Chua vs Timan
19 11 2010
FACTS: Interest Rate – Usurious Rates – 12% Per Annum
Interest Rate – Central Bank Circular No. 905-82 – Legal Rate
In February and March 1999 Chua loaned the Timans 6 loans
amounting to P864k. The interest rate agreed upon was 7%.
The Timans paid at that rate until September 1999. In October
1999, the % rate was reduced to 5%. In March 2000, the
Timans offered to pay P764k. Chua did not accept payment as
they wanted the full amount of P864k. The Timans then
consigned with the court the amount of P864k.
The RTC ruled that the 7% and the reduced rate of 5%
stipulated rate is excessive, iniquitous, unconscionable and
exorbitant (equivalent to 84% and 60% per annum rate). Chua
averred that by virtue of CB Circular 905, the ceiling on interest
rate has been removed hence the 5-7% rate is valid and in the
first place, Timan agreed to it.
ISSUE: Whether or not the rate is valid.
HELD: No. As has been ruled by the Supreme Court in a
multitude of cases, interest rates of 3% and higher are already
excessive. The rate should then be reduced to 12% per annum
or 1% per month. The Usury Law has been rendered ineffective
by the said CB Circular but it has not repealed the law, it
merely suspended it. Note that only laws can repeal laws, not
circulars.
While C.B. Circular No. 905-82, which took effect on January 1,
1983, effectively removed the ceiling on interest rates for both
secured and unsecured loans, regardless of maturity, nothing
in the said circular could possibly be read as granting carte
blanche authority to lenders to raise interest rates to levels
which would either enslave their borrowers or lead to a
hemorrhaging of their assets.
Jesus B. Ruiz, petitioner, vs. Encarnacion Ucol & the
Court of Appeals, respondents.
August 7, 1987
FACTS: The laundrywoman for plaintiff-appellant Atty. Jesus B.
Ruiz filed an administrative charge against defendant-appellee
Encarnacion Ucol. Ucol, in her answer, alleged that Tagaca was
merely used as a tool by Atty. Ruiz who wanted to get back at
the Ucol's because of a case filed by respondent’s husband
against Ruiz. She was also alleged to have made remarks that
Atty.
Ruiz instigated the complaint and fabricated the charges.When
the administrative case was dismissed, the petitioner filed his
own criminal complaint for libel against Ucol based on the
alleged libelous portion of Ucol's answer.
The lower court acquitted Ucol on the ground that her guilt was
not established beyond reasonable doubt. The trial court as to
the civil liability of the accused made no pronouncement.
Instead of appealing, Ruiz filed a separate complaint for
damages based on the same facts upon
which the libel case was founded. Ucol filed a motion to dismiss
stating that the action had prescribed and that the cause of
action was barred by the decision in the criminal case for libel.
The trial court granted the motion to
dismiss on the ground of res judicata. On appeal, the appellate
court certified the case to the Supreme Court.
ISSUE: Whether or not the civil action for damages was
already barred by the criminal case of libel.
RULING: The contentions of the petitioner have no merit. Art.
33 of the Civil Code, independently of a criminal action for
defamation, a civil suit for the recovery of damages arising
therefrom may be brought by the injured party. The civil
liability arising from the crime charged may still be determined
in the criminal proceedings if the offended party does not
waive to have it adjudged, or does not reserve his right to
institute a separate civil action against the defendant.
The Supreme Court did not find any defamatory imputation,
which causes dishonor, or discredit to the complainant. She
was the victim of an unprovoked, unjustified and libelous
attack against her honor, honesty, character and reputation;
she has a right to self-defense, which she did in heranswer,
to protect her honesty and integrity and the very job upon
which her family depend for their livelihood.
YANEZA vs. Court of Appeals
G.R. No. 149322 November 28, 2008
Facts: Yaneza is the owner of a parcel of land in San Juan,
Baras, Rizal. De Jesus is the owner of a lot which is adjacent
to Yaneza’s lot. De Jesus’ lot has no access to the nearest
road except through a road which they constructed over a
portion of Yaneza’s lot. Yaneza informed De Jesus that he is
the owner of Lot 2730-A and that he does not agree with the
use of the portion of his lot as an access road because it will
affect the configuration of his property. As an option,
petitioner offered to sell to the respondents the entire
property. De Jesus did not agree, so Yaneza agreed to a
perpetual easement of right of way (4 meters wide) and
stating that he will prepare the necessary document to
facilitate the transaction for a consideration of P20K. De
Jesus found out that it covered only 175 sq m, not 280 sq m.
There was renegotiation and, for an additional consideration
of P40K, Yaneza agreed to sell the entire 280 sq m.
De Jesus constructed a road that is wider than that which
was provided in the contract. He constructed a road three
meters wider than what was agreed upon in the deed of sale.
Yaneza initially allowed them peaceful possession and use of
the area even when he started constructing his house
adjacent to the access road. Later, a serious
misunderstanding took place between Yaneza and
respondents’ caretaker, Benjamin Manzano, because
Manzano refused to allow Yaneza to tap water and electricity
from the respondents’ property. Petitioner allegedly
retaliated and constructed a fence along the access road,
which could not allow trucks to pass through. Yaneza is now
praying for the rescission of the contract for easement of
right of way.
Issue: WON Yaneza may validly rescind the contract of for
easement of right of way? NO
Held: The construction of the road beyond the stipulated
area does not constitute a breach of contract. Breach of
contract implies a failure, without legal excuse, to perform
any promise or undertaking that forms part of the contract.
Although the contract specifically stated the area covered by
the sale, it did not contain a promise by the respondents that
they will only occupy such area. Albeit apparently wrong,
petitioner’s cause of action should not have been based on
the contract of sale.
Rescission of a contract will not be permitted for a slight or
casual breach but only for a substantial and fundamental
breach as would defeat the very object of the parties in
making the agreement. It must be a breach of faith that
destroys or violates the reciprocity between the parties.
Besides, the original agreement had already been
superseded or novated by a new contract, an oral one,
covering an increased area of 280 sq m. An additional P40K
was paid to the Yaneza which covered the entire 280-sq m
area were the access road was laid. The new contract of sale
between the parties is valid despite it not being evidenced
by any writing.
LASAM VS. SMITH
45 PHIL 657
FACTS: The defendant was the owner of a public garage in
the town of San Fernando, La Union, and engaged in the
business of carrying passengers for hire from one point to
another in the Province of La Union and the surrounding
provinces. Defendant undertook to convey the plaintiffs from
San Fernando to Currimao, Ilocos Norte, in a Ford
automobile. On leaving San Fernando, the automobile was
operated by a licensed chauffeur, but after having reached the
town of San Juan, the chauffeur allowed his assistant, Bueno, to
drive the car. Bueno held no driver’s license, but had some
experience in driving. The car functioned well until after the
crossing of the Abra River in Tagudin, when, according to the
testimony of the witnesses for the plaintiffs, defects developed
in the steering gear so as to make accurate steering
impossible, and after zigzagging for a distance of about half
kilometer, the car left the road and went down a steep
embankment. The automobile was overturned and the plaintiffs
pinned down under it. Mr. Lasam escaped with a few
contusions and a dislocated rib, but his wife, Joaquina, received
serious injuries, among which was a compound fracture of one
of the bones in her left wrist. She also suffered nervous
breakdown from which she has not fully recovered at the time
of trial.
The complaint was filed about a year and a half after and
alleges that the accident was due to defects in the automobile
as well as to the incompetence and negligence of the
chauffeur. The trial court held, however, that the cause of
action rests on the defendant’s breach of the contract of
carriage and
that, consequently, articles 1101-1107 of the Civil Code, and
not article 1903, are applicable. The court further found that
the breach of contact was not due to fortuitous events and
that, therefore the defendant was liable in damages.
ISSUE: Is the trial court correct in its findings that the breach
of contract was not due to a fortuitous event?
RULING: Yes. It is sufficient to reiterate that the source of the
defendant’s legal liability is the contract of carriage; that by
entering into that contract he bound himself to carry the
plaintiffs safely and securely to their destination; and that
having failed to do so he is liable in damages unless he
shows that the failure to fulfill his obligation was due to causes
mentioned in article 1105 of the Civil Code, which reads: “No
one shall be liable for events which could not be foreseen or
which, even if foreseen, were inevitable, with
the exception of the cases in which the law expressly provides
otherwise and those in which the obligation itself imposes such
liability.”
As will be seen, some extraordinary circumstances
independent of the will of the obligor, or of his employees, is an
essential element of a caso fortuito. In the present case, this
element is lacking. It is not suggested that the
accident in question was due to an act of God or to adverse
road conditions which could have been foreseen. As far as the
record shows, the accident was caused either by defects in the
automobile or else through the negligence of its driver. That is
not a caso fortuito.
VDA. DE MISTICA vs. NAGUIAT
G.R. No. 137909. December 11, 2003
Facts: Eulalio Mistica is the owner of a parcel of land located
at Malhacan, Meycauayan, Bulacan. A portion thereof was
leased to respondent Naguiat. Consequently, Mistica entered
into a contract to sell with respondent over a portion of lot
containing an area of 200 sq. mtrs. The agreement was
reduced to writing in a document entitled “Kasulatan sa
Pagbibilihan” P 20k – as the total purchase: P 2k – upon
signing; P 18k – to be paid within 10yrs;
In case non payment, vendee shall pay an interest of 12% per
annum. Pursuant to said agreement, respondent gave a
downpayment of P2K & made another partial payment of P1K &
thereafter failed to make any payments. Eulalio Mistica died
sometime in Oct. 1986. Petitioner claims that she is entitled to
rescind the Contract under Article 1191 of the Civil Code,
because respondents committed a substantial breach when
they did not pay the balance of the purchase price within the
ten-year period.
Issue: 1. WON the Kasulatan was a contract to sell? NO
2. WON petitioner is entitled to rescind the contract? NO
3. WON the contract is in the nature of a potestative
obligation? NO
Held: 1.The Kasulatan was clearly a Contract of Sale. A
deed of sale is considered absolute in nature when there is
neither a stipulation in the deed that title to the property
sold is reserved to the seller until the full payment of the
price; nor a stipulation giving the vendor the right to
unilaterally resolve the contract the moment the buyer fails
to pay within a fixed period.
2. In a contract of sale, the remedy of an unpaid seller is
either specific performance or rescission. Under Article 1191
of the Civil Code, the right to rescind an obligation is
predicated on the violation of the reciprocity between
parties, brought about by a breach of faith by one of them.
Rescission, however, is allowed only where the breach is
substantial and fundamental to the fulfillment of the
obligation.
In the present case, the failure of respondents to pay the
balance of the purchase price within ten years from the
execution of the Deed did not amount to a substantial
breach. In the Kasulatan, it was stipulated that payment
could be made even after ten years from the execution of
the Contract, provided the vendee paid 12 percent interest.
The stipulations of the contract constitute the law between
the parties; thus, courts have no alternative but to enforce
them as agreed upon and written.
Petitioner never made any demand for the balance of the
purchase price. Petitioner even refused the payment
tendered by respondents during her husband’s funeral, thus
showing that she was not exactly blameless for the lapse of
the ten-year period. Had she accepted the tender, payment
would have been made well within the agreed period.
3. The Kasulatan does not allow the it to be converted to a
potestative obligation. First, nowhere is it stated in the Deed
that payment of the purchase price is dependent upon
whether respondents want to pay it or not. Second, the fact
that they already made partial payment thereof only shows
that the parties intended to be bound by the Kasulatan.
SOUTHEASTERN COLLEGE vs. CA
G.R. No. 126389 July 10, 1998
Facts: On October 11, 1989, powerful typhoon “Saling” hit
Metro Manila. Buffeted by very strong winds, the roof of
Southeastern College’s building was partly ripped off and
blown away, landing on and destroying portions of the
roofing of private respondents Dimaano’s house. Private
respondent alleged that the damage to their house rendered
the same uninhabitable, forcing them to stay temporarily in
others’ houses. An ocular inspection of the destroyed
building was conducted by a team of engineers headed by
the city building official. The fourth floor of subject school
building was declared as a “structural hazard.” Lower court
awarded damages. CA affirmed but reduced damages.
Issue: WON the damage of the PR’s house resulting from the
impact of the falling portions of the school building’s roof
ripped off was due to fortuitous event? NO
Held: Private respondents, in establishing the culpability of
petitioner, merely relied on the aforementioned report
submitted by a team which made an ocular inspection of
petitioner’s school building after the typhoon. As the term
imparts, an ocular inspection is one by means of actual sight
or viewing. What is visual to the eye through is not always
reflective of the real cause behind.
Petitioners obtained a permit from the city building official
before the construction of its building. Having obtained both
building permit and certificate of occupancy is prima facie
evidence of the regular and proper construction of subject
school building. When part of its roof needed repairs of the
damage inflicted by typhoon Saling, the city engineer gave the
go-signal for such repairs without any deviation from the
original design. It subsequently authorized the use of the entire
fourth floor of the same building. These only prove that subject
building suffers from no structural defect.
Petitioner presented its vice president for finance and
administration who testified that an annual maintenance
inspection and repair of subject school building were regularly
undertaken. Petitioner was even willing to present its
maintenance supervisor to attest to the extent of such regular
inspection but private respondents agreed to dispense with his
testimony and simply stipulated that it would be corroborative
of the vice president’s narration. Besides, no complaint
regarding any defect on the same structure has ever been
lodged before his office prior to the institution of the case at
bench. It is a matter of judicial notice that typhoons are
common occurrences in this country. If subject school
building’s roofing was not firmly anchored to its trusses,
obviously, it could not have withstood long years and several
typhoons even stronger than “Saling.”
Petitioner has not been shown negligent or at fault regarding
the construction and maintenance of its school building in
question and that typhoon “Saling” was the proximate cause of
the damage suffered by private respondents’ house.
ANAMA VS. COURT OF APPEALS, ET AL.
GR. No. 128609. January 29, 2004
Facts: The property was previously owned by Douglas
Anama’s parents, who mortgaged it to Philippine Savings Bank
and later was foreclosed. Douglas and the PSBank entered into
an agreement denominated as a Contract to Buy whereby the
bank agreed to sell to Douglas the said land with all the
improvements thereon. The Contract to Buy provides that
Anama shall purchase the property of a certain amount and
shall pay to the PSBank; it also provides that (1) Anama shall
apply with the bank for a loan, the proceeds of which answer
for the balance of the purchase price; (2) should the petitioner
fail to comply with any of the terms of contract, all amounts
paid are forfeited in favor of PSBank, the latter having the
option either to demand full payment of total price or to
rescind the contract.
Anama was able to pay the first and second installments;
however, he failed to pay the third installment when it became
due. There were several transactions between them to settle
the amount due. But later, the bank executed an Affidavit of
Cancellation rescinding the contract, and forfeited the
payments made by Anama which were applied as rentals of the
use of the property. Anama was then advised to vacate the
property despite his opposition to the rescission of the Contract
to Buy. The bank sold the property to spouses Co, in whose
favor TCT was issued. Anama then filed a case for Declaration
of Nullity of Deed of Sale, Cancellation of TCT, and Specific
Performance with Damages.
Issue: Whether the rescission of the Contract to Buy was valid.
Held: Since Anama failed to pay the third installment, PSBank
was entitled to rescind the Contract to Buy. The contract
provides the Bank two options in the event that petitioner fails
to pay any of the installments. This was either (1) to rescind
the contract outright and forfeit all amounts paid by the
petitioner, or (2) to demand the satisfaction of the contract and
insist on the full payment of the total price. After petitioner
repeatedly failed to pay the third installment, the Bank chose
to exercise the first option.
The Contract to Buy is actually a contract to sell whereby the
vendor reserves ownership of the property and is not to pass
until full payment. Such payment is a positive suspensive
condition, the failure of which is not a breach but simply an
event that prevents the obligation of the vendor to convey title
from acquiring binding force. Since ownership of the subject
property was not pass to petitioner until fill payment of the
purchase price, his failure to pay on the date stipulated, or in
the extension granted, prevented the obligation for the Bank
to pass title of the property to Anama. The bank could validly
sell the property to the spouses Co, the right of the bank to
sell the property being unequivocal.
MANILA INTERNATIONAL AIRPORT AUTHORITY VS. ALA
INDUSTRIES CORPORATION
G.R. No. 147349. February 13, 2004
Facts: The contract for the structural repair and
waterproofing of the IPT and ICT building of the NAIA airport
was awarded, after a public bidding, to respondent ALA.
Respondent made the necessary repair and waterproofing.
After submission of its progress billings to the petitioner,
respondent received partial payments. Progress billing
remained unpaid despite repeated demands by the
respondent. Meanwhile petitioner unilaterally rescinded the
contract on the ground that respondent failed to complete
the project within the agreed completion date.
Respondent objected to the rescission made by the
petitioner and reiterated its claims. The trial court directed
the parties to proceed to arbitration. Both parties executed a
compromise agreement and jointly filed in court a motion for
judgment based on the compromise agreement. The Court a
quo rendered judgment approving the compromise
agreement.
For petitioner’s failure to pay within the period stipulated,
respondent filed a motion for execution to enforce its claim.
Petitioner filed a comment and attributed the delays to its
being a government agency. The trial court denied the
respondent’s motion. Reversing the trial court, the CA
ordered it to issue a writ of execution to enforce
respondent’s claim. The appellate court ratiocinated that a
judgment rendered in accordance with a compromise
agreement was immediately executory, and that a delay was
not substantial compliance therewith.
Issues: 1) Whether or not decision based on compromise
agreement is final and executory.
2) Whether or not delay by one party on a compromise
justifies execution.
Held: 1) A compromise once approved by final orders of the
court has the force of res judicata between the parties and
should not be disturbed except for vices of consent or
forgery. Hence, a decision on a compromise agreement is
final and executory. Such agreement has the force of law
and is conclusive between the parties. It transcends its
identity as a mere contract binding only upon the parties
thereto, as it becomes a judgment that is subject to
execution in accordance with the Rules. Judges therefore
have the ministerial and mandatory duty to implement and
enforce it.
2. The failure to pay on the date stipulated was clearly a
violation of the Agreement. Thus, non-fulfillment of the terms
of the compromise justified execution. It is the height of
absurdity for petitioner to attribute to a fortuitous event its
delayed payment. Petitioner’s explanation is clearly a
gratuitous assertion that borders callousness.
LIGA vs. ALLEGRO RESOURCES
575 SCRA 310 (Art. 1159)
Facts: Ortigas & Company, Limited Partnership entered into
a lease agreement with La Paz Investment & Realty
Corporation wherein the former leased to the latter its parcel
of land located in San Juan. La Paz constructed the Greenhills
Shopping Arcade and divided it into several stalls and
subleased them to other people. One of the sub-lessees was
Edsel Liga (Liga), who obtained the leasehold right to Unit
No. 26, Level A of the GSA. As the lease expired, the
stallholders made several attempts to have their leasehold
rights extended.
Allegro Resources became the new lessee. As the new lessee,
Allegro offered to sublease Unit No. 26, Level A to Liga. They
entered into a lease agreement dubbed Rental Information in
which Liga agreed to pay rental of P40K monthly. She also
agreed to pay the back rentals due Ortigas. Liga also gave
P40K as one month advance rental and another P40K as one
month security deposit as provided in the agreement. Liga
failed to pay the subsequent due rent. Despite repeated
demands from Allegro, Liga had failed to pay her rentals for the
subleased property, as well as the back rentals from January to
August 2001 due Ortigas.
Issues: 1. WON Liga should pay to Ortigas back rentals
covering the period 1 January 2001 to 31 August 2001? NO
2. WON Liga should pay to Allegro back rentals in the amount
of P40K a month starting from 1 September 2001 until such
time as she vacates the leased property? YES
3. WON Liga should pay to Allegro the amount of P20K as
attorney’s fees and the costs of suit? YES
Held:
(1) Ortigas is not a party to this case, whether as plaintiff or
otherwise. It is basic that no relief can be extended in a
judgment to a stranger or one who is not a party to a case.
(2) Allegro cannot justify the award as a legal representative by
virtue of a provision in its lease agreement with Ortigas. Allegro
did not aver in its complaint that it was acting as Ortigas’s legal
representative and seeking the back rentals due Ortigas.
(3) There is no allegation or prayer in the complaint that
Allegro was seeking the collection of the back rentals due
Ortigas.
The Court cannot countenance the obstinate refusal of Liga to
pay P40K a month to Allegro since she had already acquiesced
to pay such rental rate when she signed the Rental
Information. It is fundamental that a contract is the law
between the parties. Obligations arising from contracts have
the force of law between the contracting parties and should be
complied with in good faith.
It is a general principle of law that no one may be permitted to
change his mind or disavow and go back upon his own acts, or
to proceed contrary thereto, to the prejudice of the other party.
Likewise, it is settled that if the terms of the contract clearly
express the intention of the contracting parties, the literal
meaning of the stipulations would be controlling.
Law and jurisprudence support the award of attorney’s fees
and costs of suit in favor of Allegro. Attorney’s fees and costs of
litigation are awarded in instances where “the defendant acted
in gross and evident bad faith in refusing to satisfy the
plaintiff’s plainly valid, just and demandable claim.” Having
delivered possession over the leased property to Liga, Allegro
had already performed its obligation under the lease
agreement. Liga should have exercised fairness and good
judgment in dealing with Allegro by religiously paying the
agreed monthly rental of P40,000.00.
TIU vs. COURT OF APPEALS
G.R. No. 142596, July 10, 2006
FACTS: Private respondents entered into a contract of sale
with petitioner spouses. They agreed to sell their house and lot
at a price of only P 15,000.00 with the intention of
repurchasing the same within one year. However, it appears
that petitioners thought it otherwise, that is, allegedly they
bought the property in pursuance of a Deed of Absolute Sale.
Due to failure of petitioners to reconsider the sale as one with
right of repurchase, respondents instituted a case for
reformation of instrument or rescission of contract and
damages. The Regional Trial Court ruled in favor of
respondents which decision was affirmed by the Court of
Appeals, holding that respondents are victims of
misrepresentation. On this petition under Rule 45, petitioners
questioned the appellate court’s decision on the ground that
said court acted with grave abuse of discretion amounting to
lack or in excess of jurisdiction in not considering a ruling of the
Supreme Court in the case of Luctan v. Court of Appeals (266
SCRA 663) that, “the meeting of the minds in a contract
speaks of the intent of the parties in entering into the
contract reflecting the subject respecting the subject matter
and the consideration thereof, and if the words of the
contract appear to be contrary to the evident intention of the
parties, the latter shall prevail over the former.
ISSUE: The pivotal issue in the case at bar is whether or not
the sale is actually a sale con pacto de retro or with right of
repurchase.
RULING: The Supreme Court ruled in favor of the Court of
Appeals. The evidence of the case proved that the sale is a
sale with right of repurchase and not an unconditional,
irrevocable and complete conveyance of the subject house
and lot. This is evident from the receipt issued by
respondents and which was received by petitioners stating,
among others, that the former is selling their house and lot
under pacto de retro. The contention of petitioners has done
more harm than good to their cause. The Supreme Court
further ruled that even when a document appears on its face
to be a sale, the owner of the property may prove that the
contract is really a loan with mortgage. Thus, the Deed of
Definite Sale was declared as an equitable mortgage. In the
case at bar, the stipulation in the Deed of Absolute Sale that
respondents have agreed to unconditionally sell their lots to
petitioners must give way to the true intent of the parties –
that the sale is subject to the right of repurchase in favor of
private respondents.
In deciding the case, the highest tribunal enunciated that it is
incumbent upon petitioner to present special, strong and
convincing reasons to obtain the nod of approval by the
Court. A scrutiny of the aforequoted grounds in support of
the instance petition reveals that petitioner has fallen short
of the standards set by the rules of procedure and
jurisprudence. The petition has failed to convince the Court
that the appellate court has ruled on a question of substance
not previously decided by the Court; or has decided it in a
way not in accord with the law or jurisprudence or that the
court a quo has deviated from the normal judicial
proceedings as to call for judicial supervision. On this score
alone, the court is constrained to disregard this action as
wanting in substance or importance.
Rogelia and Adelino Daclag vs. Elino Macahilig, Adela
Macahilig et. Al; G.R. No.
159578, February 18, 2009
FACTS: A land was registered in the name of Rogelia Daclag
in 1984. When Daclag purchased the land from Maxima
Divison, it was then unregistered land. It turned out that
Maxima Divison misrepresented herself as the owner of the
land. In 1991, respondents Macahilig filed a complaint for
reconveyance. The case reached the Supreme Court and it
ruled that since the petitioners bought the property when it
was still unregistered land, the defense of having purchased
the land in good faith is unavailing. The SC, thus, ordered the
petitioners to pay the respondents their share in the produce
of the land from the time they were deprived of possession
thereof in 1984.
Petitioner moved for reconsideration of the decision in the
main arguing that the 10- year prescriptive period for filing
an action for reconveyance applies only if the action is based
on an implied trust but not in this case where the
respondents action was based on fraud, in which case the
period to file the action must have been within four years
from discovery of the fraud. They also contend that as
possessors in good faith they are entitled to the fruits
received before the possession is legally interrupted under
Article 544. They received the summons only in 1991.
SC reiterated that the prescriptive period for the
reconveyance of fraudulently registered real property is 10
years for the date of the issuance of the certificate of title
(Caro v. Court of Appeals; 180 SCRA 401) SC granted partial
reconsideration with respect to the liability of the petitioners
for the fruits. Article 528 provides that possession acquired in
good faith does not lose this character except from the
moment facts exist which show that the possessor is not
unaware that he possesses the thing improperly or wrongfully.
Possession in good faith ceases from the moment defects in
the title are made known to the possessors by extraneous
evidence or by suit for recovery of the property.
Records show that petitioners received the summons on
August 5, 1991, thus their good faith ceased on the day they
received the summons. Under Article 544 of the Civil Code, a
possessor in good faith is entitled to the fruits of the thing only
so long as his possession is not legally interrupted. Thus,
petitioners good faith having ceased only on the day they
received the summons, they should therefore be liable to pay
the respondents the 10 cavans of palay only from that date,
August 5, 1991 and not from 1984.
SERRANO v. GALLANT MARITIME SERVICES
INC. & MARLOWE NAVIGATION CO., INC.
G.R. No. 167614. March 24, 2009
Facts: Petitioner was hired by Gallant Maritime Services, Inc.
and Marlow Navigation Co., Ltd. (respondents) under a POEA-
approved Contract of Employment. On March 19, 1998, the date
of his departure, petitioner was constrained to accept a
downgraded employment contract for the position of Second
Officer with a monthly salary of US$1,000.00, upon the
assurance and representation of respondents that he would be
made Chief Officer by the end of April. However, respondents did
not deliver on their promise to make petitioner Chief Officer.
Hence, petitioner refused to stay on as Second Officer and was
repatriated to the Philippines on May. Petitioner's employment
contract was for a period of 12 months or from March 19, 1998
up to March 19, 1999, but at the time of his repatriation on May
26, 1998, he had served only two (2) months and seven (7) days
of his contract, leaving an unexpired portion of nine (9) months
and twenty-three (23) days.
Petitioner filed with the Labor Arbiter (LA) a Complaint against
respondents for constructive dismissal and for payment of his
money claims. LA rendered the dismissal of petitioner illegal and
awarding him monetary benefits. Respondents appealed to the
NLRC to question the finding of the LA. Likewise, petitioner also
appealed to the NLRC on the sole issue that the LA erred in not
applying the ruling of the Court inTriple Integrated Services, Inc.
v. National Labor Relations Commission that in case of illegal
dismissal, OFWs are entitled to their salaries for the unexpired
portion of their contracts. Petitioner also appealed to the NLRC on
the sole issue that the LA erred in not applying the ruling of the
Court in Triple Integrated Services, Inc. v. National Labor
Relations Commission that in case of illegal dismissal, OFWs are
entitled to their salaries for the unexpired portion of their contracts.
Petitioner filed a Motion for Partial Reconsideration; he
questioned the constitutionality of the subject clause. Petitioner
filed a Petition for Certiorari with the CA, reiterating the
constitutional challenge against the subject clause. CA affirmed the
NLRC ruling on the reduction of the applicable salary rate; however,
the CA skirted the constitutional issue raised by petitioner. The last
clause in the 5th paragraph of Section 10, Republic Act (R.A.) No.
8042, to wit: Sec. 10.Money Claims. - x x x In case of
termination of overseas employment without just, valid or
authorized cause as defined by law or contract, the workers shall
be entitled to the full reimbursement of his placement fee with
interest of twelve percent (12%) per annum, plus his salaries for
the unexpired portion of his employment contract or for three
(3) months for every year of the unexpired term, whichever is
less.
Applying the subject clause, the NLRC and the CA computed the
lump-sum salary of petitioner at the monthly rate of
US$1,400.00 covering the period of three months out of the
unexpired portion of nine months and 23 days of his
employment contract or a total of US$4,200.00. Impugning the
constitutionality of the subject clause, petitioner contends that, in
addition to the US$4,200.00 awarded by the NLRC and the CA,
he is entitled to US$21,182.23 more or a total of
US$25,382.23, equivalent to his salaries for the entire nine
months and 23 days left of his employment contract,
computed at the monthly rate of US$2,590.00
Issue: 1.)Is petitioner entitled to his monetary claim which
is the lump-sum salary for the entire unexpired portion of his
12-month employment contract, and not just for a period of
three months?
2.)Should petitioner’s overtime and leave pay form
part of the salary basis in the computation of his monetary
award, because these are fixed benefits that have been
stipulated into his contract?
H el d: 1.) Yes. Petitioner is awarded his salaries for the
entire unexpired portion of his employment contract consisting
of nine months and 23 days computed at the rate of
US$1,400.00 per month. The subject clause “or for three
months for every year of the unexpired term, whichever is
less” in the 5th paragraph of Section 10 of Republic Act No.
8042 is declared unconstitutional.
In sum, prior to R.A. No. 8042, OFWs and local workers with
fixed-term employment who were illegally discharged were
treated alike in terms of the computation of their money
claims: they were uniformly entitled to their
salaries for the entire unexpired portions of their contracts.But
with the enactment of R.A. No. 8042, specifically the adoption
of the subject clause, illegally dismissed OFWs with an
unexpired portion of one year or more in their employment
contract have since been differently treated in that their money
claims are subject to a 3-month cap, whereas no such limitation
is imposed on local workers with fixed-term employment.
The Court concludes that the subject clause contains a
suspect classification in that, in the computation of the
monetary benefits of fixed-term employees who are
illegally discharged, it imposes a 3-month cap on the claim
of OFWs with an unexpired portion of one year or more in
their contracts, but none on the claims of other OFWs or
local workers with fixed-term employment. The subject
clause singles out one classification of OFWs and burdens it
with a peculiar disadvantage. The Court further holds that the
subject clause violates petitioner's right to substantive due
process, for it deprives him of property, consisting of monetary
benefits, without any existing valid governmental purpose. The
subject clause being unconstitutional, petitioner is entitled to his
salaries for the entire unexpired period of nine months and 23
days of his employment contract, pursuant to law and
jurisprudence prior to the enactment of R.A. No. 8042.
2 .) N o . The wordsa la ries in Section 10(5) does not include
overtime and leave pay. For seafarers like petitioner, DOLE
Department Order No. 33, series 1996, provides a Standard
Employment Contract of Seafarers, in which salary is
understood as the basic wage, exclusive of overtime, leave
pay and other bonuses; whereas overtime pay is
compensation for all work “performed” in excess of the regular
eight hours, and holiday pay is compensation for any work
“performed” on designated rest days and holidays. By the
foregoing definition alone, there is no basis for the automatic
inclusion of overtime and holiday pay in the computation of
petitioner's monetary award; unless there is evidence that he
performed work during those periods.
Case Digest on PELAYO vs. LAURON (Mutual Support)
Facts: Oct. 13, 1906, nighttime – Arturo Pelayo, a physician
based in Cebu, was called to the house of Marcelo Lauron &
Juana Abella (defendants) in San Nicolas. Their daughter-in-
law was about to give birth & they requested him to render
medical assistance. Since it was a difficult birth, he had to
perform a surgery to remove the fetus using forceps. He also
removed the afterbirth. He finished all of these until the
following morning.
He visited the patient several times the following day. Just &
equitable value for the services he rendered: P500.00. Without
any good reason, defendants refused to pay said amount. Thus
he filed a case praying for a judgment in his favor against
defendants for the sum of P500.00 + costs along with other
relief that may be deemed proper.
The Defendants alleged that their daughter-in-law died in
consequence of the childbirth. Also, that their son & daughter-
in-law lived independently & her giving birth in their house was
only accidental. They prayed that they be absolved. CFI:
Defendants absolved due to lack of sufficient evidence to
establish right of action.
ISSUE: WON the defendants are bound to pay the bill for the
services Pelayo has rendered.
HELD: NO. CFI judgment affirmed.
RATIO: Rendering of medical assistance in case of illness is
among the mutual obligations to which spouses are bound by
way of mutual support. (Arts. 142 & 143, CC) The party bound
to give support should therefore be liable for all the expenses
including the fees of the physician. Thus, it is the husband’s
obligation to pay Pelayo and not the defendants. The husband
would still be liable even if his parents were the one who called
& requested for Pelayo’s assistance. The defendants are not
under any obligation to pay the fees claimed (An obligation
according to CC Art. 1089 is created by law, contracts, quasi-
contracts, & by illicit acts & omissions or by those in which any
kind of fault/negligence occurs.). There was no contract
between Pelayo & the defendants thus they can’t be compelled
to pay him.
INSURANCE LIFE ASSURANCE COMPANY, LTD. VS. ASSET
BUILDERS CORPORATION
G.R. No. 147410, February 5, 2004
Facts: Insular Life Insurance Company, Limited invited
companies to participate in the bidding of the proposed Insular
Life building. The Instruction to Bidders prepared by Insular Life
expressly required a formal acceptance and a period within
which such acceptance was to be made known to the winner.
Asset Builders Corporation submitted a bid proposal secured by
bid bonds valid for 60 days. Under its proposal form, Asset
Builders bound and obliged itself to enter into a contract with
Insular Life within 10 days from the notice of the award, with
good and sufficient securities. The project was awarded to the
Asset Builders and a notice to proceed with the construction
was sent by Insular Life to the former. However, Asset Builders
project. Neither did it execute any construction agreement. It
informed Insular Life that it will not proceed with the project.
Issue: Whether or not there is a perfected contract between
Insular Life and Asset Builders.
Held: There was indeed no acceptance of the offer by Asset
Builders. Such failure to comply with the condition imposed for
the perfection of the contract resulted in the failure of the
contract. There are three distinct stages of a contract-
preparation or negotiation, perfection or consummation.
Negotiation begins when the prospective contracting parties
manifest their interest in the contract and ends at the moment
of their agreement. Perfection occurs when they agree upon
the essential elements thereof. The last stage is the
consummation where they fulfill the terms agreed upon
culminating in the extinguishment of the contract.
ABS CBN Broadcasting Corporation vs. CA [301 SCRA 572 (Jan
21 1999)]
Power of the Board of Directors
Delegation to Executive Committee
Facts: In 1990, ABS CBN and Viva executed a Film Exhibition
Agreement whereby Viva gave ABS CBN an exclusive right to
exhibit some Viva films. Said agreement contained a
stipulation that ABS shall have the right of first refusal to the
next 24 Viva films for TV telecast, provided that such right shall
be exercised by ABS from the actual offer in writing. Hence,
through this agreement, Viva offered ABS a list of 36 films
from which ABS may exercise its right of first refusal. ABS
however, through VP Concio, did not accept the list since she
could only tick off 10 films. This rejection was embodied in a
letter.
In 1992, Viva again approached ABS with a list consisting of
52 original films where Viva proposed to sell these airing
rights for P60M.
Viva’s Vic del Rosario and ABS’ general manager Eugenio
Lopez III met at the Tamarind Grill to discuss this package
proposal. What transcribed at that meeting was subject to
conflicting versions. According to Lopez, he and del Rosario
agreed that ABS was granted exclusive film rights to 14 films
for P36M, and that this was put in writing in a napkin, signed
by Lopez and given to del Rosario. On the other hand, del
Rosario denied the existence of the napkin in which Lopez
wrote something, and insisted that what he and Lopez
discussed was Viva’s film package of the 52 original films for
P60M stated above, and that Lopez refused said offer,
allegedly signifying his intent to send a counter proposal.
When the counter proposal arrived, Viva’s BoD rejected it,
hence, he sold the lights to the 52 original films to RBS. Thus,
ABS filed before RTC a complaint for specific performance
with prayer for TRO against RBS and Viva.
RTC issued the TRO enjoining the airing of the films subject
of controversy. After hearing, RTC rendered its decision in
favor of RBS and Viva contending that there was no meeting
of minds on the price and terms of the offer. The agreement
between Lopez and del Rosario was subject to Viva BoD
approval, and since this was rejected by the board, then,
there was no basis for ABS’ demand that a contract was
entered into between them. That the 1990 Agreement with
the right of first refusal was already exercised by Ms. Concio
when it rejected the offer, and such 1990 Agreement was an
entirely new contract other than the 1992 alleged agreement
at the Tamarind Grill. CA affirmed. Hence, this petition for
certiorari with SC. Lopez claims that it had not fully exercised
its right of first refusal over 24 films since it only chose 10.
He insists that SC give credence to his testimony that he and
del Rosario discussed the airing of the remaining 14 films
under the right of first refusal agreement in Tamarind Grill
where there was a contract written in the alleged napkin.
Issue: Whether or not there was a perfected contract
between Lopez and del Rosario.
Held: NO. A contract is a meeting of minds between 2
persons whereby one binds himself to give something or to
render some service to another for a consideration. There is
no contract unless the following requisites concur: (1)
consent of the contracting parties (2) object certain which is
the subject of the contract (3) cause of the obligation, which
is established.
Contracts that are consensual in nature are perfected upon
mere meeting of the minds.
Once there is concurrence between the offer and the
acceptance upon the subject matter, consideration, and
terms of payment, a contract is produced. The offer must be
certain. To convert the offer into a contract, the acceptance
must be absolute and must not qualify the terms of the offer;
it must be plain, unequivocal, unconditional, and without
variance of any sort from the proposal. A qualified
acceptance, or one that involves a new proposal, constitutes
a counter offer and is a rejection of the original offer.
Consequently, when something is desired which is not
exactly what is proposed in the offer, such acceptance is not
sufficient to generate consent because any modification or
variation from the terms of the offer annuls the offer. In the
case at bar, when del Rosario met with Lopez at the
Tamarind Grill, the package of 52 films was Viva’s offer to
enter into a new Exhibition Agreement. But ABS, through its
counter proposal sent to Viva, actually made a counter offer.
Clearly, there was no acceptance.
The acceptance should be unqualified. When Viva’s BoD Medel vs. CA [299 SCRA 481 (Nov 27 1998)]
rejected the counter proposal, then no contract could have
been executed. Assuming arguendo that del Rosario did enter Usury Law
into a contract with Lopez at Tamarind Grill, this acceptance
did not bind Viva since there was no proof whatsoever that del
Rosario had specific authority to do so. Under the Corporation Facts: Medel obtained several loans from
Code, unless otherwise provided by said law, corporate powers, Gonzales totalling P500,000. These were
such as the power to enter into contracts, are exercised by the
BoD. However, the board may delegate such powers to either evidenced by several promissory notes agreeing to
an executive committee or officials or contracted managers. an interest rate of 5.5% per month with additional
The delegation, except for the executive committee, must be
for specific purposes. Delegation to officers makes the latter service charge of 2% per annum, and penalty
agents of the corporation, and accordingly, the general rules of charge of 1% per month.. On maturity, Medel
agency ad to the binding effects of their acts would apply. For
such officers to be deemed fully clothed by the corporation to failed to pay their indebtedness. Hence, Gonzales
exercise a power of the Board, the latter must specially filed with the RTC of Bulacan a complaint for
authorize them to do so. That del Rosario did not have the
authority to accept ABS’ counter offer was best evidenced by collection of the full amount of the loan.
his submission of the counter proposal to Viva’s BoD for the RTC declared that the promissory notes were
latter’s approval. In any event, there was no meeting of the
minds between del Rosario and Lopez. The contention of Lopez genuine, however, it ruled that although the Usury
that their meeting in Tamarind Grill was a continuation of their Law had been repealed, the interest charged by
right of first refusal agreement over the remaining 14 films is
untenable. ABS’ right of first refusal had already been Gonzales on the loans was unconscionable. Hence,
exercised when Ms. Concio wrote to Viva choosing only 10 out RTC applied the legal rate of interest for loan of
of the 36 films offered by del Rosario. It already refused the 26
films. money, goods or credit of 12% per annum.
CA reversed the ruling of the RTC holding that the
Elvira Arangote vs. Spouses Martin and Lourdes
Maglunob and Romeo Salido; Usury Law had become legally inexistent. Hence,
G.R. No. 178906; February 18, 2009 this petition for review on certiorari.
FACTS: Elvira Arangote acquired the subject parcel of land
from Esperanza Maglunob, who is is grandaunt of respondents Issue: Whether or not the interest rate stipulated
Martin Maglunob and Romeo Salido. In June 1986, Esperenza
executed an affidavit in which she renounced her rights, share upon was valid.
and participation in the land in favor of Elvira and her husband.
It appears that the land was not exclusive property of
Esperanza but also of the other heirs of Martin I whom she
Held: NO. SC held that the stipulated rate of
represented in the partition agreement. Elvira and her interest at 5.5% per month on the P500,000 loan
husband, Ray constructed a house on the land in 1989 and in
1993, OCT was issued in her name by the DAR. However,
was excessive. However, it could not consider the
respondents with the help of hired persons, entered the property and rate “usurious” because CB Circular No. 905 has
built a wall behind and in front of Elvira’s house. Elvira and Ray sued
respondents for quieting of title and declaration of ownership. Respondents
expressly removed the interest ceilings prescribed
averred that they were co-owners of the land with Esperanza who allegedly by the Usury Law and that said law is now legally
inherited the land from Martin 1 together with Tomas and Inocencia (Martin 2’s
and Romeo’s predecessor in interest). They argued that Esperanza could not
inexistent.
have validly waived her rights in favor of Elvira and Ray. CB Circular 905 did not repeal nor in any way
MCTC ruled for Elvira. RTC reversed MCTC and declared
respondents lawful owners of the land together with the other heirs of Martin I.
amend the Usury Law but simply suspended the
Elvira went to the CA but the CA affirmed the RTC decision. latter’s effectivity. A CB Circular cannot repeal a
Before SC, Elvira argued that both RTC and CA erred in declaring
the affidavit of Esperanza void because it is a valid and binding proof of
law. Only a law can repeal another law. By virtue
transfer of ownership of the subject property as it was coupled with actual of this circular, the Usury Law has been rendered
delivery.
SC ruled that the affidavit executed by Esperanza wherein she
ineffective. Interest can no be charged as lender
renounced, relinquished and waived all her rights, share, interest and and borrower may agree upon.
participation in the subject property in favor of Elvira and Ray is in fact a
donation. Thus, it should have complied with the requirements of Article 749 of
Nevertheless, SC held that the interest of 5.5% per
the Civil Code. A simple donation of real property to be valid: 1) must be made month, or 66% per annum, stipulated upon by the
in a public instrument; 2) it must be accepted, which must be in the same deed
of donation or in a separate public instrument; 3) if the acceptance is made in a
parties in the promissory note was unconscionable,
separate instrument, the donor must be notified in authentic form and the same and hence, contrary to morals, if not against the
must be noted in both instruments.
The affidavit executed by Esperanza relinquishing her rights, share
law. The stipulation is void. The courts shall
and participation over the property in favor of Elvira suffered from legal reduce equitably liquidated damages, whether
infirmities. In Sumipat vs. Banga, the Court ruled that title to immovable does
not pass from the donor to the done by virtue of a Deed of Donation until and
intended as an indemnity or a penalty if they are
unless it has been accepted in a public instrument and the donor duly notified iniquitous or unconscionable.
thereof. In this case, the acceptance of the donation was not made by Elvira
either in the same affidavit or in a separate public instrument. Neither was there
SC ordered that the interest of 12% per annum and
notice of acceptance given to the donor, therefore the donation is void. additional 1% a month penalty charge as liquidated
damages reasonable.