oblicon labitag notes (1) (4).pdf

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Obligations and Contracts A2010 page 1Prof. Labitag

ARRED V GARC A

; 8, 1942BOCOBO July

!A"#REPetition for review on certiorari

$AC"%- from CA, holding Fausto Barredo liable for damages for death pf Faustino arciacaused by negligence of Pedro Fontanilla, a ta!i driver employed by Fausto Barredo- "ay #, $%#& ' in road between "alabon and (avotas, head-on collision betweenta!i of "alate )a!icab and carretela guided by Pedro *imapilis thereby causingoverturning of the carretela and the eventual death of arcia, $&-yo boy and one ofthe passengers- Fontanilla convicted in CF+ and affirmed by CA and separate civil action is reserved- Parents of arcia filed action against Barredo as sole proprietor of "alate )a!icabas employer of Fontanilla- CF+ and CA awarded damages bec Fontanillas negligence apparent as he wasdriving on the wrong side of the road and at a high speed

no proof he e!ercised diligence of a good father of the family as Barredo iscareless in employing .selection and supervision/ Fontanilla who had been caughtseveral times for violation of Automobile 0aw and speeding CA applied A$%1#CC that ma2es inapplicable civil liability arising from crime becthis is under obligations arising from wrongful act or negligent acts or omissionspunishable by law- Barredos defense is that his liability rests on 3PC )F liability only subsidiary andbec no civil action against Fontanilla )F he too cannot be held responsible

%%#E4O( parents of arcia may bring separate civil action against Barredo ma2ing himprimarily liable and directly responsible under A$%1#CC as employer of Fontanilla

&ELD 'es. )here are two actions available for parents of arcia5 One is under the

A$113PC wherein the employer is only subsidiarily liable for the damages arisingfrom the crime thereby first e!hausting the properties of Fontanilla5 )he otheraction is under A$%1#CC .6uasi-delict or culpa a6uiliana/ wherein as the negligentemployer of Fontanilla, Barredo is held primarily liable sub7ect to proving that hee!ercising diligence of a good father of the family5 )he parents simply too2 theaction under the Civil Code as it is more practical to get damages from theemployer bec he has more money to give than Fontanilla who is yet to serve hissentence5Obiter *ifference bet Crime and 8uasi-delict$/ crimes ' public interest9 6uasi-delict ' only private interest:/ Penal code punishes or corrects criminal acts9 Civil Code by means ofindemnification merely repairs the damage#/ delicts are not as broad as 6uasi-delicts9 crimes are only punished if there is apenal law9 6uasi-delicts include any 2ind of fault or negligence intervenes

(O);< not all violations of penal law produce civil responsibility

e5g5 contravention of ordinances, violation of game laws, infraction of rules of trafficwhen nobody is hurt=/ crime ' guilt beyond reasonable doubt9 civil ' mere preponderance of evidence- Presumptions<$/ in7ury is caused by servant or employee, there instantly arises presumption ofnegligence of master or employer in selection, in supervision or both:/ presumption is juris tantum not juris et de jure )F may be rebutted by provinge!ercise of diligence of a good father of the family- basis of civil law liability< not respondent superior bu the relationship of paterfamilias- motor accidents ' need of stressing and accentuating the responsibility of ownersof motor vehicles

E!D )A V ARR E"A

- ; 29, 1979";0;(C+O >;33;3A June

!A"#REPetition for review on Certiorari of the Orders of CF+ "anila dismissing petitionersComplaint for *amages based on 6uasi-delict

$AC"%- )hree-way vehicular accident occurred along "ac-Arthur >ighway, "arilao,Bulacan involving .$/ "ercedes Ben?, owned and driven by petitioner ";(*O@A9 .:/private 7eep owned and driven by respondent A0A@A39 .#/ gravel and sand truc2owned by respondent )+BO0 and driven by "O()OA5- "endo?as and "ontoyas version< After 7eep driver overtoo2 the truc2, it swervedto the left going towards "arilao, and hit car which was bound for "anila5 Beforeimpact, ala?ar 7umped from the 7eep, "endo?a unaware that 7eep was bumpedfrom behind by truc2- ala?ars version< After overta2ing truc2, he flashed a signal indicating hisintention to turn left towards "arilao but was stopped at intersection by apoliceman directing traffic5 4hile at stop position, his 7eep was bumped at rear bytruc2 causing him to be thrown out of 7eep5 Jeep then swerved to left and hit thecar5

- Oct5 ::, $%&%5 +n CF+ Bulacan, two separate informations for 3ec2less +mprudenceCausing *amage to Proprety were filed against A0A@A3 .damage to "endo?a/ and"O()OA .damage to ala?ar/- ala?ar was ac6uitted9 "otoya found guilty beyond reasonable doubt- Aug5 ::, $%15 +n CF+ "anila, "endo?a filed a civil case against ala?ar and )imboleither in alternative or in solidum5- )imbol filed "otion to *ismiss on grounds that complaint is barred by prior

7udgement9 CF+ "anila dismissed Complaint against )imbol- ala?ar filed "otion to *ismiss9 CF+ "la also dismissed Complaint against him ongrounds that (ew 3ules of Court rewuires an e!press reservation of civil action tobe made in the criminal action %%#E%$5 4O( "endo?a can file an independent civil case against )imbola/ +s the civil suit barred by prior 7udgment in the criminal caseD

b/ +s the civil suit barred by failure to ma2e a reservation in the criminal action ofright to file an independent civil action .as re6uired in ec5: of 3ule $$$/D


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:5 4O( "endo?a can file an independent civil case against ala?ar

&ELD$5 es5a/ (o, not all re6uisites of 3es Judicata are present5Ratio )here is no identity of cause of action between the dismissed criminal caseand the new civil case5Reasoning +n the criminal case, cause of action was enforcement of civil liabilityarising from criminal negligence5 +n the civil case, it was 6uasi-delict5 )he twofactors a cause of action must consist of are< .$/ plaintiffs primary right ' "endo?aas owner of the car9 .:/ defendants delict or wrongful act or omission whichviolated the primary right ' negligence or lac2 of s2ill, either of ala?ar or of"ontoya5b/ (o, right to file an independent civil action need not be reserved5Ratio ec5 : of 3ule $$$, 3ules of Court is inoperative because it is anunauthori?ed amendment of substantive law, and it cannot stand because of itsinconsistency with Art5:$5Reasoning Art5:$& and :$ of Civil Code create a civil liability distinct anddifferent from the civil action arising from the offense of negligence under the 3PC5:5 (o5Ratio Civil action had e!tinguished because Ethe fact from which civil liabilitymight arise did not e!ist5 .ec #c, 3ule $$$, 3ules of Court/ Gnder the facts of thecase, ala?ar cannot be held liable5Reasoning )he offended party has an option between action for enforcement ofcivil liability based on culpa C3+"+(A0 .3PC, Art5$11/ or action for recovery ofdamages based on culpa A8G+0+A(A .CC, Art5:$/5 First option was deemedsimultaneously instituted with the criminal action unless e!pressly waived orreserved of separate application5 +t can be concluded that "endo?a opted to basehis cause of action on culpa criminal, as evidenced by his active participation in theprosecution of criminal suit against ala?ar5DispositionOrder dismissing Civil Case against )imbol is set aside and trial court to proceedwith hearing on merits9 orders dismissing complaint in Civil Case against ala?ar are

upheld5

%BA V C #R" $ APPEAL%

; 4, 1992PA*+00A February

!A"#REPetition to review the decision of Court of Appeals5 $AC"%- A stabbing incident on August #1, $%HI which caused the death of CarlitosBautista on the premises of the Philippine chool of Business Administration .PBA/prompted the parents of the deceased to file suit in the "anila 3)C5 +t wasestablished that his assailants were not members of the schools academiccommunity but were outsiders5- )he suit impleaded PBA, its President, P, )reasure, Chief of ecurity and

Assistant Chief of ecurity5 +t sought to ad7udge them liable for the victims deathdue to their alleged negligence, rec2lessness and lac2 of security precautions5

- *efendants .now petitioners/ sought to have the suit dismissed alleging that sincethey are presumably sued under Art5 :$H1 of the Civil Code, the complaint states nocause of action against them since academic institutions, li2e PBA, are beyond theambit of that rule5- 3espondent )rial court denied the motion to dismiss5 And the "F3 was similarlydealt with5 Petitioners the assailed the trial courts dispositions before therespondent appellate court which affirmed the trial courts ruling5 %%#E% 4O( respondent court is correct in denying dismissal of the case5 &ELDRatio Although a school may not be liable under Art5 :$H1 on 6uasi-delicts, it maystill be liable under the law on contracts5Reasoning )he case should be tried on its merits5 But respondent courts premiseis incorrect5 +t is e!pressly mentioned in Art5 :$H1 that the liability arises from actsdone by pupils or students of the institution5 +n this sense, PBA is not liable5 Butwhen an academic institution accepts students for enrollment, the school ma2esitself responsible in providing their students with an atmosphere that is conducivefor learning5 Certainly, no student can absorb the intricacies of physics or e!plorethe realm of arts when bullets are flying or where there looms around the schoolpremises a constant threat to life and limb5Disposition 4>;3;FO3;, the foregoing premises considered, the petition is*;(+;*5 )he Court of origin is hereby ordered to continue proceedings consistentwit this ruling of the Court5 Costs against the petitioners5Voting "elencio->errera .Chairman/, Paras, 3egalado and (ocon, JJ5, concur5

(AD RA V CA

; 15, 1988C3G@ April

!A"#RE

Petition for certiorari to review the decision of Court of Appeals5 $AC"%- A few days before high school graduation, while in the auditorium of his school.Colegio de an Jose-3ecoletos/, a classmate, Pablito *affon, fired a gun thatmortally hit and 2illed Alfredo Amadora5- )he victims parents filed a civil action for damages under Article :$H1 of the CivilCode against the Colegio de an Jose-3ecoletos, its rector, the high school principal,the dean of boys, and the physics teacher .the victim was in school to finish hisphysics e!periment 'a prere6uisite to graduation/, together with *affon and twoother students, through their respective parents5- )he pertinent provision reads< E0astly, teachers or heads of establishments of arts and trades shall be liablefor damages caused by their pupils and students or apprentices so long as theyremain in their custody5

%%#E


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4O( respondents are liable under Art5 :$H1 &ELDRatio )hose liable under the related provision of Art5 :$H1 shall be ta2en to meanas teacher.s/-in-charge for academic institutions and heads for schools of arts andtrades5Reasoning )he difference between academic and arts and trades institutions lie inhistory5 Bac2 in the times of artisan guilds, heads of academic institutions werealready focused on administrative wor2 and it is only the teachers who interactclosely with students5 >eads of schools of arts and trades, on the other hand,because of the technical nature of their craft, interact directly with the appentices5Although the same may not be said for schools of arts and trades at present, it iswhat is written5 And only a re-writing of the law can abolish the intended difference5+n the case at bar, none of the respondents were liable5 )he school is not liableunder Art5 :$H19 the rector, the principal and the dean of boys only e!ercisedgeneral authority9 the mere fact that Amadora was in school to finish his physicse!periment did not ma2e the physics teacher in-charge9 and even if he were in-charge, there was no showing that it was his negligence in disciplining *affon thatmade *affon shoot Amadora9 and the other respondents didnt have custody of theoffender5Disposition 4>;3;FO3;, the petition is *;(+;*, without any pronouncements asto costs5Voting ap, (arvasa, Paras, Feliciano, ancayco, Bidin, armiento, Cortes andrino-A6uino, JJ5, concur5

)eehan2ee, C5J5, did not participate in deliberations5Fernan and Padilla, JJ5, no part, formerly counsel for Colegio de an Jose-3ecoletos5utierre?, Jr5, J5, concur but please see additional statement5>errera, J5, with separate concurring and dissenting opinion5

& . - .

!G $ C V &A+A A! P& L PP !E C

; 16, 1925"A0CO0" eptember

!A"#RE

Appeal from a 7udgment of the Court of First +nstance of +loilo

$AC"%Plaintiff presented a complaint with two causes of action for breach of contractagainst the defendant in which 7udgment was as2ed for P1,#&%5I1, with legalinterest and cost5 +n an amended answer and cross-complaint, the defendant set upthe special defense that since the plaintiff had defaulted in the payment formolasses delivered to it by the defendant under the contract between the parties,the latter was compelled to cancel and rescind the contract5 )he case wassubmitted for decision on a stipulation of facts and e!hibits5 )he 7udgment of thetrial court condemned the defendant to pay to the plaintiff a total of P#I,#$5%#with legal interest from the date of the presentation of the complaint, and withcosts5

&ELD

, )he written contract between the parties provided for the delivery by the>awaiian-Philippine Co5 to ong Fo K Co5 of #11,111 gallons of molasses5 )he

language used in another e!hibit with reference to the additional $11,111 gallonswas not a definite promise5 till less did it constitute an obligation5- )he terms of contract fi!ed by the parties are controlling5 )he time of paymentstipulated for in the contract should be treated as of the essence of the contract5>awaiian-Philippine Co5 had no legal right to rescind the contract of sale because ofthe failure of ong Fo K Co5 to pay for the molasses within the time agreed upon bythe parties5 )he general rule is that the rescission will not be permitted for a slightor casual breach of the contract, but only for such breaches are as so substantialand fundamental as to defeat the ob7ect of the parties in ma2ing the agreement5 Adelay in payment for a small 6uantity of molasses for some :1 days is not such aviolation of an essential condition of the contracts as warrants rescission fornonperformance5- )he measure of damages for breach of contract in this case is as follows< ong FoK Co5 is allowed P#,111 on account of the greater e!pense to which it was put inbeing compelled to secure molasses in the open mar2et5 +t is allowed nothing forlost profits on account of the breach of the contract, because of failure of proof5

ELARDE V C #R" $ APPEAL%

; 11, 2001

PA(A(+BA( July$AC"%- *avid 3aymundo .private respondent/ is the absolute and registered owner of aparcel of land, together with the house and other improvements5- orge 3aymundo, *avids father, negotiated with Avelina and "ariano elarde.plaintiffs/ for the sale of *avids property, which was under lease5- Aug H, $%H&, a *eed of ale with Assumption of "ortgage was e!ecuted by *avid3aymundo in favor of Avelina elarde5 +t states that *avid 3aymundo sells, cedes,transfers conveys and delivers the property to Avelina elarde for PH11,111 andthat Avelina elarde assumes to pay the mortgage obligations on the property inthe amount of P$,H11,111 in favor of BP+5- On the same date, Avelina, with the consent of husband "ariano, e!ecuted anGnderta2ing, parts of which as follows<

$5that Avelina elarde paid *avid 3aymundo PH11,111, and assumes the

mortgage obligations on the property with BP+ in the amount of P$5H"5:5 while Avelinas application for the assumption of the mortgage obligations onthe property is not yet approved by BP+, Avelina agreed to pay the mortgageobligations on the property, including interest and charges for late payment5

#5 Avelina binds and obligates herself to strictly and faithfully comply with the ffterms and conditions<a5 until such time that assumption of mortgage obligations on the property is

approved by BP+, Avelina shall continue to pay said loan in accordance withits terms and conditions5

b5+n the event Avelina violates any of the terms and conditions, herdownpayment of PH11,111 plus all payments made with BP+ on themortgage loan shall be forfeited in favor of *avid 3aymundo, and that*avid shall resume total and complete possession and ownership of theproperty, and the *eed of ale with Assumption of "ortgage shall bedeemed automatically cancelled5


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- As per agreement, the elardes paid BP+ the monthly interest on the loan for #months, .ept $%, $%H& at P:,::I9 Oct :1, $%H& at :#,1119 (ov $%, $%H& at :#,%:I/- *ec5 $I, $%H&, plaintiffs were advised that their Application for Assumption of"ortgage with BP+ was not approved5 )his prompted the elardes not to ma2e anyfurther payment5- Jan5 I, $%H, the 3aymundos, thru counsel, wrote plaintiffs informing them thattheir nonpayment to BP+ constituted nonperformance of their obligation5- On January , $%H, the elardes responded thru counsel and advised that theyare willing to pay the balance in cash not later that Jan :$ $%H provided that< a/respondents deliver actual possession of the property not later that Jan $I, $%H9 b/respondents cause the release of title and mortgage from BP+ and ma2e the titleavailable and free from any liens and encumbrances9 and c/ respondents e!ecutean absolute deed of sale in favor of Avelina elarde not later than Jan :$, $%H5- Jan H, $%H, defendants sent the elardes a notarial notice ofcancellationLrescission of the intended sale of the property, allegedly due to theplaintiffs failure to comply with the terms and conditions of the *eed of ale withAssumption of "ortgage and the Gnderta2ing5- Feb %, $%H, the elardes filed a complaint against respondents for specificperformance, nullity of cancellation, writ of possession, and damages5- 3)C instructed the parties to proceed with the sale, directing the elardes to paythe balance of P$5H" and ordered the 3aymundos to e!ecute a deed of absolutesale and to surrender possession of property to the elardes5- CA reversed the ruling and dismissed the elardes Complaint5

%%#E%$5 4O( there is a breach of contract:5 4O( the rescission by the 3aymundos of the contract valid#5 4O( the finding of the CA that the elardes Jan , $%H letter gave three Enewconditions constituted an attempt to novate, thus necessitating a new agreementbetween the parties

&ELD$5es5 +n a contract of sale, the seller obligates itself to transfer the ownership of

and deliver a determinate thing, and the buyer to pay therefore a price certain inmoney or its e6uivalent5

- Private respondents already performed their obligation through the e!ecution ofthe *eed of ale, which effectively transferred ownership of property to elardethrough consecutive delivery5 Prior physical delivery or possession is not legallyre6uired, and the e!ecution of the *eed of ale is deemed e6uivalent to delivery5- Petitioners did not perform their correlative obligation of paying the contract pricein the manner agreed upon5 )hey wanted private respondents to performobligations beyond those stipulated in the contract before fulfilling their ownobligation to pay the full purchase price5:5 es5 Private respondents right to rescind the contract finds basis in Article $$%$

of the Civil Code, which provides<EArt5 $$%$5 )he power to rescind obligations is implied in reciprocal ones, in caseone of the obligors should not comply with what is incumbent upon him5

)he in7ured party may choose between fulfillment and the rescission of theobligation, with the payment of damages in either case5 >e may also see2

rescission even after he has chosen fulfillment, of the latter should becomeimpossible5- )he right of rescission of a party to an obligation under Article $$%$ of the CivilCode is predicated on a breach of faith by the other party who violates thereciprocity between them5 )he breach contemplated in said provision is theobligors failure to comply with an e!isting obligation5 4hen the obligor cannotcomply with what is incumbent upon it, the oblige may see2 rescission and, in theabsence of any 7ust cause for the court to determine the period of compliance, thecourt shall decree the rescission5- Private respondents validly e!ercised their right to rescind the contract, becauseof the failure of petitioners to comply with their obligation to pay the balance of thepurchase price5 )he elardes violated the very essence of reciprocity in the contractof sale, a violation that conse6uently gave rise to private respondents right torescind the same in accordance with law5- "utual restitution re6uired in rescission5

- the breach committed by petitioners was a nonperformance of a reciprocalobligation, not a violation of the terms and conditions of the mortgage contract5

)hus, the automatic rescission and forfeiture of payment clauses do not apply5Civil Code provisions shall govern5

- ince breach herein is under A$$%$, mutual restitution is re6uired to bring bac2the parties their original situation prior to the inception of the contract5

- 3escission creates an obligation to return the ob7ect of the contract5 +t can becarried out only when the one who demands rescission can return whatever hemay be obliged to restore5

- )o rescind is t declare a contract void at its inception and to put an end to it asthough it never was5

#5 C did not find it necessary to discuss third issue but said that the threeconditions were not part of the original contract, and that petitioners had no rightto demand preconditions to the fulfillment of their obligation, which had becomedue5

Disposition CA decision affirmed with modification that private respondents areordered to return to petitioners PH=,$I1 with legal interest5

D& #%E V &AL L

; 31, 19530AB3A*O3 July

$AC"%- (ovember :%, $%=- plaintiff entered into a written agreement with defendant<$5 that they shall organi?e a partnership for the bottling and distribution of "issionsoft drin2s, plaintiff to act as industrial partner or manager, and the defendant as acapitalist, furnishing the capital necessary therefore:5 that the defendant was to decide matters of general policy regarding thebusiness, while the plaintiff was to attend to the operation and development of thebottling plant#5 that plaintiff was to secure the "ission oft *rin2s franchise for and in behalf ofthe proposed partnership=5 that the plaintiff was to receive #1 per cent of the net profits of the business- Prior to entering into this agreement, plaintiff had informed the "ission *ry

Corporation of 0os Angeles, California, G5 5 A5, manufacturers of the bases andingredients of the beverages bearing its name, that he had interested a prominent


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financier .defendant herein/ in the business, who was willing to invest half a milliondollars in the bottling and distribution of the said beverages, and re6uested, inorder that he may close the deal with him, that the right to bottle and distribute begranted him for a limited time under the condition that it will finally be transferredto the corporation- Pursuant to this re6uest, plaintiff was given Ma thirty daysN option on e!clusivebottling and distribution rights for the PhilippinesM- )he contract was finally signed by plaintiff on *ecember #, $%=5- 4hen the bottling plant was already in operation, plaintiff demanded of defendantthat the partnership papers be e!ecuted5- *efendant gave e!cuses and would not e!ecute said agreement, thus thecomplaint by the plaintiff5- Plaintiff<

$5 e!ecution of the contract of partnership:5 and accounting of profits#5 share thereof of #1 per cent=5 damages in the amount of P:11,111

- *efendant<$5 the defendants consent to the agreement, was secured by therepresentation of plaintiff that he was the owner, or was about to becomeowner of an e!clusive bottling franchise, which representation was false, andthat plaintiff did not secure the franchise but was given to defendant himself :5 that defendant did not fail to carry out his underta2ings, but that itwas plaintiff who failed#5 that plaintiff agreed to contribute to the e!clusive franchise to thepartnership, but plaintiff failed to do so=5 counterclaim for P:11,11 as damages

- CF+ ruling<$5 accounting of profits and to pay plaintiff $I of the profits:5 e!ecution of contract cannot be enforced upon parties#5 fraud wasnt proved

%%#E%$5 4O( plaintiff falsely represented that he had an e!clusive franchise to bottle"ission beverages:5 4O( false representation, if it e!isted, annuls the agreement to form thepartnership

&ELD$5 es5 Plaintiff did ma2e false representations and this can be seen through hisletters to "ission *ry Corporation as2ing for the latter to grant him temporaryfranchise so that he could settle the agreement with defendant5 )he trial courtreasoned, and the plaintiff on this appeal argues, that plaintiff only undertoo2 in theagreement Mto secure the "ission *ry franchise for and in behalf of the proposedpartnership5M )he e!istence of this provision in the final agreement does not militateagainst plaintiff having represented that he had the e!clusive franchise9 it ratherstrengthens belief that he did actually ma2e the representation5 defendantbelieved, or was made to believe, that plaintiff was the grantee of an e!clusivefranchise5 )hus it is that it was also agreed upon that the franchise was to betransferred to the name of the partnership, and that, upon its dissolution ortermination, the same shall be reassigned to the plaintiff5

- Again, the immediate reaction of defendant, when in California he learned thatplaintiff did not have the e!clusive franchise, was to reduce, as he himself testified,plaintiffNs participation in the net profits to one half of that agreed upon5 >e couldnot have had such a feeling had not plaintiff actually made him believe that he.plaintiff/ was the e!clusive grantee of the franchise5:5 (o5 +n conse6uence, article $:1 of the panish Civil Code distinguishes two2inds of .civil/ fraud, the causal fraud, which may be ground for the annulment of acontract, and the incidental deceit, which only renders the party who employs itliable for damages5 )his Court has held that in order that fraud may vitiate consent,it must be the causal .dolo causante/, not merely the incidental .dolo incidente/inducement to the ma2ing of the contract5 )he record abounds with circumstancesindicative of the fact that the principal consideration, the main cause that induceddefendant to enter into the partnership agreement with plaintiff, was the ability ofplaintiff to get the e!clusive franchise to bottle and distribute for the defendant orfor the partnership5 )he original draft prepared by defendantNs counsel was to theeffect that plaintiff obligated himself to secure a franchise for the defendant5- But if plaintiff was guilty of a false representation, this was not the causalconsideration, or the principal inducement, that led plaintiff to enter into thepartnership agreement5 On the other hand, this supposed ownership of ane!clusive franchise was actually the consideration or price plaintiff gave ine!change for the share of #1 per cent granted him in the net profits of thepartnership business5 *efendant agreed to give plaintiff #1 per cent share in the netprofits because he was transferring his e!clusive franchise to the partnership5- "ay the agreement be carried out or e!ecutedD 4e find no merit in the claim ofplaintiff that the partnership was already a fait accompli from the time of theoperation of the plant, as it is evident from the very language of the agreement thatthe parties intended that the e!ecution of the agreement to form a partnership wasto be carried out at a later date5 , )he defendant may not be compelled against hiswill to carry out the agreement nor e!ecute the partnership papers5 )he lawrecogni?es the individualNs freedom or liberty to do an act he has promised to do, ornot to do it, as he pleases5

ERALDE) V CA

; 23, 19943;A0A*O February

!A"#RE- Petition for review on Certiorari, )his is an action for damages by reason of contractual breach filed by 0ydiaeralde? against enstar )ravel Corporation5

$AC"%- 0ydia came to 2now about the respondent through advertisements about tours in

;urope and eventually availed of one of the pac2ages they offered5


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- )he pac2age was EO0A3; # which covered ::-day tour of ;urope for $%1,111Php which she paid for herself and her sister5- >er disappointments .because it was contrary to what was in the brochure/ duringthe trip were<

• )here was no ;uropean tour manager for their group oftourists• )he hotels which she and the group were billeted were notfirst- class• )he GC 0eather Factory, which was a highlight of the tour,was not visited• )he Filipino lady tour guide was performing said 7ob for the

first time5- 3)C< granted a writ of preliminary attachment against private respondent on theground respondent committed fraud in contracting an obligation .as perpetitioners motion/ but said writ was also lifted upon filing a counterbond of Php%%12- 0ydia also filed other complaints at the *epartment of )ourism and the ecuritiesand ;!change Commission which fined the respondent Php I2 and Php $12

respectively5- 3)C awarded moral damages, nominal damages, e!emplary damages, and forattorneys fees to 0ydia eralde? worth Php I112, Php :112, Php #112 and Php I12respectively5 3espondent also had to pay for the costs of the suit5- CA modified the 3)Cs decision since they found no malice could be imputedagainst enstar )ravel Corporation5

%%#E4O( private respondent acted in bad faith or with gross negligence in dischargingits obligations under the contract5

&ELD es, enstar )ravel Corporation did commit fraudulent misrepresentationsamounting to bad faith to the pre7udice of 0ydia eralde? and the members of thetour group5

Reasoning- On respondent’s choice of tour guideB proiding te Volare * to3rist gro3p 4it an ine5perienced and a firstti6er to3r escort7 8"C 6anifested its indifference to te conenience7satisfaction and peace of 6ind of its clients d3ring te trip. 3espondentshould have selected an e!perienced ;uropean tour guide, or it could have allowed@apanta .the lady guide/ to go as an understudy under the guidance, control, andsupervision of an e!perienced and competent ;uropean or Filipino tour guide whocouldve given her training5- )he inability of the group to visit the leather factory is li2ewise reflective of theneglect and ineptness of @apanta in attentively following the itinerary for the day5"is inco6petence 63st necessaril be traced to te lac9 of d3e diligenceon te part of 8"C in te selection of its e6ploees. )he GC leather factorywas one of the highlights of the tour and it was incumbent upon the organi?ers ofthe tour to ta2e special efforts to ensure the same5

- Clearly, )Cs choice of @apanta as tour guide is a manifest disregard of itsspecific assurances to the tour group, resulting in agitation and an!iety on theirpart, and which is contrary to the elementary rules of good faith and fair play5- On the European Tour Manager 8"C< the euro tour manager refers to an organi?ation and not to an individual9eralde? didnt attend the pre-departure briefing, wherein we e!plained theconcept of the euro tour manager%C< the advertisement reveals that the contemplated tour manager contemplated isa natural person not a 7uridical one as )C asserts5 Furthermore, the obligation toprovide not only a ;uropean tour manager, but with local ;uropean tour guideswere li2ewise never made available5 @apanta couldnt even remember the name ofthe ;uropean guide with her supposedly5From the advertisement, it is beyond cavil that the import of the Ehe is a naturaland not a 7uridical person .in reference to the euro tour guide/5 )here is no need forfurther interpretation when the wordings are clear5 "e 6eaning tat 4illdeter6ine te legal effect of a contract is tat 4ic is arried at bob:ectie standards; One is bo3nd not b 4at e s3b:ectiel intends7b3t b 4at e leads oters reasonabl to tin9 e intends.8"C relies in the delimitation of its responsibility printed on the face of its brochure5

Q CO!"RAC" O$ AD&E%O!> contracts drafted b onl one part Private respondents cannot rely on its defense of Esubstantial compliance withthe contract5

- On the First Class Hotels )he respondents li2ewise committed a grae 6isrepresentation when it assuredin its olare # tour pac2age that the hotels it had chosen would provide the touristscomplete amenities and were conveniently located along the way for the dailyitineraries5 +t turned out that some of the hotels were not sufficiently e6uipped witheven the basic facilities and were at a distance from the cities covered by thepro7ected tour5- ;ven assuming arguendo that there is indeed a difference in classifications , itcannot be denied that a first-class hotel could at the very least provide basicnecessities and sanitary accommodations5- if it could not provide the tour participants with first-class lodgings on the basis ofthe amount that they paid, it could and should have instead increased the price toenable it to arrange for the promised first-class accommodations5- Damages(oral da6ages may be awarded in breaches of contract where the obligor actedfraudulently or in bad faith5- "e fra3d or dolo 4ic is present or e6ploed at te ti6e of birt orperfection of a contract 6a eiter be dolo ca3sante or dolo incidente., Dolo Ca3sante ca3sal fra3d , referred to in Art5 $##H,

- are those deceptions or misrepresentations of a serious character employed byone party


7/196


- without which the other party would (O) have entered into the contract- essential cause of the consent- effects< nullity of the contract and indemnification of damages

, Dolo ncidente incidental fra3d7 referred to in Art5 $##=,- are those which are not serious in character-without which the other party would still have entered into the contract- some particular or accident of the obligation- effects< damages

- C< )C is responsible for damages whether it has committed either dolocausante or incidente5- 0ydia 7oined the tour with the belief of a euro tour guide accompanying them9 shesuffered serious an!iety and distress when the group was unable to visit the leatherfactory and when she didnt receive first-class accommodations in their lodgings5

)hese entitle her to moral damages5- E5e6plar da6ages are imposed by way of e!ample or correction for the publicgood, in addition to moral, temperate, li6uidated or compensatory damages5According to the Code Commission, e!emplary damages are re6uired by publicpolicy, for wanton acts must be suppressed5- Gnder the present state of law, e!traordinary diligence is not re6uired in travel ortour contracts, such as that in the case at bar, the travel agency acting as touroperator must nevertheless be held to strict accounting for contracted services,considering the public interest in tourism, whether in the local or in the internationalscene5Disposition "O3A0 *A"A; 'Php $112, ;R;"P0A3 *A"A; ' Php I12,A)) F;; 'Php :12 and costs against the respondent )C5 Award for nominaldamages is deleted5ote !o6inal da6ages are awarded when there the complainant suffered actualor substantial damage from the breach of contract5

#"ERRE) V G#" ERRE)

; 23, 1931"A0CO0" eptember

!A"#RE

Appeal from the 7udgment of the CF+ of "anila$AC"%- On Feb :, $%#1, a passenger truc2 and a private automobile collided whileattempting to pass each other on the )alon bridge on the "anila outh 3d in 0asPinas5 )he truc2 was driven by the chauffer Abelardo elasco .A/ and was ownedby aturnino Corte? .Cor/5 )he auto was being operated by Bonifacio utierre?.B/, $H yLo, and was owned by his parents "r5L"rs5 "anuel utierre? ."/5- At the time of the collision, B was with his mother and several other members ofthe family5 " was not in the car5- A passenger of the autobus, (arciso utierre? .(/ was en route from an Pabloto "anila5 )he collision resulted in ( suffering a fractured right leg re6uiring himmedical assistance5- )he collision was caused by negligence5 4hile the plaintiff blames both sets ofdefendants, the owner of the passenger truc2 blames the automobile and vice

versa5

%%#E4hat are the liabilities of the owners and drivers of the vehicles involved in thecollision

&ELD- B was an incompetent chauffer as he was driving in an e!cessive speed5 )heguarantee the father gave at the time the son was granted a license to operatemotor vehicles gave the father responsible for the acts of his son5- Cor and As liability is based on the contract5 )he position of the truc2 on thebridge and the speed in operating the machine and the lac2 of care employedreached such conclusion5 )he fact that : drivers were approaching a narrow bridge,neither willing to slow up and give right of way inevitably resulted to the collisionand the accident5- )he contention that there was contributory negligence as the plaintiff 2ept his footoutside the truc2 was not pleaded and was dismissed as speculative5Ratio+n the G it is uniformly held that the head of the house, the owner of the vehicle,who maintains it for the general use of his family is liable for its negligent operationby one of his children, whom he designates or permits to run it, where the car isoccupied and being used for the pleasure of the other members of the family, otherthan the child driving it5

A)#E) V DE B RA

; 23, 1944O@A;)A February

!A"#REP;)+)+O( to review on certiorari a decision of te Court of Appeals

$AC"%- de Bor7a entered into a contract with (atividad-a?6ue? abani *evelopment topurchased =,111 sac2 of palay at P:5$1 per sac2 for a total consideration of P H,=11which was paid by de Bor7a5 a?6ue? and Busuego represented the Company in thetransaction as acting manager and treasurer, respectively5 +n addition, de Bor7a

delivered to the defendants a total of =,111 empty sac2s which presumealy were tobe used in the delivery of the palay5- *efendants only deliverd to de Bor7a a total of :,=HH cavans of palay with a valueof PI,::=5H1 and have since refused to deliver the balance5- Action was commenced by Francisco de Bor7a in the Court of First +nstance of"anila against Antonio a?6ue? and Fernando Busuego to recover from them 7ointlyand severally the total amount of P=,1:51 arising out of the non delivery of $,I$:cavans of rice and $,I$1 empty sac2s5- a?6ue? denied entering into the contract in his individual and personal capacity5

)he contract was between plaintiff and (atividad-a?6ue? abani *evelopment Co5,+nc5, a corporation which the defendant a?6ue? represented as its acting manager5a?6ue? filed a counterclaim for P$,111 as damages5- )rial court found in favor of the plaintiff and ordered a?6ue? to pay the total sumof P#,II:515 +t also absolved Busuego from the complaint5- a?6ue? appealed to the CA and it modified the 7udgement by reducing the

amount to P #,#$=5H plus interest and costs5 On motion for reconsideration, the CA


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set aside its 7udgment and ordered the case remanded to the court of origin forfurther proceedings5- >ence the two petitions from both plaintiff and defendant to the upreme court forcertiorari5

%%#E% $54O( de Bor7a entered into the contract with a?6ue? in his personal capacity oras manager of the (atividad-a?6ue? abani *evelopment:5 4O( a?6ue? is entitled to counter damages arising out of the erroneous suit

&ELDRatio- )he Action being on a contract, and it appearing from the preponderance of theevidence that the party liable is (atividad-a?6ue?, which is not a party to the suit,the complaint should have been dismissed5- (o award is given to a?6ue? as the C believes that he was morally responsibleto the party with whom he contracted to see to it that the corporation representedby him fulfilled the contract by delivering that palay it had sold particularly sincethe same had already been made5Reasoning- Corporations are artificial beings invested by law with a personality of is own,separate and distinct from that of the shareholders and from that of its officers whomanage and run its affairs5 )he mere fact that its personality is owing to a legalfiction and that it necessarily has to act thru its agents does not ma2e such agentspersonally liable on a contract duly entered into by them for and in behalf of saidcorporation5 )his legal fiction may however be disregarded only when an attempt ismade to use its as a cloa2 to hide an unlawful or fraudulent purpose5 As thereseems to be no showing that a?6ue? personally benefited from the transaction, heis within his rights to invo2e the legal fiction to avoid personal liability5- )he trial court in finding a?6ue? guilty of negligence in the performance of thecontract and in holding him personally liable manifestly failed to distinguish acontractual from an e!tra-contractual obligation, or an obligation arising fromcontract from an obligation arising from culpa a6uiliana5 +n the contractualobligation, it is the obligor to fulfill said contract and not its agents5 >ence, theobligor is the party guilty of negligence in the fulfillment of said contract5 On theother hand, if independently from the contract, a?6ue? by his fault or negligencecased damage to the plaintiff, then he would be personally liable for such damage5But since the suit is based on the contract, then the court has no 7urisdiction overthe issue and could not ad7udicate upon it5Disposition )he 7udgment of the CA is reversed and the complaint is dismissed,without finding as to cost5

EPARA"E P ! !

[ ]

ARA% dissent

-From the facts, it appears that as6ue? prior to entering into contract with de

Bor7a 2new that his company was already insolvent5 nowing full well that thecontract could not be fulfilled, he nonetheless consummated the transaction and

received the full payment5 >ence the CF+ and Ca are both correct in holding thefailure to deliver was the result of a?6ue?s fault or negligence5- 4hile it is true that the contract is between de Bor7a and the company, it wasproven during the trial that it was a?6ue? who prevented the performance of thecontract and also of negligence bordering on fraud which caused damage to deBor7a5 >ence the technicality of a procedural error should not be hindrance to therendition5- )he suit be considered as based on fault and negligence of a?6ue? and tosentence defendant accordingly5

&

E G# A V (A! LA ELEC"R C RA LR AD L G&" C

;)3;;) 28, 1920 January

!A"#REAPP;A0 from a 7udgment of the Court of First +nstance of "anila5

$AC"%-)he plaintiff is a physician residing in Caloocan City5

-ept =, $%$I, at about Hpm, the defendant boarded a car at the end of the line withthe intention of coming to Caloocan5-At about #1 meters from the starting point the car entered a switch, the plaintiffremaining on the bac2 platform holding the handle of the right-hand door5 Gponcoming out of the switch, the small wheels of the rear truc2 left the trac2 ran for ashort distance and hit a concrete post5-the post was shattered< at the time the car struc2 against the concrete post, theplaintiff was allegedly standing on the rear platform, grasping the handle of theright-hand door5 )he shoc2 of the impact threw him forward, and the left part of hischest struc2 against the door causing him to fall5 +n the falling, the plaintiff allegedthat his head struc2 one of the seats and he became unconscious5-the plaintiff was ta2en to his home which was a short distance away from the siteof the incident5 A physician of the defendant company visited the plaintiff and notedthat the plaintiff was wal2ing about and apparently suffering somewhat frombruises on his chest5 )he plaintiff said nothing about his head being in7ured and

refused to go to a hospital5-)he plaintiff consulted other physicians about his condition, and all thesephysicians testified for the plaintiff in the trial court5-the plaintiff was awarded with P&,$11, with interest and costs, as damagesincurred by him in conse6uence of physical in7uries sustained5 )he plaintiff and thedefendant company appealed5

%%#E%$5 4O( the defendant has d isproved the e!istence of negligence:5 4hat is the nature of the relation between the partiesD#5 4O( the defendant is liable for the damages=5 +f liable for damages, 4O( the defendant could avail of the last paragraph of Art

$%1# on culpa a6uiliana .Art :$H1/I5 4hat is the e!tent of the defendants liabilityD

I5$ *id the trial 7udge err in the awarding of the damages for loss of professional

earnings .P%11/D


9/196

Obligations and Contracts A2010 page FProf. Labitag

I5: *id the trial 7udge err in the awarding of the damages for inability to accept aposition as a district health officerD

I5# *id the trial 7udge err in not awarding damages for the plaintiffs supposedincapacitation for future professional practice .P#1,111/D

I5= +s the plaintiff reasonable in demanding P$1,111 for the cost of medicaltreatment and other e!penses incident to his cureD

&5 4O( the trial 7udge erred in treating written statements of the physicians whotestified as primary evidenceD

&ELD1. !O7 te e5istence of negligence in te operation of te car 63st bes3stained7 as not being clearl contrar to te eidence.Ratio An e!perienced and attentive motorman should have discovered thatsomething was wrong and would have stopped before he had driven the car overthe entire distance from the point where the wheels left the trac2 to the placewhere the post was struc25Reasoning )he motorman alleged that he reduced his speed to the point that thecar barely entered the switch under its own momentum, and this operation wasrepeated as he passed out5 Gpon getting again on the straight trac2 he put thecontrol successively at points one, two, three and lastly at point four5 At themoment when the control was placed at point four he perceived that the rearwheels were derailed and applied the bra2e9 but at the same instant the car struc2the post, some =1 meters distant from the e!it of the switch5 >owever, testimonialevidence alleged that the rate of a car propelled by electricity with the control atpoint MfourM should be about five or & miles per hour .around H 2ph/ and otherevidence showed that the car was behind schedule time and that it was beingdriven, after leaving the switch, at a higher rate than would ordinarily be indicatedby the control at point four5 )he car was practically empty .so its possible that itcould run fasterDDD/5 )he court granted that there is negligence as shown by thedistance which the car was allowed to run with the front wheels of the rear truc2derailed, aside from the fact that the car was running in an e!cessive speed5

2. "e relation bet4een te parties 4as of a contract3al nat3re.Ratio )he company was bound to convey and deliver the plaintiff safely andsecurely with reference to the degree of care which, under the circumstances, isre6uired by law and custom applicable to the case5Reasoning )he plaintiff had boarded the car as a passenger for the city of "anilaand the company undertoo2 to convey him for hire5*. 'E%7 te defendant is liable for te da6agesRatio! Reasoning Gpon failure to comply with that obligation arising from thecontract, the company incurred the liability defined in articles $$1#-$$1 of the CivilCode5-. !o7 te defendant co3ld not aail of te last paragrap of Art 1F0*Ratio Reasoning )he last paragraph of article $%1# of the civil code refers toliability incurred by negligence in the absence of contractual relation, that is, to theculpa a6uiliana of the civil law and not to liability incurred by breach of contract9therefore, it is irrelevant to prove that the defendant company had e!ercised duecare in the selection and instruction of the motorman who was in charge of its carand that he was in e!perienced and reliable servant5

. "e defendant is liable for te da6ages ordinar recoerable for tebreac of contract3al obligation7 against a person 4o as acted in goodfait7 4ic co3ld be reasonabl foreseen at te ti6e te obligation iscontracted.Ratio )he e!tent of the liability for the breach of a contract must be determined inthe light of the situation in e!istence at the time the contract is made9 and thedamages ordinarily recoverable are in all events limited to such as might bereasonably foreseen in the light of the facts then 2nown to the contracting parties5Reasoning )he court has the power to moderate liability according to thecircumstances of the case, i5e5 when the defendant must answer for theconse6uences of the negligence of its employees5 Also, an employer who hasdisplayed due diligence in choosing and instructing his servants is entitled to beconsidered a debtor in good faith .wLn meaning of article $$1, old CC/.1. !O7 te trial :3dge 4as liberal eno3g to te plaintiff.Reasoning As a result of the incident, the plaintiff was unable to properly attendhis professional labors for # months and suspend his practice for that period5 Bytestimonial evidence, his customary income, as a physician, was about P#11Lmonth5o the trial 7udge accordingly allowed P%11 as damages for loss of earnings5.2 'E%. "e trial :3dge erred in a4arding s3c da6ages.Ratio *amage of this character could not, at the time of the accident, have beenforeseen by the delin6uent party as a probable conse6uence of the in7ury inflicted5Reasoning )he representative from (egros Occidental has supposedly as2ed *r5"ontinola to nominate the plaintiff as district health officer of (egros Occidental fortwo years, with a salary of P$,&11 per annum and a possible outside practice worthof P#I15 >owever, even if true, the damages were too speculative to be the basis ofrecovery in a civil action5.* !O. te trial co3rt 4as f3ll :3stified in re:ecting te e5aggeratedesti6ate of da6ages allegedl created.Ratio! Reasoning )he plaintiff alleged, even showing testimonial evidences fromnumerous medical e!perts, that he developed infarct of the liver and traumaticneurosis, accompanied by nervousness, vertigo, and other disturbing symptoms ofa serious and permanent character, and these manifestations of disorder renderedhim liable to a host of other dangerous diseases, and that restoration to healthcould only be accomplished after long years of complete repose5-)he medical e!perts introduced by the defendant testified however that theplaintiffs in7uries, considered in their physical effects, were trivial and that theattendant nervous derangement, with its complicated train of ailments, was merelysimulated5-According to the court, the evidence showed that immediately after the incidentthe plaintiff, sensing in the situation a possibility of profit, devoted himself withgreat assiduity to the promotion of this litigation9 and with the aid of his ownprofessional 2nowledge, supplemented by suggestions obtained from hisprofessional friends and associates, he enveloped himself more or lessunconsciously in an atmosphere of delusion which rendered him incapable ofappreciating at their true value the symptoms of disorder which he developed5.- !o. &e is onl :3stified 4it P2007 or te a6o3nt act3all paid to Dr.(ontes


10/196


be such as to have created a legal obligation upon the plaintiff but such as wasreasonably necessary in view of his actual condition5Reasoning *r5 "ontes, in his testimony, spea2s in the most general terms withrespect to the times and e!tent of the services rendered9 and it is not clear thatthose services which were rendered many months, or year, after the incident had infact any necessary or legitimate relation to the in7uries received by the plaintiff5-On the obligation supposedly incurred by the plaintiff to three other physicians< .$/it does not appear that said physicians have in fact made charges for those serviceswith the intention of imposing obligations on the plaintiff to pay them9 .:/ inemploying so many physicians the plaintiff must have had in view the successfulpromotion of the issue of this lawsuit rather than the bona fide purpose of effectingthe cure of his in7uries5/. 'E%7 certificates or te 4ritten state6ents of te psicians 4ic 4erereferred to in te trial cannot be ad6itted as pri6ar eidence since it isf3nda6entall of a earsa nat3reRatio )he only legitimate use of certificates could be put, as evidence for plaintiff,was to allow the physician who issued it to refer thereto, to refresh his memoryupon details which he might have forgottenDisposition Judgment from the trial court modified by reducing the amount of therecovery to P$,$11, with legal interest from (ov5 H, $%$& .all 7udges ' & .ponentecounted/ ' concurred/

.

AR( E!" V %P% CABR D

; 9, 1003CO3O(A April

!A"#REPetition for review on certiorari of a decision of the Court of Appeals

$AC"% )omasa armientos friend, *ra5 irginia 0ao, re6uested her to find someone toreset a pair of diamond earrings into two gold rings5 armiento sent )ita Payag withthe earrings to *ingdings Jewelry hop, owned and managed by spouses 0uis and3ose Cabrido, which accepted the 7ob order for P=115 Petitioner provided $: gramsof gold to be used in crafting the pair of ring settings5 After # days, Payag deliveredto the 7ewelry shop one of the diamond earrings which was earlier appraised asworth 5## carat and almost perfect in cut and clarity5 3espondent "arilou un wenton to dismount the diamond from original settings5 Gnsuccessful, she as2ed theirgoldsmith, @enon antos, to do it5 >e removed the diamond by twisting the settingwith a pair of pliers, brea2ing the gem in the process5 Petitioner re6uired therespondents to replace the diamond with the same si?e and 6uality5 4hen theyrefused, the petitioner was forced to buy a replacement in the amount of P#1,11153ose Cabrido, manager, denied having any transaction with Payag whom she metonly after the latter came to see2 compensation for the bro2en piece of 7ewelry5

"arilou, on the other hand, admitted 2nowing Payag to avail their services andrecalled that when antos bro2e the 7ewelry, Payag turned to her for

reimbursement thin2ing she was the owner5 antos also recalled that Payagre6uested him to dismount what appeared to him as sapphire and that the stoneaccidentally bro2e5 >e denied being an employee of the Jewelry shop5 )he ")CC of

)agbilaran City rendered a decision in favor of the petitioner5 On appeal,3espondents conceded to the e!istence of an agreement for crafting a pair of goldrings mounted with diamonds but denied they had obligation to dismount thediamonds from the original setting5 Petitioner claims that dismounting the diamondsfrom the original setting was part of the obligation assumed by respondents underthe contract of service5 )he 3)C ruled in favor of the respondents5 CA affirmed the

7udgment of the 3)C5

%%#E%$5 4O( dismounting of the diamond from its original setting was part of theobligation:5 4O( respondents are liable for damages#5 4O( respondents are liable for moral damages

&ELD"# $E% Ratio )he contemporaneous and subse6uent acts of the parties reveal the scopeof obligation assumed by the 7ewelry shop to reset the pair of earrings5Reasoning "arilou e!pressed no reservation regarding the dismounting of thediamonds5 he could have instructed Payag to have the diamonds dismounted first,but instead, she readily accepted the 7ob order and charged P=115 After the newsettings were completed, she called petitioner to bring the diamond earrings to bereset5 he e!amined one of them and went on to dismount the diamond from theoriginal setting5 After failing to do the same, she delegated it to the goldsmith5>aving acted the way she did, she cannot deny that the dismounting was part ofthe shops obligation to reset the pair of earrings5 $E%Ratio )hose who, in the performance of their obligations are guilty of fraud,negligence or delay and those who in any manner contravene the tenor thereof, areliable for damages5 )he fault or negligence of the obligor consists in the Somission ofthat diligence which is re6uired by the nature of the obligation and correspondswith the circumstances of the persons, of the time and of the place5Reasoning antos acted negligently in dismounting the diamond from its originalsetting5 +nstead of using a miniature wire, which is the practice of the trade, he useda pair of pliers5 "arilou e!amined the diamond before dismounting and found thesame to be in order5 )he subse6uent brea2age could only have been caused byantos negligence in using the wrong e6uipment5 3es ipsa lo6uitur5 Facts show that"arilou, who has transacted with Payag on at least $1 occasions, and antos, whohas been accepting 7ob referrals through respondents for & mos5 now, are employedat the 7ewelry shop5 )he 7ewelry shop failed to perform its obligation with theordinary diligence re6uired by the circumstances5'# $E%Ratio "oral damages may be awarded in a breach of contract when there is proofthat defendant acted in bad faith, or was guilty of gross negligence amounting tobad faith, or in wanton disregard of his contractual obligation5Reasoning antos was a goldsmith for more than =1 years5 >e should have 2nownthat using a pair of pliers would have entailed unnecessary ris2 of brea2age5 )he


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gross negligence of their employee ma2es the respondents liable of moraldamages5Disposition Petition was granted and CA decision was reversed5 3espondents wereordered to pay P#1,111 as actual damages and P$1,111 as moral damages5

R % %" ( V CA

- ; 25, 2003 (A3; A()+AO August

!A"#REPetition for review on certiorari of a decision of the Court of Appeals

$AC"%- Atty5 Crisostomo contracted the services of Caravan )ravel and )ours +ntl toarrange and facilitate her boo2ing, tic2eting, and accommodation in a tour dubbed

Jewels of ;urope at a total cost of P=29 Crisostomo was given discount for herniece, "enor was the companys tic2eting manager- Pursuant to the contract, "enor went to her aunts house on June $:, $%%$.4ednesday/ to deliver the travel documents and plane tic2ets5 Crisostomo gave"enor the full payment5 "enor told her to be at the airport on aturday two hoursbefore her flight- 4ithout chec2ing her travel documents, Crisostomo went to (A+A on aturday5he discovered that the flight she was supposed to ta2e had already departed theprevious day5- Crisostomo called up "enor to complain5 "enor prevailed upon her aunt to ta2eanother tour ' the British Pageant5 he was as2ed anew to pay P:$2 as partialpayment and commenced the trip in July- Gpon Crisostomos return, she demanded the difference between the sum shepaid for Jewels of ;urope and the amount she owed respondent for British Pageant- Caravan )ravel refused to reimburse her saying it was non-refundable- )rial Court held that the Caravan )ravel was negligent in erroneously advisingCrisostomo of her departure date through it employee, "enor who was notpresented as a witness5 >owever, Crisostomo was guilty of contributory negligencefor not verifying the e!act date of her departure5 Accordingly, $1 of the amountwas deducted from the amount being claimed as refund- Court of Appeals also found both parties at fault but held that Crisostomo is morenegligent because as a lawyer and a well-traveled person, she should have 2nownbetter5 he was ordered to pay the Caravan )ravel the balance of British Pageantplus interest

%%#E4O( a travel agency is bound under the law to observe e!traordinary diligence inthe performance of its obligation

&ELD(O5 For reasons of public policy, a common carrier in a contract of carriage isbound by law to carry passengers as far as human care and foresight can provideusing the utmost diligence of a very cautious person and with due regard for allcircumstances5

- >owever, a travel agency is not a carrier that it is not an entity engaged in thebusiness of transporting either passengers or goods5 3espondents services as a

travel agency include procuring tic2ets and facilitating travel permits or visas andboo2ing customers for tours5 +t is thus not bound under the law to observee!traordinary diligence in the performance of its obligation

.

E"#% DEVEL P(E!" !C V CA

; 7, 1989";*+A0*;A August

!A"#REPetition for review on certiorari of the decision of the CA

$AC"%- 3espondents Ong, )eng, 0iwanag, Canlas, udario, (agbuya, were lessees ofpremises in 8uiapo, "anila, originally owned by the usana 3ealty5 )hey wereindividual, verbal leases, on a month-to-month basis5 3ental payments were madeto a collector of the usana 3ealty who went to the premises monthly5- Premises were sold to petitioner, Cetus *evelopment, in $%H=5 )he privaterespondents continued to pay monthly rentals to a collector sent by the petitionerfrom April to June, $%H=5 +n August and eptember, they failed to pay because nocollector came5- +n October, petitioner sent letters demanding they vacate the premises and paybac2 rentals5 +mmediately upon receipt of the demand letters, private respondentspaid arrearages, which were accepted sub7ect to the condition that the acceptancewas without pre7udice to the filing of an e7ectment suit5 ubse6uent monthly rentalpayments were accepted under the same condition5- For failure of the private respondents to vacate the premises as demanded in theletter, petitioner filed with the "etropolitan )rial court complaints for e7ectment5- )rial court dismissed the case, and subse6uently the 3egional )rial Court did so, asdid the CA5

%%#E%4O( there e!ists a cause of action, when the complaints for unlawful detainer werefiled considering the fact that upon demand by petitioner for payment of bac2rentals, respondents immediately tendered payment, which was accepted5

&ELD-ection :, 3oC, M0andlord to proceed against tenant only after demand5M statesthat the right to bring an action of e7ectment or unlawful detainer must be countedfrom the time the defendants failed to pay rent after the demand therefor. )hedemand re6uired parta2es of an e!tra7udicial remedy that must be pursued beforeresorting to 7udicial action so much so that when there is full compliance with thedemand, there is no need for court action5-for purposes of bringing an e7ectment suit, : re6uisites< $/ must be failure to payrentLcomply with conditions of lease, and :/ must be *;"A(* to both pay or tocomply and vacate5- in this case, no cause of action for e7ectment has accrued5 (O FA+0G3; ;) on thepart of private respondents, because upon demand, they paid5QQe!ceptions where demand is not re6uired< .a/ when obligation or law so declares9.b/ when from the nature and circumstances of obligation it can be inferred that

time is of the essence of the contract, .c/ when demand would be useless5-without such demand, effects of default do not arise5


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- the petitionerNs demand to vacate was P3;"A)G3;, an e!ercise of a non-e!istingright to rescind5-Petitioner claims that its failure to send a collector is not a valid defense becausesending a collector is not one of the obligations of the lessor under Article $&I=< but

$/ it was established that it was customary for private respondents to pay therentals through a collector, and :/ Article $:I provides that where no agreementhas been designated for the payment of rentals, the place of payment is at thedomicile of the defendants5Disposition petition for certiorari denied, CA decision affirmed5

A!" % VE!"#RA & C R(A $D! V %A!" %

; 4, 20048G+G"B+( (ovember

$AC"%, antos entura >ocorma Foundation +nc .>F+/ and ;rnesto antos e!ecuted aCompromise Agreement on October :&, $%%15 )he agreement was 7udiciallyapproved on eptember #1, $%%$5 )he agreement stipulated that $/ >F+ shallantos P$5I "illion immediately upon the e!ecution of the agreement, and thebalance of P$# "illion shall be paid within a period of not more than two years fromthe e!ecution of the agreement9 :/ +mmediately upon the e!ecution of theagreement antos shall cause the dismissal with pre7udice of Civil Cases and for theimmediate lifting of the various notices of lis pendens on the real properties9provided, however, that in the event that defendant Foundation shall sell or disposeof any of the lands previously sub7ect of lis pendens, the proceeds of any such saleshall be partially devoted to the payment of the Foundations obligations5- >F+ sold two real properties, which were previously sub7ects of lis pendens5*iscovering the disposition made by the >F+, antos sent a letter to the petitionerdemanding the payment of the remaining P$# million, which F>+ ignored5 antosapplied with the 3)C for the issuance of a writ of e!ecution of its compromise

7udgment5 )he 3)C granted the writ5 On (ovember ::, $%%=, petitioners realproperties located in "abalacat, Pampanga were auctioned5antos filed a Complaintfor *eclaratory 3elief and *amages alleging that there was delay on the part ofpetitioner in paying the balance of P$# million5 )C dismissed petition5 CA reversedand ordered >F+ to pay legal interest on the principal amount of P$# million atthe rate of $: per annum from the date of demand on October :H, $%%: up to thedate of actual payment of the whole obligation5

%%#E4O( antos is entitled to legal interest5

&ELD ;5- 4hen the petitioner failed to pay its due obligation after the demand was made, itincurred dela. +nterest as damages is generally allowed as a matter of right5antos has been deprived of funds to which he is entitled by virtue of theircompromise agreement5 )he goal of compensation re6uires that the complainant becompensated for the loss of use of those funds 5 )his compensation is in the form of

interest5, Article $$&% of the (ew Civil Code provides< )hose obliged to deliver or to do

something incur in delay from the time the obligee 7udicially or e!tra-7udiciallydemands from them the fulfillment of their obligation5- +n order for the debtor to be in default, it is necessary that the following re6uisitesbe present< .$/ that the obligation be demandable and already li6uidated9 .:/ that

the debtor delays performance9 and .#/ that the creditor re6uires the performance 7udicially or e!tra-7udicially5- )he compromise agreement as a consensual contract became binding betweenthe parties upon its e!ecution and not upon its court approval5 From the time acompromise is validly entered into, it becomes the source of the rights andobligations of the parties thereto5 )he two-year period must be counted fromOctober :&, $%%1 .date of e!ecution of the compromise agreement, not on the

7udicial approval on eptember #1, $%%$/5 4hen antos wrote a demand letter onOctober :H, $%%:, the obligation was already due and demandable5 "erefore *reH3isites present> $/ )he obligation was already due and demandable after thelapse of the two-year period from the e!ecution of the contract5 )he obligation isli6uidated because the debtor 2nows precisely how much he is to pay and when heis to pay it5 :/ Petitioner delayed in the performance5 +t was able to fully settle itsoutstanding balance only on February H, $%%I5 #/ )he demand letter sent to thepetitioner was in accordance with an e!tra-7udicial demand contemplated by law5

A%#E) V A'ALA C RP RA" !

; 19, 2004 )+(A (ovember

!A"#REPetition for 3eview on Certiorari

$AC"%,April :#, $%H$, spouses *aniel as6ue? and "a5 0uisa "5 as6ue? entered into a"emorandum of Agreement ."OA/ with AA0A Corporation with Ayala buying fromthe a?6ue? spouses, all of the latters shares of stoc2 in Conduit *evelopment, +nc5- )he main asset of Conduit was a =%5% hectare property in Ayala Alabang,

"untinlupa, which was then being developed by Conduit under a development planwhere the land was divided into illages $, : and # of the E*on icente illage5 )he development was then being underta2en for Conduit by 5P5 Construction and*evelopment Corp5-Gnder the "OA, Ayala was to develop the entire property, less what was defined asthe E3etained Area consisting of $H,#& s6uare meters5Ayala agreed to offer = lots ad7acent to the retained area for sale to the a?6ue?

spouses at the prevailing price at the time of purchase5 )he relevant provisions ofthe "OA on this point are<?.. "e B#'ER ereb co66its tat it 4ill deelop te IRe6ainingPropertJ into a first class residential s3bdiision of te sa6e class asits !e4 Alabang %3bdiision7 and tat it intends to co6plete te firstpase 3nder its a6ended deelop6ent plan 4itin tree


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Obligations and Contracts A2010 page 1*Prof. Labitag

-"e parties are agreed tat te deelop6ent plan referred to inparagrap . is not Cond3itJs deelop6ent plan7 b3t AalaJs a6endeddeelop6ent plan 4ic 4as still to be for63lated as of te ti6e of te(OA. +ile in te Cond3it plan7 te - lots to be offered for sale to te

VasH3eK %po3ses 4ere in te first pase tereof or Village 17 in teAala plan 4ic 4as for63lated a ear later7 it 4as in te tird pase7or Pase ,c.-Gnder the "OA, the as6ue? spouses made several e!press warranties, asfollows<E#5$5 )he ;00;3 shall deliver to the BG;3#5$5:5 )he true and complete list, certified by the ecretary and )reasurer of theCompany showing<A list of all persons andor entities 4it 4o6 te Co6pan as pendingcontracts7 if an.*.1.. A3dited financial state6ents of te Co6pan as at Closing date.&5 3epresentation and 4arranties by the ;00;3s"e %ELLER% :ointl and seerall represent and 4arrant to te B#'ERtat at te ti6e of te e5ec3tion of tis Agree6ent and at te Closing>/.2.*. "ere are no actions7 s3its or proceedings pending7 or to te

9no4ledge of te %ELLER%7 treatened against or affecting te %ELLER%4it respect to te %ares or te Propert; and5$5$ )he said Audited Financial tatements shall show that on the day of Closing,the Company shall own the E3emaining Property, free from all liens andencumbrances and that te Co6pan sall ae no obligation to an parte5cept for billings paable to GP Constr3ction Deelop6entCorporation and adances 6ade b Daniel VaKH3eK for 4ic B#'ERsall be responsible in accordance 4it Par. 2 of tis Agree6ent.5$5: E5cept to te e5tent reflected or resered in te A3dited $inancial%tate6ents of te Co6pan as of Closing7 and tose disclosed to B#'ER7te Co6pan as of te date tereof7 as no liabilities of an nat3re4eter accr3ed7 absol3te7 contingent or oter4ise7 including, withoutlimitation, ta! liabilities due or to become due and whether incurred in respect ofor measured in respect of the Companys income prior to Closing or arising out oftransactions or state of facts e!isting prior thereto55: %ELLER% do not 9no4 or ae no reasonable gro3nd to 9no4 of anbasis for an assertion against te Co6pan as at closing or an liabilitof an nat3re and in an a6o3nt not f3ll reflected or resered againsts3c A3dited $inancial %tate6ents referred to aboe7 and tosedisclosed to B#'ER.5&5# E5cept as oter4ise disclosed to te B#'ER in 4riting on or beforete Closing7 te Co6pan is not engaged in or a part to7 or to te bestof te 9no4ledge of te %ELLER%7 treatened 4it7 an legal action oroter proceedings before an co3rt or ad6inistratie bod7 nor do the;00;3 2now or have reasonable grounds to 2now of any basis for any suchaction or proceeding or of any governmental investigation relative to theCompany55&5= )o the 2nowledge of the ;00;3, no defa3lt or breac e5ists in ted3e perfor6ance and obserance b te Co6pan of an ter67 coenantor condition of an instr36ent or agree6ent to 4ic te co6pan is apart or b 4ic it is bo3nd7 and no condition e5ists 4ic7 4it noticeor lapse of ti6e or bot7 4ill constit3te s3c defa3lt or breac.@

-After the e!ecution of the "OA, Ayala caused the suspension of wor2 on illage $of the *on icente Pro7ect5 Ayala then received a letter from one "a!imo *el3osario of 0ancer eneral Builder Corporation informing Ayala that he wasclaiming the amount of P$,I1%,IIH5H1 as the subcontractor of 5P5 Construction5

- 5P5 Construction was not able to reach an amicable settlement with 0ancer so0ancer sued 5P5 Construction, Conduit and Ayala-5P5 Construction in turn filed a cross-claim against Ayala5-5P5 Construction and 0ancer both tried to en7oin Ayala from underta2ing thedevelopment of the property5-)he suit was terminated on February $%, $%H, when it was dismissed withpre7udice after Ayala paid both 0ancer and P Construction the total ofP=,&H&,$$#5-as6ue? spouses sent several Ereminder letters of the approaching so-calleddeadline on Ayalas obligation to sell = lots to them5->owever, no demand after April :#, $%H=, was ever made by the as6ue? spousesfor Ayala to sell the = lots5-One of the letters signed by their authori?ed agent, ;ngr5 ;duardo )urla,categorically stated that they e!pected Edevelopment of Phase $ to be completedby February $%, $%%1, three years from the settlement of the legal problems withthe previous contractor5-By early $%%1 Ayala finished the development of the vicinity of the = lots to beoffered for sale5-)he four lots were then offered to be sold to the as6ue? spouses at the prevailingprice in $%%15-)his was re7ected by the as6ue? spouses who wanted to pay at $%H= prices,thereby leading to the suit below5

)C ruled in favor or petitionersCA ruled in favor of respondents

%%#E%(rocedural 4O( the court should review the factual findings of the Court of Appeals as theyare in conflict with those of the trial court%ubsanti)e

$5 4O( AA0A Corporation is in default for failure to finish the development of thephase in 6uestion within # years:5 4O( the provisions of the "OA constitutes an option to buy for spouses as6ue?

&ELD(rocedural

;5 +t is well-settled that the 7urisdiction of this Court in cases brought to it fromthe Court of Appeals by way of petition for review under 3ule =I is limited toreviewing or revising errors of law imputed to it, its findings of fact being conclusiveon this Court as a matter of general principle5 >owever, since in the instant casethere is a conflict between the factual findings of the trial court and the appellatecourt, particularly as regards the issues of breach of warranty, obligation to developand incurrence of delay, we have to consider the evidence on record and resolvesuch factual issues as an e!ception to the general rule

%ubstanti)e


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Obligations and Contracts A2010 page 1-Prof. Labitag

$5 (O5 +n order that the debtor may be in default it is necessary that the followingre6uisites be present< .$/ that the obligation be demandable and already li6uidated9.:/ that the debtor delays performance9 and .#/ that the creditor re6uires theperformance 7udicially or e!tra7udicially5

- Gnder Article $$%# of the Civil Code, obligations for whose fulfillment a day certainhas been fi!ed shall be demandable only when that day comes5)here was no fi!eddate in the "OA, and the Edemand letters which were mere reminders were senteven before three years could pass after the signing5 ince the "OA does notspecify a period for the development of the sub7ect lots, petitioners should havepetitioned the court to fi! the period in accordance with Article $$% of the CivilCode5 As no such action was filed by petitioners, their complaint for specificperformance was premature, the obligation not being demandable at that point5Accordingly, AA0A Corporation cannot li2ewise be said to have delayedperformance of the obligation5- "oreover, a representative of the spouses even told AA0A that the date ofrec2oning shall be from the date the case with lancer was finished5:5 +t is a mere right of first refusal and not an option contract5 Although theparagraph has a definite ob7ect, i5e5, the sale of sub7ect lots, the period within whichthey will be offered for sale to petitioners and, necessarily, the price for which thesub7ect lots will be sold are not specified5 )he phrase Eat the prevailing mar2etprice at the time of the purchase connotes that there is no definite period withinwhich AA0A Corporation is bound to reserve the sub7ect lots for petitioners toe!ercise their privilege to purchase5 (either is there a fi!ed or determinable price atwhich the sub7ect lots will be offered for sale5 )he price is considered certain if itmay be determined with reference to another thing certain or if the determinationthereof is left to the 7udgment of a specified person or persons5

BELLA V $RA!C %C

; 20, 1930AA(C;TA *ecember

!A"#REAppeal from a 7udgment of the CF+ of 3+?al

$AC"%- uillermo Francisco .defendant/ purchased from the overnment on installments,lots %#-%=I of the )ala ;state in (ovaliches, Caloocan, 3i?al5- >e was behind in payment for these installments and on October #$, $%:H, hesigned a document stating that he received PI11 from Julio Abella .plaintiff/ onaccount of lots no5 %#-%=I, containing an area of ::$ hectares, at the rate of$11Lhectare, the balance of which is due on or before *ecember $I of the sameyear, e!tendible fifteen days thereafter- On (ovemer $#, $%:H, Abella made another payment of P=$I5#$, upon demandmade by Francisco- On *ecember :,$%:H, Francisco, being in Cebu, wrote a letter to 3oman"abanta, attaching a power of attorney authori?ing him to sign in behalf of thedefendant all the documents re6uired by the Bureau of 0and for the transfer of lotsto the plaintiff - +n the same letter, defendant instructed "abanta to inform the plaintiff that the

option would be considered cancelled, and to return the amount of P%$I5#$, in theevent that the plaintiff failed to pay the remainder of the selling price

- On January #, $%:%, "abanta notified the plaintiff that he had received the powerof attorney to sign the deed of conveyance of the lots to him, and that he waswilling to e!ecute the deed of sale upon payment of the balance due- )he plaintiff as2ed for a few days time, but "abanta only gave him until January I

- Plaintiff failed to pay the rest of the price on January I, but attempted to do so on January %, but "abanta refused to accept it and instead returned by chec2 the sumof P%$I5#$- Plaintiff brought an action to compel the defendant to e!ecute the deed of saleupon receipt of the balance of the price, and as2ed that he be 7udicially declaredthe owner of said lots, and that the defendant be ordered to deliver it to him- )he CF+ absolved the defendant from the complaint, and the plaintiff appealed

%%#E 4O( the time was an essential element in the contract, and therefore, thedefendant was entitled to rescind the contract for failure of plaintiff to pay the pricewithin the time specified

&ELD es5 )he defendant is entitled to resolve the contract for failure to pay the pricewithin the time specified5Reasoning +n holding that the time was an essential element in the contract, the CF+considered that the agreement in 6uestion was an option for the purchase of thelots5 )he C, however, was divided on the 6uestion of whether the agreement wasan option or a sale5 But the C ruled that regardless of whether it was an option or asale, having agreed that the selling price would be paid not later than *ecember,$%:H, and in view of the fact that the vendor e!ecuted the contract to pay off withthe proceeds thereof certain obligations which fell due in the same month of*ecember, the time fi!ed for the payment of the selling price was essential in thetransaction5

. . .

DA DE V LLAR#EL V (A! LA ( " R C !C A!D

C L(E!ARE%

; 13, 19583;; *ecember

!A"#REAppeal from a 7udgment of the CF+ of (egros Occidental

$AC"%- )his case is a petition of the 7udgment that ordered "anila "otor Co5, +nc5 to payillaruel for the lease of their building from June $, $%=: to "arch :%, $%=I as wellas for them to pay for the destruction of the property5- "anila "otor Co5, +nc5 leased the building from illaruel and entered a contract,the contract lasts for I years and that the amount of Php5 #I1 a month should bepaid5 +t is to be placed on "anila "otor Co5, +nc5 possession on the #$ st day ofOctober $%=15 )he leasing continued until the invasion in $%=$5 At this time nopayment of rental was done during the said period5 4hen the Americans liberatedthe country they too2 possession of the said property and paid for the same amount

to illaruel5 "anila "otor Co5, +nc5 wanted to resume the contract given that thecontract gives them the option to continue such lease5 illaruel however would want


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the contract rescinded and for "anila "otor Co5, +nc5 to pay for the rentals duringfrom June $, $%=: until "arch :%, $%=I5 4hile the trial was ongoing, the propertygot burned5 illaruel then sought for a supplemental complaint demandingreimbursement5 CF+ granted the petition of illaruel giving rise for this appeal5

%%#E4O( "anila "otor Co5, +nc5 is liable to pay for the rental fees at the time of the

Japanese Occupation and the destruction of property

&ELD(o5 )he occupation is a pertubacion de derecho .trespassing under color of title/and not pertubacion de hecho .mere act of trespass/5 )his is because the JapaneseOccupation was legitimate following both +nternational and *omestic law recogni?ethe use of private properties at the time of war5 Applying Art5 $I&1 the lessors areliable for it and that such occurrence resulted to the deprivation of the lessee fromthe peaceful use and en7oyment of the property leased5 )he obligation ceasedduring such deprivation5Also, mere disturbance entail that the lessee shall have a direct action against thetrespasser but the military occupation was not what the drafters had on mind for

such occupation is not preventable5 Further more, the fact that the military sei?urewas considered a fortuitous event means that the failure of one party to fulfill itscommitment entails that the other party is e!cused to do his correlativeperformance since the causa of the lease must e!ist throughout the term of thecontract5- +t is unwarranted by the "oratorium Order under ;O (o5 #:5 )he refusal to acceptplaced the lessors in default to bear supervening ris2s of accidental in7ury ordestruction5 Failure to consign does not eradicate the default of the lessors nor theris2 of loss that lay upon them5Disposition "anila "otor Co5, +nc5 is as2ed to pay only Php5 $I1 from July to(ovember $%=& and not for the petitioned amount5

E!GC V CA

; 19, 1989PA*+00A October

!A"#RE3eview on certiorari of the decision of CA5

$AC"%- 0utgarda Cifra, the owner of the premises at (o5 $&= +nt5, ov5 Pascual t5,(avotas, "etro "anila leased the said property to ;milia )engco5 )he contract wasnot in writing, hence, not recorded5- 4hile the contract of lease was still subsisting, 0utgarda Cifra transferred theownership of the property to Ben7amin Cifra5- )engco, despite her 2nowledge of this transfer, attempted to pay her rentals to theperson whom she used to pay her dues5 But that person refused to accept thepayment as she is no longer had the authority to accept payments5 )engco, on theother hand, did not give the payment to Ben7amin Cifra or consigned the amount tothe court5- )he record of the case shows that on $& eptember $%&, Ben7amin Cifra, Jr5 filedan action for umlawful detainer with the ")C of (avotas to evict the peititioner,

;milia )engco, from the said premises for her alleged failure to comply with theterms and conditions of the lease contract by failing and refusing to pay thestipulated rentals despite repeated demands5 After trial, 7udgment was renderedagainst )engco and ordered the defendant and any and all persons claiming rights

under her to vacate the premises occupied by her and to surrender possessionthereof to the plaintiff5

%%#E%$5 4O( Ben7amin Cifra, Jr5 is the owner of the leased premises:5 4O( the lessor was guilty of mora accipiendi#5 4O( laches had deprived the lessor of the right to e7ect her considering that theComplaint was filed only in eptember $%& whereas his cause of action arosesometime in February, $%= when she defaulted in the payment of rentals

&ELD$5 ;5 )he 6uestion of whether or not private respondent is the owner of theleased premises is one of fact which is within the cogni?ance of the trial courtwhose findings thereon will not be disturbed on appeal unless there is a showing

that the trial court had overloo2ed, misunderstood, or misapplied some fact orcircumstance of weight and substance that would have affected the result of thecase5:5 (O5 Gnder the circumstances, the refusal to accept that proffered rentals is notwithout 7ustification5 )he ownership of the property had been transferred by0utgarda Cifra, the original lessor, to Ben7amin Cifra and the person to whompayment was offered had no authority to accept payment5 +t should be noted thatthe contract of lease between the petitoner and 0utgarda Cifra, the former owner ofthe land, was not in writing and, hence, unrecorded5 )he Court has held that acontract of lease e!ecuted by the vendor, unless recorded, ceases to have effectwhen the property is sold, in the absence of a contrary agreement5#5 (O5 )he tenantNs mere failure to pay rent does not ipso facto ma2e unlawful hispossession of the leased premises5 +t is failure to pay rents after a demandtherefore is made that entitles the lessor to bring an action of Gnlawful *etainer,"oreover, the lessor has the privilege to waive his right to bring an action againsthis tenant and give the latter credit for the payment of the rents and allow him tocontinue indefinitely in the possession of the premises5 *uring such period, thetenant would not be in illegal possession of the premises and the landlord can notmaintain an action until after he has ta2en steps to convert the legal possessioninto an illegal possession5 Conse6uently, petitionerNs non-payment of the rentals onthe premises, notwithstanding demand made by Cifra, and her failure to avail of theremedy provided for in Article $:I& of the Civil Code, entitles private respondent toe7ect her from the premises5Disposition* )he petition is denied5

E!"RAL BA!8 $ "&E P& L PP !E% V C #R" $

APPEAL%

; 3, 1985"AA+A3 October

!A"#REPetition for certiorari to review the decision of the Court of Appeals5


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Obligations and Contracts A2010 page 1/Prof. Labitag

$AC"%- +sland avings Ban2 approved the loan application for PH1 of ulpicio )olentinowho e!ecuted a real estate mortgage over his $11 hectare land5

- )he loan called for a lump sum of PH1, repayable in semi-annual installments for# yrs, wL $: annual interest5 +t was re6uired that )olentino shall use the loansolely as additional capital to develop his other property into a subdivision5- A mere P$ partial release of the loan was made by the ban2 and )olentino andhis wife signed a promissory note for the P$ at $: annual interest payable wLin# yrs5 An advance interest was deducted fr the partial release but this pre-deducted interest was refunded to )olentino after being informed that there was nofu

oblicon labitag notes (1) (4).pdf

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