CIVIL LAW REVIEW 2

ROBERN DEVELOPMENT CORPORATION and RODOLFO M. BERNARDO, JR., vs.

PEOPLE'S LANDLESS ASSOCIATION represented by FLORIDA RAMOS and NARDO
LABORA
G.R. No. 173622 March 11, 2013
DEL CASTILLO, J.:
FACTS: Al-Amanah Islamic Development Bank of the Philippines (Al-Amanah) owned a 2000square meter lot located in Magtu-od, Davao City. On December 12, 1992, Al-Amanah Davao
Branch, thru its officer-in-charge Febe O. Dalig (OIC Dalig), asked some of the members of
People's Landless Association (PELA) to desist from building their houses on the lot and to
vacate the same, unless they are interested to buy it. The informal settlers thus expressed their
interest to buy the lot at P100.00 per square meter, which Al-Amanah turned down for being far
below its asking price. Consequently, Al-Amanah reiterated its demand to the informal settlers to
vacate the lot.
In a letter dated March 18, 1993, the informal settlers together with other members
comprising PELA offered to purchase the lot for P300,000.00, half of which shall be paid as
down payment and the remaining half to be paid within one year. By May 3, 1993, PELA had
deposited P150,000.00 as evidenced by four bank receipts. For the first three receipts, the bank
labelled the payments as "Partial deposit on sale of TCT No. 138914", while it noted the 4th
receipt as "Partial/Full payment on deposit on sale of A/asset TCT No. 138914." In the
meantime, the PELA members remained in the property and introduced further improvements.
On November 29, 1993, Al-Amanah, thru Davao Branch Manager Abraham D.
Ututalum-Al Haj, wrote then PELA President Bonifacio Cuizon, Sr. informing him of the Head
Offices disapproval of PELAs offer to buy the said 2,000-square meter lot. Subsequently, AlAmanah sent similarly worded letters, all dated December 14, 1993, to 19 PELA members
demanding that they vacate the lot.
In a letter dated December 20, 1993, PELA, through Atty. Pedro S. Castillo, replied that
it had already reached an agreement with Al-Amanah regarding the sale of the subject lot based
on their offered price. Meanwhile, acting on Roberns undated written offer, Al-Amanah issued a
Recommendation Sheet dated December 27, 1993 addressed to its Board Operations Committee,
indicating therein that Robern is interested to buy the lot for P400,000.00; that it has already
deposited 20% of the offered purchase price; that it is buying the lot on "as is" basis; and, that it
is willing to shoulder the relocation of all informal settlers therein. On December 29, 1993, the
Head Office informed the Davao Branch Manager that the Board Operations Committee had
accepted Roberns offer.

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Eight days later, Robern was informed of the acceptance. Al-Amanah stressed that it is
Roberns responsibility to eject the occupants in the subject lot, if any, as well as the payment of
the remaining amount within 15 days; otherwise, the P80,000.00 deposit shall be forfeited.
In a letter dated January 13, 1994, Robern expressed to Al-Amanah its uncertainty on
the status of the subject lot because PELA made a representation with their office bringing with
them copies of official receipts issued by Al-Amanah. Robern also requested for a definite
statement from the bank on whether the official receipts being brandished by PELA are genuine
or not.
To convince Robern that it has no existing contract with PELA, Al-Amanah furnished it
with copies of the Head Offices rejection letter of PELAs bid, the demand letters to vacate, and
the proof of consignment of PELAs P150,000.00 deposit to the RTC of Davao City that PELA
refused to withdraw. Thereafter, on February 2, 1994, it informed Robern that should the latter
fail to pay the balance by February 9, 1994, its P80,000.00 deposit will be forfeited and the lot
shall be up for sale to other prospective buyers. Meanwhile, Al-Amanah requested for assistance
for the removal of the houses not only from the Office of the City Engineer but also from Mayor
Rodrigo Duterte.
On March 4, 1994, Robern paid the balance of the purchase price. The Deed of Sale
over the realty was executed and TCT No. T-212983 was issued in Roberns name the following
day.
A week later, PELA consigned P150,000.00 in the RTC of Davao City. Then on April
14, 1994, it wrote Al-Amanah asking the latter to withdraw the amount consigned. Three months
later, as its members were already facing eviction and possible demolition of their houses, and in
order to protect their rights as vendees, PELA filed a suit for Annulment and Cancellation of
Void Deed of Sale against Al-Amanah, its Director Engr. Farouk Carpizo (Engr. Carpizo), OIC
Dalig, Robern, and Roberns President and General Manager, petitioner Rodolfo Bernardo
(Bernardo) before the RTC of Davao City. It insisted that as early as March 1993 it has a
perfected contract of sale with Al-Amanah. However, in an apparent act of bad faith and in
cahoots with Robern, Al-Amanah proceeded with the sale of the lot despite the prior sale to
PELA.
Incidentally, the trial court granted PELAs prayer for a TRO. The RTCs grant of
injunctive relief was affirmed by the CA when the factual and legal bases for its issuance were
questioned before the appellate court.
The respondents in the annulment case filed their respective Answers. Al-Amanah and
Engr. Carpizo claimed that the bank has every right to sell its lot to any interested buyer with the
best offer and thus they chose Robern. They clarified that the P150,000.00 PELA handed to them
is not part of the payment but merely a deposit in connection with its offer. They asserted that
PELA was properly apprised that its offer to buy was subject to the approval of Al-Amanahs
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Head Office. They stressed that Al-Amanah never entered into a sale with PELA for there was no
perfected agreement as to the price since the Head Office rejected.
In its August 10, 1999 Decision, the RTC dismissed PELAs Complaint. It opined that
the March 18, 1993 letter PELA has been relying upon as proof of a perfected contract of sale
was a mere offer which was already rejected. On appeal, CA reversed the trial courts decision. It
ruled that there was already a perfected contract of sale between PELA and Al-Amanah. Robern
and Bernardo filed a Motion for Reconsideration which Al-Amanah adopted. The CA, however,
was firm in its disposition and thus denied the same. Aggrieved, Robern and Al-Amanah
separately filed Petitions for Review on Certiorari before us. However, Al-Amanahs was denied
on procedural grounds. Al-Amanahs Motion for Reconsideration of the said Resolution of
dismissal was denied with finality. Hence, only the Petition of Robern and Bernardo subsists.
ISSUE: whether there was a perfected contract of sale between PELA and Al-Amanah, the
resolution of which will decide whether the sale of the lot to Robern should be sustained or not.
HELD: No, there is no perfected contract of sale between PELA and Al-Amanah.
A
contract of sale is perfected at the moment there is a meeting of minds upon the thing which is
the object of the contract and upon the price. Thus, for a contract of sale to be valid, all of the
following essential elements must concur: "a) consent or meeting of the minds; b) determinate
subject matter; and c) price certain in money or its equivalent."
In the case at bench, there is no controversy anent the determinate subject matter, i.e.,
the 2,000-square meter lot. This leaves us to resolve whether there was a concurrence of the
remaining elements.
As for the price, fixing it can never be left to the decision of only one of the contracting
parties. "But a price fixed by one of the contracting parties, if accepted by the other, gives rise to
a perfected sale."
As regards consent, "when there is merely an offer by one party without acceptance of
the other, there is no contract." Thus, there is no perfected contract of sale between PELA and
Al-Amanah for want of consent and agreement on the price.
BAR QUESTION NO. 1
Aldi Bank (Aldi) owned a 2000-square meter lot located in Magtu-od, Davao City.
However, the illegal settlers are already occupying the said property. Aldi Bank through its
representive, A, offered to sell the property to the illegal settlers. The illegal settlers expressed
their intention through a letter to buy the property and deposited to the bank an amount way
below the offered price. Then, A, later on replied that they cannot accept the offer of the illegal
settlers because the price is so low and they can already withdraw the money that they deposited
to the bank. Thereafter, the Board Operations Committee of the Aldi Bank accepted the offer of
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the Robins Development Corporation (Robin) buy the property to a certain amount. The illegal
settlers insisted that it has a perfected contract of sale with Aldi. However, in an apparent act of
bad faith and in cahoots with Robin, Aldi proceeded with the sale of the lot despite the prior sale
to the illegal settlers.
1. Is there a perfected contract of sale between Aldi Bank and the illegal settlers? Justify
your answer.
2. Enumerate the elements of a contract.

LAND BANK OF THE PHILIPPINES VS. EDUARDO M. CACAYURAN

G.R. No. 191667, APRIL 17, 2013
PERLAS-BERNABE, J.:
Facts: This is a petition for Review on Certiorari of the CA affirming the RTC in declaring the
nullity of the loan agreements entered into by Land Bank and the Municipality of Agoo, La
Union.
Agoo SB passed a certain resolution to implement a redevelopment plan to redevelop
the Agoo Public Plaza. To finance the plan, SB passed a resolution authorizing then Maor Eriguel
to obtain a loan from Land Bank, incidental to it, mortgaged a portion of the plaza as collateral.
It has also authorized the assignment of a portion if the IRA and monthly income in favor of
Land Bank to secure the payment. Ten Kiosks were made at the plaza, then were rented out.
Later, a commercial center on the Plaza lot was built too, with a loan from Land Bank, posting
the same securities as the first loan.
The commercial loan was opposed by some residents of the municipality embodied in a
manifesto launched through a signature campaign by the residents and Cacayuran. Invoking his
right as taxpayer, Cacayuran filed a complaint against the officials and Land bank assailing the
validity of the loans on the ground that the Plaza lot used as collateral is property of public
dominion and therefore beyond the commerce of man.
The RTC declared the nullity of the subject loans, saying that the loans were passed in a
highly irregular manner, as such, the Municipality is not bound by the same. Aggrieved, Land
Bank filed notice of appeal.
The CA affirmed with modification the RTC's ruling, excluding the Vice Mayor from
any personal liability arising from the subject loans. Cacayuran has locus standi as resident and
taxpayer in the municipality and the issue involves public interest. The plaza cannot be
considered valid collateral to loans for it is a public dominion. Hence, Land Bank filed this
instant petition.
ISSUE: Is there a valid contract on the loan agreement between Land Bank and the
Municipality of Agoo, La Union?

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HELD: No, there is no valid contract between Land Bank and the Municipality of Agoo, La
Union. Article 1409(1) of the Civil Code provides that a contract whose purpose is contrary to
law, morals, good customs, public order or public policy is considered void and as such, creates
no rights or obligations or any juridical relations. Consequently, given the unlawful purpose
behind the Subject Loans which is to fund the commercialization of the Agoo Plaza pursuant to
the Redevelopment Plan, they are considered as ultra vires in the primary sense thus, rendering
them void and in effect, non-binding on the Municipality.
BAR QUESTION NO. 2
L Bank approved a loan agreement with the Municipality of Asuncion, Laz Casas
inorder to build a commercial center in the plaza. Castro, as a taxpayer, filed a suit to nullify the
contract of loan between L Bank and the Municipality of Asuncion, Laz Casas since the plaza is
part of a public dominion and cannot be apportioned to be collateral to their loan agreement.
1. Is there a valid contract of loan between L Bank and the Municipality of Asuncion, Laz
Casas? Justify your answer.
SPOUSES JESUS L. CABAHUG AND CORONACION M. CABAHUG VS. NATIONAL
POWER CORPORATION
G.R. No. 186069
JANUARY 30, 2013
PEREZ, J.:
FACTS: The Spouses Cabahug are the owners of two parcels of land situated in
Barangay Capokpok, Tabango, Leyte, registered in their names under TCT Nos. T-9813 and T1599 of the Leyte provincial registry. They were among the defendants in Special Civil Action
No. 0019-PN, a suit for expropriation earlier filed by NPC before the RTC, in connection with its
Leyte-Cebu Interconnection Project. The suit was later dismissed when NPC opted to settle with
the landowners by paying an easement fee equivalent to 10% of value of their property in
accordance with Section 3-A of Republic Act (RA) No. 6395. On 9 November 1996, Jesus
Cabahug executed two documents denominated as Right of Way Grant in favor of NPC. For and
in consideration of the easement fees, Cabahug granted NPC a continuous easement of
right of way for the latters transmissions lines and their appurtenances over 24,939 and
4,750 square meters of the parcels of land covered by TCT Nos. T-9813 and T-1599, respectively.
By said grant, Jesus Cabahug agreed not to construct any building or structure whatsoever, nor
plant in any area within the Right of Way that will adversely affect or obstruct the
transmission line of NPC, except agricultural crops, the growth of which will not exceed three
meters high. Under paragraph 4 of the grant, however, Jesus Cabahug reserved the option to seek
additional compensation for easement fee, based on the Supreme Courts 18 January 1991
Decision in G.R. No. 60077, entitled National Power Corporation v. Spouses
Misericordia Gutierrez and Ricardo Malit, et al. (Gutierrez). On 21 September 1998, the Spouses
Cabahug filed the complaint for the payment of just compensation, damages and attorneys
fees against NPC before the RTC. In its answer, NPC averred that it already paid the full
easement fee mandated under Section 3-A of RA 6395 and that the reservation in the grant
referred to additional compensation for easement fee, not the full just compensation sought by
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the Spouses Cabahug. The RTC rendered a Decision dated 14 March 2000, brushing aside NPCs
reliance on Section 3-A of RA 6395. Aggrieved by the foregoing decision, the NPC perfected the
appeal before the CA which, on 16 May 2007, rendered the herein assailed decision, reversing
and setting aside the RTCs appealed decision. On motion for reconsideration, the
same was denied by the CA. Hence, this petition for review on certiorari.
ISSUE: Whether or not petitioners are entitled to full just compensation.
HELD: The rule is settled that a contract constitutes the law between the parties who are bound
by its stipulations which, when couched in clear and plain language, should be applied according
to their literal tenor. Courts cannot supply material stipulations, read into the contract words it
does not contain or, for that matter, read into it any other intention that would contradict its
plain import. Neither can they rewrite contracts because they operate harshly or
inequitably as to one of the parties, or alter them for the benefit of one party and to the detriment
of the other, or by construction, relieve one of the parties from the terms which he voluntarily
consented to, or impose on him those which he did not.
BAR QUESTION NO. 3
Spouses Jessie and Connie Caliente are the owners of two parcels of land
situated in a certain barangay in Leyte. They were among the defendants in a Special Civil
Action wherein a suit for expropriation was filed by the National Grid Corporation (NGC) since
their property is subject for a project of the government. But, later on the case was dismissed
because the NGC choose to settle with the landowners to the payment of an easement fee. A
Right of Way Grant was then executed by Spouses Caliente in favor of NGC with a reservation
on the option to seek additional compensation for easement fee. Spouses Caliente, thereafter,
filed a filed the complaint for the payment of just compensation, damages and attorneys
fees against NGC before the Regional Trial Court.
1. Are the spouses entitled to the payment of just compensation by the NGC?
2. Can the courts interfere with the interpretation of a contract between the parties?

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