BONG

ABELLA vs. FRANCISCO, G.R. No. L-32336, December 20, 1930, Abella entered into a contract of sale with Francisco to buy from the latter parcels of land in Manila. 2 payments have been made in the amount of P915. The remaining balance due on December 15, 1928 and extendible 15 days thereafter as agreed by both parties. Francisco was in Cebu and so an SPA was executed in favor of a certain Mabanta authorizing him to handle the necessary procedures to convey the properties to Abella when the remaining balance has been satisfied. However, there existed an option in the contract of sale that in the event Abella fails to pay the remaining balance in the designated time, the sale of the properties to him (Abella) will be cancelled and the previous payments made be returned. Mabanta gave Abella until January 5, 1929 to settle the amount but Abella only offered to complete the payment on January 9. Mabanta refused to accept the late payment and returned the previous payment of P915.00. Hence, Abella filed case to compel the defendant to execute the deed of sale of the lots in question, upon receipt of the balance of the price, and asks that he be judicially FACT declared the owner of said lots and that the defendant be ordered to deliver S them to him. ISSUE W/N the properties should be conveyed to Abella. No, in this case time was an essential element in the contract. The parties stipulated a fixed time to fully settle the payment on December 15, 1928, extendible for 15 days. In accordance with article 1124 of the Civil Code, the defendant is entitled to resolve the contract for failure to pay the price within HELD the time specified. Abella failed to pay within the specified time. BONG Agcaoili vs GSIS, G.R. No. L-30056, August 30, 1988 Petitioner was awarded the house by GSIS on the condition that he should reside on it immediately. As the house is uninhabitable, petitioner vacated the area after 1 day and refused to pay further installments until respondent make FACT it habitable. Respondent cancelled the award on grounds that petitioner S incurred delay in payment due to refusal to comply with further payments. ISSUE W/n the petitioner incurred delay in fulfilling his obligations In reciprocal obligations, a party incurs delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. Respondent did not fulfill its obligation to deliver the house in a habitable state, therefore, it cannot invoke the petitioners suspension of payment as a cause to cancel the contract between them. There was a perfected contract of sale, it was then the duty of GSIS as seller to deliver the thing sold in a condition suitable for its enjoyment by the buyer and for the purpose contemplated. The house contemplated was one that could be occupied for purpose of residence in HELD reasonable comfort and convenience. BONG Barzaga vs CA, G.R. No. 115129, February 12, 1997 The petitioners wife was suffering from a debilitating ailment and with forewarning of her impending death, she expressed her wish to be laid to rest before Christmas day to spare her family of the long vigils as it was almost Christmas. After his wife passed away, petitioner bought materials from herein private respondents for the construction of her niche. Private respondents however failed to deliver on agreed time and date despite repeated follow-ups. The niche was completed in the afternoon of the 27th of December, and FACT Barzaga's wife was finally laid to rest. However, it was two-and-a-half (2-1/2) S days behind schedule.

ISSUE Was there delay in the performance of the private respondent's obligation? Yes. Since the respondent was negligent and incurred delay in the performance of his contractual obligations, the petitioner is entitled to be indemnified for the damage he suffered as a consequence of the delay or contractual breach. There was a specific time agreed upon for the delivery of the materials to the cemetery. This is clearly a case of non-performance of a reciprocal obligation, as in the contract of purchase and sale, the petitioner had already done his part, which is the payment of the price. It was incumbent upon respondent to immediately fulfill his obligation to deliver the goods otherwise delay would attach. An award of moral damages is incumbent in this case as the petitioner HELD has suffered so much. CENTRAL BANK OF THE PHILIPPINES vs. C. A., G.R. No. L-45710, October 3, BONG 1985, October 3, 1985 FACT S ISSUE HELD CETUS DEVELOPMENT INC Vs. CA, G.R. No. 77647-52, August 7, 1989, (176 BONG SCRA 72) Petitioner corporation bought property from Susana Realty. In said properties, there are several person who lease with the same. The tenants who occupy the said properties had accustomed to pay their rentals monthly through a collector sent by Susana Realty. When petitioner corporation acquired ownership, the payment of rentals continued for 3 months, however, 3 months following thereafter , the tenants failed to pay their rentals as no collector was sent to collect from them. Subsequently, a letter was sent to the tenants demanding payment for their back rentals and to vacate the premises. The tenants complied with the FACT payment of back rentals but did not vacate the premises. Hence petitioner S corporation filed case of ejectment in court. ISSUE W/N petitioner has a cause of action The decision of the lower court and the CA were affirmed by the Supreme Court. It held that there is no cause of action on the part of petitioner corporation for a case of unlawful detainer. Records of the case show that at the time of the filing of this complaint, the rentals had all been paid. Hence, the plaintiff cannot eject the defendants from the leased premises, because at the time these cases were instituted, there are no rentals in arrears. Sec. 2. Landlord to proceed against tenant only after demand. No landlord or his legal representative or assign, shall be such action against a tenant for failure to pay rent due or to comply with the conditions of his lease, unless the tenant shall have failed to pay such rent or comply with such conditions for a period of fifteen (15) days or five (5) days in case of building, after demand therefor, made upon qqqm personally, or by serving written notice of such demand upon the person found on the premises, or by posting such notice on the premises if no persons be found HELD thereon. JANNO CRISMINA GARMENTS vs. CA, G.R. No. 128721, March 9, 1999 FACT During the period between February to April 1979,Crismina Garments, Inc. S contracted the services of D'Wilmar Garments, for the sewing of 20,762 pieces of assorted girls denims for P76,410. At first, the Crismina was told that the sewing of some of the pants were defective so it offered to take them back but

later she was informed by the petitioners representative that it was good already and asked her to return for her check. Crismina failed to pay and told her that 6,164 pairs were defective and asked for actual damages of P49,925.51.RTCfavored D'Wilmar for the payment of P76,140 with interest at 12% per annum counted from the filing of the complaint until fully paid. CA affirmed the ruling. On appeal, the petitioner contends that the interest rate should be only at 6% for the obligation is a contract for a piece of work and not a forbearance of money, goods or credit as what the respondent insists. ISSU Whether or not the obligation is a contract for a piece of work and not a E forbearance of money, goods or credit Yes. The obligation is a contract for a piece of work and not a forbearance of money, goods or credit. Forbearance" in the context of the usury law is a "contractual obligation of lender or creditor to refrain, during a given period of time, from requiring the borrower or debtor to repay a loan or debt then due and payable." Using this standard, the obligation in this case was obviously not a forbearance of money, goods or credit. The Court used the guidelines set in the Eastern Shipping Lines, Inc. vs. Court of Appeals case for the proper application of the proper interest rates wherein 2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. The said ruling roots RULI on Art 1169 of the Civil Code where the computation of the interest starts from NG the day the demand is made for the fulfillment of the obligation. JANNO KENG HUA vs. CA, G.R. No. 116863, February 12, 1998 Sea-Land Service Inc. is a foreign shipping company licensed to do business in the Philippines. On 29 June 1982, Sea-land received a sealed container of 76 bales of unsorted waste paper inits Hong Kong terminal for shipment to KengHua Paper Products in Manila. Sea-Land issued a bill of lading. On 9 July 1982, shipment was discharged at Manila International Container Port. Notices of arrival were sent to KengHua but the latter failed to retrieve the shipment from thecontainer during the grace period which lasted until 29 July 1982. Itremained there until Nov. 22, 1983, or for a total of 481 days, when shipment was unloaded from the container. Sea-Land sent letters to KengHua demanding payment for demurrage which the latter kept on ignoring. The obligation for demurrage eventually amounted to P67,340.00 before Sea-Land instituted a civil action. The RTC ruled thatKengHuabe liable for demurrage with the legal interest computed from the date of extrajudicial demand. The same is adopted by CA in toto.KengHua contends that the legal interest shall only commence from the FACT time the petitioner first knew of the demurrage claim of P 67,340.00 and not S on the previous demands. ISSU WON interest ran only from the time KengHuafirst knew about the actual E demurrage claim. RULI YES.This was the first time KengHua learned of the demurrage claim of NG P67,340.00 thusinterest cant run from date of extrajudicial demands since during those times, nodemand for interest was made. When obligation not constituting loan/forbearance of money is breached, interest on amount of damages may be imposed at courts discretion at rate of 6% per annum. Wheredemand is established with reasonable certainty, the interest shall begin to run fromthe time the claim is made judicially or

extrajudicially (CC Art. 1169). But whencertainty cant be established at the time the demand is made, interest shall begin torun only from the date the judgment of the court is made. Actual base forcomputation of leg interest shall be on the amount finally adjudged Since bill of lading didnt specify amount of demurrage, total amount demanded cant bedeemed to have been established with reasonable certainty until trial court rendered its judgment SANTOS VENTURA HOCORMA FDN Vs. SANTOS, G.R. No. 153004, November JANNO 5, 2004 FACT S ISSU E RULI NG ARRIETA Vs. NATIONAL RICE AND CORN CORP. G.R. No. L-15645, January 31, JANNO 1964 On 19 May 1952, Paz and VitaliadoArrieta participated in the public bidding called by NARIC for the supply of 20,000 metric tons of Burmese rice. As her bid of $203 per metric ton was the lowest, she was awarded the contract for the same. As a result of the delay in the opening of the letter of credit by NARIC, the allocation of Arrietas supplier in Rangoon was cancelled and the 5% deposit amounting to an equivalent of P200,000 was forfeited. Arrieta endeavored but failed to restore the cancelled Burmese rice allocation, and thus offered Thailand rice instead. Such offer was rejected by NARIC. Subsequently, Arrieta sent a letter to NARIC, demanding compensation for the damages caused her in FACT the sum of US$286,000.00 representing unrealized profit. The demand having S been rejected, she instituted the case. Whether or not the appellant failure to open immediately the letter of credit in ISSU disputeamounted to a breach of the contract of July 1, 1952 for which it may be E held liable indamages. The Court ruled that the principal reason for the cancellation of the allocation contracted by the appellee in Rangoon, Burma, was the failure of NARIC to open the letter of credit within the contemplated period. The failure must, therefore, betaken as the immediate cause for the consequent damage which resulted. Secondly, from the correspondence and communications, it is clear that what singularly delayed the opening of the stipulated letter of credit and which, in turn, caused the cancellation of the allocation in Burma, was the inability of NARICto meet the condition imposed by the Bank for granting the same. The liability of the appellant, however, stems not alone from the failure or inability to satisfythe requirements of the bank. Its culpability arises from its willful and deliberate assumptionof contractual obligations even as it was well aware of its financial incapacity to undertake the presentation.Under the provision of Article 1170 of the Civil Code, not only debtors guilty of fraud,negligence or defaults in the performance of obligations are decreed RULI liable; in general, everydebtor who fails in the performance of his obligations is NG bound to indemnify for the losses anddamages caused. JANNO EASTERN SHIPPING LINES vs. CA, G.R. No. 97412, July 12, 1994 FACT Two fiber drums were shipped owned by Eastern Shipping from Japan. The S shipment was insured with a marine policy. Upon arrival in Manila, it was

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discharged unto the custody of Metro Port Service, which excepted to one drum, said to be in bad order and which damage was unknown to Mercantile Insurance Company. Allied Brokerage Corporation received the shipment from Metro, one drum opened and without seal. Allied delivered the shipment to the consignees warehouse. The latter excepted to one drum which contained spillages while the rest of the contents was adulterated/fake. As consequence of the loss, the insurance company paid the consignee, so that it became subrogated to all the rights of action of consignee against the defendants Eastern Shipping, Metro Port and Allied Brokerage. The insurance company filed before the trial court. The trial court ruled in favor of plaintiff and ordered defendants to pay the former with present legal interest of 12% per annum from the date of the filing of the complaint. On appeal by defendants, the appellate court denied the same and affirmed in toto the decision of the trial court. Whether or not the payment of legal interest on an award for loss or damage is to be computed from the time the complaint is filed or from the date the decision appealed from is rendered. The ruling of the Court consolidated as to how the interest be determined to compute for the interest most especially those in the Concept of Actual and Compensatory Damages enumerated as follows: I. When an obligation, regardless of its source, i.e., law, contracts, quasicontracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages. II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows: 1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 23 of the Civil Code. 2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. 25 No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. 26 Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. 3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

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MAGAT vs. MEDIALDEA, G.R. No. L-37120, April 20, 1983 Guerrero needs taximeters and radio transceivers to operate his fleet of taxicabs inside the US Naval Base in Subic Bay, a requirement imposed by the US Navy Exchange for the operation of taxicabs in the area. Magat is a supplier of materials and goods from Japan to the US Navy Exchange known for his on-time deliveries. Guerrero, through agent Aligada, entered into a contract with Magat for the purchase of the taximeters and radio transceivers from Japan through Magats Japanese business associates. The taximeters were successfully purchased and paid in accordance with this arrangement. As for the radio transceivers, Magat made a firm offer in writing quoting $77,620.59 as the price and that delivery will be made 60-90 days after receipt of advice from Guerrero of the radio frequency assigned to him by the proper authorities. Guerrero accepted this offer as shown by his signed conformity in the written offer, which acceptance was communicated to Magat. While waiting for the assigned radio frequency, Magat, believing that the Guerrero would faithfully fulfill his contract and to ensure no delays in the delivery, advised his business associates in Japan to proceed with the manufacture of such transceivers. Upon receipt of the frequency assignment, Guerrero advised Magat to proceed with the purchase only after the latter has obtained a letter of credit. It being a normal business practice to open letters of credit for importations, Magat awaited such. Guerrero failed to obtain the letter of credit and operated his taxicabs without the required radio transceivers. This was despite repeated follow-ups by Magat. Magat now sues Guerrero for breach of contract and claims for damages. Guerrero moved to dismiss on ground of lack of cause of action, stating that the damages claimed are not present or have not happened, and are all just anticipated. WON Guerrero is liable for damages He is. The essential elements of a cause of action are present: [1] the existence of a legal right to the plaintiff; [2] a correlative duty of the defendant and [3] an act or omission of the defendant in violation of the plaintiff's right, with consequent injury or damage to the latter for which he may maintain an action for recovery of damages or other appropriate relief. Article 1170 of the Civil Code provides: 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. The phrase "in any manner contravene the tenor" of the obligation includes any illicit act or omission which impairs the strict and faithful fulfillment of the obligation and every kind of defective performance. NPC, vs. EIN CHEMICAL CORP. and PHIL. INTERNATIONAL SURETY Co., G.R. No. L-24856, Nov. 14, 1986

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NG MHAI FACT S ISSU E RULI NG MHAI FACT S ISSU E RULI NG MHAI FACT S ISSU E RULI NG MEGA N PCIB , vs. C A and FORD Phils. Inc. and CITIBANK, G.R. No. 121413, Jan. 29, 2001.

TELEFAST COMMUNICATIONS PHILIPPINE WIRELESS INC vs. CASTRO, G.R. No. 73867, February 29, 1988

YHT Realty Corp. vs. CA, G.R. No. 126780, Feb. 17, 2005

Ridjo Tape & Chemical Corp. vs. CA, G.R. No. 126074, Feb. 24, 1998. This is a petition to review the decision of the CA which reversed that of the RTC of Quezon City, ordering petitioners to pay private respondent Manila Electric Co. (MERALCO) the amount of P415,317.66 and P89,710.58 plus the costs of suit. On September 4, 1991 and on July 30, 1992, petitioners received a letter from MERALCO demanding payment of P415,317.66 and P89,710.58 , respectively, allegedly representing unregistered electric consumption for the period November 7, 1990, to February 13, 1991 and for the period July 15, 1991 to April 13, 1992. MERALCO justified its demand on the ground that the unregistered electric consumption was due to the defects of the electric meter located in the premises of petitioners. Since petitioners refused to pay the amount, MERALCO notified them that their electricity be disconnected. WON petitioners should pay the amounts demanded by Meralco despite the defective meter installed by the latter. Decision MODIFIED. Petitioners are ordered to pay MERALCO the amount P168,342.75, representing its average electric consumption three months prior to the period in controversy. It must be underscored that MERALCO has the imperative duty to make a reasonable and proper inspection of its apparatus and equipment to ensure that they do not malfunction, and the due diligence to discover and repair defects therein. Failure to perform such duties constitutes negligence.

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The SC concludes that this is a case of negligence on the part of MERALCO for which it must bear the consequences. Its failure to make the necessary repairs and replacement of the defective electric meter was obviously the proximate cause of the instant dispute between the parties. MERALCO, being a public utility vested with vital public interest, is impressed with certain obligations towards its customers and any omission on its part would be prejudicial to its interest. For in the final analysis, the bottom line is that those who do not exercise such prudence in the discharge of their duties shall be made to bear the consequences of such oversight. MEGA N Meralco vs. T.E.A.M. Electronics Corp., G.R. No. 131723, Dec. 13, 2007 TEC is a utility company supplying electricity in Metro Manila. The TEC entered into a contract of lease with Ultra to use the latters DCIM building for a period of 5 years. On Sept2mber 28, 1987, a team of inspectors representing the petitioner found that the TEC allegedly tampered with two meters installed at the DCIM building and had not been registering the proper consumption. MERALCO disconnected the electrical supply from the DCIM building due to the failure of the TEC to pay the differential billing of P 7,040,401.01. TEC demanded there connection of electrical service, claiming it had nothing to do with the alleged tampering. MERALCO then sent out another investigative team in TECs NS building which revealed that the electric meters were also not registering the proper energy consumption. Petitioner then demanded P280, 813.72 as the differential billingwhich TEC paid. 1.WoN TEC tampered with the electric meters installed at its DCIM and NSbuildings; 2. If so, WoN it is liable for the differential billing as computed by petitioner; 3. WoN petitioner was justified in disconnecting the electric power supply in TECs DCIM building 1. Tampering in: a. DCIM: NO, because there is a cloud of doubt over the petitioners claim of meter tampering, due to the fact that there was no drastic difference between the consumption of the TEC before and after the petitioners inspection. b. NS: NO, because such allegation was not proven. The meters were enclosed in a metal cabinet, the metal seal of which was unbroken, with the petitioner having sole access to the said meters. 2. NO. Because no tampering was committed. 3. NO. Although the petitioner sent a demand letter to the DEC for payment, it did not include any notice that electricity would be disconnected. Disconnection was subject to the prior requirement of a 48-hour written notice of disconnection under P.D. No. 401. The decree penalized unauthorized water, electrical or telephone connections and such acts as the use of tampered electrical meters. DOCTRINE: Basic is the rule that to recover actual damages, not only must the amount of loss be capable of proof; it must also be actually

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proven with a reasonable degree of certainty, premised upon competent proof or the best evidence obtainable. MEGA N Rodzssen Supply Co., Inc. vs. FEBTC, 357 SCRA 618 Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the January 21, 1993 Decision2 of the CA which affirmed with modification the ruling of the RTC of Bacolod City. On January 15, 1979, defendant Rodzssen Supply, Inc. opened with plaintiff Far East Bank and Trust Co. a 30-day domestic letter of credit, in the amount of P190,000.00 in favor of Ekman and Company, Inc. (Ekman) for the purchase from the latter of five units of hydraulic loaders, to expire on February 15, 1979. The three loaders were delivered to defendant for which plaintiff paid Ekman and which defendant paid plaintiff before expiry date of LC. The remaining two loaders were delivered to defendant but the latter refused to pay. Ekman pressed payment to plaintiff. Plaintiff paid Ekman for the two loaders and later demanded from defendant such amount as it paid Ekman. Defendant refused payment contending that there was a breach of contract by plaintiff who in bad faith paid Ekman, knowing that the two units of hydraulic loaders had been delivered to defendant after the expiry date of subject LC. WON petitioner is liable to respondent. The SC agrees with the CA that petitioner should pay respondent bank the amount the latter expended for the equipment belatedly delivered by Ekman and voluntarily received and kept by petitioner. Equitable considerations behoove us to allow recovery by respondent. True, it erred in paying Ekman, but petitioner itself was not without fault in the transaction. It must be noted that the latter had voluntarily received and kept the loaders since October 1979. When both parties to a transaction are mutually negligent in the performance of their obligations, the fault of one cancels the negligence of the other and, as in this case, their rights and obligations may be determined equitably under the law proscribing unjust enrichment. CRISOSTOMO vs. CA, G.R. No. 138334, August 25, 2003, August 25, 2003 Petitioner Crisostomo contracted the services of respondent Caravan Travel and Tours International, to arrange and facilitate her booking, ticketing, and accommodation in a tour called Jewels of Europe. She was given a 5% discount and a waived booking fee because her niece, Meriam Menor, was the companys ticketing manager. Menor went to her aunts residence to deliver Crisostomos travel documents and plane tickets and get her payment. Menor told her to be in NAIA on Saturday. When Crisostomo got to the airport on Saturday, she discovered that the flight she was supposed to take had already departed the previous day. She complained to Menor, and was urged by the latter to take another tour, instead. She took the services of British Pageant. Upon returning from Europe, Crisostomo demanded P61,421.70 from Caravan Tours, representing the difference between the sun she paid for Jewels and the amount she owed the company for British Pageant. Caravan refused.

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Thus, Crisostomo filed a complaint against Caravan for breach of contract of carriage and damages. The trial court held in favor of Crisostomo, and ordered Caravan to pay her, because it was negligent in erroneously advising Crisostomo of her departure. However, Crisostmo is also guilty of contributory negligence (for failing to verify the exact date and time of departure). On appeal, CA declared that Crisostomo is more negligent. As a lawyer and welltravelled person, she should have known better. MR of Crisostomo was also denied. Hence this petition. W/N respondent Caravan is guilty of negligence and is liable to Crisostomo for damages. No. A contract of carriage or transportation is one whereby a certain person or association of persons obligate themselves to transport persons, things, or news from one place to another for a fixed price. Respondent is not engaged in the business of transporting either passengers of goods and is therefore not a common carrier. Respondents services as a travel agency include procuring tickets and facilitating travel permits or visas as well as booking customers for tours. A common carrier is bound by law to carry as far as human care and foresight can provide using the utmost diligence of very cautious persons and with due regard for all circumstances. But since Caravan is a travel agency, it is not bound to observe extraordinary diligence in the performance of its obligations. For them, the standard of care required is that of a good father of a family. This connotes reasonable care consistent with that which an ordinarily prudent person would have observed when confronted with a similar situation. We do not concur with the finding that Menors negligene concurred with that of Crisostomo. No evidence to prove Menors negligence. The negligence of the obligor in the performance of the obligations renders him liable for damages for the resulting loss suffered by the obligee. Fault or negligence of an obligor consists in the his failure to exercise due care and prudence in the performance of the obligation. The degree of diligence required depends on the circumstances of the specific obligation and whether one has been negligent is a question of fact that is to be determined in the case. Petition denied. CA affirmed. Sabena Belgian World Airways vs. CA,G.R. No. 104685 March 14, 1996, 255 SCRA 25 Mrs. Fule purchased three round trip tickets for herself and two children from Sabena; the route: Manila-Brussels-Barcelona-Madrid. During the trip, they encountered inconveniences, such as, walking under the drizzle after disembarking; delayed connecting flight to Barcelona; and a missing luggage, among others. They allegedly incurred medical and hotel expenses. Thus, Mrs. Fule made a letter-complaint to Sabena office. The Madrid Office offered to pay about half of what she was asking, that the rest would be paid by the Manila Office. A certain Yancha made her sign a document in French language which she did not understand. It turned out that the document was a quitclaim. The trial court awarded them actual, moral and exemplary damages, among others. CA modified the decision by reducing the amount of moral and exemplary

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damages. WON Sabena is liable to the Fules for damages arising from breach of contract of carriage. Yes. In the imposition of moral damages, the defendants act must be wrongful or wanton or done in bad faith. Here, there is no finding that the carriers delay in delivering Mrs. Fules luggage was wrongful or due to bad faith. While there is failure on the part of the carrier in protecting Mrs. Fule et al from the rain, its neglect was not so gross as to amount to bad faith or wantoness. What is involved in this case is simple negligence, considering that the rain through which Mrs. Fule et al had to walk was a slight drizzle. Nonetheless, there is still bad faith in making Mrs. Fule sign a quitclaim without informing her of its contents. With respect to moral damages, the rule is that the same are recoverable in a damage suit predicated upon a breach of contract of carriage only where (1) the mishap results in the death a of passenger and (2) it is proved that the carrier was guilty of fraud and bad faith, even if death does not result. (Ibid, at p. 13) As the appellate court found the petitioner guilty of bad faith in letting the respondent sign a quitclaim without her knowledge or understanding and contrary to what she was planning to do, the reduced award of moral and exemplary damages is proper and legal. SARMIENTO vs. Sps. CABRIDO, G.R. No. 141258, April 9, 2003 Tomasa Sarmientos friend, Dra. Virginia Lao, requested her to find someone toreset a pair of diamond earrings into two gold rings. Sarmiento sent Tita Payag withthe earrings to Dingdings Jewelry Shop, owned and managed by spouses Luis andRose Cabrido, which accepted the job order for P400. Petitioner provided 12 gramsof gold to be used in crafting the pair of ring settings. After 3 days, Payag deliveredto the jewelry shop one of the diamond earrings which was earlier appraised asworth .33 carat and almost perfect in cut and clarity. Respondent Marilou Sun wenton to dismount the diamond from original settings. Unsuccessful, she asked theirgoldsmith, Zenon Santos, to do it. He removed the diamond by twisting the settingwith a pair of pliers, breaking the gem in the process. Petitioner required therespondents to replace the diamond with the same size and quality. When theyrefused, the petitioner was forced to buy a replacement in the amount of P30,000.Rose Cabrido, manager, denied having any transaction with Payag whom she metonly after the latter came to seek compensation for the broken piece of jewelry.Marilou, on the other hand, admitted knowing Payag to avail their services andrecalled that when Santos broke the jewelry, Payag turned to her forreimbursement thinking she was the owner. Santos also recalled that Payagrequested him to dismount what appeared to him as sapphire and that the stoneaccidentally broke. He denied being an employee of the Jewelry shop. The MTCC of Tagbilaran City rendered a decision in favor of the petitioner. On appeal,Respondents conceded to the existence of an agreement for crafting a pair of goldrings mounted with diamonds but denied they had obligation to dismount thediamonds from the original setting. Petitioner claims that dismounting the diamondsfrom the original setting was part of the obligation assumed by respondents underthe contract of service. The RTC ruled in favor of the respondents. CA affirmed the judgment of the RTC.

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1. WON dismounting of the diamond from its original setting was part of theobligation2. WON respondents are liable for damages3. WON respondents are liable for moral damages 1. YESRatio The contemporaneous and subsequent acts of the parties reveal the scopeof obligation assumed by the jewelry shop to reset the pair of earrings. Reasoning Marilou expressed no reservation regarding the dismounting of thediamonds. She could have instructed Payag to have the diamonds dismounted first,but instead, she readily accepted the job order and charged P400. After the newsettings were completed, she called petitioner to bring the diamond earrings to bereset. She examined one of them and went on to dismount the diamond from theoriginal setting. After failing to do the same, she delegated it to the goldsmith.Having acted the way she did, she cannot deny that the dismounting was part of the shops obligation to reset the pair of earrings. 2. YESRatio Those who, in the performance of their obligations are guilty of fraud,negligence or delay and those who in any manner contravene the tenor thereof, areliable for damages. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and correspondswith the circumstances of the persons, of the time and of the place. Reasoning Santos acted negligently in dismounting the diamond from its originalsetting. Instead of using a miniature wire, which is the practice of the trade, he useda pair of pliers. Marilou examined the diamond before dismounting and found thesame to be in order. The subsequent breakage could only have been caused bySantos negligence in using the wrong equipment. Res ipsa loquitur. Facts show thatMarilou, who has transacted with Payag on at least 10 occasions, and Santos, whohas been accepting job referrals through respondents for 6 mos. now, are employedat the jewelry shop. The jewelry shop failed to perform its obligation with theordinary diligence required by the circumstances. 3. YESRatio Moral damages may be awarded in a breach of contract when there is proof that defendant acted in bad faith, or was guilty of gross negligence amounting tobad faith, or in wanton disregard of his contractual obligation. Reasoning Santos was a goldsmith for more than 40 years. He should have knownthat using a pair of pliers would have entailed unnecessary risk of breakage. The gross negligence of their employee makes the respondents liable of moraldamages. Disposition Petition was granted and CA decision was reversed. Respondents wereordered to pay P30,000 as actual damages and P10,000 as moral damages. AUSTRIA vs. COURT OF APPEALS, G.R. No. L-29640, June 10, 1971 On Jan. 1961, Maria G. Abad acknowledged having received from Guillermo Austriaone (1) pendant with diamonds valued at P4,500.00, to be sold on commission basisor to be returned on demand.- On Feb. 1961, however, while walking home Abad was said to have been accostedby two men, who hit her and snatched her purse containing the pieces of jewelryand cash. The incident

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became the subject of a criminal case against certainpersons.- As Abad failed to return the jewelry or pay for its value notwithstanding demands,Austria brought an action against her and her husband for recovery of the pendantor of its value, and damages. Answering the allegations of the complaint,defendants spouses set up the defense that the alleged robbery had extinguishedtheir obligation.- Trial court rendered judgment for the plaintiff. It was held that defendants failed toprove the fact of robbery, or, if indeed it was committed, that defendant Maria Abadwas guilty of negligence when she went home without any companion, although itwas already getting dark and she was carrying a large amount of cash andvaluables on the day in question, and such negligence did not free her from liabilityfor damages for the loss of the jewelry. CA reversed the judgment on the basis of the lack of credibility of the two defensewitnesses who testified on the occurrence of the robbery, and holding that the factsof robbery and defendant Maria Abad's possession of the pendant on thatunfortunate day have been duly established, declared respondents not responsiblefor the loss of the jewelry on account of a fortuitous event. Plaintiff thereuponinstituted the present proceeding. 1. WON Court of Appeals erred in finding that there was robbery in the case, thusextinguishing Abads liability, although nobody has been found guilty of thesupposed crime.2. 1. No. To constitute a caso fortuito that would exempt a person from responsibility,it is necessary that (1) the event must be independent of the human will (or rather,of the debtor's or obligor's); (2) the occurrence must render it impossible for thedebtor to fulfill the obligation in a normal manner, and that (3) the obligor must befree of participation in, or aggravation of, the injury to the creditor.- The point at issue in this proceeding is how the fact of robbery is to be establishedin order that a person may avail of the exempting provision of Article 1174 of thenew Civil Code, which reads as follows:" ART. 1174. Except in cases expressly specified by law, or when it is otherwisedeclared by stipulation, or when the nature of the obligation requires theassumption of risk, no person shall be responsible for those events which could notbe foreseen, or which, though foreseen, were inevitable."- The emphasis of the provision is on the events, not on the agents or factorsresponsible for them. To avail of the exemption granted in the law, it is notnecessary that the persons responsible for the occurrence should be found orpunished; it would only be sufficient to establish that the unforeseeable event, therobbery in this case, did take place without any concurrent fault on the debtor'spart, and this can be done by preponderant evidence .2.No. It is undeniable that in order to completely exonerate the debtor for reason of a fortuitous event, such debtor must also be free of any concurrent or contributoryfault or negligence. This is apparent from Article 1170 of the Civil Code of thePhilippines, providing that:"ART. 1170. Those who in the performance of their obligations are guilty of fraud,negligence, or delay, and those who in any manner contravene the tenor thereof.are liable for damages."It is clear that under the circumstances prevailing at present in the City of Manilaand its suburbs, with their high incidence of crimes against persons and property,that renders travel after nightfall a matter to be sedulously avoided without suitableprecaution and protection. The conduct of respondent Maria G. Abad, in returningalone to her house in the evening, carrying jewelry of considerable value, would benegligent per se, and would not exempt her from

responsibility in the case of arobbery. We are not persuaded, however, that the same rule should obtain tenyears previously, in 1961, when the robbery in question did take place, for at thattime criminality had not by far reached the levels attained in the present day. Disposition Petition in this case is hereby dismissed, with costs against thepetitioner. JUVER T Southeastern College vs. CA G.R. No. 126389 July 10, 1998 On October 11, 1989, powerful typhoon Saling hitMetro Manila. Buffeted by very strong winds, the roof of Southeastern Colleges building was partly ripped off andblown away, landing on and destroying portions of theroofing of private respondents Dimaanos house. Privaterespondent alleged that the damage to their house renderedthe same uninhabitable, forcing them to stay temporarily inothers houses. An ocular inspection of the destroyedbuilding was conducted by a team of engineers headed bythe city building official. The fourth floor of subject schoolbuilding was declared as a structural hazard. Lower courtawarded damages. CA affirmed but reduced damages. WON the damage of the PRs house resulting from theimpact of the falling portions of the school buildings roof ripped off was due to fortuitous event? NO Private respondents, in establishing the culpability of petitioner, merely relied on the aforementioned reportsubmitted by a team which made an ocular inspection of petitioners school building after the typhoon. As the termimparts, an ocular inspection is one by means of actual sightor viewing. What is visual to the eye through is not alwaysreflective of the real cause behind.Petitioners obtained a permit from the city building officialbefore the construction of its building. Having obtained bothbuilding permit and certificate of occupancy is prima facie evidence of the regular and proper construction of subjectschool building. When part of its roof needed repairs of thedamage inflicted by typhoon Saling, the city engineer gave thego-signal for such repairs without any deviation from theoriginal design. It subsequently authorized the use of the entirefourth floor of the same building. These only prove that subjectbuilding suffers from no structural defect.Petitioner presented its vice president for finance andadministration who testified that an annual maintenanceinspection and repair of subject school building were regularlyundertaken. Petitioner was even willing to present itsmaintenance supervisor to attest to the extent of such regularinspection but private respondents agreed to dispense with histestimony and simply stipulated that it would be corroborativeof the vice presidents narration. Besides, no complaintregarding any defect on the same structure has ever beenlodged before his office prior to the institution of the case atbench. It is a matter of judicial notice that typhoons arecommon occurrences in this country. If subject schoolbuildings roofing was not firmly anchored to its trusses,obviously, it could not have withstood long years and severaltyphoons even stronger than Saling.Petitioner has not been shown negligent or at fault regardingthe construction and maintenance of its school building inquestion and that typhoon Saling was the proximate cause of the damage suffered by private respondents house. Bricktown vs Amor Tierra Devt., G.R. No. 112182, December 12, 1994 Private respondents are owners of a house at 326 College Road, Pasay while

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petitioner owns a four-storey school building along the same College Road. That on October 11, 1989, a powerful typhoon hitMetro Manila. Buffeted by very strong winds, the roof of the petitioners building was partly ripped off andblown away, landing on and destroying portions of the roofing of private respondents house. When thetyphoon had passed, an ocular inspection of the destroyed building was conducted by a team of engineers headed by the city building official.In their report, they imputed negligence to the petitioner for the structural defect of the building andimproper anchorage of trusses to the roof beams to cause for the roof be ripped off the building, therebycausing damage to the property of respondent.Respondents filed an action before the RTC for recovery of damages based on culpa aquiliana. Petitioner interposed denial of negligence and claimed that the typhoon as an Act of God is the sole cause of thedamage. RTC ruled in their favor relying on the testimony of the City Engineer and the report made after the ocular inspection. Petitioners appeal before the CA which affirmed the decision of the RTC.Hence this present appeal. (1)Whether the damage on the roof of the building of private respondents resulting from the impactof the falling portions of the school buildings roof ripped off by the strong winds of typhoonSaling, was, within legal contemplation, due to fortuitous event?(2)Whether or not an ocular inspection is sufficient evidence to prove negligence? On the first issue, Yes, petitioner should be exonerated from liability arising from the damage caused bythe typhoon. Under Article 1174 of the Civil Code, Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumptionof risk, no person shall be responsible for those events which could not be foreseen, or which, thoughforeseen, were inevitable.In order that a fortuitous event may exempt a person from liability, it is necessary that he be free from anyprevious negligence or misconduct by reason of which the loss may have been occasioned. 12 An act of God cannot be invoked for the protection of a person who has been guilty of gross negligence in nottrying to forestall its possible adverse consequences. When a persons negligence concurs with an act of God in producing damage or injury to another, such person is not exempt from liability by showing that theimmediate or proximate cause of the damages or injury was a fortuitous event. When the effect is foundto be partly the result of the participation of man whether it be from active intervention, or neglect, or failure to act the whole occurrence is hereby humanized, and removed from the rules applicable to actsof God.In the case under consideration, the lower court accorded full credence to the finding of the investigatingteam that subject school buildings roofing had no sufficient anchorage to hold it in position especiallywhen battered by strong winds. Based on such finding, the trial court imputed negligence to petitioner and adjudged it liable for damages to private respondents.There is no question that a typhoon or storm is a fortuitous event, a natural occurrence which may beforeseen but is unavoidable despite any amount of foresight, diligence or care. In order to be exempt fromliability arising from any adverse consequence engendered thereby, there should have been no humanparticipation amounting to a negligent act. In other words; the person seeking exoneration from liabilitymust not be guilty of negligence. Negligence, as commonly understood, is conduct which naturally or reasonably creates undue risk or harm to others. It may be the failure to observe that degree of

care,precaution, and vigilance which the circumstances justify demand, or the omission to do something whicha prudent and reasonable man, guided by considerations which ordinarily regulate the conduct of humanaffairs, would do.On the second issue, it bears emphasizing that a person claiming damages for the negligence of another has the burden of proving the existence of fault or negligence causative of his injury or loss. The factsconstitutive of negligence must be affirmatively established by competent evidence, 19 not merely bypresumptions and conclusions without basis in fact. Private respondents, in establishing the culpability of petitioner, merely relied on the aforementioned report submitted by a team which made an ocular inspection of petitioners school building after the typhoon. As the term imparts, an ocular inspection isone by means of actual sight or viewing. What is visual to the eye through, is not always reflective of thereal cause behind.In the present case, other than the said ocular inspection, no investigation was conducted to determinethe real cause of the partial unroofing of petitioners school building. JUVER T DIOQUINO vs. LAUREANO, May 28, 1970 Plaintiff Atty. Pedro Dioquino is the owner of a car which defendant FedericoLaureano borrowed. Defendant was the sole passenger, aside from plaintiffs driver, when the car wasstoned by some mischievous boys, as a result, breaking the windshield Dioquino sued Laureano; included in the suit are the latters wife and father. Dioquino prevailed in the lower court but only against principal defendantLaureano; wife and father being absolved. Nonetheless, the appeal hence is by all three defendants. WON Laureano should be liable for damages thus sustained by Dioquinos car Laureano has no obligation to pay for the damages sustained due to throwingof stones that broke the windshield. The extraordinary circumstance independentof his will as obligor exempts him of the same by reason of force majeure or casofortuito; There is no requirement of diligence beyond what human care andforesight can provide. Reasoning - Art. 1174 of the Civil Code provides:General Rule: No person shall be responsible for those events which could not be,foreseen, or which, though foreseen were inevitable. Obiter Exception: Except in cases expressly specified by the law, or when it is otherwisedeclared by stipulation, or when the nature of the obligation requires theassumption of risk- What is contemplated in the exception is resulting liability even if caused by afortuitous event where the party charged may be considered as having assumedthe risk incident in the nature of the obligation to be performed.Force Majeure or Caso Fortuito

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are extraordinary events not foreseeable orunavoidable (events that though foreseen, are inevitable)Republic v. Luzon Stevedoring Corp The mere difficulty to foresee the happeningis not impossibility to foresee the same. The very precautions adopted by appellantprove that the possibility of danger was not only foreseeable, but actually foreseen,and was not caso fortuito ." In that case then, the risk was quite evident and thenature of the obligation such that a party could rightfully be deemed as havingassumed it Disposition Wherefore the decision of the lower court assigning liability toDefendant is Reversed; Affirmed insofar as it dismissed the case against the twoother defendants ELKIE Nakpil and Sons Vs Court of appeals, October 3, 1986 Private respondents Philippine Bar Association (PBA) non-profit organization formed under corporation law, decided to put up a building in Intramuros, Manila. Hired to plan the specifications of the building were Juan Nakpil & Sons, while United Construction was hired to construct it. The proposal was approved by the BOD and signed by the Pres. Ramon Ozaeta. The building was completed. A strong earthquake occurred which caused the building heavy damage and led the building to tilt forward, leading the tenants to vacate the premises. United Construction took remedial measures to sustain the building. PBA filed a suit for damages against United Construction, but United Construction subsequently filed a suit against Nakpil and Sons, alleging defects in the plans and specifications. Technical Issues in the case were referred to Mr. Hizon, as a court appointed Commissioner. PBA moved for the demolition of the building, but was opposed. PBA eventually paid for the demolition after the building suffered more damages in 1970 due to previous earthquakes. The FACT Commissioner found that there were deviations in the specifications and plans, S as well as defects in the construction of the building. Whether or not an act of God (fortuitous event) exempts from liability parties ISSUE who would otherwise be due to negligence? Art. 1174 of the NCC states that no person shall be responsible for events, which could not be foreseen. But to be exempt from liability due to an act of God, the ff must occur: a. cause of breach must be independent of the will of the debtor b. event must be unforeseeable or unavoidable c. event must be such that it would render it impossible for the debtor to fulfill the obligation d. debtor must be free from any participation or aggravation of the industry to the creditor. In the case at bar, although the damage was ultimately caused by the earthquake which was an act of God, the defects in the construction, as well as the deviations in the specifications and plans aggravated the damage, and lessened the preventive measures that the building would otherwise have had. NPC vs CA, ECI Co., 1986 ECI entered into a contract with NAWASA to undertake a construction of a tunnel from Ipo Dam to Bicti including all materials, equipment and labor for the

RULI NG ELKIE FACT S

said construction for 800 days. The project, first involves tunnel works and second consists of outworks at both ends of the tunnel. After ECI finished the tunnel works in Bicti, it transferred all its equipments to Ipo Dam to finish the second phase of the project. Record shows that on Nov., typhoon Welming hit Central Luzon, passing through defendants (NPC) Angat Hydro-electric Project and Dam at lpo, Bulacan. Strong winds struck the project area, and heavy rains occasionally fell causing the water in the reservoir of the Angat Dam to rise at the rate of 60 centimeters per hour. To prevent an overflow of water from the dam, since the water level had reached the danger height, defendant corporation caused the opening of the spillway gates. ECI sued NPC for damages. The trial court and the court of appeals found that defendant NPC was negligent when opened the gates only at the height of the typhoon holding that it could have opened thespill gates gradually and should have done so before the typhoon came. Thus both courts awarded ECI for damages.NPC assails the decision of the CA as being erroneous on the grounds, inter alia, that the loss sustained by ECI was due to force majeure. It argued that the rapid rise of water level in the reservoir due to heavy rains brought about by the typhoon is an extraordinary occurrence that could not have been foreseen. On the other hand, ECI assails the decision of the court of appeals modifying the decision of the trial court eliminating the awarding of exemplary damages. Hence this present appeal. Whether or not NPC is liable for damages even though the cause of the damage ISSUE is due to a force majeure? Yes. NPC was undoubtedly negligent because it opened the spillway gates of the Angat Dam only at the height of typhoon Welming when it knew very well that it was safer to have opened the same gradually and earlier, as it was also undeniable that NPC knew of the coming typhoon at least four days before it actually struck. And even though the typhoon was an act of God or what we may call force majeure, NPC cannot escape liability because its negligence was the proximate cause of the loss and damage. Thus, if upon the happening of a fortuitous event or an act of God, there concurs a corresponding fraud, negligence, delay or violation or contravention in any manner of the tenor of the obligation which results in loss or damage, the obligor cannot escape liability. Thus, when the negligence of a person concurs with an act of God in producing a loss, such person is not exempt from liability by showing that the immediate cause of the damage was the act of God. To be exempt from liability RULI for loss because of an act of God, he must be free from any previous negligence NG or misconduct by which the loss or damage may have been occasioned. ELKIE PHILCOMSAT CORP. vs. Globe Telecom Inc., May 25, 2004 FACT Philcomsat & Globe entered into an agreement whereby Philcomsat obliged S itself to establish, operate & provide an IBS standard B earth station for the exclusive use of US defense communications Agency (USDCA) with term of 60 months or 5 yrs In turn, Globe promised to pay Philcomsat monthly rentals. At the execution of the agreement, both parties knew that military Bases Agreement was to expire in 1991. Subsequently, Philcomsat installed the earth station & USDCA made use of the same. The senate passed a resolution expressing its decision not to concur in the ratification of the treaty of friendship. So the RP-US Military bases Agreement terminated it on Dec. 1992. Globe notified Philcomsat its instruction to discontinue effective Nov. 1992, in view of the withdrawal of US military personnel. Philcomsat sent a reply to pay the stipulated rentals even after Globe shall have discontinued the use of earth

station after said date. After the US military force left Subic, Philcomsat sent a letter demanding payment. However, Globe refused to listen to Philcomsat s demand because the termination of the US military bases agreement constitute force majeure and said event exempted it from paying rentals. Whether or not the termination of the RP-US Military Bases Agreement constitutes force majeure which would exempt Globe from complying with its ISSUE obligation to pay rentals under its Agreement with Philcomsat? Yes. In order that Globe may be exempt from non-compliance with its obligation to pay rentals under Section 8, the concurrence of the following elements must be established: a. the event must be independent of the human will; b. the occurrence must render it impossible for the debtor to fulfill the obligation in a normal manner; c. and the obligor must be free of participation in, or aggravation of, the injury to the creditor. Philcomsat and Globe had no control over the non-renewal of the term of the RP-US Military Bases Agreement when the same expired in 1991, because the prerogative to ratify the treaty extending the life there of belonged to the Senate. Resolution No. 141 are acts, direction or request of the Government of the Philippines and circumstances beyond the control of the defendant. The formal order, the letter notification from ATT and complete withdrawal of all the military forces and personnel are also acts and circumstances beyond the control of the defendant. Article 1174, which exempts an obligor from liability RULI on account of fortuitous events or force majeure, refers not only to events that NG are unforeseeable, but also to those which are foreseeable, but inevitable. ELKIE REPUBLIC Vs. LUZON STEVEDORING CORPORATION, September 29, 1967 A barge being towed by tugboats "Bangus" and "Barbero" all owned by Luzon Stevedoring Corp. smashed into one of the wooden piles of the Nagtahan Bailey Bridge due to the swollen current of the Pasig after heavy rains which occurred days before. The Republic sued Luzon Stevedoring for actual and consequential damages. Luzon Stevedoring claimed it had exercised due diligence in the selection and supervision of its employees; that the damages to the bridge FACT were caused by force majeure; that plaintiff has no capacity to sue; and that the S Nagtahan bailey bridge is an obstruction to navigation. Whether or not the collision of appellant's barge with the supports or piers of ISSUE the Nagtahan bridge was in law caused by fortuitous event or force majeure? There is a presumption of negligence on part of the employees of Luzon Stevedoring, as the Nagtahan Bridge is stationary. For force majeure by definition, are extraordinary events not foreseeable or avoidable, "events that could not be foreseen, or which, though foreseen, were inevitable" It is, therefore, not enough that the event should not have been foreseen or anticipated, as is commonly believed, but it must be one impossible to foresee or to avoid. The mere difficulty to foresee the happening is not impossibility to foresee the same. Luzon Stevedoring knew the perils posed by the swollen stream and its swift current, and voluntarily entered into a situation involving obvious danger; it therefore assured the risk, and cannot shed responsibility RULI merely because the precautions it adopted turned out to be insufficient. It is NG thus liable for damages. VDA DE VILLARUEL Vs. MANILA MOTOR CO. INC. and COLMENARES, December ELKIE 13, 1958

The plaintiffs Villaruel and defendant Manila Motor Co. Inc. entered into a contract whereby the defendant agreed to lease plaintiffs building premises. The leased premises were placed in the possession of the defendant until the invasion. The Japanese military occupied and used the property leased as part of their quarters in which no payment of rentals were made. Upon liberation of the said city, the American forces occupied the same buildings that were vacated by the Japanese. When the US gave up the occupancy of the premises, defendant decided to exercise their option to renew the contract, in which they agreed. However, before resuming the collection of rentals, Villaruel demanded payment of rentals corresponding to the time the Japanese military occupied the leased premises, but defendant refused . As a result plaintiff gave notice seeking the rescission of the contract and the payment of rentals; this was rejected by the defendant. The plaintiff still demanded for rents in debts and for the rescission of the contract of lease, despite that defendant paid to plaintiff the sum of P350 for the rent. The plaintiff commenced an action before the CFC against defendant company. During the pendency of the case, the leased building was burned down. Because of the occurrence, plaintiffs demanded reimbursement from the defendants, afterwards, they filed a supplemental complaint to include a 3rd cause of action, the recovery of the value of the FACT burned building. The trial court rendered judgment in favor of the plaintiff. S Hence the defendants appeal. ISSUE Is Manila Motor Co. Inc. liable for the loss of the leased premises? No. Clearly, the lessor's insistence upon collecting the occupation rentals was unwarranted in law. Hence, their refusal to accept the current rentals without qualification placed them in default (mora creditoris or accipiendi) with the result that thereafter, they had to bear all supervening risks of accidental injury or destruction of the leased premises. While not expressly declared by the Code of 1889, this result is clearly inferable from the nature and effects of mora. In other words, the only effect of the failure to consign the rentals in court was that the obligation to pay them subsisted and the lessee remained liable for the amount of the unpaid contract rent, corresponding to the period from when it was occupied by the Japanese; it being undisputed that when the commercial buildings were burned, the defendants appellants have paid the contract rentals RULI at the rate of P350 per month. But the failure to consign did not eradicate the NG default (mora) of the lessors nor the risk of loss that lay upon them. KHALI L Tanguiling vs. CA and Herce,Jr., G.R. No. 117190, Jan. 2, 1997 FACT This case involves the proper interpretation of the contract entered into S between the parties. Tanguilig proposed to private respondent Vicente Herce to construct windmill system for him. They agreed on a 60,000 pesos contract price. 30,000 pesos was paid by Vicente Herce as downpayment while another 15,000 pesos was paid as an installment leaving only a balance of 15,000 pesos. When Vicente Herce failed to pay the remaining balance to Tanguilig due to the fact that he paid it to another company named SPMGI which in turn constructed a deep well that will connect the windmill to it, Tanguilig filed a complaint on the ground that the construction of the deep well was not covered by the contract price of 60,000 pesos and thus it should not be credited to him. The trial court ruled in favour of Tanguilig which ruled that the construction of the deep well was not included in the agreement. It was later reversed by the Court of Appeals which ruled that the construction of the deep well was included in the agreement because the word deep well was mention in the

proposal. Hence this appeal. 1.) Whether or not the agreement to construct the windmill system included the installation of a deep well. 2.) Whether or not petitioner is under obligation to reconstruct the windmill ISSUE after it collapsed. The Court ruled that the construction of the deep well was not included in the agreement between both parties.The preponderance of evidence supports the finding of the trial court that the installation of a deep well was not included in the proposals of petitioner to construct a windmill system for respondent. Notably, nowhere in either proposal is the installation of a deep well mentioned, even remotely. Neither is there an itemization or description of the materials to be used in constructing the deep well. There is absolutely no mention in the two (2) documents that a deep well pump is a component of the proposed windmill system. Moreover, it is a cardinal rule in the interpretation of contracts that the intention of the parties shall be accorded primordial consideration and, in case of doubt, their contemporaneous and subsequent acts shall be principally considered. An examination of such contemporaneous and subsequent acts of respondent as well as the attendant circumstances does not persuade us to uphold him.The second issue is not a novel one. Petitioner failed to show that the collapse of the windmill was due solely to a fortuitous event. Interestingly, the evidence does not disclose that there was actually a typhoon on the day the windmill collapsed. Petitioner merely stated that there was a "strong wind." But a strong wind in this case cannot be fortuitous unforeseeable nor unavoidable. On the contrary, a strong wind should be RULI present in places where windmills are constructed, otherwise the windmills will NG not turn. KHALI FIRST METRO INVEST CORP Vs. ESTE DEL SOL MOUNTAINRESERVE Inc., L November 15, 2001 Petitioner FMIC granted respondent Este del Sol a loan of (P7,385,500.00) to finance the construction and development of the Este del Sol Mountain Reserve, a sports/resort complex project located at Barrio Puray, Montalban, Rizal. In accordance with the terms of the Loan Agreement, respondent Este del Sol executed several documents as security for payment, among themndividual Continuing Suretyship agreements by co-respondents Valentin S. Daez, Jr., Manuel Q. Salientes, Ma. Rocio A. De Vega, Alexander G. Asuncion, Alberto M. Ladores, Vicente M. De Vera, Jr. and Felipe B. Sese, all dated February 2, 1978, to guarantee the payment of all the obligations of respondent Este del Sol up to the aggregate sum (P7,500,000 00) each.Failing to secure from the individual respondents, as sureties of the loan of respondent Este del Sol by virtue of their continuing surety agreements, petitioner instituted on November 11, 1980 the instant collection suitagainst the respondents. The trial court ruled in favour of petitioner. Later on, the decision was reversed by the CA. The appellate court found and declared that the fees provided for in the Underwriting and Consultancy Agreements were mere subterfuges to camouflage the excessively FACT usurious interest charged by the petitioner FMIC on the loan of respondent Este S del Sol. Hence this appeal. Whether or not the Underwriting and Consultancy Agreements were mere subterfuges to camouflage the excessively usurious interest charged by the ISSUE petitioner FMIC on the loan of respondent Este del Sol. RULI The Court ruled that in the instant case, several facts and circumstances taken NG altogether show that the Underwriting and Consultancy Agreements were

simply cloaks or devices to cover an illegal scheme employed by petitioner FMIC to conceal and collect excessively usurious interestAll the foregoing established facts and circumstances clearly belie the contention of petitioner FMIC that the Loan, Underwriting and Consultancy Agreements are separate and independent transactions. Contracts and stipulations, under any cloak or device whatever, intended to circumvent the laws against usury shall be void. The borrower may recover in accordance with the laws on usury.the instant petition is hereby DENIED, and the assailed Decision of the Court of Appeals is AFFIRMED. KHALI L SECURITY BANK vs. RTC, October 23, 1996 In 1983, Eusebio acquired 3 separate loans from Security Bank amounting to P265k. The agreed interest rate was 23% per annum. The promissory note was freely and voluntarily signed by both parties. Leia Ventura was the co-maker. Eusebio defaulted from paying. Security Bank sued for collection. Judge Gorospe FACT of the Makati RTC ordered Eusebio to pay but he lowered the interest rate to S 12% per annum. Whether or not the courts have liberality to reduce stipulated interest rates to ISSUE the legal rate of 12% per annum No. From the examination of the records, it appears that indeed the agreed rate of interest as stipulated on the three (3)promissory notes is 23% per annum. The applicable provision of law is the Central Bank Circular No. 905 which took effect on December 22, 1982. Section 1 of Central Bank Circular No. 905 states that the rate of interest, including commissions, premiums, fees and other charges, on a loan or forbearance of anymoney, goods or credits, regardless of maturity and whether secured or unsecured, that may be charged or collected by any person, whether natural or judicial, shall not be subject to any ceiling prescribed under or pursuant to the Usury Law, as amended. Only in the absence of stipulations will the 12% rate be applied or if the stipulated rate is grossly excessive. Further, Eusebio never questioned the rate. He merely expressed to negotiate the terms and conditions. The promissory noteswere RULI signed by both parties voluntarily. Therefore, stipulations therein are binding NG between them. KHALI L ORIA VS. Mc MICKING, January 18, 1912 Gutierrez Hermanos filed an action for recovery of a sum of money against OriaHermanos& Co. and herein plaintiff filed an action for recovery also for the same defendant. Before the institution of the suits, members of the Company dissolved their relations and entered into a liquidation. Tomas Oria acting in behalf of his co-owners entered into a contract with the herein plaintiff for the purpose of transferring and selling all the property which the OriaHermanos& Co. owned and among the goods stated on that instrument was the steamship Serpantes and which the subject of this litigation. When the Trail Court resolved the action for recovery filed by Gutierrez Hermanos and judgment was in his favor, The sheriff demanded to Tomas Oria to make payment but the latter said there were no funds to pay the same. The sheriff then levied on the steamer, took possession of the same and announced it for public auction. Herein plaintiff FACT claimed that he is the owner of the steamer by virtue of the selling of all the S properties of the said Company. ISSUE 1. Whether or not there was a valid sale between OriaHermanos& Co. to Manuel Oria y Gonzales as against the creditors of the company.

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2. Whether or not the sale was fraudulent. The Court ruled that at the time of said sale the value of the assets of OriaHermanos& Co., as stated by the partners themselves, was P274,000. The vendee of said sale was a son of Tomas Oria and a nephew of the other two persons heretofore mentioned which said three brothers together constituted all of the members of said company.The plaintiff is a young man of 25 years old and has no property before the said selling. The court had laid down the rules in determining whether a there has been fraud prejudicing creditors: 1) consideration of conveyance is fictitious; 2) transfer was made while the suit against him (Tomas Oria y Balbas) was pending; 3) sale by insolvent debtor; 4) evidence of insolvency; 5) transfer of all properties; 6) the sale was made between father and son; 7) and the failure of the vendee to take exclusive possession of the property. The case at bar shows every one of the badges of fraud.

PARKS Vs. PROVINCE OF TARLAC, July 13, 1926 On October 18, 1910, Conception Cirer and James Hill, the owners of parcel of land No. 2 referred to in the complaint, donated it perpetually to the Municipality of Tarlac, subject to the condition that it will be absolutely and exclusively for the erection of a central school and the other for a public park, the work to commence in both cases within the period of six months from the date of the ratification by the parties of the document evidencing the donation. The donation was accepted by Mr. Santiago de Jesus in the same document on behalf of the municipal council of Tarlac of which he was the municipal president and subsequently transferred the title to this property to the Province of Tarlac. On January 15, 1921, Conception Cirer and James Hill sold this parcel of land to herein plaintiff George L. Parks. The plaintiff alleging that the condition of the donation had not been complied with and invoking the sale of this parcel of land made by CorceptionCirerandJames Hill in his favor, brought this action against the Province of Tarlac, the Municipality of Tarlac, CorceptionCirer and James Hill and prayed that he be declared the absolute FACT owner entitled to the possession of this parcel of land.The Lower Court S dismissed the complaint. Whether or not the plaintiff, George L. Parks, has a right of action to recover the parcelof land from the Province of Tarlac on the ground that the condition imposed is a suspensive or condition precedent and therefore, the said municipality had never acquired a right theretosince the condition was never ISSUE performed. The Supreme Court ruled that the contention of the appellant that a condition precedenthaving been imposed in the donation and the same not having been complied with, thedonation never became effective is without merit and erroneous. The characteristic of acondition precedent is that the acquisition of the right is not effected while said condition isnot complied with or is not deemed complied with. Meanwhile, nothing is acquired and thereis only an expectancy of right. Consequently, when a condition is imposed, the compliance of which cannot be effected except when the right is deemed RULI acquired, such a condition cannot be a condition precedent but a condition NG subsequent or resolutory condition. BENN QUIJADA vs. CA, G.R. No. 126444 FACT On April 5, 1956, Trinidad Quijada and her sisters executed a deed of

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conditional donation in favor of the Municipality of Talacogon, the condition being that the land shall be used exclusively for the construction of a provincial high school. Trinidad remained in possession of the land. On July 29, 1962, Trinidad sold the land to respondent Regalado Mondejar. In 1980, the heirs of Trinidad, herein petitioners, filed a complaint for forcible entry against the respondent. In 1987, the proposed campus did not materialize, and the Sangguniang Bayan enacted a resolution donating back the land to the donor. In the meantime, respondent Mondejar conveyed portions of the land to the other respondents. On July 5, 1988, petitioners filed a complaint for quieting of title, recovery of possession and ownership of the land. Whether the sale between Trinidad and Regalado is valid considering the capacity of the vendor to execute the contract in view of the conditional deed of donation The donor may have an inchoate interest in the donated property during the time that ownership of the land has not reverted to her. Such inchoate interest may be the subject of contracts including a contract of sale. In this case, however, what the donor sold was the land itself which she no longer owns. It would have been different if the donor-seller sold her interests over the property under the deed of donation which is subject to the possibility of reversion of ownership arising from the non-fulfillment of the resolutory condition. Sale, being a consensual contract, is perfected by mere consent, which is manifested the moment there is a meeting of the minds as to the offer and acceptance thereof on three (3) elements: subject matter, price and terms of payment of the price. Ownership by the seller on the thing sold at the time of the perfection of the contract of sale is not an element for its perfection. What the law requires is that the seller has the right to transfer ownership at the time the thing sold is delivered. Perfection per se does not transfer ownership which occurs upon the actual or constructive delivery of the thing sold. A perfected contract of sale cannot be challenged on the ground of non-ownership on the part of the seller at the time of its perfection; hence, the sale is still valid. The consummation, however, of the perfected contract is another matter. It occurs upon the constructive or actual delivery of the subject matter to the buyer when the seller or her successors-in-interest subsequently acquires ownership thereof. Such circumstance happened in this case when petitioners who are Trinidad Quijada's heirs and successors-in-interest became the owners of the subject property upon the reversion of the ownership of the land to them. Consequently, ownership is transferred to respondent Mondejar and those who claim their right from him. Article 1434 of the New Civil Code supports the ruling that the seller's "title passes by operation of law to the buyer." This rule applies not only when the subject matter of the contract of sale is goods, but also to other kinds of property, including real property. CENTRAL PHILIPPINE UNIVERSITY vs. COURT OF APPEALS, 1995, In 1939, Don Ramon Lopez Sr. executed a deed of donation in favor of CPU together with the following conditions: a) The land should be utilized by CPU exclusively for the establishment & use of medical college; b) The said college shall not sell transfer or convey to any 3rd party; c) The said land shall be called Ramon Lopez Campus and any income from that land shall be put in the fund to be known as Ramon Lopez Campus Fund. However, on May 31, 1989, PR, who are the heirs of Don Ramon filed an action

for annulment of donation, reconveyance & damages against CPU for not complying with the conditions. The heirs also argued that CPU had negotiated with the NHA to exchange the donated property with another land owned by the latter. Petitioner alleged that the right of private respondents to file the action had prescribed. 1) WON petitioner failed to comply the resolutory conditions annotated at the back of petitioners certificate of title without a fixed period when to comply with such conditions? 2) WON there is a need to fix the period for compliance of the condition 1)Yes. Under Art. 1181, on conditional obligations, the acquisition of rights as well the extinguishment or loss of those already acquired shall depend upon the happening of the event which constitutes the condition. Thus, when a person donates land to another on the condition that the latter would build upon the land a school is such a resolutory one. The donation had to be valid before the fulfillment of the condition. If there was no fulfillment with the condition such as what obtains in the instant case, the donation may be revoked & all rights which the donee may have acquired shall be deemed lost & extinguished. More than a reasonable period of fifty (50) years has already been allowed petitioner to avail of the opportunity to comply with the condition even if it be burdensome, to make the donation in its favor forever valid. But, unfortunately, it failed to do so. Hence, there is no more need to fix the duration of a term of the obligation when such procedure would be a mere technicality and formality and would serve no purpose than to delay or lead to an unnecessary and expensive multiplication of suits. Records are clear and facts are undisputed that since the execution of the deed of donation up to the time of filing of the instant action, petitioner has failed to comply with its obligation as donee. Petitioner has slept on its obligation for an unreasonable length of time. Hence, it is only just and equitable now to declare the subject donation already ineffective and, for all purposes, revoked so that petitioner as donee should now return the donated property to the heirs of the donor, private respondents herein, by means of reconveyance. 2) No. Under Art. 1197, when the obligation does not fix a period but from its nature & circumstance it can be inferred that the period was intended, the court may fix the duration thereof because the fulfillment of the obligation itself cannot be demanded until after the court has fixed the period for compliance therewith & such period has arrived. However, this general rule cannot be applied in this case considering the different set of circumstances existing more than a reasonable period of 50yrs has already been allowed to petitioner to avail of the opportunity to comply but unfortunately, it failed to do so. Hence, there is no need to fix a period when such procedure would be a mere technicality & formality & would serve no purpose than to delay or load to unnecessary and expensive multiplication of suits. Under Art. 1191, when one of the obligors cannot comply with what is incumbent upon him, the obligee may seek rescission before the court unless there is just cause authorizing the fixing of a period. In the absence of any just

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cause for the court to determine the period of compliance there is no more obstacle for the court to decree rescission. CORONEL vs. CA, October 7, 1996 Coronel et al. consummated the sale of his property located in Quezon City to respondent Alcaraz. Since the title of the property was still in the name of the deceased father of the Coronels, they agreed to transfer its title to their name upon payment of the down payment of 50K. and thereafter an absolute deed of sale will be executed. Alcarazs mother paid the down payment in behalf of her daughter and as such, Coronel made the transfer of title to their name. Notwithstanding this fact, Coronel sold the property to petitioner Mabanag and rescinded its prior contract with Alcaraz. WON the rescission of the first contract between Coronel and Alcaraz is valid. the successful transfer of the certificate of title from the name of petitioners' father, to their names. Thus, the contract of sale became obligatory. With regard to double sale, the rule that the first in time, stronger in right should apply. The contention of the petitioner that she was a buyer in good faith because the notice of lis pendens in the title was annotated after she bought the property is of no merit. In case of double sale, what finds relevance and materiality is not whether or not the second buyer was a buyer in good faith but whether or not said second buyer registers such second sale in good faith, that is, without knowledge of any defect in the title of the property sold.

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The ruling should be in favor of Alcaraz because Mabanag registered the property two months after the notice of lis pendens was annotated in the title and hence, she cannot be a buyer in good faith. GONZALES vs. HEIRS OF THOMAS AND PAULA CRUZ, September 16, 1999 - Dec 1, 1983 Paula Ano Cruz, together with heirs of Thomas and Paula Cruz(Lessors) entered into a CONTRACT OF LEASE/PURCHASE with Felix Gonzales (sole proprietor of Felgon Farms/Lessee) of a half-portion of a parcel of land situated in Rodriguez, Rizal, covered by Transfer Certificate of Title - Contract contains the following provisions: PAR.1. The terms of this contract is for a period of one year upon the signing thereof. After the period of this Contract, the LESSEE shall purchase the property on the agreeable price of 1M payable w/in 2 years period with an interest of 12% per annum... PAR.2. The LESSEE shall pay by way of annual rental an amount equivalent toP2,500 per hectare, upon signing of contract on 12/01/83 PAR.9. The LESSORS hereby commit themselves and shall undertake to obtain a separate and distinct T.C.T. over the herein leased portion to the LESSEE within a reasonable period of time which shall not in any case exceed 4 years, after which a new Contract shall be executed by the parties which shall be the same in all respects with this Contract insofar as the terms and conditions are concerned. -Gonzales paid P2500 per hectare or P15T annual rental; he took possession of

the property and installed Sambrano as his caretaker -He did not exercise his option to purchase the property immediately after expiration of 1-yr lease. He remained in possession of the property without paying the purchase price provided for in the Contract, and w/o paying any further rentals. -Cruz sent out a letter to Gonzales informing him of the lessors decision to rescind the Contract due to a breach committed by Gonzales; letter also served as a demand for him to vacate the premises within 10 days from the receipt of the letter -Gonzales refused to vacate the property. Issue was brought before Brgy. Captain of San Isidro. - March 18, 1987 Since Gonzales refused to appear before the Brgy. Capt, a certification allowing the case to be brought to Court was issued. - Aug 24, 1987 Final demand letter to vacate premises was sent by remaining lessors after the death of Paula Ano Cruz, which Gonzales received but did not heed -Said property is currently the subject of an extra-judicial partition. Title to property remains in the name of Cruzs predecessors-in-interest, Bernardina Calixto andSevero Cruz -Cruzs filed a complaint for recovery of the possession of the property alleging breach of par.9 and payment of only P50T of the P500T agreed down payment on the purchase price of P1M ISSU E: WON par. 9 of the Contract of Lease/Purchase is a condition Yes. In requiring the lessors to obtain first a separate and distinct TCT in their names, such undertaking is a condition precedent to the lessees obligation to purchase and pay for the land. Condition is defined as every future and uncertain event upon which an obligation or provision is made to depend. It is a future and uncertain event upon which the acquisition or resolution of rights is made to depend by those who execute the juridical act.- Without the fulfillment of the condition, sale of the property under the Contract cannot be perfected, and Gonzales cannot be obliged to purchase the property. HERRERA vs. L.P. LEVISTE Co. Inc., February 28, 1985 June 10, 1969 - Leviste had obtained a loan from the GSIS. As security therefore, Leviste mortgaged 2 lots, one located at Paraaque, and the other located at Buendia. November 3, 1971- Leviste sold to Petitioner, Jose V. Herrera, the Buendia Property for the amount of P3,750,000.00. The conditions were that petitioner would: (1) pay Leviste P11,895,688.50; (2) assume Levistes indebtedness of P1854,311.50 to the GSIS; and (3) substitute the Paranaque property with his own within a period of six (6) months. Leviste undertook that it would arrange for the conformity of the GSIS to Herreras assumption of its mortgage obligation. Further stipulated in the Contract to Sell was that failure to comply with any of the conditions contained therein, particularly the payment of the scheduled amortizations on the dates herein specified shall render this contract automatically cancelled and any and all payments made shall be forfeited in favor of the vendor and deemed as

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rental and/or liquidated damages. Herrera took possession of the Buendia property, received rentals of P21,000.00 monthly, and collected approximately P800,000.00 from December, 1971, up to March, 1975. However, he remitted a total of only P300,000.00 to the GSIS. April 15, 1973 Petitioner Herrera requested GSIS for restructuring of mortgage obligation. GSIS replied that as a matter of policy, it could not act on his request unless he first performed the substitution of his property, updated the account, and paid 20% to GSIS. There was NO requirement by GSIS for the execution of a final deed of sale by Leviste in favor of petitioner. June 2, 1974 GSIS sent notice to Leviste because it intended to foreclose the mortgaged properties by reason of default of payment of amortizations. February 15, 1975 - the foreclosed properties were sold at public auction and a Certificate of Sale in favor of the GSIS, as the highest bidder, was issued. March 3, 1975- Leviste assigned its right to redeem both foreclosed properties to respondent Jose Marcelo, Jr. Later, Marcelo redeemed the properties from the GSIS by paying it the sum of P3,232,766.94 for which he was issued a certificate of redemption. The Paranaque property was turned over by Marcelo to Leviste upon payment by the latter of approximately P250,000.00 as disclosed at the hearing. Leviste needed the Paraque Property as it had sold the same and suit had been filed against it for its recovery. May 6, 1975 - Herrera wrote the GSIS informing the latter of his right to redeem the foreclosed properties and asking that he be allowed to do so in installments. However, the GSIS had not favorably acted thereon. Whether Levistes assignment of right of redemption to Marcelo would result in the unjust enrichment of the former (as not only will Herrera forfeit the Buendia property, but also the sums of money he already paid to Leviste and GSIS). No. The GSIS has not benefited in any way at the expense of petitioner. What it received, by way of redemption from respondent Marcelo, was the mortgage loan it had extended plus interest and sundry charges. Neither has Marcelo benefited at the expense of petitioner. He had paid to GSIS the amount P3,232,766.94, which is not far below the sum of P 3,750,000.00, which was the consideration petitioner would have paid to Leviste had his contract been consummated. Leviste had neither profited at the expense of petitioner, For Losing his Buendia Property, all he had received was P 1,854,311.50 from GSIS less amounts he had paid, plus P 1,895,688.00 paid to him by Herrera, the total of which is substantially a reasonable value of the Buendia Property. It is quite true that petitioner had lost the P 1,895,688.00 he had paid to Leviste, plus P 300,000.00 he had paid to GSIS, less the rentals he had received when in possession of the Buendia Property.

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That loss is attributable to his fault in: (a) Not having been able to submit collateral to GSIS in substitution of the Paranaque Property; (b) Not paying off the mortgage debt when GSIS decided to foreclose; and (c) Not making an earnest effort to redeem the property as a possible redemptioner. It cannot be validly said that petitioner had fully complied with all the conditions of his contract with Leviste. For one thing, he was not able to substitute the Paraaque Property with another collateral for the GSIS loan. Moreover, as stated by the Court of Appeals, nowhere in the letter (of the GSIS) was mentioned that a final deed of sale must first be executed and presented before the assumption may be considered. For if it was really the intention of GSIS, the requirement of Deed of Sale should have been stated in its letter. ONG vs. COURT OF APPEALS, July 6, 1999 1. On May 10, 1983, petitioner Jaime Ongand respondent spouses Miguel K. Robles and Alejandra Robles executed an Agreement of Purchase and Sale respecting two parcels of land situated at Barrio Puri, San Antonio, Quezon. 2. Stipulations: a. First P103, 499.91 shall be paid, and as already paid by the BUYER to the SELLERS on March 22, 1983, as stipulated under the Certification of undertaking dated March 22, 1983 and covered by a check voucher of even date. b. BPI loan, with regards to the properties, shall be paid by the buyer. c. Remaining balance shall be paid in 4 equal quarterly installments. d. That upon the payment of the total purchase price by the BUYER the SELLERS bind themselves to deliver to the former a good and sufficient deed of sale and conveyance for the described two (2) parcels of land, free and clear from all liens and encumbrances. 3. On May 15, 1983, petitioner Ong took possession of the subject parcels of land together with the piggery, building, ricemill, residential house and other improvements thereon. 4. Ong issued four postdated checks in conformity of the said stipulation. However, all checks were found to have insufficient funds. Further, Ong wasnt able to pay the BPI loan in full and left the spouses to pay the gap. 5. On August 2, 1985, respondent spouses, through counsel, sent petitioner a demand letter asking for the return of the properties. Their demand was left unheeded. 6. September 2, 1985, they filed a complaint for rescission of contract and recovery of properties with damages. 7. The RTC and CA both decide in favor of the spouses, hence this instant appeal. whether the contract entered into by the parties may be validly rescinded under Article 1191 of the New Civil Code; Yes, the court ruled that the agreement may be rescinded. In the case at bar, the contract was a contract to sell and not a contract of sale. In a contract of sale, the title to the property passes to the vendee upon the

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delivery of the thing sold; while in a contract to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase price. In a contract to sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. Respondents in the case at bar bound themselves to deliver a deed of absolute sale and clean title covering the two parcels of land upon full payment by the buyer of the purchase price of P2,000,000.00. This promise to sell was subject to the fulfillment of the suspensive condition of full payment of the purchase price by the petitioner. Petitioner, however, failed to complete payment of the purchase price. The non-fulfillment of the condition of full payment rendered the contract to sell ineffective and without force and effect. The agreement of the parties in the case at bench may be set aside, but not because of a breach on the part of petitioner for failure to complete payment of the purchase price. As regards the improvements introduced by petitioner to the premises and for which he claims reimbursement, we see no reason to depart from the ruling of the trial court and the appellate court that petitioner is a builder in bad faith. He introduced the improvements on the premises knowing fully well that he has not paid the consideration of the contract in full and over the vigorous objections of respondent spouses. Moreover, petitioner introduced major improvements on the premises even while the case against him was pending before the trial court ROMAN CATHOLIC ARCHBISHOP OF MANILA vs. CA, June 19, 1991

SMITH BELL CO. vs. SOTELO MATTI, 1922 1. Smith Bell and Co. entered into contract with Mr. Vicente Sotelo in August 1918. Two steel tanks were to be sold to Sotelo in the amount of P21,000.00; two expellers at P25,000.00 each and two electric motors at P2,000.00 each. a. The steel tanks are to be delivered within 3 or 4 months; b. The expellers to be delivered in September 1918 or as soon as possible; electric motors approximate delivery within 90 days and is not guaranteed. 2. The tanks arrived at Manila on the 27th of April, 1919: the expellers on the 26th of October, 1918; and the motors on the 27th of February, 1919. The plaintiff corporation notified the defendant, Mr. Sotelo, of the arrival of these goods, but Mr. Sotelo refused to receive them and to pay the prices stipulated. 3. The plaintiff brought suit against the defendant, based on four separate causes of action a. alleging, among other facts, that it; b. immediately notified the defendant of the arrival of the goods; c. asked instructions from him as to the delivery thereof; d. that the defendant refused to receive any of them and to pay their price. e. The plaintiff, further, alleged that the expellers and the motors were in good condition.

4. Defendants answer: a. The notification to the defendant was only made in May, 1919,that said tanks had arrived, the motors b. The expellers having arrived incomplete and long after the date stipulated." c. They also allege that, as a consequence of the plaintiff's delay in making delivery of the goods, which the Mr. Sotelo intended to use in the manufacture of coconut oil, the he suffered damages in the sums of one hundred sixteen thousand seven hundred eighty-three pesos and ninety-one centavos (P116,783.91) for the non-delivery of the tanks, and twenty-one thousand two hundred and fifty pesos (P21,250) on account of the expellers and the motors not having arrived in due time. 5. The lower court absolved the defendants from the complaint insofar as the tanks and the electric motors were concerned, but rendered judgment against them ordering them to receive expellers and pay the sum of P50,000, with legal interest and cost. 6. ISSU E: RULI NG: Both parties appealed to the Court.

Whether or not the plaintiff incurs delay in the delivery of goods? No, the plaintiff has not been guilty of any delay in the fulfillment of its obligation. In all these contracts, there is a final clause as follows: The sellers are not responsible for delays cause by fires, riots on land or on the sea, strikes or other causes known as force majeure entirely beyond the control of the sellers or their representatives. Under these stipulations, it cannot be said that any definite date was fixed for the delivery of the goods. xxx. From the record it appears that thee contracts were executed at the time of the world war when there existed rigid restrictions on the export from the united States xxx; hence clauses were inserted in the contracts, regarding Government regulations, railroading embargoes, lack of vessel space, the exigencies of the requirements of the United States Government xxx. At the time of the execution of the contracts, the parties were not unmindful of the contingency of the United States Government not allowing the export of the goods xxx. We cannot but conclude that the term which parties attempted to fix is so uncertain that once cannot tell just whether, as a matter of fact, those articles could be brought to manila or not. The obligation must be regarded as conditional. The delivery was subject to a condition the fulfillment of which depended not only upon the effort of the plaintiff, but upon the will of third persons who could in no way be compelled to fulfill the condition. It is sufficiently proven in the record that the plaintiff has made all the efforts it could possibly be expected to make under the circumstances, to bring the goods in question to Manila, as soon as possible. Xxx it is obvious that the plaintiff has complied with its obligation. When the time of delivery is not fixed in the contract, time is regarded unessential. In such cases, the delivery must be made within a reasonable time.

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Xxx Reasonable time for the delivery of the goods by the seller is to be determined by circumstances attending the particular transactions. TAYLOR vs. UY TIENG PIAO AND TAN LIUAN, October 2, 1922 1. On December 12, 1918 MD Taylor contracted with Tan Liuan and Co. to be the superintendent of the oil factory that the latter contemplated establishing in the city. 2. The stipulations of the said contract: a. The period of the contract extended over two years from the date mentioned; and the salary was to be at the rate of P600 per month during the first year and P700 per month during the second, with electric light and water for domestic consumption, and a residence to live in, or in lieu thereof P60 per month. b. The machinery to be installed in the said factory fail, for any reason,to arrive in the city of Manila within a period of six months from date hereof, this contract may be cancelled by the party of the second part at its option, such cancellation, however, not to occur before the expiration of such six months. 3. The machines did not arrive due to some inconsistent reason (like, oil business no longer promised large returns , either cancelled the order for the machinery from choice or were unable to supply the capital necessary to finance the project) and the company did not anymore pursue on establishing such oil factory. 4. The plaintiff files an action to recover damages in the amount of 13,000 covering salary and perquisites due and to become due under the contract. Whether or not in a contract for the prestation of service it is lawful for the parties to insert a provision giving to the employer the power to cancel the contract in a contingency which may be dominated by himself. Yes, the stipulation is legal. One of the consequences of the stipulation was that the employers were left in a position where they could dominate the contingency, and the result was about the same as if they had been given an unqualified option to dispense with the services of Taylor at the end of 6 months. But this circumstance does not make the stipulation illegal. VISAYAN SAWMILL COMPANY INC. vs. CA, March 3, 1993