SPOUSES VELARDE v.

COURT OF APPEALS, 361 SCRA 56

Facts: Petitioners entered into a deed of sale with assumption of mortgage with private respondents paying a
downpayment of P800,000 and assuming the mortgage amount of P1.8M in favor of BPI. Petitioners further agreed "to strictly
and faithfully comply with all the terms and conditions appearing in the real estate mortgage signed and executed by the
vendor in favor of BPI . . . as if the same were originally signed and executed by the vendee." As part of the deed, petitioner
Avelina with her husband's consent executed an undertaking that during the pendency of the application for the
assumption of mortgage she agreed to continue paying said loan in accordance with the mortgage deed and that in the
event of violation of any of the terms and conditions of the deed of real estate mortgage, she agreed that the P800,000
downpayment shall be forfeited as liquidated damages and the deed of sale with assumption of mortgage shall be deemed
automatically cancelled. When the bank denied the application for assumption of mortgage, petitioners stopped making
payments. Thus, notice of cancellation/rescission was sent to petitioners for non-performance of their obligation. Aggrieved,
petitioners filed a complaint against private respondent for specific performance, nullity of cancellation, writ of possession and
damages. Both parties admitted that their agreement mandated that petitioners should pay the purchase price
balance of P1.8M to private respondents in case the request to assume the mortgage would be disapproved. The
trial court dismissed the complaint, but on reconsideration, directed the parties to proceed with the sale. On appeal,
the Court of Appeals upheld the validity of the rescission. Hence, this recourse.
Issue: WON the CA erred in ruling that there was a breach in the performance of a reciprocal obligation.
Held: The failure of the vendee to pay the balance of the purchase price constitutes a breach on the performance of a
reciprocal obligation, and not a violation of the terms and conditions of the mortgage contract. This gave rise to the vendor's
right to rescind the contract. However, the automatic rescission and forfeiture of payment clauses in the mortgage contract
does not apply. Considering that the rescission of the contract was based on Article 1191 of the Civil Code, mutual restitution
by the parties is required.
Decision: The assailed CA decision is AFFIRMED.

SARMIENTO v. CABRIDO, 401 SCRA 122

Facts: The controversy herein arose when a piece of diamond was broken by Zenon Santos, an employee at the jewelry shop, in
the process of dismounting it from an original setting. The diamond was claimed to be .33 carat and almost perfect in cut and
clarity. As a result of the incident, the petitioner herein was forced to replace the broken diamond to its owner in the amount
of P30,000.00. The petitioner filed a complaint for damages with the Metropolitan Trial Court in Cities (MTCC) and claimed that
the dismounting of the diamond from its original setting was part of the obligation assumed by the respondents under the
contract of service, the respondent spouses being the owner of the jewelry shop and the other respondent their employee.
Thus, they should be held liable for the damages arising from its breakage. The MTCC decided in favor of the petitioner herein.
But on appeal, the Regional Trial Court (RTC) reversed the decision; thus absolving the respondents of any responsibility arising
from breach of contract. The Court of Appeals affirmed the judgment of the RTC, hence, this petition for review.
Issue: WON the CA erred in affirming the RTC decision absolving respondents of any responsibility from breach of contract.
Held: According to the Supreme Court, preponderance of evidence supported the view that Marilou and Zenon Santos were
employed at the jewelry shop in order to perform activities, which were usually necessary or desirable in its business. The Court,
therefore, held that an obligation to pay actual damages arose in favor of the petitioner against the respondent spouses who
admittedly owned and managed the jewelry shop. It was proven that petitioner replaced the damaged jewelry in the amount of
P30,000.00. The facts of the case also justified the award of moral damages. The petition was granted and the assailed decision
of the Court of Appeals was reversed and set aside by the Supreme Court ordering the respondent spouses to pay petitioner
actual damages of P30,000.00 and moral damages of P10,000.00.

NATIONAL POWER CORPORATION vs. COURT OF APPEALS, 211 SCRA 162

Facts: These consolidated petitions for review stemmed from several pending and resolved cases filed in several courts by the
parties involved in these petitions presenting, among others, the issue of whether or not the NPC has jurisdiction to determine
whether it may supply electric power directly to the facilities of an industrial corporation in areas where there is an existing and
operating electric power franchise. Before the filing of these petitions, the Court of Appeals rendered a decision declaring that
the lower court gravely abused its discretion in dismissing the petition below on the grounds of res judicaza and litis pendentia.
In addition, the said court elucidated that it is the Energy Regulatory Board (ERB) and not the NPC has the jurisdiction to
determine the propriety of direct connection. Both the NPC and Phividec Industrial Authority (PIA) thus filed their respective
petitions.
Issue: WON the NPC has jurisdiction to determine whether it may supply electric power directly to facilities of an industrial
corporation in areas where there is an existing and operating electric power franchisee.
Held: The Supreme Court ruled that the determination of which the applicant public utilities has the right to supply electric
power to an area which is within the coverage of both is certainly not a rate-fixing function which should remain with the ERB.
It deals with the regulation of the distribution of energy resources which, under EO 172, was an express function of ERB.
However, with the enactment of RA 7638, the Department of Energy took over such function. Hence, it is the
Department of Energy which has the power to determine whether Cagayan Electric Power and Light Co., Inc. (CEPALCO) or PIA
should supply power to the PHIVIDEC Industrial Estate Misamis Oriental (PIE-MO). Clearly petitioner's assertion that its
authority to entertain and hear direct connection application; is a necessary incident of its express authority to sell electric
power in bulk, is now baseless. Moreover, it cannot simply arrogate unto itself the authority to exercise non-rate-fixing powers,
which now devolves upon the Department of Energy.

WOODHOUSE vs. HALILI,G.R. No. L-4811, July 31, 1953

Facts:On November 29, 1947, plaintiff Woodhouse entered into a written agreement with defendant Halili stating among
others that: 1) that they shall organize a partnership for the bottling and distribution of Missionsoft drinks, plaintiff to act as
industrial partner or manager, and the defendant as a capitalist, furnishing the capital necessary therefore; 2) that plaintiff was
to secure the Mission Soft Drinks franchise for and in behalf of the proposed partnership and 3) that the plaintiff was to receive
30 per cent of the net profits of the business. Prior to entering into this agreement, plaintiff had informed the Mission Dry
Corporation of Los Angeles, California, that he had interested a prominent financier (defendant herein) in the business, who
was willing to invest half a milliondollars in the bottling and distribution of the said beverages, and requested, in order that he
may close the deal with him, that the right to bottle and distribute be granted him for a limited time under the condition that it
will finally be transferred to the corporation. Pursuant to this request, plaintiff was given a thirty days option on exclusive
bottling and distribution rights for the Philippines. The contract was finally signed by plaintiff on December 3, 1947. When the
bottling plant was already in operation, plaintiff demanded of defendant that the partnership papers be executed. Defendant
Halili gave excuses and would not execute said agreement, thus the complaint by the plaintiff. Plaintiff prays for the :
1.execution of the contract of partnership; 2) accounting of profits and 3)share thereof of 30 percent with 4) damages in the
amount of P200,000. The Defendant on the other hand claims that: 1) the defendants consent to the agreement, was secured
by the representation of plaintiff that he was the owner, or was about to become owner of an exclusive bottling franchise,
which representation was false, and that plaintiff did not secure the franchise but was given to defendant himself 2) that
defendant did not fail to carry out his undertakings, but that it was plaintiff who failed and 3)that plaintiff agreed to contribute
to the exclusive franchise to the partnership, but plaintiff failed to do so with a 4) counterclaim for P200,00 as damages.
The CFI ruling: 1) accounting of profits and to pay plaintiff 15 % of the profits and that the 2) execution of contract cannot be
enforced upon parties. Lastly, the 3) fraud wasnt proved
Issues: 1. WON plaintiff falsely represented that he had an exclusive franchise to bottle Mission beverages
2. WON false representation, if it existed, annuls the agreement to form the partnership
Held: 1. Yes. Plaintiff did make false representations and this can be seen through his letters to Mission Dry Corporation asking
for the latter to grant him temporary franchise so that he could settle the agreement with defendant. The trial court reasoned,
and the plaintiff on this appeal argues, that plaintiff only undertook in the agreement to secure the Mission Dry franchise for
and in behalf of the proposed partnership. The existence of this provision in the final agreement does not militate against
plaintiff having represented that he had the exclusive franchise; it rather strengthens belief that he did actually make the
representation. The defendant believed, or was made to believe, that plaintiff was the grantee of an exclusive franchise. Thus it
is that it was also agreed upon that the franchise was to be transferred to the name of the partnership, and that, upon its
dissolution or termination, the same shall be reassigned to the plaintiff.
Again, the immediate reaction of defendant, when in California he learned that plaintiff did not have the exclusive franchise,
was to reduce, as he himself testified, plaintiffs participation in the net profits to one half of that agreed upon. He could not
have had such a feeling had not plaintiff actually made him believe that he(plaintiff) was the exclusive grantee of the franchise.
2. No. In consequence, article 1270 of the Spanish Civil Code distinguishes two kinds of (civil) fraud, the causal fraud, which may
be ground for the annulment of a contract, and the incidental deceit, which only renders the party who employs it liable for
damages only. The Supreme Court has held that in order that fraud may vitiate consent, it must be the causal (dolo causante),
not merely the incidental (dolo incidente) inducement to the making of the contract.
The record abounds with circumstances indicative of the fact that the principal consideration, the main cause that induced
defendant to enter into the partnership agreement with plaintiff, was the ability of plaintiff to get the exclusive franchise to
bottle and distribute for the defendant or for the partnership. The original draft prepared by defendants counsel was to the
effect that plaintiff obligated himself to secure a franchise for the defendant. But if plaintiff was guilty of a false representation,
this was not the causal consideration, or the principal inducement, that led plaintiff to enter into the partnership agreement.
On the other hand, this supposed ownership of an exclusive franchise was actually the consideration or price plaintiff gave in
exchange for the share of 30 per cent granted him in the net profits of the partnership business. Defendant agreed to give
plaintiff 30 per cent share in the net profits because he was transferring his exclusive franchise to the partnership.
Having arrived at the conclusion that the contract cannot be declared null and void, may the agreement be carried out or
executed? The SC finds no merit in the claim of plaintiff that the partnership was already a fait accompli from the time of the
operation of the plant, as it is evident from the very language of the agreement that the parties intended that the execution of
the agreement to form a partnership was to be carried out at a later date. , The defendant may not be compelled against his
will to carry out the agreement nor execute the partnership papers. The law recognizes the individuals freedom or liberty to do
an act he has promised to do, or not to do it, as he pleases.
Decision: With modification above indicated, the judgment appealed from is hereby affirmed.

GUTIERREZ v. GUTIERREZ, G.R. NO. 34840, September 23, 1931.

Facts: On February 2, 1930, a passenger truck and an automobile of private ownership collided while attempting to pass each
other on a bridge. The truck was driven by the chauffeur Abelardo Velasco, and was owned by saturnine Cortez. The
automobile was being operated by Bonifacio Gutierrez, a lad 18 years of age, and was owned by Bonifacios father and mother,
Mr. and Mrs. Manuel Gutierrez. At the time of the collision, the father was not in the car, but the mother, together with several
other members of the Gutierrez family were accommodated therein. The collision between the bus and the automobile
resulted in Narciso Gutierrez suffering a fractured right leg which required medical attendance for a considerable period of
time.

Issue: Whether or not both the driver of the truck and automobile are liable for damages and indemnification due to their
negligence. What are the legal obligations of the defendants?

Held: Bonifacio Gutierrezs obligation arises from culpa aquiliana. On the other hand, Saturnino Cortezs and his chauffeur
Abelardo Velascos obligation rise from culpa contractual. The youth Bonifacio was na incompetent chauffeur, that he was
driving at an excessive rate of speed, and that, on approaching the bridge and the truck, he lost his head and so contributed by
his negligence to the accident. The guaranty given by the father at the time the son was granted a license to operate motor
vehicles made the father responsible for the acts of his son. Based on these facts, pursuant to the provisions of Art. 1903 of the
Civil Code, the father alone and not the minor or the mother would be liable for the damages caused by the minor. The liability
of Saturnino Cortez, the owner of the truck, and his chauffeur Abelardo Velasco rests on a different basis, namely, that of
contract.
Decision: Judgment is rendered in favor the plaintiff and against the defendants.

DE GUIA v. MANILA ELECTRIC, GR No. 14335, January 28,1920.

Facts: A car collision occurred causing injuries to petitioner. The trial court found that the motorman was guilty of negligence
for causing the accident for over speeding.The motorman for his part, say that the accident was caused by a stone which they
hit, and thus he is not liable.The petitioner, who is a licensed physician, asked for indemnity of P 40,000.00 as damages for
medical expenses and lost income.

Issue: WON the driver was in fact negligent, and whether the petitioner is entitled to the amount of damages he is asking for.

Held: The fact that a stone was present at the place where the car collision occurred is immaterial. The driver was still over
speeding, and because of this, the collision occurred. Thus, he was still negligent, regardless of the presence of the stone. An
experienced motorman should have stopped to look at whether something was wrong before he had driven the car to the
entire distance. As to the nature of the motormans liability, it is of contractual nature between the passenger and the operator
of the vehicle. The operator of the vehicle was bound under contract to deliver the passenger safely to his destination, and the
failure to comply with this obligation means that the operator of the vehicle would necessarily incur criminal liability. The
company cannot avail itself of liability arising from quasi-delicts, because there was a contractual relation between the
operator of the vehicle and the passenger. As to the amount of damages asked by the petitioner, the Supreme Court found it
too excessive and averred that the petitioner is trying to make a profit out of the damages by using his knowledge and skill as a
physician to gain as much money as possible by concocting ridiculous ailments, and enlisting the help of friends and colleagues
to achieve their goal. The trial court was therefore correct in denying this excessive claim of damages.

Decision: Judgment is MODIFIED by reducing the amount of damages to P 1,100.00 with legal interest.

VASQUEZ v. DE BORJA, GR No. L-48930, February 23, 1944.

Facts: Vasquez and Borja obligated themselves to sell to the plaintiff 4,000 cavans of palay at P8,400.00. But what was only
delivered was 2,488 cavans of palay at P5,224.00 and the remaining cavans and their corresponding value due were refused to
be delivered by defendants despite numerous demands. Vasquez denied having entered into such contract in his own personal
capacity. The trial court ordered Vasquez to pay plaintiff De Borja a sum of more that P3,000.00 with interest. Upon appeal to
the CA the amount was reduced. Upon motion for reconsideration, the CA set aside its previous judgment and remanded the
case back to the trial court.

Issue: WON plaintiff De Borja entered into a contract with defendant Vasquez in his personal capacity or as manager of his
company.

Held: The CA erred in ruling that the contract was made in plaintiffs personal capacity. It was clearly entered into by him as a
manager of the company he works in.The CA also erred in remanding the case back to the trial court, when it should have
dismissed the case outright. The trial court also found Vasquez negligent in the performance of his contract and held him
personally liable on that account. The CA and the trial court failed to distinguish between a contractual obligation from an
obligation arising from a culpa aquiliana. The fact that the corporation, acting through Vasquez as its manager, was guilty of
negligence in the fulfillment of the contract, did not make Vasquez principally liable for such negligence since such contract was
the corporations not Vasquezs. Thus, its non-fulfillment made the corporation liable, not its agent through Vasquez. As to
petitioners counterclaim, the court finds no basis in it, thus such is dismissed for lack of merit.

Decision: The judgment of the CA is reversed and the complaint is hereby DISMISSED.

VERMEN REALTY DEVELOPMENT CORP. v. COURT OF APPEALS, GR No. 101762, July 6, 1993.

Facts: Petitioner entered into a contract with private respondent Seneca Hardware. It stated that Seneca pay Vermen an
amount stipulated in the contract and would provide Vermen with all construction materials necessary for the building of
Vermens condominium units. In return, Vermen will pay Seneca for all the costs of the materials, plus give them two condo
units for their utilization. Seneca did pay its part of the obligation, and petitioner in turn delivered the 2 condo units promised.
But then, petitioner repossessed one of the condo units, because of such, respondent had to rent another condo unit for their
temporary use. Petitioner said that the condo unit was repossessed because respondent had not paid anything for the
purchase of such condo unit. The construction of Vermens condo units then ceased because of the denial of their loan
application. Seneca then filed a complaint for recession of the contract with damages. The trial court dismissed the complaint
and ordered Seneca to pay Vermen on its counterclaim. The CA reversed the trial court decision, hence this petition.

Issue: WON the circumstances at bar warrant the recession of the contract between petitioner and respondent.

Held: The SC ruled in Senecas favor. Since the provisions of the contract are reciprocal in nature, the non-fulfillment of one
partys obligation frees the other party from complying with his/her obligation as well. In this case, respondent did not fail to
fulfill their obligations to petitioner. The discontinuance of delivery of construction materials to petitioner stemmed from the
failure of petitioner to send purchase orders to private respondent. The general rule in contracts are that recession of a
contract is not allowed if the breach in contract is slight and casual. A contract can only be rescinded if there is substantial and
fundamental breach as to defeat the purpose of the contract. The impossibility of fulfillment of the obligation on petitioners
part would mean that the contract would have to be rescinded, and since the construction of Vermens condo units have
ceased, petitioner would not be able to fulfill its obligation to give the respondent the option to transfer to one of their condo
units.

Decision: Petition is DENIED for lack of merit.

SONG FO & COMPANY vs. HAWAIIAN PHILIPPINE CO. G.R. No. 23769, September 16, 1925.

Facts: Plaintiff Song Fo, presented a complaint with two causes of action for breach of contract against Hawaiian Philippine Co.
In its answer Hawaiian said that since Song Fo had defaulted in the payment for the molasses they delivered to them under
their contract, the latter was compelled to cancel the said contract. The trial court ordered Hawaiian to pay Song Fo more than
P35,000.00 with interest.

Issues: WON the lower court erred in its ruling finding that Hawaiian agreed to sell Song Fo 400,000 and not only 300,000
gallons of molasses; WON the lower court erred in its ruling finding that Hawaiian rescinded the contract without just cause;
WON the lower court erred in its ruling finding that in favoring Song Fo; and WON the lower court erred in denying Hawaiians
motion for retrial.

Held: As to the 1st issue, we agree that Hawaiian agreed to deliver to Song Fo 300,000 not 400,000 gallons of molasses. The
extra 100,000 gallons was not a definite promise. As to the 2nd issue, the SC ruled that Hawaiian had no legal right to rescind
the contract of sale because of Song Fos failure to deliver the molasses on time. Yes, the terms of payment fixed by parties in a
contract are controlling, the time of payment of contract should be treated as the essence of the contract, But the general rule
is slight breaches in the terms of contracts will not merit its rescission, only substantial and fundamental breaches which defeat
the purpose of the contract could validly allow rescission of contracts. In this case, there was a delay of merely 20 days from
the date in which the molasses were supposed to be delivered, from when it was actually delivered. Thus, this breach is but a
minor one, and would not merit the total rescission of the contract based on this ground.As to the amount of damages prayed
for, the SC ruled that Song Fo is entitled to recover damages from defendant for breach of contract in the amount of P3,000.00

Decision: Judgment is rendered in favor of plaintiff. They are entitled to damages in the amount of P3,000.00 for breach of
contract committed by defendant.

CRISOSTOMO v. COURT OF APPEALS, SAN JOSE AND TORRES, G.R. No. 913-84, May 31, 1991.

Facts: Crisostomo was the registered owner of a house and lot. San Jose offered to buy the house and lot for P300,000.00 from
the proceeds of a loan payment from s bank using Crisostomos land title as collateral. San Jose then issued 3 post dated checks
totaling P300,000.00. Crisostomo accepted the offer and lent her title to San Jose. After Crisostomo got tired of San Joses
repeated, unfulfilled promises to make good on the postdated checks, Crisostomo decided to encash the checks, but were
dishonored because the account in which the check was issued in had allegedly closed.Crisostomo then discovered that San
Joses load application was disapproved because of insufficient collateral. San Jose then signed an undertaking for the
forfeiture of earnest money in the amount of P20,000.00. Upon, Crisostomos insistence that her title be returned to her, she
them admitted that she gave the title to a certain Torres, the mortgagee. San Jose never returned the title and never made any
payment to petitioner. Crisostomo on her part, demanded that Torres return the property to her, which was not complied with.
Crisostomo then filed a case against San Jose and Torres for re conveyance of the title as well as for damages. The RTC ruled in
favor of Crisostomo, a ruling affirmed by the CA, with the modification that Torres be excluded from indemnifying Crisostomo.
Petitioner moved to reconsider, but such was denied. Hence, this petition.

Issue: WON Torres is a mortgagee in good faith.

Held: No she is not. The petition thus filed is meritorious. The CA erred in ruling that respondent Torres is a mortgagee in good
faith based on the evidence. There are strong indications that Torres lawyer knew of the defect in San Joses title. While
initially feigning ignorance of the owner of the property, Torres later admitted to knowing who the real owner of the property
was. Even more persuasive is that Torres lawyer introduced herself to Crisostomo who was then occupying the house, when
the former conducted an ocular inspection of the lot for Torres. Also, when Torres visited the property, she avoided seeing
Crisostomo, the actual occupant thereof, who could have enlightened her as to who the true owner was. Such indication
proves to show that Torres knew that San Jose was not the true owner of the house and lot. It is settled that a mortgagee
cannot feign ignorance to the facts which should put a reasonable person on his guard, then claim that he/she acted in good
faith under the belief that there was no defect in the vendors title. The mere refusal to believe that such defect exists will not
make him an innocent purchaser or mortgagee for value. The CA erred in ruling that Torres acted in good faith. Thus, since
Torres is not a mortgagee in good faith, there is no sufficient basis for the CA to order the notation of the Deed of Real Estate
Mortgage in Torres favor, which should be re-issued to petitioner Crisostomo.
Decision: The assailed decision of the Court of Appeals is REVERSED and SET ASIDE. The decision of the trial court is
REINSTATED.