Midterm Output

CASE DIGEST
Herbert Diano
&
John Rhil Ramos

Law 1
Obligations and Contracts
MWF 5:00-6:00pm

Atty. Ma. Cassandra Teves

G.R. No. 172239

MARMAN TRADING Vs. PLANTERS PRODUCTS, INC.,
March 28, 2008
Facts:
On April 27, 1992 and June 10, 1992, respondent PPI, as lessor, and petitioner
Marman, as lessee, entered into two contracts of lease of sulfuric acid tanks and
ammonium tanks for a period of ten years. The two contracts have identical stipulations
on renewal of the lease at the expiration of the ten-year term. On December 4,
2001, Marman manifested to PPI its intention to renew the lease contracts. Two months
later, Marman communicated to PPI its proposed terms for the renewal of the lease. PPI
replied with a counter offer which included, among others, lessening the period of the
lease and increase in the variable fee, escalation rate and minimum required volume
per year. On April 16, 2002, Marman wrote a letter urging PPI to adhere to the ten year
renewal period under the original lease contracts. Marman also manifested its
willingness to discuss the other points raised by PPI in the counter offer. On January 15,
2003, PPI wrote a letter to Marman expressing its inclination not to renew the lease
contracts because of alleged violations of the original contracts of lease, specifically
Marmans failure to conduct due maintenance of the pier facilities and overextension of
its pipeline from the middle dock to the causeway area. At that time, the original lease
contract had expired. On February 28, 2003, Marman filed a complaint for specific
performance against PPI with the RTC in Makati. Marman prayed, among others, that
PPI execute new lease contracts for ten years pursuant to its option under Section 1 of
the original contracts of lease.
Issue:
Whether or not the MARMAN TRADING has a legal ground on renewing the
contract of lease for another 10 years.
Courts Ruling:
It is equally true that the contract cannot be renewed on the mere whim of the
plaintiff since there has to be a mutual agreement as to the terms and conditions of the
renewal. However, it should be noted that the provision had already specified a period
of time for the renewal, particularly ten years. To follow defendant's line of thinking
would be to disregard completely a contractual agreement between the parties. Clearly,
the term of the renewal had already been pre-agreed upon, and can no longer be the
subject of further negotiation. Moreover, this Court has the legal duty to uphold and
enforce to the letter the contractual obligations of the parties, absent any showing that
such obligations are contrary to laws, morals, good customs and public policy. Using
such discretion, this Court finds that plaintiff is entitled to the renewal of the lease
contracts under the commercial terms mutually agreed upon for an additional period of
ten years, counted from the time of the expiration of the original contracts. First of all,
the length of the term is already stated in the lease contracts, thus can no longer be
altered by one party without the consent of the other. The terms of the renewal
provisions cannot be disregarded ten years is ten years no matter how you look at it.
Thus, the intent of the parties when the contracts were perfected should stand.
Furthermore, this Court finds that the shortening of the term despite the increased rental
rates and minimum volume constitutes unreasonable and exorbitant terms that would
leave one party unable to recoup its investments while leaving the other party unjustly
enriched at the expense of plaintiff. This Court cannot permit such an injustice to take
place.
WHEREFORE, the appealed Decision is AFFIRMED IN FULL.
SO ORDERED.

G.R. No. 183035

OPTIMA REALTY CORPORATION vs. HERTZ PHIL. EXCLUSIVE CARS, INC.,
January 9, 2013
Facts:
Optima is engaged in the business of leasing and renting out commercial spaces
and buildings to its tenants. On 12 December 2002, it entered into a Contract of Lease
with Hertz over a 131-square-meter office unit and a parking slot in the Optima Building
for a period of three years commencing on 1 March 2003 and ending on 28 February
2006. On 9 March 2004, the parties amended their lease agreement by shortening the
lease period to two years and five months, commencing on 1 October 2003 and ending
on 28 February 2006. Starting August 2005 to February 2006 Hertz failed to pay its
monthly rental to Optima. In addition, Hertz likewise failed to pay its utility bills for the
months of November 2005 to February of 2006. On 8 December 2005, Optima wrote
another letter to Hertz, reminding the latter that the Contract of Lease could be renewed
only by a new negotiation between the parties and upon written notice by the lessee to
the lessor at least 90 days prior to the termination of the lease period. As no letter was
received from Hertz regarding its intention to seek negotiation and extension of the
lease contract within the 90-day period, Optima informed it that the lease would expire
on 28 February 2006 and would not be renewed. On 21 December 2005, Hertz wrote a
letter belatedly advising Optima of the formers desire to negotiate and extend the lease.
However, as the Contract of Lease provided that the notice to negotiate its renewal
must be given by the lessee at least 90 days prior to the expiration of the contract,
petitioner no longer entertained respondents notice. On 1 March 2006, Optima, through
counsel, wrote Hertz a letter requiring the latter to surrender and vacate the leased
premises in view of the expiration of the Contract of Lease on 28 February 2006. It
likewise demanded payment of the sum of 420,967.28 in rental arrearages, unpaid
utility bills and other charges. Hertz, however, refused to vacate the leased premises.
Issue:
Whether or not Optima has the right to eject Hertz from the leased premises.
Courts Ruling:
The court finds the ejectment of Hertz from the building premises was proper. On
the first ground, the records show that Hertz failed to pay rental arrearages and utility
bills to Optima. Failure to pay timely rentals and utility charges is an event of default
under the Contract of Lease, entitling the lessor to terminate the lease. Moreover, the
failure of Hertz to pay timely rentals and utility charges entitles the lessor to judicially
eject it under the provisions of the Civil Code. On the second ground, the records
likewise show that the lease had already expired on 28 February 2006 because of
Hertzs failure to request a renegotiation at least 90 days prior to the termination of the
lease period. As the lease was set to expire on 28 February 2006, Hertz had until 30
November 2005 within which to express its interest in negotiating an extension of the
lease with Optima. However, Hertz failed to communicate its intention to negotiate for
an extension of the lease within the time agreed upon by the parties. Thus, by its own
provisions, the Contract of Lease expired on 28 February 2006. Under the Civil Code,
the expiry of the period agreed upon by the parties is likewise a ground for judicial
ejectment.
WHEREFORE, in view of the foregoing, the instant Rule 45 Petition for Review is
GRANTED. The Decision of the Regional Trial Court is hereby REINSTATED and
AFFIRMED.
SO ORDERED.

G.R No. 138677

TOLOMEO LIGUTAN and LEONIDAS DE LA LLANA, vs. HON. COURT OF
APPEALS & SECURITY BANK & TRUST COMPANY
February 12, 2002
Facts:
Petitioner Ligutan and Dela Llana obtained a loan in the amount of P120,000
from, respondent Security Band and Trust Company. As a result, petitioner executed a
promissory note binding them, jointly and severally, to pay the sum borrowed with an
interest of 15.189% per annul upon maturity and pay a penalty of 5% every month on
the outstanding principal and interest in case of default. Moreover, they agreed to pay
10% of the total amount due by way of attorneys fees if the matter were indorsed to a
lawyer for collection or if a suit were instituted to enforce payment. The obligation
matured and the bank granted an extension to pay. Despite several demands,
petitioners failed to settle their debt. Consequently, the bank filed a complaint for
recovery of the amount due with the Regional Trial Court (RTC). Due to petitioners
absence on a certain hearing, the court considered the case submitted for decision.
Thereafter, petitioners filed a motion for reconsideration; however, the trial
court denied the same and rendered a decision in favor of respondent. On appeal,
petitioners assailed the imposition of the 2% service charge, the 5% per month penalty
charge and 10% attorney's fees.
Issue:
Whether or not respondent Security Band and Trust Company has legal right to
impose the service and penalty charges, also the attorneys fee to Ligutan and Dela
Llana.

Courts Ruling:
According to the court, this is an example of an obligation with a penal
clause. A penal clause, expressly recognized by law, is an accessory undertaking to
assume greater liability on the part of an obligor in case of breach of an obligation. It
functions to strengthen the coercive force of the obligation and to provide, in effect, for
what could be the liquidated damages resulting from such breach. The obligor would
then be bound to pay the stipulated indemnity without the necessity of proof on the
existence and on the measure of damages caused by the breach. Although a
court may not at liberty ignore the freedom of the parties to agree on such
terms and conditions as they see fit that contravene neither law nor morals,
good customs, public order or public policy, a stipulated penalty, nevertheless,
may be equitably reduced by the courts if it is iniquitous or unconscionable or if the
principal obligation has been partly or irregularly complied with.
WHEREFORE, the petition is DENIED.
SO ORDERED.

G.R. No. 128991

YOLANDA ROSELLO-BENTIR, SAMUEL PORMIDA and CHARITO PORMIDA
vs. HONORABLE MATEO M. LEANDA and LEYTE GULF TRADERS, INC.
April 12, 2000
Facts:
On May 15, 1992, respondent Leyte Gulf Traders, Inc. filed a complaint for
reformation of instrument, specific performance, annulment of conditional sale and
damages with prayer for writ of injunction against petitioners Yolanda Rosello-Bentir and
the spouses Samuel and Charito Pormida. Respondent Corporation alleged that it
entered into a contract of lease of a parcel of land with petitioner Bentir for a period of
twenty (20) years starting May 5, 1968. According to Respondent Corporation, the lease
was extended for another four (4) years or until May 31, 1992. On May 5, 1989,
petitioner Bentir sold the leased premises to petitioner spouses Samuel Pormada and
Charito Pormada. Respondent Corporation questioned the sale alleging that it had a
right of first refusal. Rebuffed, it filed a case seeking the reformation of the expired
contract of lease on the ground that its lawyer inadvertently omitted to incorporate in the
contract of lease executed in 1968, the verbal agreement or understanding between the
parties that in the event petitioner Bentir leases or sells the lot after the expiration of the
lease, respondent corporation has the right to equal the highest offer. In due time,
petitioners filed their answer alleging that the inadvertence of the lawyer who prepared
the lease contract is not a ground for reformation. They further contended that
respondent corporation is guilty of laches for not bringing the case for reformation of the
lease contract within the prescriptive period of ten (10) years from its execution.
Issue:
Whether the complaint for reformation of instrument has prescribed or not.
Courts Ruling:
Reformation of an instrument is that remedy in equity by means of which a
written instrument is made or construed so as to express or conform to the real intention
of the parties when some error or mistake has been committee. An action for
reformation must be bought within the period prescribed by law; otherwise, it will be
barred by the mere lapse of time. The prescriptive period for actions based upon a
written contract and for reformation of an instrument is ten (10) years. Prescription is
intended to suppress stale and fraudulent claims arising from transactions like
the one at bar which facts had become so obscure from the lapse of time or
defective memory. In the case at bar, respondent had ten (10) years from
1968, the time when the contract of lease was executed, to file an action for
reformation. Sadly, it did so only on May 15, 1992 or twenty-four (24) years after the
cause of action accrued, hence, its cause of action has become stale, hence, timebarred.
WHEREFORE, the petition is hereby GRANTED. The Decision of the Court of
Appeals dated January 17, 1997 is REVERSED and SET ASIDE. The Order of the
Regional Trial Court of Tacloban City, Branch 7, dated December 15, 1995 dismissing
the action for reformation is REINSTATED.
SO ORDERED.

G.R. No. 152071

PRODUCERS BANK OF THE PHILIPPINES vs. EXCELSA INDUSTRIES, INC.
May 8, 2009
Facts:
On 17 March 1987, respondent, EXCELSA INDUSTRIES, INC., presented for
negotiation to petitioner drafts drawn under the letter of credit and the corresponding
export documents in consideration for its drawings. Petitioner purchased the drafts and
export documents by paying respondent the peso equivalent of the drawings. The
purchase was subject to the conditions laid down in two separate undertakings by
respondent dated 17 March and 10 April 1987. On 24 April 1987, Kwang Ju Bank, Ltd.
notified petitioner through cable that the Korean buyer refused to pay respondents
export documents because of typographical discrepancies. Kwang Ju Bank, Ltd.
returned to petitioner the export documents. Upon learning about the Korean importers
non-payment, respondent sent petitioner a letter dated 27 July 1987, informing the latter
that respondent had brought the matter before the Korea Trade Court and that it was
ready to liquidate its past due account with petitioner. Respondent sent another letter
dated 08 September 1987, reiterating the same assurance. In a letter 05 October 1987,
Kwang Ju Bank, Ltd. informed petitioner that it would be returning the export documents
because of the non-acceptance by the importer. Petitioner demanded from respondent
the payment of the peso equivalent of the export documents, plus interest and other
charges, and also of the other due and unpaid loans. Due to respondents failure to heed
the demand, petitioner moved for the extrajudicial foreclosure on the real estate
mortgage over respondents properties.
Issue:
Whether the foreclosure of the real property valid or not.
Courts Ruling:
Respondent executed a real estate mortgage containing a "blanket mortgage
clause," also known as a "dragnet clause." It has been settled in a long line of decisions
that mortgages given to secure future advancements are valid and legal contracts, and
the amounts named as consideration in said contracts do not limit the amount for which
the mortgage may stand as security if from the four corners of the instrument the intent
to secure future and other indebtedness can be gathered. Petitioner, therefore, was not
precluded from seeking the foreclosure of the real estate mortgage based on the unpaid
drafts drawn by respondent. In any case, respondent had admitted that aside from the
unpaid drafts, respondent also had due and demandable loans secured from another
account as evidenced by Promissory Notes. However , the Court of Appeals invalidated
the extrajudicial foreclosure of the real estate mortgage on the ground that the posting
and publication of the notice of extrajudicial foreclosure proceedings did not comply with
the personal notice requirement under paragraph 12 of the real estate mortgage
executed between petitioner and respondent. The Court of Appeals also overturned the
RTCs finding that respondent was guilty of estoppel by laches in questioning the
extrajudicial foreclosure sale. The validity of the extrajudicial foreclosure of the
mortgage is dependent on the following issues posed by petitioner: (1) the coverage of
the blanket mortgage clause; (2) petitioners failure to furnish personal notice of the
foreclosure to respondent; and (3) petitioners obligation as negotiating bank under the
letter of credit.
WHEREFORE, the instant petition for review on certiorari is GRANTED.
SO ORDERED.

G.R. No. 141323

Pelayo vs. Perez
June 8, 2005
Facts:
David Pelayo through a Deed of Absolute Sale executed a deed of sale and
transferred to Melki Perez two parcel of agricultural lands. Loreza Pelayo and another
one whose signature is eligible witnesses such execution of deed.
Loreza signed only on the third page in the space provided for witnesses, as such,
Perez application was denied.
Perez asked Loreza to sign on the first and should pages of the deed of sale but she
refused. He then filed a complaint for specific performance against the Pelayo spouses.
The spouses moved to dismiss the complaint on the ground for lack of marital consent
as provided by art 166 of the Civil Code.
Issue:
Whether or not the deed of sale was null and viod.
Courts Ruling:
Defendant Pelayo claimed in any event, in his Pre-trial brief filed on March 19,
1996, that the deed was without his wife Lorezas consent, hence, in light of Art. 166 of
the Civil Code which provides:Article 166. Unless the wife has been declared a noncompos mentis or a spendthrift, or is under civil interdiction or is confined in a
leprosarium, the husband cannot alienate or encumber any real property of the conjugal
partnership without the wifes consent, it is null and void.
However, according to the Court of Appeals, Petitioners not having questioned
the Decision of the CA dated November 24, 1994 which then attained finality, the ruling
that the deed of sale subject of this case is not among the transactions deemed as
invalid under R.A. No. 6657, is now immutable. CA ruled that petitioner Lorenza, by
affixing her signature to the Deed of Sale on the space provided for witnesses, is
deemed to have given her implied consent to the contract of sale.
Sale is a consensual contract that is perfected by mere consent, which may
either be express or implied. A wifes consent to the husbands disposition of conjugal
property does not always have to be explicit or set forth in any particular document, so
long as it is shown by acts of the wife that such consent or approval was indeed
given. In the present case, although it appears on the face of the deed of sale that
Lorenza signed only as an instrumental witness, circumstances leading to the execution
of said document point to the fact that Lorenza was fully aware of the sale of their
conjugal property and consented to the sale.
IN VIEW OF THE FOREGOING, the petition is DENIED.
SO ORDERED.

G.R. Nos. 180631-33

PHILIPPINE CHARTER VS. CENTRAL COLLEGES
February 22, 2012

Facts:
Petitioner Central Colleges of the Philippines (CCP), an educational institution,
contracted the services of respondents Dynamic planners and Construction Corporation
(DPCC) to be its general contractor for the construction of its five (5)-storey school
building. The construction of the entire building would be done in two phases with each
phase valued at P124,000,000.00. To guarantee the fulfillment of the obligation, DPCC
posted three (3) bonds, all issued by the Philippine Charter Insurance Corporation. The
Phase 1 of the project was completed without issue. A down payment for the Phase 2 of
the project was thereafter made. However, Phase 2 of the project encountered
numerous delays. Only 47% of the work to be done was actually finished. CCP wrote
DPCC and PCIC informing them of the breach in the contract and its plan to claim on
the construction bonds. DPCC wrote PCIC confirming the delay, at the same time,
requesting for the extension of its performance and surety bonds because the supposed
revision of the plans would require more days. PCIC approved DPCCs request for
extension of the bonds. However, negotiations to continue with the construction
between CCP and DPCC reached an end. CCP hired another contractor to work on the
school site. CCP sent a letter to PCIC of its final demand for the payment of
P13,924,351.47 as indicated in the bonds. The latter denied formers claims against the
three bonds.
Issue:
Whether or not there is a legal delay or default in part of DPCC. If there is, what
are the legal remedies of CPP in relation to the delay?

Courts Ruling:
Article 1169 of the New Civil Code provides: Those obliged to deliver or to do
something incur in delay from the time the obligee judicially or extrajudicially demands
from them the fulfillment of their obligation. The civil law concept of delay or default
commences from the time the obligor demands, judicially or extrajudicially, the
fulfillment of the obligation from the obligee. Hence, DPCC incurred delay from the time
CCP called its attention that it had breached the contract and extrajudicially demanded
the fulfillment of its commitment against the bonds. It is the obligors culpable delay, not
merely the time element, which gives the obligee the right to seek the performance of
the obligation. Thus, the court held that due to DPCCs inexcusable delay, CCP has a
legal right to demand but cant compel DPCC the fulfillment of its obligation for it is a
violation on the principle of civil servitude. Moreover, CCP can hire another contractor to
fulfill the obligation of DPCC in the expense of DPCC. Also CCP can demand and
compel DPCC to pay damages suffered by CCP due to the delay.

G.R. No. 156841

GF EQUITY, INC. vs. ARTURO VALENZONA
June 30, 2005
Facts:
Under the contract, GF Equity would pay Valenzona the sum of Thirty Five
Thousand Pesos (P35,000.00) monthly, net of taxes, and provide him with a service
vehicle and gasoline allowance. While the employment period agreed upon was for two
years. The last sentence of paragraph 3 of the contract carried the following condition:
3. If at any time during the contract, the COACH, in the sole opinion of the
CORPORATION, fails to exhibit sufficient skill or competitive ability to coach the team,
the CORPORATION may terminate this contract. The caveat notwithstanding,
Valenzona still acceded to the terms of the contract. Thereafter, Valenzona was
terminated as coach of the Alaska team. Valenzona demanded from GF Equity payment
of compensation arising from the arbitrary and unilateral termination of his employment.
GF Equity, however, refused the claim. Valenzona thus filed before the RTC Manila a
complaint against GF Equity for breach of contract with damages. The trial court,
upholding the validity of the assailed provision of the contract, dismissed the complaint.
Issue:
Whether the questioned last sentence of paragraph 3 is violative of the principle
of mutuality of contracts.
Courts Ruling:
Mutuality is one of the characteristics of a contract, its validity or performance or
compliance of which cannot be left to the will of only one of the parties. The ultimate
purpose of the mutuality principle is thus to nullify a contract containing a condition
which makes its fulfillment or pre-termination dependent exclusively upon the will of one
of the contracting parties. In the case at bar, the contract incorporates in paragraph 3
the right of GF Equity to pre-terminate the contract that if the coach, in the sole opinion
of the corporation, fails to exhibit sufficient skill or competitive ability to coach the team,
the corporation may terminate the contract. The assailed condition clearly transgresses
the principle of mutuality of contracts. It leaves the determination of whether Valenzona
failed to exhibit sufficient skill or competitive ability to coach Alaska team solely to the
opinion of GF Equity. Whether Valenzona indeed failed to exhibit the required skill or
competitive ability depended exclusively on the judgment of GF Equity. In other words,
GF Equity was given an unbridled prerogative to pre-terminate the contract irrespective
of the soundness, fairness or reasonableness, or even lack of basis of its opinion. To
sustain the validity of the assailed paragraph would open the gate for arbitrary and
illegal dismissals, for void contractual stipulations would be used as justification therefor.
The assailed stipulation being violative of the mutuality principle underlying Article 1308
of the Civil Code, it is null and void.
WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE and
another rendered declaring the assailed provision of the contract NULL AND VOID and
ORDERING petitioner, GF Equity, to pay private respondent, Arturo Valenzona, actual
and attorneys. Costs against petitioner.
SO ORDERED.

G.R. No. 165420

CONCEPCION R. AINZA, substituted by her legal heirs, DR. NATIVIDAD A.
TULIAO, CORAZON A. JALECO and LILIA A. OLAYON vs. SPOUSES ANTONIO
PADUA and EUGENIA PADUA
June 30, 2005
Facts:
Spouses Eugenia and Antonio Padua owned a 216.40 sq. m. lot with an
unfinished residential house Thereafter, Concepcion Ainza bought one-half of an
undivided portion of the property from her daughter, Eugenia and the latters husband,
Antonio, for P100,000.00. No Deed of Absolute Sale was executed to evidence the
transaction, but cash payment was received by the respondents, and ownership was
transferred to Concepcion through physical delivery to Natividad Tuliao. However,
respondents caused the subdivision of the property into three portions and registered it
in their names in violation of the restrictions annotated at the back of the title. Antonio
claimed that his wife, Eugenia, admitted that Concepcion offered to buy 1/3 of the
property who gave her small amounts over several years which totaled P100,000.00 by
1987 and for which she signed a receipt.
Issue:
Whether there was a valid contract of sale between Eugenia and Concepcion.
Courts Ruling:
There was a perfected contract of sale between Eugenia and Concepcion. The
records show that Eugenia offered to sell a portion of the property to Concepcion, who
accepted the offer and agreed to pay P100,000.00 as consideration. The contract of
sale was consummated when both parties fully complied with their respective
obligations. Eugenia delivered the property to Concepcion, who in turn, paid Eugenia
the price of P100, 000.00, as evidenced by the receipt. The verbal contract of sale
between Eugenia and Concepcion did not violate the provisions of the Statute of
Frauds. When a verbal contract has been completed, executed or partially
consummated, as in this case, the Statute of Frauds, which applies only to an executory
agreement, will not bar its enforceability. However, the sale of the conjugal property by
Eugenia without the consent of her husband is voidable. It is undisputed that the subject
property was conjugal and sold by Eugenia in April 1987 or prior to the effectivity of the
Family Code on August 3, 1988. Thus, the contract of sale between Eugenia and
Concepcion being an oral contract, the action to annul the same must be commenced
within six years from the time the right of action accrued. It is binding unless annulled.
Antonio failed to exercise his right to ask for the annulment within the prescribed period,
hence, he is now barred from questioning the validity of the sale between his wife and
Concepcion.
WHEREFORE, the petition is GRANTED. The decision dated February 24, 2004
of the Court of Appeals in CA-G.R. CV No. 70239 and its resolution dated September
28, 2004 are REVERSED and SET ASIDE.
SO ORDERED.

G.R. No. 130913

OLIVERIO LAPERAL& FILIPINAS GOLF & COUNTRY CLUB INC. vs. SOLID
HOMES, INC.
June 21, 2005
Facts:
Filipinas Golf Sales and Development Corporation, predecessor-in-interest of
Filipinas Golf and Country Club, Inc., represented by its then President, Oliverio
Laperal, entered into a Development and Management Agreement with respondent
Solid Homes, Inc., a registered subdivision developer, involving several parcels of land
owned by Laperal and FGSDC. Under the terms and conditions of the aforementioned
Agreement and the Supplement, respondent undertook to convert at its own expense
the land subject of the agreement into a first-class residential subdivision, in
consideration of which respondent will get 45% of the lot titles of the saleable area in
the entire project. The aforementioned Agreement was cancelled by the parties, and, in
lieu thereof, two contracts identically denominated Revised Development and
Management Agreement were entered into by respondent with the two successors-ininterest of FGSDC. Unlike the original agreement, both Revised Agreements omitted the
obligation of petitioners Laperal and FGCCI to make available to respondent Solid
Homes, Inc. the owners duplicate copies of the titles covering the subject parcels of
land. It appears, however, that even as the Revised Agreements already provided for
the non-surrender of the owners duplicate copies of the titles, respondent persisted in
its request for the delivery thereof .Then, petitioners served on respondent notices of
rescission of the Revised Agreements with a demand to vacate the subject properties
and yield possession thereof to them.
Issue:
Whether the termination of the Revised Agreement and Addendum, because of
the contractual breach committed by respondent solid homes, carried with it the effect
provided under Article 1385 of the New Civil Code.
Courts Ruling:
Mutual restitution is required in cases involving rescission under Article 1191.
Since Article 1385 of the Civil Code expressly and clearly states that rescission creates
the obligation to return the things which were the object of the contract, together with
their fruits, and the price with its interest, the Court finds no justification to sustain
petitioners position that said Article 1385 does not apply to rescission under Article
1191.As a consequence of the resolution by petitioners, rights to the lot should be
restored to private respondent or the same should be replaced by another acceptable
lot. Applying the clear language of the law and the consistent jurisprudence on the
matter, therefore, the Court rules that rescission under Article 1191 in the present case,
carries with it the corresponding obligation of restitution.
WHEREFORE, the petition is hereby GRANTED. Accordingly, the assailed decision
and resolution of the Court of appeals are REVERSED and SET ASIDE and the
decision dated December 19, 1991 of the Regional Trial Court in Civil Case No. B-2069
REINSTATED.
No pronouncement as to costs.
SO ORDERED.

G.R. No. 188661

Estelita Villamar vs. Balbino Mangaoil
April 11, 2012
Facts:
The petitioner Villamar, the registered owner of the property, entered into an
agreement with the respondent Mangaoil to purchase and sale a parcel of land. The
terms in their agreement includes the down payment of P 185,000, which will be for the
payment of a loan secured from the Rural Bank of Cauayan so that it will be withdrawn
and released from the bank and that a deed of absolute sale will be executed in favor of
the respondent Mangaoil which was complied by the parties. Consequently, the
respondent Mangaoil informed the petitioner that he will withdraw from the agreement
for the land was not yet free from encumbrances as there were still tenants who were
not willing to vacate the land without giving them back the amount that they mortgaged
the land. Also, the petitioner failed and refused, despite repeated demands, to handover
the Certificate of Title. Then, the respondent Mangaoil demanded the refund of the
down payment that he had secured with the petitioner and filed a complaint with the
RTC to rescind the contract of sale. In the response of the petitioner, she averred that
she had already complied with the obligations and caused the release of the mortgaged
land and a certain Atty. Pedro C. Antonio will facilitate the delivery of the Certificate of
Title. The respondent insisted that he could rescind the contract for the petitioner had
failed to deliver the Certificate of Title. The RTC and the CA dismissed the complaints
for upon the deed of absolute sale, there was already a valid and constructive delivery.
Issue:
Whether or not the failure of delivery of the Certificate of Title will constitute
rescission of the contract.
Courts Ruling:
The Court held that the failure of the petitioner to comply with the obligation to
deliver to the respondent the possession of the property and the certificate of the title,
Based on Art. 1191. The power to rescind obligations is implied in reciprocal ones, in
case one of the obligors should not comply with what is incumbent upon him. The
injured party may choose between the fulfillment and the rescission of the obligation,
with the payment of damages in either case. He may also seek rescission, even after he
has chosen fulfillment, if the latter should become impossible. The respondent cannot
be deprived of his right to demand for rescission in view of the petitioners failure to
abide with item nos. 2 and 3 of the agreement. This remains true notwithstanding the
absence of express stipulations in the agreement indicating the consequences of
breaches, which the parties may commit. To hold otherwise would render Article 1191 of
the NCC as useless.
IN VIEW OF THE FOREGOING, the instant petition is DENIED. The February
20, 2009 Decision and July 8, 2009 Resolution of the Court of Appeals, directing the
rescission of the agreement and absolute deed of sale entered into by Estelita Villamar
and Balbino Mangaoil and the return of the down payment made for the purchase of the
subject property, are AFFIRMED. However, pursuant to our ruling in Eastern Shipping
Lines, Inc. v. CA,[31] an interest of 12% per annum is imposed on the sum ofP185,000.00
to be returned to Mangaoil to be computed from the date of finality of this Decision until
full satisfaction thereof.
SO ORDERED.

G.R. No. 174118

The Roman Catholic Church vs. Regino Pante
April 11, 2012
Facts:
The Roman Catholic Church, represented by the Archbishop of Caceres sold a
32-squaremeter lot to the respondent Regino Pante, who in the belief of the Church as
an actual occupant of the lot. Terms fixed at a purchase price of P 11,200, a down
payment P 1,120 and a balance payable in three years. Subsequently, the Church sold
a lot to the spouses Rubi, which included the lot that was previously sold to the
respondent Pante. Then, the spouses Rubi erected a fence along the lot, including the
lot of Pante, which blocked the access of Pante from their family home to the municipal
road. Pante instituted an action before the RTC to annul the sale between the Church
and spouses Rubi. The Church contended that Pante misrepresented that they were
the actual occupant of the said lot. Also, the sale was a mistake that would constitute a
voidable contract because Pant made them believe that he was a qualified occupant
and Pante was aware that they sell lots only to those occupants and residents. Pante
averred that they were using it as passageway from his family home to the road,
which signifies that he is really using the actual lot. The RTC ruled in favor to the
Church, for it was a misrepresentation of Pante and he delayed in the payment of the lot
for he only consigned the balance with the RTC after the church refused to accept the
payments. Then, the respondent Pante appealed to the appellate court, which reversed
the decision of the RTC and granted the annulment of the sale. Thus, a petition by the
Church was brought before the certiorari.
Issue:
Whether the sale is voidable or not.
Courts Ruling:
The Supreme Court ruled that there were no misrepresentation made that would
vitiate the consent and render the contract as voidable. Such consent should be free,
voluntary, willful and a reasonable understanding of the various obligations that the
parties have assumed for themselves. However if consent is given through mistake,
violence, intimidation, undue influence and fraud, it would render a contract voidable. In
this case, there is no mistake as to the qualifications as to the policy of the Church on
selling only for those who are occupants and residents as none of them had occupied or
resided on the lot. Also, records show that the Parish Priest was aware that Parte was
not an actual occupant and still he allowed the sale to Pante. So, the Church cannot by
any means contend that the Church was misled by the act of Pante, that there was
vitiation of consent on the said sale. From the time the sale to Pante was made and up
until it sold the subject property to the spouses Rubi, the Church made no move to
reject the contract with Pante; it did not even return the down payment he paid. The
Churchs bad faith in selling the lot to Rubi without annulling its contract with
Pante negates its claim for damages. There was no vitiation of consent; therefore, the
contract between the Church and Pant stands valid and existing. The delay of Pante in
paying the full price could not nullify the contract, since it was a contract of sale In the
terms of the contract, it did not stipulate that the Church will retain ownership until full
payment of the price. The right to repurchase given to the Church if ever Pante fails to
pay within the grace period provided would have been unnecessary had ownership not
already passed to Pante.
WHEREFORE, we DENY the petition for review on certiorari, and AFFIRM the
decision of the Court of Appeals dated May 18, 2006. Costs against the Roman Catholic
Church.
SO ORDERED.

G.R. No. 158597

Prieto vs. CA
June 18, 2012
Facts:
The plaintiff Marcos V. Prieto with his spouse and Susan Prieto executed a
Special Power of Attorney (SPA) to spouses Antonio and Monette Prieto to use their
real property in La Union. The real property was used as collateral for a loan of P
5,000,000 from Far Eastern Bank and Trust Company(FEBTC). The defendants
spouses Antonio and Monette Prieto obtained the loan evidenced by promissory
notes and real estate mortgage contracts were in the name of the defendants, which
later on was extra-judicially foreclosed by FEBTC because of the defendant failed to
pay their loans. The plaintiff Marcos Prieto filed Temporary Restraining Order (TRO)
against the bank with the RTC, which was granted, contending that the real estate
mortgage and promissory notes was in the name of the defendant spouses thus it
should be null and void . The RTC dismissed the application for the writ of preliminary
injunction stating that although the name of the petitioner/plaintiff Marcos as a
registered owner, did not appear in the real estate contracts, the petitioner/plaintiff
cannot be absolved from liability because he ratified the contract by acknowledging the
contract. Such acknowledgement was sent through a said letter of acknowledgement
and was found as a document of adhesion. As a principal, the contracts entered into by
his agent on his behalf even if assuming that the agent has exceeded his authority.
Thus, the plaintiff Marcos Prieto filed an appeal with the CA, which was dismissed
because of the delay in filing and this petition was sought oncertiorari.
Issue:
Whether or not the ratification by the plaintiff would validate the real estate
mortgage and promissory notes and such ratification in letter of acknowledgment
could be treated as a contract of adhesion.
Courts Ruling:
The Supreme Court held that the plaintiff had precisely granted the defendant
Antonio as his agent the authority to borrow money, and to transfer and convey
the property by way of mortgage to FEBTC; to sign, execute and deliver promissory
notes and to receive the proceeds of the loans on the formers behalf. In other words,
the mortgage contracts were valid and enforceable against plaintiff, who is fully bound
by their terms. It is stipulated under Article 1898 of the Civil Code, the acts of an agent
done beyond the scope of his authority do not bind the principal unless the latter
expressly or impliedly ratifies the same. As to the ratification by the contract of
adhesion, although his agent, the defendant, had exceeded the express authority, the
plaintiff is liable by virtue of the expressed ratification. In agency, ratification is the
adoption or confirmation by one person of an act performed on his behalf by
another without authority. The substance of ratification is theconfirmation after the act,
amounting to a substitute for a prior authority. The court held that the plaintiff was a
lawyer that he is aware of the import and consequences of the letter of
acknowledgment. It is not a contract of adhesion for the plaintiff is not the weaker
party because he is fully aware of the meaning of every phrase and letter of the letter of
acknowledgment as well as the legal effect of his confirmation of the act of his agent.
Thus, the court affirms the decision of the CA.
WHEREFORE, the Court AFFIRMS the resolution promulgated by the Court of
Appeals on April 24, 2002; and ORDERS petitioner to pay the costs of suit.
SO ORDERED.

G.R. No. 129928

Virgilio S. David vs. Misamis Occidental II Electric Cooperative, Inc.
August 25, 2005
Facts:
The petitioner Virgilio David was the proprietor of VSD Electric Sales, a company
engaged in the business of supplying electrical hardware including transformers for rural
electric cooperatives. It entered into a contract with the respondent Misamis Occidental
II Electric Cooperative, Inc. (MOELCI) in order to solve its problem of power shortage
affecting some areas within its coverage; MOELCI expressed its intention to purchase a
10 MVA power transformer from David. The General Manager of MOELCI, Engr.
Reynaldo Rada, went to meet David in the latters office in Quezon City. David agreed
to supply the power transformer provided that MOELCI would secure a board resolution
because the item would still have to be imported. Both parties agreement on the
purchase of transformers and its terms amounting to P 5,000,000 and it was shipped
even without the down payment of MOELCI. After such time, nothing was heard from
MOELCI and David went to Ozamis City to confirm if the shipment was made, which
subsequently MOELCI had said that they were not stalling physical possession of the
shipment. Contrary to what MOELCI had said, the shipment was actually received by
them and copies of the bill of lading evidenced the receipt of the company of the said
shipment. Several demand letters have been made to collect the amount of the
transformers and David filed a complaint with the RTC for specific performance.
MOELCI replied that there was no contract of sale because it was under the Statute of
Frauds and that there was only a quotation letter that could not be considered as a
binding contract.
Issue:
Whether or not there is a perfected contract of sale and the delivery
consummated the contract?
Courts Ruling:
The Court ruled that there was a perfected contract of sale since there was a
meeting of the minds, there was consent on the part of David to transfer ownership of
the power transformer to MOELCI in exchange for the price, thereby complying with the
first element. Thus, the said document cannot just be considered a contract to sell but
rather a perfected contract of sale. Also, the Court held that delivery consummated the
contract, as one of the requisites of contract of sale. In the contract of sale, the seller is
required to send the goods the goods to the buyer delivery of the goods to a carrier,
whether named by the buyer or not, for the purpose of transmission to the buyer is
deemed to be a delivery of the goods to the buyer. Therefore, the contract between
David and MOELCI is valid and enforceable. The petition is granted in favor of David to
collect P5,472,722.27 with interests from the respondent.
WHEREFORE, the instant petition is DENIED. Costs against petitioner.
SO ORDERED.

G.R. No. 171076

Goldloop Properties Inc. vs. GSIS
August 1, 2012
Facts:
The petitioner Goldloop Properties executed a Memorandum of Agreement
(MOA) with the respondent Government Service Insurance System (GSIS) undertaking
the construction of a condominium on the parcel of land and the renovation of the
faade of Philcomcen Building at its own expense, which both was owned by the GSIS.
Under the terms of their agreement, the petitioner will pay GSIS for the land in eight
installments. Also, the parties will share for the profits of every condominium sold with a
certain percent. Goldloop then performed the preparatory works, such as selling the
condominiums but was not able to proceed because the building permits was not yet
been approved and there were still accrued real property taxes that were unpaid. Later
on, Goldloop received a letter from GSIS to rescind the MOA and Goldloop replied that
the work stoppage was caused of the pending approval of the building permits. Still,
GSIS sent a notice of rescission because Goldloop still have pending obligations under
their MOA. Goldloop filed a complaint with the RTC contending that it had begun with
the preparatory works and such MOA should not be rescinded, which RTC granted in
favor of Goldloop. Upon the decision, GSIS appealed with the CA that it had the right to
rescind thecontract for failure of Goldloop to comply with the obligation as stated in the
MOA, which theCA granted in favor of the GSIS. Thus, the petitioner appealed with
the Supreme Court.
Issue:
Whether or not the Memorandum of Agreement may be rescinded?
Courts Ruling:
The Court ruled that GSIS have every right to rescind the contract under the
terms of the MOA. The parties may validly stipulate the unilateral rescission of their
contract. Under Section 2.4 of the MOA, if Goldloop fail to start construction Should
Goldloop fail to start the construction works within the thirty (30) working days from date
all relevant permits and licenses from concerned agencies are obtained, or within six (6)
months from the date of the execution of this Agreement, whichever is earlier, or at any
given time abandon the same or otherwise commit any breach of their obligations and
commitments under this Agreement, this agreement shall be deemed terminated and
cancelled without need of judicial action by giving thirty (30) days written notice to that
effect to Goldloop who hereby agrees to abide by the decision of the GSIS. It is the
duty of both parties to surrender whatever amount received or property to part with.
Goldloop should return to GSIS the possession and control of the property subject of
their agreements while GSIS should reimburse Goldloop whatever amount it had
received from the latter due to the MOA and the Addendum. The Court also held that
rescission constitute a mutual restitution of the things pursuant to Article 1191 of the
Civil Code. In case both parties have committed a breach of the obligation, the liability
of the first infractor shall be equitably tempered by the courts. If it cannot be determined,
which of the parties first violated the contract, the same shall be deemed extinguished,
and each shall bear his own damages. The first infractor cannot be determined in this
case but it cannot be conclusively presumed who is the first infractor, thus both parties
shall bear the damages. Thus, it was direct by the Court for Goldloop to surrender
possession of the land to the GSIS and that Goldloop should be reimbursed for
expenses plus the return of the machineries, equipment and materials in the premises
of the lot.

G.R. No. 179505

FIRST PHILIPPINE HOLDINGS CORPORATION VS. TRANS MIDDLE EAST (PHILS.)
EQUITIES INC.
December 4, 2009
Facts:
FPHC, formerly known as Meralco Securities Corporation, which was
incorporated in 30 June 1961 by Filipino entrepreneurs led by Eugenio Lopez, Sr., is a
holding company engaged in power generation and distribution, property development
and manufacturing. FPHCs controlling interest is owned by the Lopez family. TMEE, on
the other hand, is also a domestic corporation, allegedly owned by Benjamin (Kokoy)
Romualdez. On 24 May 1984, FPHC allegedly sold its 6,299,179 shares of common
stock in Philippine Commercial International Bank (PCIB), now Equitable-PCI Bank, to
TMEE. The 6,299,179 shares of common stock in PCIB are part of the sequestered
properties that were allegedly illegally amassed by Benjamin Romualdez during the
twenty-year reign of former President Ferdinand E. Marcos, and are among the
purported ill-gotten wealth sought to be recovered by the Presidential Commission on
Good Government (PCGG) via a civil case docketed as Civil Case No. 0035 before the
Sandiganbayan. According to FPHC, said shares were obtained by TMEE through fraud
and acts contrary to law, morals, good customs and public policy. Such being the case,
their acquisition is either voidable or void or unenforceable. On 27 June 2006, TMEE
filed a Motion to Dismiss the Complaint-in-Intervention of FPHC on the ground, among
other things, that the action of FPHC had already prescribed. TMEE argued that under
Article 1391 of the Civil Code, FPHC only had four years from 24 May 1984, the date of
the sale or until 24 May 1988 within which to annul the validity of the sale transaction on
the ground of fraud. Since FPHC filed the Complaint-in-Intervention only on 28
December 1988, it meant that the action was seven months late from the prescriptive
period.
Issue:
Whether the contract of sale of stock is void. Whether there is a prescribe time to file
an action for the annulment of a contract of sale.
Courts Ruling:
In its Resolution dated 6 September 2007, the Sandiganbayan denied FPHCs
motion for reconsideration stressing anew that the subject sale was not void ab
initio, but merely voidable. Grounded on having been obtained fraudulently with the
connivance of defendant Kokoy Romualdezs dummy directors and officers in plaintiff
Board and Executive Committee, in breach of their fiduciary obligations to plaintiff and
its stockholders under the Corporation Code. Under Article 1391 of the Civil Code, a
suit for the annulment of a voidable contract on account of fraud shall be filed within four
years from the discovery of the same. Here, from the time the sale transaction took
place, FPHC did not deny that it had actual knowledge of the same. Despite all this
knowledge, petitioner did not question the said sale from its inception and sometime
thereafter. It was only after four years and seven months had lapsed following the
knowledge or discovery of the alleged fraudulent sale that petitioner assailed the
same. By then, it was too late for petitioner to beset the same transaction, since the
prescriptive period had already come into play.
WHEREFORE, the instant petition is DENIED. Costs against petitioner.
SO ORDERED.

G.R. No. 176841

ANTHONY ORDUA, DENNIS ORDUA, and ANTONITA ORDUA vs. EDUARDO J.
FUENTEBELLA, MARCOS S. CID, BENJAMIN F. CID, BERNARD G. BANTA, and
ARMANDO GABRIEL, JR.
June 29, 2010
Facts:
Gabriel Sr. sold the subject lot to petitioner Antonita Ordua (Antonita), but no
formal deed was executed to document the sale. The contract price was apparently
payable in installments as Antonita remitted from time to time and Gabriel Sr. accepted
partial payments. One of the Orduas would later testify that Gabriel Sr. agreed to
execute a final deed of sale upon full payment of the purchase price. After the death of
Gabriel Sr., his son and namesake, respondent Gabriel Jr., secured over the subject lot
and continued accepting payments from the petitioners. Despite all those payments
made for the subject lot, Gabriel Jr. would later sell it to Bernard Banta (Bernard)
obviously without the knowledge of petitioners. the subject lot has a lot of successive
buyers, Bernard, then Marcos and Benjamin, and finally Eduardo. Furthermore,
respondent Eduardo, before buying the property, was said to have inspected the same
and found it unoccupied by the Orduas. Eduardo, through his lawyer, sent a letter
addressed to the residence of Gabriel Jr. demanding that all persons residing on or
physically occupying the subject lot vacate the premises or face the prospect of being
ejected. According to Eduardo, the sale between Gabriel Sr. and Ordua is in violation of
Statute of Fraud since there is no formal deed was executed to document the sale of
real property.
Issue:
Whether or not the sale of the subject lot by Gabriel Sr. to Antonita is
unenforceable under the Statute of Frauds.
Courts Ruling:
Statute of Frauds expressed in Article 1403, par. (2), of the Civil Code apply only
to executory contracts. The Statute of Frauds, in context, provides that a contract for the
sale of real property or of an interest therein shall be unenforceable unless the sale or
some note or memorandum thereof is in writing and subscribed by the party or his
agent. However, where the verbal contract of sale has been partially executed through
the partial payments made by one party duly received by the vendor, as in the present
case, the contract is taken out of the scope of the Statute. The Statute requires certain
contracts to be evidenced by some note or memorandum in order to be enforceable.
The term Statute of Frauds is descriptive of statutes that require certain classes of
contracts to be in writing. The Statute does not deprive the parties of the right to
contract with respect to the matters therein involved, but merely regulates the formalities
of the contract necessary to render it enforceable. There can be no serious argument
about the partial execution of the sale in question. The records show that petitioners
had, on separate occasions, given Gabriel Sr. and Gabriel Jr. sums of money as partial
payments of the purchase price. Gabriel Jr. duly receipted these payments. Hence, the
sale between Gabriel Sr. to Antonita is valid and enforceable, since there is a partial
execution on the part of Antonita. The subject sale is no longer within the purview of the
Statute of Frauds.
WHEREFORE, the petition is hereby GRANTED. No pronouncement as to costs.
SO ORDERED.

G.R. No. 173227

SEBASTIAN SIGA-AN vs. ALICIA VILLANUEVA
January 20, 2009
Facts:
Respondent Alicia Villanueva was a businesswoman engaged in supplying office
materials and equipment to the Philippine Navy Office while petitioner was a military
officer and comptroller of the PNO from 1991 to 1996. Respondent claimed that
sometime in 1992, petitioner approached her inside the PNO and offered to loan her the
amount of P540, 000.00. Since she needed capital for her business transactions with
the PNO, she accepted petitioners proposal. The loan agreement was not reduced in
writing. Also, there was no stipulation as to the payment of interest for the loan. On 31
August 1993, respondent issued a check as partial payment of the loan. Later, she
issued another check as payment of the remaining balance of the loan. Petitioner told
her that since she paid a total amount of P700,000.00, the excess would be applied as
interest for the loan. Not satisfied with the amount applied as interest, petitioner
pestered her to pay additional interest. Petitioner threatened to block or disapprove her
transactions with the PNO if she would not comply with his demand. asked petitioner for
receipt for the payments but petitioner told her that it was not necessary as there was
mutual trust and confidence between them. According to her computation, the total
amount she paid to petitioner for the loan and interest accumulated to P1,200,000.
Thereafter, respondent consulted a lawyer regarding the propriety of paying interest on
the loan despite absence of agreement to that effect. Her lawyer told her that petitioner
could not validly collect interest on the loan because there was no agreement between
her and petitioner regarding payment of interest. Moreover, her lawyer told her she
could demand for the return of the excess amount under the principle of solutio indebiti.
Issue:
Whether or not the principle of solutio indebiti can be a ground to demand
the return of the excessive interest.
Courts Ruling:
Under Article 1960 of the Civil Code, if the borrower of loan pays interest when
there has been no stipulation therefor, the provisions of the Civil Code concerning
solutio indebiti shall be applied. Said provision provides that if something is received
when there is no right to demand it, and it was unduly delivered through mistake, the
obligation to return it arise. The quasi-contract of solutio indebiti harks back to the
ancient principle that no one shall enrich himself unjustly at the expense of another.
The principle of solutio indebiti applies where (1) a payment is made when there exists
no binding relation between the payor, who has no duty to pay, and the person who
received the payment; and (2) the payment is made through mistake, and not through
liberality or some other cause. We have held that the principle of solutio indebiti applies
in case of erroneous payment of undue interest. Respondent was under no duty to
make such payment because there was no express stipulation in writing to that
effect. There was no binding relation between petitioner and respondent as regards the
payment of interest. The payment was clearly a mistake. Since petitioner received
something when there was no right to demand it, he has an obligation to return it. Since
we have previously found that petitioner is not entitled to payment of interest and that
the principle of solutio indebiti applies to the instant case, petitioner should return to
respondent the excess with its interest, moral damage and attorneys fee.
So ORDERED.

G.R. No. 182435

Lilia and Luz, et al. vs. Florante Baylon
August 13, 2012
Facts:
The spouses Florentino Baylon and Maximina Baylon who died survived by their
legitimate children, namely, Rita , Victoria, Dolores, Panfila, Ramon and herein
petitioner Lilia. Subsequently, the legitimate children Dolores died and without issue and
Victoria who died was survived by her daughter, herein petitioner Luz B. Adanza.
Ramon died and was survived by herein respondent Florante Baylon, his child from his
first marriage, as well as by petitioner Flora Baylon, his second wife, and their legitimate
children, namely, Ramon, Jr. and herein petitioners Remo, Jose, Eric, Florentino and
Ma. Ruby, all surnamed Baylon. The petitioners questioned the land that was owned by
the spouses Baylon and were not partitioned between the heirs. The petitioners
contended that Rita Baylon took possession of the parcels of land and appropriated
it for herself, plus the income from the same. Thus, the petitioners filed a complaint with
the RTC and during the pendency of the case, Rita had donated a parcel of land to
Florante Baylon then Rita died and without issue. Upon learning this, the petitioners
filed a supplemental petition to rescind the donation in accordance with Article 1381(4)
of the Civil Code for such land belonged to the estate of the Spouses Baylon. They
further alleged that Rita was already sick and cannot consent to such donation.
Issue:
Whether or not the donation may only be rescinded if such property belonged to
the estate of the Spouses Baylon.
Courts Ruling:
The Court held that rescission under Article 1381(4) of the Civil Code is not
preconditioned upon the judicial determination as to the ownership of the thing subject
of litigation. Such rescission does not depend on the decision of the courts on the thing
in litigation. The primal purpose of Article 1381 is to secure the possible effectivity of the
impending judgment by a court with respect to the thing subject of litigation. It seeks to
protect the binding effect of a courts impending decision vis--vis the thing subject of
litigation regardless of which among the contending claims therein would subsequently
be upheld. The petitioners had sufficiently established the presence of the requisites for
the rescission of a contract pursuant to Article 1381. It is undisputed that, at the time
Rita gratuitously conveyed them, the lots are among the properties that were the subject
of the partition case then pending with the RTC. It is also undisputed that Rita did not
inform nor sought the approval from the petitioners or of the RTC with regard to the
donation inter vivos of the said parcels of land to Florante. Also, the Court held that
Even if the donation inter vivos is validly rescinded, a determination as to the ownership
of the subject parcels of land is still necessary. It should be stressed that the partition
proceedings before the RTC only covers the properties co-owned by the parties therein
in their respective capacity as the surviving heirs of Spouses Baylon. Hence, the
authority of the RTC to issue an order of partition in the proceedings before it only
affects those properties which actually belonged to the estate of Spouses Baylon. In this
regard, lots as claimed by Florante, are indeed exclusively owned by Rita, then the
said parcels of land may not be partitioned simultaneously with the other properties
subject of the partition case before the RTC. In such case, although the parties in the
case before the RTC are still co-owners of the said parcels of land, the RTC would not
have the authority to direct the partition of the said parcels of land as the proceedings
before it is only concerned with the estate of Spouses Baylon.
WHEREFORE, in consideration of the foregoing disquisitions, the
petition is PARTIALLY GRANTED.
So. ORDERED.

G.R. No. 165907

Spouses Narvaez vs. Spouses Alciso
July 27, 2009
Facts:
Larry A. Ogas owned a 1,329-square meter parcel of land situated in Pico,
La Trinidad, Benguet. The property was subject to a 30-year lease agreement with Esso
Standard Eastern, Inc. Ogas sold the property to his daughter Rose O. Alciso. On 25
August 1979, Alciso entered into a Deed of Sale with Right to Repurchase, selling the
property to Jaime Sansano for P10,000. Alciso later repurchased the property from
Sansano and, on 28 March 1980, she entered into another Deed of Absolute Sale, this
time selling the property to Celso S. Bate for P50,000. On 14 August 1981, Bate entered
into a Deed of Sale of Realty, selling the property to the spouses Dominador R. Narvaez
and Lilia W. Narvaez for P80,000. In 1982, the Spouses Narvaez built a commercial
building on the property amounting to P300,000. Alciso demanded that a stipulation be
included in the 14 August 1981 Deed of Sale of Realty allowing her to repurchase the
property from the Spouses Narvaez. In compliance with Alcisos demand, the Deed
stated that, The SELLER (Bate) carries over the manifested intent of the original
SELLER of the property (Alciso) to buy back the same at a price under such conditions
as the present BUYERS (Spouses Narvaez) may impose. The Spouses Narvaez
furnished Alciso with a copy of the Deed. Alciso alleged that she informed the Spouses
Narvaez that she wanted to repurchase the property. The Spouses Narvaez
demanded P300,000, but Alciso was willing to pay only P150,000. Alciso and the
Spouses Narvaez failed to reach an agreement on the repurchase price.
Issue:
Whether or not Alciso can repurchase the property on the grounds of stipulation
pour autrui.
Courts Ruling:
In Limitless Potentials, Inc. v. Quilala,[15] the Court laid down the requisites of a
stipulation pour autrui: (1) there is a stipulation in favor of a third person; (2) the
stipulation is a part, not the whole, of the contract; (3) the contracting parties clearly and
deliberately conferred a favor to the third person the favor is not an incidental benefit;
(4) the favor is unconditional and uncompensated; (5) the third person communicated
his or her acceptance of the favor before its revocation; and (6) the contracting parties
do not represent, or are not authorized by, the third party. All the requisites are present
in the instant case: (1) there is a stipulation in favor of Alciso; (2) the stipulation is a part,
not the whole, of the contract; (3) Bate and the Spouses Narvaez clearly and
deliberately conferred a favor to Alciso; (4) the favor is unconditional and
uncompensated; (5) Alciso communicated her acceptance of the favor before its
revocation she demanded that a stipulation be included in the 14 August 1981 Deed of
Sale of Realty allowing her to repurchase the property from the Spouses Narvaez, and
she informed the Spouses Narvaez that she wanted to repurchase the property; and (6)
Bate and the Spouses Narvaez did not represent, and were not authorized by, Alciso.
WHEREFORE, the Court DENIES the petition Spouses Narvaez and let Spouses
Alciso repurchase the property on the grounds of stipulation pour autrui.

Herbert Diano Cases 1-10

John Rhil Ramos Cases 11-20