Tanguilig v CA and Herce

Tanguilig proposed to Herce to construct a windmill for him after some negotiations they agreed on
the construction for a consideration of 60,000.

Herce paid a downpayment of 30,000 and an installmeent of 15,000 which leaves a balance of
15,000.

Herce failed to pay the balance which prompted Tanguiling to file a complaint. In his answer Herce
posits that he already paid the 15,000 to SGM which constructed the deep well to which the
windmill is connected to. Assuming that he really owed Tanguiling 15,000 this should be offset by the
defects of the windmill when a strong wind hit their place.

The RTC rendered decision in favor of plaintiff. The court held that there was no stipulation in the
contract that the deep well was not included in the windmill project. Regarding the repair it was not
found that the defects did not caused the windmill to fall down.

CA reversed the decision hence the appeal

The supreme court held that preponderance of evidence show that the construction of deep well
was not included in the proposals.

Nowhere in the proposals that the deepwell was a component of the windmill.

That the claim for fortuitous event was not substantiated, there was no disclosure of an event of
typhoon that caused its destruction. The event of strong wind was not unavoidable or unforeseeable,
since strong wind should be present where windmills are constructed.

Petitioner is still liable to repair the windmill due to the 1 year guaranty. In reciprocal obligations,
neither party is incurs delay when the party does not comply or is ready to comply.

When the windmill failed to function properly it is incumbent upon Tanguilig to institute proper
repairs in accordance to the 1 year guaranty. Herce did not incur delay and it is Tanguilig who should
bear the expenses of repairing. Art. 1167- if a person obliged to do something fails to do it, the same
shall be executed at his cost.
Laperal and Filipinas golf v Solid Homes

Filipinas golf club thru Laperal entered into a development and management agreement with solid
homes involving parcels of land

Solid homes undertook to convert it at their own expense into a first class subdivision in return
Laperal will get 45% of lot titles saleable area in the entire project

Solid homes wrote demand letters to produce duplicate copies of the torrens title in order to
facilitate the processing for a license to sell the subdivision lots. Despite requests Laperal did not
comply.

Due to this, the agreement was cancelled.

They entered into a revised agreement which omitted the obligation of Laperal to produce duplicate
copies of the titles covering the land. Thus, they executed an addendum.

The addendum contains that upon showing that respondent abandons the subject work all
improvements shall be forfeited without any obligation to pay. Under the addendum abandonment is
deemed to have occurred upon absence of any ten days.

However, respondent persisted the delivery of titles despite having in the revised agreements non-
surrender of these titles.

Due to the non-delivery of the titles, there was a delay in the payment of 1 million

The supreme court held that mutual recission is required in cases involving recission under art.
1191. Recission creates the obligation to return the object of the contract. To rescind is to declare the
contract void at its inception it is not merely to release the parties from the contract and further
obligations

Recission shall not take place when the object to be returned are legally in the possession of the 3 rd
party who did not act in bad faith.

Since the subject lot was acquired by a 3rd party respondent is entitled to the refund of installments
plus interests
Rivera v del rosario

Respondents executed an SPA in favor of their mother authorizing them to sell, lease, mortgage,
transfer and convey their rights over a parcel of land;

Fidela borrowed from Mariano rivera 250,000 to secure the loan they executed a REM and
agreement to sell the land. Mariano then went to his lawyer to draft the deed of REM, kasunduan
and DOS.

The kasunduan stated that the petitioners would purchase the lot for 2.1M payable in 3 installments.

However, in the deed of absolute sale the price stipulated was only 601,000. Which was later signed
by mariano’s children as buyers and mortgagees.

Although Fidela intended to sign the kasunduan only she inadvertently signed all the 3 documents.
Mariano then paid Fidela, issued checks and paid a certain Oscar del Rosario. Fidela in return,
entrusted owners TCT.

When Mariano refused to return the TCT, del rosario caused the annotation of the TCT which was
replaced and in the name of Adelfa and Cynthia Rivera.

Respondents filed a complaint for annulment of kasunduan and deed of sale which the RTC granted.
Finding that the riveras was guilty of fraud.

The court likewise ordered petitioners to pay for the balance of 4500 sq m.

The CA affirmed the RTC ruling. Hence, this appeal. Petitioners contend that the complaint for
recission of kasunduan should have been dismissed for failure of defendants to to prove that there
was no other legal means available to obtain reparation

The supreme court held that the kasunduan does not fall within art. 1381 hence article 1191 shall
apply.

In a contract of sale the title of propert passes into the vendee upon delivery of the thing to be sold.
While in a contract to sell, ownership by agreement is reserved in the vendor upon full payment of
the vendee.

Respondents bound themselves to deliver a deed of absolute sale after petitioners have paid the
second installment, however they failed to pay the 2nd installment. The non-fulfillment of the
obligation rendered the contract to sell ineffective. In article 1191, the obligors failure to comply with
an obligation already in extant, not a failure of a condition to render binding to that obligation.

In this case it is not the failure to pay which caused a breach in the obligation rather an event that
prohibits the vendor’s obligation to convey the title.

Thus, their agreement in the instant case may be set aside.

The parties entered into a contract to sell a piece of land for the amount of 3,290. Angeles made a
downpayment upon execution of the contract and promised to pay the monthly installments.

Angeles paid the monthly installments when their aggregate payment already amounted to 4,500.

Calasanz then wrote angeles a letter requesting the remittance of past due accounts, Calasanz then
cancelled the contract because angeles failed to meet subsequent payments.

Angeles then filed a complaint to the RTC of Rizal compelling calasanz to issue a final deed of sale.
Calasanz filed an answer which alleged that angeles violated the contract thereby constraining
calasanz to cancel the contract.

The RTC rendered judgment in favor of angeles.

On appeal calasanz raised the issue of w/n the contract has been automatically cancelled

The supreme court held that in reciprocal obligations either party have the right to rescind in case of
non-fulfillment of the other. And that a judicial approval is not necessary where the contract provides
that it may be revoked and cancelled for any of its violation.

BUT it is not absolute. Recission will not be permitted for a slight causal breach.

The breach is only slight casual breach provided that apart from the downpayment angeles already
paid the monthly installments for 9 years. Considering that the principal obligation was for 3,900 plus
interest the aggregate amount paid was 4,500, thus, in only a short amount of time. The obligation
would be paid in full.

The supreme court can only order the remaining balance without any interests but not uphold the
cancellation thereof.
Spouses Pajares v Remarkable laundry and dry cleaning

Remarkable laundry filed a complaint against spouses Pajares before RTC Cebu. Remarkable laundry
alleged that they entered into an contract whereby Spouses Pajares shall accept and receive
materials for laundry to be processed by Remarkable laundry in its main plant. Petitioners alleged
that sps Pajares violated the contract which required them to produce at least 200 kilos per week.

When spouses ceased dealership due to lack of personnel Remarkable laundry demands payment for
the penalties which the sps failed to pay.

The RTC dismissed the case for lack of jurisdiction. Thus appealed to the CA.

The CA reversed the RTC ruling.

In their appeal petitioners contend that breach of contract is cause of action either for specific
performance or recission of contracts.

The supreme court held that RTC was correct in dismissing the civil case for lack of jurisdiction

and that the action prayed for by the petitioners is neither for specific performance or recission of
contract. The allegations lack sufficiency that petitioner indeed compel petitioners to perform such
obligation.

After perusal of the prayer of petitioners the action prayed for is indeed for recovery of damages, in
which case the amount prayed for shall determine jurisdiction of the courts. Since the amount
prayed for is 280000 it falls short for the RTC to take cognizance.

**breach of contract may also be the cause of action in a complaint for damages.
KT construction v PSB

KT obtained a loan from PSB in the amount of 2.5 million. The loan was payable for 60 months

On 2011, PSB sent a demand letter asking KT construction the outstanding obligation amounting to
725,438. KT failed to pay thus PSB filed a complaint with the RTC of.

The RTC rendered decision in favor of PSB. KT appealed to the CA.

The CA affirmed RTC decision hence this appeal

The supreme court held that, the demand made by PSB was not prematurely made, the promissory
note stipulated that default in any of the installments shall make the obligation due and demandable
even without notice or demand.

The court explained that once indebtedness is established, the burden rests on the debtor to prove
payment rather than on the plaintiff to prove non-payment. However, KT alleged that it paid its
obligation without presenting any evidence.

A contract of adhesion is not entrirely prohibited, the party who adhered to the contract is free to
reject it erntirely. If he adheres, he gives his consent.

The CA however erred in holding Go and Go-Tan solidary liable, the court ruled that the decision is
binding only to the person whom the court acquired jurisdiction and impleaded. Go and Go- tan
were never impleaded in the civil case they were merely representatives of KT construction.
Spouses Ibañez V james harper

Spouses amado and esther Ibanez borrowed from Francisco, Consuelo, and Ma consuenla the
amount of 1.3M payable in 3 months

The spouses issued a promissory note binding themselves to pay Consuelo and Ma Consuela jointly
and severally

As security spouses Ibanez executed a deed of REM over a parcel of land

Alleging that the conditions on the mortgage have been violated and that all checks were dishonored
by the drawee ma Consuelo and Consuelo applied for the foreclosure of the REM

Spouses Ibanez filed with the RTC manila for injunction, damages, TRO. The complaint alleged that
there was no reason to proceed with the foreclosure since the REM was novated.

The RTC issued a status quo

The parties then filed a motion for approval of amended compromise agreement which the RTC
approved.

The parties then filed a motion for compromise agreement signed by sps Ibanez and Francisco in
behalf of ma Consuela and Consuela which the RTC approved and adopted its hatol

Atty. Bermejo filed an omnibus motion lifting the status quo which the RTC affirmed. It found that
the sps have yet to pay the amount due.

The sps filed a motion for the amended compromise agreement which the RTC granted.

The sps filed a petition for certiorari raising the issue of w/n the hatol based on the amended
compromise agreement is final and executory

The supreme court held that a compromise agreement is a contract whereby the parties make
concession to avoid litigation. It is binding on the contractual issues being acknowledge in as juridical
agreement and has the effect and authority of res judicata.

There is nothing in the hatol and the amended compromise agreement it is based on which shows
that the obligation is solidary. In this case solidarity cannot be inferred from the agreement, the
presumption is that the obligation is joint.

This means that Francisco, ma Consuelo and Consuelo are each entitled to the shares of 3 million.

The sps Ibanez assigned the proceeds of the gsis loan and executed a REM over the Puerto azul
property only in Ma Consuelo and consuelo’s favor. This does no extinguished their obligation with
respect to Francisco, thus, the CA erred when it ruled that the stipulations in the hatol have been
complied with.
Manuel uy and sons v Valbueco

Manuel uy is the owner of parcels of land. Manuel executed 2 conditional deed of sale in favor of
valbueco. Valbueco was able to pay 275,055 as partial payment for the 2 parcels.

At the same time manuel complied with its obligation for the ouster of illegal occupants.

However Valbueco was not satisfied with the manner he complied with and sent a letter to manuel
informing of its intention to rescind the deed of sale.

manuel filed for specific performance with the RTC of antipolo which was dismissed.

Five years later, valbueco again filed for specific performance compelling petitioner to accept its
balance. That the non payment was refused by manuel, failed to eject unlawful occupants, that
manuel did not inform him that the mortgages were already released.

The RTC dismissed the case as Manuel exercised his right to rescind the contract.

Valbueco appealed to the CA which ordered manuel to execute deeds of sale in favor valbueco after
payment of the balance. Thus this appeal

the supreme court held that in a conditional sale, ownership remains with the vendor and does not
pass upon the vendee until full payment was made. The full payment partakes of a suspensive
condition and non-fulfillment of the condition prevents the obligation from arising.

The court held that RA 6552 recognizes the right of the seller to cancel the contract upon non
payment of an installment by the buyer.

Sec 4 of RA 6552 states that if the buyer fails to pay the installments due at the expiration of the
grace period the seller may cancel the contract after 30 days from receipt by the buyer of the notice
of cancellation or demand for recission of the contract by a notarial act. In this case, Valbueca only
paid less than two years, hence sec 4 is applicable.

Wherefore, the CA decision is set aside and RTC decision reinstated

Duenas is engaged in bakery business while fong is an old acquaintance.

Fong and Duenas entered into a verbal joint venture contract where they agreed to engage in the
food business. Its capitalization would be 65 million to which they would contribute in equal shares.

The parties agreed to pay 32.5 million each. Fong required Duenas to submit financial documents
supporting the valuation of these shares.

Fong started remitting his shares while Duenas processed the necessary licenses they would use

Fong informed Duenas to limit his contribution to 5 million instead of 32.5 million.

Fong observed that despite his 5 million contribution, Duenas still failed to give him financial
documents on the valuation of his duenas’ part. Moreover, Duenas failed to incorporate their food
venture with the SEC.

Thus, fong wrote Duenas informing him of his decision to cancel the joint venture and demand the 5
million back.

Duenas informed fong that he could not immediately pay the 5 million since it was used to defray his
previous business.

Since Duenas did not pay this prompted fong to file for collection of sum of money and damages.

The RTC rendered decision in favor of fong, Duenas appealed tp the CA which annulled the RTC
decision, fong appealed hence this petition.

The supreme court held that the failure to reduce the agreement in writing does not affect its
validity or enforceability as there is no law or regulation which provides that an agreement to
incorporate it in writing.

Recission is available when one of the parties substantially fails to perform what he is obligated to
do. It aims to address the breach of faith and the violation of reciprocity between two parties in the
contract.

Recission has the effect of unmaking a contract, its undoing in the beginning not merely its
termination, hence recission creates the obligation to return the object of the contract. It can be
carried out when the one who demands recission can can return whatever he may be obliged to
return.

Fong violated their agreement by investing the shares of fong to his two previous companies, he also
failed to deliver the valuation documents of his previous business shares to prove that the combined
value would amount to 32.5 million. On this basis, Duenas’ violation of the agreement justified fong’s
recision.

Wherefore, the court grants the petition and ordered Duenas to pay fong.
Nolasco v cuerpo

Cuerpo and Nolasco entered into a contract to sell over a parcel of a land. The contract provides that
the price is 33 million payable as; downpayment for 11 million inclusive of the 2 million as
reservation fee and the remaining balance payable in 36 months.

However, cuerpo sent Nolasco a letter seeking to rescind the contract on the ground that the
financial difficulties in complying the same. They also sought the return of the 12 million they paid.

As their letter went unheeded, they filed a complaint for the recission of contract.

The RTC ruled in favor of cuerpo. The CA affirmed the RTC ruling.

On their appeal Nolasco raised the issue of w/n the CA correctly affirmed the recission

The supreme court held that in reciprocal obligations, either party may rescind or more
appropriately, resolve the contract upon the other party’s substantial breach of obligation they had
assumed thereunder.

The right to recission under art. 1191 is predicated on a breach of faith that violates the reciprocity
between the parties. Recission of a contract will not be permitted for a slight casual breach, but only
for substantial and fundamental violations.

Paragraph 7 of the contract states that failure on the part of Nolasco to undertake the foregoing
within the prescribed period shall automatically authorize cuerbo to undertake the same in behalf of
Nolasco and charge the costs incidental to the monthly amortization upon due date.

The supreme court held that while Nolasco failed to perform their obligation to effect the transfer of
title to the subject land within the prescribed period, such failure did not constitute a substantial
breach that would entitle them to rescind the contract. A substantial breach of contract is a
fundamental breach that defeats the purpose of the parties in entering into agreement.

Here, the failure of Nolasco to effect the transfer is not a substantial breach since par 7 provides a
recourse in the event that there is non performance of the obligation.

Hence, the CA ruling is set aside and the contract is still valid and substisting.
Fil estate properties v Ronquillo

Fil estate properties is the owner of central park tower while co petitioner file estate inc. is an
authorized agent. Sps Ronquillo purchased from fil estate a condominium with a price of 5 million.
Sps Ronquillo executed and signed a reservation wherein they deposited 200k as downpayment.

Sps Ronquillo paid 1.5 million and continued paying the 63k monthly amortization.

Upon learning that the construction, they also stopped paying. Claiming to have paid a total of 2.1
million they sent demand letters for the refund plus interest.

Their demands went unheeded thus they filed a complaint for collection of sum of money with the
HLURB.

HLURB declared fil estate in default since no answer was filed ordering them to pay sps Ronquillo.

Fil estate appealed but the board of commissioners of HLURB affirmed its ruling stating that the
depreciation of peso is not a fortuitous event which will exempt them from performing their
obligation.

Hence they appealed to the CA.

The CA dismissed their petition holding that the failure to develop the condominium constitute as a
substantial breach which warrants the refund.

Hence this appeal.

The supreme court held that the depreciation of peso due to the Asian financial crisis is not a
fortuitous event.

The court held that a real estate enterprise engaged in the pre selling of condo units is a master of
projections on commodities and currency movements and business risks. The fluctuating movement
of the Philippine peso in the foreign exchange market is an everyday occurrence and fluctuations in
currency exchanges happens everyday thus not a fortuitous event.

The supreme court held that the non performance of obligation entitles sps Ronquillo for recission.

Moreover sec 23 of the condominium law states that no installment payment made by the buyer
shall be forfeited in favor of the owner or the developer when the buyer desists from further
payment due to the failure of the owner or developer to develop the unit within the time limit for
complying the same. Such buyer may be reimbursed the total amount paid including amortization
interests.

Thus, with this, sps Ronquillo are entitled to rescind and demand reimbursement.

Wherefore, the court affirmed decision of RTC and CA.

Reyes and rossi executed a conditional deed of sale involving the purchase by reyes of equipment
amounting to 10 million. The parties agreed that a downpayment of 3 million would be paid and 7
million through post dated checks. He complied, but requested to convert the 4 post dated checks to
9 post date checks.

Rossi deposited the checks but they were dishonored.

In the meanwhile, Reyes commenced an action for rescission of contract with the RTC of QC.

Rossi charged Reyes with 5 counts of estafa and BP 22 which the city prosecutor of Makati dismissed.

He appealed to the secretary of justice but were denied. Thus he appealed to the CA through a
petition for certiorari. The CA granted his petition and set aside the ruling of RTC.

Hence, this appeal by Reyes.

Reyes contends that if the contract would be rescinded his obligation to pay under the conditional
deed of absolute sale would be extinguished and such outcome would necessarily result in the
dismissal of the BP 22 case.

The supreme court held that it is true that recission of a contract results in the extinguishment of
obligatory relation as if it was never created. However, until the contract is rescinded, the obligation
still subsists.

The court agrees that the civil action for the recission of the contract was not determinative of the
guilt or innocence of Reyes.

Prejudicial question arises when a civil and criminal action are both pending, and the resolution of an
issue in the civil action would determine the guilt or innocence of the accused in the criminal case.

A civil case is considered prejudicial when a) the civil action involves an issue similar or intimately
related to the issue raised in the criminal action and the resolution of which determines whether or
not the criminal action may proceed.

In this case, the issue in the criminal action is whether reyes issued the dishonored checks knowing
them to be without funds.

The issue in the civil action for recission is whether Advance Foundation’s breach of its obligation
warranted the recission.

The court held that even if the contract is rescinded it does not necessarily absolve Reyes of his
criminal responsibility for issuing the dishonored checks. The criminal action can proceed
independently of the action because the mere issuance of a worthless check is already an offense
under BP 22.

Thus, the recission does not pose as a prejudicial question that would suspend the criminal
proceedings.

Thus, the court affirmed CA decision.

Sps. Fajardo enter into a contract to sell with Gotesco for the purchase of a parcel of land.

On the contract sps Fajardo undertook to pay the purchase price of 126K within the 10 year period.
On the other hand GPI agreed to execute the a final deed of sale upon in favor of sps fajardos.

Despite full payment, GPI failed to execute a final deed of sale. Thus, sps fajardos filed before HLURB
for specific performance or recission of the contract.

HLURB rendered decision in favor of sps Fajardo. HLURB commissioner likewise upheld the ruling.

The OP and the CA likewise upheld the ruling it emphasized the mandatory tenor of sec 25 of pd 957
which requires the delivery of the title upon full payment found that GPI unjustly failed to comply
with the same.

On appeal GPI posits that sps Fajardo have no right to rescind since GPI’s in inability to comply was
due to circumstances beyond their control and thus should not be held liable to refund the
payments. Nor they acted in bad faith not entitling sps Fajardo for atty’s fees.

The supreme court held that GPI’s unjustified and unreasonable long delay in the issuance of final
deed of sale constitutes breach of contract and justified the sps Fajardo the right to rescind.

After perusal of the documents, it is shown that GPI acquired the lot in 2002 by virtue of deed of
partition and exchange, after almost 8 years it was only then the petition for inscription was filed.

Neither did GPI took positive action to file for a new petition for inscription when the CA dismissed
their petition.

Hence, the court orders GPI to return the amount paid by sps Fajardo.
UP v Delos Angeles

UP and ALUMCO entered into a logging agreement under which the latter was given exclusive
authority for a period of 5 years to cut, collect, and remove timber from Land Grant. But as of
December 1968, it had incurred unpaid account of 200K which despite repeated demands, UP failed
to pay.

UP sent a letter to notice ALUMCO for rescission of contract.

ALUMCO executed an instrument entitled Acknowledgement of debt and proposed manner of

ALUMCO continued its logging activity but again incurred unpaid accounts.

UP notified ALUMCO that as of July 1965 the contract was legally rescinded and of no further legal
effect. UP filed a complaint against ALUMCO for collection of sum of money and writ of preliminary
injunction with CFI of Rizal.

Before the issuance of the writ of preliminary injunction, UP have another concessionaire take over
the logging activity which was the Sta Clara Lumber Inc.

ALUMCO filed several motions to discharge the writ but were denied.

ALUMCO then filed a petition to enjoin UP from conducting the bidding and filed a 2 nd injunction, the
judge issued orders enjoining UP from awarding logging rights over the concession to any party.

ALUMCO on motion declared UP in contempt and ordered Sta Clara to stop any logging activities.

UP moved for MR but was denied.

Hence, this appeal. UP contends that it can treat its contract rescinded with ALUMCO before any
judicial proceeding.

the supreme court held that UP and ALUMCO expressly stipulated in their agreement that upon
default by ALUMCO, UP has the right to rescind the logging agreement without the necessity of
judicial suit.

A party who deems the contract violated, may consider it rescinded and act accordingly without
previous court action but it proceeds at its own risk. It is the final judgment of the court that decides
whether or not the recission was correct or not.

Considering that the complaint of UP made a prima facie case of breach of contract by ALUMCO and
default in the payments, ALUMCO’s excuses in the 2nd amended answer do not constitute sufficient
excuse for non-payment.

Wherefore, the writ of certiorari is granted.

Licaros, a businessman decided to make a fund placement with Anglo-Asean Bank. After investing
with the bank he had difficulty retrieving the funds and interests.

Licaros seeked the counsel of Gatmaitan, to formalize their commitments, they executed a Notarized
Memorandum of agreement.

Gatmaitan executed a non-negotiable promissory note with assignment of cash dividends.

Thereafter, Gatmaitan presented the Memorandum of Agreement to Anglo-Asean Bank for the
purpose of collecting the money, but no formal response was received.

Because of his inability to collect, Gatmaitan did not bother to pay Licaros the amount stipulated in
the contract. However, Licaros felt that he had the right to collect based on the stipulations of the
contract regardless of the outcome of Gatmaitan’s efforts.

Thus, Licaros sent Gatmaitan demand letters, demanding Gatmaitan to pay his obligations,
Gatmaitan however, did not accede.

Hence, Licaros filed a complaint with the RTC of Makati ordering Gatmaitan to pay the amount of 3.5
million.

The RTC rendered judgment in favor of Licaros.

Gatmaitan appealed and the CA reversed the RTC decision.

Hence this petition for certiorari, raising the issue of whether or not Gatmaitan became liable to
petitioner under the promissory note considering its efficacy is dependent on the MOA, the note
being merely an annex to the MOA.

An Assignment of Credit is defined as the process of transferring the right of assignor to the assignee
who would have then the right to proceed against the debtor.

Subrogation is defined as transfer of all the rights of creditor to a 3rd person who substitutes him in all
his rights.

In subrogation, consent is necessary, it extinguishes the obligation and give rise to a new one. In
assignment of credit refers to the same right which passes from one person to another.

The supreme court held that the agreement was a conventional subrogation which requires the
consent of all parties involved, due to the failure of the parties to get the consent of Anglo-Asean
bank the MOA never came into effect. As such, Gatmaitan never became liable.

The MOA required the consent of Anglo-Asean for the subrogation, the absence of such conformity
on the part of Anglo-Asean prevented the agreement from becoming effective.

Thus, the petition was set aside.

Jebson and sps salonga entered into a joint venture agreement. Salonga the owner of the lot agreed
for the construction of a building by Jebson. The building shall be subdivided between them 7 for
Jebson, 3 for salonga.

Jebson entered into a contract to sell with buenvieja without the conformity of salonga. Out of the
purchase price, 7 million was paid, a lot conveyed in favor of Jebson and the remaining balance shall
be paid through installments.

Despite full payments, Jebson was unable to complete the unit. Thus buenviaje demanded for the
completion of the unit.

Buenviaje later filed for specific performance before the HLURB, and prayed for the recission of the
contract to sell.

The HLURB rendered a decision in favor of Buenviaje. It found that sps salonga was solidary liable
with Jebson as joint venture partners.

Aggrieved, sps salonga appealed.

The HLURB-BOC reversed the decision.

Buenviaje appealed to the OP. The OP upheld the BOC decision, thus buenviaje appealed to the CA.

The CA affirmed decision of the OP.

Hence this appeal, buenviaje contends that w/n sps salonga are not solidarily liable with Jebson for
the completion of the construction.

The supreme court held that specific performance and recission are alternative remedies available to
the party who is aggrieved by a breach of reciprocal obligation.

Specific performance is defined as the remedy of requiring exact performance of a contract in the
specific form in which it was made or according to the terms agreed upon. On the other hand,
resolution is the unmaking of the contract.

The HLURB,OP,CA pointed out that buenviaje prayed for specific performance and only prayed for
recission as an alternative remedy.

Although article 1191 states that a party may seek recission even after choosing specific performance
if the latter should become impossible. The HLURB correctly pointed out that there is no finding that
specific performance has become impossible. Hence, buenviaje can no longer recant his primary
choice of relief.

Since the relief chosen by buenviaje is specific performance it is the obligation of Jebson to complete
the building, hence there is no legal ground to hold sps salonga should be jointly liable.
Gonzales v Lim

Gonzales is the owner of Motown vehicles inc. Motown was the authorized distributor of Ford
vehicles in the country.

When Ford ceased operations, Gonzales sold Motown to Severino Lim and Toyota.

They executed an agreement to which they signed which reads: Motown does not own the land on
which the improvements but merely leases the land.

After paying 6 million to the Gonzaleses, Lim discovered that Motown’s lease of agreement was
already terminated prior to sale. As a result they were constrained to negotiate with Tanglaw for a
new lease of contract.

Lim then filed a complaint for declaratory relief with damages against Gonzales.

The RTC dismissed the complaint. Gonzales appealed to the CA which affirmed the RTC ruling.

Hence, this appeal. Petitioner posits that he is still entitled to the payment of 500K despite the failure
to comply with the agreement requiring him to obtain official communication from tanglaw
regarding the motown’s lease contract.

The supreme court held that if the conditions imposed on an obligation of a party which was not
complied with the other party may either refuse to proceed with the agreement or waive the
fulfillment of the condition.

Petitioners then chose the 2nd option,

Ronquillo was one of the petitioners of a civil case for the collection of sum of money filed by
Antonio So.

The lower court rendered decision based on the compromise agreement, Ronquillo filed a motion for
execution on the ground that defendant failed to make initial payments.

During the hearing on the motion for execution Ronquillo tendered the amount of 13,000 for his
share on the initial payments. Which was withdrawn by private respondent.

The court ordered the execution of writ against his co-defendants who did not pay their shares.

Private respondent now moves for the reconsideration of the execution and prayed for the execution
of the decision against all of the defendants. Which the court granted.

A writ of execution was issued for the satisfaction of the sum of 82,000 as against the properties of
the defendants singly or jointly liable.

Sheriff eulogio, issued a notice of sheriff’s sale for the auction of defendant’s property for the
satisfaction of the amount of 82,000. The defendant moved for the reconsideration but denied.
Hence, this appeal.

The supreme court held that by express provision of the agreement defendants obligated
themselves to pay jointly and individually. The term individually has the same meaning as
collectively, separately, distinctly, respectively, severally.

The obligation in this case is described as individually and jointly, the same is therefore enforceable
against the numerous obligors.
Bankard v Alarte

Bankard is involved in doing business as a credit card provider, bankard filed a suit against Alarte for
the collection of sum of money before the MTC of pasig for unduly refusing to pay her obligations
despite demands.

The MTC dismissed the complaint for lack of evidence. Nothing in the document shows the alleged
purchase rather it is only the amount of the surcharges and interests.

Thus bankard appealed to the RTC. The RTC denied the appeal. Bankard appealed to the CA and was
dismissed.

Hence, this appeal.

The supreme court held that a monthly credit card statement of account does not necessarily
involve purchases or transactions made immediately prior to the issuance of such statement.

Perusal of the statement of account would show that it does not contain the particular purchase
transaction entered into by the respondent.

However, the manner in which it was worded indicates that it is a running balance which alarte failed
to pay in the past. This means that there were no immediate purchase transactions made by alarte
for the month that needed to be specified.

Every credit card transaction involves 3 contracts: the sales between the credit card holder and the
merchant or the business establishment which accepted the credit card, the loan agreement
between the credit card issuer and holder, the promise to pay.

In view of this, the court remands the case to the MeTC where petitioner would be required to
amend its complaint and adduce additional evidence to prove its case. The way it could be
understood by the lower courts.
Heirs of Ramon Gaite v The Plaza Inc

The Plaza inc is engaged in the Restaurant business, entered into a contract with Rhogen Builders
represented by Ramon Gaite for the construction of a restaurant building for the price of 7 million, to
secure its obligation Gaite executed a surety bond, which was paid by The Plaza Inc. then the
construction commenced.

Engr. Gonzales later informed Gaite that the building permit was revoked due to non compliance
with the provisions of national building code.

Gaite notified the plaza inc that he is suspending all construction works until the plaza inc resolves all
the problems. To which the plaza inc replied that they were not the one to initiate the resolve for
they already paid the downpayment which was required to commence the construction.

Gaite notified the plaza inc that he is terminating the contract based on his right to stop work or
terminate as provided in the general conditions.

The plaza inc notified that it could no longer credit any payment to rhogen for the work it had
completed. Hence they demanded the reimbursement of the downpayment.

The plaza filed a case for the collection of sum of money in the CFI of Cebu. and for the nullification
of contract against rhogen. Which was granted by the court.

the heirs of Gaite filed an appeal in the CA which affirmed the RTC ruling.

the supreme court held that the construction contract between rhogen and the plaza is one of
reciprocal obligation whereby the latter’s obligation to pay the contract price is predicated on the
former’s performance to complete the works within the stipulated period. Pursuant to its obligation,
the plaza furnished rhogen with the construction materials and paid a downpayment. However after
2 months the construction was ordered to stop due to the non- compliance of the national building
code.

Such non-observance of the rules and regulations of the local authorities affecting the construction
project constitutes a substantial violation of the construction contract which entitles the plaza to
terminate its contract.

Rhogen failed to complete even a substantial portion of the construction despite downpayment from
the plaza, moreover the works completed was not in accordance with the approved plans, thus art.
1167 applies.
Aguilar v City trust

Aguilar canvassed thru telephone prices of cars from different car dealers. World car inc. sent its
representatives to the residence of Aguilar and discussed with them different models, advantages,
prices and terms of payment.

Aguilar decided to buy a Nissan California which was payable for 90 days.

Aguilar was made to sign a promissory which bears that they would still be obliged to pay on
installment in 12 months for the car even if the checks in full payment in 90 days were to be issued.
These notes does not bear the dates.

The representatives went back to aguilar’s residence requesting that a certain check payable to perez
be cancelled and that two checks be issued in replacement, one made payable to sunny motors and
one payable to perez. To which Aguilar obliged.

No official receipt was made for the checks issued and that if perez failed to issue receipts Aguilar
would stop the payment of the last check.

Perez failed to deliver receipts to Aguilar which explained that the receipts were in the main office
and he had no time to go there.

Later, Aguilar was notified of its due payments amounting to 110,000, and that the car has not been
fully paid yet. When Aguilar called world cars inc. she was informed that the last payment was not
made.

Thus, she filed a complaint for annulment of chattel mortgage plus damages against world cars and
citytrust. The RTC rendered decision in favor of Aguilar.

Citytrust appealed to the CA which reversed the decision of RTC. Hence, Aguilar appealed.

The supreme court held that since payment to perez was deemed payment to world cars, the chattel
mortgage, the promissory note and other executed documents which were to take effect only in the
even the checks would be dishonored were deemed nullified, all the checks are cleared.

Since the condition for the instruments to become effective was fulfilled, the obligation of Aguilar
thereby did no arise and world cars did not acquire rights. Consequently, citytrust cannot enforce the
instruments against the Aguilar, for an assignee cannot acquire greater rights than those pertaining
to the assignor.

At all events, Aguilar having fully paid the car before they became aware of the assignment of the
instruments to citytrust, they were released of their obligation.
Filinvest land inc. v CA

Filinvest awarded to defendant pacific equipment corporation the development of its residential
subdivisions. Pacific equipment development posted a guaranty which was issued by philamgen.

Pacific failed to complete the works. Filinevest wrote to pacific its intention to takeover the contract
and hold pacific liable for damages.

Defendant posits that the failure to finish the work is due to fortuitous events.

The court commissioner dismissed Filinvest claims. The CA also upheld the ruling.

The supreme court held

Broqueza was an employee of HSBC. Broqueza obtained a car loan, appliance loan and Gerong
broqueza was granted an emergency loan. These loans were automatically paid through salary
deduction.

Meanwhile, a labor dispute arose between HSBC and its employees, Broqueza were terminated.

Broqueza later filed a complaint for illegal dismissal. Because of their dismissal Broqueza was not
able to pay the monthly amortization. Thus HSBC considered their accounts delinquent and
demanded their payments. Hsbc filed a suit for collection of sum of money against broqueza.

The MTC ruled the nature of the demands are purely civil and has no connection with the labor
dispute in favor of HSBC.

The broquezas filed a joint appeal before the RTC which upheld the MTC decision.

Thus, the broqueza filed an appeal with the CA.

The CA ruled that the obligations of broqueza has not matured yet, thus, no cause of action accrued
in favor of HSBC. Thus, dismissed.

HSBC now appeals to the SC.

The supreme court held that every obligation whose performance does not depend upon a future or
uncertain event or a past event unknown to the parties, is demandable at once.

The SC affirms MTC and RTC ruling that there is no date of payment indicated in the promissory
notes. Since the promissory note contained no period, HSBC has the right to demand the obligation
immediately or at once.

Broqueza defaulted in the payment due to her dismissal from work. The payroll deduction is merely a
convenient mode of payment it is not the only source of payment for the loans.

HSBC did not agree that the payment shall only be tendered through payroll. Hsbc did not also agree
that if Editha ceases to be an employee of hsbc her obligation shall be suspended. Hence hsbc can
immediately demand the payment at anytime because no period has been stipulated. Moreover,
broqueza already defaulted in the payment.
AFP retirement v Eduardo Sanvictores

PEPI offered sanvictores a parcel of land, sanvictores paid the required down payment, a contract to
sell by PEPI and AFPRBS as the seller and sanvictores as the buyer. Sanvictores paid the full amount
but PEPI failed to execute a deed of sale and failed to deliver it.

Despite demands PEPI failed to communicate with sanvictores for 4 years.

Sanvictores filed with the HLURB a complaint for recission of contract to sell refund of payment and
damages and attys fees.

HLURB rendered a decision in favor of sanvictores. HLURB board affirmed the HLRUB decision. They
appealed to the OP but were denied.

AFPRBS alone appealed to the CA.

The supreme court held that solidary liability is not presumed unless the obligation expressly states
or the nature or nature of contract so requires.

The nature of the obligation of obligations of PEPI and AFPBRS was solidary. The contract states that
AFPBRS and PEPI designates them as SELLER not SELLERS this could only mean that they were
considered as one seller in the contract.

Wherefore the court denies the petition.

Florentino was doing business under the name of empanada royale while respondent was engaged
in the business of leasing stalls. They entered into a contract renewable every 4 months.

Before the expiration Florentino received letters from supervalue charging her with violation of their
lease contract.

Supervalue observed that Florentino was frequently closing earlier than the usual mall hours, and a
stern warning was given.

On the second letter supervalue informed Florentino that it would no longer renew the contracts.
After the expiration of the contract, supervalue confiscated the belongings of Florentino left at the
stall.

Florentino sent a letter to supervalue demanding to return the items and to return the security
deposits. Despite repeated demands supervalue failed to comply.

Thus, Florentino filed an action for specific performance with the RTC of Makati.

The RTC rendered a decision in favor of Florentino and found that the seizure of the equipments
were illegal.

Aggrieved, supervalue appealed to the CA which modified the RTC decision and justified the holding
of the security, however ordered supervalue to return the equipments.

Thus, this appeal.

The supreme court held that a penal clause is an accessory undertaking to assume greater liablity in
case of breach. It is attached to an obligation in order to insure performance and has a double
function. A) to provide for liquidated damages and B) to strengthen coercive force of the obligation
by the threat of greater responsibility in case of breach.

In obligations with a penal clause, the penalty shall substitute the indemnity for the damages and the
payments of interest in case of non-compliance if there is no stipulation.

The penalty may only be enforced when it is demandable in accordance with the provisions of this
code.

In the instant csase, the forfeiture of the amount of the security deposits in the amount of 192K was
excessive and unconscionable considering that the breaches committed by Florentina is of not such a
degree that suprevalue was unduly prejudiced. It is equitable therefore to reduce the total amount
of security deposits.
Escañor v Ortigas

PDCP entered into a loan contract with Falcon. 3 stockholders executed an assumption of solidary
liability where they agreed to resume in their individual capacity solidary liability with Falcon for the
due payment. 2 agreements were executed.

2 years later, an agreement to cede control of Falcon to Escano, thus contracts were executed by
Ortigas to transfer their shares of stock in Falcon to Escano.

Falcon availed the sum of 178K USD from the credit line extended by PCP and executed a chattel
mortgage to secure the loan however, Falcon defaulted in the payment and after PCP foreclosed the
mortgage, there remained a deficiency of 5000 which Falcon did not satisfy despite demand.

PCP filed a complaint against Falcon, Ortigas, Escano, Silos, Silverio and Inductivo.

After having settled with PCP, Ortigas filed a 3rd party against his co – defendants which the RTC
granted and ordered his co – defendants to pay Ortigas.

On appeal, his co – defendants dispute that they are liable to Ortigas. The court having found no
genuine matters of law dismissed the appeal and affirmed the RTC decision.

Thus this appeal.

The supreme court held that

Alba filed a complaint for her illegal dismissal and payment for her retirement benefits against YL
Land Corp and impleaded yunpangco as its president.

Labor Arbiter rendered decision in favor of Alba.

On appeal, NLRC denied respondent’s appeal due to the absence of Superdeas bond. The judgment
became final and executory.

The Labor arbiter issued a writ of execution distraining respondent’s club share at the Manila Golf
and Country club.

On December 14, 2001 one De Ocampo filed a 3rd party claim which was dismissed.

The labor arbiter issued a 2nd writ of execution which was challenged by respondent due to the sale
of his club share, arguing that he should not be held liable solidarily with respondent corporation.
Which was dismissed.

The court held that respondent waived any possible defense as to his liability for belatedly raising the
same seven years after the finality of Labor Arbiter decision.

The supreme court held that the respondent’s liability was solidary.

There is solidary liability when the obligation so express, when the law provides, or when the nature
of the obligation requires. Citing MAM realty v NLRC: a corporation being a juridical entity may act
only through its directors, officers and employees. Obligations incurred by them acting as such
corporate agents are not theirs but the direct accountabilities of the corporation they represent .

In labor cases, the court has held corporate directors and officers solidarily liable with the
corporation for the termination of employment of employees done with malice or bad faith.

Since there was no finding that the petitioner’s dismissal was effected with malice or bad faith,
respondent’s liability is thus, joint.
Molino v Security Diners Inc.

Security Diners a credit card system under the name of Diners Club. Danilo Alto applied for a Regular
card he got as his surety his sister in law jeannete Molino. They both signed the undertaking.

Attached in the application form was an agreement which stipulates that the surety will be held
jointly or severally liable to pay the cardholder’s obligation with Security Diner.

Later, Danilo secured a Diamond card which credit limit is unlimited. Danilo incurred credit in the
aggregate amount which he defaulted in paying.

SDIC demanded Molino and Danilo to pay but refused thus SDIC filed a complaint against them for
the collection of sum of money.

Molino posits that her liability is limited only to 10,000 and that she did not act as a surety when
Danilo secured the diamond card.

The trial court dismissed the ccomplaint, SDIC failed to prove through preponderance of evidence
that Molino acceded as a surety in the diamond card and that she has no liability since when the
time the regular card was upgraded Danilo has no outstanding balance.

On appeal the CA reversed the RTC decision.

Hence this appeal.

the supreme court held that novation as a mode of extinguishing obligations may be done in 2 ways,
by explicit declaration or by material incompatibility.

Material incompatibility is whether the 2 obligations can stand together, each one having its own
independent existence. if they cannot exist the latter obligation novates the first.

The upgrade of the local card to diamond card was a novation of the original agreement since it was
committed to replace to first card. However the novation did not serve to release Molino of her
obligation since in the Undertaking she expressly waived discharged in the case of change or
novation in the agreement governing the use of first card.

The nature and extent of her obligation was set out in the Surety Undertaking: She bound herself to
pay jointly and severally with Danilo all obligations and charges in the use of the Diners card.

She further declared that any change or novation in the agreement or any extension of time granted
by security diners to pay such obligation shall not release her from the surety undertaking.

Thus, the appeal is dismissed.

Tiro was holding an ordinary timber license issued by Bureau of forestry. He executed a deed of
assignment in favor of Javier where Tiro assigned 120,000 to the stocks of Timberwealth Inc.

At the time the deed of assignment was executed, Tiro had a pending application for an additional
forest concession adjoining the area of the agreed deed of assignment.

The director of forestry wrote Tiro that he needs to form an organization such as cooperative,
partnership or corporation with other adjoining licensees otherwise his license will not be renewed.

Consequently, Javier by virtue of the deed of assignment are now license holders entered into a
forest consolidation agreement with other timber license holders.

Due to the non payment of the balance in the deed of assignments, Tiro filed an action against Javier
for the payment of amount dues.

The decision of the lower court favored Javier, but on appeal CA reversed the decision.

Hence this petition for certiorari .

The supreme court held that the true cause or consideration of said deed was the transfer of
concession of private respondent to petitioners for 120,000. That during the transfer of funds both
parties knew that Timberwealth was non- existent and that Tiro conveyed inchoate right over a
forest concession.

Where the parties to a contract have given it a practical construction by their conduct as by acts In
partial performance, such as construction may be considered in construing the contract.

The deed of assignment is relatively simulated contract which states a false cause or consideration or
one where the parties conceal their true agreement. A contract with a false consideration is not null
and void, under the civil code, a simulated contract, if does not prejudice a person and is not
intended for any purpose contrary to law morals, good customs, or public policy binds the parties to
their real agreements.

Javier cannot be held liable. The efficacy of said deed of assignment is subject to the condition that
the application of Tiro for an additional area for forest concession be approved by the bureau of
forestry. Since Tiro did not obtain the approval the deed produces no effect.

If the suspensive condition does not take place, the parties would stand as if no obligation existed
HDMF v Cataquiz

Cataquiz (father) entered into a sales agreement and a construction contract with Soriano. To finance
the construction and acquisition of the lot cataquiz for a housing loan with HDMF which was later
approved. The construction of the house was later completed.

However Rudy Cataquiz died when the loan was released.

Cataquiz (heir) requested for the release of the title over the subject property. HDMF refused on the
account that Cataquiz (father) failure to accept the loan during his lifetime.

Aggrieved Cataquiz filed for a specific action. The RTC ruled in favor of Cataquiz, the problem arose
due to HDMF failure to include cataquiz in the list of loans for take out despite cataquiz timely
payment.

HDMF appealed to the CA but was later denied.

The supreme court held that the loan and mortgage agreement between rudy and HDMF was
already binding and the MRI was already in effect. Upon issuance of the notice of guaranty the loan
and mortgage agreement was already in effect.

Considering that a loan is a reciprocal obligation, a perfected consensual contract to grant the loan
was already executed and rudy had complied with its part by submitting necessary documents.
Manlar Rice Mill v Deyto

Manlar rice mill is engaged in the business of rice milling and selling grains. Deyto does business
under the trade name of JD grains center and is likewise engaged in milling and selling rice. Her
daughter jannet ang deyto operated her own rice trading through her store.

Janet entered into a rice supply contract with manlar payable through checks.

Upon presentation of checks, they were dishonored for being drawn against a closed account.
Manlar made demands both from deyto and janet ang which went unheeded.

Manlar filed an action before RTC of QC which sought to hold Deyto and Ang solidarily liable on the
rice supply contract.

Deyto’s defense posits that she was never a party in the rice supply contract and that JD grains was
solely owned by her and had no participation of the contract of her daughter.

The RTC rendered judgment in favor of Manlar ordering Deyto to pay him jointly and severally.

On appeal, CA reversed the RTC ruling. Thus this appeal.

The supreme court held that in civil cases, the quantum of proof required is preponderance of
evidence which connotes that evidence that is of greater weight or is more convincing than that
which the opposition to it. It does not mean absolute truth, rather it means that the testimony of
one side is more believable than that of the other side.

Evidence shows that whenever Manlar delivers the rice, Deyto was never around and the post dated
checks were issued from a bank account owned by Ang.

There is solidary liability when the obligation expressly so states, when the law provides or the
nature of the obligation provides. Considering that the agreement between Ang and Manlar was only
verbal there is no sufficient evidence that Deyto assented to their contract together with Ang.

Under article 1311, contracts could only take effect between parties who entered into it, it cannot
favor or prejudice a third person. Not being able to establish that Deyto was a proper party in the
contract, Manlar cannot sue her.
Living Sense v Malayan Insurance

Living sense was the main contractor of the FOC network Project of Globe telecom in Mindanao.
Living sense entered into a subcontract agreement with DMI. DMI was tasked to undertake an
underground open trench work. Living sense required DMI to give a bond thus DMI secured a surety
bond from Malayan insurance. Under the bonds, respondent bound itself to jointly and severally
liable with DMI.

During the course of excavation, DPWH issued a work stoppage against DMI after finding the latter’s
work unsatisfactory. This prompted Living sense to terminate the contract.

The rtc dismissed the case for failure to implead dmi without prejudice to file again.

Living sense posits that as a creditor under art. 1216 it can proceed against any of the solidary
debtors.

Records show that when DMI secured the surety and performance bonds, the respondent bound
itself jointly and severally with DMI for the damages actual loss that the petitioner may suffer should
DMI fail to perform its obligations under the agreement.

Under the agreement the term jointly and severally was used to describe their obligation, this grants
Living sense the right to proceed against its debtors.

An indispensable party must be impleaded for the court to acquire jurisdiction over the parties. The
absence of an indispensable party renders the proceeding null and void.

In this case DMI was not an indispensable party since Living sense can proceed against Malayan
insurance, having themselves made jointly and severally liable with DMI for the obligation under the
bonds.
Arrieta v NARIC

Arrieta participated in the public bidding called by the NARIC for the supply of Burmese rice. As her
bid was the winning bid, she was awarded the contract for the same. Arieta and NARIC entered into a
contract of sale of rice. In turn, Naric committed itself to pay for the rice by means of an irrevocable,
confirmed and assignable letter of credit in US currency immediately. Despite the commitment to
pay immediately, however after a full month after the contract NARIC applied for a commercial letter
credit.

Arieta advised NARIC that if the letter credit was not approved soon, a percentage of the FOB price
will be confiscated.

PNB then informed NARIC that the credit was approved.

However, NARIC was not able to meet the qualifications financially, this resulted in the cancellation
of Arrieta’s rice allocation and the forfeiture of the deposit. Thus Arrieta sued Naric and demand
damages.

The supreme court held that one who assumes a contractual obligation and fails to perform it due to
their inability to meet certain bank requirements which they were aware of when entering into the
contract should be held liable for breach of contract.

Citing art. 1170 the court held that every debtor who fails in the performance of is bound to
indemnify for the losses and damages caused thereby.

Arrieta’s failure to promptly furnish necessary data for opening the letter of credit did not cause the
delay since arrieta provided the necessary data immediately after the execution of contract.
Kalalo v Luz

Kalalo entered into an agreement with luz, the agreement stated that Kalalo would provide
engineering services to Luz for a certain fee.