OCAMPO III. VS.

PEOPLE
G.R Nos. 156547-51. February 4, 2008

FACTS:

The Department of Budget and Management released the amount of Php 100 Million for
the support of the local government unit of the province of Tarlac. However, petitioner Ocampo,
governor of Tarlac, loaned out more than P 56.6 million in which he contracted with Lingkod
Tarlac Foundation, Inc.. thus, it was the subject of 25 criminal charges against the petitioner.

The Sandiganbayan convicted the petitioner of the crime of malversation of public funds.
However, the petitioner contended that the loan was private in character since it was a loan
contracted with the Taralc Foundation.

ISSUE:

Whether the amount loaned out was private in nature.

RULING:

Yes, the loan was private in nature because Art. 1953 of the New Civil Code provides
that “a person who receives a loan of money or any other fungible thing acquires the ownership
thereof, and is bound to pay the creditor an equal amount of the same kind and quality.”
The fact that the petitioner-Governor contracted the loan, the public fund changed its
nature to private character, thus it is not malversation which is the subject of this case, instead it
must be a simple collection of money suit against the petitioner in case of non payment .
therefore, the petitioner is acquitted for the crime of malversation.

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 Leung Ben vs. O’Brien
G.R. No. L-13602, April 6, 1918
38 Phil. 182

FACTS:

On December 12, 1917 an action was instituted in the CFI of Manila by O’Brien to
recover from Leung Ben the sum of P15, 000.00 alleged to have been lost by the plaintiff to the
defendant in a series of gambling, banking and percentage games conducted during the two or
three months prior to the institution of the suit. In his verified complaint the plaintiff asked for
an attachment, under sections 424 and 412 (1) of the Code of Civil Procedure against the
property of the defendant on the ground that the latter was about to depart from the Philippine
Island with intent to defraud his creditors. The attachment was issued and acting on the authority
thereof, the sheriff attached the sum of P15, 000.00 which had been deposited by the defendant
with the International Banking Corporation.

The defendant moved to quash the attachment; the court however, dismissed said motion.
On January 8, 1918, petitioner Leung Ben, the defendant in that action filed his petition for writ
of certiorari directed against O’Brien and the judges of CFI. The prayer is that, the honorable
James A. Ostrand be required to certify the records for review and that the order of attachment
that had been issued should be revoked and discharged with cost.

ISSUE:
The issue is whether or not the statutory obligation to restore money won at gaming is an
obligation from “contract, express or implied.”

HELD:

The duty of the defendant to refund the money which he won from the plaintiff at gaming
is not an obligation from “contract, express or implied” rather it is a duty imposed by statute.
Upon general principles, recognized both in civil and common law, money lost at gaming and
voluntarily paid by the loser to the winner cannot, in the absence of statute, be recovered in a
civil action. But Act No. 1757 of the Philippine Commission, which defines and penalizes
several forms of gambling, containing numerous provisions recognizing the right to recover
money lost in gambling or in the playing of certain games. The obligation of the defendant to
restore or refund the money which he won from the plaintiff at gaming therefore arises ex lege.

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 Arturo Pelayo vs. Marcelo Lauron
G.R. No. L-4089, January 12, 1909
12 Phil. 453

FACTS:

On or about October 13, 1906, the plaintiff Arturo Pelayo was called to the house of the
defendants, Marcelo Lauron and Juana Abella situated in San Nicolas, and that upon arrival he
was requested by them to render medical assistance to their daughter-in-law who was about to
give birth to a child. After consultation with the attending physician, Dr. Escaño, the plaintiff
found it necessary to remove the fetus by means of an operation, in which service he was
occupied until the following morning, and had visited the patient several times. The equitable
value of the services rendered by the plaintiff was P500.00, which the defendants refused to pay.
On November 23, 1906, the plaintiff filed a complaint against the defendants and prayed that the
judgment be rendered in his favor as against the defendants, or any of them, for the sum of P500
and costs, together with any other relief that may be deemed proper. In answer, the defendants
denied all allegations and alleged as a special defense, that their daughter-in-law died as a
consequence of the said childbirth, and when she was still alive she lived with her husband
independently and in a separate house and without any relation whatsoever with them, and on the
day she gave birth she was in the house of the defendants and her stay there was accidental and
due to fortuitous circumstances. Thus, the defendants prayed that they be absolved from the
complaint with costs against the plaintiff.

The plaintiff demurred the answer and that the lower court sustained the demurrer
directing the defendants to amend their answer. In compliance, the defendants amended their
answer denying each and every allegation contained in the complaint. The lower court rendered
judgment in favor of the defendants absolving them from the complaint.

ISSUE:
The issue is whether or not the parents-in-law are under any obligation to pay the fees claimed
by the plaintiff.

HELD:
The defendants were not, nor are they now, under any obligation by virtue of any legal
provision, to pay the fees claimed, nor in consequence of any contract entered into between them
and the plaintiff from which such obligation might have arisen.
The rendering of medical assistance in case of illness is comprised among the mutual
obligations to which spouses are bound by way of mutual support. When either of them by
reason of illness should be in need of medical assistance, the other is under the unavoidable
obligation to furnish the necessary services of a physician in order that the health may be
restored; the party bound to furnish such support is therefore, liable for all the expenses,
including the fees of the medical expert for his professional services. The liability arises from the
obligation, which the law has expressly established, between married couples. It is therefore the
husband of the patient who is bound to pay for the services of the plaintiff. The fact that it was

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not the husband who called the plaintiff and requested the medical assistance for his wife is no
bar to his fulfillment of such obligation, as the defendants, in view of the imminent danger to
which the life of the patient was at that moment exposed, considered that the medical assistance
was urgently needed. Therefore, plaintiff should direct his action against the husband of the
patient, and not against her parents-in-law.

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 Nikko Hotel Manila Garden vs. Roberto Reyes
G.R. No. 154259, February 28, 2005
452 SCRA 532

FACTS:

Respondent herein Roberto Reyes, more popularly known by the screen name “Amay
Bisaya,” alleged that while he was having coffee at the lobby of Hotel Nikko, he was spotted by
Dr. Violeta Filart, his friend of several years, invited him to join her in a party at the hotel’s
penthouse in celebration of the natal day of the hotel’s manager, Mr. Masakazu Tsuruoka. Mr.
Reyes asked if she could vouch for him for whom she replied: “of course.” Reyes then went up
with the party of Dr. Filart carrying the basket of fruits which was the latter’s present for the
celebrant. At the penthouse, they first had their picture taken with the celebrant after which
Reyes sat with the party of Dr. Filart. After a couple of hours, when the buffet dinner was ready,
Mr. Reyes lined-up at the buffet table but, to his great shock, shame and embarrassment, he was
stopped by Ruby Lim, the Executive Secretary of Hotel Nikko. Reyes alleged that Ruby Lim, in
a loud voice and within the presence and hearing of the other guests who were making a queue at
the buffet table, told him to leave the party because he was not invited. Mr. Reyes tried to
explain that he was invited by Dr. Filart but the latter, who was within hearing distance,
completely ignored him thus adding to his shame and humiliation. Afterwards, while he was still
recovering from the traumatic experience, a Makati policeman approached and asked him to step
out of the hotel. Like a common criminal, he was escorted out of the party by the policeman.
Claiming damages, Mr. Reyes asked for One Million Pesos actual damages, One Million Pesos
moral and/or exemplary damages and Two Hundred Thousand Pesos attorney’s fees.

Petitioners Lim and Hotel Nikko contend that pursuant to the doctrine of volenti non fit
injuria, they cannot be made liable for damages as respondent Reyes assumed the risk of being
asked to leave (and being embarrassed and humiliated in the process) as he was a “gate-crasher.”

ISSUE:
Whether or not Hotel Nikko and Ruby Lim are jointly and severally liable with Dr. Filart
for damages under Articles 19 and 21 of the Civil Code.

HELD:
The doctrine of volenti non fit injuria (“to which a person assents is not esteemed in law
as injury”) refers to self-inflicted injury or to the consent to injury which precludes the recovery
of damages by one who has knowingly and voluntarily exposed himself to danger, even if he is
not negligent in doing so.

The Supreme Court agreed with the lower court’s ruling that Ms. Lim did not abuse her
right to ask Mr. Reyes to leave the party as she talked to him politely and discreetly. Considering
the closeness of defendant Lim to plaintiff when the request for the latter to leave the party was
made such that they nearly kissed each other, the request was meant to be heard by him only and
there could have been no intention on her part to cause embarrassment to him. In the absence of
any proof of motive on the part of Ms. Lim to humiliate Mr. Reyes and expose him to ridicule
and shame, it is highly unlikely that she would shout at him from a very close distance. Ms. Lim

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having been in the hotel business for twenty years wherein being polite and discreet are virtues to
be emulated, the testimony of Mr. Reyes that she acted to the contrary does not inspire belief and
is indeed incredible. Ms. Lim, not having abused her right to ask Mr. Reyes to leave the party to
which he was not invited, cannot be made liable to pay for damages under Articles 19 and 21 of
the Civil Code. Necessarily, neither can her employer, Hotel Nikko, be held liable as its liability
springs from that of its employee. Had respondent simply left the party as requested, there was
no need for the police to take him out.

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 St. Mary’s Academy vs. William Carpitanos and Lucia S. Carpitanos
G.R. No. 143363, February 6, 2002
426 Phil 878

FACTS:

From 13 to 20 February 1995, St. Mary’s Academy of Dipolog City conducted an

enrollment drive for the school year 1995-1996. A facet of the enrollment campaign was the
visitation of schools from where prospective enrollees were studying. As a student of St. Mary’s
Academy, Sherwin Carpitanos was part of the campaigning group. Accordingly, on the fateful
day, Sherwin, along with other high school students were riding in a Mitsubishi jeep owned by
defendant Vivencio Villanueva on their way to Larayan Elementary School, Larayan, Dapitan
City. The jeep was driven by James Daniel II then 15 years old and a student of the same school.
Allegedly, the latter drove the jeep in a reckless manner and as a result the jeep turned
turtle.Sherwin Carpitanos died as a result of the injuries he sustained from the accident.

ISSUE:

Whether the petitioner is liable for damages for the death of Sherwin Carpitanos.

HELD:
For petitioner to be liable, there must be a finding that the act or omission considered as
negligent was the proximate cause of the injury caused because the negligence must have a
causal connection to the accident. In this case, the respondents failed to show that the negligence
of petitioner was the proximate cause of the death of the victim.

Respondents Daniel spouses and Villanueva admitted that the immediate cause of the
accident was not the negligence of petitioner or the reckless driving of James Daniel II, but the
detachment of the steering wheel guide of the jeep. Hence, liability for the accident, whether
caused by the negligence of the minor driver or mechanical detachment of the steering wheel
guide of the jeep, must be pinned on the minor’s parents primarily. The negligence of petitioner
St. Mary’s Academy was only a remote cause of the accident. Between the remote cause and the
injury, there intervened the negligence of the minor’s parents or the detachment of the steering
wheel guide of the jeep. Hence, with the overwhelming evidence presented by petitioner and the
respondent Daniel spouses that the accident occurred because of the detachment of the steering
wheel guide of the jeep, it is not the school, but the registered owner of the vehicle who shall be
held responsible for damages for the death of Sherwin Carpitanos.

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 SPS. GUANIO v. MAKATI SHANGRI-LA HOTEL
GR No. 190601, February 7 2011

FACTS:

For their wedding reception on July 28, 2001, spouses Luigi M. Guanio and Anna
Hernandez-Guanio (petitioners) booked at the Shangri-la Hotel Makati.Prior to the event, Makati
Shangri-La Hotel & Resort, Inc. (respondent) scheduled an initial and final food tasting. The
parties eventually agreed on a final price ─ P1,150 per person.On July 27, 2001, the parties
finalized and signed their contract.

Petitioners claim that during the reception, respondent’s representatives, Catering Director
Bea Marquez and Sales Manager Tessa Alvarez, did not show up despite their assurance that they
would; their guests complained of the delay in the service of the dinner; certain items listed in
the published menu were unavailable; the hotel’s waiters were rude and unapologetic when
confronted about the delay; and despite Alvarez’s promise that there would be no charge for the
extension of the reception beyond 12:00 midnight, they were billed and paid P8,000 per hour for
the three-hour extension of the event up to 4:00 A.M. the next day. They further claim that they
brought wine and liquor in accordance with their open bar arrangement, but these were not served
to the guests who were forced to pay for their drinks.

Petitioners thus sent a letter-complaint to the Makati Shangri-la Hotel and Resort, Inc.and
received an apologetic reply from Krister Svensson, the hotel’s Executive Assistant Manager in
charge of Food and Beverage. They nevertheless filed a complaint for breach of contract and
damages before the RTC of Makati City. Respondents averred that it was the increase in number
of the unexpected guests that led to the shortage claimed by the petitioners.

The RTC rendered a decision in favor of the plaintiffs and was reversed by the CA, upon
appeal, the latter holding that the proximate cause of petitioners’ injury was an unexpected increase
in their guests.

ISSUE:

Whether or not the CA correctly held that the proximate cause of petitioners’ injury was
an unexpected increase in their guests.

HELD:

The Court finds that since petitioners’ complaint arose from a contract, the doctrine of
proximate cause finds no application to it, the latter applicable only to actions for quasi-delicts,
not in actions involving breach of contract.

Breach of contract is defined as the failure without legal reason to comply with the terms
of a contract. It is also defined as the failure, without legal excuse, to perform any promise which
forms the whole or part of the contract. The appellate court, and even the trial court, observed that

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petitioners were remiss in their obligation to inform respondent of the change in the expected
number of guests. The observation is reflected in the records of the case. Petitioners’ failure to
discharge such obligation thus excused respondent from liability for “any damage or
inconvenience” occasioned thereby.

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 TSPIC CORPORATION VS. TSPIC EMPLOYEES UNION
G.R No. 163419. February 13, 2008

FACTS:

TSPI Corporation entered into a Collective Bargaining Agreement with the corporation
Union for the increase of salary for the latter’s members for the year 2000 to 2002 starting from
January 2000. thus, the increased in salary was materialized on January 1, 2000. However, on
October 6, 2000, the Regional Tripartite Wage and production Board raised daily minimum wage
from P 223.50 to P 250.00 starting November 1, 2000. Conformably, the wages of the 17
probationary employees were increased to P250.00 and became regular employees therefore
receiving another 10% increase in salary. In January 2001, TSPIC implemented the new wage
rates as mandated by the CBA. As a result, the nine employees who were senior to the 17 recently
regularized employees, received less wages. On January 19, 2001, TSPIC’s HRD notified the 24
employees who are private respondents, that due to an error in the automated payroll system, they
were overpaid and the overpayment would be deducted from their salaries starting February 2001.
The Union on the other hand, asserted that there was no error and the deduction of the alleged
overpayment constituted diminution of pay.

ISSUE:

Whether the alleged overpayment constitutes diminution of pay as alleged by the Union.

RULING:

Yes, because it is considered that Collective Bargaining Agreement entered into by unions
and their employers are binding upon the parties and be acted in strict compliance therewith. Thus,
the CBA in this case is the law between the employers and their employees.

Therefore, there was no overpayment when there was an increase of salary for the members
of the union simultaneous with the increasing of minimum wage for workers in the National
Capital Region. The CBA should be followed thus, the senior employees who were first promoted
as regular employees shall be entitled for the increase in their salaries and the same with lower
rank workers.

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 Regino vs. Pangasinan Colleges of Science and Technology
G.R. No. 156109
November 8, 2004

FACTS:

Petitioner Khristine Rea M. Regino was a first year computer science student of
Pangasinan Colleges of Science and Technology (PCST). Reared in a poor family, Regino went
to college mainly through the financial support of her relatives. She enrolled Logic and Statistics
subjects under Rachelle Gamurot and Elissa Baladad, respectively as teachers.

In February 2002, PCST held a fund raising campaign dubbed “The Rave Party and
Dance Revolution” the proceeds which were to go to the construction of the school’s tennis and
volleyball courts. Each student was required to pay for two tickets at the price of P100.00 each.
The project was allegedly implemented by recompensing students who purchased tickets with
additional points in their test scores; those who refused to pay were denied the opportunity to
take the final examinations.

Financially strapped and prohibited by her religion from attending dance parties and
celebration, Regino refused to pay tickets. On March 14 and 15, 2002, the scheduled dates of
examinations in Logics and Statistics, the teachers allegedly disallowed her from taking the tests.
Petitioner then filed as pauper litigant, a complaint for damages against PCST. She prayed for
P500,000.00 as nominal; P500,000.00 as moral and at least P1,000,000.00 as exemplary
damages, P250,000.00 as actual damages & cost of litigation and attorney’s fees.
The Regional Trial Court dismissed the complaint for lack of merit. It ruled that Commission on
Higher Education, not the court, has jurisdiction over the controversy.

ISSUES:

Whether or not court has jurisdiction over the controversy.

Whether or not there was a breach of contract and liability of tort.

HELD:

The doctrine of exhaustion of administrative remedies is basic. Court for reasons of law,
comity and convenience should not entertain suits unless the available administrative remedies
have first been resorted to and the proper authorities have been given the appropriate opportunity
to act and correct their alleged errors. Exhaustion of administrative remedies is applicable when
there is a competence on the part of the administrative bodies to act upon the matter complained
of.
The terms of the school-student contract are defined at the moment of its inception-upon
enrolment of the student.

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 PCST imposed the assailed revenue-raising measure belatedly in the middle of the
semester, It exacted the dance party fee as a condition for students in taking the final
examinations and ultimately for recognition of their ability to finish a course. The fee, however,
was not part of the school-student contract entered into at the start of the school year.

Wherefore, the petition is hereby granted, and the assailed orders reversed. The trial
court is directed to reinstate the complaint and with all deliberate speed, to continue the
proceedings in Civil Case No. U-7541. No costs.

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 PSBA vs. Court of Appeals
G.R. No. 84698, February 4, 1992

FACTS:

A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while
on the second-floor premises of the Philippine School of Business Administration (PSBA)
prompted the parents of the deceased to file suit in the Regional Trial Court of Manila for
damages against the said PSBA and its corporate officers. At the time of his death, Carlitos was
enrolled in the third year commerce course at the PSBA. It was established that his assailants
were not members of the school's academic community but were elements from outside the
school. Substantially, the plaintiffs (now private respondents) sought to adjudge them liable for
the victim's untimely demise due to their alleged negligence, recklessness and lack of security
precautions, means and methods before, during and after the attack on the victim.
Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that since they are
presumably sued under Article 2180 of the Civil Code, the complaint states no cause of action
against them, as jurisprudence on the subject is to the effect that academic institutions, such as
the PSBA, are beyond the ambit of the rule in the afore-stated article.
The respondent trial court, however, overruled petitioners’ contention and thru an order dated 8
December 1987, denied their motion to dismiss. Said decision of the respondent appellate court
was primarily anchored on the law of quasi-delicts, as enunciated in Articles 2176 and 2180 of
the Civil Code.

Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in
loco parentis. It had been stressed that the law (Article 2180) plainly provides that the damage
should have been caused or inflicted by pupils or students of the educational institution sought to
be held liable for the acts of its pupils or students while in its custody. However, this material
situation does not exist in the present case for the assailants of Carlitos were not students of the
PSBA, for whose acts the school could be made liable.

ISSUE:

Whether or not the appellate court's failure to consider such material facts means the
exculpation of the petitioners from liability.

HELD:

It does not necessarily follow. When an academic institution accepts students for
enrollment, there is established a contract between them, resulting in bilateral obligations which
both parties are bound to comply with. For its part, the school undertakes to provide the student
with an education that would presumably suffice to equip him with the necessary tools and skills
to pursue higher education or a profession. On the other hand, the student covenants to abide by
the school's academic requirements and observe its rules and regulations.Institutions of learning
must also meet the implicit or "built-in" obligation of providing their students with an
atmosphere that promotes or assists in attaining its primary undertaking of imparting knowledge.

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Certainly, no student can absorb the intricacies of physics or higher mathematics or explore the
realm of the arts and other sciences where there looms around the school premises a constant
threat to life and limb. Necessarily, the school must ensure that adequate steps are taken to
maintain peace and order within the campus premises and to prevent the breakdown thereof.
Because the circumstances of the present case evince a contractual relation between the PSBA
and Carlitos Bautista, the rules on quasi-delict do not apply.
However, there is, as yet, no finding that the contract between the school and Bautista had been
breached thru the former's negligence in providing proper security measures. Even if there be a
finding of negligence, the same could give rise generally to a breach of contractual obligation
only. Using the test of Cangco, supra, the negligence of the school would not be relevant absent a
contract. In fact, that negligence becomes material only because of the contractual relation
between PSBA and Bautista. In other words, a contractual relation is a condition sine qua non to
the school's liability. The negligence of the school cannot exist independently of the contract,
unless the negligence occurs under the circumstances set out in Article 21 of the Civil Code.

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 Ayala Corporation vs. Rosa Diana Realty
G.R. No. 134284, December 1, 2000
346 SCRA 663

FACTS:

Petitioner Ayala Corporation (Ayala) was the registered owner of a parcel of land located
in Alfaro Street, Salcedo Village, Makati City with an area of 840 square meters more or less and
covered by TCT no. 233435 of the Register of Deeds of Rizal.

On April 20, 1976, Ayala sold the lot to Manuel Sy married to Vilma Po and Sy Ka Kieng
married to Rosa Chan. The Deed of Sale executed between Ayala and the buyers contained Special
Conditions of Sale and Deed Restrictions. Manuel Sy and Sy Ka Kieng failed to construct the
building in violation of the Special Conditions of Sale. Notwithstanding the violation, Manuel Sy
and Sy Ka Kieng were able to sell the lot to respondent Rosa-Diana Realty and Development Corp.
with Ayala’s approval. As a consideration for Ayala to release the certificate of title of the subject
property, Rosa-Diana, executed an undertaking promising to abide by said Special Condition of
Sale executed between Ayala and the original vendees. Upon the submission of the undertaking,
together with the building plans for a condominium project, known as the Peak, Ayala released
title to the lot, thereby enabling Rosa-Diana to register the Deed of Sale on its favor and obtain
certificate of Title in its name.

Thereafter, Rosa-Diana submitted to the building official of Makati another set of building
plans which were substantially different from those that it earlier submitted to Ayala for approval.
During the construction of Rosa-Diana’s condominium project, Ayala filed an action with the RTC
of Makati for specific performance with application for a writ of preliminary injunction seeking to
compel the latter to comply with the contractual obligations under the Deed of Restriction
annotated on the title as well as with the building plans it submitted to the latter. In the alternative,
Ayala prayed for rescission of the sale of the subject lot to Rosa-Diana Realty. The lower court
denied Ayala’s prayer for injunctive relief; thus, enabling Rosa-Diana to complete the construction
of the building. Ayala tried to cause the annotation a notice of lis pendens on Rosa-Diana’s title
but the Register of Deed of Makati refused registration on the ground that the case pending before
the trial court being an action for specific performance and or rescission is an action in personam
which does not involve the title, use or possession of the property. The Land Registration
Authority reversed the ruling of the Register of Deeds. The decision of the LRA, however, was
reversed by the CA.

ISSUE:

The issue is whether or not respondent Rosa-Diana has the obligation to enforce the Deed
of Restrictions contained in the contract it entered with Ayala.

HELD:

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 Contractual obligations between parties have the force of law between them and absent any
allegation that the same are contrary to law, morals, good customs, public order or public policy,
they must be complied with in good faith. Hence, Article 1159 of the new Civil Code provides
“obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith.

Hence, respondent Rosa-Diana has the obligation to enforce the Deed of Restrictions
contained in the contract it entered with Ayala.

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 Bricktzwn Development vs. Amor Tierra Development
G.R. No. 112182, December 12, 1994
239 SCRA 126

FACTS:

On 31 March 1981, petitioner Bricktown Development Corporation executed two contracts

to sell in favor of petitioner Tierra Corp. covering a total of 96 residential lots situated at the
Multinational Village Subdivision, La Huerta, Parañaque, Metro Manila. The total price of
P21,639,875.00 was stipulated to be paid by private respondent in such amount and maturity dates,
as follows; P2,200,000.00 on March 31, 1981, P3, 209, 965.75 on 30 June 1981, P4, 729, 906.25
on 31 December 1981, and the balance of P11, 500,000.00 to be paid by means of an assumption
by private respondent of petitioner’s corporation’s mortgage liability to the Philippine Saving
Bank or, alternatively, to be made payable in cash. On even date 31 March 1981, the parties
executed a supplemental agreement providing that private respondent would additionally pay to
petitioner the amount of P55, 364.68 or 21% interest on the balance of downpayment for the period
from 31 March to 30 June 1981 and of P390, 367.37 representing interest paid by petitioner
corporation to the Philippine Savings Bank in updating the bank loan for the period from 1
February to 31 March 1981.

On 12 October 1981, Petitioner Corporation sent notice of cancellation of contract to

private respondent on account of the latter’s continued failure to pay the installment due 30 June
1981 and interest on the unpaid balance of the stipulated initial payment.

On 26 September 1983, private respondent demanded the refund of its various payment to
petitioner amounting to P2, 445, 497.71. However, petitioner did not heed the demand, so private
respondent filed an action with the court a quo.

The lower court ruled in favor of private respondent and it was affirmed in toto by the
appellate court.

ISSUE:

The issue is whether or not the contracts to sell were validly rescinded or cancelled by
Petitioner Corporation.

HELD:

The contracts to sell were validly rescinded by Petitioner Corporation. In fine, while we
must conclude that petitioner corporation still acted within its legal right to declare the contracts
to sell rescinded or cancelled, considering, nevertheless, the peculiar circumstances found to be
extant by the trial court, confirmed by the Court of Appeals, it would be unconscionable to likewise
sanction the forfeiture by petitioner corporation of payments made to it by private respondent.

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Indeed, the Court has intimated that the relationship between parties in any contract must always
be characterized and punctuated by good faith and fair dealing. Judging from what the court below
have said, petitioners did fall well behind that standard. The Court does not find it equitable to
adjudge any interest payment by petitioners on the amount to be thus refunded computed from
judicial demand, for indeed, private respondent should not be allowed to totally free itself from its
own breach.

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 ANTONIO LOCSIN II VS. MEKENI FOOD CORPORATION
G.R. No. 192105
December 09, 2013

FACTS:

In February 2004, respondent offered petitioner the position of Regional Sales Manager to
oversee Mekeni’s National Capital Region Supermarket/Food Service and South Luzon
operations. In addition to a compensation and benefit package, Mekeni offered petitioner a car
plan, under which one-half of the cost of the vehicle is to be paid by the company and the other
half to be deducted from petitioner’s salary. Mekeni’s offer was contained in an Offer Sheet which
was presented to petitioner. To be able to effectively cover his appointed sales territory, Mekeni
furnished petitioner with a used Honda Civic car valued at P280,000.00, which used to be the
service vehicle of petitioner’s immediate supervisor. Petitioner paid for his 50% share through
salary deductions of P5,000.00 each month. Subsequently, Locsin resigned effective February 25,
2006. By then, a total of P112,500.00 had been deducted from his monthly salary and applied as
part of the employee’s share in the car plan. In his resignation letter, petitioner made an offer to
purchase his service vehicle by paying the outstanding balance thereon. The parties negotiated, but
could not agree on the terms of the proposed purchase. Petitioner thus returned the vehicle to
Mekeni on May 2, 2006. Petitioner made personal and written follow-ups regarding his unpaid
salaries, commissions, benefits, and offer to purchase his service vehicle. Mekeni replied that the
company car plan benefit applied only to employees who have been with the company for five
years; for this reason, the balance that petitioner should pay on his service vehicle stood at
P116,380.00 if he opts to purchase the same.

ISSUE:

Whether or not the car plan privilege is part of the compensation package offered to
petitioner at the inception of his employment

Held:

There is no evidence to suggest that if petitioner failed to completely cover one-half of the
cost of the vehicle, then all the deductions from his salary going to the cost of the vehicle will be
treated as rentals for his use thereof while working with Mekeni, and shall not be refunded. Indeed,
there is no such stipulation or arrangement between them. Indeed, the Court cannot allow that
payments made on the car plan should be forfeited by Mekeni and treated simply as rentals for
petitioner’s use of the company service vehicle. Nor may they be retained by it as purported loan
payments, as it would have this Court believe. In the first place, there is precisely no stipulation to
such effect in their agreement. Secondly, it may not be said that the car plan arrangement between
the parties was a benefit that the petitioner enjoyed; on the contrary, it was an absolute necessity
in Mekeni’s business operations, which benefited it to the fullest extent: without the service
vehicle, petitioner would have been unable to rapidly cover the vast sales territory assigned to him,
and sales or marketing of Mekeni’s products could not have been booked or made fast enough to
move Mekeni’s inventory. Any benefit or privilege enjoyed by petitioner from using the service
vehicle was merely incidental and insignificant, because for the most part the vehicle was under

19 | P a g e
Mekeni’s control and supervision. Free and complete disposal is given to the petitioner only after
the vehicle’s cost is covered or paid in full. Until then, the vehicle remains at the beck and call of
Mekeni.

20 | P a g e
ARTURO SARTE FLORES VS. SPOUSES ENRICO LINDO, JR. AND EDNA C. LINDO
G.R. No. 183984
April 13, 2011

FACTS:

In October 1995, Edna Lindo obtained a loan from Arturo Flores amounting to P400,000
payable on December 1, 1995 with 3% compounded monthly interest and 3% surcharge in case of
late payment. To secure the loan, Edna executed a deed of real estate mortgage on a property which
is however part of the conjugal property. Only Edna signed the deed. But in November 1995,
Enrico executed a special power of attorney authorizing Edna to mortgage the property. Edna was
not able to pay the loan despite repeated demands from Flores. Flores then filed an action to
foreclose the mortgage. The trial court, RTC Manila, Branch 33, ruled that the action for
foreclosure cannot prosper because it appears that there was no valid mortgage between Edna and
Flores. Edna mortgaged the property without the consent of her husband and the special power of
attorney executed by Enrico a month after the execution of the deed did not cure the defect. The
trial court however ruled that Flores can instead file a personal action against Edna. Eventually,
Flores filed a suit for collection of sum of money against Edna and Enrico, raffled to RTC Manila,
Branch 42. The Lindo spouses filed a motion to dismiss on the ground of res judicata. The trial
court denied the motion. The spouses then filed a petition for certiorari with the Court of Appeals.
The CA ruled in favor of the spouses. It ruled that when Flores filed an action for the foreclosure
of the mortgage, he had abandoned the remedy of filing a personal action to collect the
indebtedness. These remedies are mutually exclusive.

ISSUE:

Whether or not the Court of Appeals committed a reversible error in dismissing the
complaint for collection of sum of money on the ground of multiplicity of suits.

Held:

Yes. It is true that as a rule, a mortgagee-creditor has a single cause of action against a
mortgagor-debtor, that is, to recover the debt; and that he has the option of either filing a personal
action for collection of sum of money or instituting a real action to foreclose on the mortgage
security. These remedies are indeed mutually exclusive. However, in this case, the Supreme Court
made a pro hac vice which allows Flores to recover via a personal action despite his prior filing of
a real action to recover the indebtedness. This procedural rule cannot be outweighed by the rule
on unjust enrichment. Here, Edna admitted her liability of indebtedness. Further, the ruling of the
Manila RTC Branch 33 is erroneous when it ruled that the mortgage between Edna and Flores is
invalid. It is true that a disposition of a conjugal property by one spouse without the consent of the
other spouse is void. However, under the second paragraph of Article 124 of the Family Code: “In
the event that one spouse is incapacitated or otherwise unable to participate in the administration
of the conjugal properties, the other spouse may assume sole powers of administration. These
powers do not include disposition or encumbrance without authority of the court or the written
consent of the other spouse. In the absence of such authority or consent the disposition or
encumbrance shall be void. However, the transaction shall be construed as a continuing offer on

21 | P a g e
the part of the consenting spouse and the third person, and may be perfected as a binding contract
upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn
by either or both offerors.” Thus, it is clear, the mortgage was void at the outset but it was ratified
when a month later, Enrico executed a special power of attorney authorizing Edna to mortgage the
subject property.

22 | P a g e
 SHINRYO COMPANY, INC. VS. RRN INCORPORATED
G.R. No. 172525
October 20, 2010

FACTS:

Petitioner Shinryo Company, Inc. is a domestic corporation organized under Philippine

laws. Private respondent RRN Incorporated is likewise a domestic corporation organized under
Philippine laws. Respondent filed a claim for arbitration against petitioner before Construction
Industry Arbitration Commission (CIAC) for recovery of unpaid account which consists of unpaid
portions of the sub-contract, variations and unused materials in the total sum of P5,275,184.17 and
legal interest in the amount of P442,014.73. Petitioner filed a counterclaim for overpayment in the
amount of P2,512,997.96. It was shown that petitioner and respondent executed an Agreement and
Conditions of Sub-contract hereafter Agreement signed on June 11, 1996 and June 14, 1996,
respectively. Respondent signified its willingness to accept and perform for petitioner in any of its
projects, a part or the whole of the works more particularly described in Conditions of Sub-
Contract and other Sub-contract documents. On June 11, 2002, the parties executed a Supply of
Manpower, Tools/Equipment, Consumables for the Electrical Works-Power and Equipment
Supply, Bus Duct Installation for the Phillip Morris Greenfield Project covered by Purchase Order
Nos. 4501200300-000274 and 4501200300-000275 amounting to P15,724,000.00 and
P9,276,000.00 respectively, or a total amount of P25,000,000.00. The parties also agreed that
respondent will perform variation orders in the Project. In connection with the Project, petitioner
supplied manpower chargeable against respondent. Respondent was not able to finish the entire
works with petitioner due to financial difficulties. Petitioner paid respondent a total amount of
P26,547,624.76. On June 25, 2005, respondent, through its former counsel sent a letter to petitioner
demanding for the payment of its unpaid balance amounting to P5,275,184.17. Petitioner claimed
material back charges in the amount of P4,063,633.43. On September 26, 2003, respondent only
acknowledged P2,371,895.33 as material back charges.

ISSUE:

Whether or not unjust enrichment was committed by the respondent.

Held:

No. Petitioner's reliance on the principle of unjust enrichment is misplaced. Unjust

enrichment claims do not lie simply because one party benefits from the efforts or obligations of
others, but instead it must be shown that a party was unjustly enriched in the sense that the term
unjustly could mean illegally or unlawfully. In order that accion in rem verso may prosper, the
essential elements must be present: (1) that the defendant has been enriched, (2) that the plaintiff
has suffered a loss, (3) that the enrichment of the defendant is without just or legal ground, and (4)
that the plaintiff has no other action based on contract, quasi-contract, crime or quasi-delict. An
accion in rem verso is considered merely an auxiliary action, available only when there is no other
remedy on contract, quasi-contract, crime, and quasi-delict. If there is an obtainable action under
any other institution of positive law, that action must be resorted to, and the principle of accion in
rem verso will not lie. As found by both the CIAC and affirmed by the CA, petitioner failed to

23 | P a g e
prove that respondent's free use of the man lift was without legal ground based on the provisions
of their contract. Thus, the third requisite is missing. In addition, petitioner's claim is based on
contract, hence, the fourth requisite is also absent. Clearly, the principle of unjust enrichment is
not applicable in this case.

24 | P a g e
 TITAN-IKEDA CONSTRUCTION AND DEVELOPMENT CORPORATION VS.
PRIMETOWN PROPERTY GROUP, INC.
GR No. 158678
February 12, 2008

FACTS:

In 1992, respondent Primetown Property Group, Inc. awarded the contract for the structural
works of its 32-storey Makati Prime Tower (MPT) to petitioner Titan-Ikeda Construction and
Development Corporation. The parties formalized their agreement in a construction contract dated
February 4, 1993. Upon the completion of MPT's structural works, respondent awarded the
P130,000,000 contract for the tower's architectural works (project) to petitioner. Thus, on January
31, 1994, the parties executed a supplemental agreement. Petitioner started working on the project
in February 1994. On June 30, 1994, respondent executed a deed of sale (covering 114
condominium units and 20 parking slots of the MPT collectively valued by the parties at
P112,416,716.88) in favor of petitioner pursuant to the "full-swapping" payment provision of the
supplemental agreement. In September 1995, respondent engaged the services of Integratech, Inc.
(ITI), an engineering consultancy firm, to evaluate the progress of the project. In its September 7,
1995 report, ITI estimated that petitioner should have accomplished 48.71% of the project as of
the October 12, 1995 takeover date. Meanwhile, petitioner and respondent were discussing the
possibility of the latter’s take-over of the project’s supervision. Despite ongoing negotiations,
respondent did not obtain petitioner’s consent in hiring ITI as the project’s construction manager.
On October 12, 1995, petitioner sought to confirm respondent's plan to take over the project.
Records showed that respondent did not merely take over the supervision of the project but took
full control thereof. After demands to respondent fell into deaf ears, petitioner filed a case against
respondent at the HLURB and afterwards, respondent filed a collection of sum of money against
petitioner at the Regional Trial Court.

ISSUE:

Whether or not the appellate court erred in giving weight to ITI’s report solely
commissioned by respondent, disregarding industry practice.

Held:

A contract is a meeting of the minds between two persons whereby one binds himself,
with respect to the other, to give something or to render some service. This case involved two
contracts entered into by the parties with regard to the project. The parties first entered into a
contract for a piece of work when they executed the supplemental agreement. Petitioner as
contractor bound itself to execute the project for respondent, the owner/developer, in consideration
of a price certain (P130,000,000). The supplemental agreement was reciprocal in nature because
the obligation of respondent to pay the entire contract price depended on the obligation of
petitioner to complete the project (and vice versa). Thereafter, the parties entered into a second
contract. They agreed to extinguish the supplemental agreement as evidenced by the October 12,
1995 letter-agreement which was duly acknowledged by their respective representatives. Because
the parties agreed to extinguish the supplemental agreement, they were no longer required to fully

25 | P a g e
perform their respective obligations. Petitioner was relieved of its obligation to complete the
project while respondent was freed of its obligation to pay the entire contract price. However,
respondent, by executing the June 30, 1994 deed of absolute sale, was deemed to have paid
P112,416,716.88. Nevertheless, because petitioner applied part of what it received to respondent’s
outstanding liabilities, it admitted overpayment. One who receives payment by mistake in good
faith is, as a general rule, only liable to return the thing delivered. If he benefited therefrom, he is
also liable for the impairment or loss of the thing delivered and its accessories and accessions. If
he sold the thing delivered, he should either deliver the proceeds of the sale or assign the action to
collect to the other party. Mora or delay is the failure to perform the obligation in due time because
of dolo (malice) or culpa (negligence). A debtor is deemed to have violated his obligation to the
creditor from the time the latter makes a demand. Once the creditor makes a demand, the debtor
incurs mora or delay. Respondent never sent petitioner a written demand asking it to accelerate
work on the project and reduce, if not eliminate, slippage. If delay had truly been the reason why
respondent took over the project, it would have sent a written demand as required by the
construction contract.

26 | P a g e
PADCOM CONDOMINIUM CORPORATION V. ORTIGAS CENTER ASSOCIATION,
INC.,
G.R. No. 146807
May 9, 2002

FACTS:

Petitioner Padcom Condominium Corporation (PADCOM) owns and manages the Padilla
Office Condominium Building (PADCOM building). The land on which the building stands was
originally acquired from the Ortigas & Company, Limited Partnership, by Tierra Development
Corporation (TDC) under a Deed of Sale with a condition that the transferee and its successor-in-
interest must become members of an association for realty owners and long-term lessees in the
area later known as the Ortigas Center. Subsequently, the said lot, together with the improvements
thereon, was conveyed by TDC in favour of PADCOM in a Deed of Transfer.

Thereafter, respondent Ortigas Center Association, Inc. (ASSOCIATION) was organized to

advance the interests and promote the general welfare of the real estate owners and long-term
lessees of the lots in the Ortigas Center and sought the collection of membership dues from
PADCOM. In view of PADCOM'S failure and refusal to pay its arrears in monthly dues, the
Association filed a complaint for collection of sum of money before the trial court, but the same
was dismissed. On appeal, the Court of Appeals reversed and set aside the trial court's dismissal.
Hence, this petition.

ISSUE:

Whether or not PADCOM is unjustly enriched by the improvements made by the

Association, thus requiring the former to pay dues to the latter.

RULING:

After a careful examination of the records of this case, the Court sees no reason to disturb
the assailed decision. The petition should be denied.
Evidently, it was agreed by the parties that dues shall be collected from an automatic member and
such fees or assessments shall be a lien on the property. This stipulation was likewise annotated at
the back of Transfer Certificate of Title No. 457308 issued to TDC. As emphasized earlier, the
provision on automatic membership was annotated in the Certificate of Title and made a condition
in the Deed of Transfer in favour of PADCOM. Consequently, it is bound by and must comply
with the covenant. Moreover, Article 1311 of the Civil Code provides that contracts take effect
between the parties, their assigns and heirs. Since PADCOM is the successor-in-interest of TDC,
it follows that the stipulation on automatic membership with the Association is also binding on the
former.

As lot owner, PADCOM is a regular member of the Association. No application for membership
is necessary. If at all, acceptance by the Board of Directors is a ministerial function considering
that PADCOM is deemed to be a regular member upon the acquisition of the lot pursuant to the

27 | P a g e
automatic membership clause annotated in the Certificate of Title of the property and the Deed of
Transfer.
Neither are we convinced by PADCOMs contention that the automatic membership clause is a
violation of its freedom of association. Having ruled that PADCOM is a member of the
Association, it is obligated to pay its dues incidental thereto. Article 1159 of the Civil Code
mandates:
Art. 1159. Obligations arising from contracts have the force of law between the contracting parties
and should be complied with in good faith.
Assuming that PADCOM is not a member of the Association, it cannot evade payment without
violating the equitable principles underlying quasi-contracts.
Generally, it may be said that a quasi-contract is based on the presumed will or intent of the obligor
dictated by equity and by the principles of absolute justice. Examples of these principles are: (1)
it is presumed that a person agrees to that which will benefit him; (2) nobody wants to enrich
himself unjustly at the expense of another; or (3) one must do unto others what he would want
others to do unto him under the same circumstances.As resident and lot owner in the Ortigas area,
PADCOM was definitely benefited by the Associations acts and activities to promote the interests
and welfare of those who acquire property therein or benefit from the acts or activities of the
Association.

28 | P a g e
 Reynaldo Bermudez vs. Hon. Judge A. Melencio-Herrera
G.R. No. L-32055, February 26, 1988
158 SCRA 168

FACTS:

A cargo truck driven by Domingo Pontino and owned by Cordova Ng Sun Kwan bumped
a jeep on which Rogelio, a six-year old son of plaintiff-appellants, was riding. The boy sustained
injuries which caused his death. As a result, a criminal case for Homicide through Reckless
Imprudence was filed against Domingo Pontino by the Manila City Fiscal’s Office. Plaintiff-
appellants filed in the said criminal case “A Reservation to File Separate Civil Action.”

Subsequently, the plaintiff-appellants filed a civil case for damages with the Court of
First Instance of Manila. Finding that the plaintiffs instituted the action “on the assumption that
defendant Pontino’s negligence in the accident constituted a quasi-delict,” the trial court stated
that the plaintiffs had already elected to treat the accident as a “crime” by reserving in the
criminal case the right to file a separate civil action. That being so, the trial court decided to
order the dismissal of the complaint against defendant Cordova Ng Sun Kwan and to suspend
the hearing of the case against Domingo Pontino until after the criminal case for Homicide
Through Reckless Imprudence is finally terminated. From said order, plaintiffs filed the present
appeal.

ISSUE:
Whether or not the plaintiff-appellants had already elected to treat the accident as a
“crime” by reserving in the criminal case the right to file a separate civil action.

HELD:

According to the Supreme Court, in case of negligence, the injured party or his heirs has
a right to choose between an action to enforce civil liability arising from crime under Article 100
of the Revised Penal Code and an action for quasi-delict under Article 2176-2194 of the Civil
Code. If the party chooses the latter, he may hold the employer solidarily liable for the negligent
act of his employee, subject to the employer’s defense of exercise of the diligence of a good
father of the family.

In the case at bar, the action filed by appellant was an action for damages based on quasi-
delict. The fact that appellants reserved their right in the criminal case to file an independent civil
action did not preclude them from choosing to file a civil action for quasi-delict.

29 | P a g e
 People of the Philippines vs. Relova
G.R. No. L-45129, March 6, 1987
148 SCRA 293

FACTS:

On February 1, 1975, members of the Batangas City Police together with personnel of the
Batangas Electric Light System, equipped with a search warrant, searched the premises of the
Opulencia Carpena Ice Plant and Cold Storage owned and operated by private respondent
Manuel Opulencia. The police discovered that electric wiring devices and contraptions had been
installed without the necessary authority from the city government. These electric devices were
designed purposely to lower or decrease the readings of electric consumption in the electric
meter of the said electric and cold storage ice plant.

Consequently, an Assistant City Fiscal of Batangas filed an information against

Opulencia for violation of Ordinance No. 1 Series of 1974, Batangas City. However,
subsequently, the accused filed a motion to dismiss the information upon the grounds that the
crime there charged had already prescribed.

Fourteen (14) days later, the Acting City Fiscal of Batangas filed before the Court of First
Instance of Batangas another information against Opulencia this time for theft of electric power
under Article 308 in relation to Article 309 of the Revised Penal Code. However, the case was
likewise dismissed on the ground of the constitutional right against double jeopardy. As regards
the civil aspect of the case, no right to file a separate civil action was filed by the Batangas City
Electric Light System.

ISSUE:

Whether or not the extinction of criminal liability whether by prescription or by the bar of
double jeopardy carries with it the extinction of civil liability based on the offense charged.

HELD:

In the present case, accused Opulencia freely admitted during the police investigation
having stolen electric current through the installation and use of unauthorized electric
connections or devices. While the accused pleaded not guilty before the City Court of Batangas
City, he did not deny having appropriated electric power. However, there is no evidence in the
record as to the amount or value of the electric power appropriated by the accused. Accordingly,
the civil action which has not been waived impliedly or expressly should be remanded to the
Court of First Instance of Batangas City for reception of evidence on the amount or value of the
electric power appropriated and converted by Manuel Opulencio and rendition of judgment
conformably with such evidence

30 | P a g e
 MANANTAN V. CA
G.R. No. 107125
January 29, 2001

FACTS:

In the evening of September 25, 1982, at the National Highway of Malvar, Santiago,
Isabela, George Manantan was driving a Toyota car going home. At that time, he was with Fiscal
Ambrocio, Miguel Tabangin and Ruben Nicolas. Suddenly, a jeepney, coming from the opposite
direction hit the driver side of the car, driven by Manantan. Consequently, Manantan, Ambrocio
and Tabangin were injured while Nicolas died. Trial followed.
The trial court decided in favor of the accused. However, the Court of Appeals modified the
decision of the lower court, in that defendant-appellee is held civilly liable for his negligent and
reckless act of driving his car which was the proximate cause of the vehicular accident and
sentenced to indemnify plaintiff-appellants in the amount of P174, 400.00 for the death of Ruben
Nicolas.

ISSUE:

Whether or not petitioner’s acquittal did extinguished his civil liability.

RULING:

The court of appeals in determining whether Article 29 of the Civil Code applied was not
precluded by the petitioners’ acquittal, from looking into the question of petitioners’ negligence
or reckless imprudence.
What was elevated to the Court of Appeals by private respondents was the civil aspect of
Criminal Case No. 066. Petitioner was not charged anew with a second criminal offense identical
to the first offense. Therefore, there was no second jeopardy to speak of. The decision in
Criminal Case No 066 supports the conclusions of the appellate court that the acquittal was
based on reasonable doubt; hence, the civil liability was not extinguished by his discharge. It
clearly shows that petitioner’s acquittal was predicated on the conclusion that his guilt had not
been established with moral certainty.
At the time of the filing of the information in 1983, the implied institution of civil actions with
criminal actions was governed by Rule III, Section 1 of the 1964 Rules of Court. Where the civil
action is impliedly instituted together with the criminal action, the actual damages claimed by the
offended parties, as in this case, are not included in the computation of the filing fees. Filing fees
are to be paid only if other items of damages such as moral, nominal, temperate or exemplary
damages are alleged in the complaint or information, or if they are not so alleged, shall constitute
a first lien on the judgment. The filing fees are deemed paid from the filing of the criminal
complaint or information.

31 | P a g e
 PEOPLE V. BAYOTAS
G.R. No. 136818
December 19, 2000

FACTS:

This is an appeal from the decision, dated December 1, 1998, of the Regional Trial Court,
Branch 70, Malabon, Metro Manila, finding accused-appellant Edwin Bayotas y Imperio guilty
beyond reasonable doubt of the murder of Ricardo Cao and sentencing him to pay the latter’s
heirs P50,000.00 as civil indemnity, P60,000.00 as actual damages, and the costs.
Accused-appellant pleaded not guilty but the trial court found him guilty beyond reasonable
doubt of the crime of murder qualified by treachery and hereby sentences him to suffer the
penalty of Reclusion Perpetua. Likewise, the accused is hereby ordered to pay the heirs of
Ricardo Cao the amount of P50, 000.00 as civil indemnity for the death of the said victim and
P60, 000.00 as actual damages plus cost of the suit.

ISSUE:

Whether or not the death of the accused pending appeal of his conviction extinguishes his
civil liability.

RULING:

In People v. Castillo, The Court resolved this issue stating Article 89 of the Revised
Penal Code which states that criminal liability is totally extinguished by the death of the convict.
As to the personal penalties and as to the pecuniary penalties, liability therefore is extinguished
only when the death of the offender occurs before final judgment.
Section 7, Rule 116 of the Rules of Court states that the judgment in a criminal case becomes
final after the lapse of the period for perfecting an appeal or when the sentence has been partially
or totally satisfied or served, or the defendant has expressly waived in writing his right to appeal.
Since the death of the accused occurred while his appeal is pending, the decision has not yet
become final and executory; thus, his civil liability together with his criminal liability is
extinguished. However, if the civil obligation arises from other sources of obligation other than
the crime complained of, the civil liability of the accused survived in spite of his death pending
his appeal. A preponderance of evidence is sufficient to prove his civil liability.

32 | P a g e
 BARREDO V. GARCIA AND ALMARIO
G.R. No. L-48006
July 8, 1942
FACTS:

At about 1:30am on May 3, 1936, Fontanilla’s taxi collided with a “kalesa” thereby
killing the 16 year old Faustino Garcia. Faustino’s parents filed a criminal suit against Fontanilla
and reserved their right to file a separate civil suit. Fontanilla was eventually convicted. After the
criminal suit, Garcia filed a civil suit against Barredo – the owner of the taxi (employer of
Fontanilla). The suit was based on Article 1903 of the civil code (negligence of employers in the
selection of their employees). Barredo assailed the suit arguing that his liability is only
subsidiary and that the separate civil suit should have been filed against Fontanilla primarily and
not him.

ISSUE:

Whether or not Barredo is just subsidiarily liable.

RULING:

A quasi-delict or culpa aquiliana is a separate and distinct legal institution under the
Civil Code with substantivity of its own, and individuality that is entirely apart and independent
from a delict or crime. Upon this principle, the primary and direct responsibility of employers
may be safely anchored. To hold that there is only one way to make the employer’s liability
effective, and that is, to sue the driver and exhaust his properties is tantamount to compelling the
plaintiff to follow a devious and cumbersome method of obtaining relief. True, there is such a
remedy under our laws, but there is also an expeditious way, which is based on the primary and
direct responsibility of the employer under Article 1903 of the Civil Code. At this juncture, it
should be said that the primary and direct responsibility of employers and presumed negligence
are principles calculated to protect society. Workmen and employees should be carefully chosen
and supervised in order to avoid injury to the public. It is the masters or employers who
principally reap the profits resulting from the services of their servants. It is but right that they
should guarantee the latter’s careful conduct for the personnel and patrimonial safety of the
others.

33 | P a g e
 DEL CARMEN V. BACOY
GR No. 173870
April 25, 2012

FACTS:

Spouses Monsalud and their daughter died from being run over by a jeepney driven by a
certain Allan Maglasang. The jeepney was owned by Oscar del Carmen Jr. Allan was declared
guilty beyond reasonable doubt in a criminal case while the father ofthe late Mrs. Monsalud,
Geronimo Bacou filed an independent civil action against the former in behalf of the minor
children left by the Monsalud spouses. Del Carmen Jr. claimed he was a victim as well as Allan
stole the jeep and was not hired as a driver by the former; he was a conductor (and had been
released from employment lately) and it was the brother of Allan, Rodrigo who was hired as a
driver. Del Carmen Jr. filed a car napping case against Allan but was dismissed by the court for
insufficient evidence. RTC held del Carmen Jr. subsidiary liable and held the doctrine of res ipsa
loquitur. The CA adjudged Oscar Jr. liable to the heirs of the victims based on the principle that
the registered owner of a vehicle is directly and primarily responsible for the injuries or death of
third parties caused by the operation of such vehicle. It disbelieved Oscar Jr.’s defense that the
jeep was stolen not only because the car napping case filed against Allan and his companions
was dismissed but also because, given the circumstances, Oscar Jr. is deemed to have given
Allan the implied permission to use the subject vehicle because the brothers were assigned to
said jeep. After a day’s work, the jeepney would be parked beside the brothers’ house and not
returned to del Carmen’s residence; the jeep could easily be started even without the use of an
ignition key; the said parking area was not fenced or secured to prevent the unauthorized use of
the vehicle which can be started even without the ignition key.

ISSUE:

Whether or not whether there was an employer-employee relationship between Oscar Jr.
and Allan at the time of the accident, thus holding Oscar Jr. liable.

RULING:

Under the doctrine of res ipsa loquitur, “where the thing that caused the injury
complained of is shown to be under the management of the defendant or his servants; and the
accident, in the ordinary course of things, would not happen if those who had management or
control used proper care, it affords reasonable evidence – in the absence of a sufficient,
reasonable and logical explanation by defendant – that the accident arose from or was caused by
the defendant’s want of care. The aforementioned requisites having been met, there now arises a
presumption of negligence which he could have overcome by evidence that he exercised due care
and diligence in preventing strangers from using his jeep. Unfortunately, he failed to do so. The
operator on record of a vehicle is primarily responsible to third persons for the deaths or injuries
consequent to its operation, regardless of whether the employee drove the registered owner’s
vehicle in connection with his employment. Absent the circumstance of unauthorized use or that
the subject vehicle was stolen which are valid defenses available to a registered owner; he cannot
escape liability for quasi-delict resulting from his jeep’s use.

34 | P a g e
 PHILIPPINE HAWK CORP. v. TAN LEE
G.R. No. 166869
February 16, 2010

FACTS:

On March 15, 2005, respondent Vivian Tan Lee filed before the RTC of Quezon City a
Complaint against petitioner Philippine Hawk Corporation and defendant Margarito Avila for
damages based on quasi-delict, arising from a vehicular accident that occurred on March 17,
1991 in Barangay Buensoceso, Gumaca, Quezon. The accident resulted in the death of
respondent's husband, Silvino Tan, and caused respondent physical injuries. The accident
involved a motorcycle, a passenger jeep, and a bus with Body No. 119. The bus was owned by
petitioner Philippine Hawk Corporation, and was then being driven by Margarito Avila.

On June 18, 1992, respondent filed an Amended Complaint, in her own behalf and in
behalf of her children, in the civil case for damages against petitioner. Respondent sought the
payment of indemnity for the death of Silvino Tan, moral and exemplary damages, funeral and
interment expenses, medical and hospitalization expenses, the cost of the motorcycle's repair,
attorney's fees, and other just and equitable reliefs.

In its Answer, petitioner denied liability for the vehicular accident, alleging that the
immediate and proximate cause of the accident was the recklessness or lack of caution of Silvino
Tan. Petitioner asserted that it exercised the diligence of a good father of the family in the
selection and supervision of its employees, including Margarito Avila.

The trial court rendered judgment against petitioner and defendant Margarito Avila,
wherein it adjudged guilty of simple negligence. It further held petitioner bus company liable for
failing to exercise the diligence of a good father of the family in the selection and supervision of
Avila, having failed to sufficiently inculcate in him discipline and correct behavior on the road.
The CA affirmed the decision of the trial court with modification in the award of damages.

ISSUE:

Whether or not petitioner is liable to respondent for damages.

HELD:

YES. The Court upholds the finding of the trial court and the Court of Appeals that
petitioner is liable to respondent, since it failed to exercise the diligence of a good father of the
family in the selection and supervision of its bus driver, Margarito Avila, for having failed to
sufficiently inculcate in him discipline and correct behavior on the road. Indeed, petitioner's tests
were concentrated on the ability to drive and physical fitness to do so. It also did not know that
Avila had been previously involved in sideswiping incidents. The Court also affirmed the CA's

35 | P a g e
decision in awarding civil indemnity for the death of respondent's husband, temperate damages,
and moral damages for the physical injuries sustained by respondent in addition to the damages
granted by the trial court to respondent.

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 DY TEBAN VS. LIBERTY FOREST
G.R No. 161803
February 4, 2008

FACTS:

A Prime Mover Trailer suffered a tire blow out during the night of its travel at a national
highway. The trailer was owned by the respondent Liberty Forest. The driver allegedly put earl
warning devices but the only evidence being witnessed was a banana trunks and candles. Since
the car was placed at the right wing of the road, thus it cause the swerving of a Nissan van owned
by the petitioner when a passenger bus was coming in between the trailer. The Nissan van owner
claimed for damages against the respondent. The trial court found that the proximate cause of the
three –way accident is the negligence and carelessness of driver of the respondent . However
reversed the decision of the trial court.

ISSUE:

Whether there was negligence on the part of the respondent.

RULING:

Yes. There was negligence on the part of the respondent when the latter failed to put and
used an early warning device because it was found out that there was no early warning device
being prescribed by law that was used by the driver in order to warn incoming vehicle.
Furthermore, the proximate cause of the accident was due to the position of the trailer where it
covered a cemented part of the road, thus confused and made trick way for other vehicles to pass
by. Thus the respondent is declared liable due to violation of road rules and regulations.

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 SAFEGUARD SECURITY VS. TANGCO
G.R No. 165732
December 14, 2006

FACTS:

The victim Evangeline Tangco was depositor of Ecology Bank. She was also a licensed-
fire arm holder, thus during the incident, she was entering the bank to renew her time deposit and
along with her was her firearm. Suddenly, the security guard of the bank, upon knowing that the
victim carries a firearm, the security guard shot the victim causing the latter’s instant death. The
heirs of the victim filed a criminal case against security guard and an action against Safeguard
Security for failure to observe diligence of a goof father implied upon the act of its agent.

ISSUE:
Whether Safeguard Security can be held liable for the acts of its agent.

RULING:

Yes. The law presumes that any injury committed either by fault or omission of an
employee reflects the negligence of the employer. In quasi-delicts cases, in order to overcome
this presumption, the employer must prove that there was no negligence on his part in the
supervision of his employees.

It was declared that in the selection of employees and agents, employers are required to
examine them as to their qualifications, experience and service records. Thus, due diligence on
the supervision and operation of employees includes the formulation of suitable rules and
regulations for the guidance of employees and the issuance of proper instructions intended for
the protection of the public and persons with whom the employer has relations through his
employees. Thus, in this case, Safeguard Security committed negligence in identifying the
qualifications and ability of its agents.

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 VILLANUEVA VS. DOMINGO
G.R No. 144274
September 20, 2004

FACTS:

In 1991, a collision was made by a green Mitsubishi lancer owned by Ocfemia against a
silver Mitsubishi lancer driven by Leandro Domingo and owned by petitioner Priscilla Domingo.
The incident caused the car of Domingo bumped another two parked vehicles. A charged was
filed against Ocfemia and the owner Villanueva. Villanueva claimed that he must not be held
liable for the incident because he is no longer the owner of the car, that it was already swapped to
another car . however, the trial court ordered the petitioner to pay the damages incurred by the
silver Mitsubishi lancer car.

ISSUE:
Whether the owner Villanueva be held liable for the mishap.

RULING:

Under the Motor Vehicle law, it was declared that the registered owner of any vehicle is
primary land directly liable for any injury it incurs while it is being operated. Thus, even the
petitioner claimed that he was no longer the present owner of the car, still the registry was under
his name, thus it is presumed that he still possesses the car and that the damages caused by the
car be charge against him being the registered owner. The primary function of Motor vehicle
registration is to identify the owner so that if any accident happens, or that any damage or injury
is caused by the vehicle, responsibility therefore can be fixed on a definite individual, the
registered owner.

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 CALALAS VS. COURT OF APPEALS
G.R No. 122039
May 31, 2000

FACTS:

Eliza Sunga was a passenger of a jeepney owned and operated by the petitioner Calalas.
Private respondent Sunga sat in the rear protion of the jeepney where the conductor gave Sunga
an extension seat. When the jeep stopped, Sunga gave way to a passenger going outside the jeep.
However, an Isuzu Truck driven by Verene and owned by Salva, accidentally hit Sunga causing
the latter to suffer physical injuries where the attending physician ordered a three months of rest.
Sunga filed an action for damages against the petitioner for breach of contract of common
carriage by the petitioner.

On the other hand, the petitioner Calalas filed an action against Salva, being the owner of
the truck. The lower court ruled in favor of ther petitioner, thus the truck owner is liable for the
damage to the jeep of the petitioner.

ISSUE:
Whether the petitionerr is liable.

RULING:

Yes. The petitioner is liable for the injury suffered by Sunga. Under Article 1756
of the New Civil Code, it provides that common carriers are presumed to have been at fault or to
have acted negligently unless they prove that they observed extraordinary diligence as defined in
Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier the
burden of proof.

In this case, the law presumes that any injury suffered by a passenger of the jeep
is deemed to be due to the negligence of the driver. This is a case on Culpa Contractual where
there was pre-existing obligations and that the fault is incidental to the performance of the
obligation. Thus, it was clearly observed that the petitioner has negligence in the conduct of his
duty when he allowed Sunga to seat in the rear portion of the jeep which is prone to accident.

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 PICART V. SMITH
G.R. No. L-12219
March 15, 1918

FACTS:

In December 1912, Amado Picart was riding his horse and while they were on a 75 meter
long bridge, he saw Frank Smith Jr.’s car approaching. Smith blew his horn thrice while he was
still at a distance away because Picart and his horse were on Smith’s lane. But Picart did not
move his horse to the other lane, instead he moved his horse closer to the railing. Smith
continued driving towards Picart without slowing down and when he was already so near the
horse he swerved to the other lane. But the horse got scared so it turned its body across the
bridge; the horse struck the car and its limb got broken. Picart suffered injuries which required
several days of medical attention while the horse eventually died.

ISSUE:

Whether Smith was guilty of negligence such as gives rise to a civil obligation to repair
the damage done.

RULING:

Yes. Picart was also negligent for planting himself on the wrong side of the road. But
Smith’s negligence succeeded that of Picart. Smith saw at a distance when he blew his horn that
Picart and his horse did not move to the other lane so he should have steered his car to the other
lane at that point instead of swerving at the last minute. He therefore had the last clear chance to
avoid the unfortunate incident. When Smith’s car has approached the horse at such proximity it
left no chance for Picart extricate himself and vigilance on his part will not avert injury. Picart
can therefore recover damages from Smith but such should be proportioned by reason of his
contributory negligence.

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 DURBAN APARTMENTS CORPORATION HOTEL V. PIONEER INSURANCE AND
SURETY CORPORATION
G.R. No. 179419
January 12, 2011

FACTS:

On July 22, 2003, Pioneer Insurance and Surety Corp, by right of subrogation, filed with
the RTC of Makati a Complaint for Recovery of Damages against Durban ApartmentsCorp (or
City Garden Hotel) and defendant before the RTC, Vicente Justimbaste. Respondent averred that
it is the insurer for loss and damage of Jeffrey S. See’s 2001 Suzuki Grand Vitara in the amount
of P1, 175,000.00. On April 30, 2002, See arrived and checked in at the City Garden Hotel
before midnight, and its parking attendant, Justimbaste, got the key to said Vitara from See to
park it. On May 1, 2002, at about 1:00 am, See received a phone call where the Hotel Chief
Security Officer informed him that his Vitara was carnapped while it was parked unattended at
the parking area of Equitable PCI Bank. See went to see the Security Officer, thereafter reported
the incident to the Operations Division of the Makati City Police Anti-Carnapping Unit, and a
flash alarm was issued. The police investigated Hotel Security Officer, Ernesto T. Horlador, Jr.
and Justimbaste. See gave his Sinumpaang Salaysay to the police investigator, and filed a
Complaint Sheet with the PNP Traffic Management Group in Camp Crame. It paid the P1,
163,250.00 money claim of See and mortgagee ABN AMRO Savings Bank, Inc. as indemnity
for the loss of the Vitara.

ISSUE:

Whether or not Durban Apartments is liable for damages

HELD:

Article 1962, in relation to Article 1998, of the Civil Code defines a contract of deposit
and a necessary deposit made by persons in hotels or inns:
Art. 1962. A deposit is constituted from the moment a person receives a thing belonging to
another, with the obligation of safely keeping it and returning the same. If the safekeeping of the
thing delivered is not the principal purpose of the contract, there is no deposit but some other
contract.
Art. 1998. The deposit of effects made by travellers in hotels or inns shall also be regarded as
necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided
that notice was given to them, or to their employees, of the effects brought by the guests and that,
on the part of the latter, they take the precautions which said hotel-keepers or their substitutes
advised relative to the care and vigilance of their effects.

Plainly, from the facts found by the lower courts, the insured See deposited his vehicle for
safekeeping with petitioner, through the latter’s employee, Justimbaste. In turn, Justimbaste
issued a claim stub to See. Thus, the contract of deposit was perfected from Sees delivery, when
he handed over to Justimbaste the keys to his vehicle, which Justimbaste received with the

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obligation of safely keeping and returning it. Ultimately, petitioner is liable for the loss of Sees
vehicle.

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 JOSE V. LAGON V. HOOVEN COMALCO INDUSTRIES, INC.
G.R. No. 135657
January 17, 2001

FACTS:

Sometime in April 1981, Lagon, a businessman and HOOVEN entered into two
contracts, whereby for a total consideration of P104,870, HOOVEN agreed to sell and install
various aluminum materials in Lagon’s commercial building in Tacurong, Sultan Kudarat. On 24
February 1987, HOOVEN filed an action against Lagon claiming that the latter failed to pay his
due despite HOOVEN’s performance of its obligation. Lagon, in his answer, denied liability and
averred that HOOVEN was the party guilty of breach of contract by failing to deliver and install
some of the materials specified in the proposals; that as a consequence he was compelled to
procure the undelivered materials from other sources; that as regards the materials duly delivered
and installed by HOOVEN, they were fully paid.

ISSUE:

Whether or not all the materials specified in the contracts had been delivered and
installed by respondent in petitioners commercial building

HELD:

HOOVEN's bad faith lies not so much on its breach of contract - as there was no showing
that its failure to comply with its part of the bargain was motivated by ill will or done with
fraudulent intent - but rather on its appalling temerity to sue petitioner for payment of an alleged
unpaid balance of the purchase price notwithstanding knowledge of its failure to make complete
delivery and installation of all the materials under their contracts. Although petitioner was found
to be liable to respondent to the extent of P6,377.66, petitioner's right to withhold full payment of
the purchase price prior to the delivery and installation of all the merchandise cannot be denied
since under the contracts the balance of the purchase price became due and demandable only
upon the completion of the project. Consequently, the resulting social humiliation and damage to
petitioner's reputation as a respected businessman in the community, occasioned by the filing of
this suit provide sufficient grounds for the award of P50,000.00 as moral damages. On the part of
Lagon, he is ordered by the court to pay HOOVEN the amount corresponding to the value of the
materials admittedly delivered to him.

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 SPOUSES LORENZO G. FRANCISCO AND LORENZA D. FRANCISCO V.
HONORABLE COURT OF APPEALS AND BIENVENIDO C. MERCADO
G.R. No. 118749
April 25, 2003

FACTS:

On 3 February 1984, the spouses Lorenzo and Lorenza Francisco and Engineer
Bienvenido C. Mercado entered into a Contract of Development for the development into a
subdivision of several parcels of land in Pampanga. Under the Contract, respondent agreed to
undertake at his expense the development work for the Franda Village Subdivision. Respondent
committed to complete the construction within 27 months. Respondent also advanced
P200,000.00 for the initial expenses of the development work. In return, respondent would
receive 50% of the total gross sales of the subdivision lots and other income of the subdivision.
Respondent also enjoyed the exclusive and irrevocable authority to manage, control and
supervise the sales of the lots within the subdivision. The Contract required respondent to submit
to petitioners, within the first 15 days of every month, a report on payments collected from lot
buyers with copies of all the contracts to sell. However, respondent failed to submit the monthly
report. On 27 February 1987, respondent filed with the trial court an action to rescind the
Contract with a prayer for damages. Petitioners countered that respondent breached the Contract
by failing to finish the subdivision within the 27 months agreed upon, and therefore respondent
was in delay.

ISSUE:

Whether or not respondent Mercado incurred delay

HELD:

The petitioners breached the Contract by: (1) hiring Rosales to do development work on
the subdivision within the 27-month period exclusively granted to respondent; (2) interfering
with the latter's development work; and (3) stopping respondent from managing the sale of lots
and collection of payments. Because petitioners were the first to breach the Contract and even
interfered with the development work, respondent did not incur delay even if he completed only
28% of the development work. Further, the HSRC extended the Contract up to July 1987. Since
the Contract had not expired at the time respondent filed the action for rescission, petitioners'
defense that respondent did not finish the development work on time was without basis. The law
provides that delay may exist when the obligor fails to fulfill his obligation within the time
expressly stipulated. In this case, the HSRC extended the period for respondent to finish the
development work until 30 July 1987. Respondent did not incur delay since the period granted
him to fulfill his obligation had not expired at the time respondent filed the action for rescission
on 27 February 1987. Moreover, since petitioners stopped respondent from selling lots and
collecting payments from lot buyers, which was the primary source of development funds, they
in effect, rendered respondent incapable, or at least made it difficult for him, to develop the

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subdivision within the allotted period. In reciprocal obligations, neither party incurs in delay if
the other does not comply or is not ready to comply with what is incumbent upon him. It is only
when one of the parties fulfills his obligation that delay by the other begins.

46 | P a g e
 JACINTO TANGUILIG DOING BUSINESS UNDER THE NAME AND STYLE J.M.T.
ENGINEERING AND GENERAL MERCHANDISING V. COURT OF APPEALS AND
VICENTE HERCE JR.,
G.R. No. 117190
January 2, 1997

FACTS:

Petitioner Jacinto M. Tanguilig proposed to respondent Vicente Herce Jr. to construct a

windmillsystemforhim. Aftersomenegotiationstheyagreedontheconstructionofthe windmill for a
consideration of P60,000.00. On 14 March 1988, due to the refusal and failure of respondent to
pay the balance, petitioner filed a complaint to collect the amount. Respondent denied the claim
saying that he had already paid this amount to the San Pedro General Merchandising Inc.
(SPGMI) which constructed the deep well to which the windmill system was to be connected.
According to respondent, since the deep well formed part of the system the payment he tendered
to SPGMI should be credited to his account by petitioner. Moreover, assuming that he owed
petitioner a balance of P15,000.00, this should be offset by the defects in the windmill system
which caused the structure to collapse after a strong wind hit their place. Petitioner denied that
the construction of a deep well was included in the agreement to build the windmill system, for
the contract price of P60,000.00 was solely for the windmill assembly and its installation. He
also disowned any obligation to repair or reconstruct the system since its collapse was
attributable to a typhoon, a force majeure, which relieved him of any liability.

ISSUES:

(1) Whether or not the payment for the deep well is part of the contract price
(2) Whether or not Tanguilig is liable to reconstruct the damaged windmill considering
that its collapse is due to a typhoon.

HELD:

There is absolutely no mention in the two documents that a deep well pump is a
component of the proposed windmill system. The contract prices fixed in both proposals cover
only the features specifically described therein and no other. Respondent is directed to pay
petitioner Tanguilig the balance of P15,000 plus legal interest. Regarding the second issue, the
Supreme Court has consistently held that in order for a party to claim exemption from liability by
reason of fortuitous event under Art. 1174 of the Civil Code four (4) requisites must concur: (a)
the cause of the breach of the obligation must be independent of the will of the debtor; (b) the
event must be either unforeseeable or unavoidable; (c) the event must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner; and, (d) the debtor must be
free from any participation in or aggravation of the injury to the creditor. Petitioner failed to
show that the collapse of the windmill was due solely to a fortuitous event. Petitioner merely
stated that there was a "strong wind." But a strong wind in this case cannot be fortuitous. On the
contrary, a strong wind should be present in places where windmills are constructed. Petitioner is

47 | P a g e
ordered to "reconstruct subject defective windmill system, in accordance with the one-year
guaranty".
DR. FERNANDO PERIQUET, JR. V. HONORABLE FOURTH CIVIL CASES
DIVISION OF THE INTERMEDIATE APPELLATE COURT AND THE HEIRS OF
THE LATE FELIX R. FRANCISCO
G.R. No. L-69996
December 5, 1994

FACTS:

Spouses Fernando Periquet and Petra Francisco were left childless after the death of their
only child, Elvira, so they took in a son out of wedlock of Marta Francisco-Reyes, sister of Petra.
Though he was not legally adopted, the boy was given the name Fernando Periquet, Jr. and was
reared to manhood by the spouses Periquet. On March 20, 1966, Fernando Periquet died. When
Petra died, she was survived by her siblings, nieces and nephews and by the petitioner. But a few
days before her death, Petra asked her lawyer to prepare her last will and testament. However,
she died before she could sign it. In the said will, Petra left her estate to petitioner, Fernando
Periquet, Jr. and provided for certain legacies to her other heirs. Felix Franciso, brother of Petra,
assigned his hereditary rights to the petitioner. However, later on, he filed an action for
annulment of the Assignment of Hereditary Rights claiming gross misrepresentation and fraud,
grave abuse of confidence, mistake and undue influence, and lack of cause and/or consideration
in the execution of the challenged deed of assignment.

ISSUE:

Whether or not the Assignment of Hereditary Rights is tainted with fraud

HELD:

The kind of fraud that will vitiate a contract refers to those insidious words or
machinations resorted to by one of the contracting parties to induce the other to enter into a
contract which without them he would not have agreed to. In the case at bench, no such fraud
was employed by herein petitioner. Resultantly, the assignment of hereditary rights executed by
Felix Francisco in favor of herein petitioner is valid and effective. Felix Francisco could not be
considered to have been deceived into signing the subject deed of assignment for the following
reasons: The assignment was executed and signed freely and voluntarily by Felix Francisco in
order to honor, respect and give full effect to the last wishes of his deceased sister, Petra. The
same was read by him and was further explained by Atty. Diosdado Guytingco. Furthermore,
witnesses for petitioner, who also served as witnesses in the execution and signing of the deed of
assignment, declared that Felix Francisco was neither forced nor intimidated to sign the
assignment of hereditary rights.

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 LEGASPI OIL CO., INC. V. THE COURT OF APPEALS AND BERNARD OSERAOS
G.R. No. 96505
July 1, 1993

FACTS:

Bernard Oseraos had several transactions with Legaspi Oil Co. for the sale of copra to the
latter. The price at which appellant sells the copra varies from time to time, depending on the
prevailing market price when the contract is entered into. On February 16, 1976, appellant's
agent Jose Llover signed contract No. 3804 for the sale of 100 tons of copra at P82.00 per 100
kilos with delivery terms of 20 days effective March 8, 1976. After the period to deliver had
lapsed, appellant sold only 46,334 kilos of copra thus leaving a balance of 53,666 kilos.
Accordingly, demands were made upon appellant to deliver the balance with a final warning that
failure to deliver will mean cancellation of the contract, the balance to be purchased at open
market and the price differential to be charged against appellant. On October 22, 1976, since
there was still no compliance, appellee exercised its option under the contract and purchased the
undelivered balance from the open market at the prevailing price of P168.00 per 100 kilos, or a
price differential of P86.00 per 100 kilos, a net loss of P46,152.76 chargeable against appellant.

ISSUE:

Whether or not private respondent is guilty of breach of contact.

HELD:

Private respondent is guilty of fraud in the performance of his obligation under the sales
contract where under he bound himself to deliver to petitioner 100 metric tons of copra. However
within the delivery period, Oseraos delivered only 46,334 kilograms of copra to petitioner.
Petitioner made repeated demands upon private respondent to deliver the balance of 53,666
kilograms but private respondent ignored the same. Petitioner made a final demand with a
warning that, should private respondent fail to complete delivery of the balance of 53,666
kilograms of copra, petitioner would purchase the balance at the open market and charge the
price differential to private respondent. Still private respondent failed to fulfill his contractual
obligation to deliver the remaining 53,666 kilograms of copra and since there was still no
compliance by private respondent, petitioner exercised its right under the contract and purchased
53,666 kilograms of copra, the undelivered balance, at the open market at the then prevailing
price of P168.00 per 100 kilograms, a price differential of P46,152.76. The conduct of private
respondent clearly manifests his deliberate fraudulent intent to evade his contractual obligation
for the price of copra had in the meantime more than doubled from P82.00 to P168 per 100
kilograms. Under Article 1170 of the Civil Code of the Philippines, those who in the
performance of their obligation are guilty of fraud, negligence, or delay, and those who in any
manner contravene the tenor thereof, are liable for damages. Pursuant to said article, private
respondent is liable for damages.

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PHILIPPINE CHARTER INSURANCE CORPORATION V. CENTRAL COLLEGES OF
THE PHILIPPINES AND DYNAMIC PLANNERS AND CONSTRUCTION
CORPORATION
G.R. Nos. 180631-33
February 22, 2012

FACTS:

Petitioner Central Colleges of the Philippines (CCP), an educational institution,

contracted the services of respondents Dynamic planners and Construction Corporation (DPCC)
to be its general contractor for the construction of its five (5)-storey school building with a total
contract price of P248,000,000. The construction of the entire building would be done in two
phases with each phase valued at P124,000,000. To guarantee the fulfillment of the obligation,
DPCC posted three (3) bonds, all issued by the Philippine Charter Insurance Corporation. The
Phase 1 of the project was completed without issue. A down payment for the Phase 2 of the
project was thereafter made. However, Phase 2 of the project encountered numerous delays.
Only 47% of the work to be done was actually finished. CCP wrote DPCC and PCIC informing
them of the breach in the contract and its plan to claim on the construction bonds. DPCC wrote
PCIC confirming the delay, at the same time, requesting for the extension of its performance and
surety bonds because the supposed revision of the plans would require more days. PCIC
approved DPCC’s request for extension of the bonds. However, negotiations to continue on with
the construction between CCP and DPCC reached a dead end. CCP hired another contractor to
work on the school site. CCP sent a letter to PCIC of its final demand for the payment of
P13,924,351.47 as indicated in the bonds. The latter denied former’s claims against the three
bonds.

ISSUE:

Whether or not the CA grossly erred in sustaining the CIAC award finding petitioner
liable to respondent CCP under the performance bonds and the surety bond

HELD:

It is clear from the testimony of Crispino P. Reyes, CCPs President, that the school no
longer wants to collect on Performance Bond PCIC 46172 (with a value of P692,890.74). A
party may make judicial admissions in (a) the pleadings; (b) during the trial, either by verbal or
written manifestations or stipulations; or (c) in other stages of the judicial proceeding.[38] It is an
established principle that judicial admissions cannot be contradicted by the admitter who is the
party himself and binds the person who makes the same, and absent any showing that this was
made thru palpable mistake, no amount of rationalization can offset it. Since CCP, through its
President, judicially admitted that it is no longer interested in pursuing PCIC-46172, the scope of
its claim will just be confined to Surety Bond No. PCIC-45542 and Performance Bond No.
PCIC-45541. The civil law concept of delay or default commences from the time the obligor
demands, judicially or extrajudicially, the fulfillment of the obligation from the obligee. In legal

50 | P a g e
parlance, demand is the assertion of a legal or procedural right. Hence, DPCC incurred delay
from the time CCP called its attention that it had breached the contract and extrajudicially
demanded the fulfillment of its commitment against the bonds. It is the obligor’s culpable delay,
not merely the time element, which gives the obligee the right to seek the performance of the
obligation. As such, CCPs cause of action accrued from the time that DPCC became in culpable
delay as contemplated in the surety and performance bonds. Thus, DPCC became in default on
October 29, 2003 when CCP informed it in writing of the breach of the contract agreement and
demanded the fulfillment of its obligation against the bonds. Consequently, the November 6,
2003 letter that CCP sent to PCIC properly complied with the notice of claim requirement set
forth in the said bonds. Upon notice of default of obligor DPCC, PCICs liability, as surety, was
already attached.

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 TITAN-IKEDA CONSTRUCTION & DEVELOPMENT CORPORATION V.
PRIMETOWN PROPERTY GROUP, INC.
G.R. No. 158768
February 12, 2008

FACTS:

In 1992, respondent Primetown Property Group, Inc. awarded the contract for the
structural works of its 32-storey Makati Prime Tower (MPT) to petitioner Titan-Ikeda
Construction and Development Corporation. In September 1995, respondent engaged the
services of Integratech, Inc. (ITI), an engineering consultancy firm, to evaluate the progress of
the project. In its report, ITI informed respondent that petitioner, at that point, had only
accomplished 31.89% of the project (or was 11 months and six days behind schedule).
Meanwhile, petitioner and respondent were discussing the possibility of the latter’s takeover of
the project’s supervision. Despite ongoing negotiations, respondent did not obtain petitioner’s
consent in hiring ITI as the project’s construction manager. Neither did it inform petitioner of
ITI’s September 7, 1995 report. Subsequently, both parties agreed that Primetown will take over
the project. Petitioner then demanded for the payment due him in relation to its partial
performance of its obligation. For failure of Primetown to pay despite repeated demands,
petitioner filed a case for specific performance against Primetown. Meanwhile, Primetown
demanded reimbursement for the amount it spent in having the project completed.

ISSUE:

Whether or not Titan-Ikeda is responsible for the project’s delay

HELD:

It was found that because respondent modified the MPT's architectural design, petitioner
had to adjust the scope of work. Moreover, respondent belatedly informed petitioner of those
modifications. It also failed to deliver the concrete mix and rebars according to schedule. For this
reason, petitioner was not responsible for the project's delay. Mora or delay is the failure to
perform the obligation in due time because of dolo (malice) or culpa (negligence). A debtor is
deemed to have violated his obligation to the creditor from the time the latter makes a demand.
Once the creditor makes a demand, the debtor incurs mora or delay. Respondent never sent
petitioner a written demand asking it to accelerate work on the project and reduce, if not
eliminate, slippage. Because the parties agreed to extinguish the supplemental agreement, they
were no longer required to fully perform their respective obligations. Petitioner was relieved of
its obligation to complete the project while respondent was freed of its obligation to pay the
entire contract price. However, respondent, by executing the June 30, 1994 deed of absolute sale,
was deemed to have paid P112,416,716.88. Nevertheless, because petitioner applied part of what
it received to respondents outstanding liabilities, it admitted overpayment. Because petitioner
acknowledged that it had been overpaid, it was obliged to return the excess to respondent.

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 PNB MADECOR V. GERARDO C. UY
G.R. No. 129598
August 15, 2001

FACTS:

Guillermo Uy assigned to respondent Gerardo Uy his receivables due from Pantranco

North Express Inc. (PNEI). The deed of assignment included sales invoices containing
stipulations regarding payment of interest and attorney’s fees. On January 23, 1995, Gerardo Uy
filed with the RTC a collection suit against PNEI. He alleged that PNEI was guilty of fraud in
contracting the obligation sued upon, hence his prayer for a writ of preliminary attachment. The
sheriff issued a notice of garnishment addressed to the Philippine National Bank (PNB) and PNB
MADECOR attaching the “goods, effects, credits, monies and all other personal properties” of
PNEI in the possession of the bank. PNB MADECOR however claimed that the receivables of
Guillermo Uy have been applied to PNEI’s unpaid rentals to the bank thru compensation, thus
private respondent is no longer entitled to such. Respondent pointed out that the demand letter
sent by PNEI to petitioner was made before petitioner’s obligation to PNEI became due. This
being so, respondent argues that there can be no compensation since there was as yet no
compensable debt in 1984 when PNEI demanded payment from petitioner.

ISSUE:

Whether or not PNB MADECOR is correct in its contention that compensation is

applicable to its receivables from and its payables to PNEI

HELD:

Petitioner’s obligation to PNEI appears to be payable on demand. However, the Court

found that the letter sent by PNEI to PNB MADECOR was not one demanding payment, but one
that merely informed petitioner of the conveyance of a certain portion of its obligation to PNEI.
Since petitioner’s obligation to PNEI is payable on demand, and there being no demand made, it
follows that the obligation is not yet due. Therefore, this obligation may not be subject to
compensation for lack of a requisite under the law. Without compensation having taken place,
petitioner remains obligated to PNEI to the extent stated in the promissory note. This obligation
may undoubtedly be garnished in favor of respondent to satisfy PNEI’s judgment debt. As
regards respondent’s averment that there was as yet no compensable debt when PNEI sent
petitioner a demand letter on September 1984, since PNEI was not yet indebted to petitioner at
that time, the law does not require that the parties’ obligations be incurred at the same time.
What the law requires only is that the obligations be due and demandable at the same time.

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 IGNACIO BARZAGA V. COURT OF APPEALS AND ANGELITO ALVIAR
G.R. No. 115129
February 12, 1997

FACTS:

Barzaga went to the hardware store of respondent Alviar to inquire about the availability
of certain materials to be used in the construction of a niche for his wife. The following morning,
Barzaga went back to the store and told the employees that the materials he was buying would
have to be delivered at the Memorial Cemetery by eight o'clock that morning since his hired
workers were already at the burial site and time was of the essence. A store employee agreed to
deliver the items at the designated time, date and place. With this assurance, Barzaga purchased
the materials and paid in full. The construction materials did not arrive at eight o'clock as
promised. After follow-ups and several hours later, when there was yet no delivery made,
Barzaga went back to the store. He saw the delivery truck but the things he purchased were not
yet ready for loading. Distressed by the seeming lack of concern on the store’s part, Barzaga
decided to cancel his transaction with the store and buy from another store. Not being able to
fulfill the scheduled burial of his wife, Barzaga demanded damages from Alviar but the latter
refused claiming that he is not liable for damages considering that he did not incur legal delay
since there was no specific time of delivery agreed upon.

ISSUE:

Whether or not the respondent incurred delay in the performance of his obligation

HELD:

Respondent Angelito Alviar was negligent and incurred in delay in the performance of
his contractual obligation. The niche had to be constructed at the very least on the twenty-
second of December considering that it would take about two (2) days to finish the job if the
interment was to take place on the twenty-fourth of the month. Respondent's delay in the
delivery of the construction materials wasted so much time that construction of the tomb could
start only on the twenty-third. It could not be ready for the scheduled burial of petitioner's wife.
This case is clearly one of non-performance of a reciprocal obligation. In their contract of
purchase and sale, petitioner had already complied fully with what was required of him as
purchaser, i.e., the payment of the purchase price of P2,110. It was incumbent upon respondent
to immediately fulfill his obligation to deliver the goods otherwise delay would attach.

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