Obligation to do
137552
RUIZ VS CA
GR NO GR NP 146942
APRIL 22, 2003
FACTS:
Petitioner Corazon Ruiz is engaged in the business of
buying and selling jewelry. She obtained loans from
private respondent Consuelo Torres on different
occasions and in different amounts. Prior to their
maturity, the loans were consolidated under 1
promissory note dated March 22, 1995.
The consolidated loan of P750, 000.00 was secured by a
real estate mortgage on a lot in Quezon City, covered by
Transfer of Certificate of Title No. RT-96686, and
registered in the name of petitioner. The mortgage was
signed by petitioner for herself and as attorney-in-fact of
her husband Rogelio. It was executed on 20 March
1995, or 2 days before the execution of the subject
promissory note.
Thereafter, petitioner obtained 3 more loans from
private respondent, under the following promissory
notes: 1) promissory note dated 21 April 1995, in the
amount of Php100,000.00; 2) promissory note dated 23
May !995 in the amount of P100,000.00, and 3)
promissory note dated 21 December 1995, in the
amount of Php100,000.00. These combined loans of
Php300, 000.00 were secured by Php571,000.00 worth
of jewelry pledged by petitioner to private respondent.
From April 1995 to March 1996, petitioner paid the
stipulated 3% monthly interest on the Php750,000.00
loan, amounting to Php270,000. After March 1996,
petitioner was unable to make interest payments as she
had difficulties collecting from her clients in her jewelry
business.
Because of petitioner’s failure to pay the principal loan
of P750,000.00, as well as the interest payment for April
1996, private respondent demanded payment not only
of the P750,000.00 loan but also of the P300,000.00
loan. When petitioner failed to pay, private respondent
sought the extrajudicial foreclosure of the
aforementioned real estate mortgage.
Issue:
Whether or not there is undue influence in the signing
of the promissory note, which determines if foreclosure
proceedings could proceed.
Ruling:
The promissory note in question did not contain any fine
print provision which could have escaped the attention
of the petitioner. Petitioner had all the time to go over
and study the stipulations embodied in the promissory
note. Aside from the March 22, 1995 promissory note
for Php750,000.00, three other promissory notes of
different dates and amounts were executed by
petitioner in favor of private respondent. These
promissory notes contain similar terms and conditions,
with a little variance in the terms of interests and
surcharges. The fact that petitioner and private
respondent had entered into not only one but several
loan transactions shows that petitioner was not in any
way compelled to accept the terms allegedly imposed by
private respondent. Moreover, petitioner, in her
complaint dated October 7, 1996 filed with the trial
court, never claimed that she was forced to sign the
subject note. Therefore, the foreclosure proceedings
may now proceed.
COMPENSATIO MORAE
KORINA MESA NGALOY
G.R. No.
June 16, 2000
Laforteza v. Machuca
Facts:
In the exercise of the Special Power of Attorney (SPA)
executed by their co-heirs, Gonzalo and Roberto
Laforteza. entered into a Contract to Sell with the
plaintiff over the subject house and lot for P630,000.00.
On September 18, 1998, the defendant heirs, through
their counsel, wrote a letter to the plaintiff, advising him
that he had thirty (30) days to produce the balance of
P600,000.00 under the Memorandum of Agreement
and furnishing him a copy of the reconstituted title to
the subject property. The plaintiff requested a 30-day
extension, granted by Roberto but not by Gonzalo.
On November 15, 1989, the plaintiff informed the
defendant heirs, through their counsel Roberto, that he
has the money. However, the defendants told him that
the subject property was no longer for sale and insisted
on rescission. Thereafter,the plaintiff filed the instant
action for specific performance.
Issue:
Whether or not the defendants may rescind the contract
Ruling:
Admittedly, the failure of Machuca to pay the balance of
the purchase price was a breach of the contract and a
ground for rescission thereof. The extension of thirty
(30) days allegedly granted to him by Roberto was
correctly found by the Court of Appeals to be ineffective
inasmuch as the signature of Gonzalo did not appear
thereon as required by the SPA. However, the evidence
reveals that the petitioners were not ready to comply
with their obligation, i.e. the delivery of the
reconstituted title of the house and lot. Machuca could
not therefore be considered in delay for in reciprocal
obligations, neither party incurs in delay if the other
party does not comply or is not ready to comply in a
proper manner with what was incumbent upon him.
Even assuming for the sake of argument that the
petitioners were ready to comply with their obligation,
rescission will still not prosper. The thirty-day delay in
payment, a mere casual breach, was caused by the
Machuca’s justified but mistaken belief that an extension
was granted to him. Rescission of a contract will not be
permitted for a casual breach, but only for such
substantial breach as would defeat the very object of
the parties in making the agreement
MEDICAL MALPRACTICE
PROFESSIONAL SERVICES VS. AGANA
GR No. 126467 February 11, 2008
FACTS:
On April 04, 1984, Natividad Agana was admitted at the
Medical City General Hospital because of difficulty of
bowel movement and bloody anal discharge. Dr. Ampil
diagnosed her to be suffering from “cancer of the
sigmoid”. Thus, Dr. Ampil, assisted by the medical staff of
Medical City, performed a surgery upon her. During the
surgery, he found that the malignancy in her sigmoid
area had spread to her left ovary, necessitating the
removal of certain portions of it. Thus, Dr. Ampil
obtained the consent of Natividad’s husband to permit
Dr. Fuentes to perform hysterectomy upon Natividad.
Dr. Fuentes performed and completed the
hysterectomy. Afterwards, Dr. Ampil took over,
completed the operation and closed the incision. The
operation, however, appeared to be flawed as the
attending nurses entered in the corresponding Record
of Operation that there were 2 lacking sponge and
pg. 1
announced that it was searched by the surgeon but to
no avail.
After a couple of days, Natividad complained
excruciating pain in her anal region. She consulted both
Dr. Ampil and Dr. Fuentes. They told her that the pain
was the natural consequence of the surgical operation
performed upon her. Dr. Ampil recommended that she
consult an oncologist to treat the cancerous nodes
which were not removed. Natividad and her husband
went to the US to seek further treatment. After 4 months
she was told that she was free of cancer. They then flew
back to the Philippines. Two weeks thereafter ,
Natividad’s daughter found a piece of gauze protruding
from her vagina. Dr. Ampil saw immediately informed.
He proceeded to Natividad’s house where he extracted
by hand a piece of gauze. Natividad sought the
treatment of Polymedic General Hospital thereat Dr.
Gutierrez detected a foreign object in her vagina - a foul-
smelling gauze which infected her vaginal vault. A recto-
vaginal fistula had formed in her reproductive organ
which forced stool to excrete in her vagina. Another
surgical operation was performed upon her.
Spouses Agana filed a complaint against PSI (owner of
Medical City), Dr. Ampil and Dr. Fuentes. The Trial Court
found the respondents jointly and severally liable. The
CA affirmed said decision with modification that Dr.
Fuentes was dismissed.
ISSUE:
Whether the Court of Appeals erred in absolving Dr.
Fuentes of any liability.
RULING:
It was duly established that Dr. Ampil was the lead
surgeon during the operation of Natividad. He
requested the assistance of Dr. Fuentes only to perform
hysterectomy when he (Dr. Ampil) found that the
malignancy in her sigmoid area had spread to her left
ovary. Dr. Fuentes performed the surgery and thereafter
reported and showed his work to Dr. Ampil. The latter
examined it and finding everything to be in order,
allowed Dr. Fuentes to leave the operating room. Dr.
Ampil then resumed operating on Natividad. He was
about to finish the procedure when the attending
nurses informed him that two pieces of gauze were
missing. A "diligent search" was conducted, but the
misplaced gauzes were not found. Dr. Ampil then
directed that the incision be closed. During this entire
period, Dr. Fuentes was no longer in the operating
room and had, in fact, left the hospital.
Under the "Captain of the Ship" rule, the operating
surgeon is the person in complete charge of the surgery
room and all personnel connected with the operation.
Their duty is to obey his orders. As stated before, Dr.
Ampil was the lead surgeon. In other words, he was the
"Captain of the Ship." That he discharged such role is
evident from his following conduct. Clearly, the control
and management of the thing which caused the injury
was in the hands of Dr. Ampil, not Dr. Fuentes.
Here, the negligence was proven to have been
committed by Dr. Ampil and not by Dr. Fuentes
TRANSMISSIBILITY OF RIGHTS
G.R. No. 121940 December 4, 2001
JESUS SAN AGUSTIN, petitioner, vs. HON. COURT OF
APPEALS and MAXIMO MENEZ, JR., respondents
KORINA MESA NGALOY
Facts:
The GSIS sold to a certain Macaria, a parcel of residential
land of the GSIS Low Cost Housing Project. The sale is
evidenced by a Deed of Absolute Sale, which was,
however, subject to certain encumbrances. A day after
the issuance of the TCT, Macaria sold the subject lot to
private respondent as evidenced by a Deed of Absolute
Sale. This deed was notarized but was not registered
immediately upon its execution in because GSIS
prohibited him from registering the same in view of the
five-year prohibition to sell. Sometime in 1979, for being
suspected as a subversive, an ASSO was issued against
private respondent. Upon learning that he was wanted
by the military, he voluntarily surrendered and was
detained and eventually released.
Subsequently, he discovered that the subject TCT was
missing. An Affidavit of Loss was filed with the Register
of Deeds of Pasig and a certified copy of TCT was issued
to him. Respondent then filed a petition with the RTC for
the issuance of owners duplicate copy of TCT to replace
the lost one. To show he was the owner of the
contested lot, he presented the Deed of Absolute Sale.
During the hearing, the Register of Deeds was not
served notice, and the Office of the Solicitor General and
the Provincial Prosecutor who were notified did not
attend. There being no opposition, the trial court
granted his petition. Subsequently, petitioner received a
copy of the decision. Claiming that he was the present
occupant of the property and the heir of Macaria, he
filed his Motion to Reopen Reconstitution Proceedings.
The RTC and CA denied the same, hence this petition.
Issue:
Whether the petitioner is entitled to notice?
Held:
No. Consequently, it is sufficient that the notice, under
Section 109 of PD 1529, is sent to the Register of Deeds
and to those persons who are known to have, or appear
to have, an interest in the property as shown in the
Memorandum of encumbrances at the back of the
original or transfer certificate of title on file in the office
of the Register of Deeds. From a legal standpoint, there
are no other interested parties who should be notified,
except those mentioned since they are the only ones
who may be deemed to have a claim to the property
involved. A person dealing with registered property is
not charged with notice of encumbrances not
annotated on the back of the title. Here, petitioner does
not appear to have an interest in the property based on
the memorandum of encumbrances annotated at the
back of the title. His claim that he is an heir (nephew) of
the original owner of the lot covered by the disputed lot
and the present occupant is not annotated in the said
memorandum of encumbrances. Neither was his claim
entered on the Certificate of Titles in the name of their
original/former owners on file with the Register of
Deeds at the time of the filing or pendency of the land
registration case. Clearly, petitioner is not entitled to
notice. The fact that respondent complied with the
order of publication of the petition in a newspaper of
general circulation, such is sufficient notice of the
petition to the public at large.
RESOLUTION DISTINGUISHED FROM RECISION UNDER
ART 1381
pg. 2
SPS. FELIPE AND LETICIA CANNU vs. SPS. GIL AND
FERNANDINA GALANG AND NATIONAL HOME
MORTGAGE FINANCE CORPORATION,
G.R. No. 139523. May 26, 2005
Facts:
Gil and Fernandina Galang obtained a loan from
Fortune Savings & Loan Association for P173, 800.00 to
purchase a house and lot located at Pulang Lupa, Las
Piñas, To secure payment, a real estate mortgage was
constituted on the said house and lot in favor of Fortune
Savings & Loan Association. In early 1990, NHMFC
purchased the mortgage loan of respondents-spouses
from Fortune Savings & Loan Association for P173,
800.00. Petitioner Leticia Cannu agreed to buy the
property for P120, 000.00 and to assume the balance of
the mortgage obligations with the NHMFC and with
CERF Realty. Of the P120, 000. 00, several payments
were made leaving a balance of P45, 000.00. A Deed of
Sale with Assumption of Mortgage Obligation was made
and entered into by and between spouses Fernandina
and Gil Galang and spouses Leticia and Felipe Cannu
over the house and lot. Petitioners immediately took
possession and occupied the house and lot. Despite
requests from Adelina R. Timbang and Fernandina
Galang to pay the balance of P45,000.00 or in the
alternative to vacate the property in question,
petitioners refused to do so.
Issues:
1) Whether or not the breach of the obligation is
substantial.
2) Whether or not there was substantial compliance
with the obligation to pay the monthly amortization
with NHMFC.
3) Whether or not respondents-spouses Galang
demanded from petitioners a strict and/or faithful
compliance of the Deed of Sale with Assumption of
Mortgage. 4. Whether or not the action for rescission is
subsidiary.
Held:
1) Rescission may be had only for such breaches that are
substantial and fundamental as to defeat the object of
the parties in making the agreement. The question of
whether a breach of contract is substantial depends
upon the attending circumstances and not merely on
the percentage of the amount not paid. In the case at
bar, we find petitioners’ failure to pay the remaining
balance of P45,000.00 to be substantial. Taken together
with the fact that the last payment made was on 28
November 1991, eighteen months before the
respondent Fernandina Galang paid the outstanding
balance of the mortgage loan with NHMFC, the
intention of petitioners to renege on their obligation is
utterly clear.
2) The petitioners were not religious in paying the
amortization with the NHMFC. As admitted by them, in
the span of three years from 1990 to 1993, their
payments covered only thirty months. This, indeed,
constitutes another breach or violation of the Deed of
Sale with Assumption of Mortgage. On top of this, there
was no formal assumption of the mortgage obligation
with NHMFC because of the lack of approval by the
NHMFC on account of petitioners’ non-submission of
requirements in order to be considered as
KORINA MESA NGALOY
assignees/successors-in-interest over the property
covered by the mortgage obligation.
3) There is sufficient evidence showing that demands
were made from petitioners to comply with their
obligation. Adelina R. Timbang, attorney-in-fact of
respondents-spouses, per instruction of respondent
Fernandina Galang, made constant follow-ups after the
last payment made on 28 November 1991, but
petitioners did not pay. Sometime in March 1993, due to
the fact that full payment has not been paid and that
the monthly amortizations with the NHMFC have not
been fully updated, she made her intentions clear with
petitioner Leticia Cannu that she will rescind or annul
the Deed of Sale with Assumption of Mortgage. 4. The
subsidiary character of the action for rescission applies
to contracts enumerated in Articles 1381 of the Civil
Code. The contract involved in the case before us is not
one of those mentioned therein. The provision that
applies in the case at bar is Article 1191.As a
consequence of the rescission or, more accurately,
resolution of the Deed of Sale with Assumption of
Mortgage, it is the duty of the court to require the
parties to surrender whatever they may have received
from the other. The parties should be restored to their
original situation
FACULTATIVE OBLIGATION
G.R. No. L-6220
May 7, 1954
MARTINA QUIZANA, plaintiff-appellee, vs. GAUDENCIO
REDUGERIO and JOSEFA POSTRADO, defendants-
appellants
Facts:
The action was originally instituted in the justice of the
peace court of Sta. Cruz, Marinduque, and the same is
based on an actionable document attached to the
complaint, signed by the defendants-appellants. The
defendants-appellants admit the execution of the
document, but claim, as special defense, that they
offered to pledge the land specified in the agreement
and transfer possession thereof to the plaintiff-appellee,
but that the latter refused said offer. Judgement having
been rendered by the justice of the peace court of Sta.
Cruz, the defendants-appellants appealed to the Court
of First Instance. In that court they reiterated the
defenses that they presented in the justice of the peace
court.
Issue:
Whether the second part of the written obligation, in
which the obligors agreed and promised to deliver a
mortgage over the parcel of land described therein,
upon their failure to pay the debt on a date specified in
the proceeding paragraph, is valid and binding and
effective upon the plaintiff-appellee, the creditor
Held:
The second part of the obligation in question is what is
known in law as a facultative obligation, defined in
article 1206 of Civil Code of the Philippines. There is
nothing in the agreement which would argue against
its enforcement. It is not contrary to law or public morals
or public policy, and notwithstanding the absence of
any legal provision at the time it was entered into
government it, as the parties had freely and voluntarily
entered into it, there is no ground or reason why it
should not be given effect. It is a new right which
should be declared effective at once, in consonance
with the provisions of article 2253 of the Civil Code of
the Philippines.
pg. 3
OBLIGATIONS WITH A PENAL CLAUSE
S.C. MEGAWORLD CONSTRUCTION and
DEVELOPMENT CORPORATION, Petitioner, vs. ENGR.
LUIS U. PARADA, represented by ENGR. LEONARDO A.
PARADA of GENLITE INDUSTRIES, Respondent.
G.R. No. 183804 September 11, 2013
REYES, J.:
FACTS
S.C. Megaworld Construction and Development
Corporation (Megaworld) bought electrical lighting
materials from Gentile Industries, a sole proprietorship
owned by Engineer Luis U. Parada. Megaworld was
unable to pay for the above purchase on due date, but
blamed it on its failure to collect under its sub-contract
with the Enviro KleenTechnologies, Inc. (Enviro Kleen). It
was however able to persuade Enviro Kleen to agree to
settle its above purchase, but after paying the
respondent P250,000.00 once, Enviro Kleen stopped
making further payments, leaving an outstanding
balance of P816,627.00. It also ignored the various
demands of the Parada, who then filed a suit in the RTC,
to collect from the petitioner the said balance, plus
damages, costs and expenses.
Megaworld denied liability by saying that it was released
from its indebtedness to the Parada due to the novation
of their contract, which. There was allegedly novation
when the Parada accepted the partial payment of Enviro
Kleen in its behalf, and thereby acquiesced to the
substitution of Enviro Kleen as the new debtor in
Megaworld’s place.
the Parada is the real party in interest who stood to be
directly benefited or injured by the judgment in the
complaint below. There is then no necessity for Genlite
Industries to be impleaded as a party-plaintiff, since the
complaint was already filed in the name of its proprietor,
Engr. Luis U. Parada. To heed the Megaworld’s sophistic
reasoning is to permit a dubious technicality to frustrate
the ends of substantial justice.
ISSUE: W/N there is novation of the contract.
RULING: None.
Novation is a mode of extinguishing an obligation by
changing its objects or principal obligations, by
substituting a new debtor in place of the old one, or by
subrogating a third person to the rights of the creditor.
It is "the substitution of a new contract, debt, or
obligation for an existing one between the same or
different parties."
The settled rule is that novation is never presumed, but
must be clearly and unequivocally shown. In order for a
new agreement to supersede the old one, the parties to
a contract must expressly agree that they are abrogating
their old contract in favor of a new one.
The trial court found that the respondent never agreed
to release the petitioner from its obligation, and this
conclusion was upheld by the CA.

The Regional Trial Court ruled in favor of Parada.

On appeal, Megaworld argued that the trial court

should have dismissed the complaint for failure of the
respondent to implead Genlite Industries as "a proper
party in interest."
The sales invoices and receipts show that the
respondent is the sole proprietor of Genlite Industries,
and therefore the real party.

On the issue of novation, the Court of Appeals ruled that

by retaining his option to seek satisfaction from the
petitioner, any acquiescence which the respondent had
made was limited to merely accepting Enviro Kleen as
an additional debtor from whom he could demand
payment, but without releasing the petitioner as the
principal debtor from its debt to him.

ISSUE: W/N Genlite Industries should have been

impleaded as a party-plaintiff.

RULING: No.

Only natural or juridical persons or entities authorized

by law may be parties in a civil case.
A sole proprietorship has no juridical personality
separate and distinct from that of its owner, and need
not be impleaded as a party-plaintiff in a civil case.

Genlite Industries is merely the DTI-registered trade

name or style of Parada by which he conducted his
business. As such, it does not exist as a separate entity
apart from its owner, and therefore it has no separate
juridical personality to sue or be sued. As the sole
proprietor of Genlite Industries, there is no question that
KORINA MESA NGALOY pg. 4