Sps. Godfry & Teves vs.

ICCS
G.R. No. 216714, April 4, 2018
Facts:
In 1996, Standard Chartered Bank extended various loans to petitioners Godfrey and Teves. As
security, petitioners mortgaged their property covered by Transfer Certificate of Title No. 107520 (the
subject property). Petitioners defaulted on their loan payments, Standard extrajudicially foreclosed on
the mortgage, and the property was sold to Integrated Credit and Corporate Services. ICCS was then
issued a new title when petitioners failed to redeem the subject property on May 23, 2007.
ICCS filed a petition for the issuance of a writ of possession. During the proceedings, ICCS was
substituted by respondent Carol Aqui who appears to have acquired the property from ICCS, and a new
certificate of the title -was issued in Aqui’s favor.
RTC issued two Orders: The first issue is the writ of possession. It is the duty of the court to grant the
writ of possession is ministerial. The second ordered the defendants to deliver to the petitioner, and/or
deposit with the Court the monthly rentals of the subject property covering the period from May 24,
2007, up to the time they surrender the possession thereof to the petitioner. Petitioners filed a Partial
Motion for Reconsideration of the Second Order, but RTC denied the same.
Petitioners filed a Petition for Certiorari before the CA. The latter dismissed the Petition filed under Rule
65 being an improper remedy. It is the judgment that the orders subject to the petition take part like a
judgment or final order which is appealable under Rule 41 of the Rules of Court.
Petitioners, praying that this Court set aside the second order of the RTC, argue that Aqui should file an
independent action — and not simply seek the same in her petition for issuance of a writ of possession,
since (a) the RTC, sitting as a land registration court, does not have jurisdiction to award back rentals
or grant relief which should otherwise be sought in an ordinary civil action; and (b) Act No. 3135, as
amended by Act No. 4118, contains no provision authorizing the award of back rentals to the purchaser
at auction.
Issue: Whether or not Can collection of back rentals can be awarded in an EX PARTE application for
writ of possession under Act 3135.
Held: Yes.
When the redemption period expired on May 23, 2007, ICCS became the owner of the subject
property and was, from then on, entitled to the fruits thereof. Petitioners ceased to be the owners of the
subject property, and had no right to the same as well as to its fruits. - Under Section 32, Rule 39 of the
Rules, on Execution, Satisfaction and Effect of Judgments, “all rents, earnings and income derived from
the property pending redemption shall belong to the judgment obligor, but only until the expiration of his
period of redemption.” Thus, if petitioners leased out the property to third parties after their period for
redemption expired, as was in fact the case here, the rentals collected properly belonged to ICCS or
Aqui, as the case may be. Petitioners had no right to collect them.
On the contention that the RTC — sitting as a land registration court — does not have
jurisdiction to award back rentals or grant relief which should otherwise be sought in an ordinary civil
action, this is no longer tenable. The distinction between the trial court acting as a land registration
court with limited jurisdiction, on the one hand, and a trial court acting as an ordinary court exercising
general jurisdiction, on the other, has already been removed with the effectivity of Presidential Decree
No. 1529, or the Property Registration Decree. “The change has simplified registration proceedings by
conferring upon the designated trial courts the authority to act not only on applications for ‘original
registration’ but also ‘over all petitions filed after original registration of title, with power to hear and
determine all questions arising from such applications or petition.'”
 DBP vs. CONFESOR

G.R. No. 48889, May 11, 1988

Facts:
On February 10, 1940, spouses Patricio Confesor and Jovita Villafuerte obtained an agricultural
loan from the Agricultural and Industrial Bank, now Development Bank of the Philippines (DBP), in the
sum of P2,000, as evidenced by a promissory note of said date whereby they bound themselves jointly
and severally to pay the amount in ten (10) equal yearly amortizations.
As the obligation remained unpaid even after the lapse of the ten-year period, Confesor, who was then
a member of the Congress of the Philippines, executed a second promissory note on April 11, 1961,
expressly acknowledging the said loan and promised to pay the same on or before June 15, 1961.
The spouses still failed to pay the obligation on the specified date. Hence, the DBP filed a complaint on
September 11, 1970, in the City Court of Iloilo City. The city court-ordered payment from spouses,
although there was a reverse on appeal. The CFI of Iloilo reversed the decision.
Hence, this petition.

Issue: Whether or not a promissory which was executed in consideration of a previous promissory note
which has already been barred by prescription is valid.
Held: Yes.
Where, therefore, a party acknowledges the correctness of a debt and promises to pay it after
the same has been prescribed and with full knowledge of the prescription he thereby waives the benefit
of the prescription. -The second promissory note is valid because the said promissory note is not a
mere acknowledgment of the debt that has been prescribed already. The consideration of the new
promissory note is the pre-existing obligation under the first promissory note. By reference, it is a new
promise to pay the debt. The new promise is a new cause of action. Even though a debt barred by
prescription is enforceable, a new contract recognizing and assuming the prescribed debt would be
valid and enforceable.
Under Article 165 of the Civil Code, the husband is the administrator of the conjugal partnership. As a
such administrator, all debts and obligations contracted by the husband for the benefit of the conjugal
partnership, are chargeable to the conjugal partnership. Hence the conjugal partnership is liable for this
obligation.
 JOSE ARAÑAS, Et. Al. vs. EDUARDO C
G.R. No. L-52807, February 29, 1984.

Facts:

On May 3, 1971, by the now defunct Court of First Instance of Rizal, Branch V, at Quezon City,
in Civil Case No. Q-40689 thereof, entitled "Jose Arañas, Et. Al. v. Juanito R. Castañeda, Et Al.," the
said court declared that petitioner Luisa Quijencio as plaintiff and (assisted by her spouse co-petitioner
Jose Arañas) was the owner of 400 shares of stock of respondent Universal Textile Mills, Inc. (UTEX)
as the defendant and Gene Manuel and B. R. Castañeda as co-defendants, and subsequently ordered
UTEX to cancel said certificates and issue new ones in the name of Plaintiff and to deliver all dividends
appertaining to the same, whether in cash or stocks.

UTEX filed a motion for reconsideration or clarification on whether the phrase "to deliver to her all
dividends appertaining to the same, whether in cash or stocks" meant dividends properly pertaining or
about to the plaintiffs after the court declared the plaintiff ownership of said 400 shares of stock.
Defendant UTEX has always maintained it would rightfully abide by whatever decision may be rendered
since such would be the logical consequence after the ruling concerning the rights ownership of said
shares of stock. The motion for clarification was granted by the trial court and ruled that its judgment
against its UTEX, ordering it to pay the plaintiff (Arañas) the cash dividends, which accrued to the stocks
in question after the rendition of its current decision excluding cash dividends already paid to ifs co-
defendants. Thus, the spouses-petitioner asked for a writ of execution from the court where payment of
cash dividends from 1972-1979 with interest and to effect the transfer of the shares to them. The lower
court granted such an order but absolved UTEX of payment of cash dividends which they have already
paid to Manuel and Castaneda on the decision.

UTEX alleged that the cash dividends had already been paid thereby absolving it from the payment
thereof.

Issue: WON the contention of UTEX, alleging that the cash dividends of stock had already been paid
and thereby absolving it from any further payment, valid?

Held: No.
UTEX's co-defendants were declared to be the owners of the shares of stock in question by the
final and executory judgment against UTEX. In Addition, it is elementary that payment made by a
judgment debtor to a wrong party cannot extinguish the obligation of such debtor to its creditor. It was
clear and in the motion for clarification that all dividends accruing to the said shares after the rendition
of judgment belonged to the Aranas. When UTEX paid the wrong parties, despite its knowledge and
understanding of the final judgment, it is still liable to pay Aranas as the lawfully declared owners of the
said shares. The burden to recover the wrong payment is on UTEX and cannot be passed or even
transferred to the Aranas as the innocent parties here.
 MBTC vs. WILFRED N. CHIOK
G.R. No. 172652, November 26, 2014
Facts:
Respondent Wilfred N. Chiok (Chiok) had been engaged in dollar trading for several years. He
usually buys dollars from Gonzalo B. Nuguid (Nuguid) at the exchange rate prevailing on the date of the
sale. Chiok pays Nuguid either in cash or a manager's check, to be picked up or deposited in the
latter's bank account. Chiok and Nuguid had been dealing in this manner for about six to eight years,
with their transactions running into millions of pesos. For this purpose, Chiok maintained accounts with
petitioners Metropolitan Bank and Trust Company (Metrobank) and Global Business Bank, Inc. (Global
Bank), the latter being then referred to as the Asian Banking Corporation (Asian Bank). Chiok likewise
entered into a Bills Purchase Line Agreement (BPLA) with Asian Bank.
Per the plan, Checks were drawn in favor of or negotiated to, Chiok may be purchased by Asian
Bank. Upon such purchase, Chiok receives a discounted cash equivalent to the amount of the check
earlier than the normal clearing period. Check in the amount of P25,500, 000.00 issued in the name of
Chiok, and credited the same amount to the latter' Savings Account. On the same day, Asian Bank
issued two (2) Manager's Checks (MC) with the aggregate amount of Php 18.5 million upon Chiok's
instruction which was debited from his account.
Upon Chiok's application, Metrobank issued one (1) Cashier's Check (CC)in the amount of Php
7.6 million in the name of Gonzalo Bernardo. Chiok then deposited the three checks (2 Asian Bank MC
and 1 Metrobank CC) in Niguid's account with Far East Bank and Trust Company (FEBTC), a
predecessor-in-interest of BPI.
Nuguid was supposed to deliver the US$1,022,288.50 equivalent of the three checks as agreed
upon. However, Nuguid failed to do so, prompting Chiok to request that payment on the three checks
be stopped.

Issue: Whether or not payment of manager’s and cashier’s checks are subject to the condition that the
payee thereof should comply with his obligations to the purchaser of the checks.

Held: No.
When Nuguid failed to deliver the agreed amount to Chiok, the latter had a cause of action
against Nuguid to ask for the rescission of their contract. On the other hand, Chiok did not have a
cause of action against Metrobank and Global Bank that would allow him to rescind the contracts of
sale of the manager’s or cashier’s checks, which would have resulted in the crediting of the amounts
thereof back to his accounts.
According to the right of rescission, under Article 1191 of the Civil Code can only be exercised following
the principle of relativity of contracts under Article 1131 of the same code, which provides:
- Art. 1311. “Contracts take effect only between the parties, their assigns and heirs, except in the
case where the rights and obligations arising from the contract are not transmissible by their nature, or
by stipulation or by the provision of law.”
 Sps. Francisco Sierra vs. Paic Savings and Mortgage Bank, Inc.

G.R. No. 197857, September 10, 2014

Facts:

The Goldstar Conglomerates, Inc. (CGI), represented by Zaldaga, obtained a loan amount of
P1,500,000 from First Summa Savings and Mortgage Bank (Summa Bank) now renamed as respondent
Paic Savings and Mortgage Bank, Inc. (PSMB) with a loan agreement. CGI executed in favor of PSMB
six promissory notes in the aggregate amount of P1,500,000.00 to boot a Deed of Real Estate Mortgage
over a parcel of land. As additional security, petitioners Francisco Sierra, Rosario Sierra, and their
Spouses Felix Gatlabayan and Salome Sierra mortgaged four parcels of land in Antipolo City registered
in their names (subject properties). Per the data, after signing the mortgage deed, Zaldaga gave petitioner
Francisco Sierra four (4) manager’s checks in the amount of P200,000.00 which were later encashed.
GCI then defaulted on the loan resulting in the foreclosure of the mortgaged properties' subject properties
following Act No. 3135, as amended, with due notice to petitioners. Since petitioners failed to redeem the
subject properties within the redemption period, their certificates of title were canceled, and now new
ones were issued in PSMB’s name. Petitioners then filed against the respondent in the RTC a complaint
for the declaration of nullity of the real estate mortgage and its extrajudicial foreclosure.

Issues:

- Whether or not petitioners were aware that they were mere accommodation mortgagors
- Whether or not the CA erred dismissing petitioners’ complaint on the grounds of prescription
and laches.

Held: Yes.

The petitioners are aware that they were mere accommodation mortgagors. Per, precisely
perceived by the CA, the testimony of petitioner Francisco Sierra as to the petitioners’ respective
educational backgrounds remained unsubstantiated. The other petitioners-signatories to the deed never
testified that their educational background prevented them from knowingly executing the subject deed as
mere accommodation mortgagors. The petitioners’ claim of lack of proper instruction on the intricacies of
securing the loan from the bank is further belied or contradicted by the fact that petitioners Francisco and
Sierra had previously mortgaged two of the subject properties twice to the Rural Bank of Antipolo. Indeed,
the preceding circumstances clearly show that petitioners are aware that they were mere accommodation
mortgagors, debunking their claim that the mistake vitiated their consent to the mortgage.

Yes, petitioners have a valid ground on prescription, where the four-year prescriptive period on
voidable contracts shall apply. Since the complaint for annulment was anchored on a claim of mistake,
i.e., that petitioners are the borrowers under the loan secured by the mortgage, the action should be filed
or brought within four years from its discovery. Petitioners’ action is already barred by laches, as the case
holds, operates not really to penalize neglect or sleeping on one’s rights, but rather to avoid recognizing
a right when to do so would result in a distinctly inequitable situation. The Court further holds that laches
applies. As the records disclose, despite the notice of the scheduled foreclosure sale, petitioners, for
unexplained reasons, failed to impugn the real estate mortgage and oppose the public auction sale for
more than seven (7) years from said notice.
 JOSE T. ONG BUN vs. BPI

G.R. No. 212362, March 14, 2018

Facts:

In 1989, Ma. Lourdes Ong, the wife of petitioner Jose Ong purchased three (3) silver custodian
certificates (CC) in the spouses' name from the Far East Bank & Trust Company (FEBTC). In 2002, the
petitioner discovered that the three CCs bought from FEBTC were still in the safety vault of his
deceased wife and were not surrendered to FEBTC. The three CCs have the following common
provisions:

This instrument is transferable only in the books of the Custodian by the holder, or in the event of a
transfer, by the transferee or buyer thereof in person or by a duly authorized attorney-in-fact upon
surrender of this instrument together with an acceptable deed of assignment. The Holder hereof or
transferee can withdraw at any time during office hours, Silver Certificate of Deposit herein held in
custody. This instrument shall not be valid unless duly signed by the authorized signatories of the Bank
and shall cease to have force and effect upon payment under the terms hereof.

Subsequently, FEBTC merged with BPI after about eleven years since the said CCs were purchased.
After the death of the petitioner's wife Ma. Lourdes Ong, in December 2002, the petitioner discovered
that the three CCs bought from FEBTC were still in the safety vault of his deceased wife and were not
surrendered to FEBTC.

After about three years, starting with its discovery of the certificates, the petitioner filed a complaint for
the collection of a sum of money and damages against BPI with the Regional Trial Court (RTC), Branch
33, Iloilo City (Civil Case No. 06-28822) praying that BPI is ordered to pay him P750,000.00 for the
three CCs, legal interest, for attorney's fees, for moral damages, and an unspecified amount for
exemplary damages as well as the cost of suit. It claimed that the CCs had terms of only 25 months
and that by the year 2000, when it merged with FEBTC and when the Trust and Investments Group of
FEBTC was no longer in existence, there was no longer any outstanding CCs in its books. However,
CA ruled against them. acts:

Issue: Whether or not BPI needs to pay Mr. Jose Ong Bun the value of the three (3) Custodian
Certificate (CCs).

Held:

Yes, BPI must and is obliged to pay the value of the three Ccs.

Verily, the promise has been obtained by the petitioner from BPI that the custodian certificates
would be paid upon maturity. Thus, the latter reneged on its promise when it refused payment thereof
after the demands were made by the petitioner for such payment. The claim of BPI that the certificates
had been paid, is not supported by credible evidence and, therefore, unsubstantial. Whereas, Certificates
of Time Deposits in question and the names of Jose Ong Bun or his wife had been paid by the Far East
Bank and Trust Company as early as the year 1991, when the same matured, considering that at the
time of the merger between Far East Bank and Trust Company and the Bank of Philippine Islands, no
such Silver Certificates of Time Deposits were outstanding on the books of Far East Bank and Trust
Company, is simply unconvincing.

- The fact that the petitioner still has [a] copy of the Custodian Certificate of the Silver Certificates of Time
Deposit is material, contrary to the defendant, as it is inconceivable that the bank would make payment
without requiring the surrender thereof. - Hence, therefore, the Silver Certificates of Deposit may have
been withdrawn by the petitioner or his wife, even though they failed to surrender the custodian
certificates is speculative and replete of any proof or evidence.
 THE BACHRACH MOTOR CO., INC. vs. FAUSTINO ESPI RITU

G.R. No. L-28497, November 6, 1928

Facts:

A consolidated certainty Cases no. 28497 and 28948 involving two separate sale transactions.
On July 28, 1925, the defendant Espiritu purchased the plaintiff corporation a two-ton white truck for
Php11,983.50, paying Php1,000.00 down to apply on account of this price and obligating himself to pay
the remaining Php10,983.50 within the periods agreed upon the contract. The defendants mortgaged the
purchased trucks and three others which are numbered 77197 and 92744 respectively to secure the
payments. However, the defendant failed to pay Php4, 208.28.

In case 28498 dated Feb 18, 1925-defendant bought a one-ton white truck of the plaintiff corporation for
the sum of P7,136.50, and the P500 cash deducted and 12% annual interest on the unpaid principal,
obligated himself to make payment within the periods agreed upon and mortgage truck 77197 and 92744
respectively in the purchase of the other truck. The defendant failed to pay P4,208.28 of the sum.

In both sales, it was agreed that 12 percent be paid upon a portion of the unpaid at execution of contracts,
if failed to non-payment in its maturity, 25 percent thereon as a penalty.

The defendant signed a promissory note solidarily with his brother Rosario Espiritu for several sums
secured by the two mortgages.

Issue: Whether or not that the plaintiff has the right to impose higher interest as penalty twice the fixed
rate by law?

Whether or not the 25% penalty upon the debt, in addition to the interest of 12% per annum, makes the
contract usurious.

Held: No.

Article 1152 of the civil code permits the agreement upon a penalty apart from the interest. Should
there be such an agreement, the penalty does not include the interest; and may be demanded separately
(as was held in the case of Lopez vs. Hernaez-32 Phil 631), which states that the penalty is not to be
added to the interest for the determination of whether the interest exceeds the rate fixed by the law since
the said rate was fixed only for the interest. But considering that the obligation was partly performed and
making use of the power given to the court by article 1154 of the civil code, the penalty is reduced to 10%
of the unpaid debt.

The judgment appealed from is affirmed.:

 Hydro Resources Contractors Corp. vs. NIA

G.R. NO. 160215, November 10, 2004

Facts:

National Irrigation Administration (NIA) was contracted by Hydro Resources Contractors

Corporation (HRCC) to perform the main civil work of the Magat River Multi-Purpose Project. Specifically,
the stipulation in the contract states that there would be a rate that was fixed on a dollar-to-peso basis,
based on the current currency, and in any cases of dispute, it must be agreed by both parties within 30
days and thus subject to the approval of the administrator of NIA to ensure speedy disposal of the said
project. Upon completion of the project, a final reconciliation of the total entitlement of Hydro to the foreign
currency component of the contract was made. The outcome of this reconciliation shows that the total
entitlement of Hydro to the foreign currency component of the contract exceeded the amount of US dollars
required by Hydro to repay the advances made by NIA. A letter of reconsideration was filed on November
7, 1986, of which was given the final letter that the request was denied only by January 7th, 1987. By
February 27, 1987, a request for arbitration was filed by HRCC as a response wherein the CA had ruled
that the arbitration was reversed due to a reason that it had already exceeded the 30-day period that was
given in the prescription on the contract. Further, based on Ex Gratia Argumenti which declares the
payment of foreign and national is to be considered void.

Issue: Whether or not the obligation to make payment is part of the provisions of RA No 529
based on Ex Gratia Argumenti?

Held:

The court held that only the stipulation requiring payment in foreign currency is void, but not the
obligation to make payment. The court ruled that it is thus erroneous for the Court of Appeals to
disallow the petitioner’s claim for foreign currency differential because NIA’s obligation should be
converted to Philippine Pesos which was legal tender at the time. This can be gleaned from the
provision that “every other domestic obligation heretofore or hereafter incurred” shall be “discharged
upon payment in any coin and currency which at the time is legal tender for public and private debts”.

-RA 529 clearly states that a contract funded by an international organization, particularly one
recognized by the Philippines, is exempt from the provisions of RA No. 529
 PONCE vs. HONORABLE COURT OF APPEALS

G.R. No. L-49494 May 31, 1979

Facts:
Private respondent Afable, together with Mendoza and Diño executed a promissory note in favor
of Ponce in the sum of P814,868.42 payable in Philippine currency, without interest as well as stipulations
in case of non-payment. Upon failure of the debtors to pay, a complaint was filed against them for the
recovery of the principal sum, plus interest and damages. The trial court rendered judgment in favor of
Ponce.
The Court of Appeals affirmed the decision of the trial court. On the second motion for
reconsideration, however, the appellate court reversed the judgment and opined that the parties intended
that the note was payable in US dollars which is illegal, with neither party entitled to recover under the “in
pari delicto” rule.

Issue: Whether or not petitioners (Ponce) can still recover the payment.

Held: YES.

Per, RA 529 provides that an agreement to pay in dollars is null and void and of no effect,
although, what the law precisely prohibits is payment in a currency other than legal tender. Even if the
intent or purpose of the parties was really to provide for payment of the obligation would be made in
dollars, petitioners can still recover the dollar amount in its peso equivalent. What is prohibited by RA
No. 529 is the payment of an obligation in dollars, meaning that a creditor cannot oblige the debtor to
pay him in dollars, even if the loan was given in said currency. In such a case, the indemnity to be
allowed should be expressed in Philippine currency on the bases of the current rate of exchange at the
time of payment.
 KALALO vs. LUZ

G.R. No. L-27782, July 31, 1970

Facts:

In 1959, plaintiff Kalalo (an engineer) entered into an agreement with defendant Luz (an architect)
under their firm names O. A. Kalalo & Associates and A.J. Luz & Associates, respectively), where the
former was to render engineering design services to the latter for fees, as stipulated in the agreement. In
1961, Kalalo sent Luz a statement of account where the balance due for services rendered was P59,505.
In 1962, Luz sent Kalalo a resume of fees due to the latter, and a check for P10,861.08. Kalalo refused
to accept the check as full payment of the balance of the fees due him. On 10 August 1962, Kalalo filed
a complaint containing 4 causes of action, i.e. $28,000 (representing 20% of the amount paid to Luz in
the International Research Institute project) and the balance of P30,881.25 as fees; P17,0000 as
consequential and moral damages; P55,000 as moral damages, attorney’s fees and litigation expenses;
and P25,000 as actual damages, attorney’s fees and litigation expenses).

To settle the dispute, and upon agreement of the parties, the trial court authorized the case to be
heard before a Commissioner. The Commissioner rendered a report which, in resume, states that the
amount due to appellee was $28,000.00 (U.S.) as his fee in the International Rice Research Institute
Project (IRRI) which was twenty percent (20%) of the $140,000.00 that was paid to the appellant, and
P51,539.91 for the other projects, less the sum of P69,475.46 which was already paid by the appellant.
The trial court ruled in favor of Kalalo. Luz filed an appeal directly with the Supreme Court raising only
questions of law.

Issue: - Whether or not plaintiff Kalalo was in estoppel.

- Whether or not the rate of exchange of dollar to peso are those at the time of the payment of the
judgment or at the time when the research institute project became due and demandable.

Held:

No. The statement of accounts here could not estop Kalalo, because Luz did not rely thereon on
as found by Commissioner. The finding of the Commissioner, not disputed by Luz, was adopted by the
RTC in its decision. Under Article 1431 of CC, estoppel may apply to the person, to whom
representations have been made and who claims the estoppel in his favor must have relied or acted on
such representations. - An essential element of estoppel is that person invoking it has been influenced
and has relied on representations or conduct of the person sought to be estopped, and this element is
wanting here. The essential elements of "estoppel in pais" may be considered with the party seeking to
be estopped, and the party invoking estoppel in his favor.

No. Under the agreement, Kalalo was entitled to 20% of $140,000.00, or the amount of
$28,000.00. Kalalo, however, cannot oblige the appellant to pay him in dollars, even if the appellant
himself had received his fee for the IRRI project in dollars. This payment in dollars is prohibited by
Republic Act 529 which was enacted on June 16, 1950.

Luz’s obligation to pay Kalalo the sum of US$28,000 accrued on 25 August 1961, or after the
enactment of RA 529 (16 June 1950). Thus, the provision of the statute which requires payment at
the prevailing rate of exchange when the obligation was incurred cannot be applied. RA 529 does
not provide for the rate of exchange for the payment of obligation incurred after the enactment of
the Act, and thus the rate of exchange should be that prevailing at the time of payment.
 UNIVERSAL FOOD CORPORATION vs. CA

G.R. No. L-29155, May 13, 1970

Facts:

This case was about a petition for certiorari by the UFC against the CA declaring the Bill of Assignment
rescinded, ordering the petitioner to return to Magdalo Francisco, Sr his Mafran sauce trademark and to
pay his monthly salary of P300.00 from, and until the return to him of said trademark and formula.

In 1938, Magdalo, Francisco discovered a formula for the manufacture of a food seasoning derived
from banana fruits, popularly known as MAFRAN sauce; the manufacture of this product was on a
commercial scale in 1942, and in the same year whereas, Magdalo, registered his trademark in his
name as both owner and inventor of said sauce with the Bureau of Patents; but that due to financial
constraints, Francisco Sr. entered into a contract with UFC stipulating among others that he be the
Chief Chemist, and he secured the financial assistance of Reyes who, after a series of negotiations,
formed with other partners the corporation known as Universal Food Corp., which also eventually led to
the execution of the contract called, “Bill of Assignment”. In conformity with the terms and conditions of
the Bill of Assignment, Magdalo was appointed chief Chemist of UFC. A memorandum was issued to
Victoriano Francisco ordering him to report to the factory and produce "Mafran Sauce” and another one
was issued to recall all daily employees who are connected to the production of “Mafran Sauce.

After the issuance of some successive memorandums without having recalled Magdalo back to work,
the latter filed an action for rescission of the Bill of Assignment and to declare that Universal Food Corp.
should not have any right to use the Mafran trademark and formula.

Issue: Whether or not respondent Magdalo is entitled to a rescission of the Bill of Assignment.

Held: Yes.

According to ART. 1191. - The power to rescind obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him. The injured party may choose
between the fulfillment and rescission of the obligation, with the payment of damages in either case. -
- The general rule is that rescission of a contract will not be permitted for a slight or casual breach, but
only for a substantial breach as would defeat the very object of the parties in agreeing.

In this case, the Court found that the dismissal or termination of respondent Magdalo’s employment in
UFC., as the permanent Chief Chemist, is a fundamental and substantial breach of the Bill of
Assignment. He was dismissed without any fault or negligence on his part.

- Thus, apart from the principle that the option to demand performance or rescission of the
contract belongs to the injured party, the fact remains that the respondent had no alternative but
to file the present action for rescission and damages.
- Thus, modified the Court ruled in the affirmative.
 MAKATI STOCK EXCHANGE vs. CAMPOS

G.R. No. 138814, April 16, 2009

Facts:

This was a case instituted by respondent Miguel V. Campos set to motion the SEC Case No. 02-
94-4678 with the Securities, Investigation and Clearing Department (SICD) of the Securities Exchange
Commission against Makati Stock Exchange, Inc., which sought the nullification of the Resolution of the
MKSE which allegedly denied Campos of possessing the right to take part of an allocation of Initial Public
Offerings (IPO) equally, the delivery of IPO shares that Campos allegedly deprived of, and the payment
of P2 million as moral damages, P1 million as exemplary damages, and P500,000 as attorney’s fees and
litigation expenses. Thereafter, Petitioners filed a Motion to Dismiss Campos’s Petition in SEC Case No.
02-94-4678 on March 11, 1994, based on the petition become moot due to cancellation of the license of
MKSE, second the SCID has no jurisdiction over the petition, and third for the petition failed to state a
cause of action. The SICD denied this Motion to Dismiss in an Order on May 4, 1994. Respondent
Campos filed a Petition for Certiorari with the Court of Appeals. The Court of Appeals granted the petition
and ruled that rendered the SEC order dated May 31, 1995 and August 14,1995null and void and set
aside.

Issue: Whether or not the Respondent Campos Petition failed to state the cause of Action.

Held: Yes.

The petition filled by the respondent Campos should be dismissed for failure to state a cause of
action. – Accordingly, a cause of action is the act or omission by which a party violates a right of
another. Whereas, a complaint states a cause of action where it contains three essential elements of a
cause of action, namely: (1) the legal right of the plaintiff, (2) the correlative obligation of the defendant,
and (3) the act or omission of the defendant in violation of said legal right. If these elements are absent,
the complaint becomes vulnerable to dismissal on the ground of failure to state a cause of action.

The Petition in SEC Case No. 02-94-4678 should be dismissed for failure to state a cause of
action. It does not matter that the SEC en banc, in its Order dated 14 August 1995 in SEC-EB No. 403,
overstepped its bounds by not limiting itself to the issue of whether respondent’s Petition before the
SICD sufficiently stated a cause of action. In the main, the SEC en banc did correctly dismiss the
Petition in SEC Case No. 02-94-4678 for its failure to state the basis for respondent’s alleged right, to
wit. Private respondent Campos has failed to establish the basis or authority for his alleged right to
participate equally in the IPO allocations of the Exchange.

Precisely, the terms right and obligation are not magic words that would automatically lead to
the conclusion that such Petition sufficiently states a cause of action. Right and obligation are legal
terms with specific legal meaning. A right is a claim or title to an interest in anything whatsoever that is
enforceable by law while an obligation is defined in the Civil Code as a juridical necessity to give, to do
or not to do. - Under the Civil Code of the PH, enumerates the sources of obligations: Art. 1157.
Obligations arise from: (1) Law; (2) Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by
law; and (5) Quasi-delicts.
 Deganos vs. People of the Philippines

G.R No.162826, October 14. 2013

Facts:

In amended information in 1994, the Office of the Provincial Prosecutor charged siblings Luz and
Degaños in the RTC with Estafa under Article 315 of the RPC allegedly committed receiving gold and
jewelry worth ₱438,702.00, from spouses Atty. Jose Bordador and Lydia Bordador. Petitioners herein
were under express obligation to sell on commission and remit the proceeds of this jewelry and return
those which are not sold. They were accused of failing to fulfill to pay P438,702 in "Katibayan at
Kasunduan" receipts signed by Narciso. When Narciso Degaños received gold and jewelry from
complainants, he was under an express obligation to sell them or return the same if unsold. The district
court in a prior civil action found both accused liable for recovery of the sum to which they were ordered
by the RTC. A separate case was filed before it, with jurisdiction over all related matters. Deganos
admitted that he was the only one involved and had already made partial payments amounting to
P53,307.00. Now he claims that there was novation on his contract with private complainants from the
agency and loan conversion, making it civil instead of criminal liability. Deganos admitted to the said
indebtedness and argued that he was made the partial payments for the amount of P53,307.00 and that
the transaction was not a consignment but instead an outright sale on credit.

Issues: - Whether or not the transaction was a sale on credit.

- Whether or not novation has converted the liability of petitioners to criminal liability.

Held:

No.- Transaction was an agency, not a sale on credit.

The Court held that the transaction was an agency based on express terms and tenor of
Katibayan through which the accused were obliged to sell items received for complainants.
Petitioner Degaños contends that his agreement with the complainants relative to the items of jewelry
and gold subject to the amended information as embodied in the relevant Kasunduan at Katibayan was
a sale on credit, not a consignment to sell on a commission basis.

- In contrast, according to the Article 1458 of the Civil Code, a contract of sale is a contract
whereby one of the contracting parties obligates himself to transfer the ownership and to deliver
a determinate thing, and the other to pay therefor a price certain in money or its equivalent.
Contrary to his contention of Degaños, there was no sale on credit to him because the
ownership of the items did not pass to him.

No. - Novation did not transpire as to prevent the incipient criminal liability from arising.

The courts have ruled that novation, per RPCs, is not a ground for the extinguishment of
criminal liability as it is only a public offense. It must be prosecuted and punished accordingly when
someone commits an act against another person or group; they cannot waive their responsibility in law
by doing so with impunity- regardless if this was intentional.
 Rivelisa Realty v. First Sta. Ana Clara Builders Corp.

G.R. No. 189618, January 15, 2014

Facts:

Petitioner Rivelisa Realty entered into a Joint Venture Agreement (JVA) with the respondent First
Sta. Clara for the construction and development of a residential subdivision. Accordingly, First Sta. Clara
was to assume the horizontal development works in the remaining undeveloped portion of the project
owned by the Petitioner Rivelisa Realty and complete the same within twelve (12) months from signing.
Upon its completion, 60% of the total subdivided lots shall be transferred in the name of First Sta. Clara.
But since 31% of the project was previously developed by the petitioner, which was assessed to have an
aggregate worth of P10,000,000.00, it was agreed that the respondent should initially use its resources
of up to P10,000,000.00 before it may start claiming additional funds from the pre-sale of the 31%
developed lots, and 40% of the cost of additional works not originally part of the JVA was to be shouldered
by the petitioner while 60% by the respondent.

During the project, the respondent hired a subcontractor to perform the horizontal development
work as well as the additional work on the riprap and the elevation of the road embankment. Since the
respondent ran out of funds after only two (2) months of construction, the petitioner was forced to shoulder
part of the payment due to the subcontractor. Soon after, First Sta. Clara manifested its intention to back
out from the JVA and to discontinue operations when the petitioner refused to advance any more funds
until 60% of the project was already accomplished. Rivelisa Realty readily agreed to release the
respondent from the JVA and estimated its actual accomplishment which included payments to the
subcontractor. First Sta. Clara, however, insisted on a different valuation which even ended up with
reimbursement to it. However, the reimbursable amount remained unpaid despite several demands.
When the case reached the CA, it held that First Sta. Clara was no longer obligated to comply with the
terms and conditions of the JVA after the petitioner agreed that it be dissolved.

First Sta. Clara was, however, entitled to reimbursement because Rivelisa Realty agreed to
reimburse the former for the value of the work done on the project. Rivelisa Realty received a copy of the
CA Decision and moved for a fifteen (15) day extension within which to file its motion for reconsideration,
and soon after, it did. The motion to extend was denied, and the motion also or reconsideration was due
to filling outside the reglementary period.

Issues:

- Whether or not the CA erred in finding that the 15–day reglementary period for the filing of a
motion for reconsideration cannot be extended.
- Whether or not First Sta. Clara is entitled to be compensated for the development works it had
accomplished on the project.

Held:

The 15-day reglementary period for the filing of a motion for reconsideration cannot be extended. While
a motion for additional time is expressly permitted in the filing of a petition for review before the Court
under Section 2, Rule 45 of the Rules of Court, a similar motion seeking to extend the period for filing a
motion for reconsideration is prohibited in all other courts.

The CA Decision subject of the instant petition for review had already attained finality given Rivelisa
Realty’s failure to file a motion for reconsideration within the 15–day reglementary period allowed under
the CA’s internal rules.

Yes. The Supreme Court concurs with the CA that First Sta. Clara is entitled to be compensated for the
development works it accomplished on the project based on the principle of quantum meruit. Case law
instructs that under this principle, a contractor is allowed to recover the reasonable value of the thing or
services rendered despite the lack of a written contract, to avoid unjust enrichment.
 Ang Yu Asuncion v. CA

G.R. No. 109125, December 2, 1994

Facts:

In 1987, Ang Yu, et al., filed a Second Amended Complaint for Specific Performance against
Bobby Cu Unjieng, Rose Cu Unjieng, and Jose Tan before the Regional Trial Court, in Civil Case No.
87-41058, alleging, among others, the plaintiffs are tenants or lessees of residential and commercial
spaces in Binondo, Manila that owned by defendants Cu Unjieng, et al. In 1987, Petitioners informed
that the property was about to sell, and they were given the priority to acquire the same. During the
negotiations, Bobby Cu Unjieng offered the property for P6 Million, but the plaintiffs made a
counteroffer of P5 Million. Although, both parties did not yet agree on terms and conditions. Then
Petitioners twice wrote a letter and asked the defendants to specify the terms and conditions of the
offer to sell. But there is no response from them.

The Trial Court found that the defendant's offer to sell was never accepted by the Plaintiffs for the
reason that the parties did not agree on the terms and conditions of the proposed sale. Therefore, there
was no contract at all. The judgment by virtue rendered that the defendants should subsequently offer
their property to the Petitioners for the price of P11 Million or below, which the plaintiffs have an option
to buy or right of first refusal.

In 1990, the property was sold to Buen Realty and Development Corporation for P15 Million,
transferring the title of the property to Buen Realty through a Deed of sale.

In 1991, Buen Realty as the new owner of the subject property demanded the petitioners to vacate the
premises, causing the Petitioners to file a Motion for Execution on August 27, 1991, of the Court of
Appeals Judgment and lessees, stated that Buen Realty and Development Corporation brought the
property subject to the notice of lis pendens.

Court of Appeals directed RTC on August 30, 1991, to order the Defendants herewith to issue a Deed
of the sale in favor of the plaintiffs and nullify the sale to Buen Realty in recognition of the right of first
refusal. The court set aside the title issued to Buen Realty Corporation for having executed in bad faith.

Issues:

- Whether or not the agreement developed a perfect contract.

- Whether or not Buen Realty can be held bound by the writ of execution by virtue of the notice of
lis pendens?

Held: No.

The Court held that the Contract of Sale is not perfected. A contractual relationship does not
exist between the parties because among the sources of an obligation is a contract under (Art. 1157),
which is a meeting of minds between two persons whereby one binds with respect for the other, to give
something, or to render some service. A contract undergoes various stages including its negotiation or
preparation, perfection, and, finally, its consummation. Until the contract is perfected, it cannot, as an
independent source of obligation, serve as a binding juridical relation. In sales, particularly, to which the
case at bench belongs, the contract is perfected when a person, called the seller, obligates himself, for
a price certain, to deliver and to transfer ownership of a thing or right to another, called the buyer, over
which the latter agrees. - 1458 of the Civil Code provides: By the contract of sale, one of the contracting
parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to
pay therefor a price certain in money or its equivalent.

No. The court held that whether private respondent Buen Realty Development Corporation, the alleged
purchaser of the property, has acted in good faith or bad faith and whether or not it should, in any case,
be considered bound to respect the registration of the lis pendens in Civil Case No. 87-41058 are
matters that must be independently addressed in appropriate proceedings. –
- Buen Realty, not having been impleaded in Civil Case No. 87-41058, cannot be held subject to
the writ of execution issued by respondent Judge, let alone ousted from the ownership and possession
of the property, without first being duly afforded its day in court.

Therefore, the Supreme Court decision affirmed that the Court of Appeals could not order the writ of
execution of any deed of sale between the Unjiengs and Petitioners
 LAO SOK vs. SABAYSABAY

G.R. No. L-61898, August 9, 1985

FACTS:

Petitioner Lao Sok owned and operated a department store at Carriedo Street, Manila.
Private respondents Sabaysabay, Mangulat, Salviejo, Ruinata, Capillo, and Sanorjo were all
salesladies of the department store. Later on, the petitioner’s store was razed or destroyed by
fire. Petitioner did not report the loss of jobs of the salesladies, resulting from the burning of his
department store to the Regional Office of the Ministry of Labor. However, the petitioner
promised the private respondents that he would transfer them to his other department stores.
Several weeks, the petitioner still had not kept his promise. The petitioner offered or told the
respondents that he would give them their separation pay and other benefits due them as soon
as he collected the insurance proceeds arising from his burned store. The private respondents
accepted this offer of the petitioner. Petitioner later collected the proceeds of his insurance but
did not give the private respondents their separation pays, nor did he employ them to his other
stores. The respondent then files a complaint before the Ministry of Labor and Employment
which ruled in their favor. Petitioner appealed but was denied. Thus, this petition is for review.

ISSUE: Whether or not Petitioner Lao Sok is obliged to pay the private respondents’
separation pay.

RULING: Yes. Petitioner is obliged to pay the private respondents’ separation pay since a
contractual obligation arises.

The Solicitor General further explained that it was in reality not a mere ‘promise’ as the
petitioner terms it but a contract, because all the essential requisites of a valid contract are
present, to wit: (1) consent was freely given by the parties, (2) there was a subject matter,
which is the payment of the separation pay of private respondents, and (3) a cause, which is
the loss of job of private respondents who had been petitioner’s salesladies for several years.”

Whereas, Lao Sok made an offer that the private respondents duly accepted. There
was, therefore, a meeting of the minds between two parties whereby one binds himself for the
other, to give something or to render service, (Article 1305, Civil Code). - The record shows
that the petitioner voluntarily agreed to compensate private respondents for the loss of their
jobs because they have been his salesladies for a long time; he did this freely and
spontaneously. He should not now, therefore, be allowed to renege on an obligation of his own
making. To do so, would be unjust and unfair to the private respondents who took his word for
it in good faith. The validity of that agreement must, consequently, must be sustained.

- Accordingly, both the law and equity dictate that private respondents must be
compensated for the loss of their jobs considering that they were kept waiting and
hoping that they would be re-employed by the petitioner, if not paid their severance pay.