1. Astrid A.
Van de Brug vs PNB
GR 207004, June 6, 2018
J. Caguioa
Facts:
The late spouses Aguilar's sugar crop loans were obtained and were secured by real
estate mortgage over four registered parcels of land. However, for failure to pay their
obligations with PNB, the mortgage was foreclosed and ownership of the subject four
pieces of property was consolidated under the name of PNB.
With the enactment of RA 7202, the late Romulus Aguilar wrote PNB and stated: "Since
our indebtedness with the PNB had been foreclosed, we are asking your good Office for
a reconsideration of our account based on the Sugar Restitution Law."
One of the children of the late spouses Aguilar, Petitioner Glenn Aguilar, in behalf of his
siblings Astrid Van de Brug and Martin Aguilar, wrote PNB and asked that they be
accorded the benefits of RA 7202 mentioning an allegedly similar case, entitled Sps.
Pfleider vs. PNB, et al., wherein PNB purportedly entered into a compromise agreement
with Sps. Pfleider, notwithstanding consolidation of the foreclosed property under the
bank's name.
Issue:
Does PNB have an obligation to accord the Aguilars the same treatment as it accorded
the spouses Pfleider regarding the crediting of the VOS or CARP proceeds of their
respective agricultural lots against their respective sugar crop loans covered by RA
7202?
Held:
No. The sources of obligations under Article 1157 of the Civil Code are: (1) law; (2)
contracts; (3) quasi-contracts; (4) acts or omissions punished by law; and (5) quasi-
delicts. Immediately, sources (2), (3) and (4) are inapplicable in this case. The Aguilars
are not privies to the Compromise Agreement between PNB and the spouses Pfleider.
Regarding law, as PNB's source of obligation, the CA correctly ruled that the Aguilars
are not entitled to restitution under RA 7202. Thus, RA 7202 cannot be invoked as the
statutory basis to compel PNB to treat the Aguilars similarly with the spouses Pfleider.
Petition is denied. CA decision is affirmed.
2. Ramon Reyes and Clara Pastor vs BANCOM Dev’t Corp
GR 190286, January 11, 2018
CJ Sereno
Facts:
Petitioners herein, the Reyes Group agreed to guarantee the payment of obligations.
These obligations included certain Promissory Notes issued by Marbella in favor of
Bancom.
Because of Marbella's continued failure to pay back the loan despite repeated demands,
Bancom filed a Complaint for Sum of Money. The case was instituted against (a)
Marbella as principal debtor; and (b) the individuals comprising the Reyes Group as
guarantors of the loan. Petitioners alleged that in relation to earlier contracts pertaining
to the development of a condominium project known as Marbella II where the Reyes
Group, as owners of the parcel of land to be utilized for the condominium project along
Roxas Boulevard; and Fereit Realty Development Corporation (Fereit), a sister company
of Bancom, as the construction developer and project manager, however, soon
encountered financial difficulties. As a result, the Reyes Group was allegedly forced to
enter into a Memorandum of Agreement to take on part of the loans obtained by Fereit
from Bancom for the development of the project.
Issue:
Whether or not the CA correctly ruled that petitioners are liable to Bancom for the
payment of the loan amounts indicated on the Promissory Notes issued by Marbella?
Held:
No. Bancom extended additional financing to Marbella on the condition that the loan
would be paid upon maturity. It is equally clear that the latter obligated itself to pay the
stated amount to Bancom without any condition. The unconditional tenor of the
obligation of Marbella to pay Bancom for the loan amount, plus interest and penalties, is
likewise reflected in the Promissory Notes issued in favor of the latter.Marbella, in turn,
was granted the right to collect reimbursement from Fereit, an entirely distinct entity.
3. Specified Contractors and Dev’t Inc. and Spouses Olonan vs Pobocan
GR 212472, January 11, 2018
J. Tijam
Facts:
Respondent was in the employ of Specified Contractors until his retirement. Architect
Olonan allegedly agreed to give respondent one (1) unit for every building Specified
Contractors were able to construct as part of respondent's compensation package to
entice him to stay with the company. Pursuant to the alleged oral agreement, Specified
Contractors supposedly ceded, assigned and transferred Unit 708 of Xavlerville Square
Condominium and Unit 208 of Sunrise Holiday Mansion Bldg. I (subject units) in favor
of respondent.
Respondent requested the execution of Deeds of Assignment or Deeds of Sale over the
subject units in his favor. Demand was unheeded, he filed a Complaint with the RTC
praying that petitioners be ordered to execute and deliver the appropriate deeds of
conveyance.
Petitioners argued that the alleged contract is unenforceable for being in violation of
the statute of frauds, and the cause of action had long prescribed because the alleged
agreements were supposedly entered into in 1994 and 1999.
Issue:
Whether or not the respondent's cause of action had already prescribed?
Held:
Petition is granted. CA is reversed. As a personal action based upon an oral contract,
Article 1145 providing a prescriptive period of six years applies in this case instead.
The Condominium Certificate of Title (CCT) for the Xavierville Square Condominium
Unit, was issued on September 11, 1997 or more than 13 years before· respondent's
March 14, 2011 demand letter and the CCT for the Sunrise Holiday Mansion Unit was
issued on March 12, 1996 or 14 years before respondent's March 14, 2011 demand
letter. Indubitably, in view of the instant suit for specific performance being a personal
action founded upon an oral contract which must be brought within six years from the
accrual of the right, prescription had already set in.
4. Orient Freight International Inc. vs Keihin-Everett Forwarding Co., Inc.
GR 191937, August 9, 2017
J. Leonen
Facts:
Keihin-Everett entered into a Trucking Service Agreement with Matsushita. These
services were subcontracted by Keihin-Everett to Orient Freight, which thereafter sub-
contracted its work to Schmitz Transport and Brokerage Corporation.
Matsushita called Keihin-Everett's Sales Manager, about a column issue of the tabloid
newspaper Tempo narrating the interception by Caloocan City police of a stolen truck
filled with shipment of video monitors and CCTV systems owned by Matsushita.
Matsushita terminated its Agreement with Keihin-Everett citing loss of confidence for
terminating the contract. Keihin-Everett demanded indemnity for lost income arguing
that Orient Freight's mishandling of the situation caused the termination of Keihin-
Everett's contract with Matsushita.
When Orient Freight refused to pay, Keihin-Everett filed a complaint. When RTC and CA
ruled in favor of Petitioner, Orient Freight argued that as there was a subsisting
Trucking Service Agreement between Orient Freight itself and Keihin-Everett,
petitioner avers that there was a pre-existing contractual relation between them, which
would preclude the application of the laws on quasi-delicts.
Issue:
Whether or not the Court of Appeals, considering the existing contracts in this case,
erred in applying Article 2176 of the Civil Code?
Held:
Yes. Article 2176 of the Civil Code does not apply when the party's negligence occurs in
the performance of an obligation. The negligent act would give rise to a quasi-delict
only when it may be the basis for an independent action were the parties not otherwise
bound by a contract.
Petitioner's negligence did not create the vinculum juris or legal relationship with the
respondent, which would have otherwise given rise to a quasi-delict. Petitioner's duty
to respondent existed prior to its negligent act. When respondent contacted petitioner
regarding the news report and asked it to investigate the incident, petitioner's
obligation was created. Thereafter, petitioner was alleged to have performed its
obligation negligently, causing damage to respondent.
5. Federal Express Corp. vs Luwalhati R. Antonino and Eliza Bettina Ricasa Antonin
GR 199455, June 27, 2018
J. Leonen
Facts:
Eliza was the owner of a Allegro Condominium Unit in the United States. Monthly
common charges on the Unit became due. Luwalhati and Eliza were in the Philippines.
As the monthly common charges on the Unit had become due, they decided to send
several Citibank checks Sison, who was based in New York. Citibank checks for the
payment of monthly charges and real estate taxes were sent by Luwalhati through
FedEx. Sison allegedly did not receive the package, resulting in the non-payment of
Luwalhati and Eliza's obligations and the foreclosure of the Unit.
Luwalhati and Eliza sent a demand letter to FedEx for payment of damages due to the
non-delivery of the package, but FedEx refused to heed their demand. They filed their
Complaint for damages.
FedEx claimed that it was absolved of liability as Luwalhati and Eliza shipped
prohibited items and misdeclared these items as "documents." It pointed to conditions
under its Air Waybill prohibiting the "transportation of money”.
Issue:
Whether or not Petitioner is liable on account of its failure to deliver the checks?
Held:
Yes. The duty of common carriers to observe extraordinary diligence in shipping goods
does not terminate until delivery to the consignee or to the specific person authorized
to receive the shipped goods. Failure to deliver to the person authorized to receive the
goods is tantamount to loss of the goods, thereby engendering the common carrier's
liability for loss. Ambiguities in contracts of carriage, which are contracts of adhesion,
must be interpreted against the common carrier that prepared these contracts.
Petitioner is unable to prove that it exercised extraordinary diligence in ensuring
delivery of the package to its designated consignee. It claims to have made a delivery
but it even admits that it was not to the designated consignee. It asserts instead that it
was authorized to release the package without the signature of the designated recipient
and that the neighbor of the consignee, one identified only as "LGAA 385507," received
it.51 This fails to impress.
6. Chinatrust(Phils.) Commercial Bank vs Philip Turner
GR 191458, July 3, 2017
J. Leonen
Facts:
British national Turner initiated via Chinatrust-Ayala Branch the telegraphic transfer of
US$430.00 to the account of "MIN TRAVEL/ESMAT AZMY, Citibank in Cairo, Egypt. The
amount was partial payment to Turner's travel agent for his and his wife's 11-day tour
in Egypt.
Chinatrust received Citibank-Cairo's telexnotice about the latter's inability to credit the
funds it received because the "beneficiary name did not match their books (referred to
as the 'discrepancy notice')." Chinatrust relayed this information to Turner the next
succeeding business day.
Turner allegedly informed Chinatrust that he was able to contact Esmat Azmy, who
acknowledged receipt of the transferred funds. Turner, however, had to cancel his
travel-tour because his wife got ill and requested from Chinatrust the refund of his
money.
According to Chinatrust, it explained to Turner that since the funds were already
remitted to his beneficiary's account, they could no longer be withdrawn or retrieved
without Citibank-Cairo's consent. Turner was, thus, advised to seek the refund of his
payment directly from his travel agency.
Turner allegedly insisted on withdrawing the funds from Chinatrust explaining that the
travel agency would forfeit fifty percent (50%) as penalty for the cancellation of the
booking, as opposed to the minimal bank fees he would shoulder if he withdrew the
money through Chinatrust. Hence, Chinatrust required Turner to secure, at least, his
travel agency's written certification denying receipt of the funds so that it could act on
his request. However, Turner purportedly failed to submit the required certification
despite repeated reminders.
Turner filed a Complaint against Chinatrust demanding the refund of his telegraphic
transfer plus damages.
Issue:
Whether or not petitioner Chinatrust (Philippines) Commercial Bank was negligent in
the performance of its obligation under the telegraphic transfer agreement?
Held:
No. The Court of Appeal held that petitioner's failure to immediately return the money
to respondent when it received the "discrepancy notice" from Citibank-Cairo despite
respondent's demand constituted an actionable negligence under Article 1172. The CA
misappreciated the true import of the discrepancy notice when it held that the notice
was an "effective cancellation of the remittance by the Citibank-Cairo" that gave rise to
the legal obligation of petitioner to return the funds to respondent.
The discrepancy notice implies that the funds were actually received by Citibank-Cairo
but it could not apply it because the account name of the beneficiary indicated in the
telex instruction does not match the account name in its books. As later shown, the
beneficiary account name was not '"Min Travel/Esmat Azmy" but only "Min Travel."
Petitioner, therefore, had nothing to do with the mismatch of the beneficiary name and
could not be made liable for it.
7. Encarnacion Construction vs Phoenix Ready Mix Concrete Devt. And Const.
GR 225402, September 4, 2017
J. Perlas-Bernabe
Facts:
Phoenix entered into an Agreement with ECIC for the delivery of various quantities of
ready-mix concrete in connection with the construction of the Valenzuela National High
School (VNHS) Marulas Building. ECIC received the ready-mix concrete delivery in due
course. However, despite written demands from Phoenix, ECIC refused to pay. Hence,
Phoenix filed before the RTC the Complaint for Sum of Money against ECIC.
ECIC claimed that it opted to suspend payment since Phoenix delivered substandard
ready-mix concrete, such that the City Engineer's Office of Valenzuela required the
demolition and reconstruction of the VNHS building's 3rd floor. That it failed to reach
the comprehensive strength of 6,015 psi in 100 days, the City Engineer's Office ordered
the dismantling of the VNHS building's 3rd floor, and thus, incurred additional expenses
for the dismantling and reconstruction.
Issue:
Whether or not The Agreement is void for being a Contract of Adhesion?
Held:
No. A contract of adhesion is one wherein one party imposes a ready-made form of
contract on the other. It is a contract whereby almost all of its provisions are drafted by
one party, with the participation of the other party being limited to affixing his or her
signature or “adhesion” to the contract. However, contracts of adhesion are not invalid
per se as they are binding as ordinary contracts. While the Court has occasionally struck
down contracts of adhesion as void, it did so when the weaker party has been imposed
upon in dealing with the dominant bargaining party and reduced to the alternative of
taking it or leaving it, completely deprived of the opportunity to bargain on equal
footing. Thus, the validity or enforceability of the impugned contracts will have to be
determined by the peculiar circumstances obtained in each case and the situation of the
parties concerned.
In this case, there is no proof that ECIC was disadvantaged or utterly inexperienced in
dealing with Phoenix. There were likewise no allegations and proof that its
representative Encarnacion was uneducated, or under duress or force when he signed
the Agreement on its behalf. In fact, Encarnacion is presumably an astute businessman
who signed the Agreement with full knowledge of its import.
8. Benjamin Evangelista vs Screenex, Inc. Represented by Alexander Yu
GR 211564, November 20, 2017
CJ Sereno
Facts:
Evangelista obtained a loan from respondent Screenex, Inc. which issued two (2) checks
to [Evangelista]. The first check was UCPB Check for ₱l,000,000 and the other one is
China Banking Corporation Check. There were also vouchers of Screenex that were
signed by the accused evidencing that he received the 2 checks in acceptance of the loan
granted to him.
As security for the payment of the loan, Evangelista gave two (2) open-dated UCPB
Checks, both pay to the order of Screenex, Inc. From the time the checks were issued by
Evangelista, they were held in safe keeping together with the other documents and
papers of the company by Philip Gotuaco, Sr., father-in-law of respondent Alexander Yu,
until the former's death.
Before the checks were deposited, there was a personal demand from the family for
Evangelista to settle the loan and likewise a demand letter sent by the family lawyer.
Petitioner was charged with violation of BP 22.
Issue:
Whether or not the lower court erred in ordering the accused to pay his alleged civil
obligation to private complainant. In particular, that any civil liability there might have
been was already extinguished and/or barred by prescription?
Held:
Yes. A check is a negotiable instrument that may be discharged by any other act which
will discharge a simple contract for the payment of money.
A check therefore is subject to prescription of actions upon a written contract. Article
1144 of the Civil Code provides:
The following actions must be brought within ten years from the time the right of action
accrues:
1) Upon a written contract;
If the check is undated, as in the present petition, the cause of action is reckoned from
the date of the issuance of the check.
Since no written extrajudicial or judicial demand was shown to have been made within
10 years which could have tolled the period, prescription has already set in and the
cause of action on the checks has become stale, hence, time-barred.
9. H. Villarica Pawnshop vs Social Security Commission
GR 228087, January 24, 2018
J. Gesmundo
Facts:
Petitioners are private corporations engaged in the pawnshop business and are
compulsorily registered with the Social Security System (SSS) under R.A. 8282,
otherwise known as the Social Security Law of 1997. Petitioners paid their delinquent
contributions and accrued penalties with the different branches of the SSS.
Congress enacted R.A. No. 9903, otherwise known as the Social Security Condonation
Law of 2009. The said law offered delinquent employers the opportunity to settle,
without penalty, their accountabilities or overdue contributions within six (6) months
from the date of its effectivity. Petitioners thru its President and General Manager
Villarica, sent separate Letters, to the different branches of the SSS seeking
reimbursement of the accrued penalties, which they have paid in 2009.
Petitioner HRV Villarica Pawnshop, Inc. was likewise informed that its application for
the refund of the accrued penalty had been denied because R.A. No. 9903 does not cover
accountabilities settled prior to its effectivity.
Issue:
Whether or not Petitioner Villarica is entitled for the claim of refund?
Held:
No. In cases of monetary obligations, a claim for refund exists only after the payment
has been made and, in the act of doing so, the debtor either delivered excess funds or
there exists no obligation to pay in the first place. This right arises either by virtue of
solutio indebiti as provided for in Articles 2154 to 2163 of the Civil Code or by provision
of another positive law, such as tax laws or amnesty laws.
A plain reading of Section 4 of R.A. No. 9903 shows that it does not give employers who
have already settled their delinquent contributions as well as their corresponding
penalties the right to a refund of the penalties paid. What was waived here was the
amount of accrued penalties that have not been paid prior to the law's effectivity—it
does not include those that have already been settled.
10. Asian Terminal Inc. vs Padoson Stainless Steel Corporation
GR 211876, June 25, 2018
J. Tijam
Facts:
Respondent hired ATI to provide arrastre, wharfage and storage services at the South
Harbor, Port of Manila. ATI rendered storage services in relation to a shipment,
consisting of nine stainless steel coils and 72 hot-rolled steel coils which were imported
respectively in favor of Padoson, as consignee. The shipments were stored within ATI's
premises until they were discharged.
Meanwhile, the shipments became the subject of a Hold-Order issued by the Bureau of
Customs. This was an offshoot of a Customs case filed by the BOC against Padoson due
to the latter's tax liability over its own shipments.
For the storage services it rendered, ATI made several demands from Padoson for the
payment of arrastre, wharfage and storage services.
The demands, however, went unheeded. ATI filed a Complaint against Padoson. The
RTC and CA dismissed the complaint and ruled that since the BOC had acquired
constructive possession over the shipments, neither ATI could be held liable for
damages nor Padoson be held liable for the storage fees.
Issue:
Whether or not BOC is liable to ATI for the payment of storage fees for the services
rendered by ATI?
Held:
No. The basic principle of relativity of contracts is that contracts can only bind the
parties who entered into it, and cannot favor or prejudice a third person, even if he is
aware of such contract and has acted with knowledge thereof. Where there is no privity
of contract, there is likewise no obligation or liability to speak about. Guided by this
doctrine, Padoson, cannot shift the burden of paying the storage fees to BOC since the
latter has never been privy to the contract of service between Padoson and ATI. To rule
otherwise would create an absurd situation wherein a private party may free itself from
liability arising from a contract of service, by merely invoking that the BOC has
constructive possession over its shipment by the issuance of a Hold Order.
11. Diampoc vs Buenaventura
GR 200383, March 19, 2018
J. Del Castillo
Facts:
Petitioner and her husband filed a Complaint for annulment of deed of sale and
recovery of duplicate original copy of title against Respondent and the Registry of
Deeds for the Province of Rizal.
The Diampocs alleged in their Complaint that Buenaventura became their friend and
asked to borrow the owner's copy of TCT to be used as security for a ₱1 million loan she
wished to secure. They acceded on the condition that Buenaventura should not sell the
subject property and promised to give them ₱300,000.00 out of the ₱1 million loan
proceeds.
Buenaventura caused them to sign a folded document without giving them the
opportunity to read its contents. They discovered later on that Buenaventura became
the owner of a one half portion of the subject property by virtue of a supposed deed of
sale in her favor. They claimed that the purported deed of sale is spurious; and that the
deed was secured through fraud and deceit, and thus should be annulled.
Issue:
Whether or not the Deed of Sale executed by and between the parties is valid?
Held:
Yes. The rule that one who signs a contract is presumed to know its contents has been
applied even to contracts of illiterate persons on the ground that if such persons are
unable to read, they are negligent if they fail to have the contract read to them.
Jose and Maria were presumed to know the contents of the deed of sale the moment
they signed the contract. It is important to emphasize that the spouses are not illiterate
and they voluntarily signed the contract; hence, there is no valid excuse for them not to
read its contents. They cannot evade the consequences of the contract by the simple
expedient that they did not read its contents.
12. Rafael Almeda, Emerlinda Almeda-Lirio, et. al. vs. Heirs of Ponciano Almeda
GR 194189, September 14, 2017
J. Tijam
Facts:
Spouses Venancio and Leonila were the parents of nine children: among others,
Ponciano, Severina Rosalina, Publio's deceased wife. Power of Attorney was executed
by Venancio and Leonila, who were then 80 and 81 years old respectively, granting
Ponciano, the authority to sell the parcels of land, which Leonila inherited from her
parents.
Venancio died at the age of 90; Leonila died eight years later, aged 97. Within the year of
Leonila's death, Rafael, Emerlina, Alodia, Leticia and Norma filed a notice of adverse
claim over their parents' properties.
A Complaint for Nullity of Contracts, Partition of Properties and Reconveyance of Titles
with Damages, was filed by the petitioners against Ponciano. Petitioners alleged that
Ponciano, taking advantage of his being the eldest child and his close relationship with
their parents, caused the simulation and forgery of the Deeds of Absolute Sale.
Ponciano died and was substituted by his wife and children.
Issue:
Whether or not the contract is not valid for lack of consent?
Held:
No. It is settled that a person is not incapacitated to enter into a contract merely
because of advanced years or by reason of physical infirmities, unless such age and
infirmities impair his mental faculties to the extent that he is unable to properly,
intelligently and fairly understand the provisions of said contract, or to protect his
property rights.
In this case, petitioners' claim that Venancio and Leonila were forgetful and at times
sickly was not even supported by medical evidence. It was based solely on Emerlina's
testimony, which failed to demonstrate that Venancio and Leonila's mental state had
prevented them from freely giving their consent to the 1978 Deed or from
understanding the nature and effects of their disposition.
13. Ong vs BPI Family Savings Bank
GR 208638, January 24, 2018
J. Reyes Jr.
Facts:
Petitioners applied for credit facilities with the Bank of Southeast Asia's (BSA) and
executed a real estate mortgage over their property. With regard to the P5,000,000.00
credit line, only P3,000,000.00 was released. BSA promised to release the remaining
P2,000,000.00 conditioned upon the payment of the P3,000,000.00 initially released to
petitioners. Petitioners paid the P3,000,000.00 in full. However, BSA still refused to
release the P2,000,000.00. Petitioners then refused to pay the amortizations due on
their term loan.
Later on, Respondent merged with BSA, thus, acquired all the latter's rights and
assumed its obligations. BPI filed a petition for extrajudicial foreclosure of the REM for
petitioners' default in the payment of their term loan. In order to enjoin the foreclosure,
petitioners instituted an action for damages with Temporary Restraining Order and
Preliminary Injunction against BPI.
Issue:
Whether or not BSA incurred delay in the performance of its obligations?
Held:
Yes. Loan is a reciprocal obligation, as it arises from the same cause where one party is
the creditor and the other the debtor. The obligation of one party in a reciprocal
obligation is dependent upon the obligation of the other, and the performance should
ideally be simultaneous. This means that in a loan, the creditor should release the full
loan amount and the debtor repays it when it becomes due and demandable.
In this case, BSA did not only incur delay in releasing the pre-agreed credit line of
P5,000,000.00 but likewise violated the terms of its agreement with petitioners when it
deliberately failed to release the amount of P2,000,000.00 after petitioners complied
with their terms and paid the first P3,000,000.00 in full.
14. Mendoza vs Palugod
GR 220517, June 20, 2018
J. Caguioa
Facts:
Petitioner Lolita and Jasminia were close friends. Lolita and Jasminia bought the subject
lot on installment for one (1) year until they decided to pay the balance in full. Jasminia
became afflicted with breast cancer. They constructed a residential house on the subject
lot. Jasminia executed a Deed of Absolute Sale in favor of Lolita, who eventually
mortgaged the subject property to petitioner Elizabeth Gutierrez as a security for a
loan.
Respondents spouses alleged that Lolita, taking advantage of her relationship with
Jasminia, caused the latter to sign a Deed of Absolute Sale in her favor. Respondents
executed an Affidavit of Adverse Claim of their right and interest over the property as
the only compulsory and legitimate heirs of Jasminia. Thus filed a complaint for
Declaration of Nullity of the Deed of Absolute Sale and the Deed of Real Estate Mortgage.
The CA and RTC ruled that the deed of sale is null and void for being absolutely
simulated since it did not involve any actual monetary consideration.
Issue:
Whether or not the inadequacy of monetary consideration does not render a
conveyance null and void?
Held:
Yes. The disputable presumption is that consideration is inherent in every contract. —
As correctly pointed out by petitioner Lolita, the Deed of Absolute Sale is itself the proof
that the sale of the property is supported by sufficient consideration. This is anchored
on the disputable presumption of consideration inherent in every contract. Thus, Article
1354 of the Civil Code provides: “Although the cause is not stated in the contract, it is
presumed that it exists and is lawful, unless the debtor proves the contrary.” This
disputable presumption is reiterated in Section 3, Rule 131 of the Rules which provides
that the following presumptions are satisfactory if uncontradicted, but may be
contradicted and overcome by other evidence: (r) That there was a sufficient
consideration for a contract.
15. Northern Mindanao Industrial Port and Services Corp. vs Iligan Cement Corp.
GR 215387, April 23, 2018
J. Del Castillo
Facts:
Respondent is a domestic corporation engaged in the manufacturing and distribution of
cement and other building materials. Petitioner is likewise a domestic corporation
involved, among others in the arrastre or stevedoring business. ICC invited NOMIPSCO
to a pre-bidding conference for a two-year cargohandling contract. Apart from
NOMIPSCO, RC Barreto Enterprises, MN Seno Marketing, VIRLO Stevedoring and
Oroport also joined the conference.
In the course of the conference, ICC, through Camus, required the participants to submit
their respective technical proposals and commercial bids. NOMIPSCO thereafter
submitted its proposal in which it offered the lowest bid. ICC awarded the cargo
handling contract to Europort. NOMIPSCO filed a Complaint.
Issue:
Whether or not the acts of ICC amounted to an abuse of its rights or authority when it
awarded the contract to Europort?
Held:
No. This is the prerogative of respondent, and petitioner had no right to interfere in the
exercise thereof. Under Article 1326 of the Civil Code, ‘‘advertisements for bidders are
simply invitations to make proposals, and the advertiser is not bound to accept the
highest or lowest bidder, unless the contrary appears.” “[A]s the discretion to accept or
reject bids and award contracts is of such wide latitude, courts will not interfere, unless
it is apparent that such discretion is exercised arbitrarily, or used as a shield to a
fraudulent award. The exercise of that discretion is a policy decision that necessitates
prior inquiry, investigation, comparison, evaluation, and deliberation.”
16. Team Image Entertainment, Inc. vs Felix Co. vs. Solar Team Entertainment
G.R. No. 191652 & GR 191658, September 13, 2017
J. Leonen
Facts:
Solar Team entered into a Marketing Agreement with Team Image by selling
advertising spots to business enterprises on behalf of Solar Team. Team Image allegedly
represented itself as the owner of Solar Team's television programs, series, and
telenovelas, hence collecting the proceeds of the sale without remitting them to Solar
Team.
A compromise agreement was made wherein it included that in case of breach, payment
of liquidated damages shall be made. Team Image violated the Compromise Agreement
by failing to pay its monetary obligations under these paragraphs. For these violations,
Team Image must pay Solar Team P2,000,000.00 in liquidated damages. As for Solar
Team, it violated paragraph 22 the Compromise Agreement for failure to withdraw the
complaint-in-intervention it had earlier filed against Team Image. Hence, Solar Team
must pay Team Image P2,000,000.00 in liquidated damages.
Issue:
Whether or not should compensation by operation of law applies between Solar Team
and Team Image?
Held:
Yes. Articles 1279 and 1281 of the Civil Code provide:
Article 1279. In order that compensation may be proper, it is necessary:
(1) That each one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are consumable, they
be of the same kind, and also of the same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy, commenced by
third persons and communicated in due time to the debtor.
Article 1281. Compensation may be total or partial. When the two debts are of the same
amount, there is a total compensation.
Considering that the parties are equally liable to each other in the amount of
P2,000,000.00, this Court confirms that the amounts are set off by operation of law.
Article 1290 provides that “When all the requisites mentioned in Article 1279 are
present, compensation takes affect by operation of law, and extinguishes both debts to
the concurrent amount, even though the creditors and debtors are not aware of the
compensation.”
17. Makati Tuscany Condominium vs. Multi-Realty Development Corp
GR 185530, April 18, 2018
J. Leonen
Facts:
Respondent built Makati Tuscany, a condominium building located at Makati City.
Multi-Realty, through its president executed and signed a Master Deed. Pursuant to the
Condominium Act, Respondent created and incorporated Petitioner to hold title over
and manage Makati Tuscany's common areas. Multi-Realty executed a Deed of Transfer
of ownership of Makati Tuscany's common areas to MATUSCO.
Multi-Realty filed a complaint for damages and/or reformation of instrument. Multi-
Realty alleged in its complaint that of the 106 parking slots designated in the Master
Deed as part of the common areas, only eight (8) slots were actually intended to be
guest parking slots; thus, it retained ownership of the remaining 98 parking slots.
Issue:
Whether or not the remedy of reformation is proper in this case?
Held:
Yes. Reformation of an instrument is a remedy in equity where a valid existing contract
is allowed by law to be revised to express the true intentions of the contracting parties.
Reformation of an instrument may be allowed if subsequent and contemporaneous acts
of the parties show that their true intention was not accurately reflected in the written
instrument.
The totality of the undisputed evidence proving the parties' acts is consistent with the
conclusion that the parties never meant to include the 98 parking slots among the
common areas to be transferred to petitioner. The evidence is consistent to support the
view that petitioner was aware of this fact. Petitioner recognized respondent's
ownership of the disputed parking lots on at least two (2) occasions when its Board of
Directors made known its intention to purchase them from respondent.
18. G Holdings, Inc. vs Cagayan Electric
GR 226213, September 27, 2017
J. Caguioa
Facts:
Respondent CEPALCO supplied power to the ferro-alloy smelting plant of Ferrochrome
Philippines, Inc. (FPI). When FPI defaulted in the payment of its electric power bills,
CEPALCO filed a collection suit. RTC ruled in favor of Respondent. FPI filed an
appeal.CEPALCO moved for execution pending appeal, which was granted. Sheriff
issued notices of levy upon personal and real properties. Petitioner GHI filed a case for
Recovery of Possession claiming that the levied ferro-alloy smelting facility, properties
and equipment are owned by it as evidenced by a Deed of Assignment executed by FPI.
CEPALCO assailed the validity of the Deed of Assignment and contended that it was null
and void for being absolutely simulated and, as a dacion en pago, it did not bear the
conformity of the creditor. The Deed of Assignment was in fraud of FPFs creditors as it
was made after the order for execution had already been rendered in favor of CEPALCO
and was, therefore, rescissible.
Issue:
Whether or not the Deed of Assignment is a Rescissible contract?
Held:
No. There was intention on the part of FPI to defraud CEPALCO. FPI's intention was not
to transfer absolutely the assigned assets to GHI in payment of FPI's obligation but to
place them beyond the reach of its creditor CEPALCO. This does not render as
rescissible the Deed of Assignment. Rather, they fortify the finding that the Deed of
Assignment was "not really desired or intended to produce legal effects or in any way
alter the juridical situation of the parties" or, put differently, that the Deed of
Assignment was a sham, or a contracto simulado. The Deed of Assignment is declared
inexistent for being absolutely simulated or fictitious.
19. Chua vs United Coconut Planters Bank
GR 215999, August 16, 2017
J. Bersamin
Facts:
Petitioners and Jose Go had loan obligations with UCPB as corporate officers and
stockholders of the Lucena Grand Central Terminal, Inc. (LGCTI). Spouses Chua
mortgaged their lands in favor of UCPB. Petitioners entered into a MOA with UCPB to
consolidate the obligations of the Spouses Chua and LGCTI. Jose Go executed a Revere
REM involving the properties held in trust by Revere for petitioners. Enforcing the
mortgages, UCPB foreclosed them and later sold. UCPB pursued petitioners for their
supposed deficiency, which was assigned to respondent Asset Pool A by UCPB. UCPB
and LGCTI executed a deed of assignment of liabilities whereby LGCTI would issue
preferred shares of its stocks to UCPB to offset its remaining obligations. Spouses Chua
wrote UCPB requesting that the proceeds of the foreclosure sale be applied only to
petitioners' obligation and that the rest of the properties or any excess of their
obligations should be returned to them.
Issue:
Whether or not the deed of assignment covering the deficiency in petitioner’s
obligations to UPCB is valid?
Held:
No. The deed of assignment of liabilities covering the deficiency in its obligation to
UCPB was null and void. According to the apportionment of bid price executed by
UCPB‘s account officer, the bid amount far exceeded the indebtedness of the Spouses
Chua and LGCTI, which was inclusive of the subject of the deed of assignment of
liabilities as well as the interests and penalties that UCPB waived in favor of petitioners.
UCPB could not have validly assigned to Respondent Asset Pool A any right or interest
in the balance because the proper application of the proceeds of the foreclosure sale
would have necessarily resulted in the full extinguishment of petitioners’ entire
obligation. Otherwise, unjust enrichment would ensue at the expense of petitioners.
20. Gatan vs. Jesusa Vinarao and Sps. Mildred and Nomar Cabautan
GR 205912, October 18, 2017
J. Leonardo De-Castro
Facts:
Respondent spouses Cabauatan asked petitioner Rogelia if they could temporarily erect
a house on the spouses Gatan's property. Petitioner Rogelia agreed since respondent
Mildred Cabauatan (Mildred) was Bernardino's relative.
More than four years later, petitioner Rogelia learned of a Deed of Absolute Sale
executed by Bernadino conveying a portion of the spouses Gatan's property, in favor of
respondent Mildred's parents, for the consideration of ₱4,000.00. Petitioner Rogelia
questioned the Deed of Absolute Sale, averring that Bernardino could not have signed
the said Deed because he was illiterate; and that the Deed of Absolute Sale lacked her
marital consent since it was signed not by her, but by a certain Aurelia Ramos Gatan.
Issue:
Whether or not the Deed of Absolute Sale is void and inexistent for lack of consent?
Held:
A Deed of Absolute Sale is one that was acknowledged before a Notary Public. It is well-
settled that a document acknowledged before a Notary Public is a public document that
enjoys the presumption of regularity. In the case at bar, petitioners failed to present
evidence to overcome the presumptive authenticity and due execution of the said Deed
of Absolute Sale.
Carlos Vinarao who acted as the instrumental witness in the execution of the Deed of
Absolute Sale, testified that during the execution of the said document, he was with the
seller, Bernardino Gatan, his wife Aurelia Gatan and the buyer, Sostones Vinarao and he
personally witnessed all the said parties affix their signatures before Notary Public Atty.
Alfredo Mabbayad.
The Deed of Absolute Sale executed by Bernardino Gatan in favor of Sostones Vinarao is
valid and binding on the petitioners who failed to show convincing and clear proof of its
invalidity.
GR 210669, August 1, 2017
Facts:
TGPI executed a Deed of Absolute Sale in favor of HI-LON over the entire 89,070 sq. m.
subject property. A Deed of Sale was executed between HI-LON and the Republic of the
Philippines, covering the 29,690 sq. m. parcel of land converted to RROW. The first
partial payment was made to HI-LON. The Supervising Auditor of the DPWH noted that
the use of the 1999 zonal valuation as basis for the determination of just compensation
was unrealistic.
Aggrieved, HI-LON filed a petition for review before the COA. The COA denied HI-LON's
petition declaring that they are not entitled to just compensation. In support of its claim
of entitlement to just compensation, HI-LON relies on the 1987 Deed of Sale, and insists
that its predecessor-in-interest (TGPI) acquired from the national government, through
APT, the entire 89,070 sq. m. property. HI-LON asserts that the 29,690 sq. m. RROW was
not excluded from the sale.
Issue:
Whether or not the RROW is entitled to just compensation?
Held:
Article 1370 of the New Civil Code provides that if the terms of a contract are clear and
leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulations shall control. Where the terms of the contract are simple and clearly
appears to have been executed with all the solemnities of the law, clear and convincing
evidence is required to impugn it. HI-LON's bare allegation that the object of the Deed of
Sale is the entire 89,070 sq. m. area of the subject property, is self-serving and deserves
short shrift.
As the Deed of Sale is very specific that the object of the sale is the 59,380. sq. m. portion
of the subject property, HI-LON cannot insist to have acquired more than what its
predecessor-in-interest (TGPI) acquired from APT.
GR 231053, April 4, 2018
Facts:
Issue:
Held:
