithstanding the death of the principal debtor, the sureties are compelled to pay the amount set forth in the 7udgment rendered. The 7udgment appealed from is affirmed, with the costs of this instance against the appellents. So ordered.
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$nchausti and Co. vs. Aulo + Phil. *!8 "acts# EirstB 4f the nine children of T. @ulo, si" e"ecuted the mortgage admitting a debt of P2$),..$..2 at # M per annum and mortgaging si"Cninth of their hereditary properties. SecondB 4f those si" children, ) e"ecuted the instrument wherein was obtained a reduction of the capital to 22$, pesos and of the interest to %M. ThirdB 4ther children of T. @ulo ha&e not ta5en part in these instruments and not mortgaged their hereditary portions. EourthB =y the first instrument the maturity of the first installment was dated >une ) , #(# , whereas by the second instrument Erancisco, Manuel and Carmen had in their fa&or as the maturity of the first installment of their debt. EifthB The action against 9regorio @ulo was already filled and 7udgment was pronounced when the whole debt was not yet due nor e&en the first installment of the same respecting the ) aforesaid debtors, Erancisco, Manuel and Carmen. $ssues# #2 /hether the plaintiff can sue 9regorio @ulo alone, there being other obligor; if so, whether it lost this right by the fact of its ha&ing agreed with the other obligors in the reduction of the debt, the proroguing of the obligation and the e"tension of the time for payment, in accordance with the instrument of May #2, #(##; 22 /hether the contract with the said ) obligors constitute a no&ation, entered into with the % debtors when assumed the payment of 2$ , and some odd pesos, the sub7ect matter of the suit; if not so, whether it does ha&e any effect at all in the action brought, and in this present suit. ,eld# 6t cannot be doubted that, the debtor ha&ing obligated themsel&es in solidum, the creditor can bring its action in toto against any one of them, inasmuch on this was surely its purpose in demanding that the obligation contracted in its fa&or should be solidary ha&ing in mind the principle of the law, ci&il code, article ##), and ##... *nd e&en though the creditor may ha&e stipulated with some of the solidary debtor ad&erse in installment and condition as in this case, 6nchausti and company did with its Manuel Erancisco and Carmen @ulo though the instrument of May #2, #(## this does not lead to the conclusion that the solidarity stipulated in the instrument of *ugust #2, #( ( is bro5en, as we already 5now the law in article ##. There can be also no doubt that the contract of May #2, #(##, does not constitutes a no&ation of the former one, with respect to the other debtor who e"ecuted this contract, or more concretely, with respect to the defendant 9regorio @ulo. =ecause in order that the obligation may be e"tinguished by another which substitutes it, it is necessary that it should be no e"pressly declared on that the old and the new were incompatible in all pointsK1 ci&il code, article #2 .2; and the instrument of May #2, #(##, far from e"pressly declaring that the obligation of the three who e"ecuted it substitutes the former signed by 9regorio @ulo and the other debtors, e"pressly and clearly stated that the
said obligation of 9regorio @ulo to pay the 2$ , and odd pesos sued for e"ists stipulating that the suit must continue its course and, if necessary, the three parties who e"ecuted the contract of May #2, #(##, would cooperate in order that the action against 9regorio @ulo might prosper, with other underta5ing concerning the e"ecution of the 7udgment which might be rendered against 9regorio @ulo in this same suit. 6t is necessary to state that it is the intention of the contracting parties to e"tinguish the former obligation by the new one. There e"ist no incompatibility between the old and the new obligation a will be demonstrated in the resolution of the last point, and for the present we will merely reiterate the legal doctrine than an obligation to pay a sum of some money is not no&ated in a new instrument wherein the old is ratified, by changing the term of payment and adding other obligation not incompatible with the old one. Therefore sentence to defendant 9regorio @ulo to pay the plaintiff 6nchausti and company ##2,$ pesos, with interest from the time it was claimed 7udicially in accordance with *rticle ## ( of the Ci&il Code, without any special finding as to costs. The 7udgment affirmed from is re&ersed. So 4rdered.
Article 122 = 1225 Pasay City vs. C"$ 1 2 SC%A 156 "acts# This is a petition for re&iew on certiorari of the order rendered by the Court of Eirst 6nstance of Manila, =ranch S, presided by Donorable >udge >ose 0. Moya on >uly 2), #(%(. 4n *ugust #2, #(%., respondentCappellee F.!. 6sip, Sons G *ssociates represented by Ficente !a&id 6sip entered into a contract with the City of Pasay represented by the then Mayor Pablo Cuneta. The contract entitled 8Contract and *greement8 was for the construction of a new Pasay City Dall at E.=. Darrison St., Pasay City. Pertinent pro&ision of the said contract Pursuant to the aforesaid contract, the respondentCappellee proceeded with the construction of the new Pasay City Dall building as per duly appro&ed plans and specifications. The respondentCappellee accomplished under &arious stages of construction the amount of wor5 1including supplies and materials2 equi&alent to an estimated &alue of 4'< M60064' S<F<' D?'!:<! TD6:T<<' TD4?S*'! '6'<T@CS6S P<S4S 1P#,,#), (%. 2 of the total contract price of E4?: M60064' '6'< D?'!:<! E4?:T<<' TD4?S*'! E6F< D?'!:<! + L# P<S4S 1P.,(#.,$ .+ 2. The appellants paid only the total amount of 4'< M60064' 4'< D?'!:<! TD4?S*'! P<S4S 1P#,# , . 2 to the respondentCappellee lea&ing an amount of S6S
D?'!:<! TD6:T<<' TD4?S*'! '6'<T@ S6S P<S4S 1P%#), (%. due from the petitionerCappellants to the respondentCappellee.
2 immediately
'otwithstanding demands for payment thereof, the petitionerCappellants failed to remit the aforesaid amount of P%#), (%. to the respondentCappellee. 4n May #%, #(%+, respondent appellee filed an action for specific performance with damages against herein petitionersCappellants before the respondent Court. 4n May 2), #(%+, the appellants filed a motion for the amendment of the complaint and for bin of particulars 1p. (, *ppellantAs =rief; p. #$(, rec.2. This was denied by the respondent Court. The appellants later filed a motion for reconsideration. This was li5ewise denied. 4n *ugust # , #(%+, the appellants filed their answer. $ssues# #. /hether or not the contract was perfected. 2. /hether or not the respondent court erred in rendering its decision. ,eld# /< find no error in the order of the respondent Court dated >uly 2), #(%(. Erom the reading of the premises and pro&isions of the contract and agreement which was 8formally confirmed and officially appro&ed by the parties8 in the compromise agreement later entered into by the same parties, sub7ect only to the enumerated changes andLor modifications, it is ob&ious that the contracting parties en&isioned a stage by stage construction 1on the part of the respondentCappellee2 and payment 1on the part of the defendantCappellant2. This is manifested in the contract and agreement, *nd, /e note that in the Contract and *greement, the respondentCappellee was allowed to file a performance bond of P222,2$ . which is but $M of the total bid of P.,(#.,$ .+ . * security bond was li5ewise filed with an amount of P(,,2( . . The sum total of bond then filed was P)2 ,$. . which is 7ust %.$M of the total 6bid. 6t is rather curious why all of a sudden the petitionersCappellants are insisting on a 2 M performance bond of the entire unfinished wor5 when they were quite content with a bond 7ust $M of the entire wor5. Eor ?s to allow the petitionersCappellants to adamantly stic5 to the 2 M performance bond would be tantamount to allowing them to e&ade their obligation in the compromise agreement. This cannot be allowed. The bond of a contractor for a public wor5 should not be e"tended beyond the reasonable intent as gathered from the purpose and language of the instrument construed in connection with the proposals, plans and specifications, and contract 1>ohn 0. :oper 0umber Co. &s. 0awson, #($ 'C +. , #.) S< +.,,%, *0: (+.2. The premium of the bond will be sizeable and will eat up the profit of the contractor, who is faced with the fluctuation of prices of materials due to inflation and de&aluation. :ight now, many contractors cannot proceed with the implementation of their contracts because of the
e"traordinary rise in cost of materials and labor. 'o contractor would be willing to bid for public wor5s contracts under the oppressi&e interpretation by petitionersCappellants. *gain, the respondent Court was correct in ruling that the submission of the bond was not a condition precedent to the payment of P%#), (%. to the plaintiff. 'owhere in the Contract and *greement nor in the Compromise *greement could be found the fact that payment by the petitionersC appellants of the amount of P%#), (%. was dependent upon the submission by the respondentCappellee of the performance bond. 6t cannot be argued that reciprocal obligation was created in the Compromise *greement, for the obligation to pay on the part of the petitionersCappellants was established se&eral years ago when the respondentCappellee finished some of the stages of construction. *nd, this argument is already moot and academic, for the amount of P%#), (%. has already been collected through e"ecution and garnishment upon the funds of Pasay City with the Philippine 'ational =an5.
Article 1226 (avarro vs. Mallari +5 Phil. 2+2 "acts# This action was instituted in the Court of Eirst 6nstance of Pampanga by Santiago 'a&arro, Sabas Magtoto, and Fictorino Calara, as trustees 1mandatarios2 of the inhabitants of the barrio of San Ficente, in the municipality of Macabebe, to compel the defendants, Eeli" Mallari, as principal, and 0eon Tolentino and 6gnacio Tolentino, as sureties, to comply with the contract for the construction of a chapel to the patron saint of the barrio, or in the alternati&e to require the same defendants to return the sum of P#2, paid to them, upon said contract, together with the sum of P., as stipulated damages for failure to construct the chapel according to the specifications. $ssue# /hether or not Eeli" Mallari is liable for damages. ,eld# Concurrently with the e"ecution of said contract 0eon Tolentino and 6gnacio Tolentino, also residents of municipality of Macabebe, obligated themsel&es in collateral contract of guaranty to respond solidarily for the faithful and true performance of the contract on the part of Eeli" Mallari. Eeli" Mallari, it may be stated, is not a contractor or builder by profession and 5nows nothing about constructing houses. Dis son >ose, although he supposed himself to ha&e some 5nowledge of the art, was but little better &ersed in such matters than his father; and he appears to ha&e had but little s5ill e&en in the art of drafting. *s might ha&e been e"pected from the lac5 of technical 5nowledge on the part of the 8contractor,8 a botch was made of the 7ob. The chapel was indeed constructed somewhat in the e"ternal shape indicated in the design, but the wor5 was done with complete want of 5nowledge of the art of construction and of the material employed. These words we ta5e
from the report of a competent engineer, SeNor <milio Maria de Moreta, of Manila, who made a special e"amination and careful report upon the condition of the structure. 6n concluding his report SeNor Moreta says that the plans were drawn by a person completely ignorant not only of all 5nowledge of the resisting power of materials and of descripti&e geometry, as well as of technical 5nowledge in general, but that he did not e&en possess sufficient instruction in the drawing of plans. SeNor Moreta concludes his report with the obser&ation that the building threatens ruin for want of proper foundation and that upon the slightest tremor of the earth it might come down. The photographs in e&idence as prepare one for the conclusion stated in SeNor MoretaAs report. /e do not encumber the opinion with the details stated of said report but will merely say that by that report and the testimony adduced at the trial, the case stated in the complaint is in our opinion completely demonstrated; and the plaintiffs are without doubt entitled to reco&er the stipulated damages for failure of the contracting parties to construct a chapel in conformity with the fundamental principles of the art of building and in accordance with the specifications of the contract. =ut the chapel, such as it is, appears to be in use for the purpose for which it was intended, and we are of the opinion that the plaintiffs are not entitled to confiscate the sum of P., which is as yet unpaid upon the purchase price and at the same time to claim the stipulated damages. The result is that the damages to which the plaintiffs are entitled under the last clause of the contract 1<"hibit *2 must be set off against the portion of the contract price which has been retained in the hands of the plaintiffs, with the result that neither party can reco&er anything of the other.
Pa.intuan vs. CA *+ SC%A 556 "acts# >ose Faleriano commenced a ci&il case against Pedro !. Pamintuan, to e7ect him from a property of Falerians. 6n due course, said court rendered 7udgment sentencing Pamintuan to &acate said property and to pay a sum of money for its use, plus attorneyAs fees and costs. Soon later, howe&er, Pamintuan reoccupied the property, allegedly by force. *fter appropriate proceedings, Pamintuan was, accordingly, ad7udged guilty of contempt of court, and sentenced accordingly. Subsequently, on motion of Faleriano, the Municipal >udge ordered the issuance of an alias writ of e"ecution directing the Sheriff to e7ect Pamintuan once more and to collect from him the amount of the money 7udgment. Therefore an appeal by certiorari from a decision of the Court of *ppeals PamintuanAs prayed that #. The defendants from proceeding with the said order of the Municipal Court ordering the herein plaintiff to &acate within four 1.2 days. 2. *fter trial ma5ing the in7unction abo&eCmentioned permanent and ordering the defendant not to e7ect the herein plaintiff without first filing a suit for e7ectment based on the new contract created
into between the herein plaintiff and the herein defendant; and). 4ther relief that may be found 7ust and equitable under the premises; Don. >uan P. <nriquez, >udge, rendered 7udgment dismissing PamintuanAs complaint and sentencing him to pay P$ to Faleriano as attorneyAs fees and costs, and dissol&ing the writ of preliminary in7unction aforementioned, as well as sentencing Pamintuan and his surety to pay Faleriano P$ , as damages for the issuance of said writ. Pamintuan thereupon filed with the Court of *ppeals a petition Dowe&er, the Court of *ppeals rendered a decision sustaining the &iew of >udge =arcelona and, consequently, dismissing PamintuanAs petition for certiorari and mandamus. * reconsideration of this decision of the Court of *ppeals ha&ing been denied, Pamintuan now see5s a re&iew thereof by certiorari. $ssue# /hether or not the Court gra&ely abuse its discretion in resol&ing the case base on the nature of the case of action set forth. ,eld# @es, Pamintuan merely relied in his complaint, upon a contract he allegedly had with Faleriano, after the rendition of the decision of the municipal court and the partial e"ecution thereof, whereby Faleriano had agreed to reClet and to sell the property in question to Pamintuan.The complain stated that it was 8for set forth in PamintuanAs complain was actually one for in7unction and so was the prayer in the said pleading regardless of whether or not the relief he should ha&e applied for was certiorari so that he had ) days from the notice to asail on the said decision. The complaint could be considered as one either of in7uction or of certiorari.
$1arra vs Aveyro ! Phil.2! "acts# 4n *pril # , #(#$, counsel for *le7andro 6barra filed a complaint with the Court of Eirst 6nstance of Tarlac against 0eopoldo *&eyro and <miliano Pre, for the purpose of reco&ering from them 7ointly and se&erally the sum of P.%$ as principal, besides such additional sum as might be found owing in accordance with the penal clause of the contract, at the rate of P$ a day from the date of the maturity of the obligation, which was !ecember $, #(#., until its complete payment, together with the costs of the trial, inasmuch as, on 'o&ember ) , #(#., the defendants by means of a promissory note subscribed by both of them, borrowed from the plaintiff the sum of P.%$ under promise to return it to him on !ecember .th following, with the understanding that in a contrary case they should be obliged to pay him P$ for each day of delinquency in the payment of the said principal. The defendants deny all the allegations of the complaint, and as a special defense set forth that on March 2+, #(#., the defendant 0eopoldo *&eyro sold to the plaintiff a piece of land with the right of repurchase, for the sum of P.$ ; that subsequently, this defendant borrowed from the plaintiff the title deed of the land sold, for the purpose of selling the property to another person at a better price, and afterwards returned the deed to the plaintiff as he had
been unsuccessful in ma5ing such attempted second sale; that on 'o&ember ) of the same year the defendant *&eyro, feeling sure that this time he would be able to sell his land to another, borrowed from the plaintiff for the third time said deed of the land, and that then the latter required *&eyro to e"ecute in the plaintiffAs fa&or a promissory note, with the security of a sol&ent surety, for the same sum for which this defendant had to sold the land to the plaintiff, and with the aforementioned penal clause, to be effecti&e in case of delinquency in the payment of said amount should the defendant succeed in selling the property, and with the condition that, if the sale should not be made, the borrowed deed should be returned; that as the defendant was unable to sell the land, he tried to return the deed to his creditor, requiring of course the return of the promissory note he had gi&en in security for the deed, but that the plaintiff refused to accept the deed and return the promissory note. The court rendered a 7udgment, on *ugust #+, #(#$, by ordering 0eopoldo *&eyro and <miliano Pre to pay to the plaintiff 7ointly and se&erally the sum of P.%$ with legal interest thereon from !ecember $, #(#$, until its complete payment; and by holding that the penal clause for the payment of P$ for each dayAs delinquency in the payment of the principal debt is null and &oid because it is immoral, pursuant to article #2$$ of the Ci&il Code and to other legal pro&isions. $ssue# whether the plaintiff has a right to demand that the defendants pay the penalty specified in the obligation to pay P$ per day from !ecember $, #(#., until complete reimbursement of the outstanding principal for delinquency in the payment of said principal to the plaintiff. ,eld# 'otwithstanding the imprudence and temerity shown by the defendants by their e"ecution of a ruinous engagement, assumed, as it appears, 5nowingly and &oluntarily, morality, and 7ustice cannot consent to and sanction a repugnant spoliation and an iniquitous depri&ation of property, repulsi&e to the common sense of man; and therefore, as all acts performed against the pro&isions of law are null and &oid, and as the penal clause referred to, notwithstanding its being an ostensible &iolation of morals, was inserted in said promissory note, we must conclude that the contracting party fa&ored by said penal clause totally lac5s all right of action to enforce its fulfillment.
Article 122! (avarro vs. Mallari +5 Phil. 2+2 "acts# This action was instituted in the Court of Eirst 6nstance of Pampanga by Santiago 'a&arro, Sabas Magtoto, and Fictorino Calara, as trustees 1mandatarios2 of the inhabitants of the barrio of San Ficente, in the municipality of Macabebe, to compel the defendants, Eeli" Mallari, as principal, and 0eon Tolentino and 6gnacio Tolentino, as sureties, to comply with the contract for the construction of a chapel to the patron saint of the barrio, or in the
alternati&e to require the same defendants to return the sum of P#2, paid to them, upon said contract, together with the sum of P., as stipulated damages for failure to construct the chapel according to the specifications. The defendant Pedro Mercado appears to ha&e been one of the four trustees or agents selected for the purposes of procuring the chapel to be built but as he refused to 7oin with his associates in instituting the present action, he was impleaded as a defendant. The lower court held that the chapel had been built according to contract and that the defendants were entitled to reco&er the sum of P., upon their counterclaim, the same being the balance due upon the contract price. >udgment was accordingly entered absol&ing the defendants from the complaint and requiring the plaintiffs to pay the sum of P., to Eeli" Mallari and to pay the costs of proceedings. Erom this 7udgment the plaintiffs appealed. $ssue# /hether or not the creditors has to right to confiscate the sum of P., which is as yet unpaid upon the purchase price of the construction of the chapel and at the same time to claim the stipulated damages3 ,eld# The Court held that the plaintiffs are without a doubt entitled to reco&er the stipulated damages for failure of the contracting parties to construct a chapel in conformity with the fundamental principles of the art of building and in accordance with the specifications of the contract. =ut the chapel, such as it is, appears to be in use for the purpose for which it was intended, and in the Court-s opinion the plaintiffs are not entitled to confiscate the sum of P., which is as yet unpaid upon the purchase price and at the same time to claim the stipulated damages. The result is that the damages to which the plaintiffs are entitled under the last clause of the contract 1<"hibit *2 must be set off against the portion of the contract price which has been retained in the hands of the plaintiffs, with the result that neither party can reco&er anything of the other. The 7udgment of the lower court is re&erse and both parties are absol&ed from the complaint of the other.
Article 1228 = 122* 'aureano v. Bilayco and 'izares de Bilayco 2 Phil. 1*+ "acts# 4n Eebruary 2 , #(#), the defendants obligated themsel&es to pay to the plaintiff the sum of P# , 2 as consideration of money lent by the former. The sum shall be paid in
monthly installments of P$ , payable on the fifteenth day of each month. =y way of security for the loan, they e"ecuted a chattel mortgage upon a certain property. *dditionally, they obligated themsel&es to pay interest at the rate of #$ percent on all such o&erdue and unpaid installments. Eurthermore, should the plaintiff resort to the court for the reco&ery of the sum of P2, , such sum shall be considered as indemnification. *t the time of the trial, it was alleged that there was still an unpaid sum of P), .)),,$.The defendants, there and then, offered to pay the total amount of P), .)).,$ which appeared to be due on account of unpaid installments under the contract, including interest at the rate of #$ per cent. The plaintiff, howe&er, declined to the offer and the amount was deposited to the cler5 of court until full payment. The trial court dismissed the plaintiff-s complaint, hence an appeal by the latter. $ssue# /hether or not the defendants can be compelled to pay the amount stipulated in the contract which they ha&e entered into. ,eld# >udgment of the court below is affirmed. The fi"ing of an increased rate of interest in the e&ent of paying off the principal when the obligation becomes due should be construed as a penal clause. ?nder the pro&isions of *rticle ##$. of the Ci&il Code 1now article #22( of the 'CC2, the courts are authorized to modify in the sound e"ercise of their discretion when the principal obligation has been complied with by the debtor either in part or irregularity. 6n any case wherein there has been a partial or irregular compliance with the pro&isions in a contract for special indemnification in the e&ent of failure to comply with its terms, courts will rigidly apply the doctrine of strict construction against the enforcement of its entirety of the indemnification. * tender of payment after an action has been instituted was offered by the defendants to the plaintiff who declined to the offer. 6t may and as a general rule should relie&e the defendants of all costs thereafter in the e&ent that plaintiff declines to accept payment as tendered.
2achrach vs. )olinco * Phil. 1 8 "acts# This is a case for reco&ery of sum of money for balance due to plaintiff on a promissory note. The note represents the purchase price for a truc5 which plaintiff sold to defendant. *s security for the debt, plaintiff too5 a chattel mortgage. *fter maturity of the debt, the debt was foreclosed. The plaintiff himself bought the truc5 at the foreclosure sale. $ssue# /hether the foreclosure sale was &alid ,eld# 6t was in&alid since it did not follow the requirements set in Section #. of the Chattel Mortgage 0aw that it should be sold at the same place where the mortgagor li&es or where
the property is located. The truc5 was bro5en down upon the sale, therefore the defendant failed to pro&e any damage on his part by the irregular manner of sale.
Article 12 1 = 12 2 Aguilar vs %u1iato +5 Phil. 5!5 "acts# This is an appeal from a 7udgment of the Court of Eirst 6nstance of 0aguna. >uan :ubiato is a resident of the Municipality of 'agcarlan, Pro&ince of 0aguna. De was the owner of &arious parcels of land ha&ing a pontential &alue appro"imately cause P 2%, . . :ubiato was desirous of obtaining a loan of not e"ceed P #, . . being in this state of mind, two men, Manuel 9onzalez Fila and one 9regorio *zucena, and possibly another, one Marlo <ncarnacion, came to the house of :ubiato and there induced him to sign the second page of a power of attorney in fa&or of Manuel 9onzalez Fila. =y reason of the power thus gi&en, Manuel 9onzalez Fila on *pril 2(, #(#$, formulated the document by which the lands of :ubiato were sold to Dilaria *guilar of Manila, for the sum of P + . , with right of repurchase within one year. :ubiato to remain in the possession of the land as lessee and to pay P #2 . e&ery three months as lease rent. Manuel 9onzalez Fila recei&ed from Dilaria *guilar the P + . as the selling price of the land. /hether this money was then passed on to >uan :ubiato is uncertain, although it is undeniable that Dilaria *guilar has ne&er been paid the money she ad&anced. The one year mentioned in the pacto de retro ha&ing e"pired without Dilaria *guilar ha&ing recei&ed the principal nor any part of the lease rent, she began action against >uan :ubiato and Manuel 9onzalez Fila to consolidate the eight parcels of land in her name. The trial 7udge, the Don. Manuel Camus, rendered a decision. The court found that the power of attorney only authorized Manuel 9onzalez Fila to obtain a loan sub7ect to mortgage, and not to sell the property. The 7udgment was to the effect that the plaintiff Dilaria *guilar reco&er from the defendant >uan :ubiato the sum of P + . with interest at the rate of % per cent per annum from *pril 2(, #(#$ until May #, #(#%, and with interest at the rate of #2 per cent per annum from May #, #(#% until the payment of the principal. $ssue# /hether or not the defendant would only be liable for interest at the legal rate of % per cent per annum for a contract made prior to the enactment of ?suary 0aw. ,eld# >udgment is affirmed, with the sole modification that the plaintiff shall only reco&er interest at the rate of % per cent per annum on the sum of P + . from *pril 2(,, #(#$ until paid.
Page 57
/here the inadequacy of the price in an agreement is so great that the mind re&olts at it and is such as reasonable man would neither directly nor indirectly be li5ely to consent to, a strong reason e"ist for annulling a contract.
Article 12
= 12 6 )onzaga vs. )arcia 2! Phil. !
"acts# !el :osario, a 7udgment creditor purchased at an e"ecution sale the right to repurchase under a facto de retro sale of land of Erancisco, his 7udgment debtor. The period for redemption of the interests thus sold in the e"ecution, e"pired without Erancisco ha&ing e"ercised his right of redemption. !el :osario then sold his right to the herein plaintiff. Erancisco in the meantime, paid the repurchase price under the facto de retro sale to the &endee who accepted it, and cancelled the annotation of the facto de retro sale in the registry of property. The plaintiff now see5s to register the property in his own name. $ssue#/hether or not the plaintiff obtained the right to register the property in his own name. ,eld# 'o. The plaintiff did not acquire ownership of the land but merely the right to repurchase, which was the only interest sold in the e"ecution sale. The payment of the 7udgment debtor of the repurchase price to the &endee, did not &est title in the 7udgment creditor. 6t did not constitute payment by a third person, under *rticle #2)% of the Ci&il Code. !el :osario was not a debtor. De was under no obligation to repurchase the land from the &endee. De had a right to do so, whether he e"ercised this right or not depended upon his own &olition. Dence, *rticle #2)% of the Ci&il Code is not applicable in the case at bar.
Article 12+1 = 12++ ,ahn vs. Court o0 Appeals 1!* SC%A 6!5 "acts# Santos recei&ed two diamond rings with a total &alue of P.,, in #(%% from the petitioner. She issued separate receipts therefore in which she ac5nowledged that they had been deli&ered by 0etty Dahn to her for sale on commission and that they would be returned upon demand if unsold. The rings were not sold nor were they returned when demanded by Dahn. Dahn sued for reco&ery of the rings or their &alue. /hile the ci&il case was pending, she also filed criminal action for estafa against Santos. Santos was acquitted on reasonable doubt. 6n the ci&il action, howe&er, where she also pleaded that the contracts between her and Dahn were not of agency but also of sale, Santos did not fare as well.
$ssue# /hether or not respondent erred in not allowing an upward ad7ustment of the original price of the 2 rings and in disallowing the moral and e"emplary damages granted by the trial court. ,eld# There is no doubt that the petitioner could &alidly re7ect the pri&ate respondent-s offer to pay for the rings on installment because Dahn was entitled to payment in full. 6f such payment could not be made, Santos was obligated to return both of the rings and not one of the other only at her option T Jupon demandK, under the separate receipts she had signed. *ccording to *rticle #2)) of the Ci&il Code, Ja debt shall not be understood to ha&e been paid unless the thing or ser&ice in which the obligation consists has been completely deli&ered or rendered as the case may be.K *s for the pri&ate respondent-s offer to return the solitaire ring, which was also referred, the pertinent rule is *rticle #2.., pro&iding that, Jthe debtor of a thing cannot compel the creditor to recei&e a different one, although the latter may be of the same &alue as or more &aluable than that which is due.K More so then is the care at bar if, as a&erred by the petitioner; the ring offered was less &aluable than the one that was due. /e cannot sustain the respondent court, howe&er, on the moral and e"emplary damages which it disallowed on the ground that Jthere was no clear showing of malice and bad faith on the part of the defendant.K The court thin5s otherwise we hold that the moral and e"emplary damages should be restored in light of her dubious conduct as recounted in the petitioners brief and findings of the trial court with we ha&e no reason to disturb. Petition 9ranted. !ecision Modified.
Article 12+5 Citizens Surety and $nsurance Co.pany vs. Court o0 Appeals ).%. (o. '4+8*58 "acts# 4n !ecember ., #($(, the petitioner issued two surety bonds to the defendant to ensure the compliance of the latter while he entered a transaction with Singer Sewing Machine Co. The respondent also put up collaterals such as his lumber stoc5 worth P. , and a second real estate mortgage to reimburse the cost paid by the petitioner in case that the respondent will not comply to the agreement. The respondent failed to comply with his obligations to Singer Sewing Machine Co. and the petitioner paid payments as a result of nonCcompliance of the respondent. The respondent failed to reimburse the petitioner due to the losses he encountered thereby the petitioner filed a claim of the sum of the money against the estate of the respondent. :espondent opposed the money claim by stating that the surety bonds and the indemnity agreements had been e"tinguished by the
e"ecution of the deed of assignment. Thus, after the trial, the lower declared that the collateral is 7ointly and se&erally liable to the petitioner, hereby, requiring respondent to pay the required amount with # M interest per annum. The decision of the lower court was re&ersed by the Court of *ppeals when the respondent appealed. $ssue# /hether or not administrator-s obligation under the surety bonds agreements had been e"tinguished through e"ecution of the deed of assignment. ,eld# 4bligation under the surety bonds had not been e"tinguished by reason on the e"ecution of Jdeed of assignment.K The Jdeed of assignmentK was intended as a collateral security for the issuance of two 122 surety bonds by the petitioner towards respondent as e&idenced by the latter-s subsequent acts. These are partial payments made by respondent after the e"ecution the Jdeed of assignmentK to pay his indebtedness. Moreo&er, with the e"ecution of the second mortgage by respondent, it follows that there is no e"tinguishment of obligation since indemnity bonds still e"isted by &irtue of its e"ecution. Thus, upon the failure of the respondent to comply with its obligation under the contract if sale of goods towards Singer Sewing Machine Co., the petitioner is still adequately protected by the lumber collateral which worth P. , , more than enough to guaranty the obligations. Dere, the Supreme Court dismissed the appeal and money claim by the petitioner.
Article 12+* 2elisario vs. (atividad 65 Phil. 156 "acts# The plaintiff sold the said lands absolutely and without reser&ation to the defendant for the consideration of P),, , which was duly paid, and the agreement on the part of the grantee to assume an indebtedness secured by a lien for ., $ , which was li5ewise duly paid. The deed recites that the sale is absolute and in perpetuity and the grantor warrants to defend the title. The deed bears the date of *pril 2(, #(2,. 4n the same date the defendant e"ecuted and deli&ered in fa&or of the plaintiff <"hibit = which, after reciting that the defendant is the plaintiff an option to repurchase the lands on or before the end of May, #()#, for the sum of P),, . These two instruments are &ery clear in their terms, were duly signed by both parties in the presence of two witnesses and ac5nowledge before a notary public and recorded. we see no reason whate&er for &arying the terms thereof. Then, on he 2+th of May, #()#, the plaintiff appeared at the house of the defendant and offered to e"ercise his option of repurchase under said <"hibit = by tendering to the
defendant a chec5 in the sum of P),, , drawn by :osendo Santiago against his account in the Peoples =an5 and Trust Company. the boo5s of the disclosed that at the time said chec5 was tendered to the defendant the drawer thereof had on deposit in the said ban5 sub7ect to chec5 the sum of P$.+$. Dowe&er, the defendant did not accept the abo&ementioned chec5. $ssue# /hether or not the defendant can be compelled to accept the chec5 from the plaintiff through his e"erciseof his option of repurchase. ,eld# The court held that the defendant is not legally bound to accept the chec5 because such chec5 does not satisfy the requirements of a legal tender. /D<:<E4:<, the appeal is dismissed for lac5 of merit with cost against the defendant.
Article 1256 'la.as vs A1aya 65 Phil. 552 "acts# This is an appeal from a 7udgment of the Court of Eirst 6nstance of 0aguna in a Ci&il Case 'o. $+,2, between the same parties, 7udgment was rendered gi&ing preference to the entire credit of the plaintiffs and declaring it preferential to that of the defendant <leazar, ordering 9onzalo *baya to pay the 0lamas brothers the sum of P #.,.$,.)+, as principal with accrued interest at #2 per cent per annum until 'o&ember ) #()# plus compound interest on said sum from !ecember #, #()#, until fully paid, also P # $ as attorney-s fees, and directing in case of failure of the debtor within ninety 1( 2 days to deposit said amount or to pay it to the plaintiffs, that the mortgaged property be sold in conformity with the law. <leazar appealed from that part of the 7udgment, claiming that said preference to the entire credit was only for the amount of P $,()).) . 4n appeal, the 7udgment is re&ersed,, declaring that the preference en7oyed by the plaintiffs is only for the amount of P $,()).) with the stipulated interest thereon. 4n 'o&ember 2+, #()2, prior to the promulgation of the decision of the Court, <leazar wrote the plaintiffs tendering payment of the sum of P $, ()).) with the accrued interest, stating that he formally made the offer in order to a&oid payment of the stipulated interest subsequent to the date of his letter. The plaintiffs ignored said letter. 4n !ecember #+, #()), <leazar deposited said sum of P $, ()).) with the cler5 of Court, at the disposal of the plaintiffs. 4n the following day, the plaintiffs filed a motion alleging that the credit to date amounted to P #2, %%.% and praying that a writ e"ecution for said amount be issued.
<leazar opposed the motion for the issuance of a writ of e"ecution for the sum, maintained that he was bound to pay interest only up to 'o&ember 2+, #()2, the date on which he made a formal tender of payment of the principal and accrued interest up to that date. The court entered its resolution, after the hearing of the said motion in fa&or of the plaintiffs. Erom the resolution, this appeal was ta5en. $ssue# /hether or not the defendant is bound to pay interest only up to 'o&ember 2+, #()2, the date on which he made a formal tender of payment of the principal and accrued interest up to that date. ,eld# The 7udgment is affirmed. The stipulated interest to which the plaintiffs are entitled is at the rate of ( per cent per annum from March %, #(2(, the date on which they acquired the mortgage from the Philippine 'ational =an5, up to !ecember #+ #()), the date on which <leazar deposited the sum of P $,()).) , that said interest is compound and should be computed semiCannually in accordance with the contract. The principal and interest so computed should bear interest at the said rate from !ecember #(, #()), until fully paid. The stipulated interest should accrue, and be payable up to the date on which the principal is paid. The reason for this is that the written tender payment did not ha&e the effect of suspending the interest and its accumulation.
Article 125! 9aldellon vs. Tengco 1+1 SC%A 21 "acts# This case is a petition by way of certiorari directed against the decision of the :espondent >udge Don. <rnesto Tengco; therein ordering defendant 0orenzo Faldellon to &acate the land in question and for the latter to pay all his rentals in arrears from March #(,( at the rate of P 2 . a month until the possession of the said land shall ha&e been surrendered to the plaintiffCspouses 9eraldez; and to pay the palintiffs the amount of P #, . as attorneyAs fees, as well as the costs of suit. The record re&eals that sometime in #($%, on a &erbal agreement to pay a monthly rental to the original owner, defendant constructed his house on the lot in question located at 'o. #))# *ntonio Street, Sta. Cruz, Manila. *fter buying the lot in #(%+, plaintiffs notified the defendant to remo&e his house and to &acate the premises because they want to build a threeCstorey building thereon. They also demanded the payment of P 2 . a month from *ugust #$, #(%+ until defendant shall ha&e actually &acated the land. !efendant refused to &acate the premises and this compelled plaintiffs to file the first e7ectment case on September 2+, #(%+ doc5eted as Ci&il Case 'o. #,.. of the City Court of Manila.
Page 62
Ci&il case 'o. #,.. was decided by the City Court in fa&or of the plaintiffs and defendant appealed to this court. Dowe&er this court upheld the decision of the City Court and the defendant appealed to the Court of *ppeals but then again; the Court of *ppeals ruled in fa&or of the plaintiffs with some modification. Erom the 7uddgment rendered by the Court of *ppeals, the defendant appealed to the Supreme Court but the appeal was denied for lac5 of merit. This resolution became final. Meanwhile the defendant had been depositing his monthly rentals of P 2 . with the Court of *ppeals during the pendency of the case in that Court and in the Supreme Court. =y reason of the finality of the decision of the Court of *ppeals and the remand of the record of the case to this Court, plaintiffs wrote a letter to the defendant requesting the monthly rentals starting March, #(,( be paid directly at their residence at 'o. 2 *po Street, Puezon City. This letter was sent by registered mail and appeared to ha&e been recei&ed by the defendant. The Court of *ppeals was also furnished a copy of the abo&ementioned letter. Dowe&er, despite of recei&ing such letter; the defendant still deposited his rent for the month of March, #(,( with the Court of *ppeals. Thus, the plaintiffs through their counsel sent a letter again to the defendant demanding the payment of all accrued rentals and to &acate the premises within ten 1# 2 days after notice; otherwise an e7ectment case will be filed against the defendant. The said letter was recei&ed by defendantAs daughter. This time the defendant offered to ma5e a payment to the rentals to the plaintiffs residence through his son 6sagani, howe&er the offer was re7ected by the plaintiffs because the defendant already deposited the rentals for *pril, May and >une, #(,( with the Court of *ppeals who accepted the same. $ssue# /hether the consignation done by the defendant Faldellon, herein plaintiff is &alid and in accordance with law. ,eld# /e sustain the ruling of the Court below that the deposits made by the petitioner in the Court of *ppeals, the defendant in the unlawful detainer case, on March #(, #(,( and on >une #), #(,(, without notice thereof to the pri&ate respondents and despite petitionerAs receipt of said respondentAs letter of Eebruary #(, #(,(, cannot be considered as &alid consignation as required and contemplated by law. ?nder *rt. #2$, of our Ci&il Code, in order that consignation of the thing due may release the obligor, it must first be announced to the persons interested in the fulfillment of the obligation. The consignation shall be ineffectual if it is not made strictly in consonance with the pro&isions which regulate payment. 6n said *rticle #2$+, it is further stated that the consignation ha&ing been made, the interested party shall also be notified thereof.
Page 63
/herefore the petition is hereby dismissed for lac5 of merit, with cost against petitioner herein.
Soco vs. Militante 12 SC%A 165 "acts# 6t appears from the e&idence that the plaintiffCappelleeCSoco, for shortCand the defendantCappellant Erancisco, for bre&ity, entered into a Contract of 0ease on >anuary #,, #(,), whereby Soco leased her commercial building and lot situated at Manalili Street, Cebu City, to Erancisco for a monthly rental of P+ . for a period of # years renewable for another # years at the option of the lessee. The terms of the contract are embodied in the Contract of 0ease. U<"hibit 8*8 for Soco and <"hibit 828 for EranciscoV. 6t can readily be discerned from <"hibit 8*8 that paragraphs # and ## appear to ha&e been cancelled while in <"hibit 828 only paragraph # has been cancelled. Claiming that paragraph ## of the Contract of 0ease was in fact not part of the contract because it was cancelled, Soco filed Ci&il Case 'o. :C#%2%# in the Court of Eirst 6nstance of Cebu see5ing the annulment andLor reformation of the Contract of 0ease. Sometime before the filing of Ci&il Case 'o. :C#%2%#, Erancisco noticed that Soco did not anymore send her collector for the payment of rentals and at times, there were payments made but no receipts were issued. This situation prompted Erancisco to write Soco the letter dated Eebruary ,, #(,$ U<"hibit 8)8V which the latter recei&ed as shown in <"hibit 8)C*8. *fter writing this letter, Erancisco sent his payment for rentals by chec5s issued by the Commercial =an5 and Trust Company. 4b&iously, these payments in chec5s were recei&ed because Soco admitted that prior to May, #(,,, defendant had been religiously paying the rental. #. The factual bac5ground setting of this case clearly indicates that soon after Soco learned that Erancisco subCleased a portion of the building to '*C6!*, at a monthly rental of more than P), . which is definitely &ery much higher than what Erancisco was paying to Soco under the Contract of 0ease, the latter felt that she was on the losing end of the lease agreement so she tried to loo5 for ways and means to terminate the contract. 6n &iew of this alleged nonCpayment of rental of the leased premises beginning May, #(,,, Soco through her lawyer, sent a letter dated 'o&ember 2), #(,+ U<"hibit 8=8V to Erancisco ser&ing notice to the latter 8to &acate the premises leased.8 6n answer to this letter, Erancisco, through his lawyer, informed Soco and her lawyer that all payments of rental due her were in fact paid by Commercial =an5 and Trust Company through the Cler5 of Court of the City Court of Cebu U<"hibit 8#8V. !espite this e"planation, Soco filed this instant case of 6llegal !etainer on >anuary +, #(,(.
Page 64
2. Pursuant to his letter dated Eebruary ,, #(,$ U<"hibit8)8V and for reasons stated therein, Erancisco paid his monthly rentals to Soco by issuing chec5s of the Commercial =an5 and Trust Company where he had a chec5ing account. 4n May #), #(,$, Erancisco wrote the FiceCPresident of Comtrust, Cebu =ranch U<"hibit 8.8V requesting the latter to issue chec5s to Soco in the amount of P +. . e&ery # th of the month, ob&iously for payment of his monthly rentals. This request of Erancisco was complied with by Comtrust in its letter dated >une ., #(,$ U<"hibit 8$8V. 4b&iously, these payments by chec5s through Comtrust were recei&ed by Soco from >une, #(,$ to *pril, #(,, because Soco admitted that an rentals due her were paid e"cept the rentals beginning May, #(,,. /hile Soco alleged in her direct e"amination that 8since May, #(,,, he Umeaning EranciscoV stopped paying the monthly rentals8 UTS', Palicte, p. %; Dearing of 4ctober 2., #(,(V, yet on cross e"amination she admitted that before the filing of her complaint in the instant case, she 5new that payments for monthly rentals were deposited with the Cler5 of Court e"cept rentals for the months of May, >une, >uly and *ugust, #(,,. Pressing her point, Soco alleged that 8we personally demanded from <ngr. Erancisco for the months of May, >une, >uly and *ugust, but <ngr. Erancisco did not pay for the reason that he had no funds a&ailable at that time.8 UTS'CPalicte, p. 2+; Dearing 4ctober 2., #(,(V. This allegation of Soco is denied by Erancisco because per his instructions, the Commercial =an5 and Trust Company, Cebu =ranch, in fact, issued chec5s in fa&or of Soco representing payments for monthly rentals for the months of May, >une, >uly and *ugust, #(,, as shown in !ebit Memorandum issued by Comtrust as followsB UaV <"hibit 8%8C!ebit Memo dated May ##, #(,, for P(2%.# as payment for May, #(,,; UbV <"hibit8,8C!ebit Memo dated >une l$, #(, ,for P(2%.# as payment for >une, #(,,; UcV <"hibit 8+8C!ebit Memo dated >uly ##, #(,, for P#(2%.# as payment for >uly, #(,,; UdV <"hibit 8(8C!ebit Memo dated *ugust # , #(,, for P(2%. # as payment for *ugust, #(,,. These payments are further bolstered by the certification issued by Comtrust dated 4ctober 2(, #(,( U<"hibit 8#)8V. 6ndeed the Court is con&inced that payments for rentals for the months of May, >une, >uly and *ugust, #(,, were made by Erancisco to Soco thru Comtrust and deposited with the Cler5 of Court of the City Court of Cebu. There is no need to determine whether payments by consignation were made from September, #(,, up to the filing of the complaint in >anuary, #(,( because as earlier stated, Soco admitted that the rentals for these months were deposited with the Cler5 of Court. Ta5ing into account the factual bac5ground setting of this case, the Court holds that there was in fact a tender of payment of the rentals made by Erancisco to Soco through Comtrust and since these payments were not accepted by Soco e&idently because of her intention to
e&ict Erancisco, by all means, culminating in the filing of Ci&il Case :C#%2%#, Erancisco was impelled to deposit the rentals with the Cler5 of Court of the City Court of Cebu. Soco was notified of this deposit by &irtue of the letter of *tty. Pampio *barientos dated >une (, #(,, U<"hibit 8# 8V and the letter of *tty. Pampio *barientos dated >uly %. #(,, U<"hibit 8#28V as well as in the answer of Erancisco in Ci&il Case :C#%2%# U<"hibit 8#.8V particularly paragraph , of the Special and *ffirmati&e !efenses. She was further notified of these payments by consignation in the letter of *tty. Mencha&ez dated 'o&ember 2+, #(,+ U<"hibit 8#8V. There was, therefore, substantial compliance of the requisites of consignation, hence his payments were &alid and effecti&e. Consequently, Erancisco cannot be e7ected from the leased premises for nonCpayment of rentals. *s indicated earlier, the abo&e decision of the Court of Eirst 6nstance re&ersed the 7udgment of the City Court of Cebu, =ranch ##, the dispositi&e portion of the latter reading as followsB /D<:<E4:<, 7udgment is hereby rendered in fa&or of the plaintiff, ordering the defendant, :egino Erancisco, >r.B U#V To &acate immediately the premises in question, consisting of a building located at Manalili St., Cebu City; U2V To pay to the plaintiff the sum of P. ,.( ..% for the rentals, co&ering the period from May, #(,, to *ugust, #(+ , and starting with the month of September, #(+ , to pay to the plaintiff for one U#U year a monthly rental of P l, ,2. ,% and an additional amount of $ per cent of said amount, and for so much amount e&ery month thereafter equi&alent to the rental of the month of e&ery preceding year plus $ percent of same monthly rental until the defendant shall finally &acate said premises and possession thereof wholly restored to the plaintiffCall plus legal interest from date of filing of the complaint; U)V To pay to the plaintiff the sum of P(, U.V To pay to the plaintiff the sum of P$, e"penses; . . for attorneyAs fee; for damages and incidental litigation
$ssue# /hether or not the payment made by Erancisco, to the Commercial =an5 and Trust Company constitutes &alid consignation. ,eld# The !ecision sub7ect of the present Petition for :e&iew holds the &iew that there was substantial compliance with the requisites of consignation and so ruled in fa&or of pri&ate respondent, :egino Erancisco, >r., lessee of the building owned by petitioner lessor, Soledad Soco, in the case for illegal detainer originally filed in the City Court of Cebu City, declaring the payments of the rentals &alid and effecti&e, dismissed the complaint and ordered the lessor to pay the lessee moral and e"emplary damages in the amount of P# , . and the further sum of P), . as attorneyAs fees.
/e do not agree with the questioned !ecision. /e hold that the essential requisites of a &alid consignation must be complied with fully and strictly in accordance with the law, *rticles #2$% to #2%#, 'ew Ci&il Code. That these *rticles must be accorded a mandatory construction is clearly e&ident and plain from the &ery language of the codal pro&isions themsel&es which require absolute compliance with the essential requisites therein pro&ided. Substantial compliance is not enough, for that would render only a directory construction to the law. The use of the words 8shall8 and 8must8 which are imperati&e, operating to impose a duty which may be enforced, positi&ely indicate that all the essential requisites of a &alid consignation must be complied with. The Ci&il Code *rticles e"pressly and e"plicitly direct what must be essentially done in order that consignation shall be &alid and effectual. Thus, the law pro&idesB *rt. #2$,. 6n order that the consignation of the thing due may release the obligor, it must first be announced to the persons interested in the fulfillment of the obligation. The consignation shall be ineffectual if it is not made strictly in consonance with the pro&isions which regulate payment. *rt. #2$+. Consignation shall be made by depositing the things due at the disposal of 7udicial authority, before whom the tender of payment shall be pro&ed, in a proper case, and the announcement of the consignation in other cases. The consignation ha&ing been made, the interested parties shall also be notified thereof. *rt. #2.(. The payment of debts in money shall be made in the currency stipulated, and if it is not possible to deli&er such currency, then in the currency which is legal tender in the Philippines. The deli&ery of promissory notes payable to order, or bills of e"change or other mercantile documents shall produce the effect of payment only when they ha&e been cashed, or when through the fault of the creditor they ha&e been impaired. 6n the meantime, the action deri&ed from the original obligation shall be held in abeyance. /e ha&e a long line of established precedents and doctrines that sustain the mandatory nature of the abo&e pro&isions. The decision appealed from must, therefore, be re&ersed.
Article 1262 = 1265 Palacio vs. Sludario ! Phil. 2!5 "acts# *t an inter&iew in which were present the defendant and three herdsmen, the plaintiff made an arrangement for the pasturing of eightyCone head of cattle, in return for which she
has to gi&e oneChalf of the cal&es that might be born and was to pay the defendant oneChalf peso for each calf branded. 4n demand for the whole, fortyCeight head of cattle were afterwards returned to her and this action is brought to reco&er the remaining thirtyCthree. Eirst defense that the arrangement was made between the plaintiff and the herdsmen, the defendant, who was president of the municipality, tendering his good offices only. ?pon this question, the finding of the court below is conclusi&e in fa&or of the plaintiff and is fully 7ustified by the proofs, especially by a letter of the defendant in reply to the demand for the cattle, in which he see5s to e"cuse himself for the loss of the missing animals. *s a second defense it is claimed that the thirtyCthree cows either died of disease or were drowned in a flood. *s to this point, on which the trial court has made no specific finding, the proof is conflicting in many particulars and indicates that at least some of these cattle were li&ing at the time of the surrender of the fortyCeight head. The defendantAs witnesses swore that of the cows that perished, si" died from o&erfeeding, and they failed to ma5e clear the happening of any flood sufficient to destroy the others. $ssue# /hether or not the defendant shall be held liable for the lost of the cattle. ,eld# @es. The burden of e"planation of the loss rested upon the depositary and under article #,%( the fault is presumed to be his. The defendant has not succeeded in showing that the loss occurred either without fault on his part or by reason of caso fortuito. 6f howe&er, the contract be not one strictly of deposit but one in according to a local custom for the pasturing of cattle, the obligation of the parties remain the same.Thus, the court affirmed with the cost of both instances. Article 1266 ,ouse vs dela Costa 68 Phil. !+2 "acts# The petitioner, plaintiff in a ci&il case against C.P. =ush and 9eorge ?pton for the reco&ery of a sum of money, obtained a preliminary attachment of certain properties of the latter. Three days thereafter, =ush and ?pton secured the discharge of the attachment of these properties by filing a bond posted by Ear <astern Surety G 6nsurance Co., 6nc., on *ugust 2$, #()., for P2, , the condition of the bond being that, should the plaintiff and petitioner Douse obtain a 7udgment against C.P. =ush, the latter would return to the Sheriff of Manila the properties discharged from attachment and, should he fail to do so, the Ear <astern Surety G 6nsurance Co., 6nc., would pay the &alue thereof. 4n September #st following, the petitioner Douse and C.P. =ush entered into an agreement, without the 5nowledge or consent of the Ear <astern Surety G 6nsurance Co., 6nc., whereby =ush deli&ered to the petitioner, together with other properties, those discharged from attachment to be sold at public auction. The petitioner was the highest bidder in this sale and the properties were ad7udicated to him.
<&entually the petitioner obtained 7udgment against C.P .=ush for the amount of P2, and the same not ha&ing been satisfied, he as5ed for e"ecution against Ear <astern Surety G 6nsurance Co., 6nc., as surety of C.P =ush in the discharge of the properties from the attachment. The court denied this petition. $ssue# /hether or not the court e"ceeded and abused its discretion in so ruling. ,eld# 'o. Erom the foregoing it appears that the petitioner and C.P. =ush, under the agreement of September #st, substantially altered their 7udicial relations as to the properties discharged from attachment and for the deli&ery of which Ear <astern Surety G 6nsurance Co., 6nc., was a surety, which alteration necessity released the latter from its obligations as such surety. The properties discharged from attachment ha&ing been turned o&er to the petitioner and thereafter publicly sold and ad7udicated to him under the said agreement, the obligation of C.P. =ush to return the properties to the Sheriff, in satisfaction of the 7udgment in fa&or of the petitioner, was e"tinguished and compliance therewith became impossible by petitionerAs own act, thereby resulting in the release of the surety from its obligation to pay the &alue of said properties.
Article 126! = 126* &rrutia > Co. vs. 2aco 26 Phil. 6 2 "acts# <arly morning on the +th day of *pril #(# , the steamship 'uestra SeNora del Pilar, owned by the plaintiff and the schooner Manyan owned by the defendant, collided. The steamer san5 and + li&es were lost. The said &essel was considerably in7ured. *n action was brought by the owner of the steamship to reco&er the &alue of the steamer and the damages caused by its destruction, alleging as a basis, the negligence of the &essel. The defendant denied and set up a counterclaim. $ssue# /hether or not the sail &essel was negligent in continuing its course without &ariation up to the moment that it found itself in e"tremis. ,eld# There e"ist ) di&isions of times or zonesB the first di&ision co&ers all the time up to the moment when the ris5 of collision may be said to ha&e begun. The second di&ision co&ers the time between the moments of the ris5 of collision begins and the moment it has become a practical certainty. /hile the third di&ision co&ers the time between the moments when collision has become a practical certainty and the moment of actual contact. 6t was during the time when the sail &essel was passing through the third zone that it changed its course to port in order to a&oid, if possible, the collision. This act may be said to ha&e been done in e"tremis, and e&en if wrong, the sailing &essel is not responsible for the result.
Article 1 55
Cagayan "ishing 8evelop.ent CC"8D vs. Sandi6o 65 Phil.22 "acts# Manual Tabora is a registered owner of four parcels of land in barrio 0inao, *ppari. De mortgage in fa&or of P'= for P +, and signed mortgage for additional P ,, . *nd mortgaged fa&or of Se&erina =uzon to whom he is indebted for P 2( . Tabora e"ecuted a public document by &irtue of which said lands wore sold to plaintiff company 1 CE!2 sub7ect to mortgages in fa&or of P'= and =uzon and will not transfer the title until the later has fully paid its debt. * year after the plaintiff-s incorporation on 4ctober 22,#() , a board resolution was issued authorizing its president to sell the land to Teodoro Sandi5o for P.2, and e&idenced by deed of sale. The defendant ha&ing failed to pay the sum stated in promissory notes, brought a court-s action in Court of Eirst 6nstance in Manila which this court absol&ed the defendant. Plaintiff filed a motion but was denied, hence, this appeal was made. P'= threatened Tabora to foreclose its mortgage, Tabora approached the defendant Sandi5o and made him assume the payment of Tabora-s indebtedness. The promissory note was made payable to the plaintiff company so that the lands may not be attached by Tabora-s creditors. $ssue# /hether or not there was a &alid contract by transfer of four land by the plaintiff to the defendant3 ,eld# The transfer from Tabora to CE! was sub7ect to condition precedent. Part of the mortgage and that this condition not ha&ing compared with by CE!, the transfer was null and &oid because at the time was effected, the plaintiff corporation is nonCe"istent. The transfer was effected May )#, #() and articles of incorporation was effected later 4ctober 22, #() . 6n this case, it cannot be denied that the plaintiff was not yet incorporated when it entered into the contract of sale. 'ot e&en a de facto corp. not being in legal e"istence, it did not possess 7uridical capacity to enter into the contact.
Article 1 56
)a1riel vs. Monte de Piedad !1 Phil.+*! "acts# Petitioner 0eoncio 9abriel was employed as appraiser of 7ewels in the pawnshop of Monte Piedad defendant from #(#)C#()) on !ecember #), #()2, he e"ecuted a chattel mortgage to secure the part of deficiencies which resulted from his erroneous appraisal of 7ewels amounting to P .,%,(. , with interest and promised to pay the appellee the sum of P) amount until the P .,%,(. , with interest is fully paid. *nd this was registered to become the a fore mentioned sum less what the balance of P##,).$.,$ and in case of default the Chattel Mortgage was based upon all non e"isting subtract matter as consideration and C.M was null and &oid. The lower court rendered 7udgment of lower court. Dence, this petition for re&iew by certiorari. Civil Law Obligations and Contracts Page 70
$ssue# /hether or not there was a &alid contract made3 ,eld# There is a &alid contract in this case. * contract is to be 7udged by its characteristics and courts will loo5 to the substance. 6n the case at bar, the ob7ect of contract does not in anyway militate against public good. 'either does it contra&ene the policy of law as interest of society. There is sufficient consideration in this contract. * preCe"isting admitted liability is a good consideration for a promise. 6t has satisfactorily established that it was e"ecuted &oluntarily by the latter to guarantee the deficiencies resulting from his erroneous appraisals of the 7ewels. The e"ception to this rule is where the inadequacy by is gross as to amount to fraud, oppression Lof undue influence as when statutes requires the consideration to be inadequate. /e are not con&inced that the instant case falls within the e"ception. Therefore, the petition is dismissed.
@i.eno vs. )acilago 1+ Phil. 16 "acts# 4n the ,th of >une, #( $, Manuel >imeno, Clara >imeno, <milio >imeno, Eilomena >imeno and her husband, Sal&ador Trono, filed a complaint with the Court of Eirst 6nstance of 4ccidental 'egros, allegingB that by means of a public instrument which was attached to the complaint a contract for partition of property had been entered into between them and 0ope 9acilogo; that the defendant, 9acilagao, is in possession of all the property described in the instrument of partition, but, with the e"ception of two cocoanuts gro&es described in clause , thereof, he refuses to deli&er to the plaintiffs, as per agreement, the portion that pertains to them; that the defendant, 9acilago, refuses to comply with the terms of the said instrument, under the prete"t that clause 2 thereof is slightly obscure, the obscurity being due to erroneous data furnished by the defendant himself, consisting in the in&erted placing of the words north and south used in said clause; and that, by reason of this act of the defendant, the plaintiffs ha&e suffered loss and damages to the e"tent of P% , wherefore they prayed that 7udgment be entered against the defendant compelling him to comply with the terms of the attached instrument of partition, and that the plaintiffs be allowed damages, plus cost. The defendant answered in writing to the complaint and denied each and e&ery one of its allegations with the e"ception of those contained in paragraphs # and 2 of the same, which he admitted as true and, as a defense, he alleged that the defendant had strictly complied with e&erything stipulated in the public instrument of partition to which the complaint referred. $ssue# /hether in the preparation of the second clause of the instrument of partition of certain undi&ided property, dated *ugust 2(, #( ., an error was committed in the designation of the portions di&ided up with relation to two of the cardinal points of the horizon, and the true situation of the estate that is the sub7ect of the di&ision. ,eld# 6t appears stipulated in clause 2 of the said instrument that the hacienda Eilomena de Payao should be di&ided into three parts between the plaintiffs and the defendant; the northern and southern part of the estate to go to the defendant, 9acilago, and the central part of the same, lying between the said hacienda road and the old road to the pueblo of Soledad, both of which run parallel from east to west through the central part of the property, to go to the plaintiffs.
Page 71
*llegations not duly substantiated by the record cannot pre&ail against the &alidity and efficiency of the stipulations contained in authentic documents, whether they be public or pri&ate, inasmuch as whate&er may ha&e been agreed to in a contract, where it does not &iolate the prohibiti&e pro&isions of the law or public morals, is binding upon the contracting parties. 1*rts. #2$. and #2,+, Ci&il Code.2 /hen the terms of a written contract are clear and lea&e no doubt, the literal sense of its stipulations should be obser&ed, and there should not be understood as included therein things and cases different from those with regard to which the persons interested intended to contract. 1*rts. #2+# and #2+), Ci&il Code.2 Erom the foregoing it is inferred that there was no 7ust or lawful reason for failure to comply with the stipulations of the written contract in question; therefore, the party that failed to fulfill the agreement is responsible for the loss occasioned to the other party, and is obliged to indemnify him in accordance with the law and the principles of 7ustice. Petition granted.
Tiangco vs. C"$ *8 SC%A 26 "ACTS# ?nder date of >une #), #(+ , a >oint Motion for >udgment on Compromise *greement was filed by the petitioners and respondents. >46'T M4T64' E4: >?!9M<'T 4' C4MP:4M6S< *9:<<M<'T 'ow come the petitioners and respondents in the abo&eCentitled cases, assisted by respecti&e counsel and before the Donorable Supreme Court respectfully allege that they ha&e arri&ed at and agreed to a settlement of their contro&ersy in Ci&il Case 'o. PC2$.)$ entitled A!ominador '. Fenegas &s. Sal&ador T. Tiangco. et al., CE6 of :izal Puezon City, =ranch 6S, which ga&e rise to and resulted in the abo&eCentitled cases before the Donorable Supreme Court, to witB #. That the parties ha&e agreed to as5 the Donorable Supreme Court to dismiss or order the Don. Trial Court to dismiss Ci&il Case 'o. PC2$.)$ entitled A!ominador '. Fenegas &s. Sal&ador T. Tiangco, et al., CE6 of :izal Puezon City, =ranch 6S, including an claiming, counterclaim and inter&entions arising from and by reason of said case, and li5ewise to dismiss the abo&e two said cases on the ground that the same ha&e become moot and academic, which dismissals of Ci&il Case PC2$.)$ CE6 of :izal Puezon City, =ranch 6S and the said abo&e two cases shall be with pre7udice; 2. That the parties ha&e also agreed that the 0ions Clubs in !istrict ) #C! which ha&e been placed in status quo will reorganize themsel&es in accordance with the Constitution and =yC0aws of 0ions 6nternational after said clubs shall ha&e withdrawn andLor dismissed all cases filed by them, their officers or members against 0ions 6nternational andLor its representati&es, which cases are pending or on appeal in the courts. ). That after the dismissal of the abo&eCentitled cases by the Supreme Court and all other cases pending in the courts as listed abo&e and the reorganizations, the parties ha&e agreed to request 0ions Civil Law Obligations and Contracts Page 72
6nternational to authorize as soon as possible the holding of elections to choose the !istrict 9o&ernor of !istrict ) #C! for the fiscal year #(+ C+# in accordance with the Constitution and =yC0aws of 0ions 6nternational, and further to recommend that said elections be conducted and super&ised by the Council of go&ernors. Einding the abo&eCquoted Compromise *greement to be in order, not contrary to law, public morals or public policy, the same is hereby appro&ed. The parties are hereby en7oined to comply strictly and in good faith as well as with sincerity and honesty of purpose the terms, conditions and stipulations therein contained.
Puig vs. Sellner +5 Phil. 286 "ACTS# This litigation arose from the nonCpayment of a promissory note signed by the defendants, which is as followsB 4n or before >uly #2, #(2#, we promise to pay 7ointly and se&erally at Manila to the order of !. *ndres Puig or his general attorneyCinCfact, !. :amon Salinas, the sum of forty se&en thousand pesos 1P.,, 2, Philippine currency, which we recei&ed on this date from said Mr. Salinas by way of loan at # per cent per annum; and we hereby guarantee our said obligation with fi&e hundred se&enty 1$, 2 preferred shares of the Manila 6mpro&ement Co. of the face &alue of one hundred pesos 1P# 2 each, which will be issued within fifteen 1#$2 days in the name of Mr. Puig, who shall hold them until we fulfill this obligation. 6n case we fail to ma5e payment on >uly #2, #(2#, the shares pledged shall become the property of !. *ndres Puig. O Manila, >uly #2, #(2 . The Donorable 9eo. :. Dar&ey, 7udge, rendered a carefully prepared decision, sentencing the defendants 9eo. C. Sellner and =. *. 9reen to pay the plaintiff 7ointly and se&erally and ordering, moreo&er, in the e&ent that the defendants should fail to pay the full amount of the 7udgment within three 1)2 months from the date thereof, that the sheriff of this city proceed to sell the fi&e hundred se&enty 1$, 2 shares pledged at public auction to the highest bidder. Erom this 7udgment the defendants ha&e appealed, and in their brief they assign se&en errors, which, to our mind, can be reduced to one, namely, that numbered 2, which is as followsB The trial court erred in not holding that the condition contained in the note, to wit, 86n case we fail to ma5e payment on >uly #2, #(2#, the shares pledged shall become the property of !. *ndres Puig,8 was &alid and binding against the plaintiff, as well as against the defendants. $SS&:# /hether or not such stipulation of appropriating pledged shares by creditor to himself in case of nonCcompliance by debtor is &alid. ,:'8# The question as to the &alidity of a stipulation, such as that now before us, was already decided by the supreme court of Spain in the negati&e. The law does not permit the ma5ing of stipulations contrary to law, morals or public order, one of which stipulations would be, according to the general language of article #+$(, that wherein it is agreed that the debtor 1creditor2 may appropriate the thing pledged, as if it were sold to him, by the Civil Law Obligations and Contracts Page 73
mere lapse of the term of the contract of loan, and said stipulation being &oid, under article #++. of said Code. The creditor has no right to appropriate to himself the personal property and chattels pledged, nor he can he ma5e payment by himself and to himself for his own credit with the &alue of the said property. Dowe&er, the &ice of nullity which &itiates the additional agreement entered into by the contracting parties authorizing the creditor to appropriate the property and effects pledged in payment of his credit does not affect substantially the principal contract of chattel mortgage with regard to its &alidity and efficacy. >udgment appealed from is affirmed.
Molina vs. 8ela %iva 6 Phil. 12 "ACTSB This is an action to reco&er a debt due upon a contract e"ecuted >uly 2,, #( ), whereby plaintiff transferred to the defendant the abaca and copra" business theretofore carried on by him at &arious places in the 6sland of Catanduanes, with all the property and right pertaining to the said business, or the sum of #).,%)% pesos and #2 cents, payable in Me"ican currency or its equi&alent in local currency. !efendant paid at the time of the e"ecution of the contract, on account of the purchase price, the sum of P)),%$( pesos and ) cents, promising to pay the balance on three installments P)),%$( pesos and ) cents each, with interest at the rate of $ per cent per annum from the date of the contract. The first installment became due >uly 2,, #( .. 6t was for the reco&ery of this first installment that their action was brought in the Court of Eirst 6nstance of the City of Manila. $SS&:S# The appellant relies upon four assignments of error, to witB 1#2 The court had no 7urisdiction of the sub7ect of the action. 122 The court erred in fi"ing in Philippine currency the sum which the appellee should reco&er, without hearing e&idence as to the relati&e &alue of Me"ican and Philippine currency. 1)2 The court erred in rendering 7udgment in a sum larger than that sought to be reco&ered in the complaint. 1.2 The court too5 into consideration as the basis of its 7udgment the contract in question, the same being null and &oid on the grounds that the contract did not bear the internalCre&enue stamp required by *ct 'o. # .$. ,:'8# Eirst. The actual residence, and not that which the parties had four years, prior to the filing of the complaint, is the one that should go&ern the question as to the 7urisdiction of the court. =oth parties to this case being residents the city of Manila, it is apparent that the Court of Eirst 6nstance of that city had 7urisdiction to try and determine this action. . The 7urisdiction of a court is filed by law and not by the will of the parties. *s a matter of public policy, parties can only stipulate in regard to that which is e"pressly authorized by law.
Page 74
Second. PlaintiffAs allegation must therefore be deemed admitted. Consequently it was not necessary for the court to hear e&idence as to the relati&e &alue of Me"ican and Philippine currency. There is no dispute between the parties as to the fact that the )),%$( pesos and ) Cents, Me"ican currency, referred to in the contract, were equal to 2+, .( pesos and #( centa&os, Philippine currency, at the time of the filing of the complaint. The proof required by section ) of *ct 'o. # .$, cited by the appellant, should be recei&ed only when the parties disagree as to the relati&e &alue of the currency. De was rather fa&ored thereby, since he was gi&en an option to pay in whate&er currency he might see fit. 6t is well 5nown that in the case of an alternati&e obligation the debtor has the right to choose the method of meeting the obligation unless the creditor has e"pressly reser&ed that right to himself. Third. The court had no power to enter 7udgment in fa&or of the plaintiff for ) , $2 pesos and , centa&os, under Section #2% of the Code of Ci&il Procedure. /e hold that this was error on the part of the trial court. The 7udgment of the court below should be modified in this respect. Einally, the contract under consideration was e"ecuted >uly 2,, #( ). Such contract was not sub7ect to the stamp ta" pro&ided in *ct 'o. # .$. The penalty of nullity prescribed in section # of the act is not applicable to that contract. The court, therefore, committed no error in finding that the absence of re&enue stamp did not render the contract &oid. Case remanded.
8e 'os %eyes vs. Alo?ado 16 Phil. +** "ACTS# 4n or about >anuary 22, #( $, Feronica *lo7ado recei&ed, as a loan, from =enito de los :eyes that the sum P%, .% , for the purpose of paying a debt she owed to 4limpia Waballa. 6t was agreed between *lo7ado and :eyes that the debtor should remain as a ser&ant in the house and in the ser&ice of her creditor, without any renumeration whate&er, until she should find someone who would furnish her with the said sum where with to repeat the loan. The defendant, Feronica *lo7ado, afterwards left the house of the plaintiff, on March #2, #( %, without ha&ing paid him her debt, nor did she do so at any subsequent date, notwithstanding his demands. The plaintiff, therefore, filed suit against Feronica *lo7ado to reco&er the said sum or, in a contrary case, to compel her to return to his ser&ice. The trial court rendered 7udgment whereby he sentenced the defendant to pay to the plaintiff the sum claimed and declared that, in case the debtor should be insol&ent, she should be obliged to fulfill the agreement between her and the plaintiff, which was re&ersed in fa&or of defendant. Dence, this appeal. The defendant appealed from the said 7udgment, denying all the allegations of the complaint and alleged that, although she had left the plaintiffAs ser&ice, it was because the latter had paid her no sum whate&er for the ser&ices she had rendered in his house. $SS&:# /hether or not the agreement entered into by both parties is &alid. ,:'8# The duty to pay the said sum, as well as that of P##.(, deli&ered to the defendant in small amounts during the time that she was in the plaintiffAs house, is unquestionable, inasmuch as it is a positi&e debt demandable of the defendant by her creditor. 1*rts. #,$., ##, , Ci&il Code.2 Dowe&er, Civil Law Obligations and Contracts Page 75
the reason alleged by the plaintiff as a basis for the loan is untenable, to wit, that the defendant was obliged to render ser&ice in his house as a ser&ant without remuneration whate&er and to remain therein so long as she had not paid her debt, inasmuch as this condition is contrary to law and morality. 1*rt. #2$$, Ci&il Code.2 !omestic ser&ices are always to be remunerated, and no agreement may subsist in law in which it is stipulated that any domestic ser&ice shall be absolutely gratuitous, unless it be admitted that sla&ery may be established in this country through a co&enant entered into between the interested parties. Petition dismissed.
"errazzini vs. )sel + Phil.+* "acts# This action was brought to reco&er damages for an alleged wrongful discharge of the plaintiff, who had been employed by the defendant for an indefinite time to wor5 in the latterAs industrial enterprises in the city of Manila. The defendant admitted that he discharged the plaintiff without gi&ing him the 8written ad&ice of si" months in ad&ance8 as pro&ided in the contract, but alleged that the discharge was lawful on account of absence, unfaithfulness, and disobedience of orders. The defendant sought affirmati&e relief for a further alleged breach of the contract by the plaintiff after his discharge. *ccording to the defendant, this act of the plaintiff was a technical &iolation of the pro&isions of the contract wherein he e"pressly agreed and obligated himself 8not to enter into the employment of any enterprise in the Philippine 6slands, whate&er, sa&e and e"cept after obtaining special written permission therefor8 from the defendant. The lower court ruled in fa&or of the plaintiff, hence, this appeal from the defendant. $ssue# /hether or not the pro&isions of the contract Jnot to enter into the employment of any enterprise in the Philippine 6slands, whate&er, sa&e and e"cept after obtaining special written permission therefor8 from the defendant are &alid and binding upon the plaintiff3 ,eld# The Supreme Court ruled that he contract under consideration, tested by the law, rules and principles, is clearly one in undue or unreasonable restraint of trade and therefore against public policy. 6t is limited as to time and space but not as to trade. 6t is not necessary for the protection of the defendant, as this is pro&ided for in another part of the clause. 6t would force the plaintiff to lea&e the Philippine 6slands in order to obtain a li&elihood in case the defendant declined to gi&e him the written permission to wor5 elsewhere in this country.
Article 1 15
)arcia vs. 'egarda 21 SC%A 555 "acts# 4n May 2 , #($) the petitioners instituted the ci&il case no. #(%2 entitled JMaria *. 9arcia, et al. &s. :ita 0egarda, 6nc., a corporation organized under Philippine laws, and is engaged in the sale and resale of residential lots in Manila and suburbs, against the respondent to ha&e certain contracts Civil Law Obligations and Contracts Page 76
numbered )22, )2., and (%$ declared as e"isting and subsisting; to compel the respondent to accept payments tendered by them. 6n its answer to the complaint, the respondent a&erred that in relation to the Contracts to Sell, the petitioners, as of >une ##, #($2, had failed to pay the stipulated monthly installments; that despite se&eral demands for payment of arrears made between !ecember, #($# and >une, #($2 by the respondent, the petitioners had failed to pay the amounts due; and that upon the e"piration of the ( C day grace period on >une ##, #($2 stipulated in the si"th paragraph of the contracts, the respondent had cancelled them. The trial court rendered 7udgment declaring Contracts 'os. )22, )2. and (%$ as e"isting and subsisting; ordering the respondent to accept the payments tendered by the petitioners and to pay attorneyAs fees in the sum of P#,$ . . =ut this was re&ersed by the Court of *ppeals, hence, this appeal to the Supreme Court. $ssue# /hether or not the contract that gi&es one party the right to cancel the contract should the other party becomes in default in the payment is &alid3 ,eld# The Supreme Court held that the stipulations in the contract that states that in case of default in the payment of installments by the &endee, he shall ha&e 1#2 8a month of grace8, and that 122 should said month of grace e"pire without the &endee paying his arrears, he shall ha&e another 8period of ( days8 to pay 8all the amounts he should ha&e paid8, etc., then the &endor 8has the right to declare this contract cancelled and of no effect8 is &alid. The abo&e stipulation merely gi&es the &endor 8the right to declare this contract cancelled and of no effect8 upon fulfillment of the conditions therein set forth. 6t does not lea&e the &alidity or compliance of the contract entirely 8to the will of one of the contracting parties8. *rticle #) + of the 'ew Ci&il Code reads as followsB The contract must bind both contracting parties; its &alidity or compliance cannot be left to the will of one of them. The contract e"pressly gi&ing to one party the right to cancel, the same if a resolutory condition therein agreed upon O similar to the one under consideration O is not fulfilled, is &alid, the reason being that when the contract is thus cancelled, the agreement of the parties is in reality being fulfilled. 6ndeed, the power thus granted cannot be said to be immoral, much less unlawful, for it could be e"ercised O not arbitrarily O but only upon the other contracting party committing the breach of contract of nonCpayment of the installments agreed upon.
@oa<uin vs. Mitsu.ine + Phil. 858 "acts# 4n >uly ) , #(#., *ttorney 0eocadio >oaquin, in his own behalf, filed a written complaint in the Court of Eirst 6nstance of Manila against the defendant, 4. Mitsumine, alleging that on >uly #, #(#., the plaintiff e"ecuted an instrument whereby he ga&e a chattel mortgage on certain apparatus for the manufacture of aerated water as security for the payment in two installments of the sum of Civil Law Obligations and Contracts Page 77
P$2$; that the said mortgage deed was entirely null and &oid for the reason that it had been e"ecuted by the plaintiff by mista5e, inasmuch as in May, #(#., he had instructed the defendant to acquire the said machine at the request of the plaintiffAs client, Macario Fito, and that the latter was responsible for the payment of the said P$2$. 4n *ugust 2 , #(#., the defendant answered the abo&e complaint, denying all the allegations therein contained e"cept those that were e"pressly admitted in his answer and that after the defendant had ordered the machine from >apan and deli&ered it to the plaintiff to his entire satisfaction, plaintiff paid defendant P2 on account and agreed to pay the balance of P$2$ in two installments by signing two promissory notes and a mortgage deed. The court rendered the 7udgment absol&ing the defendant 4. Mitsumine from the complaint, decreeing that the mortgage e"ecuted by the plaintiff 0eocadio >oaquin to the defendant was &alid, and ordering the plaintiff to pay to the defendant the sum of P$2$, plus P# $ for the e"penses of collection. $ssue# /hether or not 0eocadio >oaquin is liable for the two promissory notes and a mortgage deed e"ecuted in fa&or of 4. Mitsumine for the purchase of a machine for the manufacture of *erated /ater3 ,eld# The Court held that 0eocadio >oaquin is liable for the two promissory notes and a mortgage deed e"ecuted in fa&or of 4. Mitsumine as the record shows it to ha&e been duly pro&en that on *pril #$, #(#., he signed and forwarded to the commercial establishment of the defendant, Mitsumine, named the 'ippon =azar, which was an order to procure a complete machine for the manufacture of aerated waters. The foregoing facts lead to the ine&itable conclusion that the only person obliged to pay to the defendant the price of the machine imported from >apan is the plaintiff, for the reason that it was he who ordered and contracted for it. 6f, after a perfect and binding contract has been e"ecuted between the parties it occurs to one of them to allege some defect therein as a reason for annulling it, the alleged defect must be conclusi&ely pro&en, since the &alidity and fulfillment of contracts can not be left to the will of one of the contracting parties.
:ncarnacion v. 2aldo.ar !! Phil. 8! "acts# Ficente Singson <ncarnacion, owner of the house, leased his house to >acinta =aldomar and her son, 0efrado Eernando, for a monthCtoCmonth basis of monthly rental. *fter //66, plaintiff notified the defendants to &acate the house abo&eCmentioned on or before *pril #$, #(.$, because plaintiff needed it for his offices as a result of the destruction of the building where said plaintiff had his offices. !efendants, howe&er, refused to lea&e and insisted on continuing their occupancy. This caused the plaintiff to file an action before the Municipal Court of Manila which rendered a decision stating that there will be restitution and payment of rentals by the defendants from May #, #(.$, until
Page 78
they ha&e completely &acated the house. Dence, an appeal by the defendants who contend that the contract authorized them to continue occupying indefinitely and as long as they pay the rentals. $ssue# /hether or not the defendants- contention id correct. ,eld# >udgment of the Municipal Court is affirmed. *ccording to *rticle #2$% of the Ci&il Code 1'ow *rt. #) + of the 'ew Ci&il Code2, Jthe contracts must bind both contracting parties; its &alidity or compliance cannot be left to the will of one of them.K The aforesaid article, therefore, does not allow instances wherein the fulfillment of a contract would depend solely or e"clusi&ely upon one of the parties- free and uncontrolled choice.
Taylor v. Piao and 'iuan + Phil. 8! "acts# 4n !ecember #2, #(#+, the plaintiff contracted his ser&ices to Tan 0iuan and Co., as superintendent of an oil factory which the latter contemplated establishing within the city. *mong the stipulations inserted in the contract states that should the machinery to be installed in the said factory fail, for any reason, to arri&e in the city of Manila within the period of si" months within the period of si" months from the date hereof, this contract may be cancelled by the party of the second part of its option, such cancellation, howe&er, not to occur before the e"piration of such si" months. The machinery abo&eCreferred to did not arri&e at the City of Manila within si" months succeeding the ma5ing of the contract; nor was other equipment necessary for the establishment of the factory at any time pro&ided by defendants. The defendants communicated in writing to the plaintiff that they decided to rescind the contract, effecti&e >une ) th then current, upon which date the latter was discharged. The plaintiff, then, instituted an action against the defendants based on *rticles #2$% and ###( of the Ci&il Code 1'ow *rticles #) + and ##+% of the 'ew Ci&il Code2. The lower court, howe&er, rendered a decision against the plaintiff. Dence, an appeal. $ssue# /hether or not in a contract for the prestation of ser&ice it is lawful for the parties to insert a pro&ision gi&ing to the employer the power to cancel the contract in a contingency which may be dominated by himself. ,eld# The 7udgment appealed from is modified and thus, affirmed. To restrict the words Jfor any reason,K as used in the contract, to mean Jfor any reason not ha&ing its origin in the will or acts of the defendants,- would constitute an un7ustifiable in&asion of the power of the parties to establish the terms which they deem ad&isable, a right which is e"pressed in the *rticle #2$$ of the Ci&il Code 1'ow *rticle #) % of 'CC2. Contingency, thus, is lawfully within the control of the obligorCdefendant. Eurthermore, *rticles ###$ and ###) of the Ci&il Code 1'ow *rticles ##+2 and ##,( of 'CC2 pro&ide that a condition at once facultati&e and resolutory may be &alid e&en though the condition is made to depend upon the will of the obligor.
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Article 1 11
Mo?ica v. "ernandez * Phil. +5 "acts# =enito Mo7ica sold to Pedro Sanchez, three pieces of real estate, situated in the pro&ince of =ulacan and in Manila, for the sum of P#$, . . The sale was made con pacto de retro 1with a condition as to repurchase2 within a period of four years. Dowe&er, the right of repurchase of Mo7ica e"pired without his ha&ing e"ercised this right. Thereafter, Sanchez made the necessary nota de consolidacion 1consolidating entry2 in the proper registries, and thus appears upon the land records as the absolute owner of the property in question. Sanchez and Mo7ica entered into a new agreement in writing in a pri&ate document whereby Sanchez leased the said real estate to Mo7ica for a period of ten years, for the sum of P#, + per annum, being the interest at #2 percent per annum on the sum of P#$, , payable in installments of P#$ monthly, and agreed that Mo7ica was to ha&e the right of repurchase for the sum of P#$, at the e"piration of the said period of ten years. Dowe&er, Sanchez died, and Mo7ica continued to pay the rent to the widow of the former who became the administrati" of Sanchez. The defendant administrati" understood to increase the monthly rental to P)$ per month and refused to recei&e P#$ as therefore paid, although that amount was duly tendered. Dence, an action was brought up by Mo7ica praying that the fictitious alleged sale be considered as loan and that the pri&ate rental contract of the said land be registered as a public document. The trial court held in fa&or of plaintiff Mo7ica on the basis of *rticle #2+ of the Ci&il Code 1'ow article #)$+ of the 'CC2 which states that contracts of rentals of real estate for a period of si" or more years, when said contracts are to the pre7udice of third persons, must be e"ecuted in public documents. $ssue# /hether or not the defendant, being the spouse of the deceased Sanchez, can be considered as a third person. ,eld# The 7udgment of the trial court is re&ersed. ?nder *rticle 2, of the Mortgage 0aw, a third person is one who has ta5en part in the act or contract recorded. ?nder the Ci&il Code, the heirs, by &irtue of the right of succession, are subrogated to all the rights and obligations of the deceased and cannot be regarded as third parties with respect to a contract to which the deceased was a party, touching the estate of the deceased. 4ther than *rticle #2+ of the Ci&il Code, there are no other limitations to the power of Pedro Sanchez, the owner of the estate, to enter into contract of September #, #( #. Section ))$ of the Code of Ci&il Procedure pro&ides that an agreement for the leasing of real estate for the period longer than one year, or for the sale of the real property or of an interest therein, must be in writing, was not in force at the time when the contract was e"ecuted, and in any e&ent, that contract, while not a public document, was in fact, made in writing.
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2losso.s and Co. v. Manila )as Corporation +8 Phil. 8+8 "acts# * 7udgment in a mortgage foreclosure proceeding was rendered against petitioner =lossom G Co. ordering the payment of P,, ,(..%$ to respondent Manila 9as Corporation, with interest thereon at the rate of + percent per annum, the 7udgment within ninety days from the time of notification of said 7udgment, the mortgage land should be sold by the sheriff at public auction and the proceeds of the sale applied towards the satisfaction of said 7udgment. $ssue# /hether in the e&ent a 7udgment for the plaintiff in a foreclosure proceeding is affirmed on appeal, the three months stay of e"ecution allowed the defendant by section 2$% of the Code of Ci&il Procedure is to be counted from the date of 7udgment of the lower court or whether it should be counted from the date of the final determination of the case by the appellate court. ,eld# Petition is granted. The second paragraph in question relates to the manner of e"ecuting the 7udgment and says nothing about the time. *s to the time for the e"ecution, Section#.. of the Code Ci&il Procedure pro&ides that, e"cept by special order of the court, no e"ecution shall issue upon a final 7udgment until after the period for perfecting a bill of e"ceptions has e"pired and that the filing of a bill of e"ceptions shall of itself stay e"ecution until the final determination of the action, unless for special reasons stated in the bill of e"ceptions the court shall order the e"ecution be not stayed. The purpose of three months stay of e"ecution is &ery e&idently to gi&e the 7udgment debtor time and opportunity to ma5e the necessary arrangements for the payment of the debt after it has been definitely determined that the debt is due and must be paid by him. The running of said period is suspended during the appeal and as the case cannot be said to be finally determined on appeal while the record remains with the appellate court, it logically follows that the period does not begin to run until the remittitur of the record to the court below.
Araneta vs. Monteli1ano 1+ Phil. 11! "acts# *niceto Montelibano, on the #)th day of *pril, #++,, sold to Dermenegildo *raneta, for the sum of P%, , the land in question, with the right to repurchase the same after a period of four years. *niceto Montelibano remained in possession of said tract of land as a tenant of the said *raneta, paying the latter oneCthird of the crops. That *niceto Montelibano died intestate upon the 2 th day of !ecember, #+(+, lea&ing four minor children. =raulio Montelibano was duly appointed tutor. of the minor children of *niceto Montelibano. *niceto Montelibano, during his lifetime and within the four years prescribed by the contract, did not repurchase the land in question. The said contract of sale contained a pro&ision that if the said *niceto Montelibano did not repurchase the property in accordance with its terms, that he should then e"ecute and deli&er to Dermenegildo *raneta an absolute deed for the land in question. The original action was commenced by Eeli" *raneta, administrator of the estate of the said Dermenegildo *raneta. Eeli" *raneta ha&ing died and *gaton *raneta ha&ing been appointed as Civil Law Obligations and Contracts Page 81
administrator of the said estate, he presented a motion in the Court of Eirst 6nstance to be substituted as plaintiff in said cause for Eeli" *raneta, which motion was granted. =raulio Montelibano filed his answer alleging inter alia that the sub7ect piece of land was no longer in his possession and was sold by the said *niceto Montelibano during the life of the said Dermenegildo *raneta, and with his 5nowledge and consent, to one 0eon 0opez, who was then 1May #, #( ,2 in possession of the said land. The defendant further alleged that an in&entory had been made of the property left by the deceased *niceto Montelibano, and that the said parcel of land was not included in the said in&entory. $ssue# /hether or not the court can compel Montelibano to produce the said land and e"ecute the requested document. ,eld# The court held that all of the heirs of the said *niceto Montelibano were not made parties in the present action, the 7udgment of the lower court is hereby re&o5ed and the cause is hereby remanded to the lower court, with permission on the part of the plaintiff to amend his complaint. The plaintiff alleges in his complaint that *niceto Montelibano died on the 2 th of !ecember, #+(+, intestate, lea&ing four minor children, called =ibiana, Maria, :osario, and :aymundo. 6n the present action, howe&er, the plaintiff made defendants =raulio Montelibano, as tutor of said minor children, :osario, :aymundo, and =ibiana. The record does not show why Maria was not made a party defendant. ?ntil the contrary is shown, each of these heirs has an equal interest in the property in question. The heirs ha&ing succeeded to whate&er interest their ancestry had in the land and contract in question, they may, by &irtue of articles #2,( and #2+ of the Ci&il Code, be compelled in a proper action to e"ecute the public instrument required under the contract between their ancestor and *raneta.
$1anez vs. ,S2C 22 Phil. 5!2 "acts# The plaintiffs are after an action of liquidation against the respondent corporation. The Dong5ong and Shanghai =an5ing Corporation and *ldecoa G Co. entered into a contractual agreement whereby the said ban5 bound itself to open and maintain in behalf of *ldecoa G Co. a credit in account current up to the sum of P.,$, , in accordance with the conditions and securities detailed in an instrument of the said date; that, subsequently, the contracting parties also agreed that, should certain shares of the concern, 8The Pasay <state Co. 0td.,8 be declared to belong to *ldecoa G Co., in liquidation, the same should be by the latter turned o&er to the creditor ban5, as security; and that, in &iew of the fact that the said shares had come into the ownership of *ldecoa G Co., in liquidation, the contracting parties had stipulated that *ldecoa G Co., in liquidation, represented by /illiam ?rquhart, should transfer and mortgage to The Dong5ong and Shanghai =an5ing Corporation, as mortgage creditor, the said shares deli&ered to it for their custody and preser&ation, which mortgage was e"ecuted as an additional security to the said creditor ban5 for the payment of any sums which *ldecoa G Co. might be found to owe it, by reason of the aforesaid credit in Civil Law Obligations and Contracts Page 82
account current or of any other sums which *ldecoa G Co., in liquidation, might owe it; that the creditor ban5 was authorized to collect and recei&e all the di&idends, bonuses or other distribution of the capital and profits of the said concern, 8The Pasay <state Co. 0td.,8 until a total settlement of the said debt should ha&e been made, but that, should the mortgage debtor, its heirs, successors in interest, or administrators pay to the creditor ban5 all the amount owed, this obligation would thereby become null and &oid; that the right was reser&ed to *ldecoa G Co. to sell the said shares, pro&ided that the product of their sale be de&oted to the payment of its debt; that The Dong5ong and Shanghai =an5ing Corporation ac5nowledged receipt of the said shares for their 5eeping and preser&ation, and that this instrument was held by the contracting parties to be additional to each and all of those already e"ecuted, on account of the debt of *ldecoa G Co., between the latter and The Dong5ong and Shanghai =an5ing Corporation, which instruments were declared to be subsistent and in full force and effect. =efore proceeding to e"amine the agreement referred to and contained in the instrument of *ugust ) , #( ,, and to ascertain whether or not it complies with the conditions required by law, or whether it bears &ices and defects producti&e of nullity and such as substantially affect the &alidity and force of the contract therein stipulated, it becomes necessary to determine whether the plaintiffs, Woilo, >oaquin, and Cecilia lbaNez de *ldecoa, ha&e or ha&e not the personality and rights requisite to enable them to claim the nullification of the aforementioned agreement made and entered into, according to the instrument of *ugust ) , #( ,. $ssue# /hether or not the agreement contained in the instrument e"ecuted on *ugust ) , #( ,, by and between the liquidator of the firm of *ldecoa G Co. and the manager of The Dong5ong and Shanghai =an5ing Corporation, should be annulled. ,eld# 4ne who has no interest in a contract has no right of action for nullifying the same, for the interest in a gi&en contract is the determining factor that authorizes the party obligated either principally or subsidiarily to maintain said action. The courts ha&e established that one who is not a party to a contract or who has neither cause nor representation for inter&ening therein lac5s personality and right of action for impugning the &alidity thereof.
"lorentino vs. :ncarnacion !* SC%A 1*2 "acts# 4n May 22, #(%., the petitionersCappellants Miguel Elorentino, :osario <ncarnacion de Elorentino, Manuel *rce, >ose Elorentino, Fictorino Elorentino, *ntonio Elorentino, :emedios <ncarnacion and Se&erina <ncarnacion, and the petitionersCappelleed Sal&ador <ncarnacion, Sr., Sal&ador <ncarnacion, >r. and *ngel <ncarnacion filed with the Court of Eirst 6nstance of 6locos Sur an application for the registration under *ct .(% of a parcel of agricultural land located at =arrio 0ubong, !acquel, Cabugao, 6locos Sur. *fter due notice and publication, the Court set the application for hearing. 'o opposition whatsoe&er was filed e"cept that of the !irector of 0ands which was later withdrawn, thereby lea&ing the application unopposed. Thereupon, an order of general default was issued against the whole world.
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?pon application of the applicants, the Cler5 of Court was commissioned and authorized to recei&e the e&idence of the applicants and ordered to submit the same for the CourtAs proper resolution. The pi&otal point of the case is a stipulation in the contract saying that the church shall benefit from the fruits of the property in question. $ssue# /hether or not the stipulation benifiting a third person can be re&o5ed by the parties at will. ,eld# The stipulation cannot be re&o5ed by any of the stipulators at their own option. This must be so because of *rticle #2$,, Ci&il Code and the cardinal rule of contracts that it has the force of law between the parties. /hile a stipulation in fa&or of a third person has no binding effect in itself before its acceptance by the party fa&ored, the law does not pro&ide when the third person must ma5e his acceptance. *s a rule, there is no time limit; such third person has all the time until the stipulation is re&o5ed. Dere, /e find that the Church accepted the stipulation in its fa&or before it is sought to be re&o5ed by some of the coowners, namely the petitionersCappellees herein. 6t is not disputed that from the time of the death of !oNa <ncarnacion Elorentino in #(.#, as had always been the case since time immemorial up to a year before the filing of their application in May #(%., the Church had been en7oying the benefits of the stipulation. The en7oyment of benefits flowing therefrom for almost se&enteen years without question from any quarters can only be construed as an implied acceptance by the Church of the stipulation pour autrui before its re&ocation.
&y Ta. vs. 'eonard 5 Phil. +!1 "acts# This is an action by a third person upon a bond e"ecuted between the indi&idual defendants as obligors and the city of Manila as obligee. The bond was e"ecuted in connection with and to secure the performance of a contract entered into by Dosty and =rown, the principals of the bond, for furnishing crushed roc5 to the city of Manila for one year. The plaintiffs furnished the contractors with certain materials for use in the performance of said contract, ha&ing pre&iously notified the defendants of the acceptance of the conditions of the bond relating to laborers ad materialmen. The contract-s contentious stipulation reads, 86t is hereby stipulated, that suit on this bond way be brought in the courts of the Philippine 6slands for the district in which the said contract is e"ecuted; and if at the time of the suit any of the obligors is found therein, ser&ice of process as to such obligors may be made by deli&ering a copy of the same to the cler5 of said court, who is hereby appointed agent of the obligors for this purpose.8 This certain pro&ision benifited the materialmen, a third person in the contract. $ssue# /hether or not the stipulation in the contract benifiting the third person is &alid. ,eld# !id the parties to the bond intend to secure the claims of materialmen3 !id the city of Manila so demand, and did the sureties so promise3 4r did the city only demand and the sureties only promise to secure the city of Manila in damages against such claims3 These are the controlling
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questions upon which depend the plaintiffsA claim that the clause referring to the materialmen, etc., is a stipulation pour autrui. The materialmen and others mentioned in the contro&erted clause of the bond should ha&e been included as obligees, on the bond had it had been desired to protect their claims thereby. 6f the contention of the appellants be true that the city had no interest to subser&e in inserting the clause in question and if that were the &iew ta5en by the city officials, the city must be considered by all hands as a mere nominal obligee as to this clause. 6t is a rule of practically uni&ersal application that there must e"ist on the part of the original parties to the contract a clear intent to benefit the third party. =ut in the case at bar, the court ruled that there was no e"press intention of the parties to benefit third persons. Such a construction might seriously affect the interests of the city of Manila; and it is not to be inferred that the officials of the city would accept the bond which by its &ery terms might depri&e the city of all protection thereunder.
Bau00.an vs. Philippine (ational 2an6 +2 Phil. 182 "acts# 9eorge *. Iauffman, was the president of the Philippine Eiber and Produce Company. 4n Eebruary $, #(#+, the board of directors of said company, declared a di&idend of P# , from its surplus earnings for the year #(#,, of which the plaintiff was entitled to the sum of P(+, . This amount was accordingly placed to his credit on the boo5s of the company, and so remained until in 4ctober of the same year when an unsuccessful effort was made to transmit the whole, or a greater part thereof, to the plaintiff in 'ew @or5 City. Thereafter, 9eorge =. /ic5s, treasurer of the said company went to the e"change department of the Philippine 'ational =an5 in Manila and requested that a telegraphic transfer of H.$, should be made to the plaintiff in 'ew @or5 City, upon account of the Philippine Eiber and Produce Company. ?pon recei&ing this telegraphic message, the ban5As representati&e in 'ew @or5 sent a cable message in reply suggesting the ad&isability of withholding this money from Iauffman, in &iew of his reluctance to accept certain bills of the Philippine Eiber and Produce Company. The Philippine 'ational =an5 acquiesced in this and on 4ctober ## dispatched to its 'ew @or5 agency another message to withhold the Iauffman payment as suggested. Iauffman presented himself at the office of the Philippine 'ational =an5 in 'ew @or5 City on 4ctober #$, #(#+, and demanded the money. =y this time, howe&er, the message from the Philippine 'ational =an5 of 4ctober ##, directing the withholding of payment had been recei&ed in 'ew @or5, and payment was therefore refused. $ssue# /hether or not Iauffman is entitled to the amount. ,eld# The court held that yes, he is entitled to collect from the said ban5. This is because in this case, there has been a stipulation pour autrui in the contract. The right of the plaintiff to maintain the present action is clear enough; for it is undeniable that the ban5As promise to cause a definite sum of Civil Law Obligations and Contracts Page 85
money to be paid to the plaintiff in 'ew @or5 City is a stipulation in his fa&or within the meaning of the paragraph abo&e quoted; and the circumstances under which that promise was gi&en disclose an e&ident intention on the part of the contracting parties that the plaintiff should ha&e that money upon demand in 'ew @or5 City. The recognition of this unqualified right in the plaintiff to recei&e the money implies in our opinion the right in him to maintain an action to reco&er it; and indeed if the pro&ision in question were not applicable to the facts now before us, it would be difficult to concei&e of a case arising under it. * stipulation in fa&or of a third person cannot be re&o5ed by the obligated party alone, without the conformity of the other contracting party.
Melecio Co<uia vs. "ield.anEs $nsurance Co.3 $nc. ). %. (o. '42 2!6 "acts# 6n !ecember #, #(%#, appellant Eieldman-s 6nsurance Company issued, in fa&or of the Manila @ellowcab Co., 6nc., a common carrier accident insurance policy, co&ering the period from !ecember #, #(%# to !ecember #, #(%2. 6t was stipulated in said policy thatB The Company will, sub7ect to the 0imits of 0iability and under the Terms of this Policy, indemnify the 6nsured in the e&ent of accident caused by or arising out of the use of Motor Fehicle against all sums which the 6nsured will become legally liable to pay in respect ofB !eath or bodily in7ury to any fareCpaying passenger including the !ri&er, Conductor andLor 6nspector who is riding in the Motor Fehicle insured at the time of accident or in7ury. /hile the policy was in force, or on Eebruary # , #(%2, a ta"icab of the 6nsured dri&en by Carlito Coquia, met a &ehicular accident, in consequence of which Carlito died. The 6nsured made a claim but offer to pay an amount instead by way of compromise but was declined by the claimant. The Company made a counter offer but then again the Company did not accept. Dence, the 6nsured and Carlito-s parents, referred to here as the Coquias, filed a complaint against the Company to collect the proceeds of the aforementioned policy. 6n its answer, the Company admitted the e"istence thereof, but pleaded lac5 of cause of action on the part of the plaintiffs. *fter appropriate proceedings, the trial court rendered a decision sentencing the Company to pay to the plaintiffs the sum of P., and the costs. Dence, this appeal by the Company. $ssues# The Company which contends that plaintiffs ha&e no cause of action becauseB #. 2. the Coquias ha&e no contractual relation with the Company the 6nsured has not complied with the pro&isions of the policy concerning arbitration
,eld# #. *s regards to the first defense, it should be noted that, although, in general, only parties to a contract may bring an action based thereon, this rule is sub7ect to e"ceptions, one of which is found in the second paragraph of *rticle #)## of the Ci&il Code of the Philippines, readingB 6f a contract should contain some stipulation in fa&or of a third person, he may demand its fulfillment pro&ided he communicated his acceptance to the obligor before its re&ocation. * mere incidental Civil Law Obligations and Contracts Page 86
benefit or interest of a person is not sufficient. The contracting parties mush ha&e clearly and deliberately conferred a fa&or upon a third person. This is but the restatement of a well 5nown principle concerning contracts pour autrui, the enforcement of which may b e demanded by a third party for whose benefit it was made, although not a party to the contract, before the stipulation in his fa&or has been re&o5ed by the contracting parties. !oes the policy in question belong to such class of contracts pour autrui3 @es, the policy under consideration is typical of contracts pour autrui, this character being made more manifest by the fact that the deceased dri&er paid fifty percent of the corresponding premiums, which were deducted form his wee5ly commissions. ?nder such conditions, it is clear that the Coquias, who admittedly, are the sole heirs of the deceased , ha&e a direct cause of action against the company, and since they could ha&e maintained this action by themsel&es , without the assistance of the 6nsured, it goes without saying that they could and did properly 7oin the latter in filing the complaint herein. 2. The second defense set up by the company is based upon Section #, of the policy, readingB
6f any difference or dispute shall arise with respect to the amount of the Company-s liability under this Policy, the same shall be referred to the decision of a single arbitrator to be agreed upon by both parties or failing such agreement of a single arbitrator, to the decision of two arbitrators, one to be appointed in writing by each of the parties within one calendar month after ha&ing been required in writing so to do by either of the parties and in case of disagreement between the arbitrators, to the decision of an umpire who shall ha&e been appointed in writing by the arbitrators before entering on the reference and the costs of and incident to the reference shall be dealt with in the *ward. The record shows, howe&er, that none of the parties to the contract in&o5ed this section, or made any reference to arbitration, during the negotiations preceding the institution of the present case, 6n fact, counsel for both parties stipulated, in the trial court, that none of them had, at any time during said negotiation, as pro&ided in said section. Their aforementioned acts or omissions had the effect of a wai&er of their respecti&e right to demand an arbitration.
Article 1 1+
)eo -. 8ay7alt vs. 'a Corporacion de los Padres Agustinos %ecoletos ). %. (o. '41 555 "acts# 6n the year #( 2, Teodorica <ndencia, an unmarried woman, resident in the pro&ince of Mindoro, e"ecuted a contract whereby she obligated herself to con&ey to 9eo /. !aywalt, a tract of land situated in the barrio of Mangarin, municipality of =ulalacao, now San >ose. 6t was agreed that as soon as the title of the land already in the name of <ndencia, but the Torrens certificate was not issued until later. The parties made a new contract with a &iew to carrying their original agreement into effect. This new contract was e"ecuted in the form of a deed of con&eyance and dated *ugust
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#%, #( %. The stipulated price was fi"ed at P., hectares and a fraction.
and the area of the land was stated to be .$2
The second contract was not immediately carried into effect for the reason that the Torrens certificate was not yet obtainable and was not issued until the e"piration of the contract. The parties entered into another contract, superseding the old. The Torrens certificate was in time issued. 6n &iew of some de&elopment during the proceeding relati&e to the registration of the land, <ndencia became reluctant to transfer the whole tract to the purchaser. This attitude of hers led to litigation in which !aywalt finally succeeded, upon appeal to the Supreme Court, in obtaining a decree of specific performance, and <ndencia was ordered to con&ey the entire tract of land to !aywalt. This decree appears to ha&e become finally effecti&e in the early part of the year #(#.. The defendant, 0a Corporacion de los :ecoletos, is a religious corporation, with its domicile in Manila. The same corporation is the owner of another estate ad7acent to the land which <ndencia had sold to !aywalt and for many years had maintained a large hers of cattle on the farms referred to. Their representati&e, charged with management of these farms, was Eather 6sidro Sanz, himself a member of the order. De has long been acquainted with <ndencia and e"erted o&er her an influence and ascendency due to his religious character as well as to the personal friendship which e"isted between them. Eather Sanz was fully aware of the e"istence of the contract of #( 2 by which <ndencia agreed to sell her land to the plaintiff. /hen the Torrens certificate was finally issued to <ndencia, she ga&e it to the Corporation for safe5eeping and was ta5en to Manila, until the deli&ery thereof to the plaintiff by reason of the decree of the Supreme Court in #(#.. /hen <ndecia still retained her possession of the said property Eather Sanz entered an arrangement with <ndencia to pasture on said land the herds of cattle from >une #, #( to May #, #(#.. ?nder the first cause, the plaintiff see5s to reco&er from the defendant corporation the sum of P2., , as damages for the use and occupation of the land in question by reason of the pasturing of the cattle thereon during the period stated. The trial court found that the corporation was liable and fi"ed the amount to be reco&ered at P2,.(,. The plaintiff appealed and insisting that damages should at least P2., . The court said that the damages assessed are sufficient to compensate the plaintiff for the use and occupation of the land during the whole time it was used. There is e&idence in the record strongly tending to show that the wrongful use of the land by the defendant was not continuous throughout the year and it is not clear that the whole of the land was used for pasturage at any time. 6n the second cause of action, the plaintiff see5s to reco&er from the defendant corporation a sum of P$ , , as damages, on the ground that the corporation unlawfully induced <ndencia to refrain from the performance of her contract of sale of the land and to withhold deli&ery to the plaintiff of the Torrens title, and further, maliciously and without reasonable cause, maintained her in her defense to the action of specific performance which was finally decided in fa&or of the plaintiff. The
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cause of action here stated is based on liability deri&ed from the wrongful interference of the defendant in the performance of the contract between the plaintiff and <ndencia. $ssues# #. /hether a person who is not a party to a contract for the sale of land ma5es himself liable for damages to the &endee, beyond the &alue for the use and occupation, by colluding with the &endor and maintaining him in the effort to resist an action for specific performance. 2. /hether the damages which the plaintiff see5s to reco&er under this head are too remote and speculati&e to be the sub7ect of reco&ery. ,eld# #. /hate&er may be the character of the liability which a stranger to a contract may incur by ad&ising or assisting one of the parties to e&ade performance, there is one proposition upon which all must agree. This is, that the stranger cannot become more e"tensi&ely liable in damages for the nonperformance of the contract than the party in whose behalf he intermeddles. To hold the stranger liable for damages in e"cess of those that could be reco&ered against the immediate party to the contract would lead to results at once grotesque and un7ust. 6n the case at bar, as <ndencia was the party directly bound by the contract, it is ob&ious that the liability of the defendant corporation, e&en admitting that it has made itself co participant in the breach of the contract, can in no e&en e"ceed hers. This leads us to consider at this point the e"tent of the liability of <ndencia to the plaintiff by reason of her failure to surrender the certificate of title and to place the plaintiff in possession. 2. The court ha&e considered the plaintiff-s right chiefly against <ndencia, and what has been said suffices in our opinion to demonstrate that the damages laid under the second cause of action in the complaint could not be reco&ered from her, first, because the damages in question are special damages which were not within the contemplation of the parties when the contract was made, and secondly, because the said damages are too remote to be the sub7ect of reco&ery. This conclusion is also necessarily fatal to the right of the plaintiff to reco&er such damages from the defendant corporation, for, as already suggested, by ad&ising <ndencia not to perform the contract, said corporation could in no e&ent render itself more e"tensi&ely liable than the principal in the contract.
Article 1 15
Avelino 2aluran vs. %icardo (avarro and Antonio /1endencio ). %. (o. '4+++28 "acts# Spouses !omingo Paraiso and Eidela Paraiso were the owners of a residential lot in 6locos 'orte. 4n or about Eebruary 2, #(%., the Paraisos e"ecuted an agreement entitle J=*:T<:K whereby as a party of the first part they agreed to Jbarter and e"changeK with spouses *&elino and =enilda =aluran their residential lot with the latter-s unirrigated :iceland, without any permanent impro&ements, under the following conditionsB That both the Party of the Eirst Part and the Party of the Second Part shall en7oy the material possession of their respecti&e properties, the Party of the Eirst Part shall reap the fruits of the unirrigated :iceland and the Party of the Second Part shall ha&e a right to build his own house in the residential lot. Civil Law Obligations and Contracts Page 89
'e&ertheless, in the e&ent any of the children of 'ati&idad 4bencio, daughter of the Eirst Part, shall choose to reside in this municipality and build his own house in the residential lot, the Party of the Second Part shall be obliged to return the lot such children with damages to be incurred. That neither the Party of the Eirst Part nor the Party of the Second Part shall encumber, alienate or dispose of in any manner their respecti&e properties as bartered without the consent of the other. That inasmuch as the bartered properties are not yet accordance with *ct 'o. .(% or under the Spanish Mortgage 0aw, they finally agreed and co&enant that this deed be registered in the 4ffice of the :egister of !eeds of 6locos 'orte pursuant to the pro&isions of *ct 'o. ))... 4n May %, #(,$ *ntonio 4bendencio filed with the Court of Eirst 6nstance of 6locos 'orte the present complaint to reco&er the abo&eCmentioned residential lot ha&ing acquired the same from his mother, 'ati&idad 4bedencio and that he needed the property for Purposes of constructing his house thereon inasmuch as he had ta5en residence in his nati&e town. *nswering the complaint, =aluran alleged inter alia #2 that the barter agreement transferred to him the ownership of the residential lot in e"change for the unirrigated riceland con&eyed to the plaintiff-s predecessor in interest, 'ati&idad 4bedencio, who in fact is still on thereof and 22 that the plaintiff-s cause of action if any had prescribed. !ecision was rendered, the plaintiff is hereby declared owner of the question, the defendant is hereby ordered to &acate the same with costs against the defendant. =aluran now see5s a re&iew of that decision . $ssues# #. /hether or not the lower court erred in holding that the barter agreement did not transfer ownership of the lot in suit to the petitioner. 2. /hether or not the lower court erred in not holding that the right to reCbarter or reCe"change by the statute of limitation. ,eldB #. '4. The stipulations in said document are clear enough to indicate that there was no intention at all on the part of the signatories thereto to con&ey the ownership of their respecti&e properties, all that was intended, and it was so pro&ided in the agreement, the parties retained the right to alienate their respecti&e properties which right is an element of ownership. /hen there is nothing contrary to law, morals and good customs or public policy in the stipulations of a contract, the agreement constitutes the law between the parties and the latter is bound by the terms thereof. *rticle #) % of the Ci&il Code statesB *rt. #) %. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem con&enient, pro&ided there are not contrary to law, morals, good customs, public policy or public order.
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Contracts which are the pri&ate laws of the contracting parties, should be fulfilled according to the literal sense of their stipulations, if their terms are clear and lea&e no room for doubt as to the intention of the contracting parties, for contracts are obligatory, no matter what their form may be, whate&er the essential requisites for their &alidity are present. The trial court therefore correctly ad7udged that *ntonio 4bedencio is entitled to reco&er the possession of the residential lot pursuant to the agreement of Eebruary 2, #(%. 2. '4. Petitioner submits under the second assigned error that the causa, of action if any of respondent 4bedencio had prescribed after the lapse of four years form the date of e"ecution of the document of Eebuary 2, #(%.. 6t is argued that the remedy of plaintiff, now respondent, was to as5 for reCbarter or reCe"change of the properties sub7ect of the agreement which could be e"ercised only within four years from the date of the contract under *rt. #% % of the Ci&il Code. The submission of petitioner is untenable. *rticle #% % of the ci&il code refers to con&entional redemption which petitioner would want to apply to the present situation. Dowe&er, as we stated abo&e, the agreement of the parties of Eebruary 2, #(%., is not one of barter, e"change or e&en sale with right to repurchase, but is none of or a5in the other is the use or material ion or en7oyment of each other-s property. /herefore, 7udgment is hereby renderedB #2 declaring the petitioner *&elino =aluran and respondent *ntonio 4bedencio the respecti&e owners the unirrigated riceland and residential lot mentioned in the J=arter *greementK, 22 ordering =aluran to &acate the residential lot and remo&e impro&ements built by thereon, pro&ided, howe&er, that he shall not be compelled to do so unless the unirrigated riceland shall fi&e been restored to his possession either on &olition of the party concerned or through 7udicial proceedings which he may institute for the purpose.
Article 1 1!
2adillo vs. "errer 152 SC%A +5! "acts# Macario =adillo died interstate in #(%%, sur&i&ed by his widow, Clarita Eerrer, and fi&e minor children. De left a property &alued at P,,$ . 6n #(%,, the sur&i&ing widow, in her own behalf and as a natural guardian of the minor plaintiffs, e"ecuted a !eed of <"tra7udicial Partition and Sale of the Property to defendantsCappellants, the spouses 9regorio Soromero and <leuteria :ana. 6n #(%+, Modesta =adillo, sister of Marcario, was able to obtain guardianship o&er the persons and properties of the minorsC plaintiffs, without personal notice to their mother, who was alleged, could not be located inspite of the efforts e"erted. 6n #(, , their guardian caused the minor plaintiffs to file a complaint for the annulment of the sale of their participation in the property to defendantsCappellants and conceding the &alidity of the sale of the window-s participation in the property, they as5ed that, as co owners, they be allowed to e"ercise the right of legal redemption. The lower court promulgated the appealed 7udgment annulling the sale to defendantsCappellants of the minor plaintiffs- participation in the property, and allowing them to redeem the sold participation of their mother. Civil Law Obligations and Contracts Page 91
The defendantsCappellants appealed. $ssues# #. The court erred in finding that the period of thirty days pro&ided for by *rticle #%2) of the 'ew Ci&il Code for the plaintiffs to redeem the share of their mother in the property sub7ect of their coCownership sold by the latter to defendants has not yet elapsed. 2. The court erred in declaring the sale by Clarita Eerrer =adillo of the $L#2 share of his children on the property in&ol&ed to defendants as null and &oid and relati&e thereto the court consequently erred in its failure to order plaintiffs minors to return to defendants the purchase price as well as the &alue of the impro&ements made by the defendants on the property. ). The court erred in ordering the defendants to reCsell to plaintiffs the remaining ,L#2 portion of the property in question in the amount of P.,),$. . ,eld# #. /hen Clarita Eerrer =adillo signed and recei&ed on >anuary #+, #(%,, her copy of the !eed of <"tra7udicial Partition and Sale, the document e&idencing the transfer of the property in question to the appellants, she also in effect recei&ed the notice in writing required by *rticle #%2) in behalf of her children. Thus, the period of redemption began to toll from the time of that receipt. Since the required written notice was ser&ed on >anuary #+, #(%, and the offer to redeem was only made after 'o&ember ##, #(%+, the legal redemption had already e"pired and the appellants cannot now be ordered to recon&ey to the appellees that portion of the undi&ided property which originally belonged to Clarita Eerrer =adillo. 2. The !eed of <"tra7udicial Partition and Sale is not &oidable or an annullable contract under *rticle #)( of the 'ew Ci&il Code. *rticle #)( renders a contract &oidable if one of the parties is incapable of gi&ing consent to the contract or if the contracting party-s consent is &itiated by mista5e, &iolence, intimidation, undue influence or fraud. 6n this case, howe&er, the appellee minors are not e&en parties to the contract in&ol&ed. Their names were merely dragged into the contract by their mother who claimed a right to represent them, purportedly in accordance with *rticle )2 of the 'ew Ci&il Code. The !eed of <"tra7udicial Partition and Sale is an enforceable or more specifically, an unauthorized contract under *rticle #. )1#2 and #)#, of the 'ew Ci&il Code. Clearly, Clarita Eerrer =adillo has no authority or has acted beyond her powers in con&eying to the appellants that $L#2 undi&ided share of her minor children in the property in&ol&ed in this case. The powers gi&en to her by the laws as the natural guardian co&ers only matters of administration and cannot include the power of disposition. The appellee minors ne&er ratified this !eed of <"tra7udicial Partition and Sale. Dence, the contract remained unenforceable or unauthorized. 'o restitution may be ordered from the appellee minors either as to that portion of the purchase price which pertains to their share in the property or at least as to that portion which benefited them because the law does not sanction any. ). The third error assigned need not be discussed further because of the pronouncement on the first assignment of error has rendered it academic, Suffice it to state that since the ) day period for Civil Law Obligations and Contracts Page 92
redemption had already lapsed, the appellants cannot be ordered to reCsell to the appellees the remaining ,L#2 protion of the property in question.
Petronila Tacalinar vs. 'orenzo Corro y Manalili ). %. (o 115+5 "acts# 0eoncio *lfon y Fisitacion is the year #+($, was the e"clusi&e owner of the Santo 'ino Dacienda. This hacienda finally fell into the hands of 0orenzo Corro in #+(+, by &irtue of what according to the plaintiffs was a contract of lease, or according to the record found, it was a deed of sale e"ecuted in fa&or of the said Corro on Eebruary #+, #+(+. De sold the property to >uan Perez y 9onzales for the sum of P),$ , as attested by the certified copy of the notarial instrument issued by the cler5 of the Court of 0and :egistration. 6t is to be noted that before >uan Perez purchased the hacienda, and that as a result of the negotiations underta5en by Eerrer to con&ey the said estate, he arranged for its sale, on May 2,, #(##, to >uan Perez 9onzales for the sum of P$, , payable in the installments agreed upon in the deed of sale. The purchaser 9onzales had paid to the plaintiffC&endors P$ on account, saying that he had contracted for the purchase of the hacienda with the plaintiff-s attorney in fact as the latter had assured him that Corro had absolutely no rights in the said hacienda, but that, ha&ing subsequently disco&ered that the true owner of the estate was Corro, 9onzales discontinued ma5ing the partial payments agreed upon and renounced the payments he had already made in fa&or of the plaintiffs and e&en made them a present of P#, in addition because he was their relati&e. /hen 9onzales filed an application in the court of 0and :egistration for the registration of the hacienda had had purchased, his application was opposed by the widow and children of *lfon and the said court, by decree of >une #+, #(#), dismissed the proceedings for registration brought by 9onzales, until a final determination of the suit that the ob7ecting heirs of *lfon might file against the applicat Perez in the Court of Eirst 6nstance. 6t was for this reason these proceeding were commenced. The plaintiffs claim that the said hacienda was merely leased to Corro for P#,$ per annum for the period of fi&e years, and that it was in no manner sold to the lessee. The hacienda was possessed by Corro as lessee only and this fact was also set forth by the plaintiffs in the power of attorney e"ecuted in behalf of Eerrer on *pril 2., #(## and that the lessee had ceased to pay the rentals agreed upon. Dowe&er, the defendant and his wife in their depositions made before a notary state that they acquired the said hacienda by purchase from the plaintiffs, *suncion and :ufo *lfon, children of 0eoncio *lfon, who assured the purchasers, the deponents, that their father had already died and e&en showed them a death certificate, that the deponents would not ha&e decided to ma5e the purchase, were it not that the said *suncion and :ufo had also showed them a letter dated >anuary (, #+(+ and signed by their mother, ordering them to sell the hacienda and instructing them to gi&er the preference to Corro and that by reason of the statements of these plaintiffs to the effect that their father had died on !ecember 2+, #+(%, ant that they were authorized by their mother Tacalinar, widow of 0eoncio, to sell the hacienda , the deponents e"ecuted the contract of purchase it on Eebruary #+,#(#+, for the sum of P),$ of which amount they had a different occasions paid the sums of P$) and P#,., , that it was stipulated that the purchasers should gi&e a promissory note for Civil Law Obligations and Contracts Page 93
the balance of P#,$ . This contract is subscribed by *suncion and :ufo *lfon, with two witnesses. 6n compliance with one of the conditions of the sale, the purchaser, Corro, on Eebruary 22, #+(+, e"ecuted a promissory note for the sum of P#,$ in fa&or of Tacalinar, widow of the deceased *lfon, in Jconsideration of the purchase made on the #+th of the present month and year, of the hacienda in the sum of P),$ .K 6t afterwards turned out that 0eoncio *lfon, the owner of the hacienda, did not die until 'o&ember #(#2. The promissory note of P#,$ was collected in two installments by 0eoncio *lfon, who was supposed to be dead. 6t was subsequently learned that the said promissory note had been gi&en in partial payment of the purchase of the hacienda. $ssue# /hether the contract e"ecuted in #+(+ between *suncion *lfon, daughter of former owners of the hacienda is question, and 0orenzo Corro, by &irtue of which contract of lease, or whether on the contrary, as the defendants allege, it was a contract of absolute sale of the said hacienda to Corro. ,eld# <&en if 0eoncio *lfon had not 5nown of or consented to the sale of the Dacienda at the time it was affected on Eebruary #+, #(+(, yet the subsequent 5nowledge that he had of that sale and the two collections that he made on account of the promissory note of P#,$ , a part of the price, are acts which show that he had afterwards confirmed and appro&ed the said con&eyance of his property, the more so because he had in his possession, had information and 5nowledge of, the consideration which gi&e rise to the e"ecution of the said promissory note for P#,$ and he only parted with the note by returning it to 0orenzo Corro after he had recei&ed the total sum it called for. *lthough 0eoncio *lfon, the owner of the hacienda, may not ha&e authorized any one, not e&en his wife and children, to sell his property, yet after he was informed of the said con&eyance, if instead of demanding its annulment he proceeded to collect in installments the amount of the promissory note for P#,$ , thus ratifying and appro&ing the said sale, his action necessarily implies that he wai&ed his right of action to a&oid the contract, and consequently, it also implies the tacit, if not e"press, confirmation of the said sale effected by two of his children by his wife-s order. The supreme court of Spain, in applying the pro&isions of article #2$( of the Ci&il Code in a decision rendered on appeal on May ,, #+(,, announced the following legal doctrinesB The ratification or confirmation of a contract by the person in whose name the contract was made by a third party who had no authority therefore, &alidates the act from the moment of its celebration, not merely from the time of its confirmation, for the confirmation operates upon or applies to the act already performed. Eurthermore, article #)#) of the Ci&il Code saysB Confirmation purges the contract of all defects which it may ha&e contained from the moment of its e"ecution.
Page 94
Therefore, although there may ha&e been some defects in the contract of sale, by &irtue of which the defendants Corro and Samorro acquired the Dacienda, the subsequent appro&al made by its owner 0eoncio *lfon purged the contract of such defect.
)utierrez ,er.anos vs. /rense 28 Phil 5!1 "acts# 4n March $, #(#), counsel for 9utierrez Dermanos filed a complaint, afterwards amended, in the Court of Eirst 6nstance of *lbay against <ngacio 4rense, in which he set forth that on and before Eebruary #., #( ,, the defendant 4rense had been the owner of a parcel of land, with the buildings and impro&ements thereon, situated in the pueblo of 9uinobatan, *lbay, the location, area and boundaries of which were specified in the complaint; that the said property has up to date been recorded in the new property registry in the name of the said 4rense, according to certificate 'o. $, with the boundaries therein gi&en; that, on Eebruary #., #( ,, >ose !uran, a nephew of the defendant, with the latterAs 5nowledge and consent, e"ecuted before a notary a public instrument whereby he sold and con&eyed to the plaintiff company, for P#,$ , the aforementioned property, the &endor !uran reser&ing to himself the right to repurchase it for the same price within a period of four years from the date of the said instrument; that the plaintiff company had not entered into possession of the purchased property, owing to its continued occupancy by the defendant and his nephew, >ose !uran, by &irtue of a contract of lease e"ecuted by the plaintiff to !uran, which contract was in force up to Eebruary #., #(##; that the said instrument of sale of the property, e"ecuted by >ose !uran, was publicly and freely confirmed and ratified by the defendant 4rense; that, in order to perfect the title to the said property, but that the defendant 4rense refused to do so, without any 7ustifiable cause or reason, wherefore he should be compelled to e"ecute the said deed by an e"press order of the court, for >ose !uran is notoriously insol&ent and cannot reimburse the plaintiff company for the price of the sale which he recei&ed, nor pay any sum whate&er for the losses and damages occasioned by the said sale, aside from the fact that the plaintiff had suffered damage by losing the present &alue of the property, which was worth P), ; that, unless such deed of final con&eyance were e"ecuted in behalf of the plaintiff company, it would be in7ured by the fraud perpetrated by the &endor, !uran, in conni&ance with the defendant; that the latter had been occupying the said property since Eebruary #., #(##, and refused to pay the rental thereof, notwithstanding the demand made upon him for its payment at the rate of P) per month, the 7ust and reasonable &alue for the occupancy of the said property, the possession of which the defendant li5ewise refused to deli&er to the plaintiff company, in spite of the continuous demands made upon him, the defendant, with bad faith and to the pre7udice of the firm of 9utierrez Dermanos, claiming to ha&e rights of ownership and possession in the said property. Therefore it was prayed that 7udgment be rendered by holding that the land and impro&ements in question belong legitimately and e"clusi&ely to the plaintiff, and ordering the defendant to e"ecute in the plaintiffAs behalf the said instrument of transfer and con&eyance of the property and of all the right, interest, title and share which the defendant has therein; that the defendant be sentenced to pay P) per month for damages and rental of the property from Eebruary #., #(##, and that, in case these remedies were not granted to the plaintiff, the defendant be sentenced to pay to it the sum of P), as damages, together with interest thereon since the date of the institution of this suit, and to pay the costs and other legal e"penses. $ssues# Civil Law Obligations and Contracts Page 95
#. /hether or not the contract was perfected. 2. /hether or not the contract entered by third person is &alid. ,eld# *rticle #2$( of the Ci&il Code prescribesB 8'o one can contract in the name of another without being authorized by him or without his legal representation according to law. * contract e"ecuted in the name of another by one who has neither his authorization nor legal representation shall be &oid, unless it should be ratified by the person in whose name it was e"ecuted before being re&o5ed by the other contracting party. The sworn statement made by the defendant, 4rense, while testifying as a witness at the trial of !uran for estafa, &irtually confirms and ratifies the sale of his property effected by his nephew, !uran, and, pursuant to article #)#) of the Ci&il Code, remedies all defects which the contract may ha&e contained from the moment of its e"ecution. The sale of the said property made by !uran to 9utierrez Dermanos was indeed null and &oid in the beginning, but afterwards became perfectly &alid and cured of the defect of nullity it bore at its e"ecution by the confirmation solemnly made by the said owner upon his stating under oath to the 7udge that he himself consented to his nephew >ose !uranAs ma5ing the said sale. Moreo&er, pursuant to article #) ( of the Code, the right of action for nullification that could ha&e been brought became legally e"tinguished from the moment the contract was &alidly confirmed and ratified, and, in the present case, it is unquestionable that the defendant did confirm the said contract of sale and consent to its e"ecution. 4n the testimony gi&en by <ngacio 4rense at the trial of !uran for estafa, the latter was acquitted, and it would not be 7ust that the said testimony, e"pressi&e of his consent to the sale of his property, which determined the acquittal of his nephew, >ose !uran, who then acted as his business manager, and which testimony wiped out the deception that in the beginning appeared to ha&e been practiced by the said !uran, should not now ser&e in passing upon the conduct of <ngracio 4rense in relation to the firm of 9utierrez Dermanos in order to pro&e his consent to the sale of his property, for, had it not been for the consent admitted by the defendant 4rense, the plaintiff would ha&e been the &ictim of estafa. 6f the defendant 4rense ac5nowledged and admitted under oath that he had consented to >ose !uranAs selling the property in litigation to 9utierrez Dermanos, it is not 7ust nor is it permissible for him afterward to deny that admission, to the pre7udice of the purchaser, who ga&e P#,$ for the said property. he repeated and successi&e statements made by the defendant 4rense in two actions, wherein he affirmed that he had gi&en his consent to the sale of his property, meet the requirements of the law and legally e"cuse the lac5 of written authority, and, as they are a full ratification of the acts e"ecuted by his nephew >ose !uran, they produce the effects of an e"press power of agency. The 7udgment appealed from in harmony with the law and the merits of the case, and the errors assigned thereto ha&e been duly refuted by the foregoing considerations, so it should be affirmed.
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Article 1 18
'i. vs. Sun 'i0e $nsurance +1 Phil. 26 "acts# 4n >uly %, #(#,, 0uis 0im y 9arcia of Wamboanga made application to the Sun 0ife *ssurance Company of Canada for a policy of insurance on his life in the sum of P$, . 6n his application 0im designated his wife, Pilar C. de 0im, the plaintiff herein, as the beneficiary. The first premium of P.)) was paid by 0im, and upon such payment the company issued what was called a Jpro&isional policy.K.should the the company not issue the said policythen this agreement should be null and &oid.* period of . months from the date of the application was also stated The instant action is brought by the beneficiary, Pilar C. de 0im, to reco&er from the Sun 0ife *ssurance Company of Canada the sum of P$, , the amount named in the pro&isional policy. 0uis 0im y 9arcia howe&er died on *ugust 2), #(#,, after the issuance of the pro&isional policy but before appro&al of the application by the home office of the insurance company. $ssue# /hether or not the contract has been perfected ,eld# 4ur duty in this case is to ascertain the correct meaning of the document abo&e quoted. * perusal of the same many times by the writer and by other members of the court lea&es a decided impression of &agueness in the mind. *pparently it is to be a pro&isional policy Jfor four months only from the date of this application.K /e use the term JapparentlyK ad&isedly, because immediately following the words fi"ing the four months period comes the word Jpro&idedK which has the meaning of Jif.K 4therwise stated, the policy for four months is e"pressly made sub7ected to the affirmati&e condition that Jthe company shall confirm this agreement by issuing a policy on said application when the same shall be submitted to the head office in Montreal.K To (,einforce the same there follows the negati&e condition. 6t is of course a primary rule that a contract of insurance, li5e other contracts, must be assented to by both parties either in person or by their agents. So long as an application for insurance has not been either accepted or re7ected, it is merely an offer or proposal to ma5e a contract. The contract, to be binding from the date of the application, must ha&e been a completed contract, one that lea&es nothing to be done, nothing to be completed, nothing to be passed upon, or determined, before it shall ta5e effect. There can be no contract of insurance unless the minds of the parties ha&e met in agreement. 4ur &iew is, that a contract of insurance was not here consummated by the parties.
Article 1 1*
Fayco vs. Serra ++ Phil. 26 "acts# 4n 'o&ember ,, #(#+, the plaintiff, 0orenzo Wayco, and the defendant, Sal&ador Serra, entered into a contract 4n >une 2+, #(#(, the plaintiff, 0orenzo Wayco, through his attorney, wrote a letter 1<"hibit *2 to the defendant, Sal&ador Serra, accepting the foregoing contract and placing at his disposal a cash order of the =an5 of the Philippine 6slands of 6loilo in the amount of P# , , in part payment of the Civil Law Obligations and Contracts Page 97
price of the Palma Central and <state. 6n this letter, notice was also gi&en to Serra that the Philippine 'ational =an5 agreed to transfer his long term loan of P% , , to the account of Wayco and to hold the latter responsible for all the amounts had and recei&ed on account of this loan, Serra to be completely relie&ed from all responsibility arising therefrom. 4ffer was further made in this letter to gi&e the bond required by the contract of 'o&ember ,, #(#+, to secure the payment of the balance of the price of the Palma Central and <state. The letter ended with a demand by Wayco on Serra to e"ecute the deed of sale. Serra had 5nowledge of this letter on >une ) , #(#(, as may be inferred from his answer bearing that date 1<"hibit C2. 4n the following #$th of >uly, Serra wrote to WaycoAs attorney, stating that the option contract of 'o&ember ,, #(#+, was cancelled and annulled. 4n the same day, >une ) , #(#(, Wayco brought suit against Serra to compel him to e"ecute the deed of sale and con&eyance of the Palma Central and <state and to pay, in addition, P$ , as damages. he defendant filed his answer on Eebruary 2,, #(2 , containing a general and specific denial of all and each of the allegations of the complaint and a special defense consisting in that the contract of 'o&ember ,, #(#+, did not specify a sufficient consideration on the part of the plaintiff Wayco. 4n March #(, #(2 , the plaintiff filed a supplemental complaint in which Philip /hita5er, Fenancio Concepcion, and <usebio :. de 0uzuriaga were included as defendants, and it was alleged that, without the 5nowledge of the plaintiff Wayco, the defendant Serra sold the Palma Central and <state to said Messrs. Philip /hita5er, Fenancio Concepcion, and <usebio :. de 0uzuriaga on >anuary 2(, #(2 , for the sum of P#,$ , on the terms and conditions specified in said contract. 6t is prayed in this complaint that, at all e&ents, the plaintiff Wayco be declared entitled to purchase from the defendant, Serra, the Palma Central and <state on the same terms and conditions as those of the sale to Messrs. /hita5er, Concepcion, and 0uzuriaga. 0ater Mr. <usebio :. de 0uzuriaga was e"cluded from this complaint. The plaintiff Wayco ha&ing assigned his rights to !ionisio 6nza and Se&erino 0izarraga, these parties were admitted to inter&ene as plaintiffs. The cause ha&ing been tried, the court below rendered 7udgment absol&ing the defendants from the complaint. =y the terms of the contract of 'o&ember ,, #(#+, Wayco was granted the rightB 1a2 To purchase the Palma Central and <state until >une ) , #(#(, and 1b2 ha&e preference, after that date, o&er any other purchaser ma5ing the same terms. The court below holds that this contract of 'o&ember ,, #(#+, has no consideration and is, for this reason, null and &oid. This conclusion, howe&er, is not supported by the e&idence. $ssues# #. /4' the contract e"ecuted on 'o&ember , is null and &oid. 2. /4' the contract was perfected ,eld# 6t should be noted that, according to the terms of the offer, in case the total of the agreed price of P#, , could not be paid in cash, the balance was to be paid within a period not e"ceeding Civil Law Obligations and Contracts Page 98
three years. This means that a part of this price was to be paid in cash. =ut the amount of this first payment was not determined. Consequently, when Wayco accepted the offer, tendering the sum of P# , as first payment, his acceptance in&ol&ed a proposal, not contained in the offer, that this precisely, and not any other, should be the amount of the first payment. This proposal, in turn, required acceptance on the part of Serra. Eor this reason, WaycoAs acceptance did not imply conformity with the offer of Serra, but only when the latter shall, in turn, ha&e accepted his proposal that the amount to be paid in cash was P# , . 'ot only was this not accepted by Serra, but Serra cancelled his offer on >uly #$, #(#(. *n attempt was made to pro&e the allegation contained in the last amended complaint to the effect that subsequent to the e"ecution of the contract 'o&ember ,, #(#+, Wayco and Serra agreed, as a suppletory stipulation, that the amount of the first payment to be made in cash should be P# , . 6t is said that this stipulation is contained in a letter sent by Serra to Wayco. This letter, howe&er, was not introduced in e&idence, but was alleged to ha&e been lost, and secondary e&idence of its contents was presented which consisted in the testimonies of Wayco, his son, :afael, and *ntonio Felez. ?pon e"amination of the testimony of these witnesses, the same is found so uncertain and contradictory on many points affecting their &eracity as not to be considered sufficient to pro&e either the loss of the alleged letter, or its e"istence and contents. Moreo&er, it is strange, if that stipulation e&er e"isted, that Wayco, in accepting the offer, not only agreed to pay P# , in cash, but agreed also, as part of his acceptance, to assume SerraAs obligations in connection with the credit of P% , gi&en him by the 'ational =an5. 6t is stranger still that this stipulation, being so important a part of the contract, was not alleged in the original complaint, and notwithstanding that in the demurrer to this complaint attention was called to the fact that this stipulation was lac5ing, this allegation was not made in the two successi&e amended complaints but only in the fourth, after the court had sustained the demurrer filed on this ground. 4ur conclusion is that the acceptance made by Wayco of SerraAs offer was not sufficient to gi&e life to a contract and is no ground for compelling Serra to e"ecute the sale offered. *s to plaintiffAs claim that they ha&e preference o&er the defendants, Messrs. Fenancio Concepcion and Phil. C. /hita5er in the purchase of the Palma Central, two members of this court and the writer of this opinion belie&e that the plaintiffs are entitled to this preference, but the ma7ority of the court hold otherwise, for the reason that the plaintiffs ha&e not formally offered to repay the defendant Concepcion and /hita5er incurred under the contract
Montinola vs. 9ictorias Milling Co. 5+ Phil. !82 "acts# The Fictoria-s Milling Co., operating a sugar central organized a contest for the most efficient production of sugar. Derein plaintiff, Montinola was the owner of four plantations. =efore the awarding of winners, the manager of sugar central upon disco&ery of irregularities in the train reports co&ering cane deli&eries from the plantation of plaintiff Montinola directed the chemist, Carlos 0ocsin to ma5e an in&estigation. The result of the in&estigation lead to the decision of management that plaintiff be disqualified. The said decision disregarded the suggestion of the chemist that instead
Page 99
of disqualifying they may consider as one &iew of the fact that the said plantation were contagious to each other. =eing disqualified, the plaintiff brought the action to the court. $ssue# /hether or not the party committed fraud upon disqualifying herein plaintiff due to irregularities mentioned thereof. ,eld# 'o, there was no fraud, bad faith or misinterpretation on the final due to the fact that the cane from two or more plantations was in part commingled and such plantations were consequently barred from the entry into the final contest and from the participation by the owner in the distribution of the rewards.
2eau.ont vs. Prieto +1 Phil. 6!5 "acts# 'agta7an Dacienda, and that =enito Faldes was his attorney in fact and had acted as such on the occasions reffered to in the complaint by &irtue of a power of attorney duly e"ecuted under notarial seal and presented in the office of the register of deeds, a copy of which, mar5ed as <"hibit *, was attached to the complaint; that on or abo&e !ecember ., #(##, the defendant =enito Faldez ga&e to the plaintiff. The plaintiff in writing accepted the terms of said offer and requested of Faldes to be allowed to inspect the property, titles and other documents pertaining to the property, and offered to pay to the defendant, immediately and in cash as soon as a reasonable e"amination could be made of said property titles and other documents, the price stipulated in the contract for said hacienda which is also described in the complaint, as well as its &alue and the re&enue annually obtainable therefrom; that, in spite of the frequent demands made by the plaintiff, the defendants ha persistently refused to deli&er to him the property titles and other documents relati&e to said property and to e"ecute any instrument of con&eyance thereof in his fa&or; that the plaintiff, on account of said refusal on the part of the defendant Faldes, based on instructions from the defendant 0egarda, had suffered damages in the amount of P,% , , and, by the tardiness, failure and refusal of the defend to comply with his obligation, the plaintiff had incurred great e"pense and suffered great losses, whereby he was pre7udiced in the mount of P+ , ; that the plaintiff was and had been, on all occasions, willing to comply with the obligation imposed upon him to pay to the defendants the full stipulated price. $ssue# /hether or not the offer of sale of the 'agta7an Dacienda, granted by letter of !ecember ., #(##, <"hibit < constitute a perfect contract and there can be obligation demandable in law by &irtue of the stipulations contained in said document. ,eld# 'o. The letter of !ecember ., #(##, <"hibit <, contained, as aforesaid, an offer of sale or a proposal of sale on the partof the defendant Faldes to the plaintiff =orc5, of the 'agta7an Dacienda, for the assessed &aluation of the same, effecti&e during the period of three months counting from the said date. Such proposal or offer was an e"pression of the will only of the defendant Faldes, manifested to the plaintiff =orc5. 6n order that such a proposal might ha&e the force of a contract, it was necessary that the plaintiff =orc5As will should ha&e been e"pressed in harmony with all the terms of the said proposal. Consent is shown by the concurrence of the offer and the acceptance of the thing and the cause which are to constitute the contract. 1*rt. #2%2, Ci&il Code.2 Civil Law Obligations and Contracts Page 100
There is no contract unless, among other requisites, there is consent of the contracting parties. 1*rt. #2%#, par. #, of the same code.2 Contracts are perfected by mere consent, and from that time they are binding, not only with regard to the fulfillment of what has been e"pressly stipulated, but also with regard to all the consequences which, according to their character, are in accordance with good faith, use, and law. 1*rt. #2$+, Ci&il Code.2 *s the offer of sale of the 'agta7an Dacienda, made by Faldes to =orc5, or the option of purchase thereof granted by the former to the latter by the letter of !ecember ., #(##, <"hibit <, did not constitute a perfect contract and, consequently, was not binding upon the defendants Faldes and 0egarda or the plaintiff =orc5, by reason of the lac5 of the mutual assent of the parties concerned therein, which is wholly in accordance with the terms of the said offer, there can be no obligation demandable in law by &irtue of the stipulations contained in said document, and the action prosecuted by the plaintiff for that purpose in these proceedings in improper. Eor the foregoing reasons the 7udgment appealed from is re&ersed and we absol&e the defendants from the complaint. The costs of the first instance shall be imposed upon the plaintiff.
"rancisco vs. )S$S 11! Phil. 586 "acts# Plaintiff, Trinidad Erancisco in consideration of a loan in the amount of . , . out of which the sum of ))%, . was released to her, mortgaged in fa&or of the defendant 9S6S a parcel of land payable with in ten years in monthly installments and with the interest compounded monthly. The system e"tra 7udicially foreclosed the mortgage on the ground that up to that date the plaintiffC mortgagor was in arrears on her monthly installments. The system itself was the buyer of the property in the foreclosure sale. The plaintiff-s father *tty. Ficente Erancisco sent a letter to the general manager of the defendant corporation requesting re redemption of foreclosed property of her daughter. The defendant recei&ed the amount of ) , . and issued therefore a receipt in accordance with the letter of plaintiff-s father. Dowe&er respondent sent a copy of letter to plaintiff as5ing for the payment of her indebtedness since according to them the one year period of redemption has e"pired. Plaintiff-s father sent a letter in reply, protesting against the system-s request. *ccording to the defendant, the remittances pre&iously made by plaintiff-s father were not sufficient. Dence, the plaintiff instituted this complain. $ssue# /hether or not the contract telegram generated a contract is &alid and binding upon partner. ,eld# @es, the terms of the offer were clean and o&er the signature of defendant-s general manager was informed telegraphically that her proposal had been accepted. There ws nothing in the telegram that hinted at any anomaly or gra&e ground to suspect its &eracity and the plaintiff can be blamed for relying upon it.
'audico vs. Arias + Phil. 2!5 Civil Law Obligations and Contracts Page 101
"acts# !efendant, Ficente *rias, who, with his codefendants, owned the building 'os. 2 $ to 22# on Carriedo Street, on his behalf and that of his coowners, wrote a letter to the plaintiff, Mamerto 0audico, gi&ing him an option to lease the building to a third person, and transmitting to him for that purpose a tentati&e contract in writing containing the conditions upon which the proposed lease should be made. 0ater Mr. 0audico presented his coplaintiff, Mr. Ered. M. Darden, as the party desiring to lease the building. 4n one hand, other conditions were added to those originally contained in the tentati&e contract, and, on the other, counterCpropositions were made and e"planations requested on certain points in order to ma5e them clear. Mr. 0audico, finally wrote a letter to Mr. *rias on March %, #(#(, ad&ising him that all his propositions, as amended and supplemented, were accepted. 6t is admitted that this letter was recei&ed by Mr. *rias by special deli&ery at 2.$) p.m. of that day. 4n that same day, at ##.2$ in the morning, Mr. *rias had, in turn, written a letter to the plaintiff, Mr. 0audico, withdrawing the offer to lease the building. $ssue# /hether or not the plaintiff in this action is that the defendants be compelled to e"ecute the contract of lease of the building. ,eld# 'o, under article #2%2, paragraph 2, of the Ci&il Code, an acceptance by letter does not ha&e any effect until it comes to the 5nowledge of the offerer. Therefore, before he learns of the acceptance, the latter is not yet bound by it and can still withdraw the offer. Consequently, when Mr. *rias wrote Mr. 0audico, withdrawing the offer, he had the right to do so, inasmuch as he had not yet recei&e notice of the acceptance. *nd when the notice of the acceptance was recei&ed by Mr. *rias, it no longer had any effect, as the offer was not then in e"istence, the same ha&ing already been withdrawn. There was no meeting of the minds, through offer and acceptance, which is the essence of the contract. /hile there was an offer, there was no acceptance, and when the latter was made and could ha&e a binding effect, the offer was then lac5ing. The 7udgment appealed from is re&ersed and the defendants are absol&ed from the complaint.
Article 1 2+
Sanchez vs. %igos +5 SC%A 68 "acts# 4n ) *pril #(%#, 'icolas Sanchez and Se&erina :igos e"ecuted an instrument, entitled J4ption to Purchase,K whereby Mrs. :igos Jagreed, promised and committed . . . to sellK to Sanchez, for the sum of P#,$# . , a parcel of land situated in the barrios of *bar and Sibot, municipality of San >ose, pro&ince of 'ue&a <ci7a, and more particularly described in TCT 'TC#2$2+ of said pro&ince, within two 122 years from said date with the understanding that said option shall be deemed Jterminated and elapsed,K if JSanchez shall fail to e"ercise his right to buy the propertyK within the stipulated period. 6nasmuch as se&eral tenders of payment of the sum of P#,$# . , made by Sanchez within said period, were re7ected by Mrs. :igos, on #2 March #(%), the former deposited said amount with the CE6 'ue&a <ci7a and commenced against the latter the present action, for specific performance and damages. 4n ## Eebruary #(%., after the filing of defendant-s answer, both parties, assisted by their respecti&e counsel, 7ointly mo&ed for a 7udgment on the pleadings. *ccordingly, on 2+ Eebruary #(%., the lower court rendered 7udgment for Sanchez, ordering Mrs. Civil Law Obligations and Contracts Page 102
:igos to accept the sum 7udicially consigned by him and to e"ecute, in his fa&or, the requisite deed of con&eyance. Mrs. :igos was, li5ewise, sentenced to pay P2 . , as attorney-s fees, and the costs. Dence, the appeal by Mrs. :igos to the Court of *ppeals, which case was the certified by the latter court to the Supreme Court upon the ground that it in&ol&es a question purely of law. $ssue# /hether or not the contract is &alid and binding. ,eld# 4ption without consideration is a mere offer of a contract of sale, which is not binding until accepted 6f the option is gi&en without a consideration, it is a mere offer of a contract of sale, which is not binding until accepted. 6f, howe&er, acceptance is made before a withdrawal, it constitutes a binding contract of sale, e&en though the option was not supported by a sufficient consideration. . . . 1,, Corpus >uris Secundum p. %$2. See also 2, :uling Case 0aw ))( and cases cited.2 6t can be ta5en for granted that the option contract was not &alid for lac5 of consideration. =ut it was, at least, an offer to sell, which was accepted by latter, and of the acceptance the offerer had 5nowledge before said offer was withdrawn. The concurrence of both acts O the offer and the acceptance O could at all e&ents ha&e generated a contract, if none there was before 1arts. #2$. and #2%2 of the Ci&il Code; Wayco &s. Serra, .. Phil. ))#.2 6n other words, since there may be no &alid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise parta5es, howe&er, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale.
Article 1 26
'eo<uinco vs Postal Savings 2an6 +! Phil. 6!5 "acts# Plaintiff alleged that he was the highest bidder at a public auction held by the defendants on March )#, #(2., for the sale of a piece or parcel of land belonging to the =an5, situated at 'a&otas, Pro&ince of :izal, ha&ing offered P2,, for said property; that in :esolution 'o. )# of the board of directors of the =an5, authorizing the sale of said property at public auction, as well as in the public notice announcing said sale, the board of directors ha&e e"pressly reser&ed to themsel&es the right to re7ect any and all bids; that as such highest bidder at said auction, he wrote a letter to the defendants on May (, #(2., ad&ising that he was ready to tender payment for the land as soon as the deed of sale of the same in his fa&or is e"ecuted and deli&ered by the defendants; that the defendants refused to e"ecute the deed in spite of requests made therefor by him; that said refusal caused him damages in the sum of P2$, more or less. Plaintiff prayed that said defendants be ordered to e"ecute and deli&er the deed of sale of said land in his fa&or, and to pay him damages amounting to P2$, , and the costs. The defendants answered, admitting the allegations of the complaint, e"cept the conclusions of law therein set forth and the damages alleged to ha&e been suffered by plaintiff. *s a special defense, the defendants alleged that in :esolution 'o. )# of the board of directors of the Postal Sa&ings =an5, authorizing the sale at public auction of the property in question, as well as in the notice announcing said sale, the defendants e"pressly reser&ed to themsel&es 8the right to re7ect any and all bids,8 and Civil Law Obligations and Contracts Page 103
that they ne&er accepted the bid or offer of the plaintiff. The defendants prayed for relief from the complaint, with costs against the plaintiff. $ssue# /hether the bidding entered into by the parties are &alid. ,eld# @es. The conditions of a public sale announced by an auctioneer or the owner of the property at the time and place of the sale, are binding upon a purchaser, whether he 5new them or not.
Article 1 2!
,er.osa vs Fo1el 15+ Phil. !6* "acts# ?pon the death of Eernando Dermosa, Sr., his real estate situated in San Sebastian, Spain was left to his daughter 0uz and grandson, Eernando Dermosa, >r., his heirs. 0z was appointed administratri". 0uz sold the said estate to *lfonso Wobel in the amount of P+ , . . Eernando Dermosa, >r. questioned the &alidity of the contract noting that he was a minor when 0uz e"ecuted the deed of sale in fa&or of *lfonso Wobel. $ssue# /hether or not the contract is &alid. ,eld# @es. PlaintiffAs contention that the deed of cession e"ecuted by him 7ointly with 0uz D. ad7udication to the latter the property in question in order to facilitate its sale to the defendant is null and &oid for the reason that at the time it was e"ecuted by him, he was still a minor and so the cession did not ha&e any legal effect is untenable. it appears that at the time he and 0uz D. e"ecuted the said deed of cession he was almost of age, or was already 2 years ## months and ) days old.
Article 1 2*
Miguel vs Catalino 26 SC%A 2 + "acts# 4n >an. 22, #(%2, appellants brought suit in the Court against Elorendo Catalino for the reco&ery of a parcel of land, registered under *ct .(%. The plaintiffs are claiming to be the children and heirs of the original registered owner, and a&erred that defendant, without their 5nowledge or consent, had unlawfully ta5en possession of the land, gathered its produce and unlawfully e"cluded plaintiffs therefrom. !efendant answered pleading ownership and ad&erse possession for ) years, and counterclaimed for attorneyAs fees. *fter trial the Court dismissed the complaint, declared defendant to be the rightful owner, and ordered the :egister of !eeds to issue a transfer certificate in lieu of the original. Plaintiffs appealed directly to the Supreme Court. $ssue# /hether or not the sale of land in #(2+ is &alid. ,eld# 'o. *ppellants are li5ewise correct in claiming that the sale of land in #(2+ by =acaquio to Catalino *gyapao is null and &oid ab initio, for lac5 of e"ecuti&e appro&al.
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Article 1
1
8u.asug vs. Modelo + Phil. 252
"acts# This case is an appeal e"ecuted by counsel for the defendant from the 7udgment of the Court of Eirst 6nstance of Cebu declaring the document in which the plaintiff sold the two parcels of land and her carabao to the defendant null and &oid since the plaintiffAs consent thereto was obtained by means of fraud and deceit. 4n >une #,, #(#2, counsel for *ndrea !umasug filed a written complaint in the Court of Eirst 6nstance of Cebu, in which he alleged that about the month of 'o&ember, #(##, defendant persuaded plaintiff to sign a document by falsely and maliciously ma5ing her belie&e that it contained an engagement on plaintiffAs part to pay defendant a certain sum of money as e"presses occasioned the latter by reason of a lawsuit in which plaintiff !umasug was one of the parties and was protected and aided by defendant; that this document, plaintiff, who does not 5now how to write, signed by affi"ing her mar5 thereto, belie&ing in good faith that defendant had told her the truth and that said document referred to the e"penses incurred by defendant; but that three months after the e"ecution of said document, defendant too5 possession of a carabao belonging to plaintiff and also of two parcels of land, li5ewise belonging to her, situated in the barrio of Iatang, pueblo of *rgao, Cebu, the area and boundaries of which are specified in the complaint, and notified plaintiff that she had con&eyed to him by absolute sale said parcels of land and the plow carabao; that in spite of plaintiffAs opposition and protests, defendant too5 possession of said property and, up to the date of the complaint, continued to hold possession thereof and to en7oy the products of the lands and of the labor of the carabao; and that, by reason of such acts, defendant had caused loss and damage to plaintiff in the sum of P#, . Said counsel therefore prayed the court to render 7udgment by declaring null and &oid and of no &alue whate&er the alleged contract of purchase and sale of the carabao and the two parcels of land described in the complaint, to order defendant to restore to plaintiff said wor5 animal and lands, and, besides, to pay her the sum of P#, for the loss and damage caused her, in addition to the costs of the suit. The court fa&ored the plaintiffAs contention, to which the defendant e"cepted by written motion to as5ed for the reopening of the case and a new trial. Dowe&er, this motion was denied, e"ception to this ruling was ta5en by the defendant and, upon presentation of the proper bill of e"ceptions, the same was appro&ed and transmitted to the cler5 of this court. $ssue# /hether or not the instrument of purchase and sale of two parcels of land and a plow of carabao is null and &oid. ,eld# The court held that the consent gi&en by plaintiff being null and &oid, thus the document signed by plaintiff is consequently also null, &oid, and of no &alue or effect. *rticle #) ) of the Ci&il Code is therefore, applicable, which prescribes thatB 8/hen the nullity of an obligation has been declared, the contracting parties shall restore to each other the things which ha&e been the ob7ect of the contract with their fruits, and the &alue with its interest.8 6n accordance with this legal pro&ision defendant must return and deli&er to plaintiff the two parcels of land in question with their fruits, the sub7ect of the complaint, or the &alue thereof collected by him, which &alue was 7ustly estimated by the trial 7udge at P,$. Civil Law Obligations and Contracts Page 105
/ith respect to the plow carabao that died while in defendantAs possession, the &alue of which is P#2 , 1record, p. )#2 defendant is obliged pursuant to the pro&ision of article #) , of the same code 1to pay and deli&er to plaintiff the &alue of said animal, with interest as an indemnity for the detriment caused to its owner.2 Eor the foregoing reasons, whereby the errors assigned to the 7udgment appealed from are deemed to ha&e been refuted, said 7udgment should be as it is hereby, affirmed, with the costs of this instance against the appellant. So ordered.
Article 1
2
,er.edes vs. CA 16 SC%A +*
"acts # Considering the factual antecedents and issues of the abo&eCcases are the same, this court shall decide on the petitions 7ointly. This in&ol&es a question of ownership o&er an unregistered parcel of land, 0ot 'o. %, plan PsuC ###))#, with an area of 2#,,,) square meters, siuated in Sala, Cabuyao,0aguna. This lot is originally owned by >ose Demedes, father of Ma"ima ad <nrique Demedes. The following is a chronological presentation of how the ownershipLcon&eyance of said property was e"ecutedB March 22, #(., C >ose Demedes e"ecuted document entitled 8!onation 6nter Fi&os with :esolutory Conditions8 where ownership of land, together with all its impro&ements, is con&eyed to his third wife, >usta Iausapin, sub7ect to certain conditions 1 upon death or remarriage of the !4'<<, the title o the property donated be re&erted bac5 to any of the children or heirs of the !onor e"pressly designated by the !4'<< in a public document; in absence of such e"press designation, the title to the property shall automatically re&ert to the legal heirs of the !4'4: in common2. September 2,, #(% C 8!eed of Con&eyance of ?nregistered :eal Property by :e&ersion8 was e"ecuted by >usta Iausapin con&eying to Ma"ima Demedes e"cept that the possession and en7oyment of said property which shall remain &ested to Iausapin during her lifetime, or widowhood and which upon her death or remarriage shall also automatically re&ert to and be transferred to designee Ma"ima Demedes. >une +, #(%2 C 4riginal Certificate of Title 14CT2 'o. 1 C(.#2 C#(+ was issued in the name of Ma"ima Demedes married to :aul :odriguez by the :egistry of !eeds of 0aguna with the annotation that 8>usta Iausapin shall ha&e the usufructuary rights o&er the parcel of land during her lifetime or widowhood.8 >une 2, #(%. C : G = 6nsurance claims that Ma"ima Demedes and husband :aul :odriguez constituted a real estate mortgage o&er the sub7ect property in its fa&or o ser&e as security for a loan amounting to P%, . *ugust 2, #(%. C due date of loan amounting to P%,
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Eebruary 22, #(%+ C : G = 6nsurance e"traC7udicially foreclosed the mortgage upon failure of Ma"ima Demedes to pay the loan. May ), #(%+ C 0and was sold at a public auction with : G = as the highest bidder and was issued a certificate of sale by the sheriff. May 2,, #(,# C >usta Iausapin e"ecuted 8Iasunduan8 transferring the same land to stepson <nrique Demedes pursuant to the deed of donation e"ecuted in her fa&or by her late husband >ose Demedes. Since #(,# until #(,(, <nrique Demedes was the one who has been paying realty ta"es. March 2(, #(,. C : G = 6nsurance e"ecuted an *ffida&it of Consolidation since Ma"ima Demedes failed to redeem the property within the redemption period. September +, #(,. to 4ctober # , #(,. C Cadastral sur&ey of Cabuyao, 0aguna was conducted to which the property was assigned Cadastral 'o. 2(( , Cad. .$$C!, Cabuyao Cadastre, in the name of <nrique Demedes. De is also the owner of the property in the records of the Ministry of *grarian :eform 4ffice, Calamba, 0aguna. May 2#, #(,$ C :egister of !eeds of 0aguna cancelled 4CT 'o. 1 C(.#2 C#(+ and issued Transfer Certificate of Title 1TCT2 'o. .#(+$ in the name of : G = 6nsurance maintaining the annotation of usufruct in fa&or of >usta Iausapin. Eebruary 2+, #(,( C <nrique Demedes sold the property to !ominium :ealty and Construction Corporation 1!ominium2 *pril # , #(+# C >usta Iausapin e"ecuted an affida&it affirming the con&eyance of the sub7ect property in fa&or of <nrique Demedes asembodied in the 8Iasunduan8 and denying the con&eyance made to Ma"ima Demedes. May #., #(+#C !ominium leased the property to sister corporation *sia =rewery which constructed two warehouses made of steel costing P# M each e&en before signing the contract of lease. ?pon learning of *sia =reweryAs constructions, : G = 6nsurance sent a letter on March #%, #(+# informing the former of its ownership. They had a conference but failed to arri&e at an amicable settlement. Ma"ima Demedes, li5ewise, wrote *sia =rewery on Ma +, #(+# asserting that she is the rightful owner of the property. *ugust 2,, #(+#C !ominium and <nrique Demedes filed a complaint before the CE6C0aguna for the annulment of TCT 'o. .#(+$ issued in fa&or of :G = 6nsurance and L or recon&eyance to !ominium. CE6C0aguna rendered 7udgment declaring TCT 'o. .#(+$ null and &oid and ineffecti&e and declaring !ominium as the absolute owner of the parcel of land. : G = 6nsurance and Ma"ima Demedes appealed before the Court of *ppeals where it affirmed the assailed decision in toto. Dence,this petition filed by Ma"ima Demedes and : G = 6nsurance. $ssue # /hether or not >usta Iausapin effecti&ely con&eyed or transferred ownership of said parcel of land to <nrique Demedes.
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%uling # 'o. Supreme Court rendered 7udgment that the assailed decision of public respondent and its resolution dated Eebruary 22, #(+( are :<F<:S<!. The court also upholds petitioner : G = 6nsuranceAs assertion of ownership o&er the property in dispute, as e&idenced by TCT 'o. .#(+$, sub7ect to the usufructuary rights of >usta Iausapin as properly annotated upon said certificate of title.
Article 1
8
:guaras vs. )reat :astern 'i0e Assurance Co.
Phil. 26
"acts#This is an action for the collection of the &alue of an insurance policy. !ominador *lbay filed an application for insurance on his life with the defendant company. Since *lbay was in poor health, the person who presented himself for medical e"amination to the company physician was Castor 9arcia, who posed as *lbay. *s a result of a fa&orable report of the physician, the defendant company e"ecuted the contract of insurance. The insured died. The company contends that the contract should be annulled on the ground of fraud. $ssue#/hether or not the contract should be annulled on the ground of fraud. ,eld# The fraud which ga&e rise to the mista5en consent gi&en by the defendant company to the application for insurance made by *lbay and to the e"ecution of the contract through deceit, is plain and unquestionable. The fraud consisted in the substitution at the e"amination of Castor 9arcia in place of the insured *lbay. The deceit practiced in the contract is of a serious nature, the same is also ipso facto &oid 1&oidable2.
Article 1
*
Strong vs. )utierrez %epide +1 Phil. *+!
"acts# Plaintiff is the owner of + shares of the capital stoc5 of the Philippine Sugar <states !e&elopment Company, 0imited who wants to reco&er such shares from the defendant on the ground that the shares had been sold and deli&ered by the plaintiff-s agent to the agent of the defendant without the authority of the defendant. *lso on the ground that defendant fraudulently concealed from plaintiffs agent, facts affecting the &alue of the stoc5 so sold and deli&ered. $ssue# /hether or not fraud e"ists in the purchasing and concealment of the stoc5. ,eld# The purchaser of corporate stoc5 cannot escape liability for his fraud on concealing facts affecting its &alue which he was in good faith bound to disclose. 4n the theory that, because of the insistence of the seller that her agent was not authorized to ma5e the sale, there had ne&er been any consent on her part, obtained by fraud, or otherwise, where the court finds that the agent-s authority was sufficient, since, in legal effect, her consent will be deemed induced by the fraud.
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Article 1 +5
Azzaraga vs. )ay 52 Phil. 5** "acts# =y a public document, the plaintiff sold two parcels of land to the defendant for the lump sum of P.,, . , payable in installments. The conditions of the payment wereB P$, . would be gi&en at the time of signing the contract; P2 , . upon deli&ery of the Torrens title to the first parcel described in the deed of sale; P# , . upon deli&ery of the Torrens title to the second parcel; and lastly the sum of P#2, . one year after the deli&ery of the Torrens title to the second parcel. The defendant failed to pay the P# , . agreed upon when the plaintiff deli&ered the Torrens title of the second parcel, she also failed to pay the remaining P#2, . after one year from the deli&ery of the title of the second parcel. 6t turned out that the two parcels differ in size, the second being smaller. $ssue# /hether or not there was a false representation on the part of the &endor. ,eld# The defendant ha&e ample opportunity to appraise herself of the condition of the land which she purchased, and the plaintiff did nothing to pre&ent her from ma5ing such in&estigation as she deemed fit. J/hen the purchaser proceeds to ma5e in&estigations by himself, and the &endor does nothing to pre&ent such in&estigation from being complete as the former might wish, the purchaser cannot later allege that the &endor made false representation to him.K
Article 1 +1
Songco vs. Sellner ! Phil. 25+ "acts# The principal defense in this action for specific performance relates to the false representation which, it is claimed, was made by the plaintiff with respect to the quantity of uncut cane standing in the fields at the time the defendant became the purchaser. 6t is pro&ed that Songco estimated that the crop would yield ), piculs of sugar. *s the crop turned out, it only produced 2, #, piculs of sugar. $ssue# /hether or not the representation of the plaintiffC&endor is fraudulent which would in&alidate the contract. ,eld# 6t is of course elementary that a misrepresentation upon a mere matter of opinion is not actionable deceit, nor is it a sufficient ground for a&oiding a contract as fraudulent. /e are aware that statements may be found in the boo5s to the effect that there is a difference between gi&ing an honest opinion and ma5ing a false representation as to what one-s real opinion is. /e do not thin5 howe&er, that this is a case where any such distinction should be drawn. The law allows considerable latitude to seller-s statement, or dealer-s tal5, and e"perience teaches that it is e"ceedingly ris5y to accept it as its face &alue. The refusal of the seller to warrant his estimate should ha&e admonished the purchaser that such estimate was put forth as a mere opinion. Civil Law Obligations and Contracts Page 109
*nd we will not now hold the seller to a liability equal to that which would ha&e been created by a warranty, if one had been gi&en. *ssertions concerning the property which is a sub7ect of a contract of sale, or in regard to its qualities and characteristics, are the usual and ordinary means used by sellers to obtain a high price and are always understood as affording to buyers no ground for omitting to ma5e inquiries. * man who relies upon such affirmation made by a person whose interest might so readily prompt him to e"aggerate the &alue of his property does so at his peril and must ta5e the consequences of his own imprudence.
Article 1 +2
%ural 2an6 o0 Caloocan City vs. Court o0 Appeals 15+ Phil. 151 "acts# :espondent Castro accompanied by Falencia applied for an industrial loan in the :ural =an5 of Caloocan. Falencia then arranged e&erything about the loan. *fter the loan-s appro&al, Castro with the Falencia spouses signed a promissory note corresponding to the loan in fa&or of the ban5. The Falencia spouses obtained from the ban5 an equal amount of loan for P), . where they signed another promissory note also in fa&or of the ban5, where Castro affi"ed her signature. The two loans were secured by a realCestate mortgage on Castro-s house and lot. The said house and lot was to be auctioned to satisfy the obligation of the two loans. 6t is then when Castro learned that the mortgage contract which was an encumbrance on her property was for P%, . and not for P), . and that she was made to sign as coCma5er of the promissory note without her being informed. Castro made a consignation with the court. $ssue# /hether or not the consignation made by Castro is &alid. ,eld# 6t is contended that the consignation was made without prior offer or tender of payment to the ban5, and it is therefore, not &alid. 6n holding that there is a substantial compliance with the pro&ision of *rticle #2$% of the Ci&il Code, respondent court considered the fact that the ban5 was holding Castro liable for the sum of P%, . plus #2M interest per annum, while the amount consigned was only P), . plus #2M interest. That at the time of the consignation, the ban5 had long foreclosed the mortgage e"tra7udicially. The ban5 already 5new of the deposit made by Castro but did not ma5e any claim. ?nder the foregoing circumstances, the consignation made by Castro was &alid, if not under the strict pro&ision of the law, under the liberal considerations of equity.
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Article 1 ++
9aldez vs. Si1al +6 Phil. * 5 "ACTS# The lower court render 7udgment against the defendant and in fa&or of the plaintiff for the sum of P#$,#+,.#2 with the interest thereon at the rate of #2.$M per annum from *ugust #, #(2#, plus P),+)(.#2 as liquidated damages with the costs. *lthough the e&idence tends to show that the contract was one of loan, yet if the parties ha&e interpreted it in the sense that it was a contract of sale, as inferred from their declarations gi&en at the trial, said interpretation is the one to be followed. *s stated in the plaintiff-s complaint, the defendant failed to deli&er what as been agreed upon by the both parties. *s to the last error assigned by the defendantCappellant, the latter argues under the theory that the contract in question is one of loan, /e ha&e already seen that the dependant himself did not consider it so in his testimony and therefore the pro&isions of Section + of *ct 'o. 2$$ are not applicable to this case. Eor all the foregoing reasons, the 7udgment appealed from is modified, and the defendant is sentenced o pay the plaintiff the sum of P#),. ,.%# with legal interest thereon from the date of the publication of this decision, plus the sum of P, ).,2 for his failure to deli&er #,$.() piculs of sugar and in addition thereto the sum of P2, , which was stipulated to be paid in case of litigation, as is the present action. >udgment modified $SS&:# /hether or not contention of the plaintiff is tenable. ,:'8# >udgment fa&ors plaintiff.
Article 1 +*
/sorio vs. /sorio +1 Phil. 5 1 "ACTS# The plaintiff see5s to reco&er %# shares of stoc5 of J@nchausti Steamship Co.K and the di&idends corresponding to them, which were included in the in&entory of the properties of the deceased !a. Maria Petrona :eyes, whose estate is administered by the defendant. The trial court rendered 7udgment in the case, declaring that the %# shares of stoc5 in dispute and their di&idends belong to the plaintiff, and ordered the defendant !a. Tomasa 4sorio, administratri" of the state of !a. Petrona :eyes, to e"clude them from the in&entory and her accounts, and ther other defendant. The case ha&ing been appealed, counsel for the defendant and appellant, in summing up their arguments in support of the errors assigned in their brief, maintain the two following propositionsB
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J#. The donation made by !a. Petrona :eyes in fa&or of the plaintiff was no &alue and effect; and J2. That, supposing said donation &alid, the %# shares of stoc5, the &alue of which is P% shares of stoc5, the &alue of which is P%#, , cannot be considered as included among them.K The e&idence 7ustifies the conclusion of the trial court that they are the profits or di&idends accruing to the P(., , which are ad7udicated to the widow !a. Petrona :eyes in the distribution of the estate of the deceased 4sorio and which were donated by her to he plaintiff, and as such profits they belong to the latter, upon the principle of the law that ownership of property gi&es right by accession to all that it produces, or is united or incorporated thereto, artificially or naturally. The 7udgment appealed from should be, as it hereby affirmed, with cost against the appellant. $SS&: B/hether or not contention of the plaintiff is tenable or not. ,:'8# >udgment in fa&or of the plaintiff.
2las vs. Santos 1 SC%A 8** "ACTS# This action was instituted by plaintiffs against the administratri" of the estate of Ma"ima Santos, to secure a 7udicial declaration that oneChalf of the the properties left by said Ma"ima Santos Fda. !e =las, the greater bul5 of which are set forth and described in the pro7ect of partition presented in the proceedings for the administration of the estate of the deceased Simeon =las, had been promised by the deceased Ma"ima Santos to be deli&ered upon her death and in her will to the plaintiffs, and requesting the said properties so promised be ad7udicated to the plaintiffs. !efendant, who, is the administratri" of the estate of the deceased Ma"ima Santos Fda. !e =las, filed an answer with a counterclaim, and later, an amended answer and a counterclaim. Trial of the case was conducted and, thereafter, the court, Don. 9usta&o Fictoriano, presiding, rendered 7udgment dismissing the complaint, with costs against plaintiff, and dismissing also the counterclaim and crossCclaim filed by the defendants. $SS&:#/hether or not Ma"ima Santos comply with the obligation stated in the documents. ,:'8# The 7udgment appealed re&ersed and the defendantCappellee administratri" of the estate of Ma"ima Santos, is ordered to con&ey and deli&er oneChalf of the properties ad7udicated to Ma"ima Santos as her share in the con7ugal properties.
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Article 1 51
"isher vs. %o11 6* Phil. 151 "acts# The defendant >ohn C. :obb appeals to this Court from the 7udgment of the Court of Eirst 6nstance of Manila, the dispositi&e part of which readsB >udgment is hereby rendered in fa&or of the plaintiff and against the defendant, who is ordered to pay to the former the sum of P2, , with interest at the legal rate from March ##, #()+, until paid, plus costs.&irtual law library 6n September, #()$, the board of directors of the Philippine 9reyhound Club, 6nc., told the herein defendantCappellant >ohn C. :obb, to ma5e a business trip to Shanghai to study the operation of a dog racing course. 6n Shanghai, the defendantCappellant stayed at the *merican Club where be became acquainted with the plaintiffCappellee, *. 4. Eisher, through their mutual friends. 6n the course of a con&ersation, the defendantCappellant came to 5now that the plaintiffCappellee was the manager of a dog racing course. ?pon 5nowing the purpose of the defendantCappellantAs trip, the plaintiffCappellee showed great interest and in&ited him to his establishment and for se&eral days ga&e him information about the business. 6t seems that the plaintiff became interested in the Philippine 9reyhound Club, 6nc., and as5ed the defendant if he could ha&e a part therein as a stoc5holder. *s the defendantCappellant answered in the affirmati&e, the plaintiffCappellee thereupon filled a subscription blan5 and, through his ban5 in Shanghai, sent to the Philippine 9reyhound Club, 6nc., in Manila telegraphic transfer for P), in payment of the first installment of his subscription. 0ater on the defendantCappellant returned to Manila from Shanghai.chanrobles&irtuallawlibrary chanrobles &irtual law library Some months thereafter, when the board of directors of the Philippine 9reyhound Club, 6nc., issued a call for the payment of the second installment of the subscriptions, the defendantCappellant sent a radiogram to the plaintiffCappellee did so and sent P2, directly to the Philippine 9reyhound Club, 6nc., in payment of the said installment. !ue to the manipulations of those who controlled the Philippine 9reyhound Club, 6nc., during the absence of the defendantCappellant undertoo5 the organization of a company called The Philippine :acing Club, which now manages the race trac5 of the Santa *na par5. The defendant immediately endea&ored to sa&e the in&estment of those who had subscribed to the Philippine 9reyhound Club, 6nc., by ha&ing the Philippine :acing Club acquire the remaining assets of the Philippine 9reyhound Club, 6nc. The defendantCappellant wrote a letter to the plaintiffCappellee in Shanghai e"plaining in detail the critical condition of the Philippine 9reyhound Club, 6nc., and outlining his plans to sa&e the properties and assets of the plaintiffCappellee that he felt morally responsible to the stoc5holders who had paid their second installment 1<"h. C2. 6n answer to said letter, the plaintiffCappellee wrote the defendantCappellant requiring him to return the entire amount paid by him to the Philippine 9reyhound Club, 6nc., 1e"hibit <2. ?pon recei&ing this letter, the defendantCappellant answered the plaintiffCappellee for any loss which he might ha&e suffered in connection with the Philippine 9reyhound Club, 6nc., in the same way that he could not e"pect anyone to reimburse him for his own losses which were much more than those of the plaintiffCappellee 1<"h. =2.chanrobles&irtuallawlibrary chanrobles &irtual law library
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$ssue# The principal question to be decided in this appeal is whether or not the trial court erred in holding that there was sufficient consideration to 7ustify the promise made by the defendantC appellant in his letters <"hibits = and C.chanrobles&irtuallawlibrary chanrobles &irtual law library %uling# 6n the fifth paragraph of the letter <"hibit =, dated March #%, #()%, addressed by the defendantCappellant to the plaintiffCappellee, the former saidB 86 feel a moral responsibility for these second payments, which were made in order to carry out my plan 1not the first payments, as you ha&e it in your letter2, and Mr. Dilscher and 6 will see to it that stoc5holders who made second payments recei&e these amounts bac5 as soon as possible, out of our own personal funds. 8*s it is, 6 ha&e had to ta5e my loss along with e&eryone else here, and so far as 6 can see that is what all of us must do. The corporation is finally flat, so it is out of the question to recei&e bac5 any of your in&estment from that source; the only sal&age will be the second payment that you made, and that will come from Dilscher and me personally, as 6 say, not because of any obligation, but simply because we ha&e ta5en it on oursel&es to do that. 1*nd 6 wish 6 could find someone who would underta5e to repay a part of my own losses in the enterpriseX28 *nd in the se&enth paragraph of the letter <"hibit C, dated Eebruary 2#, #()%, addressed by the same defendantCappellant to the same plaintiffCappellee the former said the followingB chanrobles &irtual law library Dowe&er, Mr. Eischer and 6 feel a personal responsibility to those few stoc5holders who made their second payments, including yourself, and it is our intention to personally repay the amounts of the second payments made by those few. . . . *nd, finally, paragraph + of the same letter <"hibit C statesB 8/e are to recei&e a certain share of the new Philippine :acing Club for our ser&ices as promoters of that organization, and as soon as this is recei&ed by us, we will be in a position to compensate you and the few others who made the second payments. That, as T ha&e said, will come from us personally, in an effort to ma5e things easier for those who were sportsmen enough to try to sa&e the 9reyhound organization by ma5ing second payments. *rticle #2$. of the Ci&il Code pro&ides as followsB * contract e"ists from the moment one or more persons consent to be bound with respect to another or others to deli&er something or to render some ser&ices. *nd article #2%# of the same Ci&il Code pro&ides the followingB chanrobles &irtual law library *:T. #2%#. There is no contract unless the following requisites e"istsB #. The consent of the contracting parties; chanrobles &irtual law library 2. * definite ob7ect which is the sub7ectCmatter of the contract; chanrobles &irtual law library ). * consideration for the obligation established. 6n the present case, while the defendantCappellant told the plaintiffCappellee that he felt morally responsible for the second payments which had been made to carry out his plan, and that Mr. Dilscher and he would do e&erything possible so that the stoc5holders who had made second payments may recei&e the amount paid by them from their personal funds because they &oluntarily Civil Law Obligations and Contracts Page 114
assumed the responsibility to ma5e such payment as soon as they recei&e from the Philippine racing Club certain shares for their ser&ices as promoters of said organization, it does not appear that the plaintiffCappellee had consented to said form of reimbursement of the P2, which he had directly paid to the Philippine 9reyhound Club, 6nc., in satisfaction of the second installment.chanrobles&irtuallawlibrary chanrobles &irtual law library The first essential requisite, therefore, required by the cited article #2%# of the Ci&il Code for the e"istence of a contract, does not e"ists.chanrobles&irtuallawlibrary chanrobles &irtual law library /herefore, the appealed 7udgment is re&ersed and the costs to the plaintiff.
Article 1 55
Carrantes vs. CA !6 Phil. 51+ "acts# The citation of the case at bar was a contract or sale of a piece of land which has a consideration of one peso. *s the Court od *ppeals ruled that the deed of J*ssignment of :ight to 6nheritanceK is &oid ab initio and ine"istent on the ground that there a consideration, which the one peso. The basic characteristic of simulation was the fact the contract was not desired or intended to produce legal effects. Therefore, the respondent court pro&ides that the contract was ine"istent and &oid from the beginning $ssue# /hether or not the the sub7ect contract is &alid. ,eld# The Supreme Court declared thatB The respondentsA action may not be considered as one to declare the ine"istence of a contract for lac5 of consideration. 6t is the total lac5 of consideration that renders the contract &oid. The sum of one peso appears in the document as one of the consideration for the assignment of inheritance. 6n addition and of great legal import, the document recites the ac5nowledgment of rightful owner of the property.
Mactal vs. Melegrito 111 Phil. 6 "acts# This is an action to reco&er the sum of P#,,,,. , plus P#, . as moral damages and P$ . as attorneyAs fees. !efendant, Eilomeno Melegrito, filed an answer admitting some allegations of the complaint and denying other allegations thereof, and setting up some special defenses and a counterclaim. 6n due course, the Court of Eirst 6nstance of 'ue&a <ci7a rendered a decision dismissing the case with costs against plaintiff, Miguel Mactal, upon the ground that the consideration of the promissory note upon which the complaint is based was the dismissal of a criminal case for estafa against the defendant and, hence, illicit, immoral and contrary to public policy, as well as &oid ab initio. The case is before us on appeal ta5en by the plaintiff, who maintains that the lower court erred in holding that this action is based upon the aforementioned promissory note, and that the consideration thereof was the dismissal of the estafa case against the appellee.chanrobles&irtuallawlibrary chanrobles &irtual law library
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6t appears, and the lower court held, that, on or about Eebruary $, #($), Mactal deli&ered P#,,,,. to Melegrito, to be used by him in the purchase of palay for Mactal, with a ten 1# M2 per cent commission in his 1MelegritoAs2 fa&or or returned to Mactal, within ten 1# 2 days, should he 1Melegrito2 fail to buy palay. This obligation was set forth in a receipt signed by Melegrito, who neither bought palay nor returned said amount. Dence, Mactal accused him of estafa in the >ustice of the Peace Court of 9uimba, 'ue&a <ci7a. /hen the case was about to be heard, on 4ctober #(, #($%, Elorencio Piraso, then Chief of Police of 9uimba, acting upon MelegritoAs request, pre&ailed upon Mactal to mo&e for the dismissal of the case and be contented with a promise on the part of Melegrito to pay, not later than >anuary #($., said P#,,,,. , plus the sum of P,. , balance of his account with Mactal in connection with another transaction. *ccordingly, Melegrito signed a document 1<"hibit * Ualso <"hibit #V2, prepared by Paraso in the Tagalog dialect, which translated into <nglish, readsB 6, E604M<'4 M<0<9:6T4, married, of age, at present residing at barrio Cabaruan, 9uimba, 'ue&a <ci7a, this #$th day of 4ctober #($), hereby certify to the followingB chanrobles &irtual law library That 6 am indebted to Mr. Miguel Mactal in the sum of P#,,,,. , Philippine Currency, which 6 promise to pay him within the month of >anuary, #($..chanrobles&irtuallawlibrary chanrobles &irtual law library 6' /6T'<SS /D<:<4E, 6 ha&e hereunto affi"ed my name and surname in the presence of two 122 witnesses, this #(th day of 4ctober, #($), in 9uimba, 'ue&a <ci7a.chanrobles&irtuallawlibrary chanrobles &irtual law library 1S9!.2 E604M<'4 M<0<9:6T4 $ssue# /hether or not the promissory note was e"ecuted in consideration of the estafa. ,eld# The lower court specifically found that Melegrito had on Eebruary $, #($), recei&ed from Mactal P#,,,,. to be used in the purchase of palay for the latter, with the obligation to return said amount, within ten 1# 2 days, if not spent for said purpose. 6n fact, Melegrito admitted, on the witness stand, that he is indebted to the plaintiff in the aggregate sum of P#,,,,. , although he claims that his liability therefor was merely that of a guarantor, not principal debtor. So when the Chief of Police succeeded in persuading Mactal to withdraw the criminal case for estafa, Melegrito was only too willing to sign <"hibit *, in which he promised to pay the aforementioned amount in >anuary, #($.. The consideration for this promises was, therefore, the aforesaid preCe"isting debt of Melegrito, not the dismissal of the estafa case, which merely furnished the occasion for the e"ecution of <"hibit * /D<:<E4:<, the decision appealed from is hereby re&ersed and another one shall be entered sentencing defendant Eilomeno Melegrito to pay the plaintiff, Miguel Mactal, the sum of P#,,,,. , with interest thereon at the legal rate, from >anuary 2%, #($$, as well as the costs of the proceedings. 6t is so ordered.chanrobles&irtuallawlibrary chanrobles &irtual law library
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Article 1 *5
"elipe vs. ,eirs o0 Aldon 125 SC%A 51+ "acts# Spouses sometime between #(.+C#($ , Ma"imo *ldon and 9imena *lmosara bought pieces of lands in Masbate. These lands herein mentioned were di&ided into three parcels as follows; #), , #),#, and #.#$. * year later, 9imena *lmosara, sold the land to spouses <duardo and Dermogena all surnamed Eelipe, the petitioners without the consent of her husband Ma"imino *ldon . 6n #(,%, the widow 9imena *lmosara and their children Sofia and Sal&ador *ldon, filed a complaint in the Court of Eirst 6nstance of Masbate against the spouses Eelipe claiming that they reco&ered the land &ia mortgage but Eelipe spouses will not honor the redemption of the property. The Court fa&ored the Eelipe spouses stating that they are the lawful owner of the property, declaring that that the complaint in the present action to be without merit and ordered the case to be dismissed. 9imena *lmosara and her children appealed the decision to the Court of *ppeals and hereby the appeal was granted. The Court of *ppeals re&ersed the decision in fa&or of 9imena *lmosara and her children, stating that the con&eyance of the property from 9imena *lmosara to the Eelipe Spouses was in&alid due to the reason that Ma"imo *ldon has not issued his consent and that property in question is considered as con7ugal in nature. The petitioners assailed the decision made by Court of *ppeals. $ssue# /hether or not the contract between 9imena *lmosara and Eelipe Spouses is null and &oid. ,eld# The Supreme Court affirmed the decision of the Court of *ppeals in re&ersing the 7udgment made by the Court of Eirst 6nstance of Masbate in fa&or of petitioners. The sale made by respondent *lmosora is in&alid, as articulated in the *rticles #%$ and #%% of the Ci&il Code JThe husband is the administrator of the con7ugal partnershipY. ?nless the wife has been declared a non compos mentis or a spendthrift, or is under ci&il interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the con7ugal partnership without the wifeAs consent. 6f she refuses unreasonably to gi&e her consent, the court may compel her to grant the same.K *s stated in the facts, 9emina-s transaction was beyond the 5nowledge of her husband. Eurthermore, the J!eed of PurchaseK, considered as proof of transaction or contract, was identified as null and &oid as cited in *rticle #)( 1#2 JThe following contracts are &oidable or annullable, e&en though there may ha&e been no damage to the contracting partiesB 1#2 Those where one of the parties is incapable of gi&ing consent to a contractK. *s the husband Ma"imo *ldon-s consent was not affi"ed on the sale, therefore in&alidating the claim of the petitioner that they legally owned the property. Moreo&er, the Supreme Court further e"plained that the intention of the petitioners to claim the land is due to bad faith. The idea was ta5en in the petitioner-s Ficente Eelipe-s statement in attempting to ha&e 9imena *ldon sign the readymade document purporting to the self the disputed lots of the respondents. Thus, drawing a question that they already 5new they don-t own the land but still they insisted that the document of sale is in their fa&or.
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Article 1 *!
$1anez vs. ,S2C 22 Phil. 5!2 "acts# The plaintiffs are after an action of liquidation against the respondent corporation. The Dong5ong and Shanghai =an5ing Corporation and *ldecoa G Co. entered into a contractual agreement whereby the said ban5 bound itself to open and maintain in behalf of *ldecoa G Co. a credit in account current up to the sum of P.,$, , in accordance with the conditions and securities detailed in an instrument of the said date; that, subsequently, the contracting parties also agreed that, should certain shares of the concern, 8The Pasay <state Co. 0td.,8 be declared to belong to *ldecoa G Co., in liquidation, the same should be by the latter turned o&er to the creditor ban5, as security; and that, in &iew of the fact that the said shares had come into the ownership of *ldecoa G Co., in liquidation, the contracting parties had stipulated that *ldecoa G Co., in liquidation, represented by /illiam ?rquhart, should transfer and mortgage to The Dong5ong and Shanghai =an5ing Corporation, as mortgage creditor, the said shares deli&ered to it for their custody and preser&ation, which mortgage was e"ecuted as an additional security to the said creditor ban5 for the payment of any sums which *ldecoa G Co. might be found to owe it, by reason of the aforesaid credit in account current or of any other sums which *ldecoa G Co., in liquidation, might owe it; that the creditor ban5 was authorized to collect and recei&e all the di&idends, bonuses or other distribution of the capital and profits of the said concern, 8The Pasay <state Co. 0td.,8 until a total settlement of the said debt should ha&e been made, but that, should the mortgage debtor, its heirs, successors in interest, or administrators pay to the creditor ban5 all the amount owed, this obligation would thereby become null and &oid; that the right was reser&ed to *ldecoa G Co. to sell the said shares, pro&ided that the product of their sale be de&oted to the payment of its debt; that The Dong5ong and Shanghai =an5ing Corporation ac5nowledged receipt of the said shares for their 5eeping and preser&ation, and that this instrument was held by the contracting parties to be additional to each and all of those already e"ecuted, on account of the debt of *ldecoa G Co., between the latter and The Dong5ong and Shanghai =an5ing Corporation, which instruments were declared to be subsistent and in full force and effect. =efore proceeding to e"amine the agreement referred to and contained in the instrument of *ugust ) , #( ,, and to ascertain whether or not it complies with the conditions required by law, or whether it bears &ices and defects producti&e of nullity and such as substantially affect the &alidity and force of the contract therein stipulated, it becomes necessary to determine whether the plaintiffs, Woilo, >oaquin, and Cecilia lbaNez de *ldecoa, ha&e or ha&e not the personality and rights requisite to enable them to claim the nullification of the aforementioned agreement made and entered into, according to the instrument of *ugust ) , #( ,. $ssue# /hether or not the agreement contained in the instrument e"ecuted on *ugust ) , #( ,, by and between the liquidator of the firm of *ldecoa G Co. and the manager of The Dong5ong and Shanghai =an5ing Corporation, should be annulled. ,eld# 4ne who has no interest in a contract has no right of action for nullifying the same, for the interest in a gi&en contract is the determining factor that authorizes the party obligated either principally or subsidiarily to maintain said action. The courts ha&e established that one who is not a Civil Law Obligations and Contracts Page 118
party to a contract or who has neither cause nor representation for inter&ening therein lac5s personality and right of action for impugning the &alidity thereof.
Teves vs. PeopleEs ,o.esite and ,ousing Corp. 2 SC%A 11+1 "acts# Plaintiff filed a complaint for illegal acquisition of property of by defendant. The property being 5nown as 0ot (, =loc5 IC, at the !iliman <state Subdi&ision. 6n the plaintiff-s a&erment, she alleged that she and her late husband Celestino Te&es originally own and occupied the aforementioned parcel of land, wherein, these couple ha&e constructed a house with an assessed &alue of ),2$ . Philippine Currency. /hereas, at that time the !iliman <state Subdi&ision which was 5nown as Puezon Memorial 9ro&e was not intended for subdi&ision and distribution, Te&es spouse together with other occupants sought the assistance of the Social /elfare *dministration. The PDDC officials acceded the occupants- petition and by the &irtue of :esolution 'o. 2#, Eiscal @ear #($#C$2 adopted on September #(, #($#, the estate was con&erted for distribution and sale to the actual occupants that are qualified to acquire the residential lots under rule of PDDC. *fter the in&estigation for qualification, PDDC identified the late husband of the plaintiff as actual occupant of the 0otC(, =loc5 IC, and therefore qualified to acquire the lot. *fter the death of her husband, the plaintiff filed an application in her own name to purchase of the mentioned lot. Dowe&er, official of the PDDC disregarded her request and assisted another, in the person of the defendant in her application to purchase the lot. /ith the aid of an influential politician the latter was able to acquire the deed of sale and transfer certificate of the assailed property. 6n this case the plaintiff made an appeal to the higher court. $ssue# /hether or not the plaintiff can institute an action for annulment of the !eed of Sale and Transfer of Certificate against defendant Melisenda 0. Santos. ,eld# The case appealed was set aside and is remanded to the court a quo for further proceedings. !efendant-s contentions weighs on *rticle #)(, of the Ci&il Code states that, JThe action for the annulment of contracts may be instituted by all who are thereby obliged principally or subsidiarily. Dowe&er, persons who are capable cannot allege the incapacity of those with whom they contracted; nor can those who e"erted intimidation, &iolence, or undue influence, or employed fraud, or caused mista5e base their action upon these flaws of the contract.K. *ccording to the defendants, plaintiff is not a party to the deed of sale which was e"ecuted between the PDDC and defendant Melisenda 0. Santos hence; the plaintiff cannot maintain an action to annul the deed of sale. 6n the case at bar, the plaintiff is praying for the declaration of the nullity of the deed of sale not as a party in the deed, or because she is obliged principally or subsidiarily under the deed as stated in *rticle #)(,. She is see5ing for nullity of the contract for the reason that she has an interest that is affected by the acts of the defendants which is detrimental on her part. The abo&ementioned sentence is an e"ception to the general rule that annulment of contracts can only be maintained by those who are bound principally or subsidiarily. Dence, a person not obliged principally or subsidiarily may as5 for the nullity of the contract if her rights are pre7udiced by one of the contracting parties.
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Article 1 *8
8u.asug vs. Modelo + Phil. 252 "acts# This case is an appeal e"ecuted by counsel for the defendant from the 7udgment of the Court of Eirst 6nstance of Cebu declaring the document in which the plaintiff sold the two parcels of land and her carabao to the defendant null and &oid since the plaintiffAs consent thereto was obtained by means of fraud and deceit. 4n >une #,, #(#2, counsel for *ndrea !umasug filed a written complaint in the Court of Eirst 6nstance of Cebu, in which he alleged that about the month of 'o&ember, #(##, defendant persuaded plaintiff to sign a document by falsely and maliciously ma5ing her belie&e that it contained an engagement on plaintiffAs part to pay defendant a certain sum of money as e"presses occasioned the latter by reason of a lawsuit in which plaintiff !umasug was one of the parties and was protected and aided by defendant; that this document, plaintiff, who does not 5now how to write, signed by affi"ing her mar5 thereto, belie&ing in good faith that defendant had told her the truth and that said document referred to the e"penses incurred by defendant; but that three months after the e"ecution of said document, defendant too5 possession of a carabao belonging to plaintiff and also of two parcels of land, li5ewise belonging to her, situated in the barrio of Iatang, pueblo of *rgao, Cebu, the area and boundaries of which are specified in the complaint, and notified plaintiff that she had con&eyed to him by absolute sale said parcels of land and the plow carabao; that in spite of plaintiffAs opposition and protests, defendant too5 possession of said property and, up to the date of the complaint, continued to hold possession thereof and to en7oy the products of the lands and of the labor of the carabao; and that, by reason of such acts, defendant had caused loss and damage to plaintiff in the sum of P#, . Said counsel therefore prayed the court to render 7udgment by declaring null and &oid and of no &alue whate&er the alleged contract of purchase and sale of the carabao and the two parcels of land described in the complaint, to order defendant to restore to plaintiff said wor5 animal and lands, and, besides, to pay her the sum of P#, for the loss and damage caused her, in addition to the costs of the suit. The court fa&ored the plaintiffAs contention, to which the defendant e"cepted by written motion to as5ed for the reopening of the case and a new trial. Dowe&er, this motion was denied, e"ception to this ruling was ta5en by the defendant and, upon presentation of the proper bill of e"ceptions, the same was appro&ed and transmitted to the cler5 of this court. $ssue# /hether or not the instrument of purchase and sale of two parcels of land and a plow of carabao is null and &oid. ,eld# The court held that the consent gi&en by plaintiff being null and &oid, thus the document signed by plaintiff is consequently also null, &oid, and of no &alue or effect. *rticle #) ) of the Ci&il Code is therefore, applicable, which prescribes thatB 8/hen the nullity of an obligation has been declared, the contracting parties shall restore to each other the things which ha&e been the ob7ect of the contract with their fruits, and the &alue with its interest.8 6n accordance with this legal pro&ision defendant must return and deli&er to plaintiff the two parcels of land in question with their fruits, the sub7ect of the complaint, or the &alue thereof collected by him, which &alue was 7ustly estimated by the trial 7udge at P,$. Civil Law Obligations and Contracts Page 120
/ith respect to the plow carabao that died while in defendantAs possession, the &alue of which is P#2 , 1record, p. )#2 defendant is obliged pursuant to the pro&ision of article #) , of the same code 1to pay and deli&er to plaintiff the &alue of said animal, with interest as an indemnity for the detriment caused to its owner.2 Eor the foregoing reasons, whereby the errors assigned to the 7udgment appealed from are deemed to ha&e been refuted, said 7udgment should be as it is hereby, affirmed, with the costs of this instance against the appellant. So ordered.
Article 1 **
&y Soo 'i. vs. Tan &nchuan 8 Phil. 552 "acts# This is an appeal This is an appeal by plaintiff upon the law and the facts, from a 7udgment of the Court of Eirst 6nstance of Cebu, dismissing on the merits his action for the annulment of a contract by the terms of which he sold to the defendant Erancisca Pastrano all his interest in the estate of the late Santiago Pastrano ?y Toco. *t about age thirteen, Santiago Pastrano ?y Toco, a Chinese, came from China to reside in the Philippines and then he married Candida Fi&ares, a Eilipina woman. 4f this marriage were born two122 daughters, Erancisca and Concepcion. *t this time of marriage, Santiago Pastrano possessed &ery little property. The large estate left by him at his death was acquired by him during his marriage with Candida Fi&ares. Santiago Pastrano returned to China and entered into illicit relations with a Chinese woman, Chan Puieg, also referred as Chan 'i @u. *fter staying a little less than a year in China, Santiago Pastrano returned to the Philippines where he remained till his death in Cebu, in March, #( #. De ne&er saw Chan Puieg again, but recei&ed letters from her informing him that she had borne him a son, ?y Soo 0im, the present plaintiff. De died without e&er ha&ing seen ?y Soo 0im, but under the belief that he was his only son, and it was in this belief that he dictated the pro&isions of his will. =y the terms of the will, Santiago Pastrano attempted to dispose of the greater part of his estate in fa&or of the appellant, ?y Soo 0im. The will was duly probated in the Court of Eirst 6nstance of Cebu, and the defendant =enito Tan ?nchuan, husband of the defendant Erancisca Pastrano, who was named in the will as e"ecutor, duly qualified as such on May #), #( 2. =asilio ?y =undan, one of the defendants herein and brother of Santiago Pastrano, was named by the testator as guardian of Erancisca Pastrano, Concepcion Pastrano, and ?y Soo 0im, who were all three minors at the time of the death of the testator, and duly qualified as such before the court on *ugust %, #( 2. The guardian did not comply with this order at once, and, before the plan of the distribution called for by this order could be presented, ob7ections against carrying into effect the pro&isions of the will were presented to this court, questioning right of ?y Soo 0im to se&enCninths of the property as left him by Santiago Pastrano in his will and e&en to put in question his right to recei&e anything at all.
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!uring the pendency of the case, the plaintiff e"ecuted a deed by which he relinquished and sold to Erancisca Pastrano all his right, title and interest in the estate of the deceased Santiago Pastrano. Chan Puieg also e"ecuted a public document in which she ga&e her consent to the sale by ?y Soo 0imof his right and interest in the said sale of estate. The guardians of the plaintiff also e"ecuted a public document gi&ing their consent to the said sale of the estate to Erancisca Pastrano. *ll documents mentioned abo&e were presented to the lower court and the lower court declared Erancisca Pastrano the sole owner of the property left by the deceased Santiago Pastrano. Dence, this present action by the plaintiff for the purpose of &acating the orders of the lower court and to rescind and annul the contract by which he had sold and transferred to Erancisca Pastrano his interest in the estate of Santiago Pastrano. $ssue#/hether or not the plaintiffC appellee, ?y Soo 0im has the right to rescind and annul the abo&ementioned contract in case of incapacity in his part during the e"ecution of the contract. ,eld# The court held that the plaintiff cannot rescind and annul the e"ecuted contract since he already disposed the whole amount of P +$, which was paid to him in the consideration of the e"ecution of the contract at the time of reaching his ma7ority age e&en though he recei&e some of the payments during his minority age. The important fact is not the time when he recei&ed the money, but the time when he disposed it. This is in accordance with article #)(( of the Ci&il Code which pro&idesB The action for nullity of a contract shall also be e"tinguished when the thing which is the ob7ect thereof should be lost by fraud or fault of the person ha&ing the right to bring the action. 6f the cause of the action should be the incapacity of any of the contracting parties, the loss of the thing shall be no obstacle for the action to pre&ail, unless it has occurred by fraud or fault on the part of the plaintiff after ha&ing acquired capacity. Eor this reason, the 7udgment of the trial court is without error, and it is, therefore, affirmed, with the costs of both instances against the plaintiffCappellant.
Article 1+5
'una vs. 'inatoc !+ Phil. 15 "acts# The wife of *gustin de 0una sold a parcel of lands together with those lands under her husbandAs name. *fter the sale, they bring an action to as5 for annulment of the sales since according to article #.)2, the wife could not sell her portions of those lands in the name of her husband because the partition is illegal and &oid as it was made during the marriage and there was no 7uducial order authorizing separation of property between husband and wife. Consequently, the character of these portions of lands as con7ugal partnership assests. *nd the wife may bind the con7ugal partnership with the consent of the husband, according to article #%#. of the Ci&il Code.
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The Court of *ppeals upheld the &alidity of the three sales made since the instant case is one of recognition because the husband was not trying to cleanse the sales of all taint, such as fraud, &iolence or mista5e, nor was it his purpose to confer authority to his wife, because he stated in <"hibit 6B 8when my wife sold said lands to >. 0. she did so with my 5nowledge and consent. Thus the requirement in the statute of frauds that in a sale of real property the authority of the agent should be in writing, has been complied with. Therefore, she was only acting as his agent. $ssue# /hether or not they can as5 for the annulment of the sales of the aforementioned parcels of lands. ,eld# The Supreme Court held that they cannot e"amine the question whether or not the Court of *ppeals is right when it concluded that there had been deceit. Thus, the decision made by the Court of *ppeals is hereby affirmed.
2asa vs %a<uel +5 Phil. 655 "acts# This is an appeal from an order of the Court of Eirst 6nstance of Ca&ite, for the purpose of obtaining a declaration of nullity of a con&eyance of certain property which had been sold by the corporation of !ominican Eathers to 9a&ina :aquel. The corporation had decided to sell the property in question, and it appears to ha&e been understood that the plaintiff, who was occupying the property as a renter, would be gi&en preference in the matter of the purchase of the property. 4n March #., #(22, one >ulian Fisencio, a cler5 or employee in the office, sent a telegram to the plaintiff in Ca&ite, stating in words, to Jcome. ?rgent to arrange purchase of house Sr. Chicote.K 6n response to this telegram the plaintiff pro&ided himself with the sum of P##, $ . , which was understood to be the amount of the purchase price. Dowe&er, the plaintiff alleges that he did not succeed in getting admission at one to the office where transaction would ha&e been consummated, and while he was waiting the defendant, 9a&ina :aquel, obtained admission and purchased the property for the sum stated. $ssue# /hether or not the trial 7udge committed error in e"cluding the oral testimony. ,eld# The decision is affirmed. The plaintiff has no writing e&idencing the agreement for the purchase of the land sufficient to satisfy the requirement of Section ))$ of the Code of Ci&il Procedure. * telegram ad&ising a person to whom a &erbal promise for the sale of land had been pre&iously made to come at once in order to complete the purchase,, but which telegram neither describes the property nor states the purchase price,a nd which is not signed by any person ha&ing authority to bind the seller, is not a sufficient memorandum of sale to satisfy the requirement of section ))$ of the Code of Ci&il Procedure.
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%eiss vs. Me.i?e 15 Phil. 55 "acts# This is an appeal from 7udgment of the Court of Eirst 6nstance. !efendant appellant entered into a contract with one =uena&entura Iabalsa for the repair of a house in the City of Manila. The contractor undertoo5 to furnish the necessary materials, including a considerable amount of lumber, to be used in the repairs. The contractor being a man of no commercial standing in the community was unable to secure credit and was compelled to pay cash for all purchases. Da&ing no money and no credit he was unable to continue the purchase of the necessary lumber, plaintiffs, with whom he was dealing, absolutely refusing to allow any lumber to lea&e their yard without payment in ad&ance. The wor5 on the house being delayed for the lac5 of the necessary materials, defendant accompanied the contractor to plaintiffs- lumber yard, and after satisfying plaintiffs as to his own financial responsibility,, he was good for the amount of lumber needed in the repair of his house, he entered into an agreement with them whereby they were to deli&er the necessary lumber to the contractor for use in the repair of his house. 6n pursuance of and in accordance with the directions of the defendant, plaintiffs deli&ered to Iabalsa a considerable amount of lumber which was used in the repairs upon defendant-s house, and 7udgment in this action was rendered in fa&or of the plaintiffs for the pro&en amount of the unpaid balance of the purchase price of this lumber. !efendant contention that the alleged promise merely guaranteed payment for the lumber and was not admissible in e&idence and defendant was not bound thereby, under the pro&ision of section ))$ of the Code of Ci&il Procedure. $ssues# #. /hether or not the owner of the building was perform solely upon the credit of his promise, to be responsible and to pay for the materials and labor furnished. 2. /hether or not the promise of the defendant fall within the statute of fraud. ,eld# The 7udgment appealed affirmed. The credit for the lumber deli&ered by the plaintiffs to defendant-s contractor was e"tended solely and e"clusi&ely to the defendant under the &erbal agreement had with him; therefore that the pro&isions of the statute did not require that it should be in writing. Erom the testimony of the contractor himself, it seems clear that when the agreement for the deli&ery of lumber was made, the credit was e"tended not the contractor but to the defendant. ?nder the pro&isions of section )$$ of the Code of Ci&il Procedure, a special promise to answer for debt of another is not enforceable by action unless such promise or some note or memorandum thereof be in writing and subscribed by the party charged or by his authorized agent ta5ing into consideration all the circumstances. 6n this case, the credit for the lumber sold and e"clusi&ely to the defendants himself, under the &erbal agreement, and that, therefore, the case does not fall within the pro&isions of the statute requiring certain agreements to be made in writing.
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Sy<uia vs . Court o0 Appeals 151 Phil. 55! "acts# This is a petition for certiorari to re&iew the decision of the court of *ppeals. =efore ?s is an appeal by certiorari from the split decision of a di&ision of fi&e of the Court of *ppeals dated March #%, #(+2 as well as that resolution of the Court of *ppeals denying petitionerAs Motion for :econsideration. The instant action arose from an e7ectment case against petitioner by <dward 0itton based on the e"piration of the Contract of 0ease o&er the !utch 6nn =uilding originally owned by the Deirs of !oNa :osa 0itton or the 0itton coCownership who leased it to 0itton Einance and 6n&estment Corporation. The latter sublet it to herein petitioner for a period commencing on Eebruary #, #(, and ending on >anuary )#, #(,(. 4n *ugust (, #(,%, the 0itton coCownership was dissol&ed by partition and the ownership of the !utch 6nn =uilding and the lots on which it is built was ad7udicated to herein pri&ate respondent <dward 0itton. 4n !ecember #, #(,%, the latter ga&e notice in writing that as the new owner of said properties; rentals of the same should be remitted to him starting >anuary, #(,,. Petitioner signified his conformity to this notice and accordingly paid his rentals directly pri&ate respondent. 4n !ecember #, #(,+, petitioner wrote to respondent manifesting his willingness to renew the contract of lease upon its e"piration on >anuary )#, #(,( under such terms as may be agreeable to both of them respondents. * series of communications ensued between them, pri&ate respondent, thru counsel, consistently in&o5ing the clear and unequi&ocal terms of the contract of lease especially the duration thereof which allegedly does not pro&ide for renewal or e"tension. 4n !ecember #$, #(,+ and thereafter on >anuary ., ## and 22, #(,(, pri&ate respondent, thru counsel, as5ed petitioner in writing to &acate the premises on or before the e"piration of the lease contract on >anuary )#, #(,(, and upon his failure to &acate the premises after the e"piry date of the lease contract, he should pay the amount of P$+, %+$. per month as compensation for the use and occupation of the premises. Petitioner ob7ected to the amount as not being fair and reasonable rental, petitioner in&o5ing the huge in&estment he has put in the !utch 6nn =uilding from #(, to #(,( and also the alleged &erbal assurance by plaintiffC apelleeAs predecessorCinCinterest of petitionerAs priority to renew the lease of the premises in question. ?pon petitionerAs refusal to &acate the premises upon written demand made by pri&ate respondent on Eebruary #, #(,(, pri&ate respondent filed the case for e7ectment based on the e"piration of the Contract of 0ease. The City Court rendered a decision in fa&or of plaintiff <dward 0itton 1herein pri&ate respondent2 and ordered defendant, <nrique Syquia 1herein petitioner2 to &acate the premises and to pay plaintiff 0itton, P)#,,+#.#% a month as the reasonable &alue of the use and occupation of the premises from Eebruary #, #(,( until defendant Syquia &acates the premises, the amount of P), . as attorneyAs fees and the costs. 4n appeal to the :TC 1then CE62, the 7udgment was slightly modified in that the monthly rental was reduced to P2+, . , less any amount that defendant may ha&e deposited with the court and withdrawn by the plaintiff and that defendantAs counterclaim was dismissed for lac5 of merit.
Page 125
The case was ele&ated to the Court of *ppeals by way of Petition for :e&iew under :epublic *ct % )#, with Syquia assailing the aforementioned decision. The appellate court upon a split &ote of four >ustices concurring to one dissenting affirmed the decision of the lower court and dismissed the petition for re&iew. $ssues# with #. /hether or not the respondent Court of *ppeals has decided this case not in accord law as well as applicable decisions of the Supreme Court. /hether or not respondent Court of *ppeals has committed gra&e abuse of its failure to e"tend petitionerAs stay in the leased premises.
2. discretion in del the
). /hether or not the alleged &erbal assurances of 9eorge 0itton Sr. and 9loria 0itton :io be sufficient basis to &ary the written contract and allow the defendant an e"tension of lease contract.
,eld# The assailed decision is hereby *EE6:M<!, with the modification that this case is hereby :<M*'!<! to the :egional Trial Court in&ol&ed for the determination of the parties rights under *rt. #%,+ of the Ci&il Code. 6n dismissing the petition of appellant Syquia, respondent Court of *ppeals relied hea&ily on the findings of fact of the :egional Trial Court and concluded that there is 6t a lot more than substantial e&idence supporting the court a quoAs finding of fact and that the conclusions arri&ed at by his Donor are clearly not against the law and 7urisprudence. The case in&ol&es unlawful detainer and respondent Court of *ppeals correctly applied the 8substantial e&idence8 rule as pro&ided for under :.*. % )#, amending Section .$ >udiciary 0aw of #(.+. The decision of the latter shall be final, pro&ided, that the findings of facts contained in said decision are supported by substantial e&idence as basis thereof, and the conclusions are not clearly against the law and 7urisprudence. The contract of lease in question is with a definite period. Thus to e"tend the lease of petitioner would be completely de&oid of legal basis. 6nasmuch as the stipulated period of the contract between the parties had already e"pired and pri&ate respondent is unwilling to e"tend the same. There is no way therefore that herein petitioner can hold on to the property after >anuary )#, #(,( without conformity of plaintiffCappellee. *pplying the Parol <&idence :ule to the instant case, it is clear that there being a written agreement between the parties, the same should be controlling between them. *ssuming for the sa5e of argument that there really was a &erbal agreement or promise on the part of 9eorge 0itton Sr. and 9loria del :io to allow defendant to renew the contract of lease at its e"piration, the court belie&es that such assurance or promise would not ha&e any binding effect on the original lessor, the 0itton Einance G 6n&estment Corporation, considering that defendant did not adduce any e&idence to show in what capacity 9eorge 0itton Sr. and 9loria 0itton del :io ga&e that assurance and considering further that it was >ames 0itton who signed the contract of lease, in representation of 0itton Einance G 6n&estment Corporation as its !irectorCFiceCPresident. ?nder the Corporation 0aw, corporationAs acts are only &alid if a board resolution authorizes said acts; otherwise, said unauthorized acts are not
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binding to it. The e&idence does not show that the act of 9eorge 0itton Sr. and 9loria 0itton del :io had been ratified.
Car1onnel vs. Poncio 15 Phil. 655 "acts# This is an appeal from an order of the Court of Eirst 6nstance of :izal. Plaintiff :osario Carbonnel alleges in her second amended complaint,, filed with the Court of Eirst of :izal, that, on >anuary 2,, #($$, she purchased from defendant >ose Poncio, at P (.$ a square meter. The plaintiff paid P 2.,.2% on account of the price and assumed Poncio-s obligation with the understanding that the balance would be payable upon e"ecution of the corresponding deed of con&eyance, that one of the condition of the sale was that Poncio would continue staying in land for one year. Poncio refuses to e"ecute the corresponding deed of sale despite repeated demands. The plaintiff has thereby suffered damages in the sum of P $, . aside from attorney-s fees amounting to P #, . , that Poncio has con&eyed the same property to defendants :amon :. 6nfante and <mma 0. 6nfarte who 5new of the first sale to plaintiff and that the 6nfantes had thereby caused damages to plaintiff in the sum of P $, . !efendants mo&ed to dismiss said complaint upon the ground that plaintiff-s claim is unenforceable under the Statute of Erauds, and that said pleading does not state facts sufficient to constitute a cause of action. The 6nfantes filed an answer denying most of the allegations of said complaint and alleged, by way of special defense, that they purchased the land in question in good faith, for &alue, and without 5nowledge of the alleged sale to plaintiff and that plaintiff-s claim is unenforceable under the Statute of Erauds. They li5ewise, set up counterclaims for damages. Poncio denied specifically some allegations of said complaint and alleged that he had no 5nowledge sufficient to form a belief as to the truth of the other a&erments. Pocio similarly set up a counterclaim for damages. The lower court issued an order dismissing plaintiff-s complaint, without costs, upon the ground that her cause of action is unenforceable under the Statute of Erauds. The counterclaims were also dismissed. $ssue# /hether or not the Statute of Eraud is applicable in this case. ,eld# The order appealed from hereby set aside, and let this case be remanded to the lower court for further proceedings not inconsistent with this decision. The Statute of Erauds is applicable only to e"ecutory contracts, not to contracts that are totally or partially performed. The reason is simple. 6n e"ecutory contracts there is a wide field for fraud because, unless they be in writing there is no palpable e&idence of the intention of the contracting parties. Dowe&er, if a contract has been totally or partially performed, the e"clusion of parol e&idence would promote fraud or bad faith, for it would promote fraud or bad faith, for it would enable the defendant to 5eep the benefits already deri&ed by him from the transaction in litigation, Civil Law Obligations and Contracts Page 127
and, at the same time, e&ade the obligations, responsibilities or liabilities assumed or contracted by him thereby. So that when the party concerned has pleaded partial performance, such party is entitled to a reasonable chance to establish by parole e&idence the truth of this allegation, as well as the contract itself. JThe recognition of the e"ceptional effect of part performance in ta5ing an oral contract out of the statute of frauds in&ol&es the principle that oral e&idence is admissible in such cases to pro&e both contract and the part performance of the contractK.
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Compilation of Cases in Obligations and Contracts

Prepared by LLB 1-4 (2nd semester 09-10)

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

'ichauco vs. "igueras ,er.anos ! Phil.

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

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Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Ponce 8e 'eon vs. Sy?uco ).%. '4

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

= 12 6 )onzaga vs. )arcia 2! Phil. !

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Civil Law Obligations and Contracts

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Civil Law Obligations and Contracts

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Civil Law Obligations and Contracts

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Civil Law Obligations and Contracts

and the area of the land was stated to be .$2

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Civil Law Obligations and Contracts

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Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

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Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

Civil Law Obligations and Contracts

2. discretion in del the